Local Market Observations!
What do you see in your housing market this weekend? Overbuilding? “‘The Southeast region of the United States ‘recently has begun to suffer from too much of a good thing when it comes to housing,’ Atlanta Federal Reserve Bank President Dennis Lockhart said today.”
“Builders, lenders and others didn’t see the end of the 2001-2005 housing boom coming, he said, and ‘in the aftermath of residential overbuilding, a painful adjustment is taking place with house prices stagnant or declining and housing starts dropping sharply in many areas in the region.’
Industry changes? “A growing number of agents – spurred in part by current market conditions – are crossing the street to work exclusively for the buyer. ‘It has always been very important, in my opinion, for a buyer to have his own representation,’ said Dallas real estate agent Sally Snyder. ‘But now that the market has turned, it is even more important.’”
“‘Since I’ve been an exclusive buyer’s agent for over 10 years, this is the first time it has really been a buyer’s market,’ she said.”
More defaults? “Foreclosure filings in Delaware continued their upward climb in October, increasing 53 percent overall compared with the same period last year, county court records show. Sussex County had a record-breaking 72 filings, up 80 percent from a year ago.”
“Gerry Kelly, deputy bank commissioner for consumer affairs, said he expected foreclosures to continue to rise in 2008 as interest rates for Delaware’s subprime mortgages begin to reset.”
“‘It’s starting to hit the trend, which is a 50 percent increase. I would expect to see that over the next few months,’ Kelly said. ‘We’ll be peaking in April or May of next year.’”
Related layoffs? “Rheem Heating and Cooling Division announced late Thursday that it will lay off 125 workers at its Fort Smith plant effective Nov. 26. The layoff comes on the heels of a previously announced temporary layoff that will affect nearly all of the 1,225 workers at the plant.”
“The housing market slump has caused low sales figures for the company’s heating and cooling division, which has caused inventory to build up.”
Signs of speculation? “If the inevitable real-estate cycle had any sense of drama - or farce - it would designate this week as the top of the wheel and the height of folly.”
“First came the money-mad ‘launch’ of 1 Bloor East, the epitome of a frenzy. One man who held a place for a real-estate agent in the ruly mob that camped for days beneath the hoarding told The Globe and Mail he earned $2,000 for the service. Given the way prices rose throughout Tuesday’s launch, that payment was likely a ’sound investment,’ to use a phrase often heard in this market.”
“But the 80-storey, Kazakh-financed Bloor Street tower had less than a week to shine as the city’s tallest theoretical residential building before a usurper appeared. Yesterday, a competing developer unveiled an equally dramatic and potentially taller condominium tower, called Aura.”
“After the shocking events in October 2007, when thousands of people jostled to buy apartments at The Vista and Sky Garden III at abnormally high prices, the HCM City Construction Department made an inspection tour of the projects and found out that the projects’ investors had violated Article 39 of the Housing Law.”
“According to Nguyen Van Dung, Director of the HCM City Construction Department, Article 39 stipulates that investors of projects can only mobilise capital from the public to serve the projects’ construction after the housing designs have been approved by state management authorities and the buildings foundations have been completed.”
“In the cases of the three projects, the investors raised funds for the projects’ implementations when they only had idle land.”
“Major sales by the rival auctioneers Christie’s and Sotheby’s this week are under scrutiny, as the art world wonders and waits to see if the inflated market stays high, or follows shares and property prices into a global decline.”
“Last week, Sotheby’s sale of Impressionist and modern art in New York took a damaging turn when a Van Gogh painting failed to sell, along with works by Picasso, Renoir, Gauguin and Matisse.”
“‘It’s very similar to the housing market and the same people buying property are buying paintings, the people who’ve made money from finance. Prices are high, really high,’ said The Art Newspaper’s art market editor, Melanie Gerlis.”
“Last week, Sotheby’s sale of Impressionist and modern art in New York took a damaging turn when a Van Gogh painting failed to sell, along with works by Picasso, Renoir, Gauguin and Matisse.”
Waiting for Goghdot?
Peak Art
“‘It’s very similar to the housing market and the same people buying property are buying paintings, the people who’ve made money from finance. Prices are high, really high,’ said The Art Newspaper’s art market editor, Melanie Gerlis.”
She got that right. No fundamentals - i.e. a Ponzi scheme.
The article has quotes going on about how paintings are an investment, etc. How much would it cost annually to house, secure and insure a $10 million painting?
I have an original Edward Hopper “nighthawks ” purcashed on EBAY for $2
That’s an excellent point - they are either speculations, or (if stretching meanings a bit) short-term investments. Over the long run, an investment must have an expected total return that is commensurate with other investments, because if it didn’t, the parabolic nature of exponentially increasing values would cause its price to climb to relative values that are unsustainable.
Expensive art work probably has the highest associated costs of “investing,” - commissions, insurance, preservation risks, etc. Thus, over the long run, it must actually underperform other asset classes. The additional return must come from the enjoyment and increased social status of ownership. Otherwise, buying art as an “investment” has to mean that it is currently perceived as undervalued relative to other assets.
