An End To The Real Estate Crazy Train
KPIX 5 reports from California. “Realtors are using the words ‘overbid madness’ to describe what’s happening in San Francisco’s housing market. One case in point is a home that was sold hundreds of thousands above the asking price. Shrouded in fog, and swimming in cash a two bedroom, modern home in the Glen Park neighborhood was just snapped up for $2.1 million. The sleek home on Bosworth sold for $600,000 over asking price. Arrian Binnings of Christie’s / Pacific Union told KPIX 5, ‘That wasn’t even our highest offer.’”
“The same house was for sale in 2009 for about the same price. It did not sell after 84 days and was taken off the market. Binnings believes there is an end to the real estate crazy train. ‘The type of growth we’re seeing right now is not sustainable year over year, I expect to see these types of prices tame down a little bit,’ he said.”
The Orange County Register. “When Brian Sperry came across a two-story, waterfront home at the northern tip of Linda Isle last year, the real estate developer knew it presented the perfect opportunity. Forty years ago, the two-story house graced the pages of Architectural Digest. Now it was outdated, a candidate for a teardown – but with 113 feet of bay frontage and a dock in one of Orange County’s priciest neighborhoods.”
“Sperry’s company snatched up the property for a cool $9.5 million. He and his partners plan to spend 18 months redeveloping i, then hope to list it for at least $20 million. They’re building on speculation – no buyer in sight. ‘This will be an incredible house,’ Sperry said. ‘But the risk we face (is) what is that price going to be a year and a half from now?’”
“‘We’re kind of at the groundswell of the next real estate cycle,’ said Paul Habibi, a developer and professor at the UCLA Ziman Center for Real Estate. ‘I don’t see any imminent end to this. The capital markets are only going to get looser as we go.’ Scott Cross, president of SC Homes, is also banking on that vision. ‘We’re diving harder than ever because the market’s just skyrocketing,’ said Cross, whose firm does complete teardowns.”
The Union Tribune. “More than 200,000 property owners in San Diego County could see their property tax bill rise between 10 and 20 percent this year, a new state report says. Those owners have been receiving a break on their property tax bills since housing values plummeted during the Great Recession and were reassessed downward. Now, as values have recovered, tax bills can do the same. There is no cap on how much a property’s assessed value can recover each year if it was reduced during an economic downturn, the report from the state Legislative Analyst’s Office says.”
“‘Nobody likes when their taxes go up but in this case taxes are going back up to where they would have been,’ said Mark Goldman, a loan officer and real-estate lecturer at San Diego State University. ‘They got a break, that’s over with, and so it’s unfortunate but the rules are the rules.’”
“In tax year 2014-15, which starts July 1, property tax bills could go up dramatically because county home values increased 17.1 percent in the 12 months leading to Jan. 1, 2014, the date on which values are assessed.”
The Los Angeles Times. “Bridgette Sullenger knows what it takes to survive difficult times. Sullenger is an ordained minister who works with patients in hospice care. Sullenger also leads group counseling sessions for those left behind. Perhaps that’s why her own financial problems haven’t overwhelmed her. ‘There is a lot in her financial life that just isn’t working out for her,’ said fee-only financial planner Delia Fernandez. ‘I think anyone else being handed this information might want to burst into tears.’”
“Sullenger played along during the real estate investment boom, buying three Inland Empire houses near what turned out to be the top of the market. She rented out two of the homes. As the recession took hold, her tenants lost their jobs and couldn’t afford the rent. Sullenger wasn’t able to find replacement tenants who could pay enough to cover her costs. In 2009, with about $1 million in debt, Sullenger filed for bankruptcy protection. Eventually, Sullenger lost the two rental houses to foreclosure.”
“Sullenger’s income last year totaled slightly more than $79,000. The only debt left these days is the approximately $577,000 mortgage on the three-bedroom Palm Springs home where Sullenger lives with her two children. The question of paying for college one day is a big worry. Sullenger is setting aside less than 4% of her income toward retirement. ‘At her age, she should be saving more like 15% to 20%,’ Fernandez said.”
“Sullenger’s biggest disappointment was her home’s value, which could have ranged from $480,000 to $598,000, based on nearby home sales. Fernandez consulted with experts who valued the house at about $500,000, or about $77,000 less than the mortgage. Sullenger isn’t alone in her predicament. Nearly 20% of Inland Empire homes with mortgages are underwater, which means the houses wouldn’t sell for enough money to pay off the loans.”
“‘The housing crisis is not over,’ Fernandez said. ‘Some people like Bridgette haven’t healed from the downturn and are still stuck in a very uncomfortable situation. Moreover, Sullenger’s story provides a lesson on what it really costs to own a home.’People need to remember that they have to set aside money for maintenance, repairs,” Fernandez said.”
“Sullenger found the valuation of her house discouraging. ‘Do I short sell?’ Sullenger asked. ‘Do I rent it out for a few years and go rent somewhere else? Do I sell and take the difference in a loan? Is that even possible? Do I cry now?’ For her part, Sullenger said she is willing to consider getting out of her home. ‘As difficult as this was to hear, I feel like I know what I have to do now,’ Sullenger said.”
? “do I try to make taxpayers pick up the tab?” is what the biaaatch is thinking
Bankers, too. This is what bankers are always thinking.
English boy English!
I’m sure many kind souls across the country have tremendous sympathy for a woman making 80k living in a half a million dollar house in Palm Springs. Sounds like she can barely survive.
When I first glanced at your username it looked like MrsLolaSores.
I like it, apologies to Ben for changing, but the other felt stale. My runner up choice was LovelyLadLola.
This is preferred because it reminds me of a dinosaur.
