Days Of Free-Wheeling House-Flipping A Distant Memory
The Baltimore Examiner reports from Maryland. “You face foreclosure. You quickly move to refinance but qualify only for a double-digit subprime rate. You take it, pay for an appraisal and learn your house is worth $425,000. Then the lender reduces your appraisal by $100,000. That’s the situation Mark Allen, of Gwynn Oak.”
“‘When I finally got a full-time job, I was so far behind I couldn’t catch up. I had to refinance to save my home, but when they dropped my appraisal by $100,000, I was floored,’ said Allen.”
“Allen accepted that his monthly mortgage payments would go up by $1,000 and that he would only receive 70 percent loan to value, but he questions whether dropping his appraisal was legal.”
“Real estate lawyer Stephen Greenwood said he thought lenders are ‘being oversensitive’ to avoid financial problems such as those that affected New Century Financial, which went bankrupt.”
“‘I don’t know if it is actually legal to decide to reduce somebody’s appraisal,’ he said. ‘Then again, the lenders are the ones loaning the money, and they want to make sure their risks aren’t worse than what they already are.’”
The Times Community from Virginia. “Misery loves company. In this case, the company is Loudoun County, which is still sharing in the continued housing slump that has enveloped much of the nation.”
“The number of homes in Loudoun that sold in March 2007 nosedived 20 percent from 12 months earlier, according to the most recent data kept by the Dulles Area Association of Realtors. The average sale price also dropped from $543,515 in March 2006 to $513,066 this year.”
“Nearby, Prince William County saw a more drastic decline in the number of homes that sold in March at 41 percent. ‘You don’t want to know my prediction. I’m not optimistic,’ said Leesburg agent Jay Thomas.”
“Local agent P.J. Riner has a subdued enthusiasm about the market picking up. She tells her selling clients that when they put their home on the market it is no longer theirs. Pricing, staging and holding weekly open houses are all keys, she contends, to selling a home. ‘It can be done.’”
“‘Not just clean, but sparkling, toothbrush clean,’ explained Sterling agent and home stager Nicole Richards, who has seen a recent spike in the number of sellers looking to stage their homes. ‘It has to look good, because there is so much out there. If they can smell it, you can’t sell it.’”
“In Loudoun, 3,254 homes were on the market in March, and those that sold were taking about 130 days to do so, eight weeks longer than last year.”
“Jeanette Newton, CEO of the Dulles Area Association of Realtor’s advice? ‘Sellers, be realistic at what you price at,’ adding that the days of free-wheeling house-flipping two and three years ago are nothing but a distant memory.”
“‘I don’t think that is coming back anytime soon,’ she said. ‘I’m not even sure what that was.’”
The News Sun from Ohio. “The impact of foreclosures seeps far beyond the homeowner and is beginning to take its toll on local real estate and lending markets.”
“Sue Smedley, owner of Real Estate II, said one of the area’s biggest problems is the ‘upside-down’ house, meaning owners owe more than the house is worth. She said this happens with almost one out of two homes her agents are called to list.”
“Andy Irick, senior VP at Security National Bank, said lenders, too, are seeing upside down properties, which cost them money. He has seen homes worth $60,000 with loans for as much as $110,000.”
“Smedley and Irick are concerned that buyers from all economic backgrounds need more consumer education to ensure financing they can live with. ‘Foreclosures can be found in every neighborhood in this community,’ Smedley said. ‘It’s my 39th year in the business and I’ve never seen anything like it.’”
The Enquirer. “As thousands of hopeful sellers already know, prospective home buyers these days are scarce, selective and not easily seduced.”
“New home sales figures depict a deep slump in the Greater Cincinnati and Northern Kentucky real estate market: Sales of existing single-family homes and condos reached a four-year low in the first three months of this year. The number of homes for sale is at an all-time high.”
“Sale prices are down. From 2005 to 2006, average prices dropped in 103 of 184 Southwest Ohio neighborhoods and in 35 of 76 Northern Kentucky neighborhoods.”
“‘When you’ve got an oversupply…buyers don’t feel a sense of urgency in buying a home,’ said Lee Robinson of Robinson Realtors. ‘So they shop a lot. They can afford to be picky, and if a home isn’t perfect in every imagined way in the buyer’s mind, there are a lot of other homes to consider on the market.’”
“Robinson’s clients, Jim and Bette Ramsey of Hyde Park, know all about the slump. They listed their home of 28 years last August and still don’t have a buyer. They dropped the price from $489,900 to $449,900. Any other year, the house, on a cul-de-sac near the Cincinnati Observatory Center, would have sold itself.”
“‘In the past, we even had people coming to the door and asking if we were interested in selling,’ Jim Ramsey said. ‘And there had never been a house on the street that even had the ‘For sale’ sign posted before it was sold.’”
“The supply of homes for buyers to browse is definitely up: As of March 31, the Cincinnati Area Board of Realtors had 15,455 listings, up 39 percent in two years. In Northern Kentucky, listings were up 30 percent during that span, to 3,629.”
“The downturn extends to the west side of Cincinnati as well, said Karen Rachford, an agent in Bridgetown. She’s listing a three-bedroom slab house in Northgate where the price has dropped to $79,000, below the amount of the owners’ loan.”
“‘A year-and-a-half ago that same house would have sold for $99,000,’ she said.”
“Fueling the glut of homes for sale are those repossessed by banks and landing on the market as distress sales. Rachford expects that trend to gain further momentum as holders of two-year adjustable-rate mortgages face their first interest-rate increases.”
“‘The sellers’ payments are going up because rates have climbed some,’ she said. ‘Their income didn’t go up to match what the market has done, and they’re not able to make the payment.’”
“Mark and Kimberly Kohus are among buyers taking their time to find the right house. They say they’ve been ‘frustrated’ by the quality of houses in their price range. Mark Kohus said sellers don’t seem to realize that market forces are working against them.”
“‘They are still asking premium prices, but several of them are not in premium condition,’ he said.”
Can this get any better?
Now it’s “illegal” for appraisals to go DOWN????
