The ‘Buying Power Of Patience’ In California
Some reports on the California housing bubble. “Lancaster home-sale prices hit another record in April while Palmdale home prices retreated for a second month, narrowing the Palmdale price advantage that has persisted since the late 1980s. In Palmdale, the median price dipped to $357,000, down from $365,000 in March and the record $375,000 set in February.”
“Total housing starts in the first four months of 2006 dropped compared to the same period a year earlier in most Central Valley cities. Bakersfield, Madera and Visalia-Porterville were the only exceptions. Modesto had drops in both categories for a total decrease of 45.8 percent year-over-year, one of the largest of any Central Valley area. It was surpassed only by Hanford’s 48.1 percent total drop.”
“Builders statewide obtained 20.6% fewer permits in April compared with a year earlier. In April, permits were pulled for 11,119 single-family homes, down 25% from the year before. Meanwhile, permits for condominiums and apartments totaled 3,476, down 37.6% from the previous month. Most of the declines were seen in Central and Northern California counties.”
And a television station had this report on Sacramento. “Developers are not ignoring the housing glut and the rising interest rates. According to a national housing consultant, they’re renegotiating land and lot purchases and in some cases even walking away from deals.”
“Builders like Centex and D.R. Horton are not just cutting prices they’re cutting personnel.”
“David Garibaldi knows the buying power of patience. ‘By waiting a year we could have saved tens of thousands of dollars,’ he says.”
“He and his wife might pay more in interest but that was offset by the enormity of the incentives and price cuts. ‘We really waited until prices went down to have a little leeway in the buying department,’ says Garibaldi.”
“Now, builders are not just lowering prices. They’re slashing them. At the Landing at Riverdale North, Beazer lopped $16,000 dollars off $425,000 dollar houses. In Folsom, more than $55,000 dollars off homes selling at $586,000 dollars.”
“But national housing consultant John Schleimer says now is the time to buy. In April, 2005 4,423 homes were for sale. By April 2006 that number hit 11,344. That’s an increase of 156 percent. The combination of housing glut, higher interest rates and slow sales means good deals ahead.”
“But national housing consultant John Schleimer says now is the time to buy.”
Yes, its always “now.”
Neil
Great, he can go buy 10 homes right NOW.
Brilliant. Instead of disclousre the SEC should mandate that anyone who recommends a stock MUST have at least 2% of their wealth in it.
Don’t any one dare buy now!
This is really hilarious, for 5 years these flippers, investors whatever you want to call them have been laughing at more sensible people as homes have been appreciating 20,30,40% a year. Now that the party is over they want someone to come along and save thier asses. Well guess what, nothing has happened yet. These flippers are so spoiled they think they are entitled to make 100K a year without working, it doesnt work that way. People are talking now that because homes are not going up any more that this is the worst it will get, I will repeat,NOTHING HAS HAPPENED YET! 2007 will see slow but real prices declines, 2008 the shit will hit the fan, 30-50% down in most markets, so if you are tempted to buy now, DONT DO IT, i will say it again-DONT DO IT!!!!!!!!!
I sold my condo (San Diego, CA) in November 2005. Owed 90K, sold it for 385K. I had been looking at houses in the Eastlake area (S.D.) for about 3 months. I discovered this blog and decided to wait. I do want to own my own home. I put my money in a CD (all of it) and am getting approximately $700.00 per month in interest. Any suggestions on how I can get more without risk (don’t like risk). Love this blog!!!!!!!!
Yeah, move north of the 8. Eastlake is just an extension of Chula Vista. Down there, you have more at risk than your cash. (I grew up off Orange and 805).
“Any suggestions on how I can get more without risk (don’t like risk).”
Can’t do it, unless you can find a similar fixed cash investment paying a higher yield. Going to a longer term will increase yield, but I wouldn’t want to lock myself into a longer term when rates are trending higher. BTW, if the entire amount is at just one bank, you’ve unintentionally introduced an element of risk (however small), since deposits are only FDIC insured up to a max of $100,000.
Veronica, go to http://www.money-rates.com and look at the rates for the internet banks. A 6-month CD will more than double your yield, at 5.18%. You’ll need to put no more than $100,000 in each account so you don’t exceed FDIC limits.
Veronica — don’t know about you, but I am getting a hair under 5% on 90-day CDs. That looks to be double what you are getting; you appear to be bringing in only 2.5%, which I believe is a miserable return today. I use bankrate.com for a source, happened to find a brick-and-mortar place just two miles from me. Watch out for the $100K limit for FDIC, though. My banker told me there is a way around that with a CD and a money market at the same institution — there is a FDIC booklet that will help. With money markets, which I find also to pay very well, be certain they don’t charge you high fees.
Veronica. You can ladder out your money in CD’s. For example: Using http://www.ing.com current CD rates and 300K you divide your money
50K in savings account @ 4.255
50k in 6 month CD @ 4.75%
50k in 9 month CD @ 5%
50k in 12 month CD @ 5.25%
50k in 18 month CD @ 5.25%
50k in 24 month CD @ 5.25%
Then every 6 months you take the money from the expiring 6 month CD and put it in a new 24 month CD.
With a flat yield curve it doesn’t pay off to ladder your money in CDs. Unless you fear that the recession is near and that rates are going down, I would not tie anything beyond one year, and I certainly don’t see the point of putting 50K in 18 and 24 month CD when you can get the same rate for a 12 month CD.
One month Treasury bill pays 4.75% interest, state tax free. ING is way too low.
jl in SD..
For my 2 cents the correct yield curveplay on this $300k.
A light Barbell.
Find a triple a Tax free municipals..your in CAL so take advantage of the high tax rates…Surely a 15 year final with 10 year PAR call..on a market rate coupon will be an effective & handsome return (grtr than 7%) and soooooon to be capital gains. (stay with quality school districts & county GO’S.)…100k to 125k… 1 liquid issue!
Then you can buy the balance in short duration CA St municipal paper. This will be a minimum of 3.6% tax free divide this by 1-(your tax rate state+local+feds) and this rate is probably 47% for a 6.79% taxable equivalent return….stay
with par call or maturies inside 12/2006. Place 1 bond in the 3rd qtr and one in the 4th qtr.
Good luck. When you see the Dow break below 8500, sell the short paper and find some 5 yr. Triple tax free ….
{ of course if we are having a PANDEMIC from Bird flu ( as Homeland Sec. Dept. has everyone planning for by 2007)….just stick to T-Notes & Bills….}
That;s about a $271,000 gain after costs. I’m assuming you are married & lived there 3 of the past 5 years, so it’s all tax free.
You should be getting about $1200 a month with a 5.25% 6 month CD..or about $1100 a month with a 5% MMA. Both are readily available.
May I suggest going to http://www.fatwallet.com/c/52/ - there is a couple of stickys at the top of their excellent finance forum that show the true, sometimes unpublished highest CD & MMA rates in the country. You’re getting shortchanged it sounds like….
