Today at breakfast I chatted with a realtor. Then me and my fiancee looked at one house. This forces me to change my opinion on where we are in the market. We're deep into Denial. I thought we were going towards fear as I posted yesterday. Heck, the realtor was genuinely happy (even estatic) on his January sales. Good for him... Statistics from show sales are still happening and about at January 2006 rates. (About...) Bummer for me. Good for the Realtors (tm), bad for the GF's...
But that's not the case. Might this delay my time-line? Definitely. But what are the highest income people thinking when they buy a 1,000 ft^2 shack?!? for $1.1 million (per the realtor this morning, I don't doubt its true... stupid. But probably true.)
Ok, I'm trying images for the first time. I'm here take a fair use photo from another blog (where I forgot where I grabbed it... Mea Culpa.) Statistics such as this make me certain we're in for a correction and a real estate triggered recession. Cest la vie.
Worse (for me), this continued RE boom might make my employer determine that the economics justify moving thousands of employees out of state? Possibly. Unfortunately, this increases the probability (in my eyes). We have one set of buildings near some golfing. If this market keeps up, I'd bet the company would love to cash out there. Its not like they haven't sold a bunch of buildings anyway.
And what is it having a home for auction with a minimum bit of $4.7 million?!? We had to stop by the house in Palos Verdes Estates (90275) and look. Did it have antique fireplaces? An elevator? Anything I've come to expect in a home over $2.5 million? Nope. Good luck selling that home. Oh, great view. But I've been in two homes recently that would be $4.5 million dollar homes in this market. The difference in construction and "fittings" is staggering. Let's face it, for $4.5 million the buyer expect phenomenal stonework (maybe woodwork... but you've crossed into the price range where stone can be expected).
Denial. Nothing but denial.
BTW, take a look every Friday night or Saturday at the implode-o-meter. Its amazing how many mortgage firms fail at close of business Friday. We are now at the point where one or two fail *every Friday*. I think its going to speed up.
Unfortunately, we have our first candidate for a bank failure. Sadly, this time is going to make us wish it was only an S&L crisis... sigh. Coast is destined to be toast due to the failure of CCI. It is buried in the following article on Ben's blog:
http://thehousingbubbleblog.com/?p=2206
We're getting ready to sign a 1 year lease on a bigger place. You? Sadly, we're getting to the point we accept that my job will probably travel out of state. Cest la vie. It will make it possible for anyone who stays behind to buy. When? I have no clue.
Remember, only a few hundred of the re-locations have occurred. As best as I can tell, only ~1,700 jobs from Lockheed and Boeing and the about 1000 jobs Nissan have moved out of the area. We see commitments for 1,700 (Lockheed), 1,000 (Boeing), and the 1,000 from Nissan. Thus, of 3,700 jobs announced to be moved, we have 54% of the announced relocations still left to go! Yes, I know only 42% of the Nissan jobs actually moved people. But the jobs are gone and the region is about to discover that real estate prices are a function of income. (Notice I didn't say salary... passive income is important too.)
Got popcorn?
Neil
2 comments:
Just got here from the housing bubble blog link you posted on Ben's site!
Not to worry, seems like you now have two readers! :)
I will periodically visit back as I used to live in the South Bay (Torrance, right near the Del Amo Mall) and have moved away about 6 months ago to Phoenix. I am interested to hear the perspective from the South Bay in the coming months.
Despite your recent change in perspective, I still like the original 6.5 estimate on the Thursday post. Yes it will very from sub-market to sub-market, but I think overall it is a reasonable blanket label. I will back you up and say that 7 should hit by the fall of this year, given the extraordinary levels of consumer debt. That, as well as the sub-prime resets, will be the x-factors that speed up this entire process.
I can already see shades of it out here where I live, and come summer time, things should start to get real interesting. BTW I am a popcorn fan.
Thanks. I hope to get more organized in 2007. Goals are to start posting fliers from open houses, report more on the market (like OC renter, I'm tracking zipreality inventory, but for the local "sub-markets.")
Got popcorn?
Neil
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