Local Market Observations!
What do you see in your local housing market this weekend? Builder troubles? “Nearly 70 construction or related businesses in Northwest Arkansas filed for bankruptcy protection during the year, according to U. S. Bankruptcy Court filings. Springdale-based custom home builder Tim McMahon filed for Chapter 7 bankruptcy protection Friday, citing between $ 1 million and $ 10 million owed to 279 creditors.”
“‘More [builder bankruptcies ] are expected. More will come down the path,’ said Kathy Deck, director of the Center for Business and Economic Research at the Sam M. Walton College of Business. ‘The longer the market goes sideways… it remains difficult for some people to remain solvent.’”
“The company builds mainly in Fayetteville, Springdale, Rogers and the surrounding area. The cost of homes by McMahon Brothers Custom Homes is between $ 250, 000 and $ 1 million, the Web site said.”
A related slowdown? “In a housing market flooded with inventory, it is no fun to be a home seller. On the flip side, if you are looking to buy, build or renovate, the cards are in your favor. The housing slump has pushed down prices on many building supplies and labor.”
“‘There have been circumstances where I’ve been underbid by what I think are kind of ridiculous amounts by people who are not as experienced with remodeling aspects,’ said Dave Gridley, owner of a remodeling business based in Rockford.”
“The home improvement business is finally catching the housing virus. Remodeling and repair actually received a boost in the early phases of the housing slump as many owners opted to upgrade their current digs rather than sell and move in a softening market. Still others fixed up their second homes and investment properties to make them more attractive to prospective renters.”
“But the stimulus from both trends has now faded. Making matters worse, a typical source of cash for remodeling — home equity lines of credit — is drying up. Banks are getting pickier about making such loans.”
“David Seiders, chief economist with the National Association of Home Builders, says, ‘Remodeling is not countercyclical. We’re starting to see a setback.’”
“What the market really needs are homes that are appreciating in value. Kermit Baker, director of the Remodeling Futures Program of the Joint Center for Housing Studies at Harvard University, notes, ‘Nothing indicates that there will be a quick turnaround’ in that department.”
Or economic fallout? “As housing continues a meltdown, consumer goods cost more and unemployment rises, those who make a living cooking and serving others say they’re feeling the impact.”
“Observers noted that real estate’s downturn as well as higher food and fuel prices have negative effects on everyone’s bottom line. In downtown Modesto, Harvest Moon owner Mark Smallwood said his restaurant still is seeing sales growth, but not as much as in other years.”
“‘We’re not seeing the mortgage brokers and the real estate representatives,’ Smallwood said.’
Economic fallout, you ask ??
Sales tax revenues down 13% YOY.
http://www.bakersfield.com/102/story/317298.html
City sales tax revenues dropped a sharp 13 percent this quarter compared with last year, becoming “something we’re going to have to deal with,” officials reported Friday.
Those revenues are the single largest contributor to the city’s general fund, said City Manager Alan Tandy.
“It’s been an uncomfortable trend when it was a 1 or 2 percent decline,” Tandy said. “When it accelerates to a 13 percent decline, it becomes something we’re going to have to deal with.”
Tandy said the declining revenues correspond to the housing market slowdown. During the recent boom, people earned more and spent more. But with the dip in real estate, consumer habits have changed.
He said it’s too soon to tell what the declining revenues will mean for next year’s budget. Planning for the 2008-09 fiscal year will begin in January. Budget planning for next year will be “constrained to anything that incurs new costs or expenses,” Tandy said.
SACRAMENTO — Gov. Arnold Schwarzenegger is expected next month to seek immediate major cuts in state services, including a plan to take back $1.4 billion budgeted for schools this year and a proposal to slash the prison population by releasing tens of thousands of inmates.
The two strategies are among broad spending reductions Schwarzenegger will outline to address a projected $14.5-billion state budget gap. On Friday, the governor announced that he would declare a fiscal emergency Jan. 10, when he unveils his next budget.
http://www.latimes.com/news/local/la-me-arnold22dec22,0,3407799.story?coll=la-home-center
Well at least releasing tens of thousands are inmates back into the housing market will raise prices over the next year.
This must be the ‘pend up’ demand I’ve been hearing about.
http://www.larouchepub.com/pr/2007/071215calif_budg_crisis.html
California Budget Crisis Escalating.
“Gov. Arnold Schwarzenegger is expected next month to seek immediate major cuts in state services, including a plan to take back $1.4 billion budgeted for schools this year and a proposal to slash the prison population by releasing tens of thousands of inmates.”
This is the best idea he could come up with? Unreal…
LATimes had an interesting quote from a source, that Arnold is making these proposals, assuming the public will scream, and will be more amenable to a tax increase.
They did the same thing in the 90’s. They cut library hours and threatened to cut police, fire departments, and teachers. Never any discussion about carving off the pigmen’s pork.
Get rid of their Defined benefit pensions and convert them to 401K’s (like the private sector) of the budget problem goes away rather quickly
The governor previously told agency heads to draft plans for 10% reductions across the board in state spending for the fiscal year that begins July 1. Prison officials came up with the proposal to decrease the inmate population by up to 30,000 in response to the directive.
___________________________________
30,000 used home sales people back in the workforce.
What about his billions for stem cell research, for which the citizens actually voted? Of course private drug companies raking in billions of dollars need state tax revenues to do their “research,” the alleged benefits of which will not be shared with the tax payers unless they shell out a fortune for prescriptions. Talk about socializing costs. How is it that corporations manage to sucker the public over and over into funding stuff for which they, the corporations, have more than enough money, and from which they, the comporations, will extract the financial benefits?
