Post Local Market Observations Here!
What do you see in your housing market this holiday weekend? A confession? “Realtors had to temper their sunny market optimism this year. Former NAR head economist David Lereah was often heavily criticized for claiming that the housing bubble did not exist and there was no danger in extending loans into the subprime market. But in an interview he conducted before stepping down, Lereah gave a much gloomier assessment of the market.”
“‘We’re in a real estate recession,’ Lereah said. ‘We’re all partly guilty. But the lenders and the speculators, they had the most in it. Making zero down payments with no documentation, that’s just irresponsible. But the Realtor, the lender, the title attorney, they all got wrapped up in the frenetic pace of the boom.’”
Construction statistics? “In the first four months of the year, housing starts in the East Bay declined sharply, the California Building Industry Association said Friday. Multifamily housing starts stood at 817, a 40.5 percent decline from the same time a year ago. San Joaquin County had 29 multifamily housing starts, a 78.7 percent decrease from the same time ago, while single-family home starts stood at 935, a 29.5 percent decrease.”
Or foreclosures? “Hays County properties scheduled for foreclosure auction are expected to be 35 percent higher this June than a year ago. The increase over June 2006 was the greatest in the nine Central Texas counties the FLS tracks, agency spokeswoman Bonnie Brown said.”
“The number of home foreclosures in metro Atlanta has risen 200 percent since 2000, in part because of an increase in the use of high-interest, sub-prime mortgage loans, the Atlanta Regional Commission said this week.”
“Despite the number of homes in foreclosure, housing development continues to rise in both Henry and Clayton counties. In 2000 Clayton County had roughly 86,000 housing units, according to Equity Depot, and in 2006 there were nearly 105,000 units.”
“Henry County had about 43,000 homes in 2000 and in 2006 there were nearly 68,000.”
“When the subject of foreclosure arises, Lincoln Park isn’t usually the first neighborhood conjured up. But even that vibrant Chicago community is not safe from the dark cloud in the housing industry.”
“In the 2007 results, 11 neighborhoods, including Lincoln Park, where foreclosures have doubled, showed triple-digit percentage increases in the number of foreclosure actions taken against homeowners. They include a 167 percent rise in Mt. Greenwood and a 120 percent boost in Irving Park, says Record Information Services Inc.”
“The highest number of foreclosures for the first four months came in West Englewood, up 77 percent to 259.”
“‘Our phone is ringing off the hook,’ said Michael van Zalingen, director of a non-profit that arranges financing and offers counseling.”
Building trends? “Are McMansions McOver? If recent trends are any indication, the bigger-is-better approach to residential real estate may already be giving way to a more reasoned level-headedness.”
“A historic confluence of factors drove America on a cattle stampede to invest in real estate. Today more and larger forces have now slowed the market to a surly teenager’s stroll.”
“‘I firmly believe that when the housing market slows, you’ll see a short-term drop in the demand for large homes. But in the longer run, it’s going to be even more challenging to sell these because the average household size of the boomers is going to go down as the last kids leave,’ says housing consultant Thomas Lawler.”
“Meaning the inventory of McMansions is likely to grow. And grow. And grow. Could we one day see a landscape with large white elephants lingering on the market?”
“‘I find it difficult to see how we won’t,’ Lawler says.”
“‘We’re in a real estate recession,’ Lereah said. ‘We’re all partly guilty. But the lenders and the speculators, they had the most in it. Making zero down payments with no documentation, that’s just irresponsible. But the Realtor, the lender, the title attorney, they all got wrapped up in the frenetic pace of the boom.’”
Nice try, Pontius Pilate, but you ain’t washing your hands of this one.
Morning-after hangovers really svck, especially when you open your eyes and notice who you went to bed with…
I said I would not post a update until June but things are changing rapidly IMO so I am a few days early….
Santa Clara, Ca. (Silicon Valley)……
Last time I posted regarding this (March) I suggested that our market had turned..Prices were fairly firm but more inventory comming on and taking longer to sell….Two months later we now have inventory as high as I have seen it in two years (120)…This is still historicaly low but the trend is “Crystal Clear”….Also, all the new home builders are listing there product on the MLS, something they typically don’t do so the inventory number is higher than the indicated numbers because they only put one unit on the MLS but the development may have 100….Pricing is still relatively firm but given the incentives offered (Upgrades, Buy Downs etc.) the effective sales prices should be considered in a downward trend although subtle…
Next update; August….
“… something they typically don’t do so the inventory number is higher than the indicated numbers because they only put one unit on the MLS but the development may have 100…”
That is the situation for 92127 in a nut shell. We only see 260 SFRs currently on the ziprealty.com MLS listings, but I can assure you the actual number of new SFRs either ready for occupancy or soon to be completed is on the order of 1000, all wistfully priced in the $1m+ range (I guess we are talking about $1b or so in additional inventory hidden away from view like an elephant under the living room rug).
Anyone who can truly afford a 1M house is not going to wander into a unoccupied 1,000 home development and exclaim “Eureka, we’re home!”. These will NOT sell, at least not at that pricing. They are just wasting their time until they chop at least 30% off the price and even then I don’t think they’ll move many. IMO.
For 2+ years he was a cheerleader, as Kevin Bacon said “All is well!”…..and now this. What a piece of work.
Leary is proof that there is no god. For if god existed, Leary would have been struck down by lightning, twice.
No, it’s proof that we have a patient God, and a God of grace. So much so, that we some times forget he is also a God of justice!
Let’s keep the ridiculous notion of God, any God, off this blog please.
Yes, we only worship money and schadenfraude on this blog…right Sammy?
Dukes, Nice to see you spell God with a capital “G”!
Update for my situation:
In december 2006, my family (wife, son and 1 on the way) closed on a house in Glastonbury, CT relocating from Stamford, CT. We were in 1190 sf condo in Stamford and moved to a 3300 sf 10-year old home in Glastonbury. We needed the space with the new baby coming along and at 38 years old decided to make the move. We just closed on the sale of the condo last week for $362,000 for which my wife paid $113,000 in 1993. Had to stop looking at $1,000,000 dumps in Fairfield County.
Update for my situation:
In december 2006, my family (wife, son and 1 on the way) closed on a house in Glastonbury, CT relocating from Stamford, CT. We were in 1190 sf condo in Stamford and moved to a 3300 sf 10-year old home in Glastonbury. We needed the space with the new baby coming along and at 38 years old decided to make the move. We just closed on the sale of the condo last week for $362,000 for which my wife paid $113,000 in 1993. Had to stop looking at $1,000,000 dumps in Fairfield County.
Congratulations on the sale AND the new baby!
I live Downtown Orlando, Florida. Lots of lakes, parks and great schools. There is a mini boom here, where I live, in a three block area of the city. New office building with a Restaurant and a Sushi Bar just opened across the street, new 30 story twin towers (condos, grocery store, etc) just broke ground next door and another office building, Boutique low rise with pent houses on top will start construction in 12 months. Prices in my condo conversion (310 units) are flat and the units are selling because 1/2 a mile in either direction add $150,000.00 to the price. Very interesting anomalies, I reckon. Time will be telling.
Check if the office building is occupied.
See what kind of people is moving in, what kind of job, income …
Follow up on the sale, are they lowering price and adding incentives?
Lereah says that “we’re all partly guilty”. I say don’t blame me, scumbag.
The NAR hired this guy to represent them, and encouraged him to B.S the public about the phony real estate market. He encouraged home sellers to lie to buyers about the phony market. He encouraged people to look at houses as speculative investments instead of homes where you lived, raised kids and slept in peace.
Lereah and the Realtors he represented are the worst kind of operators, pimping a basic necessity of life, housing.
Lereah says that “we’re all partly guilty”.
I’m not guilty, I am one of your victims.
‘We’re all partly guilty’, my ass. I sold my house in 2003, after a 50% run-up in the four years that I’d owned it, thinking the irrational exuberance was about to come to a screeching halt. Since then I’d been warning everyone who would listen that we were in a housing bubble. There’s a core group on this blog, of whom I’m proud to count myself one, who saw what was coming down the pike and were the proverbial “voices in the wilderness” back in 2004 [when we still had some actual Kool-Aid drinkers who were regular posters, like LV Landlord]. As this train wreck unfolds, the main villains of the piece - much like the neo-con architects of the Iraq debacle - will try to make the gullible public believe that “We are all responsible.” You see, if everyone is responsible, no one is accountable. Nice try, DL. Your duplicitious words, and those of LAY and other NAR and MSN truth-makers - a.k.a. the Axis of Weasels - are a matter of record. So are those of Ben Jones, TXchick, Crispy, GetStucco, and plenty of other posters in here, who saw right through the flim-flam game the NAR and its cohorts were foisting on the sheeple. So don’t even try the “collective guilt” defense, Learah, because we’ve got the goods on you and your co-conspirators.
