Some Speculators Are In The Process Of Losing It All
A report from the Arizona Republic. “Scottsdale-based Meritage Homes is the latest hit by the slowing housing market. Arizona’s only publicly traded home builder must write off $100 million on land and operations after a second quarter in which home orders fell 28 percent and new-home cancellations climbed to 37 percent, according to preliminary numbers.”
“Housing is Arizona’s biggest industry, and the slowdown in building ripples throughout the economy from job losses at contracting firms to weaker sales at furniture stores. RL Brown, publisher of the Phoenix Housing Market Letter, is downgrading his earlier forecast for home building. In January, he predicted 41,000 new homes could go up Valley-wide. That compares with 42,460 new-home permits issued in 2006 and a record 63,570 in 2005.”
“New-home cancellations have left the Valley’s housing market with at least 20,000 homes built but unsold. Builders have offered hefty incentives of $50,000 and more to sell the houses, but many potential buyers can’t sell their existing homes.”
“The result is a glut of homes for sale that is putting pressure on prices and dragging down the market.”
“‘Weak demand and high inventory levels have increased competition among home builders, pressuring margins, despite reductions in new-home starts, lot supplies and operating costs,’ Meritage CEO Steve Hilton said.”
“In 2005, investors inflated demand for new homes. Builders rushed to buy land, often paying top dollar, and construct homes fast enough to keep up with demand. But prices peaked in many speculator-driven markets like Southern California, Las Vegas, Phoenix and Florida, and demand plummeted.”
“The value of some land bought during the market frenzy has fallen since then, which accounts for a lot of the recent home builder write-offs.”
The Reno Gazette Journal from Nevada. “It was less than two years ago that it seemed a downtown condo project was being announced each day. But with a slowing housing market, the brakes have been put on such vertical projects as Arterra and Waterfront Towers.”
“Portland, Ore.-based Capstone Partners announced last week that it is putting a hold on its plans for Arterra The Waterfront Towers has also been put on hold as the developers of that project redesign their initial plans.”
“The developers of Wingfield Towers have filed for bankruptcy protection in hopes of securing financing.”
“Fernando Leal, developer of The Montage, an ongoing conversion project, who has expressed doubts about non-conversion projects in the past, said the slowing market for condos still is better than that of single-family homes because, unlike the single-family market, the amount of unsold inventory actually is decreasing.”
“‘Demand for every developer has slowed to what previously would have been considered ‘normal’ and part of the real estate cycle,’ Leal said. ‘However, unlike single-family homes, the supply of downtown condos has contracted immensely.’”
In Business Las Vegas from Nevada. “Las Vegas resale home prices may be falling but national housing expert John Burns said the median price in the valley needs to drop by 33 percent or nearly $101,000 to match up with income levels that residents can afford.”
“Burns lists the median price of resale homes at $305,975. By his calculation, the price would need to drop to $205,000 for housing costs to return to the market’s typical ratio of housing costs to income.”
“Burns admits that’s not going to happen in Las Vegas and some of other overpriced markets unless mortgage rates spike or the economy has a prolonged recession.”
“But while a 25 percent or greater decline in resale homes is unlikely, a ’significant correction is not entirely out of the question. ‘That’s possible if, one, homebuilders drop prices (including incentives) 20 percent below where they would have been selling these homes two years ago and, two, a 20 percent price drop returns prices to levels similar to those in early 2005, he said.”
“Including incentives, new-home prices are down more than 10 percent from two years ago, according to Las Vegas housing analyst Dennis Smith.”
“Some speculators who helped drive up the prices made a lot of money but others are in the process of losing it all, Burns said.”
“In his latest newsletter about the Las Vegas housing market, Smith, president of HomeBuilders Research, said he has the definition to describe the current state of the market; ‘a temporary recession.’”
“The question of how long ‘temporary’ is is unknown, Smith said. He said anyone that suggests it will be over by early 2008 is basing their predictions on ‘hope instead of facts.’”
