Local Market Observations!
What do you see in your local housing market this weekend? Marketing plans? “With Florida’s real estate market reeling, brokers in Miami increasingly are targeting wealthy New Yorkers as a potential new audience to buy their unsold properties. With more than 22,000 condo units that need to be absorbed, supply in Miami has overwhelmed demand, and prices are being cut substantially.”
“‘Florida is on sale right now,’ the president of Miami-based Majestic Properties, Jeff Morr, said. A few years ago, Mr. Defortuna said: ‘We almost didn’t have to market to people. Now, the buyers are more scarce.’”
“With home foreclosures at a 20-year record high in California and up 68 percent nationwide, foreclosure bus tours in which home buyers visit a number of foreclosed properties in one outing, are popping up across the country.”
“At one tour in Pismo Beach, Calif…Mike and Mary Hays, were looking for their dream home. One house they saw sold for $450,000 three years ago. Now the bank owns it, but it could be Mike and Mary’s for $318,000.”
“‘It’s sad, but everyone is looking for a bargain,’ said Jim Fisher, another prospective buyer. ‘You don’t know the circumstances of why it’s a bargain, but it is.’”
Or auctions? “An auction for discount-priced new homes will offer three St. Cloud houses, auction organizers said. More than 200 new homes around Minnesota will be sold at the auction, said Lisa Berry, a spokeswoman for Norman Mitchel International.”
“Construction companies have an abundance of inventory because of a nationwide housing slump. ‘These builders need to get rid of their products,’ she said.”
Or builder woes? “Housing statewide has taken a hit, according to Maine Municipal Association Communications Director Mike Starn. ‘From a statewide perspective, (Sidney’s housing crunch) is certainly not a unique phenomenon,’ Starn said.”
“‘There’s a couple of contractors in town that have had spec houses on the market for upwards of two years,’ said Code Enforcement Officer Gary Fuller. ‘I don’t think it has anything to do with the town of Sidney. I also work in the town of Belgrade, and it’s also happened there. I just think the housing market is in a slump.’”
“At the market’s peak, builders churned out more than 12,000 new homes a year in central Indiana.”
“In the current slump, new-home production has dropped to fewer than 7,000 per year, leaving builders with no choice but to slash prices, eliminate hundreds of jobs, and look to unload huge chunks of office space.”
“‘I wish I had seen this coming in 2004 and 2005,’ said Brad Davis, the Davis Homes LLC’s CEO. ‘No one saw it coming then. We all saw a softening in June 2006. The first few months of 2007, we had fairly decent sales. In May and June, the market took a huge turn for the worse.’”
Or foreclosures? “Linda Caoli helps lots of families on the verge of losing their homes, including a single mom working two jobs to pay her mortgage. ‘She says Linda the house across the street, same model, with more upgrades sold in foreclosure for $315,000!’ explains Linda.”
“Her client isn’t the only one thinking about ditching her house to buy the better deal across the street. ‘Can you imagine if you had a same or similar home and your mortgage was half the price?’ asks Linda.”
“Caoli is sympathetic, but she doesn’t endorse the practice of it. Other real estate agents we talked to were far more critical, calling them cheaters.”
“‘Is it wrong to steal when you’re hungry? That’s an issue that a lot of people are trying to figure out right now,’ says Linda.”
Thank god the sale price “ranges” seem to be history. You know, price is in a range of 900-950 K.
Market rankings by Coutrywide - are you a catergory 5??
https://www.cwbc.com/ContentManaged/files/SoftMarkets.pdf
For Countrywide Purchase Loans:
Soft Market Category 4-5 loans: Maximum financing will be reduced by 5%
Soft Market Category 1-3 loans: Maximum financing will be reduced by 5% if the appraisal or appraisal review indicates any of the following: Declining Market, Oversupply, Marketing time over 6 months.
For Countrywide Home Equity Loans:
Soft Market Category 5 loans: Maximum financing will be reduced by 10%
Soft Market Category 4 loans: Maximum financing will be reduced by 5%
Soft Market Category 1-3 loans: Maximum financing will be reduced by 5% if the appraisal or appraisal review indicates any of the following: Declining Market, Oversupply, Marketing time over 6 months.
RE: if the appraisal or appraisal review indicates any of the following: Declining Market, Oversupply, Marketing time over 6 months.
These underwriting requirements virtually guarantee that the intimidation and coercion of appraiser’s will continue unabated.
Only the most corrupt and dishonest will continue to survive.
That restriction indicates ANY of the following: Declining Market, Oversupply, Marketing time over 6 months. The best appraisal in the world won’t help if properties aren’t selling.
Course, we all know properties can be taken off the market and suddenly become new listings (wink, wink)
I’m in the 3 and 4 areas.
