Local Market Observations!
What do you see in your local housing market this weekend? Lower prices? “Billy Joel has closed on his latest beachfront house, a 1-acre Sagaponack property. One of several celebs with a constant eye out for Long Island real estate, Joel paid a little more than $11.6 million for his latest home. He got $2.3 million knocked off his new home and in June negotiated a $2-million markdown on his first Sagaponack home.”
“Whether he would have gotten those discounts two years ago during the housing boom is unclear, because in the last few months a few Hamptons real estate veterans have been wondering whether even the luxury market has been slowing, as it has for the rest of Long Island.”
“Usually, buying and selling activity is seasonal, with spring and summer strong and the end of year quieter, but the housing boom fudged those lines, with bidding wars and deals all year. ‘Last couple of years, there has been no season,’ said Paul Brennan, regional director of the Hamptons for Prudential Douglas Elliman Real Estate. ‘It’s been full-court press all year ’round.’”
More foreclosures? “The foreclosure rate is rising in Wisconsin, according to RealtyTrac. There were 2,506 foreclosures in Wisconsin in October, a 67% increase from September.”
“Patrick Essie, executive director of the Wisconsin Association of Mortgage Brokers in Madison, said the October numbers were surprising. ‘Why it was bunched up in October as opposed to September or August, that is something that we don’t know,’ he said. ‘Bank repossessions were up nearly 35 percent, evidence that more homeowners who enter foreclosure are losing their homes.’”
More industry woes? “Suncoast Roofers Supply Inc., Tampa, FL, has filed for Ch. 11 bankruptcy protection. In its bankruptcy filings, the roofing supplies distributor reported a 57% decline in sales over 2006 due to the decline in housing and related markets.”
“It serves more than 2,500 contractors as well as retail customers through its network of warehouses in Florida. The distributor estimates that it has an 11% market share in the Florida roofing products market, giving it the No. 2 spot.”
Reckless Boosterism? “Who knew calling Farmington (NM) ‘home sweet home’ could be quite so sweet? The ‘Today Show,’ NBC’s national morning news program, featured Farmington on its Friday broadcast in a segment about spotting good real estate investments. Real estate expert Barbara Cororan talked about four up-and-coming real estate communities nationwide, and Farmington made the list.”
“Cororan said the area is ’still affordable, but prices are on the rise,’ said Tonya Stinson, marketing manager at the Farmington Convention and Visitors Bureau.”
“‘We have people moving from other places that had money to spend,’ said Margaret McDaniel, executive director of the San Juan Economic Development Service.”
“Texas’ slower home appreciation rate and a continued, global interest in the state as a place for business contribute to the Dallas-Fort Worth area’s evading of a housing crisis, according to real estate groups.”
“‘With the influx of population into the Metroplex, people have to have homes,’ said Sherry Matina, CEO of the Greater Fort Worth Association of Realtors. ‘Different Metropolitan areas around the country have had their day in the sun, we are having ours now. We’ve waited a long time for it.’”
“‘Last year, 2006, was the best real estate market Dallas-Fort Worth has ever had,’ said Sue Meyer, Coldwell Banker Dallas/Fort Worth president. ‘This year will be the second-best. How could you call that a slump?’”
“Despite the all-around rosy picture, Matina said ‘there are pockets of Tarrant County where the foreclosure rates were very high, but that really doesn’t happen that much in the inner city. It’s usually outlying areas of brand-new construction.’”
“First-time homebuyers who never should have qualified for loans, as well as out-of-state investors, are the victims of foreclosures in those areas, she said.”
“‘The Metroplex and Dubai seem to be where all the interest is,’ Matina joked.”
Reports related to the housing bubble? “Q. My dad died in October and left me a house valued at about $150,000, but he owed close to $225,000 on the property because he had borrowed against the home to pay for his medical bills. Now prices for the homes in his neighborhood have dropped.”
“I don’t want the house (or to take over the loan) because the property is worth about $75,000 less than my father owed on the mortgage. Is it possible to reject a property that is left to you in a will, or must I be stuck paying the mortgage bill because Dad gave the home to me?”
“Is it possible to reject a property that is left to you in a will, or must I be stuck paying the mortgage bill because Dad gave the home to me?”
That is a good question.
Just move everything out and store elsewhere.
Then let the bank do it’s thing. While they could put in a claim against the estate I’m guessing there are no real assets as these will have to be used to satisfy creditors.
Yes, you can reject an inheritance. It’s then up to the estate to dispose of the property.
Could it be Donated to a charity?
“I owe much; I have nothing; the rest I leave to the poor.”
Francois Rabelais’ will, 1553
Is YOUR NAME on the deed or mortgage? Then YES you are liable. You own part of it…just like anything in joint ownership.
