patrick.net

I know this is yesterday's news to those who follow Ben's blog daily, but the Sacramento Bee just coined a new term that absolutely *must* be added to our Housing Bubble Glossary:

http://www.sacbee.com/content/homes/re_news/story/14267623p-15079236c.html

"Repartments": Condo conversions that have been converted right back to apartments, leaving recent buyers completely screwed (and surrounded by JBRs).

"Like pennys in a pickle jar, so are the values of homes draining slowly away... in the homes of the housing bubble.." arg! I was never good at spur of the moment comedy..

Spring bounce topic and not yet one SFMLS troll comment? Quite frankly I sense a disturbing lack of work ethic on the part of our PRIME troll. Must be counting its equity.

Inventory situations in South Bay is bad, but we need to see more price reductions. Some new listings come out with outrageous pricing, the owner FBs must be extrapolating 04/05 pricing growth for another 5 years to reach the asking price.

One thing to watch on the way down is definitely inventory. When I was looking around in 93, South Bay inventory was not way up, it was bulging a bit but generally ok. Right now fringe towns like Gilroy and Morgan Hill, and even Evergreen inventory is getting ridiculous.

I think we should all add KBE to our names.

KB (Homes) Executive?

There might be a few more homes on the market in Noe Valley, but then again, there might not. According to the Noe Valley Voice, 12 homes sold in April this year, compared with 12 last year. Here are the nitty gritties from Alexander Clark's excellent newsletter:

Address Neighborhood BD BA SQFT $/SQFT Sold Date List $ Sold $ SP%LP
470 Day St Noe Valley 2 1 1805 $642.66 5/31/2006 $1,149,000 $1,160,000 100.96 %
4529 25th St Noe Valley 3 2 1400 $767.86 5/25/2006 $1,090,000 $1,075,000 98.62 %
1485 Sanchez St Noe Valley 5 2 1500 $600.00 5/22/2006 $799,000 $900,000 112.64 %
239 Valley St Noe Valley 2 1 1050 $856.19 5/24/2006 $899,000 $899,000 100.00 %
1606 Castro St Noe Valley 3 2.50 2461 $711.09 6/2/2006 $1,749,000 $1,750,000 100.06 %
76 Homestead Noe Valley 2 2 1800 $793.33 5/22/2006 $1,295,000 $1,428,000 110.27 %
3945 25th St Noe Valley 2 1 1128 $1,077.13 5/24/2006 $1,095,000 $1,215,000 110.96 %
4250 23rd St Noe Valley 5 3.50 3382 $709.64 5/12/2006 $2,149,000 $2,400,000 111.68 %
903 Sanchez St Noe Valley 3 2 1944 $694.44 6/2/2006 $1,250,000 $1,350,000 108.00 %
579 Elizabeth St Noe Valley 3 2.50 1945 $826.22 6/9/2006 $1,375,000 $1,607,000 116.87 %
766 27th St Noe Valley 3 2 1735 $1,037.46 5/25/2006 $1,500,000 $1,800,000 120.00 %
3739 26th St Noe Valley 3 1 1130 $902.65 5/12/2006 $1,020,000 $1,020,000 100.00 %
1519 Noe St Noe Valley 2 1 0 Infinity 6/5/2006 $799,000 $865,000 108.26 %
Average 3 1.9 1773 $801.60 $1,280,833 $1,383,667 107.51 %

Hmm, not sure how that is going to come out after formatting. Anyway, the bottom line is $801/sq ft (compared to $750/sq ft last year) and the average home going for 107% of asking. So 5% YoY appreciation, which is way down but still doesn't qualify as actually flat yet. Just for grins, I tried zillowing all those properties and found that zillow actually did a pretty good job on them: 4 estimates were too low, 3 were too high and one was on the mark ($1 off actually). The odd thing was that zillow tended to be too high on the smaller properties and too low on the larger ones. Who the heck would pay $2.35M to live in Noe Valley?!?! The amount of money still sloshing around just astonishes me sometimes.

brightc asked,

If there is no crash, there’s at least a 20% correction in the Bay Area housing market. Is that wishful thinking, or it’s entirely a plausible scenario?

brightc, this is what I am predicting and that puts me as the one of the most bullish regular posters here. So I think pretty much all of us would consider that plausible.

Sorry Sir Fur, is that trollalishious enough for you? I am not trying to troll, just present objective data. Obtained from a Realtwhore though, so take it for what that is worth.

