A Boom Now Only Viewable In History
The Star News reports from North Carolina. “This year’s spring house-hunting season belongs to the buyers. That’s what area real estate agents are saying. Agent Glenda Tate says she is excited about the market from the buyers’ point of view. ‘If you couldn’t afford the house in the location you liked last year, take another look at it,’ said Tate. ‘Maybe you can afford it. If you were looking for a house that cost $325,000 last year…’maybe this year I can get it for $280,000 or $290,000.’”
“James and Angela Parham say that asking prices have come down from their last visit to Wilmington in July. But there still ‘is definitely sticker shock,’ James Parham said.”
“That may be because they are comparing Wilmington not to California, where they did not own, but to Russellville, Ark., where they own a home they must sell.”
“‘I know (sellers) are dealing. The prices have changed from July. There are a lot of foreclosed homes. We’ve looked at foreclosed homes,’ James Parham said. ‘I know people who are in the housing market here and have made offers here and got them for sometimes considerably less than listed.’”
The Citizen Times from North Carolina. “The area’s housing market hasn’t turned around yet, February home sales figures from Buncombe and three nearby counties suggest. ‘We’re still on that downward line. … I don’t see anything (changing) immediately,’ said local real estate analyst Don Davies.”
“Buyers who want to move to the area are staying put because of poor markets back home, and many local residents can’t afford to buy, Davies said.”
“He doesn’t foresee a reversal in the local market ‘until something breaks loose somewhere else. We don’t have the jobs for $450,000 houses. We’ve got to have people come here.’”
“Beth Burdick of Ashford Mortgage Advisors said prices haven’t dropped as much as sales because many homeowners are reluctant to sell in a down market. ‘You have kind of a stalemate between buyers - if they can get a mortgage - making a low-ball offer and sellers holding on,’ she said.”
The Washington Post. “When foreclosure specialist John Thompson looks at a map of Northern Virginia, he sees a flaming archipelago that stretches from Dumfries to Sterling. Parts of Dale City, Woodbridge and Herndon are engulfed; Manassas and Manassas Park are ‘a volcano.’”
“Thompson calls this the ‘ring of fire,’ Northern Virginia’s foreclosure belt.”
“‘That one’s listed at $125,000,’ Thompson said one recent afternoon, sizing up a dowdy green rambler in Manassas Park that had been foreclosed on. It wasn’t the fanciest house on the block, but it wasn’t a shack. Two years ago, homes in the neighborhood were selling for $300,000 to $400,000, Thompson said.”
“On a tour of Manassas and Manassas Park, Thompson pointed to telltale signs of foreclosure: utility notices posted on windows, newspapers yellowing in the driveway, realty signs staked in the lawn. On some blocks, every third or fourth house sat empty.”
“The losses in value have been extreme. A townhouse in Manassas was being offered at $94,900 even though it was assessed at $253,900. Dozens of bank-owned properties were listed for less than $150,000, far below their assessed worth.”
“‘Banks are slashing prices, and that’s causing value of properties to go down with every sale,’ Thompson said, noting that every time a bank unloads a house at a steep discount, it further devalues other houses in the area that it might also own, fueling the downward spiral.”
“‘With the Hispanic community, we had a huge boom in the last few years,’ said Jose L. Galdos, who recently shut down his settlement company in Woodbridge and laid off his staff, having lost 85 percent of his business in the past year.”
“‘A lot of them had adjustable rates,’ he said. ‘A lot of them are walking away from those mortgages now.’”
“Thompson, Galdos and several other real estate specialists in Northern Virginia estimate that 70 to 80 percent of foreclosure cases they see involve Hispanic families. The number of Hispanic surnames in the trustee notices in the classifieds sections of area newspapers appears to confirm the observation.”
“‘What they tried to do was smart. You can’t make it in America unless you get into home ownership,’ Thompson said. ‘But their timing was bad. They bought at the end of the boom. They were pursuing the American dream, and now it’s crashing down around them like an American nightmare.’”
“‘Most of the people I deal with are responsible people who are trying to find a way out,’ Manassas real estate agent Maribel Alvarez said. ‘Some of the banks are willing and do not want to foreclose on a home, but they’re very limited because the homes are so far off what the person owes.’”
“‘What can I do? I’ve got no choice,’ said Jose Ruiz, 27, a landscaper and illegal immigrant from El Salvador who bought a Manassas condo two years ago for $200,000. He has been making $2,000 monthly payments for his mortgage and condo fees since then, spending most of his monthly income and all his savings.”
“He and his wife worry that they’ll be deported or separated from their daughters, ages 3 and 1. But they can’t sell their condo, which Ruiz estimates is worth $130,000 in the current market. So they’re planning to walk away rather than risk a forcible removal.”
The Herald Mail from Maryland. “They are people who earned six figures just two years ago. They are people who could barely afford one house, let alone the two or three they now own.”
“They are people employed by credit-processing companies. They are an area Realtor and others who have worked in that industry. They are truck drivers, retirees, correctional officers. ‘They’ are Washington County residents now living the terror of losing their homes, their good credit ratings, their dignity.”
“In the past 11 1/2 months - April 2007 through this past Monday - alone, 672 foreclosure notices have been filed at the Washington County Courthouse. That’s up 81 percent over the 371 filed in the full 12 months - April through all of March - a year ago.”
“‘There’s a lot of good people, a lot of fine, upstanding people that had good credit and bought an extra house as an investment to resell or as a rental, and ended up seeing it go down,’ said Hagerstown attorney Stephen A. Glessner, who specializes in bankruptcy cases.”
“‘I hear one horror story after another,’ said Alex Bognar, another local attorney who handles bankruptcy cases. ‘It’s terrible. Younger people, who are pursuing the American dream, and they’re in a nightmare now.’”
“It’s quite different from the heady days of 2003, 2004, 2005 and into 2006, when real estate values soared. Buyers, drawn by lenders offering 100 percent financing and loans not even requiring proof of income, flocked to the market.”
“They were buying housing ‘when housing values were rising so quick. They might enter into a contract and buy a house for $200,000 and, by the time they went to settlement, maybe it would appraise for $220,000,’ Glessner said.”
