Yes it is finally happening here at the high end in Austin. Last year the $450K and up market began to slow and then to freeze, nothing really moved from September 2008 on. Now, prices at the high end are starting to fall and often the houses are still sitting. I know of several custom homes in a central neighborhood that were built and priced in the mid-600s. Not one sold at that price, all five were rented for a year, now they are back on the market at $499K. Still sitting, they will probably get a buyer eventually but . .
For the record, the market is still hot here for homes below $250K, mainly in the suburbs and exurbs.
The yield on the 2 year note increased 5 basis points to 1.04 percent. The yield on the 3 year note also increased by 5 basis points to 1.60 percent. The yield on the 5 year note climbed 5 basis points to 2.58 percent. The 7 year note was at loser this day,too, as its yield increased 7 basis points to 3.29 percent. The yield on the 10 year note climbed 6 basis points to 3.72 percent and the Long Bond yield soared 8 basis points to 4.62 percent.
What do you think the odds are of the 10yr breaching 4.0% in the next week with the $250 debt sale?
We moved to the North Shore of Chicago from out of state 16 months ago. When I said the market looked like it hadn't "corrected," the stock response was, "Oh we didn't have as big a run-up here, so the prices are pretty stable." Reading this blog (and everyone's comments) kept my average family from making a HUGE mistake. We are renters till the inventory evens out a bit. And the mansions sell. You can't price a mid-level house till you know what the high-end is selling for.
for all you folks discussing the zero hedge paper...
every single bit of that paper is drawn from david rosenbergs morning dispatches over the past 2 or 3 weeks
rosenbergs dispatch is currently available free of charge (tho i am sure that will change)
i posted this info here before to little fanfare....for this crowd, rosenbergs daily missive is worth its weight in gold....thoughtful, data driven analysis
he even manages to utter a few bullish words about asia and bonds occasionally
The high-end stuff in Silicon Valley is just as overpriced as ever. I can't see any cracks in Los Gatos, Los Altos, Palo Alto, etc... anywhere decent to live is still overpriced and the sellers are stubborn.
Yes, the fall of the high-end is in progress here in SillyCon Valley.
I'm watching it unfold in Los Gatos, where there are twice as many houses listed in my old neighborhood as "normal" during the middle part of the decade. That's not counting the ones that were pulled from the listings after failing to sell at the desired price...nor is it counting the ones that are sale-pending, but not closing. These houses keep reappearing on the MLS, or else they become rentals.
The prices have dropped 10-20% from the peak already, but they need to drop another 20-30% from here.
This is where Bernanke's rank, utter stupidity is most fully revealed - he really thinks that following Japan's playbook will somehow miraculously lead to assets stabilizing.
"What do you think the odds are of the 10yr breaching 4.0% in the next week with the $250 debt sale?"
I guess that would depend on Fed/China/Japan and Timmay and Hilary's negotiations. But China is starting to sweat their own monetary polices and might be running out of options.
los gatos is definitely showing cracks. I see a lot properties in the 1.6m and above range that are verifiablt selling for 20% less than last year. Properties below a million though are still at ridiculous asking prices and just sitting.
The high-end stuff in SillyCon Valley is still overpriced, I agree. But if you haven't noticed the declines, then you're not looking very hard. Still, there's a long way to go, I agree.
The sellers cannot all be stubborn. Some are being forced to sell (expect more as high-end jobs are lost in numbers), and they are bringing down prices. I actually keep a spreadsheet of my old neighborhood, and I can see it happening. I also get anecdotal updates from my former neighbors, and I know that several high-end flippers in the neighborhood are caught with their nuts in a vice right now.
The biggest issue in the high end is the financing. We'll soon see whether the crazy Valley prices were truly supported by armies of rich people here, as some opined, or whether it was just another part of the mortgage finance bubble. (Can you guess which I am betting on?)
What gross annual income does one need to have (20% down, 5.5% mortgage say) to be able to qualify for a 3.3m$ house? Ballpark. Just curious, I am a lifelong renter myself.
i am assuming you all discussed the fact that UBS is changing policy and isnt allowing its clients (retail, i assume) to buy leveraged ETFS (bull or bear), nor are they going to allow purchases of straight bear ETFs
on a related note: guess i should have bought in when o-man said equities were a good buy "for the long term"
dammit, i always miss those implied "messages"....no wonder my wife is always pissed
I would love to know the debt / market value ratios in the better areas. Many wealthier folks attempted to parlay their wealth using debt. I suspect that there are many folks with negative cash flow hoping for a turnaround.
JP,
Just eyeballing the house in the photo, the cost for the sticks & bricks only--no lot cost, no builder profit or overhead, no real estate commission--would be about $750K. The lot cost is what is so astronomical in areas like Glencoe. (used to be a custom home estimator)
This seems to be the likely scenario for the Seattle area soon. The number of $1M+ homes for sale has skyrocketed over the last year, as has the number of $3M+ homes. A few have been dropping prices regularly, up to 20%; the rest have the same asking price for 9 mos (in the case of existing homes) and 2 years (in the case of developer custom spec homes). With the Microsoft hiring freeze and bank jobs disappearing, the number of 'move up' buyers for such pricey homes shouldn't be anywhere close to enough to buy all this inventory.
Exactly. Even if there are a few gung-ho buyers who gotta have that perfect house now, at whatever price, they are not the marginal buyer. There's too much supply with too few buyers at yesterday's prices. The marginal buyer (or lack of the marginal buyer) will dictate prices going forward.
It's just a matter of how long the sellers can hang on...or how soon the banks take ownership of a large enough number to set the market price (like happened in the low end).
Based on recent sales, Winnetka has about a 10 month inventory of homes on the market. In the Bay Area the median days-on-market is typically in the 30-50 day range (for homes that actually sell).
