Prices Are Back To More Realistic
It’s Friday desk clearing time for this blogger. “Faced with declining demand at current prices, a Lake Oswego home builder said he will put all 230 of his unsold homes and condos on the auction block next month. Though asking prices have ranged from $300,000 to $650,000, bids will start as low as $69,000, The Oregonian newspaper reported.”
“‘We were overaggressive and too slow to react to the changes in the market and that has created an oversupply of finished homes,’ Roger Pollock, owner of Buena Vista Custom Homes, said in a statement.”
“Now that Vegas has slowed, so has its Utah satellite. St. George real estate agent Gail Moore said her experience corroborates the report of a slowdown in Utah’s Dixie. ‘People are having to come down on their prices,’ so that most sales now are in the $200,000 to $300,000, Moore said. ‘It’s not what it used to be.’”
“At Phoenix Mayor Phil Gordon’s recent State of Downtown event, he honored Orpheum Lofts residents Bill and Verdeen Jackson for being one of the first condo residents to move to the city’s core.”
“The speech did not mention that the Jacksons’ $1.3 million loft has been for sale for more than a year. The unit has been on the market for 477 days.”
“‘They deserved to be honored as downtown rock stars,’ said Gordon noting that families move more often these days. ‘They were one of the original owners, and they invested a lot.’”
“Jennifer Edom and her family are among thousands of people in the Treasure Valley of Idaho, indeed, the nation, who are trying to sell their houses in a buyer’s market. ‘The frustration for us is there are just so many. It’s house to house to house,’ Jennifer tells CBS 2 Eyewitness News. ‘It’s very stressful.’”
“So many for sale signs she means. Two signs alone are on houses next door to hers and it seems as far as the eye can see in several subdivisions in Eagle. ‘There’s a lot of open houses every weekend, Saturday and Sunday,’ Jennifer says. ‘And there’s no traffic, there’s no people walking in the houses.’”
“Jennifer’s house has been on the market for a year, they’ve come down $200,000 in price, and are now asking $725,000. Realtor Mike Hummel says the house-selling frenzy was fueled by out-of-state investors and it had to slow down sometime.”
“‘Sellers have to be realistic about pricing their homes. We’re back to what I call a more normal market. We had an anomaly in ‘05 and ‘06,’ Hummel says.”
“After paying people thousands of dollars to stand in line for a week in bone-chilling temperatures, investors finally got a crack at what is arguably the hottest property in Toronto. The demand was so high that developers raised the starting price to their units Tuesday morning to $500,000. Others are priced at more than $8 million.”
“The night before, the price range for the units was from $300,000 to $2 million.”
“‘I have not seen this ever happen before in Toronto,’ said realtor Anna Cass, standing at the front of the line. ‘I’ve never seen a builder raise their prices so quickly, but it’s the law of supply and demand — this is business.’”
“With the number of unsold apartments reaching record-high 90,000 nationwide, innumerable ‘jackpot apartments,’ which had been seized by those lucky housing lottery winners after having had hashed through competition rates as high as hundreds to one, are being left vacant.”
“It was investigated that 40 to 70 percent of bonanza apartments, Yongsan’s ‘City Park,’ Jamsil’s ‘Triseum’ and Daechi’s ‘I-Park’ are yet to receive new tenants. A considerable number of housing lottery winners have already purchased their expensive new apartments but cannot clear partial or remaining payments because their previous homes are unsold.”
“Southern Cyprus has become a ‘victim of its own success,’ causing the property market to slow, an expert has commented. ‘House prices have gone up, more people have bought there but the value isn’t what it once was. The housing stock has been increased which has inevitably affected the price,’ broker and advisor Ewan McGarrie claimed.”
“One piece of Guam real estate, which constitutes about 1.7 percent of the entire island’s civilian land inventory, is for sale. Late businessman Harold Dwight Look donated the 1,146-acre lot to Texas A&M University in 1992.”
“The Texas A&M Foundation is selling the 1,146-acre property for a $25 million asking price, according to the seller’s representatives. The property was valued at $52 million at the time Look donated it to the university, according to Texas A&M’s Web site.”
“Guam’s property values were priced much higher when Look made the donation because of the island’s real estate boom at the time, said Nick Captain, president of Captain Realty Advisors. Between the 1980s and early 1990s, Japanese investors fueled a real estate boom on Guam with land purchases geared toward resort and hotel developments.”
“The danger of writing contemporary history is that between finishing the manuscript and the book’s publication, something will change that will make you look foolish. Just ask former Federal Reserve Chairman Alan Greenspan, whose memoir hit the stores just as the United States entered one of the most perilous economic periods in decades.”
