Housing Bubble Blowout??

[WetWillie]

Any thoughts oppinions ideas on this?? My father sent this over to me. :confused:
4. All Signs Point To A Housing Bubble Blowout
There are brand new warnings that home prices are unsustainable and the housing market is in a bubble that is on the verge of bursting, says a report in Forbes magazine.
A new study by the National Association of Realtors (NAR) claims that 23% of all homes purchased in 2004 were for investment, while another 13% were vacation homes.
Historically, the market has been protected against a sharp decline in housing prices by the fact (or belief) that most people live in their homes and would be unlikely to sell even if the market headed downward. But obviously that logic doesn't apply to investment homes or vacation homes.
There has long been anecdotal evidence that non-occupant buyers are fueling the rise in home prices. The NAR study, based on 2003 census data, says there are 43.8 million second homes in America. While 6.6 million of these are vacation homes, far more, 37.2 million, are investment units. This compares with 72.1 million owner-occupied homes. About a quarter of last year's home sales were for investment homes, NAR says.
Nearly 80% of investment buyers rent out their houses. And while an owner-occupant is unlikely to sell his or her dwelling, with an investment home the decision to sell is purely economic: If rents don't sustain a mortgage, it is pointless to own an investment property, except for the hope that home prices will inevitably rise, which has been the case in recent years.
Forbes says that since 2001, the median price of an investment home has risen 25.4%, from $118,000 to $146,900. (In most markets, the average price is considerably higher than the median.)
However, if prices start to fall or mortgage rates begin to rise, there could be a rush to sell - and that could trigger a crash.
Some investment buyers might find themselves unable to get renters at all, as rental vacancy rates are near historic highs. With many buyers putting down almost no cash, they could just let their bank foreclose and walk away.
According to the Mortgage Bankers Association, more than 32% of mortgages are now adjustable. The popularity of adjustable-rate mortgages is on the rise despite the spread between the so-called teaser rate and the fixed rate on a standard 30-year mortgage has narrowed.
At the same time, in the U.S. there have been double-digit price increases for the average new home, and 20% or more price hikes in many markets, including some of the most populous ones - in the Northeast, Southern California and Las Vegas.
And in the last six months, shares of major home-building companies are up 25 to 100%, while some mortgage lenders have increased their lending by as much as 40%.
But the fact is that while home prices have doubled in four years, they haven't been nourished by income gains anywhere near that level. So a 30 to 50% drop is completely possible.

[Kilrtoy]

Finally someone that agrees with me....
who the hell wrote that

[Dr. Eagle]

Doooooooooooooooooooooooooomed!!!!!!!!!!!!!

[Rexone]

I agree that a "correction" is overdue.

[C-2]

Be interesting to see how the cards unfold over the next year or two. The low interest/arms are gonna catch up with people on the edge ~ and when their equity dries up and find out they can't scrub their debt clean via a Chapter 7 BK - some people are gonna lose some stuff. First the toys and then their homes.
They say a crash like the early 90's will never happen again, that banks smartned up. Dunno, the whole BK reform might just send it over the edge again.
All I know is I'm gonna call that smart-a ss mortgage broker who, a year ago, was pretyy smug and didn't feel like doing a little work to earn his money. See if his tune has changed.

[Kilrtoy]

With the interest only rates coming due over the next 18 months we will see..

[throwerb]

Good time to cash out (like I did) and move somewhere the dollar goes a lot further. Nashville is a beautiful place to live. Oh, and did I mention how many lakes there are here.

[NashvilleBound]

I would have to agree with Throwerb. Nashville the dollar goes amazingly farther. I also agree we are WAY over do for a "correction" as stated. Can't wait....

[SDLifesaver]

Even if the market crashes as this report predicts those of us with homes and vacation homes who bought at the right time are in no danger. We only rent our Havasu house to friends, the mortgage is low 600 and when we bought our new house last year in San DIego the rates were still low and we we made a killing off the last house we sold. I have friends that have done some brazen things withs with those 1% arms and no down 100% financing. Those are the people who should worry. My .02

[mtndewdrops]

Interesting, however it seems that there are more and more people and less and less property to go around. I think that part of the problem is the developers, they should slow the new housing growth to keep the market stabilized.

[wsuwrhr]

I have thought the same thing for awhile.
I bought my house during the time that housing was skyrocketing, and I had to move from Upland to San Bernardino to be able to afford one.
If the market crashes like I think it will, I was planning on renting this house and moving back to Upland. :) :)
Brian

[wsuwrhr]

I still think home prices are out of line for income levels. Housing prices have risen sharply, but income levels have not.
What do you guys think?
Brian

[Not So Fast]

When we retired almost three years ago and moved from the Lake Forest (24 yrs) area in the OC and built a house here in Havasu I was happy with how it all worked out and we were able to stash some dough for retirement ( and a new boat of course), but now I look at whats happening with the prices and I just dont know what will happen. we are cool cause everything is paid for but the mortgage payments I see the younger people sign up for with all of this creative voodoo financing, well it seems to me it could go upside down real easy. The house we sold in OC was purchased for $128,500 in 1979 and that house today is above $800,000, now I look at whats happening here in Havasu and its doing the same thing, THE BIG DIFFERENCE is this is a mostly secondary housing market, vacation homes, rentals ECT. How are people doing this, refi's I guess but as someone in another reply said when the interest rates go up, and they are, the voodoo financing will force this bubble to break and I feel sorry for all of the young people (old too) that will be in financial trouble. PRICES HAVE TO FALL!! Havasu homes are averaging over $200,000 and there is some real crap here, believe that!! WTF!!! MY .02$ NSF

[phebus]

Well. maybe I'll get lucky then. We are selling a house in Havasu, and a house here in O.C. Maybe it is still a sellers market, and when we buy a new House in Havasu to make home, it will be a buyers market.
If so, it will be the first time in my life I have ever gotten lucky. :D

[OutCole'd]

When I bought my first house, it was when the market was peeked. When I sold it was at rock bottom. Buy high, sell low, I always say.
The bottom line, for the folks with a decent income that can afford the payments for their second home and plan on it for the long haul, the market always seems to come back and then some.
For the investors using at a rental, it becomes more of a problem. When the market is at it's lowest, and rents become the same as a mortgage, it is hard to fill vacancies.

[probablecause]

No way. Supply and demand.

[Mr.Havasu]

The study was done in 2003 and the market has continued upward. We might have a slow down but I don't think we will see a crash like the one on the early 90's. At least not in Havasu. So Calif. might back up a bit, but again, supply and demand.
As far as Havasu goes, I'm thinking the baby boomers are coming into retirement and we are truly a resort community. As long as there is water in that lake, they will continue to come.
Interest rates are a different story. We just signed up for some of that VooDoo financing and while it afforded us a better home we could be in for a big surprise in a couple of years when the interest only lock expires. I'll deal with that when we get there. If I have to sell because the payments are too much to handle then I'm confident the growth in Equity will more than make up for it. Maybe the days of the 30 year fix will come back into fashion but for the past 10 years the arms have out preformed the fix rates by alot. I still think investments in Havasu will pay off and That's were I'm banking my entire investment strategy.

[riverracerx]

There is so much construction going on in Havasu, in a few years you will be able to pick up a vacation home foreclosure for sure. Because the people buying the high priced homes in havasu are from Cali. And the typical Havasu economy cannot support those home prices. So who do you sell to when people are not buying a vacation home?

[Flying Tiger]

In Norwalk Calif theirs a big bill board with an old guy in a rocking chair covered by spider webs.
The caption reads:
"This is the guy waiting for housing prices to drop."
Sales are great in my neighborhood except for people like the crackw#ore that lives next door to me that is asking too much.
The pundits I watch on the financial talkathons are starting to say our economy may not fully recover, may even tank.
The dollar is at a big low.
I still plan on being RD's neighbor and I don't anticipate the prices in Parker getting better.

[INSman]

The study was done in 2003 and the market has continued upward. We might have a slow down but I don't think we will see a crash like the one on the early 90's. At least not in Havasu. So Calif. might back up a bit, but again, supply and demand.
As far as Havasu goes, I'm thinking the baby boomers are coming into retirement and we are truly a resort community. As long as there is water in that lake, they will continue to come.
Interest rates are a different story. We just signed up for some of that VooDoo financing and while it afforded us a better home we could be in for a big surprise in a couple of years when the interest only lock expires. I'll deal with that when we get there. If I have to sell because the payments are too much to handle then I'm confident the growth in Equity will more than make up for it. Maybe the days of the 30 year fix will come back into fashion but for the past 10 years the arms have out preformed the fix rates by alot. I still think investments in Havasu will pay off and That's were I'm banking my entire investment strategy.
I like your thinking, I am with you !!! :D :D

[Backfire]

When I sold my 2br, 800 sq/ft home in Glendora for 175k in 1991, I felt that the market in SoCal was at it's absolute top, based on the rules, at the time, that you can only qualify to borrow to a payment that is a certain percentage of your income. Every day, the newspapers announced another big layoff in aerospace or other sectors that were moving to Tennessee or Tijuana. Predictions of higher interest rates were normal, and we'd just been through the nightstalker affair. I felt that the housing market in SoCal would stay stalled until the "Baby boom" aged folks were ready to retire, then the prices would dump from oversupply as they left town for areas like Havasu.
I had no idea that we'd have a president in the eighties that would usher in and stabilize lower interest rates and reforms in banking, creating an oversupply of available funds that would encourage competitors to offer "high risk" loans or else not be competitive.
I believe that the SoCal market has gone much higher because these "new wave" financing instruments have allowed people to borrow money that their income would not have previously qualified them for. As long as bidders are backed by money that they can make the payments against, who knows where it will stop?

[6 Dollar Boat]

I still think investments in Havasu will pay off and That's were I'm banking my entire investment strategy.
That's a realy big risk to invest 100% in Havasu real estate. If it tanks not only do you loose your investment, but your wife earns her income from the same source. It could end up being a double wammy, like the people who worked at Enron and invested 100% in Enron stock for retirement. Good Luck to you...
6 (trying to stay diversified) Dollar

[Dr. Eagle]

Dooooooooooooooooooooooooooooooooooooomed!!!!!!!!

[cc322]

Supply and demand, I work out in the field for a water department and I see tons of new tract homes being built everyday, with a line of people waiting to buy one. Seems to be alot of peeps wanting to live in so cal. Everyone has been saying that it is gonna bust well I dont think it will maybe level off but doubt the bottom will fall out. As far as the people getting screwed with the 1% loans well there loan should have some type of cap on it after a five year arm or so :confused: I just cant see the bottom falling off that much, as soon as a house hits the market here in Mission Viejo it usually goes just my02

[Kilrtoy]

another great thread

[Big Bear]

I plan to retire in 5 years and just bought 2 acres on a lake north of Klamath Falls Oregon. If my house in Simi Valley just treads water for the next 5 years I will be OK. People are lining up to buy out here and I can only hope it continues. If the market her were to spike again before I am ready to get out, I think I would have to take the money and run. Otherwise, I sit on it and see what happens.

