The Areas That Grew The Most Are Going To Fall The Most
From In Business Las Vegas. “‘The market sucks.’ With those three little words, Las Vegas real estate guru Richard Lee elicited laughs from real estate agents and those in the development and building industry waiting for some insight on which direction the housing market is heading. Lee urges them to be patient.”
“‘Just remember that we have a shortage of land and that’s what caused the appreciation of new homes,’ Lee said.”
“With new home closings falling four of the last five months in the valley, builders have cut way back 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, of the Framing Contractors Association, said builders have backed out of projects they intended to go forward with, dropped permits and even moved more slowly on projects under way, she said. Some framers who were doing 16 houses a month are down to six to eight a month.”
The Reno Gazette Journal. “The Reno area could be the second-hardest hit community in the nation in slumping housing prices, according to a report by Moody’s.”
“Inventory of resale homes in the Reno-Sparks area has been at more than 5,000 for the majority of this year, extremely high for this market. Broker Ken Wiseman said that flippers, ‘investors who buy new homes hoping for a quick sale and profit’ have been a big reason for the large amount of inventory on the market.”
“‘With existing homes, we will get bit in the ass by the investors who tried to make that flip and got caught short,’ analyst Brian Bonnefant said. ‘That will drive the prices down. That will put the pressure on that decrease even more so than the people just trying to move and buy a better house.’”
“‘The areas that grew the most (during the boom), those areas are going to probably fall the most,’ Bonnefant said. ‘If Reno was one of the top five in growth, they are definitely going to be one of the top five in decreases.’”
“Susie and Gary Inouye of Reno are getting to see Reno’s housing market from both a buyers’ and sellers’ perspective. The Inouyes are trying to sell their present home in northwest Reno and buy a larger one.”
“The good news is home prices are going down, which will help prospective home buyers. Sellers, on the other hand, might not be getting as much for their homes as they were a year ago.”
“The Inouyes are Bay-Area transplants who plan to sell their existing home first and have done considerable research in setting the price. It’s been on the market about a month.”
“‘We’ve had quite a bit of interest,’ Susie Inouye said. ‘We feel like we’ve priced pretty good. On the flip side of that, what we’re struggling with is the other people like us are having a difficult time selling their houses. Their asking price is more reflective of where (prices were) six months to a year ago.’”
“Inouye said she and her husband are looking at buying a new home rather than an existing home, because existing home sellers might be asking too much. ‘The market has changed so quickly, that’s what people aren’t aware of,’ she said.”
“Some home sellers say the abundance of new homes on the market is making it more difficult for them to sell their own homes. ‘I feel that the new homebuilders in the area are mostly to blame for this,’ said Tina Tubridy of Dayton. ‘They have overbuilt, and anyone trying to sell an existing, fairly new home is having to compete with the drastically reduced prices builders are offering to move their inventory.’”
“Tubridy said she listed her 5-year-old home in Dayton last February for $389,000 based on her Realtor’s advice. ‘It did not sell, not even any lookers,’ she said. ‘The builder is now advertising my home in the high 200 (thousands) to low 300s,’ she said.’”
“‘I am not being greedy. I just want fair market value for my home. I don’t think my home should be devalued because the builder has overestimated the need for new homes,’ she said.”
“Some sellers are willing to wait to get their price. Jay and Fern Walton have had their four-bedroom home on an acre in Pleasant Valley for sale since June. ‘I think we’ve only had about six people look at it,’ Jay Walton said. ‘We didn’t know how tough it was (to sell) because we’re just a seller. (The market) is pretty tight right now.’”
“The Waltons have owned the 1,700-square-foot home since 1964 and have it listed for $434,000. ‘We’re not in a hurry,’ Jay Walton said. ‘If we don’t sell this year, we’ll still be here.’”
“‘I am not being greedy. I just want fair market value for my home. I don’t think my home should be devalued because the builder has overestimated the need for new homes,’ she said.”
Ah….the “devalued” nature of your home isn’t determined by what you think. Those pesky homebuilders do matter.
Definitely the money quote of the entire article.
Exactly what I thought.
It’s like she thinks her house has reached some magical level of value from which it couldn’t possibly fall.
I’m sure she didn’t mind her home being overvalued when the buyers overestimated the need for new homes
Let me tell you, if she doesn’t drastically reduce and dump that baby, she’ll be lucky to sell it for 200K. Dayton was the specuvestors promised land for the last three years. 30%-50% of new development sat unoccupied with for rent signs sitting in unlandscaped front yards. I’m sure Ben can relate with the many out-skirt areas in his area that are similar. 5 years ago she probably bought the place for about 125k-150K. Dayton is no paradise, trust me. 10 years ago you could have filmed “High Plains Drifter” there. This gal is soooo hosed.
She’s emblematic of the reason prices are “sticky” on the way down.
The really interesting aspect of the article is that a homebuilder is underselling this lady by about 25%. I thought that would eventually happen, but not quite so quickly. It will be interesting to see how this phenomenon spreads across the country.
