When my wife used to live out there, she used to rent at 1/3 the cost of buying. The only way that buying made sense there was if you expected home prices to appreciate more than any other investment for a long period of time. Otherwise, renting was a no brainer.
I remember my brother bragging back in 2005 that he's gotten "rich" because he worked 2 jobs as a registered nurse, and that he bought a 2Bed/2Bath house in Union City, CA.
He's close to foreclosure now.
Someone needs to say something about this! http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's!!! Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS to me! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
The economy is starting to heal even if it looks and feels like it's dying during the process.
There's always the danger, though, of stopping the treatment before the disease is gone because the suffering is too great. And then there's the danger of going too far and killing the patient.
Maybe we should just give up and go straight for the embalming fluid. We can have something that looks like our old economy but doesn't really do much of anything.
Talked to a Berkeley (East Bay) real estate broker. He said houses are still moving but with huge down payments > 50%. It's likely different further out.
Wow, back in the summer in the SF Bay Area people were like "house prices falling, that CANNOT happen here" jobs, high-tech, it's special here blah blah.... well, I guess not THAT special anymore, still prices in SF have been crazy for ages, even way before the dot.com boom of the late 90s
If you can't find some decent ways to employ capital during times like this you ought to give up on investing and just stick with treasuries.
There are some extraordinary bargains to be had with very little looking.
good luck
d
Jumbo financing is just coming from portfolio lenders and all the portfolio lenders are being extremely conservative. On top of that the PMI companies are tightening as well.
CR-
I do expect that "must-sell" foreclosures may have been overpresented in Dec. closing, and those tend to be lower end.
But at the pace the foreclosures are getting added into inventory, I expect they will make up more and more of the market even in a more traditional selling months.
Here's a big qualitative change for these Bay Area numbers: Every county shows no price appreciation.
For December 2006, 5 of the 9 counties showed price appreciation. What that meant was the local papers could put up the headline that prices are still rising (and mention that sales have declined again in the body, but who cares about that).
So the local paper in Marin County has to explain a 5.5% median price drop. San Francisco (it can't happen here San Francisco, we're not Solano) has to explain -1.9%.
The realtors, of course, will talk about a temporary problem with lending that will be all patched up by Spring, but I think we're crossing an important psychological threshold here in the Bay Area: Prices are down, it's happening here too, and month after month it doesn't look any better.
Chemotherapy won't help this horse. Please show more mercy.
In all seriousness, cancer has been something I've had to research in the past. I can help but seeing almost an exact analogy between the speculative ponzi units that have infested the economy and replaced real wealth producing businesses with toxic facsimiles, and the mutated cancer cells that spread into vital tissue and replace it with parasitic biomass.
Maybe it's a stretch, but it feels the same to me. I think we have economic cancer.
Volumes in CA are unsustainbly low.. something will have to give.. and it wont be financing so the buyers won't be solving this issue.
Some of foreclosures are starting to price much more aggressive, that is what will lead the market down. If the market has few comparables in the last 6 months and a lot of foreclosures.. the lenders will be cutting appraisals right and left.
Unfortunately, this cancer has metastasized so much and left unchecked for far too long. The only definitive cures for such are thorough and aggressive excision, or death.
"Home sales plummet, median prices drop slightly in December"
This is just the online version. It doesn't have the Marin Association of Realtors spin yet -- they'll put the situation in context for the non-professionals. Here's what they said last month:
"If you are an investor or a buyer, now is the time to leap into the Marin County real estate market," said Valerie Castellana, president of the Marin Association of Realtors.
Roughly:
10m housing units in 1988
13.5m housing units in 2008
Sales would need to be +35% to remain proportional.
It isn't the exurbs finally being joined by the cenurbs however. It is the more recent and more marginal being joined by traditional neighborhood housing. Core condos for instance are seeing massive declines and that should be enough to put to rest the exurban bust model.
out of respect for the blog maybe we can avoid all this chemo talk and so forth maybe?
Fair enough.
I won't mention the subject in the future.
I understand the sensitivity of the subject from experience. But I do think maybe it's constructive to be aware that in other disciplines outside of economics it's acknowledged and scientifically corroborated that not everything that's beneficial feels good.
Well it appears the pop that HAD TO OCCUR sometime finally has. Prices went from high, to crazy, to insane due to silly mortgage products and investors.
