Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Sunday, January 21, 2007

Chasing the Market Down....Waiting for Pigs to Fly.



A new class of reluctant landlord's cometh... of course they are waiting for the Great Pumpkin of a Housing Bubble to reinflate and save their sorry a$$es.

"The housing slump, combined with the traditional slowdown in home sales over winter, has led to a surge in the number of rental homes in Sonoma County, said David Rendino, an agent with CPS Property Advocates in Rohnert Park, who specializes in residential investment property."

"Property managers said they are barraged with calls for help in finding tenants and managing properties. Other new landlords are trying to do it on their own."

'"It's been really heating up as people hit winter and pulled property off the market. That's when everybody decided to quit," said Rendino, who also co-owns Liberty Property Management."

"Many never set out to own a rental home, but have become landlords out of necessity. Some are renting their homes to help make their mortgage payments until they find a buyer."

"For a solid eight years, home sales climbed and prices soared, driven first by economic growth and then by low mortgage rates. Prices peaked in August 2005, when the median hit a record $619,000. Since then, housing has been in a steady decline and the price of a typical home has fallen 8 percent."

The slump has created a new class of landlords, otherwise known as.. FBs

"Many likely have tapped equity in one home to buy a new or move-up house, but are stuck with two mortgages because they can't sell their former residence. So they look for tenants and prepare for a financial hit."

"Not everyone can afford the jump. Monthly rents likely won't match mortgage payments for homes purchased within the past five or six years. But some have decided that renting is a better alternative than letting their homes sit vacant waiting for a buyer."

"The Phillipses are in such a predicament and figure they have little choice but to be landlords."I really don't want to have to do it," Trent Phillips said."

"Trent and Selena Phillips are seeking a tenant for the Windsor house they weren't able to sell despite cutting the price $90,000. The couple called it home until they bought a house in Vallejo more than a year ago, when Trent Phillips earned a promotion that requires him to commute to Alameda."

"'We need to get a renter in there because right now I'm paying two mortgages. Every dollar I have coming in is going right back out the window," said Phillips, a Coast Guard chief warrant officer. "We're just barely holding on."'

"A home they purchased just four hours after it was listed in spring 2004 couldn't sell after a pair of six-month stays on the market between summer 2005 and December. They cut the price several times for their 1,900-square-foot, three-bedroom home, from $729,000 originally to $639,500 before pulling it off the market."

"We did almost have it sold at one point, but of course it was one of those contingency deals where the guy who was buying our place couldn't sell his place," he said. "I'm not going to give my house away. I'm not going to take it in the shorts."'

hmm... you don't want to take it in the shorts, but the overblown sense of entitlement tells me you just might.

"Bob and Nona Windus have been trying to rent out his property in Santa Rosa but is having a tougher time than he expected. After trying to sell the home he turned to renting."

"Their house hit the market for $714,000 in August. Windus said a similar house sold for $740,000 four months earlier. Still, the only offer they received was for $600,000."

'"That was the straw that broke the camel's back. We didn't have to sell, so we decided to rent it out," he said."

The Windus' now rent in River, Ore. The couple moved there, in part, to stretch their retirement dollars and don't want to forsake the sizable chunk of equity they would lose if they sold during this current housing decline."

'"I don't want to let it go while the market's in the pit," referring to the recent glut of houses on the market and the slump in sales."

10 Comments:

At 1/21/2007 07:12:00 PM , Anonymous tom stone said...

Phillips won't have any shorts left to take it in soon...and windus is delusional.ooohh wait til they get that special tenant...at least they arent in oakland where evicting some one takes 6 months,costs $6k,and no rent during the process.then of course you clean and fix it,and rent it out again.Easy money,being a landlord.

 
At 1/21/2007 08:54:00 PM , Anonymous Anonymous said...

Windus Bagus = Boobus Americanis

 
At 1/22/2007 04:31:00 AM , Anonymous Anonymous said...

Yea ... that 600K is going to look like the lotto in a year or so ...
The market was seriously skyrocketing in the SF area going back to 97 and even then rents didn't cover mortgage payments. heck they barely covered 50% and that's not even counting in property tax and insurance. And guess what, there is no more tech growth (its in India and china now) bio tech is not comming to silicon valley only and nano tech is also going over seas. In short, the economic fundamentals that were in place in 97 are gone more than liekly to never return. To that add in the fact that it was over priced in 97 with respect to rents I'd say its going to drop to much below that. Marin will always be a special place, we know that, its now just going to have to a special place wihtout any real high paying jobs. That just makes it double extra special.
Cool.
Cow_tipping.

 
At 1/22/2007 11:28:00 AM , Blogger Marinite said...

Who would want to rent from someone who failed to sell their overpriced shitbox? I mean, how secure would you feel?

Therefore, I add the following rules:

1. When out buying a house, ask your realtor (if you absolutely must use one) if the house you are interested in buying was last purchased in the last 5 years. If the answer is "yes" then don't buy it because the seller will not be able to reduce its price to where it needs to be in today's market.

2. If renting, ask if the landlord is one of these people who tried to sell the house but failed. Don't rent from them unless at the very least they are willing to sign a 2 year lease at least. But keep in mind that these are more than likely novice landlords.

 
At 1/22/2007 11:30:00 AM , Anonymous Anonymous said...

Time to start asking for a credit report on the landlords instead of the tenant.

 
At 1/22/2007 06:44:00 PM , Blogger Lisa said...

These stories will be great reminders about how RE is NOT a liquid asset. It's not like logging onto Schwab.com and getting out of an unwanted stock position.

As more & more people are stuck, more & more people will be afraid to jump in. Could happen to anyone. Job loss. Too many bills. Divorce. Whatever.

And there is no guarantee of break-even. At some point, folks have to realize that the only people who are "safe" are the ones who bought before 1997 and who haven't tapped out their equity. Everyone else is screwed.

 
At 1/23/2007 12:20:00 AM , Blogger moonvalley said...

I had to laugh a few nights ago while catching the SF news on TV. They were doing a story on RE and of course brought out the tired old chestnut that the bottom had been reached , yadayadayada, now was the time to buy zzzzzzzzz. Then, they added that rents were climbing. I guess they forgot about all those overpriced condos that failed to flip and are now for rent.
Meanwhile, here in Sonoma, many of those houses that failed to sell are also going to fail to rent unless they set those rents at levels that match the demographics rather than their mortgage needs.

 
At 1/23/2007 01:02:00 PM , Anonymous Anonymous said...

That is correct. If there was a fool with a bucket of money and a big box of stupid interested in paying the flipper's mortgage, they would have bought the dang thing in the first place. Ignorance must be truly bliss for these arrogant boobs. The rude awakening is just up ahead.

 
At 1/23/2007 05:21:00 PM , Anonymous Anonymous said...

Just sit tight and wait for prices to drop. Judging from the pattern of the last crash, should be at least 50% drop.

Gonna be a lot of repos & foreclosures coming up over the next couple years, so keep piling up the money and waiting.

 
At 1/23/2007 05:23:00 PM , Anonymous Anonymous said...

...at least they arent in oakland where evicting some one takes 6 months,costs $6k,and no rent during the process.then of course you clean and fix it,and rent it out again. Easy money,being a landlord.

A lot easier money being a professional squatter. Especially if you can play the race card on your landlord. Great places to live for FREE!

 

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