‘It’s Going To Get Worse Before It Gets Better’
The Las Vegas Business Press. “The Las Vegas Valley’s housing market continued its yearlong decline with 1,739 sales in September, or 41.7 percent fewer than in 2005, reports the Greater Las Vegas Association of Realtors. Home listings climbed to a record 20,815 units in September, which is 57.4 percent higher than a year ago, while condo/townhome listings skyrocketed to 5,135 units last month, 117 percent more than in 2005.”
“There were but a scant 438 condo/townhome sales in September, for a 34.5 percent drop over last year.”
The Review Journal. “Greater Las Vegas Association of Realtors president Linda Rheinberger said the statistics show continued stability in the local housing market and people should be careful not to jump to any hasty conclusions. ‘They look at sales down 17.1 percent from August and down 41.7 percent from September ‘05 and they want to jump off the bridge,’ she said.”
“Chris Biaggi, president of All Western Mortgage in Las Vegas, said he’s seeing a stabilization in appraisals as home prices have reached their true value. ‘That’s what people have waited for,’ he said. ‘It’s really become a buyer’s market. You’ve got sellers participating in closing costs and you’ve got interest rates as low as they’ve been in the last few years. We’ve had our correction.’”
The Las Vegas Sun. “The housing market slowdown has prompted builders to seek price cuts from contractors in a bid to make new homes more affordable. Contractors are playing ball because the alternative for them may mean no work.”
“With new-home closings falling four of the last five months in the valley, builders have cut back dramatically on home construction. During the last four months, new-home permits have fallen between 30 percent and 48 percent per month from 2005.”
“Mandi Lindsey, executive director of the Framing Contractors Association, said her members have gotten the message.”
“‘Some of the builders have asked and others said there is not a choice if you want to keep working on the project,’ Lindsey said. ‘They realize that the market is slowing and it is going to get worse before it gets better, and they have to adjust. I am sure they are not happy about it but they don’t think it is unreasonable given the fact what is going on, and they want to continue to work.’”
“KB Home has solicited price breaks of between 4 percent and 15 percent, said Don DelGiorno, president of KB’s Las Vegas division. ‘I think it will start bringing down some of the cost of houses as we get acclimated,’ DelGiorno said.”
The Reno Gazette Journal. “Even Lake Tahoe appears susceptible to the overall real estate market slowdown. Through the first three quarters, the number of sales of existing single-family homes around Lake Tahoe fell 41 percent, to 676 homes, compared with the first nine months in 2005.”
“‘This is second homes. This is disposable income and vacation homes,’ (realtor) Mike Young said. ‘Nobody is going to have to (be in a situation where) they paid too much and now they can’t sell it for what they paid for it. It’s just not an emotional market up here.’”
“Signs of weakening prices in the report can only be seen in the more affordable areas, such as South Shore and Truckee. Truckee, which is not included in Lake Tahoe’s overall numbers in the report, dropped 13 percent to $689,000. Incline Village’s median priced jumped 10 percent, to $1.045 million, while sales dropped 42 percent, to 125.”
The Arizona Daily Star. “Plans to build luxury homes on the 1,658 acres surrounding the Biosphere 2 property north of Tucson have been called off. Fairfield Homes, a local developer, had signed a contract to buy the tract 16 miles north in Pinal County and planned to close the deal sometime this fall.”
“But about two weeks ago, the deal was called off by ‘mutual agreement,’ said spokeswoman Terrell Lamb.”
The Mail Tribune. “After a decade of sustained price increases, lumber has tumbled dramatically in recent months. ‘Basically, the numbers are as bad as they were in the early ’80s,’ said Rob Brown, a broker in Medford.”
“He’s seen the price of Douglas Fir 2-by-4s fall to $175 per thousand board feet, down from $400 not too many months ago. At the same time, mills are paying $500 to $600 per thousand board feet for logs. ‘You do the math and it’s not real pretty,’ said Brown.”
“One of Brown’s major customers in Arizona told him that speculators who have ordered three or four homes are backing out when it comes time for the final inspection. ‘They’re losing their down payment, which is maybe $5,000,’ Brown said. ‘But they’d rather do that than get stuck with the house.’”
“He’s seen the price of Douglas Fir 2-by-4s fall to $175 per thousand board feet, down from $400 not too many months ago. At the same time, mills are paying $500 to $600 per thousand board feet for logs. ‘You do the math and it’s not real pretty,’ said Brown.”
