What would you say to these Manteca folks?
San Jose Mercury News – Bidding on new Manteca homes makes 34 new owners ecstatic
When homeowner Dave Cantrell walked into the hotel ballroom Saturday where Anderson Homes was auctioning off one-third of the brand-new houses in his Manteca subdivision, he tried to be optimistic.He approached Anderson Homes executive Craig Barton, shook his hand and wished them both luck that the buyers would bid close to the latest asking prices of the 34 homes in the Paseo West subdivision that have been sitting empty since the real estate market soured.
But when the rapid-fire bidding was over 90 minutes later – and one winning bidder stood up like a prize fighter with his arms raised in triumph – Cantrell didn’t even want to look at Barton, the man he invited into his home two weeks ago to calm the fears of his 26 neighbors who worried the auction would tank the value of their homes.
“I’m feeling my worst fears right now,” said Cantrell, who estimated that the auction devalued his neighbors’ homes by roughly $200,000 each compared with what many of them paid a year ago. “I lost a quarter million dollars in value. I’m screwed.”
Cantrell bought his home a year ago for $670,000 (not including the $90,000 he paid to install a pool and miniature golf course). The winning bidder Saturday of an identical home five doors down the street paid $391,000 – 38 percent less than what he paid.
Burbed Reader Mike forwarded this on to me. Do you have any words of wisdom or advice for these Manteca folks?
October 24th, 2007 at 5:51 am
“Do you have any words of wisdom or advice for these Manteca folks?”
Hmm.. how about, “Don’t have bought a house for a lot more than it was worth.”
October 24th, 2007 at 7:07 am
“If you’ve got fixed-rate loans, then it doesn’t matter what the local values are, unless your long-term financial plans absolutely depended on a refinance to extract equity. If you’re on an ARM, then gasoline is an excellent accelerant; just make sure that you leave most of your household goods and maybe a pet in the house so that the cops ‘know’ it wasn’t arson.”
October 24th, 2007 at 7:08 am
PS miniature golf. fucking miniature golf. ok guy seriously now what the fuck.
October 24th, 2007 at 7:22 am
“If you’ve got fixed-rate loans, then it doesn’t matter what the local values are, unless your long-term financial plans absolutely depended on a refinance to extract equity”
… or if you intended to move at some point.
October 24th, 2007 at 7:41 am
“Haw haw!”
October 24th, 2007 at 7:51 am
He should have bought in the Bay Area where housing only goes up!
October 24th, 2007 at 7:56 am
Life Lesson:
Only pay what YOU think something is worth, not what others tell you it’s worth. If the price is above your valuation, walk away.
I apply this principle to most of my purchases, big or small. For example, why pay $5 for a box of cereal when you know that sooner or later it will be on sale for half that price. Same thing applies to houses.
October 24th, 2007 at 8:46 am
Here’s my advice, quoting the character “Nelson” from the Simpsons: “HAAaaaa Haaaaaaaaaa!”
October 24th, 2007 at 9:47 am
%38 discount and he still over paid.
October 24th, 2007 at 10:03 am
E-Rod: Yeah, I’m thinking that six months from now, all those 38%-discount buyers will be wailing that the house next door just sold for $285K…
October 24th, 2007 at 10:22 am
Funny, friend of mine bought a house in Manteca an year ago and tried to convince me that it was the buyer’s market and price will go only up since then… Manteca is definitely not in Bay Area.
October 24th, 2007 at 10:24 am
Manteca is a suburb of Stockton and has little or nothing to do with the Bay Area (aside from the odd “extreme commuter”).
October 24th, 2007 at 10:40 am
Nothing says “you’ve made it” like a miniature golf course all your own!!
Don’t people realize this RE crash is a large-scale event?
Working from what the average person can actually AFFORD to pay, we’re talking maybe 3X the average wage, which in the US is $30K, so hey presto, we’re talking $90k. That’s what it should cost. $90k. Let’s say this person’s a high-roller though and making the Bay Area average wage, $50k, which would make the property $150k. There you have it. The most optimistic valuation for this POS would be $90k – $150k. That’s what its value will be when the dust has finally settled on the RE bubble and the US economy. And it will have a Victory garden out front.
