Real Homes of Genius: Pasadena small home market. Quick sales and people targeting foreign buyers.
While the weather is hot in Southern California, unseasonably so, the housing market has gone lukewarm. People forget that in California, housing needs to be booming or busting in epic fashion. Yet inflection points are harder to detect. People will say “well look at current prices!†Sure, let us look at them. Are you going to buy that crap shack for $700,000? Most of the justification usually revolves around other suckers paying current prices and 2013 as some kind of barometer for years to come but there is no evidence that the trend will continue. For those that enjoy looking at quality homes and I mean this in terms of construction, many have no idea what awaits them when they purchase their glorious little shipping container. And without a doubt, those buying these tiny “starter†homes are simply rubbing their hands just counting the days until they can unload with equity check in hand and start on their property ladder adventure. Some are so narrowly focused that they are missing the macro picture in the state and that is, we have largely become a state of renters. Not because people don’t want to buy, but because most families simply cannot afford to buy. Most households in L.A. County rent. What I am noticing though is quicker turnaround sales hitting the market. And these aren’t necessarily your flipper variety. These are people turning around rather quick. Take a look at these two examples in Pasadena.
Pasadena turnaround
Typically when you see a home hit the market in a short amount of time, meaning less than 12 months, you are looking at some sort of flip. These homes don’t have any indication of upgrades made since the last sale. I also found the first example to be funny since it is subtly targeting Asian buyers. Take a look at this home:
2756 Morningside St, Pasadena, CA 91107
2 beds, 1 bath, 976 square feet
“Most desirable area in Pasadena ! In the middle of two life styles, drive to south, you could enjoy the Asian entertainment and food, drive to north, the classical and modern cultures are welcome you. Minutes access to I-210 and I-10, very convenient to almost everywhere. This is a cozy house, the professional landscape will attract your eyes at the first sight. Two bedrooms and one bathroom with double sinks are been well maintained. Hardwood floor throughout all living room, dinning area and…â€
I’m fairly familiar with the area and most of SoCal but what “Asian entertainment†are they speaking of here? Maybe folks closer to this market can fill me in. 976 square feet is tiny and the price tag of $610,000 isn’t exactly a bargain. And again, what is going on with garbage can photography? Can you at least pull the bin in? We are talking $610,000 here. Look at the sales history here:
After the sales commission, you are looking at a tiny gain so someone here isn’t trying to make big bucks. But what happened from May of this year to September that justifies a $50,000 increase? The 2017 Tesla Model 3 will have a starting price tag of $50,000. Are they throwing one of those in with this purchase? What we are seeing is fewer lemmings itching to buy just because momentum is moving forward.
Let us look at our next home.
360 Sycamore Gln, Pasadena, CA 91105
2 beds, 1 bath, 1,101 square feet
This is another interesting listing. It last sold in July for $650,000 but now is quickly back on the market:
A $15,000 increase will not cover the commission on this place. Why the quick turn around? The place only has 2 bedrooms and 1,101 square feet is not a big place for the current price tag of $665,000. I’m seeing more of these kind of listings where it doesn’t appear to be a flip but people are trying to get out in a rather short timeframe. So much for the notion that you buy to stay put. And look at the history here. Since 1999 this home has sold 4 times and is now back on the market. The biggest winner was the person that bought in 2000 and sold in 2004. Yet all of this was merely part of the housing market becoming one giant speculative game. You are a speculator in housing in California regardless of you being an owner or renter.
Are you seeing this kind of short-term sales in your market that don’t appear to be flips?
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110 Responses to “Real Homes of Genius: Pasadena small home market. Quick sales and people targeting foreign buyers.”
The quick flips might be related to people losing their well-paying jobs. Pasadena has a lot of people who work in mid-management jobs at the studios, which have recently announced big cut-backs. Warner Bros., Dreamworks, Sony (on the west side) are slashing jobs. The Beats music company is closing after being sold to Apple.
Movie attendance was down 15% this summer; the music business is still falling; and California is desperately trying to retain location production activities.
I believe we’re going to see more retrenchment, which trickles down to the housing market. More downward pressure ahead.
@job losses,
You are most likely correct. The job losses are just starting. The Hollywood entertainment industry just had one of the the worst spring and summer seasons in a generation. High real estate prices and rentals in SoCal are killing the broader economy. And the two biggest known unknowns: the LA City Council voted to set the minimum wage at larger hotels to $15.37 an hour and the impact of ACA (Obamacare).
We may not be in a recession yet but the warning signs are flashing yellow.
$300 Million in tax breaks for the next 5 years should bring some jobs back to So Cal…. Just signed by Gov. Brown. It was a weird summer box office… May was especially low… But overseas demand for Hollywood films is higher than ever. The money is still coming in.. Just look at Godzilla… It made only $210 million in the US… but $324 million worldwide…. Hollywood movies and television are becoming the US’s biggest export. Who says we don’t make anything anymore!