“So the lender would offer the buyer a choice - a fixed loan at, say, 6 percent interest, or an interest-only loan in which the borrower only would have to pay, say, 4 percent interest, Glessner said. Then, the lender would offer the buyer $20,000 cash - for the increase in appraised value - in a home equity loan.”
“‘So what would you do? Which would you take?’ he asked. ‘They should have taken the 6 percent fixed loan. But a lot of these appraisals were really favorable. And people would do that, thinking 4 percent and 20 grand … and low rates are going to stay around forever.’”
“Worse yet, Glessner said, some local borrowers would ‘take the 20 grand and go buy another property. A lot of these people have two properties. Some have three. ‘You’d be surprised the number of people who have two or three real properties….People who have no money down and end up getting a check for 20 grand. Flip real estate, buy real estate,’ he said.”
“‘By the time people are three, four, five months behind in their payments, most have looked at refinancing,’ Glessner said. That’s when they’re discovering the ‘house they bought for $200,000 might be worth $180,000 or less and they have a first and a second mortgage, and now the property’s worth ($180,000) or ($160,000) and there’s no possible way to refinance it … because one, there’s not enough equity, and two, they can’t afford it,’ he said.”
“‘Or their house may have been worth $200,000, and now, it’s worth $150,000 and their mortgage is $180,000,’ Glessner said. The latter is becoming all too common, Bognar said.”
“‘Almost every person I meet with now, the house is not worth as much as their mortgage is,’ he said.”
“Of the 1,381 houses for sale here in February, just 70 sold, according to Metropolitan Regional Information Systems Inc., which tracks sales. Meantime, it said, there were 231 new listings.”
“Many of the people trying to escape loss of their houses are trying to rent them instead - to help pay the mortgage, according to those in the industry. Homeowners lucky enough to land a tenant now are facing an additional difficulty - competition, Glessner said.”
“Of course, they want the rent to cover the mortgage, he said. But with the ‘big glut’ in rentals, if their mortgage is, say, $2,500 a month, they’re lucky to rent it for $1,500, he said.”
“‘But then, their tenants contact them and say, ‘I’m going to rent one down the street for $1,000,’ Glessner said. ‘People are competing against one another to rent.’”
“Small wonder then that Bognar sees a lot of clients who are in almost a state of surrender. ‘Most of my clients are kind of resigned recently to giving up their properties,’ he said.”
“‘Some move out right away because they face reality.’ Some stay in their homes - and stop paying - until the lender forces them out, he said. Bognar said the number of clients facing foreclosure has risen gradually since last summer. Now, he said, he sees ‘maybe a couple’ of new ones every week.”
“Arriving at his office, ‘most of them just want to know information about how things will proceed, and what their options are and how long can they stay in the house. Lot of people want to know, ‘Are they going to give us any notice to get out?’ he said.”
“‘Most people are relieved to know (that) most of the time, if they do file bankruptcy, it’s four, five, six months. … We can actually drag it out for a year maybe. Otherwise, it’s like 30 days or so.’”
The Morning Call from Pennsylvania. “The good ol’ days in the Lehigh Valley included a continuing population surge, soaring housing prices, rampant commercial development and jobs galore. In the historical timeline of economic development in the Valley, the period from 2004 through 2006 will go down as a notable benchmark. It was a bonafide boom.”
“‘That boom is now only viewable in history,’ said local economist Kamran Afshar.”
“Recently, as the nation was slowly veering into recession, the Lehigh Valley economy stepped off a curb and got hit by a bus. Home-price increases slowed to a crawl, and sales tanked. Once-bustling permit offices fell silent, with half as many house-building permits issued in the Lehigh Valley as the January before.”
“Despite slow sales, the average home price had been generally inching upward through January. But in February, the average price fell $12,000 from the year before, to $210,000. That’s the second-lowest average price in two years.”
“Mark Molchany, president of the Realtors association, says he’s still seeing sellers overpricing homes and buyers expecting rock-bottom prices. Those clashing attitudes lead to slower sales, he said.”
“‘If we start pricing houses a little differently, buyers and sellers are going to get together and it will be a good spring,’ he said.”
mission acCOMPlished
“‘Banks are slashing prices, and that’s causing value of properties to go down with every sale,’ Thompson said, noting that every time a bank unloads a house at a steep discount, it further devalues other houses in the area that it might also own, fueling the downward spiral.”
I thought that supply and demand set prices. Why are they saying a market price is a discount? There isn’t a suggested retail price sticker on houses. If it were really a discount price, like a 20% discount at a department store, then it wouldn’t change comps. The Realtors and banks could end the “semi-annual” sales and sell the neighborhood houses for normal retail prices if foreclosures were really discount prices.
Supply got divorced from demand, a few years ago.
Supply ended up with the house, demand kept the money.
Or like the judge said to my sister, when she got divorced: “His–one bird cage! Hers–one bird!”
We don’t have the jobs for $450,000 houses. We’ve got to have people come here.’”
That’s the bubble model in a nutshell.
Yes_it_was. To the “t”. Build it and they will come!
Well… WHO will come? Oh… “affluent” baby boomers with Big Fat Stacks of Cash! Snowbirds with heaps of equity? Gotcha.
Very little of what was built in the last… 7 years was geared toward “local consumption”. It was totally marketed to the mythical and elusive (yet somehow… abundant?) well-to-do retiring boomer. “They have money and they like to spend it!” (Well whether or not they “have” it they like spending…)
So now towns like Vegas, PHX and just about any resort/retirement destination are stuck with inventory the locals can in no way afford. The whole Ponzi depended on out-of-towners.
I just got back from TN. A similar situation seems to be occurring in East TN as well. There was an awful lot of developments full of these absolutely MASSIVE houses. We’re talking 4-5,000 sq foot behemoths with sticker prices of 300-400k. These piss me off to no end because just as in NC, these houses are only meant for the A-holes from up North with heaps of cash from their crappy little homes in NY, MA, or wherever. Luckily, the newspapers were full of slowdown stories. I think TN, NC, and maybe even GA need to re-access how they’re handling growth. It isn’t smart to simply carve up the territory for people who have no intention of being productive citizens, but instead are just coming down to retire, leach, or whatever.
