Victims Of Success
The Beacon Journal reports from Ohio. “Area home sales in July were down just slightly from a year ago and there still is a lot of inventory available. ‘Gone are the days when you could put a ‘for sale’ sign on your front lawn and the offers would start pouring in immediately,’ said Marc Hustek, office manager of Realty One in Cuyahoga Falls. ‘The housing market isn’t anywhere near what it was in 2003 and 2004.’”
“Hustek said foreclosures in a neighborhood might be affecting sales of homes nearby. ‘It depends on how long the home has been on the market. If it’s been on the market 18 months to two years, it could affect the overall numbers. It definitely affects the value of a home because lenders are trying to at least get what they loaned on it,’ he said.”
The Dayton Daily News from Ohio. “The current slowdown in residential construction could get worse before it gets better, according to a top official with the Ohio Home Builders Association.”
“In the Miami Valley, residential building permits filed through July were 36.6 percent behind last year’s figures for the same period, according to data from the Home Builders Association of Dayton and the Miami Valley.”
“‘The numbers aren’t great, and we’re seeing that across the state,’ said Charles H. Simms, president-elect of the OHBA. ‘The projections are for another potential 20 percent decrease for 2008 in Ohio.’”
“‘Right now, it’s kind of like a Bermuda Triangle of bad luck,’ he said. ‘When the stock market fluctuates, that makes the older buyers nervous. Then there’s the credit crunch, which cuts out the marginal younger buyers.’”
“Additionally, he said, the inventory of unsold homes remain high, further driving down the need for new housing stock.”
“‘It just creates more competition,’ he said. ‘The biggest potential problem is for real estate values to begin to decrease…but I don’t foresee a big drop in Dayton or in Ohio in our future.’”
The Times Online from Indiana. “At about 75 percent, Indiana has one of the highest homeownership rates. Yet it also has the second-highest foreclosure inventory rate.”
“Peter Novak, of the Greater Northwest Indiana Association of Realtors, (said) that low rates of appreciation on real estate values coupled with affordable housing and high loan-to-value loan ratios are major factors.”
“The fallout of yearslong subprime lending is occurring locally and nationally, Novak said. ‘I don’t have local statistics to prove that, but it’s common sense,’ Novak said. ‘Anyone with good credit who could afford a fixed rate and traditional financing would have done so.’”
“Tom Dinwiddie, of the Indiana Bankers Association, said it’s wrong to assign blame. ‘We’re a victim of success. Policymakers want to increase home ownership, but at some point you have to wonder if it makes any sense.’”
The Cadillac News from Michigan. “Nancy Crawford doesn’t remember much about the foreclosure paperwork when she first began working in the Registrar of Deeds office in Osceola County. In fact, there was no need to have more than a few copies in the drawer.”
“‘It wasn’t something that we dealt with on a day-to-day basis,’ Crawford said. ‘When I first came into the office, I think we had two copies in the drawer.’”
“It really didn’t surprise her to find that there has been a more than 200 percent increase in the number of foreclosures in the county since 2000. ‘It is a sad thing. But it isn’t just here, it seems to be everywhere,’ she said.”
“‘There are a lot of reasons out there attributed to the increase in foreclosures,’ said Vander Meeden, president of the Better Business Bureau of Western Michigan. ‘One of the real problems we have seen in the last five years is the creative financing.’”
“‘A big group of people who opted for adjustable rate mortgages when the real estate market was booming three years ago are approaching an interest rate reset point,’ he said. ‘Some lenders allow people who aren’t quite ready to get a home, to do just that. The problem is overaggressive lending practices of mortgage companies and banks.’”
From GM Today in Wisconsin. “Just a year ago, mortgage adviser Cathy Savaglio seemed to have little trouble finding a loan for most of her customers.”
“‘A year ago you could get a 80-20 loan with no money down,’ she said, referring to a type of mortgage that is split into two separate loans with different interest rates. ‘Now those are completely gone.’”
“‘It’s unfortunate. I’ve had situations where it’s hard to find loans for homeowners,’ she said.”
The Journal Sentinel from Wisconsin. “Housing has been rattled by the abrupt disappearance of investors who snapped up properties during the nation’s 2001-’05 sales boom and a tidal wave of mortgage foreclosures tied to what Marquette University economist David E. Clark called ’sloppy underwriting that wasn’t serving buyers well.’”
