“Buyers Continue To Be Picky”
The Chicago Tribune reports from Illinois. “Though local observers say the slumbering Chicago housing market has started to stir, it snored right through January, when sales slid by nearly 11 percent from a year before, according to data released Tuesday by the Illinois Association of Realtors. It was the 10th consecutive month that sales declined in Chicago.”
“William Dahms, a North Side mortgage banker, has been trying to sell his condo in the Ravenswood Manor neighborhood since July and has dropped the price to $225,000 from $235,000. Dahms says he is firm on the current price, but acknowledges that buyers continue to be picky because they have many properties to choose from.”
“‘They’re a tough crowd,’ agrees Glen Ellyn agent Gaylyn Genovesi, who says buyers are turning up their noses at homes that are not pristine. She recently got a firm contract on a house that had been for sale for about a year, during which time it cascaded through several price cuts to settle at $449,000 from $517,000. After that, the owners got three offers.”
“In the Chicago area the biggest decline was in Grundy County, where home sales fell more than 15 percent. In DeKalb County, however, sales jumped 33 percent, though median prices slipped by 11 percent, according to the Illinois Realtors.”
The Journal Register from Illinois. “No matter how the numbers are added up, the prices people paid for homes in the Springfield market dropped in the final three months of 2006, for only the second time in 11 years.”
“The Danville Area Board of Realtors last year stopped providing sales figures to the national group after the community consistently was ranked at the bottom of the nationwide median-price index.”
“In addition to unfavorable publicity in national publications such as USA Today, association and city officials in Danville told the local newspaper early this year the rankings were not an accurate reflection of the housing market. ‘It’s all how you play with the numbers,’ Mayor Scott Eisenhauer said in the Commercial-News of Danville.”
The Flint Journal from Michigan. “By discounting prices on new houses by as much as $70,000, a group of area home builders hopes its deals are just too good to pass up despite the current sales slump.”
“Thirteen houses from several area builders are featured in the first ‘New Home Inventory Clearance Sale’ taking place this weekend and next. The event is sponsored by the Builders Association of Metro Flint.”
“The sale, featuring discounts as high as 21 percent, is prompted by the area’s slowdown of new house sales and builders’ desire to reduce inventory.”
“‘I’m not going to stand here and lie and say, ‘The housing industry is strong.’ It’s not. It’s weak,’ said Barry Simon, president of the Builders Association of Metro Flint. ‘But that’s to buyers’ advantage right now. There are houses out there some people couldn’t have bought two years ago that they can right now.’”
“Earlier this month, The Flint Journal reported that new housing starts in Genesee County collapsed in 2006, sinking to the lowest level in 14 years. Also, the average selling price dropped 16 percent compared to the previous year.”
“But the decline in house sales isn’t just in Genesee County and southeast Michigan. The sale comes just as a new U.S. Commerce Department report showed new house sales nationally fell last month by the biggest percentage in 13 years.”
“Lexington Properties has a home in Davison Township for sale for $239,900, down from $270,500. The company also has four others available at discounted prices, said Ted Macksey, managing partner for Lexington and president of the builders association.”
“‘This isn’t like a furniture store that has a sale every week or every month,’ Macksey said. ‘This is a true blue, incredible deal.’”
“And even the prices listed aren’t necessarily the lowest prices, Macksey said. ‘Builders are willing to make concessions, but we’re not foolish, and there is a point where we can’t go any further,’ Macksey said. ‘But we are encouraging buyers to make offers.’”
The Winona Daily News from Minnesota. “Last year, Winona County had 42 home foreclosures. The county is on track to have that many by spring this year. There have been 10 already this year with another 20 pending, putting the county on pace for a record increase, said County Recorder Bob Bambenek.”
“The county is poised to see ‘drastic changes,’ Bambenek told the county Board of Commissioners in a real estate market update Tuesday night.”
“The trend, largely a result of too much credit, isn’t unique to the area, or even the state, which saw a 46 percent increase in foreclosures between 2005 and 2006 and recorded 738 new ones in January, according to RealtyTrac.”
“In Fillmore County, foreclosures jumped 33 percent over that same period. In Houston County, they doubled. ‘It’s really scary,’ said Houston County Recorder Beverly Bauer. ‘A lot of people in the last few years have extended themselves very deeply.’”