“Greenspan argues that players in the financial game have huge incentives to identify all the risks they face in each and every transaction and to closely monitor the actions of their counterparts in any deal. They also can move more nimbly than government regulators, hiring brilliant people to develop sophisticated risk evaluation and monitoring systems.”
“Merrill Lynch blew that fantasy right out of the water. Merrill is not a dinky firm run by a couple of Wharton School dropouts. Its executives supposedly are some of the best in the business.”
“They hired hundreds of bright people with advanced degrees in finance and mathematics. They paid these analysts, traders - and themselves - hundreds of millions of dollars in bonuses to reward the great job they all were doing.”
“And they obviously did not have the faintest idea of what the heck they really were doing. Something is rotten when a firm is sailing along in one quarter and then announces asset write-downs of $4.5 billion in the next.”
“Oops, make that $7.9 billion. Or maybe that should be $12 billion, as some analysts have suggested.”
“No one attending this week’s National Association of Realtors annual convention has been able to ignore the anxiety created by the slowest housing market in more than a decade. Stefanie Cruz, a Realtor from Sandy, Utah, was more measured about the market in the suburb of Salt Lake City.”
“Short sales, in which lenders have agreed to let distressed homeowners sell for less than they owe on their loan, are a fact of life this year in Sandy, Cruz said. ‘I tell them that the balance on their mortgage doesn’t necessarily reflect what a buyer is willing to pay.’”
“‘We appreciated ourselves right out of affordability last year, but it’s making itself right this year,’ she said. Sales have slowed, investor buyers are fewer and prices are ‘back to more realistic.’”
Another fantastic week and not one server problem! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
Thanks for the Toronto thread Ben. I think we are just approaching 2005 here. People going nuts over condo’s when there are going to be 40,000 units coming online makes no sense. We can also get zero down mortgages and 40 year amortizations now. There are cranes everywhere! This can’t end well (for FB’s that is)
I loved the placement of the Toronto speculative fever right above the story about massive number of “lottery” apartments in Asia that aren’t even occupied. Do people in Toronto not read newspapers?
Oh, but its different up there right? Because everyone wants to live in Toronto…. its one of those super cities that Yun has been talking about.
you are correct groundhog. we are in complete denial. our banks are writing off hundreds of millions related to “US Subprime.” which is always followed by the MSM with “our mortgage market is fine, much different than the Americans.” that may have been true a few years ago, but now we too have the “affordability products”
Let me get this straight, canadian banks are going to end up losing on US subprime and then in a year or so will lose on canadian subprime? too bad I can’t short canadian shares. maybe I should move to canada?
I recall a recent puff piece which Ben posted, talking about how Wonderful Winnipeg was, and how everyone wanted to live there. Ha!
Toronto will be a nice place to live after the RE market there crashes. The winters are horrible, but the summers and clean, safe streets make up for it.
“After paying people thousands of dollars to stand in line for a week in bone-chilling temperatures, investors finally got a crack at what is arguably the hottest property in Toronto.
“The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.”
-Bertrand Russell
“This can’t end well (for FB’s that is).”
I probably won’t end well for anyone. Everybody is gonna be touched by the madness one way or another.
No doubt.
The consumer of last resort, the US, is about to cut back.
The newest REIC argument is don’t talk dollars about homes, talk about how its an emotional experience… oh wait, that’s what salespeople always do! Not going to fall for it.
Got popcorn?
Neil
Hi Neil!
The consumer of last resort, the US, is about to cut back.
The lost mind of mine has enough sense not to disagree, BUT for the gawd foresaken emerging markets. (ya know, where Paulson is jet-setting whereto?)
Shifting?
Leigh
How true Combo. This is global. The thought of that gives me no comfort, whatsoever. In the strangest way, will it level the playing field in the finacial sectors?
In other words, is the dollar (at the end of the day) really that much weaker (please remember, I am not a finacial wizard, be gentle, OK?)
Best,
Leigh
Ugh.. DId anyone read that whole thread on the Toroto condos? Holy bubble, that’s totally unreal.
The unit price was from 300K to 2M. Then, overnight the prices went up to 8M dollars? And there was some fool in line willing to pay 24M for a penthouse unit? Holy Christ, I heard that pot was legal in Canada now.. Apparently they are imbibing freely in Toronto!!
Also, does that mean if I got a 2M dollar unit yesterday, I would have made 6M dollars in a single day flipping the unit? If so… You can understand how people got caught up in this craze. All you need is to do that ONCE and you will never, ever have to work again.
Insane.
The demand was so high that developers raised the starting price to their units Tuesday morning to $500,000. Others are priced at more than $8 million.
The night before, the price range for the units was from $300,000 to $2 million.
Michael (beautiful name),
Then, overnight the prices went up to 8M dollars? And there was some fool in line willing to pay 24M for a penthouse unit?
