Letters From The Housing Bubble
The Wall Street Journal reports on pricing a home. “As the housing market cools, one of the hardest decisions facing home sellers is how to price their properties. Bigger inventories of unsold homes also are making it harder for sellers to figure out how to make their house stand out amid the competition.”
“Some brokers are telling customers they need to underprice the competition. Sharon Baum, a with the Corcoran Group in New York, recently listed a two-bedroom, two-bathroom apartment for $3.7 million.”
“That was $100,000 less than the asking price for a similar unit five floors below, even though apartments on higher floors typically carry bigger price tags. ‘As buyers have more choices, you’ve got to make your apartment stand out,’ she says.”
“Sellers are also being told to cut prices aggressively if their house isn’t moving, or risk chasing the market downward. If a home doesn’t get any showings in 21 days or gets 10 showings but no offers, Ned Redpath, in Hanover, N.H., often advises the seller to slice the asking price by 10%.”
“‘We don’t like to see $2,000 or $5,000 price adjustments,’ he says. ‘We want to see a real whack’ that attracts attention.”
“Another approach is a personal plea. Traci Smith in San Antonio, encourages clients to court prospective buyers with a letter explaining the intangibles that make their home and neighborhood so appealing. During the height of the housing boom, some brokers were encouraging the same type of personal notes, but from buyers eager to get their bid accepted.”
From CNN Money . “Home price increases have slowed nationwide and even reversed in many markets. Inventories are up and new home builders are cutting back. More and more sellers are having difficulty selling their properties. We’ve profiled some of these sellers and that has produced a flood of reader emails from other troubled sellers. Sellers have reacted to the quickly changing market almost with disbelief.”
“K. Gordon, Amarillo, Texas: ‘I bought a brand new house in Amarillo. Unexpectedly, 4 months later I had to move back to south Florida. 14 months and 3 agents later, the house has not sold. I’ve tapped out my credit making payments on that house as well as my current rent.”
“My latest agent is an investor. He has never failed to sell a house. Recently, he told me that it appears that this house will break his perfect record.”
“For some sellers selling their old home quickly is critical: They’ve already made other plans. Tom Shipp, Seattle: ‘My partner and I purchased a new home in Seattle, before we listed our current home on the Eastside. Our agents were confident that our current home would sell in 2 weeks and advised that we not make a contingent offer on the new house..[the bid] was quickly accepted.”
“Ninety plus days, a second mortgage, and a bridge loan later we are still trying to sell our Eastside property! We just made our first double mortgage payment and are feeling desperate and depressed. We are supposedly still in a ‘hot’ market.”
“Pat Berry, Virginia: ‘Our house has been on the market in North Springfield [near Washington, DC] since July 15. In that time, only two people suggested any interest by taking time to tour the property. My husband is due to retire on Sept. 30 and at that time, we will be carrying two mortgages on 1 and 1/2 incomes. Needless to say, my fingernails are chewed to the quick.’”
“A reader in Central Florida: ‘We put our house on the market at the beginning of July 2006 for $289,900. Since then we have dropped the price to $267,000 and have only had 2 showings. Our agent keeps telling us that there is a lot of inventory in our neighborhood and that price will be the thing that makes our house stand out. Our problems is that having only owned the home 1 year there is very little equity so dropping the price much lower will result in us actually having to pay to sell our home!”
“Jerrod Leder, St. Paul, Minnesota: In late April 2006 we put our condo on the market. We almost had an offer within the first week, but the buyer wanted west-facing windows, of which we have none. Since then it has been difficult to get as much as a showing let alone an offer. From Memorial Day through Aug. 15 we had 2 showings and one was by mistake.’”
“One group of e-mailers provided a genuine surprise because they were inordinately unsympathetic to the plight of some sellers. An anonymous submission: ‘how can you folks at money use these two idiots in fla. as an exaple of a slowing housing market???? They’re very overpriced (greedy)..and should really knowbetter than to hold two mortage commitments at one time..they deserve what the’ve gotten themselves into….they have only themselves to blame…(wonder who they’ll blame for their impending divorce).’”
“And another not quite as angry example: ‘They have a 2,861 sqft house and they want more and more and more and a pool too - boo hoo. Suck it up folks, a 2800 sqft more than big enough to ’start a family’ in. Perhaps they should take stock in the expensive lesson they are learning, do not count your chickens before they hatch.’”
“Some brokers are telling customers they need to underprice the competition. Sharon Baum, a with the Corcoran Group in New York, recently listed a two-bedroom, two-bathroom apartment for $3.7 million.”
…snip…
“Sellers are also being told to cut prices aggressively if their house isn’t moving, or risk chasing the market downward. If a home doesn’t get any showings in 21 days or gets 10 showings but no offers, Ned Redpath, in Hanover, N.H., often advises the seller to slice the asking price by 10%.”
And so it begins. This right after the anderson school is predicting 6 to 16 years of flat prices. Exactly how many 10% price cuts still qualify as flat?
I am seeing it in OC for a few houses. Even some of these still arent selling either with the lower price.
i am just checking to see if anyone bitch-slap that watts guy yet. lol.
on a more serious note, even reduced, the prices are still too high compared to five years ago. in some place, prices are 100% higher than five years ago; so a 10% decrease is really really pathetic.
200 blogs @ 9:49 PST. What’s the record?
It works when you “fuzzy” math.
There are 523 revisions to listing price in Las Vagas MLS (real time) in just the last 48 hours. This is a real time report as of 4:00 PM Pacific Time on Sep 28. The sellers are “getting it” and are running scared. Bring on the spin machine, NAR, I’ll work with the actual facts, and not wait for 30 days for the “official” figures. The internet gives me the ammunition to call Learah and Watts on their spin, and should be a warning sign to the MSN that they are truly becoming irrelevant with their crap reporting.
We live in a flat world where information is power and those holding the information are no longer the paid experts. God Bless the internet. It empowers the individual if they can navigate through all the crap. Thanks for the ‘real time’ update!! I own a condo in Summerlin and have been watching the bubble grow since Mar 03!!
523 Las Vegas MLS revisions in 48 hours? Is this “normal?” I am guessing it must be unusually high — maybe even a housing crash in progress, documented in real time. I can’t think of a more deserving locale for this to take place.
Do you think the electronic circuit breakers will be triggered? Oh, sorry, there are no electronic circuit breakers for housing…
Vegas is in BIG TROUBLE: the median price fell $2K last week alone and median price is now $19K lower than last year!!
Other markets sinking fast are:
Phoenix price declines begin to fall faster!!
Median price drops another $4K last week!
Homes now worth $45K less than August 2005!
Orlando, Florida home prices tanking!!
Median price drops $25K since August 2005!
Sacramento median home price falls another $3,800 last week
Median price now $24K under August 2005 price!!
All info can be found at http://www.realestatedecline.com
That does not make sense. Fuzzy math means mechanisms for taking uncertainty or risk into account. If anything Fuzzy math would tend to indicate low values because of the high levels of uncertainty and risk that are present in the market.
Why will fuzzy math do that? You should still get the same answers - just with the margin of error computed for you - both above and below.
Indeed seven years of great plenty will come throughout all the land ,but after them seven years of famine will arise. Looks like late 2005 to sometime in 2012 sports fans.
You forgot to mention the Jubilee. Is it every 49, or 50, years?
Debt forgiveness, or massive debt default, once in a lifetime.
I see 2007-2009 to be a period of massive defaults because we don’t have the provision for Jubilee.
Jas Jain
Nice “Mosaic Law” reference. I think we could use those Hebrew statutes about now, where most offenses were handled by taking the offender outside the camp and stoning the poor sap. Mr. Watts could use a good ‘ol Jewish rock treatment, don’t you think?
Yes, some old-fashioned justice might be required to prevent moral bankruptcy from keep on spreading. Financial Fraud is spreading for a reason — It Pays Big!
Jas Jain
I am starting a NEW GAME. I am e-mailing Realtors stating that their property is OVERPRICED and showing Comparables to them. Same unit, more upgrades, Higher floor and $100,000 less then the unit your are listing!! I hope to speed up the bursting process by letting these fools know they are hopeless and the price deceleration is occurring!! Join in the fun and we can blog about their responses!!
Maye you should be e-mailing the owners?
I would if I could get their e-mails!!! The first unit I did this on was just under a million, let him know it was 100k high, the second one I have done was 1.199 million and let him know he was 200k high. no responses as of yet!!
Do no harm.
No need to speed the process. As it is the speed will be bad enough.
Jas Jain
For a $3.7 Million dollar apartment, $100,000 is only about a 2.7% drop in (from what is likely a very-much-inflated) price.
Just say that three times without bursting out in laughter:
$3.7 Million dollar apartment
$3.7 Million dollar apartment
$3.7 Million dollar apartment
What on earth is a $3.7 Million dollar apartment?
The mind boggles.
Yeah, hysterical. That thing will be on the market 15 years at that price. Personally, I have never even considered purchasing anything with a common wall. That a neighbor could burn my investment down because of their careless smoking or cooking habit is enough for me.
Oh, I might someday buy something with a common wall. But you have to understand how low the value would be on something like that. That’s what is so pathetic about condo buyers - they are overpaying for a POS. 1400 square feet in a structure with common walls is worth about what 700 square feet is in a free-standing structure - just because of the common walls. Not to mention the HOA fees. You know that you’re seeing a buying panic when people will pay as much for a condo as they will for the same space in a free-standing structure. You know you’re seeing a sane market when people apply a substantial discount to anything with shared walls or an HOA.
