Southern California home sale volume for January slowest since 2008: The stalemate accelerates with Orange County seeing a monthly median price drop of $28,500.

Sales volume continues to be exceptionally weak in Southern California.  The Taco Tuesday debt lovers are finding that HGTV upgrades on crap shacks are luring in fewer lemmings.  People are probably coming to the stark realization that 30 years on a mortgage is a very long-time especially for buying a stucco box with outdated features.  There is this blind forgetfulness that has fundamentally erased what happened in 2008.  Well we just got a nice reminder with the sales volume figures from last month.  The latest data shows that January of 2015 was the slowest January since 2008 which is the record keeping low since 1988.  In 2008 the market was in full implosion mode and the end result is that 1,000,000+ Californians lost their homes to foreclosure.  And the bulk of these people were in traditional mortgages and not your toxic waste junk that made headlines everywhere.  Sales are down 6 percent year-over-year in SoCal from an already slow January 2014 with Orange County and San Bernardino County both seeing 10 percent annual drops.  It is also worth noting that the median price in Orange County fell $28,500 in one month.  The current median price of $562,500 is already below the $600,000 median price we saw in June of 2014.  If it weren’t for the 25 percent of investors in the market, the figures would look even dimmer.

Real estate markets turn at the speed of cruise ships

Real estate markets turn at glacial speeds.  What we can say about California housing is that for the last two decades it has followed a consistent pattern with booms and busts.  Sales volume has always declined first before price adjustments.  What does it tell you that we just had one of the worst January months in terms of sales volume?  Keep in mind the worst January was in 2008 when the market was in full on melt down mode.

Let us look at the median price for LA and OC over the last year since these are ranked among the most inflated counties across the United States:

median price la and oc

Orange County is down $37,500 from June 2014 and L.A. County is off $5,000 from the August 2014 median price.  We are inching closer to year-over-year price declines in what was supposed to be the new permanent plateau.  What we are seeing is nothing new.  This merely fits into the boom and bust nature of the market.  And in California, it is more about psychology and speculation.

Someone made a reference to all this new affluence justifying current prices.  If you look at data of a block very carefully, you will find that there are many golden handcuff baby boomers simply sitting in their stucco box sarcophagus shopping at the 99 Cents Store and relying on Prop 13 to keep taxes low on their property because any slight adjustment will suddenly force them to a Ramen diet.  The perception is that since one crap shack is selling for $700,000 that everyone in the neighborhood has the affluence to live this way.  In reality, the current price would flush out half (if not more) of the current neighborhood which is not the case across the country.  Plus some people think that having one Trader Joe’s is suddenly justification for a $700,000 crap shack.  People are deep into debt and swiping credit cards for feta cheese and two buck chuck.  Nothing wrong with that but don’t confuse this for suddenly having a fleet of wealthy individuals.

And of course, we have tons of “young” adults living with their parents:


In California, 2.3 million young adults live at home because they can’t afford market rents, let alone buying a home.  So many camp out with mom and dad.  And yes, some of these people are shopping at Whole Foods.  Does this suddenly mean we have a massive number of high income households?  No.  It just means that we have markets that suck out more money from your wallet (they don’t call it Whole Paycheck for nothing).  Plus, many higher income households already own property (and many are welcoming their adult kids back home).  Just look at how weak mortgage volume is across the nation:

mba california

Low mortgage rates have not translated to bigger household incomes.  The media tends to go with year-over-year numbers.  Haven’t seen much on the short-term drop in prices but I have seen talks about the drop in sales.  But you see from the above figures that a year-over-year drop in median prices is very likely if low sales volume continues.  Plus with the data on that Torrance block, you realize that many current owners have massive room to wiggle if they wish to sell.  But as we all know, better to eat Friskies on Monday and Tacos on Tuesday and live in a crap shack on Wednesday versus cashing in on that juicy California housing equity.

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172 Responses to “Southern California home sale volume for January slowest since 2008: The stalemate accelerates with Orange County seeing a monthly median price drop of $28,500.”

  • Is 2015 going to be like 2008 or 2007 or somewhere in between? Capitulation is coming sooner than later… Exciting isn’t it? 🙂 Wonder how much the IE’s is down YOY. If I remember the IE was the canary in the coal mine for SoCal last crash.

    • San Diego is the bellwether, not the IE. In the IE, prices are rising and bidding wars are still happening. The population is rising there and now that the economy is healing quite fast, the confidence is up in people to do the commute and get the house instead of rent in L.A. County.

    • Upland median Jan 2014 – $455K
      Upland median Jan 2015 – $455K yes, exactly the same
      Rancho median jan 2014 – 425k
      Rancho median jan 2015 – 420k
      Ontario median jan 2014- 300k
      Ontario median jan 2015 – 330K

      Desirable LA county markets (my business is mostly in the SGV) are stronger. It’s always localized and there is no “tanking” in sight. The only difference has been that the greedy sellers that were overpriced to begin with will either reduce their too high to begin with prices to allow for a sale or decide not to sell and pull off the market. I’m seeing both scenarios play out.

      Contrary to what the tank hards on this blog think there are not nearly as many sellers that truly need to sell as there were in 2009-2011. 2014 was a record breaking year for me and so far 2015 is trending to be my office’s biggest year yet so I have not had much time to post here recently but I enjoy reading all the conflicting comments when I have a few minutes. Best of luck to all of you. Crunch the numbers and do your own research before making the decision to buy.

      • I agree, no tank in sight.

      • For some reason I just don’t believe you. SGV? La Puente? Pomona? You cherry pick 3 sets of data and tell us you’re making more money then ever? Sounds like propaganda to me. I could be wrong. If your an REA in SM, BH, etc. where there is still strong tech and movie money, yes, it’s good to be an REA there. But SGV?

      • So what was the sales volume (I’m sure it was flat or down) and the mix between high end and low end (Skewing high, right)? And if there are less people with a need to sell there are CERTAINLY less people with an ability to buy. Everything is great, until it’s not. How confident are you that the last 35% of this runup is sustainable? In this economy? With the demographic changes and the new normal of lower income can anyone reason why there would not be a pullback?

        I’d also bet that if you include areas like Riverside, San Berdu, Montclair, etc that YoY is definitely down. CAB cherry picked his data.

      • @tolucatom
        plenty of Chicom purchases in the SGV. But if you look at the volume, even in the Chinese enclaves, for him to be having “record years” he either was sucking hard before or he’s up their with Marty Rodriguez of Glendora and the real heavy hitters in SGV RE. I’m assuming it’s neither and he’s an agent with no sales and time to troll. Much like “little r” Robert he’s long on Realtor BS, short on verifiable data in regards to his personal success or market claims.

        Anyone can look at closed sales on Redfin and see that it’s a slow slog in even “Prime” SGV. In this environment it only takes 2 or 3 sucker purchases per city to skew the median. But then that’s 2 or 3 less fools when more inventory come sto bare. Anyone touting this market as healthy adn sustainable really isn’t worth the typing, but I do it for fun. If he really wants to be a web archivist, he should look a little further back than my comments in 2011/12 and look to the cascade of “soft landing” posts from late 2006 through early 2008. A very good takedown of the recent “New Normal” BS is here:

      • SomePeople CallmeMaurice

        “and so far 2015 is trending to be my office’s biggest year yet”

        You are completely full of shit and everyone here knows it. 😉 It doesn’t really matter what house prices are…what matters is sales volume. And you don’t have it, by your own admission.

        So I invite you to keep the bullshit to a minimum and stick to the non peter pan realtor bullshit speak.

      • NZ, Maurice, etc.

        Pretty sad that you all had to resort to sarcasm, ad hominem attacks and complete falsehoods. “By my own admission” WTH are you talking about Maurice? I had a significant increase in volume (transactional and $ amount) YoY and the trend is showing a greater increase so far for 2015. Your claims are baseless and you made no argument whatsoever.

        And let’s get real here NZ. Like I’m going to post my broker’s license # on an anonymous blog. HA. I’m not here asking commenters for their name, address, email address, and personal phone number and I expect the same anonymity from commenters. I actually expected a better argument from you than “yeah he cherry picked his data.” If I was cherry picking I would have shown Chino Hills. I simply listed cities you had previously mentioned interest in yourself.

        Unlike those who go on this board and practically scream that anyone who buys is an idiot, I’m not here preaching any propaganda. I don’t say buy, sell, rent or provide advice either way. My only advice for potential buyers is to buy the location, do your own research and crunch your own numbers.

        The simple fact is that I presented factual data that all of you could not refute so all you could do is talk smack. So let’s put that claim of cherry picking to bed once and for all:

        SB County 1/2014 median sold price $240K, 1/2015 median sold price $254K
        RVSD county 1/2014 median $295K, 1/2015 median sold $296500

    • Typical responses to hard data that I would expect from commenters like you. NZ you didn’t pull the trigger back when prices were in the toilet 2010-2012. If I remember right you were preaching back then how they were going to keep dropping. Haha. You wouldn’t know a good deal if it walked right up and smacked you. You asked for IE. I gave you 3 decent cities in the IE because those are some cities people would want to live in over there. Cities you, in fact, mentioned you were interested in before. Up to you if you want to compare livable areas of the IE to San Murdadino.

      Toluca, SGV is huge. You clearly don’t know the area. See Walnut, Rowland hts, etc. As I said, it’s all localized.

