Builders Grappling With Half-Occupied, Completed Projects
The Baltimore Sun reports from Maryland. “The Station North townhouses rise four stories and boast granite kitchens, open floor plans and the floor-to-ceiling windows that new-home buyers have come to expect. But the courtyard is deserted. In about half of the 32 homes, the oversized front windows reveal an emptiness back to rear windows. Several ‘for rent’ signs appear next to front doors.”
“Like other new residential projects around the Baltimore area, Station North was planned at the height of the housing boom but not finished until after the market began to fizzle.”
“Many other builders around the city and region are grappling with half-occupied, completed projects they assumed would be sold out long ago.”
“New condo sales in metropolitan Baltimore fell 37 percent in the first half of this year, while new townhouse sales fell 15 percent, according to Hanley Wood Market Intelligence. And in the third quarter, as the credit crunch hit the market, there were more contract cancellations than sales in the Baltimore metro market, according to Delta Associates, which includes projects that are selling or under construction.”
“Builders now are cutting prices to levels that are more than 10 percent below the height of the market.”
“‘The market has definitely slowed down dramatically from what it was when we were under construction,’ said James D. Campbell, a principal with the Station North builder, which originally had projected homes would be sold out by now at prices up to $450,000.”
“Instead, it has reduced to $299,900 a home with hardwood floors in the kitchen, a slate-surround electric fireplace with remote; a security system and a full-size stackable washer and dryer.”
“‘We had hoped to be out by now,’ Campbell said. ‘The concept was to leave the last units until they were ready to be completed and get the highest prices, but unfortunately the market changed before we got to completion.’”
“The number of unsold new condo units in metro Baltimore has been growing since the end of 2005, when the region had 2,843 unsold units, according to the Delta Associates analysis. By the end of this September, the number had jumped to 5,091, including 865 in the city.”
“In April 2006, Jessica Franklin made a deposit on a $375,000 townhouse in Station North, with plans to move there from Washington and work from Baltimore as an affordable-housing consultant.”
“But her job plans changed, and she decided to stay in Washington, she said. Shortly after closing on the home in May 2006, she put it up for sale. But by then the market had turned, and it was difficult to compete with the builder, who had lowered prices on new units and begun offering incentives. Now, the builder is offering one of the townhouses for $299,900.”
“‘I just think that it was not a good investment for me because it turned out that the market is just not ready for those prices and probably won’t be ready for that for a few years,’ said Franklin, who has since rented out her home and is waiting for the market to improve.”
“‘Our expectations back [in 2005] might have been unrealistically optimistic,’ said Campbell, of Somerset Development. ‘We’re hoping now our expectations are unrealistically pessimistic, and we could do better.’”
The Worchester Business Times from Massachusetts. “Home stats in Worcester County are looking more troubled than in many parts of the state. According to the Warren Group’s August real estate roundup, Worcester County single-family sales dropped 7 percent during that period, and condo sales plummeted 13.5 percent.”
“‘Overall, I think a significant impact on the Worcester market is our high rate of foreclosures,’ said Jeff Hall, VP of the Worcester Regional Association of Realtors.”
“Area developer Roger Kane said the slump in Worcester County and boost in Middlesex County may reflect buyers taking advantage of falling prices to move east. ‘A couple years ago, a buyer couldn’t afford to buy a home, say, in Sudbury,’ he said. ‘This year they might be able to.’”
“Kane said there is less demand for starter homes in places like Holden and Shrewsbury than he’s ever seen, and he doesn’t know why. ‘There’s always been a shortage of that first-time homebuyer home,’ he said. ‘Now it seems like some of those homes are sitting.’”
The Boston Globe from Massachusetts. “When one of the condominiums at Dale Village, a 108-unit complex in Roslindale, fell victim to foreclosure last month, its owner left behind more than an unpaid mortgage. She also owed the condo association $9,000 in fees and legal expenses.”
“The association, which has sued the woman and her lender to collect the overdue balance, believes it eventually will get its money. But until it does, the complex has delayed small repairs to focus on bigger issues.”
“‘If one owner is unable to pay, then the other owners are left holding the bag, so to speak,’ said attorney Janet O. Aronson of the Braintree law firm which represents 2,700 condo associations in Massachusetts, New Hampshire, and Rhode Island. ‘Because when you buy a condo, you’re linked financially with people you don’t know, and you have to take the good with the bad.’”
“Aronson’s firm has seen a 150 percent increase in the delinquency of fee payments in the past two years, tracing back to when subprime mortgages exploded in popularity.”
“Unlike during the last real estate slump of the early 1990s, when some condo associations were ruined financially by unpaid fees, Massachusetts now makes it easier for condos to recover delinquencies.”
“When condo associations sue delinquent owners, ‘a lot of people say, ‘That’s not fair. Why did you do that? Why not cut me some slack?’ said Charles A. Perkins Jr., a Chelmsford lawyer who represents condo associations and whose debt-collection activities have doubled since last year. ‘But the association has no choice.’”
The Republican from Massachusetts. “At a Congressional hearing in Boston’s Roxbury neighborhood, Attorney General Martha Coakley said the home foreclosure crisis was far from over and would spread beyond urban areas to the suburbs.”
“There have been 1,000 home foreclosures in Boston in the past six months, clustered in minority and low-income neighborhoods, Coakley said. But the problem is not isolated to the cities, she said.”
“‘You haven’t seen the end of this crisis yet,’ Coakley said. ‘You are going to see foreclosures in some of our middle and more tony communities.’”
“In Springfield, according to The Warren Group, the number of foreclosure auction notices - the last step before the actual auction - totaled 682 from January to August this year, a 154.5 percent increase over the 268 auction notices in the same period last year.”
“Michael J. Farrell, president of Northeast Financial Group in Wilbraham, who helps people trying to stave off foreclosure, said he hasn’t seen a consistent approach from lenders dealing with the wave of delinquent borrowers.”
