“There Are Some Major Corrections Taking Place”
The Columbian reports from Washington. “A shake-up in the nation’s subprime mortgage lending industry is beginning to have an impact in Clark County. Some offices have closed, others have cut staffing to deal with a slowdown in the housing market and tighter regulations related to higher interest rate loans sold to people with weak (subprime) credit.”
“The Vancouver office of Home 123 Mortgage, which stopped issuing loan applications last week amid rumors of the impending bankruptcy of its parent company, New Century Financial Corp. Vancouver-based lender Millennium Funding Group, which cut 76 employees from its Vancouver work force earlier this month.”
“‘Declining home sales and a subsequent rise in loan defaults have forced ‘investors away from purchasing these loans,’ said Dave Botieff, manager of four Vancouver branches of Wells Fargo Home Mortgage.”
“Some investors have tightened their lending criteria. Many have stopped funding the loans altogether, thereby affecting the companies that sell them. That could leave local mortgage lenders stuck in the middle, said Jerre Broselle, president and owner of Cascade Mortgage & Financial in Vancouver. He predicted the ‘middle-man’ companies would be the first to cut back or close in Clark County.”
“‘If they’re expecting (investors) to fund those loans and there’s no one to cover it, the lender will close its doors,’ Broselle said. That happened to the parent company of local lenders Vancouver Mortgage and Homeloan Source, former affiliates of Central Pacific Mortgage, which abruptly closed its Folsom, Calif., headquarters in late February.”
“‘No one knows how it’s all going to pan out,’ said Kirk Faulkner, district manager of First Horizon Home Loans in Vancouver. ‘But there are some major corrections taking place.’”
The Olympian from Washington. “It seems like there is an explosion of new houses being built all around us in Tum water. Four hundred new homes will be built between Barnes, Eighth and Linwood Avenue; many more between Barnes, Sapp and Crosby; as well as new homes and apartments on Rural Road and Trosper.”
“I’m sure all of these developers know more about the future of Tumwater than I do. I cannot imagine that these new homes being built in our area are for our present population.”
“Some studies show that it will be four years before all of the present inventory of new homes will be sold, and yet the developers continue to develop.”
“In talking with a Realtor, I discovered that many of these new homes are being sold to California people moving up to the Northwest and Seattle people moving down to Thurston County because the housing is cheaper.”
“As the homes go up, have you noticed that the lots are a lot smaller and almost all of the houses are two story? Again, the developers have done their research and discovered that the younger, working families just don’t have the time to spend on their property.”
“In fact, some of the homes have asphalt or concrete yards with a postage stamp bit of grass. This allows the developers to put up more homes with the smaller lots.”
The Register Guard from Oregon. “Building permits for single-family homes dipped 15 percent in Lane County last year compared with 2005, U.S. Census figures show. In spite of that, most local builders still had a good year, according to Ed McMahon, executive vice president of the Home Builders Association of Lane County.”
“But he worries that the future may not look as promising. ‘We’re seeing more and more of a trend where land that opens up is being built on by developers,’ he said. ‘Instead of developing the lots and selling them off to other builders, they’re keeping it for themselves.’”
“Recent escalation of land costs has led to more development being done by big, out-of-town builders with deeper pockets than most local builders, McMahon said. In fact, almost 25 percent of the single-family permits issued last year went to non-Lane County builders.”
“Housing giant D.R. Horton Inc led the pack with 97 building permits, mostly in Eugene’s far-west Bethel area.”
“Nearly all of the houses constructed by nonlocal builders are built on speculation, as opposed to custom homes built for specific buyers. Of the 206 permits issued to out-of-area builders, only 21 are custom, and 17 of those belong to Adair Homes.”
“McMahon says the trend in the local building industry away from ’spec’ development began when the superheated housing boom years of 2004 and 2005 began to cool, and probably will continue.”
“A couple of years ago, builders could sell virtually everything they built, so looking for custom clients wasn’t as critical. ‘But now that things have cooled off, there’s a lot more inventory on the market, and builders are much more nervous about selling on spec,’ McMahon said.”
“Even with a drop in the number of building permits issued last year, local builders don’t seem to be overly concerned, said Katrina Wester, president of the local homebuilders group. ‘Things have definitely slowed down, but it was so good for a while that a change was inevitable, and people realize that,’ Wester said.”
The East County News from Oregon. “A year ago, real estate broker Cheri Axt had very few listings for previously owned homes. ‘There’d be three, four and five offers on one piece of property,’ she recalled. ‘One even had 11 offers.’”
“Now, the big change in sales of homes in outer East Portland is its boost in inventory. ‘I have twice the amount of listings this year as last,’ Axt said.”
“‘We’re a little bit less,’ she said of outer East’s prices compared to the rest of Portland. For that reason, the area attracts a lot of young, first-time homebuyers. ‘Many of them are from out of state, especially from Southern California,’ Axt said.”
“Another type of buyer driving outer East’s housing market is out-of-state investors, Axt said. They tend to purchase (often sight unseen) outer East’s newly constructed, skinny houses on narrow lots, and then use them for rental income.”
