“Taking Homebuilders To The Carpet”
From the Virginia Pilot. “They are signs of the times: red placards standing in front of two homes on one block in the Coleman Place neighborhood. ‘For Sale. Price Reduced.’ From Virginia Beach to Suffolk, much of the momentum in the local real estate market has shifted to buyers after years of rip-roaring price increases and speedy sales brought hefty gains to sellers.”
“The number of properties sold in South Hampton Roads fell to 1,506 in September, a 20.2 percent drop from the same month last year. The number of units sold in Virginia Beach shrank by 23.7 percent in September.”
“Many sellers are reluctant to lower their asking prices. Still some are offering enticements such as picking up closing costs to attract buyers. ‘We’re seeing lots of reductions, we’re seeing lots of incentives,’ said Andi Helfant-Frye, an associate broker in Virginia Beach.. ‘We’re seeing all the things that people used in the normal markets to entice people to look at their properties.’”
“Some worry that too many sellers still expect unrealistic prices. ‘In some areas home sellers are not making sufficient adjustments in their listing price, so their homes are staying on the market and contributing to the build up in inventory,’ said Thomas M. Stevens, the president of the NAR.”
“‘There are unrealistic expectations’ among sellers, said Dave Macklin, an associate broker in Virginia Beach Macklin said. ‘They’re looking at, ‘My neighbor sold his house last year for X dollars, so I have to sell my house for X-plus.’ And that’s not what has happened to the market - it may be worth more, but it’s not worth that much more.’”
The Washington Post. “NVR Inc., the region’s largest home builder, said yesterday that four out of 10 of its new-home sales in the Washington area were canceled last quarter. Around the Washington market, cancellation rates have tripled in the past year, to 17 percent. In August alone, that meant about 250 cancellations.”
“In its most recent earnings report, builder Toll Brothers Inc. said cancellations in the quarter that ended in July had more than doubled, to 18 percent nationally, while numerous builders said in interviews that their cancellations locally had increased.”
“Developers and builders say buyers are abandoning five-figure deposits on their future homes because they cannot sell their existing homes or did not sell them for nearly as much as they had counted on.”
“In an effort to reverse the trend, builders are helping buyers sell their old houses, delaying closing dates or offering favorable loan terms — or even cash.”
“It is difficult to put a price tag on how much in incentives builders are giving to buyers with existing contracts because they tend to be worked out on a case-by-case basis. But both cancellations and builders’ efforts to stop them have generally been more prevalent in markets where prices increased rapidly during the housing boom, including Washington.”
“With little success in selling their home and a settlement date rapidly approaching on a new $900,000 house in Clinton, Irica and James Cheeks last month decided to walk away from that dream house and their $60,000 deposit.”
“The Cheeks said that when they signed the contract to buy, in spring 2005, they had no idea the market would turn as quickly as it did. They decided on the house from Ryan Homes after they grew tired of losing bidding wars for resale homes, said Irica Cheeks.”
“They figured they would sell their house, also in Clinton, for about $725,000. That factored in the way the value of the house had been climbing. But now, after three months on the market, the house is priced at $670,000.”
“But after the couple notified the builder that they wanted to cancel the deal, the company agreed to push back the settlement date, the Cheekses said. The company also offered more money toward closing costs.”
“‘Overall, the company was very understanding,’ said James Cheeks, who now plans to settle on the new 8,000-square-foot house next week. ‘I think they were more flexible than they wanted to be, but I think they had to at this point. They realized that they needed us as much as we needed them. And they started throwing in more incentives.’”
“When sales are slow, large builders can control the number of homes they have to sell by not building or by backing out of contracts to buy land. For example, NVR recorded an $81 million write-off of deposits on land in the third quarter.”
“However, cancellations are a big headache for builders because they have already spent the money to build houses and are responsible for carrying costs. ‘Standing inventory’ in the Washington market had roughly tripled, to 3,600 homes, by August, the latest figures available, compared with a year earlier”
“Deborah Rosenstein, VP for a local builder, said her firm tries to work with every buyer, but she expressed frustration at some ‘outrageous’ demands. ‘Home buyers are really taking home builders to the carpet. ‘They just want to get out of contracts,’ she said. ‘Sometimes consumers are unrealistic. When the market was good, they weren’t saying, ‘You know, it’s too low; let me give you another $50,000.’”
…and the tide keeps receding..
http://tinyurl.com/yzy2gq
“According to the criminal complaint, about 100 investors were told their money would be placed in a real estate investment trust and insured by the Federal Deposit Insurance Corp. The complaint estimated that $8 million had been raised from the investors.”
I think the investors should probably bear some of the loss, I’m not sure if it’s possible for an entity to both be a REIT and qualify for FDIC insurance. It would certainly be a novel corporate structure.
bluto,
Yeah, uh…. that kind of rubbed me the wrong way too. It’s a conflict of terms that doesn’t set well with one another. I have a friend that used to be an FDIC auditor and I’ll bet he’d be surprised to learn that they are now insuring REIT’s as well! (I just wish I could get FDIC insurance for my clients stock portfolios)! Wouldn’t that be great?
There’s nothing to stop you from implying it is there? I mean after all everything is gray. “Intent” to occupy, etc. Some people in formerly $1m homes are upset that a strip mall is being built in “their” view. The Realtor said they didn’t know what was going to built there. Of course the Realtor meant they didn’t know if it would be a Staple or PetCo or Lowes but like I said, a little gray makes the deal. Tell your clients that the cash portion on deposit is fully insured by the FDIC.
One can certainly argue that many insured banks are, in effect, REITs. But not vice-versa.
The key structure that makes a REIT a REIT is not paying taxes. I doubt the government is willing to extend taxpayer subsidized insurance to an institution designed not to pay taxes.
