The Drag That Brings All These Housing Markets Together
NBC 4 reports from Virginia. “With bank foreclosures hitting record levels nationwide, banks have begun turning to extremes to unload properties. News4’s Michael Flynn reported that with hundreds of homes hitting the auction block, there could be great deals available throughout the Washington metro region. A single company organized the sale of about 300 foreclosed properties in an auction that will take place this weekend.”
“Real estate agent Carolyn Capalbo said that buyers are getting deep discounts from what people were paying for homes within the last few years.”
“‘I think they’ll save quite a bit and be pleasantly surprised,’ said Capalbo. ‘Just a few years ago the previous owner paid about $450,000. At auction, real estate agents expect it’ll go for about $100,000 less.’”
“Thomas Pring, who lives near a home that is soon to be auctioned, said he knows the sale does not bode well for the value of his property. ‘I’m really sad because we paid more than what they’re offering now,’ he said.”
The Examiner. “About 250 Washington-area houses will hit the auction block in October as the nation’s largest real estate auction firm that deals with foreclosures makes its first D.C. stop in five years.”
“‘It’s not unusual at these auctions to see houses selling at 20 percent below what the house was listed at on the regular market,’ company spokeswoman Crystal Wright said. ‘But people should understand too that nobody is giving property away.’”
“‘You do have an opportunity for a bargain,’ said Jill Landsman, spokeswoman for the Northern Virginia Association of Realtors. ‘But you have to recognize that the previous owner of the property was a delinquent owner, so there is a problematic background there.’”
“Many of the properties listed entered foreclosure last year during the early stages of the subprime mortgage meltdown, but lenders often try to sell the homes through real estate agents for about a year before handing them off to auction firms.”
USA Today on North Carolina. “For the past decade, Chapel Hill, N.C., has been attracting more Americans in search of an attractive and affordable place to start a business, raise a family or retire.”
“Yet until around mid-August, home sales had slowed and prices had declined, as in many parts of the nation. This year is the first since 2002 in which home sales in Chapel Hill have dropped.”
“‘A lot of people are deciding to make life changes, and this area is so diverse and popular,’ says Kim Dawson, president of the Greater Chapel Hill Association of Realtors. ‘But they can’t move here until they can sell their home in California, Florida or New York.’”
The Charlotte Observer from North Carolina. “‘Realty Place,’ said the blue-and-yellow signs. ‘Your Home Superstore.’ It was 2002, the middle of the subprime mortgage boom. A young real estate agency was fishing for customers in an unlikely place.”
“It targeted people with modest incomes and ragged credit, many of whom had been shunned by other companies.”
“But an Observer investigation shows Realty Place worked closely with the builders it had vowed to beat up. The company funneled buyers into low-priced starter-home developments, many of which are now plagued by foreclosures.”
“The company collected millions of dollars in bonuses from builders in exchange for finding buyers for their homes. In more than 50 interviews with Realty Place customers, the Observer found no one who was aware of the bonuses. Failing to tell a customer about a bonus violates state regulations.”
“The payments also raise questions about the company’s presentation of itself as a buyer’s agency.”
“‘It’s supposed to be like your mother helping you out on a real estate transaction,’ said Jon Boyd, president of the National Association of Exclusive Buyer Agents. ‘The idea that your mother would take a kickback in your transaction, well, that’s not appropriate.’”
“The company also aimed to convince people that owning was cheaper than renting. An ad distributed at a Concord apartment complex showed a $126,000 home with the slogan, ‘Compare $643 To rent!’”
“The number wasn’t real. The projected monthly payment actually was about $1,000.”
“How did Realty Place justify ‘$643′ in the Concord ad? The company claimed it was an ‘effective monthly payment,’ reflecting adjustments including a projected deduction on federal income taxes.”
“Kenneth Porter, a Charlotte accountant, was paid by Performance Realty to calculate actual tax savings for hundreds of customers. Not once, Porter said, did anyone come close to saving $221 a month, the amount reflected in the Concord ad. ‘No way,’ said Porter. ‘That’s pie in the sky.’ Few saved more than $100 a month, he said. Some saved nothing.”
“Customers flocked to Realty Place. On some Saturdays, the lines of hopeful people stretched back into the malls. ‘We had folks that were ready to write up contracts before they ever saw anything,’ said former agent John McQueen.”
The Times News from North Carolina. “It took three weeks for Mark and Rhonda Evans to get an acceptable offer on their house on Dickey Mill Road in northeast Alamance County in September, 2005.”
“Two years later — and not even a mile away — their house has been on the market three weeks with ‘just a few nibbles,’ Rhonda Evans said.”
“‘It’s the same agent, the same company,’ Rhonda Evans said. But the outcome this time is different. ‘The whole mortgage fallout, that has just affected everything,’ she said.”
“June Larson, owner of Re/Max Diamond Realty in Mebane, said she is still seeing lots of people moving to Alamance County from the northeast and Florida for central North Carolina’s lower cost of living and calmer weather. A lot of these people are slowed by the housing markets they are leaving because most people can’t keep a house in Florida and put a down payment on a house in Burlington at the same time.”
