“Buyers Sense Prices Are Still Needing To Drop”
The Review Journal reports from Nevada. “The inventory of homes for sale on the Multiple Listing Service in Las Vegas declined to 19,729 in November, down 16 percent from the previous month, the Greater Las Vegas Association of Realtors reported Wednesday. It’s still up nearly 34 percent from a year ago.”
“‘I think people are finally starting to listen and read the news,’ said Linda Rheinberger, president of the Realtors association. ‘They understand that market conditions are not what they were yesterday and who knows what they’ll be like tomorrow. It’s a different environment. They’re not going to attain the results of 2004. The market has changed.’”
“Sales continue to decline dramatically. Realtors sold 1,547 single-family home sales in November, down 36.6 percent from a year ago. Median prices are stable at $308,000, off by less than 1 percent.”
“‘We’ve been saying for months that sellers should be realistic in listing and pricing their homes for sale,’ Rheinberger said. ‘It looks like our message is taking hold.’”
“(Realtor) Kurt Lehman has noticed that inventory of rental homes on the MLS has dropped. ‘This seems not surprising, given the prices which still have a ways to go to come down, the pressure on the home lending industry to clean up their act and the tentative attitude of buyers, who sense that prices are still needing to drop,’ Lehman said.”
“Larry Murphy, president of housing research firm SalesTraq, said he gets calls and messages almost daily from people telling him the real estate bubble has exploded and prices are collapsing. ‘Exactly when did that happen? The fact is, it didn’t happen,’ Murphy said.”
“Construction crews are pouring the third and fourth floors of the parking structure and residential building for Juhl, a $170 million mixed-use condominium development in downtown Las Vegas.”
“With 214 “hard contracts,” or binding purchase agreements, Juhl is about 60 percent sold, CityMark President Rich Gustafson said. A large percentage will be primary residents in the building. ‘That’s one of our goals,’ he said. ‘We’re looking for a lights-on building.’”
The East Valley Tribune. “The good news: Arizona’s economy will continue to grow next year. The bad news: The growth rate will be slower than in 2006 as the economy downshifts for the third consecutive year. That’s the consensus outlook of 18 economists who contribute to the Arizona Blue Chip Economic Forecast.”
“Scottsdale economist Elliott Pollack said the Valley real estate market also has its good news-bad news aspects. The good news is commercial and institutional construction is strong. The bad news is single-family housing permits are being issued at less than half the pace of a year ago, even though sales have remained strong, he said.”
“‘What happened is builders overbuilt in 2004 and 2005, and about 15,000 to 25,000 excess units are now on the market,’ he said. ‘We’re basically going through an inventory correction.’”
“Downward pressure on prices also is likely to continue until the inventory is worked off, he said. ‘If all goes well, it will be a lousy year in 2007,’ he said. ‘If it’s not a lousy year, this (slow housing market) will just drag out.’”
The Arizona Republic. “Desert Communities, Inc. of Las Vegas placed the winning bid of $58.6 (million) this morning to buy the first nugget of the 275-square-mile Superstition Vistas area, a spawling, undeveloped desert area near Apache Junction held for decades by the state.”
“The Arizona State Land Department set a minimum bid of $45.25 million for about 1,000 acres out of 7,000 acres of the so-called called Lost Dutchman Heights south of Apache Junction.”
“The state had held the land beyond a previously set auction date last summer in hopes of a price rise after August auction of 325 acres at Desert Ridge, near Arizona 51 and Loop101, flopped when no one made the minimum bid of $150 million.”
“The state says the Superstition Vistas area could hold 1 million people in the future.”
‘the winning bid of $58.6 (million)…August auction of 325 acres at Desert Ridge, near Arizona 51 and Loop101, flopped when no one made the minimum bid of $150 million.’
275 square miles, some shortage.
From the Review Journal:
‘Investors who bought short-term mortgage loans brokered by USA Capital are shouting mad and divided over the best strategy for recovering some of their assets. USA Capital controlled $962 million in investor assets in April when it became insolvent and filed for Chapter 11 bankruptcy protection, which would allow it to reorganize.’
‘The company solicited money from investors to make short-term loans to developers in return for double-digit interest rates. About 6,000 investors around the country entrusted money to USA Capital
‘Taxable sales continue their downward trend in Carson City, according to a new state report. The Department of Taxation report showed sales dropped 5.1 percent in the capital city in September compared with the same month a year ago.’
