A ‘Spring Slide’ For San Diego Home Prices
The Union Tribune follows up on the Dataquick numbers. “San Diego County housing prices took their biggest-ever spring stumble last month as the median sales price fell to $490,000, down $15,000 from the previous month. The median price was just $2,000 higher than it had been a year earlier and was down 5 percent from the record level of $518,000 it reached in November, according to DataQuick.”
“Sales were down for the 23rd straight month and inventories of unsold homes topped 19,800, a 7.1-month supply.”
“The decline in prices was concentrated in new housing, a historically volatile category. For newly built homes, condos and condo conversions, the median dropped from $495,500 in April to $424,000 in May, the second largest drop in that category since DataQuick began its record keeping in 1988. January saw a $104,000 drop from December.”
“University of San Diego economist Alan Gin said the sudden decline probably reflects builders’ discounts on asking prices and similar reductions at the many apartment complexes that have been converted to condominiums.”
“On a neighborhood-by-neighborhood basis, DataQuick figures showed that 51 areas had higher overall prices than a year ago, while 36 were lower. Among the significant increases in the single-family-resale category was 66.8 percent in La Jolla to nearly $2.4 million on 26 sales and 20.8 percent in Poway to $777,500 on 50 resales.”
“Among significant decreases in the new category was a 60.3 percent drop in Rancho Bernardo’s 92127 ZIP code area, where prices dropped from a median $1.2 million on 29 homes in May 2005 to $491,250 on 66 homes this May.”
“On one cul-de-sac in 4S Ranch, located in that ZIP code, seven of the 13 homes are on the market, all priced at $1 million or more. Homeowner Jennifer Harper, whose 4,432-square-foot house is on the market for $1.25 million, said her husband has a job transfer opportunity in Denver. ‘If our house sells for what we want, we’re going to go,’ she said. ‘And if it doesn’t, we’re going to stay here because we actually love 4S Ranch. But we just can’t pass up an opportunity to move somewhere different.’”
“Her agent, Scott Voak, said it is simply a coincidence that half the block is selling, some to move up to even more expensive homes in the area, others to take new jobs elsewhere.”
“A couple in Mission Hills wants to move east but can’t until their buyers, a couple in North Park, sells theirs. ‘We were a little apprehensive and saw a lot of homes on the market,’ said Mara Conner, who with husband Fabio Tucci wants to move to Mission Hills for better schools for their two preschoolers.”
“In El Cajon, Michael Lopes and his wife, Sarab, put their 1,147-square-foot town house on the market in October and had no offers. Then they hired Calvin Goad last month, cut the asking price from $380,000 to $348,000 as he suggested and now are getting interest.’He’s terrific; he’s generated a lot of activity,’ Lopes said of Goad.”
“Horace Hogan, president of the Building Industry Association of San Diego County, said builders are cutting back on building new homes. If they continued building at a quicker pace, he said, builders would lose money because of the amount they have spent already on land and materials.”
“Gin, the USD economist, said he would call the present market a ‘plateau,’ following the proverbial ’soft landing.’ ‘There are two questions,’ he said. ‘Are we going to fall over the cliff or if we don’t, how long is the plateau going to be. I’m not in the ‘crash’ category. I see things relatively flat for the next couple of years at least.’”
A couple of California links:
‘Mortgage companies cut 1,140 jobs in Orange County in the last three months, and now some are putting up huge blocks of office space for lease.’
‘All the layoffs come on top of previous job cuts at the beginning of the year.’
‘Now, mortgage companies are suddenly looking for companies to take about 1 million square feet of office space off their hands, according to brokers.’
‘A study released on Monday finds that the Santa Rosa housing market is 52 percent overvalued. The study goes on to predict that if the past trends are an indication, prices will drop by about 26 percent over a three-year period.’
‘No one knows the answer. But even under the worst-case scenario (for the current homeowner), a 26 percent decline would simply bring prices back to where they were a couple of years ago. In other words, sellers who’ve owned their homes for several years would still be making a lot of money.’
