“Significant Downward Pressure On Prices”
The Denver Post reports from Colorado. “New-home sales in metro Denver are down nearly 20 percent through the first nine months of the year, a new report says. Existing-home sales declined 9.5 percent compared with the same period last year, according to a report by the Genesis Group. ‘The resale market is facing significant downward pressure on prices,’ the report said.”
“Aggressive building and lending practices also have contributed to a wave of mortgage foreclosures, which has helped fuel the downturn, experts say. Many parts of the metro area, particularly in Adams, Arapahoe and Weld counties, have seen home prices depreciate in recent months.”
“New-home sales have fared worse in northern Colorado than existing-home sales, said (realtor) Dave Pettigrew. ‘The cost of new construction is relatively high, and builders are bucking a lot of competition in the resale market,’ he said.”
“‘New-home builders have been under a lot of pressure, and they continued to build for too long and were not as aware of the warning signs as they could be,’ Pettigrew said. ‘If they had stopped construction a year ago, we wouldn’t have so much inventory.’”
“Declining home prices can feed on themselves once they get started, said Tom Dunn, an economist with the Colorado Legislative Council. ‘Do you want to buy something today that is going to be worth less tomorrow?’ Dunn asked.”
“Nearly three out of 10 new- home contracts in the metro area were canceled in the third quarter, compared with only one out of five during the third quarter of 2005. The seven- county metro area recorded 14,164 foreclosures in the first three quarters of the year, up 34.2 percent from the same period a year ago.”
“The inability of potential new- home buyers to sell their existing homes or to obtain financing is contributing to the high cancellation rates, said Dave Bracht, division president of Neumann Homes, which is selling off lots in areas where it has excess inventory.”
“‘A lot of builders are looking at peeling off excess inventory,’ he said. ‘We bought significant landholdings in too few places. We don’t need 400 lots in southeast Aurora.’”
The Idaho Statesman. “According to the latest Intermountain MLS statistics, the downturn in housing continued in October, with sales in the Treasure Valley falling 41 percent below the same month a year ago. ‘Even the Realtors can’t put a good face on that,’ said Ken D. Simonson, chief economist with the Associated General Contractors of America.”
“New home sales in Ada and Canyon County were off last month 50 percent and 38 percent, respectively, while existing home sales slumped 33 percent and 44 percent. New home sales in Ada and Canyon County were off last month 50 percent and 38 percent, respectively. The median price of an Ada County home has fallen 6 percent since July, from $248,900 to $235,000 last month.”
“Some sellers are being forced to consider drastic measures to market their homes. Victor Clark, a Meridian building contractor, considered offering a new Chevy truck or Suburban to anybody willing to pay $699,900 for a 3,550-square-foot, four-bedroom, 3-bath spec home he’s building in the Foothills overlooking Boise.”
“His goal, he said, has always been to keep from having to slash his price. ‘I think it’s imperative that people keep their prices up,’ Clark said. Cutting the asking price of a home simply devalues other homes for sale in the area, he said.”
“Don Hubble, owner of Meridian-based Hubble Homes attributes the continuing decline to the exodus of out-of-state investors who drove the market to record levels in 2005. ‘Now, not only aren’t they buying, I think they’ve turned into sellers,’ Hubble said.”
From USA Today. “During the real estate boom, home prices in the Sun Valley, Idaho area spiked almost as high as the peak of nearby Bald Mountain. The median home price is now about as high as San Francisco’s.”
“Sales of homes in Sun Valley and the adjacent town of Ketchum that are priced over $2 million are holding their own right now. But the rest of the market, with sales in the area down 50% from last year, looks as scary as a black-diamond slope.”
“‘I’ve been in real estate here for 18 years,’ says Mia Edsall, an agent in the southern part of the valley. ‘I’ve seen it slow but never like this. There are no buyers, and the reason there are no buyers is because they can’t sell the house they have. A lot of us (agents) are getting second jobs.’”
‘Increased competition from Canada and a dip in new home construction in the U.S. has lumber mill officials in northcentral Idaho concerned about possible shutdowns, though so far that step has been avoided.’
