The Housing Bubble

The Sacramento Bee from California. “It’s finally come to this in Sacramento’s weakened real estate market. Denial that the boom has ended isn’t moving houses. The upbeat talk of real estate agents hasn’t worked. Even price cutting isn’t working for many as thousands of houses languish on the market. Almost on cue amid the quiet desperation, auctioneers have begun elbowing their way into the sales scene.”

“‘I’m trying to get out quick,’ says Patrick Maloney, the Sacramento resident moving to San Luis Obispo. Last month Maloney put up a for-sale sign asking $293,000. But so far it’s attracted only lookers. Maloney aims today to distinguish his house from 15,000 others on the market an auctioneer.”

“In Elk Grove, John Chargin, too, is turning to today’s auction block for a house he’s listed at $549,950 and bought just last year. Chargin, a mortgage broker, moved to another office in California and wants to sell as fast as possible. ‘When you have a mortgage and don’t live in the house, you need to get rid of it,’ he says.”

“Anxious sellers say their arrival shows many people will now trade a lower price for a quick escape. ‘A lot of sellers have dropped their sales prices $10,000 and no one cares,’ says Keith McLane, principal of West Coast Home Auctions and former Sacramento land buyer for Texas-based Richmond American Homes.”

“It’s no secret that sellers are having troubles. There are also 10,000 more homes for sale than 1 1/2 years ago in El Dorado, Placer, Sacramento and Yolo counties. Many sellers report lowball offers from buyers who have again gained the upper hand in the market.”

“The minimum bid for Maloney’s $293,000 home is $169,000. Chargin’s $549,950 listing has a minimum bid of $299,000. In both cases the owners have set a private minimum amount they will accept for a sale, a process called a ‘reserve auction.’”

“Maloney says the equity he’s gained in nine years allows him to accept less at auction than he might get from a traditional sale. ‘I can see the handwriting on the wall,’ he says. ‘I don’t feel like sitting here six months or paying a house payment on top of rent in San Luis Obispo.’”

The Desert Sun. “Unlike what’s happening in places like San Diego, Coachella Valley prices year-over-year are not yet falling. But sales counts are down more than 40 percent from a year ago, according to DataQuick.”

“‘I have to tell sellers not to price their house up too high, but to price it at what they’re willing to accept and negotiate from there if they have to,’ said Rocio Flores, a real estate agent in Indio. ‘There’s a ton of inventory out there, especially with the new building still going on.’”

“Many of the homes constructed and purchased in response to the frenzied 2004 market, often by nonresident investors, are now sitting empty, frequently being offered up as rental units. And at some of the larger subdivisions, homes continue to be built.”

“‘It’s a much more competitive market out there right now, and builders are having to do things to entice buyers,’ said Fred Bell, executive director of the Southern California Building Industry Association’s Desert Chapter.”

“In response, some new-home builders are throwing in free pools, casitas and major price breaks to move their product. Some resale-home sellers are now having to drop prices by tens of thousands of dollars, as the sellers’ market of two years ago moves in favor of buyers.”

“‘I’m sure there were a lot of speculators who bought here in 2004 and 2005,’ said Chapman University economist Esmael Adibi. ‘But any of them who are still in the market, I imagine they are having problems selling those homes,’ Adibi said.”

“Some Coachella Valley owners and investors, struggling to sell their properties across many price categories, blame market psychology for the current slowdown.”

“As an investor, Alan Waters of Palm Desert typically does several remodel/upgrade projects on homes in the valley each year. He recently had a property for sale in Palm Springs for more than 18 months.”

“‘Even following a substantial price reduction of more than $200,000, bringing the price $100-per-square-foot below the neighborhood average, the property had not sold,’ said Waters, whose day job as CEO of Wilson Johnson involves commercial rather than residential real estate.”

“(Broker) Lorenzo Lombardelli contends that consumers are waiting for the market to stabilize. ‘There are plenty of buyers in the market,’ Lombardelli said. ‘But..they’re worried that if they buy now, the prices will go down even further later.’”

“‘This indicates to me that price is not the driving determination with buyers in this market,’ Waters said of his investment experience. ‘Uncertainty and ‘bubble talk’ are the issues.’”

