Telling The Truth Attractively
The News Journal reports from Delaware. “While foreclosure filings continue to rise throughout the state, housing counselors at Neighborhood House Inc. in Wilmington say they’re overwhelmed with pending mortgage defaults. Filings in Delaware continued to tick up in September, bringing the total filings for the state up 32.7 percent for the first quarter of the fiscal year. Hardest hit was Sussex County, which saw a 75 percent increase in foreclosure filings for the quarter ending in September.”
“‘Our books are filling up with default clients,’ said counselor Brenda J. Dryden.”
The News Post from Maryland. “The executive director of the Frederick County Builders Association said those in the housing field should have been more prepared for the real estate downcycle.”
“‘Housing bubble? It was more like a dirigible filled with hydrogen, an explosion — kaboom,’ Bryan Patchan said, addressing the Frederick County Association of Realtors.”
“‘Go back two years ago,’ Patchan said. ‘You knew the law of gravity would make it come down,’ he said, referring to several years of soaring prices and buyers lining up to bid on homes.”
“The ‘occupation at the moment’ is to unload the inventory of homes, Patchan said, currently more than 2,400 in Frederick County. Right now, ‘Housing starts are down by one-third, sales are the lowest in 12 years and there is a downward pressure on home prices,’ he said of the market.”
“He has spent his career in the housing industry, serving in…public affairs for the National Association of Home Builders prior to joining the local group. Describing himself as an industry pessimist, Patchan said builders should have known better than to try to get ahead of the market.”
“‘Builders need to do one house at a time, with a contract with a qualified buyer,’ Patchan said.”
“Patchan reflected on other down markets, such as in the 1980s when buyers faced double-digit interest rates. ‘What’s different this time?’ he asked. ‘For one thing, this past market was full of speculators. We didn’t realize the impact of this until the downturn. Secondly, there is the subprime market.’”
“‘It may sound like heresy from someone in the housing field, but there is too much emphasis on homeownership,’ he said. ‘It costs money to own a home. It’s like a car. You have to buy gas, maintain it, as well as make the payments. People are euphoric. They want a piece of America — a home. We are at nearly 70-percent home ownership in this country, but maybe it should be less than that.’”
The Washington Post. “Won-Ki Choi and his wife Janice had their eye on the townhouse at East Market at Fair Lakes for some time. But the $536,449 price tag was much too high for them.”
“Then they saw a newspaper ad from Ryland Homes: For two hours on a recent Saturday afternoon, the builder would sell 140 homes in the Washington area at a discount, through a silent auction. The minimum bid for the 2,068-square-foot Fairfax County home was $429,999. Won-Ki Choi wrote his name down minutes before the auction was scheduled to end at 3 p.m. He was the only bidder.”
“‘This is your lucky day,’ Jerie Wolicki, a company receptionist, told him amid applause.”
“Builders say they have no other choice. ‘We were trying to figure out how do we break through all the clutter that’s out there with home builders’ said Mike Disler, Ryland’s Washington Division president. ‘I think people understand that it’s totally beyond our control and all the builders are reacting to market conditions.’”
The Courier Journal from Kentucky. “The median price of a home in the Louisville area has risen nearly 5 percent a year over the past two decades, better than inflation, and about the same as the national rate.”
“But as the national housing slump deepens, properties are sitting on the market longer, making sellers nervous and prompting some to slash asking prices and throw in such incentives to close deals.”
“Agent Kim Farris said a glut of available properties has given buyers the upper hand in negotiations, with some offers coming in at 15 percent to 25 percent below the asking price.”
“‘There’s just so much to choose from, the market is saturated,’ said Farris, who got her real-estate license in 1994. ‘They (buyers) feel like the sellers are desperate, so they go in with a low-ball offer. And some sellers are accepting them, because they’re worried they won’t get their house sold.’”
“Joe Simms, who just stepped down as president of the local Realtors’ association, urged its members to carry with them at all times a copy of figures showing positive local trends. In a recent letter, Simms advised agents to show the figures to any buyer who wants to make an offer 20 percent below the asking price, and to share the numbers with the media to ’straighten them out.’”
“‘When the market slows, then we have to do more selling,’ Simms wrote, adding that agents could counter negative publicity by ‘telling the truth attractively.’”
“Roughly one-third of the nation’s largest metro areas, including nearby places such as Cincinnati, Lexington and Memphis, saw home prices fall in the second quarter of 2007 from a year earlier, according to the National Association of Realtors.”
“But that’s little consolation for couples such as Mark and Annie Baker, who live in the SpringView subdivision. Working with Farris, the Bakers put their four-bedroom home on the market in February for $159,900. It took eight months to find a buyer, after they dropped the price by $8,000.”
“‘This has been a proverbial nightmare, to say the least,’ said Annie Baker. ‘Everybody’s lost that warm and fuzzy feeling that the market is good.’”
“Pat Harrison, who owns Harrison Realty in New Albany, Ind., said the local real-estate market is approaching the status of the early 1980s. Harrison, a licensed real-estate agent since 1968, said the local market is hurting from a combination of problems in the lending industry and subprime loans made to borrowers with patchy credit.”
“Those issues have contributed to a surge in foreclosures in recent months. Jefferson County, for example, is on track for a record 3,125 foreclosure auctions this year, up from last year’s record of 2,710.”
“In southwestern Jefferson County, agent Berenda Burnssaid she was baffled about her inability to quickly find a buyer for a four-bedroom ranch with vaulted ceilings, a Jacuzzi in the master bath and more than 1,700 square feet of space.”
“When the home was first put on the market at the beginning of the year, the listing said it was ‘a real buy and will not last long.” The asking price was $119,900 — after several price cuts, the property sold late last month for $70,000.’”
The Daily News from Tennessee. “For numerous homebuilders, the Mid-South Parade of Homes can’t come soon enough.”
“As home sales continue to slide, the buzz created by the debut of this four-county, 161-home bonanza could be the shot in the arm that many companies need to finish the year strong.”
“But with residential home sales in the pits, the Parade might not be enough to salvage 2007’s slumping housing market. Residential sales took another nosedive during the third quarter (July through September), falling 20 percent from Q3 2006, according to Chandler Reports.”
