Real Estate Is Turning Into A Money Pit
The East Valley Tribune reports from Arizona. “Cash-strapped homeowners facing foreclosure are abandoning their homes in higher numbers and leaving behind potential public safety and health risks. City code enforcers and county health officials are saying many of the vacated houses are showing up in newer high-end subdivisions historically immune to such trends.”
“And it looks like there will be more empty homes dotting the Valley. More than 2,400 foreclosure notices were sent to Valley homeowners in July, according to the Information Market. Last month, more than 2,800 were mailed out as of Aug. 30 — about 93 per day — according to the firm.”
“Currently about 37 percent of the houses for sale in the Valley are listed as vacant, said Jim Sexton, owner of a Phoenix based realty firm.”
“Three years ago there were about 20,000 to 25,000 houses for sale statewide. ‘Now there’s about that many vacant homes just in the Valley,’ Sexton said.”
The Arizona Republic. “Metro Phoenix home sales and building are off 20 percent to 30 percent from last year - which was down 30 percent from the overheated housing market of 2005, according to RL Brown, housing analyst and publisher. Home prices are down about 5 percent. Foreclosures have climbed 10-fold. A record 50,000-plus homes are for sale across the Valley.”
“Many companies and real-estate buyers and sellers thought…that the Valley’s strong population and job growth were enough for housing to boom awhile longer. They weren’t.”
“‘I have yet to meet anyone who thinks they predicted a market downturn quick enough,’ said Landiscor Aerial Information President Nora Hannah. ‘It takes about six months to realize a slowdown isn’t just a blip.’”
“Brown said Arizona companies need to face reality and try to make money in the current housing climate, because a repeat of 2004 and ‘05 isn’t going to happen.”
“‘Businesses that made a lot of money because of the housing market a few years ago better expect to give some of it back this year,’ he said.”
“‘The slowdown in housing and now the rise in foreclosures are putting pressure on prices,’ said Mary Gomez, a West Valley real-estate agent. ‘If people don’t need to sell, they should wait.’”
“Many believe the southwest Valley, which has much vacant land, is an indicator of where the overall Valley real-estate market is headed. Goodyear, Avondale and Buckeye are among 2007’s 10 fastest-growing suburbs in the U.S.”
“Sharon DeMoss, a realty agent in Goodyear, said…because of the subprime meltdown, the market is flooded with listings.”
“‘Many of them (resale homes) are overpriced,’ DeMoss said. ‘We are sitting with our sellers and saying, ‘You guys have to be the lowest price in your subdivision for your floor plan.’ And many times that doesn’t even do it because many buyers are coming in and saying, ‘I don’t think the bottom is here yet. If I pay $250,000 for this house, how do I know that in six months I’m not going to be able to get it for $200,000?’”
“DeMoss said new homes are a great buy now because builders are cutting prices or offering incentives.”
“‘A couple of years ago, these same builders were making people stand in line to get on a list to get a house,’ she said. ‘My personal opinion is that during that 2005 frenzy, many builders went out and bought a whole bunch of land, and now they have no choice but to go ahead and build.’”
From AZ Family. “Just a few years ago, housing permits were going through the roof and many speculated that Buckeye could soon pass up Mesa when it came to the number of homes. Well, a lot of those homes in Buckeye were built, but that doesn’t mean people are living in them.”
“As lifelong resident and Buckeye Realtor Brenda Bruehl will tell you, many of the homes are vacant. ‘There’s a lot of investors that bought and couldn’t get them rented out so it’s been sitting vacant,’ Bruehl.”
“According to the Arizona MLS, there are 708 houses for sale in Buckeye and 241 of those are sitting vacant. That’s more than a third. ‘I remember when there was only 500 homes in Buckeye,’ Bruehl said. ‘Seven hundred and eight active is a lot.’”
“According to data compiled by the research group that tracks foreclosures in Maricopa County, there were 453 foreclosure filings alone in the town of Buckeye this year. That means Buckeye makes up 10 percent of foreclosures right now compared to the rest of Maricopa County.”
The Arizona Daily Star. “The developer of the Santa Rita Hotel renovation in Downtown has dropped its idea of turning the property into high-class condominiums, citing softness in the housing market.”
“Building owner Lopez said he’ll turn the building back into a boutique hotel. It’s just not a good time for condos, said Lopez, whose company HSL Properties owns many apartment complexes in Tucson.”
“‘The whole housing market is extremely soft, prices are falling and the mortgage market is very difficult,’ he said.”
The Daily Herald on Nevada. “Walking through the gated community of Black Mountain Vista on a hill in Henderson, Nev., Thomas Blanchard offers a guided tour of real-estate woe. A row of stucco duplexes that recently sold for as much as $500,000 sit empty.”
“‘That’s a repo,’ the real-estate agent says as he stands in front of 678 Solitude Point Ave. Then he points to the adjacent houses, where yellow patches blot the spartan lawns and phone books lie on front porches, their covers bleached from weeks under the desert sun. ‘No. 680, repo; 684, repo. Those two at the end, repo.’”
“Three years ago, this Las Vegas suburb was teeming with modern-day prospectors armed with low-interest mortgages, all hoping to strike it rich in real estate. Now, what started with the subprime-mortgage mess and subsequent credit crunch are turning communities like Black Mountain Vista into luxury ghost towns.”