0-care (Zero care), here, fixed it for ya 🙂
blo hard and others of his ilk were histrionic about how Barry Hussain was going to ruin Merica once he got into office. Now it’s Barry-care and Moonbeam and anything else Democratic.
Fact is that Republicans got us into this mess (Thanks Bush for 9-11, Iran $1,000,000,000 debacle and the Great Recession)….worst 2-term president EVER.
Right wingers be crazy
Come on Dfresh, the demopublicans are no different than the republicrats…
Dfresh,
Your statement tells me you bought into the game…You are one of the sheeple…
Republicans and Democrats, same shit, 2 different piles…they are both equal in their slow deliberate ruination of the once great country….
Peak America is in the past….get used to the sith overlords pushing the serfs around…that is the meme…
dfresh and others of his ilk refuse to admit that Barry Hussain and his radical Marxist cronies have ruined Merica since he got into office with his Barry-care and not one government official or banker went to jail for the banking mess. His buddy Eric Holder at the un-Justice Department was more concerned that New Black Panthers be allowed to intimidate voters. Now Gov. Moonbeam has declared Kalifornia to be a sanctuary state for all illegals to make it even more like Tijuana than it already is.
Fact is that Communist Democrats have flung open the borders to illegals and radical Muslims who behead ….Barry Hussain the worst Marxist dictator EVER.
Radical leftist wingers be crazy
e b
The single biggest liquidity pump — Beijing has shut down.
The second biggest liquidity pump is shutting down — the Fed.
The ECB is at the end of its road, and will likely hit an air pocket.
The Muslim drain on Europe is epic by any standard: crude oil AND welfare.
Russia looks very weak. Putin’s play has fouled up everyone’s expectations. The Eurozone was looking forward to massive manufactured exports to Russia — to offset booming oil and gas imports. Now, against all commercial desires, Putin has scotched everything.
He may have gone insane: Ukraine was ALREADY his plaything. There never was any chance that it could become a NATO member. Putin crossed up economics with military and political alignments. Due to language, culture and history Ukraine could NEVER ally with either Poland or Germany. (It’s their legacy of massive invasions going back just about forever.) Ukraine was only ever to replicate the dynamics of Finland.
The Russian invasion has destabilized European commercial harmony enough to trigger an epic reversal of European politics.
This should trigger a ‘currency crisis’ in the Eurozone as the 1:1 fiat parities are sundered. At this time, the ‘smart’ money is all bet the other way. Hence the going rate on Spanish sovereign debt is below 3% — a truly insane figure.
Japan is also singing the blues: her TEPCO fiasco has flipped the script for the entire nation. Japan is now bleeding international reserves at a fantastic clip. The combination of a receding population and bad economics must cause Japan to contract. Sony is symptomatic. Who would’ve thought?
As for the Muslim Middle East: it’s doing a bang up job of destroying most everything. It’s engaged in the early stages of a generational civil war — the Islamic version of the Thirty-Years War.
While our President meets ALL of the Muslim requirements for being a Muslim; he does not meet all of the secular requirements for being a Muslim. So, while his cultural understanding of Islam is far beyond that of most pundits and Democrats; even he can’t begin to ‘fix’ the Muslim Middle East. It’s a scrum.
It’s also a scrum right on top of Asia’s critical energy supply.
(Europe actually does not get most of its oil from the Muslim Middle East. It’s Russia that’s its number one source. Virtually every last barrel flowing out of St Petersburg oil terminal sails to Europe. Japan, India, Korea, and Red China just suck OPEC dry. Libya, Syria, are in fulsome civil wars. Nigeria and Africa, generally ship to Europe. The Gulf is usually found in a strong second or third position in all Western markets. So you see, for Europe they’re catching Hell from every point of the compass. No wonder Britain is begging for American crude oil.)
[For those curious: American refiners are shipping so much product — refined product — that over thirty small refineries have shut down. They are hopelessly uncompetitive. Many of these were, essentially, state owned assets. Since America is expected to produce yet another 1,000,000 per day above its numbers 365 days ago — and crude oil exports are prohibited — and cheap natural gas means cheap upgrading for heavier crudes — there will be no let up in this pressure.]
Whatever the fuel tab is — it must be paid. If that means that money has to come out of the real estate market — it will happen.
You don’t see Japanese real estate investors any more. Soon, you won’t be seeing so many Red Chinese real estate investors. And the Russians are already running away. (Orders from Moscow.)
I see a sticky, creaky reversal for LA real estate. First the S L O W S — then — haltingly — price concessions. I expect Yellen to fight any asset erosion — but to find that the Fed can’t stop the market forever.
Ultimately severe fiscal crisis will cause the Leftist/ Progressive/ Big Momma state to contract. The West can’t fed and medicate every indigent on the face of the planet. Do-gooderism will collapse with crisis.
The wild card is ebola. Being a pandemic scale disease. It could blow through the world in the next eighteen-months. We have absolutely no medical solution to it. That’s why every single attending physician is contracting ebola. It’s only a matter of how quickly.
