“Some Call It A Buyers Market, Some Call It A Bust”
The Rocky Mountain News reports from Colorado. “A record 19,425 real estate foreclosures were filed in the seven-county Denver area in 2006, 35 percent more than in 2005. Last year’s numbers topped the record set in 1988 by 13.45 percent. ‘It is a problem, a big problem, but it is not the worst it has ever been,’ said Chris Holbert, president of the Colorado Mortgage Lenders Association.”
“‘If everybody groans this is the worst it has ever been, it scares people out of the home-buying market,’ Holbert said.”
“He said people who bought during the previous foreclosure crisis in the late 1980s are the ones who have made the most money on their homes.”
“He also noted that a large percentage of homes that enter foreclosure do not complete the process. In some of those cases, lenders accept ’short sales,’ or less than the mortgage amount for the home, instead of going through with the foreclosure.”
“Holbert said lenders have told him that they are losing an average of $40,000 to $50,000 every time a home goes into foreclosure.”
“Sandy Hume, public trustee for Boulder County, said many experts tell him the foreclosure crisis ‘will get worse before it gets better. Unfortunately, I believe it will, too.’”
The Gazette from Colorado. “What a difference a year makes. In 2005, home construction in Colorado Springs and El Paso County soared to a second straight record-setting year. In 2006, the pace of home building fell to its lowest level in more than a decade.”
“The 2006 slowdown delivered a blow to the construction industry, which employs thousands of carpenters, framers, painters and other workers. Several builders, from local firms Vantage and Classic Cos. to national companies such as Pulte, said they laid off workers when production sagged. The slowdown also was felt among plumbers, electricians and other subcontractors.”
“Heidi and Greg Smith, who own Affordable Plumbing and Heat Inc. in Colorado Springs, said they were hit by a one-two punch in 2006. First, prices for copper and other materials skyrocketed. When the company hoped to offset those higher costs by doing more work, home builders cut back on construction. The result: Affordable Plumbing laid off 26 of 47 employees.”
“‘Instead of the subs being able to recoup the losses, building is down by 25 percent,’ Heidi Smith said. ‘So now it’s a fight to get the work, and you have to bid as low as you possibly can to undercut everybody else to get the work.’”
The Explorer News from Arizona. “The rookie realtor sat at a dining room table covered in brochures and home listings for his first open house. A sign-in sheet contained two names. ‘Those are fake names,’ Charles Durrenberger said. ‘A little trick of the trade. No one’s come by yet.’”
“The five-bedroom house seemed bigger than reality as Durrenberger paced through the home alone, saying things like, ‘Someone please come’ and ‘I wish someone would show up.’”
“Some call it a correction or a buyer’s market. Some call it a bust. Jane White, the owner of the home in Oro Valley Durrenberger wants to sell, just says ‘whatever.’ ‘I’m lucky in a sense because I’m not in a hurry,’ said White, who wants $492,000 for the home built in 2001. ‘The market is going to do what it is going to do. You can’t let it drive you crazy.’”
“White remains optimistic, predicting that the market will improve by spring. ‘Then maybe I can be a buyer in a buyer’s market.’”
“Experts have refrained from calling the state of the market an outright bust, though it seems like nothing less to those in the trenches. Take John, who ran into a wall when trying to sell his family’s home in Starr Pass Heights on the westside. He had a job offer elsewhere.”
“‘We hold open houses and no one shows up. We get two visitors a week, but no offers. We advertise like crazy, but without much response. I don’t know what to do next,’ John wrote.”
“The frustrated seller purchased the home for $300,000 in November 2005. Even though a realtor advised him to price the home at $375,000, John has lowered his asking price to $289,000. Still no buyers. ‘I’m definitely going to lose $30,000,’ John wrote, wondering what to do next. ‘Keep it at the insanely low price where I’m losing my shirt and wait for a buyer to come around? Try to find a renter and wait out this downturn?’”
“Production builders have been hit the hardest, said Alex Jacome, government liaison for the Southern Arizona Homebuilders Association. Rumors have swirled about people walking out on home orders and down payments. ‘I’ve heard some talk about people backing out on sales, but I haven’t seen anything concrete,’ Jacome said.”
“Nonetheless, construction workers have lost their jobs. ‘Not hordes of them, but there have been some layoffs,’ Jacome said. ‘We’re all just waiting for 2007 when this thing corrects itself.’”
“Richmond American recently abandoned two high-profile projects in Marana. The builder based its decision on an unattractive market, according to sources with the town of Marana.”
