Speculators Hoping For A Star That’s Never Coming
A report from Arizona State University. “The local resale home market may seem to be functioning at levels below desired activity, but it is following a very traditional pattern. April recordings at 4,855 sales are well below the 5,980 sales of April 2006 and 8,735 sales of April 2005.”
“‘The new home has become a strong competitive and attractive alternative to the resale home in many areas of the market as new home builders have been aggressively pursuing buyers through incentives. The general expectation is that the 2007 resale housing market should be a good year, but no where near the records,’ said Jay Q. Butler, of Arizona State University. ‘This tends to assume that there are no negative geopolitical events and that the subprime problem is contained.’”
The Arizona Republic. “It appears the market is following a traditional cycle, although ‘we may not like it,’ said Butler.”
“Ahwatukee is the one community in the Southeast Valley where sales rose from April 2006 to April 2007. However, prices dropped about 15 percent to $325,000.”
“But the situation is not a disaster, Butler said. ‘It’s not a disaster market; it’s not a horrible market; it’s a fairly normal market.’ In fact, he added, for some it’s a good time to look for a deal.”
“‘You might find a much better deal than you would in the resale market,’ Butler said. ‘Especially if the home has been sitting there for a while, they may be more willing to deal.’”
“New-home builders enticing buyers with incentives like free pools and discounted upgrades appeared to be one reason for the sluggish existing-home sales in April.”
“As housing inventories remain at a record levels in metropolitan Phoenix, ‘new-home builders (continue to add) inventory into a market, and the last thing the market needs is inventory,’ said real estate agent David Lorti.”
From Business Week. “The downturn in the housing market has caught the nation’s homebuilders by surprise, leaving many overextended with costly land they can’t develop and unfinished homes they can’t sell.”
“‘I think we’re going to see a lot more [bankruptcy] filings in the next 6 to 12 months,’ says Tucson attorney Eric Slocum Sparks, who is representing one local builder, AmericaBuilt Construction, in Chapter 11. ‘I’ve got a couple of clients who want to see me next week, and I know these aren’t social visits.’”
The Denver Post from Colorado. “Foreclosures continued to batter the Front Range housing market in the first quarter, dashing hopes that stronger job growth would hold back rising delinquencies, according to a report Wednesday from the Colorado Division of Housing.”
“Public trustees in 51 of the state’s 64 counties reported starting 9,254 foreclosures in the first quarter. If that pace continues, Colorado will record more than 37,000 foreclosures this year, about 30 percent above the 28,453 recorded in 2006, which was 31 percent higher than 2005.”
“‘I thought I would see some moderation and flattening,’ said Ryan McMaken, a Housing Division spokesman who compiled the report. ‘(But) we will exceed last year’s numbers.’”
“Distressed sales, either lender-owned foreclosures or short sales, have come to represent more than half of all transactions in many parts of the metro Denver market, said Tom Steele, an Aurora real estate agent who specializes in short sales.”
“Colorado would have probably recorded more foreclosures in the first quarter if mortgage companies weren’t so backed up and overwhelmed, said Zachary Urban, the foreclosure hotline’s supervisor.”
“‘They aren’t foreclosing on people, because they don’t have the resources,’ he said.”
The Coloradoan. “Lennar Homes, developers of two housing developments in Loveland, laid off 76 workers last week, essentially pulling out of Northern Colorado’s slow housing market.”
“Lennar continues to market homes in Hunters Run II and LakeShore II in Loveland and St. Vrain Ranch in Firestone. Realtor Eric Holsapple said virtually every national builder pulled out of the market as soon as it slowed. ‘It really impacted our market negatively in the way they exited the market,’ Holsapple said.”
“National builders came in, put up subdivisions full of homes, then offered incentives to help them sell quickly. Local builders couldn’t compete, Holsapple said. In Hunters Run, for example, Holsapple said Lennar put up 40 to 50 homes to build out the subdivision, then priced them to sell quickly.”
“‘It’s been their strategy of exiting the market; they finish out the subdivision then sell the homes for what they had to sell them for,’ he said.”
In Business Las Vegas from Nevada. “It’s been a difficult 12 months for the real estate community. About 900 Realtors gathered April 26-27 at the Las Vegas Convention Center to take continuing education classes, visit with old friends and take stock of their industry.”
“Rose Holden has seen it all before in more than 30 years in the business. The market will rebound, hopefully by the end of the year, she said. She adds the caveat that her crystal ball is broken.”
“‘The mood is typical,’ Holden said. ‘Everybody is worried that there’s no business…The business is still out there. It is just a little slower than they are used to. You have to work a lot, but some people are not used to work.’”
“Inventory remains high and sales remain slow because many sellers have been reluctant to lower their price to match what’s happening in the market. Homes priced correctly will sell, said Realtor Donna Brass.”
“‘The problem is many investors who entered the market late keep wishing for a dream, hoping for a star that’s never coming,’ Brass said. Even banks that take possession of homes are holding out for unrealistic prices, she said.”
“Brass said she expects prices to drop at least 10 percent. That prediction is in line with those of the Nevada Association of Realtors and other analysts.”
“‘I am not seeing the prices drop yet, and that’s surprising me. I think you will see it in six months and in December, they will be crying hard,’ Brass said. ‘The best deal ever will be in December. It will be the bargain of a lifetime.’”
The Review Journal from Nevada. “Realtors need to separate fact from fiction to protect clients from the ’subprime tsunami’ and false pretenses of getting rich quickly in real estate, a panel of home loan experts said Wednesday.”
“‘We’re never going to see 54 percent appreciation again, I have a hunch,’ Shane Watson, managing partner of Direct Access Lending, said during a three-hour symposium for local Realtors. ‘We believe the market is very strong here and this is just the calm before the storm.’”
“Watson said that Nevada leading the nation in foreclosure filings and Clark County being second to Los Angeles County is actually good for the industry. It will drive away investors who entered the market with marginal credit and perhaps even misrepresented their income on loan applications, he said.”
“‘What’s the old saying? Buyers are liars,’ he said.”
“Andrew Pugh of SellFastLV.com said anecdotal evidence from his business suggests that many owners have little or no home equity despite the price boom of 2003-2004. That’s why those facing foreclosure aren’t able to cut their prices and ‘be done with it,’ he said.”