“Just 5,734 residential sales were recorded during the quarter, down from the record 7,169 in 2006. And many of the top builders reported drastic sales dropoffs, a reflection of diminishing consumer confidence and lingering subprime fallout.”
“‘We’re now having to wean ourselves from subprime mortgages being available,’ said Jerry Gillis, president of FaxonGillis Homes. ‘When 30 percent of your buyers are subprime buyers, and that market is taken away from you, it has a profound effect.’”
“Even the usually strong submarkets have struggled. Three of the five ZIP codes with the highest average sales dollars for Q3 also registered a decrease in home sales. It’s difficult to figure out what the public is looking for - if they’re even looking at all.”
“During the current foreclosure fiasco, banking is the only industry that has registered an increase in home sales. That anomaly stems from banks being forced to reacquire homes from defaulting homeowners and then sell them.”
“‘After the foreclosure, the bank or other owner of the property can decide whether to auction the property immediately and move on, or hold the property in anticipation of receiving a better price and minimizing their loss,’ said Andrew Gibbs, VP of the Memphis-based financial advisory firm Mercer Capital. ‘I think you’re seeing people make these determinations now.’”
“Indeed, banks made up three of the top five residential property sellers during Q3, with a couple of them seeing more than 200 percent increases from Q3 2006.”
“This is negative for financial institutions, which don’t like to manage such large volumes of ‘non-earning assets,’ or assets that produce no interest income for the bank, Gibbs said. ‘This is particularly an issue in markets where you’ve seen declining home prices and loan structures in which the borrower has little or no equity in the property,’ Gibbs said.”
“Will the housing market rebound? ‘The housing market has slowed some, but in recent months, as can be seen in our third quarter, we feel like it’s stabilizing now,’ said said Keith Grant, president of the Memphis Area Home Builders Association. ‘We can only look up from this point.’”
‘ For the first time ever Mid-City Urban LLC is holding an auction to get rid of the last 30 condominium units in an Alexandria, Va. complex because of the downturn in the D.C. housing market.’
‘The Silver Spring development company is making the move after trying to sell the units at 378-unit complex called Parkside at Alexandria for two years so it can close its sales office and reduce marketing costs.’
‘ The close-out sale is the second Accelerated Marketing has conducted on the East Coast in two years, according to co-founder Jon Gollinger. The first one was in Boston a year ago. Gollinger, who has been involved in such sales for two decades, said he hasn’t seen interest in it since the 1990s when the economy was in a recession.’
“It’s the first auction of this kind in over 15 years in the D.C. area,” Gollinger said. ‘This represents a watershed event.’ The company is also engaged in two such sales in California.’
‘If the condos at Parkside at Alexandria are sold at the minimum prices, they’ll be half the market rate.’
‘If the condos at Parkside at Alexandria are sold at the minimum prices, they’ll be half the market rate.’
Wow, the idiots are abound in this post.
No moron, they will BE THE MARKET RATE. They could perhaps sell at “1/2 the previous market rate”, but it is impossible to have an arms-length sale and NOT be at market rate. That’s what determines it you fool.
I love how all these builders are playing up these autions as 1/2 off, once in a lifetime sales opps. What the sheeple don’t realize is that those markdowns are not going anywhere. Good luck getting a 500K morgage on a home when the house across the street sold 10 days ago at 30% off during “The sale of the centry” that one of the builders was running. Even if your stupid enough to try to buy at that rate, the banks aren’t there is NO WAY they will lend when the comps tell them that homes are worth 300K and you want 500K.
The whole idea of “short term” sales is just assinine in the housing market. The whole RE establishment works on COMPS.. Are people really stupid enough to think that the comps will “remove” the sales price homes somehow?
No, the comps will eventually remove the peak priced homes; as values continue to trend further and further down.
I’ve noticed similar comments about “below market rates” in other articles. It is amazing that most people don’t understand that there really is no such thing. The price you can get is by definition the market rate. Is it to much to ask that some of these reporters have enough basic enough economic knowledge to question these transparently idiotic statements?
Exactly. A house that was priced at 400k 6 mos ago and sells for 300K today, is a 300K house, not 100K below market.
Just like a house that was brought in 2001 for 200K and sold for 350K in 2005 is not 150K over the market value.
Exactly. What a house sells for is it’s market value. In 2005 someone was willing to pay 350K, subsequently, it was worth 350K at the time of sale.
Now. it’s probably worth 200K again.
I just had this discussion with a realtor.
Realtor: “I just wanted you to know there has been a price reduction on the house you came to look at a month ago.” [I knew this already]
Me - “Oh that’s nice. Has the one across the street sold?” [I knew it had] “It has? For how much?”
The price was for 18K less than the last list price.
“But,” explained the realtor, “it was a relocation buyout and you can’t base the value of the house currently for sale across the street on that price.”
Why not? These are identical houses. and if no one offered on the one house for three months, it seems as though it were prices too high. Sounds like a new comparable to me!
Well, not to be picky, but there is such a thing as below market rates. If the transaction is not “arms-length”; for example, if your parents sell you there 1M dollar 6000sq/ft mansion for 100K, then that is truly a “below market rate” sale of a property.
The thing there is NOT, however, is a way to sell “below market” as an arms-length transaction. The only way even possible is if a home comes on the market and is bought extremely quickly (think, under a week) before others had a chance to get in and bid the price higher (yeah, as we all know, that happens ALL THE TIME).
However, when there is disclosure of the sales, and there is ample opprotunity for all interested parties to “bid” (offer to buy at price X) on a home, by defintion, THE MARKET HAS SPOKEN.
These people should start saying “below appraised value” or “below imaginary appreciation amount”.. Something to that effect would be far more accurate!
My few repo cases (several years back) ended in sales that would’ve probably been at higher prices if I’d been willing to wait just a few weeks longer. Like a bank, I am not at all interested in owning/managing real estate, so tend to take the first plausible bid. I guess one could say that the abstraction of “market rate” is something that follows a sinusoidal seasonal curve in AZ: highest in January, lowest in July. Of course am in agreement w/ everyone else here that using the phrase “below market” to mean “below last year’s prices” is just stupid.
