Which areas will be removed from the Real Bay Area next for falling home prices?
CELEBRITY FAME! This house in Redwood City could make you a millionaire! [Burbed.com]
madhaus Says:
May 15th, 2008 at 1:37 pmWell said, Pralay, in comparing apples to apples instead of oranges, or as some in this group would misdirect, to armpits.
Unlike Santa Ana (which is a pit), Irvine was considered a desirable location and had its premium sections such as Turtle Rock. ALL of them are underwater now, because so much of that region was tied to the funny mortgage money business.
Here’s my prediction of which areas will be removed from the RBA next, in order, with RBA defined as “where prices never go down.”
- Redwood City 94062 and everything north
- the 10 good blocks of Santa Clara near Mayfield Park in CUSD
- Sunnyvale 94087 non-CUSD
- Mountain View 94040
- Mountain View 94041 (94043 is not RBA)
- What little of San Jose was in RBA (some 95125, all 95129)
- Sunnyvale CUSD
- Los Altos 94022
- Cupertino 95014 except SW hills/Kennedy MS
- Los Gatos (I don’t know the zips, but it will be one and then the other)
- West Menlo Park (east is not RBA)
- South Palo Alto including everything east of Middlefield not already kicked out of RBA
- Saratoga
- Palo Alto, Middlefield to El Camino, central (east of Middlefield already ruled non RBA)
- Los Altos 94024
- Woodside/Portola Valley/Los Altos Hills
- rest of Palo AltoRemember, premium places mean people can afford to wait until prices come back. Prices are down in the good areas, but people are choosing not to sell at market rates.
Wow… that’s a pretty bold prediction. 94040 and 94041? Palo Alto?
Personally, I’m thinking the Real Bay Area might actually expand! Didn’t you hear about CNet? Isn’t Facebook ready to pop? Look, even Plaxo got aquired! The money tap is wide open - $’s are a gushing.
Here’s a counter claim - Gilroy will be back in the RBA by the end of 2009! You heard it here first!
What are your predictions?
May 17th, 2008 at 6:44 am
Well folks, jumbo mortgages FINALLY took the drop that everyone was waiting for. A full point lopped off every month.
Called my broker and confirmed this yesterday. I’m refinancing on Monday! Hurray!
http://www.mercurynews.com/ci_9292706?nclick_check=1
Fannie Mae Chief Executive Daniel Mudd announced last week that the company will purchase jumbo-conforming loans from lenders using essentially the same pricing structure it uses for conforming loans. Freddie Mac has done the same.
May 17th, 2008 at 8:46 am
The person who wrote the post is basically disconnected with the business world. Most of his associates are worker bee types so he does not know how money is made.
May 17th, 2008 at 8:53 am
Stevo,
That’s right. This kind of rate is unprecedented. I believe the rate will eventually drop to the 5’s range (it was briefly at 5.875 already), and if it hits 5.5, it may very well send the local housing market into a frenzy.
May 17th, 2008 at 8:57 am
This economic collapse we’re in is large-scale. And it’s just getting started. I think the article is more correct than incorrect, we’ll see more areas drop out of the “Real Bay Area” as time goes by.
May 17th, 2008 at 10:13 am
Madhaus,
What? No timeline to go with the list of towns?
May 17th, 2008 at 10:14 am
Real Estater,
Since most people are “worker bees”, if they can’t afford to buy, it stands to reason that prices will drop.
BTW, what is your social circle comprised of?
May 17th, 2008 at 11:27 am
Historian,
I have a pretty wide circle, but I know very few who don’t own their primary residence. Most own a home in the Real Bay Area, ranging from $1M-ish from the list of cities above to multiple million in places like Atherton and Hillsborough. I’ve never heard of anyone even talking about foreclosure.
May 17th, 2008 at 12:52 pm
Here’s the latest DataQuick sales info, hot off the press, through April 25th. It supports my predictions rather than Lawrence Yun and his acolytes.
Of 53 zip codes reported on in Santa Clara county, here’s all of them with sales volume up this year over last.
City ….. .. Zip … median..%chg… $/sf #sls %chg
San Jose 95119 $357,250 -48.1% $244 7 16.7%
San Jose 95121 $478,000 -22.9% $329 28 16.7%
Yup, that’s it. Overall sales volume in the county is down more than 40%.
Now, prices. They’re down too. What’s more, even the places that were increasing in price are increasing much more slowly. Last month, second-tier zips (Cupertino, Sunnyvale ‘87) were up 15-20% over last year’s medians. This month, they’re just above flat. Highest end zips continue to drop.
