A Sign Of Buyer Sentiment
The Denver Post reports from Colorado. “Despite a concerted effort to reduce the tide of people losing their homes, foreclosures in Colorado shot up 40 percent in 2007 compared to 2006, according to a count from the Colorado Division of Housing. Public trustees in Colorado reported 39,915 foreclosures last year, including 10,955 in the fourth quarter. That is 11,400 more than the record set in 2006.”
“The report also found that a smaller percentage of homeowners were able to avoid a forced auction of their property once they entered foreclosure. There were 25,320 foreclosure sales last year, compared to 17,451 in 2006.”
The Coloradoan. “The proliferation of new home construction along the Front Range is a leading cause of the larger numbers motive behind larger numbers compared to counties outside of the Front Range.”
“‘Foreclosures are being partially driven by a very high inventory of newly-built homes,’ said Kathi Williams, co-chair of the Colorado Foreclosure Task Force and director of the Colorado Division of Housing, in a statement. ‘In many cases, in the Denver area, someone who can’t make his payments simply can’t sell his house fast enough to avoid that final foreclosure sale.’”
The Greeley Tribune from Colorado. “Banks and lenders filed foreclosures on 2,877 homes in Weld County in 2007, according to a Colorado Division of Housing report. Foreclosure filings increased in Weld by 38 percent, just under the statewide increase of 40 percent from 2006 to 2007.”
“‘I was expecting about a 30 percent increase, so it is very disheartening to see it up 40 percent,’ said Williams.”
The Daily Planet from Colorado. “Telluride real-estate sales racked up a record year in 2007, but the new year has opened on a darker note. This January, the dollar volume for all real-estate sales fell nearly 40 percent from last year, according to new data from Telluride Consulting.”
“Brokers say…it’s hard to dispute the conclusions of the new data: For Telluride real estate, last month was the worst January in four years — longer still, if you account for inflation.”
“Matthew Hintermeister, president of the Telluride Association of Realtors, said that a nationwide panic over sub-prime mortgages, lending crises and an overall housing and economic slump may have finally come home to roost in Telluride.”
“‘I think it’s more of a sign of buyer sentiment,’ he said. ‘Buyers are coming from all over the country, and in their home markets, the media pounds away at them that real-estate is a terrible investment, and that it’s not a time to buy. Buyers are coming to town, and they have this mindset that the world might be ending,’ he said.’”
“Even if the market in Telluride slows, we’re not likely to see the fire sales, cratering prices and parade of for-sale signs that have plagued some parts of the country. Telluride isn’t overbuilt like, say, Phoenix, and most sellers here would rather sit on their hands and wait for the market to pick up, rather than sell at a desperate discount.”
The Arizona Republic. “New-home building and sales dropped again in January, but it’s not likely metropolitan Phoenix’s housing market has hit bottom yet.”
“Single-family permits fell to 1,370 in January, according to RL Brown’s Phoenix Housing Market Letter. That’s the lowest monthly level since 1992. New-home closings fell to 1,848 last month, their lowest level since October 1995.”
“The median price of a new metro Phoenix home last month was $231,771, compared with $274,995 a year ago. The market hit a high in December 2005, when the median price of a new house climbed to almost $300,000.”
The Arizona Daily Star. “One of the largest new housing developments slated to be built in Marana has been put on hold after a falling-out between the project’s partners. Saguaro Springs is in limbo after KB Home and The Empire Cos. parted ways late last fall.”
“But officials with Marana say Saguaro Springs was stopped because Empire is attempting to exit the Arizona market, likely because of the housing slump, and the company is in the process of finding a buyer for its share of the project.”
“‘Empire is shutting down statewide,’ Marana Town Manager Mike Reuwsaat said. ‘Empire’s been shopping that project for several months.’”
“In the meantime, several hundred acres on the north side of Twin Peaks Road have been bladed, streets have been paved, utilities have been installed and three model homes are complete — though currently they are surrounded by a chain-link fence.”
“Reuwsaat said he is working with KB to negotiate how to keep the neighborhood maintained during the hiatus, the hope being that aspects such as landscaping would still be tended to. Doing so would keep the area from becoming ‘vandalized and torn up,’ Reuwsaat said.”
The Las Vegas Sun from Nevada. “In a sign the Las Vegas housing market continues to deteriorate, foreclosures in January surpassed the sales of new and existing homes for the first time during the downturn. SalesTraq reported that 2,177 homes were repossessed in January, surpassing the 1,962 sales in the new and existing home markets.”
“Sales usually outnumber foreclosures by a large margin, but that changed in January as foreclosures more than doubled from December’s 988. The previous high for a single month was 1,560, in November.”
“The median price of existing homes sold in January was $247,000, a drop of nearly 15 percent in the past 13 months. The median price was $289,500 in February 2007.”
“The median price of new homes and condos was $268,000 in January, a drop of $4,500 from December. Prices have fallen 25 percent since the new home market set a record of $355,435 in April 2006.”
“The MLS contained 23,803 available houses in January, SalesTraq reported.”
The Review Journal from Nevada. “Housing analyst Dennis Smith said residential land prices have peaked and even receded from historical highs, especially now that home builders are selling off excess lot inventory and cutting back on new home permits.”
“‘The big public builders are writing down their land holdings and they can do that,’ Smith said. ‘Right now banks are having a difficult time establishing land values. That means the appraisers are, too.’”
