This Is The New Normal
The Gazette reports from Colorado. “The local housing market remained mired in one of its worst slumps in years during September, as home construction plunged, prices sagged and foreclosures continued at a record clip. The number of single-family homebuilding permits issued last month in El Paso County fell to its lowest level in nearly 16 years, according to the Pikes Peak Regional Building Department.”
“Also, the median price of homes — mostly resales — that sold in September fell when compared with the same month a year ago, the Pikes Peak Association of Realtors said. It was the second straight month prices have fallen.”
“And with another batch of foreclosures in September, the number of loans in default for the first nine months of 2007 has surpassed the total for 2006, according to the El Paso County Public Trustee’s Office.”
“George Hess, head of Vantage Homes and board president of the Housing and Building Association of Colorado Springs, said there are plenty of homebuyers. But many want to negotiate prices because they know it’s a buyers’ market.”
“Some of his competition includes the homes he built five and six years ago that are now for sale. There’s nothing wrong with them, he said, but some buyers don’t want to pay more for a new home when they can get a better price on a Vantage Home that’s still like new.”
“‘You have too much supply and not enough demand,’ Hess said. ‘The impacts are obvious. It’s going to take a while for this credit crisis to be fixed.’”
The Rocky Mountain News from Colorado. “More than 19,000 foreclosures have been filed in the seven-county Denver area in the first nine months of the year, only about 300 shy of the record set for all of 2006.”
“There were 19,120 foreclosures in the first three quarters of the year, marking a 37 percent jump from the 14,001 filed through September of last year, county public trustee offices said Monday. A record 19,425 foreclosures were filed in 2006.”
“Denver showed the largest number of foreclosures at 5,375 in the first three quarters, and the biggest percentage increase from the same period last year, at 50.6 percent.”
“One of the hardest hit areas in Denver has been the northeast neighborhoods of Montbello and Green Valley Ranch. It’s estimated that 72 percent of the home sales in those neighborhoods are either foreclosures or short sales, where the lender accepts less than the mortgage payment.”
“‘I hope people understand these are just not statistics or numbers on a page,’ added said Zachary Urban of Brothers Redevelopment, a nonprofit group that administers the Colorado Foreclosure Hotline. ‘If you look at the neighborhood consequences, the 19,000 homes are directly impacting houses on each side, as well as across the street.’”
“About the only beneficiaries are first-time home buyers who can get deals, he said.”
The Arizona Daily Star. “As the number of foreclosures continues to rise in Tucson, the local real estate community is becoming increasingly interested in a foreclosure alternative: the short sale.”
“The downturn in the real estate market, coupled with increases in mortgage delinquencies, is making short-selling look like an attractive option for sellers in some cases, said Larry Pollman, a real estate broker who represents sellers in short-sale transactions. Pollman’s company, HomeWay Realty, has seen a surge of short-sale listings within the past eight months, he said.”
“‘They’re in vogue now,’ he said. “When the market goes down, they become in vogue.’”
“‘Lenders traditionally were hard-nosed, and they wouldn’t want to talk to you if you can’t pay,’ said said Fred Brodsky, director of the Brodsky School of Real Estate. ‘But now they’re beginning to see the light. Banks don’t want to be in the business of owning houses.’”
“Lenders also often require sellers to ‘qualify’ for a short sale by providing detailed financial information and documents to demonstrate hardship, Brodsky said.”
“One seller who recently tried holding her own auction to combat a stubborn market ended up disappointed with the outcome. Alison Torba planned to auction off a duplex and a single-family home on Sept. 30. The starting prices were $149,500 for the duplex and $79,500 for the house. Previously, they had been listed at $265,000 and $138,000.”
“A buyer ended up snapping up the single-family home before the auction at $132,000. The duplex was sold at the auction for $200,000. Torba said she ended up about breaking even. ‘I’m disappointed, but I’m OK,’ she said.”
The Tucson Citizen from Arizona. “Pima County homeowners in the next few years could be stuck with property tax bills that reflect the inflated housing values of a runaway real estate market that no longer exists.”
“Residential valuations by county assessors in Arizona lag a year to 18 months behind what homeowners see on tax bills mailed every September.”
“‘Our budget is built on a house of cards,’ Supervisor Ann Day said recently. ‘Our growth was based on an inflated housing market that no longer exists.’”
“The scenario for homeowners is property tax bills in the coming two years reflecting values the market no longer supports, said Bill Staples, Pima County assessor.”
“For example, a home that might sell for $240,000 this year that has an assessed value of $200,000 might sell for only $210,000 next year. But the homeowner’s property tax next year would be based on the $200,000 assessment from this year.”
The Las Vegas Business Press from Nevada. “The Nevada Supreme Court recently ruled that owners of condo-conversions, or apartments transformed into condominiums and sold as residential units, can sue builders for faulty construction on renovated parts of the homes.”
“Many of the valley’s older apartment buildings were quickly outfitted with new furnishings and upgraded features, making them appealing as condos to home buyers or to investors looking to cash in quickly during the now-busted housing boom.”
“But many condos were rushed onto the market, resulting in massive amounts of defective renovation work, according to allegations in Westpark Owners’ Association v. Westpark Associates LLC and Oxbow Construction LLC, the case that led to the recent ruling.”
“Nancy Quon, an attorney who has represented homeowners in defect lawsuits, was blunt about the conditions of some valley condo-conversions. ‘They can be horrible. If you buy them when they are 10 years old, right about the time you buy them, they are falling apart,’ she said.”
The Review Journal from Las Vegas. “Nevada’s economy slumped again in July, with the value of taxable goods and services purchased by consumers down 2.6 percent over the same month a year ago.” Several major taxable sales categories reported lower taxable sales than in July 2006, according to a report released Monday by the Department of Taxation. The July report continues a trend of declines that began in April.”