Most people will only act against their own interest when they are panicked. Which is why salesmen feed on panic.
I wont mind myself, just as long as it ain’t no dang common in-law!
Great idea!!! Lets all go out and go to open houses in your area. Get the realitors business card ,then go back and e mail them with your comments that the property is XXX dollars to high against any comp in the area. We will scare them into getting on with this massive down cycle in RE.
I emailed a realtor with the same type of message a few months ago. A house in a development called Estrella Mountain Ranch (Goodyear AZ) was 50K more than an identical model. Also, the lower priced house had a pool, which the higher priced one didn’t. These were EXACTLY the same model in the exact same subdivision. I actually got a lenghty reply from the realtor explaining that they were trying to inform the seller of the market changes and work with them to lower the price, blah, blah, blah…. It’s easiest to spot these crazy price disparities among flippers that are trying to sell never lived in homes in the same development.
Since when was N.H part of California?
The UCLA study, I believe, was specific to California’s market.
Also, a 10% cut is asking price isn’t a price drop if the seller is inflating the price of the home. It’s a 10% cut if they’re selling below what they paid for the home.
Well, atleast the realtor isn’t doing the ridiculous”lets lower a 290000 house to 287000 and see what happens”. This guy is smarter than most realtors. ALthough you’d think the realtors would be more agressive lowering prices instead of no income at all….
the realtors are testing the market too…they are also wishing for a higher price so their commission is fatter
You logic isn’t quite right if the owner has been in the home several years. I think if you average comps for the last year and if the current asking price is 10% less, that should count as a price drop. Lots of folks are sitting in homes with tons of equity…others not so (as we all know “the last GFs”). My job when I buy next summer is to ONLY target those that have lots of cushion when I put in my lowball offers.
“Another approach is a personal plea. Traci Smith in San Antonio, encourages clients to court prospective buyers with a letter explaining the intangibles that make their home and neighborhood so appealing”
—————————————————————————–
Uhh Yeah, good luck with that! Maybe I’ll request a letter requesting the prospective seller to explain why they think their entitled to an exorbitant profit.
If any of you have neighbors you don’t like who are trying to sell, you should all sit on your front porch (on an old sofa!) and act like a bunch of hillbillies! Work on you car in the driveway, and have your underwear on a clothesline in the front yard.
That’ll give the neighborhood some much needed character!
That seems counterproductive to me; the neighbors might decide to stay.
the thing to do is wait until they are in escrow then send an anoymous letter to the lender detailing undisclosed massive faults with the property
When I was a kid growing up in a tiny hick town, our neighbor had some black friends coming over to visit. The area has a reputation as sort of redneck, even though it’s in NJ. To add to that, my neighbor told his friends that he had to get a permit from the town in order to have them over for the night.
In advance, he got my dad and another neighbor to sit out in front of the house with wigs and straw hats, drinking beer in lawn chairs. (Of course, that’s what they would have been doing anyway, minus the lawn chairs).
All in all, it was a well-executed practical joke. My dad still like to tell that story, and that had to be 20 years ago.
It looks like some of you posters so enjoy other peoples’ pain that you would think of ways to sabotage their efforts to sell their house. That’s sick.
Nah, just a bit of humor and schadenfreude. Don’t be so edgy.
Noooooo…. sick is, when the getting was good for sellers, some of them had the audacity to ask for head shots and personal letters explaining why prospective buyers should be picked over other bidders or sicker yet was the seller asking the prospective buyer to feed the squirrels on a property she was about to sell and vacate. That was just sick.
I have only been following this blog for the last two months but I have been scraching my head as I have watched prices here in Wilmington, NC spiral upwards out of control. When it happened in California and Fla and AZ ,well, it was over there, so I didn’t really pay attention.
I read this passage:
“audacity to ask for head shots and personal letters explaining why prospective buyers should be picked over other bidders or sicker yet was the seller asking the prospective buyer to feed the squirrels on a property she was about to sell and vacate”
The question I have is, did this really happen?
jckirlan,
If the contemperaneous reports can be believed, yes, all this did actually happen. Of course, this is the Internet, but I do remember seeing this reported in real time.
It must seem hard to believe for someone who did not live here at the time, but I for one take it at face value. As a landlord, I hear crazier stuff from tenants frequently. Let me give you an example of a statement from a prospective tenant last week:
“I’m looking for a new apartment because my current place had a plumbing problem. I thought the landlord should have put us up in a hotel so we didn’t have to live there while the plumbers were working.”
Needless to say, that person’s application went straight to the shredder.
SMlandlord,
Don’t the landlords have to put the tenants up (or credit them for the expense) if there is no running water (or hot water)? Perhaps that was the problem.
CA Renter,
Landlords are required to maintain their properties in habitable condition. That includes running water, working toilets, etc. That does not include hotels for tenants when repairs are necessary, only that habitability problems be fixed immediately. If I see a tenant who demands alternative accomodations during routine repairs conducted in a timely manner, that’s an “entitlement” problem that I will not accomodate. Yes, I’ll expeditiously repair any problems. No, I will not put anyone up in a hotel while I make the repairs. A hotel room around here costs $250 per night. If the tenant was paying $250/night for an apartment, sure, I would give them that level of service. I can assure you that my tenants are not paying for a $250/night level of service. So they don’t get a $250 per night hotel room if plumbing repairs are in progress.
So when I get an applicant who expects to get $250 per night service from a $50/night apartment, I blow them off. If they want that level of service, they can buy it right down the street at the Sheraton Miramar. But they’re not getting from me on the cheap.
This housing bubble needs to crash but to willfully sabotage somebody who is trying to sell a house is evil. Remember that karma works both ways. If the new buyer wants to commit financial suicide, that’s their fault.
Sick is when a person has total income of 2700 a month and learns that the mortgage pmt is 4000 a month and the RE agent says, “‘Don’t worry about it, we’re gonna immediately refinance it.’”
Yeah funny how being greedy and liar is less of an offense to some people than wishing said liars a less than the perfect denouement of their sleazy plan.
Exactly! Having a hillbilly picnic on your front porch doesn’t destroy America. Having a negative savings rate does. THAT’s sick!
Sick is promising a working class father of three to refinance at 6% then when you get to closing saying, “sorry; 11% is the best we could get you.” Knowingly your misrepresentation was going to lead inevitably to foreclosure and his sense of failure and shame.
Better yet….
Work on the car wearing only your underwear.
This works well if they have children under 18. It also helps to have one of those electronic ankle bracelets on…
(That’s just too nasty to think about but that was what my old neighborhood was like!)
What a great idea! Wave to the people looking at the house, but say you can’t come over because your parole officer gets paged if your bracelet goes out of range…
better yet…either ship the underwear or wear camo-fatigues…
yep, nothin’ like a pair Army greens to scare the prospects away….
ship..s/h/b skip
LMAO now that would be worth the price of admission
The Simpsons…
Better yet ,put your old car up on blocks on the lawn, open the windows, and get a flock of chickens to hang and roost on the car. An old hound or two on the porch helps. Wear overalls and boots like in ‘Deliverance’ is also good.
No need to since nobody is looking at properties - LOL!
court prospective buyers with a letter explaining the intangibles that make their home and neighborhood so appealing”
(SAMPLE LETTER)
Dear prospective FB.
You may think my house is overpriced, but it is not. I am only charging you 100% more than I paid for it in 2003. Coincidentally, it’s only 20% more than my mortgage and 2 HELOC balances. A deal really.
Look at all the character of my house. It’s awesome. You can see original scratched hardwood floors where my beautiful children rode their trikes 20 years ago. You can see where the original moulding is falling off. You can see the spa-like Master Bath, with every attention to detail… well at least you can see 1/2 inch baseboards and granite counters which is close enough detail! The kitchen has linoleum that has been loved for 2 decades. But on top of the linoleum are Stainless Steel Appliances!
Smell the delicious cupcakes on the Granite Countertops. Take a stroll through my not-so green yard, but please be careful of St. Joseph.
I would love to stay in this beautiful home, but I need to sell now since I can’t afford my payments. Help me to drive my beautiful SUV packed with Plasma TVs into retirement!
Buy my house… it’s aways good to GetStucco! (TM)
If you bought it in 2003 and had children riding their trikes there 20 years ago either you were on a very long term rent to own or that is one truly special property!
Hahaha that was great! I laughed out loud when I got to the bit about the cupcakes!
“And we promise to come back and feed the squirrels.”
LOL. ….
I continue to question how many qualified buyers are really out there .This market might go into a “dead market ” where even good price cuts won’t create sales .
Already happening in FL
… and where even better price cuts will precipitate a crash.
Wiz,
Of course, with buyers like us, it will indeed become a dead market until we see houses priced at around 1999 prices (we will also need an additional discount because we are heading for a recession/depression — poor job market with lower and lower paying jobs — and pensions are falling by the wayside, so we need a discount for the additional money we need to save for retirement).
All kinds of qualified buyers right here on this blog!
Yep, going to be a dead market for a long, long time.
awesome. i was hoping would mention the squirrels. please, think of the squirrels!
Squirrels are really a triumph of marketing. Most people upon seeing a rat, scream and run for cover. But stick a bushy tail on it, and the public goes nuts wanting to feed it.