[cdog]

I'm a realtor in OC and I can tell you how crazy this market is. I would prefer to see a 20% correction. I believe that would put us into a regular market where people could actually afford to buy. I was correct when I told buyers that were looking two years ago at a 2bed 2bath condos for 250k that they are a great buy and now i'm selling those same condo's for 415k. I do believe that higher rates are soon to come. This is a cycle. The unknown factor is supply and demand and urban sprawl. When people are to the point where they will break even, will they sell and move inland or relocate to NV or AZ? If this happens in great numbers ( which I believe will happen with the baby boomers ) it may boost sales and drive up prices in Havasu type areas. Personally, I feel those people will be filling a void in the market from the people trying to dump their vacation homes in areas like havasu. No jobs and no industry = retired people. I maybe wrong, but what i'm saying makes alot of sense, I think. My mom works at wells fargo, she's a big time mortgage broker over there and has been thru this allready. Her favorite saying is that the mortgage company's will reinvent themself's. This probably means that every fly by night mortgage.com'r will be out of business when rates rise because the real mortgage company's will choke the secondary market as the fed chokes the money supply. They will do that by fee's fee's fee's to the buyer and the broker, I believe this will all adveresly affect the way this business is ran. Which will trickle down to home sales.

[SHOTKALLIN]

With the interest only rates coming due over the next 18 months we will see..
I don't think so. Not as long as people can get another interest only. Some people don't care if they ever pay off a home. Especially if they bought way over their head. Interest only and as long as the market is gaining value they will have enough equity to sell and buy a house with a fixed mortgage.
I bought a house I could afford on a fixed 30 year mortgage but all my friends did it the other way and they are making tons of dough.

[SHOTKALLIN]

I still think home prices are out of line for income levels. Housing prices have risen sharply, but income levels have not.
What do you guys think?
Brian
I think that in Ca there are lots of areas that you have to be rich or very well off to live in. Every city is not meant for everyone. Homes that cost more than $500-600K are out of range for alot of people that make decent salaries or are first time buyers. But if you look at the areas where homes are close to 1M and more those areas used to be affordable. Maybe it was 20 years ago but when most people bought there it was very affordable. At one time you could buy in Laguna for 300K. Today that same home is 1.2M. As long as people are willing to commute from places like the 909, 951 and 760 where you can still afford buy a home...prices will continue to go up. The 909 and 951 areas are no longer considered far away. Less people are commuting all the way to L.A. from these far away cities. little by little jobs are catching up with the cities once known as the the boonies. Now the boonies has been pushed further awayto places like The high desert.
I would say that income levels need to improve but equaly as important is the tranportation system in socal needs to improve. There are plans for another fwy to be built b/t Corona / Lake Elsinore through the mountain to the O.C. This will drive the prices even higher. Why isnt there some type of light rail system on every fwy in socal?

[burtandnancy]

No, Just A Hiccup

[SHOTKALLIN]

exactly. just wait til summer. everything thats slow to sell will be sold. Houses that are sitting for sale in Fontana Summit Heights) since November have had their asking prices adjusted to the current market. Up 100K. :2purples:

[Kilrtoy]

I don't think so. Not as long as people can get another interest only. Some people don't care if they ever pay off a home. Especially if they bought way over their head. Interest only and as long as the market is gaining value they will have enough equity to sell and buy a house with a fixed mortgage.
I bought a house I could afford on a fixed 30 year mortgage but all my friends did it the other way and they are making tons of dough.
I agree some people dont care if they ever pay it off......
a 375K loan with no money down......
by the time you are done, Tht is almost 3500 a month...
WTF.....
and you cant even find a 375 house anymore....

[INSman]

That's a realy big risk to invest 100% in Havasu real estate. If it tanks not only do you loose your investment, but your wife earns her income from the same source. It could end up being a double wammy, like the people who worked at Enron and invested 100% in Enron stock for retirement. Good Luck to you...
6 (trying to stay diversified) Dollar
One must consider that Havasu is not really too terribly big, and once the land is gone, it's gone. Just like lots along the river, there are only so many, and when there are non available, you can bet that when someone decides to sell one, there will be buyers a mile long in bidding wars !!!

[SoCalOffshore]

I will be speaking to some of these issues later this week on CNBC's Squawk Box. Interestingly enough, the number one performing real estate market last year was Las Vegas, then Hawaii and followed by good ole California. Understanding history is much easier than predicting the future... :confused:

[Lake Ape]

Guess what, here in Arizona they pretty much stopped making land!! I know it's hard to believe they stopped making land here in AZ. While all you Kalifornians move here and drive up the prices and the baby boomers are coming from Minnesota the average AZ family has to move from Tempe to Maricopa in order to buy a bigger house. There is no end to this bubble here in AZ, I don't care what anyone says. I have seen it every year here for the last 20 years and they just stopped making new land. The population is increasing every year and all those people have to live somewhere. Currently in AZ we have about 6400 houses on the market that are actually avialable while we usually have about 38,000 at this time according to MLS. I am a part time super. for DR Horton and see vacant houses just sitting for years cause the investors don't want to rent it, they prefer the loss and are just looking for %50/yr appreciation.. No bubble poppers here in AZ, except maybe water...

[Dr. Eagle]

No bubble poppers here in AZ, except maybe water...
Famous last words. Interest rates go up 3 points... ka-pow. Nobody will be able to afford that land that isn't being made anymore... even if it is an antique. :220v:

[haulina29]

One reason the housing market will not totaly tank as in previous years is the cost of building materials have sky rocketed in the last few years , and they arent coming down . Until building materials come back down housing prices may taper but will not crash . I think for now what you see is what you get . The high cost of materials has greatly helped old Home sales by driving existing home prices up . Usually home prices are driven by supply and demand or inflation this time its being driven by both but the inflation is not acrross the board only in the materials used to build a house and little or no inflation has kept interest rates down making for a interesting market .

[Dr. Eagle]

I guess it remains to be seen. If demand falls off because of the cost of financing, prices will fall no matter what, land, materials whatever. Remember in the late 70s and early 80s new housing was severely impacted by the 17% interest rates. Nobody could afford the 1200 house payments on a 75,000 house. Don't fool yourself, this real estate market is a house of cards (so to speak)... :)

[haulina29]

Plese give me a call when they start selling house in your neighborhood for less than you can build them for cause i will take them all .

[Dr. Eagle]

Plese give me a call when they start selling house in your neighborhood for less than you can build them for cause i will take them all .
That was kind of the point. Building came to a halt in the early 80s because they couldn't sell them at 17% interest rates. The same could happen now, but interest rates aren't going up all that fast. A spike of 3 points or more could cause a pretty severe shock though. That will push prices downward.
Point number two, the largest component of the housing costs in California is the land. A colleague of mine just got done building a 4000 square foot house in Kentucky on 10 acres for 250K. Beautiful home.

[WetWillie]

Who would build a home today and who wouldnt?? There are alot of sharp people on here and I am looking for oppinions.. :argue:

[Racer277]

Who would build a home today and who wouldnt?? There are alot of sharp people on here and I am looking for oppinions.. :argue:
I thought you had a place picked out.
Very good idea I thought also.
Have you changed your mind?

[Dr. Eagle]

Who would build a home today and who wouldnt?? There are alot of sharp people on here and I am looking for oppinions.. :argue:
I think I would definitely build a home if I had been holding the land for a few years...

[haulina29]

I do value you opinion but in California the land is a third or less of the total project in most cases take your own back yard El Dorado Hills price a lot then price a home refering to new style tract housing On another note i always wonder how those guys do it back east .

[WetWillie]

Michele found out it was not going to be finished like it should be so I backed out!
I currently have an eye on a nice lot and want to start building in 2 to 3 months just tring to educate myself before I pull the trigger..
I thought you had a place picked out.
Very good idea I thought also.
Have you changed your mind?

[Dr. Eagle]

I do value you opinion but in California the land is a third or less of the total project in most cases take your own back yard El Dorado Hills price a lot then price a home On another note i always wonder how those guys do it back east .
Hmmmmmmmmmm I beg to differ.
Take my Parent's neighbor in the 2200 square foot house at 1.4million. There is no way that house is worth over 200K on another lot.
Your example will vary by locale. I know there is no way my house would cost 350K to replace and that'd be about 2/3 the cost of the recently appraised value.
It seems that the way they do it back east is the land is cheap, and they don't have all the developers fees, taxes and other infrastructure contributions to make. That house made Kentucky look pretty damn nice. I'd love to have a home almost twice the size of mine on a 10 acre parcel for less than half what I could sell this one for.

[haulina29]

1.4 million would not be your average tract home on a postage size lot also you might be surprised what it would cost to duplicate the house you are in today i only live a few miles from you and we cant build squat here for 350 or average permit in nor cal is over 60k

[haulina29]

What your are saying is replacement home cost would be 100 dollars a foot ?

[Dr. Eagle]

What your are saying is replacement home cost would be 100 dollars a foot ?
As a matter of fact, (as I recall) my house is insured at $110 per foot per the insurance companies recommended level.

[haulina29]

I build 4 to 5 houses a year in our area you couldnt build a garage for 100 per foot junk starts at 150 . Kind of interesting you mentioned Kentucky i flew back and couldnt find the 100 acres with a 4000 sq ft house and barn for 350k but i did by a awsome piece of land outside Louisville 50 acres for 800k Kentucky is awsome also cover your butt raise your replacement cost on your insurance policy .

[Dr. Eagle]

I build 4 to 5 houses a year in our area you couldnt build a garage for 100 per foot junk starts at 150 . Kind of interesting you mentioned Kentucky i flew back and couldnt find the 100 acres with a 4000 sq ft house and barn for 350k but i did by a awsome piece of land outside Louisville 50 acres for 800k Kentucky is awsome also cover your butt raise your replacement cost on your insurance policy .
My insurance is right where it should be, as recommended by the insurance company. Surprisingly when I changed the insurance company, they cut the insured value from the prior carrier as it didn't fit their estimates of costs for the area.
I do have the replacement value coverage that covers exactly the kinds of blips in material costs you are experiencing now, adds another 60% on to the insured amount.
As far as 150 bucks a square foot, maybe you are right... I haven't been an active contractor for a few years... but thats not what I have been told by any of the insurance carriers in the area.

[haulina29]

Hows the lake level ?

[Dr. Eagle]

Hows the lake level ?
Pretty damn nice actually...
Check it out...
Water Level (http://cdec.water.ca.gov/cgi-progs/queryF?FOL)

[haulina29]

No shortage of water in Nor Cal this year .

[Dr. Eagle]

No shortage of water in Nor Cal this year .
I think we've earned a good year... :wink:

[bigq]

I will be speaking to some of these issues later this week on CNBC's Squawk Box. Interestingly enough, the number one performing real estate market last year was Las Vegas, then Hawaii and followed by good ole California. Understanding history is much easier than predicting the future... :confused:
Even more interesting is the slow down that appears to have happen in Las Vegas in the 4th quarter. It went from around 35% increase to a drop of about 2% growth, that is quite a drop. What are they doing now, anybody?

[SDLifesaver]

Build Wet Willie, Build. You obviously don't know much about Havasu if you think anything in that city is done on time. Our builder was 6 mos late, breached our contract and gave us the run around for months. I mentioned the words, "I will see you in court" and all of a sudden we had a couple hundred free sq. feet, jacuzzi tub, 8' garage doors and they paid for my storge unit while our stuff sat for 6 extra months. In the end, we got a lower rate and had more time to prepare. It's like having kids, is the time really ever right? Just do it. My .02

[My Man's Sportin' Wood]

We got one of the houses refinanced recently and paid one off (merged two mortgages into one house) and the broker kept pushing the interest only loan so we could get a lower payment. We had to insist that we wanted a traditional fixed rate mortgage. He said that he would never get anything other than interest only mortgages from now on. His attitude is reflective of the people in this area. They are BANKING on the market to keep going up at this ridiculus pace. When the bubble breaks, it's going to be bad.

