“Today It’s, How Bad Will It Get?”
USA Today reports from Colorado. “Auctioneer Bret Richards barely broke his rapid-fire chatter as he eyeballed uncertain bidders. Less than a minute later, the house was sold. In two hours, 61 were auctioned, all of them foreclosures. One of main factors pushing up foreclosures: the number of borrowers who’ve fallen behind on their adjustable-rate subprime loans.”
“The loss of a job is the No. 1 reason people go into foreclosure. That’s what happened to Bill and Dana Pittman in Denver. Dana lost her job last year, then needed surgery. The couple managed their mortgage payments with Bill’s wages and an inheritance from Dana’s parents.”
“When the inheritance ran out, they fell behind. ‘I should have tattooed across my forehead, ‘Real estate stupid,’ says Dana. She says she wrote ‘a letter of hardship’ to the mortgage company last summer, but ‘It was, like, ‘Oh, well, too bad. We want our money.’”
“To stave off foreclosure on their suburban home, the Pittmans have been trying to sell a small vacation home they own in a remote valley three hours south of Denver. But with no takers despite a cut in the asking price, they don’t expect to sell it before they put their main home up for auction on Jan. 3.”
“‘In California, I saw a billboard that said, ‘Own the home you want, not the one you can afford,’ says Thomas DiMercurio, a Denver real estate broker who specializes in bank-held foreclosures. ‘That was so silly.’”
The Denver Post. “Tighter credit could worsen the housing downturn by reducing affordability for a large block of buyers, said Tom Di Mercurio. Now that the market is slowing and needs capital to avoid a more severe downturn, lenders are becoming more risk averse, Di Mercurio said.”
“That was a mistake lenders made in the collapse of the Houston real estate market in the 1980s, and Di Mercurio said he fears it will be repeated.”
The Brighton Standard Blade from Colorado. “Fewer homes are being built in Brighton, Brighton finance director Bernadette Kimmey said. ‘What we’re seeing is on the number of foreclosures in Brighton, there’s an inventory of existing houses,’ Kimmey said.”
“The significant downturn in housing construction in Commerce City, director of finance Roger Tinklenberg said, follows market trends. ‘Nationwide the whole housing sector of the market is down significantly,’ he said.”
“‘Economists are projecting 2007 is going to be worse than 2006.’ In the metro area the market ‘is just overbuilt,’ Tinklenberg added.”
The Wickenburg Sun from Arizona. “Significant for those in the real estate business is the number of homes sold during these years. ‘The selling frenzy has stopped,’ said appraiser Tadd Nixon. ‘While values have not significantly dropped, the number of homes being sold has drastically decreased. This year we are only doing about half the number of appraisals as we did last year.’”
“Nixon attributed the rapid increase and present slowdown in the market to multiple factors affecting both Wickenburg and Arizona as a whole. He called the housing boom a rolling boom having started in California and traveling to many other hot spots of the country.”
“According to Nixon, the Phoenix market has experienced a sharp slowdown, which has been felt in Wickenburg to a lesser extent. While prices have not statistically fallen much in Phoenix, he expects that to happen since the rate of foreclosures is up sharply. With sales off in Wickenburg, he expects to see this market also soften somewhat in price.”
“‘High raw land prices are keeping the market up at the present time,’ continued Nixon. ‘We have several developments about to come on line, and when that happens we will see more available lots and can expect lot prices to level off or even drop a little. Generally the Wickenburg market moves in the same direction as Phoenix but a little later in time.’”
From Fortune. “Bret and Tricia Baird are all too aware of what they’re getting into. Friends and family have admonished them to rent when they move this month to Mesa, a suburb of Phoenix.”
“With an inventory of more than 38,000 homes for sale, up 94 percent from this time last year, Phoenix is one of the shakiest markets in the country. Nevertheless, Bret and Tricia have decided to make a leap of faith. They just put in an offer of $400,000 for a 2,700-square-foot, five-bedroom house right next door to her sister.”
“The place looks like a pretty good deal, 8 percent off the original asking price of $434,000 and $5,000 less than what the seller paid for it last year. But with the way things are looking in Phoenix, the Bairds realize they could be paying too much.”
“Tricia’s sister, for example, bought her house two years ago for $225,000. ‘We’re nervous,’ says Tricia. ‘If for some reason we have to sell a couple years from now, we’re not confident that we could get what we paid for it.’”
“‘It’s possible that the broader housing market will firm in the next few months, that the worst is over,’ says economist Mark Zandi. ‘But that to me is a dead-cat bounce.’”
“This time last year the big question was whether the real estate market was going to slow down. Today it’s ‘How bad will it get?’”
In case anyone missed this:
‘Larry and Tammy Curell are learning the meaning of Surprise, Ariz. The Curells had hoped to move to a bigger house in the fall. But nine months after putting their newly built four-bedroom on the market for $354,900, they have yet to get an offer. Their development in the Tucson suburbs was hot when they bought three years ago. Now there is a house for sale on nearly every block.’
‘Many streets have more than one. To trade up, the Curells will have to get at least $320,000, which is looking unlikely. A similar house down the street just went for $279,000. In fact, the couple may be staying put for a while. ‘There are so many developers still putting up houses and offering incentives,’ says Larry. ‘It is impossible to compete.’
