Entry Level Buyers Having A Hard Time Getting Loans
As reported by the LA Times today, homes over $500,000 in Southern California dropped 16% YOY (November). This effects our entry level buyer on the Westside and has put a serious damper on transactions up the entire real estate food chain. One entry level transaction can affect 2,3,4 even 5 other higher level transactions. Bankers are scrutinizing every applicant and demanding 20% down. Quite a bit different from giving anyone with a heartbeat a loan, as in the early and mid 2000s. They know prices are still declining and don't want anymore deadbeat loans on their books. It's all about jobs folks. You can't qualify for a loan without a good steady job and work stability. The real estate pyramid is deteriorating from the top and bottom simultaneously now. If this continues another 2,3,4,5 years or more, all the Westside markets will be 50% off their peak prices, if not more.
Does anybody have reasons why the market should turn before then? If so please enlighten us.
Posts
87 comments:
I agree
note that 717 7th, in the prized north of montana area just sold for 1.325 million
this is a full 7500 square foot lot ofr only 1.325 million
I saw that article in the LA Times as well. Over 50% of all sales in Southern California in November were either bank owned or short sales.
Governor Brown just announced another $1 billion in state cuts starting on January. That's the same as taking $1 billion out of the economy. He said there will be more cuts.
1.325 millon for North of Montana? That's a new low, considering those lots were well over 2 million at their peak in 2007. Even the mighty have fallen on the sword now.
"1.325 millon for North of Montana? That's a new low, considering those lots were well over 2 million at their peak in 2007. Even the mighty have fallen on the sword now."
Before you open your mouth and say something stupid (too late) check out what it sold for at the peak- it's down 14% from its peak sale price in 2006.
"this is a full 7500 square foot lot ofr only 1.325 million"
It's on 7th street which is BY FAR the worst street NOM. And it's incredibly close to Montana. And it's right next to a large apartment building full of apartment dwellers (yuck). And...the price is down 14% from its peak price in 2006. Break out the champagne permabears.
I stand corrected. It is not GRS, which would have peak values over 2 million for a lot that size. Not the greatest location NOM.
Thanks
It's impossible to draw conclusions from one data point anyway.
There are actually two data points, what this POS sold for at the peak of the frenzy, and what it just sold for when the world is falling apart. 14% delta.
"Does not compute...does not compute..."
OK so it is now clear that some land North of Montana is down only 14% from the peak.
that doesn't mean anything. Doesn't mean that it won't keep going down from here so that North of Montana is affordable again
Laugh-out-loud to those waiting patiently for North of Montana to get affordable.
Here is another data point that the bears conveniently ignored - teardown, standard sized lot on standard sized street in GRS just sold for over 2.1 million dollars.
Go to zillow, see for yourself. Teardown 460 18th street just closed: $2,131,000
This is what--- 14% off the peak?
Let's have an honest discussion about this sale and the sale on 7th street - both North of Montana both down only about 14% off the peak. We need more honesty here
Here come the real estate professionals to tell us that things aren't "that bad." Let's buy a house because things aren't that bad, they're only kinda bad. You're not going to lose millions, you're just going to lose hundreds of thousands.
Consider: Job creation is not keeping up with population growth; wages are stagnant; there are over 6 million homes in some state of foreclosure; the average college graduate finishes school with over $25,000 in college debt; over 25% of homes are underwater; baby boomers are retiring and downsizing; during the next 2 years either taxes are going up or federal and state budgets are going to be slashed, probably both; and banks are making it harder than ever to qualify for a loan.
Yep, it's a great time to buy! We're at the bottom and we're heading up from here!
To claim the loss was only 14% is absurd. You can't just look at the closing sale and the previous sale. There are possible substantial closing and financing costs involved.
Commission to the realtor plus closing costs could run, what, 5-7%? Let's say 6% total.
Plus unless it was bought for cash there was a hell of a lot of money lost in interest over that five year period. That's why anyone that says renting is throwing your money away and typing $x/month times 60 months = dollars lost is purposely being misleading. Even with 20% down on a mortgage during the first couple of years a substantial chunk of the mortgage bill is going to fill a banker's piehole.
