patrick.net

robertoaribas says

tatpatutu: LARGE sections of the Bay area are for more like Phoenix, than they are like the Fortress.

Not really--Phoenix has lots of new housing devlopments. It was very easy to build and as a conseqence, the area became vastly overbuilt. I don't live in the Bay Area, but my feeling is that new housing developments weren't going up at the same rate as in Phoenix.

@tatupu70

Most of the new building in Phoenix wasn't actually in Phoenix. Living in northern Arizona, I have watched the exurbs creep further and further away. Most of the new building done in the last three to five years have been in areas with at least a 45 minute commute from anything resembling a large job site. Anthem is a good example (http://en.wikipedia.org/wiki/Anthem,_Arizona), and Phoenix has already annexed a number of outlying communities such as Surprise. Phoenix doesn't build up for the most part (some new highrises go in, but nothing compared to the amount of exurbs), just out. So the central similarity between Phoenix and SF would be the ridiculous price increases seen in the surrounding areas with long commutes, and that the communities around SF (Tracy? not really sure of the surrounding towns) grew rapidly just as the communities around Phoenix (Anthem, Surprise) grew rapidly while the city centers themselves remained mostly unchanged. From what I can tell, the large increase in available "housing" in Phoenix itself was the large amount of apartments converted into condos.

New housing developments in the bay area went up in insane areas. Building out Brentwood, Los Banos, Tracy, etc.

Anything with a limited commute isn't going to plunge like those areas, but also new homes weren't built in bulk in those areas, because they were already built out.

SFace has had the best information so far.

It makes sense that housing starts have little to do with established areas in the BA.

The problem is a great many people already living there can't really afford it. Personally I think the next few years will be ugly for them. While I don't expect a 50% drop from the peak, it still wouldn't surprise me in the slightest.

Unless we start creating jobs, and high paying ones, housing will continue to decrease.

Man this whole situation is freaking me out. I've saved up 100k and paid off all my debt. I'm currently crammed in a one bed room apartment and really want to purchase a house for a higher standard of living. I'm in the DC area where many of the homes I'm looking at sold for $150k in 2001, sold for 500k in 2006, and are now selling for 300k.
I don't know if the market is going to go down or sideways but it sure can't go up (there are too many short sales and foreclosures). I've looked at three short sales and all of them were completely trashed or needed 30k worth of work to live in (bringing the price up to 300k).
I'm tempted just to buy using an FHA and hold on to the bulk of my cash. That way I can keep the liquidity and if deflation or inflation happens I can quickly make investments to follow the market.
In the DC area I'm unsure if prices will drop. Prices have increased dramatically since the late 90's (200-400%). But the DC area (Maryland and NOVA) have the highes incomes so I think housing will stay high here. Plus with tax rebates I will be paying close to what I'm paying for in rent. I figure is there is a double dip in housing the banks will collapse and our currency will lose it's status as a reserve currency. At which time inflation will probably kick in and owning precious metals will be a safe haven. Well this post is longer than I expected it to be but so be it.

newhomebuyer7 says

Well this post is longer than I expected it to be but so be it.

yup. We all have this same discussion with ourselves. What to do, what to do.

ahasuerus99 says

Most of the new building in Phoenix wasn’t actually in Phoenix. Living in northern Arizona, I have watched the exurbs creep further and further away.

Are they still maricopa county? that's where the data he is quoting comes from - and that's the area that he's using as a model to predict that the country will continue to go to hell in a handbasket.

But many areas are different - I live in Southern Utah, where prices rose almost to Vegas proportions. Then they dropped - not as badly as Vegas, but quite a bit in several areas. Huge developments were stopped overnight, and there are still houses on the golf course near my house that are half built. My friends, who live in Northern Utah, were laughing about the roads to nowhere, partially built overpasses, and subdivisions with walls, roads and a couple of half-built houses with for sale signs out front - the signs referring to the entire development, not just one house.

There are multiple houses with short-sale signs out front within a couple of miles of my house - and all of this was foreign to my friends. My area has been hard hit, theirs has been hardly hit.

If one were to take the numbers here and attempt to apply them across the board, it would certainly skew the numbers.