The good thing that I did see was that these enclaves of Mcmansions seemed to be the extent of the excesses. Older, smaller homes, and property outside of the city, which is less than 10 minutes away- was still pretty reasonable. So for people like me who HATE Mcmansions, there’s still hope.
I really don’t know what that was about? Anyone trying to make a “rolling bubble” play at this stage of the game has got to be crazy! I’m sure it’s a nice area and all so hopefully they’ll have to completely pull the plug before any perm. damage can be done?
But as long as there’s a builder with a dream there’ll be totally unnecessary development. Can’t wait until it runs completely dry and they have to get real jobs.
I don’t know why developers in the South East think us boomers from MA want to spend our hard-earned cash on their crappy McMansions. Every boomer I know wants a sweet little energy-efficient, architect-designed jewel box (about 1500 square feet would be about right). The kind of house you see in Dwell magazine. It’s mostly younger families with lots of children who want to live in those boring, energy-sucking behemoths in the far-flung, ugly new suburbs. Not us. So why all the boomer-bashing?
So why all the boomer-bashing?
Because it’s easy and fun!
My personal experience is that McMansion attaction is a intergeneral thing. I know boomers who have bought waay to much house and people my age.
In eastern TN it would be ridiculous to build 4 - 5000 sq ft homes. In middle TN that is fairly normal in the affluent areas, but there are jobs and kids to fill the large homes. East TN should be for retirees. I live in middle TN and 5 - 10,000 sqr ft home aren’t so unusual for the affluent. They are just a half mile from me. Everything is cheaper here.
DinOR, I kept wanting this logic to apply to Morro Bay (CA), and I kept feeling frustrated with the small movement. Fifteen percent decline in per-sq-ft price took nearly two years. Aha, but NOW, finally, the inventory in the under-600K category is in fact larger than I’ve seen it before. And my personal Case-Shiller-type index for this area tells me there has been a further 5% (?) decline since last fall. Like watching paint dry. Sorry to stick Cali stuff in DC-NC thread…
Oh, not at all. It’s doubly true for the Portland, OR market. Our correction has been so long in coming (it’s hardly worth it) Or at least to me any more? Rather than the fab-fab-fabulous pyrotechnics in LV, FL and elsewhere we get data that make realtor spin “almost” believable!
I now have the conviction to rent for the balance of our natural lives. We should be able to dump our modest condo (really more to get out from under the open-ended property tax and HOA situation than anything) and quit worrying about “appreciation” and “equity” altogether. Our market is toxic enough that by the time we go to retire completely (10 years) the market will just about be poised for a recovery! Seriously, why bother?
I wonder if these developers who just assumed outsiders would come to their communities and buy their products ever did any market research? Did they poll 1000 people between 55 - 65 from Massachusetts and NY and ask them what they were looking for in a house, after they retired? I don’t believe they did. What they assume people want in a house during their retirement years seems quite different from what people actually DO want IMO.
crystal coast of NC looks firm
bummer I want to have a boat n sht there someday
Don’t worry, flat - the money is a little stronger there than Fla. perhaps but the whole coast from Duck to Emerald Isle is way overbuilt - was just up that way and there are more unlived-in megamansions in NC than anywhere I can think of on the Atlantic. And it’s a difficult and expensive place to get to. Prices are on the verge of collapsing there, methinks.
Maybe as the day progresses and more BS employees are given the heavho, maybe there will be 4sale signs up at those megamansions.
So, flat, what prompted you to adopt an intelligible moniker? It’s good, I like it.
lost the last one
join your local http://www.fcta.org
or cagw.org
or …………
‘I hear one horror story after another,’ said Alex Bognar, another local attorney who handles bankruptcy cases. ‘It’s terrible. Younger people, who are pursuing the American dream, and they’re in a nightmare now.’
These poor victims. Oh, the humanity!
So, house flipping is the American Dream? pathetic.
This line jumped out at me: “What they tried to do was smart. You can’t make it in America unless you get into home ownership.” Really? Does that make me a failure because I never chose to get into the game? And here I thought I had a really productive successful life so far.
losers we are
thanks nar
Peter Schiff who runs Euro Pacific capital has assets of about 30-50 million, and rents 2 houses without “owning” any. Smart guy.
But, I guess people like him never “made it”.
What’s really, truly, disgusting (and at the risk of sounding like a broken record), is that nobody gives a damn about the True Victims of this mess.
I get so angry when I read how or governement is taking people’s hard-earned tax dollars and throwing them at FBs!
Sadly, because the folks in the US who are actually productive and are fiscally responsible are a tiny minority, they no longer have any representation in our Government. The game now is for politicians to simply confiscate money from the 5% or so of responsible Americans and use it to buy the votes of the rest of the people. Everyone–from Nancy Pelosi to Barney Frank–is scrambling to throw money at the FBs!
The True Victims are those folks who
1. PAY TAXES. (I know this is a little controversial here, but face it, the top 5% of wage earners pay 50% of all federal income taxes. Many of the the FBs are involved with so many scams, from having a “cash” landloard business, to not having to pay taxes on forgiven debt on what was really an “investment property” and not their primary residence. They don’t pay a significant amount of taxes.)
When all is said and done, only the folks who PAY TAXES will be paying for the mess. Who else will?
2. Have money SAVED. Lowering the interest rates to boost up house prices, lowering savings bond interest, limiting the amount of “I Bonds” you can buy a year to $5,000 is a way of taking money out of the pockets of SAVERS to pay for FBs. And the devaluation of our dollar further hurts American savers.
3. Don’t get the “Mortgage Interest Deduction”–Either because they make “too much money”, have paid off their home, or rent. The Mortgage Interest Deduction–according to the NAR’s own statement–keeps real estate prices higher than they would without it.
4. PURPOSELY didn’t buy real-estate during the bubble because they were smart enough to do the math. Congress and the Fed’s efforts to keep the bubble going further punishes these people.
I know the top 5% pay 50% of fed taxes. But it is the capped social security and local taxes that are the killers for a lot of people. Factor those in and I think you get a better picture of just who pays the most in total taxes.