There is not one reason in the world to believe that ebola will be confined to Africa. It’s in the nature of ebola to spread like crazy. It’s in the nature of jet travel to spread (infected) people like crazy. And it’s possible to catch ebola and spread it without getting wise — until it’s too late. It only takes one carrier to initiate an ebola outbreak. The bigger the city, the more impossible it is to contain.
Once ebola panic kicks in, we could see a financial panic like none before. The entire planet could drop back into lock-down mode. That would punk every economy on the planet at the same time.
Wile E. Coyote, don’t look down!
They are still making TONS of money and growth on INTERNATIONAL sales. It’s now common for US made movies to make TWICE as much overseas as in the US. That’s the growth market and becoming one of the US’s biggest exports.
@TaxBreaksEntertainment, yes the studios are making more money than ever overseas, while the domestic market is shrinking. Therefore job growth overseas and cut backs at home. Several studios have announced major cut backs here in LA — Warner Bros., Sony, Dreamworks.
PERSONALLY, I think it’s plausible that these people got caught up in the euphoria from 2013 which carried over for a few months this year, bought the house, came out from under anesthesia, looked around, and realized that they’d better unload their houses before they got caught underwater. I was shopping last year. The greed and fear was palpable. I pulled out because I began to feel those feelings and I felt diminished. It was like being in Vegas. I hate Vegas and what it does to people. Even as late as June of this year my RE agent was telling me sales are stronger than ever, real estate always goes up, yada, yada.
That seems more plausible. They tried to BTFD and realized it was a bad move.
Or, mega stock profits, to afford a mansion.
Housing To Tank Hard in 2014!
Looks like 2015 now Jim… but I agree with you all the way… election is going to push out your date.
Agree. Housing will be unloaded onto the market when rates begin to rise which is expected to be mid 2015. The current Administration is clearly influencing the Fed to keep rates low so that their “bright spot” in the economy is not impacted before the elections. Mid 2015 will give them enough distance from the collusion.
Collusion is possible, but the more likely reality isn’t the election, but just the fed kicking the can down the road hoping that the economy somehow magically sorts itself out before they pull the plug.
I doubt they’re concerned with the reputation of Congress so much as that no one on the reserve board wants to go down in history as being to blame for tanking the economy.
Mr @True, the rates will not rise any time soon because if they do all these years of “easy money” (or funny money as I call it) will be wasted. The casino should go on and it will until it won’t. But not this year, nor the next one. What you would expect is “untapering” of the QE, this is how I see it…
What about this article? It contradicts your prediction:
http://www.bloomberg.com/news/2014-09-24/sales-of-new-u-s-homes-surged-in-august-to-six-year-high.html
Nope, it won’t. @Jim Tank, are you still afraid of the ideas of March?
The Fed is already conditioning the markets to start pricing in future rate hikes, as early as June 2015. The Obama Administration can’t lose both Houses during this midterm election. This would make his last two years a nightmare.
Yes I am Seattle. If you take notice prices levelled off in March. Now they are actually declining. This is a disastrous trend change. If you read the Big Short you will understand housing didn’t need to decrease in value for all the derivatives to implode. It just had to stop going up. Well we are in the same situation again and guess what housing has stopped going up again.
Hi Doc.
Hard to believe these are flips. In both cases, someone went thru the hassle of moving out of their prior home (or apt) moving costs, moving into the new home, closing costs, etc.
For the first house, with brokers fee (at least $30K) they will stand to make $30K then pay again moving costs, closing costs, etc somewhere else?
The second house, they would simply be negative by $20K or more.
Methinks 2 families with ‘life circumstances’ forcing them to move and coincidentally not far from each other and in the same time frame.
Or maybe no one moved into these properties and the sell signal came earlier than expected. Anything’s possible.
In Some markets, the houses are more expensive than back @ peak bubble 2006-07..
just nuts.
it’s true that a lot of money has been created with the social media companies that didn’t even exist during the last bubble… twitter, facebook overtaking myspace, linkedin, and similar companies.
Now ask me how many engineers I know got layoff in 2008 that lost their house, and never got a job in the sector again I know ?
I know an engineer that was working for a top company in the SV who was travelling abroad all over pulling upper 6 figures and bonues…. He’s mid 40s now. Lost job in 2008. spent 2009, 2010, 2011 trying to get back in the business. So gave up and went to mechanic school…2012 works a a mechanic… 2013 pulls money from 401k starts his own shop…. business is good, so a hear.
***He lost all 3 of the houses he had during the bust. Had a stroke…heart surgery… 40 year old guy..
he currently rents…!
@Tequilini: Upper 6 figures as in $800-900k? If so, wtf did he do with all his money? If I made that much (given I’m pretty frugal), I’d be able to retire in 7-8 years!
