Post Local Housing Market Observations Here!
What do you see in your housing market this weekend? Puzzled analysts? “Chicago-area home sales in the first two months of the year declined 12.1 percent from 2006, confounding analysts who were looking for the first small signs of a spring bounce but instead saw a market continuing to struggle.”
“‘It’s not a market that got caught up in the bubble, and it didn’t have affordability issues. I suppose buyers have gotten caught up in the general psychology and are sitting on the sidelines, waiting to see what happens,’ added economist David Stiff.”
“‘The buyers I’m working with all tell me they’re in no hurry,’ he said Wilmette real estate agent John Nash. ‘They say they want to get a good deal, and I don’t know that they’re not overplaying their hands.’”
“One of his clients, Ann Peisel, listed her Wilmette home last summer, and took it off the market after three months, without a single offer. She lopped $100,000 off her asking price and relisted it a little over a month ago for just over $1 million.”
“She did get an offer–though it was for about $900,000, which she considered too low. ‘It was somebody who was taking a chance, who really couldn’t afford the price,’ she said. ‘Nobody is taking into consideration that I have already lowered the price by $100,000.’”
Subprime concerns? “With foreclosures mounting and the subprime mortgage industry melting, a University of Minnesota housing forum Friday broached the $64,000 question: What now?”
“‘This was a social experiment, and it’s terrifying,’ speaker Prentiss Cox said of subprime lending. Cox is a University of Minnesota law professor specializing in consumer protection.”
New legislation? “Rising foreclosures and the near-collapse of the market for home loans to those with bad credit have triggered a flood of proposals from Texas lawmakers.”
Lending cutbacks? “Industry analysts worry that tougher lending standards could lock out thousands of potential North Texas homebuyers at a time when home sales are already lagging.”
“‘Local builders and local Realtors should be somewhat worried that the number of potential buyers will decrease or at least shift into lower-cost submarkets as lenders start requiring equity down payments and tightening underwriting,’ said said James Gaines, a research economist at Texas A&M University’s Real Estate Center. ”
“But Jim Fite and other local housing executives say that changes in the mortgage market are welcome and overdue. ‘Is there really a surprise that many of these loans went into default and then the lenders went under?’ he asked. ‘As we have seen in the past, there is a ‘correction cycle’ that is occurring.’”
Reno, NV:
Same old story. Rapidly swelling inventories measured in years not months, a slight increase in sales over the previous few months, and minimal decreases in wishing prices. Builders continue building, with no end in sight. Massive amounts of new homes available in subdivisions north, south, east, and west. Foreclosures rearing their ugly heads, even in places like Somersett, and Double Diamond. Local shills talking up the market, touting a turnaround this year. Flippers still working hard to get their rehabs on the market this spring. Certain resale homes approaching 2 years on the market, though listing dates are a lie. County population growth slowing rapidly, probably due to prices. A worse bubble would be hard to find.
I here you BB. Something’s ’bout to give. You can feel it. Oh, you forgot to add that everyone is slooooooow as far as work goes. All the contractors I talk to, service folks, retail people, all of them have this “what happened” look on their face. My wife and I ate lunch at that Chili’s located on the south side of CC last Saturday. Normally the place is packed. The parking lot was about empty. Yeah, you can feel the winds of change blowing down the 395 corridor.
“All the contractors I talk to, service folks, retail people, all of them have this “what happened” look on their face.”
One of the many consequences of living your life with your head up your a$$.
BB Thanks for the Reno update, been gone for 12 years. I will be returning to Reno in 90 days with a head full of this blog and a pocket full of money… I’m going to be a bad-attitude-buyer. Foreclosures in Somersett?
Do what you want, but keep in mind NNV has a long way to go in depreciation. We’re about 10% - 20% off the top, but there’s another 30% to go, easy. But again, you do what you want.
I agree. Don’t be a GF. Instead, check out price histories of addresses you are interested in. Start with 1998 levels and add 3.5% annual appreciation per year up to now. Subtract 15% from that result and offer that on a house of your dreams. Go no higher than 3.5% annual compounded rate of inlation from 1998 prices.
Or if you don’t feel like doing the arithmetic above, just multiply the 1998 price by 1.158 to find the fair value today.
From this weekend’s Daily Reckoning.
Note in projected valuation declines in the Tsunami Wave blurb.
43% by 2011.
Also a lead story in today’s Boston Globe Magazine on “Who are the Boomer’s Going to sell their McMansions to?
MSM coverage is picking up steam.
Set Up to Fail
The Daily Reckoning - Weekend Edition
March 24-25, 2007
Baltimore, Maryland
by Kate “Short Fuse” Incontrera
VIEWS FROM THE FUSE: SET UP TO FAIL
Moving stinks. Who likes all the packing… organizing… repainting…
and fumes from oven-cleaner?
Even more dreaded than moving yourself: helping others move.
Unfortunately, if you’re a male with arms and legs or any sort of truck,
there is pretty much no way to avoid it (luckily, your editor has three
younger brothers and is small enough to always be put on ‘guarding the
U-Haul duty’).
Unfortunately, the ‘too short and weak’ excuse didn’t fly recently - we
were recruited to help some friends organize their house for a big move
from their apartment into their first home. But, early this morning, we
received a call from our friend telling us to not come over, as it looked
like they might not be closing on their dream house after all.
Apparently, their loan, that they had been told was a done-deal, had
fallen apart. As it turns out, their subprime lender, buckled under the
burden of failed loans and a shortage of cash, and joined the other 44
lenders that have folded since late 2006.
More and more Americans are failing to keep up with their mortgage
payments, finding themselves stuck in loans whose costs keep rising. As
foreclosures and loan defaults rise, the subprime lenders are finding
themselves strapped for cash…and being forced to shut their doors.
But this has hardly caused mainstream economists and the mass media to
furrow their brows. A headline in yesterday’s Baltimore Sun read,
“Subprime Damage is Called Limited.”