‘Prices are not good at all and we’ll have to watch that,’ said Calvin Hogg, chief financial officer at Three Rivers Timber, which employs about 190 people in Kamiah. ‘Nobody is very happy where things are.’
biege book- useless old gov info we pay big for
http://biz.yahoo.com/bizj/061129/1382854.html?.v=1
“Don Hubble, owner of Meridian-based Hubble Homes attributes the continuing decline to the exodus of out-of-state investors who drove the market to record levels in 2005. ‘Now, not only aren’t they buying, I think they’ve turned into sellers,’ Hubble said.”
Bwhahahaha………Hubble in trouble
Hubble in bubble-trouble!
Okay, footie, I’ll go you one better:
Hubble in trouble because of bursting bubble.
Europe beat you on that one!
The bursting bubble is trouble for hubble because his house price won’t double and his fortune will be reduced to rubble.
Double, double, Hubble’s in trouble;
Flippers burned in bursting bubble.
Good one there GS
Hubble in double-trouble because of the exploding bubble and he can’t dig out of the shit no matter how big the shovel.
Bubble, bubble, toil and trouble … for Hubble.
What the hell was supposed to happen with the out of state investors anyways?? Most weren’t planning on being landlords, but flippers.
Plus, if you have a lot of money, you don’t have many reasons to live in Idaho, do you?
Not to live there, just to invest there
The only reason to live in Idaho is to ski in Sun Valley, play the floating green at Coer d’Lane (sp), or fish the Henry’s Fork of the Snake for large trout.
Coeur d’Alene. Route 12 from Lewiston to Missoula is a very pretty road (on the Snake?)
I expect to start reading quotes like this from builders in Reno soon. I am in the area right now and it cannot be good for these guys. I drove around Somersett (a mostly high end new golf community) and these builders/developers must’ve been high on something when they conceptualized this place. I am in awe of it’s scope. I pulled the first listing I saw which proved to be a 4 bedroom stucco sh!tbox (resale) with a wishing price of $687,000. Bear in mind it is a tract home, not a custom and absolutely hideous to boot. I proceed to gather dozens of listings and had a good laugh. Every listing I pulled was a tract home as the custom homes (should they even exist) were in the gated areas. Some of the ones I looked at included: 3500 sq. ft 4 bedroom overlooking rooftops, $949,000. 4100 sq. ft. 4 bedroom overlooking more rooftops, $1,159,000. 4670 sq. ft. 4 bedroom with office, $1,199,900. And these are just the ho-hums. Once you get in the gated areas, the lots alone start at more than $360,000. In the non gated areas, I saw lot listings ranging in size from .39 acres to .49 acres and in price from $185,000 to $290,000. All I can say is good luck folks. There are definitely some in Reno who can afford this, but not as many as these dreamers were hoping for since this place encompasses thousands of acres. This is going to end badly. On a side note, I saw LOTS and LOTS of California plates. And wouldn’t you know it, the first resale property I saw, built less than a year ago, had a CA plated vehicle in the drive. There are some serious CA FB’s around here.
Bubble, bubble, toil and trouble .. for Hubble
The beige book is prepared by employees of the privately owned, dividend paying federal reserve banks.
It is not paid for with taxes, but in interest paid on debt money that does not exist until ignorant halfwits borrow it into existence.
But doesn’t it make good sense to borrow and buy hard assets when the giant printing presses are running at full tilt?
If you can service the loans or sell the asset when the problems start you’re just peachy. Quite a few people are peachy. Most are not.
It sounds like you have an understanding of the global banking system. The more you know, the more you ask yourself how the heck we ever let it get started in the first place. Then you realize….because we weren’t educated on the subject.
“ignorant halfwits”
I take exception to that
“It’s imperative that people keep their prices up,” Clark said.
He wants a 100% yoy decline in volume.
Hahaha!
You know the reporting would be:
Sales volume declined 100% from a year ago, but prices have edged higher!
And the reporting would have to include the mandatory real estate agent quote. You know it by heart:
“It’s a GREAT time to buy!”