They spend it all. We were in a similar situation, my husband did a stint at Microsoft in the good years. We used stock options to pay off our house and people thought we were nuts. We fully funded the kids’ college educations and our retirement and maintained a modest lifestyle, people assumed he just did not make that much. Meanwhile I just visited friends in Denver who got the same stock options and are under great financial stress. They literally got millions and have mortgages on two houses. Seriously, people, you do not have to have a huge house in an expensive neighborhood. Pay things off and live within your means.
My daughter just graduated from college and has a job in LA making $12/hr until she gets and evaluation 3 months in. She has managed to save money. She has low rent because someone died in her apartment and no one wanted to rent it. She will jump ship if her pay does not go up. Meanwhile people with 6 figure salaries are a paycheck away from bankruptcy.
As to Asian to the south they mean Alhambra and Monterrey Park. Alhambra has cheaper rents and is super low crime. It is about half Chinese and Monterrey park is around 90%.
Oops. I meant to say six-figures, like 200K + bonuses, so 250K.
1st house in 1997
2nd in 2002
3rd in 2005 ( this last one on a hill ranch spanish style and the whole nine yards…) close to a 1M.
Lost all of them in 2008, along with his Job, and his wife’s cafe shop….
he was over-leveraged
@Responder: Retire in 7-8 years on a 800-900k salary? I’ll retire in one year. Trade those golden handcuffs for cheap real estate in another state and retire a landlord! If you’re making that much, the banks will let you buy 4 investment properties with conventional mortgages. Buy a couple more with cash, and there’s your retirement portfolio. Remember to invest in ABCD. Anything Bernanke Cannot Destroy.
It seems like at least 75% of listings in LA have a previous sale date of 2009 or later. It might be more. It’s probably closer to 100% for anything under $600k.
Fascinating entry, Doc, and I enjoyed your insight with those 2 new back-to-market listings.
Too many people have been treating money as the irrelevance, as they chase assets (at any higher crazy price), searching yield and investment capital gains. Exactly, a status-cool Tesla, or a chunk towards raising kids/retirement fund. At this rate, it might not be long before we see some listings asking less than the 2011-13 ultra toppy-top-top prices the buyers paid.
No Hard Tank here: https://www.redfin.com/CA/Sherman-Oaks/3377-Coy-Dr-91423/home/4868028
This Sherman Oaks house was sold in 2011 for $769,000.
Listed in May 2014 for $849,000.
Sold in July 2014 for $1,002,000.
And this Sherman Oaks house, which we all made fun of in a previous post, was listed for $779,000 and sold for $793,000: https://www.redfin.com/CA/Sherman-Oaks/4435-Katherine-Ave-91423/home/4830837
You cherry picked 2 properties. One is located near Mulholland in one of the most desirable areas of LA. The other was priced well below the Zillow estimate for the property and as we know Zillow pulls average comps — so the property was priced incredibly well. Now lets see if the sales stick because I get listings every day and several very desirable properties I wrote off because they had back up offers are now back on the market.
We’re all cherry-picking properties. So does the doc’s current article.
Some houses have price cuts. Others are bid up beyond their list price. Hence, a plateauing rather than a tank. (Make fun of that word if you like, but it seems to fit the current picture.)
As for that highly desirable area near Mulholland, it sold for $769,000 in 2011, and now for $1,002,000. It’s not the price, but the increase that’s noteworthy.
http://www.zillow.com/homedetails/3961-Weslin-Ave-Sherman-Oaks-CA-91423/19987182_zpid/?gclid=CNeP-s-V_sACFRNffgodTnEAEg
And here’s a Sherman Oaks property that was listed for sale @ $799K in July 2013. It is reduced in priced at $779K in August 2014 (13 months later).
Here another one: http://www.zillow.com/homedetails/13527-Cheltenham-Dr-Sherman-Oaks-CA-91423/20033389_zpid/
June 2014 listed @ $1.2Million. September 2014 (2 days ago) reduced listing price @1million.
Sherman Oaks again:
http://www.zillow.com/homedetails/13596-Contour-Dr-Sherman-Oaks-CA-91423/20033373_zpid/
Listed @1 million, sold for $960K (price cut)
One more: http://www.zillow.com/homedetails/4215-Woodman-Ave-Van-Nuys-CA-91423/19985262_zpid/
Listed @1.34 million, sold for $1.26 million (price cut)
Another: http://www.zillow.com/homedetails/13829-Valley-Vista-Blvd-Sherman-Oaks-CA-91423/19985321_zpid/
Listed @1.13 million, sold for $999K (price cut)
Your examples don’t prove a tank, because ALL five of your houses SOLD for MORE than their previous sale price. All exhibit price increases. As someone else said, it’s the SOLD price (how much higher or lower than its previous sale), and not the LIST price, that is indicative.
Both my Sherman Oaks examples sold for MORE than their previous sale (the one near Mulholland Drive, for WAY MORE).
Of course, three of your examples were last sold in the 1990s, and one in the 1970s, so naturally they sold for WAY MORE than previously. It was silly of you to even submit them as examples of a tank.
