Talked to Thornberg

[latesummer2008]

Cyphire, that was awesome! You spelled it out for all the HACKS here, who THINK they know what they are talking about, but don’t. Without a Buyer, you don’t have a transaction. PERIOD…. And buyers are hesitant with good reason. Market Psychology has changed, and there are very few houses selling compared to the amount of inventory. Once this FINALLY becomes evident to sellers, prices will DROP (And I think dramatically and faster than most believe). I think the numbers coming out now for APRIL (Dataquick)are the first real slap in the face for people serious about selling. It starts to steamroll from here.Inventory will BALLOON even more this summer. Anyone buying now, will be upside down in a matter of months.
As you mentioned, nobody is looking at the MANY houses that AREN’T selling, just the reported prices of the FEW houses that are selling. Median prices may be going up, but VOLUME is DROPPING DRAMATICALLY, in many areas.
Those saying the high end is not, and will not be affected, are unrealistic. High End Buyers are generally more educated than Lower End Buyers, and will be the first to stop purchasing. So what are we left with? The Real Estate Food Chain getting eaten from both the Top and the Bottom.

Thank you for your insight into what is really going on. Unfortunately, many of the regulars on this board just like to hear themselves and each other talk, while they haven’t a clue. Way to cut through all the nonsense and tell it like it is.

Bravo!

http://westsideremeltdown.blogspot.com

[latesummer2008]

Cyphire, that was awesome! You spelled it out for all the HACKS here, who THINK they know what they are talking about, but don’t. Without a Buyer, you don’t have a transaction. PERIOD…. And buyers are hesitant with good reason. Market Psychology has changed, and there are very few houses selling compared to the amount of inventory. Once this FINALLY becomes evident to sellers, prices will DROP (And I think dramatically and faster than most believe). I think the numbers coming out now for APRIL (Dataquick)are the first real slap in the face for people serious about selling. It starts to steamroll from here.Inventory will BALLOON even more this summer. Anyone buying now, will be upside down in a matter of months.
As you mentioned, nobody is looking at the MANY houses that AREN’T selling, just the reported prices of the FEW houses that are selling. Median prices may be going up, but VOLUME is DROPPING DRAMATICALLY, in many areas.
Those saying the high end is not, and will not be affected, are unrealistic. High End Buyers are generally more educated than Lower End Buyers, and will be the first to stop purchasing. So what are we left with? The Real Estate Food Chain getting eaten from both the Top and the Bottom.

Thank you for your insight into what is really going on. Unfortunately, many of the regulars on this board just like to hear themselves and each other talk, while they haven’t a clue. Way to cut through all the nonsense and tell it like it is.

Bravo!

http://westsideremeltdown.blogspot.com

[cyphire]

Thanks LS… I guess time will tell whether we are right or wrong! I have a friend in the Agoura/Calabasas/across the canyon from Malibu area who has had his house on the market for a long, long time (6-8 months?). He has it priced at 2004-5 prices and has only dropped it in price by 50K. He has a reverse amort. loan, but really wants to get 200-300K out of the house.

He has had one serious offer but they dropped out. I don’t see him selling his house. If he had dropped it 100K after a few weeks (or 150K), he might have sold 6 months ago and still pocketed 200K and have not paid 6 month of interest / taxes / real estate showings!

Unlike him, I took the opinion that I would rather sell at 2004 prices and get out than the 2005 price which was the top of the market. I have put my money where my mouth is (by selling in Dec 2006). It was an easier decision for me than most because the move made our commute easier. And I’m on the sidelines in the stock market also (mostly).

I agree with you. I think that the bubble has been letting air out (it can’t burst because people can’t sell their houses like stocks and they also need somewhere to live), but the air will be deflating very, very fast this summer. I think that late summer 07 will very, very bad and the holidays will be far worse (a dead time anyway)….

I would rather pay top dollar for an awesome rental, than double that on a mortgage right now!

[cyphire]

Thanks LS… I guess time will tell whether we are right or wrong! I have a friend in the Agoura/Calabasas/across the canyon from Malibu area who has had his house on the market for a long, long time (6-8 months?). He has it priced at 2004-5 prices and has only dropped it in price by 50K. He has a reverse amort. loan, but really wants to get 200-300K out of the house.

