Local Market Observations!
What do you see in your housing market this weekend? A cartoon? Or a remorseful seller? “The Athens housing market, like the rest of the nation, has been slumping since its peak in 2005, but the first half of this year has been particularly hard. The Staianos, who moved to a home in the Cobbham neighborhood of Athens, originally put their Five Points house on the market in December 2006 and immediately found someone interested in buying the house, but for less money than the Staianos were asking.”
“‘We got an offer out of the gate, that in retrospect, we should have taken,’ Mark Staiano said.”
“Angie Adams has been a real estate agent for 27 years in the Pikes Peak region. Today, buyers might find 40 homes that match their desired price, location and amenities; three or four years ago, their choices would have been limited to maybe six or eight, Adams said.”
“‘Buyers used to narrow down their choices much faster,’ she said. ‘They don’t now. They want to see more. There’s just more to see.’”
“Even when Adams tries, however, some sellers don’t listen. She puts them in the ‘yes, but’ category. When she explains why they must lower their asking price to compete in the market, Adams often hears something like: ‘Yes, but my house has a beautiful yard,’ or ‘yes, but my house has a three-car garage,’ or ‘yes, but my views are better.’” “‘It will sink them,’ Adams said. ‘The ‘yes, but’ typically means they’re pricing it over the marketplace.’”
Rising foreclosures? “Mayor Robert Duffy opened a Foreclosure Summit at City Hall, telling a capacity crowd of more than 150 people: ‘We have a problem in Rochester. We have a problem with vacant houses. We have a problem with foreclosures.’”
“‘The view from the street is it’s a jungle,’ said John DeMott with Sector 4 Community Development Corp. in southwest Rochester. ‘The American dream is a little bit of an American nightmare right now.’”
“Banks are on pace to foreclose on more than 2 million American homes this year. It’s a national trend that’s hitting homes in East Tennessee as well.”
“Just ask Illree Terry about it in her La Follette neighborhood. To her…foreclosures are about the waist high grass and trash accumulating in the yard of the home next door. ‘Well, it’s just a big ol’ mess as they say and we have talked to our city for 2 months and nobody is doing nothing,’ Terry said.”
“60 days ago her neighbors disappeared. ‘Packed up and left one night about 12 o’clock and they have not been back. The house is a total wreck,’ Terry said.”
“Wayne Gregg, La Follette’s city code officer says the problem is getting worse as more homes are foreclosed on. ‘You can spend half a day trying to find who honestly owns this property,’ Gregg said.”
“In cases where the city can’t collect, it puts liens on the property to pay for the yard work. Just ask Terry, in today’s housing market, there still aren’t any guarantees. Collecting on those liens might not be as easy as it sounds.”
‘”Well, the way it looks now, No way it’s going to sell. No way,’ Terry said.”
Underwater? “Homeowners hit by rising interest rates are paying out hundreds of extra euro in mortgage repayments for properties that have dropped in value by more than €8,000 in just six months.”
“A four-bedroom semi-detached house in Rathfarnham, south Dublin, had its sale agreed at €820,000 but the deal fell through and the owner is now asking for €750,000 or ‘anything near that’ to secure the property.”
“An apartment owner in Dublin 15 saw the value of his property fall by €30,000 in just three months.”
“Group chief executive of Irish Life and Permanent plc, Denis Casey, described the falling prices as a ‘modest decline. It’s not substantial. House prices are back where they were in the third quarter of 2006.’”
An ad in the freebie paper for a spec home completed almost a year ago:
You are Cordially Invited to a Bar-B-Que To Celebrate the Completion of “Chelsea Field”
the New Model by Joshua Eiswerth
Sunday August 12, 3-6
Come Enjoy Dinosaur Bar-B-Que
Bring Friends and Family -One and All
Best New Home Buy for only $349,900
3200 sq ft
4-5br/3 ba
5 acres in (town) horse country
Except its not anywhere near the other horse farms. Actually it’s not even in this particular town but south of it as in even further from Syracuse/jobs.
Come Enjoy Dinosaur Bar-B-Que
To quote Jon Stewart “whhhhAAAAaaahh????”
Please explain, enquiring minds need to know.
Countrywide?
Dinosaur Bar-B-Que is a popular / famous BBQ joint in Upstate NY (Specifically, Syracuse and Rochester)
I never really noticed the bubble in Rochester, it seemed pretty depressed on it’s best days to me due to the general economy up there. Moved out of there a year ago, selling the house (not an investment) I had there took 6 months as it was.
Thanks for clearing that up - I was imagining either a BBQ as old as a dinosaur, or something along the lines of the gargantuan Bronosaurus Ribs, as seen in the opening scenes of “The Flintstones”
I think a Dinosaur Bar B Que just opened in NYC earlier in the year.
Darn and I thought it was for the Football (Soccer) team in England. Dratz… I’d be pissed. Where are the Soccer players so I can get an autograph.
I mentioned this week that I know of a flipper who is filing for bankruptcy. Has three houses, racked up huge CC debt trying to hold on. Wants to hold on to the primary house but is under water on two. No bailout plan in the world could convince this person to hold those two. The most interesting thing was hearing about how the pending bankruptcy was such a huge ‘relief’ and that this person couldn’t wait to ‘get out from under’ the mortgages.
I remember in Texas during the 80’s, millionaires walked away from underwater properties; it was even sorta considered the smart thing to do.
There will be plenty of those, but I bet there will be a lot of these too:
Guy who works in my office bought a one bedroom condo in northern Virginia for rental/investment. Thought the unit couldn’t go down because it was close to the metro, middle of everything, etc. Got a good tennant too. I knew that he couldn’t possibly have paid only 100 times the rent when he bought - prices are much too high. Someone told me this week he is losing $700 a month on the unit. Not a bad idea if you are seeing $60K of equity appreciation a year. Terrible if the value is only holding. Mind numbing if the unit is also losing substantial value.
Financially, he should walk away. But I think that people are so attached to the idea that they are “good investors” that they will hold on to these things for quite a while.
I think this guy and his family have more than enough cushion to survive with one really unfortunate investment. But some people who haven’t actually committed quick financial suicide will allow these bad investments to bleed them to death slowly.
It is going to be a long ride.
Unfortunately, Ben, if your friend is like most people, he or she is not likely to learn any lessons if the terms of declaring bankruptcy allows him/her to keep the primary residence.
Where’s the penalty?
If we are forced to bail out the banks the same way we bailed out the S&ls in the ’80s debacle, the penalty is to the rest of us that were responsible.
It’s already in the cake, Hoz.
And all these creditors thought Bankruptcy reform would save them and allow them to make riskier loans and trap the borrower into repaying LOL!
So much for those new models and ways to assess risk that Greenspan was talking about several years ago.
Ben, I think you need to leave a sack of groceries on this poor fellow’s doorstep some night, just to show how much we here at the HBB care.
Local updates:
Countrywide closes local office
Brown lawns everywhere
http://bakersfieldbubble.blogspot.com/
How do green pools look against the backdrop of brown lawns?
Its a kaleidoscope of the local colors…just mix in some grey from the sky and the effects of blurred vision from a mosquito bite due to the west nile virus and things start to look great!
“green pools against brown lawns” funny & sad. C&C nice work on your site.
Don’t forget the black of the spiraling vultures.
Sigh. People don’t get how bad exactly the market is. Here a California ad:
Price $509,000
Description: Weekend of august 10th-12th home will have a special price of $494,000! Better hurry!
Out here in Huntington Beach, Southern Cal it sure seems like business as usual, however there is an obvious change in the weather most in the business are noticing. I take tat back, people in the business realize the panic involved, people outside who do other jobs feel that this housing will not be in any way impacted by other places across the country. It is quite strange to say the least, kind of like you are in a surreal wonder world which is the OC. I kind of liken them to the people who see the water race out from the beach and get all excited that the can run out real far and pick up the pretty shells, while a tsunami builds on the horizon barreling towards them. It will be ugly here when reality sets in, it isn’t now though it will take a little more pain and time.
“out here in Huntington Beach, Southern Cal it sure seems like business as usual”
I drive thru Huntington beach almost daily, and on the surface things seem blissful. HB still an attractive city in many ways, and a good place to hunt for homes when the Scal RE downturn gets into hyperdrive. Still too early at this stage to get decent bargains, probably by early 2008 some good deals should be popping up, even near the beach.
