“Sellers Feel Like They’re Giving Their Money Away”
The San Francisco Chronicle from California. “Ask any real estate agent worth her lockbox key to identify the No. 1 reason houses sit on the market. Her likely answer: The sellers want too much for them. ‘The first thing every buyer asks is: ‘How long has it been on the market?’ said Aldo Congi broker in San Francisco.”
“‘The old adage that you can use sales comparables from up to three months ago is lost in this transitional market,’ Congi said. ‘We really need to get sales comparables from properties that are in escrow within the last 30 days.’”
“Congi reports that his office’s sales are down 30 percent from last year. Most offers that come in are under the asking price. ‘It’s more common for a house to sell under the asking price in this market,’ Congi said.”
“In Contra Costa County, there are roughly twice as many active listings on the multiple listing service as there were last year at this time, says California Association of Realtors President Larry Spiteri.”
“‘And it’s hard for sellers because they feel like they’re leaving money on the table, like they’re giving their money away,’ Spiteri said. Adding to the challenge, agents say, is a common misconception among sellers that agents control the price of homes. ‘We try to sell the house for the highest price possible, but we don’t control the market, buyers do,’ Spiteri said.”
“Another misconception sellers have is thinking that their home’s improvements and amenities mean it will sell at last year’s prices. Shelly Moore, who just sold her Walnut Creek home, fell into this thought process.”
“‘We bought it during a bidding war, so at first it was pretty hard for us to swallow,’ says Moore. ‘We were comparing our features to those of houses on the market. But our agent reminded us that those houses weren’t sold.’”
“‘I don’t care if you have the Goodyear Blimp over your house, if it’s overpriced, it’s not going to sell,’ said Moore’s agent, Julie Dudum in Walnut Creek.”
“For now, the norm seems to be a plethora of ‘reduced price’ riders on for-sale signs, ads screaming ‘Motivated Seller!’ and agents lining up to announce their latest price reductions at weekly staff meetings.”
“The agents say don’t blame them. ‘The last thing any agent wants is an overpriced property that sits on the market,’ Congi said. ‘All you end up with is a big advertising bill and a signed withdrawal form from your seller.’”
The Press Enterprise. “On one side of Lavender Street, a two-story home (is) already decorated for Christmas. It is in stark contrast to a house directly across the street, where palm trees, plants and grass have withered to brown, months after the owners moved out and shut off the water.”
“Suburban eyesores like these are a sign of the softening real-estate market, a situation not limited to Eastvale, an unincorporated community surrounded by Norco, Ontario, Chino and Mira Loma.”
“‘When other people don’t keep their property up, it devalues mine,’ said Eastvale resident Connie Norton, who lives on Kite Court, a block away from another abandoned house. ‘It seems like it’s awful soon for having the houses look dumpy.’”
“She has lived in the neighborhood since 2003, when the Heather Ranch housing tract was built. ‘I don’t know whether the builders are selling to people who can’t afford the homes,’ said Norton.”
“‘This home fell into foreclosure,’ Mattis said. The former owners failed to make the mortgage payments for a prolonged period, so ownership reverted to the lender. Countrywide Home Loans holds the deed, real-estate agent Bruce Mattis said. He recently got the listing for the Lavender Street house, which has been empty since July.”
The Voice of San Diego. “The other day, I’m looking through the sales data of one of my favorite downtown condo complexes, Little Italy’s Village Walk, and my eyes almost popped out of my head. Nestled right there between the Mexican Consulate and Beech Street. It’s one of the ‘older’ complexes, constructed way back in 2002. It’s had a bit higher home values than some of its neighbors.”
“Except for unit 409. It’s a two bedroom, two-bathroom condominium. It has 1,264 square feet. In October 2004, it sold for $630,000. In October 2006, just two years later, the condo sold for $500,000.”
“If you look through the data, you can find a bunch of places that are now selling for far less than similar or even less attractive properties were selling for a year or more ago. But this was a 21-percent drop in two years.”
“Obviously the housing market is going through a correction. Some say it’ll crash, others say it will just ’soften.’ But even the most bearish of observers of the San Diego housing market would see a 21-percent drop in two years as an extremely large drop in a very short time.”
“I called the real estate agent who sold the property last month: Irvine-based Marta Riojas. Riojas said that the woman who sold the condo had been gifted it by her wealthy father, who purchased it for cash two years ago. The woman was moving to Arizona and just wanted to cash it out quickly, she didn’t mind potentially leaving money on the table.”
“But Riojas assured me that she could have sold it for more. ‘Absolutely, she would have gotten more. But she didn’t want to deal with it anymore,’ Riojas said, who adamantly denied that the sale was evidence of a housing crash.”
“I can’t imagine the people trying to sell condos right around this one are too happy about the drop in price. Riojas insisted it was just a good deal that one lucky buyer was able to get. The housing market is fine, she said. When a Realtor says that, you know it’s true.”
More data from Rich Toscano.
‘We know that in many areas the market has gone to the dogs, and the good news for Realtors is, so have we,’ jokes Stacy Small, who along with her partner Donald Gorbach, a veteran real estate broker, founded Doggie Mansions this past summer. ‘The housing market has been pretty slow and it’s difficult to make money in a down market, and it occurred to both of us that this was a way we can have a sales force in place.’
‘Watch out: Home real estate is back in the sights of Capitol Hill tax reformers. High on the list of methods to collect more of what’s owed: Tighten up on homeowners’ billowing write-offs of local and state property taxes, which currently cost the government about $20 billion a year in revenues.’
‘A Corona developer plans to build a brand-new town on 11 square miles of desert between Barstow and Victorville. ‘We’re looking at 3.5 residential units per acre on the average,’ said Peter Johnson, the developer. ‘We must have smaller lots to create the (housing) density needed for a viable community. Our goal is to provide affordability.’
‘Thousands of future homeowners are turning to the High Desert for homes in their financial range. A potential mixture of single-family houses, condos and apartments in the proposed development could add up to 25,000 homes. ‘But that’s a guess,’ Johnson said.’
‘A Corona developer plans to build a brand-new town on 11 square miles of desert between Barstow and Victorville.’
I smell a business opportunity for Meth Lab supply companies. Sounds like a gold rush, and remember, the guys who made the money in the boomtowns were those selling supplies to the miners. 11 square miles out there (unless it’s a vaporware town like California City) looks like the crankster mother lode.
” Corona developer plans to build a brand-new town on 11 square miles of desert between Barstow and Victorville.’”
Don’t you understand that Developers demand that every square mile of desert scrub from victorville to las Vegas needs to have vast acreages of shiny new brown-tiled mcstuccos stretching along the 15 fwy. Who wouldn’t grab at the chance to get a spankin new McS*tbox
out in the 110 % pancake flat dreary wasteland which is what lies between victorville and barstow. 3-4 hr drive into LA: 2-3 hrs to LV. Perhaps the developers envision massive hordes of immigrants descending upon these desert burgs, which would be baking hot like the Sonoran Desert of Mexico.