I used to sell real estate. If a seller receives 2 or more offers at a lower price, trust me that is MARKET VALUE. You could get a low baller, but if a house sits on the market a month and the offers are all similiar, that’s what people are willing to pay. That’s what the house is worth in today’s market. Sellers have a “wishing” market price and buyers offer a market value price. In almost every case the buyers set the market value, not the sellers.
I agree. How do you think prices went up? People bid them up. In 2005, the price was the price and people were paying it, shady financing notwithstanding.
They come down the same way. You list at 300K and get three offers at 190k in the first month from differant parites, you’ve got a 110k headache because 190K is the price NOW!
Also, in the past when RE was normal, the same thing happened, except in smaller increments. People would list there house to high and get no takers, until either the market rose to that level or they reduced price. This has been going on since RE was invented. It’s just magnified now and the price differantials are so great.
Here’s what they’re trying to sell these for - note, they point out what earlier buyers had paid. Bet they’re just delighted.
http://www.parksidealexandria.com/neighborhood.html
These are conversions of a long time rental area of garden apartments. They are in a reasonably close-in location for the DC area, and places are generally well-maintained in this modest and kind of quiet part of Alexandria - but that’s about all they have going for them.
You would be hard-pressed to break even as an investor on these, even with 20% down. And $240/$312 condo fee is a lot for units that surely have separate utilities. That’s a lot to pay for landscaping and use of a pool for three months a year.
There area is fine for singles. Schools - so, so. If you have to get to DC for work need to bus or drive to metro or ugh drive into town.
RE: The whole RE establishment works on COMPS.
LMAO!
Appraising today is like walking thru a litgation minefield.
Blow a deal involving a lot of desperate people and you’re gonna be scapegoat toast sued to the gills.
Ain’t no way any of these HS educated, rubber stamp, incompetant, nit-wit appraisal hacks are gonna make heads or tails out of markets filled with a bazillion weird seller concessions, builder interest rate buydowns, foreclsoures, short-sales, back-room realtorwhore kickbacks and other shenanigans.
Buyer Beware!
“Will the housing market rebound? ‘The housing market has slowed some, but in recent months, as can be seen in our third quarter, we feel like it’s stabilizing now,’ said said Keith Grant, president of the Memphis Area Home Builders Association. ‘We can only look up from this point.’”
Wrong… You can go bankrupt, and many will. So, as long as you are a going concern, be certain that there is always downside risk. Also, how many times do they get to call “stabalization” before nobody believes them at all anymore? That is SUCH a crock; they MIGHT stabalize in 2-3 years… And that’s just a maybe, not even that is a definate. They have years of bleeding money/employees/inventory all over this country. To claim otherwise is just foolish; and makes them look less and less believable every day.
Thank god for the Internet so that we can quickly find and rehash these awful predictions. DL was the best to us; putting the whole BS crap line in a book for us; but the Internet allows us to immoralize the rest of these idiots as well.
How many times now is it that these morons have called the botton? Every month since Jan of 2006?
“‘We can only look up from this point.’”
He is staring up at the falling sky — profit margins — in disbelief. He can’t face reality. So, the poor bastard has to detach himself from it.
If he’s looking up, he ain’t looking down. No one has any idea where this will bottom out.
Every “bottom” call is just Bulls**t.
I love how the term “recover” is used to mean “return to the days of no lending standards, grossly overpriced houses, and rampant fraud.” Yeah, we really want to “recover” to that - right! Idiots… how about pricing the houses properly and only lending money to people who can and will pay it back? What a novel idea!
“‘We’re now having to wean ourselves from subprime mortgages being available,’ said Jerry Gillis, president of FaxonGillis Homes. ‘When 30 percent of your buyers are subprime buyers, and that market is taken away from you, it has a profound effect.’”
Send a memo to the NAR and the NAHB. Seventy pct of sales is the new norm. The overcapacity is enormous. Adjustments need to be made.
‘Just 5,734 residential sales were recorded during the quarter, down from the record 7,169 in 2006.’
Right, they can’t stand a drop, even though it is from a record. Didn’t anyone ever tell these guys it’s cyclical and you have to save a little for the down years?
And that’s the problem I have with some of these ancillary businesses, like furniture, going out of business because they can’t make it without a “boom”. Same with local governments. In Fla, things were just fine prior to the boom. People, governments and businesses were going along, operating OK. Here’s the billion dollar question: How did you make it BEFORE the housing bubble? OK, then, just go back to doing whatever it was you were doing before.
Now, for some businesses, who are struggling with property tax increases and insurance, etc., I can understand the difficulty. They have a double whammy. Greater expenses, less business. Not good. That’s when you have to re-assess and re-allocate, even re-locate.
Just as a devil’s advocate here, I will give them that before the bubble the dollar was worth more.
A lot of them probably did what my employer did, invest into the boom (on credit). We have built a new building, bought new machinery, doubled our staff and doubled our inventory, while our margins shrink. We’re chasing this rabbit uphill on an empty stomach.
Wasn’t a White Rabbit, was it?
right on Palmy !
people forget so quickly that an unusually booming period is NOT normal & delude themselves into thinking its always going to stay that way. If, god forbid, you so much as say one word to the contrary about reason, trends, or downside you are hated as some negative nellie who doesnt get the ‘ new paradigm ‘.
Then when the crash happens, as it always does, people run around squawking ” WHO COULDA KNOWNNN ??? WHO COULDA KNOWNN ??”
The Matrix movies were really a spotlight on the human race. The vast majority DO NOT WANT TO LIVE IN AN UNPLEASANT, UNHAPPY WORLD. NO MATTER WHAT !! And if you can make it all be happy with an easy out, then they take it. Willingly. Like sheep.
Just look at all the gold digging trophy wives. And huge oversuppply of male software engineers. Its the easy way to riches. No messy manual labor, thats for chumps. Or illegals.
So no matter what people piss n moan out loud about, they will still sneak down to Home Depot lot & hire a cheap illegal for the day.
