Is There A Disconnect In Your Housing Market?
What do you see in your housing market this weekend? Has the spring rally fizzled into a summer slump? Here are some observations from the topics thread. “There’s an ad running in the free weekly paper for a new condo complex on the beach in Biloxi. Unit prices are in the $350-$500k range. The developer is promising discounts to families displaced by Katrina, but since we’re talking an area where the average family income is $36K a year, there seems to be a bit of a disconnect going on.”
Another added, “I’ll report on specific projects here in Southern Delaware. The beaches here are beautiful. But, the over building (IMO) is vast. The speculators are now stuck. They thought that prices can never go down because they were on/near the beach. The listed prices here are still very high, but try selling for the list price. The prices are just starting to go soft, but I believe that this is just the start. Stay tuned.”
A reader in Arizona. “As I was continuously driving along 40 around Flagstaff, I was noticing how it looked like tinderwood ready to burn. I guess I was right, and it has started early. It is going to be a long hot summer for those folks living next to tinder-trees. AKA So Cal fires about 5 yrs ago.”
One heard this on-air. “Have the Rob Black show on in the background (Financial advice show in Bay area). His quote was ‘the housing boom is over, the housing boom is over, the housing boom is over.’ And compared it to the tech stocks in 2000. More media confirmation.”
From an ad. “Still hearing Eric Estrada pimping WA real estate and some idiotic informercial from JG Banks saying how easy it is to make a fortune in probate real estate, come to our free show and ‘BUY my OVERrated, OVER priced, and will BK your program if you actually do what is written.’”
The Orange County Register. “Ladera Realtors are saying, in the words of realtor Ron Luna, that the news is ‘not bad news, but certainly realistic news.’”
“‘Sellers have the expectations that are a little unrealistic, given the number of homes out there,’ (realtor) Angelina Kirkpatrick said. Kirkpatrick reported that in January there were 198 homes available for sale in Ladera. Now there are 354. Luna said it could grow to 400 by June.”
“‘There is so much more inventory,’ Kirkpatrick said, ‘Buyers have more to choose from.’ As an example she notes that Ladera Ranch is having an average of 12 homes go into escrow every month.”
“‘The reality is most homes are worth almost exactly what they were 6 months ago,’ Luna said. ‘Moderate appreciation is the way it’s going to be probably for the next few years until people’s income catches up to housing prices.’”
Having lived in San Diego for nearly 30 years, the fires get bad when a long dry summer follows a wet winter or two. The new growth dies and turns to tinder over the long hot summer and then we get fires into September, October, and even November if we doesn’t get significant rain.
I don’t think we are at the bad point in the cycle here in San Diego. Don’t know about Arizona.
Also, people keep talking about the $1M homes next to the forest. Don’t you mean $800K homes? Do I hear $650K?
Which forest? Glamis?
Birnam Wood.
The four houses that burned Friday were much higher than $1 mil. BTW, I heard that those homes had trees and brush right up next to them, and that the houses with trees cut back did OK. So I asked a local appraiser yesterday if there is any change in values for that and he said, no. It is common for listings to brag, ‘adjacent to forest service land.’
‘adjacent to forest service land’ is an advantage in that no one can build a McMansion up against your property line. But you do have to clear the brush and trees back to a safe distance. Here in LA County, the fire department inspects high-risk areas yearly and recommends clearance. If you don’t do your own clearance, they send in a crew and send you a bill for the work.
I was wondering why no one advertises, ‘ backs to 1,000,000 acres of bone dry kindling.’ The forest service allows shooting, too. Two of the five fires in N AZ this weekend were started by richocheting bullets.
I’m getting emails from builders that are offering cash discounts of up to 25k. These discounts are not listed on their website.
Glendale, CA-Well priced million dollar homes are selling like they are giving them away. Next door Burbank, CA-inventories have doubled and prices are being reduced fast. However, still more expensive than last year.
La Canada, CA-Inventory has doubled-however, the prices have basically surged to a point that it simply does not make sense.
I don’t know if these are disconnects are not-but they are facts.
Isn’t “well-priced million-dollar home” an oxymoron?
Also, O-A-M-O-T, 25% of the single-family homes (74/299) in Glendale have price reductions. You’ll score what you are looking for when this all shakes out, it’ll just require a little patience and delayed gratification.
Only-A-Matter-Of-Time,
Inventory in La Canada has gone from 35 in 2/11/06, to 55 in 4/25/06, to 63 in 5/19/06, to 83 today. Inventory is accelerating.
Average prices (LA county assessor) in $ per square foot have gone from the low $400/sqf 24 month ago, to the mid 500s 12 month ago (pretty much linearly), and for the last year they have been oscillating between 600 and 500. It does not look like an increasing trend for the last year.
In fact, nowadays asking prices of houses in the low $1M is pretty much around 550-500, and they are not selling, as proven by the rapidly increasing inventory.
So I do not know where you get your “the prices have basically surged …”. They are high, but not noticeably higher than one year ago. Eventually we will be neighbours of this place.
Trust me-I have been looking for the past year in these three markets. La Canada has surged incredibly high (in asking price) compared to last year.
My numbers are acculart.
