It’s The New Reality Of Real Estate
It’s Friday desk clearing time for this blogger. “One million dollars will buy you a lot of real estate in Warren County, New York. Would you prefer to spend such money on a condominium in downtown Glens Falls? Yes, you read that right. Someone willing to spend that much usually gets a bonafide mansion for the money.”
“Glens Falls Realtor Ginny McBride asked a caller to repeat Levinsky’s top asking price two or three times. ‘You mean almost a million?’ she asked. ‘In Glens Falls?’”
“Pete Swaufield, executive officer at the Realtors Association of the Fox Valley (Illinois), said sales had ’slowed considerably.’ ‘Now, instead of sellers dealing with three bidders and 15 days on the market, sellers are looking at trying to find one bidder in 90 days,’ he said.”
“Swaufield noted that the market only appears slow relative to the robust sales racked up in 2005 and much of 2006. ‘I deal with agents who have never seen a down market,’ said Swaufield. ‘This is a cyclical market, and right now, we’re in a little bit of the down.’”
“Rosanne Lynch tried to sell her home, first listing with a Web-based For Sale By Owner program, and then listing with a real estate agent. She even cut the asking price.”
“But after six months and no offers, she opted to pull the house from the market. ‘I’ve got to decide what I want to do now,’ she said. ‘The market’s flat, and I don’t know what I can do about it.’”
“It’s the new reality of real estate. Mississippi leads the nation in the number of people behind on their house notes. Prices are being reduced in some cases and foreclosures are adding up. ‘We have a subprime market collapse.’ According to Quentin Whitwell, Executive Director of the Mississippi Mortgage Bankers Association. Whitwell adds, ‘It’’s painful, there is no doubt about it.’”
“According to Kelly Hogue, an auctioneer, ‘They tell me (realtors) they have so many listings they are out of signs.’”
“The marketing boss for Norway’s largest brokerage chain, told newspaper Dagens Næringsliv on Tuesday that it’s taking almost twice as long to sell properties now than it did in January. ‘Time on the market is a good indicator of how housing prices will develop,’ Rune Garborg of DnB NOR said.”
“Several flats in the popular Majorstuen district of Oslo have also been advertised repeatedly in recent weeks, clearly because they haven’t sold.”
“Housing loan defaults were rising, said bankers. This is because many borrowers, who buy houses as an investment, have started defaulting following the hikes in interest rates.”
“‘Mortgage default is rising for the category which borrows to fund a second home or buys property as an investment,’ said U.S. Bhargava, chief general manager, Punjab National Bank.”
“The fact that the property market in the province of Malaga is slowing down has already been backed up by a number of statistics. The President of the School of Real Estate Agents, Cayetano Rengel, pointed out that the slump in property sales is becoming more and more noticeable and that this affects the new properties more because there are more of them on the market.”
“Rengel points out that now the real estate boom, which defied logic with exorbitant prices, is over. ‘Foreign investment has stopped,’ Rengel explains.”
“Soaring house prices are driving public-sector professionals out of the city, say those in the know. ‘Pportable professionals’ are beginning to leave the province behind, and it’s a problem affecting portions of the public sector, said University of Calgary economist Frank Atkins.”
“‘It’s just pure economics, when things are hot in one area, people come here and it’s really great,, Atkins said. ‘Then it gets really expensive and some people cash in their chips and move to another region.’”
“Don’t look now, but a downtown condo project is in financial trouble. On Sunday, BankEast published a foreclosure notice in connection with a planned Commerce Lofts project.”
“Developer William Cole Smith, a East Tennessee State University graduate, said the condo market hasn’t softened and he could easily sell all of the Commerce units but has decided to go in a different direction. He gave few details but said that the building is ‘going to be a different type of project.’”
“The housing market in Cheyenne, the capital of Wyoming, took off during the real estate boom and is only now showing slight signs of slowing. ‘We have not had a down year for the past five years,” says agent Bill Lewis.”
“Recently, though, Lewis says, homes for sale have been staying on the market a little longer, and some sellers are having to cut their asking prices a bit.”
“The number of homes on the market at the end of April was up 17.6 percent compared to the year before. The Houston Association of Realtors attributes the increase to the time of the year, as more people list their homes for sale in spring. But if the for-sale inventory continues to rise faster than sales, it could push down prices.”
“Sixteen percent of the April home sales were properties that had been foreclosed on. They were up 87 percent over the previous April.”
“Miles Marks of Performance Realty expects the problem to worsen. He’s already seen his properties stay on the market longer. ‘The foreclosures are just going to go ballistic here in a while,’ he said.”
What a week! My sincere thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
Thank you, Ben, for keeping up the best site on the housing bubble!!!
It is greatly appreciated!
“It’s the new reality of real estate. Mississippi leads the nation in the number of people behind on their house notes. Prices are being reduced in some cases and foreclosures are adding up. ‘We have a subprime market collapse.’ According to Quentin Whitwell, Executive Director of the Mississippi Mortgage Bankers Association. Whitwell adds, ‘It’’s painful, there is no doubt about it.’”
