Can anyone help me? I am a political refugee from Somalia and I have an Uncle that has a big ship he says is good on gas?... Anyway if you will give him rewfuge and 3 million dollars, he will give you a share of his profits upon safe harbor.....
The loan mod PR blast by the Barney F and his merry band should get interesting now that the recession is taking down the better half, how will Obama and the Democrat Congress sell loan mods.
NEW YORK (CNNMoney.com) -- All the foreclosure prevention plans announced to date will do little to help the next wave of delinquent homeowners, who can't make their monthly payments because they've lost their jobs.
But something needs to be done for them, experts said, or the country will sink deeper into an economic recession.
"Because of the financial crisis, they can't afford their mortgages on any terms," said Kathleen Engel, associate professor at Cleveland-Marshall College of Law. "None of the federal or bank programs will provide them any relief at all."
Loan modification plans have focused on assisting borrowers facing interest rate resets or other mortgage terms that have rendered the monthly payments unaffordable. Most proposals have attacked the problem by adjusting the interest rate or length of the loan so that the monthly payments drop to what is considered an affordable level, or between 31% and 38% of a borrower's gross income.
This, however, does little for people whose monthly income is virtually nothing. Representatives from lenders and firms that service loans say the unemployed have to be assessed on a case-by-case basis and can't be part of the streamlined modifications underway
The good thing about buying a house in the Bay Area right now is it proves that you have good enough credit or enough cash to get financed. The bad news is when the home prices drop another 25% and you swim away, your credit no longer will be good enough and you won't have anymore cash to buy a home for a long time.
The National Indebted Homeowners Union President Ms. Varruka Salt, appears before the Senate Banking committee to offer testimony to receive TARP funding. As a member of the Joe6Pack Preferred Shareholder in the Municiple Banking and Investment Kompany of Amerika, Her opening statement was short and to the point of her members positions
"I want it now!"
You know, as much as I hate wall street, it's been fun today watching the street fleece the washington staffers who thought they had actionable information.
Anonymous: median income is irrelevant indicator in Bay Area. People/couples here either make $200k+/yr, or $15/hr. Those of us in the $100k range are priced out of everywhere other than high murder rate neighborhoods.
if the median is truly being pulled down by the lower cost homes selling more - that means the prices of houses are still even higher than we thought. therefore, theres even MORE correction to come before things come inline with incomes!
For all those who think PPT isn't for real, check out the story:
PPT Demystified on CNBC
Summary--
"...CNBC - which loves bubbles more than Lawrence Welk ever did - invited a Chicago trader named Scott Nations to the show.
Nations then shook things up by saying, straight out, that the US government, through the Plunge Protection Team, manipulated Standard & Poor's 500 index on Oct. 10 and Oct. 28.
"
The concern comes as Harrah's Entertainment, Inc. announced earlier this week that it could not round up the funding for a $535 million casino in south-central Kansas. Earlier this year, Penn National also scrapped its plans to build a casino complex in the southeast gaming zone of Kansas, leaving Ford and Wyandotte counties as the only two zones of four remaining.
Elvis writes:
The good thing about buying a house in the Bay Area right now is it proves that you have good enough credit or enough cash to get financed. The bad news is when the home prices drop another 25% and you swim away, your credit no longer will be good enough and you won't have anymore cash to buy a home for a long time.
Elvis, RE excellent long term source of wealth..In fact best to run out and pick up a couple foreclosure deals do a quick rehab and rent them out to the budding section 8 market before the 25% equity goes to waste!
You're right. The mix has shifted dramatically. That's because the sellers in the "nicer" neighborhoods have decided that their house values will not go down, by god...
In my old neighborhood, there are now 9 houses for sale, ranging from $1.1M to $2.7M. None are moving. Only two have dropped their list price.
In a normal spring/summer selling season, 6 or 7 would be a high For Sale inventory.
I know that at least a few of these are distressed homeowners, unable to afford their mortgages.
I predict the high end will come down fast and hard over the next 1-2 years. Credit isn't getting any more available for these folks, and their jobs are being lost. And the buyers psychology has completely changed, and very suddenly I might add, because fools were paying these prices just 6-12 months ago.
The Case-Shiller index is a better measure of house price declines.
Absolutely incorrect. Case-Shiller is different. Nothing more. C-S is slow and fails to address improvements among other factors.
Right now prices are changing quickly. C-S is bad at tracking quick changes. A great many of the homes purchased in the last 5 years are substantially upgraded products as indicated by concurrent home improvement indices.
CR, try a thought experiment. Pick a typical recently constructed Orange County tract and tell us whether C-S captures anything close to the true recent rapid declines.
Ain't Never Seen that Before : The 2-yr yield just dropped below 1% for the first time ever (regular sales began in 76)
A Time to Reflect : The continuous 10-yr futures contract looks to have finally caught its 5th wave off last year's crisis beginnings near 103-20+. Ellioticians are likely quietly pleased with their analysis. The question now becomes Where is it headed? The air up here is pretty thin with little price action to work with.
Off the Charts: The market is about to bump into new territory, with the 10-yr now on the highs yielding 3.122% while the 30s are going for 3.711% into new highs and unaccountable prior to 1977.
I side with CR in preferring the C-S numbers. Even if it doesn't capture upgrades/improvements perfectly, at least it does a BETTER job of comparing apples-to-apples, for the types of homes it tracks.
Subject: *SOMALI PIRATES APPLY TO BECOME BANK TO ACCESS TARP
*SOMALI PIRATES APPLY TO BECOME BANK TO ACCESS TARP
*PAULSON: TARP PIRATE EQUITY IS AN INVESTMENT, WILL PAY OFF
*KASHKARI SAYSSOMALI PIRATES ARE FUNDAMENTALLY SOUND
*Moodys upgrade Somali Pirates to AAA
*HUD SAYS SOMALI DHOW FORECLOSURE PROGRAM HAD VERY LOW
PARTIC PATION
*SOMALI PIRATES IN DISCUSSION TO ACQUIRE CITIBANK
*FED OFFICIALS: AGGRESSIVE EASING WOULD CUT SOMALI PIRATE RISK
*FED
AGREED OCT. 29 TO TAKEWHATEVER STEPS NEEDED FOR SOMALI
PIRATES
Rob Dawg, I disagree. The median prices can be distorted by the mix - without prices changing at all.
Imagine 10 homes, half being sold for $200K and half for $800K. The median is $500K. Now imagine that only 6 homes sold, five at $200K and only one at $800K (So no change in price for each house). What happens to the median? It fall 60% to $200K.
Clearly the Case-Shiller is a better measure than the median price. If you argue it is too slow - fine - it is reported several months late and I agree that is a problem.
I'm pretty sure I'm right about this. Very simply, the folks in my former middle-class neighborhood do not have sufficient income to afford yearly home costs in excess of $100K, let alone $150K like some of these home purchases would require.
Just like at the low end, it was all smoke-and-mirrors done with creative financing.
If there was any truth to the RE Agent's axiom that stock options made it affordable, I think you can kiss off a lot of the deals financed that way, don't ya think?
We live in amazing times. The yield on the 2 year note is 0.99 basis points,shattering the 1.10 level touched in June 2003. The 5 year note has breached 2.00 and trades at a record low yield of 1.93 percent. The 10 year note has a little more distance to traverse before it sets a new low as it yields 3.17 percent. The June 2003 low on that was around 3.10. The Long Bond has traded as low as 3.76 this morning. [hat tip]
Wow, just checked local RE listings (East Bay). Just up the street from the house I sold in 2005, I could now buy the same model, for less than I paid in 2001!
Despite that - real estate is down LESS than the stock markets.
And that "4 bears" chart from yesterday ... already a few percent out of date to the downside. This stock market is falling further, faster than the 1929-1932 market! Yikes...
How do you price an asset that does not sell? Keep lowering the price until somebody buys it then mark down all other assets in that class to the new value. What happens when inventory is so high that nobody bids?
Medium price at least describes what price is attracting buyers and the message for this market at least in Calif is well south of 500K.
My take on it that the dot com crash didn't catch as many people out as popularly reported. Just a hunch, but I very strongly suspect the vast majority of people benefiting from dto com salaries and options saved their money and bought between 2000-2004. I personally know people that did this, and bidding up houses was not an issue, they paid very high down payments. I saved that money myself, won't go into details on how it left the house... let's just say there wasn't enough for either of us to buy on our own afterwards.
What makes SF different is that even during the insanity of 2004-2007, there just weren't that many houses on the market to suffer creative financing. I don't know anyone that bought in SF to flip. Everyone I know bought to be in the "cool neighborhood" around like minded people (e.g., "maternal heights).
I just don't see these people walking away like people are starting to walk in SoCal and elsewhere.
Hunters Point and Bayview may start coming down, but buying in those areas puts you at risk of idiotic zoning to prevent the horrors of gentrification.
The flip side of this "changing mix" issue is that as price declines move into higher-priced areas (I agree with Short Courage here), and sales increase in those areas, the median may appear to stabilize.
I can see the headlines now: Housing price bottom! Buy now or be priced out forever!
chillbear:
prices are dropping in many nabes in the city, but you have to look and compare apples to apples.
most of those of course are in the SOMA, south beach, bayview, mission bay, potrero/mission, sunset neighborhoods.
but many are now in the bernal and twin peaks nabes.
also every once in a while you get one in the vaunted Noe (much less often though).
pac heights and seacliff are rock solid. as is cow hollow for the most part.
as example: (per socketsite)
224 Twin Peaks Boulevard.
listed for 1.655M.
bought last year for $1.36M
even worse, EXTENSIVE remodelling was done on this.
there are many many more.
however, the trend I'm seeing is this:
home is bought.
extensively remodeled and square feet added
home sold later for more than it was bought.
HOWEVER it was extensively remodeled, so the owner actually lost money.
"Executive compensation committees, recognizing the change in market climate, are now modifying incentive stock option plans. Instead of call options, senior executives will now be receiving put options. 'We know we can't stop stock prices from falling, so this change guarantees that even in the current market climate, our corporate leaders will get the rewards they deserve. Best of all, we still don't need to charge the value of the options against earnings!' said the chairman of a Fortune 500 compensation committee..."
-- satire, not real, gallows humor, nothing to see here, move along...
Question 1 : Explain the media's thoughts regarding professional (or "wall st") economists' ability to forecast short term economic indicators:
a) incredibly incompetent
b) detached from reality
c) beholden to moneyed interests
d) their dumb, but we're dumber
e) don't care, we just love typing "unexpected"
f) what, we're spose to listen to bloggers, like this CR character?
g) no, GTE a, b, c and d
i) none of the above
All that's needed to quickly bring down prices in the high-end neighborhoods are increasing numbers of forced sales. You've already seen how quickly it can play out at the low-end.
Gee, has anybody been noticing all the layoff announcements of late? How about those recent unemployment numbers?
Think perhaps that divorce rates might edge up a little bit in these trying financial times?
Finally, everybody should closely re-examine their assumptions that flippers didn't play in the high-end neighborhoods... Those RE-Agent-Flippers and Contractor-Flippers are beginning to reach the end of their attractive financing terms (whose durations were a little bit longer than the loans made in "subprime" neighborhoods).
