“Sellers Are Waiting For Buyers To Offer More”
A report from the Courier Journal. “The number of Kentuckians buying homes reached an all-time high last year. But some of those buyers are having trouble keeping up with the payments. One in every 57 residential mortgages across Kentucky, nearly 2 percent, was in foreclosure last summer, according to the national Mortgage Bankers Association.”
“In Indiana, the rate was nearly 3 percent, putting it second in the nation behind Ohio. Kentucky was fifth, behind Michigan and Katrina-ravaged Mississippi.”
“In Louisville, there’s been a flurry of foreclosure sales, Jefferson Circuit Court ordered a record-tying 2,620 sales last year and is on a pace to set an all-time high this year. ‘We are scheduling 125 parcels every other Tuesday for 2007,’ said Daniel T. Albers Sr., master commissioner for Jefferson Circuit Court. ‘If this holds for the year, we will schedule 3,125 parcels this year.’”
“Lenders don’t want to ’set people up to fail,’ said Chris Evans, president of the Mortgage Bankers Association of Kentucky. ‘On the other hand, you do have to reach out to different segments of the market and give them a little bit broader guidelines and a little bit broader underwriting approval to get them in a home.’”
The Journal Gazette from Indiana. “Complex real estate deals involving more than 100 Fort Wayne houses appear similar to transactions that have spawned lawsuits and federal indictments in other cities.”
“In March 2006, Mel Hochstetler was selling the last of his five rental homes when he was approached by Jeff Radabaugh, he said. Hochstetler ccepted Radabaugh’s offer to option the property. Two weeks later, Radabaugh had a buyer lined up, and closed on the house.”
“‘The only thing I can say about that closing is I don’t know who bought it in the end,’ he said. ‘I think it changed hands at least twice while we were sitting around the table. I was aware that it appeared there was an inflated price on the sale,’ Hochstetler said. ‘But I got my money and the check didn’t bounce, and I left it go at that.’”
The Daily Telegram from Michigan. “Home mortgage foreclosure is the only business on the increase at the Lenawee County Register of Deeds office, department head Vicki Daniels reported Tuesday to county commissioners. Deed transfers and mortgage recordings declined for the second year in a row during 2006, she said. The slowdown has worsened since the start of this year, she added.”
“One day last week only 30 documents came into her office, she said, a fraction of the normal volume. ‘We really went down, except for the foreclosures,’ she said.”
“Rather than lowering prices, most sellers are holding on longer and waiting for buyers to offer more, said equalization department director Martin Marshall. Buyers are also in a waiting mood, he said, expecting prices to eventually come down.”
The Pantagraph from Illinois. “Real estate agents have repeatedly said Bloomington-Normal has a strong housing market. Whether residents agree clearly depends on whether they’re trying to buy or sell.”
“Larry Bloyd is a frustrated home seller. For nearly five months, the Normal man has been waiting patiently for his bi-level home on Nottingham Chase to sell. The three-bedroom house has been on the market since last fall, far longer than the two months it took to sell his last home seven years ago.”
“‘After this long, I have no clue,’ Bloyd said. ‘I’m sure we’re not the only ones in this predicament either. It’s definitely a buyer’s market,’ Bloyd said. ‘We’ve dropped our price.’”
“Meanwhile, Philip Blaxton is a hopeful home buyer. The Bloomington man and his wife have been house-hunting in the Twin Cities for about two months. They’re excited about the prospect of a good deal and patient enough to wait for the right house at the right price.”
“‘I’ve noticed the prices going down. We’ve been watching a few specific houses, and those prices have been slowly dropping,’ Blaxton said. ‘A lot of the houses we’ve been looking at have been on the market for more than a little bit of time.’”
“Blaxton said he sees more for sale signs than sold signs outside of houses. A handful of houses that were for sale when he moved to Bloomington about eight months ago still are for sale today. He’s encouraged by his observations because he hopes it means a seller will negotiate more on price when the couple is ready to buy. But he also worries about what might happen five or 10 years down the road if they want to sell.”
“‘We’ve had a long run here with a great housing market, but it seems to be cooling off,’ Blaxton said. ‘How long is that cooling off going to continue and how will that affect the future?’”
The Pioneer Press from Minnesota. “Private boat docks on a lake stocked with walleye, hiking trails, trophy home designs with some lots nearly the size of football fields. What’s for the wealthy not to love about Spring Lake Estates? That’s what Toll Brothers is trying to figure out.”
“The national luxury home builder, which entered the Twin Cities market just two years ago, is re-evaluating one of its three developments in the area, saying Spring Lake Estates, southwest of Minneapolis in Prior Lake, is not attracting buyers as planned.”
“Toll Brothers Inc. won’t say whether it will pull out of the 120-acre Spring Lake project it opened last March with Edina-based Arcon Development Inc. Toll, which owns 42 of the 120 lots there, has sold just five homes.”
“Homes range in price from $545,000 to the $1.4 million estate house with a wine grotto, an individually vented cigar room and a resort-like stone spa off the master bedroom.”
“‘We’re taking a good hard look at Spring Lake in terms of the position of that,’ said Michael Noonan, president of Toll’s Minnesota division in Eagan. ‘Maybe it’s too expensive. Maybe it’s not matching up with what the area there is saying.’”
“Noonan said he suspects the Spring Lake Estates, sitting at the edge of the metro area, might simply be too far away for many buyers. Sitting in Toll’s spartan construction trailer at the site, project manager Jon Henson agreed. Toll’s lack of name recognition in the Twin Cities doesn’t help, he said.”
“‘In the Philadelphia market we’re the Mercedes of builders,’ quipped Henson.”
