After Years Of Booms And Busts: Don’t Panic
The Los Angeles Times reports from California. “Interest rates on an average 30-year fixed-rate mortgage hit 4.1% this week, a low for the year, according to Freddie Mac. It’s helping to ease the pain of home prices that have climbed by one-third in Southern California over the last two years. When rates start to rise, there may well be a flurry of sales as buyers rush to lock in lower payments while they still can, said Mark Goldman, a mortgage broker who teaches real estate at San Diego State University. In the long run, Goldman and other market watchers say, higher rates may help to damp home sales, which are already running well below historical averages. But they’ll be balanced out by clearer lending guidelines and slightly looser credit requirements.”
“And mostly, Goldman said, they’ll be taking place in a market that — after years of booms and busts — appears to be behaving somewhat normally. ‘We’re in a period of extraordinary equilibrium right now,’ he said. ‘Don’t panic.’”
The Marin Independent Journal. “Flips have dropped significantly in Marin, from a high of 7.2 percent of all home sales in the last three months of 2012 to 4.8 percent of all sales in the second three months of 2014, according to RealtyTrac. ‘I’m cautious going into next year,’ said Brett Foley, who makes his living flipping. While Foley has prospered, leaving a job managing construction crews to flip full-time, this house and another he’s remodeling in Mill Valley could be his last hurrah.”
“‘We’ve had an incredible year and a half, almost two years. Nothing lasts forever, so is it going to level off? Absolutely,’ said Bob Ravasio of Coldwell Banker.”
The Independent. “Joe and Debbie have owned their Mission San Jose home for over 20 years. When a neighboring house similar to their 4-bedroom rancher sold recently for $1.4 million, the couple started thinking it might be time to cash in. They have long wanted to live in Livermore, and the sale of their home would make the move easy. But they won’t necessarily buy here. They may decide it’s time to rent.”
“Their daughter already rents here, paying $1,800 a month for a charming 2-bedroom bungalow in Old North Side. She would love to purchase her own home. Something similar to the house she currently lives in would likely sell for about $450,000.”
“‘Home ownership is still important for the country. It’s the most proven way to build equity and it gives families security,’ David Plouffe, former advisor to President Obama and incoming VP of Uber, said in a recent interview with Realtor Magazine. ‘It doesn’t mean it’s right for everybody. We live in an economy where people who are in their 20s are going to have eight or 10 jobs and will move around a lot. It’s different than it was a couple of generations ago, when you bought a home, planted roots, and you were going to be there forever,’ he added.”
From KUSI News. “The average price of a typical home in San Diego is $625,000 while the national average, according to the USD Burnham Moores Center for Real Estate, is $175,000. Many renters who want to take the leap to home-ownership are sitting on the fence right now because they are worried there will be no net to catch them when they make the leap to buy a home. Real estate agent Sean Hillier says it’s hard to find properties to show. ‘Right now market is kinda slow for summer, but a lot of home buyers are kinda hanging back saying I think things are kind of overpriced here,’ says Hillier.”
“Real estate experts say home prices are almost as high as they were at the peak of the market in late 2005. Norm Miller says, ‘There are about 8,000 listings, and less than 250 are in the affordable range.’ If interest rates are so low right now, why can’t people buy homes? With minimum desired credit score of 620 and a down payment of 20%, when wages have not gone up for many, it is just not feasible right now. ‘If you have aspirations for a high quality larger home, I don’t see it in San Diego county,’ says Miller.”
The Union Tribune. “Tens of thousands of San Diego County homeowners continue to owe more on their properties than they are worth. In the second quarter of this year, there were 46,585 county homeowners underwater on their homes, Zillow reported. Those with negative equity make up about 10 percent of property owners in the county who have a mortgage, down from 21 percent in the second quarter of last year. The homeowners were underwater despite an increase in the county’s median home price of more than $100,000 over the last two years.”
