“Going Through The Great Correction”
The New Mexico Business Weekly. “Albuquerque’s housing market peaked in July, according to sales data. After merely slowing in July and August, sales took a dive in September, when home sales were down 17 percent compared to the same month in 2005. Perhaps more ominous than slowing sales, or possibly because of them, is the increasing number of for-sale signs sprouting in front of everything from Westside tract homes to custom-built residences in the NE Heights.”
“The inventory of existing homes on the market went from 2,319 a year ago to nearly 4,700 this October, according to the Albuquerque Metropolitan Board of Realtors.”
“Some solace can be found in the fact that prices are apparently holding. But agents say prices are now dropping, especially at the luxury-end of the market above $500,000. Anything over $1 million is an especially tough sell. Buyers are moving to the sidelines, agents say, and are waiting to see where the market bottoms.”
“‘The last couple of years, you could place a sign out front and it sold. With twice the number of properties on the market now, sellers have to price it right and it has to be in great condition,’ said Greg Lobberegt, an agent who works the NE Heights.”
“National influences are taking the steam out of housing here. Increases in mortgage rates have taken some buyers out of the market, but there other issues. Speculative investors who were buying up homes in Westside subdivisions are disappearing, moving on to Texas where starter homes are cheaper and appreciation might be higher, brokers say.”
“California’s weak market also is hurting Albuquerque. People there can’t sell their homes and that is reducing the flow of new residents and cash into this market, says Seth Jacob, a veteran East Mountain agent who brokered several sales to Californians earlier this year.”
“‘I just lowered the price of two of my listings in the NE Heights and in the mountains. I’ve seen a lot of price reductions, particularly in the higher price ranges. Things are sitting longer,’ Jacob says.”
“Bankers also are seeing the slowdown. ‘We’re entering a challenging environment right now. The more people read the national media stories about the housing downturn, the more they shy away from making commitments. The more stories they do, the more the consumer says, ‘I ought to wait if the market has peaked,’ Charter Bank’s Lyle Greenberg says.”
“Developers plan thousands of new residences over the next five years, especially along the I-25 corridor. Real estate agents are hoping that banks put the brakes on construction lending to slow the tide of home building. Bankers say developers will slow down if the market drops.”
“‘Demand has slowed and the builders will back off a little,’ says Rick White, head of Compass Bank’s real estate construction and development group. ‘I’d be a lot more nervous doing what I do if I was doing it in Phoenix.’”
The Denver Post. “Carly and Todd Zody got way more than they bargained for when they bought their home in the Villages at Centennial. The couple were set to buy a townhouse when KB Home offered to sell them a larger duplex in the same neighborhood for the same price, plus $30,000 in upgrades.”
“‘The base price on the duplex is $20,000 more than on the townhomes,’ Carly Zody said.”
“In the past six weeks, KB Home has sold 81 homes at discounted prices. It still has 53 homes it wants to unload at discounts of as much as $20,000 each, and it will pay closing costs. ‘We typically don’t have a lot of these,’ said Rusty Crandall, president of KB Home Colorado. ‘I think all the builders have a few more inventory homes on the market than they’d prefer because of the cancellation rates we’ve seen. There are some great values out there for customers who are interested and have the capability of moving in quickly.’”
“In addition to upgrades and other incentives, KB has been holding promotional events in all its neighborhoods, where its inventory homes are offered at sharply discounted prices.”
“The competitive homebuilding market also has caused MDC Holdings, parent of Richmond American Homes, to be much more aggressive in its incentives, particularly on already- built inventory homes, said president David Mandarich. Village Homes is likely to start offering package incentives to real estate agents to sell the inventory homes quickly, said Jennifer Lambert-Pingrey.”
From CBS 4 in Denver. “Weld County was one of the hottest housing markets in the country, until two years ago. ‘At the very best, we’re flat,’ real estate agent Matthew Revitte told CBS News correspondent Sharon Alfonsi. ‘And we could be perhaps contracting.’”
“Revitte sold many homes before oversupply and rising interest rates torpedoed the market. ‘We’ve yet to hit bottom,’ he said.”
