‘The House Party Had To End Eventually’
Time Magazine looks at the housing bubble. “When Holly Schiller bought a town house in Fort Lauderdale in the fall of 2004, she figured she would pocket a profit before the place was even finished. Schiller, 51, and her husband had already flipped several properties in Florida’s sizzling market, and this one sounded sweet. ‘As with any ‘limited edition,’ the pitch stressed, ‘demand always exceeds the supply.’”
“Well, maybe not always. The housing market in parts of South Florida is melting faster than a snow cone on Miami Beach. Schiller’s town house has languished on the market for 18 months. She has slashed the price by $75,000, to $565,000, offered a $2,500 bonus to the selling agent and threw in a $2,500 store credit for home furnishings, all to no avail.”
“She’s renting out another property at a loss, while trying to sell that one too, and has a deposit down on a second town house under construction. ‘They keep telling me 1,000 people a day move to Florida,’ she says. ‘I don’t know where they’re going. They’re not buying.’”
“The house party had to end eventually, even if sellers refuse to believe it. Many remain defiant to the point of delusion. ‘We’ve had sellers’ markets for the last five years, and they’re transitioning to buyers’ markets,’ says David Lereah, chief economist for the National Association of Realtors. ‘Sales go down and prices follow. Sellers are stubborn, so there’s a standoff.’”
“Home builders, whose stock prices have tumbled, were late to cut production, a bad sign for new-home inventories. KB Home says its cancellation rate shot up to 37% in the second quarter, from 25% a year earlier. ‘People are making arguably the most significant economic decision in their life,’ says CEO Bruce Karatz. ‘They want to feel like they’re being smart, and in some markets it’s unclear whether it’s smart to buy a home.’”
“In Miami there’s a 17-month supply of single-family homes for sale, according to the NAR. Some 75,000 condos are coming on the market in Miami–Dade County, many purchased by speculators with no plans to live in them. ‘There will be lots of foreclosures, lots of auctions,’ predicts real estate agent Rob Rose.”
“The mood isn’t any brighter in San Diego. ‘$579,000–Getting Desperate!’ reads an ad posted on Craigslist in the metro area. ‘There are three times as many houses on the market as there were a year ago,’ says Vikki Kuick, a broker who placed the ad.”
“Some sellers figure they’re lucky to be getting out. Hewitt Hymas, a Navy commander reassigned from San Diego to Annapolis, Md., just sold his four-bedroom home for $476,000 (which he bought for $280,000 in 2002). Hymas relandscaped the yard, spent $7,000 on kitchen upgrades and eventually dropped the price by $18,000. ‘People around us still live with a heyday mentality,’ he says. ‘They got used to the boom and were asking ridiculous prices.’ He made a command decision not to be greedy and moved on.”
“Experts in market psychology say stubborn sellers have a classic case of denial. Richard Peterson, a San Francisco psychiatrist who specializes in financial decision-making behavior, points out that ‘people would rather gamble and hope prices come back. They ignore information suggesting that prices are dropping.’”
“Conversely, when investors see prices rising, they get overconfident, the hot-hand bias that leads folks to think a basketball player will sink his fourth shot after making the prior three, even though probability says the odds are the same for every shot. That explains sellers’ reluctance to cut prices, Peterson says.”
“Perhaps most unsettling is that cracks are emerging in the Midwest, a region supposedly insulated from real estate madness. In Glen Ellyn, Ill., a suburb of Chicago, Deb and John Tritt have tried to unload their house for seven months. They’ve spruced up the place, knocked $58,000 off the price, to $739,000, and offered a week at their Hawaii time-share to an agent who delivers an offer.”
“None of it has paid off, and two more houses in the neighborhood are for sale. ‘We’re moving to a town home,’ says Deb, ‘and the only saving grace is that it’s not finished yet.’”
I like to go over to the san diego real estate investors and see how the flippers are doing but today the message board is down or moved. Anyone know if this is a sign that the flippers are in retreat or is it just a glitch?
http://www.sdcia.com
The board is still up and still lame. They sure do hate txchick57 over there though. Wow these real estate true believers certainly are sensitive and testy!
Reading their message board suggests purchasing investment properties in Oklahoma and Texas seems to be popular. Poor, poor Oklahoman and Texan schlubs…
Looks like some took a bath in Tucson.
really? we love Txchick!
http://www.websitetoolbox.com/tool/mb/sdcia?forum=59897
txchick is a hero over there
Thanks for posting the link (it’s up and running). I just tried one click on the message board, and this beauty popped up:
“Beginner investor here. I was so excited to get started after the seminar in January of this year. As many of you know we purchased our first flip in March, a preforeclosure. A 3/2 in Clairemont. Comps at the time on that street sold for 580-$610K. We felt we had a decently discounted ppty when we bought it at $465K. Most investors and real estate professionals we spoke with thought we got a decent deal. Yup, you may know which one. The one where the inspector missed the tree-rooty drains and the mold and asbestos tile layer beneath the carpet that I discovered later. The one where the seller (who is in jail now for something else) purposely failed to disclose all that &*(_ *.
Long story short we’ve spent 77K+ in repair and modest upgrades to the entire house, and continuing mortgage/holding costs. We put it (the ppty) on the market asking $598K FSBO. Not one bite despite all the pretty pictures and craigslist, backpage, etc marketing I attempted. After 4 weeks of FSBO and being laughed at by real estate agents we signed on with an agent. If/when it’s sold we’ll have paid the buyer/seller agents 4.5 - 5.5% altogether depending on who brings/represents the buyer. Yes the numbers are red and nasty. But the property is problem free and ready to live in and in a very sought after family-oriented neighborhood.
What next? Lease or Rent?
We’ve accepted the fact that we will not even break even. We do not need any shoulda-coulda lectures. We are looking for present and future tense suggestions or solutions. To those who are tempted to send “LOL” or other types of ridiculing messages please realize they will be ignored, we have a family with 4 kids and we started out in real estate investing to improve our financial lot and this experience in the market we are in has devastated our financial situation further. By the grace of God we are barely holding things together.
Any suggestions on what to do next with the property?
Thanks.
M.”
Maybe they can try to burn it down for the insurance money (or maybe not, those asbestos tiles need a lot of kerosene)
LOL
These same shmuks would have happily pocketed $100K at my or any other young families expense, I see no reason they should not pucker up and take thier losses with equal grace! and a big LOL from me to boot!
Hey “M”:
Bend over and take it like a man. Then get another job and try to make some honest money.
Yeeesh.
–SM
I’m not understanding your ill feelings for “M”. This person wasn’t counting on rampant appreciation to make a profit on this house. If you look at the pictures of the remodeling she did, I think it’s pretty apparent that she poured a lot of money and hard work into a dump of a place and turned it into a pretty nice property. I feel bad for her that the only thing she did wrong was not know the market well enough. This sort of property upgrade should be applauded, not derided. Use your head.
You obviously have never remodeled a house given your foolish comment about honest money. It is hard, honest work. There is no shame in buying a dilapidated home, restoring it, and selling for a tidy profit. Improving homes in older neighborhoods does the whole community a favor. These folks may have been a little misguided by the seminar, but their hearts seem to be in the right place. They are, in no way, comparable to some flipper turning a condo contract for a profit before ground is broken on the project. To ridicule and shame them is shameful in itself. These people are as much victims of this bubble as they are perpetuators of it. Why don’t you direct your angry spew towards the greedy corporations who are really bending people over? Give honest, hard working families a break from your toxic venom.