“Real estate is turning into a money pit, sapping the fortunes of home buyers, hedge-fund managers and house painters alike. The really bad news? This is only the beginning.”
In Business Las Vegas from Nevada. “Not even the luxury single-family home market, which had been a bright spot, is immune from the housing slowdown in the Las Vegas Valley. Sales of new $1 million-plus single-family homes during the first half of 2007 fell nearly 34 percent from the same six-month period in 2006.”
“‘I think there is a common misperception that the luxury (home market) hasn’t fallen,’ said Brian Plaster, president of Signature Custom Homes, who predicted the second half of the year could be worse.”
“Luxury homebuilder Toll Brothers blamed part of its dismal third quarter showing when it had an 85 percent drop in its profits to its showing in Las Vegas. The company reported a $29 million write-down in Nevada, the same amount as in California, and reported it’s renegotiating deals and trying to reduce its land options.”
“In a recent report, Toll Brothers rated Las Vegas as an F minus, but CEO Robert Toll said last week, ‘You might add another minus to that.’”
“‘What are we doing about it?’ Toll asked. ‘We are out there with the rest of the builders in Vegas praying. There’s not much you can do. You can’t advertise your way out of that situation. You just have to wait for the market to come back. Yes, in the last eight weeks we have taken seven agreements. So that is what we consider real bad.’”
“As sales have declined, the inventory has grown, in part because of more existing homes coming on the market.”
“‘More people were able to buy in that price range, and they stretched their financing and maybe they shouldn’t have,’ said Kenneth Lowman, broker/owner of Luxury Homes of Las Vegas. ‘They bit off more than they could chew with adjustable-rate mortgages. Their payments all of a sudden go from $4,000 a month to $7,000, and they are forced to sell.’”
“‘Even the wealthy are affected by the credit crunch because interest rates have risen on jumbo loans, making it more costly for them to purchase, Plaster said. ‘I think people are scared right now,’ Plaster said. ‘They don’t know what’s going to happen in the market.’”
“Despite the pullback, the luxury market is faring much better than the market as a whole. New-home closings are down nearly 43 percent for the year, while existing-home closings are down nearly 35 percent.”
The Gazette Journal from Nevada. “As the number of building permits dwindle in Washoe County and local governments discuss staff cuts, spending restrictions and hiring freezes, experts say the longer-term effects of the building and housing market slump have yet to be seen.”
“‘The bubble has burst,’ said Tom Cargill, an economist at the University of Nevada, Reno. ‘This is the beginning of how it’s going to play out and spread through the economy.’”
“While building permit numbers were down in Reno, Sparks and Washoe County as compared with the previous year, single-family home permits showed the steepest decline, 50 percent or more. In Sparks, single-family home permits dropped 57 percent.”
“‘The direct and indirect effects keep going,’ Cargill said, adding the slump has a chilling effect on people not directly affected by the real estate or construction industries.”
“‘There’s a lot of uncertainty in every part of the economy,’ he said. ‘The gaming industry and tourism in general will also take a hit, not so much because of what’s happening here but from what’s happening in California.’”
“‘The economy is not going to collapse,’ he said. ‘We’re looking at a readjustment in (real estate), an important sector of the economy.’”
“‘Even the wealthy are affected by the credit crunch because interest rates have risen on jumbo loans, making it more costly for them to purchase, Plaster said. ‘I think people are scared right now,’ Plaster said. ‘They don’t know what’s going to happen in the market.’”
They don’t know? Simple, I’ll help them… the POS you rent from the lender is going DOWN, DOWN, DOWN in value with every passing day. Say goodbye to HELOCs and free money. Say hello to higher interest rates, inflation, and foreclosures.
See, it’s very simple.
As kid, I remember wondering why the media was always so surprised by current events. Didn’t the the grown-ups know anything about what was coming in the future?
It turns out they didn’t.
Either they did not know, or they benefited by pretending otherwise.
or were told by the higher ups to leave out a story
or they were ignorant!
the high-end is getting hit? I thought they could pay cash?
I constantly hear this too about the high-end retailers. it leaves out psychology though. I think in a general era of euphoria, even the rich can get carried away.
the notion that rich people will may higher prices simply because they are rich is redonkulous.
a friend of mine’s father builds multi-million dollar yachts for the rich. when clinton passed the luxury tax he all but had to shut his doors. the rich refused buy new yachts. could they afford the tax? hell yeah…there fracking rich. they just are not stupid.
shortly after the tax was repealed and his business was saved.
The rich are not stupid. They are powerful. Who do you think got the tax repealed in the first place?
They just had to make do with their 80 foot clunkers until Uncle Congressman fixed the problem.
there also was a recession and the US companies had more lower-cost competition from abroad. it wasn’t all the tax.
“a friend of mine’s father builds multi-million dollar yachts for the rich”
The news just interviewed a multi-million dollar yacht builder the other night (housed in FL I think) who said he wasn’t worried because of the world economy and there were a lot of wealthy people available to purchase yachts. Gotta lov their lack of foresight.