But even your remaining example — the house on Contour Drive — sold in 2011 for $910k, and in 2013 for $960k.
Cut in listing price only prove unrealistic seller expectations, not a tank. I’ll call a tank when houses are selling for below their previous sale price.
I’d love to see a tank. But I don’t.
The 1% are doing well. Dude, we get it.
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/06/US%20vs%20West%20Existing%20Home%20Sales.jpg
When I see sales histories like that beginning to pile up, it’s a huge red flag to stay away. Just like an eerie calm before a storm or a line outside of the Apple Store for an iPhone, before long, the day comes where the line is ancient history and you can walk right in and there’s plenty of inventory to choose from. Patience is underrated in this day and age.
Great analogy. That’s exactly where things stand.
The real estate industry is grasping for anything positive these days. The reality is existing homes sales, which make up the majority of sales, are falling.
“U.S. existing home sales fall, investors pulling back”.
http://www.reuters.com/article/2014/09/22/us-usa-economy-housing-idUSKCN0HH1WY20140922
Yet, the spin in the headlines say new home sales are climbing and indicative of recover and confidence.
“Sales of new homes reach highest level in six years in August”.
http://www.latimes.com/business/realestate/la-fi-new-home-sales-highest-in-six-years-20140924-story.html
Was writing the description for the first property farmed out to China? The way it’s written reminds me of product manuals for cheap Chinese imported electronics. What the hell are the classical and modern cultures? That doesn’t mean anything!
$165,000 to $665,000 in less than 15 years? I’m sorry but there are not enough hipster foodie joints in all of Los Angeles that could ever come to pass as giving an excuse for such an imprudent price rise.
@ Reality: “$165,000 to $665,000 in less than 15 years? I’m sorry but there are not enough hipster foodie joints in all of Los Angeles that could ever come to pass as giving an excuse for such an imprudent price rise.”
_____
It’s embarrassing, these house prices. I don’t know how Gubbermint, the Fed, all the other authorities, all the Vested Interests in housing including owners/flippers and landlords… can bare to think about honest younger workers positions-to-income to prospects (those renting/living with parents), without cringing at this insane high priced housing market. Or how they keep the audacity to keep talking about recovery with these painfully high house prices. During all 2000+ the boom years and house prices flying ever higher every year, then a bit of a crash, and then all the QE/0.5% + Global QE $Trillions… to lock in house price inflation gains and 2009 reflate for more “housing wealth”.
That really gets down the meat of the issue. Earlier entrants into the marketplace taking advantage of later entrants. This can only go on for so long before you run out of enough new people willing to participate in the scheme due to diminishing returns. The laws of negative feedback always have a way of creeping in, so something has to give and that’s typically the price of admission.
Of course, the entrenched class with something to lose will come up with all sorts of excuses and deflections in an effort maintain the status quo for as long as possible. That’s why we read the nonsense attempts at justification of how some particular area is somehow insulated from the harsh interconnected realities of the world at large.
I wonder how much value the dollar lost over the last 15 years…
How’s this one for a quick turnaround? Hasn’t worked out so well thus far.
https://www.redfin.com/CA/Los-Angeles/4431-Don-Ricardo-Dr-90008/unit-18/home/6878708
Saying there is “Asian Entertainment” is a violation of fair housing as its considered “steering” one culture to a neighborhood. I hope someone reports this broker.
Pretty sure anyone can enjoy Asian entertainment. You don’t have to be Asian.
Massage parlors are not generally indicative of an upscale location..
I think not. The listing mentions “Asian entertainment” AND “classical and modern cultures.” Hence, the broker could say that he was celebrating the area’s rich diversity, which buyers of all backgrounds love and appreciate.
actually, the fair housing law is very specific including specific words that cannot be used and steering to an Asian neighborhood is one of them.
Lynn, if merely saying “Asian entertainment” is illegal steering, then it shouldn’t be. It’s an idiotic law that needs to go.
It MAY have made sense in the 1960s/1970s, when many of the Fair Housing laws were passed. Back then home buyers relied heavily on realtors, who had exclusive access to home listings. So realtors could easily steer buyers by withholding information.
But today every buyer has access to listings via online services. And buyers, being adults, can see what’s available, decide for themselves where they want to live, and make an offer.
Indeed, online listings are one reason given on this forum for why realtors no longer deserve a 6% commission. They no longer provide any information, they merely help with the contracts and collect their money.
I too have some complaints against realtors. But some people on this forum hate realtors so much, they’re griping about nothing. Saying “Asian entertainment” is grounds for calling in the feds? Get real.
I want to personally thank SOL for bringing that Shakespearean comedy “Much Ado About Nothing” to the comment section of DHB. It really helps the readability of the page as a whole…
In my pricey little corner of the Pasadena area, I’ve noticed significant price cuts (10%+) on a number of listings; often times within just a few weeks of the initial listing.
We all know the market dried up as soon as the private equity groups stopped buying and the people like me who might want to buy simply can’t afford to. I wouldn’t be at all surprised if these were bought to be flipped by people who got into the game a couple months too late and are trying to get out now with a modest loss instead of being stuck with a big one.
