Local Market Observations!
What do you see in your local housing market thsi weekend? Lower prices? “What is striking about the mansions and tree-lined roads of this exclusive suburb of Detroit is not the elegance and wealth — it’s the real estate signs. Almost 700 homes are currently on the market in the five Grosse Pointe communities, according to brokers, twice as many as in the same time in 2005.”
“And since June, prices for the most expensive houses have dropped by around $100,000 a month.”
More foreclosures? “The Mortgage Bankers Association estimates that 1.35 million homes will enter the foreclosure process this year and another 1.44 million in 2008, up from 705,000 in 2005.”
“The projected supply of foreclosed homes is equal to about 45% of existing home sales and could add four months to the supply of existing homes, says Dale Westhoff, a senior managing director at Bear Stearns. This is a ‘fundamental shift’ in the housing supply, says Mr. Westhoff, who believes that home prices will drop further as lenders ‘mark to market’ repossessed homes.”
“Foreclosed homes typically sell at a discount of 20% to 25% compared to the sale of an owner-occupied home, analysts say. Lenders are eager to unload the properties, and the homes tend to be in poorer condition.”
“‘People didn’t leave the house happily,’ says Jason Bosch, a broker with Home Center Realty in Norco, Calif. ‘There are often signs of that. There’s used, dirty carpet. The grass is dead.’ Mr. Bosch says he now has about 120 bank-owned properties for sale or in escrow compared with none a year ago.”
“Real-estate agents, who look at prices for comparable homes, or comps, say the sale of bank-owned properties can have a big impact. ‘One month the comps are showing one price and then a bank comes in and sells a property for $30,000 less,’ says Randal Gibson, a real-estate agent in Henderson, Nev. ‘All of the sudden, that’s the new comp.’”
“Foreclosures in St. Tammany Parish surged nearly 700 percent in the third quarter this year compared to the year-ago period as homeowners struggle to make exorbitant mortgage payments caused by a post Hurricane Katrina housing frenzy.”
“‘A lot of people after Hurricane Katrina had to buy when prices were extraordinary high and extremely inflated,’ said Susan Ameen, a realtor in Mandeville. ‘They needed housing and could barely afford the house note. Now the littlest thing could set them back. That’s pretty frightening.’”
Or corporate news? “It’s a far cry from late October, when Countrywide CEO Angelo Mozilo said he expected the fourth quarter to be profitable - comments that drove the stock up to $17.11 the next day. The mortgage giant’s stock is now trading at nearly half the $18 conversion price for the $2 billion of preferred stock that Bank of America bought back in August.”
“Countrywide is facing mounting foreclosures and loan delinquencies from borrowers who were hoping to refinance before their low-interest teaser rates soared. The company has said that nearly 24 percent of the $118 billion in its subprime servicing portfolio is in some stage of delinquency. That equals about $27 billion.”
22151 off 15% from May
but I could be lying
“It’s a far cry from late October, when Countrywide CEO Angelo Mozilo said he expected the fourth quarter to be profitable - comments that drove the stock up to $17.11 the next day. The mortgage giant’s stock is now trading at nearly half the $18 conversion price for the $2 billion of preferred stock that Bank of America bought back in August.”
Le Tan Orange is fading…
When the ~195,000 “REOs” showed up for a few hours about a month ago, I had a feeling Countrywide was going down. Now they may not be REOs right now, but I believe the “pipeline” theory.
Besides, when a stock goes down by about 90%, it’s just a matter of time.
How can angelo get away with being so wrong?
Lots of reduced/below appraisal in the local classifieds these days.
‘Reduced $40k 2/1 modified A frame on 2.5 acres Appraised at $260 will sell @ $220 OBO.’
‘New construction in Ponderosa Trails Price just reduced from $630 to $585′
‘4/3/2 SFR in Flagstaff 50k below builder’ (!)
‘2,000 sq ft 3/2/2 + bonus room on 2.5 ac custom blt in late 2006 recently appraised at $490k, offered at $399k.’
Here in Vientiane (Laos), the property market is going gangbusters. Not enough high quality houses for the expats, so they keep going up. You can build a sweet place for 100k, and then rent it out to a foreigner for 1700-1800 a month. And that is probably expensive. Commercial booming too–the whole city is on fire thanks to mining, hydropower, and tourism. I am tempted to build a place on the Mekong just for the hell of it, although I wont. But the temptation is there. Happy to be a renter and let someone else deal with the varous issues.
“You can build a sweet place for 100k, and then rent it out to a foreigner for 1700-1800 a month.”
That’s a sure sign of a place crying out for capital investment. Vietnam is what Thailand was 20 years ago and I’m sure Laos and Cambodia are where Vietnam was 10 years ago. What a fun place to be. Who won that war, again?
I was shocked how many Starbucks Bangkok has now, even ‘Bon Pains’…what will the sugary drinks do to the Asian waistlines…I did enjoy having all those ’seven/eleven’ stores, open 24/7. I want to go to Asia again. I opens your mind, as well as your spirit.
As with me having the travel bug and all, can you advise re short term rentals, tropical sublets and such…vous pouvez repondre a l’addresse qui suive - riverandsource yahoo (point) com.
Lots of reduced/below appraisal in the local classifieds these days.
The thing that kills me about this statement is: Sellers use appraisals from a year ago when they went to get an equity loan (which by the way will get a higher appraisal than a for a sale appraisal) and then they say priced below appraisal. When all is said and done, I’d bet the price is way above what the house would appraise at in today’s market. Sellers don’t get that appraisals are only good for the day they are done. A hurricane or fire could come thru overnight and your house would not have the same value as the day before.
Even last year appraisals were worthless. Essentially Homeowner and Lender determine how much Homeowner wants to pull out, and usually, no matter how ridiculous, the appraisal comes in at that price. I know the appraiser is supposed to be a third party, but how do you think they get business? Never confuse market value with appraised value. Market value is what someone would pay to buy your house for today (although realtors love to say this house is below market or has instant equity, they just dont understand the definition), appraised value is just how much rope a Lender was willing to give you to hang yourself for a huge commission and then turn around and sell the loan on the same day as the closing. Collusion is rampant, without it, 5% or more increases in prices per month would not have been possible.