It is business as usual for the vast majority of ignorant folks here in LA/OC” :the effects of the closing of the subprime spigot has not quite filtered down where were seeing significant home price reductions yet in the general LA Metro region. Do see lots of brown unwatered, unkept yards and dilapidated foreclosed/REO properties here and there but the banks at this stage still unwilling to unload these properties at below market prices.
Sidenote: still like garden grove 92845-92841: perfect family area, clean, no riffraf, no slummy apt zones,good schools and parks, good access to LA/OC job markets,ect. IT is a small area -parameters 2×3 miles with valley blvd north of the 22 fwy going right thru the center all way to Katella. A small attractive oasis geographically isolated in the generally dismal LA-N OC county region.
I just checked the median list price on the San Diego 92127 (Rancho Bernardo W) MLS SFR inventory, and it has dipped below $1.3m for the first time in many months. It was near $1.4m the last time I checked (within the past week). It is too early at this point to distinguish whether this is a mere blip or a trend innovation.
Further, the MLS inventory of used SFRs+condos in San Diego is now at 20,109, and seems to be trying to pull away from the psychologically important 20,000 threshold.
A building I’ve had my eye on recently opened. In a fantastic location and everything. Can still walk to work, yet the lake front bicycle trail is just steps away. Perfect for me.
There’s a nice unit for sale or rent. The owner purchased for $410k with a 90% LTV loan. I could either rent for $3900 a month or buy for $775k. HAHAHAHAHAHAHAHA
Guess I’ll be waiting for the bank to put it up for sale.
What, renting is a nightmare? Mr. and Mrs. TooMuchHomeBuyer are going to lose their houses and will have to rent? Is the stigma too much for their fragile little egos to take? Oh my god! It’s the end of life as we know it! We’re friggin doooooooomed! (Close your eyes Tyler. Don’t watch mommy and daddy lose everything).
“have to rent? Is the stigma too much for their fragile little egos”
They are afraid that will not be invited to dinner parties if they are renters.
People may think that they are poor if they rent.
People will think that something is “wrong” with them if they rent.
Parents and siblings will not think that they are “grown up” if they rent.
If someone doesn’t rent from another FB like themselves, they may not pass a credit check to rent. They may be living with relatives.
arroyogrande –
Unfortunately, what you laid out in jest is precisely what WILL happen.
Lots of Americans assume others are doing poorly financially unless they are done up to the nines, blow wads on cars and gadgets-of-the-month, mingle with other such folks over granite countertops, and spend beaucoup bucks on dinner and drinks.
It doesn’t matter if anyone has a dime or not. What’s most important is that you look like you do.
Remind them that whoever occupies 1600 Pennsylvania Avenue is just a temp occupant.
~Misstrial
My friend’s six-year-old was over the other day, and the discussion turned to houses. The wee one informed me that we rented our house. I was about to inform her that, while we rent our house, her daddy merely rented the money to buy their house, but then I remembered, she’s 6. It amazed me that someone that young was conscious of the distinction.
Lionel, from now on, I would go with “acquaintance.”
When I first began renting, after selling out, I felt that some of the neighbors though of us as “those renters.” Much time has gone by, prices have been falling like a stone, and now I seem to see a “those shrewd damned renters.” Never loved, but at last respected.
Posted on large billboard on US HWY 19 in Clearwater, from the local Board of Realtwhores:
“IT’S A BUYER’S MARKET !!!”
Unbelievable! Then, of course, under the news is the sales pitch that you need to get in on the good deals and, of course, you need a Realtor ™ to help you get some.
Unfortunately, I don’t think I will be calling them because shills from the same group told me 4 years ago that if I didn’t pay the OUTRAGEOUS prices they had put on the properties they had listed, that I would be “priced out forever”, as the prices would only continue to go up infinitely into the future at 20-30%. I’d be lucky to pay such a “low price” if I got in then.
So, I am looking only at FSBO purchased more than 5 years ago.
It’s really amazing. Last year, it was “A GOOD TIME TO BUY OR SELL”> Now………..It’s a buyer’s marker with lots of great deals.
I wonder how those people who bought the “priced out” story are feeling today, now that they are “locked in”.
Confidence Men with lapel pins.
Here in East Tampa Bay, I saw signs for a KB Home “Fun Event” on US 41 as I was driving to do my usual Saturday errands. Can’t imagine what kind of “fun” they had in mind. Maybe they opened the development’s pool to the public, it is really, really hot, even for August, and although we had torrential rain one day last week, I am noticing the afternoon summer rainstorms aren’t quite as frequent as they used to be. Seems like a much drier summer than usual, although today I am hearing rumblings of thunder and hoping we get a good cloudburst, we could use it.
Anyway, this part of Florida always seems sort of wilted and dispirited from the heat this time of year, but this year, it seems even more forlorn with all the cheesy half sold, half done developments. One fellow I ran into has a customer who has been one of the top real estate agents in the area for years, well before the boom. Very respected. He said she told him she’s only sold one property all summer. And yet, she still asserts the area is growing, because there’s supposed to be some sort of downtown re-development that the local power brokers are still hawking:
http://www.observernews.net/artman/publish/article_002334.shtml
Palmetto
Thanks for the comments on the Tampa area. I look forward & enjoy your observations from someone who actually lives and observes first-hand area situations.
if I ever make it down to Tampa again, a cold beverage of your choice is on me !!
You’re on, Aqius! Make mine a schadenfreude cocktail!
Anyway, I just spent a little while cruising the local realtor.com listings. In the Ruskin area, for the first time in about three years at least, I saw a listing for one of the older Florida single family homes dip below $100,000, at $99,000. Boo YAH! When we moved here in 2000, you could pick up a nice, modest little block home for between $65,000 and $85,000, so we’ve still got a ways to go, but at least there’s progress. Then I checked out East Pasco County (Dade City/ Zephyrhills) and actually saw some little block and frame homes in the $70,000 - 85,000 range. Double BOO-YAH! That’s getting down to around what it used to be in that area back in 2000!! Whew, fast drop. But those houses have to go even lower, to make up for the higher insurance and taxes.
Did they really say buy now or be priced out forever? How does that work?
Yes, realtors were really saying that, as was everyone else — relatives, friends, newscasters, etc.
You see, if you can afford only $100,000 and prices go up $20K-$30K per years, it’s OBVIOUS that you will quickly be priced out…FOREVER.
Seriously heard that a number of times.
We’re still trying to buy in Flagstaff, AZ for next year’s school season. I follow the MLS weekly, but cannot see any significant breakdowns in prices there. Is it just a unique area resilient to the downturn or what is going on? - I’m really puzzled.
Joe
wlak,tlak and try some wanted flyers
make sure you state that you’re not a realhore
Pick your school district and rent for a year.
Is there any indication prices will be lower a year later?
If I remember right, the Shiller housing futures do not indicate a significant decline going forward. Also, the inconvenience of having to move again.
Thanks, Joe
Common sense is a rare commodity, why is it called “common”?
Foreclosures haven’t even started yet.
“Pick your school district and rent for a year.”
That’s certainly what I would do. It would give me a chance to scout all neighborhoods thoroughly and quite possibly to pick up a great deal on a pre-REO property. If you follow this blog regularly, you’ll see many posts by people who believe that prices setbacks may well be just steps on a long ladder down. Buying a “$300K” house for $250K is not a good deal if its mates sell for $200K next year and $175K the year after.
Hello Joe, I have a good friend in Flagstaff. We have talked about the local RE and the average wages. I strongly, strongly, strongly recommend you rent for a year. When these crazy loans go away and the investment craze goes away Flag will crash like everywhere else. Quite a bit in my opinion.
Sounds like you are looking for a rationalization to buy soon. If you do, however I would be mentally prepared to take a loss for the convenience of being in your own home right away.
Better yet…rent for at least a couple of years. Get a simple place & simplify your lifestyle (get rid of the junk in garage that hasn’t been touched in years).
Good luck!
“get rid of the junk in garage that hasn’t been touched in years”
Over my dead body. That’s not junk, it’s my collection of
2oth and 21st century artifacts.
PS: I rent.
Maybe Flagstaff is just different?
Actually it’s a highly desirable area where supply is lower than demand, relatively speaking. I had dealings with a custom home builder up there a couple of years ago and he was going out of business in that area because “there wasn’t any affordable land to buy” at that time.
Lip — with all due respect, I think that “a couple of years ago” is an eternity ago in the unfolding market of today.
