‘Many Owners Walked Away From Their Mortgages’
The Rocky Mountain News reports from Colorado. “Real estate foreclosures in the Denver area rocketed by 32.3 percent in the first nine months of the year, as condo overbuilding, risky loans and inflated appraisals drove the number of loan defaults to near record territory.”
“Through September, 14,205 foreclosures had been filed in the metro area, compared to 10,735 in the first three quarters of 2005. The record for foreclosures was set in 1988, when 17,122 were filed from Boulder to Douglas counties.”
“Economist Tucker Hart Adams said many of the foreclosures seem to be in the suburban condo market.”
“In one troubled condo project in southeast Denver, some one-bedroom units are being sold in foreclosure for as little as $18,000 to $20,000, while they sold for $110,000 to $120,000 at their peak, said broker Rob Murphy. Many owners walked away from their mortgages after being slapped with huge assessments.” ”
“‘The problem is it has a ripple effect,’ Murphy said ‘Appraisers are already under fire because a few bad apples were overinflating them. Now, appraisers can’t justify units down the street selling for $80,000 to $90,000, when they use this for a comparable.’”
“Housing prices, slumping after a five-year boom, are projected to decline in more than 100 of the nation’s metropolitan areas. Greeley is included in a list of 30 U.S. metropolitan areas that show the largest declines in median housing prices. The community showed a 10.7 percent decline in prices.”
The Greeley Tribune. “Drive down San Mateo Avenue in Evans and you’ll see a lot of empty new houses, real estate brokers say. Most of the fresh new abodes lining the northwest end of the Tuscany subdivision sit unoccupied.”
“They have been waiting for awhile. D.R. Horton built 40-some houses in Tuscany in about a six-month span last year, putting them up for sale in January. So far, according to Shawn Golding, (who) represents the homes, only seven have sold.”
“‘They’ve been slower than expected,’ Golding said. ‘They’re running some incentives and stuff on them.’”
“The Tuscany development is not alone. More new houses are spending more time on the market. As a result, sellers say they are having to lower prices and offer greater incentives to lure buyers, and developers are building fewer houses.”
“Realtors and developers in Weld County said the market became overheated near the millennium and is now overbuilt. Builders are scaling back as a result. Dotti Weber, executive officer of the Homebuilders Association of Northern Colorado, said new housing starts are down considerably in Weld County. Builders this year got 1,457 new permits as of July, compared to 1,761 permits in the same period last year.”
“Lifestyle Homes president Brad Clarkson (said) the company does about a fourth of the business that it used to. Clarkson said large-scale national builders such as Lennar and D.R. Horton came in and built more houses than the Weld market could handle. ‘They all jumped in at a time when things were really hot, and they helped us oversupply the market,’ Clarkson said.”
“The drop in business forced the company to drastically cut its workforce, Clarkson said. About 20 people today get their paychecks from Lifestyle; Clarkson said at the company’s peak, it employed 60. He said his business isn’t the only one hurt by the cutbacks.”
“‘When you oversupply the market, you wind up putting people out of work,’ Clarkson said. ‘A lot of trades are having to reduce their prices to get their jobs, or they’re shrinking their workforce and laying off labor.’”
“John DeWitt, president of the Greeley Area Realtors Association, said, ‘What we’re seeing is that builders are backing off. ‘They’re glad to do pre-sale homes, but the days when builders go in and do 20 or 30 homes at a time are over.’”
The Nevada Appeal. “Fewer Carson City homes sold in August than a year ago. The data also shows houses are spending more time on the market and costing 11 percent less than a year ago.”
“The median cost of a single-family home in August was $309,000, compared to $348,500 the previous year. Real estate agents call this a buyer’s market. ‘There are more houses to show and sellers are more negotiable,’ said real estate agent Kathy Tatro.”
“The number of Realtor sales decreased in Carson City in August, despite the falling prices, according to the Northern Nevada Regional MLS. Forty nine homes sold, compared to 68 in August 2005 and 82 in August 2004.”
“These statistics do not include owner sales. Those sellers are also feeling the effects of the market. Donaldo Palaroan said he’s reduced the price of his home in the Silver Oak subdivision from $479,000 to $474,000. ‘We’ve been in the house for two years and we bought it in a seller’s market, now we’re selling in a buyer’s market,’ Palaroan said. ‘We’re not in a hurry to sell.’”
“Another house is for sale around the corner. The home has been on the market for about a month and its asking price is $510,000, said real estate agent Bill Dooley. This price isn’t a problem for potential buyers Doug and Patti Eisner, of Walnut Creek, Calif.”
“‘It’s a good time to buy,’ said Doug Eisner. ‘I don’t think it’s ever a bad time to buy.’”
‘Meet Jeffco assessor candidate Rocky Germano. What are the biggest issues facing community now? Housing. We have over 10,000 foreclosures in the Denver area people are losing their homes.’
‘Meet Jeffco treasurer candidate Faye Griffin. What are the biggest issues facing the community now? Economy: We are seeing a lot of foreclosures on real estate and yet many new houses and subdivisions are still being built.’
