The Dark Cloud That’s On The Horizon
The Missoulian reports from Montana. “While still booming, the market for houses priced between $250,000 and $400,000 is seeing slightly longer waits, and motivated sellers are adjusting their asking prices downward in response. At least part of that is due to national news reports that markets in other regions are sliding fast, real estate broker, Matt Rosbarsky said. Potential buyers are waiting a little longer and shopping around a little more.”
“So far this year, 76 notices of foreclosure have been posted with the Missoula County Clerk and Recorder’s Office, 13 more than this time last year. In fact, the number of foreclosures filed in Missoula County soared 22 percent last year, to 215 homes in 2006.”
“‘I am seeing a few price reductions where people who are selling are re-evaluating and making some price adjustments downward,’ said Judy Wahlberg, a 28-year veteran of the Missoula housing market. ‘I think it’s going to be a good year for sellers, but we may see a little bit more negotiation.’”
The Denver Post from Colorado. “Weld County has dropped out of the No. 1 spot in a national ranking of home foreclosure rates, but only because other areas of the country are getting worse, local real estate agents said.”
“‘I don’t think we’ve seen the proof we’d like to see that things are getting better,’ said Greeley-area real estate agent Nate Buie.”
The Greeley Tribune from Colorado. “The homes that seem to be affected most by Weld’s foreclosure trend are those in the lower price bracket, Buie said. For example, in the first quarter of 2007, there were 65 homes in Greeley and Evans that were sold for less than $100,000. Of those, 92 percent of those homes were foreclosures.”
“Also, 40 percent of the homes sold in the $100,000-$149,000 had been foreclosed on. Those kinds of statistics tend to bring down the price for the homes in those ranges, Buie said.”
“‘Sellers have to keep in mind that they are competing with the foreclosures, which are going to be aggressive with their pricing,’ Buie said. ‘If you want to move your house, you want to be aggressive as well.’”
“Weld had its highest number of foreclosures ever in 2006 with 2,073. But the first three months of 2007 had 155 more foreclosures, an increase of 31 percent, than the same time period in 2006.”
“‘We have not seen a decrease in foreclosures,’ said Donna Schmidt, who has worked for the trustee’s office for 19 years.”
The East Valley Tribune from Arizona. “Some 3,737 permits were issued in March, up from 3,630 in February but down 21 percent from the year ago period, the latest Phoenix Housing Market Letter from analyst RL Brown shows.”
“‘It’s a positive sign that the trend is upward,’ Brown said.”
“The new home market is facing another hurdle, tightening lending standards, he said. Skittish lenders have done away with 100 percent financing, stated-income loans and other types of mortgage products, as well as requiring higher credit scores.”
“It’s becoming tougher for everybody to obtain financing, not just for first-time homebuyers, Brown said. ‘I think that’s the dark cloud that’s on the horizon,’ he said.”
“Also in March, 3,674 new homes were sold, down 20 percent from the same month last year. Some 10,369 new Valley homes were sold in the first three months of 2007, compared with 12,536 in the same period in 2006.”
“The local market may start to rebound as early as the first half of 2008 if the economy continues to grow and the mortgage situation doesn’t get too bad, but those are some big ‘if’s,’ said Ben Sage, director of Metrostudy’s Arizona division.”
The Tucson Citizen. “A cooling housing market here may be good news for buyers, but homeowners facing debt woes may be more likely to find themselves in foreclosure. Pima County had 1,427 foreclosure filings in the first quarter of this year, up 51 percent from the same period in 2005, according to RealtyTrac.”
“Leading the way in those foreclosures are homeowners who bought a home or refinanced using a subprime home loan.”
“Tucson’s increase in foreclosure filings is below those of Maricopa and Pinal counties, according to RealtyTrac. Maricopa filings jumped 108 percent and Pinal’s 233 percent.”
“Jim Whitehill, a Tucson real estate attorney, said he is seeing loans that originated in 2005 and 2006 entering the foreclosure process.”
“‘I think that all of us that are involved in real estate law are expecting an increase in foreclosures,’ he said. ‘We’re expecting that because there were a number of loans that were made in the last three to five years that were based upon and premised upon an increase in the value of real estate.’”
“‘They weren’t loans that were based on the borrower’s ability to repay,’ Whitehill said. ‘They were loans that were not based on the borrower’s character. They were based upon the fact that the property was worth X and that in a rising real estate market, that the property was going to be worth X-plus.’”
“Local Realtor Nancy Colvin said an increasing foreclosure rate will mean that more houses will spend more time on the market.”
“‘I know that there are going to be a lot of foreclosures out there,’ she said. ‘That’s a given. That’s an absolute given. When that number starts increasing, that just increases inventory.’”
“‘The demand of buyers is out there, but because of the changes in subprime lending, a lot of those demands are not being met,’ she said. ‘Therefore you have fewer buyers and lots of inventory so it takes a lot longer to sell. Sellers who really need to sell have to drop their prices, unfortunately.’”
Stick that #1 oversized foam finger thing back in the closet, Colorado…
“Weld County has dropped out of the No. 1 spot in a national ranking of home foreclosure rates, but only because other areas of the country are getting worse, local real estate agents said.”
“‘I don’t think we’ve seen the proof we’d like to see that things are getting better,’ said Greeley-area real estate agent Nate Buie.”
Eh, we ran out of illegals.
A new report on the Pulte development in Benson, Arizona:
‘The planned 13,750-home Pulte Homes development on Highway 90 will not happen, Whetstone Ranch developer Pat Lopez told the Benson City Council Monday night. Pulte is pulling out of the project because of the national slump in the housing market, Lopez said.’
‘We are withdrawing,’ he said. ‘The market conditions are to the point that we have to be conservative with our capital. It’s not a wise choice to drag this out.’