Here are all the zips with price increases, and selected RBA zips that are going down from last year. Los Altos 94024 has crossed into negative appreciation land.
City ….. .. Zip … median..%chg… $/sf #sls %chg
Cupertino 95014 $908,000 2.3% $645 42 -49.4%
Los Gatos 95030 $1,800,000 6.3% $731 9 -67.9%
Los Gatos 95032 $1,265,500 18.4% $560 20 -63.0% — but 95033 is down >25%
Palo Alto 94301 $995,000 11.8% $783 15 -37.5% — but 94306 down 9%
San Jose 95125 $800,000 1.3% $491 44 -22.8% — Willow Glen slowing down too
San Jose 95129 $884,750 2.9% $536 25 -43.2% — this is CUSD, also slowing down
San Jose 95130 $785,000 1.3% $581 5 -64.3%
San Jose 95134 $585,250 7.4% $419 5 -37.5%
San Jose 95138 $1,325,000 47.0% $398 11 -59.3% — What’s going on here? New big development?
Santa Clara 95051 $637,250 13.3% $482 40 -41.2% — 3rd week in a row of increases for this partial CUSD zip
Sunnyvale 94087 $929,250 0.5% $608 32 -25.6% — Looks like the end of the run-up for the best zip in the ‘vale
Here are the elite zips going down, down, down:
City ….. .. Zip … median..%chg… $/sf #sls %chg
Los Altos 94022 $1,464,000 -27.7% $768 6 -76.0%
Los Altos 94024 $1,689,000 -0.6% $827 19 -34.5%
Mountain View 94040 $570,000 -39.5% $533 18 -30.8% — what happened? this place was HOT last month
Mountain View 94041 $775,000 -8.8% $521 7 -12.5%
Mountain View 94043 $662,500 -5.4% $479 23 -17.9%
Palo Alto 94306 $1,175,000 -9.3% $795 17 -39.3%
Saratoga 95070 $1,500,000 -4.8% $717 36 -36.8%
Any questions?
May 17th, 2008 at 4:26 pm
These number make no sense. Just pull up mlslistings.com. Mountain View has zero properties listed for under $599K, yet the median for 94040 is somehow $570K?
94041 has a median of $775K? There are only 7 (out of 60) properties listed for this amount or less in Mtn. View. Same thing for 94043.
Ok, so these are listings, so they haven’t sold. So pull up Juliana’s sale-by-sale report: http://www.julianalee.com/reinfo/sold-MV.htm
(leaving aside 103.9% of asking price for a moment). Look at those sales. None sold less than $649K last month and only ONE sold less than $879K.
Pull up Palo Alto and there are only 13 out of 80+ properties listed at or below the supposed median of $1.175M. Juliana’s report show’s only 3 out of 32 properties selling below this median.
So, the only way this makes sense is that condo & resale/new homes are getting munged with this data (eg: 16 Mtn. View homes vs. 36 condos). Thanks to our handy-dandy Creekside Realty graph, we know that’s a meaningless comparison for RBA…
My suggestion for RBA zipcode week-watchers is altosresearch (I won’t even try to convince anyone on Zillow and my understanding of Trulia is that condos are munged here as well). Altos’ latest medians for for new/resale in Mountain View (yes, I subscribe):
94040: 1.123M
94041: $932K
94043: $842K
Cheers,
Stevo
May 17th, 2008 at 4:55 pm
More trouble on the horizon…
Easter Seals feels bite of housing downturn
JONDI GUMZ - Sentinel staff writer
Article Launched: 05/16/2008 09:11:37 AM PDT
Last year, the Realtors for Easter Seals golf tournament in Aptos raised more than $40,000, sending kids with cerebral palsy to summer camp in Boulder Creek. It was Easter Seals’ second largest fundraiser in California.
This year, organizers are having trouble getting sponsors for the June 20 benefit. Lenders and title companies that gave $1,000 last year have said no. At this time last year, all the foursomes were filled. This year only half of the 144 slots are taken.
“The picture is bleak,” said Tony Crane of First Horizon Home Loans, who is personally sponsoring a hole for $200 and beating the bushes for other sponsors.
“It’s sad our industry has been hit so hard,” said Misty Ewald of Century 21 in Aptos, who has volunteered for the Easter Seals golf benefit since it started seven years ago. “We’re not getting the money we’re used to.”
To compensate, she is soliciting donations from other groups and other industries.