“The developer of Emerson Hills, a 35-unit condominium building on West St. Paul’s South Robert Street, had no luck luring preconstruction buyers last year. So the developer, Minneapolis-based Sherman & Associates, sounded out the city about converting the homes from owner-occupied to rental units.”
“No way, said city officials, who have invested $1.3 million in upfront tax-increment financing for the project. ‘When we redeveloped that block, we met extensively with neighbors, who said, ‘We have quite enough rental, and we’re not interested in having any more,’ West St. Paul Mayor John Zanmiller said. ‘We’re not interested in revisiting the rental issue, because we promised people, and we’re going to keep that promise.’”
“Now, just like many developers in today’s soft housing market, Sherman & Associates is turning to financial incentives.”
“The developer doesn’t want to reduce the condos’ sticker price, which ranges from $140,000 for a one-bedroom unit to $263,500 for a two-bedroom unit. Most of the condos are priced at less than $200,000, said Brad Goering, director of sales and marketing.”
“‘We chose value-added incentives in lieu of discounted prices, which would hurt us and the home-buying community,’ Goering said.”
“Loren Brueggeman, vice president of development for Sherman & Associates, said that, while he doesn’t regret getting involved in Emerson Hills, he doesn’t know when the housing market will turn around. ‘It’s just part of the business,’ Brueggeman said. ‘We’re all affected by the housing market.’”
“And it’s tough all over. Many cities have been forced to react to a flattening condo market and a rise in construction costs.”
‘ But he also worries about what might happen five or 10 years down the road if they want to sell. ‘We’ve had a long run here with a great housing market, but it seems to be cooling off,’ Blaxton said. ‘How long is that cooling off going to continue and how will that affect the future?’
I believe this is the first time I’ve read this exact sentiment expressed. Hmm.
‘U.S. Attorney for the Southern District of Indiana Susan Brooks’ office was handling so many mortgage fraud cases in the Indianapolis area that she set up a task force, bringing together federal prosecutors, the FBI, the Internal Revenue Service, the U.S. Postal Service Inspector’s Office and the U.S. Department of Housing and Urban Development’s Inspector General.’
‘So far, they have convicted 58 defendants, from mortgage brokers to appraisers to closing agents at title companies. ‘We are working hard, and we are getting federal prison time for most of our defendants,’ Brooks said. ‘These are professional people going to prison.’
‘But it almost feels like a losing battle because there is so much fraud, she said, citing new national statistics that say new cases are being prosecuted at a rate of one a day. ‘I can’t do enough fast enough,’ she said. ‘It’s unbelievable how rampant the fraud is.’
‘But it almost feels like a losing battle because there is so much fraud, she said, citing new national statistics that say new cases are being prosecuted at a rate of one a day. ‘I can’t do enough fast enough,’ she said. ‘It’s unbelievable how rampant the fraud is.’
Well, Susan, you can take heart from this. At least you’ll have some job security. And if it gets really bad, Congress will pass an amnesty bill, because that’s the answer to any crime that gets so entrenched and widespread.
Amnesty tends to be reserved for victimless crimes. Real Estate fraud has many victims, banks, investors in equities, mortgage insurance providers, buyers, sellers, and everybody who paid an inflated price for a home because housing was artificially inflated due to fraud. Ultimately, though, I suspect that the worst perprators will not be punished. They are the people who told first time buyers to lie because “everybody does it” and “it’s perfectly legal”. People tend to trust trained figures of authority, which, imo, means that those authority figures have an extra responsibility to make sure that the advice they give is sound. Of course, that is an ethical distinction, not a legal one.
Amnesty tends to be reserved for victimless crimes. Real Estate fraud has many victims, banks, investors in equities, mortgage insurance providers, buyers, sellers, and everybody who paid an inflated price for a home because housing was artificially inflated due to fraud. Ultimately, though, I suspect that the worst perprators will not be punished. They are the people who told first time buyers to lie because “everybody does it” and “it’s perfectly legal”. People tend to trust trained figures of authority, which, imo, means that those authority figures have an extra responsibility to make sure that the advice they give is sound. Of course, that is an ethical distinction, not a legal one.
Yes, authority figures should take extra responsibility, and once upon a time banks really were fiduciaries. These days though, I would count the banks and mortgage insurers among the perps, not the victims. Any one who originates or insures a no-doc “liar’s” loan is either stupid or cynical–possibly both.
What they need to do is work with the local television station showing people going to jail for white collor crime.
I don’t think there will be any “amnesty” legislation. Rather, you’ll see prosecutions where there are clear cut cases, enough prosecutorial resources, and identifiable defendants.
The question is — what kind of resources will prosecutors put behind identifying and pursuing mortgage fraud. How ardently was real-estate fraud pursued related to the S&L crisis/bailout of the late 80’s?
Ask Neil Bush.
Uh, oh. I have seen houses in my neighborhood languish on the market for a year or more, and then, presto, sell for prices that on-line municipal property records show are up to 35% higher than the listing price. Either bidding wars are back or somebody is helping himself to cash-back-at-closing, if you ask me. More foreclosures on the way….
“Either bidding wars are back or somebody is helping himself to cash-back-at-closing”
For the most part I think you will find “phantom bidding”
going on. Fake bids from realtors. Its a sure thing when you are asked “Can you go higher, because there is another offer” … Really now, would not the seller simple accept the highest offer.. and be done with it!
Even today during open houses the realtors keep saying ‘we expect this home to get multiple offers and move fast’. Yet the homes still wind up sitting for months. I put in an offer, and then all of sudden ‘There are is another offer?’.
They dont give out what the bids are or who made.
Buddy of mine interviewed a couble of realtors and is being told. Expect multiple bids. Yet Inventory is growing with sales are down 50%. What gives…
There is more to this than meets the eye!
