The low end of the market must find stability before the rest of the market will stop falling. We still have not found a market-clearing price.
Asking Price: $183,900
Address: 211 Springview Irvine, CA 92620
I can see clearly now, the rain is gone,
I can see all obstacles in my way
Gone are the dark clouds that had me blind
It’s gonna be a bright (bright), bright (bright)
Sun-Shiny day.
I think I can make it now, the pain is gone
All of the bad feelings have disappeared
Here is the rainbow I’ve been prayin?for
It’s gonna be a bright (bright), bright (bright)
Sun-Shiny day.
I can See Clearly Now — Johnny Nash
Financial markets must discover a clearing price in order to find an equilibrium where prices no longer fall. When there is excessive spreads between the asking prices of sellers and the bids of potential buyers, the market has not found a clearing price, and prices will continue to fall.
When lenders enabled people to borrow whatever they wanted to buy houses, people were able to outbid one another for properties and drive prices up quickly. Once the toxic financing that enabled this to occur was removed from the market, borrowing power plummeted, and bids went down with them.
Sellers miss the memo, and their asking prices remain in a strange fantasy-land where the bubble never occurred.
The result is a widening of the spreads between bids and asks and a decline in transaction volumes. As we have seen here in Irvine, spreads can remain wide as long as transaction volumes are low.
If you look at the long-term chart of Irvine sales, you see that transaction volumes were steady from 2000-2005. Then in 2006, volume went on a three-year decline down to approximately 60% of its historic norms. That is where we are today. The market may seem “hot” due to the lack of available inventory, but the transaction volume says the market is anything but healthy.
Low transaction volumes and a large bid-ask spread demonstrates that buyers and sellers are not in agreement on prices. This standoff will continue until bidders raise their bids or sellers lower their asking prices. Since bidders are not likely to have access to toxic financing again soon, bids will not be going up. Asking prices will need to come down.
Bids do not firm up again until prices are at fundamental valuations because it is at these price levels where there are a large enough number of qualified bidders to increase transaction volumes and clear out the inventory. We are not there yet.
It isn’t a big mystery as to what needs to occur; prices must fall. Let’s examine a couple of low end properties trying to find bottom support.
{book1}
Asking Price: $183,900
Income Requirement: $45,975
Downpayment Needed: $36,780
Purchase Price: $300,000
Purchase Date: 6/4/2006
Gain (Loss) after 6% Commission: -$127,134
Percent Change: -38.7%
Annualized Appreciation: -11.8%
Address: 211 Springview Irvine, CA 92620
Beds: 1
Baths: 1
Sq. Ft.: 639
$/Sq. Ft.: $288
Lot Size: –
Property Type: Condominium
Style: Bungalow
Stories: 1
Floor: 1
View: Creek/Stream
Year Built: 1977
Community: Northwood
County: Orange
MLS#: P702788
Source: SoCalMLS
Status: Active
On Redfin: 1 day
New Listing (24 hours)
This is a great bank owned 1 BR, 1 BA unit in The Springs complex, nicely located for easy access and guest parking. This home is a lower end unit in good condition. The patio allows for outdoor BBQ’s. Granite counters in the kitchen. Breakfast bar and dining area. Running streams, community pool, spa, club house and tennis courts are within the complex. Property being sold in ‘as is’ condition. There is a $75 doc fee paid by buyer at closing. All offers are ‘subject to’ and ‘contingent upon’ final review and acceptance by the investor and/or mortgage insurer.
mortgage insurer? Interesting….
You and I own this one… well, more accurately, IndyMac owns this one which is owned by the FDIC which is supposedly funded by the banks, but we all know that the US Taxpayer will end up holding the bag. Therefore, we all own a piece of this loss.
As this one is only 40% off the peak, it still has further to fall.
{book7}
This second one will not be marketed as “light and bright.” Hmmm… It is marketed as LIGHT AND BRIGHT!
OMG! Did the realtor even look at the pictures?
I am speechless.