“Beginner investor here. I was so excited to get started after the seminar in January of this year. As many of you know we purchased our first flip in March, a preforeclosure. A 3/2 in Clairemont.”
I think their first statement pretty much sums things up. You might re-think your position.
1. They said flip.
2. Did they do the work, or just throw 77k at it and someone else did “the work.”
3. Were they too hyped from the “seminar” to do the real research that old-school home re-habbers would?
4. I smell greed here–coupled with the unfortunate by- product of lack of forethought and due prudence.
5. Speculating in RE through “flipping” with four children to take care of? Very, very unwise.
Just my .02
DOC
These people are victims of their own ignorance. If they had done the basic research before entering into this flip, they would know that you cannot expect to get your money back on a remodel. Kitchen remodels lose at best 5% of the investment. Bathrooms lose 10% or more. And it gets worse from there as you start talking about living rooms and bedrooms.
“M” gambled on finding a greater fool to overpay for the remodeling work, and lost the bet. It’s no different than taking your paycheck to the casino, losing it at the blackjack table, then whining about how you can’t make the rent that month.
I’ve remodeled plenty of apartments in order to increase their rental value, so I know exactly what I am talking about. The difference is, I know when to stop. And if I overinvested in remodeling ghetto properties, then whined about it in public, I would expect to be a laughingstock as well.
I have not read all the comments here yet, so sorry if one of you beat me to it:
‘They keep telling me 1,000 people a day move to Florida,’ she says. ‘I don’t know where they’re going. They’re not buying.’”
Yes, but how many of the masses of elderly DIE each day, i.e. what is the NET GAIN?
I’m having a bit of a tough time with some of the extremely negative feelings expressed on this blog. We rip into these flippers who are trapped and are going to receive a very painful lesson in economics but give attaboys and accolades to the people who post here and tell their stories of selling at the peek. I’m not really seeing a difference between the two.
So a question I have is this; just when did it become a bad thing to try to make a profit? I’m tired of this silly statement “that a house is something you live in, not something to make money on”. What a bunch of bull. If you see an opportunity, and you have the stones (or stupidity), you should go for it. I don’t have a problem with people buying homes for the sole purpose of flipping them. I say more power to the people who can take advantage of the system and make a profit. That’s the American way, isn’t it?
Obviously sm landlord, you have no problem investing in real estate (and expecting to make a profit also); the only difference I see between you and “M” is that you’re better at it.
oh puhleeze
I think what you see here is people finally getting a chance to say I told you so.
That fact is that these dumb flippers looked at one with scorn a year ago if one told them that they may be buying high/making a mistake, etc…fill in the blank.
They have no shame.
We dance on their misfortune.
Oh man, $600,000 in Clairmont Mesa, hahaha. Didn’t he drive around the neighborhood before buying. I drive down Balboa and Geneese everyday on the way to work, no way I would pay that kind of money to live there.
If I remember correctly, it was north, not Clairmont Mesa, San Diego.
Oops, maybe not. My bad.
It’s about 2 blocks from Clairemont Mesa Blvd.
Not the best area in the world. Crappy schools (unless you can do Private) and lower middle class neighbors. Also, it’s not very far from Asian gang-land (Linda Vista).
It’s a steal at $550K. Ha.
By the way BobbyJ, the Flippers didn’t put a drop of sweat into that property (they paid the contractors top dollar) and exposed his/her family to great risk. It’s pure speculation and greed.
I think you just have to keep lowering the price till it sells. The rents vs cost to buy in San Diego are way out of balance. Look at College Station Texas to get an idea what more balance looks like. Plus I think we are near the top of the sine curve and this will drop significantly before it turns so you want to be the next to sell so be agressive in your new pricing. I am sorry you are in this predicament - I also do not understand how anyone can be happy at your misfortune
The sdcia message board is leaking oil. There was a thread critical of the moderator (Greg) that was taken down.
Another wizard’s wisdom:
actually there is no stand off between sellers and buyers like this Lereah guy keeps saying. to have a stand off implies a conflict, a bargaining going on. there is no such bargaining. there are no buyers period. buyers are just waiting and waiting and renting and waiting. haha. funny but true.
Oh so true. When SFH is no longer looked at as an “investment vehicle” to be purchased on margin is when I will buy.
When the term “flipper” again means someone working in a fast food restaurant I will buy.
When 40 something bleached blond no nothing real estate hens are forced to give up their leased mercedes and go back to planning school bake sales, I will buy.
When Lereah is forced to give a speech on national TV telling the country that he is a total boob, I will buy everyone that has posted on this board a drink. (Y’all like Pabst right?)
Until then…may the sellers suffer, the flippers fry, and the realtors rot!
PBR, fine by me!
isn’t there some local micro brew that would be a notch or two above Pabst?
santacruzsux,
You can bathe in champagne when you finally buy that house at 50% off.
A notch or two above Pabst? C’mon now, it is Pabst Blue Ribbon. How do you beat a blue ribbon?
OK, make it a six-pack and you’re on.
You got it. The David Lereah “boob watch” has now commenced!
OK, I’ll take the drink. Pull my arm whydontcha. Where do I sign up? Let’s find a pub near D. Lereah’s house so we can relieve ourselves on that Realtor(tm)’s lawn when we’ve had too much Bass(tm) Ale.
a nice martini lounge in my neighborhood (Liquid Kitty) serves only one kind of beer: PBR in a can. ‘Nuff said!
Karl Strauss was the Master Brewer at PBR in its heyday.
Karl Strauss is the best beer in So Cal!
Just for that alone, PBR is worth drinking.
http://www.karlstrauss.com/PAGES/Beer/Karl/Start.htm
Don’t disrepect the STONE folks in North County, you had their IPA?
Karl Strauss does make for a good liquid lunch though.
Karl’s Horton Hooch! 12.5%!
how about a generic 40 oz Malt liquor ?
And a “phatty” to smooth it
“When the term “flipper” again means someone working in a fast food restaurant I will buy.”
I doubt they will be able to work at a fast food restaraunt as thier wages will be docked. Probably out washing windows or doing odd jobs under the radar. I always get a kick out of seeing guys driving around in a lexus with a ladder on the roof!
Right on, Santa!
Now, the current statistics are this: for the past quarter (here in Tampa), the # of houses sold in 2006 is 1/3 of # sold for the same period in 2005. Granted, the median price increased by a few percent, BUT: basically, the same # of liars (ooops, I mean, REALTORS) are now working for the same pot of money that is now 1/3 (plus a few percent) the size that it was a year ago.
Same # of vultures, less carrion. This is an ecological imbalance!
CEO Bruce Karatz. ‘They want to feel like they’re being smart, and in some markets it’s unclear whether it’s smart to buy a home.’”
- Whew! Now I can understand why I was having ‘Unclear’ thoughts about taking the leap! It’s only in ‘SOME’ markets that I need to be careful.
I emailed an agent that I have sending me listings (just to browse) asking her what her opinion on the St. Louis market is right now. I’ll sum up her paragraph (you guessed it). “It’s different here”.
“The mood isn’t any brighter in San Diego. ‘$579,000–Getting Desperate!’ reads an ad posted on Craigslist in the metro area.”