“The Tucson housing market has ‘all but stopped,’ according to University of Arizona’s economic forecaster Marshall Vest. Sellers have unrealistic price expectations and buyers think prices are plummeting ’so why buy now?’ Maybe buyers read the newspapers and sellers do not, Vest joked.”
“More than 9,000 homes in the region remain listed for sale. Inventory numbers have stayed about 66 percent higher than 2005 levels. Almost 40 percent of homes on the market are vacant, the product of investors or home-flippers who abandoned their purchases when the market shifted.”
“The investors, most from California, mistakenly thought they could cash in on 2005’s market but came too late, added Rosey Koberlein, CEO of Long Realty.”
“All in all, the past two years in Tucson’s real estate market, as one expert put it, tell a ‘textbook bubble story.’ Most think the ending will be written in 2007.”
The Arizona Republic:
‘While housing has gone up near the two retail centers and more developments are on the way, including Cooley Station in the Higley section of Gilbert, the market has cooled. The median price of an existing house in town dropped to $308,000 in November, the lowest figure in a year and a half, according to ASU. There were 285 recorded sales in November, compared with 425 a year earlier.’
‘Main Street Commons also will have a residential component. About 300 condominiums and apartments that will be constructed above ground-floor retail are scheduled to open in 2008, according to Woodbine Southwest.’
Credit Managers’ Confidence Plummets
IT IS A BUST, BUST, BUST, BUST.
The monthly Credit Managers Index stands at its lowest level since April 2003.
Stephen Taub, CFO.com
January 03, 2007
Confidence in the economy among corporate credit managers has apparently been slipping for quite a while. The evidence: the monthly Credit Managers Index, which fell for the fifth consecutive month in December, now stands at its lowest level since April 2003.
What’s more, on a year-over-year basis, nine of the 10 components that comprise the index fell. The drop has been driven mostly by deterioration in the services sector, according to The National Association of Credit Management, which has conducted the monthly survey of the business economy from the standpoint of commercial credit and collections since January 2003.
advertisement The data “strongly suggests” a slowing economy, according to NACM, which pointed out that seven of the 10 components that comprise the index declined in the most recent month.
For the CMI survey, the association asks about 500 trade credit managers to rate favorable and unfavorable factors in their monthly business cycle. Favorable factors include sales, new credit applications, dollar collections, and amount of credit extended. Unfavorable ones include rejections of credit applications, accounts placed for collections, dollar amounts of receivables beyond terms, and bankruptcy filings.
While the scores of credit managers in the manufacturing sector, buoyed by increased sale, have risen in the past two months, primarily on sales, service-sector scores fell for the third straight month, dragging down the overall index. In fact, eight of the 10 components comprising the service sector fell, according to the association.
A CMI score of more than 50 reflect a view that the economy is expanding, while a reading below 50 suggests a declining economy. On a year-over-year basis between last year and the year before, the total CMI Index fell 3.6, from 58.3 to 54.7, as nine of the 10 components fell.
“All in all, the past two years in Tucson’s real estate market, as one expert put it, tell a ‘textbook bubble story.’ Most think the ending will be written in 2007.”
It’s so amusing to read comments like this. “The ending”?? Pray tell, how do you figure to clear out a mass of inventory, avalanching foreclosures, glut of retarded specialized “developments”, the coming slew of mortgage lawsuits, indictments, etc…
in just one year?
They never get around to explaining that particular magic.
It’s a bust. But in this world of positive thinkers and political correctness you must never call a negative event by its real name. Never. Policians as businessmen as the people in the media. You can call it the total perversion of language.
Amen, brother. The real price adjustments are set to occur in 2007. The worst is not behind us by a long shot. Especially not with the sub prime mortgage lenders tightening up.
I agree. Sub prime is just starting to slide, I amazed at how quickly some of these guys have folded — they must be very thinly capitalized. But I also expect builders who have been selling to sub-prime customers to take an “unexpected” hit due to the downturn in sub prime.
CTX for example has been selling over 60% of thier homes to sub prime buyers. What happens when these customers cann’t get loans? How long will CTX be able to underwrite defaults?
60% - Where did you get this number from?
Thanks
CTX’s quarterly reports, prior to the spin-off of their sub-prime lending arm, showed the number of sub-prime loans made by CTX each quarter.
The ending probably will be “written” in 2007, i.e. in black and white in MSM. Playing out that “ending” is gonna take at least 3 painful years.
