The Aftermath Of A Boom Run Amok
The Bend Bulletin reports from Oregon. “Frustrated by a season of sluggish sales, Brooks Resources Corp. put the last three unsold townhomes in its prime RiverWild subdivision at Mt. Bachelor Village up for auction Nov. 2. It was a bit of a bust. Only one of the three sold, and at the minimum bid — more than $200,000 below list price. The other two attracted not a single offer.”
“That, for Central Oregon’s largest land developer, was a sign of the times.”
“Now, with an overhang of unsold inventory glutting the housing market — the aftermath of a three-year boom run amok — Brooks, along with some of the region’s other large builders and developers, is trying to adjust to a slump that Brooks CEO Mike Hollern believes may last another two years.”
“Whether the downturn lasts that long, or is shorter or longer, of course, is anyone’s guess. Hollern’s 40 years of experience in the local housing market is telling him to tread cautiously through the minefields.”
“‘I wouldn’t be about to predict that we’re at a bottom,’ Hollern said. ‘I know that’s not what the real estate community likes to hear. But the problem is, you don’t know when the top occurred until after it’s there, and you don’t know the bottom has occurred until after you’ve been through it.’”
“Buena Vista Custom Homes, a Lake Oswego-based company that billed itself as one of the nation’s fastest-growing builders when it moved into the Bend market in early 2006, announced Thursday that it will put all 200 of its unsold homes in Oregon up for auction next month, including 29 in its brand-new east-Bend subdivision.”
“‘We were overaggressive and too slow to react to the changes in the market, and that has created an oversupply of finished homes,’ Buena Vista President Roger Pollock said in a company press release. ‘Buyers are going to get amazing deals, but we simply have to reduce our inventory.’”
“Many of the speculators and investors who accounted for up to a third of purchases in subdivisions like NorthWest Crossing during the boom years have fled the ‘buy’ side and become sellers, inflating inventory levels and forcing the region’s developers and builders to change course.”
“When NorthWest Crossing started six years ago…lot prices that started ’slightly below market’ in the early years in the $50,000 to $70,000 range ballooned to $200,000 in the peak boom years for the best lots, Hollern said. At the same time, the subdivision’s designated builders built ever-larger homes with ever-more-expensive amenities in the subdivision’s neighborhoods because they could sell them.”
“The price escalation has pulled into reverse, Hollern said. Last year, the prices on lots sold in NorthWest Crossing averaged $218,000, the subdivision’s general manager, David Ford, said. This year, they’re averaging about $189,000.”
“‘Nobody quite knows where the price is going to settle down,’ Hollern said. ‘If you bought something in 2002 for $250,000 or $300,000 and you missed selling it for $750,000 two years ago, and now you have to sell it for $400,000, is that a bad deal? There was a peak there that some people missed if they didn’t sell. And if they bought on a peak, that’s kind of tough. So prices have to come back to, I think, to a somewhat more normal level.’”
“Are they there yet? ‘No,’ he said. ‘I don’t think so. I think there are more adjustments.’”
The Oregonian. “The Portland region remained a rare star in the gloomy U.S. housing market by reporting yet another annual price increase in October…despite a bloated inventory of unsold homes that would typically drive down prices. So far, sellers have refused to reduce their prices dramatically even though (the) wait is up by more than one-third from a year earlier.”
“Some sellers haven’t had much luck. Broker Terry Stewart listed a 1966 ranch house for $250,000 in May. It’s (in) a working-class neighborhood where crime is a growing concern. She got one offer — which wasn’t acceptable — and then the buyer pool went dry. The owners dropped the price to $245,000, then $240,000.”
“In September, the price fell again to $229,000. On Friday, the couple who owned the home closed on a sale at $223,000.”
“Stewart said that sale was typical for what she’s seeing. Home sales she works on are off about 10 percent from what they were a year ago.”
“The couple found a bigger place in Happy Valley that had been through similar price drops, Stewart said. The 2,170-square-foot home started at $409,000 in April. Stewart’s clients bought it for $355,000 in October. She said buyers remain out there, but ‘if you’re overpriced, you’re sitting and sitting.’”
The Columbian from Washington. “Clark County home sellers seemed to be backing down from a long face-off with buyers over asking prices, an October real estate report suggests.”
“The median selling price of houses sold in Clark County dropped sharply last month. At $245,000, the October median price of new and pre-owned homes sold was 7.5 percent lower than the $265,000 median price for the same month a year ago, according to appraisers in Vancouver.”
“‘It looks like sellers are finally yielding,’ said Tim Duy, an economics professor at the University of Oregon.”
“The volume of homes sold last month also continued to be lower than 2006, but that trend has been under way for several months. Kathy Rylander, an associate broker in Vancouver said she’s been most surprised to see slowing sales among inventory that was once considered somewhat affordable, priced between $200,000 and $500,000.”
“‘It’s shocking to me. That’s usually a pretty good price range,’ she said.”
“Locally, ‘it’s a good time to buy,’ Rylander said. ‘Now that we see sellers are reducing their prices, that should be an incentive.’”
The Heraldnet from Washington. “Tom Callaghan remembers when Snohomish County developers couldn’t build houses fast enough. And Callaghan, a real estate agent, couldn’t sell them fast enough. But in the space of a year, he has watched a once sizzling market smolder.”
“Those who are buying have more than 50 percent more homes and condominiums throughout the county to choose from than last year, according to the Northwest MLS. It’s a boon for buyers and a burden for builders who are stuck with too many finished houses.”
“Some builders are lowering prices and some are offering upgrades, cars and flat-screen televisions. The most common come-on is buyers’ bonuses that range from a few thousand dollars to $100,000 in at least one south Everett development.”
“‘Builders are being beaten up so badly,’ said Callaghan, an agent in Lynnwood. ‘It’s like having a gun pointed to their head. They just need to get out of that standing inventory, step back and regroup.’”
“Drive 35th Avenue SE from Everett to Mill Creek and see a glut of new developments, most offering enticements to potential buyers. For several miles, nearly every cross street and side road contains two or three signs plunked in the ground advertising new homes in the area.”