“Allen accepted that his monthly mortgage payments would go up by $1,000 and that he would only receive 70 percent loan to value, but he questions whether dropping his appraisal was legal.”
I question whether that was enough. Still for a 70% LTV, that is extremely strict. From one extreme to the other we go…
Allen needs to come to the realization that if there was an illegal appraisal it was probably the one he got when he bought the house.
Can someone please explain to me why someone would want/need to refinance into a HIGHER payment?
Perhaps there is some missing information here… going from a pay option to a 30 fixed.
What would cause a rational person to accept a refinance that would INCREASE the monthly nut without any other extenuating factors?
Chuck Ponzi
http://www.socalbubble.com
Because the looming reset on the ARM would be to an even higher payment?
Higher than double-digits? That’s like Prime plus 3%. I haven’t seen those around lately. Most were linked to LIBOR, way below double-digits.
Something still doesn’t smell right to me.
Chuck Ponzi
http://www.socalbubble.com
test
test
70% Loan to (Value minus $100K)
“You take it, pay for an appraisal and learn your house is worth $425,000. Then the lender reduces your appraisal by $100,000. ”
from http://www.workingre.com/workingre/best-show-online.htm
“Both Sides Now
Fannie says the changes are intended to hold appraisers accountable for the quality of their work and to combat fraud. Appraisers say the changes unfairly shift liability onto their slender shoulders. Meanwhile, Fannie makes it clear that they are not accountable to appraisers; in their view, it’s the other way around. Fannie is accountable to their lender-clients and that is who the forms serve.”
“For Fannie-sanctioned verbiage to “fix” Cert. #23 (Intender User), a Q&A from Fannie on the forms, appraiser reaction and other stories, see links below. ”
“Future (Looks Bright)
Insiders agree that automated valuation reports (AVMs) have done most of the damage they are going to do in replacing appraisers; the worst seems to be over. Rather, the pendulum is swinging back toward a demand for more complete reports by appraisers; toward expertise and professionalism. The trend is to put technology into the hands of the experts (appraisers)- to empower rather than replace them. ”
“It is more likely that AVMs will be integrated into reports under the watchful eye of appraisers, who will use the technology to increase productivity and accuracy– once they are comfortable with the product. Some in fact, are doing so today.”
“Rather than replacing appraisers, the theme of emerging technologies is to put more decision making into their hands. These technologies allow appraisers to become more proactive, leverage their expertise and avoid the pressure for values and fees associated with form-filling work.”
…
” As reported last issue in WRE, “Fraud or Incompetence” (link below), the incidence of fraud is skyrocketing, with brokers, agents, and appraisers being caught, convicted and doing time. As confidence in the profession plummets, all appraisers are feeling the heat. Some of the changes to the Fannie forms that are causing appraisers the most grief, for instance, are at least in part a reaction to the rampant fraud sweeping the nation. ”
“Rhonda Heilig, Special Agent for the Federal Bureau of Investigation (FBI), recounts a case she handled in which the guilty appraiser was convicted and is serving a seven-year sentence. Heilig, who overseas the Cyberbanking, Mortgage Fraud and Identity Theft programs for the FBI, emphasizes that in Federal cases there is no parole, so this appraiser will do the full stretch. ”
“Heilig looked out at the audience of appraisers and said (presumably to the guilty), “If you wind up in one of my cases, I’ll put you in jail.” Those of us present had no doubt she meant it.”
=========================
It could be that lenders are using appraisal software to spot poor appraisals, and that is why they dinged him $100k- they did their own appraisal.
“Heilig, who overseas the Cyberbanking, Mortgage Fraud and Identity Theft programs for the FBI, emphasizes that in Federal cases there is no parole, so this appraiser will do the full stretch.”
Except for the 15% good time credit, which is granted automatically in the absence of serious misbehavior. Rhonda, just because you are doing the Lord’s work, there is no need to be a blowhard.
My landlady told me a year ago that housing prices “couldn’t drop, because the tax assessments were unchangeable”.
Like the teacher who said that the sky is blue because it reflects the blue of the ocean.
In Ventura County, the tax assessor is re-assessing property that was bought between 2005-06. and that would be re-assess DOWN the value of the last assessment. Got foreclosures?
Your landlady is an idiot. My assessment (Loudoun) is 92% of what it was last year. I’ve been tracking several SFH in Fairfax/Oakton and have seen the same thing.
I know. I almost choked when I heard her say that, but I chose to let her believe it .
fx co is going to give me 1/3 of 1%
we’re off 10+% easy
join this http://www.fcta.org
might be a loudoun link
Last year one of my statisticans told me that house next door to her couldn’t go down. I asked why not. Her reply “it just can’t”. Apparently there is a magical economic forcefield in Davis, Ca.
Warning: Statistician insider joke…
“Last year one of my statisticans told me that house next door to her couldn’t go down. I asked why not. Her reply “it just can’t”.”
Must be a Bayesian who’s prior completely dominated her common sense.
With a strong enough prior, you don’t need data…
Sounds like her neighbor has a delta function prior.
Look out. looks like another lawsuit.
I know that this is off topic but it pays to look at this article, Greed is everywhere and at every level. Its just so sick.
http://money.cnn.com/2007/05/01/real_estate/bubble_investors.moneymag/index.htm
‘Then again, the lenders are the ones loaning the money, and they want to make sure their risks aren’t worse than what they already are.’”
That’s right, chump! Hey, if I’m lending you money and to get it you gotta run naked down the street, well then, that’s the way it is. You don’t have to say yes - only if you want the money. I love the way, with all the easy money of recent years, that folks feel that lenders owe them something. They owe you jack! If it was my money in this market, I would’ve cut it 150K. Knowing that appraisals are backward looking, 150K is not that much for a property to depreciate if a lender is looking forward and anticipating the market. It’s their money and they can set the rules. Yesterday they might have accepted appraisals as is, and their guidelines outlined that. But as we all know, guidelines are subject to change, and tomorrows guidelines could say “we’ll take your appraisal and automatically cut it 20% - take it or leave it”. I don’t see that happening, but if they did, it’s their dough and they call the shots.
Illegal to cut an appraisal? Give me an effen break!