The Rocky Mountain News: ‘Colorado Division of Real Estate Director Erin Toll wants Metrolist data on Denver-area home sales as part of her effort to tackle appraisal fraud, but Metrolist doesn’t plan to just hand it over.’
‘Metrolist, owned by local Realtor groups, wants Toll to file subpoenas or get court orders, instead of letting her join the organization to obtain the information. Toll and others think inflated appraisals are contributing to the growing number of foreclosures in the state and region.’
You Think
“They just put in an offer of $400,000 for a 2,700-square-foot, five-bedroom house right next door to her sister.”
Ben, what would this house rent for? I figure your close enough to know.
Here’s an active listing from the Phoenix online classifieds:
‘ 4bd South Mountain Lovely Home. This 4 bedroom 2bath single story house comes with a stove, refrigerator, dishwasher and garbage disposal. Large master bedroom with walk in closet.
Phoenix, AZ 85041 $1250′
120 X $1250 = $150,000
Future market value?
I sure hope so. I guess if sellers are stubborn enough, they can stall the downturn long enough to let rents/wages do a partial catch-up. Let’s say in 2010 that $1250 has turned into $1500; by then surely the price should be below $200K? Yawn !!
Um what would the holding cost associated with that be?
“I guess if sellers are stubborn enough, they can stall the downturn long enough to let rents/wages do a partial catch-up.”
Sellers’ being stubborn will turn soft landing into a crash. And the rent will be lower.
Sheesh, I nearly signed up to pay 1800 for a place in that neighborhood back in the spring. The owner queered the deal by not giving me a purchase option. Sometimes it’s better to be lucky than smart.
Why would you want a purchase option in a declining market? It seems that would benefit the seller.
Hedge my bet and keep her from selling it out from under me if the market continued up.
If you aren’t paying much for the option, the purchase option only benefits the renter.
The seller has just capped their upside, and if the renter is savvy enough to negotiate the option, they are only going to exercise it the option if the market value exceeds the option price.
You got it.
It’s why in commercial real estate I always laugh when landlords tout the fact that their 5 year lease has two 5 year options at the existing contract rent (plus an inflation factor).
Congratulations, you have just locked up your building for 15 years in the case where rents are rising faster than inflation, and capped your upside, and 5 years when rents are falling. It’s the TENANT’S option, not the landlord’s, there is value in owning an option, not granting one.
Even with a well written lease option (option at 100% of market rents), you have reduced your ability to do something else with the building (redevelop, change in use, etc.), the option still benefits the tenant, not the landlord.
I am sure it is all about the contract. But judging by your comments, I am not surprised the landlord declined.
How about a mandatory option to feed the squirrelies? That wouldn’t help the rentors, now would it?
In commercial Doesn’t the landlord increase the pool of tenants by assuring them that they won’t be booted out after doing thousand of dollars in tenant improvements and paying dues to get the operation going? There is a benefit to the landlord and it is marketability of the property and potential stability of the income flow. In the case of TXchick I think the landlord did the smart thing in the face of what a savy landlord would see as an unreasonable request.
1250 is kinda pricey. If you are willing to go to Queen Creek, you can rent 4 bd / 2ba for $800.
The one I was looking at was Awhataukee or however the hell you spell that.
Aw, don’t even think about living there…traffic is horrible, too many Chili restaurants and tanning salons…you’d have your trout busy all day!
Yeah, I got turned off by the “tucky” phoneme myself.
well seeing i could buy @ 400k or rent at $1250 a month
it is a no-brainer i must buy!
holy f”"”" s>>>
no wonder it is taking so long for steeper price corrections with moron’s like this couple out buying places
Wow, stove and refrigerator, next thing they’ll be telling us they have indoor plumbing too. What a bargain!
Move that house to West Sacramento/Davis/Woodland and I’d rent it in a second for the next 5 yrs. People are still asking 1800+ for a place like that except there isn’t anyone left who can pay that much for rent that hasn’t already bought or moved out of the area.
“Phoenix is one of the shakiest markets in the country”
LOL! Didnt all the CNBC Bulls call it the HOTTEST MARKETS in the country…
Now so darn hot it burns…
As i recall, they were bullish on Miami.. well that going down too…
“The place looks like a pretty good deal, 8 percent off the original asking price of $434,000 and $5,000 less than what the seller paid for it last year. But with the way things are looking in Phoenix, the Bairds realize they could be paying too much.”
“Tricia’s sister, for example, bought her house two years ago for $225,000. ‘We’re nervous,’ says Tricia. ‘If for some reason we have to sell a couple years from now, we’re not confident that we could get what we paid for it.’”
So they overpaid by at least 209K. Whatta bargain.
Pretty soon she and her idiot husband will be living in the sister’s basement.
Why not cooperate with the Co Gov’t? What are you trying to hide?
Or Is this local government posturing with their CYA statement ? I believe there are fraud appraisals, but the “responsible lenders” having reviewed the buyers 1003 and all ancillary documents decided these people could afford this mortgage.