My anecdotal indications are that folks are beginning to digest the fact that it's really over and it's not coming back any time soon. Watch for a large increase in inventory in the next few months. Many reacted to the mania on the way up. I suspect many will react to the panic on the way down.
As an appraiser, there are some facts everyone needs to keep in mind. Real Estate values are set at the margins -- a very small percentage of homes is on the market at any given time, and small shifts in supply and demand can have a multiplier effect on the averages.
With fewer financing available, more people are staying put -- which means the homes that are selling are in the must sell category, as opposed to want to sell. REOs and pre-foreclosures and the like.
That said, this is another fine example of the California Real Estate Roller Coaster -- a wild ride on the way up, and a free fall on the way down.
Good point. We haven't seen panic, yet -- at least not in the Bay Area. From what I can see, a lot of people took their houses off the market this fall, waiting for spring.
I think they were acting on the ancient Babylonian aphorism:
When in doubt,
Wait for the recession,
Then act timidly.
Sold yesterday so I have to live with the bond rally until FED cuts 75% on 1/29. After that I will have to determine what to do. With the news coming so fast, I almost feel like this is a real time financial simulation. Unfortunately, it is not.
OT Does anyway know if ACA still has to make their bond payment tomorrow or are they in receivership already?
expect it to hold steady...lenders are not dumping their properties for firesale prices. They are employing regular agressive 30-day price reductions on the existing population, but have NO intention of flooding the market with bargain-basement REOs.
This time is different. They are holding onto their inventory and taking a wait and see approach. To see if they get a bail-out, to not actually book the losses yet...whatever.
Too soon for true bargain hunters. Now if you have really really big cash and a very long time frame, why wait to time a bottom. Buy it cash in CA or FL and be happy with it (that's what the foreign investors are doing).
The median price isn't such a great measure. Jumbos are hard to come by and it's homes financed with conventional loans i.e. $417K or less -- the lower end -- which predominantly are selling at present. This is naturally pulling the median price down. A better measure is price per square foot, which has its own issues, but still is a better measure. Any info on how the change in PPSF compares with this new info on the median price?
CR -- minor point: I bought and analyzed the monthly San Diego resale home data series over '88 to present, and found seasonality only in unit sales, not prices.
Thus, price drops month-to-month are okay to compare (though we all understand that mix is shifting to less expensive homes).
Long-time readers of this blog and others understand that.
However, median price is the main metric pushed by the MSM and the realtors. It was almost universally agreed to be a fine indicator during the boom -- prices are going up, up, up!
So, now that's it's falling, it's going to be difficult to reprogram the masses to ignore "falling prices."
The percentage of homes for sale in the Bay Area that are in some stage of foreclosure is staggering (to me at least). For instance, take San Jose.
San Jose has 3,100 houses for sale, according to Realtor.com. Trulia shows 4,000 homes for sale of which 2,500 (63%) are in some stage of foreclosure. That means, only 1,500 homes are not officially distressed sales. RealtyTrac says 4,200 properties are in some stage of foreclosure: 2100 are in pre-foreclosure, 820 are up at auction, 1150 are bank owned.
San Jose has 310,000 housing units according to the Census Bureau, in which case at least 1.3% of homes are in some stage in the foreclosure process. Median household income is $89,000 and median home price is $683,000.
In the end, I think prices will return to a level that the average person with an average income in an area will be able to afford the monthly payments for, including San Jose. The question is how that will happen, whether by price drops, high inflation, or a mix of both. The Google effect can only reach so far and last so long.
There are some here who still say prices never go down in the Silicon Valley.
Sorry I haven't been around to take a beating. I'll be around more starting next week. Dealing with some family matters, but still reading the news. All dismal.
I'm almost done restocking the Bankerdome. Canned goods, bottled water, lots of ammunition, DVD's of the 2004 Boston Redsox. I even added the CR memorial wing dedicated to shock treatments and "sky is falling" images.
If you can't find some decent ways to employ capital during times like this you ought to give up on investing and just stick with treasuries.
There are some extraordinary bargains to be had with very little looking.
good luck
d
david_in_ct | 01.17.08 - 2:51 pm | #
I figured when I bought 10 and 30yr T's in August below par i WAS investing. Are you suggesting that the 12% cap gain since (25% annualized) and 5% coupon was lucky or unwise?