So in the case of 717 7th, the purchase price was $1.54m ONLY if they paid cash, the real cost of the place was $1.54m + interest over the last five years (and of course taxes, insurance, and maintenance, which I'm neglecting for this discussion).
The real loss was much greater than $300k. If you make seven figures or more then hey, you can shrug off that sort of loss. I don't know anyone that makes six figures that would simply shrug off a loss of that magnitude. Some families can weather it and still end up well, others would be permanently set back. It's like using leverage in the futures market, fantastic when you win, sucks when you lose.
You permabears really suffer from a lack of ability to think logically. Yes, people who bought in 2005, or 2006, or 2007, or 2008, or 2009 have lost money. They were stupid. Many are taking multi-hundred thousand dollar haircuts. Is that your point? If so, I agree 100%.
Now, we're almost into 2012, and things in the economy are bad for many people. There are large numbers of foreclosures nationwide (though next to none in any desirable part of the westside). The unemployment rate is absurdly high, and has remained high for longer than in any previous recession. This administration does not foster confidence in anyone, and we possibly have four more years of this incompetence. And yet absolute CRAP NOM is selling for a 14% discount from the peak of the largest bubble of all time. Just let that sink in a while.
kihei,
Your bitterness over being a renter is really sad. There is more to life than owning real estate, it's just not in the cards for some people. Let it go.
NAR announced that sales since 2007 were actually half than what they reported! How can they make a mistake like that. Realtors are just plain liars.
6:44, why make such a caustic statement? Everything Keihi said is absolutely true and the statements were all just a matters of fact. You sound like a bitter homedebtor or realtor. So sad too bad.
Honesty please. Please
If you bought that north of Montana house for $1.54 million with a 20% down payment, which is $308,000, and it went down 14% and you sold it, then after figuring in the sales and closing costs (5% for the broker and another 1% in closing costs), then you would be down 20%. You would have lost $308,000. How's that sound?
Anon 6:42, you said:
"There are large numbers of foreclosures nationwide (though next to none in any desirable part of the Westside)."
That is not true. There are loads of foreclosures on the Westside, it's just that the brokers and lenders are doing everything possible to keep them out of site and off the MLS. Fore instance, there are currently 7 bank owned homes for sale in Beverly Hills, but another 106 on record.
Don't believe what you see. It isn't the whole story. The brokers are controlling the picture that we see so that we don't think it's bad. The reality is very bad.
Sigh, here we go again, the endless pointless monotonous argument about North of Montana.
A few blocks of real estate apparently made of solid frikking gold judging by some people's years-long obsession with this little patch of land.
Wow, and it only took you three posts to settle in to your normal battle poses.
You do realize you're been arguing about the same few city blocks since at least Dec 2006, which is when I first logged on here?
Look, I know you all have axes to grind, but surely even amongst yourselves you must be bored witless having the same argument every time Latesummer2009 posts a new entry. Even being rude to Latsummer - another perennial favourite - is a little more original.
Is it possible that you all could - you know - expand your horizons a bit?
"Fore instance, there are currently 7 bank owned homes for sale in Beverly Hills, but another 106 on record."
It's not that I don't believe you, but well I don't believe you. Ever heard of citing to something?
"NAR announced that sales since 2007 were actually half than what they reported!"
Which means what? Far fewer foreclosures than everyone was predicting?
"Sigh, here we go again, the endless pointless monotonous argument about North of Montana."
There has to be a blog that is more aligned with what you're looking for in real estate. Maybe one about the inland empire? Or rural properties?
It's not that I don't believe you, but well I don't believe you. Ever heard of citing to something?
Uh, ever heard of the internet? Check on Redfin, Foreclosure.com, or anything other than the MLS. You'll see the massive hidden inventories on the Westside. Don't look if you don't want to see it, but don't tell me they don't exist.
Your bitterness over being a renter is really sad. There is more to life than owning real estate, it's just not in the cards for some people. Let it go.
kihei is so on point! I detect no bitterness in her statements, just cold hard facts. Sometimes reality is a bitter pill to swallow!