‘Slumping vehicle sales and a drop in construction and restaurant-bar business helped pull down taxable sales in July in Washoe County, the state reported. The greater Reno-Sparks area saw a 2.6 percent decline compared with July 2005. Question: What factors are at play in Washoe’s numbers? Answer: Several, notably a softer housing market, rising interest rates and high gasoline prices,’
‘Rob Joiner, a Sparks city lobbyist who has been involved in planning and redevelopment in the region for 30 years would like to see a report on the profit margins of local builders. Joiner said he’d rather see builders reduce their prices than offer Hummers or $20,000 to $30,000 in free upgrades. ‘But they want to keep prices up,’ he said.’
I met with a real estate mediator yesterday who specializes in lawsuits over the sale of homes. A year ago buyers never wanted to give back the home when mediating after a sale because RE always goes up. Now, EVERY buyer, wants to give back the house as part of resolving the dispute.
Late-to-the-party smart buyers anyway. Better too late smart than eternally f*ked.
‘Slumping vehicle sales and a drop in construction and restaurant-bar business helped pull down taxable sales in July in Washoe County, the state reported.
Very shocking, with sales in key areas down I would think that the bar business would skyrocket.
“Very shocking, with sales in key areas down I would think that the bar business would skyrocket.”
It would, but none of the bars except the Home Depot Consumer credit card.
Supprising yellow ore prices didn’t just drop with your oversupply of comedy gold. Seriously that was good
I know Rob Joiner, he’s a good man. I find this interesting that the Reno regional elected officials are coming out and being loud at this time about this issue! The market in this area should be dropping faster and in the same manner as the California residential market but it’s not. We have some really stubborn *ss FBs here.
We are still renting and waiting to buy. Renting a 2bdrm/2bath 950sf cracker box apt for $1250 a month but at least we aren’t a Reno FBer.
“‘It’s a good time to buy,’ said Doug Eisner. ‘I don’t think it’s ever a bad time to buy.’”
Oh please. The only thing more disturbing than this comment, is that there’s people who bought it, and are buying it still.
IMO Mr Eisner just picked a bad time. How about those $20k condos?
18 k for a condo - I might bite - if it were oceanfront! lol
Watch out, it might be some motel conversion built in the 1950’s with paper thin walls. People were converting almost anything into a condo since “real estate always goes up” Plus who knows if even at $18,000 that there will be enough owner occupants to keep the condo association going.
agreed - no oceanfront in CO!!!
On 18 cents on the dollar you might be able to reconvert it to a motel again if you can purchase enough units!! The renovation has already been done. The mortgage is low enough that at $30 a nght and 10 days occupancy yields $300 per month which should cover your costs!! or rent them out for $300 per month and be cash flow positive!!
I used to live in Colorado. The problem is that there’s so much housing available. It’s not like California rent on those would probably be around $300-$350. Nothing to scoff at if you pay for the condo in cash. But, the people you rent to are pretty scummy.
The real reason why Colorado is so far ahead of everywhere else in foreclosures. Is because in Colorado you don’t need to be licensed to be a mortgage broker. This means the person selling you your house can also be the person setting up your mortgage. Collusion anyone…
They know exactly what you can afford. Throw in a shady estimator and you can do whatever you want. The Agent not only makes $$$ on the house commision but they also make $$$ on the mortgage. How tempting do you think it would be to push buyers to a crazy loan that screws them but gives you a huge commision? Or better yet just tell the buyers that a crazy loan is all they can qualify for? It goes on and on…
But, where is this idiot from?? Yes, that’s right…….California.
Jason- I think he meant IF you are going to stay in the home a long time. It never is a straight line, but the trend has always been up over the years for homes.
some one-bedroom units are being sold in foreclosure for as little as $18,000 to $20,000, while they sold for $110,000 to $120,000 at their peak
Wow. And we’re just getting started.
Now we are beginning to talk turkey. Pocket change for a condo. Oh Yea Baby!
Peter, you beat me to the punch. Just think, this is the just the beginning. Early next year 2-3 bedroom HOMES for 18-20 K in Denver. Maybe, I might just be moving in a year or so to Colorado. Def. not as crowded as SoCal.
It’s the assessments that will kill you. Thus the price.
Bring it on! I made a killing the last time the Cali’s bailed and came here for a better deal. Just bring some good jobs with you, okay?
I now have a target. When the condo’s in my area (MD suburbs of DC) go from 200-300k to 40-60K, I’ll buy. I won’t even care if that’s not the bottom, I’ll be paying cash.
Gee whiz, if (and I kinda think, when) this kind of fallout spreads everyone ought to head down to the firing range - we’ll need the practice.
‘I don’t think it’s ever a bad time to buy.’”
Spoken like a true Californian.
They obviously have not visited this or other RE bubble blogs. Let’s check back with them in a year or two and see if they have the same opinion.
- “The drop in business forced the company to drastically cut its workforce, Clarkson said. About 20 people today get their paychecks from Lifestyle; Clarkson said at the company’s peak, it employed 60. He said his business isn’t the only one hurt by the cutbacks.”
These cut backs in the sub contractor trades are already rolling ahead at full steam. So Cal is going to take a beating.
Cali is definitely going to get a beating. Tech jobs have been fleeing the Bay Area for five years and there are way more realtors, marginally employed house flippers, mortgage brokers, construction subs, etc. than a normal economy requires.
A lot of people here don’t think anything bad will happen though. We’re special and everyone wants to live here! I’m entitled to my 20% per year appreciation!
Yeah, that will save us.
