How Many Zombie Listings Are Out There?
We are headed into the spring selling season and listings are on the rise. The question is, how many of those listings are actually ready to sell? Many of them are so upside down they can't possibly sell. Hence the name "Zombie". Sure, there are a few sales occurring on some listings with equity, but that is a minority. The listings that are selling have attracted multiple offers only because they are few and far between. Just because there are multiple offers on a property doesn't mean the market is picking up. There will always be some that buy even when the overall market is declining.
People need to see the big picture, instead of getting bogged down on one property.
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60 comments:
LS2009 said...
"Just because there are multiple offers on a property doesn't mean the market is picking up."
And THERE it is folks! Apprehension, nervousness & doubt has infiltrated our fearless leader. Imagine his plight, sitting there day after day as prices refuse to budge and thinking, "gee maybe this really is the bottom" - "maybe I really have been priced out forever"...
He is now stuck between a rock and a hard place. He must either
(1) admit his extreme pessimism is unwarranted and recognize, this very well may be the bottom forming or
(2) dig in his heels even further, deny all signs of a bottom forming. If this is a blip, he comes out smelling like a rose. If this is the bottom, he goes down in a blaze of pessimistic glory.
So what do you all think he is going to do? Honestly, I dont envy him & his choice. He staked his entire reputation on us being nowhere close to the bottom. How much longer can he continue to deny reality???
I disagree, and I am a bear. The market is whatever price the market will bring TODAY on a property. So far, the high end pricing on truly high end properties has held up, especially because few sellers are selling. This is NOT true of the near-perfect. The market for run-down properties in great neighborhood or decent properties in not quite so spectacular locations (even if on the Westside NEAR great locations), is spotty at best. Prices around the edges ARE falling precipitously. The bet being made is that this will creep up the the truly great properties in great locations. We shall see. But for TODAY, that market remains pretty good (not great, just not crashing hard).
Jeez, give me a break. The westside is descending into the pit. Look at the February 27 post year over year declines. Why argue with facts? The market is horrible and it's going to continue to decline. If you think otherwise you're just fooling yourself. Should we list out again the 15 or so factors pointing to continued declines in addition to the hard cold February 27 post facts?
As far as the Zombie properties go, those folks are in house/debt servitude. What a lousy life. Sooner or later the people will get a clue and walk away and the inventory will hit the market. Latesummer was right for large parts of California and many parts of the US, and he's right now regarding the westside. In fact, I was watching the business news this morning and the west housing numbers are still declining. Time to wake up. Or, not and just live in denial.
Three words:
Bear Market Rally
It happens a lot. With today's new home sales numbers, I don't even see it. But, if you want to say the market is picking up, the best you can argue is those three words.
Um, anybody check out the latest DQ sales figures for SM listed in the LA TImes? Low # of sales in all zips, high cost per sq. foot.
Riddle me that one, joker.
Multiple offer doesn't mean price war anymore. We recently bid on a house. It had 6 multiple offers, but they were all at asking. Seller tried to increase price, but the buyers refused to budge and the seller had to go with the strongest offer, the one with 20% down at asking. Just because there is no drastic price decline, it doesn't mean price appreciation either. Good luck to all the perma-cheer leaders that replied on the bubble appreciation to make their living.
I hear you. But most of the time when there are six offers on a house, the seller CAN get one of them to bump it up
Yeah - once there are already 2 or 3 offers on the table, most people dont even bother to put in a fourth, fifth or sixth - unless there is nothing else out there they like - something I am seeing alot these days.
Houses over 3.0 million seem to be moving in the Franklin district.
I am a massive pessimist and never would have expected this - anyone else observing this market segment want to say what they see
Houses over 3.0 million seem to be moving in the Franklin district.
I am a massive pessimist and never would have expected this - anyone else observing this market segment want to say what they see
How is the Brentwood area holding up?
I thought you guys would be interested in these figures as he mentions Santa Monica as the worst place in L.A. to buy a home: http://patrick.net/forum/?p=29035
Nanci - Thanks. I think some people over there are going to learn the hard lesson that some areas that are high in demand never "make sense to buy" on a rent/buy basis - they always have some premium associated with them.