If we had registered bidders that you and I can confirm/check on! Add penalties in the tens of thousands…
This phantom bidding would be over in a snap and prices would fall.
“Can you go higher, because there is another offer”
No, but I can go lower, or go away.
Sadly that did not happen! This is one of many reasons we have a bubble. It wont go away that easily. Change in interest rates or lender stardards will not change the behavior of realtor. This is a horrible practice that needs to be outlawed with heavy fines/fees and prevented as soon as possible.
Louie, I don’t know where you are located, but in this market, if a Realtor ™ tells you “there is another offer,” and urges you to change yours, lower it. And tell the SOB it will drop again each time he moves his lips (lies). Property owner is a matter of public record - go to the owner directly with the offer if at all possible.
Realtor: You know we do have another offer.
Me: Than I wont even waste my time with this offer, thanks bye.
Im located in SF Bay Area… most natives have moved out to Washington Oregon, Utah or else where…
Most new people are from the East Coast
and do believe “wrongly” everyone wants to live here.
But they dont understand the economy and really are stupid in thinking they can overpay because they are special “snobs” and their jobs will always be here to pay for their extreme $1M homes (which were only 1/3 10 years ago). Its really screwed up….
jtcc- You have to consider all the layers of “phantom bids” from buyers who did fall prey and did sign the
contracts because of fake bids. Interest rated reset and removal I/O loans will not be enough to stop the Realtors from using the oldest trick in the book.
It only takes one to stink up the neighborhood, and we are back to the races.
You really need to cleanse out the system to really get back to fundemental valuations in real estate.
Its really that f***ed up.
I know I’m only a voice in the chorus here…
But I agree, too many phantom bids. When a property has been on the market for months and then you expect me to believe multiple buyers jumped on at once?
I plan to reduce my bid as Bantering bear noted if I’m informed of a counter offer. I also plan to put on a *hard* end date to my countter-offer (with contengencies)… say 48 hours.
But we’re talking far future here.
I’m not ready to bid in 2007. I’m not even in the market. Its obvious that the smart thing to do is wait… so I shall.
Got popcorn?
Neil
Realtor: You know we do have another offer.
Me: Than I wont even waste my time with this offer, thanks bye.
Or rather, “I withdraw my offer. Oh, and please submit this new offer at 90% of my previous offer.”
This country is going over a cliff in a covered wagon and nobody gets it. WTF!! We really are a country of idiots.
I agree with Ben we have not often seen MSM quoting people who think the so-called cooling continue for five or ten years. Bad news for the I/O crowd whose payments accelerate into P&I at year ten.
“continue” –> “will continue”
http://tinyurl.com/29lhrs
Methinks I see another forced resignation of A US attorney in the near future.
http://news.yahoo.com/s/ap/20070226/ap_on_bi_ge/hong_kong_us_greenspan_1
Can you spell recession? Alan speaks.
Greenspan: “We are now well into the contraction period and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing,” he said.
Famous last words?
Something tells me this guy misses the limelight. You would think, having escaped with his head still on he would just shut up and let the blame fall on others.
AMEN, waaahoo. He needs to shut his blubbery lips and move on to another game. It is really sad watching old creeps like this try to hold onto the shreds of their former glory. The entire financial world used to wait with baited breath for his pronouncements, like pilgrims to the Oracle at Delphi. Except now, instead of being an oracle, he’s just an orifice.
Oops, I meant “bated”, not “baited”. Of course, my little faux pas might be closer to the truth.
Just like OJ?
Greenspan makes a true statement which, however, suggests by innuendo that the future will be the same as the recent past. The suggestion could be right. Most posters here think it is wrong. Probably Greenspan thinks it is wrong. He is very good at saying things that can’t really be argued with later, but that steer expectations in an inappropriate direction.
Agree with you az_lender. His future face-saving phrase is “so far.”
“Greenspan also said he has seen no economic spillover effects from the slowdown in the U.S. housing market”.
Is this guy just trying to cover his @ss or what?How can these leaders be so blind to what is going on. Do they ever get out of their mansions or limos to see what the rest of the world is doing?
More wisdom from Al… Fleckenstein’s column discusses this Greenspan quote from 4/8/05 re the “improvements” in subprime mortgage products:
“Innovation has brought about a multitude of new products, such as subprime loans and niche credit programs for immigrants. . . . With these advances in technology, lenders have taken advantage of credit-scoring models and other techniques for efficiently extending credit to a broader spectrum of consumers. . . . Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending . . . fostering constructive innovation that is both responsive to market demand and beneficial to consumers.”
http://tinyurl.com/2tbsjf
“Homes range in price from $545,000 to the $1.4 million estate house with a wine grotto, an individually vented cigar room and a resort-like stone spa off the master bedroom.”
You’ve got to be kidding. Could that be any more disgusting? And we wonder why the rest of the world hates us.
Got that right, Txchick. Here’s the Toll soundbite that bopped me over the head:
“In the Philadelphia market we’re the Mercedes of builders,” quipped Henson.
Sorry to say, Mr. Henson, but you’re not considered to be a Mercedes at all. In fact, a good friend of my family once worked for your company. In the Philadelphia area, in fact.
Your shoddy construction work inspired him to coin a new slogan about Toll Brothers houses:
Guaranteed for Five Years. Then They Fall Apart.
I just watched a neighbor chase the market down for over a year.Started off in sept 05 at 289 fsbo.Then hired a realtor and went to 265k. After several reductions and over a year on the market it sold in january 2007 for 210k.Classic example of chaseing the market down.
I had a friend who worked construction for Toll, too - back in the mid-80s. I won’t say what his nickname for them was (too derogatory for a public post).
