Reducing Prices A Question Of ‘How Much And How Fast’
A pair of reports from markets in California. “The inventory of homes for sale in the Visalia/Tulare Multiple Listing Service as of May 1 stands at 1541; four times the number of homes that were on the market as of May 1, 2005.”
“There has been a complete turnaround with five listings for every buyer,’ says broker Brad Maaske. The glut of homes on the market can be seen in the number of higher priced homes listed today compared to a year ago, says Maaske. ‘It was typical a year ago we might see 20 homes for sale over $500,000 in this market but now there are 191.’”
“Realtors are reporting sellers have to reduce their prices and the question is how much and how fast. ‘We have rolled back our new home price to what they were a year ago,’ a representative for one of the large builders says. That is amounting to about a 5 to 15% decline in the prices seen last year.”
From The Record. “Jim Mazzilli was out touring in his north Stockton neighborhood. He wasn’t looking to buy, though, just checking out the competition. He’s still trying to sell his house, which was still sitting after eight months on the market; ‘and I put $80,000 into the kitchen.’”
“In the summer, the number of homes on the county market began swelling by several hundred per month until the number of homes for sale, 3,300 as of March, was up more than fourfold from March 2005. ‘It’s really, really, really, really slow,’ said Marcia Ourganjian, whose home Mazzilli was touring last weekend.”
“‘Everyone says: ‘It’s so beautiful. It’s gorgeous. I love your house,’ Marcia said. ‘Then they leave.’”
“Delfino Larranza is both a buyer and a seller. He recently bought a bigger house and put his four-bedroom, three-bath house on the market seven weeks ago for $455,000. The for-sale sign in front of the 3-year-old house is already tagged ‘reduced price’ to reflect a price cut to $447,500.”
“‘We just want to get it done,’ Carranza said. ‘I cannot afford to be making two house payments. The buyer has the advantage, and it’s very competitive for the seller.’”
“Jose Plasencia was hosting his own open house last weekend for his four-bedroom, two-bath home, listed at $395,000. ‘Not a lot of people are coming to see the house, so I don’t know,’ he said. When he bought his Lucile Avenue house two years ago for $250,000, there were lots of people trying to buy, he said.”
“Out of five people who came by for an afternoon open house, one couple asked him whether he would cut the price right off the bat. ‘I said: ‘Make an offer.’ They didn’t.”
“Jamie Granada, a real-estate agent in Stockton, is relatively new to the field, launching her new career in January. ‘Now you actually have to work hard to sell,’ she said. ‘It’s to my advantage to be new.’ Buyers know it’s a buyer’s market, she said. ‘They’re in the looky-loo mood, trying to see what kind of deal they can get,’ she said.”
“Dale Gray, CEO for the Central Valley Association of Realtors, said that not only are most sellers shocked by this slower market, so are many real-estate agents. ‘You can’t just throw in on the wall and know you’ll get multiple offers in a few days,’ he said.”
“Many young agents knew only a super-active market, he said. ‘They need to adjust to a new reality from what we’ve known in the past,’ Gray said. ‘Buyers have choices now, which, I’m sorry, I think is a good thing.’”
“Delfino Larranza is both a buyer and a seller. He recently bought a bigger house and put his four-bedroom, three-bath house on the market seven weeks ago for $455,000. The for-sale sign in front of the 3-year-old house is already tagged ‘reduced price’ to reflect a price cut to $447,500.”
“‘We just want to get it done,’ Carranza said. ‘I cannot afford to be making two house payments. ”
————————————————
Double bag holder.
Double bag holder
Lots of those. Last summer, I drove past a for-sale townhouse on a cul-de-sac in Leesburg and as I turned around, the woman came out of her house and flagged me down. She was a realtor selling her own townhouse and explained that she had already closed on another home and wanted to get the townhouse sold soon. There were six or seven townhouses for sale on the same street.
I drove down there last week and the for sale sign is still up, nine months later. Most of the other signs are as well.
One suicide loan is bad enough. But two!? Are people so RE crazy that they can’t wait to sell their house before buying another? What happened to common sense?
Actually, her first loan probably wasn’t a suicide loan. I looked up the property in the county tax records and she bought the townhouse a few years ago for ~$275K. Was listing it for $550K. Just greedy. I don’t know if she’s dropped the price. I can’t imagine anyone paying more than $300K for it.
Common sense went out the window after seven straight years of record high housing inflation erased from memory the idea that real estate prices don’t always go up by more than 10% YOY.
hope she’s eating Alpo now!
It was probably flipped three times in the interim
he reduced the price 1% and thinks that will make a big difference.yes people we are still in the denial phase in cali.by fall i think that will change.
no kidding…i was thinking the same thing. if he wants to “get it done,” he should slash his price by 20%. I have no sympathy greedy ignorance.
Yeah, big reduction. This guy still thinks he’s going to retire on what he clears on this deal.
I love watching all the new millionaire wannabes twisting in the wind. I remember when folks would get on this blog and scold people that enjoyed watching this unfold. The more this plays out, and the more quotes we read from these specuvesters, the more I really enjoy the fact that they have totally screwed the remainder of their financial futures. That is, until the government bails them out.
Be careful you could re-ignite the flame fests of internet morality lectures.
They are still here but we are in an uneasy truce.
This guy only held the house for under 2 years and he wants the moon in a location that is lacking demand . Short term holders with this level of greed ,when other people are really hurting ,are getting on my nerves .With this correction this guy is lucky to come out ahead in that short of time ,yet he thinks hes entitled to max. gains .
Yep, the standard rule of staying in a house for at least five years to break even if you are weighing out the renting or buying decision seems to be lost on these speculators. There should be no rational expectation to make a single dime flipping a house in two years. Past performance is NO indicator of the future.
I do too and I make no apologies for it. If God intended the nincompoopia of the world to be millionaires, he wouldn’t have created prime time TV.
Or casinos!
test
” love watching all the new millionaire wannabes twisting in the wind.”
But the $50k/yr wage slaves continue to embrace the republikkkan lie that they’ll be millionares if only they work a little harder.
Hi Lingus,
Still posting the Moveon.org line, circa 2004? If you ever get tired of generalizing and stereotyping ‘republikkkans’ and want to try some new material, ask me about the Irish. I have some great material for you. Oops….
Moveon Lingus, Moveon already…
Just like the FB’s dont want to aknowledge their situation….the folks that elected the moron in chief wish to continue in their cloud of denial.
Keep on Keeping on Lingus…if for no other reason to rub their noses in it like they want to rub the FB’s noses in the mess.
On a happy note the /sarcasm on/ fiscally conservative /sarcasm off/ republican congress just raised the debt ceiling to 10 TRILLION dollars…goody we can borrow 2 trillion dollars more from the chinese to dump into the sands of Iraq.
Hey Lingus, wake up NEITHER party is for the American middle class. the Democrats are for Lawyers, Chicoms, and Illegal Aliens, and the Republicans are for Saudis, Saudi Cousins, Illegal Aliens, and selling out their base. Both parties are chauffered in SUVS, destroying the environment, and take corpoarte kickbacks and hookers. Wake the phuck up, and why don’t ya’ll be a part of the solution by forming a 3rd party that will seal the borders, ban suicide loans, mandate retirement savings, and stop the sellout of our nation to foreigners.
