Housing Is Going Into The Tank
In Business Las Vegas reports from Nevada. “With Nevada ranking first in the nation in foreclosure rates in the first quarter of 2007 and again in April, the mortgage lending industry and consumers are taking notice. Foreclosures in April were 225 percent higher than April 2006. And insiders say what some call a crisis and others call an industry correction could reshape the mortgage-lending industry for all stakeholders.”
“Mortgage Lending Division Chairman Scott Bice said much of Nevada’s foreclosure problem was caused by speculative buyers. ‘Of the 24,000 listings on (the Greater Las Vegas Association of Realtors Web site) 50 percent are vacant, up from 40 percent,’ Bice said.”
“Tom Powell, chairman of the Mortgage Advisory Council and chief executive of IntoHomes Mortgage Services in Northern Nevada, agree, saying that the last five to 10 years of bullish housing markets spurred speculators on.”
“Powell said speculators, who bought from developers, saw their investments appreciate before they were even completely constructed, and then sold those vacant homes for profit. But when the market plunged in mid-2006 many speculators were caught short, he said.”
“And foreclosure rates will continue to climb, since the majority of Nevada mortgages are less than 3 years old, the average time by which a mortgage will default.”
“Bice said the industry would have to sift out the truly needy, troubled borrowers from speculators who got in over their heads.”
“The stormy economic year ahead will be characterized by disheveled coiffure, garbage cans on the lawn and a migraine headache, especially for residential housing developers.”
“The economic downturn in Nevada, which is mild compared to housing slumps in other parts of the country, will last at least through 2007 and into 2008, according to Keith Schwer, executive director of the Center for Business and Economic Research at UNLV.”
“‘There is going to be some unpleasantness ahead,’ Schwer said.”
“Before the economy improves, the residential real estate sector will continue to lag, dragging down the Southern Nevada economy with it. Schwer said there has been a greater decline in jobs for construction in Nevada than nationally, since construction makes up a larger sector of the local economy.”
“‘Our state will be impacted…more than the rest of the nation,’ Schwer said.”
“Schwer said the faster prices come down, the sooner the market will correct itself. In the meantime, he said developers should look to make money through niche markets, especially affordable housing.”
“‘Even though housing is going into the tank, there is still money to be made,’ he said.”
“What should people watch for to determine if the housing market is rebounding? National housing analyst John Burns said the apartment market is a good indicator.”
“The reason is that as the gap between homeownership costs and rental costs narrow, buyers are more likely to purchase a home, Burns said. ‘The gap between ownership and renting reached an all-time high in most markets last year, and is beginning to narrow as rents rise and prices fall,’ Burns said.”
“Burns said he doesn’t have good data on the cost of renting a new condo versus a new apartment but suspects the differential is narrowing more quickly as prices on new condos have fallen rapidly in many areas over the past year.”
“As for the rest of this year, Burns said landlords may not be able to raise rents very quickly because builders stole their most qualified tenants in previous years and rental condos and homes are providing the apartment market competition at the higher end of the market.”
“The value of building permits issued by Las Vegas during the first five months of 2007 is down 43 percent from the first five months of 2006 from $860 million to $598.”
“Overall, some 14 percent of households can afford homes in Las Vegas versus 40 percent for the nation as a whole.”
The Arizona Republic. “Arizona, California, Nevada and Florida led the nation for skyrocketing home prices a few years ago. Now these states are leading the nation for increases in foreclosures.”
“Data from the Mortgage Bankers Association of America show these states posted the biggest gains in new foreclosures during the first quarter of 2007. Arizona fared slightly better than the other states and is at the bottom of the dubious list.”
“The four states have another thing in common. Speculators sparked their home price run-ups a few years ago. It happened in 2004-05 for Arizona. Investors left Las Vegas after pushing up prices 50 percent there and came to the Valley to do the same. By 2006, prices had shot up 50 percent in metro Phoenix, and most speculators moved on.”
“Despite its recent spike in foreclosures, more than tenfold in the past year, Arizona still ranks in the bottom 10 for the overall number of people losing their homes.”
“In metropolitan Phoenix, which makes up more then 75 percent of the state’s housing market, home prices are down about 5 percent from a year ago. More foreclosures could work to drive down home prices further.”
The East Valley Tribune from Arizona. “A 25-year veteran of the development business, Gilbert homeowner Anthony Amendola knows how to spot quality construction. That’s why he hired Toll Brothers, a national builder he respected, to build his more than $500,000 luxury home.”
“But on his first walk-through shortly before the deal was set to close, Amendola realized his dream home was a nightmare. Sinks, cabinets and faucets were missing. Gaping holes surrounded outlets. The electricity wasn’t turned on. ‘My reaction was complete disgust,’ he said.”
“Some believe the frenzied pace of construction during the housing boom led to shoddy workmanship as builders struggled to find enough qualified laborers to meet demand, a theory industry observers say is likely true in some cases.”
“For homeowner Brian Eastley, the problem comes down to quality control. Eastley walked by the construction site of his home daily, finding new issues, such as cracking in the foundation slab and stucco. He addressed those problems with Toll but still faced more when the home was done, including bubbles and trowel marks on walls.”
“‘They’re only as good as the labor they’ve hired,’ he said.”
“During the height of the housing boom, builders were so busy that they couldn’t find enough skilled labor, said John Fioramonti with research firm Hanley Wood Market Intelligence. Job superintendents were spread too thin and many didn’t have experience in mass production, he said.”
“‘It was a real aberrational time in terms of the volume that was going on,’ Fioramonti said. ‘Nobody had a good handle on how to deal with it.’”
“Supervisors were under horrendous pressure, and most builders weren’t restricting sales, (building inspector) Tony Hecht said. City building inspectors were also overwhelmed, he said.”
“Toll homeowner John Kenneally ’s battled sink holes in his yard created by water runoff from the roof. Window wells in the basement have also filled with mud when it rained, and water has seeped in through the walls, Kenneally said.”
“Workers have come out repeatedly to try to fix the problems, though not without the pressure of repeated calls, he said. Kenneally worries that his home’s value may be hurt.”
“‘We’ve had mold, and now I’ll have to fill out a mold disclosure if I go to sell or rent the house,’ he said.”
We had to put in some new spam blocking tools this morning, so if anyone experiences a problem posting comments that wasn’t evident previously, please send me an email at:
thehousingbubble@gmail.com
Hm. I read this blog a lot (probably too much :), I don’t ever remember encountering “spam”.
Have you been removing it all by hand???
I’ve had comments not show up before… fyi…
“We had to put in some new spam blocking tools this morning”
Must be the Realtors trying to get even.
Maybe the Realtors have nothing better to do than send spam Ben’s way.
Well, fancy that. Toll builds shoddy crap. Should be fun when the class action suits start rolling.
I suspect the one profession that is going to be very busy through all of this will be lawyers….unfortunately.
The Toll Brothers slogan is, “You can get better quality but you can’t pay more.”
LOL — good one!
A little OT but still funny. I was boarding my flight years ago and someone had put a sticker on the door that said “This plane was built by the lowest bidder” Talk about a sinking feeling.
Luckily Boeing and Airbus dominate the skies. I wouldn’t trust any of those Russian or Brazilian planes.