Evolution at it is best!
Oliver
LOL!
Pretty soon the FBs will be forced to eat those squirrels.
Some of us would consider that dinner. Tastes like chicken.
That’s not true. Squirrels taste much better than chicken. Grill over wood with a bit a pancetta wrapped around it. serve over beats and crispy golden potatoes, with a nice off dry white wine, and you have one tasty meal.
Oliver
My mom, who grew up in the 1930s, can vouche for the fact that squirrels are not very appetizing.
Ah, monsieur, your mama ‘az not seen mon recipes:
Grilled Squirrel with Tamarind-Orange Glaze
Squirrel with Blackberry Sauce
Squirrel Strips in Curry Sauce
Roast Squirrel with Balsamic Glaze and Bell Pepper-Onion Saute
Oui, monsieur, ze squirrel ees an incredible entre. And ze wine, oh, ze wine (Melody cues in here) – from a lusty Pinot to a teasingly borderline-complex Cab, ‘ow can you go wrong, I ask you? Squirrel – ze other French Meat! Vive le Squirrel!
Chip,
In blackberry sauce. Now that’s idea.
Oliver
Chip,
LOL!! You’re killing me here!
For some reason I’m thinking:
squirrel with Kidney beans and a nice Chianti.
I think you mean fava beans, but I get the point
I’ve always heard that squirrels are a bit rank tasting, especially ones that live in oak trees.
IIRC, marinating them in vinegar helps to reduce the bitter taste. But I could be wrong…
If buyers can’t afford your price, a personal plea wouldn’t really matter. If you’re a buyer, you could offer the seller the opportunity to come back and visit once a year to check out how their treasured property is doing.
Maybe the sellers should offer to feed the buyer’s squirrels! -
This is the reverse of what buyers were doing — sending personal letters to sellers to accept their offers over others because of this or that.
Jas Jain
Halleluia, I’m so sick of the damn housing bubble. Its been like watching a 20 inning baseball game waiting for this thing to play out. When prices bottom out, I’ll buy my house and never read another re article again. Hopefully it won’t take another 20 innings.
- Our problems is that having only owned the home 1 year there is very little equity so dropping the price much lower will result in us actually having to pay to sell our home!”
FACE it! You are going to have to PAY TO SELL YOUR HOME!!!
Forget about Help-U-Sell. I propose a new business venture called Pay-2-Sell.
Help-U-Lose
Hurt-U-Sell
Good old six percent commissions welcome you back with a hardy hug!
You mean the 6% wealth transfer tax? Works far better and more efficiently than any socialist legislation the Congress can pass through, and everybody pays it oh so willingly! (No need for a new Federal agency to monitor compliance
)
The thing is that in a normal market a person should expect to lose some money if they sell after only one year, because of selling costs, but now people seem to think they are entitled to a profit no matter how short of a time they have the home.
Bingo! But that was before the era of NEW PARADIGM thinking.
Since when has anyone expected to not have to take a loss selling a home after owning after one year? You’ve got closing costs, attorney’s fees, inspection fees, and sales commissions… it used to be you would break even on a purchase after owning for three to five years.
Try watching an entire cricket match.
At least you can buy a decent cup of tea while the match is going on. I do recommend bring a good book if you want to watch one.
Oliver
” Its been like watching a 20 inning baseball game waiting for this thing to play out.”
Someone ought to collect these analogies (simile’s ?). One of my favorites so far is (paraphrased); “Monitoring the housing bubble is like watching a snail crawl toward a buzz-saw.”
Snail to a buzz saw, lol, that captures it.
How about 20 Inning game, Alan Greenspan is the plate ump, instead full strikes he calls 1/4 strikes.
LOL…impending doom. Sellers woes are self inflicted.
I hope you don’t mind me using that quote. LOL!
I loved R. Cote’s quote: “It’s like watching paint peel“
You obviously haven’t watched enough Cricket Matches - basically - a basball game that takes 5 days to play
“Home price increases have slowed nationwide and even reversed in many markets…”
Ah, “home price increases have reversed”. English usage like that would have earned me a “D” grade in college. Why obfuscate so much? Why not just write “home prices have declined.”
Prices have not reversed, they have decelerated.
They have derisen… They have de-upped… They have anti-increased… They have de-floated.
It’s not a housing bubble… It’s a housing sponge cake… It’s going to remain upright but it will not get any frosting nor will anyone want to eat it.
More likely it is turning into a fruit cake!!! Hey the holidays are coming up, …..so your telling me there is a chance to sell!!!
Housing prices are experiencing retrograde price momentum. They are continuing to inversely appreciate.
Keeping with the food theme, it maybe more appropriate to say we have a housing soufflé. A soufflé still in the oven, with a big monster about to open the door.
Oliver
Deceleration is the second derivative. Price decreases are first derivative. You are saying that home prices are plateauing. Do you mean to be saying that?
They plateau, then they plunge. (It takes awhile for the plunging to start.)
Get out the plunger! We’ve got lots of excess, um, “inventory” to flush out!!
I don’t know about in your ‘hood, but in SD, the second derivative (acceleration) has been negative for a couple of years now, and at this point, the first derivative (price velocity) is negative as well. Unless this time is different, the first derivative will remain negative for a minimum of four more years.
Herein, I sense the exuberance of the winning team, late in the fourth quarter when all is going very well.
More like the self-satisfied knowledge of knowing that the end score was already fixed for a 100-0 victory before the game had even started. Current score: 3-0
The rate of change of the second derivative is the third derivative. We call it “jerk”. No Kidding.
Negative appreciation is my favorite.
I like “decelerflopping”
Price disinflation.
Un-high price directionwards
Exactly what I was thinking. I have seen the same thing in Las Vegas High Rise Condo market. They are just now starting to lower prices. Metropolis in LV was over 900k for basic unit of 1700 sqft. Nothing has sold in this building for over 4 months even though over 30% of the units are on the market. Posted this week a 2252 sq ft unit for $830k with lots of upgrades. This is 500 sq ft larger then the other units, has more upgrades and the cheapest price in the building. The unit is gorgeous but still overpriced. They understand that only a few units are going to sell as this market dives. It is better to get less now then to ride it to the bottom. I will guess others will respond shortly and the selling war (as opposed to the bidding war) will begin.
30% for sale? I wonder who will be paying assessments going forward, especially if any of these owners default or if they are builder-owned. This could be a problem that all owners would have to deal with.
It is amazing!! Not one sold in over 4 months and most high rise condos have not even been built yet. Go To: http://www.vegastodayandtomorrow.com/construction_stats.htm Most of these condos have CCR’s that prevent renting for any less then 3 months at a time!! They are going to have to change these restrictions or turn a blind eye in order to make these projects work. The HOA is $550+ per month. I watch in utter amazement. It is like watching a car crash in slow motion I just can’t stop looking!!
can someone remind me why flippers were buying new condos and sfhs, secure in their knowledge that they would get rich?
All together now:
Because Real Estate Always Goes Up!!!!
Any other questions?
http://auto.howstuffworks.com/crash-test-video.htm
“They are going to have to change these restrictions or turn a blind eye in order to make these projects work.”
Absolutely right. It’s do-able, but it will really piss off those few good-faith buyers who thought they were buying into a non-weekly condo.
Actually, “selling” wars are traditionally referred to as market panics or crashes.
The builders will “capitulate” much. much sooner than owners IMO.
> One group of e-mailers provided a genuine surprise because they were inordinately unsympathetic to the plight of some sellers.
Who was that? Please step forward and repent
The most important issue seems to me now to prevent any bail-out of greedy or stupid or otherwise stuck people with tax dollars (like with St.Joe’s in Florida). Are the reactions above helpful? I would say that they are least better than no reaction but could also generate more sympathy for stuck sellers.
I’ve said this before, but its worth repeating. There must NOT be any taxpayer bailout, especially for banks like Countrywide. To do so would invite more fraud. When you subsidize something, you get more of it. Just look at the celebrity “farmers” that collect subsidies just for owning “farm land”. Subsidizing the fraud of the 80s probably helped create conditions for the S&L Crisis 2.0.
I wish I did it.
Ninety plus days, a second mortgage, and a bridge loan later we are still trying to sell our Eastside property! We just made our first double mortgage payment and are feeling desperate and depressed. We are supposedly still in a ‘hot’ market
Oh, BOO-HOO - you get what you deserve when you listen to some knuckleheaded agent for STUPID advice. My 4 yr old could have given you much better advice. I bet she is much smarter than these so called experts. Drop the price of the first one enough to get an interest, and screw you if you don’t make a profit - even funnier if you take a big loss.
OK …..
I think we’ve identified one of those “unsympathetic posters” ….
I think so.
I have very little sympathy for speculators and investors who lose money, mainly because I’ve lost money in the stock market. It’s just a part of life, isn’t , something to be expected. When you win big it’s great, when you lose you take it like a woman and learn from your mistakes, and still you can’t win all the time! My real anger is directed at all the fraudsters that circled around this train wreck. Somehow, some way, the middle class will pay for all this stupidity.
I feel the same way regarding the speculators and investors. It’s funny how you hear all the stories about these people making money but where’s all the hoopla when they lose money? I guess that’s why I’m here reading blogs about these jerks getting screwed. I suppose I don’t want to hear about someone’s loss in person because I don’t want them asking me to help them out and I know I won’t be that sympathetic.