She’s emblematic of the reason prices are “sticky” on the way down.
Asking prices, not selling prices.
“‘Just remember that we have a shortage of land and that’s what caused the appreciation of new homes,’ Lee said.”
This is a close second - only a moron would think that Nevada was running out of land….
I agree–the quote is PRICELESSLY clueless. Someone selling exactly the same house for a much lower price is giving you a _remarkably_ good idea of what fair-market-value is at the moment.
Jon
- ‘I just want fair market value for my home.’ …
Well, she is going to get that FAIR market value. That new value is decided by the price a willing buyer is offering. The builder will eventually unload his inventory, estatblishing that ‘Fair’ market value.
Honey, you are going to be feeling some pain for sure.
“I am not being greedy. I just want fair market value…”
Indeed a classic quote. Does she understand the definition of “market value?” Evidently not.
“I just want fair market value…”
Watch out what you wish for.
Fair Market Value + a bottle of KY jelly = Reality
I did the math for her.
I guess she defines “fair market value” as a 100% return in 5 years. Dream on, lady.
I presume she thinks fair value is what the comps showed her neighbors sold similar houses for sometime prior to her putting the house on sale last Feb. In other words, sales made late last year. Unfortunately for her, the real world doesn’t work like that.
fair market value??? in Dayton NV of all places?? How about 80K median price would be about right. Streets torn up right now, 20 minutes drive into Carson City, over an hour to Reno, and best shopping at the Gas Station mini-mart.
They’ve got a big chain supermarket now, not that it makes a difference though.
100%?
Her downpayment was likely 10%, giving her 1000%!
And, what, pray tell …is “fair market value” anymore? Especially with a burst bubble?
Imagine the same sentiment stated for the stock market… “I just want fair market value for my Pets.com stocks. I don’t think my stocks should be devalued because the company overestimated the need for pet food ordered over the Internet.”
What was the name of the Dot com grocery delivery co that went bust?
Webvan! I had a guy who worked for me who went there. I told him he was crazy. Called him up about a year later and said “SEE!”
the real story here is not here quote, it’s the fact that the builder is offering similar houses for almost 25% off.
But the craziest dot.bomb was AllAdvantage — get paid to surf the web! It’s was stupid from the moment it started. I think they raised over $100M in VC funding too.
John Law — I think that a lot of FBs believe they can weather the lowered comps wrought by builders who are flogging inventory. They are hunkered down as if in an artillery barrage, waiting to charge out and resume their quest for gain when the smoke clears. But the buyers won’t be there, clamoring for their properties. That is when the used-home sellers will have to surrender.
Older homes near city cores will fair better in the same market. If new homes are in over-supply, that implies inventory built on the outskirts of towns and not in the center. If there’s infrastructure nearby; bus lines, trains, mixed housing and shopping, and access to jobs; those homes and neighborhoods will probably fair better in this market. Living expsense can be much less.
And of course cities with limited land experienced limited building so single family homes near infrastructure will probably hold value much better.
The worse of are suburban and extra-burban owners of large homes (McMansions) sitting next to new developments.
Thanks for the tutorial. Haven’t you been saying that for three days in a row? How about some new material?
Have you been to LV? Everything is near the 215 which is the ring road that surrounds LV. You can get to anywhere in LV within 30 minutes (traffic permitting) Summerlin the Master planned community’s road system was designed and built to withstand the full built out population. Getting around Vegas is easy except if you want to go when a major event is happening (New Years Eve Fireworks on strip). It still is not bad if you know the back roads to take that can cut your time in 1/3rd.
From Aztrias (cousin of Va_Investor)…”The worse of are suburban and extra-burban…”
I’ll take one of those Extra-Bourbons straight up, please.
Read in an earlier post about some folks’ definitions of luxury, such as yachts. Shucks, mine would be just a nice big bottle of Knob Creek.
Make mine on the rocks…
Maybe if they offerred a Chevy Suburban….
Hey asstrias, try not commenting on area on which you’re completely clueless. Just what do you know about Reno’s infrastructure and job market. We’ve already seen from your witless commentary that you’re misinformed and dillusional about your own neck of the woods, how can you possibly add anything worth a thought when it comes to a place like Reno.
A fair point, but how do you define “next to”?
Hey asstiras what in the hell are you talking about. Houses near the core. My God, the core of what, an inner city. Please give specific references at a least a zip code of a specific area so that somebody from the blog with local experience can rip your argument to shreds. If your talking about “core” maybe you mean something like the “core” of a planet or something not sure. Dang dude say same something that makes sense.
Tina baby, sorry hon but the buyers will set the price of your house. The greedy nasty builders have nothing to do with (or only a small amount) your price. Did you complain when they raised prices? huh? huh? hehehehehehehe
I am not being insulting. I just want to give you fair market value for your home. I don’t think the value of your home should be inflated just because you have overestimated the market .