Don’t forget that SS Benefits are also capped! And that wealthier people get TAXED on their SS Benefits. Also, low-wage earners who put very little into SS get a big windfall!
Any effort to uncap the SS tax that’s not accompanied by an “uncapping” of benefits would be unfair.
The fairest thing for social security would be to simply raise the starting age, gradually, to 72. This way, people can save knowing they have to have enough to get them to 72, but won’t have to worry about running out of money if they live too long.
Interestingly, this option is the LEAST POPULAR to the American public in most polls. Most Americans want to soak the 5% of Americans who actually pay for things.
When I mentioned social security I was thinking of the 7%+ taken regardless of income (up to the cap). As well as local sales taxes and property taxes. And to an extent state income taxes. I’d think these would shift that 5% quite a bit although I’ve seen little that documents this.
All these proposals to uncap Social Security won’t affect the super rich anyway! It’s only taken from payroll tax.
The super-rich make most of their money as “capital gains” or dividends. For example Steve Jobs takes a $1/year salary SO HE DOESN”T HAVE TO PAY SS TAX, and makes his money from (backdated) stock options.
If they uncap the SS tax it won’t achieve the goal of “soaking the rich” and simply put a burden on a very productive group of people–small businesmen, professionsals.
Amen to that. I pay 12.4% of my income on the first $102,000 and that is $12,500 that I will never see again. I don’t mind paying taxes to fund roads and things like that. But SS is simply a forced ponzi scheme, with me being at the bottom of the pyramid and is total bulls**t
Uncapping SS benefits only makes sense if you think SS is a retirement plan. It’s not. It’s taxes used to support a universal pension system, which bears only token resemblance to any input/output trade-off.
My Maryland-dwelling family outright mocked me when, a year ago, I told them that this was coming.
“We’ve been living in this area for 50 years, real estate never goes down here.”
“Federal jobs will prevent housing from ever going south.”
“DC has more per-capita lawyers than anywhere else - they’ll keep prices high.”
They’ve only just begun to eat crow.
‘They’ve only just begun to eat crow.’
I hope you feed it to them forcefully, then. Here’s a recipe: use a generous sauce of gloat, spiced with generalized snotty laughing, to help the crow go down easier.
“I hope you feed it to them forcefully, then. Here’s a recipe: use a generous sauce of gloat, spiced with generalized snotty laughing, to help the crow go down easier.”
Classic!!!!!! Nice one OlyGal!
LMAO, Oly. But since ravens are a member of the crow family, does it mean they can eat raven?
Hope not, I like ravens, they make great sport of letting my dogs chase them. Talk about a hopeless pursuit!
Nevermore! Of course I’ve been keeping my eye out for a small bust of Athena for the library…..
First it was wait until Spring and the market will pick up, next it will be wait until after the election and the new politicos moving in. I think DC will either be the last US bubble to pop or have one of the longest periods of flat appreciation.
17-29 months of inventory in McLean and Oakton (February):
http://www.mris.com/reports/stats/zip_stats.cfm
Ironically, there are only 13-19 months of inventory in Manassas and Sterling.
The amount of snobbery and denial in the DC metro area is staggering. What’s funny is that the area has crashed in previous housing bubbles, just like the rest of the Northeast. It’s already getting ugly here. And like California, the housing prices got so stupidly high, that even prime borrowers were taking on toxic loans. Which means that the worst is probably yet to come.
Will it be as crazy as Florida, Arizona or the Inland Empire? Maybe not overall, but places like Manassas, Virginia got every bit as inflated as anywhere in Florida and have already fallen just as hard.
“‘What can I do? I’ve got no choice,’ said Jose Ruiz, 27, a landscaper and illegal immigrant from El Salvador who bought a Manassas condo two years ago for $200,000. He has been making $2,000 monthly payments for his mortgage and condo fees since then, spending most of his monthly income and all his savings.”
“He and his wife worry that they’ll be deported or separated from their daughters, ages 3 and 1. But they can’t sell their condo, which Ruiz estimates is worth $130,000 in the current market. So they’re planning to walk away rather than risk a forcible removal.”
The way these illegals use their children as shields is disgusting.
And I don’t know why they’re so worried about being “separated” from their children. No one is going to prevent them from bringing their children back to El Salvador with them.
EXACTLY. But someone needs to hurry up and arrest them and throw them back across the border before they sneak away.
The topic on the illegals screams two questions: How/why did the bank loan to an illegal (talk about a no doc loan); Why would you be buying a house, not just the price bubble/what about INS.
The great loan artistes didn’t care who they lent to, perhaps some ire should be sent their way?
They were the ones that made it all possible…
To accomodate Illegal aliens, rather than stopping them at the border, the current adminstration came up with a special tax number, so you didn’t need a Social Security card to get a loan.
Bush has been Pro-illegal Alien better than any administration in the past. Remember the promise to put 2000 border guards on the Southern perimeter? Dropped to 200. Fencing funded by Congress. Not going to happen.
The government is by, for, and of foreign invaders.
The people be damned. IF we get enough illegals, then THEY will be the people, and can vote themselves more of our money. It’s disgusting.
All the current candidates will promote more “immigration” from 3rd world nations, legal or otherwise. So, that will solve the housing crises. They will all need a place to live…..
Just as a practical matter (not even getting into the wider immigration/illegal debate) - how do you get a credit score without a valid SSN? How does that work?
I realize you can fudge all kinds of income/employment info on low/no doc loans - but how do they get around this?
Loan officers = fudge packers
The idea of an illegal human is a very recent invention. They aren’t using their children as shields, they are working and raising families. Even if you are against that, the dehumanization is pretty nasty. And to top it off you use an anti-gay slur. When are you going to get over this childishness? Immigrants and gays are just people. The bubble was driven by a pervasive mania, not by cultural and political issues.
I predict that any government with enough strength and resolve to sweep away the illegals and gays the way you would prever will also be strong enough to deal with people who mouth off with anti-administration viewpoints on blogs.
No one is claiming they are Illegal humans. We are saying they are illegal residents. It’s not a new concept. The idea of borderless nations is a new concept, the one you propose.