I’ve seen this in Florida! (er…not that steep)! People buying sight unseen! (03?)
So unsettled was my spirit, I dared not to utter a word, for surely I’d be committed!
We received at least five mail offerings for our NW FL house, unsolicited, weekly! (02/3?)
Mania…it’s global!! (of course at different stages, mania, none the less).
Today Torronto, tomorrow Ethiopia. Have we lost our collective minds?
Good night Irene!
Best,
Leigh
Mozambique — the next frontier for the housing bubble!
Was just in Toronto. Nice neighborhoods, clean city but CROWDED! Your traffic sucks.
Thanks, Ben.
Another great week!
*******
Greenspan will have to write another memoir to “correct” the record on his first one:
“The danger of writing contemporary history is that between finishing the manuscript and the book’s publication, something will change that will make you look foolish. Just ask former Federal Reserve Chairman Alan Greenspan, whose memoir hit the stores just as the United States entered one of the most perilous economic periods in decades.”
Great deal! Great deal!!! it is not if you cannot afford it by traditional terms, and getting that its not possible as of yet, at least were im from. :/ .
Not one server problem!? Wow, lucky you . . . around here we get the former realtors w/surly attitudes serving us lukewarm food complete with icy glares. And they always to sneak in a mandatory 6% extra fee to the bill !
LOL.
Though asking prices have ranged from $300,000 to $650,000, bids will start as low as $69,000, The Oregonian newspaper reported.”
not to mention, of course, reserve pricing of $250 to $600K.
If it’s free to get in, I may just go to this. I’ve gotta see one of these for myself.
Wow, our own little auction right here in Oregon! I wonder if OAR knows about this…..
Anyone here follow the Vegas market regularly? The only updates I seem to find is here on Ben’s blog. Everything else I google seems to be Vegas realtor fluff pieces.
Nearly half of the massive inventory vacant. Do you need to know any more than that?
I have been following Vegas via Ziprealty and see some price reductions, but nowhere near where I think it should be. Seller’s holding to their price I can kind of understand, but banks and REO’s I really don’t get. I know they are in it to make money, but aren’t they losing more holding on to these properties? Vegas had to be one of if not the biggest bubble market, but it seems like all seller’s are still holding on really tight. Predictions on when, or if banks will dump properties in Vegas? Maybe it’s because I don’t live in Vegas, but here in Ventura County California where I do live I have seen changes in the market even if anecdoteally(sp?). I figured Vegas would be the first to lead the nation in the crash.
It’s all so very complicated VC.
Hubby and I have been *touring* RE for two years off and on here in WI.
Here are some of my observations (I realise we’re not in Vegas, but I still find these points valid to a degree in Vegas).
First, the banks. I have no idea what is up their behinds. Some of the more skilled ones on the blog have stated they keep homes on the books as *assets*. I’m sure they will be moving them off the books, but I honestly don’t know when. I believe I read they were almost forced to do it by govt regulators in the last recession.
What I have personally observed in this downturn of attempts to buy (which, by the way, I’m not going to, I’m simply appeasing my most wonderful hubby, for I must wrest him into the closet after viewing said homes), is that the sellers are in a staredown.
They’re either:
-Too emotionally attached (my house is special)
-Cannot sell it for less (HELOC’d the bejesus out of said home)
-Greedy and or clueless (spring will better)
-Honest hardship (medical, job loss)
These observations are simply that–many are just not willing to part with the ‘ol house and there seem to be no one size fits all. (Are there ever really?)
Nice ta meet cha!
Leigh
banks could be using the losses to offset the major billions they were making?
I’d guess that squirm time for the banks will be when they approaching the end of the second financial year in which a nonperforming loan/repo is on their books. Picky shareholders or their reps will not want to see that and I think it is when these pieces will begin to be dumped. Since the holy-crap part of the cycle is hardly a year old, we might have almost another year of holding out, then an avalanche should begin. All IMO.
At the risk of picking nits….
We haven’t reached the holy-crap part of the cycle yet.
Dude,
Good point. We have to have a six month (or longer) period of time where this roller coaster gets out of hand.
I just love:
http://www.youtube.com/watch?v=kUldGc06S3U
If its ever updated, please let me know! For when that coaster turns down… yowza!
Got popcorn?
Neil
There is a dam called DENIAL that is about to break, flooding the US and world RE markets with REALITY.
Lenders with REOs and unrealistic sellers are waiting, hoping and praying (hey, ya gotta do something when you can’t sleep) for a bailout or somebody to rescue them in some way and trying to hold on financially until that eventuality arrrives.
The alternative to somebody “fixing” this for them is too terrible for them to contemplate even if their cretinous minds can comprehend the implications of the alternative.
Da re-ver of de nial is about to be a very dry bed.