-
First and Highest to Rise will be First and Hardest to Fall. It’s a rolling Tsunami.
Kindas like FIFO accounting
Seems the homesellers are a little schizophrenic, they want to sell their current homes at a premium and buy a new home at a discount.
I second that. : )
I think there should be a law to this effect. Its like the French man who said all exports should sink before they arrive at their destination, because people love exports, but hate imports. And no one likes the insurance companies who take it in the a$$ paying for all those drowned exports
Oliver
I’d like to do the same thing.
Have any ideas to help me? I was counting on the Easter Bunny, but gave up on him, now favoring “the Great Pumpkin”.
Acording to Linus, there is a shortage of Pumpkins this year because of TOO MUCH rain in the midwest. Buy calls on pumpkin futures.No Great Pumpkin, boo hoo!
Be patient! Santa is just around the corner…
“Tubridy said she listed her 5-year-old home in Dayton last February for $389,000 based on her Realtor’s advice. ‘It did not sell, not even any lookers.
who would think !
Why don’t you sue the realtor for his “bad” advice? Let the blame game begin! If I advise you to cut your listing price today by 25% and watch it sell, the chances are you wouldn’t listen to me advice (only 35 years experience in real estate).
My dear, look in the mirror, because the only fool in this transaction is the image staring back at you.
schizophrenic is just the tip of the iceberg with these people. I can’t even begin to describe how many pissed off sellers I meet …in the grocery store, the drug store, the hair salon, the post office, etc. I told you folks I quit telling people here I am renting for fear of getting attacked for holding out my money from their home lottery,
I never looked at it that way but yea I don’t think I would tell other either YET, In 2 years start to let them know again and you may find yourself a VERY POPULAR PERSON!! Right now you will be popular but only because they see your head on a stick kind of like a lollypop or SUCKER!!!
Dum-Dums!
There is a way to do that. Its called sell in bubbleville and move to flyover country.
“The Waltons have owned the 1,700-square-foot home since 1964 and have it listed for $434,000. ‘We’re not in a hurry,’ Jay Walton said. ‘If we don’t sell this year, we’ll still be here.’”
It’s casual non-motivated “I’ll only sell it at my wet dream price” sellers like these clowns clogging up the listings. Any Realtor that takes these twits on as clients is just as guilty. People like this should be blacklisted until they wise up and cut their price to where it will sell in a few weeks.
Hey MoMo…They can price their house at anything they want… this is America. And if the Used-House Salesmen want to take the listing, that’s their business. How IS the used-house biz these days, anyway?
I agree, let them ask want they want.
Oliver
When the tell you they can wait to get their price, they are not telling the truth. They have already dreaming of what to do with all that money they are going to make, and nobody really enjoys the stress of selling a house. Every day they wake up wondering what they did wrong when there is no offers. And every time they hear of another house being sold, not theirs, they die a little bit inside with envy. It reminds me of the next lawyer telling me he is not sueing because of the money. It’s always about the money.
Good points david. I believe most of these people claiming they can/will wait it out are in denial and really cannot. Most people would not put their house on the market without a plan in place as to where they are going-what they are doing. Their projected profit has most certainly been baked into this plan. They become agitated upon realizing it is not going to work out the way they planned, and rather than accepting reality, lowering the price, and moving on, they allow stubborn denial to ruin them even further. Their greed is so great that they cut their own nose off to spite their face, in this case, throwing even more equity away (phantom), rather than cutting their losses. They are not only casualties of the bubble, but of their own foolishness.
Very interesting insight about these would be sellers. I have often wondered myself about these people who say “I am in no hurry to sell.” There are lots of them out there.
And not just in RE. I once met a guy who was selling a used washing machine. His asking was no lower than what you would pay for a new one at Lowes, and he did say “I am in no hurry…” I concluded that the seller simply enjoys making small talk with people, and had no intention to sell the washer.
Whenever I try to buy stuff used and the price is too high I always say “it looks like you are in no hurry to sell” and walk away.
just using off the top of my head calculations…hmmm…bought in ‘64 (for 10’s, not 100′ s of thousands), 42 years worth of mortgage payments (so…paid off in 1994, if not 1984?) and ‘in no hurry to sell’.
So..it begs the question…why bother to put it on the market at all? Anything above $100K tops is going to be profit for these guys. Why price it at 2005 numbers? Why not cut 25%, 30% and sell it quickly?
sheesh, some people…
“‘Just remember that we have a shortage of land and that’s what caused the appreciation of new homes,’ Lee said.”
Uhhhh, homes are now depreciating… so does that mean they’re making new land?
Lee is a jackass. Just drive or fly to Vegas and all you see forever is vacant desert.
What they are not making anymore of is Water.
Absolutely, Water rights and water usage are huge issues in LV. Last summer only businesses that had fountains which added value to the tourist industry could run them. My condo has 2 hottubs with waterfalls that could not be turned on due to these restrictions. One mall ran their fountain with imported Canadian Water in order to keep it running. They had a sign right in front of it explaining their ability to run the fountain. All the water rights have been diverted to SOCAL so they can have water.