I know someone who bought a $3.1 million house with a $2.3 million mortgage (the coming price drop is really going to hurt).The rich are over-reaching also, spending like drunken rock stars.
Read the book Richistan. It’s a real eye-opener.
That is on my to read list.
There should be sequel to that called, “Indebtedville”.
I agree with every assertion except inflation. Falling prices are deflation, not inflation. Deflation and insolvency go together just as surely as inflation and declining purchasing power.
I’m sorry, but I don’t understand how you can be rich and have payments. Payments just don’t suggeset rich to me, they suggest a highly paid debt slave.
It’s for asset allocation.
If you can pay 5%-6% on a mortgage and earn 10%-12% in the stock market/oil/gold/other real estate investments then it’s better to keep a mortgage. Yes, there’s a risk to owing others money, but not a big one if you’ve got adequate reserves. The money isn’t all tied up in one thing so, theoretically, the risk is spread about.
For similar reasons it also makes sense for us peons to finance cars with favorable terms (especially 0% promo loans, or those with lower than market interest rates) when possible. Put that $25K you’ve saved in the bank or a CD at 5% and pay 6.5% on the loan. You are actually paying only a small amount of interest and have the cash for emergencies.
yep… by having reserves (cash in the bank), a setup doesn’t bankrupt you.
Simple…why spend 1 million dollars today when the builder will sell it to you for $700K next year. I have dealt with million dollar buyers and they are very very particular about the purchase(the ones that have the real money 20%-30% down). They want to spend $1 million for a home that looks like $2 million. Gone are the days when someone wanted to show off by saying hey I will take the house at 100% financing.
Not so simple as black and white…
The Federal Reserve has created this mess moving inflation from one sector to the next. Unless this country becomes more fiscally responsible, we will continue to see low interest, hyper-inflation, dollar-devalue, and higher debt/income.
Also WHEN China decides to unload their worthless $1tril USD reserves and the Japs can’t buy anymore of our debt (treasuries)…where do you think this country is headed if you think we have problems with our economy now. You think $3/gallon is bad just wait….=)
We need to shutdown the Fed Reserve and go back to a Gold standard.
Hey Slim - good news from AZ - it’s after noon there - cocktail hour started? Being from CA it’s hard to tell who is living in the more dangerous housing time bomb.
Sorry, I’m not drinking today.
Remember those roasted chili peppers that I was groaning about yesterday? Their aftermath is telling me that I need to be extra-nice to my digestive system.
I’ll have one for you. I’m out of aspirin.
Aspirin? Don’t you hear what he’s saying? Dude needs an icecube suppository, not an aspirin.
Sorry Slim. I too disdain the human flame-thrower thing.
–
From Wealth Machine to Money Pit in just two years?
Jas
got equity?
“‘What are we doing about it?’ Toll asked. ‘We are out there with the rest of the builders in Vegas praying. There’s not much you can do. You can’t advertise your way out of that situation. You just have to wait for the market ——-
- I thought that they were meeting behind closed doors today with the Fed?
Pray hard enough, and maybe Jesus will send some sort of firestorm that will destroy the thousands of spec homes you built in the middle of the Arizona and Nevada deserts, and you can start all over again. Short of that, don’t know what heaven can do for you.
Lieutenant Dan Taylor: Have you found Jesus yet, Gump?
Forrest Gump: I didn’t know I was supposed to be looking for him, sir.
Someone told me Jesus was the answer…but I forgot the question.
Here’s a shocker for you:
The Arizona Republic. “Metro Phoenix home sales and building are off 20 percent to 30 percent from last year - which was down 30 percent from the overheated housing market of 2005, according to RL Brown, housing analyst and publisher. Home prices are down about 5 percent. Foreclosures have climbed 10-fold. A record 50,000-plus homes are for sale across the Valley.”
Year over year numbers are skewed because this time last year 06 sales were allready down from 05. Duh!!!
You never hear this from NAR and their new hand puppet Yun. Sales have been declining since end of 05 or beginning of 06 depending on the area. Sale numbers today should be compared to the same month in 05 and should be compared with 05 thru the next few years to get a true picture.
How are they tabulating prices? Prices are down only 5%???
That’s less than sales tax. Can I get a good number???
Can a Broker get a table dance??????
Speaking of table dances… Houston is the titty bar capital of the U.S., except for maybe Atlanta. I swear I saw Bill Gates in sunglasses and a cap at the Men’s Club on Richmond Avenue several years ago, before he was married. He was surrounded by 4 beautiful ladies, but he looked awful nervous. Like somone was gonna recognize him or something.
I’m not sure what this adds to the conversation, but I’m just trying to keep things lively.
I don’t know what it ads to the conversation but thanks for painting that mental picture of Bill Gates naked.
It’ll replace Viet Nam in my nightmares.
How about helping a few FB’s with all that money you got from cashing in your stock options???
The fed told him to start praying.
It does not matter what the Fed does, even at 0% fund rate no one will buy the loans anymore so banks have to hold them. If Banks are holding them they will demand standards and if there are standards it cuts demand WAY down. So if demand falls for something what happens to prices…they fall. This is the basic truth that can not be changed the game is over, the engine has no gas left in it and is just coasting at this point.
