Biting A Very Bitter Bullet
A report from the Arizona Republic. “Still dragging down the market is the number of existing homes for sale. Listings are still hovering in the mid-50,000s. Resales continued their slide in September, as did the median price of existing homes sold. Lower prices are helping the new-home market now. RL Brown, publisher of the Phoenix Housing Market Letter, said most Valley builders finally have realized they need to drop prices to sell homes.”
“David Seiders, National Association of Home Builders chief economist, said last week that these four areas will be most vulnerable to the subprime-loan fallout: California, coastal Florida, Phoenix and Las Vegas.”
“The speculator-driven housing boom is to blame. All those areas saw the huge run-ups in prices prompted mainly by speculators, often using subprime loans. Regular home buyers then often had to take out subprime loans to afford the higher prices.”
“‘With many of these mortgages scheduled to reset to higher rates in the remainder of 2007 and through 2008, additional weakness in housing markets is likely,’ Seiders said.”
“He said the potential for a vicious cycle of defaults and price declines will depend on the level of exposure to subprime loans, the current house-price environment and the strength of the local economy. Metro Phoenix is at a 15-year high for foreclosures.”
“Reason 97 that we’ve maxed-out on real estate reality shows: A Scottsdale, Ariz., couple are participating in a pilot for a TV series that aims to show, via their experiences, that the downturn in the market is pinching the wealthy, too.”
“The short version of the ‘Real Estate Rescue’ pilot, according to the Arizona Republic newspaper: A well-off guy takes early retirement, gets stuck with two very expensive houses and his new business, a tutoring service. To make ends meet, he goes back to his early career, as a pharmacist at a local grocery.”
“The fledgling producers hope to make a weekly go of chronicling the real estate travails of the well-to-do. There are no network or cable takers for the pilot, the newspaper reported. Big surprise.”
In Business Las Vegas from Nevada. “The number of new-home and existing-home sales in September fell to the lowest monthly total this decade as home prices continued to tumble, according to statistics. Builders didn’t show much confidence in the Las Vegas housing market in September when they took out 591 housing permits. That’s the lowest monthly total this decade, said SalesTraq’s Larry Murphy.”
“New-home sales plummeted to 1,328 in September, down 52 percent from September 2006, when there were 2,565. The median prices fetched for new-home sales in September was $308,055, 13 percent below the market’s peak in April 2006 when the price was $355,435.”
“As for existing-home sales, there were 1,466 in September, down 50 percent from September 2006 when there were 2,946. Of those homes that sold, the median price of $263,075 is nearly $27,000 or 9.2 percent below its peak of $290,000 in October 2006. That’s the lowest median price since it was $263,000 in March 2005.”
“Inventory remains at record levels with a 19-month supply.”
“Builders continue to offer…as much as $100,000 in free upgrades to buyers, Murphy said. Earlier this month, Lennar Homes dropped prices 25 percent in about 30 of its new-home subdivisions, Pulte had a sale advertising a 15 percent cut in prices while Astoria Homes had price cuts of $70,000 or more.”
“The fall in prices comes as a credit crunch makes it harder for buyers to qualify for loans. Analysts said that’s an even bigger problem in Las Vegas where there are a lot of first-time and second-time homebuyers. In addition, casino workers who in the past have relied on stated income loans aren’t qualifying today.”
“The release of the data by SalesTraq comes as a local housing analyst said Wall Street investment bankers are concerned that at least one and maybe other major public builders will pull out of the Las Vegas housing market.”
“Steve Bottfeld, VP of Marketing Solutions, declined to name the builder analysts named, but said they are concerned because Las Vegas has been so profitable for builders.”
“Despite the prices and sales continuing to nosedive, Bottfeld remains optimistic. ‘If we are not at the bottom, then we will have one more bad month before we see it turn around,’ he said.”
“For the ninth month in a row, Nevada reported the highest foreclosure rate in the nation, nearly triple the number of filings in September 2006, according to RealtyTrac.”
“Las Vegas firm SalesTraq reported that through September, 5,603 homes had been repossessed by banks, a 472 percent gain over all of 2006, when 1,829 homes were repossessed.”
“Tim Sullivan, president of the Sullivan Group Real Estate Advisors cited a report from Banc of America Securities tracking the volume of resetting adjustable-rate mortgages. In March, one estimate said it would peak at about $110 million and remain elevated through next summer, Sullivan said.”
“‘The net effect is that we have the first six months of 2008 to go through this and another three to four months of where we go from there,’ Sullivan said. ‘The implication is that it’s going to be a very difficult year for figuring our values from a real estate standpoint. There is going to be a lot of competition.’”
“Michael Krein, president of Nevada Real Estate Services, which handles foreclosures for lenders, said 80 percent to 90 percent of the properties he’s handled so far have been investors but expects that to change when loans reset for many homeowners next year.”
