‘A Realistic Market Seems Like A Good Thing All Around’
It’s Friday desk clearing time for this blogger. “‘Consumers held the least favorable home-buying plans since the low point in the 1990 recession, which indicates continued declines in sales of new and existing homes during the year ahead,’ according to Richard Curtin, of the University of Michigan’s Survey of Consumers.”
The Arizona Republic. “There is a three-year supply of homes on the market in Johnson Ranch near Queen Creek, a real-estate agent told reporter Betty Beard. Agents are encouraging sellers to, gasp, lower their prices, sometimes below appraisal. Throughout the craziness last year, a few moderating voices warned of the inevitable ‘bubble,’ but there was no sense that it would burst so soon.”
“A stabilized, more realistic market seems like a good thing all around.”
From Massachusetts. “Nearly twice as many Fitchburg homeowners have lost their homes to foreclosure during the last 12 months compared to the previous year. Foreclosures will most likely continue to rise for at least the next year, Jeremy Shapiro said. ‘A lot of people haven’t even been hit by rate increases yet,’ he said. ‘We’re definitely going to be seeing an increase down the road.’”
“Housing in Russia has been growing in value ahead of inflation ever since a housing market appeared in the country, but the prices have made a particularly impressive leap only recently. (Broker) Natalia Kirpichenko laughed at the official figures. She said the Moscow market ‘is poised for housing costs of six or six and a half thousand dollars per square meter.’ The fact is that well-to-do people in Moscow and Russia have nowhere else to invest their extra money.”
“There is a reason to be cautious when it comes to Dubai property - the boom in prices is a bubble waiting to burst, fed principally by speculative purchases. Media reported that 85% of off-plan flats and 50% of off-plan villas were bought by speculators. In other words, the majority of those buying have no intention of living there.”
“Kevin Fleury, a mortgage broker specialising in overseas loans (says) an exit strategy is needed. With Dubai, though, there isn’t one. ‘There is a severe danger that there will be an oversupply because so much is being built. This will suppress rents and capital growth, and I think many people will find it difficult to sell.”
From Seattle. “A local developer is betting Seattle urbanites are primed to carve out their own two-truck chunks of Belltown. The moda condos promise ‘New York-style living,’ with units as small as 296 square feet. ‘I like having everything in just one room,” Debra Smith said.”
“Erin Stines, one of the first Montreux buyers, said, ‘It was easy to clean. I didn’t really have money for furniture.’”
From Berkeley. “Last month a total of 7,941 houses and condominiums sold in the Bay Area region, the lowest July numbers since 1996. ‘Housing prices are falling, but I believe in real estate cycles,’ said agent Judy Glick, ‘We have entered a cycle where there was abnormal inflation in the past five years and now there is a market adjustment.’”
“Sam Behtash, a in Albany, said, ‘There is no change other than what is expected,’ he said. ‘It’s nothing to worry about, scare the kids or get paparazzi about.’”
“Glenna Breslan said her friends in Berkeley have taken the opposite approach. ‘They are feeling more hopeful,’ she said. ‘They have decided to look for a bigger house instead of adding on because there is an indicator that housing prices are going down.’”
The Capital Times in Wisconsin. “To hear the real estate agents tell it, the housing market has ‘lost steam.’ What they really mean, of course, is that it’s hit a wall, though you won’t get them to admit that publicly. And from all indications it’s not going to improve any time soon.”
“But then, to anyone who’s gone house shopping in Madison recently, this is hardly a revelation. The only surprise is that the market didn’t hit a wall long ago.”
“How ludicrous has it gotten? Two weekends ago, my wife and I stopped at an open house on the near west side to check out a home that a real estate agent might refer to as a ‘charmer.’ But there was nothing charming about the price: $425,000.”
“So, after a quick tour, we thanked the agent for her time and then chuckled out loud as we drove home.’
Another big week! My thanks to those who support this blog. As mentioned before, this blogger is taking Labor Day off, so look for a Bits Bucket and a predictions thread on Monday. Check back this weekend for news, your market observations and topics.
You deserve the day off, Ben - job well done.
Thanks!
To be clear: Ben’s day off = Labor Day Monday
Well it’s labour day up here in BC too - and the weather is supposed to be great - get out and enjoy it!
I can’t remember the last time Ben took a day off. Was it the Fourth? If not, probably Christmas. Never knew anyone who worked/works as many straight days as Ben Jones.