No, no, no! Does not compute. Didn’t that realtor from New Jersey just get done telling us that material prices are going up?
DL in Ny also said so!
Good point. I heard that construction costs myth over and over here in Arizona. Should house prices now fall over 50%? Here is another LV article:
‘The Nevada economy remains strong, but it draws a lot of its strength from the slowing housing construction segment, a according to an economic report released Thursday by the Federal Deposit Insurance Corp.’
‘The construction sector continues to be the largest contributor to growth (in Nevada),’ Olesiuk said.’
I went to school with Shayna Olesiuk. She’s real smart, but apparently can’t see a hard landing coming straight for her.
‘The construction sector continues to be the largest contributor to growth (in Nevada),’ Olesiuk said.’
She is FOS Full of S—. Housing growth is 20% of the growth.
Tell her to look it up on the Nevada Electric and Power website. The residental market is dead in the water, but the gambling giants are going all out on the strip with 12 Billion dollars of projects funded. Unemployment is at 4.1%, below the national average. Housing will crash, but construction is strong for now
As weeks and months go by all the phony arguments are falling by the waistside…
The declinging price of wood has been around for awhile… in fact if you look up Lumber and Products on Yahoo Industry profile… its rather clear we have overcapacity… go figure..
“Unless housing starts increase in 2006, which seems unlikely considering rising interest rates, a fall in lumber prices seems inevitable as the industry’s board ft. capacity continues to increase. ”
http://biz.yahoo.com/ic/profile/632_1158.html
Thomas,
We can also track on Random Lengths, a 60 year old trade pub. that covers all things dimensional lumber. Let me spare you the trouble of googling it.
Free fall.
Much of the “spike” we’ve seen in materials was Katrina driven. Since we’ve determined not to rebuild N.O…….
The lack of hurricanes in general this year means a lot less demand.
happy renter, (me too btw)
It’s easy for someone that lives in OR to say the hurricane season was “mild” but that I believe is the general consensus with no major damage? So the season is basically over and traders will focus on a more “normalized” lumber market. Good point, thanks.
Better give H.A.R.P. a call and have them fix the waether for a late hurricane season (sponsored by home depoyt and lowes).
With fuel prices dropping expect concrete prices to drop as well as shipping cost. This is combined with an overall reduction in demand for both material and labor. Land here in Sacramento is getting abandoned by the major builders and is getting cheaper by the minute. I’ve been wondering if the local builders are going to do what Toyota did with the Yaris and release simple, boxy, affordable, and practicle homes.
BUT WHAT ABOUT THE SHEEETROCK!!!! Someone said prices would never go down because of the sheetrock!
http://thehousingbubbleblog.com/?p=1455
I don’t know if you know what sheetrock is going for right now but it’s $4 a sheet more than it was last year,’ Realtor Linda Craft said. That’s why prices will likely continue to rise even as sales are expected to steadily slow down.”
Hey Linda, you’re just an uneducated REALTOR, not a commodities market expert.
Obviously.
The value of some homes doubled after people painted them. Paint must make up the bulk of the cost of building a home.
Also I believe there was an argument about the high cost of copper. This Bloomberg article says Copper has fallen 17 percent from its record high. However it goes on to say copper and other commodities rose recently partly driven by speculation and growth in China and Europe. The big question going forward I still have (and I know others do) is will the economies overseas still prosper without U.S. consumers buying their goods? I personally don’t think so but I’m no expert.
http://tinyurl.com/fvajk
Rents are also going up
I’m relieved to see a comp rent $100 LOWER per month than the last rent in my hood right now. Actually $40 lower than our rent, but it’s not worth for me to move for that!!
Sales are plummeting yet Las Vegas Association of Realtors president Linda Rheinberger says, “people should be careful not to jump to any hasty conclusions….” Okay, who is the prankster? She can’t be for real, right?
Maybe she is an Ent.
Of course she’s for real. She has this on her side:
(from the Review article): “No matter what happens, there’s 6,000 to 7,000 people a month moving to Las Vegas, and the hotel and casino industry in Las Vegas is not going down,” he said. “Las Vegas will just continue to expand.
and yet inventory is up 100%. those moving there probably find out how expensive the homes are and don’t buy.
