Suffering From “Non-Seller’s Remorse”
The Chicago Tribune reports from Illinois. “For Joelle Murphy and Patrick Blackwell, last fall was a blur of open houses. For 21 tedious Sunday afternoons, from August to January, a real estate agent camped out in their living room, trying to sell their house. Early in January, they decided they’d had enough and pulled their Edgewater home off the market–but only for a month. After all, the Super Bowl was coming.”
“‘We were probably priced too high,’ said Murphy, who will have lowered her asking price from $975,000 to $899,000 when her home goes back on the market Tuesday. Last year, before she and her husband listed the home, she said an appraiser pegged it at $1 million.”
“‘We dropped it to $960,000, then to $929,000,’ she said. ‘We were trying to respond to the market, but we just kept missing it, we were behind the curve.’”
“‘There’s an expectation that things are going to pick up after the Super Bowl,’ said North Side agent Patrick Martin, who will relist Joe Delfini’s Uptown condo after the game.”
“Delfini had his two-bedroom, two-bath unit on the market from August through October. He turned down the sole offer he received. He has since lowered his price, and this time, he predicts, the unit will sell. ‘What makes me optimistic is that I’m going to bite the bullet on price so that somebody is going to come in and say, ‘It can’t get much better than this.’”
“Delfini admits he wasn’t enthusiastic about his prospects in August. ‘I knew in my heart of hearts it wasn’t going to move because of the sheer magnitude of the inventory,’ he said.”
“Delfini said…he suffers from non-seller’s remorse. ‘Somebody did make an offer, and, in hindsight, I should have taken it,’ he said. ‘I needed them to come up about $5,000.’ He said the carrying costs of the condo would have outweighed the difference.”
“‘Coulda, shoulda, woulda,’ he said. ‘But in real estate, you can’t have regrets like that.’”
“In Chicago, active listings dwindled throughout the fall, from 48,400 at the end of September to about 39,000 on Jan. 1, according to Chip Wagner, a Naperville appraiser. Wagner also said the declining number of houses available was due more to homes being withdrawn from the market than from sales, and that inventory is beginning to climb again. Between Jan. 1 and Jan. 30, the number of active listings grew by more than 2,900, to nearly 43,000.”
“‘I fear that if a lot of activity comes [from new listings cascading onto the market], we’re going to sink back to where we were,’ he said.”
“Mary Jo Pritza is carrying two mortgages, one on a home she bought last year, another on an Oak Park townhouse first listed in February 2006. She decided to give it a rest at the end of November, to refinish the home’s floors and to see whether buyer attitudes have changed.”
“‘They’re very selective, unrealistically selective,’ she said. ‘They would say things like, ‘This is a great unit but it’s two blocks farther than I wanted to be.’”
“In a couple of weeks, it will be for sale again, she said, though she’s holding on to her price, which she says is reasonable. ‘I don’t know where their hesitancy comes from,’ she said.”
The Toledo Blade from Ohio. “The residential real estate market in northwest Ohio last year can be summed up in three words: houses, houses, houses.”
“(Realtor) Jon Modene in Perrysburg, said sellers of modestly priced homes are beginning to experience the same problems seen at the higher end for two years. ‘They’re under pressure,’ he said.”
“Startling evidence of that was revealed by December statistics for the city of Toledo on the median price of homes on which offers had been accepted. It was $69,000, down 33 percent in a year, Mr. Modene said. ‘It shows that the lower-priced homes were the only ones selling,’ he added.”
“Anna Mills, who buys and rehabs homes for rentals in the Toledo area, is amazed by the number of available properties brought to her attention. ‘We’re flooded with houses,’ she said. The president of the nonprofit Toledo Real Estate Investors Association buys just one house a year.”
“Last year, she hooked up two club members seeking to liquidate with California investors, who are attracted by relatively inexpensive housing in Toledo and elsewhere in the Midwest. She said an unusually high number of unsold houses in the region are vacant, either because lenders foreclosed or owners were unable to meet mortgage payments and voluntarily returned the houses to the bank.’”
The Grand Rapids Press from Michigan. “In Michigan, where the foreclosure rate was among the top five in the nation, there was one filing for every 52 households, a 127 percent increase over 2005.”
“‘It goes from someone losing an inexpensive house to a high-priced house,’ said Chet Trybus, sales manager for West Michigan operations at LandAmerica Transnation Title Insurance. ‘It’s all neighborhoods; East Grand Rapids, Ada, Cascade, you name it.’”
“Widespread layoffs from high-paying, auto-industry jobs is a key problem, but so is a new generation of mortgages that made buying a house easier, until mortgage rates started to rise.”
“Typically, a home is a source of security during financial struggles, but (realtor) Susan Kazma-Hilton in Grandville, said people need to know the limits. ‘When they first lose their jobs, and they start falling behind, they go out and get an equity line because they figure they will get another job or that this is just short term,’ she said. ‘But a lot of times it makes it worse because now they’re upside down.’”
“Easy credit can take some of the blame, too, said Ellen Coon, a partner with a Detroit-area law firm that represents banks and mortgage companies in foreclosures. ‘It used to be hard to get a 30-year mortgage,’ she said. ‘Now, you can get mortgages after you’ve filed for bankruptcy.’ she said “
““Mary Jo Pritza is carrying two mortgages, one on a home she bought last year, another on an Oak Park townhouse first listed in February 2006.
….
though she’s holding on to her price, which she says is reasonable. ‘I don’t know where their hesitancy comes from,’ she said.”
Probably from the fact that they don’t want to end up like you, with a house on the market for a year.
Unrealistically selective, eh? That’s rich. Like this person wouldn’t do the same thing if she weren’t already dragging two balls and chains.
I might start looking at houses this summer just to make people like this cry. I know its mean but with a little research I know I could find a few people that deserve it.
Mary Jo Pritza sounds like the one who is hesitant, she needs to drop her price and get rid of one of those mortgages before it costs her any more money
No, she’s too busy throwing good money after bad by having those floors done. If those floors were done last year, this place would have flown off the shelf.
Sellers seem to be somewhere between denial and bargaining, but still closer to denial.
The list of these financial dimwits is seemingly endless. They are so retarded that they cannot even figure out that carrying costs are eating all of their profit (if it ever existed). I am elated by the financial @ss whooping being laid down on these people right now. After this year, their numbers will be substantially thinner.
Annecdote alert, Saturday I was hanging around the frozen aisle at a SD Costco waiting for the misses, very busy time, and I saw 2 ladies manning a booth at the end of the aisle. The booth was sort of pointed the other way into the busy main aisleway, so I couldn’t tell what they were peddling, but I noticed both of their faces had a stone-cold somber look, almost as if they were embarrassed to even be there. I seriously thought they were selling Costco’s line of caskets, which would also explain why not even one person in 5 minutes so much as even slowed down to look. When I finally left and walked past, I almost laughed out loud when I saw they were Century21 agents trying to drum up some business. I quickly glanced at their board of properties as I didn’t want to show any intereste, they appeared to mostly be trying to peddle 700K-1.5M pos’s. What a difference a few years makes, there would have been a hoard of lookers back then.
