Archive for the 'Weekly Real Estate Activity In Ventura County' Category
There Are Bigger Things To ……
June 7th, 2009 Categories: Weekly Real Estate Activity In Ventura County
Every once in awhile it is time to get some perspective. This photo from MSN puts things into some context.
There are bigger things for us to see, investigate and challenge. Life here on Earth is great; out there who knows! But we will go and find out. Why? We are humans and it is in our bones (oops! our DNA) to face up to challenges.
My musing for the week. Lao-tzu who lived 2,500 years ago wrote “Every human being’s essential nature is perfect and faultless, but after years of immersion in the world we easily forget our roots and take on a counterfeit nature”.
That is state we are in today. We have forgotten our roots.
The National Real Estate Market.
Things are turning good so says the late media coverage. Change has been happening since November, 2008 but now constructive signs have emerged showing that things are on the upswing.
Looking at the most recent government view of the National real estate market one can see that the East coast and of course Nevada, Arizona and California continue to be under pressure.
Other States in the Central region also appear to be under some minor pressure. States such as Nebraska, Kansas, etc., have declined but others such as Michigan, Illinois to name a few have shown signs of improvement.
The driver for a healthy real estate market is financing and the banks have been struggling on a number of fronts to get the real estate financing righted. But it takes time. The other thing that will help real estate is lower unemployment, new job creation and less help from Washington, DC. When Congress gets involved all things fall apart.
When looking at the real estate market (first quarter of 2008) approximately one year ago every State has had a declined except for Alaska. It is the only State that has shown appreciation throughout Country over the last year.
This is the 1st quarter, 2009 National Real Estate Market.
This what the market looked like in fourth quarter of 2008.
This was the picture of the National real estate market in the 1st quarter of 2008.
Ventura County.
The squeeze continues.
Listings continue to decrease; sales are now decreasing; markets in Santa Paula and Oxnard show minimal inventory while the beach area show significant inventory.
Fillmore, Santa Paula, Camarillo, Oxnard, Ventura and Simi Valley/Moorpark are now showing as seller areas. One would expect to see prices starting to increase in these areas shortly.
The Santa Rosa Valley, Oak View/Ojai and the beach areas are buyer markets. The Conejo Valley is neutral at this time.
Prices are showing signs of increasing. As one can expect it appears that the lower end price range properties have been absorbed; there is some preliminary sales evidence suggesting that properties in the $ 400,000 to $ 750,000 are now attracting buyers.
The following table indicates some price upswing. It is preliminary and a few more months are needed to show a trend but there is some evidence that price appreciation may now be taking place.
The monthly value % does note that the lost in home equity has started to decrease and compared to November, 2008, there has been a 50% increase in property values in the County. Some will see this as a 50% decrease in the loss of property value but the bottom line is that the market has changed and November, 2008 appears to have been the bottom of the down cycle.
Now if unemployment and new jobs are created in Ventura County everything will be super great to have a significant advance.
I expect to see the growth rate following the chart below. So hang on…..it is going to be a lot of fun.
As noted in the last illustration we are now entering into the gold run up. We are certainly blessed to live in this area of the Country. Ventura County home prices are set to explode.
There will be many people who will become millionaires from the real estate they purchased during the down turn.
Those that want to become millionaires should be buying now because if you don’t you will have to wait for another 10-12 years before the cycle starts again.
Comments are welcomed.
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We Got What We Wished For….It Isn’t Very Nice!
May 24th, 2009 Categories: Weekly Real Estate Activity In Ventura County
My musing for the past several weeks.
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California voters (small number) decided enough was enough. Politicians on the other hand have concluded that voters don’t know what they want so “enough is enough” probably won’t fly. The next step is to replace the politicians. We did that by replacing Gov. Davis a number of years ago basically because of increased DMV fees. Well guess what….we not only have increased DMV fees but a lot of other fees. We also have to manage the activities of the non-elected deal brokers.
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Is California going to be the 1st State to declare bankruptcy?
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It appears that the brightest are leaving California. It is also being talked about that our school system is in the toilet. Funny how people outside of California have seen this, the general population has seen this but the politicians and teacher unions have not. Hmmmm….a pause here.
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I also see the blame game setting in. A number of reporters are starting to say that the voters are the culprits for the problems in California. The initiatives that have been passed over the last 10-20 years were not thought out by the voters who “want things but do not want to pay for them”. Well part of that is true but what isn’t being said is that these same newspapers made recommendations which many voters followed. Many voters think that newspapers are above the fray and make their recommendations based on what is good for society. Well it’s the dumb following the dumber.
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Ms. California stuck to her beliefs (whether you agree or disagree with her) which is a strength that many of us have given up. Look at the current situation. When the current administration speaks all others fall in line…..money is such a strong tool. The only thing that is piling up higher is the BS we are getting from Washington.
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Talking about blame game…..the Washington day time drama is a reality sage. He said, she said! Torturing….I didn’t know; I wasn’t told…..what are these people there for. Lots of excuses. Definitely need replacements in Washington at all levels of Government.
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Talk about adding to the stress. A number of lenders will now verify appraisals 3 days prior to the Note date and require the borrower to sign the HVCC Disclosure-Appraisal Notification and Acknowledgement. Yikes what does the seller do if they disagree with the appraisal. I can see “out of area” appraisers continuing to slam local values. I can also see a large number of law suits.
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I haven’t seen much in capping salaries of late. I wonder why? Hollywood stars, sport figures, television news casters, anybody making over $ 250,000 per year……what are they thinking? Cap and tax……could it be????????