“Smith said he knows of one large builder that bought 3,500-square-foot finished lots from Engle Homes — whose parent company, Tousa Inc., filed for bankruptcy — for $55,000 each.”
“Last summer, Smith had a small builder client who had finished lots appraised at $130,000 in the same area, near Sam Boyd Stadium, and was trying to sell them.”
“‘I said at that time builders might give $100,000,’ he said. ‘It doesn’t matter what the appraisal is. It’s a piece of paper. I know what builders are willing to pay. Now you’ve got $55,000 lots. You’ve got distressed sales. That may be too strong. You’ve got discounted sales.’”
“Smith said part of the next phase of our housing cycle will be banks writing down their lots.”
“‘You have builders that are losing or giving the lots to the bank for nonpayment,’ Smith said. ‘What are they going to do with them? The banks want to move these lots. Who’ll buy them? Investors. The real issue is trying to establish what values are on these lots.’”
The Las Vegas Business Press from Nevada. “The economic picture isn’t pretty. Many observers seem convinced that a recession is imminent if it’s not already here.”
“Developer George Gekakis is building the 238-unit, $30 million Sonoma Palms affordable senior apartments during the worst housing downturn in Las Vegas history, at a time when a glut of rental homes has cannibalized apartment dwellers and pushed apartment vacancy rates to 8 percent.”
“‘That’s what’s hurting multifamily,’ he said. ‘They can get a home with a $3,000 mortgage and they can rent it for $1,000, maybe $1,200. ‘All you can do is stay lean and don’t own a lot of property. But it’s going to change. In three years, we’re going to have 100,000 jobs.’”
“‘If it wasn’t for big projects on the Strip, I’d be hurting,’ said Larry Monkarsh, owner of LM Construction. ‘I think the industrial market has been kept alive by the gaming sector because home builders don’t take that much industrial space.’”
“Economic pressure forced some companies out of business and others to pare operations to bare bones. Nearly 8,000 construction workers were laid off in Nevada, mostly from the residential sector.”
“Monkarsh said he’s constantly ’shopping’ for the best deals on materials and equipment. He’s also taking another look at all aspects of the company to see where he might save money.”
“‘For example, in order to save on varying interest rates, we’ve begun to restructure and consolidate our debt on vehicles and equipment,’ he said. ‘We’ve also gone back to our employees and requested to restructure their compensation packages.’”
“Southern Nevada’s economy is performing a ‘high-wire balancing act’ between a strong push of big investment spending along the Strip and the drag of falling residential construction and real estate sales, a UNLV economist said.”
“A 16.3 percent decline in November’s gaming revenue contributed to the downward trend. ‘Still, the six-month forecast remains flat, (with) no clear sign of an overall recession in the data, despite the veil of pessimism coming from the media,’ economist Keith Schwer said.”
“A separate index measuring Clark County business activity declined 1.7 percent from the previous month and 3 percent from a year ago. It’s the largest monthly decline in the past year, Schwer said.”
“The construction industry has lost roughly 4 percent of its work force, and conditions are not as strong as suggested, he said. ‘Looking ahead, jobs for completed projects may not be as easily taken up by the same number of jobs for new projects,’ Schwer said.”
Las Vegas Now from Nevada. “More than 600 people came to Cashman Center looking for help to avoid a foreclosure. Nevada leads the nation in foreclosures, with an average of 44 homes a day being foreclosed in Clark County.”
“‘I will be out on the street on the 27th of this month,’ said Edward Kasilag, who is facing foreclosure. Kasilag says he had such good credit, a realtor talked him into buying three homes last year and using the realtor’s lender.”
“‘Basically what he told me is after the close of escrow, you can get a home equity line of credit.’ The scheme would have Kasilag getting a line of credit on each home to pay the mortgages and then eventually sell for a profit but the bottom dropped out of the housing market leaving him in a financial hole.”
“Kasilag has since lost his job. The counselors at the foreclosure workshop said they could do little to help him.”
The Salt Lake Tribune from Utah. “Two new reports out Wednesday show that demand for new homes along the Wasatch Front has plummeted, leaving the area with a glut of unsold houses. Builders along the Wasatch Front took out permits for the construction of 242 homes in January, the lowest level since 1990, a report by Construction Monitor shows.”
“January’s total is down 74 percent from 937 in January 2007, said the service. In Salt Lake County in the fourth quarter, there were a record 1,037 completed-yet-unoccupied houses and condominiums, up from 340 units in the fourth quarter 2006, Newreach said.”
“Even with the drop in new-home construction, though, Newreach is estimating that it will take 10 months to sell the county’s inventory of new, unoccupied homes - even if no new homes were constructed during that time period.”
“At the Daybreak residential development in South Jordan, all but one builder - Richmond American - has agreed to participate in a Smart Buy program, designed to create interest among prospective buyers.”
“The program, which debuted in January and runs through April, offers buyers a price guarantee. If anytime between signing their contract to a buy a home and closing the base price on the model goes down, the buyer will be refunded the difference at closing.”
The Deseret Morning News from Utah. “‘There is a huge amount of vacant new home inventory,’ said Jason Eldredge, executive VP at Newreach. ‘The sky isn’t falling, but there are areas that are in trouble.’”
“Some of the hardest hit areas are in the southern part of the Salt Lake Valley, according to the Newreach report.”