SOROS! BENGAZI! PELOSI! BARKA HUSSSSAIN OBAMA!
OOOH OOOH OOH AH AH AH!
(flings poo)
And what is a member of clergy doing playing the housing roulette game, trying to be a slumlord?
And 80K for being a minister, a chaplain in a hospice? I’m in the wrong profession.
She BK’d a million bucks!??!? And still lives in Palm Springs?? You’re welcome sister - U.S. taxpayer.
It affects the lenders, not the taxpayer. She probably should have dumped the third underwater house in the BK.
And the lenders (Fannie, Freddie) were backstopped by the the taxpayers.
Sounds like it affects the taxpayer to me…
I guess you are correct.
She aspired to be an Inland Empire Landlord King.
..and she wants to be Mayor of Palm Springs, after all she has the education.. in “Real Estate” that is..
“I may not have the city hall experience, but I certainly do have the desire and the education,” Sullenger said Monday.
In 2009, with about $1 million in debt, Sullenger filed for bankruptcy protection. Eventually, Sullenger lost the two rental houses to foreclosure.”
But this is “good debt” right ??
“But this is “good debt” right ??”
If the money was borrowed from a bank it was good debt. Very good debt.
For some reason I see you sitting behind a desk rubbing your hands together pointing to the paper saying “just sign here (rubbing hands) right there on the line (rubbing hands, evil smile) and everything will be OK (evil smile) ” Do I have a close visual, just asking ??
One more question, Do you wear black to represent the common man (think Johnny Cash) or full black going for the Snidely Whiplash look, just asking ??
“Do you wear black to represent the common man (think Johnny Cash) or full black going for the Snidely Whiplash look, just asking ??”
Go here:
http://www.youtube.com/watch?v=qdFLPn30dvQ
Hammer….Nail…..Head……well done sir, well done….
“Thank you, sir, may I have another?”
I always wondered where that line originated!
“Do I have a close visual, just asking ??”
Close, but not complete.
Facing the desk is the dotted-line-signer, a person wearing a bright, shining smile, a person filled with dreams and illusions of complete happiness, illusions and dreams pumped into her soul by The Great American Dream Machine, who was brought to my desk by Amy Hoax.
I’m seeing a Ned Beatty office look (the movie Network)….
Suits by Zegna, ties by Valentino or Hermès, paid for by the American Dream Machine.
You need to upgrade your imagery!
Ned Beatty has been in three of the most iconic movies of our time: Network, Deliverance and Stroker Ace.
Iconic movies of “your” time, baby, not “our” time.
I’ve seen two out of three. Not when they came out. I wasn’t born yet nor had my parents met.
“Hermès”
My interview tie –
I’ve seen two out of three.
You really should see Network.
In his spare time he likes to laugh a lot, best accomplished by watching Schindler’s List, Deliverance, Requiem For A Dream and other tales of human woe. No soul required.
That picture of her is all I need to see of this 48 yr old single mother of two. She’s obviously a crazy fat fraudster even if she is doing the Lord’s work holding the hands of cancer patients. And isn’t it funny how now they have to throw in some BS about helping cancer patients to garner sympathy for these fools, at least that’s an improvement.
Why you got to be negative all the time, man?
From the article:
On a pure accounting basis, she’s super rich by the standards of the New American Dream Machine&tm;.
She’s rich, bro, richer than anyone around here. The more debt, the more you have, isn’t that right, Mr. Banker?
Back me up.
The mortgage for only the primary residence is good debt, and only when compared to renting.
Or are all of you living in a box until you save up enough cash to pre-pay 15-20 years of rent?
Living in a cheap rented house, saving cash to buy an expensive one. Mr. Banker can pound sand.
Donkey… there is no good debt unless it’s earning more than the cost of the debt. A depreciating house doesn’t meet that condition.
‘Yes, we’re in a tech bubble. Of course we are. When Facebook can use $19 billion in funny money to buy a startup with revenues of $20 million (WhatsApp) or spend $2 billion to buy another startup that doesn’t even have a product on the market (Oculus), that’s a bubble.’
‘When the median rent for a two-bedroom apartment in San Francisco is $3,350—enough to pay the mortgage on an $800,000 house in any other city—that’s a bubble.’
‘When investors have so much cash floating around, and keep buying into risky startups at ever-higher valuations because they can’t get a decent return on their money doing anything else, that’s a bubble.’
‘This bubble may not look the same as the last one. But I’m not going to waste space here documenting its existence, which is only challenged by people who enjoy living in it.’
‘The more interesting question, to me, is how the bubble will eventually pop.’
Not to mention how low cost tablets have buzz sawed through the computer market causing prices there to plummet.
Good thing we can just print money without consequences.
Let the good times roll, until they don’t.
Speaking of tablets- can people please chime in on their personal favorites? My computer is going into the shop for a few weeks, so I will need to purchase something else to get by in the interim. I’m about sick of all this tech crap breaking. I want something durable.
Last I had my hands on an android tablet (18 months ago) it was glitchy and felt cheap. I think the iThings are still better quality, but you do pay for it.
You can probably get an iPad2 dirt cheap off ebay though. They’re fine for anything but 3d gaming.
“…$20 million (WhatsApp)…”
With a name even dumber than Pets.com…
‘During the dot-com bubble of 1999 and 2000, Silicon Valley believed the Internet was causing such a rapid revolution that there was ample justification for pumping billions of dollars into half-baked start-ups that went public by the hundreds.’
‘Tech executives insisted there was no bubble — that it was a “new economy” — right up to the moment when their hubris drove the region into an economic abyss.’
