Reality Is Setting In For Sellers
The Sacramento Bee reports from California. “The median price of new homes in Sacramento County has gone from about $200,000 in 2000 to nearly $400,000 this year, CoreLogic DataQuick reported. The median household income for the region was just over $57,000 in 2013, down from about $57,500 in 2012 after adjusting for inflation, according to census figures. Median incomes have fallen nearly every year since 2008. Joe and Jaime Dempsey had limited money for a down payment. They looked at house after house priced from $250,000 to $300,000, many of them being flipped.”
“‘They buy for $150,000, and do cosmetic work, and are trying to make 150 grand,’ Joe Dempsey said. ‘You can almost spot them from the moment you walk in. They are staged. They’re trying to hide the flaws. You don’t know what kind of shoddy workmanship has been done.’”
“Beth Sherman said buyers competing for homes in the median price bracket should come armed with a preapproved mortgage, a good loan officer and a hardworking real estate agent. She also recommended prospective buyers write a personal letter to sellers, saying why they want the house, and think carefully about what repairs they might be willing to make themselves. ‘This way, when the right home is found,’ Sherman said, ‘they can act quickly, which can mean the difference of getting the home they want or not.’”
From Fox 10. “Gwen Pickering, who is looking to stop paying rent and buy a home, went to an open house in East Sacramento that is going for $330,000. ‘The flippers are coming in, so even if you wanted to buy a house, say, I wanted to get a house for [$229,000], and you go in and the stuff is all cheaply done, or not done right, but people bought them.’”
“It’s a trend real estate agent Josh Amolsch says was bad the last couple of years, but he believes things are starting to improve for individual buyers. ‘There’s been a lot of price reductions,’ Amolsch said.”
“Amolsch says sometimes sellers will reduce their price if the home is going to the right buyer. ‘I’ve won deals from a letter, having my buyers write a letter. And if you can get the sellers to fall in love with the buyers and want them to have the house then that works,’ he said.”
The Los Angeles Daily News. “As we head into the final stretch of 2014 one component of the San Fernando Valley’s economy is coming into sharp focus. The residential real estate market will have one of its worst years sales-wise since the Southland Regional Association of Realtors began compiling statistics 30 years ago. And there is a good chance it will be the worst.”
“‘Right now we are down in terms of sales and it’s not going to improve. We always have a slump starting in August and stretching through February or March,’ said economist William W. Roberts, director of the San Fernando Valley Economic Research Center at Cal State Northridge. ‘And there is nothing out there in the economy that suggests the housing market is going to boom.’”
The Orange County Register. “Reality is setting in for home sellers across Orange County. Rather than holding out for the big price gains seen a year ago, most sellers are cutting their prices to get their homes sold. ‘It seems like 80 percent to 90 percent of the sales are reductions,’ said Bart Smith, an agent with Evergreen Realty in Orange. ‘(Sellers are) overpricing them. They’re looking at listings and not at closed sales.’”
“‘There are countless units on the market, and more become available on a daily basis,’ said Nicole Vazirian, who sold her Placentia townhome last July only after cutting the price by more than $47,000 after six months on the market. ‘I still see homes that are overpriced, and those are the ones that … either will sit for too long or drop off entirely.’”
The statement “you better get what you can get for your house today because it’s going to be much less tomorrow for many years to come” is more true today than ever before.
“Reality is setting in…”
I hoping I can get into a decent size home for my family of 4. Patients and maybe make a low ball offer and hope seller realize it’s a fair price given their fantasy price listings. I do see some homes that are priced right and they go fast.
You may never see prices this high again in your lifetime.
Houses aren’t “going fast” anywhere.
sac has gov workers , otherwise who has a decent job?
The whole valley seems like a shthole. No offense.
The whole valley seems like a shthole ??
As compared to what ??
The entire state is an indebted welfare hole.
Pretty much.
WalMart is a welfare queen.
“The entire state is an indebted welfare hole.”
Why such rage? CA has its problems, but this statement is absurd. Ask Get Stucco, or any other number of commenters here who love living there. Stick to what you know, like northeast ghettos.