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I see that my home State (New Jersey) finally has the lead in something (speeding tickets). Based on the article http://articles.moneycentral.msn.com/Insurance/InsureYourCar/Worst-states-for-drivers.aspx and the chart created by the National Motorist Association listed below are the worst to best States for speeding tickets. So Jersey travelers be on the alert. I was surprise that California was not in the top 5 States, but give them time….they will get there.
National Motorists Association rankings, from worst to best:
| Rank | State | Rank | State | Rank | State |
|---|---|---|---|---|---|
| 1 | New Jersey | 18 | Florida | 35 | Hawaii |
| 2 | Ohio | 19 | Pennsylvania | 36 | Arkansas |
| 3 | Maryland | 20 | North Carolina | 37 | Alaska |
| 4 | Louisiana | 21 | Alabama | 38 | Kansas |
| 5 | New York | 22 | Rhode Island | 39 | Mississippi |
| 6 | Illinois | 23 | West Virginia | 40 | Wisconsin |
| 7 | Delaware | 24 | New Hampshire | 41 | Utah |
| 8 | Virginia | 25 | Arizona | 42 | South Dakota |
| 9 | Washington | 26 | New Mexico | 43 | Indiana |
| 10 | Massachusetts | 27 | Missouri | 44 | Minnesota |
| 11 | Colorado | 28 | Texas | 45 | North Dakota |
| 12 | Oregon | 29 | Oklahoma | 46 | Kentucky |
| 13 | Tennessee | 30 | Nevada | 47 | Nebraska |
| 14 | California | 31 | Georgia | 48 | Montana |
| 15 | Michigan | 32 | Connecticut | 49 | Idaho |
| 16 | Vermont | 33 | South Carolina | 50 | Wyoming |
| 17 | Maine | 34 | Iowa |
- From the perspective of one economist the recession may be over.
As bad as it seems today, according to Robert J. Gordon, an acclaimed macro-economist and professor at Northwester University, we’ve lived through worse, and not all that long ago.
It was a lot worse in 1981-82, too, because the size of the work force was smaller then. So the same number of claims represents a larger percentage. Adjusted for the size of the work force, today’s claims are just a little more than half of what they were at the 1982 peak. The recession? It’s over! Read the following article which the author researched to verify his agreement with the professor. Interesting reading. http://articles.moneycentral.msn.com/Investing/Extra/the-recession-it-is-over-economist-says.aspx
One thing jumps out of the chart that has nothing to do with Gordon’s indicator — the fact that in this recession, we still haven’t exceeded the number of claims in the 1981-82 recession.
The National Real Estate Market.
The areas that have been my focus for investments have fared rather well during this real estate down turn (Oklahoma, Louisiana and Texas (although Texas has had more damage occurring over the last several months).
The latest Federal Housing Finance Agency report show that these States (shown as West South Central) as having a negative appreciation of -0.5%. The other sector (East South Central which I also like) had a negative appreciation rate of -3.0%. California (the Pacific area) is experiencing a -22.1% negative appreciation.
Ventura County Real Estate.
Things are looking brighter and the market is getting stronger.
Mentioned a number of times is the jack-in-the-box scenario that is forming now.
Listings have decreased significantly over the last 18 months (from 5,250 in November 10,2007 down to 2,069 as of May 23, 2009: approximately a 50% decrease).
Sales in Ventura County have increased 32% in 2009 compared to the same comparable period of 2008.
This year there have been 2,852 sales for the period January 1 through May 23, 2009; for the same period in 2008, there were 2,161 sales.
There is a squeeze occurring. We have a commodity (homes) and there is a pent up demand for this commodity and as soon as the jack-in-the-box is opened prices will accelerate big time.
Ventura County areas that are now seller markets consist of Simi Valley/Moorpark, Ventura, Oxnard, Camarillo, Santa Paula, and just recently Fillmore.
Areas that remain buyer markets consist of Santa Rosa Valley, Ventura Beaches, Oxnard Beaches and the Ojai/Oak View area. Conejo Valley is neutral.
For Ventura County the plot thickens. Unemployment and job creation will be necessary to see a healthy real estate market. The market will start to go up but the pace of the upturn is dependent on jobs and a decrease in unemployment. If jobs continue to lag and unemployment increases or stays high the market will go side-ways for a period of time but the bottom (in general) has been set.
Comments are welcomed.
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People Are Talking….
May 10th, 2009 Categories: Weekly Real Estate Activity In Ventura County
On this Mothers Day it 
appears that real estate is a good topic to talk about since the indicators now have been accepted by the media.
Good press from news outlets is also creating positive vibes for the market.
To be sure the politicians will play the game but when push comes to shove they had little to do with the change in direction.
The market would be doing the same with or without them. One should be concern that the politicians will once again stick their nose into the system and screw things up.
The good intentions of a home in every pot did not work out. In fact a great many people have been hurt with this political folly. But intentions aside the system is going back to hard nose business basics and this will continue for several more years and then the follies will start over again.
There will be some significant economic events that will slow the market but it will not create a free fall as had been the case over the last few years.
Economic events that will slow the market:
- gasoline will go back up to $ 4.50 or higher. Throughout the World and in the United States, oil people are not drilling, plant capacity increases have been shelved.
- Food prices will sky rocketbecause of ethanol and less planting in the farm land. Politicians know this is a folly but want to continue the folly to satisfy constituents and save face. Ethanol has been shown to be a pollutant but the folks in Washington have too much invested to yield to common sense today.
- Environmental costs (cap and trade) will be a hideous tax on the United States with most other Nations giving lip service but basically by-passing this issue.
- California is going to the brink of bankruptcy. It’s a matter of wills but Sacramento will realize that unless significant cuts are made they will be out of a job.
