I finally had had enough of Ronald McMansion yesterday, and objected to his carpet bombing of this blog with pure negativity.
You can count on Ron to re-post the same bad news you read on the other blogs, eliciting comments from wifey such as, “Oh, it’s him again”, and “I just pass over his stuff.”
We deserve to hear all sides of the housing arguments, that’s why we’re here.
But Ron, can you mix it up a little?
CA-renter is the best example. She provides the clearest bear arguments in her own words, based on common sense and her observations around town, but also acknowledges how sales are red hot and the difficulty of charting the course. But I like CA-renter – I’ve been to her house, and know her family. Why, because she has respect for what we’re trying to accomplish here.
This is the advanced project – the place to examine all the facts and be more educated when making our own personal decisions about real estate.
Here’s an example, the SD Home Sales over $1,000,000 for the first three quarters of the year:
| Year | # of $1M Sales | Avg. $/sf | DOM |
| 2001 | $473/sf | 76 | |
| 2002 | $468 | 103 | |
| 2003 | $476 | 89 | |
| 2004 | $526 | 63 | |
| 2005 | $554 | 66 | |
| 2006 | $583 | 71 | |
| 2007 | $567 | 79 | |
| 2008 | $605 | 85 | |
| 2009 | $552 | 100 |
Add to this year’s puzzle that there have been 4,403 listings over $1,000,000 posted on the MLS since 1/1/09.
The obvious conclusions would be that the lack of easy jumbos are choking the higher-end market, resetting ARMs have to be killing those sellers, and just wait, wait, wait, wait, wait, wait, wait, wait, wait, etc.
I’m more interested in the 896 who did buy, the relative strength in the $-psf, and ocrenter, who said yesterday that he knows a number of higher-end folks who are buying. There is also topics like Susie’s predicament – a former homeowner with enough dough to pay cash for a house, yet she may never own again, in spite of her desire to do so. It’s not because I’m an agent, it’s because those are the stories and angles that don’t get covered on other blogs.
My little sister is get married today, so I’ll be away from the computer.
P.S. I was also going to mention Ronald’s concern about spamming being ridiculous in our little corner of the world, but then I see words today with double-underlines and advertising attached to them! They are unauthorized, and anyone who can offer advice on how to prevent them will be appreciated!
“but then I see words today with double-underlines and advertising attached to them”
Don’t know what kind of platform you are on, but if it’s WordPress your solution is going to be something like this
http://www.theblog.ca/literal-comments
Greasemonkey Firefox addon may be able to remove the advertising.
The $/sqft increase lagged the increase in sales, so the $/sqft decline naturally lags the decrease in sales? Just a guess, and time will tell if it’s a trend. Do you have an average price, or number for average square feet? $500/sqft and above are beach prices, I hope. I too am very curious who is buying these homes and where they are located. There are 896 of them, so they can’t ALL be located in LJ.
For some of us Jim, it is all negative and very frustrating. I didn’t have a shot at buying a house in LA before the bubble got going, and there are many, many more people in my situation. I’m very happy renting, but other people aren’t and it’s causing them to put their life and/or starting a family on hold. Through no fault of our own we are being fucked out of home ownership and tax dollars. Maybe that’s the motivation for the ‘carpet bombing’ of negativity.
Be careful to not scare all the bubbleheads away or you’ll end up with another bloodhound blog.
Genius-Can you please explain what makes you feel that you are being “F’d” out of home ownership–shed some light on this please.
I can’t help but wonder about the relative value of the $/sf yardstick on higher-end properties because they may be beachfront with tiny lots vs. inland with huge lots. You know the lot location & size are an out-sized component of the price vs. mid-to-low end properties where it’s mostly about the house itself.
That said, averages still tend to work out over time with sufficient volumes. It’s all we have, so I guess that’s all we can use as a guide.
I’ll take a shot at what’s bugging Genius. Prior to 2001, you saved up 20% and then bought a house – it wasn’t an investment, it was a place to live. Then the politicians got involved and decided everyone should own a home. They pushed Fannie and Freddie to loosen standards, everyone else followed suit and prices took off. Anything put on the market would sell because investors saw easy money on flips and people wanting a place to live were worried about getting priced out of the market forever. Then the crash happened. Instead of being rewarded with realistic home prices, those that stayed out of the bubble and waited for this day are faced with home prices that are still outrageously expensive when compared to rent (in most places) and on top of that, they are faced with very strict lending standards, beyond just 20% down. It’s understandable given that so many people are just walking away from their mortgages because they are so far underwater, but you have to admit…if you played by the rules or you stayed on the sidelines during the bubble, you are getting screwed. I put 30% down in 2005, lost all of that money when I sold last year due to a move and am now renting with no chance of getting a loan. It wouldn’t bother me if the market were being left alone, but the politicians can’t stand to leave it alone. Next time I’ll know better than to put my own money in something that could lose value like real estate. I’ll just go interest only and walk if the going gets tough.