“Instead, mortgage companies have been postponing foreclosure auctions ‘without any end in sight. The banks just don’t seem to have a game plan,’ Farrell said.”
“He has been able to work out ‘quite a few’ short sales, he said. But the biggest problem is time. Lenders are taking so long to agree to the lower price, with lower loan repayment amount, that ‘in the meantime, we lose the buyer,’ Farrell said.”
The Cape Cod Times from Massachusetts. “Cape Cod is among the areas of the Bay State to see its share of foreclosure turmoil in recent months. On the Cape, more than 200 homeowners have lost their property to foreclosure so far this year, according to the Barnstable County Registry of Deeds.”
“So far this year, the registry has recorded nearly four times as many foreclosures as it did during the same period in 2006.”
“The Housing Assistance Corp. in Hyannis has been working on ’short selling,’ with its clients for about a month, said the organization’s CEO Rick Presbrey. ‘I think there’s been relatively little success,’ Presbrey said, noting that the state government has little real authority over national mortgage companies.”
The Street.com. “On the New England resort island of Nantucket, real estate attorney Stephen Meister has hired the auction house, Sheldon Good, to sell off three properties, two of which he developed and a third that his son bought and renovated.”
“Meister, who owns a residential development company on Nantucket, says he chose to auction because ‘I want a definite timeline,’ and the flexibility to make his next moves.”
“Meister says he has set minimum bids for his properties ‘at least 15% to 20% below market value,’ at $7.65 million, $2.55 million and $1.15 million.”
“Is Meister pursuing the right course? Ryan Wagner, a VP a real estate broker, said he recalled ‘two other instances where it’s been tried, but I don’t think in either the reserve price was met.’”
“Wagner says that ‘the market is fine.’ However, he adds, ‘I don’t think anyone in their right mind would have hoped things would continue’ at the pace that pulled the market forward in 2005 and 2006.”
Two indications that economy is getting worse by month.
1) Last Sat. I was in a party in San Diego and three people (a used car dealer, a bank loan officer who gets part of her salary from commission on loans she generates, and a store owner). All of them said that business is very bad. The car dealer said that in average they have used to sell 15 cars in a month in their lot, in Sep. they sold only three. And the loan lady was particularly worry about 2008, she said she gets 1/3 of her annual income from commissions.
2) Yesterday, I received my stuff (52” SONY LCD HDTV, Blu-ray & SONY FX900W receiver/surround sound ) from east coast (NJ) by YELLOW Transportation Co.. I started talking to the driver (a middle aged man) and asked him how the business is, he said that the business is very bad and he has never seen it this bad before. Then, I asked him how long he has been in the business, he said he has been in the business for 35 years.
These are just a couple of random selection of opinions and it says a lot. 2008 WILL BE MUCH WORSE THAN 2007.
Yesterday, I received my stuff (52” SONY LCD HDTV, Blu-ray & SONY FX900W receiver/surround sound )
So I have to know, after hearing all that doom and gloom you didn’t think to send all that stuff back for a refund? Unless of course you won it all.
Yes, I won it all and more shorting HB last year
.
I agree. I was at the Del Mar Ruth’s Chris on friday night. Totally different atmosphere compared to 2 years ago.
I for one will be damn happy when the refi rift raft stop crowding my favorite places. This seems to be happening.
I for one will be damn happy when the refi rift raft stop crowding my favorite places.
no end in sight, it seems, where I live.
Although last eve I stopped at the brand new Home Depot - hardly anyone there. (It was kind of cool to see a new Depot, the floors were so clean!)
Anyway, what was odd that this HD is one of the anchor stores of a new “Town Centre”. A lot of acreage was cleared to build another Centre that we really don’t need. But the only stores that were up and running were the HD, the new Target, and PetSmart to open soon. Everything else was a construction zone. I’ve never seen a shopping center’s anchor stores open in the midst of construction. Aren’t all the buildings supposed to be erected at about the same time, even if the store space is not yet leased?
I can’t imagine that driving around bulldozers and cranes can make for a happy sunny shopping experience.
The madmen in our area have built another unneeded mall, thus leaving us with: 2 Home Depots (none in the new mall), 2 Lowe’s, 3 Wal-marts, and 2 Best Buys (along 2 Circuit Cities, though none are in this new mall) all within a 6 to 7 mile radius… and that’s just the stores I know about and doesn’t count smaller, non-big chain stores (if any still exist). Do we really need this much overlap?! And the new Lowe’s looks like it is ready to go before the rest of the mall is finished. Perhaps desperation - a need to make money NOW before the place goes into a death spiral?
the cannibalization you are describing will result in some ghost malls shortly
Speaking of ghost malls, here’s a whole site dedicated to them:
http://www.deadmalls.com/
This strategy was notoriously invented by Wal-Mart. Wal-Mart would find a region with still only local stores. If the area could support, say, two Wal-Marts, Wal-mart would put up 5 Wal-marts. Customers were so bombarded by easy access to Wal-mart that they shopped only there, driving locals out of business. Then Wal-Mart would close 3 of the stores, leaving the original 2 that they should have been there in the first place. Getting rid of competition by leaving empty big boxes was actually financially feasible.
Talked to a book keeper for a chain of new and used autos dealerships the other night. She said her dealerships and others have been crying that nobody is buying or spending money.
Worse, at a recent automotive get together, she said that everyone from dealers to Goodyear service stores are noticing and complaining that people are NOT scheduling regular preventative auto maintenance, repairs and new tires after factory warranties expire.
People seem to be spending LESS on their cars and trying to make them last longer OUTSIDE of the more expensive large chain repair shops and dealerships.
Drive on in folks, the Service Bays are EMPTY!
Perhaps America’s love affair with the car, along with houses, is on the rocks for a while as financial austerity tightens the middle class wallets. More Trickle Down Economics from the high flying US Housing market
OTOH, I have a Tucson friend who owns an auto repair shop. It’s just him and a partner, and I’ve never heard my friend say that he isn’t busy. Must be because he’s a good mechanic. And an honest one.
