‘A Fear They May Be The Last Fool To Buy’
A housing report from the Washington Post. “The on-again, off-again effort to bring a luxury Canyon Ranch condominium community to North Bethesda is now officially off, making the high-profile development the region’s latest victim of a slumbering condo market that has claimed dozens of projects.”
“In the past six months, developers of 31 condo projects with a combined 5,700 units have abandoned their plans, according an Alexandria consulting firm. Condos are taking much longer to sell, as speculators have all but abandoned the market and buyers have become cautious.”
“Kevin Kelly, president of Canyon Ranch, said the deal fell apart because ‘the market had changed on us.’”
“The development had sold just 30 of 434 units, for $59 million. ‘I’m disappointed the market turned prior to us getting it out fully into the marketplace,’ Kelly said.”
“Most of the other canceled condo projects are being converted to rental buildings or reverting to apartments after unrealized condo conversions. About a third of the planned units were scrapped altogether. In Montgomery County, eight projects, not including Canyon Ranch, have been discarded or will become rentals.”
“Despite the scrapped condo plans, there are nearly 24,800 new condo units on the market, up from 19,400 a year ago. Another 25,700 units are scheduled to enter the market in the next three years. At the current estimated sales rate of 8,000 to 8,500 units a year, the 24,800 unsold condos represent about a three-year supply.”
“As the inventory rises above three years, there is a greater likelihood of price declines in some areas, Delta Associates said. ‘This is a supply-driven problem, not a demand-driven problem,’ said Greg Leisch, Delta’s chief executive.”
“Condo sales have been falling rapidly this year. In the past three months, 1,331 new units sold in the Washington region, the lowest quarterly figure in almost three years, according to Delta. About 2,600 units changed hands in the previous three months; 3,200 units were sold during the comparable period last year.”
“‘Prices are no longer rising. Buyers don’t feel any urge to beat the price clock,’ Leisch said. ‘On the back of their minds, there’s a fear that they might be the last fool to buy at the top of the market.’”
They MIGHT be the last fool? LOL
Txchick, OT, but Care to comment on the market? I can’t help but believe this is the suckers draw so all the big boys can slowly unwind before a larger fall in Oct. ? Most metrics are showing neg. #’s yet we are powering ever higher. Time will tell , but always wary going into October….
I’m still short. Too early as always. It’s the end of the quarter and they’re gunning for a new all time high on the Dow while the Russell 2000 and other indices are diverging badly.
keep your powder dry for oct rampage..but as usual don’t go overboard.
I’ve got good company. The ITulip crowd all shorted too early too.
There was a brief mention in last week’s WSJ that short interest is at a record high. Move along, folks, nothing to see here…
Looks like they’ve shoehorned the last GF in the door (market that is). Now she’s taking on water.
Anyone want to predict the timing of rent declines?
it’s in the mail (snail, not email), i’m seeing the same listings on CL decrease and reduce their rent month to month. they’re still in the astronomical range, but they’re creeping toward ridiculous.
i’m just waiting for banks to come out w/ a 12-month “rent advance” loan where you put down your first born child as collateral.
Well, how are i/o mortgages any different from paying rent?
You get all the glorious appreciation…and you get to pay taxes!
…but you get to paint the walls and make ‘improvements’.
I don’t think I/O isn’t going to be so cool by the end of 2007/2008.
SoCalMtgGuy
http://www.housingbubblecasualty.com
When I lived in San Francisco and briefly looked at potentially buying a place in Fall of ‘04, the real estate agent I used told me the same thing about I/O mortgages… He said that my thinking (i.e., wanting to actually pay down my mortgage balance) was “old school” and that I should have the mindset that the I/O payment was just like “rent” except I would gain equity through property appreciation (or course, he was trying to convince me that I should increase my budget and that I could “afford” to buy a much more expensive place!!). I responded that I/O is nothing like “rent” because if I rent I’m not taking on a $700,000 debt!! I also said, while appreciation might be nice, I would also be taking on the risk that, if prices stagnated or decreased, I would LOSE money if I sold. He of course then went into the routine about how in San Francisco, prices won’t go down, beautiful weather, everyone wants to live here, how S.F. is only 7 miles by 7 miles so land is scarce, baby boomers all want to be here, etc, etc, etc …. Thankfully, I never bought there and boy am I glad now!!
We are in the process of finding a house to rent in Sarasota, FL. There’s lots to choose from, the owners know it and are ready to deal. On the phone some volunteered they would take less rent than they were asking in the ad. Lots of them are…… “investors”.
I won’t rent from “investors” — look for a seasoned landlord that didn’t sell out for some reason.
I am renting from one of those ‘investors’ in Windermere, FL. A 2500 sq. ft. home for $1400/mo in a luxury gated community. I have a rookie landlord who doesn’t know jack about simple lawn care. Probably didn’t realize that in Florida, if you do nothing to the lawn but cut it, it will die. Fortunately, the HOA keeps her in check. She’s spent thousands of $$$ repacing sod. Silly girl, thought she would get rich off of her investment, but I’m the one making out like a bandit. She doesn’t have a chance in hell of selling it for what it’s motgaged for…
Has already happened in some areas…Victor Valley area in CA for one. Too many ‘investment’ houses chasing too few renters.