I’m with ya Kay…..what angers me to no avail is that this housing debacle has hurt our younger generations trying to purchase their first home, there is no way in hell I’d push my cubby bear into buying a condo or home for 500,000+ as a starter home. I’ve heard personal accounts where gen x’ers are pushing their kids into purchasing homes well over their price range for a young 20 something year old, so it’s not just overzealous realtors who are in this game it’s the brainless parents as well.
I believe most Gen-Xers are in their 30s about now (Gen X started with people born in 1965 and runs, as generations do, for 20 years thereafter). I am one, and my friends’ kids’ average age is 3. No house-pushing yet!
All this talk of “Hang Em High” really chaps my hide. I will grant that both speculators and investors will need to face their comeuppance (sp?) for poor decision making but why leave out the driving force behind this whole mess? To me the truly criminal are those that enabled the situation to occur (i.e. banks) and the affiliate support mechanisms (Home Builders, appraisers, mortgage brokerage, and RE Brokers, MBS market). These entities knowingly sucked in those with the least knowledge of the poor financial decision being made.
It’s like a drug dealer. Give ‘em a little taste for free (credit cards) and then deploy judicious amounts of propaganda in regard to the “American Dream” (read - hyper consumerism/spending beyond your means like every magazine tells you to) and then really get them hooked by telling them (Joe and Jane 6 Pack) to buy a home (as it can only go up in value) that can be used as an “ATM” as your “nothing” without a house. Once the debtor/drug addict is sucked dry in terms of what they can consume move onto the next batch of yet to be addicted consumers/debtors (read China).
Granted the debtor/drug addict is not without responsibility for the condition of their life, however, their lot in life in my view is to be pitied even if they were telling everybody and their uncle how smart/rich they were on the way up. The credit enablers/drug dealers are the ones that should be trotted out for public retribution. All this schadenfreude toward regular people needs to be redirected toward those “most” responsible.
On a related note the whole “they should’ve known better” argument is pretty thin in my opinion. Why is it that our public education system fails to teach basic finance/economics? How is a college educated specialist such as a teacher, nurse, psychologist, social worker, engineer, supposed to “know” either finance or economics when it was never a part of their curriculum.
I was lucky that these subjects were taught at home early and often. Some of my friends and collegues are not as fortunate.
The posting of another enabler. What happened to just say No! when the crack dealer offers the sample. If your sitting at a doc signing and the mortage note say 45 days from now your payment is 3000.00 per mo and your flipping burgers and you sign the docs anyway that’s an ass-pounding you deserve.
This bleeding heart everyone is a victim nonsense has to stop.
Too busy using up time and resources on fixing the f@cked-up kids that today’s parents send to school.
“On a related note,” if anyone here has a child/student under their care. Let me give you a bit of information of which YOU ARE COMPLETELY UNAWARE: your child is using his/her cell phone and ipod DURING CLASS at every moment they can get away with. YOU ARE AN IDIOT if you think otherwise (my child is different - yeah, right). I confiscate probably 3 a day (Honors and A.P. classes included), and we, as a school, must give back phones by the end of the day - or face the legal wrath of some moron parent claiming to have their child’s best interests in mind. Any other electronic device confiscated by me must be picked up by the parent at a time of MY choosing. This pisses the idiots (parents) off, but at least it keeps the phones out of sight.
I understand, Vertical_Drop, that you were probably venting disbelief toward the curriculum and standards of states these days, and likely weren’t insinuating that schools are to blame. Just so you know, we teachers are getting tired of the fall of societal expectations of families to properly prepare children for life. It is NOT my job to tell them how to behave - it is YOURS.
I’m now putting away the brandy.
MrInc:
You could call it a bleeding heart. I guess I’ll call it compassion for other’s misfortune. Yeah, the FB will get quite the lesson or “ass pounding” as was put so eloquently. My question is left unanswered. Why place all the blame toward the signor of the mortgage. Why no anger for those on the other side of the equation who knew that this person was F’ed the minute they signed the document. Any system/corporation that incents sales reps to push a product on the buyer that it knows is bad for the purshaser has some liability for what is to come. You don’t think this is happening. Ask any mortgage broker in the last two years which loan product created a higher fee 1) an option ARM or 2) a fixed rate product. Again ask yourself the question which product was in the best interest of the purchaser considering that historically this was the lowest long term interest rate seen in 40+ years.
I guess I cut a wide swath of people some slack on this whole housing speculation issue considering how specialized society is these days. I may know real estate as it is my primary source of income but I know very little about the medical fields. I guess I could be a F’ed patient some day for not knowing that a procedure prescribed by a doctor is actually harmful. I would never know this as I rely on the expert in the room (the doctor) to provide me the right information to make an informed decision. While a doctor takes a Hippocratic Oath to “do no harm” I expect the same fiduciary responsibility from other experts I deal with in other fields. In this respect the hold banking/real estate industry has massively failed society at large. Do no harm. More like Do as much harm as possible.
We Rent:
I was commenting on the curriculum. Both my parents were teachers and I have alot of respect for those that interact with children on a daily basis and try to teach them the skills necessary to be productive adults. I concur that the home is the only place that values/ respect can be instilled for life.
Nope - plenty of idiot doctors out there too - would do best to research any affliction you suffer from on your own and not take someone else’s word because they have MD after their name.
However, I am not aware of anyone who undergoes surgery because they are a greedy dumb$hit, attempting to get something for nothing and live beyond their means.
Anyone who makes $2700 a month and buys a $700,000 house deserves to get ruined. They don’t deserve all the blame - but they deserve the majority of it (along with a good large dose of ridicule).
Crisrose:
Not everyone who is going to get railed here is necessarily “a greedy dumb$hit” trying to get something for nothing. For every flipper/speculator who owns 14 properties on no doc, stated income, owner occupied loans betting on appreciation I would posit that there are at least 10 working families who wanted a clean safe place to live who aren’t necessarily financial geniuses who had the temerity to rely on the good faith of their fellow man in regard to a transaction. God forbid that someone actually trusts another person these days and believes that they won’t get taken to the cleaners. Geez, people used to be able to rely on a handshake to consumate a transaction. These days you better do a full due diligence on every vendor you use and have a truck full of lawyers to draft ironclad contracts as well as set up an LLC to protect yourself in order to purchase anything. J6P doesn’t deserve to be runined. J6P is being manipulated. Considering Woodrow Wilson was duped by the same group that is pulling the strings on this bubble I’m going to say it is unlikely that the majority of the FB’s understand what is happening to them much less why. Just my two cents.
Vertical_Drop,
Your little plea for “compassion” is misplaced. In fact, it sounds like the opening pitch for a tax-payer funded bailout of FBs. If so,you are in the wrong place. I do not consider my fellow americans a feeble-minded bunch, unable to add or subtract, or even to compare the net figure of their paycheck with the monthly nut of the house they want to buy. We are not discussing rocket science, just simple honesty.
If you make 500 a week after deductions, no you cannot afford a 400k house. You can’t afford a Ferrari either. Gee, do you think someone who can hold down a steady job could figure that out?
I save my compassion for those who are too disabled to function independently in life. Does that describe most FBs?
I think not. Try this…unlimited greed meets wishful thinking and ends at the closing with people who have abandoned honesty and common sense and are happy to sign on the dotted line. Well this is the deal-both democracy and capitalism require that adults think and act responsibly. Those who choose not to will now face the consequences. Foreclosure, bankruptcy and financial ruin are hard lessons, but some folks can only learn the hard way. Not a single FB in the whole country ever offered to share with me the appreciation they were making on the way up–don’t ask me to cover their losses on the way down.
Vertical Drop — I rarely comment about English usage here because at the fast pace at which we post, and sans spell-check, I lapse as much as anyone. But you have declared: “Both my parents were teachers and I have a lot of respect for those that interact with children on a daily basis and try to teach them the skills necessary to be productive adults.”
Please tell me, if you know — when was it that the phrasing “Those who interact with children” became “those that interact with children?” You are not the only one, so I am not singling you out except that your family was “in the business,” so to speak.
By the way, the analogy of FBs with drug addicts is totally lame. The folks in the recovery movement have a great slogan to counteract that kind of unnecessary pity…”there are no victims, only volunteers.” Based on the fact those who are pitied continue to be pitiable…while those who face up to their mistakes can get up off the ground and get on with their lives. Recovery from drug addiction is a hard road; so is recovering from greed and financial stupidity. But both are doable.
Hmmmmm. I think that it takes above average intelligence to reallly understand the mathematics of mortgage finance, and that most people who are old enough to be buying homes grew up in an era when lending standards were much stricter — back when banks did the lending themselves and wouldn’t give anyone a mortgage unless they could prove they could repay it. So most people probably believe that if a mortgage broker — apparently an expert — is going to let them have a loan, that means that someone much smarter and more knowledgable than them has analyzed the situation and believes they can repay it. They don’t realize that to the mortgage broker who is going to get a big comission on the loan, or the bank executive who intends to sell the loan off as part of a mortgage-backed security, book a big profit and get a huge bonus (or stock option cashout), the name of the game is to perpetrate fraud on the real lenders of the mortgage money, using inflated appraisals to maintain deniability.
The little person getting the unaffordable loan isn’t even the real mark in this con game — he or she is just an expendable tool which the broker or executive uses to get the commission or bonus or option exercise profit, the money for which in fact comes out of the pockets of the MBS buyers (or the FDIC, when a bank fails).
