‘Buyers Aren’t Buying’ In Silicon Valley
Realty Times reports on the Silicon Valley housing bubble. “Silicon Valley’s housing market is rearing its volatile head again. Consumers are bailing out in numbers reminiscent of the area’s last major housing market downturn, but is it a buyer’s market?”
“Buyers are negotiating down list prices, but rising interest rates and median home prices stuck at record levels are preventing more buyers from cashing in. Rather than a buyers’ market, it’s more like a ‘buyers aren’t buying’ market.”
“‘Basically, the buyers have gone away, causing the number of transactions to be at or near record low levels. This is across all four counties that I track. This indicates that it is a fairly broad change and not localized,’ said Richard Calhoun, broker owner in San Jose.”
“Calhoun’s statistical report compiled with data from the area’s official MLS, reveals in Santa Clara County (Silicon Valley) there were only 661 closed sales on single-family homes in January 2006, down from 970 in December and down further from 839 in January 2005. Since 1998, only January 2001 had fewer closed sales, 599. The next lowest was January 2000 with only 719 transactions, he said. There were only 283 closed condo sales in January 2006, down from 352 a year earlier, Calhoun reported.”
“‘Offers accepted, or initiated sales (for single-family homes) were way down also, at only 811 (for January 2006). Only January 2001 had fewer, at 761. So 811 is significant and it means February closings will be way down,’ said Calhoun. As sales fell, inventories swelled to 2,229 for single-family homes, up from 1,547 a year ago. The number of condos for sale has nearly doubled in the last year moving from 440 in January 2005 to 825 in January this year.”
“‘Buyers are a lot smarter then they have been in past years. They are doing their research and waiting for the ideal time to get into this market. This is really going to turn into a buyers’ market. We will see homes on the market for much longer than we have seen in the past and we will also see buyers really taking their time to shop for that perfect home,’ said Shawneequa Badger, a real estate agent in San Jose.”
“But a bona fide buyers’ market needs, well, buyers. The big sticking point in putting the ‘buy’ in a buyers’ market is the cost of housing. That’s because falling prices, often a key component in a strong buyers’ market, haven’t appeared. The median price in January was $740,000, up from $664,000 a year ago, and not much off the peak median price for single family homes reached twice last year, $760,000. Buyers don’t appear to be buying it.”
What I don’t get is that the cost of housing is so high it would take 15-20 years of a persons AFTER TAX income to afford a place, NET of all that interest. In many cases prices are so high that it would take 2/3’s of a persons WORKING life to just buy a home. How can that at all be rational. People forget, when you make the income to afford a 700k-1m+ home, unless your income is from investments, nearly HALF of your income in CA goes to taxes.
Do you think people will ever get the idea, especially now with 50 year mortgages being offered?
Come on, it’s just a way of renting, but one that’s acceptable among social climbers.
“Dear Steve,
Four months ago, I signed a six-month listing contract to sell my house with a big local real estate office. I think it was a mistake. They’ve only gone through the motions, and didn’t bring a single offer, showing my home just twice in a fairly hot market. Now, I’m getting calls from them, saying the price is too high and I should cut it. If price was my only weapon, heck, I could have gone FSBO. I think I made a mistake with this agency; it’s about as useful as a bulletin board. What are my options?
– Diss Enchanted”
http://biz.yahoo.com/brn/060218/17943.html
These people don’t know what a down market is!
Not only have sellers been slow to realize that prices are headed down, but realtors may not have reasonable forecasts either. In some markets a few years ago, homes would sell above the asking price, which indicates that realtors priced the homes too low. They didn’t realize that demand had shot up. Now, it’s not really clear how far prices will fall, and realtors, despite being professionals, may not have any idea what the correct price is. Add to this the realtor incentive to sell at a high price in order to maximize commission, and you have realtors reluctant to lower prices.
Eventually, they *will* get it, because the only thing that will sell an unsold house is a lower price.
Drop your price 10K/week until the place sells.
Quick thought - we know the ranks of the realtors has swelled considerably in the last few years. That suggests many, if not most, real estate agents in business today have NEVER EXPERIENCED A DOWN MARKET. And add to that, many if not most, actually believe the claptrap they’ve been fed from the headquarters office in DC. Anyone signing a listing agreement with any of these clowns is putting himself at grave risk, if you ask me.
You nailed it!….but I’ll add to that many loan agents, mortgage brokers, escrow officers, appraisers, contractors, inspectors hve ever seen or felt a down market! They too believe the lie.