If you look at the realtor's notes, it says it was given to a charity (a local hospital), so presumably they were willing to take the actual market price for the property, and not go for their wishing price like the other 300 listed sellers in Rancho Santa Fe. Just 11 sales there in june and july (so far), so about 46 months of inventory.
Thanks. About ~500k$/year before taxes, would have been my guess. About what a Harvard lawyer like Mrs. Obama would make, after bonus, I suppose. More for GS lawyers, goes without saying.
There continues to be housing lunacy in the pricier parts of California.
I continue to hear: "This is a fantastic time to buy." Mind you, prices have dropped from just above $1000/sq ft to around $900/sq ft. Neverttheless, an 1800sqft 3/2 home priced at $1.6 million is still ridiculously overpriced by historical standards in most posh California communities.
Tax + Insurance at 1.5% of 1.6 million is $24K. With a reasonable risk that you might lose another 5 to 10% in price over the next 12 months.
Alternatively, rents are getting more and more reasonable every day.
Here in Pacific Palisades, 12 - 18 condos/houses are selling per month ($800M low end to $3 - 4MM high). There remains a continuous listing of 220+ wanting to sell.
I watched two houses move rather quickly - both were at Case-Shiller index pricing less 5%. Many that are sitting are priced at C-S +25%, some even more. I was looking at a $1.1MM priced house that indexed out at $763M. They owe $750M....that's a world of hurt when they move that one. That's not at all uncommon here.
What do I consider fair pricing, today? Probably C-S less 10%-15% (to offer some reasonable downside protection).
since you're the resident expert, you might also remind the gallery about the fact that every single big law firm has more or less closed its doors to new hires.
I took a quick closer look and tend to agree with you. I was basing my number on my neighborhood which is still selling fairly quickly and on the ultra-low price sales of foreclosures that are occuring quickly at the low end.
But it appears that there is also a lot of inventory (and high DOM) at the low end as well, median is currently in the 100 day neighborhood, and of course these haven't sold yet.
In the Bay Area the median days-on-market is typically in the 30-50 day range (for homes that actually sell).
Not sure about the Bay Area, but you cannot rely on SF proper's data.
SF's MLS is one of the worst, and is hostage to lots of DOM games. The official DOM is usually off by an order of magnitude every time.
If I had a quarter for every sale that sat for month after month (and sometimes years), and then when it finally sells it sells officially "under 30 DOM"
there are homes that have been for sale for over a year with an official DOM of <30.
Nope I only buy in the nice neighborhoods. Just wanted to point out how out of line Cali and other states have gotten in the trouble they are in. 2/1 can easily be become a 3/2 1100 SqF ranch.
You are right, and that applies to the South Bay as well. Many houses are pulled off the MLS for a day, a week, or a month, only to be re-listed with fresh listing date.
I've watched it happen for the past year in my old neighborhood in Los Gatos.
Re: ""Everyone is in the same boat," said Marti Palmer, who has been looking at other homes. "You can't buy if you can't sell, so we're open to ideas.""
Maybe The Stimulus Package will help ...........ROTFLMAO
What will happen next Spring when foreclosures are still increasing and then more shadow inventory to adjust to; what are people gonna do, make lots of money in the stock market, because speculators are betting on more layoffs and increased unemployment?
I looked at the SF Bay Area (redfin) and found that the number of homes that are currently on the market for $2M+ sold is essentially the same as for those that sold over $1.25M during the first 6 months of 2009.
Hack - An H degree never was what it used to be, but I digress.
The law firm situation is variable and volatile. Many firms in middle markets are starting to hire junior litigators again, but it certainly is tougher starting out than it was a few years ago.
The NY firms certainly aren't hiring brigades of 25 year old lawyers to give sage advice on loan securitization documents for $500 an hour.
"You are right, and that applies to the South Bay as well. Many houses are pulled off the MLS for a day, a week, or a month, only to be re-listed with fresh listing date."
That is an awful lot of histrionics to conceal the fact that the contagion has left sub-prime for greener pastures, in what looks like an effort to snow potential buyers into a purchase of rapidly depreciating asset. The spin on 15% YOY declines is telling as well.
It would seem to me that sellers clinging to unrealistic prices, in the hope that "Green Shoots," will save them, would work against NAR, as even sales volume is still down YOY. I await their "sell now or be underwater forever," ad campaign.
"Home sales show faint signs of improvement"
"However those sales were still down by 0.2% from the same month last year."
"The June median price of $181,800 was down 15% from June 2008."
"The NY firms certainly aren't hiring brigades of 25 year old lawyers to give sage advice on loan securitization documents for $500 an hour. "
you massively understate the situation. biglaw (firms where you generally make 160K as a first year circa 2008) has gone from hiring 7K+ kids a year to hiring none in one year. and that means NONE - almost everyone is deferred for the next year, and the year after that isn't even getting 2L interview at the top schools.
Here's a speech Bernanke gave in 2002 wherein he claimed that the fed shouldn't fight asset bubbles. Bernanke also claims that the fed's attempts to reign in rampant stock market speculation in 1929 helped cause the great depression.
Democratic Sens. Kent Conrad and Chris Dodd were told from the start they were getting VIP mortgage discounts from one of the nation's largest lenders, the official who handled their loans has told Congress in secret testimony. Both senators have said that at the time the mortgages were being written they didn't know they were getting unique deals from Countrywide Financial Corp., the company that went on to lose billions of dollars on home loans to credit-strapped borrowers. Dodd still maintains he got no preferential treatment.
Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Conrad's two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck in his home state of North Dakota.
Robert Feinberg, who worked in Countrywide's VIP section, told congressional investigators last month that the two senators were made aware that "who you know is basically how you're coming in here."
"You don't say 'no' to the VIP," Feinberg told Republican investigators for the House Oversight and Government Reform Committee, according to a transcript obtained by The Associated Press.