“Bambenek said that of the foreclosures his office has handled this year, both completed and pending, several are associated with Internet lending companies. Some of those companies, which often deal in giving subprime loans to people with poor credit, have high interest rates and use overly complicated formulas to mask fees and other charges.”
“Bauer also said she’s seen an increase in recent years of mortgages from outside lenders, which she said she’s ‘leery about.’ ‘People have done online mortgages and all of a sudden had problems,’ she said. ‘They try to contact those people, huge corporations, and don’t get to talk to a real person. They come here and say, ‘What can we do?’ There isn’t much we can do besides giving them a copy of their foreclosure.’”
“Minnesota Attorney General Lori Swanson has suggested a series of bills to reform lending practices, some of which will be introduced in the Legislature in the coming weeks. Her agenda includes criminal penalties for those who consciously provide ‘grossly unsuitable’ loans, banning prepayment penalties, and requiring lenders to verify that borrowers can repay a loan.”
““And even the prices listed aren’t necessarily the lowest prices, Macksey said. ‘Builders are willing to make concessions, but we’re not foolish, and there is a point where we can’t go any further,’ Macksey said. ‘But we are encouraging buyers to make offers.’”
Mac is a complete loser…..take what the market offers.
Builders will go out of business… period.
Macksey is dead wrong if he thinks that he or other builders won’t sell at a loss to preserve cash flow. Subs have to be paid, after all, and a sitting spec home is a giant wad of cash waiting to be released.
Chuck Ponzi
http://www.socalbubble.com
Listen:
“we are encouraging buyers to make offers.’”
Which means? They aren’t getting ANY offers, period. Remember, its musical chairs time, “chairs” being buyers, and finding JUST ONE is going to be a feat for sellers in a deteriorating market.
“William Dahms … trying to sell … since July … dropped price … to $225K from $235K”
– wake up, Bill. That whopping 4.4% drop won’t have them beating a path to your door.
Dahm’s neighborhood, Ravenswood Manor, is considered somewhat locally desirable as it is located along the North Branch of the Chicago River and is home to state governor Rod Blagojevich. Immediately to its east is the gentrifying Lincoln Square neighborhood, while to the west is a rougher area (Albany Park) associated with increasing gang activity. Like all neighborhoods in Chicago, RE stretches the boundaries to suit their marketing needs. I almost bought a one bedroom in this area, next to the Rockwell ‘el station in 1997 for $113k. Except for some nice bungalows near the center of Ravenswood Manor, most stock is older brick apartments that have been converted.
No, a 4.4% drop won’t do the trick anymore here.
> next to the Rockwell ‘el station
Hah! I got arrested near there in 1972! It would have been a great episode of “Cops”
Grew up in the neighborhood and roamed the streets for years.
The area used to be the haunt of Ed Kelly - Commisioner of the Park district and “owner” of a lot of jobs.
Cool neighborhood, but I’m amazed to see how expensive it has gotten
No kidding it’s gotten expensive. My parents used to shop at Meyer’s in there on Lincoln back in the 1970s - back when the North Branch still stunk so bad.
Condo watching has now become a hobby, I just don’t think the trend is sustainable and I guess time will tell, huh? I hope I’m wrong and this isn’t another passing fad that will lead to another cycle of disinvestment in the city.
OT:
Waiting for the Global Financial Drama
“The script is complete. The dress rehearsal has been held. But the curtain has yet to go up on the first night of the Great Global Asset Price Collapse.
“Markets have recovered some composure after the last two days of February. The steep drops can now be described as a correction, not a collapse. But the payback from sustained overindulgence still awaits. That is not to argue that every index from Dow Jones to Topix via silver futures and Singapore property is going to suffer the same fate. There are elements of the local as well as the global in every national market. But make no mistake: the global liquidity bonanza is the pre-condition for almost every asset market excess.”
If there’s another sell-off tomorrow then we’ll get more trading curbs, viz. curtailed selling by NYSE edict. The short sellers were rrrrouted out for the time being today. probably won’t see them again for awhile. LOL.
I had posted a link… second try:
Waiting for the Global Financial Drama
‘It’s all how you play with the numbers,’ Mayor Scott Eisenhauer said in the Commercial-News of Danville.”
Really? Wow. That must be true. I bet you used that same logic when you fixed the election, because nobody in their right mind would possibly vote for you. That’s allegedly fixed the election.
