Monday, May 04, 2009

NY Times: Signs of Recovery in Sacramento's Housing Market

From the New York Times:

Is this what a bottom looks like? This city was among the first in the nation to fall victim to the real estate collapse. Now it seems to be in the earliest stages of a recovery, a hopeful sign for an economy mired in trouble and anxiety.
The Times cites increased sales to investors and first-time buyers, reduced inventory, and stabilizing prices as signs of recovery.
“It’s fragile, and it could easily be fleeting,” said an MDA DataQuick analyst, Andrew LePage. “But history suggests this is how things might look six months before prices bottom out.”...No one in Sacramento is predicting that local housing prices, which have been cut in half from their mid-2005 peak, are going to reclaim much of that ground anytime soon. Instead, this is what passes for wild-eyed optimism: a belief that things have finally stopped getting worse. “A period of price stagnation would boost a lot of spirits,” Mr. LePage said.
“[Upcoming wave of foreclosures]...will stall any progress toward stability,” said Michael Lyon, chief executive of Lyon Real Estate. “The prospects for a recovery are fool’s gold.” Mr. Lyon expects further price declines and slowing sales. But David Berson, the chief economist for the mortgage insurer PMI, argues that such bleakness from the people whose livelihood is selling houses is itself a positive sign. “Things are awful at the bottom, and we’re at the bottom,” Mr. Berson said. “No question about it. But the trend going forward should be higher sales, and that will eventually affect prices.”
Have we hit bottom? Please vote in the poll on the right. Add your opinion in the comments below.

From the Sacramento Bee:
Nearly four years into California's housing downturn, close to 24,000 Sacramento-area homes and apartments are vacant, a number that climbed 40 percent in the past year, according to a Bee analysis of federal data. Roughly a third, or about 7,200, of the six-county region's vacant homes have been empty longer than a year. About 3,500 have been empty longer than two years.
Reasons vary for the surge of vacant dwellings. Area real estate agents and others Monday cited recent foreclosure moratoriums and banks increasingly sitting on large numbers of repossessed homes. Apartment communities also report rising vacancies as 11.3 percent regional unemployment forces renters to double up or move back in with family members.


Diggin Deeper said...

Somebody's got to get it right one of these days...I'm not so sure that now is the time to call a bottom in any market. Too many other variables at play that tend to mask over the problems that still exist...Mike Lyon ought to have a pretty good fix on where we're headed locally, as it's tough to buy some out of state reporter who's trying to build a case based on "past" market bottoms.

The next 6 months ought to be a real indication of where we go from here.

patient renter said...

'[Upcoming wave of foreclosures]...will stall any progress toward stability,' said Michael LyonDamn straight.

Most of the bottom callers readily admit that their predictions make sense absent further foreclosures. Unfortunately, pretending foreclosures don't exist won't make it so.

Bottom line: This is just more of the same bottom calling BS we've come to know, and love, and mock over the last few years.

Jacob said...

Are we at a bottom? We will know when we have reached the bottom 6 months afterwards or so.

Even if prices are forming a bottom, how stable is that bottom?

There are some big issues:

1) Job Losses - 600k+ a month. I don't care if prices fall 80%, if everyone is losing their jobs then they will fall further. Last year Jan-Oct we lost about 1M jobs, about 100k a month. Then in Nov/Dec we lost another 1M (~500k/month. So far in 09 we have lost something like 2.2M (500, 500, 640, 620 ish). And great news, job losses declined last month, from a staggering 640k to a much more reasonable 620k... Such wonderful news...

2) Foreclosures - Even if all the foreclosures stopped and every single owner / investor decided not to sell, the banks stillhave 5+ years of inventory, maybe more from some estimates. These will take how long to be absorbed? 10 years, 20 years? Add to that, banks are going to be foreclosing on a lot more homes this year than last year. And you still have the Alt-A resets to deal with. And as prices continue to fall, you eventually get into defaults from prime borrowers. Since the governemt is incentivizing defaults, they will continue.

Maybe we are at the bottom, maybe prices will shoot back up tomorrow. The only thing I know for sure is that I am not buying until those job losses get much closer to 0 (or ideally go positive).

Diggin Deeper said...

Are Bulldozers Now The Best Neighbor?

"A bank in Texas is bulldozing four brand new homes and twelve nearly finished homes in Victorville city, California, about 85 miles northeast of Los Angeles. Guaranty Bank of Austin acquired the homes in foreclosure and is destroying them, reportedly, to provide a "safe environment" for the neighbors."