“Axis of Weasels”
LOL — made my day!
Yes, that is great!!!
Yes, he’s trying to rationalize socializing the costs of this fiasco.
“‘I firmly believe that when the housing market slows, you’ll see a short-term drop in the demand for large homes. But in the longer run, it’s going to be even more challenging to sell these because the average household size of the boomers is going to go down as the last kids leave,’ says housing consultant Thomas Lawler.”
Chickens coming home to roost?
OK, Thomas, fess up — what’s your blog handle?
When Mr. Lawler posts here, he uses his name. I emailed to confirm it’s him.
Thanks for the info, Ben.
In addition, boomers are divorcing like crazy once the kids leave, so there is a strong impetus to get rid of the house. I have many friends whose parents have gone this route. It was pretty good timing for my parents’ McMansion. New kitchen in 2003, Divorced 2004, finalized 2005, and mom sold in 2006.
Thank god someone else is holding the bag.
Yep, and that is the reason why Family Law practitioners are going to make money - hand over fist.
~Misstrial
Misstrial, I know you’ve probably stated it previously, but in which area of law do you practice?
Civil litigation, family law, business law, corporate law (formations), some real estate law, some trust & estate law.
No personal injury or criminal law.
~Misstrial
“…mom sold in 2006.”
How nice, such a turn in events — now “Mom” is getting the house, when in the past it used to be Dad.
Chip,
I’ve often seen the mothers and children end up with the house (for obvious reasons — they can’t be left on the street & “Dad” usually has a job that can support him and his next-in-line family, while the mother often does not).
When my parents divorced in the mid-80s, my mom got the house, but dad got an equivalent value in other property, so it’s not like he was any better/worse off. It’s highly likely that ajas dad got a majority of the other marital property. Just a guess…
Until their underemployed kids move back in after college.
I’m first to say that a lot of people are going to eat their words in the months to come.
Agreed Mike S., just walking my neighborhood I swear there is 75 homes and condos for sale since LAST YEAR within a half mile of me of the 250K to 350K costs and they are not moving or even being shown on Sundays anymore.
It is like NAR and the media, are you going to believe me or your lying eyes.
Height of insanity…across from Oakdale City Hall, six “executive” townhouses were built two years ago for 320K and no buyers…the property has benn flipped at least once by the builder and lo and behold, this week six more are having their foundations laid for construction!! Nothing has sold and they are building more.
This is going to end badly and the financial depths that will come from it will linger for years.
Lansner blog: Insider Q&A gets the Inland Empire view on housing
http://tinyurl.com/lzgbg
Predicts a total peak to trough drop of 5% in the IE. Good luck with that prediction John. I’d bet that home prices have already fallen by 5% and we are just getting started.
Yeah, that 5% prediction surprised me too.
Lereah is already suffering the effects of a terrible hangover, but the effects of the koolaide have apparently not yet worn off in The OC.
Re: McMansions…
I can’t wait to sse the added impact of natural gas prices going up (as supplies are reduced) next year to add further woes to this segment of the market.
When I was in school and living in a studio, my logic that you can only be in one room at a time anyway. Here in my 40’s, 1,000sqft is plenty with wife and dog.
Much of the market up here is retirees building 5,000sqft+ trophy homes. Funny thing is when I bike by to watch a beautiful sunset, most aren’t even on their decks enjoying it. But I do see the blue glow of the 42″ tv’s. It comforts me to see that they’re no better off than I.
Very well put, and I’ve observed the same thing. My job takes me into all sorts of neighborhoods, and the most soul-less ones are these “exclusive” McMansion subdivisions. No one is ever outside enjoying the “stunning view”; there are no BBQs, no parties in the outside living areas.
Meanwhile, I’ve been in two of these monstrosities that weren’t even furnished! The first one, the family (which was an elderly matriarch and her nearly as elderly daughter and son-in-law) had what appeared to be all of the furniture from their previous home in the family room off the kitchen, and were using 2 bedrooms of what had to be a 5 bedroom home. The living room, the formal dining room — empty. A five car garage, and they only had two cars.
The second one, even worse. Retired couple, and two grown/unmarried sons. They appeared to be living in their bedrooms entirely. There was no furniture at all in any of the common areas.
But they did have that big flat screen HD TV in the master bedroom!
The living situation you described is more common than you’d think. I just looked at a house last nite - as a prospective roommate. The guy had bought the house two years ago, and was doing a great job of updating it - but he had no furniture to speak of. There was a lot of work that still needed to be done, cosmetic mainly. He was using one of the spare bedrooms as his living room. He is so strapped for funds he is seeking a roommate.
And this wasn’t even a McMansion, it was a ca. 1965 bi-level home in a normal neighborhood of similar houses.
I’ve also had similar experience to what you and B-hamster described: when I took lengthy walks in my old “neighborhood”, nobody was out enjoying their grounds. I didn’t live in a McMansionville, it was an area of established homes on minimum 2 acre parcels. My immediate neighbors were always out. But then they changed the zoning to accommodate smaller lots - McMansion type housing. Those folks were nowhere to be seen.
This situation is very common off course. You don’t even need to drive to appreciate this. Just think of your relatives or friends. A few of them are doing the very thing that you described. See, no need to waste gas driving to McMansionville to convince yourself.
Last couple of years I’ve been workin’ as a UPS XMas season “driver helper”.
We’d hit these certain McMansion subdivisions anywhere between the hours of 7 to 9:30PM, and there would be absolutely nobody home in any of them!
Miniature nightly ghost towns.
Monday thru Friday.
So I’d ask myself-just exactly when the fook are these people around to “enjoy” their white elephants?
Hell, weekends are spent at the “second home” while is necessary to get away from the “first”-LMFAO.
“Yeah-I sleep from 11PM to 5AM in my 6000SF white elephant 6 nights a week. WTF is wrong with that-I’ve got braggin’ rights ya know!”
The McMansion deal-gluttony run amuck.
Heck, back in the late 80’s we were driving through (then) new neighborhoods in the L.A. area and struck by how deserted they were during weekdays. Took two incomes to afford a nice place, so the adults were all working and the kiddies were off in daycare. Felt like “Night of the Comet”, you know?
Funny, I have been wanting to upgrade from our little 2/1 1000 sf home for a couple years (to a 3/2 1500 sf). But I realized that perhaps because our house is so small, when the weather warms up I find we eat, play, and spend most out our time outside in the summers. Perhaps there is less desire to do that in a 4000 sf home on a small lot.
MR. F~
I have friend who makes a livin’ as a heart surgeon. He lives fairly modestly given his income, but I’d say his house is around 4000SF. Whenever, I go to visit, all the activities in his house with a wife and 3 kids are ALL centered in his eat-in kitchen, small computer room and attached FR.
That’s it…save for the bedrooms on the second level.
Total areas combined might add up to a 1000SF.
Anything over 2300SF is just money in the tax assessor’s coffers and energy $$$ up the chimney.
“‘We’re in a real estate recession,’ Lereah said. ‘We’re all partly guilty.
Of all of the nick names David has had, Lierah, Pinnochio, etc….we need to add one. It’s CYA Davey… “cover your a$$.”
He is trying to cover for his mornonic comments over the last few years. I bet his book sales about making a fortune in this real estate market will get him on Oprah.
David, got prison time?
“‘We’re in a real estate recession,’ Lereah said. ‘We’re all partly guilty. But the lenders and the speculators, they had the most in it. Making zero down payments with no documentation, that’s just irresponsible. But the Realtor, the lender, the title attorney, they all got wrapped up in the frenetic pace of the boom.’”
Lereah, what a visionary, he’s brilliant….such insight…..wow and notice how he gives such a compelling revelation WHILE stepping down.
Nice.
David Liareah finally fesses up. Essentially he says…”My bad!”