In Fairfax, Loudoun, Prince William, and outlying counties in Northern VA, rental inventory is way up over last year, still increasing every day, and asking rents are decreasing every day. The extra inventory is due to plan #2 for sellers, buying time until “the market improves”. The other kind of landlords are like my former one, who got giddy thinking about landlording as a way to wealth. Let’s see, he’s on month #4 with an empty new house. (The asking rent is way above the comps). He kept whinging that he was doing us a favor because the rent didn’t cover the mortgage.
Is his name Va_Investor? LOL
“He kept whinging that he was doing us a favor because the rent didn’t cover the mortgage. ”
This just kills me about investor/landlords … As if the tenant should care whether the rent covers the landlord’s mortgage!!
This is a good point. If you’re looking to rent an apartment in Florida, you’d rather rent one from a professional management company, rather than some flipper who lives in New Jersey who can’t handle situations like a broken heater, etc.
Anyone want to predict the timing of rent declines?
Yes, On October 15, that is when I will be moving out of my house rental of $2500/month right next door to a $2000/month rental. When we told the fb of our existing rental we were not renewing the lease he was stunned, this fb thought we loved his overpriced, energy hogging, pos. If anybody wants to see a disaster in the making check out this KB developement-( Valencia-CA-91354 zip-Streets-Coldwater-Dearborn-Whitewater) on Realtytrac or foreclosure.com. NOD’s REO’s, FB’s galore.
“As the inventory rises above three years, there is a greater likelihood of price declines in some areas, Delta Associates said. ‘This is a supply-driven problem, not a demand-driven problem,’ said Greg Leisch, Delta’s chief executive.”
Yes, I’m certain all of those flippers are still buying and first time buyers are still rushing in before they’re forever priced out of the market. Yep… No decline in demand. Nothing to see here. Move along folks, move along…
Neil
This is downright foolish - if there was no “demand-side” problem, then sales this year would be the same as last year. Instead, we’re seeing significant drops from last year’s sales. The “demand-side” problem is CAUSING the “supply-side” problem.
I always loved the “it’s supply and demand” arguement to explain the run up in housing. The demand was mostly artificially created by ridiculously low rates that “investors” took advantage of. This was not a true demand for housing.
So right Ken . The excess supply we see now shows just how faulty the demand was and it will get worst .
The demand was so panic driven that now, as we wake up, we’ll not only see the “false demand” evaporate, but we’ll see a new “fear driven” supply.
We’re about to see, in housing and the economy, the cost of a mania.
From what I can tell, going through the numbers, “demand” is down 30%. I stick with my prediction that when these exotic mortgages dry up (due to bond buyers avoiding them) that sales will be stuck at
Ok, cut off..
Sales will be stuck at less than 50% of 2005.
Very keen observation - when the banks can no longer pass their toxic garbage along only then will they stop generating their garbage.
But unfortunately, in the meantime, the graduates of Ivy League schools who run the Pension and Hedge Funds will run up herrendous losses for their clients.
Yet another good reason for ordianry people to manage their own equity portfolios with “self-directed” products such as ROTH IRAs.
we need a new word for an IO, no doc, lying-about-residency, “investor” who buys multiple homes without telling the lenders. Besides idiot, FB, etc.
How about “bankrupt” or “bag lady” or “hobo”
Exactly, if waiters did not all buy 3 condos in Vegas (etc.) is would not be so bad. They will not be able to unload them because it was all artificial = not based in reality
Maybe Leisch should look up the word “affordable” in the dictionary.
Ben, look at this. CAN YOU BELIEVE THE PRICE? Who in Flagstaff can afford 400K for a house? Sorry, don’t want to hijack this thread but I don’t know when you’ll do another Arizona one.
http://flagstaff.craigslist.org/rfs/211703149.html
and this! When I was looking in Sedona in about 1994, this would have gone for 150K. Maybe. Nice red rock view though.
http://flagstaff.craigslist.org/rfs/212645583.html
The Ponderosa Trails project probably doesn’t have a home under $400k. Flag is headed for a trainwreck, IMO.
The train will then speed south to Clarkdale, Camp Verde, then over the hill to Prescott/Prescott Valley, Chino Valley.
Completely and utterly related to the Phoenix space shuttle wreck.
Trainwreck yes, and I expect Snowbowl won’t get a permit to make snow with effluent, and if they do, only snowboarders will go there. In any case, Flagstaff is toast.
Yep. Major trainwreck. Check this out.
“The development had sold just 30 of 434 units, for $59 million. ‘I’m disappointed the market turned prior to us getting it out fully into the marketplace,’ Kelly said.”
The more stupid people without lots of money the better off the world is. Maybe that’s why they call it a correction.
I guess that he would have preferred to have the condo half built before the market turned(?)
