‘This Normalcy Seems Kind Of Shocking’
It’s desk clearing time! North Carolina. “The longer Kim Tucker shopped for a home, the sweeter the offers got. Builders were willing to knock anywhere from $3,000 to $5,000 off asking prices. ‘I’m seeing more incentives than any time in the past two or three years,’ said Glenn Astolfi, of DNJ Mortgage in Cary.”
From Massachusetts. “Property foreclosures increased by more than 70 percent nationally for the first quarter of 2006 compared to that of 2005, a trend reflected in Danvers and across the North Shore. Many people yearning for a lovely, new single-family home took a walk out onto a financial limb a few years back with low, variable rate loans, a decision some say may not have been well thought out.”
“‘A lot of people didn’t look to the future,’ Dan Bennett said.”
From Virginia. “The prices of homes in Loudoun County were sharply lower in June, down nearly $50,000 on average from a month earlier. The average price for a single family home was $673,468, down 6.8 percent from a month before and 4 percent lower than in June 2005. The price for single family homes in Loudoun were at record highs of over $800,000 in December, 2005.”
From Mississippi. “In areas like Madison, overbuilding of upper-end houses costing more than $250,000 has caused an imbalance in the market. ‘In some areas, we have up to two years on the market. If somebody doesn’t stop (building), it’s going to take us two years to get it sold. Now buyers are trying to get huge deals, but the sellers aren’t seeing it quite like that,’ (realtor) Bob Maselle said.”
“‘The Jackson area I don’t think has slowed up. I was in Cincinnati last week and they say the market has died,’ Betty Lockwood said.”
From Texas. “A ‘For Sale’ sign has been posted in front of one Catamaran Drive home on Padre Island for a year. The listing price for the canal-front property, which started at $440,000, has been dropped six times and is now $389,000. ‘It’s shocking to see, in less than a year, the prices’ ability to come down and the supply to continue to rise,’ agent Cheri Sperling said. ‘I think we’ll continue to see prices tumble farther as our home sellers struggle with this record excess of unsold homes.’”
From Canada. “In Greater Vancouver, the MLS recorded 3,344 sales in September, representing a 24.7-per-cent drop from the same month a year ago. New listings in the region increased 11.4 per cent to 5,115 units. ‘Since [the market] has been very overheated, it’s quite reasonable to go back to balance,’ (economist) Tsur Somerville said. ‘The question is, are we going to stay there or keep going?’”
From Ireland. “Driving around Westport in the rain the other day, I was struck by the number of empty houses. All over Ireland, ‘ghost estates’ are enveloping many of our towns. On the day of the 2002 census, it was estimated that there were just over 140,000 houses vacant across the country. In the past five years, this figure has increased by over 50 per cent, to about 230,000.”
From Australia. “It wouldn’t be so bad if the only casualties from Sydney’s property slump were greedy investors from well-to-do suburbs who bought too many units in Ultimo. In the Fairfield-Liverpool area, where property industry professionals say house prices have been slashed by a quarter, the jobless rate has shot from 5 per cent to 11 per cent in the past year.”
“For a while, this flood of late-arriving investors prolonged the boom in the least expensive parts of Sydney. But as they retreated prices fell sharply. ‘Many of these individuals have seen a decline in the value of their investments,’ the Reserve Bank says.”
From Arizona. “Arizona State University economist Dawn McLaren was one of those people who dared use the word ‘bubble’ over the last couple of years. ‘We had a price bubble,’ McLaren said. ‘I say the market is good. The market is coming back to reality, to its fundamental value. We’re in the middle of where this thing is going to go.’”
From Washington. “Higher South Sound home inventories continue to slow the pace of sales. Active home listings have nearly doubled since September 2005, rising to 1,764 homes last month, compared with 991 last year. ‘We’ve been used to something that has been so fast-paced that this normalcy seems kind of shocking,’ said Eric Hjelm of Greene Realty Group. ‘I got home at 5 p.m. last night,’ he added, laughing.”
“Washington Mutual announced plans Wednesday to cut 140 loan processing jobs in Lynnwood by the end of the year. ‘More reductions are possible,’ said Tim McGarry, VP of corporate public relations. ‘It is true that there may be more in the future.’”
From California. “Q: We made an offer on a house subject to the sale of our property. We thought our property would sell quickly but it hasn’t sold. We’re very concerned that our purchase offer is now overpriced since values have declined.”
“A: you were smart to make a contingent offer, imagine if you bought the second house but the first one remained unsold for a year or two? You would then have two mortgage payments.”
“Private bankers warned Federal Reserve Chairman Alan Greenspan and governors in December 2002 that consumers were taking on too much debt and that the boom in housing prices was unsustainable, Fed documents made public recently showed. The documents are minutes of closed-door meetings held at the Federal Reserve Board.”
From Florida. “I am a junior in high school. The recent inflation in the housing market of South Florida concerns me and others in my community. According to the article, ‘New home buyers are either holding back or demanding cheaper prices.’ In my opinion, it is about time home buyers did so.”
Another big week! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
Great collection of stories this week, Ben. Thanks.