“I smell a business opportunity for Meth Lab supply companies.” (re: ‘A Corona developer plans to build a brand-new town on 11 square miles of desert between Barstow and Victorville.’)
doggone it incessant_din! You beat me to this prediction!
“More data from Rich Toscano.”
Thanks to Rich for the usual outstanding analysis. One point I raised earlier (in my dissection of a Realty ad) comes through loud and clear from his graphs: Prices and interest rates are inversely related. So don’t let Realtors scare you into buying with the old story that rates are going up — rates increasing will hasten the falling knife’s plunge.
“Prices and interest rates are inversely related.”
Rates were dropping in the early 90s, and so were prices.
You raise a good point. When the economy is going into a recession, interest rates have little effect on valuations, as would-be buyers are thinking that maybe it is not a great time to make a household’s biggest investment (buying a home) when their jobs are at risk. Given that all the signs are present to suggest a recession is imminent or has already begun, I don’t think even helicopter drops of cash can save the market from continuing to correct next year.
…or has already begun,…
Thank you, GS. The economic downturn will certainly have a huge impact on the psychology of homebuying. If it’s bad now, you can only imagine what it’ll be like later.
A great example to check out in this regard is Japan in the 1990s. Interest rates were rock bottom, but the BOJ learned that they were pushing on a string, as a deflating real estate bubble led households to believe they would be better off putting money under the mattress in order to buy later at lower prices.
But don’t worry — it can’t happen here, because our savings rate is negative
Its all called the power of marketing.
Not to mention family pressure.
But what effect, if any, can interest rate movement have on those holding ARMs? Does an interest rate decrease provide a relief for those whose teaser rates are about to reset? Or is it also complicated by values as many ARM holders with pending resets may find that their LTV no longer supports a refi to extend the lower rates and keep their monthly payments from rising?
This holds true if credit standards are constant. In the 90s they were dropping. They will start increasing now. As this happens, the inverse price-rate relationship will regain traction.
Good point about the confounding influence of credit standards.
More generally, any statement about the effect of interest rates on prices must be interpreted in a ceteris paribus context (”other things being equal”).
Rates are dropping now too.
The funny thing about the 21% condo drop in San Diego is that the new buyer took it in the shorts overpaying at 500K.
I bet he thought he was shrewd and is telling a tail at the holiday parties.
“and is telling a tail” LMAO… Hope she cute…
(‘I don’t care if you have the Goodyear Blimp over your house, if it’s overpriced, it’s not going to sell,’ said Moore’s agent, Julie Dudum in Walnut Creek.”)
I think that shows how stupid this market is. how is it that in a capitalistic system, something as dumb as cheap advertising we think will steer people to buy an overpriced home?
new mantra.
LOWER THE PRICE.
Earlier this year (February), we sold a property in Contra Costa county, and had a bidding war. These guys still remember the good times like they were yesterday. It wasn’t yesterday, but it is pretty recent. The problem for them is that the past is the past, and the market is moving further from that every day their house sits with no offers.
I don’t get it either. How come people can be so astute when it comes to spending their own money, but feel they are “leaving money on the table” for a sale? Would they pay last year’s price for another house if they happen to find someone dumb enough to pay last year’s price for their house? Heck no. So enough bemoaning what they are “losing” and blaming the media. It really is as simple as you have stated - lower the price (or shut up and wait however many years or decades it takes for things to turn around).
My house lost over 30k last month on Zillow. Since I knew this was coming and never bothered to realize that imaginary income in the form of a HELLLLLOC, big whoop. I may as well bemoan the fact that I didn’t think to invest in Microsoft back in 1986 when I was first using their products.
Many people over estimated that homes were actually better “Investment” than stock or bonds. They thought if I trow $$ into a home then they get it back.
Actually RE is a great investment when and only when you can generate rental revenue that is cash positive. If you add wage inflation as we did back in the 70s. That gave landlords muscle to hike rents with their mortgage fixed in inflated dollars. If you had appreciation due to inflation even better.
Fundementally the sellers are way wacko in their belief they were going to make money in this market… or any market for many years to come.
“…situation not limited to Eastvale…”
Not limited to, but focused on… Along with a bunch of other places that had no business charging 400K+ and putting up 3000sf+. Tracy, Mountain House, Santa Clarita, Rocklin… California is full of places on the fringe of metro areas that built up in hopes of springing up into viable densities. If thes places aren’t viable, what happens to Manteca, Gilroy, PalmCaster, this Barstow pipe dream above?
I am so happy I did not “buy” in any of these hoods. Now it’s a matter of fighting the urge to jump on deals in marginal areas before we get within sight of the bottom.
Speaking of having no business charging $400K, I saw a flip this or that house over the weekend where Rudy Martinez, (I think I actually used to work with this guy), bought a 2 bedroom POS in Watts for like $175K, put some pink carpet, some shitty kitchen cabinets, some paint, a metal door from kitchen to garage, some dying sod, and was putting it back on the market for $420K. The realtor who came to inspect it complained about all kinds of stuff, including the aluminum windows, which he didn’t bother to replace, but Rudy blew it off, saying he knew what Mexicans liked, since he’s Mexican himself. He said it made him feel good to give back to the violence-ridden community. What, by ripping off his own people? What a joke!
My rental house in Valencia (Santa Clarita) has lost over $17k this month on Zillow!! It is now in the high $500’s (still way too much!). I remember when it was in the upper $600’s last year!! This is sooo much fun! Let’m burn! Next year is going to be even more interesting!
“Except for unit 409. It’s a two bedroom, two-bathroom condominium. It has 1,264 square feet. In October 2004, it sold for $630,000. In October 2006, just two years later, the condo sold for $500,000.”
“Riojas insisted it was just a good deal that one lucky buyer was able to get. The housing market is fine, she said”.
When they were 500k and one sold for 630k, they ALL were now worth 630k. But when one sells in a clearly declining market for 500k, that was not a motivated seller, and therefore we don’t have to use that sale as a comp. End of story. ONE lucky person got a good deal, and no future buyers should expect this price on any other unit here, period. Oh, and the fact that there was no one willing to outbid the buyer on this killer deal is also meaningless. The market is fine.
I am watching this market kinda closely…. but I question if the numbers are correct in that piece. Lew Breeze’s site indicates that a unit recenlty sold for $524,900 for a 1,232 sq ft unit. I see nothing else having been sold in the past month. So, instead of the unit selling for $395/sqft… it sold for $421/sqft.
You have access to Lew’s site? I miss it — it had a great graphic of the downtown SD condo inventory explosion, at least until it became self defeating for Lew to reveal such information (he is a Realtor in the 92101 zip code = ground zero for the bursting SD condo bubble).
