Now Buyers Are The Ones Making The Prices
The Hudson Reporter from New Jersey. “In the past year, three construction permits have been issued by the town for the construction of three additional housing sites which were all approved. These sites, in addition to the housing that was already being built on the Meadowlands Parkway, will lead to the addition of 2,280 new units in Secaucus.”
“With all of this new available housing, one concern is that there will not be as great a demand for the properties once they are built. Realtor Denise Michaels said that Secaucus is one of many towns where apartment and condo prices have dropped in the past year by six percent of what it was in 2006.”
“‘There is an interest, but buyers do not seem to be worried that the prices will rise anytime soon,’ said Michaels. ‘And it looks like they won’t.’”
“‘Buyers feel that they are more in control now. It used to be a question as to whether or not they would be able to meet the asking price for a residency or a home,’ said Michaels. ‘Now, they’re the ones [who are] making the prices.’”
The Record from New Jersey. “This year’s slow market is likely to become even slower as the leaves turn and the weather grows colder. That is more good news for buyers: A slow market is a buyer’s market.”
“If you are house-hunting, you have options and you have leverage that buyers didn’t have 18 to 24 months ago when houses were being bid up and snapped up within days of listing. ‘Buyers have power in this market,’ said Cathy Denis of Century 21 Mainstream in New Milford.”
“Bob Lindsay of Coldwell Banker in Wayne, said: ‘You want to be able to look at the most recent sales of comparable homes. If you look at property that sold and closed six months ago, that property would be worth less today. What you really want to see are very recent sales and very recent contracts, even if they have not yet closed.’”
“‘If you see someone who’s just listed a house, and you can see that the seller and the agent have got a clue about pricing, then I’d go ahead and consider the house,’ Lindsay said. ‘But, if the price is unrealistic, I don’t think I’d act on it.’”
“The contract can be written to say that your offer expires in 24 or 48 hours, forcing the sellers to respond promptly. ‘I have seen that done a lot more lately,’ said Leah Selig of Kern & Rogers in Wyckoff. ‘It puts a little fire under the sellers when you say, ‘In 24 hours, this offer is over, and we’re looking somewhere else.’”
The News Journal from Delaware. “Real estate investor Mike Lundregan, of Manhattan, N.Y., has been sitting on his 1910 Victorian in Lewes for 14 months, unable to sell the historic home.”
“He bought the 2-bedroom house for $389,000 in December 2005 and spent $80,000 in renovations. An appraiser told him last year that he should price it between $590,000 and $600,000.”
“‘Subsequently, the market did a bit of a nosedive,’ Lundregan said. ‘I’m the classic case of somebody who tried to capitalize on the red-hot market and then saw the bottom fall out.’”
“He dropped the price to $525,000 after the house sat for six months. Last month, he dropped the price again, to $489,000. Interest has improved, but he still hasn’t sold. ‘I think buyers are waiting to see how low prices are going to go,’ he said.”
“‘It’s really hard to argue that prices have not fallen,’ said Vince Grillo, a Realtor (in) Greenville. ‘Homes are just not moving. There’s a lot of homes that are still grossly overpriced.’”
“In other words, if all the homes languishing on the market were priced lower, they would sell — and statistics would show home prices going down, Grillo said. ‘There’s an expectation gap between what sellers perceive the market to be and what buyers believe the market to be,’ said Grillo. Two years ago, ‘homes were selling faster than you could get signs in the front yard. … the train was leaving the station and you had to get on it.’”
“‘Now we’ve done a 180 [degree turn] where it’s perceived that there’s no value in real estate. There’s no sense of urgency. It’s been a challenge to get people to even look at properties,’ Grillo said.”
The Washington Post. “During the real estate boom, many mortgage companies were willing to make loans to people with spotty credit, known as subprime borrowers, or with no money for down payments.”
“Two years ago, Jose Rodriguez and his wife bought a $550,000 three-bedroom townhouse in Alexandria with a pay-option adjustable-rate mortgage. They also got a second mortgage of $55,000. They refinanced that one with HSBC to obtain a fixed rate and now owe about $105,000 on it after tapping into their equity for renovations.”
“Rodriguez said he has always paid on time, but he suspects that will change in December, when the lender for the first loan, Countrywide, will begin requiring them to pay principal and interest.”
“‘We are responsible people, we are working people, we have never been late,’ he said. ‘We’re trying to resolve this before December. Once we get there, it’ll get nasty.’”
“They are selling the house and got an offer for $499,000, which would cover what they owe Countrywide but not the HSBC loan and closing costs. They are now waiting for the lenders to agree to a short sale. If that doesn’t work, Rodriguez said, they will consider foreclosure or bankruptcy.”