‘Finally, a price drop could allow first-time buyers to enter the market. The fact that teachers, retail managers, nurses and others could make a permanent investment in the community is a benefit that can’t be calculated. Let’s just say it’s invaluable.’
“In other words, sellers who’ve owned their homes for several years would still be making a lot of money”
NO! This is true only if they haven’t already “made” that money via HELOC. If they have, then a 26% decline is a wipeout, even if it doesn’t drop prices back to the price they originally paid.
I can’t think of a single friend or neighboor in SoCal who hasn’t cashed out lots of equity in the past year or two.
MC_White,
Correctamundo! And it’s not just SoCal by any means. This has become the method of choice for most Americans as the way to finance everything from new roofs and additions to cars and trips to Burger King. (Although I’m sure it’s more acute in SoCal).
Soon they will say: “If you bought in 1994 and haven’t taken out any equity loans you should still be okay.” What kind of make believe la la land are they living in? They know good and dang well people are mortgaged to the hilt on multiple houses and they still play the: “Well, I’ve always been on the side of the conservative homeowner” crap. They talk out both sides of their mouths, IMO.
NO! This is true only if they haven’t already “made” that money via HELOC. If they have, then a 26% decline is a wipeout, even if it doesn’t drop prices back to the price they originally paid.
Wouldn’t this only be a problem if they can’t make the payments on the second (HELOC)? In other words, just having your house devalued doesn’t mean you’re automatically screwed, right? There needs to be another detrimental factor - loss of job, resetting interest rate on the 2nd, etc.
Assuming it’s not an adjustable 2nd, they keep their income and the y live in the house for 5+ years, they’ll eventually make that equity back, right?
MjM
They’re screwed if they have to sell, and the value of the house is less than the debt owed (mortgage plus any “home equity loan”), and they don’t have enough savings to cover the difference. Many people were in this situation during the last downturn.
Fair enough, you’re correct. If you plan to stay in the house long-term, and you can make the payments, then you’ll be upside down on your mortgage for a number of years but otherwise unharmed.
But plenty of people I know have taken cash-out refis against thier LA area houses every year for the past 3-4 years to pay property taxes (!), buy cars, and pay for vacations. There was a story posted on this blog months ago about a couple who cashed out $50K and put it in a passbook savings account because “it made them look good to potential creditors.”
So for all the families you are talking about who will be OK, I say there are three families who will be looking at some serious financial hardships - and that’s just if housing prices go flat. If people had to borrow to pay property taxes last year, what do you think the chances are that they will be able to cover higher taxes next year?
Funny how the same instituions that helped fuel the lending of the RE bubble are now adding to the supply side.
Bravo! Well said Ben. As far as I am concerned housing is the material basis for community. It is the stuff of our social fabric. That which provides the anchors for us in space and once rooted thus to become familiar with and to that and those around us. Once shelter shifts from “housing” people to an investment vehicle there is a loss of community. A different class of people benefit when housing is an investment and in many cases as we have seen, the benefit goes outside of the geographic area.
Now I am all in favor of anyone making a buck. My issue has to do with what the true “cost” of that profit is. We have seen robber barons raking in boat loads of profit with the greatest cost being to the land and those folks who were used as pawns of that profit taking. And now we have seen a lot of folks reaping huge gains on their homes paper values. Some have cashed out. Good for you and a happy Ka Ching to ya too. But most have not and in many cases many will be FBs. And so we have a “cost” there with those folks and ove rthe course of this bubble far too many first time buyers either held off, moved elsewhere or, heaven forbid, bought in using voodoo financing. All three of these options diminish the community and who profits? RE King may take home a dime or two. A long time owner cashing out and downsizing or even upsizing may be the seller. And of course the State gets the increased tax revenue for now. But the folks who live and work in this community basically do not benefit. If they refi and use that cash frivilous (sp?) manner the paper gains end up elsewhere and they pay for that Plasma TV or Escalade over 30 yrs and that is bad juju. If they do not buy and rent, they escape the reaming of the overpricing and there is joy there. However, the only drawback to renting is the rootless aspect, but truth be told even if you rent long enough in the same area you have roots.
