The Return Of Sanity Has Come At A Price
The Times News reports from Idaho. “There is such a glut of high-priced homes for sale in southeast Idaho that it could be years before they all attract buyers, experts predict. Jefferson County has a 20-year inventory of homes priced at $500,000 or higher, the Snake River Regional MLS reported. Bingham County has a nine-year inventory and Bonneville County a three-year inventory.”
“‘What happened was the builders mismatched the market,’ realtor Steve Taggart told the Post Register. ‘Two years ago, we had all these people coming up from California, so they went and built all these high-end spec homes.’”
“‘You have investors who are just waiting,’ said Ryan Nickel, owner of Cherry Creek Mortgage in Rexburg.”
The Mail Tribune from Oregon. “The return of sanity to the local real estate market has come at a price. Locally, the fallout has contributed to a growing inventory of homes for sale that is nearing the 2,400 mark.”
“‘I think people are sort of getting the idea that there are changes in the mortgage market and finding they have to put more of their own money in when they buy a house,’ said Rick Harris of Coldwell Banker Pro West Real Estate in Ashland. ‘They’re finding they actually have to have a job and some decent credit.’”
“According to the latest figures compiled by the Southern Oregon MLS, the median price of $243,000 for existing Jackson County homes, sold between Sept. 1 through Nov. 30, declined 9.3 percent compared to a similar period in 2006. The inventory of homes, meanwhile, grew unabated.”
“Many of the buyers who fueled the upswing have contributed to the decline by selling. Add to that the dearth of California buyers with cash in hand, because the Golden State’s real estate market is far worse, and it’s easy to see why ‘For Sale’ signs spring up faster than weeds.”
“‘Inside the inventory there are distress sales,’ said Mike Malepsy, owner of Windermere Trails End Real Estate. ‘You’ll see 10 listings for three-bed, two-bath homes in an area for $200,000 to $250,000. There will be two or three in the remarks that say ‘Must sell’ or ‘Make an offer.’ If you really have to sell, you have to compete with the desperate home sellers, and that drives the prices down.’”
The News Tribune from Washington. “Year-over-year median home prices in Pierce County declined for the third consecutive month in November as sales remained slow. Sales of homes, including houses and condominiums, decreased by 31 percent for the same month in 2006.”
“There were 7,981 homes for sale in the county in November, 32.8 percent more than the same month last year, according to the listing service.”
“Ana Sierra-Jonsson moved to Tacoma in September and looked in Puyallup, North Tacoma and Lakewood for a two- to-three bedroom home. After she and her husband viewed about 100 properties, they decided instead to rent for one to two years.”
“‘There are such wild price adjustments going on; we thought time was on our side,’ Sierra-Jonsson said. ‘We want to see where things end up, because we certainly don’t want to end up paying too much for a house.’”
“Michael and Janelle Hanks listed a Thea’s Landing penthouse condominium at $379,000, just under the price of two recently sold units, in May, just before buying a house in Gig Harbor. ‘We get lots of showings but no offers,’ said Michael Hanks.”
“So, they are carrying two mortgage payments while they debate listing strategy on the one-bedroom condo. The couple has offered to pay homeowner’s dues for a year as a buyer’s incentive and lowered the price over the summer to $365,000.”
“‘If we got offers that were really low, it would give us a clue that it was overpriced. I think we’re priced OK. I think it’s just a bad time in the market to put something on the market,’ he said.”
“Local real estate agents, brokers, mortgage lenders and business people hashed out big questions and answers regarding the changing real estate market at a forum Thursday morning at The News Tribune.”
“The paper has written stories with context that compares this market to more ‘normal’ real estate markets, said David Zeeck, The News Tribune’s executive editor. ‘I’m not saying it’s a happy time, and I’m not saying we are 100 percent right,’ he said. ‘But I think we have done the stories you are asking us to do.’”
“Lynn Michaelis, chief economist for Weyerhaeuser Co, noted that Bob Toll, CEO of Toll Brothers, often blames the press for what’s happening to housing. ‘Yes, a lot of the markets they report on are negative, and it is affecting some buyers,’ Michaelis said. ‘But the reality is the sea change is changing. It’s not the press causing a slow down in housing. There are some real fundamental issues.’”
The Seattle PI from Washington. “The typical house that sold in King County last month fetched nearly 10 percent less than the typical sale in July, according to statistics released Thursday.”
“Geoff Pfander put his Wedgwood house on the market in September for $535,000 and sold it last month for $505,000.”
“‘We never reset our price, but the offer was lowball and we accepted it,’ he said. ‘We were so glad to be done, because the market was getting scary.’”
“Rob Cockerill and Michele Meyers bought a Broadview house at list price last month and weren’t worried about prices dropping. ‘We’re thinking it’s not going to get any better than this,’ Cockerill said. ‘We’re San Francisco II up here.’”
The Seattle Times. “The Seattle-area housing market is in a pronounced slump, with fewer houses selling, inventories climbing and prices returning to year-ago levels. King County’s median price has fallen four months in a row.”
“What’s more, last month’s median price for detached houses, $435,000, is back where it was the previous November, according to numbers released Thursday by the Northwest MLS.”
“The number of King County houses sold has declined every month since March, when compared with the same month a year earlier. Since August those dips have consistently surpassed 25 percent. Meanwhile, the number of houses for sale in King County last month was about 40 percent higher year-over-year, a percentage realized almost every month since May.”
“‘You see more buyers asking for price concessions, and they’re getting them,’ added Rich Lucas, an agent in the Auburn office of Keller Williams Realty.”
The Anchorage Daily News from Alaska. “Two failed real estate developments in the Matanuska-Susitna Borough go on the auction block this month, both of them unusually large victims of foreclosure.”
“First National Bank Alaska holds a foreclosure sale Tuesday for 62 empty half-acre lots at Gemstone Estates subdivision. The next week, 18 units at Willow Heights ranch condominiums hit the public auction block.”