Funny that subprime would have such a powerful effect on Mississippi. We just had a post here a couple of days ago (I believe I posted it) showing that California had an even higher percent of subprime lending in 2005 than Ol’ Miss. And yet our prices are remarkably resilient, at least if you go by the official numbers…
GS, I question the foreclosure accuracy for most states - not just California - there is evidence that the number one state in foreclosures is Louisiana, but it is excluded because of the hurricane Katrina relief measures. Florida areas hurt by hurricane Wilma are also excluded as are any areas receiving FEMA/DHS assistance.
mid may was 799,000
6/10/06 was 836,471
6/14/06 was 840,935
6/17/06 was 846,120
6/20/06 was 850,317
6/22/06 was 855,892
6/24/06 was 860,647
6/29/06 was 866,037
7/01/06 was 858,675
7/09/06 was 870,854
7/11/06 was 882,239
7/13/06 was 886,055
7/14/06 was 890,896
7/18/06 was 895,022
7/21/06 was 900,000
7/25/06 was 905,170
7/28/06 was 910,001
8/01/06 was 903,718
8/12/06 was 915,336
8/19/06 was 920,755
8/26/06 was 925,176
8/29/06 was 951,242
9/15/06 was 955,352
12/1/06 was 925,170
12/2/06 was 915,258
1/01/07 was 857,760
1/20/07 was 900,302
2/14/07 was 932,055
4/21/07 was 1,148,456
4/27/07 was 1,171,189
5/11/07 today 1,192,290
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
No way to compare todays numbers to last year since ZR might have picked up a few more states. At least they are going up for what it is worth.
Party on wayne, no bubble here , move along little fellow.Time for the feds to fire up the printing press and put more money into the bogus system.The crooks at goldman sachs want your money now.Stocks are cheap, buy now or miss out on the next ride to dow 20k. Where is all the money comeing from to fund the bogus war in iraq? Isn’t wartime supposed to be inflationary.You produce goods that really aren’t being consumed.No inflation, right on man.
“Where is all the money comeing from to fund the bogus war in iraq?”
That’d be coming from the same printing press used to create the dow 20K money you mentioned… unless it comes from one of the myriad other central banks around the globe that are printing away in a game of “beggar thy neighbor’s currency,” that is.
Some dare call it a sign o’ the times…
“According to Kelly Hogue, an auctioneer, ‘They tell me (realtors) they have so many listings they are out of signs.’”
The real estate sign market is the new bubble!
What about all those silly ass see me-dig me flags, that are a must, @ a new housing development, near you?
Funny they’re so busy. I put up a request on Homegain for a buyer’s agent with good knowledge of a particular housing development in the Anthem area of Henderson NV. I got 3 replies, 2 from agents more than 20 miles away - I’m not driving 20 miles or more in Vegas traffic for anything. The third, local to me, fit all the criteria, but insulted my intelligence by telling me the zip code I was looking for was wrong. Well, turns out he was wrong. You don’t tell a potential customer they are wrong over a triviality. I really couldn’t believe the hubris, and the fact he was wrong. Guess he didn’t need the money he’d have made. I doubt there are many people asking for buyer’s agents these days.
Probably time to sell….
Bank of America CEO Ken Lewis said he sees a new finance bubble bursting in the credit markets, which has been marked by low interest rates and lax lending standards.
“We are close to a time when we’ll look back and say we did some stupid things,” Lewis said of the lending business. “We need a little more sanity in a period in which everyone feels invincible and thinks this is different.”
http://biz.yahoo.com/bizj/070511/1461862...
Bad link….http://biz.yahoo.com/bizj/070511/1461862.html?.v=1
Ugh. http://biz.yahoo.com/bizj/070511/1461862.html?.v=1
The other day I got a credit card offer from Bank of America. I sent back the application (post-paid) explaining that since they market CCs to illegal aliens, they can forever count me out as a customer. Try it, it felt very satisfying.
Just a question - do you feel the same way when buying groceries?
“Rosanne Lynch tried to sell her home, first listing with a Web-based For Sale By Owner program, and then listing with a real estate agent. She even cut the asking price.”
“But after six months and no offers, she opted to pull the house from the market. ‘I’ve got to decide what I want to do now,’ she said. ‘The market’s flat, and I don’t know what I can do about it.’”
- Rose, I think that I know what you can do - REALLY cut your price.
“Rose, I think that I know what you can do - REALLY cut your price.”
Exactly. Rose is, like tens of thousands of other sellers, in extreme denial. We’ll see how long these types can last.
It doesn’t matter to me if I buy the house from Rose or I buy the house from the Bank. Either way I’m going to purchase at a serious discount.
Signed,
The Market
LOL.
Yup!
Her real estate professional is insisting that the house is priced fairly, but that there are no buyers out there. And so Rose relies on the opinion of the expert.