I am rambling. My point was that too often investment is just a shitty business and we really should try not to shit where we sleep. I think we will smell much more of the stink of this as this bubble outgases.
I too am a rambler. You are correct though, about fouling the nest and renter’s roots. Ramble on! Everything is connected. The “home as an investment” paradigm is immaculate deception. It should be obvious with the advent of the 50-year loan that we belong to the banks in the same sense that the first peoples belonged to the ancestral lands. Too bad the carrying capacity of most lots is nowhere near enough to sustain the average family of rats.
Horace Hogan, president of the Building Industry Association of San Diego County, said builders are cutting back on building new homes. If they continued building at a quicker pace, he said, builders would lose money because of the amount they have spent already on land and materials.”
Are they really going to cut their building? we’ll see.
Those materials are inventory on their books. Their money is tied up there unless they sell it via construction of houses or write it off. If they keep building, then they at least recoup the costs somehow even if they have to lower their prices to do so.
I work with a civil engineer from the San Diego area, and he stated that he has seen a dramatic slowdown in the amount of design work being solicited by residential developers in the areas outlying San Diego proper.
He also told me that he believes the housing market in SW Riverside County is overbuilt and it is going to crash hard. He has been avoiding work in the area since he thinks buildiers are going to pull the plugs on their developments with little or no warning to their subs. He started his engineering buisiness in 1989, so he’s seen this before.
I worked for a structural engineering firm from 88 to 91, only 3 years. But while I was there I learned that design firms are the very first to see the pendulum swing when it comes to economic downturns.
In fact, I was laid off because there was little work in the office. In a short time frame, about 6 months, the number of projects in the office dropped from 20 or so to 5 or 6. We’re talking medium to large sized projects (hotel-casinos in Reno or Laughlin, 1000-4000 stall parking garages, office 10-30 story office buildings, etc.). Fortunately I was just an engineers aid working through college. I already had plans in place to leave 2-3 months later to transfer to another school, Cal Poly SLO.
Anyway, I suspected this would occur with residential oriented design firms this time around.
“In El Cajon, Michael Lopes and his wife, Sarab, put their 1,147-square-foot town house on the market in October and had no offers. Then they hired Calvin Goad last month, cut the asking price from $380,000 to $348,000 as he suggested and now are getting interest.’He’s terrific; he’s generated a lot of activity,’ Lopes said of Goad.”
Let’s see? Reduce the price=more interest? WOW! I think I got it now! Holy sh*t, idiots or what?
That’s why realtors make the big bucks (because people are stupid).
1147 sf home in El Cajon for $348k…right. I’m going after that baby. Probably worth $175k max. But maybe the excitement of the price reduction will suck someone in.
>…it is simply a coincidence that half the block is selling – some to
>move up to even more expensive homes in the area…
Dead men walking?
Yes, they make the big bucks, when the home sells… how low will they have to go?
Neil
some to move up to even more expensive homes in the area…
Pardon me, but it seems unlikely that this one realtor knows what 7 different homeowners are planning? Is he the agent for all of them!?
MjM
““Her agent, Scott Voak, said it is simply a coincidence that half the block is selling, some to move up to even more expensive homes in the area, others to take new jobs elsewhere.”
It also was simply a coincidence that ‘Mortgage companies cut 1,140 jobs in Orange County in the last three months, and now some are putting up huge blocks of office space for lease.’
‘If our house sells for what we want, we’re going to go,’ she said. ‘And if it doesn’t, we’re going to stay here because we actually love 4S Ranch. But we just can’t pass up an opportunity to move somewhere different.’
But I thought everyone wanted to live in San Diego.
Everyone wants to live here. Just not at the same time.
Disclamer: doesn’t apply to those already in SD.
“he’s terrific, he’s created a lot of activity”
That’s all fine and well, we’ll see if that translates into a bona fide offer and an actual closing. Never mistake “activity” for productivity.