Nevada never did have any water rights - So Cal was using there fair share before Las Vegas even built its first casino.
But more importantly, if there is such a water shortage, why are they even building new houses at all? Seems like the local politicos have the residents bamboozled into conserving water just so there is more available for their developer friends to have for use in their new housing tracts.
You are right!! When it came to dividing up water rights they never saw LV getting any bigger the about 10,000 people so they gave up the rights from the beginning. Boy where they wrong!!! You are right they are tightening the reigns on the old homes to make way for the new. No longer are people allowed to have full lawns, which I do not think is a bad idea since it is a desert, but the reason behind this change is not admirable but financial!!
Why are they building? Because Vegas is run by casinos and developers. No one else matters. Our mayor is the biggest growth cheerleader I have ever seen and city council is a rubber stamp. Vegas will dry up and blow away in a few years, but not before developers build on every piece of land they can buy. Water problem? We don’t want to talk about that.
Nevada will take water from SoCal’s share if it has to in order to keep Vegas open. What will Cal. do, invade? Nevadans are better armed.
I have friends who lived in an Apt. in Aurora, CO; then purchased new and moved to an off-site constructed modular in Strasburg, CO. They say these local communities are having to go deeper every year into the ground to get their water. Very scary. What happens when there is no water left?
Could be an important variable in the Spring as El Nino years typically result in lower-than-average snowpack in the West.
Actually you have that backward - at least as far as CA is concerned. But the water will be the ultimate issue. Check out the book Cadillac Desert for more on that.
I’ve read pieces from that book. Scary.
Awesome book. Arizona, CA, Nevada have been at the table for years trying to hammer out equitable shared water agreements. Very confusing issues and basically Nevada got hosed (no pun intended) in several deals.
Another good recent book in the same tradition as Cadillac Desert, which is indeed a classic, is “Water Follies” by Robert Glennon about the unreasonable use of groundwater pumping in many areas of US.
“Pillar of Sand” by Sandra Postel also provides a good overview, but much more from a global perspective.
Marc Riesner author of Cadillac Desert, before his death recanted most of the conclusions in his book saying that big agriculture was preferable to subdivisions.
Yeah, but those empty, unlandscaped “investment” properties won’t be using up too much water.
“Uhhhh, homes are now depreciating… so does that mean they’re making new land?”
False
If p then q does not imply if q then p.
Be careful with that. Otherwise, you are likely to end up making some bad decisions.
thanks,
Like deciding to engage in sarcasm in the presence of doctors?
LOL.
Sufficient vs Necessary conditions. LSAT FLASHBACK… NO!!!!
If p then q does not imply if q then p.
Yes but “if p then q” does imply “if not q then not p”.
you two will bring back nightmares for me!!!!!!
Uummm…
If p and q are whole integers and p is divided by q and q is not equal to zero then what do you have?
Money Envy
How one family started keeping up with the neighbors and ended up living beyond their means. A true (scary) story of the perils of overspending.
http://tinyurl.com/mced2
Very sad. That’s probably why it is important to have hobbies and interests besided simply shopping and trying to live like your neighbors do.
Sad?? I don’t find it sad at all … more like pathetic. These people are the portrait of greed, materialism, selfishness, and sense of entitlement, that (unfortunately) one finds in much of America today. Then, after they run up 100’s of thousands of dollars in debt living like royalty, they declare bankruptcy!! So someone else gets to pay for their high lifestyle. And the wife (who sounds like a shrew, much like the wife in the infamous Century 21/”Suzanne” commercial) even in bankruptcy still mopes about no longer having membership in the country club and tennis club, and not being able to shop whenever she wants as recreation. I don’t feel any sympathy for these people, sorry.
The story is the answer to the often asked question; How do people afford these home prices? Simple, they put all their living expenses, including food on a credit card.
i don’t have issues with putting everything on cc aslong as the balance is paid off each month. we are doing that right now to rack up mileage>
Studies by the credit card and retail industries have shown, time and time again, that people who charge their purchases end up spending more (I believe in the neighborhood of 15%) than people who pay cash … You may be “racking up mileage” but you’re paying for those miles.
“It is not the man who has little, but he who desires more, that is poor.” -Seneca
Buying there would be a reach-15 percent more than they’d planned to spend-but Tammy convinced Dan they could afford it.
It’s like “Here, honey, have an apple from this tree. This nice talking snake told me it’s OK, and we won’t really die.”
Throughout the article, it’s clear that the Wife’s desires were his downfall…
“…but Tammy convinced Dan they could afford it.”
I was waiting for Tammy to say, “But Suzanne researched this! We can do this!!”
I don’t think they have learned their lessons yet, unfortunately. They still don’t seem to understand that there was NO REASON to get in trouble in the first place, if only they had understood what is important. And it isn’t having a big house or an expensive car.