In this context, yes. This morning, though, I was having fun reading some week-old entries over at David Lereah Watch, and seeing that he blamed his publisher for the title of his book. (”Boom” was THEIR idea, not his. (??!!))
Didn’t Lereah buy 2 condos in Florida during the boom ? DL is blaming investors and bad lending but he encouraged that sort of low down buying in prior statements .The media never questioned DL and the Cheerleaders who were backed by the advertisers .
A friend of mine has bought a house in Bethesda, MD., to be closer to wife’s work and some family. Looks like a nice place they got, even of they spent more than they wanted to (I expect they’ll be in this house for 20 years or so). They’ve been in a house in McLean for about 10 years, and they just want to sell and make sure they don’t have 2 mortgages.
Of course, the neighbors are all disappointed that he’s pricing around $770k …. they all think the houses in their neighborhood are “worth” the mid-800’s. (It’s a nice, but modest neighborhood for McLean). He’ll walk with more than $400k in equity, even after realtor fees. I think he’s doing it right, and I think he’ll get a fairly quick sale — I’m looking forward to seeing if my “yeah, it’s worth that” instincts are reasonably sharp.
Not a thrilling story — but I believe it illustrates that, just like builders, folks who have been in houses in good markets for the past ten years, and, more importantly, HAVEN’T MILKED THE HELOC COW, have some flexibility to price their houses aggressively and possibly make a quick sale.
When did he put the house up for sale? This year’s spring selling season is on its last legs. He may have to be even more aggressive if he wants a quick sale.
Let us know what happens.
Went in MLS Thursday — open house tomorrow. (He is at the beach, so he is happy to let his realtor show/open it over weekend - even though this is pretty a much a dog weekend for home sales, I would think).
It’ll be interesting to see how it turns out. I think he’ll get something done pretty quickly at this price — but, of course, the market doesn’t care what I think!
Of course, the bruise to my ego will matter a lot less than the anxiety his neighbors will feel if it doesn’t move in this price range. I’ll definitely keep you posted.
IMO, homes in the over $500k range rarely find “fairly quick sales”. The number of people who can afford a $770k home are few and far between, especially with standards tightening. It better be one hell of a home.
FYI. A friend of mine is trying to sell his house right now. Houses on his circle were selling for up to $800k in 2005. This is a well established, upper middle class neighborhood, with homes sitting on large 1/2 acre lots. His house hit the market in December priced at $569k for a quick sale. His family and his realtor thought it would sell “in a day”. Nearly six months later it’s listed at $499k and not one offer. The music has stopped. In order to sell a home now, you need luck on your side. This is in Reno, NV.
Reno is a total mess. I did my Master’s there during the height of the bubble (2003-2005). Craziness. That place is going to get hit really hard. California prices with few real jobs, biggest industries are tourism/recreation (Tahoe) and gambling. Good luck to your friend.
Really now… how many homes $500K+ homes were there in Reno prior to the boom??
Great point! I just cannot seem to utter Reno and $500k without laughing! Same applies to Excremento, Los Banos, Redding, Phoenix, and anywhere without steps down to the ocean. But what the hell. Times must have changed. Who wants to go in on some “Upscale” Tuscan-Style Lofts in Winnemucca?! ONLY $499k!!
it will sell-DC gov workers are spending your tax dough like drunken sailors
layoffs = 0
What “gov worker” can afford 770K? Congressman make the most, around 160K. Where is the “gov worker” with 770K? Most “gov worker” make 75K, median. Where do you come up with this crap?
Are those corruption-adjusted numbers?
There are many married couples in the DC area where both H and W work for Uncle Sam. GS-14s can make more than $120K and GS-15s can make more than $130K, so a $770K house is well within reach for that couple, particularly if they are selling up from a more modest home. I do, however, observe a keeping-up-with-the-Jones mentality here; not everyone can make a GS-15 salary. Anecdotally, I know otherwise intelligent folks who have stretched their finances to buy the house they want inside the beltway. But the correction hasn’t hit the close-in areas near DC like it has hit the far flung burbs. Time will tell.
DC_Too, when is the last time you looked at the GS salary scale? I did a few weeks ago and was shocked at what the Feds pay their “workers.” Used to be govt. people were the lowest paid. Now I think only Wall Street folks make more.
I don’t agree. I employ a number of federal scientists with masters or doctorate degrees. As the boss, I make just under $70k. I interviewed someone on Friday with a doctorate and 20yrs experience for a job starting at $52k. All our staff make between $35 and $70k, less than a typical schmoe pushing big screen TVs at Circuit City. GS-13-15 positions are few and far between outside the beltway. They are all CEO level positions (research station leaders, chief scientists, etc.). I suspect their salaries come in much lower than than typical CEOs.
I worked for the DoD for three and a half years as an engineer and DOI for fours before that (not as an engineer, though). Let me assure you, private pays way, way more and has way, way better benefits. Yeah, good luck getting that GS-14 and GS-15 pay scale. It’s not even close to being common getting that pay.
Thank you for injecting some reality to this discussion. A six-figure salary is only available if you are totally stepped out, and it takes many years to get there. Most who have earned the grade are Boomers, who’ve been in the system for more 20 years. Yes, it happens, but you won’t find many of them. My spouse worked for a federal organization that employed 5,000 in the DC area. There were a total of four GS-15’s. You don’t get rich as a government employee.
There are quite a few secret service people raking in close to 200K after their overtime. Govts in the DC area don’t know how to hire more people for less money and more coverage, they just pay lots of overtime.
Not even two government workers could afford $770K without a suicide loan. Not getting fired isn’t the same thing as having a high salary. When I got hired as a federal attorney in 2005 they paid me just a smidge less than I got paid my first year out of law school - in 1992 - and the benefits are worse. A dear friend who went back to private practice after some time off is making about 3 times what I do. She works more hours, but not 3 times as many.
Oh, and there are plenty of lay offs in government. They are called RIFs (reduction in force) and they work just like layoffs everywhere. Many government workers are protected from being fired when there is no RIF going on, but that is it.
You know one of the lawyers that works where I do arrives about when I do and he leaves about when I do. He LIKES his ~40 hour work week. THAT’S why lawyers take paycuts to work for the g’ment. Nobody gets to be partner, but then again, nobody has to bill a gazillion hours because they’re on the partner track.
I would hardly that there are “plenty” of RIFs. They’re actually fairly rare, at least compared with layoffs out in the real world.
But you’re right, only way that some bureaucrat could afford to pay 750k is if both of them were highly graded AND they had a few hundred k of appreciation from their old house to roll into a downpayment. Without the insane appreciation of the last few years, it just wouldn’t be possible. Which, IMHO is why prices won’t just “go sideways” for a while. There simply aren’t enough people who can afford these prices without the appreciation fairy giving them 200k from their last house. Which means that THEY have to have bought pre bubble.
You’re right that RIF’s are rare, but when they happen, they are devastating. What’s common are hiring & promotion freezes.
McLean Virginia. I predict he’ll get 770K, especially if he’s slightly lowballing the neighborhood.
I live in McLean and that’s about the price for an early 1960s ranch house. In a neighborhood next to mine these houses have been selling as teardowns and are replaced with (nominally) $2 million plus McMansions on (maybe) narrow half acre lots. Some have been difficult to sell. I recently saw one of these houses go as a resale and I was surprised how quickly it sold. Didn’t look into the pricing before I saw the sold sign. These houses have a very similar design. Cheap construction but looks “impressive” when finished to the untrained eye when they are done.
I just looked up the one that sold recently. It was built in 2002. The assessment jumped from 300k to 900k in 2003 and is now at $1.3 million. The original house did sell for 430k before the teardown in 2/2002. Then it sold for $1.02 million after the new construction in 10/02. And then it was sold in 11/04. (Notice the 2 years.) for $1.47 million.
I am very curious what they sold the house for now. It’s 7107 Elizabeth. It’s got to be more than $1.47 million, knowing the prevailing mentality….
So these houses were going for $700k-$800k in 2005 when a lot were bought for teardown and now they expect to sell for $2 million?
One up the road at 7003 Elizabeth Dr, McLean, VA 22101 went for $1.95 million on 3/31/2006. (From $650k 2004 teardown purchase.) The house was finished and for sale in 7/2005 when I moved to the hood. This house is 4200 sq ft. according to the county. The aforementioned house from 2002 was slightly smaller (3840 sq. ft.) but same design. It appears that small LLC investors do these teardown constructions. I noticed a teardown lot and few housed down from 7003 sold for 800k in 11/2006, so they are still getting good money and this activity is still going on. That house looked in shambles before that date….. I wasn’t sure what was going on there.