There is nothing wrong with that mind you. I used to live in NYC where very few could afford to buy and the vast majority of us rented. It was even worse in europe where many people rent from cradle to grave.
Its a matter of being comfortable with that decision IMO. Just accept the fact that some areas will never "pencil out" on a buy/rent calculator, and then decide if you still want to buy, or if you are comfortable renting forever.
If I was concerned about each and every penny I made, I never, ever would buy in any of the premium areas. Still, I can afford it, and to me it is "worth it" to pay the premium to buy - hopefully in the next year or so.
Brentwood is still a disaster. Houses going down and down.
Really the only area that is rock hard and turgid is the Franklin School district.
But frankly how long can the hunger for Franklin keep up? I am looking for Franklin to collapse later this year
Wait for it
lately this blog is just speculation or individuals personal (and emotional) point of views...i'd rather see more fact based arguments.
but i definitely don't see this continuing decline. i know several people who have lived and invested in westside properties for more than 20 years and they think this is the bottom and time to buy.
Look, no one can predict the future. Let's all just share facts and data.
Let's not talk emotions.
There are plenty of hysterical screamers, desperate to buy a house in the promised land. Let them post on another blog. This blog is for us logical types
The chances of more declines are significant as discussed on many occasions. For those believe this is the time to buy, give us some FACTUAL DATA as to WHY PRICES INCREASE from here in the NEXT 2-5 YEARS. Sure if you have money to burn and don't care, than you can buy anytime. Those people are few and far between. Normally, the affluent are even more savy when buying. Also, don't assume everyone here is a renter or can't afford to buy. Most are waiting for another 20-30% drop, bringing prices back towards historical norms.
I am still not convinced as to why prices won't remain flat or continue declining over the next 2-5 years. So why would you buy when you can rent at half the price, with NO RISK. Besides the normal realtor hype, low interest rates, "low prices", multiple offers etc..., somebody please TRY and explain buying right now.
hasn't the more desirable areas for SFR on the westside always been out of whack with historical norms of 3-4 times the annual income? Please take out CC and MV for now bc those neighborhoods have only become more desirable areas in the last 5 yrs. You can't possibly take me that homes in Westwood and Brentwood were not more than the 3-4 household income in 80s, 90s.
On another note, I do believe prices will continue to drop to a level more matching of its value. For example, one of those crappy 750k shacks in CC/MV will probably drop down to the 500k mark.
"hasn't the more desirable areas for SFR on the westside always been out of whack with historical norms of 3-4 times the annual income?"
Pretty much. Back in the year 2000, the census was reporting SM median home price was 625K, while the median income was 50K (12X income). This isnt uncommon for land constrained areas where the stats skew far from the 3X "rule of thumb". In NYC, a median home price of 20X median income is standard.
Thats not to say people are paying 12X or 20X income to buy however. For SM, back in 2000, the census reported 70% of people rented. When your renting population is so enormous, and when renters do, on average make less than homeowners, its not hard to skew the stats heavily to get ridiculous numbers like 12X or 20X income. Thus, its possible the 30% people who buy in SM are paying like 3X or 4X income. However its hard to tell since they get washed away by the 70% of the population who rent.
Excellent point Anon 6:47. It is hard to tell what the price/income multiples are due to a large population of renters. It will be interesting to look at the 2010 census numbers for comparison.
However, I believe the median income has changed very little since 2010, whereas the median price for Santa Monica has.
Perhaps some easier numbers to compare would be the mortgage/rent multiple. I don't have those numbers, but if someone does, I would venture to say it has changed considerably since 2000.
Thanks for presenting us with factual data, instead of just hearsay. This is the type of conversation weare looking for on this blog.
Uh oh. It looks like the option arm timebomb just went buh bye!!!
http://www.bubbleinfo.com/2010/03/29/neg-ams-receding/
Anon 10:52, Read the entire story you friggin idiot RE shill. "some, most likely, Different in California", more foreclosures, more delinquency reducing the amount of ARMs readjusting etc.....
Written by who, Jim the Realtor..
Great, just in time for Sping, to sell some other fool down the river to financial ruins.
"Written by who, Jim the Realtor.."
