Bits Bucket And Craigslist Finds For July 2, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Repeating the very last entry in yesterday’s Bits Bucket, which might not get seen since it was posted after midnight.
http://kob.com/article/stories/S127071.shtml?cat=516
Actual shanty towns in the US? Not good.
Here we go. The Brazilification of the US.
NM, living up to its stepping stone to the Third World reputation. Family of seven, a ten-fold increase in the number families…
Relax. We’ve got a ways to go. Like maybe 300 years at the current pace.
Geez-I go to Beantown to see a Richard Thompson on Saturday.
night.
The place is a zoo. On a Saturday night!
I park my car 2 blocks from the venue.
Couple of Somali’s score my $35.00.
So as I make my way down the sidewalk, there’s all these transient vendors with their wares laid out on blankets in front of the rent payin’ storeshops.
Interspersed are various panhandlers and the boom-box crowd.
I’m thinking like WTF…am I in New Deli or something?
Cities suck.
They never fail to remind me how far the US has gone down the socio-economic crapper.
I saw Richard in Boulder last month - great show!
Pretty impossible here in Germany. The authorities would stop that. Poor families get support from the government, including an appartment. However, they have to accept any job offers, if not, they loose the government support.
I have two words for you: Henrico Frank.
Two more words: Guillermo Ricardohijo
Henrico Frank has an appartment, and he refused job offers, so politicians wanted the authorities to suspend the Hartz IV payments to him.
He also refused to meet the chairman of the social democratic party and prime minister of the state Rheinland-Pfalz Kurt Beck even though Beck wanted to help him and offer jobs.
So, yes, it is certainly possible to refuse any work and still get government payments, simply by misbehaving in ways that are unacceptable for any company.
Right Now i would accept that deal………
I have never seen a time in America when employers just flat out refuse to hire anybody smart. Instead of Yes you maybe be overqualified, for this job.
But it also means you already have the potential to advance in this company. But NO…..Smart people get the run around, well we haven’t decided who to hire 3 weeks later……
I am so discouraged.
Once you’re past about 45, if you have a spotty work history and a history of self-employment you are essentially unemployable, no matter how smart or qualified. Hey, that’s life - employers, like insurance companies, are acting rationally with imperfect information.
That’s why I’ve stuck it out in my own business. I’m past 45. And I know how the job market treats people in my age group.
I’m 48. I haven’t seen age discrimination yet, but I do see younger workers thinking they are better than me. One currently tries to one-up me. Management is about my age, which is one reason they retain me. I’ve been preparing for age discrimination by saving lots of money. If I have to be forced to be a Wal-Mart greeter earning $25,000 per year but with a $75,000 income from investments, it won’t really feel so bad. Especially with Wally just about anywhere. Is there one in Anchorage?
I don’t think Wal-Mart greeters earn that much. Maybe $12,000 per year?
Management is about my age, which is one reason they retain me.
Definitely a saving grace. I have met few young managers who do not feel threatened by older subordinates.
and plastic surgery may help you all -
then switch jobs and do not tell anyone your real age.
I’m considerably older than 45 and have worked for a lot of different employers. The only time I’ve had trouble finding a reasonable job is during the post-2000 IT crash.
The story doesn’t make clear whether or not these squatter families are illegal immigrants. Either way, at least here in Florida, families like these could live in government (taxpayer) subsidized housing as long as some part of their income comes from agricultural work. Nice places, too, with swimming pools and clubhouses and van transportation. Places American citizens in similar circumstances couldn’t live in, unless they are working in agriculture.
It would seem from the article that these families choose to live there, rather than in the city. No rent to pay, more money to send back to the homeland.
Palmetto,
I dont know if ya saw it today but in the Herald Tribune is a article written about a appraiser who studied North Port.
He and his employees drove all the streets in town and counted fsbo,vacant,RE and empty lots. He didn’t sound real upbeat. The guy sells his study online so i am going to pick it up later today. I am sure he has a couple of bucks in compiling the info.
Something else weird i found out over the weekend. The lot behind the house is supposedly under contract for 30k.
On realtor dot com there must be 500 lots under 15k. I have no idea why someone would do this. I guess dumba$$e$ will be found all the way down…
Chris
good thing they arent paying taxes, which the immigration bill would have discovered…..
Is it true the women have to accept jobs as prostitutes?
Actually not new or all that unusual. Read Steinbeck and “Tortilla Flat” It was how most of the Navahos lived on the rez 20 years ago.
I remember Phoenix during the last serious recession having squatter towns under the bridges.
Some of this has been happening I know in the southwest portions of Tucson just off of reservation land…..whole “sort of homes” being built in areas with no water, sewer or the electricity is “pinched” from a power pole. Got so bad that landowners do not know where their property lines, roads, easements, leave off and the shanties begin.
More Hoovervilles coming.
It’s also happening along the Nogales Highway near Tucson International Airport. Worse, there are parts of midtown Tucson that are approaching the same low quality of housing.
The squatter town in Portland, OR is referred to as “Dignity Village”. City leaders actually picked out a spot for it on city property. Needless to say, surrounding property owners were upset, but the city jammed this through.
I may actually prefer this lifestyle at this point in time. I’ve gotten so fed up with everything - not just housing, but everything. I recently said I wish I could quit my job, sell all my stuff, jump into my car, and drive drive drive to the middle of nowhere, pitch a tent, and live. Of course I wouldn’t put my son thru that, but if it were just me…
This guy has been blogging about living in his vehicle for the past two years:
http://www.gotruckyourself.blogspot.com/
does he have insurance?
“We’ll help them with whatever resources that are available to the county.”
So, stick it to the taxpayers. How about enforcing the county health codes,and zoning laws, not to mention the laws against stealing power? Or, is lawlessness now simply part of the social fabric?
Probably since it is in New Mexico, it is safe to assume the majority are illegal…
“The next step for the county is to notify the land owners their property values will drop if illegal growth continues.”
That will really scare the land owners. Do they get a tax cut when their property loses value?
of course. 2 years too late.
I’ve actually walked inside one of these “towns” when I was in San Diego (long story why). The roofs of the huts were no higher than the chapparal so it was completely invisible at any distance, you had to be inside the “town” to see it, basically. it was right outside the fields in northern San Diego county, and it was fairly sizable with a network of roads. It was a shock to me, I couldn’t believe anything like that could exist here. This was in 1996 so it’s nothing particularly recent.
I received this today from a friend who lives in Westwood. She got it from the Westwood Homeowners Association. I thought maybe the geniuses on this blog could answer some of the questions at the end of the email…my suspicion is that there wasn’t enough pre-construction pre-sale interest. As for impact on the neighborhood…maybe in a general way, Westwood — the place where I grew up — will once again be acessible to the middle class? That’s my dream. Although I suspect a lot of the current, long-term residents might not be too happy with that assessment.