“He created a lot of activity” …by getting you to drop the price. You could’ve done that on your own, you know?
Nobody here SHOULD be surprised by this news. This is just the BEGINNING!
I’m guessing lots of these people that ‘have to be transferred’ really don’t have to be. Just sounds better than “I really want to get out at the top and make a killing selling you my over-priced house that I couldn’t even afford today if I wanted to.”
I made a prediction on my blog a while ago…30,000 homes on the San Diego inventory and over 1000 downtown condos. We are approaching 22k and about 740 condos….and we haven’t even hit 2007 yet.
On a side note…I got a blast text message from one of my old brokers asking if anybody knew of any ‘mortgage jobs’ available for them. The music is slowing down and there aren’t as many chairs to sit down in like 2003-2005. Just wait until the music stops and the people that were making the ‘easy’ 10-30k per month have to really add value to earn a paycheck of that size.
SoCalMtgGuy
SoCalMtgGuy,
Always good to hear from you! It’s nice to know I’m not the only guy feed up w/ that b.s. Transfer? Really? Transfer where, freaking depts. at the SAME company? Just please, stop it.
An awesome blog you have here, sir. No where else in the blogosphere is anyone doing anything as comprehensive as this. I am noticing a smaller slowdown in the Washington, D.C. area. More stories about the coming collapse in housing prices in Northern Virginia is always welcome. — PB, Arlington, Va. and a renter
“Her agent, Scott Voak, said it is simply a coincidence that half the block is selling, some to move up to even more expensive homes in the area, others to take new jobs elsewhere.”
That kills me. They just *happen* to all have their houses for sale. It wouldn’t have anything to do with their $900,000 ARMs resetting ! Or maybe they realized that RE IS a bubble and they were the last fools to buy.
As far as moving for jobs, that might be true. CA is RE, RE and more RE and now that that is slowing, people are going to have to move. Which in itself is going to force sales… at lower prices. Pretty soon CAers that were employed in or because of RE will have a choice. Stay here and be unemployed OR sell your house at a loss and move to someplace that has employment.
This should get very interesting.
“I see things relatively flat for the next couple of years at least.’”
The median price for condos drops 15% in a month and she thinks its a plateu. Some economist?
plateau? Doesn’t this economist look at historical data? Downturns in housing take years to play out. Get a clue Alan.
My thoughts exactly. I mean, what vacuum does this dope live in? Does the absence of lending standards and all those outstanding ARM loans in the face of huge jumps in rates signal anything in this bonehead’s skull?
Sheesh. What are the standards for being credited with the label economist? A pulse and a full labotomy??
Plateau with a steep slope = cliff
Let’s see… 23 straight months of yoy sales declines, seven + months of inventory and growing, interest rates still relatively low and climbing, tens of thousands of sub-prime borrowers with ARMS about to adjust upward and an affordability index that is still in single digits.
Yep, it sure sounds like a nice soft landing on a very wide and flat plateau is the most likely outcome.
““Gin, the USD economist, said he would call the present market a ‘plateau,’ following the proverbial ’soft landing.’”
As yes….to use Rainman18’s anagram, he’s just fling’n toads.
Bubblegram:
Economist Alan Gin =
Con man lies to gain
Perfect!
That a real bubblegram of bubblegum!
Fed’s Bies Says Cooling in Housing Moderate and ARM Resets volume light in 2006 and 2007.
I was under the impression a few trillion dollars worth of ARMs were resetting in 2006/2007 based on a prior thread.
http://news.yahoo.com/s/nm/20060614/bs_nm/economy_fed_housing_dc
From the article:
“Bies reiterated her concerns that real estate loan concentrations are high relative to capital, especially for smaller banks with assets of $100 million to $1 billion. The concentration level for these banks is about 400 percent of total capital, or twice the level of the late 1980s and early 1990s, a period of considerable loan loss problems in the banking industry.”
The FDIC in March, 2006 under “Scenarios for the next Recession” that risky loans would be concentrated in those least able to afford it.
