April 8, 2007

Post Local Market Observations Here!

What do you see in your housing market this weekend? Graphs? Some new statistics? There were 30,313 homes available on Long Island and Queens in February, according to statistics compiled by the MLS of Long Island. In January there were about 25,000.”

“The median closing price in Suffolk was $379,000, down $18,000 from the month prior.”

Resale trends? “Ken Klein can remember a time when Long Island homeowners didn’t need to invest much into making over their dwellings before putting them on the market. ‘Two or three years ago you could give [a house] a basic paint job and sell it for 20 percent more than you were buying it for,’ says Klein, a real estate investor from East Meadow.”

“Not anymore. Since Long Island’s real estate market tipped in favor of buyers in late 2005, some sellers say remodeling, especially kitchens and baths, has practically become a necessity to remain competitive.”

Homebuilder reports? “Dominion Homes Inc. became the latest homebuilder to feel the sting of the U.S. housing slump, reporting a 54 percent drop in homes sold during the first quarter.”

Buyers incentives? “A source of mine in the real estate business says one of his associates went to a builder about a new home. The builder told him that he would refund 10 percent of the purchase price to the potential buyer’s real estate broker, who then would hand it back over to the buyer.”

“When asked why he didn’t just knock 10 percent off the price, the builder said he wanted to keep values up.”




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162 Comments »

Comment by GetStucco
2007-04-07 09:20:27

“A source of mine in the real estate business says one of his associates went to a builder about a new home. The builder told him that he would refund 10 percent of the purchase price to the potential buyer’s real estate broker, who then would hand it back over to the buyer. When asked why he didn’t just knock 10 percent off the price, the builder said he wanted to keep values up.”

It is not so much a matter of keeping values up, as keeping the 10 percent loss in values out of plain view.

Comment by GetStucco
2007-04-07 09:21:53

And btw, isn’t the kind of deal reported above fraudulent (just like the rest of the builder incentive financing schemes)?

Comment by southfloridabubblegirl
2007-04-07 09:45:41

IMO, the scheme referenced above is not fraudulent, so long as the transaction is adequately referenced on the HUD-1. Under this scenario, the “full price” would require adequate doc stamps and intangible taxes to the appropriate governmental authority. The typical failure to disclose arrises when the broker fails to itemize the “kickback” to the seller.

Comment by GetStucco
2007-04-07 10:23:45

If it is not illegal to finance cash back deals, automobiles and exotic vacations on a home mortgage, then it certainly should be.

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Comment by GotRocks
2007-04-07 11:24:54

It sounds fishy to me. If you allow the broker to be a conduit for an undisclosed cash-back scheme, then you probably fall under some form of fraud. It’s like buying a firearm for a felon - if you buy the weapon with the intent to transfer it, you have committed a serious, non-violent, crime (at least until the gun is used).

Comment by jdd
2007-04-07 12:18:11

I don’t agree. I do think that it is tax fraud, however, it is tax fraud that benefits the government because the value is inflated. Fraud requires some sort of misrepresentation that is relied on. Who is being lied to here? Who has a right to the sales data?

Both the buyer, seller and their broker have full disclosure.

The bank? A possibility if it wasn’t disclosed. The bank could be undersecured. It may have intended to make an 80% loan based on the overstated purchase price. In fact, it may end up with an 89% loan. So, there is your fraud if the bank is not informed of what is going on. But I suspect that would be too obvious, place the buyer into an immediate default on his loan, so, it is probably disclosed to the lender. Or the declared value of the collateral is based on the true purchase price.

The only people that are probably being deceived are third parties who report sales transactions. Now, are any of them actually entitled to the truth of the transaction? It would seem odd, to me, that third parties who pay nothing for the information are entitled to it. That would seem to me to be a risk of doing business.

So, probably no fraud on them.

Gov’t, yes, but the assessed value would be based on the inflated sales price, why would the various taxing authorities care?

My analysis would change if there are government reporting requirements being falsified. The substance of the transaction is obviously a 90% sale. I am not knowledgeable about reporting requirements of the various parties involved.

The buyer is pretty stupid if you ask me, though. He or she is going to pay 10% more tax than he should on a deal he or she could have gotten, anyway.

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Comment by Chip
2007-04-08 09:04:52

Seems to me that the persons deceived by this transaction are the future appraisers of properties in that neighborhood and the buyers who rely on their appraisals. In theory, at least, upgrades add material value to a house. This transaction does not.

 
Comment by Gadfly
2007-04-08 13:43:49

Any *decent* appraiser is supposed to get a copy of the sales contract–and *these * days I would expect him/her to place a quick call or email to the selling agent asking *specifically* if there were any incentives to *any* party in the transaction. That means the appraiser has done their due diligence and puts the agent (& the broker) on the hook. [But then again, I read a lot of fantasy fiction, too]

 
 
 
 
Comment by Brandon
2007-04-07 11:25:18

My cousin just moved into a new home in Fresno under a contract he signed over a year ago. Since market prices have fallen over the past year, the builder gave him $30k towards upgrades and closing costs. So now, he is stuck with paying interest on these “free” items for the term of the loan. I’m pretty sure the builder was afraid of depressing values.

Comment by jerry from richardson
2007-04-08 09:08:50

They probably also cut back on insulation, used cheaper labor and cheaper materials.

 
 
Comment by BanteringBear
2007-04-08 11:25:55

Regardless if this stuff is illegal, it’s completely unethical. These builders are every bit as sleazy as the mortgage companies, builders, and realtors.

Comment by BanteringBear
2007-04-08 11:59:46

should have read “mortgage companies, appraisers, and realtors.”

 
 
 
Comment by edhopper
2007-04-07 09:30:12

Here’s a question. With all the foreclosures now, and more coming. Maybe this is the way to get a home at fair value sooner. But I realize there are many pitfalls in the foreclosure market.

My wife and I want to buy in Queens, NY. Can anyone offer advice, or point us to resources when attempting to buy foreclosed property. I suppose Bank owned and REO come into play here also.
I know this board has the folks who are informed on this.
Thanks

Comment by Ben Jones
2007-04-07 09:33:08

‘Subprime mortgages are causing a dramatic spike in foreclosures throughout the city with Queens homeowners facing the most devastating effects.’

‘Between January 1 and March 19 of this year, 1,223 foreclosure notices were filed within Queens, which puts the borough on pace to shatter the record 3,625 foreclosures that were filed last year.’

Comment by aNYCdj
2007-04-07 10:33:02

Ben:

It’s still NOT enough forclosures to really stimulate the job market for Paralegals in queens, a few jobs are created but when there is a whole column in the New York Times, i wont be here posting i will be too tired from working…

Comment by tg
2007-04-07 10:41:44

What does it take to become a paralegal? TIA

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Comment by Brian in Chicago
2007-04-07 12:08:58

Nothing is actually required; a law firm is simply looking for fairly intelligent and diligent people. You can go to school and get a paralegal certificate (which just teaches you how the job operates), or get hired in to a law firm as a PA (project assistant) and then learn on the job.

You don’t make much money at first, but at the large law firms a paralegal can get to the point that they are making 6 figures and some law firms even allow a great paralegal to buy a partnership share.

 
Comment by jdd
2007-04-07 12:20:19

What? That can’t be correct. Law firms cannot sell partnership interests to non-lawyers. At least in the states I’ve passed bars for and, I think, according to the model rules of professional responsibility.

That being said, the rest is correct. Good paralegals can make 80-100k depending on the market. NYC would pay the most.

 
Comment by aNYCdj
2007-04-07 16:06:58

TRUE But a lot of those $80K jobs can be very boring and lots of odd hours…Lots of dull corporate work, not exciting M&A or trial work…

Also you can make $30Hr for being a legal sec on the overnight shifts in NYC, lots of big law firms operate 24/7, but mostly secretaries, word processors, and the duplicating/ docuument production.

But if you work with a trial lawyer then working all weekend to be ready for trial at 9am on Monday, is what you really what you look foward to, get paid big $$ for.

 
 
 
 
Comment by NYCityBoy
2007-04-07 09:39:40

“My wife and I want to buy in Queens, NY. Can anyone offer advice”?

Wait!

You don’t need any other advice. The boroughs are ridiculously priced. Houses in working class, but nice, Queens neighborhoods are going for $700,000. Give me a break. When will the world get it through its skull that, “not everybody in the New York metro area is rich or makes a lot of money”. That is especially true in Queens, Brooklyn and Bronx. There is no fundamental reason for these prices.

Put your “I want to buy a foreclosure” itch away and just be patient. This won’t sneak past you. Time is on your side, not the FBs.

Comment by tcm_guy
2007-04-07 09:58:27

Consider this: You really won’t be able to buy in Queens until the same or similar houses have gone through several foreclosures in a row. Don’t let yourself be one of these foreclosures!

These “waves” of foreclosures will work the prices of houses down to where eventually the local salaries can afford them with a fixed 30 year mtg. If you get in a hurry to buy a house you can not afford then you will be foreclosed on!

Got 10% down?

