Post Local Housing Market Observations Here!
What do you see in your local housing market this weekend? Builder incentives? Auctions? How about price reductions? “Some of you may remember a listing a while back, that picture-perfect executive home out in Wingfield Springs that my clients purchased for $595K eighteen months ago at the top of the market?”
“The one I had listed for $480K then $460K then $450K? That home closed on December 21 for $439K after 75 days on the market. Now I’m sure there’s someone out there who’s going to ream me or the seller for ‘giving that house away’ or ‘undercutting the competition’ or ‘destroying the values of the neighborhood’ or whatever.”
“The truth is, it’s a market. The market doesn’t care what you paid for your house or how much you think its worth or what your neighbors think it’s worth. The market isn’t personal, whatsoever. Price is determined by what a buyer is willing to pay and a seller is willing to sell for.”
A related industry. “An estimated 500 workers at KraftMaid Cabinetry Inc., Geauga County’s largest manufacturer, received layoff notices Thursday. County Commissioner Mary Samide said she believed last year’s nationwide ‘housing bubble’ was a temporary, artificial inflation of prices that was bound to burst eventually.”
“‘People made their money up front, but somebody had to pay the price eventually,’ Samide said. ‘It’s just a shame it had to be here.’”
Suspect calculations? “Housing prices in Alberta’s largest cities skyrocketed in 2006, with an average residential property jumping 49 per cent in Edmonton and 38 per cent in Calgary over the year.”
“‘All one has to do is look back over the last 30 years to see where house prices come from, and if you use a calculator and extrapolate the percentage increases over those years, I think by the year 2025 the average home may be about a million dollars,’ said Ron Esch, president of the Calgary Real Estate Board.”
Public pronouncements? “Real Estate agent Anthony Toop said he was surprised areas like North Adelaide (-16 per cent, Adelaide (-14 per cent) and Kensington Park (-9 per cent) had experienced such big falls in property prices.”
“‘There are a lot of investors in these suburbs,’ Toop said. ‘Fewer people are paying over the odds for a property. Buyers are playing hardball and walking away if their price isn’t accepted. This is reflected in the Valuer-General’s figures, which show the boom is over and the market is marking time,’ he said.”
I noticed a recent sale in the MLS that had a slight odor. It was a new condo that I sold for the pre-construction buyer in July ‘05 for $458,900. It changed hands (foreclosed) one more time (never lived in) and was listed for $439,900 in September ‘06. It was reduced to $424,900 in October and then, in November, raised to $530,000. It closed three weeks later; selling price, $525,000. If anyone has a theory about this deal, I would like to hear it.
You have not been paying attention.
We have posted a number of these deals, which are altering the market sales picture, and inflating market prices.
The best article was in the Tampa Tribune about 2 months back.
In short: buyer contacts broker and seller, and in collusion with appraiser, re-lists the asking price, while offering an “under the tale deal”. Seller gets about the OLD asking price, appraiser gets some side money, Buyer gets CASH OUT, and a Straw Buyer (poor sucker from up north) gets sold the deal-of-a-lifetime with a toxic mortgage offering a $4000/per month rental, that never occurs.
Or the Buyer walks with the cash and waits or uses some of it to make monthly payments until he can do a few more scam deals, then declares insolvency and WALKS with the lenders money.
It’s fraud.
The loan will not be re-paid, and it’s the easiest money the Buyer ever got. No work, just paperwork.
Oh, I’ve been paying attention. I am aware of these deals but the degree of complicity blows my mind. How does the loan get through underwriting? I can understand the appraiser being in on the deal, but, underwriting? How stupid is it for everyone involved that the record is now on the MLS for all to see? Listed for $424,900 sold for $525,000. Looks like the seller, the buyer, the realtor, the mortgage broker, the appraiser and, just possibly, the underwriter have to be involved to make these deals work.
Its so brazen and common apparently the realtor doesn’t care that it shows in the MLS. Back during the bidding war days that would be common to sell well over list price anyway.
What you need to do is post the names and contact info here on the blog of the parties involved especially the broker and realtor and appraiser. Then the good people of the internet can complain to the state licensing authorities who should investigate. Aslo we can call/email those people to let them know what we think and ask details about the deal.
Word needs to get out to agents and everyone that this will be clamped down on. Undisclosed cash back is illegal.
Theory: Subprime loan, appraisal fraud, cash back.
Negative amort. and negative interest rates anyone ?
Here is a copy of a “follow-up” article from the same reporter:
Underwriter Launches Inquiry Into Home Sales
By SHANNON BEHNKEN The Tampa Tribune
Published: Oct 26, 2006
TAMPA - The underwriter for a Tampa title company involved in inflated real estate transactions in Pinellas and Hillsborough counties says it is taking a closer look at those deals and the company that settled them.
Houston-based Stewart Title Guaranty Co. is the sole underwriter for Ocean Title & Abstract, which handled settlements for 36 transactions involving Tampa real estate agent Dawn L. Molen.
The 26-year-old agent’s sales are the subject of investigations by the state attorney general’s office and three other state agencies.
Molen’s sales were revealed in a Tampa Tribune report Sunday that showed the properties sold for an average of $60,000 more than the original list price and had payments going to third parties associated with Molen.
On two of the transactions, separate settlement documents were handled by Ocean Title. The one filed with Molen’s broker shows a large “payoff.”
Documents sent to the lenders did not include that information.
An Ocean Title employee, Michelle Fabry, signed both sets of documents.
“Stewart will take appropriate action once its investigation is completed,” Patrick Thesing, senior vice president, associate general counsel and chief litigation counsel, said in a statement.
More than a dozen lending institutions funded mortgages on the homes.
If the loans go into default, the lenders could be on the hook, and Stewart, as the underwriter for Ocean Title, could hold some liability.
Fabry and Molly Boston, the managing director for Ocean Title, could not be reached Wednesday at their office.
Reporter Shannon Behnken can be reached at (813) 259-7804. Keyword: Rapid, to read “A Rapid Rise,” The Tampa Tribune’s investigation into the real estate deals.
Here is a link to a follow-up article from the Trib.
http://www.tbo.com/news/money/MGBGHK9GQTE.html
And……………here’s another one.
There’s a lot of this out there. You’re neighborhood is just a little behind on getting the free money. They’ll catch on.
http://www.tbo.com/news/nationworld/MGBYDBHURUE.html
Here’s a link to the original story here on the West Coast.
There are more. A group of about 30 houses got flipped down in Sarasota/Bradenton last year. Some of those involved were recently sent to prison, but the inflated house values remain.
http://www.tbo.com/news/nationworld/MGBXTU3SKTE.html
Is Sam Zell’s GF in trouble? Will the greatest commercial RE LBO fall through? Here’s the story at Bloomberg on Blackstone:
http://www.bloomberg.com/apps/news?pid=20601087&sid=azfTRyXwK8hE&refer=home
“Is Sam Zell’s GF in trouble?”
Perhaps. If the EOP deal did fall through the REIT index (which is up about 60% in the last two years alone) would take a mighty shellacking.
Well, at least we’re on record in this establishment as fixing the Trammell Crow sale as the top of that market. Those folks weren’t gonna go thru 1990 again. They nearly went belly up.
Apparently the residential RE market is not the only one which is drunk on credit, thanks to the permanently high spikedness of the punchbowl…
————————————————————————————————
Wanna Buy a Bridge To Big-Time Debt?