Bankruptcies building in O.C.
The effects of mortgage woes are coming home to roost as court filings have more than doubled compared with a year ago.
http://tinyurl.com/3yqf9c
But I bet none of those foreclosed homes will sell for less than 5% of the market value at the peak. I read on Lansner’s blog that 5% is the most by which OC’s prices will drop…
Only time will tell…
Thanks ockurt.
“In the first four months of the year, housing starts in the East Bay declined sharply, the California Building Industry Association said Friday. Multifamily housing starts stood at 817, a 40.5 percent decline from the same time a year ago. San Joaquin County had 29 multifamily housing starts, a 78.7 percent decrease from the same time a year(?) ago, while single-family home starts stood at 935, a 29.5 percent decrease.”
Behold the most predictable construction crash in the modern construction era. Remarkably, though starts are down 40.5, 78.7, 29.5 percent etc., depending on what locally recently-frenzied market you focus on, the reported effect on construction employment has been close to nil. What gives?
Two explanations:
1) starts are a leading indicator. Starts and permits last year (2006) were still quite high and all of that housing still has to be built out.
2) As Roubini has argued, the first to be let go are illegal workers who don’t show up on payrolls or unemployment surveys. Remittances to Mexico, however, are way down.
3) Commercial construction has picked up some of the slack in many areas. Municipal, county, state and federal entities are flush with cash and are building roads and buildings like crazy. THere is also certain amount of commercial development into all of the new subdivisions that sprouted up over the past 10 years.
By fall we will likely be in a full recession, commercial construction will pull back, most of the “momentum” residential construction will be built out, and we will start to see huge numbers of construction workers and contractors desperate for work.
2008 or 2009 might be a good time to have a custom home built as the construction industry will hit bottom long before the resale market. (And land prices generally fall faster than existing homes.) We’ll see how hungry everyone is next summer.
Construction industry bottoming - that’s what I am waiting and saving for. I’ve had to do some emergency plumbing repairs over the last few years, and the bids came in so high that I only had the plumbers do what was absolutely necessary. I was getting bids like $4500 for two days work for a crew of two guys. One jerk tried to charge me $120 to replace a valve stem in a kitchen sink. I even had one guy try to charge me his hourly rate from the time he left his house until the time he got home, including lunch, and also mark up the price on the materials.
I have some big projects lined for the time when I can hire labor at sane prices. Maybe I’ll build a house, too.
I had a builder recently explain that construction workers don’t make much money so there isn’t much to cut on prices. For example, some of his workers ONLY make $60k/year.
In Pullman, WA $60k/year is far above the median income and quite a bit of bread for a low skill framer (that was the low end of his crew). I told him that was the starting salary for most assistant professors with an average of 15 years post high school education and internships (postdocs, etc…) and he turned bright red.
Just image what the dry wall hangers are making!
I imagine that construction work is better suited for the young and healthy, and somewhat short-lived if the skills don’t turn into management. A professor can work even if he’s limping around on a cane. It gets tough for the old guys to keep working at framing.
You are right for the most part Arwen U. I left Building Trades after only 5 years with hip, knee and shoulder problems, but I worked with many mature men who were held there own against us young turks. And we were laborers in concrete placement and demolition.
You are right Arwen, my brother was a construction plumber and loved it… but by age 40 he was ready for a second career. Luckily he has a college degree and was able to land a nice position as a building inspector.
But the question remains, why should a minimally skilled laborer in a low wage part of the country be making far above the median wage? It is simple suppy and demand. During the boom there was so much construction that demand and wages for skilled and unskilled labor skyrocketed. Now everything will go in reverse.
When I was a college student I worked summers at a window manufacturer. Most of the guys were traditional factory workers in their late 40’s and 50’s.
The work was quite hard, and we were “encouraged” to work 10 hour days because there was so much demand.
That cured me of slacking off at school, since in conversation with many of guys, you could tell they were trapped in these jobs, were getting too old for it, but the pace was relentless. I saw one guy fired for carrying ONE broken pane of glass to the dumpster. (He was supposed to wait until he had two or three before he made the 30 second trip. He was considered to be slacking off.) The foreman was an older guy who was deathly afraid of being laid-off, and would do ANYTHING to keep that job.
I’ll never forget the mens washroom. Besides the usual stuff, they had a HUGE jar of generic aspirin. Most of the guys got tanked every night, came in hungover, and grabbed a handful of aspirin every morning.
That’s what you get with minimal skills as you get older.
“‘We’re in a real estate recession,’ Lereah said. ‘We’re all partly guilty. But the lenders and the speculators, they had the most in it. Making zero down payments with no documentation, that’s just irresponsible. But the Realtor, the lender, the title attorney, they all got wrapped up in the frenetic pace of the boom.’”
Lereah, what a visionary, insightful and full of knowledge and wisdom….NOT! Notice how he gives us a compelling revelation on the now defunct “housing boom” WHILE stepping down.
Nice.
Pullman, WA this spring feels like Bozeman, MT in the spring of 2006. In Bozeman, the market slowed in the summer/fall of 2005 and everyone got a bit worried. THen in early spring 2006 there was a spike of sales and appreciation before the market came to a screaching halt in late April/May.
Analogously the Pullman market slowed in the summer/fall of 2006, there was a spike in sales/appreciation in Feb/Mar, then the whole market shut down. Buyers who shot their wad in early spring are probably just a bit remorseful now. If Pullman is representative of Washington state generally (RE here generally tracks Seattle trends), then I’m guessing that the last bastion of RE bubbledom has turned south. We’ll probably see a “standoff” for the next year before sellers start to capitulate.
How could you have a bubble in a place like Pullman and Moscow, ID? Land stretches as far as the eyes can see. You can drive south endlessly once you pass Lewiston without see any town with a population of more than 100. The same could be said about Pullman to Seattle, unless things have changed since I went to school there in the mid-90s.
Nothing has changed really. YOu can drive for hundreds of miles to the north, south, east or west and see primarily farm or forest land. You have to drive for an hour to even reach the nearest interstate!
Refreshing to see a sane Bozemanite. I live behind Target, rent off course.
Cinch
I’m a little saner now that I’m out of Bozeman. Boom towns are terrible places to live, no matter the source of the boom: industry, mining or real estate speculation. The Bozeman arrogance just about drove me nuts.
Interesting. Why do you think Bozeman is so arrogant? Has it become like Boulder, CO? Home of the rich, self-righteous, 2% body fat crowd?
Ashland is well on its way too. Our Community Coop and certains swaths of town have turned into a bastions of ecogroovy exurban vegan yoga poseurs in expensive hemp clothes. I think it is the California wealth and self-righteousness effect here, but I may be oversmplifying.
I have always thought Bozeman sounded cool, but I would rather live in someplace where the hipsters aren’t.
“has it become like Boulder, CO? Home of the rich, self-righteous, 2% body fat crowd?”
Hit the nail on the head. The rich, self-righteous, 2% body fat crowd and the many more wanna-be’s.
Ooh….sad to hear that. Seems like the whole interior West is a tough nut. A sea of conservative, ratty towns, but the progressive college towns have become so “hip” they are equally annoying. Moscow-Pullman seems like a pretty nice exception, but it sounds overpriced too from your descriptions.
Fester and Groundhogday,
I’m laughing reading your description of Bozeman. Pretty accurate I think. Beside the large RE industry here, we have lots of yoga instructors moving in. Lots of physical therapists too. Wellness centers are springing up all over town, feeding on the University crowd and non-profit groups. To think of it, we hardly have any wealth creation business here except for company such as Right Now Technologies. Most businesses here feed on government handouts and nonprofit coffers. I’m beginning to realize the large size of government in relation to the total economy.
Refreshing to see a sane Bozemanite. I live behind Target, rent off course. Housing aside, Bozeman has much more to offer that Pullman. I qualify to make this claim, because I lived in Pullman in 2001 and now Bozeman
Cinch
Having lived in Bozeman since I was in the 4th grade, I can tell you Bozeman became self-righteous about 1995 or so. Four guilty parties, Robert Redford, Ted Turrner, Tim Blixseth, and most important, our local starstruck worthless news media. Redford with his’s movie “A River Runs Though It”. Which was supposed to be in Missoula, but who want’s to film in some run down sawmill town. Turnner, when he bought the Flying D ranch. Blixseth, when he started the Yellowstone Club. The Bozeman Dally Chronicle, which prints puff piece after puff piece about these guys.