Uhh, no actually its the wall street journal.
Anon 10:52, you've got to be kidding, right? Jim the Realtor's website? Our "friends" at the WSJ? California, especially mid and high end RE, is diving hard, but I guess you need those "green shoots" to survive. Too bad it's just astroturf.
Who is buying in the mid and high end? People with money to burn, people who don't know any better, and some men getting pressured to buy by nesting wives.
Anon March 28, 2010 6:38 PM:
"You can't possibly take me that homes in Westwood and Brentwood were not more than the 3-4 household income in 80s, 90s."
Do your own homework; it's not hard to look at Redfin or Zillow and find many, many 2-3 bedroom homes (not condos, not mansions) that were easily within 3-4x the household income in both Westwood and Brentwood at the time. Jeez, my place was just under 4x my income when I bought it in '86.
Anon 10:52, you've got to be kidding, right? Jim the Realtor's website? Our "friends" at the WSJ? California, especially mid and high end RE, is diving hard, but I guess you need those "green shoots" to survive. Too bad it's just astroturf.
LOL - Just because your not paranoid doesnt mean they arent out to get you...
It appears that Clusterstock is also running with the Option Arm fizzles out story:
http://www.businessinsider.com/the-adjustable-rate-mortgage-time-bomb-fizzles-out-2010-3
I agree.
March 29, 2010 1:37 PM Anon:
How much was your house in 1986 in Westwood? The median household income was definitely less than 1/3 of the price.
You know, I was afraid of something like that happening with the option arms. I am disappointed, but not surprised.
Back in 2006 when the bursting started, I thought I would be sitting pretty in 2009-2010. The blogs I visited painted a picture of us patien renters getting with massive massive discounts and plentiful inventory. Yet, here I sit, looking at what seems like low inventory and high prices, and not alot of momentum to make either of these things better (for renters) anytime soon.
It just wasnt supposed to be this way.
It IS that way in so many parts of California and the US. The only reason prices in the mid and higher end haven't cratered yet is because the wealthy have more resources. And, the gov't is doing everything they can to prop up the market. It's hard to predict the gov't interferring with the free market. Nevertheless, all that's happened is a delay. The mid and upper end is on its way down. Just be patient. Don't throw your down payment away just because you're anxious.
Case shiller is out. LA is up 0.9% in January. +3.9 on a YOY basis.
"The blogs I visited painted a picture of us patien renters getting with massive massive discounts and plentiful inventory. Yet, here I sit, looking at what seems like low inventory and high prices, and not alot of momentum to make either of these things better (for renters) anytime soon."
Well said...As a renter looking to buy, one thing I've learned in the last few years is that whatever I've wanted to have happen, has not happened. And with every Case Shiller report I feel like I die a little more inside.
Maybe I will become more optimistically bearish soon, but for now, I just want to puke.
Not so quick on the CS. From the WSJ on the CS: The high-end of the housing market is still weak with more signs of distress, as sellers wake up to the fact that the luxury market won’t be able to dodge 30% price declines from the peak. And though the low end of the market has stabilized, “it isn’t picking up as quickly as we thought,” say the analysts.
CS results: The 10-city composite index declined 0.04% as compared to January 2009 while the 20-city composite declined 0.70% over the same period.
Of course, this includes many lower end markets that have stabilized. Expect the CS to go up as the mid and higher end craters.
"Of course, this includes many lower end markets that have stabilized. Expect the CS to go up as the mid and higher end craters."
High end "craters" huh? Is that why the high end (LA) is up MOM and YOY?
Give me a break. Are you blind? Look at the February 27 post data. Looks like cratering to me.
I thought we were going to discuss facts here.
RE POST THE FEB 27 DATA
DOES FEB 27 DATA COVER SM
?
"Give me a break. Are you blind? Look at the February 27 post data. Looks like cratering to me."
Hooold up a second dude. Heres what you said previously
"Of course, this includes many lower end markets that have stabilized. Expect the CS to go up as the mid and higher end craters"
So as YOU said, this exchange was about CS as in CASE SHILLER. Was that Feb 27 post about (a) median prices or (b) case shiller? (hint it was about median)...
