“The Days Of Making Exorbitant Money Are Done”
The Chippewa Herald reports from Wisconsin. “The housing market in Chippewa County has flipped. ‘Home sales are definitely a little slow,’ said real estate agent Jason Huebner. Fewer people are buying houses as investments, doing a quick remodel and sale commonly called a ‘flip.’ The people buying houses nowadays are buying them to live in them, said Huebner.”
“There are an abundance of houses on the market. There’s 30 percent more housing inventory than last year, said Mark Fouts, president of the Realtors Association of Northwest Wisconsin. But, interestingly enough, there’s been a decline in the number of days that houses are on the market. ‘The homes that are selling are selling more quickly,’ Fouts said.”
“Gone are the days during what was a five-year period when homesellers could make a big profit by merely putting a house on the market. ‘The days of making exorbitant money on a house are done,’ Huebner said. ‘I think people are having to price their homes more appropriately,’ he said.”
“He said a good house in a good location that’s priced and marketed right will still sell in today’s market. ‘Our spin on it is it’s a good time to buy,’ Fouts said.”
From Channel 3000 in Wisconsin. “Dane County alone had more than 5,500 homes on the market this October, which was up 49 percent from 2005 and more than doubled from 2004.”
“Residents Jason and Larissa Decker said that they’ve had their home on the market for four months now. ‘We’ve had 10 showings now,’ said Decker. ‘I understand the situation.’”
“Realtors said that the situation isn’t that no one is interested, but there is more competition.”
The Marietta Times from Ohio. “Home sales have fallen by about 10 percent around the state of Ohio, according to real estate market expert. Darlene Breen, president of the Ohio Association of Realtors, said the Ohio market was on an upswing for the last few years and now it is simply normalizing.”
“Breen said with the upswing, many home sellers were overly optimistic about the profit they might see on their home. ‘Things sort of went back to normal,’ Breen said. ‘But people did not make as much as they had expected.’”
“Lydia Donnelly, a broker in Marietta, said a lot of homes in the area are on the market because of foreclosures. ‘One of the reasons we’re seeing a lot of houses on the market right now is because people have overextended themselves,’ Donnelly said.”
“She said predatory lending and especially zero down home equity loans have gotten home buyers in trouble. In 2005, almost 50,000 homes in Ohio were in foreclosure ‘Some sellers owe more on the house than what they can sell it for,’ Donnelly said.”
“When Bobby Fitzgerald got a job transfer in September, he and his wife put their Devola house on the market. ‘There were quite a few showings right at first, but lately we haven’t had as many. It’s a little slow here. The market seems dead,’ Bobby Fitzgerald said of local real estate. ‘We went through the entire month of November with no showings.’”
“Donnelly said right now buyers have their pick of homes in the area. ‘Buyers are driving hard bargains right now,’ she said. ‘Bids are about 15 percent below the asking price.’”
“‘Sometimes when people are enticed into home ownership with no money down, those people are really caught between a rock and a hard place,’ said real estate agent Dan Jones. ‘There’s an awful lot of borrowing going on.’”
“Jones also did not think the downturn in the local market was significant, although he did say there are more homes for sale this year. ‘There’s a little bit of a downturn here but it’s very small,’ he said. ‘Marietta doesn’t go as the rest of the nation goes.’”
Easy credit has been keeping this monter afloat. People have been borrowing money to pay all the bills on the basis of home prices continueing to appreciate rapidly. Look at all the forclosures now as soon as prices went down a little. It has been about robbing peter to pay paul all along. Someone is going to have to pay for all the excess.
Dude you are so right. However, the days of easy credit are slowly coming to an end. Many people are going to have to give up a little of the lifestyle they want or they are going to feel some real pain. For others, it is too late. They are going to feel the pinch one way or another. Even for the fortunate few who can refinance, that 10K-25K prepayoff penalty is going to be more than they have in the bank or in the HELOC checking book. 2007-2008 are going to be the belt-tightening years for many middle class Ameicans.
hmm, I’m not so sure. I get 2-3 refinance offers a week from Countrywide — and don’t even own a home. Re-fis are so easy to get, you don’t even have to own a home! what creeps me out is how they got my name.
Same thing with credit card offers. I could literally have 20 - 30 credit cards by now if I wanted. I pay me bills on time, and have no debt, so my fico score must be insane.
when these offers stop coming, I will believe the end is here.
http://www.optoutprescreen.com/
Gets rid of 99% of credit-card offers. Saves trees, too.
passthebubbly, THANKS FOR THAT INFO!!! I have to empty my shredder every week….
“when these offers stop coming, I will believe the end is here.”