Again, I predict the rate of price drops in the high end will accelerate wildly in the next 1-2 years...
Citigroup also lobbying lawmakers, SEC to reinstate uptick rule - WSJ
Citigroup lobbying lawmakers, SEC to reinstate short selling ban - WSJ
If either of these things happen, I'm going to spit. If the market is a casino, so be it. If the market is going to play Calvinball, then I say !#)$ 'em.
@s0mebody: "I think they should add C to GM on the list of mandatory BKs."
Just think of how many smaller banks could be saved if the FDIC/Fed/Treasury did a controlled takedown/breakup of one of the big 3, spun off the non-bank operations, and spread the deposit base around among smaller institutions that actually have a fighting chance of surviving this calamity. Could be like TARP all over again. And it would be great for competition and consumer choice.
It's going to take ALOT of layoffs in SF to make that happen. This town is loaded with DINKS, and single chicks who are going to find DINK a lot more attractive Real Soon Now. Good news for geeks, to be sure.
You may be right that some or even a lot of buyers in the Bay Area used big downpayments. I doubt it was a very high percentage. But it doesn't really matter, because it's what happens at the margin that matters. It's those buyers (and I believe there were a lot of them) that could not afford a down payment of appreciable size that set the price at the margin.
And going forward, the number of folks that have that downpayment is going to be much, much smaller. No more trade-ups from "lower" neighborhoods, no more stock wealth, etc...
SF is not different, unless it is inhabited by non-humans, not subject to greed and folly.
Got an email from a close friend outlining just that.
Nationalise C. (aka Swedish model). Break it up dump the broken pieces. Buy off bond holders at 20 cents on the dollar, 0 for Common shares. And then sell baskets of depositors to other banks.
chill, shortcourage - Ive also been tracking the Bay Area mkts for nearly a decade, especially SF proper. I was living there for 8 years, and almost bought in around 2001-2. But even then, it seemed insane, having watched the runup. At that time, the junk loans werent really there....and I had no idea such things could come to pass. At the time I didnt really think much could ever change about the old mortgage laws of 20% down and 38% of income, etc. Boy was I wrong. Then I felt like a fool for a few years because everyone said man, you TOTALLY missed the market, and the 2br condos I was looking at in cole valley for 500k, went a few years later for 900k or more. Felt pretty dumb. But I still wonder how much of that was junk loans, how much was cash, how much was options money, how much is supported by two income hhs that both draw 100k plus (meaning, both gainfully employed). Now, the cash buyers can pay the RE taxes and condo fees. The two income are at serious risk of becoming zero to one income. The option arm types are screwed in a year. Many reasons to think that these things can start down now and head much lower. How low, dont know. But I would be surprised to see those 2001 prices again. Happily surprised, but still surprised. Im still hopeful. But the really really prime spots, and one of a kind stuff (willard st. , etc) I just dont see ever really coming back down to earth.
ShortCourage writes:
All that's needed to quickly bring down prices in the high-end neighborhoods are increasing numbers of forced sales. You've already seen how quickly it can play out at the low-end
Amen!!
The move up market will be hard to find in the coming years. I know many that purchased during the dot.com years and later..all would love to sell for what they paid in fact many put their property up during 2005 peak and still could not get there asking price. Stranded high end property owners abound in Calif.
Chill Bear Reformed Dope wrote...
"What makes SF different is that even during the insanity of 2004-2007, there just weren't that many houses on the market to suffer creative financing. I don't know anyone that bought in SF to flip. Everyone I know bought to be in the "cool neighborhood" around like minded people (e.g., "maternal heights).
I just don't see these people walking away like people are starting to walk in SoCal and elsewhere."
Your exactly right. Want to know who agrees with you? None other than Case Shiller!
Basically, case shiller details that the junk loans and flips were a largely a suburban and exurban phenomenon.
The core strong burbs weak pattern is appearing all across the nation - Philly, DC, SF, CHI, BOS, etc. Basically, the price increases in the core areas were much more on the backs of legit homeowners whereas in the burbs & exurbs, it was much more a flipper phenomenon.
Now before everyone gets angry - SF IS NOT IMMUNE (there happy now)? The point is, the core cities look to get HIT, but NOT HARD ENOUGH to make many of us who post on these blogs happy.
I was crushed when I read this as I was just hoping BOS prices were lagging behind. Now ive accepted they wont fall as hard, and Im much happier for it.
SF always seemed to me to have the highest visible homeless population of any major US city that I"ve visited. Not in a threatening way, but omnipresent. I am sure essays have been written about this hypothesis, linking it to weather, liberal/progressive attitudes, and societal permissiveness.
Everywhere. GG park, downtown, Castro.., every time I'd go to my favorite Mexican place, El Toro, down in the mission, it was chock-a-block of dudes standing around doing nothing at 11 a.m. midweek.
After Wagoner gets its money from uncle Screwsam -and doing the math, 12 billion are not enough to let GM survive- are you ready for being forced by your gubermint to buy a GM crapcar?
Geoff wrote: "But I would be surprised to see those 2001 prices again. Happily surprised, but still surprised. Im still hopeful. But the really really prime spots, and one of a kind stuff (willard st. , etc) I just dont see ever really coming back down to earth."
You should set your hopes higher. Try 1999-2000 prices, if not lower. Take a look around you at what is happening to the economy Geoff. Do you really think that SF can survive as its own little island of prosperity amidst the carnage?
Even the uber-rich areas will see large price drops. That's actually happening already in the very high end...
"mr rational" posted on SF Gate comments to an RE story a couple of weeks ago that there were exactly three 3/2 houses for sale under $1M north of 280 east of Ocean.
If we get big time layoffs in SF proper, we might see some serious decline. If we don't, I just don't see prices going back to 2001. This goes for Berkeley, Albany, etc. as well.
Richmond, Vallejo, Antioch, etc are going back to 1983. No doubt about that at all.
Kristina,
is there any hope this being delayed b/c of incoming Christmas holidays?
Not knowing how your congress works, I wonder if there's place for filibustering.
If S&P goes back to 1995, surely housing must return to 1998 levels at least. Because so many people will be forced to liquidate to ensure retirement income.
One other thing about SF proper: I know several people making good money ($150k/yr+) that can put large down payments (30%+) that are waiting to buy in SF. They aren't waiting on prices to come down as much as they are waiting for something available in the neighborhood they want to live in.
Maybe SF isn't different. But we won't really know until this all plays out.
If S&P goes back to 1995, surely housing must return to 1998 levels at least.
We'll be very lucky if that happens. It's now clear that the Nikkei's "recovery" in 2005 was really a dead-cat bounce from 1990, and they're down 80% over an eighteen-year period.
karelian, I surely hope not. Alabama is filth hole full of uneducated inbreds who work for 6 dollars an hour gleefully. We are truly doomed if "right to work" becomes the United States model. Right to work states are the worst in the union, I know, I live in one.
No group is as talented in shooting themselves in their foot while they shove their $700 loafers in their mouth as the current Democratic leadership. And I am a liberal
Alabama and Mississippi have plotted this for weeks - the Japanese plants will expand even during a Depression if the Confederacy can now take out all of the Big Three simultaneously and cripple their suppliers.
Huge discounts to Toyota from desperate Great Lakes suppliers...
We were pondering these questions 150 years ago at the dawn of the Civil War... would the future of America be slavery, or free labor? I guess we all know what happened in the end: Slavery has won out.
Chill Bear, Patriot & Lawyer Liz, I see the same thing here in DC. Our burbs (even the very very pricey ones) melted down a long time ago. Here in DC (and the core areas Arlington & Alexandria), sales are UP (YOY) inventory is WAY DOWN (YOY) and the prices are down about 2-8%.
I tried to call BS on my city friend who told me this - heavily scrutinized all his stats - looks like he is right. The core areas had about 1/3 the junk loans as the burbs did, ALT A loans (all vintages) amount to 900 loans out of 8000+ loans made. About 1/3 of these have already reset - another 1/3 have been refied or the home sold!
Thankfully for me, I have no interest in the core areas - My suburban area is down 35% and is only now showing signs of life.
Charlotte is already devouring New York banking/brokerage jobs with 70% lower comp base. Auto plants of Deep South will pay 11.50 per hour. Military spending in Virginia and Carolinas will not be cut.
Beggar armies from California, Michigan and Manhattan will descend on Naches-on-the-hill to beg for some stale peach cobbler...
Right to work is going to come back with a vengeance as deflation sets in. They are the only people who can adjust in a deflationary business environment.
Live in sunset with view of ocean and city, golden gate park 2 blocks away..
It will come down but as Chill eluded to, mostly old money, non flippers, big downs, no need for car, jobs in city 25min via muni, rents on 2 bedrooms near 1800+, hospital and universities nearby, plenty of low cost things to do nearby...
Short it will come down but not as far as you are thinking...
last 3 homes on my street were sold in couple weekends...
Short - im very aware of what is up with the economy, and what we are looking at ahead. But honestly, Im afraid that the real nice areas, but certainly not all of SF, will just sit around at this topped out level for many a year, or maybe dip a tiny bit. But for now, those prices make more sense than ever, because the rents supporting them have skyrocketed. Ive been checking the area I used to live, and other areas I thought about living, in case I return, and they are WAY higher than ever before, which at any cap rate, supports much higher prices. Now, I DO also remember in 01, when the dot com bust came, how many people left the city. Moving vans everywhere, every day. And i remember the rent reductions I asked for and got, twice. However, that was a the tech bust, and it was massive, and at the heart of the economy. We arent at anything close to that, YET. Will we get there, I dont know? But even if we do, the decline in rents will have to be much more massive than the last decline, and we STILL wont approach the rent levels that existed in 2001, which SUPPOSEDLY justified those prices then.
I really hope you guys are right and that the prime areas will come down significantly, but I grow more afraid by the day that it wont happen.
And as I said in a thread yesterday, I repeat here for posterity. This is one case where I desperately hope I am wrong.
But as for prices, ShortCourage might quote, from the Princesss Bride..."unless I am wrong, and Im never wrong, they are heading straight into the fire swamp!"
I just got the most amazing loan mod offer on a client who hasn't paid in well over a year and a half. All she has to do is sign and send them about a grand. They will even GIVE HER A VISA GIFT CARD FOR $250.00. Now, even with her delinquent interest, she still isn't underwater, because her house was worth so much (at one Point). 5% simple interest for 5 years, then amortizing.
Parts of Alabama are pretty nice. I would definitely consider living in the Paint Rock area, near Huntsville. It's incredibly scenic. Might retire there.
cd, so, outer sunset... fog city... I still have designs on a social life... outer sunset might as well be outer space! Would only consider outer sunset if walking distance to OB.
Russel - connect the dots...this is playing out all over. Im most familiar with it because my two brothers live in the near to wall st Brooklyn area of Boerum Hill and Arlington DC. Both regularly make me look like a moron, because their homes have gone higher and higher. The junk is taking a hit, but the prime hoods are just rising. These are a very very tiny part of the overall market, but like I said before, the real prime stuff remains a different market. You have to realize how much money some people made the past few years, and who was buying the really prime stuff. A lot was cash. And most of the rest was with huge downpayments. The rich are still rich, even after the big stock market hit. And there are only so many places that the rich want to live. They want to be in the best hoods. We all know where they are. So do they. They stay, we sit outside and wonder why we are falling farther and farther behind.
