Bits Bucket And Craigslist Finds For April 14, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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emerging market watch / pimco
http://immobilienblasen.blogspot.com/
have a nice weekend
have added
hustle and cash flow - daily show….”pimp tax”
The past 6 months I check the price of gold on Bullion Direct every once in a while. Today is the first time I have seen them charging over $700 for an ounce of bullion. I think there were posts yesterday that Casey now liked the precious metals. It looks like his recommendation was taken seriously. That kid can really drive the markets.
He’s a player, there can be no doubt.
Yes, a player in deed….. and in own Casey’s words “…if only I had some cash…”
Don’t worry…
He’s got the Midas Touch~
In reverse.
Txchick-
Are you and your husband OK?
Yeah, but I was clunked on the nogging by a couple of golf ball sized hailstones. That hurts!
April and May are zany in North Texas. Tornado alley.
Glad you’re ok TXchick. Funny how reading everyone’s daily posts affects me. First thing I did this morning was turn on the radio to make sure that nobody died in the Texas tornados. Unfortunately, one person did.
Zillow.com estimates draw fire, state ban
http://tinyurl.com/2axrlo
zillow is on the money in my hood 22151
this board is just pissed- regulatory as*hols
This reminds me of the real estate lobby in Texas trying to get a la carte real estate services banned. People are watching the economic value or their job being destroyed by technology.
The best part about Zillow, especially as it relates to AZ, is that you can see actual selling costs of surrounding homes. You can call BS on agents. Until the zestimate is used for some legal purpose like getting a loan it’s basically an opinion, and I don’t see how you can regulate opinions.
gop and dnc got together to squash competition-lobbying scks
after the fall RE commisions and especially mort broker commisions will be peanuts
why do people need either w the internet available?
Better have an attorney then, because if you think RE agents are unscrupulous, there’s hundreds of thousands of unscrupulous sellers out there that will lie through their teeth to get their home sold.
…Still cheaper/easier/faster to hire a qualified home inspector and a real estate attorney….and a great title company of course…
“The Arizona Board of Appraisal has issued two cease-and-desist letters to the popular real estate Web site, claiming Zillow needs an appraiser license to offer its “zestimates” in Arizona.”
……
“It has drawn criticism from real estate professionals and others about accuracy.”
The “real estate professionals” are complaining about accuracy? Un-freakin-believable. The nerve of these people, after 4 years of abuse and neglect, they send their lawyers after Zillow.
When the estimates are bloated they are great. When they come in too low they need to be banned. That seems about right with the REIC. By the time this is all done everybody will hate real estate and all of the people attached to it. Let them show their souls and the world will see that they don’t have one.
I believe that zillow should be banned…
Not alphabetically correct, the kind of word that always brings up the rear.
Unbelievable. This demented bullshit will be part of the bailout. Along with the 40 trillion dollar package Congress gives to lenders, they will enact sweeping new laws at the begging of the REIC. Some of them will be designed to enforce a monopoly that Realty Clowns and their pet appraisers will have on information. Only a licensed Realtor or mortgage broker or lender will be allowed to present an appraisal, or something to that effect.
Unbelievable. $100 Billion of mortgage fraud driven by felonious appraisals in Arizona and the state has to pick on Zillow? What a joke. If they want to have an impact, go after the crooked realtors and lenders who created this mess.
HOME OFFICE 2800 sq. ft. downtown sarasota
Reply to: hous-308263392@craigslist.org
Date: 2007-04-08, 3:44PM EDT
i have a 4 bedroom 4 bath conemtporary condo. You can use it as an offcie, or home office. It also has a office beyone the bedrooms 24 foot d=cilings ..Worth about $ 750K - (lessthen $ 300 a foot) Will trade my equity for? I ow $ 620K.
“Worth about $ 750K”
Talk about somebody that should get put in jail for doing appraisals without a license. It should read, “I wish it was worth about 750k”. In the West Village, on Bleecker St., is a store called “Condomania”. They don’t sell condominiums, I can tell you that. Every time I walk past that store I think of fools that bought these ridiculously overpriced condos.
‘Worth about $ 750K - (lessthen $ 300 a foot) Will trade my equity for? I ow $ 620K.’
-would you take $150K for it?
“I ow $ 620k”
“ow” indeed! debt like that has got to hurt. although “ouch” would have worked pretty well, too.
i have a 4 bedroom 4 bath conemtporary condo. You can use it as an offcie…
This this semi-literate FB say we could use his condo as an orifice?!!
CHARLES E. SCHUMER (D-NY)
Contributions by Sector
2004
This is worth a look………….
http://www.opensecrets.org/politicians/sector.asp?CID=N00001093&cycle=2004
I am shocked, I tell you! I thought it was the little guy that had made Mr. Schumer’s senate seat possible. Now I find out it was high finance. I’m so confused.
That’s too funny. The REIC donates the money. The FBs donate the votes. Nice country we’ve become.
NYCityBoy,
Did you check out the who’s who on this page?
http://www.opensecrets.org/politicians/contrib.asp?CID=N00001093&cycle=2004
Sure, I did. It’s a who’s-who of my neighborhood. Stop by for a shot of Jack and we can walk over and say “hey” to all of Schumer’s fat-cat contributors. He’s been bought and sold by the fellows in my neighborhood. And now he is fighting “for the little guy”. Bwahahaha.
