Tuesday, October 28, 2008

Redfin layoffs

If you've not heard already you really need to read this: http://forums.redfin.com/rf/board/message?board.id=LA_OC&message.id=3042#M3042
Redfin is the type of real estate company that consumers have craved for. They are transparent and upfront about everything even when news is sometimes not that good, or in this case, lousy.
I just hope they are able to continue with what they are doing because I'd hate to have the few options homebuyers have had in the past.
Good luck Redfin.

After reading this I came upon a blog in Redfin where the CEO posted about the layoffs:
His comments are as follows:
The reductions were mostly focused on our Seattle real estate group and our marketing department. We have grown revenues nearly 50% this year, and increased market-share by more, but our Seattle business has not grown as much, and we anticipate that overall transaction volumes will not increase as much as we had once hoped, prior to the credit crisis.

That said, our Southern Calfornia business has grown, turning a profit for the first time, and now shows signs of sustained increases in revenue even through the downturn.

We aren't trying to whitewash a setback in our business, or minimize the pain it caused our former colleagues. We of course recognize that startups lead perilous lives that could end in unexpected ways. But we do think our Southern California customers should know that business in this area has increased beyond our expectations, that Redfin overall has out-performed the market, and that we are well-equipped and well-capitalized to be a stable long-term partner.

Regards, Glenn

Glenn KelmanCEO, Redfin

Tuesday, October 7, 2008

AIG- Arrogance, Impudent, Guilty

Perhaps the title more aptly describes what AIG stands for.
If the thought of your IRA or 401k or investments losing a lot of money lately doesn't piss you off enough already here comes a story from the AP press today about AIG:
Seems an 85 billion loan from the taxpayers gave them a new lease on life and what better way to celebrate..I mean..collaborate on how to spend it then to go the most expensive place you can and spend $440,000. You read that right. Sickening. These people don't live in the same world as you and I and still can't accept reality. They spent $23,380 on spa treatments alone. Even Charlie Sheen couldn't spend that much on hookers. Give me a break. What do you think?

Monday, September 29, 2008

Triple 7's- Good luck or ?

Normally if you're in Vegas and you hit three 7's you'd be ecstatic. Not today. With the DOW dropping 777.68 it's like three 7's in a jackpot. Heck let's round off the .68 to .7 and call it four 7's in a row. Only the results were in reverse. Big time. In fact the market lost about 1.1 trillion today. That's a lot of Wall street bonus's that are not going to happen and more.
I wouldn't be surprised to see the market bounce back up tomorrow but not back to the level it started today.
Still there's a big part of me along with lot of other people that hope this bill or the new form of this bill never passes. Let prices drop down to normal levels. Let people learn, albeit the hard way for some, that you need to save and be prudent before taking out loans that you can't afford to pay. And giving out loans that are unreasonable also. It's time to pay the piper.

Sunday, September 28, 2008

Trash can sales-Knucklehead of the week

With all the seriousness of the bailout plan I couldn't resist throwing in some pictures of why some places probably never sell. Pick any of the following for the knucklehead of the week.
Here's a brand new listing today at 9846 Coral Cove Cir. http://www.redfin.com/CA/Huntington-Beach/9846-Coral-Cove-Cir-92646/home/3775846

Could you have at least picked up the s*** in your living room? (or is that a bedroom?) I bet some of the better realtors in the area laugh when they see this also.

Do you like the gin bottle on the dresser? How about the fraternity brothers inflatable Coors-like bottle in the center? And WTF is that thing hanging from the ceiling? I think it's a noose so the owner can hang himself. Maybe he already did and the leftover rope is for the realtor who was too stupid to post this picture. They must think their place is so special they don't even need to clean up their crappy, boxy 1965 place. And the realtor's last words in the description: "This one's a winner." Umm..right.