Actually I think it might be the other way around. The more desperate these places get the more offers you receive. I get a couple of calls a week (sometimes a day), you can hear the desperation in their voice. They literally beg.
Denver Housing Foreclosures Worst On Record
DENVER — Denver’s 2006 real estate foreclosure rate is now officially the worst on record.
With one month left in the year, foreclosures have already eclipsed the record set during the 1988 oil industry collapse that sent Colorado’s economy into a tailspin.
Denver’s spiraling market should serve as a warning to the rest of the country, according to experts.
Click here to find out more!
An analysis shows many of the year’s nearly 18,000 Denver metro-area foreclosures fall in what’s being called the “foreclosure belt” of Adams and Weld counties and north Aurora, while upscale neighborhoods are nearly unscathed.
Observers said that Denver’s hot market for mortgage fraud has created what one called a “Wild West” atmosphere that has left buyers trapped in bad loans with no way out.
that was quick- we were debating that 2 weeks ago here- now the worst
Don’t worry Denver. Florida and California will catch up to you soon. In fact, we’ll make it obvious that its a good thing Denver took care of this pain early.
Gee, more news on Mortgage fraud… my o’ my, this couldn’t possibly effect anyone’s change of getting an 80/20 option ARM? It doesn’t get interesting until credit *really* tightens. The WSJ made it clear that in the last “few months” we’ve seen some tightening in the sub-prime… but tightening is only going to increase.
Neil
Neil,
I have to believe that at least a major recession is on the horizon, if not a full on depression. The gov’t can print all the money it wants, but who will want it? The gov’t can raise rates, but how will it pay those debts back? If the gov’t holds the line, fine, but the FBs are toast. We on the board know it was only the housing ATM that kept the economy from finally dying. How is that going to change, esp. with foreclosures on the rise. What about that post Ben had last week, more than 10,000 derelict homes in Pittsburgh, PA, alone and prop taxes in arrears. This is going to get real ugly for the good ‘Ol USofA. I don’t think anything the fed does is going to save this ship.
If housing continues to fall and the MBSs keep tanking, who is going to pay for all this? That’s right the US. We are so bankrupt and don’t even know it.
It is only a matter of time before other countries realize that investing in America is just not worth the risk. Heck, how many on this board advise investing overseas or in metals, or in other currency? That should tell you something, shouldn’t it?
OCDan,
I agree with you. This is going to be the ugliest recession of my life. Yes, I remember the 90’s aerospace downturn and my mom crying for my their friends and my dad’s laid off coworkers; oh, she didn’t cry when they were laid off… it was when she realized how desperate they were for income, any income. Engineers with Ph.D’s applying to manage a mall shop… ouch.
If China decides to divert money to Euros or Yen… we’re in trouble. They might also decide do deflate their currency. Yes, it will make their exports more expensive… but it will also make oil cheaper for them.
We are very bankrupt… credit is going to tighten like it did in 1930/1931.
But I still don’t predict a recession; we’ve gotten too good at shift labor around to new industries. I know too many Americans working abroad… It will be ugly, but not a depression in my opinion.
I even blogged why I think not a depression.
But it will be the worst recession in a long time… 
Neil
Neil and OC Dan. I don’t know nearly as much as many here about economics, but I have studied a lot of history. This looks to me like a perfect storm. If it were only the housing bubble, you could expect that FBorrowers and FLenders and FBuilders would be toast, or that only the ones with really good fiber would survive. Painful as it would be, in the long run it might even turn out to be good for the economy. We would have a healthier system. But this is about more than that.
I am from Argentina, and I remember after our big meltdown in 2001 all the economists were obsessed with our case, as if it had been a kind of lab test for the worst case scenario that anyone could think of. Now, I’m not saying things are going to get so bad here, not at all. What I do know is that most Americans are not mentally prepared for an occurence half as serious as that. You have to think that Americans are conditioned to think that shopping is patriotic, whether it’s houses or cars or cheap toys. For years they have been able to indulge in consummerism with the tacit complicity of the government. When they realize what’s happened, they will be angry. That is why I am worried about the possible political backlash of this. Americans are not used to “downsides” or “flip sides of coins”.
Can’t wait until this happens. Here in Bubble Central (CA), they’re still handing out NINAs & neg-ams to illegals, vagrants and specuvestors like candy. Still have to dig through all the mortgage refi spam in my company’s fax tray every morning to find what I need. When that river dries up, *then* I’ll know credit has really tightened.
Until then… business as usual here in Bubbleville.
you can get $ 1500 per spem fax- beats working
Harm so true. Where I work we still get 1-2 of those faxes each week. What for? We are a county outfit. What are they faxing us? Anyway, I just recycle the paper. Yeah, 50 years and you can start that 750K loan out at 1,750 a month. Right! DO the math. It ain’t gonna work out.