Development update
The “pumpkin patch ” condominium project located at Wilshire and Club View Drive was recently placed on the market for approximately $95,800,000 in its present “as-is” condition. The asking price includes construction costs spent to date, the real estate and the entitlements for a luxury hi rise 35 unit condominium building where units are expected to sell for approximately $1,600 per square foot.
It is anticipated that the new buyer would complete the building and manage the sales program.
At this time it is unknown why the developer decided to leave the project during the early stages of construction. The project was expected to be completed about March, 2009.
Many questions remain unanswered. Why sell out during the early stages of construction? Is the project truly a viable project? What negative impact, if any, will this have on the surrounding residential neighborhood?
Q: “Why sell out during the early stages of construction?”
A: Because, in part, it’s less likely today that “units are expected to sell for approximately $1,600 per square foot.”
********
There should be a name for that kind of thing. That is… planning / building projects at peak prices, with peak expectations, well past the peak bubble in housing.
Something like “downsiders” or “gravity finders”.
Or maybe just “dreamers” would suffice.
Good point. My friend did the math and couldn’t believe that those 35 units would have to sell for at LEAST $3 million a piece — to recoup what they’re asking for the (almost completely) undeveloped land. Single family homes just around the corner sell for less, and you get a lot more:
http://guests.themls.com/profile_page.cfm?mls=07-181137
So I guess the question is, why would somebody pay in excess of $3 million for something with HOA dues, when they could get a four bedroom house five blocks away for almost a million less?
Somebody didn’t pull the comps or do the math…or something.
Math. When did math or common sense have to do with California prices?
Oh, about 1997 or so, Jerry.
“Why sell out during the early stages of construction? Is the project truly a viable project?”
the secoond question answers the first..
“What negative impact, if any, will this have on the surrounding residential neighborhood?”
Doh!
In Argentina there are squatters like that. It is VERY difficult to get them off your land once they are there, so no one leaves their buildings/homes/apartments, etc. unoccupied for very long (if at all). I know Argentines who will not travel without having someone live in their house or tend to their property while they are gone for fear of squatters. Thieves are a problem, too, but theft is generally not as hard to recover from as squatters.
If a squatter is in a dwelling on your property, it does not matter if you are the owner of dwelling/land or not, or that you want to refurbish the place for your own use, if someone is deemed a rightful squatter (I don’t know the legal definition of a squatter here.), and refuse to leave after much conversation, negotiation, etc., you have to take them to court to get them out.
Folks here will live in run-own shacks that have had the windows, roofs, plumbing, etc. all removed. The building must literally be destroyed to keep out squatters here. I know of one couple who had to go through a four-year court battle to get a family who was living in their machine shed (a place where farm implements are stored) out and off their property. I know another couple who ended up buying a small property for the squatters to get them off their land. In that instance the squatters has a child less than 18 years of age, so the owners could not boot them out until the child was 18. They could not cut off the utilities, either, and had to pay for them. Of course, the child turns 16, has a kid and the process starts all over again, except you have more squatters. The government here as made the care of the poor the direct responsibility of the rest of the populace simply by enacting certain laws (or failing to enforce existing laws), that achieve that result. From the sounds of this article, it looks like this is beginning to take shape in the U.S. Look at other countries and how those who are property owners manage to keep it. You’ll be glad you did.
I don’t know what squatters are called in Argentina, but in Mexico they are referred to as paracaidistas (parachutists). When a private landowner finds them on his property the usual reaction is to hire some thugs to vacate them. For this reason in Mexico squatters usually set up camp in government owned land. These slums can become quite huge (hundreds of thousands of people and are known as “ciudades perdidas” (lost cities) because they do not show up on any official maps. Eventually the gov’t will grant title to the squatters and pave the streets, build water and sewer lines. Power (which is usually stolen prior to the amnesty) is then regularized.
This is one of the best blogs to read. Y’alls should support it.
Everything that was written here just a few years ago is now coming to fruition. You do not get this “early warning” heads up from the MSM and never will, because the MSM is beholden to their advertisement clients.
I missed the fund raiser last week, so I donated this morning. If y’alls missed donating last week then y’alls can always donate this week
What is “ya’alls?” I’m originally from Atlanta, and never heard this one.
Stay tuned. As us northerners continue to move south, we plan to misappropriate the quirks of southern dialect in all sorts of new and interesting ways.
You’uns to Ya’alls. Heh. What’s next, perogies for breakfast?
A northern girl flops ungracefully down in the University dining hall and humphs: “Men! They’re all alike!” A southern belle pipes up: “Meen’r all ah lahk, tew!”
shee-it, girl you bess take yo ass to the store with all that.
We had a short vacation in San Antonio this past weekend. We spent an hour or so driving from Canyon Lake to Bulverde and down 281. The real estate mania has reached a fever pitch there, turning a once quiet, hilly place into a traffic-clogged hilly place with overpriced (for Texans, still a bargain for Californians) cookie-cutter houses and Starbucks franchises. In other words, one of the few remaining sections of the Hill Country near a metro area has been “discovered.” Traffic jams on the north end of San Antonio are now as bad as Houston and Dallas and Austin. In fact, 281 has horrible traffic even on the weekends. It’s changed a lot over the past 5 years.
Sickening, isn’t it. And you know what will happen when the party is over.
Sounds like the Hill Country has been Californicated.
headin to San Antone in a month or so, hope the rain stays away while I visit my dad.
Builders are getting bulldozed by housing sales slowdown
By Riddhi Trivedi-St. Clair
ST. LOUIS POST-DISPATCH
06/30/2007
Tino Kenneally works in the garage of his new townhome while Bob Moore excavates what will be the foundation of a new town house and home to a new neighbor for Tino in the Villages of Springhurst in St. Charles County.
(Kevin Manning/P-D)
Christopher Miller wanted an old house with the amenities of new construction. Instead, he found a new home with the character of an old house — brick facade, high ceilings and hardwood floors.
And despite numerous upgrades, he got it at a bargain price. Miller expects to pay $315,000 for a 2,200-square-foot house in St. Louis’ Shaw neighborhood that would have cost $400,000 not long ago.
“The sales manager at McBride & Son Homes said, ‘Tell me what you want, and we will put it all together and then crunch the numbers,’” Miller said.
With sales sluggish, many builders are offering incentives, from free cars to discounts of up to $80,000 or $90,000, said Curt Johnson, vice president of new homes for Coldwell Banker/Gundaker. That’s great for buyers, but bad for builders who are suffering through the slowest sales in years.
http://www.stltoday.com/stltoday/business/stories.nsf/developmenteconomy/story/C28321F046FA61428625730A000ABB2B?OpenDocument
Sorry if this is a repeat post (but then maybe it is worth repeating
).