All those listed as Cat 5 are really screwed as other lenders will do the same. Tighten credit at the worst possible time!
Would someone mind explaining this in layman’s terms?
Is it if a house in a cat 5 appraises @ X, then the max that can be loaned is
purchase: X - (20% (down)+5% of X (cat 5)) = 75%
heloc: X - (Y(1st mtge owed) + 10% of X (cat 5)) = $$ available
I was in a force 11 typhoon once, in Hong Kong.
Nigel Tufnel: The numbers all go to eleven. Look, right across the board, eleven, eleven, eleven and…
Why don’t you just make ten louder and make ten be the top number?
Because………it goes to eleven……..:)
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Isn’t that the same a Red Zoning except that it is over wider areas?
Jas
Woo-hoo
Nassau County is only a catagory 4….phew, and everybody thought we were toast.
All those areas designated Cat 5 - just took a serious leg down. The HELOC cuts will kill the economies of these Cat 5 markets - especially Phoenix, IMO.
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CA and FL seem loaded with Cat 4. Why does VA have so many Cat 4s?
Jas
I looks like BofA is running the show for Countrywide now. They dont want to be on the hook for anymore bad loans.
WC corridor was just as nuts price-wise as all those CA, AZ, and FL cat 4s.
The category 4s in Virginia are Northern Virginia-based. An entirely different animal than the rest of the state. Northern VA is part of the DC Metro area.
Jas wrote: “Why does VA have so many Cat 4s?”
Northern Virginia will be one of the few places that might give CA, FL, NV and AZ a run for the money in the race to deflate.
Suburban areas like Manassass and Chantilly had POS Hovnanian townhouses with prices starting at the $350K range…and this is not a very affluent area.
Arlington has a lot of yuppie 20 and 30 somethings who drank the Koolaide and purchased apartment-to-condo conversions for more than $400K. Arlington will be very interesting to watch b/c many of the young people here come from out of state to work in DC for a few years and then move on….and as we’ve talked about several times on this blog, the high transaction costs associated with real estate sales should discourage people with a 3 to 5 year time horizon from purchasing a home, but during the run up, these folks thought they were buying a sure thing. Whenever I go to the Gold’s Gym in Arlington or one of the nearby coffee shops, I often over-hear some of these young yuppie types complain how they’re having a hard time selling their condo that they paid top $ for in 2005.
I moved to the Arlington area in 1998 and looked at a small 1 bdrm condo across from the Ballston metro for 134K. And it had been on the market for awhile. Same condo shot up to $350+ in 2005. And this condo building was not new. The construction and corporate invasion in this area has been insane. Kinda ruined it all for me. It was a nice,cool little area near D.C. that was semi affordable. Now it’s a pretentious, overpriced, overpopulated Money, Money, Money area. The whole character of the place is different. And I just don’t feel sorry for these people that caught up in it all. I know prices are coming down some on the condos but to get back to realistic prices, they still have a long ways to go. This mess is just getting started in my imho.
Montana’s not even in there! Uh-oh.
What’s amazing to me is that my area, which is designated cat 2, is getting hammered — down 10-15% and not really selling. I can’t even imagine how bad it must be in the “true” bubble areas.
I also love how they use the same rankings as hurricanes. definitely appropriate.
Cat 5 here in Sarasota/Bradenton. The market/economy here are horrendous but of course the local paper had an article yesterday where 4 Realtor’s were interviewed and they all said we have hit bottom…so I guess everything is fine……..
Crispy, in case you haven’t seen this. I think it’s new?
http://www.kerndata.com/index.cfm?fuseaction=User.doShowAvgPriceHistory
Thanks!!
They removed this from their site, I am glad to see its back up.
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Listing Price for SFH in Santa Clara Co. has fallen from peak of $898K in Mar’06 to $654K, or down 27.2%. It is down 16%, YoY.
Listings are 90% higher, YoY, and sales seem to be tracking 40% down, YoY. Therefore the supply-demand is worse by a factor of greater than 3 (=1.9/.6).
Jas
The SV zipcodes that I follow off and on (94022, 94024, 94040, 94306) appear to have about double the inventory they had at this time last year (which is still not to say it’s a ton, however). Some of that inventory continues to move, but the ridiculously overpriced properties are languishing (I know, it’s all ridiculously overpriced, but relatively speaking…).
I think 2008 is the year that we will finally see inventory rise significantly around here, as sales continue to slow due to financing constraints. Still a little speculative at this point, however. I thought the same thing last year and was disappointed. I dare say we have some of the stronger Kool Aid in the country around Palo Alto — it’ll take a while for the zeitgeist to change.
The high income zips will get hit last, as usual. In my area, inventory hit new lows in December. This will take time.
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Wait for local leading Scam prices to fall more than 50%. Do you remember how much prices fell in Saratoga during 2001-03?