It’s also quite possible that art does outperform most assets most years, but when if falls - watch out below! Kind of reminds me of another asset class occasionially discussed on this blog.
Ben, Believe it or not fine art insurance is not all that exspensive. Such buyers typically live in very secure neigborhoods / houses / apartments. I don’t know the cost but would venture a guess at .05% per year of appraised value. Very low incident of claims on fine art policies.
.05%? That couldn’t possibly be right. Even 0.5% would be hard for me to believe - that would only be $50,000 to insure a $10 million painting. Fire risks alone would warrant that.
These are bragging rights ego markets more than they are investment markets.
Sort of like Peak Yacht (remember that “Flip that Yacht” WSJ story I posted last spring, which was clearly a shoeshine boy moment for the yacht bubble?)…
In the end, they all had to have the same accoutrements of their trade…
Biggest boat, Biggest art, Biggest plane, Biggest debt.
Biggest p***s
latest art news in the Netherlands: several new companies who provide 100% financing for art (prices in the 2-10K euro range), most of them targeting young and ambitious people without any cash but desperate to get on the Art bandwagon. Peak Art for sure …
Oh yes, Art is the only asset besides housing where the gains are totally tax-free in Netherlands (and you don’t even pay the 1.2% yearly tax that applies to all savings accounts, stocks etc.).
“As news circulated about Barclays Bank’s write downs and executive shake-ups, market sources were saying that the bank would also cease trading MBS paper. Barclays is not the only bank to decide to pull back from MBS trading, say sources, who added that Washington Mutual might also pulled the plug on such trading, as it comes under the heat of a fraud probe”
http://www.securitization.net/article.asp?id=1&aid=7728
The above will result in 500+ jobs lost.
Does anyone has more info?
This week was driving through Georgetown on Q or R Street. It’s a good crosstown short cut to Wisconsin Avenue. There are parks, apt buildings and of course rowhouses. In the 4 or so blocks of rowhouses closest to Wisconsin Avenue, I counted 10 or 12 for sale signs (None of them appear to have sold or be under contract.) I have never seen so many in the neighborhood. Was pretty surprised. It’s sought after location (at least pre bubble prices) You hardly ever saw any for sale signs (maybe one or two at a time) in the past 7 years, I lived here.
Georgetown - Washington, DC neighborhood
I’ll bet that not 20% of them has a fixed-rate mortgage with no second or maxed-out HELOC.
All the foreign diplomats should snap those up before Santa Claus comes to town.
That’s a very good point. Their governments will have an opportunity to scarf up properties at bargain prices and currency advantage. For them, as opposed to an investor, that would make a lot of sense. While we regular folks wait for near-at-after the bottom, they are governed by their fiscal year budgeting.
I recall hearing that during the Japanese housing bubble, the Australian government sold their embassy in downtown Tokyo, and built a new embassy in the surburbs. The Aussies cleared a **billion** dollars on the deal.
Heh, I just got an image of investors barfing up properties …
Are you sure you want to scarf that up? *eg*
At least they aren’t “snapping”.
LOL — it’s an Old South expression that persists. Thought it was in wider usage.
Slightly related - just noticed a brick 2br/2ba townouse for 439k in old town alexandria (has already gone “pending”) — it’s near the newly expanded beltway/bridge on the south end — and it looks like it’s got a cheapish renovation job — but still, a sub-500k townhouse in old town (unless it’s falling down or situated right on route 1) has been a pretty rare sight. Someone priced it well, instead of trying to hold out for $495k or something like that.
I was looking to buy a place in Georgetown around 2002. At the time there were plenty of houses that had sold for around $250k in 1998, but were now listed for $750-850k (and selling quickly). It was one of my first “ah-ha” moments regarding this bubble.
These are 2-3 bedroom, 1 bath, tiny kitchen, “Georgetown patio” (10′ x 10′ stone), no parking, window unit AC houses. When I started seeing them go for $1 million I decided to sit out the market. I had no idea it would last this long or go this high.
Yep, bink you are right. I am a life long native of DC area except a few years in CA. Can’t believe what has happened. Sold a very nice, 3/2 in Fairfax on 1/4 acre in 2005 for what I thought an insane price. GLAD to be renting for a while.
And - at $250k in 1998 - they were somewhat comparable with what they would rent for then. Maybe owning cost 10 or 20% more than renting then.
But — even if DC/G-town rents have increased somewhat in the intervening ten years — they haven’t come close to tripling or quaudrupling — or even doubling, I would guess.
If someone really had the hankering to live in Georgetown (and, if you can deal with the parking — it’s kind of a fun area), they should just rent for a couple years and test it out at much lower rent. They could think of it as an “introductory rate” — or, better yet — a no money-down ARM that they could walk away from when it reset.
Did they ever restore trolley service?
If not, I can’t see how they possibly could be worth that much. My impression of Georgetown in 2000 was that while there was still money there and it wasn’t crime-ridden like Dupont Circle, it had definitely seen better days.
Two days ago I got a call from my landlord, telling me he was refinancing for a lower rate, and needs to have the place appraised. So the two show up and the appraiser goes over everything with a fine tooth comb. Questions, photos ,everything. No more drive-bys in Arizona, I guess.