“One woman bought her house in July 2003 for $170,000, ‘absolute perfect timing’ as things started to run up for the next 12 months, Pugh said. Last August she refinanced for $300,000. Now she’s behind on payments and needs to sell, but comparable sales in her neighborhood are only $270,000.”
“‘You can’t slash the price below what you owe on the house,’ he said. ‘I seriously think most people in Vegas pulled out all their equity and blew it on who-knows-what. Those 10,000 or 11,000 vacant properties on the (MLS) represent anxious sellers that are slowly bleeding to death and would love to sell at just about any price.’”
“‘Unfortunately, I can’t do anything for these people and neither can a real estate agent,’ Pugh said. ‘They might be able to short sale if they can find a buyer, prove they’re insolvent and don’t get lost in the bank’s bureaucracy. Good luck. Otherwise, they’ll go back to the bank in a few months and then show up as REOs down the road. Now, the real question is, where did all that refi money go?’”
“Now, the real question is, where did all that refi money go?”
Bugs: eh, Daffy put it down the wabbit hole.
A wabbit outhouse hole of consumer crap - tons of stuff supporting a consumer-services economy that’s all but running on fumes.
People actually have to ask this question in freakin Las Vegas ???
Its been 15 years or so but i know vegas has some of my cash :)…
Chris
If you are a card counter like Ken Uston you can beat the casinos. But given the average intelligence of rock salt, the casinos make big bucks.
one arm bandit took them all.
“Now, the real question is, where did all that refi money go?’”
This money has gone into EVERYTHING! From being blown on big screen TV’s, to Hummers, to Piano lessons for Suzy, to round the world cruises, to new windows, to new furniture, to new second cars, to college tuition, to groceries, to spa massages, to facelifts, to breastlifts…etc…etc…etc…(anyone have anything else to add?)
Going out to dinner, going to see a movie (Costs $60 for a family of 4, if you get a soda and popcorn), CLOTHING! (styles come and go every 3-6 months now), Disney vacations, new cell phone every 6 months, I-Pods, WII, DVDs, poker games…
How could you all forget the biggie….CREDIT CARDS!? Also, video games, SeaDoos, and of course, my fav, the vacation home/condo in Hawaii/Florida!
Sports equipment….kids growing, new every year, dance outfits, instruments, lessons, Christmas gifts, birthday gifts, booze, food, and parties for New Years, Valentines, St. Patty’s, Cinqo do Mayo, 4th of July, Labor Day, Halloween, Thanksgiving, birthdays, graduations, weddings, end of season sports celebrations, Superbowl, did I miss anything? Don’t forget the different serving ware for every season and perfectly matched kitchen appliances….wouldn’t want to be embarassed by having a mismatched color…
Sports and concert tickets!
How to become rich in RE seminars…
Re: clothing styles changing. When I reached age 30 I really stopped caring for the most part. Jeans (not the baggy ones), t-shirts/polos, conservative business wear, etc. will never go out of fashion. But yes, I often wonder how much of the crap I see is financed via helocs. I know that most of the people around here cannot really afford the designer shades, jeans, jewelry/watches, etc. When heloc $ finally dries up this economy is toast.
I wear my “out of style” clothes with pride. Like Tyler Durden wearing obviously Goodwill clothes in Fight Club.
The one that gets me is womens purses for thousands of dollars. A FRIGGIN’ PURSE!! I’m so glad I’m married to a woman who thinks it’s more ridiculous than I do.
Speaking as a woman here, living in NYC and working on Wall Street taught me a few things.
First of all, if you have to keep up with the way trust fund babies dress and party, you will soon owe 20k on your CCs. Been there and paid them off.
Nothing was more liberating than when I said F it and started shopping at Century 21 and Payless. I eventually pushed the policy in the firm I worked for and women finally were able to wear pantsuits. As long as they were cut fairly decently and well cared for, clothes from Century 21 and shoes from Payless worked just fine.
I stopped going out for the big nights on the town (dinner, club) and just met everyone for happy hour.
It really was the most liberating thing to not give a crap what anyone thought anymore. By then I had earned my reputation as a top notch paralegal so they wanted me around for that more than they were willing to criticize my day to day quality of dress.
I also always had two top notch suits for court that could be accessorized in a variety of ways to look different enough to get me through a two week trial. If we had a long one, they just had to put up with some of the lesser quality of stuff.
Since moving to DC the dress policies around here are much more relaxed which helped even more.
Unless you are Paris Hilton, spending more than 30 dollars for a purse is insane.
When you stop caring what other people think you figure out what is really important and what you really NEED to spend money on.
The major difference between the generation of women that existed when I graduated from college in 1989 and now is there is an extended period of adolesence that tells them that this is when they go truly wild. Money of their own, blah, blah, blah. And I mean wild. Not trying to keep up with the Jones but I’m talking a fully decked out apartment, vacations, take out every day and 1000 purses. The level of expectation has gone WAY up. They’ll settle down when they get married.
It’s going to be tough to get anyone to marry you when you have 80k in student loans and 20k on CC because you went through your extended period of adolesence.
This isn’t restricted to girls either. Guys just go for toys more than clothes.
It makes me think that debt is a recipe for divorce. Two 30ish people get married, they both have student loans and debt. Kids come along, then they must have the expected house with a double garage and a pool AND every possible activity with tutor for their kids. What a mess.
I’ve never met Mr. Right yet so I’m just speculating.
O.k. Done ranting.
Boy, that was fun. Kind of like a one-woman cat fight. Ok, that was uncalled for as your basic post is good…the amount and degree of entitlement is both a warning and sad fact, for when the cookie jar is finally yanked away the spoiled kids tend to cry. This country’s future?
When I decided improve my sartorial status (ahem), I just spent awhile reading (!) about quality ties, suits, etc so I would know what to look for, and then got tons of the stuff at Value Village/ Goodwill etc. I find extremely high quality clothes showing up in those places (probably from estate sales or people retiring, gaining weight, etc). You really score if (like me) you have a seamstress in the family who can customize the suits a bit- nothing better than a $30 bespoken suit
I’ve never met Mr. Right yet so I’m just speculating.
novasold,
Wow. If you lived near Vegas, I’d ask you out. You sound like a real person.
Those fancy chrome rims that keep spinning when a car is stopped at a light.
On a Tercel.