[Essex502]

Build Wet Willie, Build. You obviously don't know much about Havasu if you think anything in that city is done on time. Our builder was 6 mos late, breached our contract and gave us the run around for months. I mentioned the words, "I will see you in court" and all of a sudden we had a couple hundred free sq. feet, jacuzzi tub, 8' garage doors and they paid for my storge unit while our stuff sat for 6 extra months. In the end, we got a lower rate and had more time to prepare. It's like having kids, is the time really ever right? Just do it. My .02
I have to disagree. We've built 2 houses in the last two years in Havasu and both times they were done on time. It is all about the builder you choose. Our builder stated 185 days in the contract and they began July 1, 2004. We closed escrow 1/4/2005. Choose the wrong builder and you're in trouble. Our latest house is 2000 sq.ft. with a lot of upgrades.
Also, someone said earlier in the thread about $100/sq ft=junk...Not so...it all depends on the location and labor rates. We brought in the last house at approximately $90/sq.ft with granite countertops, 15" tile (and lots of it), 9 ' ceilings, 8' doors, 1100 sq.ft. garage...etc., etc., etc. and believe me - it ain't junk! Again, location, location, location. Appraised fro $360K when completed.

[Essex502]

Someone said they'd take interest only loans again and again...what if the market drops to less than what your outstanding loan balance is? Then you have to come up with the cash for the difference before you can secure that next interest only loan...Not for me unless it is a very special circumstance.

[BoatPI]

Don't beleive it for one second!!!!!!!!!!
As afr as CA and AZ goes that is. And look at Vegas. Want a smart investment, pick up if you can one of the acre lots just off the strip that we all fly near on approach to Mc Carren Airport.
1. Too many new buyers entering the housing market.
2. Continured low interest rates.
3. Lack of housing, income property is an excellent investment.
4. Rents are high and will go much higher.
5. As far as vacation property, baby boomers are still comming, big $$ to invest.
6. If you have a varible interest rate loan, JUMP OUT NOWWWWWWWWWWWWWWWWWWWWWW! You appreciation should cover you for the 20% needed to a fannie mae loan qulaification. Make it happen or you may get caught short on the gamble.
My 2 cents. ANYONE that is single, or married without children, strongly consider purchasing a duplex to fourplex and live in one unit. You cannot loose. If you gross income combined is above say $125K, you will realize perhaps as much as a $10,000 reduction in Federal income tax savings. Play it smart, keep your money and don't give it to the IRS. Consult a certified financial planner.

[SDLifesaver]

Essex502, you are a lucky guy. Everyone I know who has bought in the last 2 years from different builders has had delays and problems. Our place is a Diamondback Home but we recently had some problems and they were taken care of by Steve Anderson personaly. I think it may be luck sometimes on how things work out but we have found that that whole city is on a different time frame than what we are used to. Glad to hear your stuff got done on time with no hassels.

[Freak]

Check this guy out
The Fed sees bubbles -- and keeps them secret
In public, the Federal Reserve says there's no housing bubble. But the Fed also said there was no stock market bubble in 1999. Behind closed doors, the governors knew there was.
By Bill Fleckenstein
Our Fed chairman has argued (most recently last October, in a speech to America’s Community Bankers Annual Convention) that for a variety of reasons, real estate cannot experience a bubble. Yet anyone with a pulse can see wild speculation taking place all around them.
At the height of the stock-market bubble in the first quarter of 2000, it was becoming progressively more difficult for me to adequately describe (in my daily column) the market action. So, in an attempt to capture the mood of the day, I began to share stories of insane behavior that were being e-mailed to me by regular readers. I dubbed this series "The Mania Chronicles," and you'll find excerpts from it in Chapter 3 of the Archives section of my Web site. (Readers of the Contrarian Chronicles can access the site for the next week by using the password/username: mania/mania.)
The kind of maniacal behavior that we saw then toward stocks and which we are seeing now in real estate tends to come at the end of a speculative mania. It is almost always coincident with rising supply, which helps to satiate the inflated demand. Banks and insurers
check your credit.
So should you.
As I have pointed out, the true danger in the real-estate bubble is that folks are often speculating with more than 100% leverage. When it all ends (and though we don't have a timeline for exactly when that will be), the banking system and other financial entities will be left with the bad assets, which will severely impact the economy.
Condominium-mania
So, even though I offer up the following vignette in a somewhat lighthearted way, everyone should be aware that the current insanity it demonstrates is very dangerous. Each e-mail I have received reveals a variety of preposterous assumptions made by the people depicted, but what the vignettes share is:
The belief that one can't lose.
Incredible greed.
The absence of any common sense.
"In Chicago this weekend, there was an apartment conversion to condos where 200 people slept out overnight for a chance to be one of the first people to have a chance at buying a condo. I personally knew five people who stayed out all night, and these people were only buying on spec, with the thought of flipping the property in the next year or so. They believe it is impossible to lose money on this deal. It reminded me of when everybody would line up at stock-quote machines to check all their winning stocks."
Truth outed by a Fed transcript
Today's housing bubble is a consequence of policies designed to ameliorate the effects of the bursting of the stock-market bubble. All long-term readers know that I place the blame for the stock and real-estate bubbles squarely on Alan Greenspan and his easy-money comrades at the Fed.
Consequently, it was with interest that I read "Fed Officials Worried in 1999 About Managing Stock 'Bubble'" in last Monday's Wall Street Journal. The article discusses the fact that in 1999, Fed officials were aware of the stock-market bubble, even though they claimed before and after not to have known.
Since those days, I have been waiting to see the contents of the 1999 minutes, which are released with a five-year lag, to learn what the Fed was really saying, as opposed to what it said in public. With the Journal story serving as a reminder, I went to the Federal Reserve's Web site to review the just-released December 1999 Federal Open Market Committee minutes. I was shocked by what I found.
Lone wolf amidst bull bankers
In an introductory presentation to the FOMC, Fed economist Mike Prell noted the lunacy as follows:
"I refer to the incredible run-up in 'tech' and e-commerce stocks, some which have entered the big-cap realm without ever earning a buck. To illustrate the speculative character of the market, let me cite an excerpt from a recent IPO prospectus:
'We incurred losses of $14.5 million in fiscal 1999, primarily due to expansion of our operations, and we had an accumulated deficit of $15 million as of July 31, 1999. We expect to continue to incur significant . . . expenses, particularly as a result of expanding our direct sales force. . . . We do not expect to generate sufficient revenues to achieve profitability and, therefore, we expect to continue to incur net losses for at least the foreseeable future. If we do achieve profitability, we may not be able to sustain it.'
"Based on these prospects, the VA Linux IPO recorded a first-day price gain of about 700% and has a market cap of roughly $9 billion. Not bad for a company that some analysts say has no hold on any significant technology. The warning language I’ve just read is at least an improvement in disclosure compared to the classic prospectus of the South Sea Bubble era. . . .
"But, I wonder whether the spirit of the times isn't becoming similar to that of the earlier period. Among other things, it may be noteworthy that the tech stocks have done so well of late in the face of rising interest rates. Earlier this year, those stocks supposedly were damaged when rates rose, because, people said, quite logically, that the present values of their distant earnings were greatly affected by the rising discount factor. At this point, those same people are abandoning all efforts at fundamental analysis and talking about momentum as the only thing that matters (and that’s just like right now!).
"If this speculation were occurring on a scale that wasn't lifting the overall market, it might be of concern only for the distortions in resource allocation it might be causing. But it has, in fact, been giving rise to significant gains in household wealth and thereby contributing to the rapid growth of consumer demand -- something reflected in the internal and external saving imbalances that are much discussed in some circles. Whether our assumed 75 basis-point increase in the fed funds rate would be a sufficient shock to halt this financial locomotive is open to question." (The emphasis is mine.)
Failing to follow the bouncing bubble
One can quickly see that this particular Fed staffer understood what was going on, although without knowing more of his thoughts or talking to him, I'm not sure if even he comprehended just how misallocated capital was at the time. We must also remember that this was only December 1999, with another 50% rally in the Nasdaq Composite ($COMPX) yet to come.
In any case, one might have thought that after such a powerful introduction by Prell, some of the Fed governors might have had their curiosity piqued. But near as I could tell in going through the Q&A that followed his remarks, most of the governors were much more concerned about economic minutiae than the epic bubble they had blown. Y2K was supposedly a concern at the time, though I read with interest that "bankers around the (Philadelphia Fed) district reported that they believe that Y2K will be a non-event."
Given the concern by some Fed staff members that a bubble was brewing and that certain district reports thought Y2K might be a non-event, one might have thought that a sober band of concerned citizens might have tried to ensure that the liquidity the Fed was forcing into the economy wouldn't be used for more speculation.
But, of course, that was not the case. When Greenspan discussed the stock market in passing during the meeting, he said, "It is only a question of how much of a bubble there is in the process." In public, he repeatedly said the opposite. (Still denying it was possible to spot one, even after the blow-off of the first quarter of 2000, in a Q&A before Congress in April 2000, he stated: "That presupposes I know there is a bubble. I don't think we can know there is a bubble until after the fact.")
Considering how out-of-control the mania was in 1999, I was struck that this group of clueless buffoons spent nearly half the time (according to the transcript of this meeting) arguing about whether the post-séance communiqué should contain the language "asymmetric," "symmetric" or a little of both, etc., rather than spending any time discussing what their actions had wrought in the stock market and the economy.
Al was so pleased with himself in the lead-up to the voting that he opined: "Having said all that, my view on policy is, if I may reference Governor Kelley's comment about raising his hand and saying present, that I almost think the best way we could have gotten through this period would have been somehow to cancel this meeting. The reason is that markets, as far as I can see, seem to be pretty much where we as a Committee would like them to be." (The emphasis is mine.)
Bouncing from bubble to bubble
There you have it: The most incompetent and irresponsible Fed chairman in the history of the world thinks nothing of talking from both sides of his mouth about whether he can identify a bubble. He blows the biggest one in history, claims he didn't know it was happening. And then he bails it out with a housing bubble that he says can't exist because real estate can't experience a bubble.
What I'd like to know is, given not just Alan Greenspan's record but also what he says in public (and what we can now see he says behind the public's back), how can this menace to society have any credibility whatsoever? I certainly don't know. I encourage everyone to read through these minutes just to get a flavor for how completely untrustworthy and shallow these people are.

[Indiansprings]

I dont think Phoenix is about to bust. We are still riding the wave. Prices have got to be getting close to there limit, but, with all the Calf. money comming to AZ, we havnt hit that limit yet.

[Speedin' Ian]

Great topic!!! I currently work in Real Estate doing marketing and I think I will hold off on my first home purchase. The market is so inflatted and the fact is you can't get a lot of homes to appraise for the ammount you need to borrow. I do agree that we won't see a drop like the one in the 90's especially here in Ventura County simply because of supply and demand, but I do expect a "reality check" in the next year or so.

[Essex502]

Essex502, you are a lucky guy. Everyone I know who has bought in the last 2 years from different builders has had delays and problems. Our place is a Diamondback Home but we recently had some problems and they were taken care of by Steve Anderson personaly. I think it may be luck sometimes on how things work out but we have found that that whole city is on a different time frame than what we are used to. Glad to hear your stuff got done on time with no hassels.
We were warned away from a few builders - including Diamondback - do to problems with completion times. We have used Summit twice now and they can't be beat for getting it done on time. Both houses were done when promised. Both were built from scratch for use though the first was already a pad when we bought it. The only little problems we had were the typical cleanup issues after completion due to the subcontractors. All were handled very efficiently by Summit.

