Saturday, August 25, 2007

Sacramento Real Estate Market - August 2007 Water Cooler



Post off-topic links, observations, and stories about the Sacramento real estate market here. Please read the comment policy before posting.

93 comments:

Diggin Deeper said...

Subprime tanking all over the world right now:

The current list of likely failees due to overexposure to subprime and Alt-A:

American Home Mortgage Invstmnt with 2.3% of the total mortgage market.

(2) Macquarie Bank funds (Australia)

Sowood Private Investment Firm

Bear Stearns Asset-Backed Securities Fund. This is the third BS fund to crack.

Yet our Treasury Secretary says the subprime problem is contained within our economy...with a straight face no less!

This credit bubble is about to get out of control. There's not a market in the world that isn't feeling the effects of our subprime meltdown.

RE is history as this new party gets underway...

tough guy said...

I almost pooped my pants this morning with all the Beazer liquidation rumors flying around. Even though they don't seem true at the moment, that organization is in a heap of trouble with all the investigations and whatnot. That's what you get for hiring boneheads (that create "clever" street names like "Disk Drive"- yes, it's true in Capital Village).

Homebuilder meltdown and mortgage meltdown make me very nervous about toxic seepage from residential real estate into the overall market (which also has its share of credit problems right now). Y2K is now, go buy your generators.

smf said...

The comments that really piss me off is when I hear that 'subprime is the problem'.

No, no, no, no, NO!

Subprime and all the related exotic mortgages were simply a result of HIGH HOME PRICES. They both fed into each other and created a vicious cycle.

But almost nowhere were the RE and economic problems is it written how unaffordable of a commodity housing has become.

I mean, if we go back a few years and say that an entry level house in a decent area is $130K, the owner and bank could probably deal with a $20K swing either way.

But tell any rational and even financially well off person that their investment lost $100K and the reaction would be different.

We would not even be talking about subprime right now if home prices had stayed within affordable parameters.

tough guy said...

truly a chicken and egg dilemma. do you not feel voodoo lending/cdo's helped fuel price escalation by funding speculative behavior? i do agree price points are the problem with the market, but the mortgage calamity is a parallel beast that will run its course regardless of what happens to affordability.

landwhore said...

House down 20%, just walk away.

http://tinyurl.com/2csuty

scroll down until you find the video on "House down 20%, just walk away."

Pretty wild! After seeing this I checked to see how bad your credit is damaged by a foreclosure. It does not seem to be too bad. Just rent an apartment and buy a new car before the foreclosure. Wait 3 to 4 years, then buy a house with good credit again.

As an added bonus you will qualify as a first time home buyer.

David said...

I agree with tough guy about high prices and unconventional financing being a mutually-dependent phenomenon. They were mutually reinforcing, and still are at this time.

It can be said though that were unconventional financing not widely available, housing prices could never have reached such heights without a near-complete collapse in transactions.

As a matter of public policy, relevant changes should be implemented to again encourage responsible homeownership and somewhat limit speculative activity in housing.

David said...

The only "flippers" I know are definitely "flippers in trouble." They own a second house and a condo in Roseville that they purchased in 2005 (of all times). They cannot unload the properties and have decided to rent them, almost assuredly at a loss. They are probably under the delusion that "things will bounce back." They'll be holding those at a loss for a long time if they stick to that belief.

norcaljeff said...

Landwhore, that's referencing an incorrect link, look at this one:
http://tinyurl.com/29un24

Cmyst said...

Here's my favorite flipper property:
MLS #70045827

Purchased 3/23/07 for 315K, and put on the market 2 months (and likely several thousand $$ upgrades later) at 440K. They've been dropping the asking price every few weeks since, and now it is at 415K.
I have to wonder what these flippers were thinking. Was it possible to buy at a worse time, and now try to sell?
As an added bonus, while the bathroom upgrades are groovy, they fundamentally changed the nature of the house by removing the planters inside -- but they left the huge skylight, which is kind of pointless without the plants/atrium. It just makes the house hotter.
They're not upside down yet, but every month they hold that house is more money they're losing. Another, more structurally intact Streng, in the same area recently went off the market and it was listed at 350K.

Gwynster said...

Cmyst,

You and I share a love of Strengs. That remodel isn't nearly as bad as some of the ones here in Davis. I looked at this one over the weekend:

1015 KENT DR, Davis, CA 95616
07/04/07 -- $749,500 to $740,000
MLS #: 70055750
Last Sale: 06/19/06 $515,000
Based on List Price: $339
Based on Zestimate™: $243

The planters are gone, he totally violated the floorplan, and all the 230k upgrades are cheap Ikea crap including the floors. No real structural work was done and he stammered a little when I asked about permits (Davis is famously difficult).

The listing agent is also the seller. A snot-nosed, trump wannabe realtard who has no clue how screwed he is. He has 3 roommates to make ends meet.

As for the 5k to 10k reduction every month for 11 months? They are all over Woodland. Flipping knob bonnets.