He has had one serious offer but they dropped out. I don’t see him selling his house. If he had dropped it 100K after a few weeks (or 150K), he might have sold 6 months ago and still pocketed 200K and have not paid 6 month of interest / taxes / real estate showings!

Unlike him, I took the opinion that I would rather sell at 2004 prices and get out than the 2005 price which was the top of the market. I have put my money where my mouth is (by selling in Dec 2006). It was an easier decision for me than most because the move made our commute easier. And I’m on the sidelines in the stock market also (mostly).

I agree with you. I think that the bubble has been letting air out (it can’t burst because people can’t sell their houses like stocks and they also need somewhere to live), but the air will be deflating very, very fast this summer. I think that late summer 07 will very, very bad and the holidays will be far worse (a dead time anyway)….

I would rather pay top dollar for an awesome rental, than double that on a mortgage right now!

[NotCranky]

Cy & Late
I think there are actually just a few of us that are guessing that a big chunk of the recent appreciation is coming out soon. Most are of the “It will be long and slow camp”. I have no pride on the line. It’s just fun to opine. I guess I am going to choose to watch the value of my house decline. Right now I could sell and try to time the bottom but I think my opportunity to do so will be over soon. I did time the top an sold my other property which enabled me to pay cash for my current property and house which I built(am finishing).It is absolutely not that I don’t understand the writing on the wall. We like where we live and the yard is a gently rolling 20 acres with views to Downtown and Point Loma. We are permitted to build another house here.I am not sure we wan’t to give that all up. It’s 45 minutes from down town.

Bugs,if you read this would you be so kind as to state wether you think homes on acreage will hold up a little better or not? Not that it is going to change my mind.

My guess is that my property will go from about $800k to $425k. I guess I am ready to live with that.Obviously in theory it could go down to zero but at that point I think we have more important things to worry about!My goals since my first child was born are to be debt free and live in what is hopefully a safe and sound enviornment.My financial goals now are to aquire sources of passive income.The second house would produce income right away or my wife’s parents could live there if they wanted to. Actually I would love to have them closer to my family.
So anyway,I guess we get excited about doing things our own way and nothing is going to change that!
Best wishes

[NotCranky]

Cy & Late
I think there are actually just a few of us that are guessing that a big chunk of the recent appreciation is coming out soon. Most are of the “It will be long and slow camp”. I have no pride on the line. It’s just fun to opine. I guess I am going to choose to watch the value of my house decline. Right now I could sell and try to time the bottom but I think my opportunity to do so will be over soon. I did time the top an sold my other property which enabled me to pay cash for my current property and house which I built(am finishing).It is absolutely not that I don’t understand the writing on the wall. We like where we live and the yard is a gently rolling 20 acres with views to Downtown and Point Loma. We are permitted to build another house here.I am not sure we wan’t to give that all up. It’s 45 minutes from down town.

Bugs,if you read this would you be so kind as to state wether you think homes on acreage will hold up a little better or not? Not that it is going to change my mind.

My guess is that my property will go from about $800k to $425k. I guess I am ready to live with that.Obviously in theory it could go down to zero but at that point I think we have more important things to worry about!My goals since my first child was born are to be debt free and live in what is hopefully a safe and sound enviornment.My financial goals now are to aquire sources of passive income.The second house would produce income right away or my wife’s parents could live there if they wanted to. Actually I would love to have them closer to my family.
So anyway,I guess we get excited about doing things our own way and nothing is going to change that!
Best wishes

[latesummer2008]

Cyphire. A little clarification for you, since you are relatively new here :

1)SD Realtor – Good, informative and very professional.

2)sdrealtor – Bad, irresponsible, and unfortunately, the stereotypical Realtor.

Check the posts, and see for yourself.
DO NOT CONFUSE the two.

http://westsideremeltdown.blogspot.com

[latesummer2008]

Cyphire. A little clarification for you, since you are relatively new here :

1)SD Realtor – Good, informative and very professional.

2)sdrealtor – Bad, irresponsible, and unfortunately, the stereotypical Realtor.