“Outer East Portland’s housing market has adjusted from a period of double-digit appreciation, but that doesn’t mean prices of houses won’t go up again. ‘We’re self-correcting,’ Axt said.”
The Democrat Herald from Oregon. “Building is going on throughout both the Lebanon and Sweet Home school district, but so far, it’s not bringing in more students. Enrollment has remained flat for at least the past four years.”
“Building permits in Lebanon jumped from 92 in 2002 to 211 in 2005 and 179 last year. Lebanon’s total enrollment, however, is still hovering around 4,000, the way it’s been since 2002.”
“Real estate agent Don Robertson, a member of the Lebanon Planning Commission, said…the overall downturn in the housing market scared some buyers away. A good many of the ones who have been coming appear to be out-of-state retirees whose children are grown.”
“In Sweet Home, Superintendent Larry Horton said the district had budgeted for 90 additional students this year, Horton said, and he’s mystified as to what’s keeping them. ‘It’s really caught me off guard. I don’t have an explanation for it,’ he said. ‘If people are looking for nice new homes, Sweet Home’s the place to come.’”
“New lots approved by the Sweet Home Planning Commission went from 124 in 2004 to 564 in 2005, and to 611 in 2006.”
“Carol Lewis, community development director, noted not all the new housing is geared toward families. Lots in a development known as the Santiam River Club, which includes some 57 lots approved a little more than a year ago, are priced between $150,000 and $300,000.”
“‘It’s probably not a young working couple that’s going to be buying these lots, that don’t even have a house on them yet,’ Lewis said.”
“The state allows school districts to use either last year’s enrollment or the current year’s, whichever is higher, when figuring its budget. Sweet Home, therefore, hasn’t felt the financial impact yet, but probably will this year if growth doesn’t materialize, Horton said. ‘We’re waiting,’ he said. ‘We’re ready. We have space for them.’”
Here’s a perma-bull in WA having second thought:
‘Question: I recently read your article on whether to rent or buy given the tax deductions available. From what I can figure, it sounds I’m best off financially to continue to rent, but I wanted to run the numbers by you.’
‘Answer: In a rapidly appreciating housing market, like the one we had over the past few years in the Puget Sound region, I would typically advise you to buy a home if there were any way possible for you to afford it.’
‘But the housing market has cooled off recently, and unless I miss my guess, I am not expecting much, if any appreciation this year. In fact, we could see home prices decline for the first time in years if we get a glut of homes for sale during the spring, as we normally do in March and April.’
‘If you look at the chart, you see . . . this slow, methodological erosion,’ Anderson said, explaining the upward and downward spikes on a graph that compares Oregon school funding with the rate of inflation. How much money the district has to spend depends on how many students are enrolled in school. That equation, coupled with diminished spending power and sinking enrollment figures has school officials looking for ways to fill in the money holes.’
‘Our school population has dropped. But it’s my opinion that our school-age children have not moved away. It’s my belief that they’re still here. They’re just in a different place,’ Anderson said.’
‘Southern Oregon Multiple Listing Service reported this week the median price — with half of the transaction selling for more and half less — for existing Jackson County houses fell 8.9 percent to $255,000 during a rolling three-month period. The median price for new houses in east Medford and Central Point have declined dramatically during the rolling three-month period.’
dude, prices alreadt HAVE declined
rent rates- anyone have that link that shows rents in a zip or county?
tia
Dunno Portland properties seem to be selling well this spring - I know at least 3 people who’ve bought this spring.
Personally I’m still waiting on the pain to start here - with the subprime blowup buring up the ladder into Alt-A and eventually Prime it’ll happen - but I”m not expecting that much this year - next year is probalby when the decent drops will start.
We’ll watch California/Florida/Nevada burn to the ground before we roll over probably.
“but I”m not expecting that much this year”
Once there is no more alcohol left to spike the punchbowl, the party will end much more quickly than you suggest.
It’s certainly happening much faster than I expected re: credit meltdown - but the spring bounce appears to be alive and well here so far - the inventory is climbing - but not at the rates I see in Cali etc - sales are down - but nowhere near as badly as Cali - and as such the prices don’t seem to be feeling the downward pressure as badly as Cali.
I wonder how much sub-prime 0 down nonsense went on here - certainly not as bad as SD or LA.
Oregon was late to the bubble game - it may be late to the crash as well.
The party is about over…
the subprime thrashing is the equivalent of hearing the police sirens coming towards your house. When your parents get home and ground you for months…that is when a-paper starts taking a bashing.