The Review Journal Business Press from Nevada. “Las Vegas Valley land values softened in the third quarter amid concerns about a residential downturn, tightening credit markets, rising interest rates and increasing construction costs, reports Applied Analysis.”
“Median vacant land prices were $677,300 per acre at the end of September, or $41,200 less than the previous quarter. The average price per square foot was $15.55, which is a 5.7 percent drop from the second quarter.”
“‘It went from a buyer’s to a lender’s market,’ said Kyle Nagy, a director at CommCap Advisors, which specializes in commercial real estate financing. ‘Underwriting is more conservative from every funding source…people are taking a wait-and-see attitude.’”
“A dramatic drop in the volume of deals occurred in the third quarter with only 140 parcels totaling 484 acres changing hands. It marks a 45-percent year-to-year decline in activity, due, in part, to diminishing land supplies.”
“‘Despite a long-term limitation, shifts within the present housing market continue to place downward pressure on demand for raw residential land,’ said Brian Gordon, principal of Applied Analysis. ‘We expect this trend to continue through the third quarter of 2008 as housing inventory levels will likely remain elevated and pricing remains unstable.’”
“Many investors with a reasonable exit strategy may face tough times ahead.”
“‘The impacts associated with softening demand for land are partially offset by landowners’ unwillingness to sell at deep discounts, forcing property values to remain relatively stable,’ said Gordon. ‘If residential conditions materially worsen or growth slows down substantially, property price reductions may become a reality.’”
The Review Journal from Nevada. “Southern Nevada’s sluggish housing market is spilling over into its commercial market, as ailing companies in the housing sector retrench amid rising foreclosures and a real estate credit crunch. Local office brokers say home builders, real estate brokerages, title companies and mortgage businesses are scrapping expansion plans, chucking office space and subleasing empty suites.”
“‘All of a sudden, we’re noticing softening in the housing-related office market,’ said Brad Peterson, a VP with commercial real estate brokerage CB Richard Ellis in Las Vegas.”
“Based on his conversations with home builders and developers, David Scherer, a VP with Grubb & Ellis in Las Vegas, said doesn’t expect tenant rosters in the residential sector to bounce back before 2009 or 2010.”
The Douglas Times from Nevada. “Construction of new homes in Douglas County, Carson City and Lyon County has been in decline for several years, government and industry officials from the tri-county area said last week.”
“‘It will definitely take us a while to catch up,’ said Kevin Gattis, chief housing official for Carson City. ‘The area has been over-built so much. But things really aren’t as gloomy as people say.’”
“‘Two years ago the market was out of control and over-inflated in terms of home pricing and construction. Now, the market is correcting itself and coming back to a more normal state,’ said Matt Denio, Dayton Land Developers’ project manager on the development.”
“General contractor Steve Edelstein, bought a half-acre lot at Santa Maria in 2005 and began marketing it in December 2006. The response has been minimal and he doesn’t know when he will begin construction.”
“‘I’m optimistic about the market turning around, I just don’t know when,’ he said. Edelstein has plans for custom homes in the $600,000-$700,000 range.”
“New home permitting in Douglas County plunged to 133 in the first nine months of this year, compared to 442 in the same period of 2005, county Building Official David Lundergreen said. ‘The builders are definitely struggling,’ he said. ‘In (2003 and 2004), it was like we couldn’t build fast enough. Now a lot of guys are just holding a lot of inventory.’”
“While it’s generally bad for the market when debts go unpaid and residents go homeless, the government bailouts some politicians have suggested will do just as much harm, said Rick DeMar, CEO of the Builders Association of Western Nevada.”
“‘I’m not a panic guy,’ he said. ‘This is not a permanent crisis. This is all part of a circular economic environment. It’s not the time to short-sell your (property’s) value.’”
“While DeMar noted that many builders ‘have not made the best decisions’ in building ahead of demand, he also blamed consumers who purchased homes that were beyond their means.”
“‘If you’re making $10 an hour, there are probably some houses you can’t afford,’ he said. ‘But you bought one anyway. Before this is over, some people are going to have to bite a very bitter bullet.’”
The Deseret News from Utah. “Real estate agents and developers are often known for their creative marketing strategies to sell houses, which is why one newly constructed home in Plain City is going on the auction block.”
“‘It (the home) appraises for $370,000, and realistically I think fair market is between $345,000 to $350,000,’ said William Velazquez, co-owner of a construction and land investment firm based in Layton.”
“Home auctions by owners are becoming more common in many areas around the country but remain relatively new to Utah. Velazquez said his property will begin with a minimum bid of $50,000 with no reserve, meaning it could go for far below the market value.”
“‘I think there are a lot of people in our situation that are realistically don’t want to leave the sale to question with the market letting it sit with all the other properties in the neighborhood for months,’ he said.”