It doesn’t matter if those in RE lose their jobs.. It’s not like they bought homes for themselves during the past few years! Ohhh wait a sec….
I lived in San Francisco for 10 years before bailing last year … It truly is “special” there (sarcasm) … The funny thing is, people there actually believe that nonsense. One of the local news broadcasts in S.F. begins by stating something like “Live … From the Best Place on Earth!” (Referring to the Bay Area). Aren’t we wonderful!! Our little 80-year-old, 900 square foot, crap-boxes are really worth $850,000, and will only go UP UP UP by 20% or more per year …. After all, this is the Best Place on Earth … our local news station says so!!!!
“Let’s check back with them in a year or two and see if they have the same opinion.”
I say check back on them by Christmas and they’ll severly be regretting their decision. Colorado is showing the rest of the country the way to properly bust a bubble!
Mr. Eisner is probably a well off guy being from Walnut Creek. But regardless, it is a bad time to buy.
“‘I don’t think it’s ever a bad time to buy.”
Absolutely clueless!
Who’da thunk Colorado would be at the tip of the spear?
Condos for 20K … almost worthless, but not quite. Ah well, there’s plenty of time left in this downturn.
Emcee, interesting comment about worthless. At one point does the housing market get so long that it isn’t even worth buying unless you are really in for the long term or you pay cash outright?
I meant low, not long!
One should never buy RE for short term gains!! RE rises with inflation and local market variables. If you do not plan on living or keeping a place at least 3 years you should not expect to get your money back. Yes I know this is an ‘old’ RE market guideline and not the ‘new’ but we are going to go back to the old ways here real soon. I would actually say if you do not plan on keeping the property 5-10 years at this point you should not consider buying RE. since we have to add years to acount for the current excess in price. If you can buy a condo for 20k you might be able to turn a profit in 3 years but anything short of such a low price comparable I would not count on it!!
anyone who is footloose or transient (i.e. not PLANTED in a location) is much better off renting…
If you can buy a condo for 20k you might be able to turn a profit in 3 years but anything short of such a low price comparable I would not count on it!!
Not in a building with major defects!
Absolutley!! Always examine the structure!!!! Look in the attic, crawl around the foundation etc!! Make sure what you are investing in is going to be a “financially and structurally sound” investment!!
Do people generally inspect the building when they buy a condo? Are they even permitted to?
People generally don’t inspect. You cannot inspect inside other tenant units but if another unit is for sale in the same bulding on the top floor you can look at that unit and climb up to see if the structure is sound. Most newer properties have a 10 year structural warrantee so newer properties will be OK. Once you get outside this window or plan on keeping it past this window you will no longer be covered by this insurance. I tend to buy either newer 5 years or under or really old property that are structurally sound. Pay to have a professional inspection , and if possible arrange to walk the property with them. They tend to do a better job with your oversight and you get educated on what they are looking at. It is a small cost that can save you from buying a lemon!!!
So much oversupply Dan, it’s hard to say, isn’t it?
At what point would renters flood out of apartments and into the then ultra-affordable condos? Would the flood eventually consume the oversupply?
Except that there is such an oversupply of housing those renters “flooding into condo” only serve to drive down rent vacancy rates…
You just described a deflationary spiral. Renters move to condos. Because of the vacant apartments, rents decline (due to compitition). Thus fewer people buy 3 bed/2bath homes. This stalls the upgrade market droping the prices of 4bed homes, etc.
Those realtor phones are about to go quiet.
Neil
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Even a $20K condo might be a bad deal if the HOA, taxes, and insurance are ugly. I don’t like endless monthly overhead costs. Like an alligator you have to feed cash flow to every month.
I was one of the 49 sellers in August in Carson City. It was rougher than that article portrays. Offers didn’t really start flying until price came well under $300K, and most offers were no-money IO/ARM type folks. Realtor was a little surprised at the sudden change in the market over the summer. I was always lowering price against their advice.
The majorly understated factor about median price is that you can’t see the fact that better quality is selling for less, and lower quality isn’t selling at all.
It just blows me away that there are so many homes for sale that are over 500k asking price in a town like this. Its as if every seller expects the fairy home buyer to ride in from Cali and overpay. Hats off to you for seeing what so many won’t…
- Donaldo Palaroan said he’s reduced the price of his home in the Silver Oak subdivision from $479,000 to $474,000. ‘We’ve been in the house for two years and we bought it in a seller’s market, now we’re selling in a buyer’s market,’ Palaroan said. ‘We’re not in a hurry to sell.’”
- Whew! Thank goodness Don is ‘not in a hurry’. That 5K drop in price is quite a bold step! Don is going to ‘Control’ the market and the market WILL NOT CONTROL HIM.
and most offers were no-money IO/ARM type folks.
Wow! You do realize how lucky you were as the IO/ARM spigot is about to be turned off with the new mortgage guidelines… Ok, maybe not luck, but willing to take your medicine today rather than “chase the market down.”
Scary…
Yes, very lucky to be out before that ARM spigot closes.. But a truly qualified buyer is who actually made the offer which I accepted… From California. The fact it was so well qualified is why I took it.
“The majorly understated factor about median price is that you can’t see the fact that better quality is selling for less, and lower quality isn’t selling at all.“
Wow! That is RIGHT ON!