“How is a college educated specialist such as a teacher, nurse, psychologist, social worker, engineer, supposed to “know” either finance or economics when it was never a part of their curriculum.”
Anyone who has an engineering degree knows all about exponential mathematics, and I would expect them to know what is within their reach. But…there is the irrational side of things, i.e., the wife and kids who need good schools, neighborhoods, and a stable setting. We needed the same things too, and we found a reasonable situation by moving north. Sure, we hated to leave CA, but everything else has been just fine, and we are right side up financially.
It was greed - pure and simple. Greed for the unearned - a house (and the lifestyle they imagined went along with it) that their intellect, talent, education and salaries could never earn - but an interest only liar loan could.
They knew someone was getting ripped off - only being the halfwits that they are, they thought it was the bank. ‘Look Louise - free money! I make $6 bucks an hour at McDonalds yet we can live in this here million dollar ‘home’ for $800 a month! Boy, these bankers are idiots. Unload that mobile home - we’re movin on up!’
I hope they burn in the hell of their own making.
“How is a college educated specialist such as a teacher, nurse, psychologist, social worker, engineer, supposed to “know” either finance or economics when it was never a part of their curriculum.”
Gee, I don’t know - maybe that worn out cliche - BUYER BEWARE - should have given them a clue to do a little research before plunking down half a million on a house.
Perhaps they’ll realize that simple 2nd grade mathematics is applicable in everyday life - 2+2 does not equal five. Or, ‘How is it that we can pay off this 30-year $500k loan when we’re only paying $800 a month?’
Questions they didn’t ask or answer because they were blinded by easy $$$$$$$$$$.
Maybe they need to learn the lesson that one is responsible for educating oneself as opposed to living life as a trained ape who knows nothing unless trained to know it.
Chrisrose:
A mortgage applicant has a reasonable expectation that at minimum the mortgage broker is a dual agent between credit purchaser and credit seller. To my knowledge a mortgage broker is not required to disclose that they are an agent solely for the credit seller. While not required to disclose such a fact it is an omission that harms the purchaser as they are unaware they are dealing with a shark as opposed to an advocate. Big difference.
My whole point here is modern society is specialized. Specialization has economic benefits in terms of technological breakthroughs and comparative advantage in terms of exchange of goods. The downside is you have to trust other specialists to not screw you in the areas that you have not developed while pursuing your chosen educational path. The whole thing breaks down when trust of your fellow man/woman is no longer a given. Once the assumption of trust is broken the specialist now has to learn everything in order to avoid being fleeced. This is certainly not a good outcome for society as it is inefficient. The most disconcerting part of this outcome to me is that a majority on this board as far as I can tell believe the idea that trust equals naivete and therefore the buyer of debt deserves what will happen to them.
Sorry, but this really doesn’t hold any more… the advances in technology allowing the sharing and disbursement of information (i.e. the internet) have allowed people to educate themselves in areas that were previously difficult/expensive to learn and to do it faster than previously possible. Caveat emptor has always applied, only now there is no excuse when you get screwed because all it costs to learn just about anything online is a trip to the local public library and a quick google search (so just your time).
Ask anyone in the car sales business who has worked in the industry for at least 20 years if they make more money now than they did back then. Ask any dealership owner/principal if their business was more profitiable then or now on a per sales basis… the answer is that it was much more profitable 20 years ago because margins were greater. Yes, there was less competition and less fragmentation, but the bottom line is the internet squeezed margins quite a bit because now it is a simple matter to find out what “invoice price” is, what rebates/incentives are available, what prevailing interest rates are, what the market value for a used car is, what auction prices are, etc… if you go buy a car without educating yourself, you have no one to blame but yourself. It has nothing to do with a society that is specialized or trust in your fellow man. Those are just excuses.
Northeasterner:
We can agree to disagree.
In my way of thinking a mortgage broker is not going to divulge who its master is to the mark. A general contractor is not going to divulge their true cost basis on material or labor. A plumber, electrician or HVAC contractor is not going to divulge their cost or mark up. A web site isn’t necessarily going to give you this information. I would assume, and it is only an assumption, that the same is true for other fields.
In my way of thinking the only way to know this information is to work in a given field for years to understand where the various players make money. I know what I’m buying in real estate because I’ve spent years analyzing, watching, and learning.
Normally an uneducated buyer of a product (such as myself in regard to most consumer goods) can rely on price signals to determine if a purchase is over or underpriced (excluding defects). Price signals have been distorted for years in the RE market due to rapid credit creation. I would like to know what web sites were available for use by the public between 2002 and 2004 that discussed this fact. Most of the web sites that I recall seeing were touting the idea that homeownership was a better idea than renting and furthermore that ARM’s were the best way to finance the purchase. Alan Greenspan even opined that borrowers should refinance into ARM’s from fixed rate instruments when long term rates were at historic lows if I recall correctly.
I have to agree with Vertical_Drop.
In the modern world we live with regulations that are designed to “hold us up”, not “hold us back” as the business community would have us believe. The business community trumpets this Ayn Rand philosophy of rugged individualism, yet they are quick to socialize their losses. Who really wants to struggle daily to survive in Wall street’s hobbesian world where you might have a retirement if you’re shrewd? This credit bubble nonsense is largely due to deregulation and predatory lending pratices, IMHO; we should be above this sort of greed!
posted “My real anger is directed at all the fraudsters that circled around this train wreck.”
I got a feeling when it all comes out in the wash, the “fraudsters” are going to be a major cause of this misery.
They can all die for all I care. Let them pray to god for forgiveness of their stupidity. Forgiveness is not my strong suit. Responsibility is. That means they laughed at people like me for not joining in their “sure thing”. These FBs and fraudsters don’t care if you or I can pay our bills or go bankrupt. Their greed became their master and their master’s voice has gone hoarse. That’s their problem. Too bad, soon it will also be ours. They should suffer the maximum amount of pain for the predicament they put the rest of us in.
There will be another bubble much like this again soon because of this easy on the lenders attitude.
Count me in with “need2leave”.
Americans have got to get it through their thick heads that realtors are not “professionals”, they are salespeople.
A quick 2 minute saunter through the Zip Realty site last winter would have told these bozos all they needed to know about Seattle’s HOT!!HOT!!! market.
If they could spare the time, another 10 minutes at the county website would have REALLY been a market education about how much these HOT!!HOT!!! properties were actually selling for.
And, even if they couldn’t muster the sense to do either of the above, the sheer desperation and hysteria of realtors and the media in this town screaming “We’re stil hot!!!” at every turn should have been enough to tip them off that something was afoot.
Not to excuse local realtors for using the tactic of *lying* in order to drag these people into a declining market, but, let’s face it, they were just doing their job.
On top of everything, this guy sounds like he’s still confused about whether the market’s still HOT!!!, to the extent that he won’t lower his price to sell, 3 months after the fact and despite the fact that they’re running into trouble with the loans.
So part of him still believes/wants to believe his creepy realtor and the newspaper even though he now has *first * hand * experience* about the HOT!!! market.
Too stupid for words.
“Not to excuse local realtors for using the tactic of *lying* in order to drag these people into a declining market, but, let’s face it, they were just doing their job.”
Brokers, realtors, home builders, media shills and other RE drones that knowingly distorted and persuaded for gain are all going to try and lean on this excuse. This is what we get from industry “professionals” when greed rules? A total breakdown in personal responsibility? Honesty, integrity, ethical accountability be damned…hey, “I was just doing my job”, or “everyone else is doing it”, or “I’ve got to pay my bills.”
What a sad, lame, self-deluded group of morally bankrupt clowns. Shallow excuses are just that, though…shallow. Well, guess what? It doesn’t work. The majority of these folk are intelligent–and unless they’re complete sociopaths, which they are not, they will face their conscience–eventually.
There is nothing, and I mean nothing–no pill, no therapy or any other treatment for the sting these sorry souls are going to feel when they are alone and look at themselves in the mirror as this thing erodes. It will be their private shame–that they will not show to even their closest companion. It might take time, but it WILL hit them and they will not like what they see. Guaranteed
DOC
“The majority of these folk are intelligent–and unless they’re complete sociopaths, which they are not…”
Don’t be so generous - sociopaths make up over one percent of the population. And they come out of the woodwork when they smell fast, easy money to feed their egos.
Many of these realtors were drinking their own Kool-Aid and will be going down in flames with all of the other FB’s. They got caught up in the mania and really did believe prices “only go up.” As astounding as it seems, it’s true. My realtor, a nice woman in her sixties, got really defensive when I voiced to her my opinion that prices were going to go down. She already bought a piece of land as an investment, and another house in addition to her residence. Last time I talked to her, she is still in dreamland since our Washington market is so “hot” (vomit). This thing is bigger than anyone can imagine.
The real blame here must fall on the lenders and those who regulate them. It is they who have the professional and fiduciary responsibility to ensure that mortgage loans are made only to people who truly have the ability to repay them, and that the underlying collateral is sufficient to avoid significant loss in if the borrower can’t repay (i.e., that the appraisal is honest and accurate). As a salesperson, the realtor has a professional duty to get the highest price possible for the seller. The appraisers also deserve blame for the inflated appraisals, but can rightly protest that they have been coerced by the mortgage lenders.
The mortgage brokers and bank executives are guilty of fraud on the people whose money thay have been knowingly shoveling out to the clueless.