Comment by KennyBabes
2006-05-09 07:10:38
Just like the FB’s dont want to aknowledge their situation….the folks that elected the moron in chief wish to continue in their cloud of denial.
Keep on Keeping on Lingus…if for no other reason to rub their noses in it like they want to rub the FB’s noses in the mess.
________________________________________________
RepubliKKKans have buyers remorse but are too cowardly to admit it.
He has to get that, he took out a HELOC or Refied the home to pull out the cash to buy his hummer and new boat.
“Yeah, big reduction. This guy still thinks he’s going to retire on what he clears on this deal.”
Actually, I’ll bet this guy is screwed. Never mind retiring, he will be lucky to keep the shirt on his back. He already bought a bigger home based on the assumption that he could get $455k for his place. He needs this money to pay off his piggyback loan.
Cut your losses, if no one is interested at $455, they are not going to be enticed by a measly 1% reduction. Take $20k or $30k off today and get rid of the place while you can. Or, you can keep making 1% reductions and staying 1 step behind the market, all the while making mortgage payments, insurance, property taxes.
You’ve got to love the granularity of the prices these greedy pigs think they can get away with.
It’s like selling a million dollar race horse, you don’t accept bids in $5 increments. The auction would take years and the horse would be dead.
and who lent this dude the money for the two houses? That’s what I want to know.
This guy must be a Mormon… I mean, moving UP from a 4 bedroom, 3 bath house??!!??!!
Nah — he just realized that his home equity gains would be bigger if he moved up to a larger house.
Double bag holder.
I’d kill to see his monthly outgo in carrying those 2 houses.
Death by a thousand cuts every month.
I’m just amused by the “double bag holder” and the “cul de sac” (bottom of the bag)
It would scare the S**t outta me!
“Jim Mazzilli was out touring in his north Stockton neighborhood. He wasn’t looking to buy, though, just checking out the competition. He’s still trying to sell his house, which was still sitting after eight months on the market; ‘and I put $80,000 into the kitchen.’”
————————————————————
Why? Everyone know you get 80% max return on improvements. Unless he did all the work himself, he’s just another get rich quick moron.
And it also depends on what improvements they are. I wonder what kinds of improvements he did. You can put granite in only so many places. In five years GCTs are gonna be the *tile* of a few decades ago.
BayQT~
True, yes…granite will be as dated looking as simulated wood grain formica. I think maybe the bullnose drywall boosted the costs skyward :rolleyes:
LOL Remember Harvest Gold and Avocado Green appliances? Hahahahaha!!!!
Sigh…its been several minutes since I beheld the harvest gold fridge in the kitchen of my 900k, 1100/mo rental.
Almost like yesterday…
Oh, my God! I almost forgot about the avocado green appliances! Hahahahahahahahahaha!!!
BayQT~
Maybe I’ve seen it in too many places — it’s already looking dated to me. Next up: zirconium countertops.
He probably got his speculator “expertise” watching “Flip This House”. They use completely ridiculous assumptions like $80K in kitchen upgraden = $120K in increased price, etc. A smart buyer doesn’t want to pay an inflated price for something that isn’t there style etc.
Has anyone actaull seen one of their houses actaully sell??
“Now you actually have to work hard to sell,” she said. “It’s to my advantage to be new.”
Her strategy: price just under recent sales prices for comparable homes in the neighborhood.
Well, now I can see why being new is an advantage, no veteran RE Agent would ever think of that.
“‘Buyers have choices now, which, I’m sorry, I think is a good thing.’”
Total BS coming from a realtor. They know that in a cratering market the first thing that happens is everything freezes - which is the realtor’s worst nightmare as all they need is a sale no matter what the price. No buyer wants to get caught holding the bag on the way down when it’s nowhere near the eventual bottom. Most sensible people in the bubble markets won’t even begin to get serious until 40% comes off the top…
No your wrong it’s not BS. And i’ll say it again, what most don’t understand is that veteran Realtors weren’t making money during this boom unless they were selling their holding which a lot were or had a host of listings or relatives who wanted to sell. Look at it from a numbers perspective you had historically low inventories and each deal getting anywhere from 10 to 20 offers all the while every Tom, Dick and Harry was quitting his job and selling his parents and relatives property. The only one truly making the large money was the mortgage broker. For a veteran realtor the coming market is the best thing in the world no competition for your offers etc. etc.. So no it’s not BS it makes perfect sense
Yea Yea, but there is always the top 15% that are making really big bucks .
It’s the top 10% Wiz. But they make money in any market bubble or no bubble. This guy has the time to be CEO of his association. Not a Top Producer by any means. Just the average real estate vet which is what I was refering too.
Wizard;….Its a known fact in the industry that the top 20% of the realtors make 80% on the money….
“and I put $80,000 into the kitchen.”
Wow, I wil never understand this logic. Why put that kind of money into a house that you are leaving you will never ever get a return on that. That’s like flushing 80k down the toilet
That’s part of my pet theory on McMansions and remodeling being a side effect of the HB. I imagine the thinking goes like this; ‘If I put $80k in the kitchen, when I sell it, I will get $100k more because of the additions.’ If you go along with that thinking, you’d be crazy not to do a make-over.
So remodeling should drop as well; I think it’s already started. That’s a concern, economy wise IMO. I know three remodelers for every homebuilder, and unfortunately, they haven’t been saving very much during the boom.
and I’m sure the dude got ripped on every aspect of the kitchen remodel. You can get a 100K remodel for less than half of that if you’re willing to put a little legwork and reseach into it and do the shopping yourself. I have a 30K LaCornue stove in storage that I paid 12K cash for a few years ago from a distressed distributor.
What’s wrong with the stoves from Sears? Those fancy things make the food taste better or something?
These type of owners are not going to cook, they order pizza.
Giant stove just for look.
Ummmm, nooo, giant (*gas*) stoves are a dream…I’ll take a six burner with full burner coverage (so I can slide pans around) over the four element electric (akk! phhhht!) that I’m now using. Viking may be expensive and pretentious, but I *do* like their stoves…
Refers, however…do Vikings and Sub-Zs make my food any colder?
Ben;…SAVE ?? What a novel idea….
Negative savers may be reacting to a subconscious concern that BB will inflate nominal $ savings down to a small fraction of its current real $ value. And the jury is out whether history will prove them right — I personally have no conviction about how this plays out. I can say the late 1970s were a good time to be in debt, and a bad time to be a saver (which might explain why then, as now, buying gold and houses at high prices seemed like a wise investing choice).
That’s the problem when you get a lot of amatuers calling themselves real estate investors and or as some people call it sheeple selling property to sheeple. If your buying into a new development or over-bidding on a property or putting 80 (sheessh it’s even hard to type) grand into a kitchen. If your a real investor of single family homes the only way can truly expect a value increase is if you increase the square footage of the property or the land. You could make kitchen cabinets out of solid gold and it won’t increase the value of the property. Had someone do that once with light fixtures thought it added 100k to the value he was sorely disappointed after going through 5 appraisers.
Out here remodelers may stand a chance a lot of folks can’t afford the price of moving up and are adding second stories or increasing the square footage of their homes. I expect that trend to continue unless prices take at least a 50% drop and it makes it a no brainer to move up.
Now “your” just doing it to annoy me, right?
