From Unmitigated Optimism To Caution
Some housing bubble news from Wall Street and Washington. Bloomberg, “Home prices declined in 21 U.S. cities in January, led by Sacramento and Las Vegas, as banks sold foreclosed homes at bargain prices. The price per square foot in Sacramento dropped 28 percent to $166 from a year earlier, according Radar Logic Inc. Las Vegas fell 25 percent to $137 a square foot. San Diego was the third-worst U.S. market, with prices dropping 21 percent, and Los Angeles was fourth, with a 17 percent decline.”
“‘Like homebuilders who feel pressure to get rid of inventory quickly, many banks and lenders experience the same pressure when dealing with homes from foreclosure,’ and decide to sell at below-market prices, the report said.”
The Kansas City Star. “NovaStar Financial Inc. disclosed that more than half a dozen regulators and law enforcement authorities, including the FBI, have requested information from the subprime mortgage lender.”
“The decline in housing prices has clobbered NovaStar, which specialized in making mortgage loans to borrowers with shaky credit histories. Soaring delinquencies, defaults and foreclosures led to a staggering loss for the company last year of $733.1 million.”
“In its filing, the company repeated its earlier declaration that there were ’substantial doubts’ it could continue as a going concern and that it may be forced to declare bankruptcy.”
From Spiegel Online. “Germany’s second biggest state-owned bank, Bayerische Landesbank, revealed Thursday that the global credit crunch (more…) has cost the bank €4.3 billion ($6.7 billion) — far more than it had previouly predicted and more than any German state-owned bank has suffered so far.”
“During a presentation of the bank’s results Thursday, the company said that €24 billion of its assets were at risk of devaluation. On Wednesday, Germany’s third biggest state-owned bank, WestLB, reported it had lost €1.6 billion (more…) in 2007 after the credit crunch cost it over €2 billion last year.”
“‘What the real fallout will be, nobody knows right now,’ said Michael Kemmer, BayernLB’s CEO.”
From Reuters. “British house prices fell for the fifth month running in March, according to data from the Nationwide Building Society, as lenders pulled cheap loans, rushing to cut their exposure as they themselves struggle to obtain reliable financing.”
“Britain’s house prices have tripled in the past 10 years and, at about 174,000 pounds each, cost more than seven times the average annual salary.”
“‘Most of the recent news has been concerning,’ said Ed Stansfield of consultancy Capital Economics in London. ‘It’s looking as if the chances that we follow the United States in terms of scale of (house price) falls are rising all the time.’”
“The truth is that most British homeowners couldn’t afford their houses if they didn’t already own them. Take a buyer on an average salary of about 23,000 pounds buying an average house for about 174,000. Even if by some stroke of luck the buyer had managed to save 35,000 pounds for a deposit, finding a lender who would lend them six times their salary today is all but impossible.”
“This is beginning to dawn on many, to judge by a recent survey of British consumer morale, which showed it had fallen to its lowest level in more than 15 years in March.”
“The UK has been heavily dependent on consumer spending that is housing related in one way or another; either due to investment in housing or based on spending predicated on house price gains past and future.”
“Spain’s fast-crumbling property sector, the driver of stellar growth for a decade, still has a long way to fall and will condemn the economy to years in the doldrums, economists believe.”
“Last week official figures showed January home sales slumped 27 percent year-on-year and anecdotal evidence suggests the situation is far worse. Juanra Doral, director of operations at one of Spain’s biggest property websites, said sales on its site have more than halved year-on-year.”
“‘We are witnessing an almost complete halt. Nobody expected it to be so severe,’ he said, adding that it now took over 11 months to sell a house compared with three this time last year.”
“‘When it comes to the imbalances within the economy, Spain is like the U.S. on speed,’ said Diana Choyleva, a senior economist at Lombard Street Research in London.”
“Home starts will halve to 300,000 this year, the Madrid Association of Property Developers (ASPRIMA) said last week. The group had estimated 400,000 building starts but its chairman told journalists the estimate had become obsolete in the time it took to publish the report.”
“With hundreds of thousands of properties standing empty, prices are likely to fall 8 percent this year after tripling in the last decade, ASPRIMA has said.”
“‘Forget about Spain,’ Lombard’s Choyleva tells real estate clients asking her whether to invest in the country. ‘It’s going to be a long time before this economy returns to anywhere near the growth rates it enjoyed over the last 10 years.’”
“A plunge in consumer confidence and services sector activity shows the collapse in the property market is fast infecting the wider Spanish economy. ‘In Spain it seems to be an all-round malaise,’ said NTC chief economist Chris Williamson. ‘It was a dreadful survey.’”
“Not only that, consumer confidence fell in March to 73.1 from 76.8 in February, the Official Credit Institute said on Thursday, close to January’s all-time low of 70.9, and well below the 100 mark which separates pessimism from optimism.”
“‘Spain is a real disaster,’ said Marco Valli at Unicredit MIB. ‘The housing downturn is spilling over very quickly to all other sectors, helped by the surge in inflation that dampens purchasing power at a time in which consumer confidence drops due to the weakening labour market and economic outlook.’”
“The first hint of an end to the Spain’s decade-long property boom, which saw house prices triple, came only around the middle of last year when property websites reported prices began to dip.”
“At the time, economists and officials scoffed at any suggestion of an end to exponential growth in property. But the U.S. subprime crisis and ensuing credit crunch in the second half of last year taught Spaniards the dangers of allowing household debt to reach 130 percent of annual income.”