RE: Up market appraisers…nearly all the honest and ethical appraiser’s who were around in the ‘89-90 RE bust were run out of business by the legions of number hitters and rubber stampers hatched by government licensing in 1993. So it’s mainly the hacks and johnny-come-latelys, retained by racketeering mortgage brokers and RE agents who haven’t seen a bust. And having been in the appraising profession since ‘82, I can tell you there is one hell of a crash coming. Canary’s been dead in the mine for 2 two years now.
“Quick thought - we know the ranks of the realtors has swelled considerably in the last few years. That suggests many, if not most, real estate agents in business today have NEVER EXPERIENCED A DOWN MARKET.”
Good point!
California: 26 million adults; ~500,000 realtors
adults to realtors = 50:1 = too many new and naive realtors = bad decisions/advice/pricing
It’s cliche by now, but this is going to be very interesting.
I work for a fairly well known consulting firm especially in the DC area. An associate of mine just left to become a mortage broker. Talk about bad timing for that career move. Just more antedotal evidence of the bubble
Living in Silicon Valley and tracking the market here, I completely agree. The pace of sales has slowed. Inventory is up about 60% year-over-year, which is not as nearly much as other bubble areas such as San Diego and Phoenix. Sellers don’t think it’s a bear market yet and haven’t lowered asking prices a single iota from last summer.
Like everyone on this blog says…the spring season will be the real litmus test.
From an information perspective this article is quite good. It does bring up some points that seems to be the same everywhere.
Inventory is up. Sales are down. PRICES NOT CHANGED.
This doesn’t make any sense, but is this fact seems to be true across the country. What gives?
Patience, my friend. This isn’t the stock market - it takes a little time in real estate realm for the panic to set in. But rest assured as you wait, there is no other way this can end.
Patience, let the sellers bleed PITI for a few more months. Panic selling will set in this summer as they try to stanch their bleeding.
this phenom was predicted here many months ago.
(1) RE prices are sticky on the way down as speculators attempt to hang on to their paper gains and so they will maintain prices even while hemorraging money monthly.
(2) Recent buyers (aka “dumb money) have no clue the market has changed and continue to price as if it’s still booming.
So the beginning of an RE bubble pop is characterized by slowing sales and rising inventory amid flat or still-rising prices.
Here’s the thing. There is a lot of yabbering going on within this blog about “bursting”, “popping”, etc. but the reality is that nothing is really happening. Houses continue to sell/people continue to buy. It’s not like in some areas sales have fallen to zero. It’s all “beginning to happen” and could take years for evidence of popping to take place. I don’t see what everyone is getting so excited about. It’s all pretty dull.
Dull? Really??? We are seeing real price declines and exploding inventory.
Perhaps you should be visiting the flippers blog instead.
Some prices are falling. I spke to an agent recently who said he sold a house in a new local development in Salinas, CA for 700K six months ago. Recently, he saw a a similar house in these same evelopment listed for a 100K less…in only six months.
Price is already coming down. The first sign is seller give-backs.
Buy a place for X, but get 5-15K credit from seller for carpet,
retaining wall, whatever. Keeps the illusion of price firmness. Then you see the developers offering cars, etc. The extreme absurdity of say, buy 1 condo, we’ll throw another one in for free won’t happen, they’ll be forced to lower prices and big time. Here in San Diego we’re at that last point. Lots of inventory and
few buyers forces this.
All of the water cooler talk is still bullish. “Everyone wants to live in Silicon Valley. Real estate only goes up.”
As far as inventory is concerned - saw many for sale signs this holiday weekend - especially in some of the high end areas (Los Gatos, Los Altos Hills, Palo Alto).
I doubt that many people want to live in Silly Valley these days. It’s heinously expensive, crowded, and shed jobs at a Great-Depression-era rate during the dot-bomb - and still hasn’t recovered. It’s not what it was in the 90’s.
Many people who are able to, are shaking the dust of the Bay Area from their feet. The SF Chronicle magazine had an article a few months back about people who moved to Texas and so forth because it was so expensive here. Yes, of course, blahblah quality of life blahblah great weather blahblah diversity, but at these prices is it worth it to live here? More and more people say no.
Latest from San Mateo, Santa Clara, and Santa Cruz counties showing 20-30% you decline in sales. That yoy price increase number keeps fading as well. Must be 5-10% off the top?
http://www.dqnews.com/ZIPSJMN.shtm
Want to see some fireworks? I just posted this to Craig’s List. I predict that in a few minutes I will be called a bitter renter and a loser.