And Robert, I agree. That’s why tuition at the school of hard knocks is the priciest but produces the most successful graduates. Salesfolk are supposed offer partial explinations, but anyone who has capital to invest should really be thinking REIT with FDIC insurance, these two don’t go together too often perhaps this should be looked at a little harder (or there sure is a lot of concrete and steel for a home building site… perhaps there is someone who knows a bit more about the project).
perhaps people thought that the money was going to be in an FDIC bank, no?
bluto,
That’s always been MY understanding. Could I have had it wrong all these years? Just by their very charter implying that a REIT is “insured” in any way flirts with about 19 different sec. laws. I could see their saying the proceeds will be placed in an account for the purposes of purchasing RE when appropriate and in the interim be held in a money mkt. (which is actually SIPC ins. not FDIC) but holding it out there to unsophisticated investors w/the promise of REIT returns is in that broad “gray area” Robert Cote’ alludes to above. I’m not an expert on underwriting and entity structuring but I don’t think you have to be to see this is “out of bounds”.
N.B. The url about view loss is at my site:
http://exurbannation.blogspot.com/2006/09/planner-victim-deserving-idiot-realtor.html
Anyway. Yes, SIPC/FDIC/NCUSIF/whatever is often abbreviated (incorrectly) FDIC. My point is one of “Caveat Emptor.” If you don’t know what that means without even thinking about it you shouldn’t be doing the deal no matter what the deal.
I understand ethical people having trouble with things like we’ve just discussed but where is the line? You tell the absolute truth and they assume something else. What about concealing the truth? “You don’t need me for this deal. My 11% cut only makes it less for both sides for a limited contribution.”
1. Tell the truth.
2. Add value.
Everything else is business. You’ve covered the ethics.
From the Inman link on the previous post:
‘In his five years working as a real estate agent in Charlottesville, Va., Jim Duncan recently heard a prospective buyer say something he’d never heard before: ‘There’s just too much to choose from.’
‘Duncan said that home buyers and sellers in his market have not lost confidence in housing, but are thinking about it differently than they have over the last few years. ‘I think we’re returning to a more normal mindset with more normal expectations.’ Buyers today are thinking about their purchases more as places to live rather than properties they can flip for fast cash, he said.’ Also, ’sellers expectations are coming more in line with reality.’
The Baltimore Sun:
‘Two weeks ago, a rental property on the block attracted about half a dozen bidders for an auction, eventually selling for $24,500. Paul Sobwick, an auctioneer with Auction Brokers who had presided over auctions in the area with few, if any, bidders, said the house ‘went for a very good price.’
It wasn’t that long ago that busloads of speculators were driving around Baltimore buying houses without even stopping.
..and with the new ’starts’ number up 5.6% ,and mortgage originations was down, it will indeed be a greater buyers market going foward than your wildest imagination…
and there are certainly neighborhoods in baltimore that you wouldn’t want to stop in.
Here are some pics from Bmore:
http://tinyurl.com/y8p4ce
One of the pics is only a few block from where the auction took place. The picture shows 5 abandoned buildings in a row.
David
Bubble Meter Blog
The thing is, urban revitalization, in-migration and all that COULD be a great thing for older cities that have rotted from the inside out over the years. I lived in Boston during college, and while my wife and I relocated back to our home state of FL, after I graduated in 1998, we definitely considered staying in the city and buying a condo. There’s something to be said for being able to walk everywhere, enjoy the culture and nightlife of live/work neighborhoods, etc. The problem is, the speculators flooded in and drove prices far out of reach of the average person/family looking to take advantage of what cities have to offer. Result: You get a bunch of flipper rehabs, fraud, and future foreclosures all over various cities like Baltimore. Sad.
Maybe Mayor Carcetti will clean some of that up. Wait, HBO is not real.
#1 National Real Estate Investors’ Conference at BWI this week drew about 500 people, and many of them hopped on a bus to Baltimore for a tour of potentially lucrative investments
“Sometimes consumers are unrealistic. When the market was good, they weren’t saying, ‘You know, it’s too low; let me give you another $50,000.’”
Of course they didn’t. You said it for them. But it was more like $100,1000’s…… and the sheeple stood glassy-eyed and nodded.
I can remember bidding wars, though.
‘Sometimes consumers are unrealistic. When the market was good, they weren’t saying, ‘You know, it’s too low; let me give you another $50,000.’”
Maybe not, but I saw many reports and personally witnessed builders renegging on buying contracts, returning the deposit to the customer. then re-offering the house at higher price later to others.
some of those stories were even on this site… remember when buyers were super-angry because the builder cancelled their contract stating that “material costs were too high?” Most on this board didn’t understand why.
I was reading on the SDCIA board around that time, and found out that the builders were doing it so that they could resell the house for more.
Exactly. I think it was on patrick.net too. These people have some set of balls saying the things they do.
Had Enough?
Inspector C/Captain C,
Well it didn’t take long for you guys to give this gal the sound thrashing she so richly deserves! “When the market was good”. When the market was good? Good? How about saying “When the market was INSANE”?
One thing that builders absolutely can not contend with now (Lord knows they enough on their plate) is that lumber prices are in a free fall! Post Katrina there was a one time spike in demand on top of already strong demand but that has run it’s course. Builders (and certainly flippers) just don’t want to talk about it. As evidenced here they have other fires to put out so we’ll bring it up for them!
If I remember correctly, lumber futures took a dive in Jan05 or maybe feb but the handwriting was on the wall then but nobody believed me. At that time I knew the insanity couldn’t go on any longer and then found this blog around that time.
I, like many others have learned to tune out the lies spewed not only by the REIC but the news in general. Saying publicly that “the economy is roaring” is nothing more than pissing on our legs and telling me it’s raining.
Had Enough?
My favorite was when builders rushed homes to completion, claiming it was “substantially complete” while they were still pouring concrete for the patio to force buyers to settlement prematurely. As soon as the buyer balked or had any delay with the financing, the builders declared a default and forfeiture so they could get out of the “prebuilt” price contract and re-offer the property on the current market for a couple of hundred thousand dollars extra.
They sure weren’t playing nice then, and what goes around definitely comes around.
Substantial Completion is a commonly used term in construction management and in particular, the general conditions of a contract. So long as the “owner” can reasonably conduct operations in the new structure, that structure is considered substantially complete….. in the contract administration world anyways.
