patrick.net

Here's what's happening on the Uber high end!

http://tinyurl.com/lffok

Agree with HARM. SFH's that actually sell are down around 10-15% y-o-y.

Asking prices are all over the map. A lot of places are initially listed at an agressively low price. If they don't sell, the asking prices is regularly and meaningfully reduced -- and they still don't sell. I've seen this happen several times.

Lots of other places are listed at outrageous asking prices, apparently without regard to comps. Some 3/2 tract house will be listed for $650k, and an identical place one right next door will be listed for $900k. If this is what people have been referring to as "wishing" prices, there is a fair amount of wishing going on around here.

But here is the best part: the "price of admission" to the neighborhoods with good public schools keeps getting pushed lower and lower. For example, in South Pasadena, the cheapest SFH was around 850k a year and a half or so ago. Today it's 625k! In San Marino, I don't think it has been possible to get anything for less than 900 for the past two years. Well, recently a house was listed at 699 -- and it didn't sell! It was taken off the market! (I myself actually put in an offer on that place -- 300k :)

One of the most interesting things is that houses that are priced right -- well below comps, CLEARLY the best deal in town -- STILL DON'T SELL. Obviously, only the most experienced, professional realtors are smart enough to price houses in this way -- and they are FREAKED OUT when the places still don't sell. These are the agents who understand the market and are doing everything right -- and it's not working!

My wife went to see one place last week. Listed at at 868k, it was completely out of our reach, but I'm always willing to make another 300k lowball if I see something I like, so...:) In relative terms, 868 was a screaming bargain. It was one of the cheapest houses in the neighborhood, and everything else at that price was around 1,000 feet smaller with fewer bedrooms. All of the other hosues on the market comparable to this one were priced at around 1.1-1.2mm. So in bubble terms, this place was a really good deal. The RE agent handling the sale was excellent. It was an estate sale, and she had the house cleaned, staged, etc. You could tell that she'd invested just enough to make the place presentable, and not one penny too much -- she was smooth.

After my wife went to see the place, the realtor called us every day for almost two weeks. Since the sale required probate court approval, the realtor even assembled all of the paperwork necessary for us to make a bid and put them all into a neat packet for my wife. When my wife told her that we probably weren't going to bid, that if we did it would be very low, and that we beleive the market will decline further, etc. (she diplomtically left out the fact that we cannot possibly afford to pay 868k) the realtor's face fell -- and this is a very professional, savy lady. Something tells me that no one is going to bid on that place.

It is also interesting to note that realtors are suddenly interested in buyers again. We now have at least three that regularly call and email us. This would not have happened a year ago.

@ Alien - re: the lovely leafy Topanga

Any idea what is going on with 109 Muerdago Rd?

It looks like a great house, with a decent lot size, but its had 5 MLS#, a List Price from 899K to this morning's whopping $2.8 million, and 350+ DOM...

Does it have cooties?
Is it haunted?
Does anyone actually own it anymore?
Enquiring minds need to know....

“If the prices do drop by 30%, I wonder how many other people will jump in, making it harder for me to get the deal and creating bidding wars again ”

If your gonna jump at 30%, then it's true that their are still some sheep left.

70% loss in Mountain View/Los Altos would be absolute heaven for me (hell for homeowners), but I'm not sure it will happen here. I'm really hoping though :-)

allah - I didn't say I was going to jump, but several people have argued here that if anywhere is going to have a soft landing it is likely to be Mountain View/ Los Altos/Palo Alto - and there are enough renters in this area on good enough salaries that if they see prices drop by 30% - they will jump and think they've got a bargain, and because of the mentality in this area they will start bidding wars again :-(

okay so maybe I did imply I'd jump(didn't mean to), but I have to line everything up first before I can buy a house, so that's going to delay me until easily middle of next year and the picture will be a lot clearer then - about whether we buy or pack up and move to the East Coast - even Boston seems cheap compared to here!

and there are enough renters in this area on good enough salaries that if they see prices drop by 30% - they will jump and think they’ve got a bargain

When prices are 30% down you will have a whole new mind set. :)

Fear is my favorite emotion.