As of this minute-there are 75 single family houses for sale and the average price is $2,001,449 with a $606 per sq. ft. (la Canada)
Per ZipRealty there are today 83 SFH (I did not check if some of them are repeated). The price data I gave above are from the LA county assessor (147 houses sold during the previous 24 months, within 1 mile radius of a house in the “geographical center” of La Canada). If you have better data, please share it. Thanks
I use the Glendale Asso. of Realtors website http://www.gaor.org. This is where I received the numbers.
Further, I do not include conds.
Third, if most of the free mls search websites like ziprealty.com include properties that have a back up offer status.
This also raises the count, however, I did not use back up offer status in my count.
The price data I gave above are from the LA county assessor
This Data is inaccurate. The reason is because you need to know the neighborhood, not the area.
A jackass who inherited a house across the street from where I used to live gave it to a real estate agent who’s office was 40 miles away. For some reason, he promised me the listing, however, gave it to someone else.
The house had 12 offers on it and sold $100,000 above asking price all within 24 hours.
I would have purchased it, however, I was in escrow with another property and cash was tight.
The new owner did not even move in. Rather, they spent about twenty five thousand dollars (I spoke to the contractor)in fix ups and put it back on the market. After six months, they sold and made o$100,000.
The agent who underpriced it most likely used figures given to him by title companies which get their info. from the tax assessor. Had he known the area, he would not have looked like a fool in under pricing this property.
Does anyone think that this seller would use that agent again?
I would think not.
Only-A-Matter-Of-Time,
“This Data is inaccurate. The reason is because you need to know the neighborhood, not the area.”?????
Please, define when a neighborhood becomes an area and viceversa. Are you saying that the transactions within 1 mile radius are very uncorrelated? If you want to retrict your search to a block, you will not get enough data to make “meaningful” statistics. Is a block what you understand by a neighbourhood?
The county assessor gives you the price paid for a house (as long as it was bought within two years) and which is used for taxes purposes. What can be more accuate than this? Perhaps the averaged-season-adjusted-manipulated information given by the realtor-pirates?
By the way, the information given by the county assessor for the last 4-5 months for la canada is statiscally not very meaningful, because the number of units sold per month has gone from 10-20 to 3-4 …
You have used before the argument that “ziprealty.com include properties that have a back up offer status” and therefore its infentory is inflated. The argument is uninportant because I use the inventory number for picturing a month to month trend, it seems proper to assume that similar errors would cancel out, and again all I care is a trend and no absolute numbers.
If you are looking for a “steal”, buy a property listed in La Vina, Altadena, 100k bellow 1.1M comparable sibilings
Pasadena Renter-
He’s actually giving you correct information. I understand why he’s not defining area for you quite frankly as a realtor I wouldn’t either.
Using a tax assesment info and a one mile radius is the kiss of death for defining value or determining trends your info is skewed and you going to get false results. Tax assesor info is highly inaccurate that is why zillow is such a crock and if you don’t know the pre-defined area’s a one mile radius is virtually useless. Especially in that area by the Rose Bowl. I personally watched a guy buy a property thinking it was worth a whole lot more to find out he had spent market value. You may want to pay closer attention to the info he is trying to give you instead of spewing off moronic nonsense like this
-”Perhaps the averaged-season-adjusted-manipulated information given by the realtor-pirates?”-
and do a whole lot more research. You might actually get some accurate data and information that you could use to your advantage.
Pasadena Renter:
Let me get more specific:
The house that I gave you the example of was on 2 blocks above Bel Air road in Glendale.
The comperables on paper (forget the mile) try 2 or 3 blocks below Bel Air Drive would sell for $100,000 (yes 100,000) less in price.
Why?
The closer you move to Mountain St.-The more those houses become. I have lived in Glendale for 30 years have been an agent and broker 16.5 years.
If a house is below Kenneth road, my wife will not even consider it. (Kennth Road is 1 block before Bel Air).
In Burbank, the prices above Kenneth Road are 50% more that below Kennth road. Yes, 50% more depending on the house and lot size.
I know you seem to be looking in La Canada.
That is a more unique situation because there is a portion of La Canada where the schools the kids attend are actually Glendale Schools. Don’t ask me why as there seems to be a student body shortage in La Canada. However, the prices are change quite considerably due to this fact.
I do not know about Pasadena or any of its neighborhoods.
However, I have some friends that live their in Pasadena and they were stunned that my two bedroom and 1 bath house (less than 1100 sq. feet) (Glendale of course)sold for $715,000 within one day of my open house.
They have a 4 bdrm. 10,000 sq. ft. lot (house after addition is 3200 sq. ft) completely remodeled house that they can sell for probably $800,00 (they think)
That is how crazy the market is today.
Median prices are confusing. The only market that is iselling is people who have equity from a purchase 3 years ago and are moving up. Since, they won’t carry 2 mortagges, and they have made a ton of money…they pay asking on the move up house, and let their older house go for any first time buyer that still has decent credit and can swing a loan. This the move up market stays high, while sales of the low end get smaller asnd smaller. When the move up buyer quits looking to go on vacation, the panic will begin. Vacation for move-up buyers. July 4, 2006
This is exactly what we are seeing up here. The low end withering but high end sales keeping the YOY prices ahead of last year. There are a lot of moveuppies and CA eLocusts with tons of cash.