If you fly on RJs, some fly Brazilian aircraft (Embraer).
US Air Express jets are Embrauer 30 seaters
Northwest used to have a lot of Saab turbo-props flying to smaller midwestern destinations — I used to fly in them all the time to great lakes and midwestern desitinations for business in the 90’s.
If the pool is silty you must find them guilty! I think we’ll see a shortage of lawyers in the next few years.
Please, Lord, let me be on the happy side of a bubble for once!
Yeah, seriously…
“Some believe the frenzied pace of construction during the housing boom led to shoddy workmanship as builders struggled to find enough qualified laborers to meet demand, a theory industry observers say is likely true in some cases.”
I call this complete bulls–t. They let illegals undercut the wage market and that’s why they had only underpaid illegals doing shoddy work. They were the only ones that would work in the hundred degree heat, sweating their asses off putting up sheet rock, roofing houses and installing siding.
The one thing Bush and all of the other amnesty loving fools fail to mention is the translation of under-the-table money to real money. A job paying $10 - $12 under the table is equivalent to about $18 - $20 when Social Security and other deductions are factored in. That’s why Americans refuse to do those jobs. And that’s why the whole thing is so disgusting. Toll, and all the rest, deserve to be sued into non-existence. God knows they have broken enough laws, or at least one law thousands of times.
How do you let someone undercut the wage market? There is no shame in someone working hard and earning a living. The problem with shoddy work has everything to do with too many homes going up too quickly due to an unsustainable boom, not whether or not the worker was legal. What’s outrageous is the fact that 1/3 of pay goes to the government, thereby helping to fuel such an imbalance. And even more outrageous is that the boom was created by government too by the use of easy credit. Perhaps this is a government problem, not an employer problem, no?
Sorry, ginster. I fell off the wagon with you on this one, except for ‘There is no shame in someone working hard and earning a living.’ Absolutely true, but unless this country is willing to open all its professions to the lowest bidder, the canard about ‘Working at jobs Americans won’t do’ is the worst kind of political crap. To be fair to all, we should be dropping plane tickets into China which is where the real cheap labor pool is. It is just unfair that some have only to swim a river (a opposed to an ocean ) to construct the poorly built houses paid for with cheap Asian credit.
“…to construct the poorly built houses paid for with cheap Asian credit.”
Corrections:
1. it’s cheap Asian Crazy Credit!
2. It seems to be that globalization has as much to do, if not more, with the undermining American wages as illegal immigration. How many jobs have been outsourced to India, Russia, China, Taiwan? And these jobs were probably high paying american jobs.
IMHO, illegal immigration is part of the “globalization” process. Outsource work, insource cheap labor.
Absolutely, illegal labor undercuts living wages. How can anyone actually refute that?????
There are many people who truly think it is good. Maybe good - if you look at things globally only…
But the US only has one direction to go in globalization - DOWN. If you are on top of the heap, a leveling effect means DOWN, DOWN, DOWN for us.
Only fools can think otherwise.
I agree a middle class does not exist naturally. One thing that bothers me is the existance of minimum wages in the US, but we do not require those same wages be paid on imported items.
I suppose you could argue I have half a dozen Chinese workers building the “stuff” I buy, so “want” type things such as TV’s etc are cheap. NEED items, like health care, insurance, energy, housing etc are expensive however, which puts a greater stress on us, while wages are pressed down.
“How do you let someone undercut the wage market?”
Let them compete in a job pool where they don’t have to pay taxes but the next guy does.
I agree there is no shame in hard work but you should be LEGAL.
To be totally fair I know plenty of non-immigrants who work under the table as well. Nobody seems to mention them even though they probably outnumber the illegals, at least where my friend works.
Basic economic theory: A boom in home prices sends a signal to the market, which should lead to a boom in home building, which should lead to higher wages for construction workers who are now more in demand.
Except that’s not the way it worked out. It apparently wasn’t enough for the home builders to realize record profits thanks to a credit bubble. No, they decided that spending more on labor was a waste, so they hired the cheapest possible labor: illegal immigrants willing to work for cash wages.
You get what you pay for. All this crap about how illegals are willing to work hard is pointless. It doesn’t MATTER if they’re willing to work hard. It matters if they can actually do the job, and we’re now starting to see that (gasp!) maybe they can’t.
Actually, most of the construction workers I know saw huge increases in wages during the growth of the housing bubble.
Same here Groundhogday. It’s the reason construction costs haven’t fallen yet. The party went on so long that many subcontractors can go without work for a lot longer than they could before, holding out for their price, not the lowest price they are willing to accept to keep the lights on.
Skilled labor was in demand and got higher wages. But the builders could pay a little more and get all the skilled labor they needed. Instead they hired illegals under the table to boost profits and in turn reduced quality. The illegals worked like dogs for crap wages, no one doubts that, but they aren’t as qualified as liscensed plumber or carpenter with 15 yrs on the job, or a good apprentice, journeyman.
I think you run into problems when you hire a construction crew full of illiterate non-English speaking people who used to pick lettuce for a living just a week ago. There is a problem with experience, reading blueprints and taking verbal commands from the foremen.
Did they work hard? Yes. Did they do a good job? No. It’s easy to mow a lawn or clean a table. It’s not so easy to build a house or building.
ginster, perhaps you’ve had too much gin. I’ve got several friends in the trades, and the substandard construction has more to do with greedy builders, and a lack of law enforcement, than a lack of skilled craftsman. An old buddy of mine’s father was a hanger (drywaller). My buddy is as well, and has watched in horror while wages and quality workmanship have gone into the toilet, as illegal aliens took over the field. Contractors can get nearly 3 illegals for the same pay as my friend makes. Many times they have zero experience and simply learn as they go. My buddy has two children and a wife. If he were to start working for the same wage as these illegals, he’d have to sell his house and both cars and move into a mobile home park with his wife. How would you like your pay reduced by 2/3? You don’t know what you’re talking about. There simply aren’t enough workers at poverty wages.
And that my friend is how the Toll Bros personally were able to cash out hundreds of millions….on the back of these low cost workers doing their bidding. If they paid an honest wage it would have not profit city for them.
An old buddy of mine’s father was a hanger (drywaller). My buddy is as well,
Drywaller…hardest goddamn job in creation imho.
Roofing contractors have told me they rationalize their hiring/wage dynamics this way: “We pay the illegals just as much as the homeboys, and the illegals are great workers.”
Got 10% down?
Testify, solving. Now, if I were king, I’d dragnet each and every member of upper and middle management of the major homebuilders with widespread housing defects. Also the board of directors. Each and every asset belonging to the management and directors AND their immediate family members would be confiscated (as partial restitution for the buyers). All would be fitted with ankle bracelets and forced to live, with their families, in the most defective home in the lousiest area built by their own former company. For good measure, a few chagas bugs would be placed in the home. They’d be allowed to work, but only in the most menial of jobs related to the building industry. Contact with their society friends forbidden. They would also be required to take out the most horrendous mortgage product offered during the boom and keep up the payments on that with their lousy jobs. Now they can send their kids to the lousy schools, put up with mariachi music all night long from their neighbors with three families to a house, hoof it to Home Depot for day labor, etc., etc. Am I forgetting anything?
“How do you let someone undercut the wage market?”