70% loss in Mountain View/Los Altos would be absolute heaven for me (hell for homeowners), but I’m not sure it will happen here. I’m really hoping though :-)

Would you really want to live in MV/LA if it became like that though?

You'd have to wonder - would the current population demographics change dramatically? and for the worse?

The areas that alot of people believe will have a "soft landing" will really have a "soft sinking". That is when people buy in early because they want it so bad and are afraid they will lose the opportunity to someone else. These prices will fall at a slower pace which in my opinion is very painful for you the buyer. We are talking about years of price drops of just a few points. There cannot be bidding wars until inventories drop to very shallow levels in the area.

My problem is that a lot of people here are buying what the realtors tell them. I have one friend who is really keen to buy, despite me pointing her to the bubble websites etc - her realtor tells her, just wait until after Thanksgiving and then lowball an offer to someone (as the people left on the market by then really need to sell). Another one is the market will only correct by 15-20% at most in this area. So the realtors are using the bubble info and twisting it to try and get sales.....

eburbed - but allah's calling me a sheep if I jump at 30% drop, what am I to do/wish for? Yes, demographics could change a lot, or maybe not if lending standards are tightened?

Would you really want to live in MV/LA if it became like that though?

If it dropped 70% everywhere would you not want to live anywhere in the U.S.?

eburbed Says:

You’d have to wonder - would the current population demographics change dramatically? and for the worse?

At least for Mountain View, maybe it would revert back to what it was in the '90's - a drab, soulless wasteland with below average schools.

Ah, but in the right spot, you get into the Los Altos school district

My problem is that a lot of people here are buying what the realtors tell them.

Like I say, there are still some sheep.

Claire

but allah’s calling me a sheep if I jump at 30% drop, what am I to do/wish for?

It's about how much value you get out of owning, not what percentage you save or dollars you pay. Remember that life only runs in one direction.

For example, say you got your 30% drop next year, and then you could wait 9 more years for another 10% drop total. Is it better to buy after 1 year for 30% or 10 years for 40%? Well, that depends upon you. If you're 22, single, mobile and very likely to want to sell in less than 10 years, maybe you'll do better waiting. But if you're 30 with a couple kids and looking for somewhere to park for 25 years, then maybe that 10% ain't worth it.

If anyone were certain we're going to get 70% in 3 years, sure then we should all wait. But I'm not so sure we're going to see that across the board; maybe only in a few select areas. Really, prices "only" need to come down by 30%-45% in most Bay Area communities to return to previous long-run growth equilibrium levels*.

*Based on HSBC Megametro MSA data which I often invoke, but not everyone here takes as valid or relevant.

And it seems that a week or two ago, there was a brush fire on the hill behind the development. I suspect some of the home ‘owners’ experienced mixed feelings when their house was spared.

:lol: It wouldn't surprise me if we don't see a few "post-Katrina" moments in the years to come, where underwater (but heavily insured) FBs start shooting at firefighters during fire season. Instead of hosing down the roofs (S.O.P. in SCAL when the brush fires get close), we may see floppers dousing their vacant McMansions with gasoline!

Insurance wouldn't Pay out on those though would they? The ones soaked in gasoline?

Insurance wouldn’t Pay out on those though would they? The ones soaked in gasoline?

Why not? Fire insurance has to cover arson!! As long as the FB doesn't get caught.

Robert Cote'

Excellent comparison and a great "refresher" for those of us that might have lost sight of the difference ourselves. For me the obvious difference was that the "real mansion" was built in 1877! It probably has a considerable history. What can the seller of the McMansion boast of it's brief "history" since 2002?

This wonderful estate was built in 6 weeks from some of the finest particle board ever made. In it's brief existence it's been sold twice and refinanced more times than you can shake a stick at?