“In a healthy market there is usually about a year’s supply of vacant lots. Right now there are 22 months of inventory in the county, according to New Home Trends. The inventory of homes under construction has doubled since last year to about a 61/2-month supply.”
“Competition for buildable land had been stiff. Developers paid top dollar for vacant land, and in order to make a profit, they have to build and sell a house for a certain price.”
“‘It got to the point property kept going so high it began shutting out a lot of people,’ said Vern Holden, a broker in Mill Creek. ‘When an entry level home is $500,000 — come on, half a million for a newly married couple to buy a house? It could only go up so far and it did.’”
“Buyers, however, shouldn’t expect those deals to stick around much longer, said Todd Britsch, president of New Home Trends. For buyers, now may be the best time, he said. Many of the incentives will likely disappear after the first of the year. Sales typically slump in the fall and pick up each spring.”
“‘Builders are very, very nervous,’ he said. ‘Buyers are sitting on the fence waiting on the shoe to drop and the market to absolutely collapse. It’s not going to happen.’”
The Juneau Empire from Alaska. “Alaskans are worried about the extensive media coverage of housing problems in the Lower 48, and that is undercutting confidence here.”
“‘Folks want to know if Alaska is heading for another market crises like the one we experienced in the mid-1980s. The answer is no,’ Dan Fauske, AHFC’s CEO told the Alaska HomeBuilders Association at the group’s annual meeting. ‘The 1980s crises was an economic crisis, not a housing crises. Today what we have is a cooling off of the overheated housing market from the past several years.’”
“Fauske said that Alaska has only 11,000 of 92,000 total mortgages that are considered sub-prime and only 2.7 percent of current mortgages have adjustable interest rates.”
“Housing prices in the Matanuska-Susitna Borough have dipped 4 percent to 5 percent, and the growth in Anchorage home prices has slowed to about 5 percent over last year. But those are adjustments to an overheated market over the past two to three years in both areas, Fauske said.”
“‘We’re…coming off peaks in the market. Until about a year ago, our state’s housing market was chugging along extremely well, too well. In many areas of the state it was a seller’s market,’ he said. ‘Now more housing units are on the market for sale or rent, they’re staying on the market a little longer, and depending on how urgently an owner wants to sell, prices are likely to be adjusted downward.’”
“Bankers may have been less diligent than they arguably should be because they wanted to help their customers. New generations of younger bank officers don’t remember the 1980s. ‘In those days the only new home that a builder could finance was a pre-sold,’ Fauske said.”
“‘It is not likely that Alaska will escape scot-free from the economic squeeze being felt across the nation. Like in other states, we’ll see adverse consequences of the national housing market, which is shaking the confidence of consumers and the mortgage industry,’ Fauske said.”
“I am selling my beautiful Orbea Ordu. This bike is a light fast beast. Unfortunately due to the horrible real estate market conditions, I built a house and failed to sell my old house. Which makes me the current owner of two homes. My wife hates my bike and says that I need to sell the bike or go life in the empty house. ”
http://cgi.ebay.com/Orbea-Ordu-Triathlon-Bike_W0QQitemZ250189696937QQihZ015QQcategoryZ98084QQssPageNameZWDVWQQrdZ1QQcmdZViewItem
Deals on ebay because of this mess…
OOPPPSSS - meant to post in the bits bucket - you can delete and I will post there
Speaking of real estate-driven problems, I just got off the phone with Tucson Water. Nothing wrong with the H2O here, but there’s this vacant property in the next block that has a mondo water leak. The water’s flowing into a public alley, and has been since at least Saturday.
Property’s owned by one of those whizbang investor types who bought the place, then did a lot split. A cheap-o house was built in back of the existing house, and both houses have been for rent since the summer. The water leak appears to be coming from Chez Cheapo.
Nevermind, maybe this does fit.
This seller is in Utah - Where is there is no bubble?!??!? LMAO!!
My bike has survived three LTR’s. If I was this guy, I would tell the wife “later!”
LOL!!
Maybe a good barometer for how out of wack a country’s economy is by how much people pay for a fricken bicycle. $6500? Jeez…….
No doubt….
My kid got a pike from grandma, who got it at Wall-Mart. It wasn’t assembled properly… a keeper nut was missing from the hub. So, I take the bike to the local bike shop to get a nut.
Salesman looks at me and says what I have is not a bike. It is a toy that looks like a bike. I look him in the eyes with a “shut the f’ up look” and say “just get me the nut.” He shuffeled off. One more word from him and I would have dropped $2 in gas to get the $1 nut somewhere else.
“My kid got a pike from grandma” of course should be bike.
I got like 4 hours of sleep last night, and just can’t seem to type today.
Was it one of those sound activated singing pikes?
He was right. the crap they sell at Walmart are bike-like devices, not bikes. Complete trash.
I used to work as a bike mechanic. The language we used to describe Wal-Mart bikes cannot be repeated on this blog.
Odd.. it has two wheels, pedals, handle bars… My kid hops on it and pedals off to play with friends, hopping curbs and grinding off the tred while skidding to a stop on the sidewalk… just like the bikes I had when I was a kid.
It isn’t like he’s training for the olympics or doing the X-Games. He’s just going to ride over to his friend’s house than ride around the neighborhood.
Why, exactly, is this not a bike?
Because a bike shop did not make enough comission off of it?
“I used to work as a bike mechanic.”
Bike mechanic? The things cost like $100. If it breaks (probably after 10 years), it costs more to fix, so you just go get a new one.
This bike shop stuff reminds me of the same crud I hear from elecronics store upset Wall-Mart is undercutting them on price, and from groceriers upset Wall-Mart is undercutting them, and from record shops and from greating card stores and from hardware stores….
$500+ for a bike is just insane.
Darrel in PHX,
I am a huge bike nut, however you did right buying your kid a department store bike initially. I’m guessing your kid is still growing at the rate of several inches per month. Also, I had to buy my first high-end bike with my own hard earned money. You bet I took darn good care if it!
That’s fine, as long as you’re happy throwing it away when anything goes wrong. It’s a viable strategy if the kid is only going to have the bike for a year or so.
