New Home Auctions “The Deal Of A Lifetime”
The Chicago Sun Times reports from Illinois. “Home sellers in Chicago’s flagging housing market who are turning to auctions to unload their properties learned from a West Rogers Park auction that buyers will show up with checkbooks ready if the prices are right. About 75 would-be bidders were at a recent auction and watched as two new luxury houses, originally listed for $899,000, were bought for prices in the low $600,000s.”
“‘The ones that sold were in the low $600,000s,’ auctioneer Rick Levin said. ‘Then prices dropped below that, so the seller had the right to stop selling. This is consistent with what has been happening for the last seven or eight months.’”
“About three times as many anxious real estate sellers have asked the auctioneer for help moving their homes this year compared with last year, he said. Many are builders with a few units to move in a development or building. Others have luxury homes that are in less demand, he said.”
“Levin said the 75 people who attended the auction Wednesday ‘had come to buy,’ but the sellers were hesitant to sell at low enough prices. Said Levin, ‘The bet the developers were making was that the market would be better next year.’”
The Detroit Free Press. “In a dramatic sign of southeast Michigan’s lagging housing market, properties with opening bids as low as $30,000 will be offered Sunday in what is believed to be the largest-ever auction of its kind in Michigan.”
“Neumann Homes, a Chicago-based builder with extensive operations in Michigan, is trying to recoup its investment in the area by conducting a one-day auction of 87 homes, lots and condos in nine communities.”
“‘Every builder in the U.S. is facing a downturn, and everybody is left with excess inventory,’ said Laurie Tarver, division president for Neumann Homes in Michigan. ‘The bottom line is, no builder wants to do an auction, because it means you need to get the return quicker than you wanted.’”
“Neumann is putting 23 single-family homes, 24 condos and 40 building sites up for auction, including luxury homes and condos in Rochester Hills, Clarkston, Highland Township, Lake Orion, South Lyon, Milford, Southfield, Pontiac and Novi. Minimum opening bids will range from $30,000 to $200,000.”
“‘The advantage of having an auction as a builder is you have the opportunity to sell a lot of property in one day,’ Tarver said. ‘For consumers, it’s the deal of a lifetime. It’s definitely a buyers market.’”
“Bids for 21 of the homes, condos and lots will be sold on an absolute basis, meaning that they will be sold at the highest bid, regardless of the seller’s desired minimum bid.”
“Other Michigan builders are considering similar auctions. Jim Babcock, president of the Building Industry Association of Southeastern Michigan, recently put up for auction homes he built in Monroe. ‘It’s no secret that new home sales are slowing down and our members are doing all types of things to be creative and move product,’ he said. ‘Auctions are becoming more common.’”
“Permits in southeastern Michigan have fallen from 24,359 in 2004 to 7,429 for the first eight months of this year. But even as developers find it more difficult to sell properties, they say the downturn in the housing market is temporary and Michigan will be on the mend by 2008.”
“‘I think we’re right around the bottom of this cycle,’ said Robert Filka, CEO of the Michigan Association of Home Builders. ‘It will probably take another 12 to 18 months before things start to pick back up.’”
I’m glad the builders are auctioning the homes instead of letting them sit vacant .It really tells you that those builder don’t think we are going to have a turn-a-around in the market soon .
Question is - will the buyers of these homes actually occupy them?
good point
Sounds like a sucker’s auction where the sellers can refuse to sell if the price is too low.
This really tells you that the builders are trying very hard not to hold on to their own falling knives on the way down, and that they don’t actually believe the “market has bottomed” BS that many REIC players keep repeating in MSM reports.
“‘I think we’re right around the bottom of this cycle,’ said Robert Filka, CEO of the Michigan Association of Home Builders. ‘It will probably take another 12 to 18 months before things start to pick back up.’”
———————————————————————-
You havent seen anything yet honey! Wait and see as prices go down down down down….
More great news.
http://biz.yahoo.com/ap/061117/economy.html?.v=6
OMG
I put these quotes together from that article.
“The monthly survey of builder sentiment edged up slightly in early November following another small increase in October. It marked the first back-to-back improvements in builder sentiment since June 2005.
The level of building activity in October was 27.4 percent below activity in October 2005, the biggest year-over-year decline since March 1991.
The drop in construction was led by a 26.4 percent decline in the South. Construction fell by 11.7 percent in the Midwest and was down 2.1 percent in the West.”
So, is builder sentiment and the words of CEO’s of Toll House, and the others completely disconnected????? WTF?