Got a new post up…an inside look at the subprime industry. New Century rate sheets and more…
SoCalMtgGuy
http://www.housingbubblecasualty.com
SoCalMtgGuy — you and Fleck are in perfect harmony on this note… (And so am I
)
“Before I get going, I will say this: Alt-A and the A-paper markets are next. Do not think for one second that the lax underwriting was only for the subprime borrowers. The booming market made ‘everybody’ feel good and risk assessment was no longer a priority or focus. Why would it be? That said, just because somebody has a high FICO score does NOT mean they have the income needed to afford their option-arm loan when it resets. You will see the alt-a and prime markets falter in the future. Probably not as bad as the subprime market, but you will see record defaults in alt-a and a-paper loans over the next 12-48 months.”
the map of misery shows which areas had the most funny money floating around. Oregon area is high, but not ridiculous.
http://www.businessweek.com/common_ssi/map_of_misery.htm
stucco, your comments above are spot on. I hope no one is kidding themselves into thinking this implosion is limited to subprime. Do realize that most of the NegAm products sold over the last few years were with the Washington Mutual’s and Countrywide’s of this world. A whole crap-load of this 80/20 nonsense done as Stated/limited doc type deals were Alt-A, totally out of the subprime sector. And yes, high FICO scores at the time of close say nothing of the persons responsibilty to repay. It will come down to “will they be able” to repay, and the answer is no. This mess starts with subprime, but definately doesn’t end there. Only beginning, I’m afraid.
Uncle Git,
Make no mistake, things have changed. Took me 4 months (with one sale fail) to sell what would have sold in a week in late-2005, early-2006….and would have sold for $60K more. ~15% off peak prices.
My buyer bought mine before selling theirs. Still on the market 3.5 months later with, I believe, at least 2 sale fails.
Git,
Forgot to mention, another house in my neighborhood went up for sale (after being rehabbed) at least 6 months before mine. Just before mine sold in January, a for rent sign went up out front (hadn’t sold). Drove by there two days ago, still for rent. 12 months with no buyer or renter on a rehab. Ouch!
Similar to Sleepless, I sold last Aug in Clark County and was in business there for 15 years. I called my old neighbors to find out about a house that was on the market and doesn’t show up on the sale records. They listed as mine was closing escrow for $60k more than me. House was pulled to “relist when things get better in the spring”. They got greedy……I got lucky.
That’s my thought too. Last summer the pricing got out of hand among flippers, but the big developers have not dropped their prices yet. However, my buddy in the flooring biz says that construction has slowed dramatically.
That’s because you don’t count $100K in incentives as “dropping prices” — and the builders thank you for that concession.
In January I went with a friend who works as a designer for three brothers that are developers/builders. I must admit I was green with envy to see the “mansion” on bull mountain that one of the a brothers just finished, complete with pool, soccer field, and gourmet kitchen to die for, all perched up on top of it’s own hillside. I recently learned that this first thirty-something brother is sitting on eight “mcmasions” that he can’t move. Apparently, it is really getting down to nail-biting time. The second brother has only managed to find a remodeling job and the third brother doesn’t have any thing on his plate. Needless to say, my friend is now looking elsewhere for work.
“It’s my opinion that our school-age children have not moved away. It’s my belief that they’re still here. They’re just in a different place”
“Again, the developers have done their research and discovered that the younger, working families just don’t have the time to spend on their property. In fact, some of the homes have asphalt or concrete yards with a postage stamp bit of grass. This allows the developers to put up more homes with the smaller lots.”
Putting these two quotes together, can we safely conclude that the kids aren’t lost in their back yards??
Kids don’t play in yards anymore. They’re sitting in front of the teevees playing on their xboxes.
There’s nothing like a bunch of 10 year-olds playing a neighborhood pick-up gave of football on a postage stamp bit of grass!
Everything is fine, “just a ‘little’ correction that’s all”, according to many who have posted on the No.County times (San Diego) blog. Check out these people in MAJOR denial…
http://www.nctimes.com/articles/2007/03/12/blog/news/0055.txt
To quote one genius who commented on the NCtimes article:
“People will always need a place to live. So if you have an increasing population you should have increasing price of property.”
Damn. I KNEW I should have bought land in Bangladesh.
That’s a great article that Ben posted from WA. It’s from an Everett newspaper.
For those not familiar, Everett is right outside of Seattle and one of those areas people rushed to buy into because Seattle got so overpriced.
Looks like the breaks are starting to screech.
‘Our school population has dropped. But it’s my opinion that our school-age children have not moved away. It’s my belief that they’re still here. They’re just in a different place,’ Anderson said.’
OK for some reason the last part didn’t show up -
‘Our school population has dropped. But it’s my opinion that our school-age children have not moved away. It’s my belief that they’re still here. They’re just in a different place,’ Anderson said.’
(packman scratches his head)
Yes, I remember that Twilight Zone episode.
Once you count in concessions and “free” upgrades, prices have dropped significantly in some places.
People need to break down the costs and subtract any concessions which mask the true value of the home.
New Century Financial Corporation:
March 9th 2007 via their site:
91 searches found for “Open Position” jobs in CA:
http://www.ncen.com/career_opportunities/open_positions/index.html
All’s well in the O.C., move along….
ALL their positions are open! Ha ha ha ha ha!
All their positions are closed is more like it…
Yeah, they are either hiring (which I doubt) or the IT Guy is gone and no one left to update the site.