There was an article in the WSJ last week that I saw but forgot to mention here, about a bloggers’ dilemma: To take vacation time or not to take vacation time. But I am glad to hear Ben has made a wise choice. Unfortunately, the housing mania will still be with us when he returns…
The practice of throwing in “free” items with a house should be made illegal. It means these people are able to offset their taxes by the interest payment for the car/plasma TV. It also amounts to “price fixing” because it makes the sale price not accurate.
At closing time, supposing there’s a 20K car and a 5K TV set, and the house was $250K, the transaction sould say
HOUSE: 225K
TV: 5K
CAR: 20K
and make the sale price recorded by the county be the HOUSE line only. If it’s not a permanent fixture (and the IRS has guidelines about this already), you shouldn’t be able to include it in the sale price.
On my Sunday Afternoon letter writing binge this week, I’m going to suggest this to my (CA) legislators.
did every one go on vacation or go to early open house on a long weekend?
The Labor day massacre has begun!
Went to an open house this morning. Overpriced pos flipper here in Shell Beach;800sft; almost $1000/ft. Giving out Starbuck’s cards to get people to look. Been on the market 9 mos already. Normal granite and stainless as well as Prego hardwood floors. Wow. Will keep the sheeples informed.
I recently ordered a piece of furniture from some cabinet makers who I believe will eventually be very famous. They already have a lot of press, but are not as well know as Krenov or Maloof (but they are much much younger).
What struck me about their price for my credenza was that it cost less per square-foot than the typical $hitbox in my neighborhood (Santa Cruz bay), which seems to be in the same $800-$1000 per square foot you are seeing.
Imagine these guys can build an entirely custom piece of furniture out of exotic hardwood (no laminate or particle board in this piece) at a lower price than the average house costs in my neighborhood. They really are fantastic craftsmen who do everything by hand.
I guess if I am going to build a house I should try to talk them into building for me. If house prices keep going up at 15% a year they’ll be a bargain in 2011. It will cost less than KB.
Oliver
In many areas you can buy a plasma screen TV for less per square foot than the house to put it in.
Can I have the name? I am always interested in stuff like that.
gymnastgal32 at yahoo dot com thanks!
txchick,
Sorry about the late reply, but the bame of the makers are the Meier brothers. Their website is here (pardon shameless plug)
http://www.mbfurnituredesign.com/
Oliver
Wow! He covers his floors with pasta sauce? What a concept! Does the acidity keep the termites away, or does it just keep it shiny? -
The Crash has begun on Las Vegas Best Hi-Rise. Took 2 years to complete and the flippers are going to kill each other discounting their not yet finished units. Just received this VIP email. Watch out below.
—->I am writing to you today with an exciting invitation to one of Las Vegas’ most in-demand properties. I have an exclusive listing of a 1609 square foot condominium in tower 4 of Turnberry Place. The unit is located on the 10th floor, offering breathtaking views of the world famous Las Vegas Strip from the 114 square foot terrace. The unit will be completed in October. The lucky new owner will be able to customize the interior, right down to the flooring! Turnberry offers luxury living at its finest. Amenities include a 24-hour guard at the entrance gate, patrolling security, sparkling pool, tennis courts, valet parking and much more. The new owner will also become a member of the exclusive Turnberry Country Club and enjoy all the benefits that go with it. Smaller units, with only two bathrooms, have sold for $925,000, however because I value my ongoing relationship with you, my loyal clients, you may purchase this elite home, ideal vacation home or rental for only $860,000! This offer is not available to the public. If you would like to be among those that own multi-million dollar high-rise condominiums, but for much less, please call me today!
“Glenna Breslan said her friends in Berkeley have taken the opposite approach. ‘They are feeling more hopeful,’ she said. ‘They have decided to look for a bigger house instead of adding on because there is an indicator that housing prices are going down.’”
*******
Hope. Is that kinda like Stucco’s “Wishing Price”?
Or they could have just said:
“Let’s go for a bigger house now while it’s more expensive.”
- “Sam Behtash, a in Albany, said, ‘There is no change other than what is expected,’ he said. ‘It’s nothing to worry about, scare the kids or get paparazzi about.’”
- Like Sammy says….‘It’s nothing to worry about’.
Thats why they call it Berserk-ly !!
Like buying Cisco right after the internet
companies with no earnings crashed. Of course
Cisco later crashed in its own right.