Then look at the next two. How can construction be down overall 27.4%, but be LED by the south @ 26.4%? Someone F***ED up the numbers. I would believe the 27.4%, but nothing else. Especially when you take into account their bogus 31% increase in the NE. Whatever.
Agreed. Those NE and S numbers are a bit puzzling. Maybe the S is where the largest excess inventory is sitting.
Ha. Just remember, there are lies, damned lies, and statistics.
I like how they worded this junk. It says things like “deal of a lifetime” and “opening bids as low as $30,000″. Uh, the $30K is going to be for BUILDING LOTS, not for homes. I hope more people can read between the lines.
You never know, Pontiac isn’t the best of locations for a property… I wouldn’t be surprised if they had condos with starting bids that low.
When I worked/lived in Michigan back in the late 90’s, my Army Guard unit was based in Pontiac. It was a dying blue collar city back then. Maybe things turned around, but I doubt it.
Good point, but they are still trying to cover. When the “range” is from 30K to 200K to START, and they are offering building lots, I think you have to assume that the 30K will be the lots. I’m sure they have way more than 30K into each condo. I don’t think they are quite ready to take losses - yet. It’s still early.
Pontiac was toast when I was a college student during the 1970s.
Michigan is dead. My dad just picked up a 2 bedroom on a large lot about 100 miles north of this area for $28k
The problem with alot of the auctions going on now is that the starting bid is NOT equal to the reserve price. Somehow the idea is that once the bidding gets going, upward momentum will eventually carry it higher, eventually above the minimum bid that the builder will accept.
An annual rate of 1.5 million units is NOT low. Low is around or under 1 million, high is closer to 2 million.
In a way, when I look at what has happend so far, the “soft landing” rhetoric is not inaccurate. Except that we haven’t landed.
I guess one could argue that Japan’s RE market has had a soft landing, but also that the landing has been going on for sixteen years now.
This will be a warmup exercise compared to next year when Ford and GM are slated to start closing some of their assembly plants in Michigan.
Don’t you think people are already starting to bail?
People have been bailing out of Michigan for YEARS, Chad.
“People have been bailing out of Michigan for YEARS, Chad.
”
Of course I know that, I was referring to the inference made that those being laid off next spring aren’t ALREADY moving out or trying to sell this fall. if I were them I wouldn’t wait another minute. That’s all I meant.
Does anyone recall the 90’s experience? My recollection is that auctions didn’t really begin until it was really clear that real estate was toast.
Doesn’t it seem that jumping to auctions this time, seemingly right at the begining of this down cycle is unusual?
And what does it mean when sellers move from mere gimmicks to outright auctions almost immediately? As many have remarked here, it seems the “pros” (builders) are like pro stock traders; quick to take their loss and move on. So the question is; if we’ve moved past gimmicks into auctions already what can we expect next (and how soon)?
Isn’t the use of auctions (many of which aren’t even successful at clearing property) at this seemingly early stage a pretty big, very bad, sign?
In Chicago it is a huge surprise. Let’s see if the Tribune picks up on it.
The Trib’s coverage of RE in general has been more comprehensive than the Sun Times. CST barely covers RE at all.
I posted the CST article on a Chicago RE cheerleader board and someone shot back that the selling at auction in the low $600’s doesn’t count as a comp so it doesn’t hurt local vaules. I don’t think so!!!
According to the Chicago area MLS, these properties had been marketed since the middle of 2005 and only one had sold through the MLS prior to the auction, for $799,000 in May 06(ouch!).
As someone else mentioned above, i don’t know if the auction speaks to the weakness in the general market as much as it does to the weakness of this particular small development. These houses were not selling in the high $800,000s at the peak - they weren’t selling at all, in fact. It was a failed project in a neighborhood that wasn’t really ready for this product at this price point. I wouldn’t try to extrapolate the condition of the entire market based on this particular development/auction.
These houses were most recently priced on the MLS at $799,000. The auction buyers’ true price is, say, $620,000 plus 10% auction premium = $682,000. These houses weren’t moving at $799,000, so my guess is the developer is very pleased with the results. The buyers got a modest discount versus what they might have paid to the developer had they gone through the MLS.
That said, i would NOT want to be the lone purchaser at $799,900. Poor things will be under water for YEARS!!!!
That was my point about the auction price still being a comp. If you bought at $799 and now they are being auctioned off at $620 the buyer at $799 just got all is equity taken away even if he did put 20% down. If the guy that bought at $799 wanted to get out he wouldn’t get $799 for his place. He’d be lucky to get in the mid $600’s. That’s a comp to me.