You are absolutely right. The problem now is that the business model of buying and selling mortgages is dead. There is no secondary market right now. All the big banks have to portfolio all their jumbos, sub-prime and home equities. Of course that means higher standards, lower ltvs and most importantly PRICING OF THE RISK CORRECTLY.
I live in a semi bubble area where prices are still reasonable compared to incomes. Even so, prices only have to decline more than 5% a year for the rent vs buy equation to get tilted heavily toward renting (and that’s with a 15 year loan). For new purchases even a flat market makes buying a long term commitment. The problem here is that the rental market is dominated by apartments/condos and student housing near the university. There are very few houses offered to rent that are suitable for a family with young children. It just doesn’t pay to buy a rental around here, and with low appreciation we didn’t have flippers buying SFH, that activity was focused in the condo market.
Where ??
hehe…reminds me of a quote from the movie sling blade.
“it ain’t got no gas in it”.
The low rates pushed prices up to 2004. From then, it was the liars loans that pushed the market the next two years. No matter how low the FFR is, the liars loans are gone. I’m sure there are those who want the GSE’s and FHA to insure liars loans and the GSE’s are doing that to some extent now.
“‘I have yet to meet anyone who thinks they predicted a market downturn quick enough,’ said Landiscor Aerial Information President Nora Hannah. ‘It takes about six months to realize a slowdown isn’t just a blip.’”
Wink, wink. Maybe they are reading you blog Ben.
wow, a whole industry void of logic!
Never knew it was possible. Simple Math would allow for at least one person to have some sense of logic, but now one? wow
If us peons knew what was going to happen, no one else did?
This and other bubble blogs have been around for three or
four years. We’ve been SCREAMING “MARKET DOWNTURN!!”
HEY NORA, YA’ DEAF!!!
You read a moronic statement like that and you realize why they invented booze.
Jose’, take me away, make it all better. I don’t want to think about the stupid people making uniformed but important decisions.
In related news Nora Hannah recently moved into a hotel from the cot she was sleeping on in the rubble of her house that burned down 6 months ago….”it took me 6 months to figure out that my house burned down and that I should probably move”.
Yep, the MSM always quotes the best and brightest…..
oops…er…your blog. Wink.
“Real estate is turning into a money pit, sapping the fortunes of home buyers, hedge-fund managers and house painters alike. The really bad news? This is only the beginning.”
And those October resets are just waiting in the wings. Reality is a hard school.
It should be a very entertaining winter.
You are a sadistic bastard, aren’t you…
Private sellers in PHX area are screwed, the builders are offering up to $80K in incentives plus a brand new bigger house for the same prices. How can you compete with that ?
hope the taxes on a short sale are temporarily dropped.
And if this happens, TIMBER!!!!
To prices, that is. It would be a madhouse.
You lower your price!
How can you compete with that ?
You can’t…We discussed to this over a year ago hear on the blog…The big builders will crush the resale market if need be…
question: What would be “growing” industries with the housing downturn, and how could one break into these fields? E.g., credit counseling, BK, repo. thanks!
divorce law
Moving to NJ,
You nailed that one! I’m pretty sure Suzanne researched it.
Alcohol
Truly this like waiting for the tub to drain. Just go about your business as the market sets up a whirlpool and takes all the sludge down the drain.
Funny that this “money pit” post should come during this week. I’m house- and cat-watching for a musician neighbor who’s on tour with her boyfriend. (He’s also a musician.)
Well, I can speak freely about what I’m seeing while I’m setting out the kitty food, and that’s what I’ve been doing. My neighbor bought her house early last year, and, to put it VERY nicely, the place is run down. And, IMHO, she overpaid by about 20-25%. And the cats aren’t disagreeing with me.
Since it’s so run down, it’s going to be a quite the project to fix up. In other words, it’s a money pit.
As much as I grouse about the condition of This Middle Aged House, it’s paradise compared to my neighbors’ place. Can’t help thinking that I got a lot more for my money than they did. I’ll have to gloat about THAT topic when I feed the cats this evening.
Slim,
I’m dying to know what part of Tucson you live in. I lived there for 20 years before moving to Las Vegas 3 years ago. Just give me the major cross-streets so I can visualize it whenever I read one of your posts.
Did you get some of those serious hatch chiles? We had neighbors give us a shopping bag of them once from Surprise, AZ. Some of them were hot enough to roast themselves!
Well, er, obviously they weren’t Hatch chiles. They were green chiles like the ones grown in Hatch, natch.
Lavi, I’m about two miles northwest of the University of Arizona campus. Area’s starting to gentrify, but some of the longtime lowlife losers haven’t gotten that memo yet.
Sounds a lot like Costa Mesa. Only place I know where you can find a granite-stuffed remodel sitting on the market at $1.3 million next door to a run-down duplex rented by two big Latino families in one unit and a late middle-aged Confederate-flag-displaying beater-truck driving wife-beater-wearing guy in the other.
Thomas, you been peaking in my widows again?
You left out “beer drinking” and for the record she swung at me first. The good thing is dinner hasn’t been late since!
I moved from what I used to call “the budget foothills”.
