Wednesday, October 31, 2007

Boo!

Monday, October 29, 2007

'It's Just a Flesh Wound'

The extraordinary level of housing denial documented here in Marin has attracted the attention of at least one SoCal blogger.


Again, why do I even bother? It's fanaticism, plain and simple.

Sunday, October 28, 2007

Third Date

Bond-based funding of what we want now but can't afford, Prop 13, the housing bubble, a debt-based economy, housing prices that are only ever allowed to go up... is this what our children have to look forward to?

Friday, October 26, 2007

Better Start Stockpiling the Kool Aid

Let's see. Home owners in Marin are getting their property re-assessed at a record rate so as to lower their property taxes (when was the last time you could do that?). Foreclosures and defaults in Marin are "spiking" even in our strongest and most "immune" market of Tib\Bel. Price drops and ridiculously long days-on-market statistics are common. Sales are the lowest they've been in the last 12 years. The housing markets are getting "exponentially worse"; the current down-turn is already worse than it was in the 1990s (oh, but we are only just getting started...and don't forget that the economy is doing just dandy according to the official spinmeisters; my realtor said so!). And did you notice? A real estate agency cannot hide a disturbing fact: the median sales price and the average have diverged, at the very least confirming what we here have known for many, many moons:

What could it all mean?

And what about this:

And here is a glimpse into your housing future and that you have no doubt already seen somewhere else on the net:

Why do I even bother?

"These aren't the droids you're looking for... move along."

Monday, October 22, 2007

Sick

A reader sent me this:
"Roger guesses the house is worth 10 percent less than it cost to build--and he's worried its fall has just begun. "I have personal angst," Elliott says. "Yes, I built this fantastic house. My wife loves it. Everybody in the neighborhood thinks it's great." But it was a house built for appreciation. Now that prices are falling, he wishes he'd built something far more modest."

story: http://www.newsweek.com/id/52608/

And, check out this journalist following her house price like a stock:

This summer New York Times columnist Michelle Slatalla described how she had begun checking the value of her Bay Area home (using sites like Zillow and Cyberhome) every few hours. In a recent two-month period, the Web suggested her home had lost $92,248 in value. "I really, really need every tiny bit of information I can get about managing my biggest investment,"
Sick. Just sick. Houses are places to live and raise a family, not investments, not to be treated like stocks, or at least they shouldn't be. I know I am naive. But I feel terrible for all the people who just wanted a decent place to call home, a place to raise the kids, and yet who have been priced out and/or over-extended with crushing debt due to the aggregate behavior of these sick, greedy specuvestors. This is why investment in houses should be curtailed in my naive point of view.

Sunday, October 21, 2007

DOJ vs. the NAR Moving Right Along

I blogged this before. But oh, God! I am beaming from ear to ear. When I saw this mentioned over at Keith's blog I couldn't help myself. The US Department of Justice (DOJ) investigation of the National Association of Realtors (NAR), vis-à-vis their anti-competitive, monopolistic control over the MLS, is moving along quite nicely. Here's the anti-trust complaint (pdf). You can find a list of links with the NAR's asinine rebuttal over at the realtor.org site.

In my opinion, any and all listings should be equally available to every prospective buyer whether they use an agent or not, whether they use the internet to search or not. Ownership of such a listing should not be claimed by anyone. The bulk of the realtor's argument seems to center around the idea that the MLS consists of their (the realtor's/agent's) listings and as such they should have the right to control who has access to their listings. I think it is about time that realtors/agents remind themselves of who it is that they actually work for. If I was a seller I would want to be 100% confident that my listing is fully available to everyone and not just a network of traditional agents.

Like one agent said:
[the] NAR better be careful and change its curmudgeonly ways or it will be thwarted and become even more irrelevant than it already is.
So the lying, manipulating, unethical, lobbying, monopolist, commissioned scum at the NAR are going to get their due. And I hope it trickles down to every agent in America. The closer we get to returning the RE market to an open and free market, the better.

Saturday, October 20, 2007

Here's to Your Depreciating Pied-à-Terre



Thursday, October 18, 2007

DataQuick's September, 2007 Results

By now those of you who care already know just how bad the sales results were for Marin for September, 2007 according to DataQuick. If not, you can see their chart here.