The trouble is when stupid people give their money to con artists, it creates further problems in the “economy”
If I am reading this correctly, 30 units sold for $59 million. That is almost $2 million a unit!
Are all of the door hinges solid platinum, and all of the bathroom fixtures solid gold? Are all of the kitchen cabinets solid Amazon Rosewood, and are the floors solid 1 inch THICK granite? Are all of the adjoining walls soundproofed to STC-60 specs?
If not, then what where these buyers thinking!!!
What’s this stupidity??? http://www.marketwatch.com/news/story/Story.aspx?guid=%7B4A9E1C6E%2D3542%2D41E0%2D9537%2DD116DAC97F8E%7D&siteid=
New home sales up?? Is this due to all the discounts the builders are throwing in? People’s stupidity truly amazes me!
I seem to remember that New Home Sales include anything under contract. Is that so? HBs have been reporting large numbers of contract cancellations, you know.
New home sales are down 2.1% This is just lying with statistics.
Maybe not. Just greatly disconnected? if prior month cancellations are backed out to re-establish revised prior month sales, whereas the current month is still using un-revised figures with those coming cancellations unaccounted for…then yes, MOM would look positive. Now, prior MOM based on the revised figures may be very telling…
No, these are lies. When EVERY number so far this year has been revised lower three times it becomes a serial lie.
New Home Sales (in thousands)
January
Initial - 1,233
Revised - 1,173 (Down 4.9%)
February
Initial - 1,080
Revised - 1,038 (Down 3.9%)
March
Initial - 1,213
Revised - 1,121 (Down 7.6%)
April
Initial - 1,198
Revised - 1,121 (Down 6.4%)
May
Initial - 1,234
Revised - 1,101 (Down 10.8%)
June
Initial - 1,131
Revised - 1,091 (Down 3.5%)
July
Initial - 1,072
Revised - 1,009 (Down 5.8%)
(hat tip James Bednar)
Lies, smies. It’s different this time. The data is superb, and maybe you proved my stumbling attempt at analysis. Looking from prior month revised to current month initial, almost all are positive. Great trend for a shill, when tomorrow never comes.
note the revisions. They had to revise three months worth of data to make August’s rise look normal.
Don’t worry, when the September number comes out, August will be revised down as well. But the Headline of course will be that September’s numbers are better than expected.
There are lies
Damned lies
and Statistics
The builders are undercutting the existing market with all of their incentives. Recently some of the builders seem to be bailing with, for example $95K off on a 305K home (Florida, DR Horton ad). It’s not surprising that they could increase sales, but, IMO, from now on they will probably need to make substantial price cuts.
anyone who MUST relocate does so in the summer if they can - so no disruption to kids in school, no?
“At the current estimated sales rate of 8,000 to 8,500 units a year, the 24,800 unsold condos represent about a three-year supply.”
“In the past three months, 1,331 new units sold in the Washington region, the lowest quarterly figure in almost three years…”
++++++++++++++++++++++++++++++++++++++++++++++++++++
I never was good at math so I probably came out with the wrong answer when I divided 24,800 supply by 5324( annualizing the latest quarter), because I get a 4.6 year supply of Condos in the Washington market. Any chance that the next quarter sales will be even lower?
You can’t multiply by 12 for the annualization. Selling homes is seasonal.
But the summer is the best season so annualizing the summer quarter is the best case scenario.
You forgot to sprinkle the magic ‘inverted year’ fairy dust on the numbers.
“there are nearly 24,800 new condo units on the market…Another 25,700 units are scheduled to enter the market in the next three years. At the current estimated sales rate of 8,000 to 8,500 units a year, the 24,800 unsold condos represent about a three-year supply.”
24,800 current unsold units + 25,700 units in the pipeline = 6 years worth of condos (and that’s if sales down slow down even further).
and just think, a year ago the masses were eating up the ‘housing shortage’ theory. sad.
the fallout from this massive glut over significantly overpriced condos is going to be stunning. what do you think would happen to car prices if the dealers had a three (or even a six) year supply?
hmmmm????
‘On the back of their minds, there’s a fear that they might be the last fool to buy at the top of the market.’
Now the psychology has turned 180 degrees around. Two years ago, you were a fool for renting rather than buying a condo, as you watched all your friends become wealthier. People bought even when it made no economic sense. It may be now that they’ll be hearing about their friends losing equity, they’ll hesitate to buy even when prices have fallen enough for it to make economic sense to buy… things often over-correct…
Comming soon Industrialized mass bankrupics.
Drive through bankruptcies ! Oh wait a minute no money for gas… Never mind.
Actually I am surprised there has been no drive through mortgage refinancing places
new homes number
15-30% off in incentive in free upgrades
- and still will go negative when its revised
right, The numbers reflect the upgrade ,new car -sucker buyers,and those already in the que..I read the # had a 12% margin of error.