Actually lumber has tumbled 50%. There has been over capicity in the industry. Go figure!
I just realized I’m seeing a local example of declining lumber demand right here. I pass a logging sawmill every week. From one week to the next there has been a moderate variation in the number of fresh tree trunk sections (15 to 20 feet long I would guess) ready to be sawn, and also in the amount of finished lumber. But this week the stack of logs was at least twice as large as I had ever seen, and there was also far more finished lumber. Hello? Don’t you think you’d better turn off the spigot?
When my wife and I were in the process of deciding whether or not to buy a pre-construction home in South FL in early 2003, the price sheets were constantly being revised. At one point, if memory serves, the price on various models (including the one we were interested in) went up by $5,000 three separate times in a span of only a few weeks. We finally decided to sign a contract and now happily live in a home we would be very hard-pressed to afford at today’s market prices (even AFTER the recent softening). I remember being practically laughed at by our sales lady when I tried to negotiate the price (sales were slow as this was around the start of Iraq War II, the economy was still wobbly, etc.).
Long story short, am I supposed to feel sorry for these builders now that they’re on the receiving end of an economic pounding? No freaking way.
http://interestrateroundup.blogspot.com/
Consumers did say “you know its too low”
I remember people putting escalation clauses on houses and bidding them way up 50k or 100k higher than the asking price. I recall a story about a house that had 2 bidders with unlimited escalation clauses. The bidders eventually had to bid auction style against each other way over the asking price.
Similarly, I remember our Florida realtor telling us, “You’re not asking enough,” when we were in the process of putting our house on the market. She was right. But that was then (May 2005). I wonder what her pitch is now.
“Deborah Rosenstein, VP for a local builder, said her firm tries to work with every buyer, but she expressed frustration at some ‘outrageous’ demands……‘Sometimes consumers are unrealistic. When the market was good, they weren’t saying, ‘You know, it’s too low; let me give you another $50,000.’”
The builders were not ashamed of being too ‘outrageous’ by raising their prices every month, when the market would take it.
“The builders were not ashamed of being too ‘outrageous’ by raising their prices every month, when the market would take it.”
My thoughts exactly. Amazing that a company VP made these remarks to the local paper. This biatch is going to learn that the market can work both ways. She is very typical of the smug but ignorant a$$es that often work for builders. I am hoping her company goes under!
I don’t see how her company could survive with a dingbat like that as a VP. They obviously simply rode the bubble with no business sense, and have yet to get a clue.
And BTW, buyers sure as hell were saying it. I bet some of the real estate bubbleTV shows have on record buyers saying we better up our offer, it’s too low. I remember Reamtors advising clients on such shows to offer MORE than asking. This is documented. So will the VP resign now?
“NVR Inc., the region’s largest home builder, said yesterday that four out of 10 of its new-home sales in the Washington area were canceled last quarter. Around the Washington market, cancellation rates have tripled in the past year, to 17 percent. In August alone, that meant about 250 cancellations. In its most recent earnings report, builder Toll Brothers Inc. said cancellations in the quarter that ended in July had more than doubled, to 18 percent nationally, while numerous builders said in interviews that their cancellations locally had increased.”
If I understand correctly, then these cancelled homes show up as sales in official new home sales statistics, but actually contribute to “ghost” inventory?
Happy Halloween!
Good question - I would imangine not - the MRIS provides separate number for “contracts” vs. “sales”, so I would assume that cancelled contracts don’t show up in the latter number. (someone can correct me if I’m wrong though)
For the ghost inventory thing - depends on whether or not the house get re-listed in the MLS or not. I would hope that the inventory #’s are based on the actual number of homes on the MLS, in which case these would show up. Again someone can correct me if I’m wrong.
the home is considered sold- part of the misleading stat’s regarding new home sales
I would imagine you have not read much here, as we had a thread a couple of weeks ago confirming that cancelled orders do indeed show up as part of the “new homes sold” statistics US govt.
I think that we are talking about government, probably census bureau data, not MLS data, on the number of new home sales and new home inventory. New home sales are reported as contracts and not corrected for cancellations. When the house involved in the cancellation is finally sold, that sale is not supposed to be counted. These data come from government surveys, not MLS. This is my understanding, which I cannot verify.
Permits, NVR cancellations, and other:
http://www.xanga.com/home.aspx?user=russwinter&nextdate=10%2f18%2f2006+23%3a59%3a59.999
OT
Watching Bloomberg this morning, they had an analyst discussing JPMorgan and the current earning. She mentioned when she had asked the JPMorgan rep’s. during her interview with them about the profitability of the Mortgage section of the business, that they did not currently have that data. The kicker was the add on in the response; “and if we did we probably wouldn’t share it.”!?!?!?!? WTF
How can they not have the Data and how can they not share it?
I was half awake, so what portion of the Mortgage business she was asking about I did not catch (Margins?? Loans to Losses??Outright Profit?? Percentage of Business??).
This from JPMorgan-go figure. The Bloomberg Gal’s giggling and thinking it’s funny was just too sureal.
“The Bloomberg Gal’s giggling and thinking it’s funny” Hey, Crammer gets away with a lot more than giggling, and investors take him serious! Another thread says he is starting to CHA (cover his as_) on his recent “strong buy” for builders stock. Man, this guy plays it both ways, and the public awards him “guru” status. I am looking for another BK from a big builder soon. Then lets see what goof ball Crammer pulls out of his jock strap.
lol…I needed that laugh today. Crammer is a chump.
Cramer definitely was in CYA mode yesterday. He said he wouldn’t be suprised by a 500-700 point correction. He is a carnival barker. Salesmen lie.
After he rec’d Qualcomm it proceeded to go down about 20%. Probably one of many quality Cramer rec’s that I missed :>
yeah but i bet nobody throws an office chair farther than jimmy … or bites off the head of a bull with more feeling!
