patrick.net

Check out the YTD sales data from the Northern Virgina association of realtors. YTD sales volume down $3.5 billion compared to the 1st half of last year. That's just one small segment of the entire US market. What if a company like Microsoft saw it's revenues drop by $3.5 billion. Can you imagine the number of layoffs that would cause? I wounder what the drop in YTD sales volume is for the whole country.

http://www.nvar.com/market/pressrelease/prgnvjune06.html

I have just finished a VERY interesting book, titled "SELL NOW! The End of the Housing Bubble". It is a fascinating read, and provides poignant articulation of the various factors that have contributed to our national, global, and state crises. The author, John R. Talbott reveals the parts various culprits have played, such as Greenspan, aggressively permissive lenders, and realtwhores. He explores the historical RE crash in Japan, and makes parallels to our demographics and situation. He makes some drastic predictions for our national economy, as there will be huge ripple effects from the loss of RE industry incomes, and the carnage of unprecedented foreclosures. Analysis indicates we will return to 1997 prices, adjusted for inflation, as 1997 was the last year that most prices were in line with statistics from the previous century.
In my area, the foreclosures are beginning to stockpile. www. realtytrac.com is a good indicator of the notice of defaults, and pending trustee sales in my area, San Luis Obispo County. A glut of REO hitting the market at fire sale prices will do wonders for the sellers who have homes priced to sit.
I wonder how much of the banker woes will be shouldered by the tax payers when the soft landing is recognized as being the catastrophe that it really is.
Tulip mania, Ponzi Schemes, the Great Depression, and other historical events become models for future generations. The years ahead will likewise be recognized historically for their grief, hardship and sorrow.

mbarl you are definitely in the right place. But I don't think anyone is going to challange your assertion that lots of mortgage fraud is going on, so no need to back it up with so much data.

Wait till you get into an argument with Robert Cote about transportation issues 0:-)

Where I live in Noe Valley in San Francisco I can definitely feel the beginnings of a change in the air. Last weekend there were five signs at a major intersection for open homes. I heard an older couple walk buy and say "At the prices they are asking, no wonder!"

I read Alexander Clark's SF home sales newletter and the local free paper, the Noe Valley Voice and neither seem to show any real change in the market. Well the change is that homes have stopped going up so fast in price, but they haven't started going down. Just in the last couple of weeks though, there are a lot of homes on the market.

I will let you know if prices actually start coming down. They have pretty much stopped going up, as far as I can tell.

Option Dude,

John Talbott (Saint John) has been such a breath of fresh air and sanity in a world gone mad. I'll have to pony up and just get the book myself. I (like he) feel that 1997 was the starting point where where housing prices and reality took seperate paths.

In early 1994 my wife and I bought my folks old place of about 2,400 sq. ft. on 3 acres just outside Portland, OR for 130K. Now I realize that sounds very cheap but it actually was FMV for the area at the time. We sold on the last day of 2003 (that's about all I wanted to push my luck) for about 300K. Most of the increase came from say 1998 on! Just ridiculous. I'd love to know how long "Saint John" predicts it will take to get back to 1997 prices (where we can all build our lives from a sound footing) but to find that out I guess I'll just have to buy the book.

mbarl,

I appreciate your input. We here at Patrick have long suspected that lending guidelines have stunk to high heaven for some time but it's always nice to have the data to back that up. Many of my firends that are mortgage brokers also realize that I'm very bearish on housing so they take pains to conceal (or at least down play) wacky lending practices when they speak with me. When 40% of the homes sold in 2005 were not "primary residences" you just know there had to be a whole lot of deception by just about all parties involved. I'd heard that Washington Mutual is letting their "in house" appraisors go in favor of an outsourced firm in what I can only guess is an effort on their part to distance themselves from the value of the loans they will be underwriting going forward. Personally, I think it's a little late to avoid scrutiny but what the heck?

How is inventory holding up in my neighborhood?

Here in Alameda, the inventory has been fairly high since around October. There hasn't been a sudden buildup, but slowly from spring to summer to now, a steady supply of houses get put onto the market. It seems that abour every week or so, another 5-6 houses go up for sale.There is an ENORMOUS supply of homes for sale. The thing is that hardly anything has budged. I bike to the store every other day and go past the same houses for sale, week after week, month after month. Some of these have had " price reduced" signs sitting on top for months as well.

How are prices?

They are still well within the red zone of bubbleland. All in the minumum 650 to maximum 1.3 million for a victorian house. The reductions are hardly what I would call reductions. 5-10k tidbits, but nothing amazing.

