At Some Point, Growth Kind Of Surpasses The Demand
The News Enterprise reports from Kentucky. “Like much of the country, this area does not appear to be exempt from a housing sales slump. Building permits issued in Radcliff and Elizabethtown in 2007 for new houses dwindled from preceding years. Broker John E. Wright Sr. warns developers, especially small contractors, not to get too overzealous. ‘I think some people are getting overextended,’ he said. ‘The people who jumped in and don’t have a background are going to get hurt.’”
“Property manager Jayme Burden said some houses formerly for sale in the area now are being rented, a trend the National Association of Realtors identified in a report last month.”
“The boom in what he called ‘cell-phone contractors’ helped speed up the pace for new construction and, if the lull continues in the housing market, could lead some of them to look for other work. ‘At some point the (residential) growth kind of surpasses the demand,’ he said, ‘and that’s where we are right now.’”
The Courier Journal from Kentucky. “The partners in the massive RiverPark Place condominium and marina development have done little work since November and have greatly reduced the scope of the project’s planned first phase. It may take a decade or more, but ‘the project will get built as designed, absolutely,’ said Steve Poe, the lead partner in the venture.”
“‘We’ve been fighting the sub-prime mortgage crisis,’ Poe said, adding that with an uncertain housing market ‘we and our lenders don’t have an appetite for building a lot of ’spec’ buildings.’”
“Poe said the crisis in the national lending industry affected River Park Place. ‘Everyone, including us, has a higher level of uncertainty’ about building condo towers than ‘we did 12 months ago,’ Poe said.”
The Columbus Dispatch from Ohio. “Ohio’s county auditors take a snapshot of home values every three years to determine the property taxes you pay. Delaware County Auditor Todd Hanks said his staff has only begun reviewing recent sale prices, but a first look indicates that the average property-value increase ‘could be 1 percent, it could be nothing,’ he said.”
“In one of the fastest-growing counties in the country? The place where pricey houses were going up so fast it seemed to exist in a perpetual cloud of construction dust?”
“Hanks said his estimate might be off, but the increase is sure to be modest. After an average 11.25 percent increase in 2002 and a 16.75 percent uptick in 2005, ‘We’re not seeing big changes,’ Hanks said.”
“Madison County Auditor Jim Williamson said values in 2005 rose 15 percent, ‘but that’s quite some time ago, and I’m not sure it’s really indicative of what’s going on in the real-estate market today.’”
The Middletown Journal from Ohio. “Homeowners in 2007 saw property values deflate faster than a New Year’s Eve party balloon. Sheriff’s sales of home foreclosures in Butler County surged from 1,312 in 2006 to 1,672 properties last year, said sheriff’s spokesman Sgt. Monte Mayer.”
“Interest rates are hovering at 6 to 6.5 percent. That’s compared to the 7 percent interest rates available before the real estate bubble burst, said Coyt Rains, outgoing president of the Hamilton-Fairfield-Oxford Board of Realtors.”
“So what’s keeping buyers from entering the market? ‘With all the bad news about the market today, people are afraid. Positive news about the housing industry would help,’ Rains said.”
“It’s already a buyer’s market, but it could get even better for those looking to own a home. There are many incentives for those looking to own a home, including low interest rates and a plentiful home inventory, said Reba Owens, president of the Middletown Board of Realtors.”
“‘You are going to get more house for your money today,’ she said.” “The selection can partly be attributed to Butler County’s high rate of foreclosures, which have hit Hamilton and Middletown hard.”
“But what could happen if things don’t start turning around? ‘The housing market is one of the biggest engines that drives the economy. It affects everything. If this continues, the country would be in a deep recession,’ said Rains.”
“‘I don’t think the government can allow that to happen. It would have to pump some money into the economy to jump-start things,’ he said.”
The Toledo Blade from Ohio. “Very little subprime mortgage lending is taking place in the Toledo area anymore, but loans made in the last several years led to a glut of foreclosed homes and a struggling real estate market, two local real-estate experts said.”
“Al Green, president of the Toledo Board of Realtors, said that with nearly 7,000 more homes on the market than a year ago, sellers should expect houses to sit 180 to 300 days. ‘We’re pushing a year to sell a house.’”
“Sellers who do not adjust their prices to the middle or low end of the market will have an even harder time selling, he added.”
“As for buyers, those hoping to purchase without providing a down payment or by using a loan with a low ‘teaser’ interest rate are out of luck, said David Seeger, CEO of Great Lakes Credit Union. ‘Subprime loans have dried up,’ he said. If someone cannot qualify for a conventional loan, “there’s really not a lot of avenues left for us to place them into a … loan.’”
“Mr. Green pointed out that real estate crises are cyclical and housing downturns occurred in the area in the mid 1970s, in 1980-81, and in 1989. ‘I was frankly expecting a slowdown a few years ago,’ he said.”
The Canton Repository from Ohio. “Angela Hammond no longer believes her Canton home was worth the $75,000 sale price. The doorbell should have been the first hint. It never worked. Evergreen Homes, which sold her the home, said it was easy enough for her to fix.”
“Then, water began to leak in the basement. And she found water dripping from the ceiling in her children’s bedroom and warping the ceiling in her master bedroom, even though the roof was supposed to be new.”
“‘Wouldn’t you think they would complete the whole house and not leave certain things undone?’ asked Hammond, a first-time homebuyer. ‘They said it was inspected.’”
“Assistant Summit County Prosecutor Richard Hoenigman explained how the scheme worked: Evergreen bought the Summit County properties at foreclosure, made cosmetic upgrades to the homes, obtained inflated appraisals, and then sold them at the overly inflated value.”
“‘They would take overinflated appraisal and use it to secure a legitimate loan for the inflated amount,’ Hoenigman said. ‘Since most lenders only lend 80 percent of the value, Evergreen would take the second mortgage to make up the difference so that the unsuspecting homeowner would be able to buy the house with no money down.’”
“‘They all were in over their heads to begin with,’ Hoenigman said. ‘A lot of them just barely, if at all, qualified for the initial loan. After two years, most of these loans were adjustible-rate mortgages, and the mortgage payments would go up.’”
“More than 40 percent of the properties Evergreen sold in Summit County went to foreclosure, he said. About 47 percent of the roughly 100 properties Evergreen sold between 2005 and 2007 in Stark County have gone to foreclosure, a Repository analysis of county auditor and court records show.”
The IndyStar from Indiana. “Flaherty & Collins has taken over a stalled condo project on Morse Reservoir and plans to begin closing on homes this month. When the property was purchased in 2005, John Kretchmar, a Chicago-based developer, expected to have the first three buildings done by 2010 with three more to come but said the timeline was scaled back due to the slow housing market.”
“Despite the slow market, Kretchmar said, demand is still there for condos. ‘Noblesville is one of the fastest growing cities in Hamilton County and the Indianapolis area,’ he said. ‘Of course, the location on the reservoir is very attractive.’”
The Chicago Tribune from Illinois. “Kimball Hill Inc., a major Chicago-area builder with operations in eight states, said Friday that it was forced to delay its 2007 financial statement as its debt was downgraded by Standard & Poor’s.”
“Along with many other builders, Rolling Meadows-based Kimball Hill has seen its sales wither in the face of the worst housing recession in decades. Sales for some builders have fallen by 40 percent or more over the last two years. Housing consultant Steve Hovany said one major builder, Orleans Homes, recently sold land it had acquired in this area and at least one national builder is thinking of abandoning the Chicago market.”
“‘Just about all the major builders are trying to conserve cash, instituting layoffs or reducing the size of their offices,’ said Hovany. He said builders ‘are struggling with overhead costs that are too high and projects that no longer are profitable.’”
“S&P said ‘Kimball Hill will have no access to additional borrowings’ under its senior credit facility, which had just over $100 million available at the end of June.”
The Sun Times from Illinois. “Countrywide Financial Corp. will cut 127 jobs at its Rolling Meadows office starting Jan. 18.”
“Countrywide is the focus of an investigation by Illinois Attorney General Lisa Madigan. Madigan’s office subpoened documents from the company last fall. It is probing how homeowners were approved for mortgages far beyond their means.”
The Leelanau News from Michigan. “The just-concluded year will go down as one in which some cracks became visible in the plans of developers to step up the creation of housing stocks in Leelanau County. Three of the largest developments ever proposed for Leelanau County are taking a more cautious approach, showing signs of financial stress — or both.”
“The obvious example can be found at the BayView development in the Village of Suttons Bay, which just a couple years ago touted plans to double the size of the village when fully built. But sales of waterfront condominiums never did take off, and stagnated amid a downturned housing industry and publicity of a trail of unpaid construction subcontractors and claims of shoddy workmanship.”
“Consultant Chuck Kalchik and Timber Shores primary owner Fred Gordon, a Royal Oak attorney who has created housing developments from California to Florida, are convinced Timber Shores will be embraced by a growing number of new retirees — eventually.”
“‘You’ve just got to look at it in the long-term. It’s a 10-year build-out. We’re hitting the baby boomer market, and that is the group that is starting to retire,’ he said.”
“Timber Shores will seek to provide housing in a wide range of prices, from $175,000 to over $1 million.”
“One of the problems that beset BayView condominium sales may have been their prices, said Shelly Brunette, a real estate agent in Suttons Bay. She said…there is a two-year supply of units in the $250,000 to $550,000 range. BayView units were selling for just above that mark, in the $700,000 range.”
“And she added that developments such as BayView unveiled their plans several years ago, long before the market took a downturn. ‘Those developments that are on the bubble didn’t start last year — they started years ago before that market went haywire,’ said Brunette.”
“County planner Trudy Galla said Leelanau County had plenty of empty lots available long before developers sought permission from local units of government to create large-scale developments. She pointed to a Leelanau County Planning Department study in the 1990s.”
“‘What we found was that every (township) had vacant lots. What we were able to show was there were a lot of vacant lots out there, and so why do we need subdivisions?’ she asked. ‘No one wants to have another development out there sitting vacant. If the market studies aren’t there to support it, why are they proposing 150 to 200 more units?’”
The Lansing State Journal from Michigan. “More than 1,700 Ingham County homes were sold in sheriff’s auctions in 2007, more than triple the number of homes lost through foreclosure in 2000.”
“Approximately 95 percent of homes at that stage of foreclosure are eventually lost by the homeowner, while owners of the remaining 5 percent save their homes in the following six-month redemption period.”
“In 2007, the county saw 1,757 homes reach a sheriff’s sale, up 33.9 percent from 1,312 homes in 2006 and up 362.4 percent from 380 homes in 2000.’
The Grand Haven Tribune from Michigan. “The county’s Register of Deeds documented 850 foreclosures last year, compared with 540 in 2006 and 333 in 2005 — while only a total of 423 foreclosures occurred in Ottawa County during a five-year span from 1996 to 2000.”
“Relative to some counties on the east side of the state, Ottawa County’s foreclosure numbers aren’t bad. Default Research found foreclosures increased in 2007 from the previous year by 108 percent in the Detroit area. Last month alone, 2,069 foreclosures took place in Wayne County.”
“The situation in Ottawa County and the rest of the state doesn’t seem to be getting better. In the first six months of 2007, the county had 388 foreclosures. It had 462 in the second half of the year.”
“‘This bubble started to pop up a couple of years ago, and each year since then we’ve thought it’s got to bottom out,’ said Ottawa County Sheriff’s Deputy Steven Cotton, who posts foreclosure notices for the county. ‘And it will. But it’s gone on a lot longer than any of us out in the real world would have thought.’”
The Ann Arbor News from Michigan. “A record number of homes in Washtenaw and Livingston counties were foreclosed upon in 2007, statistics show. Combined, 2,180 homes were sold at sheriff’s auction in the two counties last year, a 90 percent jump from 2006, according to the counties’ respective Register of Deeds offices, and quintuple the number of auctions just five years ago.”
“‘When you look at a bell curve, we have not yet reached the top,’ said Washtenaw County Treasurer Catherine McClary, who estimates that in Washtenaw alone, 2,200 homes entered some state of foreclosure in 2007. ‘We will probably see that in late 2008 or 2009. This is still the beginning.’”
“The rise in foreclosures is blamed largely on this year’s swell in adjustable rate mortgage resets. Falling home prices have made it hard for homeowners to sell or refinance into fixed-rate mortgages.”
“‘When it first started, the first (foreclosed homes) were east of US-23 and now it appears that it’s an equal number east and west of 23,’ said Washtenaw County Special Deputy Sheriff Jimmy Moore, director of the civil division, who auctions foreclosed homes in downtown Ann Arbor. ‘Now, it’s the whole county.’”
“Moore said most of the foreclosed homes he auctions range in price between $200,000 and $700,000. He estimated that more than 50 percent of people vacate their house before the end of the redemption period following a sheriff’s sale here, which can be between six and 12 months.”
“The rest are evicted by the mortgage company or bank with the help of sheriff’s deputies.”
“Ralph Newkirk runs the foreclosure division for Real Estate One. Newkirk’s office deals exclusively with banks selling foreclosed properties. His listings doubled in 2006 across southeast Michigan.”
“‘Sometimes I go into these vacant homes and I see all these letters from the bank that have never been opened. They figure if they don’t look at it, it doesn’t exist,’ Newkirk said. ‘These letters are the banks pleading with people to please call me and maybe we can work something out.’”
“Barry Kenyon is a local agent who sells foreclosed homes. Kenyon said in Washtenaw County, most of the foreclosed homes he’s dealt with are in Ypsilanti Township, typically in a subdivision. Foreclosed homes are impacting the price of neighboring houses in some areas because there are simply too many for appraisers to ignore.”
“One bright sign is that mortgage lenders and banks are more aggressively trying to negotiate with homeowners to prevent foreclosure now. Moore said he has more than 100 homes on ‘adjournment’ which means the bank has asked the county to hold off on the sheriff’s auction while it tries to resolve the matter with the homeowner.”
‘Mr. Green pointed out that real estate crises are cyclical and housing downturns occurred in the area in the mid 1970s, in 1980-81, and in 1989. ‘I was frankly expecting a slowdown a few years ago,’ he said.’
‘I don’t think the government can allow that to happen. It would have to pump some money into the economy to jump-start things,’ he said.’
It should have happened a few years ago, Mr Green, but the folks running things kinda forgot and let the train run off a cliff. And even though we have a housing recession every ten years or so, this Rains guy believes it is unthinkable today!
‘I don’t think the government can allow that to happen. It would have to pump some money into the economy to jump-start things,’ he said.’
LOL! “Government,” including the Fed, created the problem in an attempt “to jump-start things” in 2002! The battery is dead. No more jump-starts.
Jas
‘I don’t think the government can allow that to happen.’
Okay comrade!
They didn’t think the government would let gasoline or milk to go over $1.29 a gallon either did they ?
Ooops!…Hi uncle Cheney
The government created it hun, and when it got really out of control they said f*ck America and catered to their Wall Street friends. This loser thinks the government actually is trying to look out for ppls best interests (although it is clear from his statement that he was just talking about his own interest in profiting from the housing scam, as opposed to Nation’s interest in getting us back to historical norms for housing prices). What freaking planet is he living on? This is the era of the Bush administration. We have one of the most corrupt terrorist organizations going. We dont have great, brilliant, hard-working ppl trying to help us all in the Fed we get crooks and rapists like Greenspan and Bern.
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Vow, Natalie!
Sadly, the USG and the Fed intervene only on behalf of a minority of losers among the middle-class and the majority of the rich. Whether we like it or not that is the system in place.
Faux News business pundits agreed that Wall Street will by Obama or Huvkerbee by pumping money if they appear as the leading candidates. Sadly, they need money more than the support from honest and decent folks. We are the suckers.
Jas
This is getting ugly real fast - still no depression though!
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What is the hurry, Crispy? Big storm in Bakersfield? You don’t want a garden variety depression, do you?
Fed will serve no depression before it is time (properly aged). Sadly, the depression beginning in 2008-10 would be the “best” vintage ever. It would be ripe by 2008Q4.
Jas
Actually, it was Coyt Rains, from Middletown who made this ridiculous statement.
Ben, it is statements such as this, made without rhyme nor reason, which show me exactly how clueless the American public really are. This is a realtor (sound of trumpets) - also known as a used house salesperson. He is supposed to know his business, because supposedly he is a businessman. Yet all he can do is bleet, “Save me! Do something”
It’s obvious he has no idea of what to do. So many are just like him. Occasionally I look up the email address of someone quoted in one of these articles and engage them in friendly conversation:
- Former head of the Louisville association of realtors: He really did not understand what was happening in the market, nor could he see why people were no longer buying homes they couldn’t afford.
- CEO of a truss manufacturer in Virginia, who saw his company gling down the tube, nearly closing one plant (built in 2005, of course) for lack of work, but who could only give me reasons why now is a good time to build a house.
- This guy Rains, who thinks it’s up to Washington to step in and bail him out.
- The people building Timber Shores in Michigan, who are building it “for the boomers.” (Good grief - ten years ago it was ‘for the children, now do we get another ten years of ‘for the boomers’?)
A long time ago I looked at a lot of the things we’re talking about today. I decided, for instance, that using HELOC money to finance things was asking for real trouble. Why should I pay for a car over a 30 year period? Why should I pay for home improvements over a 30 year period? New roof - only lasts 20 years. New kitchen - will be obsolete in 15 years. If I really had to borrow money for something like this, it was far better to get a loan for 3 years.
As long as people do not look at what is really going on in our ecoonomy, at ALL the people who have borrowed and borrowed and borrowed to buy every toy they think they deserve and who are in debt because of it we haven’t begun the descent to the bottom.
What we see now are just the pre-quake shocks. A lot of people are going to get hurt in the real quake which will follow. I feel sorry for them, not because of what will happen to them but because all the warning signs have been visible for years which they simply have ignored. Sort of like the columnist for the LA Times who noted that her condo was built on a fault line - but she doesn’t even have two days food in her pantry. She wrote that two years ago, and I’ll bet she hasn’t added to it since.
I think the most surprised people will be the ones who listen to news stories the subprime” crisis on the evening news, believe that bad things are only happening to people with less than good credit, are glad things are different where they are (their house, their neighborhood, their town, their state - or their country) without realizing that what is coming will hit everyone.
I got enough popcorn, think I’ll buy some wheat and dried milk, though.
End rant
As long as we’re allowed to rant about LA Times columnists, the one I remember best is the one who argued in 2004 that the relative costs of renting and buying should be calculated by including “appreciation” as an adjustment to the cost of buying. Your PITI might be $4000/mo, but if your house were appreciating by $2500/mo, you were as well off as some renting for $1500/mo. Ha ha, now that your house is depreciating by $1500/mo (or whatever), you are as well off as someone renting for $5500/mo.
Does anyone know of a reputable company that does land equity loans w/ reasonable interest rates? Seems to be hard to find.
Got a LOUD Guffaw from mate.
It is called Hard Money.
Most of the $ is being pumped into the Mess O Potamia region, and late at that esp for our sold’rs.
So, where will the $ come from ?
2 blows for Rolling Ghettos, IL. Yow.
“‘You’ve just got to look at it in the long-term. It’s a 10-year build-out. We’re hitting the baby boomer market, and that is the group that is starting to retire,’ he said.”
And why would I want to retire in Michigan unless it was dirt cheap ?
Perhaps the most overplayed hand of this bubble/bust has been the myth of the Boomer retiree.
First you hear they want to retire near their children, then they want to retire in the sun, then they want to retire where it is cheap. Meanwhile no one seems to be asking how many of them will be able to retire at all. (in the sense of the word as the REIC markets it)
“… they want to retire near their children”
LOL, my three kids live in NJ, CA and NC. I sort of split the difference and retired to IN.
Its not in any older person’s interest to retire to a cold and snowy state. Those broken bones don’t heal very fast. They will go south, if they can go at all.
Mosy baby boomers will WANT no more snow, no stairs and no house problems at -20 below just to name a few things…Dream on
Yea… but they were priced out of Florida, so there is a short term window to ‘trap them.’
Got popcorn?
Neil
Acutally, we don’t get that cold here in Leelanau Warmer here than Chicago. It is the lake effect. I’m a die-hard gardener and grow Zone 6 plants (think southern Virginia type plants.)
Leelanau County does tend to be warmer in winter than one would think from its location, but it does get “lake effect” snows. If the snows don’t fall in the county itself, they can fall in adjacent counties and have the effect of isolating it. The only Christmas trip I made there I spent every day shoveling out the fresh accumulation of snow and never did get to visit friends & relatives who were also in the same fix. Gave up & went home early.
I grew up in Michigan, moved to the East Coast in the mid-80’s because of the economy and am seriously thinking of moving back to Michigan when I retire in 20 years because, relative to the Balto-Wash area, it will be dirt cheap. However, I’m not going to buy an overpriced condo up on the Leelanau peninsula just to bail out some developer.
Trust me - my county (Leelanau) is NOT dirt cheap thanks to the summer people. Median list price in my tiny village is $379,000.
Locals can’t afford it. It is the summer people.
Beautiful here. We are surrounded by a US National Park on the shore of Lake Michigan and have 40 miles of pristine beachs with turquoise water and 500+ ft high sand dunes.
I’ll probably end up somewhere in the vicinity of Walled Lake where I gree up. Plenty of little picturesque lakes, but housing prices much lower than in the resort areas.
Oakland is definitely falling in prices - right in the middle of the area of auto industry collapse.
I love it up here in Leelanau but we are early-retired (physically disabling injury for me caused it) and I spend my time in my huge fower or gardens or walking the miles of beach. We had the sense NOT to buy for a few years after I took a look at the income:: price ratio. While there are 2 types of homes and 2 different markets around here (local and 2nd home), even the local marekt was completely out of whack and driven sky high by the 2nd home bubble. Median ‘local home’ was over 7 times median income and the lowest priced stick-built local homes were 5 times median income. Still hasn’t come down completely - even with a 36% drop to date, it will take at least another 37% to bring local-type homes in line with incomes. Roughly 84% of the local population is priced out of the market.
Want to hear something funny? Commerce Township in Oakland County has a little mudhole, that by virtue of having approximately 8 inches of standing water year round, was christened Mud Lake. A couple of years ago, a developer bought the land around it, changed the sign to read “Woodbridge Lake”, built a bunch of fancy ‘Executive Homes’ and even stuck a fake dock on top of the mud flat to fool the buyers into thinking they’d bought a lakefront home.
I hear there’s a lawsuit pended from disgruntled buyers.
I am retired and live in Michigan’s capitol city but would like to move to Lake Michigan.
I’m thinking of renting until prices become more affordable in about 3 years.
I’ve been thinking about Grand Haven or Ludington. Grand Haven is still way expensive but Ludington seems to be dirt cheap. From what you’ve said Ann, I might have an 87% chance of not liking it there. But real estate sure seems to be inexpensive in Ludington. I’m going to take a up trip there next week and check it out.
Hi Swami-e
If you are in Ludington, you will only be an hour or so south of me. We are in the Empire/Glen Arbor area in the heart of Sleeping Bear Dunes.
Check out Frankfort - prices are dropping faster in Benzie County as it is just a little bit poorer and had less of the 2nd home folks.
I’m serious about the quality of the healthcare. I go to the Cleveland Clinic for any specialty care.
Culturally, it is fairly okay. Ludington-Manistee-Cadillac are your basic rural places - the kind that ask ‘what is a symphony?’ or ‘what is an art gallery?” Traverse has to more to offer - decent regional symphony, fairly active arts center at Interlochen…
Unless you are into beaches, swimming, boats, fishing, hiking and the outdoors, the coastal communities can be fairly dull places (or you also have weird hobbies like I do working on healthcare policy and tracking economic trends.)
The small communities are a bit insular - most are dominated by families who have been here since the late 19th and early 20th century. Not the brightest bulbs on the Xmas tree - they think having tourism as the main economic driver is a wonderful thing and that creating low wage, seasonal jobs with no benefits is praiseworthy.
The plus-side to Leelanau is that on a per capita basis it is the most educated county in the state in terms of college and post-grad degrees.
If you get as far as Empire, just ask anyone how to contact the woman with the big white Service Dog that wears red backpacks. I can point you in the direction of 2 1600-1800 sq ft ranch homes on around 5 acres that just went into foreclosure and are only 3 miles from the beach. The amounts owed on them were $146-158K and the redemption periods are still running.
“The small communities are a bit insular” — you’re too kind. The county is run by groups of cronies. Mother was born there & thought her decision to leave was one of the best she ever made. She did like going back to visit, but advised me never to live there permanently. Her family had been living in the vicinity for 50 millenia.
It sure is different in those non-bubble states like Kentucky, Ohio, Illinois, Michigan and Indiana
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Right.
I am sure that most here know that prices are declining all 25 metros now, bubble or no bubble. Debt and the recession will affect all areas, not necessarily equally.
Jas
I just pulled up the sales stats for a town southeast of Syracuse for Sept - Nov. They sold 2 whole 4 BRs in that timeframe down from 10 a year ago. The price per sq ft on 4 BRs went from $134 to $94 per. The average sales price went from $334,400 to $183,100. Course when you’re only talking 2 houses its not that much information.
Well we do know none of those million dollar lakefront places moved now don’t we? There are two McMansions overlooking the highschool football field (shakes head at location) that look close to closing. One is being being built by the builder for himself. The other is an upgrade. The family is moving from their smaller McMansion a few hundred yards around the block. Those 2 homes should move that avg price back up to the locals liking for the next period.
There is some huge monstrosity (5000+ sq ft?) being built along the back roads heading south. And some gentleman’s farm type housing went up in a former corn field over the winter. So it looks like we are getting inundated w/out of area money moving in. (Yeah, I know I sound like some realtor. But I’m more like the regular Joe local watching the out of town money pour in.)
OT–I noticed on a NY state blog for our area that there seemed to be an awful lot of newbies here from Long Island. Not just in this town but in the whole area. Looks like some weird form of urban flight. Wonder why they skip over the Albany area.
Aren’t all these desperate rentals of falling knives just future foreclosures that haven’t been mailed in? We’ve noticed an area we’re looking to rent in has sprouted a bunch of highly puntuated, you know… “MOVE IN TODAY!!! ALL NEW!!! GRANITE EVERYTHING!!!” rentals at 3-4X the rent of the local market. I suspect when we’re ready to move in the late spring many of these babies will be gone into foreclosure, no?
I’ve seen several properties in my neighborhood (coastal CA) go up for sale for quite a long time, then see renters move in.
Others have been rentals for several years, now the owners seem to have determined that they aren’t going to go up in value any more and are up for sale, sitting on the market for months despite tepid price reductions.
Spent some time on the previous listed themls dotcom and previewed home area I used to own..sheesh. sold in ‘97 @ $210k and that neighborhood is 675-995 holy popcorn.
1920’s built homes, 1000sf and did a remodel to add 400sf in ‘84. If wishes were …oh well let it pass. Next.
coulda woulda shoulda.
Sold other home in PSP for 240k -2001(bought in 97 240k) Lease land, those homes over $1mill, at height.
Someone, keep me out of the housing mkt and Vegas.
lol
“One bright sign is that mortgage lenders and banks are more aggressively trying to negotiate with homeowners to prevent foreclosure now.”
Translation: If we can squeeze some more blood out of these turnips, for a couple more years. We won’t have to take in too many foreclosures at once.
‘I don’t think the government can allow that to happen. It would have to pump some money into the economy to jump-start things,’ he said.’
I caught Bob Brinker yesterday spewing the same nonsense about how the fed hadn’t acted fast enough and Ben Bernake was a lightweight. Then he went on to recommend that we have a huge stimulus package in passed in spring and how that would save the Repubican Party and the economy.
None of these blowhards can look past the stock market/housing to see what damage low interest rates and stimulus packages will do to the dollar or inflation.
He denied the housing bubble for so long - I have lost all respect for him. When callers would mentioned it in 2005 & 2006 he would call them “doom and gloomers”. Now he claims he “knew it all along” . What a bunch of bull!
Also, all these Clowns like Brinker and Kudlow who denied it all along and now all of a sudden rate cuts are the only saviour? What happened to the normal business cycle? That is their only response - flood the market with cheap and easy credit - isn’t that what got us into this mess???
Just imagine for a second the devestation that a serious downturn would do to the financial media in this country. If events sour enough so that the average American’s views on the financial world become so poisioned that no one subscribes to Brinker’s newsletter, viewers skip past CNBC for Cartoon Network and when CEO’s are no longer touted as celebrities on magazine covers?
Such a thought is unthinkable to them as that attitude could persist for a generation or more - and they’d be worm feast. Money must remain god.
CNBC represents the socially acceptable version of the American addiction to gambling. I am not claiming exemption; my business is a gamble too. I just thinking we HBBer’s are betting on the right side of the trade.
Brinker was calling it honest during the dot.com bubble, and talked about p/e’s, pie in the sky stock prices with nothing produced yet, and telling people to bail, turning paper profits into real profits. Since then, I lost respect for him too.
He doesn’t care about Main Street, only his pals on Wall Street. I can’t listen to him anymore. Its people like Jim Puplava and Peter Schiff who are worth listening too.
but, but…
L.Y.’er told us that the real estate market in flyover America, was doing fine?
“Property manager Jayme Burden said some houses formerly for sale in the area now are being rented, a trend the National Association of Realtors identified in a report last month.”
ARE THEY VICTIMS?
Evergreen in June 2005 bought the May Place NE property that would be Hammond’s home for $25,000 from a bank that obtained the property at a sheriff’s sale. The company painted the home’s white vinyl siding powder blue. The company told Hammond it installed a new roof, basement drywall, hot water tank, furnace, carpeting, doors and made other improvements.
The appraisal Evergreen obtained valued the 1,191-square-foot home at $80,000.
Hammond and her husband, Rodney Hammond, bought it two months later for $75,000, a discount because the company ran out of money and couldn’t install new siding or new windows.
The couple had reservations. They never got to see the inside of the house until after signing the papers to buy it, but, “We’ve been living in an apartment for seven years, and this was our opportunity to own a home.”
Besides, Evergreen said it would handle everything, Hammond said.
“They (Evergreen) were real persuasive,” Hammond said. “They said, ‘We really can get you in this house. … It won’t be a problem.’ ”
And even though they didn’t want to, the Hammonds obtained a first and second mortgage for the property because Evergreen told them it was “the norm” for first-time homebuyers.
Hoo boy, where to begin? Yes, I feel bad for them. But come on, people, do your homework! Had they hired an independent inspector, wouldn’t they have found these problems? I never buy a used car without running a carfax report. The sales rep can tell me a million times over that the car’s never been in an accident or what have you, but I’m not going to believe him/her. I sure as heck wouldn’t buy a house without doing my own background check. Unreal.
“It’s already a buyer’s market, but it could get even better for those looking to own a home. There are many incentives for those looking to own a home, including low interest rates and a plentiful home inventory, said Reba Owens, president of the Middletown Board of Realtors.”
There’s only one economic incentive to own a home, Reba, and that’s when it’s cheaper than renting. And when we get there, we’ll have a buyers’ market. Not before.
There’s also the benefit that, barring eminent domain or foreclosure, you can’t be forced out of your house. If you rent, then the landlord can kick you out for almost any reason when your lease is up.
True, but if you buy and your neighbor decides to have 3 barking dogs tied to a tree 24/7/365, you are forced to stay. Which is worse? Not sure if I ever want to own again, really. Been there, done that.
“Assistant Summit County Prosecutor Richard Hoenigman explained how the scheme worked: Evergreen bought the Summit County properties at foreclosure, made cosmetic upgrades to the homes, obtained inflated appraisals, and then sold them at the overly inflated value.”
“‘They would take overinflated appraisal and use it to secure a legitimate loan for the inflated amount,’ Hoenigman said. ‘Since most lenders only lend 80 percent of the value, Evergreen would take the second mortgage to make up the difference so that the unsuspecting homeowner would be able to buy the house with no money down.’”
Ode to Barbara…
Fraud, homeowners in despair
Fraud, in the morning air
One loan that is shared by two
I have found a few
Like a stinking rose, that finally showed
I was always certain fraud would grow
Loans, baseless from Evergreen
Seldom seen, not true…
I’m seeing the first signs of a recession, which is already here, in my area. Smaller stores closing in the strip malls. “Available” signs are numerous. These stores cannot draw on bottomless bank credit like the big stores. I’ve seen this several times before in the last 30 years. It always began several months BEFORE the government and Fed hacks, like Bahgdad Ben Bernanke or Godfather Paulson, admitted a recession had arrived. Of course, we will be told it is only a “mild recession.”
However, this could get nasty for the big stores as well as small stores. Retail sales are slowing quite dramatically. Bed, Bath and Beyond and several other name brand stores have reported slowing sales.
It’s a financial perfect storm. Consumers tapped out. Credit card debt through the roof. Property prices (the consumers ATM’s) sinking fast. Inflation waaaay up there unless anyone is dumb enough to follow the Fed and government manipulated numbers. $4 a gallon gas almost here (in California). Home energy costs going up. Health insurance costs going up. Throw is the various state budget(s) shortfalls and we have a VERY serious financial mess.
I’m sure the government and Fed propaganda teams are, at this very moment, cranking up the spin machines and we will see the usual, “The economy is strong,” and “Inflation is in check,” and “Unemployment is still low,” sound bites.
Of course, inflation is NOT in check. The economy is growing weak and unemployment is low because cash strapped consumers are taking on 2nd and even 3rd jobs. $8.00 an hour jobs with no benefits are there for the taking. However, you cannot service a $10,000 or $20,000 credit card debt on $8 an hour or buy a $600,000 home. Nasty weather coming.
Single digit cold and snowstorms have changed into 50 degree weather here in Michigan. Weird.
Sister in law is trying to sell condo that I begged her not to buy 3 years ago. (She actually thinks she is going to sell it for more than she bought it).
My apartment manager had her health insurance taken away and her apartment also that came with the job. Then they cut her to 30 hours a week. So she quit and is moving to Tampa. Good luck there. Her nephew was living with her. He was young and she helped straighten him out. He made good money selling computers at Compuserve. Apparantly they have gone out of business nationwide, so he is going to Tampa with her.
They screwed the maintence guy too, so he is going to quit.
JAS almost cost me big money because I briefly hesitated buying gold because of his deflation talk; but I quickly regained my senses and caught the recent big wave up. I don’t understand how JAS can’t see the prices of everything is skyrocketing. This is all so self evident.
Ignorance is Strength
Didja see the ol TrentLott who retired just in time for law changes to Lobbying to be with “family” is signed on to be a KStreet Lobbyist. A man whose state is well below the national average and needs help still from Katrina…just in time to help his K street lobbyists for the wealthy special interests.
There was no “there” there in terms of
“spending time with Family”
Trent Lott is Mississippi not Michigan.
As bad as our politicians are I wouldn’t want to be associated with that dude.
I think we need to thank the Canton Repository for contributing a new phrase to bubbleology. The “overinflated appraisal.” Sometimes an inflated appraisal just isn’t good enough, and you have to overinflate them!
What area of California are you in Mike..??
Thousand Oaks.
So, where are these retiring baby boomers going to get the money to buy these $700k mansions. Read recently that the median balance in 401ks of people nearing retirement is $10k. Oh wait, probably the equity from the million dollar house they are downsizing from. Ya, that’s going to work with everyone doing it at once!
““Sellers who do not adjust their prices to the middle or low end of the market will have an even harder time selling, he added.””
This, my friends, is called a cascade, as sellers continually leapfrog each other in an effort to be one of the lower priced houses in the area…a self reinforcing price decline.
Speaking of cascades, have a look at this paper from Sprott Asset Management in Toronto. According to numbers they quote from BIS, the total amount of derivative trading in Q3 2007 was $681 Trillion dollars worth. Yes, that’s Trillion with a T.
A quote: “The thing about counterparty risk is that one downgrade can lead to the next. The nightmare scenario: cascading downgrades that topple one financial institution after another like dominoes.
Could this happen? We’re afraid so. But of course, none of this is in the theory or the models.”
Warning: PDF
I live in the Central Valley Ca where household income is 40k. I bought a newer 1,400sq ft home in 2001 for 130k near Stockton then sold it for 275k in 2004 and it sold again for 315k in 2006. Without the fancy loans the average family could afford to pay 3x wages for a home, maybe little more, and would have to stay within the time tested 36/28 ratios AND have a down payment for the loan(WHICH IS CRUCIAL BECAUSE THE BUYER MUST HAVE SKIN IN THE GAME OR….WE’LL SEE WON’T WE?) so the prices were about right in 2001.
Let’s see 315k back down to 125k adj for wage inflation = 140k WOW that’s a 60% DROP! WOW
BTW anyone know how many equity loans Wells Fargo made to over leveraged home owners? Well apparently their stock holders don’t either(for now).
Chain chain chain chain chain of fooooolssssssssss…
ya got me where ya want me
….
ya cheated me mean
ya cheated me cruelllll
chain chain chain chain of foolsss
FBos.
My posts in the bits bucket keep getting deleted - Did I do something wrong?
The Leelanau News from Michigan. “The just-concluded year will go down as one in which some cracks became visible in the plans of developers to step up the creation of housing stocks in Leelanau County. ………“Consultant Chuck Kalchik and Timber Shores primary owner Fred Gordon, a Royal Oak attorney who has created housing developments from California to Florida, are convinced Timber Shores will be embraced by a growing number of new retirees — eventually.” …….“‘You’ve just got to look at it in the long-term. It’s a 10-year build-out. We’re hitting the baby boomer market, and
WOW! Thanks Ben. That is my county.
I spent Wed AM (1/3) with the publisher and senior editor of the Leelanau Enterprise (source for this story.) At their request, I was giving the Econ 101 lecture on the credit markets, demand, weird mortgages and all the other goodies. They are planning on a 4 -5 part series about the collapse of the housing market.
At that meeting, we were talking about this very article they had just done in the paper that came on on 1/3. I got to the sentence about all the Boomers who are going to retire here, rolled my eyes and said “yep - to here, to Montana, to Florida, to Colorado, to Arizona, to Cape Cod, to NYC, to downtown LA and San Fran, to……” We all just laughed at the people quoted - and we are all Boomers. We found it very funny that these morons think that thousands upon thousands of Boomers are headed to as far north on the lower MI penninsula as you can get where there is only 1 hospital (mediocre at best), a small regional symphony, a airport whose terminal would fit in a football field, restaurants where 98% of them only serve fish, steak and burgers, and the median age of the population is 12 years than the rest of the US, and poorer than the rest of the US (median income around $42K vs national of $48K.) And then there is the snow…..
Great summer vacation place but competely different in the winter. Some tourist-Boomers have moved here prepatory to retiring- and 87% of them turn around and leave.
All the soon-to-retire crowd are just so-o-o-o eager to retire here that they are dumping their second homes on the market. The 2nd homes are 71% of the real estate listings.
And the realtor who is quoted has a screw loose. Those who live here year round do NOT buy $250,000 -500,000 properties. Only 18% of the county can afford a $250,000 property. This economy is based upon Tourism and Cherry Farms! And her 2nd home people are selling - not buying. $500,000 here gets you a huge house on or near the water - a real house, not a condo.
“Property in the 51-lot Bay Hill development just south of M-204 overlooking Lake Leelanau has been for sale for years, but not one home has been built.”
And that is the story of every development. Lots have been sitting since late 2004-05. The devlopers want more than the locals can pay and the 2nd home market is deader than a dodo bird.
This county is 60% permanent residents and 40% 2nd homes. The foreclosure rate went up 189% - and over 90% of the foreclosures are 2nd homes.
(BTW- if anyone has any good charts about things like the realtionship between prices and incomes, I would love to have them. I gave the Leelanau paper the Case-Schiller graphs and the Credit Suisse reset chart plus a few other things.)
The foreclosure of 2nd homes (and I’ll bet most of them are priced higher than the mean of permanent residents) will sure put a dent in the county tax base.
Interesting, people buy 2nd homes in a modest neighborhood, build summer homes, require county facilities, which are to paid for out of the tax bae, then abandon the homes, devestating the tax base and leaving the mess for the residents to pick up. Another unexpected fallout of the bubble.
Our tax defaults - the ones which have reached the stage of foreclosure by the county - jumped 231% from 2006. (List came out in 12/07). The amount in default jumped 347%.
The long term impact on revenues is part of what the newspaper series will be covering.
Sutton’s Bay - the site of the developments in the article - has a 3 man police force. It looks like they may have to disband the department or cut other services to keep the police. (Still have the county sheriff who can just barely keep 3 cars out at a time.) Sutton’s Bay also installed a sewer system because ‘all the new homes will pay for it.’ $10,000,000 later, there are no new homes - just those vacant lots - and the residents’ water and sewer bills went up nearly 400% with more increases expected.
“‘This bubble started to pop up a couple of years ago, and each year since then we’ve thought it’s got to bottom out,’ said Ottawa County Sheriff’s Deputy Steven Cotton, who posts foreclosure notices for the county. ‘And it will. But it’s gone on a lot longer than any of us out in the real world would have thought.’”
How much longer before distraught homeowners about to be foreclosed on by the sheriff, hold out armed to the teeth, in their castle?
This is data from Kimball’s White Oak subdivision in Hoffman Estates, IL:
Think: cookie cutter mcmansions (but decent lot sizes considering whats available at similar price points in neighboring towns), yukky school system (according to greatschools.net), promise of possible future train connection to Chicago, no HOA
1680 White Oak
sold by Kimball 6/06 for $570,500
not sure of OLP, but house reduced to $514,900 before selling for
$475,000 in 8/07
1302 Caribou (same subdivision)
sold by Kimball for $456,500 in 1/03
on the market over 350 days in 2006/2007
LP $548,500, reduced to $529,900 before selling for
$480,000 in 12/07
5767 Red Oak (bank owned, still for sale)
sold by Kimball 5/05 for $591,500
OLP - $575K, reduced twice, now asking $489,900
Kimball is trying to sell houses in the high 500s (with upgrades) but the comps are in the high 400s, and heading down, down, down. No surprise this is not working for them.
Topping off the problem is that a lot of these homes were sold at fairly high LTV. It wouldn’t be a stretch to guess that a good portion of the neighborhood is “upside down” on their houses right now. Ryland is building its own development right across the street (similar houses, same situation). Toll Brothers is also in the immediate area, plus one or two other builders.
So much for the “Illinois didn’t have a bubble…” garbage.