‘It’s possible that the broader housing market will firm in the next few months, that the worst is over,’ says economist Mark Zandi. ‘But that to me is a dead-cat bounce.’
I like this guy!!!
Hmmm, nine months wothout an offer. It’s probably time for an innovative way to make their home stand out. Koi pond? Free washer and dryer? Cookies at the open houses?
Or maybe they should lower the damn asking price!
No No No, it’s time to be “innovative”, …
Teach the squirrels to dance for food. That’ll make your house standout from all the other exact same over priced POSs.
Carpool lanes in the driveway are always an attention getter.
With an inventory of more than 38,000 homes for sale, up 94 percent from this time last year
____________________________________________
All these clowns claiming inventory is dropping - sorry cheerleaders. We are still up YOY and that is all that matters. There is a tsunami of listings coming the first few weeks of Jan!
Yes, spring starts in 2 weeks!
Coming early next year due to property tax due in April and FB wont have $ for taxes. FB’s to get BF’d in 07.
“Silent Spring”
“Spring Slaughter”
Don’t you guys read the headlines? Because of global warming, spring is already here.
Spring Broke?
The April Ass-pounding!
April is National Anal Leakage Awareness Month
That reminds me of the fat substitute Olestra. That product was doomed the minute the words “anal seepage” were first uttered.
What is it with people who don’t factor in the possibility of losing their jobs in their decision making? Or any other sort of emergency?
Irrational Equanimity…
Most likely, they’ve never had such a crisis and therefore it seems too remote to them.
Personal anecdote on this matter. In 2003 I was “layed off” after having worked long hard hours each week for two years at a job that I enjoyed albeit stressful. 30 days severance…very raw deal. I owned a nice townhouse at the time (bought 3 years prior to this event) and had just gottten serious with my future wife. I didn’t have reserves to deal with being out of work for even that amount of time. 4 months later, after extreme cash flow issues, I found another job that paid somewhat less but they made some promises about early review blah, blah. Less than 2 months into the new job, the company decided to move it’s Divisional HQ from Chicago to Omaha, NE. I had just been laid off again. This time, the severance package was substantial and I actually didn’t leave until 6 mos. later. I didn’t work again until 4 months later when my wife and I moved from Chicago to San Diego. Now I make it a point to have at least 6mos worth of living expenses in cash or equivalents (T-Bills primarily) at all times. I end each week at work prepared to get the pink slip ( I work at a start-up where it doesn’t matter what level you’re at, you can get whacked at a moments notice because things move so quickly). This is the reality for the modern white-collar professional (excluding medical/healthcare) in corporate America nowadays. If you make it past 2-3 years at any company nowadays, you’re a veteran.
Truer words could have not been said about that.
You have the right attitude about this, since nobody owes you a job and can stand on your feet.
…and you don’t owe them any loyalty, either. So if you get a better offer, by all means, take it. And look out for any other opportunities you get on the side. Be sure to network.
I don’t think lack of personal experience can completely explain it. I mean, just a 8th graders exposure to the subject of human history should be enough to get you prepared if not for the worst, at least the unpleasant.
8th graders? When I was elementary school I remember a story about 2 squirrels who lived in the same tree. One saved nuts away for winter while the other played and frolicked in the sun. Winter came and the latter starved to death.
I suppose these days they’ve changed the story to read that the second squirrel bought the tree through an option ARM and retired wealthy while the first squirrel was “priced out forever.”
LOL
and the third squirrel was fed regularly by the GFs who had just bought the overpriced POS
And if there were no GF’s, the second squirrel sent “rattle mail” (nuts in the envelope) and then went on Welfare.
Yeah you’re right SFer. The smack on ther a$$ from the doctor at birth should be all we need to know that things aren’t always going to be pleasant.
I had a similar experience with a layoff and it changed my mindset toward money forever. It was my first job after college and I was making relatively good money and my fiancee (now wife) was working fulltime as well. We had a (relatively) strong cashflow, but we spent pretty much everything we made. I was in my mid-20s and thought that I had the world by the balls.
I unexpectedly lost my job in August 2004 (I had just received another raise and a very positive performance review a month earlier). I was able to get back on my feet relatively quickly, so we got through it without racking up much debt or anything. But it changed my approach to personal finances forever.
Nowadays, we keep our monthly living expenses to what my wife’s take-home salary can cover (she’s a tenured teacher in the Elk Grove USD, so her position is pretty secure). We basically use my entire earnings to pay down debt (students loans and car loan) and save. If/when we buy a home in the next few years, we probably won’t be able to keep that arrangement, so I would to have at least 6 months living expenses in cash equivalents on hand just in case.
yes, my wife and I operate in a similar manner financially. Her income is extremely stable (pharmacist) while I take more risks and my income is used to keep us out of commercial debt and for savings.
You had essentially $0 in 2003, so you decided to move to San Diego, with some of the most expensive priced real estate in the country?
I’ve got a few years worth in the bank, and would never think of moving to San Diego — too expensive.
He may have had a job offer before he moved. Also, then as now, SD rents are about the same as in Chicago, comparing apples to apples (downtown vs. downtown, etc.)