Cramer, like all salesmen, is a master at having a short memory. Every prediction he makes, he makes it seem like he’s had the conviction for months. Since he controls his show and the callers he takes, no one calls him on it on the show. I wouldn’t be surprised if he makes most of his money from his show, books, and other celebrity-type activities.
You nailed it, Grant. Fortunately for him, the public has a short and selective memory as well. And yes he does make his money from his celebrity. His trading is now restricted to a charitable trust. But at least he is willing to put the performance of the trust and its holdings up for public scrutiny. If the public choses to ignore it, it’s not because he’s hiding it.
I would love to see Cramer go on PBS’s Nightly Business Report as a “Friday Market Monitor.” They bring him on, he makes a few general statements then predicts 3-4 stocks. Six months later, they bring him back and show the charts to see how he did. Paul Kangas wouldn’t let Cramer get away with short-memory hand-waving.
I have disliked Cramer since he had his own advisory company duing the tech days and almost all of his picks were wrong, I think most of his followers now are kids that dont even remember the mess in 2000. He is not alone though, if you watchCNBC in the morning, that whole crew are nothing more than a bunch of front running, band wagon cheerleaders that seem to have little business knowledge. Cramer is the worst hooligan of the bunch though, he reminds me of a guy we used to know during football season, my system was to find out who he was betting on then go the other way, I think I will start to go against Cramer to pick my investments from now on. What really gets me though is he never gets called on his wrong advice.
He ran a hedge fund back in the day, made himself a ton of money… this was before his Mad Money/Kudlow & Cramer thing on CNBC.
Read about it in “Trading with the Enemy”… written by a former employee of Cramer’s hedge fund.
Most companies don’t break out everyting about their business to their owners. (They probably have to turn over more to their regulator but they don’t share it either). It’s never good to advertise where you are or aren’t making money as that tends to attract more competition. Moody’s and Microsoft are the only exceptions to this that I know of (and it isn’t that others haven’t tried).
““The number of properties sold in South Hampton Roads fell to 1,506 in September, a 20.2 percent drop from the same month last year.”
I’m really surprised these % drops aren’t higher. We keep hearing the market is completely dead in a lot of areas yet the level of drop off isn’t all that significant. Hmmmmm…
resale closed transactions sept are basically jul-Aug sales. Also the YOY decline in sales is huge, the impact is real for folks along the RE market food chain.
I agree w/ both of you. Surprised at small percentage decline, but remembering that in july-august the public perception of a bursting bubble was as yet limited.
Some people I know are still in “buy now or forever be priced out” mode. Not much has shown up in newspapers. I stop in Penn Bookstore on 36th and Chestnut in Philly once a week to see if anything at all has shown up on TIme or Newsweek. Nothing. Haven’t even seen a mention of it in Forbes, although I did see a full-page ad in the back for Marco Island forclosures. The news is still basically limited to independent news sources and local papers. A few blips here and there on NBC news and whatnot, but it doesn;t show up on a daily basis. Wait til it becomes even more mainstream, then you’ll see the panic.
The 1929 stock market crash actually started in the late summer and progressed over several months. The declining trend was there from august through october before things got ugly. We’re in the back of the roller coaster and the cars finally left the chain.
Norfolk-Va Beach area is semi-bubble, more along the lines of Jacksonville. It’s not in the NoVA/S Fla/CA situation. Having said that, it is extremely overbuilt, especially south to the NC line in Chesapeake and has to grind lower. And a lot of spec housing in Outer Banks NC is in trouble as well, I’m hearing. Houses on NC coast are generally built large for multi-family rental.
The run-up in prices has been almost the same in percentage terms (approx 100% in 5 years). Prices in NoVA are higher, but the median income there is much higher. Also Hampton Roads has experienced almost exactly the same inventory blow-up as the DC area did (maybe worse in percentage terms). I’m not sure how these situations are substantially different.
The argument could be made that homes were undervalued in Hampton Roads prior to the bubble, but there was a reason for this - weak population growth.
Now the sudden doubling of home prices is poised to make the population problem even worse.
The price on my little 3br 2bath cape in S. Jersey doubled the last five years. I keep hearing people say there’s no bubble here because it’s near philly and wages support it. BS! The price doubled in 5 years. That’s a bubble.
The fact that there are 4-5 times as many houses on the market is what makes it feel dead to any given seller. Factor in a 20% decline in sales and you’re looking at a 5 to 6 fold dropoff in sales chances in any one month from just one year ago.
Back from NY, NY,
A per your previous post - no bubble in NY move along…
Do tell.
Northern Virginians might recognize this real estate company: Samson Realty. Their logo is a cardinal and they provide a discounted rate.
Yesterday I found a large glossy mailing from them in my mailbox. On the front, it had several blurbs, including:
It’s the best buyers market in 10 years,
You should not speculate by waiting to buy any longer,
You should buy a larger home, then rent your old one out until the market improves.
Ridiculous. First of all, it’s not the best buyer’s market in 10 years. Up until about 2002, prices were much more reasonable and rates were not bad at all. Secondly, it’s just as much speculation to buy a larger home and rent yours out “until the market improves” as it is to “wait for prices to get cheaper”.
Kinda made me mad. But I shouldn’t be. It’s no worse than stock hyping.
You should not speculate by waiting to buy any longer,
Remember the old days when we used to speculate by putting money at risk instead of speculating by leaving money in the bank?
if you bought in may 05 w the same pitch ,can you sue
“rent yours out” — that’s a swell strategy if the rent you can get for your old home totally covers the cost of “owning” your new home. Fat chance.
“Overall, the company was very understanding,’ said James Cheeks, who now plans to settle on the new 8,000-square-foot house next week…”
Wow. That place is big enough to be a warehouse.
Probably picked up another Tea-Cup Poodle. You know, the old place just wasn’t big enough…
“James Cheeks, who now plans to settle on the new 8,000-square-foot house next week.”