Thanks for the Virginia link, Ben. I love that they’re using “averages” now. One lousy millionare makes everyone else look good.
It is ugly in our neck of the woods. These SOB’s will do anything to try and keep the “toothpaste in tube,” to use that famous, criminal DC metaphor.
According to this report, prices of townhomes and condos are up. Not quite a housing bubble.
Then quit renting and START buying! Report back in 2 years!
DCRenter — Crispy has it right — good for you! You go, girl! Buy a place now and come back to us later with your tales of glory while we compare soup-kitchen stories. We’ll be here.
How do you know I am a girl? Secondly, I was just reading was printed which said prices on condos/townhomes are RISING. SFH prices are falling.
“How do you know I am a girl?”
By your handwriting….
dcrenter –
Put other people’s money where your mouth is, buy ten properties whose prices will grow to the sky, and let us know in three years how stupid we were for missing out on the boom…
I know there’s a bubble. I’ve been saying that for about 3 yrs. Just pointing out that only the part of the report that was negative was printed here. However, I do worry that prices will remain high in the dc metro area.
For the CA folks that made the contingent - cancel the other offer and stay where you are. My best guess recommendation. Don’t take the koolaid.
Is it just me or did we see a lot more firings this week than the last?
I think it is not just you. But it was very quiet in the press.
I think the press has been very distracted with ole Foley and his pal, hASStert.
But still, lots of news on housing. The mortgage fraud story from Indianapolis took the cake for me!
High schoolers calling the bubble… maybe this bubble thing is real!
When I see first graders writing about the bubble… that’s when I’ll know “it’s a good time to buy.”
We already had the college freshman from Texas A&M write up the housing bubble.
Keep moving down the grades.
Not too far. I know a precocious third-grader who asked what a “housing bubble” is. Of course, he thought it was something plastic that goes around a building. The explanation given to him was so simple that it makes you wonder how the bubble formed in the first place.
Reminds me of being a third- or fourth-grader in 1973 and asking my dad about “Indoor China”, was there a big tent over the area or something?
(I was hearing about “Indochina”, of course)
I think the fear and panic are starting to make themselves evident here in NNV. I haven’t been paying attention to the MLS for about a week, but when scanned it today I saw a lot of “wow’s”. For most of the summer sellers would just do these worthless 5k-10k reductions about every 2 to 3 weeks until they finally found their buyer. Today I noticed some bigtime haircuts, the kind that spell “get us the hell outta here!” The pick of the litter was a 799k reduced to 699k.
Not impressed. Waiting for 699 to go to 399, then we can talk about reality.
I agree, but for those here that complain of idiots reducing their prices less than 5%, it’s a sign that we’ve just thrown it into another gear.
I agree, I’m sick of these stories about knocking off $5K off a $700K house, and “we’re not going to give it away”.
No kidding. One just needs to look at the run up in most west coast towns over the last five years and see what ill-gotten gains these weasels are sitting on. Most $700k houses in Reno are probably not work $399k in reality.
i believe we are are losing a bit of froth
I think we’ve only just made it into 2nd gear–and this thing has as many gears as an 18-wheeler yet to come!
Jon
I am repeating myself but as I have said before bubbles usually need to go down 80% from the high before they hit the (admittedly undervalued) low. I don’t think real estate will be different.
I should also clarify, that I don’t think this is true for the whole country. The whole country has not had such an extreme run up as CA, FL, and other western states. But I expect even the rest of the country could suffer a 30-50% decline.
I have recently taken up a new game baiting my slum lord real estate relatives. I am trying to get them to bet me that sometime in the next 10 years you will be able to buy a decent place in either FL, Phoenix or Las Vegas for $25,000 in real terms. While they are confident this won’t happen. As yet none have been prepared to take the bet.
Oliver
I agree that it is a real sign of the times for a house to go down by $100,000. I also agree that I won’t be biting until I can find something decent and realistic and over $300,000. ain’t it!
From your point of view which segment seems to be hurting the most? Entry level, people who actually work there. Move up buyers? Ca Equity locust faux chateaus?
Josh
This is interesting Josh. No one seems to talk about what I beleive is the biggest change in the market and that is every major lender has tightened their credit standards. They are approving 15-25% LESS application than before. That is why you see hugh numbers of homes falling out of escrow. It will shut down the entry level market and that will make it impossible for the current entries to find someone to push them up a level.
I’m sure countrywide isn’t turning down any applicant. They need to keep up the bravado to maintain share price while insiders dump more stock on all the idiots lapping up the Kool-aid.
“I’m sure countrywide isn’t turning down any applicant.”
I’m sure you’re right. They have a program for everyone.
The property ladder seems to be on the brink of tipping over…
every major lender has tightened their credit standards. They are approving 15-25% LESS application than before
What is your evidence of this?
All getting hammered from where I sit.
Here on the Central Coast, it appears to be pretty uniform - about 10-15% off (June 2005) everything - high and low end.
There are some local homebuilders dumping land in northern Santa Barbara County (about $75 million is up for sale).