‘The tech-heavy Nasdaq composite index fell from 5,046.86 to 1,114.11. Silicon Valley saw 200,000 jobs evaporate overnight. But the bubble grew so large that its bursting also dragged the national economy into recession. Silicon Valley was chastened and saw its credibility shredded.’
‘According to the latest MoneyTree report released Friday, venture capitalists invested $9.5 billion in 951 U.S. companies during the first three months of 2014. According to the report, that’s the biggest sum since the second quarter of 2001, when the dot-com boom was gasping its final, dying breaths.’
‘This increasing frenzy is being felt beyond the cubicles of these companies. Wealth is rolling through the Bay Area. Open houses are drawing mobs of potential buyers and sparking bidding wars. “There are very few markets where we consider housing to be overpriced,” said Steve Cochrane, managing director of Moody’s Analytics. “But this is one of them.”
‘If WhatsApp, one of the fastest products to reach 500 million users, does become the mobile social network of the future and ensures Facebook’s dominance for decades, it seems worth paying any price.’
“Growth is hard to find,” said Kevin Landis, chief investment officer of Firsthand Capital Management of San Jose. “Where you can find it, the price goes way up.”
We seem to be recreating the last two bubbles simultaneously. That’s really unfortunate. There’s definitely a Titanic feel to our economy right now — totally invulnerable, full speed ahead into the ice field.
And am I the only one who sees severely diminishing returns to technology? Is it really that awesome to use your cell phone to summon a glorified taxi, or make a bed and breakfast reservation? Or to have a thermostat that predicts your comfort needs? Wow, that saved a whole two minutes in my day, and which I now can spend sending messages on WhatsApp. Maybe I’m totally missing it.
‘ensures Facebook’s dominance for decades’
We probably won’t even have computers and phones as we now know them in 10 years. I’m pretty sure we won’t be looking at Zuckerberg’s sh*t-eatin’ grin on yahoo every morning then either.
Forget computers. The notion of “car ownership” is totally doomed in a decade or two.
And with that, you can forget about the notion of “parking tickets”, etc. as well.
Good thing all the municipalities would never rely on such notions because the world never ever changes.
“Forget computers. The notion of “car ownership” is totally doomed in a decade or two.”
Are you talking cars themselves disappearing, or just the ownership portion? Because if you are talking about the cars themselves, then the PTB better get going on public transportation STAT. Where I live out west, you NEED a car. There is no other way to actually survive.
Just the ownership portion.
Cars will be there until after I die and I don’t care much after that part.
My point, in case it wasn’t clear, was that the car would drive itself. You need neither to “own” the car nor to “drive” it. You don’t need to park it either and the concept of parking tickets is basically non-existent.
It’s just a robot slave.
It’s not that far-fetched and not that far-off either.
I’m starting to embrace the idea of my vehicle doing the driving while I veg out on the computer or something. I cannot handle sitting in gridlock anymore. Hopping in the back seat to take a nap or whatever seems a better use of my time.
“am I the only one who sees severely diminishing returns to technology? ”
No, not at all.
If there is a god in heaven…
What I would like to know is, why do venture capitalists like to throw brazillions of good money off utterly worthless schemes like Facebook?
half-baked start-ups that went public by the hundreds.
Now they’re going public by the… by the ones, it seems. At best, they are going public by the half-dozen. If this brings down the economy it will be by hysteria, not by fundamentals.
‘Yes, we’re in a tech bubble. Of course we are. When Facebook can use $19 billion in funny money to buy a startup with revenues of $20 million (WhatsApp) or spend $2 billion to buy another startup that doesn’t even have a product on the market (Oculus), that’s a bubble.’
I remember when Silicon Valley was about making real products: memory chips, processors, storage devices, operating systems and other non frivolous software. All that has been offshored, so now our best and brightest create software that allows kids of all ages to share gossip and selfies.
need more bandwidth baby
Trillions of digital bits per second is allot of selfies or Porn
They still do designs in Silly valley but most of the foundries are in the EAST way east.
However real money is in the Software
They still do designs in Silly valley but most of the foundries are in the EAST way east.
Some stuff is still designed here, but even a lot of that is going offshore.
I remember when Silicon Valley was about making real products: memory chips, processors, storage devices, operating systems and other non frivolous software.
I hate to point out the obvious but this is just Moore’s Law doing its job and it’s done an excellent one.
The phone sitting on my desk has more computing power than the supercomputers of 1990.
The hard problems are still ahead.
How come I’m still cleaning my house and toilets? How come I still need to drive my car? Why am I answering my door? Why is all this not automated?
So spare me, the hard problems still lie further ahead in time.
The chips and all that other garbage are just the inputs into the system.
Get off my lawn, gramps! There’s a lot of good stuff coming in the future.
Why am I answering my door? Why is all this not automated?
I’ve already done that. I’ve stopped answering my door altogether, unless I’ve recently made an appointment using some electronic device & network and am expecting a caller.
I’ve already done that. I’ve stopped answering my door altogether, unless I’ve recently made an appointment using some electronic device & network and am expecting a caller.
I’m with you, tresho. Too many crooks out there.
And y’all missed the point and grampy is still on the lawn!
Get him off my lawn!
Sheezus.
“Trillions of digital bits per second is allot of selfies or Porn”
It is good to always keep in mind that so much of the internet is about no more nor less than supplying the sick minds of billions of men worldwide with their porn fixes.
Keeping the idle moron masses occupied is good for society and good for the environment. That fluff makes them sit down and STFU.
Porn is the opiate of the asses.
I’ve tried all the major social media platforms. Have found that, when it comes to growing one’s business, they’re not very useful. And I’m not the only one. Donning my HBB Librarian’s hat and recommending BJ Mendelsohn’s book, Social Media is Bull—-.
