House Gamblers Head For The Doors
The East Valley Tribune reports from Arizona. “Valley home prices fell at a faster pace in July than in prior months, mirroring a national trend, a home price index released Tuesday shows. The S&P/Case-Shiller index of 10 cities, which measures change in single-family home values, slid 4.5 percent in July from a year ago, the sharpest drop since July 1991.”
“Prices have also fallen at an increasing rate each month since the beginning of the year. Meanwhile, the Valley’s index rating slid 7.3 percent in July from a year ago, as sellers and real estate agents continued to slog through the dampened market.”
“‘I just don’t see an end in the near future,’ said Brian Bell, a real estate agent in Mesa.”
“Valley home prices are still steadily declining, though some areas are hurting more than others, Bell said. In some subdivisions, people are just dumping properties, slashing prices in the process, Bell said. Sellers in outlying areas, such as Queen Creek, are also getting hammered hard by builders, who are offering steep discounts and incentives.”
“Prices were definitely inflated in 2005, largely a result of a huge influx of investors, and that has now been corrected, said Christian Broadwell, owner-broker of AZCO Properties.”
“‘I think we are pretty much at the bottom at this point,’ Broadwell said. ‘It’s probably one of the best markets I’ve ever seen for a buyer.’”
“Sales of foreclosure properties and homes that have been repossessed by banks are on the rise — snapped up by savvy investors at hefty discounts. Short sale deals often come in 20 percent below the value of a property, Broadwell said.”
“Brian Judy, broker in Gilbert…said he believes prices will continue to drop for now. More than 57,000 existing homes are on the market and would take roughly a year to sell if no new homes were listed for sale, Judy said. And sales will continue to drop as the slower holiday season approaches, he said. It may take years for the market to fully stabilize, Judy said.”
The Arizona Daily Star. “As more homeowners end up in foreclosure, one investor in distressed properties has ended up in financial trouble, too. Deed and Note Traders LLC, which has operated a foreclosure rescue service under the name HomeSavers, filed for Chapter 11 bankruptcy Sept. 7.”
“Scott Gibson, an attorney representing Deed and Note Traders, said the company suffered from a recent tightening in the credit market as many would-be buyers have been unable to get mortgages.”
“‘It was really a function of the whole thing happening with the financial markets, and the slowdown in sales of residential properties,’ Gibson said.”
“Gibson said he could not speak to the condition of specific properties, but said some scheduled repairs haven’t been done because of a ‘negative cash flow.’”
“Meanwhile, August foreclosures were up more than 140 percent in Pima County compared to the same month a year ago, according to RealtyTrac.”
Bloomberg Nevada Nevada. “What happens in Las Vegas doesn’t stay in Vegas when it comes to the city’s housing market. Tumbling home prices in the gambling Mecca will show how far and how fast U.S. property values will fall in 2008 as the housing decline enters its third year, said William Wheaton, an economics professor at the Massachusetts Institute of Technology.”
“‘Las Vegas is an important barometer for where the rest of the nation’s home prices are going because it’s going to show us how quickly the investors head for the doors,’ Wheaton said. ‘It will put the floor under the housing correction.’”
“‘They had the biggest price bubble, so they’re going to have the biggest price drops,’ said economist Patrick Newport.”
“The slump in Las Vegas could last until 2010, even if gamblers and vacationers continue to boost the city’s economy, Newport said. Prices have already dropped 5 percent from last year’s peak and may fall another 15 percent over the next three years, he said.”
“As homebuyers descended on the desert city, it changed the way Americans look at real estate, said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago. After Las Vegas, the investment boom spread across the country from Florida to Arizona and California, Swonk said.”
“‘The city that gave us gambling gave us house gamblers,’ Swonk said. ‘Buying a home became like buying a stock on margin, with no money down.’”
“Almost half of Las Vegas home sales in 2005 and 2006 were to people who intended to resell quickly for a profit, according to data compiled by Fannie Mae, the world’s largest mortgage buyer. Nationally, investment purchases accounted for 28 percent of sales in 2005, the peak of the housing boom, according to the National Association of Realtors.”
“Builders…have about 23,000 homes under development in the area. MGM is constructing a 66-acre condominium and casino complex scheduled to open on Las Vegas Boulevard in 2009.”
“‘It’s going to take up to two years for the market to work itself out,’ said Ryan McPhee, owner of a Las Vegas real estate investment company. ‘We have too much inventory, and more on the way.’”
“When the value of a house is less than the mortgage, owners who want to sell have to pay the lender the difference to buy out the loan, in some cases as much as $50,000, McPhee said. ‘It’s not that prices have plummeted, they’re down about 5 percent so far. But if you bought near the top with no money down, you’re under water,’ he said.”