“Homebuyers with adjustable rate mortgages faced payments they couldn’t afford. Those forced to sell couldn’t find buyers and hundreds defaulted on their loans. Now Weld County leads the nation in foreclosures, 1 in every 168 households. That’s 700 percent higher than the national average. ‘Almost overnight it’s like somebody turned the lights off,’ Revitte said. ‘Now we are going through the great correction.’”
“While the emotional toll of foreclosure is personal, the financial impact is shared. You can expect your home value to drop $10,000 or more if a neighbor defaults. ‘I don’t think the circumstances here in Weld County are that unique to what perhaps could happen in the rest of the country,’ says Revitte.”
http://phoenix.craigslist.org/rfs/227779939.htmlff off topic….but the funniest craigslist ad yet
Don’t worry the Right Buyer will come! Why? For all the same reasons we hear about in Orange County: (Bubblicious Bingo
http://phoenix.craigslist.org/rfs/227779939.html
sorry….
He is a California owner….right out of my neighborhood. Most likely a speculative buyer.
Type in the phone number on the Craigslist search bar and there are 17 ads for various houses.
The great thing about tracking the FB’s in AZ is that the Maricopa County Recorder’s office has a website where they tell you who owns the place, how much they paid for it, AND the most recent comps that actually sold.
http://www.maricopa.gov/Assessor/ParcelApplication/Default.aspx
This guy paid $265K for this house and is asking $380K.
Watch for fraud here. He is setting up for his straw buyer.
They’ll split the 120K and let the house goes to foreclosure.
must be a realtor or property manager trying to unload customers “investments” there’s different contact names. That or some chump is REALLY SCCRREEWWED!
He is a realtor(tm). The email address @kw.com maps to realtor website. At least have the decency to make up a fake yahoo address for this sort of thing.
Nice garage. Oh, there’s a house attached to that too?
God, pig snouts are ugly.
Pretty soon you will be able to get a free house when you buy a car. GM has to move inventory, just like everyone else.
Or just go into the town you like and pull the boards off the windows of your choice. Bank won’t mind, at least someone’s watching the place!
Hah hah - change the appliance color to “harvest” and that’s the same basic kitchen layout and cabinets in my parents no-frills 1973 Pulte home (they’re still there, God bless ‘em).
Ugh! Don’t open up your freezer when you are going through the door. UGLY!
I thought that WAS THE DOOR!
I read articles like this one from WSJ and it appears to me that the bankers are just printing money through complicated debt instruments:
http://online.wsj.com/article_email/SB116217677563707491-lMyQjAxMDE2NjMyMDEzNzA2Wj.html
Exotic Financing = Credit Destruction = Deflation
The article follows the chain and the players in the MBS market. The main theme of the article is the use of derivatives to hedge defaults in the sub prime market. It is often asked who the bagholder will be and in the case study of the article it is Citigroup which provided the default insurance to a hedge fund. Another excellent article by Mark Whitehouse. I hope he continues with a follow up as the whole MBS-hedge fund-derivative-bagholder chain and all the angles is quite complicated to cover in depth in a single article.
Does anyone know if the WSJ’s Mark Whitehouse is the same Mark Whitehouse who was editor/journalist of the business section of the Moscow Times in the late 90’s?
Waiter, a round of counterparty failure with just a hint of systemic risk for my banker friends.
“just printing money through complicated debt instruments:”
More like “passing the grenade” to one and other and the pin is already out of it. SOMEBODY”S gonna go BOOM out of this.
There are some great values out there for customers who are interested and have the capability of moving in quickly.’”
I have the capability, but I’ll stay seated on the sidelines thanks. Oh and by the way how about a new line, this move quickly crap is getting old.
it alarms me that people like that guy in arizona is getting 23% off the listed builder price. we are barely into this this. what’s to say the next home doesn’t sell for 10% off what that guy paid?
it’s a great deal only compared to last year’s price. 23% is still nice though, if you can afford the house in the first place.
Yes, but as long as you can find a gf with a short memory and no analytical skills you can make a sale. And that’s what the game is all about now: finding that dumbass and closing the deal.
