Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
One reader wants to hear your vote for the housing bubble ‘ground zero.’ “Which city/region has bragging rights to being the ground central of the bubble? I claim Sacramento, CA.”
“And this juicy tid-bit as anectodal evidence: just down the street from me there are actually 7 houses in a cul-de-sac are now for sale! TOP THAT!!”
One responded, “Give me the addresses please…I want to Suzanne it.”
Name:Ben Jones
Location:Northern Arizona, United States
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I’ll add that a ranking of the bubble areas is appreciated. Today, I’d have to say it’s a toss up between some of the Florida markets and Phoenix. Also, the condo bust is almost it’s own thing now, IMO.
Pinal & Maricopa county - Phoenix Arizona. No ifs or buts about it. Queen Creek in Pinal county is already getting slaughtered. Much more to come. I expect prices down 40-50% within the next 3 years.
Agreed. Phoenix is my ground zero. Florida pretty close though. Actually with that Charolette County condo news of a 98% sales drop YoY, maybe it has gotten ahead.
I totally agree with Queen Creek being bubble central. I over heard someone in the hall at work a couple of weeks ago, “bought two houses in Queen Creek to flip, can’t sell, can’t rent” Ha Ha
Ditto on Up-The-Creek (formerly Queen Creek). In the miasma called Phoenix, the Creek rules.
You might consider starting a housing bust blog.
I’m in Chandler, AZ the amount of ‘for sale’ signs is staggeing. I’m predicting 30-40% price decreases within 18 months.
it will be a comfortable 113 degrees in phoenix today. that’s prime house buyin’ weather in my book! yeah, a cookie cutter stucco box in the middle of a scorching dead zone. home sweet home.
Don’t forget to run the air conditioning during your open house while leaving the front door open to invite people in!
I have to admit that Phoenix and Florida look pretty bad. I think all the coastal California outliers (cities within 6 hrs from the coast) are in serious trouble: Sacramento, Fresno, Bakersfield, Las Vegas, and Phoenix.
However, if there is one measurement in which Sacramento leads the country it is the rapidly declining new home market. Beazer called the Sacramento market the “toughest” housing market in the country. Sacramento leads the nation in cancellations. Apparently all the major homebuilders are walking away from land deals. Housing starts are down 55% and new home sales have plunged an astounding 59% from the prior year. Prices are flat or declining.
Phase 5 of an Unraveling New Home Market
Great facts Lander. I’m a fan of your blog.
Vancouver is Ground Zero in Canada.
I’m glad you mentioned that. I usually don’t cover the city because VH blogger does such a good job. It did take off early there and has soared higher than many US markets.
Also Spain is supposed to be bad. And rumors of the market crashing in Portugal??
Good point. The Telegraph ran an editorial the other day claiming Spain was going to be a disaster and Portugal already was. Also, a man I know just got back from selling timeshares in Baja, Mexico. He went broke and had his car stolen.
ot-anybody have any experience with rentals in Portugal? I’m hoping to go in the fall. if anybody has suggestions/ideas, please write and thanks.
catherineiw@yahoo.com
I got drunk in Tijuana and got arrested and had my car stolen by the police? Does that count?
Why in God’s name did you take your car to Tijuana? You drive THROUGH Tijuana, at worst.
And Ireland! Median home price is approximately $358,000! Ok, I’m Irish, so I can say this: Those dudes should lay off the sauce before they make an offer.
Well if we are going international isn’t Shanghai the biggest bubble period?
Vancouver ? No way. Calgary is. House prices up 50% in the last year. At least Vancouver has some semblance of not enough land. Calgary has land for farther than the eye can see.
I think Calgary is overtaking Vancouver.
But at least some of the increase in prices in Calgary is supported by fundamentals (high family incomes, due to oil price boom). However if the oil price goes down that will change, and in the long run there is that unlimited land mentioned above.
Vancouver has poor fundamentals - as opposed to its image as millionaires’ city, it actually has a median family income not much better than Montreal or Winnnipeg (Canada’s cheapest big cities), and lower than Ottawa, which is less than 1/2 as expensive.
The only fundamentals we should be looking at are own vs rent ratio. Did rents in Calgary go up 35-40% in the last year?
Vancouver was always pretty attractive and expensive city (as far as I can remember), but Calgary just came out of nowhere to be Canada’s 3rd most expensive city (tied with Toronto).
Rents did not increase very much at all in Calgary. I have a friend there and his rent went up $25. He said he is paying $700 on a $250,000 place. Value to rent is over 30x, which is 2 to 3x too high.
My parents are in Vancouver and have all kinds of extra money as their business (nothing to do with real estate) is doing extremely well. For the first time in their lives, they almost had more money than common sense. I talked them out of buying some “investment” properties (they were even going to have me live in a multi-unit and manage it). I also talked my brother out of buying a Vancouver condo. I told them all to watch the US over the next few months to see what’s in store after the Olympics, if not sooner. My family will hold the money, and we’ll wait…
You are absolutely right. When the market bottoms out in Vancouver in 5 to 10 years, smart buyers should be offerring 1984 prices .
1) Miami / San Diego (a tie in my book)
2) Las Vegas
3) Phoenix
Miami and Phoenix certainly are candidates.
But a lesser known disaster blowing them both out of contention - My home state (Alabama) - Orange Beach/Gulf Shores.
Condos sold last month - 45
Number for sale - 3500
More than a 7 year supply. And they are starting new projects weekly. The agents are spinning their little hearts out.
Now they are trying to get a new 200+ condo project going in downtown Mobile by the water-front, price to be determined - but probably in the $500k-$1mil range.
I would have to say Miami because the condo virus seems to be worse here than anywhere else.
I live in San Diego and while I’m sure it won’t be pretty, Arizona and Florida definitely sound worse. Las Vegas might be a little worse and Virgnia and Massachusetts sound about the same. Totally subjective. So I’d rank:
Arizona/Florida tying with Arizona ahead by a possible nose.
Las Vegas
San Diego/Boston.
But what about Boise, Austin, Seattle, San Jose. There are just so many bubble cities it’s impossible to keep them all in your head.
Miami/Ft. Lauderdale FL - #1
Phoenix/Tucson - #2
Nothing else even close. California has always been ridiculously overpriced.
“California has always been ridiculously overpriced.”
Exactly and it’s gone waaay beyond ridiculous. You should see what they want now for a ghetto shack.
Click on my name and see what a $389,900 - $425,000 starter home looks like here in San Diego.
Description
Gorgeous home w/huge yard, recently remodeled, w/2 car garage and plenty of ample parking, alley access. Build another home or just expand. Newer roof, newer kitchen & cabinets, paint, flooring, washer/dryer & fridge convey. Nicely done!
Bedrooms: 2
Full Baths: 1
Partial Baths: 0
Square Feet: N/A (Dollhouse, LOL, 616 sq ft)
Lot Size: 6,550 Sq. Ft.
Year Built: 1923
Listing Date: 05/01/06
On Market: 33 days
Type: SFR
Status: ACTIVE
MLS #: 066036216
I’m dying to see what you got say about this POS, TXChick
Great googly moogly. Here, by way of contrast, is what that same amount of money will buy in Pittsburgh:
http://tinyurl.com/q4jwt
You know in reality thats really sad. Californians should look at that and flock themselves daily for what “we” pay for real estate. Sheesh
Which one is for sale? Is it the crappy powder blue one or the nicer little brown house with the green roof in the lower left hand corner?
LOL
Good one Garth, heheh.
of course the SD shack is worth almost nothing. it’s the land.
No, the land isn’t really worth anything either. This POS is located in City Heights (formerly known as East San Diego) and NOT in a special “pocket” neighborhood. Straight up ghetto area. I might give it a little more value if it was in the redevelopment area of City Heights but only because of the close proximity of the police station.
You couldn’t buy the garage for that kind of money around here! Check out some Los Angeles addresses. Venice and Santa Monica are always good for laughs!
OMG! I just found a house behind me that sold for $815K in January of this year! Did those people ever get stuck! The same house was sold for $500K in 4/05!!! I’ll have to take a walk tomorrow and look at it.
“Cute as a bug”….actual RE advertising copy.
And, hear, hear for staking out San Diego’s claim as the housing bubble king.
All right, I’ll divulge secrets. I was bidding on a commercial property in Old town, San Diego a year ago. I bid 1.1 mill and, after a WHOLE LOT OF DRAMA, the seller came back and said someone else bid 1.3 and did I want to counter. I bowed out and said no thanks. Last time I checked the property was listed at 2.9 mill!!!!!!!!! It is greed pure and simple right now. The sellers who are 2d home owners are trying to cash in and get out!
Good luck, they’ve officially run out of idiots.
A “starter home” should be priced with “starter salaries”. Let’s say someone is young and has just started at $40K/Yr. Using the 3xYearlyGross Rule (which is liberal…used to be 2.5) that person’s starter home should be about $120K.
Of course we know that “starter salaries” in San Diego are about $140K per year and that is why this “starter house” is priced where it is.
And with pressure on American wages to go down due to global equalization of wages, I predict American RE prices can only go up….(research provided by Suzanne).
my garden shed is almost 1/2 that size and it cost me $3,000!
People are such fools!!!
I remember 1000 square foot 40 year sold shacks in LaJolla going for 5-600K in 1988. My 1100 square foot shack in Ocean Beach sold for 400K in 1989, although I Zillowed it recently and saw $1.3M! After my husband revived me from my dead faint on the floor, we agreed it was a mistake to sell it. LOL
We considered moving back to SD a few months ago but even the rents are beyond stupid. I won’t pay 3K a month for some 3 bedroom house in Carlsbad or Vista. I’d pay that for a nice 4K square foot house in LaJolla or near downtown. I find it hard to believe that any transaction of any kind takes place out there anymore.