What Scam Options giveth Scam Options taketh away. 2008 might be the year when the high-priced zips in Silly.con Valley see declines.
Jas
SML,
Where are you, geographically?
Well, somebody became a believer: I may have previously mentioned a small house in Morro Bay that the FB (a slight acquaintance) offered to me for $580K in the fall of 2005. The FB had the property on the market for much of 2006 and 2007, at prices ranging down to $457K. No soap radio. Now it’s listed at $349K. I believe it has some chance of selling at that price, even though it’s more than $500/sqft. FB is still living in it; I don’t know whether the bank has approved the short sale. It’s the lowest-priced free-standing house in this town, and is in good shape. Too small for me, so this discussion is academic.
The central coast is coming back to reality. And as a Countrywide Category 4 market it will only get worse! Deals are coming…
In 1977, I sold a nice house on the hill northeast of the rock for $65K. The market was hot then, and I remember thinking it was priced too high.
I spoke with an old friend here in San Diego by phone. She was yawning and I asked her jokingly if the conversation bored her. She said that she was tired because she was losing sleep about finances.
I asked “what are you talking about?” I remember her a while back telling me that during 2004 and 2005 she made telling $250,000 each year selling sub prime loans. I couldn’t have imagined her burning through all that cash.
She told me that she bought 8 properties in the last 3 years. 3 in SD and 5 in AZ. The largest property she bought was $800,000 “fixer” in SD. She had to out $130,000 into it for what she thought was going to be a profitable flip and she wound up selling it for about $800,000. 130k out of pocket loss.
She still had 7 properties all with negative am loans! I asked why would she take negative am loans and she said she thought she would refy them when the appreciated.
She then explained she is upside on all of them and bleeding cash profusly. Her income totaled only $27,000 last year. Her husband is a mailman. (Being married only 3 years, she convinced him to pull equity out of his condo in Pacific Beach to help buy these properties. I hope he doesn’t go postal on her.)
I asked her the question that begged to be asked, “Why in the world are you still making payments on 7 remaning depreciating assets?”
She said funny you should ask. She just went to see a bankruptcy attorney that day and he asked her the same thing. She went on to explain how embarrassing it was for her to bein that situation after making all that money. Now, she will be getting kicked out of her home and starting from scratch in her 50’s.
She really is a nice person. She is not a gready person by nature. I think she thought she was being a good steward with her money. If she would have bought those same 8 properties in 1996, people would have called her a genius.
Yep ,I love all these nice people who are greedy and dumb deep down inside . When your greedy and dumb you should pay the price .
“You can’t break a man (or woman) that don’t borrow.”
Even better, making only $27k last year she’ll qualify for a stimulus package check.
RE: making only $27k last year she’ll qualify for a stimulus package check.
Hillary’s 5-year mortgage debt moratorium will save her azz if she can hold on until November.
First the Biatch needs to get elected then she has to get it passed. I wouldn’t count on it happening.
RE: First the Biatch needs to get elected then she has to get it passed.
It’s in the bag. You can smell it…this country’s gone insane
South Carolina voters must have lost their senses of smell?
I wonder what the record number will be, as far as a J6P “owning” a bunch of houses?
8 is enough (especially in Sacramento), but i’m thinking like 20 or 30.
Excuse me, how is she not a greedy b***h? Just because she’s your “friend” and she’s a “nice person”.
Screw that! Let her swing on the vine with her rotten bloated carcass for the entire world to see what happens when greed overcomes reason.
Not a greedy person! She bought 8 properties over a period of a few years. In other words, she jumped onto the “greed” train, to what she thought, was going to be easy riches and ended up arriving in Bankruptcy Hell on the “misery” train. I would re-examine that statement if I were you. She might be a nice person but she IS greedy and more to the point, stupid and greedy. Not a good combination.
If she would have bought those same 8 properties in 1996, people would have called her a genius
In 1996 she would need some down payment $ and no funny loans! That is why she was not a genius in 96 and is dead ass broke in 08!
friend of mine at work bought a new construction SFH in Framingham, Mass for $525,000. He says he got a deal since houses around it sold for $585,000 and that 2008 will be the bottom. I remained silent.
Please direct him to the fb club.There is no fee to join.
Oh there’s a fee. It is either 15 years of living debt slavery or anywhere from 100K-250K, dep. on where you live and then even maybe more as your house slides in value.
Silent, but debtly.
I see debt people.
lol. this would make a scary, but very long and boring movie.
Aren’t we all entertained here? I know I am.
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“I couldn’t have imagined her burning through all that cash.”
Easy come easy go? Such people are rarely responsible and are a danger to any society. I bet that such people breed bad kids too.
The Cautious attitude seems to have left the American shores some time ago.
