‘Purely Financial Investments That Sit Empty’
A housing report from the Idaho Statesman. “In the Treasure Valley, the (OFHEO) report proves the housing market remains strong despite a drop in sales since the second quarter ended June 30, said Dan Givens of a Boise-based real estate firm. Not everyone views the local market so positively. George Tallabas, a veteran real estate agent in Nampa, said second-quarter data is already too old to reflect the softening local market.”
“Quoting statistics compiled by the Intermountain MLS, Tallabas said 1,247 new and existing homes were for sale Tuesday in the popular $250,000 to $350,000 price range, and they are sitting on the market an average 45 days.”
“‘That was unheard of a year ago,’ Tallabas said. And what I’m hearing from (real estate) agents is that they’re struggling, that their (sales) numbers are clearly down.’”
“Ted Martinez, a local representative to the National Homebuilders Association, predicted that housing sales will pick up again because area homes remain affordable compared with other markets. ‘What the market is doing is going through a correction, which it really needed,’ Martinez said. ‘It’s getting down to where it’s reasonable.’”
From Planet Jackson Hole in Wyoming. “For (Broker) Ron Miller, and many like him, the Jackson Hole real estate market is a cash cow, a golden goose, with an unlimited future.”
“‘In Jackson, the market doesn’t really go down,’ said (realtor) Linda Walker. Broker Ryan Olsen agrees. ‘We are immune to the up and down treads that plague many real estate markets,’ he says. ‘Our real estate market is essentially quite ‘bullet proof!’”
“‘I’ve always been amazed with this market,’ David Viehman says. Viehman compiles an in-depth look at real estate trends in the Jackson Hole area. ‘I’ve been in real estate for 25 years and I still think, ‘This is crazy. Why would anybody pay these kinds of prices?’ To make ‘those’ kinds of profit, would be the pat answer.’”
“‘This is a real active market now,’ Walker says. ‘With low inventories, buyers are getting off the fence,’ Viehman says. ‘Maybe their spouses are elbowing them and saying ‘we better get on this before it takes off.’ That feeds an urgency.’”
“Available property may be at an all-time low but ‘dirt pimps’ are flocking to real estate courses like ravens to an elk kill. ‘There are almost 700 realtors in Jackson Hole,’ Walker says. ‘That’s a lot. A lot of real estate agents have a main job because they are not selling.’ Miller wonders. “There’s only about 40 of us who do any volume. The rest of them, I don’t know how they’re making a living.’”
“Indications are a growing number of high-end properties in Jackson Hole are no longer vacation or second homes, but purely financial investments that sit empty. It is a trend noticed by one agent, Ray Elser, when he sees a ’spec home’ change hands ‘three, four, and five times before construction is ever completed.’”
“Sure, property taxes soar with each reassessment but banks keep homeowners ahead by refinancing Jacksonites into their neo-wealth status. ‘You don’t have to sell a property to realize gain,’ Miller says. ‘You can get a new appraisal and borrow against the property and then go buy more properties. And when you borrow the money back, a lot of people don’t realize when you go get an equity loan it is not a taxable event. So you’re better off pulling a million dollars out of a property, tax-free, and buying more with that.’”
“‘Real estate values will continue to increase,’ Elser says. ‘My crystal ball can only see so far,” Viehman says, “it’s a little foggy, but there doesn’t seem to be anything that’s going to change the course.’”
Broker Ryan Olsen: ‘We are immune to the up and down treads that plague many real estate markets,’ he says. ‘Our real estate market is essentially quite ‘bullet proof!’”
Quick Boy Wonder! To the archives! Posterity shall not be denied!
‘We are immune to the up and down treads that plague many real estate markets,’ he says. ‘Our real estate market is essentially quite ‘bullet proof!’”
“My giant is invinceable!”
We need to quarantine Wyoming. Those are the greatest fools of all, and we don’t need them mixing in with the population. Perhaps we can do some sort of exchange with another country. We’ll give you 100,000 of the stupidest americans, and you give us 1,000 of your doctors, engineers and scientist.
Yes. This will go down as one of the all-time greats.