“This is the kind of drag that brings all these housing markets together. The Evanses don’t even want to leave their neighborhood. They just want to downsize. They have a contract of the house two doors down, contingent on selling the house they live in.” “But that can’t happen until someone gets freed up enough to buy it.”
“Builders are still building,adding houses to the market and, potentially, lowering prices, but some are cutting back. Eddie Boswell, owner of Boswell Construction, said his sales have fallen off and he is holding off on building new houses until his current inventory sells off.”
“‘I don’t know if it’s the finance crunch or what, but there are a lot of houses, I can tell you that,’ Boswell said.”
“Custom builders are scaling back, Boswell said, but tract builders are still getting building permits. ‘Which is kind of a telltale of who’s speculating,’ Boswell said.”
“Craig Morrison, Cimarron’s president, said…sales have definitely slowed. ‘In a normal market, we would be selling more product that we are, but this is not a normal market,’ Morrison said.”
“Morrison said sales are slower than they were last year, again because newcomers have to sell their homes in other markets.”
“Foreclosures are also adding homes to the market. One Web site selling foreclosed homes had 165 listed in Burlington alone. According to the Alamance County Office of the Register of Deeds, 937 notices of foreclosure have been filed this year so far. In 2006 there were 1,043 and 756 a year before.”
“Larson said people thought they were getting bargains from out-of-state lenders offering lower interest rates. In the end many got hit with higher-than-expected closing costs because the lenders didn’t know enough about local tax and insurance rates.”
“Larson said she thought lenders were going to stop making loans for 100 percent of a home’s value, which is how many people got under so much debt. Larson said she saw people take loans for 100 percent of the home’s value at 14 percent interest.”
“‘What are the odds he will stay there and build credit?’ Larson asked.”
More great investigative reporting from the Charlotte Observer. IMO, if we had more such news organizations, we wouldn’t be in this mess.
Is it just me, or are the Carolinas one of the few areas of the country where people seem to care what happens to their communities?
I lived in Carrboro (town next to Chapel Hill) in the early 90’s. They are (justifiably) very protectionist, want to remain undiscovered. At one point the town wanted to put a recreational soccer field outside the Highway 54 loop, and residents resisted because they felt the road was should be an outer limit. Building outside it would lead to a slippery slope of development.
There was a lot of open land, too iron-rich to farm effectively, but prime material for the cookie cutters developments YUCK. I’ve never been back, but I suspect the natives have been swamped by the wave of jobs and $$$ from RTP. Not to mention the retiring baby boomers — and yes, this is one place the baby boomers will be going to.
“undiscovered”
I find it amusing when real estate agents use “undiscovered” in their ads, as if a place will not be discovered after the ad comes out. Once an “undiscovered” place hits the RE ads, the residents might as well kiss their undiscovered place goodbye!
Doug — likewise. I’ve been disappointed a couple of times when a place I had my eye on hit the Best Places to Live (or retire) list. Those lists attract Yankees and halfbacks like bug zappers attract mosquitos.
All I know is that Chapel Hill isn’t what I would call cheap by any means. A decent houser there is close to 350-400k. How this is anywhere close to being affordable, especially for NC is beyond me.If the sales are declining, it is probably a combination of the fact that it isn’t affordable and from the fallouts in FL and other bubble-licious areas.
I’m actually sort of glad to see many of the “feeder” states that have been fueling NC with bewildered out-of-staters who want cheap property start to have severely declining sales. There’s no better way to ruin a local economy than fill it with people who aren’t moving for professional opportunity and simply want a cheaper place to live simply because they can fund it with cash out money.
Chapel Hill is scheduled for our upcoming tour. I will be staying in the Governor’s Club. I will give you some insight into what’s going on. It should be fun. The multi-million dollar houses in the club had me baffled the first time I stayed. I guess the RTP must really kick out the bucks.
I’ve looked in that region too. What’s interesting is that I didn’t think that CH was all that fantastic. What I mean by that is that if you were to drive say 10-15 minutes outside of Chapel Hill, prices drop severely. What sells for 350k in CH is 150k elsewhere. To me it wasn’t like there was such a huge difference. I grew up in the sticks, so driving 15 minutes to and from town isn’t a big deal. Especially given the fact that out here in CA, homes are 500k or more no matter how far out you live from anything remotely resembling a town. CH seemed like “the place” to live if you were hip, educated, and rich. But as far as houses and so forth, outwardly it didn’t seem that different from the exact same homes just 15 minutes away.
I think many who consider it simply hear ” good things” about it and assume that this is the place to go.
Turn left when you are leaving the gated security of the Governor’s Club and you will reach a trailer park within 2 or 3 minutes.
I think what’s important to see in places like NC is that the state and many others in the Southeast offer a diversified level of housing options. It is very different than CA where a tiny little 2 bedroom house will be 600k. In NC, the same home would be 100k or less in many instances.
All I know is that NC got the same treatment as my state, TN. Builders built enormous tracts of ugly, cookie-cutter Mcmansions next to the freeway. These of course are for Floridians and folks from the Northeast. These are the homes that are dragging down the market because they were priced in most cases beyond the reach of the local economy. On the other hand, my dad sold one of his rental houses, which was a small postwar home in 3 days. It was priced in accordance with the local economy.
The big difference is that unlike CA where starter homes simply do not exist, a person in NC has the option to start small and work their way up- be it trailer park, crappy little starter home, townhouse, suburban rancher, or Mcmansion.
Builders built enormous tracts of ugly, cookie-cutter Mcmansions next to the freeway.
I understand that commuters don’t want to be too far from the freeway, but who in his right mind wants to be too close to the freeway (unless you just love hearing the never ending drone of traffic). IMHO, if you can hear the freeway, you are too close.
The real irony is that traditionally, freeway houses were always the cheapest low-rent properties.
as far as location, location, location went, living on top of a highway wasn’t the right one.
I’ll head to Cape Carteret co NC
check it on epodunk.com
My town cares. Olympia is great. However, the next town over, Lacey, is basically a chancred leprous blot of pulsing hideousness.
Love your words : )
“This is the kind of drag that brings all these housing markets together”
ALL REAL ESTATE IS LOCAL!
Buy now or be priced out forever!
Bummer the mortgage market is international.
As I told my wife, as far as affording a home, the best thing that can happen to us is that for six months we do not qualify to buy a mortgage. Any longer… scary. Any shorter… we won’t see the full wake up of J6P. Sigh… we probably never will.
However it won’t be time to buy for a long time.
This mania went on for six years. It won’t unwind in one or two. And yes… different than what I thought 18 months ago. I learned! Ok?
And my estimate for DC is obviously wrong… We’ll blow past my price drop prediction this winter. So I’ll have to re-figure out where it will be in 2010.
Got popcorn?
Neil
Compound price drops with the weakening dollar (inflation). The real home value depreciation is worse than just the dollar figures. Scary…
“Customers flocked to Realty Place. On some Saturdays, the lines of hopeful people stretched back into the malls….”
That’s why we call ‘em Sheeple.
Looking at the dates in the CO story, one realizes how long this mania ran, and not in the places it is typically considered to have occurred.
After some observation, I would say that we had two different, but simultaneous RE bubbles thes epast years:
1) The hyper appreciation bubble, found mostly in coastal communities.
2) The “everyone can buy a house, regardless of income or creditworthiness” bubble found just about everywhere else.
I love the theory in other articles that areas that did not have Vegas/Phoenix style price jumps will see no price drops. If an area had stagnant prices or modest price rises during the lending bubble, then that area’s prices were still artificially inflated by the lack of lending standards.
If economic conditions would have otherwise led to price drops, then those price drops are still probably in the bag. Not to mention the ripple effects on the economy of big-dollar price drops in “wealthy” coastal areas.
3) Our house in the metro has appreciated so much, let’s take some our equity and buy a second home out in the rural area just for an investment.
So true Colorado . I have said all along that the builders were tied in with seminar groups and market pushers ,so it doesn’t surprise me who the builders were targeting .
The third group of people targeted were the stupid flippers/speculators who were sold a different investment line . At the end, speculators that bought at the top of the market ,or speculators that wouldn’t make a profit on rents are stupid .Speculators standing in line to buy price inflated condos ,not due to open for 2 years ,had to be in a state of frenzy to make that deal .
I kind of lump the speculators in with the hyper appreciation market.
Excellent point.
There are areas that still have a reasonable price/income ratio. Raleigh/Cary NC for example has a home price/income ratio of between 3 and 4… so it will probably stall and fall a bit, but there is money here to buy on a dip.
These are communities that I catergorize as #2. Relatively affordable (at least when compared to places like Cali and DC). But the credit bubble allowed deadbeats to buy otherwise not too expensive houses in those areas, and now we are seeing record foreclosures just about everywhere now.
“under my administration, more people are homeowners than at any time in the history of our great country”
(paraphrase) George W. Bush, State of the Union.
What an idiot. Taking credit for financial manias.
’ssshrubery’s!
“Many of the properties listed entered foreclosure last year during the early stages of the subprime mortgage meltdown, but lenders often try to sell the homes through real estate agents for about a year before handing them off to auction firms.”
- If you add up the ‘years’ mentioned in the article, the timeline starts to get a little clearer for Juan Sixpack. The peak time for resets is April, May and June NEXT YEAR!
At some point, Juan will begin to see that this is only the beginning.
“‘A lot of people are deciding to make life changes, and this area is so diverse and popular,’ says Kim Dawson, president of the Greater Chapel Hill Association of Realtors. ‘But they can’t move here until they can sell their home in California, Florida or New York.’”
Then don’t hold your breath, they may however make it there as renters after they lose their houses
‘But they can’t move here until they can sell their home in California, Florida or New York.’”
If I lived up there, I’d be thanking God for small favors.
Can you imagine how the locals feel with the invasion of folks only being stopped because the housing bubble collapses. Yes their homes will go back down in value, but I am sure they are happy the inflow of people will slow greatly.
The locals don’t like it, I know this because some of them come down to visit here. Also, anecdotally, they are getting a large influx of illegals who have left Fla for greener pastures, since the Carolinas still have some factories and processing plants that will hire. Carolinians are NOT happy about the halfbacks, legal and illegal, it seems. Unless, of course, you’re a realtor there. I used to get emails from a realtor the Triangle who specialized in selling to Floridians.
“Carolinians are NOT happy about the halfbacks, legal and illegal.”
Ain’t that the truth! A few years ago, I went to Charlotte to watch my son run in a cross country meet. Stopped at a hamburger joint on the way back. Nobody in the place spoke English. In fact, the menu had pictures that you pointed too, because the people behind the counter didn’t speak English and couldn’t understand what you were ordering.
Uh, perhaps I missed something, but what’s a “halfback”?
I hate to say it, but the collapse of the housing bubble is one of the best things to happen up here in the NC mountains!
I’m jealous, didn’t happen soon enough to save much of Florida.
Doug, you don’t hate to say it. I lived in Carrboro in the early 90’s. Carolina wants to remain undiscovered, and justafiably so.
Perhaps all those crappy cookie cutty houses can be occupied, as Florida watcher says, by BK boomers in search of warm winters and low rent.
Doug, how is Highlands area holding up? I have had people swear that Highlands is bulletproof. I disagree completely. What are you seeing in that area?
Totally with you Doug, and mainly because my home state of TN is your neighbor. Many of us were wondering just exactly when we would start to get flooded. Knoxville was mentioned as one of the ” best places to live” in the US despite the fact that it is a verifiable mess of sprawl. People believe anything and you wouldn’t believe all the folks who started moving in according to my parents.
What bothers me the most about people moving in simply for the price is that most are from super metropolitan areas and have no grasp of Southern culture and traditions. Many came expecting things to change to fit their tastes- Bed Bath and Beyond and all.
“Many came expecting things to change to fit their tastes- Bed Bath and Beyond and all.”
Jetson — that is exactly what causes hatred for the interlopers. You want to come here, adopt our ways and fit in? Fine. But noooo… they want to come in because of the low taxes, pretty scenery and laid-back lifestyle and as soon as they burrow in, some of ‘em run for city council and this and that board and try to change everything. (There are still some areas where outsiders would not dare try that — the hints to go home would not be subtle.) How many true southern accents do you find in the Northeast that do not belong to someone who is there solely because of their job or their marriage?
What locals. Chapel Hill was attracting the out of state migrants 15 to 20 years ago and house prices were always higher than the surrounding towns. It was also attracting the scorn of NC locals. Jesse Helms famously suggested that instead of building the State Zoo, just put a fence around Chapel Hill.
I was in a group of people from the UK and New York living in Chapel Hill and renting a raft in the NC mountains. One of the party gave their address for the rental contract and the women serving her turned to her coworker and said “Chapel Hill, I thought so”.
“Chapel Hill, I thought so”.
Reminds me of a bumper sticker I saw in Ashe County, NC, a while back. It said IF YOU’D RATHER BE IN CHAPEL HILL, THEN GET THE HELL OUT OF ASHE COUNTY!
One thing that I don’t think non-southerners get is that showing your wealth is sort of frowned upon there. I knew quite a few well-off people when I was growing up who drove Fords and Chevys. It’s easy to see how a yuppified place like CH could become sort of loathed by the locals.
Chapel Hill sounds like a southern version of Ann Arbor….an area of materialistic, snooty liberals who look down on us average heathens outside of town who have the gall to question them about anything (Arizona Slim excepted, of course).
I Wilmington, NC, the bumper sticker is either” I-90 WEST, USE IT” or “IF YOU THINK WILMINGTON IS PRETTY NOW, YOU SHOULD HAVE SEEN IT BEFORE YOU GOT HERE”.
Many of the locals I knew seldom ventured out of state (except perhaps Myrtle Beach). Those who had visited NYC were terrified by the place. A lot of them didn’t like foreign cars either. Pickup trucks were very popular though.
“Many of the locals I knew seldom ventured out of state (except perhaps Myrtle Beach). Those who had visited NYC were terrified by the place. A lot of them didn’t like foreign cars either. Pickup trucks were very popular though.”
Nicest thing, IMO, is that they didn’t follow you home and try to change the way you do things, or raise your taxes, right?
I didn’t go home Chip. I simply moved somewhere more to my liking. It wasn’t uncommon though for North East transplants to move back home after a couple of years in NC when I lived there.
BTW jckirlan the Interstate in question is I-40, not I-90. It goes from Willmington to Bakersfield, CA.
‘We had folks that were ready to write up contracts before they ever saw anything,’ said former agent John McQueen.”
Yes, those are the people who said to themselves “Pinch me, I own a house”. For them it was the achievement of “The Impossible Dream” and then they found out it truly was “Impossible”.
the theme song for the entire bubble economy.
If the little Eddies of the homebuilding world can see the light, why can’t the corporate monsters that keep building, see it?
“Eddie Boswell, owner of Boswell Construction, said his sales have fallen off and he is holding off on building new houses until his current inventory sells off.”
“Custom builders are scaling back, Boswell said, but tract builders are still getting building permits. ‘Which is kind of a telltale of who’s speculating,’ Boswell said.”
The big builders have an easier time getting “other people’s money.” So they have an inherent motivation to keep building even when they know its stupid.
Got popcorn?
Neil
Also got to factor in they feel they buffer the land prices by throwing up a house on it.
“Builders are still building,adding houses to the market and, potentially, lowering prices,”
What idiot banker is still extending credit so builders can build more houses.