I'm on a roll tonight so I'll throw another one out there in a minute. Today I took my wife out to test drive a car. She's never gone through the fun experience of dealing with car salespeople. I figure some of the ex realtors are probably working at some of these places now since they are loaded with slimeballs galore. She took one for a testdrive of which I asked her beforehand to have them give back the copy of your license they made when you are done. When she returned she watched our kid and I took it out. When I was done I walked inside and asked him for a copy of the license back. You can't be too protective of your personal information these days. Think I'm kidding? Read about Douglas Nissan of Orange: Four defendants: 43 counts of forgery, 31 counts of grand theft and one count of conspiracy to defraud. Sounds like a nice place to do business with. http://orangecountyda.com/home/index.asppage=8&recordid=1015&returnurl=index.asp?page3D8

When we were driving back home I asked my wife did she get the copy of her license back? She told me the guy said he never made one, he just entered the information in their computer. Lovely. I then handed her the piece of paper and told her rule number one: all these guys are liars and they will do what they can to sell you a car today.
Pretty much like many realtors. Here's a listing with only two pictures and this is one of them. Can you believe it?

And here's one for a backyard in Fountain Valley. I can see the realtor now. It has "plenty of potential."

And here's one with curb appeal in Long Beach. Just that someone ran over the curb a little too far in their excitement to see this place I guess:

Maybe the flip side of putting pictures up here like this is that the realtor doesn't want you to have any surprises when you see the property. The only surprise I would have is if one of these dumps actually sold.

Saturday, September 20, 2008

Unemployment up up up

The unemployment numbers came out on Fri. and like I said in my previous post it was going to go up out here in la la land. For CA the July unemployment number was revised from 7.3 to 7.4. The new preliminary number for August is 7.7%. Not good. The O.C. fared a little better than it's neighbor up north at 5.8% while L.A. County climbed to 8.2%. Yikes!
In CA. that accounts for a total of 1,417,175 people unemployed. That doesn't account for the "underemployed" and for those that didn't file which would push the truer number over probably 10%.
Interesting none of the news stations I watched on Fri. said anything about this. Too giddy about the 700B bailout. Did anyone ask them how the taxpayers are going to pay for this if we all keep losing jobs?

Two years ago we were at 4.9% with 873,145 unemployed people
It's going to be a bleak Christmas season for a lot of people this year and I'm not talking about the wingdings on Wall St. I'm talking about the average Joe having to cut expenses. Wait until stores report earnings and see how many of those have to lay off more workers or close entirely. Do you see how this downward spiral is going to affect sector after sector more and more?

Oh and by the way, it'd be nice if the goonies in Sacramento pass a budget soon.

Tuesday, September 16, 2008

Black Sunday? Should be Red Sunday

I haven't posted in quite a bit. My summertime vacation is over and now I'm back at work. In addition everything that's been happening with housing and the financial markets is a bit depressing. I'm not sure why they called it Black Friday. With Lehman Brothers filing for bankruptcy shouldn't it be titled Red Sunday? Afterall, being in the black to me always meant you were running a profit while being in the red was losing money. Or maybe they should have titled it "Sunday, Bloody Sunday," with my apologies to U2.
While what's happening at the National level is amazing and will have some profound effects down the line I'm looking with as much interest at California where I live. The unemployment numbers for Aug. come out this Fri http://www.bls.gov/LAU/ and I can't imagine it's going to be good. I'm sure it will go up from July's 7.3%. The Bureau of Labor Statistics stated: In July, 43 states and the District of Columbia recorded over-the-month unemployment rate increases, 6 states registered decreases, and 1 state had no change. That's not what I call a good track record nationally either.
Take a look at some of these graphs from the bls site:
As you can see here the labor force for CA has increased every year since 98. No big surprise there.As you can see with the next one that employment was steadily growing until 1/08 when all those running the Ponzi scam in the mortgage industry started losing jobs. Along with construction, etc..it continues.
Next we have the unemployment growth chart. Yikes! I haven't seen that steep of an incline since I climbed Mt. Baldy. Noticed when it started climbing. Right about the time people had to start paying the piper for the subprime mess:

Lastly we have the unemployment rate expressed in percentage.
The last four months have been grim. While March and April were at 6.2%, May moved to 6.8%, June jumped to 7.0%, and July was a juggernaut at 7.3%,. August might be the start of the Apocalypse we'll have to wait and see what Friday brings.