Exactly, Now I’m wondering if your stalking me LOL
I have been pondering this exact situtation, i.e. - less home makeovers should = less revenue at big hardware stores like Home Depot, which could mean a nice short on this stock.
Short Home Depot….Nah…Housing stock is old and dated with high levels of deferred maintenance in many parts of the country.
My 83 year old parent’s house needs $50k in modernization to market it when they pass on.
Lots of others will be in the same boat.
“That’s like flushing 80k down the toilet”
Makes you wonder how much he put into the bathrooms if he was willing to put $80K into the kitchen. I saw that price and laughed out loud. Hardly anyone in California remembers how to cook anyhow, they just HELOC and go out to dinner for a year. Why make such an expensive kitchen?
>Why put that kind of money into a house that you are leaving
>you will never ever get a return on that.
http://tinyurl.com/zyeru
“My plan is to refit the kitchen with all stainless steel appliances: dishwasher, stove, microwave and refrigerator…Since I’m selling the houses, I’m mentally prepared to leave all these appliances behind for the happy person (or couple) who purchase this darling little home.”
http://tinyurl.com/bfvph
“This means the short-term flipper might become a longer-term hold as a rental, which would really irk me since the kitchen is decked out way nicer than what is in our Newport home. I didn’t plan on Palm Springs becoming a rental. In my opinion it is way too fabulous for this destiny!”
Remodels should only be done if you plan on staying in your place for a long time because they are negative return projects. With home prices skyrocketing over the last few years, so many people have come to believe that they are adding 125k in value to a home with a 100k remodel. But that’s an illusion; the only thing appreciating has been the land and the existing structure. The other problem with a remodel is that the value you do add (say 95k on a new 100k remodel) is taxed and charged a brokerage fee at time of sale.
“Jose Plasencia was hosting his own open house last weekend for his four-bedroom, two-bath home, listed at $395,000. ‘Not a lot of people are coming to see the house, so I don’t know,’ he said. When he bought his Lucile Avenue house two years ago for $250,000, there were lots of people trying to buy, he said.”
Paraphrased: “I raised the price 160% and people don’t want to buy it - what a conundrum!”
F***ing idiot. By the time he chases the market back down to $250k again, there might be some interest. Maybe.
This ass-wipe overpaid for his crib two years ago, and believes that there is someone twice as stupid as him to take this POS off his hands. Good luck, Jose - maybe you should start hanging around the local high school to see if you can con a recent drop-out into buying your house.
He thinks he got a buy one get one free offer from Alan Greensperm. Let’s see if Bernake will honor his coupon.
Betamax beat me to that comment - what a joke! - It’s almost as if the writer of the article knows Mr. Plasencia is a fool, and just wanted to lay it out there plain for readers to see.
I know it’s been brought up before, but how does a RE agent work harder? Obviously there is a huge difference in the quality of advice a seller will get from a good vs bad realtor, and a realtor who is likeable can put on a somewhat better open house by not freaking out those touring the home with a hard sell, etc. Mostly, though, aren’t you paying for their advice? In some sales jobs you can work extra to sell more. Here, you throw it on the MLS, maybe throw it with scores of other properties in a couple newspapers, possibly call through your network of buyer-side realtors to talk it up, but what else can they do above this? About the only additional thing is to seek out people through your church or wife’s job or whatever that aren’t really in a position to buy it and convince them to hook up with a lender or something…..
AGREE. These saps think they can work harder. LOL. They were fortunate the last few years that the market consumed what ever crap they had to offer. Now only low prices will matter - NOT GLOSSY PHOTOS in $500 suits. NOT open house signs with deflated balloons. NOT pictures in some free real estate magazine at the local 7-11.
Realtors are just order takers in a good market . The realtor team that I hired in 2005 were top producers but they were hard -pressed to figure how to write a counter-offer . I sent them home ,(to their shock ), wrote up the counter offer myself and gave it to them the next morning to submit to the buyer’s agent.The deal was accepted , and the Escrow Officer told me later that she hasn’t had a Escrow go this nice in a long time . The reason I’m bringing this story up is to show that even when they are top producers it doesn’t mean your getting a pro. Also ,the real estate team didn’t want me to disclose a few things ,but I said f–k you and I did it anyway , ( right in the contract ).
I disagree with that. But I’m going to leave it at that. Since I get the impression you haven’t sold Real Estate or partcipated in Real Estate since the early mid to Early 70’s debating you would be fruitless
Mirincomestream , I was doing some stuff in the 90″s . But let me tell you something ….. Good business practice is a timeless thing. Your point that I’m a has been who is out of the business doesn’t have merit . I’m not even going to go into the kind of positions I have had in my lifetime . But when this whole housing crash comes down ,people will be wanting to know how they did things in the “good old days “. As far as disclosure goes , there are some things that must be disclosed , and I did that . I never told these brokers what my background was so they thought I wouldn’t know what should be disclosed and what shouln’t .One of these realtor jerks finally told me after the deal went to Escrow that they learned alot from me . So you can think that I’m a retired has been who can’t relate to this market ,but believe me I can .
You know, despite what I said, there obviously is SOME difference in the level of abilities of realtors to move a home…after all in every city there are a few high end agents that pull down hundreds of thousands to a million in commission every year, while the majority languish with lower numbers. Do the higher end ones just market themselves better, or do they do a better job? Other than the bottom 30-50% of crap realtors, do good ones really get more for your house?
It’s all marketing. Top producers become something akin of a “pop” star, i.e. there are plenty of people who have the same talent and work just as hard, but these folks ended up being in the right place at the right time and somehow capitalized on their timing and marketing (of themselves). Sometimes it is their good looks. You see this in every big market. In La Jolla there is that one mother-daughter team that makes me want to puke, but probably through constant referals etc. they seem to have garnered a huge share of the high end listing. It’s a self licking ice cream cone…once they make enough money, they can move around in the social circles of the people who will then prefer to use them to sell their high end properties since they appear to be so successful (thus ending up being successful).
Right oh Wizard;…You can NEVER disclose to much….
Isn’t it illegal to not disclose *a few things*? Or is that dependent upon what state you are in?
BayQT~
That’s why I disagreed, that and a couple of his other statements. I doubt the commission on his property was worth enough for a team of realtors to risk getting sued and losing their licenses.
SF;…Here is the rule: If you know it, disclose it….As for the realtor, they are held to a even higher standard….If you should have known it you better have disclosed it….
I was actually agreeing with Wizard. And wondering why the other members of the team wanted to hide stuff. I would think it would come back to bite ‘em in the azz once (if) they were found out. Shame on them; way to go, Wizard.
BayQT~
Mrincomestream …curious about your comment “I doubt the commissionson his property was worth enough for a team of realtors to risk getting sued and losing their licenses .” … So are you saying that only when you get a big commission is it worth the risk of getting sued by pulling shit by realtors ? By the way ….they got a 5% commission from me , and I can’t say they deserved it . I always pay good and I tip good at restaurants to . So you really don’t know me do you ? I know your a intelligent person because I have seen some of your posts and maybe your a realtor and I hit a nerve because I’m always realtor bashing , but you got me all wrong .
They wanted to hide a couple of stupid little repairs that I was totally willing to give money for or fix . One repair was my security system had been shut off for years and I wanted to disclose that I did not warrant it or remember the code . A few other things like that , you know repairs that the buyers can’t see .