..."In fact, federal lawmakers have put aside $6 billion in the last year for local governments to either rehab or raise foreclosed and abandoned homes."

I guess it had to come to this at some point...the ultimate in supply destruction.

This will get you to a bottom faster than any stimulus program that's been created so far.

Now I wonder what will happen to all the tilt-ups that are waiting for office dwellers, retail owners, and unneeded service infrastructure...Got to believe these could get knocked down as well.

$6B can bring down a lot of excess inventory....

patient renter said...

That NYT article is dominating the news today. I can't escape it. I have yet to hear it called into question, along with the "green shoots" crap from Ben "there is no housing bubble" Bernanke.

patient renter said...

I should also mention the comments for that NYT article absolutely trash it, and rightly so. But it's still pretty sad to see the story picked up and mindlessly parroted everywhere else.

Buying Time said...

The NYT reporter contacted me for the story....we had fairly different views on things....and I wouldn't give him the price I paid for our home. He seemed rather mifed...guess I will have to find my 15 minutes of fame elsewhere =)

Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

"But it's still pretty sad to see the story picked up and mindlessly parroted everywhere else."

And most thought we had too many investors in this market to begin with! With the NYT on the prowl, we've yet to see the flock of incoming (probably tilted toward foreign investors) that could take that 30% investor owned to nosebleed levels because of it.

There's enough blood in the streets to make a case for a bottom, but 50 years of rising credit expansion doesn't get cleansed from the system over a 12month period. With 70% of the economy dependent on a an employed and willing consumer, without them, it's just another bottom caller who has totally missed the point.

Lander said...

More from Lyon via KCRA:

"Fool's gold, in my mind, is that yes, if I close my eyes and look through a tube and see what I want to see. But if I open my eyes to the bigger picture, it was foolish -- it isn't bottom yet," Lyon said.

Lyon also said there are another 11,000 foreclosures about to join 24,000 currently vacant homes on the local market. Given numbers like that, he said the numbers don't add up to a turnaround yet, no matter what The New York Times says.

smf said...


More of my predictions coming true...

I told you that in the end, houses WILL be demolished.

And there are still too many homes out there, regardless of sales figures.

How do we know we are not a the bottom?

Real easy!

If part of the trouble was that too many investors (speculators) were buying homes that they never intended to occupy, and the SAME THING is happening (altough with cheaper prices) now, we are now even halfway thru.

Diggin Deeper said...

Mike Lyon has been as honest and straighforward about our situation as any in the area... once the true picture was revealed. To come out and flatly refute the NYT, while the market is seemingly moving in a positive direction, is fair warning to those that think this market will turn up anytime soon. His agenda notwithstanding, Lyon is probably not going to get many invites to SAR and CAR events based on his recent comments.

The real question continues to be will this be a V, U, or L shaped recovery when it finally does turn?

Husmanen said...

DD, I agree with your comments regarding Mike Lyon.

Besides the obvious increase in credibility, perception of honesty what will Mike gain from this view, specifically in a financial sense?

Could have the Jim Kringle ( ) affect where he seems to be brutally honest and gathers a lot of business.

patient renter said...

Talk of the Nation (NPR) just had a little segment on the housing bubble, and surprise surprise, their guests represented the typical collection of people who failed to see the bubble.

This is pretty much standard in any media nowadays, use the expert who has the worst track record, but what annoys me to all hell is that they cited yesterday's NYT article AGAIN along with Ben "there is no housing bubble" Bernanke's comments.

This is news and journalism in a vaccuum.

Cow_tipping said...

This is based on the brilliant logic that what falls first needs to get up first.
Really ... wow ...

Diggin Deeper said...

PR...damage control at its finest. Wishful thinking, hoping against all hope, "cross your finger hope to die?" Reminds me of past Leareah predictions(the Baghdad Bob of NAR).

Bernanke, Geithner, and Paulson never saw it coming as late as April of '08. In fact we got the "no problem, it's contained" answer from all involve. 4 months later the wheels came off the bus, and it was a fullblown crisis that turned into a nasty recession by December of the same year. Kind of like a true pandemic. Once it gets started it spreads like wildfire.

Now Ben's got the huevos to see a light at the end of the tunnel (is that sunlight or another freight train coming?), just as approx. 16 of 19 major banks will need further capitalization to keep them afloat (BofA reportedly needs $35B). All the while Ben's been busy writing bad checks for monthly expenses because the rest of the world isn't buying into our credit mess any longer.