As a headhunter I can tell you that MANY of the jobs listed on company websites are either NOT open, haven’t been updated for months or may just be there for marketing.
Most companies do not expect people to look on their website to find a job. It just doesn’t happen since most firms are relatively unknown.
‘Our school population has dropped. But it’s my opinion that our school-age children have not moved away. It’s my belief that they’re still here. They’re just in a different place,’ Anderson said.’
Can someone tell me what this is supposed to mean?
it means that person is a pollyanna RE-tard
They must be sitting on the sidelines, waiting for prices to drop.
a renter is home schooling them
Turned into zombies along with their parents?
Those kids all bought condos in FL with no-doc neg-ams.
Perhaps he’s referring to an episode of “The Twilight Zone”?
Or “Children of the Corn”
wasn’t there a Twilight Zone where all the kids got disappeared into a corn field?
Their parents are forced to charge them rent, so they are working full time jobs.
They all took jobs in the mines and garment factories to help with the mortgage payment…
The kids were sold into slavery to pay for McMansion payments. They can buy them back when the market recovers-house sells.
Who would want them back? They’re damned hard to get rid of in the first place even if you didn’t sell them into slavery. Even when you send them away, they have habit of coming back when the money runs out.
Ask Seattle Eric….he’ll know.
“In talking with a Realtor, I discovered that many of these new homes are being sold to California people moving up to the Northwest and Seattle people moving down to Thurston County because the housing is cheaper.”
And then this one…
“‘We’re a little bit less,’ she said of outer East’s prices compared to the rest of Portland. For that reason, the area attracts a lot of young, first-time homebuyers. ‘Many of them are from out of state, especially from Southern California,’ Axt said.”
“Another type of buyer driving outer East’s housing market is out-of-state investors, Axt said. They tend to purchase (often sight unseen) outer East’s newly constructed, skinny houses on narrow lots, and then use them for rental income.”
First of all, this is about all that is holding up this market.
Second, I’ll be interested in seeing the staying power of those from Southern California. Those from the Bay Area can typically live through the winter. Southerners, not so much. I know of 2 families that just moved back after being here a only a year. Good riddance, ya pansies.
Third, I’m sorry, nothing here can be used for rental “INCOME”, least of all newly constructed single family housing.
I sometimes waffle on whether I want this place to crash but when I see who is buying this stuff and why, I hope for their demise.
Yes, many of those South Californians won’t stay more than two years… the rain and cloudiness will drive them back. The “conservative” ones don’t seem to fit very well in Portland, either.
I agree with your take on the Bay Area folks - they fit well here, too. Portland is very similar to SF / the Peninsula in many ways.
As someone who spent > 20 years in both the Portland and Puget sound areas, and grew up in the Bay area, I’d have to disagree. Weatherwise, the Bay area is vastly better (not counting pollution). I can’t understand anyone wanting to migrate north except for financial reasons, or wanting to stay after experiencing 8 months of grayness and dripping cedar trees.
Ah, the old weather discussion… to each their own…
But I agree it is a good thing if the infestors are from southern California where frost, clouds, and rain are optional. N. California are at least used to rain. I keep hoping for some real PNW sog and gloom to start a homesickness epidemic. Of course, affordable homes down south might help too.
Heh I moved to Portland from San Diego last May and I’m loving it up here - no plans on leaving - although being Irish I really don’t mind the seasons - in fact that’s one of the reasons I moved up here.
Still waiting to buy a house though - as for a first time buyer there will be a better time about 2 years from now - in the mean time renting a lovely house in a nice ‘hood.
“…being Irish I really don’t mind the seasons.”
You are hereby disqualified from this study.
True. The Irish are used to abuse.
Git-You give me hope. I live in San Diego and have for the last 24 years. In the last 5, I’ve grown to hate So Cal and all the crap the goes along with it. Crime, smog, the quality of life, traffic, illegals (Mexiego?), materialism, excess and rudeness. All topped off by the insanity I’ve watched spiral out of control with respect to affordability. Maybe it’s just me. Maybe since I’m not a native ‘Diegan, I see though different glasses.
8 years ago, I fell in love with the Portland. My fiancee and I have friends up there and are strongly considering relocating. Our plan is much the same as yours, bide our time, rent and buy when the dust is settling.
Now, before all you PDX natives come down on So Cal’ers, we’re not all bad people. Hardly. Some of us just want to leave this insane rat race and the liberal, clean and green of the pacnorwest is almost like nirvana compared to So Cal.
I’ll take rain, seasons and dripping cedars any day over what San Diego and So Cal in general has become.
Op,
I don’t think it’s hate. I personally think it’s funny when people just want to “move” their problems away.
I wish people wouldn’t give up on SD and LA so easily.
Everything you say about SD can be said about Portland, but on a smaller scale. It happened everywhere the last 5. I don’t know why people perceive it the way you do. 8 years ago it was much different, IMO. Still green, but ain’t so clean now.
Lots of people have thought that by moving here, those problems are a thing of the past and they’d be inheriting this fresh, new place. Problem is, they weren’t the only ones to think so. Instead the same issues have been replicated here.
