“It’s Going To Get Worse Before It Gets Better” In Colorado
The Denver Post reports from Colorado. “Metro-area home sales fell at a double- digit rate in November and resale prices remained soft, according to housing statistics released Thursday. The number of homes sold fell 13.7 percent in November to 3,565, down from 4,133 in October. In November 2005, 3,705 homes sold.”
“The median price of a single-family home sold in the metro area in November fell to $240,000, down from $247,600 in October and $242,000 in November 2005. Median condo/townhome prices were more mixed, rising to $155,750 in November from $152,000 in October. But they remain below November 2005’s median price of $164,950.”
“Gary Bauer, an independent real-estate analyst, pins about 80 percent of November’s results on seasonal factors, with the remainder representing an additional slowing in the market.”
“The inventory of unsold homes fell 7.3 percent in November to 27,530. While an improvement from the 29,722 unsold homes in October, it remains too high, said one real-estate broker. ‘We have to absorb 27,000 listings, and then we can be happy again,’ said Mike Easley, broker in Thornton.”
“The metro area will likely top 18,000 foreclosures this year, setting a record. That contrasts with a total sales volume of around 52,000 homes.”
“More sellers are finding they have to sell their homes for less than the mortgage balance, Easley said. That is discouraging some homeowners from listing their properties.”
The Rocky Mountain News. “Rising foreclosures as well as typical seasonal forces took their toll on homes sold in the Denver area by Realtors last month. The foreclosures are concentrated in places such as Adams County, north Aurora and northeast Denver.”
“‘I would say that foreclosures are impacting the market,’ said James Browning, who specializes in selling real estate-owned homes, that have been acquired by banks after homeowners default on their mortgages. He said there are homes in Montbello and Green Valley Ranch whose prices have dropped between $20,000 and $40,000 in the past 12 to 18 months.”
“‘These are homes in the $115,000 to $160,000 range,’ said Browning, a broker.”
“However, lenders aren’t selling homes at fire sale prices. ‘The banks have taken a stand, they will not give them away,’ he said. Typically, foreclosures can be purchased at no more than a 10 percent to 15 percent discount to the rest of the market, he said.”
The Denver Business Journal. “There’s plenty of bad news to go around, the most telling being the number of days on the market it takes to sell a residential property. The average days on the market for a condo are 134, nearly approaching five months. That’s almost a 14 percent increase over the time it took last year in November to sell a condo.”
“Single-family detached home sales are taking an average of 103 days on the market to sell. That doesn’t sound quite so bad, but it’s almost a 20 percent increase in sales time compared with last year’s figures.”
“‘There’s several things happening here,’ said broker Lance Chayet. ‘People are giving up and taking their houses off the market. Some of it is seasonal factors. Another thing is that short sales and foreclosures are exerting negative pressures [on home values] and forcing some people out.’”
“Other noteworthy numbers? The number of homes under contract is down nearly 14 percent over October 2006. That number is about 4 percent less than the same figure in November 2005. ‘It’s going to get worse before it gets better,’ Chayet said.”
From Inman News. “Home sales across Colorado were down 7.2 percent in October compared to the same month last year, while the statewide median home price lost 2.1 percent, according to statistics released by the Colorado Association of Realtors.”
“The most dramatic decline in sales activity occurred in Montrose, a western Colorado town, where sales plummeted 86 percent between October ‘05 and October ‘06, from 488 to 70, while the median sales price of a home sank 1.6 percent to $193,333.”
The Aspen Times. “While by some reports say Colorado ranks first in foreclosures in the nation, the Western Slope is lagging far behind. Homeowners on the West Slope are in a better position than their neighbors on the Front Range when it comes to the housing market, said Colorado Division of Housing spokesman Ryan McMaken.”
“West Slope homeowners ‘can always sell…because there is so much demand,’ he said.”
“Overall, McMaken said people fall into foreclosure because they make bad financial decisions. ‘People miscalculated how’d they be doing now when they bought their home,’ he said. They got into risky mortgages because they thought they’d be able to make up the difference once the hoped-for raise came in.”
“But the Colorado economy didn’t live up to expectations. Cuts in wages, loss of jobs and higher costs of living have all contributed to less spending power these days.”
“‘The saving rate continues to be zero,’ McMaken said. People ’spend like they’re making more money. Clearly, people are spent out.’”
“What drives foreclosures here is ‘over-extensions,’ said Chief Deputy Public trustee Bob Slade, and ‘100 percent lending,’ now a common mortgage feature.”
and in other news
this is too funny not to share
http://iamfacingforeclosure.com/ (top story about Utah property)
My favorite line in his updated story on the Utah home is ….