Here is ghastly Tampa, our city council has approved a developer’s plan to remake Hyde Park Village, a small shopping district, with two massive condo towers and other alleged upgrades, though Hyde Park is already overflowing with empty condos and town houses nobody wants. The same council members have approved virtually every development scheme brought before them for years and years, and manage to get re-elected time after time. The locals don’t want the makeover–I can’t even imagine the impact on traffic in this tiny area with narrow two-lane streets–and even the architectural review committee said no (it never says no to anybody), but the city council decided to ignore the public and the review committee, gushing about how wonderful the new megastructures–in an area with low height restrictions–will be. The developer, in Canada I believe, apparently has no concept of the housing crash here.
The same city council takes credit for, and brags about, causing housing prices to skyrocket in south Tampa, and at least one of the council members is a property flipper himself. Another is a developer. Oh well, with local builders using cheap steel pipes from China, complete with lead contamination, maybe those moving into all these condos and townhouses will all become insane and shoot each other, the way the Romans went made drinking lead contaminated water from their futuristic plumbing.
Most people don’t realize how bad this news really is. Cities typically budget for growth year after year, except where it is obviously absent (Detroit, etc). I had the link to Lake Havasu City in the previous post, with hotel revenues down double digits. Construction is way down too. For a place like LHC, this is a disaster. They don’t have any way to make that up, so huge cuts have to happen.
The press makes a lot of noise about the housing market, but downplays the economic effect, except for crying ‘doom and gloom.’ But lower house prices are a good thing. Revamping an economy into something other than selling each other houses, however, will mean short-term pain.
I suspect the reason the press stays away from that is because it begs the question, ‘whose idea was this housing bubble?’
This is big news. 13% YOY will have a trickle down impact on all cities and counties. Areas like LHC where 99% of their activity is real estate and tourism will get crushed.
I cant wait to see these numbers from other counties/cities. Look at Orange county (see LA times) employment is down 8% YOY add in their sales tax declines and you have the makings of a disaster. Like Thornnburg said “Orange county is different, it will get hammered..”
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And don’t forget the 4% inflation rate! This means that the actual volume of stuff that is taxed is more than 13%, maybe more like 15-17%. This is not just Bakersfield phenomenon even though it is probably worse than most other areas.
Employment always lags, so we haven’t seen the layoffs yet, but they would be forthcoming. During 2008Q1 it would become harder and harder to deny nationwide recession.
Jas
The non-virtuous cycle is accelerating. Declining tax revenues cause cuts in essential services, which only creates more desperation and emboldens the criminal element to act with greater impunity. The deteriorating quality of life and bursting social services nets will exacerbate existing tensions and widen fissures among class and racial lines. Entire neighborhoods and communities are going to transform, and not for the better.
Good people of all races, classes, and creeds better starting seeking each other out and linking up for mutual self-protection, because this has the potential to get really, really ugly.
Has anyone else noticed the repeated news reports of depleted food banks? Not good as we head into the winter.
Most definitely. We are early retired and I do charity work (partly from growing up with the old New England WASP atitude of noblesse oblige, partly from being a Quaker.)
Our food pantries are desperately low. In Nov,our private charities were seeing 4 times the numbers of requests for help with food, utilites, rent and heat that they normally do. The state is broke and there is not money for heating asssistance or rent assistance or utility assistance so it is up to the private groups - and they can not keep up (just like in 1929. ) The people needing help do WORK - they just can not keep up with the rising costs.
This is a low wage area - tourism based economy.
Try getting money out of the 2nd homeowners sitting in their $800,000+ ’summer’ cottage. They give new meaning to ‘cheap bastards’ all the while whining because the law service had to raise the price by $5-10 to cover increased fuel costs.
Saw a commercial the other night claiming food charities are having a difficult time. This was in San Diego.
Where are you? In this part of Maine, the usual pattern is for people to start out as summer or weekend folk, then gradually spend more time here until, after 10 years or so, they retire. (Half my husband’s family is up here full-time now.) A (formerly) summer couple from Princeton, NJ, just donated 165 acres to the local land trust, so not all of them (us!) are so bad…
http://tinyurl.com/yqsn3c
“Try getting money out of the 2nd homeowners sitting in their $800,000+ ’summer’ cottage. They give new meaning to ‘cheap bastards’ all the while whining because the law service had to raise the price by $5-10 to cover increased fuel costs.”
“Our food pantries are desperately low. In Nov,our private charities were seeing 4 times the numbers of requests for help with food, utilites, rent and heat that they normally do. The state is broke and there is not money for heating asssistance or rent assistance or utility assistance so it is up to the private groups - and they can not keep up (just like in 1929. ) The people needing help do WORK - they just can not keep up with the rising costs.”
Few people have any clue of how many are living in dependency and have a violent sense of entitlement.
”Few people have any clue of how many are living in dependency and have a violent sense of entitlement. ”
Absolutely, and when it comes to the illegals, they are beyond an entitlement attitude. New SUV’s, dual tax free incomes, social services money, and taking Christmas present handouts from charities. Cameras, cookware, and a host of other expensive gifts free. I see it in our organization, but the bleeding hearts have compassion for the illegals.
Food banks aren’t to subsidize your ‘wants’. We imported more moral bankruptcy. Just what American needs.