Good. When they fall down maybe somebody can start building 3 bed/2 bath ranches on 1/4 acre lots.
Price those so that normal people can actually afford them, and something tells me they’d sell.
Wife’s aunt bought a Toll Bros. McMansion outside of Philly 2 years ago. On the side of the first house in the subdivision there was a 20′x10′ sign proclaiming TB to be liars, cheats and builders of low quality shacks. She bought there anyway. Great way to burn $650K.
“Guaranteed for Five Years. Then They Fall Apart.”
Change the five to a four, and then they are like Mercedes.
“And we wonder why the rest of the world hates us.”
Timeout: I love your posting TX but this line of argument gets to me. I don’t see a lot that the rest of the world is doing to make itself “Miss Congeniality”. Putting in $1.4 million homes in Prior Lake is ridiculous but I don’t think it has geo-political implications.
“Emerson Hills, a 35-unit condominium building on West St. Paul’s South Robert Street, had no luck luring preconstruction buyers last year.”
In all reality this piece of the story is even more outrageous than the Prior Lake monstrosities. South Robert Street dumps right in to St. Paul. This stretch of South Robert where West St. Paul and St. Paul meet has always been a $hithole. This area is referred to as the West Side. It is an all Hispanic area where the idea of condominiums is galactically stupid.
The world shouldn’t hate us for these silly developments. They should pity us.
Whatever. America is a symbol of greed and excess to many and apparently some of us either don’t care or add fuel to the fire with this kind of junk. Wonder if the average third world citizen feels he “needs” an “individually vented cigar room.” That truly makes me ill.
I thought the rest of the world hated us because of the Real Houswives of the OCC show.
LOL, it’s all the same disease, isnt’ it?
TXChick, you’re a daytrader! Isn’t that a group that is synonymous with greed and excess?
Huh? Most daytraders bust and lose all their money.
No. We’re associated with lack of productivity but that’s bogus too. We provide liquidity to the market (not that it is needed now, but it sure was in ‘01 and ‘02)
So, daytrading isn’t driven by greed. It’s just driven by the desire to provide liquidity? It seems to me that you are throwing some stones today while kicking aside some inconvenient truths. Go ahead and respond, “whatever”.
It’s no more driven by greed than you getting up and going to your job is. People who don’t daytrade don’t understand what it is. It’s a boring, mindless form of self-employment which pays perhaps $100K or more if you are really good, but in reality, most make $50K or less if they make anything at all. What people were doing in 1999 was not daytrading. What market makers do is daytrading.
I think this discussion proves a point. Judgements based on superficial details does nobody any good. Saying that our entire country deserves to be salted like Carthage because of the stupidity of the housing bubble idiots makes as little sense to me as painting all daytraders with a single brush makes to you.
Let’s leave the America hating to Mark, Marc Authier and Jas Jain. They seem to want to see the total annihilation of our entire system.
Never said that hate based on things like that were rational or that they applied to all Americans but it sure makes some people look bad.
I wonder what is the popular perception of the “value investors”, those that buy and hold for years, while picking up some dividend income along the way.
That’s the problem with the US. People are too nice - they forgive the obscenely wealthy for their obscene lifestyles.
I know I’ll get flamed for saying this, but I’d go further than taxchick. I’m in favor of a wealth tax and a stiffly progressive income tax and new luxury taxes that would control these peoples’ excesses.
Why do you guys think housebuilders have been having an orgy of building homes catering to the wealthy? Because that’s where the profit line is. The problem is, there isn’t enough of those ultra-wealthy people around to buy up all their product that they over-produced. This is one of the very things that led to this whole boom and bust in the first place. One of the things that will help keep booms and busts in the future under more control is to tax the ultrawealthy more.
I agree with you. I’ve complained nonstop about the 15 houses built for every idiot with $500K or more to spend.
DaniW, you need to read some Ayn Rand if you really believe that…
I’d suggest, DaniW that instead of one or more new taxes this same general result might be had by moving to a Fair Tax based on sales.
I was recently in Los Angeles and I was staying at a friend’s place in Highland/Redlands area. We checked out a Toll Brother’s development and we were both shocked by the asking price of these homes. They were asking in the 800s!
My friend who is a long time resident of the area, has no idea who in that area can afford them. Granted there are a number of wealthy people out there, but they already have bigger homes and bigger plots of lands than the Toll brother’s development.
Crazy to pay that so far out. 90 minutes on a good day to downtown LA on the 10. Yikes!
Wonder if the average third world citizen feels he “needs” an “individually vented cigar room.”
Yeah right, the average third world citizen can’t have one, only the local thug dictator is allowed. That’s much better.
I lived in a third world country for a couple years. No one needed an individually vented cigar room because they hadn’t yet been traumatized by the danger of second hand smoke. After dinner, it was cigars in the Living Room or on the patio….ah, the simple life!
I was down in Manta, Ecuador last week and it seems that lots of people had vented rooms for cigar smoking! They’re called “hogars sin ventanas”.
(Houses without windows)
Hey tx, how do you feel about Tim Blixseth building the worlds most expensive house?
I put that on here a few weeks ago. I thought we decided to pool our money on this blog and buy the beast
You know, I respect him quite a bit, as he is completely self made, but I think that idea is just way over the top.
I thought Bill Gates was the big kahuna of aircraft carrier sized homes?
“In all reality this piece of the story is even more outrageous than the Prior Lake monstrosities. South Robert Street dumps right in to St. Paul. This stretch of South Robert where West St. Paul and St. Paul meet has always been a $hithole. This area is referred to as the West Side. It is an all Hispanic area where the idea of condominiums is galactically stupid.”
Say it, brother. First time I drove past these Robert St. condos I broke out in hysterical laughter. They are so incongruous.