I am in the same position being priced out. Save up and wait for price to be affordable again. There is only so many lemons out there that will learn a hard lesson.
Obviously if I could tell the future on such things, I’d be a rich man and not posting here, but the whole thing (housing, economy, whatever) sure feels like it’s all running on its last fumes right now and a drop of ~30% doesn’t seem like it’s out of the question.
I could buy at that price — it would be about even with my current rent — but I suspect that a lot of other people could as well (I do alright, but I’m far from rich) and they’re all standing on the sidelines right now waiting for a chance to jump in. Then we’re right back in this mess again.
It should just be about basic economics of supply and demand. If everyone is on sideline waiting then there is high demand when price drops, possibly drive up prices just like everything else. No one should pay ridiculous prices for flippers. I always check price history in Redfin and stay away from them.
“It should just be about basic economics of supply and demand.”
John, John, John… The myth of supply and demand will never play any part in scientific study. The myth is used by those that control the church of economics to control and confuse the masses. Just like any other founded religion, they defend old world mantras to the very end, executing/imprisoning anyone who is so blasphemous to go against their teachings. The supply and demand myth would never pass scientific methodology as it fails in its assumptions and it fails in its ability to predict. Therefore, it is not a study nor a science rather it’s a religion.
@ pebkac_error “I could buy at that price — it would be about even with my current rent — but I suspect that a lot of other people could as well (I do alright, but I’m far from rich) and they’re all standing on the sidelines right now waiting for a chance to jump in. Then we’re right back in this mess again.”
_____
From Patrick-net re house prices/economy:- ‘Bogus Arguments About Housing’
* As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
FALSE. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing.
*They aren’t making any more land.
TRUE, but sales volume has fallen 40%. It seems they aren’t making any more buyers, either.
The percentage of listings with a price cut for Pasadena in August was 29%, which equals last years high that was hit in November. That is pretty close to the average for LA County in August (33%).
Don’t forget the taper shock 100bp 30 year rate rise early last summer.
Don’t forget the taper talk 100bp 30 year rate rise early last summer…
here, fixed it for ya 🙂
LOL and appreciate the jocularity! Although the Fed has been tapering asset purchases. 2015 should be interesting. Time will be running out soon enough to know if they’re bluffing on tightening.
that first house description reads like English as a 2nd language by whoever wrote it.
In Seattle this makes perfect sense! A guy from Seattle told me so. So there.
He got his crystal ball, ya know it 🙂 …
No Tank? We’ll crapshack! it looks like I’ll be freezing my balls of in Illinois again this winter. :p
Give this market another 2 years. Prices could be down 20-30%, the way I see it.
It’s funny when I see a house list for 650k and few days later instead of lower, they raise by 30k to 680k. Still not sold. I wish market crash so these greedy sellers will take the hit
Told you, housing to Tank Hard in 2016
Isn’t it interesting how the naysayers are not making any money, while everyone else is getting rich?? Ask me about getting rich! Jump on in before it’s too late, the market’s never been better!
@GetRetard, what makes you believe that I, for example, make no riches?
Sleepless – I need moar cowbell!!!
Sure, come on in, the water is warm! What nobody tells you is that everyone has pissed in it. No thanks.
I have been keeping an eye on properties between $1M and $2.5M in Malibu. Decent house, view, decent amount of land. Almost all the houses have very significant price cuts. Anecdotal, but it’s out there.
It’s beyond anecdotes at this point. Hard data clearly shows we’ve recently reached an inflection point in the region as a whole.
It is called money laundering you noobs.
Dear Doctor Bubble,
Asian entertainment = gamble (casinos)
I thought Asian entertainment was watching the drivers in Monterey Park.
Oooooooooh, now I get it! I thought it was foot spas! Learn something new everyday!
Down we go even in high end area
https://www.redfin.com/CA/Irvine/402-Rockefeller-92612/unit-304/home/55377618?utm_source=myredfin&utm_medium=email&utm_campaign=instant_listings_update&utm_content=address&reinfo=ZXhwSWQ9MjE2NjA4MyZleHBJbnN0YW5jZUlkPTIwNzE1MjI0MjIxMjUmY2F0ZWdvcnk9ZW1haWwubGlzdGluZ2FsZXJ0cyZjb2hvcnRJZD1CeV9TYXZlZF9TZWFyY2gmdGFyZ2V0PWhvbWUuYWRkcmVzcyZsb2dpbklkPTI0MjIxMjU=
Not yet has “it” (the condo) gone down. Only the LIST price has come down.
But as Zillow shows, that condo’s most recent SALE price, in January 2014, was for $759,000. So even with the current listing price cut, it would still sell for over the last sold price: http://www.zillow.com/homedetails/402-Rockefeller-UNIT-304-Irvine-CA-92612/111419687_zpid/
Just a greedy flipper trying to make an unrealistic profit after only 8 months. Let’s wait for the actual sale price before anyone calls a tank.