After all, one day doesnt hurt, does it? And heck, the big companies save labor money so why not joe homeowner !??!
‘Just 5,734 residential sales were recorded during the quarter’
- I wonder what the ratio of MEW / Home Equity loans per sale? Might there be a total of 900-1100 additional transactions that are not even mentioned as being part of the equation?
The real picture is much larger than reported.
Except that when sub-prime scores could get a mortgage people who used to be reasonably careful of their credit (to stay eligible), got sloppy. And we know that it got worse in the last few months of the bubble. Bet the remaining qualifying buyers are way less than 70% of the most recent volume.
“Joe Simms, who just stepped down as president of the local Realtors’ association, urged its members to carry with them at all times a copy of figures showing positive local trends. In a recent letter, Simms advised agents to show the figures to any buyer who wants to make an offer 20 percent below the asking price, and to share the numbers with the media to ’straighten them out.’”
Where do I start with this friggin idiot? Should I even bother? The only one that will get “straighten out” will be the RE complex. It’s guys like Joe Simms who use LiareahSpeak that I’d like to smack in the mouth.
The market is going to flatten guys like that out.
Where do you start? Well, you could start with the Chick’s 20-pound trout. A good trout-slap might be in order. Or, how about one of those Joshua trees from our Nevada ex-mortgage broker. That could work too.
there is just no use at all even trying to get thru to azzholes like this simms guy; he’s the typical hard-chargin, take no prisoners jock type who thinks he can dominate by his sheer force of will.
he can ’straighten out’ anything by god. people better ‘get squared away’ while he is around or it’s an ‘ all hands on deck ‘ call.
you can beat his azz, rape his dog and steal his beer keg but boy howdy he aint bowin down to NO ONE!
idjuts like him are just good for cannon fodder. too bad the insurgents missed him & killed the decent ones.
and yeah, I’ll say this to yer face grimm. I know yer type.
yer an azzzhole. no two ways about it.
LMAO!!!!! Aquis, you’re a pip!!! There seems to be a growing preponderance of these a-hole types over the last few years. Or maybe they’re just more vocal lately but I hear alot of that moron type talk now. “Just get it done or else” type stupidity.
These “new management style” types can’t quite grasp the concept that “get ‘er done” is a comedy tag line, not a leadership style.
hey there exeter
I call ‘em like I see ‘em ! I sure enough know I qualify for azzhole category myself. .. and frequently self-lampoon . .. but I try to live by the rule of practice what you preach / dont be a hypocrite. I like to be able to look my neighbors in the eye at the supermarket or PTA without shame or embarrassment over my actions. And I want to leave my children a good name.
Thats why I really despise liars, such as cars dealers, realtors, etc.
Sure, I can accept a fair amount of spin - we all like to look at the good side of things, but that doesnt mean lying or denying the downside.
Guess I’m a dying breed of man whereby a handshake seals a deal & means honesty,integrity, and I stand behind what I say. period. no weasel words. no loopholes. do what you say, say what you do.
The nature of my astrological sign influences my personality;
Leo w/Scorpio rising.
and rising.
and . . . (if you grok Scorpio’s, you’ll get the pun)!
It’s said about Leo’s ” ya either hate’em or love’em” rarely a middle ground. seems to be true. and I accept that. no regrets.
Try that on me and you’d have erruption. The RE is obligated to carry the offer to the seller. Period. Anything else is ground for my top quality snarl. Grrrrrrr.
or just as effective if not more effective, once azzhole finishes running his mouth, pause for a moment or two as your digesting what he said, then belly laugh in his face.
Andy in Jersey
I did just that to my drunk of a neighbor when he brought his recently returned from Iraq son over to rant about some cut trees.
His ‘ warrior son ‘ started screaming at me to GET BACK IN MY HOUSE as his father was blathering about suing me for topping some common trees on our property line.
I have respect for the soldiers, they have/had a tough job no doubt . . . so instead of getting into a useless argument or dust-up over the matter, I just started laughing at this troop. He didnt know what to make if it ! Obviously used to ordering Iraqi civilians around.
Well, this aint Iraq, and NO ONE intimidates me. Of course, my offer of going over to a nearby park to settle our differences was not accepted. Thats how cowards & bullies act; all bluster until you face em down. Especially without a platoon behind you.
( I understood his post traum rage but he needs to dial it down before someone pulls out a handgun instead of a pair of fists.)
Aqius,
Great, great story. Cheers.
He was the only bidder.” at a reserve auction !
“‘This is your lucky day,’ Jerie Wolicki, a company receptionist, told him amid applause.”
Ms. Wolicki is either a fool, or is a wag with a wicked sense of humor!
It’s ***always*** a lucky day when you are the only bidder at an auction.
Ever hear of winner’s curse?
Auctions are funny…
By definition, there is only one “winner” per lot, and everybody else would be a “loser”. Combine this with people learning on the job, how to bid at auctions, (I got pretty good, after about my 43rd or so) on $430k items, and you have the makings for many more financial disasters, late term ones, that allow the homebuilders to pawn off their mistakes, to the public.
It tells me he just grossly overbid on the property he bought. If their were no other bidders, even the minimum was too high. Like to know how much over minimum this sucker bid.
It looks like $6000 over minimum, but was there also a 10% over auction price tacked on?
Ghost
Ahhhh yes the ol buyers premium BS moneymaker ! good point, I forgot all about that when reading the article.
Good catch !!
This was Wolicki’s lucky day.
Choi was the only bidder and got a whopping 19% off the 536K asking price. He’s already upside down.
He just took someone else’s seat on the toboggin, screaming down the slope toward the real bottom, probably around 200K less thah Choi paid.
The Choi’s we make?
“‘This is your lucky day,’ Jerie Wolicki, a company receptionist, told him amid applause.”
Now bend over Choi boy, I’m havin some Bok Choi- someone pass the KY.
Man, that’s funny!!!!!!
The Washington Post. “Won-Ki Choi and his wife Janice had their eye on the townhouse at East Market at Fair Lakes for some time. But the $536,449 price tag was much too high for them.”