‘But overall, Nevada’s merchants reported a 3.5 percent rise compared with September 2005. Even so, the most recent report marked the smallest monthly statewide increase so far this year, which began with double-digit rises in January and February.’
‘In Lyon County, sales plunged by 9.6 percent. Douglas County experienced a 2.9 percent decline. Economists say it’s too early to determine whether there is a trend, but they note the overall softening of the economy, including the downturn in the housing market, could be emerging as a factor.’
The 12 month housing skid in NNV is now working its way through the rest of the economy. The numbers from the RGJ show the rest of our economy just now starting to follow suit. This is why I’ve said for some time now that for most of us the “fun” begins in ernest in ‘07. Not so much for the housing crash, that’s already in full swing. But rather for the shock wave from housing to ripple through the rest of the economy. Hold on tight kids, we’re in for a bumpy ride.
Even the casinos will lose some business as that is discretionary spending.
Some business? SOME? It’s gonna be more than “some”.
“Casinos will lose some business as that is discretionary spending”.
Spending? Wait a minute! I thought that was honest speculative investing?
“”Since the bankruptcy filing, “we have been brown mushrooms, kept in the dark and fed nothing,” said investor Howard Connell, referring to the secrecy that has surrounded negotiations by investor committees. “We are having stuff shoved down our throats at the 11th hour. We should have the right to say something.”
Connell said he would be “destitute within the next six months” because of losses at USA Capital.
As Connell expressed frustration, Monica Fuller, an investor who favors the reorganization plan, expressed impatience.
“Let’s get on with it,” she said. “If you sit around and boo-hoo for another three months, nothing is going to happen.”"
I look at that and say “OUCH!!!”. Why would someone invest all in like that?? 6 mo’s until the cardboard box, WTF… were you thinking?? These dudes are so screwed. I didn’t even pull the funniest part of the article were some dude suggested investors get paid before the lawyers. Dude, What planet have you been living on?
“Some investors complained that they were paying too much for loan servicing fees, but others argued that 1 or 2 percentage points was a small sum compared with the total owed investors.
Doris Stevenson said she invested both in USA Capital loans and loans brokered by another failed private lender, Global Express Capital.
Stevenson suggested USA Capital investors may do relatively well compared to those who bought loans through Global Express. Stevenson said she had $170,000 invested with Global Express, has recovered $20,000 and is awaiting one last small payment three years after a federal judge put Global Express into receivership. ”
This is unbelievable. One guy bets the farm on these “investments”, another lost money in one deal and then goes on to do AGAIN with USA Capital!.
Then, in a room full of people who will be lucky not to get completely hosed they are bitching about a 1-2% management fee that might actually extricate themselves from this madness!
Dear God, I hate to see anyone lose money but if there were ever a group of people who deserved it, it has to be “investors” like these.
They will lose their money, worry not.
Good catch!, I didn’t connect the dots on the 1-2 point management fee. That whole article could be a sketch on SNL. Friggin hilarious!.
Since the bankruptcy filing, “we have been brown mushrooms, kept in the dark and fed nothing,”
More like fed sh_t and kept in the dark.
People aren’t seeing this yet, but there is going to be a huge liquidity squeeze in mortgage land as MBSs get wise to what is going on. What I don’t understand is if the investors bought short term mortgage loans, why they would be tied up with Capital USA anymore. Once you buy a mortgage, isn’t it just you and the homeowner ?
I guess what I am trying to say is that the holders of the MBSes have to worry about both the retailer AND the homeowner. I didn’t realize that before. I thought that if you bought an MBS and the underlying asset was good, you were fine. But now I see that isn’t the case.
OT- the street
Frank Curzio
Wrong-Way Toll Points to ‘Take Profits’
Use comments from the luxury homebuilder’s CEO as a contrarian cue.
“Larry Murphy, president of housing research firm SalesTraq, said he gets calls and messages almost daily from people telling him the real estate bubble has exploded and prices are collapsing. ‘Exactly when did that happen? The fact is, it didn’t happen,’ Murphy said.”
Murphy is right. It hasn’t happened. Prices are some what still ok today.
