Watch Out Below! California RE is Cratering!

[mamboni]

Southern California home sales collapse by 21 percent year over year. Real estate tanks simultaneously with ending of government artificial market intervention.

As would be expected, home sales in Southern California have collapsed in near synchronization with the ending of tax credits and tighter lending guidelines. The July sales figures fell on a year over year basis by 21.4 percent. This is a significant drop in a summer month that usually has solid home sales. This is the proof that the market is merely being held up by massive government intervention and incredibly expensive tax credits that serve really no purpose except to provide a short term sugar high for the market. The size of the decline resembles the declines we saw during the inflection point of the bubble bursting. As you will see in the next chart, home sales always collapse first and then prices follow. This is how the market reacts to imbalances and many cities in Southern California are still largely in housing bubbles. The market is essentially saying that home prices are too expensive without government subsidies. It is also the case that the job market is incredibly weak even after all the bailouts and stimulus that have been injected. Let us examine the Southern California sales pattern first.

continued at: http://www.doctorhousingbubble.com/southern-california-home-sales-collapse-by-21-percent-year-over-year-real-estate-tanks-simultaneously-with-ending-of-government-artificial-market-intervention/#more-3599

[Liquid]

Any big city in California is still massively overinflated.

Driving to work, I pass a high-rise condo building. These condos are built for hobbits, they are so small. Sign says, starting from the high 600's..who is buying these? How much is the hoa fees also tacked on?

This isn't just one incident...it's across the board here. My bet is the next collapse starts here first.

[shamrocks33]

Yep I'm over here in the valley and cannot believe that prices have barely come down at all from pre-bubble days....not that there is any way in hell I'd be buying a house here anyways...

[milehi]

A mile or so from my office, 3200-4800 square foot homes are currently under different phases of construction with a price tag of $470K-$545K, and they're selling. These houses are in basic neighborhoods and have no yards ???

[BrewTech]

Housing prices in my area have dropped nearly 50% from da bubble days... rent hasn't changed however.

[Horn]

Have they run out of schemes to rectify a dead horse yet?

I hear they have 50yr. mortgages in japan.

Just have your first (and only) born son,, sign on to the loan at 14yrs of age.

[hoarder]

If you're in California, don't wait for a recovery, sell now at whatever you can get. JMO.

[Neuro]

Have they run out of schemes to rectify a dead horse yet?

I hear they have 50yr. mortgages in japan.

Just have your first (and only) born son,, sign on to the loan at 14yrs of age.
Hard to believe that. In Sweden they have had mortgage free house loans for at least 15-20 years. Prior to that you could get 200 year mortgages (0.5%/year). House prices in Sweden rose about 9% on an annual bases according to latest figures. It is the norm that everyone has loans to the chimneys...

[Horn]

Of course Nero, the reference to first born son being taken by the klan was a slight exaggeration.

The 50yr. is an option.

[Saul Mine]

IOW housing prices are still 79% of bubble levels.

BTW, here is why mortgages are almost always for 30 years. (http://urbansurvival.com/muc2.htm)

[PatColo]

I've really missed my daily fix of housing crash doom news @ patrick.net (http://patrick.net), as Patrick's been on vacation this week, no updates since monday...

But the usual suspects, AZ NV FL, are also still train wrecks, still falling. This gulf thing has prolly wiped an instant 25% off gulf state home values... it's just not widely acknowledged yet because real estate isn't "marked to market", and actual sales providing marked-to-market comps have slowed to a trickle.
Gulf spill plays havoc with real estate (http://www.theglobeandmail.com/report-on-business/gulf-spill-plays-havoc-with-real-estate/article1612385/?source=patrick.net)
Real Estate Doldrums on Gulf Coast Beaches (http://www.nytimes.com/2010/07/20/us/20realestate.html?source=patrick.net)

75% of home borrowers in Vegas are under water. (http://www.lvrj.com/business/las-vegas-home-values-keep-going-down-100714169.html)