I bet you insurance companies won't pay out until they are pretty certain the homeowner didn't do it, especially if lots of houses start to burn.

And - they will likely only pay fair market value, not what someone paid for the house

HARM/allah,

The studies conducted by insurance companies here in Oregon revealed that MOST homes that burned to the ground had done so AFTER the brunt of the fire passed! Cameras strategically placed showed that hot embers ignited flammable material like pine needles in gutters, firewood stacked too close to buildings resulting in setting off propane canisters. For FB's looking to take advantage of the "fire season"?

Do NOT clean gutters of leaves, branches or any other flammable material.

Stack all firewood directly adjacent to your house to create a "hot spot".

Do NOT create a zone barrier around your home. Allow fire prone materials to grow right up against it.

Remember, leaving LP Gas, diesel fuel and propane flagrantly and indiscriminately around YOUR property is your right as an FB!

DinOR,

Yeesh, you do realize if FBs learn these tricks, our house rates will jump up when we do buy.

I'm not an insurance guy, but I'm sure they would get more money back from an insurance company then they would if they sold it. They would be reimbursted by yesterdays comps.

SP,

There's always the possibility that rebuilding would cost more the property itself. That's certainly the case for Detroit and Pittsburg now, and I can definitely see that come up in McAlbatrosses.

Robert Cote Says:

"You “call the ball” on the younger blind spot. Say you came of age 1990 or later. You don’t know a world without McMansions. They’ve been in and rolling higher for a dozen years. They have no idea what happens “after.” They don’t even know the difference twixt Mansions and McMansions."

Seriously guys, we are NOT that dumb. Or rather I should say, the percentage of dumb people in Gen-X and Gen-Y is no worse than the Boomers. Besides which, most people in Gen-X or Gen-Y don't have anywhere near the money to buy a McMansion. If you want blame for price inflation there, call your friendly neighborhood Boomer.

Maybe things are different back East, but I don't remember any McMansions until the late 90's, when people had so much paper wealth that they were considering buying third world countries.

@ Alien - yeah, I replied to your post, only to realise a few minutes later that I was talking to the void....

I think 109 is REO at this point - hence the Valencia address. I took a quick look on PropertyShark and saw that it was in preforclosure a couple of months back, then about three weeks ago, 3 of the listings dissapeared, leaving two at $1.2 mil and the one that got increased today from 2.3 mill to 2.8 mil.

As I'm a newbie lookyloo at this point, I don't really know what to make of it, except that if I was thinking of buying it now (which I'm not), I'd be put off by the schizophrenic pricing/listing going on.

Seeing as there's a nice house with 29 acres up on Monte Vista for 2.5 mil, you sort of have to wonder what kind of drugs they're smoking...

Update:..just went to Zip and noticed the second listing is now at 2.8 mil too (was at 1.3 this morning) - so from 900K to 2.8 million in less than a month. Go figure...

I would really welcome a return to 10% 30 yr mortgages. That would pummel RE prices even in the event of high inflation. That would be a fantastic buying opportunity for anyone with a substantial downpayment by driving all the "howmuchamonth" idiots out of the market. Furthermore, the effect would be relatively shortlived if there was high inflation.

If the fed pushes mortgage rates up sky high, it would be one of those buying opportunity of a lifetime for people with ready access to cash and credit.

What's up with this thread? You guys are starting to make me feel good about buying last October in Mtn View with LA schools!

What’s up with this thread? You guys are starting to make me feel good about buying last October in Mtn View with LA schools!

If you are planning to stay there for a while, you should not feel bad at all.

Brand,

My original point regarding "true mansions" was simply that for years the general rule of thumb was "one mansion per town"! Where I grew up in Chicago I remember the 'Morton Mansion' (Morton Salt, when it rains it pours?) Well yeah! Show me a home in America where they don't have salt in the kitchen! Perhaps these people should have a mansion?

Peggy Morton was a real classy gal and gave any one of us kids a job if we needed one (even if it was just on the loading dock). In spite of her busy schedule she always seemed to make time for birthdays (and funerals) no matter how bad the weather.