Jas
Here’s what you can get for $25 sq. ft. (asking) in E. Utah. It’s actually not a bad place to live if you’re retired (no jobs).
http://www.elmofamilyhome.com
It’s a slow load. Doesn’t tell you in the ad, but the house is over 4,000 square feet, according to the MLS.
The house in Utah advertises it includes ‘animal rights’. I did not realize the state was so politically progressive.
No, it means you have the right to act like animals - LOL
Starting over in her 50s? Ya, I hate to break the news to her, but, no one is going to hire her in her 50s, we are heading into a recession that may take a few years to work through, and, if her job the last few years has been “selling subprime loans”, then, she has no actual job skills. I’d recommend finding a nice shopping cart before the rest of the people headed towards homelessness actually take them all.
This is what scares me, that the Paris Hilton Chicky-poos in HR , will pass by all the qualified people and hire her because she has no job skills.
It’s next to impossible today to find an ADULT in HR you can have an intelligent conversation with. So the chicky-poo will hire someone on her level, a loan officer even if she is 50!
RE: that the Paris Hilton Chicky-poos in HR ,
there’s one legtimate reason this country’s gone in the crapper which the gender Nazi’s will put you up against the wall for talking about.
Free Clue: If you want to get hired for a particular job, the first thing you have to figure out is how to go around the HR department. If you can’t do it yourself, work with a recruiter who can get direct access to the hiring manager to pitch your resume.
I second that advice.
In general, the less deals with HR, the better. Pre- and post-hire.
When I worked for Big Corporations as an employee, it was my observation that HR departments were created so the company could claim it has some female executives (as the VPs of HR almost always were)
Now I’m a consultant, so I don’t ever deal with HR.
Another shock for those of you that felt the need to pay for expensive visible tattoos is, employers will soon be able to pick and choose whom they want to work for them…
That $3,000 dragon crawling up your forearm, might render you unemployable.
Except in Santa Cruz CA, where discrimination against Body Art is illegal.
From my Loan Broker brother in Orange County CA
-70% of their loans are ‘refinance’ … owners with real equity
-30% are ‘purchase loans’
- Still doing ‘Stated Income’ loans! I asked who the heck would do that and he said that he ran it through ‘Wamu’.
- Every loan is ‘different’ and subject to change up to the last minute he said. One package was kabasheds at the last minute for an Inland Empire loan as the lender declared it ‘most distressed’ and needed the buyer to come up with a total of 10% cash from 5%.
‘It’s sad, but everyone is looking for a bargain,’ said Jim Fisher, another prospective buyer.
Must be some real dim light bulbs on those ‘foreclosure bus tours’……let me off this bus….now!
Don’t understand the “sad” part. Good times or bad, people are always looking for a bargain. I’m waiting to give someone an impaling a la Rocco.
foreclosure bus tours in which home buyers visit a number of foreclosed properties in one outing, are popping up across the country.”
I think this sentence alone tells us how far this country has sunk. This is a new one for me, I don’t remember foreclosure bus tours in any of the previous recessions.
‘I think this sentence alone tells us how far this country has sunk. This is a new one for me, I don’t remember foreclosure bus tours in any of the previous recessions.’
Round the world and home again
That’s the sailor’s way
Faster faster, faster faster
There’s no earthly way of knowing
Which direction we are going
There’s no knowing where we’re rowing
Or which way the river’s flowing
Is it raining, is it snowing
Is a hurricane a-blowing
Not a speck of light is showing
So the danger must be growing
Are the fires of Hell a-glowing
Is the grisly reaper mowing
Yes, the danger must be growing
For the rowers keep on rowing
And they’re certainly not showing
Any signs that they are slowing
A little of topic, but I was talking to my cousin about her job ( sells jet fuel to corp. flight dept.`s and FBO`s in the southeast including Fla.) She said things have never been this bad. Said they are putting leans on jets at an alarming rate for not paying their bills. I don`t get it, CNBC said things aren`t that bad. ya right.
Lane
Lane
Thats very curious indeed !!
Part 91 or Part 135 (Air Charter) airplanes?
http://www.abcnews.go.com/GMA/MellodyHobson/story?id=4186872
Read the comments on this article. I’m sure the sad stories are true, but how does anybody expect a bailout over the internet. I’m sorry, I’m involved in charity overseas and America doesn’t know what real hard times are. Tell me your story when your parents have died from Aids, and you’re a 14 year old girl selling your body to keep your brothers and sisters alive like in Africa.
The boss is in trouble.
He earns 70K/year, has two kids and a stay at home wife. Pretty sure he brought his house above $300K. He is renting the basement out to a college kid to make ends meet. Works on his house every weekend full time. Thinks his house will last for generations after the work he had put in. Why is that every do-it-yourself guys think their works are better than the pros? Sure the pros use cheap materials, but so does he.