- Chris Biaggi, said he’s seeing a stabilization in appraisals
- as home prices have reached their true value.
- ‘That’s what people have waited for,’ he said.
According to Chris we’re at the bottom now. Just like celebrity poker he is pushing his chips ‘All In’…he’s been dealt the winning hand of information. Gotta Love Vegas.
Chris went so far as to say “We’ve had our correction”!
When you wish upon a star
Makes no difference who you are
Anything your heart desires
Will come to you
The Las Vegas market is overpriced by about 50%. Not only have the prices of new construction remained the same or dropped over the last year, but also builders are offering incentives.
There are hundreds of square miles of land surrounding Las Vegas that is controlled by the BLM, and sold for whatever they can get. Recently, there were few takers at the land auction.
Further, thousands of people leave Las Vegas every month. The major employers are the casinos, which have a high percentage of minimum wage jobs. Actual income levels cannot support the price levels of houses.
Also, there seems to be a large number of vacant homes in new communities, which are full of for rent, and/or for sale signs.
Beyond this, Moody’s predicts a declining market until Q2 2009 in the Las Vegas market.
The local realtors are lying through their teeth. I know a realtor who has not sold a house since February.
you got that right …they are lying!
“No matter what happens, there’s 6,000 to 7,000 people a month moving to Las Vegas, and the hotel and casino industry in Las Vegas is not going down,”
Honey, once people get hit with the debt/HELOC/bankruptcy/ARM truck, they won’t be coming to Vegas to pay for hotels, drinks, and roulette.
Nitpick,
People will always seek out sin entertainment in bad times.
They will stop seeking out “Vegas” as a luxury package beyound their means. Groups will rent fewer hotel rooms (double up), drink cheap alchohol in the rooms and still play. Money will still flow into Vegas, just less demanding more. Some of the high end will survive; most will go downmarket. Hotels like the Reo… will get Raunchier. Waitresses will make less in tips while being expected to wear less. Places that cater to the elderly gambler… will suffer.
And 6,000 to 7,000 a month is only if the jobs pay the rent. Is someone expecting a drop in Vegas rents? Oh, people will double up… I see a lot of dealers with roomates living in someone else’s granite countered kitchen partying it up. I’m not expecting many deposits to be returned…
Neil
go to realtytimes.com - they all make idiot comments
light & airy
Drawing hasty conclusions, nah. But she’s just dandee if you want to jump to a hasty decision to buy a home. No problemo.
Linda Rheinberger said the statistics show continued stability in the local housing market…
… sales down 17.1 percent from August and down 41.7 percent from September ‘05 …
Yeah, that is about right for ‘continued stability.’ Do you agree with your fellow evile REIC zombie, aztrias?
Yes, and I’m seeing lots of houses that are still on the market since the last time I was here back in late June/early July. That’s also very stable.
peggy,
I know it’s an old joke BUT;
Doctor leaves morgue after losing a patient. Tells morgue attendent, “Notify me if there is any change in the patient’s condition”
Yeah, that’s stable alright.
ROFL!
“Chris Biaggi, president of All Western Mortgage in Las Vegas, said he’s seeing a stabilization in appraisals as home prices have reached their true value. ‘That’s what people have waited for,’ he said. ‘It’s really become a buyer’s market. You’ve got sellers participating in closing costs and you’ve got interest rates as low as they’ve been in the last few years. We’ve had our correction.’”
Wow, what spin! This guy must worship David Learah.
tj & the bear,
“We’ve had our correction”
Yeah that one got me too. He WISHES they’ve had their correction! Truth is, yeah Vegas was among the first of the “rolling bubble” equity locusts victims and their “correction” started sooner (just as San Diego showed cracks in the foundation). While they are clearly ahead of more stable and less speculative markets their correction is by no means over. Craig Biaggi might be able to make the claim that they might come out of their correction first but beyond that; “We’ve only just begun”.*
Karen Carpenter?
Roger Nichols wrote the jingle for Crocker Bank.
Richard Carpenter of the Carpenters heard the jingle on a TV commercial, and although signed to A&M, didn’t know who wrote the track. He found out and the Carpenters recorded the song.
http://tinyurl.com/n6emu
“Chris Biaggi, president of All Western Mortgage in Las Vegas, said he’s seeing a stabilization in appraisals as home prices have reached their true value.”
