Caught Up In A Titanic-Like Situation
The East Valley Tribune reports from Arizona. “With the end of the year quickly approaching, Valley homebuilders are hustling to rid themselves of excess homes and hit sales projections by offering incentives and price discounts to potential buyers. Builders are working to meet the sales numbers they predicted at the beginning of 2007, trying to stimulate activity during the slowest time of year when people are focused on holidays, not home shopping, said John Fioramonti, at Meyers Builder Advisors in Scottsdale.”
“‘It’s a good time to buy,’ he said. ‘(Builders are) going to be competing with each other like crazy for the next 90 days.’” “Real estate agents and home owners say the ability of builders to dramatically slash prices often makes it tough for nearby existing home sellers to compete.”
“In a healthy market, the Valley’s existing home market should have roughly 30,000 homes for sale, and right now it has about 20,000 too many, said Ken Peterson, VP of sales and marketing for Shea Homes. At the same time, builders need to unload inventories, Peterson said.”
The Arizona Daily Star. “In the boom of 2005, homeowners like Sue and Dave Broberg and Lisa and Robert Hall felt lucky to nab houses in new subdivisions on the outskirts of Tucson. But now, the Brobergs say there are many for-sale signs throughout their Northwest Side neighborhood. One is in front of their home.”
“‘It’s a lot different than when we bought the house two years ago,’ Robert Hall said. ‘People were fighting over lots,’ Lisa Hall said.”
“But now, buyers no longer line up to buy homes in outlying subdivisions. Instead, builders slash prices, pack on incentives and still are left with unsold spec homes and empty lots. In many cases, homeowners trying to sell properties in newer developments are finding they can’t compete with builders’ rock-bottom prices.”
“‘The builders, they just flooded this market with inventory,’ said Melinda Turner, who put her Sahuarita home on the market about a year ago without success. ‘And the rest of us, the previous customers, got really screwed.’”
“‘Certainly the prices have dropped precipitously, and the homes just aren’t selling,’ said Rancho Sahuarita seller Susan Chapman, whose house went a month without being seen by a single buyer.”
“The situation is worse for homeowner Melinda Turner, who put her house on the market a year ago, anticipating a move to Idaho. In the meantime, her husband moved to Idaho, started his own custom home-building business, but had to move back to Sahuarita because the house still hadn’t been sold.”
“Turner said the house has been seen by many prospective buyers, but the serious ones ended up buying similar new homes from the builder. ‘We ended up becoming the unofficial model home,’ she said.”
The Arizona Republic. “Elizabeth and Jose Torres were happy with their small Phoenix home. Even when a loan officer approached the couple in 2005 about buying a bigger home for a good price, they weren’t interested, Elizabeth said.”
“Eventually, though, the ‘persuasive’ loan officer sold them on the four-bedroom Queen Creek home, she said.”
“Now, the couple is at risk of losing their home because they can’t afford the mortgage payments and can’t refinance because of a prepayment penalty they said they were never told existed.”
“The Valley’s housing non-profits are being deluged with calls from homeowners asking for help. ‘We are getting three to five referrals a day about people facing foreclosures,’ said Joann Hauger, executive director of Community Housing Resources of Arizona. ‘There aren’t any programs to help them, and many are upside down in their loan and can’t sell or refinance.’”
The Pahrump Valley Times from Nevada. “Home foreclosure worries appear to have been reflected in the Wednesday legal notices in the PVT, which listed 18 notices of trustee sales. The number of such notices soared from nine in August and September 2006 to 47 in August and September this year.”
“A drive around some new housing developments showed building activity was tentative. At the Beazer Homes Tesora at Pahrump project, 14 large homes from 2,357 to 2,995 square feet were already constructed on Sedgwick Avenue. But no one seemed to be on duty at the sales office Wednesday morning.”
“A walled community of Beazer’s Burson Ranch up the street, where the sign advertised homes of 1,625 square feet to 2,749 square feet, was empty inside the walls.”
“A tour of Concordia Homes of Nevada’s Pleasant Valley project off Homestead Road, showed 49 homes already constructed, but the only activity Wednesday was a landscape crew putting in plants at Pleasant Valley Park. A count showed 14 for-sale signs in front of homes while there were 11 homes with vehicles parked in front that probably weren’t construction workers.”
“‘Our projects are moving right on along. I think we had four or five sales last month,’ said Concordia Homes spokesman Stormy Andrews of the Pleasant Valley project in Pahrump.”
“‘We’ll go through and build up an entire section and sell through it,’ he said. ‘Once we get through those, we start the next grouping.’”
“Rows of house frames were going up on cul-de-sacs in Mountain Falls in the Tivoli section and in Entrata. Luxury homes were going up in the Paradiso development, with advertised prices in the $400,000 range.”
The Nevada Appeal. “Members of a legislative study committee agreed Monday they want to help homebuyers who are facing foreclosure through no fault of their own. But they made it clear they have a lot less sympathy for speculators left high and dry by their own greed.”
“Legislative research analyst Dave Ziegler told lawmakers nearly 29,000 Clark County homes are up for sale, just under half of them vacant, which lawmakers interpreted to mean they are owned as investments by speculators. Ziegler said Nevada has had the highest foreclosure rate in the nation for nine consecutive months.”
“Tony Ramirez, of the U.S. Department of Housing and Urban Development, said there are more than 15,800 properties in Nevada in pre-foreclosure status as of August. He presented figures showing another 11,700 properties have already been foreclosed on.”
“While the vast majority of those homes are in Clark County, statistics presented by Ramirez show 40 homes foreclosed on in Carson City and 40 more in Douglas. In Carson City, he said 28 are in pre-foreclosure - 52 in Douglas.”
“In Lyon County, the situation is worse with 46 homes foreclosed on and 86 in some stage of pre-foreclosure as of a week ago.”