There are many who played by the rules and don’t feel that they have been “screwed.” If you go by past real estate cycles, the market was poised to increase when it last did–easy financing allowed it to go up further than it noramlly would have–and the subsequent fall came later and has been greater than it normally would have been–It may or may not be the bottom, but rates are low prices will look cheap five years from now.
“Prior to 2001, you saved up 20% and then bought a house – it wasn’t an investment, it was a place to live.”
And, perhaps, a bit of enforced savings. I bought my first home in 1983. Rents were quite high at the time and constantly rising, and I figured that if I was lucky 30 years later I would have essentially spent the interest on housing and own free and clear a home worth what I paid for it, plus perhaps a bit more for inflation. 25 years later, after riding the rollercoaster up and down several times, I estimate that I have equity about equal to the purchase price for that first house. Yes, I think things would have been better if there had never been a bubble, and it’s possible that I could have banked the same amount if I’d never bought a house, but I know plenty of lifelong renters who lived through both the prepubble years and the bubble and didn’t manage to save a dime.
I’ll second (third?) Genius and NC.
I’ve been f-d out of homeownership by the Government-Realtor-Banker-Fed Complex. Despite the alleged crash of the housing bubble, houses are still at unprecedented price/rent and price/income levels.
NC- you sound like a perfect candidate for the FHA zero-down scam. I’m going to take it as soon as I find a nice house inside the FHA limit.
The biggest problem with all of the political tampering is that currently, nobody knows what a house is really worth. JTR’s relentless posting of the market stats illustrates this point.
I can understand being upset at everything that’s gone down, but I don’t see anyone being ‘f-d out of homeownership’.
Everyone and their neighbors dog had the opportunity to buy the last few years. And there are lots of areas today where buying is equal or cheaper to renting.
Prices, even if they are being artificially elevated, being beyond what you can or want to spend is not the same as being ‘f-d out of homeownership’.
I agree it’s crazy we are doing everything we can to bail out the irresponsible, etc. But that’s just the reality today. People want to own homes, people want to own homes in San Diego and history has shown people will spend as much as they are allowed/able to. Throw in some ‘bonus tax payer money’ for making a purchase on top of historically low rates coupled with constant MSM that price bottoms are in? Not hard to see why the market is hot in many areas.
Jim does a great job of showing what the market is, for better or worse, regardless of his viewpoints on it he presents both sides pretty fairly IMHO.
A possible double dip recession, increasing unemployment, decrease in REOs, stock market increasing, more government intervention, etc, etc – there are lots of variables at play that could take prices higher or lower. Constantly carpet bombing one side or the other without acknowledging the other does nobody any good.
Jim,
Why so cranky? I don’t know Ronald M. but his comments always seemed respectful and within the parameters of good discourse. I’ve been reading for YEARS, have yet to buy, and value the information on your blog. Unfortunately the crankies are getting to me – it’s a new issue once a month. And I feel bad for the unsuspecting commenters on whom you choose to unleash.
An outsider’s perspective, that’s all. Things look pretty neutral and well mannered to all of us outside the “bubble.”
Some thoughts.
“nobody knows what a house is really worth.”
It isn’t the house, it’s the land the house sits on that holds the value. You can replace the house, the land is where the value is. Commute access, schools, climate – you can’t remodel those things. The price of the location is the key point. That being said, anything is worth what someone is willing to pay for it. Prices went through the roof because the banks gave out free money and when the money is free, who cares what things cost?
“There are many who played by the rules and don’t feel that they have been “screwed.”
I don’t feel screwed at all. I bought in 2002 and am still above water. When the dust on this mess settles, I will still have an 800+ FICO and ability to borrow because I won’t be walking away from my home. I can’t even rent in this neighborhood for less than my mortgage. My only regret was that I was too attached to my home to sell at the top of the market and then wait things out until now to buy again. You won’t find a bigger fan of home ownership than me, but I’ll also be the first one to say that everyone shouldn’t own a home. Not everyone is cut out to handle their own maintenance.
No one is f’d out of owning a home. You can buy a tidy little bungalow in my SoCal coastal neighborhood right now for $200k. You’d need $70k gross income and 20% down but it could be done. The schools suck, but lousy schools isn’t the same as being f’d out.
For the love of… REALLY people? Fine, change my thought to fucked out of owning a reasonable house at a reasonable cost. By Art’s argument nobody is out of a home, because everyone has the capacity to afford a cardboard box and set up shop beneath an overpass. Keep in mind I specified LA in my comment, and I didn’t mean Louisiana.
I guess when you bought before the run-up, and are still sitting on bubble equity, you’re going to see things differently than me. I didn’t mean to start a discussion on this, so apologies all around. My intent was to give a possible reason for R.M.’s perspective… and find out where these $500/sqft houses are selling.