I’ve been keeping a chart of the Flagstaff, AZ inventory numbers from the MLS for a while now. There appears to be a top forming in the chart. The last time this happened (late August last year) the median price in Flag came down) according to Zillow (I know - unreliable). This time, though, it happened two months earlier and, better, a renowned local realtor freely admits on her blog that prices are dropping. With Flagstaff’s almost total reliance on outside buyers and investors to keep prices up (what local could realistically afford these prices without a suicide loan?) I think the recent tightening in the mortgage industry has just rung the death knell for Flagstaff.
Rent for a year, then look at how things are. It ain’t “different here” - we’re just near the end of the chain and it’s taken a while for the affects of the housing crash to reach us.
Hey del, long time no see. Thanks for the info!
del,
Indeed - thanks a lot for the info. Also thanks to the other bloggers. We’re indeed not looking to buy until in a year or longer. We also have to keep an eye on rates, and my model tells me we’re looking at higher rates.
Joe
Just remember, you can always change your rate (at some point during your home ownership), but you can’t change the price. Good luck.
Del–awesome work, too!
As a former Flag realtor, I got disgusted early and bailed from the biz in `03. I though it had peaked to insanity even back then. Boy was I wrong!
I cannot believe the “gold rush” mentality in Flag. Peeps must have their brains tied behind their back when buying RE in this town. Where are the fundamentals? There aren’t any! Price to rent ratios are crazy. The only thing holding this house of cards up are the people with a lot of money who can weather the storm; they will hold onto their houses and their pie-in-the-sky prices until hell freezes over. Meanwhile, the faux riche and the shoe-shine-boy-Johnny-come-late-to-the-party types are bailing and probably sweating bullets as this thing unwinds.
I still see laughable wishing prices for both sale and rental property. It’s just a question of who’s gonna blink first. The answer should be obvious.
Patience, Joe, patience. Flag’s a nice place to live–just a crappy place to buy RE at this time.
so, if one of your kids were old enough, married with kids and came to you and said “Dad, it was tough, but we’ve managed to save up the down payment and are going to buy a home in Flagstaff right now.. whada you think?”
You’d answer “Go ahead.. your money perfectly safe. Flagstaff is different.”
Joe, I am nearly 30 year resident of Flagstaff, and more importantly a several year reader of this blog (Thanks Ben!). My take on it is that Flagstaff seems to lag Phoenix/SoCal, from where many of the equity locusts hail. About 25% of sfh are second homes, and rarely occupied. IMO, what is happening here is that prices have peaked about 18 months ago but most folks haven’t got the memo. Much more for sale than a year ago, and many realtors are obviously hungry. I have a couple of friends who are over leveraged, and are having a hard time refinancing.
During the late 70s early 80s the economy here was a total wreak. As a college student I had a hard time finding any part time work. I finally secured work at Jack-in-the-Box - but only because I had a friend that worked there. I suspect we’ll see those days again.
In short, I would recommend you rent until you get the lay of the land. My guess is that about 50% or so of the people that move here either don’t like it or can’t make it, and thus move on in about 2 years.
PS: There is only one school district, and if your willing to provide transportation you can send your kid to any school.
See you soon!
Hi Cassandra,
Thanks for your insightful comments. Coming from Germany originally, I am used to rent-to-own ratios you would consider insane here. But guess what - the ratios did never change there in decades. We may see something similar here in the US going forward, or we may not. But it’s not excluded that people will be willing to spend more on housing than previously. Short term, the correction will surely continue. I don’t think it will be as drastic as in the 80s or 90s, though. The thing Flagstaff has going for it is the relative strength of the market in comparison to Phoenix. In the stock market, it is always a good strategy to buy into relative strength and avoid weak sectors. I think it’s similar in the RE market - you buy into the strong areas, even if it hurts in the beginning. Certainly, it’s a good idea to wait right now. Thanks again for your explanation.
Joe
Stammstish: 18:00 nach 20:00, jeden Donnerstag, Ni Marcos Pizza
Stammstish = Stammtisch
can’t type in any language
Anyone I was wondering where is a nice place to stay in Flagstaff for vacation. A place where I won’t have to listen to the constant sound of trains all night. And yes its very nice up there. Thanks
Joe,
I would like to buy in Flag also but brown stuff hasn’t hit the fan yet. You can sniff it now but we need to be patient.
a realhore bought the house across the street at peak resold w 100k haircut
22151 Soviet S of DC
actually smart assuming that wasn’t her first and only spec - some people have learned how to take a loss rather than take BK - she’ll do OK
prices here in the east bay of san francisco bay is still hot and expensive. still multiple offers and high prices and very low inventory.
A couple things for you:
1) http://en.wikipedia.org/wiki/Bagdad_Bob
2) “One thing I did not bring up beacause [sic] I thought it too obvious is that the Rate changes,underwriting requirements and changes in product mix by lenders dropped the value of ALL california homes roughly 12% in the last 8 days. bye bye buyers…and ‘refi’ will once again be considered an odd name for a toy poodle.”
tom stone at athena’s “Sonoma Housing Bubble” at 8/11/07 11:47 AM:
https://www.blogger.com/comment.g?blogID=22535876&postID=652280430802675062
The market I live in is dead . When interest rates were from 15% to 18% the market was dead also ,but people had the ability to hold on until a better loan market arrived because they qualified for the original loan . To much invesntory of must sell buyers right now .
Yes it was different when interest was at 15-18-20%. People didn’t walk away as easily because they had 20-33% down and they were only allowed 28% of gross income for housing (mort, int, ins, taxes-no HOA back then). Total debt could only be 36%. So instead of living in a McMansion now they’ll have to live in a regular middle class neighborhood.
In case you missed the update I posted late:
‘Homeowners hit by rising interest rates are paying out hundreds of extra euro in mortgage repayments for properties that have dropped in value by more than €8,000 in just six months.
A four-bedroom semi-detached house in Rathfarnham, south Dublin, had its sale agreed at €820,000 but the deal fell through and the owner is now asking for €750,000 or ‘anything near that’ to secure the property.
An apartment owner in Dublin 15 saw the value of his property fall by €30,000 in just three months.
Group chief executive of Irish Life and Permanent plc, Denis Casey, described the falling prices as a ‘modest decline. It’s not substantial. House prices are back where they were in the third quarter of 2006.
I think it is indeed a modest, temporary decline like many EU countries have seen over the past 7 years. Mortgage rates in some parts of Europe are dropping again, and with a little more help from the ECB like over the last days I wouldn’t be suprised to see another price surge in the housing market. Prices are totally detached from reality and thanks to all the government intervention who knows how long at will last. Still plenty of adds here for crazy financing, cash out refi etc. and the TV news dutifully reports higher average home prices every month.
In my area of the Netherlands a lot of expensive homes sold over the last few weeks after being on the market for many months or even years; could be related to lower rates or easier credit terms. My neighbour dropped the asking price for his home again for the fifth time, it’s now nearly 30% lower that the original asking price from 1.5 years ago and still hardly any viewers. Loads of homes available in the area in the same price range, and with an asking price of around 20x average income many of those will probably never sell.
Here’s a local-market-observation/story that you all might find interesting, it fits in with the theme around here:
Tucson, Arizona - about 2 months ago a very good friend of mine (I was his best man, he was mine) told me that he’d be moving from the east side to the west side to be closer to this wife’s parents (I know, crazy!). Anyway, he purchased his home for 165k in 2004 and listed it on the market 2 months ago for 225k. 1 month in, he’d had only 2 visitors, which is practically unheard of in an explosive area like Tucson. One thing that he has going against him is that he is next to a very busy 2 lane road that will soon be going to 4 lanes and becoming Tucson’s largest thoroughfare on the east side — but little things like that never mattered during the 2004-2005 boom. So, I questioned him on his 225k price and told him that if he was serious in selling he needed to lower it to at least 205k. He said “not a chance” and said he planned on getting at least 220k for it. At this point I said that I’d bet him 500 dollars that he wouldn’t get 210k for it before the end of the year.
Now 2 months in, he has a list of 6 or 7 people visit the house - we’d jokingly discussed putting some fake ones on the list so that it appeared as though there was more interest in the house — I didn’t have it in me to ask if he’d followed through on that. No offers, not even a lowball offer. This past weekend, he told me he was now planning on taking the house off the market. I reminded him that he would then effectively lose the bet and owe me 500 dollars. He admitted that this was true, and I can see that he’s finally come around. I feel bad taking him for all that money what with having Ben’s blog in my back pocket, so I’m just going to have him take me out for a nice dinner/night on the town.