      • Well if you review I have admitted on more than one ocassion that i didn’t think they could reflate things that quickly. that said you DID cherry pick data, and if you were doing so well in the SGV by all means share some closing data on a property or 2. I see nothing in your comments that would require you to seek such anonymity. As far as my “missing out”, I’m in a renatl that fits my budget that is below what even a 20% down on 2012 prices would cost. Better yet i have a hard headed landlord that’s upside down and lives out of state! 🙂

        So CABBY… Please give us your broker info (your surely a broker and not a lowly agent with this level of hubris) so we can admire the awesomeness of your closed sales. Really, what’s stopping you? Do you really think your condescending posts will cost you biz??? Come on. If your doing so well in the SGV you should have plenty of all cash sales which we can marvel upon 🙂

        We’re waiting breathlessly…

      • how well would the RE market be if purchases were based only on income and not investor demand, record low interest rates and MASSIVE government intervention?

        there is no possible way for me to buy into socal real estate AND when i ask my homeowner friends which one of their kids could afford to buy the house they live in (you know, future demand) i always get the same answer “i couldn’t afford to buy the house i live in on the income i currently make, one even said he wouldn’t be able to afford the taxes on the reassessment at current prices….

        this too will end.

      • SomePeople CallmeMaurice

        If one is REA. Real Estate Asshole, de facto pretty much everything you say is useless. You don’t ask a slimey used car salesman what the current state of the auto market is. Why should anyone listen to your nonsense?

    • Let the Tanking begin 🙂

  • LA housing price keeps going up. And it’s not coming down. Sales is down only because of inventory shortage. Builders are smarter now, they don’t build and release new houses as fast as they used to. Most importantly there will be more chinese coming here to inflate the housing price with over the asking price cash offers!!

    • @Clueless, you may certainly be.

      The Chinese boom is over. Oil prices crashing over the last 6 months is due to the Chinese economy stalling. Ditto steel prices, lumber prices, iron ore, coal, natural gas, rice, corn, concrete, etc. The Red Chinese economy was/is one built entirely of credit (i.e. the Chinese central bank makes the Federal Reserve look like penny pinching misers).

      Real estate sales will continue to crawl along. Prices will stagnate until recession comes, then prices will slowly eek downwards over a 3 to 7 year period.

      The SoCal Red Chinese nationalist economic boom is over…

      • @blofeld
        Slowly over 3-7 is optimistic. I’d say rapidly over 2-4 years starting in 2016 with the trough being payment parity with 2011 prices in nominal dollars. Speaking of course to SoCal as a whole. Prime areas get a much smaller haircut and the IE takes one to the jaw. Media, which is of course misleading, down 25% from this cycles highs.

  • Also, people are not selling their current homes, where would they go?! Moving from one shack to another shack? Or if they sell where would their children live?! Many owners will just pass down the properties to their kids. Builders are smarter now, they’re not building and releasing new homes as fast as they used to. The homes investors bought in 08 and 09 probably won’t sell either because they’re making good money on rent. There are simply not enough housing to keep up with the demand. I Just don’t see house value drops in LA anymore. Not this time. With more chinese ppl moving in,just so that their kids can go to school here, I’d be happy if it doesn’t increase another 20% by end of this year.

  • Across the board the RE market is as weak as a kitten. Jobs, always terrible world news, scare of another sub-prime debacle, underwater houses over priced, bad misinformed RE agents, my gosh folks 4% interest, banks starting to loosen credit and still the RE market gets worse and worse every month.

    No question about it, if excellent paying stable jobs with benefits were to come back, buyers would rather pay 5 to 6% then get teased with 3.8% and no prospect of a decent living wage or stability.

    What is the sense of a $5 hamburger when you have $3 in your pocket, rather have $10 in my pocket and pay $8 for the same burger?

    • What are you talking about jobs? The jobs I see, for qualified college grads, and more than enough to afford homes. Those that chose wisely in their career choice, are being rewarded as such. Those that choose to weave baskets are moving to Texas and Georgia.

      • Realist… Not to be arrogant but I read your post and wonder if you are in trouble and want to believe everything is fine to make yourself feel good. I have invested all my life and when a person like me who is the ultimate capitalist tells you things in Ca and the Nation are not good and credit is running at a all time high. House prices are not sustainable because if you check most house sold closing’s the folks took a loss, a bath to get from under, and my friend when people take losses on their house down the road this is a recipe for disaster in the economy?

        Just a thought, do you think the Fed has been reluctant to raise rates even a 1/4 of % because they want rates to be low to make everybody happy, or our they scared to death the nation is worse off then they ever imagined and the recession will look like a cake walk if they make a mistake and raise rates. Even a 100k job is not enough in most locations to afford a nice quality of life. We are in the 5% of the folks doing well in our life that leaves 10% lazy people who don’t care that is common in any era.

        That leaves 85% who are just making it or in a deep hole, this is not going to work out well Realist if this number doesn’t change, you can’t have the middle to upper middle classon hold for this long and not see a huge storm brewing? Take care

      • Realist – Couldn’t agree more, only the well-paid workers are buying homes at these prices and can typically afford it if you have dual-income college educated of at least 100K+ in HH income. Most likely getting the down-payment from their retired parents who put them thru college.

      • Donna.. Where in his post is it mention retired parents are helping out? He said college grads can afford such SO CAL home prices. With student debt and very few companies paying new grads top dollar I believe you missed the message. Well healed and foreign buyers are the market, most new grads are renting? Take care

  • Can someone tell me where they honestly think prices will go from here in the more desirable areas in L.A. — Miracle Mile, West Hollywood, Westwood, West L.A., Santa Monica, Venice? (Forget Beverly Hills, Bel Air, Brentwood.)

    The asking prices I’m seeing are stoopid. $2 to $3 million dollar re-done houses in Miracle Mile. $1.5 million 3 bedroom fixers in Westwood (1,800 square feet, completely original condition). Are they actually getting these prices? It looks ridiculous. Where does it go from here?

    • @ question
      if you do a simple search ‘sold homes’ on Zillow or Trulia, you will see that homes in SM, Venice, WLA, Palisades, Brentwood (spentwood) are selling at high prices, some higher than pre-bubble mania.

      Equally, it is stoopid to think prices in these areas will ever drop significantly.

      AKA: regardless of rent parody, the hosing will NOT tank hard in 2015.

      • SomePeople CallmeMaurice

        Just ask yourself if you can afford the house and still comfortably live a good life without maxing out your credit. Don’t count on the house appreciating much more than inflation. If it all lines up then OK. There will always be an opportunity to buy that’s as good or better than this one.

      • The only way prices can stay so high or go higher is if we have wage inflation. Since there is no sign of that happening, I would expect a bust at worst or stagnation at least. Right now, many first-time buyers are priced out and the move-up market is stalled because people couldn’t afford their current house at current prices. They bought when they could afford it and now they are stuck. It’s a stand off.

    • They absolutely are, I live in West LA and I’ve been to the open houses. The only people who are asking “how is this possible?!” are those who don’t live in these areas, there are LOTS of wealthy people in the LA area, they make their money from all sorts of places, and it’s not typically a salary from a 9-5 job. On top of that, the wealthy only want to live in a handful of neighborhoods, and the Westside happens to be one of them. The Westside also has very limited housing stock, the only way to increase it is infill development, which can only marginally alleviate the shortage. So it’s as simple as that, supply and demand. Those of us who failed to fully appreciate that missed the rare opportunity to pick up an SFR in this area between 2010-2012 at what now seems like a really reasonable price, but upon hindsight it is obvious now that was an aberration. And even then, prices dipped only slightly and inventory was even lower.

      But just to drive the point home, all you have to do is check out prices in LA neighborhoods where the wealthy don’t want live, that’s most of LA county btw, and you can find “affordable” homes quite easily. The real question is whether you are willing to live in those kinds of neighborhoods yourself, and I’m guessing for most people on these boards, the answer is “no”. So there’s your explanation.

      • Dean, you are putting a tear to my eye with your words of wisdom. Welcome to the board. The rich are doing fabulous and only will live in certain areas. Barring a Mad Max scenario, these areas simply won’t go down much. Add in globalization, policies that clearly favor the rich, Prop 13, supply and demand, expensive rents…owning property in desirable parts of socal is a no brainer if you can afford it. There seems to be no shortage of people who can afford it.

        I don’t think socal RE will go up much from here, but I don’t know I could say the same about rents. Renters will continue to get squeezed. Enough squeezing turns renters into owners. As always, buy in the best neighborhood you can at rental parity! 🙂

    • To answer your question as to where prices go from here, my guess is that they remain flat and edge up at something close to the rate of inflation, I think we’ve already picked up most of the gains. As for prices going down significantly, I just don’t see how that could occur despite all the rhetoric on this board. All the weak hands got shaken out between 2008-2011, most of the new buyers are all cash buyers or have 20-40% down payments. They’re not going to walk away from these houses and they can make the payments or they couldn’t have gotten the financing. The only thing that might slow price appreciation right now is another recession, but again, the folks who live in these neighborhoods are mostly immune to economic downturns and it is not likely we’ll see something that happened in 2008 again anytime in the near future. Maybe I’m biased, as I am buying new construction in Playa Vista, but we are putting down about 33% and our anticipated housing expense makes up about 20% of our gross income, and that’s with a 30-year fixed. So I feel like I am being pretty conservative and I don’t think my profile is that different from other buyers on the Westside right now.