I’d rather see the red sea part…
Thank heavens (or Baby Jeebus Oly), this is not unravelling too quickly.
I so do NOT want to beat the ugly drums of negativity, no bailout…it’s toooooooooooo large.
Ya just can’t make this stuff up!
Leigh
Vegas, imho, is the one spot that can give S. FL a run for it’s money in leading the charge to the bottom. I have NO idea WTF people are thinking out there, there is just unlimited land around Vegas, and, frankly, is seems like a horrible place to live. Could be because I hate gambling.. Who knows!
However, it just seems SO bubbly there, with absolutely nothing at all supporting the prices… I just don’t get it! But, makes for a good horse race (watching FL and LV race for the bottom), that’s for sure!
“Vegas realtor fluff pieces.”
Does that make the Realtors there “fluffers”?
tee hee…
[a young fluffer is lying on the floor, unconscious and bleeding from the nose]
Young Stud: [wailing] I… I think she did too much coke.
Colonel James: Oh, you think so, doctor?
Boogie Nights (1997)
Yup, they were fluffing those rising prices, with help from a little blue pill. Call your doctor if house prices stay up over 5 years.
It’s not Vegas, but I’ve been following the Reno market for the last year here: http://dianecohn.blogs.com/
“‘Sellers have to be realistic about pricing their homes. We’re back to what I call a more normal market. We had an anomaly in ‘05 and ‘06,’ Hummel says.”
Anomaly? Is just me, or does it seem like we’ve heard every possible substitute for the word bubble?
haven’t heard the word “pimple” yet, although it resembles a big, angry pimple more than it does a bubble..
More like a MRSA boil I think than a pimple.
“prices are ‘back to more realistic.’”
Wait a minute here…last year we were told by the RE industry that the then high prices were based on fundamentals, supply and demand, everyone wants to live here, and they aren’t making any more land.
Now they say prices NOW are ‘back to realistic’?
Which is it? I’m so confused…
Let me add, as someone with a wad of cash and liquid investments, wanting to buy a house eventually, not feeling rushed in the least, and adding to our war chest by living below our means and still going on nice vacations with the money we save by renting…
It’s good to be the king.
Likewise….. And well said.
Jacques: Don’t cry, my dear. I may not have been born a king, I may not have lived like a king. But at least I can die like a king.
[He strides to the guillotine with dignity]
Executioner: Your Majesty, do you require a blindfold?
Jacques: None.
Executioner: Have you any last request?
Jacques: None.
Executioner: Test the guillotine!
[Another executioner triggers the guillotine; the blade comes down and chops the head off a wooden dummy]
Jacques: *Holy shit!* Uh, wait! Wait! Last request, I have a last request!
Executioner: What is your last request?
Jacques: Uh, novocaine.
[the executioners confer]
Executioner: There’s no such thing known to medical science!
Jacques: I’ll wait!
This is why I avert eyes from the blog when drinking liquid!
(or when my cat helps me type).
Oh My! A flying booger moment!
Please stop!
Leigh
“Jennifer Edom and her family are among thousands of people in the Treasure Valley of Idaho, indeed, the nation, who are trying to sell their houses in a buyer’s market. ‘The frustration for us is there are just so many. It’s house to house to house,’ Jennifer tells CBS 2 Eyewitness News. ‘It’s very stressful.’”
Must be the new NAR catch line “buyer’s market”.
Eagle, ID= equity locust central for the state of Idaho with some of the most expensive real estate in the state outside of Sun Valley. It’s pleasant suburb of Boise that was invaded with out of state money and prices became disconnected from reality. Your average 600k-750k house in Eagle looks like this: http://boise.craigslist.org/rfs/480966049.html . Only 4 years go, this would have been a 300k-400k house.
Sounds like Eagle has turned into San Diego North.
Sold a 3000sft house for 200K in late 90’s which was around the corner from Mrs Albertson (founder of the grocery chain). This is insane.
Jennifer Edom and her family are among thousands of people in the Treasure Valley of Idaho,….Jennifer’s house has been on the market for a year, they’ve come down $200,000 in price, and are now asking $725,000.
************
725k in Idaho? Is this for a house or a whole city block?
This sounds like LA not Idaho, somebody help me out here, what does one get for 725k in Idaho?
about 700,000 lbs of potatoes?
LOL butter or sour cream?
Someone listing a home for $750k in Idaho — ANYWHERE in Idaho — shouldn’t have to worry about houses next door or down the block on the market at the same time. Because a $750k house in Idaho shouldn’t have any neighbors, or at least not any that you can see from the house. Think big piece of land with a stream, barn and custom “Ted Turner” type home.
You’re spot on with your assessment. The prices in Idaho are absolutely outrageous. $750 house, and Idaho shouldn’t even be mentioned in the same sentence. Boy this has gotten silly.
should have read:
“…$750k house…”
A whole city block.