No worry about Albuquerque here. It is different here. Monica outlined 7 reasons. And, now everyone in the outside world knows about Albuquerque. I guess before we were invisible. Now, everyone is getting rich buying ABQ real estate. This was published in yesterday’s edition of the Albuquerque Journal.
She did make some good points in general in the first part of the article. And, she is easy on the eyes. But, to think, I can make millions just listening to her. Just buy up all of the excess inventory here. Everyone wants to move here now, because we are different. LOL
Thursday, May 24, 2007
Get Off the Couch and Learn About Wealth
By Monica Youngblood
GUEST COMMENTARY: In 1897, Italian economist Vilfredo Pareto discovered a revolutionary principle that still proves true to this day. Simply put, Pareto discovered that in any society, in any economy, at any given time, 20 percent of any population will always control 80 percent of the total wealth. Today this is commonly known as Pareto’s Law or The 80/20 Principle.
Recent research reveals to us that those individuals who have created wealth for themselves, Pareto’s 20 percent, have really only done one thing differently than the other 80 percent. That one thing? They have simply made the conscious decision to educate themselves on the matters of finances and money. End of story.
This doesn’t mean they had to earn a college degree— far from it, as there are so many simple ways to earn this education. But sadly, as a society, we choose to spend so much of our time engrossed in escapist novels and reality TV, when all we need to do is dedicate a fraction of this time toward educating ourselves on the simplest and most basic principles of wealth-building.
Wealth-building can be defined as creating the unearned income required to finance our life mission. And there should be no greater financial mission in life than to fund our retirement. However, current research reveals the following sobering statistics: 67 percent of Americans today spend more time planning their vacations than they spend planning their retirement; 50 percent of all working Americans have no retirement savings at all; and 52 percent of all working Americans over the age of 55 have less than $50,000 in retirement savings. The majority of Americans are clearly choosing the escapist route, hoping that it will all just take care of itself somehow.
But there is good news. Within the next several decades, there will be millions of dollars of wealth created right here in the Land of Enchantment through the appreciation of real estate. The bad news is that a large amount of this wealth is going to out-of-state investors who continue to buy up our commercial and residential properties. New Mexico residents can choose to participate more actively in this wealth build-up by simply making the conscious decision to educate themselves.
And the first lesson to learn is why Albuquerque and why now?
The answer is that it’s finally Albuquerque’s time, and for seven very specific reasons: (1) Population growth, (2) a thriving local economy, (3) a low cost of doing business (with a favorable tax climate), (4) a low cost of living, (5) housing that is affordable, (6) a great quality of life, and (7) incredibly strong economic development at the state level and locally.
At an estimated population of just over 800,000, the Albuquerque metropolitan area has finally surpassed the first of two key population thresholds that are indicative of explosive business growth, and current projections indicate we will reach the second and even more critical population threshold of 1 million by 2020.
One only needs to look around the Albuquerque landscape at the abundant business activity to understand this reality. This, combined with overpriced and overcrowded costal regions, and all the national recognition that Albuquerque has recently received (Forbes, Kiplinger’s, etc.), means Albuquerque is no longer the undiscovered gem in the desert. Not to mention that Fortune magazine, in its 2007 Investor Guide, forecast its top 100 real estate markets for 2007 and Albuquerque came in first in the Western U.S. and third in the nation.
There is no doubt that it is a great time to live in Albuquerque, for the culture, the quality of life and now, for the wealth-building opportunities. Simply put, anyone can choose to take advantage of this opportunity and build financial wealth.
The Journal welcomes essays on issues from New Mexico business owners and managers. Length should be kept to about 600 words. Please contact business editor Mike Murphy at (505) 823-3830, e-mail at mmurphy@abqjournal.com, or fax at (505) 823-3994.
NAME: Monica Youngblood
TITLE: Real estate agent, investor, consultant
COMPANY: Monica Youngblood Realty Group, http://www.monicayoungblood.com
From the Executive’s Desk
Hah hah — very funny tactics by Monica: play on people’s insecurities by claiming:
“The bad news is that a large amount of this wealth is going to out-of-state investors who continue to buy up our commercial and residential properties. New Mexico residents can choose to participate more actively in this wealth build-up by simply making the conscious decision to educate themselves.”
So, Monica, you’re trying to tell us it’s a good idea to buy into a market where a “large amount” of the property is controlled by out-of-state investors and speculators? In this current real estate climate?
And what the hell does “large amount” mean, anyways? Large in comparison to other markets? Any actual data to explain or back up what this bull-s*** term means, Monica?
Whoo-hoo — but don’t worry — Albuquerque is going to pass the “important” 1 million population barrier in 13 years or so. Why the hell is that important, Monica? 20% population growth over 13 years is, what, 1.5% a year or so? That may be solid, but is it really more remarkable than anywhere else.
Good grief.
Some of ALB’s growth can be attributed to an influx of illegals since Santa Fe declared itself to be a “sanctuary city” for them. The illegals cannot afford to live in Santa Fe, so they live and commit crimes in ALB.
Newcomers who travel by air should take note that the State of New Mexico grants driver’s licenses to illegals. Therefore, either next year or the year after, residents of New Mexico will not be able to board an aircraft in the U.S. using their driver’s license as I.D. (Patriot Act) They will have to use a U.S. Passport to be able to board a plane.
Persons considering a move to this State may want to factor in a higher rate for driver’s insurance since this State has a higher than normal number of uninsured (due to illegals) and DUI (or DWI if you are New Mexican) drivers. Way to tell: driver’s who are driving abnormally slow or who drive EXACTLY according to the posted speed limit minus maybe 1mph just for good measure.
Californians: there are a lot of us in the newer part of ALB over by Trader Joes and Whole Foods.
~Misstrial
Well now to be fair Misstrial we can’t blame all of the uninsured drivers on illegals. Perhaps some of the blame should go on the Motor Vehicles Department for not requiring people to have proof of insurance when they re-register their cars. But I guess since they closed down the drive-thru liquor stores, they felt that they had done enough regulating.
Hah!
When we moved here to NM last year, I got a threatening letter from the State’s MVD “Motor Vehicle Division” telling me in no uncertain terms that I needed to register my vehicle and provide proof of insurance or else. Well, to be brief, I am the wrong person to make legal threats against. With one phone call, I told the MVD that if they ever threatened me again they would find themselves as Defendants in a court of law. Me and my car are CA registered and as such, am safe from the unscrupulous NM MVD which doesn’t even have a phone number listed in the phone book.
~Misstrial
The NM MVD is very backwards. When I moved there it took three and a half months to get permanent plates because I bought my car out of state and they couldn’t find my paperwork. The problem was that they didn’t have a computerized system so the paperwork was sitting in a cardboard box in the wrong city. I haven’t heard very nice things about the DMV in Cali either, but fortunately I have no intention of moving there. Though you might consider switching to NM, taxes are much cheaper and you don’t even need to continue your insurance coverage. Just don’t speed through the pueblos.
cami:
Thank you for the advice - however, I live in 2 states and am a legal resident of CA since I have a home there & plan to return. NM or not, I will always have insurance coverage since 1) it is the law, and 2) I have a lot to lose by not being insured.
As far as the MVD is concerned, they still are not on-line re vehicle ownership or registration information. (Which is amazing and incredibly backwards.)
The Governator made an overhaul of CA DMV a campaign platform and it really has improved - so I must give him/them credit for that. Arnold fired the previous DMV director and appointed a new one who has made his mark with notable improvements. The only quibble I have with the DMV now is this ridiculous “Press 1″ for English but only after a lengthy Spanish greeting is heard. Whatever.
All the best to you
~Misstrial
Misstrial,
Hope you enjoy NM. I don’t live there anymore but it’s a great state, and I’d love to go back for a visit. (Just in case you weren’t sure, I was joking about not having insurance. Going without it is stupid, plus it makes rates higher for everyone else). If you ever end up north of Santa Fe, I highly recommend El Paragua (sp?), it’s in the Espanola area: great food and tasty margs.
