[no_such_reality]

That’s easy, it’s just asking price.

I saw that in another thread on here yesterday. link

Basically, there’s a big split in what’s being asked, what they’re getting and and even bigger split between what’s bought, pending to be bought and what didn’t sell.

[no_such_reality]

Ouch. There’s $100K split on asking unsold and asking pending. That’s pretty telling. Those that came off the market as sold are 10% below those that didn’t. The ones that are looking to come off next month are another 5% below that. On top of it, they’re closing in on a 10% drop below their asking price… and back flat to last year.

” The Active inventory has an average asking price of $747,845 while the homes that sold were at an average asking price of $667,336 and the Pending sales had an average asking price of $639,199. Part of this difference is the Actives are a little larger, 1871 sq ft on average versus 1790 sq ft for the sold. “

[no_such_reality]

Salo, like others, I think you’re being smart. As for getting labeled a vulture, well, be Tibetan. 🙂

Someone, that’s me, you and others on this board and elsewhere, are going to have to clean up the wreckage of the overextended buyers.

I like the other suggestion of offering half. Sadly, that sounds about right, now. Many have their asking price skewed. You need to take 20-30% off, just to get to current reality, and adding another 20-30% off, is about what it’ll take to be able to buy, make minor fixes like paint, and hold it for 90 days to get it sold and pay commissions to make it worth doing ($30K or so) or worth riding out without a upside down situation.

[no_such_reality]

How low-ball is it, Salo?

Just how low-ball is low-ball? What percentage off of asking? What precentage off of comps?

I was thinking it’s like the old song, you have to be cruel to be kind. You’ll get labeled a vulture, but in reality, you are probably helping them out.

I thought about that today as I looked at very similar homes with a 30-40% spread on asking price. I think I know how they got there. Some look at sales from December, added 10-20% and wallah, $1.2M. Others looked at December, realized the market has softened and turned and are doing December prices minus 10-20% trying to get out. If I recall December and Q1, these homes were all sitting at that oh-my million number.

I’ve also been wondering if it will be different this time. In previous downturns, prices where fairly sticky on the downside. I’m starting to see signs of a rout. The printed color ads are showing foreclosures being dumped claiming bank’s loss, your gain. Homes that look like they were set to be flipped, are being aborted and put back on the market.

I had a thought for Laura in the off-board thread regarding, the market can’t be determined by what buyers want to pay. I wonder what she would think when she gets an offer contingent on the buyer receiving a satisfactory letter explaining why the buyer should buy her house instead of one of the ten others for sale in the same housing track.

[no_such_reality]

Denial is coming to an end

Some sellers may still be in denial, but the wake up call is coming fast and ugly. In my neighborhood, there’s several homes, needing work no less, at $1.1M to $1.3M. There are also several homes at $799K. When the July and August numbers start showing up as comps, they’ll get their wake up call.

[no_such_reality]

The Buffet Dilemma

Again, a policy like Prop 13’s impact is only felt decades later…

Warren Buffet owns home in Laguna Beach, he bought it back in the day, like 25-30 years ago. Appraised tax value under prop 13 was limited to like $200K, (bought at like $100K or something) currently worth $4,000,000. His neighbors place was taxed at $5,000,000. Hence, Warren paid something like $2264 in property tax and his neighbors tax bill was something like $50,000.

But that isn’t the real problem with Prop 13. The real problem is that property taxes are no longer the domain of the local community, instead going to the general fund to be re-doled out at a statewide level. Hence, property taxes are no longer a local issue, property taxes no longer make the local community better or worse.

[no_such_reality]

Diego, you must be an agent.

[no_such_reality]

Not government, but hey, retiring with 100% pay and benies at 55 is a dang good deal. I love the retirement time bombs all the government unions are negotiating. LA Times article link

For the 25-50% pay increses that people claim, those are individual gains and not same job gains. Essentially, they’re talking about people 1-3 years in the job market compare to people 5-7 years in market. They’ll likely see a 50% increase if they job hop in key categories such as software engineering, etc.

[no_such_reality]

NODs nearing historical average

hmm, statewide, NODs are are 21K per quarter. Historical average is 32K/quarter. Peak in ’96 was 59K.

We went from 12K to 20K in one year as the market turned. The peak of 59K was at the end of the last bust cycle after 6 years of falling prices. If I was in Vegas, I’d wager we’ll beat the 59K Q1 of 2007.

LA Times Article on quarterly defaults Thurday, link

[no_such_reality]

They won’t trade.

Like NY and SF, they’ll do it when it’s the only option in the city and the alternative is a one to two hour commute each way.

However, that doesn’t mean there isn’t a serious market for downtown units. DINKS and single Yuppies are good targets provided downtown generates the high-end jobs in density.

A density of high-end jobs are required so that the DINKS and Yuppies, that in reality are the ones living in SF nd NY downtown, can be, just like SF & NY, only there 50% of the time or less. The rest they’re in Cabo, Jamaica, Vail, ad nausuem.

[no_such_reality]

Is the low end SFRs or condos?

What’s the low-end on SFRs?

In Huntington Beach, it’s $800,000 for a small, severely dated single story 3-2 needing lots of work away from the beach bordering Fountain Valley or Garden Grove. $1M+ for anything move in ready.

But basically, it’s still the same point, basic middle-class homes are $1,000,000.

[no_such_reality]

Low end. Snicker.

Sorry folks, can we re-read that statement.

The low-end is $900,000.

Take a step back and really digest that number and what it means.

[no_such_reality]

Yep LA. That’s the odd point on how out of whack rents and home price have become. People get emotional, can’t discern between want and need.

At the moment, I need a one bedroom, a two is nice it cuts costs with the roomie. What I want? That’s at least a 3-2 with a yard, real yard, no shared walls. etc. Yep, an SFR on a 6000 sq ft lot.

The cost difference? About $4000/month in the OC before taxes. Guess I have to miss out on that “tax savings”.

I could buy and rent out a room, but that’s about $500-$700. Roughly enough to cover the property tax on an SFR.

Of course, over the next ten years, I expect rent growth. But… as rent growth goes, more rentals will be built, it’ll grow at inflation. IMHO.

[no_such_reality]

Apples to apples.

I do this myself whenever someone asks me why I don’t buy.

It’s simple, I rent a townhome, $1950 a month and split it with a friend. The one across the courtyard, same floorplan, sold for $625,000 a while back. HOA on the property is $330. The $330 doesn’t include the special assessment for termite tenting done this year. $3000. The HOA will finance it at 8% over 5 years.

So…

Property tax $625
HOA $330
special assessment $50
———————–
Total $1005

My half of the rent? $975.

[no_such_reality]

Million dollar question.

The buy or wait question is pretty simple with housing since it leverages you so much with current prices.

If housing is going up, you buy.

If it isn’t going up, you wait.

With 20% down, you’re leveraged 5X-to-1. Your gains and losses are magnified 5 times. With a stocks and margin, you’re leveraged 2X to 1. Without margin, it’s a straight 1 to 1.

So all we really have to do is decide if housing is still going to be going up faster than inflation. That’s at least 4% a year.

A flat market means you’re lossing the inflation rate x5.

Down… say 10% whoops, that’s $60K, 50% of your down payment.

So keep it simple, just decide, in ten years, will someone buy that condo for $1,000,000? Literally.

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