For Strengs, I like Woodland better since they seem to messed with less there.

and CL has been great lately for mid century furniture! It was like finding lost treasure. Lots of people selling off their collections as they leave the state.

Cmyst said...

I have that home on my list, but I didn't know there were Strengs in Woodland. I'll have to start looking there!
The Davis homes are unreal. The asking prices are twice the Sacramento price, and the Sacramento price is 100k too high and sometimes more. I get a funny sensation in my neck even looking at the Davis homes online.

Diggin Deeper said...

"but the mortgage calamity is a parallel beast that will run its course regardless of what happens to affordability."

And most likely lower home prices will be the result as bogus credit instruments are swept out of the market creating a higher interest rate environment. It isn't as if this is new or novel in the financial world. We saw it in the late 70's and early 80's with the S&L blowup... Again in the late 90's with the Asian currency crisis. I see this as a simple replay of the past only with much greater magnitude. The only way to really clean house is through higher rates.

singlebuyer said...

Hello! I have been watching this site for several months. Am looking for a fixer upper in the low 200s. I found one near Hollywood Park. I am still nervous that this area will also experience the downturn. Any comments? Is this still a bad time to purchase an older home?

GWENSTYR: What by chance, is CL???!! I promise I won't snatch up the stuff you want....

BMac said...

Singlebuyer,

welcome, CL= Craigslist.

As for whether now is a good time to buy, I wouldn't consider it unless I happened to find just the right deal on the perfect house. Generically speaking, now is still a terrible time to buy, in my opinion, because there is such a wild spread in asking prices for similar homes right now, among other things. If you aren't SUPER-informed on many, many details of the markets and sub-markets you run a higher risk of ending up in something baaaad.
If you want specific feedback, post the MLS or address of the house you are looking at and the folks here will have no problem telling you their opinion on whether you should buy and at what price.
I think the consensus amongst most of the informed industry-outsiders is that you run virtually NO financial risk of waiting another 6 months before making offers. Good luck.

mopar777 said...

Gwynster,
Let's set the record straight about The Donald OK. He's a smart man, but not a self made man. His FATHER built the family fortune. His father started building room and garage additions when he was just 16 and had his mother sign the construction contracts because he wasn't of age yet. His father then went on to build huge apartment buildings for the government and reaped what came to be called "windfall" profits. His father advised The Donald on most of his early endevours. His father gave The Donald something like $74M to get started (and that was nearly 30 years ago!) And finally his father lived and had his offices in the modest Sheepshead Bay part of Brooklyn until his death. No, he didn't have a TV show or run around with models.

Any Genxer who watches that rediculous show of his had better realize that The Donald didn't do it on his own! Anyone who does build a fortune in real estate does so over time and with alot of hard work, brains and sacrifice (or they are just plain lucky.)

I'm not saying this out of envy. My wife and I are worth over a million (post bubble) and most of it is in rental real estate. We both drive 10 year old cars, have no debt and no worries. We have been together 27 years. After this post I'm going over to my tennant's place to install a new range hood. My goal is to be the best landlord ever.

RMB said...

mopar777

Your forgot the 600 million the Donald was forgiven by the banks in the 80's. Kind of hard not to be worth a bundle when the banks essentially give you that kind of money.

Gwynster said...

I know the dirt on the Trump. I have zero respect for him.

You know Mopar, you really need to pick a nice 3/2 in davis to rent to me >; )

Fanchew said...

Here's another reported Streng house in Elk Grove on ebay, of all places: http://cgi.ebay.com/Beautiful-Streng-home_W0QQitemZ150141301178QQcmdZViewItem

Gwynster said...

The interior planters are still there. I like it.

What I find funny is owner carrying if a buyer coughs up 15% to 20%. I'd be terrified of the owner going BK and then you're screwed.

Patient Renter said...

oi"Cmyst, You and I share a love of Strengs."

Me too me too!

"CL has been great lately for mid century furniture! It was like finding lost treasure."

What have you found? I used to check quite often but only would find stuff in the bay area... I'm looking for some teak stuff right now, but I'm open for anything cool that comes along.

Cmyst said...

Crud, they took that listing off eBay before I could see it.
The antique mall on Auburn Blvd in CH has a "googy" section (haven't been there, can't vouch) and "2 Women and an Armoire" has stuff that is pretty reasonable, too. Plus, they give you bottled water there during the week and have pastries on the weekend.

Gwynster said...

2 woman and an armoire didn't carry a lot of Eames area items when used to stop there. Sounds like I'll have to check them out now.

On CL, most people don't know they even have a mid c. piece so you just have to go thru everything. It's like ebay used to be but local.

I found a Bruer replica chair, 2 low and wide teak chest of drawers that make perfect nightstands and 50's maple blanket chest. I have to keep myself away from the big items since we live in a 800 sqft Steng duplex while we wait to buy.

Cmyst said...