The reality is that homeowners can list their homes for exactly what they did six months ago, and they still won’t sell!
Isn’t worth measured by what people are willing to pay, not what you sell it for? If not, I’ve got two cars I am going to sell for $85K each…
I’ve an old pair of walking shoes, worth $375 (bought in 2002 for $35+tax).
Maybe you can get someone to flip them…
Here in the Dallas/FW area, there is a big disconnect between new home sales and existing home sales.
The Locusts from CA are still flocking in and buying up the new construction, though they don’t know their equity is coming here to die.
I just talked to my RE agent that I used 3 years ago to get sales data to fight my latest tax apprasial (they want $79 sq/ft, sales data only supports $74…. same story every year), and he told me that practically evey week this spring his office (Ebby Holiday) was setting a new sales record. He’s been an RE Agent for 15 years, and sees the influx of CA money as temporary thing to build up his son’s college fund with.
Existing home sales, on the other hand, remaind tepid by comparsion. Prices have not appreciated significantly outside of very specific locals, and it can easily take a *long* time to sell without aggressive pricing. This is what the outsiders don’t realize: Flipping a house here is a lot like flipping a pancake that goes up and sticks to the ceiling.
As for my RE agent, he’s not too worried. When the Locusts are gone, house prices will still be within the reach of most people, and the transactions will still be there. Granted, the new agents not used to working hard or being conservative during a boom may seek other work.
The equity locusts are buying new construction and you can see it for rent anytime on Craigslist. It’s incredible the places they “invest” - Frisco, Keller, McKinney, Allen, places like that, that are both near yet more empty land that will be built on and so far away from the main employment centers that only the stupid rent there. And then to top it off, those neighborhoods are 99% late 20/early 30 somethings with little kids who go there to escape the minorities in the inner city. IOW, it ain’t a ready renter’s market.
And yet, I could bring these Clownifornians to pretty darn nice inner city places that cost about the same as these drywall palaces they are buying and are much better built. Moreover, they are far easier to rent out and will actually hold some of their value when the inevitable happens. Not all of their value but some, and eventually will recover, whereas I see acres and acres of tract home ghettos in the future littering the landscape.
LOL tract home ghetto’s nice. Here they call that Palmdale/Lancaster
DeepintheheartOf
Do you have any statistics on how much of the money is coming in from Cali?
The reason I ask is that I hope to buy in Cali. Thus, any “capitol” that is tied up outside the state will help me long term. So I keep hearing about “Californians” buying in Texas, Utah, Nevada, Arizona, Idaho, Florida, and probably every other state of the union. Is it really a significant number? Or does every non-costal state call new immigrants/investors Californians?
For if what I’m reading is true, there isn’t any financial reserve left in this state and I can expect Cali home prices to have no lower bound when they collapse.
I also know way too many sensible people who have $200k+ in savings ready to buy into Cali when the time is right. So something isn’t adding up…
Any info would help.
Thanks,
Neil
What he’s saying is that the business that IS being done in DFW is related to Cali equity locusts and not locals buying and selling to each other unless the pricing is “aggressive”. I can attest to that being the case, as two houses across the street from from my Dallas house sit unsold after 6 and 9 months, respectively.
Neil, A good number of folks in California played appreciation games over the last 5 years or so. Many of them cashed out several times on flips, and not all of them chose to keep all of their RE bloat in California.
This has given rise to the Equity Locust, a vermin that swoops into town with what amounts to phony money and they begin the California nonsense in the new location. That is to bid up prices of things beyond what the economic fundamental can support.
A prime example of this would be Boise ID, Las Vegas, NV or Phoenix, AZ.
Bless you for being interested in California. I fear in the future they may make it illegal to be a white guy. Yes, I know that is incendiary, but in the south there is a growing minority of people who think there is some value in that approach.
California is likely to be an ugly market for some time to come. If you come here, be careful if you buy.
Sigalarm,
Thanks for the input.
Don’t worry, I won’t buy for at least a year, probably more. I’m tracking the inventory very closely and wouldn’t dream of buying until the prices break.
The question is, how much will prices drop?
I guess we’ll find out starting in the fall.
Neil
On the SF Peninsula the slow market cuts both ways. Buyers are paying up for choice properties while other listings languish. But inventory is not increasing beyond the normal seasonal build. Apparently sellers also are reluctant to participate in a slower market.
They won’t have a choice when they’re forced to sell. All those ARMs will be adjusting upward very soon.
But what about the new 40 year interest only loans with a fixed rate for 10 years of interest only payments? The jackass mortgage companies keep coming up with more and more “creative” products to keep this thing going! I will be retired before prices fall significantly and I am only in my mid-30’s!
The train wreck that is Brookfields’ project in Cornville, AZ is playing out in the classifieds:
‘MUST SELL, Verde Santa Fe golf gourse home. Below market value. 2/2′
One realtors’ ad spells out the price reductions in Cottonwood:
‘PRICE REDUCED $75,000 to $499,000 Price reduced $20,000 to $249,000′
A pair of realtors write a bi-weekly column. The usual perma-bull attitude has changed, along with this insight:
‘Often-time sellers are influenced by appraisals done for refinancing and are disappointed when the comparative market analysis (CMA) comes in lower than the appraisal. This is almost always the case. For example, we had one such occurance last week where we decided not to take the listing because of the broad gap between our CMA and the banks appraisal for their refinancing.’