Roger Cole, director of the Fed’s Division of Banking Supervision and
Regulation (sounds like a fun job), told Congress on Thursday, “At this
time, we are not observing spillover effects from the problems in the
subprime market to the traditional mortgage portfolios or, more generally,
to the safety and soundness of the banking system.”
Okay…let’s check out the facts. The piece reports, “about 14 percent of
subprime mortgages are 60 or more days past due” and “lenders currently
have $1.28 trillion in subprime loans outstanding.”
That sounds like more than “limited damage” to us. Not to mention the fact
that close to 2 million of those loans’ interest rates are going to reset
in the next two years…do they really think that people who didn’t have
money to put down in the first place are going to be able to afford
noticeably higher payments. We wouldn’t count on it.
But that’s the thing about bubbles - they all burst. Has everyone
forgotten about the tech meltdown seven years ago?
Well, Morgan Stanley’s Stephen Roach certainly hasn’t. And we’ll leave you
with his much more succinct analysis:
“The bursting of two bubbles seven years apart - dot-com and housing -
holds the key to the macro outlook. While different in many respects,
these sharp swings in asset markets share one thing in common - the
initial belief that any spillovers would be limited and that the rest of
the economy and financial markets would remain unscathed. Just as that
view turned out to be wrong in the early 2000s, I fear a similar outcome
today.
“… a post-bubble macro contagion that could end up being a good deal
worse over the next year than it was seven years ago. What’s especially
worrisome about the current situation is that real GDP growth has already
slowed to just 2% over the past three quarters - far short of the 3.7%
annualized pace of the previous three years. Yet this downshift is largely
an outgrowth of a steep recession in homebuilding activity, together with
collateral impacts of a recent downtrend in business capital spending. By
contrast, the American consumer has barely flinched, with average gains of
3.2% in real consumption since mid-2006 representing only a modest
downshift from the astonishing 3.7% growth trend of the past decade.
Should the consumer move into a more meaningful period of consolidation -
precisely the risk as equity extraction from residential property now
slows in a post-housing-bubble climate - then macro contagion could become
an increasingly serious problem.
“Given the likelihood of meaningful consumer spillovers, I would place
about a 40% probability on an outright recession scenario in late 2007 and
early 2008.
“It would take a Volcker-like toughness to bring this insidious process to
an end. Yet both Greenspan and Bernanke seem to be cut from a very
different cloth.”
Short Fuse
The Daily Reckoning
P.S. If you think that this wave of defaults and foreclosures won’t effect
you, read this special report. It shows how to hedge your retirement and
property savings against this coming mega-bust…
The “Second Wave” Housing Tsunami
http://www1.youreletters.com/t/1214704/14857901/818169/356/
— The Daily Reckoning Book of the Week —
Oh, give me a break! Another of those, “Doom is on the way,” offers. Oooops. Just noticed it was on the Daily Reckoning. That’s a stay-away warning for starters. When, oh, when will people start using their own brains instead of reading these whacko’s like “Financial Sense, “Daily Reckoning”, Fleckstein, etc. If anyone had followed these financial guru’s for the past 10 years they would now be living in Section 8 housing and lining up for a donated brown bag of groceries at the local Salvation Army. Conversely, anyone listening to the bull predictors are now getting their just rewards. What goes around comes around.
Look, there’s going to be massive NO CRASH. There’s going to be a decline and possibly but it’s not set in stone, a 1987 style rapid decline. Then it will bottom out and the rise will start. Property is going to come back but it will take time. Several years. Yes, a lot of people are going to get hurt because of this mess but a lot of peole will eventually get in on ground floor property bargains when the bottom is in.
Do yourself a favor. Ignore these whack jobs and their stupid predictions.
Nor should we listen to you, Mike. If you were truly looking to help your fellow man, you wouldn’t tell them to ignore any information. What I say is to examine ALL the information out there, examine both sides of the argument (both the bears and the bulls) , look at the evidence and examine the facts, stand back and look at historical trends (remebering that human nature never changes and history usually always repeats). Stay open minded and don’t be blinded by wishful thinking. That’s what I tell people to do. The information is out there. Take a hard look and make your own decision.
Good point. Wishful thinking is what got millions of people caught in houses they cannot afford and lose in a couple of years.
But don’t pay $49.99
There much bigger issues than losing or making money, at play.
Unless you can come up with linformation to refute the facts presented in that article, you should not indicate the arguments are nutty. You in fact agree that a decline is coming. You don’t agree on its duration or depth.
I agree the article uses fear tactics to sell something but the arguments are real and the facts are true. It is not crazy to view the odds as dangerous that the FED will not be able to control the current meltdown. The reasons are as follows.
1. The historic size of the bubble and the amount of people participating.
2 Historic evidence in Japan in 1990 and the USA in 1929 that reducing iterest rates will not necessarily stop deflation of values.
3. The fact that the USA is a debtor nation (unlike the prior two examples) and may not have the luxury of even reducing interest rates for very long. The idea that the resulting weakness in the dollar woud force the FED to raise rates not to fight inflation but to encourage foreign investors to hold and buy dollars. Examples of debtor nations at the time and their resulting problems would be Russia in 1998 and Argentina in 2001. They both defaulted on their debt after lifting interest rates to 30-80% to defend their currencies.
This is a CAT 5 storm and I would not advise people underestimating its danger through 2010-2012.
I remember feeling the same way, Mike, when back in 1999 I was listening to those “whacky” “dump tech, buy gold” ads on the AM radio.
Hahaha!!
She did get an offer–though it was for about $900,000, which she considered too low. ‘It was somebody who was taking a chance, who really couldn’t afford the price,’ she said. ‘Nobody is taking into consideration that I have already lowered the price by $100,000.’”
What do you even say to this ignorant Betty.
Greed knows no bounds.