The only thing that bothers me about the current housing market is that banks aren’t foreclosing allowing deadbeats to live for free.
Believe it or not I’m all for homeownership. I’m even more for buying in 1998.
All the government intervention and bank bailouts scare me. There’s a huge amount of inventory overhang waiting to hit the market. Depending on what you believe in prices are either going up or are going down. I’m personally still in wait and see mode. We just found a new place to rent twice as nice as where we lived before for the exact same price.
about the spam, you are using WordPress right? They have a spam filter, enter your dashboard and make sure it’s on. When you start seeing spam in your comments, go to the comments section in your dashboard and mark as “spam” the ones that are spam. Then, those IP addresses shouldn’t make it through the spam filter again, no matter what name they post under.
Hope this helps some!
Anyone who believes they are being “fvcked” out of home ownership needs to truly get a life and travel to a 3rd world country and get their priorities straight. I bought a house in 2003 for $650,000 with $150,000 down that appraised in 2005 at 800K. It’s now worth $625K and I am not kicking myself for not selling for $100K or so more when I truly could have because I love my house and location and my family does too. Some people are not cut out for home ownership, plain and fvcking simple.
Quit whining and make it happen or shut the fvck up.
I’m sorry you’re not cut out for home ownership. Hopefully you’ll do better with your investments in the future.
Genius, I hope that comment doesn’t underlie the true meaning of your original post.
The point is that you shouldn’t be looking at it primarily as an investment — it’s a place to live. If you’re looking at this as a way to make money, then yeah, there’s a good chance that you’ve been ****ed out.
Wow, when the cats away, the mice will play. This thread holds the record for four letter words as long as I can remember.
ArtElectric, Spartacus: If you purchased in 2006, would you still feel the same?
I purchased in 2006. I’m not underwater, but I have a feeling once this REO comp comes through and Winter comes around, I will be. The only saving grace is that I purchased a starter home in a great zip code with top notch schools and a three to eight minute drive to ‘anywhere’. I’m not as bitter about what I can’t control as I used to – though Shadash’s flame is still lit ever so strongly. But the thought of deadbeats who are walking away and the crooks in the banking and gov’t keeps chipping away at my psyche. At least, we are moving on with our lives as homeowners who are better off than some if not many – so to speak. That said, I’m still out of a job since last year, my lifestyle has not really changed. I’m not late on any payments. It is called live within your means.
How’s life without a job 3clicks? Pretty awesome I assume; the 3 months I was between jobs were possibly the best 3 of my life. Enjoy it while it lasts. 😀 I’m pretty sure you’re going to be just fine, whether that comp comes through or not.
The last thing I wanted to do was start a riot while Jim was away. Something about intentions and a road leading somewhere…
Spartacus, your house would appraise for $500K if it was not for the government taking money to compensate for your neighbors missed payments. See the problem? Genius’ money is being used to make goods he wishes to purchase more expensive for him. I say he is fvcked.
the reason why a lot of bubble sitters are getting off the fence is because there really is a lot of great deals out there, here’s a pretty sweet deal that just closed last month:
17112 Blue Skies Rdg (Crosby Estates)
–5 beds, 6.0 baths, 4,942 sq ft
–08/21/2002: purchased for $1.47 million
–04/2008: home listed for $1.8 to $2.1 million, the homeowner by then ran the loans up to $1.9 million.
–09/10/2009: home sold as REO for $1.25 million.
At peak, a 5000 sqft neighbor at 17152 Blue Skies Rdg sold for $1.92 million in 2006. This was probably one of the comps that allowed the original homeowner to run her loan up to $1.9 mil.
This is only 35% off peak, so by someone’s definition, it is not a good deal because it didn’t get to the magic “50% off peak.” But 35% off peak on a top tier home means $670,000 off. I say that’s pretty decent.
Jim-
Thank you so much for your real estate blog. If my husband and I lived anywhere near San Diego, we would have used your services for our recent house purchase. I know it would have made the details of the transaction easier.
THANK YOU. You provided more service than our own realtor or anyone else directly involved with our transaction.
I have followed your blog as well as several other real estate blogs since we sold our home in 2006. I know I posted at least once! I always enjoyed your humor AND the solid information that told “how things currently are”, not necessarily what we wish they were.
We decided 1) We were in no hurry to buy- we could rent forever, 2) We would know the market so if a gem did come up for sale we would not hesitate 3) there were plenty of buyers out there with money from selling a prior house, an inheritance, odd financing or great jobs, or some combination thereof and 4) When we did buy, we would be satisfied if we purchased the house at current market price – not last year’s price, not our hope for next year’s price – but at current market price – as best as we could determine that to be.