The market allocates resources by fixing a price. When a good becomes scarce, such as labor, then the price must rise to attrack more labor. This is how a free market works.
But, this market depends, for it’s life, on the rule of law. If employers decide to break the law, and import slaves (gosh, did I say that?) Then the market can not function…prices will not rise for labor.
We call this behavior “criminal”. But, a corrupt society allows it. The upper class fails to realize, however, as they always fail to realize, that if they break the law, and the bonds, of sacred citizenship, it is a very short step from there, to breaking the law against lining people up in the street and executing them with a machine gun. They always fail to realize this. And their last though, is always, always, as they stare into the trench they just dug for their graves, that “THIS CAN’T HAPPEN HERE!
Importing slaves is the EXACT description. The jobs that could be shipped overseas were (outsourced) and those they coouldn’t ship overseas are now being done by LABOR that was shipped in from overseas (insourcing). When you hear the politicians talk about illegals and who will do what work, they sound just like 1850 plantation owner.
I am so sick of the “jobs that Americans won’t do” line.
Americans will pick strawberries and clean hotel rooms if it pays a decent wage and comes with benefits.
And yes, you might pay $5 for a pint of strawberries and $100 a night at the Motel 6, but that money will be going back into our economy, not mailed to Sinaloa or Chihuahua or Jalisco
Bringing it around to the social contract. Very well put
“When you hear the politicians talk about illegals and who will do what work, they sound just like 1850 plantation owner.”
you have to be kidding.
“And yes, you might pay $5 for a pint of strawberries and $100 a night at the Motel 6″…
I’m sorry, but if we ship all the illegals out and don’t replace them with a opened up legal immigration system or guest worker program, then we just won’t grow any strawberries here. They’ll be shipped in from Mexico where they are irrigated with sewer water and toxic factory run-off (like a lot of our fruits and vegies already are).
You may get americans to mow yards or move gravel for $10 an hour, and you may get them to make beds and do laundry for $5 an hour plus tips, but you’re not going to get them to pick strawberries for even $20 an hour. That is TRUELY a SUCK job.
The solution to the job problem is to make it easy for someone to sue a company for a job that an illegal has. Anyone who wants a job simply hands the foreman or receptionist a subpoena and says hire me or I’ll see you in court.
Add a punitive damage to pay for the attorney and boom, job problem solved. Americans who want the jobs can take them.
However, this does not solve the overburdening of social resources like hospitals and schools by illegals.
bullshit - remember picking strawberries or harvesting apples or whatever was what summer vacation was for. Kids will do that kind of work. In fact, it used to be a right of passage and a way to EARN your way into college, etc.
Don’t give me this “Americans won’t do it” bullshit - of course they will.
I just returned from England. The trash collecters were English, the Window cleaners were english, the Painters were English. In fact many English people were supporting families on jobs Americans USED to do, but are now brutally undercut on. And frankly YES, I would prefer to pay an extra few cents for a head of lettuce and know it was picked by an American worker who made enough to properly support his family.
“…was created by government too by the use of easy credit”
Corrections: it was Crazy Credit!
The greedy builders could have found all the legal skilled labor they needed, if only they were willing to pay the correct wages to the legal American tradesmen. But No. They preferred to keep the lion’s share of the profits by hiring cheep illegal unskilled labors from south of the border. Now the shoddy construction problems are coming home to roost, making houses worth even less than they would have been, had they been built by legal American tradesman. Any home built by unskilled illegals, should have an additional 33% discount for poor construction, on top of the 50% off that’s coming.
Legal Americans who are employed at good wages on a steady basis, are always more reliable than transients. How can you possibly expect good reliable quality work when your only willing to pay dirt cheep wages. If your not paying $20+ dollars an hour in 2007, you’re not paying enough to make it worth anybodies while.
Not only do they price out anyone who earns money above the table but they also amount to a stealth tax for the rest of the taxpayers. It’s a nasty, two-pronged effect.
And before someone gets upset, I’m very pro legal immigration. It’s illegal immigration that I find hard to tolerate. I’ve even seen professionals (in one case a research scientist) that was still here illegally so it’s not just wage earners in the bottom tax brackets that are facing these issues.
And if an American gets a knock on the door from the IRS, for taking money under the table, they are toast. That’s a debt they will be paying even after they are dead. All an illegal has to do is flee back to their country of origin. Problem solved! That is a pretty major detail, in my opinion.
I agree. It would definitely be great if the U.S. could somehow bill the Mexican (or whatever) government for our cost of medical care for the illegals in emergency rooms, the cost of incarcerating them and then sending them back to their country of origin, the cost our police forces, etc. etc.
“…the cost of incarcerating them…”
I read that as incinerating, and was horrified for a brief moment, unaware our policies had swung so far to the right.
Who is saying the illegals don’t pay taxes? Just curious.
Is this a real question?
“It would definitely be great if the U.S. could somehow bill the Mexican (or whatever) government for our cost of medical care for the illegals in emergency rooms, the cost of incarcerating them and then sending them back to their country of origin, the cost our police forces, etc. etc. ”
I doubt my solution is original. Maybe some politico has proposed it.. and/or the idea may have fatal flaws. It certainly is unlikely to ever be implemented (there’s one flaw) much less vigorously enforced (there’s another!):
Since the large majority of illegals come here for jobs, target their employers.
Firstly, set a bounty on the employer. If you (an illegal) manage to find a job in the USA, report it to the INS and receive $10,000 cash, plus a plane ticket home.
Fine that employer $50,000. Subtract the 10K bounty, the plane ticket and any administrative costs, and apply any remainder to the local property tax kitty..
It won’t be long before they stop jumping the border.. no jobs.. no money.. no point in coming.
That is an important question. Ideology and myth are important parts of the immigration issue, but reality occasionally makes a showing. Not witholding taxes for employees doing regular work on site can result in the IRS delivering a hot poker to the eye. As a result employers almost always withold, but there is no chance of the workers ever getting a standard deduction back. Who are the theives in this story again?
People say that they are for legal immigration, but that has near zero relevance. Typical times for immigration are ten years for processing in a marketplace where products are introduced and run their cycle often in six months or less. That is off by several orders of magnitude. Until that is fixed illegal immigration will pick up the slack.
And why are they here anyway? Could it be that we saturation bombed their markets with goods that we subsidized the overproduction of. Oh, oops! Tee, hee. Obey the law, we say? Where is the law in this? I see only endless, relentless greed, shirking of real responsibility, and a devaluation of humans.
So someone ends up here illegally and working. What is the right thing to do? Find out why and fix that, or just bust them up and worry about their families later?
People talk about quality work from contractors. HA! There are only a handful of contractors I have ever known who consistently get things right, and most of them would have zero chance of qualifying for that job some place like Europe or Japan where it is taken seriously. The social contract broke down completely long ago. People know that native contractors are scum who will sucker them for the worst possible work at the highest rate, so why not go illegal since the quality is going to be terrible anyway? At least illegals can be bossed around to some degree, while natives are just going to be surly and chronically disobedient. American workers mostly just want a bit more wages, but it is their attitudes that end up being the blocking issue many times.
