“It’s Not The Crazy Free-For-All Market Anymore”
A housing report from the Arizona Republic. “Permits for new-home construction are on the rise in Maricopa and Pinal counties, jumping 26 percent in February compared with the previous month and building on two straight months of gains. The skyrocketing prices of the housing boom scared away buyers and many walked away from contracts, leaving some builders with cancellation rates of 30 to 40 percent. ”
“It’s unclear exactly how many spec homes are on the market. Some analysts say the number could be more than 10,000.”
“Doug Fulton of Fulton Homes hopes the surge in permits isn’t just big public home builders cranking up local production so they can book 2007 sales. ‘I would like to see permits go down,’ he said. ‘What are you doing? You are just generating more inventory. I don’t like to see permit increases any more than I like to see additional homes listed on the MLS. It’s a supply-and-demand issue.’”
“RL Brown’s report noted that the number of closed sales was the lowest since May 2003. He said most new houses being sold in the Phoenix area these days are spec homes.”
The Explorer News from Arizona. “Like many in the formerly booming real estate market, Bob Bates decided to refinance his family’s 1,300-square-foot Marana home on an adjustable rate mortgage, using the extra cash to pay off vehicles and catch up on bills.”
“But when a slew of car accidents and health woes pushed his $33,000 annual income to the wall, the 41-year-old construction worker pursued the familiar option.”
“Despite being late on payments at the time, Bates sought out and was approved for his second refinancing last year, during the lending frenzy to those with marginal credit scores.”
“‘It made sense and I was desperate anyways,’ Bates said. ‘I was shocked they were even going to do it. If I couldn’t make my payment at $800 a month, what made them think I could afford $1,300 a month?’”
“Bates planned to fix up the 15-year-old cul-de-sac ranch house and sell it within months. Then came a nationwide sea change in the housing industry. Now, months behind on his mortgage, Bates stares down the barrel of foreclosure.”
“‘Who would’ve thought the market did what it did with houses,’ Bates said. ‘Nobody’s buying and it’s like, ‘Oh Jeez.’”
“Lenders are tightening their standards, which could have ripple effects in the market. Northern Pima County’s new construction market depends heavily on that population and could stand to lose up to 20 percent of its clients, according to David Modisett, who owns a local home financing company.”
“Property values across the board could also be jeopardized, as neighborhood prices dip when sellers look to unload discount-rate properties. ‘Those areas that have the high foreclosure rates are going to be the ones that have declining values,’ Modisett said. ‘This next year’s going to be pretty volatile, no question about it.’”
“Long Realty Vice-President Janell Jellison said the public perception of a sour market is creating drag on sales. ‘It’s stalling out the market is what it’s doing,’ Jellison said. ‘Everybody’s sitting there going ‘Well, maybe the sky is falling in, so I just won’t do anything.’”
“That mindset is obvious during a drive through many planned subdivisions, including Marana’s Gladden Farms. The community boasts nearly 100 homes for sale, many built on speculation, still waiting, empty of furniture, for their first occupants.”
The Benson News from Arizona. “While there may be a national housing slump, local experts believe Benson’s housing and land sales have gone from crazy to normal.”
“‘Land sales have taken sort of a nose dive right now because landowners have priced themselves right out of the market,’ said local Broker Mary Ann Scott. ‘The market right now is being called a corrective market.’”
“‘It was almost like a panic-buying mode in 2005,’ she said. ‘People were coming in from everywhere and buying whatever they could get their hands on. Compared to prices in California, even the overpriced land looked fabulous to them.’”
“In 2005 and 2006, because Benson’s open land became popular for housing developers and investors, undeveloped land was being sold for up to $12,000 an acre. Will White of Arizona Land Advisors in Tucson said prior to the boom, land cost about $4,000 an acre.”
“Some of the problems in the market were also caused by investors, broker John Davis said. ‘The investors would come in and buy the homes and turn around and sell them,’ he said. ‘The homebuilder had to start competing with investors. Buyers didn’t want to wait six months for their home to be built, so they would buy the one that was ready.’”
“Once the investor inventory decreases, Davis said home sales and construction will continue to go up. ‘Sure it’s not the crazy free-for-all market anymore, but it’s OK. For this area, you could say the market went from incredibly crazy to normal,’ he said.’”
The Sun News from New Mexico. “Do you want to buy a home in Las Cruces? The good news is that there are more homes on the market than in years past. Even though 2006 was another record-setting year for home sales in Las Cruces with more than 2,300 homes sold, the first quarter of 2007 reflects a major step back from that pace.”