“…Most think the ending will be written in 2007.”
The end of the line is near for some FBs, lenders, and specuflippers. In other words, the carnage has just begun.
Won’t the millions of golf caddy jobs and retiring baby-boomers save them?
$492,000 for something in Oro Valley? Does Arizona have another Oro Valley that I haven’t been through? Or is this lady just pricing $300K above market?
She is just another greedy fool wishing for the “bucket of money and box of stupid.” And there are lots more where she came from. That a realtor is willing to represent her and her price says a lot about the industry.
Actually 492K is not completely outrageous for a 4000 sq ft house - it’s priced well below most of the market. Small lot, though.
You need 4000 sqft in Oro Valley about as much as you need a handgun in hell
Last year’s numbers topped the record set in 1988 by 13.45 percent. ‘It is a problem, a big problem, but it is not the worst it has ever been,’ said Chris Holbert, president of the Colorado Mortgage Lenders Association.”
“‘If everybody groans this is the worst it has ever been, it scares people out of the home-buying market,’ Holbert said.”
Now I’m not a rocket scientist or anything but if the worst its ever been was 13% lower than this doesnt that make this the worst its ever been.
My thoughts exactly!
that’s too scary. ok, now i won’t buy a house.
I think that what is being referred to relates to the percentage of foreclosures compared to the number of homes. In 1988 there were less homes so even though there are more foreclosures now, percentage wise there are less. However, there is more to come and I think on a percentage basis, the next 3 years or so will be the worst. At least, these articles are not repeating the old mantra about the foreclosure number not meaning much since it is a lagging indicator. Just because it is a lagging indicator doesn’t mean it will not get worse.
There are a lot more people in Colorado now, so, it’s not the worst it’s ever been. If you look at what prices did in the ’80’s bust we’re just not there yet. That doesn’t mean that 2007 won’t beat the 80’s in all respects, but 2006 was not enough to bring prices down to what I would call reasonable.
“…but 2006 was not enough to bring prices down to what I would call reasonable.”
I am very surprised at how prices are holding up in Colorado. I am sure it’s going not going to last, but still, the stickiness is amazing.
Prices holding in Colorado…I don’t think so…we sat on the sidelines for over a year. Finally closed recently on a home we watched during the entire time. It started out at 899K we closed at 525K and I still might have paid too much.
Good to hear. I have been watching mostly low end stuff as the houses you mention are way out of my price range. The bottom end in all bubble markets seems to be holding as the poorest, least credit worthy and most gullible stretch to get into anything made affordable to them by the funny money crowd.
No! No! No! Can’t say that.
Let’s me explain that again:
“‘If everybody groans this is the worst it has ever been, it scares people out of the home-buying market!!!”
Got it?!
Thanks.
Great, you scared the spring bounce buyers, now they won’t show up. Good going
On a side note the owners of the vacant lot across the street from my house in cape coral have lowered their asking price. Was 149,000 when I moved in here 2years ago which is what i paid for my 3/2/2 w/pool. I bought 3 years ago and did a 1 year leaseback. They are now at 89,000. I would put the real value on that lot and the 20 or so others on my street at 15,000.
Chris Holbert, president of the Colorado Mortgage Lenders Association.:
“The truth is, it is a better time to buy now in Denver than it was four years ago” before the current crisis began, he said.”
But of course…
As far as Mortgage and Real Estate Brokers. “Now” is always the “best” time to buy…
I love it when someone starts a statement with “the truth is”. You know that the truth is the last thing you’re going to get.
“‘If everybody groans this is the worst it has ever been, it scares people out of the home-buying market,’ Holbert said.”
This pales in comparison to the number of people who were scared into the home-buying market.
Formerly from Cali I can speculate that prehaps the Ca investors liked the mountains and climate of Tucson better than Phoenix so they bought the RE up? Too bad there are few jobs there in Tucson to support the high prices.
Agree. Tucson, in general, has low salaries and wages. However the climate is cooler than Phoenix’s, the air is cleaner, and the mountains are higher and more scenic than near Phoenix. Phoenix offers a lot of variety and some good jobs. High tech in Intel, General Dynamics, Motorola, Orbital Sciences, Boeing, Honeywell, Lockheed, and lots of smaller high tech companies. Tucson has Raytheon, Honeywell, and University of Arizona, which is the base of a laser / optics / astrophysics cluster of businesses and governmental organizations. But Tucson’s high paying jobs are still a drop in the bucket.