To be fair to my client she lost her job, got behind, got a job, found a 2nd mortgage. Then she couldn't close because the title company recommended by the bank screwed up and didn't find liens that were there,
and she didn't know about because her ex didn't do stuff that he was supposed to and nobody let her know.
The mtg in foreclosure is BEHIND these liens and they couldn't get good title anyhow, which the foreclosing attys refuse to admit.
Chill Bear, Reformed Dope writes:
Parts of Alabama are pretty nice. I would definitely consider living in the Paint Rock area, near Huntsville. It's incredibly scenic. Might retire there.
Many parts of the deep south are beautiful. Then you have to deal with the locals who don't like outsiders. And try to avoid areas where manuf. jobs(textile, etc.) have left. The meth problem is out of control. A friend is from a small town in Tenn. He goes back to visit relatives but won't take his children. He tells me ALL his HS buddies that never left are meth heads today.
@Barley 2:16, glad to see the meme is already out there! It might be a crazy thought, to do an antitrust-type breakup on the big sick banks to save the healthy parts, but it's worth thinking about. The bank triage teams are already making decisions like these (if only by default)...
One other thing about SF proper: I know several people making good money ($150k/yr+) that can put large down payments (30%+) that are waiting to buy in SF. They aren't waiting on prices to come down as much as they are waiting for something available in the neighborhood they want to live in.
Maybe SF isn't different. But we won't really know until this all plays out.
$150k/year will allow you to buy a home for maybe $500k.
even if they have a $300k downpayment, that gives them $800k home.
as you well know, little can be bought in SF for $800k.
at least not now.
prices will come down in SF absent major govt intervention because the incomes simply can't afford $1.5M starter homes.
Liz, it's Saxon (aka Morgan Stanley). I keep hearing I have to get behind..UGH...I hate that, I really, really hate that. Of course soon it won't be an option anyway, I'll be behind like it or not. Hubby still unemployed after two months, savings down to 8K now...
I guess you didn't have the time to ride the tandem thru golden gate park down to ocean beach all last week...
I can drive 4 minutes and surf ocean beach..and Irving has some great eateries..
I lived in Newport beach and other nice beach areas..they get fog too...just not as much..plus I get to see a hot lady walk by about every 10minutes going to muni...
Of course thiers fog.. it beats the heck out of all east bay, south bay...
No big surprise there...I remember driving down route 80 to enjoy a nice day at the beach in the Bay Area, and passing signs saying, "come get your McMansions from the 600s, 700s, 800s, 1.9% APR*". Everyone was zipping around in Cadillac Escalades (with custom wheels) and BMWs. Real-estate agents raking it in with their $300 hair and $100 nails in high heels, driving nice Mercedes. One, two, and even three refinances were not uncommon in a 3 year period. Some smart people made 500k in fake wealth on their homes in just 3 years. It was UNBELIEVABLE compared to how the majority of the country was living.
Yep, Noe is the neighborhood I am in. I don't pay enough attention to see questions, just the basic "houses that advertise for X are selling fairly quickly", which probably has a built in two month lag.
The SF Chronicle had a internet tool to look up "upside down" mortgages by zip code, and mine was one of the very lowest at 5%. Generally all the high end neighborhoods in SF were at the very low end.
Alabama is playing a dangerous game here. They are about as red as redc can be, with all the levers of power in blue hands. They are also big time net recipents of federal $. Basically the whole state is a welfare case to the Federal govt. You could easilly see them fall to the bottom of the list for any of the infrastructure/green energy spending coming up.
Short - i dont really disagree with you. But I think the effects you are talking about are fairly marginal, and what that means is that you might get a little price erosion over a long time, so that slowly, the gap between the high end and everything else eventually closes. So the stuff Im looking to buy might stand still or dip a bit, and hopefully I'll catch up in savings and income. If I had to wager a bet, Id say these prime areas stay mostly flat for the next decade, after a very small dip in the next year or so.
Alabama is playing a dangerous game here. They are about as red as redc can be, with all the levers of power in blue hands. They are also big time net recipents of federal $.
In terms of feeding from the federal trough, is there any difference between them and, say, blue state Iowa?
The SF Chronicle had a internet tool to look up "upside down" mortgages by zip code, and mine was one of the very lowest at 5%. Generally all the high end neighborhoods in SF were at the very low end.
Yep, and those area are full of cocktail-party "not in my backyard" liberals too. Every nice area in the Bay is offset by sharply contrasting poor areas. I turned down a job in Mtn View, which at just 100k per year would have afforded me significantly less than making 80k in Sacramento.
Chill Bear, I have met at least one person who bought with intention to flip in SF. I think your ideas as to why SF is different have all been dismantled pretty thoroughly. True there are always some people waiting to buy. But there are many more who don't yet know they will have to sell.
One other thing - many younger people work in SF and work in the Valley. When they lose their jobs and can't find others, they'll leave.
And many tech jobs were in the bubble 2.0 sector, and will not come back anytime soon.
Geoff - I agree with you 100%. The other interesting thing is where the rich "want to live" is changing. Years ago, EVERYONE wealthy wanted to escape to suburbia. Now, only MOST want to go to suburbia, the others want to be in the city.
Problem is its a very very very limited housing supply. Thus every time the prices drop, even a smidge, there is another buyer right there waiting to buy it.
short, I believe your theory on rents, but seriously, take a look at what has happened. Stuff that was renting for 1600 in 1999 is renting for over 3000 now. Even in the tech bust, rents fell from only about 20%, and by 2003 we were back to about that 1999 level. Now, granted, the vacancy was kept tight there because the housing bubble meant no one could buy and had to rent. But now we'd need a much bigger decline in rent. And its hard to imagine job losses as significant for SF as what was shed during the tech bust.
Long long way to go on rents. Granted, the job losses are just starting for the types of folks who live in those areas. The construction jobs, retail, etc, lost, are what has already killed the east bay junk, etc.
Short - what you are missing is that the things you describe (job loss, death, etc) will certainly affect prices - prices will indeed go down in SF proper.
Problem is, those things will also affect the burbs the same way. Thus the burbs will keep going down too. In either event, the core wont go down ENOUGH to cause the city to be nearly as affordable as the burbs.
Thus, as long as the demand is still there, and it is still there, the price differential will continue.
Scanning the foreclosure, BK and tax lien rolls in San Francisco what stands out is the tax lien numbers are getting pretty big, showing financial stress, may show up later in greater inventory and foreclosure activity.
The_Littlest_Mandarin : "Is the "straight shooter" reading this?"
I am. Remember what the conversation was about? I said Ken Lewis did what he said and was a straight shooter. C&C was posting that BAC would back away from it's previously announced deal. The sames rumors were posted about CFC. Ken Lewis just isn't the type to go into a deal and then back away.
People were also jumping on me for saying BofA backed CFC debt. Which they have.
BofA + MER will go through. C&C posting random rumors like he has some inside line somewhere is just stupid. And will proven to be so again when that transaction closes.
Russel, you are exactly right. The price differential between ordinary neighborhoods and "prime" neighborhoods will be maintained. The whole point of this dialog is that lately it has NOT been maintained, as the prime neighborhoods have been levitating. I'm just saying that that will end soon, more quickly than it has traditionally done.
Chill - I lived in Cole Valley/UCSF area. It's ruined now. Dont think I can ever get back there. To rent anything that isnt a closet is absurdly expensive. To buy, nothing even decent for $1 mil. And still, rarely anything really even comes to market. And with a view - forget about it.
I like how we loved median price methodology during the bubble, now it's all disclaimers about how it actually depends on the houses being sold. This is why price/sqft is a better metric, particularly split by condo/house and zip.
cd: On the contrary, I was in the water last week, and I am staying in the city tonight to catch the north swell coming in tomorrow, probably at sloat. If it's big enough, I'll be out on my Parmenter mini-gun (widowmaker set up), otherwise the merrick 6/6 round pin.
and even that is distorted, since so much renovation took place in the past few years. So there does have to be an adjustment for that. How, I dunno. Let me guess. Up.
dtripper - no offense, but here is a quote I took from a guy Sept 17, 2007 re: the fall of the cities:
LBO wrote "RUSSEL trust me, ive seen this before, the core cities always fall last. They are not different, they do not make more than the rest of us - Loudoun county is now down 9% - One year from now, Arlington will be down by the same amount - I bet my life on it"
Well, LBO was kinda right, Arlington (the DC core) is down about 6.2% - the problem is Loudoun (the nice exurb) is now down -24%. Both have increasing sales - both have declining inventory. Both are in this thing together.
Same thing looks to be happening in SF. If SF is down 20% next year, the burbs will be down 30% and the exurbs 40%. No matter what, as I see it, the cities will do best.
Russel, it has to be even more refined than that. Excelsior, Bayview and Hunters Point may come down 20,30% or more. Presidio, Sea Cliff, Pac Heights, etc probably will not.
One other thing: it's not just people in the city waiting to buy. There's a whole bunch of us outside SF proper just waiting for enough of a drop to make a move.
I know it's hard to believe, but a lot of people want to live in SF. More than there are houses for. On the contrary, not that many people want to live in Stockton. Or Tracy. Or Mountain whatever, Modesto, etc etc etc. This is why houses are empty in the central valley, and rents are rising to match mortgages in San Fran.
cd: I went to cron on Tuesday. Real nice. Foggy, but glassy, 4-6 and peaky enough to catch some good rides. (Just to be clear, I suck at surfing, but I still love it)
The differential in price drops we have seen so far is because of one reason - flippers, & Junk loans - obviously, the cities had just a smidge of it, the burbs had a TON of it. Thus, the enormous differential in price drops has occurred - SF down 12% YOY, Marin down 31% YOY, and Contra Cost down 46% YOY - this much we know, and this divergence will likely be maintained.
What we are dealing with now, are unknown global forces like deflation, job loss, etc. These hit everywhere and with equal force.
Hypothetically, say we are on the verge of 40 YEARS of depression. Do you believe that the prices will be maintained? I doubt you do. However, with the DIFFERENTIAL in prices between SF, Marin & CC be maintained? I think the answer is yes.
Now, I dont think we are in for 40 years of depression, probably only 1-2 years recession, max. The thing is though, things like deflation is a global thermonuclear force - it affects everywhere, and with equal vengence.
Either way, rest assured, you are sitting pretty on the heap of the pile - your property will always do better than the others so long as the demand is there - and there is plenty of demand there.
® writes: I am. Remember what the conversation was about? I said Ken Lewis did what he said and was a straight shooter.
I saw BAC covered those debts, yes.
I was tormenting you for your petulance.
But... do you really want to make a stand about the good moral character of Ken Lewis?
Remember those those warehouse lines with CFC? Was that really anything other than an attempt to hold up the Treasury by pointing a gun at his own head? Because if that was just an attempt to transact sharp practice, man he sucks at risk assessment. Like really, way to TARP the economy, Braniac.