Comment by edhopper
2007-04-07 18:02:53

We will buy with mostly cash and maybe a small mortgage. Less than 20%.

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Comment by mgnyc
2007-04-07 10:08:11

The boroughs are ridiculously priced. Houses in working class, but nice, Queens neighborhoods are going for $700,000. Give me a break. When will the world get it through its skull that, “not everybody in the New York metro area is rich or makes a lot of money”. That is especially true in Queens,

right on the money nyc it is just common sense at this point
in many of those nice working class neighborhoods in queens
take middle village for example, most of the sellers are retired city workers hoping to cash in like some of their neighbors did back in the glory days. the only foreclosures i see in the local rags (and there are pages of them) are in areas i am pretty sure you would not want to buy.
lets see we make 250k household income and we want to live in queens? not too many of those
don’t get me wrong there are some really nice homes in queens
but not many people who can afford these prices using standard financing.
some peole got lucky and sold a coop for a nice gain or mom and dad left them some cash.
most others if they did not buy in 95-02 are on the sidelines renting or living in a coop. i just cannot see myself spending
35% or more of my income to be a homeowner in queens

 
Comment by AnonyRuss
2007-04-07 11:01:25

“Put your “I want to buy a foreclosure” itch away and just be patient. This won’t sneak past you. Time is on your side, not the FBs.”

I could not agree more. Wait. Then look for something in a nice place like Brewster in Putnam County.

 
Comment by seattle price drop
2007-04-07 16:23:30

Although there are some terrific deals showing up here and there on the foreclosure lists, the “lowered prices” of foreclosures are not yet appreciably bringing down neighborhood comps.

I’m going to wait til the foreclosures start really working on the comps before I consider entering the fray. The assumption being that once that happens I’ll have *much* more to choose from. I don’t want to panic and buy the “cheapest house in town” just because it’s the ONLY cheap house in town!

I’ve waited this long, I can wait a bit longer til there are more cheap houses to make my choice from.

Some of those deals are pretty awesome, so it IS hard to ignore them. But I’m standing firm on this.

 
 
Comment by aNYCdj
2007-04-07 10:24:34

My wife and I want to buy in Queens, NY.

You will lose FAR LESS money by Divocing her then to buy a home in Queesn……sad but TRUE!

Comment by aNYCdj
2007-04-07 10:28:55

Sorry for the missspelling BUT DAMN

Tell the wifey to shut up, and read and get 2 jobs if she wants to throw away money on a mortgage. She wont listen to reason so…..

DIVORCE is a much better financial alternative for you .

Comment by mgnyc
2007-04-07 10:30:52

djnyc thanks for the laugh

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Comment by aNYCdj
2007-04-07 10:38:44

Thanks

just callin’ them as i see ‘em……

 
 
 
 
Comment by edhopper
2007-04-07 15:14:58

I should explain a bit more. I’ve been reading this board for a couple of years, we are not going to be foolish. We live in Queens. We are well aware that houses are way overpriced. They are falling a little, but not nearly enough. $700,000 plus houses now going for $600,000 plus, they should be under $400,000!!
Hey, we see the SFH down the street (they are calling it a 2 family because you could shove someone in the basement, ha!) asking price…$1.14 mil, just cause it’s a stand alone unattached in Astoria.
My wife understands how ridiculous things are, we both are holding on for the crash.
The thing is with all these foreclosures we figure that when the time comes the banks might be a bit more realistic than some retired city worker who thinks his house is worth a mil.
So as things progress we though that looking at foreclosures might be a good idea. Again, we are not going out tomorrow to buy. But with the mortgage meltdown, well, maybe towards the end of the year. We just don’t know how to look for foreclosures while avoiding the many pitfalls.

Comment by aNYCdj
2007-04-07 16:10:27

When Owning is about the same as renting THEN ITS TIME TO BUY..

That seems like a fair assement. So you and I could be renting till 2010 or longer……

Comment by REhobbyist
2007-04-07 17:37:59

er, aNYCdj, maybe you should apologize to Ed and his wife?

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Comment by sleepless_near_seattle
2007-04-07 17:59:49

Ed, I think some people here are putting words in your mouth. Opening up all possibilities is never a bad idea. Don’t know what the wife-bashing is about either. I didn’t read anywhere in your posts suggesting your wife is the driving force here.

ANYWAY, do you know anybody at a title company? If so, they are a great resource for getting NOD (Notice of Default) lists. The list shows people/properties that have received an NOD and are in various stages of foreclosure. You might have heard of this being referred to as “pre-forclosures”. Part of the problem with buying foreclosures is that there’s really no opportunity to adequately inspect the property. If you win the bid, you have to pay cash usually site unseen.

Buying a pre-foreclosure allows you to work with the distressed owner and the bank. Working with the owner allows you to see the inside of the property. The bank doesn’t want to hold property and foreclosure process is expensive for them.

However, A LOT of people contact distressed homeowners and many title company reps are unwilling to provide the lists these days due to everyone deciding to be Trump Jrs the past few years. Also, most distressed homeowners are looking for a way to stay in the house, not leave it so the pickins can be slim.

Good luck.

Comment by sleepless_near_seattle
2007-04-07 18:08:50

By the way, I’m not advocating for you to purchase just for the sake of purchasing what appears to be a good deal but might not be. I’m advocating educating yourself for when the time is right and the numbers work.

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Comment by edhopper
2007-04-07 18:15:45

Thank you sleepless. That is very good info. It’s good to know the pitfalls of buying a foreclosed property. I don’t think we would buy a house sight unseen. But the desperate seller angle might work when the time comes.
I have a feeling the way things are going here that a good chunk of the houses for sale will be foreclosed.
The banks might have to change there way of selling.
Hey Ben, that’s a good topic. What is going to happen when half the homes for sale are foreclosed?

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Comment by sleepless_near_seattle
2007-04-07 18:40:18

I would also recommend understanding how to buy without using a realtor. I good RE lawyer is worth his weight in gold, IMO.

The way to begin the process to buy those homes is writing a letter to the homeowner. In fact, I’ve written letters to owners of homes not for sale. I liked the homes and what did I have to lose? Why only shop for things that are officially on the market?

I’ve never understood the need for buyer’s agents, except perhaps for people new to an area. But in those cases, I advocate not buying until you know the area anyway.

 
 
 
Comment by davidcee
2007-04-08 08:54:42

“we figure that when the time comes the banks” The Learning Annex right in NYC has some terrific instructors on Foreclosure Negotiation. The REO managers brother-in-law would certainly get a real “steal” before you will, unless you know how to negotiate with the banks, and they ain’t chumps. More knowledge will lead to a better buy.

 
 
 
Comment by Housing Wizard
2007-04-07 09:32:04

Its fraud , it’s a cash back . The builder should be reported . Who does this builder think he is to want to keep the price up by fraud to the lender and the tax payers .

Comment by GetStucco
2007-04-07 09:51:19

Have to wonder if the builder was Beazer. But then, weren’t they all “doing it” (referring to questionable financial deals that let the buyer finance cashouts, cars and fancy vacations on the mortgage note)?
—————————————————————————–
Inquiry Is Begun On Home Builder
Published: March 28, 2007

Beazer Homes USA, which has suffered hefty losses amid the downturn in the housing market, now faces a federal investigation into mortgage fraud and other accusations. Its shares plunged nearly 17 percent in trading after hours Tuesday.

http://query.nytimes.com/gst/fullpage.html?res=9A02E5DB1330F93BA15750C0A9619C8B63

 
 
Comment by NYCityBoy
2007-04-07 09:36:12

It’s interesting here in the Financial District. My favorite abortion of a condo development at http://www.fiveninejohn.com doesn’t seem to be moving much. I can’t tell if they are still moving forward on “the new luxury of Wall Street living”. Bwahahaha. This is a disgusting neighborhood where some greedy ba$tard$ thought converting an office building into condos would make them rich beyond their dreams. So, I don’t know the future of this disaster.

But now, just down William Street, another condo conversion is underway. It is at http://www.beatwilliam.com . The great thing about that website is they want it to read, “Be at William” but it also looks like “beat William”. I sure didn’t want to enter my information there. It is being run by the Corcoran Group. I can’t stand that little Sandy Duncan look-alike mutant. She is all that is wrong with real estate. This new condo still-birth is being built right above a DHL shipping station. There’s nothing like a DHL shipping station to make you feel like you are living in luxury. William Street is not a luxury destination. But these genius developers will want luxury prices.

I figure we are about 3 - 6 months away from a LOT of the condo building to finally complete in this town. I am not going to make a prediction for NYC again. I think it should get clobbered. I will say there are a lot of dumb idea developments going up in this city.

Comment by housegeek
2007-04-07 10:09:13

NYCity boy, I agree, and i think the real estate industry’s continued effort to keep the party going will only make it hurt more. -Witness the latest efforts by realtors claiming really high manhattan apt. sales this quarter (I’ll dredge up my post from the bits bucket for this):

A word about Miller Samuel, I am in looking at their latest –extremely surprising –figures for Mahattan apt sales.