As most on this Blog already know appraisals are worth the same as toilet paper. The appraisal industry will get hit as bad as accounting firms from the collapse of Enron and Worldcom.
It MIGHT be true if there weren’t thousands of homes in various stages of construction. I shudder to think what the condo glut will be like in the spring.
Has anyone found LV_Landlord?
Maybe she is hiding out with Ma_Homeowner, BeaconSt, DC_Bubble, VA_Investor, The Ceiling Fan Guy, etc…
That is a pretty impressive list of trolls.
Anyone remember Antonio Villagroisa?
He was a persistent bugger.
He is busy with his LA mayoral duties these days…
http://en.wikipedia.org/wiki/Antonio_Villaraigosa
I had forgotten about ceiling fan guy. LOL
Don’t forget about RE King (still the best ever, although shortlived) and wthell- two of the orginal, old school trolls.
With fuel prices dropping expect concrete prices to drop as well as shipping cost. This is combined with an overall reduction in demand for both material and labor. Land here in Sacramento is getting abandoned by the major builders and is getting cheaper by the minute. I’ve been wondering if the local builders are going to do what Toyota did with the Yaris and release simple, boxy, affordable, and practicle homes.
I work for one of the large union electrical contractors in Sacramento. Demand for building materials has certainly receeded since hitting highs in late April, but for the moment there is excess demand for quality labor. Now we do mostly commercial, industrial, and institutional, not residential, but so far the first half of 2007 looks pretty fat.
Also, while we might see a slight decrease in concrete prices over the next six months, I wouldn’t expect to see a return to pre-2003 prices (5 sack was about $65/cubic yard back then–currently around $105). Anything petrol-based (asphalt, PVC, etc) is going to be quite slow to decline because a) prices are sticky; and b) public works projects are still plentiful. In the case of asphalt, roads all over the state (but especially in the capital) have been neglected far so long that money is going to have be spent if people are still going to use them.
For my company, schools are still going up, new data centers and hospitals and MOBs will be breaking ground shortly, as well a host of state and federal-backed projects. There’s so much inertia to a project when a major corporation or government entity is behind it, that I don’t think we’ll see a major deceleration in non-residential construction for at least another 6-8 months. The only major type of commercial projects that has almost completely stopped (and will continue to lie dormant for quite some time–probably as long as residential construction is DOA) is retail centers. Although because many retail stores were built by non-union developers but the stores that occupy them insist on union labor to do the service wrok, there will be plenty of money to be made in service calls.
I’m thinking comercial will hold up for a year- I’m trying to find hwy contracor bid winners- any advice
Not off the top of my head. That’s not really my focus (I’m in purchasing, so I don’t have a lot of first-hand contact with our subs or a project’s other subs). I can ask our general superintendent on Monday if he has any suggestions (he’s been in the trade for 25+ years).
“Public works, you say? Building any of those secret detetion camps the paranoid left is worried about?
Well one of our projects that’s winding down in is working on a building out at the old McClellan airfield for use by the Department of Homeland Security. I didn’t ask any questions when the project manager said that we wouldn’t need to terminate the feeder cable on the east side of the building…
THE PARANOID LEFT!! hahahahaha!! I’m left and I just left Elko County where the VERY PARANOID RIGHT has been talking about those prison concentration camps clear back to when Clinton was in office! When the prison was built at Lovelock and sat empty for so long due to funding issues, well, guess where they thought we were all going? Thanks for making my day. Wing nuts come in all shapes, sizes and religious and political affiliations.
Residential was a bubble. Commercial was not. Typically commercial runs behind residential. If you build a home they will come and now that they have come they need places to get groceries, car fixed and of course fill those new big homes with the latest and greatest furniture and decorations!! Since more money is involved those who build commercial are a little more educated and a little more cautious. I have not seen specualtors rush to commercial investment properties like they did in the mid to late 80’s. Has anyone else seen a spike in commercial similar to Residential in your area?
I have no doubt that commercial will continue to some degree for the very reasons Shakes mentions. It could even increase if a “public works” program is started to stabilize the economy.
But it takes consumer spending to drive private commercial real estate. That will take a hit.
Could I hope Los Angeles could finally get a subway SYSTEM. (Green line to LAX and Metrolink, Redline to Burbank airport/Metrolink, Exposition line, Finally get the Wilshire cooridor to the ocean and maybe even LAX… etc.)