Ben - do you think he really is financing for a lower rate? Should be interesting to learn what it appraises for relative to what the landlord expected and on what the latest mortgage was based, unless it is an old one.
That’s what he said. I work from here so I know that no one has looked at it. I hadn’t even see the LL since the day I leased it.
Well, it could be…that he’s getting appraised for another reason…like to sell it…or to get cash to buy another rental unit…since their are so many bargains these days
That’s really good to hear (that the appraisers are actually doing their jobs again). Hopefully this lasts more than a few years before everyone forgets…
Now if they would just past laws forcing lenders to hold whatever loans they make, rather than selling them to dupes, er, “investors” as mortgage-backed securities. You better believe they’d scrutinize the borrowers a lot more closely.
Heh, mine is selling the townhouse out from under me.. Got my eyes on a nicer townhouse within cycling distance of the office, with a garage, for less than I’m paying in rent now (if you factor out city wage tax and parking garage fees).. He wanted me to buy it, and I think he’s surprised how quickly I found alternate accomodations..
I just got a letter from our old #@#$@% landlord. He’s not returning our $2,300 security deposit because the buyers were picky and wanted repairs done at the last minute — siding, plumbing (from a bad job the LL did), perfect paint, etc. He’s feeling bruised about the deal he got from the buyers (said so in the letter) and thinks it’s somehow our responsiblity to cover the costs of what it cost him to meet their demands. (BTW, he lost $140K from the time he bought it in ‘05 and sold it in ‘07. He put 20% down and just broke even).
We didn’t have any pets. We did nothing wrong to the place. We went through heck keeping it looking like Better Homes and Gardens during the showings while it was on the market. We tried to be helpful. We even paid for some appliance repairs and bought our own washer when his broke.
Thankfully we are renting from a very respectable agency now, and they’ve been great and very professional. Stupid upside-down landlords are no good. He rented it to us in 2006 “until the market got better” and then it started tanking (this is NoVA) in 2007 and he decided to sell.
I guess I shouldn’t feel bad about losing the $2K when he lost $140K. Renting from a person who was “waiting until the market got better” should have been a huge red flag to me that I was dealing with someone who knew nothing about real estate let alone landlord/tenant rules.
You can stand up for your rights here. I don’t know about Virginia law, but he may be violating it. Take a couple hours at the library to check on the laws and the regulations regarding deposits - you may very well be able to read him the riot act and get your dollars back.
In Massachusetts, for example, what he is doing (taking tenant deposits and applying them to capital improvements) may constitute consumer fraud on top of violating the security deposit law, and could get you attorney’s fees and triple damages - ie, a $10,000 plus judgment. It would serve him right .
Not legal advice, though — you need to check into this yourself.
You can stand up for your rights here. I don’t know about Virginia law, but he may be violating it. Take a couple hours at the library to check on the laws and the regulations regarding deposits - you may very well be able to read him the riot act and get your dollars back.
In Massachusetts, for example, what he is doing (taking tenant deposits and applying them to capital improvements) may constitute consumer fraud on top of violating the security deposit law, and could get you attorney’s fees and triple damages - ie, a $10,000 plus judgment. It would serve him right .
Not legal advice, though — you need to check into this yourself.
(The first version of this post got lost in the aether when I tried to post it. If it comes up as a double post in spite of my waiting 5 minutes before reposting, my apologies.)
Xenos,
I really appreciate the response. I’ve been feeling pretty depressed since I got his letter. We tried so hard to keep everything tidy and pristine on the move-out. We did everything, especially making sure of last-minute details — e.g. the inside and under the refrigerator and the garage were spotless. He was living across the country, and his agent did the final walk-through. She told me everything looked fine. His letter I think I will take to a lawyer, because he clearly says he made certain repairs so that the sale would go through, at the request of the buyers. He didn’t specify any particular damages *we* caused, and didn’t itemize them as is required in Virginia.
“I guess I shouldn’t feel bad about losing the $2K when he lost $140K. ”
I had the same thing happen to me in California but I got a lawyer. I got half of my loss back from father of LL. Same thing about the loss on the sale of his crapshack. 137k perhaps more. I swear you must be a forgiving person, who wants to bet my LL will never pay the HELOC loan off now.
At 2.3K, take his ass to court! I’m serious. Filing and court costs are only about $150 at most, and he pays if he loses, usually.
A growing number of agents – spurred in part by current market conditions – are crossing the street to work exclusively for the buyer.
The linked article conveniently neglects to provide any information on how these “buyer’s agents” are compensated. Any agent whose compensation is positively correlated to the sale price, or whose compensation is contingent on a sale being made, is working in the interests of the seller, not the buyer.
A true buyer’s agent would receive compensation negatively correlated to the selling price.
Oh one more thing - if I were a sheep and I wanted someone to look out for me, I think I’d hire a sheepdog, not a wolf who was unhappy with “current market conditions”.
I love the great stories coming out of Jersey. Especially since I was told I was crazy two years ago when I had the nerve to state that New Jersey would get hit really hard.