When this river finally runs its course and the well dries up, there is some serious pain.
In the grander picture, what gets me is that the USA really has become a nation of flippers and poker players. What happened to producing something or even service, like plumber, mechanic, electrician? I tell my son that all the time. Go to college and get a degree, that’s good. But also learn a trade. Learn how to wire a home or building, as well as, plumbing. When the big one hits (either depression or quake) in Clownifornia, people are going to be needing your service right quick. They won’t need another college professor.
‘There were quite a few showings right at first, but lately we haven’t had as many. It’s a little slow here. The market seems dead,’ Bobby Fitzgerald said of local real estate. ‘We went through the entire month of November with no showings.’
Quite a few showings, followed by not as many, followed by none in Nov. HMMM…I may be curve-fitting here, but I see a trend.
We’re talking about Marietta Ohio, not Marietta, Ga. Marietta is on the banks of the Ohio, across from West Virginia. It’s a very small town, probably a company town these days (plus a small college and county government. The nearst city any of you may have heard of is Columbus, Ohio, which is a 3 hour car ride away.
“Currently, there are 170 single-family residences on the market in Marietta and 485 in Washington County. Last year, there were 121 houses on the market in Marietta and 336 houses in Washington County during the same time period.
Current listings are staying on the market right now for about 197 days, about a month longer than last year’s listings.”
Local time on the market has increased from 5 to 6 months, on average. That seems about right for Ohio.
“She said predatory lending and especially zero down home equity loans have gotten home buyers in trouble…”
Oh boy. Together with the city’s assistance, the REIC launched a similar campaign here in Jacksonville, FL. They are targeting the least informed and experienced real estate buyers, first timers. Twisted benevolence, IMO.
Zero down payments are probably the biggest problem here in Ohio (apart from job losses). Houses have appreciated only about 15% over the past 5 years, so HELOCs and refinancing are not all that common, from what I’ve seen. However, the pathetic housing market has been proped up by first-time buyers who put no money down. Smart ones took fixed-rate loans, the rest took ARMs. (I don’t know if neg amort loans are available in Ohio.) When one of these no-downpayment owners looses a job, there is no real chance of breaking even on a sale, so foreclosure is the better alternative. Very few buyers in the past 5 years have any pockets of money, let alone deep ones.
‘Gone are the days during what was a five-year period when homesellers could make a big profit by merely putting a house on the market. ‘The days of making exorbitant money on a house are done,’ Huebner said’
Five years in Wisconsin? And the press keeps saying the bubble is isolated on the coasts?
That’s why the next time I hear there’s no bubble in Texas, I’ll be bringing out the famous trout again.
Somebody here recently posted a link to an economist’s presentation that compared SoCal to Wisconsin, and showed how cyclical the Cali market is while Wisconsin was nearly linear. Guess that’s no longer the case.
Better make that trout a 30-pounder, Txchick. I don’t think your 20-pounder will have the necessary wallop for the job.
txchick,
have you followed the CME Housing Futures at all. I was wondering if you had a take on them.
They miss the financial instruments that allow speculation such as ARMs and zero down (zero margin loans).
Where we vacation in north central Wisconsin it started in the late 90s with the dot-com bubble. What was once a sleepy resort area with family-run fishing resorts and seasonal cabins became a playground for those with excess stock market money to spend. Many of the little cabins were torn down and replaced with “log castles”. In the last 2-3 years you could see it was peaking as the resorts were turned into condos and then new construction condos and even timeshares were being built. I can’t imagine who thought time shares in northern Wisconsin were a good idea. The summers are spectacular, the winters are great if you like a lot of snow, but there are several cold, muddy months in between.
Kathy,
Thank you thank you thank you!
By the time it was evident that homes were appreciating faster than inflation, faster than incomes, faster than…… well anything bubble believers were already on the defensive and all too willing to “explain away” these events! The first most logical way was to assign the crazy market’s actions to a non-existent rise in incomes (then carefully confine those statements to “densely populated” coasts where, pffft, of course there was obvious demand! I believe we started seeing this mass distraction tactic employed as early as 2002.
Bubble believers never thought after years of declaring ‘there is no national RE market’ that hokey little towns in the mid-west would amongst the first to fall blowing BIG FAT holes in their convenient little lip service theory!
At every turn the REIC (and true believers) made every effort to make what many of us had doubts about look perfectly plausible! Note they’re not talking about the corn-belt meltdown if they can help it?
Kathy,
Loved the “log castles” btw! Be alright with you if I used that from time to time?