There are “bears” who would say we’re nuts – the bottom isn’t in – that’s okay, we don’t think we’re buying at the bottom. But our purchase price is less than the insured replacement cost – I guess we got the land for free! We’re both sort of “bears” in a macro sense. But in a micro sense – we made a choice that is right for us. We have a great place to live, an easy commute (exactly one mile), monthly cost slightly higher than current rent and an inflation hedge.
Factors:
1). Location, location, location. The house came up for sale on THE STREET and even the side of the street and relative location on the block we wanted to live in. We bought neighborhood and the house. The house is dated but liveable, and has the square footage and lot size we need. It is a solidly built custom home. Houses aren’t shares of stock – if we miss buying a stock at the low, we’ll get another chance. This house may not come on the market again in our lifetime!
2). The price was right. The house was absolutely priced TO SELL quickly at the current market. It went on the MLS on a Friday and we were in escrow on Monday with a full price offer with a 30 day escrow. There was at least one other offer. We know this from someone other than our own realtor. I have spoken to another person who was “ticked” that he didn’t get a chance to see it and make an offer. He was out of town that weekend and has been looking for a home on that block for FOUR years. I credit YOUR BLOG for helping me realize that not everyone is a BEAR, there are BUYERS in any market, and that we should be ready to make a strong offer if we wanted the property.
3) Knowing the market took a lot of time. If we had a “Jim the Realtor” on our team, I might not have spent so much time in the last three years evaluating the housing market, visiting open houses, and digesting economic data. But then, without that personal research, we might not have felt we could make a full price offer within 48 hours of the listing hitting the market.
4) The tax credit is not a factor in our decision or timing.
Jim, again, thank you for your great data. And ban anyone you choose – it is your blog and your business!
Genius, so what you’re really saying is that is sucks that too many people make more money than you and can afford a nicer house in a nicer neighborhood. I feel ya there, bro. I won’t be moving up anytime soon. Them’s the breaks. Owning a small starter house in a dodgy neighborhood that is well within your means still carries all the benefits (and liabilities) of home ownerships. If schools are number one on your list, rent in a zip code with the right schools and forget about owning unless you have an income that can compete.
My co-worker who lives in an area with bad schools and had planned to move into a “good school” area finally got tired of waiting for the good areas to drop in price and just put his kids into private school on the money he was saving as a downpayment for the nice area.
I was a snob, too, before I accepted what my income would allow me to buy safely with no chance of losing the house because I was over extended. I wouldn’t even look at certain neighborhoods at first. My Realtor had a big job to “manage expectations.”
3clicks, I wouldn’t have bought in 2006. In 2006 this 900 sqft bungalow I have was going for close to $500k. Way out of my price range and I’m far too financially conservative to get myself in over my head on an exotic loan. Now, if I had sold then, I’d have $250k in the bank right now.
you’ll end up with another bloodhound blog.
Duly noted.
What’s a ‘bloodhound blog’ ?
Never heard of Bloodhound Blog but just googled it and found this.
The name Greg Swann rings a bell. I think he was one of the more widely ridiculed bubblehead realtors. Nevertheless, I like his take on ObamaCare.
I also don’t know what a Bloodhound Blog is, but I’ll guess we’ve seen the last of Ronald’s posts. Interesting because I think he was definitely a fan of this blog and appreciated the content.
I asked him to mix it up a little, to expand the discussion beyond the pure negativity.
I speak for the many who don’t post, but contact me off-line. They tire of the pounding, and the repetition.
We can all get along here, I’m not looking to exclude people or positions. I’m hoping to make it more digestible.
Ronald’s comments are fine. Censorship is far worse. We bought in 99, sold in 05 – because I knew that in general, Americans have little self restraint, and knew the peak was near.
The real estate and mortgage market should be highly regulated, to prevent peaks and valleys, and all the heartbreak and shenanigans in between.
Why would anyone think it ok that their countryman get into financial ruin over a home – just because they desire to have one – and cannot say no to the desire? These are the same folks who eat all the dip and chips at the party, and leave non for anyone else. And the realtors and mortgage brokers should have a moral obligation to prevent that now – but do not. Realtors and M-brokers know the market, right? So why didn’t they warn the masses of the end was near?
Because they don’t give a rat’s a$$ about their own industry or the people they supposedly serve. Between 2003 and 2007, I had 1 realtor (out of 20), who said “don’t buy now.” Everyone else kept blowing sunshine. Dishonest? Probably yes.
I imagine most Americans don’t know how to say no to a lot of things – unlucky ones end up in prison. In this case, I’d be fine with prison for those who decided to walk away? It’s had a far more egregious affect than the poor shlep who sold some coke or a bag of pot.
Write your congressman, the president, and every elected official. Eliminate the miniscule tax break for ownership, make all homes sold only give a 1/2 percent commission, and regulate the hell out of the industry.