Then again, I don’t think I could stay in any one place for 24 years.
Yeah I am sure the same the exists in Portland. I have no illusions that problems exist in every city.
However, ask yourself this…would you want to raise your kids in So Cal?
‘Nuff said.
from Washington:
“It seems like there is an explosion of new houses being built all around us in Tum water…I’m sure all of these developers know more about the future of Tumwater than I do. I cannot imagine that these new homes being built in our area are for our present population…Some studies show that it will be four years before all of the present inventory of new homes will be sold, and yet the developers continue to develop.”
from Oregon:
“Recent escalation of land costs has led to more development being done by big, out-of-town builders with deeper pockets than most local builders, McMahon said. In fact, almost 25 percent of the single-family permits issued last year went to non-Lane County builders.”
This stuff just makes my blood boil. This overbuilding by these pigheaded developer/builders is a crime. And these guys talk about how they are putting homes on smaller lots because that’s what the younger people want, but they are so full of sh!t their eyes are brown. It is all about the dollar. Cram as many homes onto as little land as possible, and it’s money in the bank. Having spent much of my life living and working in the Puget Sound Area, people like their yards and gardens. Sure, there are the city folks who like downtown living, but most young folks who buy a home, like space.
I started noticing a bigtime run on land like three maybe four years ago. Prices just started to skyrocket. I couldn’t understand who was buying it all up, and at insane prices. Oftentimes, it was acreage that was more or less rural, oftentimes off the beaten path. Well, now whole subdivisions are popping up in these places. They have a lack of services, and the roads are not equipped to handle the new traffic. I believe these national builders were not only buying up land, but paying off local politicians in order to permit this stuff. There is no market for a lot of these homes at their current price points, if at all. I hope that people start asking a lot of questions. Why was this allowed? Who permitted this? I want those responsible to answer. The corruption is rampant.
A side effect of all of this, is that people like myself, who wanted to start a small business, and cultivate the land, were shut out. Now, I don’t feel sorry for myself, because hey, everyones affected. But, in the long run, in losing my small business, the county lost jobs, and tax revenue. Sure, they hope to collect property tax, but still, there needs to be business, not just homes.
OT, but they built an infill snout house (on an empty lot) in our neighborhood and it sticks out like a sore thumb. I don’t see how people like these things. Ugly as hell. I guess it shows you how the auto is worshipped in our society, as it gets the premier location in the home layout. The living room used to be front and center; now it’s the garage.
Entire neighborhoods of these houses make me want to puke. Not to mention the entire front yard (and yes, they are postage stamp sized, but mine has a few trees, rhododendrons and flowers - not concrete) being used to park their beat up minivan and a new leased SUV. Real pretty.
Our Measure 37 will ensure that, Yes, they ARE making more land.
how low did they go in Japan ?
from the Yahoo Marquee
Yahoo! Personal Finance -Will Low Mortgage Rates Revive Real Estate?
I spent wknd in N. Scottsdale, AZ…to my thinking, it’s hyper-bubble-debt-denial ground zero. Over the wknd, and at a party, I talked to 3 different people, all have HELOC’ed their houses…these are $1M plus homes, Pinnacle Peak area. All were bought after 2004. Their cars are leased (BMW, Lexus, Mercedes), and these three people all have commissioned-based silly expendable jobs…They laugh about their credit card bills, and how they “shuffle” them around (one actually admitted to over $18K debt), but continue shopping at Kierland and ordering the Grey Goose. And 2 of them are listing their houses this spring…when I point out how terrible the market is, they blandly look at me, and say something like, “it’s Scottsdale, it’ll be fine!” (I’m a little obnoxious about asking about this stuff, but, strangely, these people have no sense of privacy or shame).
Really, it’s amazing they aren’t hiding under their beds. But I guess that’s part of what has caused this debt-housing-bubble. Manic denial. There truly is a remarkable and historic come-uppance about to bring a whole lot of people right to their knees.
I don’t think people are even beginning to realize it. It’ll hit like a ton of bricks.
Funny you should mention Scottsdale. My parents live in an area like that, but it’s outside of Philadelphia.
Just got off the phone with my father (who’s having problems with his ISP and his company e-mail), and, of course, being who we are, we just HAD to talk about the economy. (We’re both economics junkies.)
Anyway, the problems in the housing market are no surprise to either of us. And we both think that the HELOC craze was stupid. Very stupid.
Mention of HELOCs makes me chuckle. Countrywide sends me one or two mailings a week begging me to take out a HELOC. “Go on vacation! Pay off you credit card bills!” They are starting to take on the scent of desperation.
Yea Ok good to see I’m not the only one seeing this. There’s a whole lot of denial going on out there.