How about the car on those wheels. Hell ,here in Orange County the number of new cars boggles my mind. They are either leases or on a 30 year plan .
It will take a car load of POPCORN to get through all of this.
…number of new cars boggles my mind.
Same here in Vegas. I live in a cluster of somewhat middle-class housing developments and every morning out to the interstate I find myself driving amongst Porsches, Beemers, Hummers and, of course, fleets of gigantic $40k+ pickups.
I find it hard to believe that this many people in these types of neighborhoods can afford these vehicles.
Breastlifts - at least that’s a good use of the money…
Don’t forget Harleys
No, no…. The MEGA biggy.
TIME SHARES!!!!
In Vegas for a wedding, took advantage of one of these Time Share spiels to get free tickets to a Cirque show (I’m sure there would not be 5 cirque shows in that town without timeshares..)
Anyway, the spiel was SOOO weak, but such a HARD SELL.
For only $48K up front, you get to rent a hotel room 1 week a year, for a $1000 for that week. Hmmm… I can rent a hotel for a week for $1000 (or less) without paying the $48K up front.
Well, hotel rooms go up with inflation, this you’re locked in forever… Oh, except the $1000 a year can go up, but once you’ve paid hte $48K up front you’re in for life.
You’re a fool if you don’t buy! We clearly aren’t explaining this clearly, because it is such a great deal, anyone would see what a great deal it is….
So, I leaned over to a guy at a table next to me, that lookedlike he wasn’t getting it… and asked “Can you beleive this scam? For only $48K, I get to rent a room for more than I’d normally pay to rent a room.”
They let me out of there pretty quickly after that.
So, that night a Cirque I was seated with a dozen couples that we’re also there at the expense of the timescam thingy. At least 75% of them had bought.
SUCKERS!!!!!
Time shares… a builder put time shares up in Seward, Alaska. To know how moronic that is… Seward is a coastal town on the Pacific. Environs full of walrus’, huge trees, etc. Only problem is the ‘nice’ season (when it isn’t raining buckets of cold water) is about two weeks long. Gee, can I lock in THOSE two weeks… Not surprisingly the development went belly up faster than a fish in a blender…
LOL
Where did all the refi money go!
a)wabbit hole- good answer.
b) 2nd & 3rd property….Real estate speculation, everyone was doing it…
c) granite countertops
d) Mercedez, Beamr’s, & hummers (both)
Daughter’s sweet sixteen party. Dropped 30k on that one. Not me, somebody I know.
How?! I know the $ is dropping in value, but quantity makes up for something!
It’s rolling around on two and four wheels, roulette wheels, jet wheels…
I wondered how so many people could afford these big new SUVs, motor homes, etc… Now I know.
Come on now…are you all forgeting what most of these fools did with the money? A lot of the speculators/gamblers used their refi cash out to get into even more homes. Most of them are probably unside down on several properties. I have a friend in San Diego who did just that, despite my warnings.
“A lot of the speculators/gamblers used their refi cash out to get into even more homes.”
Know a few families who did that… One of these families is already crying for help. The others are sure to follow.
I used to wonder about that too, a few years ago. Despite my area having a low-wage economy with a poorly-educated workforce, I kept seeing an impressive number of Escalades, Hummers, and late model luxury cars. At the time I didn’t know anything about mortgage equity withdrawal.
Don’t forget nose candy.
I kept seeing an impressive number of Escalades, Hummers, and late model luxury cars. At the time I didn’t know anything about mortgage equity withdrawal.
You know what funny about this, I see the samthing as I drive home next to these appartment complexs everyone pulling out In Escalades, BMW’s, Crylers300, Hummers, California full of this you wonder why there doing the same with there Home ATM!
Wonder how many parents HELOCed to put their kids in a house. Multigenerational pain in the offing?
The general expectation is that the 2007 resale housing market should be a good year, but no where near the records,’ said Jay Q. Butler, of Arizona State University. ‘This tends to assume that there are no negative geopolitical events and that the subprime problem is contained.’
A year ago this cheerleader was saying how the 2007 market was going to outperform 2006. Typical liar.
Typical liar with pants on fire.
That’s the first time I’ve seen his middle initial. Perhaps he’s trying to make it look like he’s just one of the John Q. Publics out there.
Looks like we need to start the Jay Q. Butler Watch.
this blog brought LIErah down- what;’s this porker’s email / web
etc ?
Jay Q. Butler
Realty Studies
ASU Polytechnic
7001 E. Williams Field Rd
Wanner 140D
Mesa AZ 85212
Telephone: (480) 727-1300
FAX: (480) 727-1407
E-Mail: Jay.butler@asu.edu
I go to ASU MAIN. Polytechnic (ASU East) is a joke. It’s in East Mesa, on the site of an abonded Air Force field. They offer majors in Golf Course Management, FFS. “Realty Studies” is a joke, and the students are weird. Definately a different world on there, where aparently the real estate market is peachy. “Its all good!” as Casey would say.
Why do they make the assumption that the subprime mess will be contained? There are still billions of dollars that are to reset over the next 12 months.
I guess ASU main isn’t oo picky about its selection process either based on your spelling and grammar. Something about stones and glass houses…
Stones and glass houses, huh?
I wouldn’t be “oo picky” about that, Ed…
“that are slowly bleeding to death and would love to sell at just about any price.’”
Translation - Blood is now in the streets. Wait until the street is flooded before you buy!
I will wait until (1) non-HBBloggers openly agree there is blood; (2) the flood is drained and the blood has at least started to dry.
Sorry…no blood in the streets in SFV part of LA yet…I wish. Soon she shall be slayed…but no blood yet. Lots of money and lots of knife catchers. Prices beyond belief! Whew!
Yesterday I was walking down the main street of Rockland Maine, just across from the Grasshopper Shop, and was startled to look at the window just beside me which shouted in huge letters: “HBB” — and the window just beside it, “HBB”. Egad. Well, it was only the Harbor Beauty Bar.
WTF are you doing in a hick town like Rockland Maine? Did the snow melt there yet?
RE: hick town like Rockland Maine?
Rockland ME was always solid, vibrant, blue collar fishing community until the Russian, Jap, and Euro fleet trawlers came in and wiped the Outer Banks stock out.
WTF do you do to add to the consumption pie?
Put on your BB monkeysuit and trade currency pips?