It’s a trick question. Illegals pay sales taxes, of course. The obvious solution is to replace income tax (which illegals generally don’t pay) with a consumption tax (which they do). An even greater advantage: Since most consumption tax proposals envision a large credit being refunded to low-income taxpayers to offset some of the cost of the national sales tax, and since illegal employees, being off-the-books, wouldn’t get this credit, they’d wind up paying even *more* taxes than the rest of us — making up for the past few decades, in which they’ve paid far less.
Who knows — with a proposal like this, and the continuing coma in the cheap-construction industry, Oaxaca might actually get enough of its men back to field a soccer team or two.
Good points! This mass movement of people has been created by market forces. Many “things” have probably been arranged behind closed doors between goverments and corporations that have created this movement and we the citizens left out wodering what really is going on. Behind it all, I’m afraid is simple greed. and those at the helm appear to be transnational corporations, who by definition have no particular national allegiance.
“…market forces”
Meant to say manipulated market forces.
By the way, this “punish the employers” won’t work.
Why not? Because a huge percentage of these people are employed by homeowners to do YARDWORK!!. What, is every homeowner supposed to be able to verify that someone is legal? Last time I looked, I didn’t have a personal Human Resources deparment.
All taxes should be property tax only.
You only pay taxes if you own a piece of the country.
Renters simply have to pay more because the property owner has to include tax costs in the rent. Tax problem solved. Big, wasteful IRS gone.
Property assessment can be kept rational by implementing a rule that any property owner has the right to forcefully sell their property to the tax authority for it’s assessed value. This will keep the assessments honest because the assessor will have penalized by assessing too high.
This would make all taxes fair because they would be based upon the true value of the property for any area.
Family friend used to work for Toll. The experience inspired him to create a slogan about the workmanship in their homes:
Guaranteed for five years. Then they fall apart.
My mother LOVES to repeat that slogan.
That sounds like the dark days of Harley-Davidson when a bowling pin company owned them. They used to say, “ride a Harley, ride the best. Ride a mile and push the rest.”
There has to be something as catchy for all of these McMansions.
hehehe…Think of all the hackster appraiser’s who fudged on their percentage of completion reports and checked the good quality construction box and gave these POS houses a remaining economic life of 60 years.
Lawyer’s will have a field day.
Have any of you ever hired employees in labor intensive industries? Do you realize what the costs are?
Just simple housecleaning is considered, for worker’s compensation insurance, to be a hazardous occupation. Forget that everyone cleans their house, and the cleaners can be bought at the supermarket. It is hazardous because “employees are working with dangerous chemicals in an uncontrolled environment.”
Work Comp for this is 33%. This means that if I pay someone $10.00/hour, I have to pay work comp $3.33.
Every paycheck I cut for gross pay of $400.00, I pay work comp $132.00.
Roofers pay close to 100%.
If you guys want good wages, and low prices, you have to get the damn government out of the picture. They are the ones raking it in with both hands, and pissing it away so they can play master of the universe.
Also, the vast majority of people who are paid under the table are paid that way to avoid Work Comp and other gov’t bs, they get paid more than the minimum wage.
“A 25-year veteran of the development business”, Gilbert homeowner Anthony Amendola knows how to spot quality construction.
Apparently not! I would NOT buy anything any of these national builders build. Complete crap from the ones that I have looked at, these folks are going to be stuck with junk for years. We went to a new Beazer development(just for sport), all I can say is a one handed blind carpenter would do a much better job.
Kinda funny story a friend relayed to me from a construction site, now I can’t tell you who he was working for or what builder only that this was in So Cal and maybe 13 years back. He told me he saw a guy on a ladder with a circular sander working on a piece of wood. He looked up and couldn’t figure out why he was doing this until he saw what he was sanding off. This is the plywood that bows a certain way, and it is spray painted on the bow with this side up for more strength. Well he put it down with the wrong side, and instead of pulling the nails and flipping it he spent probably the same time to get a ladder and sand off the paint.
It isn’t just the nationals. Back in Feb we toured a new “luxury” home by the supposedly “top” builder in Pullman. Throughout the tour we saw many, many shortcuts in construction. Then as we prepared to leave, my wife noticed that her feet were getting wet. There was a huge gap between the front door and frame, with rain essentially blowing in the front door.
But at least the counter tops were granite, right?
I believe every one of these stories. As a former owner of a McMansion from a major homebuilder, there is nothing I won’t believe. The thought of that house after 10 years scares the heck out of me. It won’t fall down but it will need constant attention. I like being a renter now and calling the front desk when I plug a toilet, or something.
As a former owner of a townhouse built by a major builder, I can back up the sentiment expressed above. I wasn’t the first owner, but it was built in 2000 — pre bubble. Over the years, I installed and updated bits and pieces, and each time I was horrified by what I uncovered, such as the shoddy wiring uncovered when installing a ceiling fan.
But there were also plenty of defects that were visible, but might have been missed in a single pass, or might only stand out on a bright day with the curtains open. One of my favorites was the pencil marks on the banister. They had marked up the dimensions and cut marks in pencil during the building process, which is understandable. But they had never erased the marks, so when they applied the finish, they essentially sealed the pencil marks under the clear finish forever.
But the best of all was the gray strip around the carpet. I don’t think I noticed it at first, because I might have mistaken it for a shadow. But after a couple of weeks I noticed — first in the basement. I tried vacuuming, shampooing, everything, but it never came out. For a while I thought that maybe the basement had flooded, but then I also noticed it in some third floor rooms, on both inside and outside walls. At one point I though it might have been dust — perhaps the previous owner’s vacuum couldn’t get against the way, but repeated vacuuming never got it out. Smoke? Mold? I never did figure out what it was.
What’s sad is that I had looked at several townhouses in this highly rated development. Each was roughly two years old, and in all of them I could see lots of defects with the naked eye. I used to joke that the master shower was caulked by a two-year-old. Everything that went into those places was the cheapest quality — the carpet in all of those places was shot in less than two years. The sad thing is that my place was the best of the lot.
the gray around the walls is dirt. The air flow is under the walls and when it changes direction from down the wall and under, the dirt is thrown out and deposits at the baseboard. This airflow is caused by the way houses are sealed for energy efficiency.
I tried all sorts of carpet cleaner, I even tried steam cleaning, and never got that stuff out. That’s why I thought it might be something other than dirt.
The airflow makes sense to me. I’ve seen it before in a previous house where a closed door lead to the stairway down to the basement (you could feel the air flowing under the door). Also, in one of the bedrooms in the townhouse I was poking around the gray stripe and was able to stick my hand under the crown molding. I was suprised that I couldn’t get the stripe out of the carpet, and that it showed up after being only two years old. I don’t know if the previous owners were filthy or what, but I was pretty anal about changing the airfilters (usually used 3m filtrete for allergies).
,i>“‘We’ve had mold, and now I’ll have to fill out a mold disclosure if I go to sell or rent the house,’ he said.”
Man, can that fat lady sing!!
Sorry if it’s a repost.
Trouble in paradise?
http://www.azcentral.com/business/articles/0617biz-kiyosaki0617.html
“People have been telling us they want more seminar-type events,” said Mona Gambetta, a spokeswoman for the Rich Dad Co., a Scottsdale firm owned by Kiyosaki and his wife, Kim, as well as Valley resident Sharon Lechter.
