I decided to break in my new scanner with today's Chronicle's front page. You gotta love it... falling prices that is. After all, cheaper houses are a good thing; just like cheaper gas, food, cars, etc. are good things.Here are some choice quotes from the print edition of the article:
Like a brick falling from the top of the Transamerica Pyramid, national and local home prices are rapidly accelerating on their way down, crushing hopes of an imminent turnaround.He was shocked, shocked!
The cost of a typical Bay Area home plunged 17.2 percent year-over-year in February, compared with 13.2 percent in January and 10.8 in December...
"Prices have a lot of room to fall," said Patrick Newport, an economist with Waltham, Mass., research firm Global Insight Inc. "We could see some really big drops."
Stephen Levy, senior economist at the Center for Continuing Study of the California Economy in Palo Alto, said the early, enormous price declines in areas like Stockton and Fresno are filtering into the Bay Area.
"Even though we don't have the high foreclosure rates, housing is a market and prices here are connected to prices in adjoining areas," he said.
Michael Carney, director of the Real Estate Research Council of Northern California, said he was "shocked" that the Bay Area number fell as far as it did, but echoed Newport in saying the accelerating decline means the worst is to come.
LOL
No shock to us. So far it is, for the most part, going according to the script. And yes, the worst is yet to come... we are still waiting for Alt-A resets which are our time bombs. Furthermore, now that the "low end" is cratering there is room for that upper end to not just crack but cave.
And what about all those sellers who have taken their houses off the market, waiting for a better market environment? Unless you are willing to wait many years, you are missing out on the best it is going to get for a while.
Perhaps it is time to re-visit that prescient The Economist article from June 16, 2005. You remember, the one that featured this cover which seems so appropriate now:
And my thanks to reader Lisa for flagging this IJ article:
Marin Assessor Joan Thayer told county supervisors Monday her department could be overwhelmed if the number of residents seeking reassessment of their homes continues to rise. Thayer expects as many as 1,000 of Marin's 74,750 homeowners to request a reevaluation of their home's assessed value by the end of the fiscal year in June - a figure she said had "doubled and may have tripled" in the past year.And I must say, isn't it about time that our local media stops with the 'well, at least it isn't as bad here as it is elsewhere' misdirection?
10 comments:
When do you think prices may hit bottom - my rental lease is up in November and Im thinking about getting a place in Petaluma?
If she thinks only 1,000 of 74,750 are going to request revaluation she's not qualified for her job.
something like 8,000 houses have sold since late 2005 and nearly all are on the tax rolls at at sales prices that justify an appeal.
When will prices hit bottom? That's an un-answerable question. But there is a real good meter for determining when prices have gotten as low as they're going to go: Buy when appreciation just starts to return.You can't call the bottom. But you can call the near-bottom by buying after prices start to rise again.
I suspect that the bust will be very far from the bottom in November, if not for several more years at that. SO I think I'd be holding onto that lease a bit longer.
In regards to the article. I'm sure thousands of happy Bay Area homeowners flipped open their papers and scoffed at that article. " What- this happening to us... surely not- we're special!"
"But you can call the near-bottom by buying after prices start to rise again."
*****
Just remember that there are going to be some deadcat bounces in the housing cycle.
So buying when houses start to rise may not signify the market has passed "the bottom."
In fact, "the bottom" could be a rather long period (relative to those in the past) with little or no appreciation for years.
This was a monster bubble, so I would expect (and I could be wrong!) that the downturn is going to have some unusual characteristics relative to those seen earlier.
If I were johnny doe, I'd buy a house when I felt like it.
For me, that would be when my life circumstances demanded it (growing family, etc.) and when at the same time the premium to own was a lot lower than the ransom that it still is today.
I believe we still pay in rent around 50% of what a monthly fixed mortgage payment would cost us.
Though with declining house prices locally I suppose that figure is improving (rising) daily!
*johnny doe-
I have a very close friend in the industry. The issue now is getting yourself a loan. If you have to plunk down 15-20% of the price of the house for a down payment you're looking at over $100K in Marin for the average starter house. Unless you owned a house with that kind of equity, you're s.o.l. Psychologicly it's pretty hard to put that kind of hard earned cash down unless you "know" the market has hit rock bottom. Therefore I don't see any first time home buyers getting in right now or anyone who doesn't have substantial equity in their current home (which would be people who bought roughly 5 years or more ago). Only those who have loads of disposable income and are not especially attached to their money should attempt to buy in the near future. But all real estate is local. In other parts of the country this may be a great time to buy, but for now I'd wait and see in Marin. Sit tight, save your money and wait for everything to shake out. I imagine the bottom won't come for at least another year...but probably longer.
When I saw the front page of the Chronicle yesterday, even I was scared! And I don't even own a house anymore. Who in their right mind would be buying with headlines like that?
And with down payments becoming the norm again, who will want to pony up six figures for something without guaranteed appreciation in the near future? And think how hard it is to save these days anyway. Cost of living is through the roof with gas & groceries.
Thanks for the nursery rhyme. Did you have a point?
It is too complicated to explain. It won't happen again. I will take it down.
RON PAUL 2008!
Bettin' Time. I guess 4354 appeals filed.
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