“The Market Is Close To Becoming Illiquid”
Newsday reports from New York. “In January, when retired psychologists Ben Schwartz and wife, Peppi, put their Commack home of 44 years on the market for $649,000, it looked like a safe bet. ‘Houses in Commack last year were at a premium,’ Peppi Schwartz recalls. ‘We thought it would sell very quickly.’”
“Yet, through a dispiriting spring and summer, the house didn’t move despite several price cuts. So last month, the Schwartzes chose an alternative that may be cropping up more: They decided to rent their house. They’re still hoping to sell, at $499,000, but are now concentrating on marketing the house as a rental, at $3,500 a month.”
“‘We have to try to unburden ourselves,’ Ben Schwartz explains. With the couple now ensconsed in a two-bedroom, low-maintenance Mount Sinai ranch house, rental of the paid-off Commack property would help offset the new monthly mortgage payments. And besides, the emotional wear-and-tear of dealing with the unsold house was just too great, says Ben, who had come to think of his once-beloved Commack home as ‘an albatross around my neck.’”
“Some Long Island real estate agents are reporting that an increasing number of would-be sellers, daunted by the cooling of the once-sizzling housing market, are offering their homes ‘for sale or rent,’ or simply for rent.”
“The sale-to-rental approach ’seems to be a trend now,’ agrees Deborah Sande, who is marketing several of these houses. She says the sellers have come down in price, ‘but there’s a point where they want to stop. And they figure they’ll rent it and get an income from it, and when the market gets better, they’ll put it up for sale again.’”
“In Rockville Centre, (broker) Liz Wallace says ‘the market has dipped,’ and that is especially likely to affect recent buyers who need to move. ‘if they bought in the last two years and paid top dollar, with 5 or 10 percent down, the sale price of the house in this market may not cover what they owe the bank.’ Such owners, she says, ‘would be more apt to rent’ out their house than offer a painfully low price to choosy buyers.”
“Sheila Kassay says there’s been a change in the sort of person renting out a house. In the past, those putting homes up for rent were often investors. ‘In the last six months,’ she says, ‘we started seeing people who really had no intention of renting their home choosing to rent, because it’s sitting empty and they’re paying two mortgages.’”
“Ilana and Stu Austin of Long Beach got caught in a two-mortgage situation some nine months ago when a house they long wanted suddenly became available. They bought it and offered for sale their home of nine years, a Spanish-style Colonial they had painstakingly restored. ‘The market was hot,’ Ilana Austin says. ‘My assumption was we would close by the end of the summer.’”
“That didn’t happen. So the couple is offering the Colonial as a $3,000-a-month rental, preferably on a short-term basis with options to renew. ‘Our intention is still to sell it,’ she says. ‘[But] we can’t carry two houses, and the rental will help with some of the expenses.’”
The Main Line Times from Pennsylvania. “In recent months, some experts in the field are questioning if the real estate bubble finally has burst. Kathy Opperman, the incoming president of the Montgomery County Association of Realtors, said,’ Generally, we are in a correction mode.’”
“‘Over the past year, there has been an adjustment in prices across the entire area, including the Main Line,’ Chairman Harrison Tyson of Suburban West Realtors Association wrote. ‘prices are getting back to where they should be.’”
“‘There is more to look at,’ said Opperman. That’s a problem Alexis Finger of Bala Cynwyd didn’t expect when she put her house up for sale several months ago. In April, Finger listed her home in order to downsize into a new condo in. She expected someone to pick up the house in a second, she said. But the seconds dragged on and on and on. ‘I went April through June with nothing, not even a nibble,’ said Finger.”
“In late September, Finger finally began getting some nibbles. ‘It was like a miracle,’ Finger said of a few families who began taking a serious look at her home.”
The Wellesley Townsman. “The Massachusetts Association of Realtor released figures this week for sales in the Bay State of detached single-family homes and condos for the month of September - and it was not good news. Despite the fact that housing has become more affordable because of falling prices due to supply and the lowest mortgage rates in six months, sales were off 24 percent for single-family homes and 28 percent for condos compared to sales in September 2005.”
“In the single-family home category, last month’s sales total is the lowest home sales volume since 1996.”
“According to Wellesley resident Karl Case, a nationally known real estate expert who teaches economics at Wellesley College, the decline in demand is being matched by seller resistance, and the sellers are holding out for what they think the property is worth. Furthermore, he said, the market is close to becoming illiquid, that is, properties are just not trading hands like they were.”
“Commenting on this week’s report by the Massachusetts Association of Realtors, Case said, ‘the numbers are not horrible, but they’re pretty bad.’”
The Lexington Minuteman. “Finding the business climate a bit stifling in Massachusetts? The solution is more affordable housing. ‘Even if housing prices were to drop 20 percent … most of the housing stock we have is beyond the reach of most young families,’ said Barry Bluestone, a housing expert at Northeastern University.”
“He added: ‘Greater Boston is the single most expensive place to live [in America]. That’s why we’re beginning to lose population and lose jobs.’”
The Shrewsbury Chronicle. “In a market where homes are sitting longer and potential buyers are taking their time, real estate professionals are trying new ways, again, to attract business. Some have held art shows during open houses. Others offer incentives, a flat-screen television, low financing, the choice and installation of granite counters, but now they seem to be pulling out all the stops.”
“And more and more sellers are burying statues of St. Joseph. ‘Basically, when the market is really bad, people will try anything,’ said Maria Salomao-Schmidt, owner of Brick House Realty, Holliston.”
“‘There are whole rituals around all these pagan things,’ she said, ‘because people just want to sell. I think it helps people think they’re doing something rather than just waiting,’ she said. ‘And if you believe in energy work, it helps people envision their home selling.’”
3K - 3500 a month for rent - these people are loonytoons.
“Peppie” is actually fairly well known as a “common sense” type psychologist. Too bad she isn’t exhibiting any herself.
Perhaps they are a little loony as you say but they’re still much better off than some of the FBs out there.
The real question — If all these F’d Sellers suddenly decide to rent their properties in mass and add to the stock of available rentals, what effect will that behavior have on the CPI and rental prices across the country? Are we going to see a bubble in rental properties too OR does one already exist?
These houses are sitting empty. I live on Long Island and see the signs all over.
the cycle. the cycle. the cycle. people tend to forget the RE cycle, which is 7-10 years up and 7-10 years down. the RE just started downward in the last six months and people are already waiting for it to go up. are they stupid? must be, no other explanations. If you must sell, lower the price. haha.
“These houses are sitting empty.”
I see the same thing in my market, an inordinate amount of rental homes. It’s an effective tactic for the NAR to keep available inventory of the ‘for sale’ market and ‘manage’ their numbers, IMO. Moreover, I suspect a lot of ‘illiquid sellers’ with upside down mortgages will have no choice but to pursue the ‘rent not sell’ alternative.
in my area rents for $300k homes are down to $1200 per month in some new developements. by brother just rented one, the “investor” said his monthly payment is over $2k, i personally considered renting a brand new 4000+sqft house on 10 acres for $2000 per month, the house was listed for $850k.
currently I am in a 3800 sqft house on 5 acres for less than that. all these were “real estate investors” who were desperate for some cash flow because their house wasn’t selling. none of them are covering anywhere near their carrying cost.
Yeah, have posted before, I am paying $1,000/mo for a spec house listed at $575,000. Admit this is a seasonal resort area and the builder might boot me next summer, but then who would heat his POS next winter?
Do the idiots in the article think they will get someone to pay $3,500. a month for a house valued under $500,000.? More like $1,500. to $2,000. a month.
Rental prices fell by 35% in basic 3-2 1200-1400 sf home stock in Austin from 1985-89. What used to rent at $750 fell to $500 or $450 even.
Ouch! In other words, in some markets the bubble is going to hurt rental price appreciation expectations too. Therefore, with falling home prices and falling rents, it’s better to take a loss at this juncture. Get out while the opportunity is available even at a loss.
dig it
You DON’T want to be a landlord at today’s pruchase prices for any leight of time! You will never catch back up to get to even. In fact, the hole will get very deep.
Eventually (3 years from now), people will buy foreclosures around you for 40-60c / dollar (in typical suburb) and rent them out for the new market rate at a positive cash flow. You will compete with these investors for the next 5 to 10 years!
I can spell…just can’t type.
“F’d Sellers suddenly decide to rent their properties in mass” That is exactly what is happening in Vegas. The Las Vegas Review Journal rentals for houses and condos last Sunday was the biggest I have seen in 12 years. Lot’s of really bad credit people still looking to rent, but smart landlords just won’t give in, so we have the lots of quality rentals looking for a very few qualified rentors. Rents are going DOWN.
You want to see a ghost town of ugly, cheap stucco, empty-never-lived in houses for rent (after failing to sell)? Take a drive through Lehigh Acres, Florida.
These houses came on line during the summer and the flippers saw stars in their eyes, until a month passed with no offers. No problem, just put it up for rent at $1400 a month (first, last, security deposit).
Seems no one’s interested in renting a stucco crap box for $1400 in Lehigh Acres - so the rents have slowly descended to the $950-1000 range. And they still aren’t renting.
So will the number of qualified renters! What a mess!
I thought Peppi was a skunk?
Le Pew
It’s Friday and I’m punchy. In this article we have Peppi Schwartz and Alexis Finger.
I laughed my head off when I read this:
In late September, Finger finally began getting some nibbles.
Hee, hee
The Dutch pronounce “finger” like we’d say “singer” and less like “linger”. Go figure.
Pepe Le Pew - best cartoon character ever!
wasn’t he a take off on Maurice Chevalier
i’d vote for Fritz the Cat
“3K - 3500 a month for rent - these people are loonytoons.”
I thought $3,500/month rent for a SFH in Commack sounded nuts, too. Commack is pretty far out on Long Island … Not really ideal for commuters to NYC, and my recollection of it (friend’s parents used to live there) was that there was nothing special about it. Certainly not a posh suburb.
So you plan to rent it….and nothing happens. What do you do then? Or the handfull of people who might rent from you will only pay 1/2 of your monthly “nut”. What do you do then?
And what if some of the renters aren’t so kind to your fabulous “rehab” job?
These alternate “plans” are about as well thought out as their sales prices.
Here’s the one I like
“That didn’t happen. So the couple is offering the Colonial as a $3,000-a-month rental, preferably on a short-term basis with options to renew.”
Of course. Someone is supposed to pay top dollar to cover their mortgage until they can sell. I don’t think so. If I paid that to rent their place, I’d make them sign a 2 year lease minimum, with a $500/mo discount for any month in which a realtor brings buyers in to look at it, and a 2 month payoff to me if they sell it and I have to move before the lease is up.
How exactly would you “have to move” before the lease ended? Are there no laws in Texas?
I like the way you think, txchick. Living in a house being shown is a PITA, and who wants to get forced to moved if it actually does sell?
TX, I would ask to look at another house, mine’s not for rent to you.
But showing a rental house to prespective buyers is a poor choice for the seller. How are you going to make sure the dishes are done? How long has it been a rental? Can you be sure the potential buyers will ‘57 Chevy on blocks in the driveway?
Either rent it until the market gets better, or keep on lowering the price. Holding onto all your options can make for a heavy burden.
And that would be fine. Yours is simply one of many many available to me.
And that is the nature of this market in a nutshell.
Being willing (even happy) to walk from a deal is the best leverage buyers can have.
chick, good suggestions. My lease ran out and my landlord tried to get me to renew. I told her that since she was (at the time) trying to sell the house, why in hell would I want to renew. She took the house off the market and is pestering me to renew again. I think your ideas will be interesting to run by her.
