The Market Was Infected By A Herd Mentality
The News Leader reports from Missouri. “After several years of construction boom, the brakes hit the local home building industry in 2007. Builders in Greene County took out a little more than 1,000 single-family home building permits — down from nearly 2,000 in 2006. ‘Basically, we built too much,’ said Tom Wyrick, professor of economics at Missouri State University. ‘We’re now working the inventory off.’”
“Greene County resource management director Tim Smith sees it differently. ‘This is a subset of problems we’re seeing nationwide,’ Smith said. ‘The housing market hit the skids in 2007, making it very difficult to move new homes to buyers. As a result, builders — not sure if they can sell — stop building.’”
“Recent homebuilder association shows sold out its booths in record times. ‘Let me say, in 2005 and 2006 we were celebrating. Now it is the opposite of the coin,’ Wyrick said.”
“After continued feverish growth between 2003 and 2006, the county had expected a slowdown in homebuilding but the landing was a little too harsh, Smith said. Eddie Castleberry, the city’s building inspector, said the troubled financial market is to blame. ‘2005 and 2006 were really fantastic years, and the money was there. Now the money got a little tighter (than we had thought),’ he said.”
The Chicago Tribune from Illinois. “Sales of new condominiums are falling while inventory, especially downtown, is rising. Last year buyers agreed to purchase 3,783 downtown condo units, down from 5,783 in 2006 and 8,162 in 2005, according to a presentation by Appraisal Research Counselors.”
“Construction is slated to be completed on 6,000 downtown condominium units this year, double the number completed in 2005, the peak sales year.”
“‘New projects are outpacing sales and the gap is continuing,’ said Gail Lissner, VP of Appraisal Research Counselors. ‘We’ll see more auctions as an exit strategy.’”
“Now 5,814 condominiums are for sale in recently completed projects, still in construction or being planned. But the weakening job market is likely to dampen 2008 sales.”
“Commercial building in the greater Chicago region will muddle through 2008 at a slower pace than last year, and construction of condominiums will fall sharply, according to a report.”
“‘Total construction will decline 8 percent, to just under $18 billion,’ said the McGraw-Hill Construction Outlook for Chicago. ‘Residential construction will continue to be the major drag.’”
“‘Most analysts now agree that if Chicago had one construction market that would be considered in a bubble, it was the condo market,’ the report said. It used the word ‘dive’ to describe condo construction starts this year.”
The Times Herald from Michigan. “For two years, a ‘For Sale’ sign has hung in front of Debbie and Steve McCartney’s home in Port Huron. For much of that time, the house has been advertised ‘REDUCED.’”
“‘We hesitated buying it (five years ago), but we did because we didn’t know if we’d find anything as nice,’ Debbie said.”
“The couple have had five appointments to show the house in the past two years, and the home that once was appraised at nearly $150,000 is now on the market for $129,000 and poised for another price drop. They paid $132,000 for the home.”
“The McCartneys’ story has become all too common. Their real estate agent, Buzz Stanko, said more and more homeowners are bringing their own money to close sales.”
“The McCartneys are on their third real estate agent, and Stanko won’t distort the reality: They likely will drop their asking price below $120,000 before they attract a buyer.”
“‘I don’t think we’re ever going to see housing prices like this for the rest of my lifetime,’ he said.”
“Proportionally, the number of home sales throughout the Blue Water Area has fallen by a much greater percentage than the sale prices. In 2002, more than 90% of the houses listed on MiRealSource in St. Clair and Sanilac counties sold; five years later, only about 20% of the listings sold.”
“Patricia Burden, an associate at Regional Realty in Yale, said a closer look reveals the houses that are selling are the ones at the lowest price.”
“‘I think that part of this entire scenario is that at the present time there are very few buyers even looking to purchase homes in the higher price ranges,’ she said. ‘Of the 110 homes sold since the first of the year, 82 sold for under $150,000, (and) only 28 (are) selling for over that amount.’”
The Grand Rapids Press from Michigan. “The growing number of foreclosures flooding the housing market is sparking real estate agents to get creative. Following the lead of others across the country, Five Star Real Estate’s James Goetzka is renting a bus and signing people up for a ‘foreclosure tour,’ complete with snacks and drinks.”
“‘This is only the first one,’ Goetzka said. ‘My goal is to continually run these because it’s obviously going to be a big dilemma here in 2008 and in 2009.’”
“Goetzka said the tour will consist of homes he has researched and believes to be good buys. All are vacant and owned by a bank or the U.S. Department of Housing and Urban Development. The four-hour tour’s route will be based on customers’ desires, but it will focus on Kent County.”