Bleeding to death? Blood on the streets? That’s just a little rasberry on your knee. Come over here and let papa give it a kiss to make it better.
Realtor Donna Brass-Balls said. ‘The best deal ever will be in December. It will be the bargain of a lifetime.
In 2017 - She might be right.
December will be the bargain of a lifetime if plan to die before January.
She must be hoping to cause a stampede in December when she gets back to work from her face-life, breast-implant, liposuction, and general Realtor surgery planned for early autumn. Oh, and her cross-country Hummer exhibition.
I thought you meant back to work in RE, but it sounds like you’re thinking about the ranch thread from yesterday.
“‘I am not seeing the prices drop yet, and that’s surprising me. I think you will see it in six months and in December, they will be crying hard,’ Brass said. ‘The best deal ever will be in December. It will be the bargain of a lifetime.’”
I bet there will be even better deals in January, even better in Ferbruary, even better in March, and so on down price depreciation line… All we have to do is wait.
The good deals will come from the lenders/banks. Forget the screwed FBs who bought at the peak of the market. They can’t lower their prices even to save their lifes since they are limited by the price of the mortage. Stalk the lenders, they will give the good deals…
http://money.cnn.com/2007/05/09/real_estate/foreclsoures_yield_buying_opportunities/index.htm?postversion=2007051012
Agreed.
“Stalk the lenders,…”
Can you offer practical advice on how to do this? And are REO sales prices reported publicly, or is it necessary to obtain such information through the county government offices?
I know that RealtyTrac offers some information on which lenders to call directly on particular properties, but even that information is scarce. Here in Northern VA the agents who are listed as dealing with Countrywide (and presumably other lenders) are probably the best resource for getting the “good deals”. I know an agent who is making tens of thousands a month — she set up a few years ago to work with the lenders on foreclosures because she saw this coming. (She’s getting sales because she has clients (banks) who are willing to slash asking prices).
http://www.countrywide.com/purchase/f_reo.asp
Can someone count up all the properties CW owns in all the states, and report back?
“Can you offer practical advice on how to do this?”
Sorry, I don’t have any suggestions that you would not get from a book on foreclosures, say. But Based on what I’ve read on newspapers, web, etc, I’ve come to the conclusion that the lenders will sooner or later have to deal like they’ve never dealt before or go bankrupt. If this whole RE mess plays out as he expect it to, lenders will get thuosands upon thousands of homes thru foreclosure. Initially, lenders might play hardball at the auction, so if they do, let them take the house back. A few months later, when the housing is deterioring, the banks will cry for an offer. At that point if the house is not too messed up and in a decent area, potential buyers can come to the bank and show them pennies on the dollar. Many banks will take the bait.
I strongly suspect that as this continues to unravel, mechanisms will be put into place and information made available to facilitate the purchase of forclosed properties.
Patience.
GS, The easiest way is to go to your local banks and ask them who deals with their REOs then talk to the banker involved in the REOs (buy her/him lunch) to let the banker know what property type you are interested in acquiring. Network the local bankers.
Thanks!
One place to look is at the HUD foreclosure website (HUD homes are FHA foreclosures). VA and similar have foreclosure lists, too:
http://www.hud.gov/homes/
http://www.hud.gov/offices/hsg/sfh/reo/reobuyfaq.cfm
http://www.hud.gov/homes/homesforsale.cfm
We’re renting in AZ. The foreclosures that come up are still listed at ridiculous fantasy prices; e.g., 400K when the last sale was for 300K at the peak of the bubble in 2005. Maybe because we’re only seeing the ones that are listed thru the local monopoly RE company? Should be asking more like 200K for these houses.
“The local resale home market may seem to be functioning at levels below desired activity, but it is following a very traditional pattern. April recordings at 4,855 sales are well below the 5,980 sales of April 2006 and 8,735 sales of April 2005.”
Exactly how often in the history of this local market have sales dropped off by 44% in two year’s time? Does that fit more into the “traditional” category or the “normal” category?
I wonder if the 10x increase in inventory is “normal” too? I bet the negative price appreciation will be “normal” now there is the “usual” 12 months of inventory on the market with the credit contracting like it has been over the last 8 years.
What a pumper. Why do people in the media even quote this clown?
“April recordings at 4,855 sales” It blows my mind that you could still have this many people buying. Where are they getting the money? I’m sure the majority are telling everyone what a good deal they got along with how much instant equity they have but in two years time will be putting those properties back on the market at a lower value. This is just why the bottom is at least 4 yrs or more down the road. The only catalyst to the fast track is financial collapse due to heavy CC debt.
Articles like this only confirm that a massive reverse-wealth effect is coming. When the Fed realizies the impact (say late fall) they will drop interest rates if they can, but housing will only continue to sink. This winter will be a cold one.
Japan dropped rates to the floor and could not contain the effect of falling real estate prices in the early 1990s. Negative real Fed Funds rates worked well to drive U.S. residential RE prices much higher than rooftop levels by 2005, but I believe a renewed attempt would merely serve to push on a string.
Stucco - I agree
the Deflation, after the money / debt derivative bubble that exists today, should spiral prices down swiftly, those in debt will see the liquidity fractional money multiplier work in reverse.
banker B of A Lewis yesterday, whispered “fire” in a crowded debt theater!
“Colorado would have probably recorded more foreclosures in the first quarter if mortgage companies weren’t so backed up and overwhelmed, said Zachary Urban-Vacant, the foreclosure hotline’s supervisor.”
“They aren’t foreclosing on people, because they don’t have the resources”
You can’t get blood from a turnip.
Why try to squeeze the mopes when the house can’t sell?
Something is better than nothing
I took that to mean the Lenders dont have the resources to do the foreclosures. They would if they could, but not enough staff.
You can see stories all the time about taking a short-sale to the lender and they cant even review it in time. No staff.
Not to worry all the Fl RE agents are now available for work.
I like that. Probably I’ve posted this story before, it’s one of my best: re-po against a pair of drunks was going to be expensive, and they were underwater as well as non-performing. After their lights and A/C were turned off, someone informed me they were at their (mortgaged) trailer removing personal belongings. I went there to tell them I had initiated a foreclosure (I hadn’t), but that it would cost me some money to finish it ($2500, but I didn’t tell them that). I said, “If you’ll sign a quit claim deed I’ll give you these two hundred dollars.” (Which I was waving in their face, folding and green.) They were delighted to have some gas money, they signed, we got the QC notarized by the park manager, and everybody was happy. The problem with the mortgage companies in the Colorado story is, apparently they haven’t got the two hundred dollars.
