“Right Now The Ownership Market Is In The Tank”
The Courier Post reports from New Jersey. “Anand Ramanathan was approaching the gas station where he normally fills up when he saw them, people dressed as dollar bills holding signs that said ‘Free Gas.’ ‘It’s a great thing, really,’ said Ramanathan, who chuckled at his good fortune as gas streamed into his car’s tank.”
“As hordes of drivers jockeyed for position at the pumps, they also got glossy, full-color advertisements from Beazer Homes, a national home builder that owns 10 residential developments in South Jersey.”
“The fact that companies such as Beazer Homes are offering incentives and, in some cases, doing it creatively to grab attention is a reflection on the state’s housing market, which cooled considerably in 2006, said Patrick O’Keefe, CEO of the New Jersey Builders Association.”
“The gas giveaway, it turns out, was Beazer’s kickoff to markdowns of another variety. Starting today and continuing through Sunday, the Atlanta-based company will give people who buy a Beazer home in New Jersey the opportunity to buy an upgrade such as a home theater, gourmet kitchen, finished basement or sun room for $1.”
“‘In recent months, we’ve offered greater incentives than in the prior three or four years,’ said Paul Schneier, president of Beazer Homes’s New Jersey division. ‘This is our best incentive yet.’ Beazer Homes saw new home orders fall nationally by 58 percent from 2005.”
“‘Two homes on my block have been up for sale for a while. In the past few years, they would have been sold by now,’ said Bobbi Ferrick of Collingswood.”
“Dave Butts, for one, hopes the region’s housing market rebounds, and soon. ‘I’d like to see it pick back up so I can sell my house and move out of the state,’ said Butts, who lives in Pine Hill. ‘I’m tired of the property taxes and high insurance costs here.’”
The Daily Times from Maryland. “James Shaw promised the sun and the moon and delivered. What he didn’t do was sell more than a few condominium units on the Crisfield waterfront before a sluggish national housing market hit bottom.”
“The fallout that followed landed the developer among civil cases in Harford County Circuit Court, where the Royal Bank America of Philadelphia in late January filed a confessed judgment against Shaw seeking $10.2 million to cover a construction loan and fees for the 23-unit Captain’s Galley condominium overlooking the Tangier Sound.”
“‘Everybody is offering incentives now; I did some of that, in Ocean City, units got $40,000 worth of furniture,’ said Thomas Monahan, a developer with projects in Crisfield, Salisbury and Ocean City. ‘But the market is coming around and I’m going to stop that. Market correction is over; prices likely are going up in the spring.’”
“At Captain Galley, units range between $400,000 and $1.2 million, and despite six sales since the development opened in August 2006, Shaw expects about a half-dozen contracts to close in the coming weeks. The money would generate revenue to push down the $10.2 million bank debt, he said.”
“A sluggish housing market last year stalled the fourth and final phase of the Harbour Light condominium complex in Crisfield, said Monahan. ‘Everybody got scared, paranoid,’ Monahan said. ‘Prices were rising so fast in 2004, 2005 and 2006.’”
The Gazette in Maryland. “Days before the first residents move into Rockville’s Town Square development, the project developer has taken more than a third of the development’s housing units off of the slumping condominium market, shifting them to rental apartments.”
“Having endured a year-long market slowdown, RD Rockville LLC has sold just 214 out of 644 units in Town Square, company officials confirmed last week.”
“‘When the condominium market was hot, everyone was saying this would sell out quickly,’ said Benjamin Harris Stonestreet, VP of construction for RD Rockville. ‘But there’s 644 condo units on this project. That’s a monumental undertaking.’”
“Until about a year ago, sales were clicking along, Stonestreet said. Throughout the summer of 2005, customers were buying condominiums at a brisk pace, basing their decisions on brochures they were picking up in a nearby sales trailer. Then winter hit and sales dropped. Company officials began banking on the post-holiday turnaround. Spring came and went and no such market shift occurred.”
“Now RD Rockville, like other condominium developers in the region, is offering incentives. Company officials confirmed that their sales representatives have given away free parking spaces that would have sold for $30,000 in a better market.”