The National real estate market will continue to plod upward because States and local agencies need to have real estate do good to collect taxes.
Ventura County.
The Ventura County real estate market as evidence by the table below is doing well. There will be hiccups but it appears that the base has been settled. We should continue to witness an increase in sales but it will take a little longer for prices to start upward. One will see sales continue to make a V shape configuration while prices will follow a U shape configuration for the next several months.
This table also notes that the Simi Valley/Moorpark, Ventura, Oxnard, Santa Paula and Fillmore areas as seller markets. The Conejo Valley and Camarillo are neutral and the other areas (Ventura Beaches, Oxnard Beaches and the Oak View/Ojai) are buyer markets.
Overall the County is a neutral market and has an average 4 months inventory.
Unemployment and the lack of job creation in the County will cause a side-ways motion until the last quarter of 2009.
Job creation is going to be a zinger. Large and medium size businesses will be facing significant increases in employee health care and taxes. This does bode well for job creation. Visit My Musings Of The Week and I think you will get a sense of what is in store.
What may help is the significant increase in sole proprietor-ships and federal, state and local governments hiring.
However the public sector is over weighing the economics of scale and eventually there will be a drastic decreases in head count as time marches on.
The general public and the private sector will not be able to shoulder the burden and all sort of changes will take place which will not be very pleasant for a lot of people.
Expect big changes in educations and State government headcounts. The tea party is set to begin.
This next chart (below) shows the distribution of single family residential sales in the County for the period of January 1, 2009 through May 9, 2009. Approximately 25% of the homes sold in the County in this time period fell into the price range of $ 300,001 to $ 400,000. 65% of all single family homes sold in the County was for $ 400,000 or less.
75% of the homes sold in Oxnard were below $ 300,000; 82% of the homes sold in Fillmore and Santa Paula were below $ 300,000. These communities accounted for 37% of all sales in the County for the period ending May 9, 2009.
Periodically I will update this chart but I suspect significant changes towards the upper price ranges towards the latter part of this year.
The projection that had been made last September, 2008 http://www.venturacountyretalk.com/2008/09/07/ventura-county-real-estate-doings-for-week-ending-september-6-2008/ appears to be on track.
Illustrated in the September, 2008 article was the Ventura County Forecast through the year 2022.
As noted it is expected that the previous highs (2003-2005) will be exceeded by at least 50% or more in Ventura County. Those living within 25 miles of the ocean can expect higher appreciation.
As mentioned earlier the U configuration price jumps will really show up around the year 2014 and then watch out.
There have been many homes withdrawn from the market place over the last several years waiting for better prices. Listings have continued downward so in effect what is happening is a “spring” effect will take place allowing prices to surge upward as shown above. Standard economics 101, supply and demand.
Your comments are welcomed.
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Watching Grass Grow!
April 26th, 2009 Categories: Weekly Real Estate Activity In Ventura County
The real estate market is just meandering; setting its base for the next cycle upward.
Much has been written over the last week of mortgage help. It appears that banks are just starting to get into the mortgage business however it appears that only 1 in 11 will be able to get help.
That means the other 10 people will probably go into foreclosure.
So be ready for another round of foreclosures will be coming to fruition in the next several weeks.
The financial sector is still trying to find its legs. Business is not creating new jobs at this time but it appears that government jobs are increasing significantly.
Unemployment is hovering around 11% but surprisingly not many government jobs at any level has been impacted. The stimulus money that States want appears to be a justification of increasing their payroll base.
There is a lot of BS going on in government with deflective stories being written to turn people’s attention away from our economic problems and creating bigger government.
Words uttered by any Federal or State representative should put one on guard.
What is being said is to make people feel good; what is being done will make people sorry and at a point they think there isn’t anything they can do.
An example is the “rainy day set aside” proposal that California will vote on this May. Sounds good to set something aside. It makes one think that someone is taking steps to do something right. But politicians being politicians when they see ”rainy day” funds they will justify taking of these funds for some other cause. There goes ”rainy day” funds.
So like Social Security which was set up as a set aside fund, later when monies were needed, its money was used, replaced by notes. I suspect this “rainy day” proposal is of the same vintage. As stated earlier, politicians say things that sound good; but later is when you really recognize what they really wanted to do.
We can start by removing those in office now and replacing them with new blood that understand and can manage the needs of the Country. We have too much “good ole boy” goings on throughout the Country. It is time to change to something better. As a first step maybe we should start “recalls” now, replacing Federal and State representatives. That clean house each two years.
As mentioned last week if you don’t like them remove them. Recalls is a start.
I found it interesting that the Congress had sessions relating to earth warming. The interesting part was they would not allow any rebuttal or opposite views to be heard at these sessions. Meaning: our minds are made up and this is the way it is going to go.
That will be a healthy tax for America. Who controls this. Our friends overseas. We pay and they make the rules. Seems only fair????
Ventura County
The County real estate is continuing its base building. Listings continue downward; discounts continue and it appears that the County inventory is neutral will a bias towards becoming a sellers market.
Santa Rosa Valley, Ventura and Oxnard Beaches and the Ojai/Oak View areas are still buyer’s markets.
Simi Valley/Moorpark, Oxnard, Santa Paula and Fillmore appear to be sellers marketswith the Conejo Valley and Camarillo currently being neutral.
Overall there has been a 35% increase in sales in 2009 compared to the same period of 2008. Areas showing significantly higher sales this year is Oxnard (114% increase); followed by Santa Paula, Fillmore and the Ojai/Oak View area.
The areas lagging 2008 residential sales are Santa Rosa and Conejo Valley.