“The Hells Angels donated $500 for the first time ever,” she said.
http://www.santacruzsentinel.com/ci_9282531
May 17th, 2008 at 5:10 pm
Madhaus
Would it be possible to add Redwood City, San Carlos, and Belmont to your data quick list for comparison? I know it’s a different county, but some of us are looking to buy further up the peninsula and it would be interesting to see how zip codes in San Mateo Co are holding up vs Santa Clara Co. I saw that Redwood City had either fallen off or was barely hanging on in your RBA map, but my impression is that San Carlos is holding on and should still be on your map of the RBA not lumped in with Redwood City or Belmont. (No worries if it’s too time consuming to pull the data.)
May 17th, 2008 at 6:18 pm
Stepford -
I believe Madhaus is pulling straight from the Mercury News website (you can search on Santa clara home sales and see it). That’s publicly available info.
Again, Aptos research does week-by-week analysis by zip. $20/month.
Stevo
May 17th, 2008 at 7:07 pm
Thanks, Stevo. Found it!
May 17th, 2008 at 7:27 pm
Stevo, since you subscribe to Altos research, it would be cool if you could share the latest numbers every week. Yes, condos are munged into the Dataquick numbers. That’s what I can get for free. But even with condos the trends are interesting. If you have better data, please share it.
Stepford Hottie the San Mateo data is also at SJ Mercury News, which is where I get these numbers every week. Since I haven’t been checking those numbers I can’t comment on trends like I’ve noticed in the Santa Clara numbers.
Here’s some San Mateo zip snapshots.
What’s up (prices):
City… Zip… Median…% chg $/sf
Burlingame 94010 $1,559,000 1.4% $714 30 -42.3%
Menlo Park 94025 $1,150,000 12.8% $799 37 -31.5%
Millbrae 94030 $889,000 18.2% $628 16 -55.6%
Redwood City 94061 $830,000 7.4% $556 23 -17.9%
San Mateo 94401 $704,500 4.2% $530 14 -39.1%
San Mateo 94402 $1,295,500 10.7% $676 18 -50.0%
San Mateo 94404 $799,000 2.3% $501 18 -41.9%
What’s up (volume):
Brisbane 94005 $660,000 -26.7% $602 4 300.0% — Wow, from 1 to 4!
Daly City 94014 $530,000 -10.9% $464 19 58.3%
Daly City 94015 $560,000 -16.4% $436 41 2.5%
Redwood City 94063 & 65 are flat and the others are down.
Note: All the best zips are missing from the list (Atherton, Hillsborough, Woodside etc), probably because too few sales by the week. 1 sale in Portola Valley.
What’s down that’s prime:
May 17th, 2008 at 7:28 pm
Sorry about not closing the bold tag. Burbed, the preview often only works for the first 5-8 lines or so.
May 17th, 2008 at 8:48 pm
Madhaus -
Not sure if I can do every week, but frankly, you only need this report every once-in-awhile.
Unfortunately, you only get one city/subscription (I think Altos should change their licensing), so I have Mountain View. Here’s the link to the latest:
http://www.mediafire.com/?lftmn1bszjn
This report shows, well, what we know. Expensive homes are doing fine, less expensive are declining. I’m not sure how much I believe the increase in price/sq. ft, but you can draw your conclusions.
In any case, I know the group here loves data, so have at a new source of data…
May 17th, 2008 at 10:18 pm
>>These number make no sense. Just pull up mlslistings.com. Mountain View has zero properties listed for under $599K, yet the median for 94040 is somehow $570K?
Stevo,
You’re right. These numbers are totally meaningless. He quotes these numbers week after week, without understanding what’s included in these numbers. Anyone with rudimentary knowledge of the local market knows the numbers don’t jive with reality.
To anyone here who is really interested in the pulse of the Bay Area market, I strongly recommend that you ignore anything posted by Madhaus. Read it for entertainment if you must, but this guy has no clue what he’s talking about.
May 17th, 2008 at 10:47 pm
Spot checking:
Los Altos 94022 -
Madhaus: $768/sq ft
Reality: $938/sq ft
(http://isvr.net/usr/1000139178/CustomPages/la_94022_mcr.htm)
Palo Alto 94306 -
Madhaus: $795/sq ft
Reality: $840/sq ft, 107% sales price/list price ratio
(http://isvr.net/usr/1000139178/CustomPages/pa_94306_mcr.htm)
End of story. Do not feed this troll any more.