This is a good topic of conversation. I would never even consider renting a house that’s also for sale at the time. I would be super pissed if they sold it out from under me. Sure, I’d prefer to be renting a house moreso than my apartment, but at least I’m the one deciding if and when I move.
Backstage
Living in a house that’s on the market is the worst. There is no quiet enjoyment to be had in a house that’s on the market. You have to deal with lookie loos and rude people coming up to your door demanding to see the place. I had people I had already told NO pushing to come in the house WHILE MY TEENAGE DAUGHTER WAS SHOWERING. There is no way in hell I’d ever allow a lock box on the house. Why anyone would choose to pay good rent and have their life totally disrupted for their landlord’s sole benefit is beyond me.
That would be me. I rented a house for sale in Arcata, CA. Nicest house I saw for rent at the time. Except, knowing the housing market (thanks in lage part to this blog), and what the landlord was asking for (pie in the sky), I took a chance. Well only had one prosective looky liu and eventually the landlord took the house off the market. Now he needs me (my rent) and I can actually get what ever I want from him. I even have him personally coming out to mow the lawn twice a month (he’s too cheap to pay somebody). My wife and I joke when he comes out. It’s starting to get strange out there.
I will consider txchick’s advice when the lease runs out next month.
In Arcata, CA, the number of for sale listings hasn’t fallen since early summer. Don’t listings usually drop in the fall?
http://www.humboldt.edu/%7Eindexhum/realestate/listings_arcata.GIF
Agree completely. And what happens when the renters do not clean out all the leaves from the gutters, the downspouts clog, it all turns to ice in the cold winter, and then water backs up into the attic and walls of your precious house?
It’s the landlord’s (owner’s) job to clean the gutters and take care of other maintenance needs, or else find out the eventual sale price of their “investment” will be discounted for the cost of the necessary repairs to make it marginally comparable to all the brand new homes on the market.
Bingo, Stucco. Those who aren’t willing to do the maintenance on their properties shouldn’t be renting them out. Being a landlord isn’t a glorious job. That so many people view it as an easy, get-rich-quick scheme shows how ludicrous things have become.
I recently looked at a rental duplex. The guy who was cleaning was the owner, a Realtor (TM) , and we chatted for a while. He moved here one year ago and left a situation in another state where he was glad to divorce out of 31 rental houses. How in the world do you keep up with 31 rental houses?
And their purchasing decsions!
Also, you can’t do higher-end rentals on houses if you’re trying to sell at the same time. People paying that kind of money are looking for a stable situation and are not going to put up with having their privacy and security compromised or the possibility of having the rug pulled out from under them.
But having said that, what an absurdity. They’ll be lucky to get $2K. And when your expectations are that far away from reality, forget it.
…not to mention the effect that renters will have on prospective buyers…
That’s going to be the next dose of reality for these clowns. They still think they can call the shots. Think again.
“And when your expectations are that far away from reality, forget it. ”
Which means they’ll pretend to try to rent it for 6 months, then put it back on the market in the spring. Spring will be an inventory tidal wave!
You’re absolutely right IMO. And a few will actually get leases signed (at large negative cash flow), and absolutely hate being landlords by spring 2008, contributing to another wave of inventory then. So I’m guessing mid 2008 as the peak of panic selling.
$3500 a month in rent for a house that can’t sell for $499,000? That does not add up.
yep should be less than 2 k. around here 900k townhouse next to the beach (one block) rents furnished - flat screens, stone floors, 2300 sf etc. for 3k a month…this high rent expectation is just a lingering affect of the seller not coming to grips with the drop in value.
I was thinking the same thing. In the Bay Area, $3,500 gets you a rental of a house that is “worth” about $1.5MM. $4.5k-$5k gets you a house “worth” about $2.5MM-$3MM.
Their rental expectations are way out of whack with reality.
I grew up one town away, and you’re right, there is nothing special about Commack. It’s a land-locked town, they might have access to the beach in Smithtown, but compare that to the five or six town beaches that Huntington residents have access to.
Yes thats true. I just relocated to Las Vegas and I am now renting a 2300 sf home in Summerlin. These are new houses selling for 400K(if they can sell them) I am renting for 1550/month. It is kind of spooky though, it seems like half of the homes are vacant. The builder has a sign in front of the community that says”Special Financial Incentives” or something like that.
My only problem is this house is too big for me. Ha,ha-I was paying 1000 more a month in LA for a 2 br apt. I will stay here while I watch the RE market here erode, I will be looking to buy in mid 2008.
crazyintheOC,
We’ll have to stay in touch then! I have a good friend that recently relocated there after YEARS of suffering in the Temecula, Perris, Menifee area! Like so many that are now in Vegas everyone he runs into wonders why they didn’t make the switch years ago. It seems their downturn started earlier than other markets and I do believe you’re right, 2008 looks better and my buddy stays at a “pay by the week” place off Tropicana and is perfectly happy (retired). Keep that on-site intel coming!
Absolutely,also I have been watching CNBC in the morning(Morning call) for several years and all of a sudden almost every guest is blaming any kind of shortfall or weakness on the slowing housing market-I think we are finally reaching what I call concencus. 2008?-yeah I think so.
all of a sudden almost every guest is blaming any kind of shortfall or weakness on the slowing housing market
Yep, and then in the next segment, they’ll have 3 economists who all agree that housing problems won’t spill over into the rest of the economy!
Crazy in the OC:
consensus (related to “sense” rather than “concentrate”)
‘“Peppie” is actually fairly well known as a “common sense” type psychologist. Too bad she isn’t exhibiting any herself.’
Doctor, heal thyself.
OT:psychologists- anyone wonder why healcare is expensive?
obesity traing and recovery coming soon- and home owner depression counciling
wow, I have spelling dislepsia- will seek gov funded help
I like healcare
Bush: “Savings accounts will allow Americans to take control of their own healcare.”
- ‘“The sale-to-rental approach ’seems to be a trend now,’ agrees Deborah Sande, who is marketing several of these houses. ‘
Just try that in So Cal area of Riverside / San Bernadino. That will be a household of 12 hispanics trying to ‘Rent’ to another clan of 18 hispanics.
…but they’ll have the nicest looking lawn on the block!
Racist
It’s racist but it’s true.
Sometimes the truth hurts.
I’ve been duly told by “Bruin” that it is an “imaginary border” and the term “illegal” is racist. Anyone that can get here, by any means necessary, has a right to be here. There is a higher moral law that supersedes US law. So get use to it.
Finally, free health care for everyone on the planet.
It is not a racist if it is a fact.
My ex-gril friend rented her house in Temecula to a Mexican family. After 3 month she found out that acually four Mexian families were living in the 4 Br house.
Please, do not talk about your actual experiences, things you’ve seen. This interferes with policy. It is a shame you saw this, for now I fear you may be “racist”.
Please discontinue attempt to state this observation, Otherwise, in accordance with policy, I shall be forced to give you the “Racist” forehead stamp. Sorry, it’s “the law”
they are 10 to an apartment in la… no joke.
Same with many Brazilian families in Hyannis.
Same with many Brazilian families in Hyannis
Whoa. How many houses does it take to hold a brazillion families?
Sorry, Please, do not talk about your actual experiences, things you know to be true. Otherwise I shall be forced to give you your “Racist” forehead stamp. Sorry, it’s the new “You are a Racist law”
That is soo true! I live across the street from that situation at the moment. 10 people leaving in a 3 bedroom 1 bath house. I bet that house looks like crap when their lease is up.
My friend’s house looked like sh!!t after she evicted them. Who knows how many kids were living there? Catholic families:(
Just cuz their Catholic doesn’t mean they live like sh!t! A$$!
I think the comment merely implied lotsa kids.
I was point to having so many kids.
Bought my last house from a Catholic family with 9 children (now at at least ten and are trying for a dozen.) Was immaculate and all the kids chipped in to help with chores and taking care of the younger kids. One TV and computer for the adults use and the kids played with homemade toys. Mom was stay at home and homeschooled up to about 7th grade.
I am pretty disgusted with the religious right in this country and what they are doing to it. To me this family was a perfect example of faith versus religion. I don’t agree with their views on a lot of things (I am EXTREMELY pro-birth control for example) but I would not have minded growing up in this family. They actually lived by their beliefs instead of proclaiming themselves morally superior and donig what ever they wanted.
Wow, that went off tangent. I guess the point is how a large Catholic family treats a house depends on the family. The same is true of Mexican families. And while it is not racist to say that being here illegally is against the law, it is racist to assume that all Mexicans are illegal. Like others I am getting really tired of labels on this blog. There is a lot of blame for the housing disaster we are facing. To blame the poorest for trying to survive simply takes away the responsibility from those who did profit from all the immoral acts.
It’s more cultural than religion-based. Italy, Spain, Poland and other Catholic European countries have among the lowest fertility rates in the world. African nations are the highest.
http://en.wikipedia.org/wiki/List_of_countries_and_territories_by_fertility_rate
Disparage Hispanics, and it’s not racist. Even if the aspersion has more to do with being poor than being Hispanic. It’s the truth - not racist !
Disparage Catholics, and suddenly it has to be qualified - not all Catholics fit the aspersion etc. Notice that? Why? Because some Catholics who dont fit the aspersion will get offended.
And you all think that you are smart because you did not fall for the housing bubble trick. Indeed!
You are not smart, but something else, best left unsaid
There are two important issues here:
Demographic collapse is real and huge. The recent fertility boom among Hispanic immigrants has produced many children that we already have every reason to believe are a great gift to this nation. Because of this it is unfortunate that the lastest measurements suggest that the differential between Hispanic immigrants and other citizens is collapsing faster than any other such demographic spike ever has, so we are back to demographic collapse as a nation but it will hit us after it wreaks havoc in Asia and Europe.
Second, regarding the overcrowding. In the area where I live which is majority Mexican there is a strong over representation of professionals among second generation immigrants. Essentially, the many children of these people who are so feared end up getting educations and becoming doctors, dentists, lawyers, and municipal authorities. There was a crowd of nearly fifty immigrants extracted from a nearby two bed one bath fifties shack, and the sheriffs and other municipal authorities who busted them and rounded them up were except for a couple of exceptions all second generation Mexican immigrants who were disgusted by the whole thing. So you can stick that in your multicultural melting pot and stir it.
“second generation Mexican immigrants”
How can anyone be a second generation immmigrant?
“second generation Mexican immigrants”
How can anyone be a second generation immigrant?
“Disparage Catholics, and suddenly it has to be qualified - not all Catholics fit the aspersion etc. Notice that? Why? Because some Catholics who dont fit the aspersion will get offended.”
bubbagump,
If you had looked at the Wikepidia chart showing fertility rates you’d see that Mexico’s 2.42 children is lower than the world average, about the same as Isreal and not that much higher than the US (2.09). Pointing that out would have made a stronger case than throwing a tantrum over the fact that I debunked a generalization concerning Catholics.
Please, let us clear some things up:
Catholic families have never been known to be large. There is no historical, literary or antidotal evidence of this.
Secondly Hispanic families units are not known to be extended, and large. This is a crazy observation. They immediately toss their children out at 18, as well they leave Grandma and Uncle joe on the church house steps. They are just that way about family.
Hispanic couples especially, new arrivals, have very few kids, and usually later, early 30’s. This is so obvious why mention it. Anyone living in Cali, or any other state with a large hispanic population, knows this by mere observation.
Add to these facts that there is no border, WASP’s don’t think they are superior, cops never pull over young men for DWB (driving while black), Indian and Chinese students aren’t smart and nobody ever has “bad” thoughts about anyone else.