Too funny, thanks for the good laugh….Another house for sale in my hood here in Ventura priced 40,000 below the assessed value.
What is happening to the RiverPark?
For the average joe ultra light sixpack, on account of the amount of moolah involved collectively…
Every man and woman that’s upside down, is an honorary donald trump, too big to fail.
For now.
My thoughts exactly, Steve. These FBs didn’t mind when appraisals came back 200-300K over what most people knew was right and fair. No, everyone looked the other way, esp. when there was cash-back to be made. Just when I thought the news couldn’t get any better. Here comes this guy complaining about appraisals coming down.
OT, but have to let you guys know. I checked Zillow (I know, I know) and the house I sold for 400K in Jan. ‘06 is only valued at 407K. It was 414K last week, so factoring in commission, this house is way under water already. At best, you might walk away with 350-375K, even though it sold for 400K. Ouch!
Where was the home you sold located, OC Dan?
Fontucky, CA. The good ‘ol IE, which will not only be toast, but charred and scared by Sept.
You pay for an appraisal and learn your house is worth $425,000. Then the lender reduces your appraisal by $100,000.
Again, I’m naive about real estate, but if an appraiser gave it a value of $425,000, how can the lender turn around and reduce it? Don’t they work off what an appraiser says?…
They might start with the appraised value, because it gives them an estimate what they could expect as collateral if the mortgage defaults. Then again, they are free to do what they want, as many already observed here.
appraisal is an opinion of some one (pparently trained) about the value.
Banks/lenders can always order another appraisal if they dont agree or use the in-house appraiser to get a new appraisal which could be different that the original one.
Just as the lenders were asking to hit a higher number during the boom, they will ask for a lower number now during the bust.
Earlier they were able to pass off the loan to a funding institution/MBS buyer and now they may ahve to keep it and hence the due diligence.
I guess I was under the assumption that it was the lender who had it appraised, and then decided to undercut that.
I think the key is in one of the comments above; that appraisals are looking back at what sold in the past. If the bank realizes that prices have slipped and are expected to slip some more, discounting the appraisal sounds very prudent.
This climate is changing very quickly. i wonder how “prudent” the banks will get before this is over. The tougher the banks get the easier it will be for me to be a buyer.
I think we’ll find that your CURRENT lender is going to be VERY willing to work with you if they think they can keep you from walking away from the house you are upside-down in.
Any OTHER lender won’t want to touch you unless you have SUBSTANTIAL equity and proven ability to make the payments.
There is a possibility that this bank is aware that this particular appraiser has been involved in fraudulent work in the recent past.
Got 10% down?
Truth is it WAS illegal when all those appraisals were grossly inflated, the appraisals that should be based on ACTUAL value of the house, wood, bricks, land etc. which has been GROSSLY inflated over the past 5 years, but no one was compaining then.
Now it’s “illegal” for appraisals to go DOWN????
Shows you how out of kilter the system is.
My mother had to get her house appraised for estate purposes due to the recent death of my father.
Some 63YO part-time female ditz shows up and feeds my mother this line about giving her a “range” of value for the house.
So I say, WTF do you mean by a range of value?
Well sir…there’s a “high” value for refinance and a low value for say, something like divorce or estate purposes, and due to the lack comps we can’t be sure, yada, yada, yada
I told her she didn’t know her job and she ought to start payin’ more attention at the yearly mandated USPAP cont. ed course.
The appraisal system has been fully compromised.
These hacks out on the street today haven’t a clue as to what they are doing.
You can thank your state licensing board for the current situation.
my advice
dump the agent and get 5.2% closer to realistic pricing
“Real estate lawyer Stephen Greenwood said he thought lenders are ‘being oversensitive’ to avoid financial problems such as those that affected New Century Financial, which went bankrupt.”
*Oversensitive? Huh?*
“‘I don’t know if it is actually legal to decide to reduce somebody’s appraisal,’ he said.
*LEGAL? Huh?*
‘Then again, the lenders are the ones loaning the money, and they want to make sure their risks aren’t worse than what they already are.’”
*Oh rilly? Ya THINK, Sherlock?*
I think it was Bob Dylan who said:
“Idiot Wind, blowing every time you move your mouth…”
The Myriad Greedhead Sheeple sooo have this coming. Do ‘em some good, actually.
Hey Neil: Got Carnage?
Hey Neil: Got Carnage?
Not yet… this starts in August. Notice the verb I used… this won’t be quick.
I’m a bit amazed at how people must refinance to avoid foreclosure. I know intellectually why its happening, but a good part of me is still dumbfounded. In other words, Joe Sixpack has no clue; this will end ugly.
As to legal, every lender who isn’t double checking appraisals is going to have a hard time selling bonds. Bummer another sale happened dropping the price… or maybe his first appraisal was “optimistic.”
Got popcorn?
Neil
First it was post Super Bowl, now August. Mind sharing your reasoning?
“First it was post Super Bowl, now August. Mind sharing your reasoning?”
I believe it is based on the Adjustable Rate Mortgage Reset Schedule graph displayed here:
http://www.autodogmatic.com/forum/viewtopic.php?p=1226
Apre May, le deluge.
By the end of August, the July closings will be out and the Spring selling season will be offically over. After labor day the panic will be kicking in for those who were expecting to sell in the spring and inventory is still through the roof.
Cycle for the past three years:
Silent Springs
Summer Bummers
Scramble to “Rent out until it’s better next year”
Late winter sales by bargain hunters who think they’re getting a “steal” and are actually catching a falling knife.
Lather, rinse, repeat.
Wow - that is a great graph. I wonder how accurate / thorough the data is. Looking at the Graph, One would expect option ARMs to reset faster than show. This is because many option ARM holders are not paying even the interest on their loans but instead paying the minimum payment.
Thanks for posting this.
First it was post Super Bowl, now August. Mind sharing your reasoning?
????
Superbowl was always when the Realtors ™ predicted a spring bounce. My predictions have been:
June of 2007, when Joe Sixpack knows RE prices are going down
August of 2007: when the carnage starts
Fall of 2008: the absolute earliest it makes sense to buy.