I mean let's be honest, it's one of those "incompetence or malice" sort of things. If he were a real straight shooter, I would expect a heart-felt mea culpa backed with some attempts to make amends for the national disaster he personally had a large hand in creating.
He took CFC's debt with the Fed there to hand him a sack of taxpayer cash to meet his obligations and hit him in the head with a bat if he flinched. Not exactly an indication of strong moral character.
Being a straight shooter is surrendering the personal fortune made at the expense of the US taxpayer. I don't think we'll see any of that soon.
"If we get big time layoffs in SF proper, we might see some serious decline. If we don't, I just don't see prices going back to 2001. This goes for Berkeley, Albany, etc. as well."
It's fascinating how the "It's Special Here" argument never dies. California used to be special and immune from housing price drops, then it became limited to the Bay Area; then San Francisco, Marin, and Santa Clara counties were downright special; now it's shrunk to certain special neighborhoods.
Eventually I guess we can expect a homeowner to insist that his living room is really special and worth every penny of $1.5M while conceding that the kitchen and bedrooms have dropped significantly to $250k.
Its fascinating to me how much people get torqued when someone in the special areas point out the mere fact that their area will do better than the non special areas.
The guy pointed out prices will decline - thats a far cry from saying they wont go down...
TH - Ive never said it is special. For the past few years Ive been waiting for the fall, and in the areas Im looking at, it just isnt happening. You will have to admit, Id think, that some areas draw from a very different buyer pool than the vast bulk of US resid RE. Not many international rich folk are going to plop down cash to pick up some crapola in Missouri. But prime coastal stuff never goes out of style, nor do the prime metropolitan city markets.
They arent immune, but the bust needs to go on longer and deeper to extract much more of the wealth that got squirreled away for the past few years. Hasnt happened yet, and given the protection of the status quo, probably wont.
"prime coastal stuff never goes out of style, nor do the prime metropolitan city markets"
Geoff - lets call a spade a spade here. What you are saying without saying it is that these areas are SPECIAL.
Thats OK - you know why? Because they ARE special.
Special in the sense they dont get hit as hard. Different in the sense they dont get hit as hard. Immune in the sense they dont get hit as hard.
Sorry to pick on TH but I really am getting sick of everyone getting angry once someone points out the mere fact that some areas do better than others. Get over it and move on!!!
How about something like this plan that would force Banks and Borrowers to work out the bad mortgages or give the banks some loss mitigation by making the defaulted borrower pony-up monthly anyway - this will keep the losses between the people they should be - Banks and Borrowers - and not put the burden on the US taxpayer's back...
i dont have a problem with calling them special. But I dont need to use that word, and I dont like the connotation very much. They are just different. High end stuff is always different. There are certain markets in the US which are part of the international RE investment market. Most arent. That's a big difference, especially when youve been throwing around money and credit the past few years, and much of it has been squirreled away by the rich and powerful, who are now much more so.
What Im talking about is coastal near a major metropolitan city, as well as inland into even bigger and more expansive properties. Im NOT talking about the psuedo luxury supersized craptastic mansion like stuff that people wanted invent and pretend it was really prime. That's just pretend, and it is doomed.
... and I'm just going to point out that people in Tokyo thought their special, prime neighborhoods wouldn't experience dramatic price drops, but they were wrong.
But this is apparently a dead thread and I'm sure we'll have a chance in the future to revisit the issue with all concerned. The issue here is not a temporary dip in housing prices, but a colossal shift in attitude that hasn't really registered with homeowners in relatively untouched areas.
Hold on TH - the guy said (and you quoted): "If we get big time layoffs in SF proper, we might see some serious decline".
So this guy is acknowledging that IF we have layoffs we get SERIOUS DECLINE - the words "serious decline" is pretty cognizant of a japan type situation.
Further - say this is Japan - what do you think will happen?
Ill tell you - wages contract by 90%, the economy contracts by 90% - housing (as a whole) contracts by 90%. Houses in SF - decline by ONLY 70%. Why - because no matter how you slice it, they really are still SPECIAL!!!
The whole notion that prices in , say, Berkeley are not going down is bunk. Look at the costs per square foot in a zipcode like 94707 and prices are down $100 per square foot in the last two years. It is rare that a house sells in Berkeley for more than it sold for in 2006 or 2007, regardless of the price range. A new house which sold for 1.6 million three years ago recently sold for under 1.2. I expected to pay over $500 per square foot in 94707 last summer but expect to buy under $400 per square foot in 6 months. It's already below $450.
emo
emoII
and the rally fades....
Uh oh. Clearly every other human being has been abducted by aliens while I was in the can.
Houses in the city seem to still be selling for nearly what they sold for last year.
Still $1.2 million a block from my apartment. No difference I can see from when I moved into the neighborhood a year and a half ago.
We still have a investor/speculator driven market except now its in the foreclosure section.
Grim!
We have gone from fake Warren Bufffettttt rumors to fake deals reached...PPT is getting desperate and running on fumes
Heh, personally I wish they would fall some, but they just don't seem to be doing so.
Phoenix foreclosures 47% of market, median price is down 30% YoY, 35% from ATH.
SPAM power for Detroit.
This might make you laugh through those bail out tears.
MorningMash has a different take on how to save Detroit.
SPV's rather than SUV's
(SPAM Powered Vehicles).
Morning Mash
Can anyone help me? I am a political refugee from Somalia and I have an Uncle that has a big ship he says is good on gas?... Anyway if you will give him rewfuge and 3 million dollars, he will give you a share of his profits upon safe harbor.....
Royal Duke Prince Ugunda amin Dada
batsign past 12PM, volume seems stronger than usual
WIRE: Paulson slips, falls in giant money hole, markets rebound.....
WIRE: Belay our last, Paulson still alive lands on head, markets decline.....
WIRE: Belay our last, Paulson covered by landslide valued at 120Bb while climbing out of money hole, markets rebound...
WIRE: Sock it to me
WIRE: Sock it toooo meee?
The loan mod PR blast by the Barney F and his merry band should get interesting now that the recession is taking down the better half, how will Obama and the Democrat Congress sell loan mods.
NEW YORK (CNNMoney.com) -- All the foreclosure prevention plans announced to date will do little to help the next wave of delinquent homeowners, who can't make their monthly payments because they've lost their jobs.
But something needs to be done for them, experts said, or the country will sink deeper into an economic recession.
"Because of the financial crisis, they can't afford their mortgages on any terms," said Kathleen Engel, associate professor at Cleveland-Marshall College of Law. "None of the federal or bank programs will provide them any relief at all."
Loan modification plans have focused on assisting borrowers facing interest rate resets or other mortgage terms that have rendered the monthly payments unaffordable. Most proposals have attacked the problem by adjusting the interest rate or length of the loan so that the monthly payments drop to what is considered an affordable level, or between 31% and 38% of a borrower's gross income.
This, however, does little for people whose monthly income is virtually nothing. Representatives from lenders and firms that service loans say the unemployed have to be assessed on a case-by-case basis and can't be part of the streamlined modifications underway
The good thing about buying a house in the Bay Area right now is it proves that you have good enough credit or enough cash to get financed. The bad news is when the home prices drop another 25% and you swim away, your credit no longer will be good enough and you won't have anymore cash to buy a home for a long time.
falling a record 40.6 percent, or $256,000, from a year ago
That's about the same percent GOOG has fallen. Go figure.
Only solution to California is let in 20 more illegal aliens and 30 million more guest workers. Otherwise, prices are going down.
Very little difference in El Cerrito, Albany, Berkeley, or any neighborhood north of 280 east of Ocean. Some areas apparently still increasing.
Richmond down 40-70% in the flats, very little in the hills. Nobody wants to live in those areas. Murder rate is really high.
hold on to your hats...GM cliff divin again. Hope yall got out as fast as you got in.
Anyone know bay area median income?
I know many still-deluded folks in $1M homes.
despite this information, many San Franciscans are sure that the price drops are only in the suburbs and bad neighborhoods...
but that prices are still excellent in "the real SF"
of course each month that goes by "the real SF" seems to be shrinking, but that's another story.
if you can believe it, many of them think SF is safe because tech won't get hurt that much!!!!
who are these people who engage in premature extrapolation?
The National Indebted Homeowners Union President Ms. Varruka Salt, appears before the Senate Banking committee to offer testimony to receive TARP funding. As a member of the Joe6Pack Preferred Shareholder in the Municiple Banking and Investment Kompany of Amerika, Her opening statement was short and to the point of her members positions
"I want it now!"
You know, as much as I hate wall street, it's been fun today watching the street fleece the washington staffers who thought they had actionable information.
Suckers.
stamps foot!
Anonymous: median income is irrelevant indicator in Bay Area. People/couples here either make $200k+/yr, or $15/hr. Those of us in the $100k range are priced out of everywhere other than high murder rate neighborhoods.
jefff writes:
Houses in the city seem to still be selling for nearly what they sold for last year.
Wait a year. It will be much different by then. Parts of Menlo are still hanging up there in mid-air, too. This, too, shall pass.
See Mr. Mortgage for details of the California housing markets.
if the median is truly being pulled down by the lower cost homes selling more - that means the prices of houses are still even higher than we thought. therefore, theres even MORE correction to come before things come inline with incomes!
Upon hearing the news of the bailout blowup, angry rioters in Detroit continued flipping cars over and setting them on fire.
Why is there a bunch of advertisements for anime on my Calculated Risk today
batsign past 12PM, volume seems stronger than usual
did you see what happend though? it rolled over to a flippity flop hoopatwist with oscillation of volume.
I think we all know what that means.
yearnin, I have been watching the SF market for 11 years now. I believe it will fall when it falls. And it hasn't yet.
Yep, the 5 minute chart on GM just confirmed the dreaded 'middle finger formation.'
For all those who think PPT isn't for real, check out the story:
PPT Demystified on CNBC
Summary--
"...CNBC - which loves bubbles more than Lawrence Welk ever did - invited a Chicago trader named Scott Nations to the show.
Nations then shook things up by saying, straight out, that the US government, through the Plunge Protection Team, manipulated Standard & Poor's 500 index on Oct. 10 and Oct. 28.
"
Gotta love this.
Tough times not expected to derail Dodges casino
Tough times not expected to derail Dodge’s casino - Dodge City, KS - Dodge City Daily Globe
The concern comes as Harrah's Entertainment, Inc. announced earlier this week that it could not round up the funding for a $535 million casino in south-central Kansas. Earlier this year, Penn National also scrapped its plans to build a casino complex in the southeast gaming zone of Kansas, leaving Ford and Wyandotte counties as the only two zones of four remaining.
hilarious housing video posted on irvinehouse blog
YouTube - Real Estate Downfall
Anonymous: median income is irrelevant indicator in Bay Area.
Geez, it looks like there's still a long way to go then.
(VC money is dryer than 2002 and layoffs are going to put major pressure on salaries. Prepare for the onslaught.)
Elvis writes:
The good thing about buying a house in the Bay Area right now is it proves that you have good enough credit or enough cash to get financed. The bad news is when the home prices drop another 25% and you swim away, your credit no longer will be good enough and you won't have anymore cash to buy a home for a long time.