Redfin lists 11 foreclosed homes in 90210. As for the other site, they're trying to lure you in to buy a subscription with BS data. If you believe that one I feel for you.
I have been both a homeowner and a renter. At the moment I have enough cash to buy comfortably on the Westside. Why would I want to? Prices will continue their gradual slide and then I look forward to buying a home when I can sleep well at night because I know my money isn't slipping out of my hands.
You Anons that think it's essential to own a house, perhaps you're so insecure about your success and standing in the world that you need a 7-figure house to let everyone know how wealthy you are. That's not wealth. It's stupidity.
Here here, I agree. I too could buy -- all cash on the precious westside, but why would I? I'm renting for about half the cost of buying, am able to move around freely, and not sweating the westside housing price slow bleed.
The bottom line is, MOST people would rather be saving cash, renting for 1/2 the price of buying, not putting 20% down at risk, the ability to stay mobile and being able to sleep at night, versus purchasing a home right now.
I have yet to see a credible argument to jump in and buy at today's prices.
How about someone actually give an example of a place that rents for 1/2 the price of buying today, rather than repeating it as fact without anything to back it up?
Yes. You can rent a two bedroom house in the franklin 90402 for only four thou a month right now. That house costs eight thou to own if you add in 18 thousand a year in property tax, which is the prop tax on it. Do the math. Franklin two bedroom
Look the real turds come on this blog and say we need to buy. But do the math. Rent a small house in franklin for half the price to own in franklin But lets not exaggerate. In worse school districts you cant rent for half of owning. And when it comes to big houses you cant rent for half. But for small houses in franklin 90402 yes rent is half the cot of owning
You can live in the promised land. Just ignore the turds and rent
This idea that everyone wants to own and the people who don't own, can't buy, is ridiculous. I know lots of people who are choosing to rent over buying. Why would they buy? It's like throwing money away.
Speeding Pullet, you are from the UK right? Well I would not expect you to understand the franklin school. There is nothing like franklin in London. It is pretty well known that there is not in London a free school that wealthy people will send their children to . In london the free schools are known to be filled with undesirable demographics (just google it) and thus the wealthy send kids to paid schools
Again, something like Franklin doesn't exist in london. so you wouldn't understand
and by the way, didn't you read the articles in the british press about british people giving up on the UK permanently in order to move to santa monica -- or did you not see these articles
Just google - "move to Santa Monica because of violence in the UK"
you will see why the Franklin School is attracting immigrants from UK
here is an extract
'Gemma and the girls were in the local High Street and encountered a gang of boys aged between 12 and 14,' says the 53-year-old.
'The boys surrounded them and shouted obscenities about what they wanted to do to Gemma. They didn't care that she was with the children, who were scared and upset.
'I was furious when I heard about it. We're in the middle of the countryside so you'd think it would be the most peaceful place on Earth, but even in the quietest places, you can't avoid thugs.'
More...
Law student, 20, who won bet to stay sober for a month drowned after drinking session to celebrate
Children discover their dead mother in a pool of blood after returning home from school
It was the latest in a string of incidents that have all served to make Numan deeply uneasy about the changes he perceives in British society. A combination of the recent riots and various instances of drunken, aggressive behaviour he has witnessed while touring has led him to contemplate a new life in Santa Monica, California.
Read more: http://www.dailymail.co.uk/news/article-2035898/Why-musician-Gary-Numan-decided-leave-drunken-violent-Britain.html#ixzz1gfPIRgcs
Anon 8.00pm.... I'm assuming that English is a second language to you.
Because if its your mother tongue then even "The" Franklin can't hope to remedy your mangling of the English language, for all its miraculous properties.
Oh, and obviously, being English means I know bugger-all nothing about anywhere else other than London...
My point, before y'all got reducto ad absurdum on me, was that there's more to the Westside than a few blocks north of Montana.
Maybe one day I can stop reading the same argument about North of Montana that I've been reading for the last 5 years, and learn about other desirable parts of Westside?
