April 5, 2012

The Race Is On In California

The Milpitas Post reports from California. “Demand in the housing market is growing rapidly in Santa Clara County, according to the Santa Clara County Association of Realtors. ‘This is not a market for the faint of heart,’ said Barbara Lymberis, president of the county Association of Realtors. ‘You either do or do not do there’s no try. Buyers, if you really want a particular home, your attitude must be to win the deal. Sellers, if you really want to sell, price under market, even at 99 percent of market value, and let the buoyancy of the market lift the offers up. Whatever you do, get moving now… The race is on!’”

From CNBC. “A stronger jobs market and higher incomes for technology workers has brought back bidding wars in San Francisco and Silicon Valley. Properties listed at $1.5 million are getting bids $200,000 to $300,000 higher. Don Faught, president-elect of the California Association of Realtors, says selling prices in the tightest Bay-Area markets bear no relation to appraised value. Instead, buyers are waiving appraisals while sellers are looking for the best terms to close a sale rather than trying to max out their selling price.”

“‘First-time home buyers are still looking for steals and not looking for a deal,’ says Faught. ‘The marketplace is not in the same condition as three years ago; people are still writing under the asking price but should be writing offers at asking price.’”

USA Today. “China’s great wall of cash is pouring into the struggling U.S. property market. Buyers from mainland China and Hong Kong are snapping up luxury homes, often paying cash, in major U.S. cities such as New York, Los Angeles and San Francisco. In the U.S., the Chinese are now the second-largest foreign buyers of homes, behind Canadians, accounting for $7.4 billion of sales in the 12 months ended March 2011, up 24% from the previous 12 months, according to the National Association of Realtors.”

“Lily-Sui Zhang, 30, says her husband’s Beijing family bought a house in South Pasadena, Calif., last year so her three young children would have access to good public schools. The family thought investing in the U.S. was ‘probably more stable than in Beijing’ due to concern about a Chinese real estate bubble, Zhang says.”

“One of her recent mainland Chinese buyers paid $5 million for a 5,000-square-foot home in Pasadena that the family expects to occupy for one month a year, says Linda Chang of Coldwell Banker. ‘They treat it like a hotel without room service,’ says Chang, who estimates that a quarter of shoppers in the $3 million-plus market in her area are from mainland China.”

“In the San Francisco Bay Area, Realtor Stanley Lo of Green Banker real estate says mainland Chinese — a third of his clientele — are looking for homes priced at $800,000 and up. One recent rainy afternoon, Lo showed a six-bedroom $4.5 million Hillsborough home to Lee Xiao Jun, from Hubei Province in China. Her husband works in manufacturing and makes frequent trips between the U.S. and China, so they want a home in a good location close to the San Francisco airport.”

“‘The prices here are more reasonable than in China,’ she says.”

The Reporter. “The Solano County area’s foreclosure rate dropped again in January compared to a year ago, taking its average below the nation’s for the first time in at least three years, according to CoreLogic. Prudential California Realty’s Linda Cook said that while the latest figures look good, several elements are at work complicating matters. ‘I think what’s really holding people together, is a sense of false hope,’ Cook said. ‘People are maxing out their credit cards trying to hold onto their homes thinking some new program or loan modification will save them. But there are some situations out there, where the people will never recover and should just inflate the boat and float away.’”

“Cook said she’s seeing multiple offers on homes especially in Vallejo, but mostly from foreign investor groups who are squeezing individual home buyers out and driving prices up. ‘It’s a mess,’ she said. “We have 27 days of inventory, where in a healthy market, it would be several months.’”

The Signal. “Santa Clarita residents who want to purchase their first homes but need some help are encouraged to apply for the FirstHome program, which offers a low-interest and deferred-payment second mortgage to low- and moderate-income families. The FirstHome loan program allows residents to use the funds from the loan as a down payment within the city of Santa Clarita’s boundaries, according to city officials.”

“‘The costs of living in Santa Clarita are so high that our loans are a little higher than other cities because that’s what it takes to get people into homes,’ said Erin Lay, housing program administrator for the city of Santa Clarita.”