“but I noticed both of their faces had a stone-cold somber look”
That’s rich.
And I thought CostCo was supposed to sell bargains.
$1.5M for a POS?! Thanks CostCo!
LOL!
My wife was a realtor in the go-go NoVA market from about 1985 to 1995. That period saw healthy and even some unhealthy annual gains in home prices, as well as one significant pullback. Her advice to sellers was, “Your first offer is usually your best offer.”
In a down market your first offer is ALWAYS your best offer! The next one will be lower.
That’s an old cliche in stock trading too. Let your first sale be your worst sale. IOW, sell when there are buyers, fool!
It’s also known as “Sell when you can, not when you have to”.
The “have to” crowd will being growing tremendously this year.
“Your first offer is usually your best offer.”
IANAR (I Am Not A Realtor), so what do I know, but it seems that this little piece of generally accepted truth might not be true after all. In a falling market, it makes sense…however, in a rising market, how could it be (generally) true?
I think that slogan was created to make RE agents’ lives easier…if the seller accepts the first offer, the RE agent doesn’t have to do any more work, and gets to collect his/her commission. If the seller holds out for a higher price, the incremental gain in the RE agent’s commission isn’t usually enough to justify the added work and expense.
In a rising market, it’s not true. In our area, for years, sellers got multiple offers, usually at about the same time (within hours or even minutes). The drill was to evaluate the competing escalator clauses and balance that against the bidders’ financial disclosure (ability to close the deal). No more.
“First offer is best offer” reflects dwindling buyer pool and declining prices. There is a much older piece of wisdom that certainly pre-dates Realtors ™:
“A bird in the hand is worth two in the bush.”
“A bird in the hand is worth two in the bush.”
And, you can never get hurt by taking a profit. (Assuming there’s any profit to be taken)
In the book Freakonomics they discuss this issue of whether real estate agents are acting in your best interest…no surprise that they will not hold out when selling other peoples property, but will hold out for the extra moolah when they are selling their own home.
That freakonomics guy is an asshat. Why people quote him like he is credible is unbelievable
I wonder?
Right ,I have never agreed with “the first offer is the best offer either” . The only thing is that in this market if you even get a offer your doing good .
“My wife was a realtor in the go-go NoVA market from about 1985 to 1995.”
AHA! So that’s why you’re a bull in bears clothing. Like I joked before “Shill in Carolina”.
Never was a housing bull. We never owned more than one house at a time, and never even contracted to buy a house until we had sold our current house, or had a solid, non-contingent contract on it. Once the Feds changed the tax rule on capital gains treatment of a primary residence (1996?), we started trading DOWN with each successive house purchase, until we now own our home free and clear. Wouldn’t dream of even buying a LOT in our community of mostly retirees (which is starting to see sales again), ‘cuz you never know when the economic $hit will hit the fan.
Very recently you stated “the smart money is buying now”. I couldn’t understand where that logic was coming from, as only realtors were saying such outlandish things.
“Last year, she hooked up two club members seeking to liquidate with California investors, who are attracted by relatively inexpensive housing in Toledo and elsewhere in the Midwest. ”
There is something really wrong about this. OK, Cali-people. As someone who used to live in the midwest (40 miles north of Toledo) there’s a reason the houses are “relatively inexspensive!”.
Do they not know why that is? So let me figure this out…a bunch of Ohio homes are not selling. Let me buy 50 of them, put some new pergo floors in, double the price and assume buyers by the dozen are going to flock to me with fist fulls of money. Don’t get it.
TIM: as a native CA, I cannot explain why people here are so damned stupid. They can create all kinds of wonderful tech gadgets of which I can never comprehend, but they cannot put 2 and 2 together. Like you say, there is always a reason behind something. I’m embarassed when I read about CA people doing this kind of “investing.” Despite low area wages, they seem to believe that local citizens can and will pay ridiculous prices. they want 2 plus 2 to equal five. It’s not going to happen and they will lose their financial a$$es, as they should.
It is the self same people who create the gadgets who just a few years ago thought their companies were all worth billions and they personally deserved to be millionaires for showing up to work and making some consumer junk. Of COURSE they’re going to think that their houses are also worth a million bucks - they think they live in the center of the universe!
And I write this as an engineer who has lived on and off in the Bay Area.
The folks in CA are no more stupid than from OH or anywhere else. They just have more money and there are a lot of them. If CA was cheap and OH had the cash, the opposite would occur.
A fool and his money…..
“OK, Cali-people…buy 50 of them, put some new pergo floors in, double the price and assume buyers by the dozen are going to flock to me with fist fulls of money. Don’t get it.”
Because some of us are idiots.
Plus, real estate only goes up.
They did and are doing the same thing in TX. Cracks me up.
Hey free Pergo floors (after a little extra waiting time), fine by me.
My buddy rents a condo….(purchased by a specuvestor who cannot resell). He hates the new pergo floors. He can’t mop his because they asorb water. They had a leak in their sink and some water spilled on the floor for a couple of weeks…..the floor is now warped and bending. They had an x-mas party and one girl in high heels damaged the floors. There are little dents in the pergo all over the apartment. In addition, I hate pergo floors because they’re so hard. Its like this vinyl laminate that is hard as a rock. Real wood floors have some bouyancy to them and carpet is just soft. Pergo on top of concrete slab in a loft……great on the knees (just kidding!!)
Sounds like he’s living in pergotory!
Hey, if he doesn’t like it, he can move. It’s his pergogative!
OK, now hear this…ALL CALIFORNIA INVESTORS…
Get in on the ground floor.
Mud huts in Borneo. $15 a piece.
Get ‘em before the price goes up.
(They’re not making any more mud, ya know.)
[appologies to any offended people from Borneo]
“Mud huts in Borneo. $15 a piece.”
I bet if you marketed them as Resort Condo-Hotels you would sell them sight unseen.
There was a stroy in summer 2005 about cali speculators buying barren desert land in South Texas for ridiculous prices over the internet. These is no water to be found for 100 miles. There aren’t even dirt roads, much less infrastructure. They might as well have bought land in Mongolia.
Yes, but there’s a great opportunity there for rattlesnake farming!
Yeah, the rookie land speculators gobbled up all the garbage land at ridiculous prices. While looking for land in Washington, I came across a parcel which was price reduced by over 50%. I knew something was funny, so I called up and talked to the agent. Sure enough, it was an “investment” purchased by some wannabes recently who were hoping to flip it. Turns out, they had an offer, but the prospective buyers did some research first, and found it was not buildable. It was all protected wetlands. So the offer fell through. Now, they cannot even give the piece away. And the county will never budge on the wetland delineation in that area.