And did you see the figure of 700 (seven hundred) realtors in JH?! Total population is 10-15,000, I think.
Let us see …
- 1 Dan Givens says - UP !
- 2 George Tallabas - softening local market.
- 3 Tallabas said - they’re struggling
- 4 Ted Martinez - predicted pick up again
- 5 Linda Walker - market doesn’t really go down .
- 5 Ryan Olsen agrees - ‘We are immune quite ‘bullet proof!’
- 6 David Viehman says ‘DOWN’
- 7 Ray Elser says. ‘My crystal ball is a little foggy,
- HELP! I feel SO CONFLICTED.
Magic 8 Ball says: “Outlook not so good.”
Miller : maybe the fog in your crystal ball is the following:
Mortgage Interest rates hit a 5 month low
But sales continue to decline month after month,
Inverntory skyrockets to new highs weekly,
Builders keep bulding more,
Mortgage applications weaken month over month so that the end of the summer SALES season saw same number of application as last December….
Go figure, “its a great real estate market, want to buy my place? Ron miller
I had to wiki it… Jackson Hole, as of 2000 census has a population of 8,647 and 3,631 households. So basically, there’s a realtor 1 out of every 5 households. I’m guessing the other 4 out of 5 has a mortgage lender.
Maybe Jackson Hole hasn’t gotten the word yet that the other 49 states are experiencing a national housing bubble crash.
Do they get internet connection out there in JH? Someone should maybe send them a telegram or something to get them up to speed. Morse code? Pony express? Smoke signals? For gosh sakes someone has to tell them.
Same thing in Seattle. As Dave Barry says, “Mt. St. Helens erupted in 1980, but no one in Seattle is aware of this yet because the weather has been pretty cloudy.”
HAHAHAHA……..well said
Hey, don’t complain. Look at it this way: We get to enjoy the shock and surprise as the market clearly turns in leading-edge areas. At the same time, we get to enjoy the sheer delusion still going in in trailing-edge areas like JH. A year ago, all we had to enjoy was “feed the squirrel” stories. Now we are seeing the denial (Jackson) and the result of that denial (Boston) simultaneously. I like it. Still, someone should send them a memo. They look so foolish I almost feel bad for them.
Even I’m enjoying feeling the change, and I’ve not been here a year yet. Now, as opposed to even just a couple months ago, I don’t get all upset at my tv when I see pundiots on CNBC get on and say things are probably at a bottom right now and will maybe maybe flatline for a while. I can be calm, much more confident in my feelings. Where do any of these people get the idea that things will improve is what I wonder instead…
“Where do any of these people get the idea that things will improve is what I wonder instead…”
Thats just it, they’ don’t. Most of them are just talking heads told what to say by a boss with interests in other places
“Thats just it, they’ don’t. Most of them are just talking heads told what to say by a boss with interests in other places.”
I can just picture it. The big boss in charge of the broadcast says “I don’t want to see one story about dropping prices until I sell my places you hear me?!
Are the wealthy on to something here? Do they establish holding companies to buy and refi these properties, take out the cash, and then let the holding company declare BK when everything collapses at the end of the game? I’m sure the mortgage brokers are in on these shenanigans, getting their commissions with each new sale or refi. Wow!
Yes and then they buy the properties back from their banking buddies for pennies on the dollar.
Stay right where you are. The black helicopters are coming to erase your memory.
Seriously. People don’t understnd this is one of the reasons for the home mortgage deduction. Without the HMID rich people would do the shennigans you outline.
It is much easier just to back date options.
wealthy people do this all the time in the Netherlands; I’m sure it must be happening in many countries.
Ugh, are you kidding me? Homes sitting empty, flipped 3-4 times before completion? And this guy’s comment is “its a little foggy” but going to keep going up?
Someone tell me, where do I get the Kool-Aid. I am ready for my blissful ride on the train for snowball debt. They all seem so happy, I just don’t understand it. Don’t they realize what’s about to happen?
I tell you, that Kool Aid is good stuff. Do I have to go right to David to get it, or can I just go to any bank, state my income at 500K a year, get a crushing bank note, and go buy something?