Once upon a time in America if you wanted to invest in the stock market you had no choice, you had to use a full service brokerage house, complete with hefty commissions and yearly equity % fees. Then along came the SEC act of 1973 and it changed everything. These changes did not happen overnight as it took decades for a discount brokerage industry to evolve, but these changes did take place. So now, if you believe (as I do) that full service borkers are salesmen, and their high commissions and equity fees are rip offs, then you do not have to put up with it.
In time, the internet will change the way RE property is purchased and sold.
“full service borkers [my emphasis] are salesmen, and their high commissions and equity fees are rip offs”
And you have been borked. The thievery is more subtle now that the borkers have been removed from (most of) the stock transactions. Now you get borked at the retail level by annuity salesmen. You get borked at the wholesale level by the mutual fund managers and the hedge fund salesmen, depending on your asset level.
Oh, and now it turns out that you are getting borked by the managers that run your company’s 401K - see recent news items - kickbacks from fund managers to plan administrators.
Just throwing my $.02 in here. Yes, the flippers and specuvestors were greedy idiots, and they deserve to lose everything. But young families who were following the advice of those “in the know” (including older, wiser family members), do not deserve to get burned. Make no mistake, I don’t want to bail them out either, but I don’t relish seeing families who just wanted a place to live being thrown out on the streets, bankrupt for years to come.
If Realtors and mortgage brokers are held up as “professionals” and experts everywhere we turn, then we cannot fault buyers 100% for their foolish decisions.
Agree that those responsible for securitizing and rating MBS pools, central banks, pension/hedge/bond/mutual funds, DERIVATIVE players (and those who *should* oversee them, but turn a blind eye to them), the FBI (for not pursuing mortgage fraud more aggressively), etc. are to blame.
The flippers could not have affected this market without the complicit agreement of the banking/financial services industry. They are the DIRECT cause of the CREDIT/housing bubble, and should be held fully responsible for any financial crisis which may ensue.
BTW, for those who think we all need to be educated about EVERYTHING, think about how much productivity this blog sucks up. We know the number of lurkers is far greater than the number of posters. How many hours do YOU spend per week researching this bubble? Me? easily 30+ hours. Quite sure I’m not alone.
Now imagine we had to spend all that time learning how to fix cars, build houses, perform surgery/practice medicine, invest our money (yes, this should be a priority), fix plumbing & electrical problems, etc. We’d know so much, but wouldn’t be able to do anything about it because we spend all our free time (and work time, for many) doing research.
The difference between first-world and third-world countries is lack of (or less) corruption. We have laws which protect the masses, as we should. Not everyone has a high IQ, and they are just a vulnerable as any “disabled” person — even though we can’t see their disability.
And all of these borkers is a good enough reason for me not to use mutual funds or hedge funds or depend on company 401Ks. I am self-employed and my retirement investment vehicle of choice is a self-directed ROTH IRA.
I’m sorry, but I don’t think that it takes high IQ to understand that an ADJUSTABLE rate mortgage ADJUSTS (sometimes up, sometimes down) and that an INTEREST ONLY mortgage means that you are only paying the interest.
I don’t think it requires a high IQ to get online and plug in your salary into any of the HUNDREDS of mortgage calculators and determine how much of a house you can AFFORD.
I don’t think it takes a high IQ to understand that the bank doesn’t care about you getting laid off, fired, forced to relocate - they expect you to pay back every DIME (plus interest) of the money they loaned you.
I don’t think it requires a high IQ to understand that just because RE is going up, doesn’t mean it’s ALWAYS going to go up.
All it takes it the common sense to do a LITTLE basic research, and to look at your PERSONAL situation, and decide how much risk you are willing to take with the roof over your head.
If you didn’t do that, you deserve to be screwed over, foreclosed on, and bankrupted.
Maybe that’ll up your IQ a couple of points.
Kiya,
You’re using logic and your own higher IQ. What many of us think should be obvious really requires higher-level thinking. Seriously, think about the beer-swilling, TV watching, stripper-oogling Joe Sixpack out there. It’s not that they don’t understand what “adjustable” means, but they are told they can “refinance” out of the loan before it resets (with **all that equity** they will be “earning” from their home.
How many times have we heard that home ownership is the way most people acquire wealth (that’s certainly the case for my family). Many of these people don’t believe prices can go down (they are correct, over the long term…so far). They’ll just hold on if their property loses value.
I was cautioning people in 2001 not to buy because prices were too high and would come down. Those who followed my advice would have missed out on tremendous gains, even though prices really were too high in 2001 (So Cal). Sometimes, things don’t always work out the way they should.
“‘We don’t like to see $2,000 or $5,000 price adjustments,’ he says. ‘We want to see a real whack’ that attracts attention.”
Let the wacking begin! I’ve got my bat handy.
No, no. UCLA has promised sellers can will the prices flat for a decade.
Wasn’t that a Simpson episode “Whacking Day”
It was a day when all the townsfolk go around whacking all of the snakes.
Hmm, kind of appropo.
honey..why did make us pay so much for this house..whack.
honey..why did we take a heloc..whack
honey..why did take a neg. arm i/o ..whack.
it’s like whack-a-mole out there…
“Sellers are also being told to cut prices aggressively if their house isn’t moving, or risk chasing the market downward. If a home doesn’t get any showings in 21 days or gets 10 showings but no offers, Ned Redpath, in Hanover, N.H., often advises the seller to slice the asking price by 10%. ‘We don’t like to see $2,000 or $5,000 price adjustments,’ he says. ‘We want to see a real whack’ that attracts attention.”
Slash! Whack! Chase or be chased! It is a Lord-of-the-Flies market.
25% off the asking price plus a ______ from your realtor.
Richard Widmark had the line …. From The Alamo:
“Cut, Slash and Run Travis, …. Cut, Slash and Run”
No no no — Robert Mitchum to seller who has to bring check to closing — “Baby, I don’t care.”
I think every open house should sport one of those “Whack-A-Mole” machine, where at the end of each successful round you get another 10% price cut.
That would bring in more serious buyers than the darn cupcake lady!
I like the “quick vote” in the CNN article, but where’s the “real estate always goes up” button for realtors to use?
“Our agents were confident that our current home would sell in 2 weeks and advised that we not make a contingent offer on the new house.”
Well, by all means listen to your agents. It’s not as if they have any financial interest in your transaction.
I hope they get a lawyer and sue these realtors! Let’s see how they feel when there “professional advice” comes back to haunt them!
*their
We almost had an offer within the first week, but the buyer wanted west-facing windows, of which we have none.
I told you we should’ve bought the one on the west side! (starts drinking heavily, wife hides in closet)
More likely vice versa.
Okay.
When my wife drinks, you won’t find me hiding in any closet!!!
before buyers couldn’t be picky, now they can pick which side their windows will face!
You come out of the closet when your wife is drunk? -
I was never in the closet to begin with, but good spin, You definately have a future in either RE or politics with that one!!
Wittiest comeback this week. Kudos.
Hahahahaha, nice Robin!
I hope they get a lawyer and sue these realtors! Let’s see how they feel when there “professional advice” comes back to haunt them!
K. Gordon, Amarillo, Texas: ‘I bought a brand new house in Amarillo. Unexpectedly, 4 months later I had to move back to south Florida. 14 months and 3 agents later, the house has not sold. I’ve tapped out my credit making payments on that house as well as my current rent.”
I passed through Amarillo one very warm afternoon I guess it must have been eight Septembers ago. I glanced over at my sister and wondered aloud how anyone could ever want to live there. With seemingly no trees, and anything outstanding to note, it just felt like a truly dreadful place to reside. I am not surprised to hear it is hard to sell a house there.
Amarillo is literally an overgrown truck stop. I think I do remember one tree…
The tree is a transplant, put there for the dogs.
Sorry, the tree died during the year-long drought we experienced recently. I operate a farm near Amarillo; had I not been raised here, I would never imagine moving here. Unfortunately, our market here has also seen much the same speculative boom as many other regions, though to a lesser degree. The real bubble here has been in raw land prices thanks to investors looking for “recreational” properties or any piece of land with a healthy payment from USDA. OT, but don’t even get me started on the farm program. Yes, a farmer who thinks it’s ridiculous… Anyhow, great info here. I enjoy “lurking” though I generally have little of substance to add.
Thanks for posting TXFarmer . It’s interesting to hear from people who actually live in Texas .
I grew up near Amarillo, too…desolate place. Every few years there’s a mini-boom due to new jobs in oil or helium industry, then it blows away in the wind like everything else.
Read about Countrywide Home Loans ripoff trying to screw our nations citizen soldiers Van Nuys California.
“We received 1137 pieces of mail in regards to our “FORECLOSURE”.
The sharks are out there.
Countrywide is like a rash on this nation’s backside. Only problem is, there are twenty or so Countrywides. Bring on the pain, and the talcum powder. Waa!!!
No silly little guppies would be a better description.
It’s like a cloud of sobriety is decending on the country. Buyers are starting to wake up to the fact that asking prices are crazy.
“…It’s like a cloud of sobriety is descending on the country….”
Too many DUI (dual unsubstantiated income) collisions will hopefully bring about the “sobriety check-points” to housing. Searching for valid loan applications, verifiable income, substantial down payment to get the great interest rates, valid appraisals, etc, etc.
Maybe if there would have been a 2 drink limit on Kool-Aid, things wouldn’t have gotten this bad.