“‘An awful lot of foreclosures have already hit the market, and our prices seem to be holding,’ Clark said. ‘We may see some further price softening in the third quarter, however.’”
“Foreclosed properties are not factored in to the MLS sales counts used to determine median price, Wisconsin Realtor Association President Bill Malkasian said. But with 10,891 new foreclosure filings in Wisconsin the first seven months of this year alone, he said, it’s clear that distress sales are hampering market recovery.”
“‘There’s a ton of houses for sale out there. How can you raise prices when there are 10 other properties like yours looking for a buyer? And if there’s a $250,000 foreclosure down the street from you, how can you sell for $290,000?’ Malkasian said.”
“‘I know there will be more foreclosures coming,’ said Patrick Essie, executive director of Wisconsin Association of Mortgage Brokers, ‘but the crisis of people getting into loans they shouldn’t - I think that’s over. For the most part, those types of loans are no longer available.’”
“Wisconsin embraced ’stupid loans’ over-sized for borrowers’ means just like other states did, but generally on a smaller scale, said Stephen R. LaDue, president of Affiliated Mortgage Corp. in Wauwatosa.”
“‘Anyone who lets greed overcome their thought process pays for it. We’re seeing that sorting itself out across the country, and it’s going all the way up the chain to the securities dealers who made deals in the international market,’ LaDue said.”
“‘There are pockets of the country that will get clobbered now and lots of speculators getting their butts handed to them,’ the mortgage broker said.”
“‘True, some suburban markets had a price decline (and) if you overpaid by 20 percent for a house during the boom, it’s worth less now. But remember when home prices were in the toilet in the early ’80s and you could buy a house for $65,000 in Mequon? That house is probably worth $250,000 now. Sit in there long enough and you’ll be OK, too,’ he said.”
The Albert Lea Tribune from Minnesota. “Nationwide housing market reports show sales were low for the second quarter this year compared to a year ago, according to Realtor.org. Realtor Shawn McCarthy of in Albert Lea said the buzz around the country of a terrible housing market is skewing the ideas of the average buyer in Albert Lea.”
“‘Compared nationally, Albert Lea is doing very well,’ said McCarthy.”
“As of Friday, there are 275 residential property listings in Freeborn County on the MLS, according to Broker Bill Leland. He said that number is more than the area had at this time last year.”
“The large amount of homes available to purchase, Leland said, is creating a downward pressure on housing prices. Sellers are having to knock down housing prices in order to keep competitive.”
“This goes back to basic economics. With an increase in supply, if demand doesn’t keep up, then the prices drop.”
“There are a lot of vacant homes in the Freeborn County area — 89 out of 275 for sale — but not all are foreclosures. Houses in Albert Lea are sitting empty for various reasons, Leland said, and only 10 of the 89 vacant homes are due to foreclosures.”
“While it’s nice to know what is going on with housing markets on the national level, McCarthy said, buyers need to focus on the trend locally. Even when the housing industry seems to be struggling elsewhere in the country, Albert Lea is not seeing a dramatic decrease in sales, prices or foreclosures.”
“However, Leland said, ‘it’s a trend that I wouldn’t want to see continue because it could be tough.’”
Ohio:
‘Gone are the days when you could put a ‘for sale’ sign on your front lawn and the offers would start pouring in immediately’
Michigan:
‘A big group of people who opted for adjustable rate mortgages when the real estate market was booming three years ago are approaching an interest rate reset point’
Wisconsin:
‘A year ago you could get a 80-20 loan with no money down’
So, MSM, no national housing bubble?
Right on.
I’ll say it again: spec homes in Waverly, Ohio!!!
The Times Online from Indiana. “At about 75 percent, Indiana has one of the highest homeownership rates. Yet it also has the second-highest foreclosure inventory rate.”
- I have plenty of relatives in Indiana and the last place that there should of EVER been a housing boom is Indiana. All of the heavy industry from the 1950’s to 1980’s is gone forever. The local cities dream that they will reinvent themselves as high tech somethings! Ohio is just as bad off.
“Ohio is just as bad off.”
If not worse.