According to their figures, apartment sales not only went up, they surged to wildy high levels in the last quarter - 3,400. During 2004 -the height of the bidding-war frenzy, apt sales were just 2429 for their best quarter.

So now they ask us to believe that in a slowing economy, with large (albeit slightly shrinking- they say- inventory) - that apartment sales reached record levels. They admit to 2 things -that somehow the admission of co-op sales into the public domain skewed results upward (though they have been reporting co-op sales themselves for years before –are they saying they were offering misleading data in those years?) and that a lot of new condos came onto the market in the first quarter — I can partly believe this — as an extrodinary number of condo buildings have been built in the city -and their is a huge rush to both build and sell these spaces.

If NYC realtors participated in the mls system, their data could be verified -but as it stands, it can’t (this is the reason why NYC data is not in the WSJ story) — and if Miller Samuel really wants us to believe Mahattan apt sales can do so astonishingly well in an environment where there are no more bidding wars, and such high inventory, they should provide much more thorough disclosure of how they came to their numbers.

It is a very lucrative business for realtors here to withhold that data and pump the market and the stats any way they see fit. Miller Samuel boasts it is indendent, but go look at their report and you will see a big “prudential doulas elliman” logo on top — a large realty firm in the city.

Also, PS Ben - NY daily news did great story about foreclosure rate in city set to jump by more than double -check out the map:

http://www.nydailynews.com/news/2007/03/28/2007-03-28_set_up_for_a_fall-3.html

Just to put it in perspective — in a fabulous year, in Realtor spin world, say 12,000 Manhattan apts will sell –but juxtapose that against 15,000 homes foreclosing citywide and you have a recipe for “it’s not different here”

 
Comment by mgnyc
2007-04-07 10:12:21

financial district is no mans land on the weekends
there is too much invnetory coming online in the next 12 months or so to not have downward pressure on prices. i work in chelsea and it is also one big condo development
are there really that many wealthy euro’s or transplantd trust fund brats to support these prices? time will tell
and btw babs corcoran is nauseating

 
Comment by sleepless_near_seattle
2007-04-07 18:05:47

“I can’t stand that little Sandy Duncan look-alike mutant.”

LOL.

 
Comment by finnman69
2007-04-08 19:55:25

not as bad as the William Gerbil, I mean William Beaver. Guaranteed to be the ugliest new building in NYC. Who thought it was a good idea to have a glass bottomed jacuzzi above the lobby? Oh yeah, I wanna see bankers asses when I come home at night.

http://www.williambeaver.com/

 
 
Comment by flatffplan
2007-04-07 09:36:34

isn’t the key to get the REO straight from the bank before thay hand it to a realtor?
5% saved

Comment by tcm_guy
2007-04-07 10:05:03

If it is about the third or fourth REO for said property, then by that time the price may be at dead bottom.

Got 10% down?

 
 
Comment by flatffplan
2007-04-07 09:38:11

inventory up in 22151 ,but stuff is moving
your tax dollars at work S of DC

 
Comment by Kent from Waco
2007-04-07 09:40:07

That sort of thing has been going on forever. When my wife and I bought our house in 2003 I got the builder to throw in a new sprinkler system, new sod, and 1/2 the price of a new fence. Total value of all those “improvements” was well over $10 grand and probably closer to $15 grand. I even got the $6,000 check for 1/2 the cost of the fence at the closing.

On balance we got the house for a fair price when all that was included. It was obvious they were trying to keep the values up. I got some necessary improvements financed in the original loan.

Of course these days things are getting much more desperate.

Comment by GetStucco
2007-04-07 09:55:39

“I got some necessary improvements financed in the original loan.”

This is different than cash back, exotic vacations and luxury automobiles. The improvements you mention are arguably part of the property you purchased, and hence legitimate.

Comment by Gadfly
2007-04-08 13:58:11

There should still be a paper trail re: all these agreements and addendums to the contract prior to close. They should be in the file–somewhere.

 
 
Comment by Recovering Homeowner
2007-04-07 12:35:29

One thing about the cash back scenario is that you will still pay property taxes on the full price. The city doesn’t take spiffs into consideration when they send their bills.

 
 
Comment by flatffplan
2007-04-07 09:43:22

One telling sign: in 2005, 40 percent of sales nationwide were of second homes. That fell to 30 percent in 2006 – and flippers are included here, though Molony said he had “no idea how much of a factor they were.

“The 30 percent statistic is much closer to average,” he added.
30%-an average of what, the last 5 years ?

Comment by Houstonstan
2007-04-07 10:18:50

I can tell you with a probability of 0.99 and confidence level of 90%, that he doesn’t know statistics.

 
Comment by B-hamster
2007-04-07 10:23:55

Yeah, even it is was 30%, they weren’t 4,000sqft behemoths. Most people I knew growing up had second homes that were cabins. Only the very wealthy had large second homes.

Ah, the beauty of credit.

 
 
Comment by garrisons2
2007-04-07 09:47:19

While I don’t have any stats to share, here in DuPage county, specifically the Wheaton/Glen Ellyn area, just west of Chicago, a respectable number of houses in the 500-700K range have gone under contract recently….most are contingent….will be interesting to see how many of them stick. Inventory is sizeable, but not overwhelming.

Generally speaking it seems to me that list prices haven’t come down much, if at all over last year or ‘05. I assume that they are going under contract for a larger discount of list, but don’t have the numbers to back it up.

 
Comment by sf jack
2007-04-07 09:47:31

This is not my local market, but anecdotally, by looking at MLS listings, I have noticed that SFH inventory in a particular price range in Truckee (North Tahoe) has jumped by 25% in the last three weeks alone.

It’s been an early spring, with not much snow, and the natives, second homeowners, flippers and developers are getting restless.

Aside from the bubble is losing air at a greater rate this year, in ‘06 it snowed nearly daily into mid-April, and inventory didn’t reach the present level until sometime in May or June.

Let’s see what this summer brings!

 
Comment by capocorso
2007-04-07 09:52:44

March was ugly here in Vegas.
Inventory- 21,287
Homes Sold- 1,605…ouch!
Here is a link to a review journal article.
http://www.lvrj.com/business/6901462.html

Comment by swissluxury.com
2007-04-07 10:03:21

Whats the problem in Las Vegas? That’s only 13.2 years worth of inventory.

Comment by crazyintheOC
2007-04-07 10:15:14

Yeah, as I have posted recently, in my cul de sac of 12 homes in NW Vegas 5 are for sale-I never see any of them being shown. 2 are vacant also(I think foreclosures). I think there are a few basic problems in Vegas, as follows: 1)There is no money here, it is very blue collar. So while the population is growing ,the median incomes can not support 300K homes, not even close. 2)The So Cal people have bid up the prices in the biggest game of musical chairs in the country with no hopes of selling or renting to cover thier payments-somethings gotta give. 3)Lastly there is alot of new inventory coming on the market in the next 6 months, including several luxury high rises. Sky Las Vegas is opening this month and I have seen them trying to now rent some of the units.

As I have said before the Las Vegas market makes no sense to me.

Comment by davidcee
2007-04-08 16:56:04

” As I have said before the Las Vegas market makes no sense to me.”

May I present some facts from Las Vegas to help you get some sense of the market from the UNLV Center for Business and Economic Research
1. New Residents (Drivers Licenses Issued
Feb 07 6,782 Feb 06 6,313 UP +7.4%
2. Active Residental Electic Meter Count
Feb 07 714,256 Feb 06 690,270 Up+3.5%
3. Total Employment
Feb 07 933,300 Feb 06 Up +3.6%

Las Vegas is 25% gambling, and 75% other activities. It’s the new contruction 20 to 40 miles from the strip that’s killing the housing market, as it should. Location, Location, Location still the “Golden Rule” This should be the motto for every city America. If employment holds up, sales will happen in good locations.

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Comment by GetStucco
2007-04-07 10:27:55

“That’s only 13.2 years”

13.2 months (still a lot…)

Comment by Gadfly
2007-04-08 14:02:59

I think (hope) that tongue was firmly planted in cheek re: the “only 13.2 months” thaingy . . . .

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Comment by optionedunarmed
2007-04-07 09:55:39

Since Long Island’s real estate market tipped in favor of buyers in late 2005, some sellers say remodeling, especially kitchens and baths, has practically become a necessity to remain competitive.”

A last minute quickie kitchen remodel is the last thing I want in a home I’m buying. You know the workmanship will be no better than flipper-quality. I’d rather pay less and redo the kitchen to my own tastes and standards.

When I look at a home, brand-new anything always looks suspicious to me, except for the basics like paint and maybe carpet.

Comment by tcm_guy
2007-04-07 10:22:47

This is what I could never understand about granite countertops. There are many colors of granite available, and if you go with Corian (TM) then the choices are multiplied by at least a factor of ten. Again I ask, why would a seller impose on a buyer: “Moron, this is the color of granite that you want.”

Got 10% down?