“The condominium prices have not been lowered, company officials say. No rental prices had been set for the 200-plus rental units as of late last week. ‘All the analysts and experts say we should be leasing 15 to 20 units a week,’ Stonestreet said, before pausing to reflect. ‘I hope the experts are correct.’”
“The Town Square development is not the only construction project to suffer from the slumping market. In Montgomery County, condominium sales have declined from 2,050 in 2005 to 1,031 last year, according to William Rich, an expert in condominium markets.”
“‘In this case, I believe the developer is going to have to take a longer-term play than anticipated,’ Rich said. ‘He will have to possibly hold on to these units a couple years and then see if the conditions change.’”
“Last year, more than 13,000 condominium units throughout the Washington, D.C., metro area were taken off the market, according to Delta Associates numbers.”
“City and company officials downplay the import of the decision to rent hundreds of Town Square units. Markets fluctuate, they say, but the 12.5-acre, $352 million mixed-use development is too loaded with amenities to suffer the same fate of the last major redevelopment project in Town Center, the old Rockville Mall.”
“Referred to as the white elephant, the large federal urban-renewal project failed from the start, with its empty cornerstone buildings that stood glaringly vacant. Mayor Larry Giammo has repeatedly said the project failed because it did not account for market demands and how people lived.”
“Giammo and the City Council have bet heavily that Town Square will be different, roughly doubling the city’s bonding debt to pay for their end of the project. RD Rockville’s original plan called for only rental units, city officials say. At the request of the city, and encouraged by a rising market, the company eventually shifted the plan to 100 percent ownership.”
“‘We’re creating a downtown, a heart of a city where there used to be a blacktop parking lot,’ said Scott Ross, managing partner of RD Rockville.”
“Giammo downplayed RD Rockville’s shift to rental, saying it would not adversely impact the city. ‘I don’t see that as a setback,’ he said. ‘Right now the ownership market is in the tank, but the retail is still strong.’”
“Giammo downplayed RD Rockville’s shift to rental, saying it would not adversely impact the city. ‘I don’t see that as a setback,’ he said. ‘Right now the ownership market is in the tank, but the retail is still strong.’”
Right now the rental market is headed into the tank, as 2.7 million vacant housing units are expensive to keep on the market forever.
You can say that again! My street corner is now sporting a (badly) hand-lettered A-frame “For Rent” sign. I suspect the house it’s advertising belongs to one of the FBs in the neighborhood.
My landlord is tiptoeing around me for a whopping $25/month (2.3%) increase in my rent - the letter I got is almost sheepish.
OMG, what am I going to do? I’m already priced out of ownership. Am I now going to be priced out of renting too?
Read: it’s okay, we got rid of all those low-end renters years ago (when we cut off the power right before Christmas and told them to scram–remember? ah, the memories). They’ve all slogged off … somewhere … maybe NOVA. Anyway, some rich people will live here now and we’ll pretend that we have a real downtown and that the Rockville Mall was actually a good idea and that Rockville didn’t look like the site of a nuclear attack for decades.
Er… yeah. I wouldn’t live in downtown Rockville even for free. I looked at the website, but the cognitive dissonance was too much. Ultimately, these units could only be a bedroom for the Rockville Metro station … the problem is that Franconia-Springfield has more units, and they’re cheaper.
I can’t think of one reason to spend a million on anything in Crisfield, MD. It is a depressed area in more ways than one. It’s the armpit of Maryland.
Unless someone’s selling silver bullion.
I wouldn’t say Crisfield is the armpit of Maryland, it’s really a nice area on the water with plenty of great fishing. Generations have made their living off of the water and the scenery in the area is beautifull. The problem lies from “outsiders” who came in and took advantage of the peacefull way of life building $500K condos in a small town whose ave income might be $20K a year.
I hope all of those developers who wrecked a perfectly peacefull small town get burned for what they did. Crisfield just isn’t the same.
In this case, I believe the developer is going to have to take a longer-term play than anticipated
What’s that old saying amongst day traders?
“The definition of a long term play is a short term play gone wrong!”
“The definition of a long-term residential real estate investment is a flipper home purchase that won’t sell at 2005 prices.”
“‘In this case, I believe the developer is going to have to take a longer-term play than anticipated,’ Rich said. ‘He will have to possibly hold on to these units a couple years and then see if the conditions change.’”
