Call It Variety, Or A Glut, Either Way Sellers Have An Issue
It’s Friday desk clearing time for this blogger. “A Dallas Morning News analysis of residential foreclosures shows the housing mess extends across North Texas – from high-end urban settings to far-flung suburbs. On the plus side for buyers, foreclosures have cut into housing prices. ‘There’s a lot of deals out here,’ said Valerie Daniels, who said she paid $171,000 14 months ago for her home on Ginger Trail. The 4,000-square-foot foreclosure was appraised then at $250,000.”
“Ms. Daniels, a mortgage banker in DeSoto, said lenders are offering reclaimed houses in her neighborhood for 25 percent to 50 percent below appraised value.”
“Tiffany McAdoo thought she saw a deal, paying $189,000 for a foreclosure on Gardenia Street, a five-bedroom, 3,800-square-foot house appraised at $265,000. But a foreclosure across the street, at just over half the size of her home, is listed at $139,000.”
“‘I’m constantly getting low-ball offers,’ said Ms. McAdoo, a mortgage broker now working at home. ‘I’m basically stuck until the market changes.’”
“Vicki Steele lost the home she hoped to live in with her two children. Ms. Steele said she decided to become a homeowner when she got a job and was no longer eligible for federally subsidized housing. She said she fell behind the payments when the interest rate went up from 8.8 percent to 11.5 percent, pushing her monthly payment from $853 to $1,300.”
“‘They think there’s a sucker born every minute and I looked like a sucker,’ she said of her lender. ‘I tried something for the benefit of my family but it didn’t work.’”
“Joe Osgood is preparing to move his family of five from their home, which is set to be sold on the Hinds County Courthouse steps in two weeks. This was Osgood’s first attempt at home ownership. He got an adjustable rate mortgage 5 1/2 years ago with a monthly note of $496.”
“Osgood said he knew the rate would adjust, but he never thought it would double. ‘You know they aren’t going to tell you that, because then you aren’t going to buy,’ he said.”
“A home-price index released Tuesday shows that Denver home values declined 4.5 percent between December 2006 and December 2007, the worst drop since a 5 percent annual decline in December 1988.”
“Filomena Carrillo lives in a neighborhood that has been hit hard. She bought her Aurora home in the fall of 2004 for $197,000. Today, she estimates she would be lucky to get three-quarters of that amount.”
“‘I’ve tried to refinance for a year now,’ Carrillo said. ‘I have big problems because they told me foreclosures nearby are selling for $150,000 to $136,000.’”
“The Springfield housing market has a wide variety of homes for sale, in all shapes, sizes and price ranges. The problem is that few of them are moving.” ”
“‘This is almost every day; people are slashing prices like you wouldn’t believe,’ said Richard Jones of Carol Jones, Realtors. ‘I have not seen the price reductions outnumber the new listings, thank God, but I’m waiting for that day.’”
“Among the properties being listed at below market value is the 13,000-square-foot home at 3769 E. Eaglescliffe Drive. Listing agent Indy Wallace said the home’s $1.9 million list price is well below the $3 million it cost to build the home for original owners.”
“Call it variety of selection. Or a glut. Either way, Triangle home builders and sellers have an issue: Homes are selling more slowly, and that has caused a buildup of inventory.”
“‘It’s more of a buyer’s market than a seller’s market right now,’ said Jill Flink, a broker in Raleigh. ‘The sellers have had a little bit of a slow time, and they’re much more interested in selling than they were before.’”
“So can you lowball ‘em? Sellers want to sell, Flink said, ‘not take a blood bath.’”
“Fannie Mae, the biggest source of financing for U.S. home loans, told lenders it will probably ban their use of appraisals by in-house employees or those arranged by brokers.”
“About three quarters of residential mortgage appraisals are arranged through brokers who only get paid if a loan closes, said said Jonathan Miller, CEO of Manhattan-based appraisal company Miller Samuel Inc. He called the practice ‘laughable’ because it creates a financial incentive for mortgage brokers to push appraisers toward higher valuations.”
