It’s A Bubble Here In California
The Santa Cruz Sentinel reports from California. “After sustaining heavy losses in the economic downturn, CalPERS is recovering. But to some, the asset tumble gave rise to a growing realization that investment returns alone can’t sustain the higher level of benefits. Even a blip in the Internet-driven economy in the early part of the decade didn’t slow things down. Soon, the housing market caught fire. With property and sales taxes on the upswing, pension portfolios looked secure. Then came the housing crash, the stock market dive, the recession. CalPERS’ fortunes plunged.”
“Local governments that followed CalPERS’ lead, sweetening retirement deals in the past decade and counting on big payouts from Wall Street to cover the cost, are faced with huge pension liabilities. ‘In retrospect, it seems clear now we shouldn’t have given the benefits,’ said Carlos Palacios, city manager in Watsonville. ‘On the other hand, this is a recession like no one has seen before.’”
The San Francisco Examiner. “The percentage of ‘underwater’ homes worth less than they are mortgaged for rose sharply in San Mateo County in the first quarter of this year, more than in any other Bay Area county. ‘The foreclosures are absolute disasters,’ said Daly City Councilman David Canepa. Canepa said that foreclosures and negative equity impact the city’s source revenue of property tax, as well as the community as a whole. Though a renter himself, Canepa can’t escape the anguish of people losing their homes as he receives about two calls a month from people asking for help.”
“‘It’s heartbreaking, these people are pouring their hearts out. We all got steamrolled by this economy,’ he said.”
“The trend toward increased negative equity was not limited to San Mateo County. In San Francisco, the percentage of underwater homes rose from 8.4 percent this time last year to 21.8 percent, while Bay Area-wide it increased to 25.7 percent from last year’s 22.4 percent mark.”
The Press Democrat. “It could take years before all the Sonoma County homeowners with negative equity in their homes can sell their properties without a short sale, according to local agents. Mike Kelly, an agent with Keller Williams, said underwater owners represent the real ’shadow inventory,’ a term associated with homes on track to be lost in foreclosure. ‘The shadow inventory is people who want to sell but can’t sell because they’re frozen into the houses,’ Kelly said.”
“About 31,000 county homeowners owed more than their homes were worth at the end of last year, according to CoreLogic. That represents 29 percent of all county homeowners with mortgages. Belinda Andrews, a broker associate in Santa Rosa, said it took three years and 10 contracts written with different buyers before a bank agreed to a short sale for a house on College Park Circle in Santa Rosa. Her client, Consuela Zavala, had bought the house for $479,000 in 2006.”
“‘We put it on the market because my husband lost a job,’ Zavala said. ‘We didn’t have the money to pay for it anymore.’”
“The bank turned down sale offers even when the home’s value kept falling and after the couple had stopped paying the mortgage of $3,600 a month, Zavala said. Last fall the bank agreed to sell the house for $219,000. Short-sale clients typically have stopped paying their mortgage even when they’re still living in the homes.”
“‘I hardly have anyone come to me who hasn’t depleted their savings and run up their credit cards trying to save their homes,’ said Andrews.”
The Daily Breeze. “The Vue, one of several condominium projects constructed in downtown San Pedro over the past several years, has been sold to a San Francisco-based company for $80.1 million. Last summer, the development landed in receivership, a form of corporate bankruptcy, and this month was sold in foreclosure.”
“The development came online right was the housing market began to crash. The Vue was one of several high-profile new condominium developments planned and launched in the early 2000s as a way to bring residents - and thereby more businesses - to downtown San Pedro.”
“While some units in those projects were sold, most are now rentals. The most recent development to come online, the LaSalle Lofts at 255 W. Seventh St., was hoping tax breaks and price cuts for first-time buyers would be enough to sell the 26 units when it opened in May 2009. All 26 remain vacant.”
The Press Enterprise. “Foreclosure filings were filed on 10,066 properties in the Riverside-San Bernardino-Ontario metro area in April, according to RealtyTrac. That’s on par with 10,033 homes in March. Foreclosure activity fell 7 percent statewide from March and 20 percent year-over-year. Mike Novak-Smith, a Moreno Valley-based real estate broker who specializes in selling bank-owned homes, said banks are taking extra care to ensure they are following rules and regulations. The industry’s capacity for processing foreclosures also may be maxed out.”