Please review theses current policy statements and behave accordingly, as review shall be made on a case by case basis.
“The Racist Board of Appeasement”
Please, do not talk about your actual experiences, things you know to be true. Otherwise I shall be forced to give you your “Racist” forehead stamp. Sorry, it’s “the law”
“Catholic families have never been known to be large. There is no historical, literary or antidotal evidence of this.”
Leaving aside your high school yearbook level irony, I never said anything of the sort so congratulations on a brilliant rhetorical victory over yourself. Flabby generalizations like “Catholics have big families” may allow idiots who mistake catagorical thinking for wisdom feel like they have something to say, but when regurgitated with no sense of context, they add nothing to an itellectually honest discussion.
Perhaps if you spent some time in other parts of the world and broadened your “actual experiences” or “antidotal [sic] evidence” you’d know that over-breeding is due to a complex mix of factors which include religion, yes, but also elements like education, cultural beliefs and economic factors to name but a few.
sobay your ethnic slurs are less and less tolerable….
Please do not strangle dialogue with political correctness. It’s an anonymous blog–far more useful to let people post exactly what they mean. If you disagree with a post, fine,post a response.
Spike, Spike, Spike….Please, Please stop interfering with the new policy……
Please do not encourage posters to talk about their experiences.
Otherwise I shall be forced to give you, as well, your “Racist” forehead stamp. Sorry, it’s “the law”
In all my years, I have found that, tolerance and acceptance of people of different racial or ethnic origins, has never been better than it is today. The question that American citizens have today is; Do we have a right to survive in our own country?
‘From 1990 to 2005, home values in the Syracuse metropolitan area grew slower than in every other city but one among the top 105 markets in the United States. In fact, if you adjust for inflation, home values didn’t grow at all. The median home price in the Syracuse area - including Onondaga, Oswego and Madison counties - remained 3.2 percent lower in 2005 than it was in 1990, according to inflation-adjusted statistics published recently by the Joint Center for Housing Studies at Harvard University.’
Yeah, but an hour south here in Ithaca they were insane in 2004 and 2005. It is all about the jobs. Sometimes I think if it weren’t for military bases, Upstate NY would have to close shop.
But someone was telling me the other day that farmers are coming back (unbelievable). Seems the movement in Upstate to “buy local” is actually working.
“Yeah, but an hour south here in Ithaca they were insane in 2004 and 2005.”
Ithaca was featured in a couple national layouts stating the area was one of the “top 10 places to retire”. The greedy, money grubbers, freaks and nattering nose pickers descended on the area like vultures on a deer carcass and paid 2x for junk. When the kings ransom comes due(taxes) and NY gets hit with a couple hard winters, watch these wackjobs come apart quickly.
If I had to come up with a list of 100 top locations to retire, Ithaca would rank in the bottom 10%. The winters are there are loooooong!
Actually, my experience is that a nontrivial amount of it is parents buying “investment” homes for their children students. They will get hit when the students graduate. I saw this before in the 90s.
Don’t misunderstand me — Ithaca will go down. I just not sure how fast it will happen.
Same thing happened to the Jacksonville market and now affordability is a distant memory for most locals.
By the way, this is so true. School taxes in the city of Ithaca are incredible. They are so high I couldn’t get the buy vs. rent numbers to work out in the late 90s!
But once you get out of the cities school district, the taxes really aren’t all that bad compared to the rest of Upstate.
Walker, I think farmers will be coming back. I don’t know how it is in CA, but in FLA, lots of farmland sold off during the boom. So it is no longer available for agriculture. With the housing market tanking, cost of living skyrocketing and many farms gone, I’ve noticed somehwhat of a decrease in the illegal immigrant population here. Many have gone to more affordable states like Georgia. But also, the food chain is so polluted, it would seem that big agribusiness can’t be trusted. So among some, there is a trend back to the small family farm. It’s a tough business, but one that could become viable, since people have to eat. I wish I knew something about farming, I’d get into it myself.
Farming’s more dangerous than coal mining. Not for the faint of heart.
Heck, EATING is starting to become more dangerous than coal mining, LOL!
My family has bailed hay and jerked cows all their lives and I don’t see the family farm is ever coming back. I’d welcome it but I just don’t see it.
“But someone was telling me the other day that farmers are coming back (unbelievable).”
Think it has anything to do with the investments in ethanol? I wondered if that would be the chow call for investors to show up here.
They all read Kunstler’s book! The Long Emergency.
3k you could ren the whole city
and Troy NY was a boom town at the turn of the century
Same with Buffalo. Now specu-vestors get buffaloed in Buffalo.
When I left Cincinnati in 1988 for Syracuse, houses were priced comparable. (I still rented). When I moved back from Syracuse to Cincinnati in 2003, I was met with housing sticker shock, to say the least.
and the reason for that is that there are literally NO JOBS. Unless you 1) work for the govt / military or a university, 2) are in medical field, or 3) work for Lockheed (2 lockheed plants employ ~7K total), I cannot think of ANY stable employment in that area.
Plus, the taxes astronomical (total property taxes with school, county, and everything approaching 2 - 3% in most towns.) Lots of CA transplants to upstate get “sticker shock” when the first tax bill arrives. LOL.
Thanks for the Syracuse info Ben. This was in the Syracuse Post Standard last Sunday but with no online link. That info doesn’t surprise me but it is median for the area.
I still believe certain towns have attracted the transfers and equity nomads more than others and do show some bubble qualities. But there are only 5-10 of those higher priced towns and they’re not all in the same county surrounded by rural pricing which is probably flatter. Then there’s downtown where even the beautiful Sedgewick area is showing major price reductions…..just a few streets over crime is pretty bad.
2 mortgages+seized up market+abundant greed=massive dose of schadenfreude.
The Schwartze’s are cutting the sales price of their house.
Oui Vey!
“So the couple is offering the Colonial as a $3,000-a-month rental”
I’ve seen a lot of “offering at…” rental prices, but precious few “rented at” numbers.
Hopefully the news will begin reporting what the anxious FBs are really getting in rents. Where I live, virtually no one will pay more than $2K a month to rent an unfurnished condo or house, period. Yet I see fools trying to get $3,500 when their property won’t sell. Eventually, they cave, but only after losing many months’ worth of potential rent.
Where I live (Palm Beach) 3,500/mo rent would be about a million to 1.25 million dollar home. Not a 500K home. Sounds like someone is trying to cover the morgage with the rent. Someone needs to tell them that’s the “old economy” idea. Now you rent at 1/2 the morgage cost, and just use the apprecation to make up the difference. A 500K property in Palm Beach should rent for right around 1750 to 2K a month, max.
I just rented a $500k condo in Seminole, FL for $1300 per month. I have good credit and am perceived as low risk to the owner. The condo has been empty for 12 months and they couldn’t get $1600 rent.
“So the couple is offering the Colonial as a $3,000-a-month rental, preferably on a short-term basis with options to renew.”
“So the couple is offering the Colonial as a $3,000-a-month rental, preferably on a short-term basis with options to renew.”
Yep, the wannabe seller is now a wannabe renter.
Can they recover some of their costs? Sure… IF they rent the place, and IF the tenants don’t trash it out too much.
And many people have an emotional attachment to their home (even when they are selling). It’s better to just let it go for both financial and emotional reasons.
Maybe they were reading at this blog. Perhaps they simply misunderstood this good advice: sell your house then rent.
I’ve seen a lot of “offering at…” rental prices, but precious few “rented at” numbers.
ROTFL We’re seeing that here in southern California too. We saw a large nice townhome “offered” at $4k/month for a 2 year lease. $100,000 to rent a home?!? (For two years). Ummm… Yea. I found online comparibles. Less nice homes were renting for $2,200 to $2,500. A similar home for $3,000. But wait, the inventory in $3k+ wasn’t moving, while I saw ok turnover in the $2k to $2.5k range. Hmmm…
Something about what the market will bear comes to mind…
Na… that would require sheeple to do math and have stayed awake through Econ 101.
Yeah, lot of that near me too. Someone has a 3BR duplex for rent in LA at 6th and Sweetzer… $4200! Sitting empty for months… same deal as you, comps are 2500 to 3500 … Kinda sad. especially if some moron rents it
‘I’ve seen a lot of “offering at…” rental prices, but precious few “rented at” numbers. Hopefully the news will begin reporting what the anxious FBs are really getting in rents.’
Chip –
Excellent point! I see these luxury McMansions offered at rents of $3K+ in my area and think to myself, “Why would any but a small handful of folks wealthy enough to rent that place not feel just as happy to buy something?” After all, if you are really rich, losing $300K or so in housing net worth over the next three years that you can more-than make back over the next 15 or so years when the real estate market recovers is worth the luxury of owning your own McMansion.
In Bryn Mawr PA recently looked at a rental house reduced from $3200/mo to $2495/mo, had been on the rental market about 4 months at the reduced price. Not too bad, the house, but a 1-car driveway at most, and that on a 1-way street. haha
And they figure they’ll rent it and get an income from it, and when the market gets better, they’ll put it up for sale again.’”
Is that what they figure? If they can get income from renting it, they must have bought it a very long time ago. And if that’s the case, then just drop the price and move on; your still going to make a ton of money!
Unless of course, you have HELOCed every drop of cash out of the home.
“‘We have to try to unburden ourselves,’ Ben Schwartz explains. With the couple now ensconsed in a two-bedroom, low-maintenance Mount Sinai ranch house, rental of the paid-off Commack property would help offset the new monthly mortgage payments
I have news for these morons. The way to “unburden” themselves is to sell their PAID-OFF house at absolute auction. I’d be astonished if they paid more than $150,000 for it if they bought it long enough ago to pay it off at a normal rate. Wake up and smell the capital gains!
THESE IDIOTS HAVE 3 YEARS TO SELL BEFORE THEY LOSE THE $500K TAX EXCLUSION. THIS WILL PLAY IMPORTANT ROLE OVER NEXT 2-3 YEARS.
Good point.
They’ve been there 44 years; they didn’t pay $30K for it originally. Wonder what it looks like; so many of these homes with older owners have incredibly ugly decor that puts off the buyers. You look at things that you’re going to have to get rid of immediately because you can’t stand to look at them and thats going to cost a lot to rip out and redo.
My wife and I were looking at a nice house in foreclosure in a neighborhood we want to move into. The house was purchased for less than 1/2 the current asking price which is about $25k less than a smaller house on the same block. She was wondering how they could possibly be foreclosed on with so much “apparent equity” in the house. Second mortgages are killing people. It’s not a housing bubble these folks bought their house for $108k in 1988. This is a 2800 square foot house on a 7000 square foot lot. These folks have been in the house 18 years. It looks like a refi or HELOC screwage to me.
Or divorce, or medical bills, or disability, or extended job loss, or death of a spouse. There could be a lot of reasons. HELOC is a prime suspect, though.
The home you describe is not a candidate for foreclosure. The monthly mortgage is ~ $725. If they didn’t HELOC or have bad luck, these are exactly the type of owners who should be able to weather the storm with little trouble.
Nobody with equity in a house would let it go into foreclosure. They would just sell it. That’s just common sense.
Only underwater houses get foreclosed.
LOL — made me think — “The couple’s heavy monthly housing expenses include taxes, insurance, water and screwage.”
$3,500 a month? Does the place come with a maid and butler? You can rent a nice 3bed 2bath in Santa Barbara for $2,000/month. This psychologist should write a paper on himself. He can title it ” The effect of housing speculation on the human brain”.
well, where i live $3500/mo. gets you a studio apartment with a kitchenette — under 800 s.f.
Gotta be rent controlled to pay that little in Manhattan, according to one blogger.