“The cause of the mess was cheap credit thanks to Spain’s membership of the euro zone, long hailed here as an unalloyed blessing.”
From Stuff.co.nz in New Zealand. “House prices are overvalued by about 30 percent, according to BNZ economists who warn against increasing the supply of houses when the market is diving. ‘We believe house prices risk falling by more than the 10 percent we already presume for this year,’ BNZ said in a report.”
“Between 2003 and 2007 there was roughly one new dwelling built for every two additions to the population. This build-rate has been higher at times in New Zealand’s past but it was not low.”
“A correction in the housing market is inevitable. It will be painful for many people but it will be good for the economy. ‘Well, it’s here. And the potential downside bears thinking about - as our indications of a 30 percent housing overvaluation attest to.’”
“‘But let’s also bear in mind the good news, in that many potential home owners, long squeezed out of the market, stand to be big benefactors,’ BNZ said.”
The JoongAng Daily from Korea. “In a switch, the price of apartments in the Songpa District of the trendy southern Seoul area are falling as thousands of new apartments near completion.”
“‘There is a large number of new apartments and there are units for sale for 20 million ($20,470) to 30 million won less than the current market price,’ said Lee Mun-hyeong, a realtor in Jamsil-dong, Songpa District.”
“According to real estate industry experts, there will be 18,105 new apartments available between July and September in the Songpa redevelopment area. That number represents 23 percent of the 78,524 apartments now in the district and is double the average annual new housing supply in southern Seoul since 2000.”
“Apartment prices in Songpa have fallen 0.3 percent on average this year. As the trend continues, more owners are considering selling.”
“‘Apartments purchased for investment purposes are on the market and the prices have declined by 50 million won this year,’ said Lee Sang-woo, another realtor in Jamsil.”
The Calgary Herald from Canada. “Alberta’s resale housing market is cooling in the same manner as Calgary’s with sales dropping and new listings rising dramatically in February, according to the Canadian Real Estate Association.”
“The association’s latest MLS data show unit sales for residential properties (single-family homes and condos) in the province decreased by 30.3 per cent compared with a year ago in February (6,602 to 4,601) while new listings increased by 44.9 per cent (from 7,800 to 11,302).”
“New listings were at the second-highest level ever for the province.”
“‘Now that price growth has come to a grinding halt, speculators are looking to get out of the marketplace,’ said Richard Corriveau, regional economist for Canada Mortgage and Housing Corp. ‘So people who had purchased in previous months are attempting to now get out of the market because there’s no incentive to wait for future price gains in the near term.’”
“The drop in Alberta sales, said Corriveau, is due to a sharp decline in net migration and ‘a response from prospective buyers on the rapid price escalation from previous years.’”
The Calgary Sun. “Calgary homeowners Darren and Colleen Long are feeling the impact of the city’s saturated housing market. The couple has had their family’s Douglasdale Estates home on the market for six months with plenty of showings, but no offers.”
“‘You need to compete,’ Colleen said of the large number of homes for sale. ‘There are four, five or six (homes for sale) on the same street.’”
“In Calgary, the average sale price for a single-family home in February was $471,696, well up from the $448,557 in 2007.”
The Vancouver Sun. “Greater Vancouver closed March with its slowest first-quarter for sales since 2001, Canada Mortgage and Housing Corp. analyst Robyn Adamache said Wednesday.”
“In Greater Vancouver, realtors saw 2,997 sales through the MLS in March, compared with 3,582 in March 2007. New listings added to the market in March were up four per cent to 5,674 compared with the same month a year ago.”
“Prices, however, remain elevated with the benchmark price of a so-called typical single-family home hitting $764,616 in March, 12 per cent more than March 2007.”
“In the Fraser Valley, property inventories hit a 10-year high in March, the Fraser Valley Real Estate Board reported, with total active listings up 27 per cent to 9,361 units compared with a year ago, although new listings in March were down from the same month a year ago. MLS sales in the Fraser Valley of 1,315 units represented a 25-per-cent decline from the same month a year ago.”
“Tsur Somerville, director of the centre for urban economics and real estate at the Sauder School of Business at the University of B.C., added that his sense is that the market psychology has shifted from ‘unmitigated optimism’ to caution, given what has happened in the U.S.”
“‘People are cognizant of risks to real estate in a way that, two years ago, they weren’t entertaining,’ Somerville added.”
The Winnipeg Free Press. “Bargain-savvy Manitobans are creating their own little desert storm, snapping up vacation homes in the Phoenix area as Arizona builders scramble to unload properties for as little as half the usual price.”
“Tom and Angela Lamboo of Winnipeg paid $117,500 for a brand new, 1,327-square-foot bungalow that includes three bedrooms, two bathrooms, a two-car garage, all new appliances, $3,000 worth of window coverings, a fully-landscaped front yard, and a 1.8-metre-high brick fence that runs all around the property.”
“‘Did I think we would get a brand new home for that price? No!’ Angela Lamboo said in an interview. ‘When you think about it, it’s crazy.’”
“Steve Lauritano, owner of Arizona Pro Realty, Inc., and business partner Diane Olson, an ex-Winnipeg police officer now living in Phoenix, said the type of home the Lamboos bought was selling three years ago for $220,000. Lauritano said Phoenix-area house prices haven’t been this low since the late 1980s.”