I believe there’s more than a causual link between the massive influx of immigrants - especially illegals - and the decline in people’s willingness to contribute to community-based charities. When people felt like their donations were going to help the truly needy and deserving in their communities, they tended to give more generously. When they see their local Salvation Army store or food bank being swarmed by Latino newcomers or people who look like meth addicts, they have much less incentive to lend a helping hand. Is that fair? Probably not, but I’m guessing the “charity begins at home” concept does not extend, in most givers’ minds, to Latino immigrants or the growing number of home-grown riff-raff.
South Americans don’t call themselves ‘Latino’, its the Mexicans and Central Americans. South Americans are a different culture, and a much higher caliber of people IMHO.
South Americans come here legally, generally, with educations, and don’t want to cheat.
When they see their local Salvation Army store or food bank being swarmed by Latino newcomers or people who look like meth addicts, they have much less incentive to lend a helping hand.
Right on. My charities are the American Cancer Society and the Ron Paul 2008 campaign. I have a nephew turning 32 next year who worked one year in his life. Of course he’s poor. It’s a matter of personal choice, in his case. In fact, most of the problems with poor people are due to mental illness, drugs, or some other anti social aspect. In the first case, let darwinism take its course and do not sanction it. In the other two cases, do not encourage them. A tiny minority is physically handicapped and that is not a personal choice. But still, I think ACS and AHA are the money smart moves to not encourage more poverty.
Well over $1 trillion dollars of taxpayer money was spent on Democrate LBJ’s War on Poverty in the last 40-something years. Poverty is still around, big time. Time to turn your backs. That is the real way to end poverty.
In fact, most of the problems with poor people are due to mental illness, drugs, or some other anti social aspect. In the first case, let darwinism take its course and do not sanction it. In the other two cases, do not encourage them. A tiny minority is physically handicapped and that is not a personal choice.
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Um, Bill…a mental handicap is no more “voluntary” than a physical one.
Not going to get into how we should handle it (way too complex), but having mental illness is NOT a “personal choice.”
Drugs, OTOH…I couldn’t care less what somebody chooses to do on his/her own time & in their own space. Just don’t ask me to subsidize it.
“In the first case, let darwinism take its course and do not sanction it.”
Unfortunately bill in Maryland is not alone in his ignorance about mental illness.
“Observers noted that real estate’s downturn as well as higher food and fuel prices have negative effects on everyone’s bottom line. In downtown Modesto, Harvest Moon owner Mark Smallwood said his restaurant still is seeing sales growth, but not as much as in other years.”
“‘We’re not seeing the mortgage brokers and the real estate representatives,’ Smallwood said.’
Is this what they call “trickle down economics”?
“Nearly 70 construction or related businesses in Northwest Arkansas filed for bankruptcy protection during the year”
Have you seen the ‘old Chips show’ Eric Estrada’s TV promos for the Bella Vista area there…..Hmmmmm…..note to self…..if ex Chips dude is saying ‘buy here’……just ignore the infomercial.
Note to self: If Ponch is selling, the area is approaching its peak.
Couldn’t he do something more respectable? Like sell Viagra?
Got popcorn?
Neil
A house nearby us in Costa Mesa just went to TS on Monday the 17th (foreclosing note was ~635k). Before the auction, there were 7 cars parked out front every night. Now, several days after the auction, there are still 7 cars parked out front.
Could this be: the sheriff hasn’t come by to kick people out? or could they be renters that now have 30 days to vacate. If it’s renters, I sure feel for them. IMO, they shouldn’t pay their last month’s rent. If it’s an owner that hasn’t been kicked out yet, they sure must love vehicles!
Love those sales tax revenue decreases! My town’s run 70% of businesses out due to high commercial property taxes. Now the piper’s come!
Each village board meeting is me reading back quotes I said for three years to now.
I may run under the “Fire ‘Em All” ticket. Traffic court — by candlelight. Business owners hiring private security and arming managers. Public transportation sold off in parcels. Poor people, heaven-sakes, can do what is best: go to a local church for assistance through volunteers and charity.
Even better: the warriors and thugs face dwindling budgets.
How I love recession, may it last for a decade.
Hey I got just the place for you, a little town called Baghdad. Run just you like. :-]
Haha, while you jest, I did visit Iraq before Clinton’s first war. I thought it was paradise. Christian Churches, Jewish Synagogues, Muslim Mosques all in the same neighborhoods. Libraries and shopping malls, no desert to be seen anywhere. Sort of like Iran now — secular, not fanatic.
Of course, the Federal Reserve allowed us to shape it into what it is today. Us as in the government, not as in us me or us you, unless you voted in either election, of course (Democrat or Republican, as both support the war).
Good photos of what Iran is really like:
http://www.lewrockwell.com/orig8/weden2.html
I’ll be about 20 miles from Iran in a few days, in Dubai. Another paradise-on-earth that will surely fall if all their dollars come floating back — surely a terrorist act, some would say.
Clinton’s first war.
When was that??
For all the saber rattling from the White House, I’ve always heard Iran was one of the more open countries in the Middle East. As opposed to our good buddies in Saudi Arabia for instance.
I’m not sure what your referring to with “Clinton’ first war”.
The First Gulf War was under Bush 1. Unless you refer to the sanctions under Clinton.
Sanctions, no, don’t you remember?, Clinton was “waging the dog” and applied sanctions for no good reason because of his BJ… at least that’s what the neo neoCons were saying.
Ed,
I think you mean Iraq…and “Clinton’s first war”…?? I’m guessing the poster means the First Gulf War under Bush1.
Haha, while you jest, I did visit Iraq before Clinton’s first war. I thought it was paradise.