“‘The foreclosures, the defaults are out there, they’re just not getting processed,’ he said.”
The Desert Sun. “Prospective buyers looking for homes in the million-dollar market have about 700 to choose from across the Coachella Valley. Some 157 homes priced in that range have sold in the past six months, and another 74 are in escrow, said Jim Franklin, president of the Palm Springs Regional Association of Realtors.”
“High-end shoppers who need to borrow have new opportunities as banks make available more jumbo mortgages, said Louise Hampton, broker associate who heads a team at Prudential California Realty. It’s often more difficult to qualify for jumbo loans, however, because banks typically require at least a 20 percent down-payment, and some borrowers don’t have the equity to refinance. Sellers of prestige homes have begun to realize that unless they’re prepared to hold on for a year or two, they must become ‘realistic’ about prices, Hampton said.”
“There has been a steady stream of foreclosures and short sales in the high-end market as well. Some high-end homes have fallen into disrepair after their owners walked away. Landscaping died, appliances were stripped and pools became messes. Buyers have swooped in and purchased more foreclosures for bargain prices, which could be a silver lining in the days ahead, Hampton said.”
“‘What we’re seeing in many of our neighborhoods is buyers have been able to come in and get a really good base price for a property,’ Hampton said.”
From KFSN. “Encouraging news for the city of Merced, it’s no longer at the top of the list for foreclosures. According to RealtyTrac, last year at this time, Merced had the third highest foreclosure rate in the country, behind Las Vegas and Modesto. But now, the top two remain the same, while Merced has dropped to tenth on the list.”
“Merced was hit especially hard by foreclosures when the housing crisis started and all those out of town investors who came as U.C. Merced was being built, bailed. But now realtors say that flood of foreclosure activity seems to be slowing down. It’s still not hard to find foreclosed homes in Merced. Local realtors say it’s not as bad as when the housing crisis started.”
“Sheila Splitt said, ‘We had a huge amount at one time, that it was just a floodgate. So I think most of them we’ve gone through.’ Splitt says those that are on the market are also selling more quickly because of increasing demand and prices she believes are at rock bottom. ‘A house that I had that I listed for $26,000, it had sold in 2006 for $200,000.’”
“RealtyTrac attributes a 40 month low in foreclosure activity nationwide to massive delays in processing foreclosures, not a true housing recovery. Splitt said, ‘The banks were not releasing their foreclosures. So if they’re not releasing them or recording them, then obviously that number would go down. But I think you’ll see it go back up.’”
The Business Journal. “The filing for bankruptcy last month of La Dante Rose Homes Inc. of Visalia underscores the continuing challenges in the central San Joaquin Valley’s housing market, especially new construction in an era of deflated values and still-high unemployment. Mike Miller, president of the Central Valley division of builder Lennar Homes, said his firm certainly has seen a slowdown since the housing bubble burst.”
“‘In ’06 we were doing a thousand, twelve-hundred homes. That was just from Tulare to Fresno. Now we’re pushing about four-fifty from Bakersfield to Fresno,’ he said.”
“He said the new home market has evolved from a trend in 2,300-square-foot, big-box, two story homes built for move-up and investment buyers to pockets of 1,300- to 2,200-square-foot, single story starter homes. Fueling that is competition from existing homes, including heavy pressure from back-to-bank properties.”
“‘There is a supply issue,’ Miller said, ‘not necessarily new homes but just the quantity of the foreclosures that are still occurring out there. We have to compete with the resale market.’”
“Some builders that have kept afloat have taken on developments abandoned by defunct players. Lennar bought two tracts of finished lots from Porterville-based Ennis Homes, which went bankrupt in 2009 and emerged from the status without, apparently, returning to business. Lennar plans to demolish 90% of the partly built homes that stand on Ennis’ 80 sites in Visalia and 81 in Tulare before building its own models in their place, Miller said, to ‘kind of clean up the blight.’”