Just what I thought. Unless this guy is planning on housing a basketball team, he is absolutely clueless about what the future holds. He’s gonna end up looking like some “Robber Baron” sitting in his castle. Nice target for all the “Broke People” soon to be wandering the country. He can add 24 hr armed guard charges, to $1000 a month electric bills while he sits in his massively devalued “edifice to his Greed, Ego and Stupidity……
Clinton is on Whidbey Island. There is a Naval Air Station there, and what used to be cheap land. But, like all areas of the Puget Sound, the cost of land is absolutely insane now. Yet still, there are plenty of trailers, er I mean, manufactured homes and low income folks representing recent history on Whidbey. The Cheeks home, shining like a beacon of greed and overindulgence, will most certainly make a perfect target when the money starved meth-heads plan their next heist.
Perhaps the Clinton they speak of is in the DC area. I may have been incorrect in assuming Washington state since I live here. I am sure one could find an 8000 square foot McMansion in Clinton on Whidbey Island as well, but it would definitely be more expensive than the $900k range.
BanteringBear - I believe the town of “Clinton” referred to in the Washington Post article is Clinton, Maryland (not Clinton, WA)…. Clinton, MD is a outer suburb (I hesitate to call it a suburb) southeast of Wash., DC, farther out than Andrews Air Force Base …. It is amazing to me that they’re building 8,000 sq. ft., $900K McMansions way out there. If the house was really on an island in Puget Sound, I might understand the ridiculous price, but the whole area around Clinton, Maryland is really still major redneck territory. I assume this is a gated community amidst all the trash out there.
seriously, you would think 7,500 would be enough.
LOL!
‘They just want to get out of contracts,’ she said.
Enter Steve Martin’s “Well excuuuuse me” for not wanting to pay too much! The markets giveth, and the markets taketh away……sorry Betty.
“‘Overall, the company was very understanding,’ said James Cheeks, who now plans to settle on the new 8,000-square-foot house next week. ‘I think they were more flexible than they wanted to be, but I think they had to at this point. They realized that they needed us as much as we needed them. And they started throwing in more incentives.’”
Wow, some people don’t know when to quit. They haven’t even sold their other house yet and HOPE to get $670k but they might get 600k or 550k or it might not sell for a year. But they gotta have that 8000 sq ft house!!
The (azz)Cheeks got a good workout getting squeezed.
Who in their right mind would:
1. Want to heat, cool, and clean 8k square feet?
2. Pay someone else to clean 8k square feet if they’re too busy (making money to pay the mortgage) to clean it themselves?
Oh, did I mention paying the property taxes? On 8k square, those will be a huge bite.
Call me jealous, crazy, or whatever you like, but 8K sq. ft. is ridiculous. Just like spending 135mil on a pinting is nuts. This again goes back to my theory about why so many people in the rest of world hate us. It is not that we go into Iraq, whether or not you agree. It is because we are plain nuts. If we spent the kind of money we do on art and oversized housing on really valuable things like feeding, clothing and helping our fellow man than others around the world wouldn’t hate us so much when we go into another country. However, when Joe Richbag buys a 145mil painting or 8K sq. ft. house in a country that goes to war over every little thing than the rest of the world looks at us with very skeptical eyes, thinking oh, here comes the US, what do they really want with us? In other words, if we took care of our business in this country and were a little less greedy and selfish, maybe we wouldn’t look so bad to other countries. I know that is simplistic, but look the esttem we had after WWII when we basically rebuilt Europe and Japan. Now look at us. Take, take, take. Gimme, gimme, gimme. What has happened to this country.
I was thinking the same thing. The world detests us because so many here are allowed to behave like are greedy swine. We are viewed as compassionless bullies, and the economic system we project in to the world looks like nothing short of “Slash and Burn”
The people of the US are the #1 source of humanitarian aid in the world. The US government is the single largest provider of emergency relief in the world.
We could feed, clothe and give shelter to the entire world and they would still hate us. With motivators such as religion, class division, graft, and envy there is no way to win. Wait a second, I think I just descibed our own society.
Dan and Imploder said what I was going to avoid. Thank you. Now I’ll sit back and wait for one of the shrinking apologist minority to come in and excuse this 8000sqft display of gluttony.
Dude, I can’t argue that the US has been and continues to be the most compassionate and giving country in the world. However, our good actions are nullified when we just invade or threaten to invade here there and everywhere, esp. when as I said we have guys buying 145mil paintings and needing to move up to 8K sq. ft. mansions. My point is that after WWII people looked up to us. We had been attacked, fought off hitler and the Japanese and then went to work rebuilding Europe and recreating Japan. Also, I don’t think we had so much of the greed mentality back then as we do now. Not everyone in this country is like that now, but of course we only hear and see the greedy pigs, not the Mother Theresa’s of this country.
I’m not sure I see a problem with square footage persay. It’s probably on a 1/2 acre lot. Many people in this country live on far larger lots. That’s taking up land space and natural resources.
If you’re worried about energy, well, it’s quite possible that the 8000 square foot house doesn’t cost what you think it does to heat and cool. We’re renting a 4000+ square foot house in Virginia, and it averages $120 a month in electric and $120 a month in natural gas. The high ceilings help.
With newer building techniques and better windows, it’s possible that houses can be bigger and more energy efficient at the same time.
Now, that sucker will cost a mint to maintain. No question. But I suppose that will keep the cleaners, roofers, carpeters, plumbers, and etc. in a job.
The Iraq issue aside (a stupid mistake by Bush, but not a devious mistake by any means), I think we ignore the way ALL industrialized countries spend money. You guys need to catch a clue about how, for instance, the Japanese chase after ridiculously priced clothes and how it is common that 18-20 something year old girls commonly prostitute themselves out to buy the latest Burberry fashion. Greed manifests itself in many ways and not only with 8000 sq ft. homes. Even the charitable Irish saint, Bono, spent a ransom to retrieve a hat he left in Ireland for a gig he was doing thousands of miles away.
The US could certainly be less glutinous (literally and figuratively) but we are also by far the most generous country in the world. And biases, envy, and death-cult fantascism will always displace the good will won by our generosity. It is myopic to think that greed has played any significant factor in anti-american sentiment.
I think that the conservatives should actually start conserving.