-native Clevelander
Sometimes I feel like I live on Mars, having missed out on the 20%+ annual appreciation, houses that sell within days with multiple offers, etc. We sold our previous house in 1999, it took about 3 months to sell and we barely broke even after taking improvements into account (new rrof, new windows and new siding). Our current house was never worth much more than it was in 2001.
I feel so left out.
I feel
“‘Right now, it’s kind of like a Bermuda Triangle of bad luck,’ he said. ‘When the stock market fluctuates, that makes the older buyers nervous. Then there’s the credit crunch, which cuts out the marginal younger buyers.’
I’ll see your Bermuda Triangle of bad luck and raise you a Bazillion Dollars…
I’m All In
Bermuda Triangle, rising inventories, slow sales, tightening credit, …
“but I don’t foresee a big drop in Dayton or in Ohio in our future.”
And with that eyesight problem do you use a cane or dog to get around?
Bermuda Triangle, rising inventories, slow sales, tightening credit, … = B A I L O U T!
1. Rising inventories
2. Slow sales
3. Tightening credit
4. Builders still building
5. Buyer psychology negative
6. Rising Foreclosures
7. General Economic Malaise
The Dayton Septangle?
They don’t even know about all that’s facing them.
Then there’s the credit crunch, which cuts out the marginal younger buyers.’”
…‘The biggest potential problem is for real estate values to begin to decrease
Charles has it exactly backwards, of course (surprise, surprise). The ‘credit crunch’ isn’t what has cut out ‘marginal’ (modest income?) younger buyers –the sky high prices have. The ‘crunch’ and real estate values falling is the long overdue REMEDY to the easy credit 100-year flood that has long sidelined responsible buyers and savers alike.
“At about 75 percent, Indiana has one of the highest homeownership rates. Yet it also has the second-highest foreclosure inventory rate.”
There’s something going on in Indiana, Jones.
The reality is that in OH, MI, and WI, the “bubble” was manifested as a postponement of the decline in real estate prices that should have happened, given the real contraction of the economies of these states.
When Michigan homeowners claims that the bubble did not affect them because their prices only went up by 20% over the 2001-2007 period, they are not accounting for the real -30% change in value that should have happened.
Real housing values in places that have lost most of their local product-export jobs are lower in actual dollar terms than they were when those jobs existed. A $150k house in 2001 when “the factory” was open is now worth about $100K at most, since the factory has closed and moved production to China. Just because the town lives on with the half-empty mall, one Ford dealership, the McDonald’s and a Pizza Hut does not mean there is any sustainable economy there. What brings new money INTO this local economy?
People like me who go back to visit their alma mater. In my case, it’s the University of Michigan, and yes, we alumni do inject money into the Michigan economy. And then we go back to wherever we moved to in order to escape the Michigan economy.
Your money isn’t going to help the People’s Republic of Ann Arbor now, Slim. It’s too late. They’re going down with the rest of us. The only thing to look forward to in AA these days is the annual Homecoming game vs. East Jesus Community College, a few weeks before the now-annual-it-seems- thumping at the hands of the Buckeyes.
Cynical “M” fan here, stuck in Detroit 4 more years.
I can recall hearing tales of economic woe when I was a University of Michigan student during the 1970s. The auto industry was already in trouble back then.
BTW, I decided to stay in Ann Arbor and take a job there after I graduated. Got laid off after a year. So, I picked up and left Ann Arbor and the state of Michigan. Only go back there to visit now.
Two things bop me over the head on every visit:
1. How dependent the state still is on the auto industry.
2. The prevalence of American cars. And we’re talking BIG new American cars.
I don’t know about you, but I see a lot of NEW, BIG American cars here in Phoenix (SUVs and trucks). I wonder what percentage of their profits in the last few years came from PHX and CA, I would be a whole lot. Michigan has a lot of SUVs, but they tend to be older. I am from Michigan too.
Yeah, it’s amazing how dependent it still is, even after all the downsizing of car companies, suppliers, diversification, etc. And you’re right….BIG cars. Big trucks and SUV’s. I say some of what’s going on with auto should have begun as far back as the recession in the early 80’s. It’s catch-up time now, and the tipping point could be the talks with the UAW.
I left Michigan in the early 80’s myself and went to Aspen, Colorado. Came back a few years later…obviously wasn’t thinking with my brain at that point. As soon as my daughter graduates, I’m outta here. If I’m going to struggle, I’d rather do it somewhere warm.