“Some of the owners who bought in the early years of the boom are stuck, even after seeing prices double in five years, McPhee said. ‘Some people have seen their home values soar, but a lot of them refinanced to pull out that equity and spend it on cars or gambling,’ he said.”
The Las Vegas Sun in Nevada. “If location, location and location are the most important factors in real estate, timing is not far behind. You don’t need to tell that to Igor Doncov, who had the misfortune of investing in the booming Southern Nevada housing market just before it began to collapse three years ago.”
“But today the San Mateo, Calif., computer consultant considers himself one of the lucky ones as he watches from afar the valley’s rising foreclosure rate which, driven primarily by investors walking away from their homes, has become the nation’s highest.”
“Doncov didn’t lose his two $450,000 homes to foreclosure. But he did lose $100,000 in down payments after he was able to sell both properties for what he owed on them a year after buying them.”
“Unlike Doncov, who escaped with only a hefty financial loss, many other investors are now caught up in the valley’s growing foreclosure epidemic.”
“A Sun computer-assisted analysis of RealtyTrac data found that new foreclosure filings in Southern Nevada have skyrocketed in the past six months, from 2,165 in March to 5,242 in August.”
“Combining the RealtyTrac figures with data from the Clark County assessor’s office, the analysis found that 74 percent of all single-family homes in foreclosure during the past six months were owned by investors who did not live in the homes.”
“Roughly 85 percent of actual auctions or repossessions of homes from March 1 through Aug. 31 involved properties not occupied by their owners, the figures show.”
“As of Sept. 1, however, the Sun analysis found that 38 percent of all single-family homes in Southern Nevada were still owned by investors.”
“Even the homebuilders, who were cashing in on the real estate bonanza, knew something was wrong. ‘Many builders were trying to discourage the speculators,’ said Irene Porter, longtime executive director of the Southern Nevada Home Builders Association.”
“‘We could just feel it and know that we would end up with these problems. But we really couldn’t do much to stop it. You can’t refuse to sell a house to someone who has a loan,’ Porter said.”
“Clark County Commissioner Bruce Woodbury doesn’t have as much sympathy for the speculators as for the homeowners who have fallen on hard times.”
“‘You hate to see foreclosures, but frankly I would rather see investors get foreclosed upon than homeowners,’ he said.”
The Review Journal from Nevada. “Boomtown bravado aside, the next year figures to be extremely difficult for many Nevada homeowners being gradually eaten alive by adjustable-rate mortgages and the collapse of segments of the subprime-lending market.”
“Nevada reported 1,470 new foreclosures in August, the highest one-month number in recent history and more than a dozen times higher than August 2006, according to information provided by Applied Analysis.”
“Jeremy Aguero of Applied Analysis, says the foreclosure issue is ‘trending toward the worse side, not getting better,’ but he anticipates a positive surge in 2008 when the massive employment call for the new resorts will begin to be answered.”
“‘Are we seeing some cyclical instability?’ he asks. ‘You bet we are.’”
“For every 1 percent homes dip in value, Nevada loses approximately $800 million in household wealth, Aguero observes.”
“But, again, he sees a pattern where others feel the panic. He asks, wasn’t it 18 months ago that affordable housing was the big question? ‘It seems to me the debate has turned 180 degrees,’ he says.”
The Salt Lake Tribune from Utah. “Zions Bancorporation, the Salt Lake City-based lender with operations in 10 Western U.S. states, said its bad loans will probably rise in the third quarter as home building and land values decline.”
“Zions expects loan charge-offs of $17 million, up from $8.7 million in the second quarter, Chief Financial Officer Doyle Arnold said at an investment conference Wednesday. The bank also plans to set aside $44 million to $46 million for potential loan losses in the third quarter, compared with $17.8 million at the end of the second quarter.”
“A slowdown in home construction and declining land values in the Southwest are affecting results, Arnold said. Residential land prices in suburban Phoenix declined as much as 35 percent in the past year and loan growth remains unchanged in most parts of the West, said Clark Hinckley, Zions’ investor relations director.”
“‘Our best guess is that in Arizona we won’t see the housing market recovering until 2009,’ Hinckley said.”
The Spectrum from Utah. “Elim Valley, a master-planned community, will celebrate its ground breaking at 11 a.m. Friday. The community is located near Sand Hollow and will reside in Hurricane’s city limits, said Ed Hemmer, who works in Elim Valley’s sales department.”
“Laura Carlson, executive administrator for Bloomington Suites, said she ‘loved it’ but thought Elim Valley chose a bad time to begin development. ‘With the economy and the real estate market right now, they’ve come at a bad time.’”
‘Residential land prices in suburban Phoenix declined as much as 35 percent in the past year and loan growth remains unchanged in most parts of the West, said Clark Hinckley, Zions’ investor relations director.’
Uh-huh, now where are those Arizona realtor numbers with the 2 or 3% stuff?