“It’s a GREAT time to buy!”
Or sell !!
Go figure.
“The market has bottomed out. Sales volume can only go up from here.”
‘I think it’s imperative that people keep their prices up,’ Clark said. Cutting the asking price of a home simply devalues other homes for sale in the area, he said.”
Good luck with that one, Mr. Clark! Someone must have appointed you the protector of home values. Congratulations! You may wind up winning the greatest fool of all award! You must have started your business with private funding, because despite today’s lax standards I have a hard time believing a bank would lend a nickel to someone with your stellar business sense. If you are that stubborn about lowering your price then you must have overpaid for your dirt. I’d like to wish you luck with your future bankruptcy proceedings, but you don’t deserve my good wishes.
-40% in Idaho. Wow. Doesn’t everyone want to live there?
Thanks for the ID/CO mentions. They give other flyover-landers ammo against the argument that bubbles were confined to the coasts. The tsunami is sweeping inland.
On another topic.. Some friends of mine were thinking of buying soon, but after I sent them my stats/analysis of the market to counter local media spin, they seem to be watching and waiting for now.
“The inability of potential new- home buyers to sell their existing homes or to obtain financing is contributing to the high cancellation rates, said Dave Bracht, division president of Neumann Homes, which is selling off lots in areas where it has excess inventory. ‘A lot of builders are looking at peeling off excess inventory,’ he said. ‘We bought significant landholdings in too few places. We don’t need 400 lots in southeast Aurora.’”
Well luckily, homebuilder stock prices always go up.
“A lot of us (agents) are getting second jobs.”
You mean real jobs. Try bankrupcty couseling.
“‘New-home builders have been under a lot of pressure, and they continued to build for too long and were not as aware of the warning signs as they could be,’ Pettigrew said. ‘If they had stopped construction a year ago, we wouldn’t have so much inventory.’”
MISH has an update from Mike Morgan, covering the many catch-22’s as to why the HB’s can’t stop building. Gotta finish what ya started ……
“During the real estate boom, home prices in the Sun Valley, Idaho area spiked almost as high as the peak of nearby Bald Mountain. The median home price is now about as high as San Francisco’s.”
This is because everyone wants to spend the Night on Bald Mountain.
http://www.inetres.com/gp/anime/fantasia/index3.html
And if they buy there, the next morning, they may feel like they spent a night on Brokeback Mountain.
Okay, aside from the fact that your comments are usually spot on and tremendously invaluable, I regret to present you with this…
http://tinyurl.com/2zbsm
You seen this one?
http://www.mightymcpilgrim.com/films/brokemac/
Oh yeah… that’s a dandy! Sorry ’bout the crickets. I’ve had my share.
Bald is how you are going to feel when you take that 50% haircut in paper equity.
“Declining home prices can feed on themselves once they get started, said Tom Dunn, an economist with the Colorado Legislative Council. ‘Do you want to buy something today that is going to be worth less tomorrow?’ Dunn asked.”
Do you want to buy something today that is going to be worthless tomorrow?
Imagine meeting your former mortage broker/realtor as your bankruptcy councilor. That would be kinda akward.
I was just Christmas shopping with the wife (well browsing) and found a toy kitchen with stainless steel look in the pottery barn for kids.
Life in Bubbleonia.
Pottery barn for kids. Here’s a tip for any guys here that are single. If your girlfriend is in love with Pottery Barn, run away quickly. For the price of their stuff you would think some craftsman from the northeast assembled the piece by hand, but it’s just mass produced crap like all the rest.
There are no buyers, and the reason there are no buyers is because they can’t sell the house they have. A lot of us (agents) are getting second jobs.’”
Funny how that happens when you cannibalize the next 5 years’ sales by shoehorning every illegal alien and 20 year old idiot on the planet into a house.
And for the guy who wants to hold the line on prices . . . better be ready to move in and pay that mortgage, Cowboy.
…better be ready to move in and pay that mortgage, Cowboy.
Aw, shucks. My 2nd job over at Walmart otta’ do it.