That about this for a second, on that 385k with just 5% CD rates or similar you should be earning $1,572 per month. I am sure you can RENT a nice condo in SD area for that. Make interest work for you versus against you! In two years properties will be cheaper, especially condos. Then you can buy. That is a win win! Though you do have to pay taxes on the int income, so maybe you should buy a condo that is overpriced by $150k! Just teasing.
Muni bonds are a good idea but a bit complicated for a newer investor. Try a CA tax-exempt money market … basically a muni bond fund. Don’t be fooled by the low yield - 3.5% is more like a 4.5-5.25% pretax yield depending on your tax bracket because you’re not paying Fed or state taxes on the gains. Vanguard has one - totally liquid, electronic transfers, and free checkwriting. I love mine - it’s generating $1500/month tax free!
Yes and they can only and must buy after making the recommendation.
Hmmm, I got 5.25% for a one year CD 2 weeks ago. Surely wouldn’t go past that. It’ll be interesting to see how the rates go next year. I’m betting around 6.5%.
I sold my condo (San Diego, CA) in November 2005. Owed 90K, sold it for 385K. I had been looking at houses in the Eastlake area (S.D.) for about 3 months. I discovered this blog and decided to wait. I do want to own my own home. I put my money in a CD (all of it) and am getting approximately $700.00 per month in interest. Any suggestions on how I can get more without risk (don’t like risk). Love this blog!!!!!!!!
Go to citibank.com-4.49% account liquid-no C.D.-no nothing-take it out anytime you want with no penalty.
The max. you can put there is $125,000.00 per accnt. Don’t worry, they will let you open up a second.
I have three my self.
Good luck.
Check out the tv show on the Sacramento link. It has a lot more detail. ‘Times are changing’
Here in So. Arizona inventory is going up, especially in the outlying areas, but there are still a lot of sales according to the stats I look at. Man, following this bubble is becoming depressing. Like watching paint dry for years on end.
Don’t want to add to your depression, but I’ve read the L.A. bubble in the 90’s took about 6 years to completely deflate.
That’s right. We bought two years into the deflation. What a mistake! We were upside down for the next five years.
The three months of the spring buying season is the high point for house sales. I consdier March 15 thru June 15 the 90 days that make or break the entire year. The build up in listings started right around March 1, and the paint will be dry by July 4. Who is going to be motivated to look at houses when you could be at the lake?? Tell me about lots of sales around August 15 in So. Arizona.
Hey Ben! Are you ok? Oak Creek is burning down as I type! Are you out of harm’s way???
Oh no …Oak Creek is burning ?
No, Jack Canyon, a few miles away.
Oh no! NAR is trying to burn Ben out and reduce the housing supply at the same time. Those Bastards!
Yeah, they hacked the weak passwords of the lesser bubble blogs, but they had to go after his neighborhood. This must be the ‘anger’ phase of grief.
“But national housing consultant John Schleimer says now is the time to buy. …” NOT!
Last stop for the RE-Express, all aboard!
What’s that Lassie? What is it girl?
Woof! Woof!
Woof! Woof! translates into “Yo! Do the math, the bridge is out!”
Oc-ed — I think that not too many of us remember the Lassie lines. Or Rin-Tin-Tin’s.
Yeah, but we all know Flipper!
I know, I dated myself with that one. Just trying to make light of the absurd “buy now” rhetoric. What is hilarious is that sheeple actually believe this line of dung. CrazyintheOC has it right, Don’t even dare buy now or you will be so upside down you will make Poseidon look like a kayak doing a roll.
“Patience”–that’s it in a nut shell. But I would much rather be a frustrated potential buyer waiting for the right moment than a seller coming to grips with the fact that the “right moment” was last year.
For a seller the right moment is anytime in the next two years.
Last year is gone.
Agreed!!!
With their eyes to the ground as they flew over the edge of the cliff…the lemmings STILL can’t see the top.
Only, follow me,” I am the pied piper!”
“The combination of housing glut, higher interest rates and slow sales means good deals ahead.”
I thought higher Interest rates meant we could afford less house. That was the mantra two years ago. How does good deals AHEAD make NOW a good time to buy? Does that not mean this is a good time to wait?
But wait: if there are “…good deals ahead”, then isn’t “ahead” the good time to buy, as opposed to “now”???
ahhh…I see GH beat me to it!
But wait: if there are “…good deals ahead”, then isn’t “ahead” the good time to buy, as opposed to “now”???
But isn’t that trying to “time the market”? My Realtwhore tells me that market timing is evil –when buyers do it. When sellers do it, that’s just the good ‘ol FREE MARKET at work and Amerikan capitalism at it’s finest!
And let’s not forget the Relatwhore definition of a “Buyer’s Market”: When there’s assloads of inventory not moving, and seller’s refuse to budge on price.
But wait: if there are “…good deals ahead”, then isn’t “ahead” the good time to buy, as opposed to “now”???
But isn’t that trying to “time the market”? My Realtwhore tells me that market timing is evil –when buyers do it. When sellers do it, that’s just the good ‘ole FREE MARKET at work and Amerikan capitalism at it’s finest!
And let’s not forget the Realtwhore definition of a “Buyer’s Market”: When there’s assloads of inventory not moving, and sellers refuse to budge on price.
Just like NO wasn’t prepared for Katrina, the housing industry isn’t prepared for the Tsunami headed its way. And the awesome part is that tsunami’s strike with little warning. Just when the RE agents, mortgage lenders, investors, flippers start feeling it’s time to test the waters they will be under water drowning in red ink.I predict that the first big wave will hit by October headed into the elections.
Actually, if you the signs to look for, there is some warning before a tsunami. And I think that Robert Toll saw those signs (as he sold a bunch of his stock at the very height of the market). But most folks don’t the signs, and they go look at how the ocean is acting very strange before the tsunami (tide heads way out), and then get clobbered by it. A lot of the people on this site have been warning of this for awhile (they understood the earthquake that was producing the tsunami - in this case, the dropping of all lending standards and the subsequent flow of easy money). But, yes, most will simply go down to the beach and wonder what is happening, not understanding, only to realize too late that they are going to be drowned (in this case, in debt).
Sorry, but your analogy was just too good to pass up. It works brilliantly in this setting.
many folks were actually wandering out into the receeding tidal zones gathering up seashells and exposed marine life before the tsunami hit. there is an element in society that will remain clueless until the very end.
the ANIMALS knew the tsunami was coming and responded accordingly. they had no investment in maintaining the status quo, only in perceiving the actual reality at any given moment. Who are the people now in the housing bubble who correspond to those animals, if anyone?
Hey, there you go, the analogy extends even further. An animal’s need for shelter can’t be any more basic — a burrow, a nest, a hole in a rock. Anywhere will do, as long as it provides shelter. Same can be said for any human who just wants shelter. A home, not an investment. Hey, I’ve never seen a groundhog flip his burrow to a racoon. (Well, maybe rats do this …)
It’s called a Rat ,and they have been scurrying for cover the last 6 months….Just looked who’s cashed out..Heck even the Treasury Sec is bailing..What does that say to you?