Or remove all her stuff and give the keys back…
Get out and give the property back to the true owner, please! Ownership is in the eye of the beholder for sure.
‘The marketing boss for DnB NOR Eiendom, Norway’s largest brokerage chain, told newspaper Dagens Næringsliv on Tuesday that it’s taking almost twice as long to sell properties now than it did in January.
Time on the market is a good indicator of how housing prices will develop,” Rune Garborg of DnB NOR said. “If the time increases, price rises will ease.”‘
It looks like the U.S. subprime contagion is spilling over all the way to Norway (or else the timing of this article is remarkably coincidental!).
Interesting how the Norwegian housing boss acknowledges that “price rises” will ease, without raising the possibility that prices will ease. I guess it is different there in Norway than in the U.S. of A.
Yep - Norway has a current account surplus in excess of 300B and little
of it in dollars.
“When great changes occur in history, when great principles are involved, as a rule the majority are wrong.”
Eugene V. Debs
“…little of it in dollars.”
Fish + oil = a good combination of tradeable goods when other countries are firing up the printing presses.
People who’ve been to Norway, say it’s the coolest country in the world. My aunt lives near there, on the Kola Peninsula. The only problem is there is no freaking sun for like 6 months, when they come to visit, they look like paper.
So I’ve got this friend who just relocated here (Chester County PA) from NC with her husband who works for SAP. They’ve been renting a townhome in a new development and sort of looking to buy, but they’ve been listening to me when I say “please wait.” But they have two little boys (preschool) and want to be able to buy in a school district soon.
But anyway they agree about the bubble and don’t really believe ChesCo is “different” but their landlord just told them he’s selling the townhouse because the HOA of this townhouse development has just voted “no renting.” He offered to sell the townhouse to them - $580K (good gravy!) but they don’t want to pay that, or honestly to live in this particular development/home. They don’t want to have to deal with HOAs either. They’re looking for a new rental but it sucks for them. It really does. It’s disruptive to their boys (two moves, now three, in less than a year!), she hates that there’s a lockbox on her house now (and people coming in and out), they can’t unpack for cripes’s sakes!
Anyway just ranting. $580K for a townhouse (end of row) in the Boro of West Chester, 3/2, a year old. That’s just crazy. He’ll never get that. But thanks to the HOA’s new rule they have to move anyway I guess.
Tons of houses on the market here in Chester County, that’s for sure, and a huge inventory of new or nearly-new housing. Should get interesting, very soon. And everyone I know is already stretched to the limit.
Honestly, if that’s their biggest worry, they are doing pretty good. I certainly wouldn’t feel bad for them.
If it is a rental, no way should there be people walking through looking to buy. Renters have rights, and one of them is that the owner need permission to enter.
“No renting”?? Are they trying to drive their prices down by 50%, or is this arse just trying to preasure them into buying while looking to cut short a lease?
If the owner really doesn’t want to sell, they can get a lawyer to work a “sale” of sorts that looks an awful lot like a lease.
L sells to T ’subject to’ the existing mortgage; L finances the sale with a wraparound mortgage -payments to L are set at (conveniently) about the amount of a monthly rent; L holds an option to repurchase the house at the end of a fixed term in exchange for forgiving T’s debt to L on the balance of the house; L agrees to pay taxes, ins., HOA until the option expires; the deal is extendable.
Basically game the system and tell the HOA to go twist; blow their money on lawyers and sue if they don’t like it. They’ll lose. I hate HOA’s anyway. Nothing but an excuse for the oldfashioned neighborhood busibodies to conduct their meddling under the venier of legitimacy, and having far too much power, money, and time. Nothing but trouble comes from too much of those three together.
Don’t get me started about HOA’s. Builders use them to screw their buyers one last time before leaving; like signing long-term sweetheart contracts for maintenance or landscaping with a company owned by the builder or his cousin, right before turning the HOA over to the resident-elected board. I living (renting, thankfully) in Columbia, MD, a privately incorporated city which is basically an HOA on steroids. I wouldn’t have bought there with somebody else’s money (but then again, aren’t all the FB’s really just spending someone else’s money?).
Have a good weekend, everybody.
-Moose
I’m with you moose
I believe Satan came up with these HOA’s. They can be HELL on Earth. I like to put up a few Christmas Lights you can SEE from the Space Shuttle. Don’t EVEN get me started about Halloween.
Hey!…Screw those HOA’s…I AM ALIVE and KICKING and I enjoy kids, pumpkins and bright shiney OBJECTS !
Whenever I drive through an HOA McNeighborhood and see the soulless cookie-cutter houses, I think of _The Truman Show_ and
the book _Do Androids Dream of Electric Sheep_.
And I wonder how often the adults have to change the batteries in their children and pets.
“I hate HOA’s anyway. Nothing but an excuse for the oldfashioned neighborhood busibodies to conduct their meddling under the venier of legitimacy, and having far too much power, money, and time. Nothing but trouble comes from too much of those three together.”