‘Nevada’s budget woes worsened significantly Wednesday when the state Tax Department reported another down month for taxable sales in August, off by 5.7 percent compared with the same month in the prior year. It was the largest drop in Nevada since September 2001 when taxable sales fell by 9.1 percent following the terrorist attacks of Sept. 11.’
‘This is the first time since we suffered through the aftermath of 9/11 that our sales tax year-over-year growth rate has been negative,’ said Gov. Jim Gibbons in remarks accompanying the report. ‘Although our tourism business is still booming and we enjoy strong room occupancy rates, this has not been enough to offset the drop in consumer and business spending caused, in large part, by challenges in the housing market.’
‘If you thought the housing industry slump was just about houses, think again. The collapse of the housing industry nationwide has sent shock waves through just about every retail business — from car dealerships to clothing stores. But perhaps no category has been hit as hard as the retail furniture business.’
‘In May, furniture store Breuners closed its two Scottsdale stores. Soon after, the family-owned business decided to liquidate its two other stores and leave the retail industry.’
‘Tres Amigos is closing its five Valley stores, including shops in Scottsdale, Tempe and Gilbert, in an effort to save the family business, Kramer said. ‘Our business is based on home sales, and we could see our sales dropping in the market,’ he said. ‘We hung on as long as we could.’
I was in LV a few weeks ago and stayed at the Wynn - on several occasions (4) I walked the casino and 40-50% of the tables were empty.
Their business model is upscale so I don’t think they fill the place as much as lower-end (non-suite) casinos. Still, I lived in LV after 9/11, and the layoffs were immediate. Anyone who works for a casino can be laid off immediately in the event of an economic downturn.
I’m not surprised. Wynn is all about image and trendiness, and even by Vegas standards, it costs a lot of money to stay or play at the Wynn. On Memorial Day weekend, I was in town without a room, so I played poker at the Wynn and won enough to get a suite for a night (about $600). It was nice and all, but you can get nice suites at other Strip properties for half that.
Vegas was better when the mob ran it.
C&C, that was my experience at Tahoe a couple weekends back as well.
I dumped my tax exempt bond fund last month for this very reason. State spending is based to a large extent on property tax revenue and sales tax. Well unless they adjust mill rates and factor in falling domestic spending their income is about to take a hit and so are their bonds.
‘This is the first time since we suffered through the aftermath of 9/11 that our sales tax year-over-year growth rate has been negative,’ said Gov. Jim Gibbons in remarks accompanying the report. ‘Although our tourism business is still booming and we enjoy strong room occupancy rates, this has not been enough to offset the drop in consumer and business spending caused, in large part, by challenges in the housing market.’
This is the same joker who recently declared that there is “no housing crisis” in NV. He roundly ignores the fact that the state leads the nation in foreclosure rates. It should come as no surprise that the guy is under investigation by the FBI. He’s a real dirtball.
We are in the “House Latitudes”…
http://en.wikipedia.org/wiki/Horse_latitudes
Nothing is selling and soon houses will be tossed overboard, in able for people to salvage something out of the wreckage~
http://www.youtube.com/watch?v=9o8imhSKXzk
With your penchant for recontextualizing rock lyrics for Bubble Relevancy, you’re not gonna take a swing at The Lizard King’s words for Horse Latitudes?
I was thinking it was more like the Housing Doldrums. Nothing is moving.
i have a question for this blog. my nephew got caught up in this housing speculation a few years ago. he quit making his house payment in january and agreed to a short sale. he owes about 300k on his 3/2 house, i personally think it is only worth about 100k. anyway i just heard that he went and payed off all his toys ie: boat, motorcycle, rv trailer, etc… with creditcards and quit making payments on them. what i am wondering is if he is getting ready to file bankrupcy and try to stiff the banks? if he does, can he get away with not paying the balance left on his pos house?
a millon thanks to anyone that can help me figure out what a weasel this guy is.
I’m sure the information is on this site.http://www.nvb.uscourts.gov/
Best,
Leigh
If he files bankruptcy, he’ll have to sell the toys to pay off the creditors. The credit card debt is, of course unsecured so they card companies can’t repo the toys in the usual way. But, in general, all of his assets will be liquidated and distributed to his unsecured creditors in a bankruptcy except for a minimum to get started again with. The bankruptcy trustee oversees this process on behalf of the creditors. The mortgage is a secured debt. Foreclosure is suspended during the bankruptcy process, but can resume when the bankruptcy is complete if he does not make his payments. I am not a lawyer, that’s my best understanding.
All he has to do is transfer title on his toys…then they won’t be part of the BK…
except for of course “fraudulent conveyance”, but don’t want to throw water on the plan.
The answer to the first question is yes, the answer to the second depends on the compentence of his legal representation.