I still see some construction in Central Florida (I’ll be out there next week, so I can see how it’s going)
My guess is the builders already have sunk costs, and their margins were so huge that even if they sell these units for half of what they were originally priced at, they’ll still make some money.
More likely the case is that the margins are negative due to land costs. However despite the fact that each sale loses $$$, it’s still worth building because each no-sale loses more $$$, due to sunk costs.
A combination of two things will finally make the builders stop building -
- Sunk costs will be relieved - by the slow trickle of sales that are happening and/or land writedowns (mostly the latter)
- Negative margins will become so big (so negative) due to prices coming down that it will even be greater than sunk costs.
Interestingly, land costs (lots of at least 60 acres that would be of interest to a developer) didn’t really bubble in central florida! Why? Because there was no phony financing for them. Find some large parcels on http://www.ocpafl.org/ (admittedly, they only change hands once every 10 years or so), and see what they’ve gone for. And there’s still a ton of empty land!
“‘It’s supposed to be like your mother helping you out on a real estate transaction,’ said Jon Boyd, president of the National Association of Exclusive Buyer Agents. ‘The idea that your mother would take a kickback in your transaction, well, that’s not appropriate.’”
Oh they were like a mother…. A mother ——
Hey, wmbz, you’re a Carolinian, aren’t you? What’s happening on the ground in your neck of the woods? I need a reality check.
I know that houses aren’t moving in the Winston-Salem area.
Palmetto, I will be in several areas of North Carolina, starting Saturday. I will try to provide an update when we get back or while we are out there.
Unless you’re in the triangle area, which is only technically in NC, you won’t get the full picture.
Things are slowing down in the Mid-lands, I’m in Columbia. Our State paper will not print anything the lest be honest/negative, no surprise! We are over built with Condos downtown, however several new projects are going up. We have one developer offering a “free” Toyota if you’ll buy a house, that’s a first for this area. Sellers are holding prices, but sales are much slower. Half backs have kept things going to some extent. Reality appears to be taking hold, of course it’s different here because we have a University and are the State Capitol…. blah, blah blah.
Very little is selling here in Wilmington, NC.
Everything still priced astronomically, lots of “for sale” signs. Friends that shouldn’t “own” one property, “own” two.
Realestate agents are recalcitrant stating is one article in the Wrightsville Local news paper that “if you can’t afford the hosues you should move as you knew you were moving to the beach and it was going to be expensive”.
There was 1908 homes for sale in the area last year, now we just broke the 3000 mark.
I see they have never met my mom.
“Many of the properties listed entered foreclosure last year during the early stages of the subprime mortgage meltdown, but lenders often try to sell the homes through real estate agents for about a year before handing them off to auction firms.”
That is an interesting note. Are auctions trending toward papa bear’s expectations?
“For the past decade, Chapel Hill, N.C., has been attracting more Americans in search of an attractive and affordable place to start a business, raise a family or retire.”
Chapel Hill used to be a nice town. Had some good times there. Now it’s all traffic, expensive houses, and yuppies. A place to be avoided at all costs.
I lived in Chapel Hill for about 4 years in the early nineties. One of the nicer towns in NC but that isn’t saying much. One of the happiest days of my live was seeing the “Welcome to North Carolina” sign disappearing in my rear view mirror as I drove up I-85 towards NYC.
This looks like Bill in Carolina Day! Whaddya think, Bill?
I love these stories in which realtors provide an estimate of what a property should go for at an auction. The typical number is 25%. In the auctions I have seen in South Florida the typical bid is off 50% from the zillow numbers. In most cases the sellers have not blinked. The result is only 20% of properties, usually with no reserve, are sold. It won’t be long before we see auctions with almost all houses showing no reserves.
Bill has pretty good insight on this, having moved from Fla to NC and loving every minute of it. I’d like to hear more about everyday life there, as compared to Sarasota.
Bill I am right there with ya…I move from Fl to Ga and should have done it sooner….love the fact that when I want to change lanes when I am driving..the people here LET ME!…just the little joys in life can make you smile….
Charlotte is turning into a sprawling disaster, with 485 acting as the noose around its neck. It has good restaurants and if you like NASCAR you get a couple of really fun weekends a year. It is very pedestrian unfriendly. Anybody that has walked down Park Road in South Charlotte knows what it’s like to have near-death experiences. The northern part can still be very redneck. There are a lot of decent neighborhoods for raising a family. Uptown Charlotte (there is no downtown) is still pretty lame and South Blvd. might be the worst street ever invented by mankind.
Charlotte is really no different from any other NC city. None of them are pedestrian friendly. They typically have tiny/dead downtown areas surrounded by huge suburban sprawl. Chapek Hill is walkable but isn’t really a city.
It does probably have better resturants than most places in NC (they like to fry everything and serve with very sweet ice tea in a lot of NC resturants), but I am surprised that someone from NYC would be impressed. E.G. The Zagats guide for Charlotte lists 46 resturants, the NYC Zagats lists 1740.