This is why some sellers really should hire a Realtor (TM) to help them sell. Can you imagine a Realtor (TM) advising his client, “Now be sure to include in your listing the fact that you are desperate for a buyer”?
Here in Norfolk, VA there are listings with bad spelling and all caps on Craigslist…. posted by the realtors.
Along with your normal “$20,000 under value, never lived in Condo in Virginia Beach” for $380K.
It’s likely that at 579K it’s 20+% overpriced, but the seller knows there’s some idiot who’ll think he’s getting a great deal if he gets the place for 10% off. Could a realtor really think of something so clever?
Yes, I can imagine, because I see the numbskull realtors advertising (usually with bad spelling) their listings with exactly that…”seller very anxious”, “make an offer, any offer!”, “seller highly motivated”, “seller DESPERATE”, or my personal favorite: “seller will take just about any offer!” (I’m not kidding).
No buyers equals no commission check, so realtors will use just about any attention getting phasing they can come up with.
do these grammar-challenged realtors think that buyers do not look at the listings on the mls and craigslist or something? i really think the selling agent thinks everyone has a realtor and only buying agents will read the stuff..how can they be so careless..if i were the seller i’d fire the realtor(R)
Hand-scrawled FSBO signs are another issue I have noticed facing some sellers…
Yeah, that’s not the height of sophistication, but really, what has been with some of these people?
Like I’ve posted before…when your neighborhood grocery bag boy brags about the house he bought and is going to “flip”, I figured the dumbing down of property exchange was complete. And that’s nothing against bag boys. That’s just an observation on the lack of willing intelligence on the part of many.
I saw a “house for rent” sign this weekend in my neighborhood in South FL, with an arrow pointing to it. Funny thing was, the word “rent” had a piece of paper taped over it with the word “sale” written on it in black marker. The store must have been out of “for sale” signs. What a hoot!
I’ve been monitoring the number of Craigslist-San Diego ads with the words “reduced” or “motivated” (both took a big jump today, 405 and 357). I think I’ll monitor “desperate” as well…..
You should try using those same search words in the Phoenix Craigslist. You’ll get twice the results!
In Imperial County, Centex is trying to sell $365,000 new houses for 0% down and $1350./month payment for 6 years. This, in an area in which 12 months ago you had to wait on a list for a year to have a chance to buy.
Alibrat, this does not make sense. You must mean $1350/month for 6 MONTHS not years. The true cost of such a loan is probably closer to twice that, plus taxes, ins, and maintenance. No way Centex can subsidize that for 6 YEARS.
Alibrat, this does not make sense. You must mean $1350/month for 6 MONTHS not years. The true cost of such a loan is probably closer to twice that, plus taxes, ins, and maintenance. No way Centex can subsidize that for 6 YEARS.
Sellers still don’t get it. The average smoe with a clue, most of us on this board, will not overpay to finance as one bard on this board put it, “your retirement at 35.” Geez, get with the program. We are subborn. I WILL NOT, EVER, IN A MILLION LIFETIMES, OVERPAY BY SEVERAL HUNDRED THOUSAND DOLLARS FOR YOUR CRUMMY SHACK. NO MATTER HOW MANY BEDROOMS. If the home was worth $300,000 in 2000, that doesn’t mean it is worth $750,000 5 1/2 years later. These people deserve to be left holding the bag. The navy commander was smart. I am sure he still made a 6-figure profit in only 3 years years, was it? I hope all these I wanna retire at 35 with 100 rentals go belly up before this is over. Priced out of the market. So be it. I will not be alone and I will not go broke to buy your POS. We all just have to wait. There are many sellers who are feeling and beg. to feel the crunch. $750,000 homes sold to a couple making $100,000 a year will come down after several of these couples leave the keys on the kitchen counter and walk out.
watch who you’re calling a smoe!
“leave the keys on the kitchen counter and walk out”
you mean the granite counter, don’t you?
Or they’ll just mail in the keys. “Jingle Mail” I think Fleckenstein called it today.
“Some sellers figure they’re lucky to be getting out. Hewitt Hymas, a Navy commander reassigned from San Diego to Annapolis, Md., just sold his four-bedroom home for $476,000 (which he bought for $280,000 in 2002). Hymas relandscaped the yard, spent $7,000 on kitchen upgrades and eventually dropped the price by $18,000. ‘People around us still live with a heyday mentality,’ he says. ‘They got used to the boom and were asking ridiculous prices.’ He made a command decision not to be greedy and moved on.”
Funny how the military people see it for what it is. I am in the service now. And have my G.I. Bill certificate in hand. And guess what, I won’t buy anytime soon. The Veteran’s Administration in my area is quietly advising vet’s like myself to wait it out some.
And don’t think that they are advising this to help me out at all. It is really because if I choose to default on a “suicide loan”. Then the Government is holding the bag and must pay up to the lender.
Gosh I hope this bubble stuff all dries up by 2008 or so. My wife is bugging the hell out of me to buy a house!
I hear you.
Hectore:
You make a good point, the military is good at teaching people to act under duress.
This commander did just that.
Most flippers have no such training and will ride the market down.
OT:
I was walking the baby yesterday and saw a realtor setting up for an open house on a very plain 26 ft wide Huntington Beach row house that has been for sale for 60 days now.
Some tourists asked her how much, she hesitated and then finally said $1.6M.
I couldn’t help it but to laugh and comment while making a riding a horse gesture ride that market all the way down and kept walking.
26ft row houses in Hutington Beach currently list for about $1.1M, one across the street that was similar sold for $940K in Feb 2006.
The Veteran’s Administration in my area is quietly advising vet’s like myself to wait it out some.
Oh man, this is getting better every day. The word is out. You got good advice from the person you talked to at the VA.
“He made a command decision not to be greedy and moved on.”
Either that, or he was forced to sell because of the relocation. I wonder if he was planning to sell before the relocation? Doubt it.
> The Veteran’s Administration in my area is quietly advising vet’s like myself to wait it out some.
That’s interesting: one government agency giving realistic advice while others promoting “ownership” society. Could you give any link, even if it’s “quiet” advice?
> It is really because if I choose to default on a “suicide loan”. Then the Government is holding the bag and must pay up to the lender.
How do you know that this is their motivation? Any comments from administrators or directors?
> Gosh I hope this bubble stuff all dries up by 2008 or so. My wife is bugging the hell out of me to buy a house!
I feel for you, because I feel the same. What you could do:
- Run the numbers again and again to show how much you could LOOSE.
- Find a house to rent in the meantime and start saving for the downpayment in 2009.
- Don’t be greedy and cheap with other things, but point out that this housing market is DIFFERENT in a major negative way.
Yeah, we hate renting, and are frustrated that on well over $120K we live in a 1200 sf apartment, albeit in Del Mar, but still, I could not afford anything decent around here, and I cannot believe I don’t make a good bit more as a software engineer than most around here…. This is ludicrous!
I wouldn’t be so sure. My brother in law is in the marines and is big on real estate investing. He’s gone in on a few deals with some buddies of his, all current or former military, against the wishes of my sister.
Also, if you default on a government (GI loan) if there is a deficiency they will take it out of your social security payments when you reach 65.
Your wife? I have been holding my wife at bay for 5+ years. WE will bite the bullet soon as part of a relo.
Some sellers figure they’re lucky to be getting out.
Those sellers would be correct.