I’m trying to ponder what “your” trying to say, Wiz, but “your” just a little too difficult to read. I’d say you and the stream are more similar that you’d like to think.
The only way we are similar is that we both hate to edit our posts .
“The only way we are similar is that we both hate to edit our posts .”
LOL I’ll agree with that.
Wiz, my comment wasn’t really about how much your house was worth or the percentage you paid in commission. First off let me say I apologize if I offended you I disagree with alot of the stuff you say in regards to Realtors but I respect your time in the business. I learned a lot about this business from a guy exactly like you. No disrespect intended.
But to me with the litigous and greedy nature of the Tweedle Dee’s and Tweedle Dum’s of today I find it hard to believe a team of top producer’s would take that kind of chance especially after you spelled out what they told you not to disclose. They had to be a crew of asshats I refuse to believe it. It’s not like it’s hard most of the contracts are typewritten and if it was a team they had an assistant to type it up. I find it hard to imagine is all. Repairs not disclosing it come on I would have had you write me out list so I could have ammended the TDS if I ran out of room why hide that. It makes absolutely no since especially from a team of Top Producers.
In other words my commission would have to be in the high 7 digits for me not to disclose something a seller wanted to disclose. Why take a chance on losing your license like that.
MRINCOMESTREAM…..Believe it or not , they were top producers and they didn’t want me to disclose these things because they thought it would scare the buyer. I told them “if the buyer walks the buyers walks “. The whole thing was so stupid to begin with because I knew the buyer wouldn’t walk because I was willing to pay for any repairs I should of .
IMO it really doesn’t matter how much commission your getting paid ,you legally have to make disclosures .
You can get top producers that don’t care what they do and you can get low producers that are amoral to . I was stuck with these jerks because I signed a listing contract . I lived up to my contract ,but I had to write the counter-offer because they were going to blow the deal .
I didn’t mean to offend you or any good moral agent out there . I would love to tell you about the time I had 10 ESCROWS tied into one closing , Lawyers involved and everything ,and my buyer wanted to back out over 50 bucks at the last minute .
Anyway , no offense to you either ,but I do realtor bash alot and its not directed at you .
But than again I say “If the shoe fits ,wear it “, in regards to realtor comments .
CNN has buffet saying this:
“Buffett: “What we see in our residential brokerage business [HomeServices of America, the nation's second-largest realtor] is a slowdown everyplace, most dramatically in the formerly hottest markets. [Buffett singled out Dade and Broward counties in Florida as an area that has experienced a rise in unsold inventory and a stagnation in price.] The day traders of the Internet moved into trading condos, and that kind a speculation can produce a market that can move in a big way. You can get real discontinuities. We’ve had a real bubble to some degree. I would be surprised if there aren’t some significant downward adjustments, especially in the higher end of the housing market.”
On mortgage financing
Munger: “There is a lot of ridiculous credit being extended in the U.S. housing sector.”
Buffett: “Dumb lending always has its consequences. It’s like a disease that doesn’t manifest itself for a few weeks, like an epidemic that doesn’t show up until it’s too late to stop it Any developer will build anything he can borrow against. If you look at the 10Ks that are getting filed [by banks] and compare them just against last year’s 10Ks, and look at their balances of ‘interest accrued but not paid,’ you’ll see some very interesting statistics [implying that many homeowners are no longer able to service their current debt].”
Just remember there are TWO statements here: 1) daytraders moved in. 2) credit standards were dropped.
Either one could create a boom/bust cycle. Put them together you’ve got a real problem
I guess Buffet and Munger heard about this $80,000 kitchen . . .in Stockton. . . and turned sour on RE.
I can’t even picture the amount of appliances you would have to buy to add up to $80K. Does that figure include someone to cook and do the dishes??
The will buy your home for cash signs are up all over south florida ,
jose will sell at a loss. what a putz!
what a hoot:
http://www.equityispower.com/
I think you mean “what a scam”
That’s the same kid that’s on the condoflip site! Strange.
These sellers are crazy. They double the selling price of their homes in 2 years and wonder why their homes are not selling. Buyers are tapped out. With higher borrowing cost and gasoline prices, I cannot imagine stretching that far to pay a mortgage. Give me a break! Prices must fall for sales rates to normalize.
his four-bedroom, three-bath house on the market seven weeks ago for $455,000. The for-sale sign in front of the 3-year-old house is already tagged ‘reduced price’ to reflect a price cut to $447,500.”
It’s worthwhile to pause and reflect upon the fact that the house referred to is in Stockton.
It wasn’t more than 6 or 7 years ago that $447k would have bought a really, really nice house in Los Angeles.
I for one am looking forward to a return to those days!
We can only hope. Do you think it’s really going to drop that far.
I’m going to go out on a limb and say yes, in real dollars (accounting for inflation), Los Angeles will revert to the mean, i.e., roughly 1999 prices. Furthermore, I expect that the price will “undershoot” on the way down, just as it did last time in the early to mid 1990s.
The decline will take longer this time, because the prices shot up much higher than last time. But for those of us with cash, I’ll bet that we see a nice buying opportunity about 5-10 years from now, perhaps as good an opportunity as the last market bottom in 1995 or so.
Some would say well yeah, but last time around there was a recession helping to drive down prices. And yes, that was due in part to aerospace layoffs, riots, and Northridge. But I wouldn’t be surprised if we get a recession just as bad this time due solely to the bubble bursting. The statistics for the percentage of jobs created since 2000 that are directly related to real estate are sobering, to say the least.
jbun - 5-10 years from now???
i think the buying opportunities will happend 18-36 months from now.
I have bet on 10 years. IMHO the debacle will not run full course for 15 years.
jbun - 5-10 years from now???
i think the buying opportunities will happend 18-36 months from now.
Well, that may be so, but I bet we won’t see much if any appreciation for years after that, so there certainly won’t be any hurry to buy!!
18-36 mo’s? Dead Baby Bounce. Wait for the real deals
I agree that it will take years for things to “reset” to the mean. This is not to say the process won’t be painful. Prices going down 5-10% per year for five years is brutal; death by a thousand cuts. And because these assets are levered 5-10% per year takes big chunks out of equity very fast.
“The decline will take longer this time, because the prices shot up much higher than last time. But for those of us with cash, I’ll bet that we see a nice buying opportunity about 5-10 years from now, perhaps as good an opportunity as the last market bottom in 1995 or so.”
I am guessing it is going to go WAY faster than that because there is so much debt involved. When RE slows down and the speculators don’t have the cash flow to carry the houses and they can’t rent them and unemployment picks up because everyone is related to the housing industry in one way or another and other jobs have disappeared, things are going to move very fast - downward.
Bernanke is going to add 25 basis points tomorrow and with oil north of $70, I don’t think the bond market is going to let up anytime soon. Bernanke may stop… err pause… sure. But the bond market isn’t. Nope. They are starting to see through this. Prices are rising and the Fed is getting antsy. The yield curve isn’t inverted anymore and now that the dollar is falling, foreign bond holders need protection from a falling currency AND inflation.
The ride is just beginning.