The far right gives him the money. The far left gives him the votes. And the guy in the middle gets it both ways.
‘And now he is fighting “for the little guy”. Bwahahaha.’
This is the part that really makes me sick — when pols pander to the “little people” while offering proposals that would mainly benefit fat-cat contributors.
From the looks of that contributions chart, Schumer has a boner for the finance / insurance / real estate sector.
I just got to send a heckling email to Mr. Schumer. I can do that. He is, ahem, my senator. He already looks like a stooge when that initial $120 billion price tag comes in. I had predicted that these grand-standers like Obama, Dodd, Clinton and Schumer would run from this beast once the real story started coming out. Do these politician morons ever know what they are talking about before they run their mouths?
Maybe it is time we start over and rebuild the system. Has anybody seen a copy of The Constitution? Let’s dust it off and start fresh.
I believe a revolution is possible.
Where do I sign up?
The constitution was forgotten long ago. Maybe it is about time it was bought back.
“The constitution was forgotten long ago. Maybe it is about time it was bought back.”
Was that a freudian slip? Maybe it is about time it was BOUGHT back? Many things in Washington can be bought and sold, but the Constitution cannot be BOUGHT…..
“predicted that these grand-standers like Obama, Dodd, Clinton and Schumer” Hey NYCITYBOY, time for me to make another contribution to the DNC. Your political opinions belong on the Fox News website, not on a real estate blog. I’m looking for information to learn about my elected officials, not some “swift boat propaganda” Ben’s great blog doesn’t need this crap.
Well do not go off on NYCITYBOY. It is Obama, Dodd, Clinton and Schumer who decided to join this blog!
Go ahead, genius. What do I care if you throw your money away? Give to a political party, any party. They are all the same. You are just a PARTISAN.
“You are just a PARTISAN” I’m here to learn about real estate, and to make money in a down market. Your political comments and name calling are not the focus of this blog. Ben asked people nicely to keep the focus on real estate. I guess nicely doesn’t work so well.
The biggest news in real estate, at this moment in time, is a massive bailout of subprime FBs. Hillary Clinton, Barack Obama, Chris Dodd and Charles Schumer have set themselves up as the Vanguard elite pushing for this bailout. How is criticism of these people not about real estate? Are you so blinded by your political prejudices that you have no ability left to remain open-minded?
You have yet to utter a word against this bailout. You have yet to criticize these grand-standers for this stupidity. The first Republican that jumps into this mess will also get roundly thrashed. You have been a political partisan every step of the way and now you are trying to play the part of a “victim”. Get a clue!
I actually think the biggest news in real estate, at this time, is the attempt to slap trade sanctions against China. What would happen if China decided to stop overpaying for our Treasuries?
David Cee-
I’ve always voted Democrat (til now!). Are you really unable to see that these flakey proposals DO have to do with RE? You say you want to make money in a down market. Can you not see that these propsals are meant to prop the market up? I don’t get it. It seems so obvious. Can you also not see that if the market stays propped, that will just screw the little guy who needs RE to get back in line with their income?
I don’t get it. How is criticising these proposals simply “political”? They are really bad public policy that will hurt everyone who matters. ( creepy lenders do not matter).
The Constitution isn’t worth the paper it’s written on. Ever hear of a quaint, outdated “right” to free speech, called the First Amendment? Apparently it only applies to porn merchants, not guys like Imus. What good is such a “right” if you can be fired or otherwise persecuted for exercising it?
Sammy, the Imus episode has nothign to do with the Constitution or rights. Racism is like a snake. Imus loved playing with it and now the snake bit him.
Imus was fired for BUSINESS reasons. Advertisers yanked their dollars due to public and activist pressure. So Imus’s masters pulled the plug on him. He is not under any kind of legal ban on being on radio.
And the first amendment only applies to government suppression to free speech. You hear anything about the FCC forcing Imus off the air? Nope. Me neither. If the government doesn’t do it, the right to free speech isn’t implicated.
God, people are so ignorant!
amen sister
el ay just went through the 1st of many blackouts to come, yesterday…
A taste of what’s going on, a comment by a resident of the city of angles, in the el lay times:
“I live in the Hancock Park area and still have no power for more than 24 hours. My fishes in the tank, are about to die, and food will perish soon as well. I know the DWP are doing their best to restore power.”
Faith based electricity…
And it’s only April.
“el ay just went through the 1st of many blackouts to come, yesterday…”
Welcome to the third-worldization of the US.
I have a buddy that is married to a nice Filipino woman and he makes a pilgrimage to Manilla every year and he relates, that in an average 24 hour day there, perhaps 4 hours are sans electricity…
Dude, we had a major wind storm that knocked electricity out not a blackout!!
You know guys, the politicians talk about using non-profits to do what ever bailout stuff they advocate, but there is a real question as to whether such activities are a valid charitable purpose. Poor people are a charitable class, but lenders are not. The exempt orgs division of the IRS has been taking down the credit counseling industry.
http://www.irs.gov/pub/irs-tege/cc_summary_of_results.pdf
Exempt orgs are not allowed to have a “significant” non-exempt purpose. Protecting Wall Street lenders would qualify as a non-exempt purpose. It isn’t a slam dunk, because there is a benefit to the borrowers, but there is an argument here.