Asking Price: $204,900
Income Requirement: $51,225
Downpayment Needed: $40,980
Purchase Price: $322,000
Purchase Date: 6/3/2005
Gain (Loss) after 6% Commission: -$129,394
Percent Change: -36.4%
Annualized Appreciation: -8.5%
Address: 150 Echo Run #67 Irvine, CA 92614
Beds: 1
Baths: 1
Sq. Ft.: 715
$/Sq. Ft.: $287
Lot Size: –
Property Type: Condominium
Style: Contemporary
Stories: 1
Floor: 2
View: Greenbelt, Treetop
Year Built: 1980
Community: Woodbridge
County: Orange
MLS#: L30910
Source: SoCalMLS
Status: Active
On Redfin: 1 day
New Listing (24 hours)
WOW..THIS IS AN OUTSTANDING VALUE FOR WOODBRIDGE! REO BANK OWNED UPPER LEVEL SPACIOUS ONE BEDROOM LIGHT AND BRIGHT CONDO IN PRESTIGIOUS WOODBRIDGE COMMUNITY CLOSE TO FREEWAYS, UNIVERSITY, AWARD-WINNING SCHOOLS, MAJOR SHOPPING AREAS, AND WITH LAKE AND ASSOCIATION PRIVILEGES! CLOSE TO PARKING AND WELCOMING VIEWS OF THE GREENBELT, THIS UPPER LEVEL CONDO IS AN END UNIT WITH A PRIVATE ENTRY BALCONY PORCH, VISTA OF TREES, A LARGE LIVING ROOM WITH WINDOWS ON TWO WALLS, A SEPARATE DINING ROOM, A SUNNY KITCHEN WITH UPGRADED COUNTERS, A LARGE MASTER SUITE WITH SMALL BALCONY PLUS A DRESSING AREA WITH A WASHER/DRYER CLOSET, AND A SEPARATE BATHROOM WITH SHOWER/TUB.
VISTA OF TREES. Hmmm… I imagine you can see them, too.
ALL CAPS.
Look at how long this one has been moving through the system:
Foreclosure Record
Recording Date: 05/09/2008
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)
Document #: 2008000222010
Foreclosure Record
Recording Date: 02/04/2008
Document Type: Notice of Default
Document #: 2008000051931
Foreclosure Record
Recording Date: 08/24/2007
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)
Document #: 2007000526514
Foreclosure Record
Recording Date: 05/16/2007
Document Type: Notice of Default
Document #: 2007000318854
This owner stopped making payments in late 2006 or early 2007. It was not foreclosed on until June of 2009.
Nobody has made a payment on this unit for as long as I have been writing for the IHB. Unbelievable.
Thank you for that song, IR. You know, the Wailers sang back up on that song, apparently. It sure brightened up those depressing photos of those dumps.
“It isn’t a big mystery as to what needs to occur; prices must fall.”
And the only way that will happen is for interest rates to go up. Will the Fed allow that to happen soon?
http://www.reuters.com/article/newsOne/idUSN1433952620090917
I can’t believe this passes,
“Heightened prospects for a strong resurgence — rather than the sluggish rebound many still envision — have led some officials to worry”
Worry about a strong resurgence? I think that’s misplaced worry by those who compeletely missed the housing bubble. They were not worried about house price inflation, but are now, in a hugely deflationary environment, worried about inflation?!?
Who’s really predicting a strong resurgence?
Do you really not believe that someone was living ~2 years rent free?
Why do you put granite counters in a 600ft^2 apt? The 1st place looks like it got new wood floors, counters & cabinets, but nothing else. It seems like overimprovement that will provide little bang for the buck.
Was that complex ever apartments or was it always condos? This is something that will have easy rental substitution and should sell below rental parity because of the lock-in, transaction costs, and depreciation risk.
Is there really any difference between owning these units or renting equivalents that would justify gov’t subsidies towards owners?
The 2nd property’s 1999 inflation adjusted price is ~$130k. Is the new normal going be close to the old normal? Still more drop to get there.
The owner(s) were living in their own darkness to even bother paying mortgage.
Yeah, I’m shocked that the owner has been getting a free ride for what, two or even three years. Am I naive? THIS is what our tax dollars are subsidizing? So the bank can keep these properties on their books to make their bottom lines look better? And in the meantime, these bozos get a free place to live? And the neighbor next door, who is either renting or paying their mortgage, is paying a thousand or so a month like a good little sheep? Why isn’t there more outrage over this? Geez, maybe I’ll go buy any old house I can, tomorrow, so I can default on the mortgage and get three years of free rent. I’m furious.