Maybe she’s the one who really couldn’t afford the price. She just bought the thing in July ‘03 for 865k.
http://tinyurl.com/2rdamq
Here’s the listing”
http://tinyurl.com/2nuebk
And it sold for 630k in 1999
http://tinyurl.com/2w9nke
I’d say, “Oh, you mean you dropped your price 10%.” That’s the reality check for people selling megabucks houses. Bet she still leave $1.00-2.00 tips at the restaurant.
Given that she owes $822,700 on a place she “bought” for $865,000, I think its safe to say she couldn’t afford it. By the way, this house is 90+ years old and only 2700 sqft, the kitchen is lacking granite and ss appliances, it is heated by uncovered radiators, and the bathrooms are likely 50 years old (since only the master bath has been “updated” meaning that they likely replaced the sink and toilet and painted the tile in the shower). I guarantee you that this is a teardown and yet they still want $1.075M. I hope this lady gets what she deserves - a short sale or worse.
After further thought, maybe this woman can afford her home. A lot of people have financed the way she has. It just bothers me that she is so highly leveraged that she can’t accept what probably was a fair price. And then she had to put the buyer down.
I hear this same story from so many who are selling and it really bothers me. It’s like they are bullying you into over-paying by making judgments about you if you don’t come in at list price. Yet another sign that it is a terrible time to buy.
Overpriced, probably.
But not everyone wants a modern house. And there’s going to be a lot of granite and stainless-steel appliances in dumpsters a few years from now.
She did get an offer–though it was for about $900,000, which she considered too low. ‘It was somebody who was taking a chance, who really couldn’t afford the price,’ she said. ‘Nobody is taking into consideration that I have already lowered the price by $100,000.’”
What do you even say to this ignorant Betty.
How in the heck did that double post? I’m trippin’ over here. Better go take my Saturday nap.
Some things just need to be said twice…..
Mrs L & I looked at an open house for a 1.2M home about a month ago, and as we were leaving and obviously not showing the requisite interest in buying, the owner/builder says, “a little more than you wanted to spend”?
I was dying to say “I think quite a bit more than I’m going to have to (you arrogant ass)”, but instead said, “Yeah, we’ll wait and see how the market goes….”
(Mrs L doesn’t like the bearish bantering….. another reason for taming the response)
Should have said “the price is fine, I was just expecting more upgrades”.
This accomplishes 3 things:
1. Gives the seller hope that he’ll sell for that price
2. Puts the house down (very subtly)
3. Possibly makes the seller add upgrades and bury himself farther.
I don’t think it’s you. Sometimes posts show up twice. I had a post completely disappear once.
Jeez, that house is crap. It isn’t worth 120K. Too old.
Roidy
Chandler, AZ: A sh*tload of homes for sale (many on the market for years now) haven’t seen even a single potential buyer looking at one in many months.
Not surprised when you’re still seeing a lot of things like this in Chandler: 3/2 2000 sq. ft house purchased 07/05 for $339,900 being “offered” 03/07 for $422,000.
$82,100 for
I took a drive down to Tucson yesterday morning. I haven’t driven on I-10 that way since last July. Amazing to see the houses from the freeway in Casa Grande all the way to Arizona City. Picacho Peak looks the same - no new development. I couldn’t imagine commuting from Casa Grande into Phoenix. That means no workouts and becoming a typical FAT American. It’s sad to see houses under construction in the beautiful Sonoran desert, knowing they will eventually become homes to druggies and other trash types. I hear that Casa Grande and Maricopa have higher property crimes than any Phoenix zip code. A lot of empty houses and more so during the day time when people commute to Phoenix to work. Sad state of affairs. I read the same thing about Palos Verdes Estates. A lot of homeowners who bought before the 100% run-up in prices still have to commute to work in LA, leaving their houses vacant. So lots of property crimes take place there.
Anthem RE:
In an area with about 9,000 homes there are 635 “owner occupied” homes on the market, with the average month having about 32 homes sold, equalling 19.8 or 20 months of inventory.
Foreclosure.com shows 69 foreclosures, 114 pre-foreclosures, and 335 tax liens.
The tsunami is starting to form, but its’ still off in the distance. The realtors I’m talking to say that the sellers aren’t lowering their prices and I’m betting it’s because they can’t go much lower.
This snail-pace slow price decline in the face of looming strict lending standards has me wondering: will 5 years be long enough to come up with a down payment for the average buyer, no matter what amount the price declines during that period?
I think the RE bubble was in not just about greedy buyers, but also about conformity. You are an oddball if you are not paying a mortgage or owning a house. Just like the silly peer pressure in high school. “Coolness” is not just a concern of teenagers anymore. When is saving money in savings bonds going to be cool? I’ve been doing that since 1998.
It’s not a market that got caught up in the bubble, and it didn’t have affordability issues. [Chicago]
Bzzzzzzzzt! Wrong answer. Thank you for playing; we have some lovely parting gifts.
Also, that dude’s name… David Stiff. As far that names go that’s a hanging slider.To bad Pfizer is laying off people; he should be selling Viagara.
Two condos went on sale this week in my building; one $30K lower than the other. The cheaper one is on a higher floor and in NICER shape than the more expensive one, and is the lowest I’ve seen for a comp in this neighborhood in a couple years.
One more thing. This is hilarious. Price history of a listing in my neighborhood:
Days on Market: 257
Price Reduced: 09/07/06 — $299,000 to $295,000
Price Reduced: 09/13/06 — $295,000 to $279,000
Price Increased: 10/25/06 — $279,000 to $279,900
Price Reduced: 11/08/06 — $279,900 to $279,000
Price Reduced: 12/04/06 — $279,000 to $278,900
Price Increased: 01/08/07 — $278,900 to $300,000
Price Reduced: 02/12/07 — $300,000 to $259,500
Price Increased: 02/19/07 — $259,500 to $279,900
Price Increased: 03/20/07 — $279,900 to $299,000
Must be David Stiff’s condo. Obviously doesn’t give a damn whether the place sells or not. Real estate is serious business, not a game to be played by childern like you. (That one’s for the former FCers here.)
Are the price jumps possibly a way of “refreshing” the listing on some database somewhere?