We must have been separated at birth. I couldn’t have said it better myself. I will NEVER buy a home with HOA dues.
Everyone cares too much about property values and do not want to risk loseing money. sSouless, pathetic existence and this is called happiness?
Well, I don’t know, the outside world could say the same of US HERE … we care very much about property prices (wanting them to decline) and we do not want to risk losing money. Many of us might be happier in our own homes, but market forces keep us renting.
“Many of us might be happier in our own homes, but market forces keep us renting.”
Maybe I am being hopelessly idealistic here, but in my opinion, buying a home should not feel like pulling the handle on a Las Vegas slot machine.
Just one minor change. If I’m T in this equation, then I want to have a put option back to L (either instead of or in addition to L having a repurchase option). Since T is really only interested in renting, T needs a way to make sure that T can unwind the sale instead of having to rely on L to exercise the repurchase option.
Amen! I have a masters in Fine Art, BA is design, another art history, and some blue-haired b!tch wants to tell me that my trim color clashes with her azaelias or that my house color is not historically accurate and yet some cheap-assed taiwainese faux-tuscan concrete lawn ornament she has prominently displayed in her frontyard is in keeping with her mid-century residential moderne home? OMG don’t get me started >; )
**copied from my regular blog Sacramento Landing but one of my better rants
hahahahaha
really no artist should ever subject themself to the HOA chain gang. I started out by looking in condo developments because that was all I could afford. Now that prices are dropping, I’ll probably be able to buy a small home on a little lot with no intrusive rules to observe. (really, isn’t the Township Code enough?)
And I like to hang my wash out to dry in the summertime. HOAs do not allow.
Purple doors rule!
Slim here. I spent a good part of my growing up years in Chesco. This was during the 1960s and early 1970s. As in, before the money bomb fell on the county. (Translation: Chesco was discovered by affluent people. Along with those who like to give the appearance of being affluent.)
After that happened, the prices of everything went up, and this includes townhouses in West Chester, a town that my mother still avoids, even though it’s only three miles from home. Reason for Mom’s WC avoidance: It was such a sh—hole for a long time. And in PA, bad reputations linger for decades.
So, I’ll agree with you. More than half a mill for a WC townhouse is too much.
This is comical. I was at my 45th H.S. reunion last weekend near Phila, and one of my classmates tried to sell me … a $500K townhouse in West Chester ! I admit I had expressed an intention of spending next winter in Chester County, but I plan to rent my cousin’s house while he and his wife are in Fla.
The townhouse situation here in Chester county is riduculous.
In the west chester area school district ( I track everything by school district) there are presently 101 townhouses for sale in the 300-500 thousand range. In Downingtown schools in the same price range there are 35 Townhouses for sale.
The only thing that is moving here are the houses that are priced lower than the comps. Those houses sell in days….everything elses sits.
And West Chester the town in getting a Starbucks so they can put the little mom and pop coffee shop directly across the street from it out of business.
I never venture out on the weekends around here because it so overcrowded and the people are rude to down right mean.
I don’t know what the laws are in Pennslyvania but I’m guessing you have some kind of rights as a renter. In Cali they have to give 24 hours notice, come during business hours(that’s 9 to 5 and NO weekends) and the realtor has to give you their card. If they haven’t given the renter 60 days notice of intent to sell the 24 hours notice has to be IN WRITING too. You do not have to allow a lockbox either.
The house I was living in was put on the market and there was no damn way I would have let anyone put a lockbox on a house I was living in. People would try to come in the house off the street. They came hours after they said they’d be there. I didn’t let their rude @sses in either. When my phone got accidently shut off early they even tried to come in when I wasn’t home and my teenage daughter was in the shower!!
The HOA where I rent just voted for the same exact thing. Luckily, they’re grandfathering in the clause so that current renters can stay indefinitely but cannot be replaced by new tenants.
Since this new rules is in place, I have considered using this as a bargaining chip with my landlord. Since he can’t rent it out to another tenants, I thought about forcing him to reduce my rent. However, since I really like the guy and he’s currently renting to me slightly below market, I decided to simply accept the same rent when my lease comes up for renewal.
That being said, I really can’t understand this move by the HOA in my townhouses. They said this rule was implemented to “protect property values.” As the new rental rule kicks in, the current landlords will be forced to put their units as their tenants leave. Right now, around 10% of the units are on the market. It will only get worse as the market is further flooded by landlords who lose their tenants and have no other choice but to sell.
At the same time, the new rule has eliminated investors from considering these townhomes since they don’t have the option of renting out their investment.
Thus, in the effort to “protect property values,” the HOA has effectively increased the supply while simultaneously decreasing the demand. I guess all the members or the HOA missed the day when they taught simple supply and demand curves in ECON101.
Freakin’ morons. Oh well.
Glens Falls is one of those towns that lately was doing anything and everything to get people to move there. All kinds of schemes to attract artists (a sure sign that an area is in a severe economic downturn), auctioning off properties for a couple thousand in back taxes, etc.