I agree that it will happen even faster than that, but I think it will have just as much to do with the speed of information and the media. The internet didn’t exist in the same pervasive form that it does now during the last RE downfall. People will be able to find what’s going much more quickly than they did then.
i agree with the 18to 36 months. What goes up must come down and usually faster then it went up. Houses on the space coast went up 2 to 3 fold from the end of 2003. That is only 2 1/2yrs. Now i believe that the only ones that are going to get caught upside down are the ones that bought from beginning of 2004 till feb 2006. I can remember when the appreciation was going up 5 to 10 thousand a month… during that time. I am kid of looking for a house now and will be offering a little over what the house was at the end of 2003. May not get any takers, but they will come to me eventually and not the other way arround.
Suggest you wait till it goes lower than 2003.
I totally agree with you on that. I’m in NoCal, but just 6 or 7 years ago I’ll bet that house wasn’t even $100,000 in Stockton.
BayQT~
” It’s worthwhile to pause and reflect upon the fact that the house referred to is in Stockton.”
Stockton, Fresno, Bakersfield….You would have to pay me $450 + give me the house for free to even consider living in any of these cities…How do you spell insanity? Anyone that buys or bought at anything over $200k deserve the beating they deserve….
You’re really not even living in “California” - as most people know it - in these towns, so what’s the point? It’s just flat, arid farmland, no different than Waco or Wichita Falls - no beach, no mountains, no culture, nothing. Just a scorching hot sun, fast food joints, and strip malls. If you’re content to live in Stockton or Bakersfield, you might as well move to Waco and save a hell of a lot of money.
I would be remiss if I didn’t add that, 6 or 7 years ago, very few people would have qualified for a $447k mortgage! (And, I would guess, almost nobody at all in Stockton would have!)
What has changed since then? Certainly not incomes, which are pretty much stagnant after you account for inflation. This alone suggests that, once credit standards go back to what they have normally been, these prices will be completely unsustainable.
The freaking MEDIAN house price in Los Angeles is now $550k. What’s the median household income? Below $50k, I believe. This has been going on for just long enough that many of us have started to get numb to the whole thing, but reflect upon that! Median house price at 11 times the median household income!!!! Has this EVER happened before, or are we in completely uncharted territory?
Great point! This bubble is about easy credit, plain and simple. NOT low interest rates. Once the mortgage well runs dry, then the demand for housing will plummet.
“Dale Gray, CEO for the Central Valley Association of Realtors, said that not only are most sellers shocked by this slower market, so are many real-estate agents. ‘You can’t just throw in on the wall and know you’ll get multiple offers in a few days,’ he said.”
Is there a law that says that everyone involved in real estate has to mangle the English language??
Hey, that’s a newspaper typo. Third party he can’t be blamed for that sheesh.
I used to live in Visalia and when I finally sold this past November, I was competing with a guy down the street with an identical house who kept lowering it by $5K every 5 days until it finally sold. The seller’s panic is alive and well in the Central Valley…it is probably the place where real estate will crater the most.
The San Joaquin Valley has the dubious distinction of the highest air pollution in the country, arsenic contaminated water (or, just foul smelling water if you live in Hanford), spoiled, complaining farmers who dump just about anything and everything on their crops in an effort to boost yields, “Valley fever,” a spore in the dust that can hospitalize or kill you, very long, hot summers and depressing foggy winters, the smell of cow dung everywhere (just imagine how bad it is when that stench condenses in the fog…it gets on everything: cars, houses, and people), a huge illegal alien population, some of the highest unemployment in the country, and a lowly educated workforce with low paying jobs. Oh, yeah, and there is of course the huge number of rednecks with their pickups who drive as if they’re on a NASCAR track (or at Pismo getting drunk). All I can say is that once LA speculators realize this–and that depreciation was and is the norm for this part of the world–the Valley is going to get hurt really badly.
Both Centex and McMillin, the two largest builders in the area, are dropping their house prices in the midst of speculators falling out and overbuilding/rapidly falling demand. When I moved to Visalia in 2002, there were only about 2 or 3 Centex and McMillin neighborhoods in the city. Even though the population has grown (now over 111,000 residents), at last count there were at least 10 Centex and 8 or 9 McMillin developments. They keep building even as the rug is being pulled out from beneath them. Looks like all those brand new dually pick ups and Humscalades are going back to the bank!
I see you have fond memories of the valley Anthony….
I’m from the country and I feel for the country folks who are seeing their livelihoods and lifestyles ruined by the constant influx of yuppies. In FL these city folks are buying subdivisions built from orange groves in the middle of the country. Next comes the Publix, banks, restaurants, BMW dealerships, Lowes, etc. Then the blue-collar folks who have a paid off house on a few acres are surrounded by yuppies. I toured a subdivision built BEHIND a beautiful house. It looked like the owner was upset and had about 3-4 cars hauled in on blocks and roosters running around, probably standing on his back deck and firing 100 shotgun shells a night.
Couple of factors unique to this situation I think a lot of analysts are overlooking. “Yes we’ll see a real estate downturn, but typically they occur slowly over many years.”
This time may be different. People may be “stunned” by the sudden downturn this time around.
There are a couple of fundamental differences in this situation:
1) Huge number of investment only purchases (28% pure investment purchases last year). These tend to be very cagey types who run for the exits en masse when things look bad.
2) Much faster forms of feedback on the state of the housing market. E.g. all the easily available MLS and sales statistics available online. People can observe changes in their local markets almost as fast as they can monitor stockmarket changes. This is a new phenomena.
3) Growing awareness of the magnitued of the Japan crash, and the 15 unrelenting years of declines the followed. I.e. the sense that you can’t just wait for the rebound a few years down the line.
This has the potential to be an unprecedented warp-speed downturn. The only thing that might mitigate this are the “pouncers”. Pent up demaned just waiting for a 10% price drop on that new home they’ve been drooling over.
I don’t think that will be enough to mitigate the other factors.
I think we could be looking at a housing market that deteriorates with unprecedented speed.
You forgot a few things…
4) the bond market has figured things out and is starting to shun US bonds. They now need a profit margin to cover a falling currency AND inflation. Interest rates are going to keep ballooning even if Bernanke stops, err… pauses. In effect he can’t stop because pretty soon he will have to support the dollar with interest rates, lest oil goes to $100USD/barrel for us while it remains $50 for everyone else, in their currencies.
5) high gas prices and higher ARMs, for which people are probably going to have trouble qualifying for now. When was the last time the mortgage market had such a short term ?
6) Many of the jobs out there are housing related, directly or indirectly. We are going to have
a) high vacancy rates (more houses than renters)
b) high debt loads
c) little equity in the houses
d) higher unemployment
e) a disproportionate amount of short term mortgages
f) a falling currency
g) climbing interest rates
h) climbing energy costs
i) tons of speculators “wanting to get out, while they can”
You tell me what is going to keep the market from falling.
Everyone who could afford to buy a house has already. People coming into the market when it falls 10% ? You have to remember the house THEY own will fall too. The only people that aren’t in this market are the renters. And at this point there aren’t many of them and they don’t have a house because they don’t want a house. Simple as that.
Look out below !
The only people that aren’t in this market are the renters. And at this point there aren’t many of them and they don’t have a house because they don’t want a house.