Thursday, August 28, 2008

Greed, Greed, Greed

“Greed is Good” according to Gordon Gecko. It seems some people are still living with this mantra. Here’s an example of something I hate. Change your listing by a stupid amount so that it remains on the “hotsheets” or e-mailing lists. WTF? Are people that stupid?
Here’s an example of what are you thinking?
This place only was listed three days ago. In the delusional land of Newport Beach where legend has it that parties thrown by Dennis Rodman can exceed most people’s mortgages a month this guy will be throwing a party if he could find a sucker for this place.
For a “close” to $1.5 million you can have this one in Newport Heights
Now don’t get me wrong, the place looks nice but if you think you can get close to a million profit from the $541,000 you paid in 1999 then good luck.
What ticks me off is that it showed up as a price change today from it’s original list price of $1,499,999 to $1,499,998. That’s right…one Frickin dollar change. What an a***hole realtor and greedy owner.
I have now figured out what we should all do for listings like this. Submit an offer!! Not the normal low-ball offer but one where you sneakily move the decimal. So instead of $1,499,999 submit an offer for $149,999.99. If you do this often enough you might find a stupid and greedy person that might accept it. After all, how do you think people get scammed from Nigeria for thousands of dollars? Greed and stupidity. A deadly combination to say the least.
They might be so excited that they think they got an offer for “full price” that they will fax over that acceptance reply right away. Then when they realize it’s not right you can sue for breach of contract. That should float some of that greedy equity out of them.

Here’s another delusional kool-aid sipping Coke-A-Mesta head that thinks his place is worth over a million:
While this one didn’t drop his place by a stupid dollar like above he is still in la-la land. Check out his own personal golf course in the backyard. This complex sold an exact model like this recently for $650k. That’s right, half of what he is asking. Does he think the sunset that you can see from over a mile away counts for ocean front?

Not to mention that there are plans eventually to build Banning Ranch with 1,375 homes and shops in development in the park area which is his view. Now what will that do the view?

Since he is asking 1,249,000 I think we should submit offers like this for $124,999 or $124,900. At least it will waste the realtor’s time since if they do see the decimal in the wrong place they may actually call you to see if was accidently placed wrong. Good for a laugh at least.

Wednesday, August 27, 2008

Condo conversions-reversions

Conversions to reversions. A bad investment. UGH!
One thing that worked during the housing boom was owners of apartment buildings turning them over to condominiums. Can’t say I blame them. Huge profits, don’t have to deal with tenants. Except some of them came late to that game.
Maybe they should have read an article like this one first describing the downturn in condo conversions. True it’s in Florida but the same thing happened here too:
Here’s an excerpt:
Condo conversions nationwide peaked in September 2005 and by June of this year levels had fallen back to those last seen in early 2004, before the bulk of the conversions happened. Nearly 28,000 units costing more than $4 billion were converted in September, while only 3,354 units were converted in June at a total of $449.4 million, according to Real Capital Analytics.
From an article in the Grunion Gazette which is in Long Beach:
http://www.gazettes.com/condoboom07262007.html “In 2006, 1,073 apartments were approved to be converted into condominiums in 78 different buildings, and since 2004 more than 2,000 condo conversions have been approved. This year owners have sought conversions of just 350 units in 18 buildings, although half of the unit total comes from one building (110 W. Sixth St., near Pine Avenue)”. Yikes! With those type of numbers, trying to convert to condos right now is just utterly foolhardy. Fifty-six percent of LB’s 173,000 housing units are rentals. That’s a lot of people who just cannot afford the high prices on their wages. Prices are still going to have to drop to come back to affordability.
Here are a couple of examples in Long Beach:
This building has eight units. I can find 5 of them still listed after 95 days. Take your pick. Unit 1, 4, 6, 7, and 8. I’m not sure if the other three have sold since I didn’t find any info on those. Since the pictures are all the same for each one I’ll spare you the redundancy other than to say that who is going to jump into this knowing that their neighbors will be paying less when they get desperate to unload these? Throw in a $225.00 HOA fine with no amenities that I can see and you got a recipe for disaster.
I’ve read in some places that the owners “have re-converted” buildings back into apartment rentals after extremely poor sales. That doesn’t bode well for the poor sap that buys then finds a few months later it’s being converted back. I’m not sure what their legal options are at that point but I know it wouldn’t be fun going through that.
A question posted on Trulia asked If a condo conversion reverts back to rentals does it hurt my value?
Here is the reply posted by a realtor in Baltimore that I believe is right on:
The problem you may run into is that when you try to sell it, the buyer may have a hard time getting financing. Condo projects are either considered insurable or uninsurable by fannie mae. This makes a difference because Fannie Mae & Freddie Mac are the largest purchasers of loans on the secondary mortgage market and without their blessing, it can be difficult to find an entity to purchase the loan. Especially with the recent changes in mortgage guidelines, it will be more difficult to get financing for an uninsurable condo. Projects that are less than 50% owner occupied are considered uninsurable. You can check with the property management company as to whether or not the property is Fannie Mae insurable, they should be able to tell you. It is certainly possible to get financing on an uninsured condo, but your buyer has to be in excellent financial shape, and could be required to put more down than usual, so you might end up with a smaller pool of potential buyers. All of that could certainly hurt property values some.