“But, but …..It’s crossed out on my list”.
Did someone buy the property, take the over-appraisel money out of it, and then just let it go?
txchick57,
Too funny! Now the “Caseman” is taking it in the shorts in some weird sort of role reversal. Justice “in the end”.
“But why would they stop making payments? I thought they were highly qualified?”
Yeah, Casey, just as qualified as you were.
“And why did the servicing company not let me know the payments aren’t being made? Somebody dropped the ball here.”
That’s why it’s called a servicing company and not a lender.
Maybe Casey will end up under the tender tutelage of Joe Arpaio.
az_lender_confucius say never use loan servicing company
I’m really beginning to question whether his plight is real. How do you not know you’re buyer is 2 back. It would seem the third party would notify you after 10 days on the first one. Something smells fishy.
mrincomestream: I wondered if he was real as well, but I looked up his property in Stockton, and sure enough he was listed as owner on record. It is hard to believe people are that dumb. Who goes to a cheesy “investment” seminar and then runs right out and buys 8 properties? I’m continually amazed that these get rich quick seminars draw any crowd whatsoever!
Someone also posted links to his property info in Dallas. In fact, txchick might have looked that one up, too. Oh, he is soooooo scre3ed. But the ignorant little wastrel probably deserves it because he’s just bumbling into these problems due to his own ineptitude. This Utah house problem sure is poetic justice!
Here’s the one in Utah:
Buyer: WILCOX, RICHARD; WILCOX, JENNIFER (Husband and Wife); CHRISTENSEN, EDWARD C; CHRISTENSEN, LINDA (Husband and Wife), Joint Tenancy
Buyer Mailing Address: 10302 N 6650 W, HIGHLAND, UT 84003
Seller: SERIN, CASEY K (Married Man)
**************************** SALES INFORMATION *****************************
Sale Date: 9/8/2006
Recorded Date: 9/13/2006
Document Number: 0120553
Deed Type: WARRANTY DEED
Assessor’s Parcel Number: 51-453-0008
Legal Description: LOT: 8; SUBDIVISION: PLAT A R WESTWOOD ACRES SUBDIVISION
*************************** MORTGAGE INFORMATION ***************************
Lender: CASEY K SERIN
Type of Mortgage: SELLER TAKE-BACK; ALL INCLUSIVE DEED OF TRUST
Loan Amount: $ 360,000
Title Company: FIRST AMERICAN TITLE AGENCY
Casey actually bought one of the homes SIGHT UNSEEN and it was a fixer too. Out of state. Thats what he said.
At least he didnt put any money down. Free ride all the way for him.
It’s as old as the human race. People always are not only willing, but desperately want to believe in the fact that you can get something for nothing. That you can get rich quick. This is a part of the human condition.
Only by learning from family, friends, mentors, or your own search for knowlege can this be overcome. A few people, such as all of us here, have overcome this part of the human condition.
Con men have exploited this since we crawled out of the caves, and they will continue to do so long after we are all departed. They always have and they always will.
P.T. Barnum said that there is a sucker born every minute. That is what this whole real estate bubble thing has been a microcosm of.
‘NUFF SAID.
Trump’s recent one in Boston was a flop. Prediction: Trump and his cohorts are done for this cycle.
bahahhahaha!
He wonders why someone would not make the payments??? LMFAO.
Just when I thought I couldn’t possibly think any less of him…
Did you read his interview with a convicted Mortgage fraud “expert”.
70:40 Did I commit mortgage fraud?
71:29 Is it fraud if there are no damages to lender?
74:30 Will I get prosecuted and go to jail? Should I continue blogging?
77:15 I felt it was wrong but I didn’t think it was a crime
78:28 Jerome: that’s not an excuse, you should go to jail
79:55 How can I make it right?
80:40 Jerome: turn yourself in to the FBI
pardon my french, but Casey puts the ummph in taking it up the ass when it comes to bad real estate deals.
“However, lenders aren’t selling homes at fire sale prices. ‘The banks have taken a stand, they will not give them away,’ he said. Typically, foreclosures can be purchased at no more than a 10 percent to 15 percent discount to the rest of the market, he said.”
That is bullshizit is what that is.
Even the Banks that have foreclosed are still hoping in the magical spring return to ever increasing prices.
I really wonder, at what point, all these fools will finally have the lightbulb click on. When will they get the picture. If they stubbornly hang on to this hope then they will lose even larger, as values continue to decrease.