Exactly, so what does that REALLY say about the median price of a home today VS 1 year ago?
>The majorly understated factor about median price is that you can’t see the fact that better quality is selling for less, and lower quality isn’t selling at all.
Great point.
I thought everyone would rush to Colorado, because (if you beleive Al Gore) the rest of the country will be under water (literally) very soon.
Colorado has always been the destination of choice (until Arizona as of late) for washed-up Bay-Area has-beens. How do you think Boulder ever became so insanely expensive?
Contrary to what most Denver-area residents want to admit, Denver is nothing more than a high plains town–it is not the West and it is not in the mountains.
Just right next to the Mountains.
And, at over 5,000 ft, I would consider that to be “in the mountains” myself.
Maybe you can explain why a subdivision in Greeley, CO would be named “Tuscany.” In fairness, I have never been there, but a graduate school classmate once informed me that the distinguishing feature of the town, besides the University of Northern Colorado, is the enormous, stink-radiating cattle feedlot.
Rush to CO for what? A Rocky Mountain High?
“I don’t think it’s ever a bad time to buy.’”
______________________________________
aka I dont think it’s ever a bad time to lose money!
If I keep telling myself that “RE price keep going up” they will!! It is the power of positive thinking. It worked when I told myself “I am not an Idiot, I am not an Idiot”. …Look I have made good money and have hardly had to really work for a living the last few years due to this positive thinking. OK “RE prices keep going up….RE prices keep going up…REPKGU”
Off topic:
GO DODGERS!!!!!!!!!
4-4 in the 7th inning
Off topic:
Lets go Mets!
Lets go Mets!
Lets go Mets!
LOL!
i.hate.the yankees go anyone else!
Yea!! I have always been a Yankee hater. It is because the fans are so smug like the current “RE flippers”. It is one thing to be good but to personalize someone elses success as though it is your own or in the case of RE they caught a rising tide without knowing really what they were doing in many cases. If one does the work and knows the pitfalls of their industry and has I smug attitude I can accept it but for all the others it is rather repulsive!!
exactly - it is not because there is a lack of talent there. it is the smugness. rather root for the sox and mainly eat sh!t every year. the one ws will be the only one in my lifetime!
Designated hitter David Ortiz claims Jeter shouldn’t be considered for MVP? Who’s the smug one?
OT - I don’t give a damn about baseball.
Totally agree, feepness. The sooner it’s over the better.
Is there, like, a game going on or something?
-
Baseball sucks. 162 long boring slow games in the season! too many games, too slow and boring.
give me football where every game is exciting and actually means something.
Word. I’m still living the the glory days of 1988 and the Kirk Gibson homer. How pathetic is that?
“‘It’s a good time to buy,’ said Doug Eisner. ‘I don’t think it’s ever a bad time to buy.’”
Only some greedy, duba$$ bay-area specu-vestor boomer would ever make such a comment. Perhaps this couple could lead cheerleading at the NAR?
What the hell is going on in Colorado? Is this economic first then housing? Or, housing then economic? Is Colorado foreshadowing what’s coming my way in Florida?
It’s as if Colorado has a statewide ban on rational thought.
It is amazing how a lot of the major markets like CA, Fl, AZ, DC get most of the attention as they seem poised to crumble before our very eyes, then all of a sudden, out of left field, here’s Colorado in a freefall. It stands to reason, that flyover country may actually implode first.
Exactly what I was thinking, except in my mind it kinda looked like this:
http://tinyurl.com/s89d5
Chart 4 explains why Colorado is imploding.
http://www.fdic.gov/bank/analytical/regional/ro20062q/na/2006_summer04.html
Now, what possessed them to get so far on the X-axis without a reason on the Y-Axis? Scary.
Interesting data! And yes it explains a lot of why CO is imploding.
excellent graph, as we have said many times before, we has national funny money, but lacked the appreciation. you could say that we are the precursor of what will happen to those other states on the far right of that graph.
I get your point, appreciation is the music driving all the markets. When it stops; Colorado happens.
Excellent find incessant_din!
This report describes the funding fueling the housing bubble. It states, “control of the mortgage market shifted dramatically in the 1980s from savings institutions to banks and to federal government-sponsored enterprises (GSEs), which played a major role in the creation of mortgage-backed securities (MBS).” It adds, “A significant development in the mortgage securities market is the recent and dramatic expansion of “private-label” MBS, which are securitized by entities other than the GSEs and do not carry an explicit or implicit guarantee. Total outstanding private-label MBS represented 29 percent of total outstanding MBS in 2005, more than double the share in 2003.”
I’ll try again. Sorry if double post.
Chart 4 explains why Colorado is seeing the freefall.
http://www.fdic.gov/bank/analytical/regional/ro20062q/na/2006_summer04.html
Now, what possessed them to get so far along the X-Axis without a reason on the Y-Axis?
Maybe it is as many have suspected before: After the tech bubble imploded, the housing prices around Denver should have fallen, but were artificially propped up by exotic mortgages. Now this support is failing, and prices are falling.
Thank you for the interesting chart. I wonder what it means for house prices around me in Minnesota, with our percentage equal to that of Florida?
Job loss, horrid economic activity?
Dontcha just love the waffle language at the end about how if there is a gradual transition, there shouldn’t be anything the FDIC can’t handle. So saith the FDIC economist.