You mean as opposed to how the game is normally played, which would be “finding a dumbass and closing the deal!
Anyone with a functioning brain could see that those volume builder developments on the west side of Albuquerque (Ventanta Ranch, Rio Rancho, et al) were destined to become flipper hells. I saw someone trying to rent a bedroom out in one of those houses months ago. The Queen Creek of Albuquerque. And as for the NE side, as nice as that is, there was no reason for the prices of those places to go up 50-70% in a couple of years. Albuquerque does not have the kind of jobs to support high prices and I believe NM is one of the 3-4 poorest states in the country.
Oh Boy, There was a radio show on over the weekend pimping Albuquerque as a great investment opportunity by two shills who were clearly in cahoots with each. You can rent your houses to people who work at the military base ! Albq. never rose as much as other areas so it’s a great buy ! We have jobs ! The area is growing ! Property managers “only” charge 10% of rents and not 12% ! Even if you have to accept a lower rent than you want you can always kick the tenant out in a year and up the rent ! The houses we bought last year are up by $40K ! And since this was a call in show there were plenty of morons calling in wanting to know how to get in on the action.
Sounds like a couple of Marshall Reddick spinmeisters. that’s their classic pitch. they’ve been big on selling Albq. for a while.
Ask Casey about that. He has one of “his” (ha!) houses in Rio Rancho. The loser signed up for 500K in Flipper Hell. I think when it’s all said and done (although the house is pretty decent), the end user will pay less than half of that.
the USA today article on Casey was the best one. “Ten things not to do.” Steely Dan had “Countdown to Ecstasy” This article was “Countdown to Imbecile”
What a bunch of crappola. NM is a sh!t State. They are so poor that the government can’t afford to compel residents to have 2 license plates on their cars. NM doesn’t even have speed reflectors on freeway lanes :/
Even Oprah stated on her “Oprah & Gail’s Big Adventure:” “We’re in New Mexico?!? When did that happen?”
You are totally right, txchick. The reason, imo, that prices are artifically high in that part of ALB is due entirely to the influx of Californians. ALB is not worth those prices. ALB is # 279 out of 371 on the “Safest Cities in the US” list. According to this list from the FBI, it is safer to live in El Paso, TX or Lancaster, CA than ALB.
But, you can go to the eastern part of ALB and its like CA there: a Trader Joe’s, a Whole Foods, a TJ Maxx, you name it.
I don’t feel sorry for the builders at all. They are still, even with the incentives, making out like bandits. Nearly all of them employ illegal labor ($10/hr) or green carders. The profit margins are something like 35k per house and that’s on the lower end. With high-end homes, their profit margins are even greater. That’s why you see so many ridiculously priced homes that few can actually afford. (How many Americans make $400k a year?)
“California’s weak market also is hurting Albuquerque. People there can’t sell their homes and that is reducing the flow of new residents and cash into this market,”
Yes, but does Albuquerque really want hordes of Californian equity locusts descending on it?
Suffer the pain now and get over it, Alby. You’ll be better off in the long run.
What do you mean, do they want them (Cali locusts?). They are the only reason for any of the building or appreciation in Albuquerque. The locals can’t afford or buy those houses!
That’s why the sooner they stop coming the sooner the music stops and maybe, just maybe, the locals might one day be able to afford a (reduced price with huge incentives) home.
Don’t worry…most Californians will be out of equity soon….
many already are on E for ‘empty’
“moving on to Texas where starter homes are cheaper and appreciation might be higher, brokers say.”
Ho Ho, Ha Ha, He He
Landlord City, here they come!
If you’ll recall, when fortune mag did a followup one the 23 year old that had bought 14 houses, and never seen 11 of them, he said he would be alright because he had moved into Alby. I think that was fall, 2005.
No offence to those of you from California, but far too many nice smaller towns and cities have been ruined by “Californication” over the past couple of years. I looked into relocating and liked Boise and Bend, Or. Bend in particular, but eventually decided not to because I didn’;t like what I saw happening. And I’m not just talking about the real estate, but the whole general attitude of style over substance, me first, etc. etc..
yeah,they moved here from new jersey,f’d it up and are moving on,i can remember the sf bay area with one area code and less than 1.5 m total population for the 9 counties.
