Monday, September 24, 2007

Canaries In Wrightwood California


First DQNews reports sales for August:

WRIGHTWOOD 7 $235,000 $327,000 -28.13%

Then Realtor.com reports 169 properties for sale.

That's right, 2 years inventory. And no, this is not an artifact of strangely low sales. This is what happens and this is going to get worse, a lot worse. No, let me rephrase; a whole freaking helluva lot worse. There are about 2400 units in Wrightwood or 1 out of 15 for sale right now. Oh, and only about half are occupied. The rest are seasonal and/or vacation homes. Now look again at the DQ numbers you skimmed in this post. Yep, a median decline of 28%. Do you think some speculators missed the last lifeboat? Sure as heck they did. Do you think some people find themselves carrying debt that "no longer matches their lifestyle and long term life goals?" Don't laugh, that's what a former neighbor said to us 11 years ago when sending their house back to the bank.

Here's the cheapest offering: Classic Mountain Cabin. I don't know about you but $260/sf for "rustic" on a 3320sf lot is not my idea of classic.

More on Wrightwood soon as we discuss Realtors® drinking their own kool-aid and the new status of the investment property we sold there last April '06 when the inventory was 66 properties.

36 comments:

Sac RE Agent said...

first again

Sac RE Agent said...

atleast the median price is showing a decline. people seem to understand that number. they seem to have a lot more difficulty when the median price is moving up, even slightly, yet sales going down and inventory increasing.

Rob Dawg said...

Sac RE,
Exactly why I like Wrightwood as a canary. The housing stock is distributed as "long tail" non-gaussian. The economy is also hypersensitive to marginal shifts in the general economy.

These days there aren't many places where you can get a habitable dwelling of any sort for $215k so the low end will also be an important metric when we see that moving down as well.

Of course there are a few outlying Sacto 'hoods that you might suggest as well.

segfault said...

Doesn't look like it has A/C--I guess you can always stick an ugly but functional window unit in.

Whenever I see a "cabin," I'm always worried that the previous owner built it themselves. With the house that I bought, it was, "my uncle is an electrician," so I wasn't surprised to see two non-GFI-protected outlets in the kitchen. It's been fixed now.

Peripheral Visionary said...

The median is likely to start making serious moves as the jumbo market dries up. That's one reason Wall Street has been pressing the Feds so hard for lifting the loan caps on FNM / FRE/ FHA; they desperately need the GSEs to start picking up the jumbo market so that it doesn't collapse. Once the jumbo market heads south, the median prices will not be far behind.

And the mountain resort communities were inevitably going to get hit (which is what this community sounds like.) Second homes are expendable, and there are no "need to buy" buyers, but you know that there are a lot of "need to sell" sellers. These are communities with (literally) no jobs, which means that all the money to support the community has to come from surpluses elsewhere--and right now, other than Wall Street, there aren't too many areas with a spending surplus (and who knows how long the Wall Street bonuses will last.)

Bakersfield Bubble said...

The second home community I am watching is Cambria. I have family near the area and so far I have only seen a few cracks... but I forsee a decline of 30-50% off today's prices...

Sweet Cashback said...

Do these shacks come with sweet functional outhouses? At those prices I hope they are standard along with running water and electricity.....but then you never know in CA.

Rob Dawg said...

PV,
Your post was an excellent expansion on what I described as "The economy is also hypersensitive to marginal shifts in the general economy."

BB,
No! Say it ain't so! I -need- Cambria to implode to the tune of 65-70% so that i can pick up some sweet southern mid-cliff retirement and rental props. Maybe some empty lots off S Windsor for tax arears?

Besides if my eldest decides upon Cal Poly SLO then I also need a campus adjacent crash pad for her and they are priced like beachfront properties too.

sk said...

OT - I used to really enjoy my bike ride from Pasadena up the Los Angeles Crest Highway all the way to Wrightwood - stop for a beer - and then back. It just seemed a miracle that a place like Wrightwood could exist so close to LA - but I guess the same could be said for Topanga, and for that little hippie-like oasis in Box Canyon. - but for how long ? Sigh.