If not then have the estate sell it and if there is any money left over its yours.
You obviously did NOT READ the linked article. Itwas his father’s - NOT his AND his father’s.
Executor will probably just try to sell and then give the lender a deed in lieu and let the lender deal with it. Lender would first have to sell the property and it may or may not be able to collect on a deficiency as estate would probably be closed before it found a real buyer. Appraisals are ‘happy guesses’ in the eyes of a court when determining how much something is worth.
OT from same article
Q. What does it mean when a property is advertised as having a “graded lease”?
A. A graded lease, sometimes called a “step-up” lease, is a rental contract that calls for specified rental increases at predetermined intervals.
For example, if you signed a three-year graded lease today, the contract might call for an initial monthly rent of $1,000, rising to $1,100 a year from now, and then stepped up to $1,200 in the third and final year.
Q. I was a huge fan of the mafia-themed “The Sopranos” show on HBO before it went off the air earlier this year. Now I hear that Satriale’s, the New Jersey pork store where the TV mobsters did a lot of their “business,” is going to be torn down and replaced with condominiums. Is this true?
A. As mob boss Tony Soprano might say, “It’s already a done deal.”
“Real estate expert Barbara Cororan talked about four up-and-coming real estate communities nationwide, and Farmington made the list.””
I love it. They spelled this little biyatch’s name wrong.
I hope she moves to Biddleville (wherever that is). I know the Charlotte area well and I’ve never heard of Biddleville. Is it near Gastropolis (Gastonia)? Anybody know?
Biddleville could be on of those “resort” towns that keep springing up here in NC. The developers try their level best to incorporate their POS resorts,so that they can start taxing the residents, and hit the state up for taxpayer-supported fire protection, etc. I’ve lived in NC all my life, and keep coming across new towns that I’ve never heard of.
LOL! Biddleville is an, ahem, up-and-coming area near “uptown” Charlotte. Of course, it’s different here. We’re bucking the national trends and the market is hot!
NYCityBoy: I’m possibly coming to NYC (from San Antonio) soon to hang out for a couple weeks and know you are job hunting (free time?). Anyway, I know only one person in the city (and barely know that person). Any chance you are willing to help out in terms of finding a place to stay (hotel, etc) and want to get together? I can pick up some of your food and entertainment in exchange for local knowledge. We can go over details via private mail, click on the URL of this posting to get my email addy. Thanks.
Correction: I was talking about aNYCdj who was job hunting. aNYCdj, are you out there? Thanks to NYCityBoy for contacting me.
you can e-mail me above link my GF website
“Suncoast Roofers Supply Inc., Tampa, FL, has filed for Ch. 11 bankruptcy protection. In its bankruptcy filings, the roofing supplies distributor reported a 57% decline in sales over 2006 due to the decline in housing and related markets.”
“It serves more than 2,500 contractors as well as retail customers through its network of warehouses in Florida. The distributor estimates that it has an 11% market share in the Florida roofing products market, giving it the No. 2 spot.”
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Why file for bankrutcy? Our local roofers just hire hitmen-
Francis Giangrossi, owner of Coast Roofing, plotted with his stepbrother, Jim Skiba, a supervisor at the company, to plan a revenge attack on Steven Stewart for harassing Giangrossi’s new wife of three months, sheriff’s officials said in a news release. Giangrossi is known as “Fran” among people in the roofing business.
http://www.bakersfield.com/hourly_news/story/299186.html
RE: Our local roofers just hire hitmen-
Murder and enormous costly to the taxpayer mayhem all over some worthless deranged woman.
When are fook are men gonna smarten up.
When are fook are men gonna smarten up.
———————
When their balls fall off?
(sorry, couldn’t help it)
From the article:
Then about a month after the first attempt on Stewart’s life, Espino, 19, Alberto Torres, 18, Montoya, 23, and Estrada, 29, arrived at Stewart’s house where Espino broke in through the front window, according to Sheriff’s Department reports. Stewart, hearing the noise, fired several rounds from a shotgun at Espino, fatally wounding him.
These are the stories you never hear — but they happen all the time.
It’s why we need to be careful about emotional responses to “gun control”, especially when facing the possibility of a very severe recession brought on by the tremendous wealth disparity.
I know it’s technically off-topic, but not in the sense that we need to be prepared for what might happen in the future. Crime is on the rise again (one of the forward-looking indicators of a recession, IMO).
As we enter an election year, consider your stance on some of these very important issues — and use logic, not emotion, when making your decisions.
Better be able to defend yourself and your property, because a tax-strapped government sure as hell won’t be there to do it.