And this has been obvious since day one.
It’s why I am not on Facebook, LinkedIn…why I don’t use or care to use Twitter…why I threw out my cell phone 6-7 years ago.
I don’t need to check in with everyone when I go to the store or go on a lunch break, thanks.
Society functioned better, not worse, before all this crap came into being. I can see people in sales wanting to use a cell phone or Twitter, but for others, they’re main purpose is as pacifiers.
Slim you are partially correct…….most social media doesn’t work too well unless you get very specific keep your friends within a small circle maybe if you had 250 photographers on FB……or join a photographers group that seems to help…but its all in responses what good is 5000 friends if you only get 5 responses to your post?
And people are scared of deleting friends…….but you need to recycle them, if they never post or respond in any way why keep them?
Also we will still need computers I cant see editing video audio or photos professionally on a tablet.
I have 2 mac minis one older for my itunes music, and a new one for Digital performer, bought last year a mac laptop and an old XP computer….I wondered why they never really made a windows full featured mini computer?……..they had this thing called a shuttle, but next were the netbooks.
It appears that all of Ebert’s Ten Greatest Films of All Time were made without computers. Same for Rolling Stones Top Ten Greatest Albums.
I can tell you that recording was much more fun when we were looking at each other, and not at blocks on a screen.
You know, we (studio guys) once did work for a client that wanted BTO’s “Ain’t Seen Nothing Yet” hyped up for a big awards ceremony. Basically they wanted big beat drum loops to make it boom. Sounds easy enough right? When we dropped the song onto a grid in logic we were blown away by how much the tempo varied — and I mean not intentionally. It took a ton of chop work to get it right, and this was 12 years ago when time stretch wasn’t out yet.
I never once heard that song and thought, “the tempo is wack,” because it flowed naturally. There’s something about tape and linearity. Plus, back in the day, you had to be good BEFORE you went into the studio.
I like Skrillex, and he’s really good at pointing and clicking, but…
http://www.youtube.com/watch?v=WddSQVTwj_Y
that songs sucks! Always has and always will. oh and I actually saw BTO last summer in Del Mar at the playgrounds. And my God was it dreadful. They NEED a computer to even out their suckitude.
Ding ding ding! We have a winner. I have wasted countless hours with social media, with minimal results. Not just for real estate, but other markets as well.
I think it can work, depending on the market, but for most of us, traditional advertising methods will give you a much better return on your time and money.
‘The front steps have collapsed, the wood siding is falling off, the house is in foreclosure, but more than 120 people flocked to a Larkspur home offered for $354,900 in the first five days it was listed. And before you start thinking “teardown,” think again. The 876-square-foot cottage was built in 1905 and has a historic resource designation that means it must be preserved in some form.’
‘Richmond is also honest about the place. After 20 years selling distressed properties, “I don’t think I’ve had any property (in) worse (condition),” Richmond said. This includes the foreclosed Martinez cemetery he sold about 15 years ago, Richmond said.’
‘Glen Allan March, the home’s former owner, was arrested in 2012 on allegations he threatened to kill the city’s mayor and fire chief because he was upset about work he could not do on the home. March, an attorney, eventually took a diversion offer in 2013 and agreed to complete an anger management course.’
“On April 3, 2007, March paid $622,000 for the property. He was hoping to fix it up and turn it into a really nice place to live,” Richmond said.’
‘But it was not to be. The property was eventually foreclosed on and now belongs to the bank. After his tour of the property was over, McGuinness asked Richmond, “You are opening at $400,000?” “Asking is $354,900,” the agent responded.’
He’s lucky that place was foreclosed on, there are hundreds of thousands in SoCal who are still in houses bought at that peak pricing as the article above about the crazy lady shows.
This is what the shills like RW and JM don’t seem to get. They foamed the runways and slowed down the train wreck but it is and always has been unsustainable. Snake oil salesman know this at least and pack up their carts and head for the next town before the “medicine” wears off.
Per Wikipedia
“A shill, also called a plant or a stooge, is a person who publicly helps a person or organization without disclosing that they have a close relationship with the person or organization.
“Shill” typically refers to someone who purposely gives onlookers the impression that they are an enthusiastic independent customer of a seller (or marketer of ideas) for whom they are secretly working.”
For what it’s worth, RW and JM are trying to show you that there’s a way to buy and rent out houses. Why? I have no idea. But I know there are people out there who can just write a check for a house. The smart ones are careful as the market starts to change. The dumb ones just keep buying. Please don’t use the word shill. Thanks
And “for what it’s worth”, there is no way to “buy and rent out houses” profitably at current grossly inflated asking prices of resale housing.
Capisce?
I credit myself for long ago introducing that term to this blog by using it consistently enough that it caught on. I stand by calling them shills for the REIC. They are fake customers feigning independence.
They’ll be fed into the Craterator and get shredded up. Just like millions of loan owners.
The opportunity to buy homes for rent is over in California…prices are too high, and the distress is gone. But buying homes in 2009-2011 for rent wasn’t crazy.
Here is what I want to get across:
1. If you look at overall metrics of people and/or jobs relative to places to live in CA, you will see that there is a massive supply shortage of shelter in the state. This is the kindling for constant boom/bust cycles here (independent of the global credit bubble).
2. Distress has moved through the system in CA (and other non-judicial states) much faster than judicial states (FL, NJ, NY, etc.). As such, the belief that just around the corner the market will be flooded with foreclosures and cause a crash is misguided.