Yeah, I heard an radio advertisement for this crap this morning in San Jose. Typical Kiyosaki poison, you don’t need money or an education to become wealthy just come to the seminar and learn how to get rich in real estate. This from a guy who can’t even prove he’s been any kind of a big player in real estate.
I’ve known a wealthy family with a father who probably started out as a working class guy. Believe me, he saw to it that all of his children and grandchildren got an education.
Gee, I wonder why I have never heard (firsthand, non-infommercial) from even one person, that they became wealthy after atteding a “get rich” seminar?
A year or so ago, a friend of mine asked about some stock trading software, that she saw on TV. I explained that it was nothing more than a basic heat map. Then she asked, “what’s a heat map?”..
It always amazes me, just how gullible people are. When greed meets naivete, look out below!
“It always amazes me, just how gullible people are. ”
I’m surprised how civilization has made it to this point with so many people of this type; and the more gulliable, the more they reproduce.
According to the linked article, Kiyosaki is training trainers at Whitney Information Networks Inc., out of Cape Coral, FL.
Page 24 from the 10-K filed April 2, 2007 for Whitney Information Network Inc. shows a negative book value per share for the past 5 years, from 2002 (-$1.59) through 2006 (-$3.84), with 11,739,000
total shares outstanding at Dec 31, 2006.
From page 3 of their 10-K: Our tuition weighted average is approximately $364 for a basic training session and approximately $14,159 for an advanced course package.
Also from page 3, they list their course work: real estate investing, business strategies, stock market investment techniques, cash management, asset protection, and other financially-oriented products.
Whitney Information Network Inc.
Ticker: RUSSE.OB
exchange: OTC BB
I do not know what kindas advanced stock market investment techniques they are teaching their students for $10,000+, but I know that I would NEVER invest in an outfit with increasingly higher and higher negative shareholder’s book value year after year for 5 years. Whatever business model they are using it is a failed business model, at least from the shareholder’s perspective. Now as far as the executive compensation goes, they may not be cheating themselves out of any.
From page 23 of the April 27, 2007 proxy:
Russell A. Whitney base salary: $600,000;
Russell A. Whitney 2006 annual incentive award: $562,500
and from page 24 of the proxy: Mr and Ms. Whitney received $5.0 million and $2.3 million in 2006 in dividends and warrant proceeds, respectively, that relate to equity not associated to compensation and thus, not included in the enclosed compensation tables.
Got 10% down?
Don’t underestimate them. The owners are probably paying themselves huge dividends.
What, oh shucks, we are now bankrupt and our shareholders now pick up the tab.
When you add it all up, the total in salaries, stock options exercised, bonuses, dividends and warrant proceeds for Mr. and Mrs Whitney is $8.57 million, or 4.1% of total revenues for 2006. Using that same percentage, that would be like the CEO of Walmart getting $14.1 billion, or the CEO of Exxon-Mobil getting $15.0 billion.
Got 10% down?
I have no problem doing this for biotech startups.
Not for training companies.
Chuck
I have a problem doing this with biotech startups, mainly because their success rate is almost zero.
What this means is I will miss out on the next Amgen ($68 billion market cap) for the sake of capital preservation.
Different strokes for different folks.
Got 10% down?
“During the height of the housing boom, builders were so busy that they couldn’t find enough skilled labor,”
And now they are taking losses, so are letting go anyone with skill that expects to actually get paid, and going with the absolute bottom basement priced help they can find.
The greedy builders could have found all the legal skilled labor they needed, if only they were willing to pay the correct wages to the legal American tradesmen. But No. They preferred to keep the lion’s share of the profits by hiring cheep illegal unskilled labors from south of the border. Now the shoddy construction problems are coming home to roost, making houses worth even less than they would have been, had they been built by legal American tradesman. Any home built by unskilled illegals, should have an additional 33% discount for poor construction, on top of the 50% off that’s coming.
I needed some work done in my yard. Went to Home Depot and there was one day laborer in the parking lot… An ‘mercan.. Seriously, a white dude with perfect English. homeless though. Usually does day labor for $5 an hour (after taxes) for construction companies but looking for a chance to get $10 (private contractor style)… hey, I have to assume he’s paying his self-employment taxes.
He worked his tail off for 11 hours for $120. At dark I made him quit, fed him dinner and gave him my number. He was to call by 8AM the next morning to let me know where to pick him up so he could finish. After dinner I dump him at the local laundry with the backpack full of all his worldy possessions.
Next morning at 9:45 he leaves a slurred and rambling message that he’s across town at a restaurant (but doesn’t bother to tell me which one or where it is)… Ummmm I’m thinking he needs a day to sleep it off. Next, next day I get another call that he’s on his way back to my side of town and will let me know where to pick him up to finish… 1) I’d already gone back to HD to pick up someone else. 2) that was over a week ago and I’ve not heard from him…
2 days after Fred the ‘mercan no shows on me, I head back to HD and pick up two people that “no habla espanol”. Plausable deniablity… could be citizens for all I know. They finish the job in 6 hours x 2 people…. about how long I think it would have taken Fred.
So, week passes and I decide to accomplish one more small task. I head back to HD to pick up more help. This time it is a Cuban that came over 30 years ago. Now is a citizen, strong English skills. 6 hours later we’re over half done, but the 108 degree heat forces to finish for the day. I pay him $10 an hour with assumption he is paying his own self-employment taxes.
Again, I’m to pick him up the next morning. AGAIN, no show!!!!
Back to HD to pick up another guy… two want to come. I say “4 hours for one, or 2 hours for 2. They take the 2 hours for 2″. Actually took 2.5 hours, but I paid them for 4 hours since they did a REALLy good job, very quickly before the heat hit.
Anyway… My conclusion is that there are citizens that will do these jobs for the right price, they are just too flaky to trust.
There are plenty of American contractors who will not show up for work once they have enough money for their latest hunting/fishing/drunken weekend trip. Offering more money just means they leave sooner.
pick up two people that “no habla espanol”…
Sorry, they “no hablan Englais”.
Hablo solo un pacito espaniol… classes en escuala secondario, pero hace mas de venty anos.
The guts of the story is that I asked for bids from several landscape contractors and they all gave me bids in the $1500 to $1800 range for the first phase. Acted as my own contractor, and with some assistance at $10 an hour, I completed the job for $550 materials, $250 labor, and 17 hours of my own labor.
And if your job gets sent overseas (if it can), are you going to expect anybody to have any sympathy for you? After all, they are just watching the bottom line.
So you made $40/hour for your labor. Was it worth all the hassle and extra gas?
NYCityBoy… I’m a computer programmer. Yeah, jobs being sent overseas, or people from overseas being brought here to do it. Do I expect anyone to have sympathy for me??? Not a drip.
GroundHogDay,
Was it worth $40 an hour and the hastle? Ummmm… YES!!!!! The job was done soooooooooooo much better with me here watching every move, making sure no corners were cut, making sure it was done exactly how I wanted it.
I’ll cut out the middle man anywhere possible. I’m the ultimate in frugal bung-holes.
Should have seen the names I was called when cutting corners on my upcoming wedding. Photographers wanted $300 an hour, 5 hour minimum, with them owning the copyright on the photos… umm… not.