The old Schwinns from your youth were actually substantially better bikes. They were heavy but could hold up to abuse. The walmart crap of this era will fail in short order, and it’s not really meant to be repaired. I’m not completely sure it’s meant to even work nine times out of ten.
Daryll:
Its NOT about a $500 bike its about weight…….same with being a dj, a $100 bike weighs 2x or more then the $500 bike, which would like to pedal or push up a hill?
My DJ small 12″ powered speakers cost $1900 a pair, sure i can buy a pair for $900 that weighs 20+lbs each more, but which would you like to carry up a flight of stairs or try and lift on a speaker stand by yourself…35lbs speakers beats 57 lb speakers anyday….the money is really worth it, not to mention my back.etc.
I will second.. Wal-Mart does not sell bikes.
I had bought a ‘bike’ there that had lots of things fall apart on it, including the brake line fraying and coming apart without warning.. Eventually I discovered that it had been recalled because the front end would collapse when you hit something (curb, bump, etc) and put your face in the ground. The manufacturer was broke, so the recall was being finished by some insurance company. I mailed them the front fork, they sent a $65 check.
Check your products out at recalls.gov. And buy a real bike; the savings are not worth your life or bodily injury. I got a cheap Trek for $300.
“I used to work as a bike mechanic.”
But riding a bike is for excercise… right? Unless you’re trying to beat the other guys in a race to prove you are better, or just impress them with the name on the frame to prove you are better, who cares how much the bike weighs?
The bikes are okay for kids but I crack up when I see a couple walk out with matching bikes. We’re going to start riding and lose weight! You can bet those rigs will never get out of the garage, lol.
Kids know good bikes and bad bikes. I was really into them way back when. You are correct, the old Schwinns were well built (I had one for 10 years, sold it after starting to college, wish I still had it) and could take heavy duty abuse. But I always washed my bike regularly, cleaned the chain regularly, took the wheels off and oiled the axles (and that was a job!). I also had a racing bike, it was good but not the high quality of the Schwinn, still fun to ride though.
I’ve seen the front wheel pop off a cheapo bike, seen the brakes catch on fire, they’d get out of alignment. Hmmm, I can just imagine how the WalMart bikes hold up.
I did one better: my bike was sitting in the trash. I was driving home one day and found this 80’s vintage Raleigh 12 speed street bike. Once I got it home and cleaned it up, it’s actually a really nice bike, weighs hardly anything, came with lightweight aluminum wheels, and what looks like relatively new “puncture resistant” tires. It is probably the best bike I’ve ever owned and even though it is this butt-ugly puece color, I bet it isn’t all that much different from some of the $1,500 bikes in the local hipster bike store.
Some of the bikes in the aforementioned store are as much as $8,000. Sorry- but if you spend that much on a bicycle, you deserve to have your head examined or at least be Lance Armstrong.
In regards for Wal-Mart… I agree that their bikes are pretty crappy. But for kids, they’re dandy. For adults, well you’ll get a year or two out of them.I owned two of them and the things just loosen up and fall apart. Then again, most adults only ride their bikes once a year. Not bad considering these cost maybe $50 new.
Just recycle it when it’s done. I have a $1K mountain bike, and places to ride it. It’s a different machine. Both have their place.
It depends on how hard the kid rides, and who can fix it when (not if) it breaks. Ideally, Parent will teach Kid how to fix it (worked for me).
“Some of the bikes in the aforementioned store are as much as $8,000. Sorry- but if you spend that much on a bicycle, you deserve to have your head examined or at least be Lance Armstrong.”
Don’t worry, but next x-mas even the Wal-Mart bikes will be $8,000.00 USD.
Got all my kids bikes at Toys-R-Us. El-Cheapos, and still working just fine. Heavy? Relatively so, I guess, but I’m sure the bikes I grew up with were just as heavy, and I rode around the freakin’ world with’em.
My wife just bought me an El-Cheapo - I had been using her $300 Trek, but she wants to reclaim it for herself. My first reaction was to take back the El-Cheapo she bought and get a “real” bike. But you know what? I have strong legs, good mechanical ability, and I’m going to be riding with my kids around the neighborhoods and along the park paths. It’s gonna be just fine, as soon as I get my spandex suit, cycling shoes, and helmet, lol. Really, this phenomenon of casual sports players buying professional gear is laughable.
POint is, “walmart” bikes are not now or ever were made like the bikes of yore.
And primarily the reason the “walmart” bikes are so cheap is because the US doesn’t have manufacturing anymore and the chinese workers are paid sht.
So, while it is nice to give a kid a “bike” to ride the neighborhood, it is also very nice to have health insurance, a living wage, bills you can pay, good education, a fire department, a police department, and did I say Health insurance for all?
Point taken that many bikes live in garages and are only used 2x more or less. When the temp gets above 115, it kinda seems Not fun to ride around. Can’t say much for the “fitness weekend folks”.
Hi. This was very interesting. I’m with Darrell. Inexpesive bike for a kid who will soon outgrow it is fine. My only concern would be that it is built well enough to be safe.
we should boycout China and everyone will have a real bike, and it will be American, for $500.
And the once bike mechanic can be a bike mechanic again.
Down with Walmart and go our local bike stores!
The other problem with Oregon is that it is very vulnerable to a recession. I believe the biggest industry in the state is tourism.
We’ve debated that at length as well. We keep hoping that our economy has “somewhat” matured since the timber dependent 80’s but then we keep running really decent companies out of town? Typically tourisim jobs don’t support 700k mortgages. (Truthfully, not many jobs DO!)
As an observer from the Puget Sound region, I would say the employment base in the Portland area is far more diverse than the Seattle area. Especially if in include Vancouver, (WA).
Maybe it’s a grass is green perspective we both share, but I beg to differ on Portland’s “diversity” in employment base based on my customer base in manufacturing.
Sure we’ve got Starbucks, Peet’s, AND Tully’s…..
Seriously, beyond Nike, Intel, OHSU, and some Linus Torvalds groupies what else does Oregon have? Most of the semi industry that was meant to replace logging has downsized dramatically since the late 90s.