I was making a call on someone else's case a few weeks back and the elderly client had an Eames chair. When I commented on it, she said she had no idea what kind of chair it was, and that no one had sat in it for probably 10 years or more, since her husband passed away.
I've tickled a lot of elderly people by admiring their furniture and complementing their style. It's kind of sobering to realize that these pieces are antiques!
2 Women and an Armoire doesn't have a lot of MCM furniture, but I found a couple dining tables/chairs there. They have really great garden stuff. I'm hoping at least one of their large concrete Buddha's heads is still around when I have a permanent home for it.

Gwynster said...

Antique is 100+ years. What want is vintage or collectible. I actually have 2 antiques left. Everything else I got rid of on CL in the past 2 yrs.

That said, I'm a huge fan of anyone who buys used and refinishes. I hate seeing perfectly good wood go to the trash piles.

Fanchew said...

I have to thank cymst for giving a name to the Streng houses. I saw house on MLS a while ago, with the planters, skylights and modern lines I had no idea other than I liked it. Now it's great to know that my tastes are in such good company. I can still see the ebay listing by the way.

singlebuyer said...
This comment has been removed by the author.
singlebuyer said...

Gwenstyr- Googy has awesome stuff- in perfect condition, but you are going to pay a lot for it. I remember when he had full 50's kitchens and bars in the antique mall he used to be at.

bmac- Thanks for your feedback. My mom happens to be my agent, so I feel(fairly) confident that she won't walk with me into a bad deal. And if she does, whoa! Holidays will be intense. Here is the MLS-70079168. FYI- will have new roof, new flooring..

HappyinSF said...

Single Buyer,
That looks like a nice small house.. My only concern would be the area, that is just beyond Land Park but not quite in gang land either so it might be fine. Is there any noise from the airport? I've never been that close to an Ex. Airport, I imagine those planes are pretty quiet. The price seems decent depending on the area, if the area proves to be at all dodgy but you really want the house I would probably offer 190-200k. Nobody knows where prices are heading exactly, but personally I think that house is only worth 130-140k (it's 900sf, my 1 bedroom apartment is 725sf), it probably sold for that or less 5 years ago. At least you are 5 minutes to midtown and really close to Land Park!

BMac said...

Singlebuyer,

yeah, that's right under the preferred final approach for Sac Executive airport so there will be lots of traffic going low and slow right over the house all the time. (small prop planes, turbo props and small jets during the day also at times).
right in the transition area from solid neighborhoods to the west and 'oh god' on the east.

like I said, there are tons of houses similar to this that are/will be on the market over the next year that will probably go for 15-30% less. If you are patient you can either save money, or get closer in to the better 'hoods for the price. Good luck.

Cmyst said...

I'm very familiar with that area; it was in my old territory zipcode before I transferred to the Folsom/EDH zips.
The neighborhood is fairly safe and stable IMHO, but it does have a crime rating of 234 (avg is 100). It is mostly working class families and retired folks (Avg household income is 51K).
If I were to purchase this house, I'd certainly want to put in central heat and air, and probably new appliances. The yard looks pretty good.
I think, in all honesty, that I wouldn't want to pay over 120K for it. If you Zillow it, you see that homes in that area were selling at 45K to 75K in 2001 (where many people say prices are heading back to) and just a bit over 100K in 2004. It is also a bit pricey, esp. for not having any real upgrades, at $240/sf.

Cmyst said...

Antique is over 100 years old?
Sheesh, ever since I was a kid, they were telling us it was over 50.
Of course, then some of US began turning 50, so...

tough guy said...

If I was a smart RE agent, shoot, I'd vet all my listings with you guys (for the bargain price of $free), take the temperature on my list price, use the info in representing my client, and at the end of the day I'd look a hell of a whole lot smarter than all the NAR lemmings.

I'd bet that what you've posted here regarding the listing in question from an earlier post contains x^10 more insight and information than any of the agents involved could provide.

That Japanese market near the exec airport is awesome.

SacramentoCrash said...

Just remember media price has as much to do with reality as WMD's have to do with the war in Iraq.

Median is used by the lazy "economists" that don't know how to peg values of properties in the various market segments.

You have to look at specific properties to determine where values are and where they have been.

Median schmedian.

Prices are dropping alot faster than people realize.

dvobell said...

Love the Streng talk!

They hide their glory from the street, do those Strengs (Eichlers, Rummers) -- but what glory it is hidden inside...

IMO, Woodland Strengs do tend to be in better shape than many in Davis. There's a huge number of homes in the category of 'cheap student rental' Strengs in Davis, many of them duplexes (or jury-rigged dupluxes) that have been chewed up pretty well.

Then there are the nice residential tract Strengs in Davis like the Atriums (Atria?sp?). These are still waaaay waaaay too effingly stupendously expensive. Plus they cost too much. And they're a bit pricey. Feeling my resentment? Then again, if you buy one in Woodland, you have to live in Woodland (sorry Gwyn); and I'll pay dearly to avoid that fate...