By Allan Sloan
Newsweek
Jan. 8, 2007 issue - It’s the happiest of New Year’s on Wall Street, which is positively awash in money. No, I’m not talking about the jaw-dropping eight-digit bonuses at Goldman Sachs or the even bigger unpublicized paydays for heavy hitters at some hedge funds and private equity houses. Rather, I’m talking about the money sloshing around the Street chasing deals.
You can see this by reading recent filings involving the biggest leveraged buyout in history: the pending $36 billion takeover of Equity Office Properties, a big commercial-property owner, by the Blackstone Group buyout firm. There’s such hunger to put money to work that three financial institutions—Goldman Sachs, Bear Stearns and Bank of America—have agreed not only to lend almost $30 billion to the Equity Office LBO, but to also invest more of their own cash in the deal than the $3.2 billion Blackstone has committed. The three firms are putting up $3.5 billion of so-called bridge equity to get the deal done. What’s bridge equity? Good question. It’s a steroidal version of the short-term bridge loan you take out when you have to close on the purchase of a new house before you’ve finished selling your old one. The difference: bridge equity in deals involving borrowed money (what financial types call “leverage”) is a higher-risk, higher-reward game than lending you money on a house.
http://www.msnbc.msn.com/id/16399599/site/newsweek/
Did the Souperbowl come early this year? SD zip shows 200 “newly listed” homes (just since 1/4/07) and has not even put up any for today. Each day’s new listings are close to 1% of the entire inventory — that seems like a lot of churn!
Phoenix MLS had dipped to about 48,200 on January 1, down from around 54,000 at its peak in late November. Today it’s up to 49,133. If that rate holds over the next few months, well, you do the math…
Gladly.
Jan 1 48,200
Jan 6 49,133
Annualized percentage rate of increase:
[(49,133/48,200)^(360/5) - 1] X 100% = 298%. If this rate held up till year end, listings would rise to over 190K.
That does not sound sustainable, even though PHX is phck’d. The most likely outcome is that inventory will hit a temporarily-high plateau, as a rising number of listings is eventually offset by falling prices (esp. when rising foreclosures give rise to rising REO sales).
Rotfl
GS, I agree that isn’t sustainable. I would have done a more linear trend rather than a compounding trend.
Even then, it implies we’re into new territory before we even leave January! Yikes…
Which other poster was it that noted the only statistic that’s going to matter in 2007 is REOs? I’m inclinded to agree.
Neil
“GS, I agree that isn’t sustainable. I would have done a more linear trend rather than a compounding trend. ;)”
The best model is probably what econometricians call a “diffusion model” — (like the cumulative logistic curve) — it starts out with exponential growth, then levels off to a permanently high plateau as falling prices enter the equilibrium adjustment process
(at least for the several years it takes the bust to play out).
Don’t get me started on diffusion models.
I’m an expert in fluid dynamic analysis.
This bust will take years to play out, but I still believe it will be faster than normal due to the crazy loans proping up current prices.
Neil
That does not sound sustainable, even though PHX is phck’d. The most likely outcome is that inventory will hit a temporarily-high plateau, as a rising number of listings is eventually offset by falling prices (esp. when rising foreclosures give rise to rising REO sales).
And if the economy tanks, unemployment rises, and interest rates rise due to inflation fears, I can see listings heading toward the sky. The dot.com crash motivated sellers of all kinds of stocks, same will happen to houses.
2007 the year if the “better list it now, there ain’t that many qualified buyers out there”
oops–49614 now…and rising! RECALC!
Orlando has 41,712 open listings this morning in MLS alone, and about the same number of FSBOS, 1-800’s et al.
Reno listings ramping up lately too. The pent up supply is bursting at the seams.
On another note, I wanted to ask everyone a question I feel is pertinent. It is one which, I think, sheds light on where this market is headed. How many people do you know personally, who are selling right now vs. buying? I know not one person who is looking to buy right now, but I know 4 people very close to me who are seriously trying to sell. 3 of the 4 properties are on the market as I speak, with one having been removed to “freshen” the listing.
No, no, no….Have you not been paying attention! It’s pent up DEMAND. The fence-sitters and bubble-sitters really want to buy, they are just confused and need to have it clearly explained, over and over again, that this is a great time to buy!
Dumb, bitter, jealous renters!
I agree, I see inventory going negative soon as buyers grab all houses for sale, leaving other buyers on the sidelines waiting for for-sale signs. It’ll be brutal, I tell ya!
I noticed in our MLS that an unusually large number of listings expired on Dec. 31. This surge in new listings is probably just the expired ones being relisted.
Didn’t you get the memo? Sellers are waiting until after the Souper Bowl to relist…
The citizens of San Diego are going to celebrate the Chargers’ first ever Super Bowl win by all putting their houses up for sale.
..of course. After we win the superbowl even more people will want to live here so prices will shoot up..
Yeah, I’ve started tracking week-to-week inventory again, in the hopes of catching the first signs of the Spring Listing Flood. You have to do week-to-week to make sure you are not catching day-of-week anomalies. That being said, I *have* seen the inventory numbers blip up slightly in several Cali locals.
Maybe we should ask Punxsutawney Phil if spring will come early this year?
Same here! As expected the Tsunami of listings has begun…
That’s also my wedding anniversary. I picked that day on purpose
You may get a nice inventory number all wrapped up in pretty paper and a bow as this year’s present.
Boy that is one way to put hubby in mind of the importance of the “DAY”.
So if your husband forgets your anniversary, it’ll be 3 weeks of cold weather?
steady ion 22151 after a 12% drop from 05 peak
in 90 drop was only 4-5% so it’s big for this Soviet s of DC
Hawaii home prices dropping.
http://starbulletin.com/2007/01/06/business/story01.html
Aloha!
Credit Condition Watch (Russ Winter):
http://wallstreetexaminer.com/blogs/winter/?p=263
Is someone trying to corner the vacant SD and PHX homes markets?
The report that 51% of current SD home sales are vacant is utterly stunning (surpassing even Phoenix’s 47% of homes sold vacant). See the chart on Russ’s link — the percent of SD homes sold vacant was only 23% as of June 2004. What on God’s earth are these people thinking? Ghost tract homes for everyone!
“As mentioned yesterday, there are now 19,000 foreclosures in the works in California. Bulls will be quick to note that this is only about 0.35% of the state’s 5.5 million homeowners. But it’s the rate of increase that is the real story, up 19% in a month. It’s been that way all year.
Further, there are key areas of the state where vacant units make up an incredibly high proportion of the sales. 51% of San Diego’s December’s sales were vacant, and Phoenix, Az had 47%. It doesn’t take a rocket scientist to see that vacant, high priced housing that is declining in value is problem enough. But add paying property taxes, insurance and debt service to the mix, and it makes default and then foreclosure all to real. There are nearly $1 trillion in mortgages due to reset in 2007, including many neg am pay options, with 110% regular am clauses. The location of those unusually toxic loans are noted in the final chart. This is a good explanation of this toxic bomb, except that very few have 120% triggers, most are 110 and 115. The foreclosure trend will surely worsen, and in San Diego as elsewhere, new building permits are coming to a crawl.”
What also disturbing is that here in Philly (and, I’m sure, elsewhere) many of the recently purchased vacant homes are STILL vacant. That is, they were bought by speculators who had no intention of occupying them. This is important because a lot of people think that any given sale means than another part of inventory is being absorbed. In reality, many of these sales are still empty properties.
Yep the revolving door of fools. It’ll take awhile to go through all of ‘em.