Saddam Hussein’s Iraq “paradise”? Were you in the Republican Guard or something?
“Nearly 70 construction or related businesses in Northwest Arkansas filed for bankruptcy protection during the year”
Here in Northwest Arkansas we are certainly hearing builders squeal. Seeing offers of free cars with homes, etc.
However, sellers are still asking for 2005 wish prices. One seller I talked to was insulted by an offer 10% below wish price. Another was giddy about the “couple from California” coming to see their home next week, because you know “it is cheap here compared to CA”.
Stocking up on popcorn. This is gonna be a while.
Rotfl
However, sellers are still asking for 2005 wish prices. One seller I talked to was insulted by an offer 10% below wish price. Another was giddy about the “couple from California” coming to see their home next week, because you know “it is cheap here compared to CA”.
Oh, this is too funny. Is somehow being from California a way to be dipped in gold? I don’t think so… Oh, the state has a lot of high paying professional jobs, but that only matters if those people are savers.
I hope you have a two year supply. This is going to be a protracted downturn. Every area is having false hopes that the rich foreigners, Clownifornians, or hedge fund managers will come in mass to buy them out of trouble. Class, open your history books to Florida 1925/1926. Ugh…
Got popcorn?
Neil
“Another was giddy about the “couple from California” coming to see their home next week, because you know “it is cheap here compared to CA”.
Yeah… but that California home sale contingency clause is going to be a downer.
Fleeing Californians = Glimmer of Hope
I know it’s not much, but AZ is at least growing in population. The AZ Republic has a front page graph showing that in 2007:
98,168 drivers licenses were surrendered from CA out of a total of 406,000.
At lease we’ll have someone to rent all those foreclosed homes that’ll be hitting the market.
While in my Phoenix apartment’s fitness room on Saturday I watched a middle aged couple, well-dressed, outside the windows, as the manager took them on a tour of the apartments. I assumed they were east coasters because they were dressed uncasual. But they were at least at the right place for housing - a place to rent. I’m expecting a 1% increase in rent when my lease in Phoenix renews in the Fall.
Comment by A.B. Dada
2007-12-22 10:10:05
“Love those sales tax revenue decreases! My town’s run 70% of businesses out due to high commercial property taxes. Now the piper’s come!”
What town are you in?
No more McMahon McMansions!
wooo wooo
I sold my home in Sarasota 2100sq ft nice home asked 339,000 got 300,000
i am otta here
Congratulations Kuros
You did very well, being in Florida. I had a 20% loss in California in the last bubble. Add to that the hidden costs of maintenance over 6 years, the PITI costing twice as much as my rent in a large apartment before buying that place…You get the picture!
Coming out of lurk mode for an update on the intersection of CA workers’ comp and the bubble. I’m a claims examiner with a desk that is entirely SF Bay area claims, but my office (70+ desks) has claims all over the state. Some observations:
— Commutation petitions continue to roll in (a commutation is when a judge orders a permanent disability award that is on scheduled payments to be paid in a lump sum due to demonstrable hardship). Every petition that I’ve seen and most of the ones my coworkers/friends have received have documents for a mortgage in default and/or back property taxes submitted as proof of hardship. The last one I got needed about $10K more than he had PD remaining, so good luck to him.
— Panicked check calls are way up. I’m not talking about a week late, I’m saying two days after the check is mailed. If I hear the words, “I got bills to pay,” one more time, I’m going to snap.
— People are much less likely to choose the stipulated award (scheduled PD payments w/ medical bills paid by the employer/insurance company) over the compromise and release (all PD paid in a lump sum with another lump sum to buy out the medical care rights). Even ones who aren’t offered a C&R are trying to get one.
— More people submitting insane medical mileage for reimbursement. Insane isn’t submitting the last couple months, this is people with ten year old claims turning in their mileage back to day one. And everyone is padding their numbers (one of mine included her daily commute; a coworker had a submission for a guy’s child support hearing where his TD was discussed), so the examiners are objecting.
— Everyone I talk to says the number of injured workers working a second job while receiving temporary disability, a little thing the law considers ‘fraud’, is way up. If I could find a publicly traded investigations company that does surveillance work in CA, I would go long on it since every examiner I know is ordering more surveillance than they have been the last couple years, but the companies I’ve checked so far are all private. Oh well.
— This is interesting: a friend at another company had an assaulted injured worker who withdrew his claim when she delayed it for investigation (on assaults, the one who swings first isn’t entitled to benefits so most assaults are delayed, it’s not a comment on the guy’s credibility). When the guy called her to request the withdrawal form, he said that he had to do it because she wasn’t paying and the state doesn’t pay the first week of disability. Since he’d already cashed out his vacation for the year to cover bills, that would have been a week with no income and he couldn’t afford it. Might have been a legit claim, might have been a guy who was afraid of being caught swinging first, but it’s not a rationale either of us had heard before.
In short, there are no people with reserves left, other than the people on this board.
Ron - thanks for the interesting and unusual post. All useful pieces in a big jigsaw puzzle, and reinforcing to those of us with reserves.
Not a problem. People are definitely short cash and trying to get it anywhere they can.
Yeesh, don’t you have some kind of nondisclosure thing? I would really hate for my claims examiner, if I were ever to be in such a situation, to be discussing my case, even if not specifically, on a public blog.
Yes, I am forbidden from revealing ’specifically identifying’ information, but I doubt that anyone who knew these people could verify I was discussing them. And if people who have claims think their examiners never discuss their claims, they’re being extremely optimistic, just like people who are rude to waiters are being optimistic if they think the waiters don’t talk about them after they leave.