AZ, most of these lenders and banks would only have to flash about 1-3K green in front of most of these FBs faces and they would sign. So many people have no cash it isn’t funny. Thinking about it, is it any wonder why we live in a debt-happy society? Can’t afford anything and have no cash for it! DUH!
The banks are going to get burned by huge numbers of credit card defaults. Of course, the interest is so ungodly, that they have already made a killing.
I wonder about Cashcall and other (high) interest lenders. Cashcall, in particular, has been hemorrhaging money. They are the last oasis in the desert- the desperate masses will borrow from then and then go under.
AZ lender: Mortgage guys seem to enjoy hanging around open houses, etc. and actually talking with people. Maybe part of the problem is that the mortgage companies don’t own the loans anymore, and those that do don’t have employees who will drive over to talk to the FBs like you did.
Wonderful story.
About 900 Realtors gathered April 26-27 at the Las Vegas Convention Center to take continuing education classes….
LMAO! What do they teach at these CONventions?
training hookers to be sign spinners
one word…AMWAY !! Beer Me
Here’s a case, Rich. (You said what I was thinking.)
They’re training them to hand hand out those flyers for hookers.
These conventions are fronts for the Church of Scientology. They’re pulling in new recruits.
How to sell quart bottles of fruit juice for $40?
Every six month when I go to pay my car insurance premium I have to put up with these people selling me on their fruit juice. The actual fruit juice changes every year, but the aoutrageous claims and hard sell is a constant.
Next time I will tell them that I have zero health problems; I have all of the energy that I need, sleep well, never get any headaches, have great sex with very intense multiple orgasms every other day, have no soreness after running, no soreness after working out, have a very balanced and pristine diet with plenty of fruits and vegetables, and I am very happy.
Somehow, they will try to hard sell me anyways.
Got 10% down?
How to sell quart bottles of fruit juice for $40?
Mangosteen was one of the first.
ok, right after you sport
Butler said. ‘It’s not a disaster market; it’s not a horrible market; it’s a fairly normal market.’ In fact, he added, for some it’s a good time to look for a deal.”
“It’s a great time to help out the real estate industry that supports my research program by purchasing an overpriced home today.”
“I’ve got a couple of clients who want to see me next week, and I know these aren’t social visits”…“‘I think we’re going to see a lot more [bankruptcy] filings in the next 6 to 12 months,’ says Tucson attorney Eric Slocum Sparksareflying, who is representing one local builder, AmericaBuiltshit Construction, in Chapter 11
“Normal Cycle in AZ”?????
What? When have we ever dropped 10% from March to April?
They point out that sales are in line with April 2000, but seem to forget to mention that 2000 was a down year and population has increased 25% since then.
Looking back to 1997, when population was 40% less than today, sales were also in-line with 2007. However, from 1997 through 2003 there was a stead rise in sales that lines up with mass population growth. 2000 was a down year on that slope, and that “just happens” to be the year they choose to compare to to claim normality….
2007 is NOT “in line” with the population adjusted up-slope we’ve had over the last decade (if you exclude 2000 as a down year, and 2004-2006 as up years).
Nor do they mention 52000 homes on the market, giving an 10.7 month supply.
Come on!
Maybe they should get their news from somewhere OTHER than the realtors’ PR agents.
First they compare to 2003, now 2001, whats next? 1931?
Some of you may remember a couple of weeks ago I mentioned a guy I know who was trying to sell a stucco house in the Seville community in SE Gilbert for just under a million bucks. Well, I checked out his latest DOT on the Maricopa county recorder’s website. Previously he owed around $650,000 on a 5/1 ARM. Seems that house payment was getting to be a little steep, so he refi’d a few weeks ago into an I/O ARM and took on an additional $70,000 in debt. Sure, he knocked around 500 bucks a month off his payment (by knocking out the P in PITI), but he now owes nearly 3/4 of a million on his house. I’ll be watching…
So this guy is still looking for almost a quarter-mil profit in today’s market? I hope he sells for $550.
Yep. He bought this home a year in April, 2006 for around $825,000. He did put down twenty percent (which is probably the only way he got a 5/1 to start), but he’s absolutely hosed now.
Gotta love that one! He’s hanging on thinking that things will rebound next year and then a couple of his neighbors will go into foreclosure and set some true comps for the neighborhood. Got TUMS?
You would think that a guy who was capable of putting down $160K last year wouldn’t pull out $70K a year later. What is he thinking?
Okay - he only wants $175 profit - I thought he was being greedy (and assumed a 100% LTV loan for some reason - amazing that he had $175 to put down in the first place).
I’m looking at a house in “Fox Crossing” in southern Chandler that sold for $600 even in December 2005. They now want $639. Maricopa recorder shows one 1st at $415 - to me that seems like the starting point in 2007…
I really wonder how people would feel knowing that $185K was just gone after 18 months - hey that’s a nice $10000 a month rent! Except that the interest was another $2000 a month or so, then taxes, then insurance, then utilities. How will people like this ever get out of their hole?
He gonna scream soon
If I listen carefully, I can already hear him scream.
I don’t know about the rest of the country, but it appears to me as I drive around the city (Salt Lake City) that the refi money went to new SUV’s, and just about every other form of recreational toy you can buy. I’ve never seen so many RV’s, boats, campers, trailers, dune buggys, hangliders and two car garages stuffed with everything from snowboards to scuba gear in my life!
Until I found this blog I spent a few years wondering how practically everyone I knew including the guy who cuts my grass could afford a big screen T.V. I’d love to see a breakdown on the percentage of home equity that was liquidated with a 15 or 30 year repayment schedule spent on a depreciating asset that would be worthless in 5-10 years.
Are that many people really that short sighted and desperate to live beyond thier means? I must be living in Potemkin Village, USA. How sad.
Answer, yes.
My sis-in-law to-be spent $30K refinancing 3 times in the last 4 years to suck $70K out of their home. House purchase 2001 = $143K. Refi 1 = $167K. Refi 2 = $219K. Refi 3 = $243K.
Now she is trying to sell. Listed FSBO for $309K. BUH HA HA HA HA. After 4 months, she brought in some realtors. Best estimate she got was that it could be listed for $280K… Listed for, not sold for.