Elvis, RE excellent long term source of wealth..In fact best to run out and pick up a couple foreclosure deals do a quick rehab and rent them out to the budding section 8 market before the 25% equity goes to waste!
Sunset/parkside/russian hill/pacific heights/west portal/twin peaks seem to holding up well..
neighborhood map..
MAP of SAN FRANCISCO
CR,
You're right. The mix has shifted dramatically. That's because the sellers in the "nicer" neighborhoods have decided that their house values will not go down, by god...
In my old neighborhood, there are now 9 houses for sale, ranging from $1.1M to $2.7M. None are moving. Only two have dropped their list price.
In a normal spring/summer selling season, 6 or 7 would be a high For Sale inventory.
I know that at least a few of these are distressed homeowners, unable to afford their mortgages.
I predict the high end will come down fast and hard over the next 1-2 years. Credit isn't getting any more available for these folks, and their jobs are being lost. And the buyers psychology has completely changed, and very suddenly I might add, because fools were paying these prices just 6-12 months ago.
The Case-Shiller index is a better measure of house price declines.
Absolutely incorrect. Case-Shiller is different. Nothing more. C-S is slow and fails to address improvements among other factors.
Right now prices are changing quickly. C-S is bad at tracking quick changes. A great many of the homes purchased in the last 5 years are substantially upgraded products as indicated by concurrent home improvement indices.
CR, try a thought experiment. Pick a typical recently constructed Orange County tract and tell us whether C-S captures anything close to the true recent rapid declines.
Link to PPT Story:
CREDIT CARDS WILL BE THE NEXT BIG FINANCIAL BLOWUP - NYPOST.com
Chill:
there is clear pressure in the SF market right now.
sales ground to a halt in Sep/October.
if you go to Curbed or Socketsite you will see tons of properties that are usually snapped up immediately that are languishing.
there are a few properties that sell like in days gone by, but those days are thin.
some areas are getting slammed (one rincon hill, infinity as example). others are seeing pressure (Sunset, Bayview, etc).
others are JUST STARTING to show cracks (Bernal)
others are solid but with questions (Noe)
others are rock solid still (the real Pac Heights).
The inventory for sale in SF only (city) is significantly higher than past years. sales are down.
prices are holding, but the MIX is radically different.
the price per square foot is much lowering
Someone needs to get the market its seizure meds.
Ain't Never Seen that Before : The 2-yr yield just dropped below 1% for the first time ever (regular sales began in 76)
A Time to Reflect : The continuous 10-yr futures contract looks to have finally caught its 5th wave off last year's crisis beginnings near 103-20+. Ellioticians are likely quietly pleased with their analysis. The question now becomes Where is it headed? The air up here is pretty thin with little price action to work with.
Off the Charts: The market is about to bump into new territory, with the 10-yr now on the highs yielding 3.122% while the 30s are going for 3.711% into new highs and unaccountable prior to 1977.
Bond Ticker - Bonds Center - Yahoo! Finance
ShortCourage, on the one hand I hope you're right. On the other hand, my girlfriend is going to get caught out very badly if you are.
Rob Dawg,
I side with CR in preferring the C-S numbers. Even if it doesn't capture upgrades/improvements perfectly, at least it does a BETTER job of comparing apples-to-apples, for the types of homes it tracks.
yearnin, once I see prices drop, I'll be a believer! Fortunately, girlfriend is lodged on Liberty Hill, right between Castro and Noe Valley.
Per CNBC, C wants short sale ban reinstated.
Subject: *SOMALI PIRATES APPLY TO BECOME BANK TO ACCESS TARP
*SOMALI PIRATES APPLY TO BECOME BANK TO ACCESS TARP
*PAULSON: TARP PIRATE EQUITY IS AN INVESTMENT, WILL PAY OFF
*KASHKARI SAYSSOMALI PIRATES ARE FUNDAMENTALLY SOUND
*Moodys upgrade Somali Pirates to AAA
*HUD SAYS SOMALI DHOW FORECLOSURE PROGRAM HAD VERY LOW
PARTIC PATION
*SOMALI PIRATES IN DISCUSSION TO ACQUIRE CITIBANK
*FED OFFICIALS: AGGRESSIVE EASING WOULD CUT SOMALI PIRATE RISK
*FED
AGREED OCT. 29 TO TAKEWHATEVER STEPS NEEDED FOR SOMALI
PIRATES
[hat tip]
Rob Dawg, I disagree. The median prices can be distorted by the mix - without prices changing at all.
Imagine 10 homes, half being sold for $200K and half for $800K. The median is $500K. Now imagine that only 6 homes sold, five at $200K and only one at $800K (So no change in price for each house). What happens to the median? It fall 60% to $200K.
Clearly the Case-Shiller is a better measure than the median price. If you argue it is too slow - fine - it is reported several months late and I agree that is a problem.
Best Wishes.
Anyone else seeing these:
Citigroup also lobbying lawmakers, SEC to reinstate uptick rule - WSJ
Citigroup lobbying lawmakers, SEC to reinstate short selling ban - WSJ
Chill Bear,
I'm pretty sure I'm right about this. Very simply, the folks in my former middle-class neighborhood do not have sufficient income to afford yearly home costs in excess of $100K, let alone $150K like some of these home purchases would require.
Just like at the low end, it was all smoke-and-mirrors done with creative financing.
If there was any truth to the RE Agent's axiom that stock options made it affordable, I think you can kiss off a lot of the deals financed that way, don't ya think?
We live in amazing times. The yield on the 2 year note is 0.99 basis points,shattering the 1.10 level touched in June 2003. The 5 year note has breached 2.00 and trades at a record low yield of 1.93 percent. The 10 year note has a little more distance to traverse before it sets a new low as it yields 3.17 percent. The June 2003 low on that was around 3.10. The Long Bond has traded as low as 3.76 this morning.
[hat tip]
CNBC and the PPT
Wow, just checked local RE listings (East Bay). Just up the street from the house I sold in 2005, I could now buy the same model, for less than I paid in 2001!
Despite that - real estate is down LESS than the stock markets.
And that "4 bears" chart from yesterday ... already a few percent out of date to the downside. This stock market is falling further, faster than the 1929-1932 market! Yikes...
Yahoo! 404 - Page Not Found
it's all so UNEXPECTED!!! I mean, who could have thunk it?
I mean, seriously....when are they going to stop this crap.
To whom was this unexpected? (and dont say economists.) Bwahahahahahaha.
Well - we have now crossed 8'000 16 times today.
Grand numbers demand the ole "sixteen grinds".
The next move can happen.
s0mebody writes:
Anyone else seeing these:
Citigroup also lobbying lawmakers, SEC to reinstate uptick rule - WSJ
Citigroup lobbying lawmakers, SEC to reinstate short selling ban - WSJ
s0mebody | 11.20.08 - 1:55 pm |
It should read:
Citigroup concedes it is clueless on turnaround- WSJ
or
Citigroup echoes complaints made by Bear, Lehman on eve of collapse- WSJ.
Agree serf,
I think they should add C to GM on the list of mandatory BKs.
anyonw watchin' the long bond?
WEEEEEEEEEEEEEEEE!
Up, up, and away.....
The New York Post story is incorrect. We don't exist.
How do you price an asset that does not sell? Keep lowering the price until somebody buys it then mark down all other assets in that class to the new value. What happens when inventory is so high that nobody bids?
Medium price at least describes what price is attracting buyers and the message for this market at least in Calif is well south of 500K.
Short,
My take on it that the dot com crash didn't catch as many people out as popularly reported. Just a hunch, but I very strongly suspect the vast majority of people benefiting from dto com salaries and options saved their money and bought between 2000-2004. I personally know people that did this, and bidding up houses was not an issue, they paid very high down payments. I saved that money myself, won't go into details on how it left the house... let's just say there wasn't enough for either of us to buy on our own afterwards.
What makes SF different is that even during the insanity of 2004-2007, there just weren't that many houses on the market to suffer creative financing. I don't know anyone that bought in SF to flip. Everyone I know bought to be in the "cool neighborhood" around like minded people (e.g., "maternal heights).
I just don't see these people walking away like people are starting to walk in SoCal and elsewhere.
Hunters Point and Bayview may start coming down, but buying in those areas puts you at risk of idiotic zoning to prevent the horrors of gentrification.
Has anybody seen the updated economic forecast from Sr. Economist at MER?
It call for deflation in 2009 putting further pressure on US housing markets and more consumer debt pain.
Luv to see the Exec. Summary
This is just another example of how the free market is self-correcting.
This is exactly what should be happen...prices drop until they reach a level the market likes.
The flip side of this "changing mix" issue is that as price declines move into higher-priced areas (I agree with Short Courage here), and sales increase in those areas, the median may appear to stabilize.
I can see the headlines now: Housing price bottom! Buy now or be priced out forever!
chillbear:
prices are dropping in many nabes in the city, but you have to look and compare apples to apples.
most of those of course are in the SOMA, south beach, bayview, mission bay, potrero/mission, sunset neighborhoods.
but many are now in the bernal and twin peaks nabes.
also every once in a while you get one in the vaunted Noe (much less often though).
pac heights and seacliff are rock solid. as is cow hollow for the most part.
as example: (per socketsite)
224 Twin Peaks Boulevard.
listed for 1.655M.
bought last year for $1.36M
even worse, EXTENSIVE remodelling was done on this.
there are many many more.
however, the trend I'm seeing is this:
home is bought.
extensively remodeled and square feet added
home sold later for more than it was bought.
HOWEVER it was extensively remodeled, so the owner actually lost money.
"Executive compensation committees, recognizing the change in market climate, are now modifying incentive stock option plans. Instead of call options, senior executives will now be receiving put options. 'We know we can't stop stock prices from falling, so this change guarantees that even in the current market climate, our corporate leaders will get the rewards they deserve. Best of all, we still don't need to charge the value of the options against earnings!' said the chairman of a Fortune 500 compensation committee..."
-- satire, not real, gallows humor, nothing to see here, move along...
Question 1 : Explain the media's thoughts regarding professional (or "wall st") economists' ability to forecast short term economic indicators:
a) incredibly incompetent
a, b, c and d
b) detached from reality
c) beholden to moneyed interests
d) their dumb, but we're dumber
e) don't care, we just love typing "unexpected"
f) what, we're spose to listen to bloggers, like this CR character?
g) no, GTE
i) none of the above
yearnin,
This time next year should tell the story in a lot more detail.
AP: Officials say congressional Democrats will demand business plan from automakers before voting on a bailout bill.
All that's needed to quickly bring down prices in the high-end neighborhoods are increasing numbers of forced sales. You've already seen how quickly it can play out at the low-end.
Gee, has anybody been noticing all the layoff announcements of late? How about those recent unemployment numbers?
Think perhaps that divorce rates might edge up a little bit in these trying financial times?
Finally, everybody should closely re-examine their assumptions that flippers didn't play in the high-end neighborhoods... Those RE-Agent-Flippers and Contractor-Flippers are beginning to reach the end of their attractive financing terms (whose durations were a little bit longer than the loans made in "subprime" neighborhoods).