So let's just agree with the realtor/investor who wrote the op; in Maricopa County, the evidence that he produced shows that prices will drop. But in some other areas, prices will remain stable and in some areas prices may increase. We all try to correlate what's said here to our little corners of the world.

robertoaribas says

By fall, the bulls on these forums will have been proven completely wrong.

I'm just sayin' that's awful strong language - applying maricopa county numbers across the board doesn't work. Not every buyer is a flipper, housing might not drop astronomically as you predict. Congrats on making money. Many people did. Many people didn't.

But the sky isn't falling everywhere like it is in your neck of the woods.

Sky's creaking everywhere tho.

@elliemae

Most of the exurbs are in Maricopa County, though a very small amount are as far north as Yavapai County (the county that I live in). I work with a few people here who have spouses who commute all the way to Phoenix for work everyday (for them it is about an hour and a half) because the housing was so much cheaper in areas like Dewey and Spring Valley, but those are definitely the exceptions.

It was interesting to hear about your area. I had never personally much identified Utah with the housing bubble, thinking it might have more in common with states like Texas, but it sounds like your area is somewhat similar to mine. In Prescott the price of housing significantly more than doubled (some houses that sold for 120k in 1999 topped out at a cool million in 2007, but the average price for a house that sold for 100k in the late 90s was close to 300k at the height of the bubble). Our area was driven by the number of California retirees who moved here, especially after we were featured in a retirement magazine as one of the nicest places to retire. Prescott went from being a tourist town of 25k to a retirement town of 40k with the only jobs being in healthcare for the retired, a diminished amount of tourism, and construction. Now all the people I know in construction have moved back down to Phoenix hoping for work (we had about ten major contractors in Prescott itself during the boom, now we are back down to two; some went bankrupt, a few were caught cutting a few too many corners and moved on to continue their shady dealings in New Orleans after Katrina).

One of the big differences I could see between Phoenix and a place like San Francisco is the number of jobs that were dependent upon the boom. I don't know what percentage of people worked in construction in each city, but it seemed like a lot of Arizona's economy was construction driven, and I wonder how much that was the case in San Francisco, or in your area in Utah. I would think that the more a given are was dependent on construction for job growth, the harder it will be for that area to recover.

ahasuerus99 says

One of the big differences I could see between Phoenix and a place like San Francisco is the number of jobs that were dependent upon the boom. I don’t know what percentage of people worked in construction in each city, but it seemed like a lot of Arizona’s economy was construction driven, and I wonder how much that was the case in San Francisco, or in your area in Utah. I would think that the more a given are was dependent on construction for job growth, the harder it will be for that area to recover.

Construction is/was a huge part of our economy - and the other part is tourism. One is nearly gone, the other crippled. There's a little agriculture, but many people sold to developers.

The Other heavy construction industry has lost the largest amount of employment in terms of percentage, losing 59.3 percent of the jobs from the 2nd quarter of 2005 to 2nd quarter of 2006.

In Washington County, there were a total of 48,777 housing units in the year 2005. This represents a growth in housing units, adding in all 10,335 housing units since the year 2001, or 26.9 percent.
http://www.ecanned.com/UT/Washington_County.shtml

elliemae says

Construction is/was a huge part of our economy - and the other part is tourism. One is nearly gone, the other crippled. There’s a little agriculture, but many people sold to developers.

You better hope its not, else welcome to the third world economy.

It is 110 degrees today in Maricopa County, and will reach 120 deg in July and August.

Anyone wants to buy my house :)

I totally agree price will come down......
GREED IS STILL IN CONTROL
WHAT WE NEED IS 15-YEAR 2% LOANS !!

thomas.wong1986 says

elliemae says

Construction is/was a huge part of our economy - and the other part is tourism. One is nearly gone, the other crippled. There’s a little agriculture, but many people sold to developers.

You better hope its not, else welcome to the third world economy.

I don't have to "hope." It is what it is. I'm not sure what you mean by that...

elliemae says

I don’t have to “hope.” It is what it is. I’m not sure what you mean by that…

Are you gonna just accept that or be a leader in your community and turn things around ?