The scary thing is that he works for a major financial institution as a financial adviser. I’ve got some money in with him but told him up front that I’m a major bear and that he needs to invest my money with that in mind. My point is that even the people who do this for a living didn’t see this coming - and that they don’t see what MORE is coming.
-Danull
we’d jokingly discussed putting some fake ones on the list so that it appeared as though there was more interest in the house
Throw the list away. If there aren’t enough names other lookers think there’s no interest. If there’s too many names they wonder why all these people looked and didn’t buy it. It’ll burn him either way.
Good point, Ghostwriter…wish I’d thought to recommend that sooner
When he relists (whenever that happens), I’ll make sure to mention that.
I wouldn’t be so impressed with people that work for financial institutions. They’re often very young and inexperienced and usually their job is to just do what the company asks, no real insight is required, in fact it can get them in trouble. Imagine you were a guy at BearSterns saying, maybe it isn’t such a good idea to sell securitized risky mortgages throughout the world. Maybe with this when this thing invariably falls apart, it will cause a world wide depression. The next thing you’d be doing is looking for a job.
About three months ago I bumped in to a guy who’s worked at Bear for a long, long time. I told him I thought this CDO thing would take down the market. He chuckled, said sure, why not, then said that Lehman’s was a lot more vulnerable to that kind of stuff. Oops.
Actually he’s very well might be right. There is a pretty good chance Lehman’s problems will turn out to be worse. It will not be the firms first close brush with death. They almost blew up during the Mexico crises.
Anecdotal info on two fronts,
Spoke with someone who works for Countrywide on Thursday who told me that things are tighter, but if you have a good FICO and can document they can pretty much do what you need in terms of lending. Wonder if that story changed by Friday.
Got a call from a friend who is a FedEX part time employee on Friday. They have 20 years seniority and it was so slow that they were sent home at 10 am. They said that they have never seen it this slow and they were scared.
Oc-ed — do you think that “…do what you need…” includes interest rates close to last month’s?
Chip,
I think it means “let us try to convince you of what it is that you need” so we can squeeze you into one of our ever shrinking loan products. I doubt that CW is going to be offering anything that they cannot sell immediately.
I went for a ride on my motorcycle through Ramona, CA. There was a house for sale my wife and I looked at in December. At that time there was a new, huge 4×4, 4 door, as long as a football field truck in the drive way.
The house has not sold and is still on the MLS, but as I drove by this time, there is now a old beater truck in the driveway.
Hmmm? Must have been a renter friend visiting.
There is one other house on the same street for the same price that has been on the market for over 400 days and neither has dropped their price.
I’m a homeowner with tons of equity as I bought at the very, very bottom. The sellers around here were desperate to sell. I got a real good deal.
Because of this bail-out talk, I’m going to get a loan on my equity (upwards of 300k) and bury it. Then I’m going to tell the lender I can’t afford the house and they can come get it. Now I won’t have to ride the value down as the housing bubble crashes and I can have all that money free. Even better, if a bail-out does occur I will apply for that and stiff my lender big time. If they ask where the money went, well, I live in an area known for meth addiction and loose women (San Bernardino, California)
Oh, this is getting sweeter by the moment.
Sounds to me like there is an abundance of dirtbags in San Bernadino.
Check the definition of “recourse” vs. “non-recourse” under CA law before you take this route.
recourse = they WILL ream you after FC vs non-recourse = oh well, my credit score is AFU’d but the chapter is now closed.
“If they ask where the money went, well, I live in an area known for meth addiction and loose women”
And the rest as they say was wasted.
The gut rehab condos under development across the boulevard from me — allegedly 75% sold — now have a big city of Chicago stop-work order plastered to the front door. This particular building has been completely empty for at least a year, with only sporadic work. (Feel those profits trickling away, mr. developer? Ahhhhhh.)
The condos behind me have an open house every chance they get, and have large “CONDOS FOR SALE” banners stuck to the sides of the buildings. People have slowly been buying there, however … there’s a moving truck out in the alley right now, in fact. This developer must be scraping for capital, though. There are four buildings total, with perhaps six to eight units in each (I think some duplex up). Three buildings are complete or nearly so. One-fourth of the lot is still mud and rebar, two years after the project started.
The local alternative weekly, the Chicago Reader, apparently just called my neighborhood (Logan Square) the new hot place to live. Ugggh. I haven’t seen the article.
At least the zoning around me is stricter than it is in Wicker Park / Bucktown, the neighborhoods southeast of me that went from a mix of immigrant working class and hipsters to full-on yuppie and spoiled rich kid gentrified over the past decade. A lot of beautiful (and once affordable) buildings came down in those neighborhoods during the boom.
I’ve lived in Logan square since 2000, sold my 3/2 condo in winter 2005 because of a divorce. I started reading bubble blogs to convince myself that I was right to rent instead of buy, as my ex did.
I feel better about that decision all the time (ha).
But ETChicago - don’t you know that all the empty buildings in Chicago are between 50-75% sold? The signs say so. (Funny that none are 20% sold, or 35% sold). They won’t say so for much longer as continued exposure to the sun and rain are making them increasingly difficult to read.
For kicks, take a drive up and down Irving Park and Foster, both east to Ashland. Lots and lots of buildings and units for sale. The same is true on the quieter side streets in the area - Sunnyside, Winnemac, Winona, Leland, Argyle.
I counted a total of 11 residents for sale in one block alone.
I’d say 2-3 per block was average.
ET, you need to learn realtor speak.
Let me help:
storybook - really small
oozing with charm/charming - old
pottery barn - painted walls
updated - new granite on top of 50 year old cabinets
needs some updating - trainwreck
will not last - terrible deal
motivated seller - will knock 5% off the price, no more
priced to sell - this is the price
75% sold - have contracts with friends and family for 75% of the units and of course we’re not really going to hold them to those contracts
hot area - the area is not “there” yet (but we’ll price it like it is)
I hope this helps
From China:
Shenzhen property price may drop 30%
“…Statistics showed in July, Shenzhen’s new house and second-hand house prices fell by 5.8 percent and 3.6 percent respectively from a month earlier. And the city’s house sales volumes also decreased
Because supply of residential property increased drastically in July, the transaction rate of half of the city’s new houses was less than 50%. Their average sales price was 13,757 yuan (US$1,819) per square meter, a 5.8 percent decline from last month.
The second-hand housing market also shrank by 50 percent in July.
Experts said concerns about stricter measures from the government and the fall of second-hand housing prices, in addition to the rising threshold of bank loans, are cooling down the Shenzhen real estate market….”
http://tinyurl.com/23nd4p
In reality I think the game really just died the last week or so. I was still hearing and seeing ads for no down, no doc, bad credit offers. I am not noticing them anymore. Looking at the credit situation, it is clear now that:
1. Subprime buyers - Gone
2. Alt-A buyers - Gone
3. Prime Jumbo buyers with No Docs - Gone
Really all that is left at this point:
1. Prime Conforming Full Docs
2. Prime Conforming Partial Docs (getting harder but not impossible)
3. Prime Jumbo Full Docs (hard but not impossible)
The only reason the conforming loans can be done is because they can be offloaded on the biggest suckers of all - the GSE’s. The secondary market for MBS are gone. So these people writing loans now need to keep them on the books if they are over $417k. I don’t see many of these non conforming loans getting done.
I also thing that now that these suicide loans have imploded fewer people are going to be willing to use them. Even the sheep know now these loans are toxic.
The REO inventory is another issue. Now the banks are staring at a shitload of inventory they thought they could sell a month or two ago. Now they know it will be next to impossible to get buyers qualified, even if they wanted to buy the home. This is going to force the bank’s hands, especially now that their MBS “investments” are imploding.
Bottom Line: the Ponzi scheme is finally collapsing and we are going to see significant price drops shortly. I think it will take 3 months before we will start to see significant price declines in the extremely overvalued areas, like California. That will have a chilling effect in most other markets.
Ponzi is toast.
When credit standards tighten the way banks get rid of REO is to take back paper on terms favorable to the REO buyer. This means either, or both, lower rates or looser credit standards. Of course these loans have to be held in portfolio. Such loans are known in the business as loans-to-facilitate sale of REO, abbreviated LTF.
Expect to see a lot more of these in footnotes to financial statements of publicly-held lenders. Also, such loans require a loss reserve which the bank can take back into income as the loan repays.