The Asbury Park Press reports from New Jersey. “When Kara Homes filed for bankruptcy this month, Amboy National Bank of Old Bridge was listed as the largest creditor with $58.2 million in loans. When local real estate mogul Solomon Dwek’s $400 million empire was frozen by a judge following charges of bank fraud, Amboy was again the largest creditor, for $49.7 million.”

“Just as Amboy has been surprised by the loans gone bad, a real estate market in decline could spell financial trouble for other local banks and thrifts that have lent heavily for housing developments and commercial real estate, bank analysts and federal regulators say.”

“‘It’s a disaster waiting to happen out there,’ said Gerard Cassidy, bank analyst for RBC Capital Markets, an international firm based in Toronto. ‘We’ve seen this movie before, and it doesn’t end very well.’”

“Regulators are proposing that banks do not lend more than three times their capital for all commercial real estate combined. That means if the bank has $100 million in capital, it should be careful about making more than $300 million in loans to businesses or developers, or it could face regulatory scrutiny.”

“In New Jersey, 47 percent of the 95 national- and state-chartered banks are already over the proposed guideline, an Asbury Park Press analysis of federal data showed.”

“‘Are we alarmed or very concerned? The short answer is no,’ said Steve Fritts, an associate director at the Federal Deposit Insurance Corp, which regulates banks and insures depositors against losses. ‘But every bank is different. In some (specific) cases, we might be concerned.’”

“Vincent D’Alessandro, VP of Shore Community Bank in Toms River, said the real estate market downturn has put more pressure on banks to beat last year’s earnings. ‘I know there are loan officers out there making loans because they have budgets to meet and job security issues,’ D’Alessandro said. ‘Banks get focused on hitting numbers, making sure their loan officers are hitting their numbers — and you set yourself up for making bad loans.’”

“Shore Community has $96.8 million in real estate loans to developers and businesses, about five times the bank’s capital. D’Alessandro said the bank is confident it has made wise loan decisions, but nonetheless it is tightening requirements for new borrowers. Unfortunately, D’Alessandro said, that hurts little guys.”

“‘It’s all about a credit crunch right now,’ D’Alessandro said. ‘You hate to say that, but banks like us will have to tighten the screws; the guy who wants to develop his house, or the roofer that needs some funding, we’ll be looking at that much more carefully. Some people may have to borrow for their living expenses, but those are the people you have to cut off.’”

“New Jersey banks are not alone in facing more risk in the real estate slowdown. Banks in 10 other states have an even greater investment in commercial real estate, the Press’ analysis showed. In Arizona and Washington, more than seven of every 10 banks have more than three times their capital wrapped up in commercial real estate loans.”

“Bank regulators have a maxim: ‘Bad decisions are made in good times.’ So regulators and analysts think there is a greater chance that bad lending decisions were made in the go-go real estate market of this decade.”

“‘Rapid growth can mask problems,’ said Michael E. Collins, VP of the Federal Reserve Bank of Philadelphia. ‘Whenever there is rapid growth, heightened competition can cause people to go out on the risk curve more than they would normally.’”

“Amboy National Bank held $1 billion in construction and land development loans as of June, the latest figures available. That’s nearly quadruple the amount from five years ago. Amboy now must deal with $108 million in bad loans stemming from Dwek’s downfall and the Kara Homes bankruptcy filing.”

“Bank President George E. Scharpf of Colts Neck has not responded to telephone and written messages asking for comment.”

“Bank analyst Cassidy said the court-ordered sale of Solomon Dwek’s $400 million real estate empire is a prime example of risk-taking gone bad for local banks. He said that if the economy falls into a recession, then ‘credit losses could skyrocket.’”

“‘Dwek is a canary in the coal mine for a developer with multiple projects in the air, and there’s a domino effect,’ Cassidy said. ‘If one starts to have problems, there are repercussions in the market.’”

Readers suggested a topic about a ’soft landing.’ “How about this issue: what is a soft landing?”

“I expect a soft landing, but my definition of the term is a lot different than that of the NAR. In my definition, the price of housing retreats to affordable levels (by traditional measures) in three years, with big nominal decline in 2007 and real declines afterward, and the excess inventory is absorbed at lower, affordable prices. But the economy is either flat or has a mild recession in 2007, followed by a recovery, instead of collapsing.”

“I call that the good ’soft landing’ scenario, and I think most posters here would agree. Especially those writing about canned goods, ammo and ’senior vittles.’”