Lew’s blog pulls no punches — says right at the top that the 92101 median condo price is down 10% already this year…
http://92101.blogspot.com/
What’s neat is that we don’t have to argue whether it was an outlier or a trend. All we have to do is wait a few months until the truth is revealed. Eventually the realtors will run out of excuses and find real jobs.
I just finished up two residential property inspections this weekend in SE Wyoming. Both were rural properties, and both have been unoccupied for over six months. One has never been lived in. Both are so overpriced it makes me laugh. My favorite was the suburban-style one story with a walkout basement. It’s on 35 acres of flat wind-swept prairie with no rocks or trees or anything to break the wind within at least a mile. It looks so out of place and lonely. The road was blown in with snow and required four-wheel drive to get in. They’re asking $395k. I would want to be paid to live there. The wind is relentless to the point of suicide. I’m guessing they’ll take a $100k haircut on that one. The other one was pretty much the same story. Owners couldn’t take the isolation and 50 mi. round trip drive to the grocery store anymore and moved. I wouldn’t be surprised to see these sitting for a while unless the prices are slashed.
No offense to people in Wyoming, but I’ve seen some properties there (on the internet) that are very desolate, and asking almost-Californian prices for them.
Just the way you describe it with the snow-covered road, wind and no trees makes me wonder why anyone would want to live there at all.
Thank goodness we all have different tastes.
What is snow? It was 85 degrees here at my house all weekend and I was sweating like mad while working in the yard.
Wind chill this morning was -20F.
Yeah but check back with us in July, Captain!
You didn’t say how big the house was, but only 35 acres in the middle of nowhere for $395K? They’ll be lucky if can sell it for $100K, let alone take a $100K haircut.
Right at 3,000 square feet-both levels, two car garage. Similar to any typical suburban tract home. Nothing special.
At least you don’t have to worry about building a fence to keep your neighbors out. That is a real selling point on a place like that.
You could sit out on the porch naked drinking beer and nobody would know or care.
Can you imagine their monthly gasoline bill if it was 50 miles to the grocery store. Geez, that’s 100 miles round trip to go to the store. Im glad the grocery store is about a 1/2 mile from my door.
True. From a defensive standpoint, clear fields of fire in every direction.
There’s a 3000 sq foot home on the end of town (20 min out of village) which is about 90 years old but well kept. It has 45 acres and has sat for about 8-9 mos with 1 or 2 price drops. It started at $425k and is down to $379k. The drive to Syracuse is about 15-20 minutes and no takers. There acreage is beautiful - lots of trees and the views are stunning.
This type of place will become uninhabitable in the next 10-20 years.
Hey, someone has to tend the new wind turbines placed there. Sounds like a great place for them! Lots of wind and no neighbors to complain about the towers…
Why?
$395k in the middle of nowhere in Wyoming?? It wasn’t that long ago, maybe 6-7 years, that you could buy a house in Santa Monica for that price.
Anyone who doubts that prices are going to come down, hard, nationwide is deluding himself. There aren’t enough greater fools in this or the next two generations to prop up these kinds of prices.
Relentless wind? Man, that’s FREE power for life with a windmill.
Maybe you’ll like this deal better: I just got a fancy, shiny, laminated advertisement from Grubb and Ellis for a bunch of fourplexes in Bakersfield - $750,000. “Projected” rents are $1200 for the one bedroom unit, and $1400 for the two bedroom units. What a freaking joke!
“‘The old adage that you can use sales comparables from up to three months ago is lost in this transitional market,’ Congi said. ‘We really need to get sales comparables from properties that are in escrow within the last 30 days.’”
This poses yet another conundrum on at least two levels:
1) How do you get those recent comps when nothing is selling?
2) How do you factor in the effects of appraisal fraud and builder incentives when this information is omitted from the posted sale price?
Excellent point.
If no one is buying you have no 30 day comps (except for mortgage fraud). Gee… once down payments are required again, what do you think is going to happen to the mortgage fraud?
I just looked at a few nice homes with my fiancee. Every Realtor ™ tried the same old line “we expect prices to be flat, not to go down.” I said ok. They asked when I’d buy: “after the summer wedding.” But they warned when interests rates go up, it will cost more per month…
I noted if that’s the case, my company is trying to decide between moving 3,000 and 15,000 jobs out of state due to our inability to hire from out of state. Many realtors argued on how the company should buy them homes (”not our business”), pay them more (”But our division’s profits are low for the company…”), or just people wouldn’t want to leave? (”oh, then why do people ask me for transfers out of state?”).
2007 is going to be… scary.
Neil
And is this market downshifting SO quickly that anything past 30 days no longer holds up as a comp???!!
Neil,
When do you think they will require down payments again?
Good question. I think they’re already starting, to a tiny degree. Probably by 2Q 2007, maybe 3Q 2007. I wish earlier, but real estate is such a slow process that moves in fits. I think we’ll actually first see a withdrawl of credit and then down payments propesed as a way to make MBS’s attractive again.
And yes, I see a lot of things RE related happening in 2Q 2007… None of it pretty (unless you are a buyer).
But buyers just have to write off 2007… Prices won’t bottom that quickly. I used to think this would be a fast turn around. But the more I research the history of real estate down turns, the more I realize they just don’t happen fast.
I must admit I’m becoming obsessed with the ratio of regional mortgage payments to total regional income. It just seems to be the best indicator of the bottom. That makes too much sense to me… For if very little income is going towards housing, people will be spending money like water. Thus jobs… jobs produce the desire to get a house, etc. And vice versa. If there is very little surplus money in a region, the service sector contracts. Thus less housing demand… Like it or not, individuals just don’t matter in the housing market; its all how the herd behaves.
I’m watching from the sidelines as the herd goes over yonder cliff… oh, that’s got to hurt.
Neil
What State are you in Neil ??
California. South bay area of LA.
You seem like you know what you are talking about Neil. My question is in general do prices at the end of cycle usually collapse quickly, stablilize for many years, and then begin a steadily accelerating climb? Or do, they decline slowly and steadily for a few years, stabilize for a few years, and then rise?
I’ve seen two scenarios here (If you don’t realize that means I’m no expert…)
1. A slow decline with an ending quick drop with almost 30 months of stable prices.
2. A slow decline, quick drop, and then a bounce at the end of the drop and then years of very slow appreciation.
Usually you have a 30 month “window” to buy at fair prices at the end of a real estate bust. However, I cannot tell you how long the minimum prices will last. If I did… I’d be a lot wealthier.
However LA has singled itself out as the most overpriced city in the *world* (based on income) with some bizzare need for conspicuous consumption. I simply cannot believe the quantity of $250,000+ cars on the road! Oh, there have always been those that can afford them… But when I see a $250k+ car pulling out of a townhouse garage… Somethings wrong.
