Speculators Want To “Stop The Bleeding”
The Wall Street Journal reports on Oregon. “Randy Bither and his wife, Karla, both from Beaverton, Ore., decided to invest in real estate to help finance their plans to move to the countryside. After talking to other investors and a real-estate agent, they decided to buy a newly constructed home and try to flip it for a higher price.”
“The 1,450-square-foot bungalow is located in Beaverton, Ore., a suburb of Portland. Purchase price: $241,000 in July 2006. The Bithers paid $2,000 more than the home’s original price to the builder to get a better grade of kitchen counters and cabinetry and for bamboo flooring throughout the ground floor, Mr. Bither says.”
“Assuming they would sell the home shortly after it was built for 15% to 20% more than they paid, the couple took out a loan with no money down, Mr. Bither says. The 80/20 loan makes the mortgage expensive, close to $2,000 a month, he says. Since they assumed they’d sell the home quickly, they weren’t concerned about carrying the pricey loan, he says.”
“But because the house isn’t selling, they are hoping to find a renter to purchase the home through a lease-option deal to help offset the high mortgage and guarantee a buyer.”
“The slowing housing market, the high-interest loan, and a plethora of other investor owners in the development have stymied his deal, Mr. Bither says. At least three other houses in his development were purchased by investors with similar strategies, he says.”
“He and his wife have listed the home for sale by owner for $250,000, Mr. Bither says. If the buyer has a real-estate agent, the agent’s 3% commission of $7,500 (if the home sells for its asking price), will negate any profit, he says.”
“The couple is also offering the property through a lease-option plan, hoping to find a renter who wants to buy the home at the end of 12 months. As part of the deal, the renter would put down $5,000, pay $1,685 per month in rent and have the option to purchase the home for $262,500, or for 5% more than the home’s current listing price.”
“If a renter puts down $10,000, he or she could rent for $1,266 a month and buy on the same price terms. ‘Whichever option comes first and can stop the bleeding, we’ll take,’ Mr. Bither says.”
The Seattle PI. “Seattle’s market was not to blame for a recent decision to change a planned 34-story downtown building from condominiums to apartments.”
“Rather, the slumping condo markets in cities such as Washington, D.C., Las Vegas, Miami and Boston affected the national firms that fund such buildings, said John Schwartz, northwest regional director of Keller CMS, which is managing the Terry Avenue Apartments project.”
“‘There was quite a bit of skittishness,’ he said. ‘I think the Seattle market clearly has a little different story to tell, but a lot of the big equity players, they take a wider view.’”
“The frenzied condo market in many cities has collapsed since the middle of 2006, dragging down prices and scuttling projects, or at least forcing them to change, according to a New York Times report Tuesday.”
“The story attracted attention in the office of Williams Marketing, a Seattle firm that works with condo developers. ‘We were discussing it,’ company President Leslie Williams said Tuesday morning. ‘No, it’s not holding true here. Some of these national lenders are getting nervous. There’s no doubt about it,’ Williams said.”
“Seattle has fewer than 9,000 condos in the works, according to Williams Marketing Vice President Warren Ballard. ‘We don’t have anywhere near the volume of construction that some other markets have,’ Ballard said. ‘You cannot go anywhere in Seattle and find a finished, brand-new condo to buy.’ Ballard said conversion condos continue to sell well, although the strengthening rental market led some apartment-building owners to forgo conversion.”
“Mike Scott, co-owner of Dupre + Scott Apartment Advisors, said he knew of just one planned conversion that fell through in 2006. He said that a record 7,000 apartments in 143 buildings in King, Pierce and Snohomish counties went condo in 2006 or were scheduled to do so soon.”
Thanks Jason!
Indeed ! My Thanks also, I think my head was going to explode if I couldn’t comment !
We are still working on the core problem. Keep in mind this could close down comments at any point. But we expect this to be fixed soon.
Brief synopsis for us tech heads in the audience?
Database corruption on the table that holds the comments is what the error showed.
FYI the blog will have to be taken down for a few minutes as part of the process.
Yeah, I know what you mean. My dog is getting tired of me griping about the real estate market.
“Killer” the Schnauzer sends his thanks for peace and quiet now that I’m on the blog. I throw him a bone and he fetches my mouse……
You should be writing sitcoms with that sense of humor. Very funny.
http://www.signonsandiego.com/news/northcounty/20070118-1602-bn18blaze2.html
Looks like the speculators resort to torching condos in development to quickly get out of it…
Insurance fraud at this scale should be a death penalty carrying felony.
Dear Ben:
I am so sorry, it was me. I let the cat out of the bag.
I forwarded the blog discussion about the Trump building in Chicago to Rosie along with a few one-liners I found especially funny: “combover logic” and “pride of bonership”
BUWAHAAAHAAAHAA!!!
The Trump camp must have gotten wind that we were questioning his assertion that his was the tallest and sent his minions to close down the blog. But the minions were no match for Jason the dragonslayer. My eternal gratitude.
Whew, thank God. I was “jonesin’” while the blog was down. No comments yet, just want to say, glad it is back up!
hey, i thought the realtors were mounting an attack on the site, but then i realized that they don’t have the computer expertise- since in their previous McJobs, they only flip things….lol.
I’m making a contribution to help maintain the blog right now. This cold turkey business was awful.
I’ve discovered a new disease: blogger withdrawal syndrome. Ben, I have to wait a month (we were hit hard with taxes, but I will give you a contribution as soon as I can)
Remember that being hit hard with taxes is a GOOD thing.
I occasionally think of the co-workers at my last professional job who never exercised and sold any of their stock options at the height of the tech bubble because they didn’t want the big tax bill. They don’t have to worry about that anymore.
The kind of taxes we pay are not a good thing, IMHO. No matter how much I plan, they always take more than I had anticipated (one of the reasons a mortgage deduction would come in handy if the prices were right). But, a promise is a promise. I want to help Ben and his blog because I can’t live without it, and I will do it as soon as I have some spare money.
Also, Bill, you have a point. Thanks to Ben’s blog I have started selling some stock (I still had some losses from the dot.com bust to offset). They came in handy to pay the tax bill and to weather the next two months with little income in sight.
I think there should be a book called “Ben’s Blog” as it is a perfect example of the Power to the People empowered by the freedom of the Internet.
I also believe that separately, a new type of cultural anthropologist which I will call a “Digital Anthropologist” could study Ben’s archives and arrive at all kinds of insights into human behavior. Enabled by a “screenscraping” program, they could collect, classify by topic and poster and infer tremendous things.
By charting each poster with respect to his views on various topics, one could test for consistency of position. The Digital Anthropologist could also classify individuals in the “blogpack” as alpha wolves, followers etc. and track the impact, e.g., that alphas might have on followers in terms of opinion.
I blabbering, but my point is a wonderful digital trail aka mouse droppings have been left for scientists to study on a subject that over time transcends virtually all disciplines and attracts participants representative of many levels of mankind.
Congrats to Ben.
You should read Enders Game..
Right, mango, I made my first contribution today too!
I figured that Larry Kudlow had sabotaged the blog to promote Goldilocks.
I guess I wasn’t the only one who checked 50 times today.
I kept checking today, too - also donated to keep it going… Thanks, Ben.
It wasn’t 50 times… but I’m happy its back up.
Neil
Me too—what a relief. At work today I found myself actually having to do work.
Glad you’re back Ben.
Are all “lease-to-own” deals that awful?
I’ve considered jumping into a lease-to-own, but if the selling price is total rent paid + original sale price, there’s no point.
But hey, you’d have the inside track on a house nobody else wants to buy
I have yet to see any lease-to-own offer that was worth considering. The only reason it is offered is because the place wouldn’t sell, not because it wouldn’t rent. Owners of these places invariably set the rent, or nonrefundable deposit plus rent, at a price higher than market rent.