Countries and civilized nations were built on the backs of their forefathers. Why don’t these people build their own countries?? Answer: it’s just easier to move into mine. It has taken centuries of human invention and labor to build
“western civilization”. It is the heritage of my people. We are being over-run and robbed of our society, and while this has happened over the course of many different civilizations, at least most other people put up a fight. “Integration” is the new concept. It is what the Roman Empire got. It is what we are getting. It would be nice to stop it before we become the new extinct Rome.
how do you get a credit score without a valid SSN?
Now who is saying that they did not use a valid SSN? I am sure that they did. Perhaps they even used one that belonged to one of your family members? Its not like mortgage brokers were checking or anything. As large companies have repeatedly said, it is impossible to verify that their entire workforces are legally allowed to work in this country. Just too darn hard.
Most likely, however, they used one belonging to their children.
Luckily, they have two kids, so they can purchase another townhome.
Tax ID number it’s an social security style number for those without Social Security Accounts.
Meanwhile, in the paradise of Mexico, Americans who move there legally are not allowed to borrow money to buy a house.
If they earn money there, though, I bet they pay income taxes.
That is ironic but there are, or were, plenty of U.S.-based lenders who will loan to Americans who want to buy in Mexico. Requires a hefty down payment, but I think that’s wise anywhere, any time. I’d guess that there could be, before long, some major price cuts on resales there as Californians and others find a pressing need to dump their vacation properties.
“‘What can I do? I’ve got no choice,’ said Jose Ruiz, 27, a landscaper and illegal immigrant from El Salvador who bought a Manassas condo two years ago for $200,000.”
Only in America.
The way these illegals use their children as shields is disgusting.
In all fairness, they’re not the only ones–every other sob story on here involves someone woefully mourning the permanent stain on the precious psyches of Madison and Jaden that requiring their parents to pay their mortgages would inflict.
On the other hand, I’m still not sure I get why deportation would require that they be separated from their children–there’s nothing in American immigration law that prevents deportees from taking their kids with them when they’re removed. Is he actually suggesting he and his wife would leave a 3 and 1 year old behind?
The kids are likely US citizens, so they don’t have to leave even if the folks were deported. Everyone born here gets citizenship. I dunno El Salvador’s policies on immigration, it might be harder than we guess.
A good PhD thesis in economics would be the relationship of illegal immigration to the housing boom. The new immigration law in Arizona would provide a good test case: is housing crashing faster in AZ since the law was passed than in, say, New Mexico? Would love to see the stats.
““‘There’s a lot of good people, a lot of fine, upstanding people that had good credit and bought an extra house as an investment to resell or as a rental, and ended up seeing it go down,’ said Hagerstown attorney Stephen A. Glessne”
A lot of good, fine, upstanding real estate speculators…
‘A lot of good, fine, upstanding real estate speculators…’
A lot of good, fine, upstanding trees were chopped down in a frenzy of greed by real estate speculators. Wetlands paved over, streams filled with gravel…
I’m enjoying the writhings of misery of these greedy wretches more than I could possibly express, although I certainly try to express it as best I can, here on the HBB and in the flesh.
In fact, I believe I’ll print off some of these articles and run outside and read them to my favorite trees, share the great pleasure with them. If the frogs will hold still, they can hear too.
Nice, Olympiagal. I too notice that no one gives a sh#t about all the continued destruction of habitat and wildlife. We’re supposed to cry for the speculators but not for the lost wetlands and species.
Well that and the fact that we’re finding so much of this development was completely unnecessary. Don’t get me wrong, if we had working people living in tents because there were not enough homes, I’d be changing my tune. Once we see how many of these homes meet with the blade of a CAT we’ll know how few really were “needed”.
Preach it, Oly (as Palmy would say)!
In fact, I believe I’ll print off some of these articles and run outside and read them to my favorite trees
Be sure to print them off on recycled paper!
Or even better, take your laptop outside and read it straight from the screen.
I’m sure the trees would appreciate the ‘cannibal-free’ format
Here, here! I’m sure all of these developers whined and moaned about enviro regulations. Now they’re whining and moaning about their losses.
There was actually something in the Times today that quoted a developer as blaming the housing crisis on - hold on to your hats! - local governments that tried to prevent sprawl. Here it is. Sorry, not a developer, but someone from the McCain campaign (quoted by Paul Krugman):
‘For example, last week one McCain economic adviser — Kevin Hassett, the co-author of “Dow 36,000” — insisted that everything would have been fine if state and local governments hadn’t tried to limit urban sprawl. Honest.’
http://tinyurl.com/2e9sga
It would have kept prices from moving as much, contrast Dallas and Houston with LA and Miami, There’s no reason other than zoning laws that prices were so far removed from fundamentals. Low zoning regions had larger increases in housing stock but much smaller increases in price.
I’ve got some family in Maryland and we would visit them once a year or so as a kid. Outside Frederick. Every year when we’d go back I could see the suburbs reaching further and further out into what used to be farmland. Great farmland, fertile soil, that was paved over for mini malls, apartment complexes, and bland subdivisions. That was a couple decades ago. I haven’t been back in that area since, and I probably don’t even want to know what it looks like now in the wake of this most recent bubble. I bet every nice dairy farm got paved over and is now a subdivision with a name like “Morningwood Terrace” or something like that.
What I hate is when the developers name the subdivision after what was obliterated in order to build it.
“Blueberry Hill”–where the blueberries used to be
“Bear Run”–where the bears used to be
“Houghton Farm”–where Mr. Houghton’s farm used to be
Key word:
“…bought an extra house as an investment…”
Some investments work out. Some don’t. This didn’t. Oh well. Suck it up and move along.
Feb. sales increased on lower prices; NAR is going to have a field day with these numbers.
Straight from the horse’s mouth, apparently a 8.2% drop in prices is a “fairly stable range”
http://www.realtor.org/press_room/news_releases/2008/existing_home_sales_rise_in_february.html
Pass me the Grape Flavor.