May 17th, 2008 at 11:16 pm
$100 a week per city? Ouch. To cover the RBA alone, that’s like $100 a month for a serious buyer.
May 17th, 2008 at 11:59 pm
Stevo, thanks very much for sharing the numbers. Unfortunately, I couldn’t get the download to work tonight. The window with the PDF just crashed each time.
I’ll try again tomorrow but no joy thus far.
$20 per zip a month? Ooof.
May 18th, 2008 at 12:36 am
Thanks Stevo. I am able to download the file after couple of attempts. Somehow FF is failing to download. But eventually it worked with IE. Here some highlights from the data:
Median List Price: $926,500 (Trend Down)
Asking Price per Square Foot: $646 (Trend Down)
Total Inventory: 60 (Trend Up)
Percent of Properties with Price Decrease: 37%
Now zipcode-wise:
94040 Median: $1,123,500 (Trend Down)
94041 Median: $932,400 (Trend Down)
94043 Median: $842,475 (Trend Up)
And analysis has something called Market Action Index (MAI) which is kind of cool.
May 18th, 2008 at 12:52 am
In addition, the median price graph at page 3. The graph goes back to 2005. Every year the median price starts dropping after summer and eventually bottoms at Nov/Dec. Then it starts going up from next year January.
But there is no such upward trend in 2008, and we are in month of May now.
No Spring Bounce in 2008?
May 18th, 2008 at 6:02 am
RealEstater, you’re the troll.
Buy now or be priced out forever, right?! AHAHHAHAHA
May 18th, 2008 at 6:53 am
“RealEstater, you’re the troll.
Buy now or be priced out forever, right?! AHAHHAHAHA”
Don’t get him mad, Alex, he’ll start bragging about his Porsche.
May 18th, 2008 at 7:44 am
RealEstater must be a real estate agent. Those dirtbags had a huge role in this real estate mess. Yet they continue to pump this crap. Just like that NAR mouthpiece, Lawrence Yun.
May 18th, 2008 at 10:46 am
new link here. Hope it works better:
http://www.flipdrive.com/fileops.php?download=Altos+Market+Intelligence+Details_CA_MOUNTAIN+VIEW_2008-05-09.pdf
Pralay, I was anticipating your permabear response just as I’m anticipating RE’s permabull note. This .pdf shows a mixed picture:
- At an aggregate level, there has been NO Spring Bounce (!)
- Inventory is fairly high at 60
- Market Action has tanked (look at the drop in late 2007). My understanding is that MA is a mix of inventory + sales…
BUT
- The quartile view is kinda cool. By its very definition, this shows the top 25%, top 50%, bottom 50%, and bottom 25% properties. Why is this important? Because this avoids the “weighting” issue that happens when you have too many low-price properties sell vs. high and vice versa
- Looking at the top quartile in aggregate, you do see a nice steady up trend…
- This is backed up by price/sq. ft., which has amazingly gone from about $575 throughout 2005 to about $675 this year.
- Look at “Days on Market” by quartile. This shows the lower two deciles at about 50 days, yet the top two deciles are at 25.
So there you go… I think the low end of Mountain View is not looking so great, but high-end continues to do well. In the end, it’s the same old story…
May 18th, 2008 at 11:02 am
Stevo,
The concept of Quartile is cool. But the problem is that dataset is very small for cities like MV. Something that is based on 2-3 sales can easily get skewed.
Here the analysis from Altos research doc you have provided (page 3, right column):
“Prices have been trending down almost across the board. It is atypical that Quartile 1 is the one
showing strength. Unless we see persistent strength in the Market Action Index, Quartile 1 will likely resume the trend of the rest of the market.”
May 18th, 2008 at 11:02 am
ah, crap, this is a private link service. Anyone have a good FREE ftp service that I can upload this .pdf to?
By the way, on the Spring Bounce item, whether or not you believe high-end is bouncing with the rest or not, last week’s interest rate cut for jumbo loans is a big deal. As I mentioned in my initial January post, it’s the single reason I think RBA properties will do well. You suddenly are able to afford a property $100K+ more expensive than you were a week ago (or you can save $100K+ off a property you were looking at a week ago, however you want to look at it). That’s going to have a significant impact on demand and inventory … and thus price. Especially since this offer “only” lasts this year.
May 18th, 2008 at 1:21 pm
Alex,
>>RealEstater, you’re the troll.
It’s not trolling if I’m providing house-by-house sales data to disprove the “you don’t know what you’re getting” summary data given by the amateur guy.
>>RealEstater must be a real estate agent.