I hope by 2Q 2007 we don’t hear these types of comments.
However, lenders aren’t selling homes at fire sale prices. ‘The banks have taken a stand, they will not give them away,’ he said. Typically, foreclosures can be purchased at no more than a 10 percent to 15 percent discount to the rest of the market, he said.”
I have been tracking an REO in Reno which is listed on the mls for $535,000. I drove by the place because I grew up around the corner and it is trashed. Broken window, dead trees and shrubs, a real mess. The asking price represents what is owed on the loan. I will be shocked if the place sells for more than $250k and that is a stretch.
Txchick57,
This is what I would call the irony of all ironies. Good find. Loved it. Way too funny.
best comment
OMFG
December 8th, 2006 at 6:59 am Why don’t you help them start a blog?
Iamscrewingtheguythatisfacingforeclosure.com
Looks like the con man got conned.. Oh, boo hoo. I would send STC down there to poop in all of their shoes.
Seriously, we told you so, like a thousand times. I agree Mr. Lightning, you been punked. Time to fill up da V DUB and head towards TJ.
Ho Ho Ho. This is what the S&Ls said too . . . .
“However, lenders aren’t selling homes at fire sale prices. ‘The banks have taken a stand, they will not give them away,’ he said. Typically, foreclosures can be purchased at no more than a 10 percent to 15 percent discount to the rest of the market, he said.”
Yeah, that one stood out. Maybe since he’s an REO guy, he doesn’t want any competition. This statistic is a stunner:
‘The metro area will likely top 18,000 foreclosures this year, setting a record. That contrasts with a total sales volume of around 52,000 homes.’ That’s almost one foreclosure for every two sales! That even beats Dallas with its 25% of the market default rate.
“short sales and foreclosures are exerting negative pressures”
Does anyone know the capital requirement
for a bank to hold a non-performing mortgage? I have read it is anywhere from 200% to 500%
of the nominal mortgage. If that is the case,
REO stuffed banks won’t be ridin’ the storm out.
Monsoon season dead ahead.
REO stuffed banks won’t be ridin’ the storm out.
Frauiditor. Good rock n roll trivia in your post.
The band REO Speedwagon has a cool song called riding the storm out. This was subliminally hidden in your post. Very cool.
You have to remember that behind every foreclosure is an MBS that has a terrible return or makes use of a default swap to cut their losses. I am very sure that mortgage credit is going to tighten up a lot in the near future.
As for the banks holding out for a good price, yeah, sure. They are no different than any other seller. Are they going to tie up all their assets in houses ?
That’s the one that stood out to me, too. Banks are sounding like FBs - “I won’t give it away.” Well, good luck selling it then. Maybe the banks can hire some bakers to bake some cupcakes for all of their open houses. And don’t forget to bury those St. Joe statues.
Let’s see, 18,000 foreclosures this year, with many more for 2007. How long until the regulators start making the banks get rid of these homes? When that happens, big discounts will come. And, being from SoCal I don’t really know what it takes to maintain a home in a cold climate in winter, but I can’t imagine that the banks are going to have fun with that.
right - like the lady who maintained she’d keep her house on the market for A GAZILLION DAYS - OR MORE! - in order to get her asking price.
Can banks wait a gazillion days too?
I hope the banks friggin choke on their foreclosure portfolio! What a set of balls these guys have. Won’t give it away my ass, wait until they are setting on a few thousand homes and let them refuse a 30% offer. Screw em. The deals are coming. Please don’t feed the bankers!
“until they are setting on a few thousand homes and let them refuse a 30% offer. Screw em. The deals are coming.”
You bet they are coming ! How do the banks figure that they will sell a house for a 10-15% discount from the mortgage price when the market has already fallen more than that ?
And then, if there are 18,000 foreclosures, that is going to make a bit of negative press !
And the comps are going to be just horrible, with people everywhere trying to ditch their house to prevent foreclosure in the first place !
And if there are 18K foreclosures, who the heck is going to buy the foreclosed house ? Obviously not the guy who just lost his house !
Man, that statement about only 10-15% off makes no sense at all.
I agree that houses will be selling for 50% off there in the near future.
The metro area will likely top 18,000 foreclosures this year, setting a record.
I think alot of areas will be setting records of foreclosures. I’m wondering how the realtors can put a spin on it.
anyone have a comparison to 1990 on that ?