“The other project, Willow Heights, looks like a ghost town: five largely empty, gray ranch-style condo buildings aligned on a pretty bluff off a rural stretch of Fairview Loop Road. Willow Heights was built by Hummel Homes LLC.”
“According to First National, Hummel owes more than $1,152,000 plus interest. Hummel owners are Janice Hummel and Blaine and Myrna Brown, according to a state database.”
“Blaine Brown said he and his wife, a real estate agent in Anchorage, ’started out with the best of intentions’ to build partially assisted-living housing with no steps and floors for easy wheelchair movement.”
“Then came hurdle after hurdle: the Valley real estate market went flat, fuel and plywood costs skyrocketed and the state required water filtration for arsenic. The couple, sole investors, lost a rental property to the bank, Brown said.”
“They covered payroll out of pocket, used credit cards to cover costs, and refinanced their Anchorage home to pay bills. Brown said he’s had to delay his retirement another four years. ‘It was not a pleasant experience,’ he said. ‘And my wife and I were the biggest losers.’”
“The Mat-Su real estate market is no stranger to foreclosure. Starting late last year, real estate agents reported a spike in the number of single-family foreclosures, due in part to the same subprime mortgage crunch hitting the Lower 48, and to cooling markets here.”
“But Gemstone and Willow Heights represent investments rather than a place to put the family. Industry observers say problems with these two developments stem as much from bad business decisions as from difficult markets.”
“‘Clearly the market is soft; there’s a lot of inventory,’ said Jerry Moses, associate broker in Wasilla. ‘That just means as a business person you have a sharper pencil; you don’t do stupid things.’”
“The average sales price for vacant land in Palmer dropped 42 percent this year compared to last, from about $103,000 to $60,000, according to Alaska MLS statistics. In Wasilla, the average price for vacant land dropped 26 percent, from about $75,000 to $55,000.”
–
“The Return Of Sanity Has Come At A Price”
Has sanity returned and how much?
My guess is that we have 1/4th return of sanity and 1/4th the price thus far.
Jas
“Many of the buyers who fueled the upswing have contributed to the decline by selling. Add to that the dearth of California buyers with cash in hand, because the Golden State’s real estate market is far worse, and it’s easy to see why ‘For Sale’ signs spring up faster than weeds.”
And yet they claim its different in California… Yet as the state goes down, the impact is spreading to the nation. Let’s not forget Florida, whom is exporting population; many sans a down payment.
So much for the ‘real estate is local’ argument. When will they realize that we live in a mobile nation and we now have a national mortgage market? I expect 10% of my friends to move to another region in any given year. That is today’s economy.
At work, coworkers are getting really skittish. They’re still in “fear,” but one coworkers desperation is becoming contageous. I’ve always believed that when this breaks it will start happening fast. However, I think we have to get past Christmas to see any change. But once those Holiday credit card bills come due… Bwaaa haaa ha!
Got popcorn?
Neil
Actually they claim it’s different in Portland/Seattle, but it looks like the P-I is finally coming around. The Oregonian (Portland’s paper) is still maintaining that our market will be fine, and in any case, start back up in 2009.
I think Bend, OR is the absolute dead spot, because it lives on California infestors. At least there are SOME jobs in Southern Oregon (where the Mail Tribune hails from), but in Bend - there is nowhere to commute TO. Anecdotally, I’m seeing a few more places in the neighborhood pop up on the market, as if folks are trying to sell and lock in their gain.
California infestors
That may not have been an intentional misspelling, but I like it.
Most of my misspellings are intentional.
Doesn’t Bend have a thriving service industry with $10 an hour jobs?
You just described everywhere.
LOL
California “Infestors”? I love it how you guys hate Californians, but you love our money!
Ha! Now that’s funny. Does anyone in Cali actually have money? Empire of Debt is more like it.
What money? Oh, you mean former lines of credit.
I live in California and I have money. But only because I didn’t get caught up in the “gotta buy a house” fever that swept through here. It’s insane. I know people that are sweating $4000 mortgages. I even know someone whose income is lower than mine and bought three (yes, that’s 3) houses in SF. With a higher income, I couldn’t afford to buy one.
Madness.
“…but you love our money!”
I guess you missed the memo that the CA state budget anticipates a $10b shortfall next year?
CA state budget ??
Thats the next shoe to drop in Cali IMO….I don’t think anyone has any clue how bad it will be…If I recall correctly the deficit was 5 bil in the 1st quarter…You can imagine what the 2nd,3rd & 4th will be like if we piggy back slow retail & car sales (sales tax) for 08…Hold on to your wallets…
“I love it how you guys hate Californians, but you loved our subprime loans.”
I think that is more accurate.
I think you are right. As I recall, some NYC-headquartered investment banks were involved with pumping in sump-prime money. Got SIVs?
Nope, don’t love your money. I pray for rain every day so all the people from South California (south of Big Sur and Sacramento) will return from whence they came.
In the 70’s and 80’s, Texans did the same thing, rolling into Colorado and New Mexico ski towns, etc, and buying up everything. To this day, they still give Texans dirty looks and poor service.
Rightly so!
On my last few trips heading north through OR, I used highway 97 which goes through Bend. While I didn’t go all the way to Bend, I did notice that there seemed to be more CA plates than even OR plates.
A dearth of Californians with HELOC in hand is more like it. Many speculators in my old ‘hood and in the Pearl.
I keep hearing how “it’s just a cycle” and “Californians are still flooding here.” Bunk. Glad to see the paper is reporting otherwise.
So why did the Portland bubble trail so many other areas? Nationally, we consider the “peak” to have been fall 2005, but that doesn’t seem to apply to Portland. Here in Sacramento, the median and avg price/sq. ft. are both down around 20% from the peak. I don’t have good data on Portland, but it seems nowhere near that yet.