“According to Annette West, a Las Cruces real estate agent, 352 homes have been sold so far this year. Through March of last year, 507 homes had been sold. ‘That’s a big change in volume,’ West said.”
“The housing slump reported in other parts of the nation is affecting Las Cruces, experts said. The record-setting pace of the past several years was fueled in part of out-of-town buyers. Many potential newcomers are now having difficulty selling their old house, which makes it difficult for them to buy a new house here.”
“Michael Tassler and his wife moved to Las Cruces from Virginia and bought a house last year. ‘Our home back there is still on the market,’ Tassler said.”
“Luckily his wife’s company helped with the move and bought the house in Virginia although it remains unsold.”
“Tassler said that his home in Virginia is slightly smaller than the one he purchased in Las Cruces, yet it is on the market for significantly more than he paid for his new house. ‘Compared to some other markets, the prices are really good here,’ he said.”
“He said he has acquaintances in California who consider prices in Las Cruces to be ‘dirt cheap.’”
“He said he has acquaintances in California who consider prices in Las Cruces to be ‘dirt cheap.’”
Maybe California investors will organize a bus tour to Las Cruces and pick up some properties for “dirt cheap”.
I went to grad school in NM and I have been to Las Cruces. It’s Freeking Hot there and the landscape is lunar. Nothing around for many many miles. I suppose it looks dirt cheap but do that many people really want this? or do they even have a clue? Inquiring mind wants to know.
‘the landscape is lunar. Nothing around for many many miles.’
I agree. Actually, it’s lunar all the way to Benson and beyond!
Except with wind….
Lets see…retire to Las Cruces or commit suicide?
Give me a minute ok, I’m thinking!
I thought that reading about the couple from Virginia. Maybe they were stationed in El Paso and know the area, but if not?
Las Cruces RealEstate was cheap before,but not anymore . Your looking at overinflated prices there because a lot of Californians had the same ideas and came there in droves. The result is HIgher Realestate prices from Las Cruces down into El Paso.
I was a public defender (attorney) in Las Cruces. It has a very high per-capita crime rate. I thought it was a good place to live until I lived there myself.
Just like Abq and SF.
That’s because it’s just cheap dirt.
“It’s unclear exactly how many spec homes are on the market. Some analysts say the number could be more than 10,000.”
Jesus! I can just imagine in the not to distant future all these building sitting empty like the dead grave yard for planes…. rows of homes lined up fence to fence in the desert…
http://images.search.yahoo.com/search/images/view?back=http%3A%2F%2Fimages.search.yahoo.com%2Fsearch%2Fimages%3Fp%3Dairplane%2Bgraveyard%26ei%3DUTF-8%26fr%3Dyfp-t-501%26b%3D41&w=600&h=400&imgurl=www.virtualtucsonmagazine.com%2Fvtmsections%2Fvalleypages%2Fvalleyimages%2Fb523.jpg&rurl=http%3A%2F%2Fwww.virtualtucsonmagazine.com%2Fvtmsections%2Fvalleypages%2Fairplanegrave.html&size=120.1kB&name=b523.jpg&p=airplane+graveyard&type=jpeg&no=45&tt=148&oid=28ff6f6768d08b98&ei=UTF-8
Tiny url next time please.
http://tinyurl.com/
Prices there are as bad as CA. I checked them out last year and couldn’t believe the prices for the pieces of crap they were selling. I mean most of the houses were just butt ugly. Some nice land down in the green belt if you didn’t mind driving through a slum to get there and then you can’t go outside in the spring and summer because of the mosquitoes.
Going to go read to a 1,600 year old…
“‘Who would’ve thought the market did what it did with houses,’ Bates said. ‘Nobody’s buying and it’s like, ‘Oh Jeez.’”
Way to Go There Homer
“But when a slew of car accidents….”
WTF?
….and D.U.I.’s
I figured DUI’s were the real issue. Is everyone in the journalistic world a liar?
That’s why you have Insurance for car accident’s. Yet, D.U.I.’s are expensive and I believe the insurance co. will not cover the accident if it was alcohol related.
LOL…A slew of car accidents. This is one unlucky dude. Yeah, I think the brewskies had something to do with it.
They can put a real DENT in your work schedule…
Do you think the journalist (and I used that word loosely) was just looking for anything to try to portray this troglodyte as a victim? He probably ran over a nail in a construction site and that became a life-changing car accident.