Check the posts, and see for yourself.
DO NOT CONFUSE the two.

http://westsideremeltdown.blogspot.com

[Bugs]

Cypher,

I like reading what both the above realtors have to say, even though I’m not in lock step with either of them. Both of them have said things that have registered with me and influenced my opinions.

In answer to your question about homes on acreage, I think the distance to employment is the bigger factor; and I think that the outlying properties will see more effects than the properties closer to services and employment.

However, I don’t think the type of buyer who moves a young family onto a 20 acre parcel out in the outskirts is the type of buyer whose primary interest is leveraging their home into a “fantastic wealth building system”.

[Bugs]

Cypher,

I like reading what both the above realtors have to say, even though I’m not in lock step with either of them. Both of them have said things that have registered with me and influenced my opinions.

In answer to your question about homes on acreage, I think the distance to employment is the bigger factor; and I think that the outlying properties will see more effects than the properties closer to services and employment.

However, I don’t think the type of buyer who moves a young family onto a 20 acre parcel out in the outskirts is the type of buyer whose primary interest is leveraging their home into a “fantastic wealth building system”.

[cyphire]

Bugs – I think you wanted to direct that to Rustico not me but I agree that distance is probably most significant (sorry Rustico). Understand that its just my opinion, I am not a sage! In fact I have very mixed feelings.

Also LateSummer2008 thanks for the clarification – I will take it under advisement.

Rustico (and all) check this out! Just got a somewhat proof that my getting out of dodge was a good move. I’ve written before that my house in the north county (2 acres – 4800ish feet) was sold in Dec 2006. By then the market was dead (according to the local realtor and I believe them). I didn’t even know how bad things were in the fall of 2006 (only 6 months ago or so) but they were dead. Notice you never really heard anything about that in the media.

Anyway I put my house up at a very excellent price (what I thought) 2,100,000 – 2,300,000. I sold it for 2,050,000 and many people thought I was crazy – I should have held out for more. Anyway, while the breaking even (roughly) as I bought for 2M was ok with me, I wasn’t prepared to keep doing the long distance drive to La Jolla for my child’s school.

There is now a house on the market same as mine but with a sports court and pool house (I didn’t have either) and a not as good view. What pisses me off (not for them – I hope they can sell they are awesome people) – is that the house has been on the market for 6 months and it keeps coming up as new on market (3 times). The MLS lets you change the ‘days on market’ which is complete crap. Now it is 2 days on market which isn’t true (maybe they changed brokers but I don’t think so and shouldnt matter). This is fraud. A home purchase is your most important decision and the data availible in the market is crap.

Anyway the houses are not custom, they are top level production (read: tract homes!) – but they actually were very, very nice. The quality of the finishes, etc. were very good (comparatively to lets say Carmel valley houses which are crap).

So anyway (too much coffee) This house started at 2.3-2.5M, then to 2.1-2.3M, now its at 1.9M-2.2M. Wow. If an offer comes in at 1.8+ they will probably take it (I don’t know for a fact but I’m sure that in today’s market they wouldn’t have a value range if they weren’t expecting to get the bottom of it.

What is freaking me out is that I called this market in our neighborhood. I thought that the 2.05M was a fair but low price. The price my neighbors got 1 year before was 2,550,000 ( 15% bigger and better view), I had competition because the exact house as mine (with a better yard, less view) was priced 200K more than mine and had gone on the market 3 months before ours. They finally sold 3 months after us for 2,100,000. To think that the other house currently on the market might sell for 1.9M or so means that prices are falling very, very fast. There are NO serious buyers our there. We had 3 showings in 10 weeks – which is amazingly bad considering how well priced the house was. Now this might not be indicitive of all markets, from my perspective getting out at any reasonable price was worth it.

So….

2005 (late) 2.50M
2006 (late) 2.05M
2007 (early) 2.10M
2007 (????) 1.9M-2.2M value range on market over 6 months and what will it finally sell for?

[cyphire]

Bugs – I think you wanted to direct that to Rustico not me but I agree that distance is probably most significant (sorry Rustico). Understand that its just my opinion, I am not a sage! In fact I have very mixed feelings.

Also LateSummer2008 thanks for the clarification – I will take it under advisement.