“They are not making any more mudd!!
The Ground Floor? Was that a pun?? Thanks for the laugh.
Thanks for the tip! I hear Borneo could be the next destination hot spot! I’m just not sure if they mean housing or temperature!
jbunnii: i could not agree more. If it weren’t for the people, the bay area would be a great place to live!
12% US Population + 50% of the current bubble = 200% increase in stupid. To paraphrase Yogi, ‘90% of investing is 50% intelligence’.
“Delfini said…he suffers from non-seller’s remorse”
AKA “I’m not just going to give it away” remorse.
The truth of the matter is, this story needs to get a lot more playing time in the MSM. Sellers need to be aware that it could and probably will be their best offer as the longer they wait the more crowded the field of panicked sellers gets. I can understand that they won’t listen to their realtor who is almost certainly telling them to sign - Realtors are untrustworthy… but, if they saw it repeatedly in the MSM, it’s the truth.
Hahahahaha, $975k, reduced to $899k, in Chicago?! I’m glad the bubble is confined to the coasts, otherwise I would opine that that price is disconnected from fundamentals.
Neat trivia fact: if you look at the top of thatTribune article, it shows the current weather in Chicago, which is -1F. The only question is whether the weather or the poor performance of the local sport team will have the greater dampening effect on the post-Super Bowl McMansioni rush.
Although, I’ve lived in Cali for over 30 years, I am originally from Chgo….I cannot FATHOM $1M properties there. It doesn’t matter if it’s on the Magnificent Mile or the outer ‘burbs….makes absolutely NO sense. My guess is that it is definitely disconnected from the fundamentals.
Any one else want to jump in here who currently lives in Chgo? Per Wiki, media HH income (2006) was $38,600; median family income, $46K. So who does she think she is going to sell to? Edgewater (far north side of Chgo) media income: $35,766. Unbelievable.
http://en.wikipedia.org/wiki/Edgewater_%28Chicago%29
BayQT~
I’ll jump in. The first thing i think it’s important to look at is that the sales and listings the article was talking about are for single-family homes, not condominiums. During 2006, 61 single-family homes sold in Edgewater with an average price of $653,000, while 983 condos sold with an average price of $248,532.
In addition, Edgewater is what is commonly referred to as a “gentrifying” neighborhood, where poor people are forced out and the housing stock is “renovated” for the new, more affluent residents. A lucky (or, in retrospect, smart) homebuyer could have bought a house in this neighborhood for $150,000 in 1990 that could easily be worth $1,000,000 today. This is reflective of both the general increase in the market in the Chicago area, but moreso of the gentrification of the neighborhood, which is now appealing to a large number of professionals with high incomes, whereas 15 years ago it was not.
I find it a bit ridiculous that you find it hard to believe that there are $1 million dollar properties in Chicago. I assume you are saying this to be a bit of a smart-ass.
In any case, a look at the fundamentals should help put things in perspective. The Edgewater neighborhood has a high number of rental properties and a high number of low-income residents. I think if you want to look at the fundamentals of the Chicago market it makes sense to view it as a whole, rather than by looking at one very dense, complicated urban neighborhood in transition.
The link below seems to have some good data. The usual suspects wind up at the top of the list, so surprises here.
http://www.housingtracker.net/affordability/?sort=price-income
Let’s compare the fundamentals of Chicago, with say, Los Angeles. The Chicago housing price to annual income ratio is 3.9 to 1, whereas in it’s Los Angeles to 10.4 to 1. HUD estimates the 2006 median annual income for Chicago metro area of $72,100, versus $56,200 for Los Angeles metro area. A frequently bandied about measure of “where housing prices should be” is 3x income, which in Chicago would yield a home price $206,300 and in Los Angeles a price of $168,600. In Chicago it would take seven years of flat prices and 3.5% wage increases to bring prices to the 3x income ratio. I didn’t do the math for los angeles, but as you can see would not be pretty.
While is don’t disagree that Chicago has some bubble issues, I do disagree with the statement that Chicago fundamentals are extremely out of whack. Let’s all hope Chicago will never have a warm weather premium. But I don’t think it will suffer the same bubble extremes that the coastal cities tend to go through.
I just don’t believe semi gentrification warrants price increases as great as that. It just seems like an excuse to justify bubble mentality.
Don’t get your drawers in a bunch, bubbleboi….I did say that I haven’t lived in Chicago in over 30 years, thus the surprise at the cost of some homes. I was not trying to be a “smart ass” as you put it.
As Chicago guy mentioned below, since you are tracking this area, your figures may be spot on (although a data source I found cited Chgo metro median salary at $70,500 for a family of four, $35-56k for moderate income. http://www.rethinkingschools.org/archive/18_01/raci181.shtml) It still speaks loudly to a fundamentals disconnect to me. I can’t translate that any other way.
And…just because there are bidding wars and homes priced/selling at over $1mil in the area, it doesn’t mean that they are not ridiculous and are primed for GFs. Living in Californa I will be the first to admit the crazy, stupid prices for housing, no matter how close to the beach or mountains they are.
BayQT~
sfbayqt - I’ve got to work on my playful banter - i always come across as so friggin’ uptight. I swear in person i’m totally laid back.
In Edgewater, no less… The Edgewater/Uptown area is still full of drug dealers, prostitutes, homeless and mentally ill. And with so many social service agencies and subsidized housing programs housed there, there seems to be somewhat of a natural limit on how much it really can improve. Rental apartments there are still cheap… A friend of mine recently left a nice $600/month one-bedroom to buy a $300,000 two-bedroom conversion down the street.
929k, reduced to 899k.
Wow.
What is with all these realtors once again predicting a post super bowl surge? Do they just not understand math? Last year the surge never happened, and now the inventory of homes is only growing, so how in the hell can there be a surge with such a huge supply? When a department store finds itself with huge inventories, do they mark the price UP? Hell no, they hold a blow out sale to get them off the books. To think that buyers are going to suddenly show up and start paying asking prices is just retarded. Here in CA we have had unusually nice weather since Christmas, so what has been keeping buyers away? Lower the price by 25% you f*cks!
“What is with all these realtors once again predicting a post super bowl surge? Do they just not understand math? Last year the surge never happened”
This year they are saying “for reals, this time we mean it. Really.”
Okay, okay, I give up. This time they will no doubt be right.
Maybe there’s going to be the real estate equivalent of the Rapture — all these houses are going to be sucked up into real estate heaven at their asking prices. We nonbelievers are going to be slack jawed at the sight of houses lifting off the ground and flying off.
Just a thought.
Flashback to character ‘Johnny’ in AIRPLANE:
“Auntie Em, Auntie Em, It’s a Twister!!!”
There will undoubtedly be some SJY’s in this process.
(SJY= slack jawed yokel)
It just remains to be seen who goes first.
They are right. There will be a surge….. In Listings… lol and a surge in Supply but not demand!