Florida 1926. Same sh!t different State.
Indeed. Here’s a link to the University of Virginia’s American history project. Close your eyes, and enter 1925….
http://xroads.virginia.edu/~hyper/Allen/ch11.html
Interesting that this story is told in Chapter 11…
lol.
“Most of the millions piled up in paper profits had melted away, many of the millions sunk in developments had been sunk for good and all, the vast inverted pyramid of credit had toppled to earth, and the lesson of the economic falsity of a scheme of land values based upon grandiose plans, preposterous expectations, and hot air had been taught in a long agony of deflation.”
Hmmmmmm
this has been going on in my country for many years; there is a load of very expensive properties in my area (priced around 750K euro, that’s about 30x median income) that have been sitting empty for sometimes more than 5 years. Property values just keep increasing so why bother finding someone to rent? And as mentioned higher up in this thread, you can use the increased property value to buy more properties without putting anything down.
I’m sure it will end, but manias like this go on much longer than anyone can imagine.
> Ugh, are you kidding me? Homes sitting empty, flipped 3-4 times before completion?
They might not be empty, they could be doing what others are doing in Elk Grove, CA. i.e. the highly flipped properties are being used as indoor grow houses.
See this outstanding post for good details:
http://tinyurl.com/phnm4
From the WSJ:
Housing Slowdown Takes Its Toll
“The housing correction is just in its early stages now,” said Joseph Carson of AllianceBernstein, who forecast a 5% decline for 2007. “Existing home prices have come down to no-change on a year-to-year basis. For new homes, prices are below year-ago levels when you include added features. The prices will have to go lower to give demand a lift in short term.”
Also be sure to check out the rest of the forecasts Here
A great visual in the forecast frameset of a house-as-dragster with its drouge chute out.
5% ? I’m already off 8% in 22151 N VA and we just slowed down last fall
how can that be the worst estimate ?
“The housing correction is just in its early stages now,” said Joseph Carson of AllianceBernstein, who forecast a 5% decline for 2007. “Existing home prices have come down to no-change on a year-to-year basis. For new homes, prices are below year-ago levels when you include added features. The prices will have to go lower to give demand a lift in short term.”
Even in So. Cal. we have passed the “tipping point” all of this blather is looking backwards. Not today, let alone the future. Add zero’s to your 5 and 8% and head for the bomb shelters.
They show only 1-in-4 for a recession in the next 12 months. Should be at least 50-50, IMO, led by housing and the Fed now is pretty much helpless to stop it.
Those last two paragraphs make me want to yak all over my keyboard.
“Sure, property taxes soar with each reassessment but banks keep homeowners ahead by refinancing…..”when you go get an equity loan it is not a taxable event.”
So, in order to pay taxes, refinance, afterall, loaned money is non-taxable. Did he really hear himself?
” ‘My crystal ball can only see so far,” Viehman says, “it’s a little foggy, but there doesn’t seem to be anything that’s going to change the course.’”
I think he is fogging up his crystal ball with his own hot air.
From the Jackson reference:
“The least expensive single-family home [in Jackson], three-bed, two-bath, 1,664-square foot unit listing for $585,000.”
How many hunders does he want? This is about the cheapest SFR in my area as well. Does he think SoCal is bulletproof as well? Can someone ship me a bottle of Jackson tap water? Yummmm, tastes like Jim Jones’ Jungle Kool-Aid. JimJones,… BenJones… nawwww.
These ’sure thing’ boys have that most desirable of opprotunities: Foreknowledge. At this point in the RE game, they will be running at the back of the herd, watching waves of sheeple plunge over the cliff unable to stop. After Vegas, Miami, LA, Phoenix and the rest burn alive, Jackson Hole gets to watch it all, and wait for the fire.
ROTFLOL
:)
From the Jackson reference:
“The least expensive single-family home [in Jackson], three-bed, two-bath, 1,664-square foot unit listing for $585,000.”