And what do we do because of this crisis? Save money!... exactly the opposite of what Bernanke and company had in mind. In order to revive the economy the consumer has to spend and spend and spend some more.

...ain't going to happen

Jacob said...

Yea, BofA needs $35B and they have a market cap of $70B ($45B of which if from the government) and the market rallies on the news.

They couldn't even pass a rigged stress test...

RV6Flyer said...

"Yea, BofA needs $35B and they have a market cap of $70B ($45B of which if from the government) and the market rallies on the news.

They couldn't even pass a rigged stress test..."

Totally agree..

Purchased SKF (3x short financials) at the market close. Figured the old buy on the rumor and sell on the news with the stress test.

If we rally tomorrow, I will short some more. The bank rally is way over done for now.

Diggin Deeper said...

The window on the sub 5% mortgage may be closing for good.

Mortgage interest rates are on the rise. 10 year rates broke over 3% last week and the 30 year is now pushing 4 1/8%. 10 year auction yesterday went well but not well enough to keep mortgage rates at 4%+. Expect to see mortgage rates over 5% and tending higher in coming weeks. Up to this point bond interest rates had been range bound on both the 10 and 30 year but again, that range looks to have been broken.

With remaining inventory on the banks' books (and more expected), rising rates will pressure prices if the trend continues. Certainly not the results the Fed and Treasury were looking for. If we get an easing in the "bubble" bond market, any hopes of a RE recovery will stall. If the bond bubble breaks, the pain will dwarf what we've seen so far.

RV6Flyer...I like the SKF trade and I'm watching it is as well. Don't see the S&P going much above 975-1000 range before the next leg down kicks in. A breakdown in T bonds might just be the catalyst that takes us lower. A normal correction will pressure the banks even further, requiring more captitalization on top of money they're going to have to raise to meet current conditions. BofA's $35B could easily become $70B when and if a correction occurs.

Don't get complacent based on how things appear. The top 5 banks in the country probably control 75% or more of all the assets and most are needing to be propped up at this point.

Cow_tipping said...

The feds are buying on every down day.
The down slides are very short, and the up sides are very tall. Definete indication that meddling is going on.

Diggin Deeper said...

Here's something odd...the stock market is falling today, while rates on 30 year bonds are rising fairly substantially as bond prices fall. In this environment one would expect the opposite... rates fall as investors shun risk and flock to safe haven treasuries, while bond values rise. Same is occuring with the 10year which ultimately affects published mortgage rates. This just adds further fuel to a rising interest rate environment. It may not last, but it is markedly different from what we've seen over the last year or so.


RV6Flyer said...

"In this environment one would expect the opposite... "

I know it is killing me. I entered into a massive short position on the 10 year futures on Monday, then covered yesterday thinking the stock market would sell off and money would flow back into T-notes. With that horrible showing on the 30 year auction, the bottom fell out. Buyers are not willing to put capital out that long with rates that low.

You also see what gold and other commodities are doing...hmm...

Diggin Deeper said...


You called the market yesterday, and few would have expected what we're seeing today...stocks, treasuries, and the dollar all working lower in tandem. Your SKF trade works well in this environment.

As you said, the 30 year auction WAS a disaster forcing rates upwards of 4.25%. Much worse than the 10 year yesterday. I've had a short position on rates since early January, and have been adding to my TBT position on dips along the way. Pricing has been too close to the trend line not to move significantly, at some point, one way or the other.

It's not over yet and it could turn around, but the headwinds are likely to slow down the process. Once the long bond broke below $123 support, it set up a trend break that might be real tough to turn around.

The picture is becoming clearer by the day...the only people who believe you can buy growth with massive debts, and control market pricing at the same time, sit behind a fog in Washington.

Ignorant Opinion said...

Come on Diggin, you've had a short position on the long bond well before January. January happened to be a great time to go short against the 30 year, but I am sure you lost money on the trade in 2008. But that's ok, you will make it up over the next few years.

Nice trades to consider for the coming collapse. I don't have any vested interest in recommending anything, just hoping some of the wise readers of this space may be able to benefit - or at least lose less money in the future.

Go Short Treasury - TBT, PST

Go Long Gold - GLD and GDX

Go Short USD against JPY or Yuan, also buy commodities (oil below $40) and emerging markets on the pull back that will be coming.