My friend is looking for a new car. I told her that she should look for one with good gas mileage. Goes to a dealership and salespeople are fighting over her. I told her to check eBay. She bought a two year old Prius off of Craigs list for $9,000 from a FB in San Diego.
was at a business luncheon yesterday, small town political kinda stuff:
lots of old timers saying :”we need to invest more in each others business. If everyone stops spending money to save for a rainy day, all we are going to get is rainy days… Cmon, guys we cant let the money stagnate any longer.”
Translation:
Spend money now. Spend money now. Spend money now…The Economy is fine if we spend money now.
“In April 2006, Jessica Franklin made a deposit on a $375,000 townhouse in Station North, with plans to move there from Washington and work from Baltimore as an affordable-housing consultant.”
What in the world is a “affordable-housing consultant” and who would pay them enough so they could afford a $375,000 townhouse in Baltimore.
Wannabe pol using congressional logic?
An affordable housing consultant is someone who works(?) for a quasi non-profit lobbying organization that lobbies local, state and possibly federal government for highly subsidized housing. I guess it would have been easier to say “private sector bureaucrat”
Subsidized housing! Then she’s an “unaffordable housing consultant” because if the government didn’t kick in, prices would be lower!
I wonder how much rent she charged…
“Subsidized housing” refers to apartments and apartment-townhouse developments for people with very low incomes. Think the person who is disabled and living on the median $800 a month in Social Security disability or the clerk at the grocery store making $15,000 a year and rasing a child or two after a divorce or being widowed. The property owner agrees to reduced rents not more than 40% of the area median rent in exchange for subsidized construction costs. There is also funding for those who can not pay even 40% of the area median rent so that they pay only 33% of their income - and the subsidy fund makes up the difference.
There are also a few housing development trusts that own the land and build a house which is sold to a qualified buyer who has an income not above a certain amount. In our area the income caps are $45,000 for 3 and $50,000 for a family of 4. The trust retains title to the land and the buyer only has to get a mortgage for the house - here, typically $104,000 -117,000. There are severe restrictions on the property: (1) buyer must live there full-time (no renting no 2nd home people) and (2) if they want out, the home must be sold to another buyer who qulified through the trust and the prior owner gets no more than 22% of any appreciation in value. Even if they stay there 30 years and pay it off the property can only be sold to another low-moderate income buyer. They can leave the property to an blood-heir (child etc) but the one who inherits must also love there and is subject to the same restrictions.
If you don’t know what you are talking about, silence is the best answer.
I guess her idea of “affordable housing” is moving to a different city and commuting an hour-and-a-half each way. That kind of consulting is absolutely priceless!
LOL. I guess many of her clients are now living in Baltimore area and commuting to DC. Great commute.
i’m seeing this a lot more- people using an excuse like their job plans not working out or other B.S. instead of just admitting they were speculating and got burned. this is going on en masse right now in the DC area’s condo market… and whenever i call the realtors on it they lash back citing the same B.S. that these specuvestors gave them- funny thing is that the realtors probably believe them!
a government worker- she stayed w her fed job-so when you work today you can carry her on your back
I posted this let see if they delete it:
Jessica is without a doubt the DUMBEST woman we have come across in this housing bubble…spending $375,000 for a condoze, and working as an affordable housing consultant….
She is the ULTIMATE Brainless, Clueless, Paris Hilton Fluff bunny, I’ll bet with fake boobs too.
She should be embarrassed in public for being such an AIRHEAD!
============================
n April 2006, Jessica Franklin made a deposit on a $375,000 townhouse in Station North, with plans to move there from Washington and work from Baltimore as an affordable-housing consultant.
so far….you’re the only comment!!!
“In April 2006, Jessica Franklin made a deposit on a $375,000 townhouse in Station North, with plans to move there from Washington and work from Baltimore as an affordable-housing consultant.”
“But her job plans changed, and she decided to stay in Washington, she said. Shortly after closing on the home in May 2006, she put it up for sale. But by then the market had turned, and it was difficult to compete with the builder, who had lowered prices on new units and begun offering incentives. Now, the builder is offering one of the townhouses for $299,900.”
There is a joke in there somewhere…
Speechless. I have never felt I could afford a 375K house and we make many multiples of what a “affordable housing consultant” makes.
They “Sold” to anybody.
i have a friend that is one of those “private sector bureaucrats”. i have known her for years and still have no idea what she does.
Generally the same thing as a public sector bureaucrat, but for more money. A government position lowers your perceived IQ. Everyone things I got smarter when I left the public sector, and some people actually started paying attention to what I said.
Tax ‘Fairness’ in Action
http://www.mdpolicy.org/pressroom/pubID.172/pub_detail.asp
Every state has its problems, but we’re especially glad this month that we don’t live in Maryland, where Governor Martin O’Malley has been undertaking something close to a tax-increase-a-day tour.
In Ellicott City he proposed raising the sales tax to a rate of 6% from a nickel. The next day in suburban Baltimore he unveiled his plan to raise the top income tax rate to 6.5% from 4.75%. Last Wednesday in Landover he called for a doubling of the cigarette tax to $2 a pack. He has also endorsed a one percentage point hike in the state corporate income tax to 8%, new commercial real estate taxes, and a 12 cent hike in the gasoline tax to 35.5 cents a gallon. The Tax Foundation says Maryland already has the 23rd highest tax burden among the 50 states, but the Governor seems to be aiming for the top 10.
At least in California you get some sunshine in return for your unreasonable tax bill. In Maryland, you get, uh…well…crabs?
Only 23rd highest tax burden? From what I hear from so many Maryland friends, you’d think they’re in the top 10! Maybe O’Malley figures that since they elected him instead of low(er) tax Erlich, it’s time he made up for that misperception and make sure Maryland DOES get in the top 10!