Um… I guess this happens a lot now. Here’s something I posted over on OCR the day it happened:
Modguy says:
September 15, 2009 at 8:51 pm
“You’re right! I know this is just one anecdotal example (I have others), but we have a borrower that hasn’t paid since 2006! They’ve applied for loan mod 3 times (signed two of them), but NEVER made a payment aftewards. They called again for the fourth time and we said flat-out “NO” (today)… We told him he’s failed to make a single payment after each mod offer over 3 years.
Well, now he’s getting an attorney (who will find ways to further delay a FC that should have happened three years ago).
If you don’t think the vast majority of the defaults will “eventually” (finally) end in FC, you’re not paying attention!”
I rent, so I’d be out in 3 days – not 3 years, if I didn’t pay… LOL
Guys, look at the pictures. Nobody is living there. Does anyone have proof somebody lived there rent free for two years?
If nobody was living there, then no one benefited from a “free ride”.
Anger is a healthy response to injustice — it means you are sane.
Still, we are sometimes led to think the worst of people. Better to discern first if an injustice has in fact occurred.
WaitingToBuyByAndBy,
it appears the propert is bank-owned now, so they would have been evicted… I’m sure it was vacant for 3 years prior to FC.
You know, IR, I’m really mad over this. Even though I knew it, when I see the example, right there in front of me, it just hits me like a punch in the stomach. I think if someone shone a light on this, just like you did with the bubble prices, there is going to be a lot of outrage, when it’s just laid out there for people to see.
I am glad people still feel the outrage. It is ridiculous that people can live rent-free for years on the taxpayer bailout money — which is ultimately how it will be paid off.
Just because you spend a lot of time on your analyses doen’t make them right.
“If you look at the long-term chart of Irvine sales, you see that transaction volumes were steady from 2000-2005. Then in 2006, volume went on a three-year decline down to approximately 60% of its historic norms. That is where we are today. The market may seem “hot” due to the lack of available inventory, but the transaction volume says the market is anything but healthy.”
Your chart shows normal Irvine volume of 1,000 a month? That’s pure nonsense. Since January, 2000, 23,847 homes have changed hands. That averages 203 units a month….during the height of the market. Our current sales are above that. It’s stuff like this that makes me call you out on it.
Seriously, this is ticking me off. How can the “Irvine Housing Blog”, the source for all things Irvine Real Estate, not know in an instance that 1,000 is 5 times normal volume?
I meant to say “instant”.
Why don’t you go register your complaint with Trulia? They were the source of the data. It clearly shows the Trulia logo three different times.
I stated, “Then in 2006, volume went on a three-year decline down to approximately 60% of its historic norms. That is where we are today.” I never said what the 1,000 means in the chart, that is your interpretation of Trulia’s data.
You are the one analyzing it. It is your work and your responsibility to stand behind it.
Looks like you only read IR’s first paragraph and not his second.
Take another look at the chart. Are those # monthly? Yearly? Quarterly? Can you tell from the legend (or lack of)?
See below. The chart is referencing a rolling 90-day period.
That wouldn’t explain the 60% of sales figure. We are at normal volume.
NewportSkipper,
You have the opportunity to make a total fool of IrvineRenter. All you have to do is:
(1) Make sure you understand the data presented.
(2) Find a data set that contradicts the data presented.
(3) Say, “Take that!”
Unfortunately, you continue to answer without understanding the actual data presented, you persist in presenting figures without providing any verifiable source.
I hope you become motivated to actually build a case some day.
Don’t be surprised though if after crunching the numbers you come to a startling conclusion.
In the meantime, you are wasting everybody’s time by accusing IR without first understanding the data and without providing any data of your own.
I’m wondering why more people aren’t ignoring NS. He reeks of troll in his constant accusations of IR without presenting any evidence to back up those accusations.
I also take exception with your overall premise that prices are falling in Irvine. Open your eyes. They have been solid for well over a year, pushing two. Time to put the Koolaid down.
You have yet to demonstrate same unit sales which demonstrate your premise.
I believe I have, but I will do it again for you when I return. It won’t be a resale of the same unit because we are talking about the last 1-2 years. It will be based upon similar units, with same floor plan where possible.
I hope this is better than the last figures you posted in the forum. I mean that seriously. Group think and confirming evidence bias are huge potential problems, and the value of dissenting views/information is to help identify these problems.
I believe, that you believe, that you do have new/insightful information. By all means go for it.