Never keep up with the Joneses. Drag them down to your level. It’s cheaper.”
–Quentin Crisp
Looks to me like Tammy married well and Dan didn’t.
Those people are patheticly insecure. Living your life based on other peoples expectations is really sad.
“The Waltons have owned the 1,700-square-foot home since 1964 and have it listed for $434,000. ‘We’re not in a hurry,’ Jay Walton said. ‘If we don’t sell this year, we’ll still be here.’”
And the year after, and the year after…..
At least they are not in a hurry. I reckon John Boy would be ashamed of the asking price.
“G’night, Jay.”
Yeah but the Waltons owned a whole mountain.
They held on to it through the Depression because they were debt free. But no doubt John Boy’s grandkids sold it to Toll Brothers and it is now covered with McMansions.
“‘Just remember that we have a shortage of land and that’s what caused the appreciation of new homes,’ Lee said.”
They DO NOT have a shortage of land in Las Vegas!! There is 15+ years of growth left especially after we clear out the excess inventory of today and the next couple of years!!! They are approaching the East and West limits due to the mountains but still have plenty of room North and South!! They tell the Realtors this to make sure they are all on the same sheet of Rhetoric!!! IF I keep telling myself and others this, then it will be true!!! BS they stated 7 years based upon the rate at the peak of building. Based up the new trend of 6-8 per month VS 16 per month in the framing business I would guess it is at least 15 years left!!! Maybe the next real estate cycle this will be true but not this one!!!
“Las Vegas still had 5,000 to 7,000 people moving in a month”
Hmmmm, any figures on how many people are moving *out* a month? Is the net still positive? And how recent is that 5,000 to 7,000 people a month figure? Anyone know?
How many of those 5000-7000 people make enough money to buy ?
Quality, not quantity……..
YES…those are the questions. I live in the southeastern part of Las Vegas…one of the older neighborhoods. Large houses (2000 or so square feet for the most part) built in the 1960s. There are so many houses for sale in my neighborhood. And they just stay for sale and stay for sale. I can’t remember the last time I saw a sign come down. There are two houses right on my street that have been for sale since I was pregnant with my 22 month old daughter. I kept track of the price of one of them…started at $400,000, now is down to $299,000. Still over priced, apparently, because no one is buying it. Every time I call about the price (maybe every six months) I ask the realtor, Bruno, how long it’s been on the market. EVERY single time, he tells me thirty days. Is that even allowed? Geesh.
A lot of the land in Nevada is federally owned and probably not buildable. I don’t know enough about it to know for sure how much land south and north of Vegas is available for building. But I don’t know who in their right mind would want to live all the way out there. There isn’t anything BUT houses. The houses don’t even have yards…just big boxes sitting on their plot with like three feet all around. It’s awful. I can barely stand to drive two blocks to the grocery store here during the summer, it’s so hot. I can’t imagine choosing to spend a couple of hours a day driving in it everyday.
“30 days is this even allowed?’ I would call the realtor out on this one. Tell him you have been tracking this home for months and you know he is lying (maybe not in those exact words)!! See how he reacts to the truth. I am a very direct person and do not beat around the bush. Perhaps, Tell him you know it has been longer then 30 days and ask him to find out how long it has been on the market as a softer approach. If Nevada was a full disclosure state it would not be allowed but I am not sure the regulations in Nevada. Anyone know the rules?
http://www.red.state.nv.us/forms/525.pdf is a link to the responsibilities of the Realtor and it states they have a responsibility to disclose data and fact known by the realtor. If he is the listing agent he should know. I would remind him of his responsibilites!!
Oh I do. Every time. I’m pretty blunt myself. He just blusters and tries to say that it’s a new listing for HIM. Which is another lie, because his name is Bruno…not likely there are a series of realtor’s named Bruno going through this house. The last time he actually told me it was hard enough for him to sell a house without people like me making it harder. It’s funny to me, because I’d never buy this house–maybe if it went down by another half I’d consider it.
Just tell him to screw himself next time! Then advise him to look for a real job.
tell him you are calling NAR!!! And DL will personally reprimand him.
I wonder if Bruno is the investor who owns the house?
Why not take all the ‘for sale’ signs down, and put ‘not for sale’ signs on the houses that aren’t? Sounds like it would make for a lot less sign pollution.
The father of a 14 year old staying with a friend got a call from the cops. Seems the boys were jumping from roof to roof in a McMansion subdivision, and the boy was said to be not that great an athlete either.
Let me guess; is this Realtor (TM) a “top producer”?
We have a Realtor (TM) who has his picture on grocery carts and bills himself as a “top producer.” I ran into him when I looked at his POS townhouse to rent. Not just a slumlord, not just arrogant, also one of the the biggest liars I ever met in my life!
Good article from the LA Times. Sorry if it was posted already.
Delicate Balance
Prices dropping, slippery home values — squeamish owners fear a tumble. Experts predict a longer, slower decline.
http://tinyurl.com/hskka
“But then again, most buyers and sellers — about 95% — are doing transactions for the same reasons they always have: a job change, someone has died, others have divorced or are having children. And that, they say, won’t change any time soon.”