There are lovely sights in CA to be sure, but it is the poorest state in the country, and an indebted money sink.
That’s right… an indebted welfare hole.
Flyoverlander rage.
When I am vacationing in Carmel, “welfare hole” is the first thing which comes to mind. Yeah….
The entire state of CA is an impoverished $hithole.
“California Most Impoverish State In The US”
http://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate
FWIW, California has something like 13% of the country’s population, but nearly 34% of the country’s welfare recipients. And then there are the super wealthy near the coastline. The middle (working) class have reportedly been leaving for greener pastures and lower taxes.
“The entire state of CA is an impoverished $hithole.”
Central valley, maybe, but the coast is pretty damn ritzy. Those welfare recipients aren’t the ones driving rents up to 5k for a 2 bedroom.
Suck on those sour grapes.
Yeah, on the coasts. I work at a school in Orange County but not on the coasts. 90% of our kids qualify for free and reduced lunch. Things look awesome from the upper deck at Fascist Island in Newport Beach, but just come a mile or two inland and reality will slap you in the face. Carmel? Please. Like that’s representative of California.
I’d be sour too if I was stuck in a hopelessly impoverished hole like CA.
YEleln can print forever !
For a record 12 weeks in a row, the U.S. dollar index has rallied to its highest levels since 2010. Against the euro(free HC land), the dollar is at two-year highs while against the yen(new keynsland), the U.S. greenback hasn’t been at these levels in six years.
‘An analysis by demographer Wendell Cox shows that poverty declined in just seven of the nation’s 52 largest metropolitan areas from 2010-13: Louisville, Ky.; Oklahoma City; Nashville, Tenn.; Columbus Ohio; Grand Rapids; and Texas’ Austin and San Antonio.’
‘Most of the areas with the strongest growth in per capita GDP posted smaller than average increases in poverty. In Houston the share of the population living in poverty rose 0.6% from 2010-13 to 16.4%, 11th highest among the nation’s biggest metro areas.’
‘The results in California suggest strongly that the tech boom has not done much to relieve poverty in the Golden State, despite the much ballyhooed “California comeback” trumpeted by the likes of Paul Krugman. In reality it’s poverty, not prosperity, that’s on the march in most California cities outside the Bay Area. Since 2010, the percentage of the population of San Diego living in poverty has grown 1.3% to 15.2%, while that of Riverside-San Bernardino rose 1.7% to 18.2%, the third highest rate among the 52 largest metro areas in the country. Meanwhile the poverty rate in Los Angeles, the state’s dominant urban region, has risen 1.8% to 17.6% (fifth worst), and Sacramento, the state capital, has seen a 2.0% increase in poverty to 16.6% (10th).’
‘This suggests that, for the most part, what has passed for growth has been too meager to reduce poverty. In many places, even ones growing rapidly, such as the Silicon Valley hub of San Jose, the number of poor continue to increase. Since 1999, poverty in the valley has jumped from 7.6% to 10.5%. This also likely is a low figure, given the extraordinarily high cost of living in the Bay Area, as well as the rest of coastal California. According to the Census Bureau, California’s poverty rate is the highest in the nation when adjusted for the state’s exorbitant cost of housing.’
‘For the most part, poverty has been reduced, or at least has grown less, in lower-cost regions that have ties to the energy and manufacturing revival, which tend to create opportunities for middle- and working-class residents. Until we figure out how to get growth whose benefits are widely shared, and reduce poverty, the one measurement likely to go up is cynicism about the efficacy of our current economic policies.’
High house prices make the people poorer.
“High house prices make the people poorer.”
But they make developers and property tax authorities richer…
http://washingtonexaminer.com/taxpayers-get-stuck-with-6.2-million-tab-for-just-3-obama-vacations-40m-over-6-years/article/2554473
Wages are stagnant or declining. Rental prices have shot up in urban areas. Now, many more middle-income and lower are paying way more than half their incomes on rent here in Los Angeles, to the extent that I’m hearing some real anger from people who ordinarily would be doing pretty well. Not sure how or why the rental market disconnected from wages so dramatically in the last few years, but there it is.