” Despite a favorable outlook, there are at least three widely acknowledged areas of near-term concern that could pose risks to the economy going forward: a spike in energy prices, a decline in home prices, and a retrenchment in consumer spending arising from record consumer indebtedness. The consequences that any of these developments might have for economic growth could range from modest to severe, depending on how events play out over the next few years. ”
http://tinyurl.com/qm5rq
I posted the link again because all three of their worst case scenarios are occurring.
As in most instances where systemic risk is allowed or even encouraged to build up in the economy over a long period of time, the various “worst case scenarios” turn out to be highly correlated, and all play out at the same time as the factors (e.g., liquidity glut) which led to the buildup of imbalances are taken away.
This is quite good information. I missed this the first time around. Thanks.
This is amazing, isn’t it? There is absolutely NO WAY in hell that Bies is not aware of the reset issue. Are we to actually believe that Bernanke honestly believes that the housing slowdown is “orderly” (as he said with a straight face several weeks ago)? It’s beyond belief that he isn’t aware of the inventory numbers. Bies, in classic politburo style, is towing the official party line. I think it’s all propoganda to pave the way for more rate hikes, to increase rates across the board, to support the dollar and keep the Chinese (and others) from bailing on our debt. Perhaps the choice has already been made — recession (regardless of how deep) is better than complete global financial collapse.
I wonder if that is a “permanent plateau” - See Irving Fisher 1929!
“Permanently high” I am sure…
Any way to tell how much the Harpers paid to begin with? Just nosy…
It certainly is an amazing coincidence that 7 out of 13 homes on one street are for sale. If I was a buyer, I wouldn’t look at any of those houses. I’d think something was seriously wrong with living there (toxic waste? airplane noise?).
how about desperate homeowners.
That’s not too hard to figure out. I found their house address is 15180 Palomino Valley Place in zip code 92127.
Their taxable value is at 698,738, which in California should have been the purchase price (or near enough) It was last assessed on 10/01/2003, (which is when it was built, so I am confident that is what they paid for it)
Isn’t it amazing how much you can find out on the internet?
Try this address:
https://www2.sdcounty.ca.gov/ebpp3/
BTW, to have a $550K or almost 100% gain in 3 years is a bit unrealistic that you would put your life on hold for … that’s greed for you!
If they do not sell in 2009 the risk is they may find Price is back to their purchase price in 2003.
They may live to regret or somebody else who will buy from them will regret.
I am getting philosophical….Circle of life.
690K back in 10/03. Sickening right?
This is nothing but a confidence game. The industry is trying to keep people in the game, and they will say anything. In Japan, I remember people defending the economy, real estate, stocks, etc. all the way down. But at some point they lost so much credibility that even the perma bulls in the industry started talking bearish.
Incidentally, that was what marked the bottom. Even good news was viewed with skeptical comments.
“Incidentally, that was what marked the bottom. Even good news was viewed with skeptical comments.”
Keep that one in your memory banks over the next six or so years as one of the “time-to-buy” signals…
Time to sell was when even negative news was bullish.
Terrible employment numbers! Fed will lower rates! Buy!
GetStucco - you seem to have put a lot of brain-work into your outlook (harvested from multiple comments over the past month). How bad is “bad” likely to get?
Heck, everyone else pony up a guess too if you don’t mind.
IMO, it depends not on the housing market which will be a complete disaster but the derivatives underlying the market. If those blowup we are talking about a complete breakdown of the world economic/monetary system. So, the short answer is no one knows. The guess is that it will be labeled “the greater depression” here in the U.S. although everywhere will get hit at some level. But hey, I’m a “doom & gloomer” so I wouldn’t be too concerned about my opinion. Just thought I’d add to the conversation.
I concur with auger-inn, with one reservation. I am sure that Ben Bernanke is bright enough to be aware of the many perils he faces in his new position, and he may have some tricks up his sleave which I cannot foresee, as I am merely a blog hobbyist, not a Princeton macroeconomics professor.