Well It’s Tucson. There, like in Phoenix, half the people do not know where their turn signal lever is. Not letting the other driver know your intentions is a major cause of accidents. So maybe that bozo is one of those jerks who never signal.
from the article:
“.. The bank hasn’t set a date for vacating the premises, so he’s planning on getting his family out “when they kick me out.”
“I’ll never live in an apartment,” Bates said. “We’ll just become trailer trash or something. We gotta do what we gotta do.”
–
“We’ll just become trailer trash or something.”
From the sound of it…you will fit right in!
WTF?
Like living in an apt is so bad or something? I used to live in an apt (and now a SFH that is a rental). Guess what? Lot’s of nice people lived there!
This “renter backlash” is really disgusting. Just because I am not stupid enough to get caught in the debt circle does not mean I am a “bad” person, or not a good neighbor.
Actually, the first apt I had in FL (which was the only apt, the other was a condo that I rented, and now a SFH that I rent) had the best mix of people of any of the places I lived. You know why? Because PEOPLE actually LIVED there.
Both of the other places I have lived were ghosttowns, and just not that much fun because of the lack of occupancy. It has it’s advantages, but it’s also a bit more lonely/boring when you have no neighbors on either side for 5 homes in both directions.
no neighbors for 5 homes, sounds like paradise to me.
“I’ll never live in an apartment,” Bates said. “We’ll just become trailer trash or something. We gotta do what we gotta do.”
And with these words, so began the saga of “The Bates Motel 2″
His parents missed their chance. This guy was a prime candidate for a vasectomy at birth.
“We’ll just become trailer trash or something. We gotta do what we gotta do.”
I love this guy’s financial plan. Somehow I don’t think that even trailer trash will want him.
“We’ll just become trailer trash or something. We gotta do what we gotta do.”
Unfortunately for Bates, and unbeknownst to him, even a trailer is no longer an option. His affordability level is a section 8 apartment in the ghetto. While there, he’ll have ample time to reflect on his poor decision making.
“‘Who would’ve thought the market did what it did with houses,’ Bates said.
Who indeed, Master Bates. How about everyone on this blog, or should I say the thinking folks of the last couple of years.
I do. Average of once per day. Keeps the stress down ..
“‘Who would’ve thought the market did what it did with houses,’ Bates said. ‘Nobody’s buying and it’s like, ‘Oh Jeez.’”
Though enigmatic at times, Bates was never mistaken for a clairvoyant.
“It’s unclear exactly how many spec homes are on the market. Some analysts say the number could be more than 10,000.”
Whatever happened to the new business model: “Only build if a contract is signed”? Or are these homes the result of order cancellations.
If I remember correctly from a couple of days back, the national number of new homes built but not yet sold is something like 179,000.
P.S. If the average valuation of 179,000 homes is $300K, the overall valuation of these exceeds $50b.
Good point - during the last bust, at least homes were priced so joe six pack could theoretically afford them. These homes are priced totally out of reach of the average consumer. So, this correction is going to be especially hard.
I was reflecting on the new home inventory overhang while I drove home from work through Santaluz a couple of days ago. When this bust is dissected, I suspect one aspect of the newfangled homebuilder business model which will eventually be recognized as a damaging factor (I am guessing six months or so after I write this) is current practice of rapidly building large planned tracts of cookie-cutter McMansions w/anchoring strip malls (”dumb growth”). The decisions to build out massive amounts of buildable land were set in stone during the boom, and now that the lending market has seized up, there are entire neighborhoods recently built or currently under construction which will not move for anywhere near what the builder thought they would sell for. And the nearby strip malls (like the one anchored by Ralph’s near 4S Ranch) are not going to make it either, as a plethora of cash-strapped residents in the nearby McMansions don’t have any dough to blow on overpriced franchise food (Panera’s, Chili’s etc).
Robert C. in da house? These folks all need to live in sprawl communities so they can install solar panels without some idiot building a 20 story building next door and blocking the sun. What’s that you say? HOA won’t allow solar panels unless you paint the upward facing side beige?
Have you walked through that Ralph’s, GS?
Rarely have I seen a supermarket THAT fancy inside. They’re definitely aiming for high income. I wonder how long before they start scaling things back a bit.
I went there on opening day; everything was on sale, and there was still a dearth of foot traffic, on a warm February Saturday, no less. Can’t blame that one on the weather…
I went by a few days after that. It was almost empty except for the bored employees standing around. Wahoo’s was packed though.