Then again, I know a guy who buys a top of the line Jaguar every 18 months or whenever he wants a new color or the latest engine. (Dang are they fun to drive… But stomping that pedal drops the gas gauge a quarter tank *really quickly*.) He’ll die with money in the bank. But for every one of those, I see 7 or 8 pretending to be one.
Neil
Stucco:
1) How do you get those recent comps when nothing is selling?
FYI. I am “real time” with the LAS VEGAS MLS. There were 211 contracts signed in November for 3 bed 2 bath single story homes built since 1994,
and there 632 available listings of 3plus 2 houses, single story homes, from 1994 to 2006.. The houses that are selling are from 1200 sq. ft. to 1500 sq. ft and priced below $279,000. Buyers are buying smaller homes and the price is down 20% from May 2006. These are not REO’s or short sales.. The comps are real and it is the lower prices, smaller houses that are selling. Get a hold of a agent is willing to produce good facts from the MLS.
Ask the agent to show you every pending and contingent sale for November in the zip code you want. Be specific on the number of bedrooms, baths, 1 story or 2 story, and minimum year built.
The info is sitting there, it just has to be worked by an agent who has some “computer literacy”.
“Buyers are buying smaller homes and the price is down 20% from May 2006.”
I believe the lack of comps is more of a problem at the high end, as low-end homes tend to keep selling through a downturn (or at least I saw this in the Bay Area during the dot com meltdown). High end stuff may not sell much if at all during a major market correction, as high end buyers generally have more staying power, and catching a falling knife is painful almost in direct proportion to the price of the home you buy.
This time may (eventually) be different — too early to tell, because flippers have not yet reached the point where they can no longer sustain cash burn.
Even if you have comps at the low end, I am not sure how you adjust them for possible appraisal fraud and (unsustainable) suicide lending to people who cannot actually afford what they are buying.
“‘We bought it during a bidding war, so at first it was pretty hard for us to swallow,’ says Moore. ‘We were comparing our features to those of houses on the market. But our agent reminded us that those houses weren’t sold.’”
Unfortunately, the fact they bought it during a bidding war suggests they likely are victims of the Winner’s Curse.
http://en.wikipedia.org/wiki/Winner’s_curse
Rule #1 of real estate: If you paid more than the asking price you deserve to be foreclosed at a later date.
That is my first rule. What are some of the other rules that people on this blog have made up? I bet some are funny. I’m guessing that TXchick57 has one that involves a pair of handcuffs and a blowtorch.
If your first offer is accepted, you over paid.
The only one I recall was a 20 lb trout.
Bring the Gimp!
“I’m guessing that TXchick57 has one that involves a pair of handcuffs and a blowtorch.”
I’m not sure this is an appropriate venue for discussing an individual’s sex life.
When everyone’s buying, it’s a great time to sell.
“If you look through the data, you can find a bunch of places that are now selling for far less than similar or even less attractive properties were selling for a year or more ago. But this was a 21-percent drop in two years.”
Just think how bad this would look without appraisal fraud and suicide loans…
Here is a blog in Sacramento that provides these listings, filtered from MLS in mass, updated every week. The auther Max (as in Max Stats) calls it http://flippersintrouble.blogspot.com/ . It is very interesting. About 5% of the total MLS is now upside down Flippers in Trouble! (FITs = listing below acquisition price, and acquired in the last 24 months.)
Great site! I’m a former Placer Co. resident (Rocklin). I sold in ‘04. Had three offers in three weeks around $499,000. Then rented a house three doors down saved $400/mo. Many of my neighors looked at me funny until I left the neighbor hood last June. Although, prices still went up after I sold. No regrets. It’s better to be early than to late. Besides, I now enjoy being totaly debt free (not to mention cashing out the equity since 1995)!
“When a Realtor says that, you know it’s true.”
When a Realtor’s lips move, you know they are lying.
Stucco,
You are on top of your game today. You are in tip top form.
Thanks — I have been in a very good mood all day
“When a Realtor says that, you know it’s true.”
Can be nominated to be the best quote of the year.
Usecar salesmen do sell use cars anymore, just pre-owned vehicles.
Riojas insisted it was just a good deal that one lucky buyer was able to get. The housing market is fine, she said. When a Realtor says that, you know it’s true.”
Going after this one is just too easy - it would be the moral equivilant of clubbing a baby seal.
Call me an eco-terrorist then.
I’ve found baby seal to taste too gamey. I prefer bald eagle. That tastes much more like penguin.
Spotted owl with desert bighorn sausage stuffing has bald eagle beat.
Regarding motivated sellers & “giving it away”…we have a house near us (North County San Diego) which is for sale for 2003-ish pricing. I thought it would fly off the market, and in a moment of delusion almost considered buying it (before remembering that 2001 prices were already too high).
Anyhow, another neighbor approached the seller and demanded she raise the price because she was “lowering our property values”. This was about six weeks ago. The house is still for sale, much to my surprise (about 2-3 months on the market now).
Oh, although this probably belongs in the other thread, we were at a local Christmas parade last night. We had groups of people on both sides of us who were talking about housing, and how prices are going down. Also, at the park last week, heard a family talking about their house hopefully going into escrow the next day. Said they were so elated because there are “millions of homes” on the market right now and selling is the hard part (though they were also buying another).
Slowly but surely, people are starting to get it.
‘Anyhow, another neighbor approached the seller and demanded she raise the price because she was “lowering our property values”.’
Sorry, but this is not how a free market works. Sellers who are leaving the area should price to market value, or else look forward to keeping their homes on the market indefinitely. Who cares what the neighbors think if you are leaving the area, anyway?
Are these people too stupid to realize that:
lower property values = lower property taxes
Unless the neighbor is also selling, she should thank the seller.
How much do you know about Prop13 in CA?
“lower property values = lower property taxes”
I’m sorry, Jerry, I gotta set ya straight on this one. Taxes will be lowered when the town’s and school’s spending budget is lowered. Regarding schools, I believe most teacher pension funds are growing exponentially, the fed is offering less and less in funding to the states, and my town in particular is still on a spending spree (because we don’t have quite the tricked out sports facilities that towns with more than 8k people have and OUR KIDS DESERVE IT.) I wouldn’t be expecting our taxes to be decreasing real soon. And I’m guessing other towns are still suffering from similar situations.
“lower property values = lower property taxes”
Not in Calif.
However, when I sold my house two years ago. The realtor told me they withhold the low comp’s from the MLS listings in order to keep the prices up. I’m sure there are many ganmes they play to manipulate prices.
It is interesting that people care about values going down. Why should a person care unless that person plans to sell too. Maybe sellers should all refuse to sell and drive prices higher? I would not even think about buying a house at this point unless you have a long-term plan to stay put where you want to buy. Let us just say that real estate has little upside potential for the majority of short-term thinkers now.