China Cen. bank just announced again they will be rotating out of dollars ,and into gold, and euros’.. The signs are there if you want to see. It’s hard to comprehend even though it’s happening before your eyes. The dollar has lost 6% of it’s value in the past months. What is going to keep it up?…more foreign buyers? Consumers?….Tide’s going out
Agreed!! It will eventually affect all of us in some way. Those of us in debt the most. There are very rough times ahead. The signs are everywhere if you just scratch below the surface (the coporate media).
I say keep an eye on the squirells!
in 1962 they predicted a tidal wave in san francisco after the alaska quake.5,000 people went to the beach to watch it come in.they were disappointed.so were their heirs.
Funny. Bad analogy, but funny.
Right! At that time he {Toll} said along with his felllow housing hype-sters “Interest rates don’t matter it’s the economy “(stupid!)
Well the government just reported Q1 GDP = 5.3%…..but housing is tanking? , with July - August widely recogonized as the TOP!
“I predict that the first big wave will hit by October headed into the elections.”
Yes, of course. That way, the a$$hat Demonrat flippers, who can’t do math, can blame their lack of prescience on the Republican party. So what’s new?
Hey Price Doubt,
Are you a screwdriver or wrench, tool? Your beloved Republicrats are just as guilty as the Dems when it comes to leadership failure and betrayal of the productive classes in this country. So please go peddle your myophic RNC shilling elsewhere. Both parties suck, and toolboxes like you who perpetuate their stranglehold on the levers of power are a huge part of the problem.
Sammy — if you’re not yet a Libertarian, you have potential. I recruit.
Right on!
Republicans vs Democrats; Liberlas vs Conservatives’ is just a smoke screen! The welathy classes run the show. It’s all about keeping the workers showing up to work and paying taxes!
That’s why the Dem’s and the Rep’s all vote the same on the globilist issues like NAFTA, WTO and the IRAQ War!
The wealthy classes got rich by screwing the working classes. People are easily manipulated during war time and other crisis!
Its time to take America back!
Amen Brother. Democrats and Republicans are like two hairy ass cheeks surrounding the same bunghole: predatory capitalism. Both parties are on the make and on the take, with no core principles or positions, just their overweening desire to con 51% of the sheeple who actually go out and vote into pulling the lever for Tweedle-dum rather than Tweedle-dee. So, to those pathetic, deluded souls who insist on touting either party in here, until medical science figures out a way to reverse your lobotomy, please don’t vote, drive, or reproduce, we’ve got enough cretins already.
Sammy
LOL!!! LOL!! I havn’t laughed that hard in awhile.
Good job Sammy!!
Geez, this is a tough crowd.
Right here is the problem. Unfortunately, too many aren’t interested in what is best for this country. I’m talking from elected officials right down to the folks on welfare. Which party? Take your pick. Look at their actions, not their speak. If anyone of them were truly American and concerned about our future, they would tell the folks that you can’t expect to survive on debt. End of story. Airlines can’t do it, car parts suppliers can’t do it, car makers can’t do it, and a country can’t do it. No one wants to hear it, but we’ll have to deal with it one way or the other. Instead, from the elected right down to the welfare recipient, we all want to know what we can get from our country. So much for the ask not what your country can do for you, but what you can do for your country. I’m 35, and I haven’t seen that attitude in my lifetime. Not a wonder to me why we are in the predicament we’re in. Instead we have come to argue about who’s “party” is going to stay in power so we can get the scraps instead of worrying about how we are going to get the whole pie. And by pie, I’m not talking about money.
Well said ! I totally agree we can’t live on debt. And yet many people don’t see it that way.
Yea I agree well said, 100% spot on.
Amen brother!!!
Yes good coment. But like it or not we are all controlled by money. Its the way the system was set up. It must expand every year or collapse. Thats why we have a fiat currancy, fractional reserve banking, and easy credit!
It’s a house of cards, the greatest ponzi scheme the world has ever known!
History shows that sooner or later someone gets too greedy, the house of cards get unstable, and it all comes tumbling down. Expect the wealthy don’t pay unless we make them. They are the ones who caused the house to be built and profitied from it.
We are at the sooner part in time.
Fiat currency is necessary because we have an increasing population (you could argue “for how long?” though). And humans create wealth from their labor. If the currency does not expand, the increased wealth will not flow into the economy at a rate comensurate with its creation, thus restricting trade (beyond local scales).
Kerk93,
Excellent post. I’m 36 years old and have a similar point of view.
Kerk93, Rancho Cal, I sympathize with your analysis that ethics and common sense are in short supply. Rare are the leaders willing to call on us to serve our country in meaningful ways. I count being a taxpayer as meaningful and patriotic(welfare recips, whether deserving or not, are deprived of that priveledge). You can do wonderful things with money. And terrible things. Be careful about whose pies you have your fingers in. Look into the mirror often, and look with the same intensity6 at the motivations and plight of others. Educate yourself, be content with the things within your reach, never fear to reach for more but know that the world does not revolve around you. This bad time is about to pass. Not to say that we will all escape unscathed. We will learn many lessons from this era of decadence. But first we must learn to make wise choices based on the best available information. Selecting representatives, like governing, is a tricky business. Sometimes they must lead and sometimes follow. Thing is, though I did not voter For W, I think I see him aspiring to learn to be a good representative. Yet it is too late. He embraced a flawed agenda and was surrounded by snakes. A GOP who has shown better judgement is Arnold in Ca. But by and large, the GOP have a big quality control problem. I am not sure why. Hopefully the Dems will come to their senses. It has not been easy for them to stay in the race with supply side economics as the running economic paradigm. Dems tend to be good at running government by making rules, but they are weak on enforcement. GOP fixate on enforcement, and, loving its opposite, liberty, tend to want to eliminate rules-which only encourages the bad guys. We will have balance, once the tide of fear ebbs. Do not give up hope and act rashly.
“But like it or not we are all controlled by money.”
No, we are controlled by our desire for instantaneous gratification. That is the source of our debts. We want everything and we want them NOW.
Now, builders are not just lowering prices. They’re slashing them. At the Landing at Riverdale North, Beazer lopped $16,000 dollars off $425,000 dollar houses. In Folsom, more than $55,000 dollars off homes selling at $586,000 dollars.”
SWEET. Wouldn’t we all love to be flies on the wall in the (falling apart) houses of those that paid $586K and see the faces of those taking the so far $55K (and increasing) haircuts.
Just came back to the Bay area (from New Mexico), the for sale signs I saw all had “REDUCED” on them. Also, VERY SWEET.
I’m renting in one of those 3 year “new” homes that you speak of and I can tell you the stucco on nearly all the homes in this tract is cracking horribly.
The 2 homes we owned were over 10 yrs old when we bought and neither one had the stucco cracking problems these have. I’d be PISSED if I paid $400K - $500K for a house that’s already showing signs of problems like this. Add this to list of FBs worries.
Hard to believe the illegal alien crew who made $7 an hour building these crap-boxes are guilty of less-than-meticulous craftsmanship.