The customers I have in Seattle are in aerospace, transportation, biotech, medical device, packaging, Microsoft. Seems far more diverse up there by my standards.
Well, there are a lot more coffee shops in Portland, now. So that might help prop up the economy.
Not likely. News is the $4 coffee is out. Starbucks reporting dismal traffic over the last several weeks.
Micky D’s is jumping in with coffee’s and latte’s at low prices — they never miss a great opportunity.
Mickey D’s hopes to sell the stuff for a whopping $.50 off Starbucks. Yeah, someone is going to walk into the office carrying a McD cup instead of a Starbucks one, simply because of a stinkin’ $.50 savings… Puuuuuulease.
The Starbucks cup is a lifestyle choice that shows the holder is better than everyone else.
It will be like Wall-Mart’s flop trying to sell upscale fashion and message Ts. You miss the point!!!!! People go buy the stuff at the mall, with the logos and sayings and such, so that people will know the clothes DID NOT COME FROM WALL-MART. Poor people shop Wall-Mart (McD) and I’m not poor.
By definition, whatever Wall-Mart (McD) sells is what the in crowd says is “out”. You shop there??? Oh, you’re poor.
Starbucks is just a trendy way to take a royal ass-pounding. Do what I did. Buy yourself a auto/digital espresso machine. It’ll pay for itself in a year, and you’ll discover what good coffee should taste like. But the real bonus is you won’t have to feel like a sell-out, follow-the-herd, wanna-be Starbuckian pud-whacker.
Or just go to Starbucks ONCE and keep the damn cup! That way you simply slide your Mickey D’s cup into it and none of your co-workers need be the wiser.
conspicuous consumption
Or do what I do… take your caffine with high fructose corn syrup, carmel color and artifical flavorings (cola).
My ex used to drink Starbucks. I went in with her. When we go to the counter she ordered her decaf, low fat, mocha frapachino…. whatever. She looks at me. “Want anything?” I look at the menu… “NO WAY and I paying close to those insane prices for anything they serve here.”
Guy behind the counter smirks and says.. “I like the tips, but no way I’d buy here.”
actually, Mcdonalds recently beat Starbucks in taste. I’m not surprised. I’ve always felt that Starbucks tasted like crap
Guy in Honolulu used to work for Starbucks and learned..opened his own good coffee food shop and uses great coffee. Makes lots of $. Learned good lessons, but quit the Logo Lifestyle Co.
Why do people lack such self-confidence that they pick their coffee by its cup and buy their clothes by its labels? I remember this crap started when I was a kid in the 70s: Friends started wearing leather Adidas tennis shoes. I wore my canvas Converse All-Stars through high school - my first protest against conspicuous consumption.
And then Chuck Ts became trendy! Just wait a while and you’ll be in style again. Gotta put on my moon boots tonight!
I can get a 16 oz cup of coffee in a 20 oz cup (which I top up with cream) for $2.00 (including tax). My kid can get a kid’s hot chocolate for $1.00. The place doesn’t feel like a cafeteria, I like the warm color scheme, and if I bring my own cup, I get 10 cents off. How is that a rip-off?
Yep, lots of service industry jobs for the tatooed & peirced Gen-Xers and Millenials who move to Portland in droves because of the artsy and anti-establishment culture.
I actually grew up in Portland. And I love that city dearly, but when recession hits, it hits hard.
In ways that kind of was my point? What percentage of OR’s CAN afford the 500-750K pulp this guy was churning out? I know I couldn’t and well.. ever actually pay it off? For a mkt. that was much lower on the Map of Misery we sure seem to be having our share of woes.
Yeah, more people want to live here than we create jobs for. As a result, unemployment is always higher than average, in good times and bad. And timber is tanking at the moment -
Timber is the most and least of our worries.
On the one hand, timber meant a lot historically and now means a lot due to the collapse in real estate.
On the other hand, semiconductor was supposed to be the new industry to replace timber and that seems to have slowed considerably.
Now Oregon claims to want bio-tech. No, wait - alternative energy. No, wait - we want any industry that other states have already been investing in for 10 years.
/cynicism off
As much as I’d like to support the NW over California, I’m partial to Peet’s and always thought Starbucks coffee tasted burnt.
One tastes like crap and both are expensive, so I just fire up a few shots of Stumptown Coffee Roasters at home and all is well with the world.
Oregonians are an interesting people.
In the 80s, friend had a travel business, Pkgs inc airfare, hotel, and lots of goodies to Reno etc, but Oregonians during 80s times would rather pay much more to drive then for the pkg.
We’ve been discussing the Buena Vista auction quite a bit at the Portland bubble blog. This builder also tried some pretty outrageous stunts to move the inventory in the past as well. “No payments for a year!” etc.
Evidently that didn’t work so hot. Some of the Portlanders have said these are really cr@ppy homes to boot. When the builders here in OR say stuff like “we didn’t react in time to the changes” I think what they really mean is “We were blind-sided because we believed our own garbage about it being different here”.
We just got back from looking at a Buena Vista neighborhood in Beaverton. The houses are wedged into the hillsides in the houses we looked at. I also drive by their subdivision in hillsboro. I can see why they weren’t selling!! Ugly houses.
I am looking for auction results to see if any of this garbage sold. I am sure the neighbors that bought before the auction are just thrilled seeing all the auction signs in the neighborhood. I am excited about new comps though.
Of all the observations we had on the Portland Housing Blog “ugly” wasn’t among them. Cheap and shoddy, sure. Now we can add ugly. Oh and welcome back!
I think the single biggest problem OR has would be California Equity locusts. I live in the Bay Area and I can’t tell you how many people here claim that Portland is: ” what the Bay Area used to be like” That and to them the prices seem sooooo cheap.
Oregon is kind of like my home state- TN. Just like half of the Northeast is full of soon-to-retire boomers who want a piece of cheap-o Southern real estate, Oregon looks awfully delicious to older Californians who want to cash out or simply just move their hordes of cash with them and buy there.
I have a neighbor who’s from OR.She says that every time she heads to visit her parents, she gets nasty looks from people who see her CA license plates.