“Why should a person care unless that person plans to sell too”
I guess they all get caught up in the wealth effect thing. Rising values = good feelings and better social status. Where as lower values = sad feelings and lower social status.
It’s a shame that consumerism is equated with a good/satisfying life.
‘Anyhow, another neighbor approached the seller and demanded she raise the price because she was “lowering our property values”.
Were any “cupcakes” offered with the demand?
Mortgage Fraud Update: Sacramento
Ben, I am posting this here, even though the thread started in “Let’s Get Hopped Up and Make Some Bad Decsions”, from earlier today. I don’t want the fellow bloggers to miss it…it is exciting…
I sent four e-mails to all four sub prime lenders who were party to the fraudulent loans in Lincoln (Sacramento MSA): New Century (2), Alliance Bancorp, Long Beach Mortgage & First Franklin, with notification to the DA, FBI & DRE. The first lender’s reply is in and it is from the CEO of First Franklin, Andy Pollock. I am pasting it below:
“I am in receipt of your email and information. It will be forwarded to First Franklin’s asset quality division for evaluation and qualification.
Our conclusions and next steps are contingent on any specific findings, if any at all.”
Andy Pollock
First Franklin
#408-964-XXXX Direct (I edited his direct phone number)
#408-955-7599 Fax
This is exciting and I think it speaks volumes about how to get this BS shut down. The last thing Andy Pollock wants is to chase some nitwit who just cheated him out of $250,000. He will be stuck with a $750,000 loan he can not sell. If he expected a profit of 5 points on this loan, that is $37,500. I don’t know if that is a realistic profit margin, but guess what? He will need to do 7 more sub prime loans, just to break even on this one fraudulent deal. And I will guarantee you it is a fraudulent loan. FF carries a $785,000 (80/20) loan on this house at 1329 Hillwood Loop, Lincoln, CA. The builder advertised the same model around the corner at 1295 Earlton Lane for $550,000. It was in the Sacramento Bee and it has more upgrades. Now Andy Pollock knows what I and the rest of the Blogger Nation knows…..this shit is out of control and must stop now. We will not stand for it and First Franklin will go bankrupt if they don’t stop it. I have 16 more loans like this T’d up, based on my new program to identify this stuff. And Sellers, don’t think Andy Pollock won’t come after you for his money, if you signed fraudulent escrow instructions. You assets will be fair game too.
The ball is rolling. We will help these lenders get it right one way or another. I am earning my “nom de plume”.
Paladin, “Have Pen, Will Write” Wire Paladin, San Francisco
(Google it if you don’t get it)
Somehow, the blurb above did not post for an hour, so I wrote it again and posted it at the bottom.
Is this a criminal or civil issue? If criminal, who gets indicted- buyer, seller, realtor, broker, appraiser? What would the charges be?
My bet is nobody gets indicted. The lender will go belly-up in the next six months. End of story.
Bill, four lenders, including some heavy weights like WAMU, plus others with guarantees by Deutsche Bank, HSBC and others, who back the originator. These are both civil and criminal. The FBI is after sellers who participated and help disquise the fraud, but signing fraudulent escrow settlement statements (the sellers have assets to pay fines and restitution) and go to jail as examples. The buyers go to jail too, although they like to skip town with the cash. Some sharp attorney may do a class action against the lenders and their appraisors, since it creates damages in the neighborhoods. Hmmm, lots of ways to get the cat skinned.
Excellent job, Paladin!!!! Please keep us informed!
You should get the press behind you on this one!
Great job, Paladin. Now this is going to be something to watch.
Kudos!
Please keep us updated.
How do you know 1) that the mortage guys are not in on the fruad. 2) they are not part of a crime syndicate. 3) they will not send their goons out to beat you up.
Just something to think about before stirring up things you arent directly involved with.
David, this story will be much bigger than I. Letting this kind of crime go unbridled, out of fear of reprisal is not my nature. And now I have set the process in motion and will simply help the feds, state and county officials be efficient prosecutors of justice. It is happening. More updates to come.
“‘When other people don’t keep their property up, it devalues mine,’ said Eastvale resident Connie Norton, who lives on Kite Court, a block away from another abandoned house. ‘It seems like it’s awful soon for having the houses look dumpy.’”
Dah, how hard was it to activate the brain cells to figure out that one. You and your neighbors could get together to maintain it if it makes you feel better but the selling price will still depend on what a willing buyer is willing to pay and when you get that news it may be time for your doctor to prescribe a daily does of Prozac. Gotta love the drama!
“‘When other people don’t keep their property up, it devalues mine,’ said Eastvale resident Connie Norton, who lives on Kite Court, a block away from another abandoned house. ‘It seems like it’s awful soon for having the houses look dumpy.’”
At my gov job I’m working with an HOA for a subdiv that was just built three to five years ago. They failed to collect enough money over the years and now they are flat broke. Lucky that the city maintains the streets, water and sewer. All they maintain are the common green areas and the stormwater detention ditches and detention pond. All of those are completely overgrown in weeds and now I’m seeing some junked cars and other crap being dumped out there. They have no money to hire anyone to do the work and even worse, nobody will even serve on the HOA board. According to the president (rules state she serves until replaced) about half of the property owners have even quit paying dues. They can’t force a collection because there’s no board to authorize it. Even if there was they’re broke and couldn’t afford a lawyer. They asked the city to take over the maintenance. Not much chance of that happening. I wonder how much more of this you’ll see as housing unwinds. It’s a death spiral. The worse the neighborhood looks the harder it’s going to be to sell.
Moribund HOA’s for everyone!
For anyone who is thinking about buying…. Never, ever, ever, buy in a neighborhood with an HOA. Got that? Never! Also check utilities - if has private water or sewer, don’t buy. Either all public, or well/septic. HOA’s suck, and small private suppliers of basic necessities is a recipe for disaster.
I agree. But in practical terms that means buying only in neighborhoods that are at least 35 years old, or where your nearest neighbor is beyond shouting distance. Everywhere else is going to have HOAs.
BS.
Property that was bought when overvalued and then rented for some cash flow is going to run down. Reluctant landlords will not maintian their “money pit” rental property.
With HOA’s I think it can work both ways - it is possible for a small set of people to run the board and probably fine and / or put liens on property to fix the commons areas. The legal mechanisms are there and a HOA board can have awsome powers well beyond that of a city.
Did they even have homeowners associations back in the 1930’s and 1940’s. I wonder if they were just created to raise property values.
I am not too thrilled by the prospect of having 100’s of rules and snoopy old retirees looking around for violations.
True, I wouldn’t want someone to have old engine blocks lying in the yard. But all these cookie cutter neighborhoods with houses so close you could reach out your window and touch the neighbor do not appeal to me.
What area is this crash ??