The Press Enterprise. “A new version of a federal refinancing program designed to ease the financial pain of upside down homeowners has been embraced to various degrees by lenders, posing obstacles for prospective borrowers. An expanded Home Affordable Refinancing Program called HARP 2.0, that the federal government announced in October was supposed to make it possible for homeowners with mortgages owned by Fannie Mae and Freddie Mac to refinance at today’s rock-bottom interest rates no matter how much more they owe on their homes than those homes are worth.”

“However, prospective borrowers are discovering that some loan brokers are not as yet offering the program and some lenders are adopting guidelines that are more restrictive than Fannie Mae and Freddie Mac require to buy and guarantee the mortgages.”

“Some lenders said they are adopting loan to value limits and setting their own minimum FICO scores for applicants because they fear that if the loans default in the future and mistakes are found in the loan underwriting, Fannie Mae and Freddie Mac will require them to buy the loans back at a substantial loss. ‘The consumer is scrambling because a lot of lenders are saying they are not doing HARP 2.0 the way it was announced by the president,’ said Jeff Lazerson, president of Mortgage Grader, an online brokerage based in Laguna Niguel.”

“Diane Piela, a 56-year-old former family physician who is disabled, said she and a friend who is a professor at Mount San Jacinto College owe 38 percent more on the house they own in Menifee than its market value. When Piela heard on the news that the HARP program had expanded, she went to a broker in Temecula who helped her and her friend apply for a CMG loan. ‘We just made an application and submitted all our financial information and we are waiting,’ she said. They plan to use their anticipated $300 a month savings to pay other bills and build their savings. That prospect, she said, ‘makes us feel much better about the future.’”

The Record Searchlight. “The north state’s economy is showing a pulse: Homes sales are up (though houses are selling for about 50 cents on the dollar); two manufacturers in town are looking to grow; the Turtle Bay auction had another good year; and claims for jobless benefits, both locally and nationwide, are down. Even area home building is buzzing again, thanks in large part to the city of Redding’s decision to temporarily slash development fees.”

“But news last week that Mercy Medical Center parent Dignity Health and the Coca-Cola Bottling Co. plant are cutting jobs in Redding are reminders that things are still tough. Then there’s the story of Machelle Sanders. Readers met Sanders last week in a story I did about the state’s mortgage relief program for unemployed workers. The 39-year-old Anderson resident has been jobless since June. She holds bachelor’s and associate degrees.”

“Sanders told me she has worked since she was a teenager and never had trouble finding work. But this recession is testing her. She applies for jobs and finds dozens vying for the same position. You hear this a lot. ‘The job market is very discouraging and depressing,’ Sanders said in last week’s story. ‘I keep getting letters, ‘Thank you for applying.’”

“Remember Famous Dave’s BBQ? The restaurant drew 1,200 job-seekers to a hiring fair it staged at the Red Lion Inn on Hilltop Drive in February. Joe Wong’s View 202 restaurant had some 700 apply for work.”

The Bay Citizen. “On Monday, April 2, 2012, Occupy Bernal and ACCE (Alliance of Californians For Community Empowerment) and two San Francisco City Board of Supervisors, David Campos and John Avalos announced their intention to vote on a foreclosure moratorium at a 2:00 p.m. meeting of the Land Use Committee. At a 1:30 p.m. Press Conference on City Hall steps, several homeowners, whose houses were at risk or had been foreclosed upon, spoke passionately about the pain and suffering big banks, specifically Wells Fargo Bank, brought to their own and their neighbors’ lives.”

“Ross Rhodes, foreclosure fighter from Bayview Hunters Point boomed passionately, ‘These predators loans … were singled out for us minorities. You came into our communities and bull-jived us about the … predator loans you put out. They knew the properties were going to fail. We want the American Dream like anybody else. We bailed them out when they were in trouble. Now it’s time for them to bail us out!’”

“Inside City Hall during the Land Use Committee hearing, Kathryn Galves spoke about the powerful health impacts on her of Wells Fargo evicting her, her sister, and their dog from her valuable Noe Valley Victorian home of 40 years the prior week. ‘Please! Please! Please! Stop these foreclosures!’ Kathy insisted she didn’t want others to ‘throw away their memories, their emotions, their treasures.’”