3. Credit standards have not yet loosened up very much. As such, the boom in prices has more to do with low rates and supply/demand imbalances than it does NINJA loans, fogging a mirror to get debt, etc. This price boom in that regard is different than the price boom that we saw in 2005-2008.
4. This cycle will turn for different reasons than the last cycle (which collapsed on its own weight). I think things will go down due to either a) a broad economic slowdown, or b) a substantial increase in development.
However, to get “b” in this state, you need a major reform of CEQA (CA Environmental Quality Act)…and I’m not holding my breath for that one. It’s the law that the Sierra Club hangs their hat on to influence development–lots of people implicitly support the status quo.
I have not hidden what I do. I invest in real estate professionally (primarily commercial, but also residential).
A. Our firm (”we”) stopped investing in residential in the early 2000’s, and had no exposure to residential when it crashed.
B. Knowing #1 from above (which has been building for literally decades), we acquired a fair amount of residential land, but also rental homes starting in late 2008. We stopped buying a while ago.
C. Knowing #4 from above (that all RE cycles eventually go the other way), we are in the process of selling.
Why do I post?
This blog was a safe haven for me as a source of rational thinking when everyone in my industry was being stupid. I have been trying to share what I see (mainly specifically with respect to CA) as the crash played itself out.
Most here believe that the crash wasn’t allowed to play itself out. However, I think they are mistaken in one key area–the data they look at to support their position is national…if you look state-by-state, a different picture arises.
I believe that the crash didn’t allow itself to play itself out in the judicial states…the price boom in Florida (high vacancy rate, huge amounts of shadow inventory) is a mystery for me–I think there are problems brewing there. I’ve personally warned people against buying rental homes there…they probably think I’m an idiot about now.
Nevertheless, I’m a firm believer that sometimes bad investment decisions result in good returns, and that good investment decisions sometimes result in bad returns. I still think that investing in FL real estate is a bad investment decision.
I try to share the sources for all of my data and rationale (and have for a LONG time).
If you think I’m a shill, fine. I do appreciate people who counter my data with alternative, SUPPORTED data…but that data seems to be sparse.
With an additional 4.4 million excess empty and defaulted houses in CA, there is a whole lot of housing prices correction ahead in CA.
“I do appreciate people who counter my data with alternative, SUPPORTED data”
This is what I’m talking about. An adult debate includes sources to support the data that is the counter-point.
And “you know the source”, isn’t a source.
And good luck offloading those depreciating shacks considering the wall of excess empty inventory and collapsing demand in California. Your “investors” are going to regret ever giving you a nickel.
Turn yourself in now.
What’s the old saying… ‘In God we trust, everyone else, bring the data !’.
And you’re another who just doesn’t like the data. Me nor the data can save you now.
Thanks rental watch. I’ve been reading this blog for years and I appreciate the occasional intelligence comment. HA seems like a troll to me, never anything useful to add, just the same tired nonsense.
Like the man said, enjoy living in the bubble. You get paid to do so.
However, to get “b” in this state, you need a major reform of CEQA (CA Environmental Quality Act)…and I’m not holding my breath for that one. It’s the law that the Sierra Club hangs their hat on to influence development–lots of people implicitly support the status quo.”
in the future there will be 3 kinds of homes in Coastal CA - millionaire homes behind gates, Government approved and funded homes for the masses of needed service workers think Ikea sized homes and last and least freeway under passes for everyone else.
And then Oxnard
Are the gates to keep the debtors inside or to keep people who actually have money out?
“Comment by Gabor”
Watchya fraid of Donkey?
“This price boom in that regard is different than the price boom that we saw in 2005-2008.”
Yeah. Because as of 2004, everything was in line with fundamentals. And the bubble was still inflating in 2008. Gotcha.
Oh, and Man Of Steel is better than Superman.
‘different than the price boom that we saw in 2005-2008′
Look down; you are holding the bag on this, and trying to explain it away. That’s what’s different.
Don’t put your family through hell R._Fraud. Surrender to the authorities.
“Look down; you are holding the bag on this, and trying to explain it away. That’s what’s different.”
And meanwhile, the rationalizations get ever more protracted and desperate.
“the rationalizations get ever more protracted and desperate.”
The things I’ve been saying and data I’ve been sharing have been consistent for a long time here…at least do me the courtesy of not calling me “lucky” if things turn out how I expect, and not how you expect.
And the data shows you’re in trouble
California Housing Demand Collapses 11% YoY
http://www.zillow.com/local-info/CA-home-value/r_9/#metric=mt%3D30%26dt%3D1%26tp%3D5%26rt%3D14%26r%3D9%252C394806%252C395057%252C395025%26el%3D0
Surrender to the authorities R._Fraud.
Ventura, CA Rental Rates Plunge 13% On Rising Vacancies
http://www.zillow.com/local-info/CA-Ventura-home-value/r_34543/#metric=mt%3D46%26dt%3D1%26tp%3D4%26rt%3D8%26r%3D34543%26el%3D0
Oxnard, CA Housing Demand Collapses 28% YoY; Prices Plunge 25%
http://www.movoto.com/oxnard-ca/market-trends/
http://www.zillow.com/local-info/CA-Oxnard-home-value/r_13150/#metric=mt%3D30%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D13150%252C114909%252C114263%26el%3D0
Riverside, CA Rental Rates Plunge 9% YoY; Housing Demand Collapses 16%
http://www.zillow.com/local-info/CA-Riverside-home-value/r_47401/#metric=mt%3D46%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D47401%252C113507%26el%3D0
Sacramento, CA Housing Demand Plunges 12% YoY To 10 Year Low As Rental Rates Dive
http://www.zillow.com/local-info/CA-Sacramento-home-value/r_20288/#metric=mt%3D30%26dt%3D1%26tp%3D6%26rt%3D8%26r%3D20288%26el%3D0
San Clemente, CA(LA/coast) Housing Prices Crater 22% YoY As Inventory Balloons 55%
http://www.movoto.com/san-clemente-ca/market-trends/
“‘We’re kind of at the groundswell of the next real estate cycle,’ said Paul Habibi, a developer and professor at the UCLA Ziman Center for Real Estate.”
