A Sense Of Urgency That Drove Them To Overpay
The Press Enterprise reports from California. “Home sale prices across Southern California were poker-hot in December, the latest report from DataQuick suggests. But even as Southern California recorded its highest median sale price since 2007, the 22 percent gain took the spark out of sales. The biggest December home sale declines were measured along the coast. Sales dropped 17.5 percent in San Diego County and fell 13.3 percent in Los Angeles County. Ventura County had a time of it, too, with sales plunging 11.7 percent.”
“As prices rose, inventory became constrained in unique ways. Homeowners with equity stood back to watch the price gains play out. Investors backed away when the buy-prices stopped penciling out. Banks began to delay closing escrow on short sales, as appraisal reports touted monthly gains. First-time homebuyers continued to feel the squeeze. Mike Novak-Smith, a broker with Re/Max Results, Moreno Valley, said market prices have been pushed up so high the investors are pulling back. ‘They were part of the price run-up,’ he said. ‘Now, a lot of the investors have pulled out.’”
The Ventura County Star. “Amid scarce listings, and surging prices and demand, 2013 was a boon time for sellers in the Ventura County residential real estate market. Buyers snapped up homes last year with a sense of urgency that sometimes drove them to overpay, said Renee Rector, a Realtor with Troop Real Estate in Simi Valley. On average, she was getting about 15 offers per home. She’s now seeing three or four. The competition from investors has lessened as the inventory levels have dried up. Prices are still rising but not as fast, and buyers are settling down, she said.”
“‘It was extremely aggressive,’ Rector said, describing the environment in 2013. ‘It was like a game. You kind of had to teach your buyers and sellers how to play that game. More importantly, not to get caught up in it.’”
The Mercury News. “Before the dot-com bubble, Bay Area homeowners spent 38 percent of their income on home payments, said Zillow’s chief economist Stan Humphries. They’re now spending just over 40 percent. ‘Our concern is when rates go back to even 5 percent, people will be spending 46 percent of their income. That’s substantially above the historical rate. And if (rates) go to 6 percent, they will be spending more than half their incomes on house payments,’ he said.”
“Sun Ming, who lives in Hangzhou, China, was here last week shopping for a house. She said she’s looking in Cupertino to be near a friend who recently bought a home there, and plans to tell several other friends to think about buying a home in Silicon Valley. She said she’s looking for homes under $2 million.”
The Times Herald. “Solano County saw growth in home sale prices last year, Solano Association of Realtors President Toni Foster said. The latest numbers show that compared to a year ago, November prices rose throughout the county, with Suisun City’s increasing an ‘impressive 59.75 percent’, she said. Vacaville saw about a 32 percent rise, while Rio Vista’s rose nearly 30 percent. Vallejo saw a 25 increase, Benicia’s rose nearly 23 percent and Fairfield’s went up 21 percent, Foster said.”
“The area also saw ‘a considerable drop in inventory’ last month, with properties ‘just now popping back up,’ Foster said. ‘For example, just ten days ago, Benicia had seven single family homes for sale and today that number is double,’ she said. ‘Still low, but growing and countywide inventory numbers are increasing daily.’”
The Bakersfield Californian. “According to appraiser Gary Crabtree, last year was a ‘watershed’ year with the median price jumping from $162,000 to $208,000 by the end of the year. Said the Crabtree Report: ‘Based upon a 12 month running average, the citywide appreciation rate is 30 percent or 2.4 percent per month. Housing supply is increasing with the total current listings on the market at 930 or 81 percent above the same period last year.’ In addition, the volume of sales decreased by 8.5 percent year over year. ‘Overall, the market is defined as in recovery with a trend towards declining price increases due to increasing inventory, interest rates and housing affordability.’”
The Sacramento Bee. “After months of trying, members of the Richmond City Council have been unable to muster the supermajority of votes they need to enact a controversial plan to use eminent domain to seize underwater mortgages and slash the amounts that borrowers owe. Now Richmond Mayor Gayle McLaughlin and other council members who support the plan are looking to partner with other communities in a joint powers authority, or JPA. The move would require only a simple majority of council votes and could broaden Richmond’s initiative to other cities in California or even in other states.”
“The housing recovery has bolstered many areas of California, including Silicon Valley, San Francisco and Sacramento. But many other cities have been left behind, and millions of Americans still owe far more than their homes are worth after last decade’s housing bubble, said Steven Gluckstern, chairman of Mortgage Resolution Partners. Richmond’s median home price sank from a high of $454,000 in 2006 to $95,000 in 2009 – a 79 percent drop, DataQuick reported. As of September, the city’s median home price remained more than 49 percent below its 2006 peak, the firm said. Other Bay Area cities, such as Palo Alto and San Francisco, exceeded their bubble-era peaks last year.”