Unless you are a doctor, lawyer, dentist or successful small business owner, there are absolutely NO high paying jobs here - none. I’m still sticking to 60-65% off peak prices as my prediction for the Central Coast.
maybe fess parker can grow grapes on it
I am not sure I wouldn’t prefer prefab condo’s over Fess Parker.
Oliver
nnvmtgbrkr ….
I enjoy reading your factual posts.
Question………
What’s your take on the national housing price % decline over the next 2 years?
Thank you
I’m all over the place on how fast this will take to unwind, but ‘07 is going to be loaded with pain. As far as how much, I believe in the mean curve. Every area has seen its own level of inordinate appreciation above the mean, and so each will correct in its own fashion. I know in my area I’ve figured, depending on the particular area, a 30% - 40% breakout above the mean has taken place. That being said, you must also factor the over-coreection that takes place as the market returns to balance. When you look at the historical graphs the correction never takes you back to average and then stops. Usually it drops below quite a bit. So it’s not far fetched when some here predict 50% price declines, because at the markets low point, we could surely get there.
In addition, the historical mean was based on a certain supply and demand relationship. That relationship surely fluctuated over the years, but given that builders still have some momentum from their attempts to meet speculative demand, and given that fundamental demand will likely be reduced due to record levels of home ownership, the new mean may fall significantly below the historical mean.
Good point.
-
My guess is that the top was around June 2005 and we will have cumulative price declines totaling 20-50% (depending on location and type of home) over 3-5 years from the peak followed by 2-3 years of price stagnation followed by a return to normal long-term historical appreciation.
Capital chases RETURN and it appears that capital has left/is leaving RE and is heading into the stock market just like the reverse happened in 2000-2005. Everything is cyclical, my friends, and nothing goes straight up forever. Reversion to the mean.
- ‘ but ‘07 is going to be loaded with pain.’
I agree totally with you. I feel a little guilty. I work in the beach area and Malibu / Pacific Palisades area. I sell and design high end custom cabinets. I’ve already booked 70% of my base salary for the fiscal year since July 1st. Not all of the work is new construction, about 60% is remodel. There is going to be a lot of pain … but in So Cal there is plenty of money still floating about.
it appears that capital has left/is leaving RE and is heading into the stock market just like the reverse happened in 2000-2005.
I call “bullshit”
Maybe I don’t understand the fundamental purpose for this blog’s existence, but I think part of it is to refute myths like this one.
People did not sell their stocks in 2000 and take their winnings and buy houses.
People did not redirect all their 401k contributions from 2000 to 2005 to change their investments from “Vanguard funds” to “houses.”
The reason real estate has gone up is the worldwide credit bubble, the duping of billions of people to enslave themselves to greater levels of future debt than they would have agreed to do before. Plain and simple.
Now it may indeed be possible that the converse is true, that people are taking their real estate winnings (sold, cash in hand) and putting it into the stock market today.
Amen, Chilidoggg. I think the converse is not true though. All those people with 401Ks in stocks now will be liquidating to keep their homes. I know, I know, bankruptcy can’t touch retirement money or something like that, but just like stocks, people will throw cash at the mortgage from anywhere to keep the home as it keeps losing value day after day.
I am a big believer in the “All credit bubbles lead to full deflationary declines” mantra. This means the stock market is right behind the real-estate market in the collosal dump. It may not look like it now with the Dow hitting all time highs, but the market is internally VERY weak.
“That being said, you must also factor the over-coreection that takes place as the market returns to balance. When you look at the historical graphs the correction never takes you back to average and then stops. Usually it drops below quite a bit.”
In construction, we call this the “plexiglass principle”–which really describes most consumer behavior quite aptly. When you bend a sheet of plexiglass and then release it, the sheet snaps back and stays bent in the opposite direction. In other words, a man-made artificial construct overreacts to pressure and gets stuck in a position of rebellion.
One of my favorite analogies. Perfect for describing construction materials, markets, teenagers…
I never knew that about plexiglass. Does it eventually revert to straight?
Oliver
NNV — after reading all of the posts that replied to yours, I offer (not an original thought, by any stretch) that what will happen is that every community in the US will revert to prices that were prevalent in a single previous year. The most recent that I have read any credible poster hang his/her hat on is 2001. Many go to 1999 and a noticeable number go to 1997, as the measure of the “overshoot” on the way down.
From my tiny corner of the universe, I truly believe that this “reversion to the mean” theory of correction is the single one on which to bank the farm. A very few factors, such as factory closings and openings, will skew it for some places, but otherwise the “karmal balance” or whatever it might be called (I just call it the Austrian balance) will persist.
What do you think the median should be in NNV?
I don’t know the area, but I have a couple of friends near Carson City who seem to be a pretty typcial, Joe and Jane Schmoe couple. He works in a warehouse and is in the Army Reserve. She delivers pizzas for Dominos and sells Avon products. They’ve got three kids. I don’t think they can possibly make more than $50k per year. Ironically, when he was called up for duty in Iraq it was a financial windfall since they received a housing allowance and combat pay, and didn’t have to pay income taxes. But in a normal year, I’m guessing that $50k for an average family is more or less typical.
This would mean that the median should be around $150k. Does this seem reasonable?
