It Was A False Economy In Texas
The International Herald Tribune reports on Texas. “Cinnamon Shores, a 250-home ‘new urbanism’ development, is one of several new projects along the Gulf Coast stretching south from Houston, where there is little evidence of the problems gripping the U.S. housing industry. Values are up in many areas and investor money continues to flow to waterfront projects.”
“The upbeat mood is due, in part, to international buyers, who are bypassing traditional markets like Florida, New York and California to invest in the Lone Star State.”
“‘I think it’s keeping the market alive,’ said Richard Miranda, a broker in Houston.”
“The coast of Texas, including vacation spots like South Padre Island and Galveston, is seen as a bargain spot compared with other areas. ‘We didn’t have the big blow up, the bubble,’ said Jim Gaines, research economist at Texas A&M University.”
“Although it is hard to quantify the number of international buyers in the Houston area, Gaines estimates that they account for 5 to 10 percent of the market. ‘For some segments, like high-end condos, it might be close to 20 percent,’ he said.”
“On South Padre Island, Mike Masso, a partner in a property agency, says he believes that affluent buyers from Mexico represent more than 40 percent of transactions, in terms of dollar value. His company is opening an office in Monterrey, Mexico, to help woo more Mexican buyers.”
“‘It seems like every week I’m working with a different group from Mexico trying to track down developable land,’ Masso said.”
“Many are like Enrique Castilla, a banker in Monterrey, who views the United States as a safe investment. At first he bought a condo on South Padre as a vacation getaway for his family, but recently he has helped form partnerships to buy land on the island to build condominiums.”
“‘They feel they will be protected with the dollar,’ Castilla said of his partners.”
The Houston Chronicle. “Home construction in 2008 is expected to fall for the second year in a row, but consumers aren’t likely to see prices this low for years to come, according to Metrostudy.”
“‘The irony is, with all the scary stuff that’s going on, it’s a really good time to be a home buyer,’ said Metrostudy president Mike Inselmann. Developers are expected to build about 35,000 homes, down more than 11 percent from the 39,500 constructed in 2007.”
“The down housing market is a result of ‘a mismanaged mortgage industry’ that made loans to unqualified borrowers who couldn’t keep up with their payments and went into default, Inselmann said.”
“Some builders are offering discounts of up to $40,000, as well as decorator allowances and other perks to unload their unsold inventory, said Jim Holcomb of Holcomb Properties, a subdivision developer.”
“‘There are tremendous values on housing right now that probably won’t be seen this time next year,’ he said.”
“That is if the national economy holds up. ‘The big variable here is going to be a recession and whether or not we have one,’ said Gaines. ‘It might be 2010 before we start seeing much improvement.’”
The American Statesman. “The Austin area’s booming job market has slowed to a three-year low, and its once sizzling real estate market is cooling fast.”
“‘When you’ve got a national economy with very weak legs, it’s a given that Austin will slow down right along with everyone else,’ said Bud Weinstein, director for the Center for Economic Development at the University of North Texas. ‘Austin has gotten used to having a supercharged economy and a very low unemployment rate, and when things slow down a bit, you think you’re having a depression.’”
“What could trip Austin up? A weakening housing market is high on the list, and that appears to be happening. Builders are pulling back in the Austin area as the national housing market continues to struggle, according to recent reports.”
“New home starts in 2007 were down nearly 20 percent compared with 2006, according to Residential Strategies Inc. Starts for new homes haven’t been that low since 2004.”
“The resale market has been softening for months. October was the fifth straight month of declining home sales. Sales of single-family homes were down 15.4 percent compared with October 2006, according to the latest figures from the Austin Board of Realtors.”
“Home starts are expected to bottom out in 2008, said Mark Sprague, Austin partner for Residential Strategies. ‘What’s happening is the rest of the national market is pulling us down,’ he said.”
From Keye TV. “The smell of plywood hangs over Downtown. It means more places to live, that most Austinites can’t afford. Consultants working on a downtown plan say only seven percent of Austin residents can afford property in the Downtown area.”
“Consultants suggest a fee on new residential development downtown — high enough to make a difference, low enough so as to not discourage development. Casey Wallace, who would love to live downtown, thinks fee or not, prices will drop.”
“‘People are paying for [Downtown living spaces] now, but I really feel like there aren’t going to be enough people who want to pay half a million dollars or more for a loft, and the prices are eventually going to come down, naturally,’ says Wallace.”
“A growing number of Texans struggling with delinquent property taxes are turning to risky tax loans even as the state attempts to crack down on the lenders.”
“Consumers who use property tax loans risk losing their homes if they default on even a small loan. Fees can run into thousands of dollars, and interest rates top out at 18 percent.”
“‘They are the payday lenders for property taxes,’ said Robert Doggett, an attorney with the Texas Low Income Housing Information Service.”
“An indication of the growth of property tax loans is reflected in the increase in the number of tax lien transfers…in the state’s largest counties, according to the Center for Public Policy Priorities.”
“The jump was most remarkable in Travis County, where tax lien transfers went from about 50 in 2005 to an estimated 1,250 in 2007, after lending companies increased their marketing in the state capital.”
“In Harris County, loans jumped from about 650 in 2005 to an estimated 1,500 last year. And Bexar County saw an increase from about 600 to 800 in the same period.”
The Star Telegram. “North Texas new-home sales fell by the largest amount in 18 years in 2007, according to figures released Friday by the housing-tracking firm Residential Strategies.”