Got an estimte from a DJ. 4 hour reception for “as little as” $500. When he showed up with the contract, he tried to make it $900 with $500 extra for the ceremony. Was ready to kick him out of my house until he came down to $500 for the reception and $250 extra for 2 hours for the pre-ceremony seating, ceremony and coctail hour while we take formals.
$200+ per hour my arse!
I’m with you Darrell, if I can do it myself then I will - not so much to save money - but to get the job done right the first time. Getting stuff done right the first time is worth the hassle, even if you are not saving that much in expenses.
Got 10% down?
Legal Americans who are employed at good wages on a steady basis, are always more reliable than transients. How can you possibly expect good reliable quality work when your only willing to pay dirt cheep wages. If your not paying $20+ dollars an hour in 2007, your not paying enough to make it worth anybodies while.
“If your not paying $20+ dollars an hour in 2007, your not paying enough to make it worth anybodies while.”
You need a wage equal to the median household income… 3x the minimum wage… to make it worth your while to do totally unskilled, manual labor like moving dirt and gravel?
Holly crap? What work do the people that make less than medain do if they are less skilled than shovel operator?????
“Schwer said there has been a greater decline in jobs for construction in Nevada than nationally, since construction makes up a larger sector of the local economy.”
“‘Our state will be impacted…more than the rest of the nation,’ Schwer said.”
Luckily California does not have a real estate dependent economy like Nevada’s.
“Luckily California does not have a real estate dependent economy like Nevada’s.”
I think you forgot to add the rim-shot to the end of that.
“Luckily California does not have a real estate dependent economy like Nevada’s.”
Or any other state, for that matter -);
Seriously, I think somethink like 40% of private sector jobs created since 2001 are RE related. One by one, these local economies will start to show cracks at the seams.
Construction seemed to be the one and only manufactuing industry that couldn’t be outsourced (except to illegal imigrants).
I think AZ’s construction economy REALLY tanks in the fall when all the new shopping malls open and no one shows up. We have SOOOOO much retail space under construction right now… Only matched by the amount of high-end condos that are being built…
You too can buy an upscale condo for $400K and up.. only a block from where $800 a month rents you an apartment that is very similar to the condo. Hmmm…. rent for $800 a month or buy for $4K a month… decisions, decisions… Oh, I just can’t figure out which is the better deal!!!
Renting is throwing money away.
Some of these economies are toast as the construction and home sales goes away.
Pheonix, IIRC, has the highest fraction of construction employment. Las Vegas cannot be too far behind. But I see the scramble in Irvine as the various mortgage companies go Tango Uniform. They are still paying a surprising number of heads to ‘close shop.’ But now the first of the ‘transition periods’ are ending and the 2nd wave of layoffs from the zombies is coming.
By October… it will be interesting.
Got popcorn?
Neil
today, buying is!
The Condos!
Oh my god, in Seattle (it’s different here), there are So Many Condos shooting up all over! There are smaller 20-60 unit buildings coming online everywhere, in addition to a few down town McCondo monsters.
It will be interesting. I can’t wait really. More and more and more inventory.
Here in Seattle too.
Enough of this Condo crap. Bring on the decline!
Apropos of inventory in Wash state.
A friend fwds this from an outfit called “Orcas Dreams:”
Dear Friends:
Right now we have lots of inventory, a total of 278 properties for sale! If last year you were discouraged by lack of choices, you will find we have a much greater selection of homes and land than we have seen for a while. It is a great time to be looking for your dream on Orcas!
It goes on to cite several specific properties from San Juan Islands MLS, ranging from a “prepared site” for $385K to a $1.05M “Pacific Moon Farm,” where for a little extra, you can buy the alpacas too. Then it talks about the “Feminization of Real Estate,” how many single women have been buying homes recently. That might be true, but I’m not quite ready to let my whole gender take the rap for the housing bubble — most of the single women I know who bought property in the past few years paid $150K or less.
Anyway it’s comical how these RE types can tell you with an apparently straight face that a big inventory is a good reason to become a buyer. Ha ha, the same people who said we should buy to avoid being priced out forever.
“Despite its recent spike in foreclosures, more than tenfold in the past year, Arizona still ranks in the bottom 10 for the overall number of people losing their homes.”
We got a late start. We’re only off 5-10% dowm from peak in prices, and people are still able to do short-sales. Give it another 6 months and check back…
umm…
Countrywide Financial CEO Sells Shares
http://biz.yahoo.com/ap/070615/countrywide_financial_mozilo_insider_transactions.html
Countrywide COO Exercises Options
http://biz.yahoo.com/ap/070615/countrywide_financial_insider_transactions.html
hmm…
COUNTRYWIDE FNL CP (NYSE:CFC) CLOSE: 39.34 +0.91 (2.37%)
oh my…
15-Jun-07 MOZILO ANGELO R 46,000 Automatic Sale at $37.99 per share. $1,747,540
14-Jun-07 SAMBOL DAVID 6,375 Automatic Sale at $37.79 per share. $240,911
14-Jun-07 MOZILO ANGELO R 46,000 Automatic Sale at $37.83 per share. $1,740,180
13-Jun-07 MOZILO ANGELO R 70,000 Automatic Sale at $37.81 per share. $2,646,700
11-Jun-07 MOZILO ANGELO R 70,000 Automatic Sale at $37.67 per share. $2,636,900
8-Jun-07 MOZILO ANGELO R 70,000 Automatic Sale at $37.95 per share. $2,656,500
6-Jun-07 MOZILO ANGELO R 46,000 Automatic Sale at $39.06 per share. $1,796,760
6-Jun-07 SAMBOL DAVID 6,375 Automatic Sale at $38.99 per share. $248,561
4-Jun-07 MOZILO ANGELO R 70,000 Option Exercise at $9.60 $6,840,002
4-Jun-07 MOZILO ANGELO R 70,000 Automatic Sale at $39.15 per share. $2,740,500
1-Jun-07 MOZILO ANGELO R 70,000 Automatic Sale at $39.01 per share. $2,730,700
=s
Wait… didn’t they just sell a bunch of bonds to do stock buy-backs to jack up the share price??? I’m sure that isn’t related.
Why do I have in mind the image of rats jumping off a sinking ship?
Did anyone else notice the ABX indices crashing recently? The last time that happened was right before the subprime meltdown in February.
I had a co-worker move to Vegas in October ‘05. She was so excited about all of the money she had already made on her house. “It’s already worth $40,000 more,” she told me. I warned her to be careful with the downturn that was coming. She would have none of that.
She stopped in the office last week. She admitted foreclosures were high and it had slowed a little but only a few people would be hurt. Sometimes I find myself hoping for bad, even with the people that I like. It just seems like they should have to take a good kick for being so blind and/or stupid. Denial is king in Vegas.
Denial is king in
Vegas humans…thanks a
lotDarrel!Let’s try this one last time and maybe I can get my / in place of a \…
Denial is king in
Vegashumans…Some quotes from Fear and Loathing in Las Vegas mainly about hallucinogens but that also apply to housing… because I drank too much instant coffee and need a break from work:
A Flipper: “Strange memories on this nervous night in Las Vegas. Has it been five years? Six? It seems like a lifetime, the kind of peak that never comes again.”