SKF and SRS – both make nice trades at current levels – need to be very active and sell after the market pulls back and add to position if it keeps moving higher.

SDS is a lower risk way to play the coming correction - will not make a 2x return like SKF or SRS.

Inflation may still be a year or two away (hard to have inflation with hyper unemployment and a dead consumer) but it will surface sometime in 2010.

In this potential high inflation, devalued dollar environment, I am a buyer of hard assets later this year – real estate looks real good if you can lock in 30 year rates around 5% at prices about 10% lower than today.

Even at today’s prices and rates, real estate values look compelling over the long-term.

The dollar is dead after the reserve currency moves to Japan in a few years and ultimately to China in the next decade.

Diggin is right, no way that we can spur enough growth to cause the US to grow into our capital structure. Only way to get out of our capital structure (debt) is to devalue currency and fuel inflation.

Lander said...

Lyon again via USA Today:Some bidders may think foreclosure bargains are waning, says Mike Lyon, CEO of Lyon Real Estate in Sacramento. That market has 1,600 bank-owned properties for sale, vs. 2,800 a year ago, he says.

He says banks have lured multiple bids by setting below-market prices. Lyon cautions that government steps to curb foreclosures have delayed some.

"People are perceiving that they are running out. But there will be more," he says.

Diggin Deeper said...

IO...Yup I've traded in and out of TBT since in the late summer of '08. Didn't lose much because I tripled up on TIPS as a hedge and had tight stops on TBT. January may have proven to be the turning point and now longer trade horizons are working.

The key is that interest rates cannot be manipulated for any length of time before market participants dictate the risks they're willing to pay for. If rates are too low, the buying stops (as we saw with the 30 year yesterday), and the government has no choice but to raise rates, or, self consume inventory...I guess the Treasury ought to be happy with the results...Recently the UK had an auction for like securities and basically no one showed up.

The Sacramento RE market may be showing signs of life but remain dependent on a combination of low prices and low rates. Take one away and the activity either slows in reponse, or the other has to compensate. Add in buyer confidence (or lack of), job insecurity, etc, and the market's bottom is dependent on a tight rate/price combination.

No wonder Lyon's not about to call a bottom to this market.

Ignorant Opinion said...

Nice move DD and a very key discipline (that I am trying to improve) to buying any leveraged ETF (particularly the shorts) - STOPS and let your winners run!!!

Recently bought a house in a nice section of a suburb 30 miles outside of sac. at approximately 35% discount to sales price in 2002 - insurance company sent an appraiser out to assess replacement cost. Assessment for property was nearly 40% higher than what I paid. And the land is worth well over 25% of the home value - purchased at less than 50% of total replacement value. I am still negative, but this was to good to pass up.

Construction costs versus what you can buy now in custom homes in a few areas has finally reached a point that is very attractive in certain areas with the rates in place. Now east sac will be the last to crack harder.

Diggin Deeper said...

We got the jobs report (only lost 539,000) and it's surprisingly better than expected. While it ought to pump up confidence levels, if one dissects the information there's an interesting footnote that's usually overlooked.

The birth/death model on the labor report, which subjectively adds or subtracts jobs, based on projected (yet unsubstantiated) businesses that start up and fail over the month, added over 240,000new jobs in April.

It's a good thing we had those phantom "jobs" added in. It would awfully hard to boost sentiment when you lose 800,000 jobs in one month's time.

patient renter said...

The birth/death model has always been the mockery of the jobs report.

DJ2010 said...

Signs of recovery? I’d say it’s more like criminals running amuck Sacramento. Buyers beware!

Here’s a nice but suspicious listing for all you smart folks to check out. Address is 8635 Brush Way in Elk Grove (MLS# 90035620). It went pending only after two days of hitting the market. Gorgeous custom home, listed on Tuesday for $240,322 (obviously well below value). A Richmond American home Built in 2005 with 2666 sqft, in practically brand new/spotless condition with tons of upgrades like cherry cabinets throughout the house, granite counters, gorgeous bathrooms, and a huge custom BBQ range on nicely done yard. Entire house shows like a model, better than any model home I’ve seen in past five years. Owner even left behind many nice personal touches like rug, shower covering, some plantation shutters, washer and dryer, etc. The list goes on and on, everything looks too good to be true. Wouldn’t you know it, we had trouble getting our agent to negotiate our offer of at least $40,000 above listing price with 20% down. Some agents are obviously working behind the curtains. Is this even legal? Someone should look into these people and the practice that’s obviously going on.