These were people that understood, appreciated and knew how to use their wealth. Her "mingling" w/riff-raff like us (cops, fireman,salesman) cemented our loyalty to their products. To this day I can't imagine using anything else! With fast, loose and easy money this type of class is something we've all lost sight of.

I drove by a couple of dry lots with for sale signs in Cape Coral Florida over the weekend. The price was 29K for a 100 X 120 lot. That's a 60% drop from the high of 75K. I also saw 5 properties for sale in the Century 21 ad for gulf access properties, no bridges, under 250K. That's about a 50% drop from the high.

The panic selling in Florida has begun. It's a blood bath here.

Watching the similar areas as SP only more towards the south, west of 85 from Los Altos down to Almaden, more into the slightly more rural pockets.

Los Gatos (95032) has seen a lot more properties sitting on the market. Reduction is not big, and pricing is all over the place. A couple of houses (2000-3000 sf) with an acre ask for roughly 1.6M while some pieces of shit hastily put together with no land ask for 1.8M. Houses outside of the Los Gatos/Saragoa Union district are dropping much faster, about 8-10% off from the peak. Monte Sereno (95030) actually seems to have some higher asking price compared to last year, just that nothing is moving.

Almaden is dropping much faster compared to LG, Saratoga, Cupertino and Los Altos, probably the fastest dropping community west of 85 from Palo Alto to Santa Teresa. Price has generally come down at least 15% for properties priced around 1M.

Land price is dropping faster than houses, just as I expected. However, due to the lack of available land in these communities, we have yet to see developers spewing out land options like they do elsewhere, and I doubt if this will happen on a large scale. But I am starting to see land that I consider attractive, just waiting for the price to get attractive as well :-)

Watching the similar areas as SP only more towards the south, west of 85 from Los Altos down to Almaden, more into the slightly more rural pockets.

Los Gatos (95032) has seen a lot more properties sitting on the market. Reduction is not big, and pricing is all over the place. A couple of houses (2000-3000 sf) with an acre ask for roughly 1.6M while some pieces of shit hastily put together with no land ask for 1.8M. Houses outside of the Los Gatos/Saragoa Union district are dropping much faster, about 8-10% off from the peak. Monte Sereno (95030) actually seems to have some higher asking price compared to last year, just that nothing is moving.

Almaden is dropping much faster compared to LG, Saratoga, Cupertino and Los Altos, probably the fastest dropping community west of 85 from Palo Alto to Santa Teresa. Price has generally come down at least 15% for properties priced around 1M.

Land price is dropping faster than houses, just as I expected. However, due to the lack of available land in these communities, we have yet to see developers spewing out land options like they do elsewhere, and I doubt if this will happen on a large scale. But I am starting to see land that I consider attractive, just waiting for the price to get attractive as well :-)

I just checked the rental market for my parents' zipcode and prices really shot up! They'd have to pay at least $250 more per month for their rental today than 6 months ago. It looks like people are really waking up in Montgomery county. I think prices will flatten or go down eventually, but it's nice that my parents have a 3 year lease locked up in the mean time.

Noe Valley is pretty much flat and has been flat since the beginning of the year. Prices aren't going up or down, homes are selling at about the same clip (11 SFH last month) but inventory is climbing. Overbids are uncommon but most places are going for asking.

I have seen quite a few "price reduced" signs. The average 3/2 1300 sq ft recently remodled Victorian is still selling for right around $1M. Some friends of ours just down the block sold the lower half of their two unit building as a TIC for $750k which was $40k over asking. I was kind of surprised at the price, since they only paid $1.2M for the whole thing two years ago. But it is large (1500 sq ft) and nice and this neighborhood continues to gentrify.

I am actually sad to see all the funky old pizzerias and greasy spoon diners replaced by white table restaurants, but I guess it is good for my investment in property here.

"Living in a superstar city is like owning a scarce luxury good."