A Predictable Harvest
The Flathead Beacon reports from Montana. “The pace of second-quarter existing home sales fell by 7.1 percent in Montana, compared to the same time in 2006, according to numbers released last week by the National Association of Realtors. ‘For sale’ signs are propping up all around Flathead Valley, but Ted Dykstra, president of the Northwest Montana Association of Realtors, attributed that to an excessive number of homes on the market, not slow sales.”
“He said many people, after watching their homes appreciate rapidly for a few years, are cashing in – while the number of homes sold has remained the same. Another issue, Dykstra said, is that the market can appear to be softening due to the sheer number of real estate agents in Northwest Montana.”
“‘We’re not seeing that. If we get into a situation where we have four or five years of inventory then we have a problem,’ Dykstra said. Right now, he estimated, the area has between 23 and 27 months of inventory.”
The Idaho Statesman. “Ada County home sales for August will likely be the fewest for that month in almost a decade, according to a local real estate broker. The sluggish housing market is weeding out people who suddenly became home builders and began building high-priced ’spec homes’ when Idaho was one of the hottest real estate markets in the country, said John Cotner, owner of Cotner Construction.”
“Those high-priced homes are not finding many buyers as consumers are concentrating on homes in the $200,000 to $250,000 range. The result, he said, is that people who were not real builders are being forced out of the business. ‘A lot of bad apples are being shaken out,’ he said.”
“In some cases, Cotner said, builders who sold spec homes to investors now find themselves competing for buyers against those same investors.”
The News Tribune from Washington. “Saving money for a down payment might soon be the newest trend revisited in financing the purchase of a home. At Community One Financial in Puyallup, senior loan officer Jayme Coffey said that in the last three weeks she and her colleagues scrambled to find new funding sources for 25 loans that had been preapproved for no-money-down mortgages – sometimes called”
“80-20 or piggyback loans – that some banks would no longer finance. ‘The 80-20 is effectively dead,’ she said.”
“Adam Stein, president of the Washington Association of Mortgage Brokers, called the recent mortgage lending environment ‘a credit democracy.’”
“Not so today. ‘There are people right now who aren’t getting home loans. That’s the sad reality,’ Stein said. ‘Right now the market is in an overcorrection.’”
“Among those left out are self-employed buyers with difficult-to-verify income and buyers with imperfect credit history, Stein said. He predicts the zero-down mortgage products left will continue to retreat in the next six months, just as the 80-20 has.”
“‘I looked for it today and couldn’t find it. I called a couple places where I used to do business,’ Stein said last week. ‘It was offered a month or two weeks ago.’”
“Chris Dunayski, who owns High Point Mortgage in Puyallup, said mortgages in the near future will look much like what buyers used in the 1980s and 1990s. Twenty to 30 years ago, a 20 percent down payment was considered the norm.” “Twenty percent of July’s $281,400 median home price would be $56,280.”
“‘I would think at some point 100 percent will be gone and people buying homes will be responsible with their money and save and invest,’ he said.”
The Seattle Times from Washington. “In the last several weeks, the national mortgage crisis has spread beyond the subprime market to jumbo loans. Nearly half of the single-family houses for sale in King County, plus 21 percent of the condos, have sales prices high enough to require jumbo loans, and that’s if buyers reduce their loan amount by putting 20 percent down.”
“‘Funding sources have dried up for all loan products except for conforming loan product,’ explains Erik Hand, president of Bellevue-based Response Mortgage. ‘Anything outside of those product types and your options are limited because there’s no investor appetite for those loans anymore.’”
“Home purchases are almost always contingent on financing and ‘we’re probably in something of a flattening [housing] market right now while we work through this,’ says Mike Skahen, owner of Lake & Co. Real Estate in North Seattle. ‘It makes me a little bit nervous because no one knows where it’s going right now.’”
“Last week, his office was handling a $1 million house purchase when the lender went bankrupt. ‘The buyer is looking for an alternative lender now, and hopefully she can find one,’ Skahen says.”
“From his high-rise office in HomeStreet Bank’s downtown Seattle headquarters, residential-lending director Rich Bennion views the widespread mortgage crisis as ‘the inevitable correction for some of the excesses of the past several years.’”
“Bennion suspects some consumers will shy away from buying altogether. ‘They’ll decide that instead of buying now, they’ll wait a year. Or instead of buying now, they’ll stay put and remodel the kitchen,’ he says. ‘It has a dampening effect on the housing market, no question.’”
The Tigard Times from Oregon. “‘Is the housing market getting worse?’ Maybe it has everywhere else but not in Oregon, and definitely not in Portland or its surrounding communities, including Tigard, Tualatin and Beaverton, according to local agents.”