I know co has a new record ,but for TX to appraoch 1988 would be killer
18,000 foreclosures will devastate the whole industry, including the banks. And that is just Denver ! Things are really starting to bubble to the surface now. The screw ups have no place to hide.
“”Ho Ho Ho. This is what the S&Ls said too . . . .”"
Exactly, they haven’t received enough inventory at the end of the pipe. By next summer they’ll be slinging them out the door for 50 cent on the dollar with incentives and kickbacks.
So, the lenders who funded the fraudulent subprime loans in the first place, is now refusing to discount 20%.
But they are paying the cost of holding the homes (tax, upkeep, loss of interest payments). Then the lenders will dump the homes at 50% discount next summer.
Of course, it is not their money, it’s the MBS holders’ money.
Maybe they can charge exorbitant fees too, for holding and dumping service, and let the MBS holders pay.
How long until the lenders have no choice but to sell cheap for cash flow?
”Ho Ho Ho. This is what the S&Ls said too . . . .”
That is funny… but sadly true. Financial institutions are just delaying the inevitable. Prices must drop to affordable levels. Due to the bubble… the price drop will overshoot the reversion to the mean.
So 18,000/52,000 *12 means that we have over 4 months of inventory in foreclosures/REOs *already*.
They can continue to “hold the line” all they want. I bet they’ll keep selling for 10% to 15% below market… but that the market slides.
We all know about the tremendous shake out going on in the sub-prime market. With that market feeding about 1/3rd of the sales… 18,000/(52,000*2/3)*12=6 months of inventory in 2007…
Any takers on a reduced foreclosure rate? I didn’t think so. Any takers on a sales rate in 2007 better than a 33% decline off of 2006? I didn’t think so.
Remember, the “trend is your friend.” And the trend says don’t even think of buying in 2007.
Neil
Wow,18,000 foreclosures .And sub-prime lenders think they were doing a service by putting unqualified buyers into homes .I can just see the builders with their “special lenders” selling to every person within 50 miles of the crappy joints along with the speculators .
Note to sub-prime lenders : Don’t sell low down bad loans to unqualifed buyers based on real estate going up .
You didn’t deserve your commissions and you set up people to fall .
I think I figured out what is happening in CO, instead of renting - buy a house zero down then when you need to move let the bank FC on it.
..three monts later…
Repeat process with same easy subprime lender that gave you first loan you defaulted on.
…ad infinitum…
Since housing typically goes down in flyover and with the new xero down philosophy in borrowing this is logical. You can not sell if you dont get a good 6% appreciation and that aint there.
The end game is credit tightens and a smaller number of people own and traditional renting is more common. (old paradigm)
“Of course, it is not their money, it’s the MBS holders’ money.
Maybe they can charge exorbitant fees too, for holding and dumping service, and let the MBS holders pay.”
No way ! The MBS holders will revolt. They were promised investment grade debt and they will sue like crazy and take all assets hostage to get at least their principle back.
The big part of all this is that when the MBS people get screwed rates and qualifications are going to skyrocket ! And that is going to drive prices down, down, down.
The bubble hasn’t really popped yet, but it will when credit tightens. What we have seen so far is mild !
mrincomestream,
You mean bankers don’t tell the truth just like realtors don’t?
lol (sarcasm off)
Hello lenders, earth calling… if you don’t start dumping reduced price properties on the market, the BUILDERS WILL KEEP CHURNING THEM OUT!! Nothing else will make them stop.
What you got here is refered to in engineering circles as a ‘death spiral’. Full regression, and the lines cross at zero.
“Gary Bauer, an independent real-estate analyst, pins about 80 percent of November’s results on seasonal factors, with the remainder representing an additional slowing in the market.”
I didn’t know the real estate calendar included a “foreclosure season.”
sure there is - for all the ppl who get coal in their stockings
Will places like Aspen and Jackson Hole fall much? Will they always have “so much demand”, or will there come a time when people stop and wonder why they ever thought of these places as being so special?
Several months back I posted an Aspen news article that was basically a couple of local brokers discussing the market. They said Aspen was up only 2% in the last few years, and that because the luxury homes price to build was so high compared to the land, that depreciation of the materials meant prices were actually down.
Aspen will track how luxury homes perform, as that’s all they have there for inventory (at least in price).
Jackson’s more diverse overall, but since in the last 10 years “the billionaires have been pushing out the millionaires” and something like 93% of Teton County is owned by the Federal government, it probably won’t take much of a hit.
At least relative to other areas over time.