If she sells for $260K, she loses money because of pre-pay penalties.
Her and her hubby make $40K less than fiancee and I, but live like they make $40K more.
a loan shart would have been cheaper
loan sharks for everyone !
um, hilarious typo there
(google “shart”)
An equity line would have been better.
“Her and her hubby make $40K less than fiancee and I, but live like they make $40K more.”
It truly hits home when it is family and it will not pleasant to be in your shoes when the soon to be SIL asks your wife to lend them moneys. And like many families, it will be hard to turn them down without causing a great deal of hurt.
Been there, done that.
Presumably, FB’s will be asking for personal loans once they are maxed out on credit cards and have no way to “reset” their CC’s with their
houseATM.I would be very direct, blunt, and to the point.
“I am not now in the banking business, and I do not ever want to be in that business.”
Got 10% down?
Just sit back and enjoy their comeuppance.
I see this in Portland also.
This is the new USA, extreme wealth from service jobs (RE/loans) and HELOC banks.
This is what makes us strong.
We don’t need no stinking manufacturing jobs, those are for the Chinese.
We’ll borrow money from them, then just print some more to pay them back. Life is good. How fast can we print?
For 1.2 trillion, if we can print 100 million dollars per hour, it’ll just take us 500 days.
The last time I went through there, I was blown away by all the the building that had taken place. I hadn’t passed through in 4 years and the differences I saw stunned me. I saw plenty of HELOC and refi toys too. I wonder how those 15 or 30 year installment plans for those matched Jet-Skis that go down to Lake Powell twice a year will work out for these people.
As for your lawn guy, I knew one guy there who made more doing yardwork than he did at his teaching job during the school year. Maybe he honestly can afford it, but there’s a lot of people there who probably just think they deserve it, thanks to their house. Perhaps “real estate is local”, perhaps not; unfortunately, bad home equity liberation ideas and exotic financing options are almost everywhere.
“But the situation is not a disaster, Butler said. ‘It’s not a disaster market; it’s not a horrible market; it’s a fairly normal market.’ In fact, he added, for some it’s a good time to look for a deal.”
Here, taste this crock of sh!t! It won’t make you gag. It’s not terrible. Heck, if you add a lot of salt, it actually tastes fairly decent, some might even say ‘good’!
If NNVmortgagebroker is around or any other regular here who lives in the Reno area, could you email me?
gymnastgal32 at yahoo dot com
thanks
any clues?
“‘What’s the old saying? Buyers are liars,’ he said.”
No that’s Realtors. Realtors are liars.
I’ve been looking for a condo in the complex I’m renting in. I rent for 2300, a 500K condo with a 500/mo maint. fee.
Today my buyer’s agent emailed me that she “doesn’t want me to wait too long, and pay someone else’s mortgage”.
Yesterday, a local blog realtor said this:
“Regarding the median price, there is really no spin on it. It is the median price. Yes, it might go up because a greater number of higher end homes are being sold, but it is still the median price. It is just a math calculation; it is not someone’s opinion. Month-to-month, year-to-year, the median price will continue to be reported accurately based on the sales. One should however not judge the direction of the market by 1 month’s movement in the median price. Over time the median price will always increase. Twenty years ago the median price for Single Family homes was just over $150,000. Last month it was $665,000. In another 20 years it will probably be over $3 million. ”
My head is spinning and I need some advice from you financial people. I am in a totally different field of work and just want a place to live. I can “qualify” for these places, but will be strapped and at the same time lose out on the downpayment’s income, tax deductions will just about equal the diff on the mtg, but the 500 fee is down the toilet.
Hawaii is always the last to fall. People believe it’s paradise. Until they get to really know it. Living here is not the same as visiting, that’s for sure. I stay because I have a good job, and my kids are still here (but want to get off the rock as soon as they can).
Stop me from making a stupid mistake. These condos sold for 300 in 2004, for 150 in 2000. I mean, come on. I refuse to buy a depreciating asset, like a new car, just my stubbornness.
Convince me to wait, someone, please.
You pay $2300 rent.
$500K at 6.2% for 30 years is $3000 a month. Add $500 condo fee. Add insurance and taxes.
So, you’d be paying $4000, maybe $4500 a month for a place you can rent for $2300 a month?
Please… Take the $2K a month and put it in a CD. You’ll come out WAY ahead.
Darrell, I’ve been making that argument for what seems decades now. But the sheeple just don’t get it. Seems they think that RE only goes up, up, and away. Just think 2K a month is 24K a year. Now, subtract 5K for a nice vacay, you still have 19K. Interest on that would get you about another 1K, so 20K a year for 30 years, compounded on top of that. WOWZERS! You are looking at a cool mil or so. Therefore, when you retire, but some nice little place for what 300K, adjusting for inflation over the next 30 and live off the interest on 700K/year, which @ 5% is 35K a year. Not a bad deal. It is amazing how many dolts have no idea how to plan for the future. Also, if you have a pension and it is still there or even SS and a spouse’s income, you guys are sitting better than pretty. Alas, people just don’t want to save anything. SPEND, SPEND, SPEND INTO OBLIVION!
I’ve bought& sold several condos
1. go to a board meeting and find out about unfunded liabilities
2. walk and talk and make a NET deal w/o realwhores and you will save big
Convince me to wait, someone, please.
I’LL RENT FROM YOU FOR $2300 WHILE you pay $4000+ mo. to own…..
Seems like a great deal for you…only lose $1700 a month on me…but think of the $100,000 or more profit you will have next year when you sell!!!!.YIPPIE!
Here’s my advice. Tell your landlord you’re moving into one of the thousands of new, lower-priced rentals on the market if he doesn’t lower your rent.
I stay because I have a good job, and my kids are still here (but want to get off the rock as soon as they can).
This is the primary reason why you should rent. Buying is much less liquid than is renting (obviously). if you don’t really want to stay there long term, you should not buy. Plain and simple.
Also you aren’t “paying someone else’s mortgage”. You are paying for your lodging.
If the condo you are looking at is $500k, as others pointed out you can either pay:
$2300/month in living expenses
or
$3000-4000/month in living expenses.
When they talk about “throwing money away” on rent, remember that when you own you throw money away on:
-interest
-tax
-insurance
-condo feeds
on a $500k home, it would be at LEAST that.