Maybe, but the days on market goes back to before the first price change, back to around June in fact. Also, if it were a consistent pattern or all very small moves it might reflect an attempt to refresh. But there are $900 drops and $40k rises.
“Are the price jumps possibly a way of “refreshing” the listing on some database somewhere?”
In my area, at least, it was a way of showing arrogance about the constantly rising prices and bidding wars waaaay back in 2004 and early 2005. In today’s market, it is asinine.
In fishing parlance its like the seller is jigging for a buyer. LOL.
And I thought the 30K increase was to cover his new ARMs reset.
“It’s not a market that got caught up in the bubble, and it didn’t have affordability issues. I suppose buyers have gotten caught up in the general psychology and are sitting on the sidelines, waiting to see what happens,” added Stiff, whose company studies home-sales data in regional markets”
economist David Stiff, of Fiserv CSW, a housing-market analyst in Cambridge, Mass.
BS! This guy doesn’t know what the hell he’s talking about. I’m in the western suburbs and have been watching the market since June 2001. It was up then and has gone to ridiculous levels in the last couple of years. We have flippers and lots of tear downs putting up expensive Mcmansions. The houses under 400k are either small or need extensive updating. Maybe he need to get out of cambridge and actually take a look at what he’s talking about. I get very tired of Chicago being called a non bubble area.
“I get very tired of Chicago being called a non bubble area.”
Here’s a bubble, there’s a bubble, everywhere’s a housing bubble…
Old McGreenspan’s screwed us all
E I E I O
FED Up where are you? I’m in Elmhurst, and it’s nice to know there are others out here.
We are near neighbors!
Kathy,
I’m in Wheaton. It is good to see others from our area on the blog. Sometimes it feels like a lot of the people around here think we’re insulated from the bubble.
They feel insulated because they owe $600K on a place they bought for $250K back in 99 (in my small circle, I know two families like this). Every homeowner I know (in the northern suburbs) thinks it’s fine that 60+ yr old 3 bed 1.5 baths with tiny lots, so-so locations, and horrid commutes are asking north of 450K (usually over 550K and in some areas 700K+). Yeah, I’m sure all those people making $150K a year want a 1920s bungalow in Skokie (no offense to Skokie residents).
I get very tired of Chicago being called a non bubble area.
Being the devil’s advocate here… If you look at Chicago from a regional perspective, there weren’t a lot of [absolute] affordability issues. During the entire bubble, you could get a 3BR SFH on the outskirts of the metro area for $200k or less. It’s just that as the bubble wore on, the exurbs got farther and farther from the city. People say that Dallas has unlimited amounts of buildable land; Chicago wasn’t all that different. It’s no wonder that Kendall County was one of the fastest growing counties in the Country.
Back in the early part of the decade, I was living just outside the Loop and commuting out to Motorola every day. It took about an hour to get there. I knew a guy that drove an hour in the other direction to get to Motorola. When he bought that house, he was on the outskirts of the metro area. By the time he sold (took him about 8 months but he finally sold in 06), there were subdivisions 30 minutes further out.
Prices started to get out of control in the existing areas of Chicagoland. It was a bubble. It’s no South Florida or anything, but it was definitely a bubble. I doubt some dude in Cambridge would be able to see that if all he was doing is looking at regional statistics.
Incidentally, I’m seeing Northwest Indiana still chugging along. It was someone insulated from the boom because most suburban Chicagoans wouldn’t dare live there. Yet, now a steady stream are taking a look and seeing that outside of Gary, it’s not a bad place. East of Gary, you can buy a 3000-3500 sq ft house less than 5 miles from the lake (which, east of Gary, is about 75% national park land, state park land, or municipal park land). There’s two interstates and a commuter rail line that takes you downtown in less time than it takes to get downtown from any Illinois exurb. Public schools perform very well and are not overcrowded. Taxes are lower, etc. I’d like to see some Northwest Indiana stats to see how it’s performing right now, because it’s looking to me like the “there was no bubble here” type of place.
Crap, I forgot to put that the 3000-3500 sq ft house in NW Indiana would cost $175,000-200,000.
In Arlington Heights there are now 100 houses on the MLS priced $699k or above. Photos or construction state show that 71 of those are clearly vacant, and another four probably staged or occupied by house-sitters. The number of homes sold in this price range in 2006 was only 51. Most of the vacant homes are new spec construction on teardown lots, mostly in lower-middle class neighborhoods.
Phoenix, AZ:
I thought after last summer the market was supposed to pick up again, no…it was the first of the year…no wait, springtime right??
Phoenix MLS = 56,825 listings
Maybe it will pick up after ….?
People lower the f-ing price.
Everything is getting better according to Tribune business editor Julie Lynem:
http://www.sanluisobispo.com/mld/sanluisobispo/16966306.htm
These are not the droids you are looking for … move along.
WOW!!!!! Over 57,000 home for sale in metro Phoenix according to Zip:
http://www.ziprealty.com/buy_a_home/search/form/cityG.jsp?locate=false&usage=search&cKey=vjj3kbp6&metro=phoenix
Yeah, that’s normal. NOT.
Too many houses + few buyers = raise asking prices?
No, sorry to disagree BB, it WASN’T normal. But it will be for a long time to come.
makes me wonder if it’s not just more houses on the market….it’s that NOTHING is selling. i’ve seen the inventory in my area here in so cal skyrocket in direct proportion to the third week of February subprime implosion. if it’s true, we won’t see it in the msm until it’s a done deal and they’ll put some bulls$%t spin on why houses stopped selling. Of course, this is all IMHO.
Right. Nothing is selling. Just more inventory in many places. Check out Miami/Fort Lauderdale/Palm Beach - 111,000 homes for sale in that area. My buddy has a condo on the waterfront somewhere in Miami. He claims that he’s in good shape. He touts the party line. No bubble in his condo building. tells me that prices are up in his building. He hasn’t told me if any have been selling. LOL.