Cornville from what I’ve seen has to be some of the butt-ugliest stuff yet. $499K for something out there? I will pass on that offer.
Lets see:
“‘Sellers have the expectations that are a little unrealistic, given the number of homes out there,’ (realtor) Angelina Kirkpatrick said. Kirkpatrick reported that in January there were 198 homes available for sale in Ladera. Now there are 354. Luna said it could grow to 400 by June.”
“‘There is so much more inventory,’ Kirkpatrick said, ‘Buyers have more to choose from.’ As an example she notes that Ladera Ranch is having an average of 12 homes go into escrow every month.”
354 homes on the market TODAY and they are moving at about 12 per month….so that is a 29.5 month supply IF no other homes are added to the market. Somehow, I don’t think many of these people can wait 2.5 years to ‘get out’ (from under) their house.
I just don’t see HOW this can possibly end well. We are going to see the opposite of the ‘run up’ we just experienced…just like the .com’s.
Have a nice weekend…
SoCalMtgGuy
Housing news from flyover country. (St. Louis, MO) Builders are offering below market financing to move bloated inventory- 5 7/8% on 30 year fixed by Jones (Centex), 4.5% first year by Mayer Homes. McBride offers to make first 6 months payments using their ARM. (Yeah, an ARM sounds like a brilliant financial planning move right about now, just in time for another reset.) Lawless Homes on the verge of bankruptcy, the Post won’t even take their ads. Other builders running 50% off up to $50k in options. Rumor has it Jones Co. laying off workers. Realtors still bothering to do open houses have taken over job of Maytag repairman.
It isn’t only that things have gone soft in lower-slower-Delaware. There are bunches of ‘investors’ who bought at the peak and are now holding the bag. They still have grand ideas of ripping down the properties that they bought and turning it into more housing.
There was something a few weeks ago in one of the beach newspapers (sadly not online, but I have the hardcopy in front of me) about how the owner of the Rusty Rudder (a large and popular watering hole) in Dewey Beach wanted to tear it down to build housing - the town wasn’t wild about the idea though, and put a hold on all conversions of businesses into housing until Oct. Similarly they quoted the new (as in they bought it one month ago) owner of the Sand Palace Motel, who wanted to run it as a hotel for a few years and then turn it into housing, and was complaining that the town was pulling the rug out from under them with the moratorium.
Having seen both the Delaware and DC markets up close, I would describe the Delaware market as much more of a bubble market than DC (and I am not denying a bubble in DC either). My sense is that many business owners in Delaware beach towns have “retired” and sold their businesses to new
suckersowners. And for that matter, the towns are losing their quirky charm and turning into generic suburbs filled with SUVs and yuppified restaurants.I am merely a renter in Delaware - if I had bought something (anything) 10 years ago, I myself would have cashed out, and would be sitting pretty now. No complaints though - I know people who bought relatively recently and wonder what they were thinking.
Speaking of Sitting Pretty, anyone checked in lately on our friend Nina in Palm Springs and her “fixer?” Or has she committed some gruesome act of self-immolation in there already?
I checked the listing a few days ago and it said “Inactive”. But no word at her blog. Not that I read it, just noticed the listing as I’ve got it saved at My ZipRealty.
I live on Maui and follow real estate closely. So far about 10% off from the peak last year. Most of the reductions are in towns and subdivisions. We just had a record crop of tourists this month. So far the economy is still great. There is one thing I find intresting. Families and others involved in real estate disputes are retreating from their positions and settling their differences. Once the problems are settled and the papers signed the disputed property goes on the market. The greed has not turned to fear, yet. I have lived here 40 years and seen a couple of cycles. So far this one does not look too bad. I remember the last peak where we had Japaneese investors going door to door making insane offers on anything they could get. This boom has been much more orderly.
I was in Hawaii both in August of 2005 and April 2006. There was not one day that the news papers did not mention about how crazy prices were. Even the tour guides had something to say.
I just was amazed at how much talk there is on this subject by the locals.
I got the impression that even it prices were to fall by fifty percent, there would still be a major affordability issue.
I got the impression that even it prices were to fall by fifty percent, there would still be a major affordability issue And you would be right. Many people here work two jobs just to live here. If one of them is not half Hawaiian the only way these families will get a house of their own is to win a lottery for an affordable house the county forces developers to build in order to get the subdivision permited. The problem is a new 10,000 fly in every day. Most leave but there are always a few that want to stay. Barring a major catastrophy (ie. Bird flu, New War with Iran, or China, terrorists shooting down planes, etc) I don’t think prices will fall more than 25%. If you can get used to living on an island this and Kauai are as close to paradise as can be found. One last thought. I picked my wife up at the airport last weekend. There were 37 private jets parked at Kahalui Airport. Thats a lot of cash sitting on the tarmac just waiting for their owners. Until those jets take off for good we will be ok.