I wondered that too. I found an article in USA Today which I put on here a few weeks ago. In essence, it said that demand had not waned on the extreme high end; in fact, inventory was very tight. That would make sense insofar as people in that strata are not hurting at all, they’re doing better than ever at everyone else’s expense.
I know there will always be billionaires that have the money to buy these places. I guess my thinking is more psychological. When the general public start to think that RE is a bad investment, will some of the very rich lose interest as well? Or will they always want more land?
As Catherine noted awhile back, there’s a large inventory of Western ranch land for sale. Lots of very nice houses on huge spreads. These were often hard to find FS in the past.
I doubt they will because a lot of them place a high premium on privacy and an abundance of space. I know that if I were one of them, I would want hundreds of acres somewhere around my castle so I would not be disturbed. Especially if I were a high profile CEO or entertainment type where security is also a concern.
just wait till those wall street bonuses disappear and the brokers get fired like after the 2000 bubble.
This MBS stuff touches a lot of entities in the financial world. The bond people, mortgage people, currency traders, banks, builders, etc. Its effects are going to be large and far reaching.
I’d liken the high-end properties to fine art. In this case, the house values are in fact going down (art is not), and that would be proven if they needed sell. But these folks are rich, do not need to sell, and will be content to hang onto the properties until their values return to 2006 levels or higher. For folks like this (Warren Buffet types excluded), the opportunity cost of holding a fun toy home with declining value is not high enough to register on their “urgent problem” screen.
Think you’re right, and this explains why I’m currently getting along better with really rich friends than with those in my puny league. Rich ones don’t mind my talk about bursting bubble, they can weather declines of a few hundred thousand in each of their several homes. Middle-class types pissed off and defensive because too much of their $$$ tied up in RE.
Yes, really rich, not the poseurs we see so much of. The really rich could care less I would imagine.
Except that to the really rich (say after 9 figures or so)money is really only continually useful as a way to keep score and no one likes to loose points already scored.
While the towns of Aspen and Jackson may not fall too much, the “down valley” towns (where the locals live and which provide the employees for the resort areas) may fall (I hope….). In my area (down valley from Aspen) housing prices have gone nuts in the last couple of years. It has always been somewhat expensive to live here, but it has gotten way out of hand. Example: a crapy duplex that sold for 239,000 two years ago recently sold for 460,000. At that rate of appreciation it will reach $1M in five or so years. The problem is that wages have not kept pace with appreciation and it is my guess that a lot (a majority) of the people that bought in the last few years are getting the ‘exotic’ loans because everybody really is ‘getting priced out forever’. I have a feeling that the next two years will be very interesting around here…..I will not (cannot..) buy until prices come down. I am always on the look out for the foreclosure sales too….
I have a few friends who used to work/live in Aspen. They now live and work in Basalt. Another just sold a 2br 2 ba log cabin 1 acre house 15 miles down a winding road from Basalt (beautiful views of Ruedi reservoir) for 550K. I think he bought in 1998 for around 360K. I think he bought an undeveloped .3 acre lot in the town of Basalt for 220K to build a new home.
“While by some reports say Colorado ranks first in foreclosures in the nation, the Western Slope is lagging far behind. Homeowners on the West Slope are in a better position than their neighbors on the Front Range when it comes to the housing market, said Colorado Division of Housing spokesman Ryan McMaken.” “West Slope homeowners ‘can always sell…because there is so much demand,’ he said.”
Meanwhile, “The most dramatic decline in sales activity occurred in Montrose, a western Colorado town, where sales plummeted 86 percent between October ‘05 and October ‘06, from 488 to 70, while the median sales price of a home sank 1.6 percent to $193,333.”
Montrose is on the western slope of Colorado, Ryan McMaken, and home sales there plummetted 86%. Do you care to retract your statement that homeowners on the western slope “can always sell…because there is so much demand.”? Or would that be bad for business?
Very good point, thanks!
Guys,
I’m not a Coloradan, but the geography there tells me that Montrose is not a “West Slope” community. By “West Slope”, the author is likely referring to the ski town communities along I-70 west of Denver, through Summit County and out to Vail, Avon, Gypsum, Eagle, etc.
Montrose, by comparison, is in high desert and “in the middle of nowhere.”
You’d be wrong. No problem, though. The Western Slope has always been considered more Grand Junction and Montrose than the mountain towns (although these are a growing factor). I’m not a Californian, but isn’t San Diego not really part of Southern California like LA and OC? By c omparison, it is next to Mexico and “not really in the state.”
OK. See my thoughts below that I wrote before your explanation.
In California, from where I am, anything south of SLO is “Southern California.”