700% increase in foreclosures in parts of LA? 600% in parts of VA? These are terrifying numbers.
Oh yeah, no worries, they are increases off historically low numbers. Yeah right, no worries.
Foreclosures up 700% in PHX.
“they are increases off historically low numbers” - LMFAO! I remember those agruements with the trolls…
Local market?
BIL works for an airline. They had half the bookings Wednesday as last year. Reports from the airport was short waits. This morning the news interviewed an airport official. They directly asked if passenger volume wasdown… The official sidestepped saying that there were lots of factors like reconfigured security and govt. allowing planes through military corridors.
Did the Black Friday shopping thing. WallMart and KMart were packed. Lots of people were in the malls, but not much buying. I think the loss leaders were snapped up, and not much else. Interviews with shoppers on the various local news channels all made comments about needing to spend less this year, so the big deals were more important than past years.
This morning they interveiwed a store manager. Any problem hiring seasonal help? Oh no. This year we really had our pick of candidates. They were hiring fewer people, and the quality of applicant was up. For most, they are getting a second job. They then interviewed several workers that basically said, with gas and food up, if they didn’t get a second job, there would not have been a Christmas for them this year.
After Thanksgiving meal, the family went for a walk in MIL’s neighborhood. On our mile walk, we passed 5-6 houses with for sale signs. 1 had a pending sign. Niece wanted to grab one of the flyers… grandma said no… then said.. oh, go ahead and hand me one. She disgustedly says $360K…. (These are 2.5K-3K sqft houses in gated 55+ community in Sun Lakes with private golf course with “market value” peak of $500K. )
More commercials about house auctions, fewer about $0 down, no doc, NegAm loans.
SIL that owes $250K on a house she bought 5 years ago for $150K has moved from aragont and free spending to broke and depressed. When we last saw them in early Sept they’d had their house on the market FSBO for money, but they were getting an agressive agent so were going to make a killing. Two months later they can’t get anyone to even look at it. Talking of getting a slightly lower paying job closer to home because fuel costs are killing her. (If she drops the price of the house at all, she’d have to bring money to closing. Money that she does not have. She’ll be in foreclosure by this time next year since her ARM will adjust from 8% to 11+% in October.)
Interesting about the airline bookings. My brother picked-up his college age kids at Regan National Airport Wednesday. One kid flew in around noon. Then they waited for the other kid due in at about 2PM. He said he was amazed how uncrowed the airport was, and that there was virtually no traffic going and returning. So unusual it was that he mentioned it several times at Turkey Day dinner.
I flew out of LAX on Friday. Shortest wait I’ve ever had going through security. 2-3 minutes.
Same at Burbank - dropped my daughter off for flight back to school - less traffic than a normal weekday.
I went to a mall area on Saturday with the family. My MIL wanted to get some yarn from AC Moore. Lots of people milling about but lines at the check out were one or two people deep. I saw a bunch of clearance items on sale for $3 and less…children’s craft sets, jewlery making stuff, grow rock crystals sets. Well I have 15 nieces and nephews and I got them done all in one shot spending less than $30….but what I found amusing was all those people milling about had virtually nothing in their carts UNTIL I casually mentioned the $3 items (the items were priced as $10-$15 on the shelves but when I scanned them they were less) A deluge came forth and snatched everything that was left.
My point? People were not there to spend real money, they were there for bargains or nothing at all.
As a side note, the Dollar Tree was hopping!
RE: Phoenix Area
Yeah, most of the people whom I talked with on Friday morning were seeking some discount items, and little or nothing else. Same for me, but that is nothing new.
I was somewhat surprised that several people on line with me signed up for one of those store credit cards. I was not shocked that many Americans like to borrow on credit cards, but that they A) did not already have one for that store, B) wanted to be bothered filling out applications in that chaotic environment, and C) had no qualms about giving out their info to some random person with a clipboard outside of a store in the identity theft capital of the USA.
I did lots of traveling the last 4 days. Flew out of BWI 5PM Thursday. Airport employees told me I just missed the crowds. Friday morning flew out of Phoenix to San Francisco. Uncrowded, but most holiday travelers were at their destinations. Saturday flew back to Phoenix from S.F. Empty seats on the plane. Today flew to Baltimore on a morning flight. Phoenix Sky Harbor was crowded. But I don’t remember flying anywhere on a Sunday after Thanksgiving.
I don’t think there was a dearth of travelers. Jury is out. I do think the 1.5 million foreclosures in the next 13 months will be significant in comparison. I do think wages will go up less than 3% in 2008. This combination will encourage looser credit, new lows in the US $ and new highs in the price of gold, but the smart home buyers will wait and continue renting.
Met w/ Orange County family over the holidays.
One cousin in now in foreclosure, against my advice, they took out a POA - “beacuse OC real estate only goes up, and they can just refinance”. Well, now the POA has reset for $1,500 per month more and the home does not appraise for a refi and they cannot sell as the prices in Orange County have gone down. Another bites the dust - UGH!
Pullman, WA
Craig’s list for rent, MLS for sale:
http://tinyurl.com/2gfonl
http://tinyurl.com/ywqxbv
4/2, 2000 sq ft for sale at $190k (down from $220k)
3/1, 1000 sq ft (basement not incl.) at $1200/mo
I’m betting this is a speculator who has decided to live in the basement until the market “rebounds”, and is trying to make the monthly nut renting out the main floor. But a reasonable rent for the main floor alone would be $900/mo, so this FB is going to be bleeding all winter.
***************************
http://tinyurl.com/yq2ega
Small 3/2 for sale at $179k (down from $220k)
Realtor owned, on and off MLS, trying to sell “as is” due to serious structural problems. This is clearly a rental unit that would bring in about $1000/mo, so seriously overpriced.
****************************************
Check out “1510 NW Hall Dr” in the link below
http://tinyurl.com/2cqfom
This house started out FSBO at $280k back in the spring. Mid-summer they listed on the MLS at $270k, and dropped to $240k by the fall. During Sep/Oct this vacant home was “for rent” and “for sale”, but now is just for rent, asking $1200/mo with no takers.