It’s not that the units here in Long Beach look bad. Though describing the neighborhood as the Eastside or Circle Area is a stretch. This is the center of Long Beach where it gets to be a much more densely populated area. I would put Redondo Ave, as the furthest to go over and still label it “Eastside” but even that could be argued is a stretch. Here’s a better map of what is considered the Eastside:
The problem for these building owners now is to recoup their investment for remodeling these units. If they go back to renting them out they’ll probably be trashed over time and when or if this market recovers so it’s viable to sell them they will have to sink some more cash into remodeling again. Can you say fire sale?
Here’s another example:
Example #2: 3440 E. Ransom St, Eight units all listed in a row, all have been listed for over 190 days now as of this listing. Throw in a $237 homeowners fine and you can see why people in this neighborhood are renting instead of buying. I love the street name- “Ransom” That sure in heck doesn’t help. Conjures up pictures of Nigerian scammers and others asking you to fork over your hard earned money. Oh wait, that would be the realtor. Again, while these units are closer to the famed traffic circle area of LB this still isn’t Eastside to me. Another central high-density area of LB changed over in a Johnny come lately to the party attempt in cashing in on the housing boom.
The pictures look nice but there are no amenities and it’s in a neighborhood I wouldn’t be jumping on anytime soon.
So far sales have been one big goose egg after half a year. What does that tell you? Guess everyone else agrees.
Need another example?:
These units are on 2925 Spaulding Ave. There are currently as of this posting 12 of these units for sale with different sizes and prices. They’ve been listed almost 180 days. That’s right folks. A half a year of no sales. The surprising point is that there have been no reductions either in an attempt to move these. Another building with a $207 HOA fine with no amenities. At least if I’m going to pay that give me a pool. This realtor was too lazy to put descriptions on most of the listings. On a one bedroom that is overpriced at 424 sq. ft. In fact in this description they put possible 2% back at closing. What do you mean possible? Either it is or it isn’t. I don’t know about you but give me a lower price over the 2% back as it will mean a lower tax base on the property every year. More savings in the long run.

Maybe buyers or investors are scared of what happened in Huntington Beach with the illegal condo conversions that involved an ex-mayor:

These are just three conversions that were in denial about the housing market or drinking too much of that kool-aid spun out from people like Lawrence Yun of the NAR. Either way here’s another article from San Diego that showed conversions were a bad idea even two years ago:

On top of this we have luxury condo projects downtown not selling with some of them having exorbitant HOA fines of $700 or more. One place is trying to “auction” their units off. Nothing more than a euphemism for unloading these money pits as fast as possible. I guess that’ll be a subject for another day. Stay away from these condo conversions in LB or anywhere right now. If you’ve got money to burn give it away to a good cause.