Is anything selling?

There have been 4 houses that I know of in my broad roaming area that have sold in the last year. In every single instance, the "owners" drive ratty old cars, seldom water the brown, dried out lawns, and otherwise don't seem to be doing much to improve their prize house. Most that have sold are also fairly small. One home seems to have been bought by a family of 10 philipinos. They take good care of it, but then again 10 people helps. One home was almost utterly in teardown condition. The buyers seem to have immediatly began tearing out the windows, gutters, and started to repaint it in what appears to be a frantic flipper property. People are working on it around the clock.

What else is happening?

It seems that as prices don't go up and don't come down, there's a lot of anger from both sides. I have a friend who just bought a 600k condo. A mention that San Diego's housing market went negative last week sent him into a rage. There seems to be tons of sites full of angry priced out people demanding a change. The city of Alameda was asked to bring up meaure A, a measure that discourages new building and has recently been under fire from local housing groups that correctly state that the measure prohibits young couples from getting started.
For sale signs have recently started to "fall down" At first I thought they just fell down on their own, but it almost appears that someone is knocking them down on purpose. hmmm. One sign I saw recently was hanging by a screw, busted in half.

More and more of my friends- even Hard-Core Bay Area activist friends who you'd NEVER think would leave SF are now saying that they are priced out and will be finding a new area to live. This is kind of sad, but ultimatly signals that the end for the boom is well under way.
The question is whether only the 200k+ a year salary folks will become the replacements for the middle class moving out, only to start the cycle again so that their kind eventually will also be priced out by the next level of high rollers.

More and more of my friends- even Hard-Core Bay Area activist friends who you’d NEVER think would leave SF are now saying that they are priced out and will be finding a new area to live.

Hard-Core Bay Area activist? What is that?

I hope the kool people from BA move to other parts of the country, say the Bush country or New Orleans. Don't come to ruin Northwest.

Hard-Core Bay Area Activist. More loosly termed might be "liberal". I'm not from California, and grew up in "Bush country". The only people that claim that other parts of the country are only full of hicks and bush lovers are those that have never been there. For my own personal selfish interests, I hope these californios don't overun the midwest and south.

OT: Yahoo stock boards

Does anyone here use Yahoo stock message boards? The new format really, really sucks.

I don't mean to put down the Bush country. It's a freedom-loving country. That's why I wish to send the "intolerant" liberal Nazis there to let them learn a few things about, uh, life. As for New Orleans, well, prison for them.

SHTF,

I've seen much of what you describe here in Oregon. Either frantic efforts to get the property "saleable" in short order or a sudden indifference b/c the "hot" spring selling season has fizzled. Many that had been previously frantic are now indifferent. Any way you slice it they are NOT moving!

Our realtor neighbor in our condo complex seems to be "taking some time off" or "pursuing other interests" but of the 147 properties sold YTD only a handful appear to be SFH. The majority where either mobiles, smallish apt. complexes and lots. Many of the "transactions" were done at nominal costs among family members or relatives. Buyers seem to have NO sense of urgency and the quiet is deafening.

Hey Gov,
I can live in either place: Liberal paradise or bible-thumping land. I think what bothers me a lot about people that identify their entire lifestyle to being liberal is that they assume that liberalism automatically equates to a better quality of life. Perhaps if your only concern is to be around people who act-think-believe as you do, and ignore the crappy schools, unaffordable housing, traffic, and other life-wasting crap that exsists here, then the definition of quality of life is a very flexible term.
I'd rather live next door to Bill the Bush supporter in my own fully paid off home, with a stable job and decent school system than to George the Prius driver in an overpriced rental or crappy home with bars for windows in west oakland.

SHTF, That's right.

I believe the money from sold RE is flowing (or at least is expected to flow)) into the Seattle Area, judging by the frantic constructions throughout this area.

A colleague told me that his secretary had recently made half a mil -- or perhaps a quarter mil, my memory is fading -- by flipping a high-end condo in downtown Bellevue. She bought the place before construction and sold it before it was fully built. That's 100% gain in less than a year.

It is ridiculous. We could actually devote a whole thread to realtwhore talk. “Cozy” and “charming” actually mean tiny and cramped. And “light fixer” means falling down.