NARA, and the mortgage industry won’t like it, so they’ll keep lobbying (bribing) elected officials, and claiming advantage to owning a chicken wire and stucco box on a bit of dirt.
ocrenter,
“Off Peak” is the wrong perspective as it uses an irrational high as the basis for measuring the change. I’d suggest using a pre-bubble historical trend line as the starting point.
Jims blog is top notch and he can delete or censor whomever the hell he wants and should, genius is a derelict, and home ownership is not for wimps who can’t stomach the value of their home depreciating like OH MY GOD
LOL
Jim’s the best and thank you again for this excellent and entertaining blog!
I can shed some light on people’s experiences with getting blocked out of the housing market as someone who went through the same thing and recently bought a few months back. Sure they *could* have bought a house they couldn’t afford, but that would have been irresponsible. The responsible thing was to rent.
I had no money out of college, but I was saving more and more every year so I planned to buy a house when I could afford one (if necessary, through FHA given a generous safety margin on cash flow). At the time, SD was netting 10%-20% appreciation a year, so every year I was set back to square one because the money I saved was more than cancelled out by appreciation. This happened over and over again until in 2004 it was obvious this was a bubble that was going to pop sooner or later. I just didn’t realize it would take another 2 years.
Bottom line, the best I could actually responsibly buy was a crappy house in a crappy neighborhood. I couldn’t even responsibly buy the *average* Mira Mesa house without a safety margin. On the other hand, banks were *willing* to lend me enough to buy a house in Carmel Valley no questions asked. The contrast was night and day here.
It’s worth noting that every time I asked about 30-year fixed, lenders like Countrywide tried to sell me on option-pay ARMs.
I saw it as a combination of normal market forces, irresponsible borrowing and lending mentality, and some government intervention through Fannie and Freddie limits and policy. The government had literally declared home ownership as some kind of a right, that getting as many people into homes as possible was the top priority. Sounds ideal, but the problem is the actual consequences and implementation of that policy.
There’s no question this was the case of multiple parties being irresponsible, and that’s why some people are bitter because they’ve had to put off specific life plans for it. It really did cause more harm than to just lenders and irresponsible borrowers. That’s the whole point.
I didn’t choose to simply blame though. I simply saved and focused on other life plans. In life you can’t live thinking about how people have wronged you because in the bottom line it doesn’t matter.
Even buying a house recently on a 30-year fixed, I made sure I could pay off the house in 10 years best case, 20 years worst case. I could care less what people will pay for this place, because I will probably never sell it for the rest of my life.
In the end, I bought a better place than the original CV home I wanted, only I can actually afford it. So bear with it and be patient, because it’ll do you a lot more good than thinking about what-if-the-bubble-didn’t-happen.
15 or 30-year fixed is the best way to buy a house – you need a big margin of safety because believe it or not you shouldn’t buy the biggest house you can afford. Put the extra money into a combo of CDs, bonds, and stocks – or pay off your house (with plenty of cash left) if the numbers work out that way. Always have huge emergency reserves – 3 to 5 years of mortgage payments. You’ll sleep very well!
To be fair, trolling is worse than censorship – repeatedly making the same comments over and over is actually a form of censorship itself against other participants. RM hasn’t crossed that generous threshold yet, but just pointing that out. Asking someone not to troll (who may otherwise be headed in that direction) is not censorship.
Why do you find Ronald Mcmansion’s comments “pure negativity”?
I find them kind of insitefull. Even kind of a balance to your blog.
Jim I like your blog, and I respect your insight.
although I always remind myself when I read your blog, that you are a realitor and in the business of selling real estate, and therefore in the field of promoting the purchase of real estate.
Ronald is pointing out the many land mines that are real possibilities for purchasers out there. Is it such a crime to list them or mention them?
It was considerd a crime back in 2004-2005-2006-2007.
The major land mine I am trying to figure out is if the “shaddow inventory” is going to be dumped on the market, if so and when, or will this inventory be trickled out over the next decade and dragging the recovery down with it?
I am sensing a great deal of hubris out in the world of realitors lately, at the same time we have a 12+ and climbing unemployment rate, and most people in California have taken a 20% cut in income. That is a disconnect that I won’t disregard, but I am wondering if the reality bulls are.
@37, I have to agree. I look at the fundamental economic drivers for CA and for SD and it doesn’t look good. Unemployment, job security, limited credit and govt interference all combine to make real estate a shaky investment.
My issue is that real estate really shouldn’t be an investment. Why? we all need it in some shape or form so we are all naturally short real estate until we start owning.
When the govt steps in and interferes, it really distorts the market. If there were no bailouts, no excessive risk-taking, I think people wouldn’t feel ‘fed’ out by real estate. Real wages haven’t increased in the US for at least 10 yrs, the only way to get was really through speculation / investment.