I am convinced that rents will fall apart here soon as I see a sea of “For Rent” signs whenever my wife and I go for a walk. There are a lot of “For Sale” signs… there seems like an order of magnitude more “For Rent”.
I think rents are going to drop in San Diego. I’ve seen a multitude of “For Rent” signs recently. There is a lot “For Sale”. There is an order of magnitude more “For Rent”.
Here is what $535,000 in La Mesa (a suburb of San Diego) will get you:
Bedrooms: 2
Full Baths: 1
Partial Baths: 0
Square Feet: 1,046
Lot Size: 4,356 Sq. Ft.
Year Built: 1922
Listing Date: 05/27/06
On Market: 8 days
Type: SFR
Status: ACTIVE
MLS #: 066044936
http://tinyurl.com/n8jfd
Sold in ‘99 for $145,000.
It’s in the ‘Village’ part of town where my fiancee and I rent. It’s been on the market with a for-sale sign for about a year. Recently, the owners changed realtors so it’s only been listed for 8 days in the MLS. I’ve been watching this place for now for the last year or so. The latest owners painted, landscaped, and remodeled the kitchen a little over a year ago. It’s a very small place, built in 1922, has no parking in-front of the house and has a mexican food parking lot view.
We rent an apartment in the same area for $1250/month. 1400sw ft, pool.
Insane.
That rent actually sounds pretty cheap. Can you give more details about it? When you moved in? Detached or not? Etc…
Curious to see if rents are already falling.
We moved in Oct ‘03 and paid $1150 at the time. Rent has gone up twice, both $50 increases (04/05) but so far nothing for ‘06. The complex consists of attached apartments (12 units) with a pool in the center, on-site laundry and off-street parking. I’d say they were built in the 50’s. Older, thick walls. Quiet complex. Very close walking distance to downtown La Mesa (Oktoberfest!), trolley, shopping, grossmont center, and Lemon Ave Elementary.
Everyone who sees our apartment is shocked at how big it is.
Finally, the last unit was vacant for about 4-5 months. I know at least 1-2 apartments will be open in less than 60 days.
I nominate the Inland Empire in CA: a property in my area Riverside (3br, 1.5 bath, 1564 sq ft townhouse) just sold to a GF about a month ago:
Sale History
04/27/2006: $369,000
09/30/2003: $200,000
08/17/2001: $158,000
a 234% increase and a 184% increase since Sept 03
Few good paying jobs not tied to RE and all those in San Bernardino, Fontucky and Moreno Valley, etc commuting to LA or SD
agreed…Corona is the area to watch, it is more or less the gateway to OC.
05′ population: 146,000
Zip mls: 2,515
I believe that beats phoenix and vegas for listing to population.
Well if you read today’s L.A. Times it appears there is no bubble here in California especially in the Inland Empire. I guess my crystal ball is a little foggy.
http://tinyurl.com/hgryh
Here’s another gem where they think going over $600.00 per sqft for a skid row cond maybe overpricing the market. I know not your area but worthy of a chuckle nonetheless.
http://tinyurl.com/eechl
when would you start reporting 41% drop in sales in ventura county this month?
when will you change price and market outlook from 4 to 2?
realtors ans
When the #’s reflect that, at this time the market is still very hot even though it has slowed a bit. As long as sellers are realistic on pricing the homes sale quick. I had 7 multiple offers in the last 5 days. The latest stats I heard were a 23 % drop in the amount of sales but prices were holding. Tim
any one care to comment, this is toaks, ventura cty, ca
I’m going to go out on a limb here and say that he’s right pricing or percieved value is the key especially here in Los Angeles. I’ve seen multiple offers on everything in a down market. What some seem to miss is that there is a lot of money on the sidelines in Southern California and everybody has a different outlook. Some will jump in at a 10% price reduction while some like me probably wouldn’t get in untill 45-50% price reduction which I think we will easily see once the rates go plus 8. Especially after looking at the LA Times today and seeing just how far the median has popped up. I mean 195k to 600k in 6 yrs with interest rates being at an all time low are you kidding me, blood in the streets is going to be an understatemnt. The rates hit 8 and it’s all she wrote. So you’re going to see a lot of falling knife buying as the rates go up. I think right now as far as L.A. is concerned your seeing a stall at the top as someone called a perfect storm. After the summer your going to see some real movement here but you won’t see anything significant in price reduction untill next year when the rates go up. Thinking they are going to go back down is a never never land pipe dream the hikes are coming it’s just a matter of when the fed increases hit the market which usually takes about 6 mo’s. So the realtor in this particular case is being cautious about what he says which is good because from his perspective the outlook is a little cloudy. He also seems to know the numbers are garbage in garbage out. We are in unchartered territory just when you think you have it nailed something comes along to give you pause. So IMO his answer was appropiate.
I was just looking up my old zip in LB 90802, and the number of listings is amazing. My old building alone had 4 listings, and the price difrence for the same floor plan was almost 70k. The funny thing was that the unit selling for 70k less, was on the market for 238 days. The other units were just listed. LOL
Oh, and I almost bought into this building in 2000 for 80K, now the same floor plan is 325K MLS #: P513914—– This area is BAD BAD, and I think it is a joke what they are asking now. It will not sell.
The Times article has nary a comment on any speculation in the market and half a sentence about ARMs. Ya think they could be missing something Wilbur?
Ya think?
They don’t mention rentals, either. The overall statement seems to be that hordes of people (actually, less than a 10% increase per year, if you don’t count babies) are flocking here to buy $600K townhouses in the exurbs. The picture accompanying the story was of some homes going up in Temecula. I’m still trying to figure out where people who live in Temecula work to make enough money to afford a McMansion.
Prescott area MLS…(population approx 150K for whole county)
2215 residential listings, 1960 vacant land listings.
This is frightening. Listings are approx running 85-100 per day for weeks now. Last summer at this time, new listings per day were 18-25 per day, and everyone was surprised at that.
Catherine — can you tell us more about the Prescott situation? Do you live there? What price range are the houses? And how did such a tiny unremarkable place get to be a “hot spot”?
I agree that the inland empire is at serious risk of a RE bubble collapse. Have traveled all over the area and haven’t seen any really large hi-tech industrial parks nor are there any significant high-paying jobs sectors to be found except in temecula/murrieta industrial park.
There is also a tremendous amount of new housing inventory being added especially in the 215/15/30 freeway triangle in Rialto/north Fontana/N, San Bernardino area and along the 15 fwy from corona south to Lake elsinore. And all the recent new housing springing up in the Coachella valley and in Norco/Mira Loma.
The RE Bubble collapse/decline will start out in the desert communities of victorville/apple valley/coachella valley(palm springs area) and like an inverse nuclear implosion spread into greater San bernardino/riverside metro areas. Already checked out ziprealty and there appears to be growing listings of reduced SFH prices spreading like some infectious disease from the San bernardino core area and surrounding outlying communities.
Corona, Rancho cucamonga and Chino will be the last places to feel the hit as they are exurban extensions of
LA/OC and have more extensive/diversified jobs sectors.
What is your opinion on Ventura? My sister is considering moving to Prescott, but owns in Ventura.
that area has been overgrowing for a long time.
I think PHX is worse
It has only begun in Phoenix.
I have 17 homes for sale out of about 55 lhome subdivision I rent in (west suburb of phoenix;buckeye). These have been listed for at least a year, none have sold. They have all been asking between 220k-235k.
A new for sale sign has gone up in a cluster of “for sale’ home at the end of my block. This new listing has never been lived in and is investor owned. The home next door to him is listed at 232K.
But the balls of this guy…he put right ON his for sale sign the price of $189,000…
Let the slaughter begin.
This is going to be fun to watch.
Damn and I’ve had to get used to picking up flyers in San Diego in front of the house without a price listed!!!
I would rather slit my wrists than have that commute on the 10 every morning. I knew someone who drove 80 miles - one way - to Woodland Hills every day from MValley. He trashed a car every 2 years due to mileage.
Not to mention, I do not think his children know what he looks like.
You have to question: is it REALLY worth it? No offense, but San Bernadino county is the most polluted air I have ever had the misfortune to breathe. I am not flaming people who live there, but if you want to live in LA, then live there. If you want pristine desert, live there. I think San Bernadino is always going to be nasty due to the LA pollution moving east in the bowl.
-Ed
Commuting! That’s what alot of these FBs forget about while the ink is drying on their new contract. I lived in Redlands/San Berdo/Riverside area for years and knew people that had marathon daily commutes. San Berdo to Palmdale, Riv. to Pasedena, Palm Springs to L.A. but the one that gets me is my wife’s ex boss who commutes from Barstow to LA. Rumor has it she misses alot of work days. I wonder why?
I’ve heard the Metrolink line that runs from San Berdo to downtown LA is the busiest line they have. Someone told me it’s standing room only. If I lived out there, that is definitely something I would be interested in.
Claudia - the Metrolink line is nice,but the problem is, your total commute will still be about 2.5 hours. The Metrolink takes about 30 minutes to 1 hour to get to outlying areas, and from there you have to change to a local bus line to get to your actual work destination. The bus system in LA is extensive, but it stops *very* frequently and must travel on the very congested surface streets just like the cars. So while you are able to get to Union Station quickly, all of that time advantage is eaten up by the stop-and-go bus that you must take from that point on. I tried doing that for a long time - the car *beats* the public transportation, every time, by at often double or 30% in off-peak times. That’s the reason why people in LA do not give up their cars - the public transportation is cheap, goes everywhere, but it’s SLOW. As an example, I commute from Pasadena to Holly wood. Public transportation leaving at 6 in the morning, arrives at my office at 8:20 am. Leaving at 5 pm, arrives home at 7:30 pm. However, I can get in my car and drive that in 1 hour 20 minutes. Yes, it’s more hassle. And the gas prices are more expensive than the cost of the bus fare ($3 will get you unlimited travel all day long). But is 2 hours of my life every day worth that? To most LA residents, the answer is no.