Some observations from Santa Clara County:
Inventory of sfh/condos is up around 1200 units YOY (source: mlslistings.com).
I drove through Mountain View about an hour ago. I think every condo in that city is for sale. Many for sale signs - zero sale pending/sold signs.
My friend is getting ready to sell her house in Cupertino. She called me very upset after she had talked to her agent. Her agent told her the market was cooling, etc. I think my friend was expecting to get a lot more for her place than she is going to - not that she still won’t turn a fat profit.
My agent called me last week. She asked me if I was ready to buy yet and I told her no. She said that there is a lot of fear out there in the market and that we should try to take advantage of it and see if we can get some price reductions. I don’t think she realizes I’d need to see at least a 25% price reduction before I’d consider buying.
A friend of a friend still has his condo for sale in SF - $60k price reduction now and still no lookers. He’s sweating it with an I/O loan and two places he’s trying to flip. He’s only been holding them since the end of last year and has done extensive remodeling.
I’m going to a bbq at the end of the month. This will be a good time for me to take the psychological temperature of my peers. Last year most of these events included a lot of people bragging about the value of their house. I’m curious to see what the conversation will be now.
All and all the Bay Area market seems “flat” to me right now. I think things may get interesting by the end of summer.
He’s only been holding them since the end of last year and has done extensive remodeling.
Now *that’s* scary. I wonder how much remodeling he’s done. He’s definitely sweatin’ it…he was counting on getting some of that remodeling money back….and then some. Ain’t gonna happen.
BayQT~
I don’t know this flipper very well, but I’ve heard that he “buys” a lot of expensive things (on credit) to make himself look like he’s living the good life. The truth is he makes between $60-$70k per year (no spouse so single income) and aside from his two “investment” properties he has a 1.1 million dollar condo with a neg-am loan. Very scary!
Just curious, where in MV did you see all these condos? I see a lot of them being sold, that is for sure.
Drive down Middlefield, you will see them!
The De shore is going to be interesting to watch. The amount of building here is hard to describe. There are so many “close to the beach” units being built. I like the area, but the rents are much lower than the list prices for homes, townhouses, and condos. Eric is right, there are many speculators now stuck and renting their homes. A lot of them are stuck with multiple spec properties.
I live in Oklahoma. Lots of new houses sitting, more being built. Inventory is as high as I have ever seen it. Prices are reasonable ($100/sq. ft. new/$80 sq. ft. used). Much of the local economy is tied up in building houses or real estate brokers or retail though. Many long time landlords are trying to sell their entire RE holdings (many houses older and near the RR tracks). I think they recognize the top of the market is here after thirty years in the business. Appreciation has been steady at 1-4% annual but I think everyone is about to take a 10% haircut and jobs (GM, Dayton) are leaving, further depressing the economy. We have some people moving in from out of state, but not too many (I know, nobody wants to live here). We have been in the same house for 10+ years and have similar to prop 13 property tax assessment rate (thankfully) so our overhead is low. Anyway, I expect a slowing economy, building inventory and flat house prices for the foreseeable future.
Small report from North County San Diego. I think maybe some buyers have blinked. There are ~20 or so houses in about a 2 mile radius I keep my eyes on when I do my walks. I the past week 4 of them now have “Sold” signs on them.
Late news - 2 more today have added “SOLD” signs to them
Is this some sort of micro localized rally? Last chance to get under contract so you can get the kids in school over here? People lowering the price? It seems at least some buyers were coming off the fence.
In another area, my wife and I went to look at some new construction in Poway. Unlike the area we looked at Memorial Day that was north of State Highway 56 (those were high priced and poorly done), this group seemed to be of at least some quality construction.
We talked to one of the ladies running the sales area, she confided that traffic had been very light, and the builder was slowing down the subsequent phases. No discussions of incentives or price cuts. This was Shea Homes “Sanctuary” at Stonebridge. Prices were $1.3M - $1.5M. Bigger lots than most huge houses in San Diego.
I’ve noticed more listings in the last two weeks go to backup / pending sales. Even seen a few closed sales. Didn’t see much of this in March/April or even early May.
One wonders if the RE transaction parasites are buying the houses just so they can put a “sold” sign on them and give the illusion that everything is “normal”. Given that they routinely “relist” houses that aren’t selling with a new MLS, I would not be surprised.
‘Moderate appreciation is the way it’s going to be probably for the next few years until people’s income catches up to housing prices.’”
Look Honey, I know you’re not that smart or you’d do the math and realize incomes cannot EVER catch up to housing prices unless:
A. There is NO appreciation for the foreseeable future
B. Prices come DOWN, WAY DOWN.
C. My Boss decides to TRIPLE my salary.
I vote”B” as most likely but then again I don’t have to LIE to my customers to sell my products
Even if the boss decides to triple your salary it makes no sense to buy unless you can eat the opportunity cost–the potential for a minus 100% leveraged (total) return or worse on your downpayment versus a positive 5% annual return on a CD.
With globalization pressure is on American wages to GO DOWN, not up. Whereas Chindia wages will continue to rise relative to ours.