Its not Kool Aid that got them drunk but it was that intoxicating smell of MONEY that got them!!
“Some brokers are telling customers they need to underprice the competition.”
Should read: “Brokers who want to eat are telling customers they need to underprice the competition – immediately.”
“Our problem is that having only owned the home 1 year there is very little equity so dropping the price much lower will result in us actually having to pay to sell our home!”
Batter learn to deal with that – you can do it now or you can do it later. Why not get on with your life?
Traditionaly you had to own a house for three years to break even. So all these people complaining about not makeing hundreds of thousands of dollars after a few short years, are just unrealistic and greedy.
Years? We’ve seen stories with them complaining they can’t make a profit after 30 days.
I thought ‘traditionally’ you put down like 20% and then you have instant equity. Too many people are putting zero down, paying zero principal but still can’t believe they have no equity since prices were supposed to go up all the time!
Actually if you put down 20% you don’t even have 20% equity since you have to pay realtor’s fees, taxes, and all sorts of other costs including moving costs which come off the top.
They are unrealistic and greedy. They obviously haven’t heard about people in California waiting 10, 12 years for things to turn around to where they could sell their houses for what they paid for them. They need to bite the bullet now or they’ll be biting it eventually anyway.
“Traditionaly you had to own a house for three years to break even. ”
That was the Old Era. In New Era rules are different. In the coming New New Era (euphemism for Real Old Era) one would have to wait for 20-30 years to break even if one has not gone broke waiting.
Jas Jain
Lumber fell to a three year low today. It looks like builders costs are falling. Competing with existing home sellers should be no problem. Existing homesellers will have to drop prices below new home prices, Ouch!
Is that right? Wow.. I recall all the noise being made about how construction material prices are going to continue going up because of China, etc.
The builders will still be fine. Their PROFITS are shrinking but they are still MAKING millions in profits. Those who need to sell, need to lower their prices ahead of the builders.
They’ve got to keep building or their out of business. To bad they jammed ten years of building into the last five years. The million units a year they continue to build just keep piling on to the inventory.
also, they negotiate the wages down…
sorry guys, it’s either $3 bucks less an hour or no work at all….
Vmaxer — that is another great “untold” story. Lumber is down, cement is down, in many places labor is down. Land prices are dropping and copper seems headed that way. It will cost noticeably less to build a house in late 2006 or in 2007 than in the past couple of years. Clue meter rises, re: pricing.
This is actually great news for me anyways. In a couple of years I’d like to build a small, energy efficient house on a 1/2 acre. If land and materials are down, and work is scarce, then I may be able to do it for cash on the barrelhead–no mortgage. For this renter, it’s all good.
posted “Lumber fell to a three year low today. It looks like builders costs are falling.”
BINGO! Game over. Facts are tough. It look’s to me more like they will no be building much.
““Another approach is a personal plea. Traci Smith in San Antonio, encourages clients to court prospective buyers with a letter explaining the intangibles that make their home and neighborhood so appealing. During the height of the housing boom, some brokers were encouraging the same type of personal notes, but from buyers eager to get their bid accepted.”
Honey your well written letter will not justify the many years of me paying interest on your already inflated house price. Does your $10 letter really match up to the $100K’s in interest im committing to for decades to come? Really now ! Get freaking real.
Money Talks honey BS walks!
I think this article is a good read.
http://www.nevadaappeal.com/article/20060928/NEWS/109280093
This is from your link, I guess this pretty much covers it.
“Home owners invested in properties they couldn’t afford at a time when the gap between income and home prices widened considerably.
“Now, if housing prices went sideways for about 12 years they still wouldn’t catch up,” he said.”
What people are forgetting is “Lost Opportunity” money. In other words, you have your money sitting in something that is gaining 0% every year for X number of years. With inflation, you are losing money even if the price of your investment stays at what you paid for it.
Claudia — right — the economists call that the “opportunity cost” of doing or not doing something.
Ah yes, the big bugbear! Opportunity cost. And that’s one that people go to great pains to ignore. Seriously, even if they know of it and roughly how it applies, they put on the blinders.
Friend of mine in the office absolutely refuses to consider it when looking at rental income. Every time I mention it, he hsakes his head and said we’ve already gone over that, and “it’s just not a concern”. Not a concern if you have 0% down on an investment, but he has 50% down on one! And he refuses to consider what else he could do with that money. What a dolt.
Family member has several rental properties in a bubbly market right now. We told her to sell when interest rates were lower, since at that time even her deadbeat tenants could have got a mortgage to buy her out. No deal. Still she won’t sell now. even though she’s too old to really manage those places effectively. These houses are paid for, and are returning a gross yield of only 6%, and that’s BEFORE insurance, property taxes, and maintenance. We tell her the money can get 5.5% in the bank with no aggravation or exxpenses, but to her, the rent is “free money” because the houses are paid for. So she nets 2 to 3% best we can tell. Less if something big breaks, like the roof last year or central air year before that.
The thing that irks me is that when I was actually looking for rental properties to buy with spare cash, I had to compete with these idiots. No chance. There’s no way I will even try to keep up with people who set their opportunity cost at 0%. (And in this DC Metro area, about three years ago I completely gave up looking.)
Quote………
“This is the start - not end - of a bear market no one will forget,” Goldinger said.
Sample personal letter to prospective buyer:
“Please purchase my overpriced POS because I bought this damned thing six months ago expecting to flip it for a thirty percent profit by now and my only other option is to rent it out for about two-thirds of my mortgage payment, and if I don’t unload this thing I will have to sell my other specuvestments at a loss to make the payments and my wife/husband will leave me. You don’t even have to feed the squirrels.”
Yours Truly,
FB
LOL.
Sample personal letter to prospective buyer:
Dear Buyer,
Whatever my next door neighbor who’s also selling said in their letter is a load of garbage. It’s my house that’s special. Everything I bought to fix it up to sell said “Special” too. I hope that you will finally be the one to realize the true distinctiveness of the updating this home has received.
Thank you for looking around. Would you possibly be interested in several condos in Phoenix as well?
-FB
“My realtor and others are just stumped in what to do about the lack of traffic.”
Hehehe… hahahahah… HAHAHAHAHAHAHAHA.
*places forfinger upon chin and puts on a look of concentration*
If things look slow now, just wait till the waves of mortgages start adjusting over the next couple years. The real pain is just beginning.
I/O mortgagers and Flippers- The calender is your executioner.
“They have a 2,861 sqft house and they want more and more and more and a pool too - boo hoo. Suck it up folks, a 2800 sqft more than big enough to ’start a family’ in. Perhaps they should take stock in the expensive lesson they are learning, do not count your chickens before they hatch.”
I swear that some of those letters were verbatim quotes from this blog. I fell out of my chair laughing.
Don’t you mean, “don’t count your square footage before it’s framed”?
What kills me is the number of “investors” who bought these huge homes to sell to baby boomers “for retirement.” Anyone with common sense knows that people usually downsize after they retire. They don’t want a 3000 sq. ft. home on an 11,000 sq. ft. lot. They want something tiny and small that they can take care of — something without STAIRS (another thing these mansions often have).
There are really a bunch of maroons out there investing in what they think retirement living should be.
It’s hard not to have stairs when you’re building on a 4,000 SF lot, as they often do now despite the fact that the development is surrounded by about ten thousand miles of desert!!
“There are really a bunch of maroons out there investing in what they think retirement living should be. ”
Yes. My Aunt and Uncle (recent retirees) sold their 3k sq. ft. home in 03′ and bought a mobile home. That’s right, a mobile home. Uncle said they saw no reason to stay in the high maintenance home anymore. They eat out when they want, travel when they want–and are very happy.
DOC
Maroons, greys, a mauve or two, and even a taupe! All kinds and colors. As a boomer, I really don’t care as long as we can swim, exercise, and mabe golf at our one-story non-McMansion. -
One other thing (non-negotiable) for those of us over 50 - the master bedroom MUST be on the MAIN floor!!!
2800 sq ft was not enough for them? Come on! you’ve got to be kidding me.
OT but needs to be a topic
a house in my hood is renting for a 1999 price
wow, I thought there was going to be pressure UP on rents ? 22151 no condos or new housing stock for miles
Rental prices here in east central Florida have been dropping steadily over the past year. Too many vacant properties owned by stuck flippers is driving the “good stuff” down below a level even my bear-self thought it would go. I love that kind of surprise. Reminds me of the only two words of English my taxi/tour driver in Rio knew: No Problem!
Second that in Jax. Rents appear to be softening, not strenghtening. Sure, rents will certainly rise *relative* to house prices. But rents may still fall.
“My latest agent is an investor. He has never failed to sell a house. Recently, he told me that it appears that this house will break his perfect record.”
Does’nt that read like the RE agent might have a conflict of interest? Maybe he is sweating the seller hoping to profit from the situation.
Spot on. sounds suss to me
“‘We don’t like to see $2,000 or $5,000 price adjustments,’ he says. ‘We want to see a real whack’ that attracts attention.”
perhaps one of the most profound statments that has come out of the bubble thus far. Reminds me of the old Batman series…Crack, Whack! (in a starburst). Some real damage being done. I am embracing the term “Wacked” and substituting it for the word “reduced” from here on out…
Obviously the FB who promised to feed the squirrels last year ran out of money
http://www.nbc11.com/news/9946298/detail.html?rss=bay&psp=news
Had to say this. As a farmer, I’ve seen a single ground squirrel attack and kill a 30 lb, highly aggressive male turkey when it got too close to the feed trough the squirrel was camped in. Squirrels ain’t the cute little furballs you just want to cuddle - they can be mean, nasty little shits in their own right.