“Sens. Bob Beers, Las Vegas, and Warren Hardy, Henderson, said they want to know how many of those homes were purchased as speculative investments and have never been someone’s primary residence. Hardy said that information is needed ’so we can determine as best we can determine whether this is the investment market correcting itself or is it a true crisis.’”
“Panel head Assemblyman Marcus Conklin said he has been told up to half the homes in foreclosure are owned by speculators. Hardy made it clear he doesn’t support much help for those owners.”
“‘There’s got to be pain associated with the greed,’ he said. ‘If we soften the load for the individuals who created this, there’s no incentive to correct it.’”
“Gail Burks of the Nevada Fair Housing Center said it’s important to act quickly because whether borrowers were individual homeowners or speculators they’re all caught up in a Titanic-like situation: Without efforts to resolve the crisis ‘we’re all going to go down together.’”
The Reno Gazette Journal. “Most homeowners in the North Valleys and Spanish Springs will see a drop in property values when they receive their annual property assessment notices from the Washoe County Assessor’s Office in late November.”
“It’s the first widespread drop in residential land values since 1981-82 when the last real estate bubble burst, county assessor Josh Wilson said.”
“Homes in the North Valleys and Spanish Springs are seeing the drop in housing values because the area, with all 54,000 parcels, was mass appraised in 2005-2006, just as housing prices hit their peak. Since then, housing prices have declined.”
“The assessor’s office provided a few examples of the changes in land values at several large communities. Sky Vista in Stead: The taxable land value for the standard lot has dropped from $92,000 to $78,000, a 15.2 percent drop. Woodland Village in Cold Springs: A drop from $82,000 to $74,000, a 9.7 percent drop.”
In Business Las Vegas from Nevada. “Harvey Whittemore (is) the developer of Coyote Springs, which straddles the line between Clark and Lincoln counties. In 1998 he and a partner purchased 43,000 acres for $15 million.”
“Q: What are the plans? A: The plan calls for 160,000 units on 43,000 acres. The exciting news is we have been at this for nine years and we are less than 12 months away from having homes.”
“Q: How did the deal come about with Pardee Homes? A: Pardee has been selected as the master developer for all the single-family and multifamily homes. They have an option to purchase land every year. What they have done is take down the first almost 2,000 acres and started the process of developing the planning and different model types.”
“Q: What is Pardee Homes paying her acre? There was a transaction listed on assessor records last year in which they paid $25.5 million for 3,605 acres ($7,074 per acre). A: That is private. I can’t disclose that.”
“Q: How much will homes cost? A: Everybody knows land is a finite commodity in the Las Vegas area, and we think that Pardee is going to have a huge price advantage compared to its competitors, and that’s going to be reflected in price. I think you are talking 10 to 20 percent below Las Vegas market.”
“Q: But the Las Vegas market price keeps coming down.”
“A: That is one thing you are going to have to look at and say long term what is going to happen with respect to prices in Las Vegas. People who have to sell their products because they built their homes already, it wouldn’t surprise me if prices would be in the $105 to $115 per square foot range. I think if you are a good shopper today, you can buy that. There is no way to replace those homes under present market conditions for that price. What does that mean on a macro basis, it means that I believe sellers today are having to sell below cost.”
“Q: Have you done anything like this before? A: I don’t think there are many people that have developed 43,000 acres. It is 10 times larger than the development we did in Sparks. We successfully developed more than 4,400 units with two golf courses and a whole resort component. My partners like to say the difference is just about adding zeros (laughing).”
The Salt Lake Tribune from Utah. “After years of increases, home sales along the Wasatch Front were down sharply in the third quarter, compared with last year. In Salt Lake County, 2,712 homes changed hands in the July-August-September period, down 33.8 percent from the same three months last year, according to the Salt Lake Board of Realtors.”
“Bob Scofield listed his 9,200-square-foot home in Orem with a Realtor about five months ago at the appraised value of $725,000. He later reduced the asking price to $699,000 before taking it off the market and listing it on a for-sale-by-owner Web site for $679,000. It’s now listed at $659,000.”
“‘Things have definitely slowed down a bit,’ Scofield says.”
“Craig Christensen, of Saratoga Springs, and his wife moved into their new home in July and consider themselves lucky to have even sold their former home at a price with which they could live.”
“But now the couple, like others who have purchased in higher-end areas, are watching as building in their neighborhood has come almost to a halt. Sellers in their area have reduced asking prices as a way to get properties sold.”
“Instead of being surrounded by scores of other families in houses priced from $400,000 to $700,000, the Christensens are surrounded by empty lots and unoccupied houses with for-sale signs in the windows.”
“Craig Christensen said he’s worried about the growing number of for-rent and lease-to-own signs cropping up nearby, including one in an unsold house next door. He and his wife have a nagging feeling their home is not worth what they paid for it and they may have to wait years to turn any type of profit if they do sell. They plan to stay put for a while.”
“‘This is definitely not what I had in mind when we decided to move,’ he said. ‘I’m very nervous about how the market is going.’”
The Deseret News from Utah. “The Wasatch Front housing market has caught the blues that have plagued much of the rest of the nation. Some areas, such as the Capitol Hill and Avenues areas of Salt Lake City and parts of Lehi, saw the average sales price drop. The Capitol Hill and Avenues drop in price was almost 14 percent, although the number of homes sold in those areas dropped less than many other areas, with a 9 percent reduction.”
“The hardest homes to move are those over $500,000, said Gary Cannon, president of the Salt Lake County Board of Realtors. Few buyers can afford those homes, especially with more creative financing options being eliminated.”
“‘The median price being pushed to $300,000 requires an annual income of around $90,000,’ he said. ‘That’s a good chunk of dough, and not a lot of people make that.’”
‘We’ll go through and build up an entire section and sell through it,’ he said. ‘Once we get through those, we start the next grouping.’