We also encountered other suspicious activities during this experience. Too much to list.
Is there someone we can contact to report suspicions of fraud? Banks are losing out big and criminals acting as real estate professionals still won’t stop even after they helped dragged down the entire economy, leaving us the consumers and tax payers to pay the price.

Buying Time said...

Yes there is a lot of questionable activity out there. For instance my dad had trouble presenting his higher offer (in Stockton) to the bank because the selling agent was pushing a buyer (because she was double ending the deal for that buyer).

We encountered a lot of frustrating behavior by agents and banks during our home search. We got sick of it all, and just bought a new home instead.

Diggin Deeper said...


My wife just had one yesterday where her buyer offered $X over list. Two other offers came in at list and another again above the listing price. The counter came back to all at list price only, plus a few contingencies. Why? The seller's agent didn't think it would appraise above that price. All prospective buyers were then on a level playing field where buyer qualifications would decide the the success of the deal. It's especially true when you're an owner occupied that won't chance the market falling further. You want out as quickly as possible and a failed appraisal causes trouble.

Maybe your offer was too high and wouldn't appraise. That's a tactic that buyer's are using, hoping they'll be compensated if the comps don't come in.

This market works both ways...especially when the price appears to be a teaser to begin with. It becomes a strategy session based on real time comps and making offers that will stick, rather than wasting time selling a home that won't close without a bunch of headaches.

It's not as easy as it looks...and there are plenty of minefields that buyers have to sidestep, including unscrupulous agents.

Buying Time said...

Very interesting DD.

I find it incredibly ironic that an apprasial is now the show stopper. When we needed a stop to the maddness there was that prices are down, they play hardball?

A home is worth what a legitimate buyer is willing to pay for it. If there are at least two offers over list....seems to me the appraisal should take that into account. Where is the logic when you need it...sigh.

DJ2010 said...

DD, I completely understand what you’re saying. However, our experience was very different. They never even considered our offer at all. We started to persist, then they moved quickly into pending. Like I said, after just two days of listing. It was quite obvious seller agent possibly had a buyer, maybe even before the home was listed, and then did everything possible to keep other offers away. You wouldn’t believe the hurtles and runarounds they were giving potential buyers. They clearly did not want other offers, period! We were told the bank required all buyers to be pre-approved by a specific loan person with Chase (who happens to be located in Roseville). We contacted him and he told us no Chase pre-approval was required. BTW, both our FICO scores are 800 plus, and we’ve been pre-approved by two other banks for above $300,000 of purchase price. Our agent kept telling us that getting our credit checked multiple times for a home loan would boost our credit. Yea, I could hear Suze Orman laughed her head off every time.

We subscribed to and had been giving our agent lists of REO and homes that were in the auction process. I’m starting to think she double dipped us. Oh, did I mentioned we had a similar incident a month ago with her on a similar home that was in the same neighborhood? She encouraged (if not pushed) us to make higher offers. The previous one was a bit smaller and she told us the highest offer was in the mid $300’s. There’s no way it would ever appraised anywhere near that. Practically identical homes sold for only around $280K in that neighborhood.

We were na├»ve enough to buy into Mike Lyon’s public appearance thinking he seems honest and sincere; so therefore, Lyon Realty has got to have some of the most honest Realtors around. A lesson well learned! Now we need a new Realtor. Any suggestions would be greatly appreciated. And sorry about the rant, I’m just so angry and frustrated.

DJ2010 said...

Buying Time,

My husband suggested we do the same. Unfortunately, there aren’t any new homes that we like in our area. Centex is great and nearby, but a bit too close to the freeway. Our only other option is to buy somewhere else, but then we’ll have to transfer our child’s school. For the sake of everyone and the economy, perhaps I should start contacting our politicians and share our personal experiences and observations with them. I mean, have they already forgotten how the housing mess started? Remember the “buy now or be priced out forever” tactics? Lies and manipulations! Now it’s deja vu all over again. Different twists and turns, but ultimately the same games, lies and manipulations. Thanks for sharing your thoughts and experience.

Jacob said...

You can ask your agent to present his offer in person with the seller present. I think they have that option in their NAR rules, not sure.

Note sure how that would work with a bank REO tho.

At least do something so the selling party knows that there is another offer.

Anonymous said...

