‘Let’s-Make-A Deal-Atmosphere’ Comes With Soft Market
The Staten Island Advance reports from New York. “Need more proof it’s a buyer’s market? How about getting a new car, money to pay closing costs or free home furnishings to go with your new house. They are not prizes in a game show, but the perks some new home builders are offering in the let’s-make-a-deal atmosphere that’s come with a softening real estate market and rising inventory.”
“A free $15,000 Saturn Ion might be the most unique inducement as of late. Brokers marketing a 72-unit townhouse development in New Dorp thought giving a free new Saturn with each new house might attract ambivalent buyers. Some buyers didn’t even take the car, opting instead for $15,000 in closing costs or money toward home furnishings, said broker james Prendamano.”
“Sweetening the pot is what a lot of builders who are trying to sell multiple units are doing in a changed market. Last summer, home builders also lost what had been a standard marketing tool over the years, the ability to offer buyers an eight-year tax abatement on new homes.”
“‘Builders are trying to make up for the [loss of the] tax abatement program, which didn’t exist for resale homes,’ said (realtor) Neil Litvin in Dongan Hills. ‘If one builder has some homes that have a tax abatement and another doesn’t, the second builder has to do something to make his homes more appealing to the buyer.’”
“Litvin said builders such as Dora Homes and the Biadon Group are offering to pay down the interest rate on mortgages, or paying $15,000 in closing costs and throwing in upgrades such as more expensive granite countertops when it comes to marketing the custom detached colonials.”
“The Advance reported last month that home sales dropped 16 percent and housing inventory rose 25 percent, according to figures from the Staten Island Board of Realtors.”
The Boston Globe. “Morning, noon, and night, on workdays, holidays, and weekends, the whir and grind of buzz saws echo through South Boston. Some of the noise comes out of the old three-deckers that are being converted into fancy condominiums.”
“Some comes from housing complexes sprouting up on previously vacant lots. The rest is from the new towers soaring over the neighborhood, altering the cityscape.”
“‘We’ve got 5,531 condominiums coming on line in the next couple of years,’ said state Representative Brian Wallace, who has spent months researching development plans. ‘The amount of development going on in the town is astronomical, and people are saying, `Enough is enough.’”
“Tomorrow, Wallace will meet with residents to discuss the building boom, and ways to stop it. He said many of his constituents want a moratorium.”
“Scott Malone , a business executive who grew up in South Boston, said he is amazed at the development and its impact. ‘It’s almost comical when you hear the prices they’re asking for these condominiums,’ he said. ‘If you grew up here, you know what they used to be.’”
“He is concerned that pending development will flood the neighborhood’s housing market to an even greater degree. ‘They can’t even sell what’s out there now,’ he said.”
I believe that’s two moratorium articles in just a few days- quite a change. Here is a reports from Pennsylvania:
‘Hanna quoted listings in the Washington D.C. area, which in August of last year had about 18,000 units for sale compared to 40,000 this August. ‘You’re not going to see that’ disparity in south central Pennsylvania, Hanna said. ‘We have a good balance of properties on the market in relation to the number of buyers out there. If you’ve got twice as many listings and buyers, that’s a concern.’
‘Active listings in south central Pennsylvania climbed to 2,933 at the end of the third quarter compared to 2,155 for the same period last year, Humphrey said.’
The moratorium will begin with the 3rd and 4th BK filings by these builders. Market forces will take care of that - assuming the FED or some other quasi-goverment organization doesn’t intervene.
It’s sad that local governments have to save builders from their own stupidity. Shouldn’t slowing sales act as enough of a moratorium on new buildings?
Unfortunately, by the time market forces have taken care of the problem, the damage has already been done.
The fact that a developer has gone into bankruptcy is of little consequence when a previously useful structure, be it low-rent housing, a parking lot, or simply a wooded piece of land, has been replaced by a useless structure, such as unwanted stucco boxes.
in central pa and other dead markets -nothing ever happens
POCANO lots near lakes going for 1K$ on EBAY
down from 10k
Should be some lift coming from gambling licenses finally issued.
Wasn’t Boston one of those desireable areas that couldn’t fall?
Where is our former Bean Town Bull - MA_Homeowner? Maybe he has a pre-cont condo he is trying to dump?
I miss the RE bulls…now all we get is boomer vs. X-er vs. echo-boomer wars.
Noticed that. I was away from the computer and read the posts last night. Not sure what happened there - except some major flame throwing. I hope we don’t start pulling a Donner Party on ourselves.
I think we have one poster/blogger in particular that we could throw overboard, to solve the problem and create peace at last.