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56 Comments »

Comment by azdude
2012-04-05 06:26:28

“‘The prices here are more reasonable than in China,’ she says.”

That that just makes me laugh so hard.

Comment by polly
2012-04-05 07:49:54

I thought this one was rather funny:

Homes sales are up (though houses are selling for about 50 cents on the dollar)… Even area home building is buzzing again, thanks in large part to the city of Redding’s decision to temporarily slash development fees.

Temp slash of fees = pulling tomorrow’s jobs to today. What are you going to do tomorrow?

And houses selling for $0.50 on the dollar? Did someone define a year in which house prices were “real” and anything below that is a discount? Who made this declaration? I’d like to apply for that job.

 
 
Comment by Ben Jones
2012-04-05 06:31:22

‘Ross Rhodes, foreclosure fighter from Bayview Hunters Point boomed passionately, ‘These predators loans … were singled out for us minorities. You came into our communities and bull-jived us about the … predator loans you put out. They knew the properties were going to fail.’

OK Ross, I’m going to give you a little advice:

‘the federal government announced in October was supposed to make it possible for homeowners with mortgages owned by Fannie Mae and Freddie Mac to refinance at today’s rock-bottom interest rates no matter how much more they owe on their homes than those homes are worth.’

‘The FirstHome loan program allows residents to use the funds from the loan as a down payment within the city of Santa Clarita’s boundaries, according to city officials.” ‘The costs of living in Santa Clarita are so high that our loans are a little higher than other cities because that’s what it takes to get people into homes,’ said Erin Lay, housing program administrator’

These loans are probably gonna fail too. So is it predatory? What people forget about the negative amortization loans, and the subprime loans is, at the time everybody was cheering about how great they were. They were helping people get their foot on the ladder, building equity, stop throwing away money on rent. You get the idea Ross?

So the next time you hear about some “program” to “stabilize” the housing market, I want to see you up there with your bullhorn letting the world know what a bulljive rip-off it is.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 07:44:39

“bulljive”

Why does Uncle Sam support policies that disproportionately saddle minority households with unrepayable debt burdens?

Comment by CarrieAnn
2012-04-05 10:46:16

We all were targetted. Ross and friends. My lilly white upper middle class neighbors were. Soldiers returning from war were. Basically no stone was left unturned until we started seeing dead people’s names on the paperwork. No one should feel especially targeted. This was a feeding frenzy. Pure and simple.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 11:41:04

All of us were equally targeted, though some of us were more equally targeted than others.

HUD Archives: News Releases
HUD No. 07-008
Brian Sullivan
(202) 708-0685 For Release
Monday
February 5, 2007

BUSH ADMINISTRATION FY2008 BUDGET SEEKS TO INCREASE MINORITY HOMEOWNERSHIP AND STRENGTHEN COMMUNITIES
Request helps reach the President’s goal of 5.5 million new minority homeowners by 2010

WASHINGTON – U.S. Housing and Urban Development Secretary Alphonso Jackson today unveiled the Bush Administration’s Fiscal Year 2008 Budget – a request that seeks to reach the goal of 5.5 million new minority homeowners by 2010, promote affordable housing and help those most in need. President Bush is seeking $35.2 billion for HUD, which represents a $1.6 billion or 4.5 percent increase over his proposed spending plan for FY 2007.

“This budget continues our deep commitment to build an ownership society that helps more minority families own a home and to promote affordable housing programs across the country,” said Jackson. “In addition, the President is making certain HUD’s budget once again includes record funding for those most in need. Our budget reflects the President’s goal to support what works and cut the Federal budget deficit by prioritizing funding towards programs with measurable, documented results.”

Today, more Americans have achieved the dream of homeownership than at any time in our nation’s history. Nearly
70 percent of all American families own their homes, and minority homeownership exceeds 51 percent, also an historic high. That figure, however, points to a significant homeownership gap between non-Hispanic whites and minorities. Despite recent gains for minority households, their homeownership rate falls 20% below the national average.