Yeah, i’m waiting for the banks to unload their POS REO’s here in Los Angeles. I am sick of seeing the foreclosed 2/1 900 sq ft POS just down the street from me sitting there last six monthes and the bank/property management co will not drop the price and just get rid of it. This holding onto the property and keeping it on the bank books just keeps the valuations in LA area artificially propped. And also understates the actual no of properties which have gone into foreclosure. Notice on foreclose.com that the no of listed foreclosures always remains at around 5600-5800 last 3-4 monthe, which is th result of the banks removing these foreclosed properties off the list as soon as the bank has it as an inactive REO property.
Can;t wait for the REO’s to flood the market at 30=50% off the artificially inflated waaaay overappraised LA RE values and watch the LA Market tank. Watch LA inner city Ghetto S*itzones literally get nuked, as the amt of RE fraud in inner LA is mind-boggling . E.G An illegal alien infested dump like Maywood/Bell still showing homes selling for average $450.000 as late as June. Ton’s of fraud in the immigrant third-world LA sewerzones.
On a lark, Zillow’d my friend’s neighborhood in 91364. 2100 Sq Ft house nearby sold for $675K in July 2007, and every other comp is less than 800K. Zillow value 912K . . . WTF. Huge haircut in that neighborhood and everyone still whistling dixie.
*Zillow* is and always has been a crock of sh!t.
Check 2-3 zip codes that you know first hand, and the quackery becomes apparent quick.
Zillow always adds appreciation in the range of at least 10% per year!
It means little.
Look at this haircut in No VA (Look at “Top Discounts” column) - If seller gets listing price (right now they’re only getting 90% of listing) it will be getting a $280K haircut in 11½ months
http://novabubblefallout.blogspot.com/
School starts here in 2 1/2 weeks. “Spring Selling Season ‘07″ is now over. How’d we do?
There is always Spring Selling Season ‘08…
My neighbor up here in Washington’s Columbia Basin thought he had his home sold to some retiree(s) from the Seattle area, but the retiree(s) now can’t sell their Seattle home, so my neighbor can’t close out of his place either; the neighbor already left town for another job, moving up the professional career ladder. If he doesn’t move his place before winter, it’ll languish for six months as the world stops during the winter up here.
Ran into an Irishman and we talked a bit about real estate and he told me that his parents house in Dublin, cost them 20,000 Punt in the mid 70’s and was worth almost a million Euros now…
From $25k to $1.3 Million…
Our bubble seems tame, in comparison~
Ireland went totally nuts in terms of real estate.
But their economy has been radically changed, too. It hardly resembles the place I visited in 1989.
Pharma, tech — they’ve had an incredible amount of foreign investment over the past 12 years or so. Hopefully all those good paying jobs won’t vanish on them once the RE bubble pops …
I think about 30% of the Irish economy is real estate and construction. Factor that with the usual multiplier effect and the fianancial institution employment and a bloating bureaucracy and perhaps the real estate bag is empty. Very typical of all mania’s as they reach their tops. Same in Spain for sure and probably to a lesser extent in U.K. and some other European countries. This can’t and won’t end nicely and i don’t think the declines have even started yet as compared to where they are likely going.
that is a rather extreme example but I have heard a few other examples from Ireland with similar appreciation (usually very nice country homes with lots of land). Ireland is all about the huge amounts of money coming from EU mainland, a large part of that is going directly into RE (just like most of the foreign money flowing into Spain has been going into RE).
In my Dutch city average home price appreciation over the last 15 years is in the 600-1000% range; some smaller (nice) towns are already around +1500%. The Dutch economy is certainly NOT in better shape than in 1990, and nominal incomes have increased only 50% or so (real incomes have probably declined). Only unemployment is probably better than 15 years ago, but difficult to tell because all the manipulation of the statistics. In Netherlands it is all about speculation, easy credit, low rates and unlimited government intervention to support the housing market.
East Tennessee and Rochester!! You know I love to see the “bubble-proof” areas get hit.
In Manhattan, Chelsea, on 6th Avenue. Within 3 blocks, 4 newly built or soon finished luxury condos. Now all “Luxury Rentals”.
So much for the impervious Manhattan RE market
http://www.nytimes.com/2007/08/12/realestate/12cov.html?_r=1&oref=slogin
your comment explains this nytimes article, about the slew of new manhattan high-luxury rental condos commanding monthly rents of up to $6,000 for 1 bedrooms and up to $11,000 for 2-bedrooms.
obviously these over-the-top supershacks were built for sale — and now converted to rentals, the rental market remaining at an all-time tight supply of under 1% vacancy.
naturally, the articles never hints at the midstream change in plans of the developers. and in all truth, sales apparently remain quite strong in manhattan.
when the financial panic filters ultimately translates into thousands of wall street layoffs, things may change.
Greetings from Long Beach,Ca
Here are a few observations.
1310 E. Ocean Blvd. #407 The Ocean Club
Sold 03/16/05 $980,000
Bank owned list price, $649,900
850 E. Ocean #410, The Pacific
Sold 08/04/06 $640,000
Bank owned list price, $429,900
700E. Ocean, #3002, International Tower
Sold 07/15/06 $669,000
Short Sale list price $469,900
3600 E 4th. #106
Sold 12/28/05 $475,000
Bank Owned list price $369,900
177 Syracuse Walk, Naples
List price 10/03/06 $1,799,000
Current list price $1,229,000
I wonder how many fb’s based their purchase price on these comps!
Nice Haircut!
Nice work Toast!
I live in Long beach, though at the opposite bombed out end(90810). What is not well known when those idiots were paying from $600,000 to close to 1 mil for those ocean blvd ‘beachfront’ condos is how crappy the beach and the ocean view is from the balcony. The entire Long Beach ‘beach’ literally stinks from port harbor pollution. Go down to Cherry ave beach and see the illegals bathing their kids in the filthy beach showers and stinky bathrooms, and cooking their meals right off the bike pathway.
The entire dwtn/east-central LB ocean front condo market is collapsing like a deck of cards. Dwtn LB just has too many ‘undesirables’:illegals, gangbangers, welfare/section 8′ers, tattoed hoodlums, lowlifer’s, who filter out from the bombed-out ghetto apt district north of 4th and east of alameda and spoil the other-wise spiffed up area of LB south of ocean blvd(rainbow harbor,pike-shoreline village-pine ave fun zone.
“‘undesirables’:illegals, gangbangers, welfare/section 8′ers, tattoed hoodlums, lowlifer’s, who filter out from the bombed-out ghetto apt district north of 4th and east of alameda and spoil the other-wise spiffed up area of LB south of ocean blvd”
Undesirables AKA ’subprime neighbors’
Austin, the new San Diego:
This article and interactive map on all the new condo units under construction or planned for downtown Austin is quite an eye-opener. The total number of units is quite astonishing you can roll your mouse over the red dots and a flash animation will show you the proposed unit for that site:
http://www.statesman.com/news/content/business/interactive_sm/05/051307_condos.html
Today’s Austin Statesman’s whole front page is devoted to condos:
http://www.statesman.com/
Whenever a front page is dedicated to condos, SUV’s, hedge funds, etc you know the jig is up. That’s a signal to the savvy to sell whatever “it” is and head for the hills.
Kinda like when Ethiopian immigrant cabbies in NoVa tell you that real estate can only go up
Giggle.
I was talking to a tow truck driver last year about getting into repos, and how he’d make bank on the oncoming flood. “Naw,” he said, “I’m studying for my RE license.”
Dja notice that few of the condos have actual pictures?
Sigh…
That is unbelievable….even if only 1/3 of those plannned condos do go up, Austin will still see a huge glut.
We’re Way Ahead of the Crash Here in Anthem, AZ
$265000 Short Sale, little Fixup! Great home! Instant Equity!
2,500 sq foot 2-story home with 4 beds/2.5 baths plus a loft!
http://phoenix.craigslist.org/rfs/394038749.html
It’s getting ugly in Lee County, and is only going to get worse. I live in Ft. Myers (rent), but teach in the Eastern part of the county. My principal and I were discussing just how bad it could get with regard to our students. Their families are going to have a tough time of it. They are on the lower end of the socio-econ scale as it is, and MANY of them have families whose incomes depend on the construction industry in some form or another.
I was in Lehigh Acres the other day, visiting a friend (she also rents). On her street, there are three construction houses, and she said that it seems like they have just stopped working on them. Not only that, but driving through, it seemed like every other house was for sale, for rent or “for sale or lease.”
If anyone has driven through Cape Coral recently, you know it’s the same there.