If you’ve ever seen the construction quality in Mexico it would be obvious.
Went to Acapulco for my honeymoon. They toilet was too close to the wall. This caused the tank lid to sit too far forward. This prevented the seat lid from laying back properly. This caused the seat lid to only remain up when being manually held.
Yes, but if you ask the front desk, they’ll give you a litter box.
A local person who was overseeing his own house construction hired illegals to do the framing and other work. His walls were off by a foot in some areas, in addition to myriad other problems. He said he’d never do that again.
you get what you piad for
This promises to be a huge problem down the road. Most of it hasn’t come to light, since the majority of new construction currently sits unoccupied. As the homes eventually find permanent owners, shoddy construction resulting from a woeful shortage of skilled craftsmen, will lead to mucho lawsuits and many homebuilder claims against their insurance carriers. Right now I’m looking for the publicly traded insurance carriers with the most exposure — they will make great short candidates!
Mr. John Schleimer. Yes, I am going to run out right now and buy a ridiciliously overpriced piece of junk for $500k plus. Good advice. I wish everyone in America was as smart as you. We all would be in better shape. Thank you and good night now!!
I live in Sac (renting) and it’s the poster child for ground zero mushroom cloud. The amount of FOR SALE signs is almost comical which makes the amount of new building even more insane.
Just in my neighborhood I’m witnessing some pretty good price cuts. Saw one 4 bd go pending recently but listed at approx. $450K was $50K lower than the $500K all the other 4 bd WERE asking. Oops, there go the comps!
Sounds like that person was actually smart, and reduced enough now to get a sale, instead of chasing the market down with multiple $5K reductions. We just need a few more of these people to price aggressively (the prices are still insane) to help those comps come down dramatically, and get the spiral started.
I agree, smart seller. One either gets ahead of the market (by reducing price and thus selling) or the seller will have a house sitting that costs big money to pay for and declines in value every month.
I too think October will be the month of reconing.
I’ll do a later post with a question.
Neil
“No, *I* live at ground zero! There’s a “for sale” sign on every third house!”
“No way, buddy, *I* live at ground zero! Foreclosures are going throught the roof!”
“Sorry, folks, where *I* live is ground zero! Inventory has quadrupled in the last 7 months, and already RE agents are showing up at my door asking if they can mow my lawn.”
Hey, not trying to be sarcastic here. Just beginning to realize that a very high percentage of our metropolitan areas probably qualify as ground zero. Or, maybe I’m just being a grouch, ’cause I live in Pittsburgh and I feel as if I’m missing out on all the fun.
I live in the Pittsburgh region too! Funny thing is I even forsee some of the bubble effects affecting some of the overpriced suburbs surrounding Pittsburgh. With gas prices rising, food and other items going up in price, many people will not be able to continue to afford this “new starter castles” anymore. It always baffles me where all these “rich” suburbanites come from? Cause last time I checked Pittsburgh is a “Rust Belt” city and the region has been depressed for a few decades now following the Steel Mill closing and US Airs troubles.
No, *I* live at ground zero.
Although “everyone” wants to live in Sun Diego, NO ONE can afford it!!!
Everyone wants to live here. Just not at the same time.
One of the things I am really hoping to be able to find data for is that some areas are leading by a small amount, but most areas of the US, from the large to the small, have some symptoms of the financial sickness we all think is going on.
I agree with the posters above, there is no politician in the ranks today that is brave enough to stand up to what is about to happen. When it hits the fan, its every man and woman for themselves.
You actually bring up a very interesting point. If everyone in bubble-land is noticing dramatic changes in local market conditions simultaneously, these phenomena make the oft-repeated theory that all RE is local (and thus national housing bubbles can’t exist) very dubious. Maybe David Liar and the rest of the Realtwhores actually believe this pap and don’t understand the global liquidity/credit bubble connections that tie these markets together. It sure seems as if all RE markets are inventory spiking at once and it seems likely they will all crash on the rocks together.
I was thinking *exactly* the same thing yesterday. Everywhere you look you see inventory tripling, Ben has been posting reams of articles from every corner (and the interior) of the country indicating this and yet its claimed RE markets are local. And this massive inventory buildup happens more or less SIMULTANEOUSLY EVERYWHERE. But I’m sure its just a coincidence…
LMFAO!!
If that’s in Natomas that is MY house…had to give a 60 day close (6/30)…wish me luck!
“…wish me luck!”
I do, and I hope you don’t have to bring a check to the closing!
Oh S#@t it IS in Natomas…sorry dude! But smart move jdog for getting out while the getting is good because if you’re seeing what I’m seeing the time bomb is ticking and it’s getting down to the 1:00 minute mark.
what affect does knocking off 10% of a 550K home do to a monthy mortage payment?
assuming nothing down on loan.
550k>>Monthly $3476
500k>>Monthly $3160
450K>>Monthly $2844
There is $316 reduction or 50k off the price. Interest rate=6.5%
Also don’t forget that lower prices = lower property tax assessments and (I imagine) lower home owner’s insurance premiums.
One more piece of anecdotal evidence? I tivo a couple of the “Flip this House” “Flip that House” type of shows. It seems that lately, the only shows they air are all reruns! Could mean nothing. But it could mean that not even flippers are stupid enough to get into the action at this point (or at least in SoCal where most of the episodes seem to be filmed). Anyone else notice this?
Which shows are building up on your DVR? I would love to record a few on my Replay DVR.
Neil
I think the title actually was, “Flip this House” or something like that. And this is one where they triumphantly accounce 100s of Ks of profit based on nothing but the opinion of some early 20s tenderfoot real estate agent. The last one I saw was one from this singer who flipped her first place and was “hoping to do many many many more of these” going forward. =)
I’ve watched this show a few times. They don’t always disclose whether or not the house sold, and sometimes when they do, they only mention an offer. At least they are risking their own capital and making improvements to the properties.
Personally, I like American Chopper better.
It also seems like many of the newer shows don’t say what the properties ultimately sold for, only what some real estate agent thinks it could sell for. Also, “Property Ladder” seems to be off the airwaves. That show seemed to have the biggest flipper bozos of all.
But now the # 1 show is DEAL or NO DEAL
I just drove from San Diego to LA then up through Silicon Valley and San Francisco on my way out to Sacramento where I stayed with my sister before flying to Las Vegas. That’s where I am right now staring out of my window at the MGM Grand looking at those two huge condos being built. How’s that for a Bubble sight seeing excursion?
Anyway, my sister is an A&E, TLC, Bravo home related Tivo nut and forced me to watch and episode of “Flip This House”.
This particular episode took place in Greenville, SC. This girl “Ginger” who works for Trademark Properties as an “investment coordinator” bought a sight unseen fixer-upper for $70,500 at auction. She said her ‘gut’ told her it would be a good investment and would just need a slap of paint and some new appliances. A real easy ‘in and out’ job.