I believe listening to what “they” say was what started this whole mess. I would expect many more job changes and divorces. And that, they say, is called thinking.
I haven’t read the article, but 2 things leap out right away: 1.) “buyers and sellers” implies a completed sale 2.) “95% are doing it for traditional reasons” fails to mention that last year and the year before and the year before that etc ect, fewer than 70% were doing it for traditional reasons i.e. 40% specuvestors.
“The decline is not as rapid as that of the 1990s, said Raphael Bostic, associate professor at USC’s School of Policy, Planning and Development, who described what’s happening as “a long, grinding slowdown, not a drop off a cliff.” In the scenario of a decade and a half ago, prices sank 17% in six years.”
And what the hell does THIS guy know? We’ve just seen a NATIONAL median decline of almost 2% YOY, the second fastest YOY decline ever recorded, and he thinks this is not as rapid as the 90’s?
When I grow up, I want to be an economist. That way, I can say anything I want and everybody will believe me. As it stands now, being a lawyer, no matter what I say NOBODY believes me.
Needless to say, this article will probably get its own post on Sunday. I e-mailed the author diane.wedner@latimes.com. 17% decline is absolute BS. two questions: is a “staff writer” a journalist? and is an “associate professor” a real professor, or a phd candidate/glorified t.a.?
oh christ, they referenced yet another Cal Poly Pomona real estate genius. have we run out of wooden spikes? free tip for the day: if your university actually SMELLS like bullshit, … oh why bother…
Poway Seller from Piggington.com has had a few interactions with Diane Wedner back when she was in denial about a housing bubble just 60 days ago.
Diane was pretty defensive and didn’t disclose who her experts were that said no bubble here.
Yes, a “staff writer” is a journalist, at least nominally. Staff writer is the title for most reporters. And yes an “associate professor” is a real professor. After Ph.D. and possibly one or more post-docs, people are hired as “assistant professors”. “Associate professor” is another step up - a promotion that comes after at least 3, and usually 6 years of work teaching, conducting research etc.
my bad. i think those other mensas were from Pomona College, not Cal Poly. but that just makes it worse, doesn’t it? when will they reach down to Mount SAC or Citrus College?
“‘I am not being greedy. I just want fair market value for my home. I don’t think my home should be devalued because the builder has overestimated the need for new homes,’ she said.”
Vow! Does she know the “‘fair market value?” How is she to arrive at that? Yes, BLAME SOMEONE ELSE. That is the mantra.
Jas Jain
Everyone up here has fallen in love with a number, and since most of them are basing all their worth on this magic number, and all of their future plans rely on this magic number, the idea that it might disappear is way to painful for them to grasp. Hard lessons learned, indeed. The other day I was in a group that was discussing the values of their homes (fantasy values, that is), when I chimed up and gave them the old “Your house is only worth what you can sell it for.” The group fell silent for what seemed like forever, trying to digest the meaning of what I just threw at them. This is a whole new generation of those who just don’t get it, but they’re about to be forced fed a hard lesson.
IMHO, a large percentage of otherwise prudent homeowners are “basing all their worth on this magic number”. Once it becomes obvious that this drop will not be minor and/or temporary — say, mid-2007 — a lot more homes will be dumped on the market in the last-ditch hope of saving whatever “worth” these people assume they have left, regardless of whether they can make the payments. It’s all psychology.
- ‘and all of their future plans rely on this magic number,’
This is probably the real core of the apple. Folks begin to dream how events will unfold for them with the imagined equity!
If the dream begins to fade, it becomes unbearable.
“‘Just remember that we have a shortage of land and that’s what caused the appreciation of new homes,’ Lee said.”
I thought the BLM had fixed that LV land shortage, resulting in a 50%-or-so drop in land values?
“shortage of land” is a bogus claim. If ine area is saturated people find another and move. NO SHORTAGE OF LAND in US of A.
Jas Jain
That depends on what you mean. Population follows the power rule of distribution that the big cities obey. Podunk farms out in the middle of nowhere do not matter. NYC and its suburbs do matter. Where the growth and the money is where people go and there is scarcity of land. Henry George formed his theories watching development in and around city cores, not out at the fringes or in entirely new cities.
“‘The market sucks.’ With those three little words, Las Vegas real estate guru Richard Lee elicited laughs from real estate agents and those in the development and building industry waiting for some insight on which direction the housing market is heading. Lee urges them to be patient.”
One sign of the morphing of denial into reconciliation will be the point wnen the guru says “The market sucks” and nobody laughs.
i expect the level of cognitive dissonance to increase,and have become careful about who and how i speak about this bubble.a LOT of people bet everything on real estate,and their reaction to their losses is not likely to be rational.there will be a big increase in divorce,alcohol and drug abuse and undoubtedly some violence associated with the bust…suicides,murders and spousal abuse.ugly stuff.i don’t want it to happen to me.