He is trying to avoid the repo man. A repossession is lawful only when the creditor has a security interest. A creditor can have a security interest only when that interest is clearly stated in the written contract for the purchase of the property or the contract for the loan. If some indication of a security interest is not in writing, the creditor cannot repossess. For example, if you do not pay your credit card bill, the credit card company cannot repossess your car, although the company could use another collection method. I suspect that he will try to get at least a portion of his credit card debt forgiven or at least negotiate better terms (i.e., lower interest rates). He will probably still have to declare BK…
Tell him to ask his attorney about “fraudulent conveyance” and its applicability in this situation.
Also, if he files BK, all those “toys” that are “paid off” become “assets” that can be seized by “creditors.”
many thanks to all of you! and i hope the term “fraudulent conveyance” means jail time. this makes me sick to see him try to scam his way out of debt. and i know hes not the only one, this has to be happening all over. we will all pay the price in the end for a$$holes like my nephew.
dont be too harsh…he’s living the american dream in the ownership society LOL
you’ve made a typo. that’s owership society
His credit card creditors could theoretically file objections to his discharge or to the discharge of their debts (section 523 of the bankruptcy code) under the theory that he knew when he incurred the debts that he could not or would not pay them.. Whether they will litigate is a crapshoot. If they do, he’ll have to settle with them and agree to pay some or all of their debts outside of bankruptcy or risk having his case dismissed.
His credit card creditors could theoretically file objections to his discharge or to the discharge of their debts (section 523 of the bankruptcy code) under the theory that he knew when he incurred the debts that he could not or would not pay them..
This is interesting, didn’t know about that wrinkle.
Whether they will litigate is a crapshoot.
I actually know someone who was sued by a cc for a relatively small amt. of unpaid debt - $1500.00. It was filed in District (local) Court. She got an atty. and got out of it for $800: 500 to cc and the balance to lawyer.
http://www.law.cornell.edu/uscode/html/uscode11/usc_sec_11_00000523—-000-.html
See 523(2)(B) and (C)
Looks like the link doesn’t work
§ 523. Exceptions to discharge
How Current is This? (a) A discharge under section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt—
(1) for a tax or a customs duty—
(A) of the kind and for the periods specified in section 507 (a)(3) or 507 (a)(8) of this title, whether or not a claim for such tax was filed or allowed;
(B) with respect to which a return, or equivalent report or notice, if required—
(i) was not filed or given; or
(ii) was filed or given after the date on which such return, report, or notice was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition; or
(C) with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax;
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;
(B) use of a statement in writing—
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; or
(C)
(i) for purposes of subparagraph (A)—
(I) consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable; and
(II) cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable; and
The new bankruptcy laws are draconian. If he goes BK, he’s in for a surprise if he thinks he can simply jetison debt.
All his assetts, including his “toys” have to be listed and if he gets caught playing games, by giving them to a friend, his wife, whoever in many cases thay can be recovered.
As a practical matter, so many people are and will be going BK, he probably will get away with anything as he will be a face in the crowd.
In the months before the BK laws changed in Oct of 2005, there was a tsunami of chap 7 filings. The lawyers, courts and trustees were so overworked I’m sure a lot of crooked stuff got thru.
If your contemplating going BK, why pay off your toys with credit cards unless you plan to sell them.
It sounds like he is planning something.
RE: As a practical matter, so many people are and will be going BK, he probably will get away with anything as he will be a face in the crowd.
Watch for a Federal debt moratorium as the economy unravels
into another Depression.
“If your contemplating going BK, why pay off your toys with credit cards unless you plan to sell them.”
Easy. He wants to keep them. This move keeps away the repo man, and as he moves towards BK, he’ll sign them over to someone else until the process is over with. In essence, he’s employing the only tactic possible to save his toys without having to pay for them. He’ll probably get away with it. While I despise his type, I smile inside knowing the credit card companies are getting throttled. These predatory @ssholes deserve it.
Bear;
I’m hear ya’!
The Bankruptcy Reform Act of 2005 is also known as the Credit Card Protection Act of 2005.
It would seem unwise to keep your toys unless he could convert them to cash. The new BK rules will set up a payment schedule for him, I believe for 5 years before any remaining debt is discharged. If he has a good income, they’ll tag it.
I also agree with hd74 that there will likely be some sort of debt moratorium.
As far as the 2005 re written BK law, when enough people, read “voters” realize that you can’t simply walk away from your debt anymore, I bet they change that too.
I’m hear ya’? God, am I lame at times.
“Las Vegas…Earlier this month, Lennar Homes dropped prices 25 percent in about 30 of its new-home subdivisions”
LVLandlord, where are youuuuuuuuuuuuuuuuuu??!!!
Yeah, remember all thos fools telling us the LV economy was bullet-proof and would grow forever and ever? Declining sales tax, just like Michigan.
“the LV economy was bullet-proof”
Yes, and the reasoning was that “5 billion people per second were moving to Las Vegas, and there is a shortage of desert land if you don’t count the huge amount of BLM land.”