‘Rows of house frames were going up on cul-de-sacs in Mountain Falls in the Tivoli section and in Entrata. Luxury homes were going up in the Paradiso development, with advertised prices in the $400,000 range.’
‘Harvey Whittemore (is) the developer of Coyote Springs, which straddles the line between Clark and Lincoln counties. In 1998 he and a partner purchased 43,000 acres for $15 million.’
‘What is Pardee Homes paying her acre? There was a transaction listed on assessor records last year in which they paid $25.5 million for 3,605 acres ($7,074 per acre).’
IMO, these illustrate why artificially propping up prices is doomed to back-fire, as these guys will continue to chug along until the price decreases force them to stop.
$7,074 per acre? Hey, that’s a bargain if…
A: Everybody knows land is a finite commodity in the Las Vegas area
And Las Vegas is just sooooo hemmed in on every side, eh?
Of course, the 43k acre sale at $348/acre is probably more like it the right price for endless miles of desert scrub land, or getting closer anyway. And when I say miles, I mean miles. That 43k acre tract is something like 67 square miles!
Oh wait, did I say “scrub land”? That Coyote Springs parcel might make scrub land look lush in comparison. They ought to call it Bleachbone Gully or something more apt.
And then there is this wee problem that La Vegas is running out of water - as are most of the western states.
http://www.nytimes.com/2007/10/21/magazine/21water-t.html?ref=magazine
The Titanic made 2 ports of call to let off passengers in France and Ireland, before it’s fateful trip to Davy Jones’ Locker
Don’t forget to get off, in time…
“Gail Burks of the Nevada Fair Housing Center said it’s important to act quickly because whether borrowers were individual homeowners or speculators they’re all caught up in a Titanic-like situation: Without efforts to resolve the crisis ‘we’re all going to go down together.’”
So what the heck do these football humpers plan on doing? From the article:
“Ken LoBene, of HUD, said all parties agree the hotline is a good first step. But he estimated it would cost $400,000 to set up the hotline, with most of that money going to the staff who can walk consumers through their options and get them to the right places for help.”
A hotline! Whoopeeeeeeeeee, that’ll do it! 400K of taxpayer money so someone can sit on the other end of line and tell you “Yep, you’re screwed alright.” Unbelievable. The sad thing is these head-up-their-butt morons have no clue just how “dire” the situation is. I’d say more than 80% of the people in trouble are unrefinancable, and I think that’s conservative. There’s no program for these folks, and there isn’t anything some idiot on the other end of a hotline is going to do about it.
No Need for human operators to answer the hotline.
Here’s a suggestion: Go back to the discussion from this summer (you might be an FB if…) and number the signs of FB-ness. Put them on an automatic answering system with pre-recorded announcements:
Press 1 if you have an ARM that is resetting.
Press 2 if your ARM has a pre-payment penalty.
Press 3 if your loan is Neg-Am.
Press 4 if you bought in 2004.
Press 5 if you bought in 2005.
Press 6 if you bought in 2006.
Whichever number you press, the response is:
“Yes, you are an FB. Have a nice day!”
LOL
LOLx2
I wonder how many “homeowners” in California are thinking about torching their home right now? Perhaps they mistakenly believe No Home = No Mortgage.
By the way, I am not trying to be cruel. My sister-in-law’s house is being threatened by the fire. But when you hear about the looting, you know someone has got to be thinking that this is their way out of the financial hole they dug.
Best wishes and prayers for the bloggers in California that are being affected by the fires.
I think it safe to say that at least some of the tears shed will be tears of joy.
Especially among builders whose insured inventory of vacant homes was in the direct path of a wild fire.
Of the houses burned, I wonder how many vacant homes will be in the total?
“I wonder how many vacant homes will be in the total?”
That might depend upon who set the fire.
I thought I saw a group of folks all blowing on the fire in hopes of turning the flames towards their homes. /sarcasm off
Does anyone know whether these fires are covered by the home insurance policy? (I rent, so I’ve never looked at these things.)
Probably. The holder of the mortgage usually requires it. If its a repo, the bank will put insurance on it.
But you can bet that these fires will bail a lot of people out of an upside down mortgage. Others, it will screw further. You can let your insurance lapse and before the bank knows, it could easily burn.
Incidentally, watch how many other fires start in and around housing developements.
I hope there is no lose of life, but people will shoot you for five dollars. Would they torch their house to get out of a 400K arm thats killing them and not even worry about who could get hurt or killed? You bet your a**
As long as no one dies or is badly burned, it sure would wipe out a lot of inventory. Buy, sadly some one is bound to get hurt. Honestly, people don’t care.
Eastern Chula Vista in San Diego County with the highest default and foreclousure rate was spared. Not one single house burned. I was in one of the reverse 911 calls.
‘we’re all going to go down together.’”
No, we’re not. The FBs, the knifecatchers, the lenders, the appraisers, the construction workers, the specuvestors, and the MBS buyers may go down, as will you, Ms. Fair Housing Center, but some of us declined to buy an overpriced ticket on the Titanic.
We’ll wave to you from onshore as you drown.
“‘It’s a good time to buy,’ he said. ‘(Builders are) going to be competing with each other like crazy for the next 90 days.’” “Real estate agents and home owners say the ability of builders to dramatically slash prices often makes it tough for nearby existing home sellers to compete.”
Are the homes affordable relative to local rents and incomes, and in light of the direction of prices (which is most likely downwards)? If not, then it might actually be a good time to catch a falling knife.
what does it cost to build per sq ft for slab,
full foundation, and crawl space home ?
They are very close to being the same on a small scale…On a large scale the slab is cheaper unless their is severe soil problems…
Depends on a lot of things, but a nice 1 story slab home can be built for $50/sqft.
“Eventually, though, the ‘persuasive’ loan officer sold them on the four-bedroom Queen Creek home, she said.”
I would love, just once, to see a “homeowner” say “You know, I screwed up. I got calls from salesmen trying to push loans, and instead of listening to my own common sense, I fell for the racket. Shame on me.”