Ruthrauff Rd turns into El Camino del Cerro at I-10. Follow that up into the Tucson foothills. Not as “special” as the Catalina foothills, but still acre-plus lots, no sidewalks, just enough desert scraped away to build the house, etc.
Realtors didn’t seem to like to show the area when we bought there in ‘95. Loved that house. Burnt adobe block, saltillo tile, black-bottom pool, jacuzzi, ramada, 1.5 acres, “city” lights.
Happier now without a mortgage, though.
As much as I grouse about the condition of This Middle Aged House, it’s paradise compared to my neighbors’ place. Can’t help thinking that I got a lot more for my money than they did. I’ll have to gloat about THAT topic when I feed the cats this evening.
Speaking of cats, how’d ya like to “steal” this foreclosure?
http://tinyurl.com/2qqz6w
The buyer forked over $2.6 million for a house he had never laid his eye on? Boy, is that ever nuts.
please put up a *warning - you may toss up your lunch* on your link!
this sucker puts the “f” back into fb in spades.
My former landlady bought the property next door back in 1998. It had gone into foreclosure, and there was an auction on the Pima County Courthouse steps. Payment-in-full was required within 24 hours.
But did I mention that she had to pay off some liens on the property? That she had years of repairs and deferred maintenance to do? That the foreclosed owner, who had been quite the slumlord before his fortunes turned, showed up and had a major confrontation with her? That he sent one of his buddies around to steal things from the property?
Any time someone tells her about “opportunities” in foreclosures, she says, “Hah!”
Idiocy knows no income level I suppose.
“When a magnificent mansion in an upscale New Jersey neighborhood went into foreclosure, Michael Acciardi thought he was getting the deal of a lifetime. He bought the $3 million dollar mansion, sight unseen, for the bargain price of $2.6 million dollars.”
“Health authorities have posted a sign out front, declaring the home unfit to live in. It is so contaminated it may have to be torn down.”
Instead of a “deal of a lifetime”, he got a deal he’ll never forget. A reduction of $400,000 off of $3 million isn’t much of a bargain either.
contaminated with what ??
Cat Urine and Feces.
follow the link and look at the pictures… breathtaking.
What jobs are available with the bursting credit bubble, and what are the requirements for them, or best way to break into these fields?
E.g., credit counseling, reposession, consignment shops.
thanks!
Auctions. I also hear taking care of repos for banks is a growth industry.
That’s one of the few areas of job growth around Detroit.
Here’s a Co. name for you:
“Pinkerton Maintenance Service”
“Service with an attitude!”
Auctioneer.
Severe economic downturns are usually accompanied by an uptick in gambling, alcohol consumption, and furthermore in things like drug-use, prostitution etc. So I would add Pimp to your list of professions.
Domestic violence has a little boomlet too.
Suicide Prevention Hotline operator
Seriouly, odds are that you will have cases where a laid-off mortgage broker or realtor goes into repos and takes back the exact house that he ‘helped’ some poor fool buy a couple of years before. Imagine getting that phone call with the old familiar voice.
“Hey Mark, this is Joe Smith”
“Oh hey Joe. You know, you were a great lender to work with and all, but if you’re trolling for my refi business you’re out of luck. In fact I am pretty sure I am going to lose this place.”
“Actually, Mark, I have a new job, and funny you should mention losing the place…”
I met a cop that lives in a house that he bought at city auction after it was confiscated becuase he arrested the previous owner for drug trafficing. The dude was getting out in a year or two, and the cop was a little more than a bit concerned that they guy wouldn’t take it well….
Here’s a case where it would be seriously worth it to rent out to someone else, or sell it…
Were it me, I’d take the f’n pig out too…
Paul
The most stupid thing I have heard is “if you do not need to sell don’t sell” (usually said by realtors), why to have your equity (and down payment) not working for you the hardest it can through the years RE having weak performance. Waiting make you lose significant amount of time that your money can be invested in higher return opportunities. So my recommendation sell NOW as fast as you can and invest your money in higher ROI. Even if it as home to live, rent for a while and when time is right buy again to the market.
I agree… All I can figure is that it is the people that don’t HAVE to sell that are most able to sell for less than market. If it is only hte “have tos” then they can manage the slow decline through the amount of short-sale they can get the bank to approve.
The don’t have to’s decide to sell, a drop prices by any amount needed to make it sell, and the bottom drops out of the market.
The sell - rent deal only works in some markets. I’d need -10% per year house price decline and flat to down rental rates to break even in 3 - 5 years. Let the equity burn, I’ve got other money to invest, and the way I see it there isn’t any asset class that looks all that attractive right now except maybe gold, and I’m not 100% on that either.
Essentially these realtwhores are saying, “Take your house off the market so I can unload my flips.”
You know they are. Funny thing - a lot of the FBs took it on the chin with stocks in 2001. I wonder how it must feel to have bought stocks in 2000 or RE in 2005? Poor saps - they’re always late to the party, but that’s what you get when one trusts the herd to make their next investment decisions for them.
“Three years ago there were about 20,000 to 25,000 houses for sale statewide. ‘Now there’s about that many vacant homes just in the Valley,’ Sexton said.”
There!
As I have noted before to others, the issue is not affordability alone, but the large amounts of overhang as well.