Well, even the crabs can end up lacking or questionable here in some years.
Yep, Maryland is a “wonderful” place - higher taxes on the way! What is really funny is that the idiots of this state voted out a perfectly decent Republican governor (who did NOT raise taxes or create any other mess) to “send a message to Bush about the war.” The morons apparently failed to realize 2 things: 1) The state governor has no effect upon the war - he doesn’t get to have a vote on it! and 2) if you elect a tax-and-spend crook, you’ll get - surprise - higher taxes and more useless spending.
Now, most people (aside from the large number on the dole) are complaining about the higher taxes and O’Malley, and many are the very same idiots who elected him!! I think they should have to pay the extra taxes as a sort of “stupidity tax” for voting for a known crook and then being confused by the outcome!
I’ve lived in the DC area since the early ’90s, and Ehrlich was the only MD governor during that time that didn’t seem like a crooked sleazeball. O’Malley seems like a real doofus to me. Of course, we have our own issues over on the Virginia side of the Potomac….
Earlier in the article, 10% price drops are reported, yet the $375k - $299k drop is twice that. Vested interests are going to spin this fiasco all the way down.
“Wagner says that ‘the market is fine.’ However, he adds, ‘I don’t think anyone in their right mind would have hoped things would continue’ at the pace that pulled the market forward in 2005 and 2006.”
Fine?? As in the acronym Fukked up, Insecure, Neurotic, Emotional? And do I hear him acknowledging that 2006 was a continuation of the 01-05 lunacy? Based on a post in Todays Bits Bucket, It appears the actual decline began this past August. Cool…..
“‘If one owner is unable to pay, then the other owners are left holding the bag, so to speak,’ said attorney Janet O. Aronson of the Braintree law firm which represents 2,700 condo associations in Massachusetts, New Hampshire, and Rhode Island. ‘Because when you buy a condo, you’re linked financially with people you don’t know, and you have to take the good with the bad.’”
It’s nice that a lawyer is telling the truth but I wonder how many sales various condo projects just lost when he said this.
I have been very wary of buying a condo for that reason. They are going up all over the area I live in and don’t seem to have decreased in price very much. When people start getting foreclosed on it is a problem for everyone in the building. Many of the buildings in the area I live are charging upwards of $500 a month in condo fees, billing themselves as luxury buildings. If people stop paying their fees the other owners are stuck with enormous fees and less amenities, an awful situation to be in.
try $630 per month for condo fee. This only includes water for utility in a condo a guy I know brought in Alexandria, VA in March of 2007. He said he got a great deal only paying for 230K!
Hahahaha! I’m currently renting for less than that condo fee! OMG!
My mortgage is less than that condo fee.
If you spend all your money on the basics, is that still “success”?
Holy crap.. That’s a real shocker of a condo fee. That would even be high for FL, where a condo fee typically includes your windstorm insurance!
WOW!
and to think - that never goes away and even if you pay off your mortgage, that is still there dogging you.
All for a glorified apartment!
In the trailer parks we call condo fees “lot rent”.
Except a trailer usually has more living space and you don’t have to share walls with anybody.
The highest I’ve seen advertised is $700 a month. When you combine that with NJ property taxes you have $1200-$1500 a month in outlays before you pay a dime to your mortgage or any other expenses. I just don’t see how people do it, barring having a high six figure income.
In Manhattan condo fees are normally over $1000 a month plus property tax of course. I saw one two bedroom a couple of years ago where the combined property tax and maintainance was $3000 a month.
In most cases, they don’t: They get a teaser loan, ignore as many payments (HOA, etc.) as they can, stop paying the bills, live rent free for a few months, and then foreclose. We’re getting to that last phase soon, I hope!
The lawyer you quoted is a she, not a he.
‘Because when you buy a condo, you’re linked financially with people you don’t know, and you have to take the good with the bad.’”
Testify, brothah! Now, if you want to buy a pig in a poke, just purchase a condo from a developer, where the association is not established, you have no idea who your neighbors might be, or how many infestors might be owners, etc. I could maybe see someone buying in an established condo complex, where they can review association financials for a period of years and take a calculated risk. With a condo, no one really “owns” their unit. They “own” the right to dwell within the four walls, pay the mortgage and maintenance fees and special assessments. Tasty.
That’s how I approached it Palm, bought in an established building with a decent rep. I have friends that bought from developers - bad news! Smaller buildings/complexes are also problematic. All the same, I am getting really worried about things up here in Chicago - where developers/builders seem bent on replicating Miami’s condo mess - only with snow.
This is what I’m wondering about. We have a 40-unit building in my area and they only sold 3. How can 3 people afford to maintain the entire building?
What you own is the airspace inside the walls & a piece of the common areas.
Allow me to Fisk this segment:
Bull$h*t. Keeping your job in Washington, DC does not mean you can’t live in Baltimore. The MARC commuter rail carries thousands daily from two stations in Baltimore city center to Union Station, Washington, DC.
So she admits it was an “investment”, or more accurately a speculation, i.e., a flip. The Station North neighborhood is above Baltimore’s Inner Harbor, and not yet gentrified. She plopped her money down (more likely just a signature and some kind of zero-down Neg. Am. NINJA mortgage) betting that the neighborhood would be the next U St. like in Washington, DC. She rolled snake eyes. “The market was just not ready for those prices” she says. She obviously thinks its better to hemorage cash over time renting than to just rip off the band-aid.
Good stuff. When fools like her are the frequent subject of cocktail party chatter, it’ll be time to buy.
Let’s not forget to thank her for her efforts in making housing affordable by jumping in on the flipping game. Hope she loses her ass.
Good stuff, indeed. It is actually really sickening that someone who works in the “affordable housing field” is out there trying to buy and flip, thus excacerbating affordability problems.
This is one who DESERVES to get hosed, badly.