Pulte is pulling out of the project because of the national slump in the housing market, Lopez said.’
OK now I dare some CNBC talking head to say that all RE market conditions are local.
They are local. The amount they exploded was highly localized, and the amount they are going to implode is highly localized to how far above fundamentals they are.
The implosion is nationwide based upon the end of easy credit, but the amount will localized.
“The implosion is nationwide based upon the end of easy credit, but the amount will localized. ”
I agree. Everyone is on their high horse, trying to seperate themselves from this current condition.
Sorry, but that’s just silly. That’s like saying there was “no national dotcom bubble” because some stocks were more overpriced than others — and the economies of some regions were more dotcom dependent than others.
What?
Here’s a little newsflash: ALL MARKETS HAVE REGIONAL VARIATIONS. That doesn’t stop us from generalizing about the conditions of markets nationally. The effort to shelve the concept of a “national real estate bubble” was a fantastic victory of spin conducted by the real estate industry, and swallowed down whole by those such as yourself.
National trends beget national results. “National” doesn’t mean “perfectly homogenous in every location”. The term is (of course) a generalization. As in, “Nationally we have an aging population”.
Duh.
I agree that my market is not going to correct as severely as say, Naples FL will. (Simply because the overvaluation in PHL is not as extreme). However, I was addressing the mantra that we’ve been hearing from the REIC: that Silver Spring MD, for example, won’t correct because they’re “different” from Naples FL and all RE is local. Or that home prices won’t slide in Bitterroot MT due to the scads of baby boomers that are about to descend on that community.
and on and on and on…ad infinitum, etc. etc.
amen
meant to reply to Darrell in PHX not to myself
13,750
Endless lines of cookies on cookie sheets, baking in the sun. This is just nuts.
The only way I can visualize this is to remember those photos of Levittown from the textbooks. But at least those were families back from WWII who needed housing. These days, are there really that many first-time buyers crammed in with mommy and daddy, waiting to absorb all this new housing? Where are they going to work? And what are they going to drink?
The difference between 1946 and now:
Every g.i. that come home was relatively loaded and as there was precious little to buy during the war years, all those war effort workers were anxious to spend all that money they’d made.
A perfect storm of consumerism that probably got us going on our merry way to where we are today.
A bunch of debthogs.
Not to mention the government started buying back all those war bonds… that didn’t last long.
Oh, and they decided to raid the social security trust fund, dumping huge chunks of change that were intended for future generations into the hands of the current (for the 40’s) retirees.
Oh, those were the good old days.
We actually have quite a bit of water available here in the valley. VAST stretches of Gilbert and Chandler farm land has been converted into housing, and housing uses a very small fraction of the water that farming does.
When I lived in Colorado, we had masses of water… that we couldn’t use. Since CA, AZ and the midwest were setteled first, those areas got “first use” rights to the water.
Here in PHX, we have rivers that flow out of the mountains into the valley of the sun, but there is no one down stream from us that has first use rights. We get to use it all.
Our city councels push us to conserve, but that is so they can resale the water rights or put in more golf courses to bring in the snow birds all winter.
“We actually have quite a bit of water available here in the valley. VAST stretches of Gilbert and Chandler farm land has been converted into housing, and housing uses a very small fraction of the water that farming does.”
Someone needs to read “Cadillac Desert”.
I thought the original question as to what they will drink was referring to alcohol. God knows, if I lived in one of those neighorhoods I would need a liquor store in the basement.
“The only way I can visualize this is to remember those photos of Levittown from the textbooks. But at least those were families back from WWII who needed housing. These days, are there really that many first-time buyers crammed in with mommy and daddy, waiting to absorb all this new housing? Where are they going to work?”
And how are they going to get financing without VA loans? Or maybe we’ll just make the recent devaluation of that particular veteran’s benefit permanent by offering no-down to everyone via the FHA?
I looked at a Pulte home over the weekend and I couldn’t believe that they wanted 700K for a big ugly stucco box in Corona, Ca. Seriously, it was the worst looking home I have ever seen! Why would anyone want to buy such a thing? It was 4000 sq feet w/ absolutely no flow to the house and my wife who has no experience with building houses was picking out all of the flaws in the workmanship (Like the door jams weren’t level). I thought they were supposed to be the best of the home builders, but I think that KB homes are built better.
BTW….Which builder (out of the 10 largest builders) has the best track record when it comes to a quality built home? They all look the same to me and the most expensive seems to be the worst built. At least this is what I have seen in the Inland Empire, CA. Can any one assist?
Don’t know which is best, but Toll Bros. is deplorable.
I know some good local small builders if anyone in PHL market wants to know. Used to work for them.
I think Richmond homes are one of the best but they’re not building in San Diego the last time I checked.
Oh, dear God, you must be kidding.
I looked at a foreclosed, ten-year-old, Richmond house in Colorado over the weekend. Every window in the place had leaked and needed replaced. The sills (what there were of them, anyway, since Richmond doesn’t trim out windows and the drywall runs right up to the vinyl frame) were deteriorating, dropping bits of water-logged drywall all over the floor.
In the bathrooms, the fixtures were cheap & corroded, and the walls were covered in mildew because of insufficient ventilation. Guess what? Bathrooms need vents; the 6″ window won’t do the job.
Out front, the driveway had significant spalling and had heaved in places, causing cracking and leaving me wondering if there was any rebar under the concrete. In short, the quality of workmanship left much to be desired. And, as I said, this house was only ten years old!
The window problem seems to be common. There is a huge Richmond neighborhood close by where I have noticed many houses with obvious trim-rot. Maybe the windows weren’t flashed & caulked properly? Who knows?