Cote’s “Wishing Price”… credit where credit is due.
Fomr the WSJ:
Housing Chill begins to Pinch Nation’s Banks
“Indeed, banks have begun to warn investors that the housing slowdown is starting to hurt their business. FirstFed Financial Corp., a Santa Monica, Calif., bank with a large mortgage business, said in a securities filing Monday that its mortgage originations were down 47% in July from year-earlier levels. The next day, First Horizon National Corp., a Memphis, Tenn., bank that sells home loans across the country, said it expects mortgage originations to fall by $1 billion in the third quarter due to a falloff in applications. And Punk Ziegel’s Mr. Bove last week cut his rating on Salt Lake City-based Zions Bancorp to a “hold” from a “buy” due to views that the bank, which provides loans to home builders, will experience lower volumes as construction slows and land values decline.”
Have a great day off, Ben!
Don’t I remember a LA Times article about this bank. Headed by a bunch of split tails. They were making subprime loans to anyone who breathed, in the name of diversity in the Peoples Republic of Santa Monica. Not long for this world.For the LA Times to be critical was amazing because of its extreme political correctness.
This is cool. An expert predicts housing market to really bust in September!!
Article at http://www.homepricebubble.com
- ‘I like having everything in just one room,” Debra Smith said.”
“Erin Stines, one of the first Montreux buyers, said, ‘It was easy to clean. I didn’t really have money for furniture.’
- What dummies! Down in Texas you get one free year of house cleaning.
Labor Day Weekend already! I guess that means the peak house selling season is over and sales will drop next month… another month another cliff!
The moda condos promise ‘New York-style living,’ with units as small as 296 square feet.
HAHAHAHAHAHAHAHAHAHAHA!!!
wake up sheeple. it’s not the tiny cramped apartments that make people want to live in NYC.
that’s like saying “it’s like being in a tropical paradise” just because you’re living in a home that’s infested with as many bugs as you’d find in a jungle!!
Well put!
but do they have 3 people who are roommates living in one 300sq ft apartment? that’s NYC living.
I read a story in the Village Voice last year of three actors living in a 400 sq ft studio in the village and the rent was around $2100 a month. not 100% sure though, but it’s close.
296 sq ft? Sounds like someone has been converting storage units into condos.
Oi!
I wanna cry.
I currently live in dowtown Seattle. I’m renting a two-bedroom apartment for $1300/month. The area of my apt is around 920 square feet.
With 296-square-feet condo priced at $149,950, that would mean $507 per square feet. So my current apt should go for 920 s. f. x 507 = $466,440. Good god! If this is not real estate mania, I don’t know what is!!!
My lease will expire in 5 months. If the apt owner decides to convert his apt into condos, I might as well buy a big truck and move my family in it. Oh well, I might as well move to Dafur. I heard that it’s very cheap to leave in the desert. As lord Keynes said, in the long run we’re all dead. I would rather get shot in Dafur than suffocate slowly in a 296 s. ft. condo @ 149,950 with a wife and two kids!
Oh well, maybe it’s not bad after all! What a difference a few months make. I just read a little bit a bout the real estate boom in San Diego around 1888. History will repeat itself! Crash baby crash!
What you are describing is exactly the reason I moved to flyover (so to speak) country when I retired. I’ve lived in the NY area and in Washington, DC and now am in Mobile, Al.
I’ve got a very nice home in a good neighborhood, 3000+ sq ft and after 12 years in this house, my mortgage payment is $425 a month. Plue $300 more for taxes and insurance.
No way would I want to live in some of the places and those homes I’ve seen described here. This geographic area and lifestyle is certainly not for everyone but as I’m originally from Ala, its a good life for me.
I like Mobile, except that it seems to be a hurricane magnet. Wonderful beaches in the area. Beaches far better than any California beaches, in fact.
Or you could move to an apartment like mine in a small city in Bavaria. Same size as yours (but only one bathroom), 660 Euro/month includes everything (heat for Bavarian winter!) but electricity and phone/DSL.
But what blows my mind completely is that it would cost me about 150k Euro to buy a similar place. Germans consider receiving 400 Euro/mo cold rent on a 120k Euro apartment to be something worth mentioning in the listing.
And prices have apparently been very close to flat here for a decade.