Now, the date I’m waffling on is when the national bottom will be… I was thinking 2009, but I’m shifting toward 2010 now. But that is so far out in the future, I’ll forgive myself if I correct my furthese out prediction.
As credit tightens, this will accelerate…
Got popcorn?
Neil
I’ve been saying bottom is 2011 to 2012 for a while. I’m actually thinking 2013 or later, personally. Of course, I was saying that’s that bottom since 2005…
Meh, whatever. Bottoms are like tops. Very difficult to call until after… bottoms get very irrational. My opinion is that 2009 will just be starting with rational pricing… we’ve got 2 or 3 years after that based on history.
Chuck Ponzi
http://www.socalbubble.com
I have an idea for a new law. Force brokers, lenders and appraisers to put half of their retirement money in mortgage backed securities. Hee hee.
“‘I don’t know if it is actually legal to decide to reduce somebody’s appraisal,’ he said. ‘Then again, the lenders are the ones loaning the money, and they want to make sure their risks aren’t worse than what they already are.’”
Funny that nobody seemed very concerned about whether it was legal to inflate appraisals, but the possibility of reducing an appraisal is now legally questionable.
Amazing. What an F-Tard attorney.
The appraisal should be a valuation of what the property is worth based on all the factors. It should be able to go up and down to reflect whatever the property is actually worth.
Unfortunately, it seems that our national economy is heavily dependent on inflation expectations these days, thanks to a Fed policy of serial bubble blowing. For the moment, it appears that the stock market bubble has been successfully resurrected from the ashes of the tech stock collapse.
DOW 20000 on the way. What a joke.
I thunk it was DOW 36,000?
I’m sure you’re right. I just noticed earlier today it was skyrocketing so 20,000 sounded like a good #.
Let the Blood bath begin…
300 Properties to be auctioned in SoCal many are in SD.
http://www.ushomeauction.com
The starting bid prices are about 30% off what most were originally purchased for. Some are 50% or more. I don’t see any reserve notices so it will be interesting to see if banks take what they’re offered.
This is going to be another shot in the heart for the SD housing market.
In case you’re wondering these still AREN’T deals. The price has only gone from outragous to overpriced.
Any HHBers from the areas listed going?
HBBers
Would be interested to see it. Went to an auction in Denver yesterday. 214 on the market, not 1 bid. None. Most were crap in rotten neighborhoods, but progressively getting to mid tier homes. The guys working it were so nice, I thought they were going to bring me a glass of milk and a cookie. And this is Colorado, RE IS DIFFERENT HERE, RIGHT????
Please keep us informed of CO auctions as they get to better areas.
I suddenly recalled a Simpsons episode where Krusty the Clown is a charity auctioneer at a Bachelor auction. All the Bacheclors were rejects and the only one he was able to sell was Apu.
I’m thinking about going but I’ll probabaly pass on this one. This might be just a marketing gimmic to get a bunch of qualified buyers information. (Heads up)
In a market that’s going down the first round of auctions will set the comp price in the area’s they’re sold in. The next round will push the prices down even further and so on and so on.
If you decide to go to the auction do your research before hand. Decide exactly which properties you want to bid on and the highest amount you will decide to bid. DON’T GET TRICKED INTO A BIDDING WAR. There might be shills in the crowd who’s goal is to bid your price up.
Another trick is called a reverse auction or a top down auction. What you do is start at a high price and lower the price down until a buyer says’s they’ll purchase. Again it’s a trick. Stick to your guns and only purchase at the price you decided by researching earlier.
I kinda like the 2BR 816 ft2 1/2 duplex POS that was “previously valued to” $389k that is now starting at $199k.
Out of curiosity I checked out the above auction site. Example house in LA area:
5429 Woodman Ave, Sherman Oaks CA
From Zillow:
Sale History
03/09/2007: $800,000
12/28/2005: $945,000
05/03/2005: $860,000
10/07/2004: $625,000
04/02/2003: $469,000
04/01/2003: $234,500
06/17/1997: $175,000
Minimum bid: $449K.
What was going on with this house? And why is it in forclosure if it sold for $800K less than 2 months ago?
First Payment Default ?
This probably did not happen in this case, but it has happened in the past.
I remember reading a newspaper account about how RE fraud took place in the DFW region of north Texas in the mid 80’s.
Invitation only, by order of a bank’s executive big wigs. The players (owners of new car dealerships and other businesses) would sit around an executive board table at the bank, and documents are passed around for signature. Each subsequent signature is a purchase of RE, with a markup. Very few questions are asked, if you ask any then you are asked to leave. Eventually, the last signature is a bank officer. Everybody around the table has just collected a profit from this “purchase” and “sale” of RE property, and the bank’s shareholders are left holding the bag. Maybe someone from TX can elaborate more on how these RE scams went down?
Got 10% down?
What the heck happened on April 1&2, 2003 to make the value double overnight?
FRAUD HAPPENS..
A fresh coat of paint.
Those kind of numbers (100% appreciation) happened all over CA, certainly all over Sacramento. Those numbers are just the figment of some asshat’s imagination.
Foreclosure on the first mortgage (lower amount), then take over by the holder of the second mortgage (higher amount the total of the first and second).
See my post below.
Adjusted for inflation off the 1997 price this thing is worth $224,000. Minimum bid is still to high.
Inflation for the past ten years has been higher than that. I’d estimate more like 300-325K.
I used 6% inflation
Why do that much work?
http://www.westegg.com/inflation/
“What cost $175000 in 1997 would cost $217436.48 in 2006.”
that is the bomb! I was doing all my calc by hand.
funny I must be dyslexic. i thought at first glance the auction site was “uhoseme”.
Is it possible the 800K is what the bank took it on the books at in foreclosure?
Will these auction results show up as the new comps? How can one obtain the information on auction results?
The price sold is “comp”. If it’s sold by realtor, and auctioner, or the home owner. The local MLS will probably try to cover up the sale though because it will put a monkey wrench in their sales.