A family friend worked for Richmond for several years right out of college. He went on to work for another builder and has nothing flattering to say about his previous employer. He has vigorously warned my husband and I away from Richmond. We are heeding his advice.
Just another note to add to the list…
Meth-homes? That is homes built by crews of Meth-addicts.
Anyone have any experience with Standard Pacific? They build a lot of expensive homes in SoCal.
Don’t invest in the west, young man…
With apologies to Horace Greely.
The Greeley Tribune from Colorado. “The homes that seem to be affected most by Weld’s foreclosure trend are those in the lower price bracket, Buie said. For example, in the first quarter of 2007, there were 65 homes in Greeley and Evans that were sold for less than $100,000. Of those, 92 percent of those homes were foreclosures.”
Don’t invest in the west, young man…
With apologies to Horace Greeley.
The Greeley Tribune from Colorado. “The homes that seem to be affected most by Weld’s foreclosure trend are those in the lower price bracket, Buie said. For example, in the first quarter of 2007, there were 65 homes in Greeley and Evans that were sold for less than $100,000. Of those, 92 percent of those homes were foreclosures.”
Does Greeley still stink all the time?
yup . . . and when the wind blows just right, Fort Collins and Loveland become more aromatic.
Not as much as before. Most of cattle feed lots have moved east towards Ft. Lupton. But if the wind blows just right you can smell it all the way to I-25.
the ISM report was surprising
is it feelings , nothing more than feeling
or does it mean the drag of housing is abating
Last Tuesday, April 24th, the Lago Sereno development in Green Valley, AZ (outside of Tucson) of Richmond American homes dropped prices by $40k across the board. These are homes priced in the mid $200’s… ouch!
Correction… Lago Sereno is in Sahuarity Ranch, AZ. That’s between Green Valley and Tucson. It’s a few miles south of Tucson.
I used to work on Country Club (south Tucson) and when went looking at homes in Shaurita/Green Valley everybody thought we were nuts wanting to move to “the sticks”.
“It’s becoming tougher for everybody to obtain financing, not just for first-time homebuyers, Brown said. ‘I think that’s the dark cloud that’s on the horizon,’ he said.”
This is it. Without easy financing the bubble effectively goes away. There is zero possibility that high prices can prevail if folks that want to buy cannot get financing.
“‘I don’t think we’ve seen the proof we’d like to see that things are getting better,’ said Greeley-area real estate agent Nate Buie.”
San Diegans have seen the proof that things are getting better. Our local paper says they are, and thus it must be so.
http://www.signonsandiego.com/news/metro/20070501-9999-1n1forecast.html
Newspapers with the exception of perhaps 1/2 a dozen, are on the shortest leash imaginable and probably won’t last too long…
How could not a one of them have exposed what has been going on?
Well, at least you can give them credit for pointing out all of the negatives of the SD market (weak jobs, low pay, ripple effect, etc). That way most morons can at least spot a trickle of danger. Or maybe not.
How much ad revenue do they receive from housing . . . tons. Plus they don’t want to be Chicken Littles, regardless if they are right or not.
That means they are done.
Stick a fork in em’…
Besides most fishwraps across the land are 85% a/p content.
Philly’s Inquirer and Daily News are both part-owned by Bruce Toll, co-founder of the luxury homebuilder co. Toll Brothers. So, conflict of interest?
“‘The demand of buyers is out there, but because of the changes in subprime lending, a lot of those demands are not being met,’
Which really means: The only people out there shopping for homes are those who don’t qualify for them under normal lending rules.
Those people should only be considered “home buyers” as much as anybody who stumbles onto a Rolls Royce dealership is a “car buyer”.
Let me fix this for her…
‘The [suckers that I want to make a comission on by locking them into a house they can't afford] are out there, but because of the changes in subprime lending, a lot of those [suckers] are not [able to transfer money from the bond market into my checking account],’
“‘The demand of buyers is out there, but because of the changes in subprime lending, a lot of those demands are not being met,’ she said. ‘Therefore you have fewer buyers and lots of inventory so it takes a lot longer to sell. Sellers who really need to sell have to drop their prices, unfortunately.’”
What is so terrible about a return to affordable pricing? I personally view unaffordable home prices as a huge impediment to a well-functioning local economy.
“What is so terrible about a return to affordable pricing? I personally view unaffordable home prices as a huge impediment to a well-functioning local economy.”
Her income is a comission on sale price, therefore, a drop in price is a drop in her income. A drop in prices is unfortunate to her.
Not to mention, there are lots of people that simply can’t drop their price based on what they owe. That means they won’t sell, another hit to her pocket bool. Nor re-buy, another hit to her pocket book.
Realtor’s don’t get a comission on foreclosure auctions.
“Her income is a comission on sale price, therefore, a drop in price is a drop in her income. A drop in prices is unfortunate to her.”
That is merely a second order effect. A first order effect would result if no sellers lowered their prices to a level where a buyer is willing and able to purchase. Now income would be a first order effect.
“No income” (rhymes with d’oh…)
It also rhymes with WTFAIGD (what the F am I gonna do?).
Unfortunately for her, because with lower prices, her commission will be lower. More proof that realtors don’t think about anything but themselves and how much money they can make.
Oh, please. We all have glass houses, looking out only for our own financial best interests. Real estate agents are no exception.
>> Real estate agents are no exception.
Yes they are, because they are constantly telling you how they are supposedly working in your best interest.
IMHO the more interesting aspect of Ms. Colvin’s comment was the intro and her inability to perceive the irrationality of the current housing market prices. Cognitive dissonance, a long time to fall with this type of pervasive irrational thinking. Do any of these realtors have a basic econ 101 course study? What do they think is going to happen to the area prices if “Sellers who really need to sell have to drop their prices”? Do they really believe that prices are going to stay high when somebody bails? Why don’t realtors ever look at a supply/demand curve?