And in case you don't appreciate just how anemic sales were this past September, I refer you to the following chart of DataQuick sales data for all Septembers in Marin since the go-go, heady days of 1995:

You can see from the above chart that September sales in Marin peaked in 2003, held steady until 2005, and then fell off a cliff. In fact, sales this past September were the lowest they have ever been since DataQuick started reporting data. And we are only just getting started with this bubble blow-off...

What happened in 1998 you might ask? Good question. I have no idea. That data is missing from DataQuick's site and the WayBack machine didn't have it cached either. So I guess September, 1998 never existed although I seem to distinctly remember it.

What Rob Dawg said:
Another thing for potential sellers to consider. This isn't polite and it isn't easy to hear and it isn't good news. It is almost a sure thing that the buying person and their agent are smarter than you and your sales agent. All the stupid people already have houses. Any stupid people left houseless or just not stupid merely newly in the market to buy are not going to be qualified buyers for a long long time.

These are hard truths. If you as a seller today knew then what you know now you would have sold in Spring '06 right? Okay, you accept that you aren't the smartest guy in the room. Now, anybody who can buy today was certainly able to buy in Spring '06 right? See the problem? The only way you can sell to the people who are buying now is to give them a deal that is homage to their skills.

Tuesday, October 16, 2007

But, But...

This quote from a recent SF Chronicle article is just too good to pass up:
But even in expensive areas like Marin County the crisis is beginning to be felt. One of the Bay Area's highest-priced ZIP codes, 94920, in the tony Belvedere/Tiburon area, was home to nine foreclosures - including a $1.3 million "Bel-Aire tract home" with "floor-to-ceiling windows ... and French doors leading to the pool."
In "tony Belvedere/Tiburon" I count at present:
  • 1 bankruptcy
  • 7 preforeclosures
  • 7 foreclosures
  • 55 tax liens
I thought this couldn't happen in Marin, certainly not in south Marin, because, as we are told, everyone here is wealthy and making big bank. You know, because we are so wealthy we don't need to take risky mortgages. But Belvedere/Tiburon? One of the most excusive if not the most exclusive and strongest real estate market in Marin? Say it isn't so! If the local real estate mythology is true, if my realtor/agent says so, if she researched it, how can there be any distress there at all?

Bel/Tib: you are not part of Marin 2.0. So sorry.

Saturday, October 13, 2007

A Couple of My Favorite Marin 1.0 Houses

I love watching the "selling" activity of the above San Rafael house. The highest official listing price I have seen for this house was $884,000 in mid-2006 (yes, it's real DOM is that long). So if it were to sell at its current asking price that would be a price reduction of 33%. However, I am fairly confident that at the bubble peak this house could have sold in the low $900Ks and so the true price drop is probably greater than 33%.

* * *

And by the way, this lame 2 br, 1 ba, 699 sq ft, built 1923 POS in Mill Valley has changed listing agents once again and is now listed as "For Sale with Lease Option" (click the link to see the posting history of this house on this blog). This one is a classic Marin flip that flopped -- bought, remodeled, and then put back on the market all within a 5 month span. It is currently listed at $575,000 and it's DOM has been reset to just 4 days. So that is a 23% drop in asking price and a real DOM of about 660 days.

When I first came across this listing on December 18, 2005 the sellers were asking $745,000 or $1066/ft^2. Many price drops later it then languished on the market (seemingly forever) at about $639,000 which is roughly the owner's break-even point (about what they owe; I dug up their loan info). So I wonder what has changed to allow them to drop the price significantly below their debt level? Are they now in the process of capitulation? Or do they think the "lease option" significantly changes the financial situation for them? Would you buy or lease this house at its current wishing price?

This house is in one of the worst locations in south Marin -- it's in Tam Junction, right across the street from a 7-11. Every winter a large pool of water forms in front of the one car garage which can only be accessed by driving around the block on the other side of Shoreline Hwy and then crossing over Shoreline so as to achieve the proper angle to enter the garage. Furthermore, when leaving the garage you then have to back out on to Shoreline and pray you don't get hit by a maniac speeding down the road. Given this, the garage is really nothing more than a storage shed; I guess you can always park at the 7-11.

The sad fact is that during the bubble people really were willing to pay stupid prices for crappy houses like this one. It is somewhat comforting to know that mindset has changed, even in south Marin.

