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July 13, 2006 at 6:28 AM #6860July 13, 2006 at 6:35 AM #28226lindismithParticipant
Am at work, and so can’t read the article too well via their online PDF, but suffice it to say, it’s a GREAT headline!
Anyone with an ounce of IQ will think twice about buying if those types of headlines continue.
July 13, 2006 at 7:37 AM #28228powaysellerParticipantI jumped too soon…it’s the same story that we had online yesterday. It came on their online newspaper at late morning, and then made it to print today.
Here’s the e-mail I sent the writers:You two did a fabulous job covering a difficult topic. You provided a complete, factual account. Although you will probably get hate mail from real estate bulls, you can rest assured that you covered the facts.
I liked the personal stories of the 3 sellers, which show us the true reality out there today: homes are taking longer to sell, driving down prices. Sellers are getting frustrated.
I would like to see an improvement in the quality of the real estate professionals interviewed. That part of the article was tainted toward the bull case, and those people made many wrong statements.
John Karevoll said that between now and fall, pricing will go up and down. He doesn’t see the drama in the price declines. Ask him to explain how the median is up so much, when individual home prices are down over 10%. I can
give you many examples of people coming to closing, owing money. Most who bought in 2004 and 2005 and are selling, are losing money today. This is not a matter of a few homes going up or down in price. Real estate doesn’t work like that. It’s a slow moving ship, and the ship has reversed course.Ask Karevoll to dig inside the numbers. Ask him , “Isnt’ it true John that median is up because sales are skewed to the higher end because the first time buyer is priced out due to rising interest rates and high home prices. Isn’t it true that each individual home is worth less today than it was last winter?”
My thought is that Karevoll wants to toe the real estate line, since the NAR is one of his biggest clients. He would be uninterested in providing data to show you the true state of the market.
Steve Doyle, Brookfield Homes’ president, is likewise interested in spinning the facts. He says that ‘When you look at economics, we still have positive job growth”.
He’s right, but it’s a much smaller positive than it was a few years ago. Most employment in the last few years was in construction, real estate, and lending, and in retail and restaurants as people took our the home equity of ever rising home prices to go on shopping sprees. As housing cools, thse industries that have been our major growth, will keep weakening. Our manufacturing sector is shrinking. Nokia is now thinking of leaving. The 44,000 people per year leaving has left many vacancies for doctors, police
officers, engineers, cashiers. I keep seeing Hiring signs at so many stores. I read that high housing prices are making it harder for SD to recruit surgeons! The outlook for the San Diego job market is bleak. My hope is that biotech will some day take off again. Our biotech companies
are small, and my friend who is a manager at one of them, is concerned for her job prospects and is interviewing in the other big biotech cities.All in all, a good article, although a little slanted toward the idea that real estate might go up again in the fall. This is not a soft landing, but a landslide.
Schahrzad Berkland
U-T SubscriberJuly 13, 2006 at 7:50 AM #28230JJGittesParticipantHey, according to the UT, prices are only down 1%. So, I guess those two houses that actually sold, while the 22,000 others are sitting on the market, were in fact just a little cheaper. Yippee.
Hey, all in all, like the NC Times article said the other day, it is still a seller’s market. Right? Oh yeah, riiiiiiight.
July 13, 2006 at 7:51 AM #28231JJGittesParticipantHey, according to the UT, prices are only down 1%. So, I guess those two houses that actually sold, while the 22,000 others are sitting on the market, were in fact just a little cheaper. Yippee.
Hey, all in all, like the NC Times article said the other day, it is still a seller’s market. Right? Oh yeah, riiiiiiight.
July 13, 2006 at 8:59 AM #28238ocrenterParticipantthis is the e-mail I submitted this AM.
“We are seeing an increase of inventories to normal levels, but it has dramatically changed the psychology of the market,” said Leslie Appleton-Young, chief economist for the California Association of Realtors. “Buyers have more properties to look at, more time to decide.
