‘Some Vacant Homes Sit On The Market For Months’
In Business Las Vegas reports from Nevada. “While major homebuilders relinquish options and pull out of escrow on properties because of a soft new housing market, builders are already plotting strategies for where the market is heading next, according to Sullivan Real Estate Advisors. Because of the high cost of land, builders have shied away from making major purchases knowing that prices are already a factor in keeping people out of the new housing market, Ken Perlman said.”
“Las Vegas lacks the ocean and water views to make it a prominent high-rise condo market such as cities like Miami, Seattle, Chicago and Vancouver, real estate research consultant John Restrepo said. Restrepo noted that the Southern Nevada luxury condo market has 4,288 existing and prospective units in 14 projects that have gone vertical, which amounts to 6.5 percent of the 66,075 units in 119 projects that are under construction and planned.”
“Some 38 percent of the projects that have gone vertical are located in the resort corridor, and 85 percent have been purchased by second-home buyers, investors and speculators, he said.”
“Housing market researcher Dennis Smith continues to say he expects a home price decline in the valley, possibly 10 percent. Smith said there will be some ‘fairly significant price cuts’ in the existing home market in order to move some inventory; he said new home prices will fall as well.”
“‘As the market continues to cool and find the bottom, many of the owners of homes listed for sale have been unwilling to cut their prices, causing some vacant homes to sit on the market for months,’ Smith said.”
“Real estate tracker Steve Bottfeld takes aim at those who believe housing prices in the Las Vegas Valley are severely overpriced, calling such claims of national experts ‘poppycock and balderdash.’ He argued that the median price of an existing home at $329,897 is nearly 13 percent ahead of August 2005 at a time of all-time inventory and cooling demand.”
“‘Under ordinary circumstances, rising prices in the face of those two factors would not make economic sense, but this is Las Vegas and there is always more than meets the eye,’ Bottfeld said.”
From KVBC TV . “The American dream of owning a new home turned into a nightmare for one Las Vegas couple. The couple is suing the developer of Spanish View Tower Homes. They say the developer has missed construction deadlines and now they want their money back.”
“‘This project, the money, was put up, the construction was begun, the construction stopped and now there’s a lot of people that might not see their money back,’ says attorney Terry Coffing. Coffing filed a lawsuit on behalf of a couple that paid $246,000 to buy one of Spanish View’s 444 luxury units.”
“Analyst Jeremy Aguero says Spanish View is one of 135 high rise condo projects in development in Las Vegas. ‘In the third quarter of 2003, we’re looking at 2500 existing and proposed projects.’ He says the market will not support that many new condos and predicts 70 percent of those projects will never get off the ground.”
The Arizona Daily Sun. “When Shelly Denny of Phoenix put one of the two townhouses she owns in Boulder Pointe on the market three weeks ago, she knew it would take a while for it to sell. Denny is asking $309,000 for the 1,440 square-foot, three-bedroom, 21/2-bath townhome.”
“But with 237 townhouses and condos listed for sale in greater Flagstaff and sales slowing down, Denny could be in for a longer wait than she thought. ‘I believe there is a year’s worth of inventory on the market,’ said (realtor) Stephen Brighton.”
“According to statistics from the Northern Arizona Association of Realtors multiple-listing service, sales have slowed locally and are down 13 percent from the same period last year. From June through August, 86 townhomes and condos sold this year, compared to 99 last year in the greater Flagstaff area.”
“For the last year ending Aug. 30, 266 condos and townhouses have sold in greater Flagstaff, but Brighton said he believes the market has cooled considerably just as it has become flooded.”
“Denny bought the two Flagstaff townhouses as an investment opportunity. She said she decided to buy property in Flagstaff because she liked the area and said it has potential in terms of real estate investment.”
“The supply is about to increase even more and the median price come down as condos at The Arbors, an apartment conversion project, are offered for sale between $95,000 and $222,000.”
“Developers of new townhomes and condos are using several incentives to lure buyers into the market. Valerie Caro, a local real estate broker who is handling the Arbors condo conversion, said the developer’s move to set aside $500,000 down payment assistance has helped court buyers for the former apartments.”