I tried this once already, but let’s try again….
You’re doing what I hope to do someday. In the meantime, the People’s Republic of Ann Arbor is heading downhill too. No amount of alumni money is going to stop the slide. There’s a better chance of the Wolverines beating Tressel and Co. I don’t see that happening either.
Cynical M fan, stuck in Detroit 4 more years.
I think that the Housing Bubble manifested itself in the industrial Midwest in the form of excess building, not excess pricess. This is particularly true around Cincy and Columbus, where the economies are not tied to traditional heavy manufacturing. Both cities took a small hit economically over the past 7 years, but nothing compared to Dayton, Toledo, Cleveland. In Cincy & Columbus, builders began to bulldoze all the farmland they could and build, build, build. Now it’s coming to a screatching stop. Streets are in and all utilities are in place, but ground is no longer being broken for new houses.
That’s what has happened in Colorado as well. Lots of “low priced” houses that the $10/hr buyers couldn’t afford.
And residential construction has come to a grinding halt in our community (Loveland) as well. A realtor friend sends us a monthly newsletter tries to put a positive spin on our situation. I have noticed from her newletter that new housing starts (for the year) hasn’t changed in about 4 months. And everyone that I know who is involved in commercial and industrial construction is commuting to Denver (50+ miles) to the few jobs that are left.
Where do you suggest people live if they move to Colorado?
You know, places that are holding their own and aren’t overpriced.
I’m heading there on vacation this Friday, and want to check into various places. Thanks in advance.
That’s a good question. I suppose that it depends on what you do for a living. Naturally metro Denver will have the most jobs, but its the least desireable place to live. Loveland/Fort Collins to the north and Colorado Springs to the south are nicer. Pueblo and Greeley are dives. The mountain resorts are super expensive and their are no real jobs there. The western slope (Grand Junction, etc.) is in the middle of an energy boom. There is nothing on the eastern plains (think Kansas).
It’s true in Michigan too. Spec houses in Detroit? Only someone with rose colored glasses or still stoned couldn’t see how stupid an idea that was.
Maybe the state can be a substitute for India. They are talking about exporting services jobs to India because they speak English and they can be trained to do it for 10 cents on the dollar.
Now that I think about it, it is already happening. A mortgage lender from Florida decided to close their processing offices there and move them to Michigan.
I just hope for Michigan’s sake that there is no potato famine.
“The reality is that in OH, MI, and WI, the “bubble” was manifested as a postponement of the decline in real estate prices that should have happened, given the real contraction of the economies of these states.”
Excellent comment! I can think of many other places that this applies to as well (Buffalo/Rochester/Syracuse).
Unfortunately, the bubble did/does infect the Midwest and the nation.
“…But remember when home prices were in the toilet in the early ’80s and you could buy a house for $65,000 in Mequon? That house is probably worth $250,000 now. Sit in there long enough and you’ll be OK, too,’ he said.”
The problem is that they are asking $425,000 for a Mequon house. And up north its still half a mil for a lake side cabin (80K 7 yrs ago), $5,000/acre for non-agricultural farm lands - in the middle of nowhere. The average pay in the UP is $11/hr currently ~ 9% unemployment and it will get worse since much of the income is tourista generated (FIBs).
The midwest will economically collapse before this is over, because more money leaves the midwest than enters, and has been for years. Those half-million “up north lake houses” meant for the financial high-rollers from Chicago, Grand Rapids, etc will be the first on the block - look for 80% price declines.
I’m continually blown away by sale prices over on the west side of the state along the lakeshore, where I grew up. Just as soon as the Chicago and GR rich folks quit spending their money, they’re all screwed over there.
True az. A really nice place on a river bluff with all the toys that I’ve had my eye on just dropped another 20k. That’s 45k off their June 2006 Wish Price since I first saw it. Their Second Mortgage must be getting awfully heavy with September rolling around and 2 kids in college this year:)
It really seems that the MSM is really trying to pull some heart strings here, and as we all know from being on the other side of the news….there must be a reason. So, yes there is many new foreclosures on the market, and yes it is a drain on the economy as a whole….but why the angle of victims rather than greed gone wild? I believe this is the setup to another political angle shoot, which would be making the bail out an honorable and humble thing to do….rather than rewarding failed greed. I think if people want to know the types of people who are doing this, just look at the numbers of abandoned animals in these houses, who are left to starve to death…these people are toilets who deserve nothing at all, the majority are scum and the minority will just have to suck it up and realize their mistakes…no sympathy here.