“‘I’m getting everything from the inner city at $8,000 or $10,000 all the way up to $150,000 or $200,000,’ he said.”
“Sue Harder was looking through the U.S. Department of Housing and Urban Development Web site when she spotted an opportunity. The director of Holland’s Ourstreet program saw HUD was making some foreclosed homes available to local governments to buy for the measly sum of $1.”
“The homes had been foreclosed on at least six months ago, and HUD hadn’t been able to find buyers for them. ‘This one is a rarity in our community,’ Harder said. ‘With the (large number of) foreclosures that have happened, this presented a unique opportunity.’”
“The City Council agreed, voting unanimously Jan. 30 to buy the 76-year-old house at 946 Lincoln Ave for $1 plus closing costs. The 1,086-square-foot house has three bedrooms, 2 bathrooms, a basement and a one-car garage.”
“Holland city tax records showed the Lincoln Avenue house had been owned by HUD since September 2006, and for six months before that by Wells Fargo Bank. The home had been purchased in April 2005 for $104,000 and was foreclosed on just less than a year later, according to records.”
“The city may work with a nonprofit agency to renovate the home and sell it to a family who otherwise might not be able to buy a house.”
“In Zeeland, city officials did likewise, with the City Council voting Feb. 1 to buy a HUD-foreclosed home at 40 N. Jefferson Ave. for $1. The two-bedroom, one-bathroom, 966-square-foot house is on 0.12 acre and is listed at $61,200, with an appraised value of $99,000, according to HUD.”
“The 87-year-old house’s state-equalized and taxable value dropped from $51,900 in 2005 to $39,600 in 2007, according to Ottawa County tax records.”
“‘What we’re looking at is putting it up for bid for some agency that wants to go in and fix it up’ and sell it, Zeeland City Manager Tim Klunder said.”
“With foreclosures skyrocketing, HUD is finding itself with homes that it can’t sell. ‘It’s given us an inventory that’s at an all-time high,’ said Louis Berra, field office manager for HUD’s Grand Rapids office.”
“In the case of the Holland house, HUD hadn’t gotten a single offer, even at a list price of $63,000, well below the appraised price of $89,000, city officials said.”
From WZZM 13 in Michigan. “With all of the foreclosures on the market, people trying to sell their homes face some tough competition. Many foreclosed homes are for sale well below the market value.”
“Tony and Sue Hinojosa are enjoying their first home. Brand new contruction with three bedrooms and one and a half baths…and they paid only $87,000!”
“For the seller it was a big loss. The Hinojosa’s got their deal because the house was foreclosed on by the bank.”
“‘Our goal is to get individuals onto a tour to look at the foreclosure homes. Hopefully, they buy those and get those out of the marketplace because we’re finding that the home seller such as your neighbor, friends, co-workers they’re having the toughest time selling in this market place because they can’t drop their price low enough to compete with the banks,’ said James Goetzka, the real estate agent who helped out the Hinojosa’s.”
“A similar house accross the street from the Hinojosa’s sold for $170,000 two years ago. They paid about half that price, forcing future sellers to lower their asking price.”
“Goetzka thinks the best way to raise listing prices is to sell foreclosed properties as quickly as possible. But, for now new home buyers are getting a great deal and they’re still helping the market with their investment.”
From Kiplinger on Minnesota. “Minneapolis real estate agent Cotty Lowry says that until it slowed down in 2006 and ground to a halt in 2007, the Twin Cities market was infected by what he terms a herd mentality, and ‘everybody and his brother’ owned at least one rental unit.”
“But as happened elsewhere, the market turned and investors bailed. In November, according to the Minneapolis Area Association of Realtors, the backlog of unsold condos rose 25% over the previous year, sales fell 20%, and the average selling price dropped 5%.”
“Fear of the unknown pervades his market, says Lowry, driving qualified buyers into high-end rentals — ‘what they think is the safe route,’ he says. Suburban empty-nesters who had planned to move downtown have decided to sit tight for now.”
The Star Tribune from Minnesota. “For Twin Cities-area real estate agents, last month was the slowest January in more than a decade.”
“The number of closed home sales in the Twin Cities metropolitan area fell 21.3 percent compared with January 2007, and the median sale price fell 8.9 percent, according to data released by Twin Cities-area Realtor associations.”
“Slack demand and an oversupply of unsold homes pushed the median sale price down to $205,000 — a 10 percent decline, or $20,000 lower — than in the same period two years ago.”