Nuts, I tell you.
yes, and you could probably buy a similar place in a small town in former Eastern Germany for below 5K euro…
Germany is the only EU country that has NO housing bubble; probably because they have their own black hole where all Tricky-Trichet’s easy money can disappear in. I’m still surprised that the Dutch are not trying to buy the whole German housing stock and instead buy dubious properties that are thousands of kilometers away from their own place (they buy up parts of Germany near the Dutch border though …).
Why is that nuts? With current interest rates you can borrow at 3-4%. At 4% you are paying EUR 500 a month in interest…..
But I am also guessing that the German apartment or house is solid workmanship unlike the junk they build in US!!!
The 3 to 4% is for the Swedish market but I am guessing that interest rates are similar in Germany.
A quick check shows that a 3 month ARM is running at 3.23% in Sweden. The longest term mortgage is a 10 year ARM at 5%. At that interest the prospect of buying becomes less attractive.
I think the Euro bubble markets could get slaughtered if interest rates return to “normal” levels. It’s much more interest rate sensitive than the US.
I wonder if Germany has tight or difficult lending standards that has partly prevented house price appreciation during the bubble decade?? It is notable that the rest of western Europe is “catching up” to German prices that were very high relatively speaking as of the 1970s.
http://svt.se/svttext/web/pages/232.html
if you want the latest Swedish mortgage rates.
“Rörlig” means variable. The rest is ARMS ranging from 3 months to 10 years.
German homeprices were relatively high in the early eighties compared to neighbour countries like Netherlands and Belgium. German prices have been stable or declining (depending on region) for the last 20 years or so, while they surged in all neighbour countries. In the Netherlands prices are 6-10x higher now than 15 years ago, so instead of very expensive German housing is now very cheap for the Dutch. Because of this, in some German border towns more than 50% of the population are Dutch citizens (because of the Dutch HMD) who work in the Netherlands. German homes are often 2-3x cheaper than 20 km away on the other side of the Dutch border.
I think the major cause for flat home prices in Germany is the enormous cost of the ‘reunion’; this absorbed all the easy money that made home prices surge in other EU countries. Another factor is that Germany lacks most of the homeowner incentives of their neighbours (like the huge HMD and many other housing subsidies of the Netherlands, easy ways of using ‘black money’ to pay for a home like in Belgium etc.).
I agree that the EU bubble markets will get slaughtered when rates and especially lending conditions return to normal (10-year fixed rate mortgage in Netherlands is around 4%; with our 50% HMD that makes an effective 2% rate).
When you say 10 year fixed then it’s a 10 year ARM since it’s probably a thirty year mortgage with fixed interest for 10 years, just like in Sweden and many other Euro countries. It appears that Germans shun the variable or short term mortgages. Quite different from Denmark where interest only (probably completely variable) is the norm now.
But it is clear that housing is not particularly cheap on relative global scale; it’s been at an elevated plateau for many years. However, Bremen is the cheapest large city, so I would guess that, ironically, the border area near Holland is one of the cheapest regions.
It’s funny how two small neighboring countries to Germany like Holland and Denmark have become the two biggest basket cases in the continental bubble in Europe. Although Spain is pretty bad, starting at a low level.
I looked up some articles on German housing and the general trend is that it gets expensive in the south, especially around Munich:
Take the example of a typical detached, one family house of average size; one with about 125 square meters (ca. 1,167 sq. ft) of living space, including garage. Such a place in the former West Germany cost about €255,000. But prices varied considerably by region. Such a house in the north cost only about €185,000. In the west the price was about €235,000, and in the south it was significantly more, coming in at just under €310,000. In cities of more than 500,000 population the price was about €300,000.
The city-state of Bremen was the least expensive of the larger cities. The house described would cost a mere €185,000. At the other end of the scale the Bavarian capital of Munich was far and away the most expensive. The house described could cost €635,000! The price per square meter for privately owned property was only €975 in Bremen and around €2,050 in Munich.
$149,950 for a 296 sq. ft. ==> $507 per sq. ft.
Gold is at $624.40 per oz., so this works out 0.811 oz. per sq. ft.