Told me their gonna put me in the Plasma TV dept.
Cannibalization of future sales seems to be the trend in many industries these days. I guess it’s all about making the next quarter’s numbers and damn the future, we’ll cross that bridge when we get there.
“Some sellers are being forced to consider drastic measures to market their homes. Victor Clark, a Meridian building contractor, considered offering a new Chevy truck or Suburban to anybody willing to pay $699,900 for a 3,550-square-foot, four-bedroom, 3-bath spec home he’s building in the Foothills overlooking Boise.”
His goal, he said, has always been to keep from having to slash his price. ‘I think it’s imperative that people keep their prices up,’ Clark said. Cutting the asking price of a home simply devalues other homes for sale in the area, he said.”
If I want a new car I go to a car dealership, not a desperate, underwater, “I’m gonna-get-rich,” didn’t-make-it-through-junior high, general contractor/flipper. Furthermore, it is not imperative to list your house above what it is worth. It doesn’t devalue anything. The maket determines value. Finally, Victor, they are hiring dancers for The Thunder from Down Under. You might want to apply.
I know it is beautiful in Idaho, but considering the winters, the probable lack of quality construction in the home, and the job prospects, I can’t believe that house is worth more than 200-250K, tops. Honestly, I don’t care what the comps are, 700K, and that’s what 699.9K is, they are not justified. Now if the entire state of California wanted to move there, maybe, since demand would increase, raising costs and values. However, I can’t believe the demand justifies this clown’s wishing price (cite Robert Cote for this phrase).
If Idaho is a such a great place to live, then how is it that I can rent a house for $1500/mo that would cost over half a million to buy?
The whole rent vs. montly payment thing has been the most effective way to convince people that we have a bubble in Bozeman. Exactly the same scenario in Idaho. With median income below $30k, $250k represents an expensive home.
Victor Clark, here’s hoping you don’t find a greater fool. No one will sympathize when prices are back to something with some plausible relationship to the return on investment and you failed to sell when you could have.
Victor Clark, a Meridian building contractor, considered offering a new Chevy truck or Suburban to anybody willing to pay $699,900 for a 3,550-square-foot, four-bedroom, 3-bath spec home he’s building in the Foothills overlooking Boise.”
Okay, after reading Bens’ blog day after day and seeing just how many people have these outrageous debts so they can rent a home for 30 years, I have one question to ask. How many of these people are making 200K a year, esp. in Idaho? Damn, I am in the wrong business. Being a librarian doesn’t cut it for one of these puppies. I need to find a job that pays as well as these people. There is going to be some serious pain next year for soooooo many people. On one hand I feel bad. As you guys know from my post last night, I was somewhat in that seat. On the other hand, come on, anyone telling you you can get a 750K debt for 1,500.month is def. selling you snake oil. Do the freakin’ math. For those slow ones out there 360 (months) times 1,500 = 480,000. Now how the hell are you going to pay the remaining 270K + the astonomical interest? Either I am working for peanuts or my amoritization math is off base.
That is what baffles me. How many people can truely absorb such a loan? Throw in the HOA (probably gated), taxes etc… then cast it against a real 25 or 30 yr fixed rate loan. What kind of income is necessary for that property. How many people earn that much…in Boise Idaho? I justs don’t understand how people can put themselves into so much risk without understanding the fundemental laws of “I earn this much and can afford that much”.
Andy, let’s just run the numbers roughly to see what it would like. Let’s start with a 700K loan, not that 699.9K. Then let’s for argument’s sake say we put down 20%. That would be 140K, leaving us a 560K mortgage. Assuming 30 year fixed with a generous 6% fixed (at that rate it cost $600 for every 100K borrowed) that means we are paying just on the PI, 3,360 per month. Now we can throw in about another $240 for HOA, to make it $3,600 and let’s add in the taxes, which at 1%, would be almost $600/month. WOW! THIS BABY IS GOING TO COST YOU OR ME $4,200/MONTH. But that’s not all. Throw in the utilities and maintenance/upkeep and you have to be near $5K on this monster home! WOW is all I can say! At that price one would need to gross about 15K/month (take home, what 12-13K). Damn, where can I find a job like that. Even if I did. I can guarantee you all I would save most of that and still rent or build from scratch somewhere. I am sure I would still be ahead of this guy.