No, we moved in Sept ‘04 after I had severance from the second job with another job in SD already lined up. Second, the move was not voluntary. My wife is an Naval Pharmacist and her first commission was in San Diego.
My first layoff came with negative 3 weeks severance (.com style bust). Second came with a 99% layoff of the company the afternoon of the day I’d given my 2 weeks notice of taking another job. (My timing is getting better, and I’m up to 0 weeks of severance!)
But I’m not betting on my improved acumen. I’m up to 19 months of current expenses through savings and “right-sizing” of expenditures.
Being an RN, I thought I could work as long as I chose to. It is rarely mentioned that the nursing shortage applies only to the hospital jobs (aka hebrew slaves.) I left after a work comp injury, and accepted payments for only 5 months. I’m still relatively young and employable, but can’t do anything physically strenous. I’m going back to school to retrain for something else that pays less, of course. It makes you realize that nothing lasts forever, and the worse case scenario may very well become reality.
Also, my understanding is seniority is everything with nursing. You can switch jobs, but you go back to the bottom of the latter, doing night shift and working on weekends and holidays, etc. And the people in front of you are career nurses who ain’t going anywhere soon. So once you get a decent assignment you strive to keep it if income and quality of life matter.
My sister is an RN; she moved into office work partly because of this.
I’ve used words such as “phoneme”, “rapacious” and “apostacy” on this thread but can’t get “ladder” right.
Well, if it’s any consolation, you can’t spell apostasy right either.
I am an RN in Phoenix, dir of nursing for a non-hospital. Great jobs here in many areas that pay well, also, non-strenuous. Can’t speak for other parts of the country, but here the RN’s are in control.
Luckily, one of the last acts of Congress before they left for good was to renew the H1-C visa.
Hospitals and clinics claim there is a shortage of nurses that are willing
to work in these areas:
http://www.shusterman.com/hpsa.html
If you click on the link, and then click the name of one of the states, you
will be surprised how many areas are considered to be “Health Professional
Shortage Areas”. A few of the places:
* Los Angeles, California
* Hawaii - Maui, Honolulu, etc.
* Las Vegas, Nevada
* Dallas, Texas
* Palm Beach, Florida
* Boston, Massachusetts
* Chicago, Illinois
* Santa Fe, New Mexico
* Phoenix, Arizona
How bad could it get?
That $400K 2700 sf home could be worth $250K in 2009….more or less depending on location and foreclosure rate and nearby new building potential. If a third or half the neighborhood passes through foreclosure by 2009…hmmm… Sounds like a typical McMansion cookie cutter … so it will be bad.
The depreciation on those monstrosities will be alarming. Incredibly shoddy construction done by unskilled labor pool of illegals….and they won’t be “interesting” homes (like some of the classic 50’s and 60’s homes of the West)…they are all alike and horrible. Phooey.
“Nevertheless, Bret and Tricia have decided to make a leap of faith. They just put in an offer of $400,000 for a 2,700-square-foot, five-bedroom house right next door to her sister.”
“The place looks like a pretty good deal, 8 percent off the original asking price of $434,000 and $5,000 less than what the seller paid for it last year. But with the way things are looking in Phoenix, the Bairds realize they could be paying too much.”
“Tricia’s sister, for example, bought her house two years ago for $225,000. ‘We’re nervous,’ says Tricia. ‘If for some reason we have to sell a couple years from now, we’re not confident that we could get what we paid for it.’””
They have all the pertinent information, and even a gut feeling, and they are still going to ruin themselves! Unfrickingbelievable! These people are not the same species as I. Nope, they are some new subspecies lacking a chromosome. They defy logic. For the record they will now be referred to as Homo sapien ssp. ignoramus.
I don’t have a snappy scientific name for such people, but I think I know what the Native Americans would call them: “Catches Falling Knife”.
Proud son of Gila Chief ‘Buyatthepeak’.
More like, Soon to be Impaled by Falling Knife.
Next door to her sister? Sounds like Bret has it worse than the guy from the Suzanne ad.
Tricia’s sister…bought her house two years ago for $225,000.
The sister bought in ‘04 - so even that $225k price is still going to drop further. These people will get exactly what they deserve.
“The place looks like a pretty good deal, 8 percent off the original asking price of $434,000…”
Begs the question, would it still be a good deal if it was 8% off of the original asking price of $500,000?
Asking prices mean S#!* in this market. With the 2006 housing market as the backdrop, a home is a place to live, not an investment–your comparison should be to rental rates, NOT to what the buyer was hoping someone could pay.
Silly, silly people.
Think how incredibly lucky the sellers were to find mopes like Tricia and Bret! I would like to see the interview with the sellers, I suspect they are renting.
Sadly they breed! 2 daughters…
Oops I mean 4 kids!!! maybe the local mormon chapter will bail them off.
When I am going to Utah, the next door family to my friend’s where I am staying at is a family headed by a single mom who is a daughter if a church big wig, and she got the $ 1/2 million house for free, courtesy of the local chapter.
I hate to get off topic, but I seriously doubt this. Even with all the money the Mormon has they don’t go around buying their members churches.
buying their members houses.