This is rural getto part of Maryland. No business to speak of. Most them commutes to DC for work. Land is relatively inexpensive compare to Montgomery county or Fairfax, VA.
TRich
“It is myopic to think that greed has played any significant factor in anti-american sentiment.”
Not Greed directly. The behaviors committed “because” of greed.
Plus, much of the financial aid given at the Government to the 3rd world is actually just a method of obtaining economic control and or allegiance. It’s usually finds it’s way into whoever in control’s Swiss and Cayman Bank accounts. But that’s cool, that’s what it was for.
On a people level, I think your right, Americans are very giving, but the rest of the world is skeptical, due to the chicanery that takes place at the Administration levels.
As far as death cults, if we were Actually FIGHTING the death cults, I don’t think we’d be getting as much flak.
Just my 2 cents
Arwen U sez:I’m not sure I see a problem with square footage persay. It’s probably on a 1/2 acre lot. Many people in this country live on far larger lots. That’s taking up land space and natural resources.
How do you figure? Land that isn’t built on isn’t ‘taken up.’ It’s still doing whatever it did before, unless you’ve got a 10 acre lawn.
Just one more clarification on the “Americans are the most generous in the world” theme. During a political discussion group about 5 years ago, we had a Dutch speaker who had done a lot of aid work in Europe clarify that although the U.S. gives the most $ on an absolute level, our per capital donations are actually quite low compared to other countries. And our aid as a percentage of GDP is lower than others. Adding to that thought the perception that much of our government aid is awarded with strings attached, and we’re not looking quite so generous.
That being said, my then 8 year old gave up his whole considerable allowance savings to give to the Tsunami victims. It was his idea. We don’t buy him much so it truly was a sacrifice. I believe many individuals dug deep for that one.
per capital= per capita
Sorry….pain killers
$26 per month will feed, clothe, educate and provide basic medical care for a kid in many third world countries. My favorites are World Vision and Compassion. The US still has a lot of generous people left. My family lives in a much smaller house because we’ve decided to help out others. So far the IRS hasn’t come knocking either, so we can’t be the only ones giving that much.
I wonder if the kids we send money to appreciate it though, and you have to really wonder about the parents. Most, the mom works and the dad (if listed at all) is a “part time laborer”.
Are we really helping or just encouraging irresponsible procreation? I don’t know, but it isn’t the kids’ fault.
Good for you. Our church, C&MA, specializes in overseas missions but in the last 3 years, we’ve seen the demand for basic human needs grow dramatically here in the US. I think the church leadership may shift in that direction.
“Just like spending 135mil on a painting is nuts.”
Well, they really aren’t making any more Van Goghs.
I better buy now, or be priced out forever.
That’s what I Ear.
Ever eat a Van Gogh? Not very tasty.
“I better buy now, or be priced out forever.”
Art market’s cyclical too. You just have to wait for a return to 1880 prices.
Saw a headline. Wynn (vegas dude) stuck his elbow thru a Picasso he’d just sold for 130 some odd million. Ooooops! I hate it when I do that!
“8K sq. ft. is ridiculous”
Yeah it sure is. It’s akin to a private individual going out to the local Kenworth dealership and buying a semi truck to commute back and forth to work. You might be able to afford a semi truck but is it practical or even desirable to do so? I say No.
Excellent Analogy. All things considered is it right?
My uncle’s third wife was in the Forbes 400. At least, she used to be. Her principal house is 5000 sq ft. Maybe that’s how she remains rich, by avoiding the 8000 sq ft.
And I meant Right for someone to drive a simi to work just “cause he can”
Ever see the Chapelle skit where he’s showing his house on MTV Cribs: Explains it all:
http://www.youtube.com/watch?v=UBXNssiRoT4
“It’s akin to a private individual going out to the local Kenworth dealership and buying a semi truck to commute back and forth to work.”
Unbelievably, that started. These slobbish morons are using GM topkick conversion and International 4700-4 door conversions for daily drivers. They rolled them out in 2002 or 03. I thought my eyes fell out of my head when I first witnessed it. Thats when I knew that we were living in unprecedented times of greed, avarice and covetousness.
Anyone who denies such is merely pandering and excusing the greedy slobs.
Imploder that is funny. In what world and economy are we living in when showing off your McMansion and getting everone to drool over it is good taste? We are indeed, a pathetic country in some ways.
Capt-
Yep, I remember the introduction of those ‘personal use’ trucks now that you mention it. I think they were targeting them toward small business owners. I don’t get it, but if someone wants to commute to work in a piece of industrial equipment then it’s a free country have at it.
Commuting to work in industrial equipment is fine, but it is the needless consumption that galls many of us. What is the MPG on a thing like that, 2 miles to the gallon? And what’s next, my own personal tank. I know it is a free country and I know this will draw the ire of the gun crowd, but it is just like the gun people. A six shooter isn’t enough. My 2nd amendment right means I can have anything short of a nuke. Please, isn’t there any moderation in this country anymore. Is it all personal extremism on the left and the right?
lmao. Guns and industrial equipment for transportation. The next thing you know, the gun loonies will be driving to the grocery store in a M1 Abrams tanks, screaming at the top of his lungs that it is “his right”.
lmao at the thought of it….
OCDan-
“In what world and economy are we living in when showing off your McMansion and getting everone to drool over it is good taste?”
The same world that has always existed. Building large ornate houses to impress is not a new phenomenon by any stretch. There is an historic neighborhood here in Grand Rapids that is nothing but mansion upon mansion with each wealthy business owner trying to outdo the other in style and splendor. The neighborhood dates back to the 1890’s. The old saying goes ‘the more things change the more they stay the same.’
I know it is a free country and I know this will draw the ire of the gun crowd, but it is just like the gun people. A six shooter isn’t enough. My 2nd amendment right means I can have anything short of a nuke.
You make a pitch for moderation and then you go and attribute extremist positions to mainstream gun rights advocates? Think before you type, dude.
“mainstream gun rights advocates? “–now there’s an oxymoron.