“Could I hope Los Angeles could finally get a subway SYSTEM. (Green line to LAX and Metrolink, Redline to Burbank airport/Metrolink, Exposition line, Finally get the Wilshire cooridor to the ocean and maybe even LAX… etc.)”
Stop it your making my side hurt from uncontrollable fits of laughter
I’m not sure if a subway along the San Andreas Fault is such a swell idea. But a well planned and executed light-rail system will be essential to any major metropolis’ continued growth in the 21st century.
Totally OT, but I know some of you like to hear it. The stats for the San Fernando Valley (sept) just came out.
Single family sales volume down over 30% y/y. Lowest sept sales total since 1993!!!
Prices down 1-3% depending on how you want to slice and dice it (single fam, condo, median, avg).
Biggest drop occured in single family average price: DOWN from $710k last year to $674k this year, just over 5%.
woohooo!
Who is the intermittent poster that keeps insisting SFV is different?
Thanks for the update!
710K median for all of the SFV. That is almost as bad as 400K for Compton.
deb posts “Biggest drop occured in single family average price: DOWN from $710k last year to $674k this year, just over 5%. ”
So much for the I/O’s and 20/80 zero down folks with closing cost and RE fees thats about 1% +6% +the 5% = 11% so far or about $ 75,000.00 to old money heaven.
Some stats from the Santa Clarita Valley:
The best way to really understand what is happening in Santa Clarita is to go to the numbers. First and most important is the inventory or total number of homes for sale. Just in the last 2 weeks it has gone from about 2540 to 2447. If this trend continues it will be very important for sellers-VERY IMPORTANT. If we don’t get under 2000 homes by the beginning of January (and ideally under 1600) prices will continue to soften, especially in the higher price points. So this is a welcome sign. I do expect it to continue because a lot of sellers that put their home on the market in spring are seeing their listing expire and deciding this is not the time to sell. Fantastic! Lets hope this continues unabated. Second, the length of time taking to sell is going way up. In September a total of 209 homes went into escrow. Of those 145 had been on the market over 60 days and 104 had been on the market over 80. 62 had been on the market over 100 days! WOW!
So just when a lot of sellers think it’s never going to happen….it happens. I am advising all of my sellers accordingly. Finally, where we are seeing most activity is under $700,000. Currently there are 351 homes in escrow in all of Santa Clarita. Of those 288 are under $700,000. And of the 63 in escrow over 700,000, 50 sold in September out of 744 homes for sale in Santa Clarita over $700,000. Meaning that in Sept if your home is priced over $700,000, less than 7% of the inventory sold (50 divided by 744). Which is why it is taking so much longer to sell in the higher price points. For listings over 1 million there are only 15 homes in escrow, 8 of which sold in September-and there are 228 homes for sale in Santa Clarita over 1 million! So that price range can really take a long time. The bottom line is that for those that want to sell , and understand the importance of pricing and condition in this market, with patience and hard work the offer will come.
The SCV stats were from:
http://neal.homejots.com/
thanks for info
“Single family sales volume down over 30% y/y. Lowest sept sales total since 1993!!!”
Gee, and I was guranteed by my real estate guru that the market would pick up right when football season started, or was it Halloween, or the moon in balance with Jupiter. I hope the agents in the Valley have lots or armed security, because these scum bags are going to hiding their faces from their brothers, sisters, aunts, uncles, church members..all the people they told “real estate is a great investment, because it only goes up” The only thing up is their career.
“‘This is second homes. This is disposable income and vacation homes,’ (realtor) Mike Young said. ‘Nobody is going to have to (be in a situation where) they paid too much and now they can’t sell it for what they paid for it. It’s just not an emotional market up here.’”
Huh, these are vacation homes and that means they are emotional purchases much more so than primary homes. What the heck is Mike talking about? These homes will drop in price much more than the primary homes of the owners which are mainly in the SF metro area. People will sell their second home first before their primary home.
I THINK what he’s trying to say (lamely) that these people all have so much money which is why they bought a second/vacation home in the first place so they don’t even care that the prices will fall.
Ha ha! I can’t really blame people who’s incomes are tied to this housing market to grasp at straws like this, but I wonder if they ever step back and realize how silly their comments are.