“For sellers of existing townhomes, there are fewer incentives to offer prospective buyers. ‘They don’t have the same ammo,’ said Brighton. ‘They have to make the price compelling.’”
“A spokesperson for NAAR said the sales figures are down from last year. ‘Our condo and townhome market in Flagstaff has proved to be an interesting one,’ said Ginny Britt, spokesperson and president for NAAR. ‘We certainly seem to have more on the market as you drive through the neighborhoods.’”
‘Barry Lyerly was driving through west Flagstaff looking for a condo or a townhome for his daughter Courtney, a fashion merchandise freshman at NAU. Barry and his wife traveled from their Southern California home to visit their daughter during family weekend and stopped to tour the new condominium community.’
‘Part of their weekend was spent looking for a new home for their daughter to get her out of the NAU dorms before the spring semester started. ‘We’re definitely interested,’ said Lyerly, who thought the prices — between $95,000 and $222,000 — were attractive.’
‘Buying a new house may be expensive, but non-traditional mortgages are making it a lot more affordable, or are they? Jerome Niedorf with First National Bank of Nevada’s mortgage banking services says no.’
‘They’re not being told that (the) $600 month payment… we’re going to be adding $1,300 a month to what you already owe. So, at the end of one year you’re going to owe 15, 16k more than you do today,’ he explained. Niedorf blames these non-traditional mortgage plans for the rising numbers of foreclosures saying buyers aren’t being told of the consequences these low payment plans truly hold. ‘Being upside down on a car is one thing, being upside down on a house is something else,’ Niedorf said.’
‘ Realtor Angelina Altishin says the number of buyers taking these plans has doubled. Altishin said, ‘Just across the board we’re seeing it because buyers want to hang on to their money.’ Altishin says with these low monthly payments, people are also buying more than they can afford.’
“‘They’re not being told that (the) $600 month payment… we’re going to be adding $1,300 a month to what you already owe. So, at the end of one year you’re going to owe 15, 16k more than you do today,’ he explained.”
Just amazing. How can so many people behave so stupidly?
But, they get to live the American Dream for 12 months.
- Then the next dream-nightmare…..financial ruin.
“The supply is about to increase even more and the median price come down as condos at The Arbors, an apartment conversion project, are offered for sale between $95,000 and $222,000.”
These aren’t those butt ugly florescent conversions behind the movie theater are they? I lived there for a short time while I went to school at NAU, it was 10 years ago but I think our rent was $700/mo for the largest apartment and they were crap. Rents haven’t gone up much from what I hear, my brother is currently renting a much nicer and larger place for $850 / month.
“Because of the high cost of land, builders have shied away from making major purchases knowing that prices are already a factor in keeping people out of the new housing market, Ken Perlman said.”
Good thing for investors in homebuilder shares that the builders are smart enough to shy away from buying land when prices are falling. Oops — they already own a bunch of land, as well as options to buy more…
Wonder how much profit this dame with the two townhouses in Flagstaff is looking for. Mindboggling that most of these dolts can’t even form the idea that they might not “make” something on these or other “investment” properties.
She took a long, deep, and deliberate chug of the Kool-Aid and is now suffering from the brain wasting disease of greed and irrational exhuberance. Her average at best intelligence will most certainly end up costing her dearly as she holds on too long to the dream of easy money, thus missing the opportunity to get out unscathed.
“Housing market researcher Dennis Smith continues to say he expects a home price decline in the valley, possibly 10 percent.”
I assume he is talking about the price decline which has already occurred so far, but which does not yet show up in the official sales data due to the lag between when deals close and when the data reflects them?
“‘Under ordinary circumstances, rising prices in the face of those two factors would not make economic sense, but this is Las Vegas and there is always more than meets the eye,’ Bottfeld said.”
It’s different there for sure in the gambling capital of the nation
– prices will have to correct downwards much further than in most other parts of the planet due to the severe excess of irrational exuberance in LV.
Reminds me of when I had just gotten engaged to my (now ex-) husband. I helped him buy a car. Actually, I told him to shut up and let me do all the talking after he explained to me how he’d purchased his last car. He had no idea how much it cost - he had just told the salesman to make his monthly payments below a certain amount that he could afford.