You can't bottom fish with 50 yards of line when you're in 500 foot waters.
As long as CNBC askes, "Have we hit bottom," you'll know we haven't. We'll have hit bottom when most are convinced we haven't. Wait until most of the herd are pessimistic, then consider trolling for whatever may still be swimming.
banker! The CRdome wouldn't be complete your wing, so there's something good to look forward to next week. If this hand-basket is going anywhere, let it be an equal-opportunity hand-basket with all of us shouting at once. As I'm the mad geographer lurking under the newspapers and the overpass muttering nonsense into the threads once in a while, I doubt I rank high enough for a proper welcome ceremonial, but consider it attempted.
Seriously, getting additional insight and conversations going about what this all means rather than the "ooh! ahh! looky! looky!" phenomena would be nice. I don't think these are fireworks going off but I'm not exactly up to speed on the critical differences between bottle rockets, flares and the seriously nasty stuff so some UberComments would be welcome.
I'm a Resident and Renter -- with money to buy when the time is right. But most asking prices are just "wishing" prices. Most folks haven't gotten the memo yet, but they will.
My personal favorite is 688 Vanessa Dr 94402 -- a bank owned foreclosure. It's 1600 sq ft and just over 50 years old. Here's the price history (from PropertyShark):
Current asking is $729k. DOM is 77. Even the bank has a wishing price.
What's it really worth? I don't know, but given the neighborhood, this is a blue collar residence. $100k family income, at 28% PITI, would support a 400k mortgage. So selling price should be in the 450k range.
"You can't bottom fish with 50 yards of line when you're in 500 foot waters.
As long as CNBC askes, "Have we hit bottom," you'll know we haven't. We'll have hit bottom when most are convinced we haven't. Wait until most of the herd are pessimistic, then consider trolling for whatever may still be swimming."
I am a big fan of gaging sentiment and when it is quantified it is a great adjunct to other analysis. However, there are times when you can directly calculate business values and the stream of income coming from the business makes it irrelevant what other people think. in certain sectors this is currently the case.
vlo (which i dont own) closed today around $51. Best guesses are that earnings will be somewhere between 6-8 bucks a share for 2008. this means you can get an earnings yield between 12 and 16 percent. that to me is a layup when equivalent bond is around 3 percent. could oil prices and crack spreads collapse, sure, but the futures market does not price that in so if you wanted to hedge you could.
these kinds of calcs are available in a number of world class natural resource companies where if you wanted you could hedge the major direct commodity exposure if you so desired.
in the last two days i have sold some of my natgas/oil royalty trusts in favor of more leverage in the natural resource sector. i think copper is a great place to be over the next five to ten years and am tickled that i have gotten a chance to buy the idea at 30 - 40% off what it was 8 weeks ago.
just like on the way up, the big moves down tend to end when the laggards play catchup and the leaders stop leading. the last two days have been exactly that. i dont pretend to know or predict the exact day of any bottom but earnings arithmetic works pretty well over the long run.
What's it really worth? I don't know, but given the neighborhood, this is a blue collar residence. $100k family income, at 28% PITI, would support a 400k mortgage. So selling price should be in the 450k range.
I sold in june 05, lived up in Emerald Hills near Woodside and now renting up in Sonoma. San Carlos, Emerald Hills etc have all gone bonkers price wise and will take years of deflation to unwind from the crazy action, that being said RE prices are set at the margin and many folks the past 5 years have purchased with IO loans and many others have refi'ed like crazy so we may see a big drop in price as these folks get hung out to dry buying million dollar 50's crap boxes and betting on huge appreciation numbers to bail them out but not able to roll over these loans or find new suckers to contine the game. I know many eager beaver types who overspent during the 99-2000 RE boom and wanted to sell for breakeven in 2005 and still could not find buyers, so the market is not as wonderful as the RE industry as presented it.
I am still obsessing over that ad for phony pay stubbs. I suspected people lied, but I thought that they just got friends and relations to issue pay stubbs out of their small business.
This ad was not for individuals but for deceitful brokers, who were lying en masse.
Sonoma county has been dropping 1.5% a month december to december and is officially 25% off the peak.oof.in '05,06 and '07 we had 70% of the purchase loans classified as "exotics".2012-2015 look like good years to buy in the wine country.