** In a nutshell, speculators that dominated the low end of the Pullman market have switched from buying to selling and there are generally no takers. The nicest houses in the $150k-200k range (ones that families would actually consider living in) are still selling, but the obvious rentals are dead in the water. Given taxes, maintenance (mostly older homes), etc… a serious investor wouldn’t pay more than $150k for the nicest rental homes (4/2 in good neighborhood), hoping to break even with $1200/mo in rental income.
LOL. The first line is “Get three of your best friends to share!” It then goes on to say it has three bedrooms (from the pics at least one is too small to fit a queen size bed without any other furniture) and only one bath. Total square footage is 1000.
How long would the 4 of you stay best friends under those conditions? And why on earth would anyone pick that market strategy to go with?
Not to mention this is zoned R1, so a violation of code to have more than 3 unrelated residents. And in this neighborhood, this violation would probably be reported.
They went with “get three friends” because the standard student rental rate is $300 per… usually per bedroom of course. This is a $900/mo rental MAX, and probably given that the landlord is living in the basement, no garage, and one bath wouldn’t go for more than $800/mo.
The flipper probably bought the house for $170k and needs $190k to break even given transaction costs (9% for realtor + transfer tax). With no money down, you would need $80k/year income to carry a $170k loan, and the owner probably makes less than $50k (perhaps far less if they are a still in school).
“‘A lot of people after Hurricane Katrina had to buy when prices were extraordinary high and extremely inflated,’
Yes, they were forced at gunpoint to sign up for these predatory loans. Yes, they really needed to buy that swampland that will be reclaimed by the ocean in the future.
I think it was the greed and get rich quickly mentality. BooHooHoo Hoo Hoo.
Long Island:
I’ve seen a lot of over priced listings languish all year. Some have been reduced as much as 20-25%, and they still don’t sell. Brokers are now advertising short sales. I’m hearing stories that small local builder’s are in panic mode. We have many million dollar plus homes, built by small builders, who now can’t sell them and are getting eaten alive by the carrying costs.
I expect that 2008 will be much worse. Many people who thought that they could wait another year , “till the market gets better” will flood the listing in the spring. Add to a flood of new listings in the spring, increasing foreclosures, inventories of available houses should balloon.
What part of Long I sland are you looking at?
I have seen reductions in pricing in my town (Seaford) but nothing that would make me do the happy dance. The median wishing price is still about 450k. About a month ago the amt. of listings in my town was about 128 now it’s 110. A few of the lower end houses sold this month… they were asking for anywhere between 329k and 399k.
Question…
There’s a house in my neighborhood that has flipped 4x in the past 6 years. The latest flipper is rumored to be a RE agent who has dropped the house price from 649k to 449k over the past year and a half. No one lives there but it’s immaculately maintained. I was considering asking if he’d be willing to rent it but not sure how to approach it because I find lately there has been a lot of houses up for rent but they range from 2000 to 3500 a month. My husband and I are not willing to rent for that much…hell, we couldn’t afford to! So how does one negotate a low rent on a nice but very vacant house?
Just offer what you think it is worth. I did that with a vacant rental house in the Phoenix suburbs. Of course, it was for rent at the time. You have to know your limit and never exceed it.
I said (via fax), here is what I will pay, my credit score as of a few days ago is this -copy available-, I can give you a certified check for the first month, so let me know. I never got to the second house on my list, so I guess that I overpaid, but it was still lower than any house had been rented for in a three mile radius on the local mls (in the previous two years).
But your situation is a bit different. I checked county records to see if the owner had any liens or creative loans. He did not. Your guy sounds like he is in over his head. So, minimal deposit and be prepared to move again. It may not be worth the trouble.
I think that great poet and thelogist, Freddie Mercury of Queen, said it best to describe all of these housing FBers.
“Another One Bites the Dust”
“He’s just a poor boy, from a poor family.
Spare him his life from this monstrosity.
Easy come, easy go, will you let me go.
Bismillah, NOOOO, we will not let you go.”
“‘People didn’t leave the house happily,’ says Jason Bosch, a broker with Home Center Realty in Norco, Calif. ‘There are often signs of that. There’s used, dirty carpet. The grass is dead.’ Mr. Bosch says he now has about 120 bank-owned properties for sale or in escrow compared with none a year ago.”
Mr. Bosch, meet Mr. Bosch…
http://members.lycos.nl/bouman102/bosch%20hell%20detail.jpg
Funny.
Here in Santa Barbara, Ca the market has really tanked over the last 4 months. Sales are down 30% from the third quarter of 2006 and 50% from 2005. Foreclosures are up and comp values are down 20% from their 2005 peak.
I received a memo from a local real estate company which states that real estate prices are expected to drop 35% in south Santa Barbara County by the summer of 2008. Such an admission by a realtor is suprising because it contains the truth. it also states that “people who owned property for more than 6 years should do fine”. So sorry to all of you suckers that bought between 2001 and 2007 and still hold the house.
I wish I had some way of finding out how many uneducated buyers
have been saved from ruin by this blogsite. Any person buying now is assured a huge loss in the coming year. it’s hard for me to imagine any home buyer purchasing a property after reading the news articles and comments contained here.
What does Isla Vista look like these days?
I visited a friend at UCSB several years ago, and I had a chance to witness the craziness of the times near the peak. I couldn’t imagine any lender loaning anyone real money for an Isla Vista purchase, a true POS ghetto.
Santa Barbara is another landmark in the bursting of the credit/housing bubble. Good news!
When the “good” areas are finally getting hit, appetizers are done & the main entre is being served.
CA renter, in response to your question on the other thread re: the stock market.
No clue. Take a trading approach, long and short. Play the swings. Growth probably outperforms due to global reach.
I do think the $ is tremendously oversold. You can cut the bearish sentiment with a knife. And when Europeans are coming here with empty suitcases and even being sold duffel bags at places like FAO Schwartz, you know something is odd.
I do think the $ is tremendously oversold
Oversold? What is the US dollar backed by?