The “increase” is only relative to Jan numbers, so highly subject to seasonality. The YOY comparison of Feb 08 to Feb 07 will look much worse, if someone has the time to look it up. I think NAR used to report YOY when it looked good for them.
“Mark Molchany, president of the Realtors association, says he’s still seeing sellers overpricing homes and buyers expecting rock-bottom prices.
Sounds like the realtors are not doing their jobs convincing the sellers to lower their prices to the point buyers will buy the property. The market dictates pricing of property, not the realtors or the sellers. Property is only worth what someone is willing to pay.
All a seller needs to do is eliminate the commissions of the realtor by using services such as for sale by owner and lower. Set the price of the property to the current market rate minus the realtors commissions. Therefore, your property compared to a property listed by a realtor would sell much faster since it is priced a current market values minus the realtors commission that a realtor listed property would have included in the price.
“Mark Molchany, president of the Realtors association, says he’s still seeing sellers overpricing homes and buyers expecting rock-bottom prices.
Sellers do want to sell overpriced. Buyers always want to buy cheap. Its a buyers market. The credit crunch has cut the pool in half and its not slowing down.
Existing home sales will be interesting…
Got Popcorn?
Neil
In DC new homes are very SLOWLY selling, but a few samll Builders are going under
Resales are completely hammered, since they can’t/won’t cut their prices low enough to sell.
The Builders are killing the resale market, since they can give away “free” options & all
Why by someones old POS house, when you can get a new one Built cheaper?
“Why by someones old POS house, when you can get a new one Built cheaper?”
Because the old house was built with more care than the new house. Because the builder of the old house didn’t scrimp on materials. Because the old house has more character. Because the old house is in a better location, closer to town. Because the old house has mature trees and landscaping. There are a lot of reasons why someone might choose an old house instead of a new house.
Mr. Molchany also said:
“‘If we start pricing houses a little differently, buyers and sellers are going to get together and it will be a good spring,’ he said.”
I think that’s a good sign, coming from a realtor. Unfortunately, I don’t think the realtors are going to be able to chip away at the hubris and greed of sellers who see 200-300% appreciation as a birthright. The only thing that will bring many of them down is to see their neighborhoods and comps swamped by REOs and foreclosures.
In truth, only the buyer is “bringing any thing to the party”. Without his or her willingness to plunk down cash or commit to indebtedness NOTHING happens. No one gets PAID!
I’ve been a seller (in a buyer’s market) and buyer in a “seller’s market” but I never lost sight of what was going on. When you’re surrounded by idiots that truly believe “it’s impossible to over-pay for real estate” sticking to your guns is kind of pointless. So many people lost their ability to bargain… any thing. Just shut up and PAY!
What they need is a realtor like this one…
“Daniel Farash said he returned home to his three-bedroom apartment on West 79th Street after a weekend away to discover many of his mattresses had been urinated on, his belongings broken and laid out in strange patterns - and his broker naked and chanting in a closet.”
“I was ambushed. She came out of that closet like a lunatic. She was naked holding my mother’s vase in one hand and a towel in another and screaming all this nonsense,” Farash, 44, told The Post. “Portions of my house were turned into . . . a satanic temple . . . like some sort of witchcraft. I was in shock. You’re talking about your home - you’re talking about your real-estate broker.”
http://gawker.com/news/metro/manhattan-realtors-satans-happy-footsoldiers-203004.php
“Beth Burdick of Ashford Mortgage Advisors said prices haven’t dropped as much as sales because many homeowners are reluctant to sell in a down market. ‘You have kind of a stalemate between buyers - if they can get a mortgage - making a low-ball offer and sellers holding on,’ she said.”
Well, shucks. There’s that pesky lil’ word again. ‘If’. If, if, if…so little, and yet so big, huh? In that spirit of brevity, I shall confine myself to only one ‘HA!” instead of my normal ‘HAHAHAHAHAHA!’
REOs may not be the most gentle laxitive, but they ARE what this market needs to become “regular.”
“Thompson calls this the ‘ring of fire,’ Northern Virginia’s foreclosure belt.”
Grrr, not another ear worm. “Just Walk Away, Renee” was bad enough, but now Johnny Cash?
I must say however, that the ring of fire analogy is a pretty good one. Those parts of NoVA were/are the blue collar areas, and prices got far out of blue collar range.
It burns, burns, burns, and the flames getting higher. Johnny Cash
Actually my favorite version is done by Dick Dale on… Tribal Thunder? Long Live the King of the Surf Guitar!
Liked seeing him in that car ad last year….
Maybe he’s referring to the Rign of Fire which surrounds the Pacific Ocean. That’s where all the tectonic plates meet the land and scrape each other, causing earthquakes and volcanoes, hence the name.
Atleast these realtors remember their high school earth science.
It’s getting bad in other NoVA areas too, most all of Loudoun Co, Haymarket, Gainsville, Centreville - all are getting spanked BIGTIME (100-300K down from 2005)
Western parts of Fairfax are about the same. The “ring of fire” is spreading inward…
I take it (blogging from here in Australia) there is either something severely wrong with Mannassas/Manassas Park as a place to live, or an unfriendly road network.
Otherwise why wouldn’t you trade off the commute against the cost of housing and live there if you had a moderately paid job in Washington?
The commute would be about 3 hours out of your life each work day (1.5 hours each way), plus paying for parking and gas (about USD 3.20 per gallon right now). And then there is the fact that other than chain restaurants and movie theaters, there really isn’t a lot of cultural value in the outer burbs. Sporting events (other than high school), comedy clubs, theater, etc. all require you to go to DC or at least the Virginia areas immediately adjacent to it.
You just describe new America in a nutshell!
It’s the commute - too many damn people trying to do the same thing, namely suck off the government. For the most part, they get the mindless hell they signed up for.
From most areas, its a killer trip just to get on the highway to DC. The schools are terrible–I am a proud grad, so I know
–and most areas are now Third World Ghetto due to all the illegal immigrants. Most people looking for cheap housing skip Manassas altogether and look at the newer construction out in the Gainesville area.
Manassas & Manassas Park are both Gangland Central !!