My Gawd I can’t believe these people.
Toledo, OH is NOT a destination; it’s a condition.
Somebody needs to tell this stupid asshat investor lady that she is gonna lose a whole lot of money. There is a very good reason why the median price for a house is 65K. TOLEDO SUCKS.
Toledo is a cold, rustbelt smokestack city where $10.00 /hr is a “good paying job”…..Toledo is a ham-and-egger town if there ever was one.
It’s not a place to move to…it’s a place to escape from.
Sounds like one of those forgotten places that shows up in the limelight every four years because only there do you find people who are so disconnected from the outside world that they never even know until the last minute which political party they will vote for.
Except for Cincinnati, Ohio is pretty much a bleak dump. We need to send txchick up there so she can learn to appreciate Texas.
Except of course come the Water Wars of 2015 and the parched Californios will pay anything to live along some of the largest fresh-water repositories on earth. Then watch as no price is too high for Ohio properties, as worthless California properties return to the dust whence they came.
Why would Californians move to Ohio to find water, when Oregon and Washington are wetter, closer, and far more attractive places to live?
“Toledo, OH is NOT a destination; it’s a condition.”
LOL — another one to add to my list of funny and memorable quotes from Ben’s blog.
Check out the Madison, WI Housing Bubble Blog:
http://madisonhousingbubble.blogspot.com/
Thanks moderator…your blog is most welcome and long overdue for Madison and Wisconsin.
they’re baaaacccckkk:
I have already counted 10 listings that disappeared in November and before reappearing in my bookmarked searches for Kane County IL ZipRealty listings.
Wish I had flagged them so I knew that the asking prices were last year.
mina
I’m watching the listings in Marion county/Washington township in Indiana (north side of Indianapolis, the most livable part of the city) and I am seeing the same thing - listings that disappeared a month or two ago are popping back up. Occasionally the realtor will update the photographs, but oftentimes they don’t - it’s odd to see a ‘new’ listing in February with lush green grass and verdant trees.
Doesn’t seem like anything is moving, but it doesn’t seem like prices are dropping, either.
And they’ll be back again. I’ve seen the same houses come back on the market, three, fours times, sometimes even more. My fave is when they list again after they’ve swore they were going to rent it if it doesn’t sell. BTW you can save more than 100 homes in Zip if you save notes.
What I don’t understand is why St. Charles, Geneva & Batavia are so expensive. Yesterday’s trib said that the average home in those areas was $330K and climbing.
How do the people who live out there make so much money? That’s one heck of a commute to downtown Chicago. Probably 2 hours each way during rush hour. They must all have jobs in the suburbs or something making tons and tons of cash. Who knows; sometimes I think it is all a facade.
My bro lives in St. Charles and commutes to Schaumburg 40 minutes, his neighbor works in Broadview. I work downtown and i was riding the elevator one day and some dude said he commutes from Geneva, someone asked him how long it takes he said 2 hours. Nice town, but 2 hours, i’d rather live in Berwyn, oh wait, i do.
From today’s WSJ
http://online.wsj.com/article/SB117064480990297820.html?mod=hpp_us_pageone
Thanks for the link! To me, this is the one thing that matters most: vacancy rate. The disillusioned still seem to cling to hopes for a post super bowl rebound. But first they should realize that the % of ownership has NEVER EVER reached 70%. During the bubble it almost but not quite got there. So would one realtor please come forward and explain to us how the market can bounce back with such a large number of vacant homes for sale? This is a record number! And what happens when units still under construction are completed and brought to market? Total meltdown. For whom does the bell toll, Mr and Ms. Realtor ™? It tolls for thee…..
Same story on CNN
http://money.cnn.com/2007/02/05/real_estate/housing_vacancy.reut/index.htm
Sellers are about to get a hard lesson as to why all of the interesting stuff in economics happens at the margin.
That 70% observation is a good point. Some sort of natural, or in the current environment, an unnatural limit? Should ownership return to pre-bubble rates of, what 62-65%, the impacts of an additional 6 to 10 million inventory are intense.
Historically the “natural rate” has been no more than 64%. Alan Greenspan himself questioned the long-term viability of the extra 5%.
http://money.cnn.com/2007/02/05/real_estate/housing_vacancy.reut/index.htm
What gets me is - why is this news now? This data ranges from over 1 month old to over 4 months old (i.. It’s from the friggin’ census bureau. Is there no other source for this data that’s more up-to-date?
‘I don’t know where their hesitancy comes from,’ she said.”
————————————————————————-
duh, just a little change in market psychology from when she didn’t hesitate to be the highest bidder when she bought the house.
“‘There’s an expectation that things are going to pick up after the Super Bowl,’
A true statement regarding inventory, not buyers.
“The Super Bowl effect” is a convenient invention to add another “light at the end of the tunnel”, conveniently positioned so that the ‘Summer Market” and the “Back to school market” are not 9 months apart.
This way, sellers never have more than 4 months to wait for the next salvation….
bwahaha…
“‘There’s an expectation that things are going to pick up after the Super Bowl,’ said North Side agent Patrick Martin, who will relist Joe Delfini’s Uptown condo after the game.”
What a bunch of idiots. Everyone knows that the market won’t pick up until after the Easter Bunny comes.
LOL that’s just ANOTHER light at the end of the tunnel.
“Widespread layoffs from high-paying, auto-industry jobs is a key problem, but so is a new generation of mortgages that made buying a house easier, until mortgage rates started to rise.”
Ya think that the fact buyers know friends going under on these suicide loans isn’t slowing their decision process? Or the fact that so many of these mortgages were used for speculation?
Until the speculative inventory gets down to reasonable levels, the spiral down will continue.
Got popcorn?
Neil
“‘They’re very selective, unrealistically selective,’ she said. ‘They would say things like, ‘This is a great unit but it’s two blocks farther than I wanted to be.’”
It sucks not to have any leverage, doesn’t it?
“‘They’re very selective, unrealistically selective,’ she said. ‘They would say things like, ‘This is a great unit but it’s two blocks farther than I wanted to be.’”
Good freaking grief, “unrealistic” what about back in the bubble crazed days when buyers had to write letters of intent to prove they were “worthy” to be picked to purchase the property over another bidder or how they had to promise to feed the darn squirrels? How the table has now turned on these people. I do NOT feel empathy for them; to feel empathy one must picture themselves in their shoes. In my way of thinking this doesn’t include making stupid real state deals, so I have no clue what it would be like to be such a cheap, selfish moron.
“‘We dropped it to $960,000, and then to $929, 000,’ she said. ‘We were trying to respond to the market, but we just kept missing it, we were behind the curve.’”
Let us all watch you now chase the price all the way to the ground now you foolish, greedy piggy.