The County real estate appreciation for the next 12 months will be 8.7% growth; we will witness a 17.9% growth over the next 24 months; and a 25.6% growth over the next 36 months.
Increase in unemployement and lagging job creation can dampened these growth rates slightly but overall it appears these appreciation rates that can be expected.
Your comments are welcomed.
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Back In The Saddle
April 19th, 2009 Categories: Weekly Real Estate Activity In Ventura County
Mother Nature and I have had some disagreements over the last several months and things have sorted themselves out. Now Mother Nature tells me (as she did before)what to do and now I do it. Strange how that works out.
Surprisingly dispite the down time nothing has changed. Things may have gotten worse.
Caps. I loved hearing about this while sick. Cap CEO pay. That’s great except it did not go far enough. I would add to the cap list:
All federal government workers should be capped at $ 75,000 annual salary; State workers should be capped at $ 70,000 per year; and Local government employees caps should be at $ 65,000. All members of Congress and the President should be capped at $ 80,000 per year including the justices throughout the Federal and State Judiciary. If I missed any one they should be capped at $ 60,000.
All union executives and private company executives should be capped at $ 100,000 per year. If we do not like who is in charge they should be immediately replaced.
(Sideline: My dad was a local union President for many years. He lived union. While he felt the need for unions he also noted that the rank and file were hurt more by union leadership and their political gyrations and hostile attitudes towards employers. It was a war. “This is what we want or we shut you down”. He also noted that when the rank and file had a strike they never, ever were ahead. Each strike made them poorer. End of story.)
Continuing with who should be capped. All movie stars, television host and newscasters and baseball/football/basketball players should be capped at $ 100,000 annual salary. Anybody working in the financial arena including Wall Street should be capped at $ 100,000.
Fisherman should not be capped (I like fishing).
All other workers should be capped at $ 150,000 per year except real estate brokers and agents…..they should make as much as they can…..no cap. That’s fair and that is my contribution to the cap situation!
Immigration. While sick I was listening to the many discussions about resolving the illegal immigration problem and a solution was devised to penalize employers monetarily and maybe sentenced them to jail.
I agree with this position but again those in power did not go far enough. I would add to the list the fining and possibly jailing of activists who push illegals to break the law. I would also include in the mix the politicians who intercede on behalf of their constituents and force Border and other agencies from doing their job. These folks too should face a penalty, jail time if required and removal from office.
I recall in the 1960’s and 1970’s when those responsible to protect our borders would be retired, demoted or re-assigned because politicians did not want these people to do their job in the area they represented. Nothing has changed much.
Why people from South America think they can ignore immigration laws is beyond me. The Europeans followed the rules to get into this Country.
But we have to give a pass to the folks from the South….Why? And those from South American countries who are now standing in line waiting to get in the right way, well it appears that you are doing a stupid thing. Why go through the hassle. Break the law.
Come in and in 10 years you will get your citizenship. That is what has happened over last 20 or more years. 10-15 years from now we will have the same situation and our politicians will find it necessary to legalize ’illegals” once again.
It’s a revolving door. Maybe we should have an open border from the North Pole/Canada to the very tip of South America. All of the people in the Americas can move as they want from one area (location) to another and would automatically be a citizen in the area they lived or settled. We would be called citizens of the Americas. That would solve the problem.
I think shortly there will be a meeting of the minds and people are going to see that there has been good from the past and this good can be used effectively in the future. People are going to do it and it will take time but it will be people solving the problem, not politicians.
Oh. One more thing that was big news and that had to do with taxes. Heck the cure for this is simple. Have a flat tax.
Everyone pays and the federal rate should not exceed 10% of one’s gross wages (including companies gross sales). States should be limited to 5% of either gross wages or sales. There should be NO deductions of any kind. At no time can the Federal/State tax rate exceed 20% combined. All other taxes for gasoline, sales taxes, and any other tax, fee or whatever it is called is to be eliminated. OK, that takes care of the tax issue. If anyone disagrees with this replace them.
Real estate on the National scale is holding its own especially in the Mid-States.
Unemployment appears to be going up along both coast lines faster than the Mid-States but job creation is down Nationally.
This will temper the upward movement for real estate for a period however the truth of the matter is that in another year real estate will be stronger and move higher and then watch out. Politicians will once again interfere with the free market because there will be a division between who has a home and there will be many without.
Ventura County.
The unemployment rate is near 10% in Ventura County. Job creation is nil. But the real estate market is putting is a solid base for its pending thrust upward which should start around September/October, 2009.
This basing will be significant for the BIG thrust that one can expect to see starting in 2010. The high prices witnessed in 2004-2006 will pale to what they will be in 2013-2027. I suspect that the upper limits of the new up trend will be about 50% or more higher than 2004-2006.
There has been a change to the weekly table. Eliminated was ”days on the market”, replaced with ”estimated inventory and designation specific areas as being either a buyers/sellers market”.
The formla used to calculate inventory was simply to take current listings and divide this by the number of sales over the last 3 months. This result was then multiplied by three to get the number of months inventory for a specific area.
True I could have used 6 months or 12 months sales but using three was closer to current market conditions. I am sure many will correct me but that is OK, I look forward to the coments.
Happily real estate is starting to get some good press. As one can see from the table above a number of areas have had significant sales since the beginning of the year.
Oxnard and Santa Paula have had 100% sales increase. But these sales were due to deep discounts of property values. So it should not be surprising to see Santa Paula, Fillmore, Oxnard and parts of Ventura showing up as seller markets.
Santa Rosa Valley, the Beaches (Ventura and Oxnard) and Ojai/Oak View continue to have large inventories BUT these have lessen substantially over the last several months and it is expected that these areas will turn the corner and show up as seller markets.