When they did the walk through however, to their horror they discovered a huge amount of mold and rot that had to be dealt with. Then they realized that the roof was collapsing and needed to be replaced. Then they ripped up the floor and discovered an army of termites and on and on. To top it off they turned it from a 2 bdrm to a 1 bdrm for some reason. Their cost over-runs totaled 30K.
Then Ginger actually tried to sell this POS to her girlfriend for $130,000 who just moved back into town. Needless to say when she toured the house, she looked as if someone was holding a turd under her nose. She ran.
Of course they never tell you it if ever sold and so I decided to look it up and found that it’s actually STILL for sale as of today (the show aired in May ’05 so figure April of last year when this was all going on) It’s still listed at $129,000. They mention the show in the listing as if the celebrity of the property will get someone to overlook the dump to price ratio.
For your viewing pleasure: http://www.eddykicker.com/moredetail.cfm?id=1097435
It was the most satisfying hour of TV I think I’ve seen in quite a while….
Wait till you see the show where Ginger buys a 500k plus fixer upper house to flip .The house was vacant for 5 years and ended up being full of toxic mold and rats . The group ended up putting 450k into this house and I think they put it on the market for over 2 million . Never found out if they sold it or not . I get sick of watching Ginger running around in her car with her dog thinking she is a big wig .That investment group just has alot of money to blow .
That was the funny part. Ginger spent so much time going to baby showers and buying puppies that when she ended up finding the time to actually vistit the job site she would get mad at decisions that were made over her head due to her absence.
Right , can’t wait to see the next POS they buy.
Trouble at Dreamland where everyone want to live.
This is in Camarillo , about 30 miles north of LA, along 101 freeway in Ventura county. Coastal city, Nice weather, low crime…
Troubled owner/flipper: Source Ziprealty.com
Here is one owner/lender selling at a loss. Appears to be a classic SHORT SALE. (Being sold for less than owed)
It says on the listing :
“Drastically reduced! ( offer must be approved by lender)”
5/24/05 Purchased for 683,500.
six month later up for sale at profit :
12/13/05 listed for 770K
1/19/06 reduced to 760K
3/23/06 reduced to 720k
4/19/06 reduced to 699K
5/17/06 reduced to 649k!
No sale yet…YOY sale came down a big 41% last time sales volume data was released. Doubtful it will even sell at this price…
Zillow.com still has Estimate of 739K , ($665,849 - $806,417 ). What will happen to comp when this sells:-(
http://tinyurl.com/q7q3g
Oh, it also says: “Present All offers”
Someone saw the writing on the wall and wants out….
Saw it LATE….Only if the present owner showed as much judgement when buying this home. Apart from a larger lot size everything looks pretty uninspiring for the price paid.
Recently I have seen several like this (selling at the same price of purchase in 04, mentions of “approval by lender”, “shortsale”, “court pending, need 10% down”) in Pasadena and Altadena. One case in Altadena (La Vina community, 1M and up asking prices) is lowering comps and current asking prices by at least 100K.
Maybe some 03/04 ARMs are resetting?
I think settling for 2004 prices is moving from DENIAL to BARGAINING: Dear God just let us get out of this for what we paid in 2004, taxes and closing cost be damned. We promise we won’t do it again.
Pre-bubble is around 1999
The tech area’s RE became bubbly with the stock options craze, circa 1996.
OT, but was this the one that was heading towards foreclosure, or another one?
3715 N HOLLINGSWORTH RD, Altadena, CA 91001
“Fabulous opportunity to live in la vina: great view site, popular stehman plan, five bedrooms or four plus media/family room upstairs and large family room downstairs adjacent to kitchen with wood floors, stone counters; four and a half baths; dining room; formal entry with curving staircase; attached double garage. Probate sale subject to court confirmation: 10% deposit required.”
1714 ASBURY DR, Pasadena, CA 91104
“Fixer…In forclosure…Subject to short sale approval by lender…Your opportunity to be the next proud owner of this nice spanish style home with a sparkling swimming pool. Huege double lot 17,288 square feet! Possible lot split? Please verify with city. To be sold in as is condition.”
Minor nit from someone who lives there. Camarillo is west of Los Angeles.
a bit ot, let’s see if zip/phoenix maintains its pattern of leapfrogging to the next 000’s each friday. that means tomorrow’s update will put phoenix at 48,000+
New question:
When the bear market does come home to roost… What do people estimate the *monthly* decline in median house sales price will be in the bubble regions?
My best estimate: 2.5% (yes two point five percent per month or ~26% drop in price per year (97.5%)^12=73.8%
Neil
Last time in LA (1990-1997), it was anywhere from 0% to -10% for the full time (except for a ‘blip’ to around positive 3% 1995-1996). That’s 7 years of mostly negative for all of LA county.
“Total housing starts in the first four months of 2006 dropped compared to the same period a year earlier in most Central Valley cities. Bakersfield, Madera and Visalia-Porterville were the only exceptions.”
This is why the central valley is destined to crash: Builders like Centex and McMillin keep building in cities like Visalia, yet I will tell you first hand that prices are nosediving in most neighborhoods (my old one now has comps $50K lower than those from last July).
“But national housing consultant John Schleimer says now is the time to buy. In April, 2005 4,423 homes were for sale. By April 2006 that number hit 11,344. That’s an increase of 156 percent. The combination of housing glut, higher interest rates and slow sales means good deals ahead.”
I don’t get it. So, now is a good time to buy, even though better deals are ahead? It is amazing that these people can’t even keep their stories straight, talking out of both sides of their mouths at once.
Someone on this blog remarked they were tired of all the euphemisms associated with this housing bubble:
“soft landing”
“balloon not bubble”
“a plane landing”
etc, etc, etc,
It is a real estate crash instigated by easy money, greed, and corruption. The resultant correction will be priced accordingly.
“Developers are not ignoring the housing glut and the rising interest rates…”
…and don’t forget the ARM reset factor through ‘06 and ‘07. I agree we’ll see some “good deals ahead”, but the best deals won’t be had for at least a few years.
Fear has very large eyes. — Russian saying
Right now the great mass of herd creatures appear to underestimate the magnitude of the Perfect Storm bearing down on the RE market. Just as today, June 1st, we crossed into hurricane season, I think the shift in popular (seller) psychology from greed to uncertainty is well underway. Next stop: FEAR, that will quickly turn to a panicked stampede for the exits.
Don’t buy till you see the whites of their eyes!
I hope you’re right, I guess, although I’m not so sure about the economic implications of a housing implosion. I’m beginning to have serious doubts that the prices are going to come down as much as a lot of us hope.
Could go either way. I can see arguments for both sides - where prices plunge and where they just lurch down slowly. There is no such thing as a permanent bull market and you can bet based on graphs that this explosive housing trend is petering out so the question remains: to plunge or not to plunge. I feel similarly to you, wondering if by Oct this year we’ll see 5% price reductions and be making excuses for why its creeping downward instead of plummeting just like the realtor cheerleaders are today. Time will tell.