‘It used to be hard to get a 30-year mortgage,’ she said. ‘Now, you can get mortgages after you’ve filed for bankruptcy.’ she said “
Yes and plenty of these sub-prime people live their lives this way, have you ever heard of a professional debtor? Let me tell you about them as I work in the collection industry. They do NOT care about their credit; this easy credit was like a dream come true. They knew eventually they would lose the house but they didn’t care at all as this is their lifestyle. They got to live in the nicest house they have ever been in and enjoyed it to the max. I bet they will be stripping it to the bare bones, kitchen sink and all at foreclosure day and will feel so justified doing so. After they take the foreclosure and try to file BK to get out of paying their credit card bills they will be anxiously waiting for the next stream of credit card offers to come in the mail. Remember this is America the beautiful where everyone can have everything they want for FREE!!!!!
SKB
Agree with you . Really these people you speak of are crooks ,and a promise to pay means nothing to them .
“He said the carrying costs of the condo would have outweighed the difference.”
I am still struck by people who don’t understand that time is their enenemy. Why take the house off the market for 4 months? Try lowering your price by 4 mortgage payments, 4 months of depreciation and 4 months of anxiety.
Yeah, I loved the story about the people who held open houses for 21 consecutive weekends. What they are telling the world is “my time is worth absolutely nothing!”
And yet, if they can afford a $1M house, they’re probably billing that time at some exorbitant rate to some poor schmuck.
“my time is worth absolutely nothing!”
Last night I drove past one of the local Safeway stores that has a gas station. If you use their lame savings card it takes three cents off the price per gallon. Assuming you have an average sized tank, your total savings will be about 45-60 cents per fill up. Their was a line of cars 4 or 5 deep at each pump station. Right down the road are two other gas stations that had maybe one or two people filling up. Price difference (including Safeway savings card)? 5 cents.
I turned to my wife and said “I cannot believe those morons would spend 15 minutes of their weekend waiting in line for gasoline, just to save 75 cents!”
I DO NOT like to spend money frivolously, but come on people! Surely your precious weekend time is worth more than a couple of quarters!
CA Guy,
OMG! LOL! My good friend is one of those who will drive all over town to find the station that is 5-10 cents less than the totally EMPTY Mobile station. Then for his $2.00-$4.00 savings he gets the privilage of waiting in a line 5 deep to fill up his Hummer H2. Oh the irony! Still LOL!
-eric
ROTFL
My fiancee was shocked when I determined the total cost to drive my car was 75 cents a mile. (After some expensive repairs last year.) Now, my driving costs are being driven by maintenance. A H2 driving costs is driven by gasoline consumption. At $2.50/gal, a H2 is burning about 16 cents a mile of gasoline. At depreciation and other costs, and a H2 has to also cost $0.75/mile to drive. (That’s what my brother calculated for his SUV of similar size.)
A proffesional should value their free time at $25 to $100/hour depending on seniority/pay/quantity of free time. So waiting 15 minutes costs $6 to $25. Hence, it doesn’t pay to drive out of one’s way for cheaper gasoline. Go to a cheaper station you’ll pass anyway? Sure!
Basic math eludes too many Americans. sigh
Got popcorn?
Neil
My math and spelling was a bit odd, but I’m glad my statement made sense. My wife even mentioned that they are probably wasting their “savings” by sitting there in their idling cars. Brilliant! Watch your “savings” go out the tailpipe while you wait in line!
Niel,
It gets better, forgot to add that my buddy is a real estate agent. You can imagine the debates we’ve had over the past few years. Although I find it very insightful to listen to his (client’s) stories. Along with Bens Blog, it really keeps me on the pulse of the market.
They’re the same folks who have a $100 per month gym membership and then drive around shopping center parking lots looking for a closer space because they don’t want to walk.
Oh man, this is so true. I can’t help but smirk at people who sit waiting for a car to pull out of a spot at the grocery store instead of taking the spot four spaces back and walking a bit. I’m usually already in the store and they’re still waiting!
Not only that, but they will sit there and clog up the dang parking lot with traffic that can not get through. If it takes 5 minutes for these obese to get their fat a$$es nice n confy in their SUVs before they pull out, that’s how long these people will wait on them!
Doh!
I remember when Krogers added gasoline retailing to their nearest grocery store. The parking lot was not really designed for this (as it was an add-on) so getting in and out was a pain in the a$$, plus you have long waits on these 4 lousy pumps. Right across the street are two huge gasoline retailers. I have often thought that thanks to Kroger customers, my waiting and maneuvering in and out of any of the two huge places was now much improved, for the difference of about 42 cents per fill up.
Thank you, morons!
I applied the “calculate my time as a professional” principle to housebuying and added $500 to my offer to match the “other offer” that also had a need to close later. I didn’t want to spend yet another weekend looking at houses that were all pretty much suitable. This totally freaked out my wife-to-be who grew up in one of those “The Art of Bargaining” countries.
Public records show Joelle and Patrick bought their house for $630K in April of 2000.
at $929,000, they’re trying to sell it for $299,000 more than they paid 7 years ago. That’s a tad under 7% appreciation per year.
I know edgewater; I lived 5 blocks away when I live at Loyola. There are some nice areas but there are some very rough parts too (i.e. Granville & Thorndale Red LIne stops). Edgewater has nice homes but not million dollar homes. I’d venture to say that this couple overpaid for their home at $630K in 2000.
Don’t forget about the $200K home equity loan they HELOC’d on the place…..because the appraiser said it’s worth a million dollars.. right?????? That’s why it was appraised last year - for the home equity loan! I hope they sell this place and lose money. They deserve it.
wow! Thanks for the history, Chi guy. Just reading your first sentence alone I knew they overpaid…big time. And with deductive reasoning, bingo, appraised for a HELOC. Priceless. So, in other words, they are yet another seller who priced their home based on what they “owe” rather than on market value.
Suckers.
BayQT~
I feel like a nitpicker, but i can’t stop myself. They purchased in 2000 for $630 with 20% down, indicating mortgage of $504,000, and took out a $100,000 equity line (i don’t see the $200K loan, just $100k). So total debt is $604,000, vs. list of $899,000.
I think they’ll clear at least a $200K on this home. Will keep you posted.
just the facts.
I don’t mean to nitpick either but I can’t help myself! According to the Cook County Recorder’s Officer, there is a $550K mortgage from Emigrant Bank in ‘02 and a $200K mortgage from Devon Bank in ‘06.
That’s $750K in mortgages, assuming they cashed out the HELOC presumably to renovate (as someone mentioned earlier). Probably a little extra for a new car and a vacation. Who knows? They’re liberating equity!
Now, the article says they are going to relist at $899K. They’ve admitted that they’re chasing the market down. So let’s say it sells for $875K. Over 7 full years that’s 5.5% profit per year after my calculations.
Realtor fee of 5% = 875K - $43,75 = $831,250. And let’s assume $5,000 in closing costs. The buyer’s closing costs reduces the number to $826,250. Pay off the $750K in mortgages and that leaves $76,000 profit. That’s an average of 1.7% profit per year for 7 years after costs are figured in. That’s more in line with reality IMHO.