Even with prices going down, there are more houses than people to fill them.
you know how in the old tv shows the parents slept in different beds? in some developments they can sleep in different houses!
you know how in the old tv shows the parents slept in different beds? in some developments they can sleep in different houses!
Even with prices going down, there are more houses than people to fill them.
This, plus the growing trend of Mcmansions being re-partitioned into McApartments by accidental landlords, means even more vacancies for years to come.
“Three years ago there were about 20,000 to 25,000 houses for sale statewide. ‘Now there’s about that many vacant homes just in the Valley,’ Sexton said.”
“‘A couple of years ago, these same builders were making people stand in line to get on a list to get a house,’ she said.
“Just a few years ago, housing permits were going through the roof …”
“Three years ago, this Las Vegas suburb was teeming with modern-day prospectors armed with low-interest mortgages…”
It’s great to see this kind of reporting that puts the housing boom in the rear view mirror.
Well, I’m going to make a move to reduce that 50,000 + inventory in Phoenix metro. There’s a nice 4/3 in Chandler that I want to buy, and I’m going to make a serious, written legal offer for it.
The house is a one-owner from 1997, she paid $207, and I’m going to offer $330. The current asking price, while rediculous, is also irrelevant. I’ll probably put a 30 day window on the offer, just to keep the “what ifs?” churning in the seller’s mind. Heck, I may still end up an “FB”, but since I’m buying for a 10 year “to live in it” period, I don’t really care.
Why tie yourself up for 30 days, as something better may come along?
Give her 24 - 48 hours to decide. Also, you don’t want to be a “phantom” buyer.
“Phantom buyer” as in “I’ve got other’s interested in this property”? My offer is about 66% of asking, so if I’m the competition for someone else, so be it - they can have it at 70%.
The next 30 days could be “paradigm-shifting” in AZ - with jumbos gone and most people with about $200 in the checking account, reality will hit hard. On this “half-million dollar” property and about 5000 others across Phoenix, expecting J6P “microbrew” to come up with $100,000 is a total fantasy. Even $50,000, or $20,000 in some cases. My competition is thin, and this is one of 1000 Chandler houses that I like enough to want to live in for 10 years, which is why I’m willing to take the “FB risk”.
I agree on the “FB” risk, I’m of the same mindset and am in the same boat on the competition thing.
I was just thinking that the 24 - 48 hour deadline might be more effective than the more open ended 30 days. I would not “lock” myself into a contract for 30 days. If something better comes along, you wouldn’t be able to pursue it..no?
To be honest, I expect the seller to react badly to my offer - on day 1. But on days 11, 19, and 30, depending on how whipped up the media around here gets about the market crashing (which is a pretty good bet now that it’s completely safe and obvious to report on), my offer could start to look pretty good.
To add, the only reason this house interests me now is because I don’t think the current owner is an FB. Meaning she’ll still make good money on the house and get on with her life elsewhere. Other houses for sale in the same neighborhood (5 out of about 220 total) seem to be mortgaged/Heloced heavily, and will be bought from a bank at some point, which has a whole different set of issues. If I set the comps for the first REO to sell at $300 or less, I’m down a few bucks but I didn’t deal with forclosure anger damage. Over 70% of the houses are 5+ year owned - all under $300k purchase price. You have to look at the assessor/recorder records for every single property in the neighborhood you’re interested in.
I would not ever, under any circumsyances, even give an offer 24 hours. All my offers are due by 9pm the day of the offer. I can share an experience I had, where an out-of-state seller, shopped my offer and I can it taken away from me. Never again. I would conduct my own auction, where every day I would make an offer, lower than the day before, with a 9PM cut off. That’s called negotiation.
AZ Owner, One of our own posted this information earlier this week. These are all Notices of Trustee Sales in Maricopa. If you graph these out in an Excel doc, you can see that the rates are going exponential already and by spring they’re going to go off the chart.
I don’t get it, is this home that special?
Jan ‘06 726
Feb ‘06 687
Mar ‘06 790
Apr ‘06 638
May ‘06 764
June ‘06 797
July ‘07 851
Aug ‘06 1019
Sept ‘06 1114
Oct ‘06 1238
Nov ‘06 1493
Dec ‘06 1407
Jan ‘07 1624
Feb ‘07 1577
Mar ‘07 1720
Apr ‘07 1709
May ‘07 2007
June ‘07 2325
July ‘07 2501
Aug ‘07 3248
Just curious, what is the current asking price? Let me guess, she paid 207K in 1997 so she’s asking 489K today. Am I close?
az,
Just curious. What pary of Chandler are you looking in?
az,
Just curious. What part of Chandler are you looking in?
What gets lost financially in Vegas
Stays lost in Vegas…
“Luxury homebuilder Toll Brothers blamed part of its dismal third quarter showing when it had an 85 percent drop in its profits to its showing in Las Vegas. The company reported a $29 million write-down in Nevada, the same amount as in California, and reported it’s renegotiating deals and trying to reduce its land options.”
“In Black Mountain Vista,…on a hill in Henderson,…a row of stucco duplexes sit empty.” ‘That’s a repo,’ the real-estate agent says as he stands in front of 678 Solitude Point Ave….Yellow patches blot the spartan lawns and phone books lie on front porches, their covers bleached from weeks under the desert sun. Three years ago,…modern-day prospectors armed with low-interest mortgages…hop[ed] to strike it rich….Now, Black Mountain Vista [is turning into] a luxury ghost town.”
