I was up in Novato again. Driving through Hamilton, one of Marin's "specuvestor" havens, it's clear the place is up for sale -- in this photograph (I remembered to bring a decent camera with me this time) you can see no fewer than 12 "for sale" signs and one garage sale sign; I've never seen so many at one intersection.Do you have any weekend observations to share? Pictures? Open house experiences? This would be a good place to share them.
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Dateline: SACRAMENTO SUBURBS: This weekend I went to look for a rental house where hundreds of Flippers have purchased homes in the last few months. They entered into escrows over 8 months ago, and have been closing deals in the $650,000 to $800,000 range in Lincoln, CA (Sacramento area north of Roseville along Hwy 65). They all purchased these units to flip, as many have done before, making $50,000 to $150,000 for very little work. Unfortunately, they have taken too big a risk this time, as the market has collapsed in Northern CA.
The builder, JTS Communities, had a "Blow Out Special" this weekend, to dump unsold inventory, before the selling season ends. Houses that fell out of contract have been put back on the market at $100,000 to $200,000 below where all the Flippers purchased.
It is Absolutely Astounding! Even the Flippers willing to sell their units at a loss of $75,000 from their purchase price 3 weeks ago, are being under sold by the very builder from whom they purchased the house. Undersold by 100s of 1000s of dollars!!! It is Brutal. with a capital "B".
Get this: The rental market value: $1700 to $2,000. Carrying costs for Flippers: $5,000 to $7,00o/month. Taxes (1.15%), Mello Roos assessments ($350/month), HOA dues ($120/month) and the 1st and 2nd mortgages are going to eat them up like the Aligator Condos in Florida. And the prices they paid. Already 20% over the NEW market, established yesterday, with another 20-30% still to drop over the next 2-3 years.
JTS clearly got tired of these Flippers leveraging off their work and beat the Flippers at their own game. It is an amazing site to behold. Max, at Sacramento Real Estate Statistics made the initial call on July 17, 2006. Check it out at http://sacrealstats.blogspot.com/2006/07/report-on-estates-at-lincoln-crossing.html
Too bad none of the Flippers were reading his blog. They could have saved themselves $250,000 in losses over the next 2-3 years.
Desmo, There are many "fake" auctions going on now. I attended one a few months ago. Minimum price advertised 35% under "appraised value". "Instant equity opportunity". The whole program was run by some scammer, who "bought" part of the home, so no sales license or DRE oversight. You bid during the day in writing, then he calls all the bidders back that evening, working the "bids" up to a point he finds acceptable. Big fake.
I didn't get out much this weekend, but from the couch I was just today commenting on the price shift that I've noticed in the MLS listings I get. Four months ago, the 3/2's in Vacaville area were all hovering around $410-$420k. Now, they come in pretty consistently at $380-$390k. Still overpriced, but a welcome reprieve. A $30k drop is a start... And there are some that are listed/reduced even lower. So, I am content to sit it out a little longer and wait for another $30k or more.
I was up in Marin this weekend, and startled by how many open houses were listed in the Marin Independent Journal yesterday -- 70 in Mill Valley alone!
I've been tracking inventory here in Santa Monica* (SFRs < $3M doubled from 35 as of 4/21/06 to 72 now), in a city with six times Mill Valley's population.
(*Updated weekly at http://www.blogger.com/comment.g?blogID=16601147&postID=115202211468115081)
Is it customary for listings to have open houses nearly every week (unlike Santa Monica), or does that show desperation?
I drove through Mill Valley yesterday and there were For Sale signs all over the place. I think there were six at the corner of Miller and Montford (2AM Club) alone. Guess Mill Valley isn't such a Zen paradise anymore, hmm?
Sacramento Bubble Sitter said..."It is Absolutely Astounding! Even the Flippers willing to sell their units at a loss of $75,000 from their purchase price 3 weeks ago, are being under sold by the very builder from whom they purchased the house. Undersold by 100s of 1000s of dollars!!!"
In these cases, the builder definitely has the upper hand: He is selling a brand new house -- at a greatly reduced price -- and is probably also offering special financing deals.
This is very similar to new car pricing. Rebates combined with 0$ down, 0% financing for 72 months, make buying a new car less expensive than buying a used car.
Yes,
I saw something that was absolutely insane. You are all probably very familiar with the "learning annex", a company that simply goes around diffrent cities with random famous people and former politicians to preach the virtues of Real estate investment and instant wealth. They typicall have loud billboards on the freeway that say: " Real estate wealth expo!" or something like that.
Anyhow, I was driving past the Oakland Collisium this weekend and noticed a huge billboard that says:
"Profit from the Real Estate Shakeup!" On the very bottom was a logo for the learning annex.
This is made all the more remarkable by the fact that less than a mile up the freeway is another learning annex billboard that says: " Real estate wealth expo!" So in essence, one company in the space of less than a mile has 2 billboards with totally opposing views on the same subject. Absolutely amazing. One clearly appeals to people that think RE is bulletproof and they can simply buy some homes to flip for a quick million. Another is for people that think the bottom is about to fall out.
All it did to me was make me realize what worthless weasley scum some of these people are that are in charge of some of these things.
"Guess Mill Valley isn't such a Zen paradise anymore, hmm?"
Right--only a paradise for zen-wannabes, while most people stress over the cost of living.
Phoenix, and they began to brag about how housing is still on the rise there
Judging from the articles being published the last couple of months about the Phoenix housing market, I would say your contact is a liar.
I was blown away by a full page Coldwell Banker ad in the Sunday IJ. Did anybody else notice anything interesting about this ad? I have never, ever seen anything like this before in the real estate section. The full page color piece did not list a single house for sale--- not one! On the contrary, they were advertising their BUYERS! "We have buyers," they bragged, "call us if you are thinking of selling." Has anybody ever seen this tactic before? I have not, and think that this is a certain sign that things are about to get very ugly...
Interesting. As I won't pay money for the IJ, I didn't see it. Any chance you could get that page scanned so that we can post it here for posterity?
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