(500,000 x 6% interest / 12 months = $2500/month just in interest).
We’re not financial people but a bunch of bitter renters.
No, I think you should buy 10 houses at any price. RE can only go up and they are not making any more land.
Wait a minute, I’m think I’ve got a case of Realtoritus.
Thank you so much. Your comments are great, and to tell you the truth, after owning a big house for many years, being able to look at termites, wood rot, rust, broken appliances, failing plumbing, leaks, mold (again, Hawaii is not paradise) and LAUGH and RELAX instead of stressing and arranging/supervising repairs had made me a much calmer, happier woman.
I do want to buy a place (whenever, I’m just impatient) I can maintain for myself and the guests I often have (another curse of living here, relatives love to come see you).
The HOA issues scare me, I’m in avoidance mode right now. I’ve seen extreme horror stories and huge gigantic special assessments take whole buildings’ values down. There are condos on the beach where the HOA’s are larger than the mtg, because the buildings are crumbling due to the harsh environments.
I live in a townhouse complex, very spread out with alot of grounds to maintain. A pool, etc, that I don’t use. Alot of families and retirees, large units between 12 and 1500 square feet.
I raised my kids in a big house, for the last few years on my own, and the maintenance, ugh. Headache after headache.
My govt job is stable and won’t be affected by the economy believe it or not. Our shortage differentials are permanent. Lucky me, no one wants my job (acute forensic psych).
bkiido”
I thought I saw some Hawaii stats this week! Their median was already down 20%.
Look on tuesday news, I posted 10 “signs” why the current bottom is not THE bottom.
larry goldilocks kuntlow is coming on in about 15 minutes here in los angeles I wonder what he thinks about his goldilocks today. looks to me like goldilocks is a bit bent over today.
My favorite line uttered by someone on this site: Goldilocks is biting the pillow.
That pillow is getting so torn up I thought somebody let the dog play with it. I didn’t realize Goldi was using that room.
We need to have an online poll for what kicks off the big crash in LA.
Will it be illegals rioting?
Fire storms in the parks?
Supermarket workers strike?
All three we hope….we have not had a good old-fashion murder the streets riot for some time…..Supermarket strikes can be replaced soon enough with a little muscle.
Firestorms in Griffith Park…that has a nice touch to it.
/sarcasm off
Let’s see, the last time the riots helped in 1992, followed by the Northridge quake in 1994. This time the illegal immigrant marches and the unusual spring fires are poor advertisements for L.A. real estate. I wish the prices would hurry up and fall there.
1) You can barely afford @ $500k.
Then what’s the issue? You can either afford something or you cannot.
2) You have a good job. Great. If the market declines to just 04 prices (which is clearly a possibility) you’ll save 40%. This could take two years or so but you have to make a choice; be “greedy” and buy what you cannot reasonably afford or be an adult and wait a few years.
3) If the market declines more than 40%…..your “good job” might be in jeopardy (due to a major recession) and all the savings you have might come in handy, no?
4) Hyperinflation might occur. A miracle might happen where your market might be the only market in the world not to deflate. The question is; what are you willing to bet on these two scenarios bailing you out?
It sure seems hard to see how waiting two years or so will put you at risk in some fashion. It seems pretty easy to see how much risk you’ll take buying property (much less a condo) right now, after the biggest bubble/fraud/lending fiascos of all time, has clearly peaked.
“Even banks that take possession of homes are holding out for unrealistic prices, she said.”
- This seems to be the case here in So Cal … there are quite a few foreclosures and the banks seem to be sitting on them. When they finally sell it will help reset the comp’s.
“Even banks that take possession of homes are holding out for unrealistic prices, she said.”
Of course they are. There are layers of risk. Sub-prime, Alt-A that can’t afford the houses they are in. That is just the first layer. The second layer is the people that can technically afford the house, but will walk as soon as they realize how much the prices have dropped.
The lenders need to keep that second group from figuring out how screwed they are, so they are being cautious on foreclosure executions and taking the properties back rather than dumping onto the market.
It can only last so long. They must be holding out for that FHA reform to allow them to refi all these potential losses onto the U.S. Treasury before the second layer of “pop” happens.
“The lenders need to keep that second group from figuring out how screwed they are,…”
Funny coincidence there… members of the REIC have a common mission with the Fed and the Treasury: Keeping GFs from realizing how screwed they are.
I used to see a dude in the parking lot at work with a new Excursion. 6 months later he had a new 5 series. I used to think he must be a bigwig or something. I recently found out he’s on a short-term contract earning about $20/hr. I checked the property records, sure enough he’s been refi’ing every 9 months, probably sucked out every last dime of equity and then some. Oh well, at least he was living large for awhile.
This is good
http://www.thestreet.com/newsanalysis/investing/10355550.html
And we’ll have fun, fun, fun until Big Daddy takes the cheap money away…
So…a return to real valuations (pre-cheap money) would also expose debt risk as displayed by interest rates. At some point you just gotta drop the hot stock and back away.
Wow, that explains a lot!Thanks for the post.
“‘It’s been their strategy of exiting the market; they finish out the subdivision then sell the homes for what they had to sell them for,’ he said.”
WOW, now this is a very confusing business strategy. I can see why the colorado builder’s couldn’t compete.
I need to write this down.
1) build a house
2) sell it for what a buyer will pay.
And this whole time I thought it was:
make sure you’re not “giving away” the home
1) build house
2) let flippers buy house. assume that they are all end users from hundreds of miles away
3) then compete with those flippers and the REO properties since they’re back on the market before you’re done building
4) strongarm your subcontractors to take paycuts on properties that have already been finished.
5) do lots of stock buybacks to burn through your cash… it will doom your company,but your options will be golden
6) accounting gimmicks to hide the fact you’re not doing well
7) file bk.
i’ll have to ponder which strategy works best long term.
“i’ll have to ponder which strategy works best long term”
Long-term? What country do you live in. In the U.S.A. it is “get yours while the gettin’ is good, then leave the mess for someone else to clean up.”
WOW. Just saw an add for a bond broker pushing Maricopa School District bonds. Since when has city govt. had to use commercials and pimps to push tax free bonds. And at 4.5%, tax free making it a 6%+ equiv yield.