That’s exactly what I thought; WTF does a 700K home look like in Idaho!
Unfortunately there were no pictures in the article! 
My guess would be ~8000 sq/ft on ~10+ acres.
Or, an entire city block.
I tried to research it (not sue-z-anne) and the Idaho records are, at best, worse than Wisconsin.
Try less than 4000 sq/ft on 0.27 acres.
http://homes.realtor.com/search/listingdetail.aspx?ctid=94676&mnp=35&mxp=34&typ=7&sid=ac03df1c712042e4af8e732942f67581&lid=1086773421&lsn=4&srcnt=13#Detail
$725K in Eagle, ID?
Ha ha ha ha haaaaa ha ha ha ha!
(deep breath)
BWAHa ha ha ha haaaaa ha ha ha ha!!
(deep breath)
Oh lordy, BWAHa ha ha ha haaaaa ha ha ha ha!!!
Got cash?
You get your own private Idaho.
When I first read this, I read “Treasure Valley” but my brain processed “Sun Valley.” My first thought was what’s so surprising about this?
$750K in Eagle??
Snicker…chuckle…yeah, good luck with that one.
“They hired hundreds of bright people with advanced degrees in finance and mathematics. They paid these analysts, traders - and themselves - hundreds of millions of dollars in bonuses to reward the great job they all were doing….(WRONG)”
- Here I am, a hick raised by my grandparents on an Indiana farm and I could see years ago that JoeJuanSixpack could not now or ever afford to service a fully amortized home loan.
The existing home supply was regulated by ‘Qualified’ buyers under normal demand. You can ‘fool’ math for a while….but payday cometh quickly.
The payday is coming for the taxpayers and suckers who invested in the ponzi scheme. Management of those banks have their golden parachutes strapped on along with dufflebags full of bonus money.
The bright people that designed these new age loans and determined the risk factors didn’t know anything about human nature or prudent lending .The toxic loans only work when real estate is going up ,and I don’t think they work very well under those circumstances either because those toxic loans encourage low down short term speculator demand and alot of fraud .
Another mistake is assuming that a person with a high credit score won’t walk on a low/no down loan . First rule of lending is to have the borrower have some skin in the game (or the loan needs to be insured ).
What did these Wall Street creative market makers think would happen when they gave borrowers a opportunity to invest with 100% leverage in a false real estate mania ,with crook loan agents .
I think the Wall Street people were just looking for a investment for investors because they had a huge money supply and they needed to create something for placement of a higher yield investment ,so they looked at data with rose colored glasses .
Wall Street made money for a while and the foreclosures and turn around rate were outstanding on the loans ,(especially with pre-pays )and they continued to feed the beast ,that nobody wanted to stop until….they started to get foreclosures .In the meantime you had the realtors and MSM cheerleader market makers chanting the myths and cheering for real estate to go up and up ,so the party wouldn’t stop .
You would of thought that all these bright people would of noticed that affordability was capped by 2003 and this would put a serious cramp in prices going up, had the loans been underwritten proper .I guess REIC fraud didn’t play into the models of risk ,but what about not overseeing the junk coming in or questioning how the market could be going up this much .
When Katrina put thousands of homes underwater in late 2005 ,it was a perfect reflection point ,but no ,….the industry continued to make the most absurd loans for another 2 years .Now when investors don’t want to fund them anymore they want to get the old government to bail them out and buy their bad junk and buy new loans that they have already proven they can’t underwrite without fraud and faulty appraisals .
I say the system needs a major clean up job , because the whole system is so corrupt that it can’t be trusted .The prices need to drop to stable levels and the appraisal system needs to be changed .
Who cares what the new loan guidelines are when you have the same clown underwriters/loan agents and the same corrupt appraisers out there .It’s a good thing that lending has come to a standstill . Anything that is not logical or corrupt needs to come to a standstill and be purged .Why should tax dollars go for bail-outs until we know just what happened here and who is to blame , and who broke the law .Also, I think the Court system needs to establish liability before we go bailing out players in this mess . BB is already giving bail out short term loans to the Lenders at the discount window ,but alot of questions need to be answered before we try to tranfer this mess to a government backed program .For God sakes ,these clowns can’t even be honest about the losses or name the parties that have the losses .
Also,when you talk about supply and demand ,you are making assumptions that no fraud comes into the mix and the demand can afford what they purchase .2003-2007 was a false demand that created a false supply . So, this current excess supply in the real estate market will take alot longer to unload and drive the prices down lower ,so lenders should be requiring 30% down or they are going to catch a falling knife .Very interesting trying to correct a market after a mania .