Comment by B-hamster
2007-04-07 10:28:59

I’m still waiting for my woodgrain formica countertops to come back into style - sooner or later they will. Just like my c1984 bright red ski pants. :P

Comment by cassiopeia
2007-04-07 12:01:21

Yeah, hamster, when those formica countertops come back in style, they will have added value for being “vintage”.

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Comment by clearview
2007-04-07 13:02:55

Remember the movie “Soylent Green”?
There’s a scene where a street vendor is selling “real plastic” plates, forks and knives, which in the year 2026 is considered expensive dinnerware.

 
Comment by REhobbyist
2007-04-07 17:48:36

Clearview - I’ve never seen it. That was sci-fi about cannibalism in the future, right? But I love Sleeper from that era - a look back at the 70s from the future.

 
 
Comment by REhobbyist
2007-04-07 17:46:21

B-hamster - you should post some photos! Our house has a circa 1970 bathroom that I left untouched because I love it - fuschia sink and metallic gold walls. I feel like I’m stepping back in time when I look at it. And it’s in very good shape - all I had to do was change the faucets.

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Comment by optionedunarmed
2007-04-07 11:14:25

People/realtors got too accustomed to marketing to flippers, who don’t care what it looks like as long as they get their generic checklist of “desireable” amenities.

 
 
 
Comment by Renterfornow
2007-04-07 09:56:56

Deceptive practices widepsread around reic to manipulate prices. This is fraud and collusion and should be treated as such.

 
Comment by BPLI
2007-04-07 09:58:54

To comment on NYC, I just moved back from LI to the Upper West Side. The amount of development going on is phenonemal. There is not a chance of all these condos selling. They will be rented by the developers when they get no one showing up for purchases, or prices 40% below their forecast models

Comment by GetStucco
2007-04-07 10:29:58

It’s different there on Lawn Guy Land. They need a really hard landing to notice that the real estate bust is closer to home than Miami.

 
 
Comment by winjr
2007-04-07 10:02:16

Inventory, per Zip Realty, including percentage increase since 1/21/07:

TAMPA - 6.7%
01/21/07 59,865
02/24/07 62,658
03/24/07 63,931
04/01/07 62,972
04/07/07 63,894

MIAMI/FTL - 9.3%
01/21/07 103,131
02/24/07 109,638
03/24/07 111,863
04/01/07 112,680
04/07/07 112,774

ORLANDO - 12.2%
01/21/07 32,341
02/24/07 34,398
03/24/07 35,971
04/01/07 36,105
04/07/07 36,284

PHILA - 5.5%
01/21/07 32,698
02/24/07 32,552
03/24/07 33,729
04/01/07 33,962
04/07/07 34,508

ATLANTA - 17.4%
01/21/07 57,620
02/24/07 61,895
03/24/07 65,107
04/01/07 66,929
04/07/07 67,660

BOSTON - 10.3%
01/21/07 42,170
02/24/07 42,870
03/24/07 45,429
04/01/07 46,298
04/07/07 46,525

BALT.- 12.7%
01/21/07 46,025
02/24/07 45,877
03/24/07 49,506
04/01/07 50,100
04/07/07 51,871

Comment by Was Optimistic
2007-04-07 11:20:14

Winjr - Those figures for Baltimore look like the total for Washington and Baltimore together. Sorry to be picky.

Comment by winjr
2007-04-07 12:29:02

Hey, I’m just reporting what Zip says: “Maryland, Baltimore and surrounding areas”. Pick your bone with them.

 
 
 
Comment by Duane Lapinski
2007-04-07 10:10:08

Last week our local paper, The Bozeman Daily Chonicle, had an article saying, “land sales were down, but prices were still going up.” I have read this artcle before on this blog in links to other newspapers. Same article, just different names and places. Up untill last fall the Chronicle had a number of stories reporting there was no bubble in Bozeman. Then there was a shocking story that home sales were down. I am just woundering, is this some sort 12-step process to restore a newspapers credibility after puplishing bogus stories?

Comment by Houstonstan
2007-04-07 10:35:07

Nope. It is common wide use of the median price as the indicator for the market. Newspapers do not want ‘old style’ investigative reporters any more but body to fill some text space. They don’t question anything too much and if they did, they’d be fired or frustrated to point where they’d want to leave.

Problem with median is that it doesn’t show calibre of what was being sold. If less desirable assetts have no sales but only medium and top bracket assetts are selling at reduced pricese, the median price goes up. If you split the median price down by market sector, you’d see the true picture. But being the gate keepers for the data, the Surrealtors don’t want us to see the true market picture. They want the happy image of RE always goes up which if you look at entire median prices, it backs up their sales pitch.

Secondly, this explains why a technical stock chart analyst looks at Volume AND price together. If price is going up on delcining volume, it is a harbinger of a sustainable growth trend. It means ’smart’ money’ / ones to keep the market trend are not particapting.

Comment by Duane Lapinski
2007-04-07 16:11:07

You are probibly right about most newspapers. But I have watched our Bozeman Daily Chronicle cover their rear ends after puBlishing stories that were just not quite true. They had facts that they did not want the public to know. They have been tip-toeing around mortage meltdown story like there is no internet. Perhaps they do not want the public to know that Washington Mutual has basicly stop issuing motages in this market, or the amount ARM made by companies like New Century. During the last housing crash they delt with by ignoring it, like it was going to go away. Only after the economic problems became to great and everyone could see them did they start to publish any stories. You see, nothing ever really bad happens in Bozeman, but when something happens you will usualy read about it first in the Montana Standard, which is out of Butte, 90 miles away.

 
Comment by Graspeer
2007-04-08 09:44:59

“Newspapers do not want ‘old style’ investigative reporters any more but body to fill some text space. They don’t question anything too much and if they did, they’d be fired or frustrated to point where they’d want to leave.”

Most news stories are nothing more the press releases that are given a small rewrite. The press releases come from government, corporations, trade associations, universities, foundations, consumer groups, etc, who want their story out and they make sure that they pick out the “facts” that they want out and bury the facts that they don’t want people to hear about.

 
 
Comment by Groundhogday
2007-04-07 10:48:29

Talk to anyone actually trying to sell a house in Bozeman and you will get a very different story. Inventory is absurdly high, sales are way down, days on market longer… all the signs of a deflating bubble. The median is up simply because the entry-level market has tanked first–condos, students (using daddy’s money), people purchasing on local incomes…

My old colleague still has his home on the market, now sitting vacant for over a year, carrying two mortgages, dropped the price from $600k to $450k and still no action. Looking at fundamentals, that house is probably worth $200-250k tops so it will be interesting to see if anyone tries to catch this falling knife.

ANother friend had his home on the market all last summer and fall with no success. Turned down a job move because he couldn’t sell, and figured he’s sell when the market picked back up in the spring. Good luck. His profession by the way: construction engineering. Really good guy, but doesn’t have a clue what is coming down the pipe.

Comment by Duane Lapinski
2007-04-07 13:43:05

Around Bozeman I am viewed as some sort of a nut. I have gotten two realtors/bartenders mad at me because I have told them that the market is tanking. They think it has not, because all these rich Californans are going to keep house prices rising. They have no idea what is going on in the California market. When I show them articles about California they don’t want to believe it. The guys in construction make me sick, I have tryed to explain to number of them the meaning of the meltdown of the mortage industry. They just tell me we have year and years of work and it won’t affect us any. In Bozeman right now the main industry is building homes. About 12% Of the workforce is in construction, for the whole U.S. it is about 6%. As far as I can tell, no other county in Momtana has that high portion of workers in constuction. Bozeman had a housing bubble during the 1970’s’ , the effect was our local economy was wiped out all through the 1980’s. It is something nobody wants to remember.

Comment by Groundhogday
2007-04-07 15:11:20

I should have met you when I still lived in Bozeman. People there just can’t believe that RE in Bozeman will ever go down, it is such a nice place to live! But almost all of the economic growth in the Gallatin Valley over the past 5 years has been contruction/RE related. What is going to happen when all of those people lose their jobs?

Given that the majority of current residents have lived in Bozeman for less than 5 years, there is virtually no memory of the housing crashes in the late 70’s and late 80’s.

I’m actually glad the builders are charging ahead. It will be an unintended affordable housing program when you can buy those new homes for 50 cents on the dollar when the builders and developers start to go belly up.

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Comment by seattle price drop
2007-04-07 16:55:16

It’s so interesting to me that every single town in the US thinks it is the *most special* place to be in the US when it comes time to talk about their RE market crashing.

I lived in Bozeman for a few years. Was it a great place to live for a few years? Yes! Undoubtedly!!

Was it a paradise among US towns that is so apecial it will hold value while other places tank? Uhhhh…. don’t think so!

Bozeman’s really nice, as are Bar Harbor, Bellingham, Seattle, Amherst, Madison ETC ETC ETC. NONE of those places are so spectacular that their 100 K houses are now worth 400, 500 K for ever and ever.

Collective stupidity and amnesia at it’s finest.