The absolute only factor that can keep prices from plunging is increasing amounts of liquidity, and all indications are that this has FINALLY started to dry up, both here and abroad. Economists can argue until they’re blue in the face that rising incomes will support the higher prices, but that’s a crock foisted on us to keep the populace from panicking. Prices will revert to the mean — the only question is how long the process will take.
Panic begains July 4, 2006. Who is going to look at houses when you could be at the beach, the mountains, the lake, having a vacation? It’s not like there won’t be a lot of houses to look at when you come back. I beliweve the Pulte’s, KB Home and Toll
will really cut the prices big time on all remaining inventory, and
prices will be heading back to 2004.
Panic begains July 4, 2006. Who is going to look at houses when you could be at the beach, the mountains, the lake, having a vacation? It’s not like there won’t be a lot of houses to look at when you come back. I beliweve the Pulte’s, KB Home and Toll
will really cut the prices big time on all remaining inventory, and
prices will be heading back to 2004.
Panic begains July 4, 2006. Who is going to look at houses when you could be at the beach, the mountains, the lake, having a vacation? It’s not like there won’t be a lot of houses to look at when you come back. I beliweve the Pulte’s, KB Home and Toll
will really cut the prices big time on all remaining inventory, and
prices will be heading back to 2004.
I like the saying. Prices will come down a lot in the stampede. Few people have thought about the “logarithmic” effect of declining sales AND increasing inventory. Here in Florida, sellers and almost-sellers seem to be noticing it. Here and there, I see price cuts of 20-25%. Soon, I believe, that will be more common as those who can, will bail. The rest will be chum.
I don’t know about all of you, but I’m seeing less and less of the small $1-$5K reductions, and more of the $10-25K reductions (houses between $650K - $1MMish). Time between reductions seems to be shrinking too.
The sellers are getting slightly smarter…increasing from an effective IQ of 20 -> 35.
Off topic, sorry. Can someone explain what this author (Kurt Richebacher) means when he says: “lenders capitalize interest rates”. How do you do that?
“Total domestic indebtedness in the United States now amounts to almost $40 trillion. An assumption of average interest rates of 5% is certainly very much on the low side. Still, it implies annual financing costs of around $2 trillion. Given last year an increase in national income by $628 billion, it should be clear that at present debt levels, current financing costs vastly exceed the increases in current income. To meet the difference, lenders capitalize interest rates, adding the sums to outstanding credits.”
It means your low interest rate is costing you additional balance on your loan.
I believe he is referring to negative amortization…adding the unpaid accrued interest back to the outstanding principal on the loan…but I could be wrong.
Mrincomestream wrote: “Geez, this is a tough crowd”
Now I have to clean the damn coffee off me keyboard!
Haven’t seen this in print yet but maybe someone has. On the radio they announced that a major insurance carrier was pulling out up in the state of Washington. Perhaps it was only referring to earthquake insurance. The on air report quoted ‘this was due to the large losses due to hurricanes along the gulf coast.
“A major Washington insurer will stop offering coverage for earthquakes in the state, a decision that will affect about 50,000 property owners.
Allstate insures nearly 250,000 homeowners in the state and about one in five has quake insurance.” This is a result of insurers rethinking their risk factors after the likes of Katrina. I smell the rise in insurance policies around the country…….gas going up, utilities going up, mortgage payments going up, repair costs going up and why not, everyone deserves a piece of the pie.
combination of deteriorating private market and soaring reconstruction costs sending insurance through the roof here in FL, that’s for sure. I’m shopping for a new policy now that my carrier is being put in receivership due to cane losses from 2004 and 2005. Only small companies doing business, and the cost ain’t cheap. Looking at $2,500 - $3,000/yr. for $375,000 in converage … and this is on a new construction home built in 2004, so that includes all the discounts you get for being up to latest hurricane resistant codes. Older homes are even higher. Yuck.
HIVtv
all those shows are from early 05 now
bid high,multiple offers =ROFLOW
that’s funny…I’m watching “HouseHunters” right not, switching from local news (big fire in AZ)…there was this woman who bought a vacation home (it was overlooking a freakin’ parking lot) in Oahu for half a mil, just thrilled to have it….obviously filmed last year….(I can tell by the bangs Suzanne Wang sports). Hilarious.
Suzanne Wang = Jar Jar Binks
OT…hope Ben’s ok! This is in his area….! This is report from Tucson, but the fire is in Sedona area…
http://kvoa.com/Global/story.asp?S=4978415&nav=menu216_2
Yeah, I just got back from taking pictures of it. It started in Village of Oak Creek, in Jack Canyon. The smoke is drifting all the way to Flagstaff now. I understand at least one house burned, but one guy said it was more. Supposedly, it began in a subdivision and spread into the forest. This area has only had a half inch of snow in the past six months. Even the cactus is shrivelled up. If it gets up on top of the Rim, into the Ponderosas, it will be a whole different animal. A realtor mentioned it could be bad for business. In your link they called it the ‘La Barranca’ fire. That is a project of million dollar homes+. I also heard they were stopping people from driving in, even if they lived there.
Ben, I’ve said on this blog numerous times that the fire danger here will completely unravel what is left of the market. Prescott had a fire today, east of town, in the forest…tankers got right on it, but it was scary….I fully expect to see a significant fire here before monsoon season…if it comes.
I’m glad you’re ok! How sad for the people who are losing their homes.
and I’ve got a report from Phoenix…those are million $$$ homes burning.
I bet the fire started in a vacant house . That’s another reason vacant houses/ghost town projets are not good .
No smoke nor smell right now. This wasn’t Oak Creek, a few miles away.
No, it was some FB who torched the house that won’t sell for the insurance money.
The Biscuit is a fire disaster waiting to happen.
Ponderosa Pine and Pinyon Juniper forest on 3 sides and decimated by bark beetles.
If I were to build there better have a fireproof panic room.
That or go out to Prescott Valley or Chino Valley.
I’m surprised no one caught this. I wonder how is it that Palmdale is down and Lancaster is up. In my mind it’s all the same $hithole. It’s like saying Venice is up but Marina Del Rey is down. I don’t get it. Garbage in garbage out probably.
Also couldn’t make any sense of this:
Palmdale home prices retreated for a second month, narrowing the Palmdale price advantage that has persisted since the late 1980s.
Um, if the prices came down, didn’t the price advantage widen, not narrow? Granted, it seems very strange to use the words “advantage” and “Palmdale” in the same sentence, but no matter.
Typical realtorspeak. High prices = good, therefore advantage, low prices = bad, therefore disadvantage
Read that report by dailynews.com from Ben’s blog which shows sharp YOY increases in home median sales prices in a number of California Desert communities. The reason for that is that the prices in these out of the way desert boonies wer so low to begin with that, for example, A house in California City which was priced at 100,000 and is now listing ay 150,000 would of course show a 50 % YOY. Ditto for Barstow. These desert burgs are so way out of the way from the LA coastal basin that having them listed on this fishy report showing the communities with the highest YOY RE price gains in Cal is special pleading. Everyone with any brains knows that, as the bubble slowly(or rapidly) unwinds/declines, these isolated desert communities(and you can include Palmdale and Landcaster) will be the first areas to drop in a RE bubble pop.