Your comments are welcomed.
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What A Difference A Year Makes!
March 1st, 2009 Categories: Weekly Real Estate Activity In Ventura County
Based on data provided by the Federal Housing Finance Agency the last quarter of 2008 and addressed in http://www.venturacountyretalk.com/2008/11/26/its-not-pretty-picture-review-of-the-national-real-estate-market/ was a disaster for the real estate market.
As shown in the graph below very few places in the United States was spared by the real estate down turn.
Comparing the National real estate market to the 4th quarter, 2007 it quite evident which areas have been hit the hardest and those that have remain relatively calm (Texas, North and South Dakota and Wyoming).
Even my favorite investment areas of Missouri, Louisiana, Mississippi and some parts of Texas have been hit.
Most of the real estate comments relating to this latest quarterly report have been discussed in other articles written and for this blog. Those wanting to review these can refer to the following articles:
Waiting For The Next Shoe To Drop/
Out With The Old. In With The New/
National real estate.
Brokers and agents have known for quite some time that the real estate market was going South. They are also witnessing good properties being given low-ball appraisals, exascerbating the problem in their particular geographic area.
People want to remain clueless as to what is going on. 
There is the political slight of hand and talk being banter about.
Last week for example the President suggested that those earning over $ 250,000 per year will be unable to take mortgage interest as a deduction.
I got news for you folks. If this group loses this deduction everyone will lose the deduction regardless of income.
Remember credit card interest was taken away as an itemized deduction a number of years ago. People at that time thought it would not occur but it did.
The tax code is a vehicle used to distribute wealth. Unfortunately it has never worked.
What one may see within a few years are no itemized deductions, a scaled back of credits and basically a flat tax (it will not be called that for political reasons) but rates will be as high as 70% to 75% for the those earning over $ 250,000. Canada has that kind of tax program as well as some European countries. Guess who we are trying to follow?
The $13 per week increase that everyone will get in their pay check. This is not a decrease in tax. These monies (credits) will be taxed next year as additional income. So you may want to reduce your exemptions if you think you will have to owe taxes.
Is a real estate contract worth anything today? Probably NOT. Will any contract be worth anything or sustainable?
Banks and other people are concern about the prospects of having real estate mortgage contracts “cram-down” with contractual changes of either interest rate, the principal or whatever. Why now?
Well these same people (banks and appraiser’s collectively) “cram down” ridiculus appraisals over the last year on seller and nothing was said. Now that banks have to face the same problem it becomes an issue. One gets what they sow.
Contract law is going to stand on its head and will be put to the test as to the meaningfulness of any contract.
California.
When looking at California itself the State is a disaster. States vying for the crown of having the worst real estate markets are Arizona, Florida, California and Nevada (ranked as 48,49,50 and 51. Yep…..California is ranked #50).
Area continuing to be the worse of the worse in California are:
- Merced
- Stockton
- Modesto
- Vallejo-Fairfield
- Riverside-San Bernardino-Ontario
- Salinas
- Yuba City
- Bakersfield
- Madera-Chowchilla
- Fresno
- Sacramento-Arden-Arcade-Roseville
- Visalia-Porterville
The area ranked as the lowest in the United States is West Palm Beach.
There is a Japanese expression “genchi genbutsu” which basically says ‘get out of your office and visit the source of the problem’. I was schooled in this philosophy and it is an appropriate approach that should be undertaken in Washington and Sacramento by both Senators and Congress people.
We need to elect better people to office and retire those that have been in office for an eternity. They have lost perspective.
Activist and special interest groups are setting National, State and Locals agenda’s which are a hindrance to all.
I suspect that 90% of the voting population hasn’t the slightest idea of who they vote for nor what the individual(s) running for office stand for.
If promised something that will not cost them anything they will vote for that person. Unfortunately when they find out they have to pay too, its to late and a lot of damage has been done. People WANT and politicians promise. So the thinking is if someone else is paying for it, it’s OK. It doesn’t work out that way for long.
Much is being directed towards statements by Lincoln, Regan and Franklin Roosevelt made in the past. Perhaps Thomas Jefferson would be worthy reference. Jefferson stated “Honesty is the first chapter in the book of wisdom“. That is what we need on the National, State and Local government levels.
Ventura County.
Surprisingly residential sales are up approximately 40% when the first two months of 2008 and 2009 are compared. Most of the increase in sales were in Oxnard and the buyers are generally foreigners (from China for the most part).
Listings continue to decrease but it appears that prices want to resist further downside erosion (see second chart).
The recent February % of -36% is significantly down from the -47% recorded a few months age. This suggests to me that while prices may still fall there appears to be some resistance to further decreases.
If this % factor continues to fall over the next few months Ventura County may be out of the woods. It would also suggest that November, 2008 was the bottom of the downside for the Ventura County market.
It will be interesting to see if this trend continues because what the politicians want to do and what the market is doing seems to be at odds with the purpose of each.
The job market will be especially hurtful to the real estate market if the unemployment rate in Ventura County exceeds 10-11% (it is now 10% in the State) and if businesses elect not to make new jobs.
If this should occur the market will tend to go side ways for a period (with perhaps some downside but not much). Unfortunately the numbers will not be available until 2-3 months after the fact.
Your comments are welcomed.
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Fear Is A Great Change Motivator.
February 15th, 2009 Categories: Weekly Real Estate Activity In Ventura County
According to the dictionary fear is defined as as being afraid; feeling that danger or evil is near; dread.
Since the beginning of time fear has been used to get people to change. The early Church is an example of this control mechanism and all religions and politicians have used it extensively over time.