“A glut of inventory, tougher requirements for loans in the last half of the year and a fiercely competitive market all contributed to the worst nose dive since the real estate crash of the late 1980s.”
“‘I think it was pretty evident to us during the third and fourth quarters that the market had slowed,’ said Ted Wilson, principal of the Dallas-based real estate consulting company.”
“This fall, builders saw about 40 percent of prospective buyers cancel contracts, twice the usual rate, according to Residential Strategies.”
“December was a particularly brutal month for the 29-county area that stretches from the Red River to just north of Waco, with sales down 25 percent compared with December 2006. Only 5,257 homes sold in the region in December, compared with 6,990 existing-homes sold in December 2006.”
“The year was the second in a row with falling sales. Home sales here fell 5 percent from 2005 to 2006. Still, the declining sales figures come after years of an off-the-chart, record-setting pace.”
“‘These numbers, relative to the ‘04 numbers are great — even ‘05,’ said Jim Gaines, a real estate economist at Texas A&M, who predicts that 2008 will be slower than 2007. ‘It’s hard to see that ‘08 would be better than ‘07. But we don’t think the market is falling off a cliff.’”
“In every month of 2007 except January, fewer homes were sold than the same month the year before. ‘I think that probably starting in March 2007, the economy began to slow,’ said Mike Bowman, founder of Century 21 Mike Bowman, in Grapevine.”
“The real estate market nationwide has struggled in recent months as lenders adopt stricter requirements, mortgage lenders have said. That has constricted the flow of eligible buyers into the market from previous years, when almost anyone could get a loan.”
“‘It was a false economy,’ said Lonny Coffey of First Advantage Mortgage in Arlington.”
“At the same time, sellers are seeing more competition from others who are putting homes on the market, Gaines said. Sellers are also seeing competition from home builders, who can afford to throw in perks to close a deal.”
The Dallas Morning News. “Dallas-Fort Worth homebuilders slashed construction almost 50 percent in the fourth quarter as the housing slowdown deepened. New home sales during the period fell almost 30 percent, according to Residential Strategies.”
“‘This is the lowest amount of homes under construction in over 10 years,’ said Residential Strategies’ Ted Wilson. ‘The mid-1990s were the last time construction was so low.’”
“‘Looking around the area, it’s evident that many fewer houses are being started,’ he said. ‘And this is the time of year you usually see a lot of construction.’”
“For the first time in years, builders started fewer homes than they sold in 2007. At the market’s peak in mid-2006, area builders were starting about 5,000 houses a year more than they were selling.”
“‘That’s what led to the buildup in inventory,’ Mr. Wilson said. It’s been more than a decade since builders started fewer homes than they sold.”
“Even with the cutbacks, there is a surplus of new houses. At the end of the year, there were almost 10,000 vacant, finished new homes sitting on the market in North Texas. Builders are offering a wide range of incentives to move unsold houses, and, with starts slowing, the inventory should decline, Mr. Wilson said.”
“The D-FW area has been hard hit by foreclosures. And the shakeout in the mortgage market has significantly reduced the number of buyers who can get a loan. ‘The discipline in the market with regard to qualifying buyers is as extreme as I’ve ever seen it,’ Mr. Wilson said.”
“Dallas artist Tomás Bustos was hoping to pay off some bills and renovate his home a couple of years ago. And a plethora of companies were willing to help him refinance. So he took out a $60,000 equity loan on the Oak Cliff home he had paid off and been living in for almost 28 years.”
“Then came the shocker. The fine print in the loan allowed the mortgage payment to balloon quickly. His mortgage payment has nearly tripled – from more than $500 to more than $1,400 – since then. And he’s in danger of losing his home and his business space.”
“Monica Gonzales, senior legislative representative for AARP, said lack of knowledge about the mortgage process and regulations make Latinos an easy target for lenders’ aggressive marketing. Many simply don’t expect to be deceived, she said.”
“‘Culturally, we have a trust that ‘this guy’s not going to do me wrong, he’s my compadre,’ she said. ‘In reality, the guy’s only looking out for himself.’”
“During the last decade, thousands of renters have bid adieu to the ‘burbs and headed downtown for a taste of urban living. The trendy new loft apartments and growing base of restaurants and retailers in Dallas’ core marks a comeback for a center city that until recently was one of the most lifeless in the country.”
“High-dollar homes have replaced empty office space, and a series of planned downtown parks will soon give core dwellers new places to walk the dog and chew the fat. But alas, all is not sweetness and lattes in the lives of downtown renters.”
“Take a gander at some of the comments you’ll find on Internet sites that rate downtown Dallas loft buildings. To hear some of those folk talk, it’s an urban hell presided over by shoddy management and noisy neighbors.”
“‘I could tolerate the noise because I lived on the 14th floor, but the lack of customer service is absolutely pathetic,’ laments one loft renter. ‘When you consider the amount of money that we pay in monthly rent, you would expect some sort of accountability on their end.’”
“And I loved the parting shot: ‘Oh yeah, my sink fell through the counter, and it took a month to get someone up to repair it.’”
“And panhandlers are a familiar peeve. Other common gripes are about trash piling up and a ‘frat house’ atmosphere. ‘Half the people coming and going don’t seem to live here. Parties get out of hand, and the police are called out,’ one reviewer of a Main Street building said.”
“A shocking number of complaints involve poop.”
Where to start? These Monterey speculators will lose big on SPI, IMO. At 7%, Austins condo affordability is as bad as some coastal California towns.