“‘We’re all paying the price for rapid growth,’ said Tom Musil, director of the master of science in real estate program at the University of St. Thomas. ‘People made a lot of money and realized a lot of gains, and now we’re seeing an adjustment to those prices.’”
From Finance and Commerce in Minnesota. “The Beard Group has reached a turning point. The 18-year-old real estate development and management company is about to assume a new name and a new business profile, and it starts that new chapter with a new round of financing behind it.”
“‘We’ve been gearing up for all this for over a year,’ said Tom Gump, one of the co-principals at Beard, whose new operating name is Neighborhood Development Partners, LLC. Those changes will…shift the company away from the mixed-use redevelopment and infill projects that have long been its specialty.”
“Instead, it’s turning its attention to land development for residential and mixed uses. ‘Probably 70 percent of what we do will be raw land from now on,’ Gump said.”
“And for the foreseeable future, the firm’s major targets in the land market will come from the ranks of the failed residential developments that dot the region, many residual fallouts from the foreclosure crisis that has hammered the housing market locally and across the country.”
“The company made its first acquisition in that distressed market last Thursday when it closed on the unsold portions of Inspiration, a 242-acre development in Bayport.”
“A Brooklyn Park-based residential firm had lost Inspiration in foreclosure late last year to M&I Bank after the developer was unable to repay $9 million of a $14.65 million development loan. Neighborhood Development obtained the foreclosed project, which includes 133 undeveloped lots, for $4 million, according to Washington County records.”
“A project with big debt-service bills but little hope of selling new homes in a deeply slumping market – means promising opportunities for a well-capitalized, experienced developer like Neighborhood Development, Gump said, and the opportunities should continue to grow during the year.”
“‘Many banks have been holding loans in forbearance, hoping the housing market would turn and their customers could get their projects back on track,’ he said. But with job creation flat and few signs that the economy will rebound this year, ‘a lot of loan committees are going to decide that they need to move those non-performing loans off their books.’”
“But despite the glut of remaining unsold homes and residential communities, always getting generous discounts in the distressed land market isn’t a certainty yet, according to one of Neighborhood Development’s erstwhile competitors.”
“Mark Petersen, who was regional acquisitions manager for homebuilder Lennar Corp. until early 2007, founded Sawbill Cos. last spring hoping to find bargains in the local residential market.”
“But Petersen said that distress hadn’t yet translated into significant price reductions, and he and his partners decided to close Sawbill early this year. ‘We looked at a lot of properties, but [sellers] were asking prices that didn’t seem realistic,’ Petersen said. ‘I just wasn’t willing to pay those prices.’”
“Historically, land prices are slow to adjust to depressed housing markets, according to Tom Musil, head of the real estate master’s degree program at the University of St. Thomas. Owners who are leveraged and strapped for cash will reduce prices if they need a sale, but longtime owners often try to maintain the price, believing that markets will return to peak prices, and that limits the potential size of the market.”
“Land buyers are also deprived of another benefit that helps other investors in a risky, transitional market, Musil said: Unlike other real estate investments, the cost of land can’t be depreciated, eliminating the small but reliable return other buyers enjoy.”
“By buying at the discount they achieved at Inspiration the company can offer attractive prices to builders, according to Gump, and that will be key to succeeding in a soft market. ‘What kills a community is when builders back away, properties sit unsold and values get depressed,’ he said.”
The Market Was Infected By A Herd Mentality
Sheephurting
Baaa! Baaaa! Moooo! Mooo!
And the lying shall lie to the lambs…
The Market Was Infected By A Herd Mentality
The Sheeple are now headed to the slaughter house!
The Market Was Infected By A Herd Mentality
They either herd they would be priced out forever or it was a great time to buy.
I told ewe that this would happen!
Life is like a box of bankruptcy…
“By buying at the discount they achieved at Inspiration the company can offer attractive prices to builders, according to Gump, and that will be key to succeeding in a soft market. ‘What kills a community is when builders back away, properties sit unsold and values get depressed,’ he said.”
Mama always said, ” Stupid is as Stupid does”
It’s hard to top Buzz Stanko:
I new a fellow named Richard Head years ago.
I seriously worked with a guy called “Dick Packer”
“And that’s all I can say about that.”
“Historically, land prices are slow to adjust to depressed housing markets, according to Tom Musil”
This is counter to what some on this blog have been saying and to what I’ve heard. Why would land not adjust more rapidly than houses? If houses are losing value, why wouldn’t land drop quicker since people would be more likely to buy a cheap house than buy raw land and build?
Tom Musil knows not of what he speaks. Plenty of data says otherwise, and so does common sense.
