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California prices and income

Profile picture for Space Acer
Historical med prices to med incomes multiples....
Normal 4-5x Abnormal 9-10 today

Its no wonder prices will fall 50%!

California Historical Housing Multiples

Year Mult Med. Fam. hg. Med. Pr % Chg.
Income
1980 4.7 $21,200 N/A $99,550 N/A
1981 4.6 $23,300 9.9% $107,710 8.2%
1982 4.6 $24,300 4.3% $111,800 3.8%
1983 4.5 $25,200 3.7% $114,370 2.3%
1984 4.3 $26,400 4.8% $114,260 -0.1%
1985 4.1 $29,000 9.8% $119,860 4.9%
1986 4.3 $30,800 6.2% $133,640 11.5%
1987 4.3 $33,200 7.8% $142,060 6.3%
1988 4.9 $34,000 2.4% $168,200 18.4%
1989 5.7 $34,500 1.5% $196,120 16.6%
1990 5.1 $37,700 9.3% $193,770 -1.2%
1991 5.3 $38,200 1.3% $200,660 3.6%
1992 5.3 $37,400 -2.1% $197,030 -1.8%
1993 4.8 $39,100 4.5% $188,240 -4.5%
1994 4.9 $37,700 -3.6% $185,010 -1.7%
1995 4.3 $41,400 9.8% $178,160 -3.7%
1996 4.1 $43,500 5.1% $177,270 -0.5%
1997 4.2 $44,700 2.8% $186,490 5.2%
1998 4.3 $46,500 4.0% $200,100 7.3%
1999 4.4 $49,800 7.1% $217,510 8.7%
2000 4.6 $52,000 4.4% $241,350 11.0%
2001 4.9 $53,400 2.7% $262,350 8.7%
2002 5.8 $54,800 2.6% $316,130 20.5%
2003 6.5 $57,130 4.3% $371,520 17.5%
2004 8.2 $55,000 -3.7% $450,770 21.3%
2005 8.7 $60,000 9.1% $522,670 16.0%
2006 9.0 $62,005 3.3% $556,640 6.5%
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October 03 2007 - US

Replies (67)

Profile picture for Bfriendly
Real Estate Agent
Contributions: 56
Great chart Ace! Pretty astonishing!
Prices in the area you are talking about, SHOULD drop 50%......of course the prices never should have risen that much in the first place!
Let me ask you this, how much of these rediculous increases would you estimate came directly from Fraud?
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October 03 2007
Profile picture for Mike2020
Contributions: 741
The chart doesn't show up correctly but you can see that California's multiple was between 4-5x INCOME.. (avg 4.5).. but it doubled to 9.0 by 2006.. (mostly due to fraud and stupid 'i wanna get rich quick' investors...)

Avg Income in Cali for next 4 yrs (assume avg income is $70k (which is very gratutious)

2008 7x income House Median = $490K
2009 6x income House Median = $420K
2010 5x income House Median = $350K
2011 4x income House Median = $280K

So.. depending on what year you start bidding in.. Bid appropriately...
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October 03 2007
Profile picture for Angelique01
I just got an email for a 3 bedroom, 1 3/4 bath house, middle class area in the middle of the San Fernando Valley. Last sold in 2002 for $239k. Recent comps in the area, $435k. New listing asking price? $615k. I honestly hope no one buys this stuff....
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October 03 2007
Profile picture for Bfriendly
Real Estate Agent
Contributions: 56
OMG!
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October 03 2007
A lot of the run up in Southern CA is due to fraud(and of course greed by speculators. I was one of the greedy speculator, but I got out in 2006.). Houses in South LA were selling for $400k to $500k in 2005 and 2006. This is an area where median income is $30k.

Fraud anyone?