“Then they saw a newspaper ad from Ryland Homes: For two hours on a recent Saturday afternoon, the builder would sell 140 homes in the Washington area at a discount, through a silent auction. The minimum bid for the 2,068-square-foot Fairfax County home was $429,999. Won-Ki Choi wrote his name down minutes before the auction was scheduled to end at 3 p.m. He was the only bidder.”
“‘This is your lucky day,’ Jerie Wolicki, a company receptionist, told him amid applause.”
Yeah! That’s sort of like telling Marie Antoinette “This is your lucky day” on the morning she went to the guillotine.
Isn’t that like ‘winning’ at the duck pond. Surely whatever you paid is worth more than your prize.
Especially if you bought 450,000 ducks.
“‘After the foreclosure, the bank or other owner of the property can decide whether to auction the property immediately and move on, or hold the property in anticipation of receiving a better price and minimizing their loss,’ said Andrew Gibbs….”
Margins are shrinking and in some cases are negative, inventory is increasing and expected to rise even more, and the number of buyers just dropped by 30 pct, you’d be insane to wait for better prices.
The carrying costs on this kind of inventory also needs consideration — taxes, insurance, maintenance, and so on.
Amazing: It may sound like heresy from someone in the housing field, but there is too much emphasis on homeownership. It costs money to own a home.
And this from a home builder! Well, I certainly cannot disagree with that statement, which I sure which the rest of the REIC and most of our politicians would get in sync with.
It’s just shameful how home ownership has been promoted to people who can’t afford it. heck, even for young, upwardly mobile types who can afford it, it’s often not the best thing to do for your career. A good friend of mine just got a lucrative job transfer even though he was way down the preference line. He was renting, and he rents in the new city. Seems that everyone ahead of him on the list was stuck in their houses and (rightfully) afraid of moving and trying to sell their white elephants.
My parents paid off their home this week and now get to rent their home from the government, HOA and insurance company for about $500 per month.
The bottom line is that even people who own their 3bed/2.5 bath houses outright can barely afford to live in them even if they have a job that pays $10/hr. They could rent it out, but even that is a losing proposition that would only return about 5-6% per year on their equity (if it doesn’t fall further and maintenance is minimal).
So while owning outright may appear to be “cheaper” than renting the $2080/month of 5% interest income on your home equity can make “renting” look down right “free” in comparison to owning.
Dan, that’s why I’m looking to pay cash for a house in a traditional subdivision here in FLA. No HOA. No insurance if I so choose. Still got taxes, of course, but maybe some day Marco Rubio (Florida’s speaker of the House) will be successful in eliminating property tax in favor of the increased sales tax.
“…eliminating property tax in favor of the increased sales tax…”
That’s an awful, terrible thing to look forward to. It forces those at all income levels to subsidize homeowners. It’s not the renters’ fault the house appreciation got out of control. Don’t make them pay for the consequences.
What’s next? Sales tax subsidies to buy down people’s interest rates??? When the state insurance fund goes broke, you gonna raise sales taxes yet again and leave the property owners scott-free?
If the taxes on the home are too high for you, then don’t buy a home - rent!
Taxation, however you look at it, is social engineering of a sort and a penalty. If people are punished for earning, for saving, for spending wisely, for having a stable home, then you know what the result is. Consumption taxes can help curb the over-consumption of the US citizen and might even encourage a little saving and financial responsiblity. What fun it could be NOT to spend so much, to save, to put one’s money into functional products that last, to have a stable roof over one’s head that the gov can’t take away.
How is that subsidizing homeowners, if your rent, you’ll be renting from someone who is also not paying property tax. What a dumb assessment. So what part of the communist manifesto are you interested in, just the part that benefits you for free? LOL
In many states where they have a high exemption from property tax for homeowners, that exemption does NOT apply to rental properties. So as a landlord, you’d pay hefty property taxes, which in the long run are naturally pushed back on the tenants one way or another. In these cases, renters pay the taxes (albeit indirectly), and homeowners do not.
palmetto, The last time I mentioned that I had gone “naked” on insurance with a recent house, everyone on the blog gave me a hard time about it. You are right, there are situations where it pays to bet “with the house,” i.e., don’t insure, if the price of insurance is statistically absurd. Thanks for making me feel that not EVERYONE on hbb is an insurance junkie.
Exactly, az. Now, to be fair, I was very glad I had renter’s insurance when the building I lived in caught fire due to a couple of druggie residents. There’s times when it makes sense, especially if you’ve got to factor in the actions of others. Renter’s insurance was but a pittance, anyway. Homeowner’s insurance in Florida is another story. It’s nothing more than blackmail, IMHO. And I like the idea of having the choice to go bare if I want to, but to have a fund set aside for storm repairs and maybe even invest that fund in treasuries or CDs.
I would like to not insure an object (like not having collision/comp on auto) like my electronics, guns, cloths, furniture, etc. But, how do you rationalize not insuring against a legal action that may occur? On the autos I can just purchase liability but I haven’t figured out how to purchase a renters policy with just liability. Any ideas?
At least he is successful in getting his name in the paper each week…gotta get ready for the next political run even if he doesn’t actually accomplish anything….
HOA’s are a dirty secret in the condo market; never mentioned except in the fine print. What good is getting “into” a condo on a exotic time-bomb loan for $1699/month when your condo fee is another $300 a month? That’s a LOT of money to pay to maintain an apartment and a few shrubs and perhaps a square foot of lawn. (I’ve heard it’s mostly a racket to pad the pockets of contracted maintenance companies.)
And I can’t wrap my head around the “ranch condos” they have here in the Midwest. It looks like you live in a row of one-story attached product with garage, but you pay condo fees for community lawn in front of your condo…weird…
I call HOA assessments “the silent killer.” You can’t avoid them, you can’t defer them, you can’t make them go away by paying your mortgage, you can’t refi them at a lower rate, they never go down, you don’t get a tax deduction for them, you usually don’t even get anything for them other than basic services. It’s money down the toilet, pretty much the housing equivalent of the FICA deduction. I pay $1000/month in rent (exactly) and my landlord has to pay some $425 of this towards assessments. Before any other cost. Every. Freaking. Month. Great investments, those condos.