Meanwhile, he’ll be slapped with so many liens that only bankruptcy protection will stop the spinning.
Does anyone know the status of Kara Homes?
Help- California people!
After living in Vegas for less than 3 months I have realized that I can not live here forever (probably not more than 2-3 years). In addition I see no value in Las Vegas real estate-at least for me-Vegas has turned into such a pit in the last 20 years it is unbelievable. But help is on the way-my company is letting me work in Vegas and LA(splitting time). I will probably rent a place in LA starting this summer but I eventually want to buy again in LA as I at least enjoy some things about LA (mainly the weather). What are the general feelings of when SoCal will be at a realistic level, if at all? Any body have any ideas about this?
Thanks boy and girls.
when price = 120x rent
just like the last 100+ years
Wow, that puts the value of my rented house at 234K, and it was purchased for 206K in 1986!
One room, one bedroom, one bath apt with no parking in Hermosa Beach CA for 1800.00 per month. Oh, by the way it is 50 years old.
lol. I remember when my buddy and I rented this dump in Hermosa a few years back…2bd 1ba…$1400/month…also 50 yrs old and no parking…and we were lucky to have it even if the water in our place smelled like rotten eggs! ha ha
Hey, at least we were walking distance to the bars
CA will almost certainly never be affordable if you figure 3X median income will get you a median home. But aside from that…. What I can’t understand is why in the world you would accept the prospect of going back… unless your hazard pay premium accounts for the cost differential AND all PAYS you the rest of the grief associated with living there.
Remarkable to me.
AZ- thats a fair question. I guess LA for me is the lesser of all evils. I have lived all over the country and in terms of weather, culture etc, for me LA is pretty good. I agree there is alot of nonsense there, ie traffic, ill. imigration(where dont you have that now adays?), homeless people and of course the ludicris house prices. Now it does help that I am single, I dont think I would want to raise a family there but what really blows my mind are all the people with kids in Vegas, to me that is crazy.
Any way, in a way you are right but hey where is a perfect place any more?, you might as well have great weather all year round and for me the weather in SoCal is as good as it gets.
Everyone is different. For me, life’s too short to waste any of it in LA.
Hey, compare that pay stub in NV to what the same one would look like in CA. It’s shocking. Pay special attn to the SIT and the MANY other assorted state taxes that appear.
If you’re around $120K you’ll be throwing away an extra $10K to live in LA. Factor that in when you do the calculations….
Is it worth $10k a year to not need air conditioning? Yes.
And you don’t need AC in SCAL?? Says who? Grnated is cooler than LV. Even so, aside from the (prohibitvely expensive) beach communities, you still need it here for close to half the year –espcially if you live in the “affordable” IE or high desert regions.
If you don’t want AC at all, try NCAL or the Pacific NW.
Well, if you can’t live close to the ocean in SoCal don’t bother living there at all. The climate in SoCal goes from near perfect to swealtering hellhole in about 20 miles. If you want to live in Phoenix or Las Vegas, live in Phoenix or Las Vegas. The IE is a poor substitute. If you don’t want to live in Phoenix or LV why would you want to live in the IE?
CA will almost certainly never be affordable if you figure 3X median income will get you a median home.
Beg to differ. This isn’t your typical boom, and the bust is going to be spectacular.
Try Chino or the IE area in 2 years. It will be cheep bring your own body armor and get use to kevlar underware.
Unless IE becomes as dangerous as Iraq, body armor will do you more harm than good. You’ll be more likely to die from heat exhaustion than from a bullet.
I don’t think there’s any material that keeps the heat in better than kevlar.
MD is now a peoples republic
council housing ?
ity Council have bet heavily that Town Square will be different, roughly doubling the city’s bonding debt to pay for their end of the project.
Maryland is under the delusion that they are experts at governance, government bureaucracy, etc. Okay, well at least Montgomery County is. Comes of being next to DC and full of wonks and career bureaucrats.
If you want really weird, try Howard County.
Maryland does some things well, and some things horribly (*cough* Baltimore Public Schools *cough*) although the horrible has a lot to do with corruption/intransigence at the top. But in the end, despite all their horn-tooting and auto-back-patting, their performance is rather average. It wouldn’t hurt them to try to learn from places that do it better, but that would, like, burst their bubble.