This point has already been discussed numerous times in other threads, and it’s been amply shown that I am not in any way related to the industry.
May 18th, 2008 at 1:24 pm
Lionel,
>>Don’t get him mad, Alex, he’ll start bragging about his Porsche.
Let’s put things in perspective. A typical home in the Bay Area is worth 8-10 Porsches. There is nothing here remotely worth “bragging” about. Don’t be an agry renter. Be a proud homeowner!
May 18th, 2008 at 3:11 pm
“Don’t be an agry renter. Be a proud homeowner!”
Wow, you’re really brimming with creativity today, huh, Realestater? I think that’s why other posters so readily confuse you with the lobotomized drones who sell houses.
As to angry, well, I’m renting an awesome 3/2 tudor in one of the more beautiful neighborhoods in Seattle, a block from my best friend and within walking distance of the university where study and work. For 1800/month. Yeah, it’s absolute hell. Later today I’m going to ride about a hundred feet to a bike trail that runs up along Lake Washington. Now if that doesn’t make one bitter, I don’t know what would. I love my family, my friends, and my work. And I also love to poke at some jackass computer twit in the RBA who probably bought a house recently enough that he’s beginning to feel as if he made a HUGE mistake and is going to take it in shorts. Life is good.
May 18th, 2008 at 3:43 pm
Lionel and Alex, trolls are like fires. Remove the fuel and they burn out. So don’t feed. Thanks.
Stevo I’d love to see that report, but I’m running Firefox too. Guess the first site doesn’t like it. Also, do you consider me a permabear as well?
May 18th, 2008 at 5:14 pm
i still think all of you really abuse the word troll.
May 18th, 2008 at 5:24 pm
Crossroads,
Basically, whenever Madhaus hears something he doesn’t like, he shifts into name calling mode. He thinks he can control the conversations, but no one is buying it.
May 18th, 2008 at 9:46 pm
And I also love to poke at some jackass computer twit in the RBA who probably bought a house recently enough that he’s beginning to feel as if he made a HUGE mistake and is going to take it in shorts. Life is good.
———
Lionel,
Probably you are not talking about Proud Homeowner, but a Worried Homeowner. Or may be Not-saved-enough-for-retirement-and-counting-on-home-equity-homeowner.
Don’t ever think that all the homeowners are boring Proud Homeowners who water their lawns for whole day. There are all kind of homeowners:
There are Angry Homeowners (from old burbed). There is Tantrum-throwing Homeowner. And, they may not be as popular as Desperate Housewives, but Desperate Homeowners are making headlines nowadays.
See, homeowners are such diverse kind of people. And you renters are only one type - Angry Renter.
May 18th, 2008 at 10:05 pm
Lionel,
Home ownership is as American as apple pie and baseball. Nothing wrong with being a proud homeowner.
I hope you enjoy the bike trails. That’s pretty much the only thing you can do in Seattle other than soak in the rain.
May 18th, 2008 at 10:10 pm
Madhaus,
Don’t feed the troll!
Doe be the doe!
Don’t buy my zip code it’s only up 3 fold!
May 18th, 2008 at 10:37 pm
“I hope you enjoy the bike trails. That’s pretty much the only thing you can do in Seattle other than soak in the rain.”
Ouch. Another good one, Realestater. Exceptional imagination you have. I mean, rain and Seattle, who ever puts those two things together? It’s like San Jose and… well, nothing comes to mind, but I’m sure there’s something about San Jose people think about, other than that awful song.
“Nothing wrong with being a proud homeowner.”
No, there’s not, but there is something wrong, perhaps even nasty, about encouraging people to buy property when we’re cresting what will be the largest drop in real estate value in the history of our country. You’re a supreme twit, realesatater, and you deserve the massive drop in equity you’re going to experience over the next five years. Enjoy.
May 19th, 2008 at 1:33 am
The schadenfreude at watching fools throwing good money after bad for the sake of some vague concept of home “ownership” is more entertaining than anything Hollywood can produce, especially watching it unfold in an area with so many supposedly intelligent, bright and creative minds (but whoever said wealth equals brains?). Home-owneders, thanks for the laughs!
May 19th, 2008 at 3:56 am
>>but there is something wrong, perhaps even nasty, about encouraging people to buy property when we’re cresting what will be the largest drop in real estate value in the history of our country.
Lionel,
I finally get where the disconnect is. You’re not even in the Bay Area! You don’t understand. There is no real estate drop here. We are insulated from the national housing downturn. What you see is not what we see. While you guys are having trouble moving $300K houses, we are tearing down $1M houses, and spending another million to build a new McMansion on the same lot.