* * *
Many of Marin's housing markets are suffering and houses are in the process of being "marked to market". Since people who like to believe that the real Marin is special and immune to market forces ("marked to myth" as Warren Buffett recently said), I think it is time to divide Marin up into "Marin 1.0" and "Marin 2.0" (obviously, I'm referring to the farcical "Web 2.0/God-let-there-be-another-internet-bubble"). Most of Marin is now or on its way to becoming Marin 1.0. But places like Tiburon/Belvedere, south Sausalito, certain parts of Mill Valley, Ross and Kentfield are still doing pretty well and so are properly classified as Marin 2.0. Or perhaps it is simply sufficient to say that the luxury home market, regardless of its actual location, is Marin 2.0 and everything else is not. What do you think?

Friday, October 12, 2007

Cows to the Slaughter

The SF Chronicle ran this story in today's business section about the tripling of Bay Area foreclosures:
Foreclosure filings across the United States nearly doubled last month compared with September 2006...

Foreclosure filings in the Bay Area tripled in September compared with a year ago.
The data for the following chart came from the Chronicle's graphic for the above mentioned article; I just added some info:

(Click on the image to get a larger view.)
You might think that a tripling of foreclosures is big news. What did the Marin IJ run on the front page of their web site today? Why, an article entitled "Here's the beef: Marin's best hamburgers".

* * *
Update 10-13-2007: I saw this in the Marin IJ today (a day late and a dollar short):
The number of foreclosures is rising in Marin, with defaults almost quadrupling in September over a year ago, but the number of properties in distress remains relatively small. The same isn’t true for counties like Alameda and Contra Costa, where the numbers are significant...

Valerie Castellana, president of the Marin Association of Realtors, said she expects to see increases in defaults and foreclosures in Marin but added, "We are blessed to have the default and foreclosure numbers so low compared to other Bay Area counties."
Uh, Valerie, according to the 2000 census Alameda has a population of about 1.4 million and Contra Costa is at roughly 950K; Marin's population is about 250K. So of course Alameda and Contra Costa's absolute numbers of NODs/foreclosures, etc. are higher than Marin's. That's why you look at rates of change, percentages, etc... to factor out population differences when comparing across counties. When you do that you find that Marin is really no different than any other Bay Area county, which of course is the point. (Also I should mention that what really matters when comparing is not the county population per se but the number of houses that are actually for sale in that county.)

What spinmeisters are Marin real estate agents/realtors and what a tool is the Marin IJ.

Wednesday, October 10, 2007

Some September, 2007 Data

Insanely busy at work.

I recently received some data from a realtor acquaintance of mine. According to her, for SFRs in September, 2007:

Needless to say (so I'll say it anyway), a year ago and more the percentage of SFRs selling below the asking price was essentially 0%.

Marin Market Heat Index stuck at a pathetic 0.33.

Recall that the Index is interpreted as so:

Saturday, October 06, 2007

Home Owner Temper Tantrum

I first saw this Inside Bay Area article over at Ben's blog and was aghast at how spoiled and entitled some home owners are; it reminds me so much of the motivations behind much of Marin's NIMBYist ways -- to protect property values at any and all costs.

Apparently, some Greater Fools who bought houses in a prestigious housing complex are staging protests against the developer and demanding that the developer pay each of the current owners a $20,000 rebate. Why? Because the developer is unable to sell any more of the houses for bubblicious prices and so are auctioning them off for whatever price they can get. As a result of the auction, the current owners expect the values of their houses to drop by "hundreds of thousands of dollars."

So in other words, the people who already bought these overpriced luxury homes expect, no, demand that prices can only go up and if they don't go up, then they were "obviously" misled and so are victims and thus entitled to compensation. Give me a break!

For perhaps the first time ever, I am in agreement with a developer who in this case refuses to pay the rebates and reasons that if the houses had spiked in value before the current owners had finished escrow on their houses, would they be willing to pay the developer an additional fee to compensate the developer for the increase in values? No, of course not.

Look, if you leverage yourself to "buy" a house with any expectations at all on the future price movement of the property, if you even so much as care or make plans based on what the future price movements of the house will be, then you are an investor and/or a speculator. Investments are not guaranteed to appreciate; by investing you are taking on the responsibility of the inherent risk and implicitly acknowledge that risk the instant you sign the contract. Buyers are not obligated to bail you out of your expensive lifestyle choices, your debts, or your poor financial decisions.

Here are some choice quotes from the article:
Despite an initial setback, outraged homeowners in the upscale Paseo West subdivision plan to continue their informal protest against a developer planning to auction off 34 brand-new homes.