I am sure many of you have received the mailings from Countrywide or some other company offering “up to” hundreds of thousands of dollars of money via a HELOC.
How did we resist the urge and they didn’t? Was it greed that drove them?
“Eventually, though, the ‘persuasive’ loan officer sold them on the four-bedroom Queen Creek home, she said.”
When the outcome is good “I’m a genius”. When it’s bad I was sold a “bill of goods.”
Give me a break. We are bombarded with ads and salespeople trying to sell us all the time. Statsman is right. Own your part in it.
Goodness, I get crap from Countrywide all the time. I put on gloves and carefully take the item out to the recycling bin, being careful to not touch any of my exposed girly skin with the nasty thing.
Speaking of crap in the mail, I am receiving solicitations almost daily from a company to rent a condo for vacation in Florida. They are offering a substantial discount and they are a big company and reputable (we have used them in the past.) I just have never seen such a flood of offers. Their former vacation crowd (i.e. HELOC-financed) must have dried up and they are desparate.
Just a interesting tidbit.
Why is a Loan Officer pushing houses ? Is that Legal ?
And yes, I’m STILL getting Home Loan offers several times a week from both Major Lenders and hole in the wall outfits I’ve never heard of. And they STILL push home equity loans. I take great delight in tearing these offers into confetti.
Don’t get them on your skin, dammit! Don’t you have a shred of caution? You don’t know where they’ve been, for one thing.
Icky.
Quote:
#####
I am sure many of you have received the mailings from Countrywide or some other company offering “up to” hundreds of thousands of dollars of money via a HELOC.
How did we resist the urge and they didn’t? Was it greed that drove them?
#####
What I did with junk mails that I received in my mail box with paid postage stamp: Take the ad-flier from Company A and put in the returned envelope from Company B, lick the envelope, seal it and drop it in the mail box whenever you have a chance and are not busy. No need to hurry to mail these out. So A get stuffed in B, C get stuffed in A, D get stuffed in C, and so on…
Every time I think about this mailing-back ads from company, I have a big smile on my face.
“The Wasatch Front housing market has caught the blues that have plagued much of the rest of the nation. Some areas, such as the Capitol Hill and Avenues areas of Salt Lake City and parts of Lehi, saw the average sales price drop. The Capitol Hill and Avenues drop in price was almost 14 percent, although the number of homes sold in those areas dropped less than many other areas, with a 9 percent reduction.”
I prophesy an increase in the Utah Mormon divorce rate.
“‘It’s a good time to buy,’ he said. ‘(Builders are) going to be competing with each other like crazy for the next 90 days.’” “Real estate agents and home owners say the ability of builders to dramatically slash prices often makes it tough for nearby existing home sellers to compete.”
Builders are setting the real current market prices. accept it or go down with even lower prices.
“‘The median price being pushed to $300,000 requires an annual income of around $90,000,’ he said.
It requires a larger income than that if they’re tithing paying mormons. Good job finding the occasional Utah article Ben. They’ve been in denial up there for a while, but if the numbers in the two articles are to be believed the market has turned in just a month or so. It’ll get real ugly there real fast.
I think $300,000+ homes in Utah generally were only made possible through liberated California-sized equity or other forms of equity locust infestment. Local incomes clearly do not support those kind of prices. (It is much worse in my inlaws’ hood — we are talking about $500K+ prices in an area where prices on that range had never been seen before Y2K.)
Despite what the REIC will admit too there has been a very large amount of speculation in Utah the last couple of years. Most of the houses that have sold in my neighborhood the last 6 months look like they’ve sold to speculators. The 70 year old 1600 sq ft (including basement) house with no garage right next door to me is on the market for $320,000 after a cheap kitchen remodel. No one who can afford that price is going pay that for that house in Utah.
Luckily after reading the comments on the deseret news article it looks like people are finally starting to understand that its not different here after all.
Silly Devildog! Don’t you know that if you pay tithing you will be richly rewarded by Baby Jeebus and nothing bad will happen to you? Such as foreclosure, for example? Or a hike in your rates? Or a pimple? Also, your hair will be blonde and your boobs will be big.
Oh, and by the way, that name of yours…alas. You’re going to Outer Darkness. Sorry. Not even the Telestial Kingdom for YOU.
There really is a strong tradition in Mormon culture that if you pay your 10% tithing, you’ll be blessed financially.
This has been a little hard to reconcile with the fact that Utah has one of the highest bankruptcy rates in the country, so the defenders of the faith have cracked into full apologetic gear. Evidently there’s been some limited research indicating that tithe-payers declare bankruptcy at a lesser rate than non-tithe payers.
Of course, if you’re able to pay 10% of your income to your church, you’re probably more financially secure to begin with. I question whether the people counted as “non-tithe payers” paid tithing faithfully right up to the event that triggered their financial death spiral — medical bills, reduction in income, etc. Anecdotal evidence of “I had the choice of paying my tithing and paying my taxes/mortgage/grocery bill, decided to be faithful and paid my tithing, and found out the next day I was the heir to a cosmetics fortune” doesn’t quite put some of these niggling questions to rest.
“Of course, if you’re able to pay 10% of your income to your church, you’re probably more financially secure to begin with.”
If you can figure what 10% of your income is, you’re certainly more financially literate than most FBs.
“There really is a strong tradition in Mormon culture that if you pay your 10% tithing, you’ll be blessed financially.”
I am sure the data would support this. Most Mormons I have ever met have definitely been near the top of the income distribution.
Unfortunately, the inference is wrong, because it ignores selection bias. It is impossible to tell whether Mormons are wealthier than average because of financial blessings God bestowed upon them, or if rather those who commit to such a creed are willing and able to successfully work their fingers to the bone in order to meet the large-family-size and strict-tithe requirements. The Lord blesses best those who best help themselves.