“South Jordan had the largest number of unsold new single-family homes in Salt Lake County in the fourth quarter 2007 with 157 units. Herriman ranked second at 121 units, followed by Riverton in third at 110 units. Draper, with 106 unsold units, and West Jordan, with 78 units, rounded out the top five.”
“Eldredge said one of the major factors impacting the level of unsold new housing is affordability.”
“‘A lot of these homes are 4,000 square feet and are $450,000 and above, and yet there are still a few builders who are bringing them to market,’ he said. ‘The lack of affordable new product has forced potential buyers into the existing home market, attached housing units and rental properties.’”
“Eldredge said the best chance to see significant price reductions on new homes could be in the higher-priced inventory above $500,000 or $600,000. ‘Builders will essentially have to decide how long they can carry the cost of their unsold inventory before it becomes too much of a financial burden,’ he said.”
“The rising levels of unsold new housing inventory have also hit neighboring counties. Utah County had 987 unsold new homes and condominiums sitting on the market in the fourth quarter of 2007, a 256 percent hike from the fourth quarter of the previous year. As of Dec. 31, 2007, there were 2,105 homes and condominiums under construction in Utah County, representing an eight-month supply.”
“Zions Bank economist Jeff Thredgold said builders sitting on unsold inventory typically have more incentive to move their properties. He also said the market will likely produce more price flexibility in new homes than in existing homes, which will help clear the market.”
“‘If you can get good financing, it is a good time to be a home buyer,’ he said. ‘You can be aggressive in trying to get a better value. It’s certainly become more of buyer’s market than a seller’s market.’”
From KUTV.com in Utah. “It almost sounds too good to be true. With the nation’s housing market in the dumps, some people are living in expensive homes, for just a fraction of a monthly mortgage payment; and its happening right here in Utah.”
“Autumn Marler plays with her three children while her husband is away from home, working two jobs. The Marlers live in a beautiful 4,000 square-foot home in Kaysville. The home is owned by a family who now lives in Massachusetts. It’s for sale for $349,000.”
“The Marlers are just ‘tending’ it. ‘I’m paying an awesome amount of rent to live here,’ says Autumn, ‘550-bucks a month. I’m getting a huge discount. That discount for me is income for my family that’s tax free and I don’t have to pay for childcare.’”
“Cathy Cardenas is the founder of Designer Hometending, a company out of Boise, Idaho that works with home owners to help sell vacant homes faster. Designer Home Tending has contracts with about 14 homes throughout the salt lake area up to 1.5 million dollars.”
“‘Usually you can get about 550 to 650 million dollar home. So, wanna move in?’ laughs Cathy.”
“But, of course, there is a catch. As wonderful as the situation might seem, as a hometender, you always have to be prepared to pack up and move out. ‘They’re given about 10 days to move out from the day they get an offer,’ says Cathy.”
“Autumn and her husband had to go through the emotional stress of losing their own home in South Jordan. Now, they can take pride in someone else’s. ‘My husband lost his job recently and we lost our home for a foreclosure,’ says Autumn. ‘He loves the fact that he doesn’t feel like a failure because we’re still living in a nice home.’”
“Even if the market in Telluride slows, we’re not likely to see the fire sales, cratering prices and parade of for-sale signs that have plagued some parts of the country.”
Having grown up near Tellyride and having seen it go bust before, my response is, wanna bet???
Same for Colorado. I remember in the 1980s bust when you could get a nice, 1-br condo apartment in Durango for $35k.
ummm, Tellyride IS in Colorado - well, actually, maybe not, it’s a different world in many ways…LOL!!
The mountain towns have virtually NO way to earn a living. That makes them totally dependent on the fickle trends of the uber rich from out of state. There is no way Aspen, Vail or Telluride could support their current prices without a constant influx of super rich outsiders. The locals either quadruple up in a small apartment or suffer horrendous drives from Leadville, Eagle and other “trailer friendly” areas. There are loads of mobile homes in them thar hills.
Yes, and there’s gold and silver in them thar hills, which is how most of these towns got their start - Tellyride, Aspen, and many Colorado resort towns (not Vail, it was a master-planned fiasco from the start). Who knows, if the price of PMs goes high enough, these towns might convert back. But the miners couldn’t afford the houses unless prices went down by a factor of about 2,000. But stranger things have happened. And BTW, most of these towns are in geological hazard zones - Tellyride has had historic avalanches and mudslides that nearly wiped the town out. And now there are big monster houses on these very same slopes.
I was in Crested Butte about 1.5 years ago - housing lots were all priced at $200K plus. The local realtor was insisting that the lull in the market was just temporary and the lots would start to sell once ski season approached.
Now, when I look on the MLS - the housing lots are prices at $100K+ and the realtor has closed his website.
LIU
I was up in Park City this January, and every time I’ve been there I’m amazed by the building (eg Sky condos on Main St., Silver Star just south of town, not to mention all the building done way away from town like Bear Hollow, Kimball Jct., Jeremy Ranch).
Considering all the other resort areas like Telluride, there can’t be enough second-home buyers willing to buy so-so properties for a half-mil, can there?
I bet PC is pretty dead certain times of the year.