[Dave C]

This is an interesting thread.
I have to agree with Dr. Eagle... we are all doomed. J/K
Just think about what is going to happen to home prices when the cost of financing goes up.
Think about the historical trend of interest rates because the last 4 years
has been abnormally low. When I think normal interest rates, I think 7% FRM & 5.5% ARM.
Here is a link to historical interest rates (http://www.hsh.com/mtghst.html)
30 FRM 1 year ARM
2005 5.8% 4.3%
2003 6.0 4.2
1999 6.9 5.7
1996 7.3 5.5
1993 8.2 5.2
1989 10.2 8.6
1985 12.9 10.6
for example, loan payment principal + interest, each 100,000 borrowed, 30 years:
4.3% $494
5.8% $586
7.3% $685
8.2% $747
10.2% $892
12.9% $1098
If you had a $400,000 loan @ 4.3%, the payment would be $1976. If interest rates went upt to 8.2%, the payment would be $2,988, at 10.2% its $3568.
something to think about as they continue to raise the rates back to "normal levels"

[cdog]

I think rates will stay below "normal level" untill the US dollar gains in value against the euro. When the fed takes a agressive stance on regaining value to the dollar, it only makes sence that the dollar will be worth more and it will cost more money to borrow. You can see how energy, oil and everyday consumer goods especially cars are effected by the US dollar's value being low. Bottom line is, if our currency was worth more, oil would be cheaper and the dollar would buy you alot more. I think this cheap currency cycle is damm near tapped.

[Dave C]

maybe but when core CPI goes up that may force the feds hand. When and if this happens is anyones guess.
especially since non-core CPI is out of f-ing control, (e.g. energy)
when CPI or other economic activity goes up, rates will follow.
definitely not a question of if, just when.
Prime rate went from 4% to 5.5% in 6 months.

[carbonmarine]

You guys are sooooo near sighted... Its not baby boomers, water, your skill that has gotten y'all $ for nothing ...
When Asia ( mainly China ) cool's one small bit (to -2 % from its existing
growth rate 9-10%), its all over ... Finnace gets pulled and money gets
tighter than Summerlove when he loses a bet over an election... Just where
do you think all this equity money has come from to fund Freddy Mac & Fanny Mae ? I shoudl have been a currency trader !!
Anyhow, Lotsa folks will be walk'in around with bloddy noses from those Low
Interest / ARM's .. My guess is The Channel traffic gets a lil light next fiscal year 2006 ..
Big bank take little bank eat:

[cdog]

You guys are sooooo near sighted... Its not baby boomers, water, your skill that has gotten y'all $ for nothing ...
When Asia ( mainly China ) cool's one small bit (to -2 % from its existing
growth rate 9-10%), its all over ... Finnace gets pulled and money gets
tighter than Summerlove when he loses a bet over an election... Just where
do you think all this equity money has come from to fund Freddy Mac & Fanny Mae ? I shoudl have been a currency trader !!
Anyhow, Lotsa folks will be walk'in around with bloddy noses from those Low
Interest / ARM's .. My guess is The Channel traffic gets a lil light next fiscal year 2006 ..
Big bank take little bank eat:
I agree with you. You live in NB, you must know something I don't. Short term arms will eat it hard. As for intrest only loans Who care's if I dont pay off 3k a year on my house. I'd have to loose 250k to break even if I. And at that point I'd still have my 20%. If your under 40 I think your home is better used as a tax write off than a debt to pay off. The average socal resident move's every 3-5 years. The baby boomers will affect things because of CA's big brother tax policy. In fact the county's want to get rid of the property tax protection for the old farts. They are saying it's unfair for the majority who are payin 10x more to live in the same neighborhood. I think it's fuct but fact is with our illegal population spurring out of control and the local goverments absorbing the cost's , they've got to get money from someware. If that goes thru there will be a stampeed out of this state for one group and the next group will take it's place. Kinda like recycling.

[Dave C]

LMAO... no kidding.
ya money will be so tight the US government might actually have to stop borrowing so much to avoid crowding the private sector........ WOW that will make for an interesting read. :wink:
But here we go again, spectulating. Us right wing kooks.... ;) :)
Ya, I should have been a trader too. :mad: my boat wouldn't be so small ;)but then again I have a FRM so maybe it will get bigger some day. All I need is a hedge.....
But at least the trade deficit will go done, as if anyone who matters cares. :hammerhea
You guys are sooooo near sighted... Its not baby boomers, water, your skill that has gotten y'all $ for nothing ...
When Asia ( mainly China ) cool's one small bit (to -2 % from its existing
growth rate 9-10%), its all over ... Finnace gets pulled and money gets
tighter than Summerlove when he loses a bet over an election... Just where
do you think all this equity money has come from to fund Freddy Mac & Fanny Mae ? I shoudl have been a currency trader !!
Anyhow, Lotsa folks will be walk'in around with bloddy noses from those Low
Interest / ARM's .. My guess is The Channel traffic gets a lil light next fiscal year 2006 ..
Big bank take little bank eat:

[It's Only Money]

maybe but when core CPI goes up that may force the feds hand. When and if this happens is anyones guess.
especially since non-core CPI is out of f-ing control, (e.g. energy)
when CPI or other economic activity goes up, rates will follow.
definitely not a question of if, just when.
Prime rate went from 4% to 5.5% in 6 months.
Why do you think non-core CPI is out of control? Energy in particular?

[Ion]

IMHO and others as well, Havasu and all other resort towns, like Palm Springs, are always going to be desireable places to live and for the most part, are exempt from the fundamentals of this article.

[cdog]

IMHO and others as well, Havasu and all other resort towns, like Palm Springs, are always going to be desireable places to live and for the most part, are exempt from the fundamentals of this article.
Do you wanna buy some swamp land? :idea: It's in a resort town. :rollside:

[Ion]

Do you wanna buy some swamp land? :idea: It's in a resort town. :rollside:
No thanks...I think I'll stick with my golfcourse properties.
:D

[Lake Ape]

Famous last words. Interest rates go up 3 points... ka-pow. Nobody will be able to afford that land that isn't being made anymore... even if it is an antique. :220v:
Several Points:
First, it won't matter what interest rates do here in AZ, while it will have a little effect it won't have a huge effect. First we (AZ) have one of the best job markets in the county (RIGHT TO WORK STATE), small businesses and big corps can't get out of CA and into AZ fast enough. The baby boomers are all coming here also, approximatly 42% of all those that move for retirement will come to AZ.
Second, while Nevada (Las Vegas) and Denver even more have seen huge slow downs and even market reversals, like Denver, this will not happen in AZ since we are very limited on where we can build. In Las Vegas the builder's built themselves out of the market and let to many investors. The investor scenario goes like this: An investor buys a house for $200K and six to twelve months later when they close the base price has risen to $250K and they sell for $245K cutting the builder's legs out from under him. In AZ they are turning most all investors away now and putting in the dead restrictions that the home can not sell or be leased out for one year or a $15-50K penalty is assessed and given back to the builder, and there is no way out of this, even on relocations!
Third, while historicaly appraisers, insurance agents, and home builders have been taught that a properties value is 20-30% in the land and rest in the house, this is changing rapidly and is currently at about 35-45% as found in the Appraisal Foundations latest research. This is because they stopped making land and we are still making people.
Fourth, people have been saying that the sky is falling or getting ready to fall for the last 50 years and it hasn't.
Fifth, Newt ain't gonna raise interestes rates any higher 3-5% in the next five years.
Six, Arizona never saw a true reversal in the market in the '80's even when my dad was paying 19%, property values continued to rise.
Water and Snake Oil Salesman are the only problems in AZ.

[riverroyal]

if it corrects 20% ,which is alot,just make sure the home is worth 20% more than you owe,then ride it out.If its worth what you owe and you did a intrest only loan or a loan with a small %rate and short term like anything under 5yrs then your in trouble,,,allotta people are in the situation,house will drop 20% then the rate will go to 7 or 8 and they will have to refi,hard to find a bank giving you money on something that its not even worth the loan amount,,,,my wife is in the homebuilding business,they arent worried,but they are building in cheaper spots,no more million dollars tract home with ocean views,now they are 400000 with cactus views,,,,,

[Dr. Eagle]

Water and Snake Oil Salesman are the only problems in AZ.
Just keep telling yourself that, you'll be fine... :rolleyes:

[Freak]

Just keep telling yourself that, you'll be fine... :rolleyes:
I agree. The price of oil/gas is going to kill. We hit a new record $56. $60 is not far off. Anyone want to guess of next years gas price.....

[Scarab Jet]

no more million dollars tract home with ocean views,now they are 400000 with cactus views,,,,,
Personally, I rather have the Cactus/desert view than the so called ocean view anytime of the day... Now... River view... that's a whole other matter, but "ocean view"... Couldn't care less for it...

[riverroyal]

i can see the ocean everyday,islands all the crap,i went the beach 0 times last year,but I was in havasu maybe 10,,kinda stupid huh,,thsi is where the work is,,,for now,we are leaving soon

[totenhosen]

IMHO and others as well, Havasu and all other resort towns, like Palm Springs, are always going to be desireable places to live and for the most part, are exempt from the fundamentals of this article.
Resort towns are the first places to get hit hard. 2nd homes are usually the first to be sold in bad times.

[Scarab Jet]

i can see the ocean everyday,islands all the crap,i went the beach 0 times last year,but I was in havasu maybe 10,,kinda stupid huh,,thsi is where the work is,,,for now,we are leaving soon
Yup... I live about 4 miles or so from the beach too and it seems that more than 60-70% of the time, all you see is fog anyway... and that cold damp weather. Way overrated, if you ask me.
Lived here in south OC for the past 10 years or so, and been to the beach probably just a couple of times. The RIVER, on the other hand, I find excuses to drive the 270 miles just to get there...
My plan is to do the early retirement on the RIVER ASAP...
Mike

[Flying Tiger]

I agree. The price of oil/gas is going to kill. We hit a new record $56. $60 is not far off. Anyone want to guess of next years gas price.....
$45 to 56 per BBL.

[locogringo]

Someone said they'd take interest only loans again and again...what if the market drops to less than what your outstanding loan balance is? Then you have to come up with the cash for the difference before you can secure that next interest only loan...Not for me unless it is a very special circumstance.
Mike, the key is leveraging your properties show that you consistently have over 20% equity in them. Preferably 30%. This offsets the interest only payment. Now, deferred interest payments is another thing.

[probablecause]

I agree some people dont care if they ever pay it off......
a 375K loan with no money down......
by the time you are done, Tht is almost 3500 a month...
WTF.....
and you cant even find a 375 house anymore....
Kind of like an RV Payment...

[Essex502]

Mike, the key is leveraging your properties show that you consistently have over 20% equity in them. Preferably 30%. This offsets the interest only payment. Now, deferred interest payments is another thing.
Daniel, The point I was making or asking:
Property has interest only loan.
Property value drops due to a market correction/bubble burst(whatever cause) to less than the loan balance.
Equity is now zero.
Interest only loan matures and is due.
Refinance is necessary to replace the interest only loan.
Interest rates may have moved to an undesirable level.
Now what?

[SoCalOffshore]

I discussed some of these issues this morning on CNBC's Squawk Box. Too early I might add. :)

[Scarab Jet]

I discussed some of these issues this morning on CNBC's Squawk Box. Too early I might add. :)
If I may ask... Who R U? I watch CNBC throughout the day and had no idea that a fellow ***boater was part of their program...

[ChumpChange]

In AZ they are turning most all investors away now and putting in the dead restrictions that the home can not sell or be leased out for one year or a $15-50K penalty is assessed and given back to the builder, and there is no way out of this, even on relocations!
Huh? Please explain.