Cheerleading is fine, but these realtors are supposed to be helping their clients.
“‘I know that there are going to be a lot of foreclosures out there,’ she said. ‘That’s a given. That’s an absolute given. When that number starts increasing, that just increases inventory.’”
Speaking of dark clouds on the horizon…………
“Securitizers Who Made Housing Bubbles Now Hide Big Losses”
http://www.larouchepub.com/other/2007/3418mbs_losses.html
I would give this more credence if it were from a non partisan source or anyone other than LaRouche.
LaRouche and his staff have been uncannily accurate when it comes to economic forecasting. They were warning of the housing bubble (and the Bubble.com fiasco, for that matter) long before any warnings appeared in the MSM.
There’s something wrong when only the the only politicians who will speak simple truths are nutcases.
“Without a banking-asset reorganization, they are throwing away tens of billions of Federal dollars.”
So, what else is new?
I took a quick ride to Phoenix yesterday. It was 83F at midnight. I don’t know know how those living there can take the summer heat. I personally would just welt under a constant barrage of 100F. How do you folks living there do it? And I know it will really help the 60,000+ homedebtors wishing to unload the white elephant. I just saw row after row of cookie cutter homes.
“personally would just welt under a constant barrage of 100F. How do you folks living there”
I moved here from Colorado, and moved there from Hawaii, and moved there from California.
When we have our 65th, 100+ day in a row, I just remember how few jobs there are in Colorado, how expensive everything was in Hawaii, and how dirty, crowded and expensive it was in California.
Then I remember that I’m inside a building that is air conditioned to 70 degrees. It makes that quick run from house to car, then car to work, then work to car, then car to home, not so bad.
Hint….. we stay inside. Except when we’re jumping ina lake or swimming pool.
Note: We have aerators on our swimming pools… jets that spray a fan of water into the air. This increases evaporation and cools the pool, plus gives us room to add more tepid, but cooler than the pool, water from the hose. Sometimes the pool still gets unfomfortably hot. Then we go to the store and buy a bunch of blocks of ice. A 95 degree pool just isn’t as refreshing as a 75-80 degree one.
“Then I remember that I’m inside a building that is air conditioned to 70 degrees. It makes that quick run from house to car, then car to work, then work to car, then car to home, not so bad.”
That’s prison.
Similar to the prison I lived n many months of the year in Colorado when it was too cold to go out. Similar to the prisin I was in in Hawaii where it took an 8 hour plane flight to get anywhere else. Similar to the prison I lived in California where we had raisor whire on the freeway signs to keep people from tagging them.
Life is a prison, at least a few months a year.
Where did you live, in the mountains? Even in the winter there are few days when it doesn’t get above freezing. Highs in the low 50’s are not at all unusual in January, and can even get into the sixties. I have never felt “imprisioned” living in Colorado. Cold snaps seldom last more than a few days. More often than not there is no snow on the ground.
I second “In Colorado”.
Having grown up there, I was outside every day. The few truly cold days were enjoyable just because they were so few.
The grid very nearly went down in many locations across the country, last year in the midst of the July heat wave, as so many people were living their 72 degree lifestyles…
It didn’t happen, so none of you are worried, i’d guess.
Want to save yourself this summer, when hades shows it’s high heat?
Buy a generator and keep a minimum of 15 gallons of gas handy.
Learn how to use it now, and you might just survive.
48,000 Europeans died of heat in the low 100’s, just 4 years ago.
So… pray for a heatwave to add more inventory? Naw… that’s just too callous.
No need to pray, it’s 99 degrees here on May 1st.
Europeans don’t know how to live in the heat. It’s a normal occurance here, so we’ve adjusted.
Any over/unders on how long until the first story of “a person who moved here during winter went hiking in 110 degree weather with a half-filled aqua-fina bottle and died” shows up?
It was 117 degrees here for a week last year…
I expect it to be warmer this summer.
I have no cement and asphalt that turns 117 into 125, thankfully.
I remember the week of 117. I was in pinetop enjoying the 70 degree afternoons and rain at 5pm
BTW Tucson was 10 degrees cooler(everyday)
Different strokes for different folks.
I lived in Valencia, CA for a long time. A lot of people there actually like the heat and dryness. My skin cracked and bled. I was not made for the desert.
Funny thing… Valencia was just as expensive as Laguna Niguel. The Summit was just as expensive as Pacific Island Drive (maybe even more), so people aren’t moving just because of the weather (sorry Gary). It all comes down to jobs and financing.
On the other hand, my parents live in the High Desert, and would never move near the ocean (humidity makes my mom’s arthritis flare up). Which is one of the reasons I never understood why everyone was in such a tizzy that old people want to retire here (many actually don’t and prefer places like Pheonix)
Just goes to show… there’s a person for every place.
Chuck Ponzi
http://www.socalbubble.com
Ponzi scheme,
Is that not where the Religion of Peace guys on “24″ blew the A-Bomb??….Valencia….sounds like with that weather and conditions they were doing you a favor…..hehehehe…..
The heat is quiet tolerable in the shade, and if you can cope with the 3 months of summer, the rest of the year is quite lovely. The bonus is that you really don’t have to think about what to wear - a t-shirt and shorts would do nicely throughout the year.
One thing that PHX had going for it was the affordable standard of living. A small business could relocate here from northeast or CA, and find sufficiently motivated workers without paying them CA/NJ wages. Ofcourse that business plan went out the window thanks to easy money and specuvestor fever.
So here we are sitting on 60K listings at 100% above the affordablility $ limit.
Somebody please make the fat lady sing….
got cash?