I’m only watching one neighborhood in Santa Barbara, More Mesa Shores, and prices there do not appear to be tanking at all (sigh). Just got this info about a house that went on the market in the spring, before I came back East:
5256 James Road (MLS # 07-3171)
Asking price: $1,275,000
Sale price: $1,262,500
This is one of the more modest houses in the neighborhood, an unrenovated Sixties ranch on only 1/3 acre.
I am seeing 3/2 SFHs in my suburb outside Chicago under 200K now. At the peak, I would not see them for less than 230K. So, 10-15% off peak now and probably accelerating.
We are in Oak Park, just west of Chicago.
Realtor.com has five 4/2s listed for under 300K. One at 250K. Two years ago they might have five under 400K. While the general ask price has not come down that much, it’s a beginning.
Is Countrywide in trouble?
Countrywide posts its lender-owned properties on its web site. Today, it had about 3800 in California alone.
I can’t remember exactly, but I swear not even two months ago, the number was around 2300.
These are REOs from serviced loans; they’re not owned by Countrywide. To get the Countrywide REOs go to the Countrywide Bank financials on the FDIC website. By the way Countrywide Bank is actually an S&L headquartered in Virginia.
This is a beautiful chart….
http://countrywide-foreclosures.blogspot.com/
Nice site.
I poked around the Zillow pages from this one. There was one house in Springfield that was last sold on July 31, 2007. And it is already on the foreclosure list. If I were a Countrywide stockholder I would be looking to collect some scalps!
I’ve been looking at houses in MD - Bethesda and Silver Spring. Three of the houses I had my eye on in Ziprealty got contracts. All were in good zip codes in Bethesda, all had serious price reductions. However I was kind of bummed because they are all between 2 and 3 times 2001 price, at least for asking. Other than that, nothing seems to be moving and more listings are piling on every day. Listings are at around 3x 2001 prices, and there are a lot of would-be-flips (I guess) that were purchased in 2004-2005 and now asking 2X the 2005 price. Yet only a handful of listings in the absolute most prestigious zip codes are moving. Nothing at all seems to be moving in merely respectable zip codes of Rockville and Silver Spring.
There is a gigantic renovation project at National Park Seminary and new houses are starting to come online. The SF is listed at 995K and the rowhouse is over 750K. The rowhouse is 2K sf and is I think 3/3. These are of course in the midst of abandoned, haunted looking buildings in a rehab project that may never even get halfway done.
Looks as if in MD sellers are still content to sit on their houses and hold out for 2005 prices. We’re looking at the ever-burgeoning luxury rental listings.
Rent for $4,000 per month or buy for a million (which would have carrying costs of at least $7,500 per month and the expectation of negative appreciation). I hope you are looking just out of morbid curiousity. Metro DC is one of the top 5 most overpriced markets in the US.
Buy? Of course not.
Mission acCOMPlished
“Real-estate agents, who look at prices for comparable homes, or comps, say the sale of bank-owned properties can have a big impact. ‘One month the comps are showing one price and then a bank comes in and sells a property for $30,000 less,’ says Randal Gibson, a real-estate agent in Henderson, Nev. ‘All of the sudden, that’s the new comp.’”
San Diego “Central Coastal” area report.
Prices are falling hard but still ridiculous. Tons of for sale (and for rent) signs everywhere.
Citibank is valuing condos at 1997/1998 prices, and will only lend 79% of that, CLTV. This is according to my latest mortgage statement. By that metric, prices still have to fall around 40-50%. Ouch.
Here in East Bay (SF Bay Area), houses are showing up with ‘Price Improvement’ signs, instead of ‘Price Reduced’. Doesn’t matter what you call it…..
Out here it’s ‘New Price’, instead of ‘Price reduced’.
And looooots of them.
“Countrywide is facing mounting foreclosures and loan delinquencies from borrowers who were hoping to refinance before their low-interest teaser rates soared. The company has said that nearly 24 percent of the $118 billion in its subprime servicing portfolio is in some stage of delinquency. That equals about $27 billion.”
This time last year, the idea of one company having $27 Billion worth of dodgy loans, would have been shocking…
ho hum, now.
24% Subprime Default Rate (Countrywide Servicing)
Historically, the subprime, home loan default rate was about 14%. Subtract that from the current default rate of 24% and you get a default “surplus” of 10%. Now apply that 10% to the Alt-A and Prime loans.
Also, keep in mind that the subprime resets just started and will continue in large amounts through the first half of 2008. Expect a 70% default rate for subprimes which indicates a default rate as high as 56% for the alt-As and primes. If I remember correctly, these “higher quality” loans begin to reset in the second half of 2009.
With the default rate for prime historically around 2% you can expect almost every mortgage insurer and CDS insurer/counter-party to be insolvent by 2012. Also, expect Treasury/Fed to give FHLMC and FNMA unlimited credit pending a government takeover (which would wipe out the shareholders).
FHLMC and FNMA will be good shorts at the end of 2009 (after a post subprime reset fool’s rally in 2008).
Here is Southern Calif the Santa Ana winds are back and so are the fires; Mailbu is burning once again.
Speaking of L.A. County, did anyone else watch Suze Orman last night? I tuned in and the show opened with a lecture from her on how lowering fed rates won’t help anybody in trouble with their ARMs, and an explanation of how the prime rate is calculated.
Her first guest was a very well-dressed, attractive Los Angeles area real estate agent — a black woman who explained that she had been in the business for 10 years, and that her 2006 income was $136K and this year she stood to make no more than about $40K. On top of that, her rental property had recently been foreclosed on — she’d bought it with an interest-only, two year ARM that had adjusted at a time when her tenants weren’t paying the rent reliably and the property was underwater. Finally, her primary residence had three separate mortgages on it, including a HELOC to pay for a swimming pool added last year. All in all, her payments on $625K in debt on her primary residence were about $3K a month, and now the house is only worth about $550K, by her estimation. The realtor explained to Suze that she is looking for another job, but finds it difficult with her now tarnished credit history.
Suze advised that she arrange for a short sale, if possible (”a house is not a hole”, was the quote, meaning don’t hang onto the house no matter what) or, barring that, that she simply drop the keys off at the bank and move out of state and try to find other work elsewhere.