To close that gap, in June 2002, President Bush challenged the nation increase the number of minority homeowners
by 5.5 million by the end of this decade. Since the President issued his challenge, 3.5 million minority families have joined the ranks of homeowners putting the nation ahead of schedule to reach the President’s goal.

“Prospective minority homeowners who take advantage of HUD’s Federal Housing Administration, HUD-approved housing counseling agencies, and the American Dream Downpayment Initiative will learn how homeownership can help them build equity to save for the future, send their children to school, and fuel our growing economy,” said Jackson.

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Comment by CarrieAnn
2012-04-05 15:12:30

Professor, I wasn’t arguing it didn’t happen. My point was it was just one of the many tricks performed in trying to fill the hungry investor maw.

 
 
 
 
Comment by Arizona Slim
2012-04-05 10:53:51

What people forget about the negative amortization loans, and the subprime loans is, at the time everybody was cheering about how great they were. They were helping people get their foot on the ladder, building equity, stop throwing away money on rent.

I can recall hearing such rhetoric in Tucson. Quite often, it was coming out of the mouths of people who, ahem, specialized in certain markets. Like Hispanic mortgage guys and gals whose customer base was heavily Hispanic. I also saw the same thing happening with real estate agents.

Not that these people weren’t tools for the higher-ups in the REIC food chain. The banks and non-banks who cooked up these loans shouldn’t be left off the hook.

 
 
Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 07:42:29

China’s great wall of cash is pouring into the struggling U.S. property market. Buyers from mainland China and Hong Kong are snapping up luxury homes, often paying cash, in major U.S. cities such as New York, Los Angeles and San Francisco. In the U.S., the Chinese are now the second-largest foreign buyers of homes, behind Canadians, accounting for $7.4 billion of sales in the 12 months ended March 2011, up 24% from the previous 12 months, according to the National Association of Realtors.”

Does anyone besides me recall the bath Japanese investors took in U.S. commercial real estate after the early-1990s real estate crash?

I am expecting a similar outcome this go-round in U.S. residential RE.

Comment by AmazingRuss
2012-04-05 07:54:40

China apparently has a massive supply of greater fools. So much for buying a house this decade.

Comment by azdude
2012-04-05 08:07:43

3 times as many fools there.

Comment by roger peters
2012-04-05 10:12:38

Confucius says replace your divot admire the pebble

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Comment by jingle male
2012-04-05 14:07:24

Carl Panattoni, the largest industrial developer in the US during the last decade is having a hard time. He contributed his industrial portfolio into a CalSTRS joint venture ($1.15 billion) in exchange for a management contract and a “hope note” (hope the asset values goes up and you will get something…maybe….someday….).

He placed his house at Pebble Beach on the market last month. It is located south of the 10th green, on the Carmel side. He bought it from Gene Hackman for $5 million in the 1990’s, added additional properties and spent years improving it with craftsmen and women working full time to make it surperb. The listing price: $79,000,000. Reportedly it went under contract for $77,000,000 within a few weeks.

Location, location, location……probably purchase by a Chinese billionaire or a Russian oligarch!

 
 
 
Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 08:10:10

Their housing bubble is poised to collapse. In a few years, their tide of investors will recede in a similar manner to how the tsunami tide of California investors receded from Idaho, Montana, Oregon, Nevada, Arizona and other former real estate investing capitals following the U.S. housing bubble collapse.

China’s housing market is set for a hard landing
By Shawn Tully, senior editor-at-large January 23, 2012: 5:00 AM ET

The numbers are grim: China’s property bubble is heading for a spectacular burst, and its effect on the country’s economy will be widespread.

Comment by Arizona Slim
2012-04-05 10:55:44

I think that more than a few of these Chinese buyers of U.S. property are looking for a place to go to after their homeland goes ker-flewie. Compared to much of the rest of the world, the U.S. is a paragon of political and economic stability.

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Comment by oxide
2012-04-05 12:04:06

I don’t agree, Pbear. The CA infestors bought those spec houses with money they HELOC’ed on their own CA homes. Are the Chinese buying CA homes with money they HELOC’ed in Beijing? Do they even have HELOC’s in Beijing?