“‘There were a lot of people that got caught at the top (of the housing bubble),’ said Mark Goldman, a loan officer and real-estate lecturer at San Diego State University. ‘During the run-up, people were just out at a frenetic frenzy in 2006 and 2007. They didn’t care what price they paid for property.’”
The Record Bee. “The impact of Mortgage Electronic Registration Systems (MERS) on county records was a topic of interest during the Lake County Board of Supervisor meeting on Tuesday. District 3 Supervisor Denise Rushing requested the issue be placed on the agenda after hearing from several local residents during public comment at previous meetings regarding the unlawful foreclosures. According to Larry Anderson, 76, of Kelseyville, Bank of America has been using MERS to foreclose on his house, as well as the houses of his neighbors. ‘It affects a lot of seniors,’ Anderson said. ‘What MERS is doing is proven fraud.’”
The Press Enterprise. “Were it not for the catchy real estate listing, an apocalyptic bunker near Barstow that was built in the Cold War would continue to be relegated to a life of obscurity. Now, in the face of drought, raging fires, earthquakes, super flu and conflicts in Ukraine and the Middle East, Kevin Layne put out there: ‘Here’s that 8,100-square-foot underground bunker in the Mojave Desert … that you’ve always wanted,’ he wrote on Twitter, linking to a $750,000 listing for the 3-story underground abode.”
“Broker James Langley, a co-owner of Kursch Group in Victorville, said his client, Gil Stoffels, bought the desert bunker in 2006 as an investment and put it on the real estate market about a year ago. ‘He’s ready to sell,’ Langley said, and a recent $200,000 price reduction is meant to draw buyers in. Stoffels said he bought the communications center on a ‘total fluke’ when it seemed everyone was flipping homes for profit.”
“The self-described entrepreneur who got his start in the logging business and the ’school of hard knocks,’ and now invests in properties, was taken in by its originality. ‘I don’t need to sell the bunker, but I’d like to,’ Stoffels said. ‘I haven’t, so far, because I’ve gotten a boat-load of ridiculous offers.’”
‘The median sales prices of existing homes in Yuba County climbed from $170,500 in July 2013 to $183,500 last month, a increase of 7.6 percent. The July 2014 median price declined from $207,500 in June.’
“Median home prices tend to bounce around a lot in markets like ours because there aren’t that many sales,” said Lloyd Leighton of Lloyd Leighton Realtors, of the Yuba County month-to-month decline. “To see a large drop like the one we see in Yuba County isn’t too worrisome.”
“I think it ties back to the whole economy,” he said. ” I just don’t see home purchases increasing rapidly as long as the economy is weak.”
have you ever been to yuba city or marysville? Seems a lot like fresno to me. I guess people buy up there and commute to sacramento for govt work.
A letter to the editor:
‘Dear Alameda:
‘I wanted to let you know that I am falling out of love with you. I know it is foolish for me to think that you would be the wonderful paradise of my childhood of the ’50s and ’60s. I moved away for a long time. I left the hassle of San Francisco to come back to Island life and now it’s the hassle of living in Alameda.’
‘I tried my best to accept your changing personality, but it’s getting very difficult…
The mayor, city council and city manager are responsible for destroying the quality of life of those already here who have put down their roots to raise their children or to grow old. They have sold you out, Alameda. Measure A was passed to save the Island we love and the quality of life we all share. Measure A was supported when we sent SunCal packing with an 85 percent vote against its housing plan that wasn’t compliant with Measure A. Now the city manager has called us racist because we want to preserve the quality of life you provide us.’
‘…Developers don’t care what kind of mess they leave they just want the money in their pockets. I foresee a very sad future for you, Alameda. Your personality and uniqueness will soon be gone. This mayor, city council and city manager are selling your soul. They have the mentality like the rest of the country that put the quality of life aside to make room for the almighty dollar.’
‘Too many cars, traffic on the bridges and in the tubes, ugly dense houses either on toxic land or on your dangerous shores to be inundated by rising waters or liquefied by a major earthquake, more speeding cars on your streets…dangerous crosswalks, safety issues for evacuations — a complete destruction of our way of life.’