They keep telling me 1,000 people a day move to Florida,’ she says. ‘I don’t know where they’re going. They’re not buying.’”
______________________________________________
BAHAHAHAHAHAHHAHAHA! Dumb A$$!
“She’s renting out another property at a loss, while trying to sell that one too, and has a deposit down on a second town house under construction. ‘They keep telling me 1,000 people a day move to Florida,’ she says. ‘I don’t know where they’re going. They’re not buying.’”
Now this flipper kills me, 1000 people a day will come to Florida and rent her units at half of the cost of buying, no taxes, no insurance, no strings, and if they dont like it in Florida they can join the 1200 people a day that are cashing out and leaving Florida
I remember when flipper was a smart dolphin that Florida was glad to have in the state!
1000 people a day ARE moving to florida. They ain’t buying houses though…they’re buying cemetary plots.
the sad part is the houses are built on the cemetary plots
Actually, one web site estimates the US death rate at about 6500 people per day in 1996. That’s surely to have gone up since then, and frankly given the geriatric effect, Florida has to be getting more than its fair share of those. So even if there are 1,000 new Floridians showing up each day, there are by this estimate at least half as many checking out each day. Maybe more. So you’re not entirely wrong. Plus, how many Floridians move out of their houses and into retirement homes or hospitals each day? That frees up housing stock too. So, 1000 a day may not even be replenishment rate to keep demand level.
Great point, Doc. Based on death stats, in ‘02, ‘04, and ‘04 about 460 a day died.
1000 people a day ARE moving to florida. They ain’t buying houses though…they’re buying fake IDs and green cards.
And they live 8 to a room… pesky housing shortage problem solved.
They keep telling me 1,000 people a day move to Florida,’ she says. ‘I don’t know where they’re going. They’re not buying.’”
They are still up north. To buy your overpriced condo, they first need to sell their overpriced 1950’s crackerbox with $10k/year in property taxes in New Jersey and it seems like all buyers are gone.
I have a sister in NJ right now that is trying to sell a 1960’s crackerbox house so they can retire to FL.
Tell her JUST SAY NO!!!!!
“The house party had to end eventually, even if sellers refuse to believe it. Many remain defiant to the point of delusion. ‘We’ve had sellers’ markets for the last five years, and they’re transitioning to buyers’ markets,’ says David Lereah, chief economist for the National Association of Realtors. ‘Sales go down and prices follow. Sellers are stubborn, so there’s a standoff.’”
I think it’s clear that Lereah never actually believed that “the housing boom would continue through the end of the decade”. He was always just a representative of Realtor’s interests, which is to maximize the number of housing transactions. Whether by pumping the demand side higher by making houses look like good investments, or now by pushing the supply side lower to make houses look cheaper, as long transactions occur Realtor’s make money.
are you saying Lereah should be referred to as Lie-reah?!
No, Lie-ar-rhea
When Lereah wrote his book about the boom lasting until the end of the decade he was just trying to make a quick buck cashing in on the ‘fever’ of the day, much like the ‘Are you missing the new economy?’ books of the dot.com era. Of course he knows what markets are capable of, but his job is to keep everyone in a perpetual warm slather that real estate is a wonderful bet regardless of reality. If it tanks, so what? Edge your predictions down incrementally, cloud and obscure your data along the way and start focusing on sellers to grease the wheels on the slide down. White-wash, rinse, repeat. He’s nothing more than a pitch-man in an economists’ suit selling elixirs out of a wagon.
and don’t forget. Blame Blame Blame. “It would have kept going, but”…
- the media scared us
- Ben B. won’t stop raising interest rates
- A few “bad apple” speculators are jumping out, increasing inventory
Rumor has it that James Glassman of “Dow 36,000″ ghost-wrote Lereah’s book!
When that punk Lereah was on the Today Show last week, discussing the slow down in sales and the need for sellers to get real on pricing, why did the “REPORTERS” fail to bring out his book - and challenge him on his, uh, flip-flopping?
Perhaps most unsettling is that cracks are emerging in the Midwest, a region supposedly insulated from real estate madness.
What? They never heard of low interst rates and easy credit in Des Moines?
Everyone thought markets that haven’t really risen in five years could not possibly be in a bubble. The big surprise: These markets should have been sinking anyway–their level prices were a bubble.
Exactly, people thought I was a little crazy even here the first time I mentioned this. For the future of the rust belt look to Buffalo.
Now that comment should scare the crap out of any real estate “investor”. I really don’t mind Buffalo every time I’ve been there though, but housing hasn’t done anything there since 1908 pricewise. The population of the city today is less than in 1900.
Look at the 40 or so most populated cities in 1950. Nearly all are down (only 2 are up) some 40-50%. That’s no more a trend than a tsunami is a tide. Just go to realtor.com and type buffal ny and less than $20,000. I am seriously planning to take a bunch of laborers and some trucks and buy these and dismantle them for their architectual elements and copper and hardwoods.
Heh? There are some Buffalo houses listed at prices like $575 and $4400 (without the K or three more zeros)!
Probably comes with liens - Like house must be torn down by…
Yep, $4,400.00 for an entire house. Round here a lot of folk would be happy if that were their bi-annual tax payment. I’ve put twice that much on one credit card this month already. Try Utica or Rochester or Syracuse. I repeat; this is not “sad,” this is the future of OPACia™ and Rustlandia™. Don’t even get me started on Crapangeles™, Lootlandia™, Fort Autism™, Grandmamiami™, The Terminus Triangle™, ProtOPACia™ and Excremento™.
Best post ever.
So Robert:
Is that a Sears Poncho, or a Mexican Poncho?
If only we could see those prices in Ithaca…
Sears Poncho/Mexican Poncho? I don’t know and I don’t eat the yellow snow.
Robert, is that decrease for the citys proper, or the metropolitain areas? Certainly suburbanization has decreased the population of most downtowns, but isn’t lowering the prices in the suburbs.
Cities proper. As long time readers know I am highly critical of the current imbalances between thew exurbs and cenurbs. With very few exceptions there is no metropolitan representative governance and where there is it is controlled for the benifit of the cenurbs. Suburbs are so much less expensive than core cities they by virtue of their existence keep all prices more reasonable. Their success is one of people voting with their feet and pocketbooks for nearly a century.
I enjoy reading your posts Robert. I learn a lot and agree with most. But I’d like to expound a bit on the Syracuse-city proper blight. IMHO it’s not the cost of living in the city the suburbanites are avoiding. It’s the crime along with desire to separate from low income groups.
I had some legal business to do downtown. Took kids. Could not believe the amount of people just sitting around with nothing to do…..loitering I suppose you’d call it. There were hundreds. Someone walking by eyeballed my purse and (thank God only) asked for cash. Yeah, that happened in other places I’ve lived/worked/vacationed but not in anywhere near the same numbers. Most people I know avoid even driving into Syracuse except for a small cultural area never mind living there.
The socio-economic realities of the people living in the city vs the highly educated, securely employed just outside the city are night and day. I’d say neither group understands each other very well and instead have chosen to live separate lives. Those with the economic ability and pull to change or improve the city just breath a sigh of relief their kids don’t have to interact with “those people”. Heck, the Syracuse police spokesman lives in my little burb, a 30 minute drive away….guess he won’t be having his family rub elbows with those people either.