Bah!
As an aside, there is certainly no “shortage” of open land in Vegas, but the amount of land that can be developed is restricted by BLM policies, so there is an artificial supply “shortage” in some sense. The difference with other cities is that BLM can at any time decide to auction large amounts of land, messing with supply and demand.
Much of this “open land” falls within city limits, creating a checkerboard effect of developed land next to open land. IMHO, BLM should allow this land to be managed by the city or county rather than the feds.
like Bob Kamikazi ?
BHAHAHHAHAHHAHHAHHA!!!!
One fact that struck me from Ben’s “Business Las Vegas” post was that the number of permits in September was only half of the number of new-home sales. This is in fact bullish (slightly) for LV housing. Builders learning not to increase the inventory faster than it can be sold off. No, I’m not ready to buy any LV property at this time, just pointing out the sort of thing we should be watching when we try to forecast.
I have addressed this in regard to LV several times lately. Yes, the builders are selling by undercutting the existing home market, hence the record defaults. There is a 2 month supply of new homes and a 19 month supply of existing, 40% of which are vacant.
But this is the key; they keep building and will continue to as long as prices are so high. IMO, due to the laws of supply and demand, the builders will continue to over-supply the market until prices fall well below break-even.
Let me add one caveat to your thesis, Ben:
Builders and developers will continue to oversupply the market as long as lenders give them the money to do so.
Despite the ongoing credit contraction, financing for spec homes and developments is still flowing. I’m guessing that it will continue to flow until lenders actually face massive defaults. Next year at this time, we will be reading articles about lenders “shocked” at the “unprecedented” rate of defaults on construction loans.
I suspect that lenders aren’t making many new construction and development loans but are stuck disbursing under loans made in 2006 and even 2005.
I also believe that lenders are rolling over fully-disbursed construction loans and capitalizing the interest. The goal is to hide the losses until caught by the auditors or regulators. That was standard practice in the S&L disaster.
I was wondering about rollovers myself. In my neck of the woods there is an abundant supply of vacant “luxury” new construction that builders have been holding for a year or more. You would think that they would be forced to drop the price and sell by now, but lenders seem to be giving them a nice long rope with which to hang themselves (and the lenders).
The loans are probably non-recourse. The losers are first the bank shareholders and then the public (FDIC takes the ultimate loss).
“IMO, due to the laws of supply and demand, the builders will continue to over-supply the market until prices fall well below break-even.”
…then land and construction prices will fall, and they will keep on building.
I noticed that as well and it gave me pause until I came to my senses and realized that the number of new home sales could decline even further and that the inventory numbers extant, when combined with ‘forced sales’ which set the new comps should ensure that the descent continues apace.
How are you guys getting all these weird emoticons? Housing Hanky Panky has referred us to a website a couple of times, but I don’t get it. The website is from Word Press, and it seems to be oriented toward the blog owner. I use IE Explorer, and am far too old to start changing over to Firefox or Mozilo. Can anyone tell me in plain, simple language how to get emoticons to work on Ben’s blog using my own computer with Windows XP?
Thanks in advance,
Confused V
If you look on the page I refered you to you will find how to create smileys.
I don’t have a directory called /wp-includes/images/smilies on my computer. Is that a directory that Ben’s supposed to have to make smilies work on his blog? I can’t find any text on that page that tells me how to get all these devils and blinky faces to show up in my posts.
Why are all the reference links from that page in German? Are emoticons a German invention? I remember a while back Microsoft introduced all these emoticon download thingies, but they only work in Microsoft products.
Go half way down this page and you will see it all.
http://codex.wordpress.org/Using_smilies
Guess we all have to learn this stuff
well that didn’t work
=:)
What a professional
That’s cool
Anybody know how to emoticon “the finger”.
“Anybody know how to emoticon “the finger””
Amen brutha!
:finger:
“David Seiders, National Association of Home Builders chief economist, said last week that these four areas will be most vulnerable to the subprime-loan fallout: California, coastal Florida, Phoenix and Las Vegas.”
Notice how it’s only cities or regions, with the exception of the 800 pound white elephant, hanging out in the bottom left hand corner?
I think you mean 800lb Gorilla. An adult elephant is in the neighborhood of 10000 - 14000 pounds.
It’s a much younger white elephant…
I expect it to grow to full size, if not bigger.
The four areas will be most vulnerable: The Northeast, the South, the Midwest and the West.
Wow….is this guy located in AZ? It’s shocking to see all these 30k millionaires sell-off all their “toys”-500SL Benz, $60k wakeboard boats etc. on Craigslist.
The thing is- it seems AZ has a lot of flash and not a lot of cash.
It will be interesting…a lot of these “toy” buyers are in real estate-mrtg. brokers, appraisers, RE agents, not to mention the builders/contractors that spend money like a share cropper on a Saturday Night!