“where i live $3500/mo. gets you a studio apartment with a kitchenette — under 800 s.f.”
Sis and Hub pay $2900 for 1000sq ft 2 bedroom on W96 and Riverside. New building, signed lease a year ago.
Thank you - as I surmised all along.
Agreed. I used to work with a number of people in the music business who temporarily rented their places in NYC while working in LA. $3500/month would have netted a fairly decent place by NYC standards, in my opinion. (No, definitely no LA ranch, but by the local standards, it would have likely been a 1000+ sq ft.
Santa Barbara= no jobs. Nice to buy a place for cash and retire there, but not nice for yuppies just starting out.
I live in Santa Barbara. I own a business here. There are plenty of jobs for people who have in demand skills such as auto mechanics, accountants, nurses, computer programmers and techs, electronic techs, plumbers, electricians, ETC.
Auto repair shops charge, on average, $82/hour labor. Mechanics I know make over $30hr. Plumbers make the same.
I rent a 1 bedroom apt for $1,000/mo. 2bed apts go for $1,350.
2 bed condos rent for $1,600. Townhomes are about $1,800. Small detached homes start at $2,000/mo.
Don’t believe me? Go to http://www.Santabarbaranewspress.com and pull up the classified section.
As for the person who pays $3,500/mo for a studio with a hot plate. Tough luck living where you are. If you were here in Santa Barbara you could BUY a one bedroom condo at today’s prices (which are dropping) and , I’f you are a well educated person, find a job paying $60,000+ a year.
“There are plenty of jobs for people who have in demand skills such as auto mechanics, accountants, nurses, computer programmers and techs, electronic techs, plumbers, electricians, ETC.”
Wow, sounds like a thriving economy. Fixing retired people and their stuff, and some alleged computer programmer jobs. Care to name some of the major employers of white collar workers?
UC Santa Barbara
To Dwr,
I just told you, go to http://www.santabarbaranewspress.com and pull up the classified section. What part of that simple instruction did you not understand? By doing that simple act,you would have had no need to ask an ignorant question.
You are the type of person no business would want to hire. I told you where to find that information, and you come back “duh, where do I go boss?”.
I own an auto repair and safety inspection business. I may be expanding my business in the next year. At that time I will be hiring a mechanic at $30/hr, and he’s damn sure not going to be the type of person who’s going to come to me and ask a stupid question (like yours) about where he can find the dipstick on an engine.
As to the person who claims that a person who rents out a studio with a hot plate in SOHO for $3,500/mo is making $150,000/year: where did you come up with THAT statistic? One of my customers has a daughter who lives in Greenwich Village. She works for NBC and pulls down $150,000. Her husband is a lawyer. They own in Greenwich. People who make that kind of money live in nice places, not studio apartments with hot plates.
“I just told you, go to http://www.santabarbaranewspress.com and pull up the classified section. What part of that simple instruction did you not understand? By doing that simple act,you would have had no need to ask an ignorant question.”
Sorry, it’s just that I don’t take orders from mechanics who live in 1 bedroom apartments.
I’m sure your little garage is doing wonders for the Santa Barbara economy. Keep up the good work and just maybe you’ll be able to rent that 2 bedroom apartment in a few years.
Dwr, you asked a question, I gave you an answer. It is obvious that your inquiry was an empty sarcasm. I blog on this site because I enjoy giving people helpful information, backed up by references and sources.
To everyone on this site, I’m sorry if any of you are bothered by my comments. However, if you think my statistics are inaccurate, then go to my references, study them, and tell me where I’m wrong.
This person, DWR, asked me a sarcastic question about employers in Santa Barbara. He never bothered to look at the source I proffered.
As far as my business. I bust my knuckles every day working on cars and trucks, making them safe and reliable for my customers. My business is small, but I intend to grow. If DWR, or any of the rest of you, look down on me for that, well then F#uck YOU.
Right on, clearview - and it doesn’t matter if you intend to grow. I have more respect for small business owners than anyone, and personally I’d rather hustle and scrape together 40 or 50K on my own than make 150 carrying somebody else’s pail anyday.
Ever notice that people who work for themselves rarely scoff at other’s pay, but for some reason high-paid white collar workers just can’t help but scoff at the $30/hour tradesman?
clearview: I blog on this site because I enjoy giving people helpful information, backed up by references and sources.
Small point: *Ben* blogs on this site–everyone else here *comments*. You’re only a blogger if you post the big pieces, otherwise you’re a commenter….
Sorry, I’m an internet novice, and I’m still angry that this DWR person sneered at me because I work with my hands and rent. I thought that people who rent during this housing downturn were supposed to be smart and sensible.
“Sorry, I’m an internet novice, and I’m still angry that this DWR person sneered at me because I work with my hands and rent.”
If you can’t take some criticism, you might not want to post things like:
“You are the type of person no business would want to hire. I told you where to find that information, and you come back “duh, where do I go boss?”.
“I thought that people who rent during this housing downturn were supposed to be smart and sensible.”
Some are smart and sensible, and some had no choice in the matter. I wonder in which category you fit.
I can give as good as I get. Your initial comment was devoid of any meaningful analysis. You asked a smart aleck question, for the sole purpose of showing how clever you are, but which displayed your ignorance. You then retorted with an insult about my line of work, the fact that I rent instead of own, and all the while providing no EVIDENCE that my facts or statements are wrong.
I run into snide people like you all the time. You provide no facts, just sneering insults.
I call into question your common sense because, when given simple directions, you are unable to carry out a simple task, all the time sneering at my attempt to provide information to the people on this site.
Any one reading my comments can learn something about Santa Barbara and California. I provided people with sources that would be helpful if they wished to examine the facts in details.
You know what, I bet your a real estate agent. You provide nothing of value, have no common sense and insult working class people. I submit my observations of you to the people.
People like you, who cannot follow directions and won’t learn, make me angry.
“I call into question your common sense because, when given simple directions, you are unable to carry out a simple task, all the time sneering at my attempt to provide information to the people on this site… People like you, who cannot follow directions and won’t learn, make me angry.”
I asked you a very simple question that should take 10 seconds, name some white collar employers, which you didn’t and probably can’t. Apparently you are a hypocrite.
“You know what, I bet your a real estate agent.”
I bet YOU’RE wrong about many things.
Let me sum this up for the readers:
DWR: “There are no good paying jobs in Santa Barbara”.
Clearview: “Yes there are, go to http://www.santabarbaranewspress.com and look at the classifieds”.
DWR: “Well, if Santa Barbara’s so great, where can I find a white collar employer who’s hiring”.
Clearview: “I just told you, bonehead, look in the SB newspaper”.
DWR: “Well, I don’t respect your opinion because your a working class renter”.
Clearview: “That’s right, I work with my hands and rent, SO F#UCK YOU”.
Paul in jax: “Right on, Clearview! DWR is a snob”
P.S. I’ll give you a name of a white collar business that’s looking for educated people: Cottage Hospital, which is a privately owned (meaning not government owned) health care facility. O, I have another, Sansum Medical Clinic, where my aunt was a lab technologist. O, right, the City and County of Santa Barbara are looking for civil engineers. Well, lookee here, the Territory Ahead needs accountants. Don’t look now, but UCSB needs computer techs and accountants. O MY GOD, a business in Goleta needs a production arts designer…
Damn, this jackass dwr has me so pissed at his stupidity I’m screwing up here. There are several “your”s in there that should be “you’re”.
Both of you are acting like jackasses. Stop it. And putting down someone for an honest day’s work and living within their means by renting what is affordable and meets their needs? Low class and unnecessary.
Can you buy the median-priced Santa Barbara home on $60K/year? (My answer is NO, but I don’t include suicide loan financing in my definition of “buy.”)
he/she lives in sojo… probably making north of 150k
My wife and I moved from Santa Barbara last year, we make over 150K combined. We found the place very inhospitable to young families starting out. There are jobs, but actually most are service level jobs. UCSB could stimulate substantially more industry, but because of eco-maniacs, no growth hypocrites (who have theirs, but do their best to prevent you from getting yours), and stupid politics, substantial industry has chosen to relocate elsewhere. Look at the tech industry spawned by UCI, UCSD, etc. UCSB lacks in comparison, and I am a UCSB grad 2002.
At least there is industry in Orange county and families have a chance of decent standard of living here.
Our standard of living is much higher in South OC than it was in Santa Barbara. SB is beautiful, but it is becomming more of a mausoleum as young educated people leave in droves.
I went to City College there, no way is there a functional economy there. Wages are extremely low and prices for most things are much higher, housing being the worst. You can survive there yes, but SB has almost NO middle class. Forget working there your whole life and then retiring. The last group of people who could even dream of that were those who settled there in the late 60’s and early 70’s.
It’s the dreaded Palm Springs syndrome, but its alot nicer place than Palm Springs.
“Our standard of living is much higher in South OC than it was in Santa Barbara. SB is beautiful, but it is becomming more of a mausoleum as young educated people leave in droves.”
You should’ve stuck it out for another year. clearview is about to hire a mechanic at $30/hr.
I dispute your statement. You claim that you and your wife pull down $150,000K, and claim that most of the jobs in SB are service level. Your purpose for making the service level statement was to prove that there are few good paying jobs in SB, but a simple examination of the Santa Barbara News Press classifieds shows plenty of job openings for tech/business types with starting salaries between $4,000-$6,000/mo.
As far as OC is concerned, the place is NIMBY heaven, with a median SFR housing price of $700,000+, with the median way more than that anywhere near the ocean.
Yes, both my wife works as a clinical psycologists, we have found that there are far more high paying jobs in OC than in SB. We have a home far nicer in RSM than in SB for about 1500K less a month. Dispute all you want. I LOVED SANTA BARBARA, I wanted nothing more than to live there my whole life. Unfortunately, the “I’ve got mine, but you can’t have yours” crowd, self righteous “limousine liberals” and hypocritical eco-maniacs who drive Priuses but tool around in private jets and live in 10000sqft + mansions, speak about the dearth of housing, but thwart any effort to build new homes (Bishop ranch anyone!?!?! I was on the committe to develop the Bishop ranch).
Forget it, Santa Barbara is beautiful, but hell for anyone who isn’t already landed or have great wealth comming in.
I’ll stand by my statement that quality of life in South OC is far better than SB for upper middle class families.
psychologists, dang the sticky key.
One other major note of difference. Look at the state of the freeways in Orange County and compare to the disaster of the 101 in SB, they can’t add one miserable lane because of eco-maniacs and the elite in Montecito forbid it.
Clearview, by the way, I don’t begrudge you for loving and defending the honor of your hometown. Any of my friends in grad school can tell you, I thought Santa Barbara was the greatest place on earth. However, once I was out of school, having to really work, and seeing what real cost of living was, the quality of the environment, etc… the Santa Barbara dream faded. We are about to have our first child and I wouldn’t dream of sending them to any school outside of Mountain View or Cold Creek, maybe Hope Ranch, because they would be lucky to hear a word of English as most schools in the SB district are predominately hispanic with schools like McKinley Elementary at a whopping 94% and less than a 30% english proficiency rate (This school is on Loma Alta drive near SB City College, a good area). This is simply a reflection of the third world nature of the Santa Barbara community, super wealthy, and poor with very little in between.
BTW, those “high paying jobs” you talk about, most professional commute from Ventura, schools as I described above being one of the main reasons.
You can believe me, I’m very harsh with our local governments, and I acknowlege that English is becoming a second language in Santa Barbara. But it’s the same in Orange County. You’re 150 miles CLOSER to Mexico than Santa Barbara. In fact you have a worst problem than Santa Barbara. What about that congresswoman in OC that sends out campaign flyers printed in SPANISH?