In other words, my guess (and I could certainly be wrong) at “Western Slope” would mean the area begins as one descends from the Eisenhower Tunnel going west on I-70.
That’s the Continental Divide area (actually above the tunnel at Loveland Pass), if I’m not mistaken.
You are right, but Grand Junction and Montrose are major components of the Western Slope.
Well then, our Colorado housing spokesperson certainly is deluded - as you pointed out.
“In other words, my guess (and I could certainly be wrong) at “Western Slope” would mean the area begins as one descends from the Eisenhower Tunnel going west on I-70.”
that would be the correct answer. grand junction, montrose, durango, etc. have been inundated with californians of late, spillover from vegas, then st. george and salt lake utah. i would think montrose got heated up from the crested butte boom, pushing working people out and down the valley, imho. much like glenwood springs and carbondale is to aspen. it’s all californication though.
No. The western slope is experiencing a natural gas / oil boom thanks to high energy prices that is all… Lots of boom type problems like meth, bad bad bar scenes, and environmental degradation. Same thing in certain parts of Wyoming : Rock Springs, Pinedale, and in the East.
The denver papers are really focusing in on the mortgage fraud and foreclosures, but what I have not seen is any article on home valuations. Other than comparable sales, do any Denver natives have informiaton they are using to determine fair value? An inititial analysis I have done seems to indicate that homes in the Wash Park, DU, Congress Park areas are priced at a 25% premium to rental properties in the area.
Currently renting a 375-400k house for $1300 in one of the areas you listed. Same sized house in one of the troubled areas would go for less than 250k . Lots of speculation definitely bubbly in certain parts of Denver, however the nicer parts of Denver do deserve a significant premium over the areas which are currently experiencing high foreclosures, but will be hit during this cycle IMO.
The foreclosures are concentrated in places such as Adams County, north Aurora and northeast Denver.”
I’m not familiar with the Colorado market. Can someone tell me what is different about these areas than the rest of Denver metro? Are these locations of new subdivision built in the past 3 years?
Drive-until-you-qualify homes on former farms and oil fields (still active) built mainly in the last 6 years. Buyers qualified for about a month of payments on an interest only ARM. Good enough for the mortgage brokers, good enough for the builders.
That explains it. Thanks.
But as these houses go through the foreclosure process and eventually get returned to the market, who will buy them? More “Drive-unit-you-can-afford-it” types? Will the process repeat itself 3 years from now?
It’s a vicious real estate cycle. My advice is to buy price and location with a fixed rate mortgage versus a bigger house on tiny lot in BFE with an interest only ARM. Only when prices are rationale, though.
I’m not either but I’m willing to guess that they are similar to Plano and Frisco in the DFW area. Exurbs where there is unlimited land, too many cheap junky houses and too far of a commute from the downtown area to really be feasible. IOW, no appreciation likely and easy to walk away from.
I am in the Plano/Frisco area and I just don’t get it. Why would anyone buy a $300,000-$400,000 house around here with the high taxes and eventual foundation problems when there are less expensive in every other city that is close by. I think most came from the OC and brought their hummers and BMW’s with them.
“eventual foundation problems”
calex: what’s the deal with the soils there? Highly expansive? I notice that MANY of the subdivisions built in CA during this bubble are on less than ideal land. Much appears to be slab on grade with tensioning, but I have to wonder how they will hold up long term. With the prices people have paid, you’d think that people would be concerned about their foundations, but instead they were snapping them up sight unseen. The reason I question the foundation is because when you walk through a new home the lack of attention to detail is pretty bad, IMO. And this is on stuff you can see! Imagine what lurks beneath.
The problem with a lot of that Dallas area is that hard pack clay soil. It absorbs water in the spring and expands, then dries out in the summer and fall and contracts. The foundation eventually comes apart unless you’ve really built it well.
A geologist friend of mine explained this to me in very fascinating detail (yeah, fascinating, right, but he was thorough I’ll say!) along with maps and all. He specifically bought his own place in a rare strip of sandstone stretching through Arlington. He also recommended locations like some in Fort Worth where the limestone is just under the surface with little soil to cause a problem — so long as you don’t want any decent trees, that is.
A lot of areas north of Dallas were the very worst (due to deep clay), in his opinion. Those house might well show it in a few years, too, in the very unlikely event the builders cut corners. Hee hee. Ouch for values.
But that can’t be. It’s special here in the OC, and everyone wants to live here.