OK thanks - will check that area out. I have a relative who lives in Espanola
(I knew you were joking ’bout the insurance, lol)
~Misstrial
I love NM food and eat in Espanola fairly regularly. Ate at El Paragua once and got food poisoning. Most annoying.
What a load of crap this is.. So, insurance rates are hi because of illegals. Total BS. Its absolutely true that NM, in general, has higher rates… But NOTHING to do w/ illegals. It isnt the illegals that are driving around drunk killing people. oh no. Its all the loser locals doing that. Add in the old Patron system (thats why there is not a ‘proof of insurance’ requirement when registering) and you’ve a recipe for hi rate. If anything, the illegals are the responsible ones.
Where’s the water?
ABQ’s (I use ALB, sorry about that) water comes from the mountains to the west of the city. You can see these mountains way off in the distance. Right now there is snow-pack on these mountains (sorry, I do not know their names) and the water situation is OK in the northern part of NM, but that could change with another drought year (like in CA or anyplace else in the West).
In southern NM, our water comes from the Elephant Butte Dam which also feeds into the Rio Grande. There is water in the Rio Grande which makes it much more picturesque than when its a dry riverbed.
Elephant Butte dam is at capacity. Boating and other watercraft are allowed as recreation there (which I am opposed to - watercraft should not be allowed in drinking water, but that’s another topic).
So, southern NM is not experiencing a water shortage though conservation measures are in effect (i.e.: no watering outdoor plants during the day or at certain other times. We have native landscaping as do many people here so that req is no big deal.) (A 15 year drought ended only last year with torrential rains.)
HTH!
~Misstrial
Not sure I’d want to drink water from a source named Elephant Butt Dam.
Me so mature….
Probably better than a Hardee’s “Anus” burger!
http://abcnews.go.com/US/wireStory?id=3215032
Thanks, hd74man. I needed a good laugh this weekend!
A house I am actually interested in has recently come on the market here. However, the asking price is at least 25x likely gross annual total (of seasonal rental) income, from which income one must deduct not only taxes, insurance, and marketing costs, but also summertime utilities. Ho hum. If one rented it out long-term and did not have to contend with utility costs, probably the asking price is 32x annual rent. Ho hum again.
32 x annual rent? Whats the big deal? DC ghetto costs that much. No bubble here…..
Got Crack?
Is that you Marion?
Hurricanes will be the catalyst for the next round of price declines. Ultimately insurance rates will push people off the cliff.
What California needs is a good solid 8.0 earthquake along the San Andreas Fault to knock all the Cali “real estate moguls” on their butts. Such an earthquake is bound to happen sooner or later. San Francisco and the Bay Area cities will be flattened.
Agree!
~Misstrial
Wouldn’t that just restrict the supply of houses to purchase and rent even further, thus exacerbating the current BA situation?
Nah.
Home prices fell by 50% or more after the ‘94 Northridge Quake (my bro lives in Simi and had the unfortunate experience to have a “new, undiscovered fault line” reveal itself one block from his house. Also: an added bonus of sand boils (quicksand) nearby too. Lots of fun.
Prices dropped after the ‘89 Bay Area (Loma Prieta) Quake too.
~Misstrial
Agreed. A lot of middle class people just up and left. Even though the market was already trending down after 1990, it really accelerated after the quake. First time I ever heard the terms “short sale” and “cramdown”.
An earthquake is the only salvation CA has. Everyone responsible for getting us in this mess can blame the collapse of the bubble on it and Bernake can helicopter in Money for Arnold to sprinkle around to rescue us from the disaster. This will keep enough people employed to push back a recession for a while longer. And nobody will feel guilty for saddling our grandkids with all of the debt. If the Almighty has a sense of humor he will wait until the space shuttle is in orbit to smite us with an 8.2
I owned a condo in Valencia, CA. at the time of the 94′ Northridge earthquake. (about 10 mi. as the crow flies from the epicenter of the quake.) That day, in retrospect, could be pinpointed as the the date the condo complex turned the corner, irretrievably downward into a slum.
About a full 25% of the unit owners, and renters, up and walked, right after the quake, leaving a lot of vacancies. Of course, by one means or another, the vacancies became loaded up with renters at much lower rates than they could have fetched late in 93′.
Add to that the impact on the HOA dues, tons of money out for earthquake repairs, all shouldered by the remaining tenants, the downward slide in quality of residents, resulted in a toxic mix that pushed the place into a continual slide that it never recovered from.
I have come to the conclusion, that not only in this case but maybe the majority of others, one can pinpoint an exact day or specific occurance that kicks the support out from under a community and turns it into a declining neighborhood.
Has geological modeling advanced to the point where we can pre-emptively line up all the realtors, mortgage brokers, and flippers along the fault lines where giant fissures in the earth will open?
LOL!
Report from southern New Mexico (88007):
Well, where to begin! Yesterday evening was a wonderful way to begin the Memorial Day weekend for realtors and sellers alike here.
About 7:00 p.m. a terrible hailstorm arose coming out of the west (AZ). High winds and a sandstorm preceded the lightning storm which was active across the sky in all directions. We were in the parking lot at Walmart when it all began and so Yours Truly got an up-close-and-personal view of nature’s fury. Then the hail (pea-sized) came down. Along with driving rain. The streets immediately flooded (remember, no storm drains) and my dear husband drove us carefully all the way home.
Imo, realtors probably couldn’t sleep last night worrying about not getting every last bit of financial blood out of relocating Arizonans (many of my neighbors are those folks who use to live in the “old” Scottsdale and moved here when every last inch was developed) and Californian$ (e$pecially them).
The rain may return today.
Anyways, Buyers-
Should you be looking at properties today or this weekend, look for the following:
1. Evidence of flooding such as dirt, sand and rock that have been washed in the roads or into garages. Sandbags, look for those, particularly in the Elks Club areas and Picacho Hills. Where I live folks have them stacked up in the driveway, so remember to take a look there. Anything north of the 70 gets SEVERELY flooded - you can see the ineffectual flood channels built around those residential areas.
2. Termites swarming. They will swarm either today or tomorrow due to the rains.
Use this info to work the price down $50k or so. Maybe more.
~Misstrial
“Use this info to work the price down $50k or so. Maybe more.”
How about, “Use this info to justify your decision to look elsewhere or to rent.”
Inventory is growing steadily in Juneau, Alaska–up ~40% since January by my rough estimate. The median asking price here is about $300K, which could get you a ~1500 sqft townhouse or a ~1350 older house in town, a new ~1600 sqft attached home in a small new subdivision. When we bought our house two years ago there was very little inventory. Our neighbors with the big house (3600 sqft–very big for here; think heating oil) on the corner are moving and have had the house on the market for a couple of months. Started at $649K, then $629K, then $619K in quick succession. This is a great family neighborhood, but there are very few families around here that could pay that mortgage. In addition, there are four other (smaller) houses for sale within the subdivision, ranging from low 400s to 500 something. Affordability is a huge issue here, as the State workers salaries have fallen far behind inflation over the years and the tourist industry jobs are seasonal and low-paying. I’m glad I’m not selling right now.
Anyone want a $300K condo for $585K?
hous-338649026@craigslist.org
In Naples FL.
I guss they are belivers in the tulip bubble
here’s the link
http://fortmyers.craigslist.org/rfs/338649026.html
It’s worth 585K with ammenities like this:
Includes a covered parking spot and additional storage locker.
In other words: it’s an apartment.
I will never understand how people can rationalize paying over half a million dollars for an apartment, unless it’s really something special. I can think of a few that I would pay that much for, but they’re currently going for almost $2 million.
The Lehigh Valley area in PA is horrible. Nothing is selling and idiots are still trying to keep hold on prices that went up 100% in 5 years. The commuters stopped coming the last 2 years, the locals are the idiots now who are trying to sell homes they paid 100k in 2001 now for 200k in 2007, NOT! The prices of homes around the lehigh valley are going to head back to 2001 levels or worse. There are more cookie cutter McMansions than we could use in 10 years. By the end of 2008 an average home will be back to something around 115-125k, that’s adjusting normal increases from 2001 when this nightmare began. The average couple around here barely makes 70k. Ya, they can avoid a 200k McMansion, NOT!
Lawler was Senior Vice president of Risk Management for
FNM during all the fraud. Am sure he has a lovely pension. Saw him on TV not too long ago. Looks like he was strained through a sheet.