Make that “yourself, your family, and your property”.
Don’t forget:
When seconds count–cops arrive in minutes.
Or hours, if it’s LAPD.
when you outlaw guns, only outlaws have guns.
Are they doing the - “This weekend only” price scam anywhere else??
Its only on the “high end” homes.
This weekend only homes are priced $100k and more less. Or they say its off the market if its does not sell “this weekend” by Sunday @ X time. Or “we have a lease in our hands right now and if we don’t sell by Sunday, then we will accept the lease”.
Hello all, I see lots of talk that banks are holding onto their REOs in various markets. How is this information obtained? The only reference I have here in Hampton Roads (Virginia Beach, Norfolk, Newport News) is a website I host for someone that does REOs. I don’t know the guy, but I’ve seen the listings go from 6 to 100+. The flip side is, the asking prices on a few I looked up on his site don’t seem good. One is listed at $40K more than the person paid 8 months ago (foreclosure after 8 months? Sheesh). So that isn’t any sort of deal whats-so-ever.
Anxious to see real movement down. There are tons of *REDUCED* on craigslist, but there is still a good amount of absolute crap at $200K, in a market where the best cities median household income is $60K, all others are worse.
Central coast update: As SLOBear first posted on his blog, quite a few furniture stores on the central coast are packing up and closing up shop. Quite a few “going out of business” signs seen in Ventura as well, on the drive down the 101 to LA.
I wouldn’t read too much into the “going out of business sale” when it somes to furniture stores. There’s a furniture store in Pensacola that has had that sale going on for about 15 years.
Hah, here in Hampton Roads, there is a furniture store named Haynes that has these type of sales promotions almost every weekend. I think they finally quit, not sure if it was legal action. They operate a number of different, dislike stores. The sheer amount of money they spend in advertising alone says that their prices can’t be that low, and that they probably have protection from every media outlet in the area.
If there is an auction of the remaining inventory, then you’ve got a real going out of business sale.
Stores can legitimately claim going out of business sales again and again. Often it’s a wholesaler going out of business, so the retailer can offer good bargins. It really is not a scam by retailer.
Years ago, there was a place called the Oriental Rug Gallery (or something like that) that “went out of business” every weekend for years in southern New Jersey. I think eventually one of their sales was the real thing…
Among the many advantages of home ownership is the ability to change the oil in your car whenever you want:
Ever wondered what it would be like to own your own home? The Day you stand on your own land and strength comes up from the ground and goes all through you and you realize no one can tell you to leave or raise your rent anymore or tell you you cant have a pet or “dont wash your car here”. And you can invite friends over or tune up your car.
http://tinyurl.com/395ayp
Well then, I guess we’ll just have to adjust all the real estate figures for “homes” to exclude condos. Condos don’t come with ground (strong or otherwise), they can raise your condo fee, I’m sure some disallow pets, and the ones that have parking spaces are probably in a garage faucets to wash the car even if they did let you.
Perhaps, a single-family on a quarter acre without an HOA.
The gov’t would have no trouble forcing you to leave should you not pay your property taxes. No one really owns anything they must pay taxes on.
Among the many advantages of home ownership is the ability to change the oil in your car whenever you want.
At this apartment complex I rent in Baltimore, there are designated areas to change your oil. As for decorating an apartment (pictures, nails in walls, etc), I certainly can do that in Phoenix. Can also install ceiling fans in it. I will do that in the summer of ‘08 when I return to work in Phoenix. Have to buy a house because you have a large dog? Some of my fellow tenants in Phoenix have large dogs. Same for my apartment neighbors in Baltimore. Have a family? Kids? My Phoenix apartment complex has 3 bedroom units and is adjacent to a park where there are organized sports for the kids, tennis courts, walking/blading/biking path, and a basketball court and playground. The apartment complex in Phoenix has 2 swimming pools and a jacuzzi. Worried about foreclosures causing tenants to be evicted? Won’t happen in Equity apartments.
Bill,
Are you saying you can’t put up pictures in your Maryland apt?????
We have a “picture wall” in our (rented) house! Lots and lots and lots of family pictures.
Can’t see how they can tell you what to do since you are paying for a HOME, as long as you leave it basically the same as when you got there.
We’ve added 4 ceiling fans, added outdoor lights, done some landscaping, etc. It’s our HOME!
I did not ask, but I kind of had the vibes that I could not put nails in the walls in this apartment. It’s temporary anyway. Looking forward to spending 3 or 4 years back out west after the summer of ‘08. But if the $ is much better here on the east coast, Maryland is as far north as I will be.
Where I live in Australia, the local Council by-laws essentially prohibit “mechanical work” in Reisdential “A” areas (SFH, no HOA), which arguably includes oil changes.