“In short, there are no people with reserves left…”
Can you imagine your agency’s coffers depleted?
In the event of insolvency of a self-insured employer or an insurance company, it goes to the state. Of course, CA is already running a deficit…
Very interesting look inside the worker’s comp industry — I’ve never really thought about some of those issues before. Thank you.
Missoula City Council just approved another smaller development after a 600-lot one the week before. Lots of upscale and subsidized type devs in the pipeline, and wonder if they’ll have buyers. Like, will builders still be able to launder $$$ through nonprofits to do downpayment assistance?
People are all hot and bothered about growth & zoning here like nothing’s changed in the last 6 months. Once in a while you’ll hear local RE has “cooled somewhat” - that’s the way they always put it.
No sales tax here local or state so I don’t have that metric.
The economy here is tourist driven (Its that US National Park that surrounds us.) 40% of the housing are 2nd homes with price tage way out of reach of the local residents. The real estate bubble collapse hit here earlier and harder because vacations and 2nd homes are luxuries which are among the first things cut. The number of tourists was down 17-18% this past summer which is the peak season.
(1) Restaurant owner described his places during the past 2 months as “scary quiet” as in 1 or 2 people in during an evening.
(2) Real estate listings here have close to doubled during the past 2 years. 70% of the listings are above the pirce range of 85% of the county. Pretty obviously fancy 2nd homes. The 2nd home people are trying to unload these things - probably before their option-ARMs or hybrid-ARMs blow up in the next year or so.
(3) Long time experienced local realtor is working for $9 in the call center for the mail-order section of a local specialty foods seller. Hasn’t sold a property in nearly 1 1/2 years.
(4) The actual closing prices on the few houses that have sold are down 30-31% from 2005-06 prices.
(5) Foreclosures are up 189% over 2005. 90%+ of the foreclosures are 2nd homes in the $300,000 -1,000,000 category.
(6) Real estate tax default list of the properties going into tax foreclosure next month just came out. The defaults are up 242%. The value of the properties in default is up 439%. (Tax appraisal value here IS the sale price.) 11.33% of the properties in tax default are lender-owned REOs. 21% of defaults are unsold condos in a development project that is now in foreclosure to the tune of $5,500,000+. (After all ‘everyone wants to have a $300,000 2 bedroom vacation condo for the 2-3 month summer season’ - or so they claimed.) It is hard to tell but it looks like 25-40% of the tax defaults are 2nd homes with hefty price tags around $500,000.
(7) In a fancy-shmancy New Urbanist development planned for 80 lots, 15 houses have been built of which 4 are through the local housing authority with subdizied mortgage. Of the 15 houses, 1 of the subsidized houses is for sale (but even subsidized, the mortgage is still too high for incomes in a tourist economy), 1 is occupied by the owner but has been for sale for over 2 years, and 4 are spec houses which have been for sale since they were completed 12-18 months ago. This was intended to be the ‘affordable workforce’ housing development. Don’t think so - the prices are 6-7 times median income and 8-9 times income for a young couple making the average wage. Less than 16% of the county can afford these ‘affordable’ homes - which, admittedly are the lowest priced in town. The median priced house is 9 times median income.
Can you offer a rough area of the country you are describing for reference? Sounds like the downturn is accelerating in your area. Wow!
Upper part of Michigan. It is called “The Gold Coast.” The downstate problems in the auto industry don’t apply here except to the extent it affects our tourists
40% of tourists are from MI, and 40% from IN, OH, IL, WI, Kentucky, TN and Iowa.
10-15% are from PA, DC-VA-MD, NY
5-10% are from CA, TX, FL and international (Germany, France , Japan etc)
Look up Sleeping Bear Dunes National Lakeshore. (Beautiful here - great place to be early-retired.) The county is Leelanau. The NYT keeps babbling on how the county seat is a great place to buy a ‘good bargain’ on a 2nd home for only a modest $800,000 -3,000,000. (And omits the fact the the interstate is 50 miles away and the ‘big’ airport has a small terminal the size of a football field.)
Got it, I have friends in Traverse city and spent a week last summer up in Mackinaw. Nice area, we really liked it. We saw a lot of for sale signs though so it definitely wasn’t “different” there.
Figures……someone living near a National Park complaining about the scenery (or lack thereof) here in Kansas….
BTW…..if you promise not to judge everyone in Kansas by the mental midgets you meet at a dog show, I’ll try not to draw conclusions about people from Michigan, by what I’ve heard coming out of the mouths of the mental-midget UAW die-hards it has been my displeasure to meet.
From North Western Pennsylvania.
I talked to a local property tax collector and she said that she has more delinquent tax payers than she has seen in fifteen years on the job. This area hasn’t seen much housing price appreciation, but with the local job market it probably hasn’t seen the property depreciation that should have occured either. Not a good sign so early into the slowing economy.
Restaurant owners say they are very concerned about going into January and February, due to how slow December has been for them. Generally December is a pretty good month for these people due to Christmas parties, catering events and just people out and about Christmas shopping. Not this year, once again many long-term restaurant owners say this slowdown seemed to hit hard, fast and deep and the worst they have seen it for fifteen years. On top of higher minimum wages, higher wholesale food costs, higher energy costs-they are getting squeezed in all directions and can’t seem to pass along the higher costs to their already shrinking customer base.
Also a local top real estate agent is now working in the local grocery store to help make ends meet while doing real estate on the side.