The thing is that social whims in places like Charlotte are different. You’ll likely go home to your family after work and fart around the garage or your large yard rather than concern yourself with bike trails and pedestrian-friendly streets. At least that’s the way it worked in my hood. If you’re from NYC and want NYC in NC… you will be highly disappointed. As for me, I’ll take the 2 acre sized yard and garage please…
UES — I apologize for picking on you a bit, though it is lighthearted — you clearly mean no offense and I don’t take your comments to be complaints. My favorite “think about this” question is, “What do you want, and what are you willing to trade for it?” That covers 99% of the events in my life. I can snow ski or I can water ski, but it is not fun to try both in the same place. Fortunately, I get to choose. Likewise, I can salivate over Zagats or Relais-rated restaurants, or I can live in the Old South. (Atlanta, like Duke, does not qualify as Old South.) No problem — I get to choose. As for myself, I’ll live in the Old South until I die and if it means I don’t get to eat at a five-star restaurant, that was my choice. But I’ll never complain locally that we don’t have one of those restaurants.
Chip,
your point is well taken. Before moving and buying a house, it’s worth thinking about whether you’ll fit in socially. I get along fine here in NYC and the NE, but would I be comfortable in a place that’s more conservative with a lot of fundamentalism? Probably not. Reaon enough to look elsewhere. I once had a job offer in Huntsville, Ala. I’m sure there are lots of highly educated folks there, but would I really fit in? I doubt it. Not long term anyways.
Spike — I think you came to the right conclusion. I spent six months in Huntsville and many years in Alabama and even though Huntsville is more “modern” than most of the rest of the state, it is too far a cry from NYC to ever appeal long-term to someone who enjoys those big-city amenities. What I like about your observation is that it is “different strokes.” I’m sure I would have a great time in NYC for a weekend or a week, and you probably would enjoy north Alabama for the same amount of time.
A relative recently went to St. Thomas and spent a couple of weeks, instead of just a night or weekend. Wake-up call. He said that all the “really friendly” locals turned decidedly inward once the last cruise ship sailed. He said they had a fairly miserable time, as they were not accepted, were not expected to stay on, yada, yada.
Chip,
For all the complaining that everyplace has been bulldozed and malled to look like every other place, it’s worth respecting regional differences. Maine is still Maine and Georgia is still Georgia, thank God. And, much as I like it, one NYC is enough.
Since you are a southerner though, one question, if you don’t mind. I have a graduation to attend at UG in Athens in the spring, and I thought I might try to see Oxford, MS on the same trip. The Guardian (UK) raves about it, and I was curious. What do you think?
Overall, construction still goes on, and I see very little in the way of incentives in the builder display ads in the Sunday real estate section of the newspaper. Every time we take the boat out on the lake we see more houses where there used to be trees. The big-city mall was busy last time we went. Restaurants are pretty full, Wally World is busy and I’ve seen no spike in the number of stores and businesses closing. The local Lowe’s is actually hiring, but Home Depot is dead (yea!).
Sales in our particular community (mostly retirees) have declined significantly, and my realtor/broker friend says it’s the old lockup problem. People can’t sell their current house to move here. Inventory is up, but that’s due to the wonderful timing of the small, local builders who bought numerous vacant lots last year which now have vacant houses on them.
Now if it would only rain…
Bill — we have plenty of rain down here in Florida. Just spent a few days in your old turf — plenty of rain. You probably remember back when one of the local rags — Tampa Tribune or St. Pete Times — was free any day that the sun didn’t shine.
“Many of the properties listed entered foreclosure last year during the early stages of the subprime mortgage meltdown, but lenders often try to sell the homes through real estate agents for about a year before handing them off to auction firms.”
It is hard for me to grasp the collective stupidity of a bunch of bankers who hold property for a year without a thought to properly pricing it to move. Do these guys actually get paid to be dolts?
i’d sure like to know.. what is their plan and why..
i guess banks have staying power and needn’t be in a hurry to book losses, which might then reflect in their stock prices.. might be some sort of a domino effect.
If they sell them, they have to take a loss, if they hold them, they don’t. It’s a lot harder to believe things are going to get worse a year from now when that means you are going to take a bath.
If they start writing down the loss on their assets, they’d also probably likely have to shift money around. It could be pretty nasty. No one actually knows how much exposure most banks and mortgage companies have in the debacle, as far as I can tell.
I would look for something like the first one to blink, whoever makes the first move might be ok. No bank wants to admit how big its losses are, but once it’s completely apparent the market is down and the losses are going to be huge, the first bank auctions should be the highest. Those banks might live, selling at 70 or 80 cents on the dollar, maybe even 60 cents. After that, other banks will wake up and smell the coffee and we should have an auction capitulation when everyone unloads in a hurry trying not to be left holding the bag.
Good point - presumably any write downs become a direct hit on the bank’s reserves - correct? And therefore a hit on their ability to provide credit (including commercial credit) and therefore their profit-making ability.
In fact - what happens when write-downs cause the reserve to go below the mandated minimum? Presumably some kind of margin calls on the bank? In what form?
And they have to pay property taxes and insurance.
2, 3, 5 or 10 grand a year in taxes and insurance beat booking a 50-100K loss anytime.
My quick calculation, for 5% down at 6.5% (which would be a good fixed rate for a risky borrower without a downpayment) is over $1500 once you add in things like PMI which would be required.
According to excel’s PMT function {=PMT(6.5%/12,360, 121000)}, a 121K, 6.5% 30 year loan has a P&I of 764.80.