“On Thursday, RealtyTrac reported that 9.3 million U.S. residential properties – about one-fifth of homes with a mortgage – remained deeply underwater in December, meaning they were worth at least 25 percent less than homeowners owed. ‘The problem is the problem’s not going away,’ Gluckstern said.”
“On Thursday, RealtyTrac reported that 9.3 million U.S. residential properties – about one-fifth of homes with a mortgage – remained deeply underwater in December, meaning they were worth at least 25 percent less than homeowners owed.‘The problem is the problem’s not going away,’ Gluckstern said.”
In reality the problem is growing.
Remember…. Credit profiles of borrowers 2011-2013 are worse than borrowers in 2006.
Millions of new defaults are baked in already.
Help is on the way!
Housing to benefit from Watt leading FHFA: analysts
December 23, 2013, 2:41 PM
The housing market will benefit next year as Fannie Mae and Freddie Mac’s regulator gains a new chief in Mel Watt, who has announced a delay to plans to increase certain fees, analysts said Monday.
Watt, to be sworn in on Jan. 6 as director of the Federal Housing Finance Agency, will delay increasing fees charged by mortgage buyers Fannie FNMA and Freddie FMCC . In a recent note, he said he wants to “evaluate fully the rationale for the plan,” and how it would impact access to credit and costs, among other factors.
Homebuilder stocks soared on news of the delay.
…
Watt is a Democrat Hack and former rep from North Carolina, a member of the Black cacus who was going to be defeated in the 2014 election. He knows nothing abount Housing!!!
Foreclosures at all time low, demand will be huge this spring, watch the sunbelt states, folks just plain sick and tired of winters.
How can that be when housing demand has fallen to 1997 levels?
With investors gone and your average Joe now reading stories showing it doesn’t pencil out, they cannot sell the urgency any more.
In SoCal, even in MoVal, a house could drop tens of thousands in price in a couple of months. Interest rates aren’t going to skyrocket overnight and bankrupt the government.
Fewer buyers = lower prices.
The smart money has to be trying to bail in the spring.
The smart money never entered by virtue of the fact there is too much dumb.borrowed.money.
That should explain why smart money is smart money. They clearly understand the massively inflated prices, the risk, the massive and growing inventory.
The truly Smart Money were those who had access to and use of piles of Other People’s Money.
These users of Other People’s Money smartly took positions at fire sale prices before the dumb.borrowed.money piled in and drove prices through the roof again.
The banker lends to me at 3.25%, so I can get an annual ROI approaching 30%. No complaints here. The renters get a great deal. Everybody wins.
Of course! :clapping:
tx, I’ll REFI my used car
that’s the American dream
Very true statement. That is what leverage is all about, not saying it is the way to go everytime, but very wealthy people do it all the time, they never use their money in big time purchases.
And wealthy people don’t buy depreciating assets like houses. Thats why they’re wealthy.
‘very wealthy people do it all the time, they never use their money in big time purchases’
It’s all fun until someone loses an eye:
‘Industrial and Commercial Bank of China, the world’s largest bank by assets, said on Thursday that it has no plans to use its own money to repay investors in a troubled off-balance-sheet investment product that it helped to market.’
‘ICBC’s shares have fallen this week amid speculation that the bank would be forced to help repay investors in a 3 billion yuan ($496.20 million) high-yield investment product issued by China Credit Trust Co Ltd but marketed through ICBC branches. The product is due to mature on Jan. 31.’
“Regarding this unsubstantiated rumour, a situation completely does not exist in which ICBC will assume the main responsibility (for the trust product),” an ICBC spokesman told Reuters by phone on Tuesday.’
‘The trust product, called “2010 China Credit / Credit Equals Gold #1 Collective Trust Product”, used the funds it raised from wealthy investors in 2010 to make a loan to unlisted coal company Shanxi Zhenfu Energy Group Ltd.’
a lot of things can change within 30 years of a mortgage.only a small fraction of the people that buy with a 30 yr mortgage will ever truly own their home.
That’s why they’re known as DebtDonkeys.
Or (eventually) as foreclosure victims…
Lets see, you think leaving like a pauper you won the game of life. I hope there is a heaven but it is just hope, I do know I live in a great world and country with great opportunities.
I rather die at 80, knowing I lived in a home we wanted, drove cars we wanted, ate what we wanted, then live to 90, dying in a rest home and believing you saved the world by telling people you should rent all your life, drive junk cars, and eat fast food?