I have pointed out that Dallas was building thousands more houses than they sell since I started this blog. Now we hear it’s been going on for a decade! This bubble has been building much longer than most realize.
And I’ve been saying that the only market for downtown Dallas and Austin are barflys.
Need more proof of a Texas bubble?
‘The numbers will probably surprise anyone who hasn’t ventured east of Interstate 35 lately. The 78702 ZIP code in East Austin currently has more than 150 properties for sale. A slew of modernist homes and condominiums are going for $400,000 to $600,000 or more. Remodeled homes are listed for up to $675,000. And four lots at the corner of Martin Luther King Jr. Boulevard and Harvey Street are on the market for $1.8 million.’
‘Despite a median home price that has risen by more than 50 percent in the past five years to $199,000, East Austin is still within reach of many potential home buyers, especially when compared with nearby Austin neighborhoods.’
‘One of the homes, a three-bedroom, three-bathroom house at 1205 E. Second St., is on the market for $495,000 and has 2,180 square feet. It also has what you would expect young urbanites to want: bamboo and polished concrete floors, granite countertops, stainless steel appliances and a second-story balcony with city views.’
‘A home at 80 Waller St., originally built in 1910, is a good example of traditional remodeling. Owner Spiros Karamalegos bought the property in April and took it down to the studs.’
‘When it’s done, it will have four bedrooms, 31/2 bathrooms and a detached garage with 600 square feet, relatively roomy for a neighborhood where some homes average 1,000 square feet or less. The asking price: $675,000. Karamalegos echoes many who have invested in the area. ‘It’s just so close to downtown, and if you want to buy a condo downtown, it’s really expensive. Plus, this is a four-bedroom house.’
I think this says it all. You could summarize the entire state of the TX market.
“A shocking number of complaints involve poop.”
I count myself fortunate to live out in the sticks, where the only poop I’m likely to encounter issued from either a turkey, a deer or my dog.
Urban pioneer, meet your new neighbor, urban wino.
And another generation of “urban pioneers” has to re-learn the same old lessons.
The acceleration is starting to scare even a BEAR like me. Developers are failing all over the country and at the same time, meanwhile these people continue to build. Texas is about 6-9 months behind the rest of the country and is starting to catch up real fast.
I still dont think its 1929 - I missed the depression thread yesterday almost 360 comments. This reminds me of 1991/1992, that was a tough time for me, fresh out of college and a few nickels in my pocket. Good luck to all.
1991 and 1992 were when I made the most money while gainfully employed . . . in the bankruptcy section of a large law firm.
Of course, I never saw my husband or my pets.
WS lawyers getting layed off, brings a tear to my eyes.
http://blogs.wsj.com/law/2008/01/11/open-thread-law-firm-layoffs/?mod=homeblogmod_lawblog
That’s gonna happen here too. That will be the chance to get those 700K Lower Greenville McMansions for half price.
That too bad. I used to really like LGA way back in the day.
I’ve known things were going to get bad here in Dallas, in Florida, Arizona, Cali, et al, but I didn’t really know what to expect in terms of the swiftness of this collapse - and, we’re only in the very early stages. I’m currently a government lawyer and even that job isn’t safe, so I’m glad we’re debt free and renting (in Downtown Dallas). I’ve said for years that if you can tolerate the vagrants and all of the “poop” it’s liveable down here, but I really didn’t see a huge influx of empty nesters and boomers clammering to get down here to buy $500K condos. There is way too much inventory here and in all the neighborhoods close to Downtown - and, it’s really overpriced by Dallas standards. Txchic is right about the 50% haircut many of the McMansions will get. I’ve watched many of this POS get built, so even at half price, I wouldn’t want to buy one of these money pits. The townhomes across the street from me were built in 2001 and completely rebuilt (2nd story was collapsing) in 2007. Add in a little mold and bam - you’ve got one hell of a great investment.
Each market seems to undergo this ’swift’ change, but as one who chronicles this stuff, the swiftness is only in perception. (It is true the lending thing broke apart relatively fast, but it was building for years).
Texas has been out on a limb for at least 10 years, IMO. The press is just now waking up. I posted on the near record (!) overbuilding and forecloures in DFW/FW in 2005.
Ben, our local paper the St George Spectrum did another story (second in two weeks) on our local housing market. Now is a great time to buy, it’s different here, etc…etc.
They had me convinced….until I read the part about the 27 month inventory and that thing about the 100 notice of defaults filed per month (I’m hearing more like 200).
http://www.thespectrum.com/apps/pbcs.dll/article?AID=/20080113/NEWS01/80113001
Oh, but it’s Different here! No, really! Heh heh heh…
“Texas has been out on a limb for at least 10 years, IMO. The press is just now waking up. I posted on the near record (!) overbuilding and forecloures in DFW/FW in 2005.”
I know - that’s how I found your blog. I was walking around amazed at how the prices of things close to Downtown seemed to be spiraling upwards at a very quick pace starting in 2002 or 2003. My wife and I were looking for something and the granite and stainless was very intoxicating. I finally had to have a sit down with my wife and we came to the conclusion that these folks were nuts. I knew what a lot of the folks paid for many of these houses and I told my wife that I wouldn’t give my parents $150,000 towards the purchase of their next house, so why would I do that for a total stranger. Of course everyone else at work said I was nuts for not buying, but loads of them took out toxic loans and have to be upside down on poorly built townhomes in Uptown.
It’s soulless Dallas, for f*’s sake.
No amount of real estate hype is going to make it into the next LES, Back Bay or SoMa happenin’ urban hotspot with premium pricing.