Sure. I don’t know that I made it up. I’m sure somebody else probably has used it before me. But it sure does describe the properties there now. Northern Wisconsin is still beautiful, but it takes a lot of money to own a vacation place there now. When I was a kid (my grandparents lived up there) schoolteachers and blue-collar types owned the cottages. I can’t even imagine who could “afford” the really big places now. Even your pretty basic place on a lake runs $300,000 - $400,000 now.
What do you do in the summer in Wisconsin? Well, if it falls on a Sunday you have a picnic.
Wisconsin is horrible in the summer the state bird is the Mosquito, the lakes are filled with flat landers - a vile infectious disease from the south - Sundays are not safe to go out on the waters- some waterskier/wakeboarder will come right thru the sails. I cannot say how much I advise you all to keep away from Wisconsin.
Thanks, Hoz. But this flatlander and her family will keep coming back.
BTW - My family has either lived in Wisconsin or vacationed there for more than 40 years. We don’t own a boat, snowmobile, ATV or any other motorized “recreational” vehicle. We hike, fish, enjoy the quiet and, oh yeah, spend money in the restaurants, supermarkets and other retail establishments. Without us vile flatlanders, the northwoods wouldn’t have an economy.
“The people buying houses nowadays are buying them to live in them” said Huebner.
What a novel concept! You know, it’s so crazy it just might work!
Look, when you’ve got a bubble in Chippewhat, WI you’ve got a bubble! I used to have a client up there (retired IBM employee) and it was basically winter and 6 bad weeks of ice fishing. Yet in this far flung corner (as Ben notes above) there’s been 5 years of madness. I still find their observation of great value b/c it goes a long way toward establishing that (1) it wasn’t just the coasts and (2) it wasn’t just 2005!
Most drug addicts probably only identify their final weeks/months prior to jail/re-hab as the time when they were really a danger to themselves or others and gloss over the 5 or 10 years that lead up to that. Now, that doesn’t mean that they weren’t a burden to others it just hadn’t reached “situation critical” yet. Think of this as your “intervention” Mr. Flipper.
Yeah, DinOR, remember the term “owner-occupier”? That was soooo old school before! But I bet it’s going to come back into vogue real soon –with a vengeance.
Hey HARM,
Tax loss selling season boredom I suppose, but in your neck of the woods that’s “venganza” right?
I went to a new housing area, many a homes vacant with the signs blowing in the wind. I CHECKED ALL THE HOMES WERE PRICED 200 TO 400K over the models with very few options in them. This is crazy pricing, the only home that sold made a 81k profit and took the money and ran. A filliper owner told me the guy was nuts, i looked at him like he was nuts, why get in a fight let him go broke i said to myself greed is a terriable thing?
wtf? English please.
I think The Shadow is trying to say that:
A flipper who currently has a house listed in this neighborhood for a significantly higher price than the models told him that the flipper who sold for an $81K profit was nuts for selling so low.
Is this right?
Off topic, but the second episode of Flipper Nation is due out tomorrow.
http://www.flippernation.com
SFer,
Not at all! If we have flippers in a county of Wisconsin that has more bears than people I……. think we can safely say we’re a nation of flippers, no?
This is why (yes here it comes again) I keep coming back to the cap gains issue. I grew up in IL and having a cabin in WI may not have necessarily implied electricity or indoor plumbing. The whole premise of the show “Hometime” (set in MN) w/ Dean Johnson (and his main squeeze of the week) actually started back in the 90’s and pre-dates many of the show we lampoon here regularly. They loved to feature “homes by the lake, eh” that were 3-4 and 5,000 sq. ft. with all the fru-fru crap you can imagine! Why? No cap. gains! In ways we could argue that America’s fascination with tax free fru-fru actually started here?
If you really look at the “grand daddy of them all” well it’s definitely “This Old House”. But when Bob ran the show it truly was more about absolute fixers in need of major repair and just trying to get the damn junker into a livable state again. “Hometime” really became more about “moving upscale” and as far as I recall started in the mid-90’s. This is when Home Depot “was the stock to own”! Remember? This was years before we laid the foundation for “The Dark Towers of Financial Doom” in cities across the land.
I lost interest in “This Old House” when they featured that New England fixer (on a busy rural road) with a water feature that probably cost more than my house.
Arizona Slim,
Hey don’t lose hope! I’ve got a feeling that things are going to get back to their original intent real soon here. Only this go round it’ll be more like “This Old McMansion” where they show viewers how strip out all that “old” fru-fru crap and get real again!
God, I hated that show. I don’t think I can express in words how much. That was the early seed of this whole flipper thing.