“‘Nevada continues to feel the effects of the slow housing market and decline in automobile sales, a trend exhibited over the past several months,’ Gov. Jim Gibbons said in comments accompanying the report.”
“Eleven of 17 Nevada counties showed a decrease in taxable sales for July 2007 compared to July 2006: Carson City, Churchill, Clark, Douglas, Esmeralda, Humboldt, Lander, Lincoln, Nye, Pershing and Washoe.”
The Reno Gazette Journal from Nevada. “Observers pointed to the downturn in the housing market as a key weight dragging down taxable sales, the construction sector, continued to fall in the greater Reno-Sparks area.”
“‘It’s a drag, clearly. It’s pretty much the same story,’ state economist Jim Shabi said. ‘If housing’s not moving and prices are down, people are not refinancing and not getting additional money to spend. People either don’t have the money to spend or are being more cautious.’”
The Sierra Sun. “Got big plans to sell your home? Now might not be the best time to put it on the market.” “The slide in real estate sales and price levels continues through most of Lake Tahoe and Truckee, marked particularly by the drop in sales volume and median home prices in Tahoe City.”
“According to a report from Chase International comparing the first six months of this year to the same period in 2006, the median home price in Truckee dropped 13 percent to $645,000. Meanwhile, volume and units sold rose modestly by 4 and 14 percent respectively.”
“Generally, real estate prices peaked in the first part of 2006 and then have declined over the past year. Throughout the Tahoe Basin, sales volume declined by 8 percent compared to this time last year.”
“Tahoe City took the biggest hit in the first half of this year. Amplifying the national trend, single-family home sales dropped by nearly 40 percent.”
“The median sales price in Tahoe City was down this year to $679,000 from $885,000, according to mid-year reports from Chase International, a 23 percent drop.”
“Agents say the current market looks good for buyers.”
“‘Of course I’m a real estate agent, I’m always optimistic,’ Curtis said. ‘I think it’s a great time to buy…I think any buyer can rest assured they’re getting very good value if they’re buying a home right now. It’s not an investment that’s looked at to flip very quickly, but a solid, long-term investment. I’m telling everyone this is the new normal.’”
Before it’s mentioned, I am aware that some of the markets in the Sierra Sun piece are in California.
‘More than 19,000 foreclosures have been filed in the seven-county Denver area in the first nine months of the year, only about 300 shy of the record set for all of 2006. About the only beneficiaries are first-time home buyers who can get deals, he said.’
No bubble in Colorado? 2006 was a tough year, and it’s getting steeper. And isn’t everyone always going-on about helping the first time buyer?
I was in CO last week, and surprised to see new developments still going up outside Denver. At least I assume they are new; they could have been sitting there for sale for a year. It was the usual homebuilders with the same names for developments that they use in other states. I didn’t stop in but as a long-time HBB’er I would say they haven’t cut the price much on these new houses, judging by the prices on the signs. Still looked expensive to me and I wonder how much pain they can take before they really cut prices and/or stop building.
Boulder is part of the slow learners club so far. It will be interesting to see what happens for the August numbers…
Yup, watching Boulder closely myself. Still wondering if the university/students will set a fairly high floor here at the bottom end, even if everything else tanks…
LL’s may try to set a floor, but students always find a way to cram 7 people into a three bedroom flat ….
I’m guessing that these are projects that were already in motion. FWIW, in Loveland Lennar pulled up its stakes and left town. This included a very unfinished development on the west side of town.
Hey In Colorado -
another update from Crested Butte - over 10 lots under $150K. The lowest is $135K. Remember, 1 year ago, lots were all above $200K. For the last year or so, there have been over 70 lots ot choose from and it appears noting is moving.
That is the key phrase: Nothing is moving.
I noticed that very few houses were on the market in my neighborhood this summer, but even fewer sold. Those that sold were discounted about 20% off the peak of a few years ago. One was a 3000 sq ft (plus a 1000 sq ft finished basement) on an 11,000 sq ft lot that sold for about 290K. It had been on the market for about 3 years, and the asking priced slowly dropped from about 360K. No doubt had they been aggressive 3 years ago they would have got a lot more than 290K for it. Of course they didn’t want to “give it away”, which in the end they did.
There was a bubble in Colorado, it just paled compared to California’s, Arizona’s and Nevada’s bubbles.
Still, 19,000 foreclosures are a lot. I think that its very telling that so many ocuured in places like Montebello (think of it as Denver’s Compton)
There doesn’t seem to be much impact yet here in the Loveland/Fort Collins area… House prices remain ridiculously high relative to the median income.
Not in Marianna Butte. The house I mentioned a few posts above sat on the market for 3 years and sold for about its 1999 price!
In Colorado,
I like it up there. Is there a lot on the market in that neighborhood?
My wife and I looked at a few patio homes in Mariana Butte about three years ago. If I recall correctly, the average asking price was ~$400k. Low enough for our salary, too high for our saver mentality.
Same here on the $400K, could do, don’t WANT to do it. Love some of the homes, the general vibe, golf courses, close to Ft. Collins but not too close. Oh well, the wait continues…..
You can get houses in Marianna Butte (but not in the St. Andrews sub neighborhood) in the low 200’s. They won’t be as fancy as those patio homes (which I’ll bet have come down in price since then).
There are also some patio homes (some which face the Golf Course) on Don Fox Ct. In the mid 200’s IIRC.
I think that what made those patio homes so pricey was that they are relatively close to the club house.
I like it up there. Is there a lot on the market in that neighborhood?