I used to often think of buying a second home in Wrightwood - then we came to Boulder CO and suddenly - Wrightwood isn't so hot ( or do I mean cool ) any more.

-K

H Simpson said...

Oh how i remember the massive crash & burn of ski condos in the 80s & 90s.

How many ski resorts went under when the development could not pay for itself.
Aschutney Vt just came out of the hole after the locals bought out the $14,000,000 of investment for 1.8m. And that was when interest rates were cheap. Who can afford it at the currently climbing rates?

How many $400-600K mountain joints have been whipped up in the past 5 years with the post and beam look, big windows, stone fireplace etc in locales miles from civilization.

This could be much, much worse than 20 years ago and we have not even factored in the huge energy costs to run resorts. Or for the users to get to in their Land Rovers / Navigators / LX470s.


Take a gander at american ski company (ASEK) who own several ski resorts. They are down 65% today to .02.
They were at $1.10 in the past year. But they are HIGHLY leveraged and have had a couple heart attacks in prior years when interest rates trended upward. Looks like investors are thinking the same as this group..

H.

Rob Dawg said...

H Simpson,
I still harbor the secret desire to purchase 600-800 acres in the Northern Berkshires and a D11R. I'd build a 27 hole course, an airstrip, x-country/mountain biking paths, hyper-luxury yurts, concert venue and corporate retreat accomodations.

Why Northern Bershires rather than souther Greens or Whites? 9 month season versus 6 and property taxes and local opposition issues. Did I mention the gun club membership?

H Simpson said...

Rob

You will be out there with the Gov Duval and his new 24 room $5.8m abode, though his is only 78 acres, but allas no pesky golf course to encourage riff raft.

Good idea to put in an airstrip. The Mass pike is a parking lot most friday nights. I was coming back from Newport last friday and route 495N was a parking lot from mass pike to rt 2. Why? Mass pike backs up so bad with idling M-Bs and BMWs that the beautiful people get off, head north on 495 to 290 and back down to mass pike in Worcester or take the northern run on 2 through Athol. Even with 4 mph traffic and twice the distance, it is faster to their "country home"

It is pretty out there I must admit. I took a quick run to area 3 weeks ago. Cannot beat the sunsets on the purple hills of Upstate NY come late summer/ early fall.

Peripheral Visionary said...

600-800 acres? Good luck finding that much contiguous land in the Berkshires. Green Mts maybe, especially further north, although in Massachusetts you'd be a native, while in Vermont you'd have to deal with being considered a flatlander.

But speaking of ski communities, I wonder what SLCMG would have to say about Park City. H Simpson asked how many "$400k-$600k mountain joints" have been "whipped up", the answer is as many as could possibly fit on the backside of the Wasatch Range. Park City has an absolute blizzard of inventory, from 1br condos all the way up to Mountain McMansions (the real Mansions are in Aspen, but don't tell the Park City people that.) Huntsville was the only community with its head screwed on the right direction, it put iron-clad zoning laws in place early and will likely hold its values (people like living next to farms and wilderness, not subdivisions--who would have guessed!) Park City, Deer Valley, Midway, Heber, all are horribly overbuilt and very vulnerable to a downturn.

Peripheral Visionary said...

And while we're on the subject of mountain communities . . .

Mountain Cabin + Delinquent Mortgage + Fire Insurance + Very High Fire Risk = you do the math

Rob Dawg said...

H Simpson,
[PV, wait your turn, I'l deal with you in a minute]

I was in Newport end of June just before the big rush. Man I was having flashbacks to summers in P-Town late 70s-early 80s before things got "sad." The new deck at the O-Club at the Naval War College is awesome. We were the first private party to use it after opening.

Ahhh Rte 2 through Athol. In school I used to use that as a bicycle training route. You know why Massachusetts/VT ends where it remains today? One of the saddest days of North American History.

You are right, unsurpassed beauty for two weeks out of the year.

Rob Dawg said...

Peripheral Visionary said...