Honestly, I think it is just what the readers will read.
Through a sob-story on the front page and the paper will sell, and the readers will be back tomorrow for another.
Put detailed business story of what went wrong, the readers will look at the picture, and then jump to they style section.
They don’t want to understand. They want to feel. We’re a country based on emotion based rather than thought. The paper is just giving people what they want.
They don’t want to understand. They want to feel. We’re a country based on emotion based rather than thought. The paper is just giving people what they want.
Exactly. Anyone who has ever worked in MSM journalism is familiar with the maxim: “if it bleeds, it leads”. “Human interest” stories full of emotion but little real substance — much less research or historical/economic context– are the fast food of modern journalism. Not to mention a whole lot faster and easier for your typical lazy deadline-focused reporter to write.
Like Lisa Simpson once said: “I’ll give them so much sap they blow their nose with a pancake”
“They don’t want to understand. They want to feel.”
Bingo. Great comment.
I wonder if Ms. Hilary Clinton can feel everyone’s pain as well as Bill did.
You should know that all the MSM wants are stories of human roadkill. I used to read only the financial sections but now those are full of human roadkill stories too.
Not to worry - the Fed and Comendant Dodd will try bail out the market. Savers will be punished and the bubble might get even bigger.
I miss Volcker!
Wanna bet?
Dodd is a *struggling* presidential candidate trying anything to gain traction. He’s got zero chance of being nominated or winning, but maybe the others will see his failure as how NOT to campaign.
I have no problem with a bailout if buyers were actually deceived, but not if they lied, gambled, or didn’t read the fine print. The class-action lawyers will be on top of it in no time. This may save at most 10% of those in trouble right now, the rest are deservedly doomed.
The class-action lawyers will be on top of it in no time.
I’ve already heard a radio ad from a firm seeking plaintiffs who want to recover losses from toxic mortgages.
NEW YORK (CNNMoney.com) — Earlier this year, a Wisconsin couple won a judgment against Chevy Chase Bank that said the bank deceived them over the terms of their mortgage.
The judge ordered Chevy Chase to rescind the loan and certified the lawsuit as class-action, which could potentially release thousands of other borrowers who felt misled…..
http://tinyurl.com/yulofr
Great. More lawyers to remove more wealth from the economy.
Just what the real estate market needs. More theft.
Wanna bet you miss Volker, or that Dodd will effect a bailout? I repeat, the only bailout I would support would be non-recourse jingle mail, primary residence only…and that’s if you can prove no lair loans or liar on primary res, etc.
And is anyone else getting REAL tired of hearing about how the Wall-Street types will get a cut in their bonuses? I guess they can’t make it on their regular salary *scrapes violin*
No bail out. I would support a bail out at the expense of the lenders of the money, as long as I get a small payout just for being frugal and refusing to participate in financial insanity.
I think a bailout can work, but only as restitution by mortgage companies that are found guilty of fraud.
“‘Anyone with good credit who could afford a fixed rate and traditional financing would have done so.’”
If only!!! Unfortunately many people with good credit and good, solid incomes used the cash out REFI and toxic loans too.
Someone’s got their thinking backwards, methinks. Try this:
If people with poor credit could were not given access to toxic financing, people with good credit could afford traditional financing because housing prices would not have gone crazzzzy.
I guess this is what drives me so frickin’ crazy. Why then hell does everyone in the REIC want to resule teh past & continue on the path to more and more unaffordable homes and more and more toxic loans?
It was clearly unsustainable in 2005 and in 2007 we are starting to add up the tab. It ain’t cheap.
Why don’t these morons look for another solution or let the market run its course. But no, some stoopid buyers and greedy lenders are going to get their just rewards, and that is too ugly to look at.
“‘I know there will be more foreclosures coming,’ said Patrick Essie, executive director of Wisconsin Association of Mortgage Brokers, ‘but the crisis of people getting into loans they shouldn’t - I think that’s over. For the most part, those types of loans are no longer available.’”
- Hey Pat, not only are the funny loans gone but so are the funny investors / homebuyers. So you need to tighten your budget because your future sales are toast.