We are closin with an REO right now. Let me tell you. I have been looking for 8 months. I have seen 120+ houses that are REO and short sales. They are very different. I had offers about 20+ property or so. It is very frustrating when they don't even call you back or say anything. We bid 30 thousands dollar more for this house. From what I heard from the listing agent. Another buyre offered 20 more but asked for 3% back with FHA loans. Banks hate FHA loans it takes at least 2 months to close and they hate contingencies from what i have heard. It took them and us a whole just to negociate about the home owner warranty which cost about $450. So my realtor step in and said he will pay for it just to get this over with.

We have already signed and pay 20% just waiting to get my key and appearantly the bank didn't sign a release statement yet..... I am pissed off at this point. Its been more than a week. so we are 6 weeks in from the day of acceptance. From what i know, some bank have better workers and they are fast at responding cares about their jobs. I heard the guy that manage the house i am buying dissappeared for a whole week. The listing agent said he got 41 offers on the house and the guy was MIA, so he just put in PS (pending sale) just to stop people from turning in bids.

DJ2010 said...

We fired our agent. Her lost. Very nice and friendly lady, but dishonest. I know enough about real estate and market conditions that I often see through her lies, but didn't want to be rude. Now I just had it with the last experience. We started looking to buy back in 2004, but prices accelerated so fast it was obviously unsustainable. Then we almost bought in 2006, and luckily I never stopped doing our research and found this site. It helped us tremendously. Not only it saved us a lot of money and trouble, I also gained valuable knowledge that money just can’t buy. So thanks Lander and many of you wonderful and intelligent bloggers here.

We’ve just started seriously looking a couple months ago, so we’ve only looked at less than a dozen homes. Nonetheless, it is frustrating when you don’t have a an honest agent on your side, and that’s what we really need. She always flooded my mail box with all kinds of properties that’s completely different from our list wants, and I basically found most (except just one) of the homes we went to see. I always do my own research well ahead so we don’t waste time looking properties we don’t absolutely love.

Can any of you recommend a good honest Realtor? Many thanks.

Deflationary Jane said...

'Can any of you recommend a good honest Realtor? '

That's like asking do you know an honest investment broker or speculatard. I've come to the conclusion they don't exist. When I was looking this last round, I just used the listing agent so I could get their greed from double ending the deal to work for me. But I'm not even looking anymore as the 'professionals' out there have completely turned me off the entire experience.

DJ2010 said...

I’m with you on that, Deflationary Jane. I couldn’t have said it better myself. The hubby is very tired and wants to buy a new home instead. Perhaps I should follow his lead this time. Or better yet, maybe we’ll just wait ’til fall comes around.

Deflationary Jane said...

My mom always taught me to vote with my feet and my wallet.

I'm waiting but then I'm also doing some volunteer work that gives me some insight on the next several years. I see nothing to lose by waiting other then letting some knifecatchers get a 8k credit on home that's at least 10% overvalued.

Bon Apetite babies.

Diggin Deeper said...

"I've come to the conclusion they don't exist."

Not true DJ, they do exist if only on the fringes right now. In this market you'll need one if you're truly going to buy. Your chances of doing a deal on your own are pretty slim without one...good or bad.

Just getting to an accepted offer is as frustrating as DJ2010 explains. The agent is just half the effort. Without a strong listing/comp database, the process will frustrate the hell out of you. The quality of those databases vary from agency to agency. Make sure the agency you choose has real time listing data and not something that gets update over a 24 hour period. The home my wife sold this week had it's listing up for less than an hour before the first 3 offers came in. Within a 24 hour period, the home was pending. This occurs more than most want to believe, especially when those "too good to be true" teaser prices show up.

My suggestion would be to try and find an agent who doesn't need RE as a source of income. Not a part timer but someone who's in it because they enjoy it. They're out there and they're not desperate, needing 6 or 7 escrows per month, in order to maintain their vanishing lifestyle.

When you deal with someone who HAS to make house payment, car, boat, college tuition, they're in it for one survive...and survival methods might require one to do whatever's necessary to meet next month's requirement...even compromise on ethics if need be.

Do yourself a favor...interview agents as if they were interviewing for a job...because they are. Get the names and phone numbers of last three transactions the agent has completed. Call them and interview them because they'll be able to tell you about the agent from an independent viewpoint.

When you find a good one, expect to be frustrated, frazzled, and disappointed with today's process, but remain vigilant... you will eventually succeed.

Deflationary Jane said...

Sorry DD. I wholeheartedly disagree. I'd say more but I kinda like you even if you are one of 'them' >; )

DJ2010 said...