“Broker Eva Sanders says many sellers still think they live in a 2005 housing market when buyers were basically standing in line for houses. ‘2005 was an incredible sellers’ market,’ said Sanders. ‘People thought, ‘I can get anything for my house and I don’t have to do anything to it.’ That has all changed.’”
“‘Now buyers have more inventory to choose from. Buyers now have the ability to comparison shop,’ Her rule: ‘If you compete you can sell, if you’re not willing to compete, you won’t sell.’”
“‘It depends on where you are and what you have,’ said Sanders. If, for example, it’s a townhouse up at Progress Ridge in Beaverton, Sanders says, ‘There are way more townhouses than we can absorb for a long time. It’s probably not going to sell.’”
The Lake Oswego Review from Oregon. “Local Realtors said the recent credit crunch is part of the market’s return to normalcy. ‘Everybody knows that it was time to adjust,’ said broker Mary Jo Avery. ‘If it kept going in the direction that it was going, people wouldn’t be able to afford homes. People with no down payment are not going to be able to buy anything for awhile. You have to have some cash to buy a house now.’”
“July saw a 21 percent drop in the number of pending sales in Lake Oswego and West Linn, compared with the same month last year. The number of home sales, including condos, in Lake Oswego and West Linn in July 2004 was 194, compared with 138 this year. The number of listings in our areas went from 555 in July 2004 to 1,008 this year, nearly double the inventory.”
“‘Most of the loan programs that were available before the credit crunch are still available,’ said Brian Bushlach, a senior adviser with Alpine Mortgage Planning. ‘But the underwriting requirements and credit score requirements have been raised. It’s almost like the old-fashioned mortgage — you have to have a job and good credit.’”
“Avery said the days of ‘aggressive pricing’ — in which the seller could set the price at a high level and most often get it — are gone.”
“If prices stagnate for a few years, or even go down, it’s all part of the correction process, Avery said. ‘It’s more a process of adjusting to prices where they need to be,’ she said.”
“While other areas of the country could see severe drop in home values, Avery said she doesn’t predict the same for this region. ‘I don’t think that will really affect us here in this slice of heaven,’ she said.”
The Oregonian. “Lime Financial Services rode the housing boom to considerable heights, growing from 30 employees in 2003 to 450 last summer. The Lake Oswego-based mortgage lender was frequently cited as one of Oregon’s fastest-growing companies.”
“Today, Lime boasts a far more modest claim to fame — it is not dead. Lime agreed in April to be bought by deep-pocketed investment bank Credit Suisse. The deal makes it one of Oregon’s last subprime mortgage lenders still operating despite an unprecedented meltdown of the U.S. mortgage industry.”
“‘I’ve been in this business for 30 years, and I’ve seen a lot of cycles,’ said Rick Baldwin, whose own subprime lender, Meritage Mortgage, closed up shop in November. ‘But none this bad. This makes every other downturn pale in comparison.’”
“By late 2006, the industry’s looser standards had reaped a predictable harvest of unqualified homebuyers and unpaid mortgages.”
“‘I call it the race to idiocy,’ said Ken Perry, whose Broker Knowledge Group offers classes for mortgage professionals. ‘The more you loosened the guidelines, the more people got into homes, the more money everyone made. But it was unsustainable.’”
“A painful truth of the industry implosion is that it was in large part self-inflicted. In their zeal for a piece of the red-hot housing action, lenders created loan products far beyond the pale of traditional banking.”
“More than a dozen mortgage professionals interviewed for this story agreed that some of the most fundamental gauges of financial prudence were relegated to the round file.”
“Traditionally, lenders didn’t extend a home loan to someone if the mortgage payment would exceed 28 percent of their monthly income or would push their total debt payments to more than 36 percent of their income.”
“In the new era, some lenders accepted debt-to-income ratios as high as 65 percent. Likewise, the traditional down payment went by the wayside. Instead of requiring borrowers to put up 3 percent to 10 percent of a home’s price tag, some lenders cheerfully made loans equal to 100 percent, or even 125 percent, of a home’s value.”
“‘It got out of hand,’ Baldwin said. ‘Everybody knew in the back of their mind what was happening. But it was just too good. It was just too good.’”
“The day of reckoning finally came. In 2006, homeowners began to default on mortgages in larger numbers. The institutional investors who bought the mortgages from Wall Street exercised their rights to demand that mortgage wholesalers such as Lake Oswego’s Sunset Direct Lending buy back nonperforming mortgages.”
“‘We were facing $20 million in buyback demands,’ said Frank Frazzitta, Sunset Direct co-founder. ‘That was more than we had in capital.’ Sunset Direct, which had 125 workers at its peak, closed in March.”