I'm gonna accept it. As a social worker, I've chosen to save the world, one old person at a time. I doubt that I could change the community doing this. But I'm trying - and I'm damn good at it.

It took 100 years to create and build upon the tourism industry here - it won't be changing any time soon. We're home to a marathon, a triatholon, Huntsman Senior Games, hiking, boating, Mormon history stuff, a college, the regional hospital and associated treatment centers, a low-crime lifestyle for people whose primary homes are in the northern areas of Utah, regional shopping areas, etc. That won't be changing any time soon.

The construction industry tanked along with real estate. That, too, won't be changing any time soon.

Any other suggestions? What have you done to change the economic climate of the area in which you live, and how successful have you been?

Now that corporate America is creating a big push towards amnesty for illegals, no doubt the hidden millionares who've been waiting on the sidelines will rush in to save the day.

UnitedSocialistStatesofAmerica says

You’re OBVIOUSLY a RE agent. OR a used car salesperson. Either way, I think I don’t like you.

Hilarious. Anyone who disagrees with you is a RE agent? Or is it just anyone who calls you out for your erroneous statements?

You're the new McCarthy, huh? Finding RE agents posing as regular Americans at every step...

Nomo, you're just making friends everywhere. Did you quit the doctor thing and become a real estate agent? Or have you been in the high-priced, over-valued closet all of this time?

USSA, I mean ray ray, I mean OTS, raise an interesting point. I'm not sure what it is, and it certainly isn't interesting to me...

maybe the border will be closed and the invaders sent home to save California some cash too?

Normograph said:

"...I just don’t buy into the whole meltdown thing just yet. The citizenry of CA is extraordinarily wealthy despite any government budget issues."

Some citizens have money and redistributing that wealth is how they plan on closing the $19 million dollar deficit. If they cannot raise property taxes they will create myriads of other "use" taxes on things for which you already have paid.

Despite a huge budget deficit, they still can find money for $10,000 tax credit for new home buyers. Why? Future tax slaves.

We do not have to believe in the melt down for it to occur.

Nomograph says

You can rant and rave all you want, but it won’t change the facts one bit.

The only people wanting to change Prop 13 are non-Californians. More accurately those who came from the East Coast over the past few years who favor MORE MORE govt spending. Its a dead issue.

I am sure politicians would like to change it too. The Democratic mantra in Sacremento is "we need more revenue not budget cuts."

Here's an idea for the Sac Politicians. Cut the enterprise zone credit.

When downtown San Francisco is considered an enterprise zone and lawyers, bankers and controllers who work within those skyscrapers are considered "eligible" based on where they live like SOMA, something about that credit is terribly wrong. It is extremely lucrative too, not some 1K per employee, it is worth up to 36K per qualified employee.

"The EZ program has been one of the more expensive of the state's many economic development programs, costing the state treasury about a half-billion dollars a year and thus contributing to its chronic budget deficits."

Read more: http://www.sacbee.com/2010/06/29/2856142/dan-walters-fight-over-californias.html#ixzz0sHvdf0Oq

I personally prefer eliminating rather useless sections of govermment like the the bridge authorities, CAL EPA, and Cal FDA. I am sure there are a hoard of other redundant functions I do not even know about.

I just got a post card in the mail from a Realtor bragging about selling a house up the street in Sunnyvale, CA (94087, Heatherstone St. for those that keep track) for $751,000. Kinda funny though cause the listed price was $980,000 and was on the market for at least three months. I feel sorry for the buyers as you could rent a nearly identical house for less than $2,500 a month. I say less because there is a house for rent three blocks to the north on S. Mary Ave where they are trying to find renters and asking for that amount and it still hasn't been rented out.

I think the sellers made a good decision.

Sell now. Do not look back. Do not try to hold out for some fantasy sales figure. Sell NOW!

Ryan are you talking about this house? Looks like the original list price was 839k

http://www.zillow.com/homedetails/972-Heatherstone-Way-Sunnyvale-CA-94087/19538727_zpid/

I also noticed that there's hardly anything for sale
some redfin facts about that area:
inventory down 10% vs. April
inventory down 19% vs. last year
sale-to-list at 101%

I wouldn't count on prices falling there unless there's some shock to the system an earthquake may do it.