Wife and I decided to poke around in North Tustin today. Only went into one open house. House is 5 bd, 3 ba, and very nicely remodeled. About 2800 sq. feet. House was purchased in August 2000 for $360,000.
Asking price now (which is reduced by about $50,000)….
Drum roll please….
$1,245,000
Sad thing is that for about $1MM I’d be very tempted to hit it. Pathetic, eh?
If they bought in 2000 for 360K the house should not be worth more than 455K in 2006 based on an historically realistic annual appreciation rate of 4%. Of course you have to add the amount that they put in for any “remodeling”. So even if they put in 200K worth of remodeling, the house would still only be worth about half of what they are asking.
I am starting to believe that 50% cuts might actually come to pass down there in OC.
Can anyone link me to a calculator that will take a past purchase price in a certain year and show what the present value should be given 4% appreciation?
Duh, nevermind. As soon as I posted, I Googled and found one.
Up here in Southern NH(near boston) the inventoryis piling up. I drive around alot for my job and it seem like everybody is selling. There are alot of ranches, splits, etc. and Boston is cooling also. Southern NH is still a rip off, not much culture and still far from Boston. I actually feel optimistic for the first time in several years of actually buying a decent place for my family. I felt some spousal pressure to buy last year but I am glad I held out. I’ve even heard of lowballing. Condos last summer got multiple offers and sold in days. No longer.
I’m in Southern NH, too. Things are definitely cooling. I’ve noticed that Brady Sullivan properties has a bunch of new condo developments with reduced listing prices (though they haven’t advertised them as such). They’ve been slowly cutting down the prices.
For those that don’t know, there are two Southern NHs talked
about and they center around the highways that go up from Boston
and meet in Manchester. One is north of Boston and the other is
Northwest of Boston. If you’re looking to setup a family or have a
family, then there are advantages to NH, at least on the western
side. I can’t speak for the eastern side. I agree about the lack of
culture but Boston is only an hour away. If you’re younger and want
more nightlife, I guess that you can rent something a lot closer
to the city.
I get a lot of flyers from Brady Sullivan. Seems to me that they’re building essentially apartments to sell as condos or converting old mill buildings or building far away from anything. The prices are frequently in the $60K to $100K range so I’m guessing that they get a lot of nibbles from their flyers. That’s waay in the affordable range around here but I’ve never actually seen one of their projects so I can’t say what one of them is like. The pictures look nice but the text descriptions do not.
Here is the freakin disconect in Florida…
Developements with names like “Canyon” and “stonebrook” and “the hills or blah blah”
Ok its South Florida there are no hills except garbage dumps, we don’t have brooks or streams just stagnant canals and last I checked there are no Canyons in Broward County.
Lin Orlando ..LOL….
In Southern NH, I have a friend that’s selling a house (he’s moving into a rental in two weeks) and offered the house on craigslist at probably $20K lower than was suggested by a realtor. And has had no response. Things seem to be slow for houses around here but I don’t see much in the way of lower prices. We still have folks fleeing Mass holding up prices here I think.
On the other hand the place next to us changed hands and we have new neighbors as of this weekend. I don’t know what they paid for the place but should find out in the papers in a few weeks.
One other thing is that the number of properties for rent has simply exploded on craigslist. I don’t know if it means that a lot of people are moving in and out for school reasons but there are a lot of places opening up relative to what I’ve seen earlier this spring.
In the St. Louis area the “developers” who did the teardowns and built on spec are resorting to renting out the McMansions, often asking around $4,500/month for a $1MM place.
Don’t bother putting in a good word for Southern New Hampshire that you know is an obvious lie. It is not going to hold up the price of your home. Sorry it is pathetic to listen to. The Boston area (which is why S New Hampshire exists) has been hit extremely hard by job loss, more so than any high priced city in the country. It is a fact that these jobs are never coming back. This is why Boston is expected to drop the most and with the least doubt. Large corporations from Boston have moved South in the last 5 years, due to high costs in the area. Example, State troopers make 70k a year in Boston, Why?. They make 25k in the South, that saves Bank of America indirectly 45k a year. More over, the Massachusetts culture is a people that have a follower mentality. They will be the most likely home owners in this country to sell out their neighbor in a vicious price war to the bottom while at the same time complaining that their neighbor is lowering their price. It will not be a fun place to be over the next ten years.
The Southern NH economy is doing quite well from what I see. High-tech is hiring and, of course, retail is doing well. Simon Property Group is in town to build the largest Premium Outlets Mall in New England (it’s going to cause massive traffic problems). I expect real estate to go down. But don’t bother worrying about the value of my home. It’s 1) less than 10% of my net worth, 2) was paid off in the 1990s.
There’s a surprising amount of old money in some of the towns in Southern NH. There’s a lot of new money too. And of course the borrowed kind.
Walk into the Salomon Smith Barney Office in downtown Manchester sometime. It doesn’t look like much outside. But when you go inside, you’re stunned at the opulance of the place in the middle of an old, rundown mill city.
They obviously need to have some pretty wealthy clients managing portfolios with full-service brokers (you know, where you pay hundreds of dollars in commissions per trade) in the area. Maybe they live in Manchester, Bedford, Hollis, Wyndham or some of the towns towards Concord. I don’t really know. But there’s more up here than meets the eye.