I see vacent lots depreciating much faster, it’s cheaper to buy a house than build your own. During the bubble, it was cheaper to buy land and build your own house.
“HUD was making some foreclosed homes available to local governments to buy for the measly sum of $1. The home had been purchased in April 2005 for $104,000 and was foreclosed on just less than a year later, according to records. The city may work with a nonprofit agency to renovate the home and sell it to a family who otherwise might not be able to buy a house.”
This is exactly what needs to happen, although perhaps not on the scale of a sale for a dollar. Don’t stop the foreclosures. Enable the preservation of viable housing and the subsequent resale at an affordable price. The best thing for the FBs who weren’t overly complicit in their own demise is a “do over” on their bubble era mistakes.
One possibility — a rent to own program. Investors rent a house to someone without a downpayment, and guarantee financing if within three years a downpayment can be saved over and above the steady payment of rent. Why didn’t Congress look to work with Fannie and Freddie on something like this, rather than making it easier to get jumbos in the hopes that housing will stay overpriced?
I could see a great opportunity for organizations like Habitat for Humanity, which renovates houses in some areas, or for organizations like Habitat. Perhaps some of these houses could be retooled for seniors so that they could live out their days at home instead of in institutions?
I see all sorts of possibilities here.
Oh man, that could make a great sitcom - a bunch of old tottering folks trying to make their way around a big McMansion…
Already done. Remember “Golden Girls?”
How about the suburbs? Access to good schools could radically increase if moderate income people were able to buy homes there.
Fighting the last war, all kinds of “affordable housing” programs are being rolled out in high-cost areas such as California, New York and Boston. Rather than build, they could just buy.
Affordable house programs are nonsense. We had one in south FL with houses priced between $164k and $300k. Only 50 were ever built. With prices today, you can find starter houses for around $200k.
“Access to good schools could radically increase if moderate income people were able to buy homes there.”
At which point they would like cease being “good schools” for any of several reasons. Not the least of which is that “good schools” are populated by, speaking in rough generalities, the children of parents willing to spend the tax money required to provide thorough education, who encourage the children to get the parent’s ‘money’s worth’ out of the school.
My spouse has taught Kaplan, Princeton Review and public school, and she’ll take the kids whose parents are materially paying for the privilege any day over those whose parents have only an attenuated ‘general revenue’ connection to their eduction costs, largely subsidized, and who view school first and foremost as ‘free’ day care with meals included.
Actually the NGO housing agency in my countyhas been talking about acquiring properties out of foreclosure and remarketing them to low and medium income households upon the usual conditions (income caps,must live in it, only sold to buyer meeting the same criteria…) We have a real problem here with workforce housing - tourism economy/incomes and 2nd home buyers. I’m on the board of the agency so all this is only preliminary discussion. Have a big regional conference on housing in about 4 weeks - should be interesting. Even the realtors are showing up to outline their market data - sales, listings, etc.
Well, at least the new problem might solve the old problem. The pols seem to have forgotten all about the old problem, because it wasn’t a problem for top executives and those “at or over 55″ when Bush said the words.
This sounds like a bailout. The mortgage gets transferred to FHA, the house goes to HUD in a foreclosure. The bank — who deluded the borrower and made the loan — makes off with taxpayer money.
While maybe these houses should be sold for a dollar, I don’t really want to shoulder the cost.
Agree. Insurance of all types and handouts to the poor just end up raising the prices of things. Making the poor not able to afford them!
When you put a high floor on prices… what do you expect - HIGH PRICES.
Exactly the reason nobody cares to build 1100 square foot houses and we have tons of 4500 square foot houses.
“The City Council agreed, voting unanimously Jan. 30 to buy the 76-year-old house at 946 Lincoln Ave for $1 plus closing costs. The 1,086-square-foot house has three bedrooms, 2 bathrooms, a basement and a one-car garage.”
There ya go……$1….their still not ‘given em away!
There ya go…
Yeah, but closing costs were $140k - read the fine print, man!
“But the weakening job market is likely to dampen 2008 sales.”
One of Chicago’s greatest strengths was its affordability. While still more affordable than SFO or NYC, it is not affordable (to buy) relative to its own past - and that’s all that matters unless one wants to take up position with Flyover Larry. If developers here think they will lure buyers from the coasts or Europe then developers in BUF or CLE are also right to think they can snag buyers from here.