“It isn’t a slam dunk, because there is a benefit to the borrowers, but there is an argument here.”
Some of us find it hard to believe that borrowers would be the beneficiaries of a policy that kept them chained to the millstone of a mortgage which is way beyond their means. It would be better for them to simply carve out a means-tested exemption to the bankruptcy law which let them get out from under the weight of an unaffordable mortgage. Let the lenders eat the cost of abandoning underwriting standards.
“Let the Lenders eat the cost of abandoning underwriting standards”.
Boy isn’t that the truth. What kind of ignoramous extends no money down loans to complete strangers who HAVE NO MONEY???!! These lenders deserve to go down. Bigtime.
As do all the CC companies “lending” to people with no money, etc. They’ve hit the wall with Americans. Time to go rape the Chinese and other emerging middle class folks. It took us 40 years + to get to where we are with the credit debacle. I’m sure they’re foaming at the mouth at the prospect of all those Chinese borrowers.
I don’t think rape is the appropriate word. Not to be a Nazi like some people, but I want to try to keep the tone within socially acceptable limits (although I realize it’s sometimes impossible when really stupid proposals are made in Congress).
Single family median price down 8%; condos 13% on Maui:
http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20070414/BUSINESS04/704140319/1071
Finally we are seeing the insanity stop in Hawaii.
Hmmm… Maui isn’t my island of choice… but if it gets cheap enough, a Hawaiian townhouse sounds good…
I cannot help but notice your link tries to play off the drop as due to a few less million dollar homes selling; but where is the dollars per square foot number? If that had been pretty, it would have been printed.
Got popcorn?
Neil
“I cannot help but notice your link tries to play off the drop as due to a few less million dollar homes selling;”
Which is an absolute crock. The best measure of what’s happening on Maui is to look at the homes sold in the Central region, where the bulk of the working class locals live:
http://www.mauiboard.com/download_files/file_1176356779.pdf
March ‘06 median for Central Maui — $674,000
March ‘07 median for Central Maui — $580,000
Yeah, but consider what getting to that Hawaii condo will cost you to fly to (if you even can) - don’t forget Peak Oil.
“Better a cruel truth than a comfortable delusion.”
Edward Abbey
I knew I like you aladinsane.
Ed Abbey was a great American.
Good quality used mental dessert, from just $2.61…
http://www.amazon.com/Desert-Solitaire-Edward-Abbey/dp/0345326490
Great book.
A poster on Calculated Risk has stated in the last couple of days that DataQuick treats Foreclosures returned to lenders as a sale at loan amount with 1 day on market.
1. Does anyone know if this is true or not?
2. How would this affect the statistics? Intuitively I would imagine it would put somewhat of a floor under median prices.
I asked this question a couple months ago, and some posters corroborated that statement. No one contradicted it. Even better, if its a negam loan, the foreclosure “purchase” puts some nice appreciation in the price!
You can thank the rules of the accounting profession. Their motto is that it is better to precisely wrong than approximately right. This means that even though your numbers are wrong, they are not based on approximations (such as calculating depreciation in a neighborhood), but rather exact numbers (such as loan balances). The reason for this is so that their work can be exactly replicated by other accountants. They consider that much more important than giving accurate data.
My poor CPA sister had to deal with me blowing a gasket when I read that.
Ben, I just emailed HBB photos a “catch-all” photo from sunny Florida! Enjoy!
Earlier this week, while I was standing in line for a plane from Kansas City to Las Vegas, the 30ish guy behind me was loudly blathering on his phone about how his mom had bought a fantastic 3bd/2bd house with a basement near KC (outside the city, not sure exact location, the KCI aiport serves an enormous geographic area in MO and KS) for ONLY $120K. He wondered aloud to his friend (and everyone else in the waiting area) whether he should buy 2 or 3 of these houses himself for “investment” because they are so cheap!!! After he hung up instead of killing him for making us all miserable, I suggested he read the housing bubble blog before making his decision. Turns out he is a home renovation contractor living in Huntington Beach (LA area). I told him there was a reason housing was cheap in MO — the typical worker makes minimum wage. He listened to me but didn’t seem to get it. Then, ironically, he made another loud boring phone call to his work buddy about installing granite counter tops in a house he is renovating.
Tell him to hightail it to Buffalo…
I spied 3 $10,000 houses in a giveaway real estate guide there, that almost has giveaway houses~
In Troy and Schenectady you can buy houses for a few thousand bucks. They hold auctions at the town hall 2 x a year with hundreds of properties each time. Give him that hot lead.
They’ve grown skeptical though of out of town “investors” who buy the properties and then can’t afford to maintain the properties or pay the taxes.
It’s unbelievable to me that people still don’t understand that 100K is a lot of money, and may be way overpriced, depending on where you are. Guess they left that point out in the RE investing seminars. These peope from high cost areas are going to get so screwed on their “fabulous deals”.
Truly depressing to know there is a vacant cavern behind the vacant eyes.
What was the quote awhile back? Something like - People make decisions based on preexisting assumptions or knowledge. If they are unable to assimilate new information, they will continue to make decisions based on this old, out of date or erroneous knowledge.
That is what I’ve decided. People are just UNABLE to process new information. When you tell someone about credit issues, and they respond by asking more questions, even if they don’t understand the particulars, they are at least trying. Most just look at you.