But speaking of ski communities, I wonder what SLCMG would have to say about Park City. H Simpson asked how many "$400k-$600k mountain joints" have been "whipped up", the answer is as many as could possibly fit on the backside of the Wasatch Range. Park City has an absolute blizzard of inventory, from 1br condos all the way up to Mountain McMansions (the real Mansions are in Aspen, but don't tell the Park City people that.) Huntsville was the only community with its head screwed on the right direction, it put iron-clad zoning laws in place early and will likely hold its values (people like living next to farms and wilderness, not subdivisions--who would have guessed!) Park City, Deer Valley, Midway, Heber, all are horribly overbuilt and very vulnerable to a downturn.

PV.
Your turn. ;-)

Big acreage is "rar"e but only because it doesn't turn not because it doesn't exist. That will be changing in the new property bust. I think you can build a golf course for about 2 ac per hole but I'm anticipating eco-golf and budgeting 3-4 ac per hole. I'm going for a project that can run year round regardless of global warming or mini-ice age.

LoL at your Park City comments. Strangely enough you bring up a topic for later this week by mentioning Huntsville. Like Huntsville VenCo has turned down fast and hard up front because our deals were easiest to back out of and the costs were so high time and money that the developers walked sooner. The upside is that what is left isn't polluted by sh¡tloads of cr@ploads of recent overbuilding so from here out we only echo the bubble.

Please, don't do the fire bit for Wrightwood. Yeah we'll see a jump in ethnic slur named lightning nationwide but not for this particular community for a number of reasons. Special case.

~FREAK~ said...

NW VT resident here - Stowe is building a butt load of lux condo's - all sold out. Jay just built a golf course, Mad River finally upgraded it's original single chair & Sugarbush built a new lodge. Large scale development in VT is just too hard for build outs like western ski destinations have. By the time you've gone through ACT 250 and everything else the markets topped and crashed and the opportunity is missed.

H Simpson said...

Freak

Mildly disagree.

Jay could get ripped.
They have overbuilt condos the past 3 years for a destination in the middle of no-where (at least in the US). Maybe those now dollar rich Canadians from Quebec will buy them instead of leasing the local dumps as they had to for years.

Then you have to crazy dumb@sses who are pumping money into Burke Mt like there is no tomorrow. That is a black hole money magnet on planet Vermont for sure.

Rob Dawg said...

I hate to say it but rural New England is dead. Not wounded, dead. The new Appalachia.

Face it. Canadians aren't going to go bad skiing when the same money takes them good skiing or a little more great skiing. Besides they are going to the Caribean not Vermont.

H Simpson said...

1 more thing to think about.
I ask you to pick up a copy of SKI magazine. Any month.

80-85% of articles and ads are for high end condos. NOTHING on ski gear.

Articles about mountains are about the places to eat and sleep and not the steeps, technique, or gear like years past.

There is going to be a lot of ski/golf yuppie homes/condos chasing darn few folks.

I was talking to a guy at our yacht club yesterday. He was getting ready to unload his sloop because he did not have time maintain ski house, boat, and have a home life. When money gets tight, folks are going to make similiar decisions.

Rob Dawg said...

Bub, but H Simpson... They aren't making any more mountains or harbors or airports....

Is anybody old enough to remember the tennis craze of the Mid 70s (?). Waiting lines for backboards, public building crazes, etc, etc. Same exact demographic that pushed boats and ski condos more recently. I got the ski cabin at a basis so low it is embarrasing. Even better, a friend who bought a failed spec house in Mammoth at the very bottom and then punched a hole in the bottom and then reached down and throttled the poor spec builder until there was nothing left and then bought. By best current estimate 1998 7-8 cents on the current value. Stupid me, I thought they overpaid a bit at mid 200s. Nothing like a quick $2 million appreciation to shut my face.

I learned on cable bindings that cost $50. Now I buy composite Olins or compound Dynstars for $15/pr at yard sales. I shall do the same for housing. [Pinky to corner of mouth...]

Sac RE Agent said...

Hey Simpson, atleast younger people today only have to unload their snowboards.

Agent #777 said...