“American International Group Inc., the world’s largest insurer, fell in New York trading after reporting the biggest quarterly loss in its 89-year history. The pretax writedown of $11.1 billion wiped out operating profit. AIG also had another $3.27 billion of losses before taxes on impaired holdings in its investment portfolio.”
“AIG guaranteed $61.4 billion in collateralized debt obligations that included subprime mortgages as of year-end.”
“Business terms have a long history of making a mark on the vernacular. Thus, it was probably inevitable that the word ’subprime’ would make a splash. Now, subprime is repeated many times daily, often with a sense of dread for fear the contagion will spread.”
“As a word, it’s become something of a celebrity. In fact, the American Dialect Society last month picked subprime as its ‘Word of the Year,’ underscoring just how far the once obscure real-estate term had barged into the mainstream. Some students, it seems, now describe about poor performance by saying they ’subprimed a test.’”
“‘When you have investment companies losing billions of dollars over something like bundled subprime loans, then you have to consider whether it’s important,’ said Wayne Glowka, dean of arts and humanities at Georgia’s Reinhardt College. ‘You probably also want to pay off that third mortgage.’”
“Foreclosures are on the rise in Douglas County and the rest of Oregon. Two years ago, Christina, 26, and her husband purchased a $192,000 home in west Roseburg with two subprime loans, set up as interest-only payments for the first 10 years. Based on their income, they did not qualify for a single mortgage and allowed their broker to ’state’ their income — inflate it on the loan applications.”
“‘I just really wanted the house,’ Christina said.”
“A few days ago, I heard a talk show host discussing the recent deluge of single-family home foreclosures. He seemed to agree with everyone else that the mortgage crisis was caused by financial institutions that gave out too many mortgages to too many unqualified applicants.”
“The talk show host went further than the rest of the pundits, though. He insisted that none of the blame should fall on those who had borrowed money to buy houses, which they could not afford and were about to lose. It was not their fault that they were drowning in debt. It was the fault of the evil moneylenders.”
“Then he abruptly changed subjects and said something that took my breath away. All banks, he demanded, should be banned from issuing credit cards. Why? Because credit allows us to buy things that we cannot afford, and people should not be subjected to temptation.”
“Good grief, I thought. Life without … temptation.”
“One thing pops into my head. I was young and had just moved from the Midwest to New York for my first full time job. To get to work, I had to walk past a bakery with prettily arranged pastries, pies, and cakes in the display window. The smells! My mouth watered. My taste buds threw up little white flags. I surrendered.”
“That I succumbed to it did not hurt people starving in Ethiopia. It did not topple empires. It would not, however, have felt good to a man suffering from diabetes. For him, surrendering to the enticement of a peanut butter cookie could trigger heart disease, blindness, kidney damage, stomach problems, and heavens knows what else.”
“If he had eaten one cookie, or three cookies, or ten cookies, according to the blame-game philosophy of the talk show host, it would not have been the diabetic’s fault that he landed up in a hospital … or dead. No indeed. It would have been the fault of the bakery. The bakery, you see, had provided temptation.”
“Similarly, department store windows should be covered with heavy draperies so that young secretaries won’t be tempted to buy pretty clothes; motorcycle shops should be forbidden from displaying Road Kings lest they attract the eyes of mid-life-crisis prone males; and brides should be prohibited from reading magazines advertising weddings gowns that they might, or might not, be able to afford.”
“We scrimp. We save. We work three jobs. We count our pennies. We add them up and wait until we can afford to buy it, whatever ‘it’ is. Or, at least, that is what some of us do.”
“Others buy what they want when they want it, whether they can afford to or not. And when they lose it, they blame the bank. They blame the credit card company. They blame fate. They blame temptation.”
“Silly, isn’t it? When we have the choice to be responsible or not …To blame the peanut butter cookie.”