‘So, what will I do? Will I sell my house that has been in my family for 50 years and move on because it breaks my heart to see what a few people who were elected to follow your laws fail you so miserably? Or will I decide to stay and ignore what is happening?’
“This mayor, city council and city manager are selling your soul. They have the mentality like the rest of the country that put the quality of life aside to make room for the almighty dollar.”
Welcome to the entire United States of Greed, where the quest for a buck trumps everything.
‘A loan and pawnshop business and empty storefronts line D Street, the five-lane artery leading to City Hall. Nearby, a Radisson Hotel and the adjoining San Bernardino Convention and Visitors Bureau stand empty, both shuttered for a few years.’
‘On a recent afternoon, a young woman at a bus stop repeatedly shouted out across the lightly traveled road, “Can I have 40 cents?” An elderly woman pulling a cart asked passersby to spare a dollar.’
‘There is no thriving downtown in this Southern California city, which has the dubious title of being the poorest of its size in the state. There hasn’t been one in years, but the dismal state of the city’s core is a constant reminder of a larger problem. San Bernardino, the state’s 17th-largest city, with almost 214,000 residents, is bankrupt.’
‘The city is now considering raising its 8.25 percent sales tax, which is already higher than the state average, and instituting development impact and franchise fees.’
‘During the housing boom last decade, cities such as San Bernardino were counting on greater revenues. “If you made promises to public-sector employees based on the assumption that you were going to take this growth and capture added value from property taxes, it became kind of tough,” said Kim Rueben, director of the Urban Institute’s state and local finance initiative.’
‘It became especially tough after the housing bust, when development screeched to a halt and the foreclosure crisis dried up revenue from real estate. “It immediately took away a lot of revenues,” said Frank Shafroth, director of the Center for State and Local Leadership at George Mason University. “It was there one day, and then it wasn’t there. That’s a double whammy.”
“I don’t see a whole lot of positive,” said Richard Castro, 57, a retired high school science teacher who ran for mayor last year and lost. “It’s tough to get kids to push forward. There’s been more of an exodus.”
“There hasn’t been one in years, but the dismal state of the city’s core is a constant reminder of a larger problem. San Bernardino, the state’s 17th-largest city, with almost 214,000 residents, is bankrupt.’
‘The city is now considering raising its 8.25 percent sales tax, which is already higher than the state average, and instituting development impact and franchise fees.’”
Oh, this is just brilliant, and the exact opposite of what they should be doing. I bet if you look up the local government’s salaries, they’ve been getting raises every year.
I bet if you look up the local government’s salaries, they’ve been getting raises every year.
Judging by their Taj Mahal city hall building (for a city of 200K) that goes without saying.
‘Thanks to the EB-5 money-for-visa program, many wealthy Chinese investors are helping revive one of San Francisco’s most ambitious development projects, a project that will help lift one of the city’s worst neighborhoods out of poverty. The $8 billion, 775-acre Shipyards project in San Francisco’s southeastern impoverished black neighborhoods of Hunters Point and Candlestick Point lay dormant for years because of lack of funding.’
‘Chinese investors can obtain American green cards through the federal EB-5 program when they invest in the Shipyards project, according to Ginny Fang, CEO of the San Francisco Bay Area Regional Center, which is a co-operator on the Shipyards project.’
‘Congress created the EB-5 investor visa program in 1990, offering a green card for cash investment in the US to stimulate the economy and create jobs. Foreigners can obtain permanent residency by making a $1 million investment in a new commercial enterprise or $500,000 into a Targeted Employment Area (TEA) with higher unemployment rates, said Fang.’
‘Data from the US Citizenship and Immigration Service (USCIS) show that 6,346 EB-5 petitions were received last year with more than $3.25 billion in capital formation, said Fang. “Approximately 80 percent were from Chinese applicants,” she said.’
‘After founding a successful brokerage in Marin County, Mark A. McLaughlin took a plunge in 2009 when the real estate market was at a low ebb and purchased the Bay Area’s Pacific Union brokerage based in San Francisco. It was a gamble that has paid off.’