If AZ isn’t building houses….I fear a wicked recession is coming. It’s really the only thing the economy runs on…but I’ve been wrong and surprised before….
Thanks to Ben for helping me feel less of a fuddy-duddy amongst all the glitz and excess.
The craigslist ads for Phoenix Az are starting to get interesting for properties over 500k. A lot of them start with the words “appraised for blah, blah in 05/06″ “the owner paid XYZ in 05/06″ or “priced xyz lower than the owner paid”. Like that information matters or one is supposed to care. I will say this those guys out there spent a lot of money on tony upgrades. Some of that stuff is unbelievable. Reading the ads you can tell some have gotten the message the parties over and price for the door. But you do get the impression that a lot are hanging on by bloody fingernails.
Preach it, Charlie! This is indeed the state where flash trumps cash.
And, while we’re on this topic, permit me to update you on the latest Arizona Slim Real Estate Bicycle Rides. Yesterday, during my 20-mile ride around central Tucson, I counted 45 houses for sale. About half of them appeared to be vacant.
Today’s ride was a hair over 14 miles, also around central Tucson. The for sale sign count: 36. I also passed by a couple of apartment complexes that are in the process of being converted to condos. However, in both cases, the conversions aren’t moving at warp speed. One complex, at the northwest corner of Columbus Blvd. and Glenn St., has been in conversion-attempt mode for almost two years, but most of the units look empty.
I’m also noticing a number of houses that were for sale that are now for rent. One such house is at the northwest corner of East 3rd St. and Country Club Rd. in the oh-so-desirable Sam Hughes neighborhood. It was on the market for two years and was pulled off during the summer. It’s now sporting a “For Rent” sign.
I also checked out the IndigoModern complex on East 3rd St. Was on one of my older, crummier looking bikes, and there was but one car parked out in front of the place. Real estate agent, I surmised. But my “old enough to drink and looks like it’s had a few” bike must have prevented said agent from coming out to chat me up about buying one of the 6 out of 11 units that are still for sale. Oh, well. That bike does provide pretty good cover when I’m snooping around.
And that’s the latest Arizona Slim report from Tucson!
Saw a HGTV show last week about a young couple from Chicago who wanted to buy a “getaway” home in Las Vegas. They were shown three homes (normal format for this show), all of which were vacant IIRC. When they chose one, the agent said there are other offers on the table. WTF? When was this show produced? Sure enough, at the end it said Copyright MMV (2005).
I wonder what their getaway is worth these days?
I wonder what their getaway is worth these days?
Not sure what it might be worth but I can tell you what it’s going to buy. One car each, half the furniture, and splitting weekends with the children.
Agents always say there are other interested parties. It’s how they get the stupid people.
If any agent ever said that to me I’d say “Ok, let the other party have it. See ya!”
That was an old one - I’ve flipped through it four or five times in the last six months or a year.
Old: American Dream
New: Speculator-driven
“The speculator-driven housing boom is to blame. All those areas saw the huge run-ups in prices prompted mainly by speculators, often using subprime loans. Regular home buyers then often had to take out subprime loans to afford the higher prices.”
Any “regular” home buyer paying a whole lot more than comp rent was a speculator by definition.
Check out this link for an auction of Lennar homes in Litchfield Park, AZ. These homes were selling for over $600,000 a few months ago. Now there are a few with a starting bid of $300,000. This is in a nice part of the West Valley. It’ll be interesting to see what they actually sell for.
http://www.realtybid.com/lennar/laureates.cfm
40% off- hey, it’s a start but FL still has them beat
There is a massive Federal and (in many states like California) State government cover up going on concerning the true financial picture.
The British pound has just hit $2.6 cents to One British pound. Just a few years ago, it was $1.50 cents. The Euro is also hammering the dollar but it’s the British pound which is interesting. The Brits are in just as much debt as the USA. Probably more. However, the Brit currency is not tanking along with the dollar. Why is that?
Way back in the 1990’s, I remember reading a book concerning the amount of dollars the Fed printed under Ronald “Deficits don’t matter” Reagan and how much was being kept under the mattresses and safety deposit boxes (for example) in scores of foreign countries. The dollar back then was King but it has slowly declined over the years and under Bush now is dropping full throttle.
The book (if I remember correctly) stated that two thirds of dollars in circulation were OUTSIDE the USA. The premise of the book was that the US dollar would become a banana republic currency if those holding dollars in foreign countries decided it was time to dump them for another, more stable, currency and the US banana republic dollars would come flooding back into the USA causing serious financial problems.
It gets worse. Since Bush was elected, the US mint has been working the printing press 24/7 and that “two thirds outside the USA” is now MUCH, MUCH greater. On the other hand, I don’t think the Brits printed as much currency as the USA. The governors of the Bank of England and much less apt to dance to the City of London’s tune and are far more conservative than Washington Hacks like Mr. Magoo and Bernanke who really are the servants of Wall Street and the US government. Yeah, I know. The Fed are independant (lol).