This RE bubble has produced pure lunacy in all participants. It’s very distressing to think somebody would put a condo on the market in Glens Falls for 200 K, let alone a million. Something is seriously wrong here.
The local realtor thinks this seller is nuts and so do I. This has got to be an example of an ignorant out of towner thinikng “this condo would be worth 3 million in San Fancisco or NYC, so a million is a steal.
For anyone from the area, when the heck did they build these condos in Glens Falls? The whole thing is very hard to picture.
The realtor had to ask this seller to repeat this asking price over a few times. And I had to go back and re-read that paragraph several times to make sure I’d read it correctly.
Who ARE these people? The only thing I can figure out is they’re really young (20’s), really foolish would-be flippers from far far away.
Maybe they’re going to “shadow buy” the top untis from themselvs, just to jack up the perceived value.
Hey, buy this condo for $200K. That is 1/5th the price the one 4 floors above it sold for…..
You know, flipping their own properties to themselves to create bloated comps.
I’m a native of Glens Falls and I can tell you SeattlePriceDrop is exactly right. What’s even more hilarious is the developer, Bruce Levinsky went bankrupt in the 90’s when he floated his pipe dream condo’s next to Saratoga performing arts center. Whats worse? His new pipedream is going up on South Street, the worst place in downtown Glensfalls.
Know Saratoga pretty darn well and was just in Glen’s Falls… There’s simply no way that area can support those dollars. There’s very little in SS and NOTHING in GF. Go 5 minutes outside either of those towns and it gets really scary really fast. Also, Bruce’s statement about 950k condos in Saratoga is not true either.
It was all about marketing to speculator and traveling equity locust or rich baby boomers from other states retiring . It was all about creating markets where they never existed before . It was all about convincing locals to speculate on liar loans to sell to cash-out buyers from other states ( based on the baby boomer myths ) .It was all about people investing in second homes or third homes in the new best places to invest in the United States.
What do you think are those real estate seminars were all about . Remember how they use to bring the investors in on the buses to buy out tracts in Florida .Remember how the MSM use to publish the next hot real estate place to invest where real estate was underpriced . Even Yuma Arizona got a run-up . It was never really about jobs in those areas or the normal factors that would cause people to go to areas ,it was all about investment potential .
True…and now we’ve come to the point that EVERY SINGLE AD for real estate (be it print, radio, TV) touting the “investment potential” of a property. I remember when houses were marketed as a place to live.
Come to think of it, I remember when houses were marketed that way too.
“EVERY SINGLE AD”
This fact alone shows that most of the REIC has yet to leave the post-bubble denial stage at this point.
“Remember how the MSM use to publish the next hot real estate place to invest where real estate was underpriced .”
I don’t have to work very hard to remember that, since a feature from the WSJ Online is on the Yahoo Finance weekend page right now doing exactly that. Turns out the next hot place is Charlotte.
http://finance.yahoo.com/retirement/article/103016/Where-Home-Prices-Are-Hot-Now
“It was never really about jobs in those areas or the normal factors that would cause people to go to areas ,it was all about investment potential.”
Why is it that people are unable to realize that home prices HAVE to reflect what local wages afford over the long term? This stuff just gets wackier every day. The guy’s building $1million condos in an area like that? Don’t these wannabes see what’s happening in Reno, Boise, Vegas, FL, etc.? It appears as if their development and marketing strategy is based entirely upon hopes and dreams. Unreal.
So, sis-in-law to-be and her hubby have changed plans.
Recap: Bought in 2001 for $143K fixed. Cashout-refi in 2003 to $167K, paid off all credit cards (ARM with pre-pay penalty). 2005, credit cards maxxed, so bankruptcy just before the law changed. Month later, cash-out refi ARM to $219K.
Fall 2006 cash-out refi to $243K to again pay off cards, and fix the house up to sell, because they are moving to Dallas. BUT, this 8-14% interest only ARM has an $8K prepay penalty if she pays it off in the first 2 years… Repaint, new kitchen counters, some landscaping, replace carpet in a couple rooms, etc. Winter 2006, listed for $309K.
Me says “NO F’n WAY”. That is $198 sq/ft. Prices in her hood have slipped from $180 per a year ago, to $160 per 3 months before she listed, and NOTHING sold in the last 3 months despite a dozen on the market in the $150-160 per sq/ft range. I’m assured I don’t know what I’m talking about.
After 4 months on the market and nothing, she calls in some realtors. Highest guess is that it could be listed for $280K….but she may need to consider lowere offers. If she goes to $260K, she can’t even cover realtor fees and pre-pay penalty.
So, last week she gets the job in Dallas she’d been interviewing for. Announces she’s moving into an apartment there while the ex. stays here to sell. What? The place isn’t even listed in MLS! I’ve been watching an waiting because I wasn’t even sure I believed them that they found somone that would list at $280K.