Mr. Pierce, I’m responding to this outragious lie that was printed in your article today in the Union Tribune. Normally I don’t write to the newspaper, but I am furious to see such blatant lie taken as truth. Inventory of homes are anything BUT normal levels. Inventory of homes are at the highest point ever in San Diego County history. I run a blog named Bubble Market Inventory Tracking and using ziprealty.com’s data, we already passed the historic population adjusted height back in June this year. How can record high in inventory be “normal levels” as quoted by Ms. Appleton-Young???
I have the data to back up what I’m saying. Ms. Appleton-Young just lies about it. You can’t continue to print this kind of trash in your paper and stay reputable. Next time you quote her, please, please ask her why would she describe “record high” inventory as “normal levels?”
Sincerely yours,
July 13, 2006 at 11:11 AM #28248powaysellerParticipantGood for you! The LA Times had more courage, and went to the heart of the matter. I saw the link on Ben’s Blog. The U-T took a conservative stance.
These reporters should really get a realtor’s license and MLS access, so they can research their own stories. They rely on the Dataquick reports, and interviews from Karevoll and Ms. Young. Thus, they are easily misled, and mislead others.
Everything that follows below is credited to my friend, who wishes to remain anonymous.
The biggest disservice that the media is perpetrating on the public is the pounding out of the median price. While mathematically correct, it does NOT tell the whole story. The + $2mil home market is hot. Those buyers are not affected by interest rates, but by stock market returns. There is weakness in the low end market, because those buyers are sensitive to higher interest rates and rising home prices. This reduction in lower end homes sold and increase in $2 mil and up homes, is skewing the median up. [In reality, each home is worth less today than it was in 2005. Most are priced at 2004 values.-my comment]
Some say that our inventory will shrink this fall, as it usually does, and our market health will return. False. Demand is declining. Inventory is not as important as the demand/supply relationship. The months supply is more important than the inventory number, and the months supply is growing. Inventory will drop in September, but so will demand. The adjusting ARMs have the potential to be a real big deal.
Another myth, propagated by economists, is that so few people have ARMs, and so many people own their homes outright, that the $2 trillion of ARMs adjusting will be a blip on the radar. What they fail to realize is that the homes on the market set the value for the entire market.
Let me explain. San Diego has about 1.1 million homes, and 55% are owned by the person living in them. That gives a housing inventory of 750,000 homes. But each year, only about 42,000 homes are sold. That is 6% of the market. (BTW, it also indicates the average San Diegan stays in his home for 13 years.) This year we are on track to sell 30,000 homes. This small percentage of San Diego homes is setting the value for the other 1 million homes.
Now consider, that 60% of San Diegans last year used ARMs. If even half of the listings are ARM sellers, who must sell (or bank REOs or foreclosures, this will impact the resale market severely. This will impact all homeowners, whether their home is paid off or not. The resale market drives the price.
So the next time someone tells you it doesn’t matter about the ARMs because they are only .01% of the market, you say, “Yes, but they are 50% of the resale market, and the resale market sets the price for all homes”.
That’s the end of my myth busting for today.
I sent this to the U-T writers (my 2nd e-mail to them today), and ended with this:
“I hope I have educated you, because you certainly are NOT educating
me!”July 13, 2006 at 11:20 AM #28249aguhoParticipantOCrenter,
Bravo! Great response!
It’s about time for LA-Y to support her arguments with data.Let’s see how she’ll spin her “liberating equity” nonsense,when all those “liberated” homeowners are forced to sell in this declining market.How many will have any of that “liberated equity” left to bring to the closing?
On a side note,I had a real estate agent/mtg.broker in our shop yesterday.He was in a rather somber mood .He tells me that “I need to do a refi soon” His listings are gathering dust and he has not earned a commission in quite some time.He goes on to tell me this gem..”cash out refi’s are the only way that people can make it it here in San Diego “. While I’ve believed this to be true for some time now,it was interesting(or ominous) to hear him say this rather matter of factly.