Olympiagal, please watch the disparaging remarks about Christianity. I agree with you on the ridiculous connection people make with tithing and financial blessings (it’s not in the Bible) and will certainly agree that most Christians probably don’t know Genesis from Revelations. However, there are those of us that are devout believers, and would greatly appreciate the separation of comments on religious beliefs and Housing Bubble comments.
Thanks.
I find Olympiagal’s comments greatly amusing. The groupthink and the discouragement of thinking for oneself that organized religion encourages prepares believers perfectly for participating mindlessly in bubbles. I also find the religious right’s wholesale embracing of materialism appalling given the teachings of it’s founder. As far as Utah goes, there is huge, huge pressure to buy a home and convey a certain successful image within the Mormon culture again in contradiction to the teachings of their prophet. Religion deserves all the ragging it gets. Hey, if the faith is strong ragging shouldn’t bother one bit, right?
The religious right does not speak for all religious folks, or at least not for me. Try to separate appropriate disdain for bad actors using the cloak of religion — of which I’ll admit, there are more than a few — from denigrating the strongly-held personal beliefs of some of your fellow travellers here. I would appreciate it, and perhaps some others would as well. Thanks.
Are you talking to me? I missed the part where I denigrated the strongly held personal beliefs bit…these are…? Outer Darkness? Yes/no? Telestial Kingdom? Yes/no?
What? Huh? Huh?
Let’s not be so vague. Get specific. Use words with syllables. I’m all for Jebus. I’m also all for specificity.
I mean, I can’t handily apologize for brutalizing your beliefs, when you refrain from articulating the point of contention.
I’m not a Mormon/LDS member. I am an Episcopalian. I know very little about the Mormon faith (although I have read plenty of articles about the Warren Jeffs (?) cult that seems to be doing some pretty awful stuff in terms of marrying off their young girls to village elders - reprehensible stuff by any stripe). I understand the skepticism and animosity that some folks have towards organized religion, and I share that animosity when it’s clear that people are taking advantage of religious beliefs to further their own secular or social agendas, or fatten their own coffers.
And, no — I was responding to Red Pill — who seems to believe that religion deserves “all the ragging it gets.” I tend to believe otherwise, and I thought the sentiment was worth expressing.
zeropointzero,
I think you put my thoughts forward more eloquently than me. Thank you for your insights.
First of all, do you actually know anything about Mormons, so that you can assert that they are Christians? In my experience, having been raised in the very heart of red rock fundamentalist Utah, I’m rather wondering on that issue. But I would love some clarification on the subject from a wise man like you.
Secondly, in my experience, Baby Jeebus is very tolerant and patient with a poor questioning sinner, such as I am. I wonder what gives you the bold confidence to question my fanciful words? I forget the scripture, something about judge not, lest yet be likewise judged….hmmm. It’s not coming to me. But I bet you can look it up. Explain that one to me, too.
Thanks!
You are right. I do not know much about Mormons … and I will not attempt to judge them (your words I think). My main objection is that many of us believe that we are blessed from giving to God. These blessings are Biblical, but are not always financial. Certainly your comment about “your hair will be blonde and your boobs will be big” was humorous, but it did take a swipe at those of us that do believe in blessings from God (hopefully in a more spiritual manner). My suggestion is that we keep Housing Bubble discussion on topic and not make fun of someone else’s belief in attacking their silly behavior, unless they clearly pointed out that was the underlying reason (i.e. someone stating that since they were a Christian, they would never lose money on a house.)
Revelation (no s)…At least get your books of the Bible right.
I eagerly await Olympiagal’s virulent anti-Mormon commentary each time Utah is mentioned int his blog. Her deep insights really add to the intelligence level of this blog, much like Gary Watts adds so much insight to the real estate economics of Orange county. Get a grip.
jb
I see a lot of these in the Central Valley of California.
Hidden behind the moat, is a failure.
“A walled community of Beazer’s Burson Ranch up the street, where the sign advertised homes of 1,625 square feet to 2,749 square feet, was empty inside the walls.”
“‘The median price being pushed to $300,000 requires an annual income of around $90,000,’ he said. ‘That’s a good chunk of dough, and not a lot of people make that.’”
duuuh most americans do not make this. Prices will tank to income affordability levels. means big big drops to get there.
Still a few qualified fools, but dwindling out there paying way beyond incomes and rents.
Actually, I’d say that you would need $90k plus 20% down. Now you have REALLY limited the pool.
For most of the country, a $300k home should be top of the line for the well-to-do. But here in Pullman, WA (median household income less than $50k) that has become a starter new home.
“‘It’s a good time to buy,’ he said. ‘(Builders are) going to be competing with each other like crazy for the next 90 days.’”
“good” and “crazy” together never ends well.
Freakin’ idiot. I may go ninja on the next person who says, “it’s a good time to buy!” When it’s a complete and utter disaster, some months from now, what will they say? “It’s a good time to….?” (fill in the blank)
9200 sq ft? wtf? that’s not a house, it’s a grocery store.
Utah houses typically have full basements. Gotta park those seven kids somewhere. What looks like a little 2,000 sq. ft. 3-bedroom rancher can be a 4,000 square foot 5 bedroom with a second full kitchen, a rec room, and an office. Add a second story, and a you’ve got more room than you can figure out what to do with.
They generally count finished basements in the square foot calculation.
It isn’t the kids they’re parking in the basement, it’s the five years of food.
Better price below comps fast sellers before prices go lower and lower and lower. then you will be chasing the market to the bottom.
ooooeeeoooeeeoooo
“Turner said the house has been seen by many prospective buyers, but the serious ones ended up buying similar new homes from the builder. ‘We ended up becoming the unofficial model home,’ she said.”
Her address?
444 Circle Jerk Way
MARKETWATCH FIRST TAKE
Could Calif. fires draw a line under housing crash?