I go to Vail about every year, nut this though, ski buddies got too many problems. But they have a house shortage in vail village. I don`t know what it is, but man the condo prices are insane. We pay $1000 per night for almost a ski in-ski out in V.V. right in the middle near red lion bar. I love the place but lift tickets $90 bucks drinks 4-6 bucks food sky high, parking for rental $20, I get back every year and I`m wow, they reemed my a$$ out. Still love it though.
Lane
I just don’t understand how the Colorado market can have such problems. All of the realtor speak stated that one year ago we could not be in a bubble because there had been no huge appreciation in the last 6 years. They also said that foreclosures were a lagging indicator. NAR said that prices were going to rise slowly here. At least we know now that Telluride is something special and that it is different there. I guess that also applies to Aspen, Vail, Breckenridge, etc. Same for Washington Park, Hilltop, Highlands, etc., in Denver. I am so glad that the law of gravity does not apply to these areas. Woe to those in Adams County, Weld County, Arvada, South Denver etc., where for some reason gravity applies.
A couple of things worth noting; another record for CO defaults is huge because 2006 was so high, and it accelerated quite a bit in the 4th quarter. Also, they have dropped the stuff about how many more houses there are now, downplaying the ‘record.’ It’s an all time bust beater now in Colorado.
Now where are those no-bubble in CO posters?
I had an interesting email with a realtor from Nashville. According to her, TN is now No.2 in the nation for foreclosures. Logically, this makes zero sense if you compare their RE prices to other places. There’s still an awful lot of homes in major metros there for 100k or even less. But she also mentioned that business has slowed drastically for her.
FWIW, most people associate the term “bubble” with sky high price increases for some commodity, whether it be tulip bulbs, precious metals or houses.
Sub-primes helped fuel a different kind of bubble in Colorado. True, most communities have did not experience the sort of hyper appreciation that was experienced in places like California, Florida and LV. Instead we had people making $9/hr buying 150K houses in places like Greeley using toxic, liar loans. We’ve heard the stories of Strawberry pickers buying 700K houses in California, but the truth is those people can’t even afford a 150K house.
Here in Larimer county with all the HP and other high tech layoffs it became very hard to sell 300K+ houses starting around 2001. So what did builders do? Most built cheap houses for the sub prime crowd, especially in growth “firendly” communities like Greeley and Johnstown, and others built huge mansions on multi-acre lots. Unfortunately “if you build them they will come” did not pan out for the high end builders.
We had a co-worker here who relocated to the Bay area, and had to sell his Ft. Collins house. It was a smaller unit, and he needed about 220K to payoff his mortgage. It took many months for him to sell. Had he owned a 300K+ Mc Mansion he would have been SOL.
In,
After all these years of struggling to understand WHY Colorado is different you finally made it graphic for me. Thanks!
Like I’ve said before, people who think we didn’t have hyper appreciation in Colorado apparently can’t remember anything before 2001. Subprime/125% loans just let us hang onto the gains for a few more years while everyone else got in on the party, too.
That’s true the CO inflation was from ‘94 to 2000.
True, but even then it was a bargain compared to San Diego.
It’s all so confusing - why can’t a nation of poor sods stuck working $10 an hour semi-full-time jobs with no benefits afford costly houses? It’s almost as if housing prices should somehow be tied to incomes… strange… we need a government study of this oddity!
I have been showing this to my friends in Salt Lake who think that the prices in their town are realistic and that there was no local RE bubble where they live.
http://www.andrerealestate.com/community_info.html
Sorry, wrong site, here is the right one:
http://saltlakecity.craigslist.org/rfs/543707562.html
“Autumn Marler plays with her three children while her husband is away from home, working two jobs. The Marlers live in a beautiful 4,000 square-foot home in Kaysville. The home is owned by a family who now lives in Massachusetts. It’s for sale for $349,000.”
“The Marlers are just ‘tending’ it. ‘I’m paying an awesome amount of rent to live here,’ says Autumn, ‘550-bucks a month. I’m getting a huge discount. That discount for me is income for my family that’s tax free and I don’t have to pay for childcare.’”
First the $550/month is well done! But why the two jobs for the hubby? Is there a bit of old debt being worked off?
The debt exhaustion we’re seeing is going to be the economic killer. Everywhere you turn its one individual or company after another who is at or near their borrowing limit. The rainy day fund is ‘credit cards.’ Funny… Its drizzling outside. What the heck are they going to do on a true rainy day? I guess we’ll find out.
Got Popcorn?
Neil
Okay, I haven’t posted for a couple of weeks, but this comment by Neil is worth echoing from the rooftops.
Debt exhaustation or Peak Debt, as I like to call it, is going to bust this economy wide open. I know that Buffet and others have said that there is money available out there. Sure, if a bank wants to enter the numbers into a computer. However, if you went in and asked for 25K in 100 dollah bills, well, that is a different monster all the way around. Despite all his cash already on hand, I would like to see Buffet cash out all his holdings and then ask for 20’s. Good luck with that.
And therein lies the great economic dilemma of our times. There is just not enough cash on hand to cover all the outstanding debt in the country, let alone the entitlement tidal waves, which of course could always be pushed around anyway.
And despite the argument that most of the economy is on paper or on a computer screen, you are forgetting that trust and faith keep the ball rolling. Just look at the Port Authority bonds auction. WOWZER! 20% interest. Good luck with that! Tolls will double to cover that puppy.
You see, even without having the cash on hand, once people realize that the system is broke, literally and figuritvely, then it is byebye whatever, i.e. Northern Rock, Goobermint bonds, or J6P trying to squeeze one last grande mocha latte from the CC.