Hey some us are securitization attorneys, and great ppl. I work mainly on muni deals, and there is some value added in taking debt and changing its structure to take advantage of changing interest rates and demand (i.e., taking fixed rate munis and turning them into weekly floaters, with the sponsor keeping the residual, etc.), and in derivative products (interest rate swaps, credit default swaps, TRSs, etc). I too was asked recently if I want had any interest in bankruptcy, as that is where they see the shift in the next 5 years. I am also doing unwinds but they are less profitable and whereas before everyone was in a party mood when the deal closed, no one is that happy in bad unwinds and there is always someone threatening to sue.
If I can just survive the next 5 years, I can invest all my cash right after one of the biggest crashes and US history and not have to worry about this bs any more. Just 5 more years!
I work in BigLaw. Here, we say “friends don’t let friends become securitization lawyers.”
I worked bankruptcy in Alaska in late 80s and it was grueling. Lucrative, but I had no life besides work.
I wonder if he replace the wiring, plumbing, roof, furnace or windows. Or did he just do the routine granite, travertine, stainless appliances, hardwood cosmetic updates?
Personally, I’d rather have a new roof, windows and furnace than travertine tile and granite countertops.
It also has what you would expect young urbanites to want: bamboo and polished concrete floors
These hipsters must enjoy picking up bamboo splinters when they slip and fall on their polished granite floors.
“‘The irony is, with all the scary stuff that’s going on, it’s a really good time to be a home buyer,’ said Metrostudy president Mike Inselmann.”
Umm…If we are coming onto a recession or worse, how is it a good time when buyers could be laid off for a year or two and not have money for mortgage payments?
I think this is a humorous comment:
‘The discipline in the market with regard to qualifying buyers is as extreme as I’ve ever seen it,’ Mr. Wilson said.”
If they are now requiring house buyers to have acceptable credit, you can just shut it down around here. The credit quality in DFW has to be the worst in the U.S.
yes..is it still true that Dallas has the highest rate of credit card usage and most revolving debt in the country ? I lived there from 1996-2001 and this was true during the tech bubble.
He means, he is scared and hopes he can move his inventory so he can eat something besides Top Ramen.
I’ve got a craving for Top Ramen, so lunch it is.
The difference is, eating Top Ramen because you LIKE it. I love it!
But I’d rather be at Ichiban in Pacific Beach (is that still there?)
“The difference is, eating Top Ramen because you LIKE it. I love it!”
LOL. Hey TX, a little suggestion.
If you’re bothered by the brief psychosis from the insane jolt of MSG in the Top Ramen packet, try substituting a quality “MSG free” bouillon. Still cheap, but way better taste!
DOC
Too late. Already ate two packages. Yummy! 24 cent lunch.
Tx: You mean Pacific Beach in SD? My favorite place. Most people have no idea about real ramen - not that cheap, chemical packaged stuff.
and they had it there. Garnet Avenue, right?
And I miss that Trader Joe’s in PB too.
You are so right, Tx. Of course, they’re ruining PB like the rest of the country - trying to fancy it up. I’m going to spend a long weekend out at the Chrystal Pier this summer. They’re nearly already all booked. Love those cottages.
Richardson has some great Vietnamese noodle houses (Pho). Well worth the $6. Others around town too. One of the best areas in the USA for Vietnamese food.
Still there . . . ate there recently . . . .great food!
Au contraire. It’s a good time to be a patient vulture, watching serenely from my roost as the lemmings line up for their date with destiny.
Life-sucking humidity is what foreigners crave, by buying in Houston?
“The upbeat mood is due, in part, to international buyers, who are bypassing traditional markets like Florida, New York and California to invest in the Lone Star State.”
“‘I think it’s keeping the market alive,’ said Richard Miranda, a broker in Houston.”
Houston is at least giving out incentives for corporations to move their. My company is looking into moving ~4,000 jobs there! Not my first choice… (I’d jump for Denver or Austin, but that deserves its own topic), but the quarterly reports are pretty clear as to the destination (land options, building/architecture options, even options on the bulldozers to start on a given date! Houston allows office buildings to be built amazingly quick…).
Other cities are being smart too. We’ve fighting for a rather political contract, so we’ve promised 1,500 new jobs to Arizona, 1,500 to Pennsylvania, a thousand to Florida, and a few other places. Gee… where are we going to pull the people from. (Sorry, we’re not going to hire those numbers in 2008…). LA and DC. Or more precisely, the bubble markets where we have large numbers of employees and housing is far beyond the pay scales.
To my fellow bloggers who know whom I work for, please don’t post my company’s name. As long as I don’t post the corporate name, posting information like this is ok.
Got popcorn?
Neil
neil
too late: already figured out you were an orville redenbacker shill years ago . . .
Do you think that significant numbers of your employees will take the transfers? The ones that own homes would have to sell….
BTW, I just read an article the other day about a company that moved from SoCal to North Carolina, I think it was. Only one employee took the transfer, everyone else quit. They ended up pleading with their controller to telecommute from SoCal. It took them 18 months to staff up again with locals.
perhaps these “investors” should heed these wise words
Housing Bottom in Texas. Information for California “investors”.
If you are a California “investor” thinking about investing in some “cheap” $200,000 condos in Dallas, Austin, San Antonio, or Houston, here is some math for you to ponder over.
$200,000 condo you are thinking about buying was $75,000 in 2002.
Property taxes on $200,000 condo in Texas will be $7,000/year (3.5%).