“Overextended homeowners have been losing their homes left and right, the banks are flooding the market with repossessed properties, and desperate builders and developers are unloading new homes at bargain-basement prices to reduce their debt loads.”
“And because nervous Phoenix residents aren’t buying move-up homes like they used to, builders are bending over backwards to accommodate foreign buyers, Lauritano said.”
“‘The prices for buying brand new are unbelievable,’ Olson added. ‘They’re cheaper than a lot of the (resale) homes that are available through foreclosures.’”
“‘Even if we were to decide to get out in a few years, I think it will be worth more than we paid for it,’ said Tony Russell, of Stonewall. ‘So I think it’s definitely going to be a good investment, as well.’”
“Lauritano agreed. ‘Home prices definitely will go up again,’ he said, adding the only question is when.”
The New York Times. “The rapid decline in housing prices is distorting the normal workings of the American labor market. The Census Bureau, however, calculates how many people move across state lines for all reasons, and that number fell by a startling 27 percent last year, after climbing by almost that percentage for each of the previous three years.”
“Out of 3,500 employees in the United States, Applied Industrial Technologies normally transfers 25 to 30 each year from one center to another, or to the headquarters in Cleveland.”
“Almost all are career people rising in the ranks. Despite the opportunity, transfers have fallen by half, VP Richard Shaw said. That is mainly because transferred employees too often find themselves owning two homes — one in the old location and one in the new — and paying two mortgages.”
“Applied tries to minimize the problem by paying one of the two mortgages for up to six months, the expectation being that the old home will sell by then. Increasingly, that does not happen, not with inventories of homes across the country at an 18-year high, according to the National Association of Realtors. That makes employees reluctant to move, even for a raise and a promotion, Mr. Shaw said.”
“He tells of one transferred executive ‘who ended up owning two homes for more than six months and, finding himself paying two mortgages, opted to move back to his original city, surrendering his new house to the bank.’”
‘BNZ economists warn against increasing the supply of houses when the market is diving.’
‘Desperate builders and developers are unloading new homes at bargain-basement prices to reduce their debt loads.’
‘Tom and Angela Lamboo of Winnipeg paid $117,500 for a brand new, 1,327-square-foot bungalow that includes three bedrooms, two bathrooms, a two-car garage, all new appliances, $3,000 worth of window coverings, a fully-landscaped front yard, and a 1.8-metre-high brick fence that runs all around the property.’
‘Did I think we would get a brand new home for that price? No!’ Angela Lamboo said in an interview. ‘When you think about it, it’s crazy.’
Note to MSM and Washington; these markets are overbuilt. And as long as prices stay artificially high, the building will continue. So anything done to boost buyers or prop up prices or even to help builders will only make the bust that much worse. And you’ll have even more foreclosures.
EOM.
Why is economics 101 so difficult to grasp for these guys? Does it take a Mensa IQ to realise that the proposed solution will only prolong the agony? Has the world become so complex that simple concepts are no longer understood? Ben, I can now begin to understand your agony.
107. A sign of strong character, when once the resolution has been taken, is to shut the ear even to the best counter-arguments. Occasionally, therefore, the strong of character exercise a will to stupidity.
– Friederich Nietzsche –
“Beyond Good and Evil” (PB translation)
(Plugs hands in ears, shuts eyes, and loudly chants): “Na-na-na-na-na-naaa…”
Durbin was interviewed last night. I am embarrassed for this country. We have lost the right to call ourselves leaders. But Bu$h is focusing on the right things. He is pushing through missile defense for Europe. Why not? We have all the money in the world. The man really is a plague.
I thought the cold war ended 15 years ago? This is ridiculous.
I thought it was the Mensa-grade financial wizards who turned the global economy into a derivatives-based craps game!
(throws $5 onto the green felt table)
Give me a “Hard 8″
Some people are going to be getting the “big dick” before it’s over.
But a well hedged craps game… Oh wait…can you hedge in craps?
Hey, don’t put all of us Mensans into that category. We are having a field day over at the Mensa boards too. Of course there are always the permabulls who are still denying that there is or will be a recession. Those are the types who drive looking out of their rearview mirror.
“Note to MSM and Washington; these markets are overbuilt. And as long as prices stay artificially high, the building will continue.”
How does that go? Something like, “Anything that is over-valued will be over-produced”.
“Germany’s second biggest state-owned bank, Bayerische Landesbank, revealed Thursday that the global credit crunch (more…) has cost the bank €4.3 billion ($6.7 billion) — far more than it had previouly predicted and more than any German state-owned bank has suffered so far.”
Yeah, bad news for the stock market to rally on.
Al, Key words: “so far”!
Also, “…the company said that €24 billion of its assets were at risk of devaluation…”
Let’s see, multiply by 1.558 equals $37 billion US. Now divide by 3, since the collotaral will melt to a third of the issued loan amount and ….wow….$12.46 billion of value.
So $6.7 billion of write off “so far” will soon become another $24 billion of write offs soon!
In the words of Comandant Klink: “I know nussingk”.
Got global depression?
RE: Got global depression…
More of this coming down the pike.
http://ap.google.com/article/ALeqM5jpugDDKV9j7rjqt_4I-dJSOFu28gD8VQKH901
Klink would say, “Hooooggggaaaannnn”. I believe it was Sargeant Schultz that used to say, “I know nussingk”. But Bu$h and the Congress could use the same line and be right.
.