Chicago is awash in condos. These condos are not priced at sustainable levels. Rents do not support these prices and the weakening job picture will finally expose this. Many accidental landlords will soon learn that they can’t carry a $300k condo with $1,000 rent and that there is no one left to flip to who can get a loan.
amen. I drive by a glut of condos each day. The prices are coming down slowly though, but $275k for a 2 br apartment (with granite and stainless steel) is a lot to ask imo.
Are they all high rise? Theres no cheap high rises here either. Im seeing some 2/2’s for $100k but low rise.
Not at all. Despite having a very large collection of high-rise buildings, the vast majority of Chicago is zoned for 3 floors or less. If you want to build something downtown, you better bring your checkbook and play all the games needed to get a building permit. This makes nothing but high-rise buildings economically feasible.
I’m with you, PT. $275K for a 2 bed is obscenely high. Think of the property taxes and condo fees on that sucker!
Chicago remains a great market for renters. Outrageous property taxes and a low, flat state income tax of 3% do not an owner’s town make.
BTW, Chicago continues to lose population. Down 12,000 more from 2006 to 2007. That makes a total of 92,000 escapees since 2000. It’s going to be tough to sell condos when people are fleeing.
I plan to be # 92,001 in 2008. I can’t tolerate Chicago’s political machinery, nepotism, payola and intellectual bigotry any longer. It’s worse here than in ‘Jersey.
It is unbelievable how much is going up downtown, we’re in for more than a few half built buildings, abandoned buildings, knocked down buildings over next few years.
If I ever remember to bring my camera to work, I’ll take a picture of the NAR building for everybody. It’s on Michigan Avenue and it has had a humongous “space for lease” sign on it for at least the last year. Must NOT be a good time to buy. (or lease)
I don’t think Chicago is all that affordable. Median household income here is no where near the $100K needed to purchase the $300K abodes so commonplace here. I haven’t seen a single family on sale for less than $350K, unless you’re in Austin or south of the Eisenhower (Englewood, etc).
I agree that Chicago isn’t that affordable. If you want a single family home on the north side, you’re paying at least $350,000 to $400,000. I can get the same bungalow in the nice area of Berwyn for $225,000 (in their bungalow belt.)
And $800,000 in Lincoln Square? Pulease.
The same thing is happening on the South Side. Pullman used to be pretty affordable. Five years ago you could get one of the historic rowhouses in the south part of the historic district (the most preserved portion) for aobut $90,000. Now they’re going for $190,000. Who is buying now?
I just saw two foreclosures come up this week for those rowhouses.
As for condos, there has been WAY too much development. But 20-somethings are still paying $335,000 for a two bedroom in Ukranian Village or thereabouts. Why? I don’t get it.
Most of the one bedrooms in downtown Chicago are over $275,000 (most over $300,000.) How many people make $100,000 to buy one of these 700 square foot units?
Chicago will see at least a 15% correction (probably more in some locations.) Downtown condos could see a bigger fall. There are simply too many of them.
Speaking of herd mentality, WTF is up with all these Bus Tours? If I’m looking for a foreclosure deal, I sure as he%& don’t want to spend several hours on a bus with people of the same mindset.
Mr. and Mrs. Used House Salesperson, back away from the Bus, use your digital camera, post pics on this internet thingee and save your rah-rah crap for a HS football game.
Bus rentals might get bubbly for a couple of years.
Step 1 - rent bus
Step 2 - lure sheep into bus
Step 3 - drive sheep around and work them into a frenzy using the madness of crowds
Step 4 - fleece sheep
The foreclosure bus tour meme seems to be spreading rapidly. One of the Tucson papers just ran an article about such a tour.
Around here we have limo driven winery tours.
How a bout the spring wine, chocolate and foreclosure festival?
Gad. What a poor facsimile of Shangrila. Must be miserable to live around there.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aK.SmXT4xRQw&refer=home
The amount Americans must spend each month on debt service, housing, medical care, food and energy rose to 66.9 percent of their total spending in December, the highest since record-keeping began in 1980, according to Bloomberg figures.
Yep those rebate checks are really going to turn things around.
Sounds like the Fed can legitimately claim victory in their War on Savers (and Savings).
Mission accomplished!
The American nightmare.
After blowing money on the unneccesary for years because “the American way of life is non-negotiable,” all the money is being paid just to get by. Insurance and taxes will be going up too.
Yes, if consumers bothered to take a closer look they’d realize the whole mess is now gamed to bleed them dry. Sales taxes, insurance, fuel costs, property taxes, transfer taxes, license fees, etc. all make up their golden handcuffs.
Although simplification is a quaint notion - the only way to beat this is to consume less - or at least make wiser allocations of the fruits of one’s labor.