A natural point of departure would be to assume that “this time is not different” and look at the range of past real estate downturns as a guide. It seems as though three years is the bare minimum for past real estate busts to play out. Some good insight to a cross section of real estate booms and busts across various countries and time periods is given here (CAUTION–PDF FILE):
http://www.imf.org/external/pubs/ft/weo/2003/01/pdf/chapter2.pdf
Of particular interest is Table 2.1 on the upper-right corner of the third page of the document (numbered page 63 at the bottom), which shows the median contraction in housing prices and duration of real estate busts over a sample of 20 housing price crashes recorded in 14 major industrial countries over the period from 1970:Q1-2002:Q3. The table further breaks out the median statistics for the episodes identified as “busts” — the worst 25% of cases (which I guess means the five worst real estate bear markets). Several points are worth highlighting:
1) They estimate one bust every twenty years, and the last bust recorded was in the 1980s; I guess the twenty-year period is up now…
2) The median drop in real housing prices in the bust cases was 27.3%. (Of course, we know that US bubble zones were much more overvalued than this, and hence have farther to fall).
3) The median duration of the busts was 16 quarters (4 years).
The second-order refinement to this is to note that because the mania got much more out of hand this go-round, with the pedal of monetary policy to the metal about the time when the boom should have been unraveling in the early 2000s, one would assume that the reversion to equilibrium would be more wrenching than usual this time (and hopefully less painful than the Japanese RE market deflation of 1990-2006). Since so many markets are simultaneously overvalued, a global unravelling of the housing bubble will also have a mutually deleterious effect.
So I would bank on a greater than 27.3% drop in real US housing prices, lasting over 4 years, starting around August 2005, with much larger drops in areas formerly described as frothy.
Today is the first time I’ve ever seen the 30 day price trend for all California cities listed on HousingTracker DOWN or FLAT at the same time. Admittedly it’s only one month - but as someone planning on a move to the SF Bay area in 2008, it is awesome to see some red price numbers and strongly positive inventory growth in the SF statistics…
http://www.benengebreth.org/housingtracker/location/California/LosAngeles
Isn’t it interesting how yesterday’s online article regarding the “Tumble” in San Diego real estate prices morphed into today’s “Spring Slide” in the print edition? I have repeatedly noticed this bizarre pattern in the SD Union Tribune’s reporting on the unraveling RE bubble — the online byline always seems relatively truthful, while the next day’s print edition byline is far more truthy, perhaps in a desperation attempt to reduce the risk the herd of sheep will stampede…
The homepage yesterday used slide too so it’s probably more a homepage/frontpage vs article decision and not print vs online.
Unraveling bubble.
Now there’s an interesting visual
MjM
This article on MSN is kind of interesting.
It blames the pending stock Bear market on the housing bubble but also states that bear markets occur every 4 years anyway.
http://articles.moneycentral.msn.com/Investing/SuperModels/WhyTheMarketsMeltingDown.aspx?GT1=8283
It certainly is an amazing coincidence that 7 out of 13 homes on one street are for sale. If I was a buyer, I wouldn’t look at any of those houses. I’d think something was seriously wrong with living there (toxic waste? airplane noise?).
None of the above. 4S Ranch is “the poor man’s Rancho Santa Fe.” It epitomizes the “McMansion” phenomenon. 3000-4000SF houses built on 1/4 acre lots. 1-2 million each.
Welcome to So CAl.
“the poor man’s Rancho Santa Fe.”
I describe it as the McMillionaire’s McMansionville.
“The median price was just $2,000 higher than it had been a year earlier and was down 5 percent from the record level of $518,000 it reached in November, according to DataQuick.”
Down 5% from Nov - May is about a 10% / year rate of decline. Of course, this is likely to snowball, as it is becoming increasingly difficult to maintain the belief that San Diego prices always go up, because everyone wants to live here, not to mention the belief that prices are still appreciating. Once all the prospective buyers are in the know, there will be a self-sustaining ratcheting effect between less purchase demand and lower prices, pretty much until the bubble is deflated.
