Frantic Bidding Has Quieted Down Significantly
The Los Angeles Times reports from California. “Buyers signed fewer contracts for homes in California last month. Pending home sales fell 5% in August from July, the California Assn. of Realtors said Monday. The group’s pending-sales index dropped 9% from last year. The index represents contracts signed but not yet closed — a sign of future market activity. ‘Rising interest rates over the past several months at the specter of a tapering of the Fed’s stimulus program sent buyers to the sidelines in August,’ the association’s chief economist, Leslie Appleton-Young, said in a statement.”
The North Bay Business Journal. “The North Bay has seen housing prices improve markedly over the past year. The San Francisco Bay Area as a whole has seen median home prices rise 31.7 percent in the 12-month period between August 2013 and 2012, according to DataQuick. In places like Marin County, values in some central areas have nearly risen to levels seen before the recession, said Blaine Morris, president-elect of the Marin County Association of Realtors. ‘Everybody who bought a house in 2010, 2011 feels pretty smart right now,’ he said.”
“It is a trend that, along with an uptick in interest rates, has given pause to some prospective homeowners and caused a period of frantic bidding to quiet down significantly, said Bill Facendini, president of Terra Firma Global Partners. ‘I think the consumer is taking a step back,’ he said. ‘Everyone is still wanting to make a good business decision, even if it’s their home.’”
The Merced Sun Star. “Merced County’s roughly 37 percent bump in housing prices in the last year is a sign of an improving housing market, according to some experts. Los Banos has seen a bump of about 35 percent in the past year, DataQuick said. Delhi’s roughly 43 percent increase in home prices during the last year is the county’s highest. Terry Ruscoe, owner of Merced Yosemite Realty in Merced, said a ‘vast majority’ of his clients come from the Bay Area and Los Angeles. A big draw for those investors, he said, is their children attending UC Merced.”
“Ruscoe said investors don’t see those levels dipping again. ‘Parents come in and they want to invest in the area, because the prices are so low compared to Los Angeles, Bay Area, San Jose,’ he said.”
“Los Banos’ proximity to the Bay Area and connection to Highway 152 has made it a bedroom community for a few decades. So, the low home prices have attracted buyers, according to Larry Borelli, owner of Borelli Realty Services in Los Banos. ‘They know that right now it’s pretty much at the bottom, so they just buy, buy, buy,’ he said.”
The Sacramento Bee. “Bay Area investors and long-distance commuters are hitting the road again and bidding up home prices in the Northern San Joaquin Valley. Stockton has seen its median home price rise by 30 percent in the past year, according to DataQuick. Tracy, a burgeoning bedroom community for Bay Area “super commuters” in the boom, experienced a nearly 40 percent gain in the median home price from August 2012 to August 2013. And Lathrop saw its median home price soar by nearly 50 percent.”
“‘Especially Tracy, Lathrop and Manteca have really felt the Bay Area influence coming out,’ said Aaron West, an agent with PMZ Real Estate in Modesto. At first, the buyers were professional investors scooping up cut-priced homes 10 at a time, he said. Then came some Bay Area residents who wanted to buy one or two rental homes. Now, with prices rising fast in the Bay Area, homeowners are once again driving across the Diablo Range to seek out homes they can afford, he said.”
The Union Tribune. “After Milly and Arnold Lee tied the knot in 2008, they settled into a two-bedroom, two-bath apartment in University City where the rent was $1,450 per month. After annual increases, the landlord now charges the couple $1,800. Arnold Lee, 34, a mail carrier, and Milly Lee, 33, a hospital administrative coordinator, said they are looking to spend $400,000 to $475,000 for a three-bedroom, two-bath home possibly in Escondido, San Diego or Mira Mesa.”
“Experts think it’s also a good time to buy because housing prices will only continue to go up, thanks to the rent increases, shortage of supply and growth of well-paying jobs. ‘Our rent has gone up every year,’ Arnold Lee said. ‘We need to capitalize on low interest rates. We need to make an investment. One of my dreams is to own a home.’”