“In the words of Comandant Klink: “I know nussingk”. ”
Not to be a fussbucket, or anything…. but that quote was actually said by SEARGENT SHULTZ (”Shultzie”)
Hey, at that price point, I might just pull the trigger….That is, if I had any confidence that my job will around by next year. Oh, and also if I had any confidence that my neighbors, who paid $150-$200k last year, would behave civily and NOT converge on my house with torches and pitch forks.
I’d be curious to know how neighbor relations work in these places. I can’t help thinking that Homeowner Joe will be less than friendly to Homeowner Jim, who paid $150k less for the same type of house.
Bingo AS. Would make for some interesting block parties!! BTW, does anyone have these anymore? When I was growing up in the midwest, St. Louis specifically, we had them every summer. Since moving to Texas in the early 90’s, I haven’t seen one. Is this a cultural/geographic thing, or has technology and our preoccupation with it really isolated us from our neighbors. Sad, if true.
Yeah, people get pissy when they find out you paid less for a house than they did. I had neighbors refuse to associate with me in one neighborhood I bought in because I basically bought a vacant home on the largest lot in the street for 50K less than they did.
Also, in the 80’s there was realtor stupid enough to live in the same neighborhood that she sold houses in (this was my family’s old neighborhood). After prices took a dump there she was pretty much run off the street and out of business as no one wanted to associate with her. A nice elderly couple bought her home at a rock bottom foreclosure price and moved in her place.
And neighborhood block parties are a mixed bag. In the current neighborhood I’m renting from, no way would I want to go to any block parties held with my neighbors. The spouses are annoying and nasty to each other because their broke through credit card debt, and all have alot of screaming kids and refuse to hire babysitters so have to take their kids EVERYWHERE. So these block parties would be extremely dull…no good food, no alcohol, and tons of screaming kids underfoot. It would be like going to Chuck E. Cheese. Now my previous neighborhood…hell yeah, we had some good block parties. But those neighbors believed in disciplining their kids and hiring babysitters so the adults could have fun.
One of my neighbors hosts an annual Oktoberfest in her carport. She’s an accordion teacher, and she invites her students and fellow players over for a rollicking good evening. And we eat, drink, and dance. Oh, do we dance.
A fun time for all, and one that has been adults-only for as long as I’ve been here.
This reminds me of Spinal Tap: “Oh, how they danced.”
$89/foot isn’t anything to get excited about. When prices drop to $50, maybe $60 foot then proceed carefully.
My friend bought a home (during the bubble) at a really good price. Home in great shape. It was an older couple who weren’t looking to rob a nice, young family (plus both owner and buyer were military so there was that connection). Anyway, friend’s new neighbor is (the most annoying) realtor. They are friends now, but when my pal first moved in this (annoying) realtor said, “What are you trying to do - bring all our home values down?!?!” Pretty rude comment to your new neighbors.
And, frankly, it’s not the buyer’s fault if a house sells under (supposed) market.
And then, if you pay too much for your house, you get yelled at by your neighbors for increasing property taxes. can’t win.
It’s very trendy now to see who can pay the least money for a house.
“Tom and Angela Lamboo of Winnipeg paid $117,500 for a brand new, 1,327-square-foot bungalow that includes three bedrooms, two bathrooms, a two-car garage, all new appliances, $3,000 worth of window coverings, a fully-landscaped front yard, and a 1.8-metre-high brick fence that runs all around the property.”
But the kicker is, the house is in that very-close-to-hell (IMO) place called Phoenix.
It’s going to be interesting to see how this plays out in different countries - it looks like this is going to painful to a lot of individuals, institutions/companies, and even governments around the world. What will be interesting is whether this pain translates into genuine societal unrest in other countries with a bursting housing bubble.
Of course, FBs deserve to riot and burn down everything right? Your euphemism “social unrest” is just a copout for criminal activity?
“Of course, FBs deserve to riot and burn down everything right?”
Uh, did you actually read ZPZ’ post?
Some countries do societal unrest on a regular basis (see 3,000 cars torched in Paris a few years ago), while others (us) have nobody living that can remember participating in such an event.
May you live in interesting times…
“while others (us) have nobody living that can remember participating in such an event.”
Are you too young to remember the LA riots? Maybe you didn’t participate, but then, millions of Parisians didn’t either. The on-going gang warfare in LA is just a slow motion riot.
I’d rather not thank you, boring times are so under rated
Applied Industrial Technologies normally transfers 25 to 30 each year from one center to another,
“He tells of one transferred executive ‘who ended up owning two homes for more than six months and, finding himself paying two mortgages, opted to move back to his original city, surrendering his new house to the bank.’”
- If Applied Industrial Technologies is promoting Jackass’s that buy homes before they sell their present home in todays market - then I should empty my 401K and savings and short their stock because they are promoting idot’s to lead the company and ensuring their doom.
“He tells of one transferred executive ‘who ended up owning two homes for more than six months and, finding himself paying two mortgages, opted to move back to his original city, surrendering his new house to the bank.’”
He better hopes he never needs a security cleatance…
I pointed that out a few weeks ago. A foreclosure that results from a foolish purchase, as opposed to hardship, can be construed by security officers as evidence of financial irresponsibility. The financially irresponsible are security risks in the same way as chronic gamblers.
I know guys that have been called in for an extra interview for taking antidepressants. You don’t even want to go down getting a DUI/DWI path.