      • @Dean
        As some have already mentioned, the bubble is the price of real estate, not the quality of buyers. History is full of bubbles where subprime, stated income, ARM, or 0 down loans were not involved. Even corporations were defaulting on real estate deals. RE prices didn’t stabilize and take off until the government and Fed stepped in. Now, prices are driven up by too many buyers competing for the same industry where inventory has been artificially suppressed.
        As they say, buy when there’s blood in the street and sell when everybody’s buying.

      • Dean – People should take heed to your 2 comments here. I agree that is exactly what is happening in so-cal.

      • Yep. We bought in a desirable area of Culver City last year with 20% down, remodeled an outdated kitchen with cash, our mortgage + taxes are slightly under 20% of our gross income. We’re two working 35 year-old adults, no money from parents.

  • The average consumer is stuck. Declining wages, increasing cost of living in shelter, food, and healthcare. I don’t see how they could expect a different result

  • I posted this in the previous entry by the Doc:

    In the Sacramento Bee today: “Sacramento home sales fall 29% in January”.

    The Sacbee is usually singing a different tune, just last month it reported on hos “robust” and “unstoppable” the Sacramento real estate market is!

  • Given median incomes of So Cal and the extent that debt junkies will go to purchase one of these over priced shacks it’s not going to be the baby boomers munching Friskies and shopping the 99c Store.

  • It’s difficult to see how home prices can even stay level, let alone appreciate, even in wealthy CA, given the headwinds we are up against.

    The stone fact is that the U.S. economy is in contraction that is probably permanent, as swelling population, massive legacy debt loads, and the overhang of promises made 40 years ago by people long gone to their graves, and based on sunny day projections, collide with resource depletion and the economic contraction that is inevitable as a result. We have passed peak oil, peak water, peak arable land. Consider that when these promises were made, we were indeed a wealthy country with ample resources still in the ground and a population of about 200 M largely productive people.

    Now we are a population of 300 million with a vastly depleted resource base, competing with other, hungrier, less complacent countries with hundreds of millions more hungry mouths to feed, that are vying for the world’s remaining mineral, water, and land resources, and that the fossil fuels we have wasted so flagrantly and that have permitted us to build cities of a million people or more in the middle of the desert replete with Hawaii-style landscaping, and feed our population with 1% of us employed in agriculture, are now in steep depletion. As someone remarked, the current “glut” of low-priced oil is merely a glut of folks who no longer have the money to buy it.

    States like CA and my own IL (which is in even worse conditions) are up against massive pension shortfalls and shrinking tax bases. CA is in better shape, arguably, and has the advantages of climate…. for the time being, at least as long as the state can keep its population supplied with water.

    I don’t see this country collapsing in a “mad max” scenario, just sliding downhill, with less and less to feed evermore mouths, everything costing more and nothing working as well as it used to, and fewer opportunities for fewer people. It’s hard to see how even the most prime property will appreciate or even retain its value when the basis for the wealth of those who bought it is remorselessly eroding.

    • Foreign investment makes up for the glut

      • Realis – I said “most likely”, that does not assume anybody else thinks that or stated that. If you say foreign investors, who am I to argue that. It probably is.

    • Excellent post but not sure about the fact that we are out of oil. I don’t know enough but i’ve heard both sides of this argument and there is a good case made for the “plenty of oil to last our lifetimes” crowd.

      • Mike, we are not “out of” oil. We are, however, producing far less of the sweet crude that is easy to extract by “conventional” drilling and easy to extract. That is the Brent Crude, which you will note sells for substantially more per barrel that the heavy, sour crude that we have been getting out of the sands in Canada, and the shale plays here in the US.

        Peak Oil means the peak of oil produced globally, which seems to have been c 2005. The decline since that time in supplies of sweet crude sent prices ratcheting upwards violently in the late 00s, which of course caused steep, rapid economic contraction made much worse by the steep debt overhang. The high prices triggered a wave of investment in shale and tar sands, where the EREOI is steeply lower than in was for the cheap, easy-to-get-at stuff we have for 100 years ripped through with such abandon. EREOI, of course means Energy Returned on Energy Invested.

        The sweet crude that came from the formerly prolific, but now tapped-out, Spindletop field in TX, for example, had an EREOI of about 100:1. In other words, you only had to invest the energy equivalent of 1 barrel of oil to get 100 barrels of sweet, light, easy to refine product. The tar sands, offshore drills, and shale plays, however, have an EREOI of, at best, 5 to 1. And that is optimistic for most of them. The usual EREOI on these plays is more like 1.4 to 1, mostly you must use extreme methods do drill and extract from wells that usually deplete in less than 2 years.

        Right now, even though we are post-peak, there is still “plenty” of oil left, almost half of known reserves, in fact. However, we are on the other side of the slope, we don’t have to “run out” of oil for the systems we rely upon for all our daily needs in this country to wobble badly, and finally collapse. All we need is for a rather small reduction in the amount available to destabilize our economy. A 5% reduction in available supplies threw this country into a complete tailspin in the 70s, destroying the economy for most of that decade, even though we had only half as much suburban, car-dependent development as we do now. What would, say, a 10% reduction in available fuels do to a country where 90% of the country lives in areas where they are totally dependent upon auto transportation, and where a good 30% of workers commute 25 miles or more each direction per day? What will happen to our agriculture when we can no longer dump tons of fossil-fuel based fertilizers on our depleted top soil, or maintain irrigation in CA, where 80% of the water is used by large growers who are irrigating their land to grow wet-climate crops like rice in one of the most arid regions in the country? In short, we are totally dependent upon intricate systems that need copious quantities of liquid fuels just to run, and ongoing depletion will cause these systems to destabilize.

    • –“CA is in better shape, arguably, and has the advantages of climate…. for the time being,”–
      You referred to climate change twice before I got halfway through your comment. You do realize that even your hero AlGore gives us at least another hundred years or so…
      Depleted resources? Huh?
      As for the housing market, things seem slower here in Carmel and the Monterey Peninsula but my friends flipping in San Diego have numerous properties in escrow. Apparently there is a demand for fixed up homes in all neighborhood classes in S.D. County.

      • Where did I mention “climate change”?

        I am not a “climate change” true believer, and St Al Gore is surely not my hero. I speak only of resource depletion and growing population. People who read carelessly tend to conflate “resource depletion” with “climate change” and they are not the same thing.

    • Laura, you are wrong. Just because it “feels” to you like the US economy is contracting, that doesn’t make it so. Please get better informed before trying to spread panic.

      “US economic growth in 2014 fastest in four years”;_ylt=AwrTcdK.qeZUWhkAebYnnIlQ;_ylu=X3oDMTEzbmdoYXFmBHNlYwNzcgRwb3MDMgRjb2xvA2dxMQR2dGlkA1lIUzAwNF8x

      • I’m sorry but telling a poster to become better informed and backing that up with a Yahoo infomercial is kind of ridiculous

      • I’m not believing government spin on econoimic “growth” for a goddamn minute.

        What are we talking about here? Jobs? The growth in jobs is strictly in the low-wage sector, and the “growth” is in equities market averages, which don’t do a crock for the vast majority of low wage earners.

        Take a look at the retail numbers for December 2014. EVERY SINGLE RETAILER reported a drop in sales YOY. Many venerable retail chains are in BK or on the verge.

        Where, exactly, is the growth? Manufacturing? Gimme a break.

        Moreover, the low unemployment figures do not reflect the numbers of people unemployed over 6 months, nor those in part time or “independent contractor” employment.

        Methinks that the touted “growth” in the economy is just more government spin, that barely conceals the increasing impoverishment of private sector businesses and workers, and papers over the increasing number of under-employed workers, people going to college on loans they will never be able to pay back just to avoid looking for a real job, and increasing number of “contractors” working for commission or on a piecrwork basis. Here on the ground, I am seeing small businesses folding that cannot pay higher minimum wages and/or health care costs, and whose owners will never figure in the unemployment statistics as they do not qualify for benefits, and evermore people workign on reduced hours.

        Worst of all, I see ballooning auto and student debt against shrinking private sector incomes, and a shrinking and increasingly impoverished private sector being forced to support an expanding and greedy public sector. The disparity between private and public sector employees is surely as significant as that between the fabled “1%”and the rest of us, to the extent that many landlords here in Chicago prefer to rent to city employees, because they are good for the rent and have stable incomes, unlike fragile private sector people.

      • Even the govt”s own BS economic metrics can’t hide a contracting economy anymore. Like UE is 5.7% Total BS. How about labor participation rates lower than 30 years ago?50M Americans on food stamps? Up from under 30M when Obama took office. If the economy is doing so well, why wont the Fed raise interest rates? THEY CAN’T!
        Keep drinking the MSM koolaid

      • Subtract gov$ injections (military/social services, debt purchases by Fed) from our GDP and recalibrate that “growth”

    • Classic. If you can’t refute the facts, attack the person. I was trying to tell you with DATA that you were wrong that “The stone fact is that the U.S. economy is in contraction that is probably permanent …”

      But if it FEELS different to you, it must me true.