Was at a Christmas party last night with some friends from college. We all make at least double the median incomes for the area, but nowhere near the kind of incomes most of the posters on this board seem to make. One common experience of the group all Gen-Xers, was that it was getting harder and harder to save money. Wages haven’t kept up with expenses, and while none of us are behind on bills, nobody seems too eager to spend money either, unless it is a neccessity. What was really surprising is that even some of the eternal optimists were concerned about the economy going into next year.
Friend who works for a Staffing firm in Florida says she has no jobs, but plenty of well qualified applicants desperate for anything.
Another friend in Charlotte, NC works with an insurance company and says she has clients calling every day wanting her to cut back the number of people on their worker’s comp policies due to layoffs. I thought it was different in NC and FL.
Hey Ken
Where in NW PA? I’m an Allegheny College (Meadville, PA) alum.
Believe it or not Ann, I am in Punxsutawney, PA. Allegheny is a great school. I went to IUP myself, but A few friends that went to Allegheny really liked it there and did well after graduating.
Keep up your great posts, they are very informative.
“Also a local top real estate agent is now working in the local grocery store to help make ends meet while doing real estate on the side.”
I keep getting contacts for contract engineering jobs. I’m into software. I’m doing well in Maryland. A young colleague of mine in his 20s is being submitted for $90 per hour in one northeastern city. He called me Friday night just a few minutes after I turned on my cell phone that night after landing in Philadelphia. There is demand in some areas still. In fact, my field of computer science has been hot since the early 1980s. I had a total of 6 weeks of downtime between jobs since 1985.
Here in the MD suburbs of DC, wishing prices are still well over 2005 prices. If the house is in Chevy Chase or Potomac, it sells after a price reduction or two, any other neighborhood and it stagnates on the MLS with serial reductions and no sale.
As I watch new listings come online there seem to be many fix-n-flips bought in 2005, 2006 and 2007 with what is probably a break-even price well above the bubble peak pricing, probably to include renovation costs. I was thinking about looking at a rental of this description since we are going to have to move again.
The market seems to be flooded with rental listings but the price drops I’ve been seeing for months seem to have stalled - probably a new crop of expired listings with unrealistic alligator-feeding rents. I expect in another two months it will be a great time for us to select a new rental.
Not housing specific — but, I thought Chistmas shopping yesterday at Tysons and Tysons II (Fairfax, Va.) was interesting. Tysons II (admitedly the lesser light of the two in terms of quality of stores) seemed dead around noon in the shops. Macy’s was amazingly empty - and doing some deep discounting. The semi-nice restaurants (Magiano’s and Daily Grill) were packed, and even had people waiting to get in (looked like a lot of Mother/Daughter combos). Tysons (original) was busier - but seemingly not as busy as in holday’s past. Apple store seemed the busiest (but, I’ve seen it more crowded in years past).
Georgetown (DC) was pretty crowded along M Street today - but, again, not seeming like the shopping crush I’ve seen on the streets in years before (and, I’ve been shopping in Georgetown before Christmas for 20+ years). Pentagon City seemed less crowded than usual earlier in the week, as well.
I hear of retail developments continuing to open around the country — but, I think internet + a slowing economy is really going to beat up traditional store-based retail — and retail/mall real estate and REITs specialiing in malls and retail.
Finally — malls are going to be increasingly dependent on food and parking for revenue. Tysons one expanded a couple years ago — and added some new stores — but also about 3 big restaurants and added theatre screens. You can still park for free - but they also have paid valet parking, as well.
In Boston, from simply personal observations, its the same thing.
Even my wife (who normally ignores this kind of stuff) has related stories from her hairdresser to the “upscale” mall experience where business is slow….regardless of the weather.
Could be wrong but this year seems exceptionally quiet, particularly considering the economy in Boston has seemed relatively strong of late.
In my old neighborhoood, Fairfax City, VA 22030. Two single family houses adverstised on Craigslist for $350K. This seems like 2004 - 2003 pricing. Quite surprised to see these prices. I sold in 2005. About the least exspensive thing then was ~$450K. At the bubble’s height probably least exspensive was $500K.
Dec 20 - $345900 Priced $100,000 below Tax Assessment ** Must see SFH in Fairfax** (Fairfax City)
http://washingtondc.craigslist.org/nva/rfs/515101642.html
Dec 20 - $355000 Wow - Great Price ** Single Family Home with Den ** (Fairfax City) img
http://washingtondc.craigslist.org/nva/rfs/515096339.html
Look out below. As Neil would say got popcorn ?
Yep - those are condo/or small townhouse prices. I didn’t think we’d be seeing much in the way of sub-400k SFRs in that part of fairfax county again (except maybe for something falling apart. That’s priced more like something near Route 1, in the eastern side of the county (stuff along route 1 is a bit more downmarket than most of the rest of fairfax).
If you were able to put down 20% - you’d pay around 1700 in P&I (maybe another 600 in taxes/insurance) - the question is - can you rent a house like that for 2,000 in decent parts of Fairfax?
Not there yet — but, a house like that at least seems to approach affordability compared to renting (but only if you were willing/able to sock down a 70k downpayment).
A comp like that has to be making neighbors who bought for 50-100k more in the last few years feel awfully queasy. And, it’s going to be a busy year at the property tax assessment appeal office in Fairfax thanks to new comps like that.
This was meant as a reply to Anon in DC’s post just above, rather than as a new item. Ooops.
The condo craze here in Toronto is still going strong:
http://www.cbc.ca/canada/toronto/story/2007/12/21/tto-condos.html
For reference, the median income in TO is ~$65k.