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Land prices went crazy during 2005. Certain lots in Tehachapi City area went up four fold! They are down more than 50% already and are very hard to sell. The volume is 10-15% of the peak (yes down more than 85%)!
Jas
Of course a four-fold increase requires a 75% drop just to correct to baseline (before overshooting). Given the extant 85% drop in volume, is it unreasonable to guess that an eventual price correction past a 75% drop is possible?
–
Possible? Unless you are joking it is in the bag. The question is: further 50%+ drop after the 75% decline is in the bag?
A. Most likely.
There are many speculative bag-holders in town. BTW, a lot that first listed for $79K in 2005 is now listed at $18K, I am told (I did see the listing when it was at $22K). I doubt that the owner would get more than $9K. The poor guy (I met him before he listed) bought for $39K in late 1980s or early 1990s. The lot is mostly rock and very hard to build on.
Yeah, land prices always go up.
Jas
I am seeing homes from the 110k in maricopa and from the 130’s in areas of queen creek.The new builders have the existing market by the balls.There is a bull market somewhere I guess.
The Mars housing market is on fire…
http://www.youtube.com/watch?v=wSv5383Dpvs
July 20, 1969
Peak Country
“‘It’s going to take up to two years for the market to work itself out,’ said Ryan McPhee, owner of a Las Vegas real estate investment company. ‘We have too much inventory, and more on the way.’”
I don’t get these people. How does “too much inventory and more on the way” translate into “up to two years until” everything is great. More buyers are not going to materialize unless they open the flood gates from Mexico and hand out free houses.
Think about it for a second … We are staggering into a recession and somehow expect enough people to accumulate a 20% downpayment during the recession to clear out the inventory plus what is coming in the future? Every time I pour over the numbers in my head, it scares the living daylights out of me. There is no industry that is ready to take up the slack from the housing/real estate/constructin sector and pay enough to buy the available homes. This is the end of mankind…
SLAP!!!
And now, back to our regularly scheduled program …
I have often thought that if the government wants to do something about the RE market ,pull the permits they issued to builders, (that gave them bogus data anyway ).Later on I would like the building departments to answer to why they allowed so much building ,(especially without roads build or water accounted for or jobs growth possible in alot of these locations .
It’s not the end, it’s the beginning of our country more closely resembling the country and people that many of you like to piss on…
Mexico, land of unfinished dwellings
There is no industry that is ready to take up the slack from the housing/real estate/constructin sector and pay enough to buy the available homes.
You said it, StatsMan. If you whittle LV down to strictly tourism the town is way beyond overbuilt. The growth industry there *was* growth.
I lived in LV for many years and every year the end of LV was predicted by someone. Then a new 5000 room casino went up and it was 90% full. The end of Las Veags has been foretold since the 40s.
House prices definitely went bonkers and are falling now. But the city did grow exponentially in the past decade, as it has done every decade. That was real.
And you can whittle LV down to tourism all you want. They may not be the glamorous jobs of “MANUFACTURING” that everyone here seems to love so much. But a dealer with a few years experience makes $60K to $80K a year with great benefits. Some make over $100K.
My ex-boss was a VP for one of the casinos. His wife at the time was a bartender at one of the top casino nightclubs in town. He told me she made more than him, only working 4 nights a week.
Plus an enormous amount of income is cash and unreported…think of the bouncer at a club getting $100 to let you at the front of the line. Valets and cab drivers getting the kick-backs from strip clubs. It is endless the kind of underground, unreported money changing hands there. Which is why I always laugh when I see the official income figures for Las Vegas which says a bartender makes $30K a year.
“The slump in Las Vegas could last until 2010, even if gamblers and vacationers continue to boost the city’s economy, Newport said. Prices have already dropped 5 percent from last year’s peak and may fall another 15 percent over the next three years, he said.”
Sounds more like housing specugamblers and vacation home buyers are going to continue to sink the city’s economy.
We drive from the LA area to the High Desert (Victorville) on the I15 freeway to visit my mother on various weekends.
- The truth is this, Traffic to Las Vegas has dropped off tremendously! I am sure that other So Ca folks will verify this. Visits to Vegas HAVE to be down from 2005.
I keep wondering how Vegas and all the other gambling meccas expect to grow? After a while, don’t you consume virtually all the available suckers?
A new sucker is born every minute?
Coworkers of mine who commute from Victorville (how?) have commented that the I-15 traffic is dead. They used to know that 1pm until 5pm, the I-15 going into LA would be a parking lot. They talk about how surreal it is to now use it as a shortcut getting around (versus avoiding it and using side streets during those hours).
Did you see the posting on the Nevada unemployment for “food service and bartenders?” Its shooting up through the roof (sorry, lost the link).
Got popcorn?
Neil
“Residential land prices in suburban Phoenix declined as much as 35 percent in the past year and loan growth remains unchanged in most parts of the West, said Clark Hinckley, Zions’ investor relations director.”