Association fees on the condo will be $3,000/year.
Maintenance and other misc costs will add up to another $2,000/year.
$200,000 can earn you $10,000/year in guaranteed income at 5% a year. You give up this potential guaranteed income by investing in a condo.
Your taxes, costs and interest income you give up total $22,000/year.
Rent you’ll be able to get in Texas is $800/month - say $10,000/year (downtown condos that rent for $1,500/month cost $500,000, not $200,000).
So each year you’ll be losing $12,000 on your Texas condo “investment”.
The condo will be worth $75,000 again in a few years (that’s what non-investor condo buyers in Texas can afford on their $30,000/year income).
So you’ll take a $125,000 loss after you sell the condo on top of your $12,000 annual losses.
Happy Texas Real Estate investing.
Where do I sign up ??
But-but-but Suzanne researched it!
Velo
Sadly, it’s been learned Suzanne has checked into “trembling hills” rehab center for a severe Xanax and Jack Daniels addiction, which took hold after the barrage of harrasing phone calls and confrontations she has received from furious clients.
DOC
Are the “trembling hills” referring to her Heloced Dow Cornings?
Silicone Valleys
BrokeHerBack Mountains
http://www.youtube.com/watch?v=Ubsd-tWYmZw
I give you the infamous “Suzanne Researched This” Century 21 ad. The caustic viewer comments would be right at home on this blog.
Did that thing ever air on TV ?
Right at the peak of the bubble yes.
Good Lord. If she was Catholic, she’d have to confess it.
Life-sucking humidity is what foreigners crave, by buying in Houston?
I have a friend who lives in the greater Houston area, and he tells me that he is seeing a very large number of foreign residents, many from South America. Maybe they are used to the humidity.
Nevertheless, how many well heeled Venezuelans, Colombians, Peruvians, Brazilians, etc., are actually buying houses in Houston? It can’t really be that many.
YES the love humidity……you should be in NYC all the immigrants who keep the doors wide open and the AC off in their stores when its 90 degrees out…
I guess this is what it feels like in New Delhi in the summer.
“On South Padre Island, Mike Masso, a partner in a property agency, says he believes that affluent buyers from Mexico represent more than 40 percent of transactions, in terms of dollar value. His company is opening an office in Monterrey, Mexico, to help woo more Mexican buyers.”
Now I’ve read everything. Rich Mexican investors are going to save the US housing market? People, step back and listen to yourselves! The Mexican market is overbuilt and they’re going to have their own financial issues. Did you miss the mis-management of their oil fields? Mexican wealth is in major danger of contracting. Yes, its concentrated wealth, with 100 other US real estate markets bidding for that wealth, why would it go to your market?
Ugh… No wonder the NAR preaches “all real estate is local.” If J6P ever knew how global this is, an underwear change would be required.
Got popcorn?
Neil
Wealthy Mexicans actually could prop up the U.S. home market, as there is a revolution brewing down under…
The poor are barely making it, and the price of corn going up, could make the Tortilla Curtain a bad place to be rich.
The only problem with this scenario is, that Wealthy Mexicans despise us, and would probably go to some other 1st world country, first.
‘Wealthy Mexicans despise us’
I can’t say much about the country, but I lived near this market the folks from Monterey are buying and I can say they don’t dislike USAns. And they are very intelligent, highly educated and well to do.
Ben,
No argument there. But my point is there just aren’t enough of them to save all the various US markets that will attract them.
Got popcorn?
Neil
Its best not to think of them as investors. Owing a vacation home in the US serves a few purposes for wealthy Mexicans:
1) Its a status symbol.
2) Its insurance, a place to flee to should the SHTF in Mexico (and most wealthy Mexicans keep a non trivial stash of cash in US banks as well, for this very reason)
But there is no way that the 30-50,000 rich families in Monterrey are going to bail out the Houston market.
Wealthy people in unstable third world countries know the value of a bolt-hole they can easily reach if things become politically uncomfortable for them. But there aren’t enough of them to make a dent in the real estate market anywhere except South Padre.
“Wealthy Mexicans despise us,” writes al…
As someone who has been traveling to and doing business in Mexico for 20 years, I don’t think that’s particularly true. Actually, I think wealthy Mexicans are more likely to despise the clergocracy and nationalist thuggery that throttles their own country’s development.
However, your beloved New Zealand - now they truly do despise us.
In the past, that might have been true…
But much of our current hatred towards immigrants and Mexicans in particular, didn’t really exist not long ago.
Great post Ben. All I see is more evidence that the news hasn’t yet traveled to flyover country as quickly. Just like the tech bubble, the cities to get hit last will be in the midwest and south.
doesn’t sound like my tribal area
the corner of Martin Luther King Jr. Boulevard and “
I think there’s an MLK Blvd. in every large city. Or maybe I’ve just been drunk the past 18 years.
And in just above every one of them, I wouldn’t walk them after sun down.
If every MLK Blvd. changed its name to Forest Hills Blvd. (or some such) it would do more to revitalize the neighborhood than anything else local government could do. Who exits MLK Blvd. for gas or Walgreen’s in an unfamiliar town?
and I wanna say this too:
The Cowboys suck. I hope they get waxed today so we don’t have to read about Tony Romo and his bimbo any more.
Agree!
I this the typical Dallas “crowd”:
http://www.dirtyscottsdale.com/?cat=32
LOL comments from that site on the over leveraged folks in Dallas:
You have to love the guys who buy expensive clothes to go out the bars and spill drinks all over themselves. The best part is he was planning return that outfit tomorrow. 30k milli.