Earlier this week, while I was standing in line for a plane from Kansas City to Las Vegas, the 30ish guy behind me was loudly blathering on his phone about…
If there’s one class of people I despise more than realtors, it’s the blathering cell-phone tribe. When I become Supreme Ruler for Life, my first edict will be that every citizen has the right, nay, the obligation, to buy a TASER and use it on rude and obnoxious cellphone users. Also those who use profanity around children or can’t get through a sentence without dropping an F-bomb.
When I become Supreme Ruler for Life…
Sammy, if you don’t get there, I will be Empress of the World and I will abolish cell phones and gratuitous bad language.
Please don’t abolish cell phones, oh Ruler and Empress. They are wonderful for emergencies and a lovely way to keep a leash on teenagers. How about no public use of cell phones or gratuitous bad language? Yes, I love being able to drop the f-bomb once in awhile. Profanity is a luxury, especially since the other indulgences are often illegal.
The issue isn’t public use of cell phones. The issue is rude, obnoxious, inconsiderate public use of cellphones. Similarly, I can’t believe the number of people who think nothing of using the worst sort of language, for no good reason, in the presence of kids (including their own). Dropping the F-bomb once in awhile, in adult company and for good reason, is one thing. Using it habitually in casual conversation shows a lack of class and character.
What about people who insist on installing radios in their cubicles? What do you guys think about that?
I couldn’t work in a cubicle if I had to listen to anything but background music, like classical. Too distracting. If people want tunes at work, they should check with their co-workers first, or use headphones. That’s basic consideration of others.
With that platform I’m voting for you as Supreme Ruler for Life.
Where do I donate?
As Supreme Ruler of The Universe, I have decreed that overuse of cellphones causes brain cancer. I also set up that study that showed it does not cause cancer. Just another part of my natural selection program.
Future foreclosure bailout recipients?
———————————————————————————–
Even the Seemingly Well-Off Caught Easy-Borrowing Virus
By Herb Greenberg
Word Count: 826
You may have seen that LendingTree commercial with a happy-go-lucky guy named Stanley Johnson, who brags about his big house, his new car and how “I even belong to the local golf club. How do I do it?” he continues with a big, dumb smile, “I’m in debt up to my eyeballs.” Lowering his voice, but still smiling, he adds, “I can barely pay my finance charges.” The smile doesn’t leave his face as he drives a riding lawn mower, saying, “Somebody help me.”
Thanks to easy credit, many Americans have been living well beyond their means. But that credit …
http://online.wsj.com/google_login.html?url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB117650906019369740.html%3Fmod%3Dgooglenews_wsj
subscribers only
Sorry for that. It is in the print edition, and will likely be available online for nonsubscribers within a couple of days…
CLICK HERE!!!
http://www.youtube.com/watch?v=hn5EP9StlVA
“I’m in debt up to my eyeballs.”
Enjoy
-Rent
I love that commercial, but I believe the insinuation that serial refinancing will enable FBs to sustainably spend more than they earn may be somewhat misleading. Any thoughts?
Zatopek, Emil (an early Hero of mine)
“What has passed is already finished with. What I find more interesting is what is still to come.”
Always enjoy your quotes.
Thanks…
Meet the man that made that quote possible:
http://en.wikipedia.org/wiki/Emil_Z%C3%A1topek
Zatopek:
“It’s at the borders of pain and suffering that the men are separated from the boys.”
How does the Senate separate the men from the boys? With crowbars.
Zatopek Zaturday…
He was the most talented long distance runner of all time, but he never smiled when he was running. He was all business~
He was often criticized for his grim looks and crazy running style and all he did was win, baby…
5,000 & 10,000 meters in 1948
5,000, 10,000 meters and the marathon (his very 1st one)
His response to critics of his looks?
“I was not talented enough to run and smile at the same time.”
Swoons:
http://wallstreetexaminer.com/blogs/winter/?p=655
Can entire States qualify for subprime loans?
“March tax receipts in California completely bombed coming up 7.4% short of forecast. Personal income taxes was unusually poor, and sales tax collection seems to be confirming the ShopperTrak trends. Year over year personal income, sales & use, and corporate taxes were 5,031 to 5,366, down 6.3%. In February it was 4,100 to 4,276, down 3.9%. Corporation taxes paid remain healthy. The swoon in state revenues is not really new news, but now it appears to be accelerating. This now brings California’s November-March tax tally in at $1.9 billion below forecast.
Meanwhile, California is going to market with a massive $40 billion infrastructure issuance (very good video here).“
GS, I have read that this is the opening $40B and that the total requested by the State of Cal is 500B. Next series $75B in October.
The budget was slightly north of $100b last time I checked (several years ago). So $500b is probably 4X-5X annual budget expenditures. It sounds like the gubenator has abandoned his pledge to keep spending under control.
Let’s see how well those spending plans hold up when revenues plunge due to non-paying FBs, declining property values, out-of-work REIC types, etc.
While Senators debate foreclosure bailouts in the face of a nonexistent crisis, lenders merrily go about their business of loaning people money which will never be repaid.
——————————————————————————-
Risky loans - alive and well
Despite the subprime meltdown, many lenders are still finding a place for exotic mortgages.