I have seen one in St. Andrews. My neighborhood appears to be sold out. I think that I have seen one or two in the “Villages” area.
The Front Range varies dramatically based on where you are buying. The more established neighborhoods in Denver proper(Capital Hill, Parkhill, Cherry Creek, Bonnie Brae) seem to be going back up after a year or two lull. The trendy neighborhoods (Highlands, Wash Park) seem to be doing OK, though not as well — maybe 2-3% appreciation. The newer, well-planned fake neighborhoods (Stapleton and Lowry) and the LoDo condo market are stagnant, but not dropping. Boulder and the JeffCo burbs (basically the older suburbs between Denver and Boulder) are doing well.
BUT, the burbs to the immediate west (Lakewood) and (especially) south and east (Aurora, Englewood, Littleton to some extent) are getting killed. Same with the marginal neighborhoods in Denver. Lots and lots of foreclosures. Probably significant price drops.
The one thing to remember in Colorado is that property started off pretty expensive here, and salaries are generally pretty low — a lot of people take a pay cut to live in Denver and the Front Range, and they pay a disproportionately high share of their income to do so. So prices didn’t go up THAT much, at least in established areas. The easing of credit standards made it easier for former renters to buy previously unaffordable property, and that’s what’s driving foreclosures. But I don’t think that Denver and the surrounding environs have to deal with the ridiculous prices that the East and West Coasts do.
Your presentation of Denver is overall accurate, IMO. However, a couple of points. Prices went up 5% to 10% annually from 1996 to 2000, from what I remember. We got to the part yearly with the “Denver is the new Telecom hub of the universe” bit. A lot of people have hung on at lower salaries because they love to live here, but have done so by draining equity from their homes. I have made a couple of offers that I suspect were not taken because the owner didn’t have the equity or the cash to bring to a closing, so it is rejected and they hope for a bailout or magical market correction. You are right, prices haven’t come down, but they will. Still in the Mile High Denial Stage, but it will come, even to established neighborhoods. Also agree on your last point, not ridiculous like the coasts, but still too high a prices for incomes here. People here seem to be long time residences, who don’t care about bubbles, or relatively newcomers living on the edge in a $400K house making $55K a year. Obviously, there are those in the middle, but they are affected by the housing envirnment around them just the same. It seems from other threads the transplants on this blog got it right, but there are a lot who didn’t and are over leveraged. I think it all ties to income, and unless companies reallocate money to salary increases. Denver will have a slow ride down for many years. Unforuntaly, many of my clients seem to be going the opposite direction when it comes to pay.
I live in Central Denver, and I just don’t know where people are getting the money to buy these houses. From their families? Sales of previous homes? Suicide loans?
My salary’s gone up $20K over the past 5 years. My rent’s stayed the same for the past 4. I was thinking I might be ahead, but I guess I’m not.
Acquaintance just bought a house in 80205, spent about $275K, fixer-upper. She and her BF did a good job of fixing it up so far, and it’s very difficult for me not to be jealous. OTOH, I know it’s not financially prudent for me to buy something without putting at least 20% down.
I give it until the fall of 2009 for housing prices to fall in Central Denver. I think Bush and company are hiding many nasty economic factors. They’ll just dump them on the next administration. These things tend to come to light 8 or 9 months in. I predict a bad recession, possibly a depression.
Here in Golden, they have started several high-end condo projects (500k and up), and some of what they have finished isn’t selling. The places they’re putting up aren’t any better than the average apartment (no sound insulation), and there are rental condos for $800 - $1,500/month. Many of us here are wondering who they think they’re going to sell those million dollar condos to…
It’s estimated that 72 percent of the home sales in those neighborhoods are either foreclosures or short sales, where the lender accepts less than the mortgage payment.”
_________________________
$HIT! This is the highest I have seen anywhere.
72%. WOW!
Remember the $100k+ condo in Colorado that sold for $20k in 2006? This is what people have to get their mind around to understand a true correction. It won’t occur under normal circumstances.
Did you typo the date? I’m not remembering any $20k condos in Colorado last year…or this year for that matter.
Same here.
I remember it pretty clearly because it was the center-piece of a post. I can’t remember if it was an auction. The building had issues, and may have been a conversion.
I believe that the condos you are referring to for $20,000 were in South Denver and they had pending assessments against the owners for something like $20,000 on each unit for some major deferred maintenance. The sale price was more like $27,000 rather than $20,000.
I talked to a realtor today about his listing of a client’s house in Highlands and he told me that basically that the above posts are correct regarding the Denver market. There are certain areas that are stable and others that have a massive percentage of foreclosures with prices coming down dramatically. Personally, I rent in central Denver but I arranged the sale of a family member’s home in Wash Park recently and it commanded a stellar price in my opinion (bidding war, etc. I don’t believe that is indicative of the general Denver market but there are pockets where people are still drunk on the Kool-Aid. I am a lawyer by trade.
If rapidly escalating home prices were the “old normal” from 1998-2005, how come the recent news that prices are falling at the fastest rate in real estate history is interpreted as a sign that the worst is over and the market is soon going to resume going up from here?
It does not appear that very many real estate market participants are on board with the “new normal” concept just yet. Part of the “new normal” is that the home builders’ new business model (keep on building McMansions priced at $500K+ into a glut, hoping that if they build them, buyers will come) is broken beyond repair. Is this really difficult to understand after thirty seconds of thought?
Builders rally as bleak data inspire ‘bottom’ calls
By Greg Morcroft, MarketWatch
Last Update: 11:46 AM ET Oct 2, 2007
NEW YORK (MarketWatch) — Shares of the major publicly traded U.S. residential builders rose for a second straight day Tuesday as investors bet that the stocks have bottomed out after months of freefall.