Most telling to me was Cal was down 11% ! They are by far the number to watch..As Ca. goes,so goes the rest as they are the largest $ value in total…
If you still own a condo for anything except basic housing then the equity boat has already left for distant shores. The overhang of investment beanie babies… err… condos is national. Taxes and dues and insurance kill even the idea of holding. Here’s what’s gonna happen in these Neutron Towers; taxes will explode as homeowners scream for their own relief, dues are going up from inflation, dues will compound as other units default, insurance goes up for all the above. Then the real cost resturcturing begins. You can bet that if your mailing address isn’t the unit both your insurance and mortgage are going to reset to non-occupier rates. I’d rather be forced to own a boat or horse than a condo. You wanna see a real implosion? Wait for a bank to take back the keys to a condo. Trust me the very last thing the VP at the branch wants to explain is writing a check every month to the condo association. Writing down a defaulted loan 50% is an accounting process. Spending, actually spending money, the banks money is just about the worst career breaker possible.
Robert, I’m going to steal that and poost it elsewhere (with atribution of course). Well put. The volume of condos coming on in the NY metro market, esp. western reaches of Brooklyn and Queens, Harlem, and the Gilded Coast of Hudson County is astonishing . . . the REIC here is something to behold, but cracks are appearing in the facade.
As always, feel free. Thanks for the kind words.
Wait for a bank to take back the keys to a condo. Trust me the very last thing the VP at the branch wants to explain is writing a check every month to the condo association.
Interesting. I’m curious though: How does the bank incur the legal obligation to pay the condo-association fees? And will the association start raising fees in large-foreclosed areas just to screw the banks? (Naturally, they’ll figure out some means of keeping fees low for owner-occupied units.)
The legal owner of the unit is obligated for the condo fees, be it a bank or an individual. The condo rules provide that the condo association can put a lien on your unit if they aren’t paid.
The owner on the title is responsible for association fees. This obligation is second in line to be paid only behind taxes in most circumstances. In an up market the bank normally just lets the dues slide and cleans it all up in escrow but that assumes a fast turn and enough money to cover all the closing obligations. This time the condohell owner will have missed the last 2 tax payments at the old high assesment and incurred the usual 10% plus penalties and the same, probably 6 months behind on association dues plus those penalties. When the bank finally gets the keys in the mail and finds that they’ve got a condo and a years of taxes and a NOD from the association they’ll have to act fast. the association will take the condo from the bank if they don’t pay up.
As to treating the bank different, I don’t think it would be allowed. The fee structures are pretty airtight. They might make some rule up about nonoccupied business owned or such but probably more trouble than worth.
That will turn very interesting. How much leverage is there vs these associations? If I were the VP, I would immediately call the head of the condo association and tell them that I’ll have to fire sale the place (drive comps down) unless they eat their fees. If the association is admin’d by owners, my guess is they’ll think about it.
FYI: I will never buy something with an association. Muni gov’ts are already screwed up, and the last thing I want is another layer to deal with…
The officers are certainly some owners. What better way to preserve comps than to foreclose and hold the unit. Like I said; the tax man is first in line with his hand out, God and the association are a close second in getting their due. At the point of finding themselves with keys the bank is just another bagholder.
Robert makes a great point.
The bank doesn’t have to pay the fees — the association will just place a lien on the unit — but if the assocaition forecloses on the unit due to the unpaid fees, then the bank will have to pony up. And if enough of the units in the building go vacant — which they will — and no one is paying association fees — which they won’t — the bank has to worry about things like vandalism, fire, damage, etc. Slowly but surely, a bank holding a condo unit will find itself having to write some checks.
The solution? Dump the unit as fast as possible at fire sale prices.
That solution is best for the bank, and also best for bears like us.
Aha. I should have read your post before writing mine above…
which is why as a homeowner don’t want to buy into a condo development infested with speculators.
what cote said
Earlier this week I switched my 401k from 20% stable to 50% stable asset fund (4.5% return) and redistributed the remainder 20% large cap value, 10% midcap, 10% small cap, 10% foreign equities . . . taking care to choose the funds that had least exposure to HBs and banks.
Got out of bonds altogether - too many MBS in all the available funds. Thoughts?
I”m amazed at the high prices if bonds. I would rather take a money market account. Mine(vanguard at 5.10) pays more than a 30 year bond . However, bond traders are a much higher caliber invester. They see a big slowdown while wall street goes nuts over 2.30 gas and the flavor of the day. I can’t see how 4.6 for long term bond compensates for inflation and other risks.
NH posts ” I can’t see how 4.6 for long term bond compensates for inflation and other risks.”
NH it looks like a classic “deflationary sign”. By the end of this winter that Gov. backed 4.6 might look very sweet. I do not like it. The Bond Market is the 800 lb. Gorrilla, not the Stock market.
Brooklynite for what it’s worth I dumped my S&P 500 afew weeks ago of course it went up 30 more points. I see the Dow is just about to break-out today over it’s old high but the S&P is still way under its old high. The NAZ is hopeless.
My gut feeling is that this is a suckers rally…. when main sreet goes, I think Wall street will follow. Most that read and post here have bet thier personal futures and fortunes on it.