Good god!!!
if you want proof that housing is a gold mine, there you have it
Dubai. I’ve been there a few times on business. No one who personally reads this blog regularly can play in that game. People who invest in Dubai property have lots of minions who read the blogs for them. It is a very-rich man’s sport, so to speak, and the Emirati are very rich. The princes (Gulf countries have lots of princes, each) own magnificent office buildings along Dubai’s corniche that have ocupancy rates of 30% if they’re lucky. “Doesn’t matter — that’s my building, my jewel.” It’s a fun place to visit if you happen to be out there anyway and it’s not summer, but fugeddabout investing there unless you just won the Powerball and want to put the proceeds to work earning possibly nothing, but you love beautiful buildings.
occupancy
Dubai is gonna crash hard. Once the “investors” realize that no one actually LIKES living in a dictatorship (benevolent as it may be) with broiling summers and no Las Vegas action, they’ll realize they’ve been left holding the bag. It is fugly coastal desert. At least Las Vegas has booze, gambling, and nekkid ladies.
For them it’s like buying race horses. Who cares if it wins…. just another way to flaunt their wealth.
there are lots of small speculators investing in Dubai; average people from the UK, Netherlands, Germany, Oz etc. Most of them are probably ‘investing’ the equity gains from their own bubble, or trying to offload some black money. I do think however that many of these developments have better plans behind them than a lot of the stuff that is sold in the US and Europe.
I know a European who is a first officer for Emirates and he is flipping condos like a madman in Dubai and is convinced that prices will go up forever…… Probably lots of expats and starry-eyed Brits who are leveraging their row house in Kent to buy there because Becks owns a place there and read about it in the Sunday Times RE supplement.
yes, just look at all the advertisements for Dubai properties on British, Aussie and Kiwi real estate websites … I’m sure there are plenty of buyers there who are spending their equity gains on Dubai RE stuff (or in Eastern Europe, the Balkan etc.). I hope they all keep ‘investing’ until the bubble pops, so they get their fair share on the way down.
Some August numbers from New Hampshire.
Real Estate Transfer Tax collected for Aug 06 12.3 million down from 16.7 million in Aug 05. 26 percent drop. This tax is collected on both residential and commercial property sales.
Warning PDF (see page 2 for Actuals)
http://www.admin.state.nh.us/accounting/fy%2007/Monthly%20Rev%20August-07.pdf
Monday is Housing Freedom Day. On that day all the lies will be stripped away, all the houses will be set free from any potential burden of possible sale to unqualified owners, agents and brokers need not remain cogs in the REIC, value will once again reign in the house of the home.
All hail “House Freedom Day 2006.”
only an asset vulture could have such a sense of humor. bravo, robert!
I will rescue you oh my Brave House. You have not been exploited and you will not be my lady. I will swoop down from the skies and bring justice.
Imagine those mile upon mile tracts in Palmdale, Riverside and Phoenix when the first REO breaks down values 40%. The other banks won’t care that 40% off of the highest price only compares to a few of all homes and they won’t care that interest rates also ate 20% of the equivalent price. What they’ll care is that on the books every single mortgage in the entire development is seriously underwater. I’m going to embark on a new career; Mortgage Falcon, MF if you prefer . I will circle overhead watching the lemmings. I’ll visit the County Recorders Office and Assesors Office making sure there aren’t any liens or tax arears. I’ll fly over the houses, looking for garage conversions and cable disconnections and brown lawns. I’ll look for the signs of “going out in style,” the New Tundra and LS450 in the driveway, moving vans, Garage Sales, FSBO ads. And every week I’ll circle down and land on the arm of a banker and wisper in his ear. He’ll reward me with a chunk of flesh from the latest kill. It’ll get so I’m famous. The neighbors will see me and call out in appreciation “Hey! MF! (Mortgage Falcon)” and I’ll continue my patrol, keeping the worlds financial system safe for all mankind.
“…MF if you prefer…”
ROFL
BRAHAHAHAHA!!!!!!!!!!!!!!!!!!
LMAO!
Just don’t wear a cape and tights!!!
Robert Cote , you started way to early drinking for the labor day weekend .lol
‘A Realistic Market Seems Like A Good Thing All Around’
Why start now?