I have been saying that here for months. I do not think that all people will remain rational when they are technically in a vice that keeps on squeezing. The fact is that we have a lot of borderline cases in society already. This straw that breaks the back will produce some ugly results. I cannot imagine the arguments behind closed doors regarding finances. Not pleasant, for sure.
Why do you think there were riots in 1992 in So Cal?
Aside from acquitting cops from beating Rodney King.
Yes, crime will go up as the magical home ATM shrivels and dies.
The “people” who rioted probably weren’t homeowners. Their rent is paid for with Section 8 tax money from people who work and don’t riot.
“‘I am not being greedy. I just want fair market value for my home. I don’t think my home should be devalued because the builder has overestimated the need for new homes,’ she said.”
Now I have to clean up the coffee I spit all over my screen after I read this line!
Of course, one thing homeowners like to do (like Santa Clara County Measure “A” that’s on the ballot now) is, once they have *their* McMansion, to start complaining about “sprawl” and “overdevelopment” to their legislators. They don’t really give a crap about “sprawl.” They want to “preserve their home values.”
Ventura was an expensive county before and after SOAR, our equivalent. Don’t be so sure about the motives of the voters. What you call preserving house prices they would call protecting a quality of life to which they have made the single largest investment of time and money in their lives and childrens lives.
And they do this by stealing property right from others? The Supreme Court established in 1998 that downzoning was “taking”, so all the folks who got downzoned can sue–and are legally entitled to–compensation.
You’re certainly entitiled to be a Communist, and believe that there’s no such thing as property rights, but it’s dishonest to frame it in terms of “saving our environment” or “fighting sprawl”
…and maybe it’s a mistake for folks to make their house their “single largest investment.” People may be more levelheaded if they didn’t put all their eggs in one unpredictable basket. (It’s predictable in terms of a roof over your head, but not as an ATM!)
Exactly why these open space preservation regulations are not takings as reaffirmed many times in many courts with the SCOTUS declining to hear any appeal because ALL the lower courts got it right.
“I just want fair market value for my home.”
Quotes on value:
“I conceive that the great part of the human miseries of mankind are brought upon them by false estimates they have made on the value of things”. Benjamin Franklin
“There is no such thing as absolute value in this world. You can only estimate what a thing is worth to you.” Charles Dudley Warner
“Quality in a product is not what the supplier puts in. It is what the customer gets out and is willing to pay for. A product is not a quality product because it is hard to make and costs a lot of money as manufacturers typically beieve. This is incompetence. Customers pay only for what is of use to them and gives them value. Nothing else constitutes quality.” Peter Drucker
“I just want fair market value for my home.”
You need an interpreter for this one
I want LAST YEARS value for my home!
Yes, in any free market, timing is very important. And, yes, one of the variables to account for is the fact you are not alone in the market. Every one else is trying to make a quick buck too including those pesky overbuilding builders.
I am glad that wife and I are content without seeking to outdo any neighbors. I no longer have any desire to ’show off’. They can take me or leave me as I am. No pretending. No big payments to worry about.
I think it’s a self-fullfulling type of thing. I wouldn’t be able to stand 10 minutes with a couple as shallow as Tammy and Dan.
The type of people who could are the type of people who would reinforce their warped values.
Nobody in my social circle would bat an eye at my 11-year old Saturn, or my shopping at Target and CostCo….I’m quite comfortable having people over for dinner at my ~1600 sq/ft home in Sunnyvale, even though they may live in Atherton or Los Altos. Nobody feels uncomfortable. Some people are simply better at business, more ambitious, smarter, or have different goals than others and make more.
I don’t think I’d get along with anyone who only talked about money or striving for more material things. (A little is OK, but I’m talking about a seriously unbalanced person here.)
The telling thing about Tammy was her boob job (on a credit card!)
And now they’re trying to back-pedal with their prayer-meetings and Christain church group. Do you think her and her hubby have been giving 10% to charity all these years? I didn’t see any mention of it when they discussed where their money went.
I have seen a lot of bad boob jobs on woman and I think to myself. Do they actually think they look good? Next time I see a bad boob job I am going to think I bet they put it on their Credit card and are still paying for those ugly ’saline sacs’ what a waste of money. I admit I am partial to quality over quantity!!!
Anything more than a mouthful is wasteful.
Aside from the cost, I don’t understand why anyone would consider going under the knife for cosmetic surgery. Whether its for lipo or implants, I just can’t see risking your health–even life–for something that’s just going to temporarily enhance your appearance (and often it doesn’t even accomplish that).
Of course, and if they were as “religous” as they claim to be, they would have come to this conclusion. (Since Tammy and Dan brought up religion, it’s fair game here.)
Fairly mainstream Jewish opionin is that cosmetic surgery that’s not reconstructive or correct grave situation is wrong, not so much because of “vanity” but for the unneccary danger you’re putting your life in.