Is there any good Portland data?
Go to Portland Housing Blog.
I love it that Californians (and thus, I assume, California) are hated - maybe this place’ll thin out a little bit here in San Diego! Then I’ll get me one-a these $800k pads for something a taaaaad more reasonable…!
” Yet as the state goes down”
Don’t worry it’s different here, we’re the 6th largest economy in the world, but it won’t have any effect!!
“So much for the ‘real estate is local’ argument. ”
But the REALTORS haven’t given up on that line. Just yesterday a REALTOR give me that very earnest, confidential look and said: “But Pullman is a very unique market.”
“But Pullman is a very unique market.”
So is Boise, DC, Miami…
cue the Joshua tree for that Realtor ™
“Golden State’s real estate market is far worse”
Worse than Oregon: maybe. Worse than Idaho: I don’t think so! I don’t know of any Calif county that has a TWENTY-year inventory of $500K+ houses. Or maybe that’s just because nobody has bothered to figure out those statistics for Calif.
Don’t worry, soon it won’t be a 20 year inventory of $500k+ houses. It will be a 25 year inventory of $350k+ houses.
Ghad… This squish down won’t even be truly recognized by the MSM until after the election next year. Cest la vie.
Got popcorn?
Neil
“Jefferson County has a 20-year inventory of homes priced at $500,000 or higher,…”
Sounds to me like more of a shortage of California infestors than a McMansion supply glut…
And with the likely Teaser Freezer effect on future mortgage interest rates (as in who in their right mind would ever offer a below market interest rate again) the sale of those homes just got very difficult.
I don’t want a teaser rate. I want a teaser price at 15% interest rate!
Word.
The question is WHEN is this dam going to break? How big does the inventory need to get before it becomes obvious to the most retarded seller that they will need to drop their price to sell? I’m not talking about some piddly-ass 15% price drop. I’m talking about an ass-pounding price drop that will actually move inventory? 30-40% minimum pricing drop to bring in lowball bids seems reasonable given the large runup the past few years. It’s going to happen and the longer these idiots bury their heads in the sand the harder the asspounding!
“How big does the inventory need to get before it becomes obvious to the most retarded seller that they will need to drop their price to sell?”
It’s not the inventory now it’s the CC liquidity that one has to watch. Government interference in the mortgage industry (freeze) and CC next will absolutely put the breaks on financial liquidity to the low end consumer. Game over in May 2008.
I so agree. As people wake up and realize they don’t live in an ATM machine anymore and they can’t refi to pay off the maxed out credit cards it’s going to get really bad - I think this will be a bigger ding on the economy than the housing market, particularly when the MSM keeps saying consumer spending is 70% of the economy.
I’m going to agree with the May 2008 time frame. By that point the banks will be very restricted (due to the credit crunch) and the FB’s will be walking in mass (like lemmings).
However, we’ll still have a long downturn after that…
Got popcorn?
Neil
I think it will come when the bag holders start to run out of cash. A lot of spec homes out West were built by small builders. They can only hold the inventory so long before the construction loans come due. How long can the cash flow last for all of these empty homes?
“They can only hold the inventory so long before the construction loans come due.”
Monthly carrying costs for small builders paying interest on const loans is burning up yesteryears profits in a big hurry. And it’s amazing what pride can do. Through word of mouth i heard that a local builder, who has about 12 500K+ spec houses scattered throughout the area, was saying he’d go BK before he drastically reduced his prices. Real smart, huh? Screw yourself and then let the banks step in, foreclose on your projects, and then do what you should’ve done in the first palce - lower the prices. The end result is the same moron.
We’re seeing the exact same thing here in Pullman, WA. The local builders and developers have gotten very arrogant over the boom years and absolutely refuse to negotiate. The new inventory and lots just sit there, but they will literally go bankrupt before caving on prices.
BK probably doesn’t mean anything to them if they are a registered LLC company. No assets, and about $12,000 total insurance to file against.
Wait a little while and start up another company under your wife or kids name.
Is this a great country or what?
Yeah… gets you out of construction defects, too. Pathetic.
If they are LLC’s… it might be the smart thing to let it implode. 2008/2009 will be interesting. Part of this is that too many have already spent their gains and have no choice but to ride the Titanic down. I hope the appetizers are worth the cold dip.
Got popcorn?
Neil
I am with you Auger. It is like watching paint dry. I think we will have to begin to see some higher unemployment figures before the damn breaks. I am surprised that we have not seen that yet. With so many broken ATM machines, I would have expected to see things slowing down more in the general economy.
Oh, 20 years of inventory isn’t a dam breaking?
Maybe so, I was thinking of inventory as water behind the dam, and it “breaking” when sellers capitulate and delivery, in Auger words, an “ass-pounding discount”.
I sold in fall of 2003 (kids grown) to downsize, and have been renting and waiting for a correction. I think we are on the verge of that correction, however, I thought that in 2006, and 2005.
Service jobs that pay jack shit is not a real economy!
You are so right, Crispy. They keep touting all the jobs created, but they are minimum wage to $10/hr jobs that don’t support a single person let alone a family. They’re mostly no skill service industry jobs with no future, either. The old days of taking a starter job and moving up to a comfortable middle class life are over.
Tell me about it. My husband was hired by a company that was so excited about his background they told him he’d be in a management position in 9 months. Fast forward 1.5 years, he is still labeled a “trainee” because labeling him otherwise would imply a raise, and other than his .25 per hour raise he got after 90 days, nada since then. Needless to say, he is looking for something better. He realizes now that there is NO ladder to climb there - the folks in the higher up positions seem to be there for life thus everyone else is and shall remain a peon. Once we unload our house we are out of this country. If we are going to live in the poorhouse, we’re going to do it in nice weather. Here come the tropics.