[Freak]

$45 to 56 per BBL.
How do you come to that #?

[callbob4homes]

I have been reading this thread since the start and I must say, there are some very well informed people on this board. There are however, some very vivid imaginations at work. First of all, and keep in mind, these are only my opinions as a REALTOR in Arizona, alot of this market cycle depends on where you live. In parts of Cal. and for the most part now the Las Vegas market, the market is softening due to overbuilding and over inflated prices, and the median income not being able to support that type of pricing. The National Association of Homebuilders/Wells Fargo Housing Opportunity Index rank 325 metro areas and track new and resale housing prices as well as chart the measurability of the average household to buy a home at the current mortgage rates. 20 of the 30 worst markets are in California and Florida. San Diego scored 54 making it the second least affordable area in America right behind Salinas Ca. (where do all those lettuce pickers live?) Phoenix came in with a score of 111. 27 of the markets studied were overvalued and 29 were undervalued. Want a good buy? Salt Lake City is the most underpriced market at 23% under fair market value. What does this mean? Beats the shiat out of me, but if you are doing or anticipate doing an interest only loan at the top of what you "think" you can afford, better put some money away for a rainy day, or better yet pay a little something on your principal every month. Personally I just did an interest only loan on a golf course home that has comparative homes in the same gated subdivision selling for 15K more than I paid and I don't close until Wed. Instant equity? Do I see these homes falling that far to put me in a bind? No, but this is a resale home and not a new build either. This is the only gated subdivision in this newer area (homes built from 2001 on) and should hold and gain because of that. I guess what I am saying is do your homework (or have your agent hopefully) don't buy way more house than you can afford if the rates start climbing (?) and put some back to your principal. (even if you have a conv 30 yr fixed, you will be amazed how much money that will save you) LOCATION, LOCATION, LOCATION. It is not just a catchy thing we agents say, it really does make a difference. Investors? The days of picking up that nice house for 125K and renting it out for 1000 a month are pretty much gone from this area now. Lots and lots of rental signs all over the place and empty houses. These guys better hope the market at least stays even until they sell if they bought last year. This is a very interesting market right now from my standpoint, have to wait and see how it pans out I guess, but at least in the Arizona market, I don't see any "sky is falling" mentality.
Damn I need to go rest now :sleeping:

[wsuwrhr]

Originally Posted by SoCalOffshore
I discussed some of these issues this morning on CNBC's Squawk Box. Too early I might add.
If I may ask... Who R U? I watch CNBC throughout the day and had no idea that a fellow ***boater was part of their program...
No shit,
why didn't you mention it to us ***boaters who are concerned?
Brian

[totenhosen]

Huh? Please explain.
It is placed on the deed by the builder. Another thing they have been doing in some communties is saying that the property can not be used as a rental otherwise they will fine you.
I already found my way around both of these items.

[callbob4homes]

It is placed on the deed by the builder. Another thing they have been doing in some communties is saying that the property can not be used as a rental otherwise they will fine you.
I already found my way around both of these items.
There is some feeling in the Real Estate legal community, that this "may" not be enforceable. To my knowledge it has not been legally tested yet, but is has kept out some investors. Although I know for a fact, that some companies have sold some to "in house" entities like supers and other employee types. As far as the rental thing, some HOA's feel that too many rentals will hurt the asethetics (sp) and lead to a downgrading of the subdivision. Which when you see how some renters treat property is quite understandable.

[Dr. Eagle]

Daniel, The point I was making or asking:
Property has interest only loan.
Property value drops due to a market correction/bubble burst(whatever cause) to less than the loan balance.
Equity is now zero.
Interest only loan matures and is due.
Refinance is necessary to replace the interest only loan.
Interest rates may have moved to an undesirable level.
Now what?
The Answer:
You're
DOOOOOOOOOOOOOOOOOOOOOOOOMED!!!!!!!!!!!!!
Seriously... you are... :eat:

[TOBTEK]

I really DIDN't want to pipe in on this one BUT.....
Believe it or not the US gov isnt stubid, When they see uncharacteristically high rates of rapid growth, like we are all seeing right now, they need to slow it down....right? So looking back over the last 50 yrs what is the average home mortgage interest rate? its 7% ! Rates will tick up to around 7% again and hover between 6 and 7%....by the way they hit 6% today. SO how else can The US GOV curb inflation?????? whats been all over the new or the last yr......OIL, its now over a dollar a gallon for unrefined crud oil. the us people WILL crub spending, if it was previously 35.00 a tank in their mini vans and now its 50.00, if it was 100.00 a month for heating their house with their oil furnice and now it 180.00 a month, ect. People wont be spending as much for entertainment...dinners, movies, toys for the children, new plasma screens, new DVD players, ect. And we all do know that mortgage rates arent predicated by Mr Greenspan...RIGHT? The mortgage rates are dictated by the 10yr bond market, which has been hovering in the mid 4% range. The US Gov KNOWS that IF they allow the retail mortgage rates to clime into the 8,9-10% range things will EXPLODE! I do not think they will allow this to happend.
As said above coutless times, They arent making anymore land in SO-CAL. while hard for some us to realize, WE LIVE IN PARADISE! Take a look on the weather station, where in MN its -40 degrees and its 72 degrees here in SO-CAL. Over the next 5 years over 1 million more people are predicted to be moving into SAN DIEGO county, and only 350,000 more new homes will be built....the ole law of supply and demand will prevail! I personally was worried a few month back when things were stagnent in our neighborhood, there were 14 homes in a four block area four sale from mid 700K to over 1m. We put our house on the market and it sold TWICE in 10 days, and since EVERY house on our street has sold (4) . People have ALLOWS been afraid of the "BUBBLE" remember when we were kids and our parents were paying 45K for home, and sold it 10 years later for 80K. I bought my first home in escondido (1991)for 142,500.00 at the start of the adjustment period, and sold it in 2000 for 250K . Stocks go up and down, so will the housing market at times. BUT when we all look back to this time TEN yrs from now I guarantee we will ALL be saying " I wish Id bought those other 10 houses and rented them out.....they have doubled in value!" LOOK AROUND at the worlds millionairs and Billionairs.....most of them made it in REALESTATE! HOW many of us have lost our butts buying and selling homes??????

[Rev. Williams]

My $.02 from the lending world....
I've been working as a financial analyst for one of the largest lenders in the US for 9 years now and I track just about everything brought up in this thread and I can say this.... In the next 3-4 years there will be major refi's going on or an unpresidented number of foreclosures. During this past refi and purchase boom 73% of all loans have been 5 & 7 year ARMS and most with an intro "Teazer" rate. What this means is that people are being qualified based on this teazer rate and are just gambling that their income will soon cover the future payments or that they can refi their way out to a better rate in a few years. If rates go up even 2% this will bust 1000's of people and they'll have nowhere to go. Also since many homeowners found this new equity gain in the home they have gone to the Lines of Credit (seconds) to payoff debt, purchase cars and boats! :D but this rate is based on a prime plus factor so when rates go here, they'll feel a huge increase in that payment. And the funny thing is, most rebuild that credit card debt just as fast as they've paid it off. So now they're in a deeper hole.
Personally I'm waiting this storm out. There is a value for everything outside of supply and demand..... It's a quality of life value. At what point is a home in SoCal worth it? 500K for a 1200 sq ft track home ?? Ya Right!! Who will have a 200K a year income and want to live in a track home surrounded by illegals and the other losers infilltrating the SoCal area?? With technology making work available from just about any location the time will come were a CEO can live on a hill in Montana and run his company from his basement. I for one have been born and raised here in north LA county and as soon as I can I'll make the break. To me having a nice community and a life to live is far better the just making it through life here.

[Dr. Eagle]

To me having a nice community and a life to live is far better the just making it through life here.
I'm in the same place. I'd love to take the 500K of equity I have now and go someplace with a nice laid back lifestyle to live a more relaxed life. I hate the fast lane! :idea:

[cdog]

My $.02 from the lending world....
I've been working as a financial analyst for one of the largest lenders in the US for 9 years now and I track just about everything brought up in this thread and I can say this.... In the next 3-4 years there will be major refi's going on or an unpresidented number of foreclosures. During this past refi and purchase boom 73% of all loans have been 5 & 7 year ARMS and most with an intro "Teazer" rate. What this means is that people are being qualified based on this teazer rate and are just gambling that their income will soon cover the future payments or that they can refi their way out to a better rate in a few years. If rates go up even 2% this will bust 1000's of people and they'll have nowhere to go. Also since many homeowners found this new equity gain in the home they have gone to the Lines of Credit (seconds) to payoff debt, purchase cars and boats! :D but this rate is based on a prime plus factor so when rates go here, they'll feel a huge increase in that payment. And the funny thing is, most rebuild that credit card debt just as fast as they've paid it off. So now they're in a deeper hole.
Personally I'm waiting this storm out. There is a value for everything outside of supply and demand..... It's a quality of life value. At what point is a home in SoCal worth it? 500K for a 1200 sq ft track home ?? Ya Right!! Who will have a 200K a year income and want to live in a track home surrounded by illegals and the other losers infilltrating the SoCal area?? With technology making work available from just about any location the time will come were a CEO can live on a hill in Montana and run his company from his basement. I for one have been born and raised here in north LA county and as soon as I can I'll make the break. To me having a nice community and a life to live is far better the just making it through life here.
I'm impressed with your vision. I think you nailed it to a tee. Some people here are living in the clouds. Resort towns. :squiggle:

[lucky]

alright - here is what is happing in my realm -- :) i divorced my ex ( whom had no motivation ) got re married - after two years work out a house deal - was able to buy a home on five prime acres for about 60 under market ( private party ( took it as /is and had to put a foundation under the home ( modular ) my finacing was owner at 5% for five years! with that being said - i have been very worried about the state of our economy - luckily i'm high on the food chain at work ! ( not that they couldn't get rid of me ) lol but i felt comfy buying a house last year even though i know waters will be rough !! so cleaned the place up , and just put a foundation under it - houses currently our in the 600,00 range - so i'm still equity ahead - I'm rolling my house into a fixed rate morgage as we speak - along with my bills - ( buckling down ) my theory is in five years - the market will be signifinetly higher and i'd rater be at 5.75 percent on a fixed Now - then at 10 on a arm - lmao - it sure is going to bite people in the ass - credit card companys should not offer home morgages lmao

[cdog]

alright - here is what is happing in my realm -- :) i divorced my ex ( whom had no motivation ) got re married - after two years work out a house deal - was able to buy a home on five prime acres for about 60 under market ( private party ( took it as /is and had to put a foundation under the home ( modular ) my finacing was owner at 5% for five years! with that being said - i have been very worried about the state of our economy - luckily i'm high on the food chain at work ! ( not that they couldn't get rid of me ) lol but i felt comfy buying a house last year even though i know waters will be rough !! so cleaned the place up , and just put a foundation under it - houses currently our in the 600,00 range - so i'm still equity ahead - I'm rolling my house into a fixed rate morgage as we speak - along with my bills - ( buckling down ) my theory is in five years - the market will be signifinetly higher and i'd rater be at 5.75 percent on a fixed Now - then at 10 on a arm - lmao - it sure is going to bite people in the ass - credit card companys should not offer home morgages lmao
If your planning on stayin there then yes. Seems to me if you ever want a bigger house you should just build it there on your property. I like the 10 year fixed for most people right now, 2 tenths higher than a 5 year is a good deal. If you lived in a cracker jack box house with no land and was planning to move within a year or two i'd say keep it where it is.