The Fresno Bee. “The landmark Fresno Pacific Towers building on the Fulton Mall was reclaimed by a bank — again — in a foreclosure auction. The building had been owned since 1993 by the partnership that included San Luis Obispo developer John King, his wife, Carole, and King’s sister Saundra, who also managed the building. For years, King promoted plans to convert six of the upper floors into luxury residential lofts for sale. But only six lofts over two floors have been completed, and none were ever sold. Only three are leased.”
“Saundra King held back tears after an auctioneer gaveled the sale to a close. ‘It’s fun to have your visions,’ King said. ‘I’m not angry or bitter.’”
The Modesto Bee. “A decade ago, about 62 percent of Stanislaus County residents owned the homes they lived in. But by last year, owner-occupied housing had fallen to just 60 percent. That’s even lower than the ownership rate was in 1990. This all comes after the real estate bubble burst more than five years ago in the Northern San Joaquin Valley, sending prices tumbling and triggering a tidal wave of foreclosures.”
“In some low-income rural neighborhoods, few folks own their homes. Only 21 percent of housing is owner-occupied in the western Stanislaus farming community of Westley. In south Modesto’s airport neighborhood, just 34 percent of homes are owned by the people who live in them. ‘People are moving out of state or people are doubling up,’ said Richard Green, director of the Lusk Center for Real Estate at the University of Southern California.”
“When Maria Rodriguez’s sister lost her house to foreclosure two years ago, the sisters agreed their families would double up in a rental. It hasn’t been easy. Six people are now crammed into a small, two-bedroom home in this rural west-side city. Rodriguez, her husband and their 5-year-old son sleep in one bedroom.”
“Her sister and brother-in-law sleep in the other. Her 18-year-old nephew stays in the living room. ‘This is all we can really afford right now,’ Rodriguez said in Spanish. ‘It’s really compact for me. But it’s worse for my sister. She basically had to move a whole home into one room.’”
“Newly released 2010 Census figures show that tough times have left more Californians renting, more staying with extended family and more living under the same roof than 10 years ago. Rodriguez, who lived with another sister in Los Angeles before moving to Mendota, said she’s used to living with family — although not in such close quarters as now. ‘None of us like the situation, but we have to deal with it,’ she said.”
The Sacramento Bee. “About 44 percent of the 80,471 Californians who moved to Texas between 2006 and 2008 – when the recession took hold – are white, said Texas state demographer Lloyd Potter. Meanwhile, only 43,405 Texans, half of them white, moved to the California, Potter said. Many of the California escapees – 295,000 – left between 2003 and 2005, as housing prices ballooned. ‘During the run-up of housing prices, many cashed out or left because they were priced out of the market,’ said demographer Hans Johnson of the Public Policy Institute of California.”
“Dan Howle is among those who uprooted. He said his decision to relocate from Sacramento to Austin, Texas, last December was all about the economics. Howle said he regularly meets other wealthy white Californians who are bailing out. ‘I still own my house in Arden Arcade, but I haven’t been able to sell it,’ said Howle, adding that the tens of thousands he saves each year in state income tax made the move worth it.”
The Tribune. “San Luis Obispo County’s commercial real estate market isn’t in full recovery mode yet, but it is showing some signs of stabilizing as the economy eases out of recession. While the situation in San Luis Obispo may be improving, the South County market remains soft, said Bruce Freeberg, an agent for Patterson Realty.”
“Freeberg does not keep statistics on vacancy rates; however, he said he believes there are going to be more vacancies and noted that commercial real estate continues to lag residential. ‘It’s mostly due to the economy,’ he said. Freeberg said many owners are putting their properties up for sale or letting them ‘go back to the bank. ‘Every situation will be unique, and some are doing fine, but I think you’re going to see more and more in distress.’”
“The weakest part of the commercial market, he agreed, will likely be offices. ‘Some buildings that had been in families for years are owned free and clear, and even if there are vacancies, they can withstand it,’ he said. ‘It’s the new ones with financing that won’t be able to hold on.’”