Simpson will not be attending todays game.She serviced romo this morning and got him fired up for the giants.
Going to be one hell of a game.
Romo is the “Weak Link” IMO….Sooner or later he will screw up….
like last year, last play?
The best nickname I’ve heard for Jessica Simpson is “Yoko Romo,” for breaking up the Dallas Cowboys.
LOL!
RE: The Cowboys suck. I hope they get waxed today so we don’t have to read about Tony Romo and his bimbo any more.
It’s over…so nice to see poor Jerry eatin’ his shorts on the sidelines.
All’s well here in Patriot-Land!
False Economy in Texas?
I think we’ve had a false economy all over the U.S. since 9/11. The Fed made it incredibly easy and incredibly cheap for J6P to go massively into debt, and the sheeple took the bait.
How many vacations, cars, kitchen remodels, semesters at college, etc. have been financed by the House ATM instead of real income / savings? Given the state of the economy, I’m guessing a lot.
Total false economy based on borrowing from asia.They fill our walmarts with stuff, we buy it like crazy and then they loan us the money back.Hopefully they learned a lesson when their cdo’s are worthless.
The lenders didn’t give a sh@t about qualifying subprimers because they sold the loan to wall street.Investors are left holding the aaa traunches while wall street worries about bonuses.
“The lenders didn’t give a sh@t about qualifying subprimers because they sold the loan to wall street.Investors are left holding the aaa traunches while wall street worries about bonuses.”
Not just subprimers. Alt A and Prime, as well. Everyone stretched beyond their means in this market, regardless of credit score. I don’t know anyone who recently bought for 2.5x or 3x gross income. More like 6x+.
Stupid question: but are those bonuses based on real cash, or loaned cash? With all the write downs I keep wondering where the dollars come from. Is it just a ledger shift from stockholders to bonus holders?
http://www.jibjab.com/originals/big_box_mart
This still makes me laugh, big box mart. think we’ve had a false economy all over the U.S. since 9/11, uh yea I sure do.
I thank the Lord everyday for our being able to get rid of our Plano house in May ‘06 having to take only $20k to closing!!! And we weren’t investors - job relocation forced our move! My husband still gives me crap about “giving” away the store when I sold the house - even now! I am just glad to be done with the Texas real estate market. Now it looks like me an my hubby may possibly be moving from LA to San Fran - the belly of the beast!! Far too many rich boomers where the housing prices are unreal. We will see….
I also liked the long “Re-de-pression” thread, but what I didn’t see was what happens to millions of children who have grown up without the word “No” in their parents’ vocabulary. My wife’s daughter just had to take her two children out of private school. I can hear the screaming from here. Many parents of younger children have never known a bear market/recession. 2008 might be the year the word “No” might beat “Sub-Prime” in repetition, from IBs to FBs to Wiis to iPods.
Just think about all the morons who overpayed for homes so all these spoiled brats could have all their toys.These kids no nothing about work either.
I lived in Austin until November 2006, and I can tell you that the job market/opportunites in Austin were never as rosy as the Chamber of Commerce would lead you to believe….there are thousands of UT graduates every year who hope to land jobs in Austin, not to mention hundreds of thousands of former Austin residents now living in Houston and Dallas who would like to return to the city, who have a hard time finding a job that pays well. (ie, $50K +)
My guess is that a professional type job pays 20% to 40% less in Austin than the same job pays in Houston or Dallas…plus, the cost of living in Austin is greater.
I know a guy here in N AZ that left Austin after the tech bust. With a college degree, he applied at some place there for an asst mgr or mgr job. I think it was KFC. He decided to move when they told him he was the only person who applied who didn’t have an MBA.
That’s right. A large law firm like Vinson & Elkins *used* to pay less in Austin than they did in Houston or Dallas. That may have changed in recent times but you used to have to accept that to live in Austin.
I lived in the Austin area a decade ago. Houses were expensive downtown but cheap in the outer burbs ($100k would get you a decent 3bd/2ba), but the city never quite lived up to its Texas-sized ‘lifestyle’ hype. A summer climate like a sauna, endless ugly subdivisions and strip malls like any other sprawling city, with an occasional hill or lake. Jobs were plentiful at the low-paying level but scarce above that, with plenty of underemployed college grads stuck doing call center work and such.
Mike G, I agree that Austin has not grown gracefully over the last decade….it has as many eyesores (sprawl, XXX movie theaters, strip shopping malls) and traffic jams as Dallas or Houston. If it weren’t for Barton Springs and Town Lake, Austin would be a pretty drab place.
Not sure if anyone saw Flip That House yesterday, but this was the worst one I have seen. The flipper’s name was Armondo. This guy had to be the biggest a-hole I have ever seen. Here he is living large not knowing how to do anything, ordering his two stooges around. At one point he pushes one of them in his pool. This guy was a complete dick. To add humiliation to it, he brings a pig over to the work site and has the two stooges run around like idiots trying to catch it.
This show was bad before, but they hit rock bottom yesterday.
That would be Armando Montelongo. Yes, he is something else. He is located out of San Antonio. The company used to be owned by him and his brother David. His brother David seemed like a nice guy. You could tell that he got sick of Armando’s egomania. He left the company. I want to see this Hummer driving a–hole make it in a down market. This jerk is another bull market genius. He will starve in the crash.
“They feel they will be protected with the dollar,”
“Um, I mean the AMERO.”
Like TXChick has written many times, DFW is one of those markets that you need to understand. Dont let the prices fool you. Houses are cheap but the the costs of owning your home is expensive.
I live in the Mid-Cities and still cant understand why they are building. I did notice some subtle changes. While driving around lately, there have been more land for sale signs.
I was very surprised when I saw how high property taxes were in Texas, as a %. But the homes are cheaper than most, at least they used to be.
What drives me nuts is these idiots from out of state who think they know better than those of us who have endured this hell hole for many years. I have no vested interest in keeping investors out of here. I just think they are mentally defective.
Americans have been taught that quantity is better than quality…
$200k houses are like so much cotton candy, to Californians
My nephew moved there last summer after the flip business slowed down in SoCal. Now he’s sitting on two houses and I’m afraid to ask how he’s doing.
This recession is going to be a whopper. Just look at how much shit hit the fan BEFORE the recession began. I would be a lot more positive if it weren’t for the fact baby boomers are nearing retirement. This is what I think makes this situation a lot different - and worse. I think I have sort of been one of the lone voices here warning about the boomer effect, but it cannot be underestimated.
The previous recessions over the last 40 years always had an ace in the hole to bail them out. Boomers were eventually going to buy us out of trouble. But the benefits of that group are now waning, and starting to reverse. We know a lot of boomers are loaded up with debt. Even more have very little savings for retirement. The theme moving forward is going to be saving. Paying down debt. This is going to take a lot of wind out of the economic sails. And I think housing will stress affordability, both in cost and energy efficiency.
I don’t think this is bad timing. It’s not an unfortunate twist of fate. We were always going to face this one day. I guess what I am saying is this recession is not just the result of a bursting housing bubble. It is the result of a fundamental shift in the psychology of a very large group of people. And it is very negative for the economy.
It IS different this time.
A lot of boomers became housing speculators. They jumped in knowing they’ll need millions to retire comfortably. After they got burned in the dotcom bust , real estate seemed safer.
I think I have sort of been one of the lone voices here warning about the boomer effect, but it cannot be underestimated.
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I agree a young growing population is much different than a older stable population. The middle east has the fastest growing population now.
“Many are like Enrique Castilla, a banker in Monterrey, who views the United States as a safe investment. At first he bought a condo on South Padre as a vacation getaway for his family, but recently he has helped form partnerships to buy land on the island to build condominiums.”
“‘They feel they will be protected with the dollar,’ Castilla said of his partners.”
The Peso has been in a virtual dead-heat against the Dollar, for quite some time now. One of the few currencies that hasn’t appreciated greatly against the greenback, since 2000.
So Dollars make more sense than Pesos?
They will if the next Mexican president is socialist/communist like the guy who came within a cat’s whisker of winning last time: Lopez Obrador. The memories of the hyperinflation of the 70’s and early 80’s is still burned into the minds of most adult Mexicans. And most understand that all it wll take for those good old days to return is a PRD victory.
1976: 12.5 Pesos to the Dollar
1990: 10,000 Pesos to the Dollar
Exactly, and they did everything to prop it up in the 70’s. Truth is that the peso should had crashed long before 1976. I was living down there then, and inflation had got so bad that I remember people taking shopping vacations to Houston in the mid 70’s. They would leave with nearly empty suitcases and return with them full of new clothes. The price differential was so big that it paid for the trip.
Anyway, in 1976 is slipped to about 23 pesos for a dollar (still not enough). That exchange rate, propped up by oil exports, lasted until 1982, when everything started to cave in.
Has anyone checked zillow in their area recently? In the East Bay here zillow appears to have significantly changed their Zestimate modelling. While a month ago, a friends apartment in Walnut Creek had a zestimate of $450K (he purchased for $440K in Feb ‘06) it now shows a Zestimate of $347K!! The historical price graph data also shows a significant descent since late ‘05. The same is pretty much true for all other sample properties I queried in the area.
It seems a reality is starting to set in, even for the wishful thinkers.
I went to zillow when I saw your email; I think something is wrong
(wronger than usual). The house I rent in Tampa has a value of almost $60,000 more than the last time I checked it, which has been since Christmas. It says that the value has increased $12,000 in the last 30 days; increasing values in Tampa?
I also track a waterfront lot in Naples. It shows a value of more than $4 million and just last month the value was around $2.7 million. And the adjacent lot which is essentially identical has historially shown a zillow value of $3.3 million and it hasn’t changed.
I can tell that december sales have been added, but it doesn’t look like their program is working correctly. This isn’t an opinon as to your friend’s house, just something that doesn’t make sense when I look at it.
my area 22151 is steady on Zillow
coupla short sale and foreclosures coming up
Yea my old Townhome is down 60K from 1.5 years ago. big drop Just showed up this last month. It was suspended for all that time even though I could see comparable sales much lower that their Zestimate.
“A shocking number of complaints involve poop. It would seem that some downtown pet owners find it’s easier to let their dogs tend to their business in the hallways than to get dressed and head to the park.”
Texas wimps! New Yorkers, who are really dedicated to city living, don’t even blink at animal excrement. For us, it takes witnessing a deposit of the human kind to attract notice.
I remember back in the crack epidemic / early 1990s recession, coming out of the subway station at Columbus Circle. Standing on the stairs was an addict whose pants were so shredded he didn’t even have to unzip to whip it out and relieve himself. Those pants, what there was if them, were stained with feces. He could be smelled before the stairs were even approached.
But he hadn’t lost his sense of respect. He politely aimed the stream against the subway wall so I would be merely spashed as I went by, rather than hosed.