Again, I predict the rate of price drops in the high end will accelerate wildly in the next 1-2 years...
OOPS:
my example above:
bought last year for 1.36M
EXTENSIVELY remodeled
put back on market for 1.655M
didn't sell
Now on market for $1.249M
Citigroup also lobbying lawmakers, SEC to reinstate uptick rule - WSJ
Citigroup lobbying lawmakers, SEC to reinstate short selling ban - WSJ
If either of these things happen, I'm going to spit. If the market is a casino, so be it. If the market is going to play Calvinball, then I say !#)$ 'em.
CR - If you are planning to update the graph of "Four Bad Bears" can you offer it as a Screen Saver?
GM is a red herring.... C prepping for a decisive last hour dive below $5.
It ain't worth two bottles of Night Train.
Barley writes:
CR - If you are planning to update the graph of "Four Bad Bears" can you offer it as a Screen Saver?
Barley | 11.20.08 - 2:11 pm
I second this great idea!
@s0mebody: "I think they should add C to GM on the list of mandatory BKs."
Just think of how many smaller banks could be saved if the FDIC/Fed/Treasury did a controlled takedown/breakup of one of the big 3, spun off the non-bank operations, and spread the deposit base around among smaller institutions that actually have a fighting chance of surviving this calamity. Could be like TARP all over again. And it would be great for competition and consumer choice.
No press conference?
short,
It's going to take ALOT of layoffs in SF to make that happen. This town is loaded with DINKS, and single chicks who are going to find DINK a lot more attractive Real Soon Now. Good news for geeks, to be sure.
Hank opens with a self-reprecating joke... he's got the common touch... funny bald guys never go out of style.
"we must foster prudent risk-taking".
Mmm-kay.
I take this moment to apologize for all of Ventura County for our hosting this travesty.
Chill Bear,
You may be right that some or even a lot of buyers in the Bay Area used big downpayments. I doubt it was a very high percentage. But it doesn't really matter, because it's what happens at the margin that matters. It's those buyers (and I believe there were a lot of them) that could not afford a down payment of appreciable size that set the price at the margin.
And going forward, the number of folks that have that downpayment is going to be much, much smaller. No more trade-ups from "lower" neighborhoods, no more stock wealth, etc...
SF is not different, unless it is inhabited by non-humans, not subject to greed and folly.
Comrade Wisdom Seeker
Now thats just plain wierd!
Got an email from a close friend outlining just that.
Nationalise C. (aka Swedish model). Break it up dump the broken pieces. Buy off bond holders at 20 cents on the dollar, 0 for Common shares. And then sell baskets of depositors to other banks.
Hank: Those fucking foreigners sent too much money to us.
chill, shortcourage - Ive also been tracking the Bay Area mkts for nearly a decade, especially SF proper. I was living there for 8 years, and almost bought in around 2001-2. But even then, it seemed insane, having watched the runup. At that time, the junk loans werent really there....and I had no idea such things could come to pass. At the time I didnt really think much could ever change about the old mortgage laws of 20% down and 38% of income, etc. Boy was I wrong. Then I felt like a fool for a few years because everyone said man, you TOTALLY missed the market, and the 2br condos I was looking at in cole valley for 500k, went a few years later for 900k or more. Felt pretty dumb. But I still wonder how much of that was junk loans, how much was cash, how much was options money, how much is supported by two income hhs that both draw 100k plus (meaning, both gainfully employed). Now, the cash buyers can pay the RE taxes and condo fees. The two income are at serious risk of becoming zero to one income. The option arm types are screwed in a year. Many reasons to think that these things can start down now and head much lower. How low, dont know. But I would be surprised to see those 2001 prices again. Happily surprised, but still surprised. Im still hopeful. But the really really prime spots, and one of a kind stuff (willard st. , etc) I just dont see ever really coming back down to earth.
ShortCourage writes:
All that's needed to quickly bring down prices in the high-end neighborhoods are increasing numbers of forced sales. You've already seen how quickly it can play out at the low-end
Amen!!
The move up market will be hard to find in the coming years. I know many that purchased during the dot.com years and later..all would love to sell for what they paid in fact many put their property up during 2005 peak and still could not get there asking price. Stranded high end property owners abound in Calif.
Chill Bear Reformed Dope wrote...
"What makes SF different is that even during the insanity of 2004-2007, there just weren't that many houses on the market to suffer creative financing. I don't know anyone that bought in SF to flip. Everyone I know bought to be in the "cool neighborhood" around like minded people (e.g., "maternal heights).
I just don't see these people walking away like people are starting to walk in SoCal and elsewhere."
Your exactly right. Want to know who agrees with you? None other than Case Shiller!
http://www2.standardandpoors.com/spf/pdf/index/052708_Housing_bubbles_collapse.pdf
Basically, case shiller details that the junk loans and flips were a largely a suburban and exurban phenomenon.
The core strong burbs weak pattern is appearing all across the nation - Philly, DC, SF, CHI, BOS, etc. Basically, the price increases in the core areas were much more on the backs of legit homeowners whereas in the burbs & exurbs, it was much more a flipper phenomenon.
Now before everyone gets angry - SF IS NOT IMMUNE (there happy now)? The point is, the core cities look to get HIT, but NOT HARD ENOUGH to make many of us who post on these blogs happy.
I was crushed when I read this as I was just hoping BOS prices were lagging behind. Now ive accepted they wont fall as hard, and Im much happier for it.
They are actually laughing at the "swimming naked" line.
SF always seemed to me to have the highest visible homeless population of any major US city that I"ve visited. Not in a threatening way, but omnipresent. I am sure essays have been written about this hypothesis, linking it to weather, liberal/progressive attitudes, and societal permissiveness.
Everywhere. GG park, downtown, Castro.., every time I'd go to my favorite Mexican place, El Toro, down in the mission, it was chock-a-block of dudes standing around doing nothing at 11 a.m. midweek.
Someday, they'll have more company.
After Wagoner gets its money from uncle Screwsam -and doing the math, 12 billion are not enough to let GM survive- are you ready for being forced by your gubermint to buy a GM crapcar?
ruh roh, crash imminent...no action until plan is submitted by Dec 2.
No time to read thread, but I discovered that one of my clients has an excellent RESPA defence--maybe triple damages.
Also, was downtown filing a quit claim deed, and the recorder's office was so empty it was downright spooky.
I chatted with a foreclosure atty--who at least isn't gonna lose her job any time soon--and even she was gloomy.
Finally, the bank I love to hate BKUNA is now under 30 cents in value.
Hahahah.
Geoff wrote: "But I would be surprised to see those 2001 prices again. Happily surprised, but still surprised. Im still hopeful. But the really really prime spots, and one of a kind stuff (willard st. , etc) I just dont see ever really coming back down to earth."
You should set your hopes higher. Try 1999-2000 prices, if not lower. Take a look around you at what is happening to the economy Geoff. Do you really think that SF can survive as its own little island of prosperity amidst the carnage?
Even the uber-rich areas will see large price drops. That's actually happening already in the very high end...
"stamps foot!"
bacon | 11.20.08 - 1:45 pm
BACON! (gulp) I mean (pause) Mr. Dreamz, Sir!
Izzit really you?
Come in outta the cold, quick there! You've been gone so long!
"mr rational" posted on SF Gate comments to an RE story a couple of weeks ago that there were exactly three 3/2 houses for sale under $1M north of 280 east of Ocean.
If we get big time layoffs in SF proper, we might see some serious decline. If we don't, I just don't see prices going back to 2001. This goes for Berkeley, Albany, etc. as well.
Richmond, Vallejo, Antioch, etc are going back to 1983. No doubt about that at all.
Kristina,
is there any hope this being delayed b/c of incoming Christmas holidays?
Not knowing how your congress works, I wonder if there's place for filibustering.
If S&P goes back to 1995, surely housing must return to 1998 levels at least. Because so many people will be forced to liquidate to ensure retirement income.
They are putting it off until Big 3 provide a plan with more accountability. Basically nothing will get done until December.
My architect daughter is actually building herself a house in Winthrop.
I hope this counts as a strong Boston area. She said the same strong/weak thing some months ago.
REID SAY NO DEAL! Dec 2 brings us a pla
Pelosi: Not enough votes for any of these proposals.
Teh Southern Block will gut Michigan/Ohio and get their thirty silver dollars from new Toyota/Honda plants.
Game, Set, Match. Alabama's revenge.
One other thing about SF proper: I know several people making good money ($150k/yr+) that can put large down payments (30%+) that are waiting to buy in SF. They aren't waiting on prices to come down as much as they are waiting for something available in the neighborhood they want to live in.
Maybe SF isn't different. But we won't really know until this all plays out.
If S&P goes back to 1995, surely housing must return to 1998 levels at least.
We'll be very lucky if that happens. It's now clear that the Nikkei's "recovery" in 2005 was really a dead-cat bounce from 1990, and they're down 80% over an eighteen-year period.
Equivalent DOW would be 2800.
karelian, I surely hope not. Alabama is filth hole full of uneducated inbreds who work for 6 dollars an hour gleefully. We are truly doomed if "right to work" becomes the United States model. Right to work states are the worst in the union, I know, I live in one.
No group is as talented in shooting themselves in their foot while they shove their $700 loafers in their mouth as the current Democratic leadership. And I am a liberal
This is regional = not GOP vs. Dems.
Alabama and Mississippi have plotted this for weeks - the Japanese plants will expand even during a Depression if the Confederacy can now take out all of the Big Three simultaneously and cripple their suppliers.
Huge discounts to Toyota from desperate Great Lakes suppliers...
Now back to your regularly scheduled equities crash....
We were pondering these questions 150 years ago at the dawn of the Civil War... would the future of America be slavery, or free labor? I guess we all know what happened in the end: Slavery has won out.
Chill Bear, Patriot & Lawyer Liz, I see the same thing here in DC. Our burbs (even the very very pricey ones) melted down a long time ago. Here in DC (and the core areas Arlington & Alexandria), sales are UP (YOY) inventory is WAY DOWN (YOY) and the prices are down about 2-8%.
I tried to call BS on my city friend who told me this - heavily scrutinized all his stats - looks like he is right. The core areas had about 1/3 the junk loans as the burbs did, ALT A loans (all vintages) amount to 900 loans out of 8000+ loans made. About 1/3 of these have already reset - another 1/3 have been refied or the home sold!
Thankfully for me, I have no interest in the core areas - My suburban area is down 35% and is only now showing signs of life.
Charlotte is already devouring New York banking/brokerage jobs with 70% lower comp base. Auto plants of Deep South will pay 11.50 per hour. Military spending in Virginia and Carolinas will not be cut.
Beggar armies from California, Michigan and Manhattan will descend on Naches-on-the-hill to beg for some stale peach cobbler...
I just looked up a house I use to rent in 2004-2006 in Pt Loma (San Diego)
My rent was 1700 IIRC. It had positive cash flow.
Its now listed for short sale.
$249K
Sad
.....
karelian,
On that note the original reason for the minimum wage was to stop an exodus of jobs to the south (post-civil war I think)
Right to work is going to come back with a vengeance as deflation sets in. They are the only people who can adjust in a deflationary business environment.
I saw something creepy last night.