Money Magazine
By Stephen Gandel, Money Magazine senior writer
April 10 2007: 5:25 PM EDT
NEW YORK (Money) — Option ARMs remain an option. Despite problems in the mortgage market, brokers say lenders are still willing to make risky loans - including those that allow borrowers to make monthly payments that don’t even cover the interest (so-called “option ARMs”).
Also still widely available are “no-doc” loans, which require no income verification, and mortgages with no downpayment.
All of those loans fall into the so-called Alternative-A or Alt-A mortgage market, which caters to people with average credit scores who want riskier mortgages and has been one of the fastest growing segments of the home loan business in recent years.
Jim Moore, a mortgage broker in Grand Rapids, Michigan who also writes about mortgages for Miamibeach411.com, said he recently completed a $3 million refinance on a second home for a borrower who was out of work. “This wasn’t even a no-documentation loan,” says Moore. “This was a no-income loan, and the lender knew it.“
Other brokers say they haven’t had to turn away customers, either. George Duartes, who is the president of Fremont, Calif.-based Horizon Financial Associates, says his firm continues to be able to find banks who want to lend to the 30 percent of his clients who fall into the Alt-A category. “So far those clients have been able to get the loans they wanted,” said Duartes.
http://money.cnn.com/2007/04/10/real_estate/alta_alive.moneymag/index.htm?postversion=2007041017
Nice find…
But some things shouldn’t be read before breakfast.
No income loan… groan.
Got popcorn?
Neil
This is why it’s SUCH a good idea to start bailing subprime borrowers RIGHT NOW while these loans are still being made! It’s the Democratic proposal to KEEP these guys in business!!!
Fellow bloggers,
I need some advice. I looked at a townhouse today that I am considering making an offer on. It was last purchased in 11/99 for $72,500. It’s listed at $189,900. The kitchen is not upgraded. The 1.5 baths are not original, but not anything fancy. The carpet’s old. The windows are original and I’d definitely want to replace. The exterior of these townhouses is, quite frankly, ugly. However this would be a good place for my son and I (I can get past the ugly exterior). The taxes are ~$2400/year. Association fee is $185/month.
So, assuming you were to make an offer on this place, whereabouts would your offer be?…
Oh, and, the “zestimate” (for what it’s worth) is $171,000 with a range of $142 - $192.
Where?
What is your household income and how secure and/or replaceable is it?
After that an opinion might be able to be rendered.
I’m almost embarrassed to post this because, seriously, the townhouse is ugly (so no judgement, please). The MLS # is 4906915. My income is $41,200 plus annual bonus (bonus this year was $7250 gross. I feel the job is quite secure presently. I even believe my industry to be recession-proof, but I’m not delusional enough to believe a layoff could never happen. I feel confident I could replace the income. Also, I have a little over $50K in savings. (Wow, I feel so vulnerable to you all now.)
So?…
Assuming the following savings/ expenses yearly:
1. 401K = 5000
2. Med insurance = 1000
3. State income tax is same as CA
4. Mortgage interest rate of 7% fixed for 30 years (depends on good credit history only)
5. 20000 downpayment
6. maintenance & Insurance = $2000/ year
7. HOA = 185/month
Your monthly nut for a mortgage at the asking price of 190K is $1131.
I have not included the annual bonus in the income as this is not really guaranteed. So the question is how much is your current rent. I’m guessing it is less than 750 per month.
Assuming you do not have any other debt (credit card), you will have about 1450 as disposal income every month after payment of mortgage.
IMHO you should rent for another year, keep watching that townhouse and/ the market. You could potentially pick it up for less than 100k in 2009.
Actually, the disposal income will be $850 per month without including bonus of 7250 in the calcs. Considering the bonus in the calcs, the disposable income per month is $1284
Current rent is $779. But it’s an apartment, not a condo/townhouse/or house. No in-unit laundry. I face both the parking lot and a very busy road so there’s a lot of outside noise. Inside, I hear my neighbor’s tv, the water running when they shower, and when everyone comes and goes as it’s a shared entrance/hallway.
Logically, I know I should just keep renting and wait at least until 2008. And I know I can go find another rental but I loathe moving and really wanted my next move to be into a house. I guess I’ll have to suck it up for another year here. (Except for the noise - I’m ultra-sensitive to noise pollution - my apartment is great. Landlord’s cool. And I sure do love leaving a message for maintenance at night and coming home from work the next day to have things fixed [garbage disposal last week].)
Thanks to everyone for your thoughts!
Logically, I know I should just keep renting and wait at least until 2008. And I know I can go find another rental but I loathe moving and really wanted my next move to be into a house. I guess I’ll have to suck it up for another year here.
Your frustrations are understandable, but the price you’re paying to rid of them is way too high. How are you going to feel in another year or 18 months when a house you like mUCH BETTER, is available for LESS than this one?
Consider finding a townhome for rent, and spending a few hundred bucks on moving help. For noise, a pair of $70 Etymotics earphones (and earplugs for lseeping) will go a long way.
If your income’s 40K, offer them around 100K and go up to 110 if you want. That is a HUGE increase in price since ‘99 (more than 2 x). You do expect that price to come down if you buy it right?
I’d wait til the lending fiasco begins to get sorted and work it’s magic on the market.
All RE is local. Is is vacant? How long on market? What would it obtain for rent? 7 years appreciation at 3% a year dictates $90,000. Take the gross rent and multiply by 10 or 12 and you get another historical measurement of value.