OT, but I thought some folks on the blog would enjoy reading this article from today’s Austin American Statesman:
The occasion is the 16th Congress for New Urbanism conference, which will bring together about 1,500 or more planners, developers and others to promote the development of walkable neighborhoods and bring sprawl to a halt.
At 5:30 p.m. Friday, Caro will talk about Moses and Caro’s Pulitzer Prize-winning book, “The Power Broker: Robert Moses and the Fall of New York,” which documents how Moses, who never held elected office, oversaw a radical (some would say ruinous) transformation of greater New York that became a template for almost every city in postwar America.
Called “surely the greatest book ever written about a city” by the late journalist and author David Halberstam, the book, first published in 1974 and now in its 39th printing, has become a sacred text of sorts for new urbanists on how not to grow a city: by favoring cars and the highways they drive on over public transit.
The construction of expressways, which Moses oversaw, bulldozed neighborhoods, displaced a half-million New Yorkers and led directly to the sprawling, car-dependent suburbia on Long Island.
“He did not have a respect for what you would call the value of community, the value of neighborhood, exemplified by the way he ran these 13 expressways right across neighborhoods,” Caro said.
“It’s very important when cities are in their shaping, when they’re becoming big,” he said, “that what they do in shaping that growth is never lose sight of the fact that what makes a city great is whether or not it’s a home to its people, whether neighborhood values are safeguarded and treasured no matter what development is done.”
http://www.statesman.com/life/content/life/stories/books/04/03/0403caro.html
Wow.
I’d love to hear Caro speak.
We’ve talked about Robert Moses and his legacy a few times here.
Thanks for the link.
I attended one of their meetings a while ago at USC (University - Southern California), with a special invitation. I found the group youthful, arrogant, and very idealistic. I believe in smart planning, and I believe we need light rail, alternative fuels, conservation of resouces, etc… Its just that I didn’t much care for their approach. Beehive living - no yards, etc… no thanks. Balance people, balance.
Most of the group had no families, and were pretty much clueless about real life.
Yup, you got it. And New Urbanism was inspired by Jane Jacobs’ The Fall and Rise of Great American Cities (I think that’s the title), and she said herself that her observations were based on NYC and similar cities, not every incorporated podunk town in the country.
NotInMontana-
When we all left The New Urbanism meeting, I took notice of their vehicles, and most weren’t exactly gas saving. Some had SUV’s, some luxury cars, etc.. What a bunch of hypocrates. I may not drive a Prius (no SUV-I loath them), but I am not part of the energy nazis either.
I’ve been known to ride my bicycle to such affairs. You’d think that others would do the same, but no-o-o. Usually, I’m the only one.
What a bunch of hypocrates. I may not drive a Prius (no SUV-I loath them), but I am not part of the energy nazis either.
Hypocrates (sic)?
Energy Nazis?
Please.
I buy your argument about young idealists needing more life experience — but Americans aren’t allowed to choose their own vehicles now, is that it? (And … you are living in Car-Lubbin’ Lotusland, after all.)
I’ll bet they weren’t wearing their Obligatory Patriotic Flag Lapel Pins, either, the bastards. Which can only mean they’re up to no good.
I can’t wait to see my very first politco wearing an American flag lapel pin, upside down…
New Urbanism sounds great on paper, but the truth is that almost all of the “new urban” planned developments I’ve seen eventually wind up becoming prohibitively expensive, which in turn makes the point of them utterly nonsensical.
What we really need is a return to building housing that meets all three classes. Small, medium, and large. As it was during the boom, the proverbial Mcmansion seemed to be the only thing built. In other words- a return to building 700-900 square foot houses that regular people can afford.
ET Chicago-
A lot of the talk at that meeting, was about how wasteful people are, how they don’t conserve, and how we are so car dependent. They all came off like they were off the grid, never abused resources, just so green… ecology/resource angels, if you well. They were going to change the world. Well, I say, start with yourself, or shut up and go home.
They want walking communities, yet drive wasteful autos. Screw them.
When my mother said “Do as I say, not as I do”, I looked at her actions.
Jetson_Boy,
I can’t believe the size of new PUD homes. I saw an ad for 5,000-6,500 sq ft. Who needs, or wants to maintain that?
I think a family of 4-6, can easily live in 2,000-2,300 sq ft comfortably. What ever happen to a nice one-story ranch with a private yard, and no HOA.
When the guys returned from WWII, and the housing boom was underway, wasn’t 1,200 sq ft considered a nice size home. What happened to this country?
We owned 4,000 sq ft, and we hated it. Its not the size, its the memories. (and I don’t mean that in a biblical sense, guys.)
my husband grew up in one of the western burbs of Chicago. Yes, all those homes were about 1200 sq ft and all were filled with WWII vets and their young families. In his case, 4 kids….of course, they all lived outside as much as possible (even in the winter).
There was a sense of real values back then. We grew up in a modest setting, and we all came out OK (4 of us). We went to the park, rode our bikes, played outside. We didn’t have play rooms, we had something better.
Over indulged brats, usually raise over indulged brats. I’d love to see a sense of real values again.
In case anyone didn’t know, I-35 runs smack through the middle of Austin. As if that wasn’t bad enough, they even made it a double decker highway.
If the money the govt. (fed & state) allocate to highway building, was put into light rail and shuttle buses in employment areas, it would be a start.
What’s it like to drive on a double decker highway?
In the winter time when the top portion ices over its a lot of fun. You do get a nice view, I’ll say that much.