Then there is the holy grail of a custom Streng. These are usually owned by old-school Davis-ites. I have met multiple older people in Davis who knew the Streng Bros. personally, and these people literally met with the Strengs and gave their own input into the design of their own MCM home!

omg. i am so jealous.

Anybody who had the wherewithal to buy a cheap investment property (or two!) here in the 1990's, when Davis was known as El Remote University Cow-Towno and not Training Tomorrow's Techies -- well, to them was granted instant RE mogul $tatu$. Wife and I didn't move here until 1999, only bought one house in 2000. waaa. blew it.

Oh well. Shouldn't really complain.
We sold our old, small, POS Stanley Davis tract home in Davis 2006 fer $430/sf!

Everybody thought we were crazy to sell. Heard by me a million times: "Well it might slow DOWN a little, but real estate doesn't really GO down, ya knoo?"

Ow. The Schadenfreude is almost painfully intense.

Gwynster said...

I'll take a Woodland Steng over a Davis Streng any day. I'd much rather live in Woodland. I hate Davis with a passion. Did anyone catch the Piece in the Sac Bee that bashed Davis for becoming a white flight city? It was excellent.

Davis was a nice place until about 97. I only live here so I can bike to work and watch these @ssholes tear their hair out as their "great and mighty wealth" crumbles. Watching that women break down in tears in the Covell Nugget last year because she couldn't sell her house was worth the price of admission.

BMac said...

Sunday's to do list:

Don't cross the Gwynster. Check.

HOUSE2008 said...

Hey all, I DID come across some encouraging news last week. I found a nice home built by Cambridge homes? selling for about $170 sqft. UNFORTUNATELY, I was looking at homes (three to be exact) that ranged in sqft from 3000 to 3300 sqft. That's roughly $500K plus. Out of my range. BUT if I was to apply the same math to homes that were for sale across the bridge were the owners were attempting to sell their 1000sq ft home for 300k well, then the $170k a sqft wouldn't be to bad, still high but a start. Hopefully this is a glimer of sanity in in a era of $300 sqft home prices:)

SacramentoCrash said...

Article on Elk Grove:

http://www.americanchronicle.com/articles/viewArticle.asp?articleID=32892

Google the title if the link gets cut off.

http://www.americanchronicle.com/AMchronDefault.asp

The Understatement of Over-Development
Darren Bocksnick

July 22, 2007

Elk Grove is a bustling, bursting community just a few miles south of Sacramento, California with no thundering herd of elk of which to boast and only a few, remaining trees inappropriate to be deemed as groves. The once, rural bedroom community of greater Sacramento is a prime example of city planning gone to pot. The city pundits so eager in their ambitious, yet oblivious quest for city-hood have created a real quagmire of congestion, over-development and undesirable living conditions.

SacramentoCrash said...

paste this after the "asp"

?articleID=32892


http://www.americanchronicle.com/articles/viewArticle.asp
?articleID=32892

Gwynster said...

Home sellers not the only ones in pain
Realtors, construction workers, others have seen area jobs vanish.

http://www.sacbee.com/142/story/310668.html

Well there goes the "jobs and growth will stabilize the market" idea. 41% of our jobs added to the area were RE related (per a 05' Sac Bee article) yet these weren't going to be affected by the housing downturn? oh pwleaze!

On the plus side, I finally met a listing agent (besides our wonderful AB) this weekend who was willing to discuss the downturn and what it means for the area. It was a real breath of fresh air after being basically lied to by various agents in Woodland and Davis >; )

On Sunday, I had an agent tell me there were NO bank owned properties in Davis. I looked at her and told her point blank that I watch Realtytrac like everyone else. She quickly came back with "we won't be in as bad of shape as Woodland and Sacramento".

Gwynster said...

Cmyst,
Another Streng for you
714 BORCHARD CT, Woodland, CA 95695
mls 70083577

Price is completely stupid. They'd be lucky if they got that much in Davis. But at least it still has the planters.

norcaljeff said...

Another Hilltop Loop bust: Home defaulted before first payment. http://tinyurl.com/29y4qs

norcaljeff said...

And yet another one: http://tinyurl.com/ypsglb

paranoid renter said...

Looking for advice...

How do you tell if prices are fair again?

Prices have fallen quite a bit from their peak (at least 20% if not more for the houses I've been looking at).

So when do I bite the bullet? The apartment that I rent for about 1100 is available as a condo at a different place (identical plan) for about 200K with HOA of $240/mo.
If you disregard the HOA, property taxes and maintenance, the mortgage should be doable with approximately just the rent.

Does that make it a good buy?

I have read about all kinds of rules of thumb including that the price should be no more than 220 times rent (in which case this looks like a good buy, but then again the rule of thumb probably did not consider HOA dues).

norcaljeff said...