(sarcasm off)
I wouldn’t doubt that there are quite a few California equity locusts buying places there, expecting to get rich on the appreciation. $300-400K buys a tiny condo in a bad neighborhood here, yet most people in OC think that prices are similar all over so they think that these prices are great deals. Time for them to get an education. And, since many bought these with HELOCs on their primary residence, it is going to hurt them big time.
In general = lower HH income and shallower financial safety nets.
My guess is that these areas also lead in the number payday lending outlets…
Northern Denver suburbs have a horrible commute I-25 to downtown. For more info http://www.denverpost.com/foreclosures
Not many large businesses in Adams Co unlike the southern metro corporate Tech Center and the newly commisioned fast rail Trex transit system to downtown. On upcoming auctions I expect a smart buyer to be able to purchase at 50% off new. Just have patience and a wad of money ready.
rampant single family home construction financed by 80/20 stated income loans. the life of the loan in foreclosure in these areas is less than 11 months. these “homeowners” couldn’t even make it a year. drove the corridor last week, the for sale signs and billboards all tout- “buy today for $899 total”.
Those are the areas no one wants to live in. They are far from the mountains, have congested, poorly maintained roads, bad schools and higher than average crime rates.
In general prices go down with distance from the mountains. East = cheap, West = Expensive
The sketch factor accounts for much of this, these neighborhoods are lower income and there is more crime. The predatory lendors have been more aggressive and are getting a greater % of households in over their heads in those areas too. I’m not sure what is going to help get these areas back on their feet. They are already pretty damn affordable, main problem is finding enough people who can keep their sh*t together & make monthly payments by holding steady work even relatively low pay.
You know Denver has it bad for the housing market right now but I believe it’s just the “Canary in the coal mine” for the rest of America…
A relative moved to Denver. I couldn’t talk her out of buying — had to get a place set for the kid to enter school. They wanted to buy in Highlands Ranch. They told me the foreclosures were to the south, but in Highlands Ranch prices never go down.
HaHa Highlands Ranch is nice but it’s full of foreclosures. Anything south of County Line is almost exacly like Southern California. This is because it was all intially built for California sellers that got out in the early 90’s and needed a nice place to raise their kids but was cheap. (comparably)
I can tell you without hesitation that Highlands Ranch will go down pretty quick. Once the banks start undercutting each other on price for sales.
It’s probably too late to tell them about bentonite or watered down paint then?
My parents bought a place in Ken Caryl ranch in the late seventies. One of the first new words we learned that year was “bentonite”. We had to have the basement dug out three times and the local roads looked like roller coasters.
In my youthful innocence I wondered how the county could have given them a permit to build in such an unsuitable location.
I’ve about come to a decision that when the time comes I’m going to have to build my own house. I want a place that’s well designed, well built, and built to last.
‘people spend like they’re making more money’
Personally, I am spending as if I were making more money. Some NY friends invited me to participate in a So Africa safari next spring. Five times what I ever spent on a “vacation” before. I said, “Sure! I’d love to come! Think of all the money I’m saving by not participating in the real estate crash!”
I am doing one of those too in Asia (Bhutan and India).
TxChick — Bhutan is cool, but pretty high altitude. Thimpu is around 7K ft. and it goes much higher from there. I think you can book a trip that takes you to Lhasa at the same time.
Are you going to Namibia (Etosha)? Better prices and much better game viewing than at Kruger or Sun City. Great golf at Sun City, though.
South Africa, wow. I went on a combined Kilimanjaro climb + Serengeti Safari this past January and had a blast. Watch out for Jo-burg airport — very dangerous — but otherwise you will have a great time.
FYI: in heart of “desirable” area in Oakland CA. Pay 2200 rent for a 800k house (now). My bet it will be 600K in 2years
The banks better start considering fire sales on all of the REO(s) because in my opinion 10% below market value is a joke.
yes - a joke without a punchline, even
went to the foreclosure auction in denver two weeks ago, based upon what i saw, the lenders that sold took a 40-50% haircut on their loans. these were homes that were sitting in inventory for quite some time.
Castle Rock (Founders Village) foreclosure sold 20% off yesterday. It’s not a house I would want to own, but still a good sign.
“‘I would say that foreclosures are impacting the market,’ said James Browning, who specializes in selling real estate-owned homes, that have been acquired by banks after homeowners default on their mortgages. He said there are homes in Montbello and Green Valley Ranch whose prices have dropped between $20,000 and $40,000 in the past 12 to 18 months.”
“‘These are homes in the $115,000 to $160,000 range,’ said Browning, a broker.”