      Yahoo didn’t make the numbers up.
      Neither did CNN:

      Or the Bureau of Economic Analysis:

      Or WSJ – “US Economy posts strongest growth in more than a decade”:

      As to unemployment: significant improvement since U-6 peaked at 17.4% in November 2009, it is now around 11.3%, and dropping. We are not back to full employment by any means, but it’s not the doom-and-gloom so many keep ranting about:

      The US economy has problems, but they aren’t the ones you think. Disagree? Bring data! Don’t just say “Those numbers don’t FEEL true to me, everyone knows they’re fake.”

      Or admit that there is no data that could ever change your mind…

      • @etherist

        I feel sorry for you if you invest based on what CNN and the government are saying. By the way, CNN ALWAYS says what the government is telling them to say for the sheeple. WSJ is always the promoter for ….obviously…Wall Street.

        With that type of data I feel sorry for you. You must be young out of school. Life will teach you by practical experience how much you should rely on that type of data.

        I am happy for you that you are optimistic. I am a realist and some call me cynic. I never trust what the government is saying because 99.9% they lie.

  • I paid off my home in full yesterday, it’s not quite the crap shack 3600 sq foot one 3/4 acres in safe thousand oaks, it’s big enough to help others that may get displaced after the kids leave, 6 bed 4 bath. I wouldn’t spend 750 on a thousand sq ft house, I own a few free and clear and rent them out but I wanted to say one thing about STATS,,, FIRST OFF HOME SALES ARE DOWN BECAUSE INVEntoRY IS LOW, you can’t sell whats not on the market, so figure that in, VERY LOW INVENTORY ! ! ! ! thanks

    • Cheri is absolutely correct. There is no inventory. Of course sales are down when there is nothing to sell. I believe a lot of this is because they typical move-up buyer is staying put since they can not afford a larger home in today’s market. My prediction is for a stagnant market for 2015. The only price decreases I see in greater LA are on properties that were way over-priced in the first place. Properties that are priced realistically are moving quickly.

      • SomePeople CallmeMaurice

        Quick anecdotal. Every house I see for sale in Malibu has a big price drop. If you bought these homes from 2005 to 2008, then you’re still underwater now. Let that be a lesson to you.

    • So, why not do the smart thing and sell that house? If inventory is low, you are in a desirable area, you could likely cash out for a nice sum, move somewhere cheaper, and live comfortably with a nice cushion for retirement, or to help our kids if that is what you want to do, or splurge on nice vacations every year? While you no longer have a mortgage, but you don’t have a crystal ball to know if your house will continue to hold its value! I honestly know several people in California who own their homes outright, who made excuses why they never moved and now are stuck with a big home, an increasingly tight retirement fixed income budget, and are now too frail to do anything! I sold the home in So. Cal. last year, after seeing this phenomena first hand … I now have infinite choices because I have financial freedom, not simply a piece of paper saying this is what I think my house is worth!!!!!!

      • Owning a home is strictly not for investment purposes. Some owners would never sell regardless of price, whatever their personal reasons or situation is.

    • Ok Cheri, so you think you’ve got this figured out and maybe you do, but there is one thing I don’t understand, if inventory is down and that is the sole cause for the low volume, then why are median prices down? It seems to go against that pesky little thing called supply and demand. That is, that if demand is strong and supply is low then prices should be rising not falling.

      • son of a landlord

        Zenithon: “if inventory is down and that is the sole cause for the low volume, then why are median prices down? … if demand is strong and supply is low then prices should be rising not falling.”

        It’s not really accurate to say that “median prices are down” because that implies that all houses are equally desirable, or part of the same housing market.

        Prices ARE rising in certain areas, despite an overall dip in median prices.

        In Santa Monica, median prices are way up. I saw a Washington Blvd. house that sold for over $1,500,000 in 2013. Today that house would easily go for over $2,500,000.

        A few blocks away, in 2013, I saw a crapbox on Stanford Ave listed for $900,000. Now there’s a house on Stanford, a few houses away, listed for $2,275,000. This one’s nicely upgraded, but it’s still the same street and similar lot size.

        Secondly, low inventory makes it hard to draw meaningful inferences from median or average prices. One Santa Monica realtor publishes a weekly list of average prices in all SM neighborhoods. Ocean Park is generally pricier than Sunset Park, but one week her charts showed Sunset Park had a higher average price than Ocean Park.

        But this was because there was only ONE house for sale in Ocean Park, and maybe two or three in Sunset Park. Accurate statistics require a sizable sampling. You can’t infer accurate information from a handful of samples.

      • Zenithon – If I may,

        “That is, that if demand is strong and supply is low then prices should be rising not falling.”

        They are for the most part, and in 2012 & 2013 they did. But they cant rise forever because at a certain price point you run out of qualified buyers. Where that price point stabilizes remains to be seen, I think we are practically there though. However, real estate is local and a home is only worth what a person is willing to pay.

  • I will tell you until we have more supply, HOME PRICES REMAIN HIGH, we are really looking at the gap in the poor and rich, like the great depression of 1929 the rich and poor will pull down the market eventually, when rates go up home prices will go down, but rates may stay low for 1 or 2 or 3 or 5 years, that all depends on jobs and economic bad news which is growing expediciously. home prices this summer higher due to NO ONE selling much, IMHO

    • Cheri… Sounds like you’ve been doing this (owning/renting) awhile. Experience and wisdom drip from your mouth, or should I say finger tips. I concur with you regarding the current market. There are still many owners holding in a ‘pre foreclosure’ pattern, hoping their other shoe won’t drop. Inflation, health insurance and lack of secure jobs is pandemic. Yes, selling inventory is sparse. Realtors are hurting for clients and so are mortgage brokers. Their once competing businesses are merging together trying to stay afloat. The only reason you see these crazy prices is there are very few homes. Yes, any realtor and/or mortgage broker will paint a shiny picture. They NEED clients.

    • cheri – i was just thinking the same thing a couple of days ago. The gap has widened and if you do want to own at these prices at cant, you will have to just move to a cheaper neighborhood or just move out of state. Sucks, it is what it is. Also, I think the Fed knows how sensitive the market is to raising rates and the economy is just not there yet. Its not bad either, I just think you are either in customer service/food service industry or a well-paid white collar job. Those middle-tier jobs paying 40-50k a year have diminished in the job marketplace. And that double-income household paying 80-90k is just not enough to buy in a nice area but in a less desirable area for sure. But families choose to live based on location then price and stretching that dollar so thin, they will probably just rent in a nice area then buy in a less desirable one. Even more so if the like the school system for their kids.

  • son of a landlord

    Another delusional seller, offering a house in Topanga Canyon:

    August 2014, paid $400,000.

    Did some upgrades.

    January 2015, offered for $925,000.

    Has since come down to $899,950.

    What justifies a ca. %125 increase in half a year?

    (Do people here consider Topanga to be prime? There are some multi-million dollar mansions there.)

    • Never liked Topanga Canyon, doesn’t mean houses are not high there, just never liked the location to buy or live.

      • SomePeople CallmeMaurice

        Part of Topanga are beautiful and the schools are excellent. Parts of Topanga are junky in a post hippy way. One big downside on Topanga is that much of the housing stock is bootlegged and self built. You have to watch out and make sure everything is up to code and legal.

      • Sister went on a horse-riding day in Topanga Canyon a while ago.. really enjoyed it. Looked into plots up there, just for research – but I don’t know enough about the risks/real costs of self-build houses (planning permission etc). Also SOAL put me off; the road access is an issue as I saw on streetview.
        son of a landlord
        May 31, 2014 at 9:46 am

        I’d hate to live up in the hills. I’d feel trapped with all those narrow, curving roads. And living amid those dry trees and brush — I can imagine a major fire breaking out, panicked cars trying to escape while emergency vehicles try moving in the opposite direction.

    • All flippers always price their flip at the bleeding edge of what they think the market can bear. But anything being sold really comes down to what a buyer is willing to pay. Whether it is a classic car, home or a piece of art. Given that, a flipper will start high and then drop the price accordingly.

  • Lots of action going on in Irvine! I just visited Hoag Imaging in Westbury, mandarin chinese was the most heard language in the office, but the most killer part is, they hand out free face masks to wear, now I just need the oversized sun visor and I will fit right in…..other than not owning a $700,000+ home and newly printed VISA cards.

    I wonder if the food here tastes better without gutter oil?

    No worries ye proletariat working slogs, ye can sell at a profit and move to the Inland Empire where all the veteran americans go to “enjoy their retirement”. That is if you’ve been a good saver, the rest of ye will work until your health departs you. Enjoy!

  • We hit an iceberg and are taking on water(prices are sinking). I got my AK47 locked and loaded. Crew, you know what happened to Francesco. Party’s over.

  • “If it weren’t for the 25% of investors in the market, the figures would look even dimmer.” It’s amazing that one quarter of the buyers are investors. If this is a preview of a California real estate “tank” (and I think it is), they’re going to get burned.

    • You are right, 1/4 goes to investors. But I always wondered if these investors are flippers (most likely paying under-market) or foreign investors paying at market price to sit and hold? And if the flippers are paying at market speculating prices will rise dramatically in the short-term to still make a profit, they are not very smart flippers! LOL!

  • 11.3 million on medi-cal. 5 million on medicare. 12.7 million on SNAP benefits. 4.7 million on food stamps.

    And that’s just California. Yep… We’re such a wealthy state we can afford for housing to just keep going up and up.

    As for my metro area.(Sacramento).. Mostly state workers and call centers and per capita income a whopping $26739 per year. But who cares about income? As my landlord keeps telling me… Real estate is going to keep going up.

