I am not one who can challenge these people in a credential war, but I do have a few points and a question to follow it all up.
-“PMZ, the Stockton-based brokerage, closed 1,707 home transactions in the second quarter, about 80 percent of them foreclosure sales, said Michael Zagaris, the company’s president. Foreclosed homes are now getting multiple bids and the supply of homes for sale in San Joaquin and Stanislaus counties shrank to 4.9 months in June from 18.2 months a year earlier, he said.
Bank-owned properties attract investors who can rent out the homes for 10 percent of the purchase price annually, said Sean O’Toole, founder of real estate auction Web site ForeclosureRadar in Discovery Bay, California. “Those deals are starting to pop up and putting a floor on the market,” he said. ”
So assuming it is investors that are rushing in to buy those 1707 houses sold in one month by one company at big discounts so they can rent them out, what is that gonna do to area rents? Remember, the population of alot of the central valley areas BOOMed because of bay area people looking to buy a house. Do you really think they are gonna stick around with crazy commutes and mostly crappy schools, and crappy weather so they can rent a house? (“We’re a good $100,000 down,” Imig said. “If we could move without taking a huge bath, we would.” by FB David Imig)
Currently Stockton has a population of ~290000 people with an average of about 3 people per houshold. Meaning there are about 95’000 households in Stockton. One company just sold 1700 properties in one month. Assuming that half of the sales are to investors, since that is who is supposidly saving the market, that means we added nearly 0.9% of the TOTAL number of households to the rental pool, by one company in one month. Now consider that a big reason to live in stockton is that you can own your own home and I cant help but think the rental pool is threatening to turn into an ocean to drown in.
-“Across the state, sales rose for three consecutive months starting in April after 30 straight months of declines, the California Association of Realtors said. About 40 percent of those transactions were foreclosure sales, DataQuick Information Systems reported.”
What a supprise! You mean to tell me that more houses sold in April, May, and June than in Janurary, Feburary and March? To Hell you Say! And those houses are selling for even less than they were at the beginning of the year as prices keep plumeting! So more houses sell when prices are lower, especially in the Spring selling months? WOW, who could have ever seen THAT coming. (sorry, just really tired of ‘suprising’ month over month numbers indicating the “bottom”.)
Which brings me to my question: How many times have you heard people exactly like this call a bottom?
Ever few weeks some reporter writes some story where a few people are quoted saying that investors are jumping in, sales are starting to rise, and a bottom is starting to be observed. A few very smart and respected people get quoted in such a way to imply that now is the time to buy as things will be turning around soon, even though that is NOT what they said. Then the obligitory crack high relator comments by someone who is in the buisness to sell you a house and doesnt believe there is ever a time to not buy a house and there you go.
Notice how they didnt focus on the growing number of foreclosures? They mention there is over 1 million US houses to be foreclosed on, and that CA is the epicenter of it all, especially the central valley, but couldnt talk of falling foreclosure rates which would really signal a true bottom. Why? Could it be that due to the following:
“California led the U.S. in default notices and bank seizures for the 18th straight month in June and had seven of the 10 metro areas with the highest foreclosure rates, according to Irvine, California-based RealtyTrac Inc., which sells default data.”
Tells me that things are getting worse, not better, as more and more houses are going into foreclosure, even if some of the previous REO is finally being worked off.
“Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market, said Ryan Ratcliff, an economist at the Anderson Forecast at the University of California in Los Angeles, and Christopher Thornberg, principal of Beacon Economics LLC in Los Angeles.”
So even the experts quoted here say that at best, the huge discounts will extend into atleast 18 months from now. Assuming we dont fall into a recession that is, or foreclosures dont go up more than the record shattering amounts already observed, or that interest rates dont go up, or that more banks dont either go under get out of the morgage biz all together, or that inflation doesnt get worse, or that the state gov’s huge budget deficits dont result in higher unemployment etc.. So basically, if we dodge every bullet coming our way, and nothing unexpected happens in a crazy wild time, we have nearly 2 years before we may see prices increase.