Even conservatively assuming the 5% rate of decline will continue for the next six months, you would get about a 10% YOY drop by November 2006, which would translate into roughly a $60K loss for the typical SD homeowner, and which is coincidently worth about 1-year’s worth of pre-tax income for the median SD household.
it always sounds better to say *down 1% from last year same period* rather than *down 10% from peak*.
Condos turned back into apartments leaving buyers hosed.
http://www.sacbee.com/content/homes/re_news/story/14267623p-15079236c.html
I thinK the developer should buy back the sold condo units from the owners . These people bought into the project based on the idea that it would be a many owner project . How would one even handle the HOA fees in a situation like that ? Lenders will back off from lending in the project . Can you imagine Homeowner meetings whereby the developer/landlord of the rental units gets all the votes cause he owns 1/2 or more the units .it’s a bad deal for those people stuck in that project .
Pretty sophisticated scam with nope hope of success. Why didn’t this woman just go to a shady realtor and get a no-doc like everyone else?
http://tinyurl.com/lqrf8
Bad link, sorry. Here you go:
http://tinyurl.com/qls8e
Mort….Maybe her next step was to take out equity and run. Can’t believe they closed the loans on the phony checks/letter . But ,goes to show you how on the ball Lender/escrow and title companies have been (not).
REDICULOUS.
The woman “bought” the home with $1 in the bank, and the lenders didn’t bother checking her assets.
Fine, send her to jail, whatever. But why does she need to pay the $63,000 in restitution. IF the bank can’t even bother to figure out to whom they’re giving 100’s of thousands of dollars, then they sure don’t deserve a bailout in the form of restitution.
This PISSES me off. The small time crook gets 2 years in prison, and the lenders get restitution!
We are all going to pay through the @ss to cover the lenders who put us here in the first place.
Urrrghhhh.
clouseau
I have been pissed about it for a long time . I see red because I’m so pissssssssssssssssssssssssssed.
At least she has a place to live for a couple years.
Good one!
My realtor told me last year that people in SoCal were seeing equity gains in mobile homes. So can equity gains in prison cells be far off? Some of them are 100 square feet! In Santa Barbara that would cost you $500K!
Yeah, and that will cost us taxpayers about $60 grand?
Did someone say the high end of the market would hold up, even if the low end sags? Check out the YOY price data for high-end homes in LA and Menlo Park (Thanks, Patrick!):
http://www.realestatejournal.com/buysell/realestateindex/20060613-elite.html
Here is a break down by zip code of YOY % change and prices.
[url]http://realestate.signonsandiego.com/area_homesales/index.php[/url]
Here is a break down by zip code of YOY % change and prices.
[url]http://realestate.signonsandiego.com/area_homesales/index.php[/url]
http://realestate.signonsandiego.com/area_homesales/index.php
Her agent, Scott Voak, said it is simply a coincidence that half the block is selling
LOL. I wonder, will she believe him?
“It certainly is an amazing coincidence that 7 out of 13 homes on one street are for sale.”
At first look you would think their is slippage i.e. a major building defect but I don’t think so. They’re lucky only 7 are for sale although the original owners quoted stand to make a tidy profit, others may be re-thinking the market it looks like a couple of the homes sold at the height of the market one year ago for 1.2 mil. Not much profit in that.
I am in the thick of it here in north county SD. 4S and an other similar area called San Elijo Hills both have a lot of resale inventory on the market. In SEH, there is also a TON of newly built inventory slated for the near future. I can only see prices going down over the next few years, all things considered. For now, however, many sellers are still being sticky. Its just a matter of time till some have no choice, and the rewrite the rules of the game (ie the comps) for everybody.
I think one of Bernanke’s tricks will be buying the long end of the curve, i.e. 10yr, to bring yields down, and hence mortgage rates.
I think nominally he can raise rates 25 bp and perhaps another 25 bp but have the printing presses running full speed, which counters his so-called “hawkish” stance.