My boss has some friends that have a home in Fairlawn and a home at The Shore. They were going to sell the home in Fairlawn in ‘05. They decided to hold off and fix the place up. There was no rush. I’m sure they figured the price would just keep skyrocketing. My boss had told me Fairlawn was bullet-proof so they would be okay. I laughed. I don’t know anything about Fairlawn but I could guess. My boss’ reasoning was that there were a lot of Jewish people that lived in Fairlawn and they would keep the prices high.
His friends finally put their house on the market for a meager $749,000. How nice of them. Not a single person looked at it. They lowered it to $699,000. In the meantime they went to The Shore where Centex was having a “giveaway” promotion. They thought of buying yet another house because, “it’s such a great deal”. The salesperson told them it was okay if they hadn’t sold their house yet. They could just take out a 2nd mortgage. I would have punched that salesperson. The one smart thing they did is to not buy the 2nd house at The Shore. Their house in Fairlawn just sat. Their realtor talked them into lowering it to $599,000. They now have one offer. It is at $520,000. They are insulted. My boss told them to work with the possible buyer. They are mulling it over.
This gets better every day. I hope their sense of pride causes them to snub the offer. This couple sounds like they need a more painful lesson. Even at $550,000 they would “lose” $200,000 of those retirement funds they were counting on. This is a classic example of “chasing the market down”. I can’t wait to see how this finally plays out. Bye bye Jersey. The world has lifted your skirt and doesn’t like what it is seeing.
My boss’ reasoning was that there were a lot of Jewish people that lived in Fairlawn and they would keep the prices high.
Not that I’m sterotyping or anything, but my perception is, The Chosen didn’t amass wealth by overpaying.
Not that I’m sterotyping or anything, but my perception is, The Chosen didn’t amass wealth by overpaying.
Or by tipping generously…
/bitter ex-valet
Uncalled for an this fine web site. Keep your religious, racial, or other stereotypes to yourself.
Usually, when someone says, “I don’t mean to be an a$$hole, but…”, they’re going to be an a$$hole.
But at least nobody’s stereotyping!
Sorry to lay my “San Francisco values” on you!
MrBubble (AKA hard-drinking, fighting Irishman with a bit of Scotch thrown in for parsimony)
Thank you Man from NC. Civil discourse is what makes this blog far and above most. When we descend into stereotyping, we’re just falling for the divide and conquer strategy.
Let’s also add gender stereotyping to the keeping it to yourself on this fine blog.
Remember, just because some FB (or their advisor) uses steretyopes to justify their stupidity, you are not allowed to crack wise about it. Any attempts at any humor, except possibly that directed at oppresive white males and/or issued by authorized ethnic comedians (please call the NAACP/La Raza for an updated list) will be severely chastised if an average womyn, hyphenated American, or undocumented, hard working, family loving, god-fearing, immigrant might be offended.
my hood may get a high 3 handle soon 2 foreclosures and short sales at 399999………..22151
Don’t “see” nuthin’ but Tule fog right now….
Market in this southern Sierra mountain hillbillyburg is non-existent. A $900,000 land buy (huge deal for this locale,) is being held up by squatting pot farmers who claim they have a handshake lease and refuse to evict. The buyer’s agent is trying to recruit “enforcers” to persuade them to leave voluntarily.
There are for sale signs all along the road, but they’re all starting to fall apart after exposure to the elements and resentful locals with shotguns. Last house sold was in April. As the foreclosures pick up, we’ll get a few whitetrash-on-a-budget-cut people living out of travel trailers, but one good snowy winter’ll put an end to THAT. I love this place because no matter how many real estate ladies try to pump it, it always goes back to its intrinsic value…which is basically how much it’s worth to YOU– and how hard you’re willing to work (physically, yourself) for it.
It’d be nice to know where you are referring to, as the Sierra Nevada Range spans more than 400 miles. Thanks.
“Don’t “see” nuthin’ but Tule fog right now….
Market in this southern Sierra mountain hillbillyburg is non-existent”
Sounds like some Sierra foothill settlement or farm township along the 99 fwy in the San Joaquin Valley portion of the central valley such as Tulare,Visalia,Taft,Porterville,Delano., Farmersville, ect. Just a guess.
In Charlotte, there is more indication that it’s not-so-different here. I try to keep my mouth shut at work about housing issues. But a few days ago my co-workers were talking about the subprime mess on their own. One person mentioned a Realtor friend that has a listing with a seller who has admitted to “having made his last payment” — it sells, or the bank gets it. Then proceeded to talk about spec builders he knew that had overpaid for land and are sitting on overpriced inventory.
The Charlotte Business Journal is reporting 8% of inventory is foreclosed property. CBJ Article
One home on my street has had several reductions, and is now 11% under the original list price, that was equivalent to the house next to it which sold this summer.
Mozo Maz, yea things are changing here. I`m tired of all the growth so I hope it comes to a complete stop. The traffic sucks here. I`m wondering about all the downtown condos?
Lane
Mozo — thanks for that report. I have two relatives relocating to NC — one to Charlotte, one to Raleigh. Both think that their areas are not going to suffer Post-bubble Price Disorder and I’m trying to feed them what I can to help them understand the market without the fog of happy-talk.