As far as home prices in Santa Barbara. Remember, all the homes in South Santa Barbara County are within 6 miles of the Ocean, probably 80% within 3 miles. If you were to compare similar homes in OC the prices would be about the same. It is a mistake to compare homes in South SB County to OC homes that are located well inland. People pay more for homes that are closer to the beach.
Yes, of course there are more high paying jobs in OC, THE POPULATION IS 10 TIMES THAT OF SOUTH SANTA BARBARA COUNTY. What I am saying is if you are a well educated person with an in demand skill you will have no problem finding a good paying job in SB.
As far as traffic in OC, I have just two words for that : ORANGE CRUSH (the locals know what that is).
Almost every person on this site agrees that housing prices will fall. Santa Barbara is no exception. In two years, I predict that prices for Detached SFR’s will begin at $375,000, Townhomes $275,000 and condos $250,000. This prediction is based on a 40-50% decline in home prices from 2005 peaks. You may disagree, but the prevailing sentiment on this site is calling for a 50% drop in prices.
Finally, it has always been the case in Santa Barbara that middle income people will just not get the same size home in Santa Barbara as elsewere. The price for living in the best climate in the United States (perhaps the world) is having to live in a small house (or condo) located on a small lot. Some people are not cool with that, but then again there are many who are. To each his own.
Wow. $30/hr as a wage slave. Where do I sign?
That’s $30/hr labor PLUS commission on parts, which, on average, adds about $10/hr to that $30/hr. You call that a slave wage? WTF? Pull your head out of your arse. A good mechanic can easily make $80,000 a year.
I’m self-employed. My shop charges $75/hr plus 20% mark up on parts. Last month I changed an engine on a 1994 Ford 1 ton truck, 460 fuel injected. 15 hours labor, $2,500 my cost on parts. I made $1,625. That’s a little over $100hr. Slave wage my sweet A$$.
There’s a jackass on this site that goes by dwr. He criticized me because I work with my hands and rent a 1 bedroom apartment. Well, I make alot of money with my hands, and the money I save by renting a 1 bedroom instead of 2 or more rooms goes back into my business. Any person who works for me will make a good living, and someday will own his own shop, which is what any good mechanic does. Slave labor? You’re a numbskull.
80k/yr=wage slave
Judging by the comments of the people on this site most of them are probably making 60K-80K a year. Middle income people, the backbone of America. They are not slaves, they’re free, well educated professionals- nurses, mechanics, electricians, computer techs. Your calling an $80K/year person a slave is an insult to them, and they are going to remember it whenever they see “Captain Credit”.
Are you and this dwr clown related? You both degrade and sneer at working class middle income people. I can be harsh with people, but I would never put someone down for making a middle income wage by doing honest work.
Then quit talking like $30/hr is a fortune because it’s clearly not.
I never said it was, and the fact that you attribute a statement to me that I never made proves that you have no credibility. In fact, I clearly stated that $60K-$80K a year is a solid middle income.
Again, your problem is you are commenting on a site that is overwhelmingly viewed by middle class people that you have insulted by calling them slaves. Many viewers of this site are business owners that pay their employees what you call slave wages. I may be crazy, but I’m not stupid. I wish to prevail with the people on this blog, and I know one way to do that is to uplift middle class Americans. Your insulting put downs of those very people will win you no allies. THAT is one thing I’ve learned by owning my own business.
Hey, I just found out that Captain Credit is a real estate agent and land spectulator. No wonder why he despises
working class, middle income people. This guy’s a pimp.
“There’s a jackass on this site that goes by dwr. He criticized me because I work with my hands and rent a 1 bedroom apartment.”
I criticized you because you’re an idiot for thinking mechanics and plumbers constitute a thriving economy.
The grease monkey is obsessed.
Yeh, Captain Credit, I’m a grease monkey, and you’re a pimping real estate speculator. Have you ever noticed how speculators and real estate agents are dispised on this site?
And you, dwr, I mentioned mechanics, and plumbers, and electricians, and computer techs and numerous other trades and professions. Middle class people are the backbone and the brains of America.
To both of you, just keep talking. I have your quotes about the middle class, and if either one of you pop off some where else I’ll be more that happy to to remind the readers what you think of middle income working class people. In fact, Captain Credit, I did that just the other day.
Call me all the names you want. Because I respect the working class people on this site and you show nothing but contempt for them I will prevail.
He can title it ” The effect of housing speculation on the human brain—a personal story”.
The wife is the psychologist.
They’re both psychologists. Obviously they specialize in “subnormal psychology”.
I’ve been noticing a lot of “6 month rentals” popping up lately, which is pretty unusual in my town. Asking rents on these homes tend to be around $1,000/month, when their for sale listing price had been around $350,000. There is not a huge population here that wants to move into a rental only to move out six months later.
I have to wonder, as a renter for most of my life, why I would want ot rent a place that was also up for sale at the same time. Renting is unstable enough without having the place sold out from under you.
Now there were times when I was in a city for just a year on a work contract, and so I was amenable to that situation — and once when my job got extended, and the landlord wanted me out, raising rent real high after the year (which I paid!) and six months later throwing me out! (Fair enough, and we got on well, actually.) But usually, I really don’t want to *have* to move every six months or year. I imagine most renters are like that as well.
Now all that changes if the rental price is a real bargain compared to other places, and I’ll take a chance then, but that also means the cash-strapped owner is taking an even bigger financial beating.
Oh yeah, let me add:
Asking rents on these homes tend to be around $1,000/month, when their for sale listing price had been around $350,000.
That’s insane. That’s TERRIBLE return on investment. Even if the house would sell for only $250k, that’s a terrible investment. The seller would probably do a lot better in the end by paying $3k to stage the house and sell for what it gets than collecting $6k (and much aggravation) by renting it out.
They want somebody to pay utilities and keep the place warm and the pipes unfrozen in the winter, perhaps?
Hooo boy! Keep the pipes unfrozen in winter!? My landlord friends are always after their tenants every year starting in October and November to make sure they take care of that. Sure, the lease says that the tenant is responsible, but… depending on most tenants for that, especially young ones with no idea, you’re asking for trouble of you hope they cover it.
And yes, the tenants do pay utilities, but alternatively, is keeping a house 52 F all winter any more expensive than the potential wear, tear, and damage a tenant is doing? Not to mention the inhibition on showings and sales that the tenant causes as you try to sell that alligator.
NoVa - I agree with you - just trying to plumb the motivation of these obviously short-term thinking neo-landlords.
Yeah, I think you got it: Plumb the thinking! Kind of like using a plunger to flush that sewage stoppage out! Hee hee!
I have to guess that these neo-landlords just are not thinking this thing through financially. Either that, or they are still stubbornly optimistic that house prices will recover and let them finally sell out at the high price they want. But that’s also reminiscent of the tech stock bust: “I just need to get back to break-even, and then I’ll dump it all and never do that again…” Thing is, once you have them, it doesn’t cost anything to keep stock certificates in a desk drawer.
“and if you believe in energy work, it helps people envision their home selling”
We prefer to believe in Ben who helps us to envision prices crashing
Here in Central Florida the landscape has been bought up by these type of greedy, absentee asshat flipper/landlords.
I know of a young couple here at work that moved into a rental home after passing the smug assh0le landlord’s credit/background check….only to have a Lis Pendens filed on the property a month after they moved in.
Lesson: Make sure you do as much homework as you can on a potential landlord. Check property taxes, amount paid, go to county court website and look up the mortgage for the property.
Does said greedy asshat landlord own multiple properties ? How long ? Got IO or ARM’s ? When do they adjust ? If they are young, greedy and stupid don’t rent from them.
Cheap rentals may be easy to find here in Florida, but finding a decent landlord may be the real challenge.
Hah! Do a credit check on your landlord! I love it.
I can only speak for myself, but if I found out somehow that my landlord was being foreclosed on, I would immediately halt payments to him to recover my rental deposit. Once that was complete, I would resume payment (if he was still the owner). In California, foreclosures take 90 days or more. That is usually adequate time to recover your deposit and months-in-advance payments
Right L.P. . I was saying this about new flipper landlords a number of months ago . A renter has to have a good stable landlord also . Don’t renters want to rent for more than 6 months usually ?
As I said before ,I would be concerned about getting my security deposit back from a landlord that can’t really afford the mortgage payments or taxes .Is the property in foreclosure while the owner is collecting the rents ?
Also it would bug me if I was renting a place for 6 months and than I got notice to leave because the owner wanted to put the property back on the market for the big spring bounce of 2007 or want to show the property while I rent it .
The current situation does not create a stable rental market . If a renter stopped paying payments it would take a while to get that renter out and the desperate landlord would go down more . Also bad renters trash the property .Its just not a good situation having a desperate landlord that really wants to sell rather than rent .
Well, I am in the process of handing over alot of cash for a rental I am taking here in PB county. Landlord wants first, last, security, and pet deposit, almost 6500 to move into a 2K a month rental. I am concerned about getting my security deposit back at the end of it, seems that landlords down here kind of count that as “part of the rent”. But, I figure, risking 2K is a hell of alot better then risking 100s of thousands by buying. Also, if I have a really bad relationship, and feel like he is going to keep my security deposit (without cause) then I might just not pay the last 2 months rent. He already has the last month, and your not going to evict me that fast, no way, no how. Especially when your sitting on 4K anyway. Or maybe just demand the inspection during the last 2 months, and make him agree to apply it?
Any ideas on how to handle this? It’s definately an issue for us in the bubble zones, that’s for sure.
Also, what would happen in the case of a forclosure? How long to evict a renter who is paying rent, and has security/last month down already? Would the bank even want to do that, especially in a falling market?
Just curious. I find it so offensive that I had to give my credit report over to this guy. F that, I want to see your credit report buddy! Can you just write a check for 6K the day you decide to take the place; do you have any liquidity at all? They are holding all the power; and it really should not be that way. I am the one who can actually afford this house, not you!
Michael,
I would do the same due dillagence on your landlord as he has done on you. I suspect you hold all the cards as he needs you a lot more than you need him. There are tons of places for rent all over the West Palm area and I would beat that into your landlord’s head over and over. I certainly would have something in the contract about the deposit being held in escrow so that it can be returned assuming you leave the house in proper condition. I would also have clasues about the home being sold during your lease as well as when realt-whores can come by and show the place. Basically, I would go in there and let them know what you want (that’s reasonable) and that it is not up for negotiation. I bet they blink first. If not, rent the house next door. I bet it’s available.
I have never given a credit report to a landlord. I absolutely refuse to do that. If I can write a check for first & last + security, they don’t need a credit report and as far as I’m concerned, I don’t want them knowing my personal data.
that would not work where i live….
Nor where most of us live. There are not unlimited rentals in Socal. In LA, when we lived there, it was particularly difficult to find a decent rental.
I have always assumed that your SS number is something that you have to fork over if you want to rent. That is until my current rental. The owner of the house told me that he does not want anybody’s SS number. He said I have excellent references from my previous landlord of 7 years, plus a local small business owner went to bat for me and gave me a great reference as well. He is concerned how having all of this personal information can actually be a liability to him.
This man is an outstanding landlord. He has cleaned the interior of the HVAC unit to make it more efficent for me, and he has added additional insulation in the attick at my request. I have performed myriad small repairs on my own because I enjoy doing this, and I do not like pestering landlords all of the time over small things. I will miss him when it is time for me to leave, but hopefully that will not be anytime soon. There is no doubt that I will get a great letter of reference from him as well. Maybe I can parlay these letters of references so that I do not have to give landlords my SS number anymore?