That’s a pretty good article summing up the boom in the Moscow housing market. As a 14 year resident of Russia with about eight years in Moscow I see the drivers of the market as follows:
1. Wealth created due to high commodity prices;
2. Wealth preservation based on prior experience (money lost in
banks/dodgy securities);
3. Lack of alternative investments;
4. Population inflow from not only Russia but the former Soviet
Union;
5. Small companies acquiring apartments as offices due to lack of
office space;
6. Small and medium size provincial companies acquiring apartments
as mini hotels for employees due to lack of reasonable priced
hotel facilities in Moscow;
7. Moscow has no second city or alternative competition as far as
infrastructure in Russia
8. Concentration of cultural, financial, and political establishment in
Moscow (like New York, Washington D.C., and Los Angeles
combined into one city);
9. Soviet legacy of inadequate housing supply in Moscow and
throughout Russia;
10. Shortage of construction companies;
11. Bureaucratic permitting process;
12. Lack of “satellite” business centers around/outskirts of Moscow.
13. Beautiful hot chicks with light morals!!!
The article gives a sqm. price of $3,400 but I would say it is actually closer to $4,000 on average for a good apartment in a good area not located in the center shell and core. I bought an apartment for about $1,400 per sqm in the center off Tverskaya in 1998. I rent this apartment out for $6,000 per month paid quarterly in advance on a long term rental contract to a western company. I bought a second apartment as my primary residence for $1,750 per sqm outside the center in Serebyny Bor (Shukinskaya metro area) in 2004. Apartments in the center sell for about $7,000 per sqm fitted out and about three months ago an apartment sold in my primary residence building for $4,000 per sqm. shell and core. The apartment in the center cost about $80K to fit out and my primary residence cost about $100K which included appliances.
I have always felt that Moscow apartment prices are insane however I guess if you factor in the level of commodity prices and the “trickle down” economics of graft and theft then the prices make sense regardless of what the “average” income is for Moscow residents.
it’s different in Moscow! Haha
when commodity prices decline, we shall see if there is a property bubble.
When property prices decline, we shall see if there is an oil bubble.
Indeed we shall, and I believe there is. Maybe even an engineered bubble .
The BP operations in Alaska are a drop of oil in the large bucket of oil. Gasoline prices are expected to fall down to $2 per gallon in the next few months. Perhaps so. But the Middle East oil fields (Saudi Arabia, Kuwait, Iraq, Iran, and so on) are on a decline and expected to produce 25% less by 2012). The oil boom is ahead. That is, profits based on dwindling reserves and field output.
We’ve got a housing bubble, credit bubble, commodities / oil bubble, hedge fund bubble, China bubble… any that I missed? I also happen to think that we’re in a higher education bubble.
We’re living in some strange times. Hopefully the upcoming correction will compel us to reallocate our collective economic resources to more productive uses.
It looks like, generally, these properties sell for $400-450 per square foot. For downtown in the capital city, with virtually no useful alternative, I’ve seen much worse numbers. The aggressive Russian oil exploration, drilling and pumping cannot hurt. Not that I’m in line to buy there…
not only that but it’s cash
my mom sold her mother’s apartment in moscow when she died a few years ago and the buyers brought a bag of cash to the bank to be counted. then paperwork was signed and the money found it’s way to the US a few weeks later.
where people get this cash, you don’t want to know or you may be sleeping with the fishes
Vui Ruskee?
GS–vwi gavarete po ruski, po nemestki, e po fransuski?
Ya ochen ponravales vasha commentary e dumou vwi dolshen buit ochen umny e kulturny chelevek. Esvenite Ya ne otvechal na vasha znakomstveny post v nachala Jul no Ya letal sledeshy dne do Florida za otpusk.
Etot blog ochen interesna. Kak mirovoy razvechikny agentsva protiv RE.
“Ya ochen ponravales vasha commentary e dumou vwi dolshen buit ochen umny e kulturny chelevek.”
Ochen spacebo. Zhal chto ya moyava ruskee vsyo zabuil.
I agree that buying/selling an apartment in Russia is an experience. The first stage is more or less the same as the West–review the apartment, negotiate terms, exchange contracts, etc. The second stage when you get closer to the money exchange is when things get weird.
First the seller doesn’t want to put the negotiated price in the purchase/sales contract. Why? He doesn’t want to pay profit taxes. Usually the buyer has not paid tax on his income so its more or less acceptable between Russians.
This drove me crazy especially with a flat tax rate of 13%. I also wanted the purchase price in the contract in case the sale is called into question and to get my tax basis in the property. We came to an agreement of what the “seller’s” tax liability would be and then I covered 50% of the liability by grossing up the purchase/sales contract.
Then the seller wants payment in cash in USD (new clean bills preferably) instead of wire transfer. I agreed but insisted the cash would be handed over in my bank which eliminated me from hauling a three big bricks around town.