Homeowners’ assessments… the silent killer.
HOA’s should be outlawed, period.
Yes, yes, they prevent people, in theory, from piling up junk cars in their yard, but that type of stuff probably violates some real law beyond some point.
HOA’s are granted nearly absolute power with no responsibility. They can do whatever they want: punish you for having grass 1/8″ too long while letting a bunch of punks who are “connected” to the ruling clique play their rap music at all hours of the night. They are basically another level of government, full of the usual corruption and incompetence, that answers to no one since they don’t really have to follow normal laws or behave any sane way. In short, they are just a way for petty, power-hungry nutjobs to skim more money off the top while spitting out orders.
Oops, I forgot to add:
HOA’s also add another level of insanity: restricting your freedom in your own home. Look, if I wanted some nasty nutjob telling me: what color my house must be, what types of flowers I can and cannot have, why I cannot plant any trees, and otherwise dictacting every aspect of my life - well, I can get that by renting! So, why would I spend extra money to buy, and then spend MORE to give up freedom so some petty jerks can boss me around?
Given the sheer number of HOA’s in recent days, I guess many people like the idea of giving up freedom for “security” from their fears of slightly longer than normal grass, extra trees, and houses that might not all look alike! ARGH!
Yep, I was looking at places, including condos, in NoVA back in 2002, and I was shocked at the condo fees ($200) one place wanted for townhouse-style condos. I asked them how they could justify the condos fees, and they said that the fees paid for grounds upkeep and shoveling in the winter, as well as the occasional maintenance item.
Well, I had just come from a full-sized house in the midwest with a full sized yard, and I didn’t spend over $10 a month on yard work (gas and fertilizer). I guess you should include my labor, but I considered it exercise. And anyway, the neighbor kid would have cost me $50 a month? And that was a full sized yard — my share of the commons in this condo would have been miniscule compared to my old yard.
I bought a townhouse instead. In that case the HOA was only $70 a month, and I don’t think I ever paid more than $400 a year for maintenance (air conditioner going out, shingles blowing off in a windstorm, etc.).
P.S. Cashed in my chips, sold the townhouse, and now I’m renting.
I paid off my house a few months ago, but still the total monthly payment for property taxes and insurance is more than my mortgage payments were!
I’m in Ohio and I too have a paid off house. PITI was $1052 a month. Now taxes and Insurance are $234. It was like getting an $818 a month raise, when we paid it off. I know everyone brings up repairs, but in the 21 years we’ve lived here we have put in maybe $3000, and some of that was from an electrical storm that I didn’t want to turn into insurance. In another 7 or 8 years we’ll probably need a roof.
We’re still young, so I’ll take the next 30 years without a mortgage or rent payment. I can’t rent anywhere here with 2000 sf for less than
1500-1800 a month. I’d rather pay the $234. Even in today’s market I can sell it for way more than I paid for it 21 years ago. I added up all the payments, interest, taxes etc. that we paid for over the life of the 15 year mortgage and it’s still worth more in today’s bad market than we ever paid into it.
I know I could have invested the money, but I have investments and they could tank too just like everything else. Plus we didn’t buy as an investment, we bought for the enjoyment of owning and doing what we want with the house and property (No HOA).
Also keep in mind, that in a market where rents are in line with the economy (not right now) taxes and insurance are figured into rents by the owner. Many people have paid them over the years, but just don’t realize it. When they raise your rents, it means their taxes and ins have gone up. When the market is stable shrewd rental unit owners don’t pay those expenses out of their pockets, trust me. I used to be an agent, and believe me taxes and insurance are figured into every investment someone buys. If the numbers don’t add up, the property doesn’t sell at that price. That’s why when there’s new owners, as the leases expire the rents go up. The owners aren’t really paying taxes & insurance, the renters are.
Many on this site are good investors and can live comfortably into retirement and old age. However, as you all know, many do not save a dime and if they can barely pay rent now, how do you think they’re going to pay it when they make a lot less. These are the people that we’ll all get to subsidize their housing with our tax dollars.
I had fun these last few years listening to co-workers who went from apartment renters to “homeowners” get hit with the realization that they no longer benefit from the cocoon effect of apartment life. Instead of a $40 or $50 electric bill in the winter, they were shelling out $150 or more. Then came the water bill, the sewer bill, the garbage bill, you know, all the stuff that was typically thrown in by the landlord. Let’s not forget fuel for the SUV. Now that they are not living a few short miles from the office, their fuel bill doubled or tripled. Funny how the real estate agent never brought any of that up
realtors are funny..instead of selling on the way down and convincing sellers to adjust they try to “educate” the buyers. Sill realtors. They need to take a page from stock brokers…they make money on the way up or on the way down.
You’re conflating the intelligence of real estate imbeciles with that of the shrewd Wall street types. I personally know 5 real estate agents and not one of them could blow their nose if there head was full of dynamite.
Some try. But they meet stiff resistance from sellers who insist (against all market logic) that their house is worth more. Believe me, although it’s good for their reputation to be able to sell a house at list price, most estate agents with most listings would be happy to get a 10% lower commission now, today, rather than risk getting no commission after a 90-day listing expires.
The advantage a broker has in trading shares in a down market is that it’s hard to argue that my shares of GE are better than those other shares of GE that just went for $41.65. With real estate, there’s almost always something special about it, and with primary residences it even gets beyond that into the emotional attachment.
Stiff resistance from sellers - no kidding!
In my TH complex homes that were on the market all summer long, no sale, are suddenly off the market. They are going to re-list to take advantage of next year’s uptick.
Meantime, the units that are selling are slowly but surely setting the comps lower.
I think there are quite a few folks in the DC region that are hoping to wait it out until spring. They had better hope that the winter is mild since no one here seems to know how to truly winterize a place (e.g., they might turn off the water, but don’t drain pipes) so unless they are going to pay for heat, it could get very messy.