I think you will find you are way too early in this mess. We could easily drop another 30% by 2008-09.
Yes, it’s vacant. DOM listed at 20, but realtor’s going to see if it’s been re-listed. Would probably rent for ~$1100 - $1200.
I was actually thinking of being generous giving it 9% appreciation. I was thinking of an offer of $140,000. But, believe me, if it were feasible to offer less I’d be all over it.
That’s why I’m getting some opinions.
O.K., so far so good. Let’s assume your real tax bracket is 10%, so you will get some benefit from owning. If you pay $140,000 and put 20% down ($28,000) and have 2% closing costs ($2800 more), you will have a loan of $112,000. Principal and interest is approx. $8120/year, or $676/mon. Add $185 HOA and $200/mon taxes (this will probably adjust based on purchase price) and you are into this for $1061/mon.
If you get if for $140,000 I would not discourage you. However, I do not know where this is and it is likely the market will become better for you as a buyer in the next 2 years. It is not a good time to buy, except for the occassional screaming deal. Also, you mentioned the property is pretty ragged, so you have to add some costs to make it livable. I say put in an offer at $130,000 and see what happens.
How much is insurance? How much would you estimate for upgrades & repairs? For $1100-1200 rent the place should sell for about 120 times rent, $132K - $144K if it’s in nice condition. A $130K offer seems reasonable, if they don’t take it walk away, there’s plenty more out there. If you can wait 1-2 years the asking price for that property might be $130K, never know.
What are similar homes in the area renting for? (I will not buy until comps sell for under 120 times monthly rent).
How has the inventory of homes changed in recent years? (It is still trending up in San Diego after seasonal adjustment and making allowance for vacant new homes not counted on the MLS).
How do you feel about buying and holding an asset with negative returns? (Even the NAR is now forecasting national price declines through 2008).
Similar homes rent for anywhere between $1000 and $1300.
Inventory is growing, though not as rapidly as some places.
I’m ok with negative returns initially. Wherever I buy, I’m fine with staying there until my 3-year old son is out of high school.
(Also possibly noteworthy - this unit is sitting vacant right now. DOM is listed as only 20, but my realtor’s gonna’ check and see if it’s been re-listed.)
NYCityBoy Verdict: No way in hell I would do this.
Townhouses are a step above condos. They get hammered hard in downturns. Older townhome developments can be difficult to sell out of. Association dues can rise easily. And if this thing is as ugly as you say it will be hard to sell. If they decide or do exterior work you will be looking at them jacking the association fees. You are taking way too much risk if you go through with this.
One reason to be very cautious about currently buying a home which is part of a homeowner’s association is the risk that foreclosures of your neighbors will knock out the cash flow of HOA dues needed to keep the common areas properly maintained. The solvent owners will be the bagholders, as either their HOA dues will have to go up to cover maintenance needs, or else the value of their properties will suffer due to a lack of proper maintenance.
I’ve seen a lot of townhouse, and condo, developments that fall into disrepair as time passes. They become nothing more than housing projects. You may have 15 years to wait but by then you may not like what is around you and no buyer will either.
Take a good look at this development. If you think that is a possibilty, then stay away. People forget that what they pay $170,000 for today could be worth $70,000 ten years later. Real estate can and does go down from time to time. Location is a big part of that.
The one thing this has going for it is location. It’s in a very good school district (Hatboro-Horsham) and the town that it’s located in (Hatboro) is somewhat unique. I’ve always said it’s like there’s this invisible dome over the town of Hatboro that keeps the real riff-raff out - even while towns around it become infested. If anyone on this blog knows Hatboro, would you agree?
Anyway, as posted above, I’m going to give the market more time. And thanks for all the input.
“I’m going to give the market more time.”
Eastcoaster — I for one admire your willingness to openly share your decision process with others on this blog.
My overriding recommendation is that there may never have been a better time in modern financial history to take your time in making a real estate purchase. The collapse of 50+ subprime lenders over a three-month period has created a massive negative disequilibrium shock to the demand side of the national U.S. real estate market whose full effect is yet to be realized. Top U.S. economic policymakers will try various kludges to fix the situation, but I see no way for many of the buyers who would have qualified in 2005-2006 to get qualified to buy anywhere near as expensive a home at this point in the credit cycle. When even the NAR is forecasting falling prices, it is quite likely that prices will fall.
IMHO wait until Fall of 2008. You will have saved more for down payment and by then there should be more choices because RE should be bottoming.
Yup, let interest work FOR you - not AGAINST.
“…because RE should be bottoming.”
That would be the quickest bottoming of a bust after the longest and largest boom in U.S. real estate history. Realistically, I see no bottoming in the major bubble markets until at least 2011 (six years after the 2005 peak); there is simply too much disinformation pumped into the MSM from the REIC for the quick-correction scenario you favor to play out. But maybe you have a better crystal ball than I do.
72500 times (1.03 raised to the eighth power)
This is purchase price adjusted for inflation between 1999 and 2007. Gives me 94596.
So I’d offer $89K. Firm, all cash.
Oh, man, I wish.
Wait a year or so and your wish will come true!