I have noticed that jobs that used to pay a “lower middle class” pay in Boston area are just above minimum wage here. May I suggest that perhaps the smaller availability of employment here has accelerated the shake-out of the middle class w/in this geographic area. Its a microcosm for what’s happening nationally at a more advanced stage.
Tearing up those old houses is akin to gutting old barns for the massive old growth timber beams. It can be lucrative.
And *that’s* why the Great Pyramids look all jagged, and no longer have a beautiful, smooth limestone face…the limestone was “liberated” over the millennia for other building projects. A tradition with a long history indeed!
Robert Cote…
…I am seriously planning to take a bunch of laborers and some trucks and buy these and dismantle them for their architectual elements and copper and hardwoods.
I think this is a seriously great idea. I have thought long about
building my own custom home and have toyed with the idea
of recycling old timbers and such from old / abandoned homes.
Its the only way these days to find tight-grained old growth woods of any quality. The stuff being sold now is, generally speaking, real junk.
BTW, Robert, I really enjoy you many other posts. They
are always very well thought out and full of interesting
factoids. I can tell that you are one very smart investor
with a lot of experience. Look forward to your future
posts.
turn off italics.
Ah yes, good old denial, thats what, oh yeah, I remember, the first stage in death. I think theres four more stages also, but hey, doesnt really matter, the end result is always the same. RIP FB’s.
Well, well……i think we can officially call it. Remember when Time finally covered the Tech bust? I can still see the pics of all those forlorn 20-somethings, who just months earlier were millionaires. But by the Time had the story, it was officialy “stick a fork in it” for Tech Bubble. Now they’re covering the housing bubble. Doesn’t look good, all you housing bulls. What was it the article called you? Oh, that’s right….”delusional”.
Ah yes, good old denial, thats what, oh yeah, I remember, the first stage in death. I think there are four more stages also, but hey, doesnt really matter, at the pace this crash is going I don’t think they will have time for the other four. The end result is always the same. RIP FB’s.
When Holly Schiller bought a town house in Fort Lauderdale in the fall of 2004, she figured she would pocket a profit before the place was even finished.
Holly figured wrong. Holly is in deep doo doo.
F#ck Holly and everybody that looks like Holly.
and the horse she rode in on too!
Holly needs to sue someone, ASAP.
KARATZ is a joke - Back in March 2006 he was saying this (businessweek.com):
KARATZ: I don’t see a fundamental slowdown other than in the hottest markets. Things don’t continue through the roof forever. This is a breather in prices, and that takes some steam out of the market. In some markets, 10% to 15% of buyers were speculators. You take them out, and the market drops 10% to 15%, and it takes three to four months for whatever overhang there was to be sold, and then the market stabilizes. That’s where I think we will be three to four months from now.
eff businessweek. It’s a total BS rag… always has been
So you are ok with what the KB CEO said back then vs. what he is saying the Time Mag article? Or do you just hate BW?
I say eff ‘em both - BW and Time.
The female flipper in FL needs to suck it up and give back the profit she made on the earlier flips. Man, I hope she hangs on though.
Just as much money is lost on the downside of a cycle as is made on the upside.
Far greater losses on the downside!~ And for many people there will be concurrent loss of jobs and income.
I disagree - it’s just harder to see incremental and slow job gains that lead up to the peak. Nobody noticed Nortel’s hiring policies that got them to 100,000 employees, but lots noticed their firing policies (sorry - layoffs).
I’m curious to see how a housing bust could impact illegal immigration though.
One of the aspects that contibutes to this result is how Sec. 1031 works. In order to defer gain, the purchase price of the replacement property must always be equal to, or greater than, the sales price of the property relinquished. In other words, you’re basically compelled to always “trade up”, and therefore take on even greater amounts of debt. This creates a fairly nasty result when you get stuck at the end and can’t unload.
What Housing gives…it can and will take. People should learn to look beyond just next week…This should and will not affect rich people, cause they are rich. But irresponsible and/or dumb (greedy)people will pay the price. This is going to be a lot of fun to watch with absolutely NO REGRETS…..)))))
What Housing gives…it can and will take. People should learn to look beyond just next week…This should and will not affect rich people, cause they are rich. But irresponsible and/or dumb (greedy)people will pay the price. This is going to be a lot of fun to watch with absolutely NO REGRETS…..)))))
What Housing gives…it can and will take. People should learn to look beyond just next week…This should and will not affect rich people, cause they are rich. But irresponsible and/or dumb (greedy)people will pay the price. This is going to be a lot of fun to watch with absolutely NO REGRETS…..)))))
Good point, but do you think you’ll have any regrets?
(snorting)
Like triple-posting? =)
I must say I’m sick and tired of seeing the words “Priced to Sell” that seems like the most overused selling point in today’s market. When the property has been listed for 8 months and it’s still priced to sell you would think the realtor’s would wake up and smell the coffee.
This reminds me of the old economist’s joke about the impossibility of finding a $20 bill on the sidewalk, because if there were such a thing, it would have been picked up before you saw it.
Similarly, homes that were “priced to sell” are not the ones clogging up the real estate ad section of the Sunday SD Union Tribune week-in and week-out.
I thought if I saw the overused phrase “snapping up houses” one more time I would stick knitting needles in my eyes.
Funny, that’s my most detested phrase, too. “Snapping up houses” — for whatever reason, it’s like nails on the chalk-board for me.
I really hate the phrase “better than new” - although after seeing some of the construction in Phoenix, it may actually have some truth.
Pride of Ownership — aaaaarghhhhh
“Hurry up, this one won’t last!” and “Great investment opportunity!” really irk me.
Maybe worse yet are the signs that some real estate agents still use that say “TOO LATE”.
Sometimes I wish I could add some fancy signs to the For Sale sign out front that says “TOO LONG” or “TOO MUCH”…
I have seen this one lately in Ventura on For Sale signs, “Honey, Stop the Car!”
Or how about the real translation of “For Sale by Owner”?
Should actually read, “For Sale for Ever”.
:^)
it is all nauseating. I like all of your translations. We should have a TRANSLATOR on the margin of this blog. Also, some acronyms used - for noobies of course!
“Priced to sell.” (As opposed to what?)
“Absolutely turnkey.” (Don’t you mean “absolute turkey”?)
“Honey, stop the car!” (I’m going to be sick!)
http://nvar.com/newsdetail.lasso?articleno=nvarn100455
How can there be a glut of houses? How can economists from a respected university be wrong?
“How can there be a glut of houses? How can economists from a respected university be wrong?”
LOL, look at what the major universities were saying and teaching before the great depression, the last tech bubble(Greenspan Fed also), heck the list goes on an on. The reality is most of these guys find themselves drinking the Kool-Aid and driving looking in the rear view mirror. Financial analysis, houseing included, is best left to the private sector with an impartial eye. That leaves out the NAR and any other AR as well as mortgage industry, gov. due to tax’s etc, basically anyone with a vested interest who cannot seperate oneself.
This is one of the sticking points on houseing, pump and dump is in stock and houseing, but as always sheeple love the dream of free riches.
OCBear
Holly’s Folly. One interesting aspect of stories like this is that these floppers are probably having their profits from earlier successful flips eaten up maintaining these alligator properties. Victims of their own success.
I think flippers all along have been using creative accounting to calculate their profits. I think many look at is as “I bought for 300k and sold for 350k, so I made 50k!” When they account for transaction fees and interest payments before sale, that number is much smaller…and much easier to be erased by a flop.