“Since January, 2,372 mortgage professionals have withdrawn their state registrations, a 20 percent decline, according to Dave Tatman, administrator of the Oregon Department of Finance and Corporate Securities.”
“Mortgage industry veterans, meanwhile, argue that they were the victims. ‘There were a lot of people who lied to get into homes,’ Frazzitta said. ‘We’ve seen every kind of fraud that you can imagine.’”
“Optimists hope the worst is past. Others aren’t so sure, noting the wave of adjustable home mortgages scheduled to tick upward over the next two years. That could mean new defaults, delinquencies and foreclosures.”
“‘You can’t bounce back from this until the adjustable-rate mortgages wash out,’ Perry said. ‘If people can’t refinance, they can’t keep their houses.’”
http://www.minyanville.com/articles/BZH-LEN-SPF-CHCI-real+estate/index/a/13890
Still NO Answer from minyanville about the intern position i applied for.
I guess they want some young little chicky poo.
Nice post Chic….
Update
mid may was 799,000
6/10/06 was 836,471
6/14/06 was 840,935
6/17/06 was 846,120
6/20/06 was 850,317
6/22/06 was 855,892
6/24/06 was 860,647
6/29/06 was 866,037
7/01/06 was 858,675
7/09/06 was 870,854
7/11/06 was 882,239
7/13/06 was 886,055
7/14/06 was 890,896
7/18/06 was 895,022
7/21/06 was 900,000
7/25/06 was 905,170
7/28/06 was 910,001
8/01/06 was 903,718
8/12/06 was 915,336
8/19/06 was 920,755
8/26/06 was 925,176
8/29/06 was 951,242
9/15/06 was 955,352
12/1/06 was 925,170
12/2/06 was 915,258
1/01/07 was 857,760
1/20/07 was 900,302
2/14/07 was 932,055
4/21/07 was 1,148,456
4/27/07 was 1,171,189
5/11/07 was 1,192,290
5/18/07 was 1,202,413
5/25/07 was 1,238,121
6/14/07 was 1,256,361
7/28/07 was 1,300,943
8/27/07 today 1,364,096
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
Numbers are going up however who knows where or who is counting.
Have to go now.
CNBC is going to tell me how I can make money in this market and how to position my portfolio in this global economy.
“‘You can’t bounce back from this until the adjustable-rate mortgages wash out,’ Perry said. ‘If people can’t refinance, they can’t keep their houses.’”
Flat out it will be at least the end of 2010 before all of these mortgages wash out. Then how will they be absorbed? No Savings no down payment. Looks like housing prices have to drop a lot!!!
But all the real estate folks I know in Oregon are saying, “there may be housing problems out there but Oregon came through just fine. We have a bit more inventory, and things stay on the market a bit longer, but basically, prices have gone up, sales are happening and you this is a GREAT time to buy in Oregon.” How can it be that all the nation except Oregon is experiencing the housing crisis. oh … wait … maybe it’s because there are so many mobile homes here .. ya think?
They’re certainly not out of the woods yet up there…
If Oregon is out of woods, they are out of business! No more logging industry!!
Oh yeah, it’s different here in Oregon. Centex just did their first “12-hour sale” like the ones they’ve been doing in CA. I drove by - didn’t look like much was happening to me. I personally watch Bend - I think it’s on the brink of catastrophe.
Is there any particular website you use to track RE is Bend, OR?
I go to Bendbubble2, and also look at Realtor.com and Craigslist. I’ve been watching a stuck flipper trying to sell lots, a couple timeshares, and a couple houses. If you want to buy in Bend, I would personally wait one year and four months - to midwinter ‘08-’09. You’ll see the despair in their eyes by then. They’re just now starting to say gee, we have a little problem.
Down here in Ashland we are seeing more slashing than in the Texas Chainsaw Massacre. Yet I still see the same homes for sale month after month. Yes, its a GREAT time to buy.
Mr Fester….Yes, I’ve been watching the Ashland MLS and it seems nothing is selling. Small prices drops every now and then, and still nothing sells.
Just give it one to two years. I think most of the “bubble” gains are about to go poof. There aren’t enough CA equity locusts to keep the market afloat.
Portland reaches the 20,000 inventory mark this week! Also our median asking price has dropped from $354,740 in April to $339,900 this week. A $15,000 drop. Of course the RE shill in the Oregonian article is still saying prices are rising here.
http://www.housingtracker.net/askingprices/Oregon/Portland-Vancouver-Beaverton/
Portland reaches the 20,000 inventory mark this week! Also our median asking price has dropped from $354,740 in April to $339,900 this week. A $15,000 drop. Of course the RE shill in the Oregonian article is still saying prices are rising here.