The Santa Cruz Sentinel. “Jamie and Kyle Lawler have given up on Santa Cruz. The couple, married a year ago, tried to buy a home in Santa Cruz, but after making 16 offers and striking out each time, Jamie decided she’d had enough disappointment. She left her job with an email marketing company in Sunnyvale and took a job in San Luis Obispo. As of August, the couple was in Shell Beach in North Pismo. ‘We know that a lot of the houses being sold were strictly to be remodeled and either sold again, or rented out to the UC Santa Cruz student population,’ she said.”
“The couple is among the first-home home buyers who got caught when the median sales price shot up from $449,000 in February to $585,000 in March, turning the buyers market into a sellers market. The median price has been at or more than $600,000 ever since. Lawler said the 16th offer was ‘the one where I thought we had it for sure. We overbid, wrote out the appraisal contingency, if the house appraised for less that what we offered, we would pay the remaining in cash,’ she said.”
“A friend of hers who knew the sellers put in a good word. None of it made a difference, so she asked herself: Why stay in Santa Cruz? ‘I love the area, the people, and the vibe,’ Jamie said. ‘But did I love my three-hour round trip commute and knowing that it would take my whole paycheck to go toward mine and my husband’s mortgage?’”
“long-distance commuters are hitting the road again and bidding up home prices in the Northern San Joaquin Valley…”
In my experience, spending the majority of one’s working life slaving away Monday through Friday and beyond to barely make the monthly debt service and the car payment is a sad predicament. It is made worse by the insatiable hunger of a suburban house for grooming and projects. It is made absolutely insane by a two or three hour drive every day just to get to the cubicle. It is a horror during those inevitable times when the job or the management is distasteful, and you are convinced that a misstep will make your whole world fall to pieces.
I don’t know why so many people voluntarily lead these lives of “quiet desperation” as a slave to the bank and a pile of 2×4s. I can’t explain why I did it for so many years. I can say looking at it from the outside now that there is a freedom unimagined in being out of debt and the long commute.
We lived in Cal for 33 years, then one day we just said we had enough.
By far the best decision we ever made, a beautiful state like Cal. wrecked by years of uncontolled growth, poor zoning, socialist mentality, a overwhelming sense of entiltiment etc.
It also is one declared major disaster area year after year, always causing a major expense to our ecocomny.
I wish it would become it’s own country?
Where did you move?
Colorado
People in Ca are crazy. Lots of people without money thinking they can live like those with money. The smart ones eventually realize it and leave. The rest continue to live like too many rats in a cage.
Last month I had a couple of days where I had to drive two hours each way for work. It’s exhausting, and would have been hard even if I had been a passenger. It would be close to impossible for me to commute like that on a daily basis, and I don’t care how much I loved the job or my house.
This isn’t just an American problem. When I was in Bogota last year I asked the husband of one of my in-laws where his office was. Referring to his apartment, he answered “right here,” because the traffic had become so bad that getting to work was an ordeal he no longer could endure.
I have read stories where commuters in China are stuck in traffic jams that last for days. If you look at Google images, it’s a wonder that the drivers aren’t driven insane.
” It is a horror during those inevitable times when the job or the management is distasteful, and you are convinced that a misstep will make your whole world fall to pieces.”
I’m doing a gig for an army contractor, and I see those guys all over the building… growing into the walls like the prisoners of Davey Jones’ locker in Pirates of the Caribbean.
Makes me wonder if that guy that shot up the navy yard did some of those people a favor.
If you drive through Stockton on a week day at four o’clock in the morning then you will get to see hundreds - maybe thousands - of cars heading west - heading toward the Bay Area.
According to the map San Fran is 85 miles away, and so is San Jose.
Get an early start (think four in the morning) and you will beat some of the traffic. Most of the traffic you will encounter are from other commuters that also want to beat the traffic.
I can’t imagine what the traffic would be like at, say, 6 o’clock.