Commentary: Natural disasters can have a perverse economic impact
“So in Southern California, one of the hardest hit housing markets in the country, the temporary reduction of available supply may not be enough to turn things around completely, but it could at least act as a brake on the housing crash.”
http://www.marketwatch.com/news/story/could-calif-fires-draw-line/story.aspx?guid=%7BE8587CE4%2D0BE5%2D4AC9%2DAD43%2DEA030CAA3F35%7D&dist=sp_inthis
I can’t believe this made the headline on Marketwatch. What is happening in parts of California are very sad, but when you have a surplus with 100,000s of homes I am not sure the lose of a few 1,000s is going to really change the economic state of the housing bust. This is like pulling a needle out of the haystack.
That just goes to show you what a pack of lame-brained morons call themselves financial journalists.
exactly…
Is trying to bring back yesteryear really worth these lamebrained contortions of logic? Even this Midwesterner knows the fires weren’t in the Central Valley/IE - talking about grasping.
Hilariously, the article cites fires in 1991 and 1993 as examples of the kind of conflagrations that removed thousands of houses from the market.
Er…just what was the housing market doing in California in ‘91 and ‘93? Bueller? Bueller?
Crashing and burning, that’s what. Fires don’t help the housing market. If anything, they help contribute to apprehension and a general sense that things fall apart, the center cannot hold, mere anarchy is loosed upon the world, and all that.
Although this bubble is ultimately going to be killed first and foremost by cold heartless economic reality (i.e. People Can’t Afford Houses They Can’t Afford), the Austrians are right in declaring that you can’t ignore psychology. The realtor boosters are whining about “negative media coverage” and buyer psychology, as if the whole problem is a function of irrationally-frightened buyers refusing to recognize what a wonderful market this is, when in fact the opposite is the case: The market is fundamentally dysfunctional, and the only thing keeping it on life support is the irrational optimism of the few remaining true believers.
Turn a little Santa Ana-driven ashfall loose on those guys and see if their happy pills start to wear off. This weather does have an effect on people, even when half the state hasn’t caught fire and your picture-postcard tract-home Mayberry isn’t shadowed by skies that look like a vision of the Apocalypse.
Remember the early 1990s in LA? Riots, earthquakes, fires? The movie “Falling Down” captured the tension in the air perfectly. That social climate just isn’t conducive to faith in an orgiastic future. Much more Mike Davis than Gary Watts.
As for that article’s suggestion that rebuilding destroyed houses can “boost the economy” — somewhere, the shade of Frederic Bastiat is flinging a brick through a window in frustration.
It’s not much of a Hardy Boys mystery…
It’s a Full On True Crisis
What now?
“Sens. Bob Beers, Las Vegas, and Warren Hardy, Henderson, said they want to know how many of those homes were purchased as speculative investments and have never been someone’s primary residence. Hardy said that information is needed ’so we can determine as best we can determine whether this is the investment market correcting itself or is it a true crisis
It’s not a crisis. It’s the investment market correcting, and when it’s all done, maybe regular people can afford regular homes with regular debt. For FB’s yes, it’s a crisis right now. For society as a whole, it’s a blessing.
Regarding Sen’s Beers and Hardy, this is what they’re really saying, “We are going to ask for information and data that is impossible to provide so that we will give the appearance of utmost concern when in reality, we need do nothing at all.”
Houston real estate benefitted from the Katrina disaster. Will Phoenix also benefit from the CA fires?
Unless these fires do a lot more damage, no. Katrina displaced several million people and destroyed hundred of thousands of homes, and businesses.
Excellent point. Though the number of SD County evacuees is currently in the neighborhood of 1/4 the population (750K), the vast majority will return to intact houses in a couple of days. There is really no comparison between the scale of SD fire damage versus Katrina damage, unless one puts the comparison in financial terms, in which case I am less sure.
Their home will be intact … except maybe their home will smell a bit and their pool will “look like something from the Black Lagoon”. I doubt their deductible will be low enough to help much.
I wonder how they will fund the repairs. Perhaps FEMA should step in and give each of them $2000 gift cards (ala Katrina.)
I doubt that many of the SD area houses lost housed indigents. If the fire sweeps through bedroom communities the people will still have their jobs mostly and will need to stay in the area while rebuilding. Big differences from NO.
Speaking of people’s homes. Speculators don’t get displaced in that way.
Financially Naked
“The Valley’s housing non-profits are being deluged with calls from homeowners asking for help. ‘We are getting three to five referrals a day about people facing foreclosures,’ said Joann Hauger, executive director of Community Housing Resources of Arizona. ‘There aren’t any programs to help them, and many are upside down in their loan and can’t sell or refinance.’”
Pahrump is in the middle of literally nowhere. It is NOT a bedroom community. Why would anyone even think of building so many houses there?
That was just dumb? What were they thinking, that a new call center was going to be built there?
Pahrump? Harumph. Defunct. Kerplunk!
Pahrump is a bedroom community. The Chicken Ranch has, I think, 20 some bedrooms and is a very warm community (if you have $300 bucks).
“But after signing the loan documents, the couple quickly wanted out of the deal. They couldn’t get copies of the papers or answers about why the figures didn’t match what had been promised and why some lines on the document were blank, Elizabeth said. But it was too late.
Now, the couple is at risk of losing their home because they can’t afford the mortgage payments and can’t refinance because of a prepayment penalty they said they were never told existed.
Ok, now….WHY would you sign a contract with blank lines? Double shame on them. I call that just plain stupid.
BayQT~
Did you notice the $20,000.00 kickback the loan officer promised? No mention in the article if the Torres’ got the $20k or not.
I thought cash kickbacks were ill-eagle?
VB
Scratch that-I just discovered the scroll wheel on my mouse;-)
yep…some info under the “Stuck” section. The article is rather long. I still have more of it to read. It’ll have to wait until I get home. Gotta get some more work done first.