“Preston Thomas, of Rossetti Co. in San Luis Obispo, said shopping centers, such as Irish Hills Plaza and Madonna Plaza, are doing well, and the retail market downtown is strong, with several new restaurants. The weak spots are office spaces, particularly those below 1,000 square feet, which cater to smaller ‘mom and pop’ businesses, he said. The tough lending environment has also proved challenging for some businesses wanting to expand.”
“Overall, Thomas said, there has been a marked improvement in the market. ‘The city of SLO … it’s a bubble here,’ he said.”
‘In San Francisco, the percentage of underwater homes rose from 8.4 percent this time last year to 21.8 percent’
Stand back everybody, this one looks like it’s gonna blow…
It will never happen according to the deluded who wagered every last dollar and their future earnings on grossly inflate housing prices in the bay area.
SF and DC are islands of stupidity in a sea of defaults, delinquencies and foreclosures.
A vastly oversold National Debacle! Ben Jones
HBB telegraph:
…stop!…more “damage assessments” being received…stop…home-owner luster dull…needs polishing…stop
And not a minute too soon.
But no one here in San Francisco is even close to believing that it’s going to happen. Most people here think that we have hit bottom.
A friend just sent me a link for a 3BR/2BTH for 400K. I was hopeful until I saw that it was 1 block form the freeway and 3 blocks from a notoriously dangerous housing project. No thank you.
We have a long way to go.
‘In San Francisco, the percentage of underwater homes rose from 8.4 percent this time last year to 21.8 percent’
Stand back everybody, this one looks like it’s gonna blow…
I wonder “how underwater” the homes in San Francisco are? The move from 8% to 22% underwater coincided with a small fall in home prices (3.5% according to Case-Shiller). Even when factoring in the negative amortization of those who are still holding onto their Option ARMs, I’d be surprised if homes are more than 5%-10% underwater on average, especially for the marginal 14% who were not underwater when home prices were 3.5% higher a year ago.
Add on top of that that a significant number of those homes required significant down payments (jumbo loans), and you can easily paint a picture where a significant portion of the underwater homeowners put 20%-25% down, saw values fall 30-35%, and are now 5%-15% underwater. This also explains why there weren’t more than 8% of homes underwater a year ago (after the bulk of the housing price correction).
This is a much different picture (and will have a much different “walk-away” effect) than someone who bought a home with 3-5% down, and watched the value of their home fall 50%.
If home prices fall another 10-20% in SF, then I think the trouble that’s a brewin’ currently turns in to real issues with walk-aways. With lack of quality housing in SF, that kind of fall will coincide with much bigger problems elsewhere in the country, in which case, how many homes being underwater in SF will be the last thing we are talking about.
Realtors Are Liars
Are you calling me a realtor?
Sorry to disappoint.
“‘The foreclosures, the defaults are out there, they’re just not getting processed,’…”
Meanwhile, more and more households in default are discovering the joys of rent-free, payment-free living in houses they technically no longer own, while others struggling to make unaffordable mortgage payments contemplate whether they, too, could do better by stiffing the lender.
California foreclosures have been slowed down by the Ca Foreclosure Prevention Act. It gives the FB another 90 days before a foreclosure is filed. It’s not like it matters much, when you can live free for months to years, before the bank files anyway.
Don’t forget if you wait right up to the very last minute and file for bankruptcy you can get another few months out of the system, and get rid of those pesky credit cards you ran up earlier in the recession.
Bottom line: All these delay-and-play, extend-and-pretend tactics merely serve to forestall and drag out the day of reckoning, but not to prevent its ultimate occurrence.
It’s a drag on the economy for decades. All they had to do was let the banks fail, and all of the loanowners who are owned by their homes.
From the Modesto Bee: “The effects of the deep national recession are still being felt in the region, where unemployment hovers around 18 percent.”
And that 18 percent is on the good side of town.
From the original post:
“‘I hardly have anyone come to me who hasn’t depleted their savings and run up their credit cards trying to save their homes,’ said Andrews.”
To which I say:
Sorry to sound cold, but it’s just a house. It’s not worth nuking your savings and maxing out the credit cards for.
The solution? Walk away. Or run.