 
Comment by REhobbyist
2007-04-07 17:51:39

People have high opinions of their homes/hometowns. Just try a lowball offer - people are highly insulted. How dare you insult their beautiful home!

 
Comment by jerry from richardson
2007-04-08 09:22:57

You see many kooks on here puting down other states and cities, as though theirs is special.

 
Comment by in Colorado
2007-04-08 22:57:44

“It’s so interesting to me that every single town in the US thinks it is the *most special* place to be in the US when it comes time to talk about their RE market crashing.”

Tell me about it. The Loveland/Fort Collins area in Colorado keeps winning “Best place to live awards” (Money magazine, etc.) and the local prices have been FLAT for the past 6 years.

 
 
Comment by AKRon
2007-04-07 23:33:21

The Bozeman real estate market was still tanked in 1990. I was there on a job interview (got a job offer there, but came back to AK instead…). I was told that the pay would not seem competitive, but it was made up for by the fact that housing was really inexpensive. I got a tour around town- I remember one duplex that was selling for $30k (!).
I also was tickbait while hiking in Yellowstone ;)

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Comment by Duane Lapinski
2007-04-09 09:29:08

Bozeman’s economy began to recover in 1991. The reason was that the city zoning code was reformed in 1990. The prior code allowed any malcontent to prevent any industry from being built in Bozeman by demanding hearing after hearing. After the last flour mill shut down in 1967, there was no industry in this town. The growth in enrollement at MSU and the 1970’s housing bubble hid the rot in the economy. The 70’s bubble was over by 1981 and MSU enrollment peaked in 82-83. but it still took 8 years for most people to understand you need more than construction jobs and students to have functional economy.

 
 
Comment by Isoldearly
2007-04-08 09:28:56

Who the hell in California is running to Bozeman Montana to live? Good God, everyone is counting on the rich Californian’s (Texas, Oregon, Vegas, Arizona, Washington to name a few). And now Bozeman? oooooooh that has to stretching it. (p.s. sales are down in California too; so deep pockets are getting shallow).

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Comment by in Colorado
2007-04-08 23:07:06

Equity locusts still need quality jobs. IMHO, this is what has killed us here in Northern Colorado. We have a lot of newcomers, but they all seem to come from Nebraska, or the Dakotas (or Mexico), and these folks seem to be content with 10/hr jobs. With all the high tech layoffs it has become VERY hard to land a job that pays 50-100K. The town fathers keep touting the immediate availability of highly educated workers, but the new employers are nowhere to be found (but the layoffs continue). The even have this thing called a “high tech business incubator” whose track record has been laughable (150 jobs created in 10 years). Reading the business section in the Coloradoan is sad. Most business “headlines” consist of some new donut shop opening.

 
Comment by Duane Lapinski
2007-04-09 09:52:59

Reply to AkRn, Bozeman’s economy began to recover in 1991. The reason was the city zoning code was reformed in 1990. The prior code allowed any malcontent to prevent new industry by demanding hearing after hearing for a new building or even a change in use of an existing building. After the last flour mill closed in 1967 there was very little new industry in this town. The 1970’s housing bubble and the growth in enrollment at MSU hid the rot in the economy. The 70’s housing bubble was over by 81, MSU enrollment peaked in 82-83. It still took 8 years for most people to understand it takes more than construction jobs and student loans to a make a fuctional econmy.

 
 
 
 
 
Comment by GH
2007-04-07 10:11:25

OK, some actual price comparisons for San Diego - These are as far as I know identical models, and while they are a very small sample and may vary in condition view etc, you get the point.

Condo - APN: 311 200 41 47 - 2 BR (920sf) Sold 08/2005 at $359K
Condo - APN: 311 200 41 12 - 2 BR (920sf) Sold 01/2007 at $282K
Ouch! a 21% reduction since 2005

La Jolla Condo - APN: 344 290 19 59 - 2 BR (1688sf) Sold 06/2005 at $739K
La Jolla Condo - APN: 344 290 20 71 - 2 BR (1688sf) Sold 01/2007 at $527K
Ouch! a 28% reduction since 2005

La Jolla Condo - APN: 345 072 57 28 - 2 BR (1100sf) Sold 05/2005 at $480K
La Jolla Condo - APN: 344 290 20 71 - 2 BR (1100sf) Sold 01/2007 at $340K
Ouch! a 29% reduction since 2005

Comment by clearview
2007-04-07 13:07:08

Comp numbers for Santa Barbara are very similar. I’ll post some next week.

 
Comment by auger-inn
2007-04-07 14:42:51

So as I read this, for approx. every 5% of price declines posted in the MSM or NAR there is approx 25% of ACTUAL price decline. That means the bottom is only about 10% reported down from here! Yea!

Comment by GH
2007-04-07 17:24:41

In my mind we are still almost at the peak. Sure would not want to be sitting on a 200K loss already though… It takes a LONG time to save that much, even if stocks and property are rising.

 
 
 
Comment by Billy_Boney_and_Ma
2007-04-07 10:20:11

“Since Long Island’s real estate market tipped in favor of buyers in late 2005, some sellers say remodeling, especially kitchens and baths, has practically become a necessity to remain competitive.”

Best I can tell, there is an exodus from LI. It has beautiful beaches and some very nice communities, but for the most part it’s just wall to wall traffic going from hellhole to hellhole. No way to live.

The exodus should put downward pressure on home prices over the next few years.

Comment by say what
2007-04-07 10:26:42

True, quality of life is not there unless you never leave your little village

Comment by Billy_Boney_and_Ma
2007-04-07 10:33:45

There are a good number of areas there that have taken on the look of run down third world.

 
Comment by watching the river flow
2007-04-07 10:38:27

“The New Suburban Poverty” (from the Nation)

What you’ll also see are people like the day laborers who gather every morning in the parking lots of the Home Depots in Nassau County, Long Island, where the median family income is $87,558 and the overall poverty rate is fairly low, but where the demand for food stamps has increased by 40 percent since 2003. Although the median hourly wage for the roofing and construction jobs that day laborers land is $10 an hour, many don’t see a penny of this: A study last year by researchers at UCLA found that nearly half experience wage theft. A worker from Mexico I spoke with on a frigid day in February said he was owed $400 for some plumbing he’d done recently. Like most of the other men around him, he wore a hooded sweatshirt rather than a coat and cupped his fingers around his mouth to warm his bare hands, proper winter apparel evidently being an unaffordable luxury. Because the work is seasonal and sporadic, few day laborers earn more than $15,000 a year. More than half of those injured on the job don’t receive the medical care they need.
http://www.thenation.com/doc/20070423/press

Comment by skip
2007-04-07 12:27:03

No wonder Americans won’t take these jobs, they want to get paid.

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Comment by Liz & Smudge
2007-04-07 15:42:12

I rent an apartment 2 blocks away from where the film “Farmingville” was made…. the area has taken on the feel of El Salvador. I grew up in this town and now the local shopping center is 100% spanish speaking even piping spanish music on outdoor speakers in the parking lot! Its weird!!!! There is a whole community of people here living completely under the radar in PLAIN SIGHT!

 
Comment by Wes Chester
2007-04-07 17:38:35

This is the largest wave of immigration in our young nation’s history. The waelthy who benefit from the wave are generally not impacted negatively. But just about everyone else is.

A huge second wave of white flight is now underway as a result. Some relocate to the affluent enclaves. Many others are simply exiting places like Nassau and Suffolk Counties.

 
Comment by Gadfly
2007-04-08 14:51:25

“No wonder Americans won’t take these jobs, they want to get paid.”

Methinkest: when there’s no one around but *legal* Yanks–oh yes, they will get paid–and far better.

 
 
Comment by Wickedheart
2007-04-07 16:20:24

Wow, median wage for day laborers is 10 bucks an hour and many of them don’t get paid at all? Who says illegals don’t depress wages? 30 years ago wages for day labors in construction were 10 bucks an hour. And not getting paid at all, that’s pretty messed up.

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Comment by snake charmer
2007-04-07 16:55:16

“Beautiful beaches and some very nice communities, but for the most part it’s just wall to wall traffic going from hellhole to hellhole.” Heh. That description sounds a lot like Pinellas County, Florida.

 
 
Comment by swissluxury.com
2007-04-07 10:24:26

Here is an update from Miami…..despite tons of available product and more on the way (18,000 new condo untits will be finished in 2007 & 2008), sellers are still hanging tough on the price. Yesterday, I tried to make an all cash offer for $750,000 on a two bedroom condo at Carbonell……the listing agent said “not to bother”…..these properties are listed at $1 million + and have a grand total of 1784 square feet. If the dreaded 50% correction comes to pass then these units will be selling in the $500,000 range and these folks might regret not considering a very fair offer. This bubble has truly been of record proportions!! Thought I sold at the top in Laguna in 2005….moved to Miami and the market here went so insane that we took a quick profit and sold the Miami/Brickell property in 2006. One of the reasons that some owners would not even look at an offer 25-30% below list price today is that they just don’t have that much equity. There is an identical unit for sale at Carbonell listed for $1.3 million and the owner “paid” $1 million for it 8 months ago. That may have been a “cash back” or “no real downpayment deal”, but even so that stuff skews the comps and pricing for the whole building. If that owner has to sell in 2009 and the market corrects 15% a year he is going to lose $500,000-$800,000. No wonder the politicians here are getting desperate (trying to eliminate property taxes entirely by raising the sales tax).