BTW, his sister-in-law is a Realtor in Marin County. No doubt she is giving him advise.
Cinch
Sweet!
After he is fired, you could get promoted. I’d start “positioning” now.
“‘It’s sad, but everyone is looking for a bargain,’ said Jim Fisher, another prospective buyer.
What’s so sad about it? If every buyer would only settle for a bargain, every house would be a bargain.
Remember: somebody always has to sell, but nobody has to buy.
It’s sad so many GFs bought homes in recent years with loans they will never be able to repay.
I’ve been lurking zillow.com for 33137 (Biscayne Bay, FL part of Miami). My interest is a “black humor” interest. My “buddy” who regards real estate as the best investment has a waterfront condo in that area. I looked at a few waterfronts. 2 bedroom 2 baths, at least one car garage parking, 1200 square feet. Well I noted a few that peaked above $300,000 in 2006 or 2007 but are priced $100,000 less. That’s a 33% haircut. And it’s going to get worse. I told my “buddy” a few years ago that fundamentals show real estate going into a depression, precious metals booming, and a severe lack of consumer buying that could affect the stock market. He kept calling me chicken little and sold all his gold (I bought 4 ounces from him at $525 spot + 4% when it was that cheap). He kept insulting me. Last time I communicated with him he callled me a rent slave. This is why I have a personal interest in seeing Miami waterfront prices falling into the toilet.
I have to go to the grocery store for some more popcorn!
The only remaining Stimson lumber mill is shutting down for a month due to low demand
http://www.missoulian.com/articles/2008/01/26/news/local/news02.txt
They’ve already laid off hundreds over the years.
Also, as someone noted here Citi is laying off 80 in Great Falls.
http://www.missoulian.com/articles/2008/01/26/news/mtregional/news09.txt
Our UM economics guru says nothing to see, move along.
http://www.missoulian.com/articles/2008/01/26/news/local/news02.txt
‘For a nationwide recession to occur, a number of bad things have to happen - and some of those already have happened, BBER chief Paul Polzin said Friday at the bureau’s annual economic outlook seminar.
“The first bad thing was the bursting of the house price bubble,” he said.’
a nearby lumber mill in norcal is also closing due to low demand…
http://news.google.com/news/url?sa=t&ct=us/1-0&fp=479be8aee4875183&ei=35ybR5yuJIzoqwP5sLykAw&url=http%3A//www1.pressdemocrat.com/article/20080110/NEWS/801100326/1036/BUSINESS01&cid=0
“So Bob, who has pretty good credit, decides to buy the cheaper house. He can’t afford both, so then he walks away from his original home, letting it fall into foreclosure. That will hurt his credit, but he’s willing to take the hit for a more affordable home.
“Is it wrong to steal when you’re hungry? That’s an issue that a lot of people are trying to figure out right now,” says Linda.”
The new flipper?
Don’t cofuse hunger with dishonest greed.
Bob is actually performing a service. The owner of the first loan will NEVER EVER make a stupid loan again. Banks and MBS purchasers need to learn a lesson.
“”Is it wrong to steal when you’re hungry? That’s an issue that a lot of people are trying to figure out right now,” says Linda. ”
First of all, First place award for article with worst journalism, ever.
Secondly, it IS wrong to steal when you’re hungry if you have caviar tastes on a nacho budget.
How would ‘Bob’ feel if he sold his used Mercedes to someone, only to have them bounce the check and leave it parked in his yard the next day because they found a cheaper car on Craigslist?
Just because it’s a bank, doesn’t make stealing OK…
I have no problem (hypothetically) from stealing from a corporation. Their only job is to suck as much money out of actual humans as possible. Back in the day, if i got a loan on my buddy, George smiths ok, then i would feel an obligation. Now, it is nothing but a business transaction governed by the bottom line and soem complex equations. I might feel bad that it hurts me financially, but no guilt about not paying it back. Its not a person I owe money to its a financial risk construct.
Three California market updates–my husband has been liquidating his grandfather’s estate which included two single family homes and one fourplex. Finally all have sold, following is the “appraisal on date of death” which is what the probate court looks at, and the actual sale price. All of the places were absolute s@#tholes, his grandfather was a bit of a slumlord.
Fourplex in Paso Robles, SLO County. DOD (6-30-06) Appraisal: $710,000. Sale price: $630,000 in June of 2007. Rents did not pencil out even at sale price, building was purchased by Vietnamese family who planned to move relatives into all of the units. According to our RE agent, the place is now valued at $575,000.
SFH in Antioch, Contra Costa County. DOD Appraisal: $385,000. Sale price $215,000 in September of 2007. House built in 1947, 3 bed, 1 bath, 1400 sf, occupied by renters for 2 decades. During the final week of escrow it was occupied by squatters.