The next day, Feinberg testified before the Senate Ethics Committee, an indication the panel is actively investigating two of the chamber's more powerful members
somehow dogpatch became part of "SF" at the highwater mark of this most recent gentrification wave. interesting to see what parts of SF are reclaimed as "not SF" in the next few years.
Prices at any price range in SF have barely moved at all, while the rest of the bay area has.
There have been plenty of reductions downtown in the financial district. Still overpriced but definite drop. But you will never see this by looking for price drops or speaking to realtors. Only by closely following the market and seeing what an equivalent place would have sold for last year.
I just looked at a place un Thousand Oaks,Berkeley Hills yesterday. Very nice Old Tudor with bay views. Asking price of 895k. I'm sure it will go for between asking and 950k with multiple offers. Sounds good right? Except the same place would gave gone for 1.2m last year.
"
Mr Geithner, confirmed by the Senate yesterday, earned $US411,200 in 2008 and the first two weeks this year as president of the Federal Reserve Bank of New York. As the country's 75th Treasury secretary, Geithner makes an annual salary of $US191,300, the Treasury's Web site says.
"
The house was a stretch at 400k - at 191k he must be dying. What a damn shame!
Just talked to the guy up the street who runs the corner store, Mass raises it's sales tax on 8/1 and starts taxing alcohol sales for the first time. Anyways, he was complainng because the credit card companies charge their fees based on the total sale inclusive of taxes. Imagine that raising taxes actually benefits the the cc companies on the front end. This guy was pretty pissed and you could tell he was going to feel it.
The thing is.. that $5,500,000 house was NEVER ACTUALLY REALLY worth 5.5 mill.. It's probably not worth 3.3 without some bubble re-inflation. Reality must just suxorz when you're a real-estate "professional".
If you'd like to see a pathological example of how the changing mix in sales can severely misdirect.... checkout on Redfin the recent median sales history of ZIP 94303.
This ZIP includes part of Palo Alto and most of East Palo Alto and on a sq ft basis implies home prices dropped by a factor of 3 in the last two years. In fact, the real change is due to a dearth of homes in PA trading recently and an incresing number in East PA selling after foreclosure.
In reality, the PA side is flat-to-down 10% and the East PA side is down by ~50%. But with few sales on the PA side and many on the East PA side, the median is more due to a weighted geographic shift than a monetary one.
barfly (profile) wrote
...anywhere decent to live is still overpriced ...
- and will remain so.
Thank god that's true.. I'd hate to have some of those simply dreadful lower class types move to anywhere even remotely close to my little place in The Hamptons.
WSJ: Verizon to Pare 8,000 Jobs as Businesses Cut the Cord Verizon Communications Inc. posted a 21% decline in quarterly profit and said it would cut another 8,000 jobs as it battles a pullback in business spending.
Both Verizon and rival AT&T Inc. said they continue face a difficult environment, with companies tightening their belts and laying off employees -- accelerating the erosion of their traditional voice businesses.
Verizon said the new job cuts, which include employees and contractors, will be focused on its land-line division, where revenue fell 5.2% in the quarter. The New York-based company, which employs about 235,000 people, cut the same number of jobs over the past 12 months.
"We really don't have a crystal ball" for the outlook on business spending, Chief Financial Officer John Killian said.
He said he doesn't expect any near-term improvement, adding, "It's really driven by employment."
This ZIP includes part of Palo Alto and most of East Palo Alto and on a sq ft basis implies home prices dropped by a factor of 3 in the last two years. In fact, the real change is due to a dearth of homes in PA trading recently and an incresing number in East PA selling after foreclosure.
Zillow shows my old house as having gone up by 100k in the last month. The house next door has same size lot, exactly same square footage and zillow shows 100k less in value than my old home.
Tax reassesment values are screwing up Zillow in Fremont. Another house on the street shows a zestimate higher than a house 30% larger 5 houses down.
Never thought of that before (obviously I'm not a businessman) but adds a new facet to the situation. In CA sales tax recently went up, typically from 9% to 10% (varies by county) or a 10% change. A $100 dollar sale (before sales tax) results in $10 going to the state but only $9.70 coming in to the merchant from the CC, who is getting squeezed.
Of course, ultimately it's the consumer that pays -- unless that consumer chooses to make the purchase on-line from a company that has no "state presence."
I never liked the idea of a sales tax holiday for on-line merchants, and now find another reason that the brick-and-mortar store that I bought at last year isn't there any more.
Two home in my area that I considered seriously overpriced recently sold for the asking price.One was a 6k sq ft home on 8 acres,nicely done but too close to a busy street $2.75MM,the other a nicely done 3/2,1800 sq ft with an artists studio $825k.The more expensive place may have been an impulse buy by someone with serious $,the other would rent for $2100 a month tops and there are comparable homes available for $100k less.When taking into account $ per sq ft and quality,prices are down quite a bit,but with few transactions above the jumbo limit it does not take many outliers to affect the median price.The lack of homogeneity makes it harder to figure out what is going on here in W Sonoma county as well,having your mansion next to a pig farm can affect people's interest when the wind shifts.
".......having your mansion next to a pig farm can affect people's interest when the wind shifts". . . . . . . my neighbors don't mind a bit come "processing time"......
Uncle Rico had the right idea. How do we get back to 1982? In this age of "Yahoo! Finance", is it naive to anticipate that degree of revulsion towards the stock market ever again? Have I answered my own question?
All this hemming and hawing about the future direction of asset prices. Screw it! We'll all be dead tomorrow. Who needs a house in SF? What constitutes a "good deal" when half your neighbors are Prop 13 gargoyles and the other half are generating a cloud of smug? Where will YOU fit into this hell of other people?
Asset-class speculation sucks. It infects your thought process until all your nobler instincts seem quaint. It quietly and insidiously reorganizes all of your priorities and values, calibrating them towards Money. Any sensibility that isn't about money (or procreation) simply atrophies. Tried following up John Mauldin with Shakespeare lately?