Oh my goshk…I have to respond to this rubbish about the southern NH economy doing well. There are severe issues in NH and companies have been bailing out of here at a rapid pace…some just closing the doors so employees show up for work to locked doors with no notice. NH’s motto “live free or die” is meaningful. You have no sales tax or income tax so an average home typically has property taxes of 8k to 12k a year. You do not need auto insurance nor do you need to wear a hemlit on your motorcycle….what does this mean for those who are responsible and actually have something to lose? Insane car insurance! Only 1 health insurance reamins in the entire state as all the rest have bailed. Bottom line if you are hoodlum with no money and rent you can have a good life here….no questions asked…I have friends in the RE business and they are frightened for their careers. You need to dig a little deeper my friend.
Please let me elaborate a little…..my house closes in 1 week thank the good Lord in Heaven. The city assessed it at 589k and property taxes were near 10k a year. This is a dump track home. I sold for 500k feeling the flames flicking at my back. I am grateful to have sold to the folks from Massachusetts. Here is an article in 10/05 when the inventories starting imploding:
http://www.dwellings.com/rudymayer/pages/local_NH_real_estate_news/10.31housing.html
and recently:
http://realtytimes.com/rtcpages/20060330_newhampshire.htm
“Foreclosures Rise, and That Worries Some
Reported by David Darman on Thursday, March 30, 2006.
listen:
Several counties in New Hampshire are following what seems to be a national trend.
They’re reporting increases in real estate foreclosures in early 2006.
That pattern is causing some economists to worry that bigger and more exotic mortgages may be the cause.
But a new report gives pause to the fears that a real estate crash could be just around the corner.
New Hampshire Public Radio’s David Darman has more.”
My utility bills for all utilities during the winter for a 2900 sq’ home averaged $1000.00 a month. Boston/Mass is what caused the disconnect here and there is no way no how this is not going to end very very badly.
Not sure which Southern NH economy you’re talking about but NH leads New England in having the lowest unemployment rate, best forecasts for economic growth, does well on standardized test scores for its young people and according to money magazine, almost the lowest tax burden in the country.
I don’t find car insurance or property taxes to be a problem. Apparently those in MA don’t either as in the past, many MA residents registered their cars in NH for the much lower insurance rates. If you don’t like your property tax burdern,
you are free to do something about it. You can simply buy
a cheaper house and lower your property tax or move to
another town with a lower rate and lower prices. In states
with Income taxes, it’s a lot harder lowering your overall
tax burden while maintaining your income.
Nashua has been picked by Money Magazine as the best place
to live. Twice. Manchester made the top ten several years ago as did Portsmouth but you can’t call Portsmouth Southern New Hampshire.
If you want to control property taxes directly, you have a
better shot at in in NH as there are a lot of small towns where
you can show up for the town meeting and have your say at the microphone. And you can run for office if you’d like a shot at making a difference.
Regarding the complaints on utility bills: if you’re complaining about high energy costs, why did you buy such a large house in the first place? When we moved here, NH was about living within your means and certainly wasn’t about the ostentatious display of wealth. Now we have Harley Davidson shops, much bigger houses, much bigger cars, more expensive cars, etc. Clearly the mentality of this area changed quite a bit since we moved here.
We’re just happy with the strength of the local economy and with the ability to control our expenses far better than we could in MA.
Michael,
Unfortunately much of NH is going to experience a utility cost shock as oil continues to escalate. I live well within my means and my house had no loan. I have some friends in the real estate business that have been candid about the reality of the bubble here. Last year you were able to see pending sales and sold homes via the mls and now NH has halted anyone having access to the information…Massachusetts still has some transparancy in regards to the home sales data, but I wonder when they too will limit the access of information. Isn’t it funny that when the foreclosures and inventories started to implode in NH they cut off access to the data? Best of luck to you and yours.
If we have an energy shock, then we have an energy shock. The market then adjusts to higher prices. We had an unreal amount of supply destruction last fall and spot NG prices were about triple what they usually are in the winter. But there was a huge amound of demand destruction that accompanied the supply destruction and we established market clearing levels. NG has declined more than 50% since then. And we’re been above the prior five-year inventory range for most of the spring.
Oil is clearly a problem but it wouldn’t be particularly difficult for the country to cut way
back on the amount of oil that we use. It’s just
that we choose not to.
I was pretty surprised the last time that I was at Toyota of Nashua though. In the past, there was a much bigger percentage of 6 cylinder engines. When I visited recently, the vast majority were four cylinder engines. Toyota, Honda and Hyundai are winning marketshare from GM, Ford and DCX which
went with a big care lineup a few years ago.
I started trading electricity, pipeline, oil, natural
gas and unranium stocks back in late 2000, early 2001. One thing that I’ve learned over time is that
the weather is a very important thing to watch. We
escaped much higher energy costs this winter as the
second half was unusually mild.
My bias is to the bullish side on energy but by far,
the easiest money to be made was over the last
three or four years. If we breakout (crude over
$75 for three days), there’s plenty of time to get
aboard. But it appears that there were a lot of
hedgies in there and some appear to have been
hammered by the reduced liquidity.