“It was 83F at midnight.”
Delightfully cool—wait until July, when it’s 105 at midnight.
“How do you folks living there do it?”
The trick, as G. Gordon Liddy once said, is not minding.
Anyone in the Bay area. How is the burned down freeway affecting these there, especially getting in/out of SF to Oakland and other towns going down the 580? What workarounds are being utilized? Just curious since I left and used to travel that stretch frequently.
Well, today the workaround was the ‘illegals march for a day’ rallies. Made the morning commute a little easier.
Illegal Beaners on the march for “respect”, more money and instant citizen…..gotta love this country where people have the moxie to try this…..
Bet the roads were easier to drive.
When the money and cheap oil runs out, they will be singin’ a different tune….
“It’s becoming tougher for everybody to obtain financing, not just for first-time homebuyers, Brown said. ‘I think that’s the dark cloud that’s on the horizon,’ he said.”
It’s supposed to be “tough” to get financing.
I can’t wait until it’s tougher. If it’s not too late, perhaps then this economy will have real wheels to run on.
Why is it ok for a strawberry picker who makes, what, 30k a year, to buy a 500k house? Why is it ok for grocery store clerks to drive BMW’s? This financing of entitlement needs to end.
Tough is exactly what is needed.
Idiots and wannabe flippers still lining up to buy high rise condos
http://www.mercurynews.com/ci_5790839
Mesa, for example, is the first developer in San Jose to take advantage of a new state law, called Assembly Bill 728, that allows developers to pre-sell units up to three years before a project is complete.
3 years before they open? What a deal for the developer. Good luck getting your cash back if the place never gets finished.
Now are these deposits guaranteed with financing?
That’s what I wonder.
That’s because demand is larger than supply - there are almost no high rise condos in downtown San Jose. Views will be stunning until things get over built. Also, most of the jobs are north of downtown where there is little housing, so commuting will be easy and you can take light rail from downtown, or take the train north up the peninsula.
“The Greeley Tribune from Colorado. “The homes that seem to be affected most by Weld’s foreclosure trend are those in the lower price bracket, Buie said. For example, in the first quarter of 2007, there were 65 homes in Greeley and Evans that were sold for less than $100,000. Of those, 92 percent of those homes were foreclosures.””
This is absolutely astounding. I can only assume that these were loans made to minimum wage workers, or the unemployed.
To illegals mi amigo. When the newpapers do the sob stories, its always the same story: the soon to be foreclosed buyers have menial jobs and don’t speak English.
BanteringBear hurriedly adds Greeley to list of places in which to never live.
Yeah, my exclusion list is growing as well.
Greeley isn’t an ugly town. I would take it anyday over just about any town in central OC.
How do you see the future of some of the cities/towns in CO? I like CO and have it on the “potential list”.
We desperately need some quality employers. Larimer, Weld and Boulder counties have really taken it on the chin regarding high paying jobs.
We desperately need some quality employers.
I see nothing has changed in the last few decades.
It’s pretty weird that they had that high of a % of foreclosures for homes under 100k .My guess is they rounded up a bunch of homeless people to buy these pads .
this will turn out to be ring-around-the-white-collar crime…aka: poor mans funny money via fraud.
Sunday a story ran from the AP in the Bozeman Daly Chronicle about prosperity returning to Butte Montana. Some of the evidence used was ” house prices have risen 10-14%”, and, “contractors are coming from Billings and Bozeman to build houses”, also, There is a sortage of homes in the 100,000$ to 300,000$ range”. Really the story should have been titled “Housing Bubble comes to Butte”. Butte has been the only Major city in this state that hasn’t been going through this housing bubble insanity, at least untill now. But like usual with many newspaper stories, there is more hype than reality in it. Here is some reality. Butte at one time used to have a population a bit over 100,000, it now has a population in the 30,000 range. So there is a lot of rental property, fix-it uppers, and vacant buildings. The reason contractors find Butte so atractive isn’t because there is some big rush to move to Butte. Butte isn’t exactly a destination city. It is that land is dirt cheep there. Right now in Bozeman, because the cost of land, labor, materials are out of sight, builders are selling homes at very thin margins, some are even upside down . In the Elk Grove sub-division one guy sold two spec-homes at a loss. He now has four lots there, with three half built homes on them, and a stack of liens. To guys like this cheep land is the path back to solvency.
I thought I’m the only one from Montana here. Good to see someone that knows about this situation in our State.
Butte, an awesome town with the most spectacle open pit mine view in the country! Silver City, New Mexico has nothing on Butte, MT! I live in Bozeman and last winter I heard on the local news that the last time school closed in Butte was i think back in the late 50s, when the temperature dips down to -47 degrees F.
I grew up in Butte. I can’t imagine house prices ever rising faster than inflation there unless the suddenly discover that the Berkeley Pit is really the mythical Fountain of Youth.
Any speculator in Butte is going to get burned.
Also, I remember walking to school in -40 degree weather. Growing up there let’s you call almost anybody a sissy when they whine about how cold it is.
I think Butte is okay relatively speaking when comparing to Harve, Glendive and Cutbank.
Just don’t go to Butte and tell the locals that. Some wise-guy Hollywood actor once walked into a Butte bar. Anounced loudly ” this is an ugly city”. The crowd in the bar beat him up and tossed him out the door. When the police came, nobody had seen a thing.
Butte is full of tough assholes. Evel Knievel for one. Got up from more broken bones than just about anyone you’d care to mention. Put his wife and kid in the emergency room on a few occasions too. Our speech coach beat up the wrestling coach in a bar one year. Yep. Good times! At least the high school had Pork Chop John’s nearby.
“Right now in Bozeman, because the cost of land, labor, materials are out of sight, builders are selling homes at very thin margins, some are even upside down.”