[Essex502]

My $.02 from the lending world....
I've been working as a financial analyst for one of the largest lenders in the US for 9 years now and I track just about everything brought up in this thread and I can say this.... In the next 3-4 years there will be major refi's going on or an unpresidented number of foreclosures. During this past refi and purchase boom 73% of all loans have been 5 & 7 year ARMS and most with an intro "Teazer" rate. What this means is that people are being qualified based on this teazer rate and are just gambling that their income will soon cover the future payments or that they can refi their way out to a better rate in a few years. If rates go up even 2% this will bust 1000's of people and they'll have nowhere to go. Also since many homeowners found this new equity gain in the home they have gone to the Lines of Credit (seconds) to payoff debt, purchase cars and boats! :D but this rate is based on a prime plus factor so when rates go here, they'll feel a huge increase in that payment. And the funny thing is, most rebuild that credit card debt just as fast as they've paid it off. So now they're in a deeper hole.
Personally I'm waiting this storm out. There is a value for everything outside of supply and demand..... It's a quality of life value. At what point is a home in SoCal worth it? 500K for a 1200 sq ft track home ?? Ya Right!! Who will have a 200K a year income and want to live in a track home surrounded by illegals and the other losers infilltrating the SoCal area?? With technology making work available from just about any location the time will come were a CEO can live on a hill in Montana and run his company from his basement. I for one have been born and raised here in north LA county and as soon as I can I'll make the break. To me having a nice community and a life to live is far better the just making it through life here.
And just think...a bill in winding its way thru congress to tighten Bankruptcy. When all these folks fail, where are they gonna' go? Debtors prison?

[lucky]

If your planning on stayin there then yes. Seems to me if you ever want a bigger house you should just build it there on your property. I like the 10 year fixed for most people right now, 2 tenths higher than a 5 year is a good deal. If you lived in a cracker jack box house with no land and was planning to move within a year or two i'd say keep it where it is.
lol - I'm planning on staying the rest of my life :) i originally thought that i would wait for four years and start building to finial on the fifth year - but I'm still fearing a recession - so - i figured lock in and punt !lol
I have house plans already ;)

[SoCalOffshore]

Originally Posted by SoCalOffshore
I discussed some of these issues this morning on CNBC's Squawk Box. Too early I might add.
No shit,
why didn't you mention it to us ***boaters who are concerned?
Brian
Just a Schiada boat owner. :D

[ChumpChange]

Just a Schiada boat owner. :D
WOW, I got to get me one of those.

[riverroyal]

you spelled etc wrong,,,,,,,,,by the way im home know,stop by,im jacked up,wanna rent a boat?ha

[sorry dog]

I hear the real estate market in Regina, SK is good place to put your money. Nice relaxed lifestyle where you have plenty of time for ***boat.

[ChumpChange]

I'm in the same place. I'd love to take the 500K of equity I have now and go someplace with a nice laid back lifestyle to live a more relaxed life. I hate the fast lane! :idea:
So is this what happened to Dr. Eagle?
I'm sure some members will be deleting things out of this thread.:D

[AirtimeLavey]

So is this what happened to Dr. Eagle?
I'm sure some members will be deleting things out of this thread.:D
Dude, this thread is 2 1/2 years old. There was no bubble burst. He was talking 30 - 50% drop in values. That hasn't happened yet either. Yes, there's some depreciation going on, but not 50%. The market is hit hard right now with really slow sales due to some of the reasons he stated and some others no one saw coming. Affordability is a big problem, but I'd be stunned to see 50% drop. 20 -30% seems more likely, although we haven't even reached those numbers yet. Of course, no one has a crystal ball, I could be wrong.
It is definitely a buyers market if you have the means and a good negotiator. Otherwise, it's still very much a location by location thing. LA Times just reported yesterday about an increase in LA County medians. What everybody's really hurting from right now is slow sales from buyers still sitting on the sidelines, and the tight lending which is finally starting to loosen little by little.
As for this thread, if you bailed in early 05, you missed some more gains. Of course if you bailed this year or in the near future, you may have given some of those gains back. The sky's really only fallng for those in RE like agents and lenders and the periferral services and those homeowners who got in over their heads. That's my optimistic/realist take, and I'll stick to it. Don't like it, but I'll stick to it. :D

[ChumpChange]

Dude, this thread is 2 1/2 years old. There was no bubble burst. He was talking 30 - 50% drop in values. That hasn't happened yet either. Yes, there's some depreciation going on, but not 50%. The market is hit hard right now with really slow sales due to some of the reasons he stated and some others no one saw coming. Affordability is a big problem, but I'd be stunned to see 50% drop. 20 -30% seems more likely, although we haven't even reached those numbers yet. Of course, no one has a crystal ball, I could be wrong.
I'll respond to this tomorrow as I'm going to go fight some traffic right now.
30-50%? It's out there. In fact, I know of a couple developers who were asking an average of $700,000 per house and were selling them at that price too. The bank got tired of waiting to be repaid so they forced the borrower to drop the prices fot he houses to about $450,000. Is there any profit in the developer at that point? NO. But what does the bank care. That sales price will cover the loan. Sounds like a pretty big drop to me. :idea:
You can say that is for a specific scenario and not across the board. Yes. But what if you lived in a neighboring house? It's a reality.

[uLtRADeNniS]

I'll respond to this tomorrow as I'm going to go fight some traffic right now.
30-50%? It's out there. In fact, I know of a couple developers who were asking an average of $700,000 per house and were selling them at that price too. The bank got tired of waiting to be repaid so they forced the borrower to drop the prices fot he houses to about $450,000. Is there any profit in the developer at that point? NO. But what does the bank care. That sales price will cover the loan. Sounds like a pretty big drop to me. :idea:
You can say that is for a specific scenario and not across the board. Yes. But what if you lived in a neighboring house? It's a reality.
Agreed!
I will also play here later.. time to go fight some traffic as well!

[AirtimeLavey]

I'll respond to this tomorrow as I'm going to go fight some traffic right now.
30-50%? It's out there. In fact, I know of a couple developers who were asking an average of $700,000 per house and were selling them at that price too. The bank got tired of waiting to be repaid so they forced the borrower to drop the prices fot he houses to about $450,000. Is there any profit in the developer at that point? NO. But what does the bank care. That sales price will cover the loan. Sounds like a pretty big drop to me. :idea:
You can say that is for a specific scenario and not across the board. Yes. But what if you lived in a neighboring house? It's a reality.
Yep, that's about a 35% drop, and you will see those scenarios, particulary with spect builders. Everybody's got isolated horror stories. A couple neighbors like that won't kill you, unless it's the majority and so far, it's not. There are some neighborhoods suffering more from foreclosures and REO sales than others, and they are seeing some drop. RE is a biatch right now for sure. I just can't see 50% drops as a norm or widespread. Hope I'm right. :)
On a side note, I just sold a house only dropping a little less than 4 % off list. Made my clients made lots of money from the apprec. in the past few years, and now we're in escrow on a deal I negotiated down 27% (it was first listed at 689k and we're in at 500K). My clients have locked in their massive gains from the past few years, and are taking advantage of the buyers market to get into a bigger house. They have the means and were sensible about it. They upgraded their house nicely and kept very care of it and as a result, we were able to get top of market for it. They'll be in their new house for years. They've done very well in this market. I know of other investors now looking at bundles of REOs and are going to make a killing.

[OSidePat]

Lets put it this way .....if your not selling who gives a darn.and if you bought your home in LA San diego or orange county its not going to tank as bad as other areas of SoCal and as for SoCal comparied to the rest of the country we are going to be much better off

[77charger]

problem is all the fancy loans are just about gone lenders are tighter so how is a someone with a 100k income going to afford a 500k house or more realisticly?.I am sure there are alot of those out there and some who need to sell their homes.
In todays oc register a 70k drop in the median price of a home and expect it to get worse.

[AirtimeLavey]

problem is all the fancy loans are just about gone lenders are tighter so how is a someone with a 100k income going to afford a 500k house or more realisticly?.I am sure there are alot of those out there and some who need to sell their homes.
In todays oc register a 70k drop in the median price of a home and expect it to get worse.
Not sure what the current median in OC is, but let's say it's 550k (I'm sure it must be higher). The example you give is down 12 %. Think it will do that x4?

[CA Stu]

Dude, this thread is 2 1/2 years old. There was no bubble burst. He was talking 30 - 50% drop in values. That hasn't happened yet either. Yes, there's some depreciation going on, but not 50%. The market is hit hard right now with really slow sales due to some of the reasons he stated and some others no one saw coming. Affordability is a big problem, but I'd be stunned to see 50% drop. 20 -30% seems more likely, although we haven't even reached those numbers yet. Of course, no one has a crystal ball, I could be wrong.
It is definitely a buyers market if you have the means and a good negotiator. Otherwise, it's still very much a location by location thing. LA Times just reported yesterday about an increase in LA County medians. What everybody's really hurting from right now is slow sales from buyers still sitting on the sidelines, and the tight lending which is finally starting to loosen little by little.
As for this thread, if you bailed in early 05, you missed some more gains. Of course if you bailed this year or in the near future, you may have given some of those gains back. The sky's really only fallng for those in RE like agents and lenders and the periferral services and those homeowners who got in over their heads. That's my optimistic/realist take, and I'll stick to it. Don't like it, but I'll stick to it. :D
Ninja please.
"Peripheral" for one thing.
Do you understand how medians are calculated? That should give you a clue as to the fact that only the topmost part of the market is moving anything, the rest of the market is dead.
Congratulations! You just made my list of the Koolaid drinkers of RE.
The realist realtors on this board are few and far between....
Thanks
CA Stu

[ChumpChange]

RE is a biatch right now for sure. I just can't see 50% drops as a norm or widespread. Hope I'm right. :)
Correct, in a macro view, 50% will not happen. People only analyze what is around them. They only care what is going on in their neighborhood as that is what affects them. If you're way out in the IE/Riversippi area, you will see 50%.
I would love to give some great scenarios but unfortunately due to what I do and Privacy reasons, I can't. Those drops ARE out there and somewhat widespread. If you lump those drops in with the rest of SoCal, you'd think it's not that bad though.
One can spin it any way that they want.

[ChumpChange]

I'd still like to know my answer to post #110. Where did Dr. Eagle go?