Spent summer vacations with a friend out in SBernardino back in 1970’s and remember everyday was a sweltering 90-100 % and air was a sickening brown haze. Nothing has changed apparantly.
I’d agree that the I.E. is WAY overvalued, but many people in Riv. Co. were pulling equity to buy homes in Phoenix. I think we’re looking at a domino effect more than one being worse than the other. In other words, the areas with the earliest, highest rates of appreciation (California) funded the bubbles for the other areas with their equity. Regardless, everything tanks. And worse than when we started because we will have way more homes than necessary thanks to the HBs cashing in.
Orlando is in for a huge spanking too (I hope).
While Miami is up 164% since 2001-Orlando is not far behind at 137%.
No Top Ten is complete without Las Vegas, Phoenix, Miami, Sacramento and San Diego. Each will have different accidents and there will be 2 dozen different excuses for why they stumble.
“Each will have different accidents and there will be 2 dozen different excuses for why they stumble.”
That’s right — don’t forget that all real estate markets are local.
Salinas, CA may outclass them all–for it has reached an absurd peak. It’s a farm town/bedroom community for San Jose, and houses start at $500K to $600K. The problem is there’s no local economy so only commuters can buy, and NO ONE truly wants to live there. Just the farmers.
Vegas, Phoenix, Sacramento, etc. are bad, but they haven’t come close to the median price of Salinas.
Salinas is a metropolitan statistical area that includes the Monterey Penninsula. The industries in this MSA are hospitality and agriculture. Although home prices are indeed exorbitant in the city of Salinas itself, the “nation’s most unaffordable” prize is awarded to “Salinas” (by Consumer’s Union/NY Times) because the Salinas MSA includes, Pebble Beach, Big Sur, Pacific Grove, Monterey, Carmel and Carmel Valley. On the other hand, average incomes in the Salinas MSA are dragged down my many low level hotel and ag workers.
I don’t list Salinas for the same reason(s) I don’t mention Santa Barbara. THey will see some extraordinary numerical drops but from uber-unaffordable to merely extremely unaffordable. I just don’t see the value of following those examples just because they are expensive. IMO they aren’t perfect storm central the way other places are.
I’m fully aware of that (I live in Monterey), and the median house price in Monterey is closer to $800K, Pacific Grove $900K, Carmel & CV are $1 million+. The scary thing is that ag and hospitality workers generally live in Seaside or Salinas–and maybe earn $20K-$40K per year per worker.
The prime locations will surely drop (Carmel had a median price of $500K not so long ago), but people actually want to live there, and people retire to the nice areas. There are a few nice areas in the hills outside Salinas, but it’s not a retirement community.
Right On Tako John,
LV, Phoenix, and Excremento are ripe for a fall, but I agree Salinas seems to take the cake for absolute insanity. When the Bay Area returns from its parallel universe, Salinas will certainly fall 50% or more. It has to. No agricultural town can support even half those prices without some extreme urban subsidies. Folks who paid $500-600k for a house in that forgettable town should all get Darwin Awards!
Sun Micro is laying off 5,000 this June/July. HP said last year it would cut 10%. Just yesterday, HP no longer allows “remote login”. Intel is “evaluating” its workforce.
Strong rumors of an imminent Intel layoff. Numbers as high as 18K. Fasten your seat belts. This sucker’s going dooooown.
Intel has a large location in Folsom, CA - that should add an exclamation point to the Sacramento bubble.
With such high valuations, what makes you think it will remain an agricultural area? I love the central coast but am perennially priced out. Look at how Bakersfield’s farmers have sold in droves. Why would Salinas be any different, especially when the price per acre they could get would obviously be substantially higher?
Good point!
I take exception to that. Damn it, I’ve said it before I’ll say it again, houses in the Capitol Ghetto must be counted on the list. You Californians always think you’re number one. DC has earned and deserves a shot at the Dumb Ass Trophy with respect to real estate. Hell, we don’t even have any INDUSTRY here. Just bureaucrats, politicians and the maggots seeking sustenance from government handouts - that means everyone else. So please, due respect for the $700,000 ghetto rowhouse in a town where virtually everyone’s pay is capped by law at 145K except the president’s, and he gets a free house. Thank you for your attention.
Hear, hear.
Hey, you people in D.C. are simply resting on your laurels.
Here in San Diego, or as the Wall Street Journal put it “Enron by the Sea”, we have taken corruption to an art-form. Hence, the complete inability of S.D. to issue municipal bonds. Our corrupt mayor(s) and San Diego City Council have generated a multi-billion dollar unfunded pension obligation, all the while the feds close in on these scallywags with multiple grand juries.
As Mark Twain once said, “You must attend to your vices, or surely you will lose them.” Here in San Diego, we tend to our vices!
“Here in San Diego, or as the Wall Street Journal put it “Enron by the Sea”, we have taken corruption to an art-form.”
Yes, art does imitate life here in San Deigo…
‘Criminal intent
Best-selling author sets his latest detective adventure in San Diego’s underbelly
By John Wilkens
STAFF WRITER
In T. Jefferson Parker’s new mystery novel, the murder happens against a backdrop of civic corruption – an underfunded city pension system, plummeting bond ratings, a councilman on the take. Any resemblance to San Diego is purely intentional. “I’ve always set my books in real places and I’ve used real street names and I’ve nibbled around the edges of the issues and personalities who live in a given area,” Parker said.’
http://www.signonsandiego.com/uniontrib/20060604/7.html
We have a long standing tradition of corruption. Probably showing my age with this but does anyone here remember how San Diego became “America’s Finest City”?
http://www.sdreader.com/php/cityshow.php?id=971
Not sure I totally agree on income to cost, but since I agree that your “maggots” are indeed the vilest of all, I will support your petition to include DC should in the top ten. I hope those K-Street lobbyists get scorched and slither back to the dank holes from whence they came, following their maggot-in-chief, Tom Delay.
DC crossed my mind but I simply don’t know enough about it.
it was 800k two weeks ago now 820k.
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
sorry 822,397 but what is a 1000 homes + or -?
1,000,000 soon!
I’ll go with Bakersfield.
At least all the other places mentioned have, you know, stuff.
Bakersfield is pretty high for an area with no stuff, but have you looked at the prices in Barstow lately?
Vancouver is hotter than ever. still lining up around the block for new condos as if they were U2 tickets… not $500,000 condos in the heart of skid row (woodwards building)
Consider the OFHEO numbers for Sac released on 6/1/06. Nationwide, prices fell in fifty-two MSA’s last quarter. That’s big news in itself.
Then narrow the focus, and consider just the fify largest MSA’s (as defined in the last PMI Mortgage Co report.) Prices fell in four of the fifty largest MSA’s last quarter. Here I’ve listed the 4 “large losers.” I’ve shown the drop last quarter and the 5-year increase.
If the drop in Sacramento does not accellerate at all, nominal prices will fall about 1% in 2006. (The real drop is worse if you adjust for inflation).
Then notice which of the four large MSA’s that have already started falling has the farthest to fall. Sac has by far the steepest runup in the last five years. It’s one of a handful of the large MSA’s that have seen triple digit increases over the last 5yrs. This shows just how steep the slope is if prices continue to slide.
MSA……………..1-Qtr…5-Yr
Warren-Troy MI.. -0.45…18.77
Denver-Aurora CO. -0.35…21.15
Cambridge MA….. -0.24…50.3
Sacramento CA…. -0.24…112.23
San Jose CA…… -0.20…45.75
Note also: this week Forbes listed Sac as the fastest growing foreclosure region. Last week I also read that Sac has been one of the nation’s hottest new construction markets. Seems like a lot of stored energy.
Sacramento has had a 110% increase in listings since 8/1/05.
http://sacramentohousingbubble.blogspot.com/
LOL! and 9/05 wa the peak. If Sac isn’t in the top 5 then this get’s ugly Quick!
Trying to post
That’s what I like. Numbers. Ok, I’ll vote for Sac. I do see the HBs rushing to move inventory there.
#1: FL
#2: Phoenix
#3: Northern VA
I think NoVA is actually the dark horse story of this bubble. Not as much press as FL and NV, but an absolutely insane run-up in prices with no Earthly justification, and now an equally insane run-up in inventory. At least if you buy a $500K crackerbox in LA, it’s close to LA. If you buy a $560K crap box in Purcellville VA, you’re in the middle of cow pastures 70 miles from DC (2-hr commute), or anything else for that matter.
Sheesh. You can get a townhouse inside the beltway for this price.
yep, in downtown Guada-la-hArlington.
That’s in Loudoun County, which is kind of a weird situation, in that a large percentage of residents are commuting to the Dulles Corridor, rather than to DC. As such, prices in Loudoun are way higher than for areas south of DC, such as Prince William and Spotsylvania Counties, that are way the hell out of town. Also, Loudoun was historically home to the “horsie set,” and seems to have retained more of its snob appeal than other, more solidly middle class suburbs and exurbs in NoVA. That said, everything here is way overpriced around here, no doubt. But the “for sale” signs are becoming legion in my little yuppie corner of Arlington, and the price reductions are starting.
I can’t argue with any of the markets above, but any list that does not include Southwest Florida is incomplete. Miami has a huge condo problem on top of it’s price increases, but Naples/Ft.Myers and Sarasota/Bradenton have more houses than people now, at prices unheard of. I know someone who bought a house there in the late ’90s for $140k, and transfered to Atlanta last year, and got $440k for the same house.