Of course, everybody ignores such nonsense.
They’re right, though. The day I first stood on the mountain and looked waaaaayyy down at that teensy little black Volvo parked in front of that cruddy little trailer-house and realized that this was all “my” property to play with, was a most intense rush. As Highs go, it’s right up there with Owlsley purple and pumping out an heir.
Hehehehe… of course, here in Maryland, the “Tax me!” state, one cannot even afford a trailer, much less a lot on a trailer park. Maryland: insuring your future is unaffordable.
Anybody within earshot of Jacksonville has heard of Nocatee - the great Nocatee, the dream development that has everything, so perfect for your lifestyle, the place you and everyone else has been waiting for. Now you can have it all.
This huge “development” straddles Hwy 210 for five miles between the Intracoastal and U.S. 1 along the Duval/St. Johns County line. This was a colossal late-in-cycle massive new-town development concept with huge infrastructure requirements, as 210 was formerly a narrow, shoulderless road. It was sold - incredibly - as being “coastal” (ads showing children riding toy bikes to the beach) and “Ponte Vedra lifestyle” even though the entire development is WEST of the intracoastal waterway, which is itself three miles from the beach at that point, and access and parking at the beach is limited at best at the closest point.
One sees new ponds and lakes, thousands of new trees, over-engineered highway gutters, walkways, pathways, fake town parks, upscale highway lighting, new exits to thousands upon thousands of potential home sites, a ready-to-go downwtown even once people start coming - but, oops, nobody is much interested. (For commuters and cycling enthusiasts, we have now been given a beautiful new four-lane with full shoulders connector road from the intracoastal to U.S. 1.)
Oh, wait, it’s just another big inland development carved out of the pines and cabbage palms and palmetto - how thrilling. What Florida really needs is for a big volcanic mountain to pop up out of nowhere in the middle of the state somewhere - now that would provide some fresh excitement.
Is that in the direction of St. Augustine?
It would be just east of a straight line between Jax and St. Aug., but really not on the way to anything except connecting to and from the Jax beaches/Ponte Vedra Beach and I-95 south. The main state road is running kind of SW-NE there so is not a principal commuter road. (Now that it’s been widened, and would be a safe and ideal venue for Grand Prix racing, they have slapped a 45-mph speed limit - “for the children” I’m sure - on it and turned it into a speed trap. This ties in with an earlier post of mine today.)
Close to nothing, convenient to nothing, but yet again, so perfect, a location in the middle of everything. “Less than a half hour to . . .”
That is a very large scale development. There is a bunch of propaganda available at ” http://www.nocatee.com “. It looks like they planned ahead for everything, except possibly a bust followed by many years of slow growth. It will be interesting to see how that turns out over time.
The weirdest thing is how they have tried from the get-go to sell this as being beach, including the new high-falutin’ Ponte Vedra postal address (as opposed to the existing Ponte Vedra Beach, where real live rich people live), like maybe nobody would notice that the beach is not close and is in fact difficult to access - it’s more convenient to get from the Southside of Jax to Jax Beach if you just want to go to the fcvking beach.
That’s how Irvine started in the OC.
My wife was talking with my aunt the other day. My aunt and uncle do very well with their own business and live in an upscale neighborhood in Little Rock. These are newish ~5k? sqft homes, typical mcmansions. She says a year ago you couldn’t get a house in that hood for less than 600k and now there are several priced under 600. I also saw a foreclosure in that neighbood a few weeks ago.
A coworker of my wife calls them a “fat girl on a bar stool” (big house, small land). I never understood the desire to live in these monstrosities. For that money you could build a very nice 2-3k house on 10 or more acres near LR.
“fat girl on a bar stool”
Man, I’m stealing that line!
That line’s a beaut! LOL
“fat girl on a bar stool”
—————————–
I nominate this as the official name for those ugly McMansions which sprung up all across the country, courtesy of this credit bubble.
Awesome!
check out the acronym — FGOBS
I can’t take it anymore. Seriously, how can anyone read this and keep a straight face in light of all that has occurred over the past few months. Morgan Stanley must have a death wish. Gotta hand it to Lennar, though.
http://www.reuters.com/article/fundsFundsNews/idUSN3057686420071201
If I read this correctly, Morgan Stanley purchased $1 billion of lots (book value, 80% of $1.3 billion) for $525 million, but then they are letting Lennar actually manage the lots via this new “entity” owned by Morgan Stanley for the most part, but managed by Lennar. Given the purchase price, how can this entity hold the lots at $1.3 billion?