How many hundreds does he want? This is about the cheapest SFR in my area as well. Does he think SoCal is bulletproof as well? Can someone ship me a bottle of Jackson Hole tap water? Yummmm, tastes like Jim Jones’ Jungle Kool-Aid. JimJones,… BenJones… nawwww.
anyone here feeling HIC slow down side effects ?
I sell to service contractors and it scks
they all got back in bed w the builders
Here’s another mountain state report. Billings (MT) Gazette talking about the HPI. Realtors express relentless optimism, of course, but it includes some interesting quotes from a guy who seems like he might “get it”:
Paul Polzin, director of the Bureau of Business and Economic Research at the University of Montana, said the data suggest “a softening of the housing market in Montana and its three (largest) urban areas.”
He also said it shows that Montana housing prices are following national trends, debunking the conventional wisdom that “hordes of immigrants” are driving up housing prices here.
Rising home prices in recent years had more to do with national factors, such as low interest rates and a rush of real estate investment, Polzin said.
Seems like he’s directly flying in the face of the claim that “it’s different here” and that everyone will be moving here.
Home prices rising, but slower than a year ago
tlm,
You have NO IDEA how long I have hungered for that brand of candor here in Oregon. Here we’re fed a steady diet of “equity rich nomads” fueling our 2nd tier local market! Since our primary industry is building retirement homes for equity fat CA’s (or so they think) no one wants to be the first to break that taboo. In MT it’s more of a “pure play”. Big Sky Country and cattle ranchin’ as far as the eye can see, but in Oregon we’re told the reason that downtown Portland lofts AND far flung places are apprecitaing is from the same demographic? So which is it? Nightlife loving CA’s or hermit life loving CA’s?
Like Ben says, so much of this 2nd/vacation home B.S is just another excuse to speculate. We only need 1 CA in 25 transactions to heat up the mix and give “credibility” to this absurd claim.
This is the first voice of reason I’ve seen here, and hopefully Oregon begins to get it soon. Desert-like eastern Montana has not gotten much of the “equity nomads” line, but there’s a lot of denial along the lines of “Vegas and California and Florida, sure. But no bubble here. Period.”
Interestingly, huge downtown loft conversions and smaller “funky urban living” condos are going in even in downtown Billings. Prices up to $450,000, I believe. Small problem, though, they are not selling. At all. I’m researching these and will post a video within the next week. I could only find one sold unit out of a few dozen, most on the market for many months.
Does say Starbucks have a real estate subsidiary sponsoring ‘funky urban living’ developers?! I wonder, because somehow the idea of funky urban lofts in downtown Billings only seems possible in the age of Starbucks. But for how long can proximity to a place to buy lattes, even if the air is fresh, while you talk on your cell phone be enough to tempt folks to spend .5 million on an apartment in Billings!? Sometimes I feel like the Kool-Aid of our era is actually Cappuccino. on Credit. Froth from froth. I wonder if any of the 700 Real Estate agents in Jackson Hole are also barristas. I love the stuff, but coffee’s psychactive properties might be underestimated
cheers all!
I grew up in Billings. The idea of $450K for downtown living in Billings is ludicrous. There are some other large developments rising up all around town (Ironwood is one, I believe). The local economy is terrible. I don’t think they built a single new house in that town while I was in High School 88-92. This will be unbelievably horrendous. I’d hate to be a flipper with an empty house. You cannot evict squatters in the winter in MT, and belive me, the winters are LONG.
Ironwood Estates:
10 miles from downtown (in Billings, that’s aways)
First house built 2002
Approximately 100 houses standing today
17 for sale (median $450,000)
New phase started, building like there’s no tomorrow
Dozens/Hundreds? of high-end houses being built in new subdivisions nearby
Trouble?
I couldn’t stop shaking my head as I counted the inventory. Ironwood is a major section of the upcoming video. Something tells me 2008-2012 looks like 88-92. Thanks for the info.
Bu-bu-bu-bu-bu-Billings?
Keep a copy of that video, you can sell it to the History Channel for their special feature on the Greater Depression.