A Realtor: “There was madness in any direction, at any hour. You could strike sparks anywhere. There was a fantastic universal sense that whatever we were doing was right, that we were winning. ”
A mortgage broker in 2009 “We had all the momentum; we were riding the crest of a high and beautiful wave. So now, less than five years later, you can go up on a steep hill in Las Vegas and look West, and with the right kind of eyes you can almost see the high-water mark - that place where the wave finally broke and rolled back.”
FB: “With a bit of luck, his life was ruined forever.”
“Suddenly, there was a terrible roar all around us, and the sky was full with what looked like huge bats, all swooping and screeching and diving around the car” -
Fuel prices are too high so Bernanke is using Flying Monkeys instead of helicopters.
Lowballer: “Let’s get down to brass tacks. How much for the ape?”
(Ape is slang for a shoddily constructed spec home?)
FB: “Panic. It crept up my spine like first rising vibes of an acid frenzy. ”
Two Mortgage Brokers in a leased BMW: “Our vibrations were getting nasty. But why? Was there no communication in this car? Had we deteriorated to the level of dumb beasts? ”
Old man on an investment tour bus: “Who are these people? These faces? Where did they come from? They look like caricatures of used car dealers from Dallas, and sweet Jesus, there are a hell of a lot of them at 4:30 on a Sunday morning. Still humping the American dream. ”
Jeff contemplating a condo purchase: “The possibility of physical and mental collapse is now very real. No sympathy for the Devil, keep that in mind. Buy the ticket, take the ride. ”
FB Panic setting in: “Jesus, bad waves of paranoia, madness, fear and loathing - intolerable vibrations in this place. Get out. The weasels were closing in. I could smell the ugly brutes. Flee. ”
RE Gambler: “We won’t make the nut unless we have unlimited credit. ”
This is just a great quote about the American Dream, especially as it applies to housing:
“We are all wired into a survival trip now. No more of the speed that fueled that 60’s. That was the fatal flaw in Tim Leary’s trip. He crashed around America selling “consciousness expansion” without ever giving a thought to the grim meat-hook realities that were lying in wait for all the people who took him seriously… All those pathetically eager acid freaks who thought they could buy Peace and Understanding for three bucks a hit. But their loss and failure is ours too. What Leary took down with him was the central illusion of a whole life-style that he helped create… a generation of permanent cripples, failed seekers, who never understood the essential old-mystic fallacy of the Acid Culture: the desperate assumption that somebody… or at least some force - is tending the light at the end of the tunnel.”
–
“Housing Is Going Into The Tank”
And when the tank bursts?
Into the sewer??
And when the sewer spills into the whole economy???
Jas
Its only a problem when the river catches fire.
Got popcorn?
Neil
Believe it or not, this has happened before…
http://www.ohiohistorycentral.org/entry.php?rec=1642
Why you gotta go and bust on Cleveland like that?
Here in San Diego, they just dump the sewage in the ocean - every opportunity they get. Wonderful local government we have here - so preoccupied with the fate of it’s retirement fund.
There’s a looming, widespread potential defect in up to 50,000 Las Vegas area homes. The matter is already before the courts, but it’s going to be a mess to straighten out. From 1995 to 2005 several of the plumbing contractors hired by most major homebuilders used a brass plumbing fitting. There are several in each home and impossible to check as they are behind the walls. The fittings were promoted as innovative, but the manufacturer apparently used too much zinc. The Vegas water is reacting with the metal, and the zinc is leaching out leaving a very weak bit of copper to hold the piece together, then failure, water damage, and a big mess. The manufacturer and supplier pulled up stakes and went to Canada. The local plumbers being sued are in bankruptcy or facing it. Costs for repairs range from the $7800 Pulte offered some of its buyers to $30,000 for a complete replumbing of a new house.
Pulte’s buyers who opted for the money face a two year wait for repair, and Putle was recently ordered by the court to butt out of the thing. Other builder are waiting to follow the court’s advice, but some are saying any problem would still be under the long term warranty. It’s going to be a nightmare for a lot of people.
And, to add to what was said above, there really are only two jobs in Las Vegas - casinos and gaming, and the construction industry. There’s no manufacturing, I’ve never been able to understand how so many could afford so much house with so many goodies. Add to that a government that is essentially and blatantly corrupt and has very little social services for those who end up that bad and it’s a recipe for disaster. It’s a place that seems to pride itself on showing off its flashy gambling dens, but has a high illiteracy rate, very poor schools (they bleat not enough money - that fraud of an excuse), and dependence on one industry that is no longer unique in the US, and there’s not much here. If the whole valley disappeared, the world’s IQ level would rise, and there’s nothing here that would be missed by civilization or history. Nevada did rank #1 this year in one area - the most dangerous state to live.
Here’s a link to the attorneys handling the case: http://www.plumbingdefect.com
Note that their expert said ALL homes with the defective fittings will have the plumbing fail.
Thanks! I had not heard this. WOW!
This whole HB circus get’s better with every act…..
However, since my job ultimately depends on consumer diposable spending, it sorta feels like gallows humor.
My last job was writing software for retailers.
Now I write software mostly used by medical field, but also used by govt, banks, and many other companies. Feels much safer having a priduct that isn’t focused at a single segment of the economy, even if that one segment was 70% of the economy.
“The stormy economic year ahead will be characterized by disheveled coiffure, garbage cans on the lawn and a migraine headache, especially for residential housing developers.”
ok, but “disheveled coiffure” translates to bad hair day. perhaps no time or money for a haircut/tint touch up. or its so bad im pulling my hair out….
Steve R,
could you try reposting that again, it’s a really important post.
err…
Lawsuits flow over plumbing in Las Vegas
http://www.reviewjournal.com/lvrj_home/2007/Feb-09-Fri-2007/business/12368182.html
Reminds of a class action lawsuit a friend joined against a certain plumbing fixture they had installed. This was in the early 90s. Many years later a check for $5 arrived. The lawyers got half, everyone else $5.
Didn’t it come through, Spike66? I can see it fine. If not, I’ll repost if the other readers won’t mind.
SteveR,
must be me, I switched browers and can see it fine. Thanks.
So that’s Pulte, and Mike Morgan is taking on Lennar for defective homes, his website defectivehomes.com, posts news on his lawsuit against Lennar involving thousands of houses in Florida.
It wasn’t only Pulte, several builders used the plumbing contractors and the faulty parts, including Richmond, KB Home, others. Not only in less expensive developments, but also in Summerlin and Anthem. It’s all over the place. I’ve got a KB model which may be affected as I was notified by the class action attorneys. Even KB says they don’t know what homes are affected, but I’d be covered by their warranty if it did cause a problem. I’ve got my place up for sale, and will disclose the potential problem to a buyer, it’s only right to do so, though I know they are selling homes without disclosing this. KB said the new owner would still be covered under their 10-year warranty. At least I’d be honest with the buyer, and safe from being sued for not disclosing.
The attorneys made a mass mailing to thousands of homes in town, so any sellers have been told months ago of the problem. Check out the link above, it’s got photos of what’s happening with the plumbing.
Did someone say faulty plumbing defect?? In HOW MANY houses???!
Yeesh, it looks like those in the home repair/plumbing repair business will be profiting in the future. I’m seriously wondering about the market out here for home repairs…my theory is that the new home construction end of the business is going to tank while the home repair end will boom, just due to all these shoddily constructed newer homes. Someone’s got to fix them.