Rent-to-own might be OK in a hot, rising market (try to find one then). Terrible idea now, IMO.
The non-refundable deposit is the killer. Who would do that? I might take a free option (cost of rent) to take a 12 month look, but there is no way I would actually put cash down on a deal like that.
The whole idea behind a lease option is that a portion of the rent is applied toward a down payment (refundable )and the purchase price is usually set at a defined figure .
The reason for a purchase/lease -option is so a renter can tie down a property until they have enough funds for the down payment .
Since anybody can get in on a no down loan these days ,(if a buyer really wanted to tie down a property ),they don’t need to resort to a lease-option .
I don’t really understand the non-refundable deposit in this case either .
Have we gotten so crazy these days that it cost more to rent a property (desposits ,first/last month rents) than to buy one ?
No way. In the BA it still ~a 50% per month premium to buy vs. renting.
Lease to own makes no sense in the current market.
I went to this article and looked at it. and a the the bottom was:
“Do you think this was a good investment? Share your thoughts on this property.”
Is this a trick question?
And Ben you can’t fool me. Doctoring up an obvious page from “The Onion” with “Wall Street Journal” headers…
“The couple is also offering the property through a lease-option plan, hoping to find a renter who wants to buy the home at the end of 12 months. As part of the deal, the renter would put down $5,000, pay $1,685 per month in rent and have the option to purchase the home for $262,500, or for 5% more than the home’s current listing price.”
Now THAT’S comedy!
Have we gotten so crazy these days that it cost more to rent a property (desposits ,first/last month rents) than to buy one ?
Backstage, I think what he was trying to say is that you have to have more money on the table to rent than to buy. And it seems he’s right.
Huzzah! I was starting to go through withdrawl!
Just saw this story about a fire in Escondido, CA. They don’t know all the details, but “the four-alarm fire gutted at least three buildings Thursday — and appeared headed to do the same to the fourth — in the condominium complex under construction near the intersection of Escondido Boulevard and Woodward Avenue.”
It’ll be interesting to see what the story is on this…
http://www.msnbc.msn.com/id/16694942/
In the mid 90’s all sorts of shit was “catching on fire” =)
FB, meet mr lighter hes the answer to all your RE problems.
Never saw so many burned up houses in the mid 90’s. I swear there were more burned up homes in those 5 years than all the other 35 I have lived here combined.
One way to get rid of competitive inventory….
…Chinese water-torture. Glad it’s (hopefully) over.
awesome its back!
“Whichever option comes first and can stop the bleeding, we’ll take” Does anyone get the feeling this guy doesn’t get that the market has gone down? He seems like one of those guys that will always be a step behind in reducing the price.
I would call this couple out of touch but, naaaa, call a spade a spade - They are greedy stupid f*cked borrowers with a wonderful sense of timing.
o - These chumps had a “strategy”, implying they actually thought this scheme through LOL
o - They elected till June ‘06 to get their asses into flipping
o - They were not concerned about the carrying costs for their business venture that will “their plans to move to the countryside”
o - A renter will come in with $5K or $10K to overpay for the same sh*tbox they brought $0 with them to buy?
o - Someone will step in and “stop the bleeding”
The sense of entitlement, greed and sheer stupidity would be comical if this were an isolated occurrance. It’s horrifying when you realize this is a recurring theme, playing out on a grand scale all over the country.
This entire mess is discouraging. Makes me sick. I can only hope all the lenders that enabled this mess and all the FBs go BK. These chumps deserve to eat catfood in the countryside beneath the highway overpass they call home. Couldn’t happen to a more deserving couple…
A renter will come in with $5K or $10K to overpay for the same sh*tbox they brought $0 with them to buy?
A LOT of the rental applicants in this area have delinquent credit histories, so finding one with $10k to plunk down is almost impossible. Another hilarious item in the CL ad is the “Semi-Negotiable” part:
Pricing
Asking Price: $248,900
Flexibility: Semi Negotiable
That is funny….I guess that means that you first must negotiate to see if you are going to negotiate.
Given what’s been done to the free market in the last few years, I suspect that it isn’t gonna be in much of a mood to “negotiate”.
Think Marcellus Wallace saying “Naw, man, I’m pretty f—ing far from O.K.”
HCB - Too funny man.
Housing market talk: I’ma call a coupla hard, (insert mortgage lender name here), who’ll go to work on the homes here with a pair of pliers and a blow torch. You hear me talkin’, hillbilly boy? I ain’t through with you by a damn sight. I’ma get medieval on your ass.
rob
Semi-Negotiable? Thats like being semi-pregnant, lol.
LOL!!! Spot on.
You said that so well I have nothing to add. If there is any Kharma, these people will all suffer.
Found this tidbit: “In Buddhist teaching, the law of karma, says only this: `for every event that occurs, there will follow another event whose existence was caused by the first, and this second event will be pleasant or unpleasant according as its cause was skillful or unskillful.’ “
Here’s an example: The first event is the sale of a house. The second event is a skillful mortgage broker placing the unskillful buyer into an option ARM or some other type of toxic loan. The event is pleasant to the broker as it generates a big commission, but unpleasant to the buyer when the payment resets.
That Buddha guy was pretty savvy.
Yeah. He was a renter.
rob
“They are greedy stupid f*cked borrowers ” - totally agree. they probably saw the lucky ones who did flip houses a couple years back and figured they’d get in on some of the “easy money ” as well. this is indicative of a general laziness that has swept the country. nobody wants to work for anything anymore.
They need the $10K to pay off their credit cards that they have been using to make the extra monthly nut!!!
Bleed baby, bleed…
News Flash.
Sylvia Brown was “dead” wrong in MO kidnapping and if Sylvia was wrong how or why should we believe LAY, Lereah or anyone else who says I think this or I think that.
I always thought Sylvia had some connection to afterworld. I guess I was wrong as she was!
http://www.nydailynews.com/front/story/489771p-412369c.html
Sylvia Browne is a fraud, or maybe it’s just that she’s so damn hideous, I’m prejudiced. This is the same freak who claims everyone in heaven speaks perfect Aramaic. I wonder if she plans on keeping the three inch talons in the next world.
Forgive me if this post gets repeated. I had to hit the “add coment” button three times before anything seemed to be happening.
And we shouldn’t believe Pelosi this or Pelosi that. She hasn’t done squat on the ethics, Reid won’t pass it because we know about ‘his’ bridge across the Colorado Riv to his property wouldn’t get built and her Pelosiness couldn’t hire her relatives. Boxer is in it too. Probably about the whole Congress. Don’t get me started. Oh, let’s not forget his Bushness for Amnesty for the 12 million illegals. Rant off now. Ben, could you have been hacked by the REIC????
No sympathy here for Mr. & Mrs. “amateur speculator” Bither! Ya took a risk, now you get to pay the price!
My favorite investment quotation, from Tim McMahon:
“Yes, risk-taking is inherently failure-prone. Otherwise, it would be called sure-thing taking.”
Great comment.
I would say that risk taking is not failure-prone. If one does the proper risk/reward analysis, and sort out the risks with the highest chance of failure, risk becomes managable. Then the one who takes the risk has an advantage.
Risk taking without doing the risk/reward analysis is gambling. Expect failure if you are wrong, expect rewards if you are right. Just don’t expect know which it is until the wheel stops spinning.
Gambling is failure-prone (especially if the folks you are gambling with run a crooked game).
“…especially if the folks you are gambling with run a crooked game.”
That’s what it has been. The most cynical among us will say that it’s how it will always be. Regardless, forewarned was supposed to be forearmed.