Comment by flatffplan
2007-04-07 10:41:31

my old man will take 750k for his 1 mill house in ft myers

Comment by auger-inn
2007-04-07 14:48:55

I have a couple of friends who will take 750K for a either of their “1 million” dollar homes as well. One is on the canal (ocean access) and the other is on the river. Seems like there is an epidemic of million dollar homes for sale, how strange? :)

 
Comment by kckid
2007-04-07 15:48:03

I’ll take $650,000 for my $180,000 home!

 
 
 
Comment by Muggy
2007-04-07 10:29:43

Pinellas County, Florida: no news here; no real price drops, inventory creeping up. However, I am seeing rent drops on Craigslist and I can’t go into a store without overhearing someone talking about how they can’t sell or their taxes are too high etc.

 
Comment by Portland Mainer
2007-04-07 10:30:50

Inventory has just gone up about 11% versus a month ago on single family homes in the Portland, Maine area (Portland zips 04101, 04102 & 04103), Famouth, Cumberland and North Yarmouth).

I called the RE agent who sold us our house and he attributes it to sellers who refused to list when the market was bad, thinking now the market has picked up.

352 9/6/2005
394 9/19/2005
400 9/29/2005
425 11/3/2005
406 12/5/2005
352 1/3/2006
344 2/2/2006
345 3/3/2006
351 4/4/2006
409 6/4/2006
477 7/22/2006
467 9/9/2006
437 11/5/2006
355 12/15/2006
311 12/30/2006
269 2/2/2007
289 3/2/2007
321 4/5/2007

Comment by flatffplan
2007-04-07 10:39:38

if I was a realwhore and someone called me from 20005 or 06
I’d ID that call and punt

Comment by Portland Mainer
2007-04-07 11:00:03

Meaning?

Comment by aucontraire
2007-04-07 12:09:19

death threats, etc., etc.!!

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Comment by Graspeer
2007-04-08 09:49:28

“I called the RE agent who sold us our house and he attributes it to sellers who refused to list when the market was bad, thinking now the market has picked up.”

I attribute it to this being the “Big Spring Selling Season” that the RE people were talking about, and while the sellers have shown up, the buyers have not.

Comment by mjh
2007-04-08 10:06:33

Good point. Realtors should be held accountable for their “wait until the spring selling season props up prices” mantra that they spread all winter. Of course, we didn’t fall for that. But many owners did, and now they’re 10′ deeper in the hole because of it.

 
 
 
Comment by Ken Best
2007-04-07 10:32:21

Climate change threatens new dust bowl
By RANDOLPH E. SCHMID AP Science Writer
Article Launched: 04/05/2007 01:09:47 PM PDT

WASHINGTON- Changing climate will mean increasing drought in the Southwest—a region where water already is in tight supply—according to a new study.

“The bottom line message for the average person and also for the states and federal government is that they’d better start planning for a Southwest region in which the water resources are increasingly stretched,” said Richard Seager of Columbia University’s Lamont Doherty Earth Observatory.

Seager is lead author of the study published online Thursday by the journal Science.

Researchers studied 19 computer models of the climate, using data dating back to 1860 and projecting into the future. The same models were used in preparing the reports of the Intergovernmental Panel on Climate Change.

The consensus of the models was that climate in the southwestern United States and parts of northern Mexico began a transition to drier conditions late in the 20th century and is continuing the trend in this century, as climate change alters the movement of storms and moisture in the atmosphere.

The reduction in rainfall could reach levels of the 1930s Midwest dust bowl, Seager said in a telephone interview.

That doesn’t mean there would be dust storms like those of the 1930s, Seager said, because conditions at that time were also complicated by poor agricultural practices. But he said the reduction in rainfall could be equivalent to those times when thousands of farmers abandoned
their parched land and moved away in search of jobs.

Currently, the majority of water in the Southwest is used in agriculture, but the urban population of the region is growing and so the water needs of people are growing as well, he explained.

“So, in a case where there is a reduced water supply, there will have to be some reallocation between the users,” Seager said. “The water available is already fully allocated.”

He said feels that adjustments can be made to deal with the change, perhaps by withdrawing some land from production and by conserving water in urban areas.

“But it’s something that needs to be planned for,” Seager said. “It’s time to start thinking how to deal with that.”

Jonathan T. Overpeck, director of the Institute for the Study of Planet Earth at the University of Arizona, said the finding “agrees with what is already happening in the Southwest, and will be further complicated by the already declining spring snowpack due to warming.”

“These are scary results, but scary in part because they are results of well thought-out scientific work by a large number of strong scientists,” said Overpeck, who was not part of the research team.

Comment by flatffplan
2007-04-07 10:42:52

acid rain !!!!!!!!!
is see al’s private jet

 
Comment by Houstonstan
2007-04-07 10:43:38

For those interested further in this topic, I suggest two reads.

1. Jared Diamond: http://en.wikipedia.org/wiki/Jared_Diamond

2. Brian Fagan “The Long Summer: How Climate Changed Civilization”. http://www.amazon.com/Long-Summer-Climate-Changed-Civilization/dp/0465022812

 
Comment by lavi d
2007-04-09 12:44:36

Pete Seeger?

:)

 
 
Comment by ray
2007-04-07 10:53:05
Comment by REhobbyist
2007-04-07 17:58:16

Ray, I started to fantasize about a Hawaiian vacation place. Then I clicked on your link and saw the reduced median prices. Never mind.

 
 
Comment by sfbayqt
2007-04-07 11:10:07

Dublin, Ca:

A friend and I popped over to D.R. Horton’s Elan community, part of the “transit village” that’s being built right next to our BART station (Bay Area Rapid Transit, for those not from this area) and parking lot. This development has 15 townhouse and condo models from 1bd/1bath to 3 bd/3bath (916 sf to 1456 sf), $399k to the low $700s (ridiculous!). Oddly, only 12 were presented on the flyer, with one of the 12 already sold out (1 bd + mezzanine/1bath, 1013sq). Really?

The one we visited was a 2/2, 1399sf, $549,900. Btw, we bypassed the sales office and went directly to the models…easy to do since they are a block away from each other and directional signs on the property pointed us directly to the unit. No one was in the parking lot but us on a Sunday afternoon. Before I get to the “financing options”, let me first say that their web site vitural tour sucks. It gives one the impression of a much more spacious unit than it really is. Secondly, as with most of the model townhomes I’ve seen over the years, the bedrooms leave much to be desired….a bed (double), night stands and a chest of drawers is about all you can get in your MASTER bdrm. My rented 2 bd/1 bath has a larger master! Oh! And 1399 sf??? Yeah, right…it’s my understanding that stairways take up quite a bit of the square footage, so how much living space do actually have? (can anyone confirm that or explain the stairway sq footage for me?)

Anyway…on to the financing options, and there were 3 on the flyer.

1) 5% down
Interest only….$2,062
Second………. 663
Taxes ……….. 572
HOA ………… 0
Payment———-$3,297

Down 27,495
Closing 18,157
Prepaids 1,842
Closing credit -20,000
Cash out of pocket to move in $19,995
HOA is paid in full for year

2) 10% down
Interest only….$2,062
Second………. 442
Taxes ……….. 572
HOA ………… 0
Payment———-$3,076

Down 54,990
Closing 18,157
Prepaids 1,842
Closing credit -20,000
Cash out of pocket to move in $47,490
HOA is paid in full for year

2) 20% down
Interest only….$2,062
Second………. 0
Taxes ……….. 572
HOA ………… 0
Payment———-$2,634

Down 109,980
Closing 18,157
Prepaids 1,842
Closing credit -20,000
Cash out of pocket to move in $102,480
HOA is paid in full for year

The above financing is a 5/1 ARM Interest Only 80% first 5.625% (6.95%apr). Second is a 30/15 fixed loan rate 9.0% (9.875%apr). Now, on top of all of that, they mention that you must (MUST!) user DHI Mortgage to receive incentive for HOA dues, special financing and closing costs.

There was other fine print, but too much to put here.

I have no idea if any of these units are sold, but I suspect a few GFs will partake. The sold units may also be gone because of the “affordable housing program” that offers a percentage of the 1 bd units for between $110k and $225k. I’ve also been charting the costs from their website since 2/2006 and the prices have come down…so far $80k reduction is the maximum for certain models.

I may visit more models tomorrow. We report more at a later date.

BayQT~

Comment by the_voz
2007-04-07 16:58:19

I just find it hard to imagine that one should be making 90k to be able to afford a one bedroom condo in BA.

 
Comment by REhobbyist
2007-04-07 18:00:16

It’s going to be a long wait, I’m afraid.