As a suggestion, going forward perhaps you could consider the idea that IR and the rest of this community is seeking to provide the most accurate information and assessment of the local R/E market given all available data, without (and this is key) without any intention to deceive anyone. Once you realize that no one is intentionally trying to pull-the-wool-over on anybody.
As for the rather tepid response to your “revelations” you have to realize that just about EVERYTHING you have posted has been posted before. You have to realize the hurdle rate for convincing anyone on this blog is pretty high, and at the very least requires verfiable sources for any claims.
One more thing. If you look back on my posts from 18 months ago, you might be surprised how similiar the arguments I made then are to your own. I once believed that government would and could stem the decline in house prices through a combination of interest rate easing and fiscal policies (Hell, they did it 2001, why not again). What I have since come to realize is that the magnitude of the current problem is simply too great.
You are saying that prices have remained constant over the past two years? OMG, even the NRA and the mainstream media aren’t saying that.
I meant the NAR…but I don’t think the NRA is saying that prices have remained constant for the past two years, either 🙂
Since your Trulia charts are not for Irvine, or at least only Irvine. Your entire analysis of Bid/Ask prices is also inaccurate. This whole thing has to be thrown out.
Wrong. Again see below.
Note to self: proofread first.
The area I’m looking at is in Torrance. A fairly old neighborhood where prices aren’t falling as much as I expected. The notice from Redfin’s saved searches gave me this condo this morning.
http://www.redfin.com/CA/Lomita/25905-Narbonne-Ave-90717/unit-2/home/7731512?utm_source=myredfin&utm_medium=email&utm_campaign=listings_update&utm_nooverride=1
A 2br condo for 240k the lowests I’ve seen for this area, and it is not a short sale. It’s in a good neighborhood. Good schools and close to everything I need and want. This bodes well for my future SFH that I’m hoping to get for low 300s!
Dang how do I make a link.
The Charts were pulled directly from Trulia.
http://www.trulia.com/real_estate/Irvine-California/market-trends/
Trulia also lists ~920 homes for sale in Irvine currently, while the upper right corner of this page shows 571.
The number of sales figures on the charts shows a rolling 90-day period.
from Trulia:
Number of Sales is a count of all known arms-length residential property sales over the prior 90-day period. Volume for All Bedrooms may be higher than the total volume for 1-4 Bedrooms. All Bedrooms includes not only 1-4 Bedrooms but also 5+ Bedrooms and records where the number of bedrooms is unknown.
So volumes are still roughly 50% of normal, and the discrepancy with Skippys total sales figure is resolved.
Volume is below normal. That’s a fact. But the question is why. The answer is the banks are restricting volume to maintain inflated prices. To support your analysis you would have to conclude volume is down becasue people are not buying, thus a drop in prices must occur. That is wrong. People are buying what little inventory the banks allow. So then the next question is…How long can the banks/government keep this up?
Prices have stabilized in Irvine as well as most other SoCal areas, especially if you look at $/sq ft as opposed to median selling price (that is, more low to mid end properties are selling recently, so the second is weaker than the first).
Fortuantly, you don’t have to “buy now or be priced out forever”, since prices aren’t going up. But they aren’t going down any more, either.
You can’t just look at $/sf either, as that assumes that all square footage is of equal quality.
“So volumes are still roughly 50% of normal, and the discrepancy with Skippys total sales figure is resolved.”
What? Volumes are normal. This whole thing is garbage.
Based on what? I have not seen any source for your numbers. I am suppose to believe what you say when IrvineRenter and CapitalismWorks have at least sourced the data they have posted.
If you are trying to make reasonable arguments against a post that is fine but source your data and explain why yours is correct verses Trulia. I am not going to believe you though with just pulling numbers out of the air without sources.
And your 90-Day theory doesn’t even compute. Three months of normal sales is around 600-750 units. Again…..garbage.
The peak on the chart shows around 1,400 units. Irvine has never had a month with almost 500 sales. It never happened.
Dude, chill out, you’ll live longer…
I agree. Stop spamming.
Spam? That’s funny. Go back to sleep, the only place where Irvine volume average 4,000 units a year. Irvine never had a 4,000 unit year and I believe it also never had a 333 unit month. I don’t really care what you want to believe.
