Monday, May 05, 2008

When You're Hot, You're Hot...

And when you're not, you're... 0.42 it seems:


Blogger mountainwatcher said...

The Marin market is cooler than ever.

I'm wondering how long it will take for this to filter down to more realistic prices.

I'm seeing some softness, but I'm also seeing some really bad properties selling at asking or above.

What is going on here?

Can you believe I just had a RE agent just tell me that this is a great time to buy?

May 6, 2008, 1:59:00 AM  
Blogger bob said...

I have to say that I'm seeing some weirdness of Alameda too. Absolutely nothing was selling for over a year. But in the last month, just about every home that has gone up along the main drags of town have gone to sale pending. These are typically in the more desirable parts of town like the gold coast, etc etc. It seems like these are all in the same price range too, as in 550-600k, which is only slightly below what the asking prices were last year.

I've noticed one house that sold literally less than a year ago in the Gold Coast area is now for sale again. Homes there are usually at least 800k-1 mil. On the other hand,there's also still an awful lot of homes that have been for sale forever that are still for sale. These are still at what I consider to be peak bubble prices. One has had "price reduced" on it forever.

My take on it is that the average buyer is only aware of the market from a very shallow perspective. ANY reduction in prices, even if the reductions are minuscule probably has a number of early knife catchers jumping in at the first sign of weakness.

I have to admit that seeing this is frustrating because it might simply slow the slide more.

None of this matters anymore to me personally since just a few weeks ago, I decided that bust or no bust, I'm through with this area and as soon as I've saved up enough to sufficiently pad myself to buy elsewhere and put the rest in retirement, I'm out of here because I can't stand the attitude here anymore, nor in most major metro areas for that matter.

May 6, 2008, 7:51:00 AM  
Blogger Alarming said...

Recently I have recived an increase of houses for sale notices by emails. Plus a lot houses are reducing at least 10% by their asking prices or already reduced asking prices. Driving through some major streets on Sundays, I could see a lot for sale signs. Very few houses got sold by my email notices. This probably explains why heat index reamins low.

May 6, 2008, 10:45:00 AM  
Blogger susan said...

I actually thought the heat index would be higher. In southern Marin (Tiburon, Mill Valley), it doesn't seem like there's much on the market - but clearly no bargains either. I still can't believe that buyers are stepping up and paying these prices. They must come down (right?). The differential between Marin and San Francisco versus the rest of country is growing to what must be unsustainable levels.

May 6, 2008, 5:47:00 PM  
Blogger Holland said...

I just did a search on properties for sale in Kentfield, Larkspur, Tiburon and Mill Valley. There are more than 240 properties for sale including condos and single family homes in these cities. There are 288 properties for sale in San Rafael and 355 in Novato.

May 6, 2008, 7:14:00 PM  
Blogger bob said...

"They must come down (right?). The differential between Marin and San Francisco versus the rest of country is growing to what must be unsustainable levels."

That's the million dollar question that I believe all of us ( who didn't buy) are wondering. Logic would say that home prices will come down by a large margin in hot spots of the Bay Area. There is an enormous amount of downward pressure from surrounding areas. Prices are down well over 40% in the Central Valley, and as much as 50% in area like Sacramento, Fresno, and other exurbs of California cities. Some of this is impacting less desirable areas such as Richmond, parts of Oakland, and Hayward.

But the fact remains that I'm still not seeing a significant improvement in prices. It could be that prices were so insanely high that even with a 100k drop in the price of homes in a desirable area, it doesn't matter. A home that was 700k now with an asking price of 600k is still about 200k more than I'd feel comfortable considering. Even 400k is still double the national average.

In SF, they're down what- maybe 1.5%? In other words, things have just stalled there. We're into the bust now 2 years deep. Yet the correction I was anticipating has yet to happen nor even pick up sufficient momentum. This is incredibly frustrating, and even more so when I start seeing homes sell in my area. It shows that even though the idea that buying a house right now is BAD, people STILL buy regardless. They're like squirrels with cash. So the big question still remains: Will prices become reasonable here? Ever?

I have to admit that I've just about relegates this area as a lost cause of ever being realistically affordable to anyone not making at least 250k per year. So the best thing I can do is save, save, save and get outta' here when I've saved enough. Perhaps when enough of us young professionals leave, prices will fall because companies will be unable to find people to work for them.