Ha ha! So much money that they won’t care if prices fall? I must know the wrong type of people who have second homes. Two of the most recent purchasers have just enough disposable income to qualify to borrow a mountain of money on their specualti… er, I mean, investment second-home.
One couple is finding it hard to rent their out on the shore, at least to rent it consistently enough to keep the house paying for itself, so it’s a bit of a ‘gator to them.
The other couple… I haven’t bothered seeking them out and haven’t chanced in to them at any parties. That’s the gal who gave me the REALLY nasty look and snapped at me last year when I mentioned that prices might not go higher and that these are being bought more for speculation than investment.
Either of these couples is banking on making heaps of money on these places, since it sounds to me like the money they are feeding these houses is money they could have used to feed other investments for their retirements. They will all probably be very disappointed. Time (as in years) will tell, because as long as they hold their jobs, they won’t really need to sell.
Actually, I think this is a very accurate characterization. Second-home markets do serve as a dispose-all for income. Nowhere is this more true than in over-crowded alpine speculator traps like Tahoe. The market there is largely fueled by hot money from the Bay area — and guess what? The Bay area ain’t so hot any more. So flip that switch, Tahoe homeowners, and watch the market grind up your equity and flush it down the drain.
“So flip that switch, Tahoe homeowners, and watch the market grind up your equity and flush it down the drain.”
That gives me a warm and fuzzy feeling inside.
David Merkel
Residential Real Estate Notes
10/6/2006 2:51 PM EDT
1) Home equity loan performance is looking decidedly soggy. Loans originated in 2003-2004 are okay, 2002 and early 2005 look poor, and anything after mid-2005 looks progressively worse in terms of credit performance.
2) The recent regulatory guidance change to lenders will have an impact. The size of that impact will depend on two things: how much the bankers take seriously disclosure requirements on how much mortgage payments can change, and how strictly the regulatory audit footsoldiers enforce the rules on risk layering. The first will impact loan production, but ignoring the guidance could bring trouble from lawsuits and the regulators. The second, risk layering, is where there are multiple risks to a mortgage loan (e.g., option ARM, interest only, no doc, low doc, stated income, high LTV, low FICO, etc.). At the regulatory audit, if loans are found to be excessively risky from risk layering, the banks might have to put up more capital to back the loans.
3) From the NAR website, “The second-home market, including vacation homes and investment property, accounted for four out of 10 home sales in 2005.” Of that 28% for for investment purposes. Now, the NAR website spins this as a positive, but from my angle, that level of demand is not being sustained. Healthy residential markets have less than 10% investor demand.
4) Recent surveys of lending quality from the Fed still have the banks with relatively loose lending standards as of the third quarter. Looks like last year, saber-rattling accomplished little.
5) It’s clear that residential real estate prices are falling in general across the US. Inventories are high; there are a lot of homes to sell, and market psychology no longer favors being aggressive with bids.
6) Kara Homes Files for Chapter 11 Protection. A midsized New Jersey homebuilder bites the dust; won’t be the last homebuilder to do so in this cycle.
7) With an assist from ISI Group, who had an excellent series of research pieces on residential real estate today, a record 10.2% of wages and salaries go to mortgage payments today. With more ARM resets coming, that figure is bound to rise.
I estimate that we are in the fourth inning of this game, where the new cycle started in September 2005. Unlike the Nasdaq in 2000, housing is something that people will fight to hold onto; that makes the decline slower as we try to digest the glut of homes in the economy. Housing has bigger ripple effects than the Nasdaq, though. Many jobs depend on it, so the second order effects from a decline in building homes will be more severe than the liquidation of some marginal tech companies.
Position: none
txchick57,
How in God’s creation can 40% of homes in 2005 sold as “vacation homes” be a positive? If I owned a home in Portland (where I work and my kids go to school etc.) and have one in Bend or on the coast and get behind in the slightest financially which one will I keep, and which one will I attempt to dump beating the bank to foreclosure? Does that really need be asked?
As Ben says, this was just another form of speculation. Just imagine all those dreams of early retirement CRUSHED when these weekend flippers realize the cap gains exemption doesn’t apply b/c they’re under water and on a path toward default. You’ve just got to imagine that they’ve already spent the money (in their minds anyway) fully intending to show that “vac./2nd home” as their primary for ANY 2 of the last 5 years! Wake up suckahs.