Have I got a graph for you:
http://www.bubbleinfo.com/journal/2007/8/22/interpreting-arm-reset-chart.html
Been posted a million times. Sorry to burst your bubble (pun).
Aw, darn. I thought I’d really found something profound.
it’s still profound, just not new.
Although this chart, created by Credit Suisse last January, has often been posted on this board, I do have questions as to why other sources say the ARM reset peak will occur in February or March of 2008.
Welcome to the fold!
Friend of mine came back from a several week road tour of the back roads and smalls towns of the Pacific Northwest…..observations….all the small town main streets are dying, up for sale, or every third store was closed. Roads were spookily empty, too.
He thinks the Depression is here already. I have to agree. Same observations I saw in Wyoming, Nebraska and So. Dakota.
“…But it was just too good. It was just too good.’”
A Mae West quote:
“Too much of a good thing is wonderful.” — … Wall Street
‘There are people right now who aren’t getting home loans. That’s the sad reality,’ Stein said. ‘Right now the market is in an overcorrection.’”
Oh, the humanity! Don’t lenders know there is a god-given constitutional right to borrow money whenever you want, at rock-bottom rates, as stated by Thomas ‘Zero-down’ Jefferson and the founding borrowers…er, fathers??
Stein said. ‘Right now the market is in an overcorrection.’”
WTF? Over correction? Stein you ain’t seen nothing yet!
lol
I think he meant to say “an over due correction”.
This jumped out at me too - wait, for anyone not to be able to get a loan is an overcorrection? So, by implication, everyone should be able to get a loan in a “normal” market?
“There are people right now who aren’t getting home loans.”
Yeah, and I love the whining about self-employed people. I’ve been self-employed for 20 years, and believe me, I can easily verify my income. Just look at tax returns and deposit receipts.
Anyone who “can’t verify income” = someone who’s trying to hide the fact they can’t afford the house in the first place.
“Among those left out are self-employed buyers with difficult-to-verify income and buyers with imperfect credit history,”
Don’t they do taxes?? Or are they running separate sets of books for the mortgage company and the IRS?
“There are people right now who aren’t getting home loans.”
So what? Is everyone now entitled to a home loan??
Let ‘em rot.
Yeah, self-employment = can’t verify income is stupid, un-examined twisted logic. Right, if your typical self-employed building contractor ( or farmer or truck driver) goes to his banker for an operating loan and tells him he can’t ‘verify’ his income he’d be escorted out of the office by men in white coats. Only in the screwed up and weird world of real estate would anyone say no problem, here’s the money.
These types of REIC ‘examples’ are simply rationales to validate poor underwriting in the name of profits.
Or who’s trying to hide the grow lamps or meth lab.
Another issue, Ted Dykstra said, is that the market can appear to be softening due to the sheer number of real estate agents in Northwest Montana.”
“‘We’re not seeing that. If we get into a situation where we have four or five years of inventory then we have a problem,’ Dykstra said. Right now, he estimated, the area has between 23 and 27 months of inventory.”
That guy Ted is a cool customer. He is very comfortable with only a two year supply of product to sell. “It is different here …”
Yeah and they are entering their prime “Winter” selling season also :)…
Ted Dykstra of Montana,
I’m writing that down. Since about two years of inventory is ok, let’s give him a call in 2009 and see how that worked out for him.
Whatever he is smoking is not the good stuff.
Got popcorn?
Neil
Yeah, I liked that comment about two years’ inventory being OK. Put that together with stanleyjohnson’s post showing that inventory increased 50% in the past four months, and you see that Dykstra will get his problematical four or five-year inventory by next spring. Unless sales increase. (Sales increase? ha ha ha)
Bozeman is already at 6+ years inventory. I guess they should start worrying!
Yeah, all of us at the HBB are takin’ down mental notes. Gonna see how long for it to get to 5 years (HONEST inventory, meaning including fsbo) in his area.
az_lender good to see you posting again. I have a friend with the same problem, DSL is blaming DELL who is blaming DSL. I am wondering how your problem is gonna get resolved.
Got 10% down?
What is the problem?
“‘Most of the loan programs that were available before the credit crunch are still available,’ said Brian Bushlach, a senior adviser with Alpine Mortgage Planning. ‘But the underwriting requirements and credit score requirements have been raised. It’s almost like the old-fashioned mortgage — you have to have a job and good credit.’”
Give me that old fashioned mortgage,
tis the old fashioned mortgage,
tis the old fashioned mortgage
and its good enough for me.
It was good enough for mother
it was good enough for father
it was good enough for granfer
tis good enough for me.
“Mortgage industry veterans, meanwhile, argue that they were the victims. ‘There were a lot of people who lied to get into homes,’ Frazzitta said.