Actually, we already did:
Favorite Realt-whore Cliches
http://patrick.net/wp/?p=176

Here's a local update from our area of interest, Palo Alto/Portola Valley/Woodside. NOTHING is happening. Same number of listings in each city, apparently nothing has gone under contract, and very little price reduction. Days on market continue to grow and grow. The only perceptible change is a few new places come on the market, and a few places get taken off the market. What ever happened to the "spring selling season?"

We did go to a couple of open houses in PA in the $1.8M-2.5M range. One realtor was particularly "forthcoming," acknowledging that the market is pretty much dead right now. The "sweet spot" in price range in PA according to her is in the $1.3M-1.7M range, and even that is dead. Meanwhile, the places we saw were all either %100 staged or empty, and they are just sitting and sitting. I get the sense that sellers are about to blink in this staring contest.

So Jeff, what's your reading on the Bellevue/Kirkland market? One more year of growth?

I've been keeping an eye on Topanga (90290), because its a nice place to live, and up until now has been waaaay out of my price range.

Did a search on Zip this morning : no minimum, 2+bedrooms SFH, just for the hell of it.

In the Million+ zone, most houses have DOM at 100+ days, although only about half of them have had price reductions. Interestingly enough, a comparison with the listing price and it's Zestimate shows some places very overpriced, while some LP's are below Zestimates. Both seemed to be +or- 200K in either direction. I couldn't find any rhyme or reason to it, but then I only compared 3 or 4 places.

I guess, knowing Topanga's past history (its just down the road from Malibu, and much more secluded, being inland), that its going to take a lot longer for the shoe to drop.

I'd guess a lot of the more 'toney' places in L.A aren't going to see the kinds of price reductions that, say, Palms/Mar Vista are going to see. Excess wealth gives patience...;-)

Though, if anyone has any real data (as oposed to my anecdotal musings) on the pricey bits od L.A, I'd love to hear about it.

skibum, thanks for your update. Wow, even Palo Alto is dead.

Jeff, I hope your friend is wrong. But the Pacific Northwest is turning itself into another BA.

I despise the weather in the Bay Area. Portland is more my style. I like clouds. I like rain. I don’t like 90+ degree days. You get the idea.

Same. :)

But I cannot leave Bay Area's restaurants behind.

I second Peter P. You guys should really learn from Peter.

Jeff, I hope your friend is wrong. But the Pacific Northwest is turning itself into another BA.

The Pacific Northwest has 2 of the world's 10 richest persons.

The Bay Area has none.

Jeff, once the much rumored RIF in Windows becomes a reality, let us see how the RE market will respond. Besides, there's an impending recession on the horizon.

I second Peter P. You guys should really learn from Peter.

But I can move to B. and drive up to Vancouver for food every weekend. :)

Vancouver has all kinds of good food now, not only Asian food.

B. is my retirement place. (I hate to use the word retirement for reasons I pointed out before.) It's close to the San Juans, one of the world's premier cruising ground.

Let us delete (or at least modify) our posts regarding B. Too many people are reading this blog.

As far as " Nirvanas ruined by newcomers", I don't think this kind of shift in population has happened, at least in a very long time, if ever. The reason being is that as recently as the 1940's, MOST of this country's population lived in the Northeast. The South, midwest, and even West Coast with the exception of parts of California were not heavily populated. I'm only 30, and I can recall a time growing up in rural Tennesee when the roads around our house were unpaved. That says a lot about the state of an entire region in the not so distant past.
These less populated regions have suddenly come into the spotlight. Why? Because the lifestyle that we expect to be dropped in our laps is no longer possible in some areas like NY, CA, etc. The irony is that California was the prime destination of out of work migrant farmers from the depression era. They found a new life here and were able to carve out a lifestyle that became the envy of most countries- a middle class society. Now we find ourselves in the same situation but in reverse. We aren't farmers by any means, but we are now in a situation where we must find another means to live the lifestyle we want, and that means going to a diffrent state- mabe even some of the states that those migrant farmers left long ago.
Simply put, these "other" areas of the country were ignored and underutilized for decades. Now that everyone knows about them, they are going to have incredible growth. That's where I'm placing my bets. California will either have a rich person paradise where everyone- even the neighbors has a million bucks in the bank, or it will have a sagging depressed economy with a sea of non-working policies that caused the housing bubble to happen that will probably stick around for a few more decades, causing even more economic woes until the generation that founded them die out.
If you want to know where the future of the country lies, it isn't here. I'd say any number of midswestern and southern states will be taking up the slack for the next foreseeable future.

Returning to the BA,

Of course all our welcome to move to Portland and I believe you would like it. However just a few of the drawbacks are:

The weather, it's depressing not seeing the sun for 9 months and the older I get the faster the summers wizz by.