I vote for PHX over SD because of inventory growth rates. Don’t have the numbers in front of me, but I know that PHX has roughly quintupled used home inventory since last summer (10K to 50K) while SD’s has grown a mere 50% since Jan 1 this year (13,896 on Jan 2 to 21,334 on June 3). Moreover, SD’s inventory is a mere 2% or so of built homes (according to recent research I did using Census data) while I suspect PHX has a much larger percentage of its build home stock on the market (but I did not check this). Finally, everyone wants to live in SD — we have a much better climate than PHX, and when the dust settles on the bubble aftermath, fundamental demand here will prove stronger than in the middle of the Arizona desert, and PHX will see its market crash harder as a result, IMO.
P.S. The big problem SD must eventually work through is the mismatch between its housing prices and its wage base. This is no big deal when prices are going up by 10%+/year, because nobody, and I mean nobody, minds pocketing an extra $60K+/year just for living in owner-occupied housing (much more for above-average-quality SD-area housing).
Now that price appreciation is grinding to a halt, we face a morning after where new potential buyers (and their lenders) will no longer be able to factor in price appreciation to their purchase decisions. In this brave new world, $600K for a modest three bedroom home in the suburbs looks mighty expensive, especially when the price tag is roughly 10X the median SD-area income.
Brilliantly stated.
I couldn’t agree more as a life-long SD resident.
Well said!
This thread is like the evil twin of threads from months ago where the theme was “real estate will never drop in my town, USA because of factors A,B,C, etc and we’re special”. Now we’re talking about our towns being the worst in the country in terms of speculation and economic imbalances and wanting to rank our ‘berg as the one most likely to suffer. Funny stuff.
Anyway, I would say that GetStucco is right in that Phoenix is a lot
less desireable than SD, but I think a lot of the flippers there are based out of SD, so desert RE tanking is going to affect folks and RE prices here as well, in addition to the speculation in our own market. I’m not aware of people in Phoenix buying properties to flip in SD - and that’s an interesting point, that money flowed from the most expensive areas to the least expensive like a liquid finding the lowest point in a topography. Now it appears that equalibrium has been reached (like a tide almost) and recession is underway. Maybe I surfed too much today!?
“Anyway, I would say that GetStucco is right in that Phoenix is a lot
less desireable than SD, but I think a lot of the flippers there are based out of SD, so desert RE tanking is going to affect folks and RE prices here as well, in addition to the speculation in our own market.”
Liberated home equity has been used to buy still more and more RE in this ridiculous game. Something somewhere is being used (however loosely) to anchor chains of leveraged investments in the bubble markets. It makes sense that the speculators in this game would try to pull pack and ditch their failing flips elsewhere to save their house(s) in San Diego, LA, SF, or whatever bubbled-out area provided the appreciation necessary for them to swarm elsewhere into ‘cheaper’ markets. In a way, Phoenix having double the inventory of SD doesn’t surprise me at all.
My vote for secondary bubble market ground zero is Phoenix.
SD is just going to take a little longer to implode. I also think the San Joaquin Valley as a whole deserves honorable mention in the collateral damage department.
This thread is like the evil twin of threads…
My thoughts exactly!!! Amazing how things have changed even on a blog of like-minded people.
GetStucco & Rich are right. This is why the “soft landing” is so scary. The real aviation metaphor is a “stall.” Flat or single digit appreciation is dangerous because the market right now is built on people who pay the mortgage interest, and the eventual ballon payment, with rapid appreciation. When appreciation drops to single digits the plane stalls. As always, it’s not the fall that kills you it’s the sudden stop at the bottom.
I am no aviator, but perhaps those who are could help me out: Aren’t crash landings normally preceded by a stall?
I believe the comments above are on target regarding how PHX and SD are attached at the hip. Correlation between these two markets due to PHX investments financed by SD home equity cashouts virtually guarantees the two markets will eventually sink in tandem like a pair of tethered anvils.
I had a pleasant conversation last summer in my SD neighborhood (Rancho Bernardo) with a PHX developer, who was telling me how strong their market was, and how prices would go up forever, blah, blah, blah… First I tried to gently suggest that perhaps there was a problem with overbuilding, but after I recognized the futility of trying to reason with him, I just adopted my politest blank-stare smile and waited for him to shut up.
The blank-stare smile is your friend.
I think PHX and SD are fairly closely tied, but I think investors will bail on their “flips” before they let their first homes go. The selling of investments in PHX is equivalent to the selling of a luxury item such as an H2. It will happen first and hardest.
Also, fundamental population needs to be taken into account. How many people lived in Phoenix and San Diego ten years ago?
The main negative difference for San Diego vs Phoenix is the fact that I think our industry may even be less sustainable than Phoenix. Phoenix has a construction bubble. San Diego has a construction and biotech bubble to name just two, in addition to the state of the city’s finances and the higher property taxes.
What’s the Real-Estate-Equivalent of wind shear?
Bravo!
In Arizona the new home builders make you sign that you won’t sell for an agreed upon time, usually 12-18 months. What happens when these houses can be put up for sale?
Although a good argument could be made for the southern San Joaquin Valley (i.e., Fresno, Visalia, Bakersfield), my sister, who lives in Phoenix, along with others on this blog and the inventory numbers, suggest Phoenix is probably “flipper” central and/or bubble central.
Out of all California markets, it would seem the Eureka/Humboldt county area is probably the last to fall (but I’m sure it will). I’ve lived in Monterey, Visalia, and Eureka in the past four years and friends from all places pretty much support what my eyes are seeing thus far.
BTW, someone really needs to let people up in Eureka know that there is, in fact, a housing bubble. People there seem far more oblivious to the fact than in other areas of the state.
For example, at the local Borders, there are two books on the shelves of interest: John Talbott’s “Sell Now!” and David Lereah’s book on profiting from the housing boom. The last several times I was there, I noticed “Sell Now!” hidden behind Lereah’s book. Of course, I put the “Sell Now!” book in front and moved Lereah’s book to the back. The next day, I’m back in Borders and guess what? Lereah’s book is back in front with Talbott’s hidden from view. There are a bunch of old farts here that really don’t want to be upset by the thought of losing hundreds of thousands of dollars. Plus, the local paper has nothing but propaganda about how great the housing market is.
One reason I chose Bakersfield is that I cannot for the life of me come up with any sort of “everyone wants to live here” argument.
Other places where “everyone wants to live” have: jobs, retirees, favorable taxes, nice weather, coastline, mountains and/or culture. At least Humboldt County has a few of these things, depending on where you are. But Bakersfield’s got nuttin.
It might have a few of those things, but it doesn’t have jobs.
Not true. I personally consider Bakersfield to be the armpit of the West Coast, but my brother lives there. He likes it. There are at least some jobs, and there are interesting areas all around (Sierra Nevada, Central Coast, Mojave Desert). So, I suppose some people like it. However, it certainly does not merit super high home prices. I am not certain where they are right now, but certainly nowhere near Salinas or even Humboldt Co. Both are poorer in jobs and probably ~30-40% more expensive.
I watch to see how long homes are sitting on the market in Bakersfield on realtor.com. It appears that the re-sale market is not moving. See the same homes for sale month after month. Does anybody who lives in Bakersfield want to comment.
I hear ya, dude! My local paper (such as it is) actually had a glowing interview with a developer, and he was babbling on about how successful he was, how they are selling out, blah, blah, blah. So I check my handy MLS and lo and behold, there are MANY listings/price reductions in his little slice of heaven.
I’m seeing lots of local lying.
I still think Barstow is really more pitiful, it just doesn’t have a huge housing inventory. I just looked and there is a 4 bed/3 bath home for $799K in Barstow, along with some new construction flipper type houses for $330K. You can get an older 2 bed/1 bath with NO air conditioning for $150K. Who in the heck would buy a house to flip in Barstow? Flippers who had car trouble on the way to Phoenix or Vegas?
Who in hell would pay 799,000 for a Mcmansion in barstow? If you were to list 20 Scal High-desert communities for desert scenery, cultural amenites, closeness to LA coast, closeness to nearby mountains, recreational assets,jobs ect, barstow would come out last. There is nothing at all in and around barstow except the Mohave River.
I always thought a real attractive desert community would be Yucca valley or JOshua tree because of proximity to Joshua tree N.P. Ridgecrest and Californai city are 2 hrs drive from Sierra Nevada and near some nice desert areas(red rock canyon) but way out of way from LA basin.
Palmdale would be okay if they ever finish the 14 freeway widening project going up thru the pass out of palmdale. This creates horrendous morning and evening commutes for commuters going to LA and is probably why Palmdale/lancaster shows over 4000 homes listed on MLS.
Need to qualify my comments about Barstow a bit. Barstow appears to be a major transporation crossroads hub where the 15/58/40 and thw 247 meet. As interstate long haul trucking is a growing vital industry in Scal this may explain the odd 60 % YOY price increases in homes(april 2005-2006.
It is also exactly the halfway point between Las vegas and LA basin and of course a major stopover point for all the Vegas-LA tourist traffic.
Have been out to some of the historic old ghost towns and sites near dagget along historic route 66 just east of Barstow so i guess Barstow not a total loss.
Stiil new home prices selling in the $300,000’s a bit overpriced. Barstow RE will get hit very hard during upcoming RE bubble collapse, as will all overpriced California desert properties.
Barstow is, and has always been, a place to gas up your car between two relevant points on the map.
Don’t forget BUN BOY. Also available in Banning and Beaumont, I think. Went to Vegas too often in my youth, I guess.