You are not adding to the conversation, you are simply making unfounded accusations that do not match the facts — repeatedly. You are behaving like a Gadfly, and if you continue on to full-blown troll status, you will not be welcome.
Do you know how out of touch that makes you sound? What I have said is 100% accurate. Ask Scott Gunther who is right and who is wrong.
NewportSkipper, if you use facts & data to back your views instead of just harsh words, I think you will make a far more powerful argument and a lot of people on this blog would be more apt to listen.
I’m open to other view points, but attacks come across as invalid whereas real data is power.
Oh, this ought to be rich!
OK, so I did a quick search on Google. Searched for
Irvine real estate “sales volume”
Click on the first link that Google returns: http://realestate.aol.com/Irvine-CA-real-estate
There is a chart right on top. Click “total number of sales” on top of the chart. This chart shows monthly data. I do not know what the source for the chart is but for 2005 it shows a total of 3614 sales transactions. It also clearly shows that sales volume is down substantially. Please see the chart and make your conclusions. Here is the monthly data read out from the chart:
Jan-05 204
Feb-05 195
Mar-05 361
Apr-05 365
May-05 359
Jun-05 366
Jul-05 302
Aug-05 349
Sep-05 358
Oct-05 223
Nov-05 280
Dec-05 252
Total 3614
The most recent sales data is for July 2009: 181 transactions. Its hard to argue this is even approximately the same volume as 2005.
Where I would disagree is that during the rise, bids were higher than asks – people bid above asking price, and often sales were well above asking.
I’m glad I listened to the advice and analysis of Lereah, Yun & Cramer and even heeded Bernanke’s ‘subprime’s contained’ remarks instead of reading IHB. Case & Shiller – who’s heard of them.
A very good point indeed.
During the frenzy people were bidding higher than the asking price which is what pushed sale prices higher.
To be fair, IR has posted a simplified graphic, but I agree it would be more accurate to show the bid above the ask on the way up.
One of my customers has a 2/2 condo in Lake Forrest, purchased in 2006. Money has obviously been tight for him the past six months. He had a room rented out, but the renter lost his job. His wife had a baby and lost her job. Today he tells me he’s trying to get a modification, and he hasn’t paid either his HOA or his mortgage for the past year.
I hate to imagine how tight money is going to be now that he either has to pay rent or his mortgage.
Maybe not the right forum for this observation, but why do people have babies when they know they can’t afford to even pay for housing?
Because for the most part, the human race is full of morons.
LOL good one
Suzanne researched it..
The myth of the jobless recovery
There is no real economic growth without job creation
Like all good parrots, the talking heads in the North American media can be counted upon to regurgitate buzzwords over and over again – even when they don’t have the faintest idea what those words mean. The latest example of mindless droning from these pseudo-reporters is that the U.S. economy is headed for a “jobless recovery”.
As with all oxymorons, no intelligent person would/should be foolish enough to add these buzz-words to his/her lexicon. By definition, an “economic recovery” means a net increase in economic activity, which also dictates positive wealth generation. When an economy is producing wealth, this must also result in job-creation.
We can invent scenarios where such job creation is delayed. For example, an economy with a large, but mostly automated manufacturing sector could see a surge in demand (and production) as economic conditions improve. Over the short term, it is certainly possible that such an economy could sell most of its production abroad. Thus, an economy generating a significant increase in net wealth could temporarily produce little new employment in the domestic economy.
However, this must only be a temporary situation. Though the “trickle down” theory of right-wing capitalists has been thoroughly discredited as a model for economic growth, there is a kernel of truth buried within this propaganda. When an economy produces significant amounts of wealth, even if that wealth creation is focused primarily in the hands of the wealthiest members of society, these people spend some of that money – creating wealth and employment opportunities for the “little people” further down the economic ladder.
The “trickle down” theory fails as an economic model for the same reason the phrase “jobless recovery” fails the test of rationality. When only the wealthiest people in a society have disposable income (people with enough wealth that they don’t need employment income to keep spending), it is mathematically impossible to have a robust economy.
The reason for this revolves around an economic concept known as the “marginal propensity to consume”. While this sounds complicated, like most jargon, it is actually quite a simple and obvious notion when explained in ordinary English. Basically, the lower a person’s level of wealth/income the more they spend out of each new dollar they receive.