Pullet. Thank you. Answer the quetion if you csn. Are wealthy parents rejecting free schools in london due to asbo behaviour by chavs. Thenk you pullet
"Yes. You can rent a two bedroom house in the franklin 90402 for only four thou a month right now. That house costs eight thou to own if you add in 18 thousand a year in property tax, which is the prop tax on it. Do the math. Franklin two bedroom"
Please show me a Franklin house that can be rented for $4K per month. Just one example.
I want to hear from the person who thinks that a 14% drop in a house's price isn't that bad. When you buy with 80% leverage, that comes out to a 100% loss of principal. Not bad.
"I want to hear from the person who thinks that a 14% drop in a house's price isn't that bad. When you buy with 80% leverage, that comes out to a 100% loss of principal. Not bad."
OK, I will try one more time. Buying in 2006 was stupid, period. Anyone who thinks that issue still needs to be debated is mentally deficient. The question now is, 4 years into a crash/near depression, why is crap on the westside selling for only 14% below the peak of the biggest housing bubble of all time? Do you now understand the issue?
"why is crap on the westside selling for only 14% below the peak of the biggest housing bubble of all time?"
Because, believe it or not, there are some, many from the top 1 percent and bubbling just below, who still have the money and want to buy a house in a nice westside neighborhood. Why is this so hard to understand?
"Because, believe it or not, there are some, many from the top 1 percent and bubbling just below, who still have the money and want to buy a house in a nice westside neighborhood. Why is this so hard to understand?"
Exactly.
The question now is, 4 years into a crash/near depression, why is crap on the westside selling for only 14% below the peak of the biggest housing bubble of all time? Do you now understand the issue?
There are many artificial barriers preventing a housing crash, such FHA replacing subprime, and suspension of mark to market, and monetary policies supporting housing. These temporary measures are like the levies in New Orleans, it's just a matter of time before they fail. 4 years is a very short time span in a real estate cycle, patience will be rewarded.
Here are some reasons that now is not a good time to buy:
Job creation is not keeping up with population growth; wages are stagnant; there are over 6 million homes in some state of foreclosure; the average college graduate finishes school with over $25,000 in college debt; over 25% of homes are underwater; baby boomers are retiring and downsizing; during the next 2 years either taxes are going up or federal and state budgets are going to be slashed, probably both; and banks are making it harder than ever to qualify for a loan.
Prices will be lower for several years to come.
Patience will indeed be rewarded.
Just ignore the realtors. Rent your four bedroom dream house and wait for the the crash. Already, those that decided to listen to latesummer have saved a ton compared to those that bought in 2007
Now Latesummer is saying to wait some more. He was right in 2007 why not listen to him now.
And Speeding Pullet still hasn't responded to the question comparing the "free" schools in London to Franklin. I wonder why.
Google Gary Numan. Or google what he is saying to the press in London, encouraging other Brits to move to Santa Monica "America clearly has its own problems, but Santa Monica is great. It has beautiful beaches and the Pacific ocean. There is not one bit of trouble and not one surly or aggressive person there. Everyone is friendly. You ask the teenagers there for directions and they are polite and helpful."
Again, anyone that studies what is going on in the "free" schools in London will understand. Google is your friend.
With regard to "the 1%"
Just look it up - people who make $388 thousand a year and up are in the top 1%
New Construction in the 90402 costs $3.5 million minimum. Look it up. You can't touch anything new for under 3.5
can $388k a year get you a $3.5 million house?
No it can't
The truth is that top 1% is not enough to get someone in to the 90402
Thanks for the props anon 4:06. The Westside literally peaked in August of 2007. Given real estate cycles of the past, we should have had an epic crash by 2009. Hence the name, Latesummer 2009. What wasn't anticipated by many was the degree of intervention by the Fed. For all those items anon 4:06 mentioned and many more, we are now in our 5th year of the housing crash with little, if anything resolved by the banks who got us here. Thats the scary part. Depending on the area, the Westside is down some 20% - 30% from 2007, with shadow inventory growing each day. At this rate, we could be in for another 4-5 years of slow housing torture, before inflation eventually catch up with our declining prices.
Unfortunately, with nobody forcing the banks hand and little real job creation, we are living the Japanese stagflation scenario. Throwing main street under the bus, with the banks feeding on taxpayers to get healthy again. Nothing on the horizon changes this, unless the debt dominoes in Europe start to fall, taking the U.S. down with it and exposing the banks for what they really are. Totally insolvent.