It’s probably human nature to cling to a decision beyond when it makes sense. I’m sure that in hindsight, most of these people regret throwing good money after bad. I’ve mentioned before, when posters think that the FBs are living high on the hog, that what I see in foreclosed houses doesn’t back that up. Unpaid bills, notes to one another about money problems.
I saw this while putting together this post:
‘Battered by the Great Recession, nearly a third of Silicon Valley residents have put their lives on hold — delaying retirement or postponing major decisions such as buying a home or car, according to a survey by a San Jose State research center. Twenty-seven percent of those who are 55 or older said they’re postponing retirement, according to the survey.’
http://www.mercurynews.com/business/ci_18068610
Why can’t the media understand? These high prices in California are the problem! Now we’ve gotten a recession, incredible distortions in the economy are forced to work themselves out. Someone, somewhere should scream from the mountain tops; never again!!!
The media understands the high price issue. The problem now the horses are all out of the gate is that if house prices were to be allowed to naturally settle, market forces would crush the banks and make walking away more attractive to those on the fence. Thus creating even lower prices.
If prices go lower -
Property tax revenues fall
Foreclosures increase
More banks fail
Bank losses multiply
Unemployment increases
Bankruptcies increase.
I may have missed a few here, but the point is this would be a better time to be putting more paycheck dollars into the hands to working folk and businesses. If that happened inflation would naturally accomplish what destructive default is already doing.
OK, I agree if anything we will see paychecks decline over the next decade and the business environment continue to tighten.
If that happens who will be left to pay all the debt?
‘if house prices were to be allowed to naturally settle, market forces would crush the banks and make walking away more attractive to those on the fence. Thus creating even lower prices’
IMO, this will all happen anyway. One top of that, the GSE loan limits are going to change, as are FHA/HUD. It’s futile to fight this.
But what I’m getting at is this:
‘to some, the asset tumble gave rise to a growing realization that investment returns alone can’t sustain the higher level of benefits. Even a blip in the Internet-driven economy in the early part of the decade didn’t slow things down. Soon, the housing market caught fire. With property and sales taxes on the upswing, pension portfolios looked secure. Then came the housing crash, the stock market dive, the recession. CalPERS’ fortunes plunged’
The housing bubble is responsible for over-extending the public sector and the recession that followed. See, I don’t think we’ve ever faced what is happening in this country. After all the damage that’s been done and is to come, if you took a poll on this:
“We will wave a magic wand and house prices will explode back to 2006 levels.”
What percentage of Californians would vote yes?
Yup that about sums it up for California.
The cold reality is that you cannot sustain an economy based on debt where people are loaned more than they can repay.
The magic wand you refer to would be inflation based on rapidly rising wages which is not going to happen rather the opposite, so I see housing going nowhere but down.
This part jumped out at me:
a third of Silicon Valley residents have put their lives on hold — delaying retirement or postponing major decisions such as buying a home or car
Are there people who consider postponing a car purchase to be putting one’s life on hold?
Lennar plans to demolish 90% of the partly built homes that stand on Ennis’ 80 sites in Visalia and 81 in Tulare before building its own models in their place, Miller said, to ‘kind of clean up the blight.’” ??
And what do you think Lennar paid for those lots ?? Maybe 10 cents on the dollar….They are going to deliver brand new product thats single story and likely affordable….So, if you happen to be a buyer for this general area, are you going to go buy a resale foreclosure or short sale with no guarantee of the condition, circumstances surrounding the property such as a previous meth lab or any idea of who your neighbors might be, or will you buy in Lennars new subdivision ??…
Lennar didn’t pay 10 cents. 10 cents would be +/- $10k per finished lot. That’s a price that many builders are paying for unfinished land at this point. The days of $10k finished lots are long past. They may have gotten away with paying 50% of replacement cost (say, $50k). They will still be able to build very competitively priced homes on those lots (construction costs are still way down at probably $45 per square foot, hard costs).
Figure $45 psf on 2k square foot home, or $90k
Add 40% for various soft costs, etc., or another $36k
Builder cost is now $176k.
Add a builder profit margin, picking 12% out of a hat for nice, clean math (although the range of builder margins could be as low as 8%), and you have a $200k, or $100 psf. Don’t know what homes are selling for in Visalia, but it wouldn’t surprise me if they sell well.