‘Picking up on a growing foreign appetite for U.S. real estate, the company recently launched a Chinese initiative with a social media marketing campaign in China and “concierge” service for Chinese investors and buyers in the U.S.’
‘Q: Pacific Union launched a Chinese initiative last year. What are Chinese buyers telling you? Why are they so keen on investment in the Bay Area?’
‘A: I think number one is diversification of capital out of China where the government could be changed overnight.’
‘Q: Pacific Union launched a Chinese initiative last year. What are Chinese buyers telling you? Why are they so keen on investment in the Bay Area?’
‘A: I think number one is diversification of capital out of China where the government could be changed overnight.’
The rats are fleeing a ship they know will be sinking. Plus they know they might be executed for their embezzlement and fraud, especially if they aren’t proteges of the new masters of the universe.
That has to be fun. On the outside you appear to be rich, successful and powerful, but on the inside you know that if your political clique loses its power and influence that you could find yourself the victim of an old fashioned Maoist purge, and wind up in front of a firing, even though you didn’t do anything different that the new PTB did. And when the poop hits the economic fan there they will need scapegoats to blame. What better than “corrupt officials” who aren’t anymore corrupt than the new bosses. At that point a country without an extradition treaty starts to look very attractive.
From the Vegas market looking at a home yesterday in the NW that started at 430k the wife and I sat down to see what the actual cost would be. By the time you added lot fee’s and the most basic of options it got up to just over 500k. My favorite things are the fact that the lowest lot fee is just under 20k and that the style of house would tack on another 7k. So not starting at 430K but rather 457K or higher once the other non-option options are added in. Only a payment of 3K a month with 10% down….what a deal.
Almost $500k in Vegas? That should be a 10,000 square foot mansion on 5 acres in that hell hole.
Nope 3200 square foot in the NW area on a 1/2 acres lot. It is a nice house but not that nice and the area is not the greatest with horse properties and some old run down houses just outside the gated area. The sales person kept going on about all the custom and simi custom homes in the area.
http://www.pulte.com/communities/NV/las-vegas/TheEstateCollection/209256/index1.aspx#.VAS0wflSrO1
Hire your own GC or CM it yourself. There isn’t any more than $140k in materials and labor there.
So, every time I see a sign for some new development that says luxury hole in the wall starting in the low X’s,” I should immediately add 25%? Awesome.
Anything goes with DonkeyMath.
‘For those who want the central bank to do more to try to boost the economy or think its current policies haven’t been effective enough, here’s a novel idea: The Federal Reserve could print money and give it away to the public. That’s the provocative suggestion made in a new essay.’
‘In Foreign Affairs magazine, Mark Blyth and co-author Eric Lonergan write, “Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly.”
‘Blyth, professor of International Political Economy at Brown University, says while quantitative easing — or mass asset purchases — have cost basically $2.8 trillion dollars so far, if you divide that by the taxpaying population it would come to about $56,000 per household. “Imagine if that had just been given to households,” he asks.’
“So why not just give them a fraction of that directly, rather than trying to force all of that money through the banking sector altering asset prices, causing asset bubbles and distortions, and hoping that some of it causes real growth,” he adds.’
Hoo-boy. Let’s at least try and maintain a semblance of a real economy. How about we assign everyone to imaginary factories. Each day, we can all sit on a stool and pretend to be working at an imaginary machine, making imaginary products. At the end of each line, “workers” can go through motions, with arms straining (come one, you got to put a little acting into it) with the load of air, putting these products into imaginary boxes. Then more people on stools can pretend to drive the imaginary trucks, turning the wheel, and going “vroom-vroom”. At the end of the day, we’ll wipe our brow and pick up a real check, to deposit and head down to wal-mart to get some more Chinese crap, then head over to the newly Canadian Burger King for chow.
Ben Jones: “The Federal Reserve could print money and give it away to the public. That’s the provocative suggestion made in a new essay.”
The current policy makers are not the first people to think of printing money to increase the prosperity of their society.