Unless you don't mind watching your housing investment slowly evaporate another 20%-30% over the next 4-5 years, rent a nice house for half the price, half the worry and enjoy sleeping at night.
Latesummer, can you weigh in please on the issue of buy vs rent single family homes.
My observation is that in the best school districts, single family homes sell for the largest premium over rental prices
in the worst school districts, there is often a much smaller premium over rental.
Ie, a small single family home that costs 5 thousand a month to rent in a great school district would cost you 10 thousand a month to own.
On the other hand, in Palmdale and Lancaseter where schools aren't good there is parity
Latesummer,
as you know, we frequently discuss the price of tear downs on this blog
But what is rarely discussed is what the buyers are doing with the tear downs.
My view is that the tear downs are quickly being torn town with high end replacement homes going up in their place
the LA times just did a piece on this - on a house that replaced tear down
http://www.latimes.com/features/home/la-hm-lisa-ling-photos,0,7857743.photogallery
Google "lisa ling's new santa monica home"
this thread is about entry level buyers - well in the nice neighborhoods the entry level buyers are competing with the tear down buyers
the difference between an entry level home and a tear down home is not that great in many areas
Getting back to the title of this thread, yes the entry level buyers are having a hard time buying in Santa Monica right now.
The standard answer put forth by people on this blog is to just settle in and rent for a few years in Santa Monica, waiting for prices to come down
But don't assume that the young people who are buying in Santa Monica are struggling now - they may have help in buying
Think about a person who is new to santa monica - they see a neighborhood filled with middle income young families, they see the houses selling for ten times the average family income in the neighborhoods and they think that these young families are struggling to pay the bills.
What they ignore is the family money. At least four of the people in my neighborhood who have purchased this year got the house as a gift from either the husband's family or the wife's family.
So they visit a neighborhood and see people working in the same professions as them, making the same money as them and feel they deserve to live in the neighborhood too.
They say - that neighborhood is filled with pediatricians - i'm a pediatrician - i deserve to own in that neighborhood - but without the family help it is just not realistic
Entry level people who want to buy should consider renting a SFR in santa monica for a few years. But they should also consider abandoning California and moving to a cool city like Boulder or Austin where they can buy a nice house on just their income. family money is a requirement in santa monica it is NOT a requirement in Boulder and Austin
Anon 7:53, why all the hostile sarcasm? People are just trying to work it out and explore what's going on in the market, what other people are doing, etc. Are you one of those frustrated real estate professionals who's trying to deal with a paycheck that is 65% less than what it was 4 years ago? You need to realize that real estate is not a guaranteed winning investment and people who work in real estate aren't always going to do well.
I agree with 8:39
This blog is for a sincere open and honest exploration - we are all supposed to be in search of the truth.
Snarky comments and insults are just not needed. Let's work together to figure out what is going on and what it all means
What they ignore is the family money. At least four of the people in my neighborhood who have purchased this year got the house as a gift from either the husband's family or the wife's family.
Dear anon,
You don't even try anymore. Copy and pasting from previous comments is very lazy. You need to work a lot harder than that to sell houses.
Anon 10:08 - More affluent areas generally have better schools, because there's more parent involvement with their child's education and what's happening at the local school. Smaller cities like Santa Monica and Culver City have more resources as local taxes go to the local schools. LAUSD on the other hand, draws from the entire city of Los Angeles and has a centralized beaucracy parcelling out funds. Still, if parents are involved at the local level, their child can still get a good education at LAUSD.
As for the rent vs buy equation, it all comes down to jobs and income. Buying is more expensive compared to renting in more affluent areas, whereas parity is found more in those areas where family income is limited.
And for the trolls here, the internet is open to everyone anonymously. Many just like to spew out hate and bitterness. My suggestion is,try and weed them out and listen to the people who are trying to figure things out objectively. Concentrate on facts instead of rhetoric. Actual sales data is all that really matters. Opinions are like a**holes, everybody has one. Those backed up with data at least carry more weight.