I guess the analogy I’d make is that the deal is similar to companies that lend the money, sell the loans but keep the servicing end. I’m no fan of Lennar, but this was a smart move for them to keep their heads above water. For Morgan Stanley, a dumb move, IMO. They will get the short end of the stick.
At least they aren’t getting those lots. At least, not yet.
I’m guessing here, but maybe Lennar owed Morgan Stanley the $525M and they decided to convert the loan into hard assets, while allowing Lennar to trade out of trouble if they can.
If the lots were valued at $1.3 billion on 9/30, they represent about 20% of total Lennar inventory on 8/30 (its last quarter reporting). Inventories were about $7 bb and Net Worth about $5 bb end of last quarter. Assume inventories are overvalued by a factor of 2 (i.e., similar to this parcel, although my guess is the other 80% is worse than this - am giving Morgan Stanley some credit) - then it implies a reduction in net worth to around $1.5 bb. Not good, but Lennar’s balance sheet is better than most, and so it can probably survive, at least for another year.
Good news from Pullman, WA.
Went to see a rental house yesterday and heard from the very chatty and helpful rental agent:
1) This is a flip that they couldn’t sell (asking $315k, dropped to $295k). It is almost impossible to sell a home in Pullman right now, the market has crashed. (In fact, this is just one of two flips they can’t sell.)
2) They are asking $1500/mo for this house, but if you offer $1200 they would probably take it. They need to get someone in this house. ($1500/mo is much too high for a relatively small split entry in an OK neighborhood.)
3) This is the worst RENTAL market I’ve seen in my 15 years in the business. There are way too many units for rent.
In a nutshell, we have more houses than families to occupy them. Regardless of interest rates or bailouts, supply vs. demand will lead to lower home sale and rental prices. People have been complaining about the cost of living, so this is a good thing… right.
I viewed a rental house yesterday in Citrus Heights, CA (older suburb of Sacramento). The house had a lot of positives, but the negatives were that it was built in 1975 and had a lot of deferred maintenance issues, and it seemed like the only “improvements” took away from the basic mid-century modern design of the house (filled in and boarded over in-ground atrium planter, chair rails IOW “Country Style”, in the dining/family area off the kitchen, and built-in hanging cabinets in one of the three bedrooms that gave it an obvious office vibe and maybe you don’t WANT an office…)
They were asking $1550/mo in an older middle class neighborhood in an older suburb. I really love the style of the house, but felt after some reflection that there were too many design elements the owners had frakked up and the rent should have been closer to $1200 for the area. So, we passed.
Cmyst,
Was that the Streng you were looking at? If so, too bad because it looked decent but I know you’ve been through the deferred mainteniance debacle before and I don’t blame you for passing.
We looked at a 1926 Mission REO yesterday - they wanted 275k for a house that needed 95K minimum in repairs, in an area where the average value of these older homes is around 150k in good shape. I did actually laugh at the bank rep, tossed him an offer of 78k (the 99 puchase price) and walked away.
How does the Pullman rental market work in the summer, with many of the students gone (the old line about Pullman was, in the summer they roll up the sidewalks)? There does seem to be more summer school action, but I would guess that landlords in Pullman (and other college towns) have the added burden of having to raise most of their money in the winter.
Most student rentals, in fact almost all rentals, are on 12-month leases. So one way or another students eat some of the summer rent. At best they can sublet for a fraction of their rent.
In a nutshell, we have more houses than families to occupy them.
One thing that I learned in B school is that most “analysis” is simply seat of the pants. None of the builders stopped to do any math (I doubt they could). Instead, they just followed the herd. It didn’t occur to any of them that perhaps they were building too many houses.
Port St Lucie is crashing hard and I remember so well people that argued with me saying you wouldn’t see 50% price declines.
I am just waiting for the crash to take hold in Royal Palm Beach, Loxahatchee, The Acreage and Little Ranches (my personal favorite)
There are a few places for sale for under 200K but they are dumps.
I am waiting for the 400K places to start to cave in.
If I recall correctly Port St. Lucie has about $400 million+ frozen up in the Florida SBA.
If I read this correctly, Morgan Stanley purchased $1 billion of lots (book value, 80% of $1.3 billion) for $525 million, but then they are letting Lennar actually manage the lots via this new “entity” owned by Morgan Stanley for the most part, but managed by Lennar. Given the purchase price, how can this entity hold the lots at $1.3 billion?
I drove through Farmington, NM in 2005 and wanted to shoot myself afterwards. That place is depressing.
Its the same. Farmington is crap. If you can take a very slow pace in getting things done and dense residents with a “whatever” outlook, you’ll do OK.