Carson City is worse than Reno as far as stupid greedy sellers go.
We know teachers who walked away from job offers there as they couldn’t afford to buy a house. Plus the teaching wage in Carson was less than in California and housing prices were still sliding in California while greedy sellers in CC were walking around, puffed up.
I just accepted a job there and will be driving back and forth from our rental in the Reno area. No way am I going to pay $400,000 for a 3bdrm/2bath crackerbox.
We may just have to find some land and slap a dome home on it with green power to it and leave at that.
FDIC 2q, 2006 state review, seems incredibly outdated, and full of false, inaccurate data especially on prices. Who for instance would now believe Florida housing prices were up 21.3% yoy in 2Q? If this is the data they rely on, look out. 2Q delinquency data is revealing, but 3Q will be more so.
http://www.fdic.gov/bank/analytical/stateprofile/index.html
http://www.itulip.com/forums/showthread.php?t=487
I’m shocked.
In the Fairfield-Liverpool area, where property industry professionals say house prices have been slashed by a quarter, the jobless rate has shot from 5 per cent to 11 per cent in the past year.”
____________________________________
So much for the “soft landing” down under!
Australia is toast…they just don’t know it yet. Same for UK. Top Ramen and doggie biscuits should be big sellers soon.
Top Ramen, yes. But the doggie biscuits would be more like a treat for a special occasion or something similar so the sales won’t be as great.
What is with Top Ramen, anyway? A very reliable rice cooker costs $20 max anywhere. Thai jasmine rice is plentiful and cheap. A couple of pats of Land-O-Lakes Lite butter and some fresh coriander and you have a wonderful, if potentially fatttening, meal, with none of the sodium in the packaged noodles. As a football team, Rice may suck, but as sustenance, it is glorious.
Back in the days when the dot-com boom was going bust, I used to frequent a web forum full of current and former dot-com types. Periodically there would be threads started with titles like ‘Only have $10 for food, what should I do?’
The advice usually given was to buy a big bag of rice, some soy sauce, and maybe some beans or potatos. Top Ramen was sometimes suggested but most folks seemed to think that it was too full of crap to be real sustenance food.
Our rice cooker runs 7/365. Use brown rice, some shitaakes, a few chunks of aburage, mirin, shoyu, a few chopped veggies . . . my favorite. I think this is called Takikomi Gohan in Japan
Potentially fattening? Nah, you don’t get fat on rice when you don’t each much else. In college I lived on rice and vegetables and never gained a pound. Still eat it now, just not daily!
er…”don’t eat much else.”
2 cups of steamed white rice and a $1.39 tin of roasted eel will make a grand meal… aah, the oily orange glaze over white puffy goodness… nevermind.
When I was in college I lived on liquor, cigarettes, and cheese steaks and didn’t gain a pound.
” In the Fairfield-Liverpool area, where property industry professionals say house prices have been slashed by a quarter, the jobless rate has shot from 5 per cent to 11 per cent in the past year.”
A year or two ago I remember telling my brother to watch Australia, as they would be our model. (I don’t remember why I made that call but I think it was because they started raising interest rates before we did.)
What about the Whiskey diet. I’ve lost 3 days already.
Everything in Sydney is still so expensive. I’ve seen 3 bedroom apartments listed in bad sections of Sydney for over $400k AU (about 300k US). Most people living in that area couldn’t afford the mortgage, and I always wondered who would be foolish enough to buy investment property in bad areas at over 250 times monthly rent.
I ate lunch with some friends in the Australian banking industry this week. They were talking about retrenchments going on (layoffs). Wait. Sydney is a great city. Property can only go up!!
Canberra, where I live, is even more overpriced than Sydney on a relative basis.
It used to be a good rule of thumb that outer suburbs here were similar in price (but nicer to live in) to the outermost suburbs in Sydney, but now they’re about 20% higher.
One problem is the land monopoly; since we had self-government forced on us back in the 80’s successive governments have used land sales as a cash cow.
sounds a bit similar to the Dutch situation; the smaller towns in the outer regions have now nearly the same (ridiculously high) home prices as the big cities, while income levels are far lower. I think the major cause of this is equity locusts and ‘investors’ from the big cities who are buying up homes in the periphery, but the local government near-monopoly on land sales is certainly another big factor in driving prices up (despite the fact that we have plenty of land available, just like in Oz i guess …).
What are property values like in Porpoise Spit?
I have been looking in Riverside, CA for a year. I have really been waiting for what is going to happen in the next year. Recently we have had new home dealer subsidizing interests rate from $40k-$80k and will to knock it off the price if you arrange your own financing. Last weekend my wife and I toured 12 open houses and 8 were vacant. Not good. We have made verbal offer to two FSBO - List $699k, offer $640k (I thought a good offer.) The other $609k / $550k. Both houses have since been taking off the market. We do hope to buy by next summer but if this gets as bad as it may we will have to wait for the true bottom.
Riverside is hosed, plain and simple. I’ll do a Gary Watts and say 40% - 50% depreciation is “in the bag”.