Okay so we sign the contract. After contract signing we go to my bank where I withdraw the cash at the teller window. I had previously ordered the cash from the bank a couple days before to make sure they would have the money available, reserved a private counting room for the parties and bought a safe deposit box for a two month period. Anyways I withdraw the cash and go to the special room where the seller or the seller’s agent and I count the cash. Thank god for cash counting machines. After the cash is counted up and checked for quality it is placed in the safe deposit box which has two keys. One key is for the banker and one key for the owner. The owner’s key is placed in trust with the banker. At this point I obtain the key to the apartment.
The seller has a certain period of time say twenty days to re-register the apartment in the buyer’s name. Upon re-registration and presentation of the new ownership certificate to the banker and a signed receipt accepting the cash in the deposit box, the seller obtains the deposit box owner’s key. Seller then obtains the cash from the deposit box. If the seller does not provide the new ownership certificate within the time frame the banker is required to return the deposit box key back to the buyer. All terms for operating the deposit box are made at the time of setting up/renting the deposit box with the banker. Both the seller and the buyer approve the terms and conditions of the deposit box.
One other point to note is that individuals are required at all times to be registered at some place of residence in Russia. People that are registered at an apartment have some rights to live in the apartment even though they are not the owners which can complicate deals. Always make sure to obtain a document that confirms that only the owner is registered at the apartment—no wife, children, in-laws, etc. If other people are registered you have to get them removed from the register. That way you get free and clear title to the property—hopefully!!!
NICE READ !
I always wondered why there were “more $100 bills in Moscow then the entire US” - now I know…Russians conduct thier business (including RE) in our dollars.
I’m reading very similar stories about some of the Baltic countries. Their capitals also have homeprices that are way above the level that the locals can afford, and the boom has only just started. I’m sure that most of the factors you give for Moscow don’t apply there. Just like in most of the West the major factor is simply speculation, often by foreigners; the fundamentals do not matter (until they do …).
P.S.: my area near the coast has the Dutch record for apartment prices at EUR 11.000 per square meter (that’s about $ 1500/sqft). I should add that there is really nothing to do here and the average income is probably EUR 30.000/year or so. Prices for apartments are relatively equal in many capital cities all over the world, because they have the same (international) customers; local home prices or incomes are usually not a major factor for those prices. For financial capitals prices are often higher because that is were all the easy money is coming from.
One of the big topics in Moscow is that Russia is catching the “Dutch Disease” in regards to the strengthening ruble due to the high commodity export prices i.e. domestic industry losing its competitive position against imports due to ruble appreciation.
I think the Dutch disease had far more to do with the housing bubble than with a strenthening currency (the euro - or ‘pleuro’ as we call it here - is just as week as the US dollar and our M3 growth is even higher). In the last 15 years or so, the Dutch have remodeled their economy after the US example and think they can get rich by financial speculation instead of actually producing something useful. Why work if you can get rich by ‘owning’ a home?
Not a new idea, because they tried this too after the ‘Golden Age’ in the 17th century (and it didn’t work very well then either, but people forget … ). The OESO and IMF made some reports about the flawed (housing) fundamentals of the Dutch economy, but politicians from left to right have chosen to ignore all the warnings and instead do everything they can to expand the housing bubble. It’s tulip mania all over.
are foreclosure rates anywhere near 1990 ?
Foreclosure rates, 1990-2004:
http://makeashorterlink.com/?G1DE62DAD
So in 2000, a sub prime loan was 23 times more likely than a prime loan to default?
That’s staggering!
From Massachusetts. “Nearly twice as many Fitchburg homeowners have lost their homes to foreclosure during the last 12 months compared to the previous year.
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The article references Fitchburg and Leominster which are quite far away from Boston. You have Boston then Route 128, Route 495 farther out with Leominster past 495 so we’re talking the boonies. In earlier boom times, people moved out to these areas so that they could afford a house. But the commutes could be really bad. Everyone knows MA has been losing population and it looks like it is
hitting the faraway places pretty hard.
They are also miserable, blue collar towns.
One Fitchburg resident, Shelly Ciccolini, says she lost her home at 15 Ohio Ave. to foreclosure in mid-August. Ciccolini said she hadn’t been able to make mortgage payments for about a year. She couldn’t work, she explained, because her daughter had been hospitalized with a life-threatening illness. “Now I have nothing,” Ciccolini said with tears in her eyes, sitting at her brother’s house in Fitchburg this week…
Ciccolini, who works at a Dunkin’ Donuts in Fitchburg, says she is staying with relatives and trying to find a better-paying job so she can rebuild her life.