Retired people who move there are in for a big surprise because the state of NM charges sales tax (”professional services fee”) for medical doctors, dentists, lawyers, etc services. Auto insurance is higher here than in Cali due to all the drunk drivers and uninsured motorists. Farmington’s proximity to reservations in the northern part of NM certainly won’t help in this aspect.
~Misstrial
That’s too funny. The occasional plague cases in the Four Corners area are just a bonus.
This past week in my little slice of heaven (Northern coastal San Diego) saw two side-by-side House For Sale signs announcing bank foreclosure, adjacent to a human sign spinner announcing the closure of the local Bombay Furniture store, which apparantly is closing all its stores nationwide. This has been the first visual evidence of something awry here, since I still see new Escalades on the road everyday, despite the $3.45/gallon gas. About 2 years ago I talked my neighbor out of selling her, then, $600,000 “starter home” to “upgrade” to a McMansion. The new tax base burden was a major factor. (She bought in the 200s) She’s no dummy; Bet she’s real happy now!
http://www.sptimes.com/2007/10/16/Business/Bombay_furniture_to_c.shtml
Dutchess and Upper Westchester County, NY-
See alot of sign rotation. New RE for sale up, FSBO down and vice versa. I saw a “sold” go up then down but nobody moved in at one place thats been for sale for 2 years. I’m also seeing no-name discount brokerage signs going up, something like Foxtons but I think they’re bankrupt last time I heard. The few acquaintances I know who are trying to sell stubbornly and pridefully hold on to yesteryear.
Poultney/Wells, VT area- Mother emailed me this yesterday;
“People have their homes on the market at exhorbitant prices because last year ’so an so’ sold theirs for xxx$’s so I think I can— It ain;t happening! Betty Xxxx wants to move to Fla. to be near her kids –she put her house on the market– it’s an ordinary house on XXXX rd.– for something like 165,000– and it isn’t moving. her agent has suggested she lower the price and she is adamant.”
I would like to toss around an idea that I’ve been thinking about for the last few years. Two years ago I started lurking on this site, and I’ve come to learn a lot about the ins and outs of RE. I agree with you all that we’re going to see a big drop. Unlike most here, I believe we could see a 80% or larger drop in housing prices nationwide. I recall that either some economist or writer, someone in media, can’t recall his name, stated in 2005 that housing would drop 90% from the peak nationwide. I’m beginning to realize that could come true given the political and financial boondoggles in the last ten years. However, there is something about this bubble that bugs me, and it’s not been address much here.
I’m beginning to think that this housing bubble’s causes are 50% fraud, 45% demographics changes, and 5% everything else. The fraud part should be obvious, I won’t go over it much. I think when we start allowing appraisers to make up values and mortgage companies forge data and local governments play hide and go seek with these companies, we have a problem. However I have noticed that quite a few of the bubble areas are the same areas where you have extraordinary population growth. Look at AZ, NV, FL, ID, parts of the DC area, and many others. Here in the Sioux Falls area we have had a huge amount of growth in housing. They are peddling the same $250 - 400K houses that you find in AZ and FL (without the palm trees and stucco). Same thing with Fargo ND, parts of MT, the four corners area of OK/AR/KS/MO, etc. Here in Sioux Falls we also have had a considerable amount of people moving here from other states, mostly the surrounding states and refugees
from California. Ironically, this same division regarding population growth almost mirrors the Blue State/Red State divide. I’m beginning to think that this housing bubble is partially a result of the 2000 elections and the controversy surrounding that. Look at how fast Idaho has grown. Same with Arizona and Nevada. These states tend towards the Red State ideology (not just the GOP, mind you). Look at IL, MN, MI, WI, and the Great Lakes states. These tend to be Blue States (probably not as elitist as their neighbors in the NE) and they don’t have very fast growing populations. (Note: politically I am an ‘atheist’. I place no faith in either Blue State nor Red State ideologies) I concluded shortly after first coming to this blog that the Red/Blue divide has caused the housing bubble to an extent. Maybe people are hunkering down for something on the horizon?
As for the other reasons, I think lax lending did play some of part, but we have had lax lending for quite a long time. Wages certainly haven’t gone up much since 2000; in fact they are probably lower regardless of inflation. I’m beginning to suspect that most people don’t make much more than $12 per hour. Maybe only 4% of the population makes enough money to support a $215K median house price. I also wonder if housing inflation has inflated metals and commodities and everything else too….
Why stretch for such an unlikely explanation… red/blue states phooey…
California (blue) is ground zero for the bubble. Within California home values exploded!!! Classic economic bubble/ponzi scheme. Then, as the California speculators were priced out of California property they wandered the West and drove up real estate prices. As the greed and fear struck each new community, the locals jumped to also invest, flip, or just not be “priced out forever.”