The mere fact that, in the same article, they are consciously withholding information about their real estate market should be viewed as a massive red flag for real estate. If there’s that kind of dishonesty for what should be publicly-available information, then rigging an election might be a no-brainer.
Stock market liked this story:
http://biz.yahoo.com/ap/070301/apfn_housing_snap.html?.v=1
Investors in housing stocks were buoyed by news from the Office of Federal Housing Enterprise Oversight showing national home prices rose 1.1 percent in the fourth quarter compared with the third quarter. Year-over-year, prices rose 5.9 percent, down from the 7.7 percent increase in the third quarter.
“These data show that, on the whole, prices are still rising, albeit at a much slower pace,” said OFHEO Director James Lockhart, who added that the appreciation was “more in line with historical norms.” Prices were rising by more than 10 percent a quarter during the housing boom.
In February, an industry trade group reported that home prices fell sharply in the quarter, but OFHEO data is considered more reliable.
The somewhat positive news came on the heels of reports in the past two days that exacerbated concerns that the housing slump may extend longer than anticipated.
The Commerce Department said Thursday construction activity fell 0.8 percent in January, twice the decline expected by analysts. Spending on housing construction dropped 1.8 percent.
On Wednesday, investors learned that new-home sales fell 17 percent in January from the previous month, marking the biggest percentage decline in 13 years. Sales were down in all regions, with the West sliding fastest at 37.4 percent.
The housing market has struggled for 18 months after a five-year bull run led to a building spree and soaring home prices across the nation. With interest rates around historic lows, the market lured speculators hoping to turn a quick profit and other buyers who otherwise could not afford an expensive house.
Mortgage lenders accommodated the demand by offering innovative products, including interest-only loans and loans that cover 100 percent of the cost of the asset.
Defaults on loans to borrowers with poor credit ratings, known as subprime loans, spiked in recent months, and there is growing concern that more secure loans, those between the subprime and prime categories, could also see higher default rates.
In response, many mortgage companies have tightened their lending policies, which crimps demand in a sector already burdened by excess supply.
The OFHEO price data could ease some concerns among companies holding subprime loans, since the value of the underlying assets may not be falling as much as had been thought.
Meanwhile, Home Depot Inc., the largest home-improvement retailer, gave a bearish outlook for 2007 on Wednesday, partly blaming the housing market. Chief Executive Frank Blake said the company does not expect residential construction and the housing sector to improve until late in the second half of 2007 or early 2008.
he’ll get a raise and a pension
how about you-how’s your 07 going to shape up ?
prices are going down dude,not up
OT, First of March. Several of you predicted inventory explosion starting now. I have posted about watching Morro Bay inventory. SFH+condo under $600K hovered in the high 30’s (35 to 39 houses/condos) throughout the fall, then sank over the holidays, and continued to sink in Jan & Feb, low 2/28 was 29 units. Today (March 1) it’s 31 units. You called the turn, and I’ll bet it’s not just a blip.
OFHEO Director James Lockhart, expects govt to give him a raise for brown nosing Helicopter Ben.
People this is spin from the govt wanting to stop the slide and plug the leaks in the dam.
I found this report on Realtytimes from a Hinsdale, IL agent:
http://realtytimes.com/rtmcrcond/Illinois~Hinsdale~sharonagonwa
The high-end is getting slaughtered here.
Good find.
I run a 5 mile loop daily near Hinsdale. Virtually nothing is moving now, nor has, since last fall. If you drive along 55th st you’ll be bombarded with sign after sign of open houses/for sale. Real ugly yard litter considering the high end area, that’s for sure.
My sister’s house in neighboring Naperville is surrounded by a similar barrage of for sale signs. Only one home sold in last eight months over there, she said, with eleven being marketed since early fall. Incredible numbers for that area.
This summer we drove through Illinois (Naperville) on SR59 and I was amazed at the building going on in this area – high-rises that were either condos or apartments. I don’t know which, but this building could not be sustained. And this went on for miles. I could only imagine the SFHs that were for sale in the neatly manicured subdivisions off the main drag.
This particularly area of suburbia reminded me of those old video games where the same background keeps rolling past over and over again: Wal-mart, Target, Olive Garden, McDonald, Bed Bath & Beyond, Old Navy, etc., all the way into Wisconsin it seemed. Excuse the criticism, but what a soulless place.
It also amazes me how much tolerance there is in suburban Chicago for industrial detritus such as ugly warehouses, storage tanks, truck depots and the like - real nightmare artifacts of dinosaur industries which have no place in the first world in 2007.