The sellers, by and large, cannot drop their prices that much. All of these homes must move through the foreclosure process. This will take 3-5 years with a potential price bottom in 2010 or 2011 15%-20% below rental income stream value. Then a bounce up to narrow that overshoot by investors. (Today’s investors jumping in will be forelosed on in 2009-11).
Of course, right about then is when the risk of a real U.S. liquid fuel energy crisis becomes a potential factor. If one hits, the suburban McMansions at a then 40c on the 2005 dollar will be 10c-20c on the 2005 dollar within another year. Maybe converted to sharecropper multi-famil homes for the desparately needed switchgrass and ethanol farms.
That link yesterday was breath taking. Thanks.
This is crazy. I have never seen 20 years of anything turn out fine - My advice to these people is get some lotion and quit handwringing and start buying.
When are we going to start hearing about massive builder BK’s? These, IMO, are really going to start hammering the financial institutions, especially the hometown banks. There is absolutely no way that these spec home builders can continue to carry the sea of vacant homes out there.
“Blaine Brown said he and his wife, a real estate agent in Anchorage, ’started out with the best of intentions’ to build partially assisted-living housing with no steps and floors for easy wheelchair movement.”
Yes, all the boomers are rushing to Alaska to retire. I hear it’s lovely. Especially this time of year.
It’s better in January, particularly above the Arctic Circle
… One can get discounts on Santa’s surplus, first hand!
“Yes, all the boomers are rushing to Alaska to retire. I hear it’s lovely. Especially this time of year.”
Apparently they never heard that, after the igloo gets too crowded, we abandon our elders on the ice floes…
There is still a way to go before sanity returns, at least in Massachusetts. Most houses are still around 300K, all are waiting for the summer of 2008. Sellers are hoping for a return to bubble year prices and buyers (self included) are hoping for a crash.
neil,
or 08,09,10,11 whatever it takes
Thats what they dont get…its not next year its a-f-o-r-d-a-b-i-l-i-t-y
lost an f there.
Just checked Realtor.com - buy in my neighborhood is minimum $205K for 50 year old ranch houses under 1200 feet, 1 bath. Not quite apples to apples, but the equivalent amount of space in the same neighborhood runs $1000 to $1200 per month in rent. We’ll see what the spring thaw brings.
“Jefferson County has a 20-year inventory of homes priced at $500,000 or higher…”
“McRanchions”
What I think has happened in Idaho (and other parts of the West) is that developers believed that any place in or near the mountains with a view and proximity to outdoor recreation such as skiing, fly fishing, hunting, etc. would become the next Jackson Hole, Vale, Aspen, or Sun Valley. What the market is seeing now is there that there are only so many people who can afford a $500k and up second home. All over the west, “McRanchions” have been built to attract the wealthy weekend baby boomer outdoor enthusiast. I can’t wait to see how long these sit on the market and how low the prices are going to go.
I failed to include that some of the mentioned properties may also be classified “McCabins” if they do not include a horse set-up.
Example: http://boise.craigslist.org/rfs/495621704.html
Log townhomes? Now I’ve seen it all.
I used to read the Log Cabin Homes-type magazines, but it quickly became apparent that Log Home no longer means cute cabin. It’s just a McMansion.
“Sellers will look at all offers between $760,000-$780,000.”
Classic!
I don’t think they’ll suffer from eyestrain
“look at”? What happened to the obligatory “entertain”?
Lots of McCabins where I live. In fact, one of the McCabin-building companies is in trouble for hiring an illegal, who is now behind bars, charged with second-degree murder, because he was driving drunk with no license and re-ended a car and killed one of the passengers.
Have rented some of this kind, in off season…you need ear plugs when someone walks around upstairs, and other nice features.
I was in Aspen in February and they are building condos like in the Snow Mass area like everyone in this country is an F’n millionaire. EXCESS LIQUIDITY is posion!
That Aspen Times article I posted the other day notes a saturated market at $8 million and up.
Wow. I thought Shady Canyon in Irvine was going to be worthy of a national news article… Aspen looks to have them beat. Weekend topic on concentrations of ultra-expensive flips?
Got popcorn?
Neil
How far down the valley from Snowmass Village are houses built now?? I worked at the Snowmass Club in the mid-80’s and have always wanted to go back and see.
The cranes on the way up the hill looks like a “mini Dubai”.
Ever been “Up for Pizza”?
About 200 coming online in Park City in next months, all over two million.
“What the market is seeing now is there that there are only so many people who can afford a $500k and up second home.”
Let me rephrase that… What the market is seing now is that equity-rich Californians can no longer tap the house ATM to buy that $500K+ second home….
I mean, seriously, I don’t know anyone who can really “afford” a second home.
Without out-of-state HELOC’s to finance down payments, I’m guessing the secondary home markets are dead in the water.
The carrying costs alone on a 500k second home are about 25k a year. Add in 5% depreciation for the next few years (and that is me just being conservative), we are talking about a $75k per year hit. Id rather take one really nice 2 week trip to an exotic location per year for $10k, and invest the difference in the S&P. Guess who gets to retire first, and will have better memories?
We wanted to buy a second home in Florida a few years ago. We’re fortunate, and don’t need to finance it.
When we looked at the cost of property tax, we realized it would be MUCH cheaper to rent for the months we wanted to live there. Just for the cost of PROPERTY TAX alone!
I mean, seriously, I don’t know anyone who can really “afford” a second home.
I do. And they paid cash, much to the sales droids amazement. Of course, they are truly wealthy, and not wannabees.
“I do. And they paid cash, much to the sales droids amazement. Of course, they are truly wealthy, and not wannabees.”
But are there enough of these truly wealthy folks to keep all the second home markets propped up?
Personally, the people I know who own second homes pulled equity out of their primary residence to buy them.
But are there enough of these truly wealthy folks to keep all the second home markets propped up?
No. But we already knew that!