If you’re living in NH, own your home free and clear
and don’t really have to worry about income, why the concerns about the energy bills of everyone else? We all have to make personal choices about our consumption and how to balance that with our income and assets.
If there’s a bubble, then there’s a bubble and it may pop or it may not. If there is an oversupply of realtors, then hopefully the number will decline.
I haven’t paid close attention to the real estate market as it’s a bit hard to get data and it doesn’t
come up in the local papers that much. I don’t know of anyone buying investment properties or flipping. Most of the people I know have one or two professional incomes with modest houses to mansions and have not gone hog wild on financing.
We went through the crash in the late-1980s / early-1990s and the economy was down but it did
eventually come back rather nicely. And jobs in
my industry have opened up quite nicely. My feel
is that the economy is strong and the Fed may wind
up killing it if they’re not careful.
Perhaps the next bubble is in Valero Oil or the IGE ETF. If you bought Valero a year ago, you didn’t really care where oil prices were. In fact you probably felt like cheering on gasoline prices.
Lots of other stuff like SJT, HGT and PVX with
12 percent dividend yields were nice too. Haven’t
checked the dividend yields on those lately but
they should still be pretty high.
I think that the quality of life in NH is pretty nice.
Maybe it was a lot nicer 20 years ago before we
had a lot of people move in. It sounds like there
are a lot of things that you don’t like with the
state but it sounds like you have a pretty good
life here as well.
Manchester? We must be thinking of different Manchesters. The disconnect between the average wages/available jobs in NH and cost of living is going to end badly. But wait…Manchester is different, Suzanne told me so! Harley’s for everyone!
http://cbs4boston.com/topstories/local_story_080182928.html
Several of my coworkers send their kids to DerryField in North Manchester. $20K per year and that doesn’t include stuff like books. Go one town to the West and you find a lot of expensive homes.
At any rate, if you have the time, visit the SSB office in downtown. Someone is paying a lot in commissions to pay for those nice offices.
I don’t think that Manchester is a particularly great city but Money Magazine thought so a few years ago.
The cut in liquidity is clearly causing an increase in crime. I remember that we used to have a lot of bank robberies in the late 1980s and early 1990s. The improving economy apparently reduced the number of bank robberies. But in the last two years, they’re picking up again. Signs of economic stress.
Disconnect in SD:
- More used homes for sale now than at any point since before 1995 (today’s zip inventory = 21,300 or so).
- We are well into the “hot spring selling season”, almost into summer.
- The market is dead. You don’t see a gazillion open house signs every Sunday anymore like you did last fall. Not many human directionals (aka sign twirlers) advertising condo flips. It is as though the sellers have thrown in the towel on serious efforts to sell, and are collectively waiting in line for their turn with the executioner.
Getstucco,
I was wondering about the lack of open house signs. Its weird how few there are. I almost think its because the realtors have given up wasting their time showing homes.
I cannot help but notice how *hungry* realtors are to be our buyer’s agent. We started off saying no as we didn’t want to feel guilty as our buying window is in the far future. Now we say no as we’re going to use an online realtor for the final process (I think its worth something to hire a negotiator). The minimum kick back to me is 1.5% of the home selling price and it can be 2.25%.
Neil
In the last week, I’ve read of a few more trendy condos being built (IIRC, couple $100K each - when homes can be bought that are perfectly fine for less than that). At least one of them with (a) TIF. We keep losing population, but somehow, developers decide we need groovy singles pads to attract the beautiful people. They are delusional. The pop here (Allegheny County) is the 2nd oldest in the country. We are also one of the top jello consuming areas.
North San Diego County:
Lately, I’ve noticed one of those “billboard” trucks driving through our residential neighborhood EVERY DAY. Its primary ads are for new homes (San Elijo Hills community, Lennar, KB Homes, etc.) and Realtors.
Also, got an e-mail from Pulte today asking if we were still interested in their homes (we sign up for everything, just to keep track of what’s going on), as they want to clear out their sales lists. I’m guessing they want to get a better idea of how many interested buyers really exist for forecasting purposes, but who knows.
Yes, some homes are still selling, but that has been the case even as the market cooled in fall 2004. I believe, though, they are selling for less, and that’s why the volume might be picking up — as well as seasonality.
40 Year interest only loans?? With a 10 year fixed rate interest only period???? Is this bubble ever going to end????
I hate the mortgage industry!! They just keep proping this thing up! It is like Night of the Living Dead! It never dies! I am sooo angry! These Bas*rds just keep moving the inevitable out further and further! Hell, I’ll be retirement age before these prices come down to earth! I really hate these people!
http://www.latimes.com/classified/realestate/news/la-re-crisis4jun04,0,6243534.story?coll=la-class-realestate-news
Here is my nominee for the most absurd local gimmick that I-can’t-believe-actually-is-being-funded. The “Clock Tower Sandwich” in Charlotte:
Curry Clock Towers
This will be 26, million dollar+ penthouses sandwiched between two hotels. Only one corner of this thing will even face the uptown tower views.
It’s ugly, illogical, insanely expensive and catering to a market that does not exist. The perfect example of a real estate bubble and an attempt to find the greatest fools.