Well it probably SHOULD be, but apparently not. For assesments, the price is usualy defined as that which would be gotten in a sales transaction between an nomally motivated seller and a normally motivated buyer. Auction prices are deemed to be from desperate sellers and so are not usually used as comps. At least that’s my understanding of the excuse used to ignore auctions and foreclosures when looking for comps.
You’ve been bainwashed by realtors.
A comp or compariable = # Properties capable of, or suitable for, comparison within the same area, which have sold recently and are used as a basis to determine the fair market value of the property in question. Licensed appraisers are bound by the rules and regulations of The Uniform Standards of Professional Appraisal Practice (USPAP).
A comparable is not what a realtor picks and chooses to make their house look less or more valuable.
Ummm… Have you been paying attention?
Last week the head of the appraisers trade group was quoted saying “Show me an honest appraiser, and I’ll show you a financially poor one”.
90% of appraisers reported feeling preasure from realtors and brokers to hit target numebers. If the appraiser didn’t hit the target that the realtor/broker picked, then the appraiser wouldn’t get any more work.
Appraisals were indeed whatever the realtor said it was, or the realtor found a “better” appraisal.
Jsut because someone feels they can cheat the system doesn’t mean you have to accept it. Eventually people like the ones you described will go to jail.
If you just walk away from a deal no comp in the world will make a difference.
Hey thanks for the link (might be useful in about a year or two)…
keep us posted- real results
We are seeing 50K, 100K drop in prices. This takes them down from ridiculous to still un-affordable. Often, I want to call the listing agent and ask them if they are on crack. You should see them out here. Brand new, side by side, 4,000 square foot homes with top of the line everything, behind gated communities — on postage stamp lots so close that you can literally pass your neighbor a bar of soap from your bathroom windows. One house didn’t even try to play this down — I kid you not, every view of the house you could see the neighbor’s wall or window — no yard, no pool and an average of 600K quarterly for homeowner’s association, not to mention that you cannot park a truck (no matter how fancy) in your driveway. HAS EVERYONE GONE MAD? As if the crime was so bad we all had to live behind manned and armed gates. All for the reasonable price of 750-1million.
Now… less than half a mile away I can buy a house on an acre, slightly older, no homeowners .. for the SAME PRICES or LESS.
Why would I buy that new crap? Where do they grow these people anyway?
This week a saved listed dropped their price by 50K overnight.
Its only the beginning.
Whatever! I’ve living the SWAN life as a renter. And if they expect me to pay half a mil for a home, it at least better have a pool (as opposed to the ponds in the postage stamp lots). ARE THEY NUTS? No pool? Half a million? C’mon Shelly!
We are patiently waiting in South Florida.
Regarding HOA.
14 years ago I bought a house in Colorado Springs, than had an HOA in the covenants, but it hadn’t been active in over a decade. About 5 years after moving in, a flyer shows up saying they are restarting the HOA. Come to a meeting at so-and-so’s house on such-and-such a date.
So wife (at the time, now ex.) and I go. The owner of the house calls the meeting to order and asks for nominations to be on the board. We need 5 to be legal. She gets 7 people self-nominating themselves. Including the wife that owns the hose we’re gathered in.
So, next everyone gets a couple minutes to say why they think we should vote for them. The owner of this house starts. She doen’t like the condition of some yards, and there was a recent re-painting…house next to hers… to a color not in the best interest of the neighborhood.
So, the other 6 speak. 5 of the 6 of them simply say, “If elected, the first item I’ll bring to the agenda is to disband the HOA”. All 5 of these guys got cheers from the assembled owners.
The lady that called the meeting got pissed off and sent everyone home. We laughed and joked about it all the way home.
At least you can find resale units priced less then new. You can’t find anything priced under the new builds here in Sacramento unless you search in the meth/prositution laden neighborhoods and are willing to a reduction in sqft too.
“New home sales figures depict a deep slump in the Greater Cincinnati and Northern Kentucky real estate market”
I live 10 miles north of the I-275 loop around Cincinnati, and I drive into the city on I-75 each day. They are still building TONs of new houses out my way, with thousands of more approved homes. And commercial building activity is very strong along I-75, with 3 new hospitals under construction, new distribution centers under constructions, new retail under construction (IKEA just broke ground this week). The area north of the city is booming like nothing I’ve seen in my life (46 years). It is amazing how much is under construction - homes, commercial, and roads. New interchanges being added, additional lanes on highways and interstates, you name it.
If the whole metro area is slowing down, it must be that the north is booming, and the rest of the area has fallen into a black hole.
Maybe this is where all the boomers are going?
In the shrinking manufacturing sector the US still shines in nondurables. Cincinnati has one the best in Proctor and Gamble & their presence is stabilizing the area.
Building is different than selling. How long has all this activity been in the pipline?
The commercial buildings seem to be leased out at a very high rate upon opening.
In the new subdivisions in my area, the homes under construction and empty lots seem to have ’sold’ signs in the yard. The completed ones have yard tools in the garage and drapes in the windows.
I agree that much has been in the pipeline for some time, but I get the sense that all the home construction during the past 15 years has finally brought all the commercial and retail interests up above the I-275 Loop. Not sure how much will remain in the pipeline after the current projects are completed.
But there are heavy construction trucks driving past my house 7 days a week to the subdivisions down the road.
Are they going to be building a new jail, too, to accomodate the Bengals players’ misadventures in the next couple years? (sorry, couldn’t resist. and, no, I’m not a Browns fan or anything like that!)
Good one!
I guess it would be too much trouble, and a little insulting, to ask the developers of these monster subdivisions where the “demand” is going to come from.
Make sure you ask the developers who built that walled, gated, and empty Over The Hedge movie set along I-5 halfway up CA’s Central Valley. It’s the Yuppie-pink one south of Stockton with no other structures closer than the horizon, walled, gated, and flanked by billboards pimping “INVESTMENT REAL ESTATE!”
Die Flipper Scum.
“‘When you’ve got an oversupply…buyers don’t feel a sense of urgency in buying a home,’ said Lee Robinson of Robinson Realtors. ‘So they shop a lot. They can afford to be picky, and if a home isn’t perfect in every imagined way in the buyer’s mind, there are a lot of other homes to consider on the market.’”