I’ll call a tank when houses are SELLING at less that their previous sale prices, never mind the LIST price.
Just curious but is tank written in invisible ink somewhere in the posts you’re responding to? Is there a cereal box decoder ring one must have because I’m not seeing the word tank in any of these top posts.
Tanky: “Just curious but is tank written in invisible ink somewhere in the posts you’re responding to? Is there a cereal box decoder ring one must have because I’m not seeing the word tank in any of these top posts.”
Sorry, Tanky, I didn’t know you suffered from poor reading comprehension and a short attention span. To understand the post, and my response to it, you must read the ENTIRE TREAD, and all the posts IN CONTEXT of that tread.
The issue of whether SoCal housing is tanking runs throughout this tread. Read the tread and you’ll see people discussing when or if housing will tank, and whether list and/or sales prices are going up or not.
But perhaps you imagine that that home listing was posted arbitrarily, out of context and without trying to make any point whatsoever?
Yes, you should stick to your cereal toys, and not post on an adult blog.
Reading comprehension has nothing to do with the question asked but good try at a diversion wrapped up in an insult.
You’re implying that every non-kool-aid drinker who dareth post something contrary to your message is proclaiming a tank. The time-honored guilt by association tactic to distort the other point of view.
Go look in the mirror whilst asking if one has an issue with reading comprehension. And the whole adult blog comment… here’s a golf clap, pal.
Nice cherry picking Pinocchio. The densely packed urban living experiment in Irvine (created during the bubble years) was an epic failure. This is Irvine, not Manhattan or SF. Care to report back on more traditional neighborhoods tanking? Property prices in Turtle Rock are going through the roof and the Chinese are still buying new 1M+ construction.
Prices are ridiculous to begin with. I can list my crappy home for 900k and reduce by 25k each month still don’t represent prices are going down. I see so many sellers just throwing a crazy number and hope some greater fool will pick it up. Unbelievable
Just watched this video on youtube http://youtu.be/vwO2hEO13iY. It clearly explains why we will have a population crisis in the next 20 years and since most of the wealth is now held by retiring baby boomers, they will have to unload their portfolios (in forms of stock, real estate and bonds) to the Gen X and Millennials.
So…. here it comes, Housing to Tank Hard in next 20 years…
Same old simplistic neo-Malthusian perma-bear gloom-and-doom we’ve been hearing for years. I’d like to discuss more but I have to excuse myself to move some gold bullion I’ve been hoarding into my underground prepper shelter.
That’s awfully rich seeing how you’re commenting on a bearish site and all.
That is soooo 2010.
The other side of the market (affluent coastal South Orange County) is even more baffling. Somebody explain this one to me: https://www.redfin.com/CA/Laguna-Beach/31713-Seacliff-Dr-92651/home/4940093
Read the price history if you want a good laugh. And keep in mind, absolutely no improvements were done to this place since it’s first modern listing in July of 2010.
As of 2013, there are 12 million millionaires in the world — a record high. Only 2% of the world’s land area enjoys a Mediterranean climate, and only a small fraction of that 2% is beachfront property. Given the large pool of domestic and foreign buyers with the means to buy a scarce commodity, there’s enough demand to support the prices.
Miami already has flooding issues due to climate change. There are many homes in Malibu being slapped by the ocean so bad they have to build a huge sea wall. ElNino is passing by California this year — another year of drought. That’s only the Mediterranean climate I know of.
Good Bye Miami – Why Miami is doomed to drown – http://www.rollingstone.com/politics/news/why-the-city-of-miami-is-doomed-to-drown-20130620
And before anyone starts yelling about it being a left wing conspiracy — do your research.
Malibu’s vanishing Broad Beach a sign of rising sea levels, experts say – http://www.latimes.com/local/la-me-beach31-2008dec31-story.html#page=1
Ah, yes, the good ol’ they’re not making anymore land rhetoric. 2% of the world’s land area appears significant on the surface, but as usual the devil is in the details. How much of the world’s land area is inhabited by humans on a reasonable scale of density? Exactly.
Whoever buys this house better be uber wealthy. The uber wealthy have done incredible in the last 5 years. If somebody wants a house on the Laguna waterfront, whether the price is 5, 6 or 7M will not be a deal breaker. These aren’t people on fixed budgets that need to qualify for loans. Properties like this are a completely different animal than your standard 700K stucco box located 3 miles inland.
Because the uber wealthy don’t care about making bad bets or losing money. They’re still trading tulips amongst each other in the millions!
Proposition 13….in principle a good thing…in practice a nightmare for the house market in California.
Even if I had that money I would not pay that price. I would rather buy a lot and build my own than giving them 6M$.
“ven if I had that money I would not pay that price. I would rather buy a lot and build my own than giving them 6M$.”