The Star Exponent from Virginia. “The Three Flags development in Culpeper County is in need of a new builder after Ryan Homes has pulled out of the project. Located off U.S. 29 South and Route 299, the subdivision contains about 72 homes but is zoned for 1,012 single family units and condominiums.”
“The Reston-based company provided a letter to all subdivision homeowners regarding its decision to drop the project. It states that Ryan Homes is ‘more disappointed than you know with the status of Three Flags.’”
“‘With the change in the marketplace, we were placed in a situation where the prices we were under contract to pay for future home sites made it impossible to operate in the black,’ the letter states. ‘We have tried unsuccessfully to come to an equitable agreement with the developer on home site prices in order to continue. We were forced to walk away from an enormous deposit rather than make poor business decision to operate at a loss.’”
“Broker Sally McDevitt said homes were once selling in the subdivision between $300,000s and $400,000s but the prices dropped because building has slowed.”
“‘It’s just because there is so much competition right now,’ McDevitt said. ‘There’s so much on the market and so many of the houses are being resold for much less than these people paid for; so the market to build one is not as good as it was at one time. Why have one built if you can buy one for a song?’”
“Joan and Bert Benning bought their ranch-style home in Three Flags for $304,000 in January. The Bennings hope that Ryan returns to the project because there are amenities they bought into that are not yet complete.”
“In the meantime, the Bennings said nearby empty lots are ‘messy and the weeds are blowing over.’”
“‘We’re hoping they can work something out because we feel they can make a winning community,’ Joan Benning said. ‘It’s already a winning community, but a finished winning community.’”
NJ is a double-edged sword. We have the highest property taxes in the nation on top of the laughable, absurd asking prices. And yes, there always seems to be some wannabe who will gladly sell their soul to live in some “sought after” community. It’s ridiculous. How does a 550K asking price and 8K in property taxes sound for a starter POS dump on a 50 X 100 lot sound?
Sounds a lot like Florida.
here’s a FB from Reno story:
house explodes into a ball of fire on Saturday afternoon reports neighbor.
quick check of tax records shows a Mr. Bedell bought this turd on 7/17/06 for $470,000. any chance this might be arson? maybe drug lab gone bad?
http://news.rgj.com/apps/pbcs.dll/gallery?Site=J7&Date=20070902&Category=NEWS18&ArtNo=902001&Ref=PH&Params=Itemnr=3&rgj_description=Photos%20by%20Tim%20Dunn%20of%20the%20house%20fire%20near%20Plumb%20and%20McCarran%20on%20Sunday%20Sept.%202%2C%202007.&rgj_date=September
Maybe they were just trying to BBQ and things got out of hand. I’ve been in that position myself, so I have some sympathy.
Yea… I’m no longer allowed to buy the extra large lighter fluid boxes either… But without the mushroom cloud, how do you really know the coals are lit?
Neil
Oh jeez. That’s cheap in Los Angeles. Have you guys already bottomed?
like orange county calif?
Like the Chicago area too
Anybody know what the median price is in metro Chicago?
Syracuse has the higest property taxes. A house with an asking price of 500K will have 20K in property taxes. Look at CNY realtor .com. NY is a very disfunctional state. Dont ever move here.
Yeah but that’s probably the most expensive house in the city.
You get the wrong picture looking at % tax rates. What you have to look at is the $ amount of taxes paid by the same size house, on the same size lot, in a comparable neighborhood. That’s what matters.
Of course areas with lower house prices have higher tax rates. They still have to raise about the same money per capita.
I can’t wait for some bubble news from Hoboken.
I lived there for 3 years and there was some serious kool aid being passed around. That town is so damn corrupt and so out of control I hope it falls hard.
I can’t even begin to describe the nonsense I witnessed. I ended up in court for some crazy builder nonsense.
If there is anyone reading this blog that has anything to do with the destruction of the Clam Broth House, I hope you go bankrupt.
I’ve been looking around as you know and when the realtors try to throw “comps” at me, I tell them that the comps of the past six months are now meaningless as they were transactions which occurred during the end of the EZ lending period. The “new” comps are going to be set from August ‘07 on forward when most of the idiots who would pay anything to get into a house are squeezed out of the market and inventory is very high. We’ll “re-comp” in February, if you please, if you don’t want to take my offers now.
What is their response? ie, do they know that you called their bluff, or do they not “get it” yet?
They get it , they just want to find a greater fool who doesn’t know about what has taken place in August .. Today on CSNBC business channel they had 5 rich people advising the sheep on getting rid of debt and all the good stuff about getting rich .
I think the Rich Dad /Poor Dad author was one of the people on the panel .I just caught the tail end of the program .
