The following graphic, also from DataQuick, shows that Bay Area prices are down almost to the peak of the last, normal, housing cycle (2003-04 timeframe) from which the recent housing bubble launched prices to the stratosphere. So it seems reasonable to wager that we have much further to fall:
The SF Chronicle had this (and this) to say:
The percentage of households able to buy an entry-level residence in the state reached 48 percent during the second quarter, double the level from a year ago, according to the California Association of Realtors. The Bay Area remains the least affordable part of the state, but 32 percent of its households can now afford a first home, up from 18 percent during the second quarter of 2007, the report said.Now is that affordability calculation based on the one using your new method (which is now invalid given that it depends on the existence of the loose lending standards which got us into this mess, almost nothing down, non-fixed rate loans; refer to item 14 in the linked-to post) or the traditional method?
Andrew LePage, an MDA DataQuick analyst, said he thinks the bottom is not imminent - and is unlikely to usher in a quick turnaround. "Recent history suggests you could be looking at at least two or three years of price stagnation," he said. "It’s looking like the bottom will feel more like a bog than something you just bounce off of.""The bottom is not imminent"? Now there's a change of tune.
I know I should not give that hack, Leslie "over my dead body" Appleton-Young, any of my attention, but:
"People are off the sidelines, stepping in, trying to gauge the bottom of the market and feeling that, even if this isn’t quite the bottom, it’s looking great," said the group’s chief economist Leslie Appleton-Young. "They’re able to get into something they never thought was possible a year or two ago."Sorry Leslie, at the moment those "knife catchers" are mostly in places like Napa where people are buying the discounted houses thus solidifying the new (lower) price structure:
Sonoma County’s summer home sales surge continued in July as buyers snapped up discounted properties shed by lenders and financially strapped homeowners.And I hate to do it, but here is what the Marin IJ had to say (after weeding out their attempts at happy-talk and feel-good journalism):
In Marin, foreclosure resales were 11 percent of total sales. Valerie Castellana, an agent in Greenbrae and past president of the Marin Association of Realtors, said sellers need to be "really astute in their pricing strategy these days."Yes, in other words sellers need to substantially lower prices if they hope to sell sooner rather than later.
Buyers remain anxious. "They want to make sure they’re not overpaying," she said. "Many of them are holding off because of that anxiety level."Smart buyers.
He said such buyers are facing a more restricted market for home loans. "We’re in a knee-jerk reaction from where we were before," Hickman said. "The pendulum has gone back 180 degrees. It’s extremely difficult to get money right now."I beg to differ. Lending is returning to what it was prior to the bubble and where it should be. We are not even close to where it was at the start of the last, normal, housing cycle. So the pendulum has swung only about 90 degrees; we have another 90 or so to go.
There is no way in hell anyone (other than sellers, of course) should want lending standards and practices to return to the way they were during the bubble. This is exactly the sort of false hope people like Hickman are trying to instill and is akin to the fear mongoring ("buy now or be priced out forever", etc) his industry routinely engaged in during the run-up. The fact is, Mr. and Mrs. Marin Seller, the only way bubble-level pricing can be maintained is to return to bubble-era lending practices. Of course, there are other ways to support your wishing prices, such as buyers suddenly getting a mass windfall, 300% raises, etc., but I wouldn't count on it.
6 comments:
Marin foreclosures were 11% of sales in '08, and 2% same time last year. It's still a small %, but a huge increase year over year. AND we have yet to see AltA and PayOption resets.
CAR's affordability index is a joke. They are still advocating based on 6x gross income. Good luck getting qualified for that these days.
Go check out Jim the Realator's site. Interesting comments on how just now, now in August, lenders are finallying eliminating items such as seller financed down payments.
So anyone who says we have had a turn around in tight lending needs to be corrected. We have had purchases pick up on the low end when prices have dropped 50% and loose lending still existed.
So what happens this fall when lending finally is returned to normal standards?
Will the knife catchers disappear.
11 percent my a___... I take anything a realtor tells me, esp a Marin realtor, and then apply the BS correction factor of 3 or so to it.. I'd bet distressed sales make up more than 1/3 of the market in Marin.. probably over half.. the 11 percent "foreclosed" is just another example of the RE machine bending the truth... the average joe housebuyer does not know all the various types of distress sales, so the realtor talks about those that have gone all the way through the complete foreclosure process.. total BS meant to deceive the public..
we're moving back towards natural selection and survival of the fittest... that process will weed out many of these punk Realtors and fraudulent mortgage brokers.. I'll wait to enter the fray when I know who I'm dealing with and under what rules... the machine still has too much influence for my liking..
"People are off the sidelines, stepping in, trying to gauge the bottom of the market and feeling that, even if this isn’t quite the bottom, it’s looking great," said the group’s chief economist Leslie Appleton-Young. "They’re able to get into something they never thought was possible a year or two ago.".....
I do despise that woman.. this from the mouth who has predicted the bottom has been here for over a year now and nobody in Marin would ever regret buying real estate, because, well, it's Marin.. If you listened to her blabbering, lying mouth in the past 3-4 years, you have lost money... pure and simple..
I hope Leslie is buying LA and Bay Area real estate right now in droves so she can be fully onboard when the appreciation rocket takes back off...
What, you say ? That there is no longer any fuel for that rocket now that the gig is up ? That we're getting back to something called fundamentals and full doc loans ? Nooooo, say it ain't so!!
"I do despise that woman.. this from the mouth who has predicted the bottom has been here for over a year now and nobody in Marin would ever regret buying real estate, because, well, it's Marin."
I remember the last RE bust, early '90's, CAR called the bottom every month for four years.
For the FB's who stick it out and don't walk, you can forget about them doing anything to help the Marin market recover...they'll be too underwater to do anything but stay in whatever POS they bought during the last few years. And new buyers will find it iincreasingly difficult to qualify for a mortgage.
Hmmm....I still think 2009 is the year of reckoning for this county. Sales and prices have been dropping, and we still have all the liar loan resets to go.
I do despise that woman.. this from the mouth who has predicted the bottom has been here for over a year now and nobody in Marin would ever regret buying real estate, because, well, it's Marin..
On the general subject of realtors, how do you suppose homebuyers should now regard their "expertise" in light of recent events? For those few surviving realtors as the downturn ensues, what level of service should be expected from them?
Gushing-sales-talk-is-cheap; what substance can they deliver--or does that really matter?
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