Despite the fact that I’ve been following this slow train wreck of a bubble unwind for the past couple of years, this really shocked me. I know from personal experience (Dad, granddad and uncle all realtors) that, when it comes to drinking their own kool-aid, real estate agents are tops, and on top of that never save a penny during the good times, believing it’ll go on forever. But for me, this brought home the absolute financial devastation that’s coming. If I’m remembering correctly, something like 40% of all the new jobs created in CA in the past five years have been real-estate related. This woman’s story of utter financial ruin is likely one of hundreds of thousands to come.
I was also very impressed with her honesty. As I said, the last thing any realtors in this neck of the woods will admit publicly is that the market is tanking catastrophically. For her to do so on television probably means she’ll have to turn in her NAR membership card, if she still has one, on Monday morning!
Sadly, something tells me that the majority of local “real estate professionals” watching her no doubt chalked her failure to thrive up to the implied demographic profile of her clientele…Around here, the official line seems to be that the Westside, with its ample supply of rich, white people, will hold up nicely despite all surrounding areas crashing and burning.
Yeah. Right. Good luck with that.
For her to do so on television probably means she’ll have to turn in her NAR membership card, if she still has one, on Monday morning!
Trust me no realtor with a brain wants to belong to the NAR. They’re forced to by their brokers. If the brokerage belongs, all realtors in the brokerage have to belong. It’s the most useless $500 dues ever. If realtors were really smart and banded together they could refuse to belong. There’s more of them than there are brokers. When I had my license, every realtor in our office b*tched about paying the dues, which by the way are due on Dec 1st, right before Xmas. It’ll be interesting in Jan to see how many belong, because I’ll bet many can’t scrape up the $500 for this worthless organization.
Suze advised that she arrange for a short sale, if possible (”a house is not a hole”, was the quote, meaning don’t hang onto the house no matter what) or, barring that, that she simply drop the keys off at the bank and move out of state and try to find other work elsewhere.
Dump the house and leave the state ? its 1993 all over again in Cali .
The glossy real estate insert which used to arrive in the Sunday paper has been replaced by a newsprint insert full of syndicated real estate advice columns. Whereas there used to be pages of ads advertising open houses, the last open house listing contained just one ad!
A group of realtors recently sent us a postcard promoting a caravan to view foreclosed properties in our area. I’m not sure if they included the place we just vacated on that tour.
Yes, we had to move out of our previous rental. The landlord called on Labor Day and said she was putting the place up for sale. Although our lease wasn’t up until the end of December, she indicated she would prefer that we leave Nov. 1. When I told her there was a place across the street we wanted to move into available immediately, she said that would be fine, but that we would forfeit our deposit. I cried poor and she relented. We moved and, amazingly enough, the deposit refund check did not bounce.
Nov. 2 the foreclosure notice went up. She hasn’t made a payment since June. As far as we know there has been only one viewing of the property in the last 2 months.
I can’t say any of this came as a surprise. I have been reading this blog for over two years now and everything is playing out as predicted. We have backed out of two real estate deals in the last four years, and I am so glad that we did. We have gone from being terrified we would never own a house again to being very glad that we live within our means and are not shackled to an outrageous mortgage. Thank you, Ben!
Our new landlord is in a better situation. Our rent payment actually covers the mortgage and she is current on her taxes. I do wish, though, that there was a law requiring that landlords put your deposit money into an escrow account and pay interest on it.
Can anyone here tell me how much time a renter has to get out after the first foreclosure notice goes up on a property before the mortgage holder boots you out. Two months? Three?
Forgot to say - this is Santa Clarita, CA!
My understanding is that In most states the renter is completely unprotected. Your contract is with the owner. Once the owner breaks his contract and gets foreclosed you could theoretically be on the street the next day.
Here in OH we had neighbors 3 doors up that lived in their foreclosed house over a year before the bank made them move.
In rent control markets at least San Fran, you get interest on the security deposit. Guess it goes in escrow account.
” do wish, though, that there was a law requiring that landlords put your deposit money into an escrow account and pay interest on it. ”
Well just insist on that term in your lease!! A lease is only what the parties agree to do and put in writing. The form leases that can be bought at the local business supply store are not sacred words carved in stone. Just type up what you want and if the landlord agrees, you both sign it.
Always run a credit check on a prosective landlord anymore. Also check with the county office that records the deed and mortgage so you know what the terms of the mortgage are.
Linda You got lucky…….
Next time remember this A LEASE WORKS BOTH WAYS if the landlord wants to break it they would have to PAY YOU to move.
You probably could have stayed till the end of Dec with a free month of rent the deposit for the other month.
And NO you would not have had to move out just because of a foreclosure. It takes time and you do have rights as an AMERICAN to a fair hearing in court. Seriously the bank or landlord cannot kick you out, only a sheriff with a court order after you lose in court can.
Also if water gas garbage any utilities are included in the rent and the landlord does not pay you can pay it and deduct from the rent . States do allow tenants certain habitability rights regarding cut off of services
“I do wish, though, that there was a law requiring that landlords put your deposit money into an escrow account and pay interest on it.”
We do have such a law in Cambridge, MA, where we are landlords. We always put our tenants’ $$$ in a separate escrow account and return it to them promptly, with interest, after deducting for damages, if any (hardly ever are any, since we have great tenants!).
Just back from a week in Manhattan. The cart vendors are an alert group, saw no less than three in midtown with “recession sale” signs plastered their cart. Funny, but they probably sense something is up.
Prices are still hitting new highs here in Greenville/Greer, SC. New projects announced this week include a new n’hood of 65 Luxury Garden Homes from the 500’s (from today’s paper). Malls and stores are beyond full, people even parking on the grass at the big mall (Haywood) yesterday. Went to take the kids to the Bee movie, a ten minute drive took 45 minutes in the shopping traffic.
MORE OUT OF STATE PLATES THAN EVER among the vehicles. Name the state, their plates are on our roads. (I ask people “are you visiting here?” and they ALL say they have recently moved here or are looking to soon relocate here).
When this topic comes up among friends, we in the business community wonder what the heck these people are going to do for work, as there are mainly lower-paying jobs available here.