You should get a condo in this market for almost nothing. I'd offer 20% below asking and ask to get 2 years without mello roos or HOA fees and no closing costs at a min. You'll know homes are reasonable once the median home prices are no more than 3.5 times median income, or lower.

paranoid renter said...

norcaljeff,

I'm not sure if the 3.5 number will ever hold. Considering the stats at:
http://www.homeinsight.com/home-value/CA/roseville.asp
Median hh income: 61K.
Median home price: 360K.
To get to 3.5 multiplier, home
prices have to fall 40%!

How likely is that?

All the condos I'm looking at are still selling at current prices. They're taking time, but nevertheless still selling.

But I think you've just convinced me to wait some more. Plus the dip in the stock market and the problem with BNP's funds due to subprime make the overall economy look a bit bad at this time.

paranoid renter said...

Wait a minute...

From housing tracker:
http://www.housingtracker.net/affordability/california/sacramento

we see that price/income for Sacramento has not been 3.5 even as way back as 1997! The lowest it has been in the last 10 years is 4.5.

There's a number of caveats though about how the data were constructed.

Who knows...I'm going nuts!!!

Gwynster said...

Say hello to the 150K new home
http://www.sacbee.com/103/story/317832.html

anon1137 said...

Wanted to keep you all updated on this East Sac house I told you about a couple weeks ago. It was first listed at $685K for 1220 ft2 (2BR/1BA), or $560/ft2.

Well, surprise, it is still on the market and the price has been reduced by $10K. The house itself has grown a little in size, so it is now 1340 ft2, which brings the new price down to $504/ft2. Now that's a bargain!

(1224 47th St., 95819, MLS # 70079029)

Gwynster said...

The house grew? you mean we can get drywall and framing steriods to fatten up out stock before selling? Maybe it was just water-weight gain.

Cramer was on the Colbert Report talking about the fixed income meltdown on 8/8/07. It was fabulous.

anon1137 said...

The credit crisis is definitely the news of the week/month. Lander doesn't seem to be following it, maybe because it's not a local story, but Peter Viles is doing a great job on the LALand blog (http://latimesblogs.latimes.com/laland/).

I think it's awesome. Republicans can't stomach aid for all the lower and middle income fools who paid too much for houses, but as soon as their hedge fund and investment banking buddies start losing money, it's a "global economic crisis" and the fed comes to the rescue.

norcaljeff said...

Anon, people of all income levels are in trouble, its not just the lower and middle class. And it has nothing to do with politics. The market needs to resolve this, not Hillary or her lame cronies.

paranoid renter said...

norcaljef,

The credit bubble was created because of the economic policy. this mess would have continued to get worse if they had not started raising interest rates. The policy is what determines how people behave. If you give people the incentive and ability to get deep into debt, they will. The market can't do anything about it.

anon1137 said...

norcaljef - you're clueless dude. The foreclosure crisis so far has been almost all about subprime, which disproportionately affects lower income buyers and entry-level homes. The upper end of the market is still moving (although, that may change with the latest mortgage market problems).

And everything has to do with politics. Follow the money . . .

Gwynster said...

Leave the politic aside for a second. The question for me has been what drove people to make suicidal RE purchases?

I'm beginning to think it really has to do with the average Joe's current lack of mobility. Wages have been flat and J6P has had little faith in allowing hard work to raise him up by his financial bootstraps. Afterall, middle class hardwork has been great for CEO bonuses but little if any of the reward trickled down to him.

What was left? He was going to have to go outside the current corporate structure and gamble. And that system is now failing him too.

High-risk mortgages become toxic mess
http://www.sacbee.com/845/story/319522.html

Gwynster said...

ps. as a life-long dem, I'm having a hard time with the current batch. The minute they try to bail the bagholders (owners or lenders) out, they have lost my vote. period.

This may be first election ever where I either don't vote or vote Rep.

anon1137 said...

I think I would support a federal aid program if it were very narrowly focused to help buyers who were victims of predatory lending - not for investors, flippers, speculators or anyone who owns or owned multiple homes; not for people who cashed out their equity; and not for high income buyers, high net worth buyers, or high cost homes. It should involve some kind of rescheduling of debt, like 40-y refis via fannie or freddie.

I figure, the repubs are wasting billions a day in Iraq and they're helping their hedge fund buddies to huge tax breaks, so what's a few billion for fraud victims.

Gwynster said...

1137,

With those restrictions, i'd think about it but if we go that route, maybe 7% will be saved? ok I can do that.

Bailing out banks and multiple refi'er? no thanks.

norcaljeff said...

PR, you don't think prices can come down 40% from their highs? Even as builders are already cutting prices 30% now and we have another $1 trillion in ARM resets due between Nov and March? And not to mention you're assuming income levels will be flat in your calculations. You need to account for 3-5% annual increases in median income. Either way if you buy now or buy next year, I would suggest not getting a loan over 3.5 times your annual salary. I still think 40% off peak is doable.

norcaljeff said...

Anon, before you spit out the clueless comment, research your info better. Check out Granite Bay, 12 Bridges, Loomis, Roseville and Rocklin, homes over $1m or near it, all tanking at least 20% now, not sure where you get your "data." You even hedged your comment by saying the credit crunch might now hurt the high end stuff...we no kidding!!

anon1137 said...

ncj - re: "upper end of the market", check out recent sales and prices for SF, San Mateo, and Marin County.

norcaljeff said...

Anon, you gotta look outside anomalies like SF. Ask yourself why weren't not seeing this in the upper end areas of Sac, OC, and even NY now. Besides, my point was around Sacto since this is where Sippin is always pointing to price strength.

norcaljeff said...

PR/Anon,

I'm not the clueless one. As I stated before, the market needs to resolve this, not politicians. Have either of you seen the stock MARKET of late? Do you follow housing, credit, finanial and mortgage stocks at all? Have you turned on a tv in the past week or so? Beazer is almost finished, Countrywide is on the ropes and any company remotely related to the subprime mortgage industry is getting hammered like Goldman and Lehman Bros. I would say those are text book examples of the MARKET taking care of this, not policy.

a_builder said...

Word on the construction site today:

Toll Bros. 'The Pinnacle" jobsite(EDH); subs refusing to do more work, Toll in arrears for tens of thousands to several subs....

Corinthian Homes (aka Reynan$Bardis) NOT PAYING SUBS! 1 large stucco contractor FOLDING DO TO NON_payment by several builders!!!

DUNMORE HOMES- <-----Kaput! Ceasing ALL projects!

ELLIOT HOMES: MASSIVE LAYOFFS! SAC FOLSOM EDH others!!!!

Lets start a BUILDER Implod-o-meter!!!

Diggin Deeper said...

Last week was "perfect vision" for the stock market and the rest of the world. No one can now deny that the macro effects of US loose lending practices have reached worldwide proportions. The consumer is basically out of gas, banks aren't lending, and depositors are sucking out all the money they can in order to protect what's left.

I agree norcaljeff, the markets can and will take care of the problem at the expense of those who failed to react to it. And the sad fact is that we really haven't peaked yet. In the next two or three quarters we should reach the height of the subprime fallout and millions will likely be handing their keys back to the lender.

Will Countrywide, Beazer, WaMU and others that drank the koolaid fail. Sure, and they should. Every debacle like this needs a poster child and this one's no different.

Imho, the US is now at the tipping point and the tough, painful decisions must be made in order to maintain lifestyle stability as we know it. If the ECB, Sweden, Australia, New Zealand, Great Britain, Japan, China, and many other central banks find it necessary to raise interest rates, what makes the US different? Basically and without exception, the developed nations of the world are going in one direction while the US is going the opposite. Why? Think about it carefully because it is centerpoint to the long term health of this economy. And without a stable economy, I don't care where you live, real estate suffers.

Cmyst said...

Darn it, I'm sorry I missed the discussion here at the water cooler for several days, because it was a good one.

Here is a great book on exactly what is happening the last few weeks economically in the US. It is divided into sections, and while the "theocracy" part is fascinating it is only one of three sections. A huge part is on the development and eventual dominance of the rentier class and how that pretty much predicts the economic downfall of an empire.
http://americantheocracy.net/

I could write a book on my observations of class in American Society. And I believe that I am probably one of the most empathetic people you will ever come across. Plus, being a product of the working class, I LOVE working class people and feel most comfortable around them no matter what their culture or color.
But be that as it may, I have walked in to way too many homes in the past 2 years that were obviously beyond the financial reach of their inhabitants. I have been dumbfounded by the "toys" and furniture (most of it very objectionable, flowery, overstuffed "Italianate" crap)and trucks/SUVs that people had. People that I knew beyond a reasonable doubt were making about half what I make and supporting several dependants, to boot.
This was sheer, unadulterated greed , and it was also the end result of an economy that is based on "the consumer" (read: credit).
I do feel for people who are losing their homes; no matter how they got into that position, it is a mess and it's stressful to get out of.
But the bottom line is that people KNOW when they're living beyond their means. And there's nothing like the stress of having to work your azz off to try to maintain your "stuff" and having it slip away anyway to teach you that none of that matters anyway.
It also highlights that there is a difference between most people who think they're wealthy and the few people who really are wealthy. Having reality bidge-slap you knocks some sense into your poseur head, which just might make you a little more compassionate towards all those people you thought had chosen to be poor in the ownership society.

anon1137 said...

Sorry to report that 1224 47th St., 95819, has been taken off the market after only 24 days, one price reduction ($685K to $675K), and one size increase (1220 ft2 to 1340 ft2). Now you might have to go all the way to the Bay Area if you're looking for $500-600/ft2.

tough guy said...

That's the Dunmore kids going kaput right? Not Pops? Good riddance to those snotty nose pricks.

waiting_for_the_fall said...

Go ahead and start a Builder Implode-o-meter. I wouldn't risk it and get sued, like Aaron.

Whatever happened to free speech?

G Spot1 said...

aAs a brand new renter, any recommendations from the crowd on where to stash a sizable downpayment? I put it in a money market at my brokerage earning about 5% but would love to hear if you more experienced bubble-watchers have better ideas. Thanks!

Gwynster said...

My favorite is staggered CDs and US direct treasuries. Most MMs aren't fdic insured that always worries me.

Gwynster said...

For our PS. I saw this on Ben's and they were talking about our untouchable Napa but they were calling his name.

“‘Those are the people who bought in the last few years, but more significantly, it’s people that bought in 2005 and 2006 with 100 percent financing and negative amortization loans. The value of the loan has increased, the value of the property has decreased, and the payments have gone up. It’s the perfect storm,’ said Barker.”

“‘What’s their option?’ said Barker. ‘They can’t refinance. They have no equity in the house. Now they have to sell. The only way to sell is with a short sale.’”

They have another option, sqwatting and waiting for the sherrif. I bet that's what most of those of FBs do.

anon1137 said...

Why don't they give the exam right in prison? They could make it a condition of release for all convicted felons:

From SFGate (http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/08/19/RE2BRFS17.DTL):

Q: I am in state prison. My scheduled release date is November. While in prison I have been reading books about real estate investing and sales. As I was a very successful salesman before I was incarcerated, I would like to become a real estate salesman after I am released. What is the procedure to obtain a real estate sales license?

A: To learn the exact procedure to obtain a real estate sales license in the state that interests you, write or phone the state real estate commissioner . . .

However, . . . . Instead of obtaining a real estate sales license, I suggest you become a real estate investor . . . .


Then again, a prison term should qualify a person to be either an agent or an investor.

paranoid renter said...

wow gwynster, you're super-conservative with you investments.

I tend to use t-bills and money market and online savings accounts. The MM should be pretty safe. While the fund itself is not guaranteed, if you get it from a reputable brokerage it should be OK (I think).

paranoid renter said...

I'm wondering if I should sell the funds sitting in my 401(k) as well considering where the markets might be headed.

Gwynster said...

yes, I do invest like a grandmother. That's what happens when you are raised on tales of the depression in Germany. Trust no one.

My cash is in interest earning savings and in CDs. My 401K did really well in the last 5 years. It obviously stays put but now moved to a pure treasuries fund. I even had a etrade account and shorted builders this spring. I'm out of there too.

Once this blows over, I'll be back into stocks and pick some long term options.

I do think things are going to get worse before they get better.

Duzhang said...

Do you really think that Dunmore Homes is going to go under ? I heard that they just had a mass layoff.

anon1137 said...

Another update on $560/ft2 in East Sac (1224 47th St., 95819, MLS # 70079029):

First listed in late July at $685K for 1220 ft2, then reduced to $675K, and pumped up to 1340 ft2 ($504/ft2). Last week it was removed from the MLS.

Update: this week, SALE PENDING.

Party on in East Sac!! (just like it's still 2004)

HOUSE2008 said...

I find the argument against credit sometimes um lacking fr a better word. This Nation would not have been founded if we didn't get "credit from the French to fight the Brits & then stiffed them. I still think their pissed about that. Actually AFTER we stiffed them we asked for more & the gave us couple mill more. So having said that I came across an apocolyptic insight concerning the U.S. I'm no math wiz but if some would care to add up the net worth of the U.S. vs. it's debt obligations (Social security, Medicare, Bonds) I'll bet we're pretty well leveraged to the hilt. Maybe to the tune of 45-65%. One expert stated that it would take each individule in the U.S. over 330yrs to pay off our obligations...ouch.
So in my corner of the world I'll hopefully contribute another 200k-300k to that tally:)plus or minus 30yrs.....

Gwynster said...

1137,

ouch! 675K for a 2/1? No thanks.
Unless someone has 300K to cough up for down and closing (unlikely), that's a jumbo and we all know what jumbo rates are like now.

I honestly wonder if it will close.

anon1137 said...

Gwynster - I can't figure it out either. There are some nice things about E. Sac but you've still got lots of traffic, the roar of the freeways everywhere, poor schools, homeless people whizzing your yard, the "Harley element", . . . . it just doesn't add up to $500/ft2 to me.

Cmyst said...

I used to track East Sac and Curtis Park. But they're just too expensive. Same with Davis and Arden Park. I figure prices would have to drop 60 or 70% for those places to be affordable for me. Plus, many of them are too small, have only one bathroom, and virtually no yard in East Sac and Curtis Park.
I've started to use the "comfort meter" as a way of determining where to look for houses. If I do a drive-by or I find myself in a neighborhood where I feel uncomfortable, I don't bother tracking homes there. Most people would think of this in high-crime areas, but it works just as well in very high income areas, cookie-cutter McMansion areas, etc.
I feel much more comfortable in EDH than I did when we moved here, but I still have occasional problems with it. (Telling people I live in Folsom, for instance, is just as bad in a way as when I used to tell people I lived in Carmichael when the house was really in North Highlands.) And for some reason, displays of anger and/or bad behavior in EDH are much more alarming to me than a similar display in my old condo area would be.
(FWIW, I feel quite comfortable in East Sac, Curtis Park, Land Park and Davis. I'd fit in easily in any of those areas. They're just overpriced way past the point that I will waste time on them.)

Gwynster said...

There was a new Streng on the Davis market today (or was it an relisiting) that still had the interior atrium and i immediately thought of you Cmyst.

RMB said...

House 2008,

last I heard the US was banrupt. If you add up all of the assest in the US it comes to about 60 trillion. If you look at the future obligation (NPV) they are about 75 trillion. So this is just a shell game for the next 20 years until the boomer have retired en masse and start wanting the govt' to pay for everything.

Cmyst said...

My Streng collection is dropping off the market at an alarming rate. I'm down to FOUR.

The Davis Streng on Notre Dame listed for 1 day is a relist. I can't remember what they had it on the market at before.
Davis prices are insane. Totally insane.

My blood pressure can't take tracking homes in Davis.

Gwynster said...
This comment has been removed by the author.
Gwynster said...

Remember the chuckle we had over of the condo in El Macero?
http://sacrealstats.blogspot.com/2007/06/notable-listings_28.html

I was channeling the spirit of AgentBubble and decided to stop by the open house and see if maybe, just maybe, they worth all that and a bag of chips.

Well now there are 4 for sale.

MLS #: 70082038 $625,000
44785 GARDEN CT, Davis, CA 95618
3Br, 2 ba Square Feet: 1,649

MLS #: 70071889 $595,000
44737 GARDEN CT, Davis, CA 95618
2Br, 2 ba Square Feet: 1,411

MLS #: 70075726 $625,000
44710 GARDEN CT, Davis, CA 95618
2Br, 2 ba Square Feet: 1,347

MLS #: 70065793 $699,000
44713 GARDEN CT, Davis, CA 95618
2Br, 2 ba Square Feet: 1,283

Not many buyers out there in this portion of the market. So which one will the singular buyer this year purchase?

The good part about the stop was meeting the listing agent. It was the first time in about 3 years that a realtor did try to sugar coat the market conditions and try to treat me like I was your average middle-aged dumb a$$ housebuying female. Maybe it was because I was dressed in just jeans and a tee and left the power clothes at home.

For whatever reason, it was really refreshing, especially after stopping at a prior open house where the listing agent tried to convince me that buyers agents in CA have a fiscal respobsibility to the buyer. He was one of those young, shiny, shmarrmy, one - a total car salesman. He had no clue who had butted heads with.

anon1137 said...

Re: overpriced East Sac (1224 47th St.)

Here's what you can get in the Bay Area for $510/ft2: 2577 Buena Vista Way, Berkeley

http://www.redfin.com/stingray/do/printable-listing?listing-id=1061411

A classic Bernard Maybeck Arts & Crafts home in one of the most desirable areas of Berkeley, owned by the same family for 50 years.

I guess that's comparable to a flipper-owned grandma shack in Sactown.

capitalME said...

I'm looking for volunteers to contribute content for NoBailout.org. We need FAQ text, About, etc for the website. Please contact me if you can write! nomortagebailout at yahoo dot com. I'm hoping to have the site up very soon.

Thanks,
Aaron

norcaljeff said...

With those unrealistic prices, someone ought to start a Davis implode meter soon.

Gwynster said...

LOL I might just to piss off Sippin. We're debating.... nahh, not worth debating.

The DQ July monthly by zip shows central Davis prices down at -17.37 YoY. True we did have a zip code change that took effect in 7-01-06. This means that the 7-1-06 to 7-01-07 report is the first time in year we've seen what's really happening in 95616.

HOUSE2008 said...

rmb...

Yikes, I didn't realize that I was that far off...Thanks for the correction.

Cmyst said...

Well, it sounds like maybe some of you were right about future job prospects for REIC folk:
http://tinyurl.com/yp6p9c

From that story:
"The positive trends could have a short life span, several economists said. The downturn in the housing market -- with job losses in the industry really kicking in during 2007 -- is starting to hit the region's breadwinners.

"Job growth has slowed down quite a bit in the first months of 2007," said Howard Roth, chief economist at the California Department of Finance. "Construction, home sales -- it's all going down."

Which is not news to Rachel Brandon of Sacramento. She shook an emphatic "no" when asked Tuesday if she is better off than she was in 2005.

"My career for the past 10 years was in the mortgage industry," said Brandon, who is 39. "I have a license to do loans. Two years ago I was making lots of money -- I was making deals in my pajamas from home. Now I'm waiting tables at Denny's for $8 an hour."

Still, she's optimistic.

"I really like my job at Denny's," she said. "I'm learning quite a bit, and someday I'd like to have my own cafe. But, two years ago if you asked me if I'd be working for $8 an hour today, I'd have said 'God, no way.' "