Even if we aren’t at the bottom, we are far enough past peak that the Chinese won’t take a huge bath, at least not initially. What I think they will take a bath on is house maintenance and/or absentee landlording.

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2012-04-05 15:55:31

Foreigners are pouring into the Manhattan market.

Meanwhile, last year, 250,000 jobs were slashed on Wall St.

And they’re never coming back!

You think that’s not going to have any effect on the Tri-State area?!?

People are dumping it as fast as they can to whoever they can pass the buck onto.

 
Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 19:02:04

“The CA infestors bought those spec houses with money they HELOC’ed on their own CA homes.

Even if we aren’t at the bottom, we are far enough past peak that the Chinese won’t take a huge bath, at least not initially.”

It really depends heavily on the willingness and ability of the Fed to keep the interest rate pedal to the metal forever, doesn’t it?

The other issue is bubble demand, which these all-cash Chinese buyers are currently generating. It vastly exceeds end-user (fundamental) demand at the moment, enable foreign investor offers to trump would-be local (fundamental demand) purchases. When the Chinese bubble finishes collapsing, the Chinese bubble demand tsunami tide will recede, leaving behind a very dry beach in its absence.

When these Chinese investors find themselves high and dry, don’t you think they will hastily cut and run, selling at whatever price the market will bear? And given that the high price they paid was due to their willingness and ability to trump end-user willingness-to-pay, to whom do you think they will sell down the road? The same sort of thing happened with respect to the California bubble demand which pushed Oregon, Idaho, Nevada, Arizona, Utah and Montana home prices skyward; once it receded, the investors who paid top dollar found themselves high and dry, with no greater fools available as prospective buyers.

 
Comment by wittbelle
2012-04-05 22:46:17

It shouldn’t matter to people like us. Unless I am mistaken, the Chinese are not interested in the kind of properties that we could afford.

 
Comment by Jojo
2012-04-06 05:55:01

“When these Chinese investors find themselves high and dry, don’t you think they will hastily cut and run, selling at whatever price the market will bear?”

Not if they are cash buyers. If they paid cash they will not be forced to sell and will likely wait and hope that prices come back.

 
 
 
 
Comment by cactus
2012-04-05 09:17:03

so inflation that was exported is comming back

 
 
Comment by In Colorado
2012-04-05 07:56:27

A stronger jobs market and higher incomes for technology workers has brought back bidding wars in San Francisco and Silicon Valley. Properties listed at $1.5 million are getting bids $200,000 to $300,000 higher

“Tech workers” must be paid better in the Bay Area if they can afford $1.5 million houses. A colleague transferred to the Bay Area, and he rents, because in his own words “there’s no way in hell” he can afford to buy a house there.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 08:15:08

I suspect it is people who manage the tech workers who are snapping up the $1.5 million houses.

 
Comment by Joe
2012-04-05 08:54:12

I’m one of those “tech workers” at Google, and I’ve been in the industry for 20 years. Ain’t no way in hell I’m buying a house in the Bay Area right now.

2012-04-05 15:57:36

My sister is one of those “tech workers” but at a famous hardware firm. She lives just down the street from Google actually.

She’s got plenty of dough but she’s not not just about to “give it away”. My mama didn’t raise no fools! :P

 
 
Comment by cactus
2012-04-05 09:24:10

Our headquarters is in Santa Clara many of our engineers rent up there.

But we can’t find engineers here in Thousand Oaks or ones that would move here so we keep hiring in Santa Clara

Almost as expensive in Thousand Oaks as silicon valley but almost no tech jobs in TO just movie business. so engineers don’t want to move. Instead we pay to fly them back and forth, rent apartments for them , etc.

no recession here

Comment by Awaiting
2012-04-05 11:58:55

cactus
What firm?
My husband is looking for some contract work or a job. (Even starting PT.) Use to be at Intel, and other firms.He’s an EE)

email me private

 
Comment by Vlad_M
2012-04-05 13:06:12

Cactus - I am one of those displaced Thousand Oaks engineering types. Drop me a line privately, thank you.