This just in from Tucson…
First Magnus (a BIG mortgage company) files for Chapter 11:
http://www.azstarnet.com/sn/hourlyupdate/197436
Ex-employees wonder where their paychecks are:
http://www.azstarnet.com/sn/related/197349.php
BTW, read the comments that follow both stories. Not much love for First Magnus around these parts.
There are two choices in something like the mortgage lender implosion. Either the situation is worse than we are made to believe; or these companies were built on a tissue paper foundation.
In either case, can giants like Countrywide be far behind?
For good or ill, I think Countrywide is dead. The big question will be the ultimate fate of GS, Lehman and Fannie Mae. That’s the economies Maginot line.
And we all know how well fixed lines of defense hold up.
“There’s a ton of houses for sale out there. How can you raise prices when there are 10 other properties like yours looking for a buyer?”
Evidently the answer to this dilemma is to go the FSBO route. I have never seen so many homes for sale by owner. The sellers must think they’ll close a deal by cutting the realtor’s 6% off - their ridiculously high wishing prices.
Two things (in my zips) this boom/bust has spawned: a glut of FSBOs and SFR rentals.
The sellers must think they’ll close a deal by cutting the realtor’s 6% off - their ridiculously high wishing prices.
Problem is there are folk that will buy today thinking 10% off original list was a fantastic deal. Many people that can be lead to water and enticed to drink.
I’m starting to see more “rent to own” signs than I’ve seen in years. And, from what I’ve read, R2O means that you’re paying above-market rent in hopes of possibly owning the same property someday.
Me? I’d rather pay lower-than-market rent and sock the extra money away in my Down Payment Fund. That’s what I did before I bought the Arizona Slim Ranch.
I’m just really happy that so many SFRs are for rent. Some are even asking reasonable prices. This fall I’ll be looking to relocate from my crowded house.
Sorry if this one has already been posted: http://tinyurl.com/2ltg7b
Next victim of mortgage mess: Auto sales
Good post
“…And of those postponing or canceling plans, home-related issues jumped to the No. 1 reason, cited by 17.6 percent of those staying away from dealers’ showrooms, with nearly 11 percent of that group citing a decline in their home equity and another 6 percent citing an increase in their monthly home payment….
“A new car is one of the a more postponable purchases that people make,” said Schnorbus. “That new vehicle purchase could be a good leading indicator if consumers are going to cut back. Over next few months, we could be getting some very interesting signals.”
“Interesting signals”, fewer sales? cash buyers? GMAC credit defaults?
I would like to see the railroad crossing signal down my road replaced with one that works. Its always hit or miss.
I wonder what Paulsson’s/Bernanke’s definition of “contained” is,
something like putting up a stop sign in front of an avalanche?
These guys don’t have clue, one by one the dominoes will fall.
Fed injected more liquidity into the market today according to CNBC.
“Tom Dinwiddie, of the Indiana Bankers Association, said it’s wrong to assign blame. ‘We’re a victim of success.”
[tacet]
Was he called ‘dimwit’ in school? Dinwiddie is an old and honorable Scottish name. Mr. Dinwiddie was in a position of power that could have reined in the errant banks. “Policymakers want to increase home ownership, but at some point you have to wonder if it makes any sense.” Why did you not wonder? Greed?
If he calls this a success, I’d hate to find out what he considers a failure.
‘It just creates more competition,’ he said. ‘The biggest potential problem is for real estate values to begin to decrease…but I don’t foresee a big drop in Dayton or in Ohio in our future.’
Well now, there’s only a few ways to compete: 1. Offer a product no one else has, 2. Offer a better quality product, or 3. Offer a CHEAPER product. But no, there’s no way there could be a big price drop in the future…..
I guess it depends on your definition of a “Big drop”. Dayton and much of Ohio has lost a generation of young people. Ever since 1978 or so, the youth have been exiting the state. There were some decent years in the 1990s, but the exidice has resumed. The older folks still here bought their houses eons ago, and that generation tended to never move up from their starter home (my parents lived in their home 40+ years, which was about average for their generation.)
Home prices have rising very slowely since 1978, so he must think there is no room to fall. But most people have a lot of equity in their houses, will probably die in them (so the heirs just want to “dump” them), and there are few young to buy them. I see plenty of room for houses to fall, at least in real terms.