The prices AREN’T cheap ANY MORE. CA prices are falling, while OR prices have come down some, but have much farther to go.
San Diegans say the same thing. Portland’s been around awhile. I think it’s just some bullshit new-age thing to say to convince themselves that the grass is indeed greener (figuratively, cuz it is greener literally) in Portland.
Americans leaving the B.C. housing market
http://www.canada.com/vancouversun/news/story.html?id=a5173b36-2dcd-4be8-a460-3695517179df&k=88000
The flip in the Canada-U.S. currency advantage is encouraging some American owners of B.C. real estate to take an exchange-rate gain by selling their properties, realtors are beginning to notice.
“We are seeing some activity that is the result of people assessing the exchange-rate situation and deciding to [sell] now rather than later,” said Patrick Kelly, president of Whistler Real Estate.
Kelly said the activity amounts to only a handful of listings. But for some owners in Whistler - where property values have stagnated over the past few years - the recent gains for the dollar gives them a return on a property investment that hasn’t performed as well as they’d hoped.
All Real Estate is local, but we are all connected.
Glad to see that it’s still “a good time to buy.” Doesn’t matter where; east coast, west coast…break out the checkbook because interest rates are at historical lows, selection has never been better, blah, blah, blah. The ship just keeps taking on more water.
Yes, RE advocates should take a lesson from the ED culture. When the moment is right, will you be ready?
Bend my old friend how could this happen to you?
Any Benders who know how the rest of the local economy is doing?
C’mon crispy, you know that Bend’s “economy” is solely reliant on RE! It’s what they do. They play musical houses and make profits on homes that have never been occupied. (I thought everyone knew?)
LOL!!
My brother-in-law opened an upscale restaurant in Bend a few years ago, then started speculating in real estate. Now his RE investments are tanking at the same time business is starting to fall off.
So much for a diverse investment portfolio…
That’s because they FED on each other (sorry!). It was realtor money keeping the upscale restaurant open… a virtuous circle that will become a downward spiral.
More like selling to Californians and Portlanders.
With the appreciation having stopped and reversed in California, I think the resort towns across the mountain west are going to be hit hard.
You’re right, it wont be isolated to Bend by any stretch. In fact when I say Bend I could be referring to any number of distance mkt, un-commutable, far flung newly trendy communities. (It’s just that Bend is the most obvious example of bad “bubble math”) and they’re so much fun to pick on.
Todd Britsch, president of New Home Trends. For buyers, now may be the best time, he said. Many of the incentives will likely disappear after the first of the year. Sales typically slump in the fall and pick up each spring.”
Hey Todd, You use the word “typically” problem is there is nothing “typical” about what we are going through. So park that word for now and come back in the spring and tell us about the pick up in sales. That is if you are still in RE.
Here we go again. We knew it was comin’. Post-Superbowl recovery, Spring recovery, kids-are-outta school recovery, blah-blah-blah recovery………..by the way you RE shills, how did those milestone recoveries work out for you in ‘06? Oh I’m sorry, did I hit a raw nerve?
Yes….and how is the Stock market working for ‘you’/us now that banks are finally starting to own up?
Its all starting to tumblin tumblin..
Then why are builders so nervous?
HURRY!!! BUY NOW OR BE PRICED OUT WHEN HOMES RESUME THEIR ‘NORMAL’ 30%/YEAR TO-THE-SKY APPRECIATION!!
WHAT ARE YOU WAITING FOR? DIDN’T I YELL “HURRY” LOUD ENOUGH?? GET OFF THE FENCE, YOU STUPID, DELUSIONAL BUBBLE SITTERS!!
DAMMIT!!! (Throws tantrum, holds breath, turns blue, then passes out. All is quiet thereafter.)
Sounds like he’s trying to convince himself. No way he believes it. I mean, with what’s been happening over the last few months, who would use the word “absolutely” in any prediction?
Exactly..it’s like the dumb ads I see on craigslist, “last weekend for low price! Act now!”
These bozos say anything, absolutely anything, to re-define the word “worth”.
Many of the incentives will likely disappear after the first of the year.
As will many of the builders themselves.
wait. I thought max loan values are set by comps. How are incentives just going to “go away” when buyers won’t qualify for loans based on recent incentive transactions?
I totally agree. Many of the incentives to buy will disappear after the first of the year. Including:
-Family bitching at you to buy as they finally realize you are right and real estate has a long way down to go.
-Co-workers bragging about their investment brilliance.
-Your spouse’s constant nagging to keep up with the Jones’ as he/she watches the Sheriff pull up in front of the Jones house.
On the other hand there may be some new incentives NOT to buy like:
-Strangers sniggling when a “now’s a good time to buy or sell” ad comes over the loudspeaker at the mall.
-Your boss announcing the company is moving and anyone who moves out of state gets a bonus. Anyone who doesn’t gets a pink slip.
-Your significant other bragging to your friends and family about your genius in helping the two of you avoid foreclosure.
“the Sherrif pull up in front of the Jones house” LOL!
Yep, see honey? That’s where keeping up w/ those Jones will get you! Great list of “incentives”. We’d get more incentives in OR but our market is fragmented w/ many smaller players that simply don’t have the resources to throw in a pool (indoor sport in OR) nor granite anything? In ways this might… work in our favor as the mom and pops either drop the damn price or the lender deals with it.
I do believe this statement, but for reasons other than that of the dude quoted. Incentives are going adios due to the fact that people aren’t mesmerized by them any more. Now all they’re gonna want is price cuts, and plenty of them. It’s “Nah, you keep your granite countertop, and I’ll take a 150K price reduction instead” time.
I’ll have to agree. Even people that haven’t been actively following the “boom” now realize chrome plated do-dads aren’t going to help your re-sale, comps, equity or MEW-ability. Portland builders treaded very lightly offering nada when LV builders were throwing in 50-75k plus a BMW lease. Now our builders realize it didn’t save PHX, SD or LV, why would it save their bacon?
Reminds me of the guy that lost his job, house and wife to drinking (but was willing to give drinking another try?)