Ladies and gentlemen, buckle up. With the sub-prime lenders dropping off like flies, 2007 is going to be interesting. I still think 2Q 2007 will be when it all falls apart, but I’m starting to entertain earlier as a possibility…
Neil
IMO, it’s the deceptive median thing again. Note the massive incentives for new homes in LV. And why did she say this?
‘They’re not going to attain the results of 2004. The market has changed.’
Something to add to the Blog…
http://www.viewfromsiliconvalley.com/id284.html
Given flat prices, an objective observer expects y-o-y percentage price increases to steadily decline. However, published Santa Clara County y-o-y price gain figures have stabilized, or even improved slightly, over the last few weeks. How is this mathematically possible?
“All Homes,” “Total Resale Homes” and “Total New Homes” are all wrong but in the “right” direction. (i.e. they all claim higher figures than proven by DataQuick’s own data.) “Total New Homes” is massively wrong, published at +11.4% when DataQuick’s own data shows -7.2%.
The “Total Condominiums” y-o-y price gain in Santa Clara County is actually under-reported. Checking further, we find errors in reported y-o-y condo price changes in San Mateo County (+0.9% reported vs. data showing +1.2%) and Santa Cruz County ( -7.1% reported vs. data showing -7.5%).
When the y-o-y condo number is positive, it’s reported as less positive. When the y-o-y condo number is negative, it’s reported as less negative. Could this be a coincidence? Or an honest error? Perhaps.
On the other hand, if you’re thinking of buying or selling a single-family home, you might be re-assured to see condo prices are not inflating or deflating the market.
If there was a conspiracy to minimize the effect of condo sales on overall numbers, deflating y-o-y sales percentages is an obvious place to start. (FYI, condo sales are 23% (Santa Clara County), 16% (San Mateo) and 18% (Santa Cruz) of last weeks’ totals.)
Except for Santa Clara County “Total new homes,” the changes are small. How much impact can such mis-reporting really have?
Pressing on, the last couple weeks’ data showed a narrowing the y-o-y decline in unit sales volume.
Admittedly, there are several possible exaplantions. It could be:
1) a sign of impending local real estate strength,
2) the reversal of 27-month trend,
3) an additional layer of DQ and/or SJMN incompetence
4) another example of View from Silicon Valley making a mountain out of a mole hill or
5) another step in a data reporting conspiracy.
Who cares? When is LOU’s Village Restaurant (Lou’s) going to reopen?? Santa Clara bloggers please let me know???
I noticed that too. Hmm, comparing to 2004 prices now (and saying you’re not even going to get that) instead of 2005. So, are LV prices back down to 2003 levels? If so, that mark a huge discount, as 2004 and 2005 appreciation in LV was enormous.
I am “live” with the Clark County MLS. There is strong buying surge in 1 story, 3 bed-2 bath houses from Nov 1, 2006 right thru today. The MLS shows 207 SFR under contract from Nov 1 to Nov 30, and 51 under contract from Dec 1 to Dec 7. The majority of these homes are from 1100 SF to 1500 SF and are listed BELOW $300,000. This is 5 times the number under contract during August 2006. It looks to me like 1st time buyers are coming into the affordable 1 story homes, while the interest rates are hanging around 6%. The homes over $600,000 in any catagory of not selling. Condos are definitely not selling. Remember, close to 10,000 auto workers took early retirement from Ford and GM and the cold winters of Michigan might motivate them to head toward Vegas with their windfall. I have been tracking this every month for 2.5 years, and this really caught me off guard.
“The inventory of homes for sale on the Multiple Listing Service in Las Vegas declined to 19,729 in November, down 16 percent from the previous month…”
“Sales continue to decline dramatically. Realtors sold 1,547 single-family home sales in November, down 36.6 percent from a year ago”.
Hum …. Sales and inventory declining. Where exactly are these houses going? How about back in the closet until next spring Larry Murphy!! The fact that there are a few GF’s still out there buying (and getting way more with their borrowed money) does not mean that this LV market is stabilized. Larry & Company have successfully sung the spring bounce song as well.
Let me pull out my little calc-ke-lator…. 3,757 homes disappeared from the MLS in November, but only 1,547 sold ….? That means 59% of the housing activity were the wannabe sellers pulling the home from the market. Yeah Larry, everything’s fine ….