Yeah, but I bet she could get some really high-quality crack in that neighborhood. And at this point, that might be a good idea…
It’s certainly possible to commute from B-More to DC, but it’s a bit of a hassle however you do it. Your specuvestor theory is likely, but it’s also possible she didn’t know what the commute would really be like.
ChrisO:
She knew what the commute would be like- 45 minutes to an hour if you are the only car on the road, and possibly, 2-3 hours if there are one or more accidents and/or construction. As for the train, while I have never taken a train from Baltimore to DC or vice versa, it is my understanding that there are reliability problems, which results in, once again, 45 minutes to 2 hours. That said, it really is not reasonably possible to commute from Baltimore to DC. Heck, my commute from Alexandria, Va via Metro takes 45 minutes door to door- and that’s getting old!
She might have known that ‘intellectually’, but not realized how soul-crushing such a commute really is. My wife and I live in a total dump in inner Arlington, but I walk to work and my wife has an easy 30-min. reverse commute. There is no amount of fancy kitchen furnishings or square footage that would make the Baltimore-to-DC commute worth it for me.
Ostriches
A good friend has moved to Alexandria and is making things work by subletting a bedroom etc. from a frequently absent townhouse owner.
Is that about as good a housing strategy as there is for the area?
Any other angles you could suggest. Any opportunity for house sitting gigs for a year?
a relative rents out an extra room in Alexandria as well….she likes the company, they get access to virtually a whole house, with a deck, easy commute….for about $500 a month.
Still think rents will go up? Not if more people get used to the idea of being “flexible” about their home.
Wouldn’t you maybe think of checking out the commute before signing for 375 grand? Maybe?
Well, *I* would, but then I wouldn’t spend 375k on a Baltimore condo. Any Baltimore condo.
I have friends who live in Linthicum Heights and commute to downtown DC, and they don’t complain too much, but their commutes aren’t that great.
Nah, not when she knew she could flip it for a 236% profit.
It was in the bag.
Well said, Moose!
Funny thing is, those condos are a very short walk from Baltimore’s Penn Station! So she SHOULD be able to commute just fine. Uh, if you survive the short walk, that is.
That neighborhood is waaaaaaay up there, far from the safe-ish Inner Harbor, and way past even the top of the Theater district as I know it. I’ve walked up to lots of the eateries on Charles Street but have never ventured all the way to Penn Station. Looks a bit dodgy there, and I certainly wouldn’t want to be wandering around there at night with my laptop bag after a long day at work.
What possessed people to pay that kind of money for that kind of area? Oh wait, we all know — just greed/flipping/speculation and the hope of easy money.
Isn’t Purgatory that place between Heaven and Hell? Sounds like condo “ownership” is a special place between renter and single family home “owner”.
i thought he place between heaven and earth was heck.
Purgatory comes to those that wait.
My understanding is that condo ownership has always been that way. Usually, apartment rent and SFH mortgage are close enough that you can go from one to the other once you have a down payment. In dense cities where houses are expensive because they aren’t making any more land (sorry, Ben, in DC it’s true), apartment to SHF is too much of a jump. Condos are a middle stepping stone. Very few people (except those “vibrant” bar-hopping internet-cafe-ing pretty “young professionals” that show up in the ads) actually like this lifestyle, but at least you can get a little equity on the way to a SFH.
But you’re supposed to only need condos in the densest and largest cities, not smaller cities like Raleigh or West Palm Beach. And IMO there is no business charging HOA on anything that’s not an apartment condo or a development where people truly want somebody to take care of the lawn (55+ and the like). Demand for condos is therefore low — until a bubble comes along and promises wack appreciation and the HB’s try to force people into it to cash in on the high profit margin.
All IMO.
“In dense cities where houses are expensive because they aren’t making any more land (sorry, Ben, in DC it’s true), apartment to SHF is too much of a jump.”
Your thought process is shared by a lot of people throughout the last few decades, which I think is the primary reason why we have suburban sprawls now. I live in DC most of my life, and true we have fix amount of land, but people living in Tokyo has a better argument, IMO. I don’t expect the 600K people in D.C. proper to own detached houses, but I think owning an apartment in the city is equivalent SFH in the suburb, (think NYC, not for everyone obviously).
I also been down the triangle area in NC, and suburban sprawl couple with car centric culture is totally unappealing to me, personal opinion of course.
Perhaps not so low:
“Democratic fundraising powerhouse Connie Milstein has a few more dollars lying around to donate to her favorite candidates. Her 5,000-square-foot, 15-room duplex at 770 Park Avenue on the 16th and 17th floors has sold for $20 million, city records show, which was exactly her asking price.”
“But those donations may be harder to keep up now that the couple has to pay a $9,915 monthly maintenance fee for their two-tier, five-bedroom Park Avenue apartment.
“
“Very few people (except those “vibrant” bar-hopping internet-cafe-ing pretty “young professionals” that show up in the ads) actually like this lifestyle…”
Some older couples prefer a condo to escape the drudgery of maintenance and upkeep that comes with a SFH. Raking leaves on the East Coast can be quite a chore, and the more reliable lawn care companies charge an arm and a leg. Of course, you can go down to the local day laborer congregation center (a nearby 7-11 in my case) and pick up a few immigrants and pay them $50, but you don’t know what you are getting.
Condo ownership is worse: I doubt Purgatory has HOA’s, flippers, or other such things!
Condos in our area built 25 years ago just assessed the owners of every unit $10,000 to replace all the siding. It should have held up better than that. Regardless, they all have to cough up $10k apiece.
A client who’s been moaning about her coop gave me details yesterday. Beautiful old building at 84th and Broadway…and the assessment is 40k. It went coop from a rental more than 10 years ago, and structural problems in the 80 year old building must be addressed. The retail leases, all high end, were negotiated by the sponsor’s lawyers, and the building receives a pittance of the rent. She told me some of the long-term tenants have to refinance to come up with the assessment, on top of rising maitenance fees…rental tenants who buy in during a conversion often don’t have the deep pockets of newcomers after the conversion.