No shortage of H1-B’s in columbus. All of them will be ready to buy a home within 5 years, and none of them are having trouble providing a new generation of youngsters.
I loved your earlier analysis of the boom playing out in construction, rather than price inflation. Very true.
And we’re (not-so) young people in the process of fleeing the state. There are 14 houses for sale on my street alone, and at least half of them are vacant “inheritance” houses with out-of-state trustees. I will be renting our house to my much younger cousin, for market value which will cover our very modest mortgage. This is for two reasons: One, I don’t want to be the 15th “For Sale” sign on the block, and two, so that he can pack up and leave when a better opportunity comes along. And it will, because there are virtually no opportunities to be had in Dayton anymore.
Dayton suburbs aren’t like the California/Florida markets. You won’t see a shack here selling for hundreds of thousands of dollars. There was never huge price appreciation in existing homes, instead it seems expectations were raised. In Montgomery County (OH), the median house price is around $120,000 and the median household income is around $43,000. For the last ten years every available corn field has been turned into a new housing development. Mostly Ryan, Ryland, and Drees vinyl-sided two stories but a number of more upscale golf course neighborhoods as well. The inner ring suburbs with mostly with 50’s-70’s era homes are turning into ghettos full of poorly kept rentals. In 1987, I bought a 1920’s dutch colonial (1350 sq ft) in a working class neighborhood for 58,000. The last time that house sold in 2005, it went for 114,000. So far the neighborhood’s of the middle-class and professionals have been spared from the rash of forclosures but working class neighborhoods are being decimated. It’s really sad. I expect that the house I live in now (14 years) will sell for about 20% more than I paid for it and 6-7% of that would go to a real estate agent. Not much of an ‘investment’ but it has been a nice place to raise kids. So will prices drop much here? In neighborhoods that are deteriorating and full of foreclosures probably so. Everywhere else…I don’t know… I hope not. I want to retire soon and move. We haven’t seen appreciation that would even keep up with inflation and you couldn’t build a house like mine today for anywhere close to what I can likely sell for. I’m keeping my fingers crossed.
Any news from Madison WI ?
There was a Madision Bubble Blog, but the person gave it up…not enough time, I guess.
Difficult to say - condos seem to be really bad, with lots of places throwing in “free property taxes for first year” or “condo fees paid for first year.” Also, no one from Madison had paid to be a “contributing writer” to write about Madison area real estate conditions on Realty Times since at least April! Why are they not advertising themselves? Finally, there a lot of realtors not updating the MLS from active until after closing. Not changing to offer-show or pending, as used to be common, but just keeping active until they walk away from the closing table.
My wife and I had an offer on our house within two weeks, within 2% of our asking, yet there are three houses on the street still sitting, but one is 30K overpriced, another keeps relisting every three weeks - same price, just keeps expanding the “Value” Price Range.
On the house we were going to purchase, we offered 15K less than the listing price (our offer was supported by comps, and the place had been on the market since October and vacant) and were told “we are very confident our listing price is accurate” and “this is what we paid almost two years ago (they overpaid then- also demonstrated by comps). The place sold two weeks ago - for exactly what we had offered 12 weeks earlier.
There is a large builder in the area that until the last few weeks was offering up to 25K in “free” upgrades. They also seem to be building like crazy, or working through their completed homes. Strangely, they also laid off a bunch of salespeople a year ago.
When looking to buy, I was interested in some places on the East Side, but it looks as though the whole area is for sale (confirmed by a Realtor). Most places were purchased 2-3 years ago and are now being resold. The people really are FB’s as they are competing with new construction (with 25K in upgrades). I’ve seem some listed 10K LESS than what they paid for two years ago. Those trying to break even or make a profit seem to be sitting.
I’m not a Realtor (and despise them) but it really does seem if homes are in excellent condition and priced right, they will sell. Almost every home I’ve been interested in seems to get an accepted offer almost immediately. Don’t expect to get top dollar for crap like two years ago.
There is a house in the outer ring I really like, but the first time I saw it I felt it was overpriced, and said so. Two days later it took a 15K whack. Good start, but I really think it’s still 40K too high, at least to me.
Looking quickly at http://www.scwmls.com/stat_pdf/JuneStats_07.pdf, I think I’m looking at a 6.4 month inventory for Dane County.