Subprime lending problems ensnaring big Wall Street firms
By Michael Hudson
THE WALL STREET JOURNAL
07/01/2007
Twelve years ago, Lehman Brothers Holdings Inc. sent a vice president to California to check out First Alliance Mortgage Co. Lehman was thinking about tapping into First Alliance’s lucrative business of making “subprime” house loans to consumers with sketchy credit.
The vice president, Eric Hibbert, wrote a memo describing First Alliance as a financial “sweat shop” specializing in “high-pressure sales for people who are in a weak state.” At First Alliance, he said, employees leave their “ethics at the door.”
The big Wall Street investment bank decided First Alliance wasn’t breaking any laws. Lehman went on to lend the mortgage company roughly $500 million and helped sell more than $700 million in bonds backed by First Alliance customers’ loans. But First Alliance later collapsed. Lehman landed in court, where a federal jury found the firm helped First Alliance defraud customers.
Today, Lehman is a prime example of how Wall Street’s money and expertise have helped transform subprime lending into a major force in the U.S. financial markets. Lehman says it is proud of its role in helping provide credit to consumers who might otherwise have been unable to buy a house, and proud of the controls it has brought to a sometimes-unruly business.
http://www.stltoday.com/stltoday/business/stories.nsf/story/E2061E836E41A2328625730A000866F3?OpenDocument
Lehman says it is proud of its role in helping provide credit to consumers who might otherwise have been unable to buy a house
I still don’t get it. If these sub prime borrowers aren’t good enough for a conventional, lower rate mortgage, why is anyone surprised when they default en masse on junk mortgages where they pay 50% or more interest (and thus higher payments).
Of course, the lenders were counting on foreclosures being low enough to not eat away all of the profit generated by the usurous rates that they charge subprime borrowers. No doubt they figured that they would simply repo the appreciated houses and resell them, much like subprime auto lenders do. Too bad it didn’t turn out that way.
are corporate inds a bad idea?
If they are issued by the underwriters, well, maybe. We dont know how far the contagion goes.
Are we perilously near stock markets’ peak?
07/01/2007
It’s the liquidity. “The world is awash in liquidity.” You can hear this repeated every hour on the hour on every business news channel in America and around the world.
No, those analysts and announcers aren’t talking about the melting polar ice caps due to global warming.
According to some of the experts, there is just so much money chasing stocks that everyone simply must buy. The assumption is that stocks won’t ever sell again at these cheap prices, at least not through the remainder of Western civilization.
Yes, this sounds a little bit like the Duke brothers in the ending scenes of the movie “Trading Places,” but the reality is that, when traders become frantic, it isn’t good to get in their way.
http://www.stltoday.com/stltoday/business/stories.nsf/story/58A587B789C72AF28625730900743597?OpenDocument
wtf? as of 12:30pm ET, look at the Dow! People are ______ (you need to fill in the blank because I am flatly confused as to what is going on in the markets).
Good markets climb a “wall of worry” don’t cha’ know. It’s just too much money chasing too few assets. That’s all. It’ll be a real show when it all stops, i.e. the risk actually shows itself. Think Long Term Capital Management in the late 90’s. Risk has not gone away nor has it been minimized. I propose the following:
First Law of Conservation of Risk: Risk is constant and conserved no matter where you put it nor how thin you spread it around.
Just because you own the other guy’s risk and he/she owns yours, does not mean you don’t have risk. You just don’t have your risk.
Second Law of COR: Total risk is the square root of the additive sum of the squares of all risks.
R_t = sqrt[ (r_1)^2 + (r_2)^2 + ... + (r_n)^2].
Just as in two wrongs do not make a right but three lefts do, risks do not cancel themselves out to a lower risk. You just loose control of your risk and not actually reduce it.
I’m in a philosophical mood today. Must be Monday.
Roid
R_t = sqrt[ (r_1)^2 + (r_2)^2 + … + (r_n)^2].
That’s the ideal case when you assume
1) Gaussian deviations (no fat tails)
2) complete independence.
The point is of course that there is dynamical dependence among risks, and that causes co-correlation and heavy tails.
Heavy tails mean that variance is no longer an adequate quantification of risk (I call variance, ‘fluctuations’, not risk), and dependency means that everything goes wrong at once.
Academically this is known as “crashes” in self organized criticality. There doesn’t have to be any one particular reason to set it off, any of a number of random fluctuations can do so.
I suspect it will happen at the point that parties who have taken derivative positions start being scared of the ability of their intermediaries to settle trades .
This would be like being scared not just of a stock market crash (the underlying investment risk which everybody knows about), but not getting your money back even if you were right.
Equivalent here is not Bear Stearns, but Refco. Imagine some hedge funds take on correct positions (and their prime brokers might be on the other side of the trade). The usual hits the fan—the capital of the investment banks is at risk—and they halt payments to clients and might prevent them from cashing in their positions at a profit, because doing so might bankrupt the bank. Private sector equivalent of “nationalization”. Or possibly they would prevent owners of risk from unwinding just when they need it. That’s the scary scenario.
Is this crazy? No. Refco did exactly that—they filched account holders’ money when they went under. They first stopped letting people trade, and letting them wire out money. Then they went bankrupt and everything was frozen. I’m personally out $5000. I’ve gotten big forms (hundreds of pages at a time) from the bankruptcy lawyers full of incomprehensible mumbo jumbo. (And I’m no idiot, though I am a theoretical physicist).
Not one cent back, years later.
“Refco did exactly that…”
How do you think Bill and Hillary Clinton made their moneys? They were a REFCO favorite and the alleged recipients of largesse from other REFCO accounts (they made $100K on a tax deferral trade that is normally done at a small loss). Sorry you were caught in that enterprise. A trading house that had been around for decades brought down by the greed of one man.
when you are selling losses, and the windfall comes in …… you were on the right side of that trade.
again, corpoate bonds…. too risky?
yes - it is Monday. I am not philosophical, just irritable because I don’t feel like working today!
“R_t = sqrt[ (r_1)^2 + (r_2)^2 + … + (r_n)^2].
That’s the ideal case when you assume
1) Gaussian deviations (no fat tails)
2) complete independence.”
Not to be a pest, but the above equation is true (no matter what the distribution is, as long as they have finite variance) for a set of securities that are uncorrelated. The more general equation is:
If security XT = X1 + … + Xn, then the risk (standard deviation) follows
R(XT) = sqrt(sum(R(Xi) + sum_ij Covariance(Xi,Xj)))
Which is why you can reduce risk by hedging with securities that are negatively correlated with each other.
Drats. I forgot to square the R(Xi). Danged standard deviations…
“…risks do not cancel themselves out to a lower risk…”
Then why diversify?
I see I’m not the only one. DrChaos highlights the basic point: Risk is not just in one industry, segment, or geographical location, but is instead, a divergence (if I may) of the prediction of the risk with it’s actual movement. The economists call this a “Black Swan Event”. This characterization is just simple bullshit, but I digress.