October 24th, 2007 at 10:40 am
PS nothing against the city of Manteca, you gotta love a city who’s name in English is Lard.
October 24th, 2007 at 10:49 am
>Let’s say this person’s a high-roller though and making the Bay Area average wage, $50k, which would make the property $150k.
Er… the Median Wage in the BA is $100k.
The target median house price IMHO is $450k.
http://www.burbed.com/2007/02/16/how-the-bay-area-caused-home-prices-to-go-up-nationally/
October 24th, 2007 at 11:34 am
I think ESR meant to say “Manteca average wage” – which is $46,000. Its neighbor Stockton has a median income of only $35,000.
October 24th, 2007 at 11:41 am
Ah.
Well that’s different then.
FWIW, Stockton clocks in at $41k
http://www.city-data.com/city/Stockton-California.html
Manteca – $55,800
http://www.city-data.com/city/Manteca-California.html
October 24th, 2007 at 11:50 am
This is insane. I knew people spending 600k in manteca were all out of their fricken minds. I feel bad for this guy, but he deserves it. I mean CMON ITS MANTECA!!!!! WTF??
October 24th, 2007 at 12:44 pm
I thought the median BA income was around $50k, but then I remembered just now, that’s for the OLD BA …….
October 24th, 2007 at 1:00 pm
That’s true, in 2005-2006 people were lumping everything from Sacramento (hey, you’ve got the Capitol Corridor, right?) down to San Luis Obispo into the Bay Area. Now that houses are foreclosing, we’re seeing which areas REALLY deserve to be in the Bay Area. That’s the 2.0 part.
October 24th, 2007 at 2:33 pm
> “I lost a quarter million dollars in value. I’m screwed.”
Only way you can recover those million dollars by buying more homes with miniature golf course. After all THEY ARE NOT MAKING LAND ANYMORE!
October 24th, 2007 at 2:53 pm
Shoulda…Coulda…Woulda….bought a shack in Sunnyvale for $670K.
October 25th, 2007 at 1:26 am
The median household income for all bay area counties is $72,000. For Santa Clara County, it’s $78,000.
The median income is not what you should use to guage the median house price. Historically, in virtually every part of the country (including the bay area), the median house price has hovered around 5.0-5.5x the local median income. This means that if the median income is $80,000, the market will support house prices in the range of 400-480k.
The median house is NOT bought by the median income family. Generally speaking, only the top 60-80% of incomes can/should realistically qualify for the mortgage on anything, with the remaining 20-40% renting permanently.
Lop off the bottom 30% of households from the “buyers” category and you wind up moving that median from $80,000 to around $120,000 — suddenly the $500k house looks reasonable. At 20% down and a 6.5% fixed 30 year mortgage you’d be paying under 30% with property taxes included. If you’re making $120k a year and can’t save $100k over the course of 4-5 years while renting, stop buying so much crap.
By that metric, it’s probably safe to say that a reasonable median in the bay area is $400-500k. Currently the median is still nearly $700k. It would take a minimum 20-30% price drop to make things rational.
Unfortunately, bay area buyers are not rational. People are more than willing to spend more than half of their income on a house. Thanks to Prop 13 and reverse mortgages we aren’t seeing old people being “forced” to sell. Greedy owners who are overly concerned with property values refuse to allow any significant new development, despite the huge swaths of unused land all throughout the bay area cities. I fully expect people to continue shelling out outrageous sums of money for shitty houses for many long years.
October 25th, 2007 at 1:20 pm
Take heart in the fact that the guy with his arms over his head also paid too much.
October 26th, 2007 at 1:48 pm
kiss your downpayment goodbye and walk, no run, away.
October 27th, 2007 at 5:54 am
[...] a Kevin posted a good explanation: What would you say to these Manteca folks? — Burbed.com: Your San Francisco Bay Area Home and … The median household income for all bay area counties is $72,000. For Santa Clara County, it’s [...]
October 27th, 2007 at 4:02 pm
Anyone who has installed a miniature golf course at his home is either rich enough to afford a measly quarter million dollar loss or is an idiot.
Judging by this guy’s reaction, I’m guessing he is in the latter category.