Met some people in an electronics store last weekend. We were all redeeming cards for free free thumb drives/memory cards that they sent to area to get bodies in the front door. She does high tech placement - said her office was flooded with recent lay offs in the past few weeks. These were fairly senior people so a lot of really good jobs were lost. NoVA area.
Not all DC jobs are safe.
Lemme guess, Micro Center on Rockville Pike? I got mine too! Great store - kicks CompUSA’s ass…
Bingo - though I wasn’t impressed by the prices. I still think we should have a DC area get together. Seems to be a lot of us.
Let me know.
The Lodi CA realtor who told me on 11/14 that he thought the market had reached bottom (since the dow was up and Walmart did well), lowered the price on his listing on 11/15. What conviction!
Local Lodi Lowdown
Hi Everyone: I’ve been lurking for more than two years now. I know there are a few Torontonians and other Canadians reading Ben’s blog. We know that the market will eventually turn in Toronto. But how much longer will we have to wait? The decision by the CMHC to allow 40 year mortgages has dragged out our bubble. The frenzy over the Bloor Street condos seems to indicate that we have a way to go yet. I’ve stopped telling my family that I’m waiting for the market to turn, even though I refuse to buy under these conditions. Any predictions or words of support from other readers in Toronto?
IMO, scenes like this condo thing in Toronto are a sign that a slide is near, and the correction may be swifter. Remember, it wasn’t too long from condo party DJs and people camping out in Florida to the first reversions. It moves quickly downhill from there.
Thanks for the response, Ben. I try to take comfort from the situation in the UK, where all of the commentators are suddenly calling the popping of the bubble there. The rush on Northern Rock seems to have played the role of the needle. The market actually did slow down in Toronto in 2006, but it received an injection from the CMHC decision. I’m suffering from crappy landlords in the meantime, unfortunately. We got pushed out of our last place because the landlady said “her husband was moving into our unit.” Ha. I’ve already seen our old place advertised as “executive accommodation” (same old apartment with a few sticks of IKEA furniture and some crappy art thrown in). Our new landlord is a jerk. I’m tired of increasing the value of my landlord’s property with all my yardwork and maintenance!
Toronto has been through real estate busts before, particularly in the early 90s, but this town is full of people who haven’t lived here long enough to remember them. But then I know some people who have but are still buying at these ridiculous prices. At least I have a good landlord and decent rental accomodations in which to wait this craziness out.
I agree with your reasoning. However, in Vancouver there have been people camping out to buy since 03 or 04 until now and still no correction. The first time I saw people camping out on the news I thought that it had to be a contrary indicator and the top was in. As it turns out, I have to admit that many of those who camped out in 05 and even in 06 are up substantially. The Vancouver market is totally nuts.
The attitude in Toronto, and in far more bubbly Vancouver, is that since prices in the US are going down but not in their cities, that is proof that “it’s different here” and prices never will go down.
You will recognize this attitude in US markets like Seattle, which has now joined the parade of declines. Also Calgary and Edmonton in Western Canada, which thought they were immune because of all the oil nearby.
Also the recent spectacular climb of the CDN$ against the US$ has provided yet another rationale for the “it’s different here” thinkers, when in fact anyone with any grip on economics knows it’s bearish for the Canadian economy and thus for real estate.
It’s also funny how many Canadians think that “there is no subprime lending in Canada”. As if all the lower income Canadians buying in to the real estate bubble are somehow just intrinsically more creditworthy than lower income Americans.
Yes, when people say this, I explain how my partner was able to get a mortgage for the family house in his brother’s name. His brother is mentally ill and his only income is his disability cheque! All of the brothers are paying the mortgage, but the lender does not know this, and did nothing to verify employment or income in the application process. People also think that there is no appraisal fraud in Canada, for some naive reason.
If it’s any consolation, Alberta is starting to really get creamed. Since June, Calgary prices are down about $ 60K on actual sales. Worse than that though, the market is in total gridlock with numerous listings and much less sales than even just a few months ago. I’m expecting at least a 50% haircut within the next two or three years along with intense agony and suffering. The banks and CMHC should be tarred and feathered for being such reckless and ignorant enablers to the coming unwind and i sincerely hope they get a comeuppance in spades. Take care and be sure to stand aside and also remember that if you own an alligator (house) anywhere and can’t sell it you become a prisoner to the alligator. A lot of people already pulling up stakes in Calgary but can’t get rid of their place as well. (Sorry for the rambling but typing as it flows)……..
Thanks for the responses everyone. I was very surprised, and happy, to see the sudden decline in Calgary sales. I’m just sad about still being a renter. I know that in theory it can be OK, but I really like to garden, and it sucks to put so much money and effort into a place that isn’t my own. We’re going to wait though, and hope that things unravel sooner rather than later.
Wow- We are looking at moving from Boston to Calgary in the next year (job transfer that may happen). I have been waiting for Boston to get sane since 2003, and Calgary is just starting the process? I may be a renter for life at this pace!
Just looking at the map, Calgary reminds me of Gainesville, FL: a town surrounded by an astonishingly enormous void of empty land. How you could have any hope of lasting real estate price gains is beyond me.