Longish commute (although there is commuter rail) is part of it - but I believe a lot of people out there aren’t commuting to DC - but rather working in local home construction/RE fields, or in office space in Tysons, Reston or Dulles corridor. There are probably more jobs in Northern Virginia than DC these days, overall.
The real culprit is that there’s been a lot of recent inventory added out there - including cookie-cutter townhouse developments. It is a cheaper alternative than Fairfax County, and I think it’s getting pounded on quality of life, quality of schools issues as well. Loudon County is also getting beaten up, however — although it’s generally more upscale than Prince William County. At least Loudon is trying to rein in growth — I don’t believe the same is happening in Prince William — so you’re likely to see cheap inventory continue to accrue there.
Parts of Manassas are exceptionally nasty — our only little slice of 1930s Appalachia right here in the DC metro — and give the rest of the area a bad name.
Or at least that was how it was. Now throw in the fact that the area is overrun with illegal aliens, and now you’ve got some serious quality-of-life issues.
loaded w illegals and skanked in general
Rich folks close in don’t like highways near their precious offspring, so they haven’t approved expansions of the roads from the outer burbs. The main East/West interstate to VA (that goes through Manassass goes from 2 lanes to 3 lanes until you get most of the way there. (There’s a much larger highway but it is more like a business loop going through the towns and communities all the way along). There is a commuter rail, but that’s at least a 40 minute ride (to a major but central metro stop). Minimum commute on most days would be an hour. Plus the then 300 to now 100 townhomes are generally in the more run down areas of Manassas (the good single family areas have done more like 700 to 500 or 500 to 300–similar to the close in burbs).
“‘What they tried to do was smart. You can’t make it in America unless you get into home ownership,’ Thompson said.”
OK all you rich renters, have at it.
Thank Goodness it’s not true. Otherwise we’d have morphed from the “land of opportunity” to the “land of gotta-buy-a-home”.
People saying that just means The Great Housing Bubble is alive and well, and there are a few organs of this beast that haven’t fully shut down yet. That’s what they were saying about stocks 9-10 years ago. But after a couple years, that was put down rather handily.
What would I do without the real estate industry to inform me what a miserable failure I am?
I have:
A great job with a huge salary
Lots of money in savings
A huge growing IRA/401K
Various other investments
No debt except a student loan (which I could pay off, but I don’t see the point of reducing my cash reserves when the interest rate is below inflation and I can stop paying anytime I am unemployed)
But since I don’t own a house, I am obviously some financial/economic loser.
I’m surprised this guy didn’t call renters, terrorists.
A few months ago on a different blog, some RE agent was mocking renters, saying that if you didn’t buy, you’d have to drive around a ten year old car for your whole life (obviously the pit of despair). Not only do I rent, my car is thirteen years old (bought new, paid cash, still runs great).
I’m looking forward to that RE agent filling my latte orders…
Or, to quote Glengarry Glen Ross:
“You’ll be shining my shoes.”
………..Hey, “coffee is for closers”.
I loved the snobbery of those hot-shots.
I’m a homeowner (a real one! The house is paid for), and I have a hard time convincing otherwise intelligent people that it may not be worth it to buy a home! You’d think they’d listen to someone who has no ax to grind, but they won’t.
And if you do the math over the long term, including maintanence, property taxes, (and for some unfortunates, HOA fees), it becomes clear that it’s hardly been a “good investment” like the NAR would tell you. And that’s not trying to model risks like neighborhood change, etc.
I’m not saying it’s wrong to buy a home! If affordability isn’t an issue for you (like being out of work for a couple of years isn’t going to bankrupt you), and you like the home, and are as sure as anyone can be that you’ll stay put for a while, go ahead and do it!
But–especially in this economy–you may want the flexibility to move in short notice. In fact with rising gas costs, it may make sense to always rent so you can move close to work–even if that changes every few years. (Not to mention saving the “cost” of your time spent in a car for 2 hours/day)
Speaking of RE filling latte orders, from chatting with the clerks at the local stores, they tell me that they’ve been flooded with inquiries about jobs from people who are usually older than those who’ve sought those jobs in the past….I think it’s happening already!
If we don’t keep buying houses, the terrorists will win.
I’m surprised this guy didn’t call renters, terrorists.
W will.Just wait.If he can read his notes. 2 words per page.
be careful the gov’t may want to put us renters in guantanomo bay
I think we renters are safe. At the individual level of finance we’re the equivalent of sovereign wealth funds.
I don’t think I know any homeowners in your shoes.
I don’t think I know any homeowners in your shoes.
I am in his (or her!) shoes. I’m sure there are others on this blog who are prudent, solvent homeowners, too.
How do people go from “For people who are intending to live in one place for the next 10 years, purchasing their housing usually makes sense,” to “It doesn’t matter how much you pay, buying your housing always makes sense”?
I know people with 7 figure net worth who rent…
Me too.
“What they tried to do was smart.”
So, it is smart that they overpaid for a house they are now losing. War Is Peace, Freedom Is Slavery, Ignorance Is Strength.
‘You can’t make it in America unless you get into home ownership,’ Thompson said.
Where in the hell is this crap coming from?!! Must be the new mantra.
” residents now living the terror of losing their homes, their good credit ratings, their dignity.”
And more of the same crap!! THEIR DIGNITY?? You’ve got to be kidding?!!
Margarita time!!!!!
reading this makes me want to choke this a$$hole.
imagine you life is based on a credit score!
Cinch
Well a lot of people do! I’m always more than a little surprised when someone I otherwise totally respect starts telling me about their “really great credit score”. Huh?
Dude, once you’ve run up enough debt to last 3 lifetimes… what’s the point? Since I’m either in the last home (modest condo) I’ll ever own OR… will go back to renting for life, WTF do “I” care? I’ll probably never buy a new/financed car again and we pretty much pay as we go.
Anyone in their 40’s or 50’s would impress me a whole lot more by boasting about how much they’re rat-holing into their IRA etc. Ya’ think?
‘You can’t make it in America unless you get into home ownership,’ Thompson said.
How many aren’t making it because they tried for home ownership at the worst possible time after being given loads of the worst possible advice?
” residents now living the terror of losing their homes, their good credit ratings, their dignity.”