Whether you know it or not you’re always taking a risk. Its just a matter of degree and kind. The way you reduce your risk is simply to know where you stand with choices you’ve made and how those choices will be affected by various economic micro and macro factors.
Since there are so many factors that can come to bear in any posture, and few have the means, time or education to fairly evaluate and weight the factors appropriately, the better way to reduce overall risk is to simply diversify your assets and rebalance those allocations periodically.
Randy Bither is out 2Kx6 = 12K, plus RE tax/insurance of 3K, about 15K so far.
If it takes another 6 months to sell at 200K, he’ll be out another 15K+50K or 65K, bringing the total to 80K.
He’s probably puttin’ all his losses on his credit cards or a HELOC mortgage his primary residence.
Ouch…
Within the next year seller’s will be bringin’ in triple digit amounts to close on their white elephants.
This dude’s already @ $80k.
I guess he’s “Takin’ lessons from Casey.”
Wow, there is apparently NO limit to how stupid people can be.
First, they buy a house to “flip” because it makes perfect sense that a brand new house in Oregon of all places could be immediately resold for a huge profit. It is so perfectly reasonable to belive that every last person in Beaverton could become fabulously wealthy just by buying new houses and reselling them to each other.
And, then, when their flip goes flop they figure they can just find a renter who is willing to fork over a huge amount of cash for the option of buying their cheap crackerbox house at an hugely inflated price a year down the road.
I thought even the most moronic would be able to see that the market is now in decline and there is a huge oversupply of unsold houses everywhere. I sure wish we could get a follow-up on this story. I bet they end up renting for $1000 or so and then ride the wave all the way down until the house is foreclosed on or sold for $125,000 or so.
Yes, it was July of 2006 and even back then there was a lot of bubble talk. This blog was hammering full blast even back then. Those foolish buyers deserve to suffer from their mistake.
A statistic which will come back to haunt most areas in Oregon and Washington is job growth. Both states are equally appalling in that area. And Seattle and Portland are notoriously, hideously expensive places to live. Housing is only one portion of the equation. Prices will have to correct in a big way, and the economies improve, or they will start to experience losses in population as young people start to move away just like in other areas.
My sister took a $20,000 pay cut to move from Phoenix to Portland, Oregon - because she could not stand the heat of Phoenix. When the big depression comes, you emotional types who could not stand 5 minutes in the heat (going between air conditioned building and air-conditioned car) will regret your wussiness and wish you had $20,000 extra to put away.
See how far that 20k gets you when Phoenix runs out of water.
Not to go too far OT, but Phoenix is a train wreck waiting to happen - rampant overdevelopment and sprawl in an ecosystem with a very limited natural carrying capacity for human inhabitation. The “business model” for Phoenix is cheap water, cheap oil, and constant residential building - not very sustainable in the future I suspect.
Yeah, but I’m only renting here. The temp goes up 10 degrees? Then I’ll wise up and go north. Having RE is having an anchor. I can (and have) moved within a week.
“Assuming they would sell the home shortly after it was built for 15% to 20% more than they paid, the couple took out a loan with no money down….
What an assumption. What will it take for people to understand there is no such thing as a free lunch!!!!!!
One of the things I learned in the Army is what the first 3 letters in the word assumuption were.
welcome back!
These folks (who seem decent compared to the mortgage weasels, banking cartels, street ho realtors, fake appraisers, etc) at least are trying to package their home in a couple of creative ways and might just navigate a way out of the forest…..If so they will no doubt be a little bit wiser next round…….In financial news MSM again pumps housing starts in a very Wizard of Oz way and Bernanke lectures US citizenry…..thought several of our regular posters might have to actually pay for a therapist if this blog stayed down any longer!
Decent isn’t the first word that comes to mind. Speculator is. It’s been discussed often on this site and elsewhere the damage speculators can do a community. Saying they’re better than mortgage weasels etc, even if true is saying next to nothing IMO. As for their “creativity”, they should try fingerpainting next time. It’s cheaper and less detrimental to the neighborhood.
Decent…ie. innocent?
No way, the wife is a mortgage broker.So this was a considered investment based on her expertise. Not.
Thank God the blog’s working now. Whew.
The Bithers’ house is in one of the many cookie cutter neighborhoods that have mushroomed in the Beaverton & Hillsboro areas over the last 3 years. Here is the actual Craigslist ad for this property:
http://tinyurl.com/yofdvs
These 1400-1500 sqft houses sold for $250k LAST YEAR. Now they are selling for much less - one sold in early Dec’06 for $220k in a much better neighborhood. There are dozens of houses similar to this one that have been on the market for more than 6 months, in each of these new cookie cutter neighborhoods of tightly packed small houses in Beaverton and Hillsboro.
Going rents for these houses are $950-$1050. You can tell the failed flips on Craigslist because they always ask for exorbitant rents (20%+ higher than the going rate).
The real question is, can the Bithers AFFORD to sell their alligator? They’ll be lucky to get $200k for it. Even though Mrs. Bither is a mortgage broker, getting a loan for the hoped-for greater fool might not be easy.
Here’s the thing about that. They want 1650 for rent? I’m paying $1750 for $3000 in one of the nicer, upscale neighborhoods in Tualatin. That rent is WAY out of line. In fact, there are two houses I’m monitoring on Craigslist in Tualatin that smell of the same type of thing:
http://tinyurl.com/3ypj8o
and
http://tinyurl.com/24otg5
These have been advertised for MONTHS and the first one just dropped the offered rent 100 bucks this week. But note they only want a renter till June when I assume they’ll put it on the market. Notice the 2nd is up front about it being for sale also.
Good luck with that.
- they’ve been
that $3000 should be 3000 sq. ft. Sorry about that.
Yeah and look at all the restrictions on renting the second place. You’d think they were bestowing a favour by allowing you to pay them rent!
$1650/mo asking rent is insane.
The other thing is, the pool of potential renters for anything above $1300 is not very large in this area. These houses will stay vacant for months at end every time the tenants move out. I have seen the same houses on craigslist advertised for more than 6 months running. Arbor, one of the big builders, just dumped TWENTY spec houses on the market in the Arbor Roses neighborhood alone. Asking rent? $1050 (including broadband hookup to the neighborhood’s T1 line). Good luck to the Bithers competing with the BUILDER in the rental market.
The question is; how long will it take for it to sink into the Bittners (and others) that they won’t be able to rent the alligator?
How long can you take the bleeding? How long can you take it as you WATCH THE MARKET DROP? Naturally, you’ll suck it up, easily, if the market even appears to be appreciating. But that isn’t going to happen this time.
So, how long do you think people can or will hang in there with these failing “strategies”?
They want a renter for only 5 months ’till they can desperately get it on the market ?
LOL !!!
That’s nothing—I saw a house for rent in Tempe where they would only do a month to month tenancy. Now THERE’S a deal—move in, and hope they don’t dump the place before you get your stuff unpacked.
My deal on the spec house where my furniture is living (in Maine) is just like that, but I don’t worry about it, because the builder is so married to his inflated asking price that he will just bleed and bleed and bleed. Oh yeah, I’ll have to move out of there SOME time (maybe when his lender forecloses?) but there haven’t been any showings since September.
Jesus, cookie cutter is right! That is one ugly home. Love that HUGE 2500 sf lot! Such a bargain for a quarter million. In OR no less. What a couple of losers. These people will be shorn just as they deserve to be.
audet, I looked at the first one too. It’s right under a power line and there’s a rail line behind the houses that are across the street. And over the hill behind the rail line is the local gun club… They wanted $1950/mo for it when they first listed it. With all that I was going to rent it anyways just to keep the wife from whining about buying a house. I finally found a nice 2200 sqf SFH in the west hills for $1400/mo. No more whining until next winter…
At least it’s an end unit, so they can get sunshine from the side…when there is any.
As for a mortgage, “Three Fingers Vito” can help.
2500 sq ft lot? Impressive!
“CUTE AS A BUG!!”
Gick! Kill it! Stomp on it! Yuck!
Look how close it is to the next house……what happens if someone gets stuck when they walk between them…..
UMmmm, that house is in BEAVERTON, Or., which is appropriate. Considering the home looks like is was built by a beaver. Click the link and tell me im wrong (could be, im a lil’ drunk).
Know the area very well. There is a ton of town houses and single homes available for sale, and rents of similar properties are around $900-1000 a month. This does not even include all the new developments or the condo to apartments coming on line in the spring. Given the current gross oversupply of rental units and flipper infestation I strongly suspect a steep decline in rents and in fact am seeing it currently. If this idiot wanted to sell his house he could drop the price and give it the old puppy dog trial. At the very least he should be fronting a months rent just to get someone in the door. $5-$10K to move is over the top stupid. Just singe a 12 month standard lease in the area on a nicer piece of property and pick the place up on the county steps next spring for $100-$150K or better yet have your pick of a number of brand new properties. This dude just made the worst financial decision of his life. What an idiot!
Even though Mrs. Bither is a mortgage broker, getting a loan for the hoped-for greater fool might not be easy.
You’re assuming that Mrs. Bither will even still be employed in another month. Mortgage brokers are like Realtors - dime a dozen and there’s too many.
Just wait until she loses her job - then they’ll really be in the tar pit.
Some housing bubble news from Wall Street and Washington. Bloomberg, “Home starts unexpectedly climbed 4.5 percent last month from November, the Commerce Department said in Washington. Building permits jumped 5.5 percent, the most in four years, to a 1.596 million pace, the Commerce Department said.”
Sales continue to fall………so what do we do?……….why, build more.
Something is dreadfully wrong with this picture.
must be a northern bias- warm weather
The builders saw an opportunity to close out more projects which were in the pipeline with the recent warm weather. This is effectively borrowing against projects which would otherwise have started in spring, so I think it will adversely affect the spring numbers and make things look even worse.
“If a renter puts down $10,000, he or she could rent for $1,266 a month and buy on the same price terms. ‘Whichever option comes first and can stop the bleeding, we’ll take,’ Mr. Bither says.”
———————————————————————–
Mr. Bither bought with 100% financing. We’ve entered the Brave New World where only renters need down payments.
yeah - how fvcked up is that?!!!
Good point! How ironic.
Brad — great catch. That’s a classic.
So this asshat goes out, gets the place with no money down, and expects some other other fool to happen along and hand over 10K to pad his ass pocket and to take away the turd of a deal that he got himself into…
I am more than shocked. How did we ever let this kinda stuff happen ? How were we able to allow the bankers to weave the debt from this kind of garbage into our banking system ?
Man. This is going to end badly. For all of us.
No one will go unscathed in the revaluation and reappraisal that will follow.
I don’t think ANY investment will be safe.
“So this asshat goes out, gets the place with no money down, and expects some other other fool to happen along and hand over 10K to pad his ass pocket and to take away the turd of a deal that he got himself into…”
That about sums it up. He needs to find someone, with money, who is even dumber than he is. Every time I think there is a limit to the stupidity of GF’s, a guy like this comes along and pushes the envelope a little bit further.
There are still plenty of people with a box full of stupid, but not many of them actually have a bucket full of money to go with it.
Man. This is going to end badly. For all of us.
Nah, it’s going to end fine for those of us on the sidelines with cash and no debt. We are going to enjoy a buying opportunity even better than the mid-1990s.
Exactly! But I love renting my 1,000 square foot apartment so much (and the freedom) that I may not end up buying at all when the bottom in RE hits in 2012 or 2013.
Brad posts “Mr. Bither bought with 100% financing. We’ve entered the Brave New World where only renters need down payments.”
Really is odd, that a renter that pays first and last plus deposits, has more skin in the game than the “Landlord”.
Hey in 2001-2004 you were a brain of the “new paridime” now you ain’t got a dime and not likely to see one in a very long time!
Exactly the situation I am in. Came up with 6K (cash) to move into my new rental unit. The RE agent mentioned to me that she could move me into the same home (it was for sale) for no money down, give me 10K back at closing for “moving costs”, and I would not have to make a payment for 2 months after moving in.
How could I refuse?
Well, to start, the taxes+insurance+HOA are more then my rent per year. That was the first problem. Need I go on?
My favorite tagline for this bubble is “Too poor to rent? Now you can buy!”
Funny thing, when I was in college, the TV died and there was no funds for a new one. Amazingly Sears had 12 months no payments/no interest on TVs priced over $1,000.
You know what happened next.
(I did pay it off in full after 12 months…)
So “too poor to rent or buy,” but a 12 month free ride helped work it out.
Damn good point…!
Man, doesn’t anybody do their due diligence anymore? This idiot bought a house-to-flip in 6/06 and he expected to make 25%? WTF. I know people on this blog have said this before but I will say it again.
People will spend hours on CNET researching a washer and dryer and a 42′ plasma TV but won’t spend 60 minutes to research a $200k plus home purchase? No sympathy from me. Another FB cruuuushed…
Easy come, easy REO.
It’s all over but the foreclosin’.
I think I’m just a little bothered that the scope and extent of this bubble, and the news of its demise, haven’t reached the masses. The Bithers are 2002-2004 flippers that are very late. That they could do this scale of an uninformed thing when the news wires are full of ‘pop talk’ is amazing. Do they not read, or at least draw air on this planet? And their realtor - scammer or idiot? Who the hell are you people?
They were listening to D. Lareah and D. Trump and all of the other cheerleaders of the RE business. They were listening to the folks (likely ones who sold them their house) that “it’s different here” and “it only goes up here”. They were not reading this blog or thinking it through, that is for sure.
June was the exact top of our bubble here. Brilliant timing!
http://housing-watch.com/regionview.aspx?city=Portland
I think its the realtors convincing these people they can make money. I remember when I was looking at condos in 1999 - I didn’t buy because nothing was well-built or in a good location - the realtor kept trying to get me to buy something I could fix up and resell — I kept telling her I wanted something to live in and I wasn’t interested in speculating or getting into something I knew nothing about.
I could totally see how these people could be led into believing they could do this by unscrupulous realtors.
The northwest has been a bit behind the curve in this bubble. Maybe things still looked rosy up there in mid-2006. Still, if they had paid any attention to what was going on nationally, it didn’t take a rocket scientist to know what was in the works for them.
By mid 2006, even here in the NW, there were numerous articles about the instability of local housing. Granted, they were always followed the next week by “save” articles.
But the articles and info. were out there for all to see and hear. These people were/are “victims” of not *wanting* to entertain the truth. It’s a deliberate refusal to accept truth on their part. There are still some of those around, a few anyway.
She’s a mortgage broker. For sure she was seeing signs of problems in the market.
Oh yeah, and on top of that they’re just garden variety idiots. Blech.
Williams Marketing V.P., Warren Ballard said: “You can’t go anywhere in Seattle and find a brand new, finished condo to move into.”
How in the world do they get away with printing nonsense like that? Wow. Just wow.
I guess their ridiculous distortions, trolling, and spin weren’t luring in enough FBs, so now it’s on to outright lying.
what a lie. check out urbnlivn.com, a guy who follows the Seattle in-town condo market–he’s noting lots of brand-new condo flippers and several large new condo blds less than 40% sold in Belltown and First Hill neighborhoods.
Link to SJ Mercury “price stabalizing sales decreasing”
http://www.mercurynews.com/mld/mercurynews/news/breaking_news/16482709.htm
Adjectives are like statistics — easily manipulated to the benefit of the presenter.
I am a .com survivor. I got laid off the week before xmas in 2000 (or was it 2001). Sure, we all felt it was odd the last year not having any real work and getting paid pretty nicely for playing ping-pong and foosball… it did seem a bit queer.
I would turn on CNBC and watch the new, young analysts talk about how the old rules had changed and we were in a “New Economy.” So I lined my pockets with more options and watched my company all but fold a couple months before our IPO.
As the reality hit, you could still turn on CNBC and see the “New Breed” Stockbrokers still pushing their shit. Fundamentals and valuations were out of whack and the world was still in denial. Companies aren’t worth 3000% of what they earn (if they earned)…
Houses don’t all of the sudden appreciate 300% in 3 years after a norm of what, 3-5% on average?
Why am I posting this? This was the year I had finally climbed that hump and am personally and professionally in a position where I CAN buy.
But thanks to sites like this and my own research, I can’t help but shudder at the fact of living through another “bubble” and watch my money disappear.
If trends continue, I think maybe sometime next year will be a good time for me as someone who does want to own, but it’s just not now.
When all of these Realtors who got their licenses in ‘04 are looking for something else, i’ll consider jumping back in. Much like the stock market, until all the New Economists were gone did we see fundamentals and economic rules that had applied over time take over.
My name is geeah…. and i’m a renter.
This is a wonderful time to save and diversify into gold, just incase Ben prefers slight inflation to combat the housing bubble. How much did the Chinese and Indians benefit from the bubble RE holders? They are probably saving their money for a rainy day.
Gold is an inflation hedge with terrible fundamentals. Now is a terrible time to “diversify” into gold because the gold boom has that price way up. The only really good investment now is in high productivity start up businesses, and that is rough territory even for familiar VCs.
The Chinese and Indians are despirate to build up to the point of having what we have, but they are not all that close. China in particular has blown their boom time money on cities designed by the insane while conficating land from the lower classes and cutting off their social services. Neither China nor India are the threats you would claim, and our fates are already intertwined.
Well I don’t know. Yes, gold is a completly speculative and nonproductive asset. The current price of gold is predicated on the idea that inflation will get much worse. OTOH if inflation GETS much worse, it’s perfectly possible that the price of gold will be bases upon the fear that inflation get much much much worse. Yes, gold has run up, but is buying gold now like buying a property in 2003 or 2006? It’s not a basket I’d put all of my eggs in by any means, but it’s perfectly possible that there’s still plenty of good money to be made there.
Mole Man, you contradict yourself. Yes, gold is an inflation hedge. However, there has been no “gold boom”, only a dollar bust.
If you believe either (a) inflation isn’t happening or (b) the dollar’s only going up, then yes, gold is a lousy investment. Personally, I can’t get enough of the stuff.
Come on now! Look at the graph of gold. In the early 1970s gold was $35 per ounce. In 1980 $800 per ounce. In the late 90s $270 per ounce, which is still much higher than the $35 of the 70s. I’ve been buying up gold in the dips the last 8 months, but bought some near the 2006 peak. You buy gold regularly, then your average purchase price per ounce drops. Cannot do that with a house. It’s all or nothing. On another subject, 3 month T-bill rates are moving up again. Today they touched 5%, which was last done in July 2006. Sometime next week they will be 5.04%. You all should be accumulating precious metals, short term T-bills, savings bonds, and municipal bonds. Long term note and bond rates may get above 8% in a few years and that’s whey you will want to start trading short term for long term.
Excuse me? The long-term fundamentals for gold are excellent. Why? Because you can generate trillions of dollars of credit with the click of a mouse but you can’t create gold out of thin air. People say “gold doesn’t pay any interest” but it does if you think of it in terms of purchasing power versus fiat currencies (and they’re all fiat these days).
Geeah — glad you are able to dodge the bullet this second-time around. A fair number of us (”us” being Ben Jones’s followers) have bet the farm on the fallacy of “housing prices go up forever.” I think you’ll be well-rewarded by having waited until the time is right to buy. We’re not there yet, and the right day could be farther out than we like (for some of us, farther out than our spouses like).
Personally, I think that if all you do is adhere to the version of the rent-versus-buy equation of your choice (from 100 to 150 or max/max 200), you’ll come out way ahead and will have lived relatively well in the interim. There must be a huge number of people out there that we don’t know about, in addition to those whom we do, who are sweating bullets day by day over how they will pay their mortgage or how they will otherwise escape the jaws of their alligator.
When I talked to a friend who had bought at the peak in 2005 and they told me how stupid i was for not buying (never mind paying 100% above what a house in a sketchy neighborhood had just assessed for that same year)… that same person told me the only way to go was interest-only loan, I knew i had to step back a bit.
From the Blither listing: “RENT TO OWN is also available…Must have an option fee upfront (down payment) along with stable and sufficient income…”
Perhaps if the Blighters had followed the rules they set for others they would still be able to help put their kids through college.
That’s pretty funny.
BREAKING NEWS: Massive fire destroys gigantic half built condo project in Escondido CA .
OK I’ll say what you are all thinking: insurance job
“Burning Down The House” by the Talking Heads will be the theme song for 2007……
This is good
http://www.itulip.com/forums/showthread.php?t=833
covered oil shorts today.
TxChick — perhaps alone, I believe that today Saudi Arabia alone controls the near-term price of oil (as in, for the rest of 2007). It is decidedly in SA’s interest to drive the price down, in order to strangle Iran’s political ambitions. Had our government’s handling of Iraq worked, SA would not have needed to take this course, but they have resolve. The three perpetual (remember that part) Bad Boys of the Middle East are Iran, Iraq and Syria. Saudi interests lie squarely in keeping the Iranian (non-Arab, BTW) Shiites from consolidating power in Iraq. IMO, they will, because the have to, do anything to prevent that. It likely is not in their long-term interest, intra- or inter-Kingdom, for a “third party” to do so.
If you count the U.S. as a “third party,” then take my meaning to be the “fourth party.”
> It is decidedly in SA’s interest to drive the price down,
It is also in their interest to occasionally let the price drop out in order to render any replacement schemes (like Hydrogen) un-economical. They did the same thing back in the 80s.
You are right on the money, Chip. Countries like Iran and Venezuela need oil above $60 because they have expanded their social programs and internal needs to that price. Anything below $60 and they are getting squeezed. Which countries have been hollering for an emergency OPEC meeting to cut output? Iran and Venezuela.
I fear that prices will not drop significantly from this point.
Believe me, I wish they would as I haven’t been able to hire for well over a year, which is hurting my business.
In 2003 my wife “forced” me to buy the house we currently live in. I say “forced” because I thought then we were in the midst of a housing bubble and I wasn’t that impressed with the house.
I finally agreed to purchase the POS but I told my wife that I was staying for no more than 7 years. She agreed.
I took out an I/O for 7 years @ 4%. Turns out our payments were lower than our rent ( I did put down a 20% down payment).
It turns out of course that many others did the same thing. I live in Marin county BTW.
I’ve also come to learn that 7 years is the average time Americans own their houses. Which of course begs the question why would you take out a mortgage for 30 or 15 years?
The only way housing prices will come down significantly is if a significant number of people lose their houses. I don’t think this is going to happen. We all read about people who have liberated their equity and gone out and bought Hummers, but I think this applies to a very small minority. Folks I know have used their equity to start up businesses or at least pay down debt. I don’t know anyone who’s bought a Hummer.
As much as I hate to say this, the new financing options do represent a new paradigm. The only threat to this type of financing are higher interest rates which again does not look like occurring.
I guess I’m answering my own question here, but until we know exactly what percentage of mortgage holders are not going to be able to meet their financial obligations, the jury is out with regards to future house prices.
Otto,
Things don’t change. How are you going to refinance out of your 4% loan in 3 years? Your new interest rate will be 6% and your loan will increase 30% or more. This is why people get fixed rate mortgages. Your paradigm works if house prices continue to rise, but falls flat if things level out or prices begin to fall. What about 60% of the houses that were sold in the last 4 years that are all on interest only loans? 60% of your new neighbors are in hot water right now! What if they all foreclose at once?
“We all read about people who have liberated their equity and gone out and bought Hummers, but I think this applies to a very small minority.”
If I am not mistaken, government statistics show equity is at an all time low despite the increase in housing prices. People have over borrowed.
“As much as I hate to say this, the new financing options do represent a new paradigm.”
I doubt it. These products have been around a long time. They weren’t used much before because lenders understood their risks. With the implosion of sub-prime borrowing and a reawakening of investors to the risks of these products, they will likely disappear.
“As much as I hate to say this, the new financing options do represent a new paradigm.”
They do represent a new paradigm in borrowing and debt, not homeownership. In the long run, it’s one that favors the lender, not the borrower.
It will cause volitility and uncertainty. That is bad for the market.
The housing bubble is just one part of a much larger credit bubble. There are so many things that could send this economy down the tubes, housing loss is just one of them.
Housing prices will drop. Mill Valley, a scary amount (you define scary). San Rafael, more. Novato, more still.
There is a group of people selling refinancing as the answer to all evils…guess who they are? They are mortgage loan officers making commissions off of your refinancing!!
Somehow I don’t believe your story. No one who takes an I/O loan can scrape together 20% down.
I agree.
i missed it but, now that i think about it, if this guy owns a house and is rooting for a housing bubble that means he will likely lose all or a portion of his 20% down. Also he claims that he wants out of his shit-box, meaning to find another place and would be forfeiting his down-payment money that he used for this place. I own a home but i bought 8 years ago with nothing(practically)down. I want prices to go down casue i am ready to move up. If a 500k home loses 20%, then the home i want to buy is now 100k cheaper. Meanwhile my 250k home loses 20% or 50 k and i come out 50 k ahead on the move up. Makes sense for me but, not for this guy.’
Obviously anyone can say anything about themselves here, but if you look at my numbers below, it is possible that he may be one of the few people to actually use this type of loan in a responsible manner. If he can get out after 7 years without losing the market tanking, he wins – relative to a fixed-rate loan. If, say, his HH income was 200k, then maybe take this loan – and if (or should I say: when) the market tanks, then live with the resets. If this is the case, then he is simply upping his risk in the market, but at least he’s playing by the rules, and will not cause others to go broke when he defaults (which he will not).
Yes, I agree it makes sense sometimes. My friend refinanced to an I/O loan because the interest rate was lower (4%). However, he isn’t a moron…he kept making the same payment he had before, so he was now paying down even more principal than he originally had. Even though it was an I/O loan, there was no restriction against paying principle each month if desired.
My cousin who had 20% down did just this in Florida in 2002. Bought a house with interest only, sold at a huge profit in 2006. They felt really smart when they made their huge profit in 2006.
…and that’s fine. As long as it was clear that your cousin had enough income so that he(she) could absorb the adjustments, or eat a reasonable loss. It’s this “ownership society” and “getting people into homes” that they have no reasonable chance of paying off with the current or projected income stream that is now crashing the market.
Somehow I don’t believe your story. No one who takes an I/O loan can scrape together 20% down.
I do. Don’t you remember David Lereah’s comment that if your martgage was paid off you were not saavy or mismanaged you money (or some such crap).
When we sold we talked to a mortgage broker. When we said that we had a pile of cash for a down payment the broker said to borrow the full amount and invest the money….make double returns!
It can make sense to get an I/O or a 4% fixed. You can always pay off principal. If one can afford the fully amortized payment, it can make sense. For about 1% of the people.
For the other 59% of the buyers who took out these loans, it’s suicide.
No one who takes an I/O loan can scrape together 20% down.
I put down more than that with an I/O loan.
In the early 1980’s, which was the perfect time to do it. But of course that was when interest rates were at all time highs - exactly the opposite to today.
This blog gives you access to info from the inside that in another day and age wasnt available. There are alot of inteligent people that post here (myself-excluded) that over time will convince you that we are right. Its not just the number of people that willlose their homes, how many will just sell at a loss to get out from the burden. That wont show on the foreclosure stats. The “new hotness” will be living frugaly and having money to actually do things. Fast forward five years and everyone will want to talk about the places they have been to vs showing off their gourmet kitchen at the local wine and cheese parties.
If the religious folk can keep the faith for thousands of years despite the lack of any empirical evidence to support it, certainly you can “keep the faith” for a year or so with the mountain of evidence hitting you on the head like a sledge hammer.
Look at IO loans and Option ARM percentages.
Then look at the % of people who pay the minimum payment for Option ARMs. (over 75% pay only the minimum balance)
That should tell you how financially sound the populace is.
I guess that one difference between your “interest only” loan for 7 years and a conventional mortgage is that you will be forced to sell in 7 years (or, if you choose, earlier) - or face double or triple mortgage payments (since I don’t know the terms, I cannot predict the max payments, but interest-only on a 500k loan at 4% would be $1700/month, while full amortization at 10% on the remaining 23 years would be $4,600/month). Thus, you better hope to heck that the market is strong at 7 years, or you will get nailed for an extra 3k per month (maybe more, if rates are higher). On the other hand, 30 years conventional at 5.5% would have been $2840.
Obviously I don’t know your specific situation, particularly income level. But, since you read this blog, you are obviously highly intelligent, so my guess is that you could eat that 3k, if necessary – or you wouldn’t have signed in the first place. So congratulations – you are probably one of the 5% of exotic loan users that can actually handle the resets, and you will simply have to save a bit less (or eat a loss) if appreciation doesn’t come through.
What keeps myself and the rest of us awake at night are the other 95% of the exotic borrowers who were (barely) qualified based on the $1700/month number (i.e., make $70k or so, combined), and will also have to face the $4,600/month number (and in a lot less than 7 years), plus taxes and insurance (especially in Florida). As their loans reset, those people are looking at trying to pay $5,000+ per month in just fixed costs on their houses, plus everything else in life (i.e., food, utilities, cars, etc.). If prices stop going up (i.e., no refinancing and no option to sell), then foreclosures hit huge – and the market crashes. That’s what most of out here expect. My guess is that you do fine (maybe not as wealthy as you may have liked, but no BK or being kicked on to the street), but it’s the others…
“… But, since you read this blog, you are obviously highly intelligent”
We all are very modest here, aren’t we?
Yep. Just about everyone here that posts has simply told the market to get lost and that we’re not going to play, when prices are insane. If the rest of the country had that attitude, there would be no bubble.
Probably the most amazing thing over the past 18 to 24 months is how accurate the group consensus of the frequent posters have been.
I’ve posted this before, but the decline in the housing market that we have seen was correctly predicted over a year ago. Timing never accurate, but the effects are eerily accurate.
I would not bet against the consensus of this group of people.
Remember that house prices do not need to fall, and in some sense that is both a disaster scenario and the most likely course. Price stagnation accompanied by high inflation for around a decade could easily be enough to bring us back to mid nineties prices. Such inflation might seem like a boon to debtors, but the conditions that come along with it will bring extreme stress that will cause many to go under.
Agreed Mole, stagnation will have equally detrimental effects on this economy in which so much is predicated on endless appreciation. Even if dramatic plunges in prices never materialize, who thinks this market could handle a prolonged period of no growth?
The problem with the inflation cure is how will the inflation occur. A drop in credit or in credit availability is deflationary. The rise in home prices spurred additional credit, which created additional increases in home prices. It was a self-reinforcing feedback loop. If home prices stagnate or start to decline, credit will no longer expand at the former rate or may even (gasp) contract. This situation causes a feedback loop in the other direction - i.e. deflation. I’m having a hard time seeing how inflation will be generated in the facing of a bursting housing bubble. And the experience of Japan says that massive government spending and money creating doesn’t always generate inflation.
This is a perfectly good line of thinking, until you think of what happens after 7 years. The last conversation I had with a owner friend, (now ex-friend) went with an I/O loan like this
Me -”What if interest rates are higher after 7 years?”
Owner - “I will sell the house”.
Me - “Will someone be able to afford the loan payments at that new rate for your asking price?”
Owner - “Huh”?
Me - “You will have to reduce the price to match loan payments at the higher rates, if you want to sell”
Owner -” I wont sell, I’ll refinance”
Me - “Refinance at the higher rates?”
Owner - ” I wont refinance, I”ll pay the higher payments on my current loan”
Me - ” Yeah, but now you are paying for a depreciating asset”
Owner -” You are full of shit. Prices wont come down”
Needless to say, that’s one friend less. Now I just avoid RE talk, to keep the peace.
But really it does not matter. If you overpaid, you end up selling at a loss, or paying for an asset that’s depreciating in value.
Many people think that they can hold out till prices come back - but was it a good investment? Like there are people who wait for Cisco to come back, and then sell at a higher price and claim a profit. Sure , after 20 years you can sell Cisco(today $28) at the 2000 price of $68 (split adjusted). But it would be a very bad investment.
If you “invested” in your house, you will most probably regret it, even if you would be able to ride it out.
If it’s “just a place to live” (i.e you *must* have enough saved for retirement, kid’s college etc in other investments), it’s fine. The poor returns are just a living expense.
Otto, I don’t think you really have a grasp of reality here.
Consider the following:
1. Anything over a 30 year mortgage was previously very rare (under 2% of all mortgages) for the last 80 years or so. Now 30%-40% of people are getting these mortgages in some areas in only the last five years. All of a sudden this is a new permanent reality?
2. You live in Marin County, which is one of the most expensive places to live anywhere. I used to live in the SF Bay Area, but I can tell you that the group mentality there pushes people to stupid decisions. If you go by the 3x your annual salary rule for maximum house price, it means you need to be making $200k per year for THIRTY YEARS to be able to afford the $600k+ houses up there. And most of those houses are 60 year old !1000sq.ft. houses. That’s not a very good deal elsewhere, and it’s not easy to pay 30 years.
3. You miss some basic economic principles here. When 60% of your entire net salary goes to a mortgage payment, this is historically far higher than what is normally acceptable. That means you will either spend less on everything else in order to afford basic items like food, clothing, consumer electronics, etc., or you will drive up wages because you and everyone else can’t afford it and complain to your bosses. In the former case, the less that is purchased around you, the less people that can be employed; this will result in decreased flow of capital and starts a chain reaction of people defaulting on mortgages and creating more unemployment because there is less cash to spend on anything when they’re unemployed. In the latter case, you have interest rates that rise quickly to attempt to stem the resultant inflation from increasing salaries; this results in a combination of company profitability being compromised as a result of increased cost of goods due to increased salaries and a consequent reduction in workforce headcounts, and an increase in mortgage defaults due to high interest rates attempting to stem inflation.
Especially with point 3 above, you can see that there is no escape from what is happening. Price increases cannot continue in perpetuity without some other form of reaction from the economy, and that reaction is ultimately manifests itself in someone either losing their job or losing their house when house prices are this high. It’s a bit like a Chinese finger puzzle - you can’t simply pull from both sides and get your way by expecting to escape. Something will always react in response to your action; it always does, and it has been proven since the dawn of man. I would suggest taking a macroeconomics course at a local college to understand some of these fundamentals if you can get past this stupidity of Bay Area real estate.
Living in Fantasyland for a while can be nice, can’t it?
OT - Watching TV this evening I came across a commercial from the Home Builders Association of Metro Orlando. The ad showed an hourglass running out and showed all sorts of quotes to frighten “sideline” buyers back into the market. They must really be getting desperate if they are going to convince people that the 22,000+ properties for sale in CF are going to disappear and end the buyers market, sending prices skyrocketing once again. It is a shame that misleading information that is now finding it’s way into our lives through commercials. I too happy to have sites like this blog available to cut through all the mainstream media spinning that has been going on lately. I am a first time buyer who ALMOST purchased last October, if it were not for this site I would have probably made the biggest mistake of my life. Thanks, Ben.
“The result is excess inventory. Once that inventory is absorbed, the market is expected to return to normal - which for Central Florida means strong but sustainable.” http://www.realopportunitycfl.com
At over 22,000 list
Hurry, only 22,000 properties available. If you don’t buy now, they will all be gone. This is a limited time offer, once the 22,000 are gone, no more will be built. Don’t miss this once in a lifetime opportunity!
Lucas — watch for “Dimedropped”’s posts — he seems very knowledgeable of the market and if I remember correctly, the true inventory here in Central Florida is more like 44,000, not 22,000. Imagine what it will be like in the Spring when those who have been waiting for the “selling season” list (or re-list) their properties.
“He and his wife have listed the home for sale by owner for $250,000, Mr. Bither says. If the buyer has a real-estate agent, the agent’s 3% commission of $7,500 (if the home sells for its asking price), will negate any profit, he says.”
This moron is still worried about his precious profit!
Looks like PHM Just lowered their guidance. Stock down after hours. Symbol PHM, on yahoo.com finance area.
Pulte Homes Inc. (PHM :
pulte homes inc com
News , chart, profile, more
Last: 32.90+0.09+0.27%
8:14pm 01/18/2007
Delayed quote data
Add to portfolio
Analyst
Create alert
Insider
Discuss
Financials
Sponsored by:
PHM32.90, +0.09, +0.3% ) Thursday evening cut its view for the fourth-quarter, and now sees the per-share result from continuing operations ranging from a loss of 5 cents to income of 5 cents. Previously, the Bloomfield Hills, Mich.-based home builder had expected per-share income at the lower end of a range from 30 cents to 70 cents. Pulte said it now expects fourth-quarter impairments and land-related charges of $330 million to $350 million, or 83 cents to 88 cents per share. The company had previously expected $150 million in impairments and land-related charges
This couple is a example of why the market was driven up . This couple didn’t put any money down and the couple is expecting a gain within a year ,and now these gamblers want to overcharge a renter. It just makes you sick and it shows that people are still getting 100% financing on speculation deals that are liar loans .
Jesus Christ those Oregon people were idiots. It seems this country has no problem producing loads of them.
I am going to laugh my ass off all the way down. These people are embarrassing.
So this is news?
The bureaucrats at all governmental levels know WTF is goin’ on.
They and their corporate pimps are nothin’ more than a bunch of scurryin’ bilge rats lining their own pockets with massive pay, pensions, and health care benefits before the ship goes down.
This housing debacle will be the final shot in the bow, that sinks everything.
http://news.yahoo.com/s/nm/20070118/bs_nm/usa_fed_bernanke_dc_2
Simple problem to solve, just don’t declare war without just cause and spend the money on Americans .
Aha! — a fellow libertarian. Too bad so few of our country’s voters would spend even ten seconds thinking about what you so succinctly wrote.
Couldn’t agree more:
The War on Cancer.
The War on Poverty.
The War on Homelessness.
Real men declare war on nasty people and countries, not on concepts.
Add to that another war you cant win, the war on drugs/prostitution/gambling. Stop farking with vices, you cant stop them.
Novel solutoin to one, if we spent the money that we have onthe war putting solar paneling on every commercial building in the us and tying it into the grid- would have been money better spent. And, we still should.
I think the war on Cancer is a good cause. Poverty and homelessness is usually self-imposed - by dysfunctional families, drugs that ravage the mind, and so on. Darwinism at work. Donate to research against cancer, heart disease, and alzheimer’s disease.
Real men declare war on nasty people and countries
Rather subjective, don’t you think? Don’t you think everyone, and every country, is regarded as “nasty” by somebody?
Real leaders declare war on countries that attack them. You know, like in 1941.
You must mean when Hitler attacked Long Island. Oh wait, he didn’t - yet we still declared war on Germany.
Try again. While I have a lot of experience on right-wing blogs, I try to stay focused on real estate here, but will respond when there are inappropriate attacks on my country’s leadership (see above) - other than real estate policy - there I totally blame Bush for letting this situation develop.
“They and their corporate pimps are nothin’ more than a bunch of scurryin’ bilge rats ”
I think you owe an apology to all of the “bilge rats” worldwide. They don’t deserve to be compared with this lot of vermin.
OT, THANKS to y’all for your comments. Today’s scare made me realize that I have come to depend on your thoughts.
Get the impression this illegal immigration thing isn’t so unplanned after all?
“The Fed chairman said the U.S. economy alone was unlikely to solve the pending problems. Even a doubling in immigration levels would not be sufficient to make up the funding shortfall, he said.”
Here’s a longer version of that aricle.
http://www.usatoday.com/money/economy/fed/2007-01-18-bernanke_x.htm?csp=15
“Get the impression this illegal immigration thing isn’t so unplanned after all?”
Gee, ya think?
http://www.eagleforum.org/column/2005/july05/05-07-13.html
http://www.augustreview.com/index.php?option=com_content&task=view&id=1&Itemid=4
Ha ha, Benny’s little war on the ragged remnants of the welfare state. Go get ‘em, Ben!
Rents rise in Santa Clara County
http://tinyurl.com/2tusqt
Reasoning is turbulent RE market has driven people to renting while things settle out. Any signs of this elsewhere ? Pheonix ?
A group of 20 somethings cheering on another youngster to buy a house since they have all made the best decision of their lives by buying in the past few years.
http://tinyurl.com/34kbrf
Makes me thankfull for being an old fart for once.
That is hilarious……they have the collective IQ of a gerbil.
California update. Spoke to a neighbor who has a relative in some new housing complex in either Oxnard or Ventura called, Riverwalk (I think that’s the name). He said the relative bought in the mid $700,000 range. Now the builders (don’t know the name) are selling the same models in the mid $600,000 range. The relative said he went to the bank and tried to re-fi and they turned him down.
Also, regarding the Bush “goldilocks economy”, this same guy (who sells machine parts) said his business is dead on it’s feet and has been for 2 months and it isn’t getting better. He thinks he’s going to have to lay of several employees if things don’t pick up in the next month. Gee! What makes me think the Bush administration is lying about the economy the same way they seem to have lied about so many other things.
However, more to the point, I STILL don’t see the property market moving upwards (for too long) from here anytime soon. The downward momentum is going to continue.
As many of us have mentioned previously here, both of the political parties are full of it. If you are looking for change or improvement, it probably won’t come from them.
On a side note, my brother-in-law (an engineer for almost 20 years) just got laid off again (twice in the last 12 months). He has no savings due to the last lay-off and wife has no job. Things are getting tough out there.
I predict the only stable jobs will be: health, public service, financial. If you don’t do something marketable in those areas you are in trouble. But I guess we can all just get call-center jobs and harass each other for the late payments on the bmw’s and credit cards. That should boost the job numbers and keep the economy going.
Er, the president doesn’t control the purse strings, congress does. Who controls congress?
You mean for the last 12 days, or the previous 12 years?
Back up. Good news!!
It’s funny watching all these investors and speculators try and time oil. Hey, it’s a great time to BUY! Then it props up for a second and then drps some more to an even lower level. Propped up and then drops some more. We are/will be seeing the same thing in the RE markets as people think now is the best time to buy with all the inventory.
Once all those people get burned by oil, they won’t want to play with fire.
Insurance brokerage firm Aon Corp. said today it would lay off 550 workers at its facilities in Texas and Maryland and New York
http://www.chron.com/disp/story.mpl/headline/biz/4481361.html
does anyone have any idea what this statement means “Renters insurance required and owner and Mainlander to be named as a party of interest”. i have seen it on several ads on craigslist in the phoenix area. seems to be on the FB type of rental ads.
i am assuming that the owner’s insurance doesnt cover the flip house (as if it was his primary residence) and he wants the renter to pay for insurance to cover the place.
also des anyone have any idea how these flippers get a mortgage on a ‘flip house’. my mortgage stated i had to actually live in the house?
This is a guess — that the owner wants to be a party of interest relative to the liability portion of the policy, so that if the tenant leaves the place damaged (or perhaps even rent-unpaid) the landlord has a defined, locatable entity to pursue.
also des anyone have any idea how these flippers get a mortgage on a ‘flip house’. my mortgage stated i had to actually live in the house?
It’s all part of the unmentioned fraud that takes place in many flipper transactions - they sign documents saying “I intend to live in this house” and “my income is $X/year” (when it’s really $X/2) in order to qualify for the mortgage.
Hopefully lenders will scrutinize these documents as part of the foreclosure process and all who committed this sort of fraud will be prosecuted. It doesn’t matter if MILLIONS of people were doing it - it’s still a felony.
I wouldn’t want to rent that UGLY house for any amount of money. Why is it that everything these days is either overdone or just plain UGLY. That house rivals Soviet construction and the colors are completely off. I think the popular colors of this era will be regarded in the same light as avocado and harvest gold. I guess if you’re just going to flip it to a greater fool it doesn’t matter what it looks like as long as you make your $$$ but eventually somebody is going to live there. It would be interesting to see if these developments result in some kind of psychiatric condtiion as I would be a depressed maniac if I had to live in the suburban Hell the planners and developers have created.
That’s an interesting point, about the suburban sprawl and cookie-cutter homes. Have you ever noticed that in tv shows and movies the neighborhoods are never rows of new cookie-cutter homes with no yards, but are usually older established neighborhoods with numerous trees and big lots. Also note the same setting in real estate commercials.
My sister is stuck in San Diego with a ARM that will reset in OCT, but has no room to refi. The value of her home if she tried to sell it now, would be about 70k less and that won’t even get a buyer, maybe 100k off the top and she gets lucky. Homes are poping up already in the first 3 weeks of JAN, two new listings for the bigger plan are going for about 80K less and much nicer. She took money out to buy fix the place up, did a few things nothing special, its still needs work but no funds to play with so they are using the 401k. They pay interest only, because they only planned on being in the home a couple years and never thought the values would go down or they could sell it. They had a great plan based on a greed and hope but bad timming and got STUCK. Its not the end of the world and they will be ok, but all I hear now is “this was a big mistake, what were we thinking, if I sell this house I’ll never buy again. His sister sold them the house and his family talked them into a house they could not afford because values will go up, blah, blah, blah. I sat through, listening to this over the years and they all said I was just scared to commit. Where are they now, the parents always talk about how broke they are, sorry we can’t help, they rolled 300k equity into a 750k home, they are over 62 and worrried big time and should be. The sister that sold them on all this is cutting hair again, sold her BMW and is working part time in RE and trying to sell her own house.
Funny how this is all playing out, I’m sitting on cash, saved 33k by renting and investing from the sale of my home.
So much for peaceful thanksgiving dinners at this household! I’m guessing that travel will drop precipitously next year as relatives that sold each other houses decide to eat alone.