I hate to get off topic, but I seriously doubt this. Even with all the money the Mormon church has they don’t go around buying their members houses.
Obviously raising my 20 children has hindered my ability to write a lucid comment.
I suspect you heard wrong about the ‘local Mormon chapter’ buying someone a home. I know that does not happen because I am very aware of Mormon church policies — financial and otherwise. We take care of our own in helping people get back on their feet, but buying folks $500k houses is not one of them.
Financial controls in the Mormon Church are tighter than many Fortune 100 co’s, believe me, I’ve worked in both (one professionally and one as a volunteer).
jb
A single mom getting a free house from the LDS church? That doesn’t sound right, unless she’s a widow or hubby did something to fall out of grace. When it comes to “family values” Mormons trump everyone, even Catholics.
Well, I didn’t mean the church itself but her family, and frankly I don’t know but somehow she doesn’t work, has 3 kids and her former hubby wasn’t rich. And you guys missed the part where I said she is a daughter of a church big wig… I am not saying the average mormom would get that kind of treatment.
I am saying an agent of the LDS church effectively condoning single motherhood is an apostacy. Now if it’s just daddy buying his daughter a house that’s one thing, it happens all the time, and maybe it was really nothing more than downpayment assistance. But if he does have some sort of position within the church he would have to reconcile his action with his (devout) faith, and contemplate how it would look to other church members.
” When it comes to “family values” Mormons trump everyone, even Catholics.”
Yeah but Mormons have a huge advantage. Catholics can only have one wife, while for Mormons, multiple wives, multiple sets of children equal even more family values.
I just had to reply to this one:
I was recently released this past summer after serving for nearly nine years as a Bishop (big wig) in the Mormon church.
The type of situation you describe is at most an abberation and more likely a mega-exageration. There are 2 easy reasons I’ll cite for this.
#1 Any financial assistance given in the church passes the scrutiny of a semi-annual audit. Each and every cash payment on behalf of a member is examined. One of the specific questions asked is whether any family member of the Bishop has received assistance. If so, then proof must be shown that it was approved from higher up the chain.
#2 Church leaders are specifically instructed that paying for the mortgage of a family on a consistent basis is a big no no. They are actually much more likely to help with rent, utilities, food, etc. than pay a mortgage.
Having said that I’ll say that a person could do a lot worse than getting close to the members of their local ward of the Church of Jesus Christ of Latter-day Saints (Mormons). In economic hard times you want to be associated with people whose values have prepared them for such.
Utah is going to get hammered in this downturn. The pervasive influence of the church notwithstanding there are just too many families “keeping up with the Jones’”. I think it comes from the faith they have that if they pay an honest tithe that all will work out financially. They ignore at their peril the additional counsel to not live extravagantly, to avoid debt like the plague, etc.
Lastly, there is a reason why the church is wealthy. No one gets paid for their service as church leaders. All the faithful members pay tithing and none of it goes to support the pastor. That is why you can attend a beatiful well maintained church building in Provo or Littlerock or Guam or Cochabamba. BTW, those nice young men in white shirts and ties riding bikes around are doing it on their own or their families’ dime.
Read all this and had to throw my anecdote here…
My girlfriend is the property manager of the apartment complex I live in. Friday night, we went to the liquor store to get some wine. She dropped me off, I went in, picked out a couple of bottles, paid and returned to the car. I was confused by the look on her face as she was obviously trying to grasp the meaning of something serious. I inquired about the perplexed look on her face and she says….
…”See that lady in there with her daughter? She gets her rent paid by the LDS church and she’s in there buying booze!” .
Anyways, this struck me funny after reading all of the comments.
Love the sinner, hate the sin.
Plus, the biggest moral conflict for a Bishop is always what to do to help the innocent children whose parents are major league losers.
“Tricia’s sister, for example, bought her house two years ago for $225,000. ‘We’re nervous,’ says Tricia. ‘If for some reason we have to sell a couple years from now, we’re not confident that we could get what we paid for it.’”
No sympathy at all. Even when it looks smarter to keep renting, these folks are buying.
There is no housing bubble.!.!.!. Remain calm ……It is a great time to buy. Prices will be going up in March……..
Sellers in Melrose, MA don’t seem to believe the Realtwhores. See from ZipRealty.com
32 SWAINS POND, Melrose, MA 02176**
Price Reduced: 05/19/06 — $489,900 to $479,900
Price Reduced: 06/20/06 — $479,900 to $478,000
Price Reduced: 06/29/06 — $478,000 to $468,000
Price Reduced: 09/26/06 — $468,000 to $464,900
Price Reduced: 10/12/06 — $464,900 to $454,900
Price Reduced: 11/20/06 — $454,900 to $449,900
Price Reduced: 12/14/06 — $449,900 to $399,900
Another 75K and it might actually sell.
I have been tracking house prices through MLS in Massachusetts. I have seen some places that have reduced prices $100-$150k since July. I have seen some with price reductions sometimes weekly. I was recently looking at a house in Bridgewater that started at $479k and is now $399k . They have reduced prices close to 30 times.