I am 80% Cd’s 10% bonds 10 div paying big caps. I am waiting to buy a house.
Dropping off a 5 digit check for an 8 month cd at indymac in an hour. 5.60%? Biggest no brainer in the history of mankind. Is was wondering how you can test for MBS exposure? Seems like everything has a tentacle in the pot.
Fidelity(netbenefits.com) - legacy plan from my old banking job . . . they give a generic sense of where the money is, asset classes, etc. The few bond funds not only had poor returns relative to stable asset fund, but also stated that they included MBS as well as FNMA and US gov debt securities . . .
As for the stable asset funds, they didn’t describe the assets in detail but my understanding was that it is money market - rtaes comparable to CDs and my ING account.
I think the stable value funds in 401(k) plans can be heavily invested in mortgage-backed securities. You might want to check that what’s inside your stable asset fund.
Stable value funds are usually insurance company contracts. At least that’s what the University of California System has. I have 40% of retirement funds in UC’s Insurance Company Contract fund (stable value fund). Do these insurance companies invest in MBS, I don’t know.
I looked at the makeup of the stable value fund in my old 401k at morgan stanley, which is supposed to be the money market equivalent, and found it was loaded with MBS and agency paper.
-
I must disagree with the stock market bearishness here. Money has left RE and is heading to US large caps. We will blow out the all time highs on both the Dow (duh) and the S&P 500 soon.
My Allocation:
CASH - 20%
BONDS - 15%
STOCKS - 65% (Mostly Index 500)
REAL ESTATE EQUITY - 0%
So you are betting that, as a recession unfolds, the prices of companies who’s profits are declining will increase?
I suppose that will occur if all the real estate “investors” get out of their “investments” whole. Think that will happen? Think its happening now?
Me thinks you are chasing the “next” fad idea. Sometimes you can’t always make much money anywhere and the best you can do is preserve as much of your principle as possible.
-
I’m not a stock market timer. I don’t pretend to try to predict the unknowable of the short-term. I simply started my portfolio 11 years ago and have dollar cost averaged into it ever since towards a target allocation that I’m comfortable with. My allocation fits my age (100 - Age) = Stocks %. I’m a Vanguard “Buy and Hold” Believer. I do believe that we are going higher, but I could be wrong.
A heavy exposure to stocks is awfully risky, it seems to me. The yield is low and the stock prices are high in the expectation that they will appreciate. But why would they? The down side risk is much more substantial, IMHO, then the upside potential. The market is being heavily supported now to get the administration through the election. Afterwards, expect a heavy fall in stock prices.
stable value or cash…. i worry about a big stock dip soon…this is the fb runup before a crash
Did same 2 or3 weeks ago. Moved 1/4 of my 401k from bonds to money market. Happy to not worry and still get over 5% tax-deferred return. Nothing wrong with being prudent.
OT but Mish just came out with an article quoting 30+% price drops in Florida! Ooooh, I’m sensing some serious ass-pounding in that area of the country!
http://www.safehaven.com/article-5978.htm
…like the chart commentary, LOL
posted OT but Mish just came out with an article quoting 30+% price drops in Florida! Ooooh, I’m sensing some serious ass-pounding in that area of the country!
I saw and read it along with the commetary of how that 30% could turn into a 50% for a flipper! Yozza! Yozza! Baldies ah’ commin”
I was trying to show constraint by only going with the 30%, I am glad you pointed out the real drop to someone selling a used model in the same development. I would think this may have some follow-on ramifications given the enormity of the drop. If the MSM picks up on this it will be a big deal.
“This is a supply-driven problem, not a demand-driven problem,…Condo sales have been falling rapidly this year”
If there is no problem with demand, then why have sales been falling rapidly?
…perhaps what he is implying with his puzzling gibberish is…as the demand curve shifts left and steepens reflecting less price-demand sensitivity (lower price not inreasing sales as expected)…the supply curve is shifting further right, reflecting a throng of sellers including HBs, condo-cinverters, specuvestors, and fixer-floppers with unrealistic expectations.
$59 million / 30 units = $1.96 million per unit. Is this right, or a typo?
Meanwhile, here’s a link to a new condo project that hasn’t been cancelled. eccoparkhomes.com
Studio: High 100’s
1 bed: High 200’s
2 bed: Mid 300’s
3 bed: MId 500’s
Right now it’s an empty lot with a sales office. I think these condos might actually sell. They are “green” condos, situated one block from the Takoma Metro station, a heavily hippie area.
I don’t know…mid 300’s for a tw-bedroom at Takoma Park? I mean, you can rent a two-bedroom house there for like $1100/month (I actually was going to last year). Even if they are green, I think mid-200s would be what I would wait for.
Wow, rooftop yoga lessons with that as well! And according to their website, “Residents won’t have to leave the building to find fresh coffee and a sandwich” — which is good. Considering the last time I was in Takoma Park at night, I’m not sure I’d have a wallet anymore by the time I got to the neighborhood shop.