For me my personal red flag is two things for seeing that things have gone off the rails. One is when the march of flipper shows start showing up. The second one is when I hear this crap of “write a letter to the owners” talk. It will be a cold day in hell before I write a letter begging them to take my money. I will pay what I believe the product costs…I will not beg you to steal from me pr get in bidding wars with unknown people who may or may not be real.
hope the flipper shows are previously recorded
Retail is for suckers. Writing letters and winning a home bid means you massively overpaid. People pretend 2008 never happened.
“She also recommended prospective buyers write a personal letter to sellers, saying why they want the house, and think carefully about what repairs they might be willing to make themselves.”
Be sure to mention how you’ll be sure to feed the squirrels…
Be sure to mention how you’ll be sure to feed the squirrels…
+1 Good call, those poor squirrels.
‘With real estate prices in the Bay Area soaring to unseen heights, evictions across San Francisco have hit their highest levels in more than a decade. The convulsion of anger from tenants has taken any number of forms — including protests outside the homes of Google employees and at bus stops where technology workers board commuter vans — but the latest battle will be waged at the ballot box. Next month, voters here will decide on one of the most aggressive anti-eviction efforts ever attempted here: a withering tax on property owners who resell residential buildings within five years of buying them.’
‘The ballot initiative, officially known as Proposition G but called the anti-speculation tax by its supporters, follows a year in which the city’s Board of Supervisors has approved a string of measures designed to slow real estate speculation and keep renters in their homes.’
‘But even tenant activists are unsure how much difference the various measures — or, really, almost anything the city does — could make in a housing market where the median rent for a one-bedroom apartment has rocketed above $3,000 per month. The dearth of inexpensive housing has even forced the city to pay to relocate homeless families well outside San Francisco.’
“This is about stopping the crazy, insane housing crisis and rent increases in our city, and making sure we protect neighborhoods that are being changed before our eyes every day,” Eric Mar, the city supervisor who sponsored the ballot measure, declared at a rally with tenants’ rights activists. “It won’t stop the flipping or the speculation, but it will be a strong message that displacement is wrong and we will fight for our communities.”
more moving to TX,VA soon
I’ll be ready
MD going left =move transplants
Just got back from DC and visiting my daughter who moved to N. VA.
She tells me that there is significant animus between the takers in Maryland and the makers in VA. Hmmm….not to far to lob some shells there from from VA over the Potomac in to Maryland me thinks.
NVA is much safer than MD- lived in both
MD crime is unrecordable
She’s going to to like VA
That sounds more generational than it does geographic. MD houses the stodgy Fed worker agencies staffed with aging boomers. NoVa is all about Generation Selfie living off of sexy defense contracts and cyber stuff. But rest assured that in the government h8er sense of the word, we are all “takers.”
Lobbing shells over the Potomac won’t do much. All they will hit are a few high-end estates and some fruit trees.
Too bad it won’t hit Bal..more!!
Baltimore is too far… and when it comes to bombing out a city, Baltimore doesn’t seem to need any outside help.
By the way, I’m referring to the Agricultural Reserve. The Maryland side of the Potomac was preserved for farms and small towns, much to the consternation of developers. The Virginia side built up like no tomorrow. Just googlemap for Dulles Airport, zoom out a bit, and it’s very easy to see.
The people bitching about high rent could care less about the indians or the animals they themselves displaced.
Pay up or GTFO. It’s a big country with plenty of room for failures.
Oh dear…
‘Builders in Phoenix and areas from Sacramento, California, to Orlando, Florida, are sweetening offers as sales slow in some of the country’s most volatile housing markets. Buyers, suffering from sticker shock after large price gains in 2013, are pulling back after the U.S. government cut the maximum size for mortgages with low down payments. In Phoenix, the Federal Housing Administration’s loan limits dropped well below the median price for a new home.’
‘“Phoenix is very slow, Sacramento is spotty,” said John Burns, a housing consultant based in Irvine, California. “The investors came in and pushed prices a little too high. And then FHA rocked the new-home market really hard.”