Would that be “aztrias”? Just curious!
Can you throw bloggers overboard?
maybe that’s who you have in mind (to throw over), but otherwise you must have missed the Girl Fight.
(another thread)
Oh, I don’t want to name names, but you can look at the previous thread about Orlando, and the one before that about Boomers and the Simple Life, and decide for yourself who’s stirring up the most trouble around here.
304 posts on the “simple life”.
Okay, let’s just ask Shaunta.
Too bad about the thread from last night
But I learn a helluva lot more from txchick…
and that’s what my intentions are here…while participating in the comments is interesting, a hoot, and all that, I’m more interested in the perspectives of some very smart, experienced financial minds here.
Not so interested in politics, posturing, bragging, and other assorted neuro-bleedings.
Let’s not kill off aztrias though. s/he is one of the very few bulls still ballsy enough to actually post to this blog. It’s hard to find a poster this clueless about RE in real time, outside of quotes from articles so that should be considered a real asset to this blog!
I have no problem whatsoever with differences in opinion or with RE bulls coming on here. Aztrias can post away, IMO. And I’ll take nice over brainy any day.
Fortunately, you do not have the last word on that.
That’s okay, I enjoy reading your posts, TX Chic. It makes everyone else seem I encounter on this blog and in the real world seem wonderful by contrast. Keep it up
yo, I just bought in NEW DORK er a dorp
NY and NE will take a huge hit
“Some buyers didn’t even take the car, opting instead for $15,000 in closing costs”
Duh. GFs aren’t CFFs, just GFs.
“A free $15,000 Saturn Ion might be the most unique inducement as of late. Brokers marketing a 72-unit townhouse development in New Dorp thought giving a free new Saturn with each new house might attract ambivalent buyers. Some buyers didn’t even take the car, opting instead for $15,000 in closing costs or money toward home furnishings, said broker james Prendamano.”
Let me be the first of dozens to say… Just lower the price!
Toured open houses this weekend.
Interesting observations:
1. Three of about 20 properties viewed had fallen out of escrow (that we knew about).
2. We’re tracking one street with five nice townhomes for sale. (+ more within 2 blocks). All five on the market since Febuary. No sales, two more townhomes to be completed within year (progressed from dirt work to framing). I only know about two of the three properties that fell out of escrow as they’re on our “tracking street.” (N. Juanita in Redondo Beach, CA). Both townhomes that entered/exited escrow were owned by the builders still. The last sale on this block closed in January.
3. Agents remain desperate to be buyers agent. We even had one come up and announce “I’m not the listing agent, I’m the buyers agent.” Oh, my fiance’ liked the words I used to tell the realtor “No you’re not.”
4. Track homes seem to be leading the market down. We looked at three townhomes near the beach, pretty identical, within 75 yards of each other. I couldn’t help but notice that they all were trying to undercut each other by $10k.
5. All sellers seem to have relocated to Nashville or Austin. Why, even the home of the “picky seller” (per realtor, only she and her friend could show the place…). I couldn’t help but notice there had *never* been a washer/dryer installed. Oh yea, that’s a normal relocation… that wasn’t hard math to figure out.
6. Homes are priced all over the map. 30% differnces in prices for similar units. We’re seeing builders jump in with 10% price drops every few weeks.
Neil
these morons will be eating squirrel meat soon
LOWER THE PRICE!!! No one wants to pay years of property taxes for a depreciating asset (car)!
What happened to the stars? Did they go out of alignment?
Funny about Nashville and Austin. In the past year, two of my good friends moved from LA and SF to Nashville and Austin respectively. We are looking to move back to Sacramento. I already drool at the prices and am looking forward to renting for 12 to 18 months shopping around. We briefly considered Pasadena/Altadena, but sellers there haven’t gotten the memo yet. We aren’t planning on paying $750k for a matchbox and my guess is it will take a while for houses there to get back to the $450 to $550 k range.
About a month ago there was an article about some high end condos being auctioned off on Oct 7. Any one have any idea how the aucton went?
sorry…in boston
There was a weekend post on this blog about that auction. If you scan throught the posts, you’ll recognize it.
“Need more proof it’s a buyer’s market?”
I am waiting for more proof that it’s a falling market — like confirmation of the price declines of 8.5% in San Diego and Miami by next summer which are indicated by the Chicago Mercantile Exchange’s new home price futures (cf. “Ahead of the Tape” on p. C1 of today’s WSJ).