I don’t expect people to bail me and live that way but I am bailing out people who overbought and driven real estate into the stratosphere. 2000sf cookie cutters aren’t really worth 700k; good schools or bad schools aside (CV, I love you but it is so easy to pick on you).
When you can’t send your kids to a good school unless you shell out 15-20k a yr in tuition or prepay it through a 200K home premium, something is wrong.
Open reply:
Hello Jim (and all the others who stop by) and thanks again for this forum. I understand now why my questions on this blog have mostly gone ignored. I thought it was simply because you were too busy. Anyhow, I’ll try to explain a bit of my reasoning for posting here and my negative attitude (at least toward the perceived subject of this blog).
I don’t recall when I first came across your blog, but it was probably close to 2 years ago. (I was originally posting under a different name, so I may appear relatively new) I became enthralled by the various arguments going around the blogosphere as related to whether there was a bubble or not. I had been looking to purchase a home for a while, but kept seeing the prices balloon month after month, and when I ran the numbers (based on 20%/30-year fixed), I saw that they made no logical sense. As my edification on the subject grew, I saw very clearly that there was an enormous housing bubble. Now, it was just a matter of trying to figure out how the deflating of that bubble would play out.
I found your blog (I only regularly follow about 6 on the subject, by the way) very insightful, because you were a realtor who was very candid, and this was something quite unusual. This gave a perspective that was very front-line and something that the average person can’t get on their own. I also found the posters to your comment section to be quite insightful and many of them to be of similar mind to myself.
Following their bubble hibernation, it seems that many of the more bearish commenters have recently gotten back into the housing market. This seems to have put me in a bit of the minority around here. I believe I’ve stated this before, but I’ll do it again. I’m based in LA, and the market here is quite different from SD. They’ve called SD the ‘canary in the coalmine’ because it peaked first, so it’s watched as a leading indicator of recovery in areas that peaked later. There’s also a major paradigm shift taking place in the entertainment industry, and this is having far reaching effects on the local economy. As an example, the number of scripts sold this year is down 50% from last, and the $ amount for those that sold is also down 50%. That’s a 75% decline from last year! Studios are cutting term deals (in-house guarantees to stars, directors, or producers) at record pace. They’re down 50% since 2000. That means fewer people with guaranteed salaries, especially when you consider that each deal leads to the employment of at least half a dozen people directly. The studios are doing this to please the shareholders of their mega-corporations, but the end result means there are a lot of people who are unemployed and the rest are quite nervous about their future. This (along with very weak tourism) is having a devastating effect on local businesses where those people used to shop and dine.
In other words, the LA area is being hit by a bit of a double whammy of a housing bubble that’s bursting (or at least deflating) and an industry that’s scaling back (by 50% or more) and leaving the area. So, this should help explain a bit of my negativity on the subject, and to be fair, this blog is title ‘bubbleinfo’ and originally seemed a bit more general, even though your personal/business focus is on RE in SD, and perhaps even a bit more specific (North SD?) than that.
As to my posts, I’m not trying to troll or bring doom and gloom to the cheerful. I’m very interested in an open discourse on the subject, exploring the situation(s) from all vantage points and with as much light shed on the subject as possible. I think you have some very pertinent information that you share with us regularly, but I also feel that it’s not painting a complete picture of the situation. For example, you mentioned ” …in Encinitas, Rancho Santa Fe, and Carmel Valley the percentage of option-ARMs and neg-ams mortgages in effect were 5.5% of those mortgaged…”. Well, what are the other 94.5%? Are they jumbos? Were they purchased 20 years ago? How current are all of them? So, while you give very specific and detailed information, I personally feel that there is much more that is still unknown, and I guess my posts are an attempt to elicit some sort of response or rebuttal.
Like some of the other commenters, I too am quite discouraged at the prospects for purchasing a home. I feel that the government intervention has done wonders for the banks and for those on Wall Street, but it has really interfered with the recovery in the housing market. I suppose that is also causing me to be a bit more negative than I perhaps should.
At any rate, I hope this explains a bit more about where I’m coming from. I wish I could commit to ‘mixing it up’ with some more positive comments, but I just don’t see a ‘red-hot market’ as being all good, at least not in the big picture as I’m seeing it. I understand that your interest is not as much on the big picture, so I will do my best to temper my “negativity” on your blog. I’ll even preface any comments I do make so that readers will know who’s making them and can skip them if they so choose. Although, to be fair, I wouldn’t consider my comments to be ‘carpet bombing’. I do lean toward the negative at the moment, but I’m hardly posting daily and in response to even half of your entries.
Here’s to hoping the discussions continue and that we can all learn something from one another. Thanks again for the forum, Jim.