Step 1: Make an iPod last three years.
I have never owned an iPod, but from what I have read Apple keeps updating their iTunes software to the point where older iPods are no longer functional.
Man, what a nice income stream scam. This almost beats the “pharmaceuticals as an income stream” racket.
Nah, I have a Gen 1 iPod that still plays fine. The battery doesn’t last very long, but replacement parts can easily be found…
And soon, there won’t be enough to pay “just to get by.”
End game…
Just watched a lesser-known Kurosawa flic the other night - “One Wonderful Sunday”. It was described as a “Kapra-esque comedy” but I thought it was pretty depressing. It’s about a poor ex-soldier and his girlfriend trying to find something to do on a Sunday in bleak post-war Japan. It’s his only day off, and they have no money. They mostly walk around trying not to spend anything. At one point one of them makes a comment about inflation, and I found it hard not to see this not as a picture of Japan’s past but MY FUTURE!
Not up to the standard of his more famous films, but worth seeing if you’re a fan. Esp. as a look at how the average Joe is going to be affected by a broken economy.
“Import prices in the year ending January 2008 are up 13.7%, which is the largest 12-month increase since the government started measuring those statistics in 1982.”
Hyperinflation has begun.
http://www.forbes.com/afxnewslimited/feeds/afx/2008/02/15/afx4660705.html
However, core inflation excluding food, energy, health care, insurance, health care and imports remains modest. In other words, if the economy gets worse and they don’t raise the minimum wage, domestic servants will remain affordable to those who have them.
We aren’t there yet. This is hyperinflation:
Zimbabwe inflation exceeds 66,000%
By Tony Hawkins in Harare
Consumer prices in Zimbabwe rose 240 percent in the month of December, taking year-on-year inflation to a new record of annual 66,212 per cent, up from less than 1100 percent a year earlier
http://www.ft.com/cms/s/0/cc641c6a-db20-11dc-9fdd-0000779fd2ac.html
“After several years of construction boom, the brakes hit the local home building industry in 2007. Builders in Greene County took out a little more than 1,000 single-family home building permits — down from nearly 2,000 in 2006. ‘Basically, we built too much,’ said Tom Wyrick, professor of economics at Missouri State University. ‘We’re now working the inventory off.’”
Is Greene County one of those `non-bubble’ areas in the midwest which Shiller referred to in recent comments?
Actually, don’t know much about Mo, but I think there was some bubble speculation/overbuild going on in the area due to Branson, which is near Greene co, and ‘estates’ on acreage in the Ozark Hills.
“The growing number of foreclosures flooding the housing market is sparking real estate agents to get creative. Following the lead of others across the country, Five Star Real Estate’s James Goetzka is renting a bus and signing people up for a ‘foreclosure tour,’ complete with snacks and drinks.”
Now serving short-sale frapacondos…
Why didn’t Congress look to work with Fannie and Freddie on something like this, rather than making it easier to get jumbos in the hopes that housing will stay overpriced?
Because,Because,Because they know where their contributions come from and they don’t want to irritate their source of funding.
From WZZM 13 in Michigan. “With all of the foreclosures on the market, people trying to sell their homes face some tough competition. Many foreclosed homes are for sale well below the market value.”
Welcome to the new market value!
Don’t know exactly where this house is, still I was chuckling and wondering if some of our Cali friends’ jaws were dropping over this one:
“Tony and Sue Hinojosa are enjoying their first home. Brand new contruction with three bedrooms and one and a half baths…and they paid only $87,000!”
Somewhere out in west michigan. That amount is about what I still owe on my Cali property and I am well above water. It looks nice, until I remember why I moved out here from there. Not much doin’ job-wise, and horrible weather winter and summer. Enjoy!
You can get a such house like that in Houston or even Dallas Texas.
Looking back, it was a mistake to invest in that submersible condo project, in Lake Michigan…
“‘Most analysts now agree that if Chicago had one construction market that would be considered in a bubble, it was the condo market,’ the report said. It used the word ‘dive’ to describe condo construction starts this year.”
bloob…bloob…bloob
I’m in a foreclosure courtroom right now. My client is trying to do a short sale. The newest bank tactic: short sales only if there is a personal deficiency against the seller. Which is stupid because the seller could just give the house to the bank in foreclosure and not owe a dime. Stupid bank thinking I guess. What else could you expect?
‘What else could you expect?’
I would expect a toaster, along with the stupidity and the foreclosure.
New bank offer:
For savings accounts over $25k, a condo. Over 50k, a SFH.