 
 
Comment by butters
2012-04-05 09:31:57

Properties listed at $1.5 million are getting bids $200,000 to $300,000 higher

As far as I know, there was only one house that got got outbid by more than 20% of asking price. Now they are reporting like it’s every house.

 
 
Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 08:56:15

It seems like an inventory squeeze is underway in San Diego County. Buy now, or get priced out forever!

HOMES FOR SALE IN COUNTY PLUMMET
Inventory falls as price declines deter many sellers from entering the market
Written by Lily Leung
12:01 a.m., April 4, 2012

The number of homes listed for sale in San Diego County has fallen to its lowest level in nearly three years, a likely sign that homeowners who want to sell their homes can’t or are still on the fence, based on recent numbers from the San Diego Association of Realtors.

A snapshot taken in March shows the county had more than 7,400 active listings, the fewest since June 2009. March’s level is 38 percent lower than a year ago and 8 percent lower than a month ago.

The findings are based on a data set starting in June 2009, when the Realtors’ association split up their inventory count between active listings and contingent listings, when a sale is waiting for final approval. Contingent transactions include short sales, in which borrowers owe more on their mortgages than their homes are worth but the lender agrees to a discounted payoff.

“We have very limited inventory,” Donna Sanfilippo, president of the San Diego Association of Realtors, said Monday. “We’re showing inventory is really down.”

Sanfilippo said home-price declines have kept potential sellers from entering the market unless they’re pursuing short sales, which have become more popular in recent years. Such deals made up 23.9 percent of total resales in the county in January, the most recent cycle’s peak.

Less inventory may also mean more competition for a limited supply of homes. That, in turn, could mean values will increase, Sanfilippo said.

That result remains to be seen as investors still have a tight grip on the local housing market. Many of them remain competitive with cash, which often beats traditional buyers — even those who have saved up a 20 percent down payment.

“Most (sellers) would like to see first-time homebuyers, but if cash is offered, and at the same amount, then they’ll go with the cash offer,” Sanfilippo said.

Comment by azdude
2012-04-05 16:32:24

they are going to rent properties and keep inventory low so prices go up, inflate, deflate. I wonder if stocks and homes will go up in price together? Or possibly we go from stock bubble back to housing bubble?

Comment by Arizona Slim
2012-04-05 16:53:49

In places like Tucson, where we already have a rental vacancy rate of something like 16%, I don’t see how adding more rentals to the market will make house prices go up.

Especially when so many of the current rental house buyers are rookie landlords. We had quite a wave of them during the middle of the past decade. More than a few of them walked away from their in-VEST-ments.

In this part of town, in-VEST-or walkaways comprise a large amount of the foreclosures.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 19:06:31

“In places like Tucson, where we already have a rental vacancy rate of something like 16%, I don’t see how adding more rentals to the market will make house prices go up.”

I suspect the reason you don’t see it is that you studied economics in college. ;-)

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Comment by erik
2012-04-05 09:37:24

“Most sellers would like to see first time homebuyers, but if cash is offered and at the same amount, then they’ll go with the cash offer”…..
What are we to make of such a statement? Why would any seller care where the of money comes from as long as they get paid?

Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 10:08:19

Cash is best; no worries about the risk financing will fall through if there is no financing.

 
 
Comment by Fitzclarence
2012-04-05 09:44:49

erik -

There are several benefits to an all-cash offer:

1) The sale can take place more quickly than if a bank / loan were involved.

2) There is no chance of the deal falling through due to a low appraisal.

3) Cash means that there’s no need for the buyer to sell their house in order to buy the next one.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 10:10:45

Sorry — I missed your (better) answer to the above question before posting my own.

 
Comment by CarrieAnn
2012-04-05 11:06:00

Good answer but it needs a clarification. The loan may fall through for far more reasons than just the possibility of a low appraisal. With cash there is that big industrial bureaucracy that is totally avoided, along with all the potential hurdles and protections that try to introduce to the transaction.