The job you are talking about it anything that deals with creating money or having access to it in the beginning of its cycle….banker,broker,real estate,builder,lender,financial planner, and on and on. If you’re the guy with access last, inflation will kill you. Unless you’re taking those loans and buying stuff you can sell while the creation of money is going on.
Sorry, I am one of those slow ones…360 times 1,500 = 540K. Whoops! Gor ahead of myself there. Still, that leaves you 210K short + the astronomical interest due!
Just got back from lunch. Brain fart! Brain is ready for siesta.
One of the signs of OCD (sorry, OCDan) is the inability to recognize you can correct your own errors within the original post …..
I readily cop to OCD. Whenever we go out the family laughs at me for checking to make sure all the car lights are off and the doors locked about 20 times. Also, as a librarian, OCD is almost a requisite.
“‘New-home builders have been under a lot of pressure, and they continued to build for too long and were not as aware of the warning signs as they could be,’ Pettigrew said. ‘If they had stopped construction a year ago, we wouldn’t have so much inventory.’”
Yes, and if the lenders had stopped handing out money to every spud that came done the road a year ago, foreclosures wouldn’t be what they are.
Amazing difference that a year makes.
A close friend of mine is one of those one-man contractor operations. Three spec homes built over the last year. one sold, one pending with a pre-sale continquency, one not a chance in hell at any kind of current pricing. He hopes when all is said and done to break even on his little adventure, and is realistic that his chances are poor. He’s layed off three workers and is living off the occasional roofing job.
This is being repeated all over this country, and the impacts it is having and will have on secondary purchases is huge.
Is this all not a huge dichotomy ?
Day after day the news here is the same: grim. And lest someone thinks the views of this site aren’t spot on, I’ll remind you that we predicted the housing turn down long before it started !
But if you listen to Bernanke, everything is fine, he doesn’t think housing is going to affect GDP or consumer spending much. And if you listen to Greenspan, he thinks the market will turn in Q1 2007 ! And yet here we have FB story after story.
Why is it that everyone else seems to be missing the big picture ?
How can this situation not totally kill consumer spending and put the US into a recession if not an outright depression rivalling the 1930s ?
The thing I want to know is when will all this start affecting the mortgage companies or the mortgage backed security holders ?
When home “owners” start defaulting on their mortgage payments someone somewhere has to be hurting ! Where are these people ? Who is getting hurt ? When will THAT news start hitting the press and when will the backlash against mortgage lending start ? THAT is when the bubble will absolutely POP, when lending standards tighten dramatically !
So when is THAT going to happen ?
Here is the answer !
http://www.pimco.com/LeftNav/Global+Markets/Global+Credit+Perspectives/2006/U.S.+Credit+Perspectives+-+December+2006+-+Credit+Innovation+and+Opportunities.htm
According to the latest Intermountain MLS statistics, the downturn in housing continued in October, with sales in the Treasure Valley falling 41 percent below the same month a year ago. ‘Even the Realtors can’t put a good face on that,’
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Boise is a wonderful little city - I lived there briefly in the early 70’s. Unfortunately, I think Boise RE is going to crash spectacularly, especially considering the very low job wages and unchecked growth in building. Once the “get rich quick” mentality gets extinguished, RE values in places like Boise tend to crash hard.
I’ve lived in the Boise area for 15 years and love it. The only drawback is the massive surge in population over the last 3 years, due in large part to the psycho “investor” purchases that have sent prices through the roof. I agree that things will crash hard here, and I can’t wait. I have absolutely no desire to sell my home, and all my additional “equity” does is force me to send ever-larger checks to the assessor.
“There are no buyers, and the reason there are no buyers is because they can’t sell the house they have.”
and they can’t sell their house because there are no buyers. howz that for circular reasoning
I really like the catch 22 article here:
http://globaleconomicanalysis.blogspot.com/