Dude - are you kidding?! NOTHING in that area is worth more than 300. And be damned sure you move to a neighborhood that is not vacant or you will end up with gang bangers next door.
Wait 2-3 years, get the house for 1/2 price and pay your mortgage off in 1/2 time!
Be glad that they didn’t accept your offers. Think about it, last summer homes in Riverside were appreciating approx. 30% YoY. Now, new home builders are offering $40-80K off. That is a rapid transformation, and be assured that the HBs are much more aware of the sales environment that FBs. This will accelerate, and prices will continue to fall. Don’t catch a falling knife! Trust me, I understand the desire to buy (I’ve wanted to buy since 2003, but felt even then that prices were out of whack with fundamentals and I refuse to overpay). But you and your wife will be much happier buying the same house for half the cost in 2-3 years. Incomes don’t support the house prices in Riverside, and the prices will come down. Your patience will be greatly rewarded. Just think of it as appreciation in reverse - whereas before FBs were thinking about how much money they “made” as their house price increased, you can think about how much more money you will have left after spending far less for homes as their price falls.
“…but if this gets as bad as it may we will have to wait for the true bottom.”
Be grateful that you get to wait for the true bottom — do so, or close to it. Ya coulda been screwed, bit-time.
I would offer a lot less than that! I have seen a house listed in Glendale, CA, where the listing price has already gone from $735,000 to $549,000 in the last 3 months. I would figure at least 20% off list price right now.
By the way, anyone else want these “owner motivated” listings to really come down in price? If the owner is so damn motivated, why don’t they lower the price like 25%?!!
Also there’s the trick mentioned here before about where they re-list it at a slightly lower price than their original plan as a new listing, that is so annoying. The arrogance is still here in the LA area market..I hope the market drops enough at least to shake the bad attitude of these sellers out. I guess we have to wait until these risky mortgages reset and the market drops enough to where a lot of people are underwater…here’s hoping that happens in 2007!
Market Stats are out for September for Northern Virginia. http://www.nvar.com/market/marketstats/Sep05/index.html
I don’t understand the 800K
Bad, bad link.
http://www.nvar.com/market/marketstats/sept06/index.html
Such a small article linked in the penultimate paragraph, and yet such a profound meaning.
“Private bankers warned Federal Reserve Chairman Alan Greenspan and governors in December 2002 that consumers were taking on too much debt and that the boom in housing prices was unsustainable, Fed documents made public recently showed. The documents are minutes of closed-door meetings held at the Federal Reserve Board.”
If these private bankers were so concerned about the level of debt, why didn’t they shut off the credit spigot? Oh, yeah, they were more interested in making money for themselves. If you ask me, though, it sounds like maybe they were actually asking the FED to save them from themselves by forcing tighter lending criteria, but AG didn’t go along. Surprise, surprise, AG couldn’t see the bubble (and apparently won’t be able to) until long after it breaks. I hope that history treats AG with the disdain he so rightfully deserves. I goes that goes for the rest of these private bankers, too, who could not stop themselves from acting foolishly because they were too concerned about quarterly profits to worry about the long term health of their banks and the economy.
So Easy Al can’t say he wasn’t warned, but we already knew that. They didn’t shut off the credit spigot, instead they put a lot of extra pressure on the system by lowering rates further, loosening credit standards and stimulating consumers to take on maximum debt - to further increase the flow of easy money. Unfortunately, these central banksters (BOJ, BOE, ECB etc.) are all the same.
Does AG deserve the blame for the “loosening/abandoning credit standards” part of this equation? Did he (or BB) have people that go to the banks and bust crooks lending money to dishwashers “stating” income of $200k, or is that some other agency?
I’m going to take this to mean that the first real down leg in prices could be back to ‘02.
At least in areas where incomes have not risen since ‘02.
Which, as near as I can tell, is an awful lot of places.
The following link was posted on Craigslist for the Orlando Area. They are casting for the show “Flip that House” and are calling all flippers.
http://orlando.craigslist.org/rfs/217052620.html
Someone needs to tell them that the housing boom is over.
I think it will make a funny show. We can see them sit around and have nobody come to their open houses. We can see the frustration and anxiety when they realize they are upside down…
But since it’s TV there will probably be people looking and the fiction of making money off real estate will continue.
nnvmtgbrkr:
I commented in the previous post that my cousin is building in Nevada (and is in a real bind). What’s your take on the prospect for prices in South Suburbano Reno - specifically Arrowcreek…
If he’s building spec, god help him. Arrowcreek is upper-end stuff. Almost none of the high-end inventory is moving - major log jam. I’m in constant amazement at how many of our local builders made the decision to build spec homes in the 800k - 1.5ml range. None of it is even getting a sniff these days. Talk about leaving your ass flaggin’ in the wind! My opinion is the smart ones will cut their losses and sell at major discount (and I’m talking major!) the others will lose everything. Happens every cycle, I’m afraid.
totally agree with you, nnv …
Arrowcreek is probably the most over-valued area of Reno. Your cousin can kiss his $ bye-bye!