So going back to your original statement above "Of course, this includes many lower end markets that have stabilized. Expect the CS to go up as the mid and higher end craters"
As I pointed out, the FACTS regarding Case Shiller are that the high end went up MOM and YOY.
http://www.macromarkets.com/csi_housing/sp_caseshiller.asp
I realize you are embarassed. You made a flippant remark about high end being down, but I showed you that was not true. The correct response was to just go silent and take your lumps. Instead, you dug yourself an even bigger hole and made reference to a tangential Feb 27 post. Either way, this is an anonymous blog - no one knows who you are - next time just admit you were wrong, shut up, take your lumps and move on.
I agree 100%
Can you comment on whether the CS mirrors what is actually happening in N of montana
Meh.
There are some sales happening right now because there are ALWAYS gullible people who never learned that the LAST person you ask for financial advice is the person who stands to make money from your purchase.
And the poor schmucks in the real estate business are so desperate for a deal that they'll tell you the sky is purple if they think it will get you to buy.
Our Blogger's ego has no effect on the facts:
Employment is in the toilet and at near-Great Depression levels. Homes have not yet returned to a decent price. Sane people these days are holding on to their money and NOT buying in case their jobs don't last and they end up needing to leave the "golden state" to find work elsewhere.
ARMS, stagnant economy, no jobs....the bottom ain't here yet.
In case people hadn't noticed, our economy in this state is literally done for...dead cat bounce is in and the housing bulls are literally done. I've been wondering how investors are sitting there with money in real estate watching the stock market climb and climb. When they don't realize those housing gains in 3-5 years, combine that with people walking out on their underwater mortgages and you are looking at YEARS of depressed housing prices.
Don't sweat it. There is literally NO need to purchase a house. Not with rents as low as they currently are. Last I looked, a nice 3 bd/2ba in West LA, Mar Vista, Palms, Westchester, Culver City, etc goes for $2700-3500/mo, but would cost around $7K+ to purchase. The housing market THRIVES on emotion based decisions. The people seeing a bottom here (LOL..a 3 month bottom) are going to be kicking and screaming as they pull that knife out of their chest 2-3 years down the road.
Conversely, those who do not buy at the bottom (be it now or 20 years from now), those who are always convinced "the bottom is not in yet" or "we have a ways to go", are simply too bearish to ever buy.
Remember, at the bottom (the real one, whenever that may be), if you are the most bearish person out there, you will be priced out forever by someone slightly less bearish than you.
Reality is, the permabears are already dead in the water. Years after the bottom, they will look back and think "what could have been"...
Anyone who thinks there will be price appreciation, is just seeing things for how they want to and not how things are. All these back and forth about statistical figures makes me think that you didn't pay attention in math class a long time ago. Why do they smooth out curves in statistics? Numbers will jump around from data point to data point. There is an overall trend. If you can't see it then you must be blind. How are people going to pay for more expensive homes if their income does not rise in proportion to property prices? Regardless of whether home prices should be 2x income or 6x income, it's still a function of income. No?
"All these back and forth about statistical figures makes me think that you didn't pay attention in math class a long time ago. Why do they smooth out curves in statistics? Numbers will jump around from data point to data point. There is an overall trend."
Good thing about Case Shiller is it doesnt have a history of "jumping around". From 1987-2010, it is very consistent in terms of identifying trends. For example from Jan 2007-May 2009, CS went down each and every month, no blips, no jumps, just consistently down.
From May 2009-Jan 2010, CS went up each and every month an 8 month trend. CS has only had 2 longer periods of uninterupted gains than what we have now (the boom of 1987-1990, and the boom of 1997-2006).
Thus, unlike other data, CS has been very good at identifying trends. Unless "its different this time" CS is identifying another trend now and that trend is, the downturn is over...
Anon 6:36, you think you are clever but you are showing your idiocy and lack of understanding of basic statistics, and the current economy and real estate market. The high end IS down and is CONTINUING to go down. Get a clue. You must be a realtard.