How do you guys make those little trademark (TM) symbols anyway? Do you cut and paste them?

newsfreak Says:
Imagine if we still communicated by pidgeons ferrying little notes back and forth or the Pony Express.
One must admit Gutenburg is not honored enough.

and don't forget to thank Al Gore for inventing the Internet...

Wow, Noe Valley is $800/sqft? Must be a nice place.

Then I guess San Mateo is not that bad at $600/sqft.

Different Sean, do you sleep at all?

have a read of this:

http://www.sacred-texts.com/neu/eng/boeb/boeb03.htm

sirs were pretty disposable in days of old when knights were bold, unfortunate occupational hazard...

Different Sean, do you sleep at all?

i'm back! :P

Went to that site PeterP put up

I did not put up the site. I merely pointed a link to it. :)

1 home for every 94 people is on the market. A ratio unmatched in any other market.

Well, don't we have 1 agent for every 52 people in California?

People seem to be bullish on Merced because of the new UC, as if every entering freshman must buy a house.

Oh, this is my kind of thread !

Bay Area inventory is up - WAY up from the beginning of the year, when I started tracking. This week I noticed a nice jump in ZipRealty site. Maybe they don't update regularly. My last weeks post about Evergreen, the inventory was 348. It's 364 now. That area is extremely over-rated.

The prices are not down yet from 2005 levels. The fringe areas are seeing gains from 2005 getting eroded. But the prices have not crashed in Phoenix and Sacramento yet. So it's still some time for BA.

The fall is going to be verrrry interesting. We will see YOY -ve numbers and a huge inventory. By that time even SJ Merc News will have a pessimistic article.

It's going to be THE FALL !

Don't you just love when they tell you how desperate they are to sell? :evil:

I already made him an offer for $200K.....but not a buck over that! :)

It's madness I tell you, madness. First came the lack of abiding hope, an eerie quiet, and now look there's a FOR SALE sign on every lawn. It was a deafening lack of sound. "Burn them to the ground!" is what I yelled to no avail and now look how many there are surrounding us. Sure, we're on the edge of a precipice, every realtor hearing voices, having visions, every realtor vomiting blood and telling us it's time to buy, hell, buy two. We tried the tactic of the despairing weblog, the strategy of the "real estate is dead" networking and I ask you right here, right now, who will YOU hurt when the change comes over you?

Just found out on Zillow that a rather crappy 3BR 1960s rancher in my immediate neighbourhood (West SJ) sold for $1,217,000 six weeks ago, $200k above asking. This house was always one of the less well maintained houses on the street. They put lipstick on the pig before putting it up for sale: new sod lawn and a new paint job, and it worked.
The mind boggles. No one seems to live in it so far, though?!

The house across the street (about the same size and age) went up for sale two weeks ago at (get this) $1,388,000, and the open houses so far were *busy*. I think folks had to stay outside at times because the inside was packed. Mostly South Asian families in brand new, rather expensive cars. No sale yet.

On the other hand, I think none of the houses for sale on my 6 mile bike commute through Saratoga and Campbell has actually sold in the last two months. Some just went off the market, most are still for sale. And every couple of days, new signs come up, plus there's lots of new construction that will come online soon.

And here's the kicker.
A few streets down, someone had rebuilt a 1960s rancher to the point where I actually liked it. 5BR, 3000sf, very tastefully done. It was on sale for $1,688,000 for about three months. No price reductions and a lonely realtor spending lots of unproductive hours at the open houses. Then the sign disappeared three weeks ago. No "SOLD", nothing. I thought the listing expired, but Zillow says it was sold on 5/26 for $975,000.

So, six weeks ago, houses go for 20% above asking, and three weeks ago, it's 40% below?!??

@Unalloyed,

Huh?

Would it be bad karma to send an email (profane of course) to the McDebtor in allah’s post?

Yes. Bad karma. Do not do it.

Girgl,

volatility before the stock market crash :-)

Girgl,

just curious, is your school district in Cupertino? Which high school it feeds into? That might explain the busy season 6 weeks ago, I am seeing the same thing with good school districts.

So great that The Dubya himself made a surprise trip to Iraq - such a surprise that Prime Minister Nuri al-Maliki didn’t know about it until five minutes before they met.

Nothing says “Dignity” like having the POTUS sneaking around to prove how well things are going and how much the Iraqis love us.

it's a shame he is not popular in iraq the way david hasselhoff is in germany. what is the Hoff getting right that Dubya isn't?