I believe it. I grew up in Bridgewater and my parents still live there. My mother’s house has doubled in assessed value in the last 7 years or so, and of course, as have her property taxes. And the town STILL can’t run a budget! The high school cut a bunch of classes two years ago from lack of funds. I had hinted to her that she ought to sell and move into a small condo or something, but she was having none of it. Oh well, she’ll have that house well past this downturn.
Wasn’t that long ago over 200k seemed like a lot for a house.
When my wife and I bought in SAC, CA. area in ‘95 $215k was scary! Sold in ‘04 for $500k been a renter since.
I won’t pay $500K even with a 20% down (which I have free and clear). It’s ridiculous.
Looks like they finally got serious with today’s reduction.
Last cut was bigger than the rest. Desperastion sets in!
Instead of trying to get ahead of the falling price market, and setting a low price early, looks like they are chasing it down. Maybe they should have been $50k less a year ago when they started, and might have been a good deal for someone, they took the risk of being greedy (or whatever) and tried to make small cuts until they get/got a bite.
I bet a lot of people are going/will go through this. People that know the market, have equity and have to sell, may do better if they price below (way below) market vaule (espicially the new homes).
very dumb When they wer at 479,900 and reduced to 478,000
that ill do it. people looking at half million dollar properties are just waiting for a 1900 dollar reduction to make an offer. That 4 dollar a month savings on the mortgage just put the property in range.
“Tighter credit could worsen the housing downturn by reducing affordability for a large block of buyers, said Tom Di Mercurio. Now that the market is slowing and needs capital to avoid a more severe downturn, lenders are becoming more risk averse, Di Mercurio said.”
“That was a mistake lenders made in the collapse of the Houston real estate market in the 1980s, and Di Mercurio said he fears it will be repeated.”
So, then, Mr. Di “Stay the course” Mercurio believes that continuing down the same path (loose lending) will ultimately fix the problem which it created? This guy is retarded. Plain and simple.
I’m not sure the quote is in context.TD is a foreclosure expert that put in years in and around the Resolution Trust Corporation in the 1980’s. I think he is referring to having a lid slammed on borrowing, which happened in Texas.
That’s the plexiglass principle at work.
When you bend a sheet of plexiglass back, it will snap back and actually hold position in the opposite direction. Essentially, its an overreaction. I always that it was a pretty cool example that exemplifies most herd behavior by people.
“‘In California, I saw a billboard that said, ‘Own the home you want, not the one you can afford,’ says Thomas DiMercurio, a Denver real estate broker who specializes in bank-held foreclosures. ‘That was so silly.’”
——————–
Wow. This guy states the obvious, and is quoted in the news. We can rejoice in it, because previously, people who stated the obvious were called nuts. Now, people who state the obvious are considered an elite minority, who can arrive at these conclusions after serious thought and analysis, and they are quoted in the news.
An improvement. Nevertheless, even now stating the obvious is an advanced accomplishment, beyond mere mortals.
We now wait for those times, when stating the obvious is so unremarakable, it goes unmentioned in the news.
Trouble is, “silly” wasn’t the right word. Disturbing, foolish, imprudent, irresponsible, unctuous, misleading, invidious, fraudulent, rapacious… sure. But not silly.
Pernicious. That’s the word I was trying to get at.
avaricious?…bubblicious?
Absolutly fraudulent!
“Larry and Tammy Curell are learning the meaning of Surprise, Ariz.”
I drove through Surprise about 18 months ago. Similar to the thread yesterday about the speculator bus in Baltimore, Surprise looked like an entire town built solely for real estate speculators. There were signs on corners guiding investors to new neighborhoods. It seemed like one of those old AZ/NV corporate towns built by the mines in the 40s and 50s, but this town was built for pure speculation.
Any Arizonans have any local feedback on its state today?
I think “Surprise” is the most appropriately funny name for a town built on speculator demand.
Execpt the “suprise” will not be a good one (to uninformed people that is)!
Lived there up until a year and half ago. Moved there in 2000 because there was value for your dollar. I had a 1800 sf on 1/3 acre and paid 139,000 which I sweated over. Glad I am not there now. Too many Macshacks on postage sized lots selling for too much money. Traffic is terrible and the city council wants as much growth as possible to get the tax revenue.
The compulsion to “own” vs. rent is all the more hilarious as many homeowners will never pay off the mortgage, thus renting money as an “owner”.
Asset-backed lending is a great business and the subprime mortgage companies will be a great buy sometime in 2007.
The bankruptcy reform of ‘05 will ensure that all upside-down refi’ers will be stuck with their debts for years.
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_public_laws&docid=f%3Apubl008.109.pdf
The compulsion to “own” vs. rent is all the more hilarious as many homeowners will never pay off the mortgage, thus renting money as an “owner”.
Most of the folks in IOs and neg-ams will never end up playing any principal, never mind the entire mortgage.
i was at the auction in denver and based on the preliminary searches that i did on the properties that sold, the lender took about a 50% haircut from their original loans, not including the 15-20% haircut in carrying interest and foreclosure costs. what are we gonna do with the next 30,000 or these things?
Boulderbo-
Have you seen any effect on Boulder pricing yet?