Rosamond was cited in this report. It is a small desert community located near Mohave about 3 hrs drive from LA near Edwards AFB. Does this have any significance to the overall SCAl RE market?
Ridgecrest is out past California city, maybe 3.5 hrs drive from LA along route 395/14. It cannot be more than several thousand souls and 1000 homes in that isolated area. And as soon as the RE market drops, it will be another tumbleweed bust town.
Barstow has seen some growth recently as nearly everyone who goes thru there on way to vegas would notice. It too will feel the full brunt of the RE debacle.
Ridgecrest. Only the largest naval air base on the planet.
I used to be stationed at the Lockheed plant in Palmdale in ‘97-’98. You couldn’t hardly give away a house at that time for any price. Neighborhoods were half empty and abandoned homes were burglarized for their appliances regularly.
The meth movie “Salton Sea” with Val Kilmer was filmed partly in Palmdale and it wasn’t a coincidence they chose that city.
remember going thru Yucca, joshua tree, 29 palms and other desert communities out in apple valley near Joshua tree N.P back in early-mid 90,s and seeing a ton of homesteaded properties on 1/2-1+ acres lots, really attractive land right at entrance to park with nice attractive homes/ doublewides . There were foreclosed, unoccupied, for sale or for lease/rent properties and units all over and units+land were selling for less that half of their value. The Desert communities became depressed ghost towns.
That Google trends is kinda cool…..
http://www.minyanville.com/articles/index.php?a=10447
“But national housing consultant John Schleimer says now is the time to buy.”
Forgive me but Jesus H. Christ….at first I thought the majority of the se guys are shills, but I’ve changes my mind. The majority of these guys are STUPID. 4,000 new RE agents in CA in 2006 and lord knows how many new “investors”….I personally know about 50 of each.
Trust me, I’m more than content to just sit back and count my $$ made of this whole bubble…but it’s really hard to reading this garbage day after day. I just wanna grab these people and shake some sense into them…yes they’ve let greed take over but it’s a natural human thing to do.
I just watched a John Beck infomertial for buying tax sales for pennies on the dollar. It looked good, then I googled him and found this.
http://www.infomercialscams.com/john_beck_free_and_clear.htm
yup. know someone that bought his book. some worthwhile info, but very repetitive, poorly written. One of those where they make it thicker so that you feel like you’re getting your money’s worth.
The tax sales haven’t been a bargain for the last 3 years or so. Went to a Riverside Co. one about that time. People buying EVERYTHING often sight Unseen. I’d checked many out before hand. Watched sheeple buying 10×10 triangles for 50k. Felt like I’d come from Mars.
2001– went to the San Berdo ‘in-person’ auction. Masses hadn’t caught on at that point. 5kft2 lots in arrowhead/crestline for $300-1000. Treasurer had difficulty getting bids.
Can’t wait for those opportunities to return. Remember, when cash is trash, watch out!.
Veronica
Low risk means you don’t beat inflation.
your $200k+ CD lets say is at 4%/year which is about $700/mo interest.
However, if inflation is 6%/year (many think it is over that and climbing) your money is worth $1050 less every month. The net being -$350/month. Your losing $350/mo. spending power.
You must take some risk to stay ahead. Try diversification into investments that maintain or do well in inflation environments.
It aint easy managing money, especially our own. Good luck.
This was one hilarious thread. Great work folks. Now, the fun down the rollerccoaster hill (and the blips like this idiot saying now is the time to buy is the upside down loop). ENJOY the ride.
Watching your $500K purchase, built by $7 unskilled and undocumented workers slide down the hill (literally and/or figuratively) PRICELESS.
I am up to have a new TV show. F%CK THE FLIPPERS - see which ones have lost the most money, and measure the decibel level of the audience laughter at which one had the most stupid experience.
The Lennox Shrill is back, advising ARM FBers to REFI with him (again, the biggest no brainer in the history of mankind) to his fixed loan (probably extremely toxic).
The news is going to have a story about houses falling down the hill in the East Bay (SF bay area).
18 yr old houses falling apart due to moving soil
OT - How to finance your flipping career using YMM (Your Mom’s Money):
http://tinyurl.com/pgna4
“my mothers house is owned, no mortgage, worth 300-500K, she is in nursing home and my sister, brother and I would like to use the equity as our personal bank…we would like to self finance some small flips all cash”
AP 6/2/06 Terrorists Strike At NAR
In what appears to be an act of terrorism, planes were flown into the home of David Lareah as well as into NAR headquarters early this morning. Witnesses at one of the the scenes said the plane looked like a “corporate jet”. Preliminary reports say nobody was hurt. As a precaution, Lareah and his staff have been taken to an undisclosed underground bunker.
In the meantime the NAR quickly drafted 500 plus pages of proposed emergency legislation destined to limit access to RE data to those “with a need to know”. If approved, the new legislation would immediately cause all consumer RE data websights (e.g. Zillow) to be shutdown until “the war on terror is won”. Said Suzanne, a NAR spokesmodel, “it is a good time to buy and we have the research to back it up. For the sake of NAR security, you’ll just have to trust us from here on out. We are your friends.”
In related news there were accusations that the NAR was “hiding behind terror” as a way to push their own agenda when a few pro consumer legislators found a proposal to remove the word “bubble” from the English language tacked on to a new bill which presumably was created to “protect our children from onlinepredators”. Lareah could not be reached for comment on what some say is a blatant attempt to keep the public in the dark as to what is happening with a worsening RE market and create a “RE priesthood”.
heheh
Now! Why now? What is soo great wiht these ridiculous “bargains”. The now! moment will arrive when the prices crater 30 to 40%. And in certain hot markets minus 50% will be the good entry point. Now is not arrived.
this will amuse you!
Californians Worried About a Housing Bubble
If you live in California, and there’s a good chance you do since it is a big, fun state with the largest population in the country, then you are worried about a “housing bubble” … at least according to Google “Trends.”
Google Trends is a beta version of a service that tracks broad search trends and patterns.
If you type in “housing bubble” for example, as I did, then you can see a chart that shows the search volume as well as the cities from which those searches originated.
The chart below shows a definite spike in the search for “housing bubble” since April.
Also, note that the top cities searching for the phrase “housing bubble” are all in California.
To be frank, we believe Google Trends is an amazing tool with many applications for financial markets, but we have no idea what those applications are.
1. San Jose
2. Pleasanton
3. San Francisco
4. San Diego
5. Irvine
6. Los Angeles
7. Sacramento
A couple of weeks ago Rancho Santa Marguerita was in the top 7.
RSM got completely hammered in the early 1990s. They couldn’t give them away.
That’s why I can’t understand why the 4 condos for sale in our neighborhood think they’re going to get 350-500k. RSM was a cheap alternative to Mission Viejo and while they’ve built a few more shops since the early 90s, it’s still inconvenient and requires the toll road to get almost anywhere. This summer is already hot. I don’t see it convincing any new buyers to consider RSM,not when you can buy in Laguna Niguel for the same price.