The folks who said Bay Area house prices never go down have changed their tune: "High end (roughly greater than $1.2 million) Bay Area homes never lose value. I think the price decline may be less gradual than we're used to since owners have a lot less equity than they did in previous declines and what little equity they had, they traded for a HELOC. And all this before ARM resets. Scary, but CR warned us months (acutally years) ago.
If you don't think the high-end in the Bay Area is in trouble, read this ad from Craigslist for a house in the Santa Cruz mountains. As I said in earlier posts, more rentals at 2X the going rental rate are popping up. This one is truly amazing, and very revealing... I especially marvel at how they are trying to rent out different parts of the house separately! It is not a typo, they are asking $12,000 per month... (Note: emphasis added is mine).
"$12000 / 6br - Los Gatos Mountains, Estate Living (los gatos)" Enter the world of luxury and have it all. Gated estate on the best street in the Los Gatos Mountains, circle driveway with fountain, 8000sf+ home, pool/spa, pool house decking and BBQ area. Wine cellar with room to set and sip wine. One car attached garage. Close to all schools and store. Master bedroom has fireplace & steam shower. So many wonderful thing about this property, must see it. Rental price is for main house,pool house,pool and surrounding area. Additional areas & structures may also be rented. 1200sf, garage/workshop for $1200. 1 Bedroom guest house for $1500. 4 stall horse barn with paddocks & riding arena for $1500. Must see it to believe it.
The BA has now joined the rest of Ca. Welcome home old friend!
"Last month was the slowest December is DataQuick's statistics, which go back to 1988"
How about a population adjustment also?
When my wife used to live out there, she used to rent at 1/3 the cost of buying. The only way that buying made sense there was if you expected home prices to appreciate more than any other investment for a long period of time. Otherwise, renting was a no brainer.
I remember my brother bragging back in 2005 that he's gotten "rich" because he worked 2 jobs as a registered nurse, and that he bought a 2Bed/2Bath house in Union City, CA.
He's close to foreclosure now.
Someone needs to say something about this! http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's!!! Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS to me! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
587,000 on a standard laon is still about 3600 a month...
that requires 60g's a year in income to cover just the mortgage.
"The median price paid for a Bay Area home was $587,500 last month, down 6.6 percent from $629,000 in November"
down 6.6% in A SINGLE MONTH! That exceeds lots of early projections for the entire downturn.
crispy&cole, yes, divide by something and it is even worse. These numbers are pretty ugly without normalizing!
Best Wishes.
Wow. December prices off 6.6% from November.
hopeinsd, DataQuick doesn't seasonally adjust, so I'd be a little careful with the month over month decline - but that is definitely significant!
Best Wishes.
Well, the chemotherapy has begun in earnest.
The economy is starting to heal even if it looks and feels like it's dying during the process.
There's always the danger, though, of stopping the treatment before the disease is gone because the suffering is too great. And then there's the danger of going too far and killing the patient.
Maybe we should just give up and go straight for the embalming fluid. We can have something that looks like our old economy but doesn't really do much of anything.
It'll be easier to cope that way.
BTW, I just feel like causing trouble today. Don't take me too seriously.
ac,
Chemotherapy won't help this horse. Please show more mercy.
Also, these numbers dont include incentives - so the drop in prices is even worse.
On the transation side - these numbers include sales taken back by the bank - so the drop in volume is even worse!
*transaction side
The median price figure is bogus, because the rate of Jumbo loans has gone down the toilet (~1600 IIRC from the Chron article).
Talked to a Berkeley (East Bay) real estate broker. He said houses are still moving but with huge down payments > 50%. It's likely different further out.
Wow, back in the summer in the SF Bay Area people were like "house prices falling, that CANNOT happen here" jobs, high-tech, it's special here blah blah.... well, I guess not THAT special anymore, still prices in SF have been crazy for ages, even way before the dot.com boom of the late 90s
If you can't find some decent ways to employ capital during times like this you ought to give up on investing and just stick with treasuries.
There are some extraordinary bargains to be had with very little looking.
good luck
d
Perhaps this report is what spooked the market at about 1:45 EST. It's pretty ugly.
Jumbo financing is just coming from portfolio lenders and all the portfolio lenders are being extremely conservative. On top of that the PMI companies are tightening as well.
Nobody wants to stand in front of that train.
CR-
I do expect that "must-sell" foreclosures may have been overpresented in Dec. closing, and those tend to be lower end.