Yep, I know a lot of people who need to sell that are waiting for spring. I expect a huge glut of homes to show up with ridiculous “wishing” list prices and very few sales. Next year will be a real eye opener for Joe Public.
The similarity between agents for stocks and houses is that they can add the most value to their clients by charging as low a price for their services as possible while still maintaining an adequate level of service.
Realtors will soon find that cutting their costs and moving property is the way to make a living. With internet listings I can reduce by 70% the number of properties I want to look at when I’m buying. There should be some way for me to benefit from the reduced workload of my agent. I’m now doing most of the initial work, all I want is some help with the paperwork.
But trying explaining that logic to a Real-Turd. Generally speaking, most are illerate when it comes to money. I’ve yet to hear one say anything of value or truthful.
And running the brain of a Real-Turd along the edge of a razor blade is like tossing a ping pong ball down an 8 lane highway.
I love the phrase “telling the truth attractively”.
I don’t know about you, but in Tennessee we have more straight forward way of describing that - it’s called lying.
What a politically incorrect word Statsman
Won-Ki may have won the key to that house, but soon he’ll be known as Win(ners)-Cur(se).
‘Everybody’s lost that warm and fuzzy feeling that the market is good.’”
A hard slap in the face hardly ever feels warm and fuzzy.
“The asking price was $119,900 — after several price cuts, the property sold late last month for $70,000.’”
That’s almost half and it’s in Kentucky not Florida, Arizona, or California. WOW!
Won Ki Choi was told by the Ryland’s receptionist after he bid in a silent auction and won, “This is your lucky day.” It seems he was the only bidder. Um, Won….if you were the only bidder, that means NOBODY ELSE WANTED THE PROPERTY! Probably because even with the low opening price it was waaaay too expensive.
I’m starting to think that in our schools, instead of teaching stuff which the students will NEVER us in their adult life (how many of us have used most of stuff taught us in physics class after we left school for instance) they should teach the kids how to recognize the many scams which operate in America and take a few lessons on how the Financial Gangsters of Wall Street REALLY operate.
How about teaching them how the big US corporations operate and the truth behind some of their slick tv commercials. They should be shown the real truth behind some of the mortgage lenders commercials we have been bombarded with over the past few years. The ones where a cheery borrower is loaned hundreds of thousands of dollars by a smiling broker or the ones where a realtorwhore is shown extolling the virtues of home ownership.
Don’t hold your breath. While these big money entities pay off the scumbag politicians via the lobbyists, our kids will still be taught things they will never use, then sent out into the world to get fleeced at some point. In fact, there’s a better chance of The Wall Street Gangsters getting into our schools (like the fast food artery clogging corporations did) and brain washing our kids into thinking the corporations and the money system is there to help them.
mike
good summary. I have a one-word addition to yer comment:
ROLLERBALL
Mike, they’re to busy teaching PC, self esteem and inviting dictators who kill our troops to give lectures.
How do you think FB’s feel about now? Empowered?
I think they could use a hug.
I hope Iran is holding a big part of the subprimes.
Sorry to disappoint you, but the US has a trade embargo with Iran, so they have no reason whatsoever to buy US trash. They put their investments in real money.
Oh BTW, most of the suicide bombers in Iraq, and the money for the Sunni insurgency, comes from the same country that supplied most of the 9/11 hijackers. And that’s country’s name doesn’t start with “I”. The name of the country where Bin Laden is hiding doesn’t start with “I”, either.
‘What’s different this time?’ he asked. ‘For one thing, this past market was full of speculators. We didn’t realize the impact of this until the downturn. Secondly, there is the subprime market.’”
You’ve got to be kidding me, right? You did not know who you were selling too and you did not know how they were financing the purchases. That’s basic stuff, man!
“‘When the market slows, then we have to do more selling,’ Simms wrote, adding that agents could counter negative publicity by ‘telling the truth attractively.’”
‘telling the truth attractively.’”. By nature, the truth is the truth, attractive or not. The presant truth is not attractive, so if you tell it “attractively” you are spinning it or basically lying.
‘telling the truth attractively.’”???? “This is a great time to buy!!” Attractive, but not the truth.
I think that slowing markets forcing people to do more selling isn’t just limited to real estate. It’s happening all over the business world. And, IMHO, that isn’t such a bad thing.
But it’s not just a matter of doing more selling. You have to get better at selling. And that doesn’t include happy talk spin or lying.
It also means that if you are selling something that is totally a waste of money you need to look for another job. Some stuff just shouldn’t be sold, and without HELOC and MEW cash a lot of it won’t be sold. The lending bubble fostered a lot of waste in our economy that needs to go.
The Loser
By Knockout, in the 2nd round
The Housing Bubble
A sharp uppercut by the speculators in the 1st round, combined with a low blow to low brow lending in the 2nd, and out went the lights…
uh, oh! Housing Bubble is not responding to smelling salts~
“Patchan reflected on other down markets, such as in the 1980s when buyers faced double-digit interest rates. ‘What’s different this time?’ he asked. ‘For one thing, this past market was full of speculators. We didn’t realize the impact of this until the downturn. Secondly, there is the subprime market.’”
Housing Bubble A Flashback To ’80s Texas (Chron.com, Oct. 6th): “What happened to houses in Texas through the S&L debacle of the late ’80s may be the template for what happens across the country… Houston, the first Texas city to fall in the oil bust, had its home price index peak at 108.5 in 1983. It also bottomed early, hitting 81.5 in 1987, [but] didn’t recover to its 1983 level until 1997…14 years… Dallas also peaked in 1986 at 110.1, bottomed at 94.3 in 1989 and regained its old peak in 1997, 11 years [later]. The Texas template tells us we could be in for a 14%-25% decline and an 8-14 year wait for recovery.”
All is well here in FL. Apparently lenders are telling struggling homeowners that they shouldn’t worry about foreclosure, just send in what you can. They also are advising fb’s to list their homes. I really heard this from a friend who had contacted the lender. Has anyone else heard anything like this???