BTW, I’ve lived in Reno for over 20 years.
isnt arrowcreek way up the hill on the way to coleville
It’s in the eastern foothills as you leave Reno to the south. If you’re familiar with Mt Rose Hwy, then it’s on you’re way up the mountain (towards Incline Village) on the right hand side. Another nice area up there is Montreux, where they hold the Reno/Tahoe Open.
Beautiful area up there. I used to go walking a dog of mine around there long before they carved it up and ruined it. I have not visited for a few years, but I am sure I would not be impressed. Chewing up large chunks of mother nature so some rich puke can enjoy a view is not my idea of progress. I might change my handle to HousingCynic.
Try reading “The Geography of Nowhere” by James Kunstler. I have a feeling you’ll like it.
The average price for a single family home was $673,468, down 6.8 percent from a month before and 4 percent lower than in June 2005. The price for single family homes in Loudoun were at record highs of over $800,000 in December, 2005.”
This is a 16% drop current month to December, and we are 4 months from December ‘06. I think that Moody’s 11.8% drop is ‘in the bag’.
“I think that Moody’s 11.8% drop is ‘in the bag’.”
I think that Moody’s predictions will be a laughing stock for a generation. They shoulda’ stuck to that which they do best, which is predicting the unpredictable in the stocks and bond markets. Probably some hot-shot smartass kid talked them into opining about housing — bad choice — fire him yesterday.
Man gets 10 years prison in fraud case
James Davis Bennett, formerly of Yorba Linda, owned several Anaheim Hills real estate companies.
By ANDREW GALVIN
The Orange County Register
A man who owned several Anaheim Hills real estate companies was sentenced today to more than 10 years in federal prison for running an illegal property-flipping and loan-fraud scheme, prosecutors said.
James Davis Bennett, 53, formerly of Yorba Linda, was convicted in January of four counts of wire fraud and six counts of bank fraud. He has been in custody since then.
Four other people have pleaded guilty to participating in the scheme and will be sentenced later, prosecutors said.
According to prosecutors, Bennett purchased multiple-unit properties in distressed areas of Los Angeles and Long Beach in the name of his mother, his wife and his stepson. He then sold the properties to “straw buyers” at a mark-up, typically $100,000 above what he paid, prosecutors said.
Bennett and his co-schemers prepared mortgage applications for the straw buyers that contained false employment, income, down payment and credit information, obtaining more than $6 million in fraudulent loans, prosecutors said. Bennett also prepared fraudulent appraisal reports, they said.
Bennett, a licensed mortgage broker and licensed appraiser, formerly operated West Belle Mortgage, West Belle Mortgage Escrow, West Belle Realty and Independent Appraisers.
He was sentenced this morning by U.S. District Judge Alicemarie H. Stotler of Santa Ana to 121 months and ordered to pay $751,050 in restitution and $12,500 in fines.
LOCK EM UP! There are dropping like flies!
Flippers probably make better bottoms anyway.
Soon the inventory months will resemble his sentence!
“formerly operated West Belle Mortgage, West Belle Mortgage Escrow, West Belle Realty and Independent Appraisers.”
Wow, I wonder why he did not name his appraisal business, West Belle Appraisers, maybe so he could pretend that his whole operation was not an interlocking scam since I bet even stupid banks would notice that the appraisal business was connected to his other real estate business. Of course any real bank should have checked up on who owned the appraisal business but I guess that would have interfered with raking in fees.
LMAO!
The names says it all “Independent” Appraisers.
10 years good job.
They keep saying our (Miami) unemployment is so low and therefor the economy - housing is safe. Duh… yes our rate is low but our salaries are even lower! I work as a manager for corporate incentives ( event planning nation wide) and barely make 40K and …. this is supposed to be a good income here. Thing is , not enough to buy a POS apt anywhere in Miami ( very bad neighbourhood maybe..). Ofcourse prices are too high. most of my colleagues bought 4 years or longer ago and admit that they would never have been able to buy in today’s market. I think it is a real shame that prop taxes lock everyone out as well, owners who want to sell and move , maybe closer to a new job or what have you, can’t unless they want to pay the “new” prop. taxes. New buyers can’t pay the outrages taxes! Will empty condos make our city better? I feel as if I am being forced to leave. It is not that I can’t live without Miami but as all of us, I’ve woven my webs and have my daughter’s school, job etc.
i doubt that old buyers can afford prop taxes in that southern sh@thole! Miami should be carpet bombed doing us all a favor.
With the situation in Miami, I don’t think you’ll have to wait too long before the housing prices start imploding. Not sure how long you’ll need to wait to get to the bottom (or close to it), though, since you don’t want to catch a falling knife. Good luck, and if you’re willing to stick it out, and I think that you’ll be able to afford a nice place before too long.
Yvonne — if you are an owner, your property taxes have been safe re “Save Our Homes.” If you are a renter wanting to buy, property taxes likely will fall significantly, since prices will fall significantly.
Just keep to the time-honored wisdom that if it costs noticeably more to own than to rent, rent.
Excellent advice, Chip!
I second that. People down here tell me I am CRAZY, the it always cost 2-4X as much to own… Blah, blah, blah…
I could show them the charts, explain the economics of it to them (why on earth would anyone chose to rent a home at a huge loss…Oh that’s right, your probably doing it right now banking on 20-30% YOY gains…NM), but I know they don’t care; rent ALWAYS was 1/2 to 1/4 to cost of ownership..