If St. Peter conducts Computed Tomography of my brain to assess my worthiness, I'm screwed!
debtfree
Thanks. About ~500k$/year before taxes, would have been my guess. About what a Harvard lawyer like Mrs. Obama would make, after bonus, I suppose. More for GS lawyers, goes without saying.
Go to Irvine Housing Blog where Irvine Renter has a calculation for you.
Best of Luck
Crossland just posted macro stats and breakdown by MLS area stats for the mid-year. He's claiming that the deal volume is drying up rapidly in the outer areas, while the higher sales volumes are closer to the center, contrary to what you concluded. His general thesis is that while it has slowed somewhat, selling prices continue to grow and we have yet to see a decade-long span when prices declined.
We're still renting and biding our time. Saw a big jump in reasonable rentals this past month. We have a suspicion that there will turn out to be a lot of "fake it til you make it" stories that are revealed when the Alt-A and Option ARM-structured prime tranches start recasting in 2010 and 2011. One house in 1B we were watching dropped 10% in asking in 45 days, and is still sitting with an asking well above $550K, and poorly-attended open house events. The mortgage documents we pulled on this house showed the owners got a note for well north of $650K.
I'm becoming increasingly convinced of my thesis that too many people have too great an expectation of income stability to sustain even standard, conventional, "safe" mortgages. It isn't the interest rate terms that are catching them off guard, it is the 30-year duration. Guys like Crossland are whistling past the graveyard in my opinion, as UE is steadily growing worse.
Good thing the recession is over
no joke
welcome back to the working poor
"For instance, a custom-built stone home at 750 Sheridan Rd. in Winnetka priced at $5.5 million in November 2007 is going for $3.3 million." - Trib
"For instance, a custom-built stone home at 750 Sheridan Rd. in Winnetka priced at $5.5 million in November 2007 is not going for $3.3 million."
There, fixed it fer ya.
Anyone have a thumb-in-the-air guess for the price-per-sqft to build that house pictured in the article?
Still waiting for SF to fall....
"The problems are movin' on up the value chain."
Where did all the "move up" buyers go? Oh right, they are now renters or "move downs."
"15-room, English-style manse -- now going for $3 million"
I wonder what that costs to heat/cool/water?
At least we're seeing some re-leveraging of consumer balance sheets!
(After all, if you can't make the loan values go up in a credit-scarce environment, at least you can make the property values go down!)
/snark
Can't wait for the NAR trumpetings regarding a rising median. Oh, wait . . .
Failures happen at the margin.
Yes it is finally happening here at the high end in Austin. Last year the $450K and up market began to slow and then to freeze, nothing really moved from September 2008 on. Now, prices at the high end are starting to fall and often the houses are still sitting. I know of several custom homes in a central neighborhood that were built and priced in the mid-600s. Not one sold at that price, all five were rented for a year, now they are back on the market at $499K. Still sitting, they will probably get a buyer eventually but . .
For the record, the market is still hot here for homes below $250K, mainly in the suburbs and exurbs.
I guess Chicago doesn't have a large Goldman office.
From AcrossTheCurve:
The yield on the 2 year note increased 5 basis points to 1.04 percent. The yield on the 3 year note also increased by 5 basis points to 1.60 percent. The yield on the 5 year note climbed 5 basis points to 2.58 percent. The 7 year note was at loser this day,too, as its yield increased 7 basis points to 3.29 percent. The yield on the 10 year note climbed 6 basis points to 3.72 percent and the Long Bond yield soared 8 basis points to 4.62 percent.
What do you think the odds are of the 10yr breaching 4.0% in the next week with the $250 debt sale?
I spoke to my neighbor yesterday who is a Wells Fargo mortgage writer, not a mucky muck.
He said Wells has already hit its annual projections for new mortgages this year, with plenty in the pipeline.
He said the vast majority were conforming -- not much shaking in the jumbos.
We moved to the North Shore of Chicago from out of state 16 months ago. When I said the market looked like it hadn't "corrected," the stock response was, "Oh we didn't have as big a run-up here, so the prices are pretty stable." Reading this blog (and everyone's comments) kept my average family from making a HUGE mistake. We are renters till the inventory evens out a bit. And the mansions sell. You can't price a mid-level house till you know what the high-end is selling for.
SINCERE THANKS Mr. McBride and everyone here.
for all you folks discussing the zero hedge paper...
every single bit of that paper is drawn from david rosenbergs morning dispatches over the past 2 or 3 weeks
rosenbergs dispatch is currently available free of charge (tho i am sure that will change)
i posted this info here before to little fanfare....for this crowd, rosenbergs daily missive is worth its weight in gold....thoughtful, data driven analysis
he even manages to utter a few bullish words about asia and bonds occasionally
google is your friend
The high-end stuff in Silicon Valley is just as overpriced as ever. I can't see any cracks in Los Gatos, Los Altos, Palo Alto, etc... anywhere decent to live is still overpriced and the sellers are stubborn.
BURN,
Yes, the fall of the high-end is in progress here in SillyCon Valley.
I'm watching it unfold in Los Gatos, where there are twice as many houses listed in my old neighborhood as "normal" during the middle part of the decade. That's not counting the ones that were pulled from the listings after failing to sell at the desired price...nor is it counting the ones that are sale-pending, but not closing. These houses keep reappearing on the MLS, or else they become rentals.
The prices have dropped 10-20% from the peak already, but they need to drop another 20-30% from here.
This is where Bernanke's rank, utter stupidity is most fully revealed - he really thinks that following Japan's playbook will somehow miraculously lead to assets stabilizing.
"What do you think the odds are of the 10yr breaching 4.0% in the next week with the $250 debt sale?"
I guess that would depend on Fed/China/Japan and Timmay and Hilary's negotiations. But China is starting to sweat their own monetary polices and might be running out of options.