Rustico (and all) check this out! Just got a somewhat proof that my getting out of dodge was a good move. I’ve written before that my house in the north county (2 acres – 4800ish feet) was sold in Dec 2006. By then the market was dead (according to the local realtor and I believe them). I didn’t even know how bad things were in the fall of 2006 (only 6 months ago or so) but they were dead. Notice you never really heard anything about that in the media.

Anyway I put my house up at a very excellent price (what I thought) 2,100,000 – 2,300,000. I sold it for 2,050,000 and many people thought I was crazy – I should have held out for more. Anyway, while the breaking even (roughly) as I bought for 2M was ok with me, I wasn’t prepared to keep doing the long distance drive to La Jolla for my child’s school.

There is now a house on the market same as mine but with a sports court and pool house (I didn’t have either) and a not as good view. What pisses me off (not for them – I hope they can sell they are awesome people) – is that the house has been on the market for 6 months and it keeps coming up as new on market (3 times). The MLS lets you change the ‘days on market’ which is complete crap. Now it is 2 days on market which isn’t true (maybe they changed brokers but I don’t think so and shouldnt matter). This is fraud. A home purchase is your most important decision and the data availible in the market is crap.

Anyway the houses are not custom, they are top level production (read: tract homes!) – but they actually were very, very nice. The quality of the finishes, etc. were very good (comparatively to lets say Carmel valley houses which are crap).

So anyway (too much coffee) This house started at 2.3-2.5M, then to 2.1-2.3M, now its at 1.9M-2.2M. Wow. If an offer comes in at 1.8+ they will probably take it (I don’t know for a fact but I’m sure that in today’s market they wouldn’t have a value range if they weren’t expecting to get the bottom of it.

What is freaking me out is that I called this market in our neighborhood. I thought that the 2.05M was a fair but low price. The price my neighbors got 1 year before was 2,550,000 ( 15% bigger and better view), I had competition because the exact house as mine (with a better yard, less view) was priced 200K more than mine and had gone on the market 3 months before ours. They finally sold 3 months after us for 2,100,000. To think that the other house currently on the market might sell for 1.9M or so means that prices are falling very, very fast. There are NO serious buyers our there. We had 3 showings in 10 weeks – which is amazingly bad considering how well priced the house was. Now this might not be indicitive of all markets, from my perspective getting out at any reasonable price was worth it.

So….

2005 (late) 2.50M
2006 (late) 2.05M
2007 (early) 2.10M
2007 (????) 1.9M-2.2M value range on market over 6 months and what will it finally sell for?

[temeculaguy]

Cypher, just read all your posts, love em, your balanced analysis is great and you aren’t listing a link to another site or selling anything, keep posting.

I agree with Bugs about both realtors bringing some valuable info to the boards but not being in lockstep with them at all times. But then again, I always agree with Bugs and am the current president of the BUGS fan club.

Rustico, your fan club is now forming, you are the man with the plan. You paid cash with your equity for a 20 acre spread with a view and zoning for additional buildings for the relatives or income, you are a god. Who cares where prices go, you win. Sure, kids will probably always have to go to school on your birthday, but you will be sitting pretty in the future.

[temeculaguy]

Cypher, just read all your posts, love em, your balanced analysis is great and you aren’t listing a link to another site or selling anything, keep posting.

I agree with Bugs about both realtors bringing some valuable info to the boards but not being in lockstep with them at all times. But then again, I always agree with Bugs and am the current president of the BUGS fan club.

Rustico, your fan club is now forming, you are the man with the plan. You paid cash with your equity for a 20 acre spread with a view and zoning for additional buildings for the relatives or income, you are a god. Who cares where prices go, you win. Sure, kids will probably always have to go to school on your birthday, but you will be sitting pretty in the future.

[cyphire]

If Rustico is happy to be there for the next 10-20 years I agree – he is a god and made the right decision. If he’s like me and is spoiled and gets bored being somewhere too long then he should buy a boat! I’m very impressed by Bugs, Rustico, and LateSummer2008 on these blogs – I guess i’m going overboard blogging – but this is my first time every blogging and it’s fun!

[Author]

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