But at the pace the foreclosures are getting added into inventory, I expect they will make up more and more of the market even in a more traditional selling months.
Here's a big qualitative change for these Bay Area numbers: Every county shows no price appreciation.
For December 2006, 5 of the 9 counties showed price appreciation. What that meant was the local papers could put up the headline that prices are still rising (and mention that sales have declined again in the body, but who cares about that).
So the local paper in Marin County has to explain a 5.5% median price drop. San Francisco (it can't happen here San Francisco, we're not Solano) has to explain -1.9%.
The realtors, of course, will talk about a temporary problem with lending that will be all patched up by Spring, but I think we're crossing an important psychological threshold here in the Bay Area: Prices are down, it's happening here too, and month after month it doesn't look any better.
A little earthquake in some of those anthills will hasten the decline. Watch out for tech drone ants wearing blue shirts!
Chemotherapy won't help this horse. Please show more mercy.
In all seriousness, cancer has been something I've had to research in the past. I can help but seeing almost an exact analogy between the speculative ponzi units that have infested the economy and replaced real wealth producing businesses with toxic facsimiles, and the mutated cancer cells that spread into vital tissue and replace it with parasitic biomass.
Maybe it's a stretch, but it feels the same to me. I think we have economic cancer.
Lehman Job cuts Lehman Brothers cuts back mortgage lending further - MarketWatch
Yeah, but ac, chemo isn't something to joke about.
dennisdman, that may be interesting but at this point, you've become a spammer.
Tell the authorities; do something constructive yourself.
Volumes in CA are unsustainbly low.. something will have to give.. and it wont be financing so the buyers won't be solving this issue.
Some of foreclosures are starting to price much more aggressive, that is what will lead the market down. If the market has few comparables in the last 6 months and a lot of foreclosures.. the lenders will be cutting appraisals right and left.
ac,
Unfortunately, this cancer has metastasized so much and left unchecked for far too long. The only definitive cures for such are thorough and aggressive excision, or death.
Yeah, but ac, chemo isn't something to joke about.
It's not a subject I've learned about out of curiosity -- I take it quite seriously.
Marin Independent Journal headline:
"Home sales plummet, median prices drop slightly in December"
This is just the online version. It doesn't have the Marin Association of Realtors spin yet -- they'll put the situation in context for the non-professionals. Here's what they said last month:
"If you are an investor or a buyer, now is the time to leap into the Marin County real estate market," said Valerie Castellana, president of the Marin Association of Realtors.
out of respect for the blog maybe we can avoid all this chemo talk and so forth maybe?
Citi still tanking
6.6% decline in one month... Bay Areans should have known this was coming. Exurban cities were already plumetting for months already.
Roughly:
10m housing units in 1988
13.5m housing units in 2008
Sales would need to be +35% to remain proportional.
It isn't the exurbs finally being joined by the cenurbs however. It is the more recent and more marginal being joined by traditional neighborhood housing. Core condos for instance are seeing massive declines and that should be enough to put to rest the exurban bust model.
The last bull market is apparently in CR blog posts . . . is this a new record today?
Woot!
San Mateo only down 0.2%
That signals a buying opportunity that CAN NOT BE MISSED!
It is different here!
out of respect for the blog maybe we can avoid all this chemo talk and so forth maybe?
Fair enough.
I won't mention the subject in the future.
I understand the sensitivity of the subject from experience. But I do think maybe it's constructive to be aware that in other disciplines outside of economics it's acknowledged and scientifically corroborated that not everything that's beneficial feels good.
ac,
I apologize for my insensitivity. I was only referring to the economic "horse", not any person specifically.
OT but has wall street trading been halted for some reason?
Sailfish Credit Hedge Fund Loses Half Its Assets, Investors Say
Sailfish Fund Loses Half Its Assets, Clients Say (Update1) - Bloomberg.com
I apologize for my insensitivity. I was only referring to the economic "horse", not any person specifically.
Oh, don't worry about offending me. But Worried is right. Probably wasn't the best subject for me to bring up.
Well it appears the pop that HAD TO OCCUR sometime finally has. Prices went from high, to crazy, to insane due to silly mortgage products and investors.
My anecdotal indications are that folks are beginning to digest the fact that it's really over and it's not coming back any time soon. Watch for a large increase in inventory in the next few months. Many reacted to the mania on the way up. I suspect many will react to the panic on the way down.