“‘In recent months, we’ve offered greater incentives than in the prior three or four years,’ said Paul Schneier, president of Beazer Homes’s New Jersey division. ‘This is our best incentive yet.’
Anyone care to predict when we’ll see “Employee pricing” being offered by the builders to the public. We saw that strategy from the US car makers a couple years ago.
By this summer. Gotta perk up those back-to-school sales…
They won’t need to do that until after the buying frenzy cools down from the “After Super Bowl” hot market activity.
Employee Pricing has been used by builders in the Cincinnati area on and off again since last summer.
I’m waiting for the buy one get one free sale.
I live in Rockville and there must be 20 condo projects in some stage of development. In fact I know of at least one right off Montrose Road where the converter/development has taken the properties off the market and returned all the deposits. The question I have is which one will go bankrupt first.
http://www.rockvilletownsquare.com/?gclid=CL-OxaS8oYoCFRNEUAodMmwXrQ
http://www.themontereycondos.com/ $300k to $700k
http://www.gallerycondo.com/rockvillecondos.htm $600k
http://www.whiteflintstation.com/?CMP=KNL-WFSGoogleMDCondosAvail&HBXPK=Condos%20Maryland&HBX_OU=50 $300K - $700k
http://www.tentenone.com/index.php?f=1 $300k - $600k
http://www.midtownbethesdanorth.com/MidtownBethesdaNorth/contact.html
http://www.thefitzatrockville.com/
http://www.sterlingcondo.com/ 300K to 900K
and these only represent some of the condos for sale in the area. Plus there must be 15 more condo projects in downtown Bethesda and Chevy Chase and then you have Gaithersburg/Germantown.
Most of these condos are what I consider starter homes for either people jsut starting to work or young couples recently married. To afford one of these $600k condos I am guessing that a person/couple should be making at least $200k a year. Also how many young people will be able to even afford the down payment?
I just don’t get it.
You’re not alone in not getting it. Used to be condos were an affordable alternative to an SFH, not any more. The prices you cite above have become all too typical nationwide. What it is about this fad of apartment style living that allows people to rationalize a lifetime of wage slavery is beyond me.
The condos on Long Island were priced higher than than single family homes for as long as I could remember. When we were first looking at houses in the early 90’s, we were advised to look for a condo, but couldn’t find anything that we could afford in the areas we were looking. We eventually left New York taking our high-priced public educations with us.
Downpayments are so unsophisticated.
Ya know, this is like fashion,
At first out of style,
And then back in style!
Got popcorn?
Neil
First payments as well, it would seem.
All of these ads feature beautiful, young, slim, fit people. Pot bellied boomers like me need not apply.
Missed one
http://www.royaltonatkingfarm.com
This is a conversion of some of the apartments at King Farm. They are right near the new day labor center.
Oh yeah, I want to live in King Farm. One artery in and out. Run red lights every morning. Look like Sam Saddriver (from the idiotic NHTSB public info campaign) but it’s not because I bought a lemon.
Holy s###! My parents sold a SFH in Rockville for $153,000 in 1997, on a largish lot with nice trees on a quiet road (Ritchie Parkway). $600K for attached housing in … Rockville?! As Michael Stipe sang, “Don’t go back to Rockville/And waste another year.”
My mother noticed back in the mid-1990’s that there was a serious premium paid in Maryland for “new” houses even though the new houses being built were crap. Walls? Think chipboard. Tyvek? How about tar paper? Saw some “house farms” going up in rural Montgy back in the 1990’s … C.R.A.P.
(It was a disaster for the county, too, running up costs and reducing tax-base-cushion farmland. And then there was that scandal with the dairy farm. That was the one case where I would say f*** the IRS. As soon as the gov’t stole the farm and gave it to a developer, and the developer threw up mcmansions everywhere, Rockville’s sewers started flooding. The change in land use borked their storm water management. Also, no more local fresh milk.)
“No down payment needed.” - that’s what I heard from a mortgage broker in Vienna, VA yesterday. Today he sent me an email saying I am qualified for a cool $1M. (My wife and I are making less than $200K.) Looks like the craziness will still go on for a while.