"These days there aren't many places where you can get a habitable dwelling of any sort for $215k so the low end"...

?

We must be talking just in California, or resorts, or _________?
Cause 215k still seems like a fair chunk 'o change to me. Wasn't it here that someone posted a link to a NW Houston home that looked clean and neat on a decent sized lot for 99K? Now, I did notice that a RR track appeared to be within 3 blocks, but still not bad.

Rob Dawg said...

Yes, California.

Funny Circus Bears said...

Bought puts at the open on CTX, DHI, KBH, and RYL.

There is limited downside to some of these, unless they go BK, so I will likely be out after tomorrows or Thursdays numbers.

Maintaining my Oct. long calls in GS and PCU.

Legion said...

@FCB

lol way to load up on those future crash and burners. Good luck to ya mate.

i'm in New mexico right now looking for "deals" acch I'm kidding, I had to say it...I was thinking of hanging out by a superwalmart at 12:01 to snag me a copy of Halo 3 the legendary edition..but
1. I already ordered it a month ago online.
2. I don't have my xbox360 with me
3. The fiancee will havve flambeed testicles for dinner if she finds out I bought two of em.

Legion said...

As for this housing mess...(and this is to SAC RE agent:-)
I am feeling like it is such a healthy correction, that I stopped paying premiums on my health insurance.

Sac RE Agent said...

Hey Legion, you've quit paying your insurance premiums because this correction is killing you or making you healthy? Actually it sounds like you're saving up those payments for a down payment on something good. Cause it is a great time to be a buyer!

Seriously though, I do believe there is still downward movement in prices. Go back to 2000 prices and add 3 to 5% appreciation per year until you get to 2008 or 2009. That is where I currently believe the bottom is. Of course, if a mortgage payment for that house doesn't jive with local wages, there will still be further movement.

Legion said...

Hey SAC RE agent

Thanks for the info on the houses...I may just have to lowball some people...too bad you don't work in montana or nm, would've been nice to work with someone who doesn't bullshit me:-)

Lou Minatti said...

Dawg,

This is OT but here's an article from my local fishwrap about that Texas Transportation Institute study you posted about the other day.

http://www.chron.com/disp/story.mpl/metropolitan/5158421.html

"That TTI study came under fire from transportation specialists in Southern California, but not because it put Los Angeles atop the list of congested cities.

Instead, they said the study understated California's traffic problems."

Peripheral Visionary said...

Lennar's numbers out . . . and a classic case of, "we knew it was going to be bad, we just didn't know it was going to be *this* bad." The question now is which of the homebuilders will survive and which will fold.

With respect to New England, rural New England is "dead", but I wouldn't have it any other way. Being "dead" and forgotten has done a lot to preserve its distinctive character. The 19th Century feel is still there in many of the out-of-the-way places, but it wouldn't last long were rural New England to become "hot" (like the Boston suburbs) and have developers move in with the aluminum siding tract houses. It's not a mistake that many artists and writers move to rural New England and never leave.

~FREAK~ said...

h simpson - good point about Jay - Bolton Valley (8 miles from me) is similar - to survive they sold off a huge tract of land for development - I think they got the better part of the deal, as who wants a ski house at a "commuter" mtn anywho?

Sweet Cashback said...

Today's news:

- Existing Home Sales At 5-Year Low
- Home Prices Post Biggest Drop in 16 Years
- Consumer Confidence Drops in September
- Lennar's loss bigger than expected
- Lowes and Target earning warning

And Wall Street reacts with.....+0.1%

I wonder what kind of news they need to start worrying.

Sac RE Agent said...

I'm lost on what kind of news too, Cashback. All historical trends, ratios, models, have been thrown to the wayside in today's world. Makes it very difficult to figure out what's next.

Funny Circus Bears said...

It's not that perplexing.

H Simpson said...

yet another reason why super expensive vacation homes are in trouble.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aimqrSLesKyw&refer=home

Never knew you could double your tax override by living there for 2 years before selling.

Now those older folks who were going to do this have less incentive to build a mountain/seaside palace.