Californication aside, what is really sad (and surprising) is that the local sellers and realtors are so willing to “cash in” on Californians and thus make housing unaffordable for locals. These Sellers and Realtors are just sick.
Excuse me, high prices are caused by excess demand, not excess supply. If more people refused to sell prices would be even higher.
“‘The last couple of years, you could place a sign out front and it sold. With twice the number of properties on the market now, sellers have to price it right and it has to be in great condition,’ said Greg Lobberegt, an agent who works the NE Heights.”
Twice the number of properties? Seems like more than that. He also fails to mention there are 1/10th the number of buyers.
Judicious — good point. These people never acknowledge that inventory did not rise versus a static buyer base — the base itself declined, at a minimum by the volume of almost all speculators, and that magnifies the disconnect.
“Weld County was one of the hottest housing markets in the country, until two years ago. ‘At the very best, we’re flat,’ real estate agent Matthew Revitte told CBS News correspondent Sharon Alfonsi. ‘And we could be perhaps contracting.’”
Do ya think?
“Revitte sold many homes before oversupply and rising interest rates torpedoed the market. ‘We’ve yet to hit bottom,’ he said.”
Correct!!!!!!
“Homebuyers with adjustable rate mortgages faced payments they couldn’t afford. Those forced to sell couldn’t find buyers and hundreds defaulted on their loans. Now Weld County leads the nation in foreclosures, 1 in every 168 households. That’s 700 percent higher than the national average. ‘Almost overnight it’s like somebody turned the lights off,’ Revitte said. ‘Now we are going through the great correction.’”
Yep, the old “great correction”
And damn it, somebody turned the lights off as well.
Ok Matt, no worries, I’ll see ya at the bottom.
“While the emotional toll of foreclosure is personal, the financial impact is shared. You can expect your home value to drop $10,000 or more if a neighbor defaults.”
I don’t understand this. Can someone explain the above. Is it simply because the bank’s firesale will lower the mean?
If the home next door to you is identicle in age and size, is sold for $10,000 less than yours it becomes the newest comparable sale (”comp”) in your neighborhood.
If you were to try and refinance or sell your home and an (honest, reputable) appraiser were to appraise it he would have to take that lower sales price into consideration when determining your home’s value and re-evaluate your home’s worth accordingly.
Anybody read CNN.com top 10 places not to buy.
The more amusing article was last week’s “5 bubble-proof markets” — SF, Boston, NYC, LA, Seattle…
The equity locust running up prices that will crash . I’m getting so sick of the speculative mania destroying the price in many towns in America .
Market price is suppose to be what a willing and able buyer will pay . I think what should be added to that is Market price is what a willing and able buyer can pay for long term without lying on their loan application .
And many more towns and neighborhoods will be ruined too I’m afraid. Capital behaves just like electricity - it flows to the places with the greatest difference of potential and the least resistance. The previously affordable towns and neighborhoods you refer to function like lightning rods for RE capital - that’s where the most can be made from the least.
Before this thing shakes out we will see some pretty amazing changes to our national and local landscapes - abandoned subdivisions, subsidized housing pits, disinvested neighborhoods, etc., etc.
Who are all the buyers on the sidelines that these articles keep talking about. Last I looked 70% of Americans own homes. Have they been calling around to pole buyers and if they have where are the pole numbers? This cracks me up everytime I hear about the buyers waiting on th sidelines.
I think the verb you were looking for is “cane”, not pole.
shaft, the term is shaft!
I think the buyers in 2004 and 2005 were getting “poled”, right up the keisters. Buyers are now being “polled” and they have responded that their keisters are “exit only”. That is bad news for all of those fellows that were doing the “pole-ing” and are now on the other side of the “pole”. They have found out that the pole consistently has a “for sale” sign attached to it.
Another blame the media quote. Can someone wake me up when someone in the REIC acknowledges the fact that in most bubble markets affordability is almost non-existent? Classic blame the messenger strategy.