May 19th, 2008 at 8:42 am
“There is no drop here”
Sure. If you say so.
As between Seattle and the Bay Area, all you have to do is look at the percentage run up over trend line the last 6 or so years, since that is where houses will return to. I know both markets well, and Seattle is definitely the better buy, although I wouldn’t buy either right now.
“We are insulated from the national housing downturn”
Have you seen prices? 90% of Bay Area zip codes are down. Some by more than 25%. The very few that aren’t will be there within months. Are you telling me that there was no real estate bubble in the Bay Area? Can you not discern a huge upward spike in prices above trendline starting in around 2001?
Are you telling me that lending standards don’t effect Bay Area buyers? That’s right, all BA buyers pay all cash. I mean, no Bay Area homebuyers purchased using option ARMs, right? Oh wait…and those haven’t even begun to reset.
May 19th, 2008 at 9:08 am
Sure. If you say so.
———–
R,
It goes back to same laughable argument: It did not rain this week, therefore it is not going to rain next week.
May 19th, 2008 at 9:22 am
I agree. Good way of putting it.
RE, out of curiosity, are you yourself now buying real estate? Is it your position/advise that now is a good time for others to buy? Saying the market in certain select areas hasn’t fallen yet is one thing, saying that it won’t fall in the near future is another.
May 19th, 2008 at 9:32 am
Are you telling me that lending standards don’t effect Bay Area buyers? That’s right, all BA buyers pay all cash. I mean, no Bay Area homebuyers purchased using option ARMs, right? Oh wait…and those haven’t even begun to reset.
R, you got it. I sent burbed a link to a pretty cool site but since it hasn’t appeared here, I’ll provide the link in another post. But the NY Federal Reserve has data and dynamic maps showing how widespread these subprime and Alt-A loans are. Some of the numbers are pretty frightening with how many of these loans are delinquent, or resetting within 12 months.
That’s part of why I’ve been discussing the DataQuick/Mercury News stats every week. If you keep looking at those numbers every week you can see trends. And while 6 weeks ago, some RBA zips were up double-digit on median price from a year ago, many of them are now down, and others are only up 2-3% so they’re about to start heading down. If you understand physics and calculus, then you know how to describe the motion of a “what goes up must come down” parabola. g, your 2nd derivative, is negative.
But then again, that’s why I’ve been suggesting it doesn’t make sense to feed trolls. They thrive on attention, so don’t provide it.
May 19th, 2008 at 9:34 am
My prediction: it will again be cheaper to buy than rent, and that day will come very, very soon outside the real bay area.
Inside the RBA, that day will also come, but it’s a couple years out.
Since I’d prefer not to wait, I’m probably going to buy a nice 3/2 in the Santa Teresa hills for $300k or so next year. Right now, they’re going for $450k, down from $600k two years ago, so this is a very realistic goal.
I’d love to hear actual number predictions, with dates, from both bears and bulls… it’ll give us something to mock them for in a year or so. Keep it within a 12 month window, so there’s a chance you’ll still be around when it hits
May 19th, 2008 at 9:45 am
“We are insulated from the national housing downturn.”
Now I finally get the disconnect. You’re not tethered to reality. As always, RE, thanks for the morning laugh. Wow. You are in for one big, honking surprise. I had a friend from Burlingame who asked me if it would be a good time to buy. Not knowing the market well, I looked at the stats: according to Money Mag, median household income is slightly over 100K, median house price over a million. 10X income, about par for the course for the Bay Area during the bubble. Not sustainable, RE. People might be dumb enough to use exotic products to “purchase” these houses, but eventually that gap has to close. If it’s happening in the Hamptons and Greenwich, it’s going to happen there too.
May 19th, 2008 at 9:48 am
Jim D, that list of crashing RBA places is on a 2 year timeline. For the last block standing. We’re already seeing low-end Cupertino prices going down (Rancho Rinkydinky), the middle will follow within 3 months and the high end before the end of ‘08.
Some of the higher-priced 94087 properties are not moving at all (over $1.3 mil), just sitting there, hoping someone will take ‘em to the prom. All those properties in CUSD, so it’s about to slop south to 95014 proper.
We’ll see the same thing play out in Palo Alto next year. That’s my prediction and I’m sticking to it.