Pick yourself up off the floor and cheer up. Falling housing prices to dramatically lower and more affordable levels is bullish for the economy.
Jack LaLanne at 80 could out-lift what a large number of 20-something year old men could lift. And you want to talk wishfully of death at that age. Never give up.
In the 1940s there were a lot of magpie people who wished they would die before they get polio. Maybe a certain number of them made certain they live very “full” lives by drinking, smoking, and debauchery so that they would indeed die young.
The problem is the polio vaccine was invented.
It is a universal rule. Do not buy if prices rose 20 percent or more in the last year.
Here in Tucson, I’m seeing houses for sale that are just sitting there. And sitting there. Methinks that the issue is price.
The smart money buys houses for cash only when interest rates are very high. Otherwise rents when interest rates are low, and builds up a pile of cash in the meantime.
“Bay Area homeowners spent 38 percent of their income on home payments, said Zillow’s chief economist Stan Humphries. They’re now spending just over 40 percent…”
Assuming that is % of gross, the math doesn’t work very well. Pay taxes and commuting costs and you have nothing left but the chains.
“‘Most men lead lives of quiet desperation…”
Thoreau
And how much of their income goes towards health insurance? The idea that demand for other goods and services can grow in this set of circumstances is an absolute fantasy, but this is what our policymakers wanted and this is what they got. No wonder they largely are despised.
“‘It was extremely aggressive’, rector said, describing the environment in 2013. ‘It was like a game. You kind of had to teach your buyers and sellers how to play that game. More importantly, not to get caught up in it.’”
Bahahahahahahahahahahahahahahahahah
It WAS a game and the winner of this game were the lenders.
The players of the game were the buyers and the sellers and the realtors, each thought there were getting a win but the only ones who really got a win, a long-lasting win that keeps on winning for thirty-years or so, were the lenders.
Sort of like, say, pro football. The fans think they are geting a win and so do the players, but it’s the owners who get the true win, and they get this true win because the fans and the players willingly hand the win over to them.
And who lost?
Everyone but the lenders lost.
Exactly. Why?
Because housing is a loss.
“We’re not the Team… We’re the Equipment!” - Nick Nolte (North Dallas 40)
“A Sense Of Urgency That Drove Them To Overpay”
That is true from 2000-2013.
A Sense of Urgency is a work of art. Instill a sense of urgency into a population of buyers and anything can be sold. Check out tulips and Beanie Babies and Cabbage Patch dolls for some examples.
‘They were part of the price run-up,’ he said. ‘Now, a lot of the investors have pulled out.’
Is the exit door large enough for all of these folks to get out without getting burned?
‘The number of single-family residential building permits issued in Clovis last year has exceeded the 25-year average for the first time since 2006. At the end of 2013, 854 permits were issued in what the city is calling a “stark turnaround” from 2012 when only 368 permits were given for the construction of new homes.
‘Many of the new permits were given for the construction of homes in the Loma Vista area, southeast of Clovis, and Harlan Ranch, northeast of the city, where 11 new projects are underway, the city said. In the south Valley, building permits were up last year too. Visalia saw a 70% jump in building permits to 429 issued in 2013 compared to 252 permits in 2012.’
‘The percentage of homes with a loan-to-value ratio of more than 125 percent in December was 24 percent in San Bernardino County and 21 percent in Riverside County, according to RealtyTrac. There still are nearly 220,400 mortgaged homes that are deeply underwater in the two-county area.’
‘A long-awaited report on the state of the city was issued today, and it is hard and unsparing in its assessment of local government, regional infrastructure and Los Angeles’ fiscal situation. It also says that Los Angeles’ poverty rate is higher than in any other American city, and that adding the unemployed and those who earn poverty pay means “almost 40% of our community lives in what only can be called misery.”
A number of months ago in the bits column I identified LA as possibly the next Detroit. A city with a lot of natural advantages and historically a strong economy that just falls apart due to bad government and demographic changes that substitute poorer populations for more affluent ones. It takes time to happen, decades, but I think we will be talking about LA in the future just like we talk about Detroit now.
Having grown up from age 4 in the Los Angeles area, the urban ghetto has spread over the last 35 years. Criminal Invaders are treated with kit gloves and the clash of cultures has destroyed So Ca. We’re in a pocket of a fairly decent lifestyle, but it is eroding. 10 years left, I’m thinking.
Taxifornia has taken its toll on jobs. The entertainment industry has had such great tax incentives elsewhere, my own brother moved to Atlanta this week, with a menu of job offers in the movie biz. He makes killer money. Only, if the dude wasn’t a spender. And multiple wives isn’t wealth building. Idiot.