A reply, “I would call that a soft landing for the economy, but not for the housing market. I have proposed the following scale a couple of times, and judging by the MSM headlines we’re starting to see in various states it seems to be holding up OK.”

“Using category 1,2 etc meanings from hurricane parlance; Soft Landing = Real median price decline. Hard Landing = Nominal median price decline. Category 1 Crash = More than 10% nominal median price decline. Category 2 Crash = More than 20% nominal median price decline, and so on.”

“A nominal median price decline is a lot harder than it seems at first glance, due to buyer substitution effects and increasing seller incentives that are now being frequently remarked on.”

Another said, “I would consider a nominal median price decline of 10% to be a very soft landing. That would only be enough to take the tip off the rediculous prices. 30% would just start to be reasonable prices. I wouldn’t consider it a hard landing at less than 40% nominal median decline.”

The second poster answered, “I respectfully disagree. A 40% median price decline is similar to what happened in the Houston area during the 80’s oil bust, and that was regarded (and reported) as an almost apocalyptic crash, well worthy of the Category 4 that my scale would give it.”

“In the UK in the early 1990’s, there was a Real Estate crash which saw something like 30% of all homeowners in the South-East (which includes London, and is the region with the highest prices and wages) in negative equity. Yet the nominal median fell by less than 20% from peak to trough (which took 4 or 5 years).”

The Herald Net from Washington. “It used to be a popular notion among local real estate agents that the Northwest housing market lagged behind the California market by about six months. I thought about that idea recently when I read that home sales decreased 30.1 percent in August in California from the same month in 2005, the largest sales decline since August 1982.”

“Things are a bit different here, and will continue to be. While the past 24 months have been crazy, the long-term outlook for the Puget Sound housing market continues to be bright. Local prices are not headed backward or even close to a ’soft landing.’”

“The ’soft landing’ term began about a year ago when David Lereah, the National Association of Realtor’s chief economist, tried to steer clear of any concept of national or regional housing bubbles, preferring to substitute balloons for bubbles. He confused many observers by saying: ‘Balloons don’t burst. You can put air in a balloon and it expands or you can take air out and it shrinks. We’re hearing a hissing sound not a pop … there’s a soft landing ahead.’”

“‘I don’t see a lot of areas in the country are really in for a soft landing,’ said Joe DiPaola, real estate attorney and broker. ‘I think what we have seen is that some areas have gotten absolutely hammered and others have slowed down just a bit. So, when you look at it on average I guess you call that a soft landing.’”

“John Tuccillo, one of the nation’s leading real estate economists, continues to assert that the local economy is the prime mover of single-family homes. ‘No housing market has ever collapsed unless the underlying economy went sour,’ Tuccillo said. ‘Short of recession, this means that virtually every housing market in the U.S. will hold up even though sales may slump and prices decline.’”

“So, when your friends in California swear the sky is falling and real estate will no longer be the same, remind them that property is cyclical and that their neighborhood will rebound when the ‘down’ period ends late next year. And, the down period in the Puget Sound will mean slower, not negative, appreciation.”

The Rocky Mountain News. “Denver business and civic leaders thought they knew fast growth and big construction. Then they arrived here and started counting construction cranes. ‘I went out on my hotel room balcony this morning and saw nine,’ one traveler said. ‘Looking out my window, there were 13 cranes,’ said another.”

“Indeed, the level of building activity is staggering. One rendering showed nearly 100 buildings, big and small, under construction or in development along Miami’s skyline. Miami Mayor Manny Diaz told the group $30 billion of private-sector projects - including 90,000 residential units, are under way or permitted.”

“The big question, of course, is how Miami will cope if, some say when, this all comes crashing down. Early evidence suggests there is no contingency plan, as Friday’s first session was titled ‘Metro Miami’s Changing Landscape - Why Real Estate Is Thriving in Southeast Florida.’”

“But even speaker Adolfo Henriques, the CEO of developer Florida East Coast Industries, acknowledged the possibility of an ‘adjustment.’ ‘We’re in the midst of a correction in the residential real-estate market, but I believe it’s an 18-to-24-month situation, and we will have a soft landing,’ Henriques said.”