‘The days of $10k finished lots are long past’
From the post:
‘A house that I had that I listed for $26,000, it had sold in 2006 for $200,000′
IMO, $200k is still a lot of money. In Phoenix I’ve seen new houses sell for $50/sf.
I know an investor who is buying pretty new homes in Phoenix for ~$50 psf, and intending to rent them until he can re-sell for closer to replacement cost of $85psf to $100psf, so I understand that pricing in that market. Phoenix has a larger problem than CA on the vacancy front (and thus prices have fallen farther below replacement cost than in many parts of CA). Tulare County (where Visalia is located) in 2010 had an 8% vacancy rate vs. Pima/Maricopa of 12%/14%.
$200k is a lot of money, but in the early 2000’s (it may have been late 90’s, but in any event, pre-bubble), we met with a builder in So. Cal. who’s entire business model was building a home that he could sell for less than $200k. He was a rare animal, and he was expecting to be the only builder in his markets who could deliver a home for that kind of price.
On a good day, with flat land, and utilities already run to the site, if the land were handed to you for free, it would cost $30-$35k per lot to finish land and get it in a position to build (grading/compacting, distribution of infrastructure, roads, curbs, gutters, etc.). When you add in the cost of land, it is very difficult to build anything new for less than $200k.
$10k finished lots in California are long past. In the depth of the recession (late 2008/first half 2009), in some Central Valley towns, finished lots selling were selling for $10k-$15k. Visalia is a much bigger market, and values of finished lots have risen considerably since late 2008/early 2009.
Personally, I don’t see how the final bottom for any property can be guessed at with what has happened and what’s to come. But I do remember we had a poster here back in 2007 or so that insisted lot prices in California would never, ever get below $50k.
And to be candid, we were very pleasantly surprised when finished lots did fall below $50k, and we bought a number of them for far less than $50k per lot.
The basic thesis is that once finished lots have been exhausted in any given market, one of two things will happen:
1. No new homes will be built; or
2. The economics of homebuilding will adjust so that it becomes feasible to build new finished lots and a home thereon. It is not economically feasible to do so now in most markets.
I think that most on this board would agree that in decent markets (good school districts, etc.), that #1 is unlikely to remain the case for more than a couple of years from now.
At the prices available in 2008/2009, one could buy finished lots all cash and simply wait for the mess to pass buy. The exit sales prices could be very competitive with builders who would need otherwise to buy raw land and build finished lots.
There will be an interesting crunch point as existing finished lots are exhausted…
“The economics of homebuilding will adjust so that it becomes feasible to build new finished lots and a home thereon.”
There’s your answer. Land is still grotesquely expensive, and so are materials. They must fall in price to be able to build what end users can afford.
Grizzly-
There’s the mis-perception.
Land is NOT grotesquely expensive.
Cost to build homes is NOT grotesquely high.
Land is currently valued at less than $0 in California in many places. One is able to buy finished lots for less than the cost to finish the lots. If someone handed you the land for free, it would be more expensive than buying existing finished lots.
The biggest problem in CA is that it takes forever to get something entitled to build. So, from a supply/demand standpoint, once demand comes back, the limited supply of approved lots (even unfinished) are going to rise quickly in value. That hasn’t happened yet.
Today we are in an odd window where builders can buy land for $0, get the improvements to the land at a discount, build a new home, sell it for essentially less than replacement cost…and make a profit. Once the land that was finished prior to the crash has had homes built upon it, that game will be over. Few (if any) homes will be built until the economics adjust.
For the economics to adjust, a number of things could happen:
1. Cost of materials fall considerably (steel, concrete, oil-based products, lumber, etc.).
2. Cost of energy falls considerably (cost to move dirt and materials). Who wants to bet that oil falls back to $30 per barrel?
3. Cost of labor falls even further.
4. Land falls in value. We’re already at $0 or close to ag value in many parts of CA. Don’t see this falling much further (if at all, can’t get below $0). Finished lots have already seen a doubling of value from the bottom (and are still selling below replacement cost).