So they’re not much of a bubble in this property after a breakdown of the numbers. That’s assuming it sells for $875K. What if they have to chase down the market even further? They’re already chased it down 7% ($975K to $899K). What if they have to drop it another 7%? That completely wipes out their $76K in profit. They’re screwed.
>>>Realtor fee of 5% = 875K - $43,75 = $831,250. And let’s assume $5,000 in closing costs. The buyer’s closing costs reduces the number to $826,250. Pay off the $750K in mortgages and that leaves $76,000 profit. That’s an average of 1.7% profit per year for 7 years after costs are figured in.
The amount borrowed in helocs, etc. has nothing to do with “profit.” If they paid $630K in April of 2000, then that is their basis. Sales price minus $630K minus transaction costs = profit (if any). Additional loans have to be repaid, but they do not change the basis.
Look, they borrowed money against their home because they thought it was worth a million dollars. Then they tried selling their house for a million dollars and it didn’t sell. The house is now for sale at $899K and will probably sell for lower.
The point is that after living in an expensive house for 7 years and borrowing hundreds of thousands of dollars against it, they’re not going to make nearly as much money as they thought they would.
Two years ago they may have gotten a million. But not anymore because the bubble has burst. The days of crazy price appreciation are over.
Chicago guy - i stand corrected - i got my 100K equity line info from the realtor’s tax database, which is frequently wrong. I trust the CCRD much more. In any case, they might have applied for a 200K equity line of credit, but that does not mean that they drew it all the way down. They applied for the line of credit close to when they put the house on the market in fall, 2006. If i had to guess, they wanted the money available for a down payment on the next place. i’m not guessing they went and bought a Hummer with it. furthermore, the house is not on the market right now - no sign in front, and not on the MLS.
i couldn’t disagree more that the bubble has burst in this neighborhood. See my other post below - the neighborhood continues to see record high sale prices for single-family homes.
This house was never worth a million dollars - it was simply an overpriced listing. Ask 10 realtors and every single one will tell you why this house didn’t sell for over $900K - it has no master bathroom. Only one bathroom on the second floor - which in this price range is a fatal flaw. There are some other floor plan quirks, including a staircase to the basement in the middle of the family room. Also, it was renovated several years ago and feels a little stale.
I’m not saying there’s no bubble, i’m just saying that this specific example does nothing to prove there is a bubble. If they had taken out numerous heloc’s over the years, and refinanced over and over again, then it might be a sort of interesting case. But from what i see, they put 20% down when they bought it, refinanced once (and took out $24K) to take advantage of low interest rates, and took out a heloc to buy their next house. normal, rational behavior in a neighborhood that has held its values extremely well.
“‘We were probably priced too high,’ said Murphy, who will have lowered her asking price from $975,000 to $899,000 when her home goes back on the market Tuesday.”
That should explain why you don’t see much in the way of the house being for sale. Previously, it has been up for sale since August - a good six months.
I’m saying that the bubble is bursting everywhere, including Edgewater. You are obviously more well versed in the neighborhood than I am; but that doesn’t mean the my thesis that the bubble has burst doesn’t apply to this particular neighborhood.
Remember, they’re chasing the market down. You yourself said the renovation is stale and it has quirky features. What price will it sell for? $875k? $800k? Will it sit on the market until the owner decides to keep the place? This guy picked the wrong time to sell.
On the bright side of things, I didn’t see a third and/or fourth concurrent mortgage associated with his name in ccrd. I know quite a few people who bought before they sold; they carried second mortgages for quite sometime. One of them still is…..
Chicago guy - this will just be my day of being wrong - the magnolia house just went on the MLS today, at $899,000. I will keep you posted on any activity.
Compared to the other houses for sale in that hood, i think it’s a fair price, even after accounting for flaws and quirks. I think it will go for around $850K. I can’t believe i just put that in writing - i’m sure i’ll have to eat my words.
Although I love reading about CA (especially) and FL, finally a word about my neck of the woods. If anyone is curious about where Edgewater and Uptown are in Chicago my VERY HUMBLE and much negelected website has a map: http://www.jrstransglobal.com/graduatestudies.htm
SFH in the Edgewater enclaves of Lakewood-Balmoral and Edgewater Glen have been flirting with $1mil for a while now. In fall 2003 the Tribune made mention of $800k homes there. These areas are sandwiched between the high-rises on the lakefront and the somewhat trendy Andersonville neighborhood along Clark St. Housing stock is large, usually attractive, but quite old. I know of at least one case in which a home on west Hood required extensive sub floor and joist replacement.
Uptown and Edgewater are very complex geographically and demographically. These SFH are immediately adjacent to a chronically depressed corridor of “four plus ones” and other rental stock along Kenmore and Winthrop avenues. Needless to say a walk around the area is always good for at least a few third world/bannana republic anecdotes.
As time permits, around work and school, I have many more photos and notes to add to the site.
When I think of edgewater I think of the Granville and Thondale El stops. Not a good area. Probably one of the worst areas on the the northside.
I posted a comment about an hour ago but it didn’t appear. These people bought the house for $630K in 2000 with a $500K mortgage. They got the apprisal last year because they refi. They took $200K out of the place. I’d even say they overpaid for the place in 2000. Now they’ve got a $700K mortgage and they’re trying to sell.
Who realistically can afford a $700K mortgage? I’m a lawyer and my SO is a lawyer also. We have good jobs and our combined incomes are well over $100K a year. We’re a bit heavy on the student loans, but those aside, we still couldn’t afford a $700K house in Edgewater.
Prices are still crazy high in Chicago. It’s no where near as crazy as the coasts, but there are some serious affordibilty issues here too.
Yes, it is going to be so interesting watching how Chicago weathers this. Considering the rest of the Midwest is already experiencing so much pain, can we be far behind?
Oh, I recently heard that the precinct adjacent to the Granville Red Line stop voted itself dry in an effort to clean up the area in advance of the large project on Broadway there. Thorndale still has a pesky crowd at the liqour store there though.
Check this out for an increase:
For the edgewater home, the sale previous to the one in 2000 was for $150k in 1992.
so
1992 150k
2000 630k
2006 929k (asking price, lowered from 975k)
nope no bubble here
I follow the Edgewater neighborhood in Chicago very closely, and because i read this blog, i am extremely conscious of price trends. While you can’t expect to sell a POS quickly (unless it’s priced very cheaply), nice houses are selling at record prices.
The most expensive house ever to sell in this neighborhood closed on November, 2006 at $1,405,000, with an asking price was $1,365,000 (yes, bidding war) and a marketing time of 11 days. The second most expensive house was $1,200,000, closing in July, 2006, with an asking of $1,035,000 (yes, bidding war) and marketing time of 12 days. In total, 7 houses have closed for over $1 million, five of them in 2006 and only one in 2005. One listing priced at $1,675,000 is currently under contract. Of the five sales over $1,000,000 in 2006, three were in bidding wars.