“Smith said for the short term, the market can’t handle the large inventory of resale homes and other homeowners who want to be sellers once the market improves. Adding in a large number of potential buyers who have been removed from the market because of changing lending requirements only slows the recovery, he said.”
“A key is what happens in California since about 35 percent of Las Vegas’ new residents come from the Golden State, he said. That market has had some softening and observers predict resale prices have to come down because inventory is too high, he said.”
A report from the Coloradoan. “With half the year already on the books, Larimer County’s economy is chugging on with little noticeable difference from the first quarter to the second.”
“‘We’re not overheating but we don’t seem to be heading in the tank,’ said regional economist Martin Shields, who gave the local economy a B grade for the second quarter, which ended June 30.”
“That’s slightly less than the B+ Shields rated the first quarter, mainly because of the continued slump in the housing market. Rising interest rates and an overbuilt single-family home market are tamping down prices creating a buyers’ market for most segments.”
“And tightening credit standards in the wake of rampant foreclosures are pushing first-time homebuyers out of the market.”
“With only small pockets of vitality, the housing market gives realtors little reason for optimism in the second quarter. Supply continues to outpace demand as foreclosed homes flood an already glutted market.”
“Only correctly priced homes in outstanding condition are moving,” said Realtor Gene Vaughan. ‘But there is a lot of inventory on the market.’”
“The more expensive the home, the longer it is taking to sell. There’s a seven-year supply of homes in the million-dollar range on the market now, longtime Fort Collins realtor said. That means it would take seven years to sell all the current listings.”
“‘We still have a surplus of new units, which is keeping prices low,’ Shields said.”
“The slump forced Loveland officials to halve their forecast for building permits this year and next. ‘We’re expecting housing construction will be slow though 2008,’ said Alan Krcmarik, Loveland’s director of finance. ‘There are still a lot of foreclosures out there.’”
“The surplus creates a buyer’s market for those looking for good value. ‘Buyers are still in a pretty good position except for interest rates,’ which jumped half a point recently, Shields said.”
“‘People need to make sure their homes are in very good shape and they need to be realistic about its value,’ Vaughan said. ‘Just because we need a certain value out of the house doesn’t mean it’s worth it.’”
“As banks and lending companies remain jittery over the high rate of foreclosures, Shields said, some first-time homebuyers are getting frozen out of the market. ‘First-time buyers are being scrutinized a lot more and probably over-scrutinized because of trepidation among lenders. A lot of people are having more problems than they should.’”
“The developers of Wingfield Towers have filed for bankruptcy protection in hopes of securing financing.”
Yep, that would be tops on my list of things to do when looking to borrow money. Nothing will gain the confidence of your lender, like a pending bankruptcy filing.
Want to stay in Reno, go to a casino. Who needs a condo there?
“The developers of Wingfield Towers have filed for bankruptcy protection in hopes of securing financing.”
Where is the logic in that statement?
Yes, my thoughts exactly. It is starting to sound like 1992 all over again. I knew a developer whose lender would not advance any more money to complete an office building in 1992. He declared bankruptcy, went to court and got the judge to subordinate the first lender’s loan to a hard money lender who would advance the funds to finish the deal. About a year later the whole deal tanked, but the hard money lender got 100%, plus interest and the original construction lender got 83% and no interest.
The point is, declaring BK is a roll of the dice for desperate people. Perhaps the developer owes money on the land loan, which is due and payable. Some neophyte judge may determine it is a good idea to extend and subordinate that land loan to a new construction lender. Hmmm, it could happen. You never know where the chips will fall in court. Some people actually kill their ex-wives and go free. It happens.
Other choices are post bankruptcy secured financing (sometimes last resort lenders would rather loan post-bankruptcy so there’s less risk that their claim on a group of assets goes to the end of the line).
“The developers of Wingfield Towers have filed for bankruptcy protection in hopes of securing financing.”
Where is the logic in that statement????
“Some speculators who helped drive up the prices made a lot of money but others are in the process of losing it all, Burns said.”
You got to know when to hold ‘em, know when to fold ‘em,
Know when to walk away and know when to run.
You never count your money when you’re sittin’ at the table.
There’ll be time enough for countin’ when the dealin’s done.
The Gambler
– Kenny Rogers –
And to think he bankrolled that silly song into appearing on billboards all over so cal, extolling the virtues of gambling @ an indian casino, near you…
I think there are a lot more suckers holding an empty bag than there were winners.This is such a good learning lesson in knowing when to sell.Just like the 2000 implosion, a lot of people just got too greedy.Knowing when to sell is just as important as knowing when to buy. Good investors do not get too greedy.
Yep. That’s why I sold all my stocks and got T-bills instead.
Its been said before but my first hand observations confirm that many speculators rolled their early profits in to bigger or more projects. I’m thinking the people who sold and stashed their profits are a pretty small group.
Las Vegas is a gambling city. Of course everyone gambles. I definately do NOT want to live anywhere near las vegas!
It’s also hotter than Hades there, with good reason I’m sure. We stopped there for gas yesterday, and the air temperature was nearly high enough to inflict first degree burns.
wimp. The first degree burns will go away by mid-Oct.
Im all in
It’s a goldilocks economy! Better jump all in to the stock market before your priced out forever.Nevermind the housing bust and massive inflation out there. The foreigners will save as they keep talking about 44% of s&p earnings from outside the US. Better get a margin account and borrow as much as you can to get in on goldilocks.
Flippers, was the code word of the housing boom, now the code word is the old mainstay of real estate FORECLOSURE.
It was funny how everyone became a real estate investor during the boom.A lot of these folks will be back flipping burgers and greeting customers at walmart.
Look on the bright side. At least the “manufacturing” job numbers will be up!
Was in the checkout line at a pet store and overheard a realtor talking about one of his listings and how he couldn’t even get a showing though it’s been on the market more than 6 weeks. I turned around only to realize that he was an employee. I nearly erupted in laughter.
Easy come, easy go. I bet many more realtors will be jobless and looking for any $8/hour job they can get based on their HS education.
These people have such entitlement/pride complexes that they’ll never be seen working at a burger joint or Wal Mart. I have no clue where they’ll work, but it won’t be there.
“I used to flip houses, now I flip burgers”
It is interesting that so many in RE feel the normal businesses matrix’s of supply and demand just don’t apply to them, or when it starts to change it is an anomaly.
EXACTLY.
Like 1999 when things like profit didn’t matter, becasue this was “the new economy”. All you needed was market buzz and revenues, and your stock could go up 5% per week, forever. So what if you were selling $10 bills for $5 each, if you were selling them through the internet and were selling more this month than last, profitability just didn’t matter… When you run out of money, just sell more stock or borrow money with your stock as colatteral. No problem.
People don’t actually need to be able to afford houses. Prices will just keep going up at 10% forever, and those price increases will allow people to cash-out refi out of the unaffordable loan into a more unaffordable loan, using the cash-out to live on until their next refi. No problem….
This whole thing would work just fine if the salaries would just go up at 25%-30% a year, I mean that is realistic right? Then when you say that to someone they scoff and say “don’t be ridiculous”, yet they can’t look at prices the same way.
Very good perspective!
“Burns admits that’s not going to happen in Las Vegas and some of other overpriced markets unless mortgage rates spike or the economy has a prolonged recession.”
I’d say both of those scenerios are “In the Bag”.
Would expect a recession within 5 years if not sooner. The USA has always had a recession every 10 years or less.
When does the current administration give the wink to let TSHTF? My guess is we muddle along until January ‘08, then steadily go downhill into a fullblown recession from there. But that could easily be off to either side.
Any guesses on a Catastrophic Event?
Charles Hugh Smith has some thoughts on events that might lead to a depression
http://www.oftwominds.com/blog.html
Good summation of the current state of media, especially as it pertains to the bubble. BTW, the “media bubble” appears to have popped somewhat. Our local paper has really taken a beating and it seems to have happened overnight.
I would welcome a recession if that is all this mess turns out to be it would be a giant blessing, this is larger than anyone wants to admit.
I would welcome one, too. IF a recession would lead us back to long term financial sanity, it never quite seems to do that, however. Unless you were raised in the 1930’s……
Thatll be bad for anyone with jobs. Even my self employment business may suffer. Id like to see house prices crash without taking out the rest of the economy(unless local)
If you have dividend stocks in large global companies that have good balance sheets and long established, you will still get the dividends in a deflationary scenario - methinks!
Thinking the same thing. Mortgage rates ARE going to spike and we are going to get a nasty AND prolonged recession.
If you think about it, this market is falling apart already, without any help from those two events. So when they do kick in…
LOOK OUT.
What market is falling apart? Dow? Nasdaq? S&P? Oh, you mean the housing market. You’re right.
‘First-time buyers are being scrutinized a lot more and probably over-scrutinized because of trepidation among lenders. A lot of people are having more problems than they should.’”
Poppycock. First time homebuyers are probably being run through the same wringer that they used to get run through before the bubble. And the people who are having problems are probably those who should be having problems. Perhaps there is some sort of “over-correction” in lending standards. It sometimes happens that when the pendulum swings too far in one direction, it swings too far in the other direction before settling in the middle. But this is encouraging news. Unless of course it is some sort of cover spin for the fact that there is just plain less money to lend.
‘First-time buyers are being scrutinized a lot more and probably over-scrutinized because of trepidation among lenders. A lot of people are having more problems than they should.’
They should be scrutinizing EVERYONE, plenty of move up and 2nd home buyers overextended themselves leading to this mess. I see no reason to pick on 1st timers
Scrutinizing is a pretty vague term.So how do you scrutinize someone with with sh@tty credit and no job? I think they have been makeing excuses and helping people lie in order to get a commission. How do you really scrutinize when your paycheck depends on giveing loans? The industry is a mess right now.
“So how do you scrutinize someone with with sh@tty credit and no job?”
Easy, shitty credit and no job = no loan for you.
They should have thought about that a long time ago.There are still loans out there for subprime canditates if you look around hard enough. They created a monster and now trying to stop it.Property values are going to plummet in some areas.
Erghhhh… wrong answer. Lenders need fees to generate revenue to help cover over the losses.
No job and shippy credit = higher interest rate and higher closing costs (which are rolled into the loan), but you still get the loan that you have no chance of repaying. The lender gets to book higher “revenue” for a year or two until they have to write it all back off in the foreclosure, but by then the insiders will have cashed out.
No problem… right?
BUT, BUT, BUT… That would be discrimination…
Heh, heh, heh… !!!
Man, if you can’t afford a freaking house, don’t buy it. Don’t try to find a way to buy it. Just RENT…
“Housing is Arizona’s biggest industry, and the slowdown in building ripples throughout the economy from job losses at contracting firms to weaker sales at furniture stores.”
Uh-oh! Methinks this state is in for some serious pain…
Nothing to see here! Housing is contained… move along folks. Move along. Nothing to see here, housing is contained…
No son… you don’t want to go back there. Yes, that’s blood. Nothing to see here, move along folks…
Its not just Arizona… once the banks get the flu… we’ll all feel it.
Got popcorn and cash?
Neil
Housing is Florida’s biggest industry, too. What’s wrong with this picture? Fer Chrissakes, “housing” shouldn’t be any state’s biggest industry. The value of housing as an industry is the shelter it provides for people who live and work in an area.
To have “housing” as a dominant industry anywhere is creepy, IMHO.
1 out of 6 in Cali is RE related I remember hearing…something like that…and the same is true of State and Gov workers as well in this state…how can we go wrong?
Big P~
RE: To have “housing” as a dominant industry anywhere is creepy
Same with tourism…here today, gone tomorrow.
However, state sanctioned casino’s will save the day.
Hey, I thought you were only following Washington and Nevada!
Keep your eyes on your own paper!
I was just commenting on this common phenomenon of “Housing is _____________(fill in the name of the state) biggest industry”. It’s just too creepy. OK, so once everyone has a house in whatever state they’re in, THEN what do they do?
Once this whole thing has fully unwound, we’ll get to see just how much trouble we’re really in here in the US. When houses aren’t being built or bought in any great numbers anymore, maybe there will be more awareness of just how much actual job opportunity is out there, how much prosperity we DON’T have. BTW, I used to think this debacle would unwind slowly, but I have a weird feeling it is going to pick up speed, as many events have done in recent years due to the internet, globalization (ugh, curseword), etc.
LOL. I’ve been following too many markets. I have a bet with a family member in AZ that Fulton Ranch (Chandler) will experience a massive price haircut. Still trying to find good info on that development.
where is goldilocks? where is the greatest story never told?
The repo man is getting busy
More vehicle owners are falling behind as the economy slows. Many slip when they lack the money to repair cars that they’re still making payments on.
By Karen Aho
Repossession agents in areas hit by foreclosures say they’ve been picking up vehicles both from people struggling to keep their homes and from those now left without work: construction workers, pavers, landscapers and real-estate agents.
“It is actually stunning the number of cars we’re taking from people who are supporting the local real-estate market,” said J. Patrick Altes, the president of Falcon International, a recovery agency with offices throughout Florida. “It’s almost the type of thing where we see it and you wonder if anyone else sees it. . . . It’s like they turned off the spigot.”
http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/TheRepoManIsGettingBusy.aspx
It isn’t jsut housing construction. We have record amounts of new office space and retail space scheduled to open this year. When all that space opens, and the offices are empty and the retail has no shoppers and the housing is sitting empty, and all those construction jobs go away, and the banks start taking mass losses on ALL types of property… Look out below.
Some Speculators Are In The Process Of Losing It All
Great title Ben. My wish would be to have it say “ALL SPECULATORS ARE IN THE PROCESS OF LOSING IT ALL”.
Bubble sitting is a form of speculation. We are all gamblers now, whether or not we like it.
Well, then I’d better come clean and admit that I speculated on a pair of shoes recently.
I’d seen prices drop on them before. Sure enough, they did again.
Saved 30%. Looking for the same savings off my next house in Portland. If not more…..
Agree. I’m trying to sell in hopes of buying back later for much less. I too am trying to become a speculator. Sell high, buy low.
jeez, GS, what do you call a chicken-s— like me who hedges against his own investments - speculators also? For the next five years if I can keep my principle in line with inflation, I will be happy enough. Precious metals, stocks, series I bonds versus T-bills, money market funds, CDs, municipal bonds, treasury notes and corporate bonds. I buy some of each of the above once per month.
I live in San Diego where it still takes a good $500K to get an “OK” place to live. I am not speculating at all, but rather, simply avoiding putting myself between a rock and a hard place, and renting for half of the amount I would be paying to “own” in the high end Torry Hills area of San Diego, where it is hard to find anything much under a million.
In Business Las Vegas from Nevada. “Las Vegas resale home prices may be falling but national housing expert John Burns said the median price in the valley needs to drop by 33 percent or nearly $101,000 to match up with income levels that residents can afford.”
“Burns lists the median price of resale homes at $305,975. By his calculation, the price would need to drop to $205,000 for housing costs to return to the market’s typical ratio of housing costs to income.”
lol!
A little late johnny boy. 33% how about 50%.
“Some speculators who helped drive up the prices made a lot of money but others are in the process of losing it all, Burns said.”
Las Vegas.. speculators.. gamblers. Same psychology.
While many if not most are ahead at some time, how many gamblers walk out of a casino with more than they walked in with? Maybe 1% ?
Based on that, I’m gonna take a swipe at the % of speculators who cashed out and walked away with a “lot of money” .. hmm.. 1% ?
It all comes down to affordability and practical lending standards = much lower house prices.
Got 20% down?
“Housing is Arizona’s biggest industry…”
Two thoughts -
1. Not for long
2. Having your biggest industry be something that can’t be exported out of state doesn’t seem like it’s the healthiest thing for your economy.
(Sorry Ben - not directed at you of course!)
Your point #2 is valid. I’d take it a step further, the fact that the biggest industry is a sink of wealth rather than a generator of GDP upon completion… should be of concern.
If the biggest industry was dam building… that would be ok. Eventually that would produce something exportable.
But what state isn’t impacted? Even Alaska is having a housing construction boom.
Got popcorn?
Neil
Eastern Nevada had no housing boom, at least along State Route 93. There are no McMansions, farms, fences, or houses in sight, with very few cars or coyotes, either.
“2. Having your biggest industry be something that can’t be exported out of state doesn’t seem like it’s the healthiest thing for your economy.”
Er, is really what you meant to say ? Having an industry you can’t outsource would be a godsend for most states. Having your economy rely on one Industry that can be exported is a disaster as Michigan proves.
I think what he meant was that the products can’t be boxed up and shipped out. Once upon a time PHX’s largest employeer was Motorolla and we boxed up cell phone parts and shipped them out, which brought money into the state. We can’t box up the houses and sell them to out of staters to bring revenue into the state. Of course, with copper so expensive, all the mines are reopening. So, we’ll have that to export again pretty soon… until a global recession hits, demand dries up, commodity prices crash, and they shut the mines again. That should happen right about the same time that construction and retail are crashing hard.
Darrell, check out Southern Copper (trading symbol PCU) world headquarters is Phoenix. It has mines in various nations. Yield is impressive.
they need to be realistic about its value,’ Vaughan said. ‘Just because we need a certain value out of the house doesn’t mean it’s worth it.’”
Ah I needd $785,000 out of mah hauwse so I cann paaay offd my Hammer, Mercedez, the naw poul, boob job for the wife, and the mistress, trap aroundz ths world witn da mitrezz, trip to Burmudaa with da wife. Never mind I onlys paid $299K for its last yera. Der must be soomee fool dat will pay me this $785K. That is dirt chep in da Bay area where weez cum from.
no sarcasm intended (yeah right on my last post). And don’t really need that - just trying to cry like some of the stupid things the real FBers did. My home in ABQ $299K would be well over a mil in the Bay. But it isn’t in the bay and is worth $299 or 300 so if tried to sell (which I am not).
” Builders rushed to buy land, often paying top dollar, and construct homes fast enough to keep up with demand.”
“Toll spends every Monday poring over prospective land deals in his firm’s headquarters, a nondescript three-story building in a Horsham, Pa., office park located about 30 minutes northwest of Philadelphia. For the head of a company known for the cut-glass chandeliers and double-height foyers in its signature mansions, his office is a strikingly déclassé affair. (Bruce Toll is vice chairman of the board and an active adviser but plays no daily management role.) The ceilings are low, the lighting is harsh, the air-conditioning is on the blink. Toll’s shares in his company are now worth more than a half-billion dollars, yet he does his business on the cheap: a glass-topped table surrounded by dining-room chairs in fuzzy orange fabric that were salvaged from a bankrupt company years ago. One after another, his deputies visit his office on Monday nights, sometimes past midnight, to submit parcels for consideration. A $30 million deal for a piece of property is common these days, and a $150 million deal is not unheard of. If the price is right and the ground is good - no one at the company calls it land - Toll wants it before the competition. In fact, when he hears about good ground in a town with a strong real-estate market and jobs nearby, Toll gets visibly excited. He gently claps his hands together and rubs his palms. Then he will give a green light to lock up the parcel for development. “Now we’re cooking,” he says. “What’s next?”
Red Light
“He gently claps his hands together and rubs his palms.”
“Excellent”…Charles Montgomery “Monty” Burns (The Simpsons), based on the notorious skinflint US industrialist, John D. Rockefeller.
Don’t let ‘em fool you. Toll also builds on the cheap. (A family friend used to work there. He had all sorts of stories to tell about the poor construction quality.)
Presently living in Toll unit (renting). I will confirm that the quality is no better, and often times worse than other large builders. Recently walked through some of their latest models (just out of curiosity) and found that quality seems to be dropping even more. America’s Luxury Builder, my a$$. Anyone with construction experience, or an eye for detail can quickly see what a charade that company is. I would never buy one of their homes.
Thanks for the info. Will be staying away from Toll houses.
I heard their slogan is, “You can get better quality but you can’t pay more.”
My little sister is marrying the son of a local builder. She said her future pappy-in-law is going to help them “get into” a house (I’m guessing at-cost purchase price under the table, plus cash for 20% down, topped with co-sign to knock the interest rate down a couple points). He didn’t raise his kids as priveleged snots, and the only reason he’s being so generous is this: “I made loads of money during this run-up and kept the prices going higher, but now look at what that has done to my kids. Now they can’t afford to buy a house.”
Pops didn’t know then that he was sh***ing where he would eventually be eating. I’m sure he thought he could never be reached by the damage he only thought he was doing to others. Yet, I’m sure he still believes he can’t be reached by the grips of a bust.
“I made loads of money during this run-up and kept the prices going higher, but now look at what that has done to my kids. Now they can’t afford to buy a house.”
The increase of home prices was not a true generation of wealth, but rather means to pull wealth from all forward generations. Greedy home speculators sucked the life blood out of their children’s futures, and spent the cash on Plasma TV’s and expensive cars. This is an irreversible disaster of epic proportions.
Met a flip-gone-bad Realtor this weekend at an open house in Las Flores (Orange County). Bought his “investment” for $ 1.2 million in May of 2005 and is now selling for $ 999 k
The problem with this house (like many in the OC) is basically a 2600 sq. ft tract home with virtually no front yard and within spitting distance of the homes adjacent to it. If you’re gonna pay $ 1 million for a house, I sure don’t want to hear my neighbor flushing his toilet.
I love this line from the Coloradoan artice mentioned above:
We’re never going to recapture those high-wage jobs, especially in manufacturing, that have been lost. The jobs are going and they’re never coming back.
And they wonder why houses aren’t selling?
oh they’ll come back, when the dollar index crashes.
thanks in no small part to your wjc and the other tlc boys.
And…
There are jobs out there. People may not get exactly what they want. If they can make ends meet they may have to settle until they can get something else in the same company or continue to look for something else.”
Meanwhile….
Even in the $200,000 range, homes are taking four to five months to sell. “As an industry we’re so spoiled,” Vaughan said. “We expect things to be sold in 30 to 60 days. That’s not realistic in this marketplace.”
And my personal favorite:
There’s a seven-year supply of homes in the million-dollar range on the market now, Vaughan said. That means it would take seven years to sell all the current listings.
Stupid spec builders, did they ever stop to verify the number of potential buyers in this price range, or did they just say “duh, the rich aren’t affected by the current economy, let’s build houses for them!”
“There’s a seven-year supply of homes in the million-dollar range on the market now, Vaughan said. That means it would take seven years to sell all the current listings.”
Wrong. It would take 7 years to sell if NO OTHER LISTINGS WERE ADDED FOR 7 YEARS, AND THE SALES RATE STAYS THE SAME.
Neither of those things are going to happen.
Bottom line: Most of those homes are NEVER going to sell. Well, not until a foreclosure-induced fire sale happens.
I wonder what the Colorado banks will do with them once they repo them from the builders? Will they sit on them, knowing that there is a 7+ year inventory? Or will the firesale them?
They will be forced to unload them. Give it 9-12 months.
“ARMageddon”
Top story on CNN/Money frontpage.
http://money.cnn.com/
A.R.M.’d and Dangerous…
ARMed and screwed.
Note to MSM:
A large portion of us renters could give a rat’s ass about qualifying for a loan right now. WE DON’T WANT TO BUY overpriced piece of crap houses. Stop blaming dismal sales on stricter lending.
Stricter lending only served to prevent those with boxes of stupid from getting buckets of cash.
No kidding.
Check out Jim Klinge’s latest blog entry. Out of 94 sales of HSBC REO’s in S.D. this year, 55% were purchased 0 down.
So much for stricter lending.
lol
hear hear.
but, but, but, real-estate never goes down in value.
That as maybe - but it’s the MSM’s job to try to scare us into buying now - as if we don’t we may not ever qualify for a loan.
It’s just the same old story from them.
As an aside I just armed a co-worker with some facts who was on the edge of looking at buying - I suspect after the numbers I shot her, she’ll be staying on the fence a while longer
I steer folks to Ben’s blog.
WE DON’T WANT TO BUY overpriced piece of crap houses.
I’d like to add that WE DON’T WANT TO FINANCE someone else’s retirement by buying their house and find out that there are fewer people down the line in this pyramid scheme known as Real Estate!
Who - just “who” are the boomers going to sell their second and third homes to, since there are fewer Americans born between 1965 and 1983 (as opposed to 1946 and 1964)? They won’t be selling to the hords of illegal aliens because Americans spoke loud and defeated Congress on the shameful giveaway Immigration Bill.
sssssssssshhhhhhhhhhh - we don’t want to scare the buyers away. They are hiding behind a bush waiting for the all clear is sign from Ben.
There were increasingly poor quality loans made starting in the spring of 2005,” he said, “with the poorest of all made during the fall of 2006
No kidding. And I think I will hand my 5 yr old child a big box of matches and tell her to go into the mountain (with dry trees) and to go ahead and play with them. Then I would be surprised when a big fire started. Fortunately, I am not that dumb. What did these clowns think would happen when you give a $500K loan to someone who I wouldn’t loan $5 to buy lunch.
They thought they’d be able to book hundreds of billions in fictional profits, skimming 20% off the top for their tens of billion in end of year bonuses, then head for the Caribbean with thier billions while the country burns toward the Greater Depression.
Imagine the assets these “new masters of the universe” a$$shats will be able to snap up with their personal billions they’ve cashed out as everyone else is left burning in flames.
1980s was the decade of greed???? I don’t think so. Each decade since has gotten worse and worse.
“Each decade since has gotten worse and worse.”
And it won’t get any better w/o some serious pain.
Maybe they are hiding behind BUSH? He wants a homeownership society? Or hiding behind Easy Al? Or behind Helecopter Ben?
One of my clients this past week works for Century 21. She said that for the past two months in her office here in Vegas, the only sales have been short sales. She estimated that home values across the city are down 25% from the peak, and she is including her own home, which is upside down and currently on the market for less than she paid for it. She said she’s had “lots of foot traffic but no serious buyers” to date.
I don’t see real estate agents helping much here in Vegas. They’re holding onto their 6 and 7% fees without a budge. I’m at the point I’m thinking they’re part of the problem. One agent came and wanted $24K, 6 months locked into an exclusive whether they perform or not. Oh, you can fire them, but sell it yourself and you owe them the commission.
One calls and tells me he’ll show to buyers for 2%, even stage an open house at no cost. ANother calls and says no agent will show a house at 2% when they can get 3 or more all over town. I told him I figured those agents who haven’t had a sale in nearly a year and the gas tank on the BMW was getting low should be glad to show at 2% and at least get some money in their pockets. Another calls and tells me I have to offer buyer’s agents 4A% or they will never show the house because the builders are offering higher percentages and I have to compete with the builders.
Thousands of agents in this town, and I believe total sales this year spread across the number of agents is 1 sale in 7 months. One paycheck in 7 months and they won’t budge. I guess hunger isn’t that painful after all.
I asked the 3 and 4% guys about the agent’s fiduciary duty to show a house to a buyer regardless of the commission percentage. It was a “yes, there’s a duty”, but we’re not going to show it.
I know they know they are in a changing industry and their lock on information, buyer’s, and sellers is lost mainly because of the Internet, but most I’ve talked to make you want to go in and take a shower after being around them to get the stink off. In the meantime, from what I’ve seen them do for neighbors, they literally just ripped them off, took the listing and left the seller dangling in the wind, no support at all.
Real estate agencies have a big part to play in this fiasco unfolding. I’d love to see some brokers called to account for their role in all of this.
Credit Card debt jumps 10% in May. Ouch.