Once the Ziman Center guys start waxing nostalgic for the bubble years to return to full bloom, you know the echo bubble is on its last leg.
“‘I don’t see any imminent end to this. The capital markets are only going to get looser as we go.’ Scott Cross, president of SC Homes, is also banking on that vision. ‘We’re diving harder than ever because the market’s just skyrocketing,’ said Cross, whose firm does complete teardowns.”
Skyrocketing today, skydiving tomorrow.
I’ve been skydiving. It’s amazing how fast you accelerate while falling. It’s not 9.8 meters per second squared, but it sure feels like it.
Los Angeles, CA Housing Prices Turn Negative; Inventory Balloons 28% As Buyers Exit
http://www.movoto.com/los-angeles-ca/market-trends/
“More than 200,000 property owners in San Diego County could see their property tax bill rise between 10 and 20 percent this year, a new state report says. Those owners have been receiving a break on their property tax bills since housing values plummeted during the Great Recession and were reassessed downward. Now, as values have recovered, tax bills can do the same. There is no cap on how much a property’s assessed value can recover each year if it was reduced during an economic downturn, the report from the state Legislative Analyst’s Office says.”
I thought Proposition 13 limited annual CA property tax increases to 2%. Is this an exception to the rule?
I can’t wait to see the look on landlords faces when tenants walk after attempting to passthrough this cost.
Wasn’t there some provision that when the bills were cut due to cratering prices, they could increase them back to the prior level more rapidly? Not sure, but I seem to remember something like that.
Prop 13 limits tax to 1% of the purchase price, plus 2% per year.
If they drop the tax, they can undrop it, plus 2% next year.
There’s no cap on how much the tax can “recover” after dropping but there’s still a maximum based on the purchase price.
it’s not so much an exception as it is a misrepresentation on the paper’s part.
Prop 13 limits the increases to base year value + 2% annually, and if the market value falls, the roll value can be reduced accordingly. However, if the market value recovers, there is no cap on the amount of the increase, provided it does not exceed the factored base year value (base + 2% from purchase to present).
So for example if the assessed value of your property is 150k, but the market value falls to 100k, it can be reduced that far. However if the market value recovers to say, 250k, your value can be increased up to 150k, but not up to the 250k market value.
I hope this makes some sort of sense.
If you buy at $100, your assessed value cannot grow by more than 2% per year from that as a baseline.
If the value of your home drops to $50, the assessor will lower your property tax bill accordingly.
However, the ceiling will still grow. After a decade, the $100 limit will grow to $120 (I’m ignoring compounding for simplicity).
If 10 years later, your home price is $130, your tax bill will rise considerably, but only up to the tax based on an assessed value of $120.
Not an exception to the rule, it’s the rule.
Take home: Never, ever buy a home in California.
unless you want to make money.
Paying retail prices for a house results in loss.
Why did you pay retail for an item that depreciates?
I’m confused, because of Prop 13?
The difference between CA and many other states, is that:
1. In my examples, other states could push your assessed value back to $130 (not limited to $120); and
2. In other states, they can simply choose to increase your rate of tax from 1% to something higher if the home value goes down.
If you don’t want to buy a house at all, that’s fine, but Prop 13 is a gift to property owners here compared to most other states.
‘Last spring, Edit Novshadyan and her husband were happy to land a Sun Valley three-bedroom house, with enough room for their son to play and their family to grow. Another child was on the way. So they signed a one-year lease with Invitation Homes, an arm of private-equity giant Blackstone Group and the largest player in the emerging single-family home rental industry. It was, Novshadyan said, a “perfect moment.”
‘Then they moved in. The house quickly became a slum — one with persistent water leaks, cockroaches and mold that sickened the couple, Novshadyan and her husband, Roland Bagdasaryan, allege. Invitation Homes failed to quickly make requested repairs, and the squalor grew so dire that the family left, according to a lawsuit filed in Los Angeles County Superior Court.’
‘Invitation Homes bought the Sun Valley house out of foreclosure in July 2012, according to public records. The Dallas company has since packaged the house into a rental bond, records show, along with roughly 3,000 others, to raise $479 million.’
‘After the couple decided not to return there, they agreed to rent a Tujunga house that Invitation Homes offered them. But before they could move to Tujunga, the company rented the house to someone else, the lawsuit alleges.’
‘The couple tried for months to retrieve their belongings from the Sun Valley home, whose locks had been changed by Invitation Homes, according to the lawsuit. They finally gained access in December and tested their belongings for mold contamination. Most of the couple’s belongings came back positive, and medical tests on the couple also found mold contamination, according to the lawsuit.’
‘Novshadyan now lives in a small Glendale apartment with her husband and two children. The couple said they had to buy new furniture, clothing, baby supplies, bedding and more. Some things, like pictures, they can’t replace.’
‘According to the lawsuit, Novshadyan and Bagdasaryan still hear from their former landlord. “Invitation Homes,” an amended complaint filed in March says, “continues to send plaintiffs emails demanding rent to this day.”
Mark yesterdays date on the calendar. The Fraudulent Reserve telegraphed the end of the 30 year bull run in bonds. They had to bullhorn the start of the next leg down in housing (obvious as the rate reversal will choke housing for the next 2 to 3 decades) so they can say ToldYaSo.