Yes, you should diversify. Still, diversification and spreading risk around do not make it go away. To view it otherwise is “unsophisticated”, it does minimize the fluctuations as DrChaos correctly terms it.
Roidy
P.S. I am but a simple experimental Physicist, and so all of this is a bit much for me.
unfrozen caveman lawyer, or MBA CPA Controller,…
the depth of the percieved risk has forced me to sell the NASDQ and move to Bonds….
and Im a long term guy…. I even like energy.
It’s the liquidity. “The world is awash in liquidity.” You can hear this repeated every hour on the hour on every business news channel in America and around the world.
“[the] vast increase in the market value of asset claims is in part the indirect result of investors accepting lower compensation for risk. Such an increase in market value is too often viewed by market participants as structural and permanent. To some extent, those higher values may be reflecting the increased flexibility and resilience of our economy. But what they perceive as newly abundant liquidity can readily disappear. Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices. This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums.” - Uncle Greenie
The point people forget about this liquidity — both nutty gold bugs and CNBC boosters — is that with fiat currency money can get destroyed as easily as it was created. There is no conservation of money. Since it was created when private sector banks offered loans (Fed indirectly changes profitability of loaning & money creation, not usually directly), when the private sector banks want to net call in loans more than they want to give out new ones, money will be destroyed.
This is why all of the private equity firms are buying up assets left and right. Whatever the future holds for the fiat value of the asset is not as relevant as the fact that in the future the asset is still worthy of a “value”. Who cares if your 3 billion evaporated overnight if you own something that is still worth more than it’s comprables.
Economy may be jittery in 2nd half, so sticking to the basics may be profitable
07/01/2007
For investors, the second half of the year won’t exactly be coasting.
Subprime mortgage concerns, speculation about interest rates and the early maneuverings of presidential campaigns will influence stock market psychology.
There is optimism about the economy and company profits. But it is tempered by the reality that a rambunctious stock market that enjoys stellar days is just as capable of sliding into a negative mind-set.
Mention the possibility of hurricanes affecting the energy pipeline or Asian markets experiencing a dramatic correction, for example, and the mood immediately turns somber.
http://www.stltoday.com/stltoday/business/stories.nsf/yourmoney/story/E9741DB32C03FBCD8625730A0006FC36?OpenDocument
Was out driving around Las Vegas on Sunday at noon. Went by a new housing development. Construction teams were actually working! Sunday at noon in 110 degree heat! Nice jig, huh? The company must think somebody is in a hurry to buy and move in.
A housing development next door has been there for over a year and has sold about half their houses. Seems they put up the shell and then wait till they actually sell the place before they complete it.
Drove around a few other neighborhoods. Saw nobody out looking at houses, but did see my first “Sold” sign in quite a few months.
The last two solds signs I saw are both back on the market this month. Cancelled. Could not get financing to go thru.
It was a nice, hot one in Tucson yesterday. Although the local REIC is crowing about recent drops in unsold inventory — back below 10,000, I see inventory on the rise. And not a lot of lookers at the numerous sale or rental properties.
I’m going to keep an eye on the place to see if the For Sale sign goes back up.
Question … was in Vegas last month. Was headed out toward the Hoover Dam. I’m guessing about 10 miles out of town on the left there was a condo\townhome developement (orange tile roofing). Again I’m guessing it appeared maybe 200-300 units. I wish I could give a more definitive location. I mentioned in amazement to my companion that there was not a single worker to be seen. This was on a Friday circa 8:30am. Maybe a couple miles down the road on the right yet another which appeared to be very similar (same builder?) in the same situation. No one to be seen.
Any idea what’s happening there?
I’m assuming this is on Boulder Highway. They had been building a lot of large condo communities on the highway near Henderson. Earlier this year they had a large arson fire at one of them, probably not the one you saw. Don’t know the one you’re referring to as I haven’t driven to Boulder City/Hoover Dam in a few years.
When things go wrong developers don’t crow about it. All I can figure is they decided they couldn’t sell, picked up their marbles and left.
The place I saw the workers is the south strip about five miles south of Mandalay Bay. Silverado Ranch area. The community is only in the 30 - 50 houses range. Hard to tell because they are still just putting the frames up.
Thanks. Seeing it in print I beleive it was Boulder Hwy, and I think there was an intersecting highway close by. Let us know if you end up out that way and get a first hand look.
Bear Stearns meets the possums:
July 2 (Bloomberg) — Only the possums are enjoying the backyard of 2035 Lilac Lane in Decatur, Georgia, where Wall Street titan Bear Stearns Cos. is just another homeowner by default.
http://tinyurl.com/2l3p2l
How soon will Bear and the other Wall Street Boyz get Congress to engineer (and us to pay) for a bailout? Not a FB bailout but a Wall Street bailout.
back room deals decide the bailout, perhaps you move a bit on immigration and Freddie and Fannie get another free pass?
The dilemma facing banks is whether to pay maintenance costs or dump the properties at fire-sale prices, said Keith Gumbinger…“No lender wants to own real estate, but at the same time you can’t just unload these properties because you would send home prices into a freefall,” Gumbinger said.
That is by far the best bubble story I’ve read in the MSM. Hats off to Bloomberg!
The biggest complaint I’m hearing from realtor friends in Northern VA is that the banks refuse to lower prices enough to get the deal done.
I called on a house that I watched go from “for sale by owner” to “for lease” over the period of 6 months. Two months ago there was a brand new realtor sign in the front yard. I called the realtor to inquire if it was now a bank owned property and what the price was. It indeed was now owned by the bank, but she told me the bank had not yet given her a price at which to sell the house.
I am not too sure if this is happening other places, but it just seems like a blatant attempt to restrict the number of houses on the market.
I have little doubt that banks are sitting on houses in markets where prices have so far remained sticky. Once the floodgates open they will have no incentive to sit on those houses.
I made an offer on an REO for 22% below their asking. They wanted 499K, I offerred $375. The bank actually countered at 492K.
God Bless ‘Em. I guess the housing being trashed adds value.
ROSEBURG OREGON
A FC on a 3/2 POS has been on the market for more than a year,
NO PRICE REDUCTIONS
From the article:
“…Our expertise is in lending money to people to buy homes, it’s not in owning homes,” said Chase Home Lending spokesman Thomas Kelly….”
Mr. Kelly, your self described “expertise” is laughable. That is why you are owning homes. Get your lending “expertise” straightened out and you won’t own any homes. Idiots all.
ROFL
This part of the Bloomberg story bopped me over the head:
The house’s condition deteriorated while it was a rental property, Ford said. Being empty for six months only made it worse to the extent that possums had the run of the backyard, she said.
And, guess what? Deterioration is what often happens when a house starts getting rented out.