I think it’s appropriate to use an auction sale as a comp as long as the seller isn’t distressed. After all, an auction is just another marketing tool. However, if the seller is distressed (foreclosure, etc), you could still use an auction sale as a comp but you would need to make an adjustment to the sale for this factor.
As a comp it would be a sale price of $680,000 (hammer price plus premium), not $620,000. That’s what the buyer was willing to pay for it. But keep in mind that the $799,000 is still a comp. I wouldn’t want to be the appraiser on the remaining two houses.
I’ll try to follow the sale prices for the remaining two units and see what they sell for - should be interesting.
They won’t - at least not right away. For the next six months they have the “seasonal” card to play to aid in damage control. I’m right down the street from West Rodgers Park, and from the looks of things Chicago will not be as immune from this as many have thought so far. For the past two years I’ve been assembling information on the condo market in nearby Edgewater as part of my graduate research - the ominous signs are becoming more plentiful. Several large projects are delayed, and what has been built is now being marketed with the usual incentives. The biggest I’ve seen so far are free parking spaces with unit purchase - spaces that were going for $35k this past spring. By spring, however, it will get really interesting around here - and my classes will be over so I can record the real fireworks when they come to this neck of the woods.
Sorry - Rogers - not Rodgers - I should know better!
$35K for a parking space? You can get one downtown for half that. You can rent one for under $200/month. This is DOWNTOWN! Where there are office buildings and stuff.
Pastethebubbly - you can’t touch a parking spot in the Near North Side or Loop in the teens. They range from $25,000 (south loop) to over $80,000 (lake point tower). My rental spot is $285 per month at my office in the Loop, and that’s because I walk a couple of blocks - across the street is $400 and if i want heated (nice amenity in Chicago) it’s in the $500’s.
OK, I actually haven’t owned a car here in five or six years. I’ve seen people recently advertising spaces in my building (Gold Coast, N. Dearborn) in the low $200s. I just ASSumed with some diligence one could find something for cheaper.
I still assert $35K for a space in Rogers Park should make one question living there, because it is much more difficult to live up there w/o a car than down here.
edgewater: “the seasonal card” will be the psychological support for the next six months. We are dealing with herd mentality, watch out when the herd changes course.
God bless America!
They’re probably still making money even at the auction prices.
Agree with your last statement - IMO it’s a sign that this downturn will be much worse that previous downturns in the housing market.
spot on, these people are catching a falling knife. even the winners “in the low 600’s” are probably under water as we speak.
Yes, I agree ,this is really early in the game for auctions .Smart for a builder to do it while the media is still sending mixed signals .
Don’t underestimate the inability of some builders to project and manage cash flow. To pay bills and avoid BK, some builders need to liquidate inventory yesterday. Absolute equals must sell equals generate cash or die!
“My recollection is that auctions didn’t really begin until it was really clear that real estate was toast.”
The logical conclusion: It is really clear the real estate market is toast, even though the cycle just turned a few months back. So it is different this time, and the landing will be harder than in the early 1990s.
By now the builders know it’s toast. That much is certain.
I went to a well-advertised public auction of RE in spring of 1992, but the property was junk. Small lots in REALLY out-of-the-way places, mostly in the desert. Nothing like actual houses. Definitely an attempt to bag some suckers. I doubt that any of the properties sold in that auction would’ve become truly marketable even in the mania of 2003-05.
WTF ?
can someone explain
‘Then prices dropped below that, so the seller had the right to stop selling. This is consistent with what has been happening for the last seven or eight months.’”
Maybe Chicago is a year behind Michigan?
No, only an hour.
Ben, I think it has more to do with the heavy job loses that MI has sustained. Chicago’s job market has been solid, not great, just solid. I think that has slowed the inevitable housing bust but it won’t prevent it…obviously.
Yes, our F.I.R.E. jobs are saving us in Chicago - so far. But the ugly stories coming out of MI, OH, IN and downstate are unsettling. I mapped a good chunk of the Upper Midwest a few years back and the situation in the small towns was bad even then. The big question is whether or not the exodus from those small towns will maintain the demand for housing in Chicago. If that demand falters - or the F.I.R.E. jobs start drying up - or both - things will get get real hairy real fast - especially with regards to the condos.
“can someone explain ‘Then prices dropped below that, …”
Only 2 people were willing to bid at that level (low $600,000s). Any other bids came in too low for the sellers to accept them.