But if your political tastes lean Left and your environmental tastes lean Green, and you’re young and like the area, it might be worth looking at. Heck, it’s close to Metro, as well. And the price isn’t much higher than comparable places in… er, well, in a good neighborhood. :-O
No, that’s not a typo. I think the lowest priced condos in Canyon Ranch were to be about $1 million (one-bedrooms, I think, not studios). They planned for it to be a kind of health resort in which you lived. The land was right across from a mall and next to a high school, but there’s nothing else in that area except access to the beltway. It’s not in Bethesda, but “North Bethesda” which is mostly strip malls along the Rockville Pike–basically, a terrible location.
If there is no problem with demand, then why have sales been falling rapidly?
Just sit down with David L and Gary W for a chat and they’ll explain everything to you.
“The volume of condos coming on in the NY metro market, esp. western reaches of Brooklyn and Queens, Harlem, and the Gilded Coast of Hudson County is astonishing.”
Good news for anyone who isn’t financing them. For decades, instead of a supply and demand market, New York has been a demand and lack of demand market, with prices soaring to unaffordable levels and then crashing.
This time, we have supply. I’m hoping affordability will return, before we get some unaffordable political response to the affordability problem.
Oh, how I love this place. And it will never sell. Ever, even close to this price. I just wonder what I’d be able to get it for. It’s in an area with a median income of perhaps 35K at most. Someone stop me from making a lowball offer. It hasn’t even been reduced yet.
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=10609627&page=1&property_type=SFR&mls=mls_dallas&cKey=ldmx6zbb&source=GDAR
In my ‘hood slap a 2 in FRONT of the price and you could expect a bidding war. Pretty, pretty house. Only $220/sf. The floors clearly cost $30/sf by themselves. Looks like a great neigborhood too. Watch, wait, patience.
It your offer were accepted, you’d pay $275/mo to have an HOA dictating the appearance of your yard.
There’s a Canyon Ranch slated here in Chicago. I’m betting that gets 86′d too.
“Canyon Ranch” is a pretty bizarre name for something in a flat flat urban place like Chicago (or Baltimore, for that matter). What’s next for Chicago, a development names “Seaside Vistas”?
They’re connected with the ‘famous’ Canyon Ranch Spa and hoping for price premium with name recognition. They’ll also offer a few lame spa services and expensive lotions with Canyon Ranch labels at a small spa located off the concierge lobby….
Canyon Ranch started right here in good ole Tucson, Arizona. And a favorite pastime among those of us on two wheels is to ride through Canyon Ranch to see if we can spot any celebrities. (Yes, CR has guard houses, but I’ve NEVER been stopped. Nor do I know anyone who has.)
I went there a couple of times (one of those local “specials” in the middle of summer…lol)…I was in a spinning class w/ Calista Flockhart, who I thought might fall off the bike, and played bingo with Debra Winger, who is a hoot. It’s a good spa, although their real estate plans suck.
the “canyons” are the spaces between the McMansions.
Have you seen the potholes on the Dan Ryan Expressway? They qualify as canyons.
Mmmm, let me see. “at current sales rate of 8,000 to 8,500 units a year, the 24,800 unsold units represent a 3 year supply….”
That’s not good. However, it could get far, far worse. Let’s be generous and say that by manipulating the numbers about inflation and unemployment (No! The government wouldn’t do that, would they?!) they can avoid saying, what many think is just around the corner, “We have entered a recession.” Well, folks, in tight financial periods, the great American consumer shuts his/her wallet and isn’t looking to invest in overvalued real estate. That means LOWER sales numbers. That also means that the “3 year supply” might easily turn into a “5 or 6 year supply”. Forget becoming a liability lawyer. Bone up on becoming a bankruptcy lawyer who specializes in boom and bust construction companies. I thought that a real estate crash was a remote possibilty and I figured it was a 75% chance that property would drop back to 2002 prices but not crash. Now, as I look at this inventory build-up coupled with the $1 trillion plus exotic loan reset getting near, I’m knocking 15% off that no crash number and putting the chances of a crash at 40%.
What’s the unknown factor? The Fed. The Fed own the printing machines and as we have seen for the last 6 years, mainly because of Greenspan and the current administration, they are no longer a responsible body were being prudent is concerned.
I just had a friend from the UK contact me who is coming to the US for a visit and he said the US dollar is close to $2 to 1 British pound. Thanks Bush, you’ve done a great job. I know you talk to god and he guides you……….the problem is I don’t think you realize it but you’ve been getting advice from Allah….
“close to $2 to 1 British pound”. This is nothing new, and it’s not just Bush’s fault.
Yes, you also have Bush I and Reagan to thank. Hello, $9 trillion dollar national debt!
Bush II has already earned himself an ignominious place in history as the worst president of all time. Many people have not accepted this yet, though many have.
But in 50 years, people will look back on this period and lament that America had an incredible chance to turn a corner on September 12, 2001 . . . and George W. Bush flushed it right down the toilet.
And what would that corner be?