Some of this stuff would make for a good comedy show. This poor dumb clown was as happy as a lark when things were going his way and had no idea that people were lying on their apps…. Riiight! I’m sure some may even have been encouraged to fudge on their applications, ya think?
They already made a comedy movie: “Escrow” coming to a theatre near you soon.
Closing Escrow.
Ah yes, it’s that V word again.
A lot of these scumbag brokers told the FB’s to just leave the income space blank and they would fill it in with whatever it took to get the loan (and that big commission).
Let ‘em rot.
The biggest wager against Wall Street going down. I don’t know if I should believe this prank of not.
$1.78 Billion Bet that Stock Markets will crash by mid-September
Anonymous Stock Trader (”Bob” ??) Sells 10K Contracts on EVERY S&P/Y
“Strike” shorts Stocks “in the money” effectively selling all his SPY
holdings for cash up front without pressuring the market downward This
is an enormous and dangerous stock option activity. If it goes right,
the guy makes about $2 Billion. If he’s wrong, his out of pocket costs
for buying these options will exceed $700 Million!!! The entity who
sold these contracts can only make money if the stock market totally
crashes by the third week in September.
http://groups.google.com/group/alt.slack/browse_thread/thread/51273b2b4b24afb4/4d30472443e53cf6#
Well, I’m betting that way too (actually, I’m giving it until October expiration) but I wouldn’t do it that way!
So how are you doing your betting on that (not looking for trade secrets, just curious).
Do you mean how do we reach that conclusion?
No, I mean she’s making some kind of bet as far as puts, options or the like (unless I read her wrong). Was just curious, not that I’ll necessarily understand it.
Long a bunch of October index puts bought last Friday. Nothing exotic.
Not to you, lol, but another thing to learn about for me.
It is only logical to conclude that Montana, a huge state with such a small population and vast amounts of undeveloped land, is under an enormous bubble. I suspect that the outlying states like Montana will get nailed the hardest and will be down the longest.
Jimmy B, I think you’re spot on what is going to happen to Montana. I grew up in Western Montana during the 1970’s. The 70’s were brutal economic times in Montana -a hard recession. The big difference then is that people lived within their means and they didn’t carry alot of debt. Now, Western Montana’s growth is credit expansion -custom houses, tourist attractions, service economy stuff. Prices for land in the Flathead Valley are unbelieveable. Where’s the manufacturing or technology job base to support the cost of housing there? Its not.
Wahooooo! I just came back from a local shopping center where there was an AMS (Atlas Mort. Serv.) unit. It always pissssst me off because the gals going in were dressed to the hilt and the staff drove Caddy Esc’s and BMW’s and the atmosphere was always pretentious. Inside they had about 12 desks and three clocks; one set to NY time, one set to Pacific coast time, one set to Mexico City time. But today I drove by and all the furniture was gone, gone, gone and the carpet was rolled up and ready to be carted off. This is great for this area that is still in total denial.
That’s funny! We in Oregon finally tossed out the 600% - interest payday lenders. You shoulda heard ‘em scream. One was a math teacher… she asked, “What will I do?” How about teach math- pro bono.
I had a gal tell me the other day all the gas stations in Oregon are full service, that you can’t pump your own gas. What’s up with that??
Been that way for a very long time…..Job creation….
That’s how it is in NJ. At least last time I was there a couple of years ago.
Haven’t seen a full service station for about 30 years.
It rains here. A lot. Back in the early ’80s, when Portland had 14% unemployment and the rest of the state was suffering too, someone decided that the folks on welfare could at least pump gas. It’s actually nice, once you get used to it. Prices are not any higher (cheaper than Washington and CA)and it’s nice that our senior citizens don’t have to pay a 40 cent a gallon premium to have their gas pumped.
Actually, that grew out of gas run-outs…….which had been a common problem, particularly along the I-5 corridor.
You got rid of the payday lenders? To what do you owe your success? There are many Arizonans (myself included) who’d like to see the same thing happen here.
Yup - passed the newly-democratic legislature this past session. THe pissing and moaning from the loan sharks was really heart-rending. NOT!
BTW, the portland market is going through all the phases of Cali and Fl., just off by about a year. It’s eerie the echos I here like that Tigard Times article. While that crap gets printed, my wife and I walk into an open house yesterday where the first words out of the agents mouth were “The sellers told me “Just bring me ANY offer!”. Of course, the 25 year old house had all the original equipment and they had it priced for last year + their-god-given-10%-appreciation. That place has gone and will be going nowhere. Inventory is really backing up no matter what the shills say.
Which area? And Mack, below, how did you get rid of them?
Legislative action.