"San Mateo only down 0.2%
That signals a buying opportunity that CAN NOT BE MISSED!"
Buy the dips, Baby! Buy the dips!
Tomorrow > News Conference > Bush > Economic Stimulas Pkg
rut ro...Bush to the rescue. We are officially done for it now.
p.s. If that aint a sell signal, I dont know what is.
As an appraiser, there are some facts everyone needs to keep in mind. Real Estate values are set at the margins -- a very small percentage of homes is on the market at any given time, and small shifts in supply and demand can have a multiplier effect on the averages.
With fewer financing available, more people are staying put -- which means the homes that are selling are in the must sell category, as opposed to want to sell. REOs and pre-foreclosures and the like.
That said, this is another fine example of the California Real Estate Roller Coaster -- a wild ride on the way up, and a free fall on the way down.
Allen C,
Good point. We haven't seen panic, yet -- at least not in the Bay Area. From what I can see, a lot of people took their houses off the market this fall, waiting for spring.
I think they were acting on the ancient Babylonian aphorism:
When in doubt,
Wait for the recession,
Then act timidly.
DJI below 12,200
Sold yesterday so I have to live with the bond rally until FED cuts 75% on 1/29. After that I will have to determine what to do. With the news coming so fast, I almost feel like this is a real time financial simulation. Unfortunately, it is not.
OT Does anyway know if ACA still has to make their bond payment tomorrow or are they in receivership already?
Barley, I think the nation is now conditioned to cringe whenever the Chimperor opens his mouth.
Our Bush recovery plan is the 2008 election.
expect it to hold steady...lenders are not dumping their properties for firesale prices. They are employing regular agressive 30-day price reductions on the existing population, but have NO intention of flooding the market with bargain-basement REOs.
This time is different. They are holding onto their inventory and taking a wait and see approach. To see if they get a bail-out, to not actually book the losses yet...whatever.
Too soon for true bargain hunters. Now if you have really really big cash and a very long time frame, why wait to time a bottom. Buy it cash in CA or FL and be happy with it (that's what the foreign investors are doing).
Down over 300 . . . D'OW!
Gary,
Our Bush recovery plan is the 2008 election.
Or delay the 2nd recession for his term as long as possible to save his legacy.
This time is different.
Funny stuff, but don't quit your day job at CFC yet.
Hamedric, maybe we were separated at birth. I've been posting almost that exact phrase in these comments for months.
That IS their strategy.
The median price isn't such a great measure. Jumbos are hard to come by and it's homes financed with conventional loans i.e. $417K or less -- the lower end -- which predominantly are selling at present. This is naturally pulling the median price down. A better measure is price per square foot, which has its own issues, but still is a better measure. Any info on how the change in PPSF compares with this new info on the median price?
CR -- minor point: I bought and analyzed the monthly San Diego resale home data series over '88 to present, and found seasonality only in unit sales, not prices.
Thus, price drops month-to-month are okay to compare (though we all understand that mix is shifting to less expensive homes).
The Dow is coming back! It's only down 287 right now.
Anyone care to venture when it will break through 12,000, and what will happen when it does?
Hedge funds to the rescue, or everyone to the lifeboats?
"The median price isn't such a great measure."
Long-time readers of this blog and others understand that.
However, median price is the main metric pushed by the MSM and the realtors. It was almost universally agreed to be a fine indicator during the boom -- prices are going up, up, up!
So, now that's it's falling, it's going to be difficult to reprogram the masses to ignore "falling prices."
Wow, hope this holds in the red.
Big volume on the NYSE. Big effort to push back by the hedgies, too, on futures.
Bush's Plan - rebates 800 to 1600 dollars lower small business taxes. Defered income declaratio
"rebates 800 to 1600 dollars lower small business taxes. Defered income declaration"
about a month's groceries and cigarettes
what are these trading halts about?
jg, they'd better push harder then.
When do these guys run out of money? Or are they all short now?
Somebody explain to me why somebody out there is buying homebuilders today!!!???
Gary,
maybe we were separated at birth
Hey long lost bro! Finally, another Japanese-Jewish who understands and appreciate gefilte sushi. Sugoi!
But seriously, what's going on with Dow?!
Dow now down 306 -- Merrill Lynch posts 9.8 billion write down.
