New home prices plunge!

Hot on the heels of the news that existing-home sales dropped in September by the biggest amount on record, we get news that new home prices dropped 9.7%! This is huge because as you all know they were going up by about the same amount for each of the last 5 years. Also, this drop happened while sales of new homes actually rose 5.3% from the month before. The explanation is that builders are now offering insane incentives to get people to close the deal. Still, sales are down 14.2% from September 2005. And the number of unsold homes sitting on the market are up 47%. All music to my ears...

It's gonna be a while

It's still gonna be a while until places are affordable enough for me to get in. I mean, when our requirements are 2bd, ideally a den or dining room, parking, washer/dryer, it adds up. Up to something like 800k+ in San Francisco. That means we need another 25% price drop! Because 800k means what, 4k a month in payments? 5k? Fucking crazy. I am seeing the same places every week do open houses. Good sign. It's Thursday today so I'm sure I'll start seeing signs go up in preparation for this weekend. I will have my usual report soon after.

"This is likely the trough for sales"

More comedy from National Association of Realtor's chief economist David Lereah:

"The worst is behind us as far as a market correction -- this is likely the trough for sales," said David Lereah, the Realtors' chief economist. "When consumers recognize that home sales are stabilizing, we'll see the buyers who've been on the sidelines get back into the market."

Read the article here. What he's commenting on is the latest info on existing home sales. It says that they have fallen for a 6th month and prices have dropped year-over-year by the LARGEST amount ever recorded. That would be 2.5%. It is all just beginning. Mr. Lereah seems to think that people will magically jump back into housing as soon as prices start dropping. The declines are ACCELERATING. Anyone with half a brain will wait to see how this plays out.

$679,000 lofts

... still exist. And while that is outrageously expensive for most people (1bd 1ba) it is far from the high for such dwellings in SF. This place is in the Lower Haight area; not exactly known as a Beverly Hills. I didn't bother to go into the open house last weekend, preferring to enjoy my Burger Joint burger at home.

October 22 Open Houses

I won't be able to hit any open houses this weekend due to prior commitments but I should be back to it the following weekend. I'm already seeing signs pop up as realtors get ready, and desperate. If anyone wants to share their experiences from this weekend do drop a note.

DNN - Fake real estate news network

Someone has to call bullshit on this... I was looking at Yahoo Finance as I usually do and noticed a video link to a story called "Why the housing market is still in good shape". I didn't really look at the news source (DNN) assuming it would be reputable because Yahoo uses ABC, CNN, Forbes etc...
The news guy in the video even looked familiar. Turns out he's former CNN Headline News anchor Bob Losure. I poked around the site though anod noticed that everything was about real estate. And just about everything was gung-ho about the market, except for a few headlines in their Top Stories segment in which they can't help to mention some of the actual cold, hard facts about the market. The bottom of the main page even mentions the sponsors of the site... all luxury home builders. I wish I could say I can't believe this kind of shit is put up with well-known news outlets but alas, I'm not surprised (see previous comments on insanity/corruption). Beware of DNN.

"The worst may be behind us."

More housing industry lackeys voicing their hopes after a housing starts blipped up in September. They are still down 18% from last year. And permits for future building are really down. Permits are considered a real leading indicator of housing and the economy in general. This is the article I saw on MarketWatch.
On other news core inflation inched up last month but is up a lot (2.9%) since last year. The Fed don't like that. On top of this you can be sure gas prices will be heading up after this pre-election relief. Look for more out-of-control inflation next year and as a result even higher interest rates.

"This doesn't help anyone"

It seems I can't turn on the television or radio without having to sit through an innane commentary on the "cooling" housing market. This morning's NBC11 morning news show had some statistics on Bay Area home price declines during September. The handsome chap to the right talked through a number of counties around here like Sonoma's 7.7% price decline in September. Then he made the bizarre comment that these price declines don't help anyone . His "argument" was something like home OWNERS lose value in their house and home BUYERS are still unable to buy a house. Sure, not all of us can afford a house still but it sure as hell is going to help. You know what else is going to help? October's decline... and November's... and yes even December's. Actually, I'm helped just fine knowing someone in Sonoma lost 50k in their house. It might keep them from putting another RX330 on the road. It's the many dipshit reporters like this guy that contributed to the madness of the bubble. Most of these people OWN HOMES. They're not going to go on the air and talk straight while their families are depending on the inflated prices of their homes.

Don't trust the neighbors!

There is a comical segment on Good Morning America something like Sell Your House in a Week or some shit like that.
It started back in September and they are still stuck with the segment because the place has apparently not had one offer!
This morning they had an interview with the home's realtor. I can't believe she would show her face on national TV after this. And she has the gall to give advice on the air. What a fucking winner. Here is a pic of her. Typical shiny-faced, smiling honky. So she and the interviewer start trading whiny comments on how sad and tragic it is for this poor family to have their nest egg threatened as their house can't sell. Later we find out that they refuse to budge on the price. Here are a few of her brilliant tips for sellers: Price it Right, Put Aside Your Ego, Don't Listen to the Neighbors. What does the last one mean? Fuck knows but she was babbling something about how your neighbors won't tell you to being the price down because that brings down their home price so do NOT under any circumstances trust your neighbors.

