The Heady Times Of A Few Years Ago Are Just Memories
The Gazette reports from Colorado. “Colorado Springs’ housing market suffered through one of its worst downturns in recent memory during 2007. Foreclosures broke a 19-year-old record, home construction slowed to a pace not seen since the early 1990s. And as foreclosed homes come on the market, they’ll continue to create competition for builders and the resale market, where prices already have declined during the past few months.”
“Several parties, not just lenders, are to blame for the mortgage woes, said El Paso County Public Trustee Carol Snyder. Homebuilders, real estate agents and mortgage brokers all eagerly worked to sell homes, she said, while many buyers bought too much home for their budgets.”
“‘You put a larger housing stock with all of the creative financing, and all the eager people at all ends of the spectrum, and you end up in the situation we are in now,’ Snyder said.”
The Rocky Mountain News from Colorado. “The final tally of foreclosure filings in the seven-county Denver area in 2007 represent a 41.5 percent increase over the record filings in 2006. Last year’s 26,326 filings were the equivalent of every home in Littleton and Louisville going into foreclosure.”
“In August, Broker Brian Bartlett started tracking the number of us foreclosures in Denver’s MLS, and found the percentage increases had doubled by the end of the year. At first, about 6 percent of the homes listed for sale were either owned by lenders or the Departmentof Housing and Urban Development and 13 percent of the sold and closed homes were foreclosures.”
“Now, those numbers have risen to 13 percent and 26 percent, respectively.”
“‘That is consistent with the raw data you have on foreclosures,’ Bartlett said. ‘Every week and every month, the numbers have gone up. And that may be under-counting it, because some lenders will not allow the listing agent to put the home in the MLS as a lender-owned.’”
The Daily Times from New Mexico. “If being spotlighted on NBC’s ‘Today Show’ were not a big enough deal, the Farmington and San Juan County real estate market was highlighted Monday by the National Association of Realtors as one of the top 10 fastest-growing places in the country.”
“During November…homes in San Juan County sold for median prices between $200,000 and $275,000, according to Elizabeth Tafoya, incoming president of San Juan County’s Board of Realtors. ‘We’re not artificially inflated, and we have affordable housing,’ Tafoya said. ‘We have some foreclosures, but they’re mostly in the manufactured home market.’”
“The housing market ‘went out of control’ even in the state’s metro areas, and took a hard fall, Tafoya said.”
“In light of the roller coaster ride that has been the national home real estate market in recent months, outgoing Board of Realtors President Rosemary Hart hopes local buyers and sellers will learn a lesson.”
“‘News about the foreclosures, lending crisis and decreases in value nationally gave us an unnecessary scare here, but didn’t really affect us,’ Hart said. ‘But people panicked and we saw a decrease in sales. Other than what I call the panic stage,’ we’ve had steady sales.’”
“Her advice to people considering buying or selling here this year is to do their homework, but make sure it’s homework that’s based on the local real estate market. ‘Stay focused in your location when you get educated,’ Hart said. ‘The house you’re buying or selling isn’t in Las Cruces or Roswell.’”
The Sun News from New Mexico. “After a red-hot pace in 2006, the Las Cruces real estate market took a slight step backward in 2007. About 2,400 homes sold in 2006, while slightly less than 2,000 sold this year, according to statistics from the MLS compiled by Kaye Miller of Steinborn Realty.”
“‘There are more homes on the market,’ Miller said. ‘It might take longer to sell, but the homes are eventually selling. It’s a little bit of a tougher market; there’s more on the market and sellers have to be aware that they have to price it right. They have to be a little more patient.’”
“Stacey Melzer sold her Las Cruces home in 2007, but it was on the market for more than six months. ‘I did not think it would take (so) long,’ she told the Sun-News after one deal fell through because a contingent sale did not pan out.”
“Eventually the house sold, but she had to make two mortgage payments for a while, she said.”
“Miller said the national real estate market affects Las Cruces because it is taking out-of-towners longer to sell their homes in other markets and delaying the purchase of homes here.”
“‘We are so lucky here because we are sort of in this little bubble,’ she said. ‘Other areas across the country are hurting so badly. It’s impacting us because people who buy a lot of these homes have to come in from other places.’”
The Arizona Republic. “Two years after Scottsdale’s real estate market started to cool from its red-hot run-up, the big question for 2008 remains whether the market has hit bottom.”
“Optimists among local real estate professionals think it has and the new year will see improvement. ‘We’re on the other side of the dip,’ said Janine Brown, Scottsdale Area Association of Realtors president.”
“A Greater Phoenix Blue Chip panel of economists noted that new-home permits fell to about 32,000 in the Valley this year, about half the totals of two years ago and will drop to 30,000 in 2008.”
“Scottsdale Realtor Mark Tait said the softer market is motivating sellers to price their homes more reasonably and do improvements that they were not willing to do when multiple offers were rolling in on homes a few years ago.”
“And back when people were camping out to pay $190,000 for 15-year-old condo conversions.”
“‘They realize it is a buyers market and prices have retracted,’ Tait said.”
“People in real estate and construction are fighting to hold on until the market improves. ‘Builders are selling finished lots for 20 cents on the dollar just to stay afloat,’ he said, adding that as many as two-thirds of the smaller builders will not survive.”
“There should be some good indicators of where the Scottsdale market is headed by the second quarter of 2008, Tait added. ‘When is the bottom? Nobody can answer that,’ he said. ‘The bottom is when the media starts writing all kinds of good stories.’”
“Thanks to recently passed federal legislation, getting out from under mortgages with a short sale is easier in the troubled Southeast Valley real estate market.”
“Nick Martini of Mesa may be one Southeast Valley homeowner who gets a break from the new law. In 2005, Martini and his wife bought a house in Mesa and owe $315,000 on it now. The couple has completely remodeled the home’s interior, but currently it would probably sell for $280,000, said Martini.”
“In November, Martini was laid off and said he is now working a lower-paying job. And, his wife is five months pregnant with the couple’s second child. They struggle to make their house payments now, he said.”
“‘Come April, we’re going to fall on our face,’ he said. ‘We’d like to keep our house. Basically, we need to make more money.’”
“Should the Martinis short-sell their house, they won’t be alone. Randy Kutz, co-owner of Phoenix Heritage Real Estate Group and Arizona Short Sale Experts, said his companies have 60 short-sale listings around the Valley, and they aren’t going away anytime soon.”
“Even if the Valley’s housing inventory is reduced, Kutz said many portions of the region are down to 2004 prices. ‘I think the short-sale situation is going to be with us for five-plus years,’ he said.”
The Mohave Daily News from Nevada. “Some Southern California investors in The Hoover Companies projects are claiming they’re not getting the money they invested returned to them when they request it.”
“The Hoover Companies owns the golf course, country club and master-planned community of El Rio in Mohave Valley. They also own the future master-planned community of Mariposa, across the highway from El Rio.”
“The El Rio development, which has been taking shape since 2005, has fallen on hard times like its cousin to the north - Laughlin Ranch - due to the sharp downturn in home sales. Only three residences at El Rio are occupied, according to Hoover spokesman Chaz Martinez.”
“Other signs of trouble for El Rio include the fact that its clubhouse restaurant has scaled back its hours, no longer serving dinner. The nearby El Rio Professional Plaza, completed this year, has so far attracted only three tenants. And the Mariposa housing project, adjacent to El Rio, lays idle.”
“In an attempt to encourage development, Hoover is offering homes at El Rio with 1,300 square feet starting at $189,000, built on lots discounted at 40 percent and priced at $49,000.”
“‘I’m proud of this because I don’t think other developers have been willing to do what we do in this horrible market,’ Martinez said. ‘I mean, some developers just go bankrupt. They’re not paying anybody back. We would never want to do that. I mean, we’re fighting this gloomy period just like everyone else. We have tried to think outside the box to spur economic growth.’”
The Reno Gazette Journal. “A trying time, these past 12 months were for Northern Nevada’s economy. At the forefront: The housing market whose downfall was, by most accounts, inevitable after the runup some years back. Even the once-hot condominium market has cooled, as some downtown Reno projects have been halted.”
“‘Even McDonald’s will be affected,’ said Tom Cargill, economist at the University of Nevada, Reno. ‘People will have less money to spend. That’s real. There’s a sense of feeling less wealthy.’”
“Ken Wiseman, broker/owner of Reno Rancho Realty, recalls the heady times of a few years ago when homes sold furiously, sometimes in a matter of hours. Those days now are just memories.”
“‘We’ve finally seen the 180-degree turnaround,’ he said. ‘The bubble has burst.’”
“Added Wayne Capurro, incoming president of the Reno-Sparks Association of Realtors, ‘It was not unexpected, but it certainly feels worse once you’re in it. It got so overheated.’”
“”Cargill said society has bought into the myth that home prices will always go up.”
“‘That’s simply not true,’ he said. ‘But this is not a catastrophe. It’s normal to have ups and downs. Business cycles are a natural part of the economy. It’s a myth to think that these things can be made to go away. This was true 300 years ago, and it’s true today.’”
“Observers apply a positive twist to the real estate spinout by saying lower prices can be a good thing.”
“‘Our market was inflated. It got out of reach for the average wage earner,’ Wiseman said. ‘Businesses won’t move here if it’s not affordable. It needed an adjustment. What goes up, comes down. We’re going to see it go back to 2003 prices.’”
“Nationally, sales of new homes last month sank to the lowest level in a dozen years, and sales of new homes in Washoe County showed an even worse downturn than the national figures.”
“Locally, the November 2006 to November 2007 figures showed new-home sales crashing by 64 percent in Reno and more than 60 percent in Sparks and countywide.”
“‘The numbers show the housing showdown is real and is showing no signs of getting better at this point,’ said Brian Kaiser, an analyst at the University of Nevada, Reno.”
“He said looking at a full year of data, Washoe County shows at least a 40 percent decrease in new and existing home sales. ‘It’s my feeling we haven’t seen the bottom yet,’ he said. ‘If you look at the foreclosure data, there’s a dramatic increase in 2007.’”
“Those homes become inventory in the real estate market. They’ll be offered at cut-rate prices and will be competing with existing and new home sales. ‘I wouldn’t be surprised if 2008 is another bad year like 2007,’ Kaiser said.”
“Eugenio Aleman, senior economist at Wells Fargo Bank, told a business conference in Minden earlier this month that the Reno area’s housing industry might make a comeback by the end of 2008.”
“‘Reno is going to come back stronger than Las Vegas,’ Aleman said. Aleman expects California’s recovery to take longer.”
“Sonny Amendola, managing broker for Century 21 Goldcrest Properties in Reno, said the real estate market locally has bottomed out. ‘We’ll see for sure if this market is going to turn around in April, May, June, when people put their houses on the markets,’ Amendola said. ‘It just went up way too fast, way too quick.’”
“Prices have dropped by about 30 percent and he’s not sure how much more they can drop.”
“Part of the equation, though, is California, where many people who move to Nevada have to sell their homes first. ‘California always has an impact on Nevada, just because of the sheer number of people who live there,’ Amendola said. ‘When California rebounds, that will affect us, too.’”
‘In an attempt to encourage development, Hoover is offering homes at El Rio with 1,300 square feet starting at $189,000, built on lots discounted at 40 percent and priced at $49,000.’ ‘I’m proud of this because I don’t think other developers have been willing to do what we do in this horrible market,’ Martinez said.’
I don’t know what Hoover paid, but I bet this land sold for a couple of thousand an acre within the past decade.
Buy ‘em for 5K, sell them for 49, and declare them worth 90. Proclaim yourself one hell of a guy and run for the state senate. He’d probably win, too.
I don’t know what Hoover paid, but I bet this land sold for a couple of thousand an acre within the past decade.
That attempt to encourage development with the deal on the 1,300 sqft starting at $189,000 results in a little over $145 a sqft.
Not only does he have a huge markup on the land, he also has a huge margin on the building costs. I would bet he paid less than $1,500 an acre in this area.
“[T]his is not a catastrophe. It’s normal to have ups and downs. Business cycles are a natural part of the economy.”
I wish ppl would at least to attempt to understand the economics and fundamentals of their professions. If anyone has ever seen charts showing rental rates, incomes and sales price overlays going back the last 100 years they would realize that we have never been this far out of whack. It perplexes me ppl that claim to be educated or knowledgeable see the burst as part of the normal ebs and flows associated with changes in our economy. It is nothing of the sort. Debt securitization and the over-leverage it encouraged was something relatively nonexistant pre-bubble. Im not sure of any other time in history where the unemployed and/or impoverished were given 800k 100% LTV mortgages with no documentation or background checks.
“I’m not going to confuse people with numbers …”
– Hollywood realtor teaching fancypants economist a thing or two.
Agreed. I hear friends and colleagues say this all the time. I think it’s called laziness. Rather than looking at actual evidence, they only have the past two decades of higher trending asset values in their head’s when they make this comment without consideration for fundamentals and historical ratios, etc.
They don’t want any real discussion on it, as this would jeopardize their own jaded perspective on it.
–
“Part of the equation, though, is California, where many people who move to Nevada have to sell their homes first. ‘California always has an impact on Nevada, just because of the sheer number of people who live there,’ Amendola said. ‘When California rebounds, that will affect us, too.’”
In 2005 and early 2006 some of the Californians from Silly.con Valley were buying heavily in Stockton, Merced, Fresno, etc., or any part of Central Valley that was within 2 hours drive from San Jose.
Arrival of Californicators to buy homes in a area in large numbers is a good indicator of what lies 1-3 years from their heavy buying into an area.
Jas
I agree with your point, Jas, but enough with the insults (i.e., Californicators). It’s not funny, it’s offensive.
“It’s not funny, it’s offensive.”
But it’s descriptive. It’s the most expensive sex FBs will ever pay for.
Perhaps I’m a little sensitive as a former Californian, but I resent the implication that I’m responsible for the ruin of the “insert state name here” housing market.
Right now, I’m in Colorado, and I hear it constantly: “Californians are destroying all that is good and precious about our state.” It doesn’t matter how hard my spouse and I work at our chosen professions, how involved we get in the community, or how well we treat our neighbors. We get no credit whatsoever and are demonized both coming and going.
Yes, we were lucky to have bought and sold during the housing boom. So, what?
My family moved here from Texas in the late 80’s,we got the same treatment, maybe even worse. Everybody hated our 10 gallon hats and texas cadillacs, but sure didn’t mind the money spent. Now go home, Redhead! Just kidding.
How people treat you is their karma; how you react is yours.
If people judge you harshly because of where you are from then that says more about them than it does about you. Be greatful these people early on show you what they are about.
Testify Red!
Most folks who criticize Californians who took advantage of the equity arbitrage are the same ones who would have done the exact same thing given the opportunity.
Red, don’t get so testy. I have lied in this state for more than 20 years, more than half my life. Went to SC, Fight On! AND I always use Californicators, Clownifornians. Face it, even if you are the smartest to ever come from this state, the rest of the country will still knock it because some of what we do here is just plain dopey. It can be just as bad as anywhere else in the country. For cryin out loud, 35% of the voters put Ahnold in office. What does that tell you? At least 1 out of 3 voters is smoking the wacky tabacky!
As for me, I have embraced it. SInce you are gone, you shouldn’t get too upset. Just hope you changed those license plates!
lied=lived, Freudian slip. Uh oh.
Also wanted to add, people get testy because they complain after moving. Kind of like going from deep South BBQ to Wisky Brats and vice versa. Don’t go to Alabama and complain about the brats or go to Wisky and complain you can’t get decent bbq. You are not going to make too many friends that way.
Not that you are, but all it takes is one slip. My mom is guilty of this. She has lived in CA for 15 years and still says that is not how it was in NJ. Geez, get over it mom. We know, thin crust pizza is better in NY and NJ. I will still say it, but only to those I know are from those places and have migrated here. I won’t say it in the pizza parlor, for crying out loud.
Our license plates were changed within the first three days, Dan. We knew better than the leave them on the cars. We’re not crazy!
“…when California rebounds…” - those people have a loooong wait ahead of them…
‘When is the bottom? Nobody can answer that,’ he said. ‘The bottom is when the media starts writing all kinds of good stories.’
Partially true- we’ll reach bottom when the fundamentals make sense.
Partially true- we’ll reach bottom when the fundamentals make sense.
We will reach the bottom when home prices and rental costs are more aligned and home prices are aligned with local incomes.
Twenty years ago was 1987. Given that we are still near the beginning of the current housing bust, I am scratching my head trying to figure out why the current foreclosure is presumptively comparable to the 1987 rate.
Local foreclosures break record, but rate can’t compare
Comments 17 | Recommend 4
By RICH LADEN
THE GAZETTE
January 3, 2008 - 11:10AM
…
Despite the record, the rate of foreclosures isn’t as bad as it was 20 years ago because there are thousands more homes now.
During the third quarter of 2007, the Colorado Division of Housing estimated El Paso County had one foreclosure for every 84 households; 20 years ago, the rate was roughly one for every 28 households.
Bring back those lazy, hazy, crazy days of selling
those days of buying and flipping and fraud
(with apologies to Nat King Cole)
Thanks for the insight, Professor Obvious.
There’s a relationship between rising numbers of foreclosures and the area’s homebuilding slowdown, said Fred Crowley, a University of Colorado at Colorado Springs economist.
And why not work in a little ‘expert’ plug for the local real estate sales folks?
If there’s good news for the housing industry, it’s that real estate experts say it’s a great time to buy a house. Thirty-year fixed-rate loans are hovering around 6 percent and buyers have a huge selection.
“You can get a very, very attractive 30-year fixed-rate mortgage if you can qualify, and you have an enormous opportunity to buy,” Crowley said.
Let’s see if that person earning say $58,000 can qualify for the 1,800 sqft home listed at $300,000. It does not matter how low the rates are, it only matters if you qualify and are approved for the loan and the income stated above would not qualify.
I don’t want an attractive mortgage. I want an attractive price. If the price is attractive and the mortgage is unattractive, “I can always refinance.” And I’d have the equity to do it too.
Heh. My husband went to UC at Colorado Springs for a while. It is (or was) a commuting college for adults. The prof’s quotes sound pretty typical. *grin*
On the other side of town is Colorado College, a top liberal arts college (it’s a Princeton want to be, quite literally). I wonder if they might have gotten less blockheaded quotes from their econ. department. I hope so, I hate to think I wasted 4 years there right down the hall in the geo department.
“During November…homes in San Juan County sold for median prices between $200,000 and $275,000, according to Elizabeth Tafoya, incoming president of San Juan County’s Board of Realtors. ‘We’re not artificially inflated, and we have affordable housing,’ Tafoya said. ‘We have some foreclosures, but they’re mostly in the manufactured home market.’”
US Census lists a 2004 median household income at $37,000. Even allowing a 10% increase over 3 years, that still runs an affordibility index of between 5 to 7 times income.
It’s different there…wherever there is.
“US Census lists a 2004 median household income at $37,000. Even allowing a 10% increase over 3 years, that still runs an affordibility index of between 5 to 7 times income.
It’s different there…wherever there is.”
Where “there” is would be the four corners region of New Mexico. They have a couple of things going for them. Very large coal mines, and extraordinarly large medical center, and several indian reservations, and a well attended college.
The coal is needed for power plants and the indians spend their government supplied money in town.
large coal mines? is that why West Virginia homes have always been so pricey?
“In August, Broker Brian Bartlett started tracking the number of us foreclosures in Denver’s MLS, and found the percentage increases had doubled by the end of the year. At first, about 6 percent of the homes listed for sale were either owned by lenders or the Departmentof Housing and Urban Development and 13 percent of the sold and closed homes were foreclosures.”
“Now, those numbers have risen to 13 percent and 26 percent, respectively.”
Just a hunch, but I suspect that a huge number of non-foreclosure sellers pull their homes off of the market from August to December. I suspect the same is not true of bank- or government-owned properties. Meaning this increase tells you next to nothing without seeing historical August-December comparisons.
Sure. 6% is a disaster. Heck, 2% is a disaster historically.
And a 41% increase, on what was probably a record year? You Colorado bubble deniers just keep at it. I’ve heard this rationalizing for years now, and the defaults keep getting worse every month.
The sad part is that prices in Denver’s nicer neighborhoods have slowed their appreciation but have not yet declined. I’m getting impatient, but not impatient enough to consider buying.
Depending on your definition of “nicer” neighborhood, I’m not sure you will see much of a decline. Prices have appreciated somewhat since 2001 or so, but not at the stratospheric levels you saw on the coasts. For example, we bought our (old and cheap for the area) house on the border of Bonnie Brae and Wash Park last summer for 14% more than it sold for in mid-2003. That’s an appreciation rate of what, 2% or so? Looking at a graph for 80210, there’s been a little higher appreciation since 2001 (47% total, or about 5.6% annually), but that’s misleading because there have been so many scrapes since then that you are comparing apples to oranges.
(By the way, we bought there because the wife has a five year academic appointment and we needed to be walking distance from DU and the lightrail for our jobs–and frankly, if she didn’t hate the idea of renting with a kid, I would have preferred to do that.)
Denver is on its own time frame. The housing bubble started much earlier in Denver due to the telecom boom. I moved here in late 2004 and keep waiting for the burst. Im still waiting and refuse to buy at these levels. Some areas, such as Park Hill and Highlands, have increased substantially. I think Park Hill is up about 25% or more in the last few years. That said, it was about 60% of wash park price per square foot when I moved here, but now closer to 85%. Outlying areas such as Parker, Highlands Ranch, Thorton, Broomfield, etc. are starting to tank. DOM is getting much higher everywhere. I have been looking at Park Hill, Country Club, Congress Park, Cherry Creek, and Wash Park mostly.
Relative appreciation simply does not matter, because housing prices are forced to be in equilibrium with the coasts.
Things that do matter for the equilibrium:
1. Median Price to Median Income
2. Price-to-Rent ratios
3. Foreclosures.
None of these bode well for Denver or Boulder.
Completely agree, and like “Equilibrium”. Many of those nice, old neighborhood homes are owned outright by elderly and retired from when Denver was VERY affordable (60’s &70’s, my grandmother was a realtor in Denver then, and Park Hill was the cheap suburbs back then). When those are transfered to the next generation, they can’t all be lived in, it will be interesting to see what happens if/when they go on the market.
Relative appreciation simply does not matter, because housing prices are forced to be in equilibrium with the coasts.
Whoops, forgot a crucial word:
Relative appreciation simply does not matter, because Denver housing prices are NOT forced to be in equilibrium with the coasts.
I’m not a Colorado bubble-denier, nor do I take issue with the idea that the 6% figure is atrocious (I have no idea one way or another). I just think the increase from mid- to late-2007 is absolutely meaningless without more perspective. It’s like saying that the inventory problem is going away because inventory decreases from July to December. Well, no. Inventory usually decreases during that time period. The real question is what it looks like YOY.
We have very few foreclosures, if any, on the market in Pullman, WA at present. Yet our inventory hardly fell at all this winter. I’m not sure you can assume anymore that only foreclosures are on the market over Xmas. There are a LOT of desperate sellers.
I have been tracking Denver numbers myself. I have noticed about 20% of owner occupied/non-lender homes are taken off the market around November, and then put back on again in Spring. This would skew the numbers and it would be interesting to see the YOY data. The worst is when I see realtors saying in December or January that inventory is decreasing and that’s a good thing. Unless your using YOY data, normal seasonal adjustments can be false deceiving.
RMN:
‘He said they expected the call volume to drop off in December, because “people don’t want to deal with it,” during the holiday season, but they received 1,533 calls last month, about double the number in December 2006.’
‘We even got nine calls on Christmas,” although there were no counselors available to take the calls, said Zach Urban, of Brothers Redevelopment, who runs the (foreclosure) hotline.’
Ben,
That was all me calling trying to see if someone would by granite countertops and some stainless steel appliances really cheap.
Eugenio Aleman, senior economist at Wells Fargo Bank, told a business conference in Minden earlier this month that the Reno area’s housing industry might make a comeback by the end of 2008.”
“‘Reno is going to come back stronger than Las Vegas,’ Aleman said. Aleman expects California’s recovery to take longer.”
-Eugenio is the Premier on the Planet Denial.
WTF! What a jackass.
“Reno area’s housing industry might make a comeback by the end of 2008″
as i said in an earlier thread today, if nothing at all is built in 2Q08, then whatever small number are built later will represent a “comeback” — ha ha, I don’t think this is what Eugenio means, though.
“senior economist” at Wells Fargo? No wonder banks are failing.
senior enonomist. another guy who gets paid big money for just showing up.
Reno is good for some gambling and entertainment fun. The RE market will down for quite a while until CA’s market rebounds in 5 or more years.
No housing = no high paying jobs = no recovery in sight. I wish these folks would define what they think it is that is going to resurrect the NNV housing market. I guess the casinos are going to start paying room maids and custodians a 100K a year.
Agreed. NNV RE won’t rebound for 6 to 9 years at minimum. The flood of easy mortgage money in 2004 to 2005 may not be seen for another 20 years. My Aunt works in a Reno casino and she definitely doesn’t make $ 100K a year.
It’s kinda pathetic that a city’s RE market is dependent on the economic health of another state.
No kidding. When we moved here 18 months ago and almost had a stroke when we saw the prices of homes, we were told, “buy now or it will be even harder later because of Californians coming to Reno with their $$$!!!”
We are still renting and very happy about it and the prices are coming down slowly. However, I think there is a delay in some of those ARM resets up here vs Las Vegas area. We are in from more drops soon!
“We’re on the other side of the dip,’ said Janine Brown, Scottsdale Area Association of Realtors president.”
No, Janine, we’re not on the other side yet. You are only off by five or ten years.
Janine reminds me of a little kid who has been riding the mechanical pony outside the supermarket. When it suddenly stops, she says “Go, Horsey, Go!” and looks to some adult to put more money in the box. Out of money, Janine. Get off it and let’s go home. No more horsey.
Actually, she may be technically correct.
I suspect that what is going to happen over the next few years will be called something other than a “dip.”
In mathematic circles, Janine’s dip is referred to as a “local minimum.” In thermodynamic circles, the dip is referred to as as a “transition state” on the way to a final product.
I am guessing the final product in question will have a higher level of entropy than the currently-available product has?
‘In thermodynamic circles’
- You took the words right out of my mouth.
“Sonny Amendola, managing broker for Century 21 Goldcrest Properties in Reno, said the real estate market locally has bottomed out. ‘We’ll see for sure if this market is going to turn around in April, May, June, when people put their houses on the markets,’ Amendola said. ‘It just went up way too fast, way too quick.’”
At this point, minor fluctuations in supply are almost irrelevant given the low sales numbers.
There will be no more “recovery” in April/May/June 2008 than in 2007 and 2006. Prices will, however, continue to decline for those few remaining sales.
Actually, the real NNV price declines begin in ‘08. What we’ve had so far has just been a baby fart.
What we’ve had so far has just been a baby fart.
Is this like the ‘year of the baby fart?’
When the alert level goes through: adult, ape, dragon,
mother of all farts.
Then we’ll be near the bottom.
Got popcorn?
Neil
“‘That is consistent with the raw data you have on foreclosures,’ Bartlett said. ‘Every week and every month, the numbers have gone up. And that may be under-counting it, because some lenders will not allow the listing agent to put the home in the MLS as a lender-owned.’”
How does a lender go about hiding the fact they are the owner? How do they hide that someone walked (or was pushed) on an over-priced property? Is it legal?
Or did I just read it wrong and he commenting that it can’t go into the MLS and has to be sold be the luck of foot traffic or auction?
I think what he means is that when you look at the listing in MLS you’ll have no idea it’s a foreclosure. You’ll figure it out once you see the property though, or if you ask the realtor. It just won’t be obvious in the listing.
Understood. Gee, I sure wish I had my own access to the MLS.
Try Ziprealty.com
Call Tax Assessor to find Name of owner if bank owned will show as such.
It’s easy enough to find out if it’s lender-owned, especially if you’re in Douglas County, Colorado. Go to the county website, and you’ll find all the pertinent information there for the asking.
–
“‘We’re not artificially inflated, and we have affordable housing,’ Tafoya said.”
OK, Elizabeth, what is the median household income in your area? 40-50K? If so, then I wouldn’t call your area an affordable housing area. BTW, what were the median home prices during 1999-2000 when the general economy was doing well? You get my drift?
Jas
This made me laugh….
http://biz.yahoo.com/ap/080103/bush_economy.html
Particularly like the part about “conditions on the ground”, then reading the names of bush’s “working group”. Those guys wouldn’t know conditions on the ground if the helicopter fell out of the sky and landed on it.
One of the most stunning moments of this housing fiasco occurred as I was flipping channels and came across Suze Orman show, just in time to hear a call from a NY couple: to summarize:
-paid $255K in 2005 to flip in FL (”hoped to make a profit”)
-bemoaning the housing crash and the fact they can’t sell
-not rented out, just throwing away $2600/month
-wondering if they can just do a deed in lieu of foreclosure to stop the bleeding
THey didn’t say where in FL, but at this point I’m doing a mental calculation, bought at the peak in FL for 255, trying to flip for at least 2 years as they’ve thrown away ~$60,000 I’m guessing they’re probably chasing it down trying to sell for $200K and it’s probably worth $180K. Then Suze asks them an intelligent question what it’s currently on the market for… drumroll….
$302,000
Absol-freaking-lutely stunning stupidity.
Take a loss? They are not gonna give it away! Isn’t the right not to lose money on real estate in the Constitution or Bible or something? Their realtor said its was a win win. The banks want to lend, and real estate never goes down in value, especially not in FL (warm winters, baby boomers retiring, etc. etc.).
Being a real estate geek, whenever I vacation, I check out the real estate market. I went to one open house in FL. The real estate agent called me back and said I know you loved the house and deals dont get any better, I have all the paper work drafted and you just need to come down and sign. I responded. Let’s just say she will never be calling my number again.
I have all the paper work drafted and you just need to come down and sign.
That has to be the worst attempt at a “close” that I have ever heard.
“”Cargill said society has bought into the myth that home prices will always go up.”
That was not a myth according to the hype put out by the NAR via David L. and his book and the information the NAR was providing to the realtors. Perhaps the NAR should be held accountable for this incorrect information!
O/T: From MoneyNews.com
“Late payments on home equity lines of credit jumped to 0.84 percent in the third quarter. That was up from 0.77 percent in the second quarter and was the highest since the final quarter of 1997. The delinquency rate on home-equity loans in the third quarter rose to 2.28 percent, a two-year high.”
“Meanwhile, the delinquency rate on “indirect” auto loans — which are arranged through dealerships — jumped in the third quarter to 2.86 percent, a 16-year high.”
Yeah baby, we are about to enter the 2nd quarter of the game.
Try 2nd inning. The amount of debt is staggering. I know I am obssessed with that part of this bubble, but it is because I lived with it for sooooo long. Once you have that “Jesus Moment” you don’t ever want to go back.
Anywho, these numbers are only going to get worse and with the housing ATM shut off, the credit cards maxed out, more and more people upside down on their newer cars (not just usual depreciation), all the bank write offs, and foreign investments gobbling up the US, there is only one way this story ends and it isn’t very pretty for any of us.
Suffice to say the game is still early, but it could very well end quickly.
As I like to remind people, no one ever thought that a goobermint could go broke, let alone the famous “OC,” but that is just what happened. And oh btw, don’t forget that it was about 15 years ago that the state was so late in getting a budget passed that they started issuing IOUs.
GOT DEBT?
As I remember it, they tapped the teachers retirement fund. What’cha gonna go after this time around.
Where will the Californians land? Talked with a realtor friend over New Year’s here in Portland. He says thousands of those burned-out SoCal homeowners will take their insurance check and move to Portland. Anyone else claiming them?
I am quite certain that very few of the 2000 or so SoCal folk with insurance checks in hand will land in Portland. I would bet that most will stay put right here in sunny SoCal. That is a nice realtor story to help convince people to “buy now, or get priced out forever by SoCal migrants with insurance claims payments in hand.” It is almost as plausible as the story that these folks will reinvigorate the SoCal homebuilding industry.
Yup, a co-worker who lives in San Marcos (very near the fires) told me that most of the folks nearby are using their checks to rebuild. Portland never even once came into their mids.
Yee-haw!
By the way, at least in S. CA, most that I know would rather stay put than deal with this for 6-8 months:
http://www.kptv.com/wxmap/9430868/detail.html
You couldn’t fit all the SoCal’ers now calling Colorado home in Mile High Stadium! And, there seems to be no slow-down in the exodus.
“Miller said the national real estate market affects Las Cruces because it is taking out-of-towners longer to sell their homes in other markets and delaying the purchase of homes here.”
“‘We are so lucky here because we are sort of in this little bubble,’ she said. ‘Other areas across the country are hurting so badly. It’s impacting us because people who buy a lot of these homes have to come in from other places.’”
Some little bubble we have here. I’m now seeing unfinished homes that all activity has halted on. One general contractor I know has 25 unsold spec homes and another has 16 unsold specs. We’ve got multiple million dollar homes that haven’t moved for over a year.
The residential electricians are trying their hand at commercial electrical and making my life difficult since they underbid me so badly. I just have to ride out the next six months and the romex twisters will all be bankrupt.
I love Las Cruces but it has some of the most butt ugly housing developments on small lots at high valuation that I’ve seen anywhere. In the middle of the boom I could buy a nicer house here in CA dollar for dollar than I could there. There were some nice large lots down in the green belt though with pecan trees that were very nice except for the mosquitoes in the standing water and the depressed housing around the entry and egress to the area.
Hi Folks,
Great blog you’ve got here. Been reading for several weeks. Some comments on the Colorado condition. I live in Boulder, moved here in 2005 and began looking for some property. Boom was going on full swing at that point. I bid separately on 5 rental proprties, kept getting beat out. I asked my mortgage broker (once I found out what they sold for) how can people make money at these prices (GRM’s of 25!)? He told me they were all taking out negative amortization loans. At that point I stopped looking seriously as I knew we were in a bubble. I rent now and love it.
Anyway two or three things unique to Colorado which will make things tough to recover. One is the fact that until recently, there was no licensing or oversight of mortgage brokers. That’s right, hang a shingle outside and voila, you’re a broker. Lots of loan fraud, rings of appraiers/brokers/realtors and straw buyers fleecing banks. In fact when I was applying for loans one broker “offered” to have an accountant write a letter stating my income as a consultant in Colorado would be what I made in DC. Thing is I was retired. So corrupt brokers with no oversight sold far more homes than they could have otherwise. Imagine how bad they are when they are licensed, now multiply by 10.
Second is the large number of recreational areas (ski towns etc.) in the state and huge condo oversupply. These were ideal second homes or weekend getwaways to buy with all that pesky home equity joe 6-pack had been building up.
Third, and most important to me, and missed completely by the MSM is something called the mountain pine beetle. It has killed hundreds of thousands of acres of pine forest here. Basically all the pines as far as you can see in most of Summit County (Breckenridge, Arapahoe Basin, Keystone), all of Grand County, Vail, and most of the rest of the high density pine forests in the state west of the continental divide. The pine beetle is now on the eastern side of the divide and will soon decimate forests in Rocky Mountain National Park and nearby Indian Peaks wilderness areas.
Unsightly (downright ugly) at the very least and a potential apocalyptic fire scenario at worst. The same thing is happeing all over the western US with the beetles, Bend Oregon is getting hit hard, as are parts of Montana and Idaho. Canada has a huge problem as well. Worst outbreak in history. You can get aerial survey maps from US forest service and see the progress over time as the beetle wipes out massive swaths of forest. If you thought CA had bad wild fires, think about heat density in 1 acre of close packed dead pine trees compared to 1 acre of dry grass near the ocean.
Anyway when you stack an economic disaster on top of a giant natural disater like all the forest in Colorado burning, you get some idea of what will happen here. I have spoken with forest service scientists about this, they say it’s not if but when. There is no way to clear it the problem is simply too large.
So yeah, tough times ahead all around. By the way I’m moving.
Al
Interesting - so, just out of curiosity, Al, you came from where and are going to where?
Hi Paul,
Sorry if this is a repost, not quite getting the interface. Lived in the DC area for 15 years before Boulder. I have been vacationing in this area my whole life. Plan to move to NW Montana this summer.
Al
By the way I’m moving.
Where to? Boulder is one of the places I secretly lust after… if only prices were not so stupid.
A large number of poeple who work in northern Colorado actually live in Wyoming. The real estate here is in a bubble and there has been some over building but prices are not nearly as inflated as Boulder, Fort Collins and Denver. Of course it is better if one can actually work in Wyoming too as we have no state income tax but you save some on housing by driving back and forth even if you have to pay the Colorado tax on your income. The increase in gas prices may have somewhat wiped the advantage out. A guy in my office who was making 65k took a job in Loveland for 80k and is driving back and forth starting this week. We were doing the math in the office and with the tax bracket he is in (both he and his wife are military retirees) we figure he will acutally lose money, at least the first couple of years. K
Hi Paul,
Came from DC area, planning to go to Montana this summer.
Al
Hi JP,
Yeah prices here are nuts, but they are coming way down at the lower end. Median here last 12 months was 545K or so. We had a big run up but no crash yet. We’ll see what happens when all those ARM’s reset. I am seeing informally a lot of weakening at all levels. Here are the county stats:
http://www.baraonline.com/news/stats
OT - Oh, and BTW,
Is the Nikkei down 600 tonight an early sign of recovery?
Just checkin’