Yeah, they’ve tried six-months-no-payments, “Smart” car giveaways, “employee pricing (10% off list),”one-day sales,” and now auctions. Expect a lifetime powertrain warranty soon.
Could be that people are just sick and tired of granite and stainless steel. Some of those designs already look old.That and most of the houses they’re in look like 1980’s beige appliances.
Personally, I wouldn’t buy anything in terms of a home made in the last 40+ years.
Love avocado green and harvest gold.
Yeah, what good is shiny Stainless steel when you have to wipe it all the time?
LOL
2 things to do before company visits…
dust/sweep -ok 3 things,
and clean SS sink…porcelain doesn’t show so much.
>
Not too shocking considering the typical job in Vancouver pays about $10/hour.
An actual conversation from Saturday night (in Portland, which is very apropos). It was 2 people talking about the real estate market. I wasn’t in the conversation; I was just working nearby.
Young man: “Hey, we bought a house this year for $199,000. I just talked to the guy at Countrywide. He said the house is now worth $205,000. Isn’t that cool?”
Old Man: “Oh. You know, the real estate market is really scary right now. I don’t know what’s going to happen”.
Young man: “Oh tell me about it” Yeah I know.
================
This young man is working 2 jobs in order to pay for his expensive home. Just 2 newlyweds, both working at low-paying jobs in order to make the mortgage payment.
As you can imagine, it was tough to stay out of that conversation. I looked at the foolish young man. Thought about it for a second. Remembered this blog. Decided “Nah - forget it”.
Now that there is a tough one! NOT!
Actually, I talk to my SIL (who is more like a sister, as we are very close) who bought RE late seventies. She’s a tough Lady. She has 15 units and a bar that she leases.
The lady works hard for her money and is not a slum lord.
I do my best to avoid talking about RE. I love her too much to cross that line.
Ocassionally it comes up, and I’ve slipped up, here and there. I alway preclude, but Sis, this doesn’t apply to you (and it really doesn’t!)
Now, on ocassion, she brings up RE! Ouch! My poor tongue needs stitches (j/k)
She wants me to find her a duplex on the many REO sites I visit. She recently connected to DSL (I said she is tough!) so I e-mailed her the links. (shewooo).
Chortle,
Leigh
I don’t understand your point here. 199K is not expensive for a house. Should they be giving houses away? The fact they are working low paying jobs means they have plenty of room to grow their income. What is the mortgage on that place, at 30yr fixed? 1500? 1700? Wow, tough stretch for two people. Let’s say the market drops 25% where they are. They are “out” 50k, which will guaranteed be recovered within 5-7 years. Big deal.
2X $10 an hour = $41,600, or 5:1 income ratio, more or less. Matt, it just sounds cheap from where you are.
Freddie Mac Could See $5 Billion in Writedowns
By ReutersReuters
| 19 Nov 2007 | 11:22 AM ET
Freddie Mac may report a loss of between $1 billion to $5 billion on its
subprime AAA portfolio, Credit Suisse said on Monday, sending shares in the
second-largest U.S. mortgage finance company sharply lower.
“While Freddie’s AAA subprime securities likely have substantial subordination,
if the recent credit spread widening does not reverse over the coming quarters,
we believe that Freddie could recognize an other-than-temporary impairment of
between $1-5 billion,” the brokerage said in a research note.
The losses may force Freddie to sell some of its portfolio holdings or raise
capital by issuing preferred stock, the note added.
Separately, a brokerage downgraded its recommendation on Freddie’s larger
mortgage-finance cousin, Fannie Mae.
Friedman, Billings, Ramsey & Co. said it was downgrading Fannie to market
perform from outperform and cut its price target on the stock to $35 from $60.
Or they could split it down the middle and hit the $3 billion mark like everyone else seems to.
No kidding. $1 bn to $5 bn makes it sound like they are pretty unsure about their financial position; much easier to say the loss was $3 bn and hint that everything will be better going forward now that the bad news is fully disclosed.
Does this mean they`re in deep silt??
Eugene Oregon is still in the full bloom of denial .. here’s an email I got today from a local realtor:
“Happy Thanksgiving!
Recently, our local press has given some very biased views concerning our Real Estate market. The truth is that our local market is fairing much better than many other parts of the country. It is true that we are no longer in the hot Sellers market of 2006, but we are in the midst of one of the best opportunities for home buyers that our market has had in many years. The local press has confused our local market with the national market and has not done a good job of giving a true picture of our local Real Estate market. This kind of reporting can significantly influence a market. The truth is that right now home buyers can easily get a home loan at a very attractive interest rate. Home buyers also have the opportunity to choose from a greatly expanded inventory of homes for sale that are at more attractive prices than over the past several years. The real truth is that we should now be in the hot Buyers market of 2007.”
The real truth is she is sick of eating Top Ramen!
“The real truth is that we should now be in the hot Buyers market of 2007.”
Shoulda, woulda, coulda, honey.
When did “real truth” equal “should”?
“The real truth is I should win the lottery!”
But isn’t 2007 almost over in Eugene, or is it different there???
Prescott AZ…how is it doing now?
Starts out: It is different here….
Jumps to: Inventory is way up and prices are just startin to fall.. proving that it is not different there except in scale and timing.
So, we’re supposed to believe now is a great time to buy???
“local press has confused our local market with the national market”
Last time I checked Portland was part of this nation, maybe not.
Real estate is local, credit is global,…
…and the NAR marketing strategy is national: ALL local markets are faring better than the national real estate market.
“The real truth is that we should now be in the hot Buyers market of 2007.”
The real truth is we WOULD be in a hot buyer’s market of 2007 if sellers cut their prices to 2003 levels. “More attractive prices than over the past several years” ain’t gonna do it.
They Gresham Outlook also published a couple of letters recently from RE shills trying to convince the clueless that the local real estate market is “Okay” in Gresham. One was from some old cow that sells mostly 500K+ homes with her fat old man. (And I’ve noticed those ads have gone down a lot in number recently) And the other was from some woman working for a title company.
Given how little most of these real estate people actually do to get paid - the sooner many of them go on unemployment or get a real job the better.