That’s because of their “pay anything for land” mentality. A fool and his money…
Funny you should mention “pay anything for land”. Last year while I was looking for a place to buy (I’m renting now), a 10,000 sqft lot goes for $110K in Bozeman, MT. Remember, this is Big Sky Country and what is underneath the big sky?
And that lot was probably out in the wheat fields, right? The just aren’t making any more wheat and hay fields, right? (just don’t look to the west)
LMAO, yes nearly 95% of all developed land in Bozeman, MT in the last 15 years was once wheat fields. The other 5% were abandoned factories or abandoned grain silo.
Why in the world would anyone build new homes in Butte when there is so much empty housing stock? There is a reason Butte housing is cheap. Think Pittsburgh after all the steel mills started shutting down.
I did a quick check on the Bozeman MLS and sure enough my old colleagues home is still listed. He has been carrying two mortgages for over a year now, asking price has dropped from $600k to $450 but seems stuck there. They bought in 2002 at $280k, refinanced in 2003 for a couple of new cars and remodeling… I’m guessing that they need $450k just to “break even” at this point, perhaps have some equity to carry over into the new home.
But I told him he was over paying in 2002 for a small house on a small lot with no garage on a busy street (8th). Rent value is maybe 1200/mo.
Man, I remember buying a duplex in Bozeman for a little over 100k to live in for college with my brother back in ‘95. We rented out the other half and lived almost ‘rent free’ for the duration. I can’t imagine house prices EVER being 600k there, no matter WHAT neighborhood you’re in.
We rented half a duplex, 3/2 with a nice yard walking distance to campus for $700/mo. Do the rent math and you can see what will happen to those $600k wishing price homes. That $280k to $600k to $450k home will eventually be worth about $200k in today’s dollars. THe only question is when the sellers decide to get off the down escalator.
A lot of people are going to lose a lot of money in Bozeman. Millions and millions.
I’m very surprised to hear this. GIven the prices, I would have assumed that builders were making money hand over fist. Elk Grove homes probably start at $400k and sit out in the middle of nowhere.
I worked on a lawsuit against the builder I mentioned. He had stiffed his flooring contractor after having put in two floors. This builder sold both homes, but for some reason he just didn’t have the money pay his subs. He and his patner had a LLC they used buy the lots. Then they they would quit claim the lot over their own pesonal corporations. Once the home was built, it would be quit claimed to him personally. His wife, a realtor, would then sell it. Or sometimes they used the first LLC to sell the the home. You see all the ways for money from a loan could be leaked away from actualy building the home. And how money from a sale could be hidden. On top of this, he had his corporation but was D.B.A. under another name. I don’t have enough time to write all the things that were going on, it took me many days at the Clerk and Recorders office to figure this scheme out. The worst part of this whole scam is it was dreamed up by guy, who is now a lawyer, whom I road the school bus with. That all this lawyer does, is comes up with convoluted business organization. Oh! you don’t have to wory about paying your bills, and Gee! look how you can fool the bank. He could not fool the banks anymore, and his bills came due, and we won the lawsuit.
#*@$# !! I RODE the school bus with.
And people do business with this douchebag?
So if I understand you correctly, he was making money but finding convoluted ways to hide it?
He was making money so long as he could sell the homes before they were finished or soon after they were finished. Then he could pay off the subs and supliers. Then get a loan for the next project. He also might have using the loan to pay for the previous projects. What I mean by money leeking is the LLC buys the lot but corporation gets the loan. When the corporation then buys the lot, some of the loan money goes into the LLC. The LLC has to pay for the lot from the land developer. But all the time The LLC “owned” it’s value went up. This is income for the partners, so that goes into their personal bank account. The corporation builds the home, our builder is employee of corporation. So he has to get payed. More loan money. The coporation sell the house to the builder. The has sell it for less what then they expected, and take a loss. But happy days, when his wife sells the they make a hugh profit, and pay off the corporation.
Sorry about the lousy job of proof-reading. I had to change computers. I meant to say the corporation sells it for less then they expected, takes a loss, or maybe just breaks even. The builder owns the home now. His wife sells it, and makes a hugh profit. I think easy way to see what they are doing is this. The LLC is use buy and hold land. It is full of assets The corporation is repository for debt, bills and risk. It is also an empty shell because there is more debt then assets. The LLC is there to protect the assets from the debt. The builder gets income when he sells the home personally, from his income as an employee of the corporation, and as an partner in the LLC. The Problem with this scheme is a large part of his income comes from debt. He needs to keep borrowing to keep income up, and the homes have to sell quikly to keep the cash flowing. Also the home values have to go up to overwhelm the debt. If anything goes wrong, this guy is upside down because the corporation is allways upside down. That is why they sold a home though the LLC, right before the corporation went belly up, because the knew they were not going to get another loan, they had to protect the cash from that sale.
Good for you.
Real qx is how much did you collect from the deadbeat?
Nothing yet. We have judgment for over $12,000. We have just filled a “Notice of Judgment” so he can’t sell any real property (his own Mcmansion) with out our client collecting the money. He had sent a letter offering to pay $6000 with some vage offer for future payments on the remaining amount, which was rejected. He has payed off anouther sub’s judgment and other liens on one tract of land in Elk Grove, so he is trying to build on or sell that tract. I think that what the letter was all about. He does own another plot of land elsewere in the valley. Basically we have him in a box, he is going to have to pay it some time. His other three lots, the with the half built home on, have liens from the excavators all the way up guys who started putting the roofs on, in addition to money owed to the bank. So there is no sense in going after them. This guy was a “cell phone contractor”. He hired subs to do all the work, while he was out making deals.