And look at the south bay in California. Full of SUVs. Average incomes $63,000 and average RE prices $600,000. Not much is selling. Prices are not budging. The ones who bought for $300,000 in 2003 think they have a Constitutional right to $600,000.
Inventory, per Zip Realty:
TAMPA
01/21/07 59,865
02/24/07 62,658
03/24/07 63,931
MIAMI/FTL
01/21/07 103,131
02/24/07 109,638
03/24/07 111,863
ORLANDO
01/21/07 32,341
02/24/07 34,398
03/24/07 35,971
PHILA
01/21/07 32,698
02/24/07 32,552
03/24/07 33,729
ATLANTA
01/21/07 57,620
02/24/07 61,895
03/24/07 65,107
BOSTON
01/21/07 42,170
02/24/07 42,870
03/24/07 45,429
BALT.
01/21/07 46,025
02/24/07 45,877
03/24/07 49,506
“‘The buyers I’m working with all tell me they’re in no hurry,’ he said Wilmette real estate agent John Nash. ‘They say they want to get a good deal, and I don’t know that they’re not overplaying their hands.’”
John Nash, huh? That reasoning isn’t particularly the sign of a beautiful mind. You of all people should know we’re not quite at at Nash equilibrium. Although you’re encouraging the “cooperate” strategy, “defect” works far better right now.
LOL.
I’m glad someone got the reference.
“Defect strategy” is when a fatty walks into the bar, together with an ugly and a skank.
A tactic I hadn’t seen used yet:
There is a new house that was for sale (Chico, CA) that we were keeping an eye on since last year. 3055sqft, and dropped from the wishing price of 879k, to 745k. Very nice home with an attached casita. This was a custom home on a large lot, among 800k-1M+ homes. By far one of the better builders in Chico.
Still in the same area of this home, is another builders “village series” of smaller production homes (2200sqft-2600sqft) on small lots, far inferior to this home in quality and construction, listing at 650k-779k. Nothing was selling, and I thought when and if that large custom home sells, the smaller ones will take an A$$ pounding when they go searching for the comps. We got a little serious at an open house on the larger home, with the RE agent sounding like the builder was very motivated. We discussed 700k, and the agent was ready to write. Came home, threw cold water in our faces, and remembered we were waiting. The agent left several phone messages, and when I finally called her back with our decision a week later, she was writing another offer, and ….well, didn’t really need to talk to me anymore. Sure enough it did sell, and here is what was recorded for the sale:
745k, 2695sqft. Amazing…… full asking price for a home that was languishing on the market for months - even at the lower price, and equally as amazing is the house shrunk 360sqft…..about the size of the casita.
So….. here’s how the builder club avoids their buddy taking that A$$ pounding. Lie on the price and size. I know this is a tight insider group in Chico, but I didn’t know this was even legal. Ugly dirty business this real estate.
So you’re saying you bid on the presumption it included the casita thingy, but if you had bought, it wouldn’t have been in the contract? (I assume a “casita” is something like a mother-in-law apartment.)
Yes, like in-law quarters, and definitely part of the house. It was even under the same roofline as the house, not like some that are detached. Allegedly, the builder would even have put a door from the hallway into this casita if you wanted it. Fully finished studio room with a full bathroom. I don’t see anyway it can be excluded from the square footage.
These things usually do not escape the eye of the motivated local tax assessor. In Georgia, for example, the tax records even show an outline of the entire structure and attachments, with dimensions (very helpful when you’re trying to figure out how much the seller is asking for the portion that is finished basement).
They don’t miss anything here Chip, but when the Tax Assessor is you brother’s wife’s ex-husband’s cousin’s nephew-in-law, it’s all good in Chico.
Dirty business in a dirtier small town…..
Pensacola, Florida
Looks like the high end in P’cola has taken one out of the Section 8/Illegals playbook. A couple owners in “our shite don’t stink” Portofino are offering 1/4’s and 1/7’s in their luxurious condos. One owner is offering three shares at $189,000 per share with himself retaining one share and another is offering 6 shares at $159,000 per share with himself retaining one share. Both of the condos have two bedrooms with 1,300 square feet however valuations are $756,000 and $1,113,000 respectively which is pretty cool since the lowest price Portofino unit with two bedrooms and 1,300 square feet listed on the MLS is $550,000!
MLS Listing
http://tinyurl.com/yvl4xb
Have any of you guys seen this in your respective areas? This is the first time I have come across listings for fractional ownership in our MLS.
Popper — that is very interesting. I clicked on your link and got only to the Pensacola MLS home page. I was a beach condo owner for 20+ years and haven’t heard of this being done, relative to a long-existing single-owner unit, until now. I suppose that, if such is possible, condos learning of this maneuver will move quickly to amend the condo docs in order to prevent fractional ownership. In Florida, any significant percentage of such ownership would, I’d think, screw the mortgage rates in the same way as happens when non-owner-occupied units pass a defined percentage — the rates then become investor rates.
Chip, I created a new tiny which I have pasted below and as a backup the MLS number is 322786. I tested the tiny on Word so I know it worked.
http://tinyurl.com/ytmyql
I have seen half or third interests in beach property before in Pensacola but it was the result of inheritance. I have never seen fractional ownership advertised on the MLS.
Good point about changes to the applicable interest rate. Could this also impact the insurance rates applied to the condo?
Popper — got it that time — thanks.
I got to Vegas a few days early for a series of meetings next week. I thought I would drive around to see what was going on. Condo and open house sign spinners here and there.
What struck me most was that, in a place that’s supposed to be booming, the stores were empty. At noon on a Saturday, about 30 customers in a Best Buy. About 20 at a Circuit City. 3/4 empty mall parking lots everywhere. Do people not shop any more?
If the place weren’t such a monument to fakery (I thought maybe New York New York would have a plausible place to drink a Manhattan, but no!) I might be tempted to come back next year and lowball.
Its tough to buy that $5000 jumbotron plasma TV when your credit cards are maxed out, you have no savings and no home equity.