The double bottom in yield July 2012 and May 2013 parallels peak housing prices perfectly. The fundamentals since May 2013 are;
-Collapsing housing demand
-Peak blow off pricing, subsequent price declines
-Rising Inventory by every metric
-Falling rental rates
-Greed that’s now turned to panic(the most enjoyable part of this)
This is another canary in the coal mine worth reposting.
Boulder, CO Median Sale Price Plunges 19.8% And Falling
http://www.zillow.com/local-info/CO-Boulder-home-value/r_30543/#metric=mt%3D19%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D30543%252C268631%252C268640%252C416088%26el%3D0
‘One year ago, Pacific Union CEO Mark McLaughlin attended a game-changing lecture about the future of Chinese investment in the U.S. The speaker was Elizabeth Harrington, the U.S. publisher at large of the Hurun Report, an authority on the wealthiest people in China thanks to its annual “Rich List.” According to McLaughlin, after hearing Harrington speak, it became clear that China’s wave of interest in purchasing U.S.—and particularly Bay Area—real estate was only in its infancy. “She was able to articulate that, if this is a baseball game, we’re in the first inning, not the ninth,” he says.’
‘Pacific Union decided it wanted to play ball. The real estate firm sponsored the Hurun Report’s black-tie dinner in Beijing, honoring the 100 richest people in China in 2013. McLaughlin was seated at a table with a handful of billionaires. “Can you imagine Bill Gates attending an event celebrating his wealth? It’s a very different culture,” McLaughlin says.’
‘He also clarifies that even though San Francisco (along with LA and New York City) is one of the prime places for Chinese investments, when Chinese clients says they want a home in San Francisco, that could actually mean anywhere from Calistoga to San Jose. Some Chinese buyers are looking for brand new South of Market condos, where they can just come in and out with a suitcase and not worry about maintenance. Others want the Napa lifestyle; with a huge uptick in Chinese interest in California wine comes an increased interest in owning homes on a vineyard.’
‘If Chinese buyers move fast, they also hold for the long-term, something that does concern McLaughlin. While high-end U.S. buyers are likely to purchase a $5-million property and then sell it a few years later to buy a $10-million property, Chinese buyers tend to buy, hold and then buy more. McLaughlin says his firm recently had Chinese buyers purchase a $2-million-plus property in Seacliff because they just had a baby and were planning to move to America in six years for kindergarten.’
This occurred to me; if the bay area is so hot hot hot, why are they flying around China trying to peddle their shacks?
If you find that purple ducks really like the food you have to sell, a good salesman actively seeks out more purple ducks, so they’ll buy your food, not someone else’s. They don’t sit on the front porch waiting for the ducks to show up.
I heard of a new reason for the Chinese buyer (a new one for me)…our admin lives in the Bay Area…the home next door was sold to a Chinese buyer. The house is mainly empty, kind of maintained by a relative who lives in SF.
However, at one point, it was occupied by a young Chinese couple. The woman was pregnant.
They stayed for a few months…long enough for her to have her child.
Boom. American Citizen.
They packed back up, and went to China.
Appalling…
As finished and washed up as many seem to think we are, American citizenship is still highly coveted around the world.
Indeed it is. Just ask anyone who has worked at an American embassy. The lines to get visas for travel to this country are quite long.
A close friend of the family received her citizenship last year, after having worked in the US for a couple of decades.
A wonderful person–I’m happy that she is a citizen, and consider her a role model for my kids.
In any event, when she went home (Africa), her family’s response to her receipt of citizenship was one of pride. Her family’s view is that she has “done it”–accomplished what everyone in the family wants to accomplish…becoming an American Citizen.
“Her family’s view is that she has “done it”–accomplished what everyone in the family wants to accomplish…becoming an American Citizen.”
Perhaps she and her family need to go out for a nice evening stroll in East St. Louis, or Oakland, or the “Pork and Beans” in Miami. That’ll remove their rose-colored glasses for good, assuming they survive…
I’ll take the bad parts of America over the bad parts of Africa every day.
There is a sucker born in China even more often than every minute.
What a decadent celebration of corruption and criminality. It sounds like something out of the Hunger Games. Yeah, they want the “Napa lifestyle.”
Doesn’t Wall Street have a similar banquet, albeit a covert one? I seem to remember reading a story from a reporter who crashed it and was asked to leave. We did have the Predators’ Ball back in Milken’s time.
I live near Napa and actually the Napa valley is really tacky and weird in many ways…faux Italian villas complete with phony patina, lotsa stretch SUV “limos”, Harley rentals to fulfill adolescent fantasies, etc., sort of a Disneyland for adults (like Las Vegas). The obsession with food and wine substitutes for religion and is so overwhelming it kills my appetite when I’m there. I love living northern Calif. and enjoy the local cuisine and wine greatly but the Napa scene is very off-putting.
20 some years ago the Japanese were buying up all the aged single malt scotch. Then they stopped.
Vintage electric guitars too.
Yep.
I remember that.
I bought a 1958 Gretsch for top dollar in 1996. I remember the dealer telling me that I shouldn’t really think of it as an ‘investment’ because I was buying at the top of the market.
I didn’t care because I had just wanted that guitar for years. It wasn’t about ‘making money’ or ‘timing’ the market.
Funny thing is that I couldn’t touch that guitar for what it’s worth nowadays. So much for being a fool, buying at the top of the market.
ps - it’s an awesome guitar and I still own it.
Let’s see if the mid-century-modern I just closed on isn’t the same.
Do you live in it too?
The MCM? Yes.