The Herald Tribune reports from Florida. “When a developer recently submitted plans for 8,100 more homes in the Manatee County mega-project Lakewood Ranch, it left some people scratching their heads. Why would developers forge ahead with plans for thousands of homes there, and at other area projects like Palmer Ranch in Sarasota and Babcock Ranch in Charlotte County, with a housing slump officially under way?”

“To developers and builders who make millions by speculating on land years in advance, now is a great time to keep charging ahead with big projects. Most won’t build out for years, or decades, so short-term housing slowdowns are not a reason to panic.”

“The only thing that could dramatically sting the long-range speculators would be a drastic drop in the arrival of new residents to buy those homes. Almost everyone in the housing business seems convinced that everything will be just fine. They believe that people will just keep coming to Southwest Florida.”

“‘That’s what we’re putting our faith in,’ said Tom McTigue, Bruce Williams Homes’ VP. ‘It’s a little bit of luck, a little bit of faith and a little bit of market research.’”

“The problem right now in the Sarasota area is the roughly four-month surplus of new single-family homes, according to Metrostudy. The imbalance came from an artificial demand, said Tony Polito, director of Metrostudy’s Tampa/Sarasota market. ‘We just saw a huge amount of speculative buying,’ he said.”

“Everyone in the business feels the pain. Bruce Williams Homes had to lay off 15 construction workers this year because of the slowdown. Builder and developer Pat Neal is discounting homes up to 8 percent.”

“‘I expect that to continue,’ Neal said. ‘I think the builders who are focused will work with buyers. This isn’t a crisis, but it is a downturn that will last a year or a little longer.’”

The Naples News. “With three children to support, for Rudy Bustillo and his wife it came down to a choice between having a home or luxuries like eating out and going to the movies.”

“They chose to have a home. Now they have a $2,100 mortgage to pay from their combined gross monthly income of $4,800, about $4,200 during the slow summer months. Bustillo leaves his home in Lehigh Acres at 5:10 a.m. and drives 50 minutes one-way and works a second job when he can.”

“‘We can’t pay our bills with just one job - mortgage, car payments, insurance, utilities…,’ Bustillo said. ‘It is hard but we wanted a chance to own our own home. We didn’t want to rent anymore.’”

“With home prices cooling and sales stagnating, builders will start to realize that they can make more money by selling 10 houses for $250,000 than building homes for $500,000 that don’t sell, said Bill Price, COO for McGarvey Development in Lee County.”

“As for why builders haven’t responded to the need before, Price said, ‘in their defense, the real crisis and an awareness of the crisis has only really developed in the last couple years.’”

The News Observer from North Carolina. “In recent months, builders and brokers have found that the region’s reliance on transplants for home sales means that the area is not shielded from the nationwide housing slump.”

“‘Raleigh-Durham is one of those [regions] that draws many new residents from other states for jobs and baby boomers who are retiring,’ said Lawrence Yun, an economist for the National Association of Realtors. ‘They are coming from places where they are having housing market problems,’ Yun said.”

“In Northern Virginia, California and Florida, speculators drove prices sky-high and are now trying to dump their properties. That’s causing a housing glut that’s keeping homes on the market, Yun said.”

“Locally, sales to people moving to the area are estimated to account for between 20 percent and 50 percent of home sales, according to builders and realty companies. Often, companies that are transferring workers to the area buy homes the owners can’t sell.”

“About 46,000 people work in the housing market, building, selling and supplying materials, in Wake County alone, according to the home builders association. So far, nobody is laying off employees or slowing building, but that’s a possibility.”

“What most people don’t want to do is lower their asking price. Daniel Wall, a builder in Fuquay-Varina, has tried to sell a $349,000 custom home in the Broadmoor subdivision in Johnston County since June. Two potential buyers who wanted to escape Florida’s hurricane season were interested but both backed out when they couldn’t sell their homes.”

“Even though monthly payments on the construction loan are $2,500, he’s reluctant to reduce the price because it’s already $8,000 below market value, he said.”

“Mark Kistler, who moved from Gainesville, Fla., to Raleigh for a job at N.C. State University, understands that attitude. He’s been renting an apartment for $1,500 a month since July because he can’t sell his Florida house, which has been on the market for 17 weeks.”

“Kistler is asking $319,900 for the Gainesville home, which he bought for $285,000 a year earlier. Kistler knows he bought near the housing market’s peak, but he doesn’t want to reduce the price, because brokers advised that it’s still below market value, Kistler said.”