Pinocchio, that is exactly what Lord B. is saying – there isn’t more land with good view to the ocean and waterfront in a safe mediteranean climate. You can produce millions of millionaires by printing more money and creating inflation, but you can’t produce more oceanfront property in a safe mediteranean climate.
I hope now you understand why prices for those properties increase the most in good times, decreased last and the least when economic depression and start increasing first and the most when it rebounds.
If you don’t like that and don’t agree with me and Lord B. it doesn’t make any difference – it will continue the same way regardless. I know that if you or me get a property like that for free, we can’t pay not even the property taxes and maintenance.
Well it is true there are not that many lots anymore but believe me. I live in the area and I had the opportunity to look at tens of lots with similar views. But building a decent house will cost above my budget limit.
Sure a lot of areas are built but many of those house are so bad that you basically can pay for the land-only. Tear the shack apart and rebuild. To make you an example, a lot in a location way better than the one where that house is built was offered to me for 2.5M$. The cost of the house would have been around 1.5M$ for a total of 4M$.
The house would have been designed by a famous architect in the area, it would have been new and modern with a view much better than the 6M$.
That house I guarantee you will not sell for 6M$.
You saw it here first, folks. Notice how the word safe was slyly inserted into the rhetoric. The inference is that most places with a Mediterranean climate have some sort of an abstract security situation. More smoke and mirrors.
People will tell themselves and everyone else almost anything to perpetuate a subjective narrative about how some place is exceptional above all others. They’ve purchased the oft-promoted idealized concept of Southern California and are compelled to convince others to believe that it’s the best item on the shelf, lest they feel inferior.
Pinocchio….I remember very well those prop 13 debates years ago. It seems the opposition to prop 13 predicated what could happen many years down the road, Howard Jarvis meant well, but in the end prop 13 was and is a major issue.
Gov. Brown vetoes bill on estate recovery: http://capsules.kaiserhealthnews.org/index.php/2014/09/calif-governor-vetoes-bill-to-protect-assets-from-medi-cal/
Land Grabbing is GO!
Took me just a few minutes to find more quick turnover, low-to-no-margin property sales in the area I look at.
Here another one who is going under…back to 2005 and my guess it will close way lower than that if at all.
https://www.redfin.com/CA/Irvine/3339-Watermarke-Pl-92612/home/5980296?utm_source=myredfin&utm_medium=email&utm_campaign=instant_listings_update&utm_content=address&reinfo=ZXhwSWQ9MjE2NjA4MyZleHBJbnN0YW5jZUlkPTIwNzMzMjI0MjIxMjUmY2F0ZWdvcnk9ZW1haWwubGlzdGluZ2FsZXJ0cyZjb2hvcnRJZD1CeV9TYXZlZF9TZWFyY2gmdGFyZ2V0PWhvbWUuYWRkcmVzcyZsb2dpbklkPTI0MjIxMjU=
here another house chasing the market
https://www.redfin.com/CA/Irvine/7-Daystar-92612/home/4745874?utm_source=myredfin&utm_medium=email&utm_campaign=instant_listings_update&utm_content=address&reinfo=ZXhwSWQ9MjE2NjA4MyZleHBJbnN0YW5jZUlkPTIwNzM0MDI0MjIxMjUmY2F0ZWdvcnk9ZW1haWwubGlzdGluZ2FsZXJ0cyZjb2hvcnRJZD1CeV9TYXZlZF9TZWFyY2gmdGFyZ2V0PWhvbWUuYWRkcmVzcyZsb2dpbklkPTI0MjIxMjU=
Now a quick calculation shows that supposing they can sell at the latest asking price (which I doubt) they would have an annualized return not adjusted for inflation of about 6.2%.
If they would have invested that money in the stock market they would have an annualized return not adjusted for inflation (true CAGR) of 9.22%. Now even if I include the fact that they would have needed to pay rent without buying the house you would not even be close to the 9.22% return of the stock market.
And given that they have to pay property taxes and mantainace I can clearly state that a 6.2% return on such an illiquid asset is kind of a bum.
which is easier to sell? A stock or a house? Good luck selling a 1.5M house to buyers who do not have the income to support mortgage+HOA+property taxes+mantainance.
And that 6.2% includes a huge run in house prices which I do not foresee in the future.
I guess yourhaven’t heard that prices never go down in wealthy areas. Wealthy people would never wait for a better deal. That’s how they became wealthy! Duh! Uber wealthy!
Tanky I have a business in one of the most expensive towns in socal. While houses quadrupled in 17 years, today sales are down 40%!!! And prices about 20%!!!
“Poor rich”
It’s amazing I saw hundreds of people line up the other day front of BOFA next to the Apple store! I think they were trying to get home loans to pick up some hot deals! Cause these great prices will not last.
Just to follow these up, although no doubt Doc already done so…
One real-estate website I used to check (I’ve closed the window and can’t recall which one I used to look them up on) stated:
2756 Morningside St.: Sold: $585,000. Sold on 11/12/14
360 Sycamore Gln: Sold: $688,000. Sold on 10/24/14
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