    • Forgot to mention Calpers being 52% underfunded on their bloated ridiculous pensions for state workers. Just under 1 trillion $$ underfunded with fresh retirees asking for their checks and benefits every single day.

      Of course we can all keep paying infinite digits for a roof over our heads.

    • You bring up good points that seem to escape most people who wear those ‘rose colored’ glasses. Just in the last week, there was also another major water main break in L.A., an article on the $1 billion cost to repair all those mains which no one know how they will pay for, and brown water coming out of taps in Gardena due to old water pipes. Ah, but give me my morning latte, living in L.A. is great and we’ll just put off worrying about how I’ll make the mortgage or rent payment next month!

  • As I posted before my owner has given me a notice to move now by April 15 so he can sell this house where I rent a 3-room bachelor. They promised me I would not have to move unless the new owner wanted me out. So much for verbal promises. They will ask $1,340,000 but based on doctor bubble post above the owners may never sell this house that was probably over priced in the first place because of a potential price drop in the coming months. On the other hand Zillow predicts 10% price increase for Chino Hills for 2015.

    So I’ve been scurrying about calling ads for private rooms and bath for rent and looking at homes for sale in Chino Hills. Renting a room in a big house with other people with all the restrictions they will put on me just doesn’t seem like something I want to do. There is a five star mobile home park in town where I could pay cash $60,000 and under and have my own two or three bedroom house with no mortgage but have a payment of $800-$1200 per month for space rent. Private rooms go anywhere from $500 to $1000. If market prices for houses drop considerably, they will also drop for that mobile home and you cannot rent it out wtf? Haha The other mobile home park where you own your own land, space rent is only 200 per month. But the only homes for sale are over $300K and at 6% interest for 20 years the payment will be up around 2000 including taxes and insurance and space rent so that is not appealing.

    I am a senior citizen and this is too much fracking stress for me. One of my daughters is single and in my home in colorado but we don’t get along and she won’t leave the house and we could not live together, yikes and the weather is frightening.

    I have to be out by April 15, 2015.

    • Daughter should be the one schlepping for a room somewhere. Your story was sad until you mentioned you own a home.

      • Would i get your sympathy back if i told you the “house” in Colorado is a 1980 mobile home and that my daughter just came out of the hospital?

    • Have you ever heard of Chiang Mai Thailand?

      You can live like a King there for 1K a month. Better weather than SoCal.

      • “Have you ever heard of Chiang Mai Thailand?” You can live like a King there for 1K a month. Better weather than SoCal.”

        No, but I just looked it up. Average temp there is 98°F in April (the hottest month) and the coolest month has an average temp of 84°F. The weather, like in most of Thailand, is typically hot and humid. You have an interesting definition of “better” weather- interesting as in an ass-backwards. Or you just don’t know what you’re talking about.

        And $1,000/mo will clearly not allow you to live like a king in Chiang Mai, but you can probably live better than you can in the U.S. for that amount. Good luck getting better medical care there than in the U.S.

        Conclusion: The weather and overall quality of life are crappier in Chiang Mai than in the U.S., but if you only have $1k/mo to spend, you can stretch it further in Chiang Mai.


    • Mike: that $200 a month isn’t for space rent but HOA fees, just like with condos and townhome developments with “amenities”. A lot of them are over 55 planned communities. It might be the answer for you. And worth the premium over a room somewhere.

      • Yes you are right about the $200 not being rent and is pretty much a fixed amount unless the board decides to raise it.

    • get a luxury one bedroom apt and spend a little money and live a little. you can’t take it with you and you’re not gonna give it to your daughter in CO

      • That’s what i did but i rented two private rooms and a bath in an upscale neighborhood in Chino Hills. Tremendous pressure has fallen off my shoulders.

        I want to thank the people here on this forum in giving me some of their time to help me make this decision.

        I was a few hours away from buying a mobile home on a lake for cash in a mobile home park and paying $1200 a month space rent. But the real estate agent got sick and I got sick and I couldn’t go see it and so I got to reading here and thinking about all that was said here. It donned on me that $1200 would never go away even on a free and clear mobile home and in fact would always go up with periodic rent increases. Then I wasn’t going to buy the other mobile home where I would own the land because the price was so high it became unaffordable for me and for most people. I was also considering buying a foreclosed house in a really bad area of Chino Hills for about the same price as the mobile home on land. But if I learned one thing from being in real estate for 30 years was that i would stick with the three key principles in buying real estate: location location location so i passed.

        For now I am a renter.

        Thanks again for this forum For all those who gave me help in making this important decision.

      • son of a landlord

        mikebarlow: “It donned on me that $1200”

        It’s “dawned” not “donned.”

      • To mikebarlow:

        I am happy that you were able to arrive at a decision that benefits you, and satisfies you for the time being.

        Now that you’ve made that decision, you have another, larger one to make that you are clearly evading, which is to boot your spoiled, self-entitled daughter who does not respect you and with whom you have no relationship with, out of the house in CO that YOU own and pay for.

        Far be it from me to interfere in what is clearly a complex persona situation with many issues only you can address. But providing your grown, and estranged, child with her own house at your expense while you live in a couple of rented rooms, is going far beyond parental duty.

        I wish you the best of luck in this, and the money to buy yourself a real house in Chino Hills.

      • Mike Barlow: Glad you thought it through to a solution you can live with. I’m with the other posters: what you don’t need is an ungrateful child bleeding you dry while you wind up in the back of the bus.

      • Thanks for the spelling lesson

        I use dictation because my hand hurts to type and I didn’t use spellcheck or so there you go

        Long story haha
        I hear you now the BUT

        We especially her mom has been in enabling her for years

        We have finally stopped giving her any money but her mom is not willing to kick her out of the house because she would be homeless

        I appreciate you being honest with me



      • son of a landlord

        It’s not that the word is misspelled — both words are spelled correctly — but that it’s the wrong word. So a spellchecker wouldn’t have caught it.

        “Dawned” means (among other things) a growing realization. As in “It dawned on me that the house was a poor purchase.”

        “Donned” means to put something on. “I donned my hat and gloves.”

        I suspect you didn’t know the right word, and that it had nothing to do with your dictation. I see people using wrong (albeit correctly spelled) words all the time, partially because they rely so much on spellcheckers that they no longer bother to learn spelling.

        Just as, because of calculators, they no longer learn multiplication tables.

      • Uh, he said he used dictation software, which would have a hard time differentiating between dawned and donned. Give the man a break.

  • How many wealthy mid-easterners are chomping on the bit to buy here? If you lived in any one of those countries that Isis is taking over, wouldn’t you spend it all trying to leave that hellhole? And since you can buy your way here, I’d like to see how many from the mid east are buying and if that’s affecting the markets in the same way the Chinese have done.

    • There are 70,000 Iraqis in San Diego county now according to the Union Tribune. Indians, Russians, various asians, etc etc are also flocking there, meanwhile almost all of the neighborhoods have building restrictions and slow growth mentalities. And then there’s the border situation. It’s all a bit mind boggling.

    • The majority of people I see at open homes in the West LA area are Asian, Middle Eastern or Indian.

      • The lookers/prospective buyers in East Sacramento suburbs are pretty much mainly Indians, then a handful of Asians, followed by few whites.

        All of the new home developments in a 10 mile radius of my zip are 98% bought by Indians. They seem to love new construction…and don’t care what they pay for it.

      • son of a landlord

        I see a lot or mixed couples at the mid-tier open houses in L.A. Usually a white husband and an Asian wife (sometimes Indian, usually Oriental). Also a lot of white couples. Half the time they have a small child or two with them.

        I notice the men usually seem emasculated. They’re big and strong enough, but the body language indicates the wife is in charge. She takes the leads in inspecting the house. He looks at her facial reactions to the house, she disregards his.

        It’s apparent the wife is the one who needs to be pleased. And the husband will take the blame if he can’t afford the house of her dreams.

      • son of a landlord – how funny, happy wife = happy life. The wife falls in love with the house and the husband argues of how expensive it is. LOL!

      • Screw you, son of a landlord. You just assume that the husband makes the money and the wife makes the decisions. When we were looking for a place, that’s what a lot of the agents we met assumed. Lots of women make bank now. Welcome to 2015, it’s a brave new world.

  • It seems to me that owning a home in Southern CA will be a privilege only affordable by the elite wealthy class. The way we are going only the top earners will be able to own property in Southern Cali, the rest will be renters. As it stands now you need to earn 100K+ a year to qualify for a mediocre 500K home in a mediocre neighborhood and that’s with a 100K down-payment in the bank. This is the new reality.

    • I won’t be surprised. Cities like Hongkong, Paris or London have been this way for a long time. Only the rich can afford to own, everyone else has to rent or just live with parents or relatives. Houses here are relatively cheaper compare to other countries, that’s why you see Asians are buying. I’ve seen an apartment for sale for 3mil in HK, and YEs I’m talking about 3mil US Dollars

    • It sure seems that way.

    • Yup, that’s exactly the way its gonna be and at those income levels. We are a nation of renters. Obviously, this is disheartening. I’m always hearing wages need to come to turn things around. But the only way wages are coming up is if the economy hits another BOOM cycle, and there is no industry right now that is going to drive that for years to come. Every market is driven by supply and demand, a couple of years ago there was this talk of a bank’s shadow inventory coming online which never happened or even exists. But if it did exist and they just dumped thousand’s of so-cal homes on the market, sure prices will go down then.