I never look at the price of the property first. I look at the financing. A couple thousand dollars in negotiating the price is not the major consideration. The new monthly payments for the mortgage PITI vs. what I pay in rent is a biggie. Can you sleep at nite with the higher monthly payment. What is the difference from the mortage payment and your rent?
I would offer to slap you alongside the head with a trout for even THINKING of buying right now.
LMAO, way to go sammy.
Wish every FB who bought in the last 2 years had to go through the final “slap on the side of the head with a trout” as rite of passage before they signed on the dotted lines.
Yes, but, if I had the stones to offer $89K like passthebubbly said above it’d be worth it. (No way would it be accepted, but it’s tempting.)
Ok, keep on saving it is!
Eastcoaster: reading between the lines I sense that you have many reservations about this place. Just keep telling yourself that in another year you will be in the driver’s seat. From the calculations presented, you are likely to end up next year paying less per month than you are now, with a lot more amenities. Good luck to you. And by the way, kudos to you for being able to save while working and raising your son on your income. If everyone was like you, we wouldn’t be in the mess we’re in now.
I woke up this morning thinking about the absurdity brought to light in Kathleen Madigan’s video about subprime bailout proposals. The idea of so many unqualified borrowers getting upwards of $500K in loan proceeds to buy houses they could not afford calls into serious question the efficacy of using helicopter drops of money to keep the economy humming.
“Comedian Kathleen Madigan has a reality check for subprime lenders hoping to get bailed out by the government.”
(Scroll down the page referenced below to find the link to this must-see video)
http://money.cnn.com/2007/04/13/real_estate/subprimebailout_cost.moneymag/index.htm?postversion=2007041316
That video clip is great. Shame on the MSM that it takes a comedian to question the insanity in simple, clear ways.
>> Still economists say bailout could have the effect of causing more defaults. “If the plan is to pay off loans when people quit, then I plan to quit paying my loan,” says Michael Englund, chief economist at Action Economics.
The bailout proponents had better consult an economist who can explain the principles of mechanism design. Because if they are not careful in the way they structure their bailout, they could easily double the number of households who pretend to be unable to make their payments. It might be tempting, for instance, to “get fired” in order to qualify for free money.
Happy weekend everyone. Conditions in Phoenix this fine morning:
Sunny
Temperature: 58 degrees
Humidity: 51 percent
Wind: ENE at 1 MPH
Housing inventory: 59,072
AZ Republic front page headline: Foreclosures rocket in Valley
So why don’t you folks back east in the way of that storm jump on a plane and head out here this weekend. And hey, while you’re here, check out one of our many fine open houses. It’s a great time to buy!
Tis a beautiful spring day in San Diego as well.
Sunny
Temperature: 54 degrees
Humidity: 36 percent
Wind: E at 4 MPH
Ziprealty.com used home inventory: 17,007
Ziprealty.com inventory was 15,000 on January 31, up by 2000 listings over the course of 10 weeks, for an average of 200 homes added to inventory each subsequent week. With a large selection of vacant new McMansions modestly priced in the $1m+ range, it is a great time to invest in a San Diego vacation home!
Foreclosures increase 30 percent
Jump over last year’s first quarter surprises experts (ha!)
http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_5483865,00.html
Note that there is still huge speculative demand for foreclosures. The last of the stupid money is not out of the market yet- there are still plenty of pre-rich “Flip this House” viewers who know nothing of inventories and the demand for securities that was funding the mortgages.
About the only answer you will get from this blog is to wait another year or two - which I agree with. The other information you need to find is how much is owed on the thing. If the seller owes $180,000, then they aren’t going to be able to do much with a low offer.
I have friends here in Hillsboro, OR that are anxious to upgrade their house. I tell them a little patience will pay off, but it seems to fall on deaf ears. Of course, they don’t have their existing home on the market yet, but “it will sell very quickly” they say. I just tell them I wouldn’t be so sure based on my past experience. I have never had a house sell quickly when you really need it to. But maybe Hillsboro, OR is different.
The other information you need to find is how much is owed on the thing. If the seller owes $180,000, then they aren’t going to be able to do much with a low offer.
Right, good point. I’m so old school. I see a purchase price of $72,500 and assume they owe that minus 7 years of mortgage payments. Keep forgetting about the housing ATM factor.
Does your local county clerk have a website where you can look up property? My county website will show everything recorded against a property and the amount. That means you can find out how much the owner put down on their home and you’ll also see any refi’s or HELOCs. Generally speaking, if you see a new mortgage recorded but no release of a prior mortgage recorded, you know they hit up the house ATM.
Wow, just saw on eBay. If you are a user, go to it. Yesterday, I mentioned in one of the threads that I’ll wait for RE agents in OC to let go of their Lamborghinis at major cut rate prices. But, I just learned (but suspected all along) that people are HELOCing to get them. If you go to the listings for Lamborghini, and find the red 1991 Diablo, read the question at the bottom to the seller. If you are not an eBay user, you cannot see it all, so I’ll save you the suspense. The looker asked if the guy would take $75K because he had a HELOC cashiers check for that much. OMG. Happily for us, the seller told him no way, and furthermore, advised him NOT to take HELOC to buy a Lambo, or any other exotic car. LOOKS LIKE WE HAVE ONE ON OUR SIDE!!!!!
You don’t think the seller just owed 125K on his HELOC?
Earth to Wall Street,
See what happens… when a small little thing… causes a really big thing…to result in an unintended consequence.