Except for a very few jobs, the University of Arizona doesn’t pay that well. Trust me on this. I’ve worked there.
“‘If everybody groans this is the worst it has ever been, it scares people out of the home-buying market,’ Holbert said.”
WHAT A DIRTBAG
True, but even this ethically-challenged baboon seems like Abe Lincoln compared to David Liereah.
Mr. Fester,
I rolled off my seat when I read your comment. I want to frame it.
Speaking of dirtbags… on the day Lennar CEO Stuart Miller is quoted as saying “‘Market conditions continued to weaken throughout the fourth quarter and we have not yet seen tangible evidence of a market recovery,” the LA Times serves up this manure cone…
http://tinyurl.com/yyl9so
Lennar to Shed Stake in Housing Venture
The builder sells control of Newhall Ranch amid a slump. The deal hints at an improving market.
By Annette Haddad, Times Staff Writer
January 3, 2007
Lennar Corp. said Tuesday that it would sell a majority stake in a joint venture that owns one of the largest residential developments in Los Angeles County, the latest example of a home builder selling land to cope with a bruising housing slowdown.
But the fact that buyers are snapping up such land is a sign of improving confidence in Southern California’s home-building market, analysts said.
“The deal hints at an improving market.”
The story hints at a lying main-stream media.
use of ’snapping up’ cliche hints of complete fabrication of truth.
Giving up on Newhall is pretty dramatic. Of all the assets they have I would think this would be one of the most viable. Speaks volumes about where they “really” think it’s headed in Los Angeles.
“Speaks volumes about where they “really” think it’s headed in Los Angeles.”
Exactly! Either that or they are insanely desperate for cash flow.
The rest of the article that I read at lunch was, that one of the buyers was PERS (Public Employee’s Retirement System) and that Lennar kept 19% of the action and all the management. Not a bad deal for Lennar, public get’s screwed again.( Bought all for 990 mil, sold for 1.3 bil.)
it’s just a rumor
‘I’ve heard some talk about people backing out on sales, but I haven’t seen anything concrete,’ Jacome said.”
He hasn’t seen anything concrete, but he’s seen plenty of stucco.
many recent deals are nothing but stucco anyway. Hollow speculative deals which will not last.
One of my relatives lives 2 blocks from the University of Arizona campus and she has been trying to sell her house for over a year now. She only received one offer and then the would be buyer backed out at the last minute. She claims the house was worth $450K two years ago and the current asking price is $350K and no one is really interested. She purchased the home 7 years ago for $185K and becuase of a divorce the house now needs to be sold. Yes the market is dead from what she has told me.
She needs to stop eating at the same trough the other greedy pigs eat at stick a 260,000 or so price tag on it and move on.
She probably can’t. She HELOC’d herself right under water.
This must be Sam Hughes neighborhood, a desirable neighborhood in the central part of town. As I posted elsewhere in this thread, housing prices have doubled or more since 1999-2000 or so with no significant change in the local economy to justify the higher prices. Tell your relative to read this blog and other blogs (Housing Doom has a great chart showing how inventory in Tucson has increased dramatically while sales per month have decreased dramatically in the past 12 months). Remind her that even at $300 she would be realizing a gain of $115k in seven years (5% increase per year, very respectable).
I know of two Sam Hughes houses that have been on the market since 2005. Haven’t been by them in a couple of weeks, but I’ll bet they’re still sportin’ those Long Realty signs.
God I am SO glad I urged my friend to sell her Tucson 2 BR with a 10-15% haircut ($163 Zestimate at peak, sold for $150K just before 2006 Thanksgiving). She wanted to “wait until spring.” I said to drop price from Zillow and keep it listed all winter. She lucked out and got a Fool within a month. I don’t want to say Greater Fool because it’s tough to be a GF on only 150K.
I just talked to her on the phone and she said “I heard sales are going up!” I couldn’t answer because properly because she didn’t remember the exact wording of whatever twisted “fact” she actually heard.
“The five-bedroom house seemed bigger than reality”
Here it is
From what I can see from the listing, looks like a real nice place. And being ~15 miles from Tucson, seems like a cool location. Question, is $495K a high price ?
$495k is a high price when you consider that housing prices have pretty much doubled across the board since 1999-2000 and that wages have not increased significantly and that Tucson is a low wage town where the average household income would be stretched to buy anything more than a $200,000 house (if that much). Oh, and you could find literally hundreds of other houses just as nice for sale.