Anyway ,now the so called experts are saying debt is bad ,which is the opposite of what they were saying during the RE boom .One of the guys on the panel said that people will be able to pick up real estate for 50% on the dollar coming up .Another rich expert, (I guess you just have to be rich to be on the panel),said in so many words that as long as you can get someone to pay 70% of the debt on a rental ,your OK.
What better way for a business channel to get a message out by using the “testifying method “by people who are already rich .I saw another program the business channel put on where some real estate millionaire was advising people to go out and buy a piece of real estate now within the next six months . I got the impression that this expert clown wanted to unload their real estate .
First , a panel of rich people, with a hidden agenda ,is not my idea of a objective program .Second ,these so called rich experts give some good advise mixed up with alot of BS.
The rich experts never discuss cost of holding property in a declining market, and if your talking investment ,the best time to buy is right before a upswing market . Since a upswing market won’t take place for years ,a investor has all the time in the world to purchase real estate without losing the opportunity to make other investments that will make more money in the meantime .
Like what?
SavingHoarding my dollars to buy US RE a few years down the line looks like the safest play on the horizon right now.I own gold, and I don’t see it going up. I have US and foreign equities. (I felt like I would be unpatriotic not to keep some money in the US … obviously I’m a moron.) Unless there is a sudden upward march in interest rates (oh please oh please), everything looks pretty risky right now (if not major downside potential, then plain old inflation risk).
(I guess you just have to be rich to be on the panel)
No, you just have to be a serial writer of investment/personal finance books to be on the panel. Regurgitating the same $hiat in as many books as you can.
Got 10% down?
Excellent point. I will use it.
Are you just testing the waters? Otherwise you are at least a year away from good prices.
“At least a year” is an understatement. It took from 1989 to 1996 in the 1990’s downturn. This time we peaked in 2005. The bottom won’t be in late 2008… But hey, no need to argue exactly when the bottom will be. We can do that discussion in 2009.
Got popcorn?
Neil
RE: “Bob Lindsay of Coldwell Banker in Wayne, said: ‘You want to be able to look at the most recent sales of comparable homes. If you look at property that sold and closed six months ago, that property would be worth less today.
Check the declining value box in the neighborhood analysis on a FNMA 1004 residential appraisal form and that loan is DOA.
I agree with you completely. Real estate people are a bunch of lying thiefs with the moral ethics of a dope dealing pimp.
In fairness to drug-dealing pimps, they usually deliver what you paid for. At least that’s what my realtor says.
The only “comp” you need is the market rent of the house (or a comparable house). Multiply it by 150, and that’s all the place is worth. Tops.
I’ve said this on other blogs and I’ll state it here: I’m a home owner and I think these people are smoking lighter fluid asking the prices they are for their p*iss-smelling dumps. These places haven’t seen a paint brush or bottle of windex in years and they’re “commanding” top dollar. Keep dreaming. If you guys waited this long, now is the time to really turn the screws. The industry made you bend over and take it for the last six years so now it’s time to repay the favor.
Thank you for that. I don’t think it’s quite time to turn the screws yet. We’re still in the phase I call Mexican Standoff II. Lenders won’t let anybody buy, so nobody’s selling. Only this time, these same sellers who rode out Mexican Standoff I * have resets hanging over their heads.
We’re just drilling the pilot hole at the moment. The screwdrivers come out Spring 2008. The power screwdrivers come out Winter 2008/2009.
—–
*Mid 2006 through Spring Selling 2007: Ran out of qualified buyers so nobody bought. Sellers, still having time before their ARM reset, refused to “give it away,” so no activity. Prices flattened.
2008 might bring new meaning to the post-Superbowl selling/buying rush that the REIC loved to talk about until this year.
“Lenders won’t let anybody buy”,
Interesting analysis, but allow me a minor quibble…lenders are plenty eager to lend, but only to those actually capable of buying - who at this time are largely people who want no part of RE.
Okay, how about “lenders won’t let JUST anybody buy,” which is what they were doing until August 10 or so.
“The power screwdrivers come out. . .”
LOLLers.
And Hoboken was a great place before the pretenders arrived and thought they were acting in a Scorcese movie.
Really, the Pretenders were a great band but must have fallen on hard times. I Didn’t know Chrissy Hynde could act.
Just a rumor but I talked to someone high up at Countrywide that said they are preparing to layoff 40% of their staff and that the company is in survival mode regardless of what they are saying publically. This person said the next 2 weeks are critical.
It’s a rumor until it happens but this person is in a place to “know”.
My, what a surprise.
Rarely see anybody in my local branch in an upscale Seattle neighborhood, and that includes the people (person?) who works there. It only opened about a year ago.
First they were making loans to people that could not repay them. Now they are making loans on collateral that is evaporating.
Not many takers for those “investments”.
They are gonners.