I’m with OCDan–ever since the gun lobby demanded and got the right to assault weapons, there is no moderation among gun advocates.
“The old saying goes ‘the more things change the more they stay the same.”
Indiana , you’re right of course. I’d have just always hoped that our culture would evolve. But sometimes it “back to the future’
OC Dan,
I’ve been to Europe numerous times to visit family. Trust me, they have their own forms of conspicuous consumption.
Case in point: one relative bragging on the fact that the buttons on her daughter-in-law’s custom made suit cost $60.00…EACH.
You think they hate us? The people in my own (European) family who treated me unkindly were more motivated by jealousy than by hate. They hate us so much that their young people have appropriated all the trappings of our pop culture.
I recall one visit, back in the mid-nineties. I was so looking forward to spending time in my family’s mountainside village, just to get away from everything that reminded me of Pop Culture. What greeted me in the town square? Teenagers wearing Gangsta clothes. I wish I was making this up.
My first visit to Europe was in the mid seventies. In my experience, they have experienced the same trajectory of focus on materialism and consumerism. They just put their own culture’s particular spin on it.
Could not agree with you more. I was in Cuba last month visiting a friend. Her family of 4 lives in a 500 sq ft apt. Right next to the uncle, grandpa, etc. No, this is not an exaggeration. They don’t have a car. They take busses wherever they go. And you know what? They seem to be extremely happy with what they have: a loving family, health, food on the table, and music. Upon asking my friend about her life in this house she said:”I’ve had only happy times here”.
Anyway, as many people have stated before, a high quality of life is not based on the size of house or type of car you have. Sure, I’ve gotten caught up in the “keeping up with the Jones” mentality at times, but I quickly smack myself in the head when this happens. I just think about my friend in Cuba.
This is two stories in a row where a builder has allowed a couple to not close on the house, but still not lose their deposit as long as they buy a new house within a year.
Smells desperate.
The builders must be bleeding cash.
OK. EVERYONE AT ONCE..”" LOWER THE PRICE ALREADY!”
Enough of the BS spiffs. We know that the buyers are paying for that. Imagine buying a new car that 2 years ago the sticker price was $25,000. Now the sticker is $50,000 BUT the dealer is throwing in a set of floor mats and free gas for a year. Would you buy it? OR COURSE NOT.
Are people really this stupid?
For the past 5 years? Unfortunately, yes they have been that stupid….specifically in SoCal.
Not in the rest of the country, however. Someone yesterday or the day before on this blog made the comment that Ford is down 50% this year. Another year like that in 07 or 08 and you can kiss Ford goodbye. Unfortunately, the gov’t will bail them out just like it bailed out Iacocca in the 80’s. Free market may azz. On top of that look at GM. I know the entielements and retirement programs don’t help, but this company, if not for its finance/leasing/loansharking dept. would have gone bankrupt already. The big 3 are in serious trouble. More and more peope are realizing that it is better to maintain a car and run it into the ground, rather than buy every 5 years and be an automobile debt slave.
Business Week Sept. 25, 2006
“But the very real problems with the health-care system mask a simple fact: Without it the nation’s labor market would be in a deep coma. Since 2001, 1.7 million new jobs have been added in the health-care sector, which includes related industries such as pharmaceuticals and health insurance. Meanwhile, the number of private-sector jobs outside of health care is no higher than it was five years ago.”
That says it all for me. When you become an economy that only grows by caring for the sick, you have a sick economy.
” you have a sick economy”
But the TV and radio says something entirely different than my personal and business experience on Main Street USA.
Had Enough?
or
It’s the economy stupid
After a meaningful number of people go broke in the next couple years, you will be seeing people squeezing the last 1000 miles out of their cars & trucks like the “Joads” in Grapes of Wrath….
Not only that, but pretty soon people will be living in their cars. BTW, have any of you seen that new car ad, I forget which auto maker, that tells the guy he can live in his car it so so roomy? So he fits everything in for a week. Could this become a self-fulfilling prophecy in this country?
maybe that’s why people are turning to trucks with sleeper cabs into their primary commuter car
“For the past 5 years? Unfortunately, yes they have been that stupid….specifically in SoCal.”
None have been more stupid than in Reno, NV. The prices there are absolutely staggering considering median income. I find it hard to believe that people can even keep a straight face when they hang the price tags on the POS’s. There are houses asking several million dollars which were $500k 5 years ago. Fixer starter homes for over $300k. It is truly wretched, hideous, and filthy. This whole thing just reeks of greed, fraud, and corruption.
lainvestorgirl keeps asking about typical post war sh#tbox in LA. My friends is on the market 3bd 1 bath, Palms area, 840k….. ?
No offers yet… What’s wrong with this picture?
clinton MD- don’t want to be there when the drums stop
whoa 900k ?
hampton roads same thing
It’s like Rodney said, “I’ll tell you what’s satisfying, cold hard cash, that’s what’s satisfying.” I’m going to make up t-shirts and give them to friends and we will wander around to open houses. They will say on the front — I don’t want a car, I don’t want countertops, I don’t want a refrigerator, I don’t want a trip to Hawaii, I just want cold hard cash. It will say on the back — LOWER THE PRICE. Maybe it will move things along.
We can just modify Clinton’s political slogan to, “It’s the price, stupid.”
Great slogan. Concise, and gets to the point.
make mine a large, beefy “T”
“walk away from that dream house and their $60,000 deposit.”
$60K will feed cloth and shelter me for nearly 2 years. $60K is just the begining, lots more pain will be felt, i plan on basking in the sun next summer in my rental … will not buy then… will wait further out in 2007-08 when we will have seen plenty of blood in the streets by then.
A bit off topic, but it’s interesting to see the recent change in the MSM concerning real estate in the Seattle area. A few months ago it was all “…sales and appreciation are up…” and “…buy now before prices escalate further and interest rates go up ….” . Now it’s “…depreciation can’t happen here…” and “…don’t be influenced by what your friends in SoCal are saying, because it’s different here…” despite the fact that sales are down and inventory is up. According to the Northwest Listing Service statistics for Sept, Kitsap County (where I live) had a negative YoY change in median sales price for the first time in eleven years.