Greenspan says the worst of housing bubble may well be over. This took my breath away even though I am not a believer of a hard crash. I call for 10-20% decline in Los Angeles County. It hasn’t even gone down a bit and Greenie says it’s over.
http://www.marketwatch.com/News/Story/Story.aspx?guid={97892278-91EA-405B-BB45-167819F5DD8F}&siteid=mktw&dist=nbi
get an ARM
greenspin 05 ?
Ya… its al over huh? I highly doubt it, seeing that this past summer out here in the SF Bay- another one of those never-fall uber-desireable areas had one of the slowest seasons- any season- in decades. Indeed prices here aren’t exactly falling, but the general feeling here of many buyers I know is they want to see price cuts. Not little 50k here, 60k there cuts, but HUGE cuts. Many are simply at a point where they’re making drastic decisions: either prices will have to come down for them to buy, or they’ll simply leave the area entirely.
Now that we’re heading into another predicted El Nino’ drenching winter, I fail to see how housing sales will improve. If anything I see housing doing outright miserably all winter long with reaching effects into the next summer. Sorry Greenie, the bust has just started.
“Many are simply at a point where they’re making drastic decisions: either prices will have to come down for them to buy, or they’ll simply leave the area entirely.”
… or rent.
Like I’ve said before I don’t personally know any first-time buyers who have the income to get a traditional mortgage out here (So Cal). What is somewhat worrisome is the relative snails pace at which prices are declining. So now, in addition to those who left while SoCal appreciation was outpacing the rest of the country, and in addition to the equity locusts that have just about all hatched and taken flight to more affordable parts of the country, I wonder how many more potential buyers will end up leaving as prices decline more quickly elsewhere. IMHO, thats thousands less households to “soften the landing.”
People burn out and leave but the population keeps rising. The Silicon Valley has a gold rush mentality and IT jobs favor youth. As works age and start a family, they want out. Fresh college grads rush in and “adjust” to the new conditions.
Google’s Mountain View campus, which was a relic corn field in 1991, is full of 25 year olds that work 18 hour days. Many rent but with long hours, they want to live near work so rents are high and if they buy, they buy near work.
“Google’s Mountain View campus, which was a relic corn field in 1991, is full of 25 year olds that work 18 hour days. Many rent but with long hours, they want to live near work so rents are high and if they buy, they buy near work.”
After Google went public and lockups on shares expired, a lot of Google employees bought homes in Atherton. How’s 94027 doing today for sales, versus July of 2005?
I agree that the market hasn’t bottomed. In the Bay Area , Fall season has been a busy time but it’s currently slow and slowing as winter starts. I’m most curious about the spring and how prices have settled by that time. If there’s going to be a “collapse” in home prices, beyond what has happened in previous, historical corrections, I think it will _have_ to show up next spring/summer. I dont see that collapse happening for single family homes near jobs and infrastructure. I’d be interested in your thoughts.
aztrias posts ” If there’s going to be a “collapse” in home prices, beyond what has happened in previous, historical corrections, I think it will _have_ to show up next spring/summer. I dont see that collapse happening for single family homes near jobs and infrastructure. I’d be interested in your thoughts. ”
I agree by next spring/summer we will be well into it. One thought they might not “collapse” but just keep going down….Japan or like they, just kept going up the last 6-7 years? The last “historical” correction was to the tune of 35%…. Not too shabby here is So Cal we had the EQ that was good for another 10 plus points in 1994.
Remember this was with out the aid of the “toxic loans” of all types. Just like another log on the fire another lot will adjust and stoke the flames again. For what 1-5 years with the teasers?
In my mind it is not the houses as it is the lending fraud. I think of myself as person that knows a few things about real estate and its up’s and down’s having been a owner over 30 years. However untill about 6 weeks ago, I had never even heard of a “stated income loan”. I learned about it on this Board.
Because of my prior feelings and understanding of the market, I sold out in summer of 05′ before I had seen this Blog. With the new information about the total bullpuckie and piggery going on I would add another 10 full downward points to my old bottom of 40 to 50 % off. This in the Grater LA Area…. 60ish off the bubble high.
How can someone call the BOTTOM when they never acknowlegded the TOP or even the existence of a bubble???
I’m pleased to announce that this blog has a deterrent effect.
Last week, I was approached by a guy wishing to do business with me. Seems that he was looking for my help in promoting a website that would help homeowners sell houses that just haven’t sold so far. (I was tempted to ask him why their website doesn’t just have “Lower the price!” in big print on the home page.)
Any-hoo, I mentioned this blog, and praised the quality of the economic commentary that can be found here.