Hometime was better I thought although the houses were monstrously large. Maybe it’s because they were all in the north woods of Minnesota which is such a beautiful place. Or was.
txchick57,
What REALLY started to turn me off was that the couples that were having the rennovation done were acting like they were the “Vander Van’s” for crissakes. Like money was no object and all the while Ben’s regulars knew full well this was nothing more than MEW $’s and cashed out 401k money!
Uh, you can stop with the “act” now o.k?
Hometime was better for a while. I stopped watching when they caught big house fever too. I hated that series where they clearly confused building a house “with character” with building a house “that cost wads of $$$”.
Anyone read “Fine Homebuilding” mag? Taunton Press trade publication, sort of, or it was. I’ve been reading it for 10+ years. They used to have all the time very cool place showing the construction costs. Only the very very high end were over $250/300 - square foot and we’re talking architect design and custom building. I think it’s all my years of reading that mag that give me the outrage over this nonsense I see now with junky crap selling for twice that.
AFAIAC, Taunton Press has gone over to the dark side, with their show-off books. Their architecture is still good, but the houses are way too big. I had liked Sarah Susanka… until she designed a “Not so big showhouse” that was three bedrooms and 2900(!) sq feet.
The tiny-house movement is fun to watch. Check out http://www.tumbleweedhouses.com/houses.htm
Houses like this would send Robert Toll into cardiac arrest.
““He said a good house in a good location that’s priced and marketed right will still sell in today’s market. ‘Our spin on it is it’s a good time to buy,’ Fouts said.”
He even admits he is spinning. LOL!
You beat me to it. Like the stupid actor who reads the entire cue card he didn’t realize that “Spin” was just the header.
Headline news should read.. EXPERTS FIND THAT FLIPPERS AND UNQUALIFIED BUYERS DROVE REAL ESTATE MARKET MANIA PRICES SKY HIGH ,BUT PRICES ARE NOW CRASHING !
Can you imagine how much panic that headline would cause in spite of it being the truth . The media talks about different facts but never ties the facts together .
It seems to me that the media has been backing off on housing news lately ,(at least I don’t see much in my local paper ).
Affordability capped out this housing boom or it would of continued .The mania went on way to long because of the easy money /get rich spin .
What I don’t like is all the loan fraud in 2006 to make it the third highest selling year when it should of crashed 5 to 10% in 2002. At that point in 2002 money would of been directed in a more constructive way rather than the situation we have today .
With all the excess inventory, sales perks, price reductions,reduced sales and cancellations WHY was the RE builders stock up on the market today?
David you beat me to that one. I noticed Fouts even copped to spinning.
Did anyone see the article in Barron’s this past week?
http://bigpicture.typepad.com/comments/2006/12/is_the_housing_.html
No bubble in Chicago folks…Check out this condo and the comments.
http://yochicago.com/today/lofts/we-like-to-watch-inside-river-north-loft_3307/#postcomment
Who was that diet guru about ten years ago…Susan Powder? “STOP THE INSANITY!”
I love how the one guy said, “…if the value of the home is wrong then the bank won’t give the buyer the money.”
Yeah, there’s no appraisal fraud going on.
CNNfn has the “5 bubbleproof markets index up again”
http://money.cnn.com/popups/2006/biz2/newrules_bubbleproof/index.html
Those charts are stupid. I can’t believe a reputable news source would even bother wasting server space with garbage like this. Then again, CNN’s parent company, Time-Warner, was dumb enough to merge with AOL at the height of the dot-com mania. I wouldn’t expect anything more than crap to come from them.
Perhaps now the days of exhorbitant rents are in…look at this rip…
Look at this charmer found on Craigslist…
It’s AMAZING what people think they can get away with…my God the greed.
Craigslist Listing
Is it legal to pre-screen tenants based on occupation?
“As a property owner or manager you have a responsibility and a requirement under the law not to discriminate in the rental of property on the basis of race, color, religion, sex, handicap, familial status, or national origin.”
Anything else is far game (including such things as homosexuality, verifiable income etc). State law may be more restrictive. Oh, if it’s an individual landlord good luck proving discrimination in court. Easy for the LL to just rent it to someone else becuase the other guy “had better credit”.
Yes, wouldn’t you as LL want to know if someone had a good job or not ?
The tax free gains in real estate made short term real estate investment a attractive investment plan for alot of people .Not enough is said about how this factor pushed up the short term demand . Had the lenders been doing their job they would of limited speculation demand and they would of know what forces were driving the market .
Sorry known not know .
Got gold?
When consumer spending dies, there goes the economy.
When the economy dies, the Fed will send the dollar with it.
Got Gold? Got Silver?