SC has lowest overall tax structure in the Southeast if not the country. People are voting with their feet. More and more people can make a living working from a computer. SC will outperform the rest of the South over the next couple of years. In fact it would be the most logical place for me to live. But I prefer FL or VA, what can I say.
Paul, you’re only halfway right. Florida’s tax structure used to be OK before house prices went nuts. For example, I make $82k. SC taxes my income at about 6%, or almost exactly $5k/yr. The county just taxed my $247,000 home for $1,150, so total income and property tax is $6,150.
In Broward County FL, in 2001, I could have gotten a very nice home for $250k. My annual property tax would have been $5,000, with no state income tax, so $1,150 less than in SC. Florida’s system was OK before the boom. Again, the tax rate really isn’t the problem, the home prices are. I hope I didn’t open up the FL SOH can of worms…
We purchased a new home in North Dallas (Frisco) from a distressed builder in April 2007. A foreclosure home was sitting next door while the home was being built. Ended up paying under $70 per sqft for the new home. The foreclosed property next door (build in 2004) later sold for higher price per sqft some months later.
I make $125k+ p.a. and the local high tech economy is solid. Paid approx. 2X annual salary for the new home. 6% fixed 30 year loan.
In my opinion the failure here was with underwriters. I should not care what your credit score is if you can show me unbroken high income for years (i.e. a career) and I am writing a reasonable (i.e. affordable) loan amount. Dossers with no income and high credit scores need not apply. This is not rocket science people.
I know people with relatively high and stable incomes, who would not get a loan from me…
I don’t think even us on HBB know horror of what’s really going on. Some guy in SF bay area rounded up six investors (AKA pulses with SS #), conspired with bank to give them all 15K monthly income on loan papers to buy several Bay area properties. When prices started dropping, fraud guy skipped town, leaving the pulses with SS# on the hook. One of the “six investors” told me yesterday her San Leandro duplex bought last year for 750K just short saled for 320K.
St. Joseph statues don’t work well, on rivals turf.
“Foreclosures in St. Tammany Parish surged nearly 700 percent in the third quarter this year compared to the year-ago period as homeowners struggle to make exorbitant mortgage payments caused by a post Hurricane Katrina housing frenzy.”
Took a peek at the online PMZ website for local (San Joaquin County California) listings.
If homes are foreclosed/bank owned they have an asterisk next to the listing. Asterisks pepper every page. And it just getting started.
DOC
Both sets of friends finally closed on their houses early this week. Here’s the summary:
Bellingham home: On market FSBO, May’07, OAP: 360K
July, reduced to 345K
August, got a realtor and reduced to 325 K
Sept, reduced to 315K
SOLD, Nov. 295K
(in May, that hoouse would have sold for 320K in 2 weeks but they got greedy)
Seattle: On market May ‘07: OAP: 629K
late June, off market and worked on in effort to “get the best price” (they spent over 35K in “improvements”).
Late July: 590K
August: 580K
September, off market a couple weeks for staging and relisted with a new realtor.
Sept., back on market 565K.
October: reduced 520K
Nov. SOLD 480K
(in May, that house would have sold for 550K in a couple weeks, again, they were greedy.)
The Seattle sellers are now firm bubble-believers. They were totally freaked last week when a house in their ‘hood that’s , according to them, “twice as nice and bigger to boot” came on the market for 450K. Friends Seattle home is a great home, view of the Lake, yadda yadda yadda. Only problem is it sold for about 160/170K pre-bubble.
The B’ham home is a dump. The new owners will have to put another 75K in just to make it liveable. The buyers were idiots from Hawaii. And the weather’s awful this year, worse than usual.
Oh and, BTW, the realtors and politicians and newspapers up here are still saying our market, unlike the rest of the US, is “strong”. It’s only every once in a while that somebody slips up and says we’re going down. Both friends took a 20% cut off of what they would have gotten last winter.
I bubble-blog part-time and I’ve been watching these spec houses in a small subdiv. near my place. There are 5 built, all empty with For Sale signs since last summer. Room for 11 more but none of them started. I posted a photo from the same angle a while back…heheh, I don’t think they were expecting this when they built up. At least one is a 5/3, who the hell needs that??
Malibu is on fire again - 2200 acres, 35 houses burned, 10,000+ people evacuated at this point. I saw some clouds off shore at dawn this morning, turns out it was smoke
ATLANTA
Banks are trying to sell foreclosed building lots for $0.50 on the dollar … Local Bankers are also saying that the foreclosure rate will be 25%….All of the re-sale houses that I have noticed since last spring as being for sale in Dunwoody (a very nice area) are still for sale…No meaningful resolution to the water crisis, but the recent government prayer for rain has made us a national laughing stock…Friday bargain hunters scenes on TV looked more like a giant ICE roundup…Steaks at the local Kroger now have anti-theft tags on them.
“Steaks at the local Kroger now have anti-theft tags on them.”
I imagine quite a few Porterhouses, have been foreclosed on…
My sister works for a major retailer. She says the national reports from the big retailers is that sales are down 17% from last year’s Black Friday weekend. I dunno if tomorrow’s sales can make up that large of a deficit.
Here in the Twin Cities, I’ve hit quite a few stores the past two days. No trouble finding parking at any store, no long lines to stand in. In fact, I had to return two items I’d bought earlier today, and in each store the return took almost no time at all. The main drags to/from the big shopping areas on my side of the Cities aren’t congested at all.
I work for a Dillard’s in a good area of Henderson, NV and my department managed to match last year’s BF totals and a few others did as well but the majority of the departments we down quite a bit. Today’s sales were abysmal; the store (and mall) was a ghost town. Nothing but people returning stuff after the BF high wore off and people asking when we’re marking stuff 50% off. I can’t even imagine how bad next year is going to be.
I second the Twin Cities observation. Was dragged to Southdale center on Saturday, and the crowds were no worse than any other weekend. Macy’s even seemed quieter than usual, with employees just standing around with nothing to do.