“‘I don’t care if you have the Goodyear Blimp over your house, if it’s overpriced, it’s not going to sell,’ said Moore’s agent, Julie Dudum in Walnut Creek.”
BINGO !!!!!!!! Julie has the message
Hey mrincomestream, aren’t you the one who has repeatedly claimed that “all comps within the past 6 months are valid”?
“‘The old adage that you can use sales comparables from up to three months ago is lost in this transitional market,’ Congi said. ‘We really need to get sales comparables from properties that are in escrow within the last 30 days.’”
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I’ve said it before and I’ll say it again - ALL COMPS ARE IRRELEVANT IN A DECLINING MARKET. My offers will be no more than 1997 Prices + 3.5% Annual Inflation.
That’s what I’m working on also. I get asked what my target prices is all the time from co-workers, neighbors, and friends. The reaction I get when I answer their question is usually really hostile with remarks like “prices can never drop that far”.
“ALL COMPS ARE IRRELEVANT IN A DECLINING MARKET”
I went to two open houses today for the first time in a couple of years, both in CA 91361. Both realtors had long lists of comps prepared and shoved them at me before I could even get a setup. At the latter, the Realtor(tm) handed me the “comps” all at $420K or above for some 924 square foot stucco crapbox now reduced to $400K, said they will likely go for $390K, and then noted it had been on the market for 114 days.
Comps!
My offers will be no more than 1997 Prices + 3.5% Annual Inflation.
gecko a very cognizant and consistent tattoo of this point. Being in Costal So Cali I would be willing to give it 5% annual. What do you think?
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offer 3.5%. MAYBE accept a 4-5% counteroffer.
Keep in mind, that’s 41% over 97 prices.
And 5% annual inflation over 10 years is 62% over 97 prices…
Inflation is way scarier than you think…
They are valid if there are no others available. In commercial in some instances they can back as far as 3+ years. However, when using comps like this greater responsibility lies within the hands of the appraiser to interpret the market and determine the value. In other words it becomes wild ass guess time. A declining market doesn’t change there validity. The interpretation just becomes different.
“When a Realtor says that, you know it’s true.”
This quote is being criticized out-of-context! The quote is from an opinion column, and the writer was being VERY sarcastic. It’s a good idea to read the entire stories that Ben posts here. I’d imagine that because of space limitations (or copyright issues??), Ben probably can’t post the entire articles here. But Ben does provide the link to every article, and each one is worth reading in its entirety.
http://www.voiceofsandiego.org/opinion/slop/
I heard an interesting call on Bob Brinker’s “Money Talk” financial radio show today. A lady called in who could not afford her property taxes ($5,000.00). She still owed $480,000.00 on her house and it was now worth $430,000.00 (based on new houses selling in her area). She could not get a loan because of being $50,000.00 underwater. Bob could not help much but suggested she might consider selling the house. But if she sold, I believe she would need to bring a check to closing for the $50,000.00, taxes, real estate commission at least. Bob said he expected more calls like this in the future. If I were in this position, calls like this would be chilling.
It is that time of year. Only 7 days until the first installment of California Property taxes become delinquent. I don’t think that will help the market. Not to gloat, but I’m glad I’m renting.
I live in Irvine and I am renting. Sold my home in Feb. of 05 and I am smiling all the way to the bank. RE Idiots and the mortgage business are directly responsible for the mess we are in and it will continue in to 2010. OUCH !!!!!!!!!
I suspect the Dec 10 property tax payment may have the highest delinquency rate in CA since 1991.
suspect the Dec 10 property tax payment may have the highest delinquency rate in CA since 1991.
I think this would be a interesting data point to follow and it will arrive shortly…Any of you ‘Data Miners” know how to get this info ??? We are going to have it shortly…Due date is the 10th of December….
“A lady called in who could not afford her property taxes ($5,000.00). She still owed $480,000.00 on her house and it was now worth $430,000.00 (based on new houses selling in her area). She could not get a loan because of being $50,000.00 underwater.”
Need a HELOC to pay your property taxes? Game Over!
“But if she sold, I believe she would need to bring a check to closing for the $50,000.00,…”
The loan won’t close. Woudn’t the procedes from the sale go to the leander (lesss closing costs) and the borrower (house seller) keep paying on the loan until it is payed off?
At least this person would get out of property taxes.
OH yea. The house loan uses the house as collateral. If the house is sold the lender can ask for other colleteral or another loan.
Tales from the end of the great real estate boom
By Scott Burns | December 3, 2006
http://www.boston.com/business/globe/articles/2006/12/03/tales_from_the_end_of_the_great_real_estate_boom?mode=PF
Thanks, Gekko
“Almost immediately my son Ollie, who lives in Santa Rosa, tells me that real estate values are down. A day later, the Press Democrat has an article observing that the median price is down 4.2 percent — to $565,000.
Worse, prices have fallen for four consecutive months. This means that many of those who bought at the top — which the Press Democrat identifies as August 2005, when the median home price in the area peaked at $619,000 — are now upside down. With virtually no down payment and creative financing, recent buyers now owe more than their house or condo is worth.”
So anecdotally, Santa Rosa prices are off by (565/619-1) X 100% = 8.7% from the August 2005 peak. Not sure what kind of new math was used to come up with that 4.2% figure…
Back to the future some more… The main difference that I can see this time is that, so far as I know, few speculators paid cash, thanks to scandalously loose lending standards. I hope all the “condo slaves” enjoy feeding their pet alligators.
‘This may be a good time for Californians to talk to Texans who went through the Texas real estate crash in the late ’80s and early ’90s.
Back then I wrote about Dallas “condo slaves.” These were people who had bought overpriced condos in a rising market. They bought them with buy-down mortgages that would reset to a higher interest rate in a year or two. They bought them with very low down payments, often less than 5 percent.
Then the market turned.
Prices slipped. Inventory ballooned. Thousands of homeowners and condo owners walked away from their mortgages. Prices plummeted. Then the condo lenders disappeared. Condo prices fell some more.
Those who tried to tough it out found themselves in an odd position. They could rent identical units around them for less than they were paying on their mortgage because the other units had been sold to speculators who paid cash. But they could not refinance to a lower interest rate because their condo was now worth less than their mortgage balance. They were “condo slaves.” They were indentured to their depreciated property.’
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“condo slaves” is a great term.
posted ” “condo slaves” is a great term.”
Mission acomplished!
There are only two ways out -
1. Pay down the loan.
2. Foreclosure.
The third option has expired….find a GF. Extremely unlikely now…might as well buy lottery tickets.
Problem is the recent Californians as they call themself come from the east coast. I kid you not. They actually believe you should pay more to live in sunny-warmer weather regardless of economic climate.
This is the same fallacy that you should expect higher P/E’s for tech stocks because they are in a growth industry… It’s only growth if the E’s of the P/E’s are growing.
That’s wall street speak for household income growth…
John Doe.