And yes, copying and pasting is just lazy and pathetic.
Yeah, that was my snarky comment. Sorry, the holidays are getting to me.
"Those backed up with data at least carry more weight."
Do you have any data to back up this statement:
"Entry Level Buyers Having A Hard Time Getting Loans"?
LS2009 said...The real estate pyramid is deteriorating from the top and bottom simultaneously now...Does anybody have reasons why the market should turn before then? If so please enlighten us...
How about this, why not work from reality backwards. For instance...
1. Case Shiller indicates the LA peak was in summer 06 (at 273.85).
2. Prices absolutely crashed, then bottomed in LA in spring 09 (at 159.18)
3. Today, 2.5 years later, prices are STILL above the early 09 bottom (now at 168.00).
True, prices are a bit off the 2010 highs, but nowhere near the 2009 lows either. Thus, if, despite your parade of horrors that you present us with, day after day after day, the LA market did NOT breach the early 2009 bottom in
2nd half 2009,
2010, or
2011...
why will it suddenly all come crashing down now in 2012?
Why will prices drop? See below.
December 15, 2011|By Alejandro Lazo, Los Angeles Times
"Banks in November scheduled more than 26,000 homes to be sold at California foreclosure auctions, a 63% increase from October and a sign that a surge in discounted, bank-owned properties is on track to hit the market next year."
OK, but why is this article by the LA times going to be more accurate than those that told us about an upcoming "TSUNAMI" of REO first in 2008, then, 2009, then 2010, then 2011, and now apparently 2012...
Take this article from Diana Olick:
"the wave of foreclosures we keep hearing about is about to hit with a thunderous roar."
http://www.cnbc.com/id/36179757
That was a year and a half ago...I remember some blogs were giddy envisioning late 2010, early 2011 as an absolute bloodbath...but it didnt happen.
Where was the "thunderous roar"?
A much-quoted and seen horror chart from Credit Suisse several years ago indicated a "tsunami" of negative amortization, option arm, etc. loans coming due and continuing the horror until 2014/2015 or so. That chart was embraced by many as to the horrors to come, but somehow those horrors did not materialize, and it can't just be the first-time homebuyers credit that stopped the horror. A Ph.D. dissertation should be written about why the Credit Suisse horror chart did NOT come true.
Ph.D. dissertation should be written about why the Credit Suisse horror chart did NOT come true.
Don't need a Ph.D. dissertation. It's called suspension of mark-to-market.
"Don't need a Ph.D. dissertation. It's called suspension of mark-to-market."
Knowing this, it makes you wonder why Anon @Sept 19 3:56 pm cited the LA times as proof the tsunami will be released "soon" crushing prices in and around LA.
Knowing this, it makes you wonder why Anon @Sept 19 3:56 pm cited the LA times as proof the tsunami will be released "soon" crushing prices in and around LA.
I hate it when people say stuff like "soon" because it's so vague. The truth is that no one really knows. Anyone who claim knowledge really don't understand. It could be a tsunami, but it could also just be flooding. Both can be equally destructive, the difference is how long it will take.
Agreed 1:32 pm. Thus far, the release of REOs has been nothing more than a drip, drip, drip, process. Why is there any reason to believe this is going to change anytime soon?
Whether it's a slow bleed, or a tsunami, one thing we know for sure -- prices are going to continue to be under downward pressure. The government and the banks are doing everything to soften the blow -- sub-4% interest rates, mortgage re-purchase programs, adjusting the jumbo loan threshold, etc., etc. Still, prices continue to drift downward. Can you imagine what would happen if they stopped all the support programs?
It may just continue as a slow bleed -- that may be better for everyone than a collapse. But either way, we know which direction it's going: Down.
Why is there any reason to believe this is going to change anytime soon?
I also agree. The Fed maybe able to hold out for a while longer. In my opinion, interest rate is a ticking time bomb. When it goes up, things will get very ugly for housing and thus the economy. It maybe a while though before interest rate on US treasuries go up. However, this thing with Europe may just be the straw that breaks the camel's back. Only time will tell though.