That was the red flag right there, of course. Never shoulda married a guy who, although he had a master’s degree in engineering from a good East Coast school, didn’t realize what a stupid way to make a major purchase that was.
Unfortunately, as I’ve discovered, not all engineers are as smart and savvy as we think we are. There’s nothing worse than a dumb nerd.
Speaking of nerds…
“Real estate tracker Steve Bottfeld takes aim at those who believe housing prices in the Las Vegas Valley are severely overpriced,
- calling such claims of national experts ‘poppycock and balderdash.’
I think this sums it up:
Wierd Al rides again
Dang…try this one:
Wierd Al
That looks a lot like me.
“Denny bought the two Flagstaff townhouses as an investment opportunity. She said she decided to buy property in Flagstaff because she liked the area and said it has potential in terms of real estate investment.”
Alrighty then. She “liked” the area and it has “potential”.
Was there a calculator anywhere near her when she made this decision?
God, that was funny.
Denny is asking $309,000 for the 1,440 square-foot, three-bedroom, 21/2-bath townhome.
Local townhouses around here are very nice, much bigger, and much cheaper. I saw a half a dozen for sale just walking around the other day. Fancy two stories, cut up roofs, wood shingles, balconies, righteous. I’ll put those new and used THs up against Denny’s any day.
“Denny bought the two Flagstaff townhouses as an investment opportunity. She said she decided to buy property in Flagstaff because she liked the area and said it has potential in terms of real estate investment.”
Sounds like another Carleton Sheets graduate.
The fact that this is still happening explains why prices are not falling faster than they are. I’m getting the feeling that there must be many thousands of these zomby “investors” out there who don’t know that the world has changed.
Come to think of it, maybe this is the solution to the oversupply problem: Encourage all the newbie Carleton Sheets graduates out there to buy up the oversupply and use their credit to take out the last round of FBs. Much more efficient to spread the losses that way than to do a government bailout. These zombie “investors” can bleed the prices back down out of their own funds and credit. By the time they’re cooked, maybe the last round of FBs will have been through BK and can bail them out with new credit. And on and on.
I think that this was the grand plan for the workout NASDAQ bubble and not to let the terrorists “win” by having 9/11 cause a recession.
‘Barry Lyerly was driving through west Flagstaff looking for a condo or a townhome for his daughter Courtney, a fashion merchandise freshman at NAU. Barry and his wife traveled from their Southern California home to visit their daughter during family weekend and stopped to tour the new condominium community.’
‘Part of their weekend was spent looking for a new home for their daughter to get her out of the NAU dorms before the spring semester started. ‘We’re definitely interested,’ said Lyerly, who thought the prices — between $95,000 and $222,000 — were attractive.’
Sweet fancy Moses. Is there something kinda stupid about a college freshman getting her own condo? I think this is just another example of entitlement being passed on to kids. Why not at least try a dorm for a year, it’s good for socialization and getting some independence, then if the kid wants out, go get a job to help with rent…but a brand new condo?
“What…you live in a DORM? Eww…that’s so lame!”
Just another: “See there are still people out buying houses” story, alas.
They are putting their kid in a house but its for investment purpose . I can just hear them now ,….”Well dear I just figured it out , if we buy that condo it will go up 20% per year and by the time Lola is out of college we will have college paid for with extra when we sell. Isn’t real estate wonderful !”
Fashion merchandise freshman!
I noticed that also.
Major in “Fashion Merchandise” = Future sales clerk at Macys.
You can get a “degree” in Fashion Merchandise? This is worth $40k+
We’re going to compete with the Chinese and Indians with Fashion Merchandise grads? We are so screwed.
For what it’s worth, NAU has one of the leading fashion industry programs in the nation. My ex-neighbor was a fashion grad from NAU. Sadly, she didn’t do anything with her degree and went to work at her husbands background checking company.
There are college student neighbors around here who had houses bought for them by parents. One is an absolute delight to have as a neighbor — she’s a graduate student.
But I can think of a couple of other houses occupied by undergraduates who need to learn the meaning of words like “yardwork” and “home maintenance.” Weeding the yard hasn’t killed me yet, and I’m a lot older than they are.