“heir profits from earlier successful flips ”
My bet is that whatever % of these ‘profits’ Holly and her ilk didn’t plow back into buying additonal units in an effort to become the next Robert Kiyosaki , went toward matching BMW’s for her and her hubby , a bunch of other trinkets and a couple of extended vacations.
They’ll all just walk away from them eventually and file.
“Schiller, 51, and her husband had already flipped several properties in Florida’s sizzling market, and this one sounded sweet: three bedrooms, private elevator, designer appliances…..Schiller’s town house has languished on the market for 18 months. She has slashed the price by $75,000, to $565,000, offered a $2,500 bonus to the selling agent and at one point threw in a $2,500 store credit for home furnishings–all to no avail”.
He who lives by the pyramid game dies by the pyramid game. Sorry, but not too much sympathy for flippers. Whatever happenned to the quaint notion of working for your money?
and despite already having two white elephants on her hands she just couldn’t resist signing a contract for a third ? This is where the dumb & lucky of the past few years get to learn they aren’t “Real Estate Investors ” after all.
I have posted before - this is similar to a gambler at the table and can’t walk away after a hand where they win $300. They say, “just one more - I am on a winning streak!” They end up losing the 300, going to the ATM machine, taking out another 500 and promptly lose that too.
LOSERS ALL
“He who lives by the pyramid game dies by the pyramid game. Sorry, but not too much sympathy for flippers. Whatever happenned to the quaint notion of working for your money?”
Where have you been? Those days are long gone. American culture has devolved into the idea that you can get something for nothing. Observe Las Vegas, Reality TV contests, MTV, state lotteries, and 20yr old nose picking Google employees.
You think it’s easy to build a scalable reliable search, email, portal solution? I love old people who think young people have it so easy. Shut up.
well it might be difficult for 20 year old nose picking google employees… those old guys at yahoo seem to keep their fingers out of their noses, that probably makes it a little less difficult. ;-D
LOL! Portal solutions are so 1998, and George Mason University is only respected in NOVA.
I don’t think his comment was to suggest that they don’t work hard. But, hard enough to warrant millions in stock options? That’s just dumbass good luck to be in the right company at the right time.
Hey, when did *you* start training for your career? I started at 14, and I’ve been doing it ever since. Usually over 40 hour weeks, often over 60, every week, except vacations, ever since. No parties in college, often no dating. You get married to the work. The guys at Google are pretty much like me, except often smarter (I know some). So yeah, they earned it. Every bit as much as anyone else who ever earns those returns, be they CEO or Basketball Star.
To suggest anything else is just uninformed, jealous, and kinda petty. Lucky? Sure. But lets just say *you* never had a chance to get a shot at that luck.
Perhaps you were in middle school when the dot.com era occured?
Thousands of people worked “hard”. They all worked hard for a chance of getting the lottery ticket of instant riches.
Pfft. how spoiled and idiotic this generation has become. This is not the norm, and you will soon see.
Which generation is that?
Baby Boomers?
Gen-Xers?
echo-Boomers?
Are there others?
I’m 28, which category do I fit in? And when should I stop picking my nose?
perhaps you missed the 20 yr old reference.
next.
Sol Veritas, apparently we’re the “Cold Generation”, inbetween the Xs and Ys…. And I’ll cling to that because I can’t stand most Xs I know
Serious start ups are no picnic. I’ve been in a few. We all had to work 70-80 hours a week. Hell, I’m still busting at 60 hours now. You worked, slept, and ate. The end.
Careful poordad, this younger generation of so called “nose pickers” may opt to cancel your social security - and, frankly, I wouldn’t blame them if they did.
If anyone had it easy, it was the baby boomers, I ought to know - I am one.
As a 23-year-old, I’m voting for the first party that cancels Social Security, and then I’ll invite my parents to live with me. I know it’s not going to be around for me, so the farcical notion that I am financing my retirement with it is absurd, and I am not counting on it for a dime.
Ditto. And I’m 40.
you can pick your nose, your friend can pick his nose, but you can’t pick your friends nose
Words to live by.
Schiller was been officially schillerized. And her husband Irving as well.
I think they are running out of “for sale” signs around Boise. two recently completed spec homes are sharing the same “for sale” sign- its placed in the middle between the two driveways.
I bet the makers of “for sale”, “open house”, and “price reduced” signs are doing a booming business. The main road i live off of has “for sale” signs planted on every side street.
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=U05501149&page=1&property_type=SFR&mls=mls_so_cal&cKey=xgw83xwl&source=SOCALMLS
Then you got people like this that make me laugh please look you think this is the way to sell your home?
Price history from this listing:
Price Increased: 03/27/06 — $769,900 to $769,990
Price Increased: 06/08/06 — $769,990 to $769,999
Price Reduced: 06/26/06 — $769,999 to $769,000
Price Increased: 06/30/06 — $769,000 to $769,900
Price Increased: 07/09/06 — $769,900 to $769,990
Price Reduced: 07/16/06 — $769,990 to $725,000
Price Increased: 07/19/06 — $725,000 to $725,001
Price Reduced: 07/30/06 — $725,001 to $724,900
Price Reduced: 08/02/06 — $724,900 to $700,000
Sounds like they will soon be entertaining offers on the range from $600,000 to $700,000, if they get lucky…
The above (linked) listing is MLS #U05501149, a 3 BR, 2.5 BA house in Costa Mesa Listing Date: 12/02/05
On Market: 248 day
Price history:
Price Increased: 03/27/06 — $769,900 to $769,990
Price Increased: 06/08/06 — $769,990 to $769,999
Price Reduced: 06/26/06 — $769,999 to $769,000
Price Increased: 06/30/06 — $769,000 to $769,900
Price Increased: 07/09/06 — $769,900 to $769,990
Price Reduced: 07/16/06 — $769,990 to $725,000
Price Increased: 07/19/06 — $725,000 to $725,001
Price Reduced: 07/30/06 — $725,001 to $724,900
Price Reduced: 08/02/06 — $724,900 to $700,000
looks like the pricing work of an insane person
Un-effing-believable
I looked up that property in Costa Mesa. This is one of 3 detached legal condo “infill” units. All 3 are identical and were built and sold in 2002 for around 350k. One of the units sold in september 2005 for 760k. These units are subject to $95.00 HOA dues and reside on a moderately traveled main arterial (aint no kids playing in the street, and there are no common areas). MLS listing says that its priced under market. I find this funny, because the market has drastically changed from september of 2005, and if it was indeed priced to market, it would have sold by now. Listed at new 700k price on 8/5/06, given a typical 30-40 day marketing period, if it doesnt sell at 700k, we know its still too high. I feel sorry for the guy who bought the model match last year for 760k. He’s already down about 8-9%. And (they) say real estate never goes down. Pretty desirable area also, Eastside Costa Mesa. Its gonna get real ugly folks.
Funny, I popped the address into Zillow & the estimates for the 4 units are
581,093
618,846
623,091
Looks like someone is upside down on their house with a suicide loan.
785,602
Forget putting a price on it at this point. Just set out a sign that says “delusional and greedy”.
What means “already price negotiated?”
It means, please don’t lowball me any further.
LOL
Let it sit!
“He made a command decision not to be greedy and moved on.”
wow..he settled for a meezly 70% profit in 4 years…guess it’s easy ‘not to be greedy’ with that sort of profit. jeesh…like he didn’t make out like a bandit?