That area is a low-income working-class-going-downhill neighborhood - and they chose it to build those ‘New Urban’ condos-over-retail-shops structures. Priced higher than the perfectly decent 1940s-50s-era 1100-sq. foot 3BR ramblers filling the neighborhood, too. And who needs to live over a shop when the huge Signal Hills shopping center is just down the road in one direction, and downtown St. Paul in the opposite direction?
It’ll become more low-income rental housing soon enough - neighborhood protests be damned.
“And we wonder why the rest of the world hates us.”
don’t worry txchick57, after this housing debacle we’ll have our hands so full that we won’t have the time or the energy to interfere in other countrys’ affairs
“house with a wine grotto, an individually vented cigar room…And we wonder why the rest of the world hates us.”
If “the rest of the world hates us”, this would be a silly/stupid reason to do so. I don’t get it.
Basically, about half of the world subsists on a dollar a day or less, this country has 5% of the population and consumes 35%+ of the resources, a quarter of the world has limited access to daily clean drinking water, 50% illiteracy rate among women in India, and some fat white dude in Minnesota has to spend an extra half million to have not only a house but all this crap, sit on his leather ass and wait for a pizza to get delivered, bitching about welfare moms.
Bingo.
It is easy to agree with what t-bone writes. But the fact that this is treated as a uniquely American phenomenon on this board drives me nuts. If the U.S. is so awful, give me the name of a country we should emulate. Heck, give me a list of countries that we should emulate.
“about half of the world subsists on a dollar a day or less”
This is still true with much of China. But look what happens once the “dollar a day” leash is let loose. The Chinese have become the hungriest pigs at the trough in no time flat.
Somebody please point out a nation that the U.S. should strive to be like. Please!!!
Norway? LOL, that should get ya going.
Next!
can’t we all just get along;-)
I agree no nation is perfect, and the phenomenon of conspicous consumption among the newly (and old) rich is a basic part of human nature across the globe. There used to be an ethic in this country of downplaying one’s personal wealth-at least in the midwest, where I am from, which makes the fact that this story is from MN that much more sad. A new ethic, of finding new ways to ostentatiously display one’s wealth in the most brazen ways, seems to have taken hold on all classes of society-from “bling” on one’s car and jewelry at the lower socioeconomic end of the scale, to crap like this at the upper-middle end, and even more absurdity, such as trips to space, private islands, etc, at the high end. The virtue of modesty seems to have dropped off the face of the earth in this country. I know many retired.older farmers in Iowa who have a net worth of seveal million dollars, without exaggeration. These guys go out to eat once a week at a diner and spend 5 bucks, live in the same house they build 25 years ago, etc, partly out of habit, but also because suddenly buying a bunch of crzy toys and building a McMansion would sort of violate everything they ever stood for, and would be, if you can believe it, sort of looked down upon by their friends. Their idea of success is to leave a thriving business to their kids, and maybe donate a bunch of money to their church. The day of the quiet millionaire is coming to an end-people at all levels really seem to be obsessed with putting on a display. I realize that this is not the cause of worldwide poverty, but, god, do we have to be so smug about it? I mean do we really need to walk through a crowd of beggars with a wad o $100 bills in our hand?
“from “bling” on one’s car and jewelry at the lower socioeconomic end of the scale,”
Change socioeconomic to intellectual and you are spot on.
“I know many retired.older farmers in Iowa who have a net worth of seveal million dollars, without exaggeration. ”
And I bet they have pi$$ed and moaned their whole lives that the government should always do more for them. Farmers are notorious welfare gatherers. How much of that fortune did they earn and how much was expropriated from other hard workers? There are so few saints amongst us.
How about the original Native American nations? They were relatively peaceful with little inequality and lasted for thousands of years with a light environmental impact.
By contrast, in a little over 200 years the USA has brought the whole continent to the edge of environmental collapse, driven by an unsatiable thirst for growth and consumption.
As one native American has said: “Let’s get the U.S. out of America!”
I know a lot lot of people that have come into new money, and I’ve come to realize two things:
1 - There is always a steady fear that they may lose it all.
2 - They’re the most angry and selfish people I’ve ever met. (I’ve earned mine, screw the rest of you.)
More and more, I accept that my 1,000sf in a 1929 coal miner’s house ain’t too bad. Another closet I could use, a vented cigar room I could do without, and my wine (MD 20/20) is to be served very cold. (Actually the last one is a joke, I don’t drink wine.)
You perfectly described my former boss. Who also made a practice of collecting worker’s comp while working, and whose mother collected social security disability while working, and whose brother collected heating bill assistance while working. That whole family liked complain about people collecting welfare because everyone on welfare was just cheating the system, dontcha know.
America with a total population of 5% of the world consumes 35% of the resources but that 5% goes and attacks everyone else and wages unjustified and heartless wars and kills millions of people regularly all over the world pursuing its energy and resource needs. What America needs to do is to go to rehab. It needs to purge its fuel addiction.
What, exactly, is a wine grotto?
Now that I know one exists, I kinda feel that I need one.
In college, we used to go spelunking and drink beer. Is this a beer grotto?
That’s a very good question, ’stage.
I come from a wine-making family, and AFAIK, no one has a wine grotto. More info on this “amenity” would be appreciated.
I just googled it and it appears to be a refrigerator.
Oh, fridge! I got one of those. No need for another.
Maybe the got their taverns and caverns mixed up.
I figured the party was over when I read a recent Wine Spectator article showing guys having caves dug under their house and gunite sprayed on the walls for their 2,000 bottle wine cellar. And the pictures showing the whole family sitting around a table in this “cave” with a nice glass of red wine.