TIA
What kind of prices were the auctioned properties selling for? Thanks.
condos from the 20’s to the 50’s, singles from the 50’s to the 90’s. most expensive home sold was $125,000, a 2800 s.f house on acreage in livermore. most of the homes in aurora, denver proper $70-90k. just two years ago you couldn’t find a single family, even in the hood for less than $150k. boulder is dead on the low end ($300-500K) although there are over 100 condos going up downtown in the $1.2-2.2 million range. i know a couple of the developers that paid over $100 a square foot for their ground and their thinking is that they just have to find 6 or 8 more fools to sell to. i keep telling them to look at what’s selling (or not selling) in key west, tahoe, sun valley, not what sold in boulder over the past year. it’s not gonna be pretty imho.
Wow, so that sounds like a real auction, without reserves or shills or crap like that. So we have an idea of what comps really should be.
Any of those Denver condos in the Cheesman Park/ Cherry Creek/ Speer Blvd or that general area? If so they may actually cash-flow positive.
What do you call someone who has double the mortgage payment than the person who lives next door, who bought 2 years ago?
Greater Fool.
This dupe is of the mindset: “Yes, I’m getting ripped off, but I know I’m getting ripped off, so it’s OK.”
A fool and their money…
The worries they voice are the necessary caution they feel is warranted to guarantee that their house doubles in value over the next two years just like the lucky sister’s.
The seller of that house is so lucky to find those buyers. And its probably a tax free gain! They got in the last lifeboat on the Titanic.
Maybe they had a St Joe statue in the yard?
When we were in Pagosa Springs to visit relatives, we saw a shop selling St Joseph statues. Unbelievable…
To find somebody this dumb you should have to bury St. Joseph himself in your yard.
Wait…are you sure the two houses are similar, you know, square footage, comparable lot size, granite counters, all that stuff?
I’m kind of hoping against hope that the sister who bought the house for $225,000 paid for a doll house. For Bret and Tricia’s sake, anyway.
“but I know I’m getting ripped off, so it’s OK.”
I don’t think these two have the mental capacity to know they’re being ripped off. They’re just all giddy they are going to get to live next to her sister. Damm the price full speed ahead.
Yeah. But they are the lesser greater fool. The seller paid 5k more for the same house a year before. So these lesser greater fools can sleep at night knowing that because they were savvy negoiators and really stuck it to the seller.
The Denver Post. “Tighter credit could worsen the housing downturn by reducing affordability for a large block of buyers, said Tom Di Mercurio. Now that the market is slowing and needs capital to avoid a more severe downturn, lenders are becoming more risk averse, Di Mercurio said.”
“That was a mistake lenders made in the collapse of the Houston real estate market in the 1980s, and Di Mercurio said he fears it will be repeated.”
Instead, I guess they should make the bigger mistake of issueing more bad credit to help this Ponzi Scheme along?
‘The place looks like a pretty good deal, 8 percent off the original asking price’
I’m trying to sell my 14 year old Subaru. Where do I find people like this?
Wherever these overpriced houses are, duh.
“‘High raw land prices are keeping the market up at the present time,’ continued Nixon. ‘We have several developments about to come on line, and when that happens we will see more available lots and can expect lot prices to level off or even drop a little. Generally the Wickenburg market moves in the same direction as Phoenix but a little later in time.’”
More like highly leveraged/financed land that developers need to unload.
“With an inventory of more than 38,000 homes for sale, up 94 percent from this time last year, Phoenix is one of the shakiest markets in the country. Nevertheless, Bret and Tricia have decided to make a leap of faith. They just put in an offer of $400,000 for a 2,700-square-foot, five-bedroom house right next door to her sister.”
More like a leap of stupidity.
“To stave off foreclosure on their suburban home, the Pittmans have been trying to sell a small vacation home they own in a remote valley three hours south of Denver. But with no takers despite a cut in the asking price, they don’t expect to sell it before they put their main home up for auction on Jan. 3.”
Why don’t they lower the price enough to sell it? Are they clueless?
Upside down or need $XXX to keep the suburban home.
They have it all wrong. Sell the big house and move into your vacation house!
NO JOBS. Nearly all the employment in Colorado is in Colorado Springs, Denver, Boulder and Fort Collins.
The article said three hours from Denver - that means nearly inaccessable in winter.
I hate to get off topic, but I seriously doubt this. Even with all the money the Mormon has they don’t go around buying their members houses.
I just figured out why the employment #s have been so strong. Its all the FBs out there scrambling to work 2 and 3 jobs to pay their mortgage. Everyone is working because they have to. But the jobs are low paying crap, and this won’t last. Look for big employment declines as the FBs get discouraged and fall behind as well as employers trimming forces in the slowdown. Crash is still coming, just nobody has quite connected the dots yet. The stock market is very close to the top. I think it is safe to short here - go ahead, you can blame me if you lose.
Nah, unless it’s the Great Depression there are always low-paying jobs. Even in the 1980s and 90s recessions fast-food joints were hiring (hence all the illegal immigrants). And the high-end jobs that aren’t RE related should be mostly OK. The middle class will be the ones screwed. As always.