No, but he easy money Fed policies and deficit spending was allowed to continue (and intensify) under his watch. Plenty of blame to go around, and Dems aren’t known for being frugal themselves. Even so, whatever happened to the “conservative” party of fiscal responsibility and small government? I miss that party.
I miss them too. I agree with Mike, Bush had a real chance to stop socialism from advancing in this country, and instead he helped it along.
Harm
We Have no choice. A Dem or Rep… Suppersized Government. I would not mind so much I would just like to see a “smart government”
I have heard all the GW Jokes and do laugh…. but when you really ponder what the Dem’s are tendering you got to shake your head! BTY I am a regestered Dem. Right now I would vote every incumbunt out!
“Suppersized” makes me hungry. Even more so than “supersized”. Supper was a buffet for the whole family where we were encouraged to eat it all up to make cleanup easier. Seconds were welcomed.
Bush had nothing to do with what the fed did, that was Alan Greenspan’s act. At least in theory, the Fed is “independent”. I don’t doubt they are sensitive political players but the mistake was Alan’s, not Bush’s. Besides, Bush is an “idiot” right? Exactly how would an idiot figure out how bad “investor” behavior would get? How no doc and zero down loans would proliferate? Did Bush think these things up? Did Bush make people take out these loans? Build these developments?
Bush is by no means perfect but he is no more to blame for the debacle of greed in this real estate bust than Clinton was to blame for the dot com fiasco. Or do you imagine Clinton somehow forced people to buy stocks in 99 and 2000 to improve Gore’s electability?
There have been some significant developments the past few weeks with many regional (and even national) comps starting to go negative.
But please, please, PLEASE let there be an end to the incessant mortgage broker ads on the radio.
Heard a great one yesterday here in the SF bay area by an obviously desperate broker which said roughly the following:
“…we can get you a $300k loan for just sixty-three dollars a month!…You heard that right!…Just 63 dollars a month!…Think of how much you’ll save in payments!!!”
Needless to say, the fast-talking guy at the end said it all: 0.5% I/O fixed for 5 years, yadda, yadda yadda. But the best part was, “…terms and interst rate may change at any time.”
Just f@#!ing criminal.
Has anyone read David ‘Why the real estate boom will not bust’ Lereah’s book? I’m thinking about getting a copy for it’s amusement value.
Buy used, or better yet, steal.
Library.
I actually don’t really care if the market is going up or down. I would like to buy a home and be able to do more or less what I want with it. I will buy when prices are reasonable and in-line with rent. Here in San Diego, home prices remain at 2X rent. Beyond that, I don’t really care if the price of my home falls or goes up, as long as I can afford it and it makes sense.
That’s my position, too. I’m looking forward to owning my own home, but I won’t buy until prices are reasonable and I can afford it. $800K for a POS starter home in a decent neighborhood here in OC is just ridiculous. But, those prices are starting to fall, and I’ll wait until their sane again (and maybe even get a bit of deal).
At the current estimated sales rate of 8,000 to 8,500 units a year, the 24,800 unsold condos represent about a three-year supply.”
I read somewhere that the magic number is 8 months supply before you see price reductions….The best things in life are free…Maybe
condos too.
“At the current estimated sales rate of 8,000 to 8,500 units a year, the 24,800 unsold condos represent about a three-year supply.”
and then:
“Condo sales have been falling rapidly this year. In the past three months, 1,331 new units sold in the Washington region”
——————————————————————–
something doesn’t jibe with the estimated sales rate of 8K to 8.5K units/yr. Wildly overoptimistic. Maybe more like a 5 year supply unless they lower prices 50%?
I am currently renting a townhouse in Valencia, CA (north LA County). What recourse do I have as a renter when the bank forecloses on the property. I assumed I can rent the place from the bank but after reading Robert Cote’s postings, I doubt the banks want to manage a property. Wouldn’t the bank prefer to get some cashflow rather than let the property sit empty? If they sell it, they have to take a (huge) loss since it is a foreclosed property, no?
If you have a lease it will be honored or bought out. IIRC banks prefer empty; easier, less liability, etc. If you want to stay negotiate. Tell the bank to cut the rent in half, you will do all the upkeep, you’ll accomodate painters/repairmen/realtors and promise a no problem 30 day move out whenever they say the word. If you are lucky it will sit like that for a long time.
Robert,
Thanks for the response. I have a two-year lease that will expire in December 2007 (zero increase for the entire term of the lease). The landlord has an option-ARM and is paying the negative amortization schedule. Moved in January 2006 and the owner has already been late in paying the HOA (about $100/month) four times since. I am assuming the owner is having a hard time carrying the mortgage, taxes and HOA fees, hence my thinking that the property might get foreclosed. Loan is with Countrywide and I think there is a second loan since property was purchased for ~$500K and the loan balance is only ~$400K. I doubt the owner put down $100K with an option-ARM.
Anyhow, when the time comes, I will try to negotiate with the bank as you suggested. If they lower the price to ~250K, I will buy the property in cash.