From the Encyclopedia Internetica:
“Yes, kids. Even Billings, Montana was infected. The Bubble knew no bounds. Imagine: $450,000 factory lofts in Billings, Montana. The state with the second lowest per-capita income in the country at the time. Crappy lofts had asking prices of almost 18 times the per capita income! Montana, for heaven’s sake, where the men are men, the antelope are nervous, and dental floss grows on bushes! And Billings, whose Wikipedia page at the time (according to the WayBack machine) had nothing to say about the local economy except that one of its companies was defunct and three others were unlinked, out of a total of six companies listed. Unconfirmed rumors have it that Montana may have linked to the Internet through primitive modems as early as 2006, although those reports are unconfirmed. As you can see from this primitive “video”, some technology had reached Montana at the time, possibly through trade with tourists. Truely, no place was spared from the ravages of the Real Estate MegaBubble of the early 21st century.”
Yikes!
I would like to ask these builders one question. What the f*** are you smoking? I am sure they can easily be found drowning in their drinks in the corner of the local watering hole. I am beginning to smell the rather potent stench of rotting spec homes and builder BK’s.
The second quarter report ends with sales thru June 30, 2006. In internet time, that is ancient history. Anyone with the slightest desire to get to the truth can punch up sales and listings for July, 2006 and even August, 2006. Tell these reporters to do their job and get the true figures before they come to their outdated conclusions. Expect the dot.com real estate crash of 2006 any day now. Fall is here, School starts, and there are no buyers left. Period, end of the bubble.
Thanks, David, I’m putting together a sort of independent market conditions video right now. I plan to send it to the newspaper and ask them to do more investigating (especially since the bubble is making national news). Unfortunately, Montana is non-disclosure, so you can’t really tell what’s going on without MLS access. Inventory (tracked through realtor.com) is building, but yoy sales are still up. We’ll bust, but probably behind the curve a bit. Meanwhile, I’ve lost track of all the new developments. Many going up and many more planned. If inventory is up 40% this year with high sales, what’s it going to look like if sales drop?
Montana has “urban areas”? Would Butte be one of them? HAHAHA!
You’ve heard of ghost towns? Well Montana is the “Ghost State”.
How many Unabombers and Elizabeth Claire Prophets are there anyway?
“In Jackson, the market doesn’t really go down,’ said (realtor) Linda Walker. Broker Ryan Olsen agrees. ‘We are immune to the up and down treads that plague many real estate markets,’ he says. ‘Our real estate market is essentially quite ‘bullet proof!”
These two RE brokers need to learn the basics of markets. All asset markets go up and down. What idiots!! They can’t really believe this can they ? They are about to get an expensive lesson in markets and finance, courtesy of Mr. Market.
Attitudes like that lead to the purchase of multiple housing stocks. I’ll bet many a ‘great’ deal has passed over their desks that their just couldn’t refuse. Up to the eyeballs in leveraged debt.
If anything, I would guess that Jackson Hole is actually more prone to fluctuations than most communities. Its housing is almost entirely vacation/retirement homes for the wealthy or wannabes. What do you think people in trouble are going to try and unload first–their primary residence in California or their playpen in Jackson Hole?
The people who actually work there have been priced out for at least 20 years, and most commute from towns 40 or 50 miles away in the ‘real’ Wyoming. In fact, I’m pretty sure I’ve read that getting workers there is becoming quite a problem. It’s a very small town and there isn’t much else nearby.
Having lived in Wyoming for 5 years, I can tell you what is going on with Jackson. It is a fairly small state with 500k people in the entire place with most located in very few small “cities.” I believe the realtor quoted is pretty much right. You won’t see the place crash like in California, Denver, Florida, etc.
The uber-rich are pushing out the rich when it comes to buying a place there (think of Aspen). These people probably own multiple homes and pay cash for their little palaces. Jackson Hole is surrounded by National Forest and National Park land (I believe the airport is in the Grand Teton NP, but I may be wrong.). Anyway, I remember reading when some of the larger (figuratively speaking) ranches in that valley that haven’t been built on have sold out to a developer.
Most of the people who work 9 to 5 there (school teachers, etc.) usually live 4 to a house, Idaho, or Star Valley to the south and commute in. I’ve heard that Jackson actually had to hire the sheriff/police from Green River and put them up in hotels a week at a time, because they could find anybody willing to work there due to the cost of living.