A friend of mine in Utah just tipped me off about a mortgage scandal emerging. I can’t find the exact article he mentioned, but apparently mortgage brokers were listing eachother’s phone numbers as the loan applicants place of employment so when the lender called to verify income the brokers would pretend they were the applicant’s supervisor and “confirm” a hugely inflated salary. “Utah is ranked fifth in the country - behind only Florida, California, Michigan and Georgia - in loans that show signs of fraud or misrepresentation, according to the Mortgage Asset Research Institute, which tracks such data.” Here’s one article:
http://www.sltrib.com/business/ci_7465796
Report the fraud! I’m not a constituent, but I did alert the IRS! (from your link, thank you).
Great people make this world go round!
With all the hanky panky that borrowers and the REIC can pull ,the only real security a lender has is a reasonable down payment on a sound appraisal in the final analysis . The underwriters are just going to have to work overtime on any deals that the parties that answer the phone don’t come from established business phone numbers. I know underwriters I knew in days gone by would have to get a person from a personel department to confirm employment ,rather than some jerk answering the phone .The fact that someone would confirm income over the phone shows that they might be fake because alot of companies refuse to disclose income over the phone of course . These underwriters these days don’t know how to spot fraud and they need to learn how to . The underwriters don’t know how to spot deals that don’t add up or they don’t want to . A person that works in a donut shop doesn’t make 75K a year ,ok ,and a person that works full time also doesn’t work fulltime as a landscaper on the side ,ok. This easy money BS has to stop . The underwriters should ask for bank deposits on so called extra jobs sometimes . Why take overtime or extra job income on a low down loan anyway unless the person can prove they have worked that many hours for years ,otherwise its a short term thing that the person will burn out on . It will get to the point where lenders will require authorization to check with the IRS to get income verfication .
“They hired hundreds of bright people with advanced degrees in finance and mathematics. They paid these analysts, traders - and themselves - hundreds of millions of dollars in bonuses to reward the great job they all were doing….(
…craven whores all, who diligently worked to produce impressive-looking Powerpoint presentations justifying whatever their bosses wanted to make maximum bucks in the short-term and to hell with risk, long-term viability or fiduciary responsibility. And you can bet that anyone who raised the alarm about risk was branded “not a team player” and didn’t get a bonus, got demoted or fired.
From Jennifer in Eagle, ID:
“And there’s no traffic, there’s no people walking in the houses.”
But what about all this pend up demand I keep hearing about? Surely there must be hundreds and hundreds of people wanting to pay $750k for a home near Boise, ID? Well, at least there are 714 homes currently listed on the Southwest Idaho MLS for $750 and up.
Correction: $750k and up!
When I was a kid, I always dreamed about living in Idaho and growing potatos. HAHAHAHA
I wanted to live in Montana and grow dental floss.
If you did, you’d probably be a tycoon by now. Or at least a Mental Floss Flycoon.
raisin it up,
waxin it down.
What is so amazing is that even the builders out there drank the cool aid. They believed the lies, that if they built them they buyers would magically materialze. I have seen the same thing in Berthoud. Greedy builders built hundreds of mansions on “acreage” (Ok, not as ugly as acreage in Las Vegas, but hardly the garden of Eden) because out here “everybody wants acreage”. Problem is nobody can afford a 700K house.
If you drive from Loveland to Boulder via the back roads you will pass many of these developments. Big honking houses (they look to be at least 6000 sq ft) on their treeless, dry “acreage”. I can only imagine the amount of dust, they must buy swiffers by the pallette load.
Your point baffles me, too, in a couple of zip codes in Georgia that I follow, far enough outside metro Atlanta that it would be a painful commute. From $300K to $500K, there are 126 active SFR listings. Bump it to $700K and there are 186. That’s almost 50% more units, priced just in the $500K-700K range. That is way too much money for the area — salaries are nowhere near high enough to support amortizing debt for that many houses, even with two-earner households. Something’s gotta give and it will. Fortunately, I’m not the one needing the Rolaids.
The water in Georgia has given..out.
http://www.atlantawatershortage.com/category/water-usage/
The only “walking around” and “traffic” last weekend was because it was Gay Pride weekend and lots of folks were visiting their RE friend’s listings. Just looky looing themselves.
Finally, people are starting to see Mr. Magoo (the genius Emperor of The Fed) without his clothes on. Over the years, I would scan the book shelves at Borders and Barnes and Noble and shake my head in wonder at the book titles and accolades given to the man I call Mr. MaGoo. A.k.a Alan Greenspan “The Maestro”.
I know he has his defenders but as far as I’m concerned and I’ve been saying it for 6 years, this credit crunch mess which has made thousands homeless and destroyed the value of the US dollar, can be laid at the feet of Mr. Magoo with herlp for Mr. Incompetent the Governor of Texas, G.W Bush. I don’t reggard him as President as the election both times were fraudulent.