Oh and watch the rush to the exits when these 2nd homeowners do the math and come to grips w/the fact that in order to exploit the 500K exemption selling at a PROFIT is kind of important. They’ll look at kids braces, trombone lessons and “focusing on the things in life that really matter” and start dumping these McAlbatrosses (TM) like an ugly girl at a dance!
I always wondered about that rush to buy second homes. When I met my current (last) wife, we each owned a small house, and we thought about a vacation home. It seemed more work than it was worth, and we decided to find a place outside Portland’s Urban Growth Boundary. I’m glad we did. The house ain’t much, but the land is pretty - like being on vacation without having to drive anywhere. I think Bend will REALLY tank.
-
“In resort areas - given the number of days people actually use their second home - staying at the Ritz for $500 a night could be a much better deal. Do the math; it’s not pretty.” - http://www.moneyweek.com/file/10891/six-months-to-housing-hell.html
“1) Home equity loan performance is looking decidedly soggy. Loans originated in 2003-2004 are okay, 2002 and early 2005 look poor, and anything after mid-2005 looks progressively worse in terms of credit performance.”
Never claimed to be the brightest tool in the shed, but why does that not make sense to me?.
Wonder how many take the equity out to be able to afford the mortgage payments?
Makes perfect sense to me EXCEPT for the 2002 part. Don’t know why that would be since these homeowners should have equity in their houses and if they needed to would still be able to sell at a profit and pay the mortgage. Mid-2005 and onward look horrible because (IMHO) we are now scrapping the bottom of the credit barrell, fraud, house prices have deprectiated since then (or very little appreciation), etc., etc.
Maybe the 30yr cost of a mortgage was the about the same in ‘02 and early ‘05, my guess.
land in pocanos is going for 10-15% of peak
get a 3rd home today !
Alan Greenspan on the tape:
“Worst may well be over” in US housing slump says the Maestro.
I just pass it on.
Greenspan Sees Mortgage Applications Strengthening
By Tony Crescenzi
RealMoney.com Contributor
10/6/2006 4:21 PM EDT
URL: http://www.thestreet.com/p/rmoney/tcrescenziblog/10313649.html
Greenspan Points to Flattening Out of Mortgage Applications
Greenspan Says Worse May Well Be Over in U.S. Housing Slump
(headlines from Bloomberg from a luncheon in Calgary, Canada)
I noted Wednesday that the difference between the four-week average and the one-year average in mortgage applications is the narrowest since January, indicating that the rate of decline in sales had slowed.
While this suggests that the worst of the percentage declines in sales are probably over for now, other effects loom, particularly with respect to housing-related jobs. The steadying in demand for housing nonetheless represents one of the main ingredients necessary to stabilize bloated housing inventories, a process now under way. Cutbacks in land purchases and speculative building also will work to stabilize inventories.
Greenspan today validated once again the importance of the weekly data on mortgage applications as a tool to gauge the housing market.
I hope this toad is around to see the collapse and the destruction of his carefully crafted “legacy”.
Well, if Alan Greenspan says so, it must be true. Hurrah! Thank goodness the housing bubble is behind us and we can all return to consuming freely. Whew!
Good’ol Greedspam!
look at the chart.
http://calculatedrisk.blogspot.com/2006/10/greenspan-worst-may-be-over-for.html
Geeze, everyone I knew when I lived in Tahoe talked about how “it’s different here” because there’s such limited growth allowed in the Basin. But yes, houses were bought there as investments or for rental properties. Unfortunately, too many people had this same idea of buying “rental” properties. This not only killed the motel/hotel industry, but depressed the price of rentals. Add to this timeshares, and you’ve got some good bargains for travelers – unfortunately at the expense of the lodging industry and RE “investors.”
I knew a few working people that invested in second (and third) homes in Tahoe. I’ve since moved from there, but wonder how they are faring. And many of them were living on HE extraction.
And I won’t even get into the crappy quality of homes built there. “Rustic Brady Bunch” was (what we called) the style of homes built all over South Shore in the early seventies.
It is different in Tahoe. By 2100, you’ll be the West Coast and all that property will be ocean front.
“‘This is second homes. This is disposable income and vacation homes,’ (realtor) Mike Young said. ‘Nobody is going to have to (be in a situation where) they paid too much and now they can’t sell it for what they paid for it. It’s just not an emotional market up here.’”