Again, most buying in Jackson can afford to pay the ultra-expensive housing…..they sure as hell don’t work there. Forbes called it the best state to live in because there is no state income tax and property taxes are low. If these people make that much money, think of how much they save not having to pay California state income tax?
Just my two pennies.
If I didn’t know better, I would’ve thought this article was a satire written by one of the sicker minds on this blog (you know who you are)- or an Onion.com spoof. This is without a doubt, the mother lode of asswipe comments. Whoever is doing the filing, please keep these filed near the top - I think we’ll be seeing these pulled out plenty of times, just like the “South Florida blahblahblahlblah…”
- ‘You don’t have to sell a property to realize gain,’
- ‘The rest of them, I don’t know how they’re making a living’
- ‘You can get a new appraisal and borrow against the property and then go buy more properties
. And when you borrow the money back, a lot of people don’t realize when you go get an equity loan it is not a taxable event. So you’re better off pulling a million dollars out of a property, tax-free, and buying more with that.’”
This point is worth noting. Obviously money from a loan is not considererd “earned income” so it’s not taxed….but if someone is unable to pay it back, it SHOULD become income and be taxed. After all, it *was* income if it wasn’t repaid.
So, maybe you should be able to BK on it, but if you choose that route, then you should have to pay the feds INCOME TAX on the amount borrowed and not repaid. And you shouldn’t be able to BK out of this tax debt.
It’s only fair.
If you are involved in a short sale, you are taxed on the difference as a capital gain. You may or may not be able to clear that tax burden with BK. If not, it’s payments to uncle sam for life. There will be many, many people who thought of refi as “free money” who will row that boat.
I just hope my Representative Anna Eshoo doesn’t propose legislation to let them off the hook, like she did for stock-option speculators who lost and then owed AMT.
The key will be to get them into a BK when they are in trouble prior to the 1099 being sent to them and IRS zinging them. Once the IRS says they owe taxes on the difference then we are in a whole new ballgame. We can still wipe out the tax debt but we have to jump through time hurdles to do so.
If the bank doesn’t collect it can be taxable event; “foregiveness of debt”.
If the population characteristics from this story are accurate, in time Jackson may end up the worst case of all: Monied players living as lords locking in insane housing prices expecting high-dollar services from people who can’t live there. Frozen to the ground with expectation, frozen in place unable to sell, frozen in place unable to buy, frozen.
That’s a good comment. Arrogant m***erf****ers. I wouldn’t give them a bucket of water if they were on fire.
Tx-
Would you at least spit on ‘em?
Which side of a stamp if Liareah or Appleton-Young were on the front? (Old or young lawyer joke)
We hear about 100 K reductions already, that foreclosures are likely to accelerate and that inventory is still increasing. My guess for this year is -10% nationally by Christmas (the data that will show up in Jan.). Who knows what will happen in 2007, but a 20% decline in prices nationally seems reasonable and much more in the formerly hot markets.
I would like to see the methods and data used to predict minimal declines and a quick recovery by NAR and many main stream economists. They seem to be winging or coming up with happy numbers that are still not so far off as to be unbelievable to journalists yet.
In Boston, it already looks like its down 20% from the peak prices.
“I would like to see the methods and data used to predict minimal declines and a quick recovery by NAR and many main stream economists.”
I bet they just make up whatever numbers seem plausible to them.
“‘Real estate values will continue to increase,’ Elser says. ‘My crystal ball can only see so far,” Viehman says, “it’s a little foggy, but there doesn’t seem to be anything that’s going to change the course.’”
I don’t know which amazes me more- the ignorance or the hubris. Makes me want to get a rubber mallet and give ‘em the equivalent of cranial CPR…
God, that’s really good.
I think using a stainless steel or granite mallet would be both more appropriate and more satisfying to use.
Ah, but the ball peen hammer is so much more devastating for cranial manipulation! PING!