Is Bun Boy paying $50 a an hour to their burger-flippers? Because if not, I can’t figure out how the residents are able to afford $800K McMansions…
LOL. The only time I was ever in Barstow was when my parent’s car broke down (overheated, naturally) while passing through the area. I am completely mystified as to why anyone would actually want to linger there for any length of time, even if houses were dirt cheap.
LOL. Try this
http://www.oftwominds.com/blogmay06/RE-ad.html
I think the whole state of California is pretty much F***ed. Everything is far too expensive for a state where most people earn about $30 to $60K a year.
Agreed. I think the big drain has backed up. Although expensive for years, California has simply gone over the top with this last bubble. People will leave in droves, or simply rent, rather than pay these prices.
I think California is the #1 bubble market.
Without the equity tapped here from the bubble nowhere in the West would have a bubble.
Very true. The run-up started here and the people who cashed in took the money and spread the wealth to other areas.
Oh, sunsetbeachguy, I could not agree with you more. Without the CA bubble, we’d have no southern OR bubble, no LV bubble, nor the AZ bubble (all places in which the fundamentals are even more f***ed than CA)
Agree. Whatever happens in CA will be reflected with a one year lag in Seattle. House prices here are going to drop anywhere from 20 to 40 percent depending on the area and runup.
Bingo! California equity money has been the roving eye of Sauron for the last five years. ANY town or market in the US that has captured the attention of that malevolent orb has quickly been overrun by gluttonous Orcs (flippers) and goblins (retirees). That is the golden thread linking Phoenix, Sac., LV, Seattle, Boise, Reno, Bend & Ashland, OR, etc. So, when Sauron falls, all will rejoice in Mordor and beyond..!
Great metaphor. Tell Frodo to hurry up and drop the damn ring.
Ground zero? Las Vegas, at least in terms of absolute destruction. IMHO, no other city is so entirely dependent upon growth. I see LV going back to casinos / tourism and not much else.
I have spoken of Las Vegas before (I helped my bestfriend move there last year) and the local saying: “Everyone leaves Vegas within 2 years of moving here”. Sure enough, my best friend who has been there 1 year, wants to get the hell out.
Also, he is renting from an owner who lives in the mid-west (or farther east) for less than their mortgage payment. Finally, new people to Vegas seem to get sucked into gambling, and I am sure this could speed up mortgage payments falling behind.
The Nevada Legas News is the official record of Trustee’s Sales. Average is 60 per day since April 1. Most of these are 100% finance that bought more house then they can afford.
At the same time, employment on the strip for commercial ($7 Billion City center) and Trump Tower is strong, and all the other remaining gambling hotels will be demolished and rebuilt. 3 new major hospitals to be built for all the retirees coming here.
I expect major price reduction from the run up over the last 5 years, but I just can’t put Vegas in the same league with Phoenix and sacremento.
New Residents (Drivers License Count) April-06 6,784 April-05 UP+ 2.8%
Total Employment April-06 914,100… April-05 866,600 UP+5.5%
Unemployment Rate April-06 4.0% …April -05 4.1% Down -2.4%
I vote for Vegas; call it a hometown bias. We have it all: california speculators, california prices (ok, not LA), california-style overbuilding. What we don’t have are california incomes or diversified economy. So essentially we are a California outlier with all the negatives and none of the positives. As people around the country feel the pinch and cut back on their discretionary spending, Vegas gets that hit too. This place is going to be an equity mirage in the desert for years. Let me remind you that in the 50s they sold land here at 50 cents an acre, when they could find buyers.
Don’t forget about the world’s oldest profession, which should provide good recession insurance for the LV economy.
90% of US cities (population wise)!
Your comment is probably correct. Wherever this bubble is centered, there is going to be a big pull back of money out of real estate (a la Nasdaq collapse) that will force everywhere down.
T-minus 4 to 4.5 months until the meltdown. Just wait until sellers don’t even have the hope of “back to school” moving the house.
But my bet is that it will “pop” first in either the Florida condo market or Vegas. Yes, Pheonix has inventory through the roof.
Neil
If by “ground zero” you mean greatest prices depreciation and most complete devastation I have to go with Phoenix. They won’t be able to give some of those houses away in twenty years time.
In the end, people will go where prices are cheaper. A condo in Phoenix is much much cheaper (still over priced) compared to San Diego. Basically, if and/or when Phoenix and San Diego drops 30-40%, San Diego would still be over priced.
If people always went where prices were cheaper they would live in west Texas, Detroit, or North Dakota. Coastal cities at least have a chance for a bounce back after the crash. Desert communities like Phoenix or Las Vegas could be like that lady on the commercial: “I’ve fallen and I can’t get up…” Not wishing anything bad on anyone but some of the desert boom-towns have no logic to where they are. If gasoline prices or water become a problem during the downturn these areas could become untenable for such large populations.
I think you got that exactly right.
I’m with crispy@cole, even here in the nowhere that is Oklahoma City, the average income is roughly $30000 and the average new home cost is $150000. a 1952 asbestos sided rat trap is about $60000 to $80000. Also there are heaps of new neighborhoods going up everywhere and selling to …. uh…. damn if I know who.
Started following this site and man is it addictive. This is the first time that anyone has mentioned Oklahoma City. Will be moving there for a job (go figure) and do you or anyone have any insight to the local market there. Bubble? Bubbling? Bubbled? I was told “noone rents.” Kinda off topic.
I vote for Phoenix though as a family friend considered buying a house there and was shown 40+ houses in 2 days. All but 2 were empty.
Location, location, location. Houses are similarly priced pretty much everywhere but some will sit and others will never sit. Not all neighborhoods or schools are the same. Most people who work in OKC commute from Edmond or Norman. The surrounding burbs are your best bet. Yukon, Mustang for west OKC. Norman for south OKC and Edmond for north OKC jobs is the way most people do it. Try to pick the very best lot/location for the neighborhood. We have been looking for years now and I have yet to get excited about anything so don’t get emotionally invested. Summer is a good time to rent a duplex or something and take a good long look around. Prices aren’t going anywhere and they are building even more as I write this. Good luck in Oklahoma!
“No one rents.”
By definition the best time to purchase something is when “no one” else wants it.
Sign yourself a year-long lease.
Ditto! Norman, OK here.
This one in Tampa takes the cake, it has been listed for almost 4 YEARS (1339 days) and even has a “for rent” sign out front.
MLS #: T1497723
Southampton,NY has to be ground zero in the east.
Phoenix. And here’s why…
The amount of speculation in the Phoenix area is the sum of all the local AZ speculators combined with all of the out-of-state speculators (particularly from CA). The absolutely huge amount of CA money that has been ‘invested’ in AZ has taken this market to a level that I feel is unmatched.
Because of this fact, LA can not match Phoenix in excess. A local market can just gin itself so much w/o huge infusions of ‘foreign’ capital.
IMHO, the only other possible rivals for the crown are the usual FL suspects.
I have a side interest in lofts in Phoenix. One of the loft builders of several lofts has a web site I visited occasionally. Today I noticed some of the areas are sold out. That’s very surprising. I do want a loft, but I don’t “need” one.
Aha! The optima Biltmore lofts are 50% off! I’m sure the suckers who bought a $949 1bdr unit will consider jumping out (pun intended).
Correction: $949,000.
Starting price for an auction? Let’s see what the GFs actually pay.
I found this rental amusing. From CraigsList:
$1250 - ****SUPER CLEAN 1b/1b VACANT Month-to-Month in ENCINITAS**************
Reply to: anon-166359438@craigslist.org
Date: 2006-05-30, 8:44PM PDT
**SPECIAL CIRCUMSTANCES**
I am currently listed with a Realtor
Please note that during the day, Realtors may show this unit
So it is important to me that you keep it up
Looking for someone who is clean w/ minimal furniture & stuff
I have a small couch, pub table w/ 2 chairs, TV stand and a desk for you to use
All you really need is a bed & TV
http://sandiego.craigslist.org/apa/166359438.html
All those requirements and he’s only willing to pay you $1250 to stage his POS? Do you need a SAG card for the gig?
I have a 2br/2ba unit, 930 sqft rented for $1100/month. It’s in Sabre Springs just off the 52 in a much more desirable location. The Craiglist ad says that rental at 700sqft. I got curious so I did a search for Pacific Pines. There is a 2br/2ba in the same complex being offered to rent at $1325.
There will be quite a reckoning when landlords figure out that an extended vacancy eats up that paltry $25 or $50/month pretty damn quick.
Oh yeah, when I was in college (1991) I rented a 2br/2ba apartment less than 2 miles from that listing for $600/month. How funny, I still remember my roommate stiffing me for $75 when we moved out.
This is funny. Why would anyone want to move in when the apartment has a revolving door open to the public all the time?
I just want to put in my vote for the most over-priced cities here to get it on record. In the following order from very overpriced to less overpriced, I’d say
1. San Diego
2. Miami
3. Phoenix
4. Sacramento
5. Las Vegas.
I think Phoenix and Sacramento may be (if they’re not already) the first to show signs of stress.
Here’s how I see it. I don’t know the answer, so I’ll throw out my list.
Disclaimer: Denver does not count since it participated in a different runup and missed “The Great American Housing Bubble”
1) Phoenix. Inventory and desert are a tough combination. Falls under its own weight.
Lancaster/Palmdale. People never learn their lessons.
2) Northern Virginia. Government cutbacks will happen. Look at Socal in the 90s for the result of that. When cutbacks hit an already declining bubble market, it’s ugly.
3) Florida. They have had the most bubbles, and they are the most adept at holding on to the last second.
4) Las Vegas. Bartenders and cocktail waitresses don’t make that much money, and aren’t planning for the future.
5) Sacramento. There was no good reason for the magnitude of its runup. Bay Area’s sins will punish the capital.