Upon learning of the auction, the subdivision's 26 owners became infuriated — upset that the auction would lower property values and turn the neighborhood into a rental community... The consensus from homeowners is that the auction will undercut property values by hundreds of thousands of dollars and that the current tight credit situation will mean only investors will participate in the auction, and would rent out the homes.

Following a meeting last Friday with Barton, homeowners crafted a letter asking Anderson Homes for a $20,000 per owner rebate for their property.

On Wednesday, homeowner Dave Cantrell — the de facto leader of the protest — received a response. In a letter via e-mail, Anderson Homes president andowner Larry W. Anderson said he was "perplexed" by the rebate request.

"In nearly 25 years of building homes, I have not asked a homeowner to pay more for a house when the value increased," he wrote. "Housing is cyclical and values will fluctuate as history tells us. Housing has been hit especially hard this cycle due to the financial market crisis and large number of foreclosures."

Tuesday, October 02, 2007

Owners Face Selling at a "Loss" Now that the Housing Bubble has Burst

Nothing but boring and utterly predictable news in the world of housing these days. Hence, no posts. So I guess I have to post this, now old, article from the SF Chronicle.

These poor saps buy a house in American Canyon, in south Napa, for $424,000 and find that they cannot sell now for their wishing price of $925,000. So they have to "sell for a loss" at $868,000. Sheesh! I'm sorry, but selling for $444,000 above your original purchase price is hardly selling for a "loss". Now, they did put in "upgrades" but I seriously doubt said upgrades totaled anywhere near the $444K. Of course, like idiots they could have also HELOCed out their phantom equity and so may in fact be SOL.

At least the article mentions the fact that, with the possible exception of during the unusual years of the housing bubble, you don't normally get back in the sale price what you paid out for upgrades... a point that most sellers would do well to remember:
The trouble is, upgrades for one family are renovations waiting to happen for another family..."Upgrades are very difficult to value," Barker said. "So much of what people do to their homes they won't get a return on."
I fully agree with this reader's comments on this ridiculous couple's situation:
What's amazing to me about this article is what it reveals about people's perception of a "loss." If you read the article, you learn the couple paid $424,000 in 2001, and now they're bracing themselves for a "loss" when they sell for $825K-$868K. The couple "declined to say" how much they spent on upgrades.

Either of the two ways they're defining this to be a "loss" is nonsensical. It seems like their perceived loss is the fact that, at best, they will be selling for $100K less than they could have sold a year ago. No loss there. As far as the upgrades, that's silly as well. If you spend money on maintaining a car, the amount of money spent is not simply added to the value of the car. Ditto for granite countertops, or most other expenditures on a home, other than those that add square footage.

It just boggles my mind. If people are whining about "losses" now, think how psychologically ill-prepared people will be when they face real losses, i.e., selling their home for less than they paid. We've got a long way to go.
Look, it's not going to get any better any time soon; only worse. There is no way a significant majority of people are going to pay (let alone be able to pay) the fantasy pricing we've "enjoyed" over the last few years now that easy credit is history. Not now, not when significant down payments, documented income, mortgage payments at 30% or so of income, etc. become the norm again. Hoping for the days of easy credit to return is just wishful thinking. And don't even get me started on the rising interest rates on mortgage loans. So deal with it. The sooner you do, the less your "loss". Or take your over priced POS off the market and give those who are serious about selling a break.

Or, you could be like the following Mill Valley sap who has been trying to sell his house for essentially two years (it's amazing that they never bothered to play the relist game and get that DOM reset; either they are very arrogant or very respectable). My guess, knowing a lot of South Mariners, is that they are arrogant and feel entitled to getting near that bubble peak price. It will be fun watching this house over the years:


Looking at that above house, it seems really nice. The write-up (not shown) certainly sounds wonderful (but don't they all?). You would think that this house would sell in a heartbeat as it's a South Marin wannabe's wet-dream-come-true. So what's wrong with it? Must be the price. But given that the sellers seem to be willing to knock $100K or so off the wishing price each year, it should be marked to market in, oh, about five years.

Clearly, we are still in the denial phase. Sad. So very sad.

Thanks to the reader for sending me the link to the Chronicle article (I had seen it before) and kicking my lazy arse back into blogging.

PS - By the way, I'll share an anecdote with you all. I was up at the Novato Target the other day (because I am too cheap to pay South Marin prices if I don't have to) and guess who I saw working at a cash register? A former Marin real estate agent acquaintance of mine. How sweet it is! I didn't have the heart to ask if she still had the leased Lexus.
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