At least, they can earn real money in warehouses, depots and the like, in opposite to the debt money in housing. Even the first world needs transportation.
Good description, B-hamster.
Naperville has two distinct personalities. There’s the inner city, old area,and the annexed southern area along 59. The inner-city area is striking and user friendly. The outer area is nasty and brutish. They’ve over-built and are suffering the consequences of too much too soon. Still, if you live within a 4-5 mile radius of downtown, you could do a lot worse. Money mag had it as their #2 best places to live with population under 250,000 for a reason.
Out of all fairness, I’ve heard great things about downtown N-ville. Unfortunately, we were relegated to newer part of the city, although we did get to visit family for a night.
Downtown Naperville is indeed a nice place. And it probably has a lot to do with the fact that it came about as its own city along the railroad and then much later got swallowed up by the suburban expansion of crap development. If you want a good suburb in Chicago, a good place to start is within a couple miles of a Metra rail station - all of their lines were once (and some still are!) freight lines that radiated from Chicago (railroad capital of the USA). Quality houses and solid neighborhoods. The type of place worth paying a small premium for when it comes to housing.
My one Naperville experience was Sullivan’s Steakhouse, and it was a damn good one.
Have you read the book Geography of Nowhere by James Howard Kunstler? I bet you know who he is. That’s pretty much all he writes about.
I really wonder what percent of the American people are bothered by what you described, the soullessness of much of America? I bet it is less than one percent. Most Americans like it. That’s why it is everywhere. Sad. Sad. Sad.
I temporarily moved to San Francisco about ten years ago for grad school. I kept hearing about the “Haight-Ashbury district” you know, hippies and all. I went there and do you know what was on the corner of Haight and Ashbury? A Gap and a Ben and Jerry’s.
“Minnesota Attorney General Lori Swanson has suggested a series of bills to reform lending practices, some of which will be introduced in the Legislature in the coming weeks. Her agenda includes criminal penalties for those who consciously provide ‘grossly unsuitable’ loans, banning prepayment penalties, and requiring lenders to verify that borrowers can repay a loan.”
**********
I don’t know the particulars about Minnesota.
But if this comment were to come from California (and someday it just might) I’d be saying something like: “At least 3 or 4 years too late.”
IMO, this is showing up in the midwest, Colorado, etc, first because their prices have been flat to down the longest. Ohio is so ahead of everyone else they passed laws about it over a year ago.
I would agree with that.
I should add that I’m undecided on strict regulation - but to me it seems the public debate about any regulation, or about lending guidelines, should have occurred much earlier.
The people that should have been spearheading that debate were the same ones strongly denying any problem was even possible, until it was too late.
Yep…
Some interesting new laws are coming.
And what is the level of verification? What loan to income ratio will be the limit? This could halt sales faster than anything else envisioned.
Got popcorn?
Neil
> I should add that I’m undecided on strict regulation
I think the proposed regulation goes to far:
“criminal penalties for those who consciously provide ‘grossly unsuitable’ loans, banning prepayment penalties, and requiring lenders to verify that borrowers can repay a loan.”
The last point should have been demanded by the market since long ago and, hopefully, will be soon; the government should not interfere. On the other hand, prepayment penalties should be up to negotiation - if someone wants the lower rate, e.g. a fixed rate, why should the lender not demand a prepayment penalty, to share the rate risk with the borrower.
It is too late in Minnesota, too, but, at least, we had only about 50% price increase 2000-2005 in the Twin Cities. The crash will hurt, but not so much as elsewhere.
Kash has so very interesting graph’s based on the recent OFEHO release. pay particuliar attention to the rate of appreciation
http://streetlightblog.blogspot.com/
Keep in mind the OFHEO data is seriously flawed. Uses refi appraisals, etc.
When I hear about scary increases in foreclosures in places like MN it totally freaks me out. I somehow always think of MN people as sensible generally…if even with relatively flat appreciation people there can be convinced that it’s stupid to *not* overextend themselves on a house, and the levels of overextension there are relatively minor compared to elsewhere, then we are in soo much trouble as a country. Even in CO it feels like a prospecting culture, you know? And there’s only so much land at the foothills of the rockies, or the san juans, or wherever. But if anyone can think that suddenly one bit of frozen tundra should just endlessly appreciate, and have that norwegian no-nonsense background to boot….