Personally, I wouldn’t care if a home were not perfect, provided the seller dropped the price to fair market value (generally around 50% off the 2005 peak for San Diego).
If I were looking for a house for personal use and saw that even your neighbors’ houses weren’t perfect, I wouldn’t even get out of the car. Guy three houses down has a shitty lawn and his house needs to be painted, too bad for you.
Three blocks from me is a gently rotting house, owned by someone in her 80s who can barely pay the property taxes (I think she was born in the place). The neighbors pitched in to paint the front but the sides are flaking paint.
Worse - in lieu of a new roof, someone put clear plastic all over the top of the house. It is now shredding and hanging off the sides in big clumps.
This is a pretty affluent area in San Diego but that one house is such an eyesore and definitely driving down prices of adjacent houses. Worse - the house was pretty nice “back in the day” (40 years ago).
Clipped myself…Some guy a couple of houses away has too much oil on the driveway, too bad for you. Your neighbor walked their dog and it sh*t in your yard, too bad for you.
Of course this is after screening for whatever matters to you: any indication of fraudulent comps in the area; any illegal alien purchases within blocks; more than one family living in a house; drug activity; too much noise; too much traffic; neighbors with high LTV ratios and apparently living too good a life; graffiti, etc. Take your cue from those NY co-ops.
They listed their home of 28 years last August and still don’t have a buyer. They dropped the price from $489,900 to $449,900.
28 years? Smells like HELOC spirit..
Hyde Park in Cincinnati is one of 2 old distinguished professional neighboorhoods - big Victorian homes on large lots. (I used to rent an appartment on the periphery of the neighboorhood). The place is inhabited by lawyers, doctors, and successfull professionals. I used to ride the city bus to work with these people back in the mid 1980s.
This neighborhood has probably appreciated much faster over the last 10 years than any other neighborhood in the Cincinnati metro area. Probably 2x-3x the average for the area. It is natural that it would give up some of the gains in a slowing market.
‘It has to look good, because there is so much out there. If they can smell it, you can’t sell it.’”
My question is, ‘Can a Buyer smell the Seller’s fear of not selling?’
I guess I had a Fraudian-dyslexia moment when I read it: “If they can smell sh!+, you can’t sell it.”
Pricing, staging and holding weekly open houses are all keys, she contends, to selling a home. ‘It can be done.
Pricing is the key. I priced mine 10% under recent comps and sold it in less than a week. When I look around my street, I see several TH’s in the $400-$430 range, one at a price of $500k, and one on the market for $345k.
All are identical units. The one listed for $345k was snatched up within a week. The one listing for $500k has been on the market for over 100 days, and the $4-420k have been on the market for a little over a month.
where you at willis ?
I’m in 22151
20152
The interesting thing is that the one that recently sold for $345k was bought 3 years ago for $360k, whereas the one’s listed in the low 400s were bought 5-7 years earlier for $180-250k. Go figure.
Of course, the one listed at $500k was bought in 2005 for $460k. With you’re neighbor selling for $345k, that’s gotta hurt.
My S.O. and I have been scouting out neighborhoods, and we’ve decided that Oakton might be a nice place to settle down (eventually, not this year), so I’ve started tracking houses, finding comps, digging through the tax records, etc., so that I can get a better feel for the area, pricing history, and pricing trends. To make a long story short, I’m seeing a similar pattern in Oakton: prices all over the place, with some people thinking that it’s 2005, and others undercutting them by 20%.
Not really… You came in with $0 down, so you just live there 6 months without paying rent, waiting for the bank to come take it back from you.
A little OT, but I like these craptacular places: http://tinyurl.com/2jh868
Sure, they look damned nice on the inside, but these “manor homes” are glorified townhomes. Giant, ugly, McMansions glued together to form a continuous city-block. There is no lawn. The only grass is the grass between the street and the sidewalk.
Notice that this focker has been on the market for more than a year. My GF and I laughed 2 years ago when they started building these things and signs popped up saying “starting in the $600s!”. Now this clown wants $844k!
The kicker is that this is out in the suburbs. This is off of RT 50, near Fairoaks, and across from Giant. Rt 50 has heavy duty traffic, is loud, and can be a real pain to commute on. These things are right on rt 50. Go a half mile north into the Oakton area and you can get a 15-25 year old house on a thickly wooded 10-20k sqft lot.
(BTW: they just broke ground on some more units)
Update: this has been on the market for over a year. Builder has lowered price to $844k. Nextdoor unit sold in 4/2006 for $978k. Ouch!
“Mark and Kimberly Kohus are among buyers taking their time to find the right house. They say they’ve been ‘frustrated’ by the quality of houses in their price range. Mark Kohus said sellers don’t seem to realize that market forces are working against them.”
“‘They are still asking premium prices, but several of them are not in premium condition,’ he said.”
My point exactly.
Amen. Our realtor thinks we’re being to picky. Actually, we don’t need the perfect house, just something solid in a decent neighborhood. BUT we really don’t want to a pay premium, perfect PRICE for an okay house in an okay neighborhood.
We keep saying to ourselves, for $—,— I would expect — !
Allow me to suggest finding one who doesn’t. Is there a shortage of real estate agents where you are?
If they can smell it, you can’t sell it
“Nearby, Prince William County . . . 41% drop in sales
We live 20 miles further out than PW County - sellers here are far more stubborn, being the last to experience drastically rising prices. They must not realize there is a 12-month supply of housing on the market in closer-in PW County.
I viewed a stinky, smelly 40-year-old vacant rambler (NEVER updated) 20 miles *west* of PW County two weeks ago. It also had a rotting, squishy subfloor in the bathroom with a 14×14″ black spot from water damage. Asking Price? Chirpily “dropped 50K for quick sale!” It was now at a bargain $399K from $450K. But if one drives 20 miles in *closer* to the jobs, and one can buy (examples)
this:
http://www.homesdatabase.com/PW6305752 in Bristow, VA for $434,900. (2003 house, 5 beds, 3.5 baths. No yard)
Or perhaps this:
http://www.homesdatabase.com/PW6359069 (1996 house, 4 beds, 3.5 baths, bigger yard for $459,900)
or perhaps *rent* this:
http://www.homesdatabase.com/PW6374504 (2005 house, 4 beds 3.5 baths) for $2,200 a month
We don’t have a need to move closer in, though, so we’re waiting the sellers out. (I still feel sick when I think of the smell of that rambler)!