The upswing, which saw most of the biggest firms rise 3% to 7%, came despite the latest government report showing weak pending home sales.
Flattened by the mortgage crunch, a forward-looking gauge of home sales fell further in August to its lowest level in more than six years, a real-estate trade group said Tuesday.
The pending home sales index fell 6.5% in August after dropping a revised 10.7% in July, the National Association of Realtors reported Tuesday. The index is at its lowest level since its inception in 2001. See full story.
It could be a case of investors believing the situation cannot get any worse.
http://www.marketwatch.com/news/story/builders-rally-bleak-data-inspire/story.aspx?guid=%7B4AF54FDF%2DBB20%2D4FD8%2D9D26%2D599467A4CE26%7D
Builders have rallied big the last couple weeks. Some are up 15%.
These bottom callers are revealing a severe case of ignorance regarding the history of housing busts. Four years is pretty much the minimum duration, and we are currently in the mother of all housing busts, which suggests it may last for more than four years, with lots more “worse than expected” financial reports along the way to the real bottom.
Just shorts getting scared when the Dow hit a new high. Hell, who wouldn’t be scared by that. I’m short and am currently pissing my pants. Thanks Bernanke, you retard.
I was referring to analysts calling the bottom more than investors acting on that assumption. Of course the rally is due to short covering — it’s always due to short covering!
No, equity rallies can only be caused by secret cabals comprised of U.S. government and financial entities. Praise be unto the members of this blog for setting me straight in this respect.
“Four years is pretty much the minimum duration, and we are currently in the mother of all housing busts…”
as someone more savvy than myself remarked regarding housing busts, the magic ratio is 2:3, the first being the lengh of the BOOM, and the second being the level of the inveitable BUST that follows. so, depending upon when you choose as the bubble starting date, the bust will last 1-1/2 times as long.
1997-2005? 12 year bust
2000-2005? 8 year bust.
it’s gonna a long, long, long, LOOOONG time before prices come back.
if ever.
Pikes Peak Busted
“The local housing market remained mired in one of its worst slumps in years during September, as home construction plunged, prices sagged and foreclosures continued at a record clip. The number of single-family homebuilding permits issued last month in El Paso County fell to its lowest level in nearly 16 years, according to the Pikes Peak Regional Building Department.”
‘The pace of local home construction last month plunged to its lowest level in nearly 16 years, more evidence the area remains in the midst of a housing slump.’
‘Just 118 single-family home building permits — a key measure of new home construction activity — were issued during September in Colorado Springs and El Paso County, according to figures released today by the Pikes Peak Regional Building Department.’
‘That’s the lowest one-month total since 92 permits were issued in November 1991 — a time when the Pikes Peak region was starting to awaken from a real estate collapse in the late 1980s.’
It’s a long way down…from Pikes Peak.
Rent a car! Ol’ Pike, she will burn your brakes out!
Or ride the train. Pricey, but very relaxing.
And so the Great American experiment ends in a hail of lawfire…
“The Nevada Supreme Court recently ruled that owners of condo-conversions, or apartments transformed into condominiums and sold as residential units, can sue builders for faulty construction on renovated parts of the homes.”
This is common in CA, I’m surprised that it hadn’t happened in NV yet.
The smartest condo converter that I saw hired the meanest plaintiff’s attorney that he could find for advice. Ultimately, he did minimal work to anything that could leak. What he did was overfunded the HOA and had the new homeowners hire the contractor and do the work. The building needed a new roof? Here’s the money, you put on the new roof. You want double paned windows? Here’s the money, you replace all the windows.
He focused on the legal aspects (putting a map on the project) and aesthetics (paint, carpet, appliances, etc.). I’m not sure if he’s still in business, but I’m sure he’ll be on better footing when the lawsuits start rolling in.
Yes it is nice to see some Denver news again. I can report that new builders are not coming down on prices yet. My wife and I have been watching new homes in the area and they are mostly offering the same incentives that they have been for the last year or so. About 45k off a 365k house when all is said and done. Now that is not too bad but considering the news going on the last couple months I am surprised that we are not seeing the big cutting to move inventory. For example Ryland has a newer build in Elizabeth Colorado that has been open from late May and they only have 7 homes under construction and only show 6 homes as ’sold” so far. So given the rate of cancled contracts maybe 3-4 will close. No even one solid sale per month so far but they are still unwilling to budge on prices. Anyone have any ideas when they think Colorado builders will start to cave?
Have you inquired directly or are you just relying on flyers and newspaper articles? When builders do cut their prices, they usually don’t want anyone to know. It really irritates a person to know that the guy next to you got a 25% discount while you paid full price just 2 years ago. My 2 cents.
This is from talking with them to the point that we were willing to make a offer. The sales guy stated that noone gas gotten more then 40k off so far but was willing to take our 84k offer in. After some back and forth the best they would do was 46,500 that we then turned down as the poperty is in Elizabeth. I feel that we will be able to get a better deal down the road but if they would have been willing to take our first offer it would have been good for us.
I seem to recall a national builder discounting homes pretty heavily somewhere around Frederick.
Holy sh*t lady. I say you’re one lucky FB!
“A buyer ended up snapping up the single-family home before the auction at $132,000. The duplex was sold at the auction for $200,000. Torba said she ended up about breaking even. ‘I’m disappointed, but I’m OK,’ she said.”
Disappointed? No more houses for you!
Slim here from Tucson. The area in which Torba’s properties are located isn’t the best in town. I’m surprised that she got $200k — even if it was for the duplex.
Hi Slim!
That’s what I’m saying! (I don’t know the area).
If you’re suprised, then why the heck is she disappointed?
No more houses for stoopid people!