[cdog]

http://www.ocregister.com/money/ocregister-median-sales-1893717-www-homes
:eek:
Tuesday, October 16, 2007
Orange County home prices and sales
DataQuick
Comments 0| Recommend 1
For the month of September, sales for all types of Orange County home sales decreased 43.7 percent. The median sales price decreased 9.5 percent. The median is where half the homes sold for more and half for less. Types of homes selling, as well as home value changes, cause the median to change.
Take a look at the numbers from the previous two months:
August
July
Sort the table by clicking on the labels at the top of each column.
"Change" is based on comparison to same period one year ago.
Community Zip Median Change Sales Change
Aliso Viejo 92656 $511,000 -4.5% 42 -52.8%
Anaheim 92801 $460,000 -16.4% 21 -36.4%
Anaheim 92802 $483,500 -22.1% 8 -61.9%
Anaheim 92804 $467,500 -19.3% 29 -40.8%
Anaheim 92805 $475,000 -14.4% 11 -72.5%
Anaheim 92806 $527,500 -14.2% 7 -78.1%
Anaheim 92807 $617,500 -12.7% 23 -25.8%
Anaheim 92808 $527,500 -23.9% 22 -33.3%
Brea 92821 $600,500 7.2% 13 -45.8%
Brea 92823 $825,000 12.1% 4 -33.3%
Buena Park 90620 $525,000 -11.0% 11 -71.1%
Buena Park 90621 $506,000 -12.8% 16 -50.0%
Corona del Mar 92625 $2,075,000 21.3% 8 -60.0%
Costa Mesa 92626 $606,000 -11.1% 21 -41.7%
Costa Mesa 92627 $552,500 -23.8% 18 -50.0%
Cypress 90630 $536,500 -4.4% 26 -39.5%
Dana Point 92624 $2,275,000 156.2% 4 -50.0%
Dana Point 92629 $845,000 -15.4% 27 22.7%
Foothill Ranch 92610 $675,000 2.4% 7 -53.3%
Fountain Valley 92708 $558,000 -16.6% 25 -37.5%
Fullerton 92831 $465,000 -33.6% 14 -48.1%
Fullerton 92832 $510,500 -8.1% 6 -60.0%
Fullerton 92833 $545,000 -6.8% 28 -53.3%
Fullerton 92835 $780,500 18.0% 7 -58.8%
Garden Grove 92840 $405,000 -32.3% 24 -33.3%
Garden Grove 92841 $500,000 -14.5% 11 -54.2%
Garden Grove 92843 $479,000 -18.8% 10 -58.3%
Garden Grove 92844 $408,000 -26.5% 7 -66.7%
Garden Grove 92845 $550,000 -6.7% 11 -42.1%
Huntington Beach 92646 $546,250 -25.0% 31 -40.4%
Huntington Beach 92647 $602,500 -11.4% 20 -47.4%
Huntington Beach 92648 $765,000 -23.5% 35 -12.5%
Huntington Beach 92649 $710,000 -22.7% 25 -19.4%
Irvine 92602 $620,000 -25.7% 18 0.0%
Irvine 92603 $920,000 5.6% 9 -62.5%
Irvine 92604 $461,000 -29.0% 14 -51.7%
Irvine 92606 $587,500 -17.8% 11 0.0%
Irvine 92612 $484,500 -23.3% 17 54.5%
Irvine 92614 $613,000 12.6% 20 -16.7%
Irvine 92618 $452,500 -27.0% 12 71.4%
Irvine 92620 $707,500 -27.4% 17 -66.7%
Ladera Ranch 92694 $829,000 0.0% 25 -69.5%
La Habra 90631 $404,000 -19.2% 26 -66.2%
La Palma 90623 $700,000 -2.8% 8 0.0%
Laguna Beach 92651 $1,300,000 -35.8% 25 4.2%
Laguna Hills 92653 $510,000 -17.7% 19 -48.6%
Laguna Niguel 92677 $787,500 10.1% 46 -50.0%
Laguna Woods 92637 $267,500 -8.7% 43 16.2%
Lake Forest 92630 $425,250 -30.9% 24 -66.2%
Los Alamitos 90720 $845,000 -4.9% 6 -66.7%
Midway City 92655 $512,500 -14.6% 4 -33.3%
Mission Viejo 92691 $564,500 -14.5% 36 -37.9%
Mission Viejo 92692 $610,000 -10.2% 33 -48.4%
Newport Beach 92660 $1,537,500 13.9% 24 -7.7%
Newport Beach 92661 $3,460,000 164.2% 5 25.0%
Newport Beach 92662 $2,400,000 394.8% 1 0.0%
Newport Beach 92663 $532,000 -75.9% 9 -35.7%
Newport Coast 92657 $5,708,250 342.5% 18 20.0%
Orange 92865 $540,000 -7.7% 23 -4.2%
Orange 92866 $570,000 -23.0% 7 40.0%
Orange 92867 $631,500 -5.7% 27 3.8%
Orange 92868 $428,500 -10.4% 9 -50.0%
Orange 92869 $490,000 -28.0% 16 -65.2%
Placentia 92870 $570,000 -7.3% 20 -64.3%
Rancho Santa Margarita 92688 $515,000 -3.6% 49 -29.0%
San Clemente 92672 $750,000 0.7% 14 -61.1%
San Clemente 92673 $887,500 -16.7% 28 -24.3%
San Juan Capistrano 92675 $1,100,000 52.8% 22 -51.1%
Santa Ana 92701 $411,000 44.5% 16 -73.8%
Santa Ana 92703 $384,750 -33.9% 11 -70.3%
Santa Ana 92704 $525,000 -15.9% 15 -78.3%
Santa Ana 92705 $785,000 15.1% 13 -53.6%
Santa Ana 92706 $585,000 -7.1% 7 -75.0%
Santa Ana 92707 $405,000 -28.3% 16 -67.3%
Seal Beach 90740 $730,500 -40.4% 11 -42.1%
Stanton 90680 $431,500 9.2% 9 -64.0%
Trabuco/Coto 92679 $975,000 22.3% 36 -28.0%
Tustin 92780 $555,000 -7.9% 20 -45.9%
Tustin 92782 $859,000 31.1% 23 -4.2%
Villa Park 92861 $1,050,000 -14.3% 4 33.3%
Westminster 92683 $574,500 -5.0% 32 -43.9%
Yorba Linda 92886 $825,000 8.4% 31 -54.4%
Yorba Linda 92887 $805,000 -11.0% 13 -31.6%
All resale houses $655,000 -3.7% 942 -50.1%
All condominiums $419,000 -4.8% 415 -43.9%
All new homes $520,000 -31.1% 286 -1.4%
All homes $570,000 -9.5% 1,643 -43.7%

[Havasu1986]

http://www.ocregister.com/money/ocregister-median-sales-1893717-www-homes
:eek:
Tuesday, October 16, 2007
Orange County home prices and sales
DataQuick
Comments 0| Recommend 1
For the month of September, sales for all types of Orange County home sales decreased 43.7 percent. The median sales price decreased 9.5 percent. The median is where half the homes sold for more and half for less. Types of homes selling, as well as home value changes, cause the median to change.
Take a look at the numbers from the previous two months:
August
July
Sort the table by clicking on the labels at the top of each column.
"Change" is based on comparison to same period one year ago.
Community Zip Median Change Sales Change
Yorba Linda 92887 $805,000 -11.0% 13 -31.6%
A house on the street behind me was asking 890K and sold for 875k in 1 month. 30 day escrow. GONE. ;)

[mbrown2]

Wow...look at those number for the Newport area...still seems location matters and in some cases can cause it to be unfeathered for the most part..

[totenhosen]

I've got actual examples of houses even in the LA area selling for less than 30% than they were sold for less than 2 years ago.
Riverside and San Bernardino counties more than 50%.
A source I have at a lender says when they take a property back they are immediately listing it for 80% of the outstanding loan balance. Starting in Jan it will be 70% or less.

[totenhosen]

Wow...look at those number for the Newport area...still seems location matters and in some cases can cause it to be unfeathered for the most part..
High priced areas can be very deceiving as homes vary greatly in size, new build, waterfront etc. Also they tend to have fewer sales.

[talkinghead]

Lets put it this way .....if your not selling who gives a darn.and if you bought your home in LA San diego or orange county its not going to tank as bad as other areas of SoCal and as for SoCal comparied to the rest of the country we are going to be much better off
The DC area is almost totally insulated from this downturn, so there are areas that will be better off than So Cal.

[cdog]

A house on the street behind me was asking 890K and sold for 875k in 1 month. 30 day escrow. GONE. ;)
On average the sales are within 3-5% of asking price because those who are motivated price their home correctly and those who are jokers sit and blame the agents, market, Bush, buyers, lenders, newspaper adds and so on. The buyers are out there. I myself have an offer in on a Scottsdale home. We're on the 3rd counter and my offer is 25% off of peak pricing. They’ve come down 60k so far. My goal is a conforming loan for the best possible rates.

[talkinghead]

RE in Temecula still seems pretty strong to me, but I think much of that comes from Camp Pendleton.
Also I think Standard Pacific may be the 1st large builder that goes under.

[cdog]

Wow...look at those number for the Newport area...still seems location matters and in some cases can cause it to be unfeathered for the most part..
My mom owns dirt over looking crystal cove. I was told today it'll be paid off this year and it's worth 4x's what she paid. Crazy! But people with money, alway's have money, And stay away from boats.:)

[SB]

Ninja please.
LMAO
Bad RE here. People out of work, taxes and insurance going up. Houses not selling. 2 year inventory sitting here.

[Pepperkornski]

Correct, in a macro view, 50% will not happen. People only analyze what is around them. They only care what is going on in their neighborhood as that is what affects them.
One can spin it any way that they want.
A recession is when your neighbor loses his job.
A depression is when you lose your job.

[plaster dave]

A recession is when your neighbor loses his job.
A depression is when you lose your job.
HAHAHA

[mbrown2]

My mom owns dirt over looking crystal cove. I was told today it'll be paid off this year and it's worth 4x's what she paid. Crazy! But people with money, alway's have money, And stay away from boats.:)
That's cool...but what about he Herbsts?....seems they have a couple boats...:)
Good luck on the AZ move....we did the same thing about 4 months ago...20-25% off peak here in AZ and were able to do conforming....Also, helped that we sold our place in Cali for pretty close to asking in about 3 weeks.

[mbrown2]

High priced areas can be very deceiving as homes vary greatly in size, new build, waterfront etc. Also they tend to have fewer sales.
I hear you...but look at the appreciation %'s....even with small volume those appreciation %'s are unreal...definitely vapor money until you run the comps on your shack across the street from the 2.5mil pad....it can only help and not hurt...
Well...it might hurt the guy that just built the highest price pad in the neighborhood...but in this market...every peak pad is a little lower then it was in 05.

[wright27]

Interesting, however it seems that there are more and more people and less and less property to go around. I think that part of the problem is the developers, they should slow the new housing growth to keep the market stabilized.
I agree, but it will never happen. I work with one of the top 5 largest new home builders, and if there is money to made they will make it.

[cdog]

That's cool...but what about he Herbsts?....seems they have a couple boats...:)
Good luck on the AZ move....we did the same thing about 4 months ago...20-25% off peak here in AZ and were able to do conforming....Also, helped that we sold our place in Cali for pretty close to asking in about 3 weeks.
There's acceptations to every rule.
Do you still talk to Missy and Jeremy?
We'll have to get together and catch a punk show in PHX. The Edge has good updates and info on shows. I hear Social D will be back in town in December.

[mbrown2]

Do you still talk to Missy and Jeremy?
We'll have to get together and catch a punk show in PHX. The Edge has good updates and info on shows. I hear Social D will be back in town in December.
Yep, still talk to them...just saw them a couple weeks ago...they are doing well...I helped Jeremy sell the stoker on these boards just last week.
I am getting tix for that show....definitely have to hook up a pre-show beer at the Library...and then stumble over to the Marquee.

[cdog]

Yep, still talk to them...just saw them a couple weeks ago...they are doing well...I helped Jeremy sell the stoker on these boards just last week.
I am getting tix for that show....definitely have to hook up a pre-show beer at the Library...and then stumble over to the Marquee.
Sounds good. Tell them we said hi. I'll look you up when we're in town.