As I’ve said before,take a look at your own neighborhood and see just how many people have done at least 1 cash out refi(or more) in the last few years.I believe you’ll be astounded(or appalled) at those numbers.
Soft Landing……….impossible
Blood in the streets…….. very possibleaguho
July 13, 2006 at 11:59 AM #28255aguhoParticipantAnother myth, propagated by economists, is that so few people have ARMs, and so many people own their homes outright, that the $2 trillion of ARMs adjusting will be a blip on the radar. What they fail to realize is that the homes on the market set the value for the entire market.
Powayseller,
You are absolutely right.Here in The South Bay, there are thousands of homes that have been built since 2001.There is a very small number of these that are owned free and clear(if any).In fact, a good many of them have larger mtg’s now then when they were originally purchased.
Our house(built in 2003) will be paid off in 5 years.Ten of our 12 neighbors have mtg’s(ARMS) and HELOCS that total more than 500,000.My guess is that NONE of these 10 will EVER own their home free and clear.
As for some of the more mature areas of the South Bay,there are definitely homes that are owned free and clear or have small(120,000 or less )mtgs.However,there are also many that SHOULD be owned free and clear by now,but the homeowners got the FEVER( multiple cash out refi’s),and now they have a big fat mtg.
I can think of nothing worse than “owning” your house for 20 years or more,and now having a 400,000 + mtg.(on a house that originally cost the homeowner 70,000) as you approach age 55.Forget about retirement………
aguho
July 13, 2006 at 12:13 PM #28257LA_RenterParticipantOC Renter,
I also wrote an e-mail to the U-T. That statement really struck a nerve, I noticed on Bens Blog there were about five to six seperate threads all going WTF? It really does show the value of these blogs educating people on the current market wtih both opinion and just cold hard data. I know that Rich makes the point that there is not a conspiracy among the journalist covering RE so lets just hope this is a bit of laziness on the part of the U-T, but there is no way anyone can back up that statement from Ms. A-Y.
July 13, 2006 at 2:29 PM #28266AnonymousGuestI found it interesting. When they highlighted the one lady who owns a condo downtown that is on the market and she made reference to her unit not having a view I couldn’t help but think to myself – I wouldn’t want to be in her shoes. With so many units on the market (supply) what is it then that will make her unit attractive to a buyer?
As far as median prices I’m reminded of the story of the guy who drowned in a river he had calculated was an average of only 12″ deep.
I can’t help but wonder what impact new construction, and more significantly, condo conversions has had on median prices.
As far as the comment about inventories reaching a more normal level it seems like that pendulum swung through the center quite a while back and is more on the side of “high” than anything else. It seems as though there is an elephant in the room and they aren’t looking at it.
July 13, 2006 at 5:02 PM #28282powaysellerParticipantaguho, I admire people who live in their means and get a mortgage much less than they can afford. You are my role model.
You also made a light go off in my head: I read that 60% of San Diego purchases were ARMs, but how many ARM refis do we have? Is it possible that 20% or 50% of ALL San Diego homes are ARM refied????
I remember snooping through the foreclosure database, and found 3 foreclosures in Poway, whose owners bought in 1982 – 1985, and started refinancing all the equity out during the housing boom years. I don’t know what kind of loan they got, but those wouldn’t count as new purchase loans, right?
This ARM thing could be bigger than the $2 trillion. Is it? Does anyone know what is included in the $2 trillion resets in the next 18 months? CA led the nation in ARMs, so how many are in SD County?
July 13, 2006 at 9:31 PM #28309sdrealtorParticipantI told you all it was coming and this is what will finally start to make a difference. Perception becomes reality and perceptions will begin changing. By September/October there will be no denying of what is going on with prices. Still it will take time, so dont expect major price changes anytime soon. But they are coming….
As for the ARM issue, everyone in my circle of friends is pretty conservative, most have 30 year fixed rates and no HELOCS like me. I’m sure there are lots of them out there, I just dont see many of them.
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