Check out Baha Mexico. Crazy what happened down there due to California investors. Must be a dozen or more HUGE condo buildings with $500k 2br condos built in the last 2 years. That isn’t red or blue - that’s green$.
Heard it said once that trends start in Cali, and move west from there…..that’s why you see so may design studios, etc. in SoCal.
I tend to agree with larenter. The “business model” was tested and refined in California before it went nationwide.
trends start in Cali., and move west from there
Is that why so many homeloaners are now under water?
(* ducks *)
red state blue state who cares. Both parties are bad. Vote independent.
Green Valley,Arizona (30 miles south of Tucson city center)
I got a postcard in the mail yesterday from a local realtor. It said that sales are down 32%(presummed she means price) and number of units sold down 34% YOY.It did have the obligatory great time to buy and bargains available.
What I find telling is the GV consists primarily as 55+ retirement community and winter townhouses etc. Residents are faily affluent and many homes w/o mortgages. It experienced the insane building as did all of greater Tucson. The slowdown has only really begun and sales taking the hit we all knew was coming. It would seem that already people planning to move to milder climates(many folks from snow belt) they are not able. Although forclosures are still few the % is going up since i’ve been tracking.
desertfox
The worst neighborhood in New Zealand awaits bargain hunters:
“Otara - Auckland’s own version of South Central LA - has always been, and still is, the cheapest suburb in Auckland.
Its QV average sale price is $241,000, compared with the national price of $406,176.
While community spirit and church attendance is notably high in this mainly Pacific Island neighbourhood, so is the suburb’s reputation for poverty, crime and rundown housing.”
A straight up comparison with US prices is appropriate. Kiwis have about the same local currency median family income as Americans. Even these gang banger meth lab houses are priced at about four times the national median NZ family income. Such a deal!
http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10479538
Cmon people, $241,000 would be a huge bargain for a place in South Central LA.
Christ Almighty, NZR, it sounds like things are more bubblicious over the pond than they are in Godzone (Queensland).
I’ve always relied on the 3x gross income affordability index - what’s the average gross in Otara?
I’m a sadistic beyotch but I am enjoying watching this place go down $3-5K per day. When it breaks 300K, I think the sweet young thing at the bottom of the page may pass out on his fainting couch.
http://dallas.craigslist.org/rfs/495694902.html
Only $168/sq ft for a bitchin’ condo in a rippin’ part of Austin with an honest-to-goodness tennis court and pool(not to mention the minor consideration of $450/mo. HOA)? I’ve heard of all hat and no cattle, but this buck is clearly lacking both hat and chattel.
If that guy sells he’ll be moving to Broke Back Mountian with his boyfriend.
Is that guy for real? Holy smokes, lose the hat freakboy!
“I’m also willingly to write a check at closing to a buyer/investor for $6,000 CASH to cover all 2008 property taxes and to put cash in your pocket at closings with a 3 week or faster closing! We will just add $6K onto the agreed upon sales price. This will only add about $15 a month to your mortgage, but puts alot of cash into your pockets! ”
Sounds like mortgage fraud to me.
Just walked by the Countrywide Mortgage branch in Seattle on Queen Anne hill…looks like they’ve cleared out. This a recently opened branch, in a neighborhood of high end homes and condos. They have been the prefered lender on several luxury projects around here.
They’re quietly disappearing, from everywhere.
IT’S DIFFERENT IN MANHATTAN, RIGHT?
They’ll Take Manhattan — For Less
No Longer Immune, Sales and Prices Slip;
Waiting for Bonus Time
By BEN CASSELMAN
November 30, 2007; Page W1
Even as the national housing market has been hit by slow sales and falling prices, Manhattan has continued to shine. But now its light may be dimming.
http://online.wsj.com/article/SB119638554201808816.html?mod=googlenews_wsj
PB,
surely you agree that roubini is as bearish as anyone. yet, from the wsj article:
“To be sure, almost no one is steeling for a crash in Manhattan. Prof. Roubini believes prices will fall 10% over the next two years, substantially less than the 30% or more he predicts will occur in many markets.”
even i’ve predicted a much greater fall for manhattan than that (25-30%!). as a manhattan co-op owner, i take comfort from this article!
Property market still going gangbusters in Shanghai. Lots of real estate folks (you can pick them out by their jackets) hovering around the major highrise complexes handing out flyers, putting stickies on the pavement etc. Prices are in the range of $400-$600 per square foot in the good places (there are much fancier addresses out there, no idea what they cost; correspondingly there are much cheaper ones too). There are RE kiosks on almost all roads and intersections (a la Starbucks in the US). One of these days I’ll upload a photo or two.
Thanks for your input, yensoy!
Here are a few haircuts of note from my area of Florida in November.