Honolulu home prices for 2006
http://the.honoluluadvertiser.com/article/2007/Jan/04/ln/FP701040345.html
Pensacola, Florida
More listings screaming “motivated seller” and “price reduced”. I am not seeing much activity in the $300,000 and above range. It would be interesting to know the inventory and sales activity by price range. The high end looks pretty dead to me.
A house disapeared from the MLS listing in early December which had been listed for almost a year. The house reappeared a week ago with the realtor screaming “Owner says get backup contract!”. Yesterday the description was edited to:
“This Home can close in 4 days, all the title work is complete, survey complete..ready to be Your Home!”
What’s up with that! Did someone’s subprime go bust?
I’ve noticed the sub 300K activity as well on escpa.org, plus I’ve sampled some of the court records related to sales and noticed quite a percentage of buys using 100% financing. It looks like inventory is already starting to tick up on the MLS listing as well. BTW I’m originally from Pensacola.
I saw that in one of your comments a few months back. Most of the people I grew up up with have left Pensacola. Atlanta seems to have attracted the largest percentage though I know a few in Tampa.
There are 661 properties in the normally accepted “Pensacola area” (I left out Pace, Milton, Century, etc. but did include Gulf Breeze) listed at prices greater than $500,000. That sounds like a lot of expensive homes in the poorest part of Florida to me. Pensacola is not exactly a bastion of business–the lead article in the business section of the PNJ today was about a batting cage opening up for business!!! Sheesh.
Agreed, I owned and lived in downtown at Carlton Palms (condos that used to be a hotel) and I always felt the Downtown Improvement Board and the city in general never did enough to entice bigger businesses to locate in Pensacola. Instead, all of the focus was on residental development hoping retirees would move in and spend money downtown. We’ll see how that pans out! I’ll look forward to seeing more of your comments.
“What’s up with that! Did someone’s subprime go bust?”
Darn tootin’. Nobody orders a title search until the loan app comes in.
I heard last night that local December sales are looking to be down 60%, yoy. The holidays are a big buying season in the resort areas of N AZ, so this is faily significant. More from the local papers later today.
Wow! Even as bearish as I am, I didn’t think that would happen until more sub-prime lenders failed and the guidance was taken seriously.
Please post on this… Now, just to restate, that is sales are 40% of last year (December vs. December)? Dollars or units? Either way, the Realtors ™ go hungry. Ouch.
Thanks for the great work,
Neil
Gee, I got the Remax Sedona newsletter a couple of days ago and according to them, everything’s peachy.
it must be all that sun and granola
Ben,
This is consistent with the MBA’s Seasonally Adjusted Mortgage Applications Composite Index (MACI). It went up strongly and peaked on Dec 8th (hence, strong sales in Nov.) and since then it is down 20%+ over the past three weeks ending Dec. 29th.
I am fully expecting a much worse reports for December sales when the numbers come out towards the end of the month. Many local reports during the middle of the month should provide more clues.
Jas
I have a personal observation here in Nashua NH. I am seeing places I can actually afford here forthe first time. I have also seen alot of price reductions on listings. The mid catagory(around 250-350) is just swamped for a town of this size. This winter is turning out to be bad for sellers. Oddly enough its 68 degrees in mid january in New Hampshire. Realtors and sellers can’t blame the harsh weather-no snow or extreme weather.
OK guys here was today’s California call. Guy has a 980 disablility check, mom lives with him and she gets 1k disability. They took out the ole POARM for 260k and are currently enjoying a payment of 980/month on it. He asked me if he could refi (paying a 10k pppenalty) and get 80 in cash AND lower his mortgage payment. SO, he wants a bigger loan and wants the payment to be less than his POARM. Cali has some of the stupidest people on the planet.
He’s just trying to do what everyone else is doing………..cashing out on the great “appreciation” of his “investment”.
What’s so unusual about that??
His stupidity is only exceeded by the person who gave him the loan.
http://hosted.ap.org/dynamic/stories/W/WINTER_STORMS?SITE=COCOL&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2007-01-06-08-03-17
Colorado has been hit with its third winter storm in as many weeks. Here in Colorado Springs, the city has under-funded snow removal, so most local streets are still icy and treacherous - not ideal for house-hunting. Of course it also gives the Colorado NAR hacks a ready-made excuse for the further slippage in sales amidst rising inventories.
Funny how in 2005, Florida buyers were braving hurricanes to hurry on to the next condo investment opportunity, but now a little Colorado snow has frozen the Springs’ market.
[Oops - reposted to respond to GS's comment]
“A little Colorado snow”? Try massive amounts. I must’ve shoveled tons of the stuff over the past three weeks. Colorado Springs is the evangelical mecca of the US, with Focus on the Family, the now-infamous Pastor Ted Haggard, and many other such organizations headquartered here, so apparently the strategy of the city council is to pray for sunshine and warmth rather than commit resources to keep the streets clear. They don’t even put down salt, so just about every side street is glare ice covered in packed-down snow, with predictable effects on traffic. Of course, we’ve also got the Californicators speeding around in their SUVs, thinking 4WD can compensate for driver stupidity - very gratifying to see them in the ditches.
Glad to hear someone is having a proper winter.
Moscow is about 36F, no snow, no ice. There was even an article in one of the papers about a “heat wave” in mid December. I have turned off all the heaters (radiators-central heating) in our flat and have to keep a couple windows open due to the heat generated by our neighbors’ apartments. Unreal.
The last time we had weather like this was when the dinosaurs were driving around in SUV’s and causing global warming.
73 degrees in Philly today. Most area ski resorts are CLOSED.
http://www.skireport.com/pennsylvania/
Today’s Washington Post RE section claims “the tide is turning” in real estate.
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/05/AR2007010500839.html
Essentially, the article posits the worst is probably over for the 18 month housing slump. Here’s a sample:
“In the main, however, the housing market appears to have weathered the correction phase of the cycle without the blood running in the streets that some bubble-bust bears had forecast. Median prices of resale houses have fallen 3.6 percent nationally year to year, and anecdotal reports of 10 percent to 20 percent asking-price reductions in formerly hyperinflated markets are commonplace. But that’s what corrections are all about, as opposed to outright busts.”
“But that’s what corrections are all about, as opposed to outright busts.”
Outright busts are about 25%+ drops in residential construction (like the one we are currently experiencing). In seven-out-of-seven previous busts since 1955, there was an accompanying GDP recession.
Harney is very tuned in to what legislators, lobbyists, and industry reps are thinking. But he doesn’t have a clue about what’s happening outside the Beltway.
They reprinted this article today in the L.A. Times. What I want to know is, with the median priced home in L.A. affordable only to the top ten percent of wage-earners, who are these “buyers” that he keeps referring to? Millionaires who’ve recently moved here?
The irony is that the MLS published one of their page-sized ads in the RE listings section of today’s paper, showing the number of completed sales down yoy by about 6% overall, against a gain in inventory of around 36%.
That can’t be good. Neither can the little cardstock insert advertising two upcoming foreclosure auctions in West Hollywood this month.
Anecdotally, our oh-so desirable WeHo building will be having it’s first foreclosure auction in the next few months, if that email I got from foreclosure.com is accurate. Wonder what that’ll do for the comps for all those people who paid upwards of $550K last year to buy a 2 bedroom here?
“The Tide Is Turning”
“Those questions are becoming increasingly relevant as the latest sales data show a small but unmistakable uptick in activity and declining unsold inventories.”
I think he has the direction of the tide wrong…the inventory tide is starting to come IN…and the housing market right now approximates the Bay of Fundy.
http://www.thehopewellrocks.ca/english/fundytides4.htm
Asking prices are irrelevant. Sales prices are the bottom line. Anything greater than 10% is no longer a correction, it’s a crash.