Campbell Soups Q1 profits fell. I suspect that’s going to get better very soon…………
Have you seen what it costs for a freaking can of soup these days ? I only buy on sale these days and if the deal is good enough I clean the shelf out.
a can of soup? that’s nothing..try going into a Panera or other place like it..
oh, you want an extra roll?? that’ll be another buck..
I’m with you, Mo. These days, I’m a from-scratch soup maker.
And it taste so much better
And better taste with like 1/50th of the sodium. I rarely buy processed foods.
I used to make soup, but I gave it up. I found that prepared foods are getting so cheap that it’s easier than making from scratch. When Lean Cuisine in on sale, lunch costs me ten bucks for a whole week.
Ten bucks won’t buy you enough veggies for a week of soup.
I beg to differ. The main ingredient in soup is water. How much does that cost? Buying whole foods and making soup is MUCH cheaper.
Let’s look at it this way. A lean cuisine meal is what, 10 ounces? So, 5 meals = 50 ounces. For $10, I could easily buy 2 lbs chicken, 5 lbs of assorted vegetables, and some rice. Along with the water used, I’d have at least 20 lbs of soup vs. the 50 ounces of Lean Cuisine.
Best advice I ever received about cost of food is to look at it in the terms of nutrition per dollar. You’re better off with fewer fresh veggies & fruit than 10 bags of chips.
Funny, we’ve been doing a lot of that too.
Hey Slim good for you. I always made from scratch. In 70s my oldest daughter (4 at the time) had asthma so bad they thought she would die. We were living in AK. Took her to LA to UCLA specialists. She was on so many medications and I just didn’t like it. Read up using some old Adele Davis books. We went to a pure diet - no processed anything and I put her on a vitamin regimen. Within 6 weeks she was off all meds and has only needed ER care about 4 times - she’s 35. She rarely even needs to use her whiffy. It’s just like computers - garbage in garbage out. Yes, I spend much more on food because I only use fresh, but what is more important to spend money on than what you put in your body.
I did just that the other day, what with all the “I have 2 years worth of food on the shelves” posts from the other day in addition to a huge sale.
I’m assuming the drop is because of its competition with Ramen Noodles?
Today’s Officers Of Loan (TOOL)
“Bankers may have been less diligent than they arguably should be because they wanted to help their customers. New generations of younger bank officers don’t remember the 1980s. ‘In those days the only new home that a builder could finance was a pre-sold,’ Fauske said.”
“…because they wanted to help their customers.”
Those customers probably also being a new generation of younger buyers who don’t remember anything but the good times.
“‘Folks want to know if Alaska is heading for another market crises like the one we experienced in the mid-1980s. The answer is no,’ Dan Fauske, AHFC’s CEO told the Alaska HomeBuilders Association at the group’s annual meeting. ‘The 1980s crises was an economic crisis, not a housing crises. Today what we have is a cooling off of the overheated housing market from the past several years.’”
Huh? How do these guys get to be CEO’s? Seriously.
The housing crisis isn’t an economic crisis? WTF kinda crisis is it?
You become a CEO by being able to work the system, finding an angle, gaming the system, being an office politician…
In short, by being a good liar…. duhhhh.
@Catherine,
“The housing crisis isn’t an economic crisis? WTF kinda crisis is it?”
It’s a contained crisis…….I think……….
Contained to the entire globe.
They think they can prevent it spilling over onto Mars, maybe not.
And let’s not forget that favorite REIC mantra: “all real estate is local”. Except that the most remote, sparsely populated state in the union also experienced the bubble… along with North & South Dakota, Montana, Idaho, rural Ohio, Indiana, Missouri, Wisconsin, etc.
“‘Builders are being beaten up so badly,’ said Callaghan, an agent in Lynnwood. ‘It’s like having a gun pointed to their head. They just need to get out of that standing inventory, step back and regroup.’”
Sniff, sniff….SOB! Puhleez, you should see how badly the builders beat up this area, with their crappy crackerboxes and faux McMansions and stupid HOAs. THEY have a gun pointed to their heads? Well, I hope the gun goes off, because they sure didn’t hesitate to point guns at the heads of the citizens, through their attorneys. I’m serious. I went to one county commission meeting where some attorney for a builder started banging on the podium and threatening legal action if they didn’t get their way. It was gross. I hope the major builders get boned.
Palmetto,
I have to disagree with your “I hope the major builders get boned.” comment.
You should be hoping that all of the builders get boned.
%$&#@* them all.
..and while we’re at it..let’s line up the mtge people, the r/e people, the Wall Streeters and all the rest of them. Not to mention the Sheople that lined up like lemmings to bid on every POS house that came on the market.
Pen
Pen, the reason I mentioned the majors is because I know of some very fine small builders and I wouldn’t want them to go away. The Florida post mentions one smart outfit that has pulled back and is only doing renovations right now. My old house was built back in the early 70s by a farmer from the Midwest who built seven nice solid little homes in a platted neighborhood. He really knew what he was doing, they’re all great places. He has since passed away, but he’s the sort of builder I’d hire if I was going to build.
ok, that’s fine with me, but I think of that as a local builder..not a small builder..
What he did was, he bought up a number of lots, cheap. Then he’d build one home, sell it, go on to the next, etc, etc. It was his winter hobby in between summers on the farm. Good workmanship. If they built homes like this guy did, there wouldn’t be mold problems. He didn’t use sheetrock. Just panelling over concrete. Very smart for this part of FLA.
Your wish
is granted.
(enjoy!)
This is based on a lie. The problem is NOT the standing inventory. The problem is the LAND!!!! Almost all of them way overbought land at the peak prices and they need to sell it for more than they paid, The ONLY way they can hope to do that is to put a house on it and hope it sells.
The 52-Week Low Club (WB)(CFC)(WM)(TWX)(GM).
What ever happened to the 5 mile high club?
http://www.marketwatch.com/news/story/story.aspx?guid=%7B93d1df8b-fa55-4ed9-8486-a94c77b662d9%7D&link=http://www.247wallst.com/2007/11/the-52-week–10.html
It’s obviously time to buy the dip.
Nice upbeat article.