How the heck are they paying rent AND a house payment when it is clear they can’t live within their means with what was originally a much lower house payment?
Anyway, now she says they’ve decided they don’t want to move to Dallas after all. Sure, she had this great job offer, and they even had an offer on the house. But “some other stuff” came up.
Donky dung…. They SO didn’t have an offer in the house. At least not one that would let them sell without having to take their checkbook to closing.
So, they can sit in the house until Oct 2008, when their interest rate jumps form 8% to 11.5%. Then they’ll be another foreclosure stat…
Let me get this straight…
They had a mortgage of $167K and some credit card debt which caused them to file BK in 2005.
**After** they file BK, they are able to refi again A MONTH LATER?!?!?! AND they have cards (which they could max out again by 2006) AND were able to refi again in 2006???
Is that honestly possible? If so, it’s no wonder we’re not getting anywhere. No way responsible people can keep up with that.
Are we all wrong here? I’ve seen this stuff with our friends & relatives as well (but not quite as bad).
Seems there aren’t any consequences for theft.
Some have mentioned it before, and I have to agree that it doesn’t seem just: if you steal a $5,000 car, or smoke some dope (not advocating this), the consequences are far, far worse than if you “steal” hundreds of thousands of dollars from lenders.
Not sure that’s how it should be.
While the behaviour of the lenders may seem bizarre, remember there is (or at least was) a minimum period after bankruptcy when you couldn’t declare again.
While lenders may take a hit as well, it seems to me this merry couple could be in a world of financial hurt for the next few years.
Okay, I just took the time to go read the whole article. It’s pretty funny (and sad too). It’s from the Albany Times Union which is one of the better local papers in the country. The title is: “950K Condos a Leap of Faith in Glens Falls”. That’s the funny part.
The sad part is: These condos are in the process of being built by out of town developers (big surprise). And the developers are shafting their local contractors by not paying them for work already done. This is happening all over upstate NY.
Same thing is happening in Troy, NY as we speak. Out of town developer comes in to super depressed and dilapidated area “with potential” (read: near the Hudson, Saratoga, Adirondacks). Convinces the politicians that that area is the next up and coming thing for the well-heeled so they can quit their “attract the artists” agenda and go directly for the big bucks.
These towns are very poor, in fact, they have a “third world ” feel to them. Frankly, I think they’d build a better foundation by sticking with the starving artist plan. But the pols get stars in their eyes and let these guys start their silly projects. They hire local contractors and then , very early on, quit paying them. They then proceed to alienate every other person in town from the clerk at the grocery store to the coffee shop waitress with their arrogance, corruption and sleaziness.
In the begining, a lot of locals look at these big wig out of towners as saviors. Within a year, everyone hates their guts.
This is feature length movie material.
I don’t know if this was already posted. On Yahoo’s front page.
http://promo.realestate.yahoo.com/Americas_Most_Overpriced_Real_Estate_Markets.html
“Glens Falls Realtor Ginny McBride asked a caller to repeat Levinsky’s top asking price two or three times. ‘You mean almost a million?’ she asked. ‘In Glens Falls?’”
The following remains my greatest bubble story and the most frightening moment I might have ever had. I won’t go into too much detail. We were talking to some clients and they told us how they had a few townhouses on the market for $600,000. This is up past Westchester County. Somebody said, “those must be really nice”. The woman replied, “not really. They are more for lower income families.” NYCityBoy almost swallowed his Adam’s Apple. A chill went down my spine.
A low income family with $200K a year income?
Would they like to adopt me?
“not really. They are more for lower income families.”
The world went mad about 4 years ago, and now the last of the lunatics are running the asylum.
Note the juxtaposition:
1. Unreality in Glens Falls: “Glens Falls Realtor Ginny McBride asked a caller to repeat Levinsky’s top asking price two or three times. ‘You mean almost a million?’ she asked. ‘In Glens Falls?’”
2. But reality bites in Illinois: “Pete Swaufield, executive officer at the Realtors Association of the Fox Valley (Illinois), said sales had ’slowed considerably.’ ‘Now, instead of sellers dealing with three bidders and 15 days on the market, sellers are looking at trying to find one bidder in 90 days,’ he said.”
Yes, but she’s obviously insane. You can get a single family in scarsdale for $600,000 these days. (Admittedly not on a huge lot, and probably not in the best condition, but still…).
And anything north of westchester is rapidly becoming worthless.
God bless the subprime loan. Clearly, this whole mania was based on a foundation of subprime garbage. Now it will all sink back into the dump.
Back to the FH — Back to the FH –
Back to the F-H-H-A…
Yeah for San Diego… They’re #1!!!!
http://promo.realestate.yahoo.com/Americas_Most_Overpriced_Real_Estate_Markets.html
“Take San Diego. A slumping housing market, where only 5% of residents can afford the median home, and a high price-to-earnings ratio made the oceanfront city our most overpriced real estate market.”