Sounds as though he could have used some prophecy, sight and revelation from another Hinckley…
http://www.familyforever.com/temples/prophets/gbhinckley.htm
Haw! Snotty!
But, yes, where’s Baby Jeebus and the Prophet to guide the way, not only to the Celestial Kindgom, but to the Kingdom of Big Righteous Dollars as well?
You know what? I bet he sipped from a Coca cola when he thought no one was looking. Or else had an impure thought.
Okay, doom to YOU, pal! Because Baby Jeebus sees ALL!
You crack me me up OG
Just curious about the usage of the word “Jeebus”, which is obviously a corruption of “Jesus”. I understand tha the word is used in a mocking sort of way, but I am curious as to who is being mocked? Is it Jesus himself, or is it crooked and corrupt church leaders of various denominations. I know that some Evangelical groups say a lot of “Baby Jesus” prayers, but I realize that the context of the above comment was targeted more directly at LDS/Mormon folk.
Anyway, just curious.
Homer Simpson… On a deserted Island hoping to be rescued, spelled out Jeebus on the beach. As well as I can remember.
It’s a simpsons reference.
It’s target, IMHO, is “believers” who only see the diety as some sort of cosmic concierge who is supposed to swoop in and make everything better whenever they have a problem.
President Hinckley warned of the coming economic downturn years ago and said not to get involved with non-traditional mortgages. That was one of the first things that got me paying attention to the bubble (this has been a common theme in the church for years, and has been expressed with increasing urgency)along with my on the ground observations in early 2004.
Lots of LDS members will soon get to learn the value of following the prophet and general authorities in matters financial. I expect lots of these people who get to learn the lesson will be prominent church and business leaders in SLC.
How about a prominent sportscaster? http://www.ksl.com/?nid=148&sid=1868459
‘Course, it was following the old-fashioned anti-debt guideline of borrowing no more than three times your income for a house that got me thinking I couldn’t afford a 3-bedroom SFH in Aliso Viejo for $359,000 in 2001.
It is different these days — just not quite as different as the RE boosters wanted to believe. Still kicking myself for not jumping in then — but I was just out of school and just married and wet behind the ears. Live and learn.
“…snapped up by savvy investors at hefty discounts. Short sale deals often come in 20 percent below the value of a property, Broadwell said”
Savvy investors? I don’t think so. I think Tonto had it correct “Kimo sabe” or more properly ‘Qui no sabe’. So loan rangers ride again. LOL
Short sales probably aren’t a great deal at this point.Wait another year when panic sets in.
Are these the same savvy investors who are also takeing it in arrears on their great investments of 2005?
Loan arrangers
“Sales of foreclosure properties and homes that have been repossessed by banks are on the rise — snapped up by savvy investors at hefty discounts.
And just what are these “snappy savvy” investors intending to do with these wise buys? This clod needs to peddle this crap else where, it doesn’t flush.
Are these “savvy investors” the same “sophisticated investors”
of a few years ago who signed up for those 0% down ARMS?
“Life is hard; it’s harder if you’re stupid.” - John Wayne
What would the late John Wayne say about the investors that bought at the peak of the market in Vegas /
You got until 12 noon to get out of town ..or…
Pay the money or your dead where you stand …
Sorry ,Just started thinking about the duke .Boy those were different times in America .
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”
- Charles Mackay
OT — it sure is touching what is going on over at Ron Paul’s website right now. Something tells me that if any of the top tier candidates (of either party) were to do something similiar all you would see are flashes of “Haliburton”, and “GE”, etc. Bring sane economics to government!
http://www.ronpaul2008.com
“‘Las Vegas is an important barometer for where the rest of the nation’s home prices are going because it’s going to show us how quickly the investors head for the doors,’ Wheaton said. ‘It will put the floor under the housing correction.’”
I am not sure it will be that immediately apparent as Wheaton suggests. The problem is that many LV investers were CA homeowners who liberated equity to gamble. It may take quite a while for the blow back effect of LV house gambling losses on CA specuvestors to play out.
Vegas was the nearest big city with cheaper housing, in proximity to the city of angles, for gambulators…
el lay probably has the lion’s share of despair, yes.
We’ve got quite a few specuvestors from CA over here in AZ too. The one’s that I know (3 houses in Surprise all with family partnerships) got near 100% financing, ARM or Int Only loans, and they’re just holding onto their houses the best they can.
I suspect as soon as the current tenants move out, it’ll be time to “let er go”, but you know they might decide to hold onto the properties for a while. People in SoCal seem to have a lot money and they can hold on longer than most.
The only difference between a Californian and anybody else, is the financial lodestone around the neck of many a fair weathered one…
In article after article, I keep seeing this assumption that the market’s going to correct quickly and appreciation will return in ‘09(first it was late ‘08). I recall during the 90’s meltdown here in SoCal there were several stagnant years after the bust. What makes these “experts” think people will be able to wash the sh*t taste of price drops out of their mouths so quickly this time around?