$495K is way overpriced for this house for Oro Valley (or all of Tucson). Look at the pictures…basic, cheap construction (bland basic kitchen, crappy light fixtures, etc.), small property (.18 acre), & NO POOL. The only thing it has going for it is large square footage. This house should be priced at around $345K max.
What a boring house — a textbook reason of why model homes are furnished to the nines with thousands of $$ of trendy bric-brac: to hide how empty and bland the rooms are.
The semi-prefab home I grew up in had better kitchen cabinets.
and it looks like a disorganized energy sucker. how depressing it is.
jtcc, ding , ding, ding, ding, you hit the nail on the head. Looks like she purchased in 2001 for $254,800 (that looks like the last transaction on the house).
It’s scary in all its cave like banality. I’d go crazy in a cold sterile house like that. Also, seems like it’s trying to be impressive but its phlebian at best.
Stock market changes direction after federal reserve meeting minutes for last month show concern about housing bubble:
http://biz.yahoo.com/ap/070103/wall_street.html?.v=30
“Though the minutes from the Fed’s Dec. 12 meeting said inflation continues to moderate, the bleak assessment of the housing market unnerved investors who were betting that the sector’s problems wouldn’t necessarily spill over into other portions of the economy.”
Good. There is hope after all that these rolling bubbles will end. I sure hope the FED doesn’t get spooked and increase money supply to bail out the housing slowdown.
ah hah so they acknowledge a bubble
The Fed is now worried about housing:
Stocks Fall After Fed Minutes Stir Concern on Housing
NEW YORK (AP) — Stocks lost momentum and turned lower in the first session of 2007 after minutes from the Federal Reserve’s last meeting showed gathering concern at the central bank about the severity of the pullback in the housing sector.
they should be showing concern about all the fraud
“The investors, most from California, mistakenly thought they could cash in on 2005’s market but came too late, added Rosey Koberlein, CEO of Long Realty.”
Going back to the 49ers, California gold-miners-come-lately have learned tough lessons about how the opportunity to pick up nuggets of gold off the ground can evaporate over night.
Hope they get burned so bad this time that they keep their money grabbing paws INSIDE Cali.
lol
Business Press Maven: Building Up the Housing Sector
By Marek Fuchs
Special to TheStreet.com
1/3/2007 12:08 PM EST
URL: http://www.thestreet.com/p/newsanalysis/maven/10330355.html
(Editor’s note: To access some of these stories, registration or a subscription may be required. Please check the individual links for the site’s policy.)
Last seen during the spiritually uplifting Holy Season, The Business Press Maven was busy spitting wooden nickels at the prevailing thought in the business media that the housing slump was over. It seems the slender rise of consecutive existing-home sale numbers was enough to get the business media — from the wire services to The Wall Street Journal — in a lather about a recovery in the housing sector.
It is an ancient foundation of Business Press Maven thought that instant recoveries are a false God, and you should not follow story lines that worship it, no matter how good they make you feel about that big depreciating asset you live in. Here, I was specifically worried about the cancellations that don’t show up in many home sales numbers and how the builders were going to have to take charges.
They have taken some already, but were acting like they wouldn’t have to take any going forward — paging Hovnanian (HOV) — and in declaring an end to the housing decline in the last week of 2006, the bulk of the business media was falling for this nonsense, hook, line and sinker.
While giving the hairy eyeball to the “Downturn Over,” articles, I implored Business Press Maven readers to pay attention to the small batch of articles alerting investors to the prospect of those charges.
Well, late Tuesday, guess what: Lennar (LEN) , a Miami-based homebuilder, slashed its fourth-quarter forecast. Guess why. Land charges. It had to write off deposits on land that it no longer intended to buy.
As Barron’s aptly put it over the weekend: “Just as a house is not necessarily a home, an order for a house is not necessarily a sale.”
Now — as in the case of my near-perfect timing in the Pfizer (PFE) debacle last month — I must make clear that I do not possess the power of telepathy. But a bunch of readers emailed last week, asking when I thought the land charges would come to the fore.
I said such timing is always difficult, but I thought many of the builders were hoping to be saved by a miracle of a spring selling season; when that didn’t materialize, the charges would. That is still a danger, but it is interesting to see how quickly into 2007 the clown parade of charges began.
And that taught the business media a lesson, right? In The Business Press Maven’s first official act of 2007, he gave the hairy eyeball to a Reuters story that came across the wire at 1:53 a.m. this morning. Guess the headline: “Manhattan Apartment Downturn Short-Lived: Report.” Guess the lead: “The decline in the Manhattan apartment market seems to have been over in a New York minute in contrast to the sluggish U.S. housing market, according to an influential property report released on Wednesday.”