 
 
Comment by SDMisfit
2007-04-07 11:27:22

A 2-bdrm 1-ba house for $675,000 - 3041 B Street in the Golden Hill neighboorhood of San Diego. Perfect starter home.

But wait! There is more! A studio apt is included, currently rented for $900/month.

But wait! There is more! The city has approved plans to add two additional units!!!!

This was at one time, one of the best neighborhoods in San Diego. Beautiful well-maintained mansions with fabulous views, close to Balboa Park and downtown. But most of the mansions are now split into 4 or more separate dwellings. Many houses were replaced by cheap, tiny apartments built to house non-english speaking immigrants from the poorest parts of Mexico and Central America. Only three businesses that cater to English speakers remain.

This is how the bubble can keep going. There are 100 million people living in poverty in Mexico Central America. It is the responsibility of the United States to care for these people. We now have a surplus of 3 million homes in this country. We can pack 33 poor immigrants into each house. The super-rich living in La Jolla and Rancho Santa Fe have a desperate need for servants. They can hire the immigrants. The immigrants can pool their incomes to pay the mortgages. Lets declare all poor people in Central America and Mexico to be US citizens and solve all our problems with one stroke.

Comment by diemos
2007-04-07 14:26:59

You joke, but that is the plan.

http://en.wikipedia.org/wiki/North_American_Union

 
 
Comment by mjh
2007-04-07 11:40:32

Overheard a conversation at the barber shop today.

Last year, a guy looks at a $420k house in Ahwatukee (Phoenix), but settles on the same house across the street at $360k. The $420k has been on the market for a year now with $30k in total decreases, still not sold.

The kicker is when he says “2 houses down, same basic house, the guy just listed for $310k and goes under contract the next day. I can’t believe he’d do that, the entire neighborhood is decimated!” He went on to talk about how far “under market” $310k is. He was a paramedic, a profession I admire, so I didn’t jump on that one.

Talked to the barber while getting my hair cut (highly recommended, these guys know everything that happens in an area!). Without me bringing it up, he starts going on about all the people losing their homes to foreclosure in the area. Says he’s never seen anything like it, and he’s an old timer. 85045 (newer part in this fairly well-off area) has the highest credit card debt of the entire city. People overstretched for the 1-2 year old homes, and they’re going down in a blaze of glory.

Comment by Houstonstan
2007-04-07 12:04:25

What is more scary is we are still in early stages on this. CC usage & HELOC has been a big stimulant to the consumer economy.

Even though my line of work is not involved in RE, I still have concerns it will ultimately impact my industry. Knowing that, I am preparing myself just in case. Not only financially, but making plans to update my education with certification/skills/knowlege not required by my company but would be enablers should I wish to pursue a career change. (I consider myself highly skilled but each skill and experience has a shelflife. Beside, you have seconds to make an impression from someone reading a resume).

 
Comment by AKRon
2007-04-07 22:56:55

Where did you find credit card debt by zipcode? Thanks for any info.

Comment by mjh
2007-04-08 09:51:35

The barber saw it in the AZ republic a couple of months ago. Don’t have the story handy, sorry.

 
 
 
Comment by Troy
2007-04-07 11:49:37

New 2B listing in the Condo dev I’m tracking in N San Jose . . .

Listing $510k, sold for $495 in late 2005.

zillows for ~$500k now, we’ll see how the market is. Was Zillowing at $300K as late as 1/2005, with a hyperbolic rise from $300k to $500k in that year. Sellers of this unit in 2005 were smart smart smart.

Listed $420K 1B condo in same dev sold for $400K last month. Seller got in @ $360 in 2005 IIRC, basic break-even not counting carrying costs.

 
Comment by HarryD
2007-04-07 11:56:55

In Boston, note that Rick Shaffer (the otherwise common sensical real estate lawyer/financial advisor) on his BEST MONEY (96.9 FM) weekend show is now furiously try to backpeddal on this invariably positive comments on real estate over the past 2 years - although hes not completely admitted he was flat out wrong

1. he’s been claiming (in the last several shows) he actually was (all along) hugely troubled by no down, option ARMs, and regular ARMs etc. Since I;ve listen to most of his shows for years, I can say that while he’s commented about adjustables etc and in general has suggested callers to get fixed loans in the past - he certainly was not pushing huge alarm bells in any significant way or was he talking about any credit bubble, He expressed at best, minor concerns over the years.

2. In fact - he has been consistently denying there is in fact ANY real estate bubble at all in Mass - instead adopting the Karl Case (Wellesley College) views on “stickiness” - basically saying houses are not liquid and therefore hard to sell, meaning that this limits the downside as sellers will simply pull a property off the market - rather than get too low a price.

3. Last fall he stated that NO WAY would real estate prices drop in Boston metro in any significant way SHORT of some kind of huge spike in interest rates

4. on Jan 13th, 2007 show he stated “Boston (prices) will not go any lower” “The market has bottomed out” (exact words)

5. he has claimed as recent as 6 months ago that the early 1990’s style (10 to 30%) downturn in Boston is not possible - and that was due to “Tax Law’ changes (I presume he means it related to passive loss rules from the 1986 Tax, an opinion I find to make little sense)

6. Because of limitations on buildable lots and tight zoning etc, he claims Boston metro and new england etc - cannot experience a significant downturn, which of course is why he had to explain the early 1990’s downturn as a tax issue. Of Boston metro etc is better off than (lets say Houston) in that regard, I conced that point - or areas with near endless land

7. Just a few moments ago on the show, despite his various levels of backpeddaling, he states
“we are not headed, by the way, to anything like the late 80’s or early 90’s” - his exact words

My impression is Mr Shaffer holds large amounts of investment real estate - so unfortunately despite have excellent knowledge in financial and legal matters, this major conflict of interest has caused him to lose much of his objectivity over the past 2 to 4 years in regard to these matters as the extent of this super-bubble became obvious to anyone looking objectively at these facts

Unfortunately, many callers to his show, partly due to his advice ended up buying at the top of the market - because he was invariably so positive about real estate

 
Comment by Bay Area Watcher
2007-04-07 12:10:53

Inventory data - courtesy of ZipRealty - for the San Francisco Bay Area:
02/08/07 24,400
02/19/07 24,800
03/14/07 26,612
03/23/07 27,999
04/06/07 29,381 ~+20% in 2 months

Inventory is growing faster and faster. In 2006, 29,361 was reached only on June 12th. At the top of 2006(August/September) the inventory was close to 35,000. At that point the sellers withdrawed their house from the market and decided to wait for the next spring season, hoping some new fools will show up. Now we are on our way to 40,000++ and fools are running dry.

Move along, this is different here !!

 
Comment by dan
2007-04-07 12:19:01

“When asked why he didn’t just knock 10 percent off the price, the builder said he wanted to keep values up.”

How stupid is that?. That means the buyer’s property taxes will be assessed AT THE FULL VALUE even tho that’s NOT what they paid for it.
PLUS it’s helping the Seller’s screw other people by maintaining the illusion of a full value that’s not really there.

Comment by mjh
2007-04-08 10:09:11

But do you think the builder gives a damn about the buyer?

 
 
Comment by Brian in Chicago
2007-04-07 12:25:23

As for Chicago, a new 83 floor condo tower just started construction in the last week. Every single floorplate is different, which should drive construction costs way up. The building is going to look crazy. Hopefully in a good way.

I’ve been working on the new Google MyMaps to plot out the “boom” for Chicago. When I’m done I’ll post a link here. Already have 75 buildings over 12 floors plotted on the map, oldest one built in 1999. I think I have about 125-150 left to go. Then it will take a lot more digging to uncover the crazy number of “low rise” buildings, townhouses, etc.

 
Comment by Tango in Uniform
2007-04-07 12:27:43

Billings, MT here.

Foreclosures have been fairly low the last few years. Less than 10 a month, usually. At latest check, they’ve been ticking up quite a bit. The very upscale Ironwood subdivision had its first foreclosure last month. I think it’s going to get much worse. The line I always hear is that “People in Billings are conservative, they wouldn’t get in over their heads.” We will see about that.

January stats showed mean sale price down about $7,000 from the peak last summer. Realtors have not released any stats to the public since then.

 
Comment by CentralBanker
2007-04-07 12:30:29

I’m watching a particular subdivision on the nice edge of Potomac, MD — an ultra high-end suburb of Washington DC with multi-million dollar estates.

There are five identa-townhomes for sale. Prices for the five are as follows:

1. $750K (corner lot)
2. $775K (dropped for $815 to $779 and now to $775K)
3. $789K
4. $825K (corner lot)
5. $845K (corner lot)

The $750K listing is the most recent. And I think that is overpriced.

How can you possibly expect to sell a home when a nearly identical home next door is selling for alsmost $100K to $25K less.

Nuts.

Comment by sleepless_near_seattle
2007-04-07 18:10:38

You can’t, unless you can perform Jedi mind tricks.

“That $750K property is not the house you’re looking for….”