I just spoke a few weeks ago with a Realtor (TM) in town who owns rental property. He told me that he definately does not rent until he gets your SS (credit) and driver’s (criminal). He says he has been saved many times from people with very bad credit and/or very recent trouble with the law. He said he is more than happy to watch these people go to his competition.
The landlords in these rural counties are very concerned about meth houses. Meth houses eventually become condemned, and the landlord loses his entire investment in his property, so they have reason to be very edgy. Also, in the past 2 years the meth problem has really gotten out of hand in these rural counties.
Now here is a very interesting observation about my previous landlord of 7 years: He demands all of this personal information from would be renters, he screams out loud how he always checks everybody out thoroughly, and yet he had some of the worst renters imaginable in his other rental properties. People who moved in without any intent of ever paying a dime in rent, people who overfilled the upstairs bathtub while they where away and caused the ceiling to come crashing down, people dealing drugs out of his property, young families with kids that where tearing up the landscaping (I can’t imagine what the interiors looked like,) etc… If he was using all of this personal information to check people out so throughly then why the hell was he having to evict so many of these people?
Because he is a damn liar who goes into panic mode every time a property of his is vacant, and is willing to rent to the first person who shows up with a deposit check.
M. Fink - I don’t think the bank would have the right to evict you just because they become in the owners of the property. In Chicago where i live, your lease would be valid through a change of ownership, even foreclosure. The new owner is buying the property subject to an existing encumbrance - the bank can’t just throw you out now that they own it.
i’m not sure of the laws in Florida, but i would imagine they are the same. A lease is a legally binding document.
aren’t there plenty of places to rent down there? seems like plenty of vacancy.
When our landlord refused to refund our deposit, I took her to small claims court, which awarded me double the amount. It was a pain in the neck, but once we cleared the waiting period, I filed an abstract with the county recorders office and finally, about a year later I got a call from a title company asking for an invoice as she was trying to refi… If the owner has property in the area (other than the rental) you will get paid one day, and at least here in CA with 10% simple interest…
Seriously, though I would pull the GRANTEE / GRANTOR records on her from the County Recorders office and find out when she bought and if she has been doing a lot of Refinancing…
Why don’t you consider using a well established property management company instead. Seems a safer bet than dealing with an individual.
“well established property management company” Absolutely, the reputation of the property manager is way more important than one or two sleezy owners. I was shocked when my manager told me she is now running credit checks on owners before taking their homes to rent.
“I was shocked when my manager told me she is now running credit checks on owners before taking their homes to rent.”
That’s very useful. Makes great sense, in this market. It’s pretty unlikely I’ll be looking to rent again after this place, but if I do, I’ll ask the agent if they ran a cc on the owner and go from there.
The tables sure have turned.
Document the crap out of the house’s condition right when you get the keys. List every little thing that’s imperfect. Take video.
My approach is always to start out with a trusting attitude, so as to maintain a friendly relationship with my landlord. WRONG!! I get screwed every time, because they view their tenants as insects (well not my current landlord — I finally got lucky and found a great one).
And yes, if you have an inspection option, take it when you move out. At my last place I requested a walkthrough with my landlord prior to moveout, and I brought a witness as well. That drastically limits his/her ability to screw you over on the security deposit (this may depend on state — I’m in CA). If it really looks like they intend to screw you, mention some of the safety problems with the house. If they DO screw you, notify the appropriate housing authorities (in CA, landlords have strict requirements for maintaining safe housing, and many older houses may have violations — mine sure did).
I’d also try to get my security deposit put into an escrow at the start.
Take a lot of photographs of the interior when you move in. Make sure you catch on film any pre-existing imperfections. Send the landlord a copy, informing him that you are not asking for repairs, but just documenting the condition of the place at move-in time. He’ll get the point.
Always take pictures and have the landlord or realtor date and sign them. Many years ago we moved into a place which was three years old. The rugs were seconds and the prior renters had three dogs.
After we rented for six years the landlord attempted to keep $2,000. or the rental deposit to repurchase rugs. The funniest part was that we had pictures of the 9 year old rugs and they were in pretty good shape. My wife is an interior decorator and no slob about her home.
A trip to small claims court solved the problem. Some of these people are simply thieves. Take pictures and document to protect yourself. So much for “wear and tear”.
Correct. Theft by deception. Sad commentary about our society. They deserve jail time.
Reminds me of our Dallas experience in the 80s. Took job w/ new company and moved from NoVA. Didn’t know squat about Dallas so we decided to rent for 6 months. This would give us time to look around, learn the area, and figure out where we wanted to live. Rented from a divorcee and moved in. About 2 months later a process server showed up, “inviting” us to be a witness at divorce court. Seems the divorce agreement said the ex-wife must either live in the house or sell it. I still remember the judge saying, “Well it looks like Mr. (me) has no right to occupy this dwelling.” We really had to scramble to find another place before the sheriff showed up.
I concur with the other posters- you REALLY have to do your homework before you rent from an individual landlord, as opposed to renting from a property management company.
Mr. Judge should have made reasonable provisions for getting you out and turning 1/2 of the rent money over the the aggrieved ex hubby. He didn’t have to be such an arrogant ass.
My parents got a real doozy of a divorce judge too. The guy must have been working with 1/2 of his brain tied behind his back. He called all the kids in to testify and then summarily ignored everything we said. Being minors, though, we weren’t legally bound by anything he said, so we paid as much attention to his decrees as he did to our requests. What a jerk.
Surely it’s more the case that the ex-wife has no right to let the dwelling to you. WTF did you do wrong?
If anything I would have thought you had a claim against the “landlord” to find you equivalent accomodation and pay moving expenses.
Well since divorce was brought up, I have to add my two cents in here about the parallel I see between stubborn sellers and divorce. I’m going thru one right now and it’s been 2 long, miserable years. I cannot get the ex to provide 100% of the discovery requested and, frankly, I’m too tired to deal with it anymore. So rather than be stubborn, greedy, and let this continue to bring me down, I’m settling. For an amount FAR less than what I believe to be fair and equitable (in fact, it’s not even on the fair and equitable radar screen). Why? Because the price of sanity means more to me. THAT’S why I don’t understand people who can’t just throw in the towel on real estate and say, “Well, shucks, I guess I waited a year too long to sell for maximum price. Oh well, I still have a gain so best to be rid of the problem.” And that’s why I have no sympathy for their so-called plight.
‘There are whole rituals around all these pagan things,’ The truth about Catholics’ fetish with the saints and Jesus’ mom, Mary: it just paganism.
How anyone could still be a Catholic after the priest-molester scandal is beyond me.
Religious belief in the 21st century is impossible without a will to compartmentalize away any evidence which contradicts your faith.
from the scientific american study in 1999…
Whereas 90% of the general population has a distinct belief in a personal god and a life after death, only 40% of scientists on the B.S. level favor this belief in religion and merely 10 % of those who are considered ‘eminent’ scientists believe in a personal god or in an afterlife.
Contrary to the notion fostered by so-called ‘creation-scientists’, Albert Einstein did not believe in a personal god.
I’m in the middle on this. I think those pushing intelligent design as science or the Bible or other religious books as historical facts are full of it. But I also don’t think that science can or could disprove the existence of a god of some sort. Science and metaphysics are separate magisteria. Therefore, I take religious faith traditions as attempts to explain unknowable things and as allegorical rather than literal. While literal interpretations of religious works are IMO laughable, the scientific assumption of the inverse is no less in error. IMO, the mirror image of stupid is stupid. People want to have certainty, but certainty is simply not to be had. One of my favorite quotes is from St. Augustine, “We do not know in order to believe, we believe in order to know.” In other words, knowledge doesn’t create faith, faith creates knowledge.
As I believe Voltaire said doubt may be uncomfortable but certainty is absurd. There are some things that are simply unknowable, at least on this plane of existence. Human beings are flawed and therefore fallible. Certainty in either direction is an illusion. But then again that’s just my opinion.
“But I also don’t think that science can or could disprove the existence of a god of some sort.”
Scientists generally have no interest in the question of the existence of a god. Their interest is in finding natural explanations of phenomena which primitives attributed to God’s work. It is religious folks whose (financial) interest lies in continuing this primative faith in magical causes for natural phenomena.
I agree that charlatans abound. But virtue, ethics and such are valuable and important areas of thought and study that science can’t solve in and of itself. If your’e interested, here’s a link to an article about the Pope’s recent (misreported) speech where he talks about rationality and the necessary preconditions for a civil society, that modern rationalism could not have existed without the civil society created in Christendom through the intersection of Jerusalem, Rome, and Athens. Really quite impressive and not at all dogmatic.
“Socrates or Muhammad? Joseph Ratzinger on the destiny of reason.”
http://www.weeklystandard.com/Content/Public/Articles/000/000/012/736fyrpi.asp
I will post no more on this topic and apologize to others for the digression and any offense I may have given as none was intended.
Very good summation of what I believe as well.
Let’s not talk about religions, jerk off!
Let’s not talk about your bad habits.
You can talk about my bad habits all you want. I’m Catholic and I’m a sinner! =)
I suppose none of you send your kids to school or have any faith in their saftey there since school teachers molest kids in far greater numbers than pervert priests.
My point is that those who remain Catholic do so because of faith in Jesus Christ. Those within the Church are the toughest crtics of the way the Church has handled this also.
I don’t want to start a religious argument here but this board generally doesn’t get into poltical and religious fights. I hope it stays that way.
Burying the statues is not a Catholic thing at all. It is some poor superstition, having nothing to do with Catholic belief, period.
Pervert priests are intolerable, but the ratio is actually less than the number of child molesting teachers, believe it or not. Might as well withdraw your kids from school.
Scientists know perfectly well that they have nothing to say about religious truths. The problem is that some religious people think their faith has something to say about the workings of the physical world.
It goes at least one step further. Traditionally churches collected rents from poor miserable sinners whose fear of the big guy led them to think they had better pony up, lest they get hit by a lightning bolt on the walk home from church. Some of the faithful also felt the need to help the big guy enforce his protection racket by burning doubters (aka heritics) at the stake and such. Nowadays, it is harder to enforce rent extraction schemes, in part because of the tendency of science to crowd out magical explanations for complicated natural phenomena, but that doesn’t stop churches from trying to keep these supernatural stories alive in the minds of the faithful (e.g., “creation science”).
P.S. Religion is not really that off topic here. Just yesterday, we learned that Gary Watts is a housing evangelist whose faith-based forecasts for ever-increasing OC real estate prices draw throngs of realtors, mortgage brokers and other industry disciples in to his seminars.
California may be on the verge of creating a surplus of Bed and Breakfast operations. A new growth industry?
Everyplace has a surplus of B&B’s. Up here in this coastal ME resort, all B&B’s had a very bad year this year. Blame it on gas prices or expiring HELOC’s or just too many retirees thinking this is a fun retirement project to support their houses.
“The sale-to-rental approach ’seems to be a trend now,’ agrees Deborah Sande, who is marketing several of these houses. She says the sellers have come down in price, ‘but there’s a point where they want to stop. And they figure they’ll rent it and get an income from it, and when the market gets better, they’ll put it up for sale again.’”
sounds similar to the situation of the last years in Europe. There is no way that all those houses that are for sale at 10, 20 or 30x median income are going to sell. At the same time most owners do not want to discount more than 10 or 20% from the highest valuation ever. So some sellers have tried renting out, but there is no way people are going to pay the outrageous rents that these buyers are asking to ‘break even’, so that doesn’t work either. In the end, many buyers have decided to sit it out and wait for the market to recover. Some have taken their homes off the market in the last year. As long as the ECB keeps rates artificially low - effectively below inflation in some countries - EU homeprices keep rising and homeowners are bailed out by inflation. But the real problem is still there and growing, because incomes are not rising and rates will have to rise sooner or later.
correction just in case: ‘buyers’ in the text above (2x) should be ‘owners’.