It’s not empty! We’ve got some hay, and baby cows, . . . and Bubba.
Hehe. Down here we have Gustafson dairy. Everyone is convinced the man and woman on the label are incestuous twins.
Westchester/Dutchess/Putnam counties showing signigicantly more FSBO signs, nearly everywhere. I think this accounts for the dropping inventory shown on OSG/Hardtack.
I can’t speak for other states but sales volume literally crashed for September in NY and much of New England. I say crashed because we saw declines of 20-50% for almost all counties. Thats a crash by any measure.
A couple of weeks ago I drove through Victorville, CA (north in I-15). I remember passing by two new furniture “mega-stores”. Their parking-lots were virtually empty. It was about noon, on a Saturday.
I expect to see empty buildings to go with those empty parking-lots the next time I drive through there.
Here in PHX, furniture stores are falling left and right. Started seeing ads for yet another on TV last night… advertising “upto 90% off on select sofas and sofa sets”.
lol, “list” $2899, sell for $300, which is still retail! Hahahaha!!! Hope their rent isn’t too high.
“couple of weeks ago I drove through Victorville, CA (north in I-15)”
Victorville is nothing but a 15-20 mile long strip pasted along the I-15 and crammed with shopping and strip malls, vast tracts of new mcstuccos, and more shopping malls . I don’t think there is one single large factory or industry anywhere in the entire victor valley.
Soon the tumbleweeds and coyotes will reclaim large sections of the hi-desert, too late to save a lot of prized yucca trees and priceless sagebrush which were bulldozed and ripped out for cheap Mcstucco crap housing. They’ll be giving away these 1-10 acre properties for pennies on the dollar when gas goes up to $5.00 a gallon.
Speaking of pipe dreams. A house just went up for sale down the street from me. The lot is gorgeous with spectacular views of the Brazos River valley. However the house is a generic McMansion.
From 2004-2006 the house sat there for sale listed at $375. My wife and I looked at it but were not particulary impressed with the house although the lot is nice. Finally in 2006 this evangelical homeschooling family with 6 kids from CA bought it thinking they were going to start some mission in Waco. Don’t know what they paid but the county currently has it assessed at $320 and around here tax assessments follow market value fairly well. They put the house in the name of their own personal “ministry” to get out of paying any taxes:
https://actweb.acttax.com/act_webdev/mclennan/showdetail2.jsp?can=180033070007092&ownerno=0
A year later after putting some serious $ into exterior “improvements” such as a fancy brick and aluminum fence and a new pool we suddenly saw a moving van at the place and a day later they were gone. Seems they decided to move back for California.
Now the house is listed at $475 which is at least $100 more than any other comparable house in the area. And those other comparable houses themselves tend to sit for a year or two before selling.
http://homes.realtor.com/realestate/waco-tx-76633-1089044653/
I can’t imagine what that guy’s note looks like. But the idea that he is going to sell this place for a dime more than $300 in this market is absurd. They are also too cheap to keep the maintenance up and the pool is now green scum.
I talked to a neighbor who knew them and he said they listed it at that price because their ‘retirement’ is tied up in that house and they needed to get it back out.
Um…yeah. Better think about putting those kids in public schools and finding real jobs folks. Because no one in Texas is ever going to pay for your retirement in California.
CA equity locusts have all their retirement tied up the house , so common when I lived in CA “why invest in the stock market RE is the way to riches. “
I belong to a professional organization based in D.C. At a dinner three years ago the organization’s accountant, a young, 40ish guy, told me that he was planning to use his house as his retirement. We argued back and forth for awhile, but he was adamant. I was very bothered that our organization’s finances were being managed by a guy who was riding a bubble. He’s still working for the association; I’m sure that his “retirement” is deflating, and I’ve decided not to renew my membership in the organization after 2008 (they’re raising the dues again.)
and I’ve decided not to renew my membership in the organization after 2008 (they’re raising the dues again.)
Of course they’re raising your dues, the acct. needs to pay off his HELOC and his ARM just adjusted!
They are going to need divine intervention to get that price . LOL
“Rheem Heating and Cooling Division announced late Thursday that it will lay off 125 workers at its Fort Smith plant effective Nov. 26.
Happy Thanksgiving - guess they got Rheemed, all right.
From New Jersey….
http://www.nj.com/starledger/stories/index.ssf?/base/news-2/1194501074231620.xml&coll=1
Builder defaults on loan of $9.5M
The developer of an upscale condominium building that opened in downtown Newton in spring, but since then sold only a few units, has defaulted on a $9.5 million loan, according to a lawsuit.
The Residences at Aberlour, a six-story building at Routes 206/94 and Trinity Street, initially marketed its one- and two-bedroom condos as age-restricted to residents 55 years old and older with prices in the $350,000 to $400,000 range.
With sales anemic, Newton officials in the summer agreed to eliminate the age restriction, and the developer reduced prices and shifted its marketing to young professionals. Still, only two or three of the building’s 45 units have been sold.
…they listed it at that price because their ‘retirement’ is tied up in that house and they needed to get it back out.
