Comments on: General Market Observations

By: Mike

Mike — Mon, 03 Mar 2008 22:08:54 +0000

It seems that many people assume that 400K is a good price. Given that not everybody makes close to 200K a year, many people are probably thinking in ‘ranges’.

Nobody seems to even think that prices might fall to high 100’s. However, think again.

Wages will not rise (did you get 10% raise this year?) and inflation will make simple things (like food, gas and clothing) much more expensive. And how much raise do you need to get close to 200K?

Government is mulling plans to make future walk-aways very ‘uncomfortable’.

I know many of you think that prices will rise again soon, or wages will pickup (inflation eating payments), but consider that some people much better informed than you believe otherwise.

Buying now may make you a financial slave for ever, ruin your marriage and maybe even your health…

On the other hand if you don’t believe me, go right ahead, buy that great deal of 500K….

By: Wes

Wes — Wed, 20 Feb 2008 20:01:42 +0000

For housing prices, just looking at arm reset charts, which will keep dumping bank-owned houses on the market, it doesn’t seem like late 2009 before that starts to ease off. The other concern, though is interest rates. You have to keep an eye on those too. They keep talking recession, but inflation is also pressing in.

I made a graph:
http://public.fotki.com/Wezvog.....graph.html

Notice that the total cost of a 400k loan at 6% is the same as the total cost of a 300k loan at 9%. People are trying to hold out for the price bottom, but the total cost bottom… who knows where that is. Just something to keep in mind when everyone is obsessing over purchase price… course if you are paying cash you are golden and can wait for the real bottom.

By: Greg Weston

Greg Weston — Wed, 20 Feb 2008 11:55:31 +0000

Escondido market in northern San Diego market is in freefall:

See:

http://gweston.wordpress.com/2.....ice-drops/

By: North Ga Real Estate

North Ga Real Estate — Mon, 18 Feb 2008 14:16:30 +0000

Lots of foreclosures in Florida and Georgia and for the person who can afford it be a great time to buy a second home for vacation and maybe for retirement. The inventory is high and the rates are good and interest is lower and supose to drop again next month. What a great time to visit these areas and check it out.

It is a good time to actually find homes reduced in price allowing you to get more than you would normally get for that price.

New construction is good in these areas also. Many builders offering reduce cost and incentives.

By: Bander

Bander — Mon, 18 Feb 2008 08:49:58 +0000

Any comments on Lakewood area? My wife and I have been floating around distressed properties and very hesitant to make offers at this point. Agents on both sides seem to be selling the mantra of “it can’t get worse, look at how much it’s been reduced already.” If we don’t see at least 60k reduction in price from previous year, we don’t even walk in. Great site.

By: JerryC

JerryC — Sun, 17 Feb 2008 23:36:44 +0000

Boy, things really look bad out there in Ca. In Massachusetts, it’s slow and ugly. Very few listings in my town, and the surrounding towns, but what’s selling is 20 – 30% below the market high. My zillow value has gone from $600K (in 2006) to $469K today. I’d say that’s pretty ugly. We’re not planning on moving, so I guess it doesn’t matter. In cities like Lowell, Worcester, Lawrence, etc it’s a full fledged foreclosure disaster. We had a really severe downturn in the late 80’s (to 1995) and this one could end up like that, especially if we go into recession and people lose their jobs. Before this ends, I think my home value could fall to $400K. Such is life….

By: Julie

Julie — Sat, 16 Feb 2008 23:59:19 +0000

I fully agree. I have been waiting for prices to come down to buy our next “step up” property. We bought at a reasonable price and only bought what we could afford. So, here we are, qualified buyers with excellent credit, waiting for prices to come down and BOOM! Now all those people who made bad choices before will be doing it again, keeping prices inflated for the rest of us, who bought RESPONSIBLY!

By: Julie

Julie — Sat, 16 Feb 2008 23:55:34 +0000

Hey there – I live in San Pedro and went to 4 open houses last Sunday. In all, I was the only one to walk in and out – didn’t see another soul. When I expressed this to my agent, she said the exact opposite,”People are tired of waiting on the fence, they want to buy, things are picking up.” It’s intriguing to hear how realtors put a spin on everything to make it seem like, “Now’s the time to buy!!!!”
She went on to say that I should be “open minded” to a 5 year loan. After all, it would be “fully amortized”! And in our local paper, the More, this morning, an article by a realtor encouraging to have buyers put a “I’ll sell my house to you, only if I find one myself” contingency. I can tell you first hand, that we’ve tried that and no one will even bother looking at your house with that on the contract.
One final thing, with the new MLS system, has anyone noticed that we no longer get a date for when the property was listed? Or a days on market? Or culmative days on market? I think this is intentional, so that, we, as buyers don’t know if a house has been sitting for a long time. What do you think?

By: rick

rick — Fri, 08 Feb 2008 19:29:57 +0000

I wonder why the agents don’t just tell the sellers to either price it right or there will be no listing.

What’s the point hosting a house that you know will not sell or will not even have buyers visiting? So that you can have some time for yourself?

Until those agents give up their real estate job there will be a stand-off.

By: Richard Ludwig

Richard Ludwig — Thu, 07 Feb 2008 02:22:33 +0000

Here in Newport Beach the prizes are still high and no takers, some of the high price houses in Newport Coast go lower now, still to expensive, the brokers are happy when 1 or 2 people show up at the open houses, there are a lot of owners afraid for the next months because they are over the real value in their loan amounts and most of them have arms. I believe it will need another 20% price dip before people go buying again. Cheap loans is one thing, making it tougher to get them is almost the same as making them more expensive. If you cann’t get them it does not really matter if you can afford them.

By: tbgpalisades

tbgpalisades — Sun, 03 Feb 2008 04:42:25 +0000

It all depends on what it would rent for – that determines the floor. Economists refer to this a ‘intrinsic value’. It’s not the market to speculate on any value other then rental value for the property.

By: HouseHunter

HouseHunter — Sat, 02 Feb 2008 02:05:53 +0000

We have neem looking for houses in the North Orange County area. We found a bank owned house in YL listed at approx $860K. The last time this house sold for $1.2M during 2006. I’m pretty sure we can get it for approx $780K. How much more do you think the market will go down? Do you think this would be a safe buy?

By: EUPHOR1C

EUPHOR1C — Wed, 30 Jan 2008 16:22:20 +0000

Yeah, you really proved your point by making such an ignorant statement.

By: Ben Bittrolff

Ben Bittrolff — Wed, 30 Jan 2008 13:39:11 +0000

Make sure you're sitting down before you fire up these cahrts. Really Scary Fed Charts, Why Bernanke Will Cut Furiously TheFinancialNinja

By: scott

scott — Wed, 30 Jan 2008 02:27:27 +0000

I live in Laguna Beach. You inlanders are totally screwed I would get the hell out if you can and move to the coast. Inland is the worst situation but the people suck and totally deserve it.

By: scott

scott — Wed, 30 Jan 2008 02:24:08 +0000

Buy a house if your in the market dumb dumb. Such girly men. You my Friend ARE THE HERD. Sell at the bottom buy at the top. dumb as nails joe six pack. sorry.

By: court

court — Tue, 29 Jan 2008 23:21:47 +0000

New Conforming Loan Limits to Artificially Support SD Market.

First, I like your website…

Second,
How do you think the conforming loan limit ($417K) revamp to higher limits will affect the San Diego, L.A. and other high price real estate markets and it’s revaluation/correction?

My initial response to this is it really stinks for those millions of us that live in high cost areas (like L.A. and San Diego) that have been waiting for this market correction so prices will come down into an affordable range. Now this bailout comes along and props up the mid to high price range properties because more people can afford them again, and it bails out all the speculators from high interest jumbo loans.

Correct if I’m wrong but I’m thinking, “what a crappy system!”

What are your thoughts on this?

By: California Kid

California Kid — Tue, 29 Jan 2008 03:11:28 +0000

Hey Chuck,

This site has been a real pleasure to read during the last year. I am seeing similar situations in North Orange County (Yorba Linda) where open houses see little to no traffic. Their are 7 houses on my block of about 30 (can we say 25%) that are on the market of which probably 3 or 4 are selling due to financial hardship… the others waited to long to catch the big money. I really enjoyed the government looking to raise the jumbo loan amounts thinking this was the reason for the sagging market??? If people can’t afford a 0% or low, low interest ARM loan without stated income, then what’s the logic behind a higher loan amount on a standard fixed interest rate. Their will most certainly be more downturn in the market as the housing to income ratio is still out-of-line. My estimate for how much the S. California market corrects…. probably about 40% tip-to-tip (highest selling point).

By: Chuck Ponzi

Chuck Ponzi — Sun, 27 Jan 2008 00:45:45 +0000

It seems to be a divided market.

After last weekend, I went to some “regularly priced” open houses (meaning not short sales or bank owned). No one.

Not a soul. Agent’s reps admitted it was worthless way to spend a Saturday.

That’s the opposite of what I saw at the lower-priced end of the market. The ones I saw were in South OC. AV, MV, and SC. It’s a bloodbath in Orange County nearest I can tell.

Chuck

By: southoc

southoc — Sat, 26 Jan 2008 21:30:33 +0000

I’ve been to a number of open houses relatively recently in South OC. No other buyers in sight. Common for RE agents to say “don’t even look at the asking prices…if you like it, offer what you think it’s worth.” All the places I visited a number of months ago are either still on the market of voluntarily removed their listings.

A few agents have said they don’t expect anyone else the rest of the day, so they’ve offered to take us around to other vacant listings in the neighborhood (not theirs) or to some other of their listings.

By: Ben Bittrolff

Ben Bittrolff — Sat, 26 Jan 2008 15:53:17 +0000

Bottom Line: The average Joe six pack is a baby boomer quickly running out of time. His single largest asset, his primary residence, is deflating rapidly. This single largest asset is also the primary collateral for his single largest liability. His balance sheet is rapidly deflating as all his assets, from his home to his equity portfolio, all simultaneously deflate while his debt outstanding may actually still be increasing. His debt servicing are costs not dropping, despite aggressive rate cuts, and may actually be rising. It has also become damn near impossible to refinance certain mortgages as easy credit evaporates. On top of that, Joe six pack should now be seriously concerned about his job security. So when a cheque for $300 to $1500 arrives in the mail, Joe six pack is not going to spend it on a $200 steak dinner or a new computer or on a vacation. Got it people?

More on the stimulous package: (http://benbittrolff.blogspot.c.....ckage.html)

TheFinancialNinja

By: Colorado Real Estate Agent

Colorado Real Estate Agent — Sat, 26 Jan 2008 15:13:17 +0000

Buyers are in a panic mode right now, the economy is not as strong as it should be. So, even if buyers can afford the down payment and purchase of the property, they would rather hold on to their cash and see what the market is going to bring next.

By: laef2

laef2 — Sat, 26 Jan 2008 04:01:51 +0000

Rent for a while.

Hollywood is kind of a dump.

Lots of drugs, homeless, gang members exc. I assume you don’t have children as its not a real child friendly area.

I don’t know what kind of commute you can stomach. If you go up in the hills or perhaps Pasadena or San Marino its not to bad. There are some trains and light rail.

In general things are nicer near the beach.

By: RH

RH — Fri, 25 Jan 2008 16:17:02 +0000

Rob Dawg,

I will be attending Musicians Institute in Hollywood. My wife and I have done research on all the sub communities West and North of Hollywood, we were told to stay away from the East and South of Hollywood.

We are planning on renting for at least a couple months to see what the areas are like and to get a better idea of what we should be doing.

By: GS

GS — Fri, 25 Jan 2008 00:03:03 +0000

I just discovered your blog. Great!!! I visited a couple open houses in the Silverlake area and just flat out told the agents the properties were great but I simple could not afford it. One Lady acted like she didn’t understand what I said. Another agent looked at me like I had killed his dog. As soon the the Agents and sellers are willing to price their properties at an appropriate level to incomes then homes will sell again. But seem to me that another 15 to 20% drop needs to take place for that to happen.