We got rid of the payday lenders by finally having a Democratically controlled legislature (don’t start on me, guys
which also finally forced the tobacco companies to stop putting the stuff in their cigarette paper (saltpeter, I believe) that keeps the things burning (and starts apartment-building fires). Not that they won’t go corrupt on us in a while, but it’s good for now.
The legislature set a maximum allowable interest rate and a ban on rolling a loan over more than once. Cheers to them!
‘For sale’ signs are propping up all around Flathead Valley, but Ted Dykstra, president of the Northwest Montana Association of Realtors, attributed that to an excessive number of homes on the market, not slow sales.”
And that iceberg in front of the ship is nothing to worry about. It was put there for asthetic purposes.
“Our dead soldiers are littered all over the battlefield, but I attribute that to an excessive number of bullets hitting them, not to their lack of body armor.”
“Most of my brains are splattered all over the sidewalk, but I attribute that to the excessive speed of my motorcycle, not the fact that I didn’t wear a helmet.”
“It hurts when I pee, but I attribute that to the excessive number of losers I took home from that sleazy bar, not the fact that I didn’t use protection.”
It appears that Ted Dykstra is trying to replace Montana’s last genius - Ted Kazynski (or however you spell the uni-bombers last name)
I recently spent time in Portland area, Seattle/Tacoma/Puyallup, I primary mission was looking at ag property in Oregon. It looked like somebody dropped a money bomb in those areas. UFB, it looked like the Bay Area just before the dot.com bust, everybody having a great time, spending money like crazy and thinking this was going to last forever. The puyallup area was really really crazy, since I grew up nearby I know it well. Large parts have been converted to a mini-LA with miles of strip-malls along Meridian Ave. Tacoma downtown and port area do look wonderful but who is going to support all that new construction? construction looks like it is the main employer outside of Boeing and MSFT. I did see lots of homes forsale way overpriced and nothing was moving but the locals think that everybody wants to move and live there so it will all keep rolling along.
Tacoma continues to amaze me - what is the industry there that generates all these good paying jobs to match housing prices.
I love the state and spend time there particularly on the coast but I could never live in Or-Rain-Again full time…..
It’s all those high-paid Micro$oft executives that enjoy the 2 hour commute up I-5 to Redmond!
At least that’s what I’ve been told!
So true…!!
I was just at a meeting in San Francisco last week, and I had the pleasure of being stuck in 2 hours of traffic while passing through the incomparable splendor of Marin County. I had a lot of time to ponder the virtues of $900k homes from Mill Valley to Vallejo. My conclusion-What an overcrowded He//hole! I will never understand why people crowd like lemmings into such places. Sure the area was nice ONCE and it might have some cool jobs, but nothing is worth enduring that torture everyday…
Whatcha looking at ag property for? You going to grow stuff?
Oli…..Where the old beer factory was ??
looking at vineyard property around Carlton, Oregon, on a consulting job. Very overpriced clear evidence of airball financing going around. Part of the problem is that anything within a 1 hour driving radius of Portland is considered ” potential development property” another word for way over priced or buy me now and you will be reward someday!
A lot of folks looking at vineyard property, including Calpers, if memory serves. I’ve been watching someone trying to sell 10 acres of hillside bare land as “vineyard property” for $600K. They cut the price to $580 almost at once, but it’s been sitting for three months since. I have more stories. You’re right - it is overpriced.
“While other areas of the country could see severe drop in home values, Avery said she doesn’t predict the same for this region. ‘I don’t think that will really affect us here in this slice of heaven,’ she said.”
First requirement for getting into ‘heaven’: Ya gotta be dead.
Well, the RE market’s got *that* step down.
First requirement for getting into ‘heaven’: Ya gotta be dead.
Buyers:” I’m dieing to get that house”
I think there would be a new meaning to dead.
“Adam Stein, president of the Washington Association of Mortgage Brokers, called the recent mortgage lending environment ‘a credit democracy.’”
Democracy my ass. More like a pirate ship. The bigger a loser you were and the fewer scruples you had, the better you did.
“‘Is the housing market getting worse?’ Maybe it has everywhere else but not in Oregon, and definitely not in Portland or its surrounding communities, including Tigard, Tualatin and Beaverton, according to local agents.”
Ah, the shrill sound of denial. Thank god the hard-working reporter went to an impartial source and not some shill.
I spent yesterday at the Portland Zoo, courtesy of an agent friend throwing his annual party. According to him, he’s keeping busy; according to his wife, it was a stretch to throw the party this year, but he really wanted to do it and get more contacts. So yes, things do appear to have slowed a bit. We have lots of $600K condos to sell you here, also.
How many of the Zoo animals signed up ? They’re the only ones left to buy ……
The orangutan wanted to buy but was afraid she couldn’t sell her cage — and the chimp RE seller wouldn’t accept her contingency offer.
I just read Time this week-lays out the whole Ponzi scheme with mortgages/hedge funds,etc. My wife read it too and is finally on-board. Amazing how accurate the predictions on this blog 1-2 years ago are proving today!
I wonder how ol’ Auction Heaven in ‘07 is feeling about his prediction. He’s looking pretty good from where I am sitting. Seeing a modest number of auctions right here in CAshland, Oregon. How sweet it is…!
Fester…A buddy of mine is having a heck of a time selling a modest spec home in Medford…14 months and counting…
July listings for Jackson County was 3014, if I remember correctly. Just a year ago it was 1400-1600. He’ll be waiting a very long time now…..Owners are still delusional, sales are still being made, but nothing like last year or the year before
Water cooler talk where I am accedes prices have stopped rising, but the idea of falling? Zut alors! Not here….
“From his high-rise office in HomeStreet Bank’s downtown Seattle headquarters, residential-lending director Rich Bennion”…”suspects some consumers will shy away from buying altogether. ‘They’ll decide that instead of buying now, they’ll wait a year. Or instead of buying now, they’ll stay put and remodel the kitchen,’ he says.”
A false trichotomy. Understandable, though; at very high altitudes, clear thinking is often the first thing to go.
Former landlady was not a fan of the “remodel to make your house worth more” philosophy.
And, as it turned out, she was right on the money. I found a chart showing the paybacks on various remodeling projects. The kitchen remodels were at the top of the chart, in that you’ll likely get back 90% of what you put in. Which means that you’re still eating 10%.
Other remodels didn’t have anywhere near the payback. If you can call it that.
LOL. I remember talking to a car salesman in 2003 in Denver that had finished his basement. He figured that for the $10K he put in, he’d get another $40K for the house. I found it amusing that his fantasy numbers not only worked on people he pushed into cars, he made them work on himself.
“He figured that for the $10K he put in, he’d get another $40K for the house.”
This is a direct result of watching Flip This House.
If you haven’t seen the show, every time the featured flipper completes an “upgrade” they pop a little tag up on the screen with a rough cost, say $4000. Then the little tag flips (how clever) to reveal the “added value” which is always at least double the cost, sometimes as triple or quadruple.
“Granite Toilet Seats: $1000″
*flip*
“Added Value: $3000!”
One exception, Slim. I bought a little house that had no water view. The absentee owner didn’t realize that the ocean could be seen from the rooftop. Hence, adding a dormer window made it an oceanview house. That improvement more than paid for itself when I flipped the place.
I saw a similar chart back in 2003. NONE of the improvements (kitchen remodel, added bathroom, etc) listed had an ROI higher than 50%. I wish I knew where they’d gotten the numbers - maybe from a previous housing bust? I can see a bust skewing those numbers downward just as the recent inflation would skew them upward.
OT…you gotta just love the shills, they SPIN everything..
Here they partially attribute the falling ranks of Realtors to “normal attrition”. I’m sure everybody leaves an easy job that is still providing a decent income. Give me break.
http://tinyurl.com/3xznaw
“Mortgage industry veterans, meanwhile, argue that they were the victims. ‘There were a lot of people who lied to get into homes,’ Frazzitta said. ‘We’ve seen every kind of fraud that you can imagine.’”
Cry me a F*@King river. Whose job is it to verify income again?
Like Sam Kinison talking about how Jessica Hahn was a “victim”.
““Bennion suspects some consumers will shy away from buying altogether. ‘They’ll decide that instead of buying now, they’ll wait a year. Or instead of buying now, they’ll stay put and remodel the kitchen,’ he says. ‘It has a dampening effect on the housing market, no question.’””
I know for a fact that this is happening. Two people I know, their family has expanded and they want to upgrade to a larger home. Due to the current home prices, they are opting to expand their current homes with additions.
When our kids were small, we expanded their bedroom floor area-with bunkbeds. They survived.
Margaret,
Long time lurker…
Margaret, yours is the post of the day. Thanks for humurously providing perspective. I have 2 little kids, and we live in a 1800 sq ft house; plenty of space. Yet around me, people frequently ask “What - only 1800 sq ft? When are you going to upgrade?.” I don’t get it.
Western WA. housing market update: We’re now burying St. Joe’s statues in the front yards here. Seriously, friend of mine just did it. She’s going abroad for a year or two. The going away party was yesterday.
Wishing price: 325K (down from 360K). Asked a guy at the party what the house would have sold for in ‘96 (my benchmark year) and he said, “80K- tops”.
A thousand years from now, archeologists will be digging up St. Joe’s statues up and down the old street grids of this era/strata and trying to piece together what happened.