5. Home prices rise. The stage is set for this as affordability levels in CA are at historic highs (even higher than what was reached in the mid-90’s, after the S&L debacle).
I wish materials/energy/labor would fall in value. I truly do, but a fair bit of cost is tied up in energy/oil, in terms of transporting heavy materials, refining steel, oil related products. As long as there is strong demand from emerging markets, these prices are going to be sticky on the way down. Lumber is cheaper than it was from 1993 through 2000 (the last homebuilding recession). Labor costs have also come way down.
In talking to people in the industry, the numbers do not support the notion that the cost to build homes is too high and must fall. Today, homebuilders can build a home for ~$40-$45 per square foot for hard costs. This is incredibly cheap. In 1998, this number was $50 per square foot. I think we can all agree that 1998 was not a bubble in terms of cost.
So, when I think about the economics of homebuilding adjusting, I have to ask myself, what is more likely?
That it becomes even cheaper to build a home? or
That homes revert to historic affordability levels?
One path requires that we further deviate from the trendline (it gets cheaper and cheaper to build). The other path requires that we revert to the trendline (home prices rise).
In the same way it was logical to expect reversion to the trendline when home prices were ridiculously high, and affordability levels were historically low, it is now logical to expect a reversion to the trendline when home prices are depressed, and affordability levels are historically high.
“In Phoenix I’ve seen new houses sell for $50/sf.”
I was amazed to see that the median income in Arizona is roughly $10k/yr less than Washington state. Affordable homes have to be cheap because of the typical low incomes.
US interactive guide - GIS Map
http://tinyurl.com/65×52d7
I just love those stats about the % of people who “own” their homes. How many folks truly “own” their homes free and clear….as opposed to just renting from the bank?
Just read this and had to repeat it:
I “own” more of my rental than someone who is underwater, because I own 0% and they own minus X %.
I just love those stats about the % of people who “own” their homes. How many folks truly “own” their homes free and clear….as opposed to just renting from the bank?
News / laments from: “The O.C.!”
Demand for O.C. homes in mysterious 9% drop:
May 16th, 2011, by Jon Lansner
A springtime mystery: Where did the home shoppers go?
The latest Orange County home inventory report from local broker Steve Thomas (data as of May 12) shows demand for homes falling 5% in the past two weeks — and 9% overall in the past six weeks — during what’s supposedly prime homebuying season. Thomas writes …
What’s causing the descent in demand? It’s not the end of the first time home buyer tax credit, like last year. Interest rates are low, prices have fallen considerably, and sellers are motivated. Financing is incredibly tight. Lawrence Yun, the Chief Economist for the National Association of Realtors, estimates that there would be a 15% bump in demand if financing would relax their standards. That would boost demand to almost 3, 500. But, tight credit has been an issue in the current market since the autumn of 2007, the beginning of the credit freeze. The only real change over the past six weeks is an increase in the price per gallon of gas.
Then, Thomas added: “Currently, nobody can put their finger on precisely what has subdued demand this year.”
heheeeheeeheehaahaaahaaheeehaahaaa… (Hwy50™)
“Local governments that followed CalPERS’ lead, sweetening retirement deals in the past decade and counting on big payouts from Wall Street to cover the cost, are faced with huge pension liabilities. ‘In retrospect, it seems clear now we shouldn’t have given the benefits,’ said Carlos Palacios, city manager in Watsonville. ‘On the other hand, this is a recession like no one has seen before.’”
yeah - but you are on the hook for them now. The public unions will give up nothing and everything promised to them will come from the taxpayers if CalPERS can’t deliver.
Do you crush the taxpayers or declare bankruptcy to void the crazy union deals?
Increase my taxes and I will leave the State!
‘On the other hand, this is a recession like no one has seen before.’
Actually it is quite reminiscent of the first really bad financial mania driven by European settlers arriving in California during the mid-1800s to stake their claim on a gold mine. Towards the end, those who thought they were going to get rich off finding readily-available gold instead found themselves stranded and unable to support themselves — similar to flippers who overextended themselves at peak bubble prices and who are now stuck with multiple overpriced homes which they cannot sell to cover their loan balances.
U.S. borrows $58,000 a second…