I’m in So Cal and have a couple of wannabe-flipper “friends” who have “invested” in the AZ market after making a decent profit off their first deal a couple of years ago (by blind luck). These guys quit their real jobs (cop, finance) to get in the housing industry/flipper game. They basically have the same mentality, although they don’t know each other, so this illustrates the reach of the RE fever of the last few years here in SoCal. When we go out drinking they always say something like “Dude, I have this parcel of land in AZ I’m gonna subdivide and sell off lot by lot.” When I remind these guys of the bubble, they pause briefly with a deer-in-the-headlights look, then laugh nervously and say “Ah it’ll be fine, come on dude, have another beer!” Pure denial. These are people up to their eyeballs in debt, driving tricked out Hummer H-2’s and using credit to put in swimming pools in their McMansions (while the for sale sign sits out front for the last year in one case). Their jobs? RE agent and homebuilding supplier sales rep. Ouch.
Just got a call from my ex-wife who’s complaining that her cop-husband spends no time with her and the new baby because he is working 40 extra hours of O/T each week to avoid having his “investment” properties foreclosed on. The guy owns two empty houses in Victorville that won’t rent and won’t sell for more than his loans. Lots of pain on the horizon.
good to hear a 1st hand perspective from Scottsdale…
we are hearing a lot about Fl and CA, and the subprime implosion.. I’m still waiting on the reality to get headline space for AZ..
got cash?
“Housing giant D.R. Horton Inc led the pack with 97 building permits, mostly in Eugene’s far-west Bethel area.”
“Nearly all of the houses constructed by nonlocal builders are built on speculation, as opposed to custom homes built for specific buyers. Of the 206 permits issued to out-of-area builders, only 21 are custom, and 17 of those belong to Adair Homes.”
Hahahaha! I love it! Those idiot builders paid a King’s Ransom for the land now choking their books, and with no Greater Fools left to play the land-grab game, and to avoid quarter after quarter of impairment charges, they’re stuck with no other option than to build and pray. What irony. Inventory continues to increase, and they have no choice other than to throw logs on the fire.
Anyone read the comments from WSJ “Has your Bubble Popped?”
http://discussions.realestatejournal.com/RealEstateJournal%20Discussions/1
They have a good discussion going on over there. Some folks have gotten a little testy. Wonder why.
Over 20,000 comments!! Maybe there is fear, loathing, and denial in the air.
I’m trying to read the comments, but it’s frustrating. All the owners do is quote statistics which break down home vs. rent into black and white terms. The owners seem to think that they are investing in the future with 3-year fixed and have tons of equity (wrong) and that the renters are going to rent forever (also wrong). Everyone is ignoring that there are many shades of gray between the two extremes.
I could probably explain this all but it’s not worth the trouble. I am just going to skip it and go my own way. I very simply didn’t have the income to buy in 2000-2002 (fresh out of school) and the prices rose much quicker than my income. Oh well. I am going to stick to what I am comfortable with. I will not buy a house unless it’s 2-2.5 times my income with a reasonable piece of land and a reasonable commute. And the stat-quoting “owners” can shove it.
Oxide… i hear ya.
i was in a similar situation back in late 90’s, just outta school, and the housing mkt in RDU, NC, went ballistic on me.. the telco boom, i couldn’t afford a down payment and didn’t have the right gut feeling about getting a house for 0 down, so i hunkered down in a rental and kept saving… fast forward 5 years.. the housing price came back and i had a comfortable downpayment available. This cycle is a little more brutal — as in nose bleeds ahead.
So ignore the media, come to this site for a little solace, and see you in a couple of years at the REO party!
got cash?
I was in a similar situation as you.
Just fresh out of grad school in 2002, and prices were out of reach. My income did rise fast enough that it was theoretically possible but I didn’t like the risk (I live in NYC.)
Nor did the “buy v/s rent” ever work out!
Spokane, WA–Almost no article in local paper regarding real estate bubble. Most recent article in Business section showed how we are ” bucking” the trend in CA, FLA, AZ, NV. I am not seeing much new MLS inventory but Craigslist for the area is exploding with sellers. I have not found even one honest realtor here as I look at property. Must be more patient–wait it out!
The time to buy in Spokane was better than 3 years ago. At one point, I was considering buying a fixer there because they have a ton of beautiful old homes; architectural masterpieces. Back then, on the mls, there were more than 700 homes under $100k. My how things have changed. The bubble in Spokane is profound to say the least.
Even more bubblicious is Lake Coeur D’Alene, Hayden Lake, Lake Pend Oreille, and all of Sandpoint property in Idaho. Many of my friends bought 3,4,5 properties in the last few years. But they all say property values will stay high in those areas because of the exceptional beauty and the Californians moving there all paid cash—no funny mortgages. Do you have any insight regarding vacation properties in Idaho?
“…friends bought 3,4,5 properties…they all say property values will stay high in those areas because of the exceptional beauty and the Californians moving there all paid cash—no funny mortgages.”
LOL! More special talk. People are stupid. I mean no disrespect to your friends, as I have heard the same sort of blather from my own friends and family. Fortunately, not so much anymore. I don’t have any insight regarding vacation properties in Idaho. But I am sure they are driven by the same fundamentals as all vacation and second home markets. As soon as money becomes tight, the vacation home is the first to go. Already seeing a lot of that in Tahoe. Unfortunately, the music stopped, so no more buyers. OOPS! Price cuts already happening. Oh the humanity!