May 19th, 2008 at 11:06 am
>>I’d love to hear actual number predictions, with dates, from both bears and bulls
Did you see what the Conference Board is saying? The forecast is for modest economic growth, no recession. Some experts are saying that the worst of the housing and economic crisis will be over by the end of this year. Southern California is already experiencing a sales jump of 21%:
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/05/19/financial/f101235D45.DTL
By the time buyers return to the market in force, the doom-sayers here will be trampled.
May 19th, 2008 at 11:15 am
>>Some of the higher-priced 94087 properties are not moving at all (over $1.3 mil)
There is never been much of a market for homes over $1.3M in 94087. Those properties are pushing the envelope. Just think about it. For $1.3M, would you still want to be in Sunnyvale?
Most of the action is around $1M, and at that price homes are selling quickly. There has not been much inventory south of Fremont Ave. all year.
One final comment. From an investment perspective, the rule of thumb is to avoid the top end of a neighborhood. Even on the street level, you want to be in the crappiest house on the best possible street. That gives you maximum potential.
May 19th, 2008 at 12:09 pm
If it’s happening in the Hamptons and Greenwich, it’s going to happen there too.
——–
Take the example of San Jose median sale price. It was going up through out 2007. It started dropping only very recently - from January 2008. That means till Dec 2007, anybody could make very same laughable argument - price did not drop in 2007, therefore will not drop in future.
———-
We’ll see the same thing play out in Palo Alto next year. That’s my prediction and I’m sticking to it.
———-
As you can see in Alto research data (provided by Stevo), MV mid-range is already started getting affected by downturn. It’s matter of time it will catch up with high-range. Once it happens, PA is not far.
May 19th, 2008 at 2:02 pm
“Southern California is already experiencing a sales jump of 21%:”
Wrong. Jumped from previous month, but dropped 19% YOY. All that’s happening are morons are buying REOs, all thinking they’re junior Donald Trumps. Well, they are. They’re going to go BK just as the Donald will.
Some twit was crowing on calculated risk about how houses in OC were selling fast, ignoring that 71% of sales were either REOs or short sales. Gee whiz, that’s great news when nearly 3/4 of the houses selling are foreclosures.
As I said earlier, as long as income/price ratios are so horribly skewed, prices will keep dropping and dropping and dropping. What will 4X income look like in your neck of the woods, RE?
May 19th, 2008 at 2:04 pm
Here’s another happy stat from CA:
L.A. home prices down 19.4%, back to March ‘05 levels
More on today’s DataQuick report on April home sales in Southern California: Median sales prices in Los Angeles have fallen 20.9% from peak levels, 19.4% over the past year, and have now rolled back to March 2005 levels, according to DataQuick’s analysis.
May 19th, 2008 at 2:21 pm
Lionel,
The reason sale increased is mentioned by the report:
Nonetheless I always keep hearing the argument that RBA is different and special, therefore downturn in other parts of California won’t affect RBA. If I use the same logic, upturn in San Diego won’t help RBA either. Although it was not really an upturn.
May 19th, 2008 at 2:29 pm
So you know that 94062 includes Woodside as well.
May 19th, 2008 at 2:50 pm
So you know that 94062 includes Woodside as well.
I sure do. I lived in Emerald Lake at one point, and found that mail addressed to me with “Woodside” instead of “Redwood City” found me just fine. Heh heh.
Anyway that’s why I said “Redwood City 94062″ and not just the zip by itself. Woodside makes it to the semifinals. The finals is which block of Palo Alto will sell without a loss.
May 19th, 2008 at 3:09 pm
>>MV mid-range is already started getting affected by downturn. It’s matter of time it will catch up with high-range. Once it happens, PA is not far.
There’s no scientific basis to any of your predictions. Even in stock market anaysis, where there’s an abundance of graphs and data available, the majority of the analysts are wrong most of the time. A self-appointed amateur analyst has no chance at all. You’ve been predicting the sky’s falling for months now, and nothing has happened.
May 19th, 2008 at 3:28 pm
>>As I said earlier, as long as income/price ratios are so horribly skewed, prices will keep dropping and dropping and dropping. What will 4X income look like in your neck of the woods, RE?
This issue has been discussed here multiple times already. The ratio you’re talking about mostly affect blue collar, non-RBA neighborhoods. Indeed we are seeing those neighborhoods being affected. However, in America, majority of the wealth is owned by the top quartile of the population. Thus, the “average” income (which is quite high in the BA) doesn’t matter to a large extent, because RBA is a premium market. When you own a house in the RBA, the money comes to you. As I said, be where the money is…not where the hiking is!