See
http://www.aish.com/societyWork/sciencenature/Judaism_and_Cosmetic_Surgery.asp
…for example. Now I don’t know much about Evangelical Christian practices, but I’d bet they have come to similar conclusion.
I admire their current attempts to get their lives back on track, but, like Congressman Foley, it appears that Tammy and Dan are only remorseful because they “got caught”.
I drive a 5 year old Honda myself, and have no desire to be replacing it anytime soon.
It doesn’t bother me that others make more money than me. They are willing to put in the time and effort that it takes to accomplish this. They have less time for family and more time for business; this is their choice and I respect that.
What bothers me is when these people do not respect my choices. One very succesful businessman told me last year that I should buy myself a laptop computer loaded with Wi-Fi and everything to keep the economy going. We where not even talking about ‘puters, he just said this out of the blue. I do not even need one since I really do not go anywhere. What would I do with it, surf the net while I sit on the front porch with it? Let the whole neighborhood know how sophisticated I am?
What these people have is only the illusion of temporary wealth. It will all melt through their fingers just as soon we hit a recession.
need 2 leave ca - imho, that is what happens with maturity. I may have wanted to outdo people in my 20s, I’ll admit. I could not care less now. Who cares? I oly live to please myself ad I do not require all those bells and whistles. Many people never left that ego-centric me, me, me stage….
I am glad that wife and I are content without seeking to outdo any neighbors. I no longer have any desire to ’show off’. They can take me or leave me as I am. No pretending. No big payments to worry about.
I used to work at the NEVADA TEST SITE, site of hundreds of above ground nuclear bomb tests, driving time from Las Vegas airport: 50 minutes. I have also worked at YUCCA Mountain, future storage site of our country’s high level nuclear waste, driving time from the LV airport: 80 minutes. And I drive slow!
You can build a golf course over a garbage dump,and its still a garbage dump. You can build a city over America’s Chernobyl and your living in a contaminated area.
Sign posted all over the Nevada Test Site “Do not pick up any metal on the ground”. Us workers prefered to not even get out of the car till we got where we were going.
what is the half life for that radiation? 50000 years? There is no fence where you go from 0-million rads. It is gradual. I have often wondered when that sprawl was hitting radiated land….
MBA said:”I have been saying that here for months. I do not think that all people will remain rational when they are technically in a vice that keeps on squeezing. The fact is that we have a lot of borderline cases in society already. This straw that breaks the back will produce some ugly results. I cannot imagine the arguments behind closed doors regarding finances. Not pleasant, for sure”.
I would definitely agree MBA.. It’s going to get very ugly… homeowners here are definitely feeling that presure you speak of.
Just from my observation yesterday at two different garage sales, the women homeowners were trying to talk me into buying their furniture that they out for their sale-one even said she just bought a brand-new couch, but that she now wants to sell it because its not “county looking enough”, she also complained her house was too small for all her furniture. At both of these garage sales I could feel alot of uneasiness in the air.
And as I was driving to another garage sale, I saw an angry man rip down a garage sale sign and throw it into the back of his pick-up truck and tear out down the street. Who knows what the problem is, but I would assume his plans changed and he wasnt too happy about going around and pulling all his garage sales signs down.
All this negative RE news coming out here in Reno is going to take a toll on homeowners nerves who are already on the edge about their house depreciating in value. I see it already just going to weekend garage sales.
NVMojo said:” I told you folks I quit telling people here I am renting for fear of getting attacked for holding out my money from their home lottery”.
I agree Mojo. They sure want to brag about their appreciation when things are going good for them…but flip the coin, and watch out.
It is tough watching people that are close friends finally coming to grips that they have been living way beyond their means for quite some time. Even if they haven’t exactly been living large, it is still way above their means. And the worst part of it all is that a lot of that past overhang has to be paid for from tomorrows paycheck, so it only increases the pain. The cuts required to get down to a normal level aren’t enough. They have to cut down to a sub-normal level so that they can get their car equity up to a point to sell them, pay off the credit cards, home equity line of credit and student loans.
Gone are the things like high speed internet, big cell phone bill, Starbucks, Dining out, Digital Cable and even the pets. Severe financial dieting going on in order to pay for yesterday’s fun.
I think a lot of us are in for a very rude awakening, whenever we as a collective whole come to terms with how much we can really afford as a society once we stop financing todays living expenses with tomorrows paycheck.
Coming to terms with reality will be very, very ugly, because most people are in far deeper than most of my friends. At least I am in an area that had relatively low housing appreciation, so people couldn’t pull out an extra $50,000 a year to help cover any shortfalls in the grocery bill.
I think the divorce and bankruptcy lawyers will be the next group to make a killing off of the housing bubble.
Most of my nephews and nieces are going to be in for this rude awakening. I do not say anything because they would not follow any of my advice. I sure hope they are enjoying the party while it lasts.
Some of my cousins in CA and FL have awakened. Very, very sad to see these things play out with the people in your life that you care about.