SFH in Lakeport, Lake County. DOD Appraisal: $315,000. Sale price $230,000 in December of 2007. 3 bed, 2 bath 1800 sf, had to buy them a new HVAC system and still felt lucky to be rid of it, have you been to Lake County?
It doesn’t pay to die at the peak of the housing market.
‘Marketing plans?’
“Hello, real estate infesters, I’m your falling-knife-catcher btour guide.”
Home-repo bus tour
Surging foreclosure rate drives latest sales tactic
By Emmet Pierce
STAFF WRITER
January 27, 2008
SAN DIEGO – All aboard the REPO Express, a new kind of bus tour that takes riders on a guided search for bargains within San Diego County’s surging home foreclosure market.
http://www.signonsandiego.com/uniontrib/20080127/news_1m27tour.html
Misfired that one…
“…falling-knife-catcher bus tour guide.”
That is the first misfire I have ever seen from PB.
In the NY Times Real Estate Section, they list recent sales from around the region. The price categories were raised this week. The first category was under $300,000 and is now under $400,000. The last category was over 1 mil and is now over 1.2 mil. The other’s between were also raised.
I think this is a blatant attempt to stop people from realizing that price are falling in and around NYC. The RE Section has only one set of advertisers, The RE Industry. They will do what ever it takes to keep them happy.
In the NYTimes Magazine today, “The Ethicist” answers a question from someone trying to sell a home who wants to know if it’s ethical to hide an audio recorder in the home to hear what potential buyers are saying.
If this is a common practice, I now have another thing to do when I’m looking at an open house for fun: Say ridiculous things!
Like:
“I’d buy this house if it had granite countertops!”
“I *must* have this house! Let’s offer 20% less, but I’d pay full price if I needed to”
or
“Keep a lookout while I jack off on their pillows”
“Wow, this place has lots of copper pipe and wiring, mark it on the list.”
Nothing hurts like the truth…
“Let’s consider this in two years when the market is off 50%.”
http://www.nytimes.com/2008/01/27/magazine/27wwln-ethicist-t.html
Let us touch on a subject rarely brought up concerning property. The reason being, I just read Lost In Utah’s posting. It’s a very important point. Where you live is even more important than the price. I was born in the city (London) and lived there half of my life. The other half in the USA with short periods in Australia (Sydney), Spain (Barcelona) and Italy (Turin).
About 25 + years ago, I moved out of Los Angeles where I worked in the movie industry and bought a house on 3 acres in Fallbrook, ca. It was always a dream (fantasy) to live in the country, away from traffic and crowds, breathing fresh air, etc and Fallbrook fitted all the ideas of my “fantasy”. Which is what it turned out to be. Fallbrook is about 20 miles inland from the California coast, between (roughly) Los Angeles and San Diego. A beautiful area. In the 1930’s, it used to be a “getaway” for the Hollywood in-crowd. In fact, a big landowner was director Frank Capra (”It’s a Wonderful Life”) who bought several hundred acres. It’s a beautiful area. Avacado trees, orange trees, lime trees, lemon trees, etc. The house I bought had 200 lime trees, a dozen avacado trees, persimmon trees, 20 or so lemon trees, grape vines, etc. It had a garage for 4 cars, where, I figured, I could buy a classic car and restore it, etc. It never got hot during the summer. The property was situated on a small hill and, like clockwork, at noon a breeze from the ocean came in to cool things down. Niverna. Price of the property was $120,000 in 1982.
Cut to 6 months later. BORING! Constantly looking after the irrigation system for watering the lime trees which the ants used as a highway and blocked the system in the process. Btw, the lime trees, etc, were not a money maker. In fact, the water bill was more than the cost of having the damn things picked. The trees were planted to make the area look pretty. A non-stop chore of clearing the grass, etc. There were of course the scores of illegal immigrants who used the back roads, crossing into property, after crossing the border on their way to the cities in the North.
I could go on but there’s no point except to add that my neighbors, nice people but with nothing to say outside of, “Could get some rain soon,” added to the depression which was overtaking me. Eventually, I couldn’t deal with it anymore, sold and moved back to the city where, if I want limes or avacado’s or lemons, I go to the supermarket and buy a couple. Of course, I didn’t move back to areas like South Central Los Angeles, or Carson or Fontana. That would be even worse than living in the boonies. Btw, some of those places mentioned, like that toilet called Fontana or Carson, is where they have been building thousands of sh*t boxes which are now being abandoned. Surprise.
So, it really comes down to WHERE you are happy living. Being in a nice, brand new McMansion or even a shiney new tacky track house with a stainless steel fridge and a granite kitchen top, stuck in some boring area in the backwoods of Texas, or Utah or Idaho or many, many other places in the USA (because it’s so big and still mostly empty) is not the answer.