Which means the highway from Stockton to the Bay area will eventually have to have a few lanes added to it, which means (oh, joy!) ROAD CONSTRUCTION!
the altamont pass is a joy.Everybody coming over the hill just to get a piece of the dream. traffic is a nightmare on that road. i-80 from sacramento to the bay area is also hell during commute times.
And shoppers for housing in Sac and Stockton do their shopping when?
Well, if they have to work during the week then they would most likely have to do their shopping during the week-ends - and a week-end is the time of the week when the traffic is at its lightest. And if they do their house shopping during the week-ends they they are going to get a very distorted view of just what traffic will be like during the work week, and reality will expose its ugly head only AFTER they commit to buying their (choke) dream house.
Which means one more car will be clogging the roads.
But it doesn’t stop there! The excited new buyer will become a shill for houses in Stockton and Sac and will act intice other buyers to make the same sort of commitment. He will do this because he is a human being and this is how we are wired. Deep down he may have many regrets but he will not allow for others to know this.
Cars are not the long term answer. As much as I don’t like high priced fuel, it helps keep traffic down. If fuel were $.75 per gallon, we would have gridlock everywhere.
Automated cars that could draft off each other might be a viable solution.
Don’t know if I would rather deal with normal LA traffic or a 4am commute from Stockton to the Bay Area. Both sound like hell on earth.
I see where some counties in N Cal want to succeed from the state? Prices in all of the state continue to amaze, there is little quality of Gov’t or life, it gets worse everyday for the Californians.
The Bay area and San Jose are totally out of control, along with Orange County and San Diego, they just keep asking higher prices and the folks keep buying.
Not really. Housing demand in the Bay area has been slipping for months as a result of grossly inflated prices.
I see where some counties in N Cal want to succeed from the state?
I think what we’re seeing in general is rural people wanting to secede from city people. Large group priorities are much different than small group priorities. I think even down to the instinctive level. Small groups want conformity to social norms and traditions because there is real risk of the entire group being wiped out if somebody acting “different” goes nuts. Large groups can take advantage of diversity without risking the survival of the entire group. Large groups can disarm everyone without risking the survival of the group. Large groups can (and frequently need to) sacrifice some convenience and economic growth to maintain the environment because their size means that they will trash the place by default. Small groups don’t have that concern. I think the behaviors and voting patterns that extend from those instincts drive some of our politics including rural areas wanting to get away from cities controlling the way they live, because the way the want to live makes sense for them even if it doesn’t make sense in the city.
“I see where some counties in N Cal want to succeed from the state?”
You mean like live off them? Or, were you talking about “secede?”
The Jefferson secession movement goes waaaay back to 1941, was sidelined by Pearl Harbor and WWII but is making a comeback…
http://en.wikipedia.org/wiki/Jefferson_(proposed_Pacific_state)
Hmmm. Interesting that it as well as the “state” of Absaroka were both products of the Great Depression…kind of like now. And then fizzled with WWII.
Half a million for a house for mail carrier and a paper pusher at a hospital.
No housing bubble here - keep moving…
——————-
Arnold Lee, 34, a mail carrier, and Milly Lee, 33, a hospital administrative coordinator, said they are looking to spend $400,000 to $475,000 for a three-bedroom, two-bath home possibly in Escondido, San Diego or Mira Mesa.”
No one spends 400 to 475k. They spend a specific amount. Here they will spend at least 475k and probably more if the bank will let them. 400k is pretty cheap for SD right? I’m sure the schools suck anywhere they’d find something for 400k. They are young, they should think about that.
Actually $320K would get you into a condo (that used to be an apartment) in the Poway District.