> “He made a command decision not to be greedy and moved on.”
I found that also misstated - but if he cashed out when he saw the market not longer increasing, power to him. Or was it just being forced to move at the right time that made him into a happy flipper?
It is a real shame that this probably-OK person had to pollute his sentence with “not to be greedy.” He should have said the truth, that he was happy to take his profits and move on.
I sold my place at a relatively great profit and at what turned out (in retrospect) to be the peak of that market. I’ve never tried to be a saint about it — I got out when the gettin’ was good and now that I am convinced the bust will hit everywhere, I’m waiting for an outstanding deal before buying back in. I neither blessed nor cursed anyone in the process. It was just business and risk-taking.
No, I think he meant that he wasnt greedy. Being greedy (and stupid) would have been boosting the price and moving away and letting the realtor try to sell it. I am learning that some of my co-workers have two mortgages, not flippers but trying to max their selling price. The market is not being kind to them now.
SidneyPrice above said “Being greedy (and stupid) would have been boosting the price and moving away and letting the realtor try to sell it.”
—That’s exactlly what a military co-worker of mine here in South Florida did a month and a half ago. House is still empty! It was very interesting watching him go through the entire scenario that we have come to see as the phsycological routine of many of these sellers. For the first several months he did the FSBO routine (will sell easy at high price because it is special). Finally about 6 weeks before his transfer he listed with a realtor along with a 25K price cut (though still overpriced in my opinion). When he left 6 weeks ago, his comments were, “I hope none of the high school kids vandalize it or a hurricane hits before I get an offer!” I was flabergasted! He is into his second month of paying PITI and utilities for an empty house. I explained to him well in advance the whole concept of chasing a falling market, price to sell, etc., but he was certain that a rich Venezeulean or Colombian would show up to buy it. After all, that’s what makes the South Florida market special, don’t you know. These kinds of sellers have some imaginary price point in their head and feel they deserve the profit. They feel cheated out of profits that never existed (paper profits) and hate to price lower, even though they are still making a lot of money.
One of few sellers with enough sense to realize he was making out like a bandit. Teehee, i know several guys who “won’t sell for that little”, even tho the little is like a LOT if you had to save it—like 200-250K. They will wait til market improves right… most of these people lost asses in dot.com bust too, so one would think… oh never mind.
“Experts in market psychology say stubborn sellers have a classic case of denial.”
What a difference a year makes. In July 2005 the NY Times published a piece titled “Fear of Committing?”. The Times piece quoted psychiatrists about the “denial” some people have that prevent them from buying a home:
“”There are so many levels to this situation,” said Dr. Ann S. Maloney, an Upper East Side psychiatrist who recognizes the routine guises of denial. “A lot of people will say they are afraid of losing their investment. The classic is, ‘We’re looking for a perfect place.’ The next one is, ‘We’re waiting for what we can afford.’ ”
That form of denial doesn’t seem like a hang-up now. More like a survival instinct.
I am a proud, card-carrying member of the San Diego chapter of the “Renters Denial Club” since 2001. Our mission statement: We are in complete denial looking for the “perfect place” here in sunny San Diego. It’s has nothing to do with the complete disconnect prices have from reality. Nothing whatsoever.
I found this on web page (and saved it):
http://www.elliman.com/MainSite/Company/News_Detail.aspx?ID=957
It should be the above mentioned NYT article or, at least, the essence of it: Not buying real estate is medicinalized as mental illness. Disgusting!
Here’s the link to the original on the Times’ website. To me marks The Top of the Market, July 31, 2005:
http://www.nytimes.com/2005/07/31/realestate/31cover.html?ex=1155096000&en=a2443e652654cc0a&ei=5070
I how about paragraphobia. This guy should find the enter key and use it once in a while/
Finally, Seattle is showing weakness.
http://seattletimes.nwsource.com/html/localnews/2003181723_webhomes07.html
Actually, Seattle’s been showing weakness since last fall, with a nice little bounce late spring/early summer.
The difference now is that SOME realtors are finally getting SOME honesty on board.
And that IS a cause for celebration.
Seattle is late to the party…the dot com crash slowed the building of condos. Now we have an abundance of condos (Seattle and eastside) hitting the market next year.
Back at the ranch in Idaho, the bubble party marches on:
“The Westpark Company submitted an application for Mayfield Springs, a 909-acre, 2,492-home planned community along Interstate 84 approximately 14 miles east of Boise near the Boise Stage Stop and Elmore County line.”
For those of you not familiar with Idaho, this is the boondocks with nothing but sagebrush for miles. Of couse the bubble is due to a land shortage and I’m sure it’ll be a tight squeeze for these home being built in the middle of the desert.
Right - windy, flat, no trees, nothing. But for anyone commuting into Boise from Mountain Home - its 20 miles closer right? If you’d live in ‘Mountain Home’ (a euphamism on the same plane as ‘Greenland’), the Boise Stage Stop probably doesn’t look so bad. Problem is 2492 houses would house 2/3 if not all of Mountain Home outside the air base.
they are not making any more land, you know
From the article:
“And for every bubble guy, there’s one who thinks prices overall are about right, given mortgage rates that are still low by historic standards and other measures of affordability. “My view is that the run-up of home prices has been driven by the fundamentals,” says Dick Peach, an economist with the Federal Reserve Bank of New York. He figures we’ll have a soft landing.”
I just don’t get it…what “fundamentals” make the prices “about right”??? I get how low mortgage rates etc. could run the prices up in the first place, but what makes him say they are “about right” now? Every article that contains quotes like this without getting into the meat of “other measures of affordability” drives me up a wall.
FUNDAMENTALS!??!?!?! 40% Speculators???? 80% of Ca using NegAm/Pay Option ARMS??? WTF???
Richard Peach
Vice President
Macroeconomic and Monetary Studies Function
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Phone (212) 720-5654
Fax (212) 720-1844
richard.peach@ny.frb.org
____________________________________________
Let this clown know what we think of his FUNDAMENTALS!
No don’t! Let him pop the bubble!
Peach said interest rates are a fundamental. So now that they are much higher than they were a year ago, I guess we can say the bubble has fundamentally popped…
Richard Peach
Vice President
Macroeconomic and Monetary Studies Function
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Phone (212) 720-5654
Fax (212) 720-1844
richard.peach@ny.frb.org
And I just don’t get it either…..After watching “property Ladder” and “flip this house” I still don’t understand the math that a shoddy $500 paint job adds $10K in value. Why do people overpay so drastically for cheap “improvements” they could do themselves ?
BTW - this Peach guy worked for the following (per his RESUME):
NAR and MBA!
Fortunately he’s not on the current FOMC voting roster.
It’s actually a lot more basic than most people acknowledge. Simple really. When the underlying notion that a loan is there to eventually get paid off vanishes, no one should be surprised what the end result will be. The basis for every day economics don’t go disappear just because some dumbshits got loans. Those lenders want their money. It’s that simple.
will he lose his cushy gov job if he’s wrong ?
No
The Fed is not a government agency.
