March 26, 2006

Merced, California: The Land of the Open House - "Where did everyone go?"


Classic. This is what it looks like when the Ponzi scheme is over and the suckers are holding the (worthless) bags, wondering where everyone went... There's a sucker born every minute, but we've run out of suckers...

MERCED, Calif. — Where did everyone go?

Merced, once the state's hottest housing market, is headed back to being, well, Merced again.

Real estate agent Mark R. Gregory is holding an open house to sell a nearly new three-bedroom on a corner lot, and it's as if the Earth had been emptied.Last year, this Central Valley city enjoyed the state's hottest real estate market. Sure, things have slowed since then, but Gregory possesses a salesman's indestructible optimism.

He put a sign on the lawn, a note on the Internet, an ad in the paper. He's hoping for investors from the coast marveling at how much house you can buy here for $359,000. Or local couples looking to move up into something nicer. Or Bay Area workers willing to make the long commute.

Three hours quietly pass. At 4 p.m., the agent pulls up the sign and locks the door. Total visitors: zero."It's like everyone got together and said, 'Let's not buy for a while,' " Gregory says.

The good times have already ended here, in the same way slamming into a wall reduces your speed. A house will fetch 20% less today than it did last summer, brokers say, assuming it finds a buyer at all. Just a little while ago, Merced was an investor's dream.

The Office of Federal Housing Enterprise Oversight reported this month that prices in the city and surrounding area increased 31% in 2005. The housing agency ranked Merced first in price appreciation in California and ninth in the nation

11 comments:

ecobuilder said...

More and more sad news for realters.
And it's not interesting anymore. Bubble deflation is solid fact.

Hey, Keith. This blog is done. Need to start a new one - AFTER THE HOUSING BUBBLE. Start discussing different strategies for survival.

Anonymous said...

I have relatives that moved to Merced two years ago to start a house-cleaning business. They said business was great from all the new McMansion owners and they were getting lots of customers.

We're trying to figure out now if they'll continue to do great (lots of homes needing to be kept in show condition from the inventory blast) or if they'll end up leaving penniliess, on one-way bus tickets...

Anonymous said...

Great idea ecobuilder! The bust is a given Keith; lets start discussing some aftermath scenarios of the housing bubble and how we can best travel the bumpy road.
For those of us who are not mortgaged to the hilt, don’t have home equity loans, and haven't used the 1800 sq ft ATM machine, its still getting scary. Being a faithful reader of this blog, I know it’s coming, but most people I talk to haven't a clue when I bring up the subject of housing collapse.
The popping housing bubble bursts over us all, whether we like it or not. There must be some good, sound, historical precedents for survival. Anybody out there have some thoughts???

Robert Coté said...

Are you paniced? Is anyone reading this paniced? At most the people that should have already bought their home suicide kit from late night TV are beginning to be nervous about the future. We've got a long way to go for paniced.

If my daughter decides to go to UCM in two years we'll probably just buy a house for her rather than pay dorm fees. You want to see panic? Panic is not a reversion to the 2002 price ($180k), panic is not a reversion to mean ($130k), panic is overshooting because what idiot would want to buy a house where prices have wiped out thousands in the middle of nowhere ($110k)? I'll be one of those idiots, paying less per year for the house than UCM board, getting to deduct mileage to visit my daughter, her getting paid to "manage" the property, the fellow student paying rent enough to cover expenses, laughing all the way to the bank.

keith said...

MOABO on houses in 2009. Corrections always overshoot on the way down.

Horde cash - or metals - and get ready for 2009 - 2011. Japan did take 10 years to bottom out though, so we'll see...

Thoughts on the turnaround year?

When I see properties that are cashflow positive rent to ownership costs, then we'll know we're getting close.

Today though, where owning is about 2 to 4 times the cost of renting, we know we're wayyy over the top

Robert Coté said...

Thoughts on the turnaround year?

Wed Sept 17th 2008, 10:30AM. Seriously. Okay, that's when we'll stop cratering and start bouncing along the bottom with the usual confusing signals for the next 6 months just like the top we've been in for almost 6 months now and are on the edge of the cliff.

Mozo Maz said...

Only this year did Japanese real estate rise in three major metros. The rest of Japan is still sinking. After FIFTEEN years.

I bet they thought it could never happen to them. Just like we think it could never happen to us.

I do think the most spectacular part of the crash will come first. The internet makes communication so much faster than the 1980s busts we are familiar with.

It will probably create an amplified sense of desperation, and induce more fence sitters to list property and try to get out.

UNlike the stock market or the commodities markets, there are no "limit downs" or "trading freezes" in real estate.

dotherobot said...

...yeah, we should focus on "Surviving the Real Estae Crash" rather than on the panic. The panic is here, the question is How to survive it?

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