I love the “Don’t be influenced by what your friends in SoCal are saying”.
ROTFL… No no, don’t heed the warnings. Stay in your nice warm cabin. Ignore the fact that the life boats are being lowered half full with mostly 1st class people. Roll over and get more sleep.
Yeh, almost certainly the Pacfic Northwest is merely lagging what’s happening elsewhere. And, btw, those comment are _exactly_ what people were saying about the SF Bay Area six to nine months ago!
Our favorite Seattle flipper/investor has been mighty quiet on his blog since Oct 6. I wonder how much action his two properties are getting?
http://seattlerei.blogspot.com/
That guy Eric has got to be taking a bath. What is he thinking. Read down lower where he says he is sick and has the feeling of death. Yeah, he’s going to have that feeling a lot more in the coming years. I love how he also says in the top or second entry that the price is right for the right investor. Sure, the price of anything including that 135mil Van Gogh was right for some twisted sick noodlehead. Sure, he wants to tear down and rebuild, but it doesn’t pencil out. How in the world is it going to pencil out for anyway else, but some FB? This guy is a stinkin’ genius. When are we finally going to run out of idiots here.
OT, but an update. Woman I work with told me that family that had bought in NJ with a bridge loan finally sold. Instead of the 1mil they got 749K. I told the wife who sold months ago she would never get the mil, but noooooo. She was so sure the market was hot. On top of 25% drop, it must have taken several months to move the property since I spoke with the wife before July.
I hope they didn’t already spend that missing 250K
I gotta admit, he knows how to get a decorator to make a house look good. But at the same time I have to wonder what he was thinking when he bought those properties in Buffalo for “cash flow.”
He is the prototypical flipper in trouble and amateur “investor.” If he was smart, he might be able to cut his losses and get out quick since there are still some boneheads buying, but he seems to be the stubborn and greedy type. His Seattle and Everett homes are WAY overpriced and languishing on the market.
You think Seattle is different? Vancouver, BC has got “It’s different here” elevated to a religious creed. And this is a metropolitan area that sits directly on the US border. The local RE gurus are telling the multitudes that the US RE meltdown can’t cross the border because… well, just because.
“…buy now before prices escalate further and interest rates go up ….”
What a stupid comment. As if they’re totally independent.
Las Vegas:
http://www.reviewjournal.com/lvrj_home/2006/Oct-18-Wed-2006/news/10265116.html
What I don’t understand is why does the inventory keep growing?
Beyond the people who are nearing foreclosure because of resets.
I’ve never seen so many for sale signs and now there are more and more for sale by owner signs. What does that mean?
What I don’t understand is why does the inventory keep growing?
jag - What I think is happening is that owners / speculators are making an attempt at “timing the market”. It’s becoming increasingly apparent that home prices are declining nation-wide so owners / speculators are attempting to sell their homes at the peak of the market.
What I don’t understand is why does the inventory keep growing?
Maybe the owner’s job security is a little shaky and they prefer to play be ready. Friend of friend w/ financial bkgd just laid off this past week—original friend who passed on that info has been holding his own breath. He’s safe (for now) but many who worked under him will be laid off by end of month.
So I live in Hampton Roads, and always post RE negative things on the Pilot’s site whenever there is a RE story. I also do a number on Craigslist, and often respond to the local Centex ads with comments like “What about the $100K off sale?” and such. Centex never replies.
Until the other day. I’m not sure if this was in response to the Chesapeake, VA or Williamsburg, VA posting of theirs. But low and behold:
As a special “Thank you” for previously visiting our website, Centex Homes would like to invite you to a “Private Sale” event
that will take place Wednesday through Saturday, Oct. 18th - 21st, 2006.
This unadvertised sale is being presented to a small number of people who have shown interest in Centex Homes. We will be offering once in a lifetime savings, savings that are so exciting
that the Centex Sales Representatives don’t even know what they are yet. Management wants to keep this promotion top secret so that it’s only offered to folks like you that have visited our communities or Website before.
This is a once in a lifetime opportunity for you to take advantage of
unbelievable savings on the purchase of a new home in any Hampton Roads Centex community. In order to be part of this event, you need to make an appointment as this opportunity is offered on a first come first serve basis and we only have a limited number of appointments available.
To make an appointment with your New Home Consultant for a chance to get in and take full advantage of this once in a lifetime opportunity, call me today at 757-xxx-xxxx.
As Carol-Anne once remarked…. “They’re here”
This is a once in a lifetime opportunity for you to take advantage of
unbelievable savings on the purchase of a new home in any Hampton Roads Centex community. In order to be part of this event, you need to make an appointment as this opportunity is offered on a first come first serve basis and we only have a limited number of appointments available.
Limited. haha. They wish the entire country would show up drooling. Typical sales BS, make it seem exclusive and like you may miss out if you don’t act now. I’m sure if no sale occur they’ll have another ‘invitation only’ sale immediately after this one. Classic.
I seriously think it’s them looking to deeply discount properties to clear inventory without telling the whole neighborhood. The price point of their products in this market…. it’s a no go. I heard one neighborhood (not specifically a Centex hood, but a $600K+ hood) sold 9 of 100 homes all summer. That would be 10 years inventory. The way the article read, the homes were built and empty.
I was listening to the Washington Post radio station(107.7FM) on my drive home from work today. They had about a 5 minute segment with Mr. Cheeks and a realtor as call in guests. Mr. Cheeks sounded like a reasonably smart guy, although no genius. The realtor was basically doing the rah, rah, great time to buy, NAR talking points shtick. The host of the program was unimpressive. He didn’t ask Mr. Cheeks any ‘what if you can’t sell your current house’ type of questions, or what’s your Plan B, etc.
The most interesting part of the segment was that the host got Mr. Cheeks to admit-almost as an aside-that he owns “multiple properties”. The lack of any dissenting view to the garbage the realtor was spouting made it seem almost like a paid infomercial.