“The usual suspects littered our list: Miami came in second, followed in order by: Sacramento, Calif.; San Francisco; Washington, D.C.; Honolulu; New York; Los Angeles; and Boston. San Jose, Calif., rounded out the top 10.”
“…, where only 5% of residents can afford the median home, and a high price-to-earnings ratio made the oceanfront city our most overpriced real estate market.”
Wait a minute — haven’t they heard of the newfangled CAR affordability methodology, which pushes it up into the 20%+ range?
‘Behind The Numbers
Using the 40 largest metro areas, we started by estimating a “price-to-earnings” ratio for each market. (Like the P/E of a stock, this value attempts to measure the price a homeowner would pay for one dollar of return.) Using data from the National Association of Realtors (NAR), the U.S. Census Bureau and the Office of Federal Housing Enterprise Oversight, we took each market’s median home price and divided it by annual rents minus taxes and insurance for those properties. (We assumed for this exercise that other costs don’t vary drastically from city to city.)
The average P/E for the 40 markets is 28. Note: Unlike, say, the S&P 500 index of stocks, ours is not a weighted-average P/E. If it were, certain cities with greater overall sheer market value would carry more weight.’
I can’t find the P/E for San Diego anywhere in the story. Did it come out negative? This is conceivable — imagine an $800K McMansion purchased with 100% financing renting out for $3K/mo. With 1% property tax plus an ARM at 5% interest, that would knock the FB back to $3K - 6% X $800K/12 = -$1K/mo. And then there are insurance and maintenance, not to mention negative equity appreciation to factor in — what a PITI.
If it were cash-flow-negative, then I guess the P/E ratio would be negative, right?
No. I think they’re looking at it from the PoV of someone paying cash, like you would with a stock.
If you bought it for $800K and it would rent for $4000 a month, with insurance of $2500 a year, and property tax of $10000 a year, then:
800000/(48000-2500-10000) = 800000/35500 = 22.
You’d have to rent for 22 years to make back the cost of the house.
Since the average of these markets is 28, and San Diego is the highest of these, then clearly my numbers for San Diego aren’t right. Maybe that house only rents for $3000 a month.
800000/(36000-2500-10000) = 800000/23500 = 34.
Probably closer to reality.
IF they counted the costs of renting that money, just about everyone in the country would be upside down.
For Phoenix, it would be something like:
(255000/(18000-1200-2000) = 255000/14800 = 17
http://finance.yahoo.com/retirement/article/103016/Where-Home-Prices-Are-Hot-Now
“Portland, Ore., Boise, Idaho, Seattle, Salt Lake City, Houston, Austin, and Charlotte and Raleigh, N.C., are among the cities bucking the national trend. Homes’ appreciation there between the fourth quarters of 2005 and 2006 far exceeded the national average of 5.9%, according to the Office of Federal Housing Enterprise Oversight. In some markets, like Boise and Seattle, the appreciation jumped well into the double digits.”
COMPARING 5 month old data to 17 month old data? COME ON!!!!!!!!
They left out a few dozen cities….
http://promo.realestate.yahoo.com/Americas_Most_Overpriced_Real_Estate_Markets.html
I’ve missed you “clearing your desk”!!!! I’ve missed the blog. I see things are full steam ahead…. woohoo. I want to say hi. I had some priorities to tend to and had no “free time”. So have you had a party without me? I hope not. Defaults in the OC are going up up up. Realtors I know are lost trying to figure out what to do.
Glad to see you all are still here
Welcome back.
And defaults in OC are going to continue going up, up, up, what with all of the resets and layoffs of mortgage folks here (Lending Tree, Impac, New Century, Fremont, etc.). It’s been quite the party for us lately; the FBs partied over the past several years and they are definitely feeling the hangover now.
Hi Melody . The whole drama is playing out exactly like many predicted it would .
Melody, you’re the designated party planner — the big SoCal event won’t happen without you!
Hi, Melody!
We missed you! Let’s get the party started!
I believe there’s a Socal Blog party being planned at Patrick’s for 7/7/07 as we speak.
Just sayin’ …
(And no, I won’t be at it. That’s an 18-hour flight for me. :()
Thanks for the info, ajh. It’s difficult to keep up with everything these days. So many posts!!
If we go, we’ll have a drink for you!
200K is low income in the 5 boros, no doubt, where fixer-uppers in the hood will run you about 2 mil. Because it’s different here … the kool-aid is gushing through the taps.
‘The foreclosures are just going to go ballistic here in a while,’ he said.”
——————————————–
Japan style deflation is coming….
It’s far too late to think along those lines…
This ship has sailed.
But what does that mean? Does that mean my dollar bills will still have value, or even more value, two years from now? Or will I be scrounging the garbage cans in Grand Central for my lunch (saw guys doing that the other day. It was pretty disgusting.)?
This talk of deflation confuses me even more than the talk of inflation. How does this all play out?
If the Fed succeeds in nothing else whatever, they will have wildly succeeded these last few years in sowing confusion.