Kind of ridiculous. For one thing, I would certainly not want to sit around in anyone’s wine cellar. They are 50 degrees and damp and mouldy. Oh, I forgot. The cellar is really just there for show, and NOT for the proper storage of the wine…
I even saw a one million dollar house where they have a “wine grotto”, and there’s an ELEVATOR in the house just to get down to the cellar. WOW. What happened to stairs?
ok so it’s a big hole under your house with toxic $hit sprayed on the faux walls.
What will nouveau riche WT think of next?
Can’t wait to see what hip-hop culture does with the wine grotto when they get a clue that it’s the latest arriviste must-have. Somebody call me when Ludacris shows up on MTV Cribs hosting a tour of his wine grotto.
Good place to hide out when rivals are doing a drive by
‘A Cask of Amontillado’ comes to mind.
Just invite your realtor over for a nice drink…
A lady I know used to clean houses for a living. She used to clean the house of a lawyer/judge. She said they lived like pigs, and of course the lazy asses had to have an elevator.
“Homes range in price from $545,000 to the $1.4 million estate house with a wine grotto, an individually vented cigar room and a resort-like stone spa off the master bedroom.”
Hey, that’s a bargain! A house like that out here would cost more like ten times those numbers! Must be the location
And if you’ve ever lived with a cigar smoker, you would appreciate that individual venting… Excuse me, I have to go check the climate controls in my wine cellar.
I’m sure if we were to read about the “amenities” in the latest hedge fund master of the universe monuments to their greatness, we’d really heave.
I don’t think the rest of the world should hate “us”. But I have no problem with them hating people who have wine grottos, individually vented cigar rooms, and resort-like stone spas in their homes because, frankly, I’m not too fond of those people either.
I feel the same. And I don’t care how much money I have, if you’re gonna smoke on my property, it’s gonna be outside, away from the house be it rain, snow, sleet, or shine.
“Lenders don’t want to ’set people up to fail,’ said Chris Evans, president of the Mortgage Bankers Association of Kentucky. ‘On the other hand, you do have to reach out to different segments of the market…”
Translation: “Once I have my fees I don’t give a flying #$%# what happens.”
You got that right NYCityBoy
Chris Evans is just another RE self-serving moron. Look at Bowling Green. Typically, most entry level homes have been purchased by new homedebtors with over 100% LTVs. Typically, the higher end homes have been purchased by business owners with IOs. Any recent immigrants into Bowling Green (that would be Bosnians) who wanted a house now has at least one. And the builders keep on keeping on.
FED sure isn’t seeing the love these days. But that’s okay, my Jun $65 puts sure are:)
From the Indiana story:
“left Lincoln Title in November to start her own title company, Mad Anthony Title”…
So, when did you suspect something odd was going on?
Anyone out there betting against FMT? They report this Wednesday.
I’m going to start a short in the utilities index. TXU sold for uber billions? Sounds like a bell ringing to me.
““Toll Brothers Inc. won’t say whether it will pull out of the 120-acre Spring Lake project it opened last March with Edina-based Arcon Development Inc. Toll, which owns 42 of the 120 lots there, has sold just five homes.”
“Homes range in price from $545,000 to the $1.4 million estate house with a wine grotto, an individually vented cigar room and a resort-like stone spa off the master bedroom.”
LOL! Beverly Hills Mansion price at Walmart Salary !!!
BAAHAHHAHAHAHAHAHAHAH!
I would say someone make a horrorable mistake in demograpics…
Even typical buyers in California has a hard time affording a $500K home.
Just had a look at Minnesota income distribution. Median household 2005 was $52K, maybe able to afford those 1BR condos in the article but not the 2BR condos. Top 6% made $150K plus, not quite able to afford Toll’s lowest price of $545K. If I were earning $150K in Minnesota, I’d be spending my money on a wintertime Caribbean vacation, just like the lady from Saskatoon i wrote about last week. Who the heck is going to buy Toll’s $1M+ stuff? For that, you can get oceanfront in Maine, which is certainly no colder than MN.
But you can get a $500k loan and pay only $1,600/month. I saw it on the Internets!
Can you all see this? Verrryyy interesting . . .
https://image.minyanville.com/assets/FCK/File/CMOV%20Feb26.gif
can you explain this a little bit? i get that CDS in this case are “credit default swaps” (right?) but what are you getting out of the chart? thx
Look at the “worst performing” group and what is in it.
So this means the perceived risk of default on bonds issued by Countrywide, GMAS, and Residential Capital has suddenly increased? (Over what period?) Sorry to be dense, just trying to learn something.
Why univision? The rest are more sensible…
The ten year note is fetching a lot of investor bucks today–yielding 4.62% right now. The foreign investors are still bidding this POS, depreciating asset to the heavens. The masses are asses.
why not take 5.15% in the mm
I don’t get the risk free rate of a 10 year bond- it has tons of inflation /stagflation risk
The investors must think interest rates are headed down? Bonds like bad news. Recession ahead?
I grew up around and in Bloomington, and the Pantagraph is the local rag. The whole area has been ga-ga on housing for a long time. Even my mom has strange beliefs about housing prices and how “its different here”.
Some examples of what is happening right now in the Bloomington - Normal market (based on asking price from the MLS):
Single Family Homes
Total Properties 947
Average Price $237,043.05
Median Price $184,900.00
Avg Sq Ft 2,354
Price per Sq Ft $96.30
at $96.00 / sq foot you would think this place is a bargain! Truth be told the only real employers there are ISU and State Farm. If State Farm (which by the way over the last 5 years started doing investment banking) has a downturn that area is in serious trouble.
I recently went back to visit and the number of new developments (including $700K + McMansions) and strip malls was staggering. Oh yeah, compare those numbers above with the census 2000 numbers:
Median Price: $114,800.00
That’s a 60% run up in 6 years or so, or 10% a year. So even this place has been “bubbled”. as I am pretty sure that wages have not appreciated at this rate.