Clinton and Geithner: A New Strategic and Economic Dialogue with China - WSJ.com
"but they need to drop another 60-70% from here."
fixed that for you.
the 95030 is STILL over $700/sqft.
...thoughtful, data driven analysis
Unfortunately that does not describe behavior of Americans so the value is questionable.
Greenlander,
los gatos is definitely showing cracks. I see a lot properties in the 1.6m and above range that are verifiablt selling for 20% less than last year. Properties below a million though are still at ridiculous asking prices and just sitting.
greenlander,
The high-end stuff in SillyCon Valley is still overpriced, I agree. But if you haven't noticed the declines, then you're not looking very hard. Still, there's a long way to go, I agree.
The sellers cannot all be stubborn. Some are being forced to sell (expect more as high-end jobs are lost in numbers), and they are bringing down prices. I actually keep a spreadsheet of my old neighborhood, and I can see it happening. I also get anecdotal updates from my former neighbors, and I know that several high-end flippers in the neighborhood are caught with their nuts in a vice right now.
The biggest issue in the high end is the financing. We'll soon see whether the crazy Valley prices were truly supported by armies of rich people here, as some opined, or whether it was just another part of the mortgage finance bubble. (Can you guess which I am betting on?)
Obama got out just in time...(but I think he kept his old house, yes?)
Quick Question:
What gross annual income does one need to have (20% down, 5.5% mortgage say) to be able to qualify for a 3.3m$ house? Ballpark. Just curious, I am a lifelong renter myself.
i am assuming you all discussed the fact that UBS is changing policy and isnt allowing its clients (retail, i assume) to buy leveraged ETFS (bull or bear), nor are they going to allow purchases of straight bear ETFs
on a related note: guess i should have bought in when o-man said equities were a good buy "for the long term"
dammit, i always miss those implied "messages"....no wonder my wife is always pissed
I would love to know the debt / market value ratios in the better areas. Many wealthier folks attempted to parlay their wealth using debt. I suspect that there are many folks with negative cash flow hoping for a turnaround.
Speaking of douchebags with overpriced houses:
Tim Geithner Can't Sell His House - ABC News
Tim Geithner Can't Sell His House, Either
'Scuze me please, but: Who beside a family with about eight children needs 'the 15-room, English-style manse'?
Could it be that sanity is taking hold?
I thought houses were places to live and raise kids, not display how in debt the occupants are.
JP,
Just eyeballing the house in the photo, the cost for the sticks & bricks only--no lot cost, no builder profit or overhead, no real estate commission--would be about $750K. The lot cost is what is so astronomical in areas like Glencoe. (used to be a custom home estimator)
Looks like the Hamptons are not doing so badly then. Better for sure the Chitown
not an issue of income, question of whether or not you feel comfy losing a million bucks on paper in the next year
This seems to be the likely scenario for the Seattle area soon. The number of $1M+ homes for sale has skyrocketed over the last year, as has the number of $3M+ homes. A few have been dropping prices regularly, up to 20%; the rest have the same asking price for 9 mos (in the case of existing homes) and 2 years (in the case of developer custom spec homes). With the Microsoft hiring freeze and bank jobs disappearing, the number of 'move up' buyers for such pricey homes shouldn't be anywhere close to enough to buy all this inventory.
Debtfree,
I come to a very gross calculation of 43k/mos
assuming dti of 30%
3.3m * .8 = 2.64m
30 yr fixed mtg @5.5% is approx. 550 per 100k principal
2.64m/100k * 550 * 3 = 43560
Good living for Bandos coming to the high end neighborhood near you.
Size of these houses represent ego of their owners. Let them have it.
marksparky,
Exactly. Even if there are a few gung-ho buyers who gotta have that perfect house now, at whatever price, they are not the marginal buyer. There's too much supply with too few buyers at yesterday's prices. The marginal buyer (or lack of the marginal buyer) will dictate prices going forward.
It's just a matter of how long the sellers can hang on...or how soon the banks take ownership of a large enough number to set the market price (like happened in the low end).
Looked up the house in the post on Zillow.
750 Sheridan Rd, Winnetka, IL 60093 - Zillow
The last sale in 2005 was at $1.33 million. Me thinks somebody pulled $1-$2 million out in a HELOC.
medina and mercer island have been 2x where they should have peaked out. bellevue is also ridiculously overpriced.
nothing in king county without tons of personal shoreline should be worth over a million bucks. nothing.
The best thing about large homes are challenging indoor egg hunts at Easter.
Based on recent sales, Winnetka has about a 10 month inventory of homes on the market. In the Bay Area the median days-on-market is typically in the 30-50 day range (for homes that actually sell).
Cinco-X, if you're still around, I just left a reply on the last thread.
TBTF = Systemically Important Ponzi Scheme (SIPS)
Any system that must bail out fraud to survive is itself fraudulent.
Fire Bernanke now! Ponzi debt must end!
What is the link to David Rosenberg's dispatch? Thanks
the bay area also includes coco, alameda etc...
you're probably talking about desirable parts of mar, sf, sm, sc and scz, a small minority
Heck, if you got $2.4 million sitting around and want a 10,000 sq. ft home on a lake, try Rancho Santa Fe, CA. Weather is a little nicer.
SDLookup.com | 17176 Calle Serena - MLS# 090038017
If you look at the realtor's notes, it says it was given to a charity (a local hospital), so presumably they were willing to take the actual market price for the property, and not go for their wishing price like the other 300 listed sellers in Rancho Santa Fe. Just 11 sales there in june and july (so far), so about 46 months of inventory.
@poic
Thanks. About ~500k$/year before taxes, would have been my guess. About what a Harvard lawyer like Mrs. Obama would make, after bonus, I suppose. More for GS lawyers, goes without saying.
most big firm lawyers burn out in their 3d year before they make that kind of scratch.