‘While the number of new-home communities in Phoenix grew by a third in the past year to 457, sales per community plunged 45 percent last month from a year earlier, said Jim Belfiore, president of Belfiore Real Estate Consulting in Phoenix. Prices, including incentives, fell 0.2 percent in September from a year earlier, following a 7.5 percent jump last year, he said.’
“Phoenix is a cautionary tale about raising prices too aggressively and opening up communities too aggressively,” said Alex Barron, senior research analyst at Housing Research Center LLC in El Paso, Texas. “It’s a bad combination where affordability got out of control and the FHA limit went down. Homes are unaffordable now, and all of a sudden there’s a ton of supply.”
“The issue in Phoenix is the market got away from itself, so everybody is offering some level of concession,” said Joel Shine, chief executive officer of Salt Lake City-based Woodside Homes. “Frankly, in a master plan with 10 other builders, and all offering concessions and you choose not to, then you need to make sure you buy your salesperson a high-quality TV set so they have something to do while they’re sitting alone.”
‘After jumping 32 percent in 2013, new-home sales in the Las Vegas area in the first eight months of this year fell 26 percent from a year earlier, he said. Smith said he recently spoke with a builder who lost a sale in the Las Vegas area to a competitor who cut the price by $17,000 and covered closing costs.’
‘In Sacramento, where new-home sales last month dropped 16 percent from a year earlier, builders are beginning to discount finished homes, said Greg Gross, director of the Northern California region for Metrostudy.’
“There almost isn’t any new-construction home in Sacramento that would qualify for FHA under the new limits,” Gross said. “Last year, there were plenty.”
You mean without gubmint subsidies, people can’t afford to buy houses?! Whodathunkit! Imagine what the housing market would be like if the gubmint stopped mucking in it…
That’s right. Don’t go around telling me how strong demand is for your shacks until the government isn’t guaranteeing almost every single loan. Sure enough, they cut the cap a tad and boom, it’s a glut and would you like a free garage? Oh, and the knuckle-heads that bought last summer; you’re FB’d.
Speaking of FB’s, I talked to a gal a few days ago who just bought a townhouse, for like $100k more than a 3 bedroom detached house would have cost a few short years ago. I am convinced these people are speculators, believing the massive price increases are here to stay.
Instead of all the gimmicks, why don’t they just offer lower prices as a concession?
They are lowering prices. But these gimmicks are how the builders always start. We’ve seen this all before.
Yep, starts with the gimmicks and ends with major price cuts. All the local builders here (central FL) seem to be sitting still - not cutting prices yet, but hanging out for a “spring recovery”. Meanwhile, “existing owner” homes seem to be selling fine if they’re priced right. The 100k markup flips are the ones sitting. The 30k markup flips with 30k of work are the ones moving.
It’s the beginning of October. Spring is a loooong way off. 4 more months of numbers and stories clueing in the public to the price declines and it will be much worse for them.
The gimmicks serve to hide falling market value.
Looking forward to seeing the builders in Vegas turn on each other but the feeling on the street is everything is fine. Few builders are offering any incentives and there are still price increases going on. At least on the higher end stuff 400k+
And most importantly, there is a whole lot of room for contractors to move prices lower. They only have $50/Sq ft in the entire thing… lot, labor and materials.
This is exactly what happened last time - the “hey if they don’t want to buy today at price X, we’ll just sell it next year for x+10% and they’ll be sorry”.
In reality the sellers who ended up selling for x-30% were the sorry ones.
LAS VEGAS BUSINESS PRESS
‘Builders closed on 530 homes in the month, bringing 2014’s total to 3,733 — a 25.7 percent drop from the same period in 2013, according to Home Builders Research. What’s more, builders pulled just 544 permits in August, a disappointing number compared with expectations that called for more than 700 permits, CEO Dennis Smith said.’
‘The resale market seems to have slackened as well. Sales of existing homes were down 13.1 percent year over year from January to August, Smith said. “Brokers have told us there are plenty of people looking at homes, but many won’t sign a purchase contract. This suggests that there is a healthy dose of price resistance taking place,” he said.’