"It may just continue as a slow bleed -- that may be better for everyone than a collapse. But either way, we know which direction it's going: Down."
Again...
1. Case Shiller indicates LA bottomed in LA in spring 09 (at 159.18)
2. Today, 2.5 years later, prices are STILL above the early 09 bottom (now at 168.00).
It seems to me, that if it continues as a "slow bleed" that the direction in which it has been going is: Sideways...
Case Shiller L.A. metric is for the metropolitan area which is quite a bit larger than the Westside. At 4% interest rates houses should be selling like wildfire on the Westside. The FACT is, their not. Get a life and try some other other occupation. Selling houses won´t do it anymore. It´s truly sad you have to resort to blogs, trolling for prospects.
"Get a life and try some other other occupation. Selling houses won´t do it anymore. It´s truly sad you have to resort to blogs, trolling for prospects."
Out of curiosity, why is anyone who disagrees with you suddenly a realtard (tm)?
Does this sort of argument (refuting inconvenient facts with character assasination) work for you in real life?
If a co-worker says, "your production is down 3% over last year" do you counter that fact by suggesting that the mailman is banging your co-workers wife?
Seriously, why do so many think that an appropriate response to facts is ad hominem attacks??? Does that somehow make the facts less factual???
Here are some more facts:
Job creation is not keeping up with population growth;
Wages are stagnant;
There are over 6 million homes in some state of foreclosure;
The average college graduate finishes school with over $25,000 in college debt;
Over 25% of homes are underwater;
Baby boomers are retiring and downsizing;
During the next 2 years either taxes are going up or federal and state budgets are going to be slashed, probably both;
And banks are making it harder than ever to qualify for a loan.
"Here are some more facts:
Job creation is not keeping up with population growth;
Wages are stagnant;
There are over 6 million homes in some state of foreclosure;
The average college graduate finishes school with over $25,000 in college debt;
Over 25% of homes are underwater;
Baby boomers are retiring and downsizing;
During the next 2 years either taxes are going up or federal and state budgets are going to be slashed, probably both;
And banks are making it harder than ever to qualify for a loan."
I agree. There, see how easy that was, I didnt call you a bitter renter or the like. I just acknowledged that facts are facts.
Now that said, despite that parade of horrors you presented above, here are more facts:
1. Case Shiller indicates LA bottomed in LA in spring 09 (at 159.18)
2. Today, 2.5 years later, prices are STILL above the early 09 bottom (now at 168.00).
Does the recitation of these facts make me a realtard, or perhaps some desperate, underwater homeowner???
Fact - Case Shiller LA metropolitan area is a HUGE geographical area compared to the Westside.
Fact - Record low 4% interest rates hasn´t spurred sales activity.
Fact - FHA being the lender of last resort hasn´t spurred sales activity.
Fact - Suspension of "mark to market" hasn´t spurred sales activity.
Fact - Shadow inventory getting larger as NODs and foreclosure activity increases.
Fact - Lying NAR hurts Realtor credibility even more, as the last 5 years of sales figures are found to be bogus.
Fact - Renting the same house is still much cheaper than owning it on the Westside.
Fact - Number of reasons to rent grossly outweighs the number of reasons to buy for a large majority of people.
Fact - European banking crisis is unresolved and puts the global economy, including U.S. banks at risk.
Fact - Good paying jobs have been outsourced abroad during the last 11 years and are being replaced slowly by lower wage service jobs.
Etc. Etc.
This is a dead argument and has been beaten to death by 95% of bloggers here. Time to just ignore those who are tryying to justify that homes not losing value on The Westside.
let´s discuss current sales, such as the $45,000,000 La Jolla mansion, that just sold for $14,100,000. Although not on the Westside, it could be a comparable sale for top tier properties in Southern California (10,000,000+). The home cost $34,000,000 to build in 2008.
Here is the link to cut and paste for the La Jolla mansion
http://www.signonsandiego.com/news/2011/dec/21/razor-house-sold-141-million/
Latesummer,
let me see if I can follow your logic. Case Shiller can be dismissed because it covers the entire metro LA area and this blog is about the westside, but then you open this post with the following:
"As reported by the LA Times today, homes over $500,000 in Southern California dropped 16% YOY (November)."