Well said. Makes me feel a little sad for my former agent if in fact that’s what she’s experiencing. One has to be compassionate toward those who are less fortunate, especially in this economy. She was a very nice lady, didn’t seem like a bad person at all. I actually informed her about that particular property a couple weeks prior the listing. I wouldn’t be surprise if she gave it to another buyer for whatever reason. She hesitated when I told her we wanted to go see it. Maybe she never even tried to present our offer. No worries though, there will be plenty of other homes. We just won’t buy one from her.

Now you sounded just like Suze Orman, who by the way is my favorite financial expert. Great advice, except we exhausted the entire interview process and ended up thinking we picked the best agent with Lyon. References definitely help, but one situation is different from another. Still, it’s better off having them than nothing at all.

Diggin Deeper said...

DJ...actually I'm an observer more than anything on the ground, if you will, that believes this market is still froth with wife and I are playfully at odds about this market and will probably remain so until we truly find a bottom. I get to see the insides of the agency process, mingle with the people, get real time war stories, and deal with her frustrations, completely from an opposite side of the table.

I'm not suggesting anyone buy right now, but those that do can (and will) find plenty of disappointment. They've been led to believe that, since it's a buyers market, they ought be able to dictate the rules. It doesn't take long before that abruptly changes... it's a banker's market with banker's rules, and they are not prone to understand the emotional ups and downs of the prospective buyer.

So I guess I kinda like you too...At least your voice has been consistent and your position unwavering >;)

Diggin Deeper said...


Keep in mind that market is probably moving at a greater speed now, than when we were on the upswing, especially when the price point is $300K and below.

Your 20% down and a high credit score don't necessarily give you the pick of the litter. From what I've observed, it's fickle and every deal is completely unto itself. Contigencies or waiver of contingencies, inspection requirements, closing cost assistance, etc. all play roles of different importance on each seperate property. On one recent short sale, that was listed by my wife, the negotiator came back on the accepted offer wanting to include a small percentage buydown to pay for non-recurring expenses (electricity, water, etc.) Who would have thought that seller's negotiator would actually want the offer amended to cover these costs?

That said, all is not what it appears out there...the variables, and how they line up with the banks, may mean more than bloated offers, 20% down, etc

DJ2010 said...

This is no doubt a buyers market, if only Realtors would stop the lies and deceits. Banks can set their rules, but ultimately they still need Realtors to sell the properties. They’ll lose less or might even recoup some of their losses if Realtors do their jobs properly by allowing this to be a free market. Judging from some activities they’re obviously engaging in, I’d say it’s real tough for banks to win, let alone be in the driver seat in this market.

There probably are good Realtors out there, and we definitely need one of those if they exist. While I despise Realtors who are deceptive by their own nature, I can sympathize with those who feel they must do what they have to in order to survive. Maybe they have children and families who depends on them. Let’s be real, haven’t some of us (at one point or another) in our lives find ourselves in a situation where we have no choice but do what’s necessary? I certainly have. I would tell you about how I struggled to put myself through college, but that’s a different story.

BTW, short sales are not worth my time. We all know the reasons why. Beats me why anyone would waste their time on them. We’ve been saving for five years. We make the entire purchase (on a smaller home) in cash if we want to, but I know better than to be that follish in this economy ^_^

DarkMatter said...

LOL....what a BS story. I wonder why they didn't mention the thousands of homes the banks are hiding and refusing to list. When that shoe drops, you will see many, many sub 50K homes.

DarkMatter said...

We are witnessing the biggest pump and dump in history, and the banks, White House and media are all complicit.

Ask yourself, How can these recent headlines be indicative of a recovery?:

"FED sees bank losses of $559 BILLION."

"Unemployment highest in 25 years."

"Banks need $75 BILLION more"

Fannie Mae asks for $19 BILLION"

Chrysler files bankruptcy, Won't pay back Government aid."

Some recovery......

paranoid renter said...
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paranoid renter said...

Market will be in recovery when:
- People stop reading housing blogs.
- Nobody wants to own a home for its investment value.
- Employment has stabilized.

The last one is the most important. As long as unemployment keeps going up, there is absolutely no chance that housing will stabilize. In fact, housing is usually a laggard in that it goes down after unemployment starts rising and it stabilizes/goes up only when unemployment starts falling.

Of course this time around housing prices started falling even before unemployment went up which is a bit of a weirdness.

The most optimistic predictions call for unemployment to stabilize/go down in 2010.