“Neumann Homes, a Chicago-based builder with extensive operations in Michigan, is trying to recoup its investment in the area by conducting a one-day auction of 87 homes, lots and condos in nine communities.”
This is a terrible sign. It’s a cash crunch. Mommy!
I get a kick out of a builder declaring this the bottom of the cycle. This from a group who was apparently clueless that they were flooding the market with too much product in the first place. Their market judgment is worthless at best and dangerous at worst.
I would vote for the latter, TX
Granted I’ve only lived in Chicago for 3 years, but West Rogers Park isn’t nice. I’m thinking of the area of Western and Howard. Shady, western or howard bus to get to anything and building anything priced at 800K+ is uhm, crazy. I wouldn’t park a nice car up there, let alone a nice building. The people that paid 600k to live up there. Equally crazy. 600k, you could get a nice free standing house in Park Ridge or something. There will always be poor people in a place like Chicago and they will live someplace the key is figuring out where gentrification got enough traction this time (Roscoe Village, Wicker Park, Bucktown, maybe West Loop, maybe Andersonville) and where it didn’t and anything nice will be reswallowed and resurrounded by poverty (Humboldt Park, Avondale, Rogers park, maybe uptown). A concrete box faced with brick and lined with Brazillian hardwood and granite is not kryptonite to poverty and unsavory people that want your wallmounted 48′ plasma.
48′ plasma… that’s a damn big screen. I think I could see that without my glasses and I’m about 20/400 vision, hehe
as for plazma, panasonic 42″ is selling for unbeatable $900+ this time around//not a bad deal!
I was about the write something similar.
$600K for Rogers Park… I gotta just shudder. You can get three or four bedrooms in a condo downtown for that, easily. And in a year you can get four or five bedrooms downtown for that.
Rogers Park sucks. I mean it’s not the West Side or anything, but it sucks. City of Chicago schools at Evanston prices. And hour-long commutes on the L. Enjoy.
Have a friend who bought a condo a few years back in Rogers Park. Nice place, questionable neighborhood. At the time she bought, she was sold on the gentrification plans the area was touting. Now she’s nervous since the plans seem to be changing…
Jesus, why flip houses. I see a PS3 on ebay about to sell for 24K plus. WHAT IS WRONG WITH PEOPLE
And we have a winner, maybe THAT’S the next bubble we’ve been speculating about.
CNBC just showed hordes of post-adolescents storming a Best Buy. The Japanese do know how to market to our worst fears. Must… be … first… on… block… to… buy… PlayStation!
Japanese kids are studying calculus and physics while American kids are studying the intracacies of the latest Tony Hawk game on PS3.
One just sold for $15K….unbelievable.
The Japanese kids probably went just as apeshit for it when it was released there (1 week ago).
Josh
japanese kids love their games too, but they also study. Games are cooooooooollll……
Andy Stitzer: You guys, she’s picking me up in an hour.
David: Oh, drag, dude.
Cal: She’s picking you up from here?
Andy Stitzer: Yeah.
Cal: That’s f@#$ed up, man.
Andy Stitzer: Why?
Cal: Why? Seriously. I mean, look at this place, man. You gotta see this through the eyes of a woman, you know? What is she going to think when she comes in here? Look. He’s got a billion toys.
Andy Stitzer: So what?
Cal: And more video games than a teenaged Asian kid.
Andy Stitzer: Okay.
Cal: [Pointing to an action figure on a shelf] Is that the Six Million Dollar Man’s boss?
Andy Stitzer: That’s Oscar Goldman.
Cal: Why do you have that?
Andy Stitzer: That’s worth a lot of money. That’s much more valuable than Steve Austin.
Cal: Well, that may be the case. But none of this s#$t is sexy, okay?
Andy Stitzer: I’m not trying to be sexy, man.
Cal: [Pointing to a framed poster] I mean, seriously, Asia? You framed an Asia poster? How hard did the people at the frame store laugh when you brought this in?
Andy Stitzer: They did not laugh at me.
David: Know why you’re gay? Because you like Asia.
Andy Stitzer: You guys cool it with the gay. You know, she’s on her way over here, okay?
Cal: First, you relax, okay?
Andy Stitzer: Just stop calming me down and tell me what I should do.
Cal: Okay, we just take everything that’s embarrassing and we move it out of here so it doesn’t look like you live in Neverland Ranch.
didn’t you see 40 Year Old Virgin? Video games are cool……
Andy Stitzer: You guys, she’s picking me up in an hour.
David: Oh, drag, dude.
Cal: She’s picking you up from here?