Smiles,
Leigh
That’s what I say. She’s darn lucky to break even. Imagine the people upside down scrambling to figure out what to do.
“‘It’s a drag, clearly. It’s pretty much the same story,’ state economist Jim Shabi said. ‘If housing’s not moving and prices are down, people are not refinancing and not getting additional money to spend.”
-It is truly scary when you realize that people are guided by their ‘Feelings’….not fundamental economic decisions. The stock market is up one day because of the ‘Hope’ of a rate cut? Worse yet, the stock market is up on ‘Gap’ stores earnings!!?? The store caters to flighty teenagers!
Even scarier is that he is suggesting that people SHOULD be refinancing in order to get cash as if that is normal economics.
No different than the “housing karma” idiot from an earlier post today.
“Agents say the current market looks good for buyers.”
“‘Of course I’m a real estate agent, I’m always optimistic,’ Curtis said. ‘I think it’s a great time to buy…I think any buyer can rest assured they’re getting very good value if they’re buying a home right now. It’s not an investment that’s looked at to flip very quickly, but a solid, long-term investment. I’m telling everyone this is the new normal.’”
*******
Median prices in Tahoe City (-23%) and Truckee (-13%) now taking it on the chin!
That’s as surprising as a sunrise.
Mr. Curtis:
The “new normal”, especially for vacation property buyers, is that it will be an even better time for buyers years from now.
And it should be “Ms. Curtis.”
I wonder how some of the recent (’03 to ‘06) Alt-A Bay Area second home buyer equity locusts feel about their Tahoe purchases now?
This is going to be ugly for a long time.
“Some of his competition includes the homes he built five and six years ago that are now for sale. There’s nothing wrong with them, he said, but some buyers don’t want to pay more for a new home when they can get a better price on a Vantage Home that’s still like new.”
Interesting…
If I offered you a 6 year old car, or a new one?
Which one would you pick?
RE: If I offered you a 6 year old car, or a new one?
Depends on the mileage.
With all the cost cutting going on with the Big 3 to fund the health care of UAW pensioners, the cars they made 6 years ago, are far better in build quality than the POS plastic garbage they put out on the lots today.
Ford sales down 21% last month.
They and Chrysler will be completely dead in another 5 years.
And, the ad-valorem tax or registration cost depending on the state that is always higher on newer cars. I always drive an older car because I don’t want to pay more taxes.
You couldn’t pay me to buy a POS McMansion bubble house built in the past four to five years. I’ll take a well-constructed 80s house in a neighborhood with decent-sized lots and established trees every time.
and no HOA, fewer foreclosures, established neighborhood….
Rally Bob, my wife and I have been talking about that very topic recently and I would truly appreciate any insight into this topic. Why do you feel so strongly about the 80s houses? Thanks in advance.
“If I offered you a 6 year old car, or a new one?
Which one would you pick?”
Life expectancy of a car: 10 years. Life expectancy of a house: 100 years.
Buying a 6 year old house is like buying a 1 year old car. Since I can get a SUBSTANTIAL price break on a 1 year-old car, I buy 1 year-old cars.
If I could get a 6 y/o house at a substantial savings compared to a new house, I’d go with the 6 y/o house. Not to mention the pre-bubble houses are probably better built than the “thrown up as quickly as possible with sub-standard materials and illegal labor” bubble boxes.
That awnsers the question, man that really sucks. Those $h1tbox mcmansions look so cool inside. But it makes sense, they’ll probably fall apart. That really bites.
Are there any good builders or are the they all junk?
RE: Are there any good builders or are the they all junk?
Good builders got to compete with the garbage-just like the legit banks had to compete with the shyster mortgage brokers.
It’s always a race to the bottom.
I’d stear clear of anything built in the last 5 years.
As HBB one poster noted-most homes today are built of vinyl and glue cobbled together by unskilled illegals.
So this morning I turned on the TV, and what do I see? An infomercial from some outfit that was done up like some of the propaganda on faux “news”(it had about the same level of depth and sincerity), only this was all about how with their system, you can profit off of the mortgage meltdown.
It’s finally here. Now that it’s showing up in infomercials with fancy graphics that scream “meltdown,” we may be getting through the denial phase and on to the panic.
Oh but wait, not so fast: At the end of the piece of this thing that I was able to sit through(all of like 4 minutes) the ultimate message was that there has never been a better time to buy real estate.
I guess we’re still in denial after all…..
Now now, don’t try to tell me ABC/CBS/NBC/CNN are objective, ok?? Surely you weren’t born yesterday.
No, only the day before!
One seller who recently tried holding her own auction to combat a stubborn market ended up disappointed with the outcome. Alison Torba planned to auction off a duplex and a single-family home on Sept. 30. The starting prices were $149,500 for the duplex and $79,500 for the house. Previously, they had been listed at $265,000 and $138,000.”
Sounds to me like the RE meltdown is just starting. Yes, you’ll see this where a house that was worth $135K at the peak will probably sink back down to $20K or lower. Even a lot of your “prime” communities will take a bad bath. Instead of sinking to 20K, that 135K house or the equivalent will merely drop to 40K - 70K. I say this because most of the USA economy is basically housing and related industries including Walmart, Olive Garden, Nails By Her, etc. Yes we still have a considerable amount of manufacturing and high tech and other REAL industries but it’s not enough to hold up 302 million people (consider that the areas that had the proportially highest RE run-ups, AZ - NV - FL and the like, don’t have a whole lot of real economic activity at all). No, it’s not the end of humanity that housing in the USA falls by 40% - 95+%. Who cares? I don’t. I don’t understand why the media makes a big stink about the housing market. Much ado about nothing if you ask me. It was patently obvious to anyone with a clue that the housing economy was a scam, and like all fraudulent ventures, it will go up in a puff of magic. All of the tearjerker stories in the world won’t budge my opinion of the RE market; the vast majority of people who bought in the last decade are going to get burned. There isn’t anything we can do to recover the housing market so any bailout is either for Congress’ beer buddies or a PR stunt.
Wins the thread!
Turn down the lights……… The party’s over.
Beer Aeyra!
Serenity Now!
‘You have too much supply and not enough demand,’
Simple conclusion: The prices have not adjusted down yet to the level needed for the market to clear.
Or putting it another way: We have just the right amount of supply and demand for the current prices.
“‘They’re in vogue now,’ he said. “When the market goes down, they become in vogue.’”
I wonder how the people on the losing end feel about this. This is like saying “you’re broke but stylish”.
Markets are starting to bring the pain!
Broke is the new black (Thx TxChick!)
I was just a year too early (story of my life)
Who cares if you are broke as long as you look FAHHHHHBULOUS in the BMWer with the top down going 75 southbound on the Harbor on a sunny Sunday afternoon!
You people are so negative on this board. HEHE!
Could’nt resist the reference to the top down.
Nobody on the road
Nobody on the beach
I feel it in the air
The summer’s out of reach
Empty lake, empty streets
The sun goes down alone
I’m drivin’ by your house
Though I know you’re not at home
But I can see you-
Your brown skin shinin’ in the sun
You got your hair combed back and your sunglasses on, baby
And I can tell you my love for you will still be strong
After the boys of summer have gone
I never will forget those nights
I wonder if it was a dream
Remember how you made me crazy?
Remember how I made you scream
Now I don’t understand what happened to our love
But babe, when I get you back
I’m gonna show you what I’m made of
I can see you-
Your brown skin shinin’ in the sun
I see you walkin’ real slow and you’re smilin’ at everyone
I can tell you my love for you will still be strong
After the boys of summer have gone
Out on the road today, I saw a BLACK FLAG sticker on a Cadillac
A little voice Inside my head said, “Don’t look back. You can never look back.”
I thought I knew what love was
What did I know?
Those days are gone forever
I should just let them go but-
I can see you-
Your brown skin shinin’ in the sun
You got that top pulled down and that radio on, baby
And I can tell you my love for you will still be strong
After the boys of summer have gone
I can see you-
Your brown skin shinin’ in the sun
You got that hair slicked back and those Wayfarers on, baby
I can tell you my love for you will still be strong
After the boys of summer have gone
One of my favorites. Still can’t believe some micheal jackson song beat it out for song of the year.
Still one of my favorites also implosion.
“‘Our budget is built on a house of cards,’ Supervisor Ann Day said recently. ‘Our growth was based on an inflated housing market that no longer exists.’”
Can we multiply this scenario for every little town in every state across America?
Budget problems?
Hahahahahaha
Don’t get me started on that one Sleepless. Just don’t.
Erm…..what’d I do?
I was responding to this comment:
Even scarier is that he is suggesting that people SHOULD be refinancing in order to get cash as if that is normal economics.
Look
Got it. Your post didn’t show up under that post of mine, though. Unless my browser is playing tricks again.
One question. Where were you 3 years ago, Ms. Day? Oh that’s right, getting every pet project done for your “pals” in town! Typical politician. Always wants to look good in the rearview mirror.
Is there really a “credit crisis”? Are buyers with 20% down applying for fixed mortgages who have incomes large enough to carry it and some money in the bank really unable to obtain credit?
Back when I last got a mortgage, in 1989, that was pretty standard. Sometimes you could get a 10% down mortgage in certain areas but you then had to pay “PMI” which is such a rip-off that most intelligent borrowers saved enough not to pay it.
I don’t think there’s any “crisis” here. What do they want? People on SSD to be able to get 500K mortgages again?
People with high FICO scores should avoid getting suckered into catching a falling knife on the fear-mongering sales pitch which suggests that loans will soon be generally unavailable. The thing which is going to go away is unaffordable pricing, not loans.
Until a couple of years ago, I thought our government was relatively honest in economic policy. Maybe incompetent and inept, but not outright fraudulent.
But the maneuverings in the name of “affordable housing” that just contributes to the bubble (talks of bailout, the FHA, any “affordable housing” plans, even the mortgage interest deduction) is a big ripoff just meant to help banks.
The best way to keep house prices affordable and from “bubbling” is by:
1. Requiring any lender that’s backed, insured, etc, by any Government institution (Fannie Mae, etc) to require 20% down and no more than say, 25% of gross as payments
2. Doing away with mortgage interest deductions. (I can see letting you roll the proceeds from one house into your next, within, say, a year or two, without paying capital gains.)
That would keep housing tracking inflation and general wage increases.
You left one out.
Any loan backed by govt agency (FHA, Fraffie Macy) or has depositis insured by FDIC should have to use appriasals based on fundamental value rather than current market. Use cost of rent, cost of construction, availability affordability, etc to set what a house is worth/how much can be loaned against it.
Current Market, as done now, begs for boom and bust cycles since changes in things like interest rates create higher prices, which creates market momentum, and that momentum feeds back into market prices, which feeds back into market momentum….
Using cost of rent, cost of construction, and affordability would allow prices to move up or down to reflect changes in interest rates, availabilty, etc, but would prevent those changes in prices from creating a feed-back loop of market momentum that multiplies the boom… and eventual bust.
Right! Actually the best way to value houses if there is a comparable house that foreclosed and sold at auction nearby would be to use the foreclosure (or settlement price for a short sale) as a fair comparison.
I see plenty of SFH listings in central Florida that have been for sale for over a year. Those houses are effectively worth zero.
Exactly Dr. Bear. Someone will always need a legitimate loan and someone/institution will be there to make a little “ching” off the deal.
The problem is that these so-called “experts” are afraid that the suicide loans are going to go away. Well, I think I can safely say that 99.98756% of us on this board will be glad when that day comes.
Why?
Because 20-25%, 6 months reserves, NO MORE THAN 4X income (only for certain areas), 2 or 3 years of tax returns + current pay stubs, and some job stability will be the norm.
Guess what? No more bazillion dollar commissions for flaky jake realtwhores and their ilk/partners in crime, the REIC because only real lenders and buyers will be playing at that point.
OCDan,
I think old-fashioned lending standards will return with a vengeance. And for self-employed folks like me, higher down payments, a year of more of cash reserves, and 4+ years of tax returns.
Or, just wait a few years and buy for cash.
“The local housing market remained mired in one of its worst slumps in years during September, as home construction plunged, prices sagged and foreclosures continued at a record clip.”
By some accounts on this blog, Colorado is ahead of the pack by 1-2 years. So Colorado is roughly 3-4 years into this with more bad news coming.
To me, this points to more and more evidence that we will experience something like Japan with a slow bleed to the bottom. It suggests AT LEAST 2 more years before CA/FL/AZ/NV get to the same point as CO is RIGHT NOW, which isn’t a happy place.
Colorado is in slow bleed mode. However that was before credit problems. (Don’t know how much impact credit contraction will have)
If rest of the country follows Colorado model, we are in for decade long slow decline (5% per year ?)
I can share some personal stories from Colorado.
Case 1: Friend of ours bought a house in Superior, CO (just outside Boulder). This was in 2003. Price was 450K. The same house was sold in 2000 for 430K. They decided to move in 2006 and put the house on market for 550K (We politely told them its nuts considering that there were massive layoffs in that area due to Sun - Storagetech merger.)
But they had to get that price claiming they spent all that money on new roof, paint etc.
Fast forward 6 months, price dropped to 530K. Obviously no bites. House still sits on market. As per Boulder county accessor’s records, appraised value is 456K.
So for last 8 years or so, prices have not moved much. In the mean time, our friends are still holding on to house. They don’t call us as much any more
Case2: Another friends bought a house 3 and half years ago in SW Longmont for 260K. Last year tried to sell at 300K. One contigent offer came in at 280K. Obviously deal did not happen.
A big pharma buys (all cash deal) biotech he works for (guy becomes millionaire) and they were offered platinum relocation package.
Company bought their house (relo deal) for 350K.
Company paid at least 100K over realistic selling price but its peanuts for company.
Roof, paint, etc. are maintenance expenses - you can never plan to recover the costs associated with simply maintaining the asset in usable condition.
On one hand, yes, CO is ahead of the pack. I don’t think everybody else’s trajectory will be the same, though, because conditions aren’t the same. All real estate is local, but the financing was global, etc.. So CO stopped appreciating with the end of the tech boom, but easy financing + 125% loans resulted in the slow-crash-with-no-capitulation of the last few years. Meanwhile everybody else partied and now gets to have their crash at the same time as the easy money goes away. I’m thinking that CO has less distance to fall, but everybody ends up synched back up in another year or two. At that point prices should reflect incomes+reserves everywhere, I’d think, with the money mostly concentrated in the most geographically desirable areas, as always.
If prices sare going to link up with incomes, CO has a ways to drop. We don’t have CA prices, but our percentage drops may be just as comprable. I would guess 25% to 35% of the people I place are within 3x income of the house they are in.
This is from talking with them to the point that we were willing to make a offer. The sales guy stated that noone gas gotten more then 40k off so far but was willing to take our 84k offer in. After some back and forth the best they would do was 46,500 that we then turned down as the poperty is in Elizabeth. I feel that we will be able to get a better deal down the road but if they would have been willing to take our first offer it would have been good for us.
My favorite and only brother has had a home on the Denver area market since Dec. 05. The house is in the pretty tony area of Greenwood Villiage 45 minutes out of Denver. He told me last week it may be sold. I didn’t pry.
Last year it had problems selling because of it had a two car garage instead of a three car.
We should have a Bubble Chat Room.
A few realtor acquaintances have also told me that local buyers want a 3 car garage these days. Also:
9 ft ceilings
No oak cabinetry (Maple and Cherry are in)
Good night Irene.
I would also like 5 baths, a guest house, hardwood floors throughout the house, and OF COURSE, granite countertops and subzero toys.
Don’t forget 5 fireplaces and an outdoor grill/kitchen!
Hardwood is also expected. I haven’t seen granite and stainless being de rigeur our here thought. I think Corian or Tile are more desireable.
Greenwood Village isn’t actually 45 minutes out of Denver, unless you’re talking height of rush hour. It’s 10-15 minutes from downtown, max, in the Denver Tech Center.
‘If you look at the neighborhood consequences, the 19,000 homes are directly impacting houses on each side, as well as across the street.’”
The infection is spreading. Housing Herpes is coming to a neighborhood near you. Run, but don’t try to hide.
“The infection is spreading. Housing Herpes is coming to a neighborhood near you. Run, but don’t try to hide.”
Can it be something stronger for those with multiple transactions?
And the beat goes on…
Weak dollar prompts record foreign buyouts of U.S. companies
BOSTON: European, Asian and Canadian companies are taking advantage of the weaker dollar to buy their U.S. counterparts at a record pace, increasing investment in the United States but also raising fears about a potential loss of jobs and autonomy.
“We could be looking at the world’s largest tag sale if we continue to see declines in the dollar,” said Donald Klepper-Smith, chief economist at DataCore Partners.
http://tinyurl.com/29mwr5
Ah, a slave nation of litigious, obese, entitled deadbeats.