The "strategic default" (walk-away) tidal wave is only still in the early stages, 6-18 months from now, walking away (by home borrowers who can still afford the mortgage) will be the norm, expected, smart (http://gold-silver.us/forum/general-discussion/cbs-60-minutes-mortgages-walking-away/msg42838/#msg42838). For now, bankster-gummit is even keeping the true foreclosure inventory data hidden... huge shadow-inventory not listed for sale anywhere, just sitting in banksters' back pockets.. they're being silent about if/when/how they'll eventually liquidate them. Secret, engineered end of the institution of private property agenda?

And many will die... ;)

[Neuro]

I am sure the dead horse can be triggered into appearing live, by a few modifications. In Sweden as I said, the standard nowadays is to have a house loan where the principal is never payed down 0 mortgage IOW. The interest rate is around 3% when the interest is tied for 3 years. However 30% of the interestpayment is deductible against your income tax so in reality you only pay 2% of the principal every year. Which is great because Swedes don't earn much income. The average Swede has been convinced it is a good idea go spend about 25% of their income on their house, let's say it is 40.000$ for a couple (usually not married, instead their is legislation treating unmarried couples as married couples. Now the average Swede would spend around 10.000 $/ year on their house, with a 2% interest rate that means about 500.000 $ in loans. Not bad for a couple earning 40.000 is it? The average house is a bit less than that in Sweden, because some of that money is spent on a second summer house/winter cottage. And there are areas where unemployment is very high, and no-one buys houses in those areas, and the average house price may be 50.000 there. You can make a great bargain on beatiful houses in those areas. I bought a 120 year old timber house with a quarter acre garden, for a little more than $30.000 this summer, with 2 ceramic fire places, 2 wood fired ovens, and one wood fired small stove in the main house.

Now I am rambling, but surely the US housing market would be revived if people only payed 2% of pricipal loan amount every year. Average now is what 8-12% (interest rate and mortgage incl.)?

[mamboni]

I've really missed my daily fix of housing crash doom news @ patrick.net (http://patrick.net), as Patrick's been on vacation this week, no updates since monday...

But the usual suspects, AZ NV FL, are also still train wrecks, still falling. This gulf thing has prolly wiped an instant 25% off gulf state home values... it's just not widely acknowledged yet because real estate isn't "marked to market", and actual sales providing marked-to-market comps have slowed to a trickle.
Gulf spill plays havoc with real estate (http://www.theglobeandmail.com/report-on-business/gulf-spill-plays-havoc-with-real-estate/article1612385/?source=patrick.net)
Real Estate Doldrums on Gulf Coast Beaches (http://www.nytimes.com/2010/07/20/us/20realestate.html?source=patrick.net)

75% of home borrowers in Vegas are under water. (http://www.lvrj.com/business/las-vegas-home-values-keep-going-down-100714169.html)

The "strategic default" (walk-away) tidal wave is only still in the early stages, 6-18 months from now, walking away (by home borrowers who can still afford the mortgage) will be the norm, expected, smart (http://gold-silver.us/forum/general-discussion/cbs-60-minutes-mortgages-walking-away/msg42838/#msg42838). For now, bankster-gummit is even keeping the true foreclosure inventory data hidden... huge shadow-inventory not listed for sale anywhere, just sitting in banksters' back pockets.. they're being silent about if/when/how they'll eventually liquidate them. Secret, engineered end of the institution of private property agenda?

And many will die... ;)


This sounds very deflationary.