Of course, there are many who like the idea of planting their own food, riding their horse around their fifty acres, feeding the goats, living the country life but, before you reach for the dream, it’s best to try it out first. That property that Lost in Utah posted looks great and it sure is worth the money compared to what you can buy in the city or the place you are used to and I’m sure there are scores of people who would love it but I’m not one of them. If that property was going for $20,000, I wouldn’t want to live there. You are what you are. I’m a city dweller. I like the “electricity” a city gives off and the bigger the city the more I like it.
Where we live, it’s pretty much pitch dark at night, and we don’t help matters by having just one light on…
You wouldn’t believe how this unnerves city slickers that come to visit.
Our nemesis is gophers and deer. So, we fixed that by building a large enough greenhouse to supply more than enough food for the 2 of us.
Aside from our house, we are surrounded by Mother Nature and it’s quite a treat watching her do her thing.
We were outside reading books one day, and a Blue Heron flew in and landed on a rock, 15 feet away from us. It had a wingspan of around 8 feet.
Nice place to live! OT, but reminds me of a hike near the San Juan R. in Utah where I rounded a corner just as a great blue flew from a small pool, nearly flew into me, the wings were massive. What a treat! Got to release a rare Harlan redtail hawk the other day from rehab. They actually glued new feathers onto the old ones that were missing so it could fly, it will get new ones when it moults. They release where the bird was found, and this one came from my area so I got the honor. These birds are amazing.
A heron lives nearby and visits the pond 50 yards from the house daily. Sometimes I am sitting there when he comes in. Turkey and deer peek out from the treeline and wander into the yard below the windows in my “office”. Two hundred robins are hanging around, I can’t figure if they are leaving late or arriving early. I look out over a twenty mile wide valley. I can see a couple of houses, but too far to look in the windows. I can walk to town in 20 minutes if i wish.
I owned a farm once with acres around the house to mow and a 100 year old barn and other buildings to maintain. It was a killer, beautiful, but I was so glad to get out of the maintenance business. Talk about a real depreciating asset!
Enjoyable read, Mike. It makes me wonder how we can have a housing market where sellers are obsessed with how much their property is ‘appraised’ for by hired guns who tell them what they want to hear.
In reality, a property is ultimately only worth what buyers are willing to pay. Sellers often forget that.
Mike, interesting post and very accurate. I would buy that property I posted above in a minute if it were where I wanted to live, I could pay cash and the taxes are low. If I had a spouse to keep me company and was retired and could go on road trips when I got bored or had family nearby it would be fine, it’s a pretty and mellow area. I learned the hard way that where you live is more important than what you live in. Fortunately, the price was cheap for the lesson. I rented a beautiful strawbale house in SW Colorado in the country and left after one month. I sacrificed my deposit and last month’s rent and ended up with their abandoned cat in the process. The area just didn’t suit me, I actually hated it and I thought I would really like it. I knew that in just one month, because the things I needed weren’t there. I have really examined why and where I need to be and that will drive my decision to buy even more so than actual price. A house is just one component of a good life.
Lost,
fascinating point. Could you describe the things you found missing that caused you to leave after a month? I am thinking about leaving NY for other places, and I am sure you have specifics that have not occured to me. Many thanks.
Spike, this probably won’t help you much, as I have a disorder called Civiliphobia, and I need lots of wide open spaces. I like to get out and hike with my dogs in the middle of nowhere. And yet I like espresso shops and art galleries and similar yuppster stuff for entertainment and occasional socialization. I also need internet access (currently use a modem on my computer that ties into cell phone towers) and a good source of organic fruits and veggies (which I currently don’t have). In short, I do best in small progressive towns that are outdoors oriented, I like the people there and there are cool places to get away and hike or bicycle. Most of these towns have become so yuppified that they’re expensive and unbearable, they’re just small versions of overly regulated cities, but there are still a few last great places. Where I was for one month turned out to not have any places nearby that weren’t private property, the town was very redneck, and it was too high of an altitude and thereby too cold (almost 7000 ft.). No good grocery store or bookstore and no internet.
In general, note what you do with your time and what brings you your feelings of happiness and security. Believe me, if you move to a place where you can’t have the things you need, whether they be spiritual or phsyical, you won’t be happy. Know thyself and act accordingly.
I can relate to some of this. I spend about half of the year in my home in a nice rural area (rapidly becoming an exurb/suburb, unfortunately), and the other half in the heart of urban metropolis (NYC, San Francisco, Hong Kong, and most recently Chicago).
I find solitude and boredom a necessary impetus for my writing and drawing. I love nature and dark skies, that near perfect quiet that you get at night and neighbors that are far enough away you never have to see them.
After a while, though, I’m ready to walk out the door and down the street to a museum or orchestra hall. I want to meet world travelers and see a new show every night. I like having something always going on outside my window. Great architecture, cool shops and world class food are also all a plus.