Blind optimism backed up by almost zero economic logic.
I think it’s whats called the Jiminy Crickett approach.
If you wish hard enough…..
“I recall during the 90’s meltdown here in SoCal there were several stagnant years after the bust.”
Somewhere in the bowels of the archives for this blog is a link to a series of LA Times articles which document the serial-bottom-caller phenomenon during the early 1990s bust (which roughly played out in the LA Basin over the period from 1989-1996). A seven year duration for the current correction would last from 2005-2012, and I expect a similar pattern of bottom calling to play out this time for the whole ride down. The alternative would be to just fess up that no bottom is in sight, in which case the market could drop with a deafening thud and stay on a permanently low plateau for ten or so years hence.
Buyer psycology…. No one wants to pay 30-40% more that rent if they aren’t going to get appreciation. The fatal flaw of any bubble. Prices are justified ONLY if prices are still increasing. Once prices turn flat, the current price is no longer justified.
I think they are WAY past the time when they should be working on buyer psycology. With the tigtened lending standards, there simply arent’ eniugh qualified buyers.
They need to work ONLY on seller psycology. If I were a realtor, I’d constantly be saying, “The bottom has fallen out, and if you want to sell, slash the price by 10% every couple of months until it sells.”
Realtors don’t get paid until there is a transaction, and there aren’t going to be enough transaction until the bottom has fallen out and prices are down 30-40% from peak.
Shiller’s always pointed out that psychology is the main driving force in inflating/deflating bubbles. I’m not so convinced that buyers will jump in the game anytime soon. Who’s to say we won’t see a long, protracted slump similar to Japan’s? How did their helicopter drops workout?
Here in LA LA land… its looking more like 50%.
Downpayments are the killer. Median is floating around 500K give or take. Find out how many people have 25K to 50K as a 10% down payment. Not many.
Rents in my “hood” say prices should be around 200K. People are asking upward of 450K.
Interest rates also have upward pressure.
Well ,when you have a market were 75% of the foreclosures are low down investors that are walking ,you can get a serious brutal and fast correction of a market . What did Ben say ,38% of the entire market in Vegas is investors ..WOW..not good…
I guess when LV Landlord said the correction was behind them in LV she was just cheerleading .
Curious what percentage of foreclosures across the nation are investors? I’d love to see that number in bold on the front page of the WSJ. Makes me feel extra special about future bailouts. As for LV Landlord… she’s probably throwing down suds in some dive bar with Taco Bell Jeff saying,”I used to be in the real estate business… tough racket (sips beer)”.
Shot out to Glengarry Glen Ross.
“Cynical realism is the intelligent man’s best excuse for doing nothing in an intolerable situation.”
Aldous Huxley
Thanks for explaining to me why I have not gone crazy with the commodities and emerging market stock investments as the credit crunch has gone down.
It is my pleasure to open the doors of perception for you…
Cynical realism be damned, the reality is a world awash with dollars.
“Whatever else is unsure in this stinking dunghill of a world a mother’s love is not. ”
James Joyce
Hoz — Methinks you are right. It is business as usual at the Fed under BB — send out a tsunami of liquidity to try to offset a market downturn, with no idea of what kind of bubble will result when the wave hits the shores next spring.
The number of 51K of homes in the phoenix area doesn’t include the FSBO sellers, there seem to many of them around also, just by looking at the signs that are out. I saw one that said Make Offer? Is it that bad now, what will it be in the next three quarters as resets really take hold and bite? There are teeth waiting to latch on to some of the FBrs.
buyers market
how about the one from b.c. to 2001
100-120 times rent
the last 20 coming from hud,interest deductability and other gov “programs”
“‘I think we are pretty much at the bottom at this point,’ Broadwell said. ‘It’s probably one of the best markets I’ve ever seen for a buyer.’
- You can’t get tired of this quote! It is hilarious to read about this huge disconnect.
He would be right about ‘It’s probably one of the best markets I’ve ever seen for a buyer.’ if his historical time frame is only six months!
I am sure Mr. Broadwell is buying everything in sight it is such a good market.
Exactly.
Hopefully Mr. Broadwell is advising his parents, in-laws, siblings and friends to jump right in, the water’s fine!
Flashback to the scene from Jaws when Mayor asks his family to go in the water
Spot on
Came back to bite him too… pun intended
“Sales of foreclosure properties and homes that have been repossessed by banks are on the rise — snapped up by savvy investors at hefty discounts.”
OK, so we have numbers that indicate a large number of homes were sold to investors…sorry…speculators.
We now have an obvious inventory problem, where too many houses were built, by at least 25% nationwide.