“‘The market is soft, and they aren’t selling properties like they used to, but the broker still feels we’re priced competitively,’ Kistler said. ‘Did I pay too much? Should I reduce the price? Those are the things going through my head. I could drop the price significantly and get a buyer, but I don’t want to take a loss.’”

“‘All the Realtors tell me it’s still a sought-after market, not flat like on the coast. I don’t know the answer. I wish I knew so I could sell my house,’ he said. Until it does, he won’t be eating out, making any big purchases or taking a vacation.”

What do you see in your housing market this weekend? Prices reduced, Incentives? Here’s one from San Diego. “The slowing real estate resale market has hit homes in the Murrieta-Temecula area especially hard because of the plethora of new developments in south Riverside County. Prices are plummeting, and unsold inventory is mounting.”

“Angel McCormick held her ‘For Sale’ sign while wearing the bright yellow duck outfit for nearly 11 hours over four days on various well-traveled streets near her home. It brought her lots of smiles and waves, one unappreciated hand gesture..and a few low-ball offers, however, her house remains on the market. ‘We don’t want to make money on this home. We just want to pay the house off and make the move out of state for my husband’s job,’ she says.”

From New Mexico. “Santa Fe home sales dropped sharply in the third quarter of this year, falling more than 30 percent. Robbie Dobbyns, who is past president of the Association of Realtors, said there was ‘a little bit of a lull in the third quarter. Dobbyns also said Santa Fe sales have been slowed by the fact that buyers from elsewhere are unwilling to pay Santa Fe prices after they experienced big declines in their own markets.”

From Las Vegas. “Homeowner Denny Segler is what most would call a motivated seller. His house has been on the market for two months, leading this real estate agent to up the ante in order to get it sold. ‘I’m offering a new car in the driveway if somebody wants to buy this house. Rather than spend the money and give it to another agent, I’d just as soon give it to the people buying the house,’ Segler said.”

“Segler realizes that the current glut of homes for sale in the Las Vegas valley, means buyers can be more demanding than in years past. ‘As soon as I get someone that’s interested in this house, I’m willing to negotiate with them,’ he said.”

In Colorado. “If you pay the asking price of $2.45 million for the home John Fritzel recently built at 470 Steele St. in Cherry Creek North, he’ll throw in either a new $73,000 CLS 550 Mercedes-Benz or a $68,000 GL 450 Mercedes SUV. ‘Things are tough, and everyone knows that,’ Fritzel said.”

From Michigan. “Just how sluggish is business for many home builders? ‘We’ll build a doghouse right now if you want one,’ said Duane Marlink of Hudsonville-based Marlink Builders Inc. ‘It’s quite slow out there.’”

From Australia. “Debt-stricken families with new homes, cars and plasma televisions in Sydney’s sprawling housing estates are relying on charity handouts to buy food. Welfare agencies report a worrying increase in the number of middle-income families with big mortgages seeking help to pay grocery, electricity and gas bills.”

“Dubbed the ‘pay-later poor’ by St Vincent de Paul, they live in homes boasting cable television and the latest electrical goods and use credit cards to meet basic living costs. Many of the families live in so-called McMansions. ‘I call them the pay-nothing-now poor - couples who have wanted everything now,’ said St Vincent de Paul Society CEO John Picot.”

From Florida. “The number of homes in some stage of foreclosure in Palm Beach County and the Treasure Coast soared last month compared with a year ago. ‘People are not sitting and hoping for a sale,’” consultant Mark Wiser said. ‘They are dropping the price, doing open houses midweek, whatever it takes to get out before foreclosure.’”

“Exotic mortgages allowed local buyers to afford homes in one of the hottest real estate markets in the country. However, those loans are beginning to reset with monthly payments that are out of reach for many, making foreclosure an unwelcome choice in a market where homes aren’t selling. At the same time, home values are stagnant or even dropping.”

“Spectrum Home Furnishings and its Spectrum’s Office at Home stores throughout Southwest Florida are closing their doors. ‘You could say it’s almost a perfect storm of events,’ said John Munzenrieder, who founded the business 23 years ago. ‘Basically, it was the housing bubble, new home and condo sales down 50 to 60 percent, our sales were down almost an equal amount, along with hurricanes that drove people off and increased insurance costs for us and our clients.’”