Thanks. This is consistent with the death spiral deal they did with Bank of America. Without the non-GSE secondary market, CFC is simply too big. I assuming the layoffs are happening no matter what and that even then CFC may not survive.
That’s a big blow to the REIC. This would be similar to dot-com layoffs I was apart of. Where they systematically had a small layoff round at first (which CFC already did) succeeded with a large layoff shortly after.
Survival was the name of the game after the dot-com bust.
Things don’t look great for the company that I’m at now (high tech, not public). Our revenue has been trending down this year, and I would not be surprised at a layoff by Q4. I have gone through three layoffs in my career, but I’m afraid this time I’ll still be on board if they let go of up to 60% of engineering. I would have to work twice as hard to pull my weight.
Ben, I smell a great weekend topic for next week. HBBers should describe what they feel the future is in their particular workplace. Details don’t have to be exact but a general overview would be very educational.
‘Homes are just not moving. There’s a lot of homes that are still grossly overpriced.’”
Exactly. We sold our house in February and have the cash sitting in the bank. We’re waiting until next year before even looking for a new place. We expect prices will slip further between now and then. Our old subdivision has 35 properties for sale, and only one (!) is in escrow. In many areas, the real estate market is almost paralyzed today.
Meanwhile, the bank is investing your savings into subprime mortgages. If its bank of America, they might even be illegal aliens. Comforting thought….
I doubt that any more money is going into subprimes. The move now is for lenders to get OUT of subprimes, not into them.
I agree with you, the mortgage companies and banks are really tighening up. I was talking to my friend from Florida last night and he said jumbos in FL are now at 9%.
i guess jumbo is taking on a whole new meaning to these idiots
Sub-prime borrowing is over unless you are a well heeled professsional with 100% kosher financial statements and squeeky clean tax records. The banks and their masters, the Financial Gangsters of Wall Street, are now totally concentrating on how to get back the money they are losing and might be losing in the future. How are they going to do it? By stealing from the 401k’s by pure manipulation.
The world might split in two, tsunami’s might wipe out coastal areas, earthquakes will kill millions but you can guarantee one thing 100% without fear of it turning out different. That is, the Financial Gangsters of Wall Street, of which Henry Paulson is one of the Godfather’s, will not lose money. Everyone else will - but not them.
Don’t worry if you spread it around many banks so that no where you keep above FDIC limit. That way, even after a CFC like run, uncle sam will pay up.
The banks have up to 99 years to pay FDIC insured money
Interesting:
A better link to the previous FDIC response:
BobR. This is such a mess it will take 3 years before it’s worth buying. Next year the mess will be revealed in all it’s glory but 2008 is waaay too soon to buy. Even if the bottom IS reached in 2008, 2009 - prices ain’t going nowhere for 5 years after the bottom is in. People will be so sick of hearing all the scams and rip-offs which have happened in the real estate (realtors) and finance areas (brokers and banks) most will be gun-shy where property is concerned for many years to come. The trend has turned. Sit back, pour a drink, settle into your favorite armchair and watch the play unfold. It’s going to be a very bumpy ride.
Plus it’ll take most people 3-5 years just to save up their downpayment.
Umm, you may want to replace “most” with “some”.
house next to me sold at a new low in 1997
seven years from peak
and that’s w a roaring stock market
Just be aware, that the double loan reset tsunamis don’t really decline until 2010/2011. Think of 2005 and 2006 vintage 5/1 ARMs resetting…
Were they still giving those out in 2005-2006? By 2006 I was reading about 3/1 neg-ams, and even 1/0.5 I-O’s with teaser rates for 2 MONTHS, which means resets in 2008-2009 or so. Buyers in 2006 were the bottom of the barrel.
Mike , You sound like Betty Davis in the movie All About Eve .
But anyway ,I really agree with everything you say in your post .I think people will be really turned off when they find out the truth about how corrupt the RE market got .
When a industry ,like the REIC ,betrays the trust of the real estate buying public like it has ,it will create a gun shy population . The loans investors are going to be so gun shy after getting ripped off ,that I would be surprised if they won’t need to insure all loans just to get investors to put up the money .
I also agree with you that after the real estate prices crash , they will remain low for years . There is never a quick turn-a-round after a crash .There are alot of conditions that are needed to bring on a appreciating market ,and by the looks of it those factors are not going to be present for a decade at least .
It’s also hard to tell how much overbuilding there was. It make take years to absorb the extra inventory in some areas.
“They are selling the house and got an offer for $499,000, which would cover what they owe Countrywide but not the HSBC loan and closing costs. They are now waiting for the lenders to agree to a short sale. If that doesn’t work, Jose Rodriguez said, they will consider foreclosure or bankruptcy.”
- Juan, er I mean Jose should be thankful that someone offered 499k.