“However, lenders aren’t selling homes at fire sale prices. ‘The banks have taken a stand, they will not give them away,’ he said. Typically, foreclosures can be purchased at no more than a 10 percent to 15 percent discount to the rest of the market, he said.”
OK when is 40,000 15 % on a 160K house.
Anyway, they will sell for 15% less than comps, and they would sell about 3 houses in a neighborhood and the comps will promptly drop to that -15% level, and they will ahve to under cut by 15% and again 3 houses later, its again under by 15, and so on. Soon you’re looking at 50% and then 40% and 30% and so on till it drops to its actual value. Lots of losses along the way both for the geniuses that catch the falling knife and for lenders who will have to take each house back several times while chasing an ever shrinking pool of buyers.
Cool.
Cow_tipping.
“‘These are homes in the $115,000 to $160,000 range,’ said Browning, a broker.”
How the hell can anyone NOT make the payments on a house that cheap? 30 year fixed on $160K can’t be more than $1000/mo. Damn!
That’s why if you buy them at $50.000 it’ll be cash flow positive when you rent them out. I was paying $35,000 for properties in forclosure during the last downturn.
gary you’re an idiot- it snowed
“Gary Bauer, an independent real-estate analyst, pins about 80 percent of November’s results on seasonal factors, with the remainder representing an additional slowing in the market.”
When you start having alot of foreclosures in a area it really destroys the area values . This is why the sub-prime lending foreclosures are going to hit alot of people in lowering their property values that never expected such a hit .
After the fact alot of people are going to be outraged at how the easy money was a set up for a big fall . I think most people assumed that the lenders wouldn’t make a loan unless they were on firm ground .I don’t think the speculators or joe blow homebuyer knew that the kind of buyer that was buying into the new home tract ,etc. they bought into would determine how stable the value of that tract was or wasn’t .
The Aspen Times. “While by some reports say Colorado ranks first in foreclosures in the nation, the Western Slope is lagging far behind. Homeowners on the West Slope are in a better position than their neighbors on the Front Range when it comes to the housing market, said Colorado Division of Housing spokesman Ryan McMaken.”
“West Slope homeowners ‘can always sell…because there is so much demand,’ he said.”
I was just waiting for some turkey to say this. Let’s all beat the drum now, “It’s different here. - boom boom boom - It’s different here. - boom boom boom” How many of you have been to the western slope? Yeah, the only reason there was demand, IMO, is because it was getting too expensive on the front range. Now, it’s more expensive on the WS compared to wages than the FR. Just look at rents. In small towns that are even an hour commute to Montrose (like Cedaredge) have rents for $400, but property (non-trailer) is a mind boggling $200k upward - for the middle of nowhere!!!
“An hour commute to Montrose”…. hilarious. The reason you live out there is to have a 2-3 traffic light commute.
Along with the Ownit story about that company going bust, and what’s happening with MBS, the story that the banks won’t take more than 10-20% off “market price” is ludicrous. Uh, what price? And what if all the sellers are MBS trusts and creditors going after bankrupt originators?
These players do not care about the 10% haircut - the priority will be selling out quickly. So the market price will just reset again…
Really, this is the part of the MBS phenomenon no-one has written on. When a bank is selling, it’s not pretty either. When an MBS paperholder, there are strict trust rules and no-one “in charge.” This will get even bloodier for house prices.
Amen, brother ! You hit the nail on the head. And I agree that nobody is writing about it. Everyone if focusing on the market side. The market does this, the market does that. Buyers doing this, buyers doing that.
What NOBODY mentions is how that will all change when the mortgage funds dry up. Then it won’t be the market doing this or that, it will be the mortgage company doing this or that. At that point the home owners or would be home owners will just be pawns blown around on a rough sea.
A haiku for Colorado:
Pike’s Peak or bust
a lot of foreclosed houses gathering dust
don’t cry
I think its important to point out to non-coloradans that Denver’s real estate market in the suburbs has been sluggish for the past five years compared to the rest of the country. The foreclosures you’re seeing here are actually a soft landing compared to what you might see in other parts of the country.
I think its important to point out to non-coloradans that Denver’s real estate market in the suburbs has been sluggish for the past five years compared to the rest of the country. The foreclosures you’re seeing here are actually a soft landing compared to what you might see in other parts of the country.
You gotta be kidding! To this old RE hand it’s something to behold. BTW I’m glad I’ve sold 2 properties this year (finally, after 12 months+ of MLS listing and 10-20% price cuts) cause I don’t expect any kind of quick recovery.
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