They made the exit ramps very short on the bottom, so you really have to pay attention less you end up hitting a pillar and
I always lose radio reception on the bottom.
we used to have double decker highways in san francsico and oakland. they all fell down in 1989.
I-35 is a highway?!? When I lived in that overrated slackertropolis back in the late 90s, I always assumed it was an oddly shaped parking lot.
I misused the word “highway”. Sorry. Please don’t beat me, I prefer handcuffs anyway
Excuse me, while I get a wet washcloth to cool off!
Good thing Chucky Whitman blew his load back in the sixties. He’d have hundreds of stationary targets to choose from these days in that parking lot they call an interstate. I know its far, several hundred yards probably, but the tower is visible from the highway, he was a marine, and with a scoped rifle?? Just sayin’…
Wouldn’t have made much difference, given the fact that he was pinned down by people in much closer proximity to him - civilians with long guns. He would have done better in a gun-free school zone.
And don’t forget all these roads we paid for will soon be toll roads! Yeeee Haaa!
Caro was influential enough that no one was able to get almost anything through the public review process in NYC for 25 years after his took.
What followed his book is as extreme as Robert Moses, but in reverse.
Moses was a trip in his own way. He loathed the lower classes, and when he designed Jones Beach, which is beautiful, he made sure there was no public transportation connection, which would have made it easily available to the carless folks in Brooklyn, the Bronx, et. al. If you couldn’t afford your own car, then stay in your tenements and sweat.
What’s the worry? They aren’t making any more muskeg in Canada.
“‘But let’s also bear in mind the good news, in that many potential home owners, long squeezed out of the market, stand to be big benefactors,’ BNZ said.”
Big benefactors because they pay too much to catch a falling knife?
They meant to say “beneficiaries,” of course.
This article from a couple of days ago says, “Get something back from the seller, but don’t expect a complete steal. Houses still cost a lot of money, but a motivated buyer might give you help where you need it most: with cash.”
From context, she meant to say, “a motivated seller” might help you with cash (i.e., agree to pay your closing costs).
It’s interesting to wonder whether these little mistakes tell us something about the authors’ frame of mind.
Actually, “motivated buyer” makes sense. And it’s clearly the seller who needs help with cash the most. Buyers who don’t have the cash simply don’t have to buy.
In another context, the phrase “motivated buyer” makes sense, but if you read the article you’ll see that’s not what she meant. In her article, “you,” the reader, are a first-time buyer who (in her mind) needs help with closing costs, and a seller can help you (out of their healthy profits, of course).
But in this sentence she mixes up the roles, so for half a sentence it’s the buyer who has cash and the seller who needs it. Which is a little funny (”funny because it’s true”) from a bubble blogger perspective. But I guess not funny enough to be worth me typing an explanation of it.
NEW YORK (Reuters) - More Americans have fallen behind on consumer loans than at any time in nearly 16 years, as credit problems once concentrated in mortgages spread into other forms of debt.
I guess since the housing market reportedly turned around 45 days ago, most people must be buying homes before they catch up on their credit cards and such.
It’s a conundrum.
Keep reminding them that debt is not wealth! I have 0 debt!
Its liberating, isn’t it! Leverage used properly can create wealth, but few have the skills.
The Winnipeg Free Press. “Bargain-savvy Manitobans are creating their own little desert storm, snapping up vacation homes in the Phoenix area as Arizona builders scramble to unload properties for as little as half the usual price.”
“Tom and Angela Lamboo of Winnipeg paid $117,500 for a brand new, 1,327-square-foot bungalow that includes three bedrooms, two bathrooms, a two-car garage, all new appliances, $3,000 worth of window coverings, a fully-landscaped front yard, and a 1.8-metre-high brick fence that runs all around the property.”
“‘Did I think we would get a brand new home for that price? No!’ Angela Lamboo said in an interview. ‘When you think about it, it’s crazy.’”
“Steve Lauritano, owner of Arizona Pro Realty, Inc., and business partner Diane Olson, an ex-Winnipeg police officer now living in Phoenix, said the type of home the Lamboos bought was selling three years ago for $220,000. Lauritano said Phoenix-area house prices haven’t been this low since the late 1980s.
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I have to say that I’ve seen some evidence of Canadian buyers taking advantage of the exhange rate and AZ housing slump, especially in some of the retirement areas around the fringes. Consider that a $220k house in 2005 would have cost about $260k Canadian, and now it’s a $118k house (either US$ or loonie), so for them this is a 55%+ off sale. It would not surprise me to hear that there are 1000+ sales to Canadians per month in the Phoenix metro right now.
Canadian knife catchers. If they bought with cash, they can’t walk away since they own it outright. They will probably just sit tight and accept the loss. They spent about $89/foot for their starter house which isn’t a bargain. Texas would have gotten the same house for about 2/3 the price.
Of course property taxes in Texas are 3 times what they are in Arizona and I don’t think you can find a new house in Texas for sale
‘I don’t think you can find a new house in Texas for sale’
There are 10,000 new, finished houses for sale in Dallas alone, and there have been for years.
For some reason it chopped off my “less than 80K. 80K is the lowest I have seen advertised on billboards this year”. Must not like the less than sign all by itself.
My coworker just paid $140K for a new 3200sf house in DFW. Another one bought a house in foreclosure. He paid $265K for the 3500sf on 1 1/2 acres. The previous owner paid $435K. There are plenty of cheap homes in DFW, but for some reason, idiots keep buying expensive ones. But yes, you do have to watch for property taxes, which run at 3.25% or sometimes even higher.