And many will die... ;)

[Saul Mine]

I am sure the dead horse can be triggered into appearing live, by a few modifications. In Sweden as I said, the standard nowadays is to have a house loan where the principal is never payed down 0 mortgage IOW. The interest rate is around 3% when the interest is tied for 3 years. However 30% of the interestpayment is deductible against your income tax so in reality you only pay 2% of the principal every year. Which is great because Swedes don't earn much income. The average Swede has been convinced it is a good idea go spend about 25% of their income on their house, let's say it is 40.000$ for a couple (usually not married, instead their is legislation treating unmarried couples as married couples. Now the average Swede would spend around 10.000 $/ year on their house, with a 2% interest rate that means about 500.000 $ in loans. Not bad for a couple earning 40.000 is it? The average house is a bit less than that in Sweden, because some of that money is spent on a second summer house/winter cottage. And there are areas where unemployment is very high, and no-one buys houses in those areas, and the average house price may be 50.000 there. You can make a great bargain on beatiful houses in those areas. I bought a 120 year old timber house with a quarter acre garden, for a little more than $30.000 this summer, with 2 ceramic fire places, 2 wood fired ovens, and one wood fired small stove in the main house.

Now I am rambling, but surely the US housing market would be revived if people only payed 2% of pricipal loan amount every year. Average now is what 8-12% (interest rate and mortgage incl.)?


Interesting. What that amounts to is leasing your house and just forgetting about ever owning. IMO that combines all the worst features of owning plus all the worst features of renting. Of course the worst feature of renting is that it does not contribute to national security: a man usually will decline to fight to protect property he doesn't own.

[PatColo]

This sounds very deflationary.

And many will die... ;)


Some have said re the inflation v. deflation debate, that the things which we own will go down in value (deflate); and the things which we need will go up in price (inflate)-- sort of an (engineered) 1-2 punch destroying the former Middle Class. This would certainly be consistent with the bankster-engineered real estate crash, which is deflationary of course, robbing the biggest category of Middle Class net-worth. Where did the former real estate equity go? Assuming bankster-gummit begins printing like mad to pay "national debts", you could say, that's where the former Middle Class (real estate) wealth went... just a fancy wealth-redistribution two-step. With an impoverished population, real estate's not going to reflate, purchase prices & rents are going to fall more/less together, reflecting the new lack of buying/renting capability of the newly-impoverished masses.

...and many ... oh never mind.

[Neuro]

I agree Saul Mine. What has happened though is that house prices in Sweden , through lowered interest rates and mortgage payments has increased from 25.000 to 350.000 USD the last 35 years, even more in Swedish Kronas, so nobody think they need to pay off mortgages, they will simply be inflated to worthlessness. The assumption is that the loan amount is not going to be worth very much 30 years down the line. Then you can sell your expensive house pay off your loan and buy a cheaper house and still have money for coffee and porridge. Of course Swedish people have stopped producing anything of value, do they will earn less, and interest rates will most likely go up rather than down. So most likely things will change and those who don't own their house outright will be forced out and the housing market goes to hell... And people will have no job, no income, no house, no porridge and no coffee.

I don't think it is a good thing, but I think if TPTB decides to do so, they can very well do in the US what they did in Sweden the last 30 years.

[Horn]

Of course Swedish people have stopped producing anything of value,

Another victim of return on investment.

It used to be & probably because the Swedes used to make such valuable items.

Regardless, the masses will pour into 50yr loans should the offer be presented.

In Costa Rica, I think it was something like 50% down then 15yr. max. mortgage.

And you didn't even receive a proper address for that money... ;D

but done & full stealth owner in a fortnight. 8)

[the riot act]

Just looked on zillow today and the value of my house has dropped another 24k. That's 48k in the last 2 months. :boohoo

[Cebu_4_2]

Just looked on zillow today and the value of my house has dropped another 24k. That's 48k in the last 2 months. :boohoo


Zillow, I get monthly email updates. This is the first month in over a year I'm up 5K. Ususlly runs 3-5K a month to stay here. House was 280 at peak, now 130 so lost more than 50%. Will take more than a double to get back there, not gonna happen.

[Neuro]

Just looked on zillow today and the value of my house has dropped another 24k. That's 48k in the last 2 months. :boohoo
Well the good thing is that at this price you may actually find a buyer. Not the artificial bank debt price houses were transfered for before...