I think San Jose (where I live) is full of people like me who would eventually like to buy a house, but cannot afford the ridiculous prices being asked for by sellers.
There is a duplex near where I live (95118) that has been on the market since February for $865,000. Total income? $2400/month. Seller has not lowered his price since February. Unfortunately, the bubble has not yet burst here. I have a feeling I will be waiting until 2010 or later to buy.
Just a sidenote om new tract development off 405 in Irvine hills. Looks like OC going full blast on developing the formerly empty area south of culver blvd all way to lake forest. Sandcanyon and hwy 133 will soon be the trunks from which urban development will branch out. Lots of building activity going on in the area where the 405/5/133 intermingle(el toro Y). Homes, commercial buildings, condos, mixed use,all going up. Some hi-powered companies springing up off alton /barranca parkways(realtytrac has their office here).
I have been to a just completed h-end SFH/condo master=planned tract in turtle rock off shady canyon-all million dollar homes. There is no such thing as affordable housing in South OC except for $500,000/600,000 mini- condos.
There are unfortunately still too many RE mortgage corporations and lending operations in S OC.
peter– clarification— Shady Canyon is where the LOTS are 1M to start. Irvine Company has been very smart at rolling out their developments. When they built Turtle Rock, it was sold with the views of those open hills (which they own)-very nice. That was 25 y ago. Then over the years, they build in patchwork on the edges, selling more views.
One thing obvious over the last 15 yr–the push upward. All of the new apt/condo buildings in Irvine are now at least 4 stories high. Greenspace? gone. Costs too much.
I like your description of Cal as a big, fun state. Funny, ironic, stated with brevity.
There is of course some dark edges in LA(illegal alien infestation, some gang activity, freeway road-warrior wild-west shootouts, middle-class burbs becoming tijuana slums, 4-hr long 2 mile/hr Sigalerts due to overturned big-rigs ) but why bother. We want to keep up the illusion of California as this sun-spashed, french-Riviera retreat, Mediterranian sun-soaked oasis brimming with movie stars. It helps to keep the Re bubble prices propped up in Cal.
Of course out in the boonies of Scramento and Riverside/San Bernardino they only ride the coattails of the skyrocketing San francisco/newport beach/Santa Barbara over- priced Markets.
Another nail in the coffin for propping up housing prices may be on the way. The IRS ruled that “charities” that funnel money from the seller to the homebuyer are a scam that inflate housing prices and lead to higher delinquency for FHA loans.
http://www.washingtonpost.com/wp-dyn/content/article/2006/06/01/AR2006060101969.html
Don’t know if anyone posted this:
How low will it go?
From unrealistic sellers to climbing inventory, what’s next in the post-boom era
“The housing market is cooling in New York. It’s also leveling off and going sideways. And ebbing. In fact, the market may be simmering, swooning, and trending downward as well. But it could simply be normalizing, too. It depends on whom you ask or read. Or overhear on the sidewalk.
“The Real Deal this month examined changing market conditions from a number of vantages, including the growing amount of properties sitting on the market, hiring by brokerages, and how agents are dealing with sellers still hanging on to the boom market of early 2005.
“The results were often surprising. Townhouse inventory, for example, in the last year has increased faster than condo inventory, unusual given the amount of condo construction in the city. Co-op inventory is growing modestly by comparison. And the still-high price of apartments is allowing brokerages to keep expanding even as the market cools, which some view as a tactical mistake. Read on for more.”
Inventory spikes, but not for all housing types
Property market cools, even if broker job market doesn’t
Brokers manage seller expectations
Any adjective works, as long as it’s not “strong”
Go to chart: More apartments sit unsold in Manhattan
The CBS Sacramento video says that inventory had gone up from 4,423 to 11,344 and illustrates this with a “bar graph”. Impression from the bar graph is that 11,344 is about 25% higher than 4,423.
I hate fake graphs.
“Statewide, the 10 cities and communities with the greatest median home price increases in April compared with the same period a year ago were: Barstow, 60.9 percent; Delano, 56.3 percent; Taft, 53.8 percent; Lake Forest, 44.7 percent; Merced, 38.5 percent; Ridgecrest, 37.1 percent; Inglewood, 33.5 percent; California City, 32.7 percent, and Indio and Banning, ties at 30.4 percent. ”
Just to comment on the communities mentioned in the article from dailynews.com. Banning has seen some new housing tracts sprung up along the frwy 10. It is halfway point from Riverside to palm springs, basically a stopover along the San Gorgonio pass. Nothing out there except the Indian casino and Gigantic Windmills. That 30.4 % YOY will disappear very fast as banning has no jobs, only the tourism stopover traffic to sustain the RE home prices.
Ditto for Barstow, which has seen a rapid increase in new home tracts and some urban growth recently. It gets its few jobs from the traffic heading out to Vegas but other wise has no other basis for a continuing escalation of RE prices. Not an especially attractive place to own a home unless you like 100 % blistering hot sun 8 months of the year. RE home prices were probably rock bottom to start with so the 60.9 % yoy is a misleading indicator: if med price was only $60,000 last april and a few newly-built homes are listed for $100,000 that would show a 60% increase.
California City is so way out there(just past Mohave) and isolated off the beaten tract that any RE appreciation gains are a temporary mirage in the desert.
Lake forest out in S. OC is located adjacent to some recently-built fast-growing hi-tech industrial Parks and the RE yoy gains are allowing it to catch uo to the average prices for Aliso Viejo, Laguna hills, ect.
Inglewood is non-descript and pedestrian but is situated close to some high=end Jobs sectors in Southbay/LAX and the LA westside. It is plain-jane(nothing interesting in that city and some ugly sections) but people will look for homes there just to be close to the hi-end jobs located within reasonable commute distance. A few places such as Ladera hgts and Baldwin hills on the hgts overlooking LA Cienega blvd are isolated livable oasis’s but the supply of SFH’s very-very limited, Still it is a bit surprizing that plain, non-descript Inglewood showed a 33.5% yoy from April 2005-2006 ,
Californians Worried About a Housing Bubble
“If you live in California, and there’s a good chance you do since it is a big, fun state with the largest population in the country, then you are worried about a “housing bubble” … at least according to Google “Trends.”
Dear TxChick. I enjoy your description of Cal as a big fun state. The best fun is located about a hundred miles out of LA in any direction! The best fun beachs start just north of Ventura( all waters from ventura to San diego a highly toxic stew).
I have the best fun after i have faught 3-4 hrs thru illegal-alien infested, traffic choked LA Metro basin to get to the city of Mohave, after which it is all fun all way to the East side Sierras.
Cal was a big fun state 30 years ago when i could just jump in my truck and within one hr be hitting the trail in the San Gabriel mountains or swimming in a still pristine shoreline/beach in Malibue or Laguna beach/Dana point.
Today LA county is an increasingly illegal-alien infested overpopulated, traffic choked nightmare of 10.2 million nerve-wracked souls and rediculously overpriced homes.