This increased liquidity MAY prop up asset values temporarily. Ultimately, he will continue to create inflation.
At some point, we will see a transition to deflation, if we are not seeing that already.. I think we are seeing some deflationary pressures from Japan sopping up excess liquidity. We havent yet by any means.
Personally, I sold all my CA real estate in the summer of ‘04 when the yen hit 102 prior to rates skyrocketing. I was a bit early. I on no US-based assets and no dollar denominated assets. Also, I think one should hold all their accounts in segregated accounts and certainly not at real estate intensive banks, like Countrywide, Wells Fargo, etc. You will become a creditor to the bank. More later…but real estate deflated 95% during Weimar. I expect something of similar magnitude, except they had rent control in effect. John Templeton, I hear, thinks an 85% drop would not be unusual. Real estate is highly leveraged market much like commodities. Bids dry up.
“At some point, we will see a transition to deflation, if we are not seeing that already.. I think we are seeing some deflationary pressures from Japan sopping up excess liquidity.”
You mean like the biggest 1-day percentage drop in gold prices since 1980 (the Volcker era)? That is what we had just yesterday…
I’ve always loved Art Cashen’s comment about gold:
“Always have enough to bribe the border guards!”
If dollar devaluation is that great, having a few gold coins maybe not such a bad idea.
On the radio here in SD it was announced that housing went down 15K month over month. Guess its time for us bitter jealous renters to point out to the flippers that theyre losing big time every month! Gonna have to work overtime to make up for that! What, company doesn’t pay overtime anymore? How about a second job. Wouldn’t mind seeing that moron Gin in a more suitable calling, like walmart greeter!
For all the attention that the San Diego housing market gets, most people are forgetting that there has been very modest appreciation on the order of 0 to 10% depending on area and housing type, from the middle of 2004 until now.
While San Diego may indeed be in store for some flat or declining prices, it still enjoys some fundamentals including an employment base, and being a generally desirable place to live. Not nearly as overvalued as many other parts of the country IMHO
You are either new to this part of the blogosphere, or else you have been ignoring lots of evidence that contradicts your naive statement (”Not nearly as overvalued as many other parts of the country IMHO”).
Nah, he has tried the soft pedal troll here a number of times.
Each time he gets a smackdown. I tire of the trolls with a lack of intellectual curiousity and a dishonest discussion pattern.
West coast wonder: go to Piggington.com and read the evidence for a CA housing bubble it is San Diego centric.
You have been warned, if you choose not to heed the warning and get your ass-pounding don’t ask for pity or help from the taxpayer or me.
Even as a former Realtor, I have to confess my economic naivete as to WHY it is such a catastrophe if one owes (say after a REFI or a top-o-the-market-purchase) a balance that is more than current market value — assuming one can still comfortably make the monthly note?? Sure, it’s gotta be depressing, but other than that — hell, people have driven around for years in cars that they’re upside down on. Can someone enlighten me?
It isn’t a problem, unless you get a transfer, divorce, death or can’t afford the mortgage payment when the reset date arrives.
Otherwise it is great to have an extra 200k of needless debt that never sleeps attached to your paycheck!
Gadfly, I think the problem is the inability to refi out of a toxic funny-money loan into a “normal” loan. Areas like SD had an incredible uptake of I/O and neg-am loans in 2005. Without positive equity, these borrowers have nowhere to turn when the teaser rates are over.
Holy “Bursting-Bubble” Batman get this…
“Among significant decreases in the new category was a 60.3 percent drop in Rancho Bernardo’s 92127 ZIP code area, where prices dropped from a median $1.2 million on 29 homes in May 2005 to $491,250 on 66 homes this May.”
Meanwhile in her cat layer, Catwoman , aka Leslie Appleton-Young, is still looking to find her Moniker
Holy dropping indicator! We knew there was something amiss in Gotham Robin. Now we know what it is. Have Alfred rerun all of our computer reports. You warned me about Catwoman and now I fear she really is lost. We can do nothing to help her until she asks for help.