6) San Diego. It’s absurdly great weather hypnotizes people and delays the reckoning.
7) San Jose. I mean, really, it’s a shithole. And it’s lost A LOT of its jobs, and it’s STILL LOSING them.
9) Inland Empire. People never learn their lessons.
10) Boise. Whomever convinced the crowd in SD to fawn over that wasteland deserves his name remembered alongside Ponzi’s. Bravo, Sir (or Madam).
9) Inland Empire. People never learn their lessons.
Keepers. Yes, and I’ll remind people about my discussion about “critical mass.” Critical mass is when a region becomes internally self sustaining. Phoenix has crossed the threshold, Palmcaster & IE have not. It is much harder to when you are next to another accessible region even though many would argue that Los Angeles is no longer accessible from either Palmcaser of the IE. Man were those places ever desolate in the early 90s and this time it is going to look like a suburban shantytown. These people will have no place to move to and this time they cannot walk away and they cannot move “back” or folow the jobs as the “back” is in a neighborhood they won’t live in and there were no jobs created. Side note; this months “weak” jobs report of +75,000? They’ve been talking to the NAR, that’s seasonally adjusted, the actual raw numbers were -135,000 and 80,000 new entrants into the workforce not registering either.
Palmdale/lancaster have not built up to critical mass at all. There is only the huge boeing plant site 42 and a few ancillary feeder sites which provide the only hi-paying job sectors in all of the palmcaster region. It takes between 2.5 and 3 or more hrs to reach dwtn LA/westside LA from Palmdale, in normal commute traffic conditions. If the 5/14 frwys have accidents, as they always do, then all bets are off.
Completing the frwy widening project going up thru Soledad Canyon near palmdale lake( as of 2005-early 2006 still not completed)will reduce commute time a little bit, but the arterial chokepoints of the 5 fwy (section between the 134 all way to dwtn) and the 405 (sepulveda pass chokepoint)remain and are unsolvable.
The Inland empire area( the Counties of riverside and san bernardino) an area the size of west Virgina and a population or over 6 million, has not reached critical mass despite the glowing reports of the LA times. No diverse hi-paying jobs sectors at all. A lot of warehouse and trucking operations, not a source of especially hi-paying jobs(Class A big-rig drivers do make some bucks but income stream spotty)
There are some attempts to built up nascent hi-tech industries in Ranch Cucamomga ,Temecula and southeast riverside/west moreno valley but they are relatively miniscule, more like seeds just planted in the ground.
South orange county by comparison is adding more and more new hi-tech parks onto it’s already substancial industrial infrastructure.
Just a tiny correction,
Its air Force plant 42 not a Boeing plant. The second someone else wins the contract, their name goes on the building.
Also in Palmdale is the lockheed skunk works manufacturing, Northrop has a small production line, and others.
But you are correct in that it cannot support the current housing base. Its only hope is better rail access to LA. But since a tunnel to LAX/South bay (other central location of aerospace jobs in the area) isn’t even in the planning works…
The hammer will hit.
Ontario/Riverside has at least started the estabilishment of a business base. But you can tell its weak. How? Look at the growth out of ONT airport… ONT is driven by the business traffic of the “Inland empire.” If the business out there was strong, you would expect ONT traffic to be going up quick. It isn’t… Even with LAX nearly maxed out.
But I cannot help but notice that in the area where the jobs are almost all of the homes for sale are vacant. And yet prices won’t go down… Hmmmm…
So Cal is in for a world of hurt. A real estate train wreck if you will.
Neil
the large Defense/aerospace industry presense in the South bay/El Segundo/lax region is one reason the south bay will remain relatively stable thru the upcominG RE Debacle. Interesting point you brought up about better rail connection from palmdale to the SBay Aeroplace complex. I used to haul areo-parts for boeing/Northrup from their plants scattered throughout SBay and in westminister/Huntington beach. Had to do some fast runs up to Palmdale to that AF plant delivering vital parts. Using a fast light fast pickup I could deliver from LAX to palmdale in 1.5 hrs in light traffic conditions. From OC about 2 hrs. A box truck or large stakebed might do it in 3 hrs if driver really skilled and experienced in Scal traffic conditions. Big-rig - 5 hrs to one-half day.
All This is in ideal light-traffic mid-day with no accidents screwing the timetables .
Yes, critical mass is the key issue with Las Vegas as well.
Could we add St. George Utah to this list? And Kingman Arizona? And all those “2 hour away” towns spawned from the Las Vegas/Phoenix bubble?
For the life of me I cannot understand any type of RE appreciation in Kingman. Been there. Unless you worked at a gas station on the Interstate, why would you want to live there?
Please explain how we can put Las vegas and Phoenix in the same bubble catgory? Las Vegas Strip has some of the most expensive building projects committed thru 2010. The MGM City Center project, hotels and retail, at 7 Billion Dollars…is the most expensive project in LV History. The top 10 of the most expensive built hotels in the world are in LV. The Lied School at UNLV, not associated with any realty group, tracks employment and population. These numbers for 2006 are holding steady.
I know the bubble here is real, its just not in the same league as Phoenix and Sacremento
Oh gosh ,I can’t make up my mind . Alot of the main media articles say Seattle Washington is the most overpriced . I think ground zero is a toss up between Southern Florida and Phoenix . However ,sellers will lose the most in the higher priced States/locations .A 30/50 % correction on a 800k house is more money than on a 350K house .
Frankly, I think every nook and cranny of the US is in for a huge slide, no matter how much they “participated” in the run up.
For the sheer drama of it all, Phoenix and FLA and CA. are fun to watch right now. You just can’t beat stuff like 1/2 off condo sales.
But I’m sure that every local market will get “exciting” in this way in the coming months.
Seattle will take it’s beating and it will be a pleasure to witness. 1998 prices sounds about right. That would put us back on track for more normal appreciation.
This survey from ING seems to contradict the stats and ovservations of this blog in regards to refinacing and Home ATM’s.
Housing Bubble About to Bust? Consumers Say No in ING DIRECT National Survey
06.02.2006 12:00:00
http://finanzen.net/news/news_detail.asp?NewsNr=403698
While talk of a housing bubble triggered by higher interest rates is a topic of discussion and much news coverage, most consumer are confident about real estate prices and don’t seem concerned by some increases in mortgage rates. Three quarters of the respondents said that they had very little concern about the prospective value of their homes.
Respondents to ING DIRECT’s fourth annual homeowners’ study foresee continued increases in home mortgage rates in the year ahead but are not overly concerned.
And of those who have owned a home for at least three years, 74percent said they were not very concerned that there might be a downturn in the housing market in the next year, which would lower the value of their home.
Only 9 percent of those who experienced an increase in their home’s value during the past three years say that the increase has allowed them to spend more than they earn annually. On the other hand, nearly two-thirds believe a 10% decrease in home value would have no impact on day-to-day spending.
Homeowners are most likely to consider their home to be an investment or a place to live when they retire. One in four think of their home as a source of extra income to draw from when cash is needed. This is reinforced by the ING DIRECT finding that only 8 percent of homeowners say they refinanced in the past three years and received cash back.
“We’ve long viewed buying a home as the most important long-term investment a person can make and that a home is the largest savings account one will ever have,” says Arkadi Kuhlmann, president and CEO of ING DIRECT. “It is encouraging that most people do not consider the equity in their residences as piggy banks to be tapped for spending on vacations or furniture.”
ING direct has lost much of it’s luster.
I am taking all of my downpayment $ out of WAMU and ING and putting it at Farmers and Merchants which is the strongest retail bank in So Cal.
The lend very little on residential RE.
And polls are notoriously unreliable, homeowners have had too much Kool-Aid since 2001 and are strongly in denial.
They will only wake up once it is too late. Being fat, dumb and happy will do that to anyone.
What do you think about co-america bank? Have been to some of their branches including the one in Costa Mesa.
They have nice impressive operation, at least on the surface. Did not know that info about Farmers &merchants bank and will consider it as i have to park some money in a safe bank.
I used to work in Comerica’s bldg in Costa Mesa.
I never did any research on them.
This seems to defy other surveys done by non-banks.
ING Direct is a lender, and they have motivation for publishing good news. They didn’t choose to include me in the survey, and I’m one of their customers.
I have one of their mailing solicitations with me. On the envelope: Zero Closing Costs; What’s the Catch? Inside: There is no catch — just a few things to know.
It is for a 5/1 ARM and if the mortgage is $500K+ or you use a different title agent, you do not get the zero closing costs.
The header says, “Leading the charge against hidden and inflated mortgage fees.” Perhaps, but they are definitely not leading the charge on full education for the customer about the differences of mortgage types and risks. “The inital fixed rate can save you some serious money. Even when the rate adjusts, new rates can fall well below what you’d pay for a 30-year fixed-rate mortgage.” They do say the rate can go up and down elsewhere, but the statement above is preying on the victim. They avoid saying that the rate could skyrocket.
“Consumers Say No in ING DIRECT National Survey”
This was a very unscientic poll. What about the non respondents? If it was a telephone survey, all of the owners of vacant homes for rent or sale were excluded.
“And of those who have owned a home for at least three years, 74percent said they were not very concerned that there might be a downturn in the housing market in the next year, which would lower the value of their home.”
Which could mean that 26% were very worried! Add the number on non-reponders, and/or the excluded, to the 26% and the actual number of people concerned about a downturn, which would lower home prices.
And what about those who have bought in the last three years? Why doesn’t the report include their responses? If I had bought in 2002, I wouldn’t be nearly as concerned about a downturn as I would be If I’d bought within the last 2 and a half years. This tells us that the concerns of recent owners have been excluded from the survey report, which is very curious, if you ask me! Perhaps they’re VERY concerned, but their responses were not rosey enough for this survey report!