““Dave Butts, for one, hopes the region’s housing market rebounds, and soon. ‘I’d like to see it pick back up so I can sell my house and move out of the state,’ said Butts, who lives in Pine Hill. ‘I’m tired of the property taxes and high insurance costs here.’”
Way to go Mr Butts….leave those property taxes and High Insurance costs to the next Jackass.
I bet he was tired of paying rent and bought. Now he’s tired of property taxes and insurance. Haha. Way to think this out Mr. Butts.
As the greatest fool spans the horizon with his 150x zeiss spotting binoculars trying in vain to find just one greater fool!
Ya stupid Butt! If your chocking on them taxes and insurance (which you should have known of when you bought) what makes you think your different than any other moron. Oh, yeah.. you didn’t think it through and they are LMAO!
It is so amusing to see these stupid greedy fliper junkies wake up with no more dope and say “WOW This place is really expensive!”
As if they didn’t have all the cost information at thier fingertips before spending a huge fraction of a million dollars they didn’t have! Will never have and could never hope to have.
“A fools lenders money will soon be parted!”
Let me correct the typo for the newspaper…
“James Shaw promised the sun and the moon and delivered. What he didn’t do was sell more than a few condominium units on the Crisfield waterfront before a sluggish national housing market hit Mr Shaw’s bottom.”
roflow
smack down,yo
Can you guys see this?
https://image.minyanville.com/assets/File/sg376147.gif
Looks like a bear flag to me on the longer term chart.
Yes, can see it. Do you mean “bear flag” because the recent run-up failed to reach the descending diagonal that connects the last two tops? “Bear” with me, I don’t know chart stuff.
Great visuals here! I’m going to adopt this one. “It May Be that the Only Purpose for Your Life was to Serve as a Warning to Others.”
http://www.itulip.com/forums/showthread.php?t=920
“Its systems for screening subprime borrowers and for assessing the default risk they posed were flawed.”
Is this rocket science people? People who have a history of not paying their bills are not going to change. Isn’t that what the credit score is? Not sure what kind of system they are useing for risk management but it is surely out dated.Would you loan money to people with poor credit? Personally I would not loan them 50 bucks if they have ever stiffed someone on a loan. How in the world do you loan someone 500k who has sh@tty credit?
You are absolutely right. The worst borrowers I ever had were people I lent to on a motto of “Give trailer trash a chance.” I gave them a chance and they blew it at my expense, but I do know that it doesn’t take a lot of paperwork to determine up front who is going to repay.
txchick: I love that one. Those posters are Demotivators from Despair. They have quite a few good ones.
http://despair.com/
back from running errands, (I work from home most of the time, so I don’t drive around every day) MANY new “for sales” signs, some streets have more houses with signs than without.
I like the for sale signs that are handwritten, too cheap to buy a sign? A lot of hoa’s are not allowing signs in the yard. You often see them in the windows of the unit.
an open houses on weekdays,,,, nothing says desperation like an open house on wed/sat and sunday..
LEND sinking $1.00 so far today. Any bombshells ready to explode? What I like about sub-prime is any one of them issues any bad news and they all get clobbered, it’s contagious… and there’s likely to be a lot of bad news for a while. And… The MSM is bashing them ruthlessly now, which adds to the bearishness…
NEW is collapsing again today. Could they be headed for bankruptcy so soon?
““Days before the first residents move into Rockville’s Town Square development, the project developer has taken more than a third of the development’s housing units off of the slumping condominium market, shifting them to rental apartments.””
Ewwwwww, how must the ‘home owners’ feel…to have to live next door to (shudder!) RENTERS. No one will want to come to dinner parties with RENTERS wandering the halls. Gross.
“What he didn’t do was sell more than a few condos … before a sluggish national housing market hit bottom.”
PUH-LEEZ ! He has lots of time left to sell them before it hits bottom.
Its gotten to the point I don’t even get worked up about the way we can set a new bottom every month.
But I see buyers leaving this area…
Down payment requirements increasing.
The MBS bond market is trying its best to imitate an olympic diver too:
http://www.eurobondonline.com/abx-HE-BBB-06-2.Htm
Got popcorn?
Neil
Even the AAA’s going limp. This is going to be fun.
The “appetite” for the bonds at all grades has been lost.