May 19th, 2008 at 3:43 pm
Damn! Money IS COMING to this guy! Pretty soon this regular Silicon Valley tech guy won’t be working for paystubs, health insurance and most importantly frequent flyer mileage. I am soooooo jealous!
May 19th, 2008 at 3:55 pm
Pralay, DNFTT. You need to spend your discretionary cash (and as a renter, you’ve got a lot) more wisely than on troll food.
May 19th, 2008 at 4:07 pm
You need to spend your discretionary cash (and as a renter, you’ve got a lot) more wisely than on troll food.
———–
But you know what, Madhaus - you were wrong all along. Your all those stats/data were not really scientific. After many considerations, I decided to buy a multi million dollar home in RBA so that MONEY COMES TO ME. Once money comes to me, I don’t need to spend money WISELY on troll food. I can spend as much I can. Ha ha!
Ooops! I am again confused. What comes first?
Money comes to me first and then I buy a multi-million dollar home?
Or I buy multi-million dollar home first and then money starts coming to me?
It is such a chicken-egg confused scenario! Anybody (except Madhaus, because he is wrong all along) to help me?
May 19th, 2008 at 4:42 pm
After many considerations, I decided to buy a multi million dollar home in RBA so that MONEY COMES TO ME. Once money comes to me, I don’t need to spend money WISELY on troll food. I can spend as much I can. Ha ha!
I must not live in the RBA then. I’ve been in this house since 1993 and the money clearly comes out of my checking account and goes to the mortgage company. But I tested your theory. I asked everyone at work where they lived and how much money comes to them. And sure enough, the top dude who lives in Portola Valley had the most money coming to him. And the killa-commutas from Tracy, their money comes to the oil companies.
May 19th, 2008 at 5:10 pm
I must not live in the RBA then.
——–
Of course you don’t. These are the reasons:
1. In your zipcode $1.3 million homes are not moving.
2. Your data is not scientific (data—>mathematics/mathematician—->people who don’t get Nobel prizes—->non-scientific—->not smart enough for RBA).
3. Money never comes to you.
May 19th, 2008 at 6:10 pm
“Thus, the “average” income (which is quite high in the BA) doesn’t matter to a large extent, because RBA is a premium market.”
I do admire your ability to rationalize, RE. It’s going to be useful when the RBA gets hammered over the next few years. The pablum you’re spewing is identical to what people said in the 90’s back in LA. Premium neighborhoods like the Palisades will never go down. Well, they do. Hard. I have a buddy who lost 400K in a few months back in that time. All he did was buy a nicer house next door to his own. The market whipsawed so fast he couldn’t sell his own house and he was hosed. Prices come down. Because ultimately people have to pay for their homes. If people in the RBA actually could afford their houses, they wouldn’t be using an overabundance of crappy loan products like I/Os, which have dominated your market over the last few years.
May 19th, 2008 at 8:52 pm
My prediction (no surprises here) is a sharp dip by the end of 2009 all over the BA (resets) & decline for a couple of years thereafter in the RBA, as people try to wait out the sellers. With lots of minor ups & downs based on pandering like the Fannie Mae announcement. Predict bottom in 2011.
May 19th, 2008 at 8:59 pm
It’ll be interesting to see how the political situation plays out with RE. My guess is, if it’s Hillary, she will try to bail out the pre-foreclosure crowd & probably prolong the pain. I think Obama won’t. McCain, given his history, will do what makes the banks happy.
I’m thinking if it’s anyone but Obama, we’re looking at a lot of inflation. If it’s him… I dunno.
May 19th, 2008 at 11:00 pm
All,
Here’s my challenge to Madhaus.
A) If his prediction comes true, I will personally buy his house for $800K to bail him out.
B) If his prediction fails to come true, he shall retire from this site and redirect his energy to guitar playing.
Madhaus, are you up to it?
May 20th, 2008 at 12:15 am
Lionel,
>>It’s going to be useful when the RBA gets hammered over the next few years.
Long before RBA gets hammered, you would’ve lost your job in Seattle, and forced to move to the BA to find employment. In other words, it will take a full blown depression to affect the RBA.
>>The pablum you’re spewing is identical to what people said in the 90’s back in LA.
Don’t compare us to LA. BA is special.
May 20th, 2008 at 8:44 am
Madhaus,
Don’t go into hiding now. Still remember Pralay’s fiasco where he could not identify a single bargain house in the Bay Area? Are you willing to stand behind your own prediction?