I know quite a few people with secondary homes who paid cash or can easily afford the 2nd home. But for every one of those… I know three people who speculated in multiple homes and will take the Joshua treatment.
The hardest hit areas will be the vacation markets where buying is completely out of line with renting… oh… that’s pretty much everywhere.
Got popcorn?
Neil
“What the market is seeing now is there that there are only so many people who can afford a $500k and up second home.”
Lovely. Now if you feel like taking a vacation, come on up to my area and help me explain to the village council how tax revenues will be dropping because prices are falling, that credit is tightening up and there aren’t exactly hordes of buyers for $500,000 to $3,000,000 2nd homes.
I kid you not – they think the ‘buyers will come, well, sooner or later but eventually.” This summer, the median listing price here was $389,000 and average list was $700,000+. This in a place where median income is around $44,000 for permanent residents. To get housing in line with income, the median priced house (mortgage or rent) would have to be at $137,000. The median listing price this summer was almost a 9::1 ratio with median income. The ‘lowest’ price (for anything with functioning walls and roof) is about $140,000 for a double-wide modular. The minimum for stick built houses as small as 1100 sq feet was $280,000. (Sounds great compared to CA but keep in mind this is a summer-tourist area. Lovely for retirement but not exactly thick with jobs paying more than $25 – 40K)
The 2nd homebuyers can’t afford a place when they are looking at a jumbo loan AND lenders are going back to the 28-31/ 36-41 income debt ratio. Not a whole lot of room there for mega-expensive 2nd homes.
I look around my area with its 40% 2nd homeowners who ‘just had to have a summer place on the lake” and wonder. 70% of the houses on the market are summer homes with prices such that 21.3% of the local population might possibly be able to buy 69% of that 70% (or 49% of all listings.) Of the listings, fully 21.5% are out of the price range of anyone who lives here. How many of these 2nd homes (and I’m talking $500,000 up to $5,000,000) are financed with hybrid-ARMs and option-ARMS?
We are already seeing a 1::92 foreclosure rate. It is not the permanent residents defaulting - it is the 2nd homeowners who comprise 97%+ of the defaults on their $800,000 ‘cottage’ and $1,700,000 beach house. They are already defaulting at a 1::58 rate. What is going to happen in 2008 and 2009?
This area has already seen an actual 31% price drop - and that is the drop from the listing prices of 2006/early 2007 to the actual closing prices since 7/2007.
If lending standards are tightened on the income debt ratio back to the 28-31% of gross for the primary house and 31-41% of gross income for all fixed debts, how many buyers are out there for a $1,900,000 summer ‘cottage’ that is over 5 hours from any city with more than 15,000 people and where the local airport terminal would fit in a football field?
These $1,000,000 and up properties have been sitting on the market for nearly 2 years. Nothing has sold - and there are not even lookers.
Anyone interested in a 1960’s 1600 sq ft ranch with 2 bdrms, 1 bath, indoor outdoor carpeting, formica countertops, plain pine board cabinets and that fake wood Avatibi paneling on .83 acres for a bargain price of $795,000?
Or how about a 1400 sq ft concrete block cottage with 3 bedrooms on 1.36 acres and the interior walls are just the painted concrete block and the floor is bright blue indoor-outdoor carpeting for a modest $1,750,000?
“‘If we got offers that were really low, it would give us a clue that it was overpriced. I think we’re priced OK. I think it’s just a bad time in the market to put something on the market,’ he said.”
So they think they priced the condo properly based on the fact that they have received NO offers at all as opposed to “really low” offers? huh? I’d be really worried about my asking price if I weren’t getting any offers at all!
I totally disagree. Everyone is telling realtors their listings are priced great, they just want to wait until Spring. Everyone is busy holiday shopping.
Actually, you are correct. If it’s priced competitively based on the few limited sales that occured recently, you may get lowball offers. If you get no offers, it essentially means your price is so freaking high no one takes you seriously enough to even consider making an offer. Ppl dont need to deal with crazy sellers anymore. It’s easier to move to the next house. There are many, many to pick from, and the goal is to find the most desperate, not the one with the highest aspirations. All realtors need to understand if you want a nibble, you have to undercut the most recent sales price. Period. This elevator is going down.
“Everyone is telling realtors their listings are priced great, they just want to wait until Spring.”
How quickly they forget this is EXACTLY what was said last year!
“Lynn Michaelis, chief economist for Weyerhaeuser Co, noted that Bob Toll, CEO of Toll Brothers, often blames the press for what’s happening to housing.”
Is your massive over-building of houses taking it’s Toll, Bob?
It’s not really that he built too many houses; after all, there is a housing shortage (remember?). It’s that he built too many houses for which there are no buyers qualified anywhere near Toll’s wishing price.
If toll was building a smaller home, less expensive instead of sucking up all the land on these mcmansions..wouldnt they be thriving? so instead of 1 behemoth…2 homes priced at say…300-350…i guess you can shoot your whole wad/(fill in) on building the taj but how many people could afford it..I think toll brothers are priced out of the market right now…they have to wait until the market rebounds to unsustainable levels again.
I think toll brothers are priced out of the market right now…they have to wait until the market rebounds to unsustainable levels again.
Bob Toll has built his empire on godawful FUGLY developments, I mean eye-crunchingly hideous “communities” that have infested and visually corrupted every locale where his heavy equipment has cleared land. Toll’s hallmark has been to cram as many ugly-ass garage mahals on as little acreage as possible. And the sheeple have waited on line for the privilege of purchasing one of those overpriced POS’s; they can’t get enough of Tollworld Fugly and houses that fall apart at the seams.
He is going to die a rich man. Why mess with success?