While the physical (and digital) currency itself is tightly bound to its purchasing power, they’re not the same thing. They are two separate things, tightly bound. Ultimately purchasing power is what people desire, while the slips of paper (or values in an online account) are the physical/digital manifestation of that purchasing power. The link can be broken.
Ultimately, the policy makers like to threaten the currency because they’re enamored of debt, and currency debasement is a good way to get people to take on debt, as they get to pay it off in debased currency. The central bankers are… bankers.
However, the one thing that prevents that desire from going too far too quickly is the fact that inflation causes strong social discomfort and is a good way to make politicians lose their jobs. The central bank ultimately is a political machine (there’s a reason they continuously favor certain sectors and population segments which also happen to be quite politically powerful). So that’s a brake.
Japan has ZIRP for decades but in a deflationary environment. We’ve had ZIRP for six years now, but in an inflationary environment. That may well have unhappy consequences for the policy makers.
‘For those who want the central bank to do more to try to boost the economy or think its current policies haven’t been effective enough, here’s a novel idea: The Federal Reserve could print money and give it away to the public. That’s the provocative suggestion made in a new essay.’
They did that already, back when Alan Greenspan was at the Fed. My wife has a $2000 viola bow to show for the largess.
“Let’s at least try and maintain a semblance of a real economy.”
Back when Dubya send me a free check I promptly sent it off to Countrywide mortgage.
in that hell hole.
Hey! Don’t you talk about our hell hole like that.
NYC gets the same reaction. People would always screw up their faces and say how can you live there. I must have lousy taste in cities.
I lived there for one year as a young lad, so I speak from experience. No disrespect meant to those who like the place, but gawwwd I could never live there again.
No big deal. I like it here; it’s easy living. Even after eight years, my husband still pines for NYC.
NYC is truly a miserable hole.
Where do you live?
“The self-described entrepreneur who got his start in the logging business and the ’school of hard knocks,’ and now invests in properties, was taken in by its originality. ‘I don’t need to sell the bunker, but I’d like to,’ Stoffels said. ‘I haven’t, so far, because I’ve gotten a boat-load of ridiculous offers.’”
Those offers aren’t “ridiculous” but actually realistic. Your price is ridiculous. You’ll take one of those offers, or you’ll NEVER sell your POS bunker.
“‘Home ownership is still important for the country. It’s the most proven way to build equity and it gives families security,’ David Plouffe, former advisor to President Obama and incoming VP of Uber, said in a recent interview with Realtor Magazine.
Strange how this deliberate falsehood gets accepted as truth.
Ca will bust/circumvent prop 13 soon. More taxes needed. check out howmoneywalks.com
Read the SB article I posted in the comments above. It’s the pension obligations they incurred during the boom that are killing them. Man, these bubbles have a tendency to bite you in the butt.
It’s the pension obligations they incurred during the boom that are killing them ??
No question about it….Something has got to give…Higher taxes ?? Less services ?? Cut in Pensions ?? Haircut for the bond holders ??
All the above ??
Ca will bust/circumvent prop 13 soon ??
Not going to happen…They may need to raise taxes but they will need to find another way because there is NO WAY a referendum would pass overturning prop#13 and thats what it would take…They can’t legislate it out…Thats what pisses them off…
as long as these public unions keep funneling cash to democrats nothing will ever change.
some fear isil
pub unions are much more dangerous
Really? Have public unions recently engaged in beheadings and posted them on the web, for instance?
If not, what have they done that is even worse?
Dumb question of the day: How can San Diego housing be so vastly overpriced yet so many FBs remain so deeply underwater? ‘Tis a puzzlement!
“there may well be a flurry of sales as buyers rush to lock in PEAK PRICES”.
Welcome to a life sentence of mortgage payments. YOU OVERPAID.
‘During the run-up, people were just out at a frenetic frenzy in 2006 and 2007. They didn’t care what price they paid for property.’”
Well naturally, when you gamble with OPM and the banks let you the sky’s the limit.