Bloomington is the A-hole of the country. Been there. Never going back.
You haven’t been to Atlantic City NJ then.
I have a good friend who is a professor at ISU. There is no way ISU professors can afford a $700K McMansion. ISU is not a big research university and doesn’t have the big bucks professors like at the Big Ten.
Is Bloomington anything like Champaign. When I lived in C-U, it was scattered with the empty carcasses of strip malls. I got the impression that every few years, someone would build a new strip mall. Stores would move to the new strip mall, and nothing would fill the old one. Rinse, repeat.
Champaign has had an absolutely frightening housing bubble the past several years. My friends used to live outside the city in the boons, and now the developments are in their back yard. They keep wondering who are all the people buying, since the greatest influx of population has been - you guessed it - low-income immigrants.
And there sits Champaign on the wide Illinois prairie, thousands of acres of open space for nice spacious SFHs, and they’re building attached housing on postage-stamp lots. It looks so flimsy as to blow down in the very next tornado passing through, too. The old houses are brick and stone. The new developments are all plastic siding.
OT, but interesting poll from the sun sentinel.
Legislators are searching for a reform plan so people buying homes at today’s sky-high prices don’t get socked with huge property tax bills. If they succeed, what will you do?
43.8%
I’ll stay in my home. (612 responses)
7.2%
I’ll downsize to a smaller home. (100 responses)
18.2%
I’ll buy a bigger home. (254 responses)
10.6%
I’ll buy my first home. (148 responses)
5.9%
I’ll continue to rent. (82 responses)
14.3%
I’ll sell my home and move away. (200 responses)
What people say they will do with their money, and what they actually do once at the bridge, can be two different things.
“Toll Brothers Inc. won’t say whether it will pull out of the 120-acre Spring Lake project it opened last March with Edina-based Arcon Development Inc. Toll, which owns 42 of the 120 lots there, has sold just five homes.”
They better Bake it, Boil it or Bar-B-Q it beacuse they’re gonna have to eat it . BEER ME !
I agree no nation is perfect, and the phenomenon of conspicous consumption among the newly (and old) rich is a basic part of human nature across the globe. There used to be an ethic in this country of downplaying one’s personal wealth-at least in the midwest, where I am from, which makes the fact that this story is from MN that much more sad. A new ethic, of finding new ways to ostentatiously display one’s wealth in the most brazen ways, seems to have taken hold on all classes of society-from “bling” on one’s car and jewelry at the lower socioeconomic end of the scale, to crap like this at the upper-middle end, and even more absurdity, such as trips to space, private islands, etc, at the high end. The virtue of modesty seems to have dropped off the face of the earth in this country. I know many retired.older farmers in Iowa who have a net worth of seveal million dollars, without exaggeration. These guys go out to eat once a week at a diner and spend 5 bucks, live in the same house they build 25 years ago, etc, partly out of habit, but also because suddenly buying a bunch of crzy toys and building a McMansion would sort of violate everything they ever stood for, and would be, if you can believe it, sort of looked down upon by their friends. Their idea of success is to leave a thriving business to their kids, and maybe donate a bunch of money to their church. The day of the quiet millionaire is coming to an end-people at all levels really seem to be obsessed with putting on a display. I realize that this is not the cause of worldwide poverty, but, god, do we have to be so smug about it? I mean do we really need to walk through a crowd of beggars with a wad o $100 bills in our hand?
The Eskimo spend all their wealth on yearly parties competing to see who can give away the largest amounts. There is some truth to what you say, but at the same time it is important to understand the extreme breadth of human experience.
In many ways I think you are wrong. Most of the conspicuous consumption is from people who are not particularly well off, they just want to appear that way. It’s “Keeping up with the Jonses” on steriods. It’s trying to be a movie star on a movie usher’s salary. Many are funding these fantasy wealth binges using borrowed money and betting the future will be better than today.
Most of the wealthy people I know do not show it off. Sure, they have nice cars, and excellent quality clothes and furnishings, they take nice vacations. They don’t show it off: they don’t need to.
P.S. we are talking working wealthy, not the uber rich.
Larry Bloyd is a frustrated home seller. For nearly five months, the Normal man has been waiting patiently for his bi-level home on Nottingham Chase to sell. The three-bedroom house has been on the market since last fall, far longer than the two months it took to sell his last home seven years ago.” “‘After this long, I have no clue,’ Bloyd said
I’m going to go out on a limb and guess this guy’s last statement was the first smart (er, accurate?) thing he’s said in a very long time.
Well it turns out a guy I work with owns NEW. He bought it for the dividends. After almost a year of me telling this guy about the housing bubble and Bad mortgage companies he buys NEW and won’t sell because it has ALREADY GONE DOWN 50%. Why do I bother?
At least I can vent here where people right or wrong think like me.
Thanks for all the good work Ben!!!
Yeah, that stopped someone who paid $300 for Yahoo from selling it at $150 too. ooops
cactus, I feel your pain. Sometimes it is not so much the likes of David Lereah, Cramer and other assorted lying shills that arouse our anger, but our friends and neighbors going along with the gig like Stepford Wives, with blank looks and open mouths, sometimes with s**teating grins. You tried to help them out, and they did exactly the opposite of what you advised and let you know, with glee. Without the agreement of mouthbreathers, there wouldn’t be bubbles and busts and hedge-fund faux palaces. That’s what gets to me.