Yep, I was a condo slave in the Northern VA area during the last downturn (early 90’s). Will never forget that knot-in-the-stomach feeling.
Good read.
Sacramento Mortgage Fraud Update:
I started this thread earlier today on the “Let’s Get Hopped Up and Make Some Bad Decisions” section. I am posting it here so all the bloggers who encouraged me (and discouraged me) can see a bit of success to date.
Background: Five homes sold on one street, Hillwood Loop in Lincoln in the last few weeks, all using $750,000 fraudulent loans, $200,000 over market, 80/20, 100% financing. I am working with the FBI, DRE and county DA, but it is tedious, as they are just starting to understand the reality. A good friend suggested I will be more efficient in stopping this fraud, by putting the lenders on notice. So I wrote to all 4 lenders: New Century w/ 2 loans, Alliance Bancorp, Long Beach Mortgage and First Franklin. I CC’s the FBI, DRE and DA.
Today, Andy Pollock with First Franklin responded. His statement is below:
“I am in receipt of your e-mail information. It will be forwarded to First Franklin’s asset quality division for evaluation and qualification. Our conclusions and next steps are contingent on any specific findings, if any at all.
Andy Pollok, First Franklin, 408-964-XXXX {I edited his direct #}, 408-955-7599 Fax”
SO THE BALL IS ROLLING NOW. I can tell you Andy will find huge fraud behind the asset at 1329 Hillwood Loop, which secures his loan. His mortgage is for $785,000 (80/20). The builder advertised a similar, but better model for $550,000 in the Sacramento Bee a month ago. So Andy will be eating $235,000, plus expenses.
Economics is where the key lies to stopping this stuff. A sub prime lender makes money on the spread when the put the loan into the MBS loan pool. Suppose they make 5 points, so Andy was going to make $37,500 on this loan. Now, he will lose at least $235,000, so he must originate 7 more loans just to break even on this one mistake. Hmmm, I don’t think these loans grow on trees…..
I feel like I am earning my new “Nom de Plume” and after a month of hard work, I am finally starting to see results.
Paladin
“Have Pen, Will Travel” Wire Paladin, San Francisco (Google it if you don’t get it)
Kick a$$ and take names.
You may just be elected the next governor, since Spitzer just succeeded with that strategy in NY.
Thanks SSBG, but if nominated, I will not run, if elected I will not serve. I have little patience for politics. However, if Arnold asked me to chair a task force to put the real estate bubble fraud to rest, I would take that up in a California minute!
Good job, Paladin. Good proactive folks are hard to find today.
As I tell my sweetheart, a hard man is good to find….er, well, whatever……….
“I am posting it here so all the bloggers who encouraged me (and discouraged me) can see a bit of success to date.”
Stay the course!!!
“And it’s hard for sellers because they feel like they’re leaving money on the table, like they’re giving their money away,’ Spiteri said. ”
Those same sellers had greedy intentions in the first place. The “money on the table” is not really theirs. It was over-inflated figures. What they can get from selling their house is only the amount the buyer is willing to pay. Stupid sellers! Overweighted in inflated house loan and underweighted in savings for retirement. And they heard the pied pipers telling them all along that real estate is a safe investment. Never occurred to these FBs (now FS’s) the data of 15 years ago when there was a depressed RE market.
The cardinal rule of investing is never risk more than what you are willing to take a loss on. Seems that these California FBs broke that rule through and through. I watched from the sides all through 2000 to now and these stories just get more interesting. On a personal note, my latest Series I paper bond purchase was sealed as I received it in my mail this weekend. Series I savings bonds deliver low yields for the most part, but they are not really for greedy people anyway.
The problem with comparables is they are seldom truly comparable.
Here we have the biggest purchase in people’s lives - housing - and the reality is that cost benchmarking isn’t half as good as the unit pricing used on a stick of butter.
Will we ever see any better metrics? What about cost per square foot to start?
I realize it’s not an exact science and it’s hard to quantify all the subtleties and intangibles from property to property. But does this mean that we shouldn’t even try?
Shouldn’t we augment measures like median price with other measures that help put properties on an even playing field for comparative purposes? What will it take for this to happen? Or am I smoking something?
If you go look at all houses within 25% of the price range of what you are looking at within a mile radius, you can get a good idea of price/sf/quality and then make an intelligent decision.
Factor in school district and other boundaries….look for other pluses and minues as well (high voltage lines, busy street, views , etc…)
“Foreclosures, abandonments create suburban eyesores”
Southern Cali. It’s starting. At the edges like it always does. I remember the 90’s. The rumble started at the edges. Palmdale / Lancaster. Then it started moving inward. Anyone watching the So CA market should read this whole article. I see this as a portend.
“Suburban eyesores like these are a sign of the softening real-estate market, a situation not limited to Eastvale, an unincorporated community surrounded by Norco, Ontario, Chino and Mira Loma”
There is nothing worse than owning a home in IE unincorporated areas. Talk about exurban hell: can’t imagine the dark apocalyptic no-mans unincorp land lying between Norco,Ontario,chino and Mira Loma. Once Drove thru Uncorp area between Fontana and Rancho cucamonga, and saw rustic pigsty ranchette properties with big-rigs parked on the yard, chicken-farm ranchero shacks packed with illegals, and areas with pallet/lumber/ construction/truck yards next to rustic appalachian fontucky crack shacks next to newly minted pardee track homes.
I think that we will see a lot of foreclosed abandoned properties throughout the inner ring LA areas as their owners put zero down using every suicide loan to pay as little as possible. LA innor dumps will not suffer much in neighborhood quality however( Can you decline from a turkey to an ass?)
“The rumble started at the edges.”
That’s just too funny!
Location, location,location. In Providence over the past couple years the houses in crack areas have been gutted, painted, and flipped. The tenants remain the same and the houses are going back to looking like they were a couple of years ago.
You can take the trash out of the trailer but you can’t take the trailer out of the trash!
Yes, as Imploder says, the 90s started in Lancaster/Palmdale. It started in those areas with the FHA/VA loans which were as close to 100% financing as existed back then. That last cycle peaked in the 1st/2nd quarter of 1990. By the 4th quarter of 1991, I drove those areas looking at long lists of foreclosures from the bank I was with at that time.
Tha amount of 100% financing in the last 4 years is amazing. Add to this, loans with short-term, artificially low payments, and it is frightening to even think about the potential for disaster.
SL,
Come 2008, who’s really going to be left as a truly qualified, capable and willing buyer? I’m beginning to think very few… so few, in fact, that median prices everywhere (and I mean everywhere) will have to return to roughly 3x median income.
The only reason prices in any region ever exceeded 3x was due to decades of ever-rising equity rollovers. The equity train has derailed, though.
We’re not going back to 1997; we’re going back to 1977.