~90% of S&P stocks down today.
Cramer says "I never felt there was a level of fiction to the financials honest ... honestly"
more cock and bull stories for suckers who watch his show.
ABX looks like 9 new lows, CMBX looks like 13 new highs, LCDX widens though looks to be shy the late November spread...WM out yet?
The percentage of homes for sale in the Bay Area that are in some stage of foreclosure is staggering (to me at least). For instance, take San Jose.
San Jose has 3,100 houses for sale, according to Realtor.com. Trulia shows 4,000 homes for sale of which 2,500 (63%) are in some stage of foreclosure. That means, only 1,500 homes are not officially distressed sales. RealtyTrac says 4,200 properties are in some stage of foreclosure: 2100 are in pre-foreclosure, 820 are up at auction, 1150 are bank owned.
San Jose has 310,000 housing units according to the Census Bureau, in which case at least 1.3% of homes are in some stage in the foreclosure process. Median household income is $89,000 and median home price is $683,000.
In the end, I think prices will return to a level that the average person with an average income in an area will be able to afford the monthly payments for, including San Jose. The question is how that will happen, whether by price drops, high inflation, or a mix of both. The Google effect can only reach so far and last so long.
There are some here who still say prices never go down in the Silicon Valley.
Gaaaaah!
Sorry I haven't been around to take a beating. I'll be around more starting next week. Dealing with some family matters, but still reading the news. All dismal.
I'm almost done restocking the Bankerdome. Canned goods, bottled water, lots of ammunition, DVD's of the 2004 Boston Redsox. I even added the CR memorial wing dedicated to shock treatments and "sky is falling" images.
If you can't find some decent ways to employ capital during times like this you ought to give up on investing and just stick with treasuries.
There are some extraordinary bargains to be had with very little looking.
good luck
d
david_in_ct | 01.17.08 - 2:51 pm | #
I figured when I bought 10 and 30yr T's in August below par i WAS investing. Are you suggesting that the 12% cap gain since (25% annualized) and 5% coupon was lucky or unwise?
You can't bottom fish with 50 yards of line when you're in 500 foot waters.
As long as CNBC askes, "Have we hit bottom," you'll know we haven't. We'll have hit bottom when most are convinced we haven't. Wait until most of the herd are pessimistic, then consider trolling for whatever may still be swimming.
conventional wisdom=oxymoro
banker! The CRdome wouldn't be complete your wing, so there's something good to look forward to next week. If this hand-basket is going anywhere, let it be an equal-opportunity hand-basket with all of us shouting at once. As I'm the mad geographer lurking under the newspapers and the overpass muttering nonsense into the threads once in a while, I doubt I rank high enough for a proper welcome ceremonial, but consider it attempted.
Seriously, getting additional insight and conversations going about what this all means rather than the "ooh! ahh! looky! looky!" phenomena would be nice. I don't think these are fireworks going off but I'm not exactly up to speed on the critical differences between bottle rockets, flares and the seriously nasty stuff so some UberComments would be welcome.
RE San Mateo County:
I'm a Resident and Renter -- with money to buy when the time is right. But most asking prices are just "wishing" prices. Most folks haven't gotten the memo yet, but they will.
My personal favorite is 688 Vanessa Dr 94402 -- a bank owned foreclosure. It's 1600 sq ft and just over 50 years old. Here's the price history (from PropertyShark):
7/97 -- $295k
4/00 -- $495k
3/06 -- $920k
8/06 -- $985k
7/07 -- $834k (bank repo)
Current asking is $729k. DOM is 77. Even the bank has a wishing price.
What's it really worth? I don't know, but given the neighborhood, this is a blue collar residence. $100k family income, at 28% PITI, would support a 400k mortgage. So selling price should be in the 450k range.
We have a ways still to go.
Good observation puravidavid!
Bull markets climb a wall of worry. Bear markets dive a cliff of hope!
This aint over until MSM believe there is no end and only worse to come.
"You can't bottom fish with 50 yards of line when you're in 500 foot waters.
As long as CNBC askes, "Have we hit bottom," you'll know we haven't. We'll have hit bottom when most are convinced we haven't. Wait until most of the herd are pessimistic, then consider trolling for whatever may still be swimming."