I don’t know how many seemingly intelligent people can be so dumb .
The most surprising thing on Ben’s desk tonight is the report from Cary, NC. I thought everybody wanted to live there.
Wait a minute! Are you saying there’s someone who doesn’t want to live in that land of perpetual paradise? Blasphemy!!
now Martha-land
Sarasota update, my old neighborhood. A listing on realtor.com that’s been there since at least April just dropped $50K from $449K to $399K. Over 10% in one shot. 4BR, 2440sf, tile roof, larger lot, pool. Quite nice. Two more same-size dollar reductions should start to generate some interest.
Our house took 3 weeks to sell last May; the non-contingent cash offer was 3% below our asking price. My wife and I thought it over for about 15 nanoseconds before signing.
“The prices of homes in Loudoun County were sharply lower in June, down nearly $50,000 on average from a month earlier. The average price for a single family home was $673,468, down 6.8 percent from a month before and 4 percent lower than in June 2005. The price for single family homes in Loudoun were at record highs of over $800,000 in December, 2005.”
They should have qualified this to read the price for single family detached homes. Overall the numbers for all single family homes (the numbers that most people use) are way lower, e.g. Dec. 2005 it was $580k, not $800k. Also using average is relatively meaningless as well - median is more meaningful.
hello
From Arizona. “Arizona State University economist Dawn McLaren was one of those people who dared use the word ‘bubble’ over the last couple of years. ‘We had a price bubble,’ McLaren said. ‘I say the market is good. The market is coming back to reality, to its fundamental value. We’re in the middle of where this thing is going to go.’”
“…this thing?…”
Say what?…
And you call yourself an economist? At a PAC 10 school?…
jd,
I agree, things are on their way down, way down. I know because I’m been experiencing “this thing” for about 420 days. Now I’m $30k below all the comps in my area, Anthem, and all I’m getting are lowball offers $75K lower than my listing. I have already dropped my asking price about 20% and I didn’t want to go another 15% lower. Fortunately I can stay where I’m at, but others with vacant homes will have to go even lower or loose it all.
It’s hard to imagine that prices are going to decline 40-50%, but in the last year Anthem has already gone down about 30% and there’s still a lot of grief to come.
Can anyone tell me where to find the number of listings in an area and the number of houses selling in that area?
Thanks,
It’s hard to get answers unless you post early in the day.
I believe a lot of folks get the type of info you are looking for at Zip Realty. I think you have to sign up, but it’s free. I am not in the market myself - just a casual bubble fanatic, so I am usually satisfied with the information I get here.
“‘A lot of people didn’t look to the future,’ Dan Bennett said.”
There will be some great opportunities in five years for the people who do look to the future, thanks to the collective stupidity of those who don’t, or whose crystal balls were completely darkened by the ink cloud the NAR shot their direction.
Is any relationship between Bush endorsed A.G as chairman on April 2003 and A.G. endorsed Bush tax cut on 2001,2002.
Also, does the bubble economics help Bush reelected on 2004 ? if Greenspan ever use this to exchange as one more term of Fed chairman ?
There have been plenty of conspiracy theories regarding Greenspan over the years, nearly all of it bunk IMHO.
Quite simply, Greenspan never needed to directly engage a president in any sort of quid pro quo. He just did his best to ensure that business conditions were optimal for the 99th percentile in wealth, and those people applied the appropriate pressure to persuade four presidents to support Greenspan as Fed chairman.
Thank God we don’t have to worry about the nasty surpluses where the Federal Government would have to start PURCHASING assets!
What a freakin idiot.
I’ve never been to that “mess that Greenspan made” site, but I think the remarks above about the bankers’ warnings in December 2002, coupled with those notes from meetings in 2000 where AG was truly perplexed by the technology boom (what with all those “internet tubes” and whatnot) make it clear the guy was senile. Has he figured out how to use e-mail yet?
Oh and btw, I never heard of the PPT before I discovered this blog. So it seems the US government DOES purchase assets, at least in some small fashion, no? It’s just a matter of how much with some of the conspiracists. So, did AG know this when he made those remarks in Winter 2000? He must have, right? Because the executive order for the PPT was instituted after the October 1987 crash (on AGs watch)
if I’m so smart why don’t I get a 200k speaking gig…
should be “Winter 2001″
Mess that Greenspan Made is a great site, and it doesn’t just talk about the Fed.
“‘If the deal doesn’t go through, nobody gets paid,’ said Bill Matthews, a senior vice president at the Conference of State Bank Supervisors.”
State the obvious why don’t you
“From Mississippi. “In areas like Madison, overbuilding of upper-end houses costing more than $250,000 has caused an imbalance in the market. ‘In some areas, we have up to two years on the market. If somebody doesn’t stop (building), it’s going to take us two years to get it sold.”