HARM,

I've been a huge fan of "Earl, the Dead Cat" ever since Goodyear issued a "death warrant" in National Lampoon circa 1976. I recall "Earl" even came with his own certified death certificate? Even dead cats need love!

The Housing Bubble Glossary would be making a grave error by not including "Repartments" in it's stable of descriptive terms. Already it feels as natural as saying "uh-partment" with the added satisfaction that some FB specuvestor only collects about 1/3 his PITI. I move for a second!

Lady La La,

While I am grateful for the title of "Wizard of Rains" alas, I am unworthy. The title of Wizard implies that one has powers and if I had one iota I would make it STOP! Perhaps Duke of Drizzle would be more appropriate?

Three houses that were pending in around my hood just went back up for sale. One of them is this utterly crappy, rundown excuse of a house. The asking price, though high, is still way cheaper than the avg home in the area. 530k. But it is now also back up for sale. I saw the owner frantically ripping up carpet through the open door. I kinda want this guy to sell his house. He's this older poor guy driving a beat up truck. Looks like he's never had any money to speak of, so out of all the people that really don'y need 600k extra, he could use it.
But... screw it.. we young folks need our chance at something too, so the sooner it all falls apart, the better.

Saying "no" to bullcrap deals is a start!

One of the reasons we may be seeing inventory log jams in the BA (and elsewhere) is that people are actually stopping to think! It wasn't long ago folks were custom building their "dream house" BEFORE even listing their existing home! People that were "transferring" would make buying a new house their FIRST priority in a list of about 40 things that need to happen to have a successful transition. Anyone here remember when the husband would move out first, get an apartment or hotel before flying the wife out to find a suitable rental home in the kids new school district and get everybody "settled in" to their new surroundings and making sure the job worked out BEFORE buying a home?

Well it seems now "the home" is more of a priority than making sure the job works out and that everybody likes the area. Now that euphoria of easy money has worn off people are re-visiting the "checklist". I mean what's next? Will the "leap before you look" crowd demand that the negative equity from their former home be rolled into their new loan like when they trade in their car?

John M,

You know, I'm not sure if I was being flippant or not there b/c obviously the new lender would be reluctant to loan more than the house is worth. Oh wait a minute, we've been doing that for at least the last five years!

Where there's a will, there's a way and given the current state of finances I can't rule anything out! I'd also heard that a senior treas. dept. official (Emil Henry) speaking at a RE "round table" told attendees not to expect the treas. to bail out fannie/freddie! I found that frankly, shocking.

John M,

"We will remove firewood from under the cauldron" (Bloomberg article)

What can I say? Wisdom of the ages.

OO writes:
just curious, is your school district in Cupertino? Which high school it feeds into? That might explain the busy season 6 weeks ago, I am seeing the same thing with good school districts.

Interesting observation!
It's in the Cupertino school district, and feeds into Lynbrook High.
For the out-of-towners: Lynbrook High appears to be such a scholastic nirvana to some people that they pay a premium that seems equal to the price of sending two kids to a good private school. But of course the premium translates into a fraction of a low, low monthly payment spread out over 40 years, and private schools want cash today. :-)

SQT writes:
I would be a little hesitant to put complete faith in zillow’s sale numbers. One of my husband’s clients is a long time mortgage broker who can actually be trusted. She’s looked up some sale numbers for us on homes in our neighborhood, and they don’t track with what zillow says. Off the top of my head I can remember one house that zillow listed as selling for $456k, but when my husband’s client looked up the sale record, the house really went for $415K.

That makes sense.
So, the house in question (the one with $1.6mil asking price) is at 1522 Ardenwood Dr, SJ 95129. Does anyone have better information about what it sold for?

All this talk about desperatly trying to get kids into good public schools reminds me of a guy I met around 2 weeks ago. He was from Houston. Anyhow, he's been here for 10 years and recently moved to a better part of the city because the schools were somewhat better on the other side of Alameda.
We both started talking about it and agreed that when we both lived in our respective home states, we never thought that much about the public schools because they were all pretty decent. There simply were not that many private schools. Out here, people are willing to relocate and pay huge sums for a school system that needs some serious work.

Girgl Says:

It’s in the Cupertino school district, and feeds into Lynbrook High.
For the out-of-towners: Lynbrook High appears to be such a scholastic nirvana to some people that they pay a premium that seems equal to the price of sending two kids to a good private school.