My own feelings are that things are so bad, what with the massive property declines and the fact that most US households are totally maxed out because they have used their over-valued property and their credit cards to afford a life-style which was WAY beyond their means. Throw in that money pit with no end called Iraq and a few other places, which Bush created, that soak up dollars like a sponge meaning the Fed has to print more pallet loads of “bricks” (a brick being a wad of $100 bills the size of a house brick) to pay off Presidfent Mustafa and his brothers and cousins and God knows who else in these toilets, and I seriously think the US has so many problems that both the Fed and the government under Bush (which are incompetent anyway as we have seen time and time again) just do not know what to do - so they are continually lying and spinning the facts.
We have been tracking this on a bunch of other web sites. In fact the US treasury is not actually printing a lot of money.
The Eurobanks are printing a heck of a lot. The Treasury is growing the supply quite slowly.
M3 measuring debt based money supply growth is going fast. Actual cash is slow to negative for the past year or so. Been slow for a while too.
We do have too much government debt but our politicians realize people don’t want to make the hard choices unless they really really have to. We haven’t been at that point yet.
The Fed is in fact independant of the government.
The Fed may be independent, but it doesn’t act independently.
I think the premise that the “Fed is independant of government,” goes in the same naive column as “Wall Street is monitored by the SEC,” or, “By the time your interest rates reset your house will be worth much more,” or “Mission Accomplished,” or, “Brownie, you’re doing a heck of a job.”
You missed the point of my posting, including my (lol) when I stated the Fed is independant. They dance to the tune being played by the Financial Gangsters Of Wall Street and the government even though we are told they do not. The point about the posting was, THEY ARE LYING.
I care as much about the so-called truth of M3 as I do about, “There is no inflation.” THEY ARE LYING. The whole point about the posting was THEY ARE NOT TELLING US THE TRUE STATE OF US FINANCES.
Oh… I just lost focus to respond about anything on the Fed.
I think the Fed is relying on inflation and velocity of money in their calculations and moves. Unfortunatly that promotes a very unstable system.
I really think they should have have held rates steady.
Otherwise you post is just a bit paranoid with the caps and the lying comments. Maybe they are or perhaps they are dumb. I think their primary mission is to protect the financial aspect of the system and that is what they are doing. Lower costs for the banks shields the banks somewhat from losses. So lower rates. Simple as that.
You put out a statement about the printing presses and that was wrong. Then you say that you don’t care about M3. Fine. I just have trouble following where you are going with all that and you are not doing much beyond shouting.
Explain what you think they are lying about clearly and the board will discuss it.
A. They are lying about how much money they are printing.
B. They are lying about inflation.
C. They are lying about the true state of the US economy.
D. They are lying about the financial status of many US banks.
Who is lying? The axis of evil:
A. The Bush Government.
B. The Federal Reserve.
C. The Financial Gangsters of Wall Street.
As per. your request, no caps, no shouting. Just tell me what part of lying do you not understand? Seeing as Henry Paulson is one of Wall Street’s Godfather’s, it isn’t hard to work out who he is working for. Seeing as Mr. Magoo has changed his views about everything he has said in the past concerning the US economy, inflation and the property market, how can anyone take his word which was the word of the Fed. Seeing as Bernanke is just another Washington Hack like Magoo who does what the Bush administration tells him to do (print money) and is in the pockets of The Wall Street Gangsters, how can you trust his word?
If you think that inflation (for instance) is running at 2% as Bernanke said, then I wouldn’t bother replying to this post. Instead, get your bath water checked out and until then stop swallowing it.
Didn’t they stop publishing the M3? And it has to be derived/estimated now, or something along those lines?
I don’t know about the word “lying” that was used above, but I’d definitely say there’s some serious intentional under-reporting of inflation. Hmm… housing, food, and energy have skyrocketed, yet everything’s rosy w/ 3-4% inflation. Inflation’s not a problem they say, so more rate cuts are just fine (to the cheers of WS). I disagree, and apparently so do the forex markets, as they flee the dollar.
The of these “sob stories” of how I was used and abused will continue rain down to fill a river the size of the Amazon and I DO have sympathy down-trodden.
WATCH OUT for the poor Crocs…Ooops, THOSE are ALLIGATORS
“The short version of the ‘Real Estate Rescue’ pilot, according to the Arizona Republic newspaper: A well-off guy takes early retirement, gets stuck with two very expensive houses and his new business, a tutoring service. To make ends meet, he goes back to his early career, as a pharmacist at a local grocery.”
And he ends up using copious quantities of pharmaceutical drugs, but it’s ok, because they’re “legal”*
* side effects are too numerous to mention in this short thread
You left off the best part:
“The fledgling producers hope to make a weekly go of chronicling the real estate travails of the well-to-do. There are no network or cable takers for the pilot, the newspaper reported. Big surprise.”