I’d go for option #3 myself.
Yeah, why pay $3.5K a month to own, when you can rent for 40% less.
I really don’t get this staging thing. Are people THAT influenced by the new paint, flowers, absence of doodads, and the smell of baking cookies?? Part of me wonders if the people who fall victim to such meaningless things are the same ones who bought houses 2 years ago because prices always go up 20% a year … and maybe more rational buyers realize that all else being equal, a dirty clothes hamper or lack thereof is not a big deal.
It fits the America i’ve become all too familiar with…
Image is everything, substance, not so much.
I just put my house up for sale, $10K to $31K less than the same models in the development. I am not painting. If I get someone asking why it hasn’t been painted, I’m going to point out that I’ve reduced the price over similar homes. Do they want to paint the house when it’s empty in the colors they want, or do they want me to paint it all white and add that cost to the sales price. They’re going to end up paing for paint one way or the other. I’m lucky, I’m a seller with a paid off 6-year old house who doesn’t really have to sell, but would like to get something smaller and easier to take care of because of health reasons.
I can say that I’ve got a good lot of people upset over my asking price, especially those trying to sell. I’m enjoying that for some reason.
SteveR,
Good job! As a potential buyer, I’ve always wanted something a little run-down for a great price. I’ve seen some “remodels” with pink black tile and pergo floors, and I didn’t want to pay for it.
We used to refer to it a s MBF: management by facade.
No. But the realtor journals gossip that this influences people. So the people that are professional real estate coaches/experts tell sellers that their house has to be perfect, and the seller has to spend this money to fix this and update. They will come in like whirlwinds pointing out frauds and shortcomings and making the seller feel foolish.
And all of this has the goal of shaming the seller into spending lots of money to make the real estate agent’s job easier.
Come on. The real estate agent is supposed to be a professional seller. They are getting paid hugely to make the deal. If they really think a few farkles are going to help, let them contribute out of the $27K I’m going to be paying out to them.
I’m not interested in making their selling job easier. If they can’t handle selling it after its clean and tidy, find someone who can.
[
Staging is the process of trying to make a home purchase into an impulse buy. It tries to make you imagine living there right that moment, just like the cold drink fridge near the check out like that charges more for 20 oz than you pay for a 2 liter bottle that needs a glass and a few ice cubes.
That being said, there is something to the inverse of staging. At one time when I was looking in Jersey (never bought) I was shown a condo that reeked of dog urine and bird feces. Since it was a dog, it wasn’t a litter box, it had soaked into the floor boards. No idea if it would ever come out. I didn’t consider myself influenced by clutter, but that? No chance. I wonder if the owner even knew? The pets belonged to the renters….
not_buying,
Agents and sellers do this extreme staging because the terms “it’s all about price” fails to register with them. There must obviously be something wrong with the house, not the price.
I will admit that when we bought our first house in 1994, though (cheap stuff then), the cleanest ones were the most appealing. Still, it turned out that the basement leaked like a sieve (after the purchase).
I have a bad time in empty rooms - having (just regular) furniture helps me a lot in understanding how small/large it is.
Of course, i dont need the rooms to be ‘decorated’, and with flowers and other stuff in the room.
Finally talking about my neck of the woods. I hope that sale prices drop another 30% in Prince William County. We need a good shakeup.
Neil,
Please pass the popcorn.
Thanks
same with Montgomery County!
Here, here. But 60% please. I would actually be interested in some of the nicer condos in Bethesda/Rockville right near the various metro stops, but $600K for a 2 bedroom? What are the developers smoking?…Oh, and take out those ugly as sin stainless steel appliances . Hate ‘em.
Oh, and take out those ugly as sin stainless steel appliances . Hate ‘em.
But “Prison Chic” is Sooooooooo Trendy!
That Baltimore guy is thinking, “But I shopped around paid a good chunk of change to find the most crooked… I mean gerenous.. appraisal I could get, and the bank doen’t have to accept it???”
“Newton’s advice? “Sellers, be realistic at what you price at,” adding that the days of free-wheeling house-flipping two and three years ago are nothing but a distant memory.
“I don’t think that is coming back anytime soon,” she said. “I’m not even sure what that was.” ”
What that was is criminal mortgage fraud, using inflated appraisals based on inflated appraisals to generate cash back at closing deals.
Wow - some pessimistic (and, thus, realistic) comments from the realtors in Loudoun/Prince William. And pretty on-the-spot, no-spin, no-fluff on those stats by the newspaper there.
Just nice to hear some realtors admit there is going to be more pain going forward, rather than all the other quotes I read (or overhear in the local coffee shop) from the real estate community that the market is “leveling off” or “becoming more balanced” or “taking a pause” or “going to get going again soon”
My favorite quote:
“‘I don’t think that is coming back anytime soon,’ she said. ‘I’m not even sure what that was.’”
don’t forget soft landing
OT, from the CSM:
What’s US economy’s future? Ask illegal immigrants.
The rise and fall of border crossings foretells economic change, researchers say.
“A slowing US economy, resulting in fewer jobs, is discouraging immigrants from slipping into the United States, according to economists at Arizona State University in Tempe. In fact, falling border apprehensions may be an early predictor of where the economy is headed.
“If that’s true, then Americans should prepare for rough economic times ahead, says Dawn McLaren, a research economist at Arizona State’s business school.
“For the past decade, Ms. McLaren has been tracking the relationship between border apprehensions and economic growth. Every time apprehensions declined, the economy slowed about 12 months later, she found. “About a year before a recession, or a down cycle, there was a slowdown in the number of arrests” on the border.”
They got the word out about the lack of construction jobs down yonder.