“He added: ‘Greater Boston is the single most expensive place to live [in America]. That’s why we’re beginning to lose population and lose jobs.’”
I call B.S. on this one. The SF Bay area is the most expensive. That’s why we’re losing population and jobs
Yeah, seriously. Greater Boston IS NOT the “single most expensive place to live in America.” It’s up there, granted, but most expensive? Sorry, that’s ridiculous.
I’d put Manhattan up to that challenge. Typical NYC numbers include Brooklyn, Queens and the Bronx. But if we’re talking Manhattan alone, I’d put my bets there for “most expensive”…
absolutely hands down. my doctor/banker couple friends could not handle it in manhattan. my sister lives in san fran on 80 k and 2 kids and manhattan broke my friends’ back at probably 200k a year income.
ALERT bob pissani is “SHOCKED” at the RE #s
do these people have eyes ?
(Are we going to see a bubble in rental properties too OR does one already exist?)
Articles are breaking this week about a rental squeeze, as scared would-be buyers try to cram into rental housing even as units intended for ownership sit empty.
Sooner or later, however, rents will fall if more people choose the rent out route.
Let’s say an investor or deperate owner can’t pay, can’t sell, and rents to cover part of the monthly nut, but still can’t make it and the bank taxes over. May a bank blow off a lease in foreclosure? (Assuming, of course, the FB doesn’t sign a ten-year, below-market lease with his wife).
In a bankruptcy, I think the renter would be just another creditor. They would lose their right to occupy the home, but could sue for their deposit and damages I suppose.
And stand in line with everyone else waiting to be made whole. Keep in mind that the bank who loaned the FB the purchase money may be earlier in line.
They can’t sue without lifting the stay and 99 out of 100 times, it isn’t worth trying.
Typically, yes. If the lease was entered into after the loan that was foreclosed, then the lease is a junior encumbrance and would be wiped out (just like the foreclose of a first loan wipes out a second). It’s not a question of can a bank do it, it simply what happens by virtue of the foreclosure (all junior encumbrances are wiped out, there is no election to allow some to stay).
A point I would like to see discussed relates to your statement about the rental squeeze. I can’t understand how that would really happen (assuming no decrease in supply of rentals) just because would-be buyers are sitting out. If they are first time buyers, then they’ve been sitting out the whole time, and the fact that they continue to put off buying shouldn’t increase the number of renters. The only increase should come as a result of those who were owners but sold and now rent. Thoughts?
Waiting — “The only increase should come as a result of those who were owners but sold and now rent. Thoughts?”
More or less along the same lines, I think this “news” of a tightening rental market is REIC B.S., perhaps meant to scare the last GFs out there into buying or to off er some bit of false hope to the FBs who can’t find buyers. Here is east central Florida, more and more rental listings are appearing, not fewer and fewer.
These people who are renting solely because the can’t sell need to realize something:
They need to rent at a DEEP DISCOUNT!
Why?
Because, since they’re trying to sell the house, they have to inconvience the tennant with:
1. No long-term lease available
2. The need to have the house ready to “show”
3. No professional management company handling issues.
When I’ve needed to rent a place I’d much rather rent something managed by a Management Company so there’s a neutral party available 24/7 to call when the heater breaks, the roof leaks, etc, who is authorized to call a repair person. Otherwise, you’ll get an annoyed owner “investor” trudging out trying to fix it himself and doing a half-assed job.
And, even with notice, having to make the house ready to show is a severe inconvenience! If you’re renting short-term, you’re probably not worried about keeping the house spic-and-span.
I wouldn’t rent a house under these conditions, and neither would most people, unless it were at a substantial discount.
So very true. Actually, I would never rent a house that would be “shown” for any reason. The discount would have to be comically steep to even get me to listen to such a scenario.
We had a friend living in a house with 30 day notice clause. She got a $900k house for around $2k /month, but she had to be able to move herself, kids and horses on 30 day notice. What a house, though, it was aswome, 2 acres, barn, AV room…..
has horses and rents? hhmmm
I’d closely watch the unemployment rate now. In my country (Finland) we did have very similar housing bubble bursting in the early 90’s and the unemployment went from below four percent to 16+ percent in 1,5 years!
Of course no two bubbles are exactly the same but the US housing bubble seems to be bursting, not like in Japan, but like in Finland back in 1990-1992. Fast and furious.
Similarities:
- Banks giving loans to everybody with a pulse, “new era”.
- Real-estate bubble with a lot of house flippers, “me and my uncle too”.
- New jobs created mainly to domestic service/non-tradables and government sectors before the crash.
- Trade deficit.
- Manufacturing base being decimated or uncompetitive.
- Economy more and more based on consumer spending.
- Consumer indebtedness. Finland: 90 percent of household’s disposable income (1990), US now: 110+ ?
The only thing “missing” now is somekind of interest rate rise shock in order to avoid currency crash. Over 3 billion dollars of foreign money is needed every business day to keep the US trade in balance….
What will Asians do when they realize that US consumers are cutting down their spending and their export sectors are experiencing “unexpected” glut of inventories? Going to be interesting…
I found it interesting that in Wednesday’s 25 October Fed Reserve meeting that voted to keep rates at 5.25%, the only dissenting voice (Fed Reserve Richmond bank president Jeffrey Lacker) wants to RAISE rates, not drop them.
The Fed doesn’t know what to do right now. They can’t lower rates, b/c that will start the crazy lending again and offer a lower rate of return for investors, but they have internal pressure to raise rates to control growing inflation (due to their own crazed money creation policies).
I see them raising rates up just a quarter-point at their next meeting in Jan 07, which will be disastrous to our wobbling housing market. (Which I am fine with, btw.)
Renting in NoVa, fwiw.
They’ll either sell their goods for less or devalue their currency to achieve the same thing. Either is deflationary (for everyone).
They can’t sell their home of 44 years for some astronimical price so they’re going to rent it? Is this stupidity, greed or a combination of both?
So many people are beginning to choke, even the ones that have plenty of equity that would allow them to slash asking prices in order to sell. I firmly believe the downside being felt in 2006 is a precursor of what will be experienced in 2007-2008. Soft landing? Yeah, right.
probably common market psychology. In my area of the Netherlands, there are homeowners who are sitting on 500-1000% gains and still refuse to lower their asking price (usually a little over the highest price ever for a comparable home). They are convinced that RE prices can only go up and if necessary they will wait a few years longer to cash their lottery ticket.
That is really crazy, as the European central bank is basically the German central bank, and will NEVER inflate. Those people will probably wait their whole lifetimes.
i disagree.
the ecb is not even close to the bundesbank.
look at the exploding m3 data. in the days of the german bundesbank this was there main topic they watched and they actet on this datapoint.
since the ecb has taken over this data is only a footnote.
“In late September, Finger finally began getting some nibbles. ‘It was like a miracle,’ Finger said of a few families who began taking a serious look at her home.”
Har! The miracle doesn’t happen until your house actuall sells. in the meantime … folks taking a “serious” look at your house? …. that’s just the Housing Gods messin’ with your head.
It’s gotten very macho and blustery on this board, and in its own way just as unseemly as the sound of Bulls bellowing a few years ago about their brilliance and prescience in buying a home and seeing it quadruple in value.
The fact is, yes, you can command pretty high rents on Long Island and in the city. In fact, rents have been going up in the City, not down. If that couple’s mortgage is really paid off, they’ll do okay. Those who have purchased more recently are in a lot more trouble, as rent will cover mortgage.
Is it a good thing the market is correcting? Yep. It will lead to saner prices and a healthier culture in these cities and suburbs, in which the young are not forced to move far away. But, really, these howls of joy at the fact that ordinary people–who don’t pay close attention to housing markets–are getting screwed is beneath the board.
Sorry, these “ordinary people” sure as hell didn’t mind trying to screw buyers a year ago.
We sold in Florida last year. 80% gross increase in 3 years. Should I have sold for less, out of compassion for the cash paying couple who bought it? What should I have sold it for? What government agency should have set the price?
The market sets the price. Sometimes it’s good to be a buyer, other times it’s good to be a seller.
Exactly. These were the very same people (in most cases) that had to have their big-a$$ pick up trucks and Humscalades. They had to look down upon people making far more but being a “lowly” renter.
And, these hold-outs are what will cause this massive correction to be protracted. The sense of entitlement to those paper gains is enormous. Even people who bought their homes twenty years ago for next to nothing feel extreme bitterness as dropping the price only slightly from what their neighbors’ house sold for last year.
Maybe I’m just bitter. But my wife and I have tried to be smart about money: living below our means and renting rather than buying when the economics just don’t make sense. If we end up buying in several years at the expense of some FB or speculator, so be it…we are not the ones that doctored our household income to get a loan or pulled out massive dollars from our HELOC just to be “better” than everyone else.
I have to disagree, their greed and stupidity effects everyone. We will be paying for this for years to come. So let’s have some fun at their expense.
Weenie?
“Weenie is a very sensitive guy, and it angers and saddens him that everyone isn’t just as sensitive as he. …Though he seldom comes into personal contact with the working classes, he keenly feels the pain of their oppression nonetheless”
Funny- but-useful site.
“But, really, these howls of joy at the fact that ordinary people–who don’t pay close attention to housing markets–are getting screwed is beneath the board. ”
A couple that’s been living in their house for 44 years and can’t get asking price for it are getting “screwed”?
Spot on. Reveling in other people’s misfortunes will only come back to bite you…
Be happy that you are in the situation to relax and not worry…but pray for those who might be in a situation that is extremely hard on them…
These members of the REIC had NO PROBLEM finding GF’s for their “deals”. Now we must feel sorry for them. F-THat!
“And besides, the emotional wear-and-tear of dealing with the unsold house was just too great”, says Ben.
What a bunch on pansies!
They’ve been running the buy-versus-rent numbers over at boston.com’s RE discussion board. The bottom line is that rents in Boston run about 60 cents to the dollar compared to the cost of buying now, even after Boston’s recent 15% “correction.” Here’s one example for a 1BR condo that rents for about $1300 (comparing on craigslist):
1300/2250 = 0.57778. Ouch.
And Zandi says that Boston has bottomed out. Right.
“In Rockville Centre, (broker) Liz Wallace says ‘the market has dipped,’ and that is especially likely to affect recent buyers who need to move. ‘if they bought in the last two years and paid top dollar, with 5 or 10 percent down, the sale price of the house in this market may not cover what they owe the bank.’ Such owners, she says, ‘would be more apt to rent’ out their house than offer a painfully low price to choosy buyers.”
Downpayments are so 20th Century…
“According to Wellesley resident Karl Case, a nationally known real estate expert who teaches economics at Wellesley College, the decline in demand is being matched by seller resistance, and the sellers are holding out for what they think the property is worth. Furthermore, he said, the market is close to becoming illiquid, that is, properties are just not trading hands like they were.”
Case is Robert Shiller’s collaborator and co-developer of the Case-Shiller-Weiss (CSW) repeat sales index of home prices. Normally when the stock market becomes illiquid, prices go into a free fall and electronic circuit breakers are triggered to halt program trading from dumping more shares (= inventory) onto the market, but maybe the housing market is different (no electronic circuit breakers).