My sister learned the hard way about how little you really own with a condo. She bought a new small condo in the SF valley (3 stories with parking underneath), put $30k down (about 30% of the price back then), and settled in to live there indefinitely. Then the Northridge earthquake hit. Overnight she became homeless. The building was yellow-tagged. She couldn’t even pitch a tent on the property had she wanted to. The other owners for the most part had little or no equity, so they walked instead of seeing about repairing the building. Now she’s in a house, lesson learned.
Growing up on Long Island, I know what the solution to this is! The town of Long Beach, Long Island, was a swanky beach resort in the 20s, and was OK until WW II. After the war, there were empty apartments and bungalows.
The buildings were rented out vis government contracts to various forms of welfare recipients, including “halfway houses” for drug addicts and the mentally ill, as well as regular poor people (what’s now “section 8″). The advantage to the landlord is you get your $$$ directly from the government so you don’t have to deal much with the tenants.
It wasn’t until 1980 that this area recovered, and it started to be a normal neighborhood again. Now, it’s a nice place to live.
But the “slump” lasted over 30 years! And this is a nice beach location where one can commute into NYC.
It won’t be too long before empty condo developments go to the “Section 8″ crowd.
A good growth business in areas that get infested with non-working people would be “burglar bars!”
Read the Wikipedia article on Long Beach, Long Island
http://en.wikipedia.org/wiki/Long_Beach%2C_New_York
…if you don’t believe how a swanky resort community, beach front properties, commutable to NYC, can turn into a crime infested dump and take 30 years to recover.
This is one of those reasons why, when I meet people in Lake County , Florida, (where there ISN’T a Beach or a New York City nearby) who think that the condo development they “invested in” can’t become a drug-infested slum, I laugh my a$$ off!
The welfare plan was implemented in large parts of NYC too, back in the day. For example, the former beach bungalows of the Rockaways were winterized (barely) and then rented out to the poor via the government.
Other states sent their most troubled residents here. By 1990, only one-third of the adults on public assistance had been born in the state. The states where the poor came from sent people up to recruit businesses to leave, touting low taxes.
Speaking of Maryland, more specifically Howard county, how about a drop of $110,000? (It is still way overpriced!)
http://tinyurl.com/2yqfar
Speaking of Maryland, more specifically Howard county, how about a drop of $110,000? (It is still way overpriced!)
Is this Lawrence lady all over the d*mn world. I receive emails from central FL from her. You have to have a license in each state you practice. in.
Anyone want a job?
http://dallas.craigslist.org/acc/449948141.html
Here is my analysis of Default Claims involving Global Securitized Markets.
“Your all a bunch of crooks, you should be in jail.”
So do you want the job or don’t ya?
Ohhhh . . . this is good.
http://www.minyanville.com/articles/Cornstock+Homes-Tousa-housing-Corus+Bank-Standard+Pacific/index/a/14486
“Please tell us how to get rid of our billion dollars’ worth of debt because we don’t really like it anymore.”
OK!
Keep an eye on mid ’08 as the timeframe when entire project foreclosures will start kicking-in in the Miami market.
If I had just “snapped up” a Miami condo, for a “great price”, this forecast would be slightly unnerving.
“The first comes courtesy of Comstock Homes (CHCI), which on Friday announced that net orders for the third quarter were… 3 (that’s three without any zeros) and net new order revenues were -$11.5 mln (as in negative revenues).”
3 house ordered in a month…wow..
No, that’s in a QUARTER.
I hope they’ve gotten an upgrade on that news!
oops
3… okay, that is impressive! Based upon that happy number and the -$11.5 million in revenues, I assume their stock is up 25% in the past few days, right?
Nice post Chic…
From the article txchick linked to:
For the entire month of September, CHCI managed to close on four units at The Eclipse project, which is becoming pretty much synonymous with the faith of the company. Mind you, The Eclipse is a terrific development if only at half the prices for which it is being pitched.
I live about a mile up the road from the Eclipse. I wouldn’t buy there for half of what they’re asking…not that I would get myself trapped in a condo in any event.
The Eclipse has huge disadvantages. You can’t walk to the subway from it, unlike the older condos nearer where I live. It’s near what is still basically a ghetto neighborhood. Units on one side have nice river views, but the other sides look onto a sea of big box stores, traffic-clogged streets, and auto dealerships. Who wouldn’t want to buy into that for $500k plus?
The Eclipse - is that the one at the intersection of South Glebe and Jeff Davis Hwy? There is a water treatment plant nearby. After a good downpour (and sometimes when it is dry) it emits a horrible stench.
Yeah, that’s the one. The county is currently rebuilding the treatment plant under a court order, and due to the construction the stench occasionally reaches my area near 23rd Street, well over a mile away.
On the plus side, they opened up a nice Harris Teeter grocery store in the basement of the Eclipse, with free parking for one and all. It’s nice not to have to go to that crowded store in Pentagon City anymore.
The Eclipse doesn’t look like a bad development, actually, it’s just in a bad location to try and move upscale condos to the “young and hip” set, when similar units are available in much more happening locations.
‘An electric fireplace, with a remote’?
You know, I can’t quite define why I am so firm on this, but—that is an abomination. Really. That ought to draw down meteorites and cause the dead to walk or something. That is just wrong, wrong, wrong.
My hands smell like a bit woodsmokey right now because I’m working at home today and just lit a cozy little fire. A REAL FIRE.
I use to think the idea was a strange one, but try to look at it as an American seeing Japanese cultural habit.
People do odd things…
The Japanese have elegant, graceful, zenny ways. Unless they are the ones who invented this vile creation, and then I’ll change my mind on that. I just cannot get over an electric fire with a remote! WRONGNESS.