OT, has anyone discussed this? It sounds panicky:
The Housing Bubble Gets Ready To Burst: Homeowner Tips To Survive The Real Estate Burst
“The question regarding soft or hard landings with respect to our nations housing “bubble” is about to get answered, with a touch down that will evolve into a very hard landing. This hard landing may put at risk the entire economy. The two largest culprits are homebuilders/mortgage firms that forced real estate appraisers to come up with inflated valuations and the second culprit are teaser rate, adjustable rate mortgage products that are now starting to adjust beyond many homeowners ability to make the payment. The victims are or will be our nation’s homeowners, our nation’s pension funds and ultimately the U.S. Taxpayer in a Katrina type bail out.
“The National Mortgage Complaint Center & its partner The Homeowners Consumer Center suggest homeowners do the following to weather the 2006 real estate bubble burst.
1. Don’t sell right now if you don’t have to. If you do have to sell, do it now, even if you have to reduce your price. The national or some regional markets may ultimately correct to 10%-20% less than current market valuations, especially in formerly hot markets like California, Arizona, Nevada, Washington DC Metro, New York, Florida and the Carolina’s. It may take 5 to 7 years for these markets to recover to 2005 price levels.”
The two largest culprits are homebuilders/mortgage firms that forced real estate appraisers to come up with inflated valuations
As an appraiser nobody “forces” you to put a number on anything.
You do it of your own free will.
The honest say f*ck you and walk away-the sleazebags sign on the dotted line.
Unfortunately, FNMA has bet the farm on the sleazebags
and I thought money couldn’t be conjured out of thin air….boy was I wrong.
“Sure, property taxes soar with each reassessment but banks keep homeowners ahead by refinancing Jacksonites into their neo-wealth status. ‘You don’t have to sell a property to realize gain,’ Miller says. ‘You can get a new appraisal and borrow against the property and then go buy more properties. And when you borrow the money back, a lot of people don’t realize when you go get an equity loan it is not a taxable event. So you’re better off pulling a million dollars out of a property, tax-free, and buying more with that.’”
It’s fractional reserve lending and a fiat currency, except on a global scale versus just one or two countries at a time.
I was thinking along the exact same lines! Why not! Why not just cut out the middle man , the Federal Reserve , and monetize your own debts and print your own damn fiat with a 0% reserve ratio of your very own. What’s good for the banks , is good for flipper. It’s the new American way. The Fed has taught us well. They ought be proud.
And this realtor has her pants down, bare ass to the wind, saying to all that listen - This is what I did! Me! and now I’m rich, rich, rich! Soon, all will be gone, except for the fact that her pants are down.
“‘Real estate values will continue to increase,’ Elser says. ‘My crystal ball can only see so far,” Viehman says, “it’s a little foggy, but there doesn’t seem to be anything that’s going to change the course.’”
Hardy har har. Crystal balls? Criminy.
My good friend in Sun Valley, ID, a county supervisor, who watched Sun Valley change into a Silicon Valley second home egotastic epicenter of narcissism, says this crazy ski town boom (including Jackson Hole) will last only, just ONLY as long as the rest of whatever boom built them keeps booming. When the first wave of “oh shit” hit the Bay area in the dot.com blow-up, those Sun Valley 12,000 sq ft “cabins” that got used twice a year went for sell fast. Some are still for sale.
Also, there are many, many, many (ok, a lot) of big ranches for sale in Wyoming and Montana right now. Montana just about burned up, so there goes that. And Jackson Hole, from what I hear, is built on the housing boom money…like, those CEO’s builders. Lots of them there. Of course, they may be immune, since they sold most of their stock last year.
Correct me if I’m wrong, but aren’t there enormous tax advantages to building these homes in Wyoming, because well-heeled out of state owners establish residency there and the state income tax savings alone allow them to own these properties for nothing after about ten years? No wonder the real estate market is bullet proof.
If you make money in a state (either through employment or business), that state is going to tax you for it, no matter where your “official” residence is.
Otherwise all the rich people in the US would “officially” live somewhere like Tonopah, Nevada.
Wealthy transplants to ski towns should be aware that the locals find them to be an endless source of amusement.