Make sure that you post some of the flamemail here!
Hey Loony Lou, I had some fun on that forum over the weekend. Until I got banned.
Well, I was just called a “gold bug”. Which is about 180 degrees away from my actual opinion on gold prices.
I’m still waiting to be called a bitter renter. I figure that should occur sometime in the next 10-15 minutes as people roll into their offices in San Jose and read the forum.
alright already……
“lou’s a bitter renter”
lou’s a bitter renter”
renting in ma,
Inventory is up. Sales are down. PRICES NOT CHANGED.
This is exactly what your basic supply and demand model would predict at this stage of the game. I did a post with a graph to show what’s happening, but basically:
1. Demand shifts down as buyers (speculators) leave market.
2. Quantity sold decreases because the old, prevailing price no longer clears market.
3. Inventory grows based on 2 (pretty much where we are now)
4. Then prices come down to clear market.
This is only the demand side. I suspect the supply curve is also shifting outward as speculators dump their properties.
Of all the bubble markets, Silicon Valley truly defies gravity. There is absolutely no reason for property prices to be as high as they are, outside of toxic lending and irrational exuberance on the part of recent buyers. According to the census bureau, the region has lost 20% of its workforce since 2000, the biggest drop in any metropolitan area since the Great Depression. Wages have been stagnant and stock options are no longer $1000 bills. Apple, HP, Oracle, and Google have been doing well, but outside of that, its stagnant. Very few people make the money needed to buy a $700K home (even with two incomes) and for those who actually can scrape together the mortgage payment, $700K will buy you a 50-year old, dilapidated crackerbox of a house (if you have more than 1 child, this home is too small for you.
I grew up in the Bay Area and I lived there for a few years as an adult. Many of the homes there were built right after WWII, and they’re really starting to deteriorate after fifty years. Outside of having decent weather, there’s not much appeal to justify these outrageous prices. Homes are tiny and packed together, the schools are poor, taxes are high, and traffic is terrible. If you’re a multi-millionaire and can afford to live in Atherton or Los Gatos it’s not bad, but if you can “only” afford a $700K home in San Jose, it’s dismal.
John, do you have a link to this data about SV jobs? I’ve heard this as well.
Tried to post a reply, but it didn’t come through. You have to compare these two Bureau of Labor Statistics docs (scroll to the line for San Jose in each and compare Dec 2000 with Dec 2005):
2005
2000 look at Dec 2000 San Jose employment = 1.01 million
Also this NY Times article
Lou,
the population numbers and employment quite deteriorated since 2000 as John said. I used to sit in traffic in Northern San Jose crawling one mile per hour back in 1999/2000. Now it is a ghost town, no traffic at all, square miles of office parks absolutely empty. And I mean completely without life. I almost cried when I saw it, that’s how creepy it is.
You can drive down 101 past Palo Alto/Redwood City and see the sun set straight through some of the office buildings.
Amen. In some respects I can understand San Francisco being expensive, but San Jose? Huh??? San Jose is about as exciting as, well, San Jose.
I was looking at a condo listing in Los Gatos this morning. I calculated that the HOA and taxes would cost more than half of what I pay to rent a comparable unit. And that doesn’t even include the huge mortgage.
Yes, for much of the Bay Area, I have to say that John in VA’s description is a very good one.
As a “native Bay Arean” I concur that John is right. Believe me when I say I would love to relocate, and will when/if I get the chance.
Lou, I can’t agree with you more. Outsourcing in SV will only accellerate because of exorbitant housing costs.
So what explains this? I’ve been to SV a few time and it’s an OK place. It’s better than here, but it’s not Mill Valley or Santa Barbara. I cannot understand how a metro area can lose 20% of its jobs while at the same time prices are soaring, unless all the former coders began new careers flipping houses.
Over on CL someone told me with a straight face that job growth at Yahoo and Google are responsible. Those two companies account for a small portion of the total jobs.
yahoo hired about 2k people last year… probably 1/3 required relocation… mostly new grads, not home buyers.
No mysterey in SV- They make money by selling each other RE using borrowed Chinese money.
Many of the laid-off simply live off of their HELOCs and began flipping in places like Sac & Fresno. The lucky ones made more than their old tech jobs. Though the easy flipping money has been made, there is still quite a bit of equity in SV left to burn off.