I agree with you Neil, the tighter lending will decelerate the buying opportunities, but I would almost like to see it continue so the REIC and the wannabes will finally have to face the fact that the buyer pool is exhausted, and the current prices are based on toxic loans. Keep the toxic loans, there’s no one left. And when this 59% comes back on the market in the spring, WOO HOO!
“Hum …. Sales and inventory declining. Where exactly are these houses going? How about back in the closet until next spring Larry Murphy!!”
…..and that closet is overloaded to the bursting point..you can hear the hinges screaming on the closet door.
nnvmtgbrkr –
I just wanted to say thanks for your continued updates on the Reno area. My brother & sister-in-law are looking to move from Martinez, CA, to the Del Webb in Somerset (sp?). I have advised them to wait awhile, but you know how that goes. A few months back, I put together several pages of your insightful posting from here (as well as other Reno regulars), and e-mailed it to them. Their response: “How do you know so much about real estate”?
Yep, I’ll add that to my resume; Expert Reader …..
“Murphy is right. It hasn’t happened. Prices are some what still ok today.
Ladies and gentlemen, buckle up. With the sub-prime lenders dropping off like flies, 2007 is going to be interesting. I still think 2Q 2007 will be when it all falls apart, but I’m starting to entertain earlier as a possibility…”
That is exactly what I think too. So far it has just been the small mortgage players getting hit and downsizing. I figure that one of these days a biggie will get hit and the MBS holders will get very vocal and mortgage credit will dry up like a desert lake in summer. And THAT is when we will really see the housing bubble burst.
I agree Neil. I think this implosion has accelerating faster than expected. Late 1st quarter could be the real beginning of the chaos.
Unfortunately,
It truly will be chaos. The #1 thing we’ll hear? “How did this happen so suddenly?”
I hope to be off my low-carb diet by then so that I can enjoy popcorn while watching the news and their inevitable sob stories.
Neil
Many models say that a recession in the next 12 months is a virtual certainty,”
I’d like to turn in a Thesis for my MBA degree in economics from UCLA and conclude the paper with “virtual certainty” as to
where the economy is heading. Is that some term coined by the brilliant minds at the economics department. Why don’t they use “on the one hand, this will happen” BUT “on the other hand, this might happen”. Holy Cow, Crammer has now spread his gospel to our colleges and university. Put out enough predictions with non committal words, and sometimes you will look like you know what your talking about. UCLA should be ashamed!!!
OT but timely. Anyone remember the insider selling of housing stocks?
http://www.cfo.com/article.cfm/8380669/c_8380813?f=home_todayinfinance
So, how many endangered species, flora and fauna are there on Supersitition Vistas to be bulldozed for shitboxes?
More than we care to mention, TX. But this is Arizona. S-boxes ALWAYS matter more than endangered species.
Who knows but someone has probably went through and got rid of anything they didn’t want someone to find.
Let ‘em keep building out there. Eventually somebody’s gonna find that lost gold mine.
Actually AZ has a law that requires developers to “save” certain kinds of desert plants. I’ve had accounts that would harvest the plants, put them in planter boxes, and keep them alive until the development was ready.
were ready.
And what are these 1 million new residents going to drink?
(don’t answer that…)
One day I took a walk in the Superstitions in an area not officially approved for public access. (Public land, but supposedly off limits.) About ten minutes off the road, a bunch of javelina came charging across my path. They weren’t really after me, it was just disconcerting. I have a comical fantasy of some FB in Superstition Vistas opening the kitchen door and having six javelina rush right on in and then tear up the living room for lack of egress.
Wow !!! From $150M down to $45M … off 66% or so…
Nice discount!
Anyone notice that the home builders costs are decreasing ? Lumber is cheaper, copper is cheaper, land is cheaper. One has to expect that labor will get cheaper as things slow down. And the volumes haven’t dropped that much YET !
Pretty soon home builders will be selling houses way, way less than the current offerings. And that will put even more price pressure on the current offerings.
That’s 70% off by my calculation.
70% in the worst bubble areas, without a strong economy, and far from urban centers. I think 30% to 40% is more likely.
Developing perp-walk at Fannie Mae. Is Gaines heading for Camp Fed…..until her can pay off a politcian anyway.
raines is an AA a protected species
BTW had an “i’m going to put the house back on the market after super bowl” converation last night- wow, people can’t even remember 06 super bowl “silent spring”
The superstition mountains are home to the “Lost Dutchman’s Mine” IIRC. I hope some construction crews don’t rape and pillage it before I get my shot!