Seems people aren’t too sure the city of Maripoca is going to be able to pay those bonds…
For those not from PHX, Maricopa was a “boom” town born out of the desert in 2003. The 2000 census put the population at 1000. However, when they incorporated in 2003, they claim a population of 5,000. Suposidly population soared to 20,000 last year, but I think that is mostly fake since it is all speculators.
It is WAY out in the desert. Like an hour from downtown.
1200 houses on the market, in a place that MAY have a population of 10,000.
How are they going to pay off school construction bonds? Answer: NOT!
Who in the Sam Hill lives out in Maricopa besides jackrabbits and tumbleweeds?
Here is a neat trick.
Go here:
http://maps.yahoo.com/;_ylc=X3oDMTExNmIycG51BF9TAzI3MTYxNDkEc2VjA2ZwLWJ1dHRvbgRzbGsDbGluaw–#mvt=s&q1=maricopa,%20az&trf=0&lon=-112.034283&lat=33.062126&mag=5
Zoom in one level.
1 picture from 2001, the other from 2005?
Darrell said: “Seems people aren’t too sure the city of Maripoca is going to be able to pay those bonds…”
The City didn’t issue the debt - the school district did. I don’t know the financial condition of the school district, but the city isn’t on the hook for the debt. Don’t confuse the two.
Maricopa will turn into a ghost town. I drove through there at night once while going to San Diego - it was pitch black, kind of creepy.
What happened to the speculators’ star? Maybe it ‘blowed’ up! From the Washington Post:
Astronomers have spotted a cataclysmic explosion that marked the death of a huge, distant star in a blast five times as bright and powerful as any they had seen previously. They said yesterday that a similar fate may be imminent for a star in Earth’s galactic neighborhood….
If that nearer star, named Eta Carinae, blows up like the one just discovered, they said, it could possibly spew dangerous radiation in Earth’s direction. More likely, however, it would erupt into the most luminous star in our sky — visible during the day and bright enough to let people read unaided at night for weeks and perhaps months.
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/07/AR2007050700752.html?hpid=sec-nation
Well.
Since the radiation that will kill us will be a big burst of gamma and X rays and traveling at the speed of light… Well, will know about it when its too late.
So, some astronomer will look up and say “Hey it looks like…. urk ack grg…”
Just hope you on the side it hits first. That way you don’t have sit around thinking about burning to death as the planet slowly turns twords the event.
Keep on the sunny side, always on the sunny side…
This Fiserv forecast says -8% overall next year… the MSM is starting to talk about it.
By the way,the largest drop on this list of 100 largest markets is… Las Vegas.
http://money.cnn.com/2007/04/09/real_estate/forecast.moneymag/index.htm
“New-home builders enticing buyers with incentives like free pools and discounted upgrades appeared to be one reason for the sluggish existing-home sales in April.”
Where is the water for all these new homes in Arizona, Nevada deserts? And now they are offering free pools? Make sure the water come with it, plus refill.
How could the states allow such things? Did they find new water source?
They are gowing into farmland. Houses use less water than farms.
I used to think pools used alot of water until I had one. They recycle all the water. Filling it is like 25.00. For a big pool. They DRAIN electricity, chemicals, and deteriorate and add liability and hassle to your life though, JOY!!!!!
Glad I sold that house!!!!!!
Yeah…
A boat is a hole in the water into which you pour money. A pool is water in a hole into which you pour money.
Drained my pool thinking I could do a replaster myself. A month with no filter dropped my elec bill about $30. Got wise and paid to have it replastered for $3500.
I bet the pool costs us $1000 a year, at least. But, we do use it enough to make it worth it.
The Butler did it…
“‘The new home has become a strong competitive and attractive alternative to the resale home in many areas of the market as new home builders have been aggressively pursuing buyers through incentives. The general expectation is that the 2007 resale housing market should be a good year, but no where near the records,’ said Jay Q. Butler, of Arizona State University. ‘This tends to assume that there are no negative geopolitical events and that the subprime problem is contained.’”
er, the delusional Butler did it…
“But the situation is not a disaster, Butler said. ‘It’s not a disaster market; it’s not a horrible market; it’s a fairly normal market.’ In fact, he added, for some it’s a good time to look for a deal.”
“Colorado would have probably recorded more foreclosures in the first quarter if mortgage companies weren’t so backed up and overwhelmed, said Zachary Urban, the foreclosure hotline’s supervisor.”
“‘They aren’t foreclosing on people, because they don’t have the resources,’ he said.”
I believe that: attorneys, collectors are all humming full steam and can’t keep up . . . also, I would bet many banks are cooking their books. They have to file quarterly “call reports”. If you time your foreclosures right, they won’t appear as bad on your mandatory FDIC reporting. If you raise red flags for the FDIC . . . C&D orders, memorandums, civil money penalties . . . not pretty. Talk about credit tightening!!
What did they spend all their free money from refi?
Bling Bling
Pimp my ride
Fat Wheels
65 inch Plasma tv
Want to watch something depressing? Go to Costco or Fry’s and watch the people blowing money on huge TVs they have to have , but really can’t afford. Will they take those away after going bankrupt? Man there will be a lot of Plasma’s on sale soon!
Most of em’ are gonna need plasma…
LOL, reminds me of ads I used to see in the 1970s, encouraging you to “sell your plasma”. Meant something different back then than it will this time.
In about 3 years, you are going to be able to buy a lot of 50 buck plasma TV…..waiting for digital televison to turn off analog in Feb. 13, 2009 and see what happens to advertising revenues and advertisers crapping in their pants when sales go down 25%.
May be an easy way to kill you TV finally.
I saw some clown in the check-out queue with TWO giant-ass flat-screen TVs on one of those flatbed carts at the Costco in Nashua NH (but hey there’s no sales tax in NH so I guess it’s OK). COST is up on a bloody-red day, too. Thanks clowns!
Chasing the Brass Monkey, Donna?
“‘I am not seeing the prices drop yet, and that’s surprising me. I think you will see it in six months and in December, they will be crying hard,’ Brass said. ‘The best deal ever will be in December. It will be the bargain of a lifetime.’”
Urban reality bites…
“Colorado would have probably recorded more foreclosures in the first quarter if mortgage companies weren’t so backed up and overwhelmed, said Zachary Urban, the foreclosure hotline’s supervisor.”
“‘They aren’t foreclosing on people, because they don’t have the resources,’ he said.”