“Homeowners are most likely to consider their home to be an investment or a place to live when they retire.”
What about people who own more than one home? Have they been excluded as well? Shouldn’t “their home” read “their home or homes” ?
Rainman, I asked our friend Bubblefucius about consumer surveys.
He said:
“Consumer survey like talking to yourself, you always get the answer you expect.”
Gotta go with Phoenix. Seems like every job created in Phoenix over the past few years is in construction, so locally you will have rising inventory/declining sales and sales prices/increasing unemployment/decreasing consumer sentiment. Seems like every RE agent has a few investment properties too, so no appreciation on the properties and no income at the day job == more inventory. I hear McDonald’s is giving free happy meals for working the graveyard shift.
It was tough not to pick Miami, if we were talking condos only it’s Miami Beach by a large margin (THEN: 9100 built over last 10 years…NOW: 25k being built, another 25k approved and funded, plus 50-100k hotel/apt conversions in the offing…assume all available within 4 years that’s over 30 times the 10-year moving average. Moving avg = 910/year, next 4 years avg over 30k/year…and it’s front-loaded!). And anecdotally there are not enough renters to fill the existing condos…most of them are empty, the building I rent in is a ghost town like all the rest around here. Walk down Collins Ave from Haulover Beach to 20th Street, if you find a building with over 30% of the lights on call me and I’ll give you directions back to Collins Ave, cause you’re obviously lost!
I say Miami because of the condomania also, which will pull down all the housing that has floated up as a result.
Inland empire (riverside and San bernardino counties) mirror Phoenix in this respect: there has been a hugh amount of construction of new housing tracts and other urban infrastructures all over the IE. My guess is that Construction and trucking/warehousing account for a disporportionate number of jobs in the IE. As construction employment dwindles down due to a sliding RE Market this will have the effect you indicated for phoenix.
SW Florida is ground zero, Sarasota/Bradenton has been overspeculated with houses doubling in 2 years. I know of a case where a $350k house sold for $720k less than a year later and the person never made a payment on it due to financial issues. Inventory has exloded and we’ve seen a near 50% drop in sales yoy the past few months. Median is already down about 15% since August ‘05. New home communities are filled with vacant houses where flippers are trying to unload. I’ve driven through communities where 30-40% of the houses were for sale. Condo conversions are reverting back to apartments or are sitting mostly vacant. A co-worker has lowered their price 30% and haven’t had a single person look at the house. The press and Realtors can say what they want, but it is downright ugly in this area right now…..
That $350k to $720k was a scam. The buyer, seller and appraiser are all in on it. The buyer drastically overpays, gets a 110% mortgage based on the bogus appraisal, he keeps the 10%, the seller pays off the appraiser and pockets the rest. The buyer never intended to make a payment.
I’ve dusted off my trusty Bubble Implosion Spreadsheet Calculator ™, which contains secret formulas known only to me (and a few unfortunate others who are no longer around to talk about it), such as ratio of realtors to lapdogs, condos per square mile with elevators that only go up (never, ever down), and I’d tell you more but then my patent wouldn’t be worth the ones and zeros it’s printed on, and then I’d need to go through the whole damn process again, which is VERY expensive …
The program has calculated Naples, FL as Bubble Ground Zero. You can run the numbers yourself by downloading the program from my website, http://www.bubblegroundzero.com/Ineedalife.html.
1. San diego
2. Phoenix
3. Ft. Lauderdale/Miami
We just moved to seattle a few months ago from San Diego. My wife just got a job doing the EXACT same thing and she is making $25,000 more now.
“Sun Tax” Yeah, the weather is great, but the pay sucks and you have to deal with all the ken and barbie dolls.
I nominate places that have temperatures above 100 degrees (Bakersfield, Sacramento, Phoenix and Las Vegas). What quality of life is there in such an environment? What can you do except run up high utility bills?
A close second is hurricane alley. Insurance costs are huge and growing. High tax areas as well.
I’ll take coastal breezes in the horribly overpiced OC, where it got dangerously close to 100 degrees today - a rarity, and earthquakes. Earthquake insurance is quite affordable here so far, but we haven’t had a really big one in quite a long time. Prop. 13 also makes it more predictable, thereby making it more comfortable for financial planning.
Wouldn’t Miami not only qualify as hurricane alley but also as a place that has temps over 100 degrees?
Miami rarely goes above 100 degrees. On the other hand, the humidity hovers between 80%-100%, making the regular 90-95 degree temperatures brutally uncomfortable.
Too bad it wasn’t the Miami Heat versus Phoenix Suns in the NBA finals. How ironic would that have been?
Ground zero for the housing bubble has to be the fast growing, overbuilt, less populated areas with no end users to even rent these properties whose local economy is tied to RE and are very vulnerable to hurricanes.
SW Florida coast from Naples to Sarasota, east coast from Pt St Lucie to Melbourne and the Fla pandle. Condo wise it seems to be Florida again only because it so rampant in so many markets from MIami/Ft Laud to Daytona to Tampa to Ft Myers. Vegas, Phoenix and San Diego obviously are right up there too..
Inability to even rent a property is the biggest key as to how quickly some of these submarkets do actually crash and burn very fast IMHO.
I was thinking the exact same thing after watching the Mavs win game 6. It would’ve been the “battle of the bubble cities”. Heck, the announcers would’ve even broken out with the bubble colloquialisms - “Shaq dunked that ball like he was unloading a condo flip” or “Got the drop and the foul, appraise that basket for 2 plus one”.
But with Dallas vs. Miami, it’s more like the bubbles vs. the non-bubbles.
Glad to see I am not the only one up so late!
”
FLORIDA HOUSING BUST INCREASING
Tuesday, May 30, 2006 - FreeMarketNews.com
There is apparently another factor in the Florida housing crisis, aside from the periodic hurricane cycles. According to a Palm Beach Post story, the ease with which housing loans for rebuilding storm-damages have been obtained has led to a spate of foreclosures and defaults.
Over $106 million in home loans have collapsed in that vicinity during first quarter 2006 alone. This compares with about $68 million in mortgage defaults in the period of 2005. As the article puts it, “Experts say the worst is yet to come,” citing a spokesman for the Center for Responsible Lending, a Washington nonprofit that tracks lending practices, as saying, “We know the whale is coming, we just don’t know how big the whale is.”
It notes the explosion of new brokers and brokerages who obtained Florida licenses during the last housing boom, and helped a number of middle-income buyers to move into half million-dollar homes. - ST ”
http://www.freemarketnews.com/WorldNews.asp?nid=13963
My favorite part
““We know the whale is coming, we just don’t know how big the whale is.”
Well sir, whales in general are quite large. Go ahead and google it.
“Wouldn’t Miami not only qualify as hurricane alley but also as a place that has temps over 100 degrees? ”
It never gets to 100 down in Miami. Usually low 90’s though the very high humidity and no relief from the heat for 6-7 months are the story if you live in a place like that.. Live right by the beach and it is much more tolerable with nice ocean breezes. Another bonus is you can actually survive by the beach in the day to day world if you don’t speak Spanish.
True the heat here is…a challenge…but the humidity is a bear. We live on the water, but when the air is stagnant it feels like a sauna. The upside is NO ONE wears a coat and tie, which is a nice change from Los Angeles.
If you don’t speak Spanish you can skip going into Miami proper. They don’t speak English and best I can tell they have no desire to learn. But once you go into North Miami it starts to blend into a bilingual zone. Then when you hit the Broward County line, its like crossing a National Border. Everyone speaks English, nobody is bilingual and the signs aren’t in Spanish anymore…its really QUITE ODD.
Miami sucks. The Cubans as an ethnicity are the rudest, most surly people, as a group, that I’ve ever encountered. They seem to have a congenital inabilty to drive competently or observe traffic regulations, like signaling lane changes or stopping for red lights. All the gated communities are completely barren of anything resembling character or charm (or community, for that matter). The criminal element is everywhere, especially after dark, even in upscale areas and neighborhoods. Third World-style corruption is rife among “public servants,” especially the police and elected officials.
Alligators that eat Miami residents are doing a public service and should be spared any penalty.
Alligators that eat Miami residents are doing a public service and should be spared any penalty.
LMMFAO!!!!!!!!!!!!!!!!!!!!!!!!!!
Dear All,
I have lived overseas for twelve years and was planning to return to my hometown of Pensacola, Florida in the near future. I did a MLS search of housing in P’cola including both the mainland and beach housing and was shocked at the increase in prices over the last two to three years i.e. greater than 100% increase on the mainland and upwards of 300% on the beach. I love my hometown but in all honesty it is Hooterville. The local income level cannot support such a massive increase in prices. Suspecting a “bubble”, I did a bit more searching on the Net and came up with Ben’s blog which has been a wealth of information and a big help in getting up to speed with the re situation not only in my hometown but across the States. Thanks Ben and all the participants on this blog.
Well to get back on topic I would put my money on the bubble bursting in Florida with Naples and Miami as the lead dominoes to fall. Why? Because everything being equal between the West coast bubble and the East coast bubble i.e. high inventory, greedy flippers, interest rates, aggressive financing instuments, etc. Florida has the hurricane risk which is causing a new expense to hit the carefully constructed and financially sensitive flipper businesss plan- increased insurance rates- which will be a killer for marginal flippers. There has been coverage of the increased rates for wind damage insurance however a major revision to flood insurance is also lurking in the future for Florida residents who live within 5 miles of the coast. I got the scoop about the flood insurance from my brother in law who is in the Florida insurance industry.
Glad to know that I am not the only one that finds the increased housing prices shocking and unsustainable.
P’cola Popper
Which is the greater cost. Flood insurance or wind insurance? Which is most/least easily obtainable?