The “I need this price to bail me out of disaster so that’s what I’m listing it for” attitude. Yeah, you dictate to the market. Good luck with that.
“A growing number of agents – spurred in part by current market conditions – are crossing the street to work exclusively for the buyer.”
Not sure how it works. Sounds like a buyer will pay that agent out of their own pocket, otherwise it’s not a buyer agent at all, but a seller agent who shepherds the shopper around, and ultimately is paid out of the proceeds based on the seller agent contract.
And assuming it is truly a buyer-paid agent… there are zillions of houses for sale…why on earth would I pay a re salesperson anything when I could simply put all the listing agents to work to compete for my attention, and to ultimately trim their own commissions to make the deal?
2 observations from Seattle.
1. Calling up a non-WaMu banker to put some inheritance money into a CD. I mentioned that “I didn’t want to do anything stupid with it.”
“Oh, you mean like buy real estate?” the banker shot back.
Nice change. WaMu tellers kept telling me to buy a house when I bought a CD. I took out a nice short maturity and they never saw it again.
2. I handle corporate matches for the non-profit that I work at. I learned from a mortgage company that since they were suspending their 401K for several months they wanted to hold off their match to us for those months also.
Cracks are showing…
I just got my new tax assessment in the mail. It’s $40k ABOVE what I just paid for the place in July! Talk about greed. The taxes here in WA state are such a joke, I’m about ready to abandon ship and find a new state. The infestors are crawling around here right now, driving prices to new highs. Totally ridiculous.
Bantering: If prices are going down in Washington, the assessment must be wrong. I would fight it. The only silver lining to a falling market here in California is that people who bought in 2005-2006 are receiving lower tax assessments automatically. You should too.
http://portland.craigslist.org/mlt/rfs/480742859.html
Portland’s fancy Johns Landing Area in SW near the river.
$309900 FABULOUS ROWHOUSE - 2 MASTERS - SOLD FOR $425K IN 2005!
The SD Union Tribune sdhomes Buying Guide has served up another classic realtor shill piece this weekend. My own editorial marks are added in italics…
Discovering the true value of home ownership
By Steve Rogers
President & CEO, Prudential California Realty
While there are those who seek safe harbor from the changes currently roiling the real estate market, our Prudential California Realty agents tell us many are rediscovering a constant value while also catching a falling knife — a long-term commitment to owning their home at the possible cost of catching a falling knife and riding the market down for the foreseeable future. With short-term investments sagging and short-term investors scambling to find greater fools on whom to unload their falling knives, the idea of homeownership has become more and more appealing so long as you don’t mind catching a falling knife. That’s because the return goes so very far beyond financial rewards which, unfortunately, actually become financial penalties if you happen to catch a falling knife. To own a home is to make a priceless investment in our lives subject to the risk of catching a falling knife — and a confident affirmation about our future which also hints at ignorance of the fact that home prices are dropping across all of Southern California.
Blah, blah, …, BLAH, …
Oops! I missed one. I feel obligated to clarify that Mr. Realtor did not actually mention “falling knife” anywhere in his original blurb…
…our lives subject to the risk of catching a falling knife — and…
That really funny…had visions of the circus woman tied to a spinning wheel…while the blind folded knife thrower… hurls the knifes.
Dream city out of reach without any dream jobs
November 18, 2007
After being beset by wildfires, home foreclosures and political scandals, it’s easy to lose a sense of perspective and forget that most people still view San Diego County as one heck of a place to live.
They just can’t afford to move here.
http://www.signonsandiego.com/uniontrib/20071118/news_1b18dean.html
pssst…
Tijuana-adjacent
maybe you very much need the mules painted like zebras, to attract new humans to your ciudad?
According to the U.S. Census Bureau, there has been a net domestic outflow of more than 130,000 people leaving San Diego over the past six years.
And still outflowing …
“After being beset by wildfires, home foreclosures and political scandals, it’s easy to lose a sense of perspective and forget that most people still view San Diego County as one heck of a place to live.”
LA county is coming down in average median prices and is now at $500,000. The gap differential between LA and SD counties is inching closer. SD is the better county overall than LA(less crowded, more open spaces, greener, less gangbangers). The quality difference will eventually assert itself and soon LA Cty average RE prices will be at same level as SD or even lower. And OC will fall to close to SD as well.
I have been to all three counties, and all over the IE as well, and my view is LA County is way overrated and overhyped. It is in fact 50% third-world s*ithole. In next several years, maybe as early as 2009, LA county will be priced lower than SD. Fraud ‘premium’ alone accts for 10% of LA median Prices.
Good article. PB you should call some of these editors and offer to explain the real story. The way write you need your own thriving multimedia business. Radio, lecture, blog reports and speeches.
Did I miss anything?
Most of the art market in the US — painting, sculpture, photos, printmaking, decorative arts, custom jewelry — is too high. Like the housing market, it exists in several strata, from “starter” to “jetsetter.”
A few observations:
The artists I know (not famous, but moderately successful, with gallery representation across the US), are still getting exhibits but don’t seem to be selling as much. This can be a little difficult to gauge, as each exhibit is slightly different, so the response from collectors will vary as well. But there seems to be softness at this level, call it the $500 to $20,000 per-piece level.