First trim of the month was an 1862 sq.ft. condo that was first listed in January of 2006 for $489,900. After 4 withdrawals and relistings that included 9 price reductions, it closed in November for $285,000. Now that’s a haircut.
Our second painful coiffure in November was a 2nd floor corner, direct ocean unit. It was first listed in April of 2006 for $535,000. At various times the seller was offering 1 year’s HOA fees, home warranty, closing costs, rate buydowns and even plasma TVs in an attempt to entice a buyer. Perhaps an earlier price reduction would have sold the unit. Closed yesterday for $300,000. Ouch!
Checked those on your site. The second one sounds like a unit that a friend of mine looked at maybe six years ago. Crusty old fella was selling it and thought it was worth at least as much as others in the building with a much better view. Can you tell if this unit has been on and off the market for a long, long time - same owner since at least ‘01-’02?
Chip, This owner actually bought in March 2005 for, get this, $420,000. That’s gotta hurt.
Ouch!
Hey, cocao beach. I owned a condo there…essex house. Sold it in 2001 for 38k. The last time I saw anything for sale in the essex, was 139k…mind you, these are 500 sq ft. studios, all the same. looks to me theres going to be some big haircuts in cocoa beach..and soon. Thats a hundred grand in 4 yrs…
If the dead tree edition of the SD Union Tribune increases the advertisement share of its Sunday edition (already up around 85 percent) any further, I may have to request they pay a recycling fee for me to take delivery.
Makes you wonder who is supposed to buy all that stuff.
SW MO (Ozarks)
We were shopping at the local small-town appliance store last week. Owner said business is good, but all sales are now all to homeowners. Previously a big percentage of their sales were to builders (in this little town the builders are small-time, just building a few houses, not entire tracts). Appliance store owner also said that many of those new houses never sold, and have been rented instead.
I went walking in downtown Atlanta during the lunch hour. All I can say is I hope there is a Plan “b”. Cranes still abound while finished condos remain empty. Hugh banners across some condos say “in the low 180,000’s, now leasing. One condo, called “The Twelve” the parking deck is empty. Curious to see how many light up after dark. The building continues, ad naseum. In Cobb county, I see the same houses for sale and an uptick in Hud Homes for sale. Prices have not come down enough for me to buy though. Many McMansions are sitting empty and there are many deserted lots (after the idiots cut down all the beautiful trees). One builder has built approximately 20 homes close to Six flags. It appears all remain empty with one lone car outside of the model home day after day. Many new subdivisions advertise “in the low 700’s, in the low 500’s, with $50,000 builder incentives. I also see a lot of commercial space both new and old, just sitting empty. Laundramats are empty on weekends. To me that is a barometer of undocumented workers. It appears that many seem to have left. Being from the Southwest, I am a jalapeno freak. Stores no longer carry the quantity nor quality (sad).
“The 20-county metro Atlanta region is supposed to add another 2.8 million residents by 2030, bringing the total to almost 7 million, according to the Atlanta Regional Commission.”
“Between 2000 and 2005, for example, the population of the 10 counties in the ARC grew by almost 400,000.
But here’s a number that startled me. In that same time frame, the number of jobs in the 10-county area actually declined by 2.3 percent, according to the U.S. Census Bureau. Total payroll rose by 10.8 percent, less than inflation.”
“Since 2005, Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said, regional job growth has picked up a bit, and now averages about 2 percent a year. But in his latest employment projection for the region, titled “Circumspect Growth Prospects,” he makes it clear that the mix of those new jobs is changing, with fewer high-paying premium jobs being created.”
“39,800 premium jobs in the past six years; in that same period, the 28-county metro Atlanta region gained only 8,500 such jobs, an annual average of 1,400. In a region this size, that’s not a lot.”
“For example, continued growth of the magnitude projected by the ARC will occur only if we make the policy changes and infrastructure investment needed to handle it. If we do not find ways to address crushing issues such as traffic congestion, air quality and water, among other challenges, the quality of life in this region will decline and people will stop coming.
And looking around, I don’t see such changes coming. In fact, the leadership vacuum at the state and regional level has become the dominant theme of conversations all over the city. You hear frustration, verging on despair, about the region’s inability to even begin addressing challenges such as transportation.
It’s hard to factor things like that into growth estimates. But their impact will be enormous.”
http://www.ajc.com/opinion/content/opinion/bookman/stories/2007/11/18/bookmaned_1119.html
“The Twelve?!” Sounds like some dark cabal from a video game or something… “Beware the Mark of the Twelve!”
I guess that is better than the standard practice of naming developments after what was destroyed to build them: Hickory Grove, Oak Hill, etc.