*Inability to prove income (self-employed)

*Market jitters between negotiations and loan shopping could cause banks to tighten credit part way through the process. (The 10% down the buyer thought he could get the loan with might turn in to a request for 20% under a certain credit score.)

*Loss of job or income part way through escrow could nix the deal. Better chance of home still selling if home price money is there in full up front.

*Market jitters could interject a spike in interest rates (With volatility the rate lock periods were shortened in 2008 in our area)

 
 
Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 10:12:47

My take on the current CA inventory squeeze and reports of bid wars: It is a ginormous dead cat bounce playing out in slow motion, which will leave the current generation of investors feeling like they caught themselves falling knives, once the latest wave recedes in a few years from now.

This is just a hunch, based on what little I know of financial history.

Comment by oxide
2012-04-05 12:06:06

Or wishful thinking.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 19:08:20

Oxide, you aren’t a Realtor®, are you? Because your posts lately have read like things a Realtor® would write.

Just sayin’…

 
Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 19:25:16

“Or wishful thinking.”

No; actually based in financial history. Your skepticism compels me to substantiate my post. Please closely examine the DJIA charts linked here. You will note that after the Great Crash of 1929, the DJIA hit a temporary trough below 50 in late 1932, only to subsequently quadruple in value by late 1936. Unfortunately for anyone who jumped in at that point, a further decline of near 50 percent played out by the second half of 1942.

Can you explain why you don’t believe similar long-period swings in housing prices are not likely, given how massive the recent bubble was? I sincerely doubt it.

Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 20:20:43

A similar argument can be made from the perspective of recent Japanese stock market history. I don’t have the data, but I suspect a parallel downtrend has played out in their housing market for over two decades since 1989. Those who invested in Japanese assets after 1989 got stucco, permanently.


I keep hearing about reasons to buy stock for the long haul and you will be fine. Take a look at the chart of the Japanese stock market over the last 20 years. If you bought stocks in the Japanese Stock Market in late 1990 when stocks were so called “cheap”, you would be down over 50% today, 18 years later.

In addition to the page you are currently reading, I have the following pages that show some more details using 1930’s stock charts as well as another page comparing the 2008 market downturn to three other bear markets including the 1930’s U.S. Depression Era.

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Comment by butitsdifferenthere
2012-04-05 10:15:58

‘You either do or do not do there’s no try. Buyers, if you really want a particular home, your attitude must be to win the deal. Sellers, if you really want to sell, price under market, even at 99 percent of market value, and let the buoyancy of the market lift the offers up. Whatever you do, get moving now… The race is on!’

Wow, talk about typical REA Spew! I’m offended she ripped of Yoda’s line.

The Chinese invasion is in full swing here in Palo Alto. I rent, but my neighborhood is becoming less and less American. When I say Chinese, I do not mean Chinese-American. Not sure how this is going to end, but not buying for a while, if ever. I’m 35, so I have some time. Doubt I’ll be able to buy in a decent area around here anytime soon.

Comment by Arizona Slim
2012-04-05 10:49:45

‘You either do or do not do there’s no try. Buyers, if you really want a particular home, your attitude must be to win the deal. Sellers, if you really want to sell, price under market, even at 99 percent of market value, and let the buoyancy of the market lift the offers up. Whatever you do, get moving now… The race is on!’

Those who do not heed the admonitions of the all-powerful REIC will be…

…left behind in rentals.

 
 
Comment by CarPort Pirate
2012-04-05 12:37:18

“Do or do not there is no try.”
my younger son heard this saying at school it made him nuts. He spent
a summer w/ an uncle, one of the chores was to manage the goats into
a trailer to take them down the road.

He called me feeling very frustrated ” Mom when I get back to school, I’m telling “Jack” do or do not there is no try is doesn’t apply to all situations, you try herding a stubborn female goat who WILL NOT GO INTO THE TRAILER, because her love interest is still in the backyard.
I think this is the one of the most overused and trite sayings ever.

One of my sons is special needs, “The do or do not” attitude is common among the Special need services overall in CA. To get anything done, you have to sue to get stuff done that is required by federal law. If you don’t have the money to sue too bad for you.