Supermarkets are going “upscale” because they believe that they won’t have to compete with WalMart. Problem is there aren’t enough rich people.
Or, you will have a situation we have here over and over again here in FL.
They build up these shopping centers next to these “new era” homes where there are going to be 10,000 homes. So the merchants do a little math and think “10,000 homes, probably about 20,000 people, that’s enough to support my business!”.
What they don’t realize is that 1/2 to 2/3rds of those homes are going to be empty. So that 20K people your expecting is more like 10K. Oh, and those people are cash strapped as he** because they spent WAY too much to live in this new community.
There was a time when people who bought 500K condos really did have lots of disposable income and would shop at places like Restoration Hardware and B&O for their homewares. Those days are LONG gone. People buying 500K condos are, in all likelyhood, shopping at the dollar store and Wallmart, and likely making about 50-75K a year.
So, in effect, Boomies and Macy’s is not what you need to put in these McMansion/highrise condo areas. Try Target and Wallmart.
“Brown’s report also noted that the number of closed sales was the lowest since May 2003. He said most new houses being sold in the Phoenix area these days are spec homes. Falling sales could mean either reduced demand or that a lot of the spec inventory has been sold. ”
Follow the logic here? This professional cheerleader for the homebuilding industry shamelessly attempts to cover his rear end, with an either/or rational for why sales are down.
Since there couldn’t possibly be a decline in demand, the supply of spec homes has to have been exhausted. Remember, we bottomed at the end of last year and the spring selling season is just getting underway.
Anybody flying into Phoenix can look out the window and easily see numerous housing tracts in various stages of development, even rough grading. The big builders aren’t going to stop building anytime soon.
I hope Neil has plenty of popcorn. We are watching previews of coming contractions for the AZ economy.
Neil can afford the popcorn because he does not have a MTG payment/tax payment/HELOC/insurance eating through all his capital.
It’s going to be rice and beans in many a McMansion this year; while I sit next door in my rented unit and munch my popcorn. Assuming Neil doesn’t buy it all up and create an “asset” bubble in popcorn. Between that and ethenol, I think that I better go stock up.
At least their cholesterol will go down!
What popcorn you talk’n a’bout? What farmer wants to grow popcorn when he can get more for planting regular corn to turn into ethanol. Popcorn prices are going to go up, up and away.
“Falling sales could mean either reduced demand or that a lot of the spec inventory has been sold.”
He is reaching.
Just for fun, I browsed through the r/e ads in 85310 today. There were several hundred existing homes for sale in this zip code alone, let alone the new homes under construction and yet to be developed.Crazy.
Bates:
“If I couldn’t make my payment at $800 a month, what made them think I could afford $1,300 a month?”
Because you met our strict underwriting guidelines: You were able to fog a mirror.
What made him think he could afford it? LOL
Yes always someone else’s fault…
You got the loan because you told the loan officer that you were going to use the monies to bring the house up to a sellable condition and then you didn’t. You thought you had all the time in the world.
“They don’t understand the enormity of a foreclosure versus getting a charge off on their cell phone,” Modisett said.
I believe this also to be true regarding medical bills…
“But when a slew of car accidents and health woes pushed his $33,000 annual income to the wall, the 41-year-old construction worker pursued the familiar option.”
Most of the time, you can negotiate some sort of payment plan for medical bills, correct? Not so for your home.
The hospital can’t undo your surgery, so if you don’t reach a payment plan most of the time they will sell your debt to a collection agency for pennies on the dollar. However that bank can take your house back and until now recoup their losses, so the bank had less incentive to work with you. Plus if to many banks work with people falling behind and make it to consumer friendly then soon wouldn’t everyone fall behind and need an improved payment plan.
Very stupid to put your home in jeopardy to pay for medical bills. I think it was a can’t work situation plus buying or fixing cars then a home equity loan for dummies.
“‘Who would’ve thought the market did what it did with houses,’ Bates said. ‘Nobody’s buying and it’s like, ‘Oh Jeez.’”
Wait, I thought real estate only went up….?
“If I couldn’t make my payment at $800 a month, what made them think I could afford $1,300 a month?’”
——————————————————————————-
What’s wrong with this statement!!? Since when is it the banks job to determine if you can afford it or not? Typical dumba$$ remark.
“Since when is it the banks job to determine if you can afford it or not?”