“‘It’s not unusual at these auctions to see houses selling at 20 percent below what the house was listed at on the regular market,’ company spokeswoman Crystal Wright said. ‘But people should understand too that nobody is giving property away.’”
Not yet.
That’s way they are not going anyway.
“‘It’s not unusual at these auctions to see houses selling at 20 percent below what the house was listed at on the regular market,’ company spokeswoman Crystal Wright said. ‘But people should understand too that nobody is giving property away.’”
Well if the bids support only a 20% reduction in pricing then fair enough. However why is it important for you to comment on pricing at all? Your job should be sales facilitator, not bubble pricing supporter.
“‘It’s not unusual at these auctions to see houses selling at 20 percent below what the house was listed at on the regular market,’
To quote Clarence Thomas after he was informed of his Supreme Court confirmation: “Whoop-de-dang-doo” or some such thing.
There was a auction recently in Ft. Meyers for townhomes..previous owners paid $300-$320(new construction)..auctions had 50 sold between $135K-150K….OUCH!!!!
“auctions had 50 sold between $135K-150K….OUCH!!!!”
That was the winning bid, NOT the sold price. The property is SOLD when the winning bidder gets financing and the deed is recorded.
Just have to ask…
Annette of the Annette, Brett and Janine?
James
20% below what some of that junky Prince William county stuff was listed for does not get me excited. There may be some bargains there for a local, patient invester at 40-50% off list, who can spot a townhouse or small house in better-than-average condition in a less-crummy neighborhood — but otherwise, 20% off on a lot of those places is just for knife catchers or folks who desperately want to get on the property ownership ladder.
Exactly. The D.C. exurbs would have to fall at least 50% in order to be an adequate trade-off for the hellish commute.
The problem with a lot of these isn’t so much hellish commute (although Woodbridge and Manassas are pretty far from DC) as is general quality of neighborhood and construction. Woodbridge and Manassas are home to a lot of immigrant population — legal and otherwise — and, paradoxically, a lot of these folks are going to lost their housebuilding jobs as new home construction in DC area wanes — causing more of these already kind of marginal neighborhoods to lose value. Vicious circle.
Woodbridge is a pretty decent commute to Ft. Belvior — and not bad even to the Pentagon or Crystal City (as a lot of these jobs allow a 7:30 to 3:30 kind of schedule, and carpooling is actually pretty efficent to Crystal City and Pentagon) and there is even good commuter rail to Woodbridge and Manassas. Probably not a lot of DC commuters — more like people who work near reston or tysons for Manassas — and other parts of NoVa up to the Pentagon for Woodbridge.
It’s just that a lot of it was built as an “affordable” alternative to Fairfax county — and less desirable areas are going to take it harder in the shorts than Fairfax, Alexandria, Arlington — even if these areas are also overpriced.
Yeah, if you can do the carpooling thing (which I did), Woodbridge isn’t too bad a commute, but if you can’t, it’s terrible even at 6:30 in the morning.
Manassas on the other hand, well there aren’t any good commutes from there. Manassas to Tysons or Reston is a hell commute because of the inadequate road network.
“Larson said she saw people take loans for 100 percent of the home’s value at 14 percent interest.”
Math skills and common sense have slid off the endangered speices list and into extinction.
I know! Why not just get a bunch of credit cards and put the house on that? It’s about the same thing.
Welcome back to the future…
“Larson said she thought lenders were going to stop making loans for 100 percent of a home’s value, which is how many people got under so much debt. Larson said she saw people take loans for 100 percent of the home’s value at 14 percent interest.”
I found the Hudson and Marshall website (not suprisingly: http://www.hudsonandmarshall.com/) — and clicked on the first couple links to the DC area sale. A lot of Woodbridge and Manassas stuff — and junky looking stuff from a lot of other second-rate and mostly far-flung suburbs. Prince William County - which some of you may recognize as a recent entrant in the movement to deny muncipal services to illegal aliens - seems to be ground zero for the DC area forclosure bug.
Both Prince William and Loudoun Counties are going to be the biggest losers in the DC-area crash. I lived in Woodbridge for awhile (rented, of course). Hellish commute, mediocre public services, and a distinctly redneck-ish culture were among the several reasons I now rent a smaller place in Arlington.
In all honesty, Prince William isn’t all that bad for a lower-middle class family that wants a real house with a yard for the kids to play in, but the idea of McMansions and upper-middle class prices for junky houses there is simply mind-boggling.
Some friends of mine are moving out of state, or that was the plan anyway, and he’s flying off to Boston every week for his new job, has been since the springtime. Bought a place in 2005 for $440k, put lots of VERY nice work into it, and now they have that 1960’s-era DC-burb house listed for $480k. Whoops, make that $450k now — reduced! First offer in six months came in last week: $390k. Oh, the pain! (They owe $415k)
What’s the ‘burb? Just curious — since you still can’t get any decent SFR in Alexandria proper under about $450k.
2005 — yep, that’s the peak around here.
They are up in Frederick, in an older development filled with lots of 3/1’s.
in 22151 we have a short sale and a foreclosure- never happened in 90’s
If I bought a place in a booming area in 2005 and could cut my loss today at 11%, I’d take the money and run. They might recoup most or all of their loss by not buying foolishly in their new location.