You might want to dump it if you can find a buyer.
why?
Why not?
You can do better than that.
You’re backpedalling again.
The rubber/glue form of debate is weak.
‘More seniors today are carrying mortgage debt in retirement than ever before, rising from 22% to 30% from 2001-2011, according to a new report by the Consumer Financial Protection Bureau. Over the same period, the median mortgage balance for older Americans has nearly doubled from $43,400 to $79,000.’
‘Nearly 60% of 4.4 million retired homeowners in the U.S. today spend more than 30% of their household income on housing alone. In 2011, older homeowners with a mortgage spent $800 more per month on housing than their counterparts without a mortgage, according to the CFPB — $1,257 vs. $434.’
“Much of the increase can be attributed to the refinancing boom of the 2000s,” the CFPB says. Other factors contributing to the problem, according to the CFPB, “include a general trend among Americans to buy their first home later in life, provide small down payments on home purchases, and borrow against their home equity to pay for a variety of expenses.”
‘With so much of their wealth invested in their homes, seniors’ financial health is far more vulnerable to economic downturns like the housing crisis of 2008. In fact, if you take their homes out of the equation, older Americans’ actual net worth is vastly lowered — from a median net worth of $170,516 to just $27,516, according to the U.S. Census.’
‘A recent report by Boston College researchers found evidence that nearly two-thirds of homeowners with mortgage debt are still working at age 64, compared to half of homeowners who have paid off their mortgages.’
“Older adults are supposed to be at the peak of their wealth accumulation and debt-free going into retirement, yet over time they have become increasingly more indebted and more leveraged,” Barbara Butrica, the study’s author, wrote.’
The story makes absolutely not sense. Suzanne’s research told them that their house was their key to wealth in retirement.
I wonder what portion of the mortgages are reverse mortgages…clearly not a great situation either way…but I wonder how much equity raiding has to do with the debt.
Read it and weep, boys!
http://www.bloombergview.com/articles/2014-05-07/buying-a-home-isn-t-bad-for-you
There’s my mule……. Cheetos. Fetch. NOW.
I bet you will like this one, Amy.
http://www.marketwatch.com/story/americas-least-favorite-neighbors-renters-2013-10-30
America’s least favorite neighbors: renters
Most Americans know their neighbors by name, new research finds, and might even invite them over occasionally for tea. That is, unless the neighbor is — gasp — a renter.
Indeed, people are more prejudiced against renters than any other group living on their street, according to a survey of over 3,000 adults released Thursday by research firm Harris Interactive on behalf of Trulia, a real-estate firm. Of those picky neighbors, 33% want people on their street to speak the same language, 16% want their neighbors to have the same family structure and 10% prefer the same race or ethnicity. But 35% (even those who are renters themselves) said it was most important that their neighbors be homeowners. In fact, 51% of homeowners say they prefer to have other homeowners as neighbors.
Renters are just gross. They should have separate bathrooms and drinking fountains, no homeowner wants to get contaminated by something a renter touched!
The neighbors that rent are never home since they have the time and money to enjoy the good life. Those of us stuck in home ownership are slaves to the money pit.
Everyone wants everyone else to be a slave…keeps people in line.
Good take Carl… You know what comes to mind when I think slavery, it is the NFL and NBA draft, now those leagues are free enterprise “not”.
You are going to play in Cleveland and you better smile and say thanks for the opportunity?
“Every time I call it a game, you call it a business. And every time I call it a business, you call it a game.” - A line from the movie “North Dallas Forty”.
Another line from the same movie:
“We’re not the team. The owners are the team. We’re the equipment.”
Who fawking gets invited over to the neighbor’s house for tea? Was this from AARP or something? Good gawd.
Pay cash and #WIN!!!
Better yet, rent for half the monthly cost and buy later.
Remember….. housing demand has collapsed and inventory is rising.
I bought in ‘97. But there is NO WAY I would buy today. Renting is king to avoid loosing your shirt on an overpriced shack today. Factor in taxes, depreciation and upkeep and you’re upside down FOR LIFE!!!
We’re born upside down. The biggest accomplishment of life is to get on one’s feet, and stay there.
If her house was worth $600,000, she would magically be able to afford the house payments again!
It’s a miracle!!!!
Every once in a while I’m reminded why you are not supposed to drink liquids while you read this website.
Thanks a lot, Shoeguy! At least I didn’t ruin my shirt. All I had to do was wipe my floor.
People, we’re WAAAAAAAY off the mean. Rent, keep stockpiling cash and get ready to be an “all cash offer” when craterton comes…
Wait. We have to wait for Mz. Craterton to make it with the forklift driver before we can buy a house?
Don’t interfere with Mz. Craterton. She’s developing and procuring my Cheetos inventory.
Janet the weather lady says unwind 5-7 years
so 4 trillion divide by 7 ?
unleashed
Housing inventory is up 80% y-o-y in San Diego. Yeah, we’re on the groundswell of the next big boom. OK.
There are a quite a few out there who made the mistake of thinking they were going to somehow profit from buying a retail item at retail price plus a 200% premium. They’re in for the surprise of their debt-drenched existence…..
“… their debt-drenched existence…..”
Enslave them and you own them and you own what they produce. But the down side of owning them is you have to deal with all the problems that ownership entails.
But if you indenture them then you still reap the benefits of owning what they produce but you don’t have to deal with all the hassles that are associated with ownership.
Slavery is nineteenth century thinking and it is driven by coercion.
Indenturing is the thinking that dominates today and will continue to dominate in the future, and it is driven by persuasion.
Until they hang your head from the lamp post!
Truly, you are one of those who are in need of some persuasion.