This was quite evident with the stimulus package. It was voted on and perhaps 5 or 6 people actually read the whole legislation. All one heard or read is that if this legislation did not pass all heck was going to happened.
Well it past and perhaps fear was not evident to many before its passage but we can see how piggish and greedy it gets when it comes time for political pay back. All of us will see and feel this excess for years to come.
What does the stimulus package do for real estate?
Very little but there will be another piece of legislation that will address real estate. The cost of this new legislation will be another trillion dollars.
Side bar: It is funny but initially everyone wanted to fix real estate first. Now however it is taking a back seat to everything else. I guess the real estate market was not that important.
The stimulus package and all the talk about it is a lot of pork. More candidly it consist of a lot of crap. Crap is crap no matter what kind of package it comes in. Throw enough of it against the wall and hope that it sticks. When it dries we can hose it off. Get ready with the hoses.
Items included in the stimulus package inserted to help real estate included:
- it reset conforming loan limit cap at $ 729,750 up from $ 625,000;
- 1st time home-buyers get a credit of $ 8,000 if they purchase a home between January 1 and December 1, 2009;
- removed from the package was the condition that an individual getting this credit had to live in the home for 3 years.
That was the real estate portion of the stimulus package. Nothing to get excited about.
More interesting was that Fannie Mae and Freddie Mac declared that investors can buy up to 10 properties (up from 4). Also announced were the standards for loans which as expected are getting tighter. The announcement indicated that:
* The minimum credit score goes to 720
* 75% LTV for a Purchase for 1 unit properties
* 70% LTV for a Purchase on 2-4 unit properties
* No Bankruptcies or Foreclosures for 7 years
* No late payments within the last 12 months on any mortgages
* In order to include the rental income from other rental properties, a two year history is required from the borrower’s Federal income tax returns.
* 6 months reserves will be required on each investment property that you own including the subject property.
These standards will be modified as time goes on but as of today investors and home buyers are going to have to ante up more money.
Ventura County.
With the going’s on in Sacramento it appears that we are in store for a big tax hike. Gasoline which has an 18 cent tax plus a 6% state sales tax (this will go up), and a 1.25% county tax plus additional sales taxes and a 1.2 cent per gallon State UST fee will be going up to about 26 cents per gallon plus all the other associated fees. That is approximately a 40% increase in the gas tax.
I suspect that the reason for such an increase is to allow the State to maintain parity. Auto gas mileage is forecast to go up say from approximately 25 miles per gallon to about 35-40 miles per gallon. That is a 40% increase in gas mileage.
The State recognizes that the number of gallons people will buy will decrease therefore they have to increase the gasoline tax to maintain their income. Strange how these numbers work out.
The sales tax is expected to increase about 1%, therefore Ventura County will have an 8.25% sales tax.
Will these taxes impact real estate? Yes a little but the overall projection for real estate is up but it may take a little longer to achieve. I suspect it will approximate an additional one year slip before real estate really gets legs.
Now I think it is time to start making some big changes in Sacramento. Those folks live on a different planet.
The Ventura County weekly real estate market continues to show strength. Properties are selling faster over the last several weeks compared to a comparable period last year.
The Conjo Valley, Simi Valley/Moorpark area have had a significant increase in listings but the other parts of the County show a continuation of downward listings. Prices continue to go lower but the rate of growth appear to have slowed.
The following 15 year average valuation for Ventura County shows a 27% decrease in prices for the year 2008.
However it appears that the bottom of the market occurred in November, 2008 (see table below). Prices for the last two months (December, 2008 and January, 2009) appear to be trying to stablize and the annual Inc/Dec % since 2008 (drop from 46% to approximately 40%) could be suggesting that the upward trend that we have been waiting for may be at hand. That is not to suggest that further price deterioration will not occur, it simply means that the steepness of the decrease may be softening.
If February follows this pattern and it continues into March we have in place that the market is starting to settle out and ready for an upward swing.
A caveat. It appears that Nationally real estate prices are approaching 2002-2003 prices. If this continues than the downward price spiral will continue and one could see significant lower real estate prices in Ventura County. As noted in the above table prices in this time frame were as low as $ 370,000 (average sales price).
Should the real estate market start getting good press and TV coverage it will fix the pattern upward.
Seller’s have to remain patient; buyer’s who are still waiting to buy have missed the bottom.
Your comments are welcomed.
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What’s Next Doc?
February 1st, 2009 Categories: Weekly Real Estate Activity In Ventura County
There appears to be a lot of frantic talk and juggling in Washington at the expense of Mr. and Mrs. America. (I will not say anything about the favoritism bestowed on politicians when it comes time to pay their taxes with interest and penalties. The IRS treat politicians differently).
Young families will be taking the brunt of all this as will their children in the future. Many people wanted change. Well we are getting what we asked for and it may not be very pleasant.
With government now being the owner of most financial institutions and real estate in the United States the question becomes “What’s Next Doc?” Socialism? That appears to be the way things are going. In Europe they want to get away from socialism; we appear to be wanting socialism.
With interest rates hovering around 4.5% (they should be lower; why they are not shows that interest rates are managed and it is not the market that sets rates) real estate sales have been accelerating as well as morgage re-financing. Attempts to help those who bought over their heads with unreasonable type mortgages are not able to stay out of foreclosure. It has been reported that close to 60% of those helped are now back in foreclosure. So that concept didn’t help except to create a great deal of havoc and miss guided hope.
Side bar: Those who are re-financing. The IRS will be auditing re-financed mortgages. They want to know how the re-finance monies were spent. If spent on paying off credit cards, auto debt, etc., they will be askings for a revised income tax return. Credit card and auto debt interest are not tax deductions.