Read the story, it’s a handful. They are buying new builds, which only contributes to the problem. There were something like 2,500 foreclosures in Phoenix last month. And, from their comments, they are clearly speculating. Spend winters? For less than even these costs, they could rent nice, brand new houses with a pool, close in. But, they say, ‘we’ll rent them out when we’re not there.’
Have you seen the Phoenix ‘for rent’ ads? It’s one giant ‘first month free’ space.
yeah, Ben…these “landlords” crack me up. Up here, it’s “first month free” plus all the shiny appliances and granite countertops you can shake a stick at. And, some throw in a big screen tv and “free” yard service. Oh, yeah…I forgot…one is advertising that the owner (a nurse) will come over and take care of you if you are sick! Truly!
yeah, good luck with finding short term renters. I f you want strangers sleeping in your bed stay at Motel 6.
“…Lauritano said Phoenix-area house prices haven’t been this low since the late 1980s.””
I’m calling B.S. on this; Phoenix area home prices were lower in until 1997-8.
How long per year can they legally live in the house? Can they stay indefinitely in the US without being legal residents?
Please - genuine question, nothing to do with illegal immigration.
So they go back home once in a while, get their medical stuff done, and come back.
They can only live outside Canada for six months less a day per annum or they start running into problems with medical coverage, pensions and taxes. So they will have to maintain two residences, a huge expense in retirement. Good luck to them…
The US and Canada have a reciprocal agreement on this…the six month rule applies to Americans who have summer homes or lakefront cottages in Canada as well. You do have to leave Canada, but I believe for only 48 hours, and the six month clock starts running again. No need for two houses, though, just stay in a hotel, then cross the border again. Upstate folks who’ve retired to Canada do this…it’s not uncommon.
Or why not just get dual citizenship? That’s what I heard.
Dual citizenship, but that’s difficult and unnecessary. Getting a green card (the right to work) is easier but still hard. Most snowbirds are retired and none of them work for the half year they’re south of the border.
Winnipeg winters would probably make Phoenix look like paradise, hard though that is to believe.
““The truth is that most British homeowners couldn’t afford their houses if they didn’t already own them. Take a buyer on an average salary of about 23,000 pounds buying an average house for about 174,000. Even if by some stroke of luck the buyer had managed to save 35,000 pounds for a deposit, finding a lender who would lend them six times their salary today is all but impossible.””
I read overseas news and there was a crazy bubble all over England. Even in rural locations, the rent was half the cost of owning. One guy said he was renting the biggest house in town for the same cost as fools mortgaging some starter house in that town. I wonder if England will go thru the same bust as America. Will there be any attempted bailouts?
They already are. Spoke to my brother this morning - a firefighter in England, says the rot has started. They were a day late to the party initally, and they’ll sure as hell be a dollar short at the end of it!
“This is beginning to dawn on many.”
You have to love the bluntness of the British media. Here, that same set of facts is reported as a “buyers’ market.”
It isn’t just England , it’s Scotland, Wales, Northern and Southern Ireland and from what I can see most of Southern Europe as well. We may be late to the party but we will more than make up for it.
I’m sure this has nothing to do with the housing bubble affecting the broader economy, but… I had purchased tickets on Aloha Airlines for a trip to Hawaii at the end of April. After finding out Sunday they were ceasing operations on 03/31, I purchased tickets on ATA. Today ATA has ceased operations. I realize that these weren’t the biggest airlines, but I’ve been flying them for years and they offered great service out of Oakland. Aloha was 60 years old, and ATA was 35 years old. I’m a little gun shy about purchasing tickets for a 3rd time, since Amex says they’re not sure I’ll get my money back on the first two, and buying 5 round trip tickets to hawaii 3 times for one trip gets a little expensive, even for us renters!
Please let us know in advance what airline you are going to pick next for your vacation.
LOL…!
I was thinking about UA but they’re too big to fail!!
Might want to skip the trip, something fishy is going on. If you don’t get refunded, sue them!
What’s this all about, obviously not about hiding debt. I’m guessing these new CLO’s will soon be exchanged for treasuries at the FED.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4fHfr0N0dbI&refer=home
I wonder who will buy CLOs of failed underwritings? I doubt if the residual slice retained by the IBs provide sufficient credit risk coverage and CDS-type insurance is probably out of the question. Maybe there are still plenty of dumb and ignorant municipal and state government financial officials who are willing to take a chance with the taxpayers’ money?
PS: I bet the push money to the rep’s who sell this stuff is huge.
This is very weird and kind of funny. Years ago everyone in America acted like it was Candy Land.
“RE always goes up. The experts know best. Unemployment is only at 2%, inflation is only 3%, the Dow Jones is at 12000 and blah blah blah…”
Now, everyone is acting like a 95% drop in housing prices is the end of the world. No its not. It’s only money. It’s not like anyone takes the dollar seriously anymore. Think about it, it’s not that bad.
“Think about it, it’s not that bad.”
Yes, as long as you have no assets or money sitting in the bank it’s no problem at all.
April 3 (Bloomberg) — Bear Stearns Cos. Chief Executive Officer Alan Schwartz said the fifth-largest U.S. securities firm may have survived if the Federal Reserve acted sooner to lend money directly to investment banks.
Bear would have survived if CEO Schwarts hadn’t gambled recklessly with investors money.