It’s the bank’s money, right? So yes, it IS their responsibility to determine who they should lend it to. Same as if someone hits you or me up for a loan. If we lend to someone that we _know_ hasn’t got a hope in hades of repaying us, who’s the stupid one? Who deserves what he gets? Primarily the lender, in my opinion, because he had the most to lose.
What’s the difference between lending money to unqualified borrowers and simply setting the money on fire? They’re equally stupid acts with the same outcome: you lose your dough.
It used to be the banks’ job. It was called “qualifying.” Oh wait, we don’t do that anymore.
–Shannon
Bank not stupid. Man did “Qualify”. He fogged the glass door with his breath on way in. Sharp eyed loan officer see this. Did not have to use mirror, as loan was already “fully documented” at door.
“Did not have to use mirror, as loan was already “fully documented” at door.”
Imploder very funny! LOL, honestly! These modern day “lenders” are something else, but I’m still trying to figure out what that is.
now accepted as truth
After ending 2006 lethargically, the economy is expected to remain sluggish most of this year as businesses and consumers cope with fallout from the painful housing slump.
Forecasters say prices could plunge 30% to 50% more
http://www.poughkeepsiejournal.com/apps/pbcs.dll/article?AID=/20070327/BUSINESS/703270312
Thats interesting because most of the MSM is saying 20% like its as bad as it can get
There are already places here listing 10-20% less and its just started
Preparing to move, my girlfriend and I stumbled across a folder that contains MLS printouts from a year or so ago. We had been eyeing some townhouses in nearby Abacoa, a master-planned community. The townhouses were listed from $422K - $439K.
Recently we saw one advertised in the Palm Beach Post for $339K, although the “average” listing has been around $360K. That is a pretty huge haircut in a year! The funny thing was, two years ago they were listing for $480K!
Even at the low price we’re not interested.
Don’t worry droog, you’ll pick one up for 200K in 2-3 years.
Droog,
I live right across the street from Abacoa (in Evergrene, I am sure you know the area).
Abacoa is in bad trouble (just like CityPlace). Downtown just killed their foot traffic, and they were already deep in the dumps for residency. I have a friend with a few flips/flops in there that is already close to the preconstruction price he paid for the condos, and still no takers.
Also, Abacoa has WAY too many kids for my taste. College kids are fine, but there are lots of families in there as well, which is just not my scene (might be yours, just thought that I would tell you).
Jumby Bay HOPS on the weekend and Thurs (oh no, that’s tonight… I might have to go over there and munch my popcorn there for awhile), if you’re trying to relive your college years..
There’s nothing more pathetic than an old person hanging out with college kids. They just look so depressed and desperate - and old.
Never read Michael’s age anywhere. Also depends on the locale and age distribution of others who frequent the place. Sports Bars by colleges tend to get a large cross section.
rent x (X)
back in 1991 my house was 105 times rent
now 238
in the depression I bet it was 85 X monthly rent
The house I rent sells for approx. 380x rent (760k). This is in Central Fremont, CA. The elementary school is not even in the top 10 elementary schools in Fremont! In the top Fremont school district (Mission San Jose) the ratio is probably about 450-500x (1.25 - 1.5M) for the same house. Go across the bay to Palo Alto and you’re looking at 500x plus easy (2M +)
Yes, that’s life in the Alt-A (San Francisco) Bay Area.
It gets to be entertaining when the realtors try to give props to the terrible school system in San Francisco.
Dublin area is renting aroung 300-400x rent. Builders have about 1000 condos/townhomes under construction right now, plus sfh. Alt-A indeed. The bay area is going to have an interesting time ahead. I’m thinking we need about a 40% haircut from today’s prices. How about you guys?
I’m definitely in for the 40% haircut. Unfortunately I’m not seeing any real progress towards that. Buyers here don’t even flinch at 800k asking prices for crappy 50-yr-old homes. They don’t even question 2 million for the same thing in Palo Alto. They rush to sign contracts for 1.3M new homes with no backyard in Fremont (not even the best part of Fremont). My friends who are homeowners are still in denial about RE ever going down (”as long as you hold for at least 5 years it will always be positive”) and seem to think that a 4000-5000k mortgage is normal.
I’m starting to think that perhaps the Bay Area really IS special. And I’d like to see any evidence that prices are going down in any of these cities: Fremont, Palo Alto, Menlo Park, Cupertino, Mountain View, Foster City, Sunnyvale, Santa Clara, San Carlos, Burlingame, San Mateo.