“These statistics do not include owner sales. Those sellers are also feeling the effects of the market. Donaldo Palaroan said he’s reduced the price of his home in the Silver Oak subdivision from $479,000 to $474,000.”
Yeup. With a reduction of 1.04% this for sale by owner truly is not in a hurry to sell.
what every reasonable person would agree to is that almost everyone who works deserves to be able to own a home and provide for a family–the building block of society. this rampant greed and consumerism will be the end of this country because it attacks the family. this get rich at all costs sets everyone against their neighbor and is why home prices are ridiculously high. unfortunately, once a democracy votes according to self interests and not what’s best for society as a whole, you will have the deterioration of that society.
Secula don’t get me started. You are preaching to the choir. Amen brother or sister. Greed and consumerism is killing us very quickly.
And down the crapper we go. Wee!!
I agree Secula. In my town (Ashland Oregon) many folks are chortling about how much equity the boom has given them as our town turns into an overpriced place for retiring Californios to come and die. Working families have to commute in and the schools shrivel. This has certainly been bad for the town.
“what every reasonable person would agree to is that almost everyone who works deserves to be able to own a home and provide for a family”
I’m think I’m reasonable, but I don’t agree with that statement (even though I admit you qalify it with “almost”).
I do agree strongly with the following: Nobody owes you (me, one, etc.) anything. The four words that give you freedom.
Could simply be a word choice issue. An idealistic way of putting it may be that its in society’s best interest if a working person is able to afford a house. Of course, the market has already resolved this in that a working person can afford RENT, and thus a place to live. And this brings us full-circle to rent/price valuation metrics and why there is a bubble in the first place.
And while I agree (in a theoretical sense) that nobody owes me anything, I think you would agree that this statement is pretty detached from the current me-first/wall-st. option scam/inflation/ppt/cooked cpi/cooked gdp/missing m3/guns-n-butter/debt-riddled/mew-hummer economic reality in the US.
Unless you’re suggesting that we give up these bogus fed-notes and buy everything with gold coins? Not a bad idea come to think of it…
Go Fountainhead!
Nice sentiment, but more appropriate in the 50’s when land and jobs were plentiful and the population was 1/2 of what it is now. We are pushing the limits of population growth, not just for lack of land, but the resources (water, energy) needed to sustain that growth, not to mention jobs. The reality is we have two Americas, have and have-nots. This RE bubble allowed many of the latter to join the former temporarily, but that will rapidly reverse in the coming years. The greed of some modern citizens exacerbates this issue as the uneducated sheeple are slaughtered in the process.
Sadly, the have-not pretenders will actually facilitate this transition of money, land, and power to the haves in a way that would have been impossible without all of these inflationary excesses. Makes me wonder what Greenscam was REALLY up to when he encouraged ARM’s and creative lending for the peeps, knowing full well what the inevitable outcome would be.
He works for the elite bankers in the City of London (not to be confused with London). That’s why he’s a Knight. He was probably put in place to bring the US to it’s knees financially. The elite bankers never got over the fact that the colonies broke away from the motherland. The federal reserve system set in place in 1913 was a big step in reclaiming what they felt was their turf.
Lack of land and resources? Are you nuts? Or maybe you just haven’t been to Europe, where they are (so far successfully) cramming a LOT more people into a given space than we do. I souldn’t even mention parts of Asia!
Here in the DC Metro area, I sometimes marvel at how people say development needs to stop because “there’s no more land”, while I drive past hundreds, nay thousands, of empty acres just past Dulles airport. And all the spread-out suburban lawns in these suburbs! You could house four Europeans families in a typical single-family home in Loudon County! (Most families I knew when I live in Europe, including mine, had about 700 to 1200 sqft. And a back yard the size of my living room.)
You cannot compare America to Europe. European societies are more homogenous (ethnically and culturally) have mass transit systems, much less dependence on foreign oil, and a mentality that does not think “bigger is better.” Americans are not going to start acting like Europenas so you can cram them all into little spaces where there was once a lawn. You also do not seem to understand how development works. Just because there is “land” somewhere, does not make it suitable for building. There are considerations such as freeway congestion, school availability, access to jobs, water, electricity, etc. Not to mention other more latent considerations like maintaining natural spaces (trees to create oxygen) and local growth policies, to name a few. Besides, who wants to live next to an airport?
Just because there is “land” somewhere, does not make it suitable for building.
Of COURSE that land is suitable for building. High and dry, wooded/fields, easy Tollway access. It is not a land problem — it is an administrative and government problem. no infrastructure? Uh, you do haave to build it; it doesn’t get laid in by the fairies at night.
And that land is MILES from the airport, not right next to it (though people will indeed live next to airports — I did for years). Who says you can’t build near airports?
Now if you’re saying we can’t build on that land because the regulators WON’T let us build on that land, that’s a different matter. Sure, if we want to have McMansions, golf courses, and horse estates for everyone, we might not have enough land. But there’s nothing to say we can’t (at least in some parts of the country) live more like the admittedly congested European model.
It’s the choice we make to prevent ourselves from building on land, but we definitely should not be saying there’s “no more land”. That’s just idiocy.
I don’t think “reasonable people” being the arbiters of what everyone deserves is a good idea. It reminds me of long ago taking a philosophy course about “utopia” and it seemed to me that it required oppressing the human spirit to maintain it.