“Lawler was Senior Vice president of Risk Management for
FNM during all the fraud.”
Any relation of the wrestling world’s Jerry Lawler?
That’s what I was just wondering. That was the guy that smacked down Andy Kaufman and basically ended his comedy career.
Went shopping today for fresh produce at my local hydro harvest farm, on Shell Point Road in Ruskin, Florida (SouthShore Tampa Bay). For seven bucks, I got a huge head of bibb lettuce, four ears of tender white corn, a big-a** beefsteak tomato and a whole mess of strawberries fresh off the vine. And I don’t have to worry about e-coli, pesticides or Chinese toxins. I like Publix, but the expensive, anemic produce department can kiss my patootie. So can the Texas farmers whining about they don’t have enough illegals to pick their lousy, toxic, wooden produce. Buy local! It’s cheaper, fresher and here, I am supporting a local American family.
What does this have to do with housing? Lots. Shopping at a local American family farm takes money out of the pockets of local developers, who tap the illegal immigrant farm workers for cheap labor. It’s better food, and cheaper. So you can use the extra money toward your taxes and insurance, if you own. Or to fill your gas tank.
I so agree.
We shop at the local Farmer’s Market and buy locally grown whenever possible. We also belong to a local co-op which buys beautiful local organic/pesticide free/sustainably grown produce & fresh eggs. The big growers/employers & magnets for illegals can go to hell.
Who do we see shopping at these places? Mostly the WW2 Generation and retirees. Younger people take note - amazing low prices for savers like us.
~Misstrial
Us too - we’re lucky that we have a Farmer’s Market within walking distance of our place.
Our local Ralph’s has what is possibly the most sorry-a$$ selection of organic produce its possible to have - and twice the price of the Farmer’s Market.
Went out grazing today at my local open houses. For pretending to show interest, I got all manner of finger foods and those little triangular sandwiches. Mmmmmmmm.
Sammy…Just a little north of you, we got hard candies and bottled water. Maybe we should consider taking our hunt to your neck of the woods?
“The number of home foreclosures in metro Atlanta has risen 200 percent since 2000, in part because of an increase in the use of high-interest, sub-prime mortgage loans, the Atlanta Regional Commission said this week. Despite the number of homes in foreclosure, housing development continues to rise in both Henry and Clayton counties.”
Atlanta is still in a state of Denial for the most part, but I’m witnessing growing inventory in which many homes are not even listed on the MLS. Inventory and prices are stagnating even intown areas. The decent has begun! Can’t wait for the Panic phase!
Still following the same townhome development in Potomac, MD, an upscale suburb of Washington DC.
Since my last update a month or so ago, nothing has sold. One more has been added.
Here they are:
1. $725K. 117 days on market.
2. $749K. Corner unit. Inactive listing. Sold?
3. $750K. 73 days. Corner unit.
4. $759K. 18 days.
5. $769K. 65 days.
7. $845K. 130 days. Corner unit.
These homes sold for between $300 and $400k about 5 years ago.
…and they’ll be selling for between $400k and $500k 5 years from now.
“…
7. $845K. 130 days. Corner unit.
These homes sold for between $300 and $400k about 5 years ago.”
Can you see any signs of inflation there, Mr. CentralBanker?
Over on Phillyblog they’re falling all over themselves with “it’s different here”
EXACTLY!
People have no idea just how much money is floating this country–especially in NE cities. There are certain floors over at the Cira center trading $20B in capital around the world. Whether or not we have a backwater government, we don’t have backwater business.
There’s something really traggic and self-absorbed about this whole conversation and all pretty much boils down to relatively well-educated, well-employed people not being able to accept that they can’t afford to buy real estate in the most expensive area in the state (and don’t quote data from Gladwynn–I’m talking $/sq ft, so don’t try to compare a 4000 sq ft house on an acre with a 500 sq ft condo). There are a LOT of people floating around who are able to afford $1m without much thought and a lot of people who think a $100k would cover one Amex bill. And many of them live in Philadealphia.
I’m not exactly a proponent for $10m condos in Philly just yet, but thinking that $300k for a trinity on a gorgeous Wash West street is outrageous is simply short-sighted. Take that money out 60 miles west to some nice 4 bedroom house and tell me how much you want to live THERE. People are in the most established cities for a reason. It’s an increasingly exclussive club and the price of admission isn’t going down much any time soon.
Which I don’t understand if any place in the country is going to have mortgage irregularities it’s going to be Philadelphia.
People are in the most established cities for a reason. It’s an increasingly exclussive club and the price of admission isn’t going down much any time s
Until the ghetto boys start bringin’ out the el cheapo Eastern Bloc AK-47’s they’ve been hoardin’.
It’s an increasingly exclussive club and the price of admission isn’t going down much any time soon.
A stunningly self-important and myopic view of the situation in Philadelphia.
There are great residential urban neighborhoods in Philadelphia. I lived in a few of them. But what makes Philly different than NYC, for instance, is that you can be in a great neighborhood but six blocks away from the ‘hood. It’s a checkerboard effect. It’s not like Manhattan, which is buffered from its war zones. And in the current crime-favorable climate, the perps are a lot bolder and more willing to venture out of their familiar territory. When the ATM muggings start in Society Hill, Katie bar the door. Literally. And pack. (firearms, but you can pack your bags, too if you really get scared.)
but thinking that $300k for a trinity on a gorgeous Wash West street is outrageous is simply short-sighted.
For anyone who doesn’t know what a trinity is, it’s a three story house that consists of three rooms, one stacked atop the other. It’s a rowhome, and has those spiral staircases that makes moving a nightmare. 900 sq. ft maybe. Pre-boom price, 70-80k, only because of its location. (Washington Square West).
People in Philly have lost their minds.
From Upstate South Carolina: Housing is still strong in the most desired areas within 20 min drive of downtown Greenville and suburban corporate jobs (Eastside Greenville/Greer), not much available for sale, expecially in the 200K-350K range. High end over 500K is sitting and about dead. Lots of foreclosure activity in Nhoods under $150K. Custom local builders starting to sweat inventory levels according to a banker friend. Exurbs are seeing a lot of price reductions and desparate sellers offering plasma TVs and Visa gift cards, etc to buyers.
Also, a mom at the kids elem. school told me she, husband, their kids and her sister moved here from CA six months ago and lots of her CA friends are looking to move here also (caucasian evangelical types). Her job here - Realtor. Her sister’s job here - Mortgage Broker with Countrywide…no kidding.
PHX inventory at 61,293 this morning. Looks like the big spring selling season has resulted in a big increase in inventory.
In the Sarasota-Bradenton area which has been crashing hard I have started to notice a lot of commercial space for lease. Just in the last few weeks I see signs in nearly every strip mall I drive past. They have been bragging that Commercial RE is still “hot” in this area but it seems that might be starting to change. It has been about 18 months since residential started to crash so that seems to be about the right timeline for commercial to go bust. Funny, I guess all these developers thought that the people buying up all these stucco boxes were actually living in them…..LOL
There are 61,293 homes for sale in Phoenix, AZ According to Zip Realty. Up from ~5,888 in August of ‘05. That statment should be today’s AZ Republic headline.
Foreclosed homeowner to bank: “Would you like some hogs with that REO?” (BTW, this is absolutely the most over-the-top real estate story that I have seen to date, and I have seen quite a few on this blog…)
——————————————————————————-
Repossessed house turns into pig prison
Like an expected 1.5 million Americans this year, an
Saturday, May 26, 2007
JESSICA BRUDER
When police arrived at a foreclosed Eagle Creek home Thursday night, it looked as if the place had been hit by a twister.
Part of the front foundation and wall had been ripped away. Torn-off chunks of the house littered the yard, along with trash, tools and abandoned cars. A load of dirt had been dumped on the roof. And an unpleasant aroma leaked out from smashed windows.
But the strangest scene was out back, where a concrete porch had been reduced to rubble, and three sets of beady eyes and nervously snuffling snouts were peeking out from the door frame.
http://www.oregonlive.com/oregonian/stories/index.ssf?/base/news/1180155303269110.xml&coll=7
Angry FBs. The downside to wanting to buy a foreclosure.