I'll be here until 4:30

So a few words about last weekend... we decided to check out some a few of the rash of open houses that have appeared within a few blocks of us. Many 1bd condos with asking prices heading down towards 400k. But we already know we're not buying yet. I'm sticking with my prediction that by this time next year we'll get that second room for the price of a 1bd today.

Here are our requirements: at least one 1bd, parking, either another bedroom/insuite laundry/office/den/second bedroom... some other room.

So there were three open houses just a block from Divisadero. Now it should be stated that I'm not interested in helping anyone sell their homes. In fact, part of the reason for checking out open houses is to give these realtors some hope that the market is still a magical fairyland. Whatever small thing I can do to confuse and frustrate these people is worth my time. So needless to say I won't be advertising any homes by mentioning specific addresses.

First place we went to had a total of 6 1bd units. And may I say they are tiny units. 3 were just remodeled and the other 3 are being worked on as fast as the minimum wage immigrants can work. This pic is the exterior. We checked out all 3 completed units and no one else came to see it during that time. All the usual shit like stainless steel appliances, plasic-looking wood floors, staged IKEA furniture. The dude representing the building was actually pretty helpful explaining what an individual TIC is and telling us why you don't see many sq. ft numbers (some idiot sued because the number advertised didn't exactly match the number they measure after they moved in). I did my usual act of pretending to be really interested in buying a unit very soon. As we left he informed us he'll be there until 4:30 if we want to come back... right I'll remember that if I'm out and need a place to take a shit. By the way the units were something like 430k or thereabouts. Still a fucking ripoff... I'm telling you... an extra room next year.

Before the next open house on the street we took a detour to a 1.8m 6bd Victorian mansion on Fulton. Great place but the woman is telling us that heating bills could be $200/m! What the fuck man? I just paid $25 for PGE. Anyways I overheard her telling someone else that a nearby Victorian went for 2.3m so she's all riled up that this place will go for around the same. She definitely still conducts herself like an overconfident fairyland realtor. I'll keep an eye on it.

I'll just mention a couple other places. One was another incredibly unexceptional group of 1 bedrooms going for again down around 400k. Now I was starting to hit some desperate realtors. I mean I had this one run several flights of stairs just to get me various advertising flyers to take home. I swear that not even a year ago these realtors would not take their ass of the sofa.
She also touted the fact that the loan being offered for this place was a 7-year interest-only. What the fuck?!!? They're still offering this shit!!! hahahahaha they are going to be so fucked. I mean interest-only made some sense when prices were guaranteed to be going up I will give you that. But now it's fucking retarded. I guess they want to keep people's monthly payments down while the seller can still keep the price of the house up. Great! Another example that these people are clinging to the housing fairyland. This will just make the fall that much harder.

Last place was another walkin on McAllister: 2bd + sunroom and private deck. I gotta say this place was awesome. I would be happy to take this place. But they were asking 800k. I'll have to post the photo of the realtor later after I scan it because it's pretty funny. And she seemed pretty tense at the open house. She was trying to sound as casual as possible telling us that it's a great time to buy and that prices are softening. Of course she came off as a nervous-wreck. I can almost see the sweat on these people. This place will need to soften at least another couple hundred thousand to get me to into it. And you know what... we saw a 2bd earlier this year that was going for 950k and it sold. So she is right... prices are headed down but they have only just started.

Housing slowdown creating 'ghost towns'

This article is one of voting members of the Fed talking about how some cities are slowing becoming McMansion ghost towns... so far in Las Vegas and Phoenix. Remember that Las Vegas at one point was selling 40% of homes to non-resident speculators... or something like that.

Yellen said that she heard the ominous description from a "major home builder," who told her that the share of unsold homes in some subdivisions around the two Western cities has topped 80%.

"Prices are softening a bit."

We are 30ish and live in the Hayes Valley/Lower Haight area of San Francisco. Our combined income was enough to buy a house when we were deciding what to do for a living. We have steady jobs and artsy hobbies. We live in a 1-bd apartment and pay almost $1600/m for it plus a $200/m parking spot. We have been locked out of buying a suitable home in this city and have many strong views about it. We also know many people like us.
After following the state of the housing market in the mainsteam media over the last year (since the last time we looked into buying something) we've noticed a definite change in the market just in our neighborhood. This blog will talk about some of our comments local open houses, some economic news, and a lot of ranting. We encourage your comments. And unlike many other blogs, we make no request to keep posts PG-rated and profanity-free.