No you will not. That’s plain dumb and I’m not calling you dumb, you are obviously smart enough to know this already. If the bank will eventually sell to you and you can afford $250k cash then you get the bank to write you out a nice 15y 4.8% fixed for $150k and you put down $100k. After deductions I’m sure you can put the other $150k in laddered CDs and spend the next 15 years giving the nice bank some of the interest you are earning and some of the principal depreciated into 2021 dollars all the while paying the federal govt less in income taxes.
Robert is right. Use the bank’s money to get into your house at an affordable loan level with a 60% mortgage, and put the other 40% as a cash downpayment. Use the cash difference in an investment to earn all or some of your mortgage.
It is the smart way to use your money. And theirs.
Talk to the bank. They would much prefer an occupied building than not, and a long-term lease may be ok as the foreclosure party is in it’s early stages. But then, that is also a problem. In two years, when the banks are holding thousands of such properties, a renter with good credit has a real shot at a highly discounted price.
In the early 1960’s, General Mills went BK and the banks started a firesale of assets to generate cash flow. My father was leasing a small farm owned by General Mills that had more than $300,000 of notes against it. He gathered up all the money he could find, or that anyone would loan him, and made his best offer. $37,000. They accepted the offer, cancelled all the notes, and he still owns the ranch today.
Plan on the bank starting the eviction process the day they take the house back. It happened to me in the early 90s, the bank gave me 15 days to leave. YOU WILL NOT GET YOUR DePOSIT BACK from the bank or the Landlord, I stopped paying rent two months before the foreclosure to get my deposit back. My landlord did not have my deposit in a seperate interest bearing account as required by state law, BUT even if the money is in such an account, there is a strong possibility you will never see the money. I was able to stay in the Banks house for 60 days rent free, but definitely NOT worth the headache.
EVERYONE : DO NOT RENT FROM A FB, rent from a professional land lord. My experience sucked.
Quite a difference of opinion worth investigating. Not paying rent for two months would ruin your credit, no? Regarding renting from a professional landlord, can the prospective renter require the landlord to present their financial status before signing the lease agreement? Unless you rent an apartment, I don’t see how a renter can avoid this situation.
In my present rental, the previous tenant told me he had rented the house for three years, zillow shows the owner bought in 92.
Ask enough questions and it becomes obvious if its an FB or not.
In Cali read the NOLO press “tenents rights handbook” or “landlords handbook” so you know the laws, then see if the prospective Landlord knows the laws. I got screwed once and learned
The legal answer to whether they can evict you is: it depends. Did you enter into your lease before the trust deed was recorded? If so, then your lease would survive the foreclosure and the bank would be required to honor it (or could offer to buy it out). If you entered the lease after the trust deed was recorded, then the lease is wiped out by foreclosure unless it contains a non-disturbance and attornment provision agreed to by the bank. (A non-disturbance and attornment provision basically says that the bank will not evict you and you agree to treat the bank as the landlord after foreclosure). From a legal standpoint, when the foreclosure occurs all junior encumbrances (including any lease entered into after the date of recording of the foreclosed upon trust deed) are wiped out. As such, the bank has the right to commence eviction proceedings. What the bank wants to do from a practical standpoint is another matter (it may or may not want to have the place occupied). You can try to keep up on any foreclosure proceedings by filling out and recording a document with the county recorder that you want to be sent a copy of all other recorded documents (including an NOD) regarding the property. This would give you a heads up regarding any potential foreclosure. Hope this helps.
I love considered opinions. There are also local ordinances especially in places like Los Angeles County that may come into play. My amateur guess is that in LAC a bank would first try a blatant eviction and if they get resistance offer a buyout. Even an inhouse lawyer is gonna cost them twice any potential return in these situatons.
Thanks all. Unforunately, the landlord purchased the house in October 2005 and we leased it in January 2006. BTW, the mortgage statement is addressed at this rental because - you guessed it - it is claimed as a primary residence on the mortgage. I guess I need to start scouting for another rental soon.
No, contact the lender. Contact NOLO. Contact the other guys on Ben’s Blog who are hyperintelligent.
Rather than become a a guppy, become a shark. Contact the municipality, insurer and leinholders as to your landlords’ misdeeds.
Corus Bank is up about 4% today, presumably due to loan just announced to build more condos near Atlanta (see below). IMO, funding more condos anywhere seems stupid. Anyone from the area know anything about this project or the condo market in Atlanta?
CORUS BANK Announces $127,800,000 Loan
Chicago, IL… Corus Bankshares, Inc. (NASDAQ:CORS) announced on September 26, 2006 that its
banking subsidiary, Corus Bank, closed a $127,800,000 loan on September 8, 2006 to CityView
River Place 442, LLC, an affiliate of Trammell Crow Residential and CityView, to finance River
Place, a new multifamily community located in Sandy Springs, Georgia, just outside of Atlanta.
River Place is located on the east bank of the Chattahoochee River at the intersection of Powers Ferry
Road. The community will consist of 284 residential condominium units, 110 townhomes, 38
condominium flats and 10 single-family homes.