Well if you reduce your California state taxes as much as possible and you rent, staying in California should not be a problem.
I don’t recommend the idea of sticking around in the same place in the next ten years regardless. Suppose your neighborhood goes to hell in 2 years. Are you going to sit through it another 8 years of your house value depreciating faster than an intern’s panties falling in the oval office?
The bad changes may occur before you notice and it could be too late.
Whereas if you rent, and you find something really shockingly indecent happened in your neighborhood, just finish the lease and move to a better place.
” I think we will be talking about LA in the future just like we talk about Detroit now.”
Could be likely.
The LIEberals are destroying the state of California at a faster and faster rate. And those are the California Republican legislators too! California Republican legislators make John McSame look like a Ron Paul.
Well…. LIEberals are doing a pretty good number on the entire nation too.
Ever fly from Albuquerque or Phoenix to L.A. in the daytime? Once you cross over the huge Mt. San Jacinto a couple miles to the west of Palm Springs you look down and see huge roofs of washed-out gray warehouses lining up from one end to the other for 80 miles or so. How much more grotesque can that get? Then you see a small group of tall buildings to the right (”downtown” LA) and then land at LAX.
The only interesting parts are about a mile strip from the beach sand. Everything else is grime.
In 1985 I felt great I was working in the high desert of California instead of the big companies like McDonnell Douglass or Hughes. I could not fathom wanting to move to L.A. I did not know what led Randy Newman to compose “I love LA” back in the early 80s. I never knew what redeeming value it had - it was just a grimy spot but it turned out to be my favorite place to buy precious metals.
Living in the desert I managed to find five atheist young females in a town of 28,000 and I hung out with them (not at the same time). It was (and probably still is) a highly religious community of nutters on Sundays and pure logicians Mondays through Fridays. But at least I was able to get in great shape - cycling, swimming, and snow skiing. Eventually I had to circle back to large cities. The conservative nutters were about all that was left. Now I have to choose between nutter religionists and wealth confiscators. How fun can that be?
Los Angeles’ poverty rate is higher than in any other American city, and that adding the unemployed and those who earn poverty pay means “almost 40% of our community lives in what only can be called misery.
No problem. There is a thin one mile strip of LIEberal money starting at the beach sand from Pacific Palisades to Torrance. They dirty their own nest, those savages, don’t they?
I always regard myself as a visitor here. I have the Arizona license plate on my car by golly. I’m only around because it’s economically a better choice than working in Phoenix where I officially reside.
So I don’t give a hoot about what happens economically to California. The LIEberals are destroying business and while doing so they put their own necks on the chopping blocks.
It’s fun to watch.
‘Orange County Home Sale Activity for Home Sales Recorded in December 2013′
They seem to be nearing a tipping point, with many zip codes seeing huge reported percentage gains in the 2013 median offset by large percentage declines in sales.
Typical runup to a bubble peak…
I think the hissing sound is already being heard here in Tucson. I’m seeing a steady increase in “for sale” signs.
And there are more than a few listings that are just sitting there. When I look at the prices on those places, my jaw clatters to the ground.
That’s a hefty collapse in resale demand.
And of course we’re going to keep oversupplying the market with new inventory.
An FB lawyer. I wonder why foreclosures are down in California?
“The banks kept the loans on the books to make their bottom lines look better,” said Foondos, who began taking foreclosure cases pro bono after running into hassles when he tried to renegotiate his own mortgage. “And now the banks recognize the potential here for people to come back and sue for wrongful foreclosure.”
‘In the Glaski case, Fresno County resident Thomas Glaski bought a home in Fresno for $812,000 in July 2005, including an adjustable-rate loan from Washington Mutual. The house ultimately was foreclosed on, and Bank of America was named in the suit because it ultimately came to own the home.’
“The banks kept the loans on the books to make their bottom lines look better,”
It’s no mystery. Take a look around at all the excess empty housing inventory. 1 out of 4 are empty. Even in NYC, NYC suburbs, DC and in California it’s even more than that.
No mark to market for 5 years, I wonder what the Banks could possibly be hiding?
http://www.bloomberg.com/news/2013-12-16/zions-says-volcker-rule-leads-to-387-million-charge-for-cd0s.html
Those “bottom lines” are beginning to sag.
” On average, she was getting about 15 offers per home.”
I’m throwing the BS flag on this one….