I call BS. I have relatives in another hoity toity resort town, Ketchum/Sun Valley, Idaho and from what I can tell, plenty of the locals, bartenders, waiters, school teachers, etc were “in on the real estate thing.” Sure, there is the part of town with multimillion dollar properties that might be immune, but there were/are a lot of locals with crappy income trying to flip little houses in town, condos, land, u-name it.
Yeah, I knew may people that jumped into the game in Tahoe. The guy we rented from was a busboy that bought his second home on stated income. Unfortunately he bought his second home at the peak with some hybrid mortgage I can’t recall. I wonder how he’s doing…
Hmmm…the partyline is usually 5000 people moving to Vegas every month. Now it’s 6000 to 7000? And I wonder how many are leaving every month. I bet its close to equal. I know for sure that the schools, for the first time in recent history, have fewer students than anticipated. The middle school across the street from my house had to lay off 3 teachers, which equals 450 fewer kids than they thought they’d have. I think that once California regains some semblence of affordability, people will go home. Especially when they get a whiff of our stinky schools.
I get so tired of hearing about the Vegas economy. Sure there are a lot of jobs, but it doesn’t really matter because they don’t pay enough to allow home ownership. My husband is a craps dealer at the Luxor, and even with a parttime job dealing at an off-strip casino AND me working, we don’t qualify for the median house. It’s sick.
I was asking the realtor about affordablity for the locals back in Mar 2003 when I purchased a condo. She stated that for the average person in LV it was starting to get hard to afford the housing based upon the local wages. She stated she felt that it was going to put pressure to raise the minimum wage. I purchased back in Mar 2003 and the condo spiked up 80% since then due to the flood of speculators!! If it was getting hard then it is definately impossible now!! I think Vegas has a lot to offer but in no way should its fundamentals be that disconnected. Historically, in vacation towns one can expect to pay a 15-25% premium in the area. When I bought it was a 20% premium based upon my numbers. By owning a property and watching its value soar and all of the explanations about the rise, has definately given me an education on the mania of this bubble.
3 teachers, which equals 450 fewer kids
In Australia, teachers consider themselves hard done by if they have more than 30 in a class.
I guess you service guys/gals in the US really are more productive . . .
Yeah, that was a goof. Each teacher gained or lost represents about 35 kids (one class load).
Nobody teaches 150 kids in the same period (not even P.E.!).
Hmmm…the dean told me 150 for each teacher. That’s 30 kids each for five periods.
I don’t get what raising the minimum wage is going to do for affordability. My family’s income is about $20,000 above the median family income in Las Vegas. Anyone making minimum wage doesn’t have a prayer of affording ANYTHING.
We qualified for a $250,000 30 year standard mortgage last summer (2005) and literally could find NOTHING. I cried in the realtor’s car. It’s actually painful to work your butt off for years toward attaining the American Dream only to find out that it’s been stolen out from under you. Maybe affordability will get back on track in Vegas, but it doesn’t matter to us, because we’re leaving next summer. Families are leaving–let the speculator’s have the place.
I know someone who bought a HUGE zero footprint house near Blue Diamond–she practically lives alone in her development. Now they are building a city bigger than Summerlin, Coyote Springs, an hour northeast of Vegas. It makes me sick. Literally sick to my stomach. I think that Vegas is in for the biggest crash of all–not only housing, but everything.
You are right, raising the minimum wage in itself will not help but in turn all the other jobs that were of higher skill or need would raise with it. At least that is what she meant. The median income probably would have been a better term to use. I think Coyote Springs is a disaster waiting to happen. Vegas is a boom and bust town. I think we will see a different Vegas in 08-11. People will be able to afford homes again.
The nieve speculators will have their butts handed to them and won’t go back for another pounding until the next cycle begins. People love Vegas for all it has to offer, many peoples eyes glaze over at the riches to be had. It somehow triggers the greed portion of the brain and common sense gets put away. Save your pennies and keep the faith!!
Raising the minimum wage would actually affect a lot of Vegas employees…dealers make minimum wage as a base pay as a rule. But it wouldn’t make enough of a difference. I’m afraid that as the housing bubble continues to burst, dealer wages will actually fall no matter what happens with the minimum wage, because people won’t feel as generous with their tips, and won’t have the extra to play.
Vote for Jim Gibbons for GUBERNOR of NEVADA! He’s behind the working man and woman …bending them over and smiling!