I have yet to see any weakness in single-family homes in this neighborhood (condos are another story altogether!).
The house referenced in this article was simply overpriced. A mediocre renovation, very close to Foster Avenue (a busy street). I predict that at the new price the house will sell nicely as there is not a lot of inventory in that neighborhood right now. I’ll let you know when it does sell.
Here’s a better link to a picture of the reference ‘Millinois Dollar Home’ in Edgewater:
http://www.cookcountyassessor.com/filings/searchflat//ParcelImage.asp?pin=14081270320000
Guess you have to throw in some added value for the magnificent landscaping and for the ability to borrow a cup of sugar, in dead winter, without going outside.
Dare I say that those bidding wars of July 2006 are OVER????
Chicago guy, as i mentioned, the record sale price in the neighborhood was in November, 2006 and involved a bidding war. I think this neighborhood in particular is one of very few where a bidding war might still occur.
Real estate is local, and in dense urban areas varies from block to block. Go three or four miles south to much more expensive neighborhoods (lincoln park, lakeview) and they have a large supply of new construction houses with prices from $1.75 millions to over $4,000,000 - i think bidding wars in those neighborhoods will be much less frequent.
I don’t doubt your numbers and figures. I just can’t wrap my head around that fact that people will pay over a million dollars for a home in Edgewater. That blows my mind but I guess it really shouldn’t. I lived five blocks north of Edgewater for over five years.
I don’t understand those bidding wars and how people can afford them. I don’t understand why anyone who could afford a million dollar house would purchase one in Edgewater. Call me crazy or stupid or naive or whatever but I’m a fairly well educated guy and I’m well versed in real estate. Being a lawyer I know more about the ins-and-outs of RE as opposed to just pricing.
The only answer I can settle upon is that there will always be a greater fool out there….almost always…unless they run out of GFs.
I live in Edgewater and I agree that it is nuts what these places are going for. If I had a million to spend, why wouldnt I go out to Barrington and get a nicer house, more land and probably lower property taxes as well. I think the market for places like the aforementioned is pretty scarce. 10-15 years ago when they were 150k, sure they were a heckuva bargain. Now, you’d have to be nuts.
Thank you for the info. Clearly Lakewood-Balmoral remains a bright spot. Several new condos, straddling Broadway, appear to have been put on the back burner or slowed considerably. You’re right, the condo market in particular really bears close watching as this spring might be a local turning point of sorts.
Edgewater John, I just went to your website and will bookmark it. I went to an open house at 5440 Sheridan. I would say I was shocked at how lame these units are, but unfortunately i’ve come to expect dinky, poorly constructed, poorly laid out units at all new developments, so really it was just business as usual. 14 units out of 48 are still listed on MLS, but that doesn’t mean the rest have sold, necessarily.
According to the developer/realtor shill at YoChicago.com, the 5440 Sheridan has a new design. Which is great, of course!!! Check it out here:
http://yochicago.com/today/architecture/3855_3855/
Ah yes, but I think you saw 5430 Sheridan, 5440 is still an empty lot but a 17 story condo tower is planned for the parcel - an issue of much contention in Edgewater.
Since you keep a close eye on the area, check out Catalpa Gardens - three condo towers on the 1100 block of west Catalpa squeezed between the el tracks and an alley? I heard rumors of iffy construction, and no one seems to believe they will all sell - ever.
According to charts I have seen we are right now @ Fall 03 price levels so It might be worth $800,000. The million days are Ova. I bet you that million dollar value appraisal that was done cause that’s what they needed for them to refi and take money out to buy a hummer or go away on vacation.. Now they are paying for it..HAA HAA
Here’s a picture of the million dollar Chicago house….It’s an old picture taken in 2000. It was taken shortly after the FB’s above purchased the home. Click on the camera icon to view the picture.
http://www.cookcountyassessor.com/filings/searchflat//search_res.asp?PIN1=14&PIN2=08&PIN3=127&PIN4=032&PIN5=&ClassSel=&ClassSel2=&pin_search=Search+By+PIN&pinhelp=Enter+Permanent+Index+Number+%28P.I.N.%29%0D%0A%0D%0ASearch+by+entering+your+14+digit+Property+Index+Number+PIN+in+the+corresponding+boxes+in+the+Search+by+Property+Index+Number+function.+Your+PIN+can+be+found+on+your+Notice+of+Proposed+Assessed+Valuation%2C+or+on+your+tax+bill.+The+first+2+digits+should+be+entered+into+the+first+box%2C+the+second+2+in+the+second+box%2C+3+digits+in+each+of+the+third+and+fourth+boxes%2C+and+the+remaining+4+digits+in+the+last+box.+Once+you+have+entered+your+PIN%2C+click+once+on+the+Search+button.+This+will+bring+up+a+page+with+your+desired+PIN%2C+corresponding+address%2C+class+code%2C+neighborhood%2C+assessed+value%2C+and+city.&pin=1408127032
I remember more than a year ago people were talking on here about chasing the market down. it’s happening. with no savings and little wage growth, how long can this go on? as long as the stock market still is going up?
Until their mortgages reset. Most of the people who bought in the last few years don’t have much, if anything, invested in the stock market. They will chase the market down, with some getting out just in time (i.e., getting just enough to cover the debt, selling costs, etc.), and others realizing too late that they are hopelessly upside down with only two options: foreclosure or trying to hold on to the place until the market recovers (a long time, and unlikely for those whose mortgages reset or have an unexpected expense, such as health care, divorce, job loss, etc.).
“In a couple of weeks, it will be for sale again, she said, though she’s holding on to her price, which she says is reasonable. ‘I don’t know where their hesitancy comes from,’ she said.”
I BET that the old Dutch TULIP Farmers that were making Fortunes, had thoughs similar to Mary Jo’s comment… ON the Downside of the PEAK.
Prices by neighborhood *pdf warning*
Based on that link it looks like prices in most neighborhoods are increasing. However, I notice that the median prices the Chicago Tribune publishes vary alot from month to month. I think this must be because the number of transactions is fairly small and can be swayed by closings in one new condominium development, for instance.
If there is a trend, the more expensive neighborhoods seem to be fairing poorly compared to the less expensive neighborhoods.
The other condo i’m watching now is in the near north side. The asshats who bought it in 2003 paid $530K. They put it on the market 30 months later for $775K. That’s appreciation of $2,800K a month!
Of course, their crappy loft won’t ever sell for 3/4 of a million dollars so they lowered the price after one month to $699,000. It hasn’t sold yet.
I hope they can sell it, or refi, before the ARM resets at 36 months. Talk about trying to beat the clock!! I hope they lose everything and go into foreclosure. Now I’m just bitter.
I’m starting to see a lot of homes for sale on Craigslist by you know who…..real estate licensed owner. Rushing for Exit.