Another great week folks! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
I am shocked how cheap Texas is and it’s still getting cheaper and cheaper! I do hate hot summers, high property taxes and some of the laws in that state are ridiculous. But im now seeing REO houses for under $50/foot! I don’t understand why some of you say they are ugly. Sure they are cookie cutters, but have you seen how expensive the same houses are elsewhere?
Texas has always been cheap - so becareful of the areas that are TOO cheap.
Where are you looking?
Hot summers, hahaha, that is an understatement, I am quite sure that hell is more pleasant. The places I’d consider living, well for more than 3 seconds anyway, are waay too expensive.
Summers aren’t too bad in Amarillo. Its the arctic of texas!
My daughters home in San Antonio was $57 a sq ft brand new.
Ben, fantastic blog…I learn more everyday from fellow bloggers then from the talking heads in the MSM!
I still am a bit shocked how quickly things have unraveled over the last 12 months. Prices are now dropping pretty quickly in OC, CA. They still have a long way to go, but are dropping fast nonetheless.
Agreed, from 92627. Fun time for those of us who watched the greatest minds of our generation, ah, prove they are not so great after all. Teehee…
On zip realty I’m seeing individual houses listed for under the 2004 purchase price and not moving. Also I think a lot of the older homes purchased in the 1990’s listed at crazy prices are HELOC’s.
I’d say it will be a bloodbath here by 2009 at the latest.
Understand the prices are still insane 500k-600k for a tiny 1970 1200 sq ft 3/2.
And nothing is really moving. I’m actually trying to figure out who is buying we must still have a lot of crazy loans available.
Or some people who bought a long time ago are selling cheaper homes in other parts of CA and buying here.
I can’t figure out what fool would throw 150k down on one of these old small homes with no yard.
The asking price on the townhouse I’m renting in North Jersey has dropped about 15% in the last 10 months. For every dollar in rent I’ve paid the value of the property has dropped at least $2.75 to $3.00.
proud to be renting. I’m not buying until at least spring 09, maybe not until 2010.
“‘I just really wanted the house,’ Christina said.”
And I really want a BMW M5, but I know it would be a bad idea to buy one. It’s called not buying things you can’t afford Christina.
Yeah, and I want a Klein bicycle.
No, make that two. I want two of them. Now. Or else I’ll throw a temper tantrum.
I want a white pony that flies.
road or mtn?
Mtn pony, please!
Yeah, and I want a Klein bicycle.
When I got to CA, I realized I had died and gone to biking heaven, so I should splurge on a good bike. I went out and tried a whole lot of them.
I got on the Klein Quantum Race (ca ‘01) and was instantly one with the bike. I bought it that day; I have never regretted that expenditure, not even for a moment.
(For some reason, the good folks at Klein understand my body type. YMMV.)
I want one of these
http://www.waterfordbikes.com/site/tech/tubesets.php
Do you mean one of the tube sets or one of the biker dudes in the photos?
Klein has the funny fat tubes. I may look funny, but I’m comfy.
Three of the biker dudes, please. What colors do you have? I’ll take one of each. LOL
‘Three of the biker dudes, please.’
They look too sinewy, I think. I prefer humans with more mass. Also, those weird seed pods have got to go. Or are those bike helmets? Whatever, they gotta go, because they make me crazy.
And I want a Klein bottle!
(Actually, I got one for a friend.)
yeah, but did you really, really want the house?
I want a Ferrari, a yatch, a mansion, a better income…etc.
You know, having millionaire relatives teaches you one thing:
YOU HAVE TO WORK FOR THE ‘STUFF’ YOU WANT. If you want more, work harder. Get more responsibilities placed on your shoulders.
It is really simple.
Nothing in life is free.
Get whatever you want…as long as you can PAY for it.
What I learned from wealthy relatives is if you’re a miserable SOB without money, you’ll continue to be a miserable SOB with it.
…and I want to ride the rainbows on a magical pony..
That’s really not a tall order. I mean c’mon, how much does a hit of acid cost anyway? (take two hits and you won’t believe what you can do with your “magic pony”……..not that I would know, of course)
I mean c’mon, how much does a hit of acid cost anyway?