Most of the swarming masses in the 1930s still had some dignity, decorum and personal pride. I think that because these qualities no longer exist in the swarming masses that we will not recover from what is to come. Too many selfish, oafish people - not enought with character.
Nah, only the one with dignity, decorum and personal pride will survive.
The selfish, oafish gluttons will be extinguished from the gene pool.
At least I can hope.
but they are the ones incessantly breeding - I fear they will survive
“Then the idiot who praises, with enthusiastic tone,
All centuries but this, and every country but his own”
They’re on my list too…
Regarding the Eisner’s, it’d be interesting to find out what they do for a living to be able to handle the operating costs of the $510k alligator. In 2003, the median household income for the area was around $43k.
http://quickfacts.census.gov/qfd/states/32/32510.html
BayQT~
I am amazed that so many people are blind to all the costs that come with a house. The bigger the house the higher the insurance, the more it costs to heat and cool, the more time it takes to clean and keep up the place. I have neighbors who were ’shocked’ to get the supplemental tax. They would ask us did you know this was going to happen. I say “yea” did you “READ” the paperwork you signed? All they looked at was could they afford the mortgage payment!!!! Some took out HELOC’s to pay their taxes. The HELOC train has reached its final stop!!!!
Hahaha… yeah the good old supplemental tax. And you might even get 2 of those bills if you bought in the first half of the year.
The Bay area special, and everyone wanting to live there? My wife and I are two votes AGAINST that idea. We packed and left, and glad about said decision. From what I could tell, many more people leaving than going into the Bay area. Moving truck guy said was empty going into CA, and full leaving. UHaul price $4000 out, $120 in (SF to ABQ). Take that for what it is worth.
$500 from SF to Chicago, $3,000 from Chicago to SF.
Opposite flows to yours.
I suspect the movement is more complex than what U-Haul based predictions can capture.
>>Through September, 14,205 foreclosures had been filed in the metro area, compared to 10,735 in the first three quarters of 2005.
The record for foreclosures was set in 1988, when 17,122 were filed from Boulder to Douglas counties.
Oops! Can you tell I’m not used to using quotes on this board?
Anyway…the point I wanted to make was that in 1988 “short sales” were almost unheard of. If that were the case today, I believe we would have passed the 1988 record for foreclosures at least a year ago.
Hey I like your handle better than mine…
The thing that scares me is that i don’t know what will pull the housing market out of it’s nose dive..
The “soft landing”, of course ;).
‘Appraisers are already under fire because a few bad apples were overinflating them. Now, appraisers can’t justify units down the street selling for $80,000 to $90,000, when they use this for a comparable.’”
Yeah, the lender’s love the rubber stamp value boys on the way up…then when the shit hits the fan, and the underwriting gets sticky it’s back to the “conservative” guys.
Too late MF’ers, the damage has been done.
You queered the comp base-and now there’s hell to pay.
F*ckin’ hypocritical azzholes.
The mortgage lending business make me want to puke.
it will be intersting to see how soon the $hitboxes built in 04 and 05 will sell for less than it cost to build them.there has been a sudden and dramatic drop in land prices here in sonoma county…about 30% over the summer.permits are a big part of the cost,i know,but all of the subs will be fighting for work,and dropping their prices.if it suddenly costs 175 sq ft to build what it cost 225 sq ft a year earlier it will increase the downward pressure,especially with the tiny pool of qualified buyers here.
I have a cousin who is a builder and he states it is his subcontractors that are getting rich off of this boom. Every house he builds gets higher and higher. He builds million dollar plus homes in KANSAS and changed his pricing structure to not quoting a price but creating a cost sheet and taking 8-10% on top. People agree to it without blinking. His costs have recently just started to decline to to excess workers and not enough work. In a couple years you will be able to get some high quality labor for a decent price!!
I belive the overall cost of building a house is going to decline. The comodity cost of lumber is at a 5 year low and with more contractors available the labor rates should be more flexible.
I concur!!! We live in a world of supply and demand!!! It is already starting in this direction in many areas.
FWIW….when the market started to level off in the Denver area about 3 or 4 years ago, some of the first struggling homeowners that I ran across were subcontractors who thought the music would never end. They all needed me to jack up the values of their homes so that could do cash out refinances to hold them over until that next big job came in. Problem was that they had already done the same thing several times already, those big jobs never showed up, and the last appraisers had already put them upside down on their mortgages or darned close to it.
My lack of cooperation made me the “bad” appraiser….go figure.
You were conservative on the value and you screwed the deal up.. when I was youger in my early 20’s I was deemed inexperienced and conservative.. Now I am a deal killer.. don’t send it to me cause I will do the appraisal correct.. lets send it of to skippy the trainee he bring it in.
I would say 90% of loan originators are scum.. and the other 10% are O.K. but remember you are only as good as your last appraisal..Don’t forget that fact.. I have got my pee pee slaped.. but the ones that want them done right will come back to you….
yo
That was just a test. Anyhow, this mention of flyover states getting hammered is interesting. The truth is that while some “flyover” states like Colorado are getting creamed, there are and still are tons of areas that never experienced the boom- entire states for that matter. GA, TN, AL,Most of TX ( except Austin) and perhaps the rest of the Southeast thrown in for good measure.