Menlo Park and Palo Alto (I used to live there) are a world unto themselves (they’re adjacent). Both have a lot of accumulated wealth and high incomes. The Bank of Mom & Dad is quite willing to “invest” there for their kids, and many retirees who bought their homes before, say, 1990, are staying.
The rest of the Peninsula (including San Mateo, where I am) has seen as much as a 10% decline, but the trend seems to have flattened. In my neighborhood and among my (volunteer) coworkers, no one seems concerned about declining prices, because we enjoy our homes and surroundings, and we don’t need to sell to fund our retirement. Actually, some of us wouldn’t mind further price declines, which would make it easier for our kids to buy.
Indymac says Alt-A is A OK…
Should we take their word for it… Kind of like the Realtors saying there is no bubble, taking that back, saying it is a souffle, taking that back saying it is only local… taking that back saying it is nationwide but will bounce back in a couple months… taking that back and saying now it will only take a couple years… on and on and on…
I have a really hard time believing anything I here from the RE industry…
IndyMac says subprime contagion into Alt-A loans ‘overblown’
http://www.marketwatch.com/news/story/indymac-says-subprime-contagion-alt-loans/story.aspx?guid=%7BDCFE691E%2DFB93%2D473C%2DAE9D%2D5FD26F200887%7D
Just had a conversation with a Phx (Camelback corridor) zillionaire…he predicts and warns that prices “need and WILL” fall 40%+ for the market in AZ to even begin to recover. This guy shall remain nameless, but he knows his shizzle.
AND, he is certain that the job market in Phx will be squashed, big-time…”50-60% of the people I know have some finger in the real estate pie”.
Real estate also has a disproportionate effect on the Tucson economy. And, as Ben’s post shows, our real estate isn’t exactly flying off the proverbial shelves.
Az Slim - been reading the blog for some time - you Neil and the boys (+ txchick) are great…..doesn’t it seem like everyone in Tucson is tied to a Real Estate economy…..even crappy restaurants and marginal businesses (art galleries, etc.) stayed in business the last 5 years…..should be interesting 2 years ahead……I know so many Brokers/Agents/Builders/Appraisers/etc. the country clubs are stuffed to the gills with fast money types……looking for the fall…..Sideliner
Funny you should mention the plethora of REIC types, Sideliner. Last night, I was at a networking event that was filled to the gills with ‘em.
To keep The Troublemaker (my mouth) from springing forth with something I might later regret, I focused on enjoying a nice Thunder Canyon ale and Mexican food to go with.
As the evening progressed, I couldn’t help but wonder how busy those REIC folks really are right now. I sure heard a lot of upbeat-sounding talk, but as you well know, talk is just talk.
I think about all the people I know around here who left real jobs - like engineering - to pursue riches in real estate. There were times when I wondered if I wasn’t the crazy one to continue to work a steady 8-5 job in an office. Looks like I wasn’t so crazy after all.
This state is gonna get killed!
Agreed. It will be ugly here in Phoenix. I am already seeing tax return clients who are in deep dudu. An example would be someone who has multiple filps in the process and had to change them to rentals, that are negative cash-flow even with ARM’s. Now their income is going to drop from say $200 to $300 for each of the past two years down to maybe $50,000 in 2007 if they are lucky. And this scenario is being played out all over AZ, CA, NV, etc.
I am in full belief that Phoenix and the OC had job growth almost totally dependent on R.E. related fields, and or theose that cater to these people, like the restaurants, golf courses, clothing stores, etc.
I am pretty sure a major recession is in the cards at this point. The reason I can tell is because every other mouthpiece on CNBC keeps saying there is nothing to worry about. Well if that is so, then why keep talking about it and move on to other news. The powers that be must expect this to get very bad, very quickly.
As a side note, when I get home, usually at about 1am (after doing tax returns), I watch CNBC Worldwide. And the perception is that the worldwide economy is going to suffer as the U.S. hits recession. So the rest of the world has already assumed a recession and is “battening down the hatches”, so to speak.
Think that it is only in Phoenix? Think again. Here in Bozeman Montana the largest industry is real estate/construction. Galletin County has 60K people and at last count 900 real estate agent, that is almost 1 for every 60 people!
“Just had a conversation with a Phx (Camelback corridor) zillionaire…he predicts and warns that prices “need and WILL” fall 40%+ for the market in AZ to even begin to recover. This guy shall remain nameless, but he knows his shizzle.”