Ronald,
You’re right about L.A. From what I’m hearing, the entertainment industry is getting hit very hard right now — worse than the people I know have ever seen, and they’ve been in it for decades. People who are not from L.A. might not understand how important the entertainment industry is to that area. It is huge. Very big changes, and not good ones at all. 🙁
FWIW, I would not touch L.A. real estate with a ten-foot pole right now. Of course, with all the govt intervention, I could be wrong.
That’s mixing it up right there – I think all of us would rather hear your personal insights than link after link.
I probably didn’t make that clear. The content that has bugged me are the links to articles most everyone has seen, and it feels like they are being shoved down my throat when I see them repeated over and over. They may be new to you, and you didn’t realize it.
As far as the mortgage count, they gave me the 5.5% stat as an free sample of what they have, and said I could have anything I want…for just a measly $25,000.
It ticked me off because they could solve the transparency problem a lot quicker than the realtors, but are holding it hostage.
P.S. I hope to meet you someday, Ronald.
As a fellow skeptic and commenter who doesn’t communicate all that clearly at times, may I please I add to RMcM’s comments?
I feel that as far as information gathering, particularly in comparing my own data interpretation with the the coordinated spin spewed at us by the gov’t/corporate MSM cabal, I’ve got a pretty good bullshit detector.
My nightly internet wanderings have kept me from buying into Iraq war lies and the other economic deceptions of the corporatists, thereby getting me and my 401(k)out of the stock market at its 14K high. I’m still not back in, but I’m waiting for the right opportunity. It’s kept me safe from the housing collapse. I’m still not back in, yadda yadda…
Still, I want a place for my family to call home, a place to settle in until I get my kids through school and retire. It’s looking more and more like persistent renting is the safest financial path, but I love Carlsbad/Encinitas and want to stay.
I’m looking at housing PURCHASE prices and market trends to make the best risk/benefit calculations possible. Your blog once fit into that “mental math,” though it does so less and less these days.
One could once come here and get a virtual feel of at least the geography and mid-day gestalt of a neighborhood, while at the same time hearing Jim’s learned perspective on an individual residence. Now it’s getting the feel of a real estate investment infomercial, AM radio real estate talk show, or a real estate investment “seminar” at the local Ramada. None are worthwhile uses of my time.
I may be projecting, and offer this opinion not from malice, but as a potential customer. I certainly don’t mean to associate you with the Mozillas of the world. From my persective, things have changed around here the past few months.
I hear more and more of the bubble fever in your voice and words than I did a year ago. Further, it seems most commenters here appear to be only milder versions of the “flip that house” cast.
Where are the HOME buyers? Who cares about FAMILIES and NEIGHBORHOODS and COMMUNITIES anymore? Those are the things that drive long-term value in real estate.
I’ll keep reading and maybe posting (if allowed), but thought you might like to know that I’ve turned up the gain on the trusty old BS o’meter. My suspicion is that I’m not alone.
“…but then I see words today with double-underlines and advertising attached to them! They are unauthorized, and anyone who can offer advice on how to prevent them will be appreciated!”
~~~~~~~~~~~~~~ Hi Jim – if you’re asking about how to control spammers in your comments section of your blog, I use a plug-in called Aksimet, go here for more info:
http://akismet.com/faq/
Really enjoy reading your blog, and think you are one of the best real estate bloggers. Thank you!
Are we in the “Anger” stage of the market recovery ?
Not yet Scooter but it’s coming.
JTR, I think you’ve handled this situation well enough. You had an issue with a commentor and you’ve given that person a chance to discuss the problems you have. As someone who has run discussion boards, forums and blogs for more than fifteen years, well done.
I would also add to what someone (forgive me I don’t recall who and I’m too lazy to go back and dig it out) said about trolling. Shilling and trolling are bigger problems than someone who *seems* relentlessly negative. The latter is a person expressing an honest view that may go against the majority of the commentors but it’s still an honest expression. Trolls and shills only want to stir up fights (not discussions or arguments) and shills just want to grab some of your readers for themselves. Those people will wreck your site quicker than one person who seems (and I don’t mean to beat this to death) “relentlessly negative.”
But as I said, job well done JTR.
Thanks.
JtR,
Sorry about all the links, but that simply has more to do with time than anything else. You have links and quotes from articles in your entries, so I didn’t see it as a problem. I’m more focused on the quotes that I’ve posted, but I like to include the link for anyone who wants to go back to the source. Seeing other commentors re-quote the articles that I’ve quoted made it seem that others were finding the information pertinent to the discussion.
I do see your point, and hopefully your pointing this out will make me a better netizen.
Nice replies, Ronald.