Thus poor people have a marginal propensity to consume of “1” (or 100%), because due to their minimal wealth, they are forced to spend their money as fast as they receive it – just to survive. Conversely, at most, a billionaire might have a marginal propensity to consume of 0.1 (or 10%) – and likely far less – since these people have so much wealth (and consumer goods) already, that there is little need or motivation to spend any more each time their wealth increases by another dollar.
Plutarch, the Greek philosopher, uttered this famous quotation over 2,000 years ago: “An imbalance between rich and poor is the oldest and most fatal ailment of all Republics”. The reason this is true is based upon our marginal propensities to consume. When wealth is evenly dispersed in a society, this means that a high percentage of that wealth is in the hands of people with a high marginal propensity to consume.
These people spend a high percentage of each dollar they take in. And then the person receiving that dollar spends a high percentage of that dollar, and so on and so on…
Conversely, in a society where wealth is highly concentrated in a tiny percentage of the population (like the United States, today), only a small fraction of each new dollar of wealth that is produced gets spent. This small “multiplier effect” dictates weak economic activity – since instead of being spent and re-spent, money collects in large pools of “idle wealth”, which produces no economic benefit for a society.
Nowhere are these economic principles truer than in a consumer economy like the United States. With the exodus of manufacturing, the U.S. economy now produces little wealth. Therefore, for well over a decade this economy has become totally dependent on ultra-high levels of consumption to sustain the economy. In fact, for over two years, the U.S. as a whole had a negative savings rate – meaning a marginal propensity to consume of greater than 100%.
IR,
I think you’ve missed the point in the jobless recovery.
You’re thinking of the economy.
They are referring to their excess bonus’–not the economy. Who care what how economy is doing and long as they get their fat bonus’. Maybe you and I care, but WS, the news and BO are concerned about who purchased the election.
A bid-ask spread isn’t the same as the difference between the median asking price and the median sales prices. Right now, sales are skewed toward the low end, since high end homes aren’t selling due to the scarcity of financing and other factors. What is the average sales price as a percentage of the average asking price, for homes that have sold? I would expect it to be about -3%.
And no, Irvine home prices have not been rising for the past two years. They peaked in late 2006, leveled out in 2007, dropped significantly in 2008, and have edged up slightly in 2009. Dollars per square foot should be the measure tracked, not median home prices, to account for the changing mix of home sizes sold.
Redfin has charts showing this data separately for houses and condos. http://www.redfin.com/city/9361/CA/Irvine .
In terms of $/sq ft for sales, it seems to me that houses are flat so far in 2009 while condos are still falling.
NewportSkipper: “Irvine never had a 4,000 unit year and I believe it also never had a 333 unit month.” Why the suspense? Show us your proof already! A person who claims to have superior RE intelligence should know how to accurately reference your “facts”. Without proof, your comments add nothing to this blog.
I’d like you to create your own blog like IHB, but with your own data since you believe you are the one who knows the truth about Irvine RE.
Come to think of it, you sound a lot like a cult. They provide no proof, yet believe they’re the only ones who know the “real truth”.
Speaking of rent free living, have you heard about the no risk 30 day car return deals if you put less than 3,000 miles on the car. A friend of mine is thinking about paying cash for an Escalade, going on a road trip to Colorado, then returning the car to get his money back. Beats racking up the miles on his car or renting.
The beat goes on…..
GM has 30-60 days with less than 4000 miles.
http://www.gm.com/guarantee/?brandId=gm&src=gm_com&evar24=gm_com_vlp_60DayGuarantee
I believe there may be certain stipulations with those deals, one of them possibly being that you don’t get the sales tax back.
Japan Land Prices Drop Most in 5 Years on Recession (Update1)
By Katsuyo Kuwako and Go Onomitsu
Sept. 17 (Bloomberg) — Japanese land prices dropped the most in five years as the recession discouraged buyers and tighter credit markets choked off funding to developers.
Average prices declined 4.4 percent in the 12 months ended June, the 18th consecutive annual decline, the Ministry of Land, Infrastructure, Transport and Tourism said in a report today. Values fell in all but three of the 22,435 locations surveyed.
The decline in land values, which are about half of what they were at the height of Japan’s bubble economy of the 1980s, may slow as the nation emerges from its deepest postwar recession. An 18-month climb in Tokyo office vacancies ended last month and the number of unsold condominiums on the market are down 43 percent since December.