My folks still live in NC, and all they can say these days relates to the rather enormous numbers of Californians, New Yorkers, and Floridans moving in. Yes- homes in some of these areas are under 50k. But with such HUGE price diffrences, I wonder how much longer their region will stay affordable.
It is also interesting to note that of the cities listed on the top 10 places to live, most were in the states I mentioned above. Guess housing bubbles aren’t too great for people- as mentioned above as well by another post.
Those regions will remain affordable. What is going to happen soon is that so many for CA, NY, and FL will be under water that they’ll stop driving those markets. And the big publicly traded builders must build. So they’ll switch to any area with jobs that can support the construction costs.
To think this is only the warm up act until 2Q2007… *Late* 2Q2007 I should note.
Neil
I spent some time in MA durring the end of last year and earlier this year. Many of the people whom I met were thinking of or knew a realative who was moving or planning to move to NC. I live in Richmond, VA and I have been to parts of NC. Nice area, just interesting that NC keeps comming up. Are there specific reasons for this?
Most of NC (the “flyover part” funny enough) has been relatively unscathed by the bubble, i.e. prices haven’t risen that much. Exceptions are the coast (Wilmington) and the mountains (Asheville).
A good source to see where the bubble has affected the most is:
http://www.ofheo.gov/media/pdf/hpi_msa06q2.txt
There are 379 metropolitan areas tracked in the U.S.; 14 of these in NC. Of the 14, only 3 are in the top half price index increases; most are in the 30th-60th lowest increase range.
By comparison, FL has 21 areas - the very “cheapest” Tallahassee still is 240th highest out of 379, and 18 out of the 21 are in the top 300.
All of California’s 28 areas are in the top 300 (that is mind-boggling). The least gain in CA is Hanford-Corcoran (I’ve never heard of it), with a 240% gain since 1995! As a state - CA is doomed.
TX is probably the best-off state, with 20 of its 26 in the bottom 100. Austin is the worst there at 196.
Even Iowa has it’s hot spot - Waterloo-Cedar Falls at #245, with a 193% gain. Most of the fly-over states though are pretty low overall. You can really tell from those stats how localized the bubble is; problem is that it’s in so many locales - about 30% had above 7% annual appreciation (what I would consider high bubble factor); about 55% had over 5% annual appreciation (what I would consider at least some bubble factor).
bold off
trying again - durn back vs. forward slash
Most of NC (the “flyover part” funny enough) has been relatively unscathed by the bubble, i.e. prices haven’t risen that much. Exceptions are the coast (Wilmington) and the mountains (Asheville).
A good source to see where the bubble has affected the most is:
http://www.ofheo.gov/media/pdf/hpi_msa06q2.txt
There are 379 metropolitan areas tracked in the U.S.; 14 of these in NC. Of the 14, only 3 are in the top half price index increases; most are in the 30th-60th lowest increase range.
By comparison, FL has 21 areas - the very “cheapest” Tallahassee still is 240th highest out of 379, and 18 out of the 21 are in the top 300.
All of California’s 28 areas are in the top 300 (that is mind-boggling). The least gain in CA is Hanford-Corcoran (I’ve never heard of it), with a 240% gain since 1995! As a state - CA is doomed.
TX is probably the best-off state, with 20 of its 26 in the bottom 100. Austin is the worst there at 196.
Even Iowa has it’s hot spot - Waterloo-Cedar Falls at #245, with a 193% gain. Most of the fly-over states though are pretty low overall. You can really tell from those stats how localized the bubble is; problem is that it’s in so many locales - about 30% had above 7% annual appreciation (what I would consider high bubble factor); about 55% had over 5% annual appreciation (what I would consider at least some bubble factor).
A good source to see where the bubble has affected the most is:
http://www.ofheo.gov/media/pdf/hpi_msa06q2.txt..
Not a good source. Only goes thru June 30, 2006 the 2nd quarter. With the internet and good blogs, this government information is stale within 10 days of release. And what has happened to house prices in the last 3 months is a crash of epic proportions. Better update your sources before you make any real estate decisions
Oooo K, well
- I’m not looking to make any decisions, just providing some data relevant to the question asked, with some additional color.
- Anyone who makes real estate decisions based on activity from the last few weeks or months is a fool (e.g. one of the recent speculators). What’s really important is the long-term trends; and in this case illustrating what areas have deviated the most from the long-term trends.
- This is the best data I’ve seen with regards to completeness, in that it covers every part of the country, and it provides detailed data going back over 20 years. If you know of any more comprehensive data, please provide a link - I’d love to have it. All the locations that I’ve seen that provide up-to-the week or even up-to-the month data include data that’s either only regional or is only recent (within the last few years).
- With all due respect to this and other like blogs, 99% of the information in the blogs in anecdotal, and is also very much slanted (e.g. you don’t hear much about the places in the midwest that have averaged less than 3% gain). While the sum total of the anecdotal evidence is meaningful and mostly comprehensive, it’s also not measurable in real terms like the data from OFHEO is.
thanks for the link, packman
N.C. is the promised land, in cycles. There was a mini-boom in NC after the last RE downturn. Asheville and western NC were a hot market in the late 90s when Va. was dead. I’ve lived in Boone and Asheville and did well with a property in Asheville that I bought in ‘96 and sold in ‘98.