1626 E. Martin Luther King Jr Blvd, Los Angeles, CA 90011
$639,800

* 3 Bedroom, 2 Bathroom House
* 1,069 Square Feet

Great opportunity! Great open feeling inside. 1 bedroom has closet and private bath. 1 bedroom has own closet. Back bedroom has own hall w/ bath and extra space that could be used for studio/work room/other. Large back yard. Front and back yard gated. Don't miss this! Won't last! Close to public park with pool, soccer/baseball/football field, playground and more! Property sold "As Is". Tenant occupied. Rent control. Do not disturb tenant or owner.
Offered by Combatti, Filomena, Coldwell Banker-

This house was sold 8 months ago (02/01/07) for about $480,000.

http://lalife.com/address/1626_E_Martin_Luther_King_Jr_Blvd_Los_Angeles_CA_90011
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October 03 2007
Profile picture for Marci Reinheimer
Start watching for bank foreclosures that have been on the market over 9 months. I just got an email for a house that was originally listed for 800 that just dropped to 550. It's in No Cal, but I have a feeling the banks are getting anxious. Those are the ones that I would be lowballing the heck out of.
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October 03 2007
I work at a bank we are still won't take less than 80% of appraisal on an offer(banks are very slow). It won't be 2009 till banks start realizing all these appraisals reports are lagging and will start accepting low ball offers.
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October 03 2007
Profile picture for Angelique01
I saw one online that I kind of like. It looks like it's been available for a really long time, and I'm not sure why. If it's still available, I should see what's up with it. Thanks, Marci.
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October 03 2007
Profile picture for CarmelInMist
Contributions: 220
Hi, I'm a new poster and also live in CA and trying to buy. I didn't mean to highjack your thread but I have this burning question to ask and having trouble to add a topic. Please allow me to ask my question on your thread.

I need some help. How hard is it to find out seller's mortgage info - conventional or arms and the rate reset date? Is this entirely confidential? Do buyers agent have to have subscription for this kind of info?

The reason I'm asking is that we made an offer 2 months ago and was rejected and not countered. Seller paid 170K in the 90s for a modest condo and has the listing on the market for the last 2 years. Price dropped from low 600K to 500K. We submitted a "lowball" based on the then short sales listing prices in the same area along with a pre-approval letter. At first sellers agent said that the home owners are upside down with their mortgage with no equity therefore there is no room to negotiate. We requested seller's mortgage info from our agent whom we met only once. Our agent didn't respond to our request. A week later we asked the managing "broker" that we wanted this info before we try a higher offer. The managing "broker" said he would try to find out but it's been another 3 weeks and nothing has come out. He disregarded our caution to be discrete about our desire for this property and went ahead bombarding the sellers agent with multiple phone calls in one morning demanding them to reduce price. This time the sellers agent said that this is not a distressed sale and they are not in any hurry to sell or if they don't get what they want they'll just stay. But recently they reduced the price again but still in high 400K. None of those short sales has any takers either. They are all still way higher than the pre-bubble prices. Our "lowball" offer was higher than that

We are very upset with our agent's recklessness. We are very ready but not in a hurry either. We are under no pressure to buy or move. We decided tha
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October 03 2007
PropertyShark.com. Look at all the 2005 and 2006 sellers trying to breakeven.
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October 03 2007
Profile picture for CarmelInMist
Contributions: 220
We decided we need more info to make an informed decision. If the sellers interest reset date is way far away then we would not bother to make any aggressive offer. Whether we are gonna buy this one or another, we will apply more strategies. Any help will be appreciated.
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October 03 2007
Profile picture for Space Acer
Bruce - there is even more fraud in North California as HOs are trying to refinance and are forcing the numbers to work. See yesterdays San Jose Mercury News about that.
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October 03 2007
Profile picture for Lshashab
Contributions: 94
is REO pre-foreclosure or already bank owned?
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October 03 2007
Profile picture for Marci Reinheimer
REO is bank owned
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October 03 2007
Profile picture for Lshashab
Contributions: 94
why would my agent tell me the opposite? Is she up to something shady?
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October 03 2007
Profile picture for Aratinga
Contributions: 429
Property Shark only has data for limited areas... I can't even get data on San Bernardino County or Riverside County properties.