OT..late post from yesterday
I know you have all see the rate reset chart, but have you had a chance to look at the entire document that chart was pulled from?
It is a good read. warning, it is a 67 page PDF
http://www.recharts.com/reports/CSHB031207/CSHB031207.pdf
I created a petition called U.S. Tax Payers Against a Wall Street and Mortgage Bailout.
Please sign it and pass it on to other blogs and email lists.
http://www.petitiononline.com/bailout/petition.html
Coldwell Banker: Few worries about subprime
CEO says crisis will only delay rebound in housing prices, says repossessions will increase supply by a month at most.
http://tinyurl.com/3ae6j2
They should save themselves time and money and ramp up the Xerox machine. Change the data by every month and print off a new copy. Keep the statement the same. Do it for the next 3 years. Then finally they can release a statement that says our prediction came true, housing is finally starting to go up. After falling 50% over 3 years we are on the path to appreciation.
So, yesterday there was a bit of a debate on the Fed working with brokers to cause the short-squeeze, or unfortunate timing that options were expiring as a run on Countrywide happened.
CNBC’s Bob Passani has an interesting take. He doesn’t say whether planned or not, but the move did do one thing… bring back stability.
We were having these crazy girations as people shorted, then dumped shares, then others sold shorts and ran a short-squeeze… repeat!!!
With the Fed perched to step in with another action at anytime, people are too affraid to do the market manipulations. No more wild 3% swings in half an hour, antics… At least for now.
I had a feeling that flipping was going on in Albert Lea. For those of you who don’t know, Albert Lea is a sclerotic small town about 100 miles or so south of the Twin Cities. There’s some fast food joints and maybe a Walmart to work at, and this is basically the job market. The houses don’t even command $50k, try more like 10 - 20K. Seriously, the area has deteriorating highways and much of the entire Freeborn and nearby counties have failing local economies. Anyone trying to flip anything there will be roasted. I wouldn’t even give you $1,000 for most of the land there, BTW. Friendly town but in the same hot water as Michigan.
As I saw it, the 1980’s fixing and flipping of houses was the begining of todays housing buble game. The newly fixed lower income houses pushed up the values of ALL houses in the area. Afterall, who would ever consider thier more expensive house to be valued anywhere near the low income flipper property.
Currently the bottom of the pyramid needs more entrants locally, and construction unemployment must remain low.
The Quadcities is desperate to continue, “bucking the trend” by testing the newest idea, foregiveable loans to owner occupy and rehab the empty subprime low income houses.
IMHO, with the help of some high up “coconut cultist”, the people who take this deal are either the lowest IQ greedy people ever, or …?
http://www.qctimes.com/articles/2007/08/21/news/local/doc46ca728aa052a085326256.txt
Our city council is just now learning about the impact of resetting a.r.m.s and what they will do to the city. The last major front page story about the subprime blowup was written by a young woman who professed to not know the difference between a subprime mortgage and a prime rib special.
http://www.qctimes.com/articles/2007/08/18/opinion/opinion/doc46c600241ceb6754276637.txt
I no longer see the ads on telephone poles saying they will buy my house for cash, and there do not seem to be anymore all pink houses in town.
In the 1980’s fixing and flipping houses commenced. The newly fixed lower income houses pushed up the values of ALL area wide houses. Afterall, who would ever consider thier more expensive house to be valued anywhere near the low income flipper property.
Currently the bottom of the pyramid needs more entrants locally, and construction unemployment must remain low.
The Quadcities is desperate to continue, “bucking the trend” by testing the newest idea, foregiveable loans to owner occupy and rehab the empty subprime low income houses.
IMHO, with the help of some high up “coconut cultist”, the people who take this deal are either the lowest IQ greedy people ever, or …?
http://www.qctimes.com/articles/2007/08/21/news/local/doc46ca728aa052a085326256.txt
Our city council is just now learning about the impact of resetting a.r.m.s and what they will do to the city. The last major front page story about the subprime blowup was written by a young woman who professed to not know the difference between a subprime mortgage and a prime rib special.
http://www.qctimes.com/articles/2007/08/18/opinion/opinion/doc46c600241ceb6754276637.txt
I no longer see the ads on telephone poles saying they will buy my house for cash, and there do not seem to be anymore all pink houses in town.