What’s so confusing about it?
Inflation means things get more expensive.
Deflation means things get cheaper.
Now of course it’s entirely possible, and indeed commonplace, that some things get more expensive at the same time other things get cheaper. Indeed, we are quite likely to see asset deflation (i.e. houses) combined with consumer price inflation (gas, food, etc) in the near future.
GS is referring to the fact that we are screwed either way, and yet the Fed is making sure we cannot make adequate preparations (get out of or into the $$$).
On one hand, if things are left to run their course, we’d likely experience deflation, which is good for us savers/dollar holders.
On the other hand, the world’s central banks might decide (likely have) that they do NOT want deflation, and they will print like mad — thus the “War on Savers” GS often refers to.
GS is right, but I think the course is becoming more brightly lit. Inflation here & more to come, it seems. Get out of those dollars. (???)
“making sure we cannot make adequate preparations”
The only sure preparation is to get as rich as the top 0.5% of the U.S. wealth distribution. Then a little paper gain or loss here or there matters not in the least.
“Indeed, we are quite likely to see asset deflation (i.e. houses) combined with consumer price inflation (gas, food, etc) in the near future.”
The confusing part is figuring out at what point Bernanke will feel like his hand is forced and he has to pull a Volcker, and sacrifice J6P to sky high interest rates in order to save the dollar. And it is also confusing to imagine how L-T Treasury yields can stay so low and stock prices can keep going up-up-up-and-away under conditions that favor high inflation. Isn’t there normally a risk premium on L-T Treasuries when inflation is ramping up?
My guess is that BB is balancing recession fears against inflation fears, with perhaps a bit of bond and stock market price stabilization thrown in to make sure all the angels can keep dancing on the head of the pin. Something is definitely different now than in the 1970s and 1980s, when inflation fears brought high T-bond risk premiums and interest rates.
Well, my prediction last year was that BB would hold the rates until the end of the year and than move up slowly .
England just raised their rates didn’t they ?
BB can get away with not doing anything for a little longer than he will have to act . My bet is that he will raise the fed rate because it’s the lessor of the two evils .
Bring it. Do you take…..CASH?
“The number of homes on the market at the end of April was up 17.6% compared to the year before. The Houston Association of Realtors attributes the increase to the time of year, as more people list their homes for sale in the spring.”
How unfortunate that April of 2007 came at a different time of year, as compared with April of 2006.
Nice snark, lol.
“Developer William Cole Smith, a East Tennessee State University graduate, said the condo market hasn’t softened and he could easily sell all of the Commerce units but has decided to go in a different direction. …”
Hmmm, it appears East Tennessee State either graduates dumb asses or bold face liars (or maybe both).
I think “ETSU graduate” says it all…
“Sixteen percent of the April home sales (in Houston) were properties that had been foreclosed on. They were up 87 percent over the previous April.”
Yep. They are growing like weeds. The signs sprouted up in the past 6-8 weeks. They aren’t found so much in the older neighborhoods. They are contained so far in the new subdivisions where people bought within the past 2-3 years. I think I’ll bring my camera along when I go for my ride tomorrow morning.
Wow, look at the price paid in 2005:
http://ventura.craigslist.org/rfs/324454928.html
Still overpriced, IMO.
Even on a beach, there’s no way in hell that I’d fork over $486K for a condo.
a bit off topic for this post, but I thought you guys might find this observation valuable, and perhaps would like to comment on it.
It has been disclosed in the biography of the current Governor of California that he made his initial big money investing in Real Estate after the big real estate bust after the big earthquake in 1971(approx).
I wonder what he thinks about the current state of real estate prices in California.
That’s not particularly off-topic, and I could imagine Ben using that snippet in one of his California threads.
It means the top politician in the state has personal experience of a really soft Real Estate market. Hmmmmmm, that could have all sorts of implications going forward. (Think possible legislation, a-la Massachusetts/Ohio/etc.)
(Think possible legislation, a-la Massachusetts/Ohio/etc.)
Please clarify what legislation you refer to. Thanks
A million $$$ in Glens Falls? The whole town isn’t worth that. No wonder these small towns get sick of the big cities invading them. Back in 2000 I think many of the small towns around the USA maybe had an average price of 50K - 100K. Even here in the Siouxland you could get a GOOD house for around 100K. These people buying these condos and houses and shacks for a Million are going to get burned big time, and I don’t think they’ll ever recover. Multiply this by millions and you see why we’re worried. Who’s going to buy this stuff? Certainly not me or anyone else. I suppose they could empty the prisons and fill these houses with their ilk if they don’t open the borders for more illegals to come in. And to boot, Glens Falls is a tired old rust belt city not too dissimilar from Buffalo or Syracuse. The only city in upstate NY worth anything is probably Saratoga Springs, and only because it’s a resort town. Even so, those houses are badly overpriced.
I shudder to think of what they’re doing in the more bubblier areas….