Squirrels are in fact cute little furballs with serious fangs and sharp claws. They can be very friendly or quite ferocious depending on the circumstances. Turkeys, on the other hand, are dumb as rocks. If turkeys weren’t good to eat, I’d say leave them to the squirrels. Of course, a squirrel wouldn’t bother to eat something as useless as a turkey. Instead, a squirrel would leave the carcass to keep the hawks busy.
Amusing, but yet another example of how the popping of this bubble has led to tons of garbage windbag analysis similar to what inflated it. Back in in the early 90s I lived in Mountain View and coveted a cute bungalow that had a for sale by city for $200k sign on it for more than a year. The vicious squirrels in Rengstorf Park in Mountain View were a major problem back at that time when real estate values were bottoming. This is pretty much proof that the squirrel issues there are unrelated to the real estate markets. Time to drop the lame cute garbage and get back to reality, eh? That’s what bubble pops are all about. All the junk we all made up is about to be evicerated by the markets. Only the true will survive, and the vicious attack squirrels of Rengstorf Park in Mountain View will lunge madly at the victor.
Squirrels typically are not aggressive. Seems a bit odd. I had to go through the rabie shots when I was in 3rd grade and it was not fun. I hear it’s not as painful now.
Man, there’s an eerie similarity to the War on Terror[ism]: “We can’t do anything about the problem because the more squirrels you kill, the more you’re going to get.”
Welcome to Planet of the Squirrels.
One viewer wrote, “I come to the parks to watch the wild animals, not the humans. I will no longer visit your parks knowing that any of them have become a killing ground for natural wildlife.”
Natural wildlife? Not anymore. They’re dependent on human food and 4-year-old kid blood. A win/win situation would be brunswick stew for the FB’s in need of a free dinner.
I haven’t heard that word,’brunswick’ stew since the last crash in ‘95.
Slightly OT - Squirrels are a serious nuisance in the Mid-Atlantic states and getting worse due to people treating them like anything but what they are - rats with tails. Squirrel behavior has changed markedly in the past 30 or so years - unlike humans they have become much more intelligent. They are very difficult to trap and know that they can generally outwit half-serious human attempts to thwart them. If they get up under rotting or poorly-built eaves they will find crawl spaces and especially in an old “balloon-framed” house they can get access to all you crawl spaces between floors and even some walls. Once they nest and have offspring (April in Va.) they will aggressively continue to find entrances until all possible entryways are sealed or until they are killed. Besides the obvious noise problem, there is the potential for electrical fires from them chewing through wires. It can be a long, trying, and expensive process to permanently get squirrels out of a house - one that requires a lot of patience. This problem is getting worse, not better - for example, it is almost impossible to put bird-feeders out now anywhere in certain towns in Virginia (Virginians can back me up on this one!).
But go to, say, Australia, and squirrels are deathly afraid of humans and won’t let one get within 100 feet (Aussies on the blog can back me up on this, too - or have you corrupted the squirrels there, too, in the last 20 years?).
Please don’t feed the %$#*&# squirrels!!
Agree with you that squirrels are smart. We have lots of them around here and I can assure you that they are very smart critters - and they work together as well. I have seen them cooperate on hawk defense and incredibly they seem to have co-opted the crows to aid in their aerial defense system - the crows chase off the hawks for them in exchange for access to the nut stashes. It’s incredible to watch.
Yer right, mate! I was in Australia for a few years, and my impression was that most of the non-native species were deathly afraid of humans. Not just scared squirrels. Scared cats as well. Ask my Aussie friends how they feel about cats. Yikes! On the other hand, some native species were fearless, like the the poor, harmless, native, and probably doomed (due to cats) blue-tongued lizards.
As for squirrels in my neighborhood here near DC, they’re way to bold and a real pain, but we’ve got at least one fox and a couple of massive tomcats that keep them somewhat under control. The kids with pellet guns seem to help as well. (not my kids, and fortunately no windows hit yet.)
“A reader in Central Florida: ‘We put our house on the market at the beginning of July 2006 for $289,900. Since then we have dropped the price to $267,000 and have only had 2 showings. Our agent keeps telling us that there is a lot of inventory in our neighborhood and that price will be the thing that makes our house stand out. Our problems is that having only owned the home 1 year there is very little equity so dropping the price much lower will result in us actually having to pay to sell our home!”
Duh. Just like you would have to “pay” to actually sell your car, your boat, or any other personal possession that you bought on credit and want to dump on the market!
This dolt in Seattle who’s paying 2 mortgages and is “desperate and depressed” continues to amaze. From the article:
“We are supposedly still in a hot market and our property has what the agents say are the 3 mandatory factors for a quick sale: price, location, and condition.”
Does this guy ever listen to the radio, watch the national news, or heck even read the Seattle Times RE section in the Sunday paper where they have, for MONTHS now been printing all the “negative” national RE news?
Can he not deduce that just possibly his agent is a dope who cannot think or fathom beyond a memorized short list of “price, location, and condition” and that he needs to grab the bull by the horns and lower the price?
He’s had over 3 months to get his act together and sell that sucker.
They certainly can’t change the location; at this point it looks like they can’t change the condition enough to matter. Looks like Door #3.
This dolt in Seattle who’s paying 2 mortgages and is “desperate and depressed” continues to amaze. From the article:
“We are supposedly still in a hot market and our property has what the agents say are the 3 mandatory factors for a quick sale: price, location, and condition.”
Does this guy ever listen to the radio, watch the national news, or heck even read the Seattle Times RE section in the Sunday paper where they have, for MONTHS now been printing all the “negative” national RE news?
Can he not deduce that just possibly his agent is a dope who cannot think or fathom beyond a memorized short list of “price, location, and condition” and that he needs to grab the bull by the horns and lower the price?
He’s had over 3 months to get his act together and sell that sucker.
Weird how things can change in less then 1 year. Now we have all the flippers, greedbag homeowners, and the feds scared stupid. I have made it a rule. I will never ever support a bullcrap capitalist society where greedbags live on the backs on us poor folk. Can you imagine living a life where all you could eat was dog food when you have nothing left after making the stinkin’ mortgage payment. And the greedbag who sold you the place is probably ridin’ around in his corvette with you money. Funny stuff.
Posted ” I will never ever support a bullcrap capitalist society where greedbags live on the backs on us poor folk.”
Neither do I. But it can get worse, in my time they could take you in the spring and get you home dead or shot to hell and gone before Thanksgiving. Now they only want your money. BTW they only did that to poor people.
Stop blaming capitalism for certain people’s stupid mistakes, or failure to do the research before making the single biggest investment of their lives. Why does the nanny state have to save them from their own stupidity?
Because the “nanny state” wouldn’t just be saving them, but us as well (if there were a severe depression). The biggest problem is that the “nanny state” will be stepping in *now*, instead of five years ago, to prevent this from ever happening.
If you really want the nanny state you’re talking about, we’ll have a lot bigger problems than periodic recessions or depressions due to irrational exhuberance. We’ll have a socialist state with a lot less freedom, and a lot higher unemployment, long waits for medical care, etc. In other words, Canada.
Anyone know when and why Ziprealty stopped showing listing dates? And where can you find out listing date easily?
um… in the Boston area they still show the listing dates.
I am proud to take the title of the first unsympathetic poster. I have sympathy for the illiterate that were lied to and ramrodded into an inappropriate home/loan, and are now left holding the bag. None for people that knowingly chose to get F*&&CKd by purchasing POS2 before selling POS1. Flippers and those cooking the party should be thrown into the clink. I have an idea for us. Throw all of the MB, Realwhores, executives, fraud folks into my new prison idea. Take em to the Amboy Crater and toss em in. AC it - if they try to escape, the heat will get em in about 2 miles. For winter, put prison in northern Alaska.
I disagree. I think it’s perfectly ok to prey on the stupid.
Without examples of total failure starkly visible, no one takes financial responsibility seriously.
We need more homeless and especially homeless families, you know, perhaps losing the house and living out of their H2 to demonstrate to other’s that there are consequences to their flippant ways.
Bought for $22Mil in ‘02, now for sale for (only) $37mil: LOL
http://www.cnn.com/2006/SHOWBIZ/Music/09/28/people.billyjoel.ap/index.html
Is it just me or is anybody else sick and tired of these F**CKING “LowerMyBills.com” mortgage ads on all these damn web sites showing people dancing on rooftops and whatnot?
WTF!?!?!?!
Funny. I was thinking the same thing. Really cheesy.
Yeah, And why does the chick gotta be such a lard-ass?
“brokers are telling customers they need to underprice the competition”
Thank God for inventing the stomach…
This guy on Coast to Coast AM is painting the picture…avg American has $12k in credit card debt, 18% have 3 months savings or more…..most much less if any. 500 stations across North America, 5 million listeners.
First Hour: Financial writer Michael Shedlock comments on stocks and the housing bubble.
Isn’t that Art Bell’s program?
God i just want this Bubble to burst and get it over with, the longer it goes on the more pain we’re gonna have!
“Earth to all NAR SpaceCadets…Houston has a major cupcake shortage down HERE !!!”