Seems like people have gotten so spoiled with the new house sizes, though. Would they really accept a modest sized home? “Modest” doesn’t seem to be in the vocabulary anymore. No, you got family of 2.5 in a 5/3 because everyone needs “space.” Especially here in MT, the new arrivals expect to have a lot land too.
yep - every kid has to have own room, house has to have oversized master with oversized bath, all w/walk in closets, LR, DR, FR, Den, maybe a media room or gym and huge kitchen with restaurant grade STAINLESS STEEL appliances, granite counters (of course) for people that don’t have time to cook - let’s see what did I leave out - oh yeah -3 car garages, 2 story foyer. Anythng else?
Don’t forget the gift wrapping room.
‘there’s so much more to life than a mortgage and a lawn to mow’
how about a sun room and an arboretum and a foyer and an entertainment room. pitiful really.
i’m building a house on 3 acres of land-750 sq ft.
ever hear of living small? there is a whole movement in housing that is designing in this sustainable manner.
Don’t forget the gift wrapping room.
LOL!
‘there’s so much more to life than a mortgage and a lawn to mow’
Absolutely. Sold out and much happier for it.
“…i’m building a house on 3 acres of land-750 sq ft.
ever hear of living small? there is a whole movement in housing that is designing in this sustainable manner.”
I agree. I had wanted to purchase raw land, and build myself, but the prices were way out of my range. Instead, I settled upon a fixer of 3 acres. At nearly 1700 square feet, it’s much larger than I need. I’d like to build one in the 1000-1200 range. The outdoor space is much more important to me. I like plenty of space for vegetables and ornamentals, as well as for my dog and any livestock I might care to add.
Toll seems to doing OK (not great) with Naval Square in Philadelphia. Lowest-priced types all sold out. Remaining 1BR w/ 15-ft ceiling at $375K is actually quite attractive, looks out only on green space and other good-looking buildings, has a 9×15 porch on the front, part of the old Naval Hospital. Some 2BRs much larger at $399K, but they look out on urban semi-blight and too little of the Schuylkill to compensate. Common facility excellent, walkable few blocks to market. I would consider that place in 2008-9 if I could tolerate middle-Atlantic weather.
Did you visit the models?
Since that development is based on updating existing historic buildings, you may have luck with the units they didn’t build from the ground up. I agree that when older buildings are restored or renovated, some attractive original features are retained. The Victory building at 12th and Chestnut is one example of a successful update.
However, I worked at Valley Forge Woods, a Toll Development, and I remember the homeowner complaints ranging from improperly grounded electric to bathroom pipes bursting, showering the diners below. And that was before the boom.
Hope I don’t sound too negative, but if you’re going to buy a Toll product give it a thorough once-over ahead of time!
‘Two years ago, we had all these people coming up from California, so they went and built all these high-end spec homes.’”
I don’t think they ever had “all these people coming up from California”. Living in CA, and knowing folks who live in Idaho, it was more like people in Idaho were fantasizing about Boise becoming the next Beverly Hills and they were all buying and selling 2nd homes to each other.
Not so accurate- The beginnings of the Boise area bubble began with out of state investors snapping up starter homes which at the time sold for $90k to $120k. Pretty much overnight, locals joined in on the flipper game and builders ramped up construction, people in other western states cashed out equity in moved to Boise…..the rest is history.
It sure wasn’t because HP or Micron were hiring.
I remember speaking with a Realtor several years ago that told me college students were buying these starter homes on part time income…Said they rented rooms to other students to help with the payment….
A lot of people from California were buying houses around Boise, but most have no intention of ever living there.
Funny!
I have a large group of coworkers getting ready to retire in Idaho (they vacation together every year, during the winter, in Idaho). So there is a precident…
For a few dozen. Now how many spec homes are on the market? How many people from Idaho retire in the sunbelt?
yep… nothing to see here…
Got popcorn?
Neil
So, there is an FBI guy on CNBC right now talking about the FBI crackdown on mortgage fraud.
An almost exact quote… A lot of buyers inflated their income to qualify for a loan, and a lot of brokers and appraisers colluded to inflate the value of a home to get a deal done. We’re not interested in looking into those. We’re focused strictly on the organized rings that bought many houses at inflated values greatly, then stripped those houses of the false equity before letting them go into foreclosure.
In short, rob 5 or 6 banks (average bank robbery gets $5K, but some of these cash back deals were $50K) at a shot, and you’re too small for us to worry about. Get in a ring that rips off millions, and we’re coming after you.
We’re not interested in looking into those.
OUTRAGEOUS! As you pointed out, the average take for a bank robbery is 5K.
What’s the average HELOC amount? 25K? 50K? So everyone who lied, heloc’d and walked away should do at least as much time as a bank robber!
Yesterday someone was rushing me to commit to a loan in Maine. I said I needed to have a personal representative take a look at the place. Agent said they could provide me with a recent appraisal at higher than the contract purchase price. Fat chance I would fall for that! Will just get a friend to do a drive-by. Still worrying about govt’s rumored interference in existing mtg contracts, but it seems the bush Plan is “voluntary” so far.
I saw that interview, I think you are misrepresenting what he said. He said they roughly group fraud into two types, fruad committed for profit and fraud committed to have a place to live. He said they aren’t looking to go after people who inflated some income or such things to LIVE in their house. One example he gave was where many people might have gotten together to share the mortgage to live in a single house.
In contrast, he said the other group, fraud for purposes of profit, they would go after. The example he gave was people who committed multiple fraud to buy and extract all equity from homes and then walk away.
So if I were to print my own $20 bills because I needed a place to live, the government would look the other way?
“Rob Cockerill and Michele Meyers bought a Broadview house at list price last month and weren’t worried about prices dropping. ‘We’re thinking it’s not going to get any better than this,’ Cockerill said. ‘We’re San Francisco II up here.’”
They paid list price in this market!!! What kind of realturd did they have, and why would they admit to being so stupid??
they will fill it w KINCADE oil paintings- there’s a bubble
“‘We’re San Francisco II up here.’” with a line like that you can tell they can think an original thought. They were like putty in the REALTORS hands.
