Taking a Plunge Into The Market ?
There seems to be a growing chorus about jumping into the Westside market, now that prices have dropped. Realtors are pushing low interest rates as the reason to buy now. Perhaps it is true, interest rates are headed up in the near future. How will that affect the "nascent" recovery in housing? If you were to buy an $800,000 house and interest rates do rise, what effect will that have on the resale of your home later? These, and other questions need to be answered before taking the plunge.
My guess is, there are weak hands out there buying due to pent-up demand, low saleable inventory and impatience. Bidding war stories on desirable listings that aren't "zombies", have encouraged some fence-sitters to dive in. Could a double-dip in prices be in store, once the fed stops buying mortgage backed securities and ends the first-time buyer credit?
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Please keep the discussion on topic. If you want to discuss schools, continue it on the previous thread. Thank you
I came to this blog to find out what people who follow the market are saying...
we stopped at an open house 2 doors down from us - 631 Sunset in Venice - listed as a short sale at $699,999...TINY (850 sq ft) house on a big lot. The people inside were CRAZY - people with their realtors, contractors, walking around with clip boards drawing out their expansions. it was like a walmart sale. I mean, what is going on? the selling realtor said it was priced low to create bidding wars. But - this is in a part of Venice where there have been multiple = multiple home robberies (including our own) in the last couple of months. and i heard other realtors telling their buyers that it's a "seller's market" again already. REALLY?
Yeah things are really getting hot North of Montana. Just went to see a teeny tiny old one story house north of montana. Multiple offers above 2 million. They won't tell me what they ultimately accepted for it but it is in escrow now.
Go drive by if you want to see how small a house you get for 2 million plus today
334 15TH St is the place
Anyone else going to cite examples?
I mean we all know about the 3 million plus houses moving in the 90402. But those are huge and don't irritate me
but to see a small home sell for 2+ is a shock
A house down the street from me was for sale for months, then a friend made an offer and the realtor said they had 'multiple offers' a month later he balked and they 'wanted to work with him'. THERE WERE NO MULTIPLE OFFERS. THE REALTOR IS A LIAR AS IT SEEMS MOST ARE. What's important is the market is still going down, not that a few houses sell.
Despite what some people might think, citing to some graph, prices don't rise with interest rates. If other factors are constant, prices decrease. This results because the increased interest on debt increases the monthly payment. So, people can't afford as much debt, and therefore prices decrease. The same thing, but in the other direction, happens when interest rates decrease, which we all know too well.
Assuming the economy stays about the same (unemployment, inflation, etc.), then prices will decrease unless the fed continues to play games with market rates for interest. I'm not sure about a double dip. That would mean there has been some type of real upswing. Not for example, the fact that higher end short sales are bringing up the median housing price. My prediction is a Japan type situation in many markets, including the Westside. Just a slow degrade in prices over many years.
This bust, I do think is different. There are some people out there that have to buy, or don't have patience to wait. But by and large most of the solid buyers are staying out of the market until at least 2012/2013 when most of the junk loans and foreclosures are finished. The risk to the hard fought down payment is just too much. The glory of owning your own home has lost much of its luster, and now everybody knows real estate doesn't always go up.
Yeah, me too. We had also called about a property and was told there were multiple offers and we should move on it when there were no multiple offers. Glad we did our due diligence. Buyer be ware, there are a lot of desperate sellers and agents out there who will say and do whatever they can to get you to sign on the dotted line.
I don't care what zip code you live in, you need income to support your mortgage. We had a lot of leverage power in the last decade first with low interest rates, then with toxic mortgage products. Most of that is gone. The one thing that's left but about to end is low interest rate. No point in arguing about if price will no up or down based on interest rate cause we are about to find out soon enough. My money is on down and my argument is based on income!
Agreed. NOW incomes must support prices because incomes must support mortgages. I do think there's about 14 other factors pointing down. Interest rates are one, and that will kick in sooner or later.
Agreed^2. Historically, mortgages have been about 3-4x income, because that's what a reasonable person can afford and still have room for emergencies, repairs, vacations and minor details like food.
If you want to look at what a neighborhood can afford, look for an average home or condo rental prices. They are honest reflections of what the community can afford. They'll almost certainly be within 3x - 4x the median household income for the area (obviously, a 5000 sq ft mansion will be more)
15th street house. It's been on the market for 145 days. And if the photos are halfway accurate, it's very nice and in good condition. Is 2.25 million too much for a house on a 7500 sq ft lot? In my opinion, yes, but that doesn't mean much. SM is at the extreme end of the market. I don't see it as a sign of an improving market.
A rule on realitors and offers:
the statement "Multiple offers" is usually (but not always) a lie to get you to bid.
the statement "1 or 2 offers" is usually a lie and that there are no other bidders.
the statement "3 or 4 offers" is a stretch of the truth that usually means they have one offer already - maybe two.
Anything above that that is specific (i.e. 5 offers, 11 offers, 17 offers) is usually the truth - they usually dont make up numbers this high.
Just FYI
California's median home price rose 11.2% in February from a year earlier, while home sales in the state dipped for the second consecutive month, according to a report released Thursday by MDA DataQuick, a La Jolla, Calif., housing-data provider.