Sometimes in history, a perfect storm arrives and we are seeing one now in the USA. A perfect storm created by a combination of Mr. Magoo in charge of the economy and a Clown in the White House in charge of the USA’s destiny.
It was well reported that Magoo, the ego maniac, stated many years ago that he knew how to handle the US economy and avoid future recessions. Now we know how? Via the printing press and giving free money to anyone with a pulse. The USA is about to (or is already) go into a recession. The US dollar is little more than a banana republic peso currency (actually worse) and the world is laughing at US incompetence. Very sad.
“After paying people thousands of dollars to stand in line for a week in bone-chilling temperatures, investors finally got a crack at what is arguably the hottest property in Toronto. The demand was so high that developers raised the starting price to their units Tuesday morning to $500,000. Others are priced at more than $8 million.”
Do these ppl not have access to media? Are they oblivious to what goes on in the US? I heard Canada was behind in the times, but this is freaking amazing. There will always be the “me-toos,” but this party ended months ago. I guess when you run out of greater fools, you just got to cross the border.
Are they oblivious to what goes on in the US?
But…IT”S DIFFERENT HERE.
The eternal cry of the FB.
Rinse, repeat.
The oft-repeated refrain here in Canada, regarding most issues, is that they are smarter than people in the U.S. and therefore they can’t repeat any mistakes the U.S. has made. Sometimes they’re right, sometimes not.
The HOAs for these condos are $500+, with lovely views of the freeway. Most were set to open this year, but it looks like development on many of the high-rises is delayed. Don’t worry, it’s different here, wealthy foreigners will buy these expensive condos, everyone wants to live here, and the GTA economy is immune to recession. Ignore the massive layoffs, unemployment, affordability problems, and crumbling infrastructure.
REALTORS FIGHT BACK!
i just watched a new commercial on TBS promoting house buying and realtors. its has to be a national ad campaign. the disclaimer at the end said “remember all housing markets are local” WTF??? keep an eye out i’m sure it will run all weekend!
Speaking of WTF, one of my favorite all-time videos:
http://www.albinoblacksheep.com/flash/end
Yeah, the mortgage crisis is local (ps bs). Sure areas rise and fall at different times and at different rates, but this places all local re markets at risk, and makes it a horrible time to buy.
3546 Starline Dr, Rancho Palos Verdes, 90275
Status: ACT MLS#: R958368 $1,699,900
Description: THE ULTIMATE CUSTOM HOME THAT HAS IT ALL: BREATH-TAKING VIEWS, STYLE, COMFORT ELEGANCE, SERENITY, AND VALUE. A GATED PRIVATE DRIVEWAY LEADS TO A HILLTOP LOT OFFERING SWEEPING OCEAN, HARBOR, CITY AND COASTLINE VIEWS. THE DRAMATIC GLASS PANEL WALLS CLEVERLY INTERGRATE ALL ARCHITECTURAL ELEMANTS WITH THE FANTASTIC NATURAL VISTA. AS A RESULT, EACH ROOM INTHE HOUSE OFFERS A PICTURE SQUEVIEW. 3.236-SF HOME FEATURES A HUGE LIVING ROOM WITH CATHEDRAL CEILING, DINING ROOM, FAMILY ROOM. 4BDRMS, 3.5BA, LAUNDRY AREA, AND A 3-CAR GARAGE. OTHER FEATURES COUTERTOPS, JACUZZI TUB, SOLID WOOD CABINETS, BUILT-IN TOP-OF -THE-LINE APPLIANCES AND CUSTOM DRAPES. THE PROPERTY IS VALUED AT $1.9 MILON ON ZILLOW.COM. SOLD “AS IS” WHERE IS”.
If Zillow is valuing this property for 1.9 does that mean this house is under value at only 1,699,000.00???????????
I heard that thief teams are visiting homes for sale in NYC. Two women. One chats up the realtor. The other grabs cash and jewelry.
I was in an open house here in Columbus where the home owner had left a large roll of cash out in the bedroom! (FSBO) I nicely let them know before anyone else came by.
2007..The FB’s Dream Price
2008 and beyond..It don’t mean NOTHING
Jennifer’s house has been on the market for a year, they’ve come down $200,000 in price, and are now asking $725,000…..
“Sellers have to be realistic about pricing their homes. We’re back to what I call a more normal market. ”
Having a listing for more than a year is normal?
No, it isn’t normal Curt . The whole market isn’t normal because you are in the aftermath of a correction of a real estate mania . It’s just so silly that you have people calling market bottom every 6 months . How can you have market bottom with this much overbuilding and this many foreclosures .