After a nasty divorce following 25 years of homeownership, I now find myself a tenant. With the dramatic lowering of the costs of keeping a roof over my head, I now have the discretionary income to do some long deferred travelling in Europe…
Sure nice to be on the other side of the fence looking at travel brochures, rather than to contemplating how I’m going to pay for sky-rocketing property taxes and filling the fuel oil tank next winter.
What you point out makes sense in a logical world. It just happens that we do not live in one of those. When you talk about the Internet, research, the example of Japan … most people know nothing, and still buy a $1M home. I am surrounded by rocket scientists (literally) which do not even know what a option ARM is, while waiting for their ARMs to reset.
Don’t get me wrong, I wished you were right, but I think you give too much credit to most people
They don’t have to agree. Economics will force them to agree. They made a conscious decision to purchase their house. When they go to refinance their mortgage, the bank will tell them the mortgage is worth more than the house and they will be forced to do something about it. It won’t be their decision.
People say it can’t happen. I say it will happen. Inevitable. Just wait.
I’m with you in the sense that it must happens regardless of what people think. But I disagree when you say that it will happen faster because of people being more informed. People could be more informed if they wanted to (the instruments exist), but they choose not to be informed.
I agree with you. The buyers here in Santa Monica haven’t a clue - they’re oblivious to the economy, the homeless sitting outside their residences, the overated school district, gang laden high school and liberal city council.
I agree, although I’d sum up the “fast drop” argument with one word: leverage. High leverage will make any market drop quickly once it finally turns down, because it’s what FORCES people to sell — there will be no choice whether to wait, for many. This market is much more leveraged than any we’ve seen except perhaps in the 1920’s. Not only via easy credit, but by the less obvious factors like high r.e. related employment, etc.
Is this the same as “Inland Empire”?
It is odd that the guy asks for 80% in 2 years and can’t figure out why his house can’t sell. It will probably take a long time, 6 months to a year, for prices to really start coming down. Everyone just waits their turn to sell…no one is desperate enough.
Some of the speculators aren’t panicked because they don’t intend to sell for a loss - ever. When you sell at a loss, you have to write a check at closing to cover the difference, and these speculators don’t have anywhere near that amount of cash, and no equity in the home. They’re going to hang tight losing $3K/mo until they’re out of money and then they’ll simply give the keys back to the bank. That’s when we’ll start to see some really motivated selling - banks trying to get these properties off the books.
I’m happy to announce I just went into escrow on my last house in Sacramento, which is the house I live in. Gonna rent for a few years and swoop back in and buy at a discount.
Just FYI, but we prices are down 10% since their Aug 05 peak. I was lucky to find a couple suckers last summer to buy two investment homes I had here in Sac..both at over 300% gains.
I beleive the Sac market to be amongst the worst in the country. Ther are 6 houses for sale on my 12 house cul-de-sac. 3 of those homes have been for sale SINCE LAST SUMMER…all are rookie speculators who just refuse to sell thier over-priced POS at a loss…
..the blood has barely started flowing and will get much worse once the rookies start bailing and the I/Os reset.
My home sold in two weeks after I freshened it up, offered a 3.5% commision ( I sell them myself) and priced them $20K below other comparable listings.
I am flabergasted at the amount of stupidity amongst realtors who looked at my home. Surely they cannot be that stupid and are just playing a ’shil’ game. All said to a tee…as if it were rehearsed..”the market is FANTASTC in Sac and we look for a 10% appreciation this year.
LMFAO!!!!
I beleive the Sac market to be amongst the worst in the country.
Hahaha, this gives fresh meaning to the mantra “but Sacramento is different!”
Congrats on the escrow!
Freeloading Roommate…I toally AGREE with your analysis. Well done!
Look, I appreciate the positive feedback, but what the hell is going on with everybody accusing me of being freeloader? Maybe you guys should think first before making assumptions about somebody you know nothing about. >:(
I can’t tell if you’re being sarcastic, or just really f’ing obtuse here… but I’m going to choose to believe it’s sarcastic…
Or perhaps he HAS a freeloading roommate.
One thing to keep in mind: the Feg Gov’t is minting money like it is going out of style to desperate prop up the economy and soften the RE crash….and it is working to a certain extent nationwide. Even the once hot markets that have/are correcting there are still buyers out there. Price your home right and it will sell.
What happens if the economy tanks and there are massive lay-offs like the early 90s?? Bad Things.
No matter how far the RE drops…one thing is for certain. The USD is toast. You cannot print money 24/7 and not reap the consequences sooner or later.
You are the only one to have said that on this board besides me. RE will go down that is obvious and certain but the US$ will also crash and when it does the world will descend into a recession. You cannot keep printing money and spend two dollars for every one you earn. We do not have the smartest President or Congress and I am a Republican. Look at gold to see where the Greenback is going. RE will plummet and with it the value of the Dollar. We are on a fast tract to becoming a third world country unless we have radical economic changes.
You are the only one to have said that on this board besides me.
Uh, no. Someone’s not been paying attention in class!
p.s.: Join us over at Ben’s Money & Metals for more on this subject.
Exactly, TJ.
Actually, many of us have been talking about hyperinflation and the falling dollar for over a year now.
Many of us got tired of talking about hyperinflation close to a year ago now.
True, GS. Just refering to the existence of Ben’s blog (with comments).
“You are the only one to have said that on this board besides me. RE will go down that is obvious and certain but the US$ will also crash and when it does the world will descend into a recession.”
Alex, how long have been reading here? I’ve only been on for a few months and it is my impression that we’ve had that dollar crash discussion many times. I always learn something each time I’m looking forward to another.
Would someone on this blog who keeps saying “the US government keeps printing money” explain what they mean? The government can deficit spend and fascilitate loose credit but not print money. If fear strikes the bankng system, they will not be able to fascilitate debt. There is no printing of money.
How can we be so sure? What’s to stop them from “printing” money into offshore hedgefund accounts (controlled by the Fed, but not traceable to the Fed) to be redirected into certain “investments” in the U.S.?
Yes, it’s a bit tin-foil hat, but please tell me exactly WHY this isn’t possible. Of course, we know this is hyperinflation, and that’s what many of us expect here. We just don’t know if it will happen concurrent with the deflation, before or after (I think concurrent, and it’s going on right now).
Well, it is true that they are doing their utmost to encourage an expansion in the money supply, but if RE tanks, what effect will that have on the money supply? A large part of the increase in the money supply has been due to the RE price increases, and the expansion of credit through the price increases through equity loans and HELOC’s. A collapse in RE will have the opposite effect of the expansion.
The USA does not increase the money supply by “printing” dollars; the money supply is increased by increasing debt. When debt if paid off or defaulted on, the money supply drops. If the economy tanks and there are massive layoffs this will cause a decrease in the money supply as people stop increasing debt and as the lenders become more cautious because they are losing money through default, which also decreases the money supply.
SCDAVE, let’s just say that I’m glad I’ve awakened from the horrible nightmare of living in the San Joaquin Valley.
BTW, in late 2002, an entry level new home in Visalia from Centex or McMillin was $120K. Last summer, I went to their showrooms, and they were all the way up to $280K. A month ago, I was down there for a friend’s wedding…prices starting out at $240K with “good-sized” discounts if “you bring us an offer without any contingencies!” I have to think prices in that hellhole will revert back to $120-130K for a 1400 sq foot new home in the not too distant future.