BayQT~
I saw that….and then had to look at the date of the article again. I’m surprised that it was even mentioned in light of all the fraud going on. Googling real estate kickbacks brought up this article from Realty Times. Apparently, there is a *right* way and a *wrong* way to do it, but it still smells illegal to me:
http://realtytimes.com/rtcpages/20070112_cashback.htm
BayQT~
This is off-topic, but does anyone know if mortgage lenders can go after borrowers to the bitter end - i.e. every penny is collected? Wasn’t the Bankruptcy Reform Act designed to facilitate the ability of lenders to get all of their money back? The question then is whether deposit-taking mortgage lenders (i.e. banks) will have time to collect on their loans, assuming the Fed doesn’t shut them down first. The mortgage REITs died because they needed short term financing from institutional investors. Banks that financed their mortgage portfolios mostly via deposits shouldn’t have this problem. Thoughts, anyone?
Fei,
Bankruptcy still protects the debtor from this “bitter end” chase. Without bankruptcy, then yes to the bitter end. In bankruptcy, if the debtor has a reasonable job a payment plan is set for a specific period of time (max five years). A reasonable budget for the debtor’s living expenses is established by the court and the surplus goes into this payment plan. Once the time is up, the debtor is free from the rest of the debt (if he kept up with the payment plan). If there is no surplus for a payment plan then none of the debts get paid and the game is over.
“banks that financed their mortgage portfolios via deposits”……I don’t think there has been much of that going on in recent years.
No, they can’t go after you for every penny. The reform bills made it tougher to do a BK but if you pass the means testing you still can go BK easily and most who do have taken their finances to the max so their is no question they can’t be helped with “Credit Counseling”, in fact you’d be a fool not to max out the way the reform bill works.
Dear John letter…
They wont be buying your homes and it’s doubtful there will be much in their xmas stocking, either
Builders are working to meet the sales numbers they predicted at the beginning of 2007, trying to stimulate activity during the slowest time of year when people are focused on holidays, not home shopping, said John Fioramonti, at Meyers Builder Advisors in Scottsdale.”
They’ve evacuated hundreds of thousands of homes. If it gets bad enough today we might actually see tens of thousands of homes destroyed down there. And there may be more fires this winter, especially if the drought keeps up. I hope no lives are lost — there have been very few fatalities so far.
What I wonder is whether this will start making some areas down there uninsurable, like some areas of Florida already almost are.
On a bigger topic, I saw a report that home ownership levels spiked largely due to the ridiculous financing available since 2000, and now — unthinkable! — they may be about to drop again. But all that ridiculous financing created a demand spike that caused huge amounts of overbuilding.
I wonder if prices won’t wind up reverting to BELOW the pre-bubble mean, since after this bubble only hardcore “20% down, fully verified, non-jumbo” loans will be available, but all that oversupply will still be sitting there and the builders will drop prices into the basement to move it… that would suck for everyone who owns a home now, but it might bump the home ownership levels back up without re-inflating the bubble….?
“But all that ridiculous financing created a demand spike that caused huge amounts of overbuilding.”
Overbuilding was coupled with exhaustion of several year’s worth of prospective home purchase demand, as people who should have been saving up for a downpayment raced into purchasing homes they could not afford out of fear they would get priced out forever. The REIC seems to have burned the legs of the chair they sat upon in order to warm the room.
Ya’ll see this?
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/22/AR2007102200429_pf.html
What was that Thomas Wolfe book about the Asians messing with our markets?
They bought a big stake in Blackstone; how’d that one turn out for them?
It’s a rather troubling development, don’t you think?
And I was wrong about the author of that book. I can’t even think of the name of it anymore. I’m just too tired these days.
This is it
http://www.amazon.com/Debt-Honor-Jack-Ryan-Novels/dp/0425147584
“If you didn’t write it down, it didn’t happen.”
HUGE Clancy fan!
It’s deja vu all over again…
[Going to try to post this again, it failed first time, apologies if it comes through twice.]
They’ve evacuated hundreds of thousands of homes. If it gets bad enough today we might actually see tens of thousands of homes destroyed down there. And there may be more fires this winter, especially if the drought keeps up. I hope no lives are lost — there have been very few fatalities so far.
What I wonder is whether this will start making some areas down there uninsurable, like some areas of Florida already almost are.
On a bigger topic, I saw a report that home ownership levels spiked largely due to the ridiculous financing available since 2000, and now — unthinkable! — they may be about to drop again. But all that ridiculous financing created a demand spike that caused huge amounts of overbuilding.
I wonder if prices won’t wind up reverting to BELOW the pre-bubble mean, since after this bubble only hardcore “20% down, fully verified, non-jumbo” loans will be available, but all that oversupply will still be sitting there and the builders will drop prices into the basement to move it… that would suck for everyone who owns a home now, but it might bump the home ownership levels back up without re-inflating the bubble….?
“If it gets bad enough today we might actually see tens of thousands of homes destroyed down there.”
I made the same sort of mistake when the 9/11 attacks occurred. My first impression, based on the eyewitness news coverage of the collapsing twin towers (which housed 50,000 or so employees at full occupancy) was that tens of thousands would die, but the actual death toll was in the single-digit thousands (3 thousand or so if memory serves).
Similarly for the terrible SoCal fires currently playing out, I doubt the number of homes destroyed will ultimately exceed 10,000, which is not a significant proportion of the total housing stock for a population in excess of 15,000,000.
I suspect there is a principle of estimation bias which reflects a tendency to overestimate the magnitude of a disaster currently in progress.
thanks to the searchlight of this blog I will forever cringe when I see/hear the phrase ” It’s a good time to buy !” , and variants thereof. This blog has shed light on the inane parroting of realtors chanting this same stupid tagline over. and over. and over. and …
(Ben, you are getting the bill for the pallet of blood pressure meds I ordered)
“its a great time to buy because …… ”
” its really a great time to buy … ”
” now is an excellent time to buy ….”
just insert any reason , any words, any phrases into the end of that GOLDAMN STUPID MARKETING PHRASE BURNED INTO REAL ESTATE AGENTS HEADS !