I live in Orange County, in my area it has become very CHINESE straight
from BEIJING. The whole strip mall has become CHINESE.

Across the street is a 99 Ranch, a grocery store, when it first opened up about 16 yrs ago, there were a lot of cultural differences. ex: On Halloween, it is traditional for all the stores in a strip plaza to hand out candy to all the little kids. Twenty little kids go through the sliding doors, march right up to the cashiers with their little bags out. the cashiers just look at the kids and then stare at the parents. One of the Moms asked “aren’t you participating for Halloween”?
Blank looks from the cashiers; finally one of the baggers asked in Spanish, “What is going on”? I said “Trick or treat for Halloween.”
One of the cashiers spoke broken Spanish w him. He told me they didn’t know anything about giving free candy, little kids and Halloween. After that first Halloween, 99 Ranch participated and realized it was free advertising.

I have asked many Chindia neighbors why they want to buy homes. Often the reply is “a house is something we can hand down to our children. How come you haven’t bought a house YET?”
Because I don’t want my children to inherit debt, and I wouldn’t be the owner anyway the bank would be. confused looks all around

a neighbor bought a duplex and moved in. OMG, I didn’t realize it would cost more than the down payment and initial asking prize. In China buying houses was like buying a car the buyer and seller agree on the price, money exchanges hands, titles are written up and you are now the proud owner of a house to hand down to the kids.

Comment by oxide
2012-04-05 13:06:20

OMG, I didn’t realize it would cost more than the down payment and initial asking prize.

I don’t quite get what you mean. Are you saying they don’t understand the concept of “interest?”

2012-04-05 16:03:52

They don’t understand the concept of a “mortgage”.

These are recent introductions (at least in generational terms) in both China and India.

Comment by oxide
2012-04-05 17:27:56

So they think they’re “snapping up” houses for $30K to $40K (10% down)? Fire up the robosigners, they’re gonna need ‘em…

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Comment by Neuromance
2012-04-05 20:01:22

The more creative the financing, the more money the middleman gets, and the higher the price of the good becomes.

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Comment by 2banana
2012-04-05 19:15:21

They certainly don’t understand the concept of public unions and property taxes.

I don’t quite get what you mean. Are you saying they don’t understand the concept of “interest?”

 
Comment by Cantankerous Intellectual Bomb Thrower©
2012-04-05 19:27:08

Something I once heard during an LDS General Authority’s talk on personal finance:

Them that understands interest, gets it. Them that don’t understand it, pays it.

 
 
 
Comment by Curt
2012-04-05 13:28:03

Those who cannot remember the past, are condemned to repeat it.

Comment by Hwy50ina49Dodge
2012-04-05 17:34:36

History is a race between education and catastrophe.

H. G. Wells

 
 
Comment by Realtors Are Liars®
2012-04-05 19:10:29

Why quote the lying realtors? Everyone should know how corrupt they are by now.

 
Comment by jeff saturday
2012-04-10 09:34:52

Down On The Corner lyrics
Songwriters: Fogerty, John;

Early in the evenin’ just about supper time
Over by the Fed House they’re startin’ to unwind
Four kids on the corner tryin’ to bring you up
Benny picks a number and he blows it out on HARP

Down on the corner, over on Wall Street
‘Benny And The Fed Boys’ are printin’
Gonna prop up balance sheets

Mozilo hits the washboard and people just got to smile
Geithner thumps the gut bass and solos for a while
Paulson twangs the rhythm out on his Kalamazoo
And Benny goes into a dance and doubles on kazoo

Down on the corner, over on Wall Street
‘Benny And The Fed Boys’ are printin’
Gonna get your QE3

Down on the corner, over on Wall Street
‘Benny And The Fed Boys’ are printin’
Gonna prop up balance sheets

You don’t need a penny just to hang around
But if you lost a $Trillion, this is where you`re money`s found
Over on the corner there’s a happy goal
Prop up housing prices and raise taxes on that coal

Down on the corner, over on Wall Street
‘Benny And The Fed Boys’ are printin’
Bring a nickel, tap your feet

 
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