Well, given how Seattle is a ’special’ market immune to the RE bubble, I guess ’special’ people are the ones who are buying…
“The average sales price for vacant land in Palmer dropped 42 percent this year compared to last, from about $103,000 to $60,000, according to Alaska MLS statistics. In Wasilla, the average price for vacant land dropped 26 percent, from about $75,000 to $55,000.”
Sweet music to my ears. I cannot wait until land prices come crashing down like a piano from the roof of the Empire State building.
Alaska should be cheap, even though th ey have high wages. It was on my drive to Alaska and back in 2001 that I first seriously started contemplating a national/global housing bubble, because I saw construction like mad the entire way. Even in the Yukon.
I agree with you, that Alaska should be cheap. In fact, the same goes for many, many areas of WA, OR, ID, MT, and WY. Forget well paying jobs, it’s difficult to find any work in many of these places.
And needless to say “they aren’t making any more land” argument, while disingenuous everywhere, is laughable in the northern rockies.
“I agree with you, that Alaska should be cheap. ”
Anchorage does have a problem with lack of land (though the prices are still waaayyyy overinflated) because it is on a peninsula between two arms of the sea, with a mountain range and two military bases at its back. That is why many people commute 40+ miles from the Matanuska Valley (Palmer, Wasilla). The market in Anchorage has gotten really slow, but the Valley is imploding.
Juneau is similarly an anomaly- it is build on the sides of a mt. range, stuck between the mountains and the ocean, so they are a bit tight for land. OTOH, Fairbanks (aka Tumor on the Tundra) is in the middle of the Tanana Valley, which is the size of Pennsylvania with a total population of about 90,000- prices rose there recently primarily because of recovery from the economic collapse of the late 80s combined with the national bubble. Probably every place in Alaska will get a 25% haircut just from bubble deflation, despite the recent run up in oil prices…
And they should know better up there because they’ve been through a serious crash before. In early 80s after the pipeline was finished and the plethora of really high paying jobs disappeared, housing tanked 50% and it hadn’t even gone up that much. Once all those outsiders figured out there were no local jobs to replace their fat pipeline jobs, they bailed fast. I was so glad I didn’t buy into a $90K condo because everyone said I should buy - a year later the same condos were going for $45K.
Actually, the house price ‘boom’ in Alaska continued through the mid 80s. Ironically, I was a voiciferous naysayer even then- and I recall at least one friend telling me that I should buy some land because ‘increasing prices are a law of nature’ (!) The collapse happened in the mid 80s due to rock bottom oil prices (they fell to about 12 bucks a barrel). You couldn’t find a U-haul in Alaska for love or money, so many people headed back to the lower 48…
“If you really have to sell, you have to compete with the desperate home sellers”
If you really have to sell, you ARE a desperate home seller!
Consumers Are In Gloomiest Mood in Two Years-CNBC
add a zero after 2 and i will believe it.
“‘If we got offers that were really low, it would give us a clue that it was overpriced. I think we’re priced OK. I think it’s just a bad time in the market to put something on the market,’ he said.”
Ill give you $50.00
Done and done.
Old collectible: Hummel Figurines
New collectible: Hummel figurines
“The other project, Willow Heights, looks like a ghost town: five largely empty, gray ranch-style condo buildings aligned on a pretty bluff off a rural stretch of Fairview Loop Road. Willow Heights was built by Hummel Homes LLC.”
“Two years ago, we had all these people coming up from California, so they went and built all these high-end spec homes.’”
Nice going on the starry eyed greed guys. Ever think maybe we were moving away from California to get away from $500K houses and have some money left in our pockets ?
Irony from so many perspectives, including that of the “California taxed” Oregonians.
I hate to say this (for our Cal bloggers sorry) but something tells me if the US would have given Cal back to Mexico we wouldn’t see half the problems in this country, first and formost nobdy would have any money to sepcualte in other states for starters among a host of other things?
Being a Californian occupying force in alien states, can only cause the locals consternation, as evidenced by all the vitriol we read daily, on here…
Be an Intra-Stater instead and don’t leave the boundaries of the Golden State of mind and place, and nobody will ever bag on you.
There’s plenty of out of the way cool spots to live in California, nowhere near the hustle and bustle of the big city, and quite reasonable price-wise.
Quite true. Spread the word!
…or don’t…
This is the most stupid thing I have read in the past week. California is a net contributor to the united states economy, budget, and everything you could possibly imagine.
As a x Cal resident let me adress my stupidity to you this way ? Of course it was tongue and cheek know what that means, but this notion that Cal with 35 million people or more is the leading ecomny engine in America yes by pure numbers but like gross means nothing i want to know what you net, the state has produce huge expenses for the federal gov’t, natural diasters being one, a huge welfare state, illegal aliens out of control, most stupid as you put house prices in America, the 9th court of appeals which is anti Ameican for sure, more ACLU lawsuits then any other state, one of the worse punlic school system in America and yes for such a powerful ecomny to have broken down freewways and a health care system that is two class rich and poor no middle class, unkept state of trash and dirty streets, a ocean that is closed half the time due to pollution, that is constantly broke, it is without a doubt the most mis manged place in the Nation. So take your stupid thing you read this past week and read into what has happen to the place in the last 40 yrs my friend or try traveling to another beautiful state but may i suggest you don’t invest in it you people have runied enough places???
Ya know IMHO you are so wrong. I was born and raised in LA (westside) and it was heaven. We had the best public schools in the nation at that time, had great freeways that took you anywhere fast, great weather, reasonable housing - basically everything everyone is looking for now. We also had great Universities, the entertainment industry, enough foreign flair to make it interesting. Every type of terrain and weather available for any type of living or activity. You also forget it’s a huge state and can’t be pegged as one thing. The problem is everyone else in the US wanted a piece of the action, came to CA and overcrowded and ruined it, but to write it off as if it was never worth anything, just shows ignorance of the history and contributions of the State. I’m not saying it is perfect or better than anyplace else, but it was a damn delightful place to grow up.