15377 Maturin Dr
UNIT 205, San Diego, CA 92127
For Sale: $320,000
Price Cut (Sep 19): -$2,000
Zestimate®: $315,646
Bedrooms:2 beds
Bathrooms:2.5 baths
Condo:1,116 sq ft
Year Built:1995
Zestimates
Value Range 30-day change $/sqft Last updated
Zestimate What’s this? $315,646 $227K – $357K -$2,566 $282 09/24/2013
Rent Zestimate What’s this? $1,762/mo $1.5K – $2.2K/mo -$9 $1.58 09/23/2013
Market guide
Zillow predicts Rancho Bernardo home values will rise 9.7% next year, compared to a 10.1% increase for San Diego as a whole. Among Rancho Bernardo homes, this home is 36.7% less expensive than the midpoint (median) home, and is priced 1.4% less per square foot.
Foreclosures will be a factor impacting home values in the next several years. In the Rancho Bernardo market, the number of foreclosures waiting to be sold decreased 23.5% in the last year. The number of unsold foreclosures is 31.5% lower than in San Diego, and 60.8% lower than the national average. This lower local number could help Rancho Bernardo home values rise more quickly than other regions in San Diego.
Sounds to me like a case where HA’s ‘buy at 2X your rent’ comes into play. $1800 in rent is not the equivelent of a $400k mortgage, taxes, insurance, and repairs. Paying double for +1 room is crazy.
Throw another couple of fb’s on the fire.
“In places like Marin County, values in some central areas have nearly risen to levels seen before the recession, said Blaine Morris, president-elect of the Marin County Association of Realtors. ‘Everybody who bought a house in 2010, 2011 feels pretty smart right now,’ he said.”
It’s a bird, no it’s a plane — IT’S A GINORMOUS BUBBLE!
as long as the 10 year yield stays low the party continues. Got equity?
Considering the ten year yield is up 60% since the low (may 2013), the party ended months ago.
Welcome to reality.
yields have been headed down my friend. The party is still roaring. Got equity?
And 60% higher than May.
Got cash? (We know the answer)
Got Kool-Aid?
‘Everybody who bought a house in 2010, 2011 feels pretty smart right now,’ he said.”
smart huh ? more like lucky
Few can tell the difference.
“In places like Marin County, values in some central areas have nearly risen to levels seen before the recession, said Blaine Morris, president-elect of the Marin County Association of Realtors. ‘Everybody who bought a house in 2010, 2011 feels pretty smart right now,’ he said.”
That’s the median price they are referring to…and with foreclosures corked, all it takes is a few more homes selling at the high end (e.g. Belvedere/Tiburon) and it’s enough to tip the median up for the county.
In my neck of the woods in Marin, sales have slid to a stop. Everything that went up for sale over the summer is still for sale.
And given all the stressed out folks, crazy drivers, spoiled kids, it doesn’t seem everyone is smug and happy and living in RE Nirvana.
http://www.utsandiego.com/news/2013/sep/24/case-shiller-standard-poor-real-estate-housing/
The comments:
‘Too bad it’s the investors driving up the property value. It will be interesting when they have no families that can afford these house once they try to flip them.’
‘Yawn……seen this before…….jobs are not there to sustain it…..’
‘Anyone trying to get the prices we were seeing in the Spring are going to be out of luck, that ship has sailed.’
jobs are not there to sustain it
As far as I remember the job market has always sucked in San Diego. When I lived there the word was that if you wanted better pay, you had to move to either LA or the Bay Area.
6,300 San Diegans leaving the labor force + 2,900 new payroll jobs adds up to a sizable drop in the unemployment rate. Go figure!
But at least housing prices are going through the roof.
SD unemployment rate drops to 7.4
By Jonathan Horn
9:11 a.m. Sept. 20, 2013
Updated 12:45 p.m.
San Diego County’s unemployment rate dropped to 7.4 percent in August, despite statistics showing that job growth has slowed significantly in the region since March.
The jobless rate fell from 7.8 percent in July as 6,300 people left the labor force — either they gave up looking, retired or went back to school.
Meanwhile, employers across the region added a net 2,900 people to their payrolls in August, the state Employment Development Department reported Friday. Adjusted for seasonal factors, such as the school year starting, the data show that San Diego County had no net gain of jobs last month.