Is it too late in the season to pray for hurricanes? Because otherwise, I would say two years on the market means too much inventory, with no demand to ever absorb it. Especially at $250,000 a pop! In Mississippi!! Come on, sheeple, get a clue…
if two years on the market means too much inventory, I think we need massive flooding in the Netherlands to clear the balance. There is a good number of homes here that have been on the market for more than 5 years …
“Private bankers warned Federal Reserve Chairman Alan Greenspan and governors in December 2002 that consumers were taking on too much debt and that the boom in housing prices was unsustainable, Fed documents made public recently showed. The documents are minutes of closed-door meetings held at the Federal Reserve Board.”
—————————–
For those of you who are chomping at the bit to get in at 2003 prices, please read the above very carefully. Many of us think the credit bubble got started in 2001. In many areas of the US (like So Cal), the RE cycle was already topped out around the same time. If the credit bubble implodes, and there is no major bailout, it’s very likely prices will go below 2001 levels. Yes, very possible to see 35-50%+ drops in some bubble areas.
There is no rush to buy right now or in the near future, and there is no guarantee prices will start rising after just a few years. We’ve never seen this kind of credit market before, and it would be a good idea to wait until ALL the dust settles before making a move, IMHO.
Good luck to all!
Funny thing is that this 50% drop may take 5 or 6 years to occur while incomes go up 2% per year. In 5 or 6 years, the boomers that have money will start to retire and downsize their homes, knocking another 20 to 30% perhaps? All these savings bonds I’ve been stupidly (not my term, but other people’s) buying since 1998 will finally be put to good use buying an ocean view for 30 percent of 2005 prices.
latest bubble news from the Netherlands:
In the third quarter of 2006, home sales were down 10% and prices were up 0.8% (that’s about 4% annualized); however, prices for the more expensive homes increased at around 10% annualized. So again another all-time high for Dutch home prices. It might be that the above-average appreciation of expensive homes is keeping the market afloat (just like in the US, the richest 1-2% of the country is doing extremely well, while the rest is doing a little worse every year financially). Due to heavy manipulation of the realtor numbers it’s very difficult to say what is actually going on. Inventory levels seem to be stabilizing, but I think that is mostly because RE agents are removing many of the homes that have been lingering on the market for years without selling.
The realtors are organizing a special ‘open home’ day in my part of the country today with lots of publicity. Our neighbours have been trying to sell their home for a few months now, asking about 9x (+800%) the 1990 valuation. I’m in one of the most prestigious streets of the city where until a few years ago, homes always sold even before they officially came on the market. I haven’t seen any prospective buyers today, despite very nice weather…
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OT: More on Casey Serin
A would-be real estate mogul follows boom tips straight to bust
By Carol Lloyd, Special to SF Gate
Friday, October 6, 2006
“I’ve always been entrepreneurial,” he said.
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2006/10/06/carollloyd.DTL
My house rent is currently 280x. Been looking at new home developments. Today I went to a home site in Gilbert and was told that one sale had cancelled that day creating an available spec home. The home was listed at 280k, the incentives were 37.5k, but since it was spec and needed to go back in the sold column, I could get off maybe 75k. Another potential FB slipped away and they thought I could be their next GF. At another site I visited in the am and was told one spec home may become available due to cancellation. I got a call later that day that the home was indeed cancelled and I could get the home listed at 235k base to 199k with “tons of upgrades”.This one was in Pinal county where I have seen new builds reduced to as low as $75 per sq ft. The speed and momentum are starting to take off in Metro Phoenix and have already passed Moody’s numbers in less than a week. May actually be able to afford a home here by Xmas! It will of course be purchased as a place to live for maybe ten years or more, financed as a traditional fixed rate fully amortizing loan at an income multiple I am comfortable with.
Careful about buying in the desert exurbs, even if it looks cheap. Some of those areas are going to wind up like Wonder Valley but more crowded. If you must buy, make sure you figure out which part of the neighborhood is going to become a squatters’ artist colony and which area will be inhabited by motorcycle gangs on the weekend.
Hope those prices reach Tucson soon, sellers here are still demanding $175-275 per sg/ft and these are for small, old, cheaply built inner-city dumps in high crime gang-infested ‘hoods’
Avg salary here is about $33K with most jobs paying anywhere from $8-13/hr tops.
Funny thing i see the same ones for sale for at least 6-9 months now w nary a SOLD sign anywhere, even with all the ‘Reduced Price’ signs. Those 100% HELOCed must have trouble sleeping at nite.
I think the Boom is over but you would’nt know it in the suburbs, new developments and shopping centers for miles around, its what we old timers refer to as ‘Blade & Grade’ to our beautiful desert wilderness.
And everyone keeps saying its different here, everyone wants to live in Arizona, you cant go wrong! WTF? What are they drinking/thinking?
with all the building that has been going in many parts of the nation, you’d think the US population most have gone up tremendously! 1000 people per day move to Florida?? Great, so where are the empty cities ( with prices comparable to those in Florida, you could not sell your home in saw Iowa and buy a condo here) where people sold their homes to buy here. Or are the homes here mostly second homes? If so, any economic turn down would put these homes on the market again. I just don’t understand whose buying all these units (Miami)
nobody. its all hype created to increase the prices.