And investors…sorry…speculators are snapping up foreclosed homes. These homes are only temporarily out of the inventory, as these speculators bought to sell ‘when the market comes back’.
Yeah, good luck with THAT!
We’ll see the same numbers for inventory next year, if not more, when these speculators finally realize that the boom will NEVER come back.
Okay, folks, ready for some industrial-strength snark? From the Arizona Daily Star story mentioned in the original post:
Another distressed property buyer, HomeVestors, is getting plenty of calls in Tucson, said Fred Hubbard, a local franchisee of the Dallas, Texas-based firm.
The company does not offer rent-to-own deals for its sellers because of the potential for legal complications, Hubbard said.
“There’s been a lot of abuse in lease-backs,” he said.
To which Slim says, “Well, hi there, Fred! Long time, no hear from. You were the agent for the sellers of the Arizona Slim Ranch when I bought it back in 2004. And you were so clueless that MY real estate agent had to show you how to do your paperwork.”
Slim -
‘04?? Say it isn’t so!
Not sure how many flippers read these blogs i hope not for solice. If you bought at the top end and thought you could flip for a nice profit by now you must realize you are holding a nothing hand and you can’t leave the table for a loan either.
Now you have to make a huge decision in your life , do you sell for a loss and save your good name , suck it up, or do you just walk away and ruin yourself credit and debt wise. I really can’t feel for you because the whole thing was right in front of you, a something for nothing and to good to be true, one thing in life you never risk your shelter or nest egg for a gamble that was a ponsi scheme, did you really think you could buy a home lets say 500k or more with no money down, no income verification, and a low low payment i guess you and plenty others did, may i suggest that you try the first option sell as cheap as you can even take a loss, save your name and never think about this get rich quick ever again, if you do that then i want you to suceed in getting out from under, waiting for the gravy train at this point and juncture can’t happen, the train got derailed and it ain’t coming for years.
if it ever comes back at all! thank you very much
con artists / speculators.
“Now you have to make a huge decision in your life , do you sell for a loss and save your good name , suck it up, or do you just walk away and ruin yourself credit and debt wise”
I think there will be a “safety in numbers” justification in many of the walker’s minds (and of course 95% will walk rather than be concerned about their own good names). If the typical “walking FB” sees half of their friends and relatives do the same thing, they will not feel morally inferior, simply that they too were “victims of circumstance”.
However, these people don’t realize that they will now join the growing (and intended) ranks of America’s “credit zombies” - never seeing a single-digit interest rate again in their lives. A walking deadbeat is the CC industry’s dream customer - paying 31.99% on revolving balances forever. Someday they MIGHT get a “rent-to-own” offer on a small condo or cheap house somewhere, but buried in the paperwork will be the reality of the terms - fees and interest rivaling the worst APRs of the early 1980s. And those Kias and Mitsubishis they’ll be buying on “we finance anybody” plans will surely be 18% APR bloodsuckers that saddle them with 84 month loans on cars worth nothing after five years.
(and of course 95% will walk rather than be concerned about their own good names)
TO THE DUMB FLIPPER (yes, I mean YOU):
Your name was given to you by your parents and their parents and unless you are spawn of the jackal, they are turning over in their graves at your stupidity! Do not sully their names even if you have no integrity. Be a man and suck it up.
they too were “victims of circumstance”.
Ah, “victimization” the universal absolvent of responsibility in much of today’s America. If you can find a way to present yourself as a “victim” in one way, shape or form (no matter how ludicrous it might seem) you can rape, pilage and murder and still hold your head up high.
Hey - just walk away, lesson learned. There will be/are so many flippers with writeoffs on their credit that it will simply become irrelevant. Any banker would rather make a loan to a person who’s now on the right track with problems 4 - 6 years in their history. The guys in trouble are those who were actually foolish enough to put some of their own skin in the game.
“Some of the owners who bought in the early years of the boom are stuck, even after seeing prices double in five years, McPhee said. ‘Some people have seen their home values soar, but a lot of them refinanced to pull out that equity and spend it on cars or gambling,’ he said.”
are we going to have to bailout these idiots too!
Good thought ride the wave, i see one of these people every morning ,first thing he did was buy a Porsche and crossover Suv and his for sale sign has been swinging in the wind for over a year. He just told me the other day man i’m hurting like i never hurt before keep lowering my price no takers, i didn’t have the heart to tell him he needs another 7% off his price this week just to get a look?
After reading these articles on the current real estate debacle, it is amusing to see everyone in the media refer to this as “the long real estate slump” as if this has been going on for multiple years. In reality, they all denied the very existence of the bubble until just recently. Once they couldn’t deny the problems, they immediately switched to the “long slump” angle.
It is their way of trying to once again convince people the worst is over. It truly is a pathetic ploy to make people think the slump as been longer than it really has been.
Next thing you know they will start with the stories about how statistically, corrections are over by now…so it’s a great time to buy!