Sunday, August 24, 2008

Knucklehead of the Week! Gold, Silver and Bronze Medals

I sometimes wonder what goes through people's heads. Who is worse, the realtor or the seller here?

Are realtors that desperate, (yep), that they will post pictures like this and expect the unit to sell? Congratulations you get the gold medal for this week's worst attempt to sell a unit
First of all this 2 bed/1 ba cramped hell hole is located in one of LB's more desirable neighborHOODS- 2841 E 64th St. , just a stone's throw away from Paramount and even better Compton. I once got a summons for jury duty in Compton. I threw it away figuring there were more people for outstanding warrants than for outstanding no-shows for jury duty.

Neighborhood aside, let's look at the realtor's description: "This is a great starter home or great for investor. The tenant is out and property is cleaned up, come see for yourself." Really?? Then why don't you get your lazy realtor a** over there and take some decent pictures?All that's missing is the trash bins in that extra storage area in the back you show kindly showed us.

Again are realtors that desperate to take this kind of listing? At least have the person clean it up before posting it. The realtor needs to take charge and say "Lakeesha it's time to clean your room" And don't come out until it's clean. Check out the food that's on the tray in a plastic bag on the bottom right. Wonder if that's still there?

Now these people if they didn't take out some greenbacks in refinancing have some equity in this place. Based on only the $586 they pay in property taxes they should have some money left over to hire a cleaning service at least. It doesn't get any better in the living room:

Do the extra fans come with this place? Because it's hot as hell when you get north of the 405.

I love this line from the realtor: Has a huge lot for room to add on or for that pool you've always wanted. Like that will happen in a million years. Someone buying this small dump built in 1948 has dinero left over for a pool? Our rookie realtor continues: "Hardwood floors throughout and new vanity and faucet in bath. Lots of possibilites here."Are those hardwood floors in the living room? No, really are they? Because I can't tell. It looks like the living room used some of that left over linoleum from the kitchen.

With the median wage earner in this neighborhood earning as much as the local drifter in my neighborhood that collects cans they'd have to put down $53,000. Figuring payments, taxes. and insurance you're looking at approximately $1,750/mo. Too much for even an investor to bail these people out on a 60 yr. old building. I assume this realtor has another job because she isn't going to be selling many homes with listings like this.

Update: I just finished posting this when I came across this picture:http://www.redfin.com/CA/Long-Beach/232-E-Louise-St-90805/home/7514689

Too funny. Nothing says buy my house more than throwing in a couple of extra couches and a recycle bin. Again, another realtor so desperate for a listing that she couldn't wait a couple of days after trash day. If this was an Olympic event than you get the silver for "stupid realtor pictures". Congratulations.

Not to leave the Huntington area out of the mix. This one is in Fountain Valley actually. The listing agent describes this as built in barbecue. Looks more like a rejected toaster oven taken out of the trash bin. Too you Fountain Valley we give the bronze medal for an overpriced 70's disco era house with some bad kitchen linoleum and other accessories. But this is not a barbecue for summer outdoor eating.


Thursday, August 21, 2008

Here's the latest numbers from Data Quick for all of the O. C. Remember when the real estate pundits were saying how we hit the bottom when July's foreclosures dipped in comparison to May? Umm..not quite. And August's numbers don't look much better on the horizon. We are over 10 times the Foreclosure rate of 2006 with 5 months still to be tallied. Yikes!

Year 2008 2007 2006

Month Defaults Forec. Defaults Forec. Defaults Forec.
January 2,352 802 847 153 384 25
February 2254 732 811 164 316 14
March 2476 698 986 204 407 28
April 2598 898 855 234 374 22
May 2468 1131 1021 276 444 37
June 2282 1056 1108 311 462 13
July 2320 1351 1167 367 440 44
August 1476 469 498 59
September 1239 444 588 78
October 1448 530 599 104
November 933 364 665 102
December 1895 644 688 121
Total 16,750 6,668 13,786 4,160 5,865 647