Furniture / decorative arts: stuff is still moving, but this could be because of the devalued dollar. Lots of Canadian, Japanese and European collectors are seeing value here, even with prohibitive shipping and VATs. Interior decorators are still buying a fair amount, too — but they’re buying for the rich and super-rich, for whom a retail price is still not an issue (the decorators typically get a discount, but charge their clients full price).
High-end art: still seems ridiculously inflated to me. While some auctions and artist markets are soft, there are others that still seem very bullish — such as the Jeff Koons pieces we’ve discussed (e.g., laughed at) recently. High-end art is a trend-driven house of cards, so it could buckle at any time. I keep expecting the bottom to drop out. But it hasn’t yet.
This was supposed to be in response to Aladinsane’s post about Peak Art.
Don’t know why it showed up down here.
C’est la vie.
Pensacola, Florida
Local journalist declares that homes are 16% overvalued in Pensacola and references an article in Smart Money magazine of property values. Local realtors go ballistic. Here is a comment from a Realtard about the article:
“I am surprised that you would quote an out of town source regarding homes being currently overpriced. They really do not know and neither do I. I know that you know that real estate values and markets a VERY local. I am a Realtor and am doing an analysis of the local market every day and I sure would not make a statement like that. My crystal ball was broken a long time ago, when I was much younger, and I have not been able to replace it. I am sure that Smart Money doesn’t have one either. But, I do believe that making statements like, homes are 16% over valued, has gone a long way towards hurting people who are trying to sell their homes. It has also hurt potential buyers, because they are scared to make a move and, therefore, do not buy a home when the opportunity is at hand. Another question I would ask you, do you have another agenda? I know that you have a liberal leaning and are a Democrat and I am convinenced that the Democratic Party wants the economy to look bad/ drive it down, so they can gain power.”
The journalist left this response in the comments section:
“The story I referred to is at the top of the Smart Money site and discusses 330 areas of the nation.
I’m a newspaperman. I’m supposed to tell the truth as best I know it. I’m not supposed to be a shill for any industry.
I have found other information from Smart Money to be accurate and I think this survey is on-target, too.
Having lived here 29 years and having bought four homes here, I think I know a little about the market. I also talk to Realtors for their experiences and insights.
My take is that the asking price for many, many homes is ridiculous, with too many people thinking they’re going to get post-Ivan prices when the reality shows they won’t. The number of sales continues to drop, 406 last October compared to 505 in October 2006. We have about 18 months inventory of homes.
I more than anyone would like to see the housing situation get better. Our economy depends tremendously on housing and related industries, and we’re not going to get better until they get better.”
So many humans just can’t figure out that we are animals. WE have population booms, patterns, etc. Bubbles are natural, but so many people can’t seem to grasp when they are inside of one.
Global pollution is a reality, compared to 2000 years ago, we pollute a lot more and have killed off a lot more trees. Yet so many people don’t see the need to try and cut back / conserve / reduce.
October Sandicor SFR sales data is out for San Diego. There was roughly a 4 to 1 ratio of new resale listings to current sales, whether measured by numbers of homes or total values (by new listing price / sale price).
For the zip code where we live (Rancho Bernardo W 92127), the median sale price was $749,000, over 26 homes sold (versus 67 new resale listings). That contrasts rather starkly with a current median list price (on ziprealty.com SFR resale listing inventory) of $1,250,000.
.pdf file link:
http://www.sandicor.com/statistics/stats2007/10-2007/sfd-10-07-stats.pdf
Well, the housing bubble has even permeated high culture apparently. Arizona Opera is in the middle of a run of Die Fledermaus here in Phoenix. For those who don’t know it, it’s a light comedy and the third act takes place in a jail with a highly inebriated jailer who rants on about everything under the sun. Though set in 18th century Vienna, this scene is always updated to include contemporary topical references to politics, celebrities, etc. Last night the jailer ranted “The jail is being foreclosed on! Where’s a good subprime mortgage when you need one?” Not everybody in the audience was laughing (I was, of course.) Janet Napolitano, AZ governor, was in the audience last night—not sure whether she was laughing or not.
I went to an open house near my rental. Asking price, $775,000. I was the only person there and on the list. The Realtor and I had a heart-to-heart.
I explained that my wife and I are in the market and have nearly $75,000 down in the bank, ready to go, earn roughly $180,000 together, and would prefer to start building equity than rent. But that sellers were going to have to start getting realistic about their prices and that we weren’t going to take the bull inflated prices of the last few years because of all the funny money loans. Those days are gone and now people with cash and income are in control.
It was great. I countered everything she pitched at me with data and logic. Ultimately she asked what I thought the place was worth and I said, “Well, generally homes are worth between 100 and 125 times what they can command in rent. We rent a similar place for $2100, so somewhere between $210,000 and $300,000.”
*Jaw Drop*
She said we may wait a long time for the foreclosures to hit this area. But I countered with, “Come they will, just like in the early 1990s downturn. And we’re perfectly happy to build equity in the mean time by the old-fashioned method of saving part of our income. And we’ll be ready.”