Anon 11:03
Your point it well taken. However, I do believe that 5-6 month worth of data is insignificant in the span of 10-15 years in real estate cycles. Using statistics to predict the future is like driving a car sitting backwards. You will not see the bend in the road until you have already passed it. Neither you nor I can accurately and consistently call the bottom. Not to say that we are not at a bottom, rather that bubble era appreciation will not return for a very long time. We may very well be at a bottom and see normal housing appreciation, which basically tracks inflation. I do think it's interesting that you argue over fluff rather than the meat of the issue which is income. Do you not agree that income pays for houses? Do you also not agree that without income appreciation, there will not be home value appreciation?
NEW YORK (CNNMoney.com) -- The market seems to have pulled the rug out from under housing industry hopes for a sustained early recovery.
After a five-month run-up in home prices starting last spring, prices have now fallen for four consecutive months, according to the S&P/Case-Shiller Home Price Index of 20 cities, a gauge of market values, released Tuesday.
"The high end IS down and is CONTINUING to go down. Get a clue. You must be a realtard."
And THERE it is folks! When you are obviously losing an argument, go personal on your opponent. Best of all call them a realtard (TM).
Now as to the substance of his claim, the high end is going down, here are the FACTS.
In January of 2009, the highest 1/3 tier in LA had a value of 169.97.In January of 2010, the highest 1/3 tier in LA had a value of 175.58
So again, for the simpletons out there:
Jan 2009 = 169.97
Jan 2010 = 175.58
Which number is higher???
Oh, and for those who want the raw data, here it is
http://www.macromarkets.com/csi_housing/sp_caseshiller.asp
Again, 169.97 or 175.58 - which one is higher???
What a goof ball. The high end you're referring to is half a million plus. That sweeps in a bunch of junk given the FHA raised the loan cap to $729. This blog we're discussing one million plus.
There can't be a temporary bump...a bull fake out so to speak...where prices(especially those supported by low interest rates and easy money due to fed purchase of mortgage securities)?
The thing is, there is some sort of odd impression out there that a bottom will pass by quickly....
Yeah, maybe, but like others have said, the recovery will be long. When the true bottom hits, you will be plenty fine if you bought a year before that or a few years after. The reason you might not see that logic is because people calling bottom now(or ostensibly 9 months ago) are not calling the true bottom. Rather they are calling the temporary bull fake out.
Check out this doomfest from LS2009 good bud, Dr. Housing Bubble on why CA real estate will get much worse in 2009:
http://www.doctorhousingbubble.com/california-2009-economic-and-housing-forecast-examining-5-areas-showing-california-will-have-a-tougher-economic-year-than-2008/
The best part is where our fearless leader chimes in to offer high praise, and to reinforce how 2009, will be "nowhere close to the bottom". He wasnt opining on high end mind you, LS2009 was opining on CA real estate in general:
"LS2009 said...Great post to begin 2009, DrHB. Hopefully, people will look at the facts this year and try therapy for any cognitive dissonance. I believe the big difference this year will be in consumer psychology. The facts have been horrible for some time now, but very few now doubt, the shape we are in. California is often times the leader in economic and social trends. This time will be no different, except it will be to the downside. All the “talk” among friends will become a self-fulfilling prophecy and the numbers will only reinforce reality."
Wow, so wrong...oh so wrong...
Serious economic meltdowns are coming to all neighborhoods in California, during 2009."
I don't know what you're trying to say. The YOY declines in 2009 for substantial for the mid and upper end (i.e., $750k and up). Only the lower end has stablized after some crushing adjustments. 2010 isn't going to be any better than 2009 for the mid and upper end.
Anybody got the website for that chart for the upper end prices? Some high end real estate site. Not the CS which starts at about $500k. I think its got some good data to demonstrate to all the realtards that prices are still falling dramatically.
"I don't know what you're trying to say"
Im trying to say that LS remark:
"Serious economic meltdowns are coming to all neighborhoods in California, during 2009"
All neighborhoods? ALL??? Sorry, but for many areas in CA that WILL GO DOWN AS THE WORST CALL EVER.
3 words: Artificial Govt Support. Throwing good money down a rat hole and just prolonging the agony. Prices are the problem. If it wasn't for gov't manipulation we would be though the worst of it by now after 2 years. But no, let's stretch it out for another 2years until it's even worse before we go down the toilet.
Get a clue.
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