I was driving through $500K+ residential neighborhood in Kirkland, WA and passed a house with a red & white sign, "$299,000".
But the house was boarded up. No, not just the windows, the entire front porch was boarded up with sheets of plywood, too!
The neighbors must be freaking over their property values.
Live in sunset with view of ocean and city, golden gate park 2 blocks away..
It will come down but as Chill eluded to, mostly old money, non flippers, big downs, no need for car, jobs in city 25min via muni, rents on 2 bedrooms near 1800+, hospital and universities nearby, plenty of low cost things to do nearby...
Short it will come down but not as far as you are thinking...
last 3 homes on my street were sold in couple weekends...
demand is there..
Chill what are dinks? come on no need for that...
Short - im very aware of what is up with the economy, and what we are looking at ahead. But honestly, Im afraid that the real nice areas, but certainly not all of SF, will just sit around at this topped out level for many a year, or maybe dip a tiny bit. But for now, those prices make more sense than ever, because the rents supporting them have skyrocketed. Ive been checking the area I used to live, and other areas I thought about living, in case I return, and they are WAY higher than ever before, which at any cap rate, supports much higher prices. Now, I DO also remember in 01, when the dot com bust came, how many people left the city. Moving vans everywhere, every day. And i remember the rent reductions I asked for and got, twice. However, that was a the tech bust, and it was massive, and at the heart of the economy. We arent at anything close to that, YET. Will we get there, I dont know? But even if we do, the decline in rents will have to be much more massive than the last decline, and we STILL wont approach the rent levels that existed in 2001, which SUPPOSEDLY justified those prices then.
I really hope you guys are right and that the prime areas will come down significantly, but I grow more afraid by the day that it wont happen.
And as I said in a thread yesterday, I repeat here for posterity. This is one case where I desperately hope I am wrong.
But as for prices, ShortCourage might quote, from the Princesss Bride..."unless I am wrong, and Im never wrong, they are heading straight into the fire swamp!"
Somali&Pirates 500 goes frazier
Russel: "core" SF is pretty nice. My beef is as much with SF governance and taxes as it is with prices.
cd writes:
Chill what are dinks? come on no need for that...
Dual Income No Kids
DINKs
Dual Income No Kids
Announcement from Toyota & Honda:
"We have plenty of jobs at $40 an hour...we have no jobs available at $75 an hour."
Stock market is for fools
Rumors is all the ppt has left
7900 level has just been breeched
Watch out below.
This sucka is going down.
George W. Bush
DINK = Dual Income No Kids
Ha "dinks", we used to be dinks til the layoff came...I miss being a dink.
I just got the most amazing loan mod offer on a client who hasn't paid in well over a year and a half. All she has to do is sign and send them about a grand. They will even GIVE HER A VISA GIFT CARD FOR $250.00. Now, even with her delinquent interest, she still isn't underwater, because her house was worth so much (at one Point). 5% simple interest for 5 years, then amortizing.
Quelle desperation!!
chill-my bad..uneducated...
Parts of Alabama are pretty nice. I would definitely consider living in the Paint Rock area, near Huntsville. It's incredibly scenic. Might retire there.
Also, smart NASA people there.
cd, so, outer sunset... fog city... I still have designs on a social life... outer sunset might as well be outer space! Would only consider outer sunset if walking distance to OB.
lawyerliz writes:
5% simple interest for 5 years, then amortizing.
Quelle desperation!!
lawyerliz | 11.20.08 - 2:38 pm
And that my dear CR'rs is how we reward fiscal responsibility and saving...
Lock into a 30yr mortgage @ 6+% or be behind 1.5 years and get 5% simple for 5 years...
The next great wave: DINKS -> SINKS
(c'mon, you can figure it out)
NINKS anyone?
ades writes:
NINKS anyone?
nades | Homepage | 11.20.08 - 2:42 pm
It is the NIMKs that should scare everyone...
More like BINKS
Lawyerliz, can I get one of those?
Russel - connect the dots...this is playing out all over. Im most familiar with it because my two brothers live in the near to wall st Brooklyn area of Boerum Hill and Arlington DC. Both regularly make me look like a moron, because their homes have gone higher and higher. The junk is taking a hit, but the prime hoods are just rising. These are a very very tiny part of the overall market, but like I said before, the real prime stuff remains a different market. You have to realize how much money some people made the past few years, and who was buying the really prime stuff. A lot was cash. And most of the rest was with huge downpayments. The rich are still rich, even after the big stock market hit. And there are only so many places that the rich want to live. They want to be in the best hoods. We all know where they are. So do they. They stay, we sit outside and wonder why we are falling farther and farther behind.
Please please please let me be wrong.
To be fair to my client she lost her job, got behind, got a job, found a 2nd mortgage. Then she couldn't close because the title company recommended by the bank screwed up and didn't find liens that were there,
and she didn't know about because her ex didn't do stuff that he was supposed to and nobody let her know.
The mtg in foreclosure is BEHIND these liens and they couldn't get good title anyhow, which the foreclosing attys refuse to admit.
Chill Bear, Reformed Dope writes:
Parts of Alabama are pretty nice. I would definitely consider living in the Paint Rock area, near Huntsville. It's incredibly scenic. Might retire there.
Many parts of the deep south are beautiful. Then you have to deal with the locals who don't like outsiders. And try to avoid areas where manuf. jobs(textile, etc.) have left. The meth problem is out of control. A friend is from a small town in Tenn. He goes back to visit relatives but won't take his children. He tells me ALL his HS buddies that never left are meth heads today.
ah....el toro
one of the few things i miss about the bay area
that and escape from ny
@Barley 2:16, glad to see the meme is already out there! It might be a crazy thought, to do an antitrust-type breakup on the big sick banks to save the healthy parts, but it's worth thinking about. The bank triage teams are already making decisions like these (if only by default)...
One other thing about SF proper: I know several people making good money ($150k/yr+) that can put large down payments (30%+) that are waiting to buy in SF. They aren't waiting on prices to come down as much as they are waiting for something available in the neighborhood they want to live in.
Maybe SF isn't different. But we won't really know until this all plays out.
$150k/year will allow you to buy a home for maybe $500k.
even if they have a $300k downpayment, that gives them $800k home.
as you well know, little can be bought in SF for $800k.
at least not now.
prices will come down in SF absent major govt intervention because the incomes simply can't afford $1.5M starter homes.
Anonymous, I agree the landscape is beautiful, the people..eh, not so much. Education is non existant.
Dunno Kristina, who is your lender?
And you still have to get behind to get help.
Liz, it's Saxon (aka Morgan Stanley). I keep hearing I have to get behind..UGH...I hate that, I really, really hate that. Of course soon it won't be an option anyway, I'll be behind like it or not. Hubby still unemployed after two months, savings down to 8K now...
Chill,
I guess you didn't have the time to ride the tandem thru golden gate park down to ocean beach all last week...
I can drive 4 minutes and surf ocean beach..and Irving has some great eateries..
I lived in Newport beach and other nice beach areas..they get fog too...just not as much..plus I get to see a hot lady walk by about every 10minutes going to muni...
Of course thiers fog.. it beats the heck out of all east bay, south bay...
No big surprise there...I remember driving down route 80 to enjoy a nice day at the beach in the Bay Area, and passing signs saying, "come get your McMansions from the 600s, 700s, 800s, 1.9% APR*". Everyone was zipping around in Cadillac Escalades (with custom wheels) and BMWs. Real-estate agents raking it in with their $300 hair and $100 nails in high heels, driving nice Mercedes. One, two, and even three refinances were not uncommon in a 3 year period. Some smart people made 500k in fake wealth on their homes in just 3 years. It was UNBELIEVABLE compared to how the majority of the country was living.
"others are solid but with questions (Noe)"
Yep, Noe is the neighborhood I am in. I don't pay enough attention to see questions, just the basic "houses that advertise for X are selling fairly quickly", which probably has a built in two month lag.
The SF Chronicle had a internet tool to look up "upside down" mortgages by zip code, and mine was one of the very lowest at 5%. Generally all the high end neighborhoods in SF were at the very low end.
Alabama is playing a dangerous game here. They are about as red as redc can be, with all the levers of power in blue hands. They are also big time net recipents of federal $. Basically the whole state is a welfare case to the Federal govt. You could easilly see them fall to the bottom of the list for any of the infrastructure/green energy spending coming up.
Chill Bear and Geoff,
Here are a few more predictions regarding high-end house prices...
(1) Amongst those "old money, non flippers" that you imagine providing stability to the neighborhoods, there will be deaths and divorces.
(2) Amongst those DINKs, and other high-income households, one or more incomes will disappear.
As these things happen, insufficient "old money, non flippers" will be there to buy the houses. Prices will drop, at the margin, where it matters.
Also, re: high rents...
Rents will come down in this recession, thus pushing the buy/rent ratio even more out of whack (absent falling prices).
Short - i dont really disagree with you. But I think the effects you are talking about are fairly marginal, and what that means is that you might get a little price erosion over a long time, so that slowly, the gap between the high end and everything else eventually closes. So the stuff Im looking to buy might stand still or dip a bit, and hopefully I'll catch up in savings and income. If I had to wager a bet, Id say these prime areas stay mostly flat for the next decade, after a very small dip in the next year or so.
Alabama is playing a dangerous game here. They are about as red as redc can be, with all the levers of power in blue hands. They are also big time net recipents of federal $.
In terms of feeding from the federal trough, is there any difference between them and, say, blue state Iowa?
The SF Chronicle had a internet tool to look up "upside down" mortgages by zip code, and mine was one of the very lowest at 5%. Generally all the high end neighborhoods in SF were at the very low end.
Yep, and those area are full of cocktail-party "not in my backyard" liberals too. Every nice area in the Bay is offset by sharply contrasting poor areas. I turned down a job in Mtn View, which at just 100k per year would have afforded me significantly less than making 80k in Sacramento.
Chill Bear, I have met at least one person who bought with intention to flip in SF. I think your ideas as to why SF is different have all been dismantled pretty thoroughly. True there are always some people waiting to buy. But there are many more who don't yet know they will have to sell.
One other thing - many younger people work in SF and work in the Valley. When they lose their jobs and can't find others, they'll leave.
And many tech jobs were in the bubble 2.0 sector, and will not come back anytime soon.
We'll see moving vans in SF next year.
DINKs > SINKs is a little too easy
I prefer "OINKs"
Geoff - I agree with you 100%. The other interesting thing is where the rich "want to live" is changing. Years ago, EVERYONE wealthy wanted to escape to suburbia. Now, only MOST want to go to suburbia, the others want to be in the city.
Problem is its a very very very limited housing supply. Thus every time the prices drop, even a smidge, there is another buyer right there waiting to buy it.
short, I believe your theory on rents, but seriously, take a look at what has happened. Stuff that was renting for 1600 in 1999 is renting for over 3000 now. Even in the tech bust, rents fell from only about 20%, and by 2003 we were back to about that 1999 level. Now, granted, the vacancy was kept tight there because the housing bubble meant no one could buy and had to rent. But now we'd need a much bigger decline in rent. And its hard to imagine job losses as significant for SF as what was shed during the tech bust.