Their real estate agent, Buzz Stanko, said more and more homeowners are bringing their own money to close sales.”
All parts of this sentence are beautiful, especially the beauty of the name ‘Buzz Stanko’. It’s like a large and magnificent jewel set around with small diamonds, as if it were the brooch my grandma wears to funerals and sometimes the opera.
I’d hire the guy, and not even kill him although he’s a realtor and probably deserves it, just so I could holler that name into the phone whenever I wanted to. ‘Course, he’d get mad and quit when he noticed my giggles.
It’s almost as good as the impressive name owned by that prez. of the local realtors guy, somewhere in Florida, I forget where…
‘Dick Gaylord’.
Yeah, a fiction writer should be taking note of all these good names for some kind of novel. But then, the editor would say, “Too contrived sounding.”
Speaking of funny names, I was doing some cold-calling for my business yesterday. One of the daily “No, thank yous” came from a Dr. Pepper.
“Get me Stanko!”
We should keep a running tally of all of these names, updated and posted every week.
I loved Ao. They must have had to do a short sale on consonants.
Btw the 11 foreclosure call is PACKED. I had to wait 15 minutes for a seat to open up. Its sort of sort watching all these deadbeats lose their home. In an unusual twist, the judge is asking each homedebtor ‘why did you fall behind?’. The excuses are all over the place. Oh, the old man just moved the old lady in the wheelchair up to the bench. Of course, they’re losing the property because their tenants stoped paying rent. These people are like 85 years old. The lady in the wheelchair can barely speak. How the hell did she get a mortgage??? I wish all of you could be here to see this. It would really open up your eyes to the trenches of the foreclosure housing bubble. Its a joke. These bankers were giving out free money to people who could never be expect to pay it back.
What city/state are you in?
Chicago, Cook County, Illinois
The foreclosure call is on the 28th floor. I usually sit and surf my blackberry until my case is called. today I decided to make a post from the front lines.
Legal Eagle, talk about being on the front lines! Keep reporting, it’s fascinating. Thanks.
And Slim says “Thank you!” as well.
legal eagle,
great post, please do more.
Just insane! The saying goes on that anyone with a pulse got a mortgage.
Remember the bankers were giving away money that belonged to the investors. They were high on OPiuM. So why care for anything?
I grew up in St. Clair county, back when it was worth living in, and was talking with a good friend from High School two days ago, whom I had not caught up with for a good while (even though he lives in DFW).
He gave me the update on friends and family back in Michigan, and it sounds like everyone there is living with economic fear. I don’t recall hearing a mood like this since the ‘77 - ‘83 era. Everyone is aware how bad real estate is, but they seem even more concerned about losing jobs and pensions. Call it the three headed economic monster. Nobody is going to buy much real estate, no matter how cheap, if they don’t have the income.
‘We hesitated buying it (five years ago), but we did because we didn’t know if we’d find anything as nice,’ Debbie said.”
“The couple have had five appointments to show the house in the past two years, and the home that once was appraised at nearly $150,000 is now on the market for $129,000 and poised for another price drop. They paid $132,000 for the home.”
How is this so dire? They have made mortgage payments for 5 years. Selling for $129k or $120k for that matter shouldn’t hurt that much. A house is something to live in, not a lottery ticket.
How much do they owe on that house? They had better sell soon or they will be forced to walk away
The full article doesn’t really say WHY they want (or need) to sell. Do you suppose the property tax increases are making them nervous?
Y’all just missed a good case. The homedebtor told the court that her husband bought the house in the name of her 17 year old son. She then said that she wants a short sale (they all say that) but they have to wait until the son turns 18 next month so he can be of legal age to execute the docs. Of course none of her story makes any sense and she fails to present a copy of the short sale K to the judge. The judge looks a little confused. So he did the only thing he can do - he entered judgment against the defendant. Or her son. Against somebody. About 4 months from today this property will become another REO. Again, I wish the Hbbers could see these courtrooms. In cook county we have 10 busy courtrooms dedicated to foreclosures. Its insane. I strongly encourage you to go to your local courthouse and visit a foreclosure call. It is shocking, absolutely shocking how bad the foreclosure epidemic has become. Billions of dollars of wealth just squandered away. How depressing.
Cook County ? Are Elwood and Jake anywhere around ?