Techies who became agents or mortgage brokers are dying on the vine now.
Silicon Vally and Boston have similar tech employment profiles (I think Boston though about 50% of SV) and equally unbelievable real estate run-ups. Another mystery.
Difference between Silly Valley and Boston, is that Boston has more financial institutions, and less Google, apple, Cisco, Intel, etc… In other words it has a slightly more diversified job oportunity base, with a marginally less chance of outsourcing, at least internationaly. Maybe Companies will keep on moving to NH or RI, and leaving Boston behind.
At least, Boston has good Chowdah.
Forgedaboutit!
Totally agree. its amazing people do not know the worst price to rent ratio in the whole country is in the bay area according to WSJ. First home buyers in bay area are typically immigrants who have little experience with capitalist systems and get their info from local news papers like San Jose Mercury News which have vested interest in high home prices (builder ads etc). and not this blog or Barrons/Economist.
I disagree. I think that many immigrants, even though less familiar with the American economic and social system, are extremely rugged, frugal, and skeptical. I’ve never met an immigrant who have spent even a thousand dollars recklessly.
According to Zip Realty and Zillow, a home listed since 09/26/2005 in Walnut Creek with an asking price of $1,399,000 has a value estimate of $1,100,508 with a range of $935,000 - $1,155,533. The price was reduced on 11/08/2005 from the original asking price of $1,499,000. A 6.6% reduction.
Maybe in the spring when a flood of new sellers hits the market we’ll see more practical reductions.
So far I’ve only seen one markdown in my bubble area that is well over 10%. In my area reductions of 2-7% have been quite common for years as part of the dance between buyer and seller. The only noticeable change I’ve seen so far is days on market, which has increased a lot, but still nary a dent in prices.
I am on the fringe of Silicon Valley here in Dublin and I am not at all surprised at this article. There are SO many ostriches here with their head in the sand, it is UNbelievable. As I mentioned on another thread, there is a house (still on the market) about a half mile from me that was listed in Nov. 2005 for $935K ( I made an error in that other post), reduced it in Jan to $895,950 and then early this month to $887K. Ok, so it’s going down, but trust me, it is very nice here but this is NOT a million dollar neighborhood. Not even close. And hold onto your hat….it was bought/refinanced in 1993 for $322.5K.
There is also a condo in a conversion about a mile away. Conversion began in April 05 (asking mid $400k for 3/2)and before all of the units were sold, a couple went up for sale (Nov)…for $519,950. Only this month did they drop the price to $499,999. Before this is all over, the poor folks who bought there will be upside down for sure.
BayQT~
I think 2006 is going to be a watershed real for silicon valley real estate. Few of my friends who owned houses took it off the market in dec 05 since they were’nt getting the asking prices. Another few who want to buy say its too overpriced. I believe this is stagnation and stagflation and someone has to blink for the whole thing to unwind. In this case the catalyst is going to be higher interest rates.
If homes took 3 years to double, I think we should have patience of 3 years for them to halve.
Is median price drop a blip or an omen? - OC Register.
it just shows you how big this bubble is that even when we are just slightly coming off record home sales for the year, inventory in too many places has managed to go up alot. that’s bad. any time you overproduce while you’re selling record amounts of your product has to be bad.
Yes, it’s interesting that at the beginning of this downturn, the inventory in San Diego is approaching the levels seen at the bottom of the last downturn. Not good, indeed (except for us bears).
Econ 101 when sales volume drops and the price remains the same then the price is too high. The market just does not reflect the lower value yet.
OT but extremely important:
THE ANGEL IS BACK! Barron’s extremely bullish article on TOL probably was the cause for the HBs opening up pretty much across the board this morning. But as has happened so often recently, they started sliding, sliding. But guess what? At 11:20 the angel arrived. Waved her magic wand and every one of them turned up. It is like the Thunderbirds or a women’s choreographed swim team. They all moved up! At exactly the same time.
Here is the link to Marketwatch where I monitor 11 HBs and a few subprime lenders.
http://www.marketwatch.com/tools/quotes/quotes.asp?addsymb=LEND+WU++FED++WLS&symb=bzh+ctx+dhi+hov+len+phm+ryl+spf+tol+fnm+kbh+WCI&siteid=mktw&vc=1&x=10&y=10
Look at the charts. Look at the trading patterns leading up to 11:20 and then after 11:20. See any difference? Now look at the sub-prime lenders charts. Nothing happened to them at 11:20. Hmmm…
Life is just one big mystery, isn’t it?
