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powayseller
ParticipantSales prices are down 10-20% or MORE! My friend who’s a realtor told me his buyer just got a house for $480K, that the seller had paid $540K, so the seller had to bring $60K to closing.
ARMs and foreclosures affect the entire market. We are selling 30K homes this year, in a city with 1.1 million homes. That means those 30K homes set the prices for the other 1 million.
Does Alan Gin ever talk with any realtors, buyers, sellers, to get actual data of what’s going on out in the field?
Another lie: he says the SD economy is resilient. Read my economy thread: 80% of our new jobs in the last 5 years are RE related and mortgage equity withdrawal dependent, and as housing cools, the SD economy will go into recession. Check Cheryl Mason’s report, the Labor Market info Excel file, which I have studied. Also he doesn’t talk about the 44K people per year leaving. I talk to people DAILY when I do my shopping, and have many stories of peole telling me that they know of at least 5-12 people who left SD because of the high cost of living.
ParticipantThe use of the median is the greatest disservice that analysts like Gin, and the media, have perpetrated on the public. Home prices have been falling since 2004, and the median kept going up. Why, I asked, and I found the answer with Bob Casagrand, a real analyst! He explained that the mix of homes sold has changed: this year 10% of sales are high end, while last year it was only 8.5%. So the distribution of homes sold has shifted up, because the rich people ar not affected by rising interest rates and high homes prices as much as the first-time buyer. The first time buyer was squeezed out first.
According to Jim Klinge at http://www.bubbleinfo.com, North County homes are back at 2004 pricing, which is a 20% drop! Yet median is down only 1%. Furtermore, the median was at its peak in November, and has been falling ever since. If you want to use the median, track it month to month. We track GDP and CPI monthly, why does the median have to measured year over year?
Now you have 2 analytical realtors, Casagrand and Klinge, who explained WHY the median was still rising even though home prices were falling. Why couldn’t Gin figure it out???
A better mass price indicator is the Case-Shiller index, or the OFHEO index.
A better indicator than median is also months inventory and HAI. Klinge shows us that months inventory has really risen, to 70 months supply for $1 mil homes in Escondido. Months supply is considered by realtors to be an accurate gauge of pricing, and that’s what they use to advise their clients on pricing. Why doesn’t Gin know that?
Most ARM holders CANNOT refinance. Current ARM rates are about 50% higher than they were a few years ago, and people don’t have the 50% higher income to qualify. They can’t get a 30 year fixed because they don’t have 20% equity. Many refinanced and took HELOCs, further reducing their equity and increasing their debt loads. People got ARMs so they could afford a house, and they took on debt loads of 30% -45% of income, so they cannot qualify for a loan at a higher rate. I would be surprised if more than 1% of exotic loan borrowers qualify for a refinance. I read that 1/4 I/O loans are made to people who grossly misrepresented their income, according to last week’s banking survey. There will be $1 trillion of ARMs resetting nationwide by end 2008, and I figured that 40%, or $400 billion, is in CA. If we assume each ARM is for $500K, that is 800K CA homeowners who cannot refinance, cannot make the new payment, and will default.
So I predict that 800,000 CA homeowners will default on their mortgags over the next 18 months. Why doesn’t Gin analyze this, and tell us his projections for ARM defaults? Why doesn’t he talk about ARMs at all, about option ARMs, I/Os, or foreclosures rising rapidly?
ParticipantSD Realtor, my neighbor has tried to sell her house for a couple months. She held several Open Houses herself, and I spoke with her once for over an hour during one of these events, and nobody came by. I left her a note last week, explaining that she was priced too high, with the following recommendations from http://www.bubbleinfo.com: if you get no traffic, you are >10% too high, if you get traffic and no offers you are 5-10% high, and if you get offers you are in the right range on pricing. She still has not dropped her price, and she is about 25% too high in my opinion. The other neighbor has dropped twice, by $5K or so each time. That one is an inheritance sale, so they are not in a hurry. I am amazed at how slow sellers are to catch on to the falling market. Now I understand why RE is sticky on the way down; it is stubborn sellers.
ParticipantWhy hold on to the condo? Why not sell it and collect interest on the proceeds? I bet you can get that same condo in 5 years for half the price. On top of that, you’ll have 5% annual interest, or an additional 25% of the proceeds. Wow!
If you hold on, you may break even on the cash flow and own a property at half of today’s price. You’ll also be saddled with all the repair bills.
Can you rent a condo downtown? I bet the rental supply in downtown SD will increase in the next few years. What a fabulous way to get to know the area and in which building you’d eventually like to make a purchase.
ParticipantI invite you to rebut the comments I made in my opening thread. Please take them on, one by one, and rebut them.
You and Alan have made vague comments about analyzing data, but have not rebutted my comments, nor given us data to support your conclusions.
Data, please…
July 20, 2006 at 9:10 AM in reply to: Senate Banking Committee Semiannual Monetary Policy Report of the Federal Reserve Board #28972ParticipantExcellent! Thanks. Watch what you can. The Congress people are really laying it on about the economic downturn. Poor Ben, what will he do?
ParticipantThis explains why another writer has been writing the housing stories. Is he leaving because of the high cost of living here?
ParticipantShe will have to discount her house heavily to sell it, but the other people will be discounting heavily too. As long as you buy/sell into the same market, whether it was on the way up or on the way down, you should be ok.
What is more of a concern is whether her husband will still have a job in 2 years. Is his company real estate dependent, or MEW-dependent? I don’t know the answer to that. If he is laid off and forced to sell, then they will wish they had sold at the top of the market and not the bottom.
But as Bugs said, we can’t have everyone escaping the market. We can’t have all 1.1 million homeowners in SD bailout out to escape the housing bubble. So only a few win.
Of course, none of this matters if we start another war in the Middle East. We could all be dead by September.
ParticipantNow I see. They are preparing to ask for government grants for affordable housing, as a way to boost sales.
ParticipantI don’t understand how a “dead cat bounce” is possible in the housing market. It is a big slow moving ship, that does not reverse direction for a couple weeks or a month. Once it moves, it keeps moving for years, in that same trend. Am I missing something?
Participantlindi, what are those supervisors planning to do? Leave San Diego? What is happening to those supervisors can be multiplied by tens of thousands of people next year. When those people leave SD, the stores they frequented will have less business, and so the decline starts. Who said you don’t need a recession to see home prices drop? All you need is home prices to stay flat, so MEW stops, and our construction dependent economy starts the lay offs.
The land costs are a large component of the house price. In our case, land value was 1/3 of sale price at time of sale.
workers comp is a huge cost, 30% of labor pay. So if the well driller charges $100/hr, then $30/hr of that is workers comp. This rate was quoted to me by every sub that I asked. This is why illegals are so much cheaper: subtract FICA, Medicare, and workers comp, and for half the pay they still end up with the same wages.
July 20, 2006 at 12:05 AM in reply to: Why are foreign companies buying our roads and bridges? #28948ParticipantWhen was the last time a US company purchased a government owned asset? Or a private company? Using cash.
ParticipantGold prices are historically correlated with inflation, not with the dollar.
ParticipantNo, and that’s why I switched to foreclosure.com.
The latter updates NODs to Inactive if needed, but they don’t provide a loan history.
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