“Scottsdale economist Elliott Pollack said the Valley real estate market also has its good news-bad news aspects.”
I’ve seen this guy speak, and he’s a hack/shill. Another “economist” with no econ degree who makes a living off of writing newsletters and rosy forecasts for local builders and agents. He’s a Realtor (TM) himself, too, I believe.
If you’re an economist and an industry expert, how tough is to notice if there are 25,000 “excess units” being built? These aren’t packs of gum folks.
“These aren’t packs of gum folks”…..laughed out loud!
25,000? How many years supply is that? Before the spring re-listers, interest rate adjusted and foreclosed sellers pile back into a market now devoid of “investors”, speculators, flippers, people who can’t “trade up” and those now unable to get a loan under tighter qualification guidelines?
More urgent/desperate real estate supply meet less urgent, less qualified and less interested demand. Buyers will become an endangered species.
58 million for 1000 acres? Thats 58,000 per acre for undeveloped desert land. That’s insane. I can get a better deal then that where I live in a suburb of New York City. An approved building lot would be more then that but raw land would be cheaper.
Yep. $5 million sounds like a more reasonable price to me.
Probably cram 15 homes per acre on it to cover the costs. Most hew houses in gilbert have no yard at all, courtyard garbage.
And I’m sure that’s WITHOUT roads built and utilities connected. 1000 acres is 1½ square miles.
GOV in the RE biz- and some want their healthcare delivered by gov !
The Arizona State Land Department set a minimum bid of $45.25 million for about 1,000 acres out of 7,000 acres of the so-called called Lost Dutchman Heights south of Apache Junction.”
“The state had held the land beyond a previously set auction date last summer in hopes of a price rise after August auction of 325 acres at Desert Ridge, near Arizona 51 and Loop101, flopped when no one made the minimum bid of $150 million.”
Is anyone else as excited as i am about Lexsus’ “December to Remember” sales event? God i hope my wife suprises me with a 50k car loan in my driveway on xmas.
Yeah, I get sick of all my friends that give me cars for xmas. Adds to the pressure of what to get them, in return.
If my wife spent 50K on any vehicle…..nahh, I better not say. I’m doing my best to keep it PG-13 lately.
i have to confess though, i did blow 30k an 2003 cobra convertible about two years ago. Almost never drive it but, when i do, i cream from every orafice. That car just screams.
So does the Maryland state police.
I’m like the guy in the Mustang commercial. It’s not that I can’t find a car I like in Germany, it’s that I can’t find a speed limit I like in America.
Hey, MDMORTGAGEGUY…So it only cost you $30,000 for a “creaming in every orafice” every once in a while.
I can get you a better deal than that on Hollywood Blvd.,
cash only!!!
Come’on nnvmtgbkr you’re a mortgage broker you probably have a couple of 50k cars in the driveway and a nice Aston Martin or BMW 760 for the weekends. Nevermind the Hummer for those once a year camping trips. According to this blog all of us in the industry have a few. No need to hide you’re among friends here. (*snicker*)
[img]http://smilies.sofrayt.com/fsc/wink2.gif[/img]
hehehe
How about that 10 cylinder one that parallel parks automatically???
Same thing happens in the stock market. Folks get excited and buy AFTER the market has sustained a big rally. Folks get nervous and pessimistic AFTER stocks have sold off substantially.
Now we’re seeing this same emotional reaction to the housing market. We shouldn’t be surprised at all.
The javelinas in AZ can get you:
http://www.azstarnet.com/metro/159441
The biggest Turkey subprime lender is “Ditech.com” owned by, believe it or not, General Motors finance GMAC. Ditech use to blanket the television airwaves with commericials like,
“Consolidate your credit card bills on to a new home equity loan”.
“Need money for a vacation or a new SUV vehicle, phone Ditech.com”.
Or “Don’t speak english, we speak spanish and can get you that home loan fast”.
Along with producing gas-guzzler Hummer SUV’s, General Motors “Ditech.com” financial subsidiary financed the vehicle with a sub-prime, adjustible rate, and negative amortization loan on negative equity McMansions. No wonder the bond rating agencies S&P and Moody’s have downgraded General Motors bonds into deep “Junk” territory.