‘Sales agents also say they’re finding that more local homes getting listed these days are owned by investors.’
“At least on the higher end stuff 400k+…”
I imagine that $400k buys a lot of house in Las Vegas, NV; Sacramento, CA not so much.
I’ve bee looking in the Sacramento foothills for about a year. I can say, without a doubt, the market is frozen and starting to slide.
Around here, most of the houses were build in the 60’s, 70’s and 80’s. Most of them in the $300k - $400k need work. Some cosmetic, others need structural repairs. I’ve seen houses with failing plumbing, septic systems, roofs, foundations, etc. The sellers are insane. They almost always start out asking for insane prices. Then the sit…
I was in contract on a house a few months ago. Looked like a great deal at the time. After doing a home inspection I backed out because of what the inspector found. The place sold for almost $100k under what I offered!
Since then, I’ve written offers WAY below asking prices, just to feel out the market. Most of the time the sellers respond with counter offers. I just wrote one the other day. Asking price $375k offer was $300 and seller pays all closing. They countered at $335k and would pay closing. That’s $40k plus about $6k in closing. So with one offer, I got them down $46k!
F*@# writing letters. I’ll write an offer based on what I feel the place is worth. Take it or leave it.
There isn’t a house in the entire county worth $375k. You’re overpaying by 200%.
Blanket statements such as this are why you lose credibility.
It WOULD be interesting to see what homes sold for if the federally guaranteed mortgages suddenly vanished from the scene.
Worry about your own lack of credibility kiddo.
Housing prices are falling.
“…Smith said he recently spoke with a builder who lost a sale in the Las Vegas area to a competitor who cut the price by $17,000 and covered closing costs.’”
Ppphhhhtttt! Chump change. I am the buyer and NOTHING happens until I say so. I’ll hold out until I get a 50% price reduction, 2 free cars and the selling Realtor agrees to shave my back in in the middle of the driveway at high noon. Then we can begin negotiations.
…”hardworking real estate agent.” ?
Its not hard work, its like a mildly time consuming hobby that can pay big. Why do you think sociopaths are universally attracted to it? They can sense the con, its parasitic nature, and the built in conflict of interest. They wallow in its corrosive effect on society. Its the perfect gig for them. But if it was hard work, totally different story.
Lying isn’t difficult for a realtor. It comes naturally.
You learned from the best.
You’re enraged.
Its not hard work, its like a mildly time consuming hobby that can pay big.
I’ve lived through two California economic down-turns, and I can assure you that a realtor has to spend many a free day trying to move something, heck, anything when interest rates are high. A friend’s father built homes for a living, and he didn’t make a fugg’n nickel on three of ‘em back in the late seventies, and he aged twice as fast.
This is my prediction For the housing market in the near future. All the distressed homes that was bought for low price and flipped for profit will all dry up by this year if not already. If you look at the price history of these homes, they were mostly bought for in the 400’s and now being back on the market for 600k in a matter of months. The unfortunate flippers that are late to the game is now scrambling to sell and will resort to price reductions bc they are running out of the greater fool to buy and time. I am seeing many homes just sitting bc they are priced too high and seller already priced reduce, anymore would mean a loss. Come next year, home prices will not tank but be at fair market price that will be affordable again for middle class buyers. The flippers will not be in the market bc profit margin will be too risky for the price they can sell. Home owners that wants to sell will realize their homes needs to be priced right or it will just sit. Hopefully the housing market will be based on basic economis fundamentals. Hope I am right as I am saving for the right time to buy.
Sit tight and save your cash. You’re going to need every penny. And most of all, don’t buy housing until after prices fall to early 1990’s levels.
Never going to happen, a depression the likes of (you don’t want to see) would happen, nobody will be able to buy anything nor would you want to live with a gun by your bed in the empty neighborhoods because you got yours and nobody else got theirs?
I know. Falling housing prices to long term trend means the end of the world to you. If I were as far in debt on a depreciating asset as you are, I’d likely think the same.