    • Hunan with his ‘new reality’ – why you bother coming here if you’re so complacent the values can’t fall. Doc recognising the bubble phenomenon: “We are inching closer to year-over-year price declines in what was supposed to be the new permanent plateau.”

      In recent months, nearly every day in the MSM (main stream media) I read about this ‘new normal’…. journalists guilty of the biggest cliché of a bubble. Feels like it’s really topping out to me.

      Houses owned outright / or those with very small mortgages.. all the cash-buyers, and not making US main banks any money at all. You can brag how much it’s worth, but time will come when the banks want to get fresh debt on these houses in volume, and best way to do that is with a monster prime price crash, to bring out those of us in position to buy, from panicking freaked out owners rushing to sell as prices cascade. Ohhh… my imagination. Remember, US banks far better capitalized now.

      Those of us who are patient renter-savers, have knives laid against and inside the body of a complacent, over-extended, worn-out home-owner enemy, just ready to cut…

      • son of a landlord

        “Those of us who are patient renter-savers, have knives laid against and inside the body of a complacent, over-extended, worn-out home-owner enemy, just ready to cut…”

        Sure, you can be patient, and wait, and dream of your day of opportunity.

        But a lot of people grow old and die while waiting.

      • Keep the dream alive Brian. I just don’t see this apocalyptic crash coming any time soon. With Fannie Mae and Freddie Mac insuring 90%+ of all the mortgages out there, the feds can’t afford a housing crash. Maybe there will be a 10-20% correction sometime in the future, but that still will not be enough to bring the majority of homes into the affordable range, And if that did happen it would just insight bidding wars from all the pent up buyers like yourself who have been waiting on the sidelines for a decline, that would just push prices back up. Bottom line, in order for there to be a big decline you need a large inventory, and there just isn’t any. Just my 2 cents.

      • BTW Brian, that knife thing is just weird and creepy. Maybe you should keep sayings like that to yourself.

      • It’s from a war-book Hunan – Use of Weapons – because for me there is a war raging in the market; ‘Gents, we are not in disarray! We are falling back. And, all the time, their supply lines get longer. We must take them to the point where they start to think about pulling back, then present them with the possibility – the seeming possibility – of a knock-out blow. But it won’t knock us out; it knocks them out.’

      • Your bottom line is not a fully formed representation of markets in action – although no doubt you have good reason to presume it fully true in the rising price stage.

        Values can also fall by buyers falling away , unwilling or unable to pay the current asking prices. Owners may find themselves with ever declining ‘inventory’ of willing and able proceed-able buyers. And values are set at the margin, and it takes very few new sales at lower prices to bring all house prices down (although I read Doc’s recent blog about this with some interest). Admittedly, rising inventory to market would be nice.

      • Hunan “And if that did happen it would just insight bidding wars from all the pent up buyers like yourself who have been waiting on the sidelines for a decline, that would just push prices back up.”

        Such thinking is really on the complacent side from my market position. It’s one reason prices get ever bubblier; the expectation there are loads of market participants below who will step in to buy at anything near these prices, if market dips. You may find buyer interest instantly disappears, and values cascade, as sellers and remaining buyers transact for much lower prices. A deflationary bust; it’s why a bear market can bankrupt millions of people (homeowners / investors).

        And the Bank of International Settlements is again ringing the alarm about the $9Trillion lent around the world, with US $ having risen 12% and prospect of interest rate rises. BBC World News just announcing that already interest rates between companies and banks, for commercial lending, is notching upwards.

  • Here’s a supporting link for those who will find it hard to believe.

    Most of San Diego County’s estimated 70,000 Iraqis are Chaldeans and are concentrated in and around El Cajon.

    These are the kind of numbers that are occurring with many different nationalities. Why we can’t have any sensibility to this process is beyond me. There are so many places in this country that need a population influx like that but they aren’t put there. Nope.

  • HAPPY NEW YEAR. YEAR OF THE SHEEP FORECAST: The property market will improve for commercial real estate, but as the Earth of this year gets used up, the housing market and real estate overall will decline, except for the sale of expensive homes. People will be more interested in remodeling than in buying and selling. The stock market should also improve due to the Wood Element helping Fire activities, but companies that deal with volatile stocks will do better than those that handle long term investments.

  • mikebarlow,

    Since no one has answered you I give you my opinion of the scenerio you have described. Short-term you should rent, even if this means you need to compromise. Dont make any decisions in haste. If you buy a mobile home there is no guarantee they will not raise your rent or as they are doing here in the bay area trying to force the residents out. Wait this stupidity out.

    • Buying a mobile and leasing the land will put him in the position of potentially being forced out, but not if he owns the land in one of the places he mentioned. As I said the $200 a month is not “space rent” but HOA fees that pay for the maintenance of the common areas and any amenities. The land can’t be sold out from under him as in a leased land park.

      • This. Also, the numbers he cited mean that the monthly cost to him for that HOA would be about the same as the monthly rent on a room somewhere would have been. Difference is with this mobile park nobody can suddenly tell him to leave because they want to sell.

  • The price reductions are probably due to the gray paint I see slathered everywhere. Whatever HGTV tells you gray is not a good choice for exterior or interior. Depressing decoration in the midst of a depression. Shame on you.

  • One word; Drought.

    • A non-factor. People will stop watering lawns (during the day) and there will be less lawn mowers employed. Other than that, the water will always flow. That’s called riot prevention.

    • That is a big word and it is frighteningly real. Californians are in denial. They don’t talk about it. SF had the 1st January in 165 years without one drop of rain. Here’s what it will look like because it’s happening now in Brazil – “São Paulo and the 20 million people who live there are literally running out of water and it’s getting dangerous”

      Read more:

      • son of a landlord

        Among other things, the article says: “Not much has been done to fix broken water systems. Experts say that the best course of action would have been to fix leaky old pipes months or years ago — more than 30% of all the city’s water is lost in leaks or stolen away.”

        It sounds like much of the problem is man-made. I know California’s government isn’t run too well, but hopefully better than Brazil’s.

      • “One-fifth of Los Angeles’ water mains were installed before 1931 but account for close to half the pipes that are most prone to cause damaging leaks, an analysis by the Los Angeles Times has found. Those deteriorating pipes pose a major financial problem for the L.A. Department of Water and Power and city leaders.”

    • It is the drought, which really has very little to do with “climate change”, that I was referring to. It is only because of these huge, costly prosthetic devices known as “dams” and “aquaducts” that CA can support anything like its current population- and even those are failing to avail as the current drought deepens. What is especially creepy is the consideration that the past 100 years have been anomalously wet years in the history of the west, as it becomes known that for most of the area’s history, it has been much drier.

      The fact is that CA and other western states are, always have been, and most likely always will be, incurably arid, and that CA is grossly overpopulated with respect to its scarcest resource, which is water.

      While I have always been a “global warming” or “climate change” skeptic, I’ve also always had a lot of doubt about our ability to continue to supply water to the most arid regions in the country in the quantities necessary to maintain large populations there. Even northern CA is semi- arid, and the stone fact is that if it were not for the 1400 or so dams, reservoirs, and aquaducts in CA, some of which have to move water steeply uphill at great cost in energy which is not quite offset by the power the dams produce, the state would be able to support perhaps a tenth of its current population, while places like Phoenix and Las Vegas would dry up and blow away without the dams of the west that the U.S. taxpayers as a whole have committed trillions of dollars in today’s money to, over the past century.

      It takes copious amounts of liquid fuel to build and maintain these systems, and that might be in steeply shorter supply in coming years.

  • funny how the prices are still higher than they were in January of 2014 when the sales volume is down to what it was in 2008 during the collapse of the market.

    • Historically, home prices are not as volatile except for that one-off during the great recession but that had a lot more to do with the fed letting sub-prime loans run rampant. Now that banks are back to the same-old lending standards before the sub-prime no-doc loans, all the borrowers are well-qualified with skin in the game. These owners will not walk away from their down payment/equity.

      • How many buyers are using their own hard earned cash that they saved as their down payments as opposed to bubble equity from the sale of a house that they bought earlier?

        Have working people really saved $150K to use as 20% down? I thought I had a high household income but outside of my retirement accounts I don’t have anywhere near that amount saved up.

        Its easier to walk away when your down payment wasn’t cash that you saved because that money never really existed.

        Also, another observation: Those weird mortgages that caused the last bubble aren’t necessarily gone. I applied for a mortgage recently and was surprised to be offered 0-down 5/1 ARMs and even an interest-only option, and that’s with a teaser rate lower than a 30 year fixed.

      • @Donna

        The bubble is in the price of real estate, not the quality of the borrowers. Prices crashed in the past, well before subprime loans became popular in the early to mid-2000’s. Even corporations walked away from their own loans when prices fell. The current “recovery” has been investor-led. But even investors would recognize opportunity costs when the investment does not pay off.

      • SouthBayPirate -Its hard to imagine anybody coming up with 100K for a downpayment. The only was I was able to do it was live at home for a few years. I’m sure r.e. agents in the business would have a more consistent idea as to how borrowers get it. If I was to guess, parents who want to help their son/daughter who just got married with a grandchild on the way? Maybe inheritance from grandparents. Maybe a combo of all 3?