Last I checked, much less than a movie ticket. Lasts longer too. Again, not that I would know.
Yeah, it’s quite amazing all the things the posters don’t know. LOL.
LOL
Ah. Now I see how you are. I had suspected, of course, but…
Funny- the desk clearing mentiones two markets where the “experts” claimed there was no bubble: Denver and Dallas. These cities were said to have been immune from the bubble, yet we read of falling prices? Even here in Boise, the “experts” claim it’s “different” here because everyone wants to live in Boise and we have a strong job market (if you like retail or call centers).
It’s gonna hit the fan though- I ran a very unscientific survey of foreclosures in my area. According to realtytrac, within a 1.5 radius of my house (approximately) are 143 properties in pre-foreclosure, up for auction, or bank owned.
I guess it’s considered a bubble in Dallas when those cheap $99,900 houses are worth “only” $89,900
Probably- I commented yesterday that Texas houses are like buying a new car: they depreciate 20% as soon as you move in.
They depreciate 20% as soon as you drive them out of the lot.
You can drive Texan houses?!? I want one now!!!
We call them mobile homes….
Im sure all houses will drop 20% as the bubble deflates some more.
hopefullly these reductions will make their way into nyc area. still holding pretty firm around these parts
major drops are for areas i have no interest in
Keep renting or relocate. I am not seeing much, if any drops in some parts of Florida either. People are still buying to live in or rent out. I am almost sure prices will drop, the worry is the drop may not be enough!
‘I commented yesterday that Texas houses are like buying a new car:’
What, like with plentiful bullet holes in them? Hidden illegal aliens? Explain yourself, man.
The problem with most of North Texas/Arkansas/Oklahoma etc is the only jobs are building houses and working at Wall Mart. Most of the towns have very little else to keep them going.
RE: “Fannie Mae, the biggest source of financing for U.S. home loans, told lenders it will probably ban their use of appraisals by in-house employees or those arranged by brokers.”
“About three quarters of residential mortgage appraisals are arranged through brokers who only get paid if a loan closes, said said Jonathan Miller, CEO of Manhattan-based appraisal company Miller Samuel Inc. He called the practice ‘laughable’ because it creates a financial incentive for mortgage brokers to push appraisers toward higher valuations.”
LMAO…I think the FNMA regulators are a little bit too late to the party.
All the crooked and corrupt appraiser’s have finished off the punchbowl.
They are all now living comfortably in Paraguay counting their racketeering loot.
At least it will lock out new corruption. With that, prices will drop another leg down.
“lock out new corruption”..
Not to attack you, but trust me, there will be plenty of new forms of corruption to take the place of the old ones…
It’s always a worldwide bull market in corruption.
oh no, now realestate appraisers will lose thier jobs!
Oh, well, that’s a shame.
Maybe they can walk the streets on Hollywood Blvd. They already trained for it!
Can anyone tell me how good those prices are? How’s the neighboorhoods? Can I get a fair apprasial for property taxes?
http://www.realtor.com/search/listingdetail.aspx?ctid=4&typ=1&sid=fa338a8d50c4430abfe658a08d18b9c9&pg=105&lid=1092754106&lsn=1043&srcnt=14701#Detail
$72,500
4 Bed, 2 Bath
1,868 Sq. Ft.
0.16 Acres
http://www.realtor.com/search/listingdetail.aspx?ctid=4&typ=1&sid=fa338a8d50c4430abfe658a08d18b9c9&pg=105&lid=1088689387&lsn=1049&srcnt=14701#Detail
(small house but nice landscaping)
http://www.realtor.com/search/listingdetail.aspx?ctid=4&typ=1&sid=fa338a8d50c4430abfe658a08d18b9c9&pg=102&lid=1095227475&lsn=1011&srcnt=14701#Detail
http://www.realtor.com/search/listingdetail.aspx?ctid=4&typ=1&sid=fa338a8d50c4430abfe658a08d18b9c9&pg=102&lid=1095481364&lsn=1015&srcnt=14701#Detail
(huge fixer upper for under $32/foot!)
http://www.realtor.com/search/listingdetail.aspx?ctid=4&typ=1&sid=fa338a8d50c4430abfe658a08d18b9c9&pg=96&lid=1096434390&lsn=956&srcnt=14701#Detail
$69,900(under $32/foot)
4 Bed, 2.5 Bath
2,208 Sq. Ft.
0.11 Acres
I showed those houses to my dad and he is impressed! In my neck of the woods, you couldn’t touch those houses for $200k! What a ripoff!
Uh huh…… the first couple are too boring for words but tolerable and the last few should be burned to the ground as a crime against asthetics.
Listings are meaningless unless you know a LOT about the town and the neighborhood.
maybe il buy one of those texas places for cash and get a job at walmart.
You can do better than that. I have friends making over $50k/year in Texas. Plenty of jobs to go around. My bro could relocate there and make his $100k+ a year as a lawyer and pratically buy a small mansion for a quarter million
None of those houses are ugly unless you compare them to mansions. Those are nice middle class housing. Us middle class can only afford such houses.
You need to get out of Florida and see some of the older architecture. Think the Shennandoah Valley in VA, the small towns of New England, and one of my personal favorites, the parts of the Ohio suburbs of Cleveland Heights, University Heights and Shaker Heights that were built between 1910 -1939 (a treasure trove of Tudor, English and Colonial Revival houses - and yes, many under $100-125K in very nice neighborhoods) - and then there is the West End of Toledo with a fabulous collection of Queen Anne, Gothic, Craftsman and 1930’s Tudor/Colonial Revival.
Those all look like mid-60s to early 70s. That was a horrible time for residential architecture - form following function went out the window.
Attractiveness has nothing to do with the size of the house. A mansion doth not mean taste, just showy square footage. I’d rather have a small, well designed house than a stuccoid showboat.
That last house is so ugly I hope the Russians and/or Chinese have made it the targeting coordinates of at least one of their ICBMs.
Anyone believe the claim about the cities in this article?
http://tinyurl.com/222flt
1) Gainesville?: Never been there, so can’t comment much, but there’s nothing retirees love more than hundreds of drunk Gator fans peeing on their lawns.
2) Ithaca?: There’s nothing retirees love more than 10 feet of snow every winter, which happens to last about 8 months there.
3) Orlando?: There’s nothing retirees love more than to see their 300K house they just bought sell for 125K down the street. Mickey is crying.
4) Pittsburgh?: There’s nothing retirees love more than to watch a AAA team get swept by the Cubs. (really a shame, always sorta liked the Pirates)
5) Portland?: There’s nothing retirees love more than seeing smack being shot up in their favorite park.
6) San Antonio?: There’s nothing retirees love more than walking up and down a glorified ditch with a 20 dollar margarita.
7) Tucson?: eh, I’ve always kinda liked Tucson. Pretty mountains and hiking.
7) Tucson?: eh, I’ve always kinda liked Tucson. Pretty mountains and hiking
Gets red-hot in the summer. High load for retirees’ fragile hearts.
Ive been to Gainesville. My bro and sis attend college there. For retirement, theres cheaper parts of Florida, including PSL and Cape Coral, also warmer winters than Gainesville.
“7) Tucson?: eh, I’ve always kinda liked Tucson. Pretty mountains and hiking.”
What’s the residential utility energy situation there?
“‘This is almost every day; people are slashing prices like you wouldn’t believe,’ said Richard Jones of Carol Jones, Realtors. ‘I have not seen the price reductions outnumber the new listings, thank God, but I’m waiting for that day.’”
So am I richard, so am I. As for the slashing of prices, I don’t find it particularly hard to believe. What I can’t believe are the crazy 35% discounts off of already 40% discounted clothing in department stores. They might actually be selling it for cost once they take another 30% off. Soon enough, clothes will cost about the equivalent of how much oil it takes to bring it here from other countries. Richard, welcome to the world of commodity pricing.
Man you can sell stuff at a loss. Generally what happens is you take a write down over a few quarters or stuff sold in bulk to reseller who can then make deeper discounts.
Once the write downs start you really don’t have a bottom to pricing.
Buildings generally don’t drop below taxes owed but not always.
Is this another Crazy Eddie moment?
HIS PRICES ARE INSANEEEEEEEEEEEEEEEEEEEEE!
———————————–
What I can’t believe are the crazy 35% discounts off of already 40% discounted clothing in department stores.
I had to google that Crazy Eddie reference. I guess there is one of that type in every state. Didn’t Seinfeld have an episode that made fun of the Elain because of here love affair with the Wiz? Nobody beats the Wiz!
“‘I just really wanted the house,’ Christina said.”
And I really want to puke……
There you have it folks. Crustina is the product of the borrow and spend mantra that we bought and we were sold.
“Silly, isn’t it? When we have the choice to be responsible or not …To blame the peanut butter cookie.”
Beautifully said.
This is perfectly natural for the ‘addict’ to blame someone else for their misery. Those who buy without any regard for their ability to pay things off are ADDICTS. Step 1 to any addiction problem is ADMISSION. This shows many addicts still are not yet ready to face their ‘treatment’. The raising of credit rates to the point one can no longer pay their CC will mean that ‘THE PUSHER’ will no longer supply their drug. The addict will go through WITHDRAWL until they reach step 1 - ADMISSION. This is when America can start to get on ‘the road to recovery’ and focus on work, paying off our debts and even start to save for a rainy day!!!
Just my 2 Yen worth!!
Blaming the peanut butter cookie is exactly what people are doing regarding the housing boom . Now I admit that during the boom people didn’t get very much counter-data regarding the risks they were taking ,but to commit fraud to get a house is just to much .
The bizarre behavior of people during the boom was just over the top ,and it was so bizarre that it deserves a psychological study .Were the borrowers set up by lie after lie by the people in the industry, or were they unable to say ‘no” to the easy money ? I think it was a little bit of both ,but now comes the time for the blame game .
A con artist pushes on the buttons of human nature ,so weren’t all the buttons pushed during the frenzy by the industry ? The cheerleaders were rah rah to the point of making a person feel inferior if they didn’t buy .
Humans can become very evil if they think they are being left out, or missing the boat, or not part of the greater society they live in .IMHO ,the emotions are very powerful ,and somehow normal people loss their common sense during this boom . Without the lenders underwriting loans ,it was to much temptation for the people who were being conned by the industry .
What if the bakery told you that the peanut butter cookie was fat free ,and would make you grow hair on your chest ,but it was a lie .
My point is that there is a difference between a temptation and a con job . The buying public thought the real estate values were solid or they would not of been jumped in IMHO .
I’m not excusing people who committed fraud to get real estate ,but many buyers who didn’t lie on their applications are getting harmed also by this housing price meltdown who really just believed they had no choice but to pay the going price .
I guess my point is that this real estate frenzy went beyond all logic because of the lenders failure and breach of their duty to underwrite the loans that the REIC took full advantage of . IMHO ,they were selling tainted peanut butter cookies ,and a lot of people are dying ,so it goes beyond mere temptation ,especially when you look at all the brainwashing that went on .
I lean towards HW’s “con job” analysis. A lot of people without much earning power thought they could get rich by leveraging RE infestments. Indeed, the erosion of the manufacturing base in the US is part of what caused people with few other prospects to believe they could rise socially and economically by becoming big RE operators. It’s become clear that mere work will be done much cheaper overseas, so the US has become a dog-eat-dog sort of a place. All of us dogs here on HBB are likely winners.
“‘This is almost every day; people are slashing prices like you wouldn’t believe,’ said Richard Jones of Carol Jones, Realtors. ‘I have not seen the price reductions outnumber the new listings, thank God, but I’m waiting for that day.’”
Judgement day is coming soon to Jones-town…
Please have laced beverages @ the ready.
“So can you lowball ‘em? Sellers want to sell, Flink said, ‘not take a blood bath.’”
Well, that’s just too d*mn bad, because I am in the mood for a blood bath. However, I am not a barbarian here, so I say let’s be generous, and let Mr. Flink’s sellers have a rubber ducky for their blood bath.
Who can really stay upset, if they have a rubber ducky bobbling around on those foamy 98 degrees warm red waves? Rubber duckies are just so cheery and darling.
Heh thanks for partially censoring that “D” word.
Well, you know–I’m delicate like.
Delicate like, what exactly, bee-yatch?
I hate to say it but lately i think my generation of boomers may be the most self-centered, greedy, narcissistic collection the world has ever seen. But we do know how to party. And rock out, so… it evens out really.
throw in some salt and celery and they will think it is Bloody Mary and be happy.
I know you, you’re Happy Bunny.
One-size fits all blame
“Others buy what they want when they want it, whether they can afford to or not. And when they lose it, they blame the bank. They blame the credit card company. They blame fate. They blame temptation.”
My sense is that we’re finally coming out of the denial stage of grief–people I know who previously didn’t believe in the housing bubble are coming around. A couple of anecdotes from friends that suggest this:
One couple, who purchased a new home in the fall of 2006, decided to “double down” by keeping their old house as a rental. I shared my opinion that it was a bad time to “double down” at the time, and they honestly seemed to appreciate my sharing my concerns. The house was NOT cash-flow neutral; they were happily planning on losing hundreds of dollars a month of cash-flow in the hope of making it up on appreciation. They recently decided to “un-double-down”, and put their old house on the market. I hope they manage to unload it without too much trouble.
Another friend, a single woman, who also bought in the fall of 2006, recently told me that she “bought at the wrong time.” We had had a couple of conversations about purchasing back in 2006, and at the time she was not convinced by my bubble arguments. But she seems to have seen the light now, and is amazed at the many options available due to the increase in inventory (it was very low back in 2006). She now plans to trade to a different house after her 2yr owner-occupied cap-gains tax test is met. My guess is that the market here will have significantly decayed by then, and she may not be able to sell her old house for what she paid by then. Her plan of a lateral trade may be more challenging than she suspects as a result.
My sister bought a house in San Diego 10 years ago for $165k, it went up to $650k and she was persuaded by my older sister to keep it and rent it out for $1700 a month, and buy another house in Rancho Bernardo for $750k, despite my protestations to the contrary.
She was staring @ nearly $500k profit, tax-free, in selling the old house, and turned it down.
I expect her to lose both houses, within a year or 2.
But it gets better…
My older sister bought a crapshack in San Diego around the same time for $500k, in a show of sisterly solidarity and to “prove” me wrong, somehow.
And so it goes…
But will they ever forgive you for being right?
Maybe she will come to her senses when she sees prices crashing and sell it for $400k, still making over $200k profit. She can simply walk away from the other house and lose her tiny 3% downpayment.
Why would she lose both houses?
Oh no, how much did she borrow on the first house?
Man, that’s going to be a tough Thanksgiving family get-together!
RE: There’s a lot of deals out here,’ said Valerie Daniels, who said she paid $171,000 14 months ago for her home on Ginger Trail. The 4,000-square-foot foreclosure was appraised then at $250,000.”
It astounds me that even at foreclosure price levels a person would purchase a 4,000 sq. ft. residence in a time of major living standard declines.
Homes of this type are truely lifestyle dinosaurs.
No #1-You will forever and ever be a target of the property tax collector. Assessments are always based on the Cost Approach which trends towards the establishment of upper valuation limits. Assessor’s must drool over 4,000.
#2. Utility costs as commodities have nowhere to go but up. Looks like a lot of nukes for TX. Got disposal sites?
#3. Maintenance costs-see #2. 3,500SF deemed the absolute upper limit of house size which can be managed by 2 people. Enjoy escalating minimum wages for the hired help.
As the US enters an age of shortages-this enormous square footage becomes an incurable obsolescence creating a sure circumstance of future impaired liquidity.
Boils down to J6P having virtually no understanding of history or current geo-politics.
You can’t say enough about #1 - it’ll be a death embrace with the tax man as muni pensions explode and muni budgets break down.
What’s wrong with 4000 square feet? She could always rent half the house to another family or rent out rooms for a few hundred. As for a/c just cool a few rooms, why cool the entire house?
She got a great price and paid under $50/foot. There was no sense paying the same price for much smaller houses.
You just don’t get it, do you? Texas is cheap for a reason.
You sure have some size fixation, dude/dudette. Yes, there is sense in buying a smaller house. 4,000 sf is a load.
Except for the bad timing of buying into a declining market, I don’t see a problem with buying a large house. As Bye suggests, parts can be rented out. I am prejudiced by the money I saved in living in a group situation 1996-2004. Kitchens are problematical though. A 4000-sf house probably still has just one kitchen, making it hard for two whole families to share the space.
“Foreclosures are on the rise in Douglas County and the rest of Oregon. Two years ago, Christina, 26, and her husband purchased a $192,000 home in west Roseburg with two subprime loans, set up as interest-only payments for the first 10 years. Based on their income, they did not qualify for a single mortgage and allowed their broker to ’state’ their income — inflate it on the loan applications.”
“‘I just really wanted the house,’ Christina said.”
_________________________________________________________
Rosewood, not Roseburg.
I guess Shakespeare would say ‘mcAdoo about nothing’….Crap wordplay I know..
Her house is worth as least as much as she paid for the appraisal! (Like, some 3-figure or 4-figure amount.)
I’m thinking about getting a t-shirt to wear to open houses this spring with
**WARNING** in big yellow letters and
a falling knife in the middle of one of those circles with a slash through it
The housing Bubble T is so 2005
Sounds good, but how does the picture clearly indicate that the knife is falling?
http://www.whenrealityknocks.com/wp-content/content/falling_knife.gif
Neil, if you’re on the blog tonight…..
Just watched The Nightly Business Report on PBS. Wells Fargo is now requiring 25% down in “declining” markets. Wachovia is requiring 20%+. B of A is requiring 10% down. The piece complained about how it is knocking buyers out of the market.
No one cares to remember than down payments have been the norm except during the last few years of bubble madness.
Just wait until the pay option ARMS start to explode later this spring.
Neil, you may get your 30% down sooner than you think.
wonder if DC makes the list
He read about this. It’s a matter of time before surviving banks require 30% down with good credit or as much as 50% down with bad credit.
My original prediction was 25%.
I do think it will be the norm.
And then 30%
Thanks for remembering!
Got Popcorn?
Neil
ps
Work and life is keeping me away a bit more.
It may be the norm for a second house, investment property, etc., but first time buyers will always have much better terms. The gov. will have to step in with “first time buyer” terms…no money down, or 3%, no PMI, etc. They will have to, because there i s no way the average Amercian can save that kind of money. On the plus side, if we can make sure the people who enroll in these programs are at least ok risk’s, it’s win-win.
“Among the properties being listed at below MARKET value is the 13,000-square-foot home at 3769 E. Eaglescliffe Drive.”
“You keep using that word. I do not think it means what you think it means” Inigo Montoya, Princess Bride
lol
I never tire of that phrase. The number of experts who know nothing of market economics…
Got Popcorn?
Neil
Noting like a painful lesson to drive a point home. Of course “the experts” were saying real estate never goes down’, we are not in a recession’, prices can’t go any lower’…..
Inconceivable!
I wonder if Bye FL thinks 13,000 sq ft is too much, or even enough. LOL
“So can you lowball ‘em? Sellers want to sell, Flink said, ‘not take a blood bath.’”
hey Flink, couple years ago why didn’t u say something like - buyers want to buy, not get ripped off.
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