90402 is Rockin. Here it is
Realtors are sucking in more suckers.
The people who buy today are getting what they deserve.
While the realtors laugh all the way to the bank
According to Redfin, compared to a year ago, 90402 is down 18% median price sold, and down 38.8% median sold $/SqFt. I think you mean Cratering.
334 15TH St: According to Zillow it sold on 02/08/2008 for $2,400,000. Ouch. After being on the market for 145 days, doubt they are suddenly inundated with multiple offers over ask...But yes,we rent in the 90402 and are looking to buy and there is more movement than 4 months ago for sure. We are sitting tight.
I am still waiting. I am looking further south than the other people on this blog. We are very solvent, high income, high credit score and have previously owned a number of homes. We moved here in 2006, rented and will continue to rent unless we see a totally amazing deal.
Prices always revert to fundamentals, I can't say when or how fast. Often they over correct. The patient get the best deals and there is no hurry.
People generally expect to see whatever they have seen the last 10 years or so. As a result many think prices will go back up. It may take another year or two for serious discouragement to set in. My husband is now surviving the 4th round of lay-offs since he started work and his company is profitable. It is crazy out there. More of my friends are out of work. Anyone who thinks this will not impact markets is delusional.
From Carl Case (of the Case Shiller index)
“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” said Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College in Wellesley, Massachusetts."
Uh ohh - if this is the best we can get from the usually bearish Karl Case, the perma-bears here better strap on their flak jackets. The spring selling season is here - its gonna be a looong haul til we get to the winter and another chance for declining CS prices. Suddenly, that "bottom" hit in spring 09 that everyone here assumed was "temporary" is looking more permanent by the day!!!
http://www.businessweek.com/news/2010-03-15/real-estate-recovery-signaled-with-homebuilders-as-fed-unwinds.html
I just saw that our local Circuit City box was taken over by TJ Max.
This is good news for Santa Monica - one more empty storefront filled.
The marathon going on now is also good news for us
Brings new people to our town
Give me a break. Mid and high end isn't even close to a bottom. Pick a zip code and see what it's doing on Redfin. You better sell now before you lose any more equity, if you have any left.
There are ZERO indicators of rising prices in anything over $1.2mm. There is no reason to buy if you can wait, and there is almost nobody who "must" buy, so those "plunging" in will also see "plunging" equity -- or at best, a flat year ahead.
I was shopping recently -- will go up to 1.2 for 3/2, have downpayment, income, high FICO, etc -- but deciding to wait another couple years and will sign a new lease soon. I see no value in local offerings, and would rather keep saving than pump cash into what seems likely to be a depreciating asset (Westside house). Too bad Feds turned 'latesummer 09' to 'latesummer 12/14'. BTW, I've been bubblesitting since 06, and would never have predicted this amount of govt manipulation...
9:37...are you looking in Santa Monica??? What area?
"You better sell now before you lose any more equity, if you have any left."
Its funny - people have been telling me that since 2002 (I bought in 1998).
Then I look at what identical homes to mine are selling for and I just laugh, and laugh, and laugh...
1:17pm -- you bought near to the bottom. You would make money if you sold. The point is not that you would not. The point is that if you wait, you may make LESS. And the point is that if you had sold in 2007, you would have made MORE. You are laughing, but it sounds like the laughter of a fool who stepped in it.
Give it a while, and we might see those 1998 prices again. Where are we now? For most neighborhoods, 2002? I don't know why SM should be any different. Correction is from bottom up, and so SM is on its way down. It's a great time to sell. Lock in that gain and get out while you still can!
"Give it a while, and we might see those 1998 prices again. Where are we now? For most neighborhoods, 2002? I don't know why SM should be any different. Correction is from bottom up, and so SM is on its way down. It's a great time to sell. Lock in that gain and get out while you still can!"
Yep, pretty much the same thing people have been telling me in 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, & now 2010. And yet, I still sit here after all these years, and laugh and laugh and laugh.
"He who laughs last is generally the last to get the joke."
I bought in 1993 and am pretty darn happy with my purchase, not as a personal piggy bank, but as a solid investment and a great place to call home for my family.
I laugh at the fence sitters....
I laugh at the fence sitters....
Me too. I know a guy who didnt buy on the westside in 1999 because he was convinced prices were way too high and were about to crash. I told him he was crazy but he assured me that I was the one who was crazy for buying then and I would soon be underwater.
Last I heard he was still renting as of 2004. I wonder what happened to him???
Hey, let's hear the funny fence sitter/renter stories from people who bought in 2005/2006/2007!
:crickets:
When my friend bought a house for $146 in West Covina the part right next to Walnut in 1995, there were multiple offers on it before she even looked at it. It was a foreclosure. She bid less than asking and still got it because she put 35% down. Multiple offers only means that the asking price is reasonable. It does not mean the whole market is bottomed out. Actually, the recent desperation has something to low inventory on MLS. If you look at RealtyTrac.com, there are a lot more houses that received NOD, or in auction or bank owned already. In some cities, these "shadow" inventories are 4-5 times of MLS listings. Is this normal? In 2003-2006, this is just the opposite.
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