Ok, just got to comment. The ‘ravens to an elk kill’ line seems telling. Strikes me as a former local yahoo makin’ it big in real estate. To use such a visual that specific (yeah, ravens do like dead things. Been there done that) in that context seems like it must be an easy-use thought for her. Her and the hubby: from gutting elk to gutting their neighbors. Fun stuff
We have maybe 4.7 million or so vacant homes in a country with 114 million or so households amounts to roughly 1 home to every 24 households. I am guessing that demand at the moment is a lot lower than 1 out of 24 households looking for another place to buy? Supply and demand will not balance out until prices fall, plain and simple.
And contrary to Liareah’s assertion, falling prices will not bottom out by some time next year, unless this time is different. First the sheep have to learn what a really dumb idea it was to invest so much of their lives’ savings in RE, IMHO, and that has taken 4+ years in all previous downturns of which I am aware (as supported by David L’s own powerpoint slides, no less!).
See the 1920’s Florida history, though. It went down REAL fast. Nationwide, the speculation might not be as bad this time as Florida was then, but it seems in the same realm. I say 50% nationwide price drop within 3 years. (Keeping in mind that prices are set at the margin — only a few need to be selling at those prices, as long as those are the only sales.)
Will falling prices offset rising interest rates enough? Could, but if the FED raises rates by 10% (5% to 5.5% for example), how much would housing prices have to drop to attract new buyers in a negative market? Remember, when using percentages, it’s always a larger percentage going up than going down.
10%, 20%, 30%, 38.56453%?
dirt pimps…that is a new one to me…lol
but banks keep homeowners ahead by refinancing Jacksonites into their neo-wealth status. ‘You don’t have to sell a property to realize gain,’ Miller says. ‘You can get a new appraisal and borrow against the property and then go buy more properties.
Ahh, leverage. Looking back just a few short years ago when the equity markets were down 3 years running, people using margin were the ones that got hit the hardest. They had to pay those margin loans, and had to sell stocks to cover those balances if they received a margin call, and it fed on itself. Same thing will happen here. Leverage is leverage. It can be a great tool if used wisely, but if not, watch out. The same tools you used to build wealth when assets were rising will turn into a Hangman’s knot, when asset prices turn. The more leverage, the faster it happens.
Also, this guy sounds like he’s giving financial advice. Funny thing is, I know many realtors, not one of them would I consider to be financially astute, at least not enough to give financial advice. Bull markets make everyone LOOK smart, but at the end of the day…
‘Financial leverage or alcohol , one or the other is responsible for all the world’s ills’
Or something like that.
I know your eager to see the correction, but I think it is taking much longer than many who post here expected. The central San Diego median price in October 2005 was $545k, the most recent numbers published by data quick is for July 2006 and the median was $540k.
don’t forget that the median price is not a pure indicator of housing prices, since lots of bigger builder’s homes have been coming on the market in the last couple of years pushing up the median price. That obscures the larger price drop of the average size house that would show up on price/sq ft data.
‘We are immune to the up and down treads that plague many real estate markets,’ he says. ‘Our real estate market is essentially quite ‘bullet proof!’”
This is another way to say that Jackson Hole is working off an entirely new economic model just like Florida.
We have maybe 4.7 million or so vacant homes in a country with 114 million or so households amounts to roughly 1 home to every 24 households
But, according to In The Bag Gary, there will still be great demand due to rich baby boomers, rich immigrants having bigger and bigger families, that will have the ability to pay higher and higher prices. He said we would look back 5 yrs, and think that it was low right now. Are you telling me that Gary is WRONG???? Oh my GOODNESS.
so when jackson climbs back into its hole, i just hope that noone out there asks us to sympathize, empathize with their pain and suffering.
(Is this working–Changed name for Robert Cote’s sake)
“‘Real estate values will continue to increase,’ Elser says. ‘My crystal ball can only see so far,” Viehman says, “it’s a little foggy, but there doesn’t seem to be anything that’s going to change the course.’”
Your crystal ball is no foggy; that is a massive debris flow of inventory headed your way which is blocking out the light of sun.
“not” (strike “no”)