Deterioration begins the day a house is finished being built.
It may not matter whether it is rented, owner-occupied or empty.
“It may not matter whether it is rented, owner-occupied or empty.”
Yeah, but at least a renter (or owner-occupier) will notice when the pipes burst and will whine to you about so you can get it fixed. If it is unoccupied, you get to find the surprise on your next visit. On the bright side, an indoor swimming pool might add a lot of value to the place.
one of more than 60 subprime home loan companies that have halted operations, gone bankrupt or sought buyers since the start of 2006, according to data compiled by Bloomberg, from the Implode-O-Meter blogsite
Fixed that for them.
I was hanging out with some friends this past weekend who are getting married in less than two months. Eventually the discussion turned to whether they might stay in the Boston area. The bride to be said that it’s too expensive to buy a house around here, and I said that I think prices will come down. She said, “But prices just go up.”
I practically spit out my pizza and said, “What?!” Then I went on to tell her how prices have dropped in the past year. She was still incredulous and eventually I asked her if she was going on anything other than a hunch. She said, “No.”
It is so hard to combat ignorance.
For an individual, yes. But market forces are stronger than each one of us, even stronger than bald faced ignorance.
maybe not so much ignorance, as location. in s.philly, prices have not moved at all. the standoff continues…..nobody’s buying but nobody’s dropping price.
If you got a 100% mortage with negative amortization how can you cut the price? Thats the reason we are not seeing big price drops and it is also the reason why foreclosures are going to be growing more and more through 2010 probably.
you’re right, assuming that the seller can afford to wait it out with a depreciating asset. instead of cutting their losses, i guess some will just wait til the bitter end.
I just had a chat with a co-worker this morning. He is convinced that prices will continue to slowly climb in Fort Collins, on because houses are not “insanely proced” like in California. He has no clue about the sub-prime situation, which is very prevalent out here.
Local mom and pop builders are aware, however. Most “chain” builders left town already, and the mom and pops have only a fraction of their usual starts, and most of them are not building specs at this time either.
The bride to be said that it’s too expensive to buy a house around here, and I said that I think prices will come down. She said, “But prices just go up.”
I practically spit out my pizza and said, “What?!” Then I went on to tell her how prices have dropped in the past year. She was still incredulous and eventually I asked her if she was going on anything other than a hunch. She said, “No.”
I’m with her. I want to leave Boston when I finish nursing school next year, partly because housing is so expensive here. Hubby wants to stay, and he insists that prices will come down. A $450,000 house reduced to $390,000 is still too expensive. It’s also very hard for a first-time buyer to come up with a $70,000 down payment for a $300,000 house.
I may change my mind if I can find a 3-bed, 1.5 bath house or condo for $225,000 or less, and it’s not in the ghetto or the middle of nowhere.
Liz,
If you can afford to be patient, you will eventually be able to find a 3 bedroom, 1.5 condo for $225,000. It is difficult to know when exactly that will be, but I think that by 2010, you’ll see those prices.
Look at this and you will get a sense of how much further things have to go before they are normal again:
http://www.macromarkets.com/csi_housing/MSA/boston.asp
“Other prior downturns have been inflation- and interest-rate-related,” Mayer said. “This was neither.”
He attributes the slowdown partly to market saturation from overbuilding and partly to low buyer confidence levels.
Jerry Rombach, executive officer of the Home Builders Association of Greater Southwestern Illinois, took aim at a familiar target: builder and development fees imposed by governments. Although he didn’t provide details or specifics, he said communities with higher fees were seeing the biggest drop in new house sales.
“Some communities have become overdependent on development fees, school impact fees, road impact fees, brick requirements,” he said. “All of those pretty dramatically inflate costs of home construction. The market is reacting to that and shifting away from those communities and toward those that are not as aggressively fee driven.”
Why can they not say it. They all have other reasons for why homes are not selling. It’s simple, there is only one reason why many people don’t buy - AFFORDABILITY!
Finally, the MSM tells the truth or should I say points you in the right direction.
http://heraldtribune.com/article/20070702/REALESTATE/707020666/1201
The herald has been better than most of the papers reporting on the bubble. I wish the sun sentinel would follow suit.
The Sun-Sentinel is easily the worst paper in Florida on reporting the bubble. Paul Owens is nothing but a shill for FAR and I don’t think anyone else at that worthless paper writes on RE.
What’s sad is Broward County is probably affected more than any other county other than Dade and Lee and all our RE coverage simply regurgatates FAR and NAR press releases.
Heck, we’d probably get better coverage if we just let the Realtors® themselves write the RE articles for the Sun-Sentinel.
North Port always was the red-headed stepchild of Sarasota County. This report helps quantify just how bad it is there.
Yep. One need only look at satellite photos to see it. It has a similar history to Lehigh Acres. Huge swaths of grids of empty decaying roads, without any kind of supporting infrastructure.
This report is going to make Dennis Black public enemy #1 in the Realtor®, mortgage banking, and developer crowd. I doubt he’ll get many appraisal jobs after this report.
The sad part is he could have probably written nearly the same report for any municipality in Florida.
Fraud update:
http://heraldtribune.com/article/20070702/REALESTATE/707020482/1201
Fraud update:
http://heraldtribune.com/article/20070702/REALESTATE/707020482/1201
OT other than financing things to each other this is a big part of the current bubble- soon to unwind after created temporary high corp profits
http://news.yahoo.com/s/ap/20070702/ap_on_re_us/shredding_tomcats
From today’s WSJ:
“In a sign that demand for commercial real estate continues unabated despite the recent turmoil in the debt markets, investors [led by Somerset Partners] agreed late last week to buy 450 Park Ave., a boutique office building in midtown Manhattan, for $1,589 a square foot, or about $510 million……….Somerset is capitalized by European family trusts and high-net-worth individuals who see New York buildings as a bargain compared with the prices being asked for office space in London and Dublin.”
Now does that sound familiar? For “European family trusts” read “Clownifornians”. For “New York” read “Texas”. For “buildings” and “office space” read “houses”. For “London and Dublin” read “San Francisco and L.A.”
Couldn’t happen to a nicer bunch. Let them keep putting their money down. Probably at the direction of an Asset Management division of the ibanks. See how well that worked for the investors at Bear Stearns.
Our media still show stories about NY realtors in the luxury field and how they make millions and millions.
The same is going on with RE in Berlin, which is extremely cheap. What all the investors don’t quite see is that the rental market is highly regulated…
Ok, what business model do they adhere to that makes this profitable? How does this work? Is it really 322,000 square feet?
I - don’t - get - it.