She goes on to say that the economy is not good. But, but, the government and Greedscam and Gentle Ben all say the economy is good. This lady has no hope of getting back on her feet. I know, everyone will jump on me for being a communist, but this is the future for many Americans. At a time when there are more houses than households, millions will be tossed into the street who only wanted one small, crappy house, while friggin’ lowlife loser scum flippers who earn less than this woman control twenty with OPM. Fry flipper scum.
Mort — We agree about the flipper scum. As far as this lady is concerned, why doesn’t her brother take her in, permanently if necessary? That is an action, a tradition, deeply rooted in the US culture, though pointedly not part of the NEA curriculum for government-school students. It also is an ingrained no-brainer in a whole lotta other cultures worldwide.
When you’re in the middle of family health problems, a lot of things can get left undone.
This is nothing new and unique to 2006. Life can be a bitch, and we all gotta deal with it. Why didn’t she sell once it was apparent she was having money problems? Houses were still selling in early 2005.
Mort . This person with the sick kid is the kind of person that the banks should give a break to ,not the fxxxing flippers who messed up on their last flip . I feel no sympathy for people who bought a bunch of toys with their equity and now they can’t pay .
It sounds like they made some effort, she was a year behind on payments. I just wonder why we can’t have affordable housing for all in this country, especially while in the midst of a glut. We both know why we can’t have affordable housing, and it makes me more than a little pi$$y.
“13. Beautiful hot chicks with light morals!!!”
Is this what’s causing Moscow’s housing bubble?
Yea, Silicone bubbles…..
“Consumers’ attitudes about home buying remained low in August, with home-buying plans falling to the lowest level since 1990, according to a consumer confidence report.”
So who is buying now then? Only illiterates who don’t watch TV? I guess they are a group with high credit scores…
‘I like having everything in just one room,” Debra Smith said.”
Good. We’ll call your new room the iHole. Everybody who is anybody will want one. I mean they are sooooo “trendy”.
Considering most of the women I know have more than a single room’s worth of just shoes and clothes…
Unless you are some new breed of female….get real Deb!
Speaking of Deb, we have not heard much from her recently.
How’s things in SFV, Deb?
iHole…LOL!
I don’t have a problem with these, it’s the price that kills me.
From Seattle. “A local developer is betting Seattle urbanites are primed to carve out their own two-truck chunks of Belltown. The moda condos promise ‘New York-style living,’ with units as small as 296 square feet. ‘I like having everything in just one room,” Debra Smith said.”
whoa.. am I reading this correctly.. 296 sq. ft.. is that to live in.. ? I remember at one point I rented an 800 sq. ft. apt. and it was so tiny I felt as though the walls were caving in.. I cannot fathom 296… pls tell me that is the closet!
From Seattle. “A local developer is betting Seattle urbanites are primed to carve out their own two-truck chunks of Belltown. The moda condos promise ‘New York-style living,’ with units as small as 296 square feet. ‘I like having everything in just one room,” Debra Smith said.”
~ There is the marketing phrase.. ‘New York Style Living’.. is that under the stairwell or something ? What a rip-off !
This is slightly OT, so I apolgize ahead of time.
Has anyone else noticed that nobody wants to talk about housing anymore? It used to be very good evening converstaion when out with another couple, now nobody wants to touch it?
I wonder if that’s because they feel bad about what’s happening to other people? Or maybe they bought at the wrong time? Or they are leveraged to death?
Whatever the reason, people could not stop talking about it 9 months ago. Everyone pointed out that I had “missed” 100K of appreciation because I was renting my condo, and did not buy it. It was overpriced then, before 100K was added to the price, but that did not stop people from ribbing me about it.
I wonder, if I were to rib them about how much money they are losing every day, if they would be as nice as I was?
It’s all fun and games until it’s them getting skewered.
“everyone’s a Darwinist
until they’re someone else’s lunch.”
From Buk-y Ball
I was at an office happy hour last night and this lady said that one of her neighbors (a lady) literally fainted in her arms after confessing she and her husband owned three investment properties in Phoenix with toxic loans and that they’ve been sitting for sale for 9 months with nary a offer. This could get really ugly, really soon.
A *Realist* market is one where house are affordable with a 30 year fixed rate mortgage. We have a long way
D
O
W
N
to go.