Las Vegas better get its act together, NAR is meeting there in November:
http://www.realtor.org/convention.nsf/
(The general session is kicked off by a comedian (and no, it’s not DL).
Who is going to cater that one, Chuck E. Cheese? Or are they gonna brown bag it?
Got 10% down?
“‘There is going to be some unpleasantness ahead,’ Schwer said.”
Didn’t they say that on the deck of the Titanic after they hit the iceberg?
I believe they said “Iceberg damage is contained. Full steam ahead.”
Gs………in todays world everything is contained, from icebergs to subprime loans. Do you not believe in “Goldilocks”?
“‘There is going to be some unpleasantness ahead,’ Schwer said.”
Didn’t they say that on the deck of the Titanic after they hit the iceberg?
no, no..you’re thinking of when you sat down to watch the movie a few years ago…
“‘Even though housing is going into the tank, there is still money to be made,’ he said.”
Now there’s some great investment advice!
From txchick’s comment..”Well, fancy that. Toll builds shoddy crap. Should be fun when the class action suits start rolling.”
What will be really fun and interesting, is when people find out that their purchase contracts with certain builder’s, contain clauses that prevent them from filing class actions, going to the media, discussing issues with other owners, etc. I am not sure how binding these documents are, but I had read about these agreements over the past few years. The builder’s knew that they were erecting crap-boxes. They might be greedy, but their attnys aren’t stupid. Many of the FBs signed everything away, including their rights. Have fun in mediation. BTW-I hear that a very high percentage of the time, the mediators side with the defendant.
Usually such contracts if they exist as badly as you say can be overthrown because they are too one-side and “unconscionable“.
“Before the economy improves, the residential real estate sector will continue to lag, dragging down the Southern Nevada economy with it.
Dragging down? More like dragging out back and beating half to death!
From the future:
June 19 (Bloomberg) — Japanese stocks dropped for the first time in four days after confidence among U.S. homebuilders fell to a 16-year low, raising concern a slumping housing market may curb growth in the world’s biggest economy.
You mentioned Japanese stocks, so I just had to post the joke that my friend sent me:
“Why it’s important to understand English
I had a bunch of Canadian dollars I needed to exchange, so I went
to the currency exchange window at the local bank.
Short line.
Just one lady in front of me. . .an Asian lady who was trying to
exchange yen for dollars and she was a little irritated . . .
She asked the teller, “Why it change?? Yesterday, I get two hunat
dolla fo yen. Today I get hunat eighty?? Why it change?”
The teller shrugged his shoulders and said, “Fluctuations”.
The Asian lady says, “Fluc you white people, too!”
LOL!
I’ll believe it when I see it. Still renting here in the Vegas valley (and still liking the town - you Vegas haters have a right to your opinion but there is a lot to like here) and hoping to buy in the next five-ish years when things start to make sense price-wise. Maybe locally, maybe elsewhere in the country; my job isn’t tied to geographical location too strongly. The reason I post is that I’m not seeing listings coming down from wishing prices yet. I check often and I’m just not seeing it yet. Lots of homes staying on the market for months without selling, open houses all over my neighborhood with no cars parked in front (well, maybe the realtor’s) but still not much movement on prices. No way would I buy at these prices, I work too hard for money to throw it away or tie myself into an insane loan just to be able to paint the walls whatever color I want. Still, the sellers I’m seeing have yet to face the new reality of falling prices. Perhaps the tipping point will be the ARM resets over the next couple of years, maybe they’ll just end up choking on the carrying costs (for the vacant, speculator owned properties), I don’t know what’s going to do it. I’d just like to look in the business section, see some statistics and listings, and for once say, “oh yeah, that makes sense”.
Let’s be honest about LV. If it weren’t for air conditioning, gambling and nudity no one would live there.
All three of those reasons, added to the fact there is no state income tax, are precisely why I want to move there. LOL.
Don’t let the “no state income tax” bit fool you. You get taxed, just in different ways. You end up paying one way or the other. When I moved here, I had to pay over $600 to register a 10 year old car in Nevada. DMV fees are breathtaking at times. Other government services come with high fees. You pay a transfer tax when you sell property or even quitclaim a portion in some cases. Gas taxes are among the country’s highest. All sorts of little fees here and there.
FYI, that DMV fee is mainly the Clark County portion of the fee. When I lived in Vegas, it was about $500 to register my 2003 Honda. About $400 of that went to Clark County. If you live outside Clark (yeah, I know, that’s only 30% of the state population) it’s a lot less.
Furthermore, it’s WAY WAY less than I’m paying in income taxes in California. The fee-for-service model is just fine with me.
Well, I dunno. Vegas is basically the same as Phoenix, except there’s actually fun stuff to do, and people are moving to Arizona like there’s no tomorrow.
and our mountains have proper pointed-tops to them (sorry Phoenix)
I’ve almost always vacationed there.. i like the action and the desert.. and have been looking to buy something in the Vegas area since around Oct ‘06 (might’a done it already had I not stumbled across this blog.. thanks Ben, et al.). And yeah, so far nothing looks right. But I’m still learning the neighborhoods and scouting around, so there’s no hurry at all.
The Vegas market’s rise may have been spectacular but it failed to reach escape velocity before running out of fuel.
Noe we let gravity and time do their job.
Hey, sellers. Resistance is futile. You will be assimilated.
We’ve hit Vegas so regularly over the years (and like it) that we seriously considered getting a place there in the 90’s — as a sort of vacation home, although we rent in LA. Of course, that was when prices were cheap.
Probably will get one up there in a few years… when they’re giving them away. Seriously.
Help! Been renting a house in Manhattan Beach for 11 months. Got a call today from property mangement company…..owner is “thinking” about selling the house and is going to call to see if I want to buy it. Wife is pissed. To gradeschool kids. I have been lurking for two years.
Tell him you’ll make him an offer: PITI (+HOA if one) = your current rent.
See if that causes a little bit of reality to set in.
The asking price is how many times your annual rent?
Suze Orman would say, don’t pay more than 20x annual rent.
I would say, don’t pay more than 12.5x annual rent.
There must be other rental houses in Manhattan Beach.
Suzie Orman has some good advice, but a lot of what she says makes me shake my head and says “Are you crazy, lady?”
Is your lease up for renewal soon ? Sounds like a shot across the ‘rent increase’ bow.
Say thanks, but response should be you are not interested in buying due to family commitments at this time but would be willing to discuss renewing a lease.
If they are following up with an major rent increase, then you options are: pay up; meet them half way; go and look for something else and say feck ‘em.
No magic answers I am afraid unless you have some rent control stipulations in your area.
OT but I’m traveling this week and I notice on cable (I don’t have it, so I have to get my fix on the road) and HGTV has a few shows I hadn’t heard of: MyFirstPlace and Spice Up my Kitchen. Ugh!! Are these NEW shows?
I will say that even the shows indicate a “buyer’s market.” However, until this obsession ends we got a ways to go….
Is there one called “Pimp Your Flip” yet?
Landlord purchased 11.5 months ago for 1.0-M. Rent is 3140 per month. No where near cash flow.
Then prepare to move. He’s going to have a serious learning process ahead of him, and I’m guessing you don’t want to be a part of it.