Ben - let’s have a CONTEST!
All find and post a pic of the biggest overpriced POS you can find. Then, let’s vote. It will give a good estimate as the most inflated area, as a 600 sq ft tar paper shack should not be 700k - anywhere.
I love some of the pix already posted. Great laughs.
Here’s my entry:
http://tinyurl.com/lf8w2
Casa — I give up. You win with this entry. Simply unbelievable.
Winner? I don’t think so:
http://tinyurl.com/ob6s9
It’s a tie!
Smaller house, older house, smaller yard and $80,000 more is a tie? Oh, did I mention this is the cheapest SFR in the county?
Your house has a red door, that alone is worth 120K!
Go to zip realty and check out all of Compton California. It’s ridiculous. Make sure you read the descriptions too. The realtors use the same old terms, but it just doens’t sound right. Most desireable part of Compton?? I didn’t know there were any desireable parts of Compton!!! Hello, it Compton!!
Compton is the most crooked city government in California. The mayors office once wrote a check to pay for a pizza ordered from a Dominos I was managing and the check bounced.
The main industry in compton is stealing. The Entire city is one gigantic nest of gangs. All shops in compton have iron security bars covering the entire shopfront.
The state oF California had to take over the Compton school system because of Municipal fraud and mismanagemnt.
Some compton city administrators recently indicted for absconding or funneling tax monies into personal accounts or mis-using state issued credit cards for personal use.
Average SFH’s in compton going for $400.000. Are they nuts! Compton is a cesspool!
Yeah but you could live next door to Snoop Dogg! That’s gotta be worth something.
I would also like to nominate Bend, Oregon as a top 5 contender for most overpriced sh*tboxes per capita.
Very interesting comment. Bend ranked nationwide #1 in 1st Quarter ‘06 for appreciation according to the most recent OFHEO house price index. As I recall prices went up about 7% in three months there. For those not familiar, the OFHEO numbers are considered a “constant quality” index because they track the average price increases for each specific house that property sells from one year to the next. That’s why the OFHEO numbers are considered most reliable by, for example, Consumer Reports and PMI Mortgage, among others.
We (Ashland) have Bend beat hands down. Biggest bubble in the PNW. Median home price currently ~$475k, at least $150k higher than Bend, with fewer jobs. But the same problem, Our drier climate attracts wealthy booming Californians than wetter parts of the region.
I have to go with Phoenix. Many collegues of mine still believe they can sell their homes for 2005 prices. I found out recently several of my friends bought investment properties in the area and they are renting them out for a fraction of their mortgage. There are so many clueless people here.
When I tell them about my 3200 sq. ft. home (with basement 4,800 sq. ft.) won’t sell at 365k in a Detroit suburb, they are shocked. Phoenix has room to go down a ton!
Phoenix! Many people are still clueless here on the housing market. Around the office there is still talk about how much their homes are worth. They believe 48k inventory is normal for the size of Phoenix.
In addition, they can’t believe my 3,100 sq. ft. (4,700 sq. ft. w/basement) won’t sell in my Detroit suburb for 364k. It cost us that in 2001! People are going to be in a real shock and a world of hurt when their market tanks and the jobs start disappearing. (FYI, The McMansions are now being sold to multiple families according to my realtor.)
Hope those multiple families all have good paying jobs outside the construction/RE industry…they’ll need it to make those monthly payments.
Here’s a nominee for OP/POS:
http://tinyurl.com/ovenz
It falls short of the 600 SF requirement, but as you can see, the dining, living and kitchen is a combo.
OK, I know I’m late to the party, but someone has to speak up for the Northeastern strongholds. Here in Monmouth County NJ realtors keep telling I could put my house on the mkt for $450-500, about 150 percent more than in 2000.
The effect of the burst may not be as deep here as elsewhere, but it’s going to be wide (population density rears its ugly head). Also, Boston ain’t gonna be no picnic.
I would have to go with California. California equity locusts have swarmed over the major cities of the West and Southwest, causing ruinous speculation along their entire trajectory. Phoenix, Las Vegas, and Seattle are just regional hubs in the California empire of speculation. The other cities may fall before CA, but when the crash sets in it is Californians who will be feeling the most pain. Californians are leveraged to a ridiculous degree and they are about to get the lesson that leverage works two ways.
On the East coast Boston is already imploding. Equity locusts from there have created bubbles in Vermont, New Hampshire, Maine, and Rhode Island. What happens to New England (with Boston at the epicenter) will probably be similar to what happens in California and its speculation empire.
Looking back at the past month it’s really amazing how fast this accelerated ! As a long time reader here it still amazes me how high inventories have popped ….Of course you have the obvious cities ,but now even lesser metros are skyrocketing….Jacksonville, Coastal Al., etc…It’s downright unerving what this portends for the nation as this accelerates going foward. Who needs terrorists we will die by our own hand, all due to greed
The bust at the DE Shore will be huge! There is a small year round population compared to the massive amount of building here. The speculators are all in. There is no one left to sell to, but the building continues. The new construction is nice, but there is way too much being built. When you can rent $440,000 townhouses for less than $1500 per month, you have already over built. Yet, the building continues.
How did the auction go? Also, where in RB was it?
A place by the Euphrates, and home of Shaul, king of Edom.
Ahh, the King of cheese!
I’m surprised that nobody is suggesting SF Bay Area to the list. I think it should be - at least in top ten. Here are the reasons:
1) Layoffs - 20K from SUN, Intel is preparing, Oracle is running numbers, …
2) Smart young people are leaving and these are ones which keep economy afloat
3) More than half of loans are interest only (I think something like that)
4) Still building condo’s on every available lot not matter how undesirable the location, great view of freeway etc.
Yes bit there is a flood of smart young people from India & China taking their place.
Loudoun County, Virginia, is hands-down the epicenter of the housing bubble, and is going to be Ground Zero of the bubble implosion.
For the record:
Who is your daddy (of the bubble)?
The urbanized parts of CA.
Bay Area and greater LA is the daddy of the entire West Coast bubble.
Maybe, but I think that San Diego has them both beat for ratio of income to house though. As one earlier poster suggested, the compensation in SD leaves much to be desired considering the median house price.
I agree…it’s hard to afford “gems” like these when you consider the San Diego discount.
http://tinyurl.com/g6969
http://tinyurl.com/g4hre
The 384 SF OB “Paw Print” POS is the all-time winner.
Bring your contractor or book of matches.
San Diego is really just a suburb of LA.
I know I lived there.
The only thing that let’s San Diego pretend it is separate is Camp Pendleton.
Where does SD get all of it’s water, power, gas, etc?
LA
nuff said.
So UCSD, SDSU, and USD don’t count? Hey, we even have major sports teams that we almost care about. Then there is the border traffic.
Laid back San Diego is, suburb of LA it is not.
Oh yeah, where does LA get all of it’s water, power, and gas?
“etc” I’ll give you. We get quite a bit of “etc” from LA and could probably use less of it.
Since we are in a University location discussion.
UCR
UCLA
UCI
UCSB
CSULA
CSU Pomona
CSU Fullerton
CSULB
CSUN
CSU San Bernardino
Pepperdine
USC
Clairemont Colleges
Cal Tech
My point on the utilities is that LA built most if not all of the infrastructure that supports SD.
SD is nice enough but without LA, you’d die of dehydration.
The day that Pendleton is sold off to developers is the day I’m outta San Diego for good! LA needs to stay where it is.
The marines had better be able to hold *that beach*. Pendleton is a national treasure as a military base.
Keep it that way.
Oh, I’d like to see a huge airport built in its hills, but keep the beach for the Marines.
Neil
Pretty horrible…
>> http://tinyurl.com/ob6s9
I think ground zero is Santa Clara County….
(1) Already ground zero for highest level of exotic loans and easy borrowings.
(2) Continued job losses, jobs from 2001 have not come back and will not come back. HT companies are infact laying off workers locally. See Sun HP and Intel.
(2) The economy is counter inflationay ie (Deflationary). Which means we cannot give out salary increases while margins are shrinking.
OCR - Your right… didnt see your post…
There is still lots of new construction going on. Makes me laugh when people say “we have no more land” yet we still see new
construction going on. New Condos and Dev every month.
“we have no more land”
That is a great line to use by builders to convince buyers why their prices are not out of line. But I am utterly dumfounded that buyers could be sufficiently oblivious to the huge amount of new building recently completed or currently in progress (at least around SD) to buy into this nonsense.
ADAMOWSKI WINS the contest. At least the other one looked like a gingerbread house. Check this out: less than 500 sq ft. BUTT UGLY and 400k. They ARE smoking crack there….
Kudos for finding this anti-gem:
MLS ID#: 066041469
There is no question that it will be Florida, Arizona, and Nevada…the first because of hurricanes and hot weather, bugs, and snow birds are gone, the latter two because of inventory, hot weather. Once word gets in the national news with ‘investor war stories’ other areas will join in the melt down……
I tend to agree with you. Also, these markets seem more purely speculative than most others, in that there is less native industry or growth to support them. And I don’t want to hear about all of those casinos going up in LV. As someone else said, bartenders, cocktail waitresses, and blackjack dealers do not buy $600k houses.
I’m in No. Virginia, and I’m sure the bubbleburst here will be agonizing, but I don’t think it will be a ground zero situation the way that Phoenix or Sacramento will be. The economy in No.Va. has a lot to it and is surprisingly diversified. As we all know, the bubble isn’t really related to economic growth, but I think the strength of a local economy–or lack thereof–will play a part in determining how nasty the ‘pop’ is.
Orlando Florida! Esp. the condo market. They’re starting to put condos in parking lots of outlet malls! And people stopped buying about a month ago.