I have not heard it, no. But it would not suprise me one bit. These lenders don’t want these homes back; why on earth would a company in the business of making money want to put a bunch of depreciating assets on the books? That’s crazy, and explains pretty clearly why they would do whatever they can to keep you paying, even if not the whole amount. Now, should values shoot up again (yeah, right) then the repos will start. However, if they repo now, they are forced to recognize the loss at the sale of the property. Keep the homeowner paying and they can extend the time before the loss is realized, or perhaps securitize the loan and get it off their books..
Not sure about the “list their homes” thing?? Banks know that values are dropping like crazy. Again, if they thought they could get the loan amount out they would foreclose in an instant..
The way these banks are behaving is the way I was behaving towards non-performing borrowers five years ago. It’s too late to play Mister Nice Guy, and they will be sorry they did. The only way to treat non-performing borrowers now is…not to have any!! and I don’t have any n-p-b now. I think my clientele correctly recognize that in any event of default now, I would be a lot more trigger-happy than I used to be. (All have apparently positive equity.)
That makes a lot of sense to me from the lenders perspective. Give them just enough hope that the FB’s won’t wall up defensively so as to bleed them dry before taking back their overpriced shack.
Press;
They are foreclosing like hell here. The number of foreclosures is building and will build until Summer/Fall of 08.
Although, I bet some dumba** at a bank really told people that.
Ha Ha. Just heard on Paul Harvey that granite can hold radon gas and cause cancer as a result. While I doubt we’ll have a bunch of FBs dieing because of their recently redone counter tops, it would have a certain poetic appeal. Anyone know how bad the radioactivity in granite can be? Is it just enough to activate a monitor, or can it realy cause health problems? Keeping up with the Jones can be hazardous to the health of more than just your wallet it seems.
Sheeple indeed.
That will just be the tip of the iceberg. Wait until some attorney hires a forensic chemist to testify about the formaldehyde in that pressed board, especially in those totally closed up houses in NV,AZ,CA,FL and potential for cancer. Just been biding my time before the show starts.
RE: Just heard on Paul Harvey that granite can hold radon gas and cause cancer as a result.
Hmmm…I’m still waiting for the disclosure that the microwaves from a cellular phone cause brain tumors.
We’ll be a nation of genetic mutants from out of control consumer consumption.
All right out of a Stephen King novel.
“Even though there wasn’t much suspense, Janice Lim Choi cried when told that she and her husband had won the auction. They had looked at dozens of houses over three months. “The price is very reasonable,” said Won-Ki Choi, a federal government worker. Then he turned to a Ryland employee. “Don’t you think the price is okay?”"
Don’t you think the price is okay? That’s funny.
Anybody buying in the D.C. market right now is a complete fool. But to go to an auction with minimum bids and not notice that NO ONE is bidding, and then to bid anyway? That’s a special level of foolishness, right there.
but, but…the receptionist congratulated him!
Hey Janice, the crying has just begun.
‘We can only look up from this point.’
I hope that turns out to be looking ‘up’ from the gutter, where every single builder who lied and massaged real-site data (is there another kind? Well, okay, then, not those two or three non-lying builders. But all the million other ones.) would be spending their nights, snuggled in piles of grimy, fetid litter and foul traces of Popov-laced vomit while the lower rent hookers flick their cigarette butts at them for idle amusement. That’s ‘up’, right?
“Been down so long, that looking down looks like looking up to me.”
They’re so low….they have to reach up to tie their shoe laces.
“‘It may sound like heresy from someone in the housing field, but there is too much emphasis on homeownership,’ he said. ‘It costs money to own a home. It’s like a car. You have to buy gas, maintain it, as well as make the payments. People are euphoric. They want a piece of America — a home. We are at nearly 70-percent home ownership in this country, but maybe it should be less than that.’”
Amazing how everybody gets religion after the fact.
“It may sound like heresy…” It sounds like honesty. I almost forgot what that sounded like, coming from a builder/realtor/mort broker.
Perhaps a few have noticed one of Heroes mentioned often in quotes?
Get to know the man
“Every age needs men who will redeem the time by living with a vision of the things that are to be.”
Adlai E. Stevenson, Jr.
“Patchan reflected on other down markets, such as in the 1980s when buyers faced double-digit interest rates. ‘What’s different this time?’ he asked. ‘For one thing, this past market was full of speculators. We didn’t realize the impact of this until the downturn. Secondly, there is the subprime market.’”
And lets not forget the “I am stuck in my depreciating asset.” group..What about the millions of Americans who bought homes in 05-07 that are now worth a whole lot less…for them the housing recovery is 10 years away!
Yeah, how about a little love from the bloggers for Patchan?
“‘Builders need to do one house at a time, with a contract with a qualified buyer,’ Patchan said.”
What a concept. He’s got a bunch of other great quotes. Singing my song. I’m sure he wasn’t very popular during the boom. In the bust, he’s a prophet.
A fun video on Yahoo finance page right now. “One-Day Home Sales” from ABC News, featuring some excellent footage of angry FBs in new hoods whose comps are suddenly quite a bit lower. Fun to watch facial expressions as greed turns to fear, as the light bulb comes on at last. The people who laughed at you a year or 2 ago for being an untouchable renter. Big fun.
“I paid $630K for this house and the starting bid on a similar house is now $355K.” Ouch, a 44% reduction in one year.
“I bought this house for $440K (one year ago) and today I could buy it for $285K.” 35% haircut, hey, you’re doing better than your neighbor across the street.
Toward the end of the video they ask “how do you recover from something like this?” The answer, if you didn’t put much down, walk away.
RE: untouchable renter.
The American housing caste system.
The “dung haulers” will have the last laugh (snicker).
“‘Housing bubble? It was more like a dirigible filled with hydrogen, an explosion — kaboom,’ Bryan Patchan said, addressing the Frederick County Association of Realtors.”
Ladies and gentlemen, presenting the Housing Bubble Blog Imagery Of The Day!
Oh the humanity!
Being a Buffalo Bills fan is like being a modern day Sisyphus, condemned to always buy a house in 2006, over and over again…
“‘This is your lucky day,’ Jerie Wolicki, a company receptionist, told him amid applause.”
Sadly, I take great pleasure in seeing sheep get slaughtered.