This is what happened…
Pulte lays out 2007, 2008 profit outlooks
Tue Feb 21, 2006 11:51 AM ET
NEW YORK, Feb 21 (Reuters) - Pulte Homes Inc. (PHM.N: Quote, Profile, Research), the No. 2 U.S. home builder, on Tuesday provided its profit outlook for 2007 and 2008.
The company expects to earn $6.60 to $7.20 a share from continuing operations in 2007, according to material handed out at its annual investor conference in New York. Analysts were expecting $6.18 a share, according to Reuters Estimates.
FACT BOX
PHM.N (Pulte Homes)
Last: $38.60
Change: +0.76
Up/Down: +2.01%
MarJunSepDec
Quote
Full Chart
Company Profile
Analyst Research
News for PHM.N
Pulte lays out 2007, 2008 profit outlooks
Pulte sells stake in Mexican mortgage company
UPDATE 2-Pulte 4th-qtr profit up, sales firm in all regions
Pulte also said it expects a 2008 profit from continuing operations of $7.25 to $8.25 a share.
It also affirmed its forecast for a 2006 profit from continuing operations of $6.00 to $6.25 a share. Analysts expect it to earn $6.07.
© Reuters 2006. All Rights Reserved.
Well, since they said it, it must be true!
Nevermind that other homebuilders **cough** TOL **cough** have had to adjust down their estimates twice since November.
it could be that a REIT that invests in homebuilders picks them up when they go down a little bit. could be pensions funds or anybody. it seems like automatic purchases because of ETFS and the like probably buy them. that’s what I would think.
I noticed that too, but they are all coming down at this moment.
This was a reply to dawnal….. sorry
There seems to be a diminishing impact by the angel. Earlier similar appearances tended to have a more lasting effect. I can’t remember exactly when it happened but I was short WLS. The stock was trading at about 110. Along came the angel and lifted it to 132. I shorted again but couldn’t catch the 132. I got it at 128. It slid back to where it started in about 10 days or so and is now in the mid 80’s. So the angel is fighting a losing battle and for those who are onto it, each visit by the angel is an opportunity for shortselling. Just keep your powder dry so that the angel’s visit doesn’t force you to cover your shorts and leaves you with some capital to short after the visit.
Thank you for link to homebuilders. I added it to favorites to watch.
Dawnal - Toll Brothers, the company, is buying its own stock, with company money. It has been fully disclosed and is perfectly legal. Of course, the Toll Brothers themselves have been selling their personal holdings like mad. There is no conspiracy here. When the company runs out of cash to buy its own shares with, kaboom, it hits the floor.
Several of the HBs have been buying their stock back. But what explains a dramatic change in direction in the price trends of eleven homebuilders, all at precisely 11:20 am? Did they all call each other and say it is time to buy our own stock … check our watches….OK lets do it at 11:24?
Any think is possible, I suppose…….
“Do you think people will ever get the idea, especially now with 50 year mortgages being offered?”
No.
After the dot-com bubble burst, I saw a few bumper stickers in San Jose and Mt. View that read, “Please lord, just one more bubble.” Well, Silicon Valley got it’s “one more bubble”, but my guess is most investors missed the selling opportunity this time as well.
Please Lord, just one more BUST.
You don’t even have to pray - it’s coming.
BAJA IS BUENO FOR BUYERS
The area is enjoying a real estate boom fed by Americans taking cash out of their homes to buy property south of the border.
From the LA Times.
http://tinyurl.com/mbr3y
hoz said:
Exactly!
Mortgage time bombs
this home was listed in my neighborhood since april 05 at original price of $1.2M. It’s been 10 months and it’s still empty. It’s listing on craiglist for $1.09M. Reducing $110K (still less than 10% of original asking price). I wonder what is the monthly carrying cost for this guy.
http://seattle.craigslist.org/rfs/135077932.html
Sonoma Stats:
For Sale Listings: 176 (www.ziprealty.com)
# of Listings w/reduced prices: 52
% of Listings with price reductions: 30%
183 For Sale listings according to Pacific Union/GMAC MLS
(GMAC MLS) claims 50/183 under contract
More Sonoma State of the Bubble
2005 Total Units Sold 1/01-2/20: 78
2006 Total Units Sold 1/01-2/20: 64
2006 Unit volume: Down about 19%
————————————————–
2005 Total Sales 1/01-2/20: $50,961,973
2006 Total Sales 1/01-2/20: $53,231,980
2006 Total Sales Volume: up 0.4%
I think it’s great that all these folks selling have unrealistic expectations. It’s gonna mean a big increase in inventory and an even more precipitous drop later on. Adam Smith’s invisible hand has a way of slapping markets that get this silly.