If you believe that wishful reading of a few statistics was bad enough, look where the second sentence takes us: “And the Manhattan market could be set for a surge in 2007.” From recovery to surge in the space of two seconds. I wish those “For Sales” signs I pass in my neighborhood would disappear that quickly.
Investors: If you treat only one thing I say this morning as if it were handed down from a mountain, let it be this — ignore such contrived bullishness; pay attention to the coming accumulation of charges.
On the subject of contrived story lines, few are more common than how easy it is for a CEO to be portrayed as a genius. This lulls investors into a false sense of security that they are in good hands when — at least in the short run — larger market forces usually have more to do with how a company is performing in the stock market than CEO brain power.
And yet the business media always fall back into the safety of that story line — the stock is up recently, so the CEO is a genius. Look at a pair of articles that came out in the last couple of days on AT&T (T) . The stock has performed well in only the last year, after God knows how long of doing nothing. Considering the circumstances, the CEO for 16 years — through many of the miscalculations, miscues and bad luck — should not be instantly canonized because of one good year, right?
Barron’s did a great job in a cover story called “AT&T’s Uncertain Future,” pointing out the challenges faced by the company, which is still operating in an unbelievably competitive arena and is now harnessed to the almost unreasonably high expectations and valuation of the BellSouth deal.
In light of these larger forces that hold AT&T’s fate in the saddle, CEO, Edward E. Whitacre is mentioned a grand total of once. Contrast that to a love letterfrom Forbes throwing around words like “renewed” and handing a microphone to the CEO so that he can try to pump the stock up further than it went in 2006.
“Shoot,” he is quoted as saying, “even now it’s way behind. It oughta be up 200%!” With one good year of performance under his belt, he even shouts for revenge against journalists who have criticized his high pay and poor performance. “You tell him he’s a sorry bastard,” he says, apparently grinning, about one scribe.
Rather than questioning whether Whitacre has come down with a bad case of unearned overconfidence, Forbes spends the next paragraph talking about the “sweep and scale” of the AT&T/BellSouth deal. They don’t quote his mother, but they might as well.
In any case, even in declaring an end to the housing correction, the business media required two months of statically insignificant evidence. Here, it’s one year.
“He said people who bought during the previous foreclosure crisis in the late 1980s are the ones who have made the most money on their homes.”
I hope lots of investers who listen to this guy’s advice jump in and buy right now, so they can get impaled by a falling knife as ARM resets lead to skyrocketing foreclosures over the next couple of years.
the ‘clever’ buyers are the only ones thinking about buying now. As they do buy, they thus commit and are taken out of the equation for further buying as the market drops. There eventually will be no buyers - that’s the nature of a crash.
For those with sufficient resources to last a decade upside-down this might be true, but the real money was made by those who bought in the mid to late nineties. Also the current situation is very different and was driven by easy credit and has resulted in price escalations many times greater than those seen in the late 80’s, and which will take many times longer to return. Also - consider that if you took the same money today that you would pay for a basic home in bubble areas such as Southern California and invested at 5% you could double your money in the same time it is likely to take prices to return to where they are today… Never mind spending the next decade trying to explain the foreclosure and bankruptcy on your credit report everytime you want to rent a house, get a job or do just about anything else which depends on decent credit in todays world.
Colo HUD foreclosures purchased in 1988 were a good deal. I should know … I bought 8 and they paid off handsomely. My lowest priced 2 bdrm condo was $15000, 5% down FHA loan…it rented for $375/month. ..sold it for $69000.
…wondering what to do next. ‘Keep it at the insanely low price where I’m losing my shirt and wait for a buyer to come around? Try to find a renter and wait out this downturn?’
If he foolishly picks option B, hope he can find a renter willing to sign a looooooooong lease. It’s gonna’ be quite a wait.
I had been considering renting a larger home in the Sacramento area. After weighing my options, I decided to stay put and not spend money on moving charges. Now I’m getting phone calls from people who refused to bargain saying they’ve “reviewed their options” and are willing to consider lower rent with a longer lease.
Better be careful if renting from a flipper though –some of them are asking for huge up-front deposits plus first & last. I would refuse to pay any unusually large deposits and get a receipt for everything. Guess what’s likely to happen?
Charging last month’s rent is illegal in CA.