OT, but regarding a recent thread on regulation:
3) a lot of times, DU does not require an appraisal or just needs a drive-by. wouldn’t you close a loan with no appraisal if you could?
4) a lot of times DU does not require income or asset verification. full doc price, but it behaves like stated.
5) DU does not have FICO minimums. i have seen FICOs in the high 400s get an Approval from DU.
For those who don’t know…DU is the tool Fannie Mae uses to evaluate loan applications (1003’s)…so, our government-sponsored (but not backed) entity doesn’t need appraisals and doesn’t really care about credit scores. What are their financial reporting problems again?
‘Denny bought the two Flagstaff townhouses as an investment opportunity.’
Bad move. I have the Sun’s classifieds right here and the Flag TH’s rent for around $800 to $1,300. And as far as the NAU student and the dorm room;, here is an apartment ad:
‘LUXURY Brand new 1 bdrm in Country Club. $800/mo.’
Ben,
What are dorms going for up there..? In Tucson, many kids are renting brand new, super nice apartments for less than dorm cost. Personally, I think buying a brand new condo for a freshman is silly…our deal with our kids was that we’d pay for dorm the first year, (it was required that they live on campus first year) if they wanted an apartment after the first year, they had to work for half the rent, we’d pitch in the rest…you’d be amazed at the stories we heard…that the rest of their friends were living it up (read that: trashing) in brand new houses, bought by parents.
Too much, too soon for a lot of these kids…brand new BMW’s, lots of cash, no jobs…then they end up in rehab, the parents wondering what happened. I know this isn’t just my opinion…I do work for recovery homes, and most of these “rich” kids had everything handed to them, without any consequences. And what was most unbelievable was that after the parents spoiled them rotten with all the goodies, they’d balk at paying for rehab the kid would end up in. The parents would yank all support, then the kid would go on state assistance to help with a treatment program.
Man, the issues in our economy are way worse than just bad math.
There is really only one reason why parents are buying condos and homes for their children in college. They really expect that by the time the student graduates in 4-5 years, the property will be worth 50-100% more. Maybe having a child in the house for two years would also allow gains to be free of captial gains taxes. If the father is smart enough to keep track of the RE market, he may end up selling at a loss and letting his daughter rent an apartment or dorm room for her last year or two of school.
I don’t know about dorm costs, but there aren’t many BMW’s at NAU. Flag is really a blue collar town, and projects like Ponderosa Trails, with huge houses priced at $400k to $700k and up, never made any sense. Unless, that is, the developers were planning to sell to speculators. And judging from the number of ‘brand new’ homes for resale, that’s exactly what happened.
I don’t know Ben. Having worked at the University, it’s my opinion that the students drive nicer cars than the staff.
Your spot on about Flag being sort of blue collar, but there sure is a lot of out of town money sloshing around. Especially those out of state students.
flagsatff is very bluecollar. Flagstaff also has one of the highest rates of poverty, drug abuse, and crime. The things they hide from the tourist. The problem with Flagstaff and Arizona in general is California. Californians are ruining Arizona like they ruined their own state. Say no to Arifornia. Flagstaff is loosing the bllod of it’s community. Investors, retirees, and summer dwellers are not going to help me when I am sick, teach my children, or sell me my food. They contribute nothing.
They are putting their kid in a house but its for investment purpose . I can just hear them now ,….”Well dear I just figured it out , if we buy that condo it will go up 20% per year and by the time Lola is out of college we will have college paid for with extra when we sell. Isn’t real estate wonderful !”
So many will find out otherwise…
If house appreciation regresses to the mean (after the correction, of course), I doubt that many of these parental buyers will realize their investment dreams. Especially after they have to repair the damage done by their offspring and their offspring’s “friends.” Those repairs can really add up.
I wish I knew how many Carlton Sheets ‘graduates’ really make money with that program. I suspect that for most it is a $250 book to sit on a shelf and gather dust. They also sell a coaching line. Just what I need, some moron college kid in Salt Lake telling me how to ‘make money’ when they get their $8 per hr and read from a monitor.