Well, you could almost hear the enthusiasm draining out of the other end of the phone connection. The guy said he’d send me more info about his website, but I haven’t received it yet.
I doubt that I’ll ever hear from him, and, quite frankly, I think that I scared him off. Nothing like injecting a little reality into a conversation with a real estate bull.
I think your friend is onto something, but maybe you can just re-direct him. I think a website that allows sellers to therapeutically express their frustrations and fears might be a hit. Think of all the advertising revenue from divorce lawyers, bankruptcy lawers, credit counsellors, RE agents specializing in short sales, etc.
Actually, his website offers some sort of system to help sellers sell their slow-moving properties. Or so he said.
IMHO, the only system that’s needed is a home page that says:
Just Lower Your Price!
Oh, there are plenty of scam artists and other assorted idiots who think they can make money buying and flipping “distressed” properties (defined as 5% off the peak wishing price from last year), facilitating short sales and various other worthless activities. So far, it seems that the banks and lenders are also drinking the kookaide and prices aren’t down there either. This is a giant blockage in the system that will have to be cleaned out before any equilibrium is found.
I have a mental image of “…scam artists and other assorted idiots… and giant blockage…” in conjunction with that Saturday Night Live sketch about ‘Super Colon Blow’.
Being as we are close to the lunch hour, I tried to avoid that very obvious analogy. Oops. Screwed up again!
Lots of times NIMBY’s call for moratoria to preserve their “quality of life.” This is the first time I’ve heard a call for a moratorium in a region with a housing affordability specifically to keep prices high.
The legality of housing moratoriums ought to be mentioned. Coastal communities often cite lack of water or other infrastructure constraints as reason for a moratorium, but without some type of nexus, a moratorium for the sake of controlling inventory would be an infringement on property rights and probably illegal, depending on the state.
OT, Manhattan, from Property Grunt blog:
“I walked by that development yesterday which is east of 1st ave on 59th street where in front of the building there were mountains of TVs, dvd players and stereoes. I assumed that these were incentives that were given to the new owners. But after inquiring why the sidewalk had become a dumping round for all things Sony, I learned that these appliances were to be installed in the apartments for they were now rentals.
“It seems that the condo to rental conversion has become the rage becasue there are no buyers and the market has pretty much popped. What does surprise me is why these items are being installed into these apartments. Perhaps the owners intend to create an air of moder sophistication. I think it is a complete waste of time and money. First of all TV’s, DVD players and stereos are constanly being updated so whatever they are installing now will look pretty antiquated by next year. Also people do not rent an apartment because of a tv or dvd player. They rent it because it suits their needs. The owners would have been better off just using the money for OPs because with a building that far east they are going to need the help of brokers to get them rented out.”
My guess is that these items are being installed into these rentals to up the “luxury” quotient as an “incentive” (much like the builders’ “incentives”) for tenants to pay higher rents for the units. Really despicable, and kind of bizarre given that finding the cheapest possible rent is a favorite sport of New Yorkers, even among those who can afford to pay more. There isn’t much in this city that trumps the bragging rights of a great deal on an apartment.
——————————————————————————–
Don’t know if this was posted yet. From the LA Times.
Mortgage Standards Tightened
U.S.-chartered lenders are discouraged from qualifying buyers based on low starter rates
http://tinyurl.com/kgtdh
Here’s another…traffic sounds like it will be really fun in Century City
Condo Tower Will Replace St. Regis Hotel
Despite a slowing housing market, a New York developer is gambling that well-heeled buyers will fork out as much as $25 million for lavish Century City condominiums as big as many mansions.
http://tinyurl.com/kwcvx
Lansner blog: ‘Deep homebuyer’s market’ takes root in O.C.
This is kind of interesting.
http://tinyurl.com/lzgbg
Lasner is editing posts - AGAIN. I don’t mean foul language either.
But have you noticed that johnson seems to be missing?
Staten island is dead as door knob.
As opposed to when it was alive?????? When was it ever alive except with cops, gangsters and fireman?
It’s almost as if this whole housing fiasco was planned. I mean, lower the interest rates, look the other way while banks, mortgage brokers make fraudelent loans, let builders completely rape the land.. I mean it doesn’t take a genius to see how all of this will end. Was the gov’t, the Fed (whoever) really asleep at the wheel or were they driving the whole time?
I vote for “driving”.
I forgot, change the bankrupstsy laws just before the whole scenario implodes.
“A free $15,000 Saturn Ion might be the most unique inducement as of late.”what goober is going to take a cheap plastic disposable car as bait to buy a freaking house?