La la la la la la la la la la la. You’re gonna crash!
http://www.parkerchris.pwp.blueyonder.co.uk/vocationvocationvocation.html
When loans were, routinely, made with 20% downpayments and MEW was rare, sure, a 10% reduction was no big deal.
But with the new loans at 100%, the unprecedented “investor” activity and the unprecedented construction of new supply….no, a 10% reduction puts tons of people on the margin in a position where they either have to sell or are contemplating selling (if not just walking away).
Sure, the vast majority of homeowners aren’t effected but all the prices of everyone’s properties are generated at “the margin”. And the margin, IMHO, has never been in more precarious position.
Its worse that this, much worse. A FLAT market will cause the 100% loan buyers to enter foreclosure. Really!
I just found an example and posted on my blog about it which proves my point. I like posting the real life examples, been talking about ‘theory’ too long about this bubble.
http://realestatehaircuts.blogspot.com/
Yes, but it’s even WORSE than that because the purchase prices do not reflect the closing costs when the home was bought. So the home owners probably paid 2% more than the posted purchase price!
“A little Colorado snow”? Try massive amounts. I must’ve shoveled tons of the stuff over the past three weeks. Colorado Springs is the evangelical mecca of the US, with Focus on the Family, the now-infamous Pastor Ted Haggard, and many other such organizations headquartered here, so apparently the strategy of the city council is to pray for sunshine and warmth rather than commit resources to keep the streets clear. They don’t even put down salt, so just about every side street is glare ice covered in packed-down snow, with predictable effects on traffic. Of course, we’ve also got the Californicators speeding around in their SUVs, thinking 4WD can compensate for driver stupidity - very gratifying to see them in the ditches.
“…the now-infamous Pastor Ted Haggard, … so apparently the strategy of the city council is to pray for sunshine and warmth…”
Some people have to pray for absolution…
–
Does anyone know who came up with the term Californicators?
I have been using it for a couple of years, but I have only seen it on blogs recently.
Just curious,
Jas
Probably popularized by the song “Californication”, I think by the Red Hot Chili peppers or some band of that sort.
I get all the new ones mixed up, ever since grunge took the mainline.
I swear I remember bumper stickers to that effect in the 80’s about people from CA going to OR.
I think late ’70s.
First saw it on a bumper sticker in Vail (!) in 1976 during the centenial celebrations.
“Don’t Californicate Colorado!”
“Buyers are playing hardball and walking away if their price isn’t accepted.”
This is hardball????
Its the start. Counter offers aren’t even being considered… interesting.
Ahhh… the art of low-balling. Why waste time? I like the fact the trend is to short decision times for the sellers (as a buyer).
And yet… we’re not even into January from a business perspective. People barely went into work last week to set up their desks.
Interesting… very interesting.
Neil
Interesting post on brokeroutpost.com, confirming what many of us have suspected about the California market (mainly that loose lending standards [in the form of stated income/liar loans] have caused the last leg of the run-up, and tightening standards would/will cause much pain):
http://tinyurl.com/yzl7mf
“I decided to read thru this whole thread before i threw myself into this since i know some of the stronger personalities both loan officer and AE wise already have a ego interest in being right/on the moral highground of this issue… i can see where some say stated is for lighter documentation in the case of someone who runs a business (w2 stated is crap and while ive done them to make my paycheck.. they should be banned). But i also agree that that if it tightened down regulationwise in California the market would crap out overnight for the next 2-3 years since very few could buy a home full doc the correction would be horrendous, long lasting, and not pretty especially for schmucks who got 2 and 3 year arms on a stated loan and now cant refiance full/lite doc and have to eat the adjustable payment. Stated programs are just that… you STATE the income that seems reasonable and the underwriter either swallows it, counter offers, or rejects it. Its not like the banks are idiots.. they spend millions on credit risk assessment when they sell this crap on the secondary market to hedge funds. If a large lender has idiot underwriters who like it and approve it… and ivy league bond traders are stupid enough to trade it and buy it in large pools… how can it come back to us and people say “ohhh.. the loan officers are the evil ones..” if a deal doesnt make sense the underwriter or the manager at the lender should put the brakes on it. The stated loan / inflation phenomenon has two sides… many in california have GREATLY profited (i mean homeowners too who sold their home and bought a huge spread in another state) and if they tightened down and made us afraid of pushing stated loans you can just chalk up a nice fat recession or write the book about the 2nd great deperession of the new millenium.”
I’ve said on piggington a bunch of times, we need to stop demonizing the RE people as if they were to blame. Nobody made an FB sign up for the loan.
OTOH you seem to be building yourself a moral defense. Since you are smart enough to be here, you ought not to be able to do that. Take your share of the lumps like a man, of the monster you helped create.
Josh
“OTOH you seem to be building yourself a moral defense. Since you are smart enough to be here”
It wasn’t my post…this is a post from someone on brokeroutpost.com. My hope was to illustrate that even people in the mortgage industry know that California’s RE prices will come down hard if the use of “liar’s loans” is restricted…and to illustrate the point that these types of loans are indeed used to lie about a borrower’s income.
Great post. Reality bites, doesn’t it?
No lookers in SW MO off I-44
A friend put her house on the market 2 months ago here in our small (4000 people) town in SW MO (halfway between Springfield and Joplin). The house next to her sold 6 months ago and she priced her house accordingly. My friend is very frustrated though — she said not a single person had come to see the house. Her realtor says the house is “priced right” but the market is “slow”. Another friend has had a similar house priced a bit lower on the market for 6 months no offers. It’s been shown 10 times, max.
Not including 30+ empty lots, there are 8 houses for sale within a few blocks of the duplex I am renting. Only 1 house has sold in the last 6 months and it was by far the nicest floor plan and location. These houses are a mix of renovated ranches and new mini-McMansions.
So I find myself in an unexpected position. I had thought I was all set - I had bought a new townhome in early 2000, have a 5-3/8% fixed 30 year loan, never used the house as an ATM, and was ready to ride this all out.
So what happened? I am moving in with my girlfriend. So what do I do with the townhome now? I am leaning towards trying to rent it and not trying to battle with the other sellers. Don’t need the money from it for anything else, but it would be nice to get some income from the place instead of letting it sit empty. So what would you folks do? FWIW, I am in the DC area.
Sell it now before it returns to it’s 2000 value (or less).
If you purchased in 2000, have a 5-3/8 fixed, and desire to be a landlord, go ahead and rent it out.
Or else sell it - price it below the other sellers.
But don’t let it sit empty.
My vote is to keep it for the following reasons:
(1) insurance in case the relationship doesn’t work out;
(2) if it does work out, keeping the property (assuming good cash flow) would be a nice way to send the kids to college.
If you do rent it out, please familiarize yourself with the local landlord -tenant rules and regs so you can keep yourself out of trouble. Also, the key is finding a good tenant. Take your time - check them out.
“(2) if it does work out, keeping the property (assuming good cash flow) would be a nice way to send the kids to college.”
I disagree. Sell the house now, take whatever money you make on it, and put it in a CD earning 5%. (Stock are way too risky now, too.) If you don’t trust the American dollar, put it in a Euro-denominated CD.
If you continue to own the home, it will drop in price over the next few years and probably stay flat for awhile after that. The return on your money — even at 5% — will be better than housing will over the next 20%.
Last line should read: “over the next 20 years.”
What bank in the US will take a Euro denominated CD?