I know that my agent asks someone in a title company he knows to pull mortgage info on properties I'm interested in. He can tell me what the balance(s) are on the loan(s) and if they're current, but I don't know if he has access to the type of loan it is (ARM, 30 yr. fixed, Interest-only, etc.)
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October 03 2007
Profile picture for Marci Reinheimer
Ishashab, I don't know, how long has your agent been an agent?
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October 03 2007
Profile picture for Lshashab
Contributions: 94
I'm not sure exactly but at least 3-4 years. She's said a few other things lately that don't seem qite honest. Just a feeling though nothing solid.
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October 03 2007
Profile picture for Space Acer
2-3 years ago they said forclosures would never hit SF Bay Area. Only the poor areas maybe. Oddly enough I see on RealtTrac 500-600K to Mill Plus being listed as in some stage of stress.

Currently see 800sq condos listed as 500K a year ago with current bids at 250-299K dont seem right since they were listed as $80K in 1997. We may be running out of fools that can justify appreciation of 80K to 250K ... maybe 100K sounds right but it ends at 115K at most...

Same applies to other local homes TH or SFR... dont make sense! Way to high!
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October 03 2007
Profile picture for Marci Reinheimer
Here's an explanation of the difference

REO is an acronym that stands for Real Estate Owned. This type of property has come back into the bank's portfolio through the foreclosure process.

REO's are different from pre-foreclosures. Because pre-foreclosures haven't gone through the foreclosure process, they cannot be purchased from anyone other than the current homeowner. However, an REO has been repossessed from the home's owner and is now owned by the bank.
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October 03 2007
Profile picture for CarmelInMist
Contributions: 220
Thanks Aratinga. Our agent did find out that the seller is current with their mortgage payment. I understand that property profile only gives limited info. If average agents have no access to the kind of mortgage info that we requested, then we should be told so. Instead, they just let us dither. In one of the open houses we met an agent who deals short sales and REOs who told us that he has 5 subscriptions to access the financial background of the properties, such as liens, etc. Or some such thing.

We feel sellers agent might play a mind game by giving consistent stories.
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October 03 2007
Profile picture for Lshashab
Contributions: 94
Well there are lots of those REOs and shortsales in our area. Some are even new construction where the builder went bankrupt.
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October 03 2007
Profile picture for Marci Reinheimer
Ishashab, where are you - No or So CA?
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October 03 2007
Profile picture for Lshashab
Contributions: 94
I'm in central CA. Lots of farms and farmworkers around here. Incomes just couldn't keep pace with the prices. Oh so much overbuilding. Builders are slashing prices and offering incentives all over the place. You can get a brand new home for less than an existing home. And sellers still don't want to budge.
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October 03 2007
Profile picture for Mike2020
Contributions: 741
If they drop the price, send them a new offer but 10K less than your previous one.. This establishes that you still are there.. but you will continue to lowball them further and further as they drop their price further and further.. UNLESS they just take your offer before you drop it AGAIN... (They will realize that you might be the only person throwing offers in and that you will never move your bid up to reach them..)

(Ignore posts about "offending" the homeowner with lowballs.. That's like a store being OFFENDED that you are waiting for a SALE.. (P.S. Nobody cares..))
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October 03 2007
Anywhere close to me perhaps??? The descriptions you give make it sound like you're close (Sacto).
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October 03 2007
Profile picture for Lshashab
Contributions: 94
Fresno area. I hear Sac area's taking an even sharper decline. Is this right IYO?
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October 03 2007
Profile picture for CarmelInMist
Contributions: 220
Mike2020, thanks for the encouraging words! I understand we are in a difficult market for sellers and buyers. I don't consider making lower-than-over-priced asking-price offers "lowball" at all. It is a reality check. I consider that buyers are forced to play hardball. But I still use that term before the seller side use it on us to degrade or belittle. "You don't want to bail us out this mess then you are low!" That's what's implied to me.
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October 03 2007
Profile picture for Marci Reinheimer
I was just wondering if you were near me. Our area is taking a pounding. I'm in East Contra Costa - the market is very similar to Sacramento's
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October 03 2007
Profile picture for Angelique01
Space Acer, the condo situation is exactly the same down here.
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October 03 2007

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