I agree. McMillian, Centex, Lennar, Pulte and all the others are building in Bakersfield like crazy. The valley will be in for some serious pain. I predict prices to drop 30-50% over the next five years.
Her husband said there are just so many selling factors that have been going against sellers: The long rainy season, rising interest rates and soaring gas prices that discourage the typical Stockton home buyers - Bay Area commuters such as he.
________________________________
What about PRICES???
over at the sandy eggo investors forum somebody is eagerly wondering if there is a lender who will do 10 homes at a time.
i felt myself reahing through my monitor to strangle the stupid s.o.b.
somebody stop me
Don’t strangle him! Encourage him! That will be 10 bargain basement properties coming online in the very near future!
I can attest to the SJV being a hellhole and smelling of the “bovine fecal matter”. As a vetera driver between SF and ABQ, I have taken many of the routes through the “Valley”. The stench from the BULL$HIT (pun intended) was just sickening. I couldn’t imagine living it in. I know that in 2000, homes could be had anywhere in the valley for around $100K. These prices will fall back toward that level as floppers bail and idiot commuters (driving lost distances) realize that it is costing them huge dollars to drive to their crummy jobs that they hate somewhere in the Bay area. And, lets not forget that the rivers will most likely be flooding large areas of these new McMansions and making them worthless this summer. The Governator is trying to press Bushie for $300 M to fix that mess, but it will probably come too late. Their published timeline for fixing is Nov 06. Me thinks the 200% of normal snowpack in the Sierras will be rushing down for flooding within days to the next few months.
Sit back, and ENJOY THE SHOW.
SD ziprealty inventory = 19,798 — 202 to go for the big 20K mark.
Will we get there by next weekend? Will that be enough for the popping SD bubble to reach common knowledge status?
Hopefully, but I dunno, man. The common seem to have very thick heads. And greed has clogged the path to where their knowledge resides.
20K is nothing. Wait till we’re at 25k and 30K. Then people will really be shutting up about how “San Diego is different!”
30k or more is probably the tipping point. at 20k i see less than 10% of any typical neighborhood having a for sale sign. not enough to induce panic.
IMHO it’s kind of like the difference between heat and temperature. After all the greatest fools aren’t exactly noted for their prescience. They don’t panic until they run out of money. It doesn’t matter how many other houses are for sale if they can “hold on until prices go back up.”
And not to forget the SJV was a magnet for druggies, unemployed looking for cheap places to live, low wage workers, etc, before this ridiculous runup with a 15% unemployment rate. And, they are all still there. The place stunk like BULL$HIT before the run-up, and continues to this day.
There may be a silver lining for them, when SF and LA fall into the ocean at the next big one, then SJV will become beachfront property. LOL
IMNO one has to exclude Sac from the Central Valley. Yes, RE prices are going to drop there as much as other CV locations….but Sac is just different than Stockton, Fresno, BF etc. Much more culture and just a more mature city with alot a older (albeit overpriced) homes and alot less ileegal imiigration etc. etc. - Still no match for the coastal areas of CA and SD, SF etc…but a good second. Buyers in Sac pay a sunshine tax too.
thejdog;….I appears you are in tune with the Sac market…There are a few others alsothat post here AZ, etc….I would love to chat with you…Maybe we could blog on Ben’s “Bucket” this weekend…Let me know what time roughly…
I very much do agree that there is a big difference in the amenities of the cities from SJV and those in Sac. Sac is concentrated with gov’t employment as the backbone, where as SJV is based on agriculture. More business minded folks in Sac.
A friend of a friend bought a $1.1 million condo in SF about 18 months ago. This guy has a neg-am and makes about $80k year. He has a roommate that helps with the mortgage (big deal, I know). I could not for the life of me figure out how he could even GET a loan of this size - little to no money down. Well today I heard he bought another condo IN SF using a HELOC. He put it on the market a few weeks ago and has had ZERO interested parties. Apparently he is still thinking of buying ANOTHER condo. Is this sh*t for real? I’m totally blown away that banks will lend this kind of money to totally unqualified buyers.
Also, received two phone calls in the last week from Bay Area friends bragging about their home values. Another girl I know is thinking about jumping in, buying a fixer in Hayward to flip in a few years. Wow, I feel like I am on another planet between this blog and the rest of my world. I have to give a big thanks to Ben and all the contributors here. Sometimes I feel like I am the last sober one at the party.
I make 85K and my wife makes around $50K and we don’t even think we can afford a $500K TH in NoVA ..
That’s because you can’t. It’s just that other people (sheeple) don’t get it yet. The lenders told them they could afford it, so off they went to buy a house.
I know a couple whose max annual income (RE related) was perhaps $120,000. They currently have over $1.2 MILLION in debt. Their equity is around %50K, at best. Needless to say, these are the folks who “skip a mortgage payment” (yes, they actually have mortgages where you can skip one or two payments a year) so they can go on vacation.
Lots of these idiots running around right now. The market will not be set for buying until EVERY ONE of these “homeowners” is shaken out, IMHO. Gonna be a few years.
That’s $50K equity, not %50K. Where **is** that edit button…
No matter, the two will be equal soon enough.
As for the fool who spent $80K upgrading his kitchen, I don’t know where his brain is (unless he sits on it). I just bought a newer home (5 yrs old) out of CA. Our kitchen is beautiful, modernized, and spacious. I can’t imagine that $80K was spent on it though (but no granite countertops). It will suffice us for many years to come. I am sure that $80K in Stockton will net him about $20K more on a sale at most.
IMPOSSIBLE to spend 80K to upgrade a kitchen. Buyer is either exagerating or is a total mark.
Easy to spend 80k on upgrades
Viking range $9,000
Sub Zero ‘fridge $2,500
Bosch Dishwasher, $1,300
Viking Trash Compactor $1,300
French Country tub sink with pump-type faucet $1,100
You’re (your?)over $15k and have not installed one thing, don’t have a square inch of granite, or a single cabinet.
And perhaps redoing the kitchen included knocking down the wall between kit and DR.
Yeah, and if you spend 15k your gonna spend another 15k installing it.
Thanks SO much for that! In your sentence, the correct word is *you’re*, not *your*…..*you’re* = you are.
Take note everyone.
(Yeah, I’m a grammar snob…sorry)
BayQT~
Au contraire mon ami. You can spend 40K on stove and refrigerator alone. Then toss in 50/square foot tile, 500 Dornbracht faucets, wine cooler, two dishwashers at 1K apiece, hardwood or stone flooring. That’s before you’ve even looked at cabinets. High end for 200 square foot kitchen - maybe 40-50K.
I know people who have spent OVER $80K on kitchens. You’d be amazed at how well people can spend money.
I TOTALLY believe THAT! Just yesterday I was told of a person who pays $1,000/month for his Denali, and he communtes from Tracy to Sacramento/Elk Grove….daily.
Ooooh, that HURTS!
BayQT~
There was a CNN article about a family that spent $100,000 on an OUTDOOR patio kitchen. (not really a kitchen, it was in the back yard were they put a grill and a fireplace, etc)
I know people who put in a $200,000 kitchen. It included a fireplace from some castle in Europe that had to be taken out of the castle stone by stone, then meticulously reassembled here in the states.
People can spend a crapload on stupid stuff. Hell, that Tyco dude spent thousands of bucks on an umbrella, and showercurtain.
clouseau.