NC faded a bit, and like TN, TX, etc. did nothing during the recent run-up. Now NC is the promised land again for Floridians, Northeasterners. NC is being its usual counter-cyclical self.
This is nothing new. Same old rehashed cycle. NC looks good on paper: has the biggest mountains and some of the best beaches, has universities and cities, seems less “hick” than TN, AL, GA (not true). Total tax burden in NC, while not terrible, is higher than GA, SC, VA. Cities like Asheville and Durham are considered hip and “progressive,” meaning poorly-managed, crime-ridden, and run by “communitarians.” Psst - stay in Richmond.
Employment growth for state of North Carlolina for last 5 years….and the unemplyment rate.
The US unemplyment rate for Aug 2006 is 4.7% N. Carolina is worst than the nation. Doesn’t look that good on paper.
Emplyment…..unemployment rate
2001 Aug 3921246… 5.9(b)
2002 Aug 3924595… 6.4(b)
2003 Aug 3943681… 6.5(b)
2004 Aug 4032481… 5.3(b)
2005 Aug 4114036… 5.4(b)
2006 Aug 4230342… 4.8
Agree with cee - I think the main reason most of NC isn’t as “bubbly” as other areas is unemployment. Most of the furniture and textile jobs have moved overseas. The main high-tech area - RTP - is still suffering quite a bit from the .com bust, e.g. companies like Nortel have laid off thousands in the area and are not hiring any back.
The areas that have been more bubbly - Wilmington and Asheville - are also the areas based on tourism and retirement; i.e. mini versions of what’s gone on in Florida.
fed and other gov pensions aren’t taxed in NC and FL is too expensive now
Not that I disgaree completely with what your are saying but CO never really was part of the boom either…
DIA is the 9th busiest airport in the world. At least SOMEONE is “flying through” rather than over.
This is great, Dever has not experienced the run up that we had in CA, AZ, or UT. I suspect that is were the more savvy investors will head in the near future. That is those that sold their CA and AZ holdings in 2005/06. Also, sounds like a great place to 1031. Why not trade those over priced CA, and AZ properties for those $20k condos. Think about it, you can sell a SFH in AZ that collects $900 a month in rent for about $200k. This would allow you to buy 10 condos with 25%-30% down…..talk about cash flow. Despite the high vacancy I am sure you could easily cash flow 10 time what you get in AZ.
a nightcap from realty-idiots-times
read this twice
“The prices continue to be unchanged. Although you will notice that listing price can change from the sold price.”
It’ll be a repeat of Houston, circa 1986. You Californians who think times were tough in 1993, HAH. You didn’t see jack shit.
There is such a cornice hanging over the front range with all of these toxic loans, that only a fool would invest at this point, then yodle about what a great deal he got.
Yes, they’re cheap, but to whom are you going to sell? To whom would you rent? The large population of recently foreclosed FB? Cash flow in principle, but too much inventory to compete with and too low of a portion of non-deadbeats. One more winter after this, then start looking. The quality stuff is going to get a lot cheaper. At this point, for the next half a decade, $20K might be a poor investment.
For reference, the OFHEO data is useful for picking bottoms. Look for when the Deviation from 20 Quarter Moving Average series has a definite bottom and just starting a recovery. It’s usually close enough to the bottom in the main series to make a killing with little risk of losing your shirt.
http://www.housedata.info/CO/Denver.Aurora/
Keep your powder dry, and aim straight.
Donaldo Palaroan said he’s reduced the price of his home in the Silver Oak subdivision from $479,000 to $474,000. ‘We’ve been in the house for two years and we bought it in a seller’s market, now we’re selling in a buyer’s market,’ Palaroan said. ‘We’re not in a hurry to sell.’
——————————
Just thought I’d throw this out there, but based on what I can tell, Mr. Palaroan bought this house for $347K in June 2004. He wants a $132K+ profit in two years, and it seems that CO has been slow for quite a while, already (boulderbo, please correct me if I’m wrong, but trying to go from memory on other threads here).
“In one troubled condo project in southeast Denver, some one-bedroom units are being sold in foreclosure for as little as $18,000 to $20,000, while they sold for $110,000 to $120,000 at their peak, said broker Rob Murphy. Many owners walked away from their mortgages after being slapped with huge assessments.” ”
1/6 of original price! Wow!
“In one troubled condo project in southeast Denver, some one-bedroom units are being sold in foreclosure for as little as $18,000 to $20,000, while they sold for $110,000 to $120,000 at their peak, said broker Rob Murphy. Many owners walked away from their mortgages after being slapped with huge assessments.” ”
Wow - you could really undercut the rental market and make out like a bandit if you scoop up a couple of those 20K properties. Honestly that’s a hell of a deal.
Many owners walked away from their mortgages after being slapped with huge assessments for things such as fixing the boiler system, repairing a parking garage that was in danger of collapsing, removing asbestos and dealing with pipes that were leaking thousands of gallons each day.
Not a deal. Of course that is what happens to folks who waive thier right to an inspection so that the wont be priced out forever.
We never had a real estate bubble in Colorado. That just passed us by. There were no speculators, no flippers, and no hot demand causing housing prices to skyrocket, that just didn’t happen here. The high foreclosure rate in Colorado is starting with low housing prices. I do not think what is happening here is applicable to the bubble areas, like CA and FLA.