Friday, August 24, 2007

Artificial Price Hikes, Greed, Layoffs, and Feng Shui

From the Sacramento Bee:

"Closed" in real estate has long meant the moment when a home loan was approved, escrow was finished, buyers got keys and everybody got a nice commission. Now it likely means the office is empty and your job is gone.
...
Exact figures on how many people in the Sacramento-area mortgage industry have lost their jobs aren't available, but the number is likely several hundred...Already gone is the Roseville branch of Houston-based Aegis Mortgage Corp., with an estimated 50 to 60 employees losing their jobs. Gone, too, in the same Douglas Boulevard building is the Roseville branch of Scottsdale, Ariz.-based First Magnus Financial Corp. Farewell to 20 jobs...Those closings came after lights also went out in the Folsom branch of American Brokers Conduit. The number of employees let go is unclear.
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This week brought more reports of area mortgage office closings. On Monday, Sacramento employees of GreenPoint Mortgage received news that their office will soon be history...On Tuesday, employees at Accredited Home Lenders offices in Sacramento, Roseville and Folsom also got word their offices will likely close by Sept. 5.
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[Heather] Fern-Luzzi of First Magnus remembers the mortgage business during the housing boom as practically euphoric and populated by newcomers attracted to the commissions..."We got a lot of people into it because they were greedy."
Also from The Bee:
With almost 16,000 existing houses for sale in El Dorado, Placer, Sacramento and Yolo counties, it takes all the mojo you can muster to make your house stand out in the crowd. If yours has sat on the market for a while or had an escrow fall through, it might be more than supply and demand. A pair of Lake Tahoe authors say you might have a feng shui problem.
From the Modesto Bee:
Statistics documenting the challenging reality faced by new home builders in the Northern San Joaquin Valley were shared this week with members of the construction industry. Sales are down. Prices are down. And plans for future projects are dwindling.

That was the gist of Stephen Smiley's presentation at the Building Industry Association of Central California's an-nual meeting of purchasing agents, subcontractors and suppliers...He predicted new home sales throughout Stanislaus, San Joaquin and Merced counties may remain slow despite price cuts and purchase incentives from builders.

"We'll really be fortunate to see 5,000 sales this year," Smiley said Wednesday. That's less than half as many homes as sold annually 2003 through 2005 in the three counties. "But our expectation is to see the market ticking back up a bit next year." Prices may continue to fall, however, because the region's builders are stuck with about 637 completed homes waiting for buyers. Smiley said such "standing inventory" was virtually nonexistent during the 2000-'05 building boom.
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Because of the sales slowdown, Smiley said, many big builders have curtailed construction plans in the Northern San Joaquin Valley. "If you're trying to sell land, there aren't many people buying," he said.
From the Merced Sun-Star:
Wander into the sales office at the Sandcastle subdivision on Gerard Avenue and you'll find a whopper of a deal: a $90,000 price cut on a four-bedroom house. But even with bargains like that, Merced can still lay claim to this dubious distinction: it remains one of the least affordable housing markets in the country.

For the third year running, Merced clocked in near the top of a nationwide ranking of the least affordable housing markets released this week by the National Association of Home Builders. Among smaller cities, Merced ranked as the second- least affordable housing market in the country, behind Salinas. That means that only 3.8 percent of the homes sold here during the second quarter of 2007 were affordable to families earning Merced's median income of $46,800.
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During the second quarter, Merced's median home price fell to $296,000 -- down from the high of $376,000 in 2006. But even with the price plunge, the gap remains vast between what houses cost and how much families here can afford to pay. One reason: while Merced's housing prices spiked into the ionosphere during the recent housing boom, local families did not see a similar rise in their incomes. Housing prices surged by about 75 percent between 2004 and 2006, but household incomes climbed only five percent.
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[O]n the price side of the equation, Merced is still suffering the effects of an artificial price hike created by out-of-town investors, said real estate broker Carole McCoy. "We had a false increase in value driven by investors coming in from out of the area," she said.

6 comments:

cba said...

Interesting times.....government policy imposes many types of regulations trying to make the opportunity of ownership a reality for some. Costs for these programs spread around to all taxpayers, land owners and developers.

Now that wall street accidently/intentionally made homewoners out of renters and others that otherwise have no business being owners....govt is staying out of the subprime mess....and is content with foreclosures making renters out of owners (albeight less than credit worthy owners). Makes me wonder why we should have any policies that tries to make something happen (ownership)that really has limited value. All government programs should be aimed at the rental market IMHO.

mopar777 said...

I'm looking to buy another duplex in my Folsom neighborhood. At 341 Montrose Drive (95630) sits a 2/1 & 2/1 property that made the Gallery of Insane Greed a year ago on this blog. The flipper had bought in 8/04 for $188k, pumped it for almost $300k in HELOCs and was trying to sell it for $550k!
Could someone please verify this and see if he and his beauty school dropout realtor finally sold it or simply pulled it off the market?
I saw the listing agent at a Christmas party last Decmeber and she looked like Roseanne Barr at peak weight wearing rouge and spiked hair.

When the fed "injected" over $100BLN into the markets to try to stem the hedge fund disaster earlier this month does that mean that it simply created the money out of thin air, therfore setting up lots more inflation?

Gwynster said...

Mopar,

Yes. As soon as it was lent, it winked into existance.

AgentBubble said...

341 Montrose:

Tax records show approximately $430K on mortgage. Was withdrawn after 278 days on 5/21/07 at $489,000.

Rich said...

Found this....made me laugh.

http://stripgenerator.com/strip/44318/

Rich said...

Try, try again.