Another factor to weak prices in 06 is the drastic slowdown in the immigration process. Green cards now take more than 5 years. The number of H1-b visas has reduced by 2/3rd starting fiscal 04. This is lack of 130k new people in the US, 40% of them in the valley.
If you add up the numbers for there are 100k less people in the valley till date who could’ve bought houses mostly in santa clara/san mateo/alameda counties. Add to that the uncertain job market and record high prices, no immigrant is on a temporary visa is going to buy a house.
if you exterpolate this further to job hiring, you notice, Cisco, Oracle, Juniper, Yahoo all have frozen hiring. 5k google employees cannot sustain the whole valley. Job insecurity is very high among tech employers with outsourcing on everyone’s minds.
The decline is imminent whatver the realtors tell you.
It also appears that not even businesses are pushing for immigration reform. Outsourcing is way more attractive. Silly Valley is dead in the water.
this point is so interesting…the outsourcing point people are making on this thread..
just noticed this forum and thank you all for all the great info and perspective you provide!
I am reading Thomas Friedman’s “the world is flat” (great read so far!) and he makes the point very clear and sorta exhiliratingly but we should all be scared, we US folks, well-educated and not. Our counterparts in Asia come much cheaper, and don’t need to leave their home countries anymore, thanks to all the lovely infrastructure we bought via the dotcom craziness. Indian engineers and software writers and medical researchers don’t need those harder to get visas anymore to live way better than their parents did. Eastern Europeans too, Chinese too. Thus, the pool of people who would be potential buyers of those waaay expensive houses will be staying away in droves I’m guessing. They might come for college, some numbers of immigrant folks, but go back home happily.
I am trying to convince (but its hard since he feels like I made him miss the run-up since 99) hubby that it’s a truly shitty time to buy, even in Ann Arbor MI with it’s not-so-overvalued status, but he is so subject to the disdain with which our society treats renters…it’s like calling someone a peasant for godsake…and can’t believe he’s as old as he is and doesn’t have a house yet.
I guess I am one of those buyers who aren’t buying…folks around here don’t get why there are so many listings and so few sales. The realtors still try to convince you that it is an insult to the buyer to offer more than a couple K under asking, even though asking prices are often 20% over the ridiculous levels they were at just a couple years ago. They actually tell you this. They try to convince you that a buyers market means you have a lot of choices but that’s all it means; supply and demand apparently should not have any effect on price. It’s a pretty well -educated town, Ann Arbor is, a lot of advanced degrees per capita, and the people I’m seeing now who are even showing up at open houses seem very naive. Foot traffic at these things is waaay low, never mind how different the entire atmosphere is from a couple years ago where houses would go in days and people were writing offers on car hoods most sundays…I was one of them!
It’s been slow here for over a year, but finally finally we’re starting to see some downward price pressure, and only in the last few months have *some* of the realtors admitted to it. Sellers are still being greedy, but some of them are starting to get a little desperate. The same oversupply issues are happening here too, it seems to me; despite passing some greenbelt-legislation to preserve farmland outside town, sprawl is apparent and builders are building. I think listings are twice what they were a year ago and daysonmarket has close to doubled too. Still, prices haven’t changed much. I think offers aren’t even being made, what with this RE culture of it being ‘an insult’ to offer what you think is a reasonable price! I mean, what can possibly make sense as a determinant of resale house prices if not exactly that–what people are willing to pay for it?! I am soo sick of the extortionist playing field and it’s not even so bad here as coastal or desert lands. Makes for such human ugliness. My fear is that it’s not just been an ugly interpersonal social blight, that something so emotionally charged as housing has become such a forum for speculation and manipulation and greed and fear, but that it has also hugely distracted us from pursuing way more important social ends and that we are utterly screwed, not just for when all that debt can’t get paid but also in terms of having any clue how to bounce back from it.
I feel like getting together a coalition of potential homebuyers and bargaining as a group…hey, you RE people and greedy sellers…we’d like to buy your goddamned homes but not if the prices will put us in bankruptcy-brink debt, so we’ll just stay away in droves til you get some clue!