And what was he telling you in March, 2006 about the coming 12 months. If he wasn’t contributing to this discussion 1 year ago, he belongs on the back of the bus.
I had nothing to say to the guy back then…he was already out…he was out in 05.
He’s so out, that he’s renting. And this is a guy who lived in a 3 million plus “estate”.
Timing the market like that is how people like him acquire three million dollar estates.
My small builder/investor friends don’t live in $3M estates, but they knew enough to get out in ‘05. Any analytical person can see that the boom and bust cycle in RE will never be abolished, and that timing the market is absolutely necessary. The question to ask of the big builders is “If you’re so rich, why ain’t you smart?”
I’m guessing Bob Toll and other HB CEOs aren’t exactly members of DENSA. They’re probably not in “hurtin’ status” either.
40%+ fall in Phoenix? I believe it. I’m not quiet so sure about the job market. That zillionaire knows too many people in the RE pie. Most of the people I know here are engineers and are working in their field (computer types).
I was at a greek restaurant a couple months ago and one old timer and his lunch guest at the next table were discussing RE. The old timer came across as very wealthy. He was really talking up real estate, not trying to sell anything though. He seemed to have a spread up in Prescott as well as somewhere in Phoenix. Perhaps along Lincoln Blvd in PV. The old timer was mentioning that he has made a lot of money in real estate over the years. Perhaps so. Hopefully his purchase price was below the 1994 levels
what a joke…driving I looked up the records for Pima county and it appears this guy has a full page of driving with suspended license, etc. Damn the press…see link for his infractions….
http://geronimo.jp.co.pima.az.us/casesearch/findname.php
“Doug Fulton of Fulton Homes hopes the surge in permits isn’t just big public home builders cranking up local production so they can book 2007 sales. ‘I would like to see permits go down,’ he said. ‘What are you doing? You are just generating more inventory. I don’t like to see permit increases any more than I like to see additional homes listed on the MLS. It’s a supply-and-demand issue.’”
No, no, no. It’s not supply and demand. It’s about keeping the cash flow going and continuing your salary until the eventual BK filing. If you stop building, how on earth can you justify paying you and your buddies?
Isn’t Fulton Homes under investigation for mortgage fraud? That’s the latest I heard.
Haven’t heard this. Are you thinking of Beazer?
No, heard from mortgage banker contact in Phx. Fulton is a local Phx builder only.
“(…) his family’s 1,300-square-foot Marana home (…)”
Newsflash: Marana is in the middle of the desert. It’s a bit of a drive to get to Northwest Tucson, which is not exactly Palm Springs. This is what I don’t understand about the Tucson market: there is at least some semblance of culture in the town, centered mainly around 4th avenue, the U of A, or the northeastern foothills. Why would you choose to live as far away from that as you possibly could? To have a close drive to the Biosphere?
In Marana (20 miles up I-10 from Tucson), my tax assessment increased 50% this year. Lovely. There are literally 100’s of empty new homes around old Marana, and 1 or 2 more being built daily. Marana is on the freeway/ RR tracks (think flat ag land) and is the redneck area.
However, nice condo conversions in Oro Valley ( also 10 m NW of Tucson) are still being bought like hotcakes by out of town speculators.
Oro Valley is in the foothills and the upscale area.
Rob, you can still appeal your Pima County tax assessment. In fact, do yourself a favor and file. I just did.
I just filed for my property tax reduction in Yavapai County as my lot went up 70% in one year. Assessors and county politicians are NUTS!!!
Greed from the other side…….
Definition of “Wealth Effect”: a mentally deluded state of mind that people get when they borrow enormous sums of money they do not have the means to pay back. (see aslo. Sucker, Fool, and Greed)
http://en.wikipedia.org/wiki/Wealth_effect
“That giant ATM you’ve been living in has just shut down,” said David Wyss, chief economist at S&P in New York. “Consumers are in debt and we’ve been living beyond our means for some time.”
If bailouts gain traction, it will be those who tried to avoid catching a falling knife who will turn out to have been defeated in the War on Savers (if not deluded).
Stucco?
I’m comlpetely opposed to ANY bailouts. Any politician that suggets it or votes for it receives only my contempt.
My posts on this topic became so vitriolic that Ben started deleting them…
Ha! The Invisible Hand! I’ll bet there’s been a few times Ben wanted to ban me too. This topic can get a person a bit worked up.