Couple that with the ARM resets in the next 3-4 years, see Credit Suisse and others, and this is going to be one heckuva ride.
Got canned food (and no debt) and cash?
While the “loss of faith/financial armaggeddon” scenario is remotely possible, I think Neil’s point is that not only is the debt fueled expansion at an end, but psychology is now moving to saving/debt reduction. Wile E. Coyote has gone off the cliff and is looking down.
Project Mayhem?????
The first rule in Project Mayhem is that you do not ask questions.
“Buffet and others have said that there is money available out there”
True, but what Buffet and pals aren’t looking at is the amount of leverage. The leverage is being whittled away and soon debt to liquidity be visible on their radar screen. Maybe then they will have an epiphany of great magnitude.
OCDan-
Nice to hear from you. The two job need might be debt, or it could be under employment (common these days), or salary deflation that needs to be made up. Three kids to feed and raise isn’t cheap. Even EE’s are taking a salary hit. Debt (self inflicted) or cost of living (inflation), its expensive to live, let alone thrive right now.
OCDan - miss your posts, still have the one about getting under the gubmint radar archived, it was great.
“First the $550/month is well done! But why the two jobs for the hubby? Is there a bit of old debt being worked off? ”
Did you see the furniture in their new RENTAL? One of the largest creditors in Utah is RCWilley Home Furnishings. I’d bet that they owe a good chunk to them. I’d hate to have that burden though. If I remember correctly, the APR on the letter telling me they reaised my credit limit, was 21%. I buy stuff there on their 12mo no interest plans, put the money in an account that makes me money, make the min payments and pay off at 11mo 29 days. I know several people, however, that buy stuff and end up paying for it for 5 years or so.
Since the ‘Oracle of Omaha’ was cited earlier in this thread, I would point out that RC Willey is owned by Berkshire Hathaway. Furniture stores are getting killed in this downturn, so Buffet has to be feeling some pain.
These guys are really being taken advantage of. They are basically house sitting. House sitters used to get paid or at least didn’t have to pay anything. An apartment manager does what these guys are required to do but
1. Gets Paid
2. Gets more security for longevity of stay
3. Doesn’t have to buy a bunch of expensive furniture
4. Often has staff to do gardening
This company is convincing the homeowner to let them use their house as a rental for free and the company gets the dough.
The young couple has to pay rent and maintain the place and can get kicked out at a moments notice.
Just change one factor, make this a 1 bedroom dive. OK, I get to PAY RENT, MAINTAIN THE PLACE, CAN GET KICKED OUT AT ANY TIME, MUST KEEP EVERTHING IMMACULATE AT ALL TIMES, MUST SUBMIT TO NAZI INSPECTIONS AT ALL HOURS.
So I get to live in a McMansion? It’s a really bad deal for the homeowner and ESPECIALLY for the young couple.
I worked as a muti-property manager for several years.
This is the “best” scam I have ever seen. This company is the kind of fungus that grows in the dark damp housing market in places like Utah, Las Vegas etc.
RE: Everywhere you turn its one individual or company after another who is at or near their borrowing limit.
The $10/20k ATM REFI/HELOC machine ran great guns under Clinton.
All gone now, Billary.
And under George W. Bush. All gone now, smarmy preppie.
“The $10/20k ATM REFI/HELOC machine ran great guns under Clinton. All gone now, Billary.”
Actually, if Hillary! loses out to Obabma, the November election will be the first one since 1980 without a Bush or Clinton on the ticket.
The King is dead. Long live…I mean just dead.
And that lack of either of our Ruling Families (Bush/Clinton) would be a real blessing!
I thought it was Hitlary.
Honest!
I think we are begining of large scale deflation. Its going to get pretty ugly. I keep hearing about the oil/commodities bubble.
Expect it to be quite short lived as more and more people conserve resources and cash. So there should be a shockingly large correction as job losses mount.
If you remember the M0 numbers were flat (no increase in dollars) and M3 was going up. I expect that M0 is slightly negative and M3 is also begining to follow. There needs to be increasing velocity of money for the debt cycle to perpetuate and that doesn’t seem to be happening. MEW and new loans have been decelerating for alomst a year.
Price declines across the board. Then layoffs as buisnesses fail and wages drop.
I’m thinking debt collapses faster than wages so overall we will probably see a net benifit in 2011-2012.
“The Marlers are just ‘tending’ it. ‘I’m paying an awesome amount of rent to live here,’ says Autumn, ‘550-bucks a month. I’m getting a huge discount. That discount for me is income for my family that’s tax free and I don’t have to pay for childcare.’”
—–
The PTB are not going to like the fact that J6P is remembering the old phrase “a penny saved is a penny earned”. Widespread frugality would bode very poorly for our “consumer economy”. And to be honest, a penny not spent is worth about 2 cents earned due to taxes.
Ummm, I need an acronym lesson. What does PTB stand for?
The men behind the curtains, the Powers That Be.
Unless you pronounce it pah-tah-bah it’s an abbreviation, not an acronym. P(owers) T(hat) B(e).
Thank you, Rob and Tux!
Uh - I think you need to check the dictionary for what acronym and abbreviation mean. PTB is an acronym, not an abbreviation.
“etc.” is an abbreviation.