Sandpoint is awesomely beautiful and has been f*cked up just like all the other beautiful places. I know that area pretty well….a really close friend owns the McD’s there. I would love to have a place around Sandpoint or Coeur…..if it were anywhere near reasonable. *IF* your friends were buying multiples in that area, they are holding crap, in the middle of nowhere, with no way to unload….unless a GF comes along. Get cash, watch the market, and make sure you buy the right location. Yes, location does mean everything; especially in a specialty market. A lot “close to the lake” could mean on the back side of nowhere……..
Sandpoint=beautiful scenery, bad schools, poor medical care and scary hospital(Bonner General), meth makers in the hills, bring your own jobs. But, really beautiful scenery. And, my friends bought lakefront properties, ski condos,etc—they consider these as investments. I would not buy at the prices they paid as I knew it was real estate mania
aucontraire,
You forgot skinhead and white supremacy capital of the west. Remember Mark Fuhrman?
Wow–You mean the new influx of tall, blonde, big-boobed gals are Aryan??? I thought they were Californians!!
Though seriously, the skiing at Schweitzer is fogged in every time I go up there and buy my $52 ski ticket. May seem like a bargain to most of you–just imagine skiing with your eyes closed–that’s Schweitzer Mountain
Look in their mouths. If the tall, blonde, big-boobed gals have all their teeth, the are Californians. Otherwise they are Idahoans
NOTE: I can get away with saying things like that since we Alaskans are essentially Idahoans with oil…
I have relatives in Spokane. My parent’s 1913 house in a historical district was recently valued at something like 12 times what they paid for it more than 40 years ago. My how time and dollars fly.
They had some incredible double digit appreciation there one recent year. (Well over 20%, IIRC.) All my cab driving schoolmates still there are probably sub-prime flippers now…
“Outer East Portland’s housing market has adjusted from a period of double-digit appreciation, but that doesn’t mean prices of houses won’t go up again. ‘We’re self-correcting,’ Axt said.”
Well, gee, how sweet of them to give GFs a great buying opportunity!
Geez
Option One (H&R Block) changes lending guidelines, from another board
View all Topics | View all Messages
OPTION Q (HR BLOCK0 JUST PUT OUT OMINOUS MESSAGE THAT EFFECTS ALL SUBPRIME/ALT-A (Not rated) 19 second(s) ago
This effects LEND big time. Also, short HRB now.
Option One Super Broker Guideline Changes
Throughout our 14 year history, Option One has taken pride in honoring commitments to our brokers and borrowers. We understand the changes that we are about to outline are extremely sudden and we apologize for the short notice and the impact it may have on your business. Our volatile and challenging business environment demands agility and the ability to make tough decisions today that will enable us to serve our customers for years to come.
Therefore, OOMC is making the following changes effective 3/11/07:
Elimination of all loans > 90% LTV/CLTV
NO new submissions of loans with CLTV’s greater than 90% will be accepted, this includes PreQuals, AU approvals and loans manually underwritten
Elimination of all Loans 90% LTV/CLTV and loans
“This effects LEND big time.”
Why?
this is from an NFI board, probably crispy and implodometer will expand on it
Eliminates > 90%. This is great. Last week the trend was 95%, this week 90%. Next week???!!! Next month????!!!
This is huge. Most people cannot even come up with 5%. Now 10%? The number of qualified buyers was just reduced significantly. This is really bad news for sellers. And the news may get worse yet.
Bad news for sellers. GREAT news for next years buyers!
Personally, I could care less about the *poor* sellers at this point. I’m a total harda$$ about this. Friends have been hemming and hawing about selling this past year and couldn’t even be bothered to take a look at the info on this blog. Great people, just mesmerized by their imaginary equity.
Take the “glass half full” approach Bantering. Think of all the 20 and 30 somethings that will not be screwed to death by a 40 or 50 year mortgage on a ridiculously overpriced house.
Unbelievable, the PPT doesn’t even bother to be discrete, getting in the market usually at the same time, around 2PM. Gee…apparently, the serious headline below hitting the waves are “good” for the economy:
“NEW YORK (CNN) — Embattled mortgage lender New Century Financial Corp. warned Monday of a series of serious financial problems that cast its future in doubt - and cast a pall over much of the nation’s financial sector.”
“doesn’t even bother to be discrete”
Wouldn’t you guess they would be on autopilot?
They’re doing the front nine in the morning, taking time for a twomartini lunch, and before they hit the back nine, puts it right about at two.
TRUMP IS GOING TO SELL !
http://www.wnbc.com/money/11229999/detail.html
Why do you think that combover idiot is “licensing” his brand to everything except cat food?……it’s the only way that goof can make a buck. Casinos are a cash cow for everyone, except The Donald……speaks volumes.
he’s late
will all those folks he screwed in the 90’s get any $ ?
http://www.king5.com/topstories/stories/NW_030807BUB_home_sales_pierceTP.2ecd0214.html
Click the link for a video report via King5…..bunch of bulls talking about a “Hot Spring”…..dunno; I just don’t know who is buying there.