I’m renting a place, and when the landlord and I took a walk through, he warned me of the high price associated with using the gas fireplace. He is right of course. When the fireplace is lid, is is equivalent to perhaps three stove burners going on at the same time. Depending on where you live, gas price can be expensive. But it is odd that he mentioned it, given that he can afford a house that is “worth” $400K.
And I am a Master of Doing Odd Things, just so you know. A recognized and revered scholar and savant on the subject.
Electric fires with remote controls are not odd. They’re EVIL.
Gas fire places are the hottest thing going in the local new construction (up here amongst the woods and farm country in upstate NY)
The truth is all these newbies come from someplace else and aren’t really into dirtying their hands w/logs or soot removal.
I know they sound silly, and I initially laughed at the one that came with my last place, but they can be very nice. I had a basement office that got chilly in the winter, and it was really convenient to flick a switch to light the gas fireplace.
Also, with a real fireplace, you have vacuum effect where the fire draws cold air into the house. With a sealed gas fireplace, you don’t have to worry about that. Nore do you have to worry about your heat going up the chimney when the fireplace isn’t in use.
I didn’t say fake fires with remotes are ’silly’, I said they are ‘EVIL’. And they ARE.
Anyhow, gas is just fine. I have no objection to gas fires. Nice, tidy, convenient, real flames, all in all very acceptable. As long as they don’t have a remote. Then all agreement is off, and again I demand—the dead must rise and walk about and meteorites should fall from the sky to protest.
Have you seen Dawn of the Dead (Ving Rhames vers.) lately? Here’s a clue: they all die horrible deaths. I’d rather prefer the dead didn’t rise, thank you.
“My hands smell like a bit woodsmokey right now because I’m working at home today and just lit a cozy little fire. A REAL FIRE.”
In some states, real fireplaces have been banned or made difficult in new construction because of air pollution levels. In 1997 in Chandler, AZ (borders Phoenix) I paid $5000 extra for a real fireplace, and friends who built a year later faced a $10,000 fee. I felt they were trying to discourage people from building them. We were supposed to only use it certain days of the week. The federal gov’t was threatening to withhold highway funds because the air quality in Phoenix was so bad.
I like wood fires too, but I’m allergic to the wood smoke. If I ever have a fireplace it’ll have to be gas….sigh.
BREAKING NEWS:
Treasury Secretary Paulson called for an aggressive response to deal with an unfolding housing crisis that he said presents a significant risk to the economy. Full article coming soon.
Paulson: save the economy by keeping home prices high.
http://www.msnbc.msn.com/id/21322471/
“The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.”
Perhaps we need a low requiring everyone born after 1980 to spend at least 50% of their income on housing, in addition to the 33% on taxes.
This is so backwards. What about free markets? Prices are too high let them adjust - why get in the way?
Paulson said this summer things were “the best in his 36 years of business” WTF??
When you make what he makes, I guess you wouldn’t be very rational about housing prices matching income either. If he gets his way and prices remain high, I’d bet 1/3 of this country’s houses will be sitting vacant in a couple years.
Actually, that first sentence isn’t backwards at all. Economic growth WILL be impacted even more the longer the price drops last.
The problem I have is the assumption that this is a bad thing. It isn’t a bad thing. The market MUST be allowed to correct itself, even if it overcorrects, without govmint intervention.
These capitalism-is-fine-as-long-as-markets-only-go-up guys are really starting to get on my nerves.
Relax Hank, a fundamentally strong economy ought to weather a little ‘ol recession just fine…but if…
“We must help as many able homeowners as possible stay in their homes,” Paulson said. “Foreclosures are costly and painful for homeowners.”
For the last time, they do not ‘own’ the fu*king homes and they are not ‘homeowners’ until the note and taxes are paid.” And, Hank, do you really think that we believe that you care about the ‘homeowners?’” I mean, what was all that stuff yesterday- the pooling of monies by the major banks?
“Perhaps we need a low requiring everyone born after 1980 to spend at least 50% of their income on housing, in addition to the 33% on taxes. ”
Stunning.
Paulson has it totally backwards.
Gotta love those the supply side Kudlow style “free markets”. Free(inherently unfair and lopsided) markets for us, and bailouts for the wealthy elite on Wall Street/K Street.
Privatize profits, socialize losses. Lather, rinse, repeat.
“This is far and away the strongest global economy I’ve seen in my business lifetime,” - U.S. Treasury Secretary Hank Paulson, july 2007.
“The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.”
The longer housing prices stay unaffordable, the greater the penalty to our future economic growth.
“The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.”
The logical conclusion to that statement is that house prices should fall as much as possible and as fast as possible. But bailing out bankers and/or home”owers” will only MAKE MATTERS WORSE.
I’m still at a loss of how these banks are going to sell 100 billion in commercial paper to buy up these bad mortages from the SIV’s . If peopel wanted to buy this stuff they would already be doing it. Something is fishy about this fund, somehow the FED has figured a way to get them cash.
Wake up, Central Mass. Worcester is a dump. A dump that happens to be on a commuter rail line to Boston. You’re right–once the houses get cheaper near Boston, there is no reason to be in Worcester because there are no jobs there.
I have great affection for Worcester, but you can rent an entire flat in a triple decker for $800/mo, maybe less given all the vacancies, which means–guess what?–those houses are not even worth $300K.
Shrewsbury is some diesel-fume-polluted, sandy, dingy wreck, only a hop, skip, and a jump from some serious cowtown. No-one under 30 with an IQ over 80 or who doesn’t have a major drug habit wants to live there. Get a grip.
OK, here’s dear Jessica’s history on the Baltimore condo:
She bought place last year with a construction loan of $356,050.
Once it was ready (I think) in about May 2007 according to mortgage docs, she then took a mortgage of $365,750.
Mortgage terms: ARM at 7.375% (ouch!) for 5 years then 2.75% above LIBOR. Ouch, speaks poorly for her affordable housing advice, eh?