A command sent to the wrong computer address caused a cascade of events that led to the loss of the Mars Global Surveyor spacecraft in November
The problems with the spacecraft began in June, when a command that oriented the spacecraft’s main communications antenna was sent to the wrong address. The mistake caused a problem with the positioning of the solar power panels.
The problems came to a head Nov. 2, when the spacecraft detected the positioning error and tried to go into a safe, or contingency, mode. That, in turn, exposed one of the batteries to direct sunlight, causing it to overheat.
Software on the spacecraft interpreted the overheating as a battery overcharge and shut down the charging system. As a result, the batteries drained within 12 hours, resulting in a loss of communications with Earth.
The spacecraft, which had orbited Mars for 10 years, was given up for lost Jan. 28.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/04/14/MNGHNP8L001.DTL
Looks like Helicopter Ben has put the pedal to the metal:
http://www.shadowstats.com/cgi-bin/sgs/data
M3 annual growth is rising. Now at 11.5% per year.
I think condos ANYWHERE in the US right now are a bad investment. They are the first of the housing market to crash and the last to ever come back. Your fees are tied to weather damage, ageing of the property, foreclosures, etc. You don’t have total control over your own expenses. You also still need your insurance for the inside, and depending on where the location is, that could be expensive or nonexistent. Think more than twice about risking housing investment in this volatile market. You’re in good shape renting with savings in the bank. There’s no rush.
Coinfucious carry more water, in quote form:
“Great wisdom is generous; petty wisdom is contentious.”
Zhuangzi
One of my “nodding acquaintances” from the local dog park is a lady who happens to be a realtor. She’s decent enough, from what I can tell, and doting on her dog, a very expensive (upwards of a thousand dollars) foo-foo breed. Her dog plays well with mine, a stray we rescued a few years back (think “dawg”). Anyway, the lady - I’ll call her Kathy - came over with tears in her eyes and asked if we’d be interested in adopting her dog, since she was “downsizing.” I had to decline, since one is enough for us. It turns out she’s being forced to sell her house and move in with her sister’s family (in a rental with a no-dog policy), plus she’s working much longer hours. You could tell she was distraught, and not just about losing the dog. Kind of put a human face on the other side of the housing bubble equation. The good news is, a friend of my wife (and fellow stay-at-home mom) is interested in giving the dog a home, so at least that would cushion the blow.
I feel sorry for her. The dog, that is.
passthebubbly: very funny - I laughed through my crocodile tears. Sammy almost had me feeling sorry for her, despite the fact that the realtor should be financially secure after six years of raping house buyers.
As a breed rescuer, believe me, I’m seeing plenty of this already.
If the dog is a French Bulldog, drop me an email. My group can help.
How about a HBB-sponsored bailout to rescue the unfortunate dogs belonging to FBs?
Why anyone would pay good money FOR a dog baffles me - so many without homes in shelters. Now, why anyone would pay good money ON a dog is a different matter (with a geriatric dog pack, my vet bills are higher than my income, sort of makes me understand what it must be like to have a mortgage I can’t afford.) (Sorry about getting off topic.)
It’s something like $50 to neuter a cat nowadays. I hope people care enough to keep their pets from running around like little Paris Hiltons.
No pet deserves that kind of slur!
I don’t see how there will be any bailout for the FB’ers…Then everyone will stop paying on their mortgages and wait to be bailed out…
I wondered how PMI insurers were managing to remain solvent during this RE meltdown. It now seems that they don’t pay claims if there was fraud involved in the mortgage applications. Good riddance greedy lenders/ GFs
Correct me if I’m wrong, but I believe that one purpose of the 80/20 loans was to negate the need for PMI.
I think you are correct re: 80/20 mortgages, however if you have a first only with less than 20% down you must have PMI. Please correct me if I’m wrong
“IMF policymakers on Saturday are to press on with a campaign to save their 60-year-old body from irrelevance at a time when their sister institution, the World Bank, has been shaken by a pay scandal involving its president, Paul Wolfowitz.”
My update on the IMF,
The US is upset with China because China loans money to undeveloped countries without any political restrictions. This is making the World Bank look like New Century.
China gets the raw materials and arranges terms that are very favorable to these African and South American countries - terms that might turn these undeveloped economies around.
In the past when the World Bank loaned moneys to an African Nation, US terms and conditions applied. e.g. Grain seeds must be bought from the US, the only grain seed availalble is GM seed. This seed must be continuously imported.
China has limited restrictions and a lot of cash.
India and the rest of the emerging Asian countries agree with China’s position. The population in this area is 3.3B.
China which has 1.2T in reserves mostly US dollars also has 1.2B population
from Gulf news today
“The Gulf is home to more than 100 million Muslims and wealth in the region is expected to grow to $1.8 trillion by 2010 from $1.2 trillion in 2005, according to a report by Merrill Lynch & Co and Capgemini Group. Record revenues for Middle East oil producers, including Saudi Arabia and Kuwait, have helped spur the growth of Islamic banking into an estimated $1 trillion industry worldwide.”
I guess its different in the Gulf.
Despite Paulson’s and Gutierrez’ denials of a trade war, the US actions in recent days leave little doubt that the war has started.
Good for China. I hope the World Bank (and Wolfowitz) goes down in flames (figuratively, not literally)…