Duane and everyone, I just got a nice Realtor PDF market report on the Bozeman market. Let me know if you want it. It does show a definite shift in the last part of the year. Here’s the Realtor commentary:
So basically, cutting through the crap, nothing under $1 million is moving. And the realtors are hoping like crazy that it starts moving again in the next couple of months. Good luck!
The $1m+ market, probably the whole market was doomed the day Tim Bilxseth anounced the building of the 53,000 square foot, 155 million dollar monstrosity. It’s not a home, it’s an ego trip. It’s also Tim Bilxseth personal Tower of Babble. There is a paper on the subject, at http://www.mises.org, “Skycrapers and Busness Cycles”, by Mark Thornton. Bloomberg also had a story, “The Curse of the Skyscraper”. Basically it is this, You tell what city where the next financial storm is going to come from by seeing where the tallest skyscraping being built. If it holds up in a perverse way, little ole Gallitan County is going to be where the bank, savings and loan or credit union suddenly fails and takes the rest of Montana”s economy with it.
Shades of Tuxedo Park, NY in the late 1920’s…
Then in the 1930’s those that managed to hang onto their homes often moved into the carriage house because they couldn’t afford to keep up the main house. With 53,000 it probably has a nice room garage and space for an extra frig or two.
The Story mansion is a good example, built just as Story familie’s fortune began to evaporate. It became a frat home, a huge party house.
I used to live 2 blocks from the Story house. It was a real eye sore until the city put in the bucks to renovate it.
We are re-living the roaring 20’s in so many ways. When I started to hear about “balloon” payments it really struck home. My grandparents had horror stories about mortgage balloon payments and huge numbers of foreclosures in the 1930’s.
Hi all,
Check this out from the “Commiewealth of Massholeachusetts”.
BOSTON — Massachusetts has become the first state in the country to declare a moratorium on foreclosures stemming from predatory lending.
Homeowners will now be able to submit a complaint to the Division of Banking.
The division will then call the lender and ask them not to foreclose.
The move comes after dozens of homeowners marched on the State House last week, demanding a meeting with Gov. Deval Patrick.
The state secured 60-to-90-day freezes on foreclosure for most of the protesters.
Homeowners having trouble will also be provided with housing counselors.
WTF…
Any thoughts on the precedent that this may set? Will lenders be afraid to make loans here in Mazzholeland to anyone with less than perfect credit and 20% down?
Any thoughts or feedback the notion of a lender not being able able to foreclosure on the posted collateral?
Where does this leave the ABS, MBS, etc. holder?
“The division will then call the lender and ask them not to foreclose.”
The lender will then say “Sorry, the loan has been securitized and we cannot change the contract terms without creating a gigantic legal headache”.
The division will say: “Oh, okay”.
Clearly, with the disposal process of foreclosed properties by lenders taking nearly a year, a 60-90 day “freeze” on forelosure is no big deal to lenders.
Another “feel good” gesture by Massachusetts politicians….they have the art down to a science.
Sounds good. Everybody worships at the altar of “free markets” this and “capitalism” that, but those systems suck worse than Communism.
America. Love it, or….
Holy Guacamole, Batman! That’s completely awesome! (Doesn’t mean I approve, just that I’m in complete, stunned awe!) Wow, the ramifications of this are amazing. Free housing for FBs! That oughta send a shock through the market. Wonder how many states will follow suit?
Old Deval must have been crapping his shorts at the prospect of MASS homelessness. Masshomelesschusetts. Is that a great state, or what?
Palmetto is right. It must mean that Deval has a clear vision of how bad it’s going to get in Massachusetts.
They’ve already got an outward move in population; can you imagine what it will be like when people can simply squat in the high foreclosure areas?
If they did something like that here in Virginia there would be blood in the streets, and it wouldn’t be restricted to one party or the other.
Because of this freakin’ bubble there are certain parts of Northern Virginia I wouldn’t even drive in (there were before but now there are many more.)
Governor Deval doesn’t seem to bright to me. It’s hard for me to believe Massachusetts citizens are going to sit down and take that.
novasold, I logged off to do some work, but I just had to log on to see the response to this post, because it is the most mind-numbingly awesome post I’ve ever seen on this blog, bar none. But the ramifications seem to escape the bloggers, because I’m not seeing much reaction. I, too, get so caught up nattering about conditions in my area, that a bombshell like this could probably easily pass me by. When I logged off, I laughed for like 15 minutes straight, with tears coming out my eyes. Except for the Depression, I think this sort of thing is totally unprecedented in the history of the US.
A lot of people have flamed me in the Florida threads for supporting a higher sales tax and the abolition of property tax. But our Speaker of the House, Marco Rubio, knows exactly what’s going to come down in Florida and it is going to make Massachusetts look like paradise. He’s one smart politician and he’s trying to get out ahead of exactly this situation. What good are property taxes if no one is paying them? And, do people even realize that a lot of times, when banks take property back, they don’t pay property taxes, either, in certain cases? Nor do they pay HOA fees.
Yep, Deval seems to be very much of the “bread and circuses” for the masses persuasion. Is he decreeing moratoriums on taxes in Masshomelesschusetts, if it is that bad? Bet not. How about moratoriums on building? How about moratoriums on paying all bills? YEEHAW! Meanwhile, millions of illegal immigrants are out in force all over the country, fingering to the cameras in the streets, demanding a free pass and rights in a country of which they are not even citizens. But perhaps they sense there’ll be all kinds of property for squatters shortly.
Palmetto,
This is going to cause MBS buyers to get pucker butt faster than anything else. What value with these securities have on the secondary market… no much.
Taxachusetts just voted itself out of the national mortgage market. Now, that might not last long, but I bet the flow of money to the state has already been slowed.