Trying to attract MSM sponsors for a show about the downside of real estate gambling must be like trying to attract public funding for an abortion clinic in heart of the Bible belt.
“All those areas saw the huge run-ups in prices prompted mainly by speculators, often using subprime loans”
No s**t! And if the speculators disappear, so do the price runups that they caused.
“Santa Maria Ranch, a 954-acre development on U.S. 50 in Dayton”
Any of you ever been to Dayton? Well, if you managed to make it past the infamous cat-houses east of Carson City, you would’ve bumped into Dayton. Not scenic, no jobs, no shopping, over a hour from the nearest ski resort, and it just plain sucks. Now this….
General contractor Steve Edelstein, bought a half-acre lot at Santa Maria in 2005 and began marketing it in December 2006. The response has been minimal and he doesn’t know when he will begin construction.”
“‘I’m optimistic about the market turning around, I just don’t know when,’ he said. Edelstein has plans for custom homes in the $600,000-$700,000 range.”
This is just a f-n joke. 700K homes in the middle of BFE. This is just classic to what has gone on up here. If this guy plans on building a 700K home in Dayton Valley, he’d better just go ahead and call a BK lawyer right now. The thing is, there is an insane glut of custom homes in that price range closer to the east slope of the Sierras, a much more desirable area, in that price range, THAT ARE NOT SELLING, not even getting a sniff.
It just blows me away how many of our local builders walked the tight-rope without a safety net by building, not one or two, but several custom spec-homes in the 500K - 1M+ price range in an area that just can’t support it. Yesterdays millionaire builders are returning to rags once again, a position they were familiar with before the boom.
It
LOL it could be worse, they could have built them in Lovelock.
….or Battle Mountain, BM for short.
Pimco’s Gross suggests the following
The Fed’s target for overnight loans between banks will have to fall enough that interest rates will be about 1 percent above inflation, he said.
“An increasingly recessionary looking U.S. economy will likely require 1 percent real short rates and 3 1/2 percent fed funds in order to stabilize a potential growth contraction in lending not witnessed since the early 1970s,” Gross said.
If this happens what happens to the US dollar and inflation? Any predictions?
The Fed will become a black hole from which even light will not escape if rates go as low as Pimpco Bill Gross wants. It’s the Weimar scenario and you won’t be able to buy anything with dollars.
Weimar? That’s way overboard. Still, your point is well-taken.
There was a clip of Gross on Marketwatch, pumping furiously for a huge rate cut. The pumping was so furious you could hardly see him through the smoke.
For the real rate to be 1%, the nominal rate would have to be about 11%, not 3 1/2%. Of course, you won’t get Bill Gross to admit that without the aid of a Joshua tree.
Like I’ve said many times before for many years, PIMCO’s Bill Gross is not financially savvy, just another dumba$$ trying to push people to buy his bonds. Hopefully he, along with LAY, Yun, Lereah, and the rest of them will be hung out to dry.
Can anyone hazard a guess what these losses amount to in dollar terms………?
http://www.markit.com/information/products/abx.html
Seems difficult to found out the size of each issue (such as ABX HE AAA 07-2, etc.). Like hanky-panky, I would be interested in anyone’s pointer to a resource showing how much was originally lent on each of these.
“Steve Bottfeld, VP of Marketing Solutions, declined to name the builder analysts named, but said they are concerned because Las Vegas has been so profitable for builders.”
“Despite the prices and sales continuing to nosedive, Bottfeld remains optimistic. ‘If we are not at the bottom, then we will have one more bad month before we see it turn around,’ he said.” *
* Past performance isn’t necessarily an indicator of future performance.
All of a sudden, we’re noticing softening in the housing-related office market,’ said Brad Peterson, a VP with commercial real estate brokerage CB Richard Ellis in Las Vegas.”
So, you’re just noticing that now, are ya’? I got other news for you. While you were sleeping, we invaded Iraq, Britney Spears gained weight (I still think she’s hot. Hey. I’m 56, gimme a break!) and Bush is aiming at Iran…Goooo Bushie!!!
Oh, by the way Mr. Peterson that “softening” included the commercial RE market. Ck your email. You were fired in July.
Go back to sleep. By the time you wake up again and grace us with your wise, timely and insightful comments on the market, Hillary will be in her second term and we will be past the gay marriage thing and guys will be marrying farm animals.
Are you my daaaaaady?
Where has this guy been??
DarthRealtor lol !! You cracked me up !! I am on floor laughing..lol!!
Thanks, guys. It’s nice to be appreciating…er appreciated.
Late post here, but the Utah house in question auctioned for $295k — a guy bought it for his daughter. We are still about 9-12 months behind the rest of the country in terms of market events. Heck, I just saw two new car giveaways in my ‘hood just this week — the first I have seen.
jb