How far from the property will you be living? WIll you be enough to check up on it on a regular basis, or is it far enough away that you would be considered an absentee landlord?
I did the long-distance landlord thing very briefly, and while it worked out OK, it was still a hair-raising experience that I would not recommned for an amateur. Also, I second Sherry’s comments on finding good tenants - that made all the difference in my experience.
“So what would you folks do?”
Have the girlfriend move in with you.
Hmmm, how much do you like the place? I can tell you from personal experience that these move-in relationships do not always work out.
Could be you’ll wind up liking the townhouse better than the girlfriend.
Absolutely if you can rent it out for more than what it’s costing you every month (hoa, taxes, insurance, etc) to own it, then do so. In ten years, you’ll have lots of equity and be able to sell it at a profit. Meanwhile, I hear rental property offers some nice tax advantages.
These kinds of deals are just letting the housing ponzi cancer grow larger and larger before it’s detected. End result will be the same, just as fast. Death. However, because it’s being delayed, the soon coming crash will be even steeper.
I haven’t been to a local open house lately, partly because I can’t muster the interest, and partly because it isn’t worth navigating through the icy, uncleared Colorado Springs streets. But mostly, it was that look of alarmed recognition that greeted me as I breezed in, camouflaged [I thought] by a bevy of looky-loos, and started grazing on the finger foods. Methinks some local realtors have read my open house reports in here, and were not amused. Or maybe I misread whatever expression lurked behind that botox perma-grin: it was open to interpretation. So, friends and neighbors, I’m off the open house circuit - for now. But rest assured, I’ll be back in the game about the time the Spring Miracle Revival turns into the Spring Rout. See you then!
I’m off the open house circuit too. Perhaps permanently. So far I’ve been spreading my bearish thoughts on local TV, on the editorial page, and (soon) in the local business journal. I think it’s safe to say I’m pretty much blacklisted by now.
Yeah, I can see the headline in the business section of the paper: LOCAL HOUSING BEAR DIES IN FREAK OPEN HOUSE ACCIDENT - FELL DOWN STAIRS 17 TIMES.
LOL!!
Enjoy your time off, Sammy.
We’ve also experienced the same thing, but doing the “new development” circuit over the past few years. The salespeople started recognizing us, so have had to stay low for a while. Even when we just drive through those communities (always keeping a finger on the pulse, even if we can’t go into the homes), I hide under the dashboard as we pass the sales offices.
Bet your husband likes that
I was half-expecting to see cars with heavily tinted windows and NAR bumper-stickers doing drive-bys past my house. Enjoy your hibernation, and we’ll have to compare notes in here once things start heating up in the Spring.
LOL! Indeed he does!
Looking forward to the long-anticipated “spring selling season”. We’ll be getting back out about then.
Take care, Sammy!
Kind of like the card counters in Vegas.
you have knowldege of this implosion… I wonder if the posters above will resort to wearing disguises, which might include wigs, fake teeth, and hiring a Hollywood make up artist.. LOL
I know it sounds crazy, but I’ve seriously considered going in disguises.
These salespeople, once they catch on, can make you feel really, really uncomfortable.
Okay…maybe we’re just a bit too obsessed with this “housing bubble” thing.
Maybe lending standards haven’t tightened up as much as we need (from brokeroutpost.com):
http://tinyurl.com/y3hugh
“who does 14 mo out of BK…With another BK back in 11/97 both chapter 7, 100% LTV 626 Fico on a purchase in WA state?”
“Yeah that’s just it everyone says they used to be able to but with some of the companies like Ownit and Seabring going under it seems everyone is tightening up on what they’ll do.”
“We can still do that scenario. I just double checked w/ my UW before posting to make sure I hadn’t missed anything.”
“We have always been able to do BK’s 1 day out with a 580 mid score as long as they have trade lines.”
“We may be able to help if this is a Full Doc loan.”
“I can also still do it. 1 day out of BK - need 600 CS to do 100%.”
“Is it full doc? I should be able to do this.”
“Are you looking for option arm. We have subprime option arm bankrupcy OK. Give us more information as to the product that you are looking for. We may be able to help.”
Credit = Crack. Borrowers and lenders, like junkies and dealers, will find a way until one or both of them are dead.
Sorry if I duplicate this…
brokeroutpost.com post, confirming that no-doc/liar loans have contributed to the run-up of prices in select bubble markets:
http://tinyurl.com/yzl7mf
“I decided to read thru this whole thread before i threw myself into this since i know some of the stronger personalities both loan officer and AE wise already have a ego interest in being right/on the moral highground of this issue… i can see where some say stated is for lighter documentation in the case of someone who runs a business (w2 stated is crap and while ive done them to make my paycheck.. they should be banned). But i also agree that that if it tightened down regulationwise in California the market would crap out overnight for the next 2-3 years since very few could buy a home full doc the correction would be horrendous, long lasting, and not pretty especially for schmucks who got 2 and 3 year arms on a stated loan and now cant refiance full/lite doc and have to eat the adjustable payment. Stated programs are just that… you STATE the income that seems reasonable and the underwriter either swallows it, counter offers, or rejects it. Its not like the banks are idiots.. they spend millions on credit risk assessment when they sell this crap on the secondary market to hedge funds. If a large lender has idiot underwriters who like it and approve it… and ivy league bond traders are stupid enough to trade it and buy it in large pools… how can it come back to us and people say “ohhh.. the loan officers are the evil ones..” if a deal doesnt make sense the underwriter or the manager at the lender should put the brakes on it. The stated loan / inflation phenomenon has two sides… many in california have GREATLY profited (i mean homeowners too who sold their home and bought a huge spread in another state) and if they tightened down and made us afraid of pushing stated loans you can just chalk up a nice fat recession or write the book about the 2nd great deperession of the new millenium.”
Thank you for that link, ag.
Problem that I am facing, is that I am a Californian (I reside in 2 states - and am a legal resident of CA) who did NOT contribute one iota to the housing price run-up and yet I am lumped together with those who did and am labled a “Californicator” as a result. (ag: this comment does not apply to you
Sometimes I think the run-up here was allowed to happen because, after all, what else is there left to do? Aerospace is gone. Defense is largely gone. Hi-tech jobs have largely been offshored. Illegal immigration is rampant. So, is this the “peace dividend” the MSM has been writing of??? Unaffordable housing???
~Misstrial
Where’s here? I’ve heard you mention Las Cruces, NM. Where in CA?
Supply in High Desert and Placitas in Abq has really climbed. Placitas is about 17 mos and High Desert is nan as of the end of Nov.
For the first week since September, 2006, the inventory in PIttsburgh did not decline. It rose slightly:
‘09/13/06 - 9,282
‘09/22/06 - 9,275
‘10/06/06 - 9,247
10/
(Sorry, hit the wrong button)
For the first week since September, 2006, the inventory in PIttsburgh did not decline. It rose slightly:
09/13/06 - 9,282
09/22/06 - 9,275
10/06/06 - 9,247
11/02/06 - 9,191
11/30/06 - 8,774
12/08/06 - 8,696
12/23/06 - 8,416
12/31/06 - 8,349
01/06/07 - 8,353
Months of inventory: 8.5
On Long Island, there’s a flurry of open house this weekend. I see more that say “Price Reduced” , “Owner Motivated”, “Bring All Offers”. It looks like smart sellers are looking to get an early jump on the competitition. My feeling is that any strong buyers will be looking the next couple months for a good deal, then it’s down hill after that. Sellers that aren’t agressive in picking up a buyer early will be left swinging in the wind, as prices drift down the rest of the year.
they want as much for a 1br coop as mine is worth in queens. and it comes with higher taxes, maintenance and a $300 a month commuting charge courtesy of the LIRR as well as parking fees
Funny, i saw 3 open houses in Seaford, LI which isn’t much, i know, but i haven’t seen ANY since before Thanksgiving. Curious.
Danni
Check MLSLI.COM. Most open houses are listed there. I saw plenty all the way up to DEC 23rd.
I’m sorry that I don’t have the link … but in yesterday’s paper a listing said “get this before the bank does”.
The property is listed for $400K and I know that the comps in the neighborhood were in the $525K range about a year ago.
25% Central Coast discount is nice … but I’m waiting for 50%.
Nice…I’m seeing easy 15% off peak prices here on the retail side. Need to see much more before I consider pulling the trigger. There is one house here that we REALLY like, but it’s priced 50% (!!!) more than we would pay for it…the seller is expecting a quick sale because it is suck a nice house on a nice lot, and that “the central coast is the last hidden secret of California”. Zillow has it zestimated at halfway between what we would pay and what they want for it, and the trend is DOWNWARD. Interesting times, interesting times…
National Auction Company has 20 condos in New Smyrna beach scheduled for an absolute auction on February 10th. They also have three Gulf side condos located on Perdido Key in Northwest Florida scheduled for an absolute auction on Febuary 24th.
http://tinyurl.com/y4hh76
Berkeley CA. Of course I get tons of “tempting” refi offers in the mail/by phone but the latest one had something new to me: CountryWide wants to come to my house in a van to close the loan using their “mobile closing services”. The thought of those weasels entering my house makes my skin crawl, no thank you!
I believe I have found a picture of Contrywide’s “mobile closing services” vehicle:
http://www.madehow.com/images/hpm_0000_0004_0_img0102.jpg
Hmmm. Hope that comes with some “borrower helper”
Amazingly, here in the OC, I have lately received about 2/3 fewer refi/mortgage offers by mail than 6 months ago. Are the lenders cutting back on marketing as the market drops, foolishly at a time when demand is dropping and when they should ramp it up?
Report from Southern New Mexico:
When we moved here in July, there was approximately 6 FSBO listings. Now, there are about 12. Ad captions are getting a bit more desperate with:
“FSBO, DESPERATE”
& “ATTENTION 1ST TIME HOME BUYERS”
& ‘For Sale or Lease - No Realtors”
& “PRICE REDUCED”
(All of the above-listed captions are from separate ads.)
Most newcomers are from AZ trying to escape growth (read: Californians) there. Apparently, the collapse in AZ is affecting (imo) the housing market here in Southern New Mexico.
Here in my neighborhood (88007), prices are not really coming down.In fact, builders are continuing to build custom homes. Probably because they have signed contracts and do not want to go to litigation over B of K (that’s Breach of Contract - “K” is used for legal folks :). New construction has slowed, however. I am not sure if this slowdown is due to the time of year or to the housing collapse in AZ. In any event, there has just been 1 price reduction in Picacho Hills on Fairway Village (gated street - which has 6 homes for sale) Dr. Around the corner is another street with another 6 homes for sale (vacant). Pueblo Gardens has finished building and that street (gated street) has vacant homes for sale. Probably about 15 vacancies there. More vacant homes up off of Barcelona Ridge.
In the Telshor area and in High Range, prices are coming down. Not much tho. Best I have seen is a $10k reduction for a 3/2 2-story. However, the number of entry-level homes on the market (prob spec homes) has increased. I think that these sellers know that S ‘07 is going to be a crowded market and so they want to beat the rush. *shrugs*
In any event, we got some of CO’s snow today and that will probably give realtors & sellers some consternation/worries/thefits. Who wants to go house-hunting in the snow??? *nods in agreement with Sammy*
Although Las Cruces leadership is not prayer-oriented (read Sammy’s CO Report above), the local leadership here do take their cue from Mexico (not called “New” Mexico for nothing - hey!) and basically are clueless/incompetent/unqualified to prepare/cope with anything more than a light, gentle rain. Retire here at your peril.
~Misstrial
Ha! Here’s a market niche for the “condotels”
http://www.iht.com/articles/2007/01/01/business/Hedge.php
Two months ago they were asking a million for this home. The new year comes and they’ve dropped the price to $800K. It’s been sitting vacant for a while and the house needs some major updating on the inside from what I hear.
http://yahoo.idx.prudentialamericanadvantage.com/details.aspx?firstrecord=6&VIP=Yahoo!+IDX&cc=realestate&fclose=n&newhome=n&za=and&searchtype=8&searchgeo=60641&propertytype=1,2&sort=5&sortacdc=desc
I’m in Chicago too. The house across the street from mine sold for 380 in 1999. Then, it sold for 650 in 2002. These people did some work and listed it for 1.5M about a year ago. It was reduced to 999. It sat and sat, finally they reduced it to 992. That’ll line em up outside. The people moved out in August and it’s been empty since. Now, the paint is peeling (I know that will cost 15K), and it is starting to look deserted. Anyone with half a brain knows you don’t pay 1M to live in Rogers Park, no matter how pretty the house.
http://www.coldwellbanker.com/servlet/PropertyListing?action=detail&ComColdwellbankerDataProperty_id=10074151&page=property
This house on our block in North Park was originally listed (August) at 875-925K. I was curious and just looked on-line to see if it had been reduced. According to Zillow, the owners purchased it in Feb 2005 for 730K. It had a new addition put on a few years ago. I think the sq footage includes the garage:
San Diego, CA 92104
MLS ID#: 066077546
$799,900 - $859,900
4 Bed, 2 Bath
1,910 Sq. Ft.
It should be priced at 2004 levels in order to move, IMHO. They are waaay overpriced. Let’s hope it sits for a long, long time.
What is with this 799-859 pricing? Who’s going to offer 859?
Realtors play the most idiotic games…..
nudge, nudge, wink, wink////we’re willing to off “cash back” if you buy it for $849,000…
Check out CNN (right now, around noon PST, 3 pm EST, Saturday Jan 6). “Mortgage Meltdown” is the name of the piece. All these sob stories about how the toxic mortgages and the old housing ATM machine is wiping people out.
Idiots, didn’t read the documents, spent beyond our means, blah, blah, blah.
http://www.cnn.com/video/player/player.html?url=/video/business/2007/01/05/am.foreclosures.up.cnn.cnn
Saw that, but only caught the end. From what little I saw, looks like they are giving “helpful hints” to FBs trying to stay out of foreclosure. Were talking about many of the things we address here on Ben’s blog (I/Os, buying more house than one can afford, using HELOCs to “untap” your equity — and not being able to pay it off). Good stuff!!!
I thought it was “liberate” your equity.
Observation:
The McMillin Homes development “Quintessa” in Rolling Hills Ranch (South East San Diego County) is offering incentives of up to $200,000 per home. I noticed one used home for sale that was REO. Anyone trying to sell here most likely has lost all their equity or is underwater. Zip 91913.
Misstrial
I am originally from Las Cruces having spent considerable time in California, Arizona, etc. Las Cruces and other surrounding areas have been overran not by the illegals but by those from mostly California who have caused housing to be unreachable for many. This has been going on since the early 1990’s. The housing in Picacho, High Range and even Telshor behind Missouri ave are not and never were for local consumption. Las Cruces’ economic base is built on White Sands, State Govt. NMSU and CLC and Dona Ana County–the only entities that provide some semblance of a living wage. There is absolutely no industry there unless you count the call centers. Houses in Las Cruces for $300,000 and above were never built for local consumption. What is there to do but shop and eat. And visit your local doctor. Who can afford it. Only retirees. I saw and still see how the City of Las Cruces caters to senior citizens without a care for those with young children. While I still own property within Las Cruces, I am astounded at what the property would fetch if I were to sell the property even in this declining market. Why even Dale Bellamah homes (virtual ovens in the summer) are listing at over $150,000 in some cases.
Yes I heard it snowed today in Cruces…the Organ Mountains are beautiful as usual. However, I can assure you that when Atlanta/Cobb County receives a millimeter of snow I too experience clueless, incompentent/unqualified people who are unprepared to cope with anything more than a light, gentle rain. Its a global condition as evidenced by those in Colorado.
Thank you for your post.
I agree that the City (LC) has little care for children. Went out to MV Market, a store off Telshor, Lowes, and Toucan. ALL of the schools we passed by had parking lots that drained onto the playing fields, picnic tables, and outdoor playgrounds. Streets had no storm drains but merely had drainage ditches where water was guided to flood school cross-walks and side walks. Just sickening.
God save us from clueless bureaucrats everywhere.
~Misstrial
News from my neighborhood, West Hollywood 90048.
Auctions, that’s right folks - auctions! On my way back from my run, I noticed a big auction sign for a house on Norwich in the Arts district (my ‘hood, by Pacific Design Center). I checked the website for the auctioneer, and found another property that had been on the mls for months.
See it for yourself here :
http://www.premiereauctioneer.com/
I won’t have time to check any open houses this weekend in my LA area (90024/90064 zip codes), but for sale signs have sprouted over the last week. The real estate section of the LA Times came in twice as thick as last week. Maybe next week I’ll get some time to peek in…
Too bad these aren’t “real” auctions… Just attempts to create interest on properties that aren’t selling. Bet the reserves are pretty close to list price. Desperation? maybe. Opportunity for a good deal? Not so much. The waiting continues…
Gotta love the internets!
From the West Knoll house they’re auctioning
List Price: $950,000 (zestimate= 650,000)
DOM 32 (which is wrong, it’s been re-listed. should be over 100 days IIRC. Love those realtors!)
History
Event date 7/19/1989
Sale amount $325,000
Transaction type Refi
Date keyed 9/8/2006
Loan amount # 1 $649,000
Hmmm, wonder why they’re auctioning it
looks like someone bought a new house, and doesn’t like paying 2 mortgages. or they just blew the refi $$. Whatever. Good luck with the “auction”
Seems like a marginal slow down in the Orlando market. Orlando will be the number one market for real estate this year!!!!!
http://www.orlandosentinel.com/business/orl-realestate0607jan06,0,4279475.story?coll=orl-home-headlines
Santa Monica, CA
It looks like the Open House frenzy is history, the signs on all of the street corners are gone. All of the signs in front of houses that I normally drive past are still there, fading in the winter sun.
Looking at the listings, the ones that are still listed are flagged as “reduced” on the MLS, but it looks like a lot of listings have been pulled.
Since I posted in December on the absence of shoppers before Christmas, I should post this update that the consumer looked pretty healthy today when I tried to do some shopping. Two of the four retail stores that I drove to had cars backed up out of the lot and on to the street. I threw up my my hands, drove home, and ordered what I wanted online.
I’ve seen signs on Rose Ave. on the Santa Monica border which have been there since last March. But still, when are prices going to actually start moving down on the West Side? Veince was down a bit, then they rose again in November. West side prices are insane, but still they stay put and yet the houses don’t seem to be selling. At some point there needs to be real change. I’m looking forward to this spring to see what happens. Has anybody seen any signs of such a change coming to the West Side, or has it already started to happen but been well hidden?
my buddy is sweating bullets about his condo (26th St. Santa Monica). We went out for drinks on Friday and he was bumming abour how he bought the condo to “beat rent”, but the mortage is $2500/mo + $750 hoa.ins. ($3250), and rent used to be $750.
I tried to warn him in 2005 (when he told me he planned to sell in 2007), but oh well.
One of the nicest guys I know, great friend. Oh well, live and learn.
This is a SFR in Laguna Beach in the Arch Beach Heights area, where there are fantastic ocean views. Can’t tell the actual DOM because of relistings but it was a private auction property, opening bid at $795,000. Seller did not receive any acceptable bids. So now it’s just an MLS property listed at $ 1,199,000.
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=U6603772&page=1&property_type=SFR&mls=mls_so_cal&cKey=9mqprl4j&source=SOCALMLS
In NY, the RE brokers are defending “average home price” and discrediting “median home price”. My guess is they’ll simply use whichever measure paints a rosier picture of a pained market.
http://tinyurl.com/yjzp5g
3305 e wildwood dr, phoenix, az 85048, according to zillow, just sold for 199,000 in Nov. ‘06. A nice new comp in this area considering comparable homes are bubble priced at 280k to 320k.
That’s one about 1/4 mile from me that I saw sell a while ago. That neighborhood comps out a little lower than others in Lakewood, don’t know why.
Can anyone explain 3316 E Ashurst Dr, Phoenix, AZ 85048? Sold for $200k, zestimate is $612k. There’s a car out front, and I saw lights on the other night.
The U street that it’s on is flipper ground zero. Zillow isn’t up-to-date, the whole thing is built now. Houses were built around ‘02. A month ago there were 7 for-sale signs for about 25 houses.
Not seeing much on the way of downward Pirces here on the north side of Dallas. Kind of unfortunate, because I’m interested in finding a house. Oh well, justgoing to ait a bit longer and hope locusts don’t move in.
And before txchick replies “stay inside the loop”, all of my family is on the north side, and prices just seem ridiculous for anything inside the loop (maybe I just haven’t found the right neighborhood)
One for Paladin–
Took a look on the foreclosure sites– low & behold, found 3 very close to me here in Irvine (OC). Yes, even in this older (70’s) neighborhood, flippers seem to have made an appearance. Three (2 SFH, 1 townhouse/condo) in default nearby…SURPRISE, have the same owner name. Oh, and all bought in Sept 05. With different lenders.
The spankees– WMC Mortgage, First Franklin, mystery guest. Oh, and all the neighbors.
The paddle– $900k, $900k, $500k.— $2.3Million.
zip-92604 for the curious.
If there is that kind of fraud in the old areas, it must be rampant in those new developments.
Nice…
My neighborhood has several homes for sale and most have been sitting for a minimium of 8 months now. I thought two were sold, but I just learned the desperate sellers resorted to renting them……One home was pulled off the market as the seller grew tired of waiting………Wait until the spring hits and a tidal wave of homes floods the markets again…….
I had an interesting real estate day yesterday….our former realtor called to see if we might possibly want to put our house back on the market….we took it off last April. There does appear to be a potential build up in the over $300k level of our market but homes priced below that are sparce (for now).
As we discussed the market, I learned one home we had considered our direct competition had finally sold almost a year later. The owners are now out of state and needed to get rid of it. A 1985 2600sq ft 4/2.5 colonial with an acre, they had only reduced the price once from $249,900 to $235k. The house had ended up selling for $207k. But it gets even better….the buyers are going to put in new floors, countertops, appliances, and paint….and flip it for $299k! We’ve put in new floors, new paint inside and out, new appliances, new furnace, hw heater, water filtration system, garage doors, and didn’t get one offer a year ago for $229k.
Even more interesting is the people who wanted us to vacate immediately so their dogs didn’t have to go in a kennel have put their home on the market (10 mos later). The house is right next door to the home mentioned above. I think the price is their former purchase price plus 7% realtor fee.
This is particularly interesting as another couple that came back to view our house several times but chose another (for $70k more) put their new home back on the market after only 7 mos. They’ve marked it up $30k. After 3 mos it’s still sitting.
Things are getting really interesting……
Anyone watching the SLC market? We are supposed to be moving there next spring, and the prices to me are way high for the area. They definitely have the “it’s different here” attitude because they were undervalued for so long, and came late to the party.
But, I know the speculators swept through there last summer because I have found three or four individual listings for brand-new homes (flips) all on the same street in Lehi, and I’m seeing similar stuff in Draper. But they are asking $400,000-$500,000 for tract homes…even as high as $600’s in Herriman (way out there) and West Jordan. Granted the homes are large (3,000-5,000 sq ft), but that often includes unfinished basements, and they are all ugly tract homes on tiny lots with little to no landscaping.
Any thoughts? Since they appreciated so late in the game, do you think it will take longer for them to come back down to reality?
My personal suggestion is to wait until the credit market tightens up. After at least 6 months (preferably longer), you will know how the market will settle — which does NOT mean that you will find the bottom after 6 months, just that you *might* see how much of an impact suicide lending has had on the area.
IMO, if SLC has tract homes going for $500K+, there is a major bubble there. The specuvestors from CA were talking SLC up in 2003/2004/2005, so I imagine there is a very large speculative premium there.
Good luck!
The sunshine is bright
The winds calm and steady
With Spring round the corner
The sellers are ready
To relist the boxes they do hope to sell
or languish unsold on a slow trip to Hell
There are now two camps with shamans who say
By gazing at data they do see the day
of booming or busting this real estate game
will turn south this year, rebound, stay the same
who knows cry the buyers, confusion and fear
are making them nervous of losses this year
they see greater fools
buyers f#cked up the arse
who listened to tales now proven a farce
the atm’s broke, prices flat or a fallin
the well has run dry, pain soon comes a callin
we’ll lose everything, home and hearth, quads and caddies
the media and bloggers, bitter renters are baddies
they drove down the market with talk of a bubble
if it were not for them there would be no such trouble
we listened to Gary, AG, LAY and DL
but now that we’re broke, hope to see them in Hell
prices always go up, ATM refis, and IO’s
paper riches forever. we thought that was so
but the meddling bears blogged too far and wide
and over time the effect has turned back the tide
and as it goes out, as Buffett foretold
we all stand there nekkid with nothing to hold
but a big box of stupid paid for with our greed
now our last hope is to relist once more
wishing prices will rebound or walk through the door
leaving keys on the counters of granite so bright
and head for the hills, tails tucked in ever so tight
as the bears watch and wait, spreadsheets and data
debating the shills pointing to their errata
don’t give it away, it’s worth every penny
good luck says the bears while shaking their head
as word of this scheme oh surely has spread
joe sixpack may no longer be eager to buy
despite all the lies you lay on the guy
for truth has a way of finding it’s way
so good luck again, you greedy house seller
but I’m out of the game till your price hits the cellar.
Nice one, oc-ed!
I read that as a rap, and it rollls out nice. Your stage name could be Bubble-B, your posse could be “The Poppers”.
Excellent, oc-ed!!
Thanks folks. I wonder if 50 cent would be interested since I expect a 50 {per}cent plunge in the OC. Bubble-B is a good one! OC has been taken by Omar Credle.
A short tale from the Tampa Bay area:
I took a ride down US301 on my old Silverwing to visit a buddy in Fort Lonesome. Yes, the place is just like it’s original name, a deserted outpost at the four-corners intersection of SE Hillsborough County with neighboring Polk, Manatee and I think Hardee?
Anyway, the entire stretch from Hwy 674 (College Rd. in Ruskin) to Hwy, back up to 672 (Big Bend Rd), comprising the Riverview/ Sun City areas is lined with undeveloped/ partially developed and new developments on virtually every square acre of land available.
I thought this would end last year, but no, it continues.
Signs from Lennar, Pulte, Beazer, KB Homes and everyone else you can think of on tracts of land from about 20 acres to 200 acres, with signs………NEW HOMES FROM THE LOW 200’s.
One is listed as “PRE-contruction Pricing”. I thought this would end by now.
This area is the middle of nowhere. It is 5-6 miles minimum to any stores. There are no gas stations. There are no shoppes…..Just miles and miles of vacant land, and new houses. Need milk? Take a trip.
But what was most disturbing was the sign along the roadside…………. $300,000 LOAN…….$998/month for 5 years FIXED.
Back-loaded flipper/renter loan.
This lending will drive this market for several more years unless the forclosures put an end to it sooner.
Is there any sanity left in the mortgage/housing market?? When will this all end??
I just can’t believe this lunacy!
As you pointed out, the party will end only when the credit bubble is deflated (hopefully happening right now!).
IMO, too many people attributed the run-up to psychology. While psych did, indeed, play a major part in the run-up, it would have been impossible to get where we are without the EZ credit. And, there would have been no psychologically-driven bubble without the EZ credit to get it started (so everyone could see friends & neighbors getting in on the action, and deciding to pile on, as well).
Let the subprime market get what is coming to it. I hope it wipes out the credit markets for a while. We need to get back to a more cash-based economy. Imagine what cars, homes, etc. would cost if everyone had to buy using mostly cash. Greedy subprimes and their Wall Street enablers…
First of the auctions noted in todays RE section of the Seattle Times. One was a Bellevue 4,000 s.f., starting bid 250K (a super deal if it stayed anywhere near that low).
The other was a 2,000 s.f in Tacoma, starting bid 25K. Obviously, another low starting bid.
I’m going to assume that there’ll be takers for these and they’ll get bid up, way up. But it’s a great sign of things to come, once the last of the RE bulls have been weeded out, pockets empty.
Well, on top of the Auctioned Homes posted above, I just saw a price drop that took my breath away.
A place that was listed at 319K a month ago dropped to 219K today on Zip. Now THAT is a motivated seller. So much for incentives and all that garbage.
Get a Zip Realty account and start watching those prices slide.
It’s starting for real and the new lending guides don’t even start til the end of January.
It’s going to take some real discipline and self restraint to hold back on buying in the next few months.
I just have to keep reminding myself that, while there might be one or two good deals out there this week, there will be a whole lot more homes to choose from once this really gets going.
A friend snatched up a “deal” a few months back in B’ham. As of last week, he could have gotten TWICE the house for the approximately the same price, in the same neighborhood.
Restraint is the name of the game now. Very hard after waiting so many years to buy. But well worth it in the long run.
I’m in the same boat, and yes, it’ll be very difficult to sit on the sidelines as houses start to dip into my range. But jumping in now negates the “work” of waiting. I figure, for all the agony I’ve been through, I might as well make it completely worth it.
Hanging out here is great daily therapy to reenforce that
“A place that was listed at 319K a month ago dropped to 219K today on Zip. Now THAT is a motivated seller. So much for incentives and all that garbage.”
Keep an eye on it, and let us know if it sells!
If investors don’t see a glimer of hope in late feb to April 1st (i know a short window) they better be ready for a very hard fall or risk a finacial disaster. Rates will probally hold at 6.25 or so, the public must see that sellers are willing to budge or it is curtains for many and the US economy (i don’t care what the Fed chaiman says) the housing market will dictate what the future holds as far as a recession or worse.