        Those weird mortgages are definitely still there, but you are put through a wringer to get them and justifiably so. But if you do qualify for them today, then you qualify for, no big deal as they do serve their purpose if that’s what you want. But at today’s 4% fixed 30, what’s the point. The problem was back then, I swear, anybody with a pulse can get a no-doc, piggyback loan, with no pmi. I believe FICO came up with a formula and sold it to their customers saying, if this borrowers has this fico, the likelihood of making payments is really good. So everything back then was fico driven, meaning if you have good credit, 740+ fic and the income, you can get one of those loans. But not only that, agents were doctoring paystubs to get their borrowers income to qualify. My comapny’s HR lady will tell me how agents would call her and ask her to fudge the numbers. Pure, utter greed down the line from R.E. Agent>Appraiser>Property Insp.>Loan Officer>Tile>escrow, etc. Just close the loan and move on to the next one. Now that things are back to normal, banks must due their due diligence before closing a loan. I recently had the bank call my work the day of my refi. closing and ask HR if I still work their AND to rate my future employment with the company as bad, good, avg, etc. and I have been their for 10 years.

      • Prince Of Heck – I agree, the bubble is definitively in the price. It’s the just the quality of the borrower back then was crap. The same non-savvy loan borrower who trusted their agent and overpaid for the house and didn’t know a balloon payment was coming because like all borrowers, they just care what the payment is, “Can I afford the payment”? And even if they questioned the balloon, who prodded them to just close the loan anyway, their “friend”the agent. All you have to do is refi out of it later because prices are going up and if you don’t buy now you miss out next month.

        Even my company paid 18million for a couple of buildings but short sold one and did a deed in lieu of foreclosure on the other and we now leased it back from them. It was a good deal, otherwise the building would have just sat empty like all the others around us and they don’t have to hassle with setting up a new tenant/lease. The bank was in the business of loans, not leases. But again, 25% investor numbers are too high, not the historic norm. But a flipper/investor buys under market, curious as to the how much of the 25% or foreign investors paying market just to park their money, I assume to keep the principal safe and hope for an equity play for the future. Its public record, not that many homes are sold at deep discounts like before, but they are there, even in the decent areas.

      • I agree with SouthBayPirate and Prince of Heck. “Skin in the game” is probably irrelevant if house prices were to plummet. If you owe $500 on your house but your house is only worth $250k with no economic recovery in sight, a wise choice might by to walk away regardless of how much “skin” you have in the game. This has nothing to do with the quality of the borrower (like Prince of Heck stated); it’s a simple economic choice that any person with half a brain would likely make.

      • It goes both ways, there are people who don’t look at their home as strictly as an investment. They don’t sit there and crunch numbers trying to figure out if they are ahead from what sold down the street. They are aware of what’s going on but they make the payment because their stable job allows them to. People that post/read here are a lot more savvy and agonize over what they paid. I am one of those people. But for avg joe, they will stay and make the payment if they can to keep a stable home for the kids and not walk away from their deposit IF they can recoup it AND they can make the payments.

    • Lynn…It is called ( seller) I’m underwater I need to be rescued, in comes the friendly RE agent who tells seller everything is great list high. Of course nobody see your house so in about 60 days your friendly agent now tells you lower the price you will till make a profit? 60 more days nothing then desperation sets in and you know the rest take a loss and move on?

  • son of a landlord, the wife has ALWAYS taken the lead in choosing the house. The men you see are not “emasculated”- just out of their element and don’t care as much as the wife does.

    Houses are really a woman’s thing. Some man way back in ancient times remarked that men are only guests in their wife’s houses and I think that’s true. Women simply invest a lot more emotion in their houses.

    We have the houses, while the men have the cars and boats

    • Laura dear, you don’t live in L.A. In the small vintage homes in Burbank, there are many single men who pick out the home and live here. They are fixed up real sweet with flowers in the front and well maintained lawns. The prices in Burbank are much cheaper than over the hill.

      • You are right Bruce, 1300 sf in West Hollywood can go for more than $1mil. Burbank homes are a bargain in comparison. Just over the hill.

  • I’m a Boomer and I’m staying put. No kids to take in either. Yipppeee!

    • My goodness what an unempathetic comment to make, on this forum of people who do not own a house and are worried about where to move.

      Try contributing something useful to the discussion next time.

    • ignore Rhiana, who is one of the biggest Trolls on this board…

      She constantly trolls about how her ancient, lonely,old lady of a boomer self is so high and mighty living in her pasadena crap shack she bought in 1970 for $90K

  • What really annoys me on this blog is the trolls who, I don’t know, ignorant at best, or freaking damn stupid at worst. They claim the prices will never go down because of the “rich” Chinese, because of the high paying non-existing jobs (we have already established that that only %5 of the house holds in LA make above $200K) ,etc, and so on. The only high paying jobs left are in the IT. No manufacturing high paying jobs, no energy sector jobs. Everyone cannot be a programmer or DBA, we need more “other” jobs that are no longer here. The labor participation rate is at 30-40 years low. The unemployment is the way it was 5 years ago, nothing has changes, “we” just stopped counting some “folks”. The other part who still believes in the “market fundamentals” that no longer exist in this economy.

    Let me make it clear for everyone…
    1. You didn’t buy in 2009-2011, you wouldn’t buy now even if prices fall. The prices didn’t fall far enough in 2009-2011. People who claim the prices were in the toilet should pull out their brains out of the toilets. The prices would’ve fallen much lower in 2009-2011 if the FED and the government did not intervene with 0% forever interest rates, QE to infinity money printing, trillions in bailouts. Take away the bailouts, return the interest rates to where they were in 2006, stop printing money and see where the prices will go, good luck finding enough rich Chinese to buy all those houses…
    2. Like some already mentioned – the rich Chinese. They come from the same place where the rich Americans come from – the 0% interest money printing banks. The Chinese come from the Chinese central bank, the Americans come from the American one. Chinese are hiding their ill gotten money, but like some mentioned, China is in recession now, so the flow of the ill gotten money will eventually stop.
    3. The .gov programs to support housing like near 0% down payment, visas for the foreign buyers, etc is the example of the failed housing market. The .gov has to go through the hooks to support the current prices, they try to keep it on life support…
    4. The builders do not build enough. Se the #3. Zoning prohibits the builder from building higher or bigger homes, multifamily homes. Aka the government is not interested in the increasing the of the supply (the lows to prolong foreclosures, etc). There is no enough infrastructure in the rural areas to start building because the .gov spends more money on wars than on fixing the roads and bridges.
    5. Wages will rise and people will start affording the homes ones again. No, they will not. That is the reason why we have such a high unemployment. The jobs are gone, forever. Some went to Chinese, some were replaced with robots or computerization, but the lost jobs are not coming back. So we have a supply and demand problem in the labor market. We will not see any significant wage increase any time soon, unless the unemployment suddenly disappears…
    Now, the bears.
    1. The FED will raise the interest rates. Not going to happen in your lifetime. The .gov and the leveraged financial institutions cannot bare anything above 0%. The $18.5Tril government debt and $60Tril the private debt is not repayable. I see more money printing, aka QE whatever, cumming. The only fix for the debt problem is more debt!
    2. The price doesn’t matter, the sale volume matters. No, the price does matter, and the volumes don’t. The whole propose of so called “help” from the government is to make people “feel” rich, so they can start spending more money. The higher the price is, the more people will spend…
    3. The prices will fall if no one can afford to buy. All I see is the inventory is falling… aka the prices will remain the same. See #1 and #2. The FED will keep rates at 0% for ever. Moreover, there is no enough assets to accommodate already printed trillions of $$$$. The only way to save your money is to buy hard assets – aka, farm land, real estate, companies and businesses.

    What cannot go on forever will not. The housing will collapse not because we have low demand or the prices are too high, but because the whole financial system is broken. We do not have a housing or a stock market bubble or something else bubble. The only bubble here is the DEBT bubble. The whole financial system will collapse with the dollar crisis, this is when the housing will tank, but so will everything else. Like robert said, it doesn’t matter if the $1M home now costs $300K if you only have $200K. It is better to have $2M and buy that $1M for $1.5M…

    • Wow! I like it. You had me until you started talking about the dollar in the end. Don’t know enough about that or probably just don’t care about it. Either way, good post. Yea, the trolls bother me too but it ‘s better for discussion purposes. Just feel bad for the readers/lurkers/uninformed to take their troll statements with a grain of salt. People should pay attention to Bull = 4&5, Bear = 1,2,&3.

    • Sleepless,

      I agree with you. I was saying the same thing for years, except in smaller bites (I didn’t want anyone to choke:-) ).
      I was never so hard working guy to type as much as you did. Thank you for taking the time.

  • For those who is still in doubt in what to expect, I would recommend to watch this interview

  • With Telsa, Volvo and now even Apple planning to launch self-driving vehicles between 2017-2020. I predict in the next 15 years LA traffic will become MUCH more pleasant of an experience. People will be able to catch up on sleep… do actual work, read books, watch tv.. all while commuting. Real estate prices for the suburbs will sky-rocket when commutes are no longer miserable experiences.

    • SomePeople CallmeMaurice

      Suburb house prices will what will happen to prices for places without commutes? Or does everything just skyrocket, everywhere, all the time, ad infinitum?

      • The money never runs out apparently. Actually all these advancements should make prices cheaper… but for house prices, there’s such a VI disgusting lust to see them as specuvestments with ridiculous values, rather than homes to house people working / producing value in an economy.