Washington and local politicians will continue with their double talk over the next several months (it appears to be worse now than ever) and will say anything to anyone depending on the time of day and the way the moon is set in the sky.
And of course there is the bail out money. Everyone now is in line. States, Cities, Counties, businesses, unions, banks and other financial institutions……you name it they are in line looking for some easy money.
One of these fine days common sense may come into play but that may be just a dream. Reality will set in when these monies have to be repaid (or do they?).
Ventura County:
Following the rest of the Country, Ventura County showed a significant increase in single family home sales. Interest rates were quite favorable (about 4.5%) and home prices (mainly foreclosures) have been discounted significantly creating opportunities for new home owners and investors.
As noted in the chart below home sales increased approximately 70% in January, 2009 over the same month as 2008 (505 sold in January 2009 as compared to 307 in January of 2008).
Listings continue to decrease; prices continue to fall; sales, as mentioned, have increased (124 in the last week of January); days on the market for listed homes has decreased; and property discounts continues to hover around 5% (difference between list price and average sales price).
The squeeze is on. Buyers waiting to buy at lower prices may have missed the train because eventually the spring in the box is going to let go and prices will accelerate big time.
Reference the following articles to see the picture for Ventura Count beginning in 2009 Year 2009 Fearless Forecast For Ventura County Real Estate/ and Out With The Old In With the New/
Your comments are welcomed.
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Digging In.
January 4th, 2009 Categories: Weekly Real Estate Activity In Ventura County
OK. Now what are we doing? You don’t know? Well I am packed and ready to go. Just let me know.
The “bail out” line gets longer. Every type of business imaginable is now asking for federal help. OK, I am jealous because I didn’t get in line .
That $ 600 incentive that most Americans received last year is chump change compared to what banks, investment houses, auto manufacturer, etc., are getting.
What is galling is that banks used part of the bail out money for year end pay incentives to their executives (I thought I had read that $ 1 billion was paid out as incentives to bank and investment executives. That is really rubbing salt into the wound).
Add to the mix now are our 50 States. At last count States have asked for a total of $ 1 Trillion to help them through their economic mess. By all estimates this is a low number. Heck it has to be low. Why California can spend a trillion dollars in a day and not bat an eye doing it. In fact the Sacramento people will holler that isn’t enough.
I think this States action is the other shoe dropping. In a previous article Waiting For The Next Shoe To Drop it was pointed out that Government will tax until people get fed up with taxes and make drastic political changes. We haven’t gotten there yet but we will shortly.
The next group to add to the “bail out” line will individual cities and towns and who knows when it will stop.
Consumers have dug in. Spending it is said will be minimal for durable goods and the like. The reason is simple. Consumers know that they will be facing tax increases at every level, food price increases, durable goods price increases, gasoline prices will start increasing, tax will be assess on the number of miles an individual drives.
So it is not that consumers aren’t spending. Their money is being redirected to tax, tax, tax, tax, fees, fees, fees, fees, and rate increases for sewer, water, electricity and the list goes on and up.
There is only so much money to go around. And unlike our institutions Mr. and Mrs. Main Street cannot get bail out money.
There is talk that savings are beginning to increase so do not be surprise if someone comes up with the idea of taxing savings. Oh…..they do that already. What ever interest one earns is taxed.
Where has all of the money gone? No one has an answer and no one is interested (so it appears).
Spend and tax big time is the model that has been set and it appears there are no (or limited) hooks or explanation required as to how bail out funds received were spent. Now that is an ideal situation.
We do need an upgraded infra-structure (roadways, bridges and the like) but we also need to manage the funds and that isn’t going to happen.
Getting a mortgage loans continues to be difficult. The Federal Reserve has once again admonished banks and publicly reminded them that their business is to make loans.
That isn’t happening. Banks are more interested in acquistions than making loans. Read my related article Quiet Before The Storm / for additional Federal Reserve thoughts on the topic.
Is it possible that we need a new vehicle for consumer/mortgage type loans? Banks have other interest and they are not consumer interest.
The general real estate market is changing. Homes will be getting smaller. Mega-mansions are now and will continue to have difficulties getting approved.
Those with connections may be successful but in general mega-mansions have seen their day for now.
Tract homes will be closer and it appears that most entities will be mixed with a combination of homes, small stores and some park type areas. Planning departments are going to squeeze as much as possible into small areas, creating bigger tax revenue streams for respective communities.
So small and tight fitting may be on the horizon for most new home buyers.
Ventura County Real Estate.
The “jack in the box” spring is being set. Listings in the County are down; sales continue upward but most of these are due to foreclosures which is good that these properties are now off the market.
Foreclosures certainly have put a dent in neighborhood values, exacerbated by banks and appraisers continuing to low ball property values.
Ventura pricing is now at the year 2003-2004 levels. This appears to be close to the bottom. Time will tell.
As noted in my article Out With The Old. In With The New. real estate in Ventura County will start heading upward. It is estimated that Ventura County as a whole will appreciate about 8.4% in 2009. Referring to the article other areas of California will do well except for Los Angeles which will appreciate some but not as strongly as other areas.
All in all Ventura County and real estate in general will weather the economic storms far better than other investments.
Your comments are welcomed.
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Hit The Reset Button
December 21st, 2008 Categories: Weekly Real Estate Activity In Ventura County
Let me off now. Something is rotten and it is all starting to smell.
What in the world is happening on the National level.
A few billion dollars here; five billion there; here a billion, there a billion……what are we doing? Does anyone know?
The logic appears to be that if we throw a lot of whatever against the wall (money, excrement) something will stick. It gives the appearance that something is being done and that will make people happy and feel good.