TOA reports after the bell:
TOUSA Reports Second Quarter 2006 Financial Results
Monday August 7, 6:14 pm ET
Highlights of the second quarter include (compared to the prior year period):
— Net income of $67.6 million, a 48% increase
— Homebuilding revenues of $659.6 million, a 7% increase
— Combined(1) net sales orders of 2,117, a 34% decrease
— Stockholder’s equity of $1.1 billion
— Revised 2006 net income guidance to a range between
$231.0 million and $262.0 million
With the quote “an after-tax charge of $4.0 million (or $0.07 per diluted share) for severance and other costs associated with streamlining the organization for the quarter ended June 30, 2006.”
Not good for TOA, but great news for housing bears!
Dick Peach from the FED of NY - Worked for the MBA and the NAR. Sounds like they have an impartial guy!
The Northern Virginia July numbers are out. Nasty.
http://www.nvar.com/market/marketstats/jul06/index.html
Alexandria City SFH’s appreciated by $1 YoY, from $599,999 to $600,000. Now that’s what I call a powerhouse investment!!
Five more years of this kind of growth and Alexandria SFH owners will be able to do a cash-out refi and use their $5 in appreciation to buy a value meal from McDonald’s (if inflation hasn’t drive the cost over $5 by that point).
LOL
Fauquier County was up $50. woo hoo. 730 properties are on the market, and there are 54 under contract.
WTF….one of my friends has a 2bd 1bth on Crowell St in San Diego, kinda has a view of the airport and the bay behind the airport. He paid 640k 2 yrs ago and now his realtor has offered him 950k for it. I told my wife either the realtor is full of s*it or a complete idiot.
2bd &1bth….nearly $1m…..I thought the market was flat here.
There was a house for sale in my neighborhood in the southeast at 300K… It sat there for about three months, with no real signs of interest. Then a realtor came along and bought it for 300K, and then immediately put it back on the market for 350K. It’s been sitting for the past two months, no traffic.
My point is that there are some pretty dumb realtors out there.
-mr. b.
I live in a small, historic village in MD.- no shops, restaurants, nothing but some great old houses and pristine farmland- an hour from D.C. There is a rail station 5 minutes away, but more commute the clusterf’d roads than ride. Just over South Mtn., a 2 minute drive, they’ve begun cutting in roads and laying pipe for what must be at least a few new houses. I was passing as the foreman was driving out, and asked if he thought they’d sell any houses in this market, and he chuckled and said “I doubt it” and I said “well, at least you’re working” and he gave me a big smile and nodded. This land is part of a realtor-owned parcel of maybe 100 acres, with a gorgeous stone house/big barn, and a Victorian, both of which on the market well over a year. This construction has only begun within the last few weeks, and I’m astounded by the stupid timing. Two recently built McMansions nearby have been sitting empty for months since completion. I can only surmise that the builders are clueless, or they feel they can squeak in a few sales before the market is totally belly-up. One would think that the fact that NOTHING has been moving here would be an indicator to even the most dense. I hadn’t seen land listed, so I’m hoping the realtor couple are building these and they’ll lose their shirts.
But don’t they have to take a part-time 3-mth course and pass the final with a mark of >50%, demonstrating that they briefly retained half of what little they learned? They’re experts!
And just what did little Johnny have to say about ‘Holly Schiller’ and her plight?
“Holly, holly auction, free, free, free” !
I guess Holly better dust off the ole dildo and put it back in service!!
“She’s renting out another property at a loss, while trying to sell that one too ……”
“They keep telling me 1,000 people a day move to Florida,’ she says. ‘I don’t know where they’re going”.
Get a clue Holly. They’re enjoying life with all the money saved, while at the same time renting a place as nice as yours for 1/3 the price of buying it. Incidentally, I have a friend moving to town that needs somewhere to crash for awhile, so if you wouldn’t mind stopping by with a rental agreement for that other place you own ……
I’ve always marveled at the attitude of gamblers who win big then proceed to give it all back with the explanation that ‘it’s just the house’s money anyway.’ Seems these days it was always the houses money - easy come, hard go.
Good one! Houses money - easy come, hard go.
The house always wins.
“Sellers are stubborn, so there’s a standoff.”
WOOT! See?! The sellers are stubborn! It’s NOT the buyers! I TOLD you!
“They keep telling me 1,000 people a day move to Florida,’ she says. ‘I don’t know where they’re going”
Umm, a wild guess - they are renting from you, at your loss.
It might not be such a good idea to rent right now from a flopped flipper who is taking a loss on the difference between your rent and his expenses. People are starting to get a bit testy around these parts (Florida). I think it is the combination of the real estate and financial markets, the ferocious heat and the bad news that hits relentlessly, day after day. Like today, with the Alaska pipeline going off line. (Suspicious timing, that) Used to be, tenants in trouble resented the landlord when they were being evicted and sometimes trashed the premises. With conditions as they are, I can see a reversal where landlords who have to rent at a loss resent their tenants. The way things are going right now, the less I am a potential target for the resentment of those less fortunate, the better.
“They keep telling me 1,000 people a day move to Florida”
..how many a day are moving OUT of Florida?
“Some sellers figure they’re lucky to be getting out. Hewitt Hymas, a Navy commander reassigned from San Diego to Annapolis, Md., just sold his four-bedroom home for $476,000 (which he bought for $280,000 in 2002). Hymas relandscaped the yard, spent $7,000 on kitchen upgrades and eventually dropped the price by $18,000. ‘People around us still live with a heyday mentality,’ he says. ‘They got used to the boom and were asking ridiculous prices.’ He made a command decision not to be greedy and moved on.”
Excuse me, but isn’t asking almost double what he paid for the place four years ago ridiculous too? Talk about the pot calling the kettle black.
Gosh, I haven’t heard that saying in a long long time!!!!
This guy is greedy, but not like most. If I was in his shoes, I would lowball the house and get out asap. Others are in denial.
Is anyone else getting a laugh out of tv shows like house hunters, both domestic and international, where people o’r the water are paying even more ridiculous prices for wrecks than people are here? Or shows like what you get for the money that are even tonite, showing people telling everyone to move to vegas as the prices have no where to go but up! LOL!!!
A cartoon is worth a million words when it comes to the housing bubble.
http://www.time.com/time/cartoons/20060805/7.html
OT
Asked if he was surprised by the closing, at first, a tight-lipped Gilliland said, “No comment.” Later, he said that it’s not surprising that Palms is closing offices, given that “Sarasota’s real estate market was off by, what, about 40 percent this year?” At the time of the merger, the partners had hoped to weather a 15 percent drop in sales, Gilliland said.
http://heraldtribune.com/apps/pbcs.dll/article?AID=/20060808/BUSINESS/608080676
This is funny from 2004, talk about doomsday:
http://www.the7thfire.com/debt_elimination/bursting_of_the_housing_bubble.htm
But in Tucson everything is rosy because “it’s different here” :
http://www.azstarnet.com/business/141168.php
Sweet. And its got all of 3 bedrooms! No worry, I can guarantee this house will be one giant tax write-off. Easy to do when your corporate jet is parked out front.
While Time magazine is a complete piece of junk, that they have finally caught up with reality and are making the busting bubble mainstream with such articles is good news.
All we need is an Oprah housing bubble special, and we’re all set.
man that is so true. i cant wait for next spring’s show when everyone in the audience gets a free condo!!
it wont be as good of a deal as an american pos car, but it’s marginally better than getting a timeshare.
Oafrah had something re: housing - not the bubble and she had a series on America’s Debt Diet.
Stupid sheople will not do anything even if Oafrah says to do so. Too ingrained in them..