Roid
It is a scyscraper. It is located on a block surrounded the worlds largest financial institutions: Blackstone (55th and Park ), JPMorgan (46th and Park), MetLife (Park and 45th), and Citi (Park and 56th), the list goes on. I don’t see any problems finding tenants for this building, and they should be able to rent it out well over $100/sq ft. They may get hurt in the downturn, but they don’t have to worry about falling mortgage rates, etc. They will just sign a large institution to a very long term lease.
Spent the weekend in San Diego taking my shepherd to the dog beach. Took a nice cruise around the bay and counted tower cranes, too.
TxChick57 — never seen so many French Bulldogs in one place!
Stucco — What’s the story on that new Navy ship in the NASSCO dry dock?
p.s.: What ever happened to feepness?
Posted this Friday and apologize for the repost - Unemployment
Brookstreet Securities Corporation
Irvine, CA
In another fallout from Orange County’s subprime mortgage industry collapse, Brookstreet Securities Corp., an Irvine broker dealer, shut its doors and laid off 100 local employees because it could not meet margin calls on complex securities backed by faltering mortgages, a company spokeswoman said. The securities, known as collateralized mortgage obligations, lost value as Wall Street confidence in mortgage-backed securities collapsed.
Approximate Affected Workforce: 51-100
Capital One Financial Corporation
McLean, VA
Credit card company Capital One Financial plans to eliminate 2,000 jobs, or about 6 percent of its workforce, as part of a $700 million restructuring, the company said yesterday. The McLean company, which is attempting to diversify into banking from being the largest independent issuer of credit cards in the United States, said the job reductions would affect all parts of the company, including its British unit. About half of the employees being eliminated have been notified, said the company, which has 33,000 workers. Capital One, which has 720 retail bank branches throughout the Northeast, Texas and Louisiana, expects the layoffs to reduce operating expenses by about $400 million in 2008 and $300 million in 2009.
Approximate Affected Workforce: over 1000
Safe Auto Insurance Group Inc.
Columbus, OH
Sterling, CO
High turnover and difficulties recruiting staff led to the abrupt closure of the Safe Auto Call Center Tuesday and the elimination of more than 60 jobs. It is only after many months of analysis that we regretfully announce this decision, the senior vice president said in a news release sent from the company’s Columbus, Ohio, office. The office showed high levels of turnover, far exceeding the turnover averages from our other locations and it was difficult to recruit others to replace those people, she said.
Approximate Affected Workforce: 51-100
LSI Corporation
Milpitas, CA
Chip maker LSI Corp. said Wednesday it will cut roughly 900 jobs, or 13 percent of its non-production work force, as part of a restructuring plan. Separately, LSI said Magnum Semiconductor Inc. agreed to buy its consumer products business for an undisclosed sum. LSI said the job cuts and the unit sale are part of a business acceleration plan begun in April.
Approximate Affected Workforce: 501-1000
Rogers Corporation
Rogers, CT
Rogers Corp., a maker of specialty materials used in electronic and consumer products, on Wednesday lowered its fiscal second-quarter guidance and said it planned to eliminate 400 jobs to cut costs. The company said the decline is mostly due to lower sales in its custom electrical components and printed circuit materials segments.
Approximate Affected Workforce: 101-500
Tyco Electronics Corporation
Middletown, PA
East Berlin, PA
Reading, PA
Tyco Electronics Corp. announced the closing of its East Berlin facility and laid off 600 employees. As the transition from the East Berlin facility to other facilities in central Pennsylvania, South Carolina and China gets started, the company will phase out different sections of the facility, getting rid of both jobs and machines. Tyco Electronics Ltd. packed a one-two punch with its announcement Friday that it will also be closing its plant in Reading in March 2008. The facility, which employs 145 workers, will be shifting its production to Juarez, Mexico. It makes outside communications products sold to other companies for placement on utility poles.
Approximate Affected Workforce: 501-1000
Dubreuil Forest Products Limited
Dubreuilville, ON
Dubreuil Forest Products is laying off about 100 workers at its sawmill operation in Dubreuilville. The company is suspending one of its shifts starting June 30. Factors for the job losses include a decline in housing starts, low demand for lumber and a strong Canadian dollar. More than 90 per cent of the random-length spruce-pine-fir softwood lumber produced at the Dubreuilville operation is sold in the United States.
Approximate Affected Workforce: 51-100
Alsco Metals Corporation
Raleigh, NC
Roxboro, NC
More than 60 employees of Alsco Metals Corp. are going to lose their jobs at a plant in Roxboro, officials said Tuesday evening. Alsco, headquartered in Raleigh, is a 60-year-old company that boasts of being the largest supplier of residential aluminum building products in North America. Alsco wants to consolidate operations in Ohio.
Approximate Affected Workforce: 51-100
Briggs & Stratton Corporation
Milwaukee, WI
Port Washington, WI
Briggs & Stratton Corp. will close its Simplicity lawn mower and snow-thrower factory in Port Washington next year, eliminating some 325 jobs. Briggs plans to shift most of the work to McDonough, Ga., site of another of the three factories it acquired when it bought Simplicity in 2004. Though expected, Briggs said in late April that it might close its factory, the official announcement Friday left workers glum and wondering about their futures.
Approximate Affected Workforce: 101-500
Delphi Corporation
Troy, MI
Athens, AL
Delphi Corp. will close a north Alabama auto parts factory that employs more than 1,000 people by March 2009, and cutbacks will begin almost immediately. The union said the plant at Athens employs nearly 1,400 union members and managers, while Delphi said the total employment was closer to 1,200 people. The company declared bankruptcy in October 2005 and said in court papers that it planned to close the Athens plant unless a buyer was found. It manufactures steering components and axles.
Approximate Affected Workforce: over 1000
Hanesbrands Inc.
Winston-Salem, NC
Hanesbrands Inc. will cut 5,300 jobs, or 11 percent of its current work force, and close nine sewing and assembly operations as it moves production to lower-cost sites in Asia and Central America. The underwear and apparel maker said Wednesday it will close plants affecting nearly 5,000 employees, mostly in Mexico and the Dominican Republic. Positions in Canada, the United States and Puerto Rico also will be eliminated. Another 350 management and administration positions will be cut, mostly in the United States. The Winston-Salem, N.C.-based company said the closings, which will cost about $42 million, are a part of an ongoing restructuring effort to make its business leaner and more profitable. The bulk of the layoffs will be in the Dominican Republic, where 2,500 jobs will be eliminated, and in Mexico, where about 2,200 workers will lose their jobs. Hanesbrands currently employs about 47,000 people.
Approximate Affected Workforce: over 1000
Springs Global US, Inc.
Fort Mill, SC
Lancaster, SC
Fort Lawn, SC
Springs Global announced today that it will cease bedding manufacturing operations in South Carolina and close the Grace plant in Lancaster and the Close plant in Fort Lawn. In all, more than 700 jobs will be eliminated.