“We’re not going back to 1997; we’re going back to 1977. ”
Good prediction on housing prices. 3x median income is reasonable. What happens if income goes down and/or we have high unemployment? Like a depression. How about 1937? Although I would agree that this is a worst case scenario.
Incomes will go down and we will have high unemployment — “it’s in the bag”. I’ve been consistent about predicting a depression.
in 1992 or 1993 a neighborhood of about 30 houses in Palmdale, all framed up, with no place to go, the HB having gone bankrupt, were sold as a set for a hollywood movie, in which they were blown up.
Anybody remember what movie they were in?
And more important, is this a possibile “growth industry?”
Does anybody know what’s going on with prices in Glendale? I know someone who says it’s bulletproof due to a constant influx of Armenians.
Glendale will crash just as it crashed in the early 90’s. I looked at one house in ‘94 that sold at peak for $425k and was for sale at $290k. There were plenty of Armenians moving in then.
One house has been for sale for 6 months. Another - for sale for three months, then taken off. Two houses were sold, the tenants kicked out. The new owners stripped them, installed chain link construction fencing - they were slated to be torn down and replaced with condos. This was over a year ago. They remain empty and boarded up.
One six unit apartment building is EMPTY. No tenants. Weeds and brown grass. I have no idea why it is apparently abandoned.
This is near Doran/Glendale Bl.
in glendale as well and can’t figure out this city.
i asked in another thread but something strange is going on with our new neighbors next door. they bought the place 5/06 for right under 1mil and i just saw on zillow that it sold 11/15/06 for 1.4mil. there was never a for sale sign this last time and the same people are living there. can someone please explain what manipulation is going on over there? i am scared this place is just going to be a vacant house that they will walk from with lots of money in their bank accounts. they easily have $500,000 worth of cars parked on the street or in the driveway. one of them a fixed up exotic that takes up the 2 car garage.
It was probably bought in someone elses name for these people
I just found out about a similar situation in our condo complex. The unit across from us has been sold twice in two years for the exact same price. The same person has been living in it all this time.
What… Like Armenians like losing money? Not the one I know.
LOL… not the “one” …. Not the “ones”
“System of the Down” Are Armenians. (a musical ensemble for those unacquainted)
slate,
The Armenians have been in Glendale for a long, long time — even prior to the last RE bust. LA, as a whole, will fare better than places like Victorville, Fresno and Redding, but it will go down. Like imploder said above, it startes at the outer edges and moves inward. I anticipate the main metro areas will lag the far-flung areas by 6-18 months. That being said, I have full confidence LA will drop by 35-50% (maybe more if there is a severe recession/depression). During the last downturn, our old house in LA lost almost 40%, and it was a very nice house/nice lot/nice area. Nothing is immune, IMHO.
startes=starts
edit button, please!
We lived in glendale for a few years and as a friend of mine liked to say…
armenians are the only people with “mean” in the middle of their name~
Does that mean they are just average?
http://www.detnews.com/apps/pbcs.dll/article?AID=/20061201/BIZ03/612010399/1001/BIZ
“talled subdivisions leave Metro homeowners on barren blocks home alone
Robert Snell | The Detroit News / The Detroit News
TAYLOR — It would be easy for Christopher Lightfoot to erase the eyesore.
The carpenter figures parking his Ford E150 van on the front lawn would obscure the abandoned condominium complex across Beech Daly, the one with waterproof-wrap rippling in the wind and a half-finished fieldstone chimney.
But it wouldn’t fix the problem. Stalled subdivisions are becoming an increasing part of the landscape across Metro Detroit amid a slumping housing market for single-family homes and condominiums, threatening increases in property values and quality of life for neighbors.
As builders such as Neumann Homes auction new houses and struggle with plots that aren’t selling, residents are coping with empty lots and blight. They cope too with envy, as neighboring homes built after the housing-market bubble burst are selling for much less….”
I tell you what’s perplexing to me. This weekend the 3 houses that are for sale on my street were open as usual on Sunday. Ordinarily, there might be a few people that look at them. Then the agent folds the sign and leaves. Done deal. Repeat next week over and over.
This weekend there were TONS of people looking at these houses. They looked serious too. Mostly older people driving Volvos and Bimmers. Either that or they were older asian couples looking intently at these places. Perhaps due to the nice weather people simply got bored and wanted to look at houses. But something else tells me that despite what we discuss here on this blog, MOST people out there are still clueless about RE trends and the first sign of a slight price reduction in these houses will cause them to be sold. These people looking at them look serious and appear to want these houses BADLY. Have any of you had the same kind of observation?
It’s really infuriating to see these people come every weekend and clog up the streets. I almost feel like yelling: ” Hey- do you READ the paper?” I swear its like Californians must be taking stupid pills every morning.
Lastly, of the very few homes that have sold in our area, it seems like the people that are buying at least look like they aren’t the kind of people that could possibly afford. One house down the street sold to what appears to be a family in the carpet cleaning business. They drive 2 beat up vans to work every day.
Just remember, lookin’ ain’t necessary buyin’.
I’m sure there are a bunch of knifecatchers out there who think that right now is the time to get a “great deal.” But the real measure at the end of the day is how many of those houses on your street are actually sold.
“its like Californians must be taking stupid pills …”
Hey not all of us are stupid.
I sold in ‘04 after 10 years of equity build up. I’ve been a happy renter since!
Jetson,
Personally I’ve been approached by people who say they have been in contact with people who are supposedly “in the know” and have “their ear to the ground” (think big names and Beverly Hills Offices) who have said that the market is taking off again in the spring.
Those people you saw looking around in the houses are probably the suckers who believe they have been “tipped”. The poor carpet guys, oh, god. I don’t want to think about them before going to sleep….
“I swear its like Californians must be taking stupid pills every morning.”
I’ve asked myself that same question everyday since I had to move to San Diego in Sept. ‘04.
Jetsonboy,
I’ve noticed the same thing.
But remember, people have all sorts of reasons for visiting houses.
If I notice a nice looking house I will go inside as I am interseted in architecture.
Remember though that looking is noy buying.
Check to see if the houses actually sell.
I have a friend who was looking, but now persuaded to wait - she was being told by the realtor - if you wait until after thanksgiving - then it will be a great time to buy as only the people who need to sell are still on the market and they are more motivated. Perhaps quite a few folks are buying into this?
Good point. We may be seeing an end of year bargin hunter run as people still think they have money to spend.
Wait until the xmas bills come in. And right after then it’s tax time. The normal spring/summer ‘07 buying season will be THE test.
“The housing market is fine, she said. When a Realtor says that, you know it’s true.”
I sure feel better. Don’t you?
NAR ran that ad campaign for a reason. Far too many people look to Realtors ™ for information regarding housing. They look no further and accept what they are told and if NAR is telling them it is a good time to buy, then buy they might. Knifecatching lemmings one and all.