Apologies if this has already been posted. I am not able to keep up with all of the topics the way I had in the past.
A friend sent this to me this morning.
http://articles.moneycentral.msn.com/Investing/CompanyFocus/WhosToBlameForTheMortgageMess.aspx
BayQT~
“‘Builders are being beaten up so badly,’ said Callaghan, an agent in Lynnwood. ‘It’s like having a gun pointed to their head.
Nah - it’s like having a Hummer and boat payment held to their head.
So… can I have a Hummer, too?
“can I have a Hummer, too”
Assuming we are talking about cars, you may find Hummer H2s (and boats, and jet skis, and mountain cabins) listed on Craig’s list more and more in coming years…along with the words “must sell”.
Let’s get the terminology straight. It’s like having a NAILGUN pointed to their head.
Pop…er…I mean…laser…er…nail gun.
“The Portland region remained a rare star in the gloomy U.S. housing market by reporting yet another annual price increase in October…despite a bloated inventory of unsold homes that would typically drive down prices.”
In due time…
Slashed prices fail to lift US housing market
By Daniel Pimlott in New York
Published: November 19 2007 19:55 | Last updated: November 19 2007 19:55
Confidence among US homebuilders remained at record low levels this month, as a report warned that slashed prices and incentives offered to buyers appeared to have had little impact on the housing market, currently scraping the bottom of a two-year recession.
The Wells Fargo/National Association of Home Builders’ index of builders’ sentiment remained at a reading of 19, the same as in October, and the lowest since the survey began in 1985. The index last showed a positive outlook, indicated by a reading of 50 or more, in April last year.
Sales of new homes were at their worst in a decade last month, and sales of previously owned homes fell by the most since records began. The chief executive of Wells Fargo, the west coast bank, last week said the housing slump was the worst since the Great Depression.
“Many [builders] are reporting that their special sales incentives are having limited success in terms of getting buyers in the door,” said Brian Catalde, NAHB President. Builders are not expecting an upturn until at least the second half of next year.
http://www.ft.com/cms/s/0/e867eb8c-96d6-11dc-b2da-0000779fd2ac.html?nclick_check=1
Alarm at rising US car loan defaults
By Bernard Simon in Toronto
Published: November 19 2007 23:28 | Last updated: November 19 2007 23:28
US car loan delinquencies have climbed markedly, raising another potential red flag for financial institutions and the automotive industry.
“We are beginning to see deterioration in auto asset-backed securities (ABS) credit conditions,” Lehman Brothers said in a report on Monday, drawing on data from two of the US’s biggest car finance companies – GMAC, 49 per cent owned by General Motors, and Ford Credit.
Delinquency rates on two GMAC ABS issues from this year reached about 0.75 per cent and 0.6 per cent in September and October, far above the rates on similar securities issued in earlier years.
http://www.ft.com/cms/s/0/ca3cf880-96dd-11dc-b2da-0000779fd2ac.html
Shares fall globally on new fears for banks
By Michael Mackenzie and Paul J Davies in London
Published: November 19 2007 20:59 | Last updated: November 19 2007 23:39
Fears that banks could still be feeling the impact of the credit squeeze by Christmas next year drove down shares globally on Monday after Goldman Sachs predicted a further $48bn of writedowns by the end of 2008.
The report of its three leading banking analysts – the trio who foreshadowed Merrill Lynch’s writedowns last month – helped prompt large falls on stock markets on both sides of the Atlantic, taking European indices to their lowest point since August.
http://www.ft.com/cms/s/0/202e4e00-96df-11dc-b2da-0000779fd2ac.html
Dollar loses grip on Asian debt sector
By Gillian Tett
Published: November 19 2007 18:23 | Last updated: November 19 2007 18:23
The US dollar has lost its status as the pre-eminent currency for fixed-income products such as corporate bonds in Asia, a sector it used to dominate, a new study has found.
This is because there has been a sharp rise in the use of local currencies in the Asian debt markets, with 53 per cent of the market denominated in them instead of the dollar, according to a report from Greenwich Associates, the research group.
http://www.ft.com/cms/s/379aec50-96c7-11dc-b2da-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F379aec50-96c7-11dc-b2da-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Likely surprise = oxymoron
Fed likely to give investors a surprise
By Krishna Guha in Washington
Published: November 19 2007 21:59 | Last updated: November 19 2007 21:59
The US Federal Reserve will on Tuesday publish its first set of enhanced economic forecasts alongside the minutes of the last meeting of the Federal open market committee, and the result may surprise some investors.
The new economic projections are likely to show that Fed policymakers expect the US economy will pull through an expected near-term rough patch and regain strength over the course of 2008, even though they see downside risks to that forecast.
http://www.ft.com/cms/s/b87e70ee-96db-11dc-b2da-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fb87e70ee-96db-11dc-b2da-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Sounds like a reason to raise interest rates./
Breathe…P’Bear.
Leigh
P.S. I love you!
Thanks for bringing a soothing spirit of calm to this blog, and sorry if my posts sometimes border on rage. I am still working through the anger phase of the housing bubble stages of grief, which leads me to worry about how the emotional state of the masses six months down the road, as I have a tendency to be six months early…
That joker in Alaska has a short memory. I lived there in the 80s and worked with attorney doing bankruptcies. When I moved from Kodiak to Anchorage everyone said “buy a condo.” It was at the tail end of the pipeline boom and it was exactly like it is now. People buying toys and living high on the hog - most from other places and having the first real money they had ever had. 1983 those condos were $90K. By 85 they were $45K and they couldn’t sell them. What was most amazing was as soon as people filed bankruptcy they were offered all sorts of credit - creditors figured they couldn’t file again for 7 years so they would be able to extract their money. All those folks that had been make over $100K/year (in 1984) working pipeline jobs all of the sudden were back to making $20K or less per year and nearly all went back to where they came from. Next boom didn’t happen until 89 and the Exxon Valdez debacle. As an aside, when the Permanent Fund Dividend started in 81 or so, every person including children received about $1200. The divorce rate soared. Women with 3 kids all of the sudden had a big lump of money and got rid of the big lump of husband.