Interestingly, she also has a place in Prince Georges County listed on the construction mortgage, and what is curious is that I see no mortgage lien release. So is she paying both mortgages? Perhaps. Doesn’t matter, and I haven’t got time to chase that down right now.
In any case, her monthly Prin+Int on the condo is $2526. Plus taxes. Plus insurance. We could estimate $2850 or so. Oh, plus condo fees.
Now who’s gonna rent a place in that part of town for that kind of money? This doesn’t sound like a nice rental investment to me, not at all. She will be hurting for a long time with this dog.
Let me add one thing: She signed the construction mortgage (as do so many others) with the intention of it being her principle residence, but I guess once it became clear she’d either rent or sell it, she refi’d it, and those docs are clearly for investment/rental. So I’ll give her credit for playing that one properly in the end.
Except if she had to get a 7.375% ARM when fixed rates were @ about 6%, methinks she had bad credit. Just what we need. People helping other people with affordable housing, when they don’t even have good enough credit to get a fixed rate.
Keep in mind that the rate she’s paying is for a non-owner- occupied property, so it will of course be higher than the bargain 6% 30-year fixed was at the time (May 2007).
And if the property was indeed $375k as the article says, she had 95% financing on her construction loan and perhaps similar on her refi with a new (bogus!) appraisal. That calls for yet another bump up in the rate she would get.
So 7+% is no big surprise, and I’d suspect her credit doesn’t suck. Yet.
He warned that conditions in financial markets had improved since mid-August, yet that a full recovery is likely to take time, and that more setbacks were possible. “In particular,” he said, “investors are continuing to reassess the risks they face and have not yet fully regained confidence in their ability to accurately price certain types of securities.
Yea, I bet these guys don’t want to accurately price these types of securities to their real value as it would cause a BIG PANIC in the markets. They know but do not want to tell us.
One interpretation of HP & BB warnings: Never fear, more bailouts are near.
On my way home today in NE Ohio. By the freeway were two Auction signs. One for building equipment and one for building supplies.
$100 oil, subprime meltdown, cost of war, look out below on WALL STREET yes people did jump from windows in 1929???
A few did. Suicide statistics where no higher in 1929 then prior years. 1929 suicides are mostly myth.
Oh please, please tell me that my great grandfather died of old age. He did not jump off the roof of a 10 story building in 1929, leaving my grandmother to sell his clothes out of a wooden box on wall street.
updated…
http://biz.yahoo.com/ap/071016/paulson_housing.html?printer=1
In his most somber assessment of the crisis to date, Paulson said that the housing correction is “not ending as quickly” as it had appeared it would and that “it now looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet.”
“We must help as many able homeowners as possible stay in their homes,” Paulson said. “Foreclosures are costly and painful for homeowners.”
But Paulson also stated, “When investors are relieved of the cost of bad decisions, they are more likely to repeat their mistakes. I have no interest in bailing out lenders or property speculators.”
Whatever else you say about the man, you have to admire his courage to stand up against bailouts given the brigade of moonbats at his flank barking in favor of them.
Paulson Says Housing Is Likely
To Adversely Affect Economy
Treasury Secretary Endorses
Standards for Mortgage Brokers,
Expects More Declines in Housing Starts
By DAMIAN PALETTA
October 16, 2007 12:47 p.m.
WASHINGTON — U.S. Treasury Secretary Henry Paulson offered a sobering view Tuesday of the pressure the housing market was having across the country, saying the decline stood “as the most significant current risk to our economy.”
Mr. Paulson even acknowledged that problems in credit, mortgage, and housing markets were much more severe than anticipated.
“The ongoing housing correction is not ending as quickly as it might have appeared late last year,” he said in a speech to Georgetown University Law Center, according to prepared remarks. “And it now looks like it will continue to adversely impact our economy, our capital markets, and many homeowners for some time yet.” (Read the full text of Paulson’s remarks.)
Housing prices have flattened or fallen in many parts of the country, as homeowners with adjustable rate prime and subprime mortgages have found it increasingly hard to make their monthly payments. The market’s problems have impacted everyone from low-income homeowners to huge Wall Street banks.
Mr. Paulson and his senior aides have found themselves on the front lines of the effort to both stabilize jittery credit markets and help borrowers prevent foreclosure, a difficult tight rope walk as they try to prevent “bailing out” risky investments.
http://online.wsj.com/article/SB119254743128760627.html?mod=hps_us_whats_news
“When investors are relieved of the cost of bad decisions, they are more likely to repeat their mistakes. I have no interest in bailing out lenders or property speculators.”
Practice what you preach and drop the Citi toxic mortgage Superfund plan, then.
OT but, I couldn’t help noticing a story about family pets being abandoned. It’s not just a flipper speculator thing anymore. This is now about real homeowners being tossed out of their homes, and abandoning their pets.
Video from SW Florida: http://www.youtube.com/watch?v=2exOP2Fa45w
NEW YORK, Oct 16 (Reuters) - D.R. Horton Inc (DHI.N: Quote, Profile , Research), the largest U.S. home builder, said on Tuesday that quarterly net orders for new homes plunged 39 percent amid a spike in cancellations as the U.S. housing market continued to skip along rock bottom
“…skip along rock bottom…”
How can you skip along rock bottom and dive 39 percent deeper at the same time?
I guess the bottom is actually the sloped side of an abyss.
“Many other builders around the city and region are grappling with half-occupied, completed projects they assumed would be sold out long ago.”
A glance out the car window in some San Diego ‘new home communities’ suggests that builders are also grappling with half-occupied, half-completed projects as well. It must really svck to have half-completed homes sitting unfinished with wood beams exposed to the elements as the California rainy season approaches. They should at least consider covering up their half-finished ‘investments’ with tarpaulins.
What they should do is cover up their faces not to be seen?
or just paint their faces orange like Mozillo