Approximate Affected Workforce: 501-1000
Weyerhaeuser Company
Federal Way, WA
Claresholm, AB
Forest-products company Weyerhaeuser Co. said Friday it will close its plant in Claresholm, Alberta, Canada, and eliminate 85 positions amid the sagging housing market. The plant makes iLevel Trus Joist TJI joists, a structural framing material for floors. It is the smallest of seven THI joint plants Weyerhaeuser owns.
Approximate Affected Workforce: 51-100
Woodbridge Foam Corporation
Mississauga, ON
Corunna, ON
Woodbridge Foam Corp. will close its Corunna plant in December, resulting in the loss of 182 jobs. The manager of Woodbridge plants in Sarnia and Corunna, said Monday the decision to close the Corunna facility was driven by a number of factors. “This includes a shift in the energy management market from requiring an engineered premium product to a commodity-based market where lower-cost plastics are available which significantly erodes our sales,’’ he said.
Approximate Affected Workforce: 101-500
84 Lumber Company
Eighty Four, PA
The 84 Lumber Co. laid off 26 employees at its corporate headquarters Thursday, blaming the job cuts on a slumping housing market. Sales are down and, as you go, you look at programs you can put on hold or eliminate, and the unfortunate aspect of that is that there are people attached to those programs, a spokesman said. The company supplies building materials and services to professional contractors, announced a three-year strategic plan last year to more than double its annual sales to $10 billion. The plan called for opening 125 new stores in high-growth areas nationwide. The company also closed 67 underperforming stores.
Approximate Affected Workforce: 1-50
King Motor Company
Fort Lauderdale, FL
King Motor Company of Fort Lauderdale is selling off its Sunrise property and new-car dealerships and plans to relocate its management to another facility in Deerfield Beach, the company said Tuesday. Up to 99 employees will be laid off as a result of the sale.
Approximate Affected Workforce: 51-100
Limited Brands Inc.
Columbus, OH
New York, NY
Limited Brands said today it will reduce its home-office and New York City work force by 10 percent, or about 450 jobs. Currently, 3,500 people work in corporate and brand positions in the Columbus headquarters. These and other moves are being made to reduce expenses by $100 million annually beginning in fiscal 2008.
Approximate Affected Workforce: 101-500
Welcome to tapped out country.
Fook…you know the shit’s deep when workers in Mexico and the DR get the ax.
This global trade/NAFTA crap is pure BS-nothin’ but one way ride to Palookaville for everybody except some Chinaman who’s now makin’ $40 a week instead of a bag of rice.
Have a Chinese catfish.
Chinaman is not the preferred nomenclature, Dude.
Hoz,
great post, thanks for your work.
Hoz these numbers are scary.
I am sure when we are finally in a depression Congress people and business leaders will say in unison, “Gee we didn’t see this coming!”
So - 30-year fixed mortgage interest rates are creeping up — but, admittedly, still seem to be comparatively low as opposed to the 1980s and 90s. My question is — what would it take for interest rates to go to 8% and beyond for good credit, fully qualified/conforming borrowers? And, alternately — what can the real estate community to to try and keep this from happening, if anything?
1. inflation
2. stop inflation (or at least keep it secret)
1. It’s the banks who set the interest rates, so they would have to be self-motivated to raise interest rates and tighten standards. In the interest of maximizing their profits, they would love to have interest rates as high as possible, but it’s kept in check by the competition, and since credit is in plentiful supply, rates are pretty low at the moment. It would take a reduction of credit availability leading to a tightening of banking standards for 8% prime loans to happen. Credit availability is determined by the Feds overnight rate, and the general willingness to buy securitized loans. The overnight rate I don’t see jumping up in a murky economic picture, but the reckless buying of mortgage backed securities might be coming to an end soon. Personally, I don’t see your scenario happening anytime soon, and I think house prices will fall substantially before rates are that high.
2. I don’t see the real estate industry having much power over the banks, so I don’t think there is much they can do one way or another about interest rates, personally.
It’s the banks who set the interest rates
No it’s not. It’s the bond market, and in particular the foreign lenders (led by China) who keep loaning the US +$2bn a day so it can keep on spend, spend, spending.
All it would take is for the Chinese to decide not to buy any more US debt for interest rates to go up. God forbid they actually might try to unload some of it.
Nice work on that Hoz.
A Greater Fool Arises: A friend out in the burbs of DC has been trying to sell a home for about $700K for the past 7 months. No offers the whole time. This weekend, I learned they have accepted an offer at just a little less than asking. Apparently the buyer really, really wants the house because it is very convenient to their job at a local hospital. Initially, the buyer asked for the sale to be contingent on the sale of their current home. Friend rejected that clause. Buyer buckled and sale is moving forward without the contingency. Here is the kicker: Buyer’s existing home is much further out in the exurbs — where prices have dropped the most and inventories are the highest.
I’m very happy for my friend.
But I am stunned by this. I thought buyers had wisened up and were holding out and offering less. But apparently, this buyer is so frightened of losing this home that they are willing to take on the burden of their new and existing homes simultaneously. Who are these people? Friend is legitimately worried that the sale won’t close.
When will the masses really understand that housing is already a risky investment with all indicators pointing down?
W. C. Fields was right; there is a sucker born every minute (fortunately for your friend).
That was P. T. Barnum. But it’s still true.
“That was P. T. Barnum.”
that’s debatable..
The entire quote is “There’s a sucker born every minute…and two to take ‘em.” The source of the quote is most likely famous con-man Joseph (”Paper Collar Joe”) Bessimer. Barnum’s fellow circus owner and arch-rival Adam Forepaugh attributed the quote to Barnum in a newspaper interview in an attempt to discredit him. However, Barnum never denied making the quote. It is said that he thanked Forepaugh for the free publicity he had given him.
wikipedia search:
There’s a sucker born every minute
.. but it’s still true.
I had a friend in a similar boat as the purchaser of your friend’s house — he really wanted a new place in Bethesda (near wifey’s job and family), and so he went ahead and payed above-asking (among several contracts) for a place, without a sale contingency for his place in McLean.
I was really worried for him — but he managed to get a solid contract in about two weeks. He sold at less than he was asking, but still is managing to pull a ton of equity out of the McLean place. And, of course, I had a fun time teasing him about the prospect of paying two mortgages going forward.
But — my friend was dealing with close-in and desirable, established neighborhoods without much competition from new home developments, so it was never THAT much of a worry. I’m sure it’s a much tougher sell in Leesburg, Manassas, Warrenton or parts thereabouts.
Agreed — equity trading from McLean to Bethesda seems like a fair swap with similar market risk.
But South Riding to Vienna does not. (I consider South Riding to be exurban. I suppose some folks do not.)
I imagine the buyer is taking on substantial market risk in waiting to sell their South Riding home. Most likely the buyers have mentally overestimated the value of their existing home. If it sells for less than they imagined, it will be identical to overpaying for my friends home.