        My young pal with a PhD in Particle Physics (Experimental) and a good undergrad degree in Astrophysics, is now working in a completely low-stress alternative field, in a lower-cost area – rather than try to contribute to tech advancements in high cost (rent-purchase) areas. The specuvestors pricing out many of those who could help companies make leaps and bounds with tech advancement.

    • Not going to happen any time soon. People predicted flying cars, fusion electricity 50 years ago, and we still drive pretty much same carts and burn oil and coal to produce energy. Self driving cars? 30 years from now maybe…

  • I think it’s accurate to say that the OC housing market isn’t as bad as it was in 2008 because supply is constrained. We have a ways to go before we get to the percentage of homes sold seen in 2008 to early 2012 (~10-15%)

    However, after adjusting for supply, the market in OC (~22%) hasn’t been this bad since the beginning of 2012, so it’s also a stretch to say it’s healthy. Healthy was the ~30-50% of the market that was being sold in late 2012 to early 2014.

    I also doubt we’ll see a 2008 style market crash, but I think it’s accurate to say that existing wages alone cannot support these prices. When we see another recession I wouldn’t be surprised if the exit of investors/drop in demand from families takes a good ~15-20% off of home valuations.

    • History is what it is, it happened. I just think it is uneven to compare today’s number with anything that happened during the run-up. It just doesn’t seem like a fair comparison.

      • It’s not just the run up in home prices, it’s also the huge drop during the great recession.

        If the worst market was ~10% of inventory sold, and the best was ~50%, then a healthy market should be at ~30%. At ~22%, assuming it stays there, the market is on the unhealthy side, and the biggest contributor to that is probably little to no wage growth.

    • There are two different markets in Southern California In wealthy coastal cities, and in West LA, prices are higher than ever … higher than 2007 prices.

      In inland areas, prices are substantially lower than 2007 prices.

      So, the pattern of the wealthy getting more of the wealth certainly holds in housing markets.

      • I think that sums it up. More diserable areas go first faster with not as many homes as historically, tthus the inventory issue. Not only that, these homes are typically larger with bigger lots, so less per acre. Then the smaller, denser working neighberhoods go amd they also have the same inventory issue but on a bigger scale but still the same result of supply constraint for qualified buyers who didnt get burned on the last runup and still want to own.

    • IMO, the next price downturn will be worse because the Fed and government have already expanded their energy containing the last one. With fewer qualified or willing organic buyers at today’s prices, would investors step in even if they couldn’t count on a safety net from the powers that be?

  • The only bidding war in housing including IE is the for sale sign companies who can’t handle the traffic?

  • I see another couple losing their shirt, Simi Valley house listed for 960k on the markert 4 months now low 800’s . This house sold in 2007 for 960k. Even if it sells at lets say 810 k with comission 200k loss Wow another home sold another big loser.

    • I agree, there are still a lot of homes that people overpaid for still out there.

      But they are still making the payments because they can afford to. They are not stupid, they know what there house is worth compared to what they paid during the bubble. My cousin is in that same situation but continues to pay but she makes over 6 figures. Why does she pay? I dont know,probably because its her home, raised the kids there, in fact the kids are still there, where else are they gonna go? But most likely because she can still make the payment and it doesn’t bother her. Hell, if she pays it off till the end of term, it’s all just on paper unless she sells. She has good job, but if she did lose her job, short sale here we come, that’s when somebody has the opportunity to take advantage of a distressed sale.

  • I miss Blert. Does anybody know if he’s posting on some other site?

  • The sales tempo should continue to absolutely crater from here on out.

    1) The 0-care tax on First Time Home Buyers is ONLY NOW beginning to kick in… just BEGINNING.

    The average Joe does not read this blog — and hasn’t a CLUE as to what’s in the offing.

    2) Putin’s slow motion, salami-style, aggression will proceed like cancer against the harmony of Europe.

    3) Barry’s zany Iranian gambit is a psychic cancer against pretty much everybody else.

    Atomic missiles under the theocratic thumbs of the mullahs are toxic to commerce.

    At some point a psychological rout will erupt.

    At such a time, land values, real estate values can implode — effectively overnight.

    The buyers run for the hills — and property goes begging for a bid.

  • Housing to tank HARD to fall 2015!

  • We are toast. Look at the Snap benefit recipients of today compared to 2008. The Baltic Dry index is collapsing like in 2008 along with oil and housing indicators are just now about to turn. September and October will be very interesting.

    I live in the I.E. , the recovery is a farce. Skilled craftsman construction workers are living in desperate times. New home building is at historic lows in the area which also means the workforce never came back. Commercial building in the area has never recovered. Mad Max is extreme but families living together , financial resources combined, slow sales and buying power will become a new reality to many people. The rich will prosper and the debt slaves will suffer. Wash, rinse, repeat.

  • I am guessing that many posters here do not own and do not know a lot of people that own real estate, that is the only explanation I can think of for the complete lack of discussion regarding the massive number of pre-peak owners and the ridiculous amount of equity that most are sitting on. This must be a renters’ blog, I guess.

    Most of my friends are in their 40’s and have owned real estate beginning in the late 90’s/early 00’s. Conventional financing, downpayments, been paying down their mortgages for many years. And re-fied into the lowest rates in history to boot. I’ve got a bunch of regular-people type friends sitting on $500K-plus in equity, some a lot more. I myself have about $1.3 free and clear and I’m not Mensa.

    $1 million properties are no stretch/no problem for so many people with a big downpayment. Most of the dpwnpayments I see in North County San Diego are huge.

    Property values do not go up in a straight line forever, but if you are not in the game and building equity than yes, you will probably eventually be priced out. Many already are. For me, I started buying condos and renting out rooms and scraping for years to get started, but people these days won’t do that, I guess that approach is somehow below them.

    If you want a nice house in a nice area you have more competition than you can imagine. I am sorry if you cannot comprehend how much money is on deck and what you are up against, but it’s out there and it’s real. If you are waiting for great property to be affordable in better areas of SoCal, you are going to die a renter. If you have been sitting on the sidelines, you must be feeling that once again the market has run away from you. What were you doing in 2010 when values pulled back? Why didn’t you buy something then?

    Best luck to all in your endeavors, but to those waiting for a big crash and affordability in the nice areas, I think you are going to be disappointed.

    • Anybody who bought in the late 90’s or very early 00’s has no clue what those who didn’t then are facing. That’s you, with no clue.

      Your preaching doesn’t look at the economic changes that took place beginning around 2004; if you already had lots of equity by that year, you would have to have a personality quality called “empathy” (not sympathy) to see what it is like for others. Empathy. You don’t have any.

      One cannot now buy as investment in socal and rent it out and make a profit, without being extremely lucky. Just because you bought early enough doesn’t make you some kind of wise man.

      • Oh please, cue the violins.

        SoCal coastal RE was expensive when I bought my first 2/1 condo. I didn’t rent out a room to make a profit, I rented out a room so I could afford to live there and eat more than Ramen. Did you buy a condo and rent out room to get your first foot in the door in SoCal RE Steve? If not, why not? Did you live with roommates in 2 separate condos over 10 years to get a foothold in RE and build equity Steve? Why not?

        Did you buy property during the last downturn, when prices were 1/3 to 1/2 down from the peak? If you didn’t, why not?

        I can empathize and sympathize with people that have sacrificed to get into RE out here and are making it happen. I look at people who bought at the very peak of the market in ’06, who paid a huge premium, and they have stuck it out and many have property at least if not more valuable than when they bought and they are 9+ years into paying the property off, and say kudos to them, not bad at all for buying at the worst time possible when it comes to valuation.

        I also look at people who got in the game in ’09-’12 when values dropped big and say good for you for getting in the game, you deserve the big jump in equity you have seen in just a few years.

        Plenty of people cannot afford Manhattan, or San Francisco, or London, or Paris, or Hong Kong, or LA, or San Diego, or any number of other metro areas that are expensive. They can either sacrifice and get a foothold or be lifetime renters. Or bail to a place where they can afford to get what they want right now – the mantra of the American entitlement generation – I want it now.

        Perpetual sideline sitters sure are an interesting bunch. When the market goes up they call for a crash and when the market goes down they sit there frozen and unable to pull the trigger, waiting for the market to fall further I guess. Good strategy.

      • Paralysis by analysis, you’ve got to get in the game. In the looooooong run, real estate pays of just like the stock market. You just have to wait. Nobody wants to pay top dollar, but you do your due diligence, bite the bullet and commit, then enjoy your new home. But if you are buying as an investor, good luck.

  • McMansions in SGV are not selling well anymore.
    The Chinese have been missing in action.

  • No housing bust in Irvine. Anyone been up to the new Toll Brothers project at Hidden Canyon ? It is an absolute feeding frenzy – the Chinese are lining up to pay $2.5 million for a home they may not even live in full-time. Lots are being snapped up faster than Toll Brothers is even releasing them! The models won’t be open until end of the month, and already Phase 1 is sold out. Go figure.

  • Whenever there is a impending crash, every one says this is not gonna happen because this time is different than the last time.

    Since 2006, I knew about the crash coming in socal and bought at the bottom in 2011.
    Now, looks like the general economy does not support the recent run in real estate prices and a bust ( big or small ) is due soon. The government is doing all it can to prop up the price.

    I am in san diego btw

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