Hmm…The following kind of goes against some of your isolated observations:
http://biz.yahoo.com/ap/071125/holiday_shopping.html
AP
Retailers Buoyed by Strong Holiday Start
Sunday November 25, 6:44 pm ET
By Anne D’Innocenzio, AP Business Writer
Retailers Have a Strong Start to the Holiday Shopping Season, but Shoppers Need to Keep Buying
NEW YORK (AP) — The nation’s shoppers set aside worries about higher gas prices and a slumping housing market and proved their resilience over the Thanksgiving weekend, giving what the nation’s merchants wished for — a strong start to the holiday shopping season.
Stores and malls opened the season as early as midnight, drawing bigger-than-expected crowds Friday for discounted flat-panel TVs, digital cameras and toys such as all things related to Disney Channel’s “Hannah Montana.” Strong sales continued through Saturday, according to one research group that tracks total sales at retail outlets across the country.
Clearly, the biggest draw was electronics, benefiting consumer electronics chains like Best Buy Co. and discounters such as Wal-Mart Stores Inc. and Target Corp. Popular-priced department stores including J.C. Penney Co. and Kohl’s Corp. drew in crowds with good deals. Toy stores like Toys “R” Us Inc. fared well too. Still, apparel sales appeared to be mixed at mall-based clothing stores, though a cold weather snap helped spur sales of outerwear and other winter-related items.
“This was a really good start. … There seemed to be a lot of pent-up demand,” said Bill Martin, co-founder of ShopperTrak RCT Corp., which tracks total sales at more than 50,000 retail outlets. ShopperTrak reported late Sunday that sales on Friday and Saturday combined rose 7.2 percent to $16.4 billion from the same two-day period a year ago.
Total sales on Friday, the day after Thanksgiving, rose to $10.3 billion, up 8.3 percent from the same day a year ago. Martin had expected increases no greater than 5 percent.
Meanwhile, Internet research firm comScore Inc. reported a 22 percent gain in online sales on the day after Thanksgiving compared with the same day a year ago and estimated online sales would exceed $700 million online Monday, the official kickoff to the online shopping season.
The signs were encouraging, but stores are now wondering whether bargain hunters will keep up the pace as they face an escalating credit crunch, depreciating home values and rising daily living expenses.
Frederick Crawford, managing director at AlixPartners, a turnaround consulting company, said that amid economic challenges, people are buying fewer gifts.
“Clearly, it was mission-based shopping,” Crawford said. “People had their list, and they were very specific in what they were looking for.”
Consumers were out looking for bargains.
“The bargains are better this year, a lot better,” said Theresa Calib, of Houston, Texas, who was at the local Greenspoint mall Saturday. “We always know what we want to get, and we get it.” She noted she took advantage of Foot Locker Inc.’s two pairs for $89 sale.
I’m trying to get everything done, and I did it,” said Pat Marcantonio, of Wakefield, R.I., who returned Saturday to the Warwick Mall after braving the crowds Friday morning.
Marcantonio also shopped for herself Saturday, loading up a Bath & Body Works bag full of frosted cranberry and sweet pea lotions. Bath & Body Works was offering select gift sets at 30 percent off.
Meanwhile, in downtown Philadelphia, Barbara McGlade, of Wyndmoor, Pa., had picked up deals on fleece clothing at Modell’s, with prices marked down from $29.99 to about $15.
“If I see something now, I’ll pick it up,” McGlade said. “You don’t know if you’ll see it again.”
The nation’s stores worked hard to lure shoppers with expanded hours, including midnight openings, and a blitz of early morning specials Friday. J.C. Penney and Kohl’s opened at 4 a.m., an hour earlier than a year ago.
Many stores were also more focused on discounting products that they knew shoppers wanted. Gail Lavielle, a spokeswoman at Sears Holding Corp., which operates Kmart and Sears stores, said it zeroed in on great deals on electronics, instead of offering deep discounts on a wide range of products. Still, analysts say frustrations were high across among shoppers who couldn’t get their hands on limited deals at many different stores.
Lavielle noted that the turnout Friday was better than a year ago, and customer flow was steady throughout the weekend. Both Kmart and Sears sold out a significant inventory of its flat-panel TVs. Other hot items were Global Positioning System receivers, game consoles like the hard-to-find Nintendo Wii, and digital cameras.
Toys “R” Us chairman and CEO Jerry Storch said the toy seller drew a strong turnout Friday for its 101 early morning specials. He said that he was pleased with traffic on Saturday and Sunday as well.
“This was a robust start to the holiday season,” Storch said. Popular items included anything related to Disney’s hot franchises “Hannah Montana” and “High School Musical,” video games, consoles, an interactive parrot from Hasbro Inc., and radio-controlled helicopters and planes.
In a statement Saturday, J.C. Penney reported “strong performance across all merchandise categories,” including fine jewelry, outerwear, and young men’s and children’s assortments.
Wally Brewster, senior vice president of marketing and communications for General Growth Properties Inc., which operates more than 220 malls in 44 states, estimated that sales rose 2.5 percent for the weekend compared with a year ago, in line with projections. Electronic items were extremely popular, but he added that the cold weather helped spur sales of fleece outerwear and other winter items.
Karen MacDonald, spokeswoman at Taubman Centers, which operates 24 malls across 11 states, estimated that business was up anywhere from mid to high single digits Friday, while sales Saturday increased by as much as the mid-single digits.
Both Macerich Co. and Simon Property Group reported strong sales at malls across the country over the weekend.
Despite a decent showing, many shoppers interviewed said they planned to curb their spending.
Earl Lee, a mechanic from Live Oak, Fla., who was shopping in Tallahassee, said that he was planning on spending less this holiday season.
“Gas prices, everything’s so high,” he added.
John Muller, of Clifton, N.J., who was standing outside Macy’s Herald Square in Manhattan on Sunday, said he plans to spend only about $500 this year, half as much as a year ago, because of higher expenses and worries about the economy.
This year, “we are mostly buying for the kids,” said Muller, who has two children, ages 3 and 7.
I was in northern Indiana yesterday helping my father with some housework. We went over to Lowe’s to get some supplies and while waiting for them to process the truck rental paperwork at the customer service counter I overheard them deny credit to the people standing next to us. Also, while the parking lot had plenty of cars in it, there were very few people in the checkout lanes. In fact, about half of the lanes which were staffed had no customers.
