DataQuick CA Sep'07 (all homes)
Change From The Peak (Prices peaked at different times in various counties and cities)
Santa Barbara County -37.0%
Merced County -31.6%
Yolo County -24.7%
Stanislaus County -23.5%
El Dorado County -23.1%
Placer County -22.0%
Sacramento County -21.0%
San Benito County -20.7%
Monterey County -18.8%
San Joaquin County -18.7%
Napa County -18.5%
Santa Cruz County -17.2%
Madera County -17.2%
Kern County -15.7%
Marin County -15.6%
Solano County -15.4%
SanLuisObispo County -15.1%
Ventura County -14.6%
SanBernardino County -14.5%
Tulare County -14.5%
Sonoma County -14.2%
Nevada County -14.2%
Fresno County -13.3%
Riverside County -12.6%
San Diego County -10.5%
Alameda County -9.6%
Orange County -9.3%
San Francisco County -7.8%
Contra Costa County -7.3%
San Mateo County -6.8%
Los Angeles County -4.5%
Santa Clara County -2.8%
Jas, I agree that the housing market here in CA is weak and weakening, rapidly. But, those DQ numbers are clearly affected by change in mix.
They are nowhere near as exciting as the DQ 'all comers' drops, but I go by same-house OFHEO and Case-Shiller for my read on what is happening to home prices (as you do, too, I'm sure).
But, it is fun to throw gasoline on the fire on occasion!
I couldn't find cashflow statements but all three reports suggested they had positive operating cashflows and put those proceeds toward debt retirement... a very good sign but is it too little too late? Who knows.
Meanwhile, back at the interest rates, Libor is lower than its recent September peak, lower since the beginning of the year and lower than it was this time a year ago.
So, two things: The pressure from resets is actually going to be easing as they come around, and new buyers are looking at good home prices, along with lower rates available to finance them.
In fairness to Seb - prices are coming down in lotsa places coupled with flat or declining rates and some of the pressure comes off.
Saw my first 'HUGE PRICE REDUCTION!!!' sign today in front of a house that has been for sale for at least six months. In this area median priced houses sell for 2-3 times local median incomes. What's not to like about that? That is unless your trying to sell into that market...
MDC mostly increased their cash rather than retiring debt, but it amounts to the same thing: A stronger balance sheet. Between the cash ($729M) and untapped $1.25 billion of credit, they are sitting on $2 billion in dry powder waiting for the opportunities to arise in this distressed market.
I still think they are the best investment opportunity in the space -- which is a little like being the "world's tallest dwarf". Still, this is one who stands to do better in the long term the worse the short term gets.
(I have no position in MDC at the moment, but I keep having to resist the temptation.)
You raise a good point on how the damages will be moderated if Libor remains where it's at.
But look at the reset schedule and back it out 2 years to compare to the libor charts. The only people who will benefit are those who bought after Apr 2006, when sales had already started their slide. And that's only if these marginal buyers didn't go with teaser rates.
So unless there's another 25bp cut ASAP, the pain will still be a mutha for the next 6 months. And I there is a 25bp cut, the pain goes all over.
Winter before last, when I first began to think seriously about selling my home and renting, there were only seven homes listed for rent on the MLS for Palatine, IL (Chicago suburb). None was anything I'd have wanted to live in.
Today there are 94, with the top 10 all asking over $3,000, and 48 of them asking over $1,600 and apparently more-than-just-decent housing (e.g., at least 3br 2-1/2 bath SFH or townhome, 2br 2-1/2 bath luxury condo, excellent condition and neighborhood). And the selection in neighboring Arlington Heights is only slightly less. And there are many more on CraigsList.
Alas, extreme busyness due to having signed on with a Silicon Valley startup (I'll continue to be based in Palatine) caused me to rush my search for a rental when I put my home on the market in August -- if I'd had more leisure I'd have been able to rent either of two truly luxurious homes for $2,300 or $2,400 a month, as the owners caved from their original $3,000 asking rents after they learned I was signing a lease on a townhome for $1,950 (also a very nice place).
Next year the rental market here is going to be very interesting, thanks to the huge inventory of vacant McMansions and luxury condos.
Surely I'm wrong, it would appear the average price in some states (TX, UT, CO)skyrocketed from 06 to 07.
Same here with the rentals jm, if you are not in a hurry, and I was as well, you can rent a FABULOUS place for a song, even brand new homes.
Sebastian, LIBOR may look good now. But, wait until we have a bank failure or two, or a corporate default or two, and have a return of the risk premium. My guess is, rates will not be so pretty, thereafter.
Banker, I'm not so sure about the CW bailout succeeding. At least the stock market keeps punishing them towards zero. And I'm not complaining about that for a reason..
Citigroup is the new bailout. I bet libor takes it up the ass when they realize that nobody will invest in the super-SIV and Citi will blow up. If someone does invest into that, the price of that investment ain't gonna be mark to make believe, it's gonna be mark to market. And for Citi, the end result is just the same. All they can do is delay the inevitable for a few months by selling the better quality assets - or should I say, less shitty assets. Without real taxpayer bailout money, they are as good as kaput.
Having said this, my bet is euro will be worth 2 bucks before summer and the FF will be standing firmly at 0.25%, but here I'm being just slightly pessimistic. I'm not betting real money on that one.
JM, I'm sure you will have looked into this but, on the chance you haven't - it's a pretty good idea to know as much as you can about the finances propping up your rental these days.
Someone correct me please if I'm wrong, but I believe most or maybe all leases are subordinated in default situations.
Any lull in interest rates for mortgages is likely to be brief. Federal reserve monetary policy is too loose, just look at the price of oil and gold. If the Fed blunders and cuts again next week, it could backfire badly at the worst possible time for the housing market (next spring.)
I know exactly what the bubble is like in here, and yes indeed it is bad. But the fact remains that Europe is lagging the US quite a bit. We are not starting forest fires yet in here just to be able to collect the money from the insurance.
Eurozone will experience a double whammy if there is a global slowdown starting from the US, but before that happens the euro might get pretty valuable.
Eurozone will experience a double whammy if there is a global slowdown starting from the US, but before that happens the euro might get pretty valuable.
The ECB will never let it happen. They'll destroy the euro before letting it get to $2. Europe is even more export dependent than the US. They can't let that happen and won't.
57% cancellation rate... Is that bad?
Ryland's results were better, much better, I wonder why?
OT, but data came out...
October 24, 2007
DataQuick CA Sep'07 (all homes)
Change From The Peak (Prices peaked at different times in various counties and cities)
Santa Barbara County -37.0%
Merced County -31.6%
Yolo County -24.7%
Stanislaus County -23.5%
El Dorado County -23.1%
Placer County -22.0%
Sacramento County -21.0%
San Benito County -20.7%
Monterey County -18.8%
San Joaquin County -18.7%
Napa County -18.5%
Santa Cruz County -17.2%
Madera County -17.2%
Kern County -15.7%
Marin County -15.6%
Solano County -15.4%
SanLuisObispo County -15.1%
Ventura County -14.6%
SanBernardino County -14.5%
Tulare County -14.5%
Sonoma County -14.2%
Nevada County -14.2%
Fresno County -13.3%
Riverside County -12.6%
San Diego County -10.5%
Alameda County -9.6%
Orange County -9.3%
San Francisco County -7.8%
Contra Costa County -7.3%
San Mateo County -6.8%
Los Angeles County -4.5%
Santa Clara County -2.8%
Data:
DQNews - DataQuick Real Estate Headlines and Statistics
Jas
OT: Another shot at the Amnesty Bill failed. Now who is going to fill those homes?
http://www.msnbc.msn.com/id/21456667/
Something seems a bit fishy with Ryland's numbers. We'll see...
Jas, I agree that the housing market here in CA is weak and weakening, rapidly. But, those DQ numbers are clearly affected by change in mix.
They are nowhere near as exciting as the DQ 'all comers' drops, but I go by same-house OFHEO and Case-Shiller for my read on what is happening to home prices (as you do, too, I'm sure).
But, it is fun to throw gasoline on the fire on occasion!
I couldn't find cashflow statements but all three reports suggested they had positive operating cashflows and put those proceeds toward debt retirement... a very good sign but is it too little too late? Who knows.
Meanwhile, back at the interest rates, Libor is lower than its recent September peak, lower since the beginning of the year and lower than it was this time a year ago.
Mortgage Indexes: WSJ LIBOR: History: 2007
So, two things: The pressure from resets is actually going to be easing as they come around, and new buyers are looking at good home prices, along with lower rates available to finance them.
Sebastia
good home prices? wtf does that mean. geez.
good home prices? wtf does that mean. geez.
In fairness to Seb - prices are coming down in lotsa places coupled with flat or declining rates and some of the pressure comes off.
Saw my first 'HUGE PRICE REDUCTION!!!' sign today in front of a house that has been for sale for at least six months. In this area median priced houses sell for 2-3 times local median incomes. What's not to like about that? That is unless your trying to sell into that market...
dryfly --
MDC mostly increased their cash rather than retiring debt, but it amounts to the same thing: A stronger balance sheet. Between the cash ($729M) and untapped $1.25 billion of credit, they are sitting on $2 billion in dry powder waiting for the opportunities to arise in this distressed market.