So Southern California data IS relevant, but LA data is not relevant. Is that correct?
95% of the homes on the Westside are over $500,000 which includes a bit more financing than the majority of homes in the Metropolitan LA area. So yes, it is relevant as getting bigger loans is tougher now.
Why don´t you register your name Mr. "Anonymous" instead of hiding?
"95% of the homes on the Westside are over $500,000 which includes a bit more financing than the majority of homes in the Metropolitan LA area."
Right, and Southern California covers San Diego, Orange County, and the Inland Empire, all of which have $500K+ homes and have nothing to do with westside real estate.
Why don't you ever ask one of your fellow permabears to register a name?
Who are these people that hold onto the illusion that the real estate market is healthy and heading for better days? Real estate agents? Mortgage brokers? Underwater homeowners?
Single family residences are a deteriorating market, in spite of every lifeline the government and banking industry has thrown.
Fact - Record low 4% interest rates hasn´t spurred sales activity.
Fact - FHA being the lender of last resort hasn´t spurred sales activity.
Fact - Suspension of "mark to market" hasn´t spurred sales activity.
Fact - Shadow inventory getting larger as NODs and foreclosure activity increases.
Fact - Lying NAR hurts Realtor credibility even more, as the last 5 years of sales figures are found to be bogus.
Fact - Renting the same house is still much cheaper than owning it on the Westside.
Fact - Number of reasons to rent grossly outweighs the number of reasons to buy for a large majority of people.
Fact - European banking crisis is unresolved and puts the global economy, including U.S. banks at risk.
Fact - Good paying jobs have been outsourced abroad during the last 11 years and are being replaced slowly by lower wage service jobs.
Etc. Etc.
This is a dead argument and has been beaten to death by 95% of bloggers here."
Respectfully, you are still skirting the issue I brought up on Dec 19 @ 2:59 pm. Specifically, despite the parade of horrors you recite above.
1. Case Shiller indicates LA bottomed in LA in spring 09 (at 159.18)
2. Today, 2.5 years later, prices are STILL above the early 09 bottom (now at 168.00).
Further, each of your parade of horrors was true in 09, 10, 11 and now 2012. Thus, if these items did NOT cause the market to smash through the 2009 lows yet, why will they suddenly cause it to happen now (in 2012)?
No he did address it, and your data is irrelevant to the westside because it includes other parts of Los Angeles. In other words, prices are still dropping on the desirable westside, but not in the other parts of LA, which results in the LA metric being above the 2009 low. Now please don't ask for any proof of this, just accept it and move on, thankyouverymuch.
"let´s discuss current sales, such as the $45,000,000 La Jolla mansion, that just sold for $14,100,000."
When was it ever a $45,000,000 mansion? Oh, you mean the ASKING PRICE?
"The home cost $34,000,000 to build in 2008."
According to what, the amount owed on the place? Are you for real???
The place was built in 2008 and never lived in. I´m assuming that was the cost of construction.
Anon 2:48 is correct. Sure, prices have stabilized at the lower end, where they are down 40%+ from their top. The higher end is still cratering.
The housing crash is like dominoes falling. The dominoes are falling from the lower tier to the upper tier, and from outlying areas to the central core westside. In some places the dominoes have completly fallen, but the westside is still seeing the dominoes fall. In a couple of years the westside market will be down another 25+%.
Can we get back to talking specific houses
"Anon 2:48 is correct. Sure, prices have stabilized at the lower end, where they are down 40%+ from their top. The higher end is still cratering."
Nope. Just like the low end, Case Shiller is showing the high end (above 497K) bottomed in early 2009, and is still above that level today, 2.5 years later.
For the record, high end LA hit 163 in early 2009 and has been "cratering" all the the way up to 170 now.
http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us----
"Anon 2:48 is correct."
Anon 2:48 was being sarcastic. I guess it was too subtle for you, sorry.
I recognize 2:48 was being sarcastic...hence I did not respond to 2:48.
I did respond to 4:35 (who was referencing 2:48 in his post). Was 4:35 being sarcastic as well?
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