"most big firm lawyers burn out in their 3d year before they make that kind of scratch"
Varies from first year to about tenth year, but basically yes.
Another funny stat about the Rancho Santa Fe house market
Number of current listings over $8 million- 35
Number of sales over $8 million in 2009- 0
There continues to be housing lunacy in the pricier parts of California.
I continue to hear: "This is a fantastic time to buy." Mind you, prices have dropped from just above $1000/sq ft to around $900/sq ft. Neverttheless, an 1800sqft 3/2 home priced at $1.6 million is still ridiculously overpriced by historical standards in most posh California communities.
Tax + Insurance at 1.5% of 1.6 million is $24K. With a reasonable risk that you might lose another 5 to 10% in price over the next 12 months.
Alternatively, rents are getting more and more reasonable every day.
Here in Pacific Palisades, 12 - 18 condos/houses are selling per month ($800M low end to $3 - 4MM high). There remains a continuous listing of 220+ wanting to sell.
I watched two houses move rather quickly - both were at Case-Shiller index pricing less 5%. Many that are sitting are priced at C-S +25%, some even more. I was looking at a $1.1MM priced house that indexed out at $763M. They owe $750M....that's a world of hurt when they move that one. That's not at all uncommon here.
What do I consider fair pricing, today? Probably C-S less 10%-15% (to offer some reasonable downside protection).
since you're the resident expert, you might also remind the gallery about the fact that every single big law firm has more or less closed its doors to new hires.
even a H degree isn't what it used to be.
no way. people forget, the LA high-end got CLOBBERED in the early 90s.
even the nicest parts of BH and malibu, brentwood, etc, will not survive this phase @ > $500/sqft.
Bought a house today for $28.63 SqF. positive cash flow.
does the rent include a cut of the meth sales?
Hollywood:
I took a quick closer look and tend to agree with you. I was basing my number on my neighborhood which is still selling fairly quickly and on the ultra-low price sales of foreclosures that are occuring quickly at the low end.
But it appears that there is also a lot of inventory (and high DOM) at the low end as well, median is currently in the 100 day neighborhood, and of course these haven't sold yet.
In the Bay Area the median days-on-market is typically in the 30-50 day range (for homes that actually sell).
Not sure about the Bay Area, but you cannot rely on SF proper's data.
SF's MLS is one of the worst, and is hostage to lots of DOM games. The official DOM is usually off by an order of magnitude every time.
If I had a quarter for every sale that sat for month after month (and sometimes years), and then when it finally sells it sells officially "under 30 DOM"
there are homes that have been for sale for over a year with an official DOM of <30.
HH,
Nope I only buy in the nice neighborhoods. Just wanted to point out how out of line Cali and other states have gotten in the trouble they are in. 2/1 can easily be become a 3/2 1100 SqF ranch.
Yearning to Learn,
You are right, and that applies to the South Bay as well. Many houses are pulled off the MLS for a day, a week, or a month, only to be re-listed with fresh listing date.
I've watched it happen for the past year in my old neighborhood in Los Gatos.
Re: ""Everyone is in the same boat," said Marti Palmer, who has been looking at other homes. "You can't buy if you can't sell, so we're open to ideas.""
Maybe The Stimulus Package will help ...........ROTFLMAO
What will happen next Spring when foreclosures are still increasing and then more shadow inventory to adjust to; what are people gonna do, make lots of money in the stock market, because speculators are betting on more layoffs and increased unemployment?
Interesting approach...
I looked at the SF Bay Area (redfin) and found that the number of homes that are currently on the market for $2M+ sold is essentially the same as for those that sold over $1.25M during the first 6 months of 2009.
Does this imply a ~37% markdown from asking?
Listen to me: There will NEVER be a better time to buy real estate in Palo Alto than right now.
Thanks OH Chick. So $750K for bricks and sticks translates to $77/sq ft. (I would've guessed $80.)
investment advice for 2009: don't fight the Fed.
political advice for 2009: don't fight the Fed.
Jim Bunning withdraws from 2010 reelection campaign, citing a lack of fundraising...
Bunning Opts Out of Re-election Bid - Washington Wire - WSJ
Hack - An H degree never was what it used to be, but I digress.
The law firm situation is variable and volatile. Many firms in middle markets are starting to hire junior litigators again, but it certainly is tougher starting out than it was a few years ago.
The NY firms certainly aren't hiring brigades of 25 year old lawyers to give sage advice on loan securitization documents for $500 an hour.
"You are right, and that applies to the South Bay as well. Many houses are pulled off the MLS for a day, a week, or a month, only to be re-listed with fresh listing date."
That is an awful lot of histrionics to conceal the fact that the contagion has left sub-prime for greener pastures, in what looks like an effort to snow potential buyers into a purchase of rapidly depreciating asset. The spin on 15% YOY declines is telling as well.
It would seem to me that sellers clinging to unrealistic prices, in the hope that "Green Shoots," will save them, would work against NAR, as even sales volume is still down YOY. I await their "sell now or be underwater forever," ad campaign.
"Home sales show faint signs of improvement"
"However those sales were still down by 0.2% from the same month last year."
"The June median price of $181,800 was down 15% from June 2008."
Home sales show faint signs of improvement - Los Angeles Times
"The NY firms certainly aren't hiring brigades of 25 year old lawyers to give sage advice on loan securitization documents for $500 an hour. "
you massively understate the situation. biglaw (firms where you generally make 160K as a first year circa 2008) has gone from hiring 7K+ kids a year to hiring none in one year. and that means NONE - almost everyone is deferred for the next year, and the year after that isn't even getting 2L interview at the top schools.
and that means NONE
Uh oh. Would that be you, HH?
no, as i've explained, i create cheap escapist culture for the masses. it's always a bull market for crack.
no, as i've explained, i create cheap escapist culture for the masses.