Personally, I'm not planning on ever sending my kids to a school like that. I've noticed all those commercial study centers popping up all over the place named things like, "Ivy League Study" or something of that sort, for those kids who want to spend their afternoons and weekends learning how to ace the SAT's and get into Harvard. It can't be healthy for these kids.

Speaking of Harvard, I'm still tracking the listings in my old Boston neighborhood, and it's deathly quiet. Maybe 1-2 under contract among 100 or so listings in the last 1-2 months. Another posh neighborhood there, Waterfront, reports a 40% drop in PRICE YOY already! This ride down the backside will be extremely interesting. Bubble "leading edges," where prices escalated higher above fundamentals (SD, FL, LV, etc) are going to be the leading indicators of when the real earnest declines start happening.

willywhopper2 Says:

Out here, people are willing to relocate and pay huge sums for a school system that needs some serious work.

Not only that, but there are many additional costs. In these primo school districts like Palo Alto, Saratoga, Los Altos, etc., There is huge extracurricular fundraising from parents for the schools. A friend lives in Saratoga, and he reports that the district has several million in fundraising per year from parents. Of course, when the CEO of McAfee is one of the donors, what's the big deal. On the other hand, my friend reports much of the money goes to paying for teachers, guidance counselors, and other basics, as opposed to arts programs, shiny new gyms, etc.

John M,

Absolutely! And not just the Cubs, Stevie Bartman! Remember the kid that tried to grab a foul ball along the 3rd base line that started the historic meltdown at Wrigley? Since Cub fans found poor Stevie the scapegoat for their obvious inadequacies why not blame the housing bubble on Stevie!

I believe the way that the ChiSox have played so far this year proves that "05" wasn't a fluke and you can count me among "Thome's Homies"! You know, I still pinch myself every morning and having the Sox win in 05 when even David Lereah has pointed to August of 05 as the peak of the housing market (just as we stopped our AL Central collapse) belongs in Peter P's realm of destiny!

Skibum,
My wife worked in the SF school district for four years. The few times that I went with her to school functions, I was amazed that the kids were having class in alluminum trailers. That's appalling.
The whole fundraising thing is messed up. This basically means that the wealthy areas with wealthy parents will have better educated kids. This should never be the case. I'm antimate about giving every kid the same access to education, and frankly, if I ever have kids, this will unquestionably be the final straw to send me packing elsewhere.

George,

You know I've made similar observations particularly regarding a certain friend of ours and it IS exciting to see them benefit from the fruits of their labor! After all this is the BA Housing Crash web site.

Also noteworthy is the seeming total abscence of BA Troll Perma-Bulls!

I don't know if you'd noticed but the "For Sale" and directional markers have become an eye sore and issue for the Santa Cruz city council. Too funny!

Dinor,
I think the most promising sign has been the advancement of sites like boycott housing. To me, that site represents more of the kind of folks that are your average everyday folks that are finally smelling something funny. The comments on there are very telling, and the number of comments has almost quadrupled in the last 2 weeks. There are a lot of sites like this, where ordinary people go. While this site has what we might consider " more enlightened", once you start seeing sites like those above filling up with people, then there's evidence that the masses are getting educated rather quickly.

WW2,

Oh absolutely! We can debate the effectiveness of boycotts until we're blue in the face but however misguided we might see their efforts they appear to be getting the word out and the "word" is gaining traction! I'm squarely in HARM's corner b/c I'd rather shake things to their foundation by making real reforms to open up the MLS, do away with shotgun appraisals and take a long hard look at our tax code! But if these guys are "gittin' her done" God love 'em!

Dinor,
what I like about the "boycott housing" site is that it seems to be the first sign of a new more widespread recognition of the problem. I mentioned yesterday the effectiveness that a well-informed liberal mass can have on an area. I've been hoping for years that SURELY the same people that protest the war would jump all over this. If you piss off the folks in Berkeley, while they wouldn't be capable of changing legislature would at the very least jolt people into the recognition that there's a problem.

LILLL,

My brother in law, great guy from South Philly. Works for a VERY conservative accounting firm that wanted to transfer him to their Los Angeles branch. Even though the firm offered to buy his house at FMV he said he would make an effort to sell it someone in the family first.

After accepting the position he made arrangements to occupy a rental home while he "checked out" the local market. This took a year. They finally settled on a place about 15 minutes north of Pepperdine and have been there for ten years. I'm not saying this is necessarily for everyone but wouldn't making sure your home can be sold first be a logical step in the process? As more folks rediscover sanity we'll find that "reversion to the mean" isn't strictly an economic term.