Long long way to go on rents. Granted, the job losses are just starting for the types of folks who live in those areas. The construction jobs, retail, etc, lost, are what has already killed the east bay junk, etc.
Is the "straight shooter" reading this?
Down goes Frazier! Down goes Frazier!
Crash is starting early today
Short - what you are missing is that the things you describe (job loss, death, etc) will certainly affect prices - prices will indeed go down in SF proper.
Problem is, those things will also affect the burbs the same way. Thus the burbs will keep going down too. In either event, the core wont go down ENOUGH to cause the city to be nearly as affordable as the burbs.
Thus, as long as the demand is still there, and it is still there, the price differential will continue.
Yep, Noe is the neighborhood I am in
Scanning the foreclosure, BK and tax lien rolls in San Francisco what stands out is the tax lien numbers are getting pretty big, showing financial stress, may show up later in greater inventory and foreclosure activity.
Who or what the heck is frazier?
Kristina. Don't use up all your savings unless the hub has got a line on a job. If you are going to default anyway, you need some cash.
You can always catch up if the hub gets a job. There are fees and costs to doing this of course.
The_Littlest_Mandarin : "Is the "straight shooter" reading this?"
I am. Remember what the conversation was about? I said Ken Lewis did what he said and was a straight shooter. C&C was posting that BAC would back away from it's previously announced deal. The sames rumors were posted about CFC. Ken Lewis just isn't the type to go into a deal and then back away.
People were also jumping on me for saying BofA backed CFC debt. Which they have.
BofA + MER will go through. C&C posting random rumors like he has some inside line somewhere is just stupid. And will proven to be so again when that transaction closes.
Geoff: I agree completely based on PERSONAL OBSERVATION.
I should have bought a 6 BR victorian in the Haight while I had the chance. Fill it full of students.
Frazier is Joe.
Russel, you are exactly right. The price differential between ordinary neighborhoods and "prime" neighborhoods will be maintained. The whole point of this dialog is that lately it has NOT been maintained, as the prime neighborhoods have been levitating. I'm just saying that that will end soon, more quickly than it has traditionally done.
Lawyrliz:
Joe Frazier - Wikipedia, the free encyclopedia
Chill - I lived in Cole Valley/UCSF area. It's ruined now. Dont think I can ever get back there. To rent anything that isnt a closet is absurdly expensive. To buy, nothing even decent for $1 mil. And still, rarely anything really even comes to market. And with a view - forget about it.
I like how we loved median price methodology during the bubble, now it's all disclaimers about how it actually depends on the houses being sold. This is why price/sqft is a better metric, particularly split by condo/house and zip.
Geoff:
SMOKING Joe
Chill, suns out..another nice weekend
haight's not far from sunset so your sunset quote doesn't make sense...
cd: On the contrary, I was in the water last week, and I am staying in the city tonight to catch the north swell coming in tomorrow, probably at sloat. If it's big enough, I'll be out on my Parmenter mini-gun (widowmaker set up), otherwise the merrick 6/6 round pin.
square foot by zip is all that matters.
Note, If Due Diligence or market conditions change valuations considerably, the deal (price) may change but the deal will go through.
and even that is distorted, since so much renovation took place in the past few years. So there does have to be an adjustment for that. How, I dunno. Let me guess. Up.
dtripper - no offense, but here is a quote I took from a guy Sept 17, 2007 re: the fall of the cities:
LBO wrote "RUSSEL trust me, ive seen this before, the core cities always fall last. They are not different, they do not make more than the rest of us - Loudoun county is now down 9% - One year from now, Arlington will be down by the same amount - I bet my life on it"
Well, LBO was kinda right, Arlington (the DC core) is down about 6.2% - the problem is Loudoun (the nice exurb) is now down -24%. Both have increasing sales - both have declining inventory. Both are in this thing together.
Same thing looks to be happening in SF. If SF is down 20% next year, the burbs will be down 30% and the exurbs 40%. No matter what, as I see it, the cities will do best.
dtripper: I am calling it as I personally observe it. You can call me wrong all you want, I'm just telling what I see on the ground here in SF.
And what I see is very little danger of anything more than flat prices for the prime neighborhoods.
That might change, but that's what I see right now.
Russel, it has to be even more refined than that. Excelsior, Bayview and Hunters Point may come down 20,30% or more. Presidio, Sea Cliff, Pac Heights, etc probably will not.
One other thing: it's not just people in the city waiting to buy. There's a whole bunch of us outside SF proper just waiting for enough of a drop to make a move.
I know it's hard to believe, but a lot of people want to live in SF. More than there are houses for. On the contrary, not that many people want to live in Stockton. Or Tracy. Or Mountain whatever, Modesto, etc etc etc. This is why houses are empty in the central valley, and rents are rising to match mortgages in San Fran.
Merrick-great shaper..I remember when Tommy C was thier big sponser rider..
Smooth he was..
Actually Monday was fun at OB..
7-8 stewart at least made it feel that way...no wind, sun and 2-3..
hope ya had fu
cd: I went to cron on Tuesday. Real nice. Foggy, but glassy, 4-6 and peaky enough to catch some good rides. (Just to be clear, I suck at surfing, but I still love it)
Anyday you get to the line at OB is a good day.
Chill Bear, the point I am making is twofold.
Hypothetically, say we are on the verge of 40 YEARS of depression. Do you believe that the prices will be maintained? I doubt you do. However, with the DIFFERENTIAL in prices between SF, Marin & CC be maintained? I think the answer is yes.
Now, I dont think we are in for 40 years of depression, probably only 1-2 years recession, max. The thing is though, things like deflation is a global thermonuclear force - it affects everywhere, and with equal vengence.
Either way, rest assured, you are sitting pretty on the heap of the pile - your property will always do better than the others so long as the demand is there - and there is plenty of demand there.
® writes:
I am. Remember what the conversation was about? I said Ken Lewis did what he said and was a straight shooter.
I saw BAC covered those debts, yes.
I was tormenting you for your petulance.
But... do you really want to make a stand about the good moral character of Ken Lewis?
Remember those those warehouse lines with CFC? Was that really anything other than an attempt to hold up the Treasury by pointing a gun at his own head? Because if that was just an attempt to transact sharp practice, man he sucks at risk assessment. Like really, way to TARP the economy, Braniac.
I mean let's be honest, it's one of those "incompetence or malice" sort of things. If he were a real straight shooter, I would expect a heart-felt mea culpa backed with some attempts to make amends for the national disaster he personally had a large hand in creating.
He took CFC's debt with the Fed there to hand him a sack of taxpayer cash to meet his obligations and hit him in the head with a bat if he flinched. Not exactly an indication of strong moral character.
Being a straight shooter is surrendering the personal fortune made at the expense of the US taxpayer. I don't think we'll see any of that soon.
i buleive the term is, bublam!
"If we get big time layoffs in SF proper, we might see some serious decline. If we don't, I just don't see prices going back to 2001. This goes for Berkeley, Albany, etc. as well."
It's fascinating how the "It's Special Here" argument never dies. California used to be special and immune from housing price drops, then it became limited to the Bay Area; then San Francisco, Marin, and Santa Clara counties were downright special; now it's shrunk to certain special neighborhoods.
Eventually I guess we can expect a homeowner to insist that his living room is really special and worth every penny of $1.5M while conceding that the kitchen and bedrooms have dropped significantly to $250k.
Its fascinating to me how much people get torqued when someone in the special areas point out the mere fact that their area will do better than the non special areas.
The guy pointed out prices will decline - thats a far cry from saying they wont go down...
TH - Ive never said it is special. For the past few years Ive been waiting for the fall, and in the areas Im looking at, it just isnt happening. You will have to admit, Id think, that some areas draw from a very different buyer pool than the vast bulk of US resid RE. Not many international rich folk are going to plop down cash to pick up some crapola in Missouri. But prime coastal stuff never goes out of style, nor do the prime metropolitan city markets.
They arent immune, but the bust needs to go on longer and deeper to extract much more of the wealth that got squirreled away for the past few years. Hasnt happened yet, and given the protection of the status quo, probably wont.
"prime coastal stuff never goes out of style, nor do the prime metropolitan city markets"
Geoff - lets call a spade a spade here. What you are saying without saying it is that these areas are SPECIAL.
Thats OK - you know why? Because they ARE special.
Special in the sense they dont get hit as hard. Different in the sense they dont get hit as hard. Immune in the sense they dont get hit as hard.
Sorry to pick on TH but I really am getting sick of everyone getting angry once someone points out the mere fact that some areas do better than others. Get over it and move on!!!
So it sure looks like there is more money to be made for everyone if we keep up this tsunami of foreclosures:
A Foreclosure Solution so Simple it Would Work « Your Mortgage or Your Life…
How about something like this plan that would force Banks and Borrowers to work out the bad mortgages or give the banks some loss mitigation by making the defaulted borrower pony-up monthly anyway - this will keep the losses between the people they should be - Banks and Borrowers - and not put the burden on the US taxpayer's back...
i dont have a problem with calling them special. But I dont need to use that word, and I dont like the connotation very much. They are just different. High end stuff is always different. There are certain markets in the US which are part of the international RE investment market. Most arent. That's a big difference, especially when youve been throwing around money and credit the past few years, and much of it has been squirreled away by the rich and powerful, who are now much more so.
What Im talking about is coastal near a major metropolitan city, as well as inland into even bigger and more expansive properties. Im NOT talking about the psuedo luxury supersized craptastic mansion like stuff that people wanted invent and pretend it was really prime. That's just pretend, and it is doomed.
In the SOCAL sales up thread, I opinied how Mr. Mortgage was gonna spin this SINGLE DATA POINT of good news to show it was bad.
Now we have NOCAL sales up. So what does Mr. Mortgage do now?
Well it looks like we have our answer - hes just not gonna report on it at all - coward...
... and I'm just going to point out that people in Tokyo thought their special, prime neighborhoods wouldn't experience dramatic price drops, but they were wrong.
But this is apparently a dead thread and I'm sure we'll have a chance in the future to revisit the issue with all concerned. The issue here is not a temporary dip in housing prices, but a colossal shift in attitude that hasn't really registered with homeowners in relatively untouched areas.
Hold on TH - the guy said (and you quoted): "If we get big time layoffs in SF proper, we might see some serious decline".
So this guy is acknowledging that IF we have layoffs we get SERIOUS DECLINE - the words "serious decline" is pretty cognizant of a japan type situation.
Further - say this is Japan - what do you think will happen?
Ill tell you - wages contract by 90%, the economy contracts by 90% - housing (as a whole) contracts by 90%. Houses in SF - decline by ONLY 70%. Why - because no matter how you slice it, they really are still SPECIAL!!!
The whole notion that prices in , say, Berkeley are not going down is bunk. Look at the costs per square foot in a zipcode like 94707 and prices are down $100 per square foot in the last two years. It is rare that a house sells in Berkeley for more than it sold for in 2006 or 2007, regardless of the price range. A new house which sold for 1.6 million three years ago recently sold for under 1.2. I expected to pay over $500 per square foot in 94707 last summer but expect to buy under $400 per square foot in 6 months. It's already below $450.