May 7, 2008, 7:59:00 AM  
Blogger sf jack said...

The bubble was built over a decade and some of you expect it to "turn over" this quickly?

In Marin, disregarding the usual problems with using the median price to gauge the market, housing probably topped out less than 18 months ago.

So we have a very long ways to go before this whole cycle winds down.

And as far climbing up again? On an inflation-adjusted basis, the prices of 2006 are not going to be seen there again for years.

As in YEARS.

May 7, 2008, 10:11:00 AM  
Blogger bob said...

No, I don't think any of us expected things to correct overnight, myself included. But so far- at least in my hood- I'm not seeing any dramatic moves towards any significant correction. Prices seem to be coming down a little, but the prices themselves are still above and beyond acceptable.

The thing I'm wondering about is if the uneducated masses are simply 'guessing' the bottom versus doing something smart, like wait until the market starts to reverse itself before getting in.

I imagine many of them 'hear' from the radio, TV, or papers that now we're in this big housing bust and there's lots of foreclosures... hence NOW must be a ripe time to buy even though the prices aren't dramatically cheaper. I was talking to my Wife's Mom. One of her relatives was interested in buying foreclosures in Sacramento because he had 'heard' that you could get a deal on them. I told her what a bad idea that was since the only deal they could be would be if compared to prices two years ago. They are still overpriced even at a foreclosure discount.

Secondly, I am almost positive that the fall of the credit market means that anyone with less than steller credit, a lack of a large down payment, or the means to sell an existing residence would severe the legs of anyone trying to get in. I figured this would cut off the vast majority of buyers- even those who made good incomes. But again- there are quite a number of homes selling in my area, which seems to defy this obvious financial wall.

Again- it's frustrating. In other parts of the country, prices are down as much as 50% or more, and these corrections happened rapidly. The BA seems stickier.

To counter this though, I would find it almost physically impossible for the BA to NOT be affected by all the downward pressure now being places on it- huge price reductions in neighboring exurbs, a severe cut in credit lending, the negative news broadcasts and the escalating cost of fuel and the overall economy. Is it simply a matter of lining up the ammunition before the storm?

May 7, 2008, 1:16:00 PM  
Blogger marine_explorer said...

One of her relatives was interested in buying foreclosures in Sacramento because he had 'heard' that you could get a deal on them. I told her what a bad idea that was since the only deal they could be would be if compared to prices two years ago.

If there's an even riskier business model than flipping homes during a boom--that's it.

I imagine the 2008 trend for October will be scraping the bottom of the graph--as realtors scrape the bottom of the market for any livelihood: Lord of the Flies, Marin-style.

May 7, 2008, 4:20:00 PM  
Blogger mountainwatcher said...

I talked to a mortgage broker today.

He said that lenders are now requiring 20/30% down and strict income verification.

Is he right about this?

This should change the landscape a bit.

May 8, 2008, 1:36:00 AM  
Blogger bob said...

Yes, lenders are now requiring as much as 30% down payment and PERFECT credit for anything these days. Again- I could be wrong about this but if you look at the big picture, this pretty much knocks out the vast majority of buyers in the subprime heavy suburbs and exurbs as well as the 'hoods' in Oakland. Stockton, Manteca, Hayward, and Sacramento will get a double pounding by this because they have actual working class and middle class people living there who couldn't afford prices when they COULD get loans, and definitely won't be able to even qualify now.

I look at it this way: Even if the immediate inner core of the 'desireable' parts of the BA somehow defies gravity and retains its values for now, the dominoes have already been set into motion. Community after community on the outer edges of the BA will ultimately have massive price corrections. This will work its way closer and closer inwards until the very edges of what could be considered drivable by BA residents will start to have the effect of drawing away buyers from the core, which in turn will affect inward prices, working its way to the center until these external pressures affect even SF itself.

Again- unless the BA can defy physics, there is no way that I can see say- Hayward prices fall 40-50% and not affect nearby oakland, and subsequently Berkley, Alameda which is across the estuary from Oakland, or SF across the bridge.

May 8, 2008, 7:29:00 AM  

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