Not looking forward to a return to the early 1990s, let alone the 1970s (bag ladies) or 1930s.
One time I was crossing the street at 4th and Broadway. It was around 12:30 in the afternoon. A homeless guy was in front of me in the crosswalk. Right in the middle of the intersection, he whipped it out and began urinating. Just like that! He then calmly put it back in his pants and staggered on.
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“Not looking forward to a return to the early 1990s, let alone the 1970s (bag ladies) or 1930s.”
You need to look farther back to look forward. (As someone said, Farther you look back farther you can see forward!)
Jas
This will be another factor depressing prices for the hipster-downtown neighborhoods. A nasty combination of rising crime/social unrest from the sluggish economy, and deteriorating police presence because of constrained municipal budgets, and some gentrification-pioneers of the last two decades may find to their surprise that gentrification can work in reverse, and neighborhoods that were unlivable crime-ridden crapholes in the 70s-80s could become so again.
“Texas wimps! New Yorkers, who are really dedicated to city living, don’t even blink at animal excrement. For us, it takes witnessing a deposit of the human kind to attract notice.”
All you wimps ought to check out Santa Monica some time. At my last office, I had to push bums out of the way to leave the building at night. The side of the building had a stand of those tall, skinny corporate decoration trees, and the bums would use the spaces in between as toilet stalls by day, and campsites by night. At some times of year, the parks smell so bad from the bums that it reminds me of the stables in Central Park, but with a “human accent”. Periodically they would set up “box cities” in our parking lot. Once I almost ran over a guy sleeping in a parking space, because I thought the box I saw was too flat to have anyone in it. Thanks goodness we moved out of that office last year.
$ hit Happens…
“A shocking number of complaints involve poop.”
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“‘Culturally, we have a trust that ‘this guy’s not going to do me wrong, he’s my compadre,’ she said.”
That may only work in mostly homogeneous society. We are in a diversity society and people shouldn’t assume “cultural” values in their dealings.
“‘In reality, the guy’s only looking out for himself.’”
Welcome to America! All immigrant groups need to get Americanized.
Jas
Oh God, I live in Texas too, but I’ll be rooting for NY today. I just can’t stomach the thought of a Dallas Superbowl with Terrell Owens and Jessica Simpson both competing for Romo’s attention.
I don’t get it (well, maybe really i do)…
—-“The upbeat mood is due, in part, to international buyers, who are bypassing traditional markets like Florida, New York and California to invest in the Lone Star State.”——
Why would international buyers seek Texas? I have nothing against Texas. I’m sure there are nice people there. If one has family or job opportunity there, living there should be fine.
But, what star attraction would make someone from Denmark or Spain or Australia say, “gee, i wanna move to America and where better than Texas?”
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Maybe, Tejas was hitherto undiscovered and it has been discovered by some rich foreigner with money burning hole in the pocket. Rich have as much of herd mentality as anyone. Once they hear about someone successful buying in Tejas they get interested. It is all very simple you know. Next year it could be Oklahoma. And Louisiana year after.
Jas
From what a Houston friend tells me, the foreigners are from South America. Why they might be attracted to the Houston area (other than not needing to speak English), I do not know.
As an investment? Good air links to South America, a regional financial center, and from a distant observer’s viewpoint being the center of the oil industry in the world’s biggest oil consuming nation is an easy sell in an age of $100 oil.
As a desirable ‘lifestyle’ place to live? Not so much.
I think you hit it with the air links. That also brings consulates. So, you basically have IAH, ATL, and MIA as airports aimed south, with foreign consulates. And Houston is warmer than Atlanta and a lot cheaper than Miami.
“Culturally, we have a trust that ‘this guy’s not going to do me wrong, he’s my compadre,’ she said.
Hey lady, when trust and money co-mingle, lower your expectations of honor and dignity.
>> “During the last decade, thousands of renters have bid adieu to the ‘burbs and headed downtown for a taste of urban living. The trendy new loft apartments and growing base of restaurants and retailers in Dallas’ core marks a comeback for a center city that until recently was one of the most lifeless in the country.”
What Dallas (and Denver and others gamma cities) historically fail to understand is that even in New York City nobody ever lived in the CBD (in NYC’s case, downtown. Of course even in NYC now they are, in places like Beaver). NYC’s “downtown” services are little better than the historical financial districts of any other US city. In the case of San Francisco, there are none.
As we drive into San Antonio on Bandera Highway, there is a billboard which for year(s) proclaimed that the realtor (with fugly photo, of course) “sold one house a week!”
Yesterday we noticed the same billboard now exhorts us -DON’T LET THIS MARKET SCARE YOU” in big red letters, sans photo. Red scare?
Red scare?
With the mentality of some people in Texas, that’ll be next.
“Buy a house now! What are you, a commie? A terrist-lover? You MURKA-hater!”
Any want to pony up $1.3M for a West Texas house in the middle of freaking nowhere? Wanna bet the owner of this place is some idiot from NY buying into the West Texas romantic mystique?
http://dallas.craigslist.org/rfs/538040918.html
Ft. Davis info:
http://www.fortdavis.com/areainfo.html
No way their are UFO’s out that way
You guys forgot to mention all the gas leases that have been going on in the Barnett shale (Dallas/Ft. Worth area). It has pumped millions into the local economy and keep everything rocking. I think it is really different here in Dallas/Ft Worth. If any metro-area is going to be saved in the coming recession, it will be Dallas/Ft Worth.
Peace.