Dressed or in the buff?
not really relevant. i'm so far from being physically attractive enough to be any kind of a model or screen actor, that the issue never comes up.
There was a request to point to David Rosenberg's site at Gluskin Sheff - here you go
https://ems.gluskinsheff.net/Articles.aspx
One of the best sources of daily reviews of economic data and market musings (and free, for some reasons, must be temporarily)
Highly recommended
Here's a speech Bernanke gave in 2002 wherein he claimed that the fed shouldn't fight asset bubbles. Bernanke also claims that the fed's attempts to reign in rampant stock market speculation in 1929 helped cause the great depression.
FRB Speech, Bernanke -- Asset-price "bubbles" and monetary policy -- October 15, 2002
Hey, Bernanke. It's the ponzi debt, stupid.
and free, for some reasons,
He's trying to rebuild after leaving Merrill (leaving = plus in my book.)
whatever the reason, I'm grateful
(Rosenberg had huge following during his time at ML, he needs no advertising)
When I said SF, I meant the city of San Francisco, not the bay area.
Prices at any price range in SF have barely moved at all, while the rest of the bay area has.
Yeah, there have been a few "reductions" at the high end. E.g. $80k reduction on a $2million house. BFD.
And most of the REOs are in bayview.
I just don't get it.
The Case-Shiller numbers for San Francisco are actually for the entire bay area, not san francisco.
so you're talking about SF NW of the 280 - barely 500K people.
MrM,
It looks like the Rosenburg reports are free on a trial basis. May not last long.
yes. Anything else is "not SF"
Democratic Sens. Kent Conrad and Chris Dodd were told from the start they were getting VIP mortgage discounts from one of the nation's largest lenders, the official who handled their loans has told Congress in secret testimony. Both senators have said that at the time the mortgages were being written they didn't know they were getting unique deals from Countrywide Financial Corp., the company that went on to lose billions of dollars on home loans to credit-strapped borrowers. Dodd still maintains he got no preferential treatment.
Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Conrad's two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck in his home state of North Dakota.
Robert Feinberg, who worked in Countrywide's VIP section, told congressional investigators last month that the two senators were made aware that "who you know is basically how you're coming in here."
"You don't say 'no' to the VIP," Feinberg told Republican investigators for the House Oversight and Government Reform Committee, according to a transcript obtained by The Associated Press.
The next day, Feinberg testified before the Senate Ethics Committee, an indication the panel is actively investigating two of the chamber's more powerful members
Yahoo! 404 - Page Not Found
Yeah right !
somehow dogpatch became part of "SF" at the highwater mark of this most recent gentrification wave. interesting to see what parts of SF are reclaimed as "not SF" in the next few years.
Yeah, I didn't expect to have to sign up with a web form and give them my phone number.
But thanks for the tip anyway. I'm very impatient at times.
Prices at any price range in SF have barely moved at all, while the rest of the bay area has.
There have been plenty of reductions downtown in the financial district. Still overpriced but definite drop. But you will never see this by looking for price drops or speaking to realtors. Only by closely following the market and seeing what an equivalent place would have sold for last year.
I just looked at a place un Thousand Oaks,Berkeley Hills yesterday. Very nice Old Tudor with bay views. Asking price of 895k. I'm sure it will go for between asking and 950k with multiple offers. Sounds good right? Except the same place would gave gone for 1.2m last year.
Geithner takes a pay cut:
"
Mr Geithner, confirmed by the Senate yesterday, earned $US411,200 in 2008 and the first two weeks this year as president of the Federal Reserve Bank of New York. As the country's 75th Treasury secretary, Geithner makes an annual salary of $US191,300, the Treasury's Web site says.
"
The house was a stretch at 400k - at 191k he must be dying. What a damn shame!
The house was a stretch at 400k - at 191k he must be dying. What a damn shame!
Maybe his wife went back to work?
whooohooo! mo' cowbell - there's always a bull market somewhere!
lol thanks for the laugh HH
the median has dropped 20% in the past year. that's something - like probably all of your equity if you bought after '05.
Just talked to the guy up the street who runs the corner store, Mass raises it's sales tax on 8/1 and starts taxing alcohol sales for the first time. Anyways, he was complainng because the credit card companies charge their fees based on the total sale inclusive of taxes. Imagine that raising taxes actually benefits the the cc companies on the front end. This guy was pretty pissed and you could tell he was going to feel it.
...anywhere decent to live is still overpriced ...
The thing is.. that $5,500,000 house was NEVER ACTUALLY REALLY worth 5.5 mill.. It's probably not worth 3.3 without some bubble re-inflation. Reality must just suxorz when you're a real-estate "professional".
If you'd like to see a pathological example of how the changing mix in sales can severely misdirect.... checkout on Redfin the recent median sales history of ZIP 94303.
This ZIP includes part of Palo Alto and most of East Palo Alto and on a sq ft basis implies home prices dropped by a factor of 3 in the last two years. In fact, the real change is due to a dearth of homes in PA trading recently and an incresing number in East PA selling after foreclosure.
In reality, the PA side is flat-to-down 10% and the East PA side is down by ~50%. But with few sales on the PA side and many on the East PA side, the median is more due to a weighted geographic shift than a monetary one.
hard to think of a shakier investment than RE between the 101 and stanford - especially those crapalicious shacks near alma and the caltrain
barfly (profile) wrote
...anywhere decent to live is still overpriced ...
- and will remain so.
Thank god that's true.. I'd hate to have some of those simply dreadful lower class types move to anywhere even remotely close to my little place in The Hamptons.
Jumping off topic.. I gotta admit.. I do kinda like Palo Alto
WSJ:
Verizon to Pare 8,000 Jobs as Businesses Cut the Cord
Verizon Communications Inc. posted a 21% decline in quarterly profit and said it would cut another 8,000 jobs as it battles a pullback in business spending.