But I find a few months of that is enough. My friend says when you’re around masses of people for a long time, you start to feel dirty and small. I think that’s a fair description. I’m always excited to get into a city, and equally excited when it’s time to leave. I get tired of looking at countless faces, tired of hearing sirens and people arguing or partying all night. The inflated cost of everything is frustrating. The bad smells, bad air, constant traffic and traffic noise and lack of any interesting wild life outside of zoos are all hard to take. I can understand why people fled to suburbs once cars took hold. For many, it’s a fair compromise.
I am exactly like this. When I left Park City, Ut, even a couple of young Mormons said “it’s dull here, isn’t it.” I was actually quite shocked about the lack of sophistication. I like good conversations (does not have to be hours of them), and they were not happening, too many people had nothing to say but platitudes. After a while started feeling half brain dead, and craved city vibe, but cannot live like this for long.
“‘Is it wrong to steal when you’re hungry? That’s an issue that a lot of people are trying to figure out right now,’ says Linda.”
When your moral compass can’t differentiate between right and wrong, you’ve got problems, America.
I’ve heard that in some places they cut your hand off for stealing, whether you were wrong or not.
Linda, check it out. When you took your car to the mechanic for that ticking sound, and he told you it needed a whole new transmission for which you spent $1500, only to find out later it was a stone in your hubcap…
The dude was HUNGRY, Linda. Is that so wrong?
Auctions Results.
Auctioniers advertise their low starting bids but never the sold prices. Does anyone now how we can publish them to prove there are no bargains out there yet.
PS Nothing worth mentioning has been auctioned in OC.
Every week the Sunday AZ republic has run a column in the real estate section with the headline “How much has your home appreciated?” I noticed today that the headline has been changed to smaller, light gray type and now reads simply “Home Values.” They must have figured that a headline reading “How much has your home tanked” in boldface would be too much of a downer.
“Her client isn’t the only one thinking about ditching her house to buy the better deal across the street. ‘Can you imagine if you had a same or similar home and your mortgage was half the price?’ asks Linda.”
“Caoli is sympathetic, but she doesn’t endorse the practice of it. Other real estate agents we talked to were far more critical, calling them cheaters.”
Depending on how the loan (and the CA laws) were written about a “no recourse” mortgage, it may not be illegal to do this.
However, I seriously doubt that you can get away with this too easily. Now that lenders are actually looking at your credit history, they’ll see that you have a current mortgage, and aren’t likely to give you another mortgage unless you have the income and downpayment to justify it.
More likely this “single mom” has a more complicated strategy planned. Like her live-in boyfriend will buy the home on his credit, and then she’ll walk away from the current home, etc. (Still not illegal, and more doable w/o the mortgage company knowing what’s going on.)
Also, I can’t imagine that any Realt-Whore(TM) would be unsympathetic to this. After all, houses are exchanged and that’s how they make money
I’ve been watching these three condos in downtown Missoula. They’ve been on the market for almost I year, I think, and they’re still not sold. There are only these 3, from 283k to 299k, which is way too much for local medians. They’re over retail space, which is what the planning depts love now, and those took long enough to lease out themselves.
There was a lot of hype a year or so ago about how young professionals loved to live downtown blah blah. Yeah no indoor parking, Check n Go Place downstairs, not even a decent patio. Just 3 of many urban condos that are just sitting there.
Things not all doom and gloom here in Dallas. My MIL just sold her 510k condo for near asking (Sold within 2 months, I was actually shocked). A co-worker is moving up and just sold his northern suburb McMansion/tract home pretty quickly despite over-development in the area.
My house stands out because it’s on a huge lot and has a classic farm/cottage look. When I was in the post office last week, a stranger mentioned she had seen me gardening and asked if we were planning to sell anytime soon because they’re in the market and really like our house.
I’m still down on RE, even in non-bubble Dallas, but the personal events of this week were unexpected considering that the national bubble has now become conventional wisdom. My anecdotal evidence tells me we’re holding steady for right now.
Talk about anecdotal evidence. I am out of town a lot and live in South Florida. I haven’t even been keeping up with the market as it’s ugly. However the wife likes where we live, the payment is affordable and so we are staying put.
I bought in July of 2005 at the peak of the market. A 3 bedroom townhouse for $295,000. The sales since that time have not shown much of a decline.
Today my neighbor told me that on in the community just sold for $310,000 and doesn’t even have the view I have. I didn’t believe him. Well I just checked on Zillow and that’s exactly what it sold for on 12/20/07.
And the what has me most baffled is I checked county records and they only put down 5% and got the load through WAMU.
I just can’t believe that over 2 years since I bought right at the peak that values haven’t dropped much more by now at least where I live.