(sorry to be anal)
PTB is not a word, therefore not an acronym. Hence tuxedo’s little joke about pa-ta-bah.
Perhaps the HBB should create an LOA (list of acronyms).
Totally, and it needs a big “So, you just now figured out there’s a housing bubble” section with lots and lots of long, slow, 3rd-grade-reading-level articles explaining this nightmare to get people like me up to speed. And then the whole site needs restructuring so as to enable topic searching and browsing. I think the HBB needs an DUI (dedicated unpaid intern). I’d volunteer, but I’m off to my second job, now.
“We’ve also gone back to our employees and requested to restructure their compensation packages.”
I suspect that since the company is in Las Vegas the employees aren’t covered by a collective bargaining agreement. What’s this “we requested?” Restructuring of compensation — does that mean a pay raise? Who’s the we: the Queen of England?
The quote from the article is euphemistic BS-talk for “I cut my employees’ pay.” There’s going to be a lot of this in all sorts of small businesses throughout the USA.
Just more jargon. Kind of like “facing a challenging environment” is an acceptable way to say “we’re f_____d.”
Cutting pay? Who’s cutting pay? They must not have gotten the memo - wages are supposed to be rising so everything will be hunky dory for housing.
Well, I am sure the executives are getting pay raises while the workers are flogged, but that’s the way the game works.
Same idea with the “challenging environment” - it doesn’t mean “we’re hosed” but that “YOU are hosed.”
“‘Basically what he told me is after the close of escrow, you can get a home equity line of credit.’ The scheme would have Kasilag getting a line of credit on each home to pay the mortgages and then eventually sell for a profit but the bottom dropped out of the housing market leaving him in a financial hole.”
Victim! Quick, let’s use our tax dollars to bail him out.
Three houses and no job. And using home-equity loans to float them after he buys…LAST YEAR!
Well, in fairness to Eddie it DID say “has since lost his job”. Poor schmuck. So let’s see, that’s 3 buy commissions on… 200k (?) homes so a 36k check to the broker (18K after paying “the vig”) and kickbacks on 3 sham loans…?
All in a days work for the upstanding REIC members in LV!
(And they’re fighting regulatory scrutiny tooth and nail)
In the comments to the Telluride article, a post was made about kickback deals.
“Victim!”
Well agreed. But here’s the bad news for the REIC, at some point even Harry Reid will wake up and realize that until we get these cons on a leash these types of bail-outs will never cease.
As Ben rightly points out, this occured sometime in 2007 and obviously the guy is ALREADY in trouble! Sounds like a “cash back” scam to me as the REIC pigs continue to feed on the un/under-educated workforce of Sin City.
I understand the NV leg. has recently passed a law banning “no-doc” loans so hopefully this won’t be an issue going forward but they always seem to find a way to work around it?
“‘I will be out on the street on the 27th of this month,’ said Edward Kasilag, who is facing foreclosure. Kasilag says he had such good credit, a realtor talked him into buying three homes last year and using the realtor’s lender.”
A re@altor “talked him into buying three homes”?
If this idiot is that easily “talked into” things, perhaps we could talk him into walking out into the middle of LV rush-hour traffic. Victim, my a$$.
– Judge Smales
“You’ll get nothing and like it”
still,
That’s why I kept reading ahead to see what the guy did for a living? Now they did mention he had or should I say “had” good credit. If he was pushing a broom, well then I can understand, but otherwise…?
I DO think it says something about a person to live in Vegas and still have good credit/morals. (I know several really decent folks there) This is why he was probably ear-marked as the “Last Greatest Fool” by the realtwhore.
“‘Basically what he told me is after the close of escrow, you can get a home equity line of credit.’”
Oh my. The salesman told Eddie one thing, and yet another thing actually happened! The whole problem, I betcha, is that Suzanne never got a chance to research it.
tsk tsk
And I will double that tsk tsk
“A 16.3 percent decline in November’s gaming revenue…”
There’s the confirmation I’ve been looking for. It correlates with the anecdotal evidence. I’d bet the January number was down even more, except I don’t want to contribute anything to the gaming revenue.
TV ad last evening: Call this number and get a free three vacation at (don’t remember the hotel on the strip).
This am on the radio: call (number) as you are ENTITLED to have your CC debt lowered 50% to 60%. Your CC companies don’t tell you this.
Last evening on TV: ads for vacationing in NYC; ads to visit in FL.
Phone calls all week: car dealer, bring your car in for a service special; mortgage companies; cruise lines with promotions, I told him I don’t cruise and then he hollered to someone in the background, it must be his wife; newspapers with subscription specials. The list gets bigger daily.
Aren’t you on the ‘do not call’ registry?
“A 16.3 percent decline in November’s gaming revenue …”
And they’re still constructing giganic casinos …
“‘That’s what’s hurting multifamily,’ he said. ‘They can get a home with a $3,000 mortgage and they can rent it for $1,000, maybe $1,200. ‘All you can do is stay lean and don’t own a lot of property. But it’s going to change. In three years, we’re going to have 100,000 jobs.’”
Las Vegas only having 100,000 jobs! This guy is even more bearish than I am. Looks like gambling is really, really slowing down.:)
Good Lord. That is SO funny! Foreclosures OUT NUMBERING sales in Las Vegas! God that is funny! 44 a day? They’d better watch it or it might become a trend.
Hmmm.. Is that infinite inventory?