“Bankers also are seeing the slowdown. ‘We’re entering a challenging environment right now. The more people read the national media stories about the housing downturn, the more they shy away from making commitments. The more stories they do, the more the consumer says, ‘I ought to wait if the market has peaked,’ Charter Bank’s Lyle Greenberg says.”
Well to be fair, the only reason the national media is writing about the “Housing Downturn” is because there IS a “Housing Downturn!” I guess they could blame public schools for teaching (some) people how to read. Maybe we just need a moratorium on education in general to solve this little problem.
Lobotomies for everyone! Yeah, that’ll solve the problem.
I think that there probably is some truth to his comment that as more people read MSM stories about the housing downturn, the more they shy away from buying. There are obviously other factors (affordability, exhaustion, etc.) in play here, too, as the slowdown started when the MSM was still cheerleading. But the sheeple are usually slow to change their minds, so the more stories there are about the bubble bursting the more they will sour on RE. All part of the process of bursting bubbles. And the MSM will continue to print articles on the bursting bubble, regardless of what the REIC wants, because sob stories (like foreclosures) sell papers and attract viewers. So, I personally don’t care how much they try to blame the media (which they clearly are trying to do), as long as the bust keeps coming and the last of the GFs understand that RE is a terrible investment right now. Then we’ll just move on to the knife catchers.
Just like a certain guy who likes to create his own reality keeps blaming the media for his problems. The US has got a giant reality check coming, and it’s not going to be pleasant.
http://maps.google.com/maps?li=rwp&q=1450+CLUBHILL+DR,+ROCKWALL,+TX+75087&ie=UTF8&z=18&ll=32.947088,-96.478254&spn=0.003264,0.00824&t=h&om=0
Does anyone remember this FB, from the old FC days?
Does it belong to Joe Wang ?
Do you know him?!!
Or maybe Wa Ho?
“Who are all the buyers on the sidelines that these articles keep talking about.”
I’m one of them. I read this blog for many months and based on your collective wisdom, sold my house at the peak of the boom. Now I’m in an apartment waiting on the sidelines. Let me know when to jump in (prefer western Oregon or Washington ). Thanks for great info!
Any idea of the % change in your previous home’s value as of today?
Albuquerque is a nice place to live. The best part of town is the NE Heights. I agree that the west side of the city is way overbuilt and will go down. Also, quality of houses built in the last few yrs is like everywhere else, shitty. When I moved here, I figured the west would be bad, and bought in the NE Heights. Our home has gone up 25K from April to Oct. Now if it goes down, oh well.
Having moved out of Albuquerque 07/06 after living there for two years this comes as no surprise. I worked one of the better jobs. You have a choice of two there, the University of New Mexico and Sandia Labs. The rentals I had was very nice, quiet and very inexpensive. To buy a house on the other hand was not going to happen. I could not afford to buy based on 3.5 times income. The few houses I did look at in NE Heights were in need of extensive repair and were in the 200k range.
While Albuquerque looked good on the surface when I moved there.
It looks totally different when you get into the details. Rt 66 east into the foothills is a pit. Rt 66 west of Old town is a pit. Top that off with Florida style empty and abandoned strip malls throughout the city, along with bubble gum laddened sidewalks and your view of Albuquerque rapidly changes.
The Albequerque data came out on October 10th, and the Lawler Economic & Housing Consulting report discussed the results in its October 11th daily report.
I actually like Albuquerque.
That being said, you couldn’t pay me to live on the west side of town. The development out there doesn’t look all that different than what’s being built in CA, AZ, FL. The rest of the city at least has some character.
The Californication of ABQ continues with the opening of ABQ Uptown tomorrow. It’s one of those “lifestyle” malls with New Mexico’s first Pottery Barn.
I like the way of life here. The pace suits me. It’s not for everybody, though.
The market has slowed down quite a bit. Last year if a place went on the market in my neighborhood (near Nob Hill), they were snapped up in a matter of days. Right now there are 3 places for sale on my street and they’ve been on the market for months. It’s insane that places that sold for the low 100s a few years ago are now listed in the low 300s.