I’ve heard rumors that “nuclear waste” has gone from trading at 50 to 65 cents on the dollar to 17 to 25 cents on the dollar. Can anyone confirm? (To say the least, volume in the sub-sub-sub-prime area has fallen off a cliff.)
Small drop in stocks? How the &*%!! can we got this long with a 2% dip? Alas, I think the first one we see won’t stop in single digits…
As long as you’re ready, it will be loads of fun. 
Got popcorn?
Neil
America better call the Orkin pest control man because the are thousands of these pesky white elephants hiding under rugs all over the frigging COUNTRY !
“Referred to as the white elephant, the large federal urban-renewal project failed from the start, with its empty cornerstone buildings that stood glaringly vacant. Mayor Larry Giammo has repeatedly said the project failed because it did not account for market demands and how people lived.”
“‘Everybody is offering incentives now; I did some of that, in Ocean City, units got $40,000 worth of furniture,’ said Thomas Monahan, a developer with projects in Crisfield, Salisbury and Ocean City. ‘But the market is coming around and I’m going to stop that. Market correction is over; prices likely are going up in the spring.’”
LMFAO…What a buffoon.
And you can bet some newbie appraisal hack rolled that non-realty furniture concession right into the sales price.
Exactly. I don’t know if he is delusional or just trying to use the scare tactic (buy now before those incentives go away and prices go up) to get people to buy now before he has to offer more incentives and/or lower the price.
Buffoon is right…
The supply of Ocean City buyers with decent credit has to be run through by now, and the white trash who vacation there can’t get liar loans so easily as of this week.
Guess nobody told him about the Great Credit Crunch.
Oh well, even a half-built condotel is easier on the eyes than those f*cking ponies next door. Assateague Island: the Eastern Seaboard’s most vicious mosquitoes.
There is a recent report in the Gazette.net regarding the Rockville Town Square Condominium developer converting condominiums into rental units
Friday, March 30, 2007
Slowdown in condo market prompts conversion of Rockville units to rentals
by Warren Parish | Staff Writer
E-mail this article \ Print this article
Citing sluggish sales, the residential developer in Rockville’s Town Square is shifting more than three-quarters of its units from condominiums to rentals, leaving some buyers to choose between switching buildings or tearing up their contracts.
Scott Ross, managing partner of RD Rockville LLC, the company developing the residential side of the $352 million mixed-use development in the heart of the city, said last week that all but one residential building would now be marketed as rental units.
Ross declined to disclose additional information, saying the press has been unfair in its coverage of the faulty sections of pavement on Maryland Avenue and Gibbs Street.
In February, RD Rockville scrapped a plan to sell all of its 644 Town Square units, deciding that more than one-third would be rented. According to numbers provided by company officials in February, RD Rockville had sold 77 condominium units in its other buildings now slated for rental.
Earlier this month, the company sent a letter to such purchasers, informing them of the decision.
Due to ‘‘very few sales,” states one letter, the developer decided that condominiums will ‘‘initially be rental units.”
The company is offering three options to buyers who purchased units in buildings now slated to open as rentals. They can either rent their selected units, buy a different unit in the Palladian — the one building still slated to go condominium — or walk away entirely.
‘‘We don’t like any of those options,” said C. Richard Lee of Rockville, whose mother, Pokuang, signed a purchase agreement for a unit in the Lunette building in October.
Speaking on behalf of his mother, who was out of the country on Monday, Lee said the company’s decision has left the family scrambling to find a home for her.
‘‘It’s not like we’re getting an incentive to move into another unit,” he said, pointing out that the Palladian space offered in exchange for the Lunette unit has a less attractive view and costs more.
Other buyers in the rental buildings who face the same dilemma have criticized the decision, saying lower rates of ownership could hurt their investment.
Admitting the market has slowed since the winter of 2005, city and company officials have predicted long-term success for the 12.5-acre residential and retail development that features a new county library and a public square.
RD Rockville’s original plan called for only rental units, city officials say. At the request of the city, and encouraged by a rising market, the company eventually shifted the plan to 100 percent ownership.
Just 152 out of 644 units are now slated to be owner-occupied. Residents began moving into the Palladian earlier this month.
http://www.gazette.net/stories/033007/businew203324_32363.shtml