Thanks for the Lowedown…
My last visit to a Ca. Central Valley Lowes was like a ghost town, 1 cashier open and empty aisles.
in lexington, south carolina, a nice middle of the road conservative area, the Lowe’s did 258k sales on black friday, which sounds great, until you compare it to last year which was right around 450k on same day
My sisters and I went to Sedona on Christmas day a few years ago. Most shops and restaurants were closed. Had to look hard for public restrooms. Oh yeah, I think because people are usually at home enjoying the holiday, as opposed to wanting to take a day trip.
Pessimists (spinners) will say business was down in Sedona that day. Realists will say “because the businesses were mostly closed!” LOL.
Okay I’m an equal opportunity pessimist. We will see 1.44 million more foreclosures in 2008. That will make the economy noticeably worse.
Heres a good one guy bought a year ago for 880K trying to sell for 885K comparable homes are now selling for 780K
http://www.zillow.com/HomeDetails.htm?zprop=16421708
I would hope all these over priced homes drop another 100K in 2008
Yea its expensive in east Ventura county, just a little.
Hey Ben & All,
I need some advice.
My gf and I are negotiating (with a property manager–the owner is Saudi Arabian) to rent a ‘new’ house in central Florida.
The leasing agent hasn’t been forthcoming with expenses, like: it’s going to cost $200.00 to bring cable to the house; recycling bin deposits. We worked the price lower from 1,375 to $1,200—for 2.100sq/ft.
The advice I need is: Am I missing anything or have to watch out for?
Thank You,
Chris
Most property managers that I’ve dealt with will only provide the names of utility providers and their websites–I’ve always had to research the costs myself. Fixed cost services, like cable and trash, don’t vary much per tenant, but electricity can vary greatly depending on lifestyle choices. I don’t think that it’s reasonable to expect them to provide estimates of utility costs, particularly since they have no control over rate increases (and with property tax revenues in the toilet, expect surcharge fees to crop out throughout many municipalities in 2008).
The potential most contentious issue with lease agreements tends to be defining the scope of responsibility for basic maintenance. For example, who is responsible for yardwork and what are the expectations of both parties. Make sure that anything that is discussed verbally makes its way into the lease agreement. If you don’t agree with the language, then don’t sign it. Don’t be afraid to strike-through lines that you disagree with and/or request a re-write. If they flat-out refuse to include the changes that they have agreed to verbally, then walk away. Do not give in to a friendly smile. In the end, all that matters is what’s on the lease agreement.
Negotiating a favorable price is only one step in a rental. Or said another way, a fair and satisfactory monthly payment is only one of many necessary factors to securing a favorable lease.
Professionally, I am a purchasing agent for an electrical contractor. I write dozens of purchase orders a day as well as negotiate rental contracts and subcontracts for a wide variety of material, equipment, and services. I used to be quite timid about insisting on the terms that my employer required. I quickly got over it when I realized that ANYTHING is open to negotiation, especially when the other party needs the deal to happen more than you.
Renters (especially when we’re young) often feel subordinate to property managers. We’re not–it’s the other way around, in fact. They are providing a good/service that we are paying for. They either cater to our requirements (within reason) or we go elsewhere.
A lot of property managers try to captivate the potential renter by insisting on an application fee before they will seriously negotiate. In my area, that can be around $25 per person. The fee is reasonable, but refusing to negotiate before qualifying a renter is ridiculous. Do not pay them a dime until you’ve established that a satisfactory lease agreement is likely. If that means that some property managers won’t take your business, then so be it.
Thank you Walt526. I’ve been using email with the leasing agent so I have a hard copy trail. We almost leased a place a few weeks ago but bailed because the lease agreement was where they made up the discount on the low rent. Get this: after the fifth day of move in, it would cost us $50.00 for each service call, like if we needed a plumber or the garage door failed. I read your reply out loud to my girlfriend, she has her heart set and often makes impulsive decisions, usually when it involves buying something that she wants. Thanks again. Cheers! Chris.
Anybody here from the North Shore, LI? What are you seeing?
Grew up in Great Neck NY.
NY is a crazy world. More money than GOD. It is becomming 2 classes. have and haves not. People who have rub it into those who do not.
I am gald I left. Brother bought an 1800 sq ft house for 469K in 1999. A smaller house just sold for 1.2 million.
Just nuts. Its mostly oriental money
With all these people imploding financially, if I were looking for a new mate (I’m not - been happily married 17 years) I would make sure I had a credit report for them before it got too serious.
Otherwise you are getting a lot more than you bargained for.
I hope you are not kidding. Because from experience, you are right. After getting ripped off for a lot of money 3 years ago, I insist on doing background checks via internet. This society is a rip off society these days.
Looked at some places in ATL today. Not because I’m a buyer, but because I am fascinated by it all. Ppl still asking crazy prices for homes (intown small 1920’s 3/1 bungalows in good areas are over 450k), but whereas they used to sell in a few weeks, they sit for months and still no sale. So its just a matter of time. One area, however, in which the break finally occured is in the condo market. The ATL hirise market was extremely overbuilt and over-run by speculators. Units that were sold initially for $350k over the last two years, were listed for $400k or more. They sat for months. Now several are listed as short sales for $320k. Still too high, but there is no way to get around the reality that investors will not break even on these things. This will further accelerate the downward spiral. 1000s more units in the pipeline. These units rent for about 2k per month. Around 250k maybe they would make sense.
DC Burbs.
My old neighborhood, 22164 was one that got pretty bad during the bubble. Flop houses and what not. I sold my TH for 350 in 10/05.
Was cruising the net this weekend and one of them is now for sale for 185k. There are SFHs that are under 300k in the same zip.
In the area where I rent 22043, a pretty nice neighboorhood, prices are below 500k for SFHs which is not as big a decline but, I think, a big psychological breaking point.
This spring should get pretty interesting in the Metro DC area.
Rollover: The Anatomy of the Accelerating U.S. Real Estate Bust
http://www.youtube.com/watch?v=I5kNJgLwD3Y&feature=related
For those who haven’t seen this or the other videos that go along with this one….. they’re pretty intense.
Neil, better go re-stock your popcorn pantry……
From Ben’s NY Times article: