There’s Blood On The Desert
The Rocky Mountain News reports from Colorado. “New home construction in the Denver area last year fell to its lowest level in 16 years, as builders cranked down on construction because of a sluggish and overbuilt market. Permits for single-family homes dropped 34 percent to 10,986 in 2007, down from 16,263 in 2006, the Home Builders Association of Metro Denver said. A record 20,420 permits were pulled in 2005.”
“Denver-based MDC Holdings, in a recent SEC document, said it cut its work force in half at the end of 2007, from its peak two years ago. And MDC, parent of Richmond American Homes, sold and closed only 818 homes in Colorado last year, a 44 percent drop from the 1,463 it sold in Colorado in 2006.”
“‘It is tough out there,’ said Roger Reinhardt, executive VP of the Home Builders Association of Metro Denver. ‘It wouldn’t surprise me if we’ve lost 10,000 jobs, or even beyond that,’ from peak employment, he said.”
“Economist Patty Silverstein said that an estimate of 10,000 lost jobs seems too high, but she said no good data exists that tracks the home-construction market. She said a drop in home construction spreads to related businesses ranging from furniture to granite countertop and tile and carpet companies.”
“‘There’s going to be some short-term pain. But on a macro level, this is exactly what needs to happen. We need to whittle down the unsold inventory to help stabilize prices for existing homeowners,’ Silverstein said.”
The Gazette from Colorado. “Colorado Springs’ upscale housing market remains fit, even as it’s gotten fat. A slowdown in sales has swelled the inventory of $1 million-and-up homes on the market to a more than four-year supply, according to one estimate.”
“The Re/Max Properties report showed a roughly 55-month supply of $1-million-and-up homes for sale in the Pikes Peak region. A year earlier, the figure was about 30 months.”
“The report also shows a nearly 34-month supply of homes priced from $750,000 to $999,000, and a 17.4-month inventory of $500,000 to $749,000 homes.”
“Many people from California or other areas with more expensive housing move to the Springs and find they have enough equity in their old homes to afford an upscale property here, said Stuart Scott of Stuart Scott Ltd., who compiled figures from the Pikes Peak Association of Realtors.”
“‘People who are buying these houses are not satisfied with buying the less desirable house,’ Scott said. ‘They buy the best house and when they buy the best house, they pay the top price.’”
“‘We still see a lot of money out there,’ said Dirk Gosda, California-based Sunrise Co.’s Colorado president. ‘The high end, we still see people buying homes in California. They see it as better than stocks and bonds.’”
The Albuquerque Tribune from New Mexico. “Home sales in Albuquerque declined almost 20 percent in 2007, to 10,671. But the Realtor association says that might be a result of market stabilization - 2005 and 2006 saw housing booms that simply could not continue, realtors say.”
“‘We saw years of 16 percent growth, and those were nice years, but that’s hard to sustain,’ said Janice McCrary, the association’s CEO.”
“Michael Sivage, an Albuquerque builder and developer, said building permits are down more than 50 percent from the boom of 2005, but still more than double than in 1990, the low point of the last housing market recession.”
“The MFA report shows the median home price in Albuquerque - at which half the homes cost more and half cost less - was $200,000 last year. That means a family of four needs to earn $62,345 a year to afford the house. But the median household income in the city last year was $55,900.”
“‘And if the incomes are only moderately increasing - 2 or 3 percent - and home prices are increasing at 10 percent, then that gap continues to spread,’ Sivage said.”
“‘Are there buyers that are a little skittish? Yes,’ said Cathy M. Olson of Prudential Sandia Real Estate, who prepared the realtors association report. But that’s due more to to ‘media campaigns that the sky is falling.’”
“Erin Quinn, the MFA’s senior policy and program adviser, said the rewards of homeownership remain.”
“If a home’s value rises 7.5 percent a year, she said, ‘that’s better than a lot of stock. And this isn’t just an investment. This is the place you are coming home to at night and making memories and having birthday parties.’”
The Arizona Republic. “Suzanne Lostaunau can still laugh about her Scottsdale Ranch home being unsold after nearly 10 months on the market. And that’s after cutting the price by a hefty 9 percent.”
“But she is eager to sell and recently got some high-profile help. Donna and Shannon Freeman, the mother-daughter hosts of the HGTV cable series Secrets That Sell, came to central Scottsdale to film a segment on Lostaunau’s 2,500-square-foot home.”
“The Lostaunaus’ inability to sell is not unusual in a Scottsdale housing market that saw sales fall 20 percent in 2007 from the previous year. The Valley has more than 46,000 resale homes on the market, with 7,770 in the Scottsdale area, according to a recent report.”
“Last April, the Lostaunaus listed their home for sale at $660,000. They have had about 30 showings since then. A few potential buyers were interested. But no one has closed a deal.”
“So what’s the problem? ‘For one, I don’t have a pool,’ Suzanne said. ‘After that, I don’t know. The price is reasonable, and Realtors all love it.’”
“It may be four months before the Lostaunaus home is featured on Secrets That Sell. Suzanne said she is looking forward to her TV debut. ‘The truth is I probably wouldn’t have done it if I wasn’t so desperate to sell my house,’ she said.”
“Nearly forgotten in this struggle to sell the Scottsdale Ranch home is the appreciation on the property. The Lostaunaus bought their home for $290,000 in June 2002.”
The Christian Science Monitor on Arizona. “The state of Arizona and all its cities and towns are confronting huge revenue shortages this year, mainly because sales-tax revenues are far below projected levels. In fact, Arizona has the dubious distinction – along with California, Nevada, and Florida – of leading the country in the current economic slide.”
“‘Those four states are where the housing bubble was the biggest, where investors and speculators had a significant presence,’ says Marshall Vest, an economist at the University of Arizona’s Eller College of Management in Tucson. ‘Those states saw a higher use of subprime mortgages. These are the states that have been in recession for several months already.’”
“Consumers in Arizona, Dr. Vest says, lived beyond their means for the past seven years. It was easy for them to tap the equity in their houses and to get very low interest rates on credit cards.”
“So when the housing bubble burst, housing prices declined, along with the equity homeowners enjoyed, and banks began to tighten up on credit. That meant people had much less money to spend.”
“‘In addition to that, we had 6 percent employment growth just two years ago. Today it is essentially zero,’ Vest says. Arizona’s economy peaked in August and has been shrinking ever since, he says. It’s been in recession, he adds, since the third quarter of 2007.”
The East Valley Tribune from Arizona. “Queen Creek’s plan to cut $5 million from its budget due to a slow housing market will hit several town departments. The ‘potential budget gap’ comes from a lower-than-projected number of new-home permits - from about 500 originally anticipated to less than 275 permits now expected this fiscal year.”
“At the height of Queen Creek’s building boom, fees from more than 1,200 new-home permits would hit the town’s coffers in a year, Assistant Town Manager Patrick Flynn said.”
“Queen Creek has the highest per capita municipal debt in Arizona…$7,671 for every resident.”
“‘To bring infrastructure to the community is expensive stuff - that’s just the way it is,’ Flynn said. ‘It’s impossible to do those larger projects without going into debt.’”
“And as Queen Creek expects less revenue due to a slow housing market, the town will take on $40 million more debt this year with the purchase of Queen Creek Water Co.”
“‘We’re down to (new-home construction) permit levels that are just about a break-even to cover the debt,’ Flynn said. ‘We build up reserves and other backstops to help with that. But we’re in an anomaly. People will still be coming to Arizona, and before you know it we’ll be back on the growth train.’”
“About two-thirds of Gilbert’s debt goes toward major street, water and wastewater infrastructure projects, town spokesman Greg Svelund said. ‘Which of those things do you want to get rid of?’ he said.”
The Review Journal from Nevada. “All but five of 61 ZIP codes in the Las Vegas Valley showed depreciating home values in 2007. The biggest drop came in ZIP code 89169, where median home prices slipped 24 percent from $275,000 in the second half of 2006 to $210,000 in the second half of 2007, housing analyst Larry Murphy of Las Vegas-based SalesTraq reported.”
“Also hit hard were ZIP codes 89146, down 22 percent to $222,450, and 89085, down 20 percent to $336,150.”
“Overall, the median price of an existing home in Las Vegas decreased 4.3 percent to $275,907 based on 23,956 sales in 2007, according to SalesTraq. For December, the price is down 11.2 percent from a year ago at $253,000.”
“Tony Silva of TRG The Realty Group said: ‘For me, it’s no shock of what’s happening. I told everybody and nobody would believe it. Prices are still going down. Look at the figures. The figures don’t lie. It’s going to come back, but people have to realize they’re not going to get the prices they want for their house. Prices are going to be back where they were before this surge started in ‘04.’”
“Declining home prices bring an upside. Francisco Jimenez was able to buy two condominiums for $105,000 and $111,000, well below the $185,000 median, at separate foreclosure auctions held in December.”
“He picked up a third condo at a Feb. 10 auction, paying $140,000 for a 1,200-square-foot unit with attached garage that previously sold for $243,000.”
“‘This is like the stock market. Buy low and sell high,’ Jimenez said. ‘There is opportunity for lower-income people to buy, if they can’t afford $250,000 for a home but they have a job and good credit. It’s a good opportunity for anyone who has the money. I would buy another 10 if I had the money.’”
The Las Vegas Business Press. “Home buyers looking to purchase units at Sky Las Vegas, One Queensridge Place and Panorama Towers won’t be running to BankUnited for a mortgage. The Florida-based bank has named those projects and others in a blacklist of 191 luxury condominiums across the country for which it will no longer write loans.”
“Declining market value, high investor concentration and structural-based litigation are reasons for being blacklisted, the company said.”
“BankUnited also looked at delinquent homeowners’ association dues, rising foreclosures and its own exposure in the over-saturated condo market.”
“‘The projects blacklisted in Las Vegas are all great projects,’ said Sam Cherry, developer of Newport Lofts and SoHo Lofts, which are named in the blacklist. ‘It’s easy for a bank that puts out so many nonperforming loans to say they’re not going to do it anymore.’”
“Almost 70 luxury high-rise projects were planned in Southern Nevada last year, totaling 45,616 units, reports Restrepo Consulting Group, a local real estate research firm. However, only 10 of those projects have broken ground; and, 27.5 percent have been suspended or canceled.”
“Yet, luxury condos are still hot sellers that command big bucks, Restrepo reports. Almost 90 luxury condos were sold in 2007 with a median price of $502 a square foot. It marks a 4.9 percent increase over the previous year.”
“In Nevada, licensed real estate agents are seemingly as numerous as video poker machines. But unlike slots, most Realtors aren’t making very much money.”
“‘Not making money? There’s blood on the desert,’ said Bill Ochs, owner of Nevada Mortgage.”
“‘This slowdown in the housing industry is deeper and more long-lasting than most had predicted,’ said Jeanette Cobb of Windmill Realty. ‘Things are so bad, I’ve been told half the real estate agents have deserted the industry. Some 6,000 of them moved on.’”
“Nevada Real Estate Division records indicate otherwise. But state sources say they expect many will not renew their licenses when their two-year anniversary date arrives.”
“Such a scenario has already occurred among the ranks of state-licensed mortgage agents. According to the Nevada Mortgage Lending Division records, 6,722 mortgage agents have active state licenses, but more than three times as many — 27,170 — have licenses that are closed or inactive.”
“‘In the home building industry, we do have our own real estate sales agents, and our industry has laid off thousands in recent months,’ said Monica Caruso, spokeswoman for the Southern Nevada Home Builders Association.”
“Margaret Westcamp, a Las Vegas Realtor, said she’s stopped mentioning her profession to shuttle drivers when she returns home from business trips and vacations.”
“‘I swear, it seems every time I mention to the driver that I’m a Realtor, out would come the loan officer business card,’ Westcamp said. ‘They’re not servicing loans. They’re driving vans and limos.’”
“The Southern Nevada Home Builders Association’s Caruso said many people have forgotten that the housing market is coming down from the biggest and most unprecedented boom in sales and price appreciation in the nation’s history.”
“‘Anyone old enough to remember gas lines, ’stagflation,’ the savings and loan crisis and the mini-recession of 1991 knows these things come in cycles,’ Caruso said. ‘We are simply coming down from a boom that never could have been sustained.’”
‘We saw years of 16 percent growth, and those were nice years, but that’s hard to sustain,’ said Janice McCrary, the association’s CEO.’
‘Michael Sivage, an Albuquerque builder and developer, said building permits are down more than 50 percent from the boom of 2005′
‘Permits for single-family homes dropped 34 percent to 10,986 in 2007, down from 16,263 in 2006, the Home Builders Association of Metro Denver said. A record 20,420 permits were pulled in 2005.’
‘Denver-based MDC Holdings, in a recent SEC document, said it cut its work force in half at the end of 2007, from its peak two years ago. And MDC, parent of Richmond American Homes, sold and closed only 818 homes in Colorado last year, a 44 percent drop from the 1,463 it sold in Colorado in 2006.’
Records and booms in 2005, in New Mexico and Colorado. Hmm, anyone still want to say these states weren’t in on the housing bubble of that time?
‘Against the backdrop of an ailing housing market, the Reno-Sparks area’s rental market has begun coughing, too. A report by CB Richard Ellis Inc., in Reno shows rental vacancy rates in the multi-housing sector across the region surpassed 6 percent in 2007, the first time that’s happened in seven years. ‘We’ve lost a lot of residential construction jobs. When these jobs are lost, (workers) generally will leave town,’ said Len Ramos, CB Richard Ellis first vice president for the multi-housing group. ‘That causes vacancies because they generally live in apartments.’
‘Add in a flood of unsold homes and condominiums and many of their owners putting them up for rent, and it further swells the market’s inventory, Ramos said.’
‘At the same time, rent rates aren’t rising as much as recent years, he said, reducing property owners’ operating income and crimping values that in turn have slowed rental property sales. Kim Grist, co-owner of Reno Rental Finders, said she’s seeing more homeowners-turned-renters caused by foreclosures and other reasons.’
‘But their choices for renting are better, Grist said, adding, ‘The market is widening. Each tenant has a choice, now. It’s like going to the clothing store. You have more choices.’
And I think I mentioned seeing more reports like this:
‘While the recorder’s office lists David Jones as the owner, the leasing company says it actually belongs to someone else. Two different names on the same address. So Eyewitness News went to the listed address and found another gated home and this Carolyn Pierce.’
‘I don’t want to sound confused about it, but I’m kind of confused about everything right now,’ she said. Pierce told us her husband was a partner with David Jones in an home owner investment group. They would buy houses and rent them. But then the market tanked and the investments failed.’
‘Basically, any rent money goes right back into the mortgage, but it was never enough to cover the mortgage,’ she said. That $1,200 a month rent only covered half the mortgage. Carolyn and her husband were hemorrhaging money with one house already defaulted and their mansion about to go into foreclosure as well.’
‘Pierce told us her husband was a partner with David Jones in an home owner investment group. They would buy houses and rent them. But then the market tanked and the investments failed.’
You know, if the government doesn’t stop it, a massive housing bust could do a lot to make the distribution of income more equal. Those who had nothing will be able to get homes for cheap. Those with wealth in financial assets will get a haircut. Those with wealth in residential investment properties will get their heads cut off.
I said “if.”
There is no “if”. The gov can’t stop it.
The bubble never really hit New Mexico hard. When we moved here in 2006, houses were selling like hotcakes. As, the investors were buying them like candy. (Am I making you hungry?) Californians were coming in by the droves and paying cash for them, too.
A house would go on MLS in the a.m., and would be sold by noon. However, unlike other bubblelicious places, the prices were low and there weren’t bidding wars.
There were (and still are) many nice houses in the 150K to 200K range. The investors are selling them, as the houses didn’t get the rapid appreciation that they did in other states.
We are all happy to see the investors’ properties being sold and homeowners moving in. Still many Californians moving in.
A house went up for sale last month in my tract for $210 and it sold in just a few days. Escrow has closed and the new owners have moved in.
We live in the N/W ABQ - Rio Rancho area.
New Mexico never had crazy, outrageous prices like many other areas did. For 225K, you can buy a gorgeous home in a nice area.
For 150 - 180K you can get a smaller nice home in a nice area.
But what do you do for work ?
Fidelity Investments is opening (open?) in New Mexico…not sure where though.
Given the median income in New Mexico, anything higher than $100k is a crazy price.
I gave up on my home state over ten years ago, and even in this bubble-building boom (I’m a civil engineer) I still couldn’t find a job in ABQ that paid more than my first job in the po-dunk deep south over a decade ago. A common thread on this bolg regarding this bubble. “If the income don’t pay the bill, you’re listening to a real estate shill.”
New Mexico. Just like old Mexico, but with granite and stainless steel.
Ok, sure. Why not. Too bad there’ll be zero appreciation for the next ten years. With that in mind, why buy?
Santa Fe prices won’t drop because they’re less than California? ROTFLMAO
“We are all happy to see the investors’ properties being sold and homeowners moving in.”
Infamous bubble-boy, Casey Serin, once “owned” an speculative investment property in your neighborhood.
6021 Guadalajara Drive, Rio Rancho, NM, 87144
The Serin buy high price = $497,000 (Feb 2006)
Rio Rancho is a pit.
When I lived in NM, it was called “Rio Rathole.”
Har har! We *still* call it that! A foul nest of californication. What a godawful shite-hole. Impossible to get into or get out of during rush hour, and few jobs locally besides Intel, which is laying off thousands. A cancerous blot on the ass of New Mexico. Feh!
Yeah, I live just a few blocks from Casey’s forclosure! I saw the legal notice many months ago. Rio Rancho is a shite-hole, a godawful piece of californication in a beautiful but poor state. It’s sickening. Impossible to commute to or out of, and no jobs locally except Intel, which is currently laying off thousands. Seattle Renter, were you cursed by living here or did you just know the area via its infamy?
For 225K, you can buy a gorgeous home in a nice area.
Where? Nowhere east of the river. And west is no place anyone would want to be.
“Colorado Springs’ upscale housing market remains fit, even as it’s gotten fat. A slowdown in sales has swelled the inventory of $1 million-and-up homes on the market to a more than four-year supply, according to one estimate.”
Cognitive disconnect: ‘Fit market’ and ‘four-year supply’
Hogs get fat, just before slaughter time.
Wonder how much of that $300K appreciation the Scottsdale bimbo hopes to steal from someone has been heloced and spent already.
i thought the same thing-
she is entitled to all that $$ for sitting on her fat ass
-btw- this is my first post since last week. i had the flu
i would not wish this on my worst enemy. this flu going around in ny area is an ass kicker
Welcome back, glad you’re better. My bro (Colorado) had the flu recently and thought he was dying, was ready to call an ambulance. He said it was the worst he’s ever felt.
Was visiting a neighbor last eve. She was in the ER on Sunday for what she called food poisoning.
Could have been the GI flu, for all we know. She was still pretty woozy yesterday.
I just finished 2nd bout - it’s the strangest flu ever. No fever or cold-like symptoms, but Fri. night I thought I was dying. for a couple of days before I thought I had food poisoning, sciatica, kidney infection, intestinal blockage and other odd assorted diseases. Others I know have had the weeks of coughing, losing voice and sinus infections. I think I would rather just be really sick once for a few days then have this thing linger about morphing day by day.
Are they crazy - me too - this is my second bout of ‘the lurgy’ since the beginning of Jan!
Was convinced when it was starting that I was brewing a kidney infection, then my sinuses exploded and I’ve not been able to breathe through my nose, nor taste anything, in over a month.
Fortunately, I was able to take to my bed for the first couple of days of both bouts, but I can believe that many people could be forgiven for thinking they might be dying.
I haven’t felt so grim (for both times) since I got stomach ‘flu as a teenager and had to be given an intravenious drip.
Get well soon, y’all
mgnyc –
Do you get a flu shot? I have done so in all but two years since 1996, and those two years were the ones when I succumbed to the annual epidemic.
I’ve been sick on and off since mid November. Throw a bout of measles into that too. Just now starting to feel human again.
None. I checked Maricopa County Recorder. They owed $199K in 2003 and no filing since.
then if I were a potential buyer, she wouldn’t like my offers. She has a lot of fat that can be cut off.
I’ve never been to Colorado Springs but is there any industry there or near there that can support more than a handful of people that can afford a $1 million home???
Churches.
LOL!! Ted Haggard and the prosperity gang. Throw Oral Roberts U. in there - under a major senate investigation.
I lived in CoSpgs for 9 years (’93-’02). There were a lot of tech jobs when I was there. MCI (WorldCom), HP, Agilent, Compaq, Digital, Cray, Oracle, Kaman Sciences, defense contracts out the wazoo with NORAD and Space Command (Falcon AFB, not Shriever AFB).
Other jobs too, like USAF Academy, Fort Carson army base, Peterson AFB, US Olympic Training Center..
It really did have a good employement base… Then the tech wreck. Then the war in Iraq.
Grew up there. The county (El Paso) has 6 military bases, including a major Air Force command HQ. Enough contractors to build another major command. The only problem with the place is the rampant Californication (strip malls and McMansions) that has been going for for about 20 years. That and all the uber-right wing ‘churches’ based here. You can actually buy bumper stickers there that say “Focus on your own damn Family”.
Freshman
Americans are ‘financially illiterate’ - survey
RE: Financial literacy…
I had a few college educated acquaintences who didn’t know what a government bond issue was…
“So…how are you going to vote on the $400 million bond referendum?”
“Oh-I’m for it…”
“Guess you like to financially burden your kids, huh?”
“What?”
The I explained a bond was essentially an IOU which was a debt against future tax revenue
They were horrified-not only at their ignorance, but at what they now understood about the issurance, which was a float to pay current expenses because of a huge general fund revenue drop.
Not a clue.
Just tell ‘em that bond is just shorthand for bondage. As in, your children will be in bondage for the profligacy of your actions.
..not to mention that the elected officials in the area floating the debt get a nice big payoff too!
college educated has become an oxymoron in many cased (see Wall St. MBAs)…
..and don’t even get me started on the stupid advanced degrees that people are now extorted into getting to get some fairly basic jobs…a buddy’s wife had to get a masters in sociology to be a social worker here in MA….of course, the “state” paid for it…and of course, the degree came with an automotic bump in grade level/pay…
RE: a buddy’s wife had to get a masters in sociology to be a social worker here in MA….
A bud of mine’s 24YO daughter just got a Master’s in Autism Counseling…
Goes around as an independant contractor for the state of MAZZ to various school districts and “counsels” couples on their kids educational needs @ a rate of $300.00 per hour.
Says she’ll easily gross a couple hundred grand providing justification for people to demand their kid be sent to a private institution at a six-figure cost to the school district.
The system is toast.
“Many people from California or other areas with more expensive housing move to the Springs and find they have enough equity in their old homes to afford an upscale property here, said Stuart Scott of Stuart Scott Ltd., who compiled figures from the Pikes Peak Association of Realtors.”
There’s those pesky Californians again. This is beginning to have the flavor of an urban myth.
I heard this “urban myth” from several realtors in Tulsa as well.
Anyone have any news or reputable articles about the
Broken Arrow/Jenks/Bixby area?
Tulsa? Cheapest place in the U.S., and always will be. New houses are cheap to build, old houses are like used cars.
Very good comparison! Anyone have any comments on the lack of basements in tornado ridden Tulsa? I have done research on the clay soil issue and cost issues. Parker, Co. has a basement in nearly every home.
Same problem here in SW MO along I-44. Very few houses have basements yet every year a tornado or two or three or more come thru and wipe out some families. It’s true that tornadoes are partial to trailer parks though.
I’ve always heard we can’t build basements because the water table is too high; basements flood here when they don’t in Kansas or west Oklahoma. Besides, the only place you really need to worry is all those trailer parks just north of Woodward. Seems like there’s always a tornado “just north of Woodward.”
housingtracker, I don’t have anything specific for Bixby, Jenks, and the others, but I saw this in the Tulsa World about a month ago:
http://www.tulsaworld.com/news/article.aspx?articleID=20080125_238_A1_hHous82558
And then:
http://www.tulsaworld.com/news/article.aspx?articleID=20080213_1_A1_hTuls71208
This ate my comment before, I think.
As I said, I always understood that we can’t have basements here because of the high water table which causes them to flood, even compared to Kansas or west Oklahoma.
housingtracker, I don’t have any links for Jenks, Bixby, or the others, but I did read these two articles in the Tulsa World about the Tulsa area:
http://www.tulsaworld.com/news/article.aspx?articleID=20080125_238_A1_hHous82558
and
http://www.tulsaworld.com/news/article.aspx?articleID=20080213_1_A1_hTuls71208
Thanks so much for the info. I missed that one for TulsaWorld. That was a great debate in the comments section between that realtor and an informed individual.
I remember hearing this in the late 80’s when people were complaining about Californian’s taking their equity to the state of Washington and buying homes. The Washington folks hated the CA’s because the developers were cutting down all of the WA trees to make way for new homes. There were stories in the CA newspapers of support groups where new arrivals could gather together to get comfort from other recent CA arrivals. I also heard that if you moved to Washington, the first place you should go was the DMV to get Washington plates. Driving around with California plates was dangerous.
Very true John. The inlaws live in Washington and I drove the family up for a few days in the 80’s. I was honked at and given the finger many times.
Sorry, Stuart. his former Californian (along with a few other states) is renting now that I’m in Colorado. I’m not interested in buying a McMansion in the Springs, nor anywhere else for that matter.
–
I wonder if “The Desert” is a safe place to go amidst blood. I am planning to go for the tennis tournament in few weeks. I will check out the housing scene while I am there.
Jas
Maybe we’ll see you there. You can’t miss us…unfashionable, long-haired, bookworm types.
I have to say, Palm Springs seemed to be suffering a decline (or downtown was) three-four years ago. Economically, a very schizophrenic place, that has no serious hopes beyond more outside money coming in. It’s all brand name.
E: I live in Palm Desert and never go to PS. There is nothing there that isn’t what we call down valley, so it’s not really worth the drive. As the rest of the area has developed, PS has been sort of left behind. Prices are still not declining fast enough here, but there’s plenty to choose from, although I wouldn’t buy for at least another year.
You coming to the Pacific Open?
Just don’t get blood on your new nikes.
“‘Are there buyers that are a little skittish? Yes,’ said Cathy M. Olson of Prudential Sandia Real Estate, who prepared the realtors association report. But that’s due more to to ‘media campaigns that the sky is falling.’”
It’s just plain gotta sad now. Must be hard to be so dumb as to keep repeating the same lame lines over and over, and these newspaper dolts keep printing it. There is a report out that says most Americans are financially/economically illiterate. Ms. Olson is one such example.
OOPS… Gotten
“Last April, the Lostaunaus listed their home for sale at $660,000. They have had about 30 showings since then. A few potential buyers were interested. But no one has closed a deal.”
“Nearly forgotten in this struggle to sell the Scottsdale Ranch home is the appreciation on the property. The Lostaunaus bought their home for $290,000 in June 2002.”
They owe $200K and have lowered the price from $660K to $600K in 10 months on the market.
http://recorder.maricopa.gov/recdocdata/GetRecDataPgDn.aspx?&rec=0&suf=&nm=Lostaunau+Suzanne+&bdt=06/20/1947&edt=2/26/2008&cde=ALL+TYPES&set=250&res=True
Zillow doesn’t allow you to view comps or provide a zestimate…. Nice.
http://www.zillow.com/search/RealEstateSearch.htm?dg=dg1&addrstrthood=10618+e+torquoise&citystatezip=85258
Secrets that sell… Hmmmmmm… LOWER THE PRICE!
Lower it to $400K and they’ll sell it in 10 minutes with profit to spare. But that would hardly please the HGTV people, now would it.
On a side note, I notice that HGTV is an awful lot of H and not a lot of G. Could it be because it’s hard to get product placement for a packet of tomato seeds?
Give it some time. If our economy really goes into the toilet, alot of H & G viewers will be demanding more shows about gardening, so they can learn how to grow their own affordable food and fend off hunger. When gardening fruits and vegetables in your backyard, or the windowsill/patio of your overpriced condo suddenly becomes “fashionable” to the mainstream public for whatever reason, then we know we’re really in an economic depression.
“‘Anyone old enough to remember gas lines, ’stagflation,’ the savings and loan crisis and the mini-recession of 1991 knows these things come in cycles,’ Caruso said. ‘We are simply coming down from a boom that never could have been sustained.’”
I Member Well….
me too
but the market is having a good week so far
dead cat?
“We are simply coming down from a boom that never could have been sustained.”
Yes, but a boom unlike any other in generational memory, with another potential mini-boom ahead after Ben “Poo-Poo Head” Bernanke completes his ZIRP. The unavoidable correction will be staggering by comparison.
By the way, I’d like to extend my personal “thanks” to Poo-Poo Boy for taking saving rates under 4 percent across the board. Idiot.
Pretty neat to see inflation for sure running over 8% and the long bond throwing out under 5%.
Makes me go huh?
“Arizona’s economy peaked in August and has been shrinking ever since” said Marshall Vest, an economist at the University of Arizona’s Eller College of Management in Tucson. “It’s been in recession since the third quarter of 2007.”
Officially professor, a recession is defined as two consecutive quarters of negative growth in GDP, so by that definition our recession would be closer to this date forward rather than at the start of the “shrinking” period following the bubbly peak of August 2007, but you are the one with all the educational wisdom to impart to our children, so who am I to question people with letters after their name?
They back date the start.
If the economy started shrinking in August, then they wouldn’t get around to declaring it a recession for a good 9 months or more. But when they do, they would say it started in 3rd qtr.
OT…. No need to vote now. It was bound to happen at some point.
http://www.theonion.com/content/video/diebold_accidentally_leaks?utm_source
From the original post, with some boldfacing offered by Yours Truly:
“‘Those four states are where the housing bubble was the biggest, where investors and speculators had a significant presence,’ says Marshall Vest, an economist at the University of Arizona’s Eller College of Management in Tucson. ‘Those states saw a higher use of subprime mortgages. These are the states that have been in recession for several months already.’”
“Consumers in Arizona, Dr. Vest says, lived beyond their means for the past seven years. It was easy for them to tap the equity in their houses and to get very low interest rates on credit cards.”
Sotto voce: I first heard Dr. Vest using the term “bubble” to refer to our housing market back in 2002.
“Last April, the Lostaunaus listed their home for sale at $660,000. They have had about 30 showings since then. A few potential buyers were interested. But no one has closed a deal.”
“So what’s the problem? ‘For one, I don’t have a pool,’ Suzanne said. ‘After that, I don’t know. The price is reasonable, and Realtors all love it.’”
“It may be four months before the Lostaunaus home is featured on Secrets That Sell. Suzanne said she is looking forward to her TV debut. ‘The truth is I probably wouldn’t have done it if I wasn’t so desperate to sell my house,’ she said.”
“Nearly forgotten in this struggle to sell the Scottsdale Ranch home is the appreciation on the property. The Lostaunaus bought their home for $290,000 in June 2002.”
—————————-
I think I’m going to make a full-price offer on this house. However, the only contingency is that Ms. Lostaunau must also buy the Chandler house that I paid $175k for in 2001 from me, for $485k. I too think my price is “resonable”, and I do have a pool!
RE: $660k… don’t have a pool,’ Suzanne said. ‘After that, I don’t know. The price is reasonable, and Realtors all love it.’”
Amazing the number of people this blog reveals as truely brain dead.
I love that this lady is not real serious on selling her home (considering how much she paid, not including HELOC), and still having her home on the MLS for 10 months. haha, just keep ramping up the inventory!
No HELOC. Check the County Recorder link posted above. They owed $199K in 2003 and no filings against the deed since.
I’ve spent the better part of the last two decades searching for intelligent life in Arizona. Occasionally, I find it.
Gotta tell you, Slim, as a fellow desert dweller, I just wouldn’t buy a house without a pool in the desert. Then again, I’m a swimmer and there’s nothing better than a tall drink, a good pool float and a warm night. Skinny dipping in the privacy of your own yard is a pleasure, too.
lmao-
my mom lived out in tuscan for a few years in the 90’s
and when i visited her i felt the same way slim
people paying for a $2 breakfast with a check? wtf
ariziona is a great place to visit
‘…searching for intelligent life in Arizona. Occasionally, I find it.’
And when you do find it, it has got spines all over and has a woodpecker living inside its head. (Carnegiea gigantea, saguaro cactus)
Only problem is you can drive 20 mins and find a house that size with a pool for $230K new. Is it worth paying another $400K for a Scottsdale Address ?
I just moved from Phoenix, and totally agree a pool is a requirement for any and all houses over $200k unless it’s on the side of Camelback.
According to Janice McCrary of the Realtorwhore association, “We saw years of 16 percent growth, and those were nice years, but that’s hard to sustain.”
You are 100% correct Janice. It is hard to sustain. Especially when a big chunk (probably the biggest) of that 16 percent was based on fraud and corruption. Now - go and get your nails done.
Ben,
I know this is a bits bucket topic but I was wondering if you had some thoughts on the cram down legislation.
Seems like it would support prices momentarily by lowering supply; but perhaps not enough to make a difference.
Also wonder how banks/investors will take this. Not only do they get immediate losses and have increased risk. They also have to look and say these guys are willing to change the rules after you are commited. There is some estimate that this will cause a 1.5% increase in rates. I’m thinking it will put them much higher and cause capital flight.
Thanks
I used to get a little worked up over the bailout plan de jour. Then I realized that no plan, short of giving everyone a free house, will do a damn bit a good for anyone but the banks. It still won’t stop the price drops. Once you realize the run up in price was due to nothing more than loose lending standards, and then realize those standards are now much tighter; you realize prices MUST fall to come back in line with incomes. Incomes have not risen at all since this boom started.
Inventory may start dropping (though I doubt anytime soon) and people may start buying (there will ALWAYS be some buyers) but prices will still continue dropping until the price/income ratio is restored.
“He picked up a third condo at a Feb. 10 auction, paying $140,000 for a 1,200-square-foot unit with attached garage that previously sold for $243,000.”
“‘This is like the stock market. Buy low and sell high,
As previously noted, speculation is still too high in this environment. I guess he figures his profit will be high once the market comes back, right?
Dummy…
http://www.dollarcollapse.com/iNP/view.asp?ID=63
The best line: “But now is too early. Home prices are only down 6%, and if they’ve got to fall 21% (as we projected in 2005)…..well you get the picture. Don’t catch a falling guillotine. Wait for the massive thud before you put your hands in there.”
I expect Francisco to be looking for his hands quite soon.
Tomorrow I’ll take my camera to Santa Fe. Pretty much every sign for new housing developments has a “Prices Slashed!” or “Prices Drastically Reduced” sign on the front. At the far southern end of town developers are still leveling huge, huge pieces of land, though I drive by that area 3x a week and only see people on site once a week.
It’s also funny to see intersections in the middle of nowhere (Pojoaque) with bunches of For Sale/For Rent signs.
“About two-thirds of Gilbert’s debt goes toward major street, water and wastewater infrastructure projects, town spokesman Greg Svelund said. ‘Which of those things do you want to get rid of?’ he said.”
well, i say keep everything going. while you’re at it keep sending the monthly utility bills, yearly tax bills, and whatever you can think of to all of those empty houses.
yep. bill em. those bastards are sure gonna pay if my name’s Greg Svelund.
and it is.
“We’ve gotta protect our phoney baloney jobs, gentlemen!”
-Gov. William J. LePetomaine
This has got to be the busiest blog I’ve ever seen. I never get to an article with less than 50 comments and I think I’ve learned a lot but I have a question.
It seems everyone posting here is resigned to the fact that the housing market is just beginning to feel the heat of very long and very deep recession and I wonder where all the knowledge or information comes from.
If there were a bottom near would anyone here know it? And I mean that with all due respect for most bottoms are predicted long after they occur as are market tops.
I’m in San Diego and Realtors are beginning to see some activity in the low end as housing actually becomes affordable for fist time buyers. But I get the feeling that anyone suggesting this might be a sign of the bottom is simply ridiculed for their ignorance of the true state of the American housing market.
That ridicule is well deserved for those of us who are more ignorant than the knowledgeable posters here and I’ll take my lumps but what indicators and information are you using to determine this market has a long way to go down? (Unless I’ve misread the hundreds of recent posts, in which case my question is moot)
Scroll down to chart #3, then repeat…’Bottom, we don’t need no stinkin’ bottom.’
http://www.prudentbear.com/index.php/GuestCommentaryHome
Oh, we will be near the bottom when cost of rent is near cost of purchasing. Normally rent cost per month is higher than a purchase.
There are a bunch of people buying in the dip and a little bit of bargain hunting right now. Problem is as more loans go bad and risk is repriced into the loans prices will go down even further.
So, look for rentals and do a careful analysis of cost vs buying. Don’t skimp on things like home insurance, mello-roos and the big killer mantinance. Ye olde guidline was 10x yearly rent=price.
If you are in the area of 120 times rent its probably OK to buy.
You can offer banks 10x expected rent and see if they budge.
A very sincere thank you
It will happen when the ‘numbers’ make sense. When one can rent out the property and cover their expenses for PITI and maintenace then REAL investors will buy. We are not there yet. I can rent my Socal home for about 2,600 a month. Once you subtract all the other stuff it supports a $1,800 mortgage PI My home is truely worth just over 300,000, It is still selling for about $500,000. Still way to high!! it was about $650,000 at the peak!!
In some areas people will pay a 10-20% premium to live there based upon status, schools, closeness to work etc. so at best it makes my homes value around $360-$380,000. I also have solar panels that provide just over $200 in free electricity which is why I have some value added. I thought using an example might help.
The activity is the falling knives. They think it is a deal because it is on sale but the markup was so high that it really doesn’t make sense. We have until spring of 09 until we will see a bottom at the earliest. I hope this helps.
Shakes
Very helpful and informative I appreciate the time and effort.
In most bubble effected areas foreclosures are still rising at pretty rapid growth rates. I’d expect the bottom of the market to be near when
a. the number of foreclosures declines for 3 consecutive months
b. Sales numbers return to follow seasonal rates at pre-2004 levels
c. median home prices return to pre-bubble rates when compared to median income (depends on region)
rent-to-purchase price metrics are not applicable in all regions. Particularly here in the Bay Area, where rents are ridiculously low compared to purchase prices.
You will know we have bottomed and started back up again we you see 6 months in a row of year over year increases (however incrimental) in housing prices…
Meh. This isn’t a good one.
You get noisy data in a slow sales enviroment and have to do year/year comparisons or every August looks like a good time to buy.
I think it will end when interest rates finally spike up to 12% for a 30 yr. mortgage, most likely sometime in 2010.
“If there were a bottom near would anyone here know it? And I mean that with all due respect for most bottoms are predicted long after they occur as are market tops.”
The Trend is Your Friend! Saved me in the dot.com, and is saving my now. I can no longer figure things out, so when the downward trend reverses over a 6 month period, I’ll Be Back.
Bottom fishing is playing the lottery, I want my 6 month up tick
My, what great quotes today!
“But we’re in an anomaly. People will still be coming to Arizona, and before you know it we’ll be back on the growth train.’”
“It’s a good opportunity for anyone who has the money. I would buy another 10 if I had the money.’”
I do wonder where he got the money he has.
I was thinking he should hook up with one of those women who collects a hundred cats. Someone like that would understand wanting to collect condos.
If there were a bottom near would anyone here know it? And I mean that with all due respect for most bottoms are predicted long after they occur as are market tops.
To learn anything you must put aside the safety of your ignorance.
Very willing to do so. Can you enlighten me?
Maybe, maybe not. If you read the posts perhaps you can gain clarity. Many posters feel the rent vs buy formula is far from being close, that’s just one of many indicators that shows how far prices need to drop in order to have a market with fundamentals.
Perhaps you can enlighten me with some new formulas or fundamentals?
“He who tries to pick bottom gets sticky fingers” On the flip side what is wrong with being a little late. I personally would rather be a little late than a little early due to inflation. If you miss time the bootom by one year and 10% you must recover that 10% and are down another 3-5% for inflation. This will greatly lengthen you breakeven point. If you are a little late the market is not going to zoom up again due to the “Once bitten Twice shy”. Markets drop like a V and come back up like a U. Their is time on the backside. If one watches the supply of homes, prices of homes and the numbers sold. Once can find the bottom within a reasonable period and will not catch a falling knife which is what is happening currently (see my post above)
I’ve been tracking unsold inventory here in San Diego and it appears to be unaffected by any ‘good’ housing news. Still at historic highs. Will watch carefully and again thanks for the time to reply.
“I personally would rather be a little late than a little early due to inflation.”
I agree that one must watch the price/rent and price/income ratios but one must also take in location/jobs. Those areas closer in and those areas where the job market is expanding will start to recover sooner. For the retirees it will also be geared to weather, taxes, and elder services.
No. Nobody would know if we were at the bottom. But, it is pretty easy to know that we are ridiculously far away from the bottom. Two ratios are still crazy: price/rent and price/income. Until these ratios are sane then we are nowhere near the bottom.
Now, you will go on to ask if prices will overshoot historical norms on the way down, by how much, and when. And, that is a much more difficult question. I can imagine two scenarios. A soft landing where prices fall another 50% to where local incomes and rents can support prices. The other scenario is a hard landing where prices fall 80% because mortgages are simply unavailable and cash is the only way to buy a house.
Pick you scenario and place your bet.
Well, some of the more astute (IMO) posters here have said you’ll know it’s a good time to buy when it’s contrary to what the masses are thinking, when people tell you you’re crazy for buying (and I mean people on the street, not HBBers).
Markets drop like a V and come back up like a U.
Markets drop like a \ and come back up like a J.