I'm told it's a terrible place to be single.

High state income taxes.

The weather.

Not nearly as good rest. as the BA.

People "think" this area is more prestigious than BA.

The weather.

HARM and I often kid that Portland is a great place. Just bring your job, spouse and plenty of money with you. Be prepared to get paid less (no matter what you do).

High state income taxes.

But no state sales tax. Solution: live in Vancouver, WA and shop across the border. :)

Great summary, DinOr, especially about the weather. I was going to say, the Weather, or more precisely, the long dark days. There's a reason why Starbucks was founded in Seattle. For those who love sunshine, PNW is going to depress you.

Portland has good beers, so said my home-brewer grad-school friend.

Seattle has a blue-collar, working-class root. I think the BA libs who want to move up here will be in for a shock. Better go somewhere else. I heard Minnesota is quite liberal, although the harsh winter is going to freeze your dog's dick dead if he decides to pee on the sidewalk.

s/dick dead/dick off/

I heard Minnesota is quite liberal, although the harsh winter is going to freeze your dog’s dick dead if he decides to pee on the sidewalk.

Is it true that liberals tend to be dog people while conservatives tend to be cat people? Just wondering.

Peter P,

You certainly wouldn't be the first to suggest and do exactly that! Then to go one better many apartment building complexes in Vancouver, WA have almost ALL OR Lic. plates b/c we charge $40 for two years. It also makes for a "big city" commute everyday coming south into Portland and then northbound at the end of the day. There are only a few square blocks out of all of Portland that are on a par with most other major cities. However, much of the balance of the city is unremarkable. IMO.

$40/twoyear is cheap. Up here, they charge me $150 a year. And then the sales tax. It's robbery.

Those are probably my biggest concerns. I dislike the greed and cramped feel of the Bay Area.

Bay Area is not cramped at all. In Tokyo, it is scary.

Returning to the BA,

Portland takes pains to remind everyone that he who develops last develops best. The city council is filled with self important dickheads that do exactly as they please (without respect to the voters).

But we still have "big city" style politics. Our former Chief of Police (pretty good guy) was dumped from office over a FIVE YEAR OLD AFFAIR w/former co-worker. The Chief had just gotten divorced and did a few dumb things. NOW 5 years later this comes up just as he is trying to get all of our poor former law enforcement officers OFF of disability and back on a desk job to save the city money! Funny how that came up just as he was trying to clean up a situation of people that "threw their back out" 5 or 10 years ago and are still collecting a FULL paycheck on disability! Anyone attempting to move to Portland b/c they think they will escape that brand of politics is kidding themselves. Sorry.

@Returning,

L.A. until I can make my own move to one of those nice mid-sized cities in either the Pacific NW or the South. Naturally, I will try to shut to shut the door behind me. :twisted:

I wonder if residents of these CA-exodus destinations will begin to organize their own "Minuteman" border brigades to keep out Kalifornicators?

"So... you say you're from San Dieg-ho, eh...? Sorry, we don't recognize CA drivers licenses here --too much fraud down there. What makes you think you can come here and f@ck up Portland too? "

What is th prognosis for the southern cal area? I left the inland empire area of western san bernardino county. The same crap happening there to a lesser extent. I moved to SC for the time being I'd like to go back but homes tripled in the last five years. Alot of flipping in the LA metro area on dumpster houses in some of the worst areas. Amazingly! they are getting over 500k fr some of this "s'it". The real estate business is scamming consumers here big time..

Your right on with income not keeping up with the cost of living that is why I left. The condo I rent here for $695 would cost me $2000 in california. If the levels ever dropped significantly like pre 2000 prices I may have incentive to return. I remember in 2000 you could still get a decent condo for 150k two years later 225k presently 400k all in a five year span.

The real estate industry in california is saying million dollar homes will be the norm in the next few years. Some of the first 40 year morgage programs are originating from southern cal. So if a million is the norm who are all these people who will be buying at that level? Will companies be paying salaries to suppport that regional market? I think alot of people are in big denial the whole lifestyle there is unsustainable.

I didn't even touch on gas prices and gridlock. That's another problem in itself...

Re: HARM Said...(paraphrase)

"This is a LOCAL shop,
for LOCAL people.."

{Edward and Tubbs, Royston Vasey residents, 'League of Gentleman'...}

Ah...OK....none of you has the foggiest what I'm on about....

(I'll get me coat......)