I looked at the outside of a house two days ago that hasn’t been lived in for 8 years. It’s being sold by the heirs, who were given the title in 2000. It’s a total wreck and in a decent middle-class, well-kept neighborhood. It could very well be totalled, for all I know. There’s obvious water damage everywhere, and a horrible roof and windows. The description says it needs a kitchen and bathrooms as well.
It just amazes me that anyone would let a valuable thing like a house in a popular suburb just sit there for so long.
I’ve been interested in getting a place in the NC or VA mountains, so started tracking inventory about 10 months ago in the major areas on realtor.com. (I don’t know of a historical database - if anyone does let me know please).
Generally the numbers were flat up until last month, with only a moderate decline during the winter. In the past month though the listings have jumped suddenly - Asheville for instance went from 790 to 905 SFH in just one month.
I think in general NC and rural VA have been insulated some from the bubble since they didn’t experience the speculation that most areas did - right up until the end at least. They were late to get onto the bandwagon, but now are also starting to see the inventory increases that other areas started seeing 15-20 months ago. The OFHEO HPI numbers also reflect this - these areas are not yet experiencing price declines. It’ll be interesting to see what the Asheville and Wilmington numbers look like in this week’s 1Q OFHEO numbers, since those are two areas that have experienced at least some bubble.
Am back up in Va over the holiday and I can at least report that prices for modest houses in Charlottesville (expensive for Va) are slightly higher on average than in Jacksonville (cheap for Fla.).
I would say the only really reasonably cheap places that didn’t see the bubble in Va./NC are in the stretch from west of the Triangle (say, Burlington) to the Triad area of Greensboro, Winston-Salem, up to the Va. line and west and north across into the depressed furniture and textile places like Martinsville, Va., or Hickory, N.C. Most of the “desirable” mountain areas in both Va. and NC around colleges or hip towns or tourist sites are pretty dear. A friend of mine did recently offer me 100+ acres in Patrick Co., Va. (eastern foothills near NC) for $120K, so raw land can still be reasonable in the boonies.
Saw a house that’s been on the market for around a year having an open house(again) this weekend. Must have been 6 for sale signs, 6 flags, and 1 for rent sign posted. It’s never been lived in in that time. Flippers getting desperate. I think it was going for 1.4 mil.
Sounds like $1,400/mo rent would be just about for a nice, comfy rental. If they throw in decent window treatments.
It looks like nothing has happened in LA south Bay area. Not one thing.
wife and i went to a couple open houses in northern va on sunday. my wife asked the agent in one of overpriced pieces of shit “so, do the current owners just need more space? or maybe a job transfer?”
agent replied, “nope, they just want to move out of the state IF they get the price they are looking for”.
translation “no reason, just hoping some greater fool will help finance they’re early retirement”.
roflmao. can’t believe she answered my wife’s question like that. i don’t blame them. my wife and i plan to do the same thing (except rent instead of moving out of the state). we plan to go greater fool fishing when she gets back from a month long business trip (pray it’s not too late). the waters in NoVA are still brimming with them.
As promised, and to mark the 1 year birthday of Hardtack and it’s early form “Ivy Mike”, here are some year over year market information. This came from building a large spreadsheet this morning that compared data from last Memorial Day weekend with this year. There are some interesting trends and information revealed, which I will probably write about more in the future on various weblogs, including the one covering Hardtack at http://blog.osgcorp.com/.
Anyhow, on the the juicy bits.
Across the 40 metro areas we have year over year data, the trend is: Prices down, inventory up. In some cases way up. Some leaders for inventory accumulation are:
Single Family Inventory
Salt Lake City, UT +139.6%
Norfolk, VA +102.4%
Alberquerque,NM +86.2%
Portland, OR +78.6%
Wichita, KS +78.6%
Wilmington, NC +78.6%
Condo Inventory
Boise, ID +261.5%
Grand Rapids, MI +212.1%
Portland, OR +162.7%
Alberquerque,NM +109.8%
As far as price is concerned, the trend is down in general, but some markets are showing appreciation. Keep in mind, Hardtack only tracks the seller’s asking price. So these do not represent what the properties sell for.
Down Markets - Single Family Median Price
Salt Lake City, UT -15.2%
Bakersfield, CA -13.8%
Boston, MA -11.7%
Miami, FL -10.4%
San Diego, CA -10.2%
Orlando, FL -9.9%
Sacramento, CA -9.6%
Las Vegas, NV -9.2%
Cleveland, OH -9.1%
Up Markets - Single Family Median Price
Austin, TX +20.0%
Raliegh, NC +14.9%
Bloomington, IL +10.3%
Buffalo, NY +8.3%
Syracuse, NY +6.7%
Madison, WI +4.2%
Right now to look across the 40 metro area condo market is to glimpse insanity. The apparent overbuilding and speculation that had taken place (and in some markets may still be taking place) is impossible to ignore. Many people are going to be damaged or ruined financially from this.
Down Markets - Condo Median Price
Salt Lake City, UT -30.8%
Tampa, FL -18.3%
Syracuse, NY -14.6%
Phoenix, AZ -12.2%
Boston, MA -10.8%
Birmingham, AL -9.2%
Richmond, VA -8.2%
Miami, FL -8.1%
Bakersfield, CA -7.5%
Up Markets - Condo Median Price
Cincinnati, OH +40.8%
Austin, TX +27.2%
Omaha, NE 24.8%
Oklahoma City, OK 22.4%
Raliegh, NC 21.6%
Memphis, TN +20.6%
Casper, WY +15.7%
Boise, ID +15.5%
Lastly, and most curiously, it seems there is a bit of a land rush in many midwestern areas. After some discussion with family in the midwest, it would seem that there is a push to snap up tillable land to put into corn production. In essence to grow more ethanol. There is something of an ethanol mania sweeping farm country, with many farmers seeing this as a way to make a better living and help ensure United States energy independence at the same time.
We’ve been back in Greer, SC for 19 years. It’s my husband’s home. We live on a quiet street downtown. Two houses up from us is a house that has been on the market for over a year with apparently no nibbles. It’s a nice enough house but built in the 1930’s and probably has had much updating in 20 years. It belonged to an older couple, now desceaed.
The lehigh valley area has more homes for sale (that won’t sell) and prices are already dropping. The prices have to get back to 2001 levels before anyone starts really buying. Anyone local that is, the commuters are being foreclosed on left and right and mcmansions are sitting empty.
Are talking about Allentown?
Went to see some apartments in Orange County. They were doing specials on 2 bedroom apartments. One place offered $500 off, another place half month’s rent off. (3 out of 5 places we checked out were no-answers: probably because of the weekend.)
So, the rents may not be dropping like flies but they are throwing out incentives….
My thoughts:
I was attending my sister’s graduation the week before Memorial Day weekend in the Lehigh area, and my word, where did all those McMansion’s come from?! We were up in the area a few times over the years when she was attending college there, and the area is full of McMansions, sprouting like weeds everywhere. All huge and surely grossly overpriced for a region that is generally economically depressed (and will be that way for many years to come, most likely.) Insanity…
Here in Maryland, the lunacy continues at a slowing rate. Anything built or sold at the height of the boom - late 2005 or early 2006 around here - has suffered price reductions. One idiotic condo development that was finished and sold around that time has 6 or so units for sale: the larger ones sold for about $320K, and are now selling for well under $300K (and nobody wants them), and the smaller, basement ones sold for about $275K and now are selling for about $250K (and still nobody wants them). The whole development was poorly planned - they should have put in some affordable townhomes instead of cramped condos - and is in a mediocre section of Glen Burnie, not far from a bunch of run-down things. Why would anyone pay over $200K for anything in that area is beyond me.
Meanwhile, post-War shacks are still selling for $250K and up, though some “deals” can be found for under that… and all of them sold for about $100K in 2002 or so. Overpriced lunacy in Pasadena goes for well over $300K for McMansionis, and Columbia is in the $500K and up range. Very few people around here can afford any of this stuff.
Finally, BGE, our utility company, is raising rates 50% starting this month. I hope all these people enjoy cooling their McMansions through the hot, humid Maryland summers now!
Everyone here is still in denial, but nobody is cheering real estate along anymore (except the Sun, but they are more tabloid than newspaper). I think that the current theory is that being close to DC will save us, or the BRAC will save us, or maybe if we all close our eyes, the problem will go away and people will go back to buying $600K McMansions on $60K a year salaries. Right…
Bring on the crash!!