. .. doesnt matter what, how, why, when, its all preceded by ” ITS A GREAT TIME TO BUY . .. . ” . (said in best cheerleader chirpy voice).
I swear to god as I look at investment properties the FIRST thing I will say to all the azzhat agents is ” if you EVER utter that rediculous phrase I am walking out of here .. . minus my right boot ” !!!
Torture an agent today, tell them you’ll be “Snapping Up” properties when it really is a “good time to buy”
mo money
” snapping up “.
yeah mon, throw the marketing BS right back em!
Good idea / will do just that.
On another note, I saw a Drees Homes ad in The Tennessean today. Seems that they are offering a weekend of opportunities to buy (i.e. Hovanian style) with up to $97,000 off. But you must buy now.
… and I thought we’d be somewhat immune from that in Tennessee. Time to head for the hills.
We got a postcard in the mail today from Ryland offering $80K off, but only if we buy during 16 hours THIS Saturday or Sunday. No, thanks.
Guess these guys haven’t heard of “comps” - or at least they’re not too concerned about what said comps are going to look like on Monday.
S. California: they now have 500,000 people being evacuated from their homes. It seems there are over 14 major fires, and new ones cropping up everywhere.
Someone mentioned upthread that the majority of home owners will return safely to their homes. That is not guaranteed.
The fires are 0 % percent contained. That’s out of control, folks.
It’s FAR too early to tell how much damage will be done before it’s over. One thing for sure: those smoking holes of a foundation are NOT going to get rebuilt any time soon.
On the other hand, I noticed about an hour ago that the wind has shifted back onshore. The doomsday scenarios of the San Diego fires burning all the way to the ocean aren’t going to pan out, thank God.
Without the hurricane-force winds, the firefighters can start to take control of the fires — especially since the returning onshore winds will blow the flames back onto the areas that were burned on the way west.
I’m worried about Silverado and Modjeska Canyons in OC, though. The wind shift puts them right in the way. Sad — Modjeska’s gorgeous.
“The situation is worse for homeowner Melinda Turner, who put her house on the market a year ago, anticipating a move to Idaho. In the meantime, her husband moved to Idaho, started his own custom home-building business, but had to move back to Sahuarita because the house still hadn’t been sold.”
Can you believe this? Hey, lets go into the home building business. We can also open a Yugo dealership and sell Beta Video Tapes.
Hey, he had a DREAM! Gotta follow that dream, do your own thing, ya know! What color is your parachute? blah blah blah
My dream is for a money plant grows in my apartment. A little water, a little miracle-gro and I’m set for life.
Thats my dream too, except I’m adding three hot asain chicks and a never ending supply of Corona
“‘The median price being pushed to $300,000 requires an annual income of around $90,000,’ he said. ‘That’s a good chunk of dough, and not a lot of people make that.’”
Still, it takes the two income model for the average couple. Even then, pay the majority of your take home on PT&I, utilities and maintenance on top of that. The children (if there are any) end up living below the poverty level. BTDT.
Housing greed takes an awful toll on a family. When average people realize that a house is a depreciating asset, I wonder if we will see a huge shift in attitude about life goals.
Thank you Countrywide! My wife and seven kids were worried sick about our ARM which we were tricked into signing-up for in 2005. Countrywide called me up and is willing to negotiate me into a better mortgage.
Now I feel a weight has been lifted off my shoulders. To celebrate I’m going to smoke some blunts and down a couple quarts of Colt 45. It’s about time the government applied pressure to these mortgage company crooks who took advantage of us little people.
Cheers to Mozilo!
“Mozilo”
Name sounds like a cooking oil, and
both are slick.
I always think of the weird scrubbies that were the competition to the SOS pads when I see his name.
is this sarcasm? tricked? blunts? colt 45? ????????????????????
in the words of my mother “never seen anything like that in my life have you?”
“A: Everybody knows land is a finite commodity in the Las Vegas area”
It’s a mother#*$%ing desert!
“The Valley’s housing non-profits are being deluged with calls from homeowners asking for help. ‘We are getting three to five referrals a day about people facing foreclosures,’ said Joann Hauger, executive director of Community Housing Resources of Arizona. ‘There aren’t any programs to help them, and many are upside down in their loan and can’t sell or refinance.’”
Just for the record, this article ran as the lead story on the front page of the Sunday Arizona Daily Star. Know what the headline was?
“Now may be the best time to buy a house”
“walt526
2007-10-23 17:42:47
“A: Everybody knows land is a finite commodity in the Las Vegas area”
It’s a mother#*$%ing desert! ”
And they (LV) are running out of water - as are most of the western states with the explosive development:
http://www.nytimes.com/2007/10/21/magazine/21water-t.html?ref=magazine
One word: desalinization. One month of occupation costs of you-know-here would pay for a plant or three.
“Eventually, though, the ‘persuasive’ loan officer sold them on the four-bedroom Queen Creek home, she said.”
Yeah right. He put a gun to their head and offered them a speculation they couldn’t refuse.
IF Olympiagal has a problem with helping the poor and treating our neighbors with love and respect, then I have problem with her.
IF Olympiagal wants to criticize aspects of Utah/mormon culture circa 2007, I say more power to her. The level of materialism is nauseating in the state of Utah. Free thinking is suppressed while all the problems seen anywhere else run rampant, they just go more underground. Some of these “nice christians” are the most aggressive drivers you have ever seen hanging on your bumper as they spit and seethe behind you(when your already going OVER the speed limit).
This whole greed speculation thing is directly contrary to what top mormon leaders teach.
That said, there are some wonderful people in Utah. They wont tell you they are wonderful though. If they did, then they wouldn’t be.