The Boston Globe from Massachusetts. “Gregory Truman and Wayne Pruitt didn’t need a real estate agent to sell their Brighton condo two years ago, but they could have used a crystal ball. The market was so hot that Truman and Pruitt were able to sell the unit in a matter of days for more than $468,000. They promptly upgraded, paying $644,000 for a 1930 Colonial across the border in Brookline.”

“They got a first mortgage for $333,700 and secured a home equity line for $140,000 (they used $70,000 of that money for the initial purchase of the home and $52,000 to spruce up the place). Over the next two years, in addition to sanding and painting both inside and out, the couple landscaped the front yard, added stone walls, and put pavers on the driveway.”

“Yet in May of last year, the house they had refashioned as their own became suddenly unaffordable when Truman learned that he hadn’t made tenure. He would be out of a job by August of this year.”

“Downsizing was in order. They put their house on the market in May of this year for $748,000, hoping to net a decent return on top of the cost of their improvements. Yet even after three busy open houses, the only offer they received came in the form of a casual inquiry through a neighbor as to whether they’d go as low as $699,000.”

“Unwilling to take a loss, the couple decided to refinance instead. They lowered their monthly payment by using a somewhat risky mortgage with an adjustable rate negative amortization, which allows them to pay less interest than the amount actually being charged. The difference, however, is added to their loan balance, essentially chipping away at their equity month by month.”

“‘I really don’t think we’ll be able to sell and get any sort of return,’ Truman says. ‘I regret buying the house. It was really a blunder.’”

“Perspective is easily regained now that we’re on the other side of the pop, the bust, the not-so-gentle thud. When we were living through what was unquestionably the biggest borrowing frenzy in history, homeownership shook off its staid status as the American dream and reemerged as the American joy ride. Every sale down the block, every bidding war, every visit to zillow.com confirmed that we were rich and getting richer.”

“Practicality was almost illogical. Though we skimmed off layer after layer of equity to upgrade our kitchens or pay down our credit cards, our home values magically rose as if to compensate within the same year, sometimes within months.”

“But with buyers back in control and perspective restored, most of homeowners aren’t feeling quite so wealthy anymore. As our equity levels recede, some of us, like Truman, are feeling foolish that we stretched our finances so thin. And clearly, with the midyear foreclosure rate up more than 60 percent over last year, some of us are downright devastated.”

“Lynne Nadorff has never touched her home equity but is second-guessing some of the improvements she made on the two-family Colonial she bought in downtown Lenox in 2002. After initially listing her house in July for $595,000, Nadorff has since reluctantly dropped the price to $495,000.”

“‘Maybe it would have worked better if I hadn’t put so much into it,’ she says of her investment. Knowing she won’t get out what she put in is hard to take. ‘It’s my retirement; it’s my nest egg; it’s everything.’”

“‘People, whether it’s naivete or denial, don’t seem to see where it’s leading,’ says Janet Werkman, bankruptcy lawyer based in Cambridge. Easy access to home equity, along with risky mortgages, contributed to the startling 66 percent rise Massachusetts foreclosure filings from the first half of last year to the first half of this year. Credit counselors and bankruptcy lawyers also link the climbing default rate to the proliferation of subprime lenders, who provide high-cost mortgages to people with bad credit.”

“‘I tell people all the time they’re not going to take away the TV that you charged, but they will come and take the house if you can’t make the payments,’ says Donna Cabana, a foreclosure prevention counselor in Springfield.”

“Brokers have also targeted the elderly, the population with the fastest growing rate of refinancing the country, says Len Raymond, founder of a Braintree-based nonprofit. Nationally, the percentage of homeowners aged 75 or older with home-secured debt nearly doubled between 2001 and 2004, from 9.5 percent 18.7 percent.”

“‘We had client who had refinanced 12 times in four years, Raymond says. Each time, that much more house got gobbled up, not just by the amount borrowed, but by steep transaction costs.”

“Whether we’ve poured money into our houses or routinely pulled money out, our expectations (and perhaps those of lenders) have reached unsustainable levels. These days, the reality check comes at sale time.”

“‘When somebody goes to sell, and they’ve taken out equity to make improvements or pay tuition or whatever, a lot of people are surprised to find that they don’t have the equity they thought they had,’ says Gary Rogers, a sales associate in Waltham. ‘I tell them you can’t spend the money twice.’”

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