Tucson area: I’ve been getting “new listings” and “price changes” email for the past few years from a big real estate company website. They’ve been arriving in huge batches — jamming my inbox for months now — but I never remember seeing “Bank Owned” in the description before. Just yesterday, I got three.
Anyone with market conditions for the following areas?
Ogden, Utah
Mountain Home, Idaho
Great Falls, Montana
Wow—not too sure you could say Mountain Home has much of a RE market. There is a lot of talk about planned communities between Boise and Mountain in the empty desert near the Stage Stop.
Here’s some info from the following story: http://www.boiseweekly.com/gyrobase/Content?oid=oid%3A170860
Mayfield Springs: Developer Greg Johnson applied last September 16 for a municipal water right for a 2,000-unit planned community called Mayfield Springs, to be located directly across I-84 from the Boise Stage Stop at exit 71. A representative from Mayfield Springs told BW that the proposed planned community will be completely self-sustaining, and will initially include 900 acres of homes, schools, a town center, storefronts and a hotel/convention center, mostly in Ada County along the Ada/Elmore border but also possibly expanding into Elmore County. The community will also include a championship golf course designed by Gene Bates, who designed the nationally acclaimed Circling Raven golf course at the Couer D’Alene Resort Casino in North Idaho. The representative said the developers plan to turn their planned community application to Ada County as soon as this week.
Unnamed planned community: Sharp said she has been in discussion with Farwest LLC, a Boise-based firm that plans to develop a planned community on a that 12,000-acre parcel in the Indian Creek area of Mayfield. Representatives from Farwest did not return repeated calls from BW, and Sharp told BW that the county has not yet received an application for this community.
Unnamed planned community: On June 19, a group representing Arizona-based developers Cardon Bowden Investments and Cardon Hiatt Companies conducted a “meet and greet” with the Elmore County Board of County Commissioners. The group told the Commissioners that they “have 1800 acres, 1200 of which are on the Elmore County side” of the Ada/Elmore border, and they were “working on the concept” of a 5,200-unit planned community with four units per acre, according to the meeting minutes.
After being questioned by the commissioners about the water needs for such a project, the group said they “hadn’t gotten that far yet.” Brent Bowden with Cardon Bowden did not return repeated calls from BW concerning the development.
War Eagle Speedways: While not technically a planned community, this $200 million super speedway complex proposed near Interstate 84 exit 74, three miles east of the Boise Stage Stop, is based on the same principles: Self-containment, self-sustainability and sheer immensity. Proposed to stretch two and a half miles south along Simco Road, the 2,000-acre site will contain its own trauma ward, RV parks and fire department, all woven around eight separate motor race venues with a total seating capacity of over 200,000 spectators. War Eagle vice president Pamela Dugger told BW that the company has filed for a conditional use permit from Elmore County, and is “very hopeful” that they will be able to break ground by late fall of this year.
Hmmm, “sheer immensity” huh? In Idaho??? Where will the people come from? Maybe the developers should take a look at the massive, and doomed, planned communities in Nevada and California before going any further. But — applause for the county commissioners who questioned water needs.
Hey Tim-
My dad’s been trying to sell his place near Ogden for 3 months and has had some lookers but no sale yet. He’s asking something like 30% over what he paid for it in 2003. I’d say Utah right now is in a market phase similar to late 2005 in most of the country - just past the peak, but with enough activity to mask the downturn. BTW, when people talk about how nice some places in Utah are they’re NOT talking about Ogden. Subprime meltdown will have a big impact there too, since there are lots of marginal buyers in that area.
-Jason
From Meridian, Idaho:
The other day, I saw the RE Agent signs disappear from three new construction homes that have been on the market since fall; they were replaced with generic “for sale by owner” signs. It seemed kind of odd until today when my wife and I were walking the dog and saw they were having an open house at all three homes. We struck up a conversation with a lady (turned out to be the builder) standing outside of one of the homes. It turns out that the builder got rid of their RE agent and are trying to “dump the homes for a low price so they can move on”. She said the market is pretty rough and they need to get rid of the places. She mentioned another private builder they know who’s paying $40,000 a month in payments on inventory they can’t sale.
In other news, construction carries on while new-construction and resale homes sit on the market. According to the MLS February sales statistics, Ada County has over a 10 month supply of new homes on the market.
Its been a while since I have posted here. I’ve been following this blog even when it was on blogspot. It is morbid fascination that keeps me coming back here. I sold out in the spring of ‘05. Now the chickens are really coming home to roost. The pain that is going to hit us (as a nation) in the next few years is going to be worse than the Great Depression, and I dread the future. I really hope that maybe there is some way to get out of this mess, but other than the utter destruction of the dollar, I can’t see a way out. So all of you who are gloating about being renters and waiting for the bottom, better realize that when this thing finally tanks, the pain is going to be so enormous and you may not have much of an apetite for popcorn or that “bargain” afterall.
c’est le vie
I myself am a bit worried about what I am asking for, fearful that I may get it.
Yeah, this will end badly, IMHO. Everybody loses. Sucks.
You are right. A good storm forcast doesn’t mean we will survive the storm. It just gives us better odds.
“Good storm forecast”.
Well put.
A week late perhaps, but this story is based in the SGV area; West Covina: my SO was out last Sunday and happened upon an open house. Nice place, from the her description. I had showed her the LA Times article that ran that morning about the “rise” in LACo sales prices and she’s carrying the bubble antibodies now (with slight relapses from time to time…this OH visit was one). She engaged the stooge inside and asked for the cut sheet on the property. She had to wait because he was reworking the ask on the sheet with a Sharpie, slashing $25k off the printed price all while telling my SO about how the Times was confirming that LA’s market is “different this time” and only goes up! I have a lot a respect for this guy who can perform two mutually exclusive tasks at the same time…
We hit about ten open houses in Jacksonville yesterday. Few people were out looking. The realtors are finally coming around and telling the truth about the market. Several realtors were telling us that sellers are now accepting “low ball” offers of 20-30% off with seller paid closing costs. All were fearful about the market and were admitting that prices would be down tremendously this year.