Bailouts! I got my latest $1000 Series I paper bond in the mail today. Can’t tax the interest on that until I redeem it, or 30 years, whichever comes first. I’ll try to avoid redeeming the bonds in the next ten years. By that time we will get a fiscal conservative congress. 2017 and the tax hikes by the theftocraps in 2009 through 2012 will be reversed.
This was written back in 2002 (just before the U.S. national savings rate went negative for the first time since the 1930s — pretty good timing!)
==========================================================
The Central Banks’ War on Savers
by Gary North
…
What the Old Boys want is for bank depositors to be schmoon (plural of schmoo), those fat, ham-shaped little creatures that laid eggs, gave milk, and would drop dead whenever a hungry person looked at them. But cartoonist Al Capp understood the implications of such creatures.
Ironically, the lovable and selfless Shmoos ultimately brought misery to humankind because people with a limitless supply of self-sacrificing Shmoos stopped working and society broke down. Seen at first as a boon to humankind, they were ultimately hunted down and exterminated to preserve the status quo.
http://www.lil-abner.com/shmoo.html
The same is true of savers who are willing to roll over and play dead every time a recession threatens. When savers stop saving, misery will result. The Establishment economists have never accepted this universal fact of economic life.
Central bankers have not yet grasped the implications of the substitution of fiat money for thrift. They expect savers to roll over and play dead. They ask rhetorically, “Who needs savers when you have the legal authority to create digits and print pieces of paper with politicians’ faces on them?”
Anyone who worries about imminent price deflation has not thought through the Old Boy Network and its solution to every economic slowdown: more fiat money. In contrast, anyone who worries about the long-term decline of productivity due to the euthanasia of savers has indeed thought through the Old Boy Network’s solution.
http://www.lewrockwell.com/north/north137.html
“‘Who would’ve thought the market did what it did with houses,’ Bates said.
Umm… anyone who would have done some objective research?
the az republic headline really, really, really bothers me. it trumpets that permits are up 26%. then glen creno states that permits are actually down from the previous year, which was down from the year before. silly comparisons. he quotes a seasonal statistic like it is a good thing, and then hides that it is actually worse. just one more reason why the az republic is not even worth lining your bird cage.
Can you believe this!!
A bailout in the works
http://news.yahoo.com/s/nm/20070327/us_nm/usa_subprime_states_dc
Ya think that might be why the Goldmans of the world are “snapping up” these bargains now?
Wall St wasn’t satisfied with screwing the FB’s, now they’re going after us. The responsible people have to pay the mortgages for the morons so that the lenders don’t have to take a loss
Here is the url:
real estate brokers and mortage brokers need to get their passports, bus tickets, and wigs and other disguises ready - to leave the country (preferably late at night) to a locale where there are no extradition treaties -to keep one step ahead of authorities
Think that this happens only in big cities across the country and in “hot” market States? Think again! Bozeman, MT sees the same trend. Galletin County home of Bozeman has ~60K people as of 2005, there are 900 real estate agents. That is 1 real estate agent for every 60 people. The number one industry in Bozeman is, you guess it, construction and real estate.
Right, vulture buyers circling around looking for that big 10% off those super-bubble highs?
What a bargain
In the land of Oz no doubt
I know! The freaking homes are overvalued by 300 % and yet they think that dropping 10% makes it the deal of the century.
I can wait. The only way is DOWN from here.
AZ Slim
Thxs, I have already done that.
My wife works in escrow - I here and see a lot - just can’t post it. What is odd is that she has more business now than in the past 10 years.
“Arizona Commissioner of Real Estate Sam Wercinski holds no amazement over the turbulence that lax lending has wrought. Still, he’s confident that local real estate markets hold a trump card over others nationally and will stay strong.
We have the influx of people in to Arizona that will absorb these homes as they become available on the market,” Wercinski said.
He pointed out the good weather and Sun Belt culture that continues to attract a stream of out-of-state residents. Newcomers soak up excess housing inventory, keeping agents, builders — and property values — afloat.
“I think we’ve pretty much seen the low point of the residential market,” Wercinski added.”
David Lereah’s spin is ridiculous and annoying, but somewhat understandable in his role as an employee of private organization. But the Arizona Real Estate Commissioner has no place pimping residential subdivisions. That is certainly not his role. At this point, he should be the one public figure in Arizona not putting his head in the sand or just plain lying. He should be spearheading reform in his high-fraud, bubble-epicenter state and preparing for the harsh results of this housing chaos. You are no longer an active broker, Wercinski. Do your job or step down.