I am a big fan of gaging sentiment and when it is quantified it is a great adjunct to other analysis. However, there are times when you can directly calculate business values and the stream of income coming from the business makes it irrelevant what other people think. in certain sectors this is currently the case.
vlo (which i dont own) closed today around $51. Best guesses are that earnings will be somewhere between 6-8 bucks a share for 2008. this means you can get an earnings yield between 12 and 16 percent. that to me is a layup when equivalent bond is around 3 percent. could oil prices and crack spreads collapse, sure, but the futures market does not price that in so if you wanted to hedge you could.
these kinds of calcs are available in a number of world class natural resource companies where if you wanted you could hedge the major direct commodity exposure if you so desired.
in the last two days i have sold some of my natgas/oil royalty trusts in favor of more leverage in the natural resource sector. i think copper is a great place to be over the next five to ten years and am tickled that i have gotten a chance to buy the idea at 30 - 40% off what it was 8 weeks ago.
just like on the way up, the big moves down tend to end when the laggards play catchup and the leaders stop leading. the last two days have been exactly that. i dont pretend to know or predict the exact day of any bottom but earnings arithmetic works pretty well over the long run.
Watch for a large increase in inventory in the next few months
You mean the Superbowl of (Pent-Up) Supply? Or as we like to say back home: S.O.S.
What's it really worth? I don't know, but given the neighborhood, this is a blue collar residence. $100k family income, at 28% PITI, would support a 400k mortgage. So selling price should be in the 450k range.
I sold in june 05, lived up in Emerald Hills near Woodside and now renting up in Sonoma. San Carlos, Emerald Hills etc have all gone bonkers price wise and will take years of deflation to unwind from the crazy action, that being said RE prices are set at the margin and many folks the past 5 years have purchased with IO loans and many others have refi'ed like crazy so we may see a big drop in price as these folks get hung out to dry buying million dollar 50's crap boxes and betting on huge appreciation numbers to bail them out but not able to roll over these loans or find new suckers to contine the game. I know many eager beaver types who overspent during the 99-2000 RE boom and wanted to sell for breakeven in 2005 and still could not find buyers, so the market is not as wonderful as the RE industry as presented it.
I am still obsessing over that ad for phony pay stubbs. I suspected people lied, but I thought that they just got friends and relations to issue pay stubbs out of their small business.
This ad was not for individuals but for deceitful brokers, who were lying en masse.
Amazing.
Sonoma county has been dropping 1.5% a month december to december and is officially 25% off the peak.oof.in '05,06 and '07 we had 70% of the purchase loans classified as "exotics".2012-2015 look like good years to buy in the wine country.
The folks who said Bay Area house prices never go down have changed their tune: "High end (roughly greater than $1.2 million) Bay Area homes never lose value. I think the price decline may be less gradual than we're used to since owners have a lot less equity than they did in previous declines and what little equity they had, they traded for a HELOC. And all this before ARM resets. Scary, but CR warned us months (acutally years) ago.
If you don't think the high-end in the Bay Area is in trouble, read this ad from Craigslist for a house in the Santa Cruz mountains. As I said in earlier posts, more rentals at 2X the going rental rate are popping up. This one is truly amazing, and very revealing... I especially marvel at how they are trying to rent out different parts of the house separately! It is not a typo, they are asking $12,000 per month... (Note: emphasis added is mine).
"$12000 / 6br - Los Gatos Mountains, Estate Living (los gatos)"
Enter the world of luxury and have it all. Gated estate on the best street in the Los Gatos Mountains, circle driveway with fountain, 8000sf+ home, pool/spa, pool house decking and BBQ area. Wine cellar with room to set and sip wine. One car attached garage. Close to all schools and store. Master bedroom has fireplace & steam shower. So many wonderful thing about this property, must see it. Rental price is for main house,pool house,pool and surrounding area. Additional areas & structures may also be rented. 1200sf, garage/workshop for $1200. 1 Bedroom guest house for $1500. 4 stall horse barn with paddocks & riding arena for $1500. Must see it to believe it.
Here's the link:
craigslist | Page Not Found
Check out this post on my blog for some additional graphs and data from the DataQuick information.
Blogger: Blog not found
"These numbers are pretty ugly without normalizing!" -CalculatedRisk
Au contraire, CR, these numbers are beautiful.
I do think maybe it's constructive to be aware that in other disciplines outside of economics .Tactical Flashlights
r c helicopter
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