Rich
Good sniffer for bs. It’s a Tr00p top producer bragging about 15 offers down to 3-4. And let me guess, only a dual offer need apply from their corp. I despise that firm. I’ve had many a battle and got lots of bs. They lost us as cash buyers twice on their listings. We told them to take their multiple offer “script” and ridiculous price and shove it. As it turned out, both proved to be dual agency deals. They were sniffing to see if they could pump up the price for their seller. They used us to get their buyer to pay more. s.c.u.m. in my opinion. And I could go on about making you sign to double app a mortgage, one being a mortgage firm they own….. Excuse me while I Technicolor yawn. (respa laws be damned)
They should be called “We Say So” Inc… lol
“‘It was extremely aggressive,’ Rector said, describing the environment in 2013. ‘It was like a game. You kind of had to teach your buyers and sellers how to play that game. More importantly, not to get caught up in it.’”
Seen this before
“Sun Ming, who lives in Hangzhou, China, was here last week shopping for a house. She said she’s looking in Cupertino to be near a friend who recently bought a home there, and plans to tell several other friends to think about buying a home in Silicon Valley. She said she’s looking for homes under $2 million.”
______________________________/
It’s disappointing that this gets reported as a simple “globalization of the real estate market” item. But in this broken culture of economic determinism, nothing matters other than the price.
What Americans should have done is buy up international stocks 20 years ago and become as rich as the Chinese.
Remember 24 years ago Japanese investors were buying up American real estate like crazy. Nakasone said Americans spend Mondays talking to others about their weekends instead of working and on Fridays talk all day about what they will do on the upcoming weekend.
I was in my early 30s or late 20s when I heard about that. So I decided never to be like that. My weekends were about road biking or snow skiing, but I was focused on work and the work was fun. I was near the same age as my colleagues and we got along well as a team to produce.
“Remember… Housing is a depreciating asset that never pays you back and always results in loss.”
I think you need to continue reminding people here. They seem to forget.
hmmm….. timing is everything. Pretty hard to have bought in 2003 and sold in 2006 for a loss.
And have you also convinced yourself the same is true for the other 2000 years of civilization?
Hint: Its not.
If you sold in 2006 it was probably not smart timing, rather accidental.
Alexandria VA Housing Prices Crumble 15% In 2013; Inventory Skyrockets 27%
http://www.movoto.com/alexandria-va/market-trends/
BUY OR BE PRICED OUT FOR EVER!!!!! And be enslaved to landlords!!
Southland December Home Sales at Six-Year Low; Median Price Jumps
January 14, 2014
La Jolla, CA—Southern California home sales fell to a six-year low for the month of December as investor activity eased again and buyers struggled with a tight inventory of homes for sale. The median price paid for a home jumped to the highest level in nearly six years, the result of demand outstripping supply, declining distress sales and a slight increase in the share of sales in mid- to high-end areas, a real estate information service reported.
The median price paid for all new and resale houses and condos sold in the six-county region last month rose to $395,000 – the peak for 2013 and the highest for any month since the median was $408,000 in February 2008. Last month’s median was up 2.6 percent from $385,000 in November and up 22.3 percent from $323,000 in December 2012. Until last month the median had more or less moved sideways – ranging from $382,000 to $385,000 – since last June.
The median sale price has risen on a year-over-year basis for 21 consecutive months. Those gains have been double-digit – between 10.8 percent and 28.3 percent – over the past 17 months.
http://www.dqnews.com/Articles/2014/News/California/Southern-CA/RRSCA140114.aspx
“Southern California home sales fell to a six-year low for the month of December as investor activity eased again and buyers struggled with a tight inventory of homes for sale.”
Sounds great! Maybe there is a La Jolla condo in my future at some point over the next decade?
La Jolla, CA
What a beautiful area. Del Mar Race Track, nice villages to eat in, and a coastal climate. Very upscale, clean, and not over-developed (last time I was down there). Oh, and gotta eat at The Fish Market restaurant.
Thanks for LaJolly Chamber of Commerce advertising.
‘What a beautiful area’
I’ve already said all I’m going to say about La Jolla except to repeat that where I grew up, even the poorest neighborhoods had driveways.
Actually the weather is too warm for this Phoenix guy. Being a resident of Phoenix, when I want to be at a place to get away from the heat, I prefer the South Bay part of L.A. as close to the ocean as possible. And the further north the better - even can handle being at southern Oregon beaches. My tanning days are over with and I did a bunch of them down in San Diego on the beach 20 years or so ago.
Millions of Chinese plan to buy homes in California with in the next 2 years.
Housing in California will go up 70% with in the next 2 years.Don’t miss out in the gravy train and miss out in big time equity gains. Cash out on your stocks and buy California real estate.