A new edition of Lowball! is up.
http://njrereport.com/index.php/2007/03/24/lowball-march-2007/
MLS Town OLP LP SP % off OLP $ off OLP
2223440 Hardyston Twp. $179,900 $143,000 $95,000 47.2% $84,900
2277922 Independence Twp. $450,000 $275,000 $250,000 44.4% $200,000
2336286 Phillipsburg Town $159,900 $115,000 $90,000 43.7% $69,900
2321999 Elizabeth City $479,900 $479,900 $290,000 39.6% $189,900
2226538 Blairstown Twp. $650,000 $495,000 $425,000 34.6% $225,000
2327755 Branchburg Twp. $450,000 $399,900 $300,000 33.3% $150,000
2354690 Mendham Twp. $1,200,000 $1,200,000 $825,000 31.3% $375,000
2275609 Stillwater Twp. $239,900 $199,900 $168,000 30.0% $71,900
2360200 Wanaque Boro $450,000 $450,000 $320,000 28.9% $130,000
2245985 Mahwah Twp. $775,000 $599,900 $555,000 28.4% $220,000
2277032 Andover Twp. $3,500,000 $2,900,000 $2,538,000 27.5% $962,000
2256538 Lake Mohawk Sparta $2,500,900 $2,000,000 $1,815,000 27.4% $685,900
2270544 Berkeley Heights Twp. $599,900 $449,999 $440,000 26.7% $159,900
2241307 Hillside Twp. $380,000 $285,000 $280,000 26.3% $100,000
2268877 Livingston Twp. $849,900 $669,900 $630,000 25.9% $219,900
2336323 Hopatcong Boro $184,500 $144,900 $138,000 25.2% $46,500
2274990 Millburn Twp. $3,495,000 $2,800,000 $2,620,000 25.0% $875,000
cool
better than powerball
some of those hoods are pretty decent
No subprime problems in Maryland according to the press (spoonfed by the “Maryland Association of Mortgage Brokers”) .
Nothing to see here folks, move along…
http://www.thebaynet.com/news/index.cfm?fuseaction=news.viewStory&story_ID=5197
In my area (South Shore Tampa Bay, unincorporated Hillsborough County) the bulk of the listing action is in Sun City Center, a large over 55 retirement community. I went through there yesterday for a little garage and estate sale action. People are swooping down on the garage and estate sales like vultures, but not, it seems, on the real estate. I noticed something I rarely see in Sun City Center, which was lots of FSBO signs. In the past, there was always a modest but steady supply of homes for sale as the residents either passed away and their heirs listed the houses for sale, or someone had to go into a nursing home. FSBO signs were only occasional, as most people listed with a real estate agent familiar with the community. The real estate agents usually hire the estate sale organizers on behalf of the heirs who are selling the homes. There was never much of a problem selling in Sun City Center, because as soon as someone deceased or went into a nursing home, there was usually a retiree from up North to take their place. Prices were usually modest.
But, during the boom, WCI expanded Sun City Center like crazy, in anticipation of all the boomers retiring or wanting homes for the winter months. And of course, Sun City Center also got its share of flippers.
I don’t really know the exact reason for the proliferation of FSBOs in Sun City Center. But I suspect that a number of retirees can no longer afford what was once a modestly prices but upscale community, considering that the combination of taxes, insurance and community fees must be killing them. Probably also a certain number of the FSBOs belong to flippers who don’t want to pay real estate commissions, or can’t afford to. And I’m also willing to bet that Sun City Center is sort of a canary in the coal mine in showing that “the boomers are coming” mantra is a lie. I think many of the developments around the country that built based on the lie built as if the mythical “boomers” were coming to their area only. I think that’s what WCI did and it is now paying the price.
Too much supply, not enough demand.
Exactly! Nice analysis, Palmetto.
The supply is getting way ahead of demand. The Sun City developments are built by Del Webb, the creator (or at least early adopter) of the active retirement community paradigm. In a way they’ve become a victim of their own success, since they’ve sold out some massive Sun Cities in AZ and CA, as well as FL. I guess it wasn’t unreasonable to think that a lot of retiring boomers would want to buy in a Sun City, and most boomers haven’t reached retirement age yet. But it may be that Del Webb overestimated boomers’ income/wealth and/or desire to move. Perhaps those who want to move to a Sun City can’t afford to at current prices, and those who can afford to don’t want to.
I found a really nice mid-century modern house for sale… i hope when i’m ready to buy a place after the dust has settled it’s the type i could find…
but right now it sits as a saved house in my listings as a reminder that there’s still some time to wait… the details:
Last Sale: 12/22/05
Sales Price: $268,750
Zestimate™ $384,659 (at least it’s nice seeing those charts come down).
And what is this house going for?
List Price: $550,000
Mind you, the description (NO interior photos) says: “expanded and replaced interior walls, added modern bathrooms and a state of the art kitchen”
So I think maybe 50k in renovations? Does that justify a DOUBLING of the price? Time for more coffee.
geeah, a nice midcentury is surely worth waiting for. You just have to hope they kept the remodel in line with the style. I have seen horrors done to those lovely houses here in LA.
According to Zip, there are now 120 houses for sale within a one-mile radius of my house! A few weeks ago I posted about my neighbor who put his house up for sale. He and his wife are in the process of getting a divorce as he has been having a affair with a woman half his age for the past six months. He did a cash-out refi to buy her half of the house from her and he’s trying to sell it himself. He was the cheapest house in th neighborhood until another seller came in over the weekend and listed the same model home and undercut him by $30K. Karma is a b!tch!!!
Some other friends of mine are trying to sell their home here and move out of state due to a job transfer. No bites and they are beginning to panic. Moderate price cuts don’t appear to be working anymore. Buyers are unwilling or unable to take anything but huge prices concessions from sellers right now.