That's what 700k gets you in California? Wow I don't feel so bad spending $290k

newhomebuyer7 says

That’s what 700k gets you in California? Wow I don’t feel so bad spending $290k

BTW, a house at fox run looks way better than that 700K sunnyvale house.

Toothfairy: Yep, that's the place. I walk around the area and pick up the fliers, it was $980,000 in the beginning. I would hardly say there is no inventory in the area. One went up on S. Mary Ave. (closest cross street is Heatherstone St).I don't know if it is listed on MLS yet, but the asking price is $725,000. (I would say there is a price drop right there.) Not to mention, the other house on S. Mary that is closer to Fremont St. that has a "sale pending", the house on S. Mary close to Remington St. advertising a guest house, the other house on Heatherstone St. less than a block down from the one that just sold. I could go on.

I go check them out cause they are on my walking path and keep track of them. For example, there is another house close by that sold about a year ago for $780,000. The people are trying to sell it now for $789,000 (this one is not on MLS). So far they don't seem to be having any luck.

So, Toothfairy, I would not only count on prices falling further, but I'd say if the people who bought the place on Heatherstone would have waited, they could have got a better deal simply by pointing to the place on S. Mary that had an asking price of $725,000. Not sure how you determined area, but I look specifically at 94087. I measure by taking a walk through the neighborhood and dropping in at the open houses on weekends. Prices will continue go down though the pace of the fall may vary.

toothfairy says

I also noticed that there’s hardly anything for sale
some redfin facts about that area:
inventory down 10% vs. April
inventory down 19% vs. last year
sale-to-list at 101%

I wouldn’t count on prices falling there unless there’s some shock to the system an earthquake may do it.

Let's rewind back one year:

825 Nectarine Ave: October 2009 sale price $851K
967 Heatherstone Way: Much smaller sqft. November 2009 sale price $800K
859 Maranta Ave: September 2009 sale price $890K.
944 Cambridge Ave: July 2009 sale price $815K

Let's rewind back three years:
864 Orange Ave: Only 1040 sqft. September 2007 sale price $848K

Bottomline, 972 Heatherstone Way sold for $751K. Similar properties were sold for more than $800K. Prices are already falling without earthquake.

exactly why/when are you expecting a recovery?

ie. WHAT are you expecting to recover?

Ag is about the strongest player we've got:

http://www.nytimes.com/2010/06/29/business/media/29nuts.html

but it's hard for 2% of GDP to pull the entire train.

Troy says

exactly why/when are you expecting a recovery?

Well, GDP has been positive for last 3Qs, wages have been rising for 6 of last 7 months. I'd say we are in the midst of a recovery right now. We might double dip and go back into recession, but history shows that to be very rare.

This time might be different, but it usually isn't.

tatupu70 says

wages have been rising for 6 of last 7 months.

How is that exactly a good news? Doesn't high unemployment eventually results in wage growth because the labor pool becomes smaller and smaller, possibly with only skilled workers?

Just an example, the fire department in my city downsized, closed down two fire stations and virtually in hiring freeze. As a result, existing firemen are working overtime and getting paid overtime (and overtime means higher hourly rate). A classic case of wage growth. And it is happening everywhere.

tatupu,

I would not rely upon GDP reports. They are as manipulated as the CPI. Any gains in GDP will be erased by revisions moving forward.

inflection point says

tatupu,
I would not rely upon GDP reports. They are as manipulated as the CPI. Any gains in GDP will be erased by revisions moving forward.

Are you one of the shadowstats crowd? I don't buy into the conspiracy stuff. GDP and CPI are difficult to measure--government probably gets it wrong sometimes, but I don't think it's on purpose. Economists would figure it out pretty quickly...

tatupu70 says

I’d say we are in the midst of a recovery right now.

http://calculatedriskimages.blogspot.com/2010/07/weekly-initial-unemployment-claims-july.html

"Recovery" consists of returning the the worst of the tech recession!

This time might be different, but it usually isn’t.