Andy Stitzer: Yeah.
Cal: That’s f*cked up, man.
Andy Stitzer: Why?
Cal: Why? Seriously. I mean, look at this place, man. You gotta see this through the eyes of a woman, you know? What is she going to think when she comes in here? Look. He’s got a billion toys.
Andy Stitzer: So what?
Cal: And more video games than a teenaged Asian kid.
Andy Stitzer: Okay.
Cal: [Pointing to an action figure on a shelf] Is that the Six Million Dollar Man’s boss?
Andy Stitzer: That’s Oscar Goldman.
Cal: Why do you have that?
Andy Stitzer: That’s worth a lot of money. That’s much more valuable than Steve Austin.
Cal: Well, that may be the case. But none of this sh*t is sexy, okay?
Andy Stitzer: I’m not trying to be sexy, man.
Cal: [Pointing to a framed poster] I mean, seriously, Asia? You framed an Asia poster? How hard did the people at the frame store laugh when you brought this in?
Andy Stitzer: They did not laugh at me.
David: Know why you’re gay? Because you like Asia.
Andy Stitzer: You guys cool it with the gay. You know, she’s on her way over here, okay?
Cal: First, you relax, okay?
Andy Stitzer: Just stop calming me down and tell me what I should do.
Cal: Okay, we just take everything that’s embarrassing and we move it out of here so it doesn’t look like you live in Neverland Ranch.
No, try the NYMEX exchange. The bubble is in greed.
This just in:
‘According to the latest report from the Illinois Association of REALTORS®, total home sales (which include single-family homes and condominiums) were down 14.7 percent in the third quarter of 2006 to 46,759 homes sold compared to 54,804 homes sold in the period July through September of 2005.’
According to the NRA … now is a good time to buy …. (Oh, by the way you should ignore the falling KNIFE) HAHAHAHAHA
The NRA cares about carrying guns, not falling knives. (grin)
Actually I’m surprised that the realtors got that many sales .
I think the spin by the realtors worked to some degree and the NAR ads do have a effect because people do not think . To me it’s been a suckers rally in 2006 and for people to buy with these minor discounts with the interest rates up about a point from 2005 shows just how much all this BS spin does work .
I talk to people about the market and they actually think that it will turn around in 2007 .So if your not a blog reader your still getting brainwashed by the faulty information and happy talk .
I agree — sales volumes are still high. It’s 1989, not 1991, in the cycle.
The traffic at the 6 homes for sale in my neighborhood visibly picked up last weekend. The NAR campaign is sucking out the less intelligent of the fence-sitters who see falling prices and think they’re getting a great deal. These are TH’s, however, that are in the lower $200’s. There is, however, ZERO traffic at the SFH’s around the corner, of which there are 4, for upwards of $350K.
This is it. I can charge a home in Michigan on my credit card while I visit over christmas!
30k!
Lumber prices are closely tied to housting starts….check out this graph of recent lumber futures.
http://www.insidefutures.com/articles/article.php?id=2535
” originally listed for $899,000, were bought for prices in the low $600,000s.”
And just what was the yearly income of the buyer? These have to be more flipper’s who think they got a real bargain. People today don’t have a clue as to what a real $600 K house should look like and what income it takes to buy and maintain one.
Just love how the builder sentiment has risen going into the winter season where the weather will put the kibosh on home building. All connected with the RE industry today remind me of a fish out of water flopping all around trying to find its way back to water but the pond has gone dry.
“And just what was the yearly income of the buyer?”
No doc = annual income does not matter.
“The bet the developers were making was that the market would be better next year.”
What a coincidence, that’s the same bet I’m making as a renter who could comfortably afford to buy.
I lived in Roger’s Park for 5 years while going to Loyola U. Granted I lived in East Roger’s but it was a crap hole there too. West Rogers can be divided into three distinct zones: the ghetto area the above poster referenced, little India and then the Jewish part. I can’t imagine that anyone would pay for a $600K home anywhere in the RP except for the Jewish area, which is nice, safe and lowkey. The little India part is just that - little india. Blocks and blocks of indian/pakistani storefronts with east asians living there. No parking and crappy housing stock. very congested all around.
unrelated side note: I was researching properties in zip 60641 yesterday and I came accross a condo conversion fire sale. $104K for unfinished 1bd units at Cicero/Montrose. Apparently the developer remodeled the hallways and installed an intercom system but that’s about it. They haven’t done anything else. ALl the units are for sale ‘as-is’ and half torn up and completed. The description touts - ‘build equity now!’