All its going to do is bankrupt a few dozen more mortgage companies… The implode-o-meter must be fed!
Got popcorn?
Neil
Neil, I can’t even believe this. I mean, a few dozen homeowners march on the State House and Deval makes a knee jerk reaction like this? All it is going to do is cause MASS confusion and delay the pain, unless he can decree all foreclosure actions null and void.
Yep…
MASS confusion it is.
This “Spring Sting” is definately interesting…
Got popcorn?
Neil
…and Neil….fed it shall be…..
See you on the way down with popcorn…..
MA has free-er healthcare comming in july too
business w head south
“The Missoulian reports from Montana. “While still booming, the market for houses priced between $250,000 and $400,000 is seeing slightly longer waits, and motivated sellers are adjusting their asking prices downward in response.”
I live 3hrs south of Missoula here in Bozeman, and I strongly think that this report was too rosey! There are 9 condos on sale within 300 yards from my rented condo. These sellers are in denial as they are asking for $244K for their 2 door garages with a house attach to them. The same newly built condos (ugly, two door garrages) just down the street were put on sale about a month ago for $239K, and just yesterday, Fort Rent signs were put in its place.
Bozeman, MT number one industry? you guess it, construction and RE related business. We are S**t out of luck, and our local newspaper is the b***ch to the RE industry here. I no longer believe in the traditional “free” press.
Bozeman is not south of Missoula.
southeast
Were these condos built by some outfit that used to be a roofing company? You know the one thats crew is a bunch meth-addicts, wife-beaters, and drunks? Or am I confusing them with that other roofing guy who has all of his employees regester as independent contractors so he dosn’t have to pay workmans compensation?
LOL, tragically a few of them are my new neighbors. You know the trick out trucks and overwhelm the small condos in terms of size.
Have noticed there has been a lot fires around here lately, paticularly in Methgrade, oh! sorry I mean Belgrade.
Cinch, there are a few of us Montanans here. I hear you on the ridiculous rosy press that RE gets around here. I did something about it.. started making videos about the Billings market. So far I’ve been on TV and in several newspapers challenging Realtors who say stupid things. Check out my blog (click my name). I’m just a young, know-nothing renter trying to make a difference.
Bozeman will fare much worse than Billings, though.
Good to know someone is seeing this too in Montana, Tango. And you are right, I think Bozeman will be worst off out of the three highest growth cities in Montana (Bozeman, Billings and Missoula).
>> I no longer believe in the traditional “free” press.
Oh, it’s free alright - free to tell you whatever it wants to tell you.
testing
A “realtor” friend of mine that deals with bank properties mentioned that he sees about 1-3 forclosures in Tucson per day. Today that number jumped to 143.
He also mentioned anything over $200K is just not moving.
But it’s different here! BTW, water for my 1000 sq ft grass yard only costs $100/m.
Funny how that works.
However let me point out a few ‘facts’
Back in 2003(when I bought my foreclosure house) there where nearly 300 notices per month. So to say we have a 50% increase is sooooooo stupid. Yah, from an extremely low base.
I have a friend who ‘closed’ 6 homes last month and has 5 in escrow this month. Then he looks at the statistics and says, oh sales where down. Yah, if you don’t know how to sell it is.
Jimmy whitehill does only local foreclosures from investors who carry there own paper. Chances are they where sub-prime and foreclosure property investors bought/fixed and flipped. Now they get it back and do it again.
That’s what I love about foreclosures is the fact you get to recycle them a few times before they stick.
I am so happy I did not decide to take money out of my 401k to buy a house. I felt the pressure from my friends and family. As soon as I said I was going to buy a house, the same night I got a phone call from RE agent. That’s when I knew something was up.
Actually, that worked out real well for me. Technically, of course I got a loan secured by the ballance in my retirement account. But it was in 1999, so I was moving money out of the inflated stock market and into pre-bubble housing. When I refi’d in 2003 I paid it all back.
Today real estate news… Sales way down from where they were expected to be, largly based on the sub-prime melt down. The manufacturing report showed continuing inflation worries.
What is the lead story on MSNBC real estate bage? 4-16 month old data showing vacation home sales were up…
Even that is just spin that vacation homes were up 50K, but investment poperties were down 670K, resulting in a drop of net drop of 620K houses.
What follows their lead story?
More real estate news
Las Vegas house ‘flipping boom’ goes bust
Amid housing bust, some markets still boom
Freddie Mac boss: The worst isn’t over yet
New home sales post small gain in March
Mortgage rates dip for 2nd straight week
Existing home sales tumble in March
Wait… they don’t even have today’s story????? Come on!
+++++++++++++++++++
And Yahoo? Protecting you home’s value in a high foreclosure market, as if that is possible. Hello people… supply/demand.
Followed by:
Spring: Bargain Time for Home Buyers
How to Avoid a Bad Co-op or Condo
Make Your Vacation Home Pay for Itself
Followed by net articles:
Dirtiest and cleanest cities
CNNMoney.com - Today, Tue, May 1, 2007
Best Affordable Suburbs: Northeast
BusinessWeek Online - Today, Tue, May 1, 2007
How to design an efficient kitchen
Bankrate.com - Today, Tue, May 1, 2007
U.S. pending home sales fell 4.9% in March
OH, there is today’s big news… the 11TH STORY ON THE PAGE!!!!
What the?!?!?!?
++++++++++++++++++++
Mean while, the local news web outlet, azcentral, hasn’t updated their real estate page in 2 months.
Main business page? No mention of the drop.
They do have a real estate blogger. All she is mentioning is the couple day old news of housing starts being up… oh, and some fluff story about a new professor joining ASU’s school of real estate.
Had I not watched CNBC, which did its best to bury the story too, I would have had no clue.