In CA there are legal limits to what a ll can charge. Also, in some counties, ll have to keep the money in a separate interest bearing account.
insanely low price
Naw… we’re not at the “insanely low” price stage yet. We’re just a few months past the insanely overpriced stage. We won’t hit “insanely low” until 2011, maybe 2012, at the earliest. Nice try though.
I know — what a doofus, huh? He buys at the very tippy-top of the market, and thinks that a 3% haircut is “insanely low”? Gives us a fairly revealing peak into the confused mind of a FB.
I agree totally. We are still at the top.
“White remains optimistic, predicting that the market will improve by spring. ‘Then maybe I can be a buyer in a buyer’s market.’”
Don’t hold your breath. You already made your choice.
The Boyz Bungee jumping?
http://finance.yahoo.com/
“He also noted that a large percentage of homes that enter foreclosure do not complete the process. In some of those cases, lenders accept ’short sales,’ or less than the mortgage amount for the home, instead of going through with the foreclosure.”
So why do I bother paying my mortgage on time again when I can just let it go into foreclosure and possibly save $50,000 ?
A short sale still leaves the former homeowner without any equity from the property. Most folks can only afford to buy another property with the proceeds from the sale of their current residence as a down payment. Short sales are often below market as well because the seller is in a time bind and can’t wait out the market. And, of course, the house still needs to sell so it’s pressure on the market regardless of how far along the process it goes. It’s only the people who can raise the funds to restore the mortgage to a current status that matter in this case.
Doesn’t a short sale mean the seller pays income tax on the amount of the loan forgiven?
Yes, there are tax consequences to a short sale.
‘We’re all just waiting for 2007 when this thing corrects itself.’
It’ll correct itself, just not in the direction he imagines.
All of the houseDebtor are so busy hanging on to the Sleigh ride down the slope to the Bottom they don’t see the CLIFF!
OT… Gary North
http://www.lewrockwell.com/north/north499.html
Great piece, thank you for the link.
I want to thank everyone here for making me feel better about my (and my husband’s) current living “status”. We rent a very nice 3/2 home in the midwest for a very modest monthly amount. The house sits on an acre and is backed with woods, rolling hills and a stream. I love it here. My husband has been feeling a little down about not being a homeowner by now (we are in our late thirties) and was feeling pressured by friends and family to finally buy a home. I started researching the housing market at that point, and found this blog among many other resources.
My SIL is a bank branch manager and while visiting on New Year’s Even we were discussing resolutions and I told her we were putting our savings (approx. $22,000) into diversivied investments with either T. Rowe Price or Fidelity (still deciding) instead of using it as a down payment on a house. She went balistic on me. I got a nice little discertation on the greatness of “investing” in a house versus investing in - well, anything else. I was told I was making a huge mistake and would regret it in the end.
You see, my BIL/SIL live in a $300,000 new home (not even a year yet) and they did the whole 80/20 because they didn’t have their old house sold yet so they didn’t have the downpayment when the house was finished. They got in at the still low rates of 2005 on a 30-year fixed. She said that her wisest investment (remember now, this is coming from a “banker”) is all of this [waving her hand around, pointing to the house). She informed me that when her mortgage is paid off in 24 years (they pay bi-monthly) they would have a house free and clear that they can live in… “you can’t do that with your Fidelity investments…” she said. I told her that in 24 years she would have a house she paid $600,000 for and there was NO guarantee she could get that back if they decided to sell it. I also informed her that in 24 years my husband and I would have accumulated approx. $420,000 in our investment (with a $2500 per year reinvestment rate) and we would be able to buy a house free and clear where ever we like… and retire early to boot!
I’m just so sick and tired of people all around us making us feel as though there is something wrong with us because we decide to rent and invest our money instead of “renting a mortgage” and making the banks rich! Why don’t they see mortgages for what they really are? They are simply “renting” the purchase price of the house from the bank.
Don’t get me wrong, when we can pay cash for a house, we definitely WILL buy a house… not until that time.
Thanks again!
Wow! You’re sexy and I didn’t even get to see a picture!!!!!!
Go T Rowe Price. Have had them for 16 years and never a compalint.
Comment above was to “HappyRenting”
compalnit=complaint
More power to you for trying to communicate your point to your SIL. I’ve gotten to the point that I just smile and agree with whomever is telling me on how I’m missing out. Fewer hard feelings that way, and no worries about I-told-you-so happening in the future.
good luck happyrenter
and the “status” thing had me laughing
what a crock of crap
i love putting well above an average nyc area mortgage payment in my investment accounts every month
Good for you. And she will be strapped with property taxes and repairs and maintenance (the roof, heating systems, etc are no small expenses, even painting a house). So add that to the $600,000.