 
 
Comment by SLO Bear
2007-04-07 12:43:06

It looks like there is a high-end Central Coast builder in trouble.

http://centralcoasthousingbubble.blogspot.com/

Comment by AshlandRenter
2007-04-08 11:41:15

Similarly, in Ashland Oregon:

The Billings Ranch development, which contains a mix of McMansions and townhouses and was originally supposed to include a golf course, now lists at least 9 houses in some state of foreclosure by the builder Thurmond Construction (foreclosure.com).

 
 
Comment by Bay Area Watcher
2007-04-07 12:50:31

Inventory from ZipRealty for San Francisco, Bay Area

02/08/07 Bay Area 24,400
02/19/07 Bay Area 24,800
03/14/07 Bay Area 26,612
03/22/07 Bay Area 27,728
04/02/07 Bay Area 28,688
04/06/07 Bay Area 29,381 ~=+20% in 2 months

The inventory is growing faster and faster. Last year we reached the 29,380 mark on June 12th. The top was in august/september with around 35,000 units. At that point the sellers withrawed their houses from the market hoping new fools will show up in the spring.

Now it’s time to sell, they are not making more fools :)

Move along, this is different here!!

 
Comment by housing_bust
2007-04-07 13:09:41

I just got back from driving around outside of Orlando by Mount Dora… There’s a Centex Homes Community http://www.centexhomes.com/Orlando/ that was started over a year and a half ago… It’s designed for 695 homes/villas… To date, only 5 homes have been closed on… go to http://www.lakecopropappr.com/property_search.asp , accept the disclaimer, and type SULLIVAN RANCH for the subdivision name to see it for yourself

 
Comment by geeah
2007-04-07 13:54:58

Truth in advertising or funny slip up? Anyways it made me laugh… especially when you see the house last sold for $185k in 2000.

Price: $675,000 - For Sale: Great hose at this price. Check out this floor plan.

Comment by Liz & Smudge
2007-04-07 15:53:21

I would jump on that because b y 2012 the house will be worth about 3 million dollars! at 675k its a bargain!

 
Comment by the_voz
2007-04-07 17:13:07

that house might be worth 200k, near 6k yr in taxes a year, ouch. Yep, thats a 70k a year family type house.

 
Comment by NOVAwatcher
2007-04-08 06:31:43

Ugh, what a dump. Prices are all over the place in that area. You can easily find a similar house being offered for $200k more. At the same time, you can easily find a house in that same $650-$675 price range that is far, far, nicer (and with a similar amount of land).

For example, I found these places on Zip (FX6340649, FX6303561). I still think they are way over valued, but they are nicer.

Comment by geeah
2007-04-08 09:23:28

eh, if i had my choice i’d personally go to the modern/contemporary style… which is hard to find around here… I love the homes in Hollin Hills (Alex) but they are a bit out of my price range… until i get my rich sugar momma that is.

 
 
 
Comment by FaceDown
2007-04-08 00:58:04

Personal Denver story here.

My mother-in-law will be moving to Denver later this year and she wants to buy a house. I’ve done all I can do to get her to rent, but I know when to stop pushing. Besides, if it all goes south it won’t wreck her. Anyway…

My wife and I went to look at one of the houses for her yesterday. The twenty-something realtor couldn’t stop telling us about the “investor” who originally bought and sold the house through her. Basically, the “investor” bought the house for $72,250 in 02/2006 and then sold it in 05/2006 for $247,000. That’s right. In 3 months he put on a new roof, new paint, and new appliances and jacked some couple for $175,000 appreciation. I’d guess that the guy put ~$40k into the property prior to selling it.

Here we are 11 months later and this couple is trying to sell their 843 sq ft mansion for $250k. That’s only $300/sq ft in the same Denver neighborhood where we overpaid at $150/sq ft 12 months ago. This couple is screwed (provided this isn’t some sort of fraud).

For your pleasure: [url]http://www.zillow.com/HomeDetails.htm?zprop=13294956[/url]

 
Comment by Muggy
2007-04-08 08:32:53

Ben, no love for my arson report?

Comment by Ben Jones
2007-04-08 09:42:39

I tried to punch it through. When you have a lot of links like that, the software thinks it is spam. Try again and I’ll give it another shot.

 
 
Comment by dba
2007-04-08 08:58:19

“Not anymore. Since Long Island’s real estate market tipped in favor of buyers in late 2005, some sellers say remodeling, especially kitchens and baths, has practically become a necessity to remain competitive.”

if you want me to buy your POS cape or ranch that you bought for 1/3 to 1/4 of current values back in the 1990’s you better do some renovations to make it worth my while. i’m not going to pay top dollar for a 1960s era kitchen or bathroom.

 
Comment by waiting_for_the_fall
2007-04-08 11:18:10

I looked at new Townhomes for sale in the SF East Bay. I talked to an Asian couple there and asked if they knew about the Housing Bubble. They didn’t know about it and said housing would never go down. They quoted the recent 22% increase last month.
There’s still alot of people out there who don’t have a clue.

 
Comment by Matt inPhx
2007-04-08 11:39:01

There is a master planned community west of Phoenix called Verrado. I used to rent there and have a friend there with a house on the market. Here are some March numbers from v.aznb.com:

List price: $437818 Sold Price: $392000
Beds: 4 Baths: 3 Sq Ft: 2614

List price: $457539 Sold Price: $370918
Beds: 3 Baths: 2.5 Sq Ft: 2806

List price: $565494 Sold Price: $518000
Beds: 5 Baths: 3.5 Sq Ft: 3864

List price: $829000 Sold Price: $790000
Beds: 3 Baths: 3.5 Sq Ft: 3155

Of course this is one of those places everyone says will not be affected by the bubble bursting. My friend has already reduced his by $70k.

 
Comment by SLO Bear
2007-04-08 13:03:02

The San Luis Obispo Tribune today published 2 articles on the housing market on the Central Coast.

http://centralcoasthousingbubble.blogspot.com/

The first article, which is not available online, is basically an interview with a local mortgage broker who believes that SLO County will not experience as many problems with subprime lending because the brokers “are more ethical here”. Yeah sure - do some research on YSP’s (broker kickbacks) or interview someone in default and then get back to us.

The second article looks at the rise of foreclosures in the County. We have seen on this blog that foreclosures are up dramatically and even the Tribune’s data shows a YOY increase for March NOD’s (up 58%), NTS’s (up 258%), and Trustee’s Deeds (up 567%). But as you might expect, local “experts” don’t find these numbers alarming.

Do you have any suggestions for the Tribune’s business editor, Julie Lynem? If so, please email her at jlynem@thetribunenews.com.

 
Comment by cassiopeia
2007-04-08 16:53:46

In LA’s Westside. A slow Easter weekend. Prices still unreal in the open houses I visited.
One tear-down in the marginal area of Cheviot Hills just off the freeway has an asking price of 1.149M.
A nicely redone house on Selby that went for $415K in 99 has an asking price of 1.599M (WTF???!!!).
On Pelham Ave., a house that sold for $910K in 2005 now is supposed to pick 1.780 because it has been turned into an ugly McMansion. I don’t get it.

 
Comment by amoney
2007-04-08 22:58:07

Latest RE newsrag is out for Kauai, HI and prices are down for some places a middling 1-2% compared to last month. These retarded agents think that’s being generous, but they don’t realize they’ll lag the market right into foreclosure. A place just came on the market near where I live, just under 2K sq. ft. on over an acre of land for 550K. These types of deals will trash the comps. Hawaii is generally clueless about the subprime issue, the media here is even more pathetic that on the mainland - every story has to have a hawaii angle on it, or it ends up being an inch long at the bottom of page 8 below the 17 ads to fly to Vegas. I kid you not.

Comment by redmondjp
2007-04-09 14:02:41

Heh heh heh! Having spent 8 days reading the local rags while on the Big Island in February, you are right-on regarding the Vegas ads.

I always wondered where people who already live in paradise go on vacation–now I know . . . Vegas, baby, yeah!!!

 
 
Comment by CA renter
2007-04-09 02:51:21

Went out looking at houses yesterday. Inventory is down compared to the same time last year (for the specific zips I watch). Prices down, generally, but plenty of sales still going on.

That being said, there seems to have been a rush to market just in the past few days. Inventory numbers are finally moving up a bit, so will see how long that trend lasts.

Lots of people entirely clueless about the bubble. They still think it’s a “supply and demand” thing in So Cal because “everybody wants to live here.” No matter how I try to explain the credit bubble, they just don’t get it.

Also, in our former “starter” neighborhood (where we sold), there are foreclosures & NODs on almost every street (short streets, small ‘hood). It’s an area which was racially mixed (racially balanced with white, black, Latino, South-Pacific Islander, Asian, etc.) and became almost 100% Latino, largely due to the credit/housing bubble.

 
Comment by norcal jeff
2007-04-10 00:55:30

New Homes in the Sacramento area are still going for 20-30% below asking price, sometimes even higher. Most builders will include almost every imaginable option/upgrade with no closing costs and some will pay for 6 months of your mortgage. This is just the beginning of a strong downward shift in prices and inventory is spiking.

 
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