…
A flood of 40 hour a week jobs being sliced and diced into 29 hour a week jobs to avoid obamacare.
Might be a good thing… more people have work, and they have less money to drive prices up with.
Surely the people whose hours are gonna get cut weren’t the ones driving prices up…surely?
asain inWesters bought near me a chopped down all the trees= wow spend 3k and lose another 3k
sounds like “Normalizing” what comes next ?
Some local observations…
Last year around this time, there were 27 condos for sale in Glendale, CA. Today, the number is up to 61.
Last year one bedrooms were selling for the mid to high 200,000s. Now they’re selling mid to low 200,000s.
I like watching condos because in my experience, that market is the canary in the coal mine. It looks to me that the latest bubble has begun to deflate.
most accurate for measurement by sq ft
very astute grasshopper
Out of curiosity, I checked each of the 61 listings and over a third are sitting empty. Five are Short Pays and 2 are REOs.
I think it is normal after such a period of bidding wars and increasing home prices. The market is cooling down a little bit. If this was not the case, i wonder how bumpy the road would have been.
It is hard to say what the market will look like within a short time period.
It could go down, stagnating or slowly up again. But after all this will be the next massacre in the US.
Considering resale housing prices are 250% higher than longterm trend and 200% higher than construction cost(material, labor and profit), there is no need to play your guessing game.
dc are inventory lowest I’ve seen since 05
sequester and dod cuts be damed
San Diego home prices appear to be leveling off on a permanently high plateau.
Business
Real Estate
San Diego home prices leveling off
By Jonathan Horn
1:38 p.m.Sept. 24, 2013
Home prices San Diego County began to flatten out this summer, but their jump over the last 12 months is the largest in any yearlong period since March 2005, the S&P/Case-Shiller Home Price Index showed Tuesday.
Home prices in the county rose 20.4 percent from July 2012 to July 2013, trailing just three other cities included in Case-Shiller’s 20-city index. San Diego beat the national average of 12.4 percent.
But from June to July, prices grew 2 percent, which is a decline from the 2.8 percent they rose from May to June, according to the index, which lags two months.
David Blitzer, chairman of the index committee at S&P Dow Jones, said an increase in interest rates in May could be a reason for demand for housing to decline. All 20 cities on the index saw monthly increases, but fifteen of those gains were smaller from the month before.
“More cities are experiencing slow gains each month than the previous month, suggesting that the rate of increase may have peaked,” he said in a statement. Blitzer noted that the Federal Reserve’s announcement last week that it would not begin to taper its stimulus program that keeps long-term interest rates low could provide a temporary boost to the housing market.
The average 30-year fixed mortgage rate was 4.5 percent, as of July 11, Freddie Mac reports. That’s up from 3.3 percent the week of May 2.
But rates are still low by historic standards, and therefore are keeping demand artificially high, said Michael Lea, a real estate professor at San Diego State University. The supply of housing is constrained because a lot of people are still underwater on their home mortgages, he said.
“If you had a normal amount of supply on the market with the given demand, you would not be seeing such hefty price increases,” Lea said.
Lea said the peak buying season ends this time of year, so he expects the market has reached its limit for the current period.
Across the country, the biggest jump in the Case-Shiller index came in Las Vegas, which saw its index increase 27.5 percent from July to July. San Francisco came in second with a 24.8 percent increase, while Los Angeles came in third, one spot ahead of San Diego, at a 20.8 percent year-to-year jump.
…
Out of peer pressure, we went out to look at some of the new home construction this weekend in the Northern Virgina area where we lived in a townhome over the last 10 years and trying to upgrade.
The prices are insanely high. Starting at 620K for a 3000 sqft home in 2 levels before any options kick in. Even though we make decent income, i feel at loss as to how i can afford it. All our friends bought homes that are equally expensive or more. How they can afford is beyond me.
I am not sure if i am wise being conservative or stupid for not having bought into this hype. I have no idea where this is all leading up to. Meanwhile the Mrs thinks i have no balls making a decision.