…are priced between $150,000 and $300,000.”
“‘It’s probably not a young working couple that’s going to be buying these lots, that don’t even have a house on them yet,’ Lewis said.”
My 27 y.o. son and I just finished a long talk this morning on house buying in the LA basin. I know, it isn’t the Northwest and it fair to keep the posts centered, but this tale has common threads.
First, above all I sent him the link to Ben’s site, the finest in the land. He read it last night and this morning had an atlered reality experience when I followed up. Seems a ‘friend’ is suggesting he talk to a real estate ’specialist’ (cue the Dath Vader music) with lots of talk about IO’s, and low, low interest rates. But God bless his pointy little head, my son just couldn’t understand how he could earn 70K a year and make payments on a 500K house. My plan to him was to figure out his total purchase costs (PITI), subtract his current rent and then do an automatic savings deposit on the difference. Then live for at least one year on the difference. After I ran the numbers by him, he got quiet and finally just said ‘I knew it was bogus’.
Back to the idiot with the $300,000 lots. Total maroon. Screw up your own kid, not mine. Thank you Ben (and everyone here) for this incredible site. It really came home for me today.
You’re a good dad. I hope he appreciates you!
and you didn’t even need the 20lb trout….
you’ve got a good son who listened
turnnout’s son says: ‘I knew it was bogus’.
This is so refreshing after so many of us have posted about friends and relatives who have drunk the k.a.
Nice to hear about a kid with sense, for a change.
can someone refresh my memmory what were the stages…
denial acceptance panic something something
this whole thing starts being borring if you just look at rational numbers people had on hand and while they were being duped used common sense. However considering the disparity in knowledge, gullibility etc. I guess $!#t happens. What is more interesting is the psychological process by which a person convinces themselves that yes this is for sure there is no way no how. This euphoric state of utter stupidity is more interesting to notice. Mind you I am not talking about people whom look at a negative cash flow loan as an “investment”.
not talking about little old ladies but people whom look at neg cash flow as investment. (badly worded… missed a sentance from thought to paper.)
For all the Portlanders on the blog. Do you know if anyone’s living in the Strand condos? They are three towers located just north of the Marcum bridge on the west side of the river.
Every time I drive past there on I-5, I see one building with maybe 10 lights and the other two are pitch black. But they are completed.
Two nights ago I drove past at night. On one of the top floors in the building with 10 lights on, I see the silouette of a person and a small child and I got a weird sense of deja vu. Then it hits me, are those cardboard cut-outs that I’ve seen before???? I took a closer look as I rounded the bridge (heading south) and I swear they looked 2-dimensional. I plan to drive by there tonight or tomorrow to see if they are there in the same position.
Williamette Week (the Portland weekly) did note that half the condos sold in that area (South Waterfront) had been sold to out of state people. I’m sure that they’re all going to move to Portland any day now…
Hahaha
http://www.bpr.com/localsearch_display.html?mls=RMLS&listingid=7019845
$500k condo - 1033 Sq Feet.
California ?
Nope - Portland….
*Course a man like myself wouldn’t even consider slumming it in $500k condo’s - what I really need is this -
http://www.bpr.com/localsearch_display.html?mls=RMLS&listingid=7018036
Do they think this is the new Manhatten or something ?
There are three things I have had enough of:
Stainless steel appliances
Granite countertops
Condos
I will be avoiding all three until the end of time. I actually saw a trailer on craigslist boasting granite. I about fell out of my chair.
Friends bought what should have been a really beautiful Craftsman last year. Except the previous “owner” (flipper?) had installed black granite countertops and a new wooden floor in the kitchen.
The floor was laid badly and warping everywhere and the countertops were totally gross- who the heck wants a black kitchen? Not to mention they show every smudge, fingerprint, etc. My friends hate the counters and the floor and want to replace them- no money for that of course. (Not after overpaying on the house!)
I told them that when I buy, I’m subtracting the cost of a re-do on all the “improvements” if the house I want is one that’s been “improved”.
They said they wished they’d thought of that before they plunked down their money on that place. This crap is definitely the burnt orange shag carpet and avocado fridge of the 70’s.
I’m seeing ads where Pergo floors and plastic fences are noted as if they’re a plus!
Black kitchens, holy smokes.
I know, I can’t believe that.
Those are the ones.
If you’re driving South on the Marcum bridge, it’s the tower on the left in that picture. About 2-4 floors down from the top, just left of center will be two silouettes. A scattering of other lights on in the building, the other two buildings, DARK.
I love the angle of that picture. They make it look like there’s a huge marina there. Fisherman’s Wharf, it ain’t.
BTW, just south of the bridge is the John Ross. Equally as bleak and construction is sloooooowwwwwww on the neighboring towers.
And I thought they had all these checks in place to make sure these would be owner occupied….oh well, at least the tram works.
was replying to Uncle Git @ 15:28.