Yeah, they ought to bail. But I think they spent a lot of their own cash on refurbing the place, so their loss is more than the $50k+commissions. I gotta say, it’s beautiful inside — unlike most of the other very plain houses in their neighborhood, many of which are cheap 3/1’s. They are way out in Frederick, but he works (er, worked) in Montgomery County, so that was not bad for them. Not till they needed to sell, that is. Too far out.
That said, even people I know closer in to DC are having a heck of a time selling houses these days. Some get no traffic and no offers; others get lots of traffic but still no offers. One got an offer that fell through because of “just a few lates on their credit”. Doh!
NoVa — another time-honored one-liner: No matter how far down the wrong road you go, turn back.
Democrats press the White House on mortgage reform. They want to make tax dollars available to help people out with Adjustable Rate Mortgages and keep them in their homes. They all want to forgive taxes on forgiven debt from short sales.
http://biz.yahoo.com/ap/071003/risky_mortgages_congress.html?.v=6
I had been a dem all my life, and now count myself an ex-dem. I am disgusted with their stupidity…Hilbil, Schumer, the whole bought and paid for crowd. Of course, I loathe the repubs as well.
Just another happy American.
Just a odd continuation of the data from JohnF.
The ratio of 4.1 price x income came back eventually. It took a long long time. You can see the twin peaks in price which would be East and West coast bubbles.
Wages inflated (i.e. inflation) was 18% from 92-97 and price deflation was 12% and the balance was re-established. A couple pretty grim years there as incomes dropped.
This time is much much worse as ratios spiked to 9x incomes.
My guess is that incomes will drop a lot farther this time and recovery period will be longer. Not sure how effective we will be at inflating away this debt. Last time the treasury printed a lot of money. You can look at M1 or Mprime and see the spike in printing.
Meanwhile the Fed began to loosen credit standards. There are other wildcards like the congress who might change tax structures. The changes in capital gains also caused an inflation in prices by making housing a better investment.
this time you have War to unwind too
many factors different this time
More BS news ALERT…
“WASHINGTON (Dow Jones) — Top Senate and House Democrats pressed for more aid to subprime-mortgage borrowers on Wednesday, saying more funding is needed to prevent foreclosures and urging that caps on the portfolios of mortgage-buyers Fannie Mae and Freddie Mac be lifted and other steps taken.
“This is a national crisis,” said Senate Majority Leader Harry Reid, D-Nevada, at an event on Capitol Hill.
The lawmakers said action is needed from the White House, the Federal Reserve and Congress itself to help head off foreclosures.
About two million homeowners could lose their homes to foreclosure over the course of this year and next year, the lawmakers said.
The Democrats’ plan is the latest salvo from Washington aimed at helping struggling homeowners and the weak housing market. ”
you know what? I USED to consider myself a Democrat. After hearing about the latest penchant for Democrats to bemoan all ” those poor homeowners”, I’m starting to see that both parties at this point are worthless. I can’t believe these folks are still even considering this. Yes- that’s right- Uncle same will come to the rescue if you’re too irresponsible for your own stupidity.
It’s like giving DRUGS to DRUG ADDICTS! (Oh wait, we do that, too). BTW: I’ve been a registered Democrat since 1980. But I’m having real doubts now.
As a more or less libertarian/republican; I don’t think you will find any help on our side of the table either.
I don’t know what to say. Tinkering in markets is very dangerous and unhealthy. Same with getting involved with all the tribal warfare over seas.
Confirmed Republican here since 1980 myself, and I’m disgusted with the whole bunch too. Just might have to sit the next election out.
I long for days of the Republican’s “Contract With America”, where balanced budgets were promised.
We had a balanced budget for a while (at least on paper) … but … something happened …
While there are many libertarians on the blog, I think I’m one of the few who is a registered member of the Libertarian Party. It shall set you free. When you have difficulty distinguishing between the two major parties, it’s not your fault — they have, IMO, morphed into two branches of the same big-spending, big-government party. Of the three, Libertarian is the only one in which government is the problem, not the solution.
I wonder what their answer is to the question of affordable housing for young working families. They are setting themselves up for a disaster, IMO.
Anybody else seen this interview w/Chuck Shummer. FB need not take any responcability. ALL of these poor people were VICTIMS and we MUST rescue them.
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vBilH2hqcNcw.asf
I want my employer to pay me by loaning me money and then later forgiving the loan. No taxes!!!
Actually, that was a trick used by Enron! (And one of the things Sarb-Ox tried to fix. See http://www.senate.gov/~levin/newsroom/release.cfm?id=210509 for example).
And, while I don’t like tax CHEATS (like people who are collecting SSD but are really working as home flippers), someone exploiting a loophole is fair game. The real answer is a “no deduction/no loophole” tax system, but that’s a dream.
The houses mentioned in DC are not “prime’ real estate. Way out in the sticks or in “transitional” neighborhoods. Actually the way NC people feel about their new neighbors is the way No.VA. felt 35 years ago. I was at a store talking to the Mgr. and I mentioned a local place. He told me it was owned by an “old family name”. What he meant was that old family name = white.