“Between 2003 and 2007 there was roughly one new dwelling built for every two additions to the population. This build-rate has been higher at times in New Zealand’s past but it was not low.”
“A correction in the housing market is inevitable. It will be painful for many people but it will be good for the economy. ‘Well, it’s here. And the potential downside bears thinking about - as our indications of a 30 percent housing overvaluation attest to.’”
Imagine being stuck in a house in NZ and paying interest rates of 11% on your rapidly depreciating house?
Ouch!
Good job, I dunno what people were thinking here.
My partner and I bought our first house in 2003 to live in not to sell for a profit. NZ $170000 in 2003 gov valuation of $174000 previously bought for $87000 in 1985($82000 household income 2002, $97000 in 2007).
Gov valuation $360000 as of 2007 what a load of crap, justified a large rate increase for the local council. I bet they won’t be doing anymore valuations for rate calculations for quite a while now.
“Auckland’s biggest real estate agency group, Barfoot and Thompson, has reported sales volumes fell 56.2 per cent in March from a year ago.”
http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10502027
Timber!
“The rapid decline in housing prices is distorting the normal workings of the American labor market. The Census Bureau, however, calculates how many people move across state lines for all reasons, and that number fell by a startling 27 percent last year, after climbing by almost that percentage for each of the previous three years.”
That’s a stunning change and a percentage that will likely grow in the next few years. On top of all the other bad things about the housing bubble, the anchor of home ownership in a declining market will distort the labor markets and act as an additional drag on the economy for years. Nice job Fed.
Should read…
“The decline in housing prices has clobbered NovaStar, which specialized in making mortgage loans to borrowers that couldn’t pay them back.”
Viral Video Film School (Finance) Very funny!
http://www.bigpicture.typepad.com/
““The first auctioned home — a three-bedroom condominium with a new kitchen on Governors Road — went for $155,000 to a mother buying it for her daughter. Later a young couple closed at $165,000 on the home they were renting on Downing Street.””
Mother means well but catching a falling knife and depleting her savings isn’t a wise financial decision. I declined my dad’s offer to help me afford a house in Florida as I don’t want to catch a knife and plan to leave the state anyway.
“‘There is a large number of new apartments and there are units for sale for 20 million ($20,470) to 30 million won less than the current market price,’ said Lee Mun-hyeong, a realtor in Jamsil-dong, Songpa District.”
_____________________________________________
Okay, who from the NAR is giving seminars in Korea now? “Less than the current market price”…I thought we went over this a thousand times before. Welcome to the brave new world of RTP (Real-Time Pricing). As my mom always says, when you have Lee Mun, make Leemunade.
‘Like homebuilders who feel pressure to get rid of inventory quickly, many banks and lenders experience the same pressure when dealing with homes from foreclosure,’ and decide to sell at below-market prices, the report said.
Correction: they are selling at the NEW market prices.
“‘When it comes to the imbalances within the economy, Spain is like the U.S. on speed,’ said Diana Choyleva, a senior economist at Lombard Street Research in London.”
Meth odd to their madness…
Brand new House explodes after gas line cut: 2.4 million FB
http://www.1010wins.com/House-Explodes-in-Scarsdale-after-Gas-Line-Is-Cut/1940171
My 91 year old aunt in Calgary sold her house for $510k, like 4 months ago. Cost her $21k, 30+ years ago.
I think she timed it just right…
…many banks and lenders experience the same pressure when dealing with homes from foreclosure,’ and decide to sell at below-market prices, the report said.
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When housing prices were going up $10,000 or more per month, why wasn’t anyone being accused of selling at “above-market” prices?
I guess “market price” only goes up?
As a footnote to the Calgary/Edmonton news, Saskatoon’s newscast announced that it now costs more to buy a house in Saskatoon than it does in Edmonton: average bungalow is now 340,000 here, vz 330,000 in Edmonton, with the average 2 story around 400,000 vz 360,000 in Edmonton.
This is a town of 200,000 people in a province with no economy to speak of: it’s been tied for poorest province in confederation for decades, and the population peaked back in the 1920’s. Edmonton is a city of a million people and is the center of the tar sands development (oil, in other words), with the highest in-migration rate in the country: 58,000 people moved to Alberta last year.
According to the CMHC dude interviewed by Global News, higher prices in Saskatoon make sense because “We have a diversified economy — Potash, farming….while Alberta only has oil”. Of course, oil is kissing 100 bucks a barrel and there’s steam coming off the head of Alberta’s economy, but hey! We have potash!!
It’s official: this place has finally gone mad.
Here’s the story: sorry, I can’t find video
CTV news
As a footnote to the Calgary/Edmonton stuff: Royal LePage reports that prices in Saskatoon are now higher than prices in Edmonton.
http://canadianpress.google.com/article/ALeqM5jc2PcFs7fcipTmGKFCJcZmens3uw
So now the little prairie town of 200,000, with no economy to speak of, costs more than the city of 1,000,000 that’s the heart of the oil sands development, but don’t worry! It’s not a bubble!! We have a diversified economy! We have potash AND farming, while Alberta only has oil!!
Course, oil is kissing 100 bucks a barrel….
This place is delusional.
My freakin’ comment has now been eaten 3 times: I’m not going to be funny this time.
Housing prices in this stupid podunk town are now higher than prices in Edmonton, center of the oil sands development:
Royal LePage report.
All is stupid and annoying, and I bet this won’t go through either.
God, sorry guys — but I really did wait ten minutes between each submission….