People around here are starting to get it. Nothing has sold around here since December. Phoenix inventory is continuing to skyrocket with 57K Maricopa/Pinal counties. Getting very ugly…
“Moderate price cuts don’t appear to be working anymore. Buyers are unwilling or unable to take anything but huge prices concessions from sellers right now.”
spike, I think you’ve just nailed the major dynamic behind this bust. I, for one, am not going to buy in my area until prices come down to at least 2000 levels, or more, like 1998. When major corrections occur, they tend to overcorrect before returning to normal. That’s the definition of a bust, IMHO. I’ll buy now only if I get a price at the level I want. If not, I’ll wait.
Back in 93021 inventory is up on Realtor.com and asking prices are down 6%. Here in Phoenix rentals go fast and sales are slow……
After three days of rain the sky finally cleared and the sun rose over 57,243 houses for sale in PHX this morning, up over 8000 since the first of the year, and up about 3000 over the last two weeks. Looks like rain makes housing inventory grow along with the grass.
On one street, three blocks long, next to me in Costa Mesa, CA, I see 11 for-sale signs (two are FSBO). (This is an area with probably 2/3 condos and 1/3 sfrs.) Last week there were 10 on the same section of street. I’m pretty sure there weren’t 10 sales on this stretch of road for the entire year last year. The next road over, which had a lot of listings last year, hasn’t caught up. There are only 2 homes for sale right now, whereas last year I’d see 6 or 7.
Seems the homebuilders are now advertising on the MLS, as their zero lotline homes are showing up on zip searches. (In neat little bundles.) They’ve been for sale for quite a while now, with little action showing (despite all the sign spinners working hard to draw attention to them).
Huntington Beach is a riot. The streets all over the city are littered with for-sale signs. It’s especially obvious (and has been for months) driving down PCH near the main pier and shopping area. LOTS of townhomes for sale, in the ~$1.5 million range. The for-sale signs are choking up the sidewalks.
New development: Seems a great number of realtors in Orange County have gone to using “Garage Sale” signs to advertise their homes for sale. Not sure if this is a marketing gimmick or a way to loophole some city sign ordinances, but on a 5 mile drive in CM and HB, my wife and I found boatloads of these fake “garage sale” signs, for lots of different realtors, trying to get you to go see a home for sale. (They all had the real estate agent/office listed at the bottom of the sign.)
I’ve been seeing the same kind of signs in Orange and Irvine. I had just assumed that the RE’s figured out people needed to sell everything they owned to make their mortgage payments while they try to unload their POS onto someone else - and combined the two efforts.
No joke - this made sense to me since I have an employee who is in her mid-twenties, makes less than 65,000 a year and has a mortgage on a five bedroom house with a $4,000 a month interest only payment. Her roommate (one of two) just moved out, she has been looking for another one for more than a month, and is now planning a big garage sale (property taxes are due). Have you guys looked at Craigs list lately? LIterally dozens of room for rents in Mission Viejo alone, all going for $1000 or more FOR A ROOM! You can get a nice 1 bedroom apartment for another hundred bucks. Things are getting ugly.
Lots of inventory in central penna., lot of home have been on the market for over a year. Not sure about price inceases/deceases YOY, however many have ‘price reduce” tags.
22151 N VA south of soviet DC
steady prices now w slightly growing inventory
stuff far from DC and over 700k hurting
A home in our development was put on the market last May for $730,000. It sat there all summer and fall. The price was dropped twice, eventually to $675,000. Still no sale.
It was taken off the market at Christmas and went back on a month ago at $725,000.
A neighbor just told me it sold and they are getting $725,000. The new buyers are a family from California - the guy got transferred to a job here in Portland at a semiconductor company.
From central coast California….. prices dropping painfully slow…sellers still holding on to inflated prices…. most unrealistic since there’s no job market to support these high prices , generally retirees up here and government jobs…..
From LA’s Westside. I drove around the Rancho Park, Cheviot Hills area. In some corners it was hard to figure out which way to go, there were so many for sale signs. The jump in inventory is beginnning to show. So far, nothing reasonably prized.
In today’s RE section of the Times, it was interesting to see that one of the QA columns dealt with the tax liability of a short sale, another one titled “Don’t expect bailout if you overpaid” in answer to an upside down FB who felt he was deceived by the builder on his house’s appraisal. Interesting, uh? You can say things are peachy as much as you want, but people’s letters are beginning to paint a darker picture.
tHeWoRm
bEgInS
tO tUrN
Prices trickling down in Kauai month to month. Sometimes you see a sold or in escrow label over the ad in the local RE rags but then next month that same place will be advertised for a lower price. Its harder to get a loan and that is reflected around here big time. Tons of open land but the job market is a joke and the prices need to come down 50-70% to make them workable again.
Bottom line, the RE market is toast all over the world.
“She did get an offer–though it was for about $900,000, which she considered too low. ‘It was somebody who was taking a chance, who really couldn’t afford the price,’ she said. ‘Nobody is taking into consideration that I have already lowered the price by $100,000.’”
Wrong, you greedy fool. What people are taking into consideration is that the crashing housing market could trim several hundred thousand dollars off the current “market value” of your grossly overpriced house.
“‘It’s not a market that got caught up in the bubble, and it didn’t have affordability issues. I suppose buyers have gotten caught up in the general psychology and are sitting on the sidelines, waiting to see what happens,’ added economist David Stiff.”
I’m SOOOOOO sick and tired of hearing this. It is true that the Chicago area has not appreciated as fast as the CA markets over the last 5 years (ONLY around 50% over that time) but go back ten years. Appreciation is over 200% during that time and around #005 if you go back 15years!
I have a friend who bought a 1 bed 1 bath condo in a Chicago burb for $60,000 in 1993. Nothing special but a decent starter place. She sold it in 1998 for $90,000 in 1998. It’s now on the market for $189,000! That’s over 300% in 14 years if the buyer gets what they ask. IMHO the most the place is worth is $120,000.
“…and around #005 if you go back 15years!”
That should be 300%