Michael,
The Gift That Keeps On Giving!
It’s just a blessing they’re being honest about it. Since the REIC has ruled the media w/ an iron fist over the last decade it’s refreshing to finally see everyone’s “hand”.
I’m actually being strangely drawn into wanting to get a house there.
Prices are falling, nay, disintegrating, there like I wish they would here in the B.A. There’s a very nice house listed for $470K in Oct that’s down to $400K now. Everything is zillowing for $30-50K over their realtor.com prices.
I’m looking to work out of my home so all I need is a Whole Foods, Costco, Target . . . W Vegas has that and a lot more like Roy’s, Melting Pot, and Sedona.
With no income tax the tax situation is pretty good there. One downside is no Prop 13, so after 30 years I might be paying $1000+ mo in property tax. Plus also the sketchy water supply situation.
“Last summer, Smith had a small builder client who had finished lots appraised at $130,000 in the same area, near Sam Boyd Stadium, and was trying to sell them.”
This area is a spanish-speaking ghetto. Does the builder throw in bars on the windows?
We sold and are living in a spanish-speaking ghetto (month to month rental).Why are illegals nocturnal?
I’ll bite: why?
I love a good riddle.
They’re nocturnal because it’s easier to avoid detection after dark.
Had a 4,000 sq ft McMansion and sold a couple of years ago, while we could still find a sucker. Thought we would be changing states, so a month to month apt.(with our belongings in storage) made sense. Then we got caught in the real estate down drift, so we decided to wait the market out in California. So here we in Mexiland. We are paying cash for our next home. Leasing a nice place now doesn’t make sense.
“Developer George Gekakis is building the 238-unit, $30 million Sonoma Palms affordable senior apartments during the worst housing downturn in Las Vegas history, at a time when a glut of rental homes has cannibalized apartment dwellers and pushed apartment vacancy rates to 8 percent.”
Hmmm. This is starting to smell like an opportunity one, two, or three years down the road. When apartment vacancy rates hit about 15%, I might go shopping. Las Vegas is not going out of business, but some apartment owners might be.
“This is starting to smell like an opportunity one, two, or three years down the road”
Happening in all of the big bubble areas…crazy *ahem* investors buying apartments at 3% cap rates, losing money every month but looking for rent increases and appreciation to eventually bail them out. There’s just too much housing inventory vs. demand in a lot of places, even in places where they are “not making any more land”. Maybe Prof Bear can remind us what the vacancy rate is on SFHs listed for sale?
Too much housing, too few people…
“Autumn and her husband had to go through the emotional stress of losing their own home in South Jordan. Now, they can take pride in someone else’s. ‘My husband lost his job recently and we lost our home for a foreclosure,’ says Autumn. ‘He loves the fact that he doesn’t feel like a failure because we’re still living in a nice home.’”
If they can be told to move within 10 days, what kind of security is that? Its a feel good situation that offers nothing in the long run. I feel for the job loss. Many Americans at no fault of their own, are in the same boat. Even with 6 months of savings to fall back on, good positions are far and few between. Salary deflation, and/or under employment is a bitter pill. Its not looking too promising out there for the recently unemployed crowd.
RE: good positions are far and few between…
Per Fortune Mag’s “Top 100 Companies to Work For”
39,000 applicants for 50 positions at THE CONTAINER STORE’s HQ
in Coppell, TX.
hd74man-
That’s telling. 39,000 applicants for 50 positions! What a feast for the employer, cheap, educated, experienced slaves.
(And no I am not a liberal, just a recovered neocon.)
Soon to be repeated all over the country.
Massive unemployment, coming soon to a broken nation near us all. Of course, the “official” numbers will be tweaked until unemployment is at worst stable if not “magiced away” until we have 100% employment, or some such nonsense.
His solution to not having to move is to persuade a prospective buyer not to buy. There are all sorts of creative methods he could employ.
With an active imagination and a little luck he could be living there for years.
Aww, what are you implying, something like maybe?..Beetlejuice, Beetlejuice…
“Eldredge said the best chance to see significant price reductions on new homes could be in the higher-priced inventory above $500,000 or $600,000. ‘Builders will essentially have to decide how long they can carry the cost of their unsold inventory before it becomes too much of a financial burden,’ he said.”
That is the price range where my SIL and ex-hubby purchased a brand new home last August. Now that they are divorced, they have to sell. The real estate sh!t storm is pounding both sides of my family.
RE: Now that they are divorced, they have to sell.
TOAST…eom.
I have a question.
If the people who “bought” the house can’t afford the payments, and foreclosure sales bring the price down, why don’t the banks just reduce the loan amount?
Yes, I know they are willingly losing money, but they’re going to anyway.
But why go through all the hassle of foreclosure, eviction, auction, marketing and sale when the end result is essentially the same?
Would a wise move by the bank be to try to figure out their total loss on a property and then find out the “owner’s” maximum ability to pay and offer to negotiate?
I’m no expert, but I would imagine that would encourage many, many more borrowers try to get the same deal which would only exacerbate the problem.
Also, there must be tax advantages lenders would lose.
Nail on the head - the same is true for any retail transaction. Often they would be *willing* to give you a certain deal if they knew that you’d keep it quiet and no one would know about it. But if you tell others about it they’ll demand the same deal, and the retailer won’t make the profit they otherwise would (or in this case would lose more money than they otherwise would).