Today’s supposed to be the biggest shopping day here in Canada. The stores are significantly less crowded than I’ve seen before, but the MSM has been crowing about how surprisingly strong the economy is here.
Was in San Francisco last week. North Beach bars and restaurants said they’d never had such a quiet week, any time of year. The weather was gorgeous, so that’s no excuse. The Union Square Westfield Shoppingtown (I hate that name) was quieter than last year. Everyone was stuffed into the food court, but no one was on the upper levels.
Was in San Francisco last week. North Beach bars and restaurants said they’d never had such a quiet week, any time of year.
I dislike crowds. Have three Shell Vacations Clubs locations in San Francisco where I could use for a week. No crowds at bars and eateries makes it more inviting!
Anon, zeropoint,
These properties in the links are old houses from the 1950’s. Older houses are definitely seeing deep discounts in Fairfax, but such houses often need major renovations or tear-down. For properties built post 1980, I haven’t seen any deep discounts, maybe 5–10%. I saw a townhouse built in 2004 listed at $700K today– these TH’s are usually big, close to 2500 Sq ft, but anyway, a TH at that price in Fairfax? These sellers and some builders like Stanley Martin are still dreaming. It has been a slow decline and it may take 3 more years to see prices return to sanity. The outcome in the credit crunch and foreclosures may accelerate it in 2008, but that is not a sure thing.
TedK, Yep these are older smaller houses. Which to me is great. Lower cost to operate. BUT 1/4 - 1/3 acre lots. NO Homeowners Association or HOA Nazis. Typically 1 story ranches or split levels. Perfect size for singles of empty nesters. But room to expand if you like. Despite being track houses relatively well built compared to today’s construction.
Ted - for a guy like myself with a circa-1824 residence (old town), 4 brick walls under 60 years old would be heaven.
But seriously - obviously - this is still the very low end of single family property in Fairfax. The least attactive little properties like this are the places you’ll see the deepest discounts - because the HAVE to compete on price if they otherwise aren’t very loveable. I agree - we’re still in the early stages of this in NoVa.
“…those who make a living cooking and serving others say they’re feeling the impact.”
No joke. My wonderful housekeeper came to me last week and asked if I could give her any extra hours or knew anyone who needed help. This was quite a shock, since she is a great cleaner, reliable and responsible, and I was thrilled to get her for 1/2 day every other Thursday, after being wait-listed for 6 months, in the State Without Immigrants. But I guess one of the first things people cut back on when they’re having financial woes is cleaning, figuring they can either clean their own houses, or live with the dirt. Anyway, she said all her work had dried up and she was thinking of moving to Florida (!). Also noticed on Friday that the manicurist’s was not the usual pre-holiday mob scene, getting your nails done being another thing it is easy to cut back on…
Good points, I wouldn’t be surprised to see a lot of companies in non-essential industries start to see a bit of a hit here and there. People will start cutting back on the cable bill, eat out less often, get fewer haircuts, put off car maintenance, fire housecleaner and other non-essential services.
They have already started to cut back on car purchases, furniture purchases and other high ticket purchases. Once they realize they are still unable to balance their personal budgets without HELOC, Credit Cards or other tricks…..they will come to terms with reality. They have been living beyond their means and something will need to change. Either spend less or make more. In a slowing economy making more is not an option for most people, so spending less will be the only path to solvency.
Will be interesting to see if all of the 1099 workers saved anything from last year to pay their taxes this April. Many seemed to save very little, and assumed the good times would only get better.
Reality Bites.
“People will start cutting back on the cable bill, eat out less often, get fewer haircuts, put off car maintenance, fire housecleaner and other non-essential services.”
I dunno ’bout the TV. I have always been impressed by the satellite TV dishes mounted on the sides of literally EVERY trailer in these run-down trailer parks on the outer edges of Any-town, USA. Dish Network will do just fine during the hard times, IMHO.
I’m guessing there’s more than a casual relationship between parking in front of a TV hours each day, and a lack of worldly success.
Oak Park, IL
The Wednesday Journal, our local paper, reports that the number of single family homes for rent is at an all time (well 35 year) high. One firm has 26 houses for rent versus the normal 10.
One problem for potential landlords - house rents are mostly $1,500-1,900/month. One guy notes that rents are up 10% in the past 6 years but taxes are up 40%. Currently 36 houses are listed for sale under $320K, far more than in recent years. My observation is that most houses (3/2 single) are listed for 400K+. Most potential landlords want more than 2,000/month.
Good you pointed that out Jay - taxes. Buying in Cook county without giving serious, really serious, consideration to property taxes is a daredevil move. Stroger and Daley are going to come looking for money again, and again, and again…
Much of the tax problem in Oak Park is our own fault. Oak Park is known for Oak Park-River Forest High School, which is why we settled here. Well, voters approved tax hikes for: high school-capital and operating budget, elementary schools-capital budget, library-capital and operating, parks-capital and operating. The village also spent $20 million on a GarageMahal for the public works department. Lots of public construction for a village of 50,000 people.
My occasional thumbing through the Charlotte MLS is giving me the impression that pricing is becoming more competitive. Neighborhoods like WIlmore that were thick with flippers lst year asking $350K or more for their properties, are backing off. I’m starting to see more ads now under $250K there. Some of the listings even mention “available for rent”.
I’m also beginning to notice certain streets, with multiple properties for sale. When trying to sell a house adjacent to I-485 or fronting a busy street, it will languish without an aggressive discount … and you’ll likely be facing other several sellers right next door to you, that are also stuck and trying to snag a buyer.