It would be naive to think they are ignorant to these facts. These people know exactly what they are doing, just like they knew this bubble would implode eventually.
I’m really sick of these liars.
Cool.
Is Fred going down too?
Are you and I talking about the same Fred, Larry?
“Prices were definitely inflated in 2005, largely a result of a huge influx of investors, and that has now been corrected, said Christian Broadwell, owner-broker of AZCO Properties.”
To borrow a line from Jay Leno: AW, SHAAA-DUP
My question is, was he saying that in 2005??? We likely know the answer.
“‘I think we are pretty much at the bottom at this point,’ Broadwell said. ‘It’s probably one of the best markets I’ve ever seen for a buyer.’”
You know how some of us got flamed for calling a peak early? Well, I’m thinking some of these jokers will be calling bottoms all the way to 2012.
Yep and the bottom will be 2nd quarter then 3rd quarter and then 2013 and 2014 etc. all the way to 2018. Then they will say that RE is a horrible place to invest and this will indicate it is time to buy
Finally a true economist will be heard that points out that “personal houses” are not assets and should be regarded as liabilities.
Ben,
Thanks for more good Utah articles. My father-in-law is a commercial loan officer at Zion’s. The past few years as I’ve issued the warning cry the family has kind of looked at me like I’m kinda nuts. He says the rising prices just show how stable the economy is and I just tell him to wait. Sorry, but normal economies don’t double salaries and available jobs in just a few years. Much of it is built on debt, as historically wages are in the basement in Utah, because of oversupply of labor as a result of kids who don’t want to move away from family.
On a related topic: Anyone who spends more than $50k for a house in Huricane (pronounced hur-i-kin, rymes with Laverkin) is smoking crack.
“As of Sept. 1, however, the Sun analysis found that 38 percent of all single-family homes in Southern Nevada were still owned by investors.”
So much for the failed theory that all the investors had left the market!
That is a mind blowing statistic. I sure wish some of these so-called RE experts would conduct similar studies in other markets. It really wouldn’t be all that difficult, just an issue of database matching.
Well, they left one half of the market. They’re still there on the selling side.
Question for the blog: if you HAD to get a mortgage right now, is there any direct lender out there that anyone would consider halfway trustworthy?
A friend who is very meticulous has used this place, although I have not used them myself…
http://www.providentfunding.com
Big Louie, down by the docks.
More bad news for the real estate professional:
http://www.inman.com/inmanstories.aspx?ID=64713
Real estate discount company Foxtons’ turbulent ride through the U.S. real estate market is approaching an end.
Foxtons, a low-commission real estate firm that had grown to 500 employees who served consumers in New Jersey, New York and Connecticut, this week announced that it is releasing 350 of its 380 remaining employees “and may be filing for bankruptcy protection in order to close the business in an orderly fashion.”
Real estate investors are betting on bargains in depressed markets they think are ready to bounce back.
http://tinyurl.com/2v3bhy
“Real estate investor Matthew Martinez is the point man for a private equity group that plans to invest $200 million in Florida condo developments. ‘The smart money is thinking about buying there right now,’ says Martinez.”
Some days I think there is no hope.
“One area suffering from steep declines is the Miami/Ft. Lauderdale/Palm Beach region, where prices are expected to drop as much as 12 percent.”
AS MUCH AS?! Meaning that’s the most it will drop? Puke!
Great bargains, eh? I’ll get interested when I can pay a property manager, HOA dues, taxes, maintenance, and PI on a 15-year note out of the rent collected. Someone give me a call when than happens!
Bill
“Prices were definitely inflated in 2005, largely a result of a huge influx of investors, and that has now been corrected, said Christian Broadwell, owner-broker of AZCO Properties.”
“‘I think we are pretty much at the bottom at this point,’ Broadwell said. ‘It’s probably one of the best markets I’ve ever seen for a buyer.’”
Liar, liar, pants on fire….
100% increase. 7-10% decline… And that is the correction. Were near bottom?
Too bad there isn’t a God that smotes liars with lightening bolts. I think that if there were, the comments from realtors would be VERY different.
They can’t truely belive this horse dung, CAN THEY?
i think they actually do. when you ask one of those hopeless believers a question based on facts, they have a very dazed look on their face and cant answer the question.
“Over the years I have gone through a variety of lending struggles and for the most part the lending industry has rebounding timely and with good “products. I expect that will happen in the Spring as well. Interestingly, the housing market has always led the economy out of recession. Two many jobs–especially related to the construction end of it–count on the Housing Industry.”
This is cut from a much longer email. In a nutshell, the Realtor we were working with in the spring is convinced that the market will come back to “normal” in the spring because the economy depends upon real estate. How’s that for a bit of wishful logic twisted backwards around an element of painful truth?
joe momma, you are on target. They denied the bubble until well after it was obvious the bubble had burst, and now they are pretending that the a.) the bust is long in the tooth, and that b.) this is an ordinary housing recession.