Perhaps they should cover their houses in plastic sheeting and duct tape before walking away. How many subprime borrowers had “good” credit ratings to lose?
I keep reading about people who were “just pursuing the American dream”.
What about the American Dream is specifically American? Home ownership?
Silly Wabbit, Realtor don’t sell wooden boxes. They sell dreams!
I’ve been asking about this for years: What is the American Dream? Sometimes it’s buying a home, other times it’s getting rich. And yeah, why is it specifically American?
I am thinking it’s a hand-waving cover for irrational thinking.
Make that flag-waving cover and you’ve got the right idea.
Consumption, not citizenship, is the American Dream, which we’ve been doing pretty well for the past 50 years. What until the rest of the world catches up with their own “Dream”.
The “American Dream” seems to be an archaic term born in the 1950’s when GI’s got home loans from the goverment, we actually made stuff, and people actually could afford what they bought. That dream has been long-gone for years.
Yeah, that’s how they package and try to sell it. Here’s something that always gets me, though. I believe the rate of home ownership during the bubbly times went from 65% to a whopping 69%. 4 friggin percent? That’s it? So only 4% more of Americans got their “dream”? Hardly worth it (though we all know that).
Which would be fine if that 4% was created through income growth, or an increase in job stability. But since much* of it was fueled by mortgages that gave the illusion of affordability….
*Some of it WAS because people managed to homes at low interest rates before the same rates drove the prices up.
The New and Improved American Dream is jacking up the Spring FSBO price or Relisting with SuperAgent to land a Spring SUCKER and that Wishing Price…before the Bank reams you
The American Dream is that instead of being locked into a permanent underclass, if you worked hard you could rise in socioeconomic class. It’s American because as long as America had a frontier, we had a place where you could establish yourself in life without having to fight resistance from Powers That Be. Brad Hicks explains it in his fifth paragraph here.
““‘What they tried to do was smart.”
No it wasn’t. It was utterly retarded.
As is now evidenced by reality.
I’m sure Johnny Cash is insulted using the name of his song for an article with dump of town like Manassas. There is a reason why its called “Manasty”!!
Manassas is a total disaster. My parents have lived in the same neighborhood there for 30 years. It was a nice, safe, lower middle class area (cops, teachers, very low level GS workers, etc).
In the past 3 years, their neighborhood has been transformed into the barrio. One gang murder and one random robbery-murder at the park 2 blocks away. Zero non-hispanic kids in the local elem school. (All the “native” residents home-school).
My mom had to join a gym b/c she is afraid to walk by herself in the neighborhood. Oh, and now that the construction industry is kaput, tons of guys just hanging out all day long drinking.** Oh, and every third house at least is vacant and for sale.
**Except for one intrepid soul, who has turned a Target shopping cart into a portable burrito stand. He walks up and down their street ringing a bell. It is surreal. My parents would love to sell but they don’t think anyone would buy it. It sucks.
But your parents are the retired baby boomers with tons of cash to buy up McMansions in trendy retirement places right ?
Seriously though most of the housing stock owned by boomers is not the best and smaller than the McMansions so as this bubble pops most boomers will find that their houses won’t return a lot.
Not a lot of people want to retire by downsizing and have to take out a loan on a new place. It only works if they can pay cash after downsizing and make a nice profit.
Not only did the industry sell certain ethnic groups a home ,but did I read it right that they got 20 k in cash to buy another home? If lenders were giving out cash on a purchase ,or shortly after ,than the buyers were being paid to buy houses .What a joke . Buy a home and buy another home with your cash back loan from the lenders.
The industry wasn’t just selling the American dream of home ownership ,they were selling the dream scheme of purchasing 2 or 3 or 4 houses without putting up one dime of down payment . And these acts by borrowers and the industry drove real estate prices up and priced a real buyer out of the market and created fake shortages .
Apparently the industry was trying to find bodies that would buy into these ponzi schemes of multi-purchasing of real estate . Not only had the borrower not shown ability to pay for the first home they bought or ability to come up with a down payment ,but now they are given a loan out of the equity of the first home to buy another one ? This was indeed a Ponzi -scheme that was marketed by the REIC .
And the powers want to bail-out the poor homeowners that were bribed into buying real estate as well as the lenders that allowed and funded these Ponzi-schemes .
On the Cable business TV channel today they were talking about the subject of “Should the Feds buy MBS’s ?” Currently the Feds are just giving loans against this junk paper . Doesn’t Wall Street just want the Feds to buy this junk paper ? One of the talking heads in essence thought that somehow a new market should be provided to sell this junk paper ,so the lenders can take thir losses . Shouldn’t the talking head be saying ,”The Feds eventually will have to sell this discounted paper in spite of the fact that the Feds paid full value for it .” Another talking head said words to the effect that Congress would need to approve of the Feds actually buying mortgage backed securities . Other talking heads have stated that the foreclosures should just be bought by the government .
Why is it that every act and talk by the powers is a attempt to transfer the loss of the current bagholders to someone else . Faulty lending , in fact crazy fraudulent lending, that was done with the idea that the risk would be passed on ,and now who is the final bagholder? Everybody knows it to big to bail out ,so what in the hell are the powers doing ? I’m waiting for the next phase of this ongoing drama.
Privatize the gains and socialize the losses! The cheerleaders at CNBC et al. are ultimately doing a disservice to their viewers. But then again their viewers are traders and financial hacks who are essentially gamblers.
Cinch
I didn’t think it bothered me but all the WP articlec has made me mad as hell. Since when is the American Dream giving out mortgages to illegal aliens?
“‘You have kind of a stalemate between buyers - if they can get a mortgage - making a low-ball offer and sellers holding on,’ she said.”
“If they can get a mortgage” - that is the first time I’ve read such an unconditional-surrender statement coming from a former cheerleader. I wonder if the sellers understand how much that changes the rules of a game they were already losing. If I were a seller and read that in my local rag, I’d immediately whip into Dutch-auction mode.
Right ,someone who can qualify is golden and can call a lot of shots in a market like this .Qualified buyers should tell commissioned sales people that they want to be picked up in a limo and have lunch at 12 o’clock .