Sure didn’t take long to go into the crapper.
And the UK is right behind us.
Goodbye English as the language of commerce.
Gotta try to brush up on that German. I’m okay on kiddie stuff but the business language is almost impenetrable (sigh!).
“The median sales price in Tahoe City was down this year to $679,000 from $885,000, according to mid-year reports from Chase International, a 23 percent drop.”
Secondary vacation homes will bear the brunt of the decline, and Tahoe has been woefully overpriced for a long time, thanks to the smug ones from the bay area.
That thought a Million Bucks seemed cheap, for something 200 miles away.
Sorry if this is a repeat
.
Fed Fails to Restore Creditor Confidence, Pimco Says
Oct. 2 (Bloomberg) — As far as the world’s biggest bond investors are concerned, the Federal Reserve is failing to restore confidence in the U.S. credit markets.
Pacific Investment Management Co., TIAA-CREF and Insight Investment Management say the central bank’s decision to lower the overnight lending rate between banks by half a percentage point last month won’t prevent the economy from slowing or corporate defaults from increasing. Lehman Brothers Holdings Inc. strategists say last month’s rally in high-yield corporate bonds, the biggest since 2003, may fizzle by year-end.
http://tinyurl.com/2jd3hb
A tip of the hat to txchick for turning us on to this site:
http://www.minyanville.com/articles/Citigroup-bank-earnings-balance+sheet/index/a/14318
The 1st National Bank of your house, is overdrawn.
“‘It’s a drag, clearly. It’s pretty much the same story,’ state economist Jim Shabi said. ‘If housing’s not moving and prices are down, people are not refinancing and not getting additional money to spend. People either don’t have the money to spend or are being more cautious.’”
Stick a Javalina in it, Tucson…
“‘Our budget is built on a house of cards,’ Supervisor Ann Day said recently. ‘Our growth was based on an inflated housing market that no longer exists.’”
Much of our growth is based on people moving here. To do what? Well, they’ll figure that out after they get here.
Needless to say, a lot of people move to Tucson, then realize that the local job market is rather limited. And then they leave.
We have something like two people leaving for every three who are moving in.
This sounds like Portland, although I’m not sure how many are leaving. Fairly transient populace though. They come without jobs for the “lifestyle” then realize that sitting on their laptops in a coffeehouse gets old and doesn’t really pay the bills.
Hey! We have the same phenomenon here in the Mile High City.
LOL. But at least you have 300+ days of sunshine, no?
I know of at least 7 people (native Portlanders) who have moved to CO and claim they won’t move back if they can help it. (And they say Portlanders are tough as nails when it comes to weather) Maybe all of our coffeehouse dwelling castoffs are ending up there?
Much of our growth is based on people moving here. To do what? Well, they’ll figure that out after they get here.
Its the same everywhere. That’s what happens when we offshore everything that isn’t nailed down.
“A buyer ended up snapping up the single-family home before the auction at $132,000. The duplex was sold at the auction for $200,000. Torba said she ended up about breaking even. ‘I’m disappointed, but I’m OK,’ she said.”
Coulda been worse…
A duplex just sold for $4k in the motor city, a week ago~
You received 50 times as much, and you’ll never have to think about it again…
Of course I’m a real estate agent, I’m always optimistic,’ Curtis said. ‘I think it’s a great time to buy…I think any buyer can rest assured they’re getting very good value if they’re buying a home right now. It’s not an investment that’s looked at to flip very quickly, but a solid, long-term investment. I’m telling everyone this is the new normal.’”
So by Mr. Curtis’ reasoning, I can tell you to go ahead and walk on top of that fire. It won’t burn you. That is the new normal, fire won’t burn. Go for it, walk on that fire. Just stick your foot in. No problem.
Yes. This will be the new normal. No more housing economy. Say goodbye to the MIC. Kiss goodbye to Walmart and Home Depot. Adios y hasta la vista to Burger Barn and Applebee’s and all of the other fat@$$ cheesy restaurants. RIP US Dollar. And kiss goodbye to $800 gold…not going to happen without Uncle Fed taxing it or taking it away.
Shut down the Blue States: they lose, you win.
Shut down the Red States: you lose, they win.
The more things change, the more they stay the same. What will I do?
Disappear. Goodbye
Hey aeyra,
Disappear if you must, but not yet. Still lots of innings left.
Disappear? I second that. Northeastern coast of Brazil is beautiful this time of year. Or any time of year, for that matter.
“Nancy Quon, an attorney who has represented homeowners in defect lawsuits, was blunt about the conditions of some valley condo-conversions. ‘They can be horrible. If you buy them when they are 10 years old, right about the time you buy them, they are falling apart,’ she said.”
May I interest you in a nice tort dessert in the desert?
I feel we can get a good Quon-tity of money…
Many of you may not be aware of it, but our horribly flawed system of law doesn’t exist anywhere else in the world, for good reason~
I should probably save this for the FL news, but looking at the Rochester, NY Craigslist for real estate sales, there are 25 local properties for sale and 18 FL properties. The FL sellers are starting to attack the snowbird population in a big way, or they are becoming more desperate, or both.
http://rochester.craigslist.org/rfs/
Do they still have Nick Tahoe’s and the garbage plate there? Hell, do they still have Kodak there??
(Spent the ice storm of 91 there)
was watching “Judge Maria Lopez” here. There was a real estate case. At end of show she made a comment about people getting into RE deals w/o knowing what they were doing. Also mentioning subprime problem and now many people losing homes after thinking they had low rates. Amazing to hear that now. Wouldn’t have a few years back.