A lot of flim flam in the papers and other media. The story line being that a lot of people are being helped as well as a number of businesses.
Before pursuing that line of reasoning I found it of interest that countries such as France and other European nations whom have been described as Socialist are now becoming capitalistic in their approach and we in the United States are doing everything possible to become Socialist.
Well let’s see. Fixed interest rates are hovering around 4.5%. Strange how that happened.
Somebody in Washington states that interest rates will go down to 4.5% and low and behold within days they are at 4.5%. Just imagine if the individual stated 1%. Where would the rates be? Which suggests that if the markets are doing what they are supposed to do (supply and demand) why weren’t rates at 4.5% or lower previously?
Reminds one of gasoline prices. We are experiencing managed economics going sour.
Who is helped with these lower rates? We are being told qualified home buyers (and even some of these are not being helped) including first time home buyers. But there are not many of these people around.
Then another article tells us that of the number that have been helped to renegotiate there mortgage rate and principal, approximately 50% of those people are again behind in mortgage payments and are again flirting with foreclosure.
Hmmmm……that doesn’t appear to be the right correction. Or maybe its me. I must have fallen off the turnip truck and the “new” new math is beyond my comprehension. But none of what is happening makes much sense.
Here is an example of a real world situation. A Pasadena real estate agent told me last week that he had a buyer with a credit score approaching 800; his client was putting down nearly 25% on a property worth a little less than $ 500,000 and the buyer was refused a loan because within a quarter mile of the property being purchased were five foreclosures. The bank felt it was too risky an area.
The questions before the house are: Why do we have banks? What is their business? Who was first in line getting government bailouts? And who is putting the screws to the consumers? To direct you to the correct answer the first letter is “b”, I think you can add the rest of the letters.
Banks (me talking) appear to be holding onto the cash for the purpose of acquisitions and the like and have forgotten their business purpose.
Folks that would like to take advantage of the low rates cannot because they are upside down in property value (thank you Mr. Frank, Mr. Dodd, banks and appraisers who are now low balling property values in a a number of areas).
When looking at the Fitch Report (www.fitchratings.com) for the year 2009 the new home builders appear to be a sorry sight. With the exception of M.D.C Holdings, NVR, Inc., Standard Pacific and Toll Brothers other new home builders appear ready to be taken over (which will probably occur) or are ready to get in line for government bail out money. So the new home building sector appears to be in for a rough year in 2009 as suggested by the following listing.
–Beazer Homes USA (‘B-’; Outlook Negative);
–Centex Corp. (‘BB’; Outlook Negative);
–D.R. Horton, Inc. (‘BB’; Outlook Negative);
–Hovnanian Enterprises, Inc. (‘B-’; Outlook Negative);
–KB Home (‘BB-’; Outlook Negative);
–Lennar Corp. (‘BB+’; Outlook Negative;
–M.D.C. Holdings, Inc. (‘BBB-’; Outlook Stable);
–Meritage Homes Corp. (‘B+’; Outlook Negative);
–M/I Homes, Inc. (‘B’; Outlook Negative);
–NVR, Inc. (‘BBB’; Outlook Stable);
–Pulte Homes (‘BB+’; Outlook Negative);
–Ryland Group (‘BB’; Outlook Negative);
–Standard Pacific Corp. (‘B-’; Outlook Stable);
–Toll Brothers, Inc. (‘BBB-’; Outlook Stable).
Unemployment is heading upward, consumers are tightening their belts and not spending, the recession appears to be getting deeper (maybe the “D” word will start to appear. “D” for depression) and we are watching and listening to the Washington soap opera which is forever trying to blame others for their incompetence. State politics is in the same position.
Why it is that Americans as bright and innovative people hire representatives who are not bright is beyond me. It is what it is and fortunately we can change the cast of characters every two and six years in Congress and four in the White House.
Unfortunately the administrators that have been in place for too long appear to be the people running the operation. Congressional people are figure heads for the grey force.
Eventually when someone takes the time and follows the money we will know who was helped and to be sure the politicians will be a lot richer.
What kind of a legacy are we leaving the next generation? They most certainly will be over whelmed with the debt that they inherited.
Ventura County Level:
On the local level things are becoming squeezed. It is the same story as in prior weeks:
- Listings continue to decrease;
- Properties sold (especially in the price range of less than $ 500,000) have increased;
- The variance between list price and sales price appears to be tilting downward (but the numbers do not show it yet).
The squeeze is taking place and when the jack in the box pops all heck is going to break loose.
Within the County it appears that banks (and appraisers) are low balling property values in a number of areas throughout the County needlessly and they will continue to do this until a seller or a group of sellers sue banks, their officers and appraisers who work with them. Then it will stop.
This managed economics as stated earlier has gone sour and there appears to be too many cooks in the kitchen making different dishes that are at odds with everything else.
Unfortunately one has to clean out the whole kitchen and get things back to normal.
The cleaning processes has to be initiated by sellers who are fed up with current property value actions being taken and will constructively attack lending institutions who appear to be selectively low balling a number of areas within the County.
The common denominator is money and it does outpoint greed eventually.
The change made for Ventura County is the forecast appreciation for the County has been increased from 7.6% to 8.4% for the next 12 months. So if the numbers are right it appears that Ventura County will start seeing positive upward growth starting right about now.
Again if unemployment increases significantly and there is no new job creation then things could get a little uglier for the County. With pending layoffs at the State level, County, and local government levels one should see unemployment increase about another 1/2%. This will put a damper on the timing of when real estate prices start going up but as of today we should see a good appreciation in the County.
Comments are welcomed.
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