Basically, what sells are the best condition homes, no higher than prices from this spring/summer. The market is thin for any “minor updates needed” homes, or those with some kind of problem to overlook.
From our local paper…
“State Treasurer ‘Snookered by Professionals’ on $20 Million Investment”:
http://tinyurl.com/3djtsy
I didn’t know you were in Maine. We should get together for lunch the next time I got up to N.S. It should not be long now before I do it.
‘the revelation that the Treasurer had invested $20 million from the state’s cash pool in a hedge fund account ‘
Glad to see my state has a conservative flair in them.
Took a long walk through Chicago’s North Side yesterday. In the heart of Lincoln Park at the corner of Lake View and Deming saw the new 2520 condo project.
1 bedrooms - starting $750,000
2 bedrooms - starting $1M
3 bedrooms - Starting $1.25M
They are tearing down an entire hospital complex to build this - covers nearly a whole city block in arguably one of the most expensive areas of the city. The costs of this project must be enormous. Demolition is about half done and the buildings they are taking down aren’t small - including an old chapel.
Walked past and into many stores on our 5 mile walk from Addison to North and back again. Walked during prime shopping time 10am -2pm. It was unseasonably warm -52 degrees. The stores weren’t not the least bit crowded and the shelves were overflowing. Stores of every type - Walgreens, Gap, many boutiques, even Starbucks - M-T.
Chicago’s condo developers are taking it right up to the edge baby! True believers until the very end.
It was unseasonably warm -52 degrees.
You must have anti-freeze running in your veins. I never leave the house when it gets below 20.
Italics off?
Italics off again?
So…when will it be time to buy in the DC area? I’m discouraged watching all of these houses languish on the market forever when I’d be willing to buy them at a fair price. I’m resigned to renting for another year but my husband and dog are getting kind of sick of it.
Local Market observation: I went to and auction from REDC.. never again…
.
Read: http://www.redcgroup.com/faq.html . specially number 3. they have a HUGE event coming up in California.. may I kindly suggest, dont bother unless you plan to pay very close to listing. While I was there, I was surprised houses went up so fast in price, well after a while in there I was pretty sure that while some might have been real sales (specially crappy looking ones), there also a big show going on, with banks and/ or investors aka fake bidders bidding against you.
Dont waster a day of your life like I did… I still cry for my wasted day.
“As housing continues a meltdown, consumer goods cost more and unemployment rises, those who make a living cooking and serving others say they’re feeling the impact.”
My poor landlady is both a real estate invester and a chef. The next few years are going to be rough ones.
I still eat out and still tip 20%. No debt and renting.
Looks like a car ad you’d see in a newspaper:
http://www.norwoodbuilders.com/
Year end savings on 2007 models.
Norwood jumped head first into the suburban Chicago “mini-downtown” condoze. Their buildings look like decent quality (lived across from some in Des Plaines) and I’ve heard good things about them. All the same it looks like their stuck with a heck of lot of inventory at a very bad time. By now they must have sold to every empty nester couple possible - I have no idea where their future demand will come from for them - and they probably don’t either.
Here in the east bay, berkeley, el cerrito, albany, oakland it seems to my eye that many are doing quite well. Housing is still difficult to find at a reasonable price, if impossible. Rents are still high, and people are pulling in great paychecques all over the place. Fancy cars roam the streets, the farmers market, organic and expensive produce is packed to the gills with people yesterday. Upscalish shopping (not malls) are very busy.
However, go down the downtown streets of Berkeley and Oakland and another picture emerges. Homelessness is abounding. Mentally ill, alchoholics,druggies roam at every turn.
It is like Dickens’s England here at times, only a modern day American version. The neighborhoods around Oakland in the less well to do and in Richmond, the less well to do, are battle zones. Unsafe to go out at night. There is at times a feeling like we live in a bubble of affluence surrounded by a fevered discontent, violent and resentful. And yet I have not had a problem whatsoever, living in a ‘border’ area. All SEEMS at peace. Yet we are a nation at war. I feel that beneath the surface of things.
This seems to be the pattern. I’ve seen it in LA and San Diego, too.
The higher-end areas are holding up fairly well (stagnant, not growth) but the lower-end has fallen hard & fast. Higher crime, definitely a feeling of discontent there. I think it will roll into the better areas over time.
–
Palm Desert Area…
An acquaintance lives in one of the desert cities. When I visited in Apr’05 homes like her were selling for $480k. My son visited her last weekend. He said that the price peaked above $500K later in 2005, according to the owner. Now, there are some homes listed for $400K (39xK). He thinks that they wouldn’t sell for more than $350K. Looks like a 30% haircut already.
Jas
Looked at three homes, today.
Home 1 - Older home (Sears). Price is almost right and would love to restore, but don’t know if I’m up to it.
Home 2 - New construction priced WAY below comps. Almost back to 1998 prices. But no customizations like fireplace OR garage door openers (3 car garage), sod or seed, garage is unfinished. Realtor not impressed when I said the price in that area was for a high end home and he was being really cheap.
Home 3 - REO. Nice and clean for an REO, but small and part of a HOA.
The broker selling home 3 only does REO properties and is convinced the market will be improving in Spring and prices will be going up.
Oh, he meant HIS market so more REOs- silly me!!
Were I worthy to do so, I would off him up to HBB for either trout smack or a very special holiday JT treatment.
Perhaps I’ll send him back East and Leighsong can take him down a few pegs.