I love it that Lake Realty in Seattle is freaking over the mortgage problems. They were one of the initial instigators of the “Get in on the equity train!!!” RE mentality in 1996. While other RE Agencies were still just selling homes to live in, Lake was ahead of the crowd, selling casino tickets to RE riches and pushing it hard.
Yeah, here in the western suburbs of Portland, places like my old place are listed at $280K. I sold mine (nice, with a hot tub/huge deck) for $156K in November 2000.
That’s the thing that gets my wife and I. We see these 30 year old starters they want 320-360K for that sold 5 years ago for less than half that and think “WTF are these people smoking?”
I always love to tell the realtors that we are renting a 3000 sq ft house in one of the better neighborhoods in Tualatin for less than what we’d have to pay for the crap we walk through at the low end here. It’s disgusting.
I was just looking at a nice 4/3 2100 sqft brick house in Fort Wayne, IN - $134K.
Mature trees, nice landscaping, but needs upgrades, so I’ll have to subtract that from any offer I make. Plus maybe delay the offer until the weather turns cold.
2001, a friend brought in Seattle near NOAA. She brought a 1945 military like house approximately 900 sqft. I think her price was $201K. She probably put in $20K of repair. Did she got in at a reasonable price? Last I visit, I notice that there were a few houses where she thinks the owner should just tare it down and restart.
“‘It depends on where you are and what you have,’ said Sanders. If, for example, it’s a townhouse up at Progress Ridge in Beaverton, Sanders says, ‘There are way more townhouses than we can absorb for a long time. It’s probably not going to sell.’”
Reading between the lines, Sanders prolly does not have any of those Townhouses at Progress Ridge in her inventory.
Very sly defensive mechanism Realtors (TM) like to use. When it comes to talking about obviously slow moving markets it is better to talk about somebody else’s territory and not your own.
Got 10% down?
“Twenty percent of July’s $281,400 median home price would be $56,280.”
So none of these noveau riche yuppie kings and queens have 56k? I do and then some. Guess it is better to wait. Maybe that Calvin guy was right.
Cinch-
My browser has freaked out and I can’t post underneath comments. I used to live a couple miles from NOAA (1990-’04). I like that area because it’s near one of my favorite parks.
In answer to your question, No, your friend didn’t get a “good deal” (unless she bought for investment purposes and then chose to sell last year, in which case she would have made out handsomely). Sounds like she still owns the property though, so if she can afford the payments and likes her home, no problem. It’s not a horrible neighborhood to be “trapped” in forever.
In yet another vain attempt to sell,friends in Seattle who’ve been trying to sell since May, just took their house off the market so it could be “staged”.
In May ‘06, I’m pretty sure that if they’d asked 540-550K for the house, it would have sold in a week. Which would have been great cuz that’s right about when the market convulsed for good, by month’s end.
Here’s the sad history:
May 4th: on market for 630K
@May 20th: considered accepting an offer of 550K, but the bank wouldn’t lend the prospective buyers more than 540K so that was the end of that.
mid June: on the advice of the realtor, spent 30K “upgrading” (paint, new doors, deck, etc.) and reduced price to 590K.
last week: switched realtors and took it off the market to “stage”. Won’t lower asking price but have told me they’ll happily take 500K now. Too bad they don’t just list it for that and sell. (Although, frankly, there are some much nicer homes in their ‘hood that are a better deal asking 520K now, plus jumbo’s a problem).
It’s painful to observe the excruciating details of friends chasing the market down in both Bellingham and Seattle, up close and personal. I’m bracing myself for when reality hits them in a few months that it’s “not gonna happen”.
I don’t feel sorry for anybody, I’m just astounded at the lack of common sense and the amount of delusion. No “street smarts” here at all.
Whoops, make that May ‘07 on the post above. My friends may not have any common sense, but I don’t know what year it is. Perhaps that makes us even.
Test
Hi Fester, Lisa and other Ashlanders. Couldn’t post underneath you for some reason. I used to live on High Street in Ashland a number of years ago. Do you live in that area of Ashland? I used to spend many summer days out at Emigrant Lake. My grandparents used to run the Corps ranch out on Neil Creek Road.
Hi SFGal,
I live near Hunter Park and Walker Elementary School. I don’t know anyone on High Street, but it seems a nice area. Briscoe School is now closed, partly structural, partly aging boomers moving in and a decline in kids in that part of town. Corp Ranch Road is home to McMansions these days. Otherwise, things are still nice around here. Still visit the lake with the family, enjoy watching the hawks circle…nice spot.
Hi Fester,
I went to Briscoe School in the 60’s. I believe I attended Briscoe when I was in the 4th and 5th grade.