No hay trabajo…
Or the more colloquial:
No hay chamba
Hmmm. I wonder if this analysis includes the Mexican economy and its effects on migration. For one thing, I would think that rising costs of corn would decrease immigration (why? a huge number of S. Mexicans are peasant corn farmers. Cheap corn exports broke a lot of them, they headed north to the border area for industrial work, a lot of that was lost to China, so they entered the U.S.).
A little OT - I heard on the news a month ago we’ll have a record amount of corn grown in the U.S. this year - for ethanol. My kids will love corn on the cob on the cheap. (Assuming they grow too much)
I don’t think your kids are eating field corn; the store is selling sweet corn grown under contract for a premium price.
The Corn Belt is mighty wet this year and somewhat later planting dates should reduce the crop yields; I’d guess 5% or so if most of the crop gets in by mid-May.
I do not think we’ll have a corn surplus this year. Maybe next year.
This gives a whole new meaning to your “SWEAT EQUITY” you Greedy little Lizards !
Finally got a reasonable answer on this one:
http://www.azcentral.com/class/marketplace/homes.php?pgAction=homedetail&address=5516+W+REDFIELD+RD&city=GLENDALE&zip=85306
04/02/2007 VAITA, AARON $315,000
01/05/2007 ANDERSON, RONNIE $235,000
07/29/2004 ANTHONY, CAROLYN $157,000
How did the house go up $80K in 90 days?
I got an answer from a friend. Foreclosure on the first mortgage on Jan 5. This aligns with what I saw on RealtyTrac. But they probably couldn’t sell becasue of a second mortgage. The holder of the second has 90 days to claim the house from the first holder by paying off what the holder of the first is owed.
So, the holder of the second waited as long as possible, then took it. The 4/2 transaction is the combined first and second…
So, there are 2 nearly identicle houses on the street for sale for $260K-ish, and they have both been on the market for months. This one had a first and second that totalled $315K. NO WONDER the owner walked away and let the bank have it.
I should add… At the time the second closed, they came in and replaced the front doors. It had wood and glass french doors that would be easy to break into. They put in heavy steel doors.
Based on that, and the quickly deteriorating condition of the front yard, I assume they are in no hurry to put it on the market.
question,
Is that how it works with a 2nd mortgage? Buy out the first of forfit one’s position? Note, I’m asking… I assume its dependent on state. (e.g., what are the rules in CA?)
What I’m getting at is why is Countrywide sitting on so many foreclosed homes? Is it that they must “age” for 90 days before they can Ignore the 2nd (done by their partner HSCB)? Could it be that the agreement between Countrywide and HSCB had different conditions?
(e.g., split sales price by debt owed to each or until 180 days?)
Got popcorn?
Neil
GE announced that they are now thinking losses could be less than previously thought. Maybe lots of their foreclosures had 2nds, and maybe, just maybe the holders of those 2nds took them so they didn’t have to take a full loss now.
I think this is the shorting opportunity of a lifetime. I love how subprime is the new Las Vegas, “what happens in subprime, stays in subprime.” We all know what’s coming. The when part is the hard part. Hang in there Txchick. Go gold! Go crash! This is really fun. I feel awful. Out
Friends of mine are trying to sell their house way up in Maryland — almost to Pennsylvania, looong commute to the jobs in the DC area, but it was what they could afford at the time, which was late 2005. Then in April 2006 he got transferred to new job out of state. Bad timing.
“No worries, we’ll just put it on the market for a $100k profit and see what happens.”
Well, what happened is that it languished for 6 months at $370k. They took it off the market in late autumn. They put it back in time for the “spring selling season” at $370,000. Nothing. They lowered it a month ago to $360,000.” Nothing. Fear is growing.
Now they are talking about dropping by anothre $10k and/or renting it out. Personally, I think they’re still priced too high, since now they’re only *starting* to catch up with the rest of the prices in their area.
Worst thing for them now is that buyers pretty much require Montgomery County salaries to afford the mortgage, but it takes $3/gallon to get to those jobs over 60 miles away. My friends are getting more and more frantic by the day, as they see the “spring buyers’ market” fall apart before their eyes.
Can they lower more, or are they just stubborn? I hope people who bought in ‘05 realize by now that they’re underwater.
These sellers THINK they have a $100g’s equity cushion, but in fact they have none. They will follow the market down to a sale at a loss, or they will foreclose. If they rent their place out then they will stretch out their heartache over a period of year(s). If you want to, cut and past my respnose to your friends in an email. This may help them, it may not, but you would be doing as much as you can for your friends.
Got 10% down?
Yep…
Sorry your friends are in trouble. We all have loved ones who are going to be really hurt. Most will chase the market down. Most will lose their down payment.
Folks, its just starting. It doesn’t really get going until August… so we know this will get scary.
Got popcorn?
Neil
This bimbo air-head realtor (BTW, she has stopped listing her “reasons why the bubble is bogus”) is not even blonde…:
http://realtytimes.com/rtmcrcond/California~San_Diego~lisablanchard
…but she can still make this stupid remark:
“NOTE: The number of Days on Market all areas of the county except the South is trending downward in a sign that properties are selling faster.”
(1) Days on the market are for houses that actually sold.
(2) If you relist your house, the meter resets.
“Days on the market are for houses that actually sold.”
I know, this drives me batsh*t. In medical research, this problem (i.e. survival curve analysis) has been dealt with ages ago. Apparently the RE researchers prefer century-out-of-date statistical techniques. Suppose a surgical treatment was applied to 100 patients. We follow them for ten months and note the time to relapse of all patients who relapse during that time (say it averaged 8 months), but 90% of the patients did not relapse during the study. If they reported that ‘average time to relapse was 8 months, don’t use the treatment’, they would be drummed out of the scientific community… Even the estimates from (number of houses sold per month)/(inventory) is an overestimate, as the market is sliding downward all the time. Frankly, there may be a significant number of houses in the market now that will NEVER sell in the next 10 years.
“When I finally got a full-time job, I was so far behind I couldn’t catch up. I had to refinance to save my home, but when they dropped my appraisal by $100,000, I was floored,’ said Allen.”
This is exactly what I said would happen about a month ago and people doubted it. Now look…