I’ve been wondering for awhile what extant insane appreciation rates have convinced people that refurbishing will pay for itself. “Hey look, i got 80k more than I paid for the house, it must have been the 20k kitchen I put in.” The conventional, non bubble time consensus is that remodeling does not pay for itself except for minor cosmetic changes (fresh paint and green grass) and major rehabs of completely unliveable spaces. For everything in between you’d be lucky to break even.
As far as SAC being different than the rest of the Central Valley, I think not. People think it is different because there happens to be a lot of SF Bay Area folks living in Roseville, but it really is part of the Valley. Plus, it is actually **SMALLER** in population than Fresno!!
Hmmm, looks like I’ll be picking up some cheap central CA SFR’s within the next couple years…
The fear that I might have to visit such a place suffices to ensure that I personally would never buy a property in the central valley.
Plus, another thing that is disturbing about Sac is the fact that most of the people that live there used to live in SF…and the fact that they would willingly give that up in the face of 2 hour commutes is beyond me. Is home ownership really worth that much? Face it, Sac is nothing more than a glorified Fresno (with Roseville being the equivalent of Clovis near Fresno).
You may be right….but ask yourself this: would you rather live in Sac or some of the other god forsaken places in the US?
Let’s be clear, as far as Sac is concerned, it is by far not most dsirable place to live in CA….but again by far it is not the worst. And I know from experience. Sacramento, compared to the rest of the US, has much higher payiong kobs and also much better weather. There will always be a prmium over say Wisconsin or Kentucky or any one of 45 different states.
Yes. Sacramento is between 15%-50% over-priced. It is not for you or me to decide how much though. It is up to a prospective buyer.
Madison beats Sacramento hands down.
That said, I agree Sac isn’t that much of a hellhole, and seems reasonable enough. (I’d never live there, but it’s not that bad at all). Actually, maybe I’d live there if you could get a SFH for the low 100ks
And Sacramento IS more desireable than Fresno or Bakersfield. Those 2 cities are probably in the bottom 10% of places that I would live in the entire country. I’d rather live in rural Alabama I think. (and I’ve lived in Fresno before… yech).
Sacramento IS different than Fresno/Bakersfield, but it doesn’t matter because they’re all gonna fall like stones into a river. They’re all just way too overvalued… Sac has already stated falling, the other 2 not far behind.
Clouseau
Cheap Central Valley homes for everyone in the next few years.
Lunarpark, you are one of the few sober folks in the Bay area. Anybody buying a fixer in Hayward is a greater fool. They will need to tear the whole thing down and start over. As for the dude in SF, I have no words for that kind of stupidity. I completely left the area do to fools like these driving places beyond reality. And I am far from the only one that left. Exodus out of CA is extremely high. Saw someone on I-40 just east of Flagstaff where the vehicle said “leaving CA, and Oklahoma or bust”.
Oklahoma or bust?
Sounds fitting. Almost everyone from the southern San Joaquin Valley had their roots as an Okie. Interesting people…when they had their dust bowl in the 1930’s, they all swarmed out to one of the driest places in the country…Bakersfield. Now that they are going bust in the SJV, they pack it up with their tails between their legs to go back home to Okie. I always thought those people were dumb.
I was talking to my grandma who is 92 a month or so back and she was telling me about one of her brothers who died recently. Without a hint of humor, she described his wife as “I don’t know if it was that she was retarded, or if it was just that she was just from Oklahoma….”
I don’t where these folks were from. The license plate holder had a Covina (Los Angeles area) plate holder. Just saw them from a distance at a gas station
From . . . Mish’s Global Economic Trend Analysis
http://globaleconomicanalysis.blogspot.com/
“Monday, May 08, 2006
Foreclosures, the IRS, and Donuts
RealtyTrac is reporting Foreclosures Up 72 Percent From Last Year.
“Georgia, Colorado and Indiana Post Nation’s Highest First-Quarter Foreclosure Rates
“National foreclosure filings continued to climb in the first three months of 2006, evidence that more U.S. homeowners are struggling to stay current on their monthly mortgage payments.
“A total of 323,102 properties nationwide entered some stage of foreclosure in the first quarter of 2006, a 72 percent year-over-year increase from the first quarter of 2005 and a 38 percent increase from the previous quarter, according to the RealtyTrac™ U.S. Foreclosure Market Report. The nation’s quarterly foreclosure rate of one new foreclosure for every 358 U.S. households was higher than in any quarter of last year.”
A Chill is in the Air for Sellers
Because sellers are not panicking, it appears unlikely that the real estate market will fall abruptly. “Sellers remain optimistic,” said Edward Leamer, an economist at the University of California, Los Angeles.
Somebody send this guy a link to this blog. He’s embarrassing himself.
Either way, housing execs come out on top
http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_4678526,00.html
“A house at 57 Marina Boulevard in San Rafael, across the bay from San Francisco, was originally listed at $1.45 million. The owner recently dropped the price to $949,000 when a competing house on the same street lowered its price to $959,000, from $989,000. In Marin County, the prices of about a quarter of all listings have been reduced. County records show that 57 Marina Boulevard was sold in February for $700,000, so the owner, Dan Marr, is unlikely to lose money even at the lower price, though he may not make as much as he had hoped. “I don’t want to talk about it,” he said.” - from the link by JMUNNIE.
A$$HOLES like this are the ones that ruined the market for so many, and he is now looking for a really stupid greater fool. Here is wishing that he can’t sell it for what he paid for the POS. That was one greedy flipper.
Here in San Bernardino, Inland empire area, there are still people buying houses and there stopping them. One told me that “if there was a bubble how come it hadn’t pop”, i said it takes time, they answered back ” you said that 6 mths ago”. Oh well.
there is no stopping them is what i meant.
What’s the difference between borrowing all this money for speculating in RE and borrowing all this money for speculating in stocks?
I can sell a portfolio of stocks in about 10 minutes.
I don’t have to pay taxes on stock portfolios.
Stocks are priced more realistically.
I don’t use debt to buy stocks.
“I can attest to the SJV being a hellhole and smelling of the “bovine fecal matter”. As a vetera driver between SF and ABQ, I have taken many of the routes through the “Valley”. The stench from the BULL$HIT (pun intended) was just sickening. I couldn’t imagine living it in. I know that in 2000, homes could be had anywhere in the valley for around $100K”
Yes. I live and work here in SJV and truly, driving through areas where chemical fertilizer has been sprayed is like driving through a gigantic A**Hole. What saves my sanity is the fact that I; (1.) Rent on the cheap, save and consequently have $ to do what I want when I want. (2.) Have the geographic advantage of driving 2 hours East or West to what I consider two of the most beautiful places in the world–Lake Tahoe and SF/Santa Cruz.
Prices are so out of whack here, it’s a joke. Glad I’ve kept my sanity through all of this. I will not be surprised when very nice homes are once again under $200k here. Saw a woman trying to step down out of a Hummer in a dress at the grocery store awhile back. 9 miles per gallon to go get a loaf of bread, I guess. Laugh and shake my head just thinking about it now. My intuition tells me there’s going to be a rude awakening for those that have been caught up in all of this. Easy money lending in the future? Maybe. But I say so what? Who’s biting when borrowing is the new Black Pariah?
DOC