Lastly, what kind of moron makes an offer close to asking (like a few thousand less) on a home that has been sitting for 7 months on the market.
My summary: this buyer will Buy High (my friend’s home) and Sell Low (existing home). The buyer will get screwed on sides.
Maybe it’s somebody who found out about Peak Oil.
“When will the masses really understand..”
They’ll will catch on sometime after the credit/money pool has completely evaporated.. but not before.
Anecdote from DC about delusional sellers:
An acquaintance bought a condo in late 2005 for $300k. Same acquaintance now wants to move up to a SFH. He lists his condo with an asking price of $330k, which he tells me he is confident he can get.
Naturally, I pull up his MLS listing and find another identical unit in his building that has been on the market for months and is reduced in price down to $230k (that’s right, $100k less than his asking price and $70k less than what he paid in 2005). In addition, the last sold comp was $240k.
I can’t figure out how this guy can be so delusional about his asking price. I’ve got to think he and his realtor have access to the same comps and listings that I can see. The delusion is amazing.
Just curious — is it actually in DC, or a nearby suburb, like Arlington. Both suffer from too much inventory. DC has the added worry of some urban-pioneering neighborhoods that will suddenly get really ugly (price-wise) if the appreciation train comes to a stop.
I can appreciate you not wanting to give the actual address and call your friend out — but, can you at least supply the neighborhood?
I’m just always extra-curious about the DC area condo market — I think it will be the worst performing sector in the DC area (along with the far far exurbs).
zeropointzero, you’ve in turn made me curious. I’ve become convinced (dejectedly) that nothing will bring down prices in NW DC. What makes you think that DC condo prices will fall so much? Are you talking about in Shaw or NE DC (the urban-pioneering-type neighborhoods) only? Or would your thinking include pricier neighborhoods like Woodley/Dupont/Adams Morgan as well?
Prices have already declined at least 10% or more, especially from developer orginial asking prices (note, they usually won’t advertise much less since they would have open revolt on their hands, but can accept much less… ergo, you have to make an offer to find out just how low they will go). I think there are more price declines in Penn Quarter, Logan/U, etc. as there are more new condos there… as opposed to say Woodley/Cleveland that have seen very little new development. There are literally thousands of unoccupied condos accross the metro area. As prices of SFH gradually decline and as a few more developments are completed (ex. by the new stadium, Fort Totten, and natl harbor) the prices of condos will continue to decline. I wouldn’t be surprised if the Rockville condos (aka N. Bethesda - LOL) are selling at close to 75K off initial asking. Anything in PG county or NE is likely 100K lower.
I think there are two levels of the DC condo market that are especially endangered — the urban pioneering neighborhood like Shaw and the stuff near North Capitol and New York Ave. are prime examples — and the highest-end new construction — like stuff in Foggy Bottom/West End — where a townhouse starts to look like a decent alternative.
In the Shaw example — I imagine folks believe they’ll pay their dues living in a sketchy neighborhood, which, as it improves, adds extra equity to extract to move up to that townhouse of place in the burbs. But, when the music stops, and suddenly you realize you’re paying nearly 3 grand a month in mortgage/condo fee AND a neighbor just sold for $40 grand less than you paid — and you got the 3 year ARM because you knew you would be selling soon (but then realize that everyone else in your building got the same kind of financing) - I just think that might mentality might really make for some fire sales.
As far as the upper end — say the super expensive stuff in the West End, such as:
http://www.washingtonpost.com/wp-dyn/content/article/2006/12/16/AR2006121600647.html
Or jaw-dropping stuff like the Columbia:
http://www.columbiacondominium.com/floorplans_index.htm
For that stuff — I just can’t imagine an updside much higher than what these are selling for over the next few years.
I think older stuff in Dupont and Calvert Woodley and Adams Morgan might hold up better in the long run — but, I have a friend who bought in a supernice building in Cathedral Heights in 2005 who is regretting it now.
My guess is that solid parts of DC will always have reasonably stong demand — but, really, folks definitely overpaid in the last few years, and I expect a lot of people will be happy to just break even 5 years down the road. That’s the way the condo market felt in the 90’s in a lot of DC area.
Seems incredibly expensive, but out of all U.S. cities DC housing prices are probably the greatest beneficiary of:
http://www.bloomberg.com/apps/news?pid=20602081&sid=aI7QoXDif6iY&refer=benchmark_currency_rates
Here is a house in Maryland for only $5,300 - must be a mistake? http://dc.yahoo.idx.prudentialridgewayrealty.com/details.aspx?firstrecord=61&=&VIP=Yahoo!+IDX&cc=realestate&fclose=n&newhome=n&za=and&searchgeo=Chevy+Chase%2c+MD&searchtype=2&propertytype=1%2c2&sort=5&sortacdc=desc
It’s just slightly south-east of Logan Circle.
Buy now or be priced out forever.
Real Estate for the Future
Grand Water Front View Lots
“The potential for owning land in the Hawaiian Chain –especially water front– can be your dream. Ask how you can become one of the many future owners of prime water front view lots.”
“Created from a perpetual hot spot on the ocean floor, the Hawaiian Islands were made Millennia ago.
The active hot spot has continued to supply abundant amounts of lava to the big island of Hawaii and now is beginning to create your own private island of Lo’ihi.
Scheduled for surfacing starting sometime around 5997, give or take a few thousand years, you can look forward to your place in the Pacific sun.”
http://tinyurl.com/2gaxsa
enjoy
OT– Oil just hit $71.09 –Yikes
The Phoenix Business Journal has a pool as follows:
“Should the government intervene to prevent a predicted wave of mortgage defaults?”
The results are approximately 80% against. My response is below:
“FB’s (foolish buyers) were either too greedy in thinking their homes would appreciate at 20% per year ad infinitum because they never read a book on economics (OR) they were ignorant as to basic math and whether or not they could really afford the 1% teaser rate negative-amortization loan when it readjusts. Either way, these are private parties and if they lose its their loss. What would have happened had they made money, would they have given it back to the government. Why should taxpayer money be used for this? Frankly, it is illegal per the U.S. Constitution to use tax revenues for private bailouts. And any Congressperson doing such should be thrown out of office.”
http://www.bizjournals.com/phoenix/
Been having fun using sites like zillow and redfin to look at sales history/prices in certain neighborhoods. In my area (SF Bay Area) and in particular the peninsula, I can see sales history showing prices come down. One particular condo complex in Foster City shows sales in 2005 at like 740K - 750K range for a 2/2. The exact same model condo sold at 665 in January 2007. That’s a nice drop, can’t wait to see more this year.
My only point really is that using available tools out there, it’s easy to make comparisons especially with condos and townhouses that have the same floor plans. At least 10% drops in prices in the Bay Area is huge in my book, because they always say how this place will be immune.