I suspect the sellers and agents here are holding out for a phenomenon I haven’t seen discussed much yet…how buyers on the fence jump in when interest rates really seem to rise consistently (not the up and down hovering we’ve mostly had since fall 05). that there will be fear among the few buyers around once rates edge up to like 7%. my realtor already has said oh yeah, there are great deals to be had (where? prices are the same …true, not any higher…as last year and rates are a bit higher) and so much choice, so things are great until rates go up again…as though they are convinced or trying to convince that if rates go up you buyers are just screwed into higher payments, since apparently *nothing* can cause lower prices!
i just saw two listings, though, in the same subdivision, for two very similar houses, where one was asking 20% less than the other. But the realtors around here …in coasts and deserts too?…don’t actually provide comps anymore to buyers, if they ever did. I’ve never been offered an analysis of why an asking price was reasonable, and I’ve been playing buyer on and off for 9 years now.
cheers!
Shel: If someone tells me I’ve insulted him with a low-ball offer, I invite him to act the gentleman and demand satisfaction, Regency-style. His choice of weapons.
(Realtors tend to select the OC Register’s housing classified sections at twenty paces. They’re getting thick enough that swords would be safer.)
Seriously — the idea that an offer made in economic bargaining is “insulting” is just stupid. This isn’t personal, it’s business. Accuse me of lying and we shall meet on the field of honor, sir; offer me a lower price than I like and I say no and sell to someone else. If I can.
This one’s for you lunarpark:
“Condotino condos for everyone!”
(for those unfamiliar with this, “Condotino” = Cupertino, CA - home of Apple, etc.)
We had a thread on Condotino at Patrick’s a while back.
LOL, yes I’m just waiting it out here in Condotino - maybe I can get one of those Vallco condos at the 50% sale.
Hope you can speak Mandarin.
There are alot of PROFESSIONALS that are looking at this market and saying “Are you Nuts!”
Fortune Magazine (Oct. 31 2005 issue) had a great cover story article about Tom Barrack “Worlds Best Real Estate Investor”… a California Billionaire that recently pulled all his money out of USA real estate and is now investing overseas.
One of his quotes in the article suggested that the writing is on the wall… and the fact that there are so many amatuers in the market now- “you would be crazy to invest now”.
As many on this blog has suggested over the last few months…
When EVERYONE thinks they can get rich on real estate, just by signing up for easy loans- that’s about the time that the GAME IS OVER.
I personally have (recently) pulled out of the market, and will continue to rent while this thing SHAKES OUT!!
Not sure what to make of it, but I saw a sign in Los Altos on Sunday for an open house/wine tasting. Price reductions are dandy, but liquor is quicker?
Sure, liquor ‘em up really good, then pick their pockets.
Nice to see a BA thread after all those Phoenix / OC / SD threads.
I think - based on my social circle - that BA prices are high mainly due to immigrant high tech workers. For most, this is the most immigrant friendly place. The weather is nice. Compared to other areas most job opportunities in their field. Many are 2 income families earning well over 200K. The only thing they have seen RE in BA do is prices going up as most of them came here after the previous downturn. They want to live in BA forever. All their friends have bought homes, and encourage them to do the same. So there is siginificant price support. Then in addition there is a bubble, low interest rates and what not. I perfectly understand why there is a bigger bubble in BA than in other areas. Hence I also think that it will take a long time for it to pop - may be the last in the country.
I grew up in San Jose, and very few of my friends remain there today because it costs too much to live there. But it can be a fun place for DINKS, dual income no kids, who have money to spend. However, the place is highly polarized with rich v. poor; the middle class folks are moving away. The evidence is in the K1-12 schools, which are losing kids to the central valley causing school closures in the San Jose area. Some authors have referred to the area’s future as a Blade Runner style of melting pot.
I’m flying to Portland to look for housing this Friday. I live in Salinas, CA…and its just too outrageous. Not only are we the least affordable city in the US, but we also have one of the most rapidly shrinking populations. The community college where I teach has had a 15% drop in head count in ONE year. Houses have been sitting on the market for months…but their prices aren’t budging…or, at least, are not realistically budging. One has to ask: Why? Salinas has no night life. It has little to no culture unless you count the Rodeo as culture. It has a very limited economy. What it does have are gangs, poverty, and the smell of fertilizer in the morning. Why buy a $700K 3 bedroom ranch house for this? It baffles! iT SUCKS. And we’re getting the hell out.