Same thing for things like phone service - the phone company really could afford to give you a much lower price than they do, vs. losing your business to a different phone company. However they’re willing to lose your business because they don’t want to give that same low price to *all* their customers.
figure out their total loss
figure out their potential loss
See the new OTS proposal to do just that. The problem is the lender has to recognize a loss on the forgiveness. If the lender forecloses they can postpone the loss with a phony appraisal. Also, there may be PMI which would have to be foregone if the lender foregives any of the debt.
If the loan is on the books of an FDIC insured institution the loan will have PMI if it was greater than 80% of the purchase price. Say the loan was 100% and was for $400k. Assume the property is now worth $300k. If the lender forecloses it gets $80k from the PMI company so with $10k in foreclosure expense the book value is $330k. It would be no problem for a lender to get that appraised value if the property is worth $300k. So with foreclosure there’s no recognized loss.
Thanks, Tux!
From Telluride: “I think it’s more of a sign of buyer sentiment,” he said. “Buyers are coming from all over the country, and in their home markets, the media pounds away at them that real-estate is a terrible investment, and that it’s not a time to buy. Buyers are coming to town, and they have this mindset that the world might be ending.”
Maybe Mr. Realtor or maybe it’s because the banks are no longer offering Option ARM loans with 5% down. I have a friend that lives in Eagle Co which is near Vail. All over the Vail valley, people have bought up properties and are renting to the locals at prices way below a traditional mortgage. The same is true for ski condos. The reason they can rent so cheaply is that many of the properties are under Option ARMs. The people whom own the properties are hoping for rapid appreciation to overcome the negative amortization. Now, that the banks are requiring 20% and a conventional mortgage for second homes, I expect resort property to significantly decline in price and ownership level.
“‘I will be out on the street on the 27th of this month,’ said Edward Kasilag, who is facing foreclosure. Kasilag says he had such good credit, a realtor talked him into buying three homes last year and using the realtor’s lender.”
“‘Basically what he told me is after the close of escrow, you can get a home equity line of credit.’ The scheme would have Kasilag getting a line of credit on each home to pay the mortgages and then eventually sell for a profit but the bottom dropped out of the housing market leaving him in a financial hole.”
“Kasilag has since lost his job. The counselors at the foreclosure workshop said they could do little to help him.”
Can people really be this fookin’ stupid?
Very obviously, Mr. Kasilag should have spent his spare time determining via the TV media whether or not Britney Spears had her panties on or off for the day.
get a crowbar and a claw hammer and tear that thing up. sell it all and pay off your mortgage. if your lucky you will have a small living space, a basement, a roof, no mortgage, appeal your taxes and whalla..a place to live. anyone…copper wiring: how much that going for?
Long-time lurker, first-time poster.
I’ve been following the bubble for over three years, and the graph from the Las Vegas Sun article is among the scariest bits of data I’ve seen yet.
Sweet Jebus - foreclosed homes are being supplied at a rate 11% higher than the entire demand for homes! When a sh*t sandwich gets this large, I fear that everyone will be forced to take a bite.
Remember, the more bread you have the less (you know what) you have to eat….
Geesh, what restraint, what took you so long?
“Smith said he knows of one large builder that bought 3,500-square-foot finished lots from Engle Homes — whose parent company, Tousa Inc., filed for bankruptcy — for $55,000 each.”
They aren’t building anymore finished desert, anymore.
And sadly enough, the desert ecosystem is very very fragile, it doesn’t recover easily from human nonsense.
3500 square foot lot? You mean like 50 x 70? A single wide mobile home would cover the lot!
In Colorado Springs I figure well over 1/2 the homes are 300k and up with many well over 500000. These are nice homes 3000-6000 sqft with good views. However local wages don’t support these prices no matter how good a value it is. My forcast is pain and lots of it.
As for Breckenridge I have on good authority prices will continue upwards forever. I get this imformation from someone who owns a condo there. Incidently they also recently bought a condo in Florida as an investment.
Feb. 21 (Bloomberg) — The U.S. Treasury is “interested” in a proposal to help homeowners facing foreclosure by refinancing their mortgages on homes that have fallen in value, a department spokeswoman said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aLYeeJerD2R0&refer=home
Welcome to United Socialist America
A quick looksie on Realtor.com shows 1500 houses for sale in the 200-300K range, and 1000 in the 300-500K range.
That’s a lot of expensive houses. And as you said who makes that kind of money in Springs? The tech employment base is but a shadow of its former self. I know that pay is better these days in the military, but how many people at the Academy can afford a 400K house?
A military housing allowance can go a long way. Plus, there are a few tech companies that pay very well…six-figure well. In a two-income family, you’d have more than enough for a $400k home, particularly if you had anything to put down.
“Buyers are coming to town, and they have this mindset that the world might be ending,’ he said.’”
It’s not just buyers who are feeling that. Mere renters feel the same.
Actually the world, as we knew it, already ended.
No Snacks!
Higher taxes are the only real answer - LV Review Journal
No matter where you look, the state’s infrastructure needs are crippling local and state governments. And that doesn’t even include education, health care or social services, which all continue to be ranked so low that Nevada can keep its derisive label as the Mississippi of the West.
http://www.lvrj.com/opinion/15833957.html
Tax Revolts are just around the corner…
It’s a repeat of the early 1930’s