Lehigh and the Cape are going to be hit so very hard. The Gateway area will, too….and, well, let’s face it, all of Lee County is in trouble.
I bought my kids dinner the other evening and took them for a drive while they were actually quiet! We hunted for brown lawns. There are deserted houses all over the place here in Riverside, Ca. Houses have gone down approx. $30,000 (15%) in the last year in this specific area.
There was even a large home that went up for auction and it never sold. Now it’s for rent. On one main street there is a large banner thrown over a brick wall that reads “Bank REPO Sale”. These are in the higher end areas. The prices are still too high. The lady down the street has been trying to sell her house for 2 years! She lives in LA and couldn’t stand the commute. The house is up for sale again at a “New Low Price”. Still no one is biting.
I’m wondering how much further the prices will fall. I suspect maybe 20-30% more here in Riverside. Hopefully, it happens quickly!
riverside will be hit hard, and i mean hard! Lots of new housing tracts sprung up all over riverside county in such places as South Corona, Norco,Mira loma,Moreno valley,Temecula valley along the I-15,ect. And these are just the areas immediately adjacent to Riverside Metro. Seen enormous new entire communities sprung up along Van Buren blvd from i-215/60 al way to where it intersects the 90 fwy-this would be south riverside.
All this new construction was bound to negatively affect the home prices in the older established inner neigborhoods of riverside. Also, much of the sales in riverside-part of the IE- was to first time homebuyers using toxic loans. As the price declines accelerate all over the iE there will be a bloodbath and foreclosures galore, which is actually well underway in the IE.
Sorry to say Riverside Metro overall is not all that appealing to begin with, and all the new hapharzard slapdash contruction of homes, malls, and business zones especaiily along the outer fringes of riverside metro to it’s west and south unincorporated regions has resulted in some unsightly rural/urban scarring of the landscape. Typical slash and burn IE pattern of development.
The city and area has changed quite a bit in the last 20 years (just as has the OC and LA). Many more illegals and gangbangers. Most jobs in the IE are consumer-based (shipping, construction, warehousing) and thus most of the lower-end people in $400,000 homes won’t be able to hold on much longer. I expect the median home price to go back to $150,000 in most areas including Rancho Cucamonga, Ontario, Fontana, Banning, Victorville and Victor Valley (probably lower), most of the Palm Springs lower-class areas, etc. Overall, expect an implosion of historical proportions for most of SoCal. Also, whe you see the change in Northern part of the OC, it will soon spread to South OC. Expect areas like Irvine, Mission Viejo and Laguna Niguel (areas that got hit hard last time) to tank again, along with newer areas like RSM (home of the $275,000 home masquerading as a mil home).
The nastiest scarred slimiest area of the IE has to be the region bounded by the 71 hwy to the west, the 10 fwy to the north, the 215 along the east and the 91 along the south margin. On the map it is shaped like a soup bowl, a toxic-brewed boiling pot. Within this hot dusty dry region are the unfortunate communities of Chino,Pomona,Ontario,fontana, Rialto,Colton,Mira Loma, Old Riverside Metro, Norco, North Corona, San berdoo metro, Roubidous, Glen Avon, Pedley, and South Rancho Cucamonga. This is the least desriable and least attractive part of the IE, much of it is old worn out scarred industrial pockets and slovenly gutted ranchette acrerage razed over into ugly unsightly brown McShitbox tracts.
Mark this area as seeing a particulary nasty RE decline, as it also contains large numbers of illegals and assorted lowlife , as well as 90% toxic loan purchasers who are bailing out of their POS stuccos out in the sticks. This is the nasty scarpit region of the IE, epitomized by the crowning city of Fontucky and the depraved gangsta lair of inner San Berdoo metro, and the really ugly decaying slumville known as Colton.
I tried to post this question earlier, but it didn’t take (?). Sorry if it is a duplicate: If you decide to rent, how do you know if your landlord is current on mortgage payments? What if your landlord is a fb or flipper, and decides to pocket your rent money and not pay the mortgage? You very well could be visited by the Sheriff and moved out on a moment’s notice. Is there any kind of public list that shows your home has NOD?
Magic Kat:
You should be protected to some extent depending on the jurisdiction. Renters do have rights. But the answer is going to be it depends on the locality. Some localities have laws that are quite favorable to renters, for example, Seattle. Even if the house goes to foreclosure, I think the lender would have to go through a lengthly process to evict you. I suspect one key is to have a valid rental contract or lease so you can prove you aren’t just a squatter.
In any event, you should be able to track down the lender, or at least who is paying the property taxes (if they are being paid) through your local property tax assessment office. Here in Waco that information is all online. If you know the property address you can find the owners and whether the taxes are current.
In any event, I hardly think a lender is going to be in a great hurry to evict renters if the market is tanking. You may be able to cut some deal.
“You may be able to cut some deal”
I don’t know, what with all the “deal cutting” and bail out talk, I’m wondering what kind of deal you’re thinking about. Lenders are not in the landlord business…
Back in the early 90’s, a friend of mine had lost his home to foreclosure in OC, CA. This was when the county went BK and foreclosures were at least half of the homes on the market. First, the owner (a mortgage agent) tried to negotiate a payment schedule with the bank, then to add the missing payments to the back end of the loan, then a short-sale. All were turned down by the lender. The owner had paid $265K for his home, and after the foreclosure, the home was sold by the lender (Countrywide, I think) for $179K with new paint, carpet, and landscaping. Today, homes in that neighborhood are going for $550 (or so they are listed). If lenders didn’t play ball back then, what will make them change their minds now?
I didn’t mean cut a deal to rent the place permanently. However, if the place went into foreclosure in say, October, the lender might be willing to collect rent until spring if they don’t want to dump the place into a dead market.
You just never know. They may have other houses in the neighborhood and may not want too many for sale signs around. That sort of thing.
In any event, I doubt there are many jurisdictions (if any) where the first time you learn of a foreclosure is with the sheriff showing up with an eviction notice and truck.
Been there, done that.
The banks don’t want the liability. I got booted from my home ’cause the LL owed 496k (bought for 375k & refi/heloced the rest), and couldn’t make payments. Bank foreclosed & and agent offered 500 cash for keys. I told ‘em get bent, I have a valid rental contract and they have to give me my 800 deposit + moving expenses to get me out. I got a K and left.
Didn’t pay the last month to the LL, didn’t pay “negotiate time” rent to the agent, and walked a K to the good. It takes at least a K to evict, so you always have that leverage.
Epilogue: The home got a 308k bid on short sale - no go. The LL paid 375k for units. The last flier says 365k. Bank lost at least 140k so far. I’d buy for about 100k & discounting.
Blah.
It had been slow here in Western North Carolina for past two months then this past week 3 houses closed in my neighborhood. One was about $150,000 more than it was selling for 2 years ago? I have noticed the million dollar plus homes are sitting much longer with no sales in the past 45 days. With school starting next week I guess this would be about normal.
Correction, four closed, one was over one million and within 10,000 of asking price. Florida escapees? I don’t know?
Infusion is the same as a trasfusion for a gut shot. It may keep you alive for awhile but in the end you bleed out without major surgery.
Dr. ? oh Dr!!!!!!!!!!!!!!!!!!!!!
Just got off the phone with a friend in Anaheim who just listed their home: $595,000 low list price, $610,000 high list price. WTF? Oh, please, let me buy your home for $610K! Ha! She tells me the home across the street is in escrow for $425K, but it’s a short sale, doesn’t have a pool, and she’s got a nicer yard. All I could do is smile and say “good luck.”
Zillow says the house I sold in the Fall of 2005 in Saratoga, CA (next to San Jose) is now worth 200K more! Zillow also reports that the relative’s house that I sold in May 2006 in Menifee, CA (Riverside County) is worth essentially the same now.
–
Yes, the homes in high-end zips in Santa Clara County have done well due to local tech stocks havingg gone up a lot. For the past year the prices are mostly flat in the high-end and down 10-25% in the low-end zips. It is a tale of two “cities,” or Haves and Have-nots, in SCC.
Jas
–
Local Listing Price On Identical Home Down 32.6% from May’06
Tehachapi, CA (In one survey, according to a reliable local, voted among 10 best places to live in CA!)
In May of 2006 I accompanied an out of town friend to look for some reasonably priced homes. I have fliers in my folder for homes that we saw. I just looked at a listing of what looks like an identical home (looks better maintained from the picture) by the same builder.
May’06 810 Kelton Street $251,900
Aug’07 912 Kelton Street $169,900 -32.6%
These are in the city (80-85% homes are in spread out suburbs) and in walking distance from main shopping area.
Jas
I say dammmm! Gonna be some refi problems in that hood.
“May’06 810 Kelton Street $251,900
Aug’07 912 Kelton Street $169,900 -32.6%”
Heh heh… didn’t Beacon Economics’ Thornberg just get quoted within the last couple of days ‘forecasting’ a 20% drop to the bottom of the correction? Even the most bearish of the MSM standbys are off by an order of magnitude on the size of this financial earthquake.
For those of you in the SOUTHERN CALIFORNIA area that might want to go take a peek at this auction.
I was told that you had to register to be allowed in. It’s free and you don’t have to buy anything. Although they post a ’starting bid’ they do have a reserve. Add 5 % buyers premium to the bid. I was told that the only way to know what a property actually sold for was to be at the auction.
I guess you could also wait for title to transfer and record.
————————————————————————————–
http://www.ushomeauction.com/
HUGE 4 DAY Southern CA Foreclosure Auction Event
All homes open for inspection from 10AM to 5PM on 8/4/07, 8/11/07 and 8/12/07
580 FORECLOSED HOMES MUST BE SOLD!
On a personal note, the three parties that I know personally who have been “trying ” to sell since May are still actively engaged in chasing the market down. All of these people have plenty of equity in their homes and could have sold quickly under neighborhood comps a few months ago but had stars in their eyes about RE riches. I’ve been suggesting for over a year now that they quit listening to the RE agents and check out this blog and Calculted Risk to gain perspective.
One party currently owns a Seattle home and lives (rents) in B’ham. I really like these people and would hate to see them HAVE to move back to Seattle just because they “can’t sell” their house there. They insist they hate living there and don’t want to go back.
The saga of them “trying to sell” is sickening and textbook and involves initial too- high asking price then advise by their realtor to “fix some things” so it’d sell at initial asking. They dumped another 30K into the house so they could sell it for the original 630K. Right.
Didn’t sell even with the improvements (BIG SURPRISE- DUH) so lowered to 590K in July. Now a house 2 blocks away, bigger, nicer, killer lake views, etc. went on the market for 540K 2 days ago.
Normally, I’m a very calm, collected person. Yesterday, I surprised myself by kind of losing it with them. Told them about the new house on the market (they’re not checking the MLS- they leave all that to their realtor -lol-) and then kind of screamed at them “You need to GET SERIOUS about selling that house!!! I like you guys and want you to stay in B’ham! If you don’t GET SERIOUS about selling that house you’re going to end up back in Seattle FOREVER!!)
Another friend is leaving for England in September so needs to sell. Also stubbornly chasing the market down. Also has new comps on the street which make the house look like a REALLY BAD “deal”. Also could have gotten out a few months ago with a tidy profit but wanted “more”.
All of these people are smart in other aspects of their lives. Blindingly stupid in this one aspect.
In general, inventory is coming on fast and furious the past 2 days. It appears that the wider public is beginning to wake up to the gredit crunch problem and how it might relate to them personally, now that it’s been hinted at on the evening news.
This is the worst part of this asset bubble. People have a great deal of money and emotion tied up in their houses in any given point in time. That situation was never going to lend itself to clarity of thought. (”so much money” as my sister sighed one day)
Now people are expecting that middle class houses in decent neighborhoods are “worth” over 1/2 million dollars in bubble areas and 1/4 million in “non”-bubble areas. (Remember when that was a lot of money???) Anything resembling sanity is going to be lost to most people except those reading a daily dose of reality like on this blog.
In other words, it might have been good that you lost your temper to get some reality through to your friends but I get why otherwise smart people have a hard time with the change in the market conditions.
“People have a great deal of money and emotion tied up in their houses in any given point in time.”
They do? Most people have absolutely no money in their home! 100% financed i/o mortgages in a declining market. The banks and hedge funds, etc, have money in their homes.
Vermonter, they not only have a great deal tied up in their home, but they have thousands of dollars of depreciating assets - SUVs, plazma TVs, X-boxes, and the like. The type of things that end up 30 cents on the dollar after a mere 5 years. These are not the times to squander.
As for the post further down that a financial talk show suggests to get completely out of bonds due to the credit crunch, would that also mean to get out of gold and stocks? In my recollection, as interest rates went up to double digit percentages, treasury rates did too. So money market funds and T-bills were the best investments when rates increased.
I think rates will eventually have to go up above 7.5% when world peak oil can no longer be hidden. I’m not backing out of my municipal bonds though. I’ve been DCA’ing in them since 2002.
In the long run, precious metals, stocks, and bonds beat real estate and the inflation rate on an annualized basis.
There are still investment extremists on the board (they speak louder than me) who think they can time the market. BWAHAHAHA! They have no humility and they will end up just as the FBs in real estate - eating crow.
Maybe long term bonds if interest rates go up. I don’t know if rates are going up or not? A recession and rates head down. I bet they meant junk type bonds? And you’re right timming the stock market is tough although most of us probably knew the dot com bubble was a bubble. I worked at Conexant at the time and we were fighting with Lucent over Agilents 10Gb/s BERT production constraints. At 500k ea LU had brought out 2 years worth of Agilent production so they LU could keep up with nortel. Now I think they have merged no? RE was no different with bidding wars going on buying up future inventory scared of a shortage. So whats next ? With Central Banks making money out of thin air anything can become the next shortage.
“So whats next ?”
Based on nothing more than “We’ve gotta get screwed by something,” I’d guess that one or more vital commodities will be manipulated into the stratosphere.
Visited one of the San Diego REDC “auction” houses thats going next weekend. Nearby, so biked over. Nice place, kinda close to the freeway. Supposed to be open for preview. Went before lunch, nobody around. Went after lunch and I could see that there was someone inside. I rang the bell, and I hear a little kid say “house isn’t for sale…” I can see stuff stacked up in boxes in the living room. All the landscaping is dry and brown. I say “Hello?” and a woman yells something unintelligable from inside. I say “Pardon?” And she repeats, there’s no open house. So I figured I should probably beat it before things get ugly. Probably tenants, the Trustee sale happened less than a month ago so the bank is moving fast on this one, good for them.
Its still so early, but I’d consider it at 50% off the previous FB price. Wondering if the lending turmoil might provide an opportunity for someone with cash. REDC has reduced their cut to 5% on top of the “auction” price. I plan on going to watch the festivities next saturday.
It is done:
Was at the gym last night and two really big (steroids) guys I know were talking about real estate. One was talking about getting renters out of his rental and selling it ASAP cause the market is getting bad. The other big guy agreed and said the market is going down.
You know it is bad when the gym steroid guys can see the writing on the wall!
Location: Southern CA
People who made “liar loans” should be required to pay taxes on their stated income to the IRS! At least that will keep you and me and the honest savers from ending up paying to bail out “Harry Howmuchamonth” and “Sally Specuvestor” who gambled and want us to clean up after them
Reuven — that’s a pretty interesting notion. You might pick up some bounty money by point the “revenuers” to lenders who likely have a lot of that paper in their files. Would that sow fear and panic, or what!
Oh, that would be a good one…
“She said, ‘In two years, we’ll flip you out and you’ll build up equity in the house,’” Ruiz said.
http://www.suburbanchicagonews.com/heraldnews/business/506894,4_3_JO12_FORECLOSE_S1.article
“”‘In two years, we’ll flip you out and you’ll build up equity in the house,’” Ruiz “”
She misunderstood, what they really said was
‘In two years, we’ll foreclose you out and we’ll build up equity in the house when we buy it at auction,’” Ruiz
A few anecdotes:
1.) On Thursday, as we were driving from San Diego to LA and back, KNX 1070 (news radio) talked **non-stop** (all day & evening) about the credit contraction and how people should get out of their bond holdings (of any kind) if they own bonds.
2.) Went to Lowes and the employee who was helping us made a comment about how they needed every customer/sale they could get because they were hurting. When I asked if it was bad, he replied that they were “all” hurting. He said, “the entire nation is hurting right now.”
He brought up this topic on his own — I didn’t prompt him.
3.) Went out to our favorite sushi restaurant tonight (Sat.) and it was very slow. Noticed it was slow the last time as well (believe it was a Friday night). We’ve been going to this restaurant for almost 10 years, and have never seen it so slow in all that time. There’s usually a large number of people waiting to be seated; now, many empty tables, even on Fri & Sat nights.
4.) Still trying to sell my parents’ homes. We’re priced very well (I am a long-time HBB’er, after all), and there have been a number of showings, but no offers yet. Listed less than a week, so will see how it goes.
5.) Wanted to sell some agency bonds at the bank (Mom’s holdings, against my advice at the time). Investment officer/advisor said this was not a good time to be doing that — we’d be losing more money & market wasn’t liquid. Will try to sell Monday.
Concerning #3… I couldn’t say the same for resturants I’ve been going to here in San Diego. The win bar is still packed and ‘wait’ time to get a table still occurs at my favorite eateries including sushi, mountain, burgers. However, if you measure the ‘wait’ time…. I suppose it’s been shorter lately. Say, down to 10-15 minutes from 30-45????
With the news radio inciting fear into these markets maybe the next word to make it in to the mainstream will be Gridlock. That is not a comforting vision as the next sequence event to that would be Panic. Fugly everywhere it seems and don’t underestimate how fugly it may get.
“A cartoon?”
The image of Bernanke uttering the words “It’s just a summer breeze” against the backdrop of a twister is especially appropriate for the unraveling of this bubble, since the foreclosure crisis is reaching into the heart of tornado alley this time. The twister symbolism also brings to mind the scene from The Wizard of Oz when the man behind the curtain is revealed to be a mere huckster rather than a great and powerful wizard.
Federal agency establishes agency to probe home lending practices
Counselors see sharp increases in clients under foreclosure
By: Gene Hanson
Thursday, July 26, 2007 10:13 AM CDT
With the number of home foreclosures continuing to rise, the Department of Housing and Urban Development has created a Fair Lending Division to review lending practices.
It will investigate complaints against lenders who might have violated the Fair Housing Act by refusing mortgage loans, refusing to provide the same information regarding loans or imposing different terms or conditions for granting a loan.
…
At ACORN Housing in Kansas City, the number of persons seeking help because of threatened foreclosures have risen from 10 a year to 10 a month, according to Carmen Blatt, the office director.
The Community Services League has received an increasing number of calls from homeowners stuck in adjustable rate mortgage loans they can’t pay.
“We have one client who has a $250,000 home,” said Bruce Bailey, director of housing for the league. “His adjustable rate mortgage raised his monthly payments from $3,200 to $5,100 a month. They simply could not pay that much.”
He said most homeowners caught in the adjustable rate squeeze had already tried to refinance their homes and found it was not an option. And he said the larger the mortgage balance, the more the payments went up when the adjustable rate kicked in.
“We can only advise them to try to sell their homes, if they can, and walk away,” he said. “Sometimes homeowners get angry when they find out there is no way to save their homes, and they don’t keep it up. That’s not in their best interests.”
http://www.kccommunitynews.com/articles/2007/07/26/liberty_tribune/business/b.lt.biz.regulations.txt
Funny/wierd/sad update on friends who were advised by their living-in-the-past realtor to 1)overprice then 2)”renovate” to the tune of 30K when the overpricing didn’t work in May: Said realtor called them today and said he was “out of his depth” and gave a referral to another agent they might want to use.
Back to square one.
Posted this in another thread, in response to this observation by Tom:
“Also, because of the [t]ax shortfall, the cops are out in full force writing speeding ticket[s].”
I’ve been noticing that here in Central Florida. Also am noticing more and more totally unmarked cars — Dodge Chargers, Mustangs, etc. Valentine One keeps me honest and entertained.
http://www.kansascity.com/business/story/227321.html
Only 12 of the planned 54 duplex and condo units — advertised for sale for $285,000 to $475,000 — are completed. Only one is occupied.
Applebaum has four other Johnson County projects that appear stalled, The Star found. One involves another closed Shawnee Mission School District building bought in 2004 for $800,000 in Merriam. The West Antioch Elementary School property, a 5.7-acre lot at 7101 Switzer Road, remains an empty and weedy field.
I was just at an open house in the Old Town neighborhood of Chicago. It was a vintage conversion that has been on the market about 7 months but recently got a new realtor/marketing team- and now they’re being more aggressive with their advertising.
High ceilings and upgraded luxury cabinets/fixtures but no parking. Prices for a 600 square foot studio at $289,000 up to $750,000 for two bedroom, two bath 1600 square foot duplex. Only 18 units in the building. They’ve sold 3 of them (in seven months.) The 950 square foot one bedrooms were selling for $499,000.
The place was swarming with people (and I’ve been in the building twice before during other weekend open houses and never seen it like that.) At least 20 people there. They also had a mortgage broker from National City hovering about (how convenient!). I didn’t get a chance to ask her how it was going over there with what is going on in the mortgage markets- but I doubt she would have been truthful with me anyway.
I couldn’t believe all of those people were there for the overpriced units on a 90+ degree 100% humidity day when loans are hard to get.
Many people are still drinking the kool-aid. We have a long way to go until we hit bottom.
Gallatin Valley MLS (Bozeman, MT area):
1144 SF under 1 acre
880 Condo/Townhouse
740 SF over 1 acre
2870 Total homes
3017 Lots
1188 Other land
I sure would love to know the rate of sales in these categories… but since the entire valley has a population of around 70,000; my rough hunch is that it will take a decade to work off this inventory. That is assuming there is no mass exodus when the construction industry crashes.
Randomly picking about 50 listings, I didn’t find a single pending offer.
looking through a real estate mag for the ASPEN to RIFLE area (colorado), one page has 40% of houses with reduced prices, but most show only a few. But IT IS HERE, though people are talking about it only in a whisper.
Robin Fall is caught between a loft and a lake place.
Last summer, a mortgage lender eagerly offered her 100% financing to buy a two-bedroom cottage near Nagawicka Lake. She gladly took the loan, thinking she’d sell her Historic Third Ward condo and move to Delafield. But the condo didn’t sell.
So she tried to sell the cottage instead. No takers, even for $20,000 less than the $239,000 she paid.
Last week, searching for a way to ease the $1,200 monthly burden of owning the cottage, Fall tried to refinance, only to be told that mortgage lenders no longer touch deals with 100% financing, even for someone with a nearly perfect credit score.
“It’s the worst decision I ever made,” she said.
The mortgage industry is choked with regret, too.
Whacked by mounting losses from subprime loans - high-interest loans made to unreliable or overextended borrowers - mortgage lenders of all types are pulling back, fast and hard. Many are either going out of business or raising standards so high that only borrowers with pristine credit histories and ordinary deals need apply.
The lending straitjacket forces home buyers and sellers to fall in line with the stricter guidelines or get out of the market. Milwaukee-area real estate brokers report that deals are falling through as lenders snatch back promises made to buyers who went house-hunting with prequalification papers in hand. …the article continues.
Craziest thing…they are just beginning to get the memo up here in Wisconsin. Sometimes I shake my head so much it hurts!
We sold our home in Niceville FL in June 07. Yep, we priced it right…sold it to the first person who looked at it.
We are NOT flippers. Bought a condo for our son in 2000, rehabed and sold it in Dec 05. Bought a lot in Pensacola FL in 2000 with the intention of building a lake side home. Bottom line: to many darn restrictions with the HOA, so we sold the darn thing.
I actually felt bad selling to this builder who continuously solisited US for 150k… we payed 78k.
Made unintentional money…lol…probably a mindset from mars. But sincerely…we bought all cash and really did use our heads and thought we were going to live in Florida forever (life changing events…I’ll spare ya the doldrums).
I too send people to this forum, but few have the guts to read. See! I’m shaking my head again (need aspirin).
I must giggle or I’ll cry.
http://www.jsonline.com/story/index.aspx?id=645633
A thousand pardons…reference to beginning of post of above article…curtsey.
Cracks may appear in Manhattan apartment market
http://www.reuters.com/article/newsOne/idUSN1228750920070812
I saw the bubble pop here in New Jersey.
A local development of neglected “million dollar” McMansions left uncompleted by Kara Homes. Kara Homes went bankrupt last year and their development have been, well abandoned since. Over the weekend at the Hawkin’s Ridge development, two homes that were under development were demolished.
It’s amazing, I would never thought I would see that!
I’m in the DC metro area and I keep looking at 22207 for any kind of decent price, but they have not budged. So far it looks like all the bargains are in new developments and lousy neighborhoods. Or outer suburbs. Big deal. As long as the nice neighborhoods and better zip codes are still expensive then there’s nothing to entice me as a buyer.