I grew up there too. Seems like it started downhill with Prop 13, not because it was wrong to freeze taxes but when you do it that way the bureaucrats will deliberately cut spending in all the worst ways to teach the t-payers a lesson. And they sure did.
“There is such a glut of high-priced homes for sale in southeast Idaho that it could be years before they all attract buyers, experts predict. Jefferson County has a 20-year inventory of homes priced at $500,000 or higher, the Snake River Regional MLS reported. Bingham County has a nine-year inventory and Bonneville County a three-year inventory.”
The year: 2027
The event: The 1st new custom house built in 20 years, in Jefferson County…
Location to be determined.
aladin, it could happen sooner if the bulldozers arrive a few years from now…
You know I’m waiting for them to refilm that ‘lethal weapon’ movie.
Got popcorn?
Neil
“Jefferson County has a 20-year inventory of homes priced at $500,000 or higher…”
Simple solution to clearing out the glut- drop the price below $500,000…
Cocksure Cockerill & Co.
“Rob Cockerill and Michele Meyers bought a Broadview house at list price last month and weren’t worried about prices dropping. ‘We’re thinking it’s not going to get any better than this,’ Cockerill said. ‘We’re San Francisco II up here.’”
http://www.minyanville.com/articles/hope-homeowners-lenders/index/a/15141
boring day
“You have investors who are just waiting”
Waiting for what? For idiots to pay even more for the spec houses that were already inflated in price by a factor of at least 2.5 or 3, considering that it’s Idaho. I was there (Boise specifically) in Nov. 2000 and those big 2-story McMansion-type houses were selling at less than $200,000. I can’t imagine Boise or the surrounding area having become that much more chic that those houses have multiplied in value. Not that there were that many high-paying jobs anyway. That’s what I don’t understand about the CA transplants. You still have to have a lot of high-paying jobs in the areas that you move to in order to support similarly priced real estate.
“That’s what I don’t understand about the CA transplants. You still have to have a lot of high-paying jobs in the areas that you move to in order to support similarly priced real estate.”
A lot of the sheeple from CA, who paid absurd prices for houses in outside markets, are realizing this as they ride their house price down, down, down.
“Rob Cockerill and Michele Meyers bought a Broadview house at list price last month and weren’t worried about prices dropping. ‘We’re thinking it’s not going to get any better than this,’ Cockerill said. ‘We’re San Francisco II up here.’”
“There is a sucker born every minute.”
Joseph Bessimer
Dammit. And here I thought Portland was SF II!
How is this going to play out?
Here’s what I expect:
More and more houses will be added to the ‘For Sale’ inventory. I believe we have a current inventory of around 2 million homes + condos for sale. Over the next few months, there will be hundreds of thousands, possibly millions more homes added to that inventory.
For a variety of reasons which we’ve already discussed.
Scenario: you have A TON of real estate, with very few buyers. Those who are out looking / actually able to buy will sense desperation. They will pull back, decide to wait a while to see what happens.
Outcome: this is a crisis which will start at the bottom. It will hit those families who have the least staying power. The “flippers with 5 empty houses” will get chewed up real quick. Same thing with those families who are swimming upstream carrying a $4,500 mortgage every month.
That’s how this thing will play out. It will start at the bottom wiping out the weakest players.
Next, it will work its way up to the more-or-less stable middle class, any one with big debts, 2nd mortgages, big credit card debt will be in trouble.
It’s like a Darwin’s Law of the real estate jungle, working its way UP to wherever it needs to go. When it’s finally done, or it’s hit some kind of equilibrium, then R.E. prices will stabilize and life can start going back to normal.
“Michael and Janelle Hanks listed a Thea’s Landing penthouse condominium at $379,000, just under the price of two recently sold units, in May, just before buying a house in Gig Harbor. ‘We get lots of showings but no offers,’ said Michael Hanks. So, they are carrying two mortgage payments while they debate listing strategy on the one-bedroom condo. The couple has offered to pay homeowner’s dues for a year as a buyer’s incentive and lowered the price over the summer to $365,000.”
“‘If we got offers that were really low, it would give us a clue that it was overpriced. I think we’re priced OK. I think it’s just a bad time in the market to put something on the market,’ he said.”
So because you got NO - NADA - ZIP offers - you decide you’re priced “OK?”
Sure - sit on that POS condo and ride it all the way down to $100,000 - if you’re lucky!
“There is such a glut of high-priced homes for sale in southeast Idaho that it could be years before they all attract buyers, experts predict. Jefferson County has a 20-year inventory of homes priced at $500,000 or higher, the Snake River Regional MLS reported. Bingham County has a nine-year inventory and Bonneville County a three-year inventory.”
Snicker. $500K homes in the land of Napoleon Dynamite! These people are crack smokers.
Don’t you know about the annual Napoleon Dynamite festival they have there? People from as far as Japan come for it. That right there is a big selling point. Pedro for President! Embarrassed to admit it, but I am from and currently living in Idaho and that movie portrayed growing up in smalltown Idaho in the 80s to a tee. That part of Idaho is fugly and everyone I know from there escaped to Boise where there is at least trees and a minute amount of culture.
“Don’t you know about the annual Napoleon Dynamite festival they have there?”
Flippin’ Sweet sounds like something associated with Casey Serin…
“Geoff Pfander put his Wedgwood house on the market in September for $535,000 and sold it last month for $505,000.”
“‘We never reset our price, but the offer was lowball and we accepted it,’ he said. ‘We were so glad to be done, because the market was getting scary.’”
$30k (6%) off a $535K house (probably only worth $175K) is “lowball”? Until this mindset changes, we are nowhere near bottom.