(That 70% observation is a good point. Some sort of natural, or in the current environment, an unnatural limit?)
Owner occupancy is higher in some parts of Europe, ie. Italy where many own condos. The difference is that those in their 20s are more likely to live at home — fewer renters, not more homeowners.
Bottom line — there is no reason to buy before marriage and kids (or a decision that one will likely remain unmarried and without kids) and certainty where you want to live long term. The only possible growth in homeownership is among less well off families. And growing that by having them overpay using loans they cannot afford will turn to have been a bad decision.
This analysis is very 1990s and unsophisticated. You have to buy as soon as possible, regardless of the above considerations, or risk being priced out forever!
Oh wait, now I’m the one who sounds dated.
Just as a stab at it, I’d say the 70% number is probably a function inverse to mobility; i.e. you might decide you’d rather live elsewhere; you might get a run-up in pay and decide you’d like to live in a more preferable spot. The end effect is the same.
WT Economist - If I used your sage advice back in 1990 I probably would be better off. I bought a house, partially because I got a 16% raise and partially because I thought I’d like to have a wife and being a home owner would be an attraction. Never got married and sold that house for a loss in 1996. If I stayed put, my rent payments would have been $475. My house payments were above $900 over 6 years. I would have been better off renting! My dad was involved in real estate 2 or 3 decades earlier than that and he simply told me that I was stubborn and had to learn the hard way. I did.
Remember all this unwinding is happening under continuing loose credit and low interest rates. Imagine what happens if rates increase just 1-2%? At this point we are just working through the reverse in psychology. When fundamentals return it will be even worse.
Yup, and my money is on the prices down/rates up trend to accelerate now that MBS bag holders are finally figuring out they’ve been swindled. Elections are done, Iraq isn’t, football’s over — there is no good news out there at all and plenty of dreary days in which to focus on the Grim Reaper of Mortgage Debt shuffling and clanking our way. ‘Ol Bob Marley had a picnic in the park compared to what a lot of these FBs will be seeing in their dreams and in their mail.
Txchick (or anyone else who knows Texas well), if you’re out there, do you have any insight into the Austin market? I have a close friend who’s moved out of town and has to sell his house. Thanks in advance for any info.
Update on my posting concerning a fancy looking invitation card I received from DH Horton about a month ago, concerning a new townhouse complex in Ventura called “Oceala”. I threw the card away but yesterday, my wife and I decided to take a drive to the Channel Islands Marina and, driving down Victoria after leaving the 101, I noticed the signs pointing to “Oceala”, was curious to see what I am missing by not buying one of DH Horton’s grossly over-priced crap boxes and turned off and went looking.
Well, folks. It isn’t a new complex. In fact it isn’t even built! The fancy card from DH Horton was a sales come on. All I saw was a portable sales office and a whole bunch of heavy duty construction equipment. The road leading into “Oceala” didn’t go anywhere because there was nowhere to go. I just wasn’t in the mood to hear some realtorwhore sales crap about, “Now is the time to buy,” and “These will not last long,” so I didn’t go in. Anyway, she/he would be pissing against the wind because I ain’t buying.
However, aside from the DH Horton’s hype b.s and their lies because the invitation to take a look at their “Oceala” project, gave the impression these townhouses were ready to be occupied. Touch of deception I felt. (Gee! That’s a new one!) Had I driven 100 miles with the intention of possibly buying, I would have been really pissed off but seeing as I was only out for a drive it didn’t matter. Btw, the card said “beach close” as opposed to “close to the beach”. The beach was about 2 miles away. If you want to visit the part of the beach they refer to, you had better walk from your yet-to-be-built townhouse because in the summer you sure as hell will not get a parking space.
The point is, after seeing this unbuilt complex, we decided to drive around. Wow!! Yes, two exclamation marks. Count ‘em. This area was almost totally agricultural land a few years ago. Not anymore. It a place with a mixed community. Mostly latino. At least 80% of which, and possibly higher, are lower paid workers. I think my jaw dropped just looking at what has taken place in the area and, more to the point, what IS STILL taking place. There is construction going on EVERYWHERE.
Masses of large developments in various stages of completion from DH Horton’s come-on “Oreala” with no buildings to other places being cleaned of building debris as properties are completed. Here and there are empty fields which I suspect, Oxnard has zoned as agricultural land only or the owner isn’t interested in seeing his land covered with tacky, wall to wall sh*tboxes or didn’t have the right city “connections” to get his land re-zoned. There are also lot of old Japanese farmers in Ventura who have lived there from the 20’s, 30’s and 40’s and I suspect, don’t want to “join the craziness” and prefer their old way of life instead of adding a few million pieces of green paper to their bank accounts. Most of these farmers have enough money stashed anyway.
My wife just sat looking shaking her head as we passed new building after new building, then (and she’s a sensible retired CPA AND lawyer) she said, “This is total insanity. Where are the people going to come from to buy these places even if they could afford them?” Then a moments silence. Then she said added, “Very sad. This is not the America I grew up in (born and raised in Michigan) and it’s not the America I want to live in. This is nothing but out of control greed and a lot of people are going to get hurt.” A few more moments of silence and then this from a lady I haven’t heard curse more than 2 or 3 times in 15 years. “This country is fu*ked. All we seem to be doing is shuffling and printing money.”
It’s going to be interesting watching what happens in Southern California. I’m hoping for the best but expecting a serious crunch. I’m hoping that the genius in the White House has some brilliant plan which will get the US out of the financial hole which has been dug on his watch and which is STILL being dug on his watch. Unfortunately, the prior financial history of the genius in the White House is not a good indicator of where we are heading….
Mike: I think my wife is getting tired of hearing me utter those exact same phrases every day! Each morning and evening we pass by thousands (literally) of units under construction. Despite all efforts, I cannot seem to just let go of these thoughts:
“This is total insanity. Where are the people going to come from to buy these places even if they could afford them?”
“This country is fu*ked. All we seem to be doing is shuffling and printing money.”
CA Guy
And, of course, the Oxnard story is just a small slice of the craziness which is taking place all over callifornia (and other states). From what I hear, North San Diego County (where I lived for a couple of years) is just as bad. Temecula, Murrietta Springs, etc, have all gone nuts. Building everywhere. I don’t get it or am I missing something? NOTHING adds up. I could understand it if these properties being valued at $600,000 were being sold for $200,000 or even $250,000, then it’s a good way to get people in property and thus become government tax cows but this is total insanity. Far worse than the tech bubble because this could lead to a serious recession. In the tech bubble, the suckers got their bank accounts reamed and there was a slight recession - but this has all the marks of a horror story which could last much longer than many are predicting.
CA Guy,
I still think the USA is the greatest country in the world, but in the near foreseeable future, I totally concur with your wife’s sentiments. From some very recent conversations, I’m seeing signs even amongst commercial tenants of an ominous financial squeeze here in L.A.