Most poeple can afford a low monthly payment ….. but that never meant that they were qualified for the loan when it reset.
- Fast forward to California and multiply the Juans by 4 or 5 hundred thousand …
Fast forward to AZ. Lots of Juans and Juanitas are leaving the state. Our two janitors at the office are leaving because of the new law in Arizona. One is going to Kansas. The other is going to Mexico. They are taking their children with them. Nice gals but the law is the law. In that same building is an older white janitor. Why they don’t have him do the cleaning of our offices is beyond me. Like an AZ state senator said (not US senator), the intent of the law is to drive out the criminals, er, illegals, from Arizona. It will be painful at first but the economy will compensate. Perhaps wages will go up, but big deal.
We wanted to buy in Culpeper County, VA, in 2005, and you could maybe find a dump for $400K. Now it’s just massively different, but with about 22 months of inventory, it still seems a poor time to buy. Renting is still cheap. The new 600K “McMansion” next to our rental last year is in foreclosure this year.
who knows, may the next prez will chop some fat in DC
I see a Mexican casa in Jose Rodriguez’s future.
more like a casita
I wish I spoke fluent Spanish. I’d hit every local Hispanic neighborhood, church, and community group warning them of what sharks the REIC are - including, if not especially, their fellow Latinos who have preyed mercilessly on their lack of sophistication and naivity. It really pisses me off to see hard-working, simple people get screwed over by slicksters.
Southern California update. Yesterday, I went to visit a friend (known him for 30 + years) in Santa Clarita. He bought the property in December 2006 using First Magnus mortgage who, like scores of other fly-by night brokers, has since gone belly up. My friend is 75 years old, recently has had serious cancer, no income except for a small social security pension and survives financially by doing odd jobs for a relative who owns some stores. The property cost $475,000 and, of course, he has a sub prime.
The property situation in Santa Clarita blew me away. They are still building! Everywhere! Hundreds of new developments. Every few miles from Los Angeles to Santa Clarita on the 5 freeway, there were more and more building projects. Building pads being scraped and leveled. Construction equipment all over the place. It gets worse. Santa Clarita is smack bang in the desert and the population is exploding. My first question is, where is the water going to come from? My friend’s (over 55 complex) is okay but it sure ain’t worth $475,000. I would be prepared to buy if I wanted to live in an over 55 community (which I don’t) for $190,000 with a max price of $210,000. These are 2 bedroom 2 bathrooms units. Construction is the usual newly built track housing Californian deal. Ticky-tacky stucco sh*t boxes built so close to each other you can hear your neighbor fart. He told me the HOA are constantly cruising looking for petty violations like a not allowed “Welcome” mat outside the front door or wind chimes hanging by the door. Btw, it was 112 degrees. Everyone had their air conditioning blasting away with no thought of energy conservation let alone energy costs which are continually going to go up.
My overall impression was that California is a guaranteed train wreck with the train gathering speed every day. I am fully expecting the UK and Spanish property markets to crash and I wouldn’t be suprised to see California (and obviously Florida which is the poster child for stupidity) crash at least 50% from the top and possibly more. Thanks Mr. Magoo. You’re “The Maestro” sure enough….conducting the financial death march.
now that you are at it..include sydney/melbourne/perth (australia) delhi,mumbai,bengaluru (india),Ireland,Dubai,Canada, Panama, Parts of latin america etc etc…
This is a ginormous bubble. And inflation is coming!
Don’t forget Eastern Europe where prices are even more monstrous relative to incomes.
Only Western Canada (minority of the population) is bubble land. Toronto is somewhat overpriced and might not see nominal declines. You might also like to know that the French-speaking areas are almost bubble-proof, because they do not have a cultural preference for owning and will not pay more than renting. Montreal, which has about the same household incomes as Vancouver, is only 1/3 as expensive.
I’m flipping through the Dallas Morning News RE section looking at all the overpriced garbage and see the following Realtor BS describing some nearly completed condos in downtown:
“Although more than 70 percent of the residences have sold, some of the most outstanding values in the building remain. Current inventory includes one bedroom/study plans starting at $765,290…”
“These east facing residences have nighttime views of the “urban river” formed by the serpentine intersecting of North Central Expressway, Woodall Rodgers Freeway and Interstate 30.”
Yeah, we’ve got no problems here in Dallas - Three quarters of a million dollars with a nightime view of the highways intersecting. Really cool if you’re messed up on ’shrooms, but that crowd normally doesn’t have the 20% down you’ll now need to get the loan. We got hundreds of similar dumps just getting ready to come online in the next six months alone, and the building continues.
Yes, the condo scene in Uptown Dallas should be interesting. I bought one of the small penthouses in one of the older highrises for $163 sq ft in 1998 and sold in 2003 for $235. While I lived there, the skyline view from my balcony (facing away from downtown toward Turtle Creek) literally doubled and it looks like they have built even more since I moved. Still, this is NOTHING compared to Florida.
I took ’shrooms once when I was 19. I remember thinking, “this isn’t for me” when I watched two of my buddies chasing a duck. I doubt I will be buying under the ’shroom influence any time soon.
Did they catch the duck? You left out the most significant part, man.
If you were all on ’shrooms, are you really sure there was a duck?
What were their intentions with the duck? That’s the disturbing part.
They must be from out of state. That kind of money doesn’t exist in N TX except for the Park Cities.
“‘We’re hoping they can work something out because we feel they can make a winning community,’ Joan Benning said. ‘It’s already a winning community, but a finished winning community.’”
Surely she means wHinning community.
I wonder when the penny will drop and realize this will NOT get finished and they are stuck with a bombsite for a view.
I live in Jersey City and have seen the enormous run-up in prices here over the past 5 years. While I have noticed some modest price declines on a few properties here and there, in general it doesn’t seem like the market has changed all that much.
There is non-stop construction going on in the downtown area of Jersey City. There are literally thousands of condo units under construction, not to mention the massive amount of new construction that has been put up in the past three years. Most of the new buildings advertise themselves as “luxury” buildings and start one br apts off of at around $475-500k. Many of these buildings have monthly maintenance fees of between $500-700. It is hard to imagine that many people will be willing to take on the kind of monthly nut it takes to pay a jumbo mortage, NJ property taxes and maintenance if they can’t count on rapid appreciation. It will be interesting to see how it plays out in the next few years. I wouldn’t be surprised to see many of these condo towers abandoned halfway through construction.
Every city I’ve traveled to the last year or two is in the same boat - Fort Myers, Tampa, Miami, Phoenix, Boston, Vegas, NYC, Jersey City, and of course Dallas where I live, as well as most of the surrounding ‘burbs around here, etc., etc., etc. Even after the MSM finally picked up the story and all of the collapse of the last 6 months, it’s impossible to really put your arms around just how severe this is going to be. The billions and billions of dollars tied up in overpriced “luxury” condos alone is beyond shocking and they are everywhere as far as the eyes can see. Dark empty buildings everywhere and in every major and minor city.
Ditto, I have seen the same thing the past two years in New York, Reno, Seattle, all of Florida, Aspen, Lake Tahoe, San Fran, Silicon Valley, Western North Carolina, Denver and Victoria Canada.
“The billions and billions of dollars tied up in overpriced “luxury” condos alone is beyond shocking and they are everywhere as far as the eyes can see. Dark empty buildings everywhere and in every major and minor city. “
And while these are the biggest boondoggles there is also plenty of empty lots where productive and taxpaying businesses and homes used to be which were bulldozed and are now empty because of a “luxury” condo project which simply ground to a halt. I have one down the street where a motel, restaurant, and boat marina/storage are now an empty lot with some new condo foundations sticking up which no one has touched in 6 months.
Same thing happened in Gainesville at the intersection of University and 13th St–businesses destroyed, loss of property and sales tax revenue, for a condo project that has now lost funding (but not without getting a giant tax break from the city). It’s a huge eyesore and waste.
Despite this, the condo mania continues in G’ville. Not that anyone is buying. I wish the crash would accelerate and the construction stop. We are losing all our trees for unneeded and often soon-to-be abandoned projects.
“If you see someone who’s just listed a house, and you can see that the seller and the agent have got a clue about pricing, then I’d go ahead and consider the house,’ Lindsay said. ‘But, if the price is unrealistic, I don’t think I’d act on it.”
That ’s why nothing is moving. Asking prices are so high, that potential buyers don’t even start a negotiation. It to frustrating to deal with unrealistic sellers.
Later in the same article:
8. Don’t lowball. It’s tempting in this market to offer way below the asking price, but, in the fine art of negotiation, that will only offend and alienate the seller.
“One of the things I see with buyers, especially investors, is they go in with ridiculously low offers — like $100,000 below asking price — and they insult the seller,” said Denis, of Century 21. “You should make a fair and reasonable offer.”
WTF? There is near complete agreement in this blog that we should insult the sellers.
If you don’t insult the seller, your probably offering to much.
If the “seller” doesn’t want to ring your f—ing neck then you offered too much.
Yea… but at this time the sellers are not ready. I prefer silence.
Got popcorn?
Neil
“Denis,” of Century 21, said, “They come in with ridiculously low offers.” Um, Denis…..that’s the art of buying and selling, you Bimbo. Smart buyers buy low - and sell high. Not, “I know you are selling for $500,000 but would you be too insulted if I offered $485,000? Oh, dear, I hope I didn’t upset you.” Instead, you go in and get into the realtors Beverly Hill wind tunnel face. They are as*holes anyway. Don’t worry about being polite. “Your client wants $500,000? I’ll offer $325,000. You’ve got 24 hours. If not I’m dropping the price to $300,000 and also looking at elsewhere. Tons of stuff is coming onto the market. Tell your client the property is going to be worth $300,000 in the next 2 years but I’m willing to be generous and gamble and throw in another $25,000.”
And sellers didn’t insult buyers during this run-up. If the offer wasn’t “at” or above asking they wouldn’t even look at the offer. I’d say since ‘04 anyone turned down was done a big favor by the seller.
What was that saying. Be nice to the little guy while you’re climbing the ladder because you may meet him on the way down.
“in the fine art of negotiation, that will only offend and alienate the seller.”
Good. After all, I’m the one with the money. Don’t offend my money by having high asking prices. Sell now or be priced in forever. It’s my money…I’m not just going to “give it away”. Nor do I want to throw my money away on mortgage interest. Plus, I have several potential sellers looking at my money, so you may want to lower your asking price before we get into a bidding war for my cash.
“in the fine art of negotiation, that will only offend and alienate the seller.”
Good. After all, I’m the one with the money. Don’t offend my money by having high asking prices. Sell now or be priced in forever. It’s my money…I’m not just going to “give it away”. Nor do I want to throw my money away on mortgage interest. Plus, I have several potential sellers looking at my money, so you may want to lower your asking price before we get into a bidding war for my cash.”
Well said!
I plan to memorize this for future encounters with seller and Realtors! Especially the ” before we get into a bidding war for my cash”
I agree. They need to convince the buyer to help spend his money with them. Remember the price is set by the buyer.
What some one is willing to pay for the property.
The fine art of negotiation? Geezus, it’s just a f*n’ house, not nuclear disarmament.
The lack of traffic at open houses and such is just the buyers thinking, “I’m only willing to pay half what this guy wants but that will insult him so I’m just going to wait. When he actively lists the house at a 40% discount from the current price I’ll come back around and look at it and THEN offer him a 10% lowball”.
Sellers who wonder why their houses aren’t selling need to shake the concrete out of their heads and get what’s going on.
I will wait to insult sellers with offers in a few years when they expect it.
Silence is the greatest insult of all.
Right NYCityBoy, don’t even give them a offer if they are priced to high . If you have a listing that is priced to high ,the seller is expecting you to come within 10% of his wishing price .I knew someone who wanted to buy a property in a certain project . The buyer sent out a flyer to all the owners in the neighborhood and proposed a price that they would be willing to pay for their property ,apond inspection .The buyer gave their phone number and said , “Call me if your interested in selling as well as saving some money by not hiring a realtor .”
Just keep in mine that you have to know what your doing if you send out a letter or flyer to potential sellers . Also you don’t have to mention price in the flyer ,but just say you would like to buy in the neighborhood .But ,that being said ,prices are going to go down more so why buy just yet ?
Why not get an email account at hotmail.com and don’t use your real name in the account name. Then make your offers to the realtor by email. If you “insult” the seller, they won’t know who insulted them so you haven’t lost any future opportunity.
and the realestate agent who overpriced the home in the first place. My policy is “DONT ASK DONT GET”
Watched Flip That House for the first time, last night. Pretty funny show. They had this idiot on, with absolutely no construction experience, trying to flip a POS home. The guy quit his job to flip homes, and at the end of the show he was going back to work. It didn’t go well.
Oh yeah, all the profits are “projected” now. There were no actual buyers. What a surprise.
At the end, his “projected” profit was $45,000, but that was the top end of the range the realtor gave him. Assuming it only sells for $15,000 less, which is quite generous, he has other costs to look at. Maybe he nets $20,000. But he and his dad spent 3 months on this debacle. So each one gets $10,000 for 3 months work?
Doesn’t sound like lifestyles of the rich and famous to me. Not when you consider the extreme risk they took to do this. And the scenario I painted could easily turn into a massive loss, meaning they were paid nothing for their time. The home wasn’t sold.
Good luck.
Saw a real flip on some show, where the developer actually knew what he was doing. It was a small 2 story that was in bad shape. At the end of the first day they had gutted the interior down to the studs and had a new roof on it. Did a real nice job. Don’t remember the location but it must have been somewhere inexpensive because they only paid $15,000 for the place and sold it for $120,000. Though it might have been recorded a few years ago.
2 houses side by side for sale in Santa Cruz. Really nice neighborhood and great views. Both are asking for 1.3 million. Both are vacant.
One of them sold for 999,000 in 2005.
What a joke! I was thinking they’d be a good deal for 700K.
On Sunday, while driving .5mi to Safeway, my wife and I saw 6 signs for open houses.