I still think they are the best investment opportunity in the space -- which is a little like being the "world's tallest dwarf". Still, this is one who stands to do better in the long term the worse the short term gets.
(I have no position in MDC at the moment, but I keep having to resist the temptation.)
Sebastian,
You raise a good point on how the damages will be moderated if Libor remains where it's at.
But look at the reset schedule and back it out 2 years to compare to the libor charts. The only people who will benefit are those who bought after Apr 2006, when sales had already started their slide. And that's only if these marginal buyers didn't go with teaser rates.
So unless there's another 25bp cut ASAP, the pain will still be a mutha for the next 6 months. And I there is a 25bp cut, the pain goes all over.
Winter before last, when I first began to think seriously about selling my home and renting, there were only seven homes listed for rent on the MLS for Palatine, IL (Chicago suburb). None was anything I'd have wanted to live in.
Today there are 94, with the top 10 all asking over $3,000, and 48 of them asking over $1,600 and apparently more-than-just-decent housing (e.g., at least 3br 2-1/2 bath SFH or townhome, 2br 2-1/2 bath luxury condo, excellent condition and neighborhood). And the selection in neighboring Arlington Heights is only slightly less. And there are many more on CraigsList.
Alas, extreme busyness due to having signed on with a Silicon Valley startup (I'll continue to be based in Palatine) caused me to rush my search for a rental when I put my home on the market in August -- if I'd had more leisure I'd have been able to rent either of two truly luxurious homes for $2,300 or $2,400 a month, as the owners caved from their original $3,000 asking rents after they learned I was signing a lease on a townhome for $1,950 (also a very nice place).
Next year the rental market here is going to be very interesting, thanks to the huge inventory of vacant McMansions and luxury condos.
Surely I'm wrong, it would appear the average price in some states (TX, UT, CO)skyrocketed from 06 to 07.
Same here with the rentals jm, if you are not in a hurry, and I was as well, you can rent a FABULOUS place for a song, even brand new homes.
It might be a good idea to go long Ryland (just a little) to offset the shorts on everybody else. Some hedging.
With Libor on decline banksters won't get their rate cut next week. Bernspan has no excuse to cut. oh-oh.
Sebastian, LIBOR may look good now. But, wait until we have a bank failure or two, or a corporate default or two, and have a return of the risk premium. My guess is, rates will not be so pretty, thereafter.
JG,
We've lost several hedge funds, CW got bailed out, the big banks have taken huge earnings hits...just sayi
Banker, I'm not so sure about the CW bailout succeeding. At least the stock market keeps punishing them towards zero. And I'm not complaining about that for a reason..
Citigroup is the new bailout. I bet libor takes it up the ass when they realize that nobody will invest in the super-SIV and Citi will blow up. If someone does invest into that, the price of that investment ain't gonna be mark to make believe, it's gonna be mark to market. And for Citi, the end result is just the same. All they can do is delay the inevitable for a few months by selling the better quality assets - or should I say, less shitty assets. Without real taxpayer bailout money, they are as good as kaput.
Having said this, my bet is euro will be worth 2 bucks before summer and the FF will be standing firmly at 0.25%, but here I'm being just slightly pessimistic. I'm not betting real money on that one.
JM, I'm sure you will have looked into this but, on the chance you haven't - it's a pretty good idea to know as much as you can about the finances propping up your rental these days.
Someone correct me please if I'm wrong, but I believe most or maybe all leases are subordinated in default situations.
Any lull in interest rates for mortgages is likely to be brief. Federal reserve monetary policy is too loose, just look at the price of oil and gold. If the Fed blunders and cuts again next week, it could backfire badly at the worst possible time for the housing market (next spring.)
"Euro at 2 bucks". Ha!... cuz Europe doesn't have the EXACT same problems we do. Riiiiight. Pass the pipe.
I know exactly what the bubble is like in here, and yes indeed it is bad. But the fact remains that Europe is lagging the US quite a bit. We are not starting forest fires yet in here just to be able to collect the money from the insurance.
Eurozone will experience a double whammy if there is a global slowdown starting from the US, but before that happens the euro might get pretty valuable.
Eurozone will experience a double whammy if there is a global slowdown starting from the US, but before that happens the euro might get pretty valuable.
The ECB will never let it happen. They'll destroy the euro before letting it get to $2. Europe is even more export dependent than the US. They can't let that happen and won't.