Then the agent spotted a lone, lanky silhouette against the searing mid-afternoon Nevada sun. He squinted to size up the approaching figure: salt-and-pepper hair, elbow patches, briefcase.
“Shiller!” gasped the agent. “I reckoned you’d be comin’ to town right soon.” The agent then hastened to mask a palpable fear. “Is that an asymptote in your holster, or you just happy to see me?”
But the quip came too late to disarm the chart-slinging preppy. As one deadly shot echoed against the distant clanging of a quarter-slot machine, Shiller turned back to the parching sun and, with the studied assurance of an Ivy League academician, strode off — southwest toward the Inland Empire.
LOL…Jen, Iove reading your comments.
Jen is stucco?
Jen is quite the character….
Oh…By the way…I just remembered….”Go West Young Man” ?? Where West ???
“Is that an asymptote in your holster, or you just happy to see me?”
Jen, Careful… you are “revealing” yourself.
Yup, recent news stories about the bubble are getting mighty colorful. I’m looking forward to reading a yarn or two in the LA Times written in Raymond Chandler/detective-fiction genre.
“It was a hot sweaty afternoon in the Inland Empire. The kind of heat that just saps the motivation right out of you. I went into the office, partly for the air conditioning, and partly to pick up a fresh stack of foreclosure notices. Just then, LAY walked in.
LAY was dressed to the nines as usual –smart designer-label red dress, pearl necklace, gold Realtor(tm) lapel pin and high heels. She obviously had more on her mind than a valley full of mosquito-infested swimming pools and abandoned stucco McCrapshacks.
“What brings a classy gal like you out to a hellhole like this?” I growled.
“I was lookin’ for a man who can get his hands on some local information,” she cooed, “and I hear you’re the best.”
I poured myself a shot of bourbon, poured her one, then sat down and opened the books. Looks like this lonely REO man was getting some business today after all…
Off Topic, development down the street is all paved and curbed, sign just went up.”20 lots @ 101,000. and/or “16 paper lots” offers responded to on Sept. 21. What does this mean? This is the same outfit that tried to buy my place and cut down all the old growth pine trees. In the city of Bend. Thanks.
Sorry, left out the “16 paper lots for $71,000 ea.”
I saw both those listings also….Its happening throughout the west coast…They don’t want to build and raw dirt is also unsaleable….Put in all the infrastructure and offer it at a price that you think a builder can make money…..Then pray….
c’mon az_owner, what’s the asking price (roughly will do)
495
Hah! I almost nailed it (and I posted my guess before I read your answer). Asking prices south of you are similarly delusional.
Good luck with your offer.
az,
From your info, I think I was able to pin down the house. I like it a lot.
If you got the right one, you’ll probably notice that there could be significant HOA issues. Something else I will need to consider and get hard data on BEFORE making the offer. A “special assessment” to keep the amenties “flowing” could be ugly. It is a nice house, but one of thousands in 85248 and 85249, so I’m not going to kill myself for it. Let’s just not get into a bidding war!
I didn’t see that on ZipRealty’s page for the home I thought it might be. Are the owner’s initials DT? Does the street have the same name as an obscure brand of gum?
As for getting into a bidding war, don’t worry. I already have a mortgage that is as good as it will ever get for me. I’m probably stuck in my house until I die.
I suggest you bid $350k, then back out at the last minute.
Maybe we should start a HBB pseudo-buyers collusion club! We could really rattle some FB for the benefit of the handful of legitimate buyers on this blog.
I drove through Sparks and stopped at the home depot there, and they had a special section for Burning Man participants, really well stocked.
Just 1 checker on duty, on a Sunday.
I had time to kill, and dispatched it fatally, cruising the failed housing projects along Pyramid Way, and the ersatz shopping malls with only the koroprate monstas stores being open, all the little guy merchants are nowhere to be seen, a disaster in the making…
All around Reno, one could feel a dis-ease in the air~
“I had time to kill, and dispatched it fatally, cruising the failed housing projects along Pyramid Way, and the ersatz shopping malls with only the koroprate monstas stores being open, all the little guy merchants are nowhere to be seen, a disaster in the making…”
Wow, you sure nailed this on the head. I live about 4 miles from the area you are talking about. It perplexes me how a city with under 500K people needs this much new shopping. The Summit Sierra mall is still being built out and Legends at Sparks Marina (aka “The Flood Pit”) has just started construction. Add to it all the new stores out on Pyramid highway and it’s disgusting.
As for the failed housing projects, it’s pretty sad. I really like this area and one of the things that attracted me here was the open space. Now it seems like a war has been waged on any open space remaining within city limits. Very, very sad.
Heard at the coffee cart this morning:
coffee lady to customer: “did you sell your house yet?”
customer: “No, we are living in the new one and took the other one off the market and cashed out the equity for the money.”
Ugh, unbelievable. Reno always did seem to want to be just like Vegas, seems like we are quickly heading in that direction. Thank God I don’t work in any industry tied to Real Estate!!!