Buckle your seatbelt cowboy. You’re in the the ride of your life.
“If you look at the price history of these homes, they were mostly bought for in the 400’s and now being back on the market for 600k in a matter of months.”
Anyone who gets out of bed early five days a week doing the 8 to 5 wage-slave thing to raise a family will [never] be able to pay-off a $400k to $600k mortgage unless they come into lucky money.
The right time to buy is when the right deal comes along. Check public records on homes you want look at the down payment the folks put down, see how long they have been in that house, drive by, if it doesn’t look prosperous offer a deal they can’t refuse.
Don’t worry about “Ted OR ALICE WHO EITHER OVER PAID OR STOLE A HOUSE”, you worry about getting a deal on the house you want.
Life isn’t about poor souls down on their luck or fat cats who can do anything they want it is about you or your family dealing on what you can afford, in life there is always bad news it will drive you crazy, make good news for yourself, buy right and be happy!
Remember…. If you’re paying more than construction costs($55/sq ft-lot, labor, materials and profit) for a used house, you’re getting ripped off.
Yes sellers are sitting but so are buyers, in other words many sellers are either pulling the house off the market or refuse to give their house away.
Buyers are waiting and waiting, good homes they passed on are now off the market, now they have to choose second tier homes.
Why they are afraid to offer lower on good homes is beyond me, it is like the bar scene, I won’t approach the girl I might get rejected, so the guy goes home night after night hoping she approaches him?
“…refuse to give their house away.”
People are actually offering zero dollars?
“…refuse to give their house away.”
The likelihood is that sellers don’t have any money to bring to the closing table. Without QE the signs would be saying, “Take Over Payments.”
if i were to make an offer on all the homes i saw, it would be over 100K less than asking price. Its outrageous what home owner / flippers want. its highway robbery. The waiting game between buyer and seller, seller would lose out. Flippers need cash flow so they would be the first to give in to price reduction. for Example, 650K home, i would only pay at most 510K. most houses goes from high 3’s to 400 per square foot. Its crazy. I hope to be the last to laugh when the market truly corrects itself and middle class family can finally afford a decent home. I rather be spending my money on vacations and eat good rather than be house slaves to my mortgage. Unbelievable that people are willing to pay upwards 700K for crap shack. Do you even realize how long it takes to save 100K for average middle class family with kids….. People are truly greedy. I suppose i would be too if i could find a greater fool buying my 700K crap shack. A 700K home its about 140K down payment and over 3K monthly mortage for 30 years!!! most likely once you buy, ask yourself when you can sell without losing money on it.
john your situation is not everybody’s situation. Any on given Sat or Sun. I visit many home developments. People walk thru, you never know who can afford or not but the comments are always can the builder do better on the price.
Agents say “no”, we can give you incentives but no price reduction. In over 7 months of visiting these sites I have yet to see price changes, just incentives like lot premium or washer dryer for free the usual nonsense.
This tells me buyers want to buy, they want a deal there is no such thing as no buyers exist.
What kind of deal you ask, seems to me 10 to 20% price reductions would spur them.
Many if these folks have two incomes and a some express cash deal if the builder would budge, so it seems like buyers are trying to buy but arrogance prevails,
Resale homes well look at the above scenario, if you are selling your house and reduce it then you go to buy a new home and they say no deal you are apt to stay where you are at, or reduce your price at the bare minimum.
This is why we are at a standoff in housing, many can buy, many want a fair deal, but it looks like those that are selling new or used are holding pat.
Unlike before folks can make their payments and builders are in a better position to wait it out so it seems.
Remember. Prices are falling. Sit tight and stay out of debt.
There are no buyers. Housing demand is at 20 year lows and falling.
“There are no buyers.” There are always buyers for anything, it is a matter of two parties coming together to negotiate a price.
Housing demand is at 20 year lows and falling. There is no negotions.
A house is 500k the seller paid 300k, they realize that 500k isn’t going to fly they reduce it to 399k, bingo buyers come around it is always about price, everything sells at the right price.