There is absolutely NO WAY that this is the bottom.

paranoid renter said...

There are so many homes in Granite Bay showing up for 300K-400K. I'm watching closely for something near the lake...if something shows up I'm going to be very tempted, as long as the place doesn't look like it has been abused.

Jacob said...

- Employment has stabilized.

The last one is the most important. As long as unemployment keeps going up, there is absolutely no chance that housing will stabilize.
I agree, I have posted that as one of my main indicators of when it will be a good time to buy.

Without jobs there is not bottom to how low home prices can go.

500k job losses a month (or worse) is terrible news. And there are no signs that we will add jobs anytime this year. Sure this month's job loss numbers were lower than the previous month but still way too high.

Shadow inventory is another concern. All it takes is one bank to capitulate and flood the market and everyone gets bloody.

Foreclosures are also still too high and the reset / recast chart shows a lot of Alt-A problems coming soon to a market near you.

Sales are up, sure, but 50% or more are to investors. Some plan to rent some plan to flip. I think both will get burned as rents fall and prices continue to fall.

I am still looking for that perfect home. But will wait until the $8k credit expires and see if the job numbers are trending better next year.

Diggin Deeper said...

Imho, our real estate market is at the mercy of the banks that will either succeed or fail over the next 12 months. Make it more interesting by adding in failed auto companies, bleeding GSE's, defunct states, and falling tax revenues...

The stress tests and the outcomes are laughable. When you consider that AIG was given an initial $50 Billion bail out, and then told to raise capital on the open markets. They tried, coming back hat in hand, and now we own them to the tune $165 Billion with losses still mounting.

Sound familiar?

That's the same solution given to banks that now need $75B to make it through this downturn. Kind of like using a chocolate cake recipe to make an apple pie. It just doesn't seem to turn out right. Banks have been told they can't come back to the government for more? We'll see.

We're getting strung along in a dilution game spreading the waste products out over a longer period of time into a greater body of water. The hope is we'll end up with harmless trace elements sometime in the future. It's all based on an assumption that the body of water is infinitely larger than the waste it has to dilute. A simple search, to determine the worldwide value of those toxic assets, will give one an idea of just how large that body of water has to be.

patient renter said...

it's a banker's market with banker's rulesExactly! Wouldn't I love to hear that on the NAR commercials :)

HOUSE2008 said...
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HOUSE2008 said...


Well, I could recommend one SMART realtor. Deborah Stasfford with Keller Williams in Rosevile. I'm not one to judge people on character but instead watch what they do. Several thing impressed me. She's on the ball. She continuosly proded the sellers for progress & even at one point offered to do their job! The reason: They seemed to lose the paperwork every week. Anyhow, the owner got wind of it & the seller agent & secratary were fired. The Owner of real estate X to his credit got more done in two weeks than the last 3 months! Basically Deborah went up the food chain till things got done. She made them pay for the % rate lock that expired. Their incompetence.
The DAY after this house was appraised the hvac was stolen! She contacted Wells Fargo & they agreed to replace it. 5K right there. Then on the HOA dues. On the mls web site it stated monthly dues as $130 a month & in the good faith estimate it said $130 a month. I called the HOA management & was told it was $250 a month. That was a deal breaker. Well, she again contacted W/F & told them to pay for the next 5 years. They agreed to 3 years & wrote a check for 6K. (I'll have various raises to cover this in the next 3 years thus the improtance of the monthly dues.) So there you have it. My two cents on her performance. She'll definately be on your side...

DJ2010! said...

She sounds like a miracle worker. Thank you kindly for the recommendation, and congratulations on your purchase. We’ve decided to wait out ’til Fall to start looking again. In the mean time, we’ll use the opportunity to revisit our interview process as well as gather info from others’ experiences. Let’s see if we can’t find a better Realtor that way. We’re hoping to find a local agent here in Elk Grove but if not, we’ll be sure to check out Ms. Stasfford in Roseville.

What I’ve shared about our qualifications are very conservative figures. Some of us actually know how to manage our finances and live within our means. My husband and I are still very young. We have absolutely no debt, and we choose to drive reliable vehicles that saves gas when we can easily have Mercedes. Obviously, we can buy and move into a McMansion to impress others, but what good will that do for our children’s futures? We choose to live conservatively not only for ourselves but for the security of our children and grandchildren (if we’re someday lucky enough to have them).

patient renter said...

DJ2010 - Good on'ya. Hopefully things will be more clear come fall.