Folks have any insight into the Austin, TX market?
Yes, they are not making any more land. Buy now or be priced out forever.
It is turning. Patience grasshopper.
…two starving vultures sitting in a Joshua tree. One turns to the other and says: “Patience, my ass! I’m gonna kill something!”
LOL Sweeney
Once guy down my street has had is place for sale about 8 months. He just arrived in town and is trying to lease it now. No takers yet.
The market has slowed considerably here.
See the Austin Business Journal Aug 10 issue Big headline “Fla. company drops $4B Leander plan” Latest issue talks about East Austin condos, on pg 3. Letter to editor, pg 31, about Aug 24 article, “S. Austin condos in limbo”. The writer states, nicely I might add, “The big mistake we developers can make is to convince ourselves that we can somehow do what no other developer has done before– build at last year’s construction costs and sell at next year’s market prices.” He is optimistic and if he isn’t greedy will probably be fine.
Moved the wife and kiddos in 2006 to an outlying town and love the area. Wife is a CA native and surprise and happiness, she loves our little town/ bedroom community for Austin. New-ish subdivision and so far, only an occasional ‘for sale’ has popped up and the builder appears to be slowing starts. But I see lots of signs around town and while resale appears to be moving, it is early in the game.
That said, $75-100 a sq ft will get you decent place to live. Appears to be about 3-4X income in the area I’m in.
“‘What are we doing about it?’ Toll asked. ‘We are out there with the rest of the builders in Vegas praying. There’s not much you can do. You can’t advertise your way out of that situation. You just have to wait for the market to come back.
————————————————
Bob…Bob…Bob, you’re making $28 million / year and this is the best you can come up with?
Come on Bob, say it with me. We… could … maybe…
(Bob:) Drop the prices?
I knew you could do it Bob.
——————————————–
“Bob” Toll, one of the nation’s best-paid chief executives, earned $28.6 million in salary and bonus in 2005
Toll builds top end houses. The market for top end is way overbuilt. The only real alternative is to start building modest sized houses again, but the prices they paid for the land may preclude that too. There’s a lot near my house that has a $130k asking price. There is nothing small enough that you could build on that lot and have it affordable. I live about 1/4 mile away, and have a lot 4x the size, it’s valued by the county at $35k. If their land book is similar to this, there is no simple answer for Toll. Bankruptcy may be their best bet I doubt they can wait for the “market to come back”.
“Toll builds top end houses”
Don’t bet the house on that. Others on the blog would certainly disagree…
They’re guaranteed for five years. Then they fall apart. (So says a family friend who used to work at Toll Bros.)
–
You forgot the $360M in stock sales.
Jas
you know what happens to an athlete when they find out he’s on steroids and he can’t use them anymore? his performance shrinks and so does his arms. we are going to see that the economy will do the same thing. the economy is built on the steriods of cheap credit and lending standards. the performance of the economy is going to deflate and we’re going to see what it was really capable of.
I agree John….Cheap easy money goosed this thing along for far to long….
“…sapping the fortunes of home buyers, hedge-fund managers and house painters alike.”
I like the contrast…”hedge-fund managers and house painters alike”
Kinda covers the whole spectrum…Lao Tzu: “The high…rests upon the low”
Big condo project in Tempe near ASU called Mosaic… 90 days ago was listing condos atarting at $400K. Must be a joke since you can rent a similar sized apartment a block away for under $1000 a month.
Today they are advertising… starting from mid $300K. $50K reduction in just a few months. Only $250K more in price reductions needed.
But they are advertising “Whole Foods right in the building”.
Ohhhhh….. 3x as expensive as renting, but there is an organic grocery store in the lobby. That is SOOOO worth $3000 a month extra!
organic grocery..
perfect for the sh!theads that pay the $300k premium..
Wholefoods has a way a charging whole bills..as in tens and twenties.
The don’t call it Whole Paycheck for nothing!
Darrell,
I was passing through Tempe today and since I had a few minutes, I noticed that there are 3 other good sized condo projects going near ASU, all seem to have all the best amenities, theaters, bistros, etal. Most of the websites have removed the costs.
http://www.centerpointaz.com 800 condos
http://www.haydenferrylakeside.com 144 condos
http://www.weststonecommunities.com/home.html 330 condos
(Asking $300,000 to $1,000,000)
Totals 1,274 High Rise Condos near Downtown Tempe.
Oh man, these are all under construction and seem to be at about the same stage. These don’t quite compare to the Miami condos, but they still stand out.
Lip
And drive past those Hayden Ferry condos on the 202 some Sunday night–about two apartments with lights on, the rest pitch black. It’s kind of a nice building, with a great view of Camelback Mountain, but the prices are insane. WAY too many condos in Tempe right now.
Toll: “Yes, in the last eight weeks we have taken seven agreements. So that is what we consider real bad.’”
Hey Toll, what about your brethren Lennar in Bakersfried: x1 building permit…is that considered like … really really bad?
“Three years ago there were about 20,000 to 25,000 houses for sale statewide. ‘Now there’s about that many vacant homes just in the Valley,’ Sexton said.”
Did I read that right? I am not from California but can this possibly be true? Holy CR*P!!!!!