Got surfwax?
C
My wife told me that a friend of ours, who is looking to buy a house, came up to her yesterday after church and told her to thank me for suggesting that she wait at least until next summer to start looking, because prices will be significantly lower. She (the friend) asked my wife how I knew so soon about the housing bubble bursting. My wife told her that it was from me hanging around this blog, instead of reading and blindly believing everything the RE people were saying. Thank you, Ben!
Doug - Thanks for Applachian State putting it on the bloated over rated Wolverines!!!
“My wife told me that a friend of ours, who is looking to buy a house, came up to her yesterday after church and told her to thank me for suggesting that she wait at least until next summer to start looking”
She couldn’t even bake you a f—ing cake? Unbelievable!
“If the lender accepts less than what is owed, the forgiven debt is considered taxable, he said. “Even if they get to the finish line, when they’re told what the terms are, they say: ‘That’s crazy. Why am I going to do that? I’ll have a tax liability,” Boutcher said.
A cash-strapped borrower should also think about a “deed in lieu of foreclosure,” which means giving the lender ownership rights without the shame of a foreclosure.”
This is why the Bush Plan will have the unintended consequences of driving down prices very quickly. A lot of people will walk if they aren’t taxed on the forgiven debt. SWEET!
“The Reston-based company provided a letter to all subdivision homeowners regarding its decision to drop the project. It states that Ryan Homes is ‘more disappointed than you know with the status of Three Flags.’”
Furthermore, we are lowering the flags to half staff, removing one, and renaming the development toTwo Flags.
Thank You
I saw this as good news. Ryan pulling out means that 940 crap homes and garden apartments (ie condos)’s worth of concrete and precious lumber resources won’t go to waste. People want housing? Let them eat inventory.
How about re-naming the community to to one finger.
We’ve had multiple fires up where I live.
I’m wondering if people aren’t torching their houses for the insurance money if they can’t sell them.
(They no longer go out to dinner, buy clothing or go to movies. Still, they have not been able to pay their mortgage on time in the past six months. “It’s just adjusted to where we can’t keep control of it,” said Kimberly, 28.)
how are the consumer #’s still holding up when it seems like everyone is cutting back on going out and etc?
how are the consumer #’s still holding up when it seems like everyone is cutting back on going out and etc?
Just like weight loss, consumers don’t tell the truth. They _intend_ to save, and cut back, but doing it is another thing.
Truth has little respect in the USA, it is not welcome.
how are the consumer #’s still holding up when it seems like everyone is cutting back on going out and etc?
I know of two families (mine included for two years now) who have cut way back voluntarily, and two not voluntarily. It will have to show sometime.
already showing in car sales. I assume that people are going to use credit cards for awhile. In my mind, increasing consumer spending at this time and with no savings is a bad thing. no matter what the kudlows of the world say
I get sick when the cnbc reporters report with glee that consumer spending is holding up. that’s not a good thing in our position/
I’ll react with glee when they report consumer spending is down.
I’m not expecting any real cut until October. Mid to late October. Airlines are going to hurt… resort hotels will have to discount. Overall, Christmas 2007 is going to suck.
J6P is being slowly cut off. He’ll figure out ways to get more credit… but think about the timing of the credit markets. As all appetite for CDO’s are lost… where are the retailers going to get the cash for “HDTV, no payments for a year!” They cannot even borrow in the commercial paper markets against a CDO… that breaks the model.
Got popcorn?
Neil
I think the Fed will step in and start monetizing the toxic debt. The responsible middle class will face the long rubber glove yet again. They will not allow the credit markets to freeze.
Quote:
“He bought the 2-bedroom house for $389,000 in December 2005 and spent $80,000 in renovations. An appraiser told him last year that he should price it between $590,000 and $600,000.”
A reasonable price for a 2 bedroom is about $180,000. He overpays by $200,000, puts in $80,000 in renovations that he thinks a buyer would want (not necessary what a given buyer would have spent the 80K on). Plus if the house needed 80K of renovations, it probably wasn’t worth close to the $180k in my benefit-of-a-doubt estimate.
So his total investment is $470,000 and the house is probably worth no more than $200,000 after the renovations, and this greedy jerk wants over half a million for it. I hope he gets burned.
I’m renting a house for $1600/month in a quiet neighborhood. The house was on the market for $315K and is probably worth about $160K, 10 times my rent. I won’t be buying for at least a year, and if this crap with overinflated prices keeps up, maybe not for two or three.
Any guesses on when sellers will finally crap their pants and lower prices to the 1997-1999 levels?
I don’t know when or if we will reach 97-99 levels. We first must reach 03-04 levels…when the “fog a mirror” financing began. Then we’ll see if there is any support around that level.