Posted on 08/14/2007 8:47:33 AM PDT by Hydroshock
Edited on 08/28/2007 8:53:29 AM PDT by Admin Moderator. [history]
NEW YORK (CNNMoney.com) -- The binge that many housing markets went on in the early- to mid-2000s is over, and some of the hottest markets like California are now experiencing the worst hangovers.
But other areas, especially many that recorded slower home price growth earlier this decade, have seen little increase in foreclosure rates, according to the latest data released Tuesday from RealtyTrac, the online marketer of foreclosure properties.
"While foreclosure activity has skyrocketed over the past year in many cities, particularly in California, Ohio and the Northeast," James Saccaccio, RealtyTrac's chief executive, said in a statement, "foreclosure activity seems to be subsiding in parts of Texas, South Carolina and other states."
"Still," he said, "the overall trend is toward escalating foreclosure rates, with 82 of the top 100 metro areas reporting year-over-year increases in the number of homes affected by foreclosure."
Stockton, California now leads the nation in foreclosures. Of RealtyTrac's top 10 metro areas for foreclosures, four are in Central California.
Stockton, Riverside/San Bernardino (which is it? They are two different cities; I’m assuming they mean Riverside in San Bernardino County), Bakersfield, and Sacramento ... four of the top ten. But readers may not be aware that NONE of those markets are particularly “hot” by California standards — Riverside was indeed HOT about four years ago. We pondered buying there — you could get a lot of house for not much dough and still be (more or less) in So Cal. Stockton, Bakersfield, and Sacramento are Valley towns, a whole different ballgame. Hot markets to a point, but nothing compared to the “hot” that was coastal and So. Cal. until about three years ago. Still, it’s an interesting article. I’m glad you posted it.
It also sounds like the home prices will get back to reality. Some people lost their butt speculating.
The easy credit has already dried up. It is only a matter of time before prices revert to historical norms.
Riverside is in Riverside County.
None of these areas have as much objective value as coastal California - the prices shot up later when they were seen as affordable alternatives, and are falling first as the market cools off.
When I bought my first home, the lender wanted to write me a mortgage for twice what I thought I could afford.
I did not fall for the bait but I think most people do.
“It is only a matter of time before prices revert to historical norms.”
Nonsense. Prices will not go down. They won’t even stay the same. They will continue to rise!
(This message brought to you by the free republic “There is no bubble” brigade.)
You got that right! Here in the Seattle area, our bubble “burst” - the increase is now “only” 7% per year, rather than 20%...
Land is the only thing that’s truly a finite resource, and the only resource that is REQUIRED for life. Not gold, not silver, not hog futures, not computers.
and conveniently lien stripping provisions are gone under the new bankruptcy code.
This is where an undersecured lenders loan can be bifurcated into secured and unsecured portions with the unsecured portion removed from the colateral and moved to the unsecured creditors.
This was done mostly with 125% loans (forgot about those) in hot markets.
The prices shot up for the same reasons foreclosures are up. The majority of new homes are built in these regions, and nearly every new home built in California is of the "luxury" variety (i.e. 500K and up). Of course no one can actually afford these prices so the builder financed them with so-called no income verification loans.
Everyone looked to get wealthy fast and easy.
I think most of California is going to get hammered.. for the simple reason that the average person can’t afford the average home.
I think coastal, as in literally on the water or a block away in a posh neighborhood could be surprisingly ‘sticky’. There is lots of super rich people out there in this new globalized American economy(especially in California), that make enough to pay the costs with traditional loans or even cash.
Duh!! You’re RIGHT! So which town did they mean, I wonder? Hmmm ....
Yep. I think you’re exactly right.
Nonsense. Prices will not go down.
Bunny, if Socal is thinking the way I am, he's not saying that prices will go down, but that they'll stop appreciating at the outrageously high rates they were in the recent past, at least they'll stop appreciating that way for now. They will continue to rise at a more modest rate, I think, for a couple of reasons: they represent land and homes, a finite resource; and they're located in a geographical area that is hugely DIVERSE in its economy (there is no one industry that dominates here) and one that has an incredibly nice climate. The demand for housing here is going to continue.
Those who will get "hammered" will be limited to the folks who took on loans they couldn't handle. The demand for housing in many areas of California, Southern California in particular, is going to continue to increase because:
1. There's lots of employment here in every industry you can imagine.
2. The climate is excellent.
3. There's only so much land for homes, while foreseeable demand for it is infinite.
"Average" is a relative term. "Average" people haven't been able to afford the "average" home in Southern and Coastal California for at least 15 years, yet average people are still here and thriving, and property values are at worst leveling off, and in many cases, rising "only" two to eight percent instead of 20 percent. There are more dynamics at work in real estate than meet the eye, I think.
Your idea of "coastal" as being within a block of the water is puzzling. I grew up in a home that was maybe a mile from the water, and you could see the whole bay and ocean from our windows. Believe me, it was most definitely a "coastal" piece of property. To me, a piece of property within a block or the water (posh or not) would be waterfront property. A subtle difference in terminology. "Coastal" property would be something within a mile or two of the water, I'd think. The view is not what makes something "coastal," but rather the marine climate and proximity to the sea. A marine climate is very, very distinct from non-coastal places, and its very possible (I know because I've done it) to live less than a mile from the beach and not see the ocean for months at a time, yet you never for an instant forget that you're "coastal." It's just very, very different from being inland.