It looks like the Feds and a number of Senators were sitting up a plan to lower interest rates as well as provide government backed loans to bail out lenders and provide lending during a credit crunch.
This is more than a credit crunch situation . This is the aftermath of a market that went 20 to 50% over real affordability and a whole lot of excess building and foreclosures ,just at the time when people are finding it harder and harder to get the prior easy money financing . How could you have so many factors converge at the same time to create such a situation of a market where its a risk to make any loan ,(unless someone put 50% down ).
For BB to say the bottom is 6 months away and for BB to ask for a 1 million dollar loan limit on government backed loans ,(in a declining market ) ,just tells you the course the powers plan to take .Maybe there will be alot of forces that will try to stop the FEDS and the Senators from what seems to be the plan in the works ,but the spin continues to the point of it being absurd .
As a taxpayer in the United States ,I have better and more just ideas on where our tax dollars should go ,like everyone I guess who has a opinion .
‘The frustration for us is there are just so many. It’s house to house to house,’ Jennifer tells CBS 2 Eyewitness News. ‘It’s very stressful.’”
I am so sick of these sob stories. Most homeowners have received a huge windfall in unearned asset appreciation at the expense of everyone else. Shut the f*uck up!
Many homeowners have blown their huge unearned asset appreciation windfall on lattes, Escalades and exotic vacations. And now they can leave the keys at the bank without paying any taxes on the windfall shortfall.
Yeah - I love people that got $200K tax free with no work and now that they’re losing the house they never really owned they’re crying the blues. Now that’s chutzpah.
This real estate mania is going to cost everyone in one way or another and I don’t believe in hard working honest people paying for all the greedy players in this real estate mania .
These borrowers that expected their house to fund their lifestyle by repeated equity refinances really get me seeing red .Also, lenders telling borrowers ,with little skin in the game ,that they can always refinance ,to justify putting people into the leverage game ,that they couldn’t afford ,was a crime as far as I’m concerned . Wow …that’s like saying take the loan I’m giving you in spite of it being a bad loan that you don’t really qualify for and come back in 2 years and I will give you another one that you might like if you qualify .Pure madness .
“So many for sale signs she means. Two signs alone are on houses next door to hers and it seems as far as the eye can see in several subdivisions in Eagle. ‘There’s a lot of open houses every weekend, Saturday and Sunday,’ Jennifer says. ‘And there’s no traffic, there’s no people walking in the houses.’”
Sounds like it is time for Jennifer to find some foreign investors who are interested in buying Treasure Valley, Idaho real estate. Or if that strategy fails, perhaps she can find a trust fund baby living in the area who does not read the newspapers.
Re: Toronto
That article reminded me of what this blog was like 3 years ago. Ben gathered articles about the irational exuberance - not the collapse. We used to comment on the insanity of the market - not feel vindicated!
There has been no sign of vindication for any readers of this blog in Vancouver Canada. The ridiculous fact is that I could have waited until 2005 when it became clear to people on this blog that the real estate cycle had turned down in the worst US bubble cities, purchased Vancouver Canada real estate at that point in time and could sell it today for a significant profit. Frustrating to a real estate bear like me? You bet. Ben posts the occasional article on Vancouver here and I am greatful to him for that. But I don’t think the magnitude of the bubble here is really appreciated by most people on this blog. You can find crappy houses in East Vancouver in subpar neighborhoods selling for 1 million CDN (1.06 US?). It’s a total joke.
“The public need not worry, however, Greenspan says. He argues that players in the financial game have huge incentives to identify all the risks they face in each and every transaction and to closely monitor the actions of their counterparts in any deal. They also can move more nimbly than government regulators, hiring brilliant people to develop sophisticated risk evaluation and monitoring systems.”
Awesome — then they can bail themselves out of this mess too!
“And they obviously did not have the faintest idea of what the heck they really were doing. Something is rotten when a firm is sailing along in one quarter and then announces asset write-downs of $4.5 billion in the next. Oops, make that $7.9 billion. Or maybe that should be $12 billion, as some analysts have suggested.
Deposed Merrill CEO Stan O’Neal barely was out the door before Citigroup had its CEO Charles Prince walking the plank. Somehow this company similarly had failed to spot $8 billion to $11 billion in additional losses.”
I love this Idaho Statesman piece, which does a great job of citing evidence on how rotten the accounting for the big IBs has become. How can your loss estimates waver over a range of $0 to $12 bn??? What else does Merrill have to hide?
As the writer has suggested, those ever-larger-than-expected losses at the big IBs are nicely interpreted as the hidden source for recent years’ massive bonus pay at the big Wall Street IBs (so reminiscent of Enron’s off shore accounts!). A take-the-money-and-run business plan works best when you can hide losses off balance sheet forever, and second best when you can delay an honest accounting for as long as possible.