And mentalpause, thank you very much for posting your story. It is similar to my experience, purchasing a *home* for my family in late 08. Almost everything you said echoes what I wrote after my purchase. 🙂
I think it rude to publicly attack a regular blog poster for expressing a consistent viewpoint rather than using email as most poster’s have their ‘thing’. I have seen this happen on blogs before and have learned to vote with my feet as it was a bad sign…
dudesdad and your ‘censorship’
I haven’t deleted anything of Ronald McMansion’s, and he’s been commenting for months and months. How is that censorship? I finally said something because of the one time I post a sunny piece of data directed his way, he’s kept coming. After months of silence, that was the crossroads, and I have to say something. Look at all the other stuff posted here, I think most people would say I let plenty go, but when it seems like someone keeps coming, I gotta draw the line.
anon – Ronald already said he is totally anonymous, how am I going to email him? Because he expresses a consistent viewpoint means he can load up on me? I don’t see why you think I have to lay down and take every comment, like this was some open forum where anything goes. It’s not a free-for-all here. I’m the moderator, yet only occasionally do I ever object to anything. I don’t know why you can’t live with that, it’s not a bad thing. Adios.
Thanks mentalpause for your warm thoughts, enjoy your new home!
Carlsbad Renter, Amen to your post.
I respect a calm head. It is tough know what is going on, and even tougher to predict the future. I find the hype that surrounds the real estate world very dangerous.
It was tough to filter out the hype back in 2003-2007. We were all called crazy or retared for doing it, but if we stopped trusting ourselves and our math skills, and bought into the hype, we would all be bankrupt now. Literally
There is a new type of hype that started this spring. I for one will continue to try to see through the hype,be non partisan and see with my own eyes.
No thanks state controlled media, I can think for myself thank you very much.
Does anyone remember Gary lereah He is a realitor that got nick named “scary Gary” for correctly calling the 1990 California real estate bust, he achieved a lot of prominence and respect for his accuracy, honesty and ability to point out problems that the msm would not do at that time. The media thought his observations were outlandish and extreme, hence they dubbed him “scary Gary”.
unfortunatly after that it all went south. Independence and objectivity and reputation out the window. He eventually became so engrossed in the bull market that followed that he lost all ability to see beyond his own interests. Last I heard of him was a 2007 statement that “OC reality prices of 10-15% appreciation were in the bag.”
What a shame. I wonder what caused Gary Lereah to loose all his once hightened sence of understanding and obvjectivity. His ability to see beyond the hype?
Oh yeh, it was his self interest.
There is a solution: Leave California. Home ownership and employment solved in one swoop. If Jim the Realtor really wants discourse, let’s let this one roll. An argument for most people staying here is extremely weak.
In short ya’ll need to move if you cannot afford it, and by afford I mean making under 200k.
I would like to state something that I believe is pertinent.
If Ronald is so passionate and such an expert about real estate including being a bubble prophet, why didn’t he make huge money selling at or near the top?
Have you ever heard, read, or seen a stock or investment expert blather about how this investment increased this much and that investment increased that much yet the dude never once participated?
There is a description for these types of schills:
Worthless time wasters
spatacus,
When did I claim to be an expert? One of the things that I’ve liked about this blog, and the comments on it, is the fact that it is largely free of personal attacks in spite of varying opinions.
There seem to be some misconceptions at the moment. There was no censorship that I’m aware of. My presence here has always been anonymous, so Jim had no way of alerting me to the fact that my posts were annoying him. We had no means of discourse on the matter, and as it turns out, he had been holding back for quite some time until he reached a breaking point.
As I’ve stated already, my posts were not intended to simply promote negativity. I was just sharing information that I felt pertinent to the discussions and to which I hoped to garner some sort of reconciliation with the info that Jim provides.
For what it’s worth (to you), I made money on the sale of my last house. I wouldn’t call it huge money, but I’m not interested in real estate to make money. At the moment, I’m interested in NOT LOSING money.
It seems that things are getting a bit more testy lately. The sellers are wanting a bottom to be called, and the buyers are wanting the prices to continue downward. I’m not interested in name calling or bashing someone because their point of view differs from mine. I’m interested in open and honest discourse of the subject matter. I like the varying opinions. They help me see things from different perspectives, and there are some very good arguments made here that could sway me either way. It certainly provides food for thought if nothing else.
oops! I didn’t mean to leave out the ‘r’ in spartacus. That was a typo, not me trying to be a smartass.
Oops!
I made a mistake, I think the man I was writing about is Gary Watts, not Gary Lereah.
Sorry.
On one hand, I don’t mind reading Ronald’s posts. On the other hand, I did find the links redundant only because I frequent those other sites.
That was my only beef really, the repetition. I took it personal when it seemed to escalate, but we’re fine now.
Ronald, would you come down for a beer at Pizza Port? How about Oct 17th?
JtR,
Thanks for the invite. I’d like to visit, and would certainly enjoy a brew. I’m just not sure when we’ll next be in the area. Things are hectic for both of us (mostly in a good way).
Rain check?
No worries I’d like to join you guys for a brewski but I’m surfing in Central America.
Next time maybe 🙂