Some developer got a little overzealous with his conversions. He must be taking a wash.
“The RP.” Folks up there really call it that? That’s cute.
Every Loyola grad I know calls it that. I suppose not everyone calls it that…but then again, those people probably wouldn’t post on this board. …
Where do I live then… The GC. We 60610 types consider the RP halfway to Milwaukee.
Are those The OC wannabes?
Hey,
OT : any body has any links or blogs regarding the commercial real estate market. Is it getting hammered the same way? personnally i havn’t seen the insane appreciation in pricing since the land/building (for warehouses, retails..etc) value is tightly coupled to the cash flow, and the entry $$ amount is higher. Although on multi-tenant building i have seens caps shrink and ‘new’ landlords betting on appreciation.
thanks
The price of commercial real estate escalated way up relative to the fundamentals, but in office and multi-family the fundamentals are catching up and the price is leveling off.
If you do an inflation-adjusted chart of office rents, retail rents, industrial rents since 1980, they’ve all dropped through the floor over time. Apartment rents are flat. Home prices through the roof.
I’d say you have an un-bubble unwinding in office, though the market may have already priced that in. Some claim that the un-bubble is based on fundamentals — cheaper buildings in outlying locations (and home offices) more competitive with CBDs.
Trammell Crow sold out a few weeks ago. I see that as a smart buyer getting out and not wanting to go through 1990 again, which about put them in bankruptcy. Others here disagree. History will decide. I wouldn’t invest in REITS or commercial property.
TX,
What do you make of all the private buyouts of companies like HCA etc? If the stock market / economy tanks, don’t they stand to lose a whole bunch of money??
Who loses a lot of money? The PE firms? Not hardly, they take a boatload of money up front and replace it with debt.
$600K for a home, they got a really good deal…on a falling knife.
ROTFLMAO.
Probably worth $275 on a good day.
Here’s a link to Wikipedia. It shows the household income distribution in our country, as of 2005 Census. Thus there should be very few homes over $600 (which would require at least $200K in income, which only 2.5% of the population has).
I can still remember about 10 years ago, when there were few homes in CA over $600-$800. And those were almost exclusively in West LA areas, select South OC neighborhoods, Malibu, etc. I did review appraisals in all of those areas back then. Since then, real wages have declined, so there is much more hurt coming. Prices will fall to pre-1997 levels before all is done.
In my hood os Scottsdale (zip 85258) the average household income is only $88,000 - which yields $264,000, but the average home price is $500,000. Still a long way down to go.
I always look at what my neighbors can pay for the property, not what I can pay. Because when its time to get out (sell), its what the average Joe in my hood can pay, not what I could pay.
Sorry, forgot the link:
http://en.wikipedia.org/wiki/Household_income_in_the_United_States
Exactly.
One point not emphasized enough is that home price that exceeded people’s ability to pay were historically supported by trade-up equity. People were not financing more, just putting more down. Well, this bust is going to eliminate equity as a factor for all but those who’ve paid their homes off or nearly so. Consequently, prices will have to come back down to levels not seen in decades, IMO.
Wall Street conventional thinking is that the US Housing bust will lead to federal reserve interest rate cuts that will once again stimulate the economy. The problem with that scenario is that we have had a credit bubble that has artifically created speculative demand for luxury housing. There only exists limited “real” demand for the millions of ultra-luxury condo and McMansion houses built coast to coast. Just making credit cheaper again doesn’t address the massive misallocation of capital in real estate. Eventually the misallocated capital needs to be written off. We have built enough luxury condos in New York, Boston, Miami and Las Vegas for the next several decades. And what other Asset class is large enough to ameliorate the effects from the multi-trillion dollar Housing asset bubble?
PS3s?
Beanie Babies II
These are hilarious. Education in the RE market.
http://www.sptimes.com/2006/11/17/Tampabay/Sitter_s_fears_set_ar.shtml
http://money.cnn.com/2006/09/22/real_estate/help_home_for_sale_young_ballanco/index.htm
http://money.cnn.com/2006/10/24/real_estate/help_home_for_sale_Morrisett_maldve/index.htm
http://money.cnn.com/2006/09/15/real_estate/help_home_for_sale_Eaton/index.htm
http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm
I had a chance to observe the auction process in southern ca years ago….after the auction (held off site) all the buyers went back to the condo. I was a total rookie agent (without a sale) and they sent me back alone to be there with them. They all stood around staring at each other. It seems to be that after the auction would be a good time to talking about what your really going to pay!