Both Verizon and rival AT&T Inc. said they continue face a difficult environment, with companies tightening their belts and laying off employees -- accelerating the erosion of their traditional voice businesses.
Verizon said the new job cuts, which include employees and contractors, will be focused on its land-line division, where revenue fell 5.2% in the quarter. The New York-based company, which employs about 235,000 people, cut the same number of jobs over the past 12 months.
"We really don't have a crystal ball" for the outlook on business spending, Chief Financial Officer John Killian said.
He said he doesn't expect any near-term improvement, adding, "It's really driven by employment."
This ZIP includes part of Palo Alto and most of East Palo Alto and on a sq ft basis implies home prices dropped by a factor of 3 in the last two years. In fact, the real change is due to a dearth of homes in PA trading recently and an incresing number in East PA selling after foreclosure.
Zillow shows my old house as having gone up by 100k in the last month. The house next door has same size lot, exactly same square footage and zillow shows 100k less in value than my old home.
Tax reassesment values are screwing up Zillow in Fremont. Another house on the street shows a zestimate higher than a house 30% larger 5 houses down.
zillow is 500K above cyberhomes in some 'hoods. must be a conspiracy between them and the county assessors.
I'd argue that that median is valid for both sides of the 101 - it is just ten years early on the SC county side.
Regarding credit card fees on taxes...
Never thought of that before (obviously I'm not a businessman) but adds a new facet to the situation. In CA sales tax recently went up, typically from 9% to 10% (varies by county) or a 10% change. A $100 dollar sale (before sales tax) results in $10 going to the state but only $9.70 coming in to the merchant from the CC, who is getting squeezed.
Of course, ultimately it's the consumer that pays -- unless that consumer chooses to make the purchase on-line from a company that has no "state presence."
I never liked the idea of a sales tax holiday for on-line merchants, and now find another reason that the brick-and-mortar store that I bought at last year isn't there any more.
Two home in my area that I considered seriously overpriced recently sold for the asking price.One was a 6k sq ft home on 8 acres,nicely done but too close to a busy street $2.75MM,the other a nicely done 3/2,1800 sq ft with an artists studio $825k.The more expensive place may have been an impulse buy by someone with serious $,the other would rent for $2100 a month tops and there are comparable homes available for $100k less.When taking into account $ per sq ft and quality,prices are down quite a bit,but with few transactions above the jumbo limit it does not take many outliers to affect the median price.The lack of homogeneity makes it harder to figure out what is going on here in W Sonoma county as well,having your mansion next to a pig farm can affect people's interest when the wind shifts.
".......having your mansion next to a pig farm can affect people's interest when the wind shifts". . . . . . . my neighbors don't mind a bit come "processing time"......
smart RE agents would only show the 'next to pig farm' props after a careful check of the weather reports for wind direction and velocity.
which is worse: pig farm, cattle feed lot, or chem factory (to have upwind on prevailing winds)?
oh, forgot the waste water treatment plant as a choice.
hard to think of a shakier investment than RE between the 101 and stanford
As someone trapped on Sandhill for at least one more year, permit me to quote the crazy lady in Happy Gillmore:
"Get. Me. Outta. Here!"
Cheers,
prat
Great for sharing.
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Uncle Rico had the right idea. How do we get back to 1982? In this age of "Yahoo! Finance", is it naive to anticipate that degree of revulsion towards the stock market ever again? Have I answered my own question?
All this hemming and hawing about the future direction of asset prices. Screw it! We'll all be dead tomorrow. Who needs a house in SF? What constitutes a "good deal" when half your neighbors are Prop 13 gargoyles and the other half are generating a cloud of smug? Where will YOU fit into this hell of other people?
Asset-class speculation sucks. It infects your thought process until all your nobler instincts seem quaint. It quietly and insidiously reorganizes all of your priorities and values, calibrating them towards Money. Any sensibility that isn't about money (or procreation) simply atrophies. Tried following up John Mauldin with Shakespeare lately?
If St. Peter conducts Computed Tomography of my brain to assess my worthiness, I'm screwed!
-6
-6.72
But we knew that.
Yes, the home price still falling and may lead to more dip in the time to come which can be proved a good deal to buy a house in couple of months from hence.
An interesting article is Housing News, Daily Housing Market, Housing Crash News and Real Estate News is-this-right-time-to-buy-house.php
I rent in the ranch. Sold a much inferior home for 2.4MM in 2007. Wow.
debtfree
Thanks. About ~500k$/year before taxes, would have been my guess. About what a Harvard lawyer like Mrs. Obama would make, after bonus, I suppose. More for GS lawyers, goes without saying.
Go to Irvine Housing Blog where Irvine Renter has a calculation for you.
Best of Luck
Crossland just posted macro stats and breakdown by MLS area stats for the mid-year. He's claiming that the deal volume is drying up rapidly in the outer areas, while the higher sales volumes are closer to the center, contrary to what you concluded. His general thesis is that while it has slowed somewhat, selling prices continue to grow and we have yet to see a decade-long span when prices declined.
We're still renting and biding our time. Saw a big jump in reasonable rentals this past month. We have a suspicion that there will turn out to be a lot of "fake it til you make it" stories that are revealed when the Alt-A and Option ARM-structured prime tranches start recasting in 2010 and 2011. One house in 1B we were watching dropped 10% in asking in 45 days, and is still sitting with an asking well above $550K, and poorly-attended open house events. The mortgage documents we pulled on this house showed the owners got a note for well north of $650K.
I'm becoming increasingly convinced of my thesis that too many people have too great an expectation of income stability to sustain even standard, conventional, "safe" mortgages. It isn't the interest rate terms that are catching them off guard, it is the 30-year duration. Guys like Crossland are whistling past the graveyard in my opinion, as UE is steadily growing worse.
Not sure if the data is correct or not, but according to Zillow that house was sold in 2005 for just $1.3M!