I agree with you. But with all the liquidity out there the stock market may take a bit longer. As fas a feeling the effects of a major recession (major layoffs, etc.) I think (a wild guess really) that it has just barely started and won’t really be noticed until about election time ‘08. Or at least the Dem’s will blame the Rep’s for one. I’m hoping for a housing bottom by 2010. But it’s more hope than anything that I know for sure.
an 8% discount off the asking price what morons. Those sellers probably would have dropped another 50K if the breeders had the balls to ask instead of just makin babies
I bet the deal was negotiated by a Real Estate professional. It went something like this:
“We want a nice house near my sister.”
“Here it is. And at 8% discount”
“What would we do without you?!”
“Now you can stop throwing money on rent. An houses always go up. Enjoy!”
Someone above mentioned that none of these people will pay off any of the principal, let alone the entire mortgage. That is exactly the problem with this Ponzi scheme. We have reached the tipping point in credit. These people are so close to the line they don’t know it. When you have to pick a payment each month that should tell you something right there. BUT NO! Sadly, these people never seem to account for lost job or death or divorce, let alone the $1,500 water heater replacement, which ends up on the Home Depot card at 29%! I don’t make the most money, or have the most saved, but this board has really awakened me to thinking, not worrying, but good planning and forethought, of events that can occur.
I realize that unless you have hundreds of millions you will never completely protect yourself. However, if you can’t even get a new water heater or replace a roof without going into debt time and time again, you need to rethink your financial acumen, or, lack there of.
We owned for ten years and the experience was great. However, I now know what it really takes to be a homeowner and one who cares about the home, his family, the neighborhood, and most importantly, his family’s financial stability. I can’t imagine paying several thousand dollars a month for a home and then unable to fix a leaky pipe without a Home Depot card account that I know I will never get out from under. Sadly, for so many Americans this is the way of life.
Fortunately, I found out that this is NOT the American dream. Freedom is truly the American dream and half a mil to 1 mil of a mortgage is not freedom when you have to pick a payment or eat Ramen for 30 years.
“….the Bairds realize they could be paying too much.”
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Jeez, are people really this stupid? You’re gonna buy a house in Phoenix (with almost 35 k to chose from) and do a handstand because you saved $ 5 k off last years price plus 8% off the current asking?
These dopes deserve the 2006 RE Darwin Award!
They don’t call them Greater Fools for nothing. And this couple proved it.
“Tighter credit could worsen the housing downturn by reducing affordability” “That was a mistake lenders made in the collapse of the Houston real estate market in the 1980s, and Di Mercurio said he fears it will be repeated.”
I guess by your logic, drinking too much isn’t the problem, its stopping at the end of the night that leads to the hangover in the morning. So next time, just keep drinking and everything will be just fine.
‘The selling frenzy has stopped,’ said appraiser Tadd Nixon. ‘While values have not significantly dropped, the number of homes being sold has drastically decreased. This year we are only doing about half the number of appraisals as we did last year.’
I thought that demand for appraisals would go up as the banks tightened their lending requirements?
Right now there is a standoff between buyers and sellers so that the number of houses sold goes down but when the sellers collapse the number of houses sold will go back up and so will the need for appraisals and appraisors.
comments?
appraisals and appraisers
One of the guys I work with is buying a house in phoenix right now (I live here.) He’s having trouble closing because the seller is upside down on the house and has to bring money to the table just to -sell- the house to him. The house is vacant, so what’s the seller to do? He’s trying to borrow the money from a HELOC on his new home. He’s having trouble getting THAT loan. So, the whole process is being held up because the Seller can’t get the money to afford to sell! It’s crazy, I tell ya.
go this from my real estate agent in Kauai:
Aloha Everyone! Happy Holidays! The real estate market in Kauai for the entire Island is as follows according to November MLS stats:
Number of Residental sales (units sold) is down 20% from last year for November 2006; our YTD sales numbers are down almost 32%. Condo sales numbers are down 61% for November compared with last November. However, YTD number of sales was only down 1% probably do to the large amount of projects being built and closing out. Total Sales Volume (how much sold in terms of dollar amount) was down 30% for Residential over last November, 27% for our YTD comparison. And now the number you’ve all been waiting for: (insert drum roll) Kauai Median Sales price was down 14.5% over November of last year, but only down 5% over 2005 number (YTD) probably again because of the projects that were sold two years ago finally closing out. The median price for a house on Kauai fell from $689K (2005) to $590K (2006). Interestingly, though, Hanalei (Princeville) remained above last years price at $947K (November 2005) jumping to $987K (Nov. 2006) beating all the forecasters dim predictions. Condos as well in Hanalei (Princeville) rose a healthy 25% over November of 2005, from $585K to $732K respectively. I guess that speak well of buying high end real estate as a solid investment value, it appears to weather the storm better than anything else, or has so far. My feelers tell me the market is picking up a bit in the last 30 days, so if you’ve been thinking about buying and want to get the “Bargains” before the “Bargains” go up again, better give me a call so I can get started looking for that property in Paradise you’ve been hankering for all this time…For more detailed info open the attachment I’ve sent with the newsletter. Have a great Holiday everyone!!!