My father was a realtor here in SD in the late 80’s, till 91. He used to hate those seminars. The week(s) afterwards he would get all sorts of calls from people wanting to buy properties zero down. Like all of a sudden mr sheets had ripped away the curtain to show how yes you too can buy beach front property in Del Mar for nothing down (and make it cashflow positive)!
Josh
I will, -in a small fashion- defend the purchase of a condo for a college student. I remember seeing this done in the 1980s for some friends. However… these were really CHEAP, old condos. Kinda like buying your kid a beater to drive at first, a cheezy condo might be a more cost effective choice than renting, assuming you were willing to pay the student’s rent in the first place…
The parents I remember were not looking for appreciaition, though. They just figured they could sell the condo for what they payed, and come out ahead of paying rent for their kids.
wow,the s and m comunity is MUCH bigger than i suspected,even after working in sf.
Las Vegas? What a dump! Anybody who lives there should have their head examined.
A friend of mine told me she was buying a house for her daughter going to school at the UofA in Tucson. I asked why, since the market was dropping and may be depressed for awhile. She said her daughter needed the house for her dog, and she didn’t care if she lost money on the house, as long as her daughter was happy. (Lucky kid–I certainly didn’t have that sort of pampering when I went to college!)
Btw, I grew up in Flag, and don’t necessarily consider it a blue-collar town–there’s a fair number of professionals (doctors, lawyers, CPA’s, etc.) as well as university professors/administrators. But I agree that local home prices are way out of whack, due mostly to all the second-home buyers from Phx. and CA. Lots of regular-wage jobs go begging because you can’t afford the housing on those salaries.
When I was at university and wanted to live on-campus rather than at home, my mother hid from my father the fact that she was paying my room rent. It was expected I would work my food, drink, transport, clothes, textbooks etc etc.
(With the benefit of hindsight I think he guessed she was giving me something on top of the university fees that he paid.)
(At that time in Australia university fees were insignificant, about $300 a year. They covered various campus memberships, the actual tuition was free.)
“She said her daughter needed the house for her dog, and she didn’t care if she lost money on the house, as long as her daughter was happy.”
This is why our country is doomed….We have a whole generation raised by doting parents who inculcate in their children this massive sense of entitlement. Daddy’s little college girl needs a whole house so she can have her dog at college?? Well just buy it for her!! Imagine what a nightmare it would be to be in a relationship with this girl …. No boyfriend, spouse or partner could ever satisfy her with that sense of entitlement.
You are spot-on with that last comment. For a lot of kids these days, going to college has nothing to do with getting an useful education. They go to college so they can goof around and party for 4-6 years at mummy’s and daddy’s expense. What happens when (if) they finally do graduate with their Sociology degree? Who cares. They can always move back in with mom and dad and work at Starbucks for a while. Meanwhile, China graduates 300,000 engineers a year. We are doomed and we deserve to be doomed.
A house for her dog. What a thrill.
Because the darling daughter will be “much too busy with school” to properly attend to the dog, her neighbors will have to deal with melodious sounds of barking at all hours of the day and night. How wonderful.
Yes some rich kids near here in mid-town Tucson parents bought them a $769K 4 bdrm house to live in!
Oh but the realities of being a realtor here:
http://www.azstarnet.com/business/149037.php
Oh my gosh the photo in this article is priceless. The “house” behind the realtor has bars on the windows and the “yard” is either rock hard dirt or completely paved over. It actually looks like a small town jail.
The bars are so the Mortgage Company can lock the “owner” inside so they won’t escape paying their debt.
You’ll no doubt enjoy the comments that follow the Tucson realtor realities story:
http://regulus2.azstarnet.com/comments/index.php?id=149037
“Las Vegas lacks the ocean and water views to make it a prominent high-rise condo market such as cities like Miami, Seattle, Chicago and Vancouver, real estate research consultant John Restrepo said.
Ah, but you’d better get in now before the Big One hits Calif. and LV becomes prime oceanfront property. It’s all about timing.
Let’s not assume parents who buy their kids condos are “rich”. Or that children who drive nice cars are from rich parents.
Many of you would be surprised just how much of the material items are purchased on credit with minimum payments.
Sad, really.
Try being a teacher in Flagstaff and compare what the college kids and high school kids drive compared to us!