There were about 50 cases on the 11 am call today in one courtroom. There are 10 foreclosure courtrooms. Each courtroom has at least 2 or possibly more calls day. Long story short, there were a hell of a lot of cases. The clerk always announces the property address when the case is called. Most of the foreclosures are in ‘questionable’ areas (as my secretary likes to call them). I’d say 90% of the cases called are on the south and westsides of the county. Very few cases called in the more affluent north and northwest areas of Cook County. Its amazing because the banks are going to own blocks upon blocks of houses in crime and poverty ridden areas in the minority areas of this county. These houses will rot before they’ll be able to sell them again. Some of these houses are in the worst of the worst neighborhoods, places you and I couldn’t go without being shot. The fallout from this epidemic will be enormous and will likely rattle our country to its core for least a generation.
“The fallout from this epidemic will be enormous and will likely rattle our country to its core for at least a generation.”
A quote: “If you think education is expensive you should consider ignorance.”
This lesson is going to be very expensive. I just don’t want to be stuck paying the tuition.
When I lived in Oak Park back in the 90’s I read a Tribune article about how the biggest slumlord in Chicago was a University. The urban decay of the 70’s and 80’s turned these older multi-flat properties in the south and west into worthless liabilities, so people simply willed these things to the University. Don’t remember which University it was.
Now it appears that the biggest slumlords of Chicago are going to be the lenders, and the biggest winner may be the university when they unloaded these things on the sheeple.
Wait until the fallout of what you’re reporting reaches Urkel’s county budget!
“Billions of dollars of wealth just squandered away. How depressing.”
Soon to be “Trillions of dollars of wealth just squandered away” which will become VERY depressing.
“Billions of dollars of wealth just squandered away. How depressing.”
Illusionary wealth. So good riddance.
Divorce Court, Chicago STYLE, was entertaining enough. You have to bring plenty of cash to the table to get out of that game ALIVE too
“Recent homebuilder association shows sold out its booths in record times. ‘Let me say, in 2005 and 2006 we were celebrating. Now it is the opposite of the coin,’ Wyrick said.”
Lol. I think he is saying that there are two sides to every coin and that he is suddenly seeing the other side turn up in the great coin-toss game.
Yeah, being on your tails is not such a good thing.
“Suburban empty-nesters who had planned to move downtown have decided to sit tight for now.”
I’ve always referred to the (wrongly) projected influx of empty nesters and retirees to the new, shiny downtown Minneapolis high-rise condos as the new wave of ‘hip-sters’.
‘Hip-sters’ in terms of eventually needing a hip replacement.
I’d like to know where the suburban empty-nesters who want to move back to central cities really are. I was under the understanding that once people moved away from cities and into the suburbs, they tended to stay put.
Under these circumstances they would be foolish to trade soil, any amount of soil, for a cube of air and HOA fees.
From an appraised value of $99,000, to just one Dollar.
Randolph Duke: Pay up, Mortimer. I’ve won the bet.
Mortimer Duke: Here, one Dollar.
“In Zeeland, city officials did likewise, with the City Council voting Feb. 1 to buy a HUD-foreclosed home at 40 N. Jefferson Ave. for $1. The two-bedroom, one-bathroom, 966-square-foot house is on 0.12 acre and is listed at $61,200, with an appraised value of $99,000, according to HUD.”
““It’s ‘a good time to buy a home … just not good enough’ in the eyes of a lot of potential home buyers, said Seiders.””
In other words, it’s a bad time to buy a house!
Ah, Michigan, to be serviced by such a realtor!
One can only imagine the joy of working up a sweat with Buzz Stanko, on a summer’s eve, when he hotly suggests, “Just drop your ask, baby…”.
And the winner of this year`s farting contest is…Buzz Stanko !!!
The Times Herald from Michigan. “For two years, a ‘For Sale’ sign has hung in front of Debbie and Steve McCartney’s home in Port Huron. For much of that time, the house has been advertised ‘REDUCED.’”
“‘We hesitated buying it (five years ago), but we did because we didn’t know if we’d find anything as nice,’ Debbie said.”
“The couple have had five appointments to show the house in the past two years, and the home that once was appraised at nearly $150,000 is now on the market for $129,000 and poised for another price drop. They paid $132,000 for the home.”
“The McCartneys’ story has become all too common. Their real estate agent, Buzz Stanko, said more and more homeowners are bringing their own money to close sales.”
“The McCartneys are on their third real estate agent, and Stanko won’t distort the reality: They likely will drop their asking price below $120,000 before they attract a buyer.”
I’m DUMBFOUNDED! How hard is it to price a house “to sell?” Just find the lowest price a house sold for in the immediate area, and price yours 5-10% below that. At least that way, you have half a chance of getting a couple of competing bids.
They sat for TWO YEARS without seriously adjusting the price? What idiots! What did they expect to happen?