I posted something on here over a year ago by Scott Reamer on Minyanville explaining how this very thing would work out. Gotta love Minyanville and the professors on there. They’re way ahead of this stuff.
illiquid: I think that describes the 1980 housing market crash in the Netherlands. After a few years of speculation, suddenly the bottom fell out of the market and buyers disappeared. Those who had to sell were out of luck, average home prices dropped 40% in 1.5 years. A friend of mine purchased a very nice, brand new home with more than 50% discount. And I should add that it took about 10 years before home prices started to rise again (for the biggest housing bubble in history).
Of course, that was before the great Greenspan, Bernanke and Trichet so it’s anyones guess if it can happen again.
There is a mini rental mania; large rental complexes are 95-99% occupied (e.g., Archstone). Many folks prefer to not rent ‘inventory’, since the owners can choose to sell….either any time (think of the inconveniences a renter has to suffer through this process) or at the end of a 1-year lease (the norm); renters then have to move again….while allowing prospective buyers in during the last few stressful weeks. Given that moving is one of the most stressful events one can encounter, renters like to know they have the option to rent ‘indefinitely’, should market conditions dictate it. Many, many renters are potential buyers waiting for prices to drop.
I just returned to SOCAL and was talking to a buddy who has wanted to sell his home in Temecula, it has been on the market since June he has his 3rd person come to view his home 2 days ago. 3 showings in almost 5 months- I’ll say that is illiquid!! I also went running around the new construction where there are 4 develpopments in Oceanside. I saw 2 dozen homes that were completely built but were still available. There were at least 4 dozen homes in various stages of construction. It is amazing the shift in the market since I left SOCAL 7 months ago
I can’t imagine the traffic coming south from Oceanside getting any worse. It is bumper-to-bumper at 4 a.m. on a weekday morning.
Shakes: Where are these developments in Oceanside?
Arrowwood is the development. Montemar, Buckingham, Bellingham and one other I can’t think of. Richmond American and KB homes are the builders
Thanks
For God’s sake, the Schwartz clan bought this house 44 years ago…It should be paid for by now!!…What have these two psychotic assmonkeys been doing with their money(and lots of it)?
According to the article, it IS paid for. They just don’t want to sell for less than they dream it is “worth”.
Keep on dreaming, bozos. You’ll wake up with a big hangover one of these days!
“Close to becoming illiquid”!?!?!?!?
Liquid means “readily converted to cash”, i.e. immediately turn your asset to greenbacks.
REIT shares are liquid, stocks are liquid, bonds are liquid.
Real Estate IS illiquid! It is a KEY feature of the asset class! This is why non-sophisticated individuals should not be investing in real estate–they don’t fundamentally understand it.
“Real Estate IS illiquid!”
This depends on your preferred definition of liquidity. The MIT Dictionary of Modern Economics offers two:
1) An asset is the more liquid the more readily — in terms of time and other transactions costs involved — it may be converted into money.
2) The second characteristic of liquidity, emphasized more strongly in recent times, is degree of freedom from the risk of fluctuation in capital value (in monetary terms).
By definition 1), housing is almost as liquid as any other asset — just ask anyone who has ever sold a home by absolute auction (the kind w/o a reserve price). The problem at the moment is with definition 2), as sellers are having a hard time dealing with the fact that market prices have fluctuated down to a level they never anticipated could be attained, given that “real estate always goes up.”
By any definition housing is grosslly illiquid. By time, by transaction documentation, by transaction costs, by unreliability of transaction price and by unreliability of completion of a transaction (buyers backing out). An absolute auction my generate “liquidity”, yes, but often risks realizing either a ludicrous, relative value, or no value (after costs).
And the problem with definition 2 is not with a sellers price EXPECTATION but with the price that is realized. Any asset that you have to place in a market that has severe limitations (by geography or time for example in any auction) will not offer a good opportunity to capitalize on the potential current market value of the asset.
The assumption of “liquidity” is that you can effect a transaction relatively easily, quickly and near the prevailing value of the asset.
An auction will effect “liquidation” but it is clearly a tool of last resort (in a weak market) to liquidate an asset at a price reasonably close to its “market” value.
Read definition 1) again.
The posterboy for liquid is M1 - cash and checkable deposits: everybody will take it right this second at full value. So liquidity has to do with discount from market value and how long it takes to get your money. Discount from market value has to do with such things as intermediaries and information transfer. Sure you can sell a house at auction, but even that takes time and it may not result in a very perfect market. After that, you may or may not get paid, and you may have to wait a long time.
I’d say real estate is pretty damned illiquid. And destined to get a lot more so.
Exactly. Pretty damned illiquid is right, especially now. Even in the best of times here, when you could put your house on the market and have an offer in hand by tomorrow, or at latest by end-of-week, it still almost always took a month to actually get the sale done and the cash in hand/bank.
If the alternative to show liquidity is to resort to an absolute auction where the price you get double-digit percent less than via normal methods of sale, that is a definite indication of *illiquidity*. And like Paul in Jax says, even that takes time (e.g. days). Nothing at all like M1. And it’s not even like buying/selling stock, where transactions are fast and “spreads” are small.
“Even in the best of times here, when you could put your house on the market and have an offer in hand by tomorrow, or at latest by end-of-week, it still almost always took a month to actually get the sale done and the cash in hand/bank.”
You guys don’t get it. You can sell any house in an afternoon if you are willing to accept the auction price. The problem is, most sellers are not willing or able to lower their homes to a price where the homes will sell. Liquidity is a red herring, unless you are worried about definition 2) (uncertainty about the market price). End of story.
No we do get it. If there is a tradeoff between a quick sale and the best price, an asset is illiquid. With a liquid asset there is no price penalty for a quick sale.
OK — I will wave the white flag, yogurt!
That was a refreshingly polite exchange.
I have noticed that only trolls tend to go for the impolite angle (like Northeaster — haven’t seen his posts since the big reported Mass price drop shot down his “flat earth” theory…).
Technically–you are correct. There are various degrees of “liquid”.
One very important feature of “liquidity” that is not covered by the MIT definition is that liquid assets should be readily convertible into cash without a significant loss of principal (high transaction costs, discounts for illiquidity, etc.). With your auction process, you are taking a 10% hit to your assets actual value just to get out of the asset.
As the universe of investments go, and as most people I know think of investing, real estate is (on the scale of least liquid to most liquid) among the least liquid of assets. Granted, housing is the most liquid among various types of real estate (unentitled land being the most illiquid), but none-the-less, still significantly less liquid even in normal times than most other available investments.
“As the universe of investments go, and as most people I know think of investing, real estate is (on the scale of least liquid to most liquid) among the least liquid of assets.”
It seemed to be among the most liquid fall 2004 when everything sold above list price to the highest of multiple bids. D’ya think the degree of real estate liquidity might possibly have something to do with price trajectory?
“These times, they are a’ changing…”
Well no. Multiple bids above list price indicate a lack of knowledge about true market price. That’s an indication of illiquidity.
Granted the housing market was more liquid back then than today.
This doesn’t happen in truly liquid markets like stocks and bonds. Indeed liquid markets don’t have a “list price” at all, only bid/ask.
“Well no. Multiple bids above list price indicate a lack of knowledge about true market price. That’s an indication of illiquidity.”
That depends. We knew we were under market — wanted to spark a bid war and did.
The 3rd Qty GDP numbers tell us that the fast-sleek-US RE based economy has lost its wheels.
She says the sellers have come down in price, ‘but there’s a point where they want to stop. And they figure they’ll rent it and get an income from it, and when the market gets better, they’ll put it up for sale again.’”
Hmmmm. There seems to be a lot of unfounded assumptions going on here. First these people can find a tennant willing to pay $3000 and second holding on will get a better price later. I am all but certain prices will be much lower later and these folks will be in trouble.
and they also assume the dozens of other property owners they are currently competing with won’t do (or try) exactly the same thing.
That’s why, the moment there even appears to be a “bounce” in the market, supply will come pouring out. What will ensue then is the next “leg” down. The only thing I wonder is what could possibly occur that would create even a bounce under these conditions?
‘Our intention is still to sell it,’ she says. ‘[But] we can’t carry two houses, and the rental will help with some of the expenses.’
Has the entire country lost all sense of risk? Who signs for a second mortgage if they can’t cover both payments?!?!?!?! All debt entails some risk - if you can’t deal with the risk don’t do it. Counting on selling the first house quickly because there is no way you can cover both mortgages is risky no matter how ‘hot’ the market is. Who loaned these knuckleheads the money for the second house? Has LTV and debt ratio become old school also?
Has LTV and debt ratio become old school also?
Absolutely.
(But what goes around . . .)
in Netherlands most of the banks offer special mortgage rates for knuckleheads like this; for the first 1-2 years the mortgage rate for the second home is just 1% or so. Of course this is the perfect incentive for home owners to stick to their ridiculous asking prices.
“Has the entire country lost all sense of risk?”
Lost sense of risk (and missing risk premiums) = essence of The Conundrum.
“History has not dealt kindly with the aftermath of protracted periods of low risk premiums.”
http://www.economist.com/finance/displaystory.cfm?story_id=4352087
Look at the goons in the background of the photo. How many bodyguards does one retired chairman need?
The photo was from Sept 05 (pre-retirement) and the goons are likely fellow economists…
One more time - the house they are trying to sell is paid for. These idiots are going into debt, and increasing their exposure to RE, in a falling market.
They should have just stayed in the first house, if they couldn’t get what they wanted.
Somewhere Saint Joseph rolls over in grave….
No sympathy at all for these people. If they were smart, they would have made the offer on their new house contingent upon selling their old one, or sold their existing house FIRST (duh!) and rented an apt. with their stuff in storage while they shopped for a new place. How presumptious of them to think that they would have no problem selling their existing house. I’m truly amazed at how many of these 2-house ‘horror’ stories I have been reading on various RE blogs–hello, people, YOU are the ones who created the artificially-high demand (and hence prices), and now you’re crying because you can get rid of (often paid-off) house #1 (at a 500% profit)–waaaah!
“And more and more sellers are burying statues of St. Joseph. ‘Basically, when the market is really bad, people will try anything,’
Except lowering the price of course. Because that NEVER works. Freaking A people, how long is this crap going to go on?
Hey Ben,
I was surprised to see a post from the Main Line Times…you really do leave no stone unturned in bringing us the most up-to-date bubble info…
In that article Ted Moser, builder extraordinaire, dismisses the idea of a housing bubble. Of course he would. He is sitting pretty from the buckets of $$$ he made 2001- present. Right now, he’s watching land prices go down, and waiting til they’re low enough before he seals some sweet deals.
But of course that’s just between him and his accountant…
“Sheila Kassay says there’s been a change in the sort of person renting out a house. In the past, those putting homes up for rent were often investors. ‘In the last six months,’ she says, ‘we started seeing people who really had no intention of renting their home choosing to rent, because it’s sitting empty and they’re paying two mortgages.’”
I wonder if H&R Block could be an unexpected beneficiary of the housing bust. More non-investors forced to rent out properties = more complicated tax returns = more business for tax preparers.
More capital losses, too. “Whaddya mean, I can only write off $3,000 a year?”
Actually, rental income/loss is not a capital gain/loss. It’s considered passive income with special rules, i.e. you may be able to write off a passive rental loss without a passive gain of some sort. As long as you don’t earn over $125,000 a year you can take your full loss. So if your rent is 12,000 and your expenses 24,000 you can take the 12,000 losss against other income including earned and capital income. After 125,000 there is a phase out and no losses allowed after 150,000.
Personally I’d rather have passive income and pay the taxes.
Yep, my saying for those who are always saying “But I NEED the tax deduction” (for mortgage interest) is “I’d rather pay taxes on interest I receive, than not pay taxes on interest if pay.”