“There are signs the decline in land prices in Tokyo and other big cities is coming to a halt,” Takashi Ishizawa, Tokyo- based real estate analyst at Mizuho Financial Group Inc. said. “It’s possible Tokyo prices could even rise next year, but the regional districts will continue to see declines.”
Price declines in Japan have been less severe than in other markets that had rallied in recent years.
The value of commercial property in Japan dropped 5.9 percent from a year earlier. In the U.S., commercial real estate values fell 27 percent in the same period.
Prices in residential and commercial districts fell in all of Japan’s 47 prefectures, the first time since the ministry began compiling the data in 1975.
Rural Districts
Values in Tokyo, Osaka and Nagoya, the three major metropolitan areas, declined 6.1 percent, snapping a three-year gaining streak. Prices in rural districts dropped 3.8 percent.
Property developers and managers accounted for eight of the 10 biggest bankruptcies of listed Japanese companies this year, stoking consumer concern about job security and deterring banks from refinancing loans to the industry.
KK DaVinci Holdings, which manages property assets worth more than 1 trillion yen ($11 billion), said last week it may not be able to reach an agreement with creditors to extend a loan secured by its Pacific Century Place building in central Tokyo because of the market slump.
The most expensive piece of commercial property remained Tokyo’s Ginza shopping district, where land can cost as much as 25 million yen a square meter. The value declined by 17 percent from a year earlier.
The capital’s Chiyoda ward, where the Imperial Palace is located, has the most expensive residential land even after values fell 11 percent to about 3 million yen a square meter.
Tokyo Prices
Average prices in Tokyo’s commercial districts dropped 8.9 percent, reversing a 4 percent gain the previous year, as companies relocated or negotiated lower rents.
The ministry said in June that commercial property prices in the Tokyo metropolitan area were still at the same level they were 35 years ago, after the collapse of the real estate bubble of the 1980s erased what had been a fourfold increase.
Office vacancy rates gained for 18 straight months through July, according to Miki Shoji Co., a privately held office brokerage company. The rate was unchanged at 7.57 percent in August.
The number of unsold condominiums in Tokyo and surrounding areas fell to 7,037 units at the end of August from 12,427 in December, according to data compiled by the Real Estate Economic Research Institute.
To contact the reporter on this story: Katsuyo Kuwako in Tokyo at kkuwako@bloomberg.net; Go Onomitsu in Tokyo at gonomitsu@bloomberg.net
From Google:
3 million Japanese yen = 32 913 U.S. dollars
1 meter = 3.2808399 feet
So the Chiyoda ward is going for $10,034/sq. ft.?
We have the So Cal meme that “they aren’t making any more land”. I guess in Japan, it is more evident.
Actually, 1 sq. meter = 10.8 sq. feet but your point is still valid, Irvine prices look like a bargain by Japanese standards.
What does a coop in Manhattan cost? That’s a better American equilvalent. Irvine, at it’s roots, is still a suburb.
Thanks for find the flaw in my logic. I’ve heard of homes going for $1000/sq. ft. but I should have questioned $10k/sf.
So $3,048/sf it is. As Geotpf points out, this may be equivalent to Manhattan or something.
Tony’s point about building on reclaimed land is very interesting.
Actually, the Japanese are making land. The new airport at Osaka is built on a -slowly sinking- reclaimed land.
They also done extensive land reclamation at Tokyo.
Clicking on that streamwood place (which I sort of like as a live-now-rent-later place, other than the 1300/month part) led me to this one:
http://www.redfin.com/CA/Irvine/32-Streamwood-92620/home/5493105
Is it me or did their open floorplan result in the kitchen no longer having a stove or oven? “This unique unit is truly one of a kind.” Because its the only one in the complex with half a kitchen?
I have had friends live comfortably in that situation but they did so with the understanding that they were paying a lot less for their unit than they would for a fully featured one — or often because it was the best they could afford in a location they wanted so they lived with it.
Methinks NewportSkipper is a scared Realtard trying to desperately dump his three “investment” properties while hiding on his boat so the repo man can’t get his mercedes!
LOL.
Perhaps “skipper” refers to skipping out on his mortgage payments rather than a boat.
Probably just another FB never the less.
The dark photos are the result of poor camera exposure, which was set to capture the details of the outside rather than the inside. The place really could be “LIGHT AND BRIGHT”, despite the poor photos. :cheese: