Paquin: 'I think we are at, or very near the bottom'
From the Sacramento Bee:
Sacramento-area homebuilders are still in a tailspin, having to compete with banks that are slashing prices on thousands of foreclosed properties. During the just-finished third quarter, builders sold 1,204 homes, the lowest quarter since the Folsom-based Gregory Group began tracking numbers in 1999. The firm counts sales in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties...Sales were off 24 percent from the same quarter in 2007.One day Paquin will be right. Here's his new home sales forecasts from the last three years:
...
For the first nine months of 2008, new-home sales totaled 3,990, [Gregory Group President Greg] Paquin said. That's a hefty tumble from 6,087 sales the same time last year. And it's a huge fall from 13,535 sales for the same period in 2004. Paquin estimates the year will end with maximum sales of 5,500 new homes in the capital region.
...
"I think we are at, or very near the bottom, in terms of sales and pricing," he said.
2006 Forecast: about 14,094
2006 Reality: 9,588
2007 Forecast: 9,500 to 10,000
2007 Reality: 7,407
2008 Forecast: 7,700
2008 Reality: 3,990 (as of Q3)
From the Sacramento Business Journal:
Auto dealers are hurting all over the United States, but Greater Sacramento’s new-car franchises have disappeared at a rate two-and-a-half times greater than the national average. The number of new-car franchises operating in the Sacramento region shrunk by 13.3 percent from December 2004 to August 2008, compared to 5 percent for the national average, according to Urban Science Applications Inc., a Detroit-based retail consulting firm.Sacramento Bee real estate reporter Jim Wasserman on his blog Home Front:
...
Greater Sacramento has lost a higher proportion of new-car franchises than much of the state and nation because all the broader economic problems — rising gas prices, credit crisis and declining home values — were amplified by the region’s surge in population and accompanying supercharged housing boom. “The housing market cratered here first,” said [Brian] Maas, from the California car dealers’ group.
A lot of people think everyone who got in over their heads with a bad loan should go down with the ship, lose the house, let the market flush them out. There's a case for that, sure. It seems to be the outcome that's happening most often.
But it's sure hard imagining yourself in these peoples' shoes. These are real people who regret not looking at the details of loan papers set in front of them. They could kick themselves.
...
Bottom line, I can't tell who is innocent or guilty, who should have been smarter or who foolishly refinanced to buy a boat and other toys.
16 comments:
I can't tell who is innocent or guilty, who should have been smarter
The implication here is that people who were "innocent" deserve "help". Let me help you with your rationale.
If you're losing your house you're either guilty of stupidity or a victim of bad luck such as a job loss. Either way, you're no more deserving of "help" than your neighbor who is renting and also may have been a victim of bad luck.
Having a mortgage doesn't make you special, and it certainly shouldn't qualify you for some sort of help that someone without a mortgage is exempt from receiving.
Bailing out those guilty of financial mistakes opens up a door better left closed.
Where does it stop, then?
We are all guilty of committing some financial errors in our life. But if we get bailed out every time, there is no incentive to learn how NOT to make the error again.
Or as I told my wife:
If when our kids get to be adults, and one of them keeps getting into financial problems; does us giving this kid money help him or harms him?
Often, having to do 'something' means that inaction is the best option.
Yea, I have a different idea of what a victim is.
People that got paid cash at closing with no money down to buy a home much nicer and more expensive than they could afford, who then got to pay subsidized rent, who then got to refinance and take money out to buy whatever tehy wanted, who then stopped paying their mortgages and lived for months rent free, who then get paid cash to leave w/o destroying the banks house are not victims in my mind.
It was never their home. Most of these people never paid a penny towards the home. 100% financing with neg am or I/O loans never paid one cent to the principal of the loan.
They benefited greatly.
Another day, another bottom caller. They were silent there for a while but are starting to creep back. DOW cracked 8k today, eventually finished higher but still, 7700 was the last bottom so it has almost lost all of its gains over the past 5 years.
When homes get to 1999 prices (not adjusted for inflation) we might be at the bottom.
But who knows, Paulson and the G7 are gonna do something this weekend. The government will start buying stock in the banks.
Maybe it will unfreeze the credit, but the thing is, I am not convinced credit is frozen. I think it is just banks not lending to people and businesses and other banks that can't pay them back.
jacob, we are way past lost all gains, the dow is not inflation adjusted and in the last 5 years inflation has been somewhere around 15-20 percent, so, we are way below the previous bottom. The funny thing is that people think the dow can't go any lower. Hmm that's what they though at 11K, 10K, 9K. oh well time will tell
The kool-aid drinkers next door to me in the Natoma Station part of Folsom just vacated their home of 12 years. The moving van pulled up in the morning and then they vanished, just like gypsies.
They bought at the bottom in '95 and managed to blow over $250K on toys (most of them with wheels.)
My question is if the three imported sports cars (now parked outside of their apartment) are indeed stolen property.
PR says "If you're losing your house you're either guilty of stupidity or a victim of bad luck such as a job loss. Either way, you're no more deserving of "help" than your neighbor who is renting and also may have been a victim of bad luck."
It is not that black and white. I know many, many innocent people who just wanted to buy a home. They had to compete with all these mortgage fraudsters drunk with credit power, yet had no idea the market was a bubble. It was not that easy or certain for many. They only buy a home once or twice in their lifetime.
Now the innocent people have houses worth $200,000 less than their 2005 purchase price. They have fixed rate 30-year loans and they can make their payment. But they look around and see the houses next door being foreclosed and resold for $300,000, instead of $600,000. They are essentially stuck for $24,000 a year more for the same product.
What would you do?
Not everyone is a criminal and yes, life is not fair. And there are many, many innocent victims in this mess.
"Now the innocent people have houses worth $200,000 less than their 2005 purchase price. They have fixed rate 30-year loans and they can make their payment. But they look around and see the houses next door being foreclosed and resold for $300,000, instead of $600,000. They are essentially stuck for $24,000 a year more for the same product.
What would you do?"
Since we're presently prone to socializing all of our problems, let the innocent walk...Let's give them a "do over", a mulligan, a "Get Out of Jail Free" card.
OR
Tough Luck...
Stay in the house, pay it off, and chalk it up to buying at the wrong time...given enough time it usually works out.
No one knows if prices will rise or fall, looking 20 years out. Chances are pretty good that within that time frame, home prices will be higher than they are today, if history is any example.
As for being duped by loan sharks, not hardly if they have a low interest 30 year fixed rate loan that they can still pay on. Did anyone call this market a bubble in 2005? How could anyone know that prices wouldn't continue to rise, unless a little voice said "this place isn't worth the $600,000 price"? And it wasn't the loan shark's call...that remained with the buyer.
In hindsight the innocent people appear to be those who didn't participate yet will now have to shoulder the bill for those that want out because of a poor decision made at the wrong time.
Isn't there some group more deserving to save?
They are essentially stuck for $24,000 a year more for the same product.
It is not that black and white. I know many, many innocent people who just wanted to buy a home
Innocent has nothing to do with it, it's all about personal responsibility. If someone bought an overpriced home that was THEIR decision. They are responsible for whatever happens. Pushing that responsibility off on someone else who had no part in the transaction is a violation of the other person's economic freedom. It's forcing someone who had no involvement to bear the outcome of someone else's bad decision.
Is it sad that someone made a bad decision? Of course. But what's even more sad is the idea that anyone thinks it's ok to force the outcome of their bad decisions onto others.
Patient Renter....I totally agree with you..."Innocent has nothing to do with it, it's all about personal responsibility"
Two words that are too easily applied today: Victim and Hero.
It is entirely personal responsibility, as PR says. I don't feel sorry for people who decided to buy at the top of the market -- half my family decided to do that, against my advice. I love them, but I also realize that their bad decisions are now impacting all the rest of us.
I am old enough to have learned many lessons the hard way, and those are the lessons that stick with you. The only exception to this is elderly people that were duped into refinancing their homes, and even in those cases I think there should be a criminal investigation including the person's own family and associates as well as the mortgage broker.
"They have fixed rate 30-year loans and they can make their payment. But they look around and see the houses next door being foreclosed and resold for $300,000, instead of $600,000. They are essentially stuck for $24,000 a year more for the same product.
What would you do?"
Pay the mortgage and carry on?
I didn't realize until recently that the house my ex and I bought 15 years ago lost value after we bought it, and didn't regain that value until this housing bubble started. It wouldn't have mattered. That was a great house, we could easily afford it, and we enjoyed our life there.
Of course, we didn't buy it as an investment. We bought it to live in and finish raising our kids in.
I wonder if Paquin, the overpaid prognosticator has read PMI's report that sees a 96% chance of lower home prices in this region come October 2010. In the October 2006 report I seem to remember the number to be a 71% chance of decline by October 2008.
Remarkable numbers by professional insurers whos careers depend on them being right about his kind of thing.
Of course, we didn't buy it as an investment. We bought it to live in and finish raising our kids in.
And that is the biggest problem. Over the past decade how many people bought homes to live in vs how many people bought them to make money?
Now lots of people will walk, they have been and will continue for some time. They don't want to be "saved".
It's ridiculous that we would feel sorry for someone who now has to pay "$24,000 for the same product." That's the market. That's the risk. That's precisely why I refused to buy in those years. I was right. They were wrong. Where's my big government check?
The truth is many many houses in the Sacramento area are worth more than the people in them. They need to be replaced with people who have actualy cash down and who can afford the homes with a 30 year fixed. Sorry, but that's the long time difference between an owner and a renter -- a downpayment. I believe there are many people out there with a downpayment and the ability to pay just waiting to move in when the price gets a little more reasonable. That is the ONLY way to economic stability. Keeping non-payers and those without the ability to pay long term in homes worth more than they are, is in no way headed for stability. Its kicking the can and turning what could be beautifully kept up neighborhoods into ghettos. I think the housing boom in Sacramento will go down as the ghetto-fication of Sac suburbs. Mostly because if you can't afford your mortgage then you surely can't afford to keep up the property.
I have to explain to my family from the midwest all the time that this isn't a case of subprime borrowers getting kicked out of boarded up old shanties like you see on the national news. This is people getting kicked out of $600,000 homes. Just because you get kicked out of a $400-600,000 home -- don't make you homeless.
Sorry. Absolutely no sympathy here.
Yep, it must be the 10th of the month ... that's when the Realestate WhO)3s call bottom.
Yea ... that is 50 bottoms in a row ... is the bottom getting sore yet. BTW I am going to buy then no one is calling bottom. That is the smartest way to buy I think ...
Cool.
Cow_tipping.
I am going to buy then no one is calling bottom. That is the smartest way to buy I think ...
I think you're right. The other day someone asked how we'd know when it's time to buy. Your idea sounds as good as any.
Post a Comment