Texas, Nevada, Florida and Colorado top the list.
Just my two cents, as I am a native of the California coast.
Oh boy....
August 14 2007: 2:52 PM EDT
Dow tumbles 200 as selloff accelerates
Major gauges slump as investors worry about Wal-Mart, bank stocks, mortgage market and credit crunch.
Riverside is a separate city in Riverside County while San Bernardino is a separate city in San Bernardino County but a lot of times you will see Riverside/San Bernardino referred to as the Inland Empire.
At what point would you say those factors have already been priced in? When valuations are double what they were 5 years ago? 300%? 500%? 1000%? Have the fundamentals really gotten THAT much better in such a short period of time?
One could easily argue that in many areas of Southern California, illegal immigration and crime are substantially worse than a decade or two ago. Crowding and traffic have gotten obscene. The state has gone broke and is now writing long term bonds for routine infrastructure maintenance. Native-born Americans are leaving in droves. “Progressive” zoning regulations are plopping blighted low-income housing in the middle of affluent suburbs. These trends are only getting worse with time, and the liberals in charge will fight to the death to keep it that way.
There is a very real possibility that prices will fall dramatically in the near future. CA real estate was always higher than most of the nation for the reasons you listed, and will probably remain that way as long as the pros outweigh the cons. But there is scant evidence that the most recent runup in prices is sustainable once the easy money goes away.
riverside be in riverside county.
si.
keep buying coastal.... always buy coastal.... next 20 years another several million are moving to California... most to the coast.
“There is a very real possibility that prices will fall dramatically in the near future”
What tea bag did you pull these leaves out of? Lipton?
Ah. That makes sense, certainly the Inland Empire is what I’d call it. But San Bernardino is SO different from Riverside! Oh well.
Virtual land is not limited. 2,000 people can live in luxury on a one acre plot by building a sky scrapper on it. Land prices can only go so high before it's cheaper to build up. Falling birth rates and new building technologies mean there will be an oversupply of real estate in the future.
BUMP!
You may be right, though of course I hope you're not! ;^) I wouldn't be surprised to see prices drop, but I would be surprised to see them drop dramatically. Even in the Valley, where things are much different than in So Cal. The wildcard is how resourceful people can be in overcoming challenges. I am SO GRATEFUL that we had the (uncharacteristic!) smarts to turn down a loan guy that was trying his best to talk us into an ARM. Instead we got in on a 30-year fixed at 6 percent with no prepayment penalty. An ARM would have made sense if we'd planned on selling our house in five years, but we plan on staying put for as long as God will have us!
Had we wanted to sell our place after a few years, we'd not have made much if any profit, as the property (barring improvements we've made to it) would sell today for about as much as we paid for it three years ago. Flippers have been eating the big green wienie, and I have to say that's a bit gratifying, as we saw many homes that were ridiculously overpriced by flippers hoping to make big quick profits. They pushed the market as far as it would go, and the market finaly said: Go screw yourselves, flippers!
I'm by nature a pollyanna, and am weird enough to absolutely LOVE Southern California (I was not born and raised here; I come from a small town, rural and scenic coastal region). I never thought I'd EVER be a believer in So Cal, but I am. I love the dynamism here, the entrepreneurial spirit, the innovation in capitalism, the underlying resourcefulness and imagination of the people here. Yes, traffic sucks and illegal immigrants are a drain. Yet my perspective is from the Front Lines, and I see the ways many people manouevre around such challenges. The Northridge Earthquake taught me how easy it is to underestimate the people here. So I (eternal optimist) have hopes that all the things you list will become resolved for the better in ways we can't imagine from our present vantage point.
Now, that's an interesting possibility.
Would 'near future' mean sometime before the sun becomes a red giant?
Don't know your location in the state but in most areas luxury homes start at $1M with the median at about $2.5M. In the poorest part of the state, the San Joaquin Valley, some new, 3 bedroom and most new, 2 story, 5 bedroom homes are now at about $500K. These are tract homes by mega builders like KB and Glennwood, not custom jobs on an acre.
I mean 3000+ square feet starting at 500K. McMansions I believe they are called. Almost all new tract homes in the state start at 500K and go up to 1 million, often in the same tract. My point being is that there are really no entry level homes being built anywhere in California.
A McMansion is an entry level home for multiple Mexican families. Many smaller communities in the Central Valley have banned the practice of multiple family occupancy in a single residence to preserver their community's tax base. That ban has been imposed on developers, not buyers.
There’s no bubble. Inflation is being held in check by the troubled housing market but other signs are: strong metal prices (many mines being opened after years of being capped) and oil prices at an all-time high. Real estate is the third item that betrays an inflationary cycle... mostly brought on by the binge spending in Washington. The time to pay the piper must come someday.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.