It’s just the sheer idiocy of it all. For example, I know a guy locally who owns two places he meant to flip, but is now stuck with. I asked what he was renting them for. He tells me he “has to get” $1200 rent for each of them. If he rented for $950.00, he would have had them rented from day one. But no, 3 months later, they have not rented, because he “has to get”. If someone came along today and rented for 1200, he’d get 10,800 for the year. Had he rented for 950.00 from the get-go, he’d get $11,400 for the year. At what point does someone realize that “has to get” just doesn’t get it? They say we’ve got a serious problem with math education here in the US. Math, hell. People don’t even understand simple arithmetic.
but our friends and neighbors going along with the gig like Stepford Wives, with blank looks and open mouths, sometimes with s**teating grins. You tried to help them out, and they did exactly the opposite of what you advised and let you know, with glee.
Recently a good friend of mine stunned me by announcing she had purchased a home, w/o having sold her current residence. I had never had “The Conversation” with her, however she knew I was waiting to buy because of the slow slide in prices in our area. Additionally, her former BF - a realtor - came right out and told her that his business was DOA. Now them’s some pretty clear tea leaves, one would think.
Last week she called and told me that… ta-da!…her next door neighbor’s lawn just sprouted a For Sale sign. Naturally they are undercutting her wishing price. And this is still February. What’s going to happen in her ‘hood come March and April?
Exhibit B: I broke my own rule of not giving anyone advice when another friend told me her daughter was looking for a house. The daughter is a good kid, very responsible, has some cash in the bank due to lots of hard work. I felt bad for the kid. So I had The Conversation with her mom. Two days later, mom calls and tells me her other daughter, who is a newly minted realtor, is showing homes to daughter number 1.
I can just imagine their thought process: it’s a win-win situation for the two sisters. One gets a house, and the other gets a commission. My new rule re: Real Estate - don’t talk to anyone, period. Unless someone asks for my opinion. And then if they balk and start to rationalize, my response will be: I am not a real estate professional. You really should converse with someone who is qualified to opine.
philly, I understand. Don’t you wish you could just look at them when they balk and say “Well, then, you’re an idiot”?!!!
As to the story about the two daughters and the mom, that’s a heartbreaker. I don’t know the family involved, but it almost sounds as if the mother favors the realtor daughter and is willing to sacrifice the good kid to the realtor daughter. I’ve seen this happen in families. It’s not pretty. The good kid may have some misgivings, but gets pressured by the family and wants to make others happy, so goes along. Later, when good kid is underwater, gets dissed by family for not being responsible with her money. You know the people involved. Please tell me I’m wrong.
palm, I never even thought of that aspect. But now that you mention it, realtor daughter is the first-born, and very tight with mom. The dynamic you describe may very well be in play.
Is it just me, or are other posters also tripping over realtors in their personal network. About half the folks I know have a close relative who got their real estate license in the past four years.
Not tripping over any realtors in personal network at this time, thank God.
I have a new saying for the bubble: “Take away the keys. Friends don’t let friends buy houses”.
“…sellers are holding on longer and waiting for buyers to offer more…”
More? From what I’ve been reading it seems many sellers are getting any offers, so anything would technically be “more”.
“‘We chose value-added incentives in lieu of discounted prices, which would hurt us and the home-buying community,’ Goering said.”
Hear that, home buyers? A lower price would hurt you, lol.
For you OC fans, look at the piece posted today in Calculated Risk. A claim that 50% of the recent runup in prices was due to lax mortgage standards was printed in the OC Register.
There’s your first 50% off of current prices right there. The next 20-30% comes off when the appraisal and general fraud “comes to light”.
I’m surprised a newspaper printed that fact so early in the game. Good for them.
I rent in Anaheim, CA. When I moved here in 2001 from NYC the median home price was around $170.000. Now they’re going for over $600.000. What changed?. Lemme tell you:
Now, my neighborhood is FULL of Mexicans (nothing wrong with that …well, maybe there is .. read on..) who bought up most homes and started cramming in tenants. Right now I have about 14 people living in the house to my left and 10 in the house to my right. Garbage sprung up everywhere. Street-cart vendors selling all sorts of crappy ethnic food items walk up & down my street plying their ‘trade’ from stolen supermarket carts. The street is FULL of parked, shitty cars. Noisy kids yelling in Spanish run across my front lawn constantly. People mysteriously come and go at all hours of the day and night or hang-out for HOURS in parked cars having sex or drinking alcohol. Mexican music blares at all hours. My 4th of July American Flag is routinely stolen from my frontyard every year to the point that now I don’t even bother anymore. Instead, Mexican flags wave proudly all over the place. Most of my new neighbors seem to work at fast food joints or landscaping jobs. Most are illegally here and have no drivers license or insurance (I know because I speak perfect Spanish and talk to some).
Is this the famous freakin’ “American dream”? Well, I guess it is for them. I have nothing against Mexicans except I DON’T WANNA LIVE IN MEXICO.I feel like I’m paying First World rates to live in a ThirdWorld shithole. Like I’m an alien in my own fuckin country.
In NYC I would hear every conceivable language in the world yet it made the place feel cosmopolitan. This place on the other hand feels like 100% freakin Mexico because there is NO diversity at all.
So, to end my rant: who the fuck gave these people credit to buy a home while responsible people like myself and many others are holding-off, even while we pull in 3 times as much income as they do?.
Be thankful you’re renting and can move. Imo, changes like you are describing are almost irreversible.
You’re right Implosion. Thank God since I’m renting I can and will move. But many of my ex-neighbors were owners and I know they felt ‘pushed-out’. Now I question the wisdom of buying a home in California since this can happen to ANY area and seems to be the trend, except in the Million+ nabes.
la cucaracha la cucaracha !!! better start learnin it now….
The only reason anyone would own a home in Bloomington-Normal is if they worked at State Farm or at one of the Universities (Illinois State or Weslyan).