FB2
“As more homeowners end up in foreclosure, one investor in distressed properties has ended up in financial trouble, too. Deed and Note Traders LLC, which has operated a foreclosure rescue service under the name HomeSavers, filed for Chapter 11 bankruptcy Sept. 7.”
As much as i’d like to blame Vegas for our housing woes, gambling on homes was a common theme, all across America…
Seven out, line away
“As homebuyers descended on the desert city, it changed the way Americans look at real estate, said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago. After Las Vegas, the investment boom spread across the country from Florida to Arizona and California, Swonk said.”
I blame the entire phenomena on Las Vegas. It created a nation of gamblers.
Hey Ben. I too appreciate the articles on Utah and positive comments about the LDS church, as I am a Salt Lake native and church member. I am not preaching religion here (since not the topic). The LDS church has always publicly taught members to live frugally, be careful with debt, and not to spend more than one can repay. Certainly a lot of members have not followed that advice. But I remember hearing about staying out of debt, etc since I was very young and long before this bubble crap ever started. In church services, we regularly teach and discuss such principles in a way to help people make wise financial decisions. It helps all areas of life (personal, work, family, spiritual, mental, physical, etc). It is hard to be spiritual when you are under a crushing debt (I have experienced such). Certainly do not recommend it. And I have no sympathy for the floppers and now bag holders.
These principles should be at the forefront of any church’s teachings. Not just the LDS.
Usury has been demeaned, condemned and banned by just about every major world religion at one time or another. But you don’t hear many pastors talking about debt these days.
http://tinyurl.com/34lf6g
“Prices were definitely inflated in 2005, largely a result of a huge influx of investors”
“Unlike Doncov, who escaped with only a hefty financial loss, many other investors are now caught up in the valley’s growing foreclosure epidemic.”
“Combining the RealtyTrac figures with data from the Clark County assessor’s office, the analysis found that 74 percent of all single-family homes in foreclosure during the past six months were owned by investors who did not live in the homes.”
NO, NO, NO these houses not HOMES were not owned by investors they were purchased by greedy mortgage speculators. They didn’t invest anything in the property, they didn’t convert the house into a home, they didn’t own anything but mortgage debt and they weren’t investors by any reasonable stretch of the imagination.
My wife and I were working in our backyard. Time to pick up trimming. Go and get plastic bags. Said to wife, hey Gary Watts, will you hold the bag? Fitting image - Mr. Watts and his “it is in the bag” and thinking of the folks who are now holding the financial bag by following his foolish advise.
“Brian Judy, broker in Gilbert…said he believes prices will continue to drop for now. More than 57,000 existing homes are on the market and would take roughly a year to sell if no new homes were listed for sale”
Judy, Judy, Judy how do reconcile your data with “the analysis found that 74 percent of all single-family homes in foreclosure during the past six months were owned by investors who did not live in the homes”. Judy is 74% of SFH was ‘owned’ by phantom buyers when money flowed freely, where are you going to find your buyers? Judy, what industry do you have left after the housing melt-down to draw people into the area? I think you are a good candidate for nnvmtgbkr’s Joshua tree retraining program for RE and brokers.
I think you are a good candidate for nnvmtgbkr’s Joshua tree retraining program for RE and brokers.
for the new people here, what exactly does this entail?
I think it involves being whacked by a Joshua tree. Think of Txchick and her 20-pound trout and you get the idea…
lol - now i get it.
thanks,
Not exactly, I believe that nnvmtgbkr has a slightly more intrusive use in mind.
… and you most definitely do not want to “get it”.
OT a place to be $ MAY
a tiger w oil
“There was a time when a fool and his money were soon parted, but now it happens to everybody.”
Adlai E. Stevenson, Jr.
Arizona Slim - agreed that sound financial principles should be taught in all churchs. I hope LDS church does not have a monopoly on that. I assume all faiths have an interest in members being taught and living sound financial principles. Make that schools, or whatever learning is done. Unfortunately - too many missed those lessons.
“So now, less than five years later, you can go up on a steep hill in Las Vegas and look West, and with the right kind of eyes you can almost see the high-water mark — that place where the wave finally broke and rolled back.”
Hunter S. Thompson
““Jeremy Aguero of Applied Analysis, says the foreclosure issue is ‘trending toward the worse side, not getting better,’ but he anticipates a positive surge in 2008 when the massive employment call for the new resorts will begin to be answered.”
This guy Jeremy is quoted in about 90% of Review-Journal stories. Doesn’t matter is the topic is housing, jobs, gaming revenue, he’s quoted as an expert. And 90% of the time he has no clue what the hell he’s yapping on about.
I am sure he must be related to the editor of the newspaper somehow.