And if even prospectors would be willing to gamble on subdivisions in Flint MI for gossake…
tis koolaid to beat all koolaid…
norwegian no-nonsense background
Doesn’t Norway have a cost of living problem that makes ours look laughable in comparison? I think that no-nonsense background is just that: background, ancient history.
Well, the Norwegians have oil, so they can pay it (until they can’t).
it wouldn’t happen in lake wobegone;-)
Most foreclosures in the Twin Cities are still in poor areas like North Minneapolis. There many got their subprime mortgages to buy what they could not afford, like anybody on the coast.
“Most foreclosures in the Twin Cities are still in poor areas”
I have heard plenty of anecdotal evidence that many of the $400,000 suburban McMansions were bought by people with $60,000 - $80,000 incomes. Like most American Metro areas, widespread use of Toxic Loans in the Twin Cities. Stay tuned.
Extremely OT, it has nothing to do with housing bubbles, credit bubbles, etc. It just made me laugh out loud for the first time this week:
Lonely man brought donkey to hotel room, court told
“A man who was found dressed in latex and handcuffs brought a donkey to his room in a Galway city centre hotel, because he was advised “to get out and meet people,” the local court heard last week.
“Thomas Aloysius McCarney with an address in south Galway was charged with cruelty to animals, lewd and obscene behaviour, and with being a danger to himself when he appeared before the court on Friday. He was also charged with damage to a mini-bar in the room, but this charge was later dropped when the defendant said that it was the donkey who caused that damage.
“Solicitor for the accused Ms Sharon Fitzhenry said that her client had been through a difficult time lately and that his wife had left him and that his life had become increasingly lonely.
“’Mr McCarney has been attending counselling at which he was told that he would be advised to get out and meet people and do interesting things. It was this advice that saw him book into the city centre hotel with a donkey,’ she said. She added that Mr McCarney also suffered from a fixation with the Shrek movies and could constantly be heard at work talking to himself saying things like ‘Isn’t that right, Donkey?’
“Supt John McBrearty told the court that Mr McCarney who had signed in as ‘Mr Shrek’ had told hotel staff that the donkey was a family pet and that this was believed by the hotel receptionist who the supt said was ‘young and hadn’t great English.’
“Receptionist Irina Legova said that Mr McCarney had told her that the donkey was a breed of ’super rabbit’ which he was bringing to a pet fair in the city. The court was told that the donkey went berserk in the middle of the night and ran amok in the hotel corridor, forcing hotel staff to call the gardai.
“McCarney was found in the room wearing a latex suit and handcuffs, the key to which the donkey is believed to have swallowed. He was removed to Mill St station after which it is said he was the subject of much mirth among the lads next door in The Galway Arms.
“He was fined €2,000 for bringing the donkey to the room under the Unlawful Accommodation of Donkeys Act 1837. Other charges were dropped due to lack of evidence.”
Only in Ireland could one bring a donkey into a hotel room and not be questioned. Funny if anybody remembers the scene from the movie The Commitments where a kid brought a horse into the elevator of a housing project.
Receptionist Irina Legova said that Mr McCarney had told her that the donkey was a breed of ’super rabbit’ which he was bringing to a pet fair in the city.
WTF!?!?!
SUPER RABBIT!?!?!?
He was fined €2,000 for bringing the donkey to the room under the Unlawful Accommodation of Donkeys Act 1837.
Oh my God, that’s EVEN BETTER. This is has happened so many times in the past that they actually have a law againts “accommodating donkeys”.
http://yochicago.com/today/housing-trends/center-city-price-appreciation-strong-in-chicago_4192/#postcomment
More fun from Realty Times. This one from Arlington Heights:
http://realtytimes.com/rtmcrcond/Illinois~Arlington_Heights~rozannekurman
Reality is beginning to sink in.
Interesting, that realtor writes, in all CAPS:
Her agenda includes criminal penalties for those who consciously provide ‘grossly unsuitable’ loans, banning prepayment penalties, and requiring lenders to verify that borrowers can repay a loan.”
———————-
Gee, think that might be a good idea????
Lenders have been morons these past few years.
It’s tough to buy or sell. I know this must drive realtors crazy! The seller screwed up 2-3 years ago and overpaid for a house, now I am expected to bail him out by over-paying for the same house. The best you can expect is to get your money back.