Tides are turning for renters too. We have been treated like the scroungy lower dregs of society for some time now. I rent and get just what you do.
Congrats!!!
Got gold?
To HappyRenting - more power to you. Your SIL is wrong. You are better off renting at least through 2011. Even if the stocks go down in the next 6 years, you will be better off putting money in mutual funds than buying a house - because you buy more shares at lower prices when you spread the stock purchases over years. with a house, you cannot dollar cost average. If you buy a house now, if you buy in 2008, if you buy in 2009, you will be buying at way overinflated prices. Forget real estate! Renting is freedom!
If it isn’t a bust then why would the Fed minutes reflect this sentiment?
From MSNBC.COM: Minutes of the Fed’s deliberations show that policymakers revealed increased concern over the real estate bust — even as they were reiterating that their No. 1 aim was to make sure that inflation, which has been calming down, continued to recede.
It’s not a buyers market it has become a crashed speculative market which was never based on sound economic principals regardless of what the NAR said.
Buyers! FBs! Thiiiiiiis Sundayyyy! It’s the World of Imminent Foreclosure at Crazy John’s $hitshack Shack!
Big Homes! Little homes! McMansions and ranches. We’ve got what you need!
Suggested Retail Price $300,000… but buy now and pay only $289,000 with no money down!
With prices THIS LOW, we must be in-SAAAAAAANE!!
In all seriousness, that this guy thinks a 3.7% discount off the peak-bubble price is “insanely low” tells me this market has only just begun to nosedive. There is entirely too much wishful thinking and denial still going on out there, and it seems that no amount of news or information can get through to people like this except total failure to sell their overpriced house and subsequent foreclosure and/or bankruptcy.
Suggested Retail Price $300,000… but buy now and pay only $289,000 with no money down!
With prices THIS LOW, we must be in-SAAAAAAANE!!
But wait! Buy in the next 10 minutes and we’ll thow in absolutely free this do-it-yourself sheetrock patching kit and a handy dual pane window leak detection monitor. Also this handy guide how to keep your family warm in winter at 62F is yours to keep even if you decide you are now an FB!!
lol crazy eddie antar!
a ny sleaze legend
a schmuck from brooklyn fools wall street geniuses
I used to be a lifeguard at his house in NJ (he had a bunch of spoiled little girls and a big backyard pool). Is the guy still in jail?
Not sure if he is out yet but if he is without a doubt he is
probably a sub prime mortgage lender
ROTFLMAO
BTW
300K less 289k = 11k
How does he get 30k ??? An expect sale at 270k or closing costs, or ????
closing costs, Realtard fees
“The frustrated seller purchased the home for $300,000 in November 2005.
Bought at the absolutely top of the market…Thank goodness the seller doesn’t read this blog.
If this guy BS about takin’ a $30k hit, he’d be checkin’ himself into a mental institution he knew the value loss percentages being bandied about here.
“Rumors have swirled about people walking out on home orders and down payments. ‘I’ve heard some talk about people backing out on sales, but I haven’t seen anything concrete,’ Jacome said.”
RFLMAO!!!!
Don’t believe ‘em — they’re just RUMORS! NOBODY’S walking out on their deposits. Sheesh. How do these rumors get started, anyhow?
That’s a homebuilder spokesdroid saying that. He tells a newspaper reporter they’re “rumors” and of course the newspaper prints it. Then these people blame “the media” when the blububblubububble pops.
Think real hard about this.
ot-a guy in mybuilding just “bought” a new e350 benz with all the bells and whistles, i am cordial with this gentleman but i never knew what he did for a living, can you believe he is a realtor?
lol
anyway i ask how is the market? it’s good it has stabilized. lol
i hope so with the payments on that german tank jackoff
Boy the other side of town sure is hurtin. In november 3 homes within 5 houses of mine sold. One 1,700 SF sold for $245,000 cash from flipper who overpaid $190,000 from foreclosurer.(People refused to use realtor so he made out like bandit). Oh and this place has no A/C only swamp. The really nice 2,200 SF A/C new pool 4 years old, granite counter tops spotless sold for $255,000 after coming down from $300,000. The other 1,400 SF (very nicely done) sold in 1 week at asking of $195,000.
Guess I’d better stay on this side of town as Starr pass and it’s expensive homes just don’t know how to sell.