[AirtimeLavey]

Ninja please.
"Peripheral" for one thing.
Do you understand how medians are calculated? That should give you a clue as to the fact that only the topmost part of the market is moving anything, the rest of the market is dead.
Congratulations! You just made my list of the Koolaid drinkers of RE.
The realist realtors on this board are few and far between....
Thanks
CA Stu
Chicken little, please! Thanks for the spell check. I'm usually better than that, but was typing fast last night and didn't have time to proof it.
Yep, working in RE, I have a very good understanding of medians and averages and comps and highs and lows, etc. I also know when there's hype from people who don't read the whole article(s) or understand the real point of the article(s) or base their assessments of the whole economy or parts thereof on what's happening in their little piece of the world. I look more for statistical info like CDog posted before I state an opinion. That doesn't mean I can't or haven't been wrong, but that I don't just go with the mob drama of the day. I'm far from a koolaid drinker if you've noticed any of my posts on any other topics.
I guess my point is that RE has been and will be one of the best, if not the best long term investments (and at times short term as well) out there. It will cycle. It is cycling. What's funny to me is to see people come on here and say, " see, I told you the market was going down." Duh. There are people on here who sold in 03 and 04 claiming the sky was falling then. They lost out on 2 more years growth because of their panic. Right now RE can be a good investment if you do your homework. I know that makes your head spin, but I doubt you can find one realtor or investment advisor that will dispute that. Now, let me clarify before you run that one out of control. I'm not saying real estate across the board in all areas.
I'm saying don't panic and believe the hype until you see the numbers for yourself. I'm one of those guys that needs proof before I jump to conclusions. Many here just form opinions based on what friends say they think is going on, without real backup information. You tell me who's the real koolaid drinker? :idea:
Yes, I'm more of a big picture guy, looking more at the macro. Definitely there are stories here and there as CDog's post shows, it's different in different areas. At least lets address it that way and not make out a few examples as the "bubble bursting" everywhere. According to those stats, NPB is in a world of hurt, if that number was reported properly. The "All homes" number is -9.5%. I know there is more downside coming.
Overall, I'm not a koolaid drinker, but definitely I'm a "the glass is half full" kinda guy. Interesting that many realtors on here don't even bother expressing an opinion. It's their livelyhood and they don't want to stick their neck out. That's their prerogative. At least I'm out here throwing out an opinion, right or wrong. If you post about boats, it's always nice to have folks in the business post what they think.
Working in RE, it blows right now, but let's keep everything in perspective when we're throwing opinions out there. Damn, I hate long posts...

[totenhosen]

Interesting that many realtors on here don't even bother expressing an opinion. It's their livelyhood and they don't want to stick their neck out. That's their prerogative. At least I'm out here throwing out an opinion, right or wrong. If you post about boats, it's always nice to have folks in the business post what they think.
They use to a few years ago and told most people that said a decline was forthcoming were idiots. I don't see too many people qouting Gary Watts anymore and is 20% appreciation for So-Cali is in the bag.

[cdog]

I knew it was time to liquidate real estate when everyone was talking about how it would never go down.
I know there will be widow in the near future where everyone will have given up hope for it to come back and that's when I'll jump back in.
All real estate is local. There will be markets doing well even in today's market.
Everyone needs a place to rest there head at night.
Loosing $500 a month on a rental is not an investment.
Fundamentals are key.
I have a no BS approach to this whole thing and have been very honest about it. That said. It has hurt my business a little because I'm a realest and not a pie in the sky kind of guy. People 9 times out of 10 will list their home with a guy or gal who tells them what they want to hear. So in the defense of the pie in the sky crowd. They've got bills to pay too and it takes a decent amount of $$$$ to keep the doors open in the real estate business. Sellers and buyers are more informed than ever before in history. With risk comes loss or rewards. Ownership has its privileges.

[AirtimeLavey]

Two guys that I think always have good input and probably know more than most (defintely more than me). :D
They use to a few years ago and told most people that said a decline was forthcoming were idiots. I don't see too many people qouting Gary Watts anymore and is 20% appreciation for So-Cali is in the bag.
There's always the spinners, as CAStu likes to keep lists on.
I knew it was time to liquidate real estate when everyone was talking about how it would never go down.
I know there will be widow in the near future where everyone will have given up hope for it to come back and that's when I'll jump back in.
All real estate is local. There will be markets doing well even in today's market.
Everyone needs a place to rest there head at night.
Loosing $500 a month on a rental is not an investment.
Fundamentals are key.
I agree.

[yamamoto]

I think real estate will bottom out when there is a parity between the opportunity cost of renting a home versus buying a home.
For example, go to realtor.com and search for a home in your neighborhood, then on the same website, search for rentals in the same neighborhood. Figure out what it cost to own the home monthly with tax, ins, gardner, hoa, etc. Remember the down payment used for purchase could be earning interest in the bank at approx 5%. This is the total cost of owning a home.
Now what does it cost to rent the same home? In my neighborhood, the total monthly outlay for rent is about 50% of the total monthly cost to own. Some may say renting is throwing money away every month, until I look at the interest I am getting on my equity I sold from my house and parked it in the bank. Also, my neighbors may be paying down their loan each month, but the property values are also falling, this is not building equity.
Obiously there are some tax advantages to owning vs. renting.
Historically, the monthly cost to rent, was just slightly lower than the monthly cost to own, but the barrier to owning was the down payment, but funny financing took care of the down payment. But now, people will need down payments again.
So either rents (on homes) will climb, or prices will fall until there is parity.

[totenhosen]

I think real estate will bottom out when there is a parity between the opportunity cost of renting a home versus buying a home.
For example, go to realtor.com and search for a home in your neighborhood, then on the same website, search for rentals in the same neighborhood. Figure out what it cost to own the home monthly with tax, ins, gardner, hoa, etc. Remember the down payment used for purchase could be earning interest in the bank at approx 5%. This is the total cost of owning a home.
Now what does it cost to rent the same home? In my neighborhood, the total monthly outlay for rent is about 50% of the total monthly cost to own. Some may say renting is throwing money away every month, until I look at the interest I am getting on my equity I sold from my house and parked it in the bank. Also, my neighbors may be paying down their loan each month, but the property values are also falling, this is not building equity.
Obiously there are some tax advantages to owning vs. renting.
Historically, the monthly cost to rent, was just slightly lower than the monthly cost to own, but the barrier to owning was the down payment, but funny financing took care of the down payment. But now, people will need down payments again.
So either rents (on homes) will climb, or prices will fall until there is parity.
Personally I don't think there will ever be a parity in So-cal. If it does great, than I'll buy some investment properties unless I can get a better ROI elsewhere.

[CA Stu]

Chicken little, please! Thanks for the spell check. I'm usually better than that, but was typing fast last night and didn't have time to proof it.
Yep, working in RE, I have a very good understanding of medians and averages and comps and highs and lows, etc. I also know when there's hype from people who don't read the whole article(s) or understand the real point of the article(s) or base their assessments of the whole economy or parts thereof on what's happening in their little piece of the world. I look more for statistical info like CDog posted before I state an opinion. That doesn't mean I can't or haven't been wrong, but that I don't just go with the mob drama of the day. I'm far from a koolaid drinker if you've noticed any of my posts on any other topics.
I guess my point is that RE has been and will be one of the best, if not the best long term investments (and at times short term as well) out there. It will cycle. It is cycling. What's funny to me is to see people come on here and say, " see, I told you the market was going down." Duh. There are people on here who sold in 03 and 04 claiming the sky was falling then. They lost out on 2 more years growth because of their panic. Right now RE can be a good investment if you do your homework. I know that makes your head spin, but I doubt you can find one realtor or investment advisor that will dispute that. Now, let me clarify before you run that one out of control. I'm not saying real estate across the board in all areas.
I'm saying don't panic and believe the hype until you see the numbers for yourself. I'm one of those guys that needs proof before I jump to conclusions. Many here just form opinions based on what friends say they think is going on, without real backup information. You tell me who's the real koolaid drinker? :idea:
Yes, I'm more of a big picture guy, looking more at the macro. Definitely there are stories here and there as CDog's post shows, it's different in different areas. At least lets address it that way and not make out a few examples as the "bubble bursting" everywhere. According to those stats, NPB is in a world of hurt, if that number was reported properly. The "All homes" number is -9.5%. I know there is more downside coming.
Overall, I'm not a koolaid drinker, but definitely I'm a "the glass is half full" kinda guy. Interesting that many realtors on here don't even bother expressing an opinion. It's their livelyhood and they don't want to stick their neck out. That's their prerogative. At least I'm out here throwing out an opinion, right or wrong. If you post about boats, it's always nice to have folks in the business post what they think.
Working in RE, it blows right now, but let's keep everything in perspective when we're throwing opinions out there. Damn, I hate long posts...
"Livelihood". :D
I don't think anyone ever gets in at the exact bottom and then sells at the absolute peak.
I still think it's premature to talk about buying any RE as an investment at this point. Doesn't make any sense, and by your own admission, a RE professional (with bad spelling :D ) "there is more downside coming".
Thanks
CA Stu

[yamamoto]

Personally I don't think there will ever be a parity in So-cal. If it does great, than I'll buy some investment properties unless I can get a better ROI elsewhere.
your right, parity my be a dream, but it is sure hard to want to pull money out of the bank, spend more monthly to catch that falling knife.

[totenhosen]

your right, parity my be a dream, but it is sure hard to want to pull money out of the bank, spend more monthly to catch that falling knife.
I can see your point. But if you already own a home and want to move to another one the falling price scenario isn't as much as a concern since you are already in the market and would have a lose on paper on either the palce you are currently in or the one you buy.

[riverfun]

renting is a short term solution to a long term problem. If you never buy when your 55 or 60 you will be paying 3000.00+ per month when you could have taxes and insurance only (providing somebody actually got a fixed rate mortgage). I bought my current residence from my former landlord, at the time I was paying him 1000.00 per month, when I bought my payment went up to 1350.00 per month impounded. I now have neighbors that pay 2400.00:eek: per month and guess what I still pay 1350.00:)

[yamamoto]

renting is a short term solution to a long term problem. If you never buy when your 55 or 60 you will be paying 3000.00+ per month when you could have taxes and insurance only (providing somebody actually got a fixed rate mortgage). I bought my current residence from my former landlord, at the time I was paying him 1000.00 per month, when I bought my payment went up to 1350.00 per month impounded. I now have neighbors that pay 2400.00:eek: per month and guess what I still pay 1350.00:)
You are absolutely right, renting is not a good long term strategy, owning your own home is the best hedge against inflation. However, real estate is in deflation, so renting during a deflationary period will allow me to get more for my money when I decide to step back into the market.
Is there a theoritical point where one cannot justify the current price of real estate? How about the fact that household incomes only rose about 15-20% over the past 5 to 7 years but the cost of housing rose at least 200%. Or if housing affordibility is at an all time low, does it make sense to purchase?
I just chose to step off the real estate elevator, and let it drop a few floors before I step back on.

[yamamoto]

I can see your point. But if you already own a home and want to move to another one the falling price scenario isn't as much as a concern since you are already in the market and would have a lose on paper on either the palce you are currently in or the one you buy.
You are right, but we would like to move into a bigger home, without the property tax pain that goes with it.

[riverfun]

Yamamoto you are correct in not wanting to buy in this market. I thought you were trying to wait until buying was on par with renting as far as the cash outlay goes. I dont think it will ever happen in a area like so-cal, maybe the midwest etc.

[talkinghead]

I have wanted to move up to a bigger house out of need, but it seems difficult to do that anytime but in particular right now.
I say buy a new house this winter, rent your current house for a year or two then sell.

[talkinghead]

"Redefining Failure and Success
We’ve all heard about the 25 year old mortgage broker making $15,000 a month. Or the 22 year old agent with a high school diploma raking in six-figures a year simply for showing houses. We’ve also heard about a 24 year old investor that went $2.2 million in debt with an income of less than $40,000 a year. The theme? Getting rich quick isn’t enough. Getting rich young became the new standard. Forget about education because school is for elites who care about issues surrounding the world. Street knowledge and the love for the almighty dollar became the new Mammon."