Homeowners Laugh Tonight Only To Cry Tomorrow
A report from the Columbia Missourian. “Boone County witnessed its first spike of foreclosures in 2003, when the number rose from 99 the previous year to 150, according to the Boone County Recorder of Deeds office. Banks foreclosed on 143 homes and other properties in Boone County during 2006, and that number increased to 231 in 2007. During the first four months of this year, 103 foreclosures were recorded in Boone County compared to 58 during the same period in 2007.”
“‘I think this year is definitely going to be a record year in terms of foreclosures,’ said Bob Peery of Premier Mortgage Service. ‘In the near future, they’re going to get worse.’”
“Subprime loans were very much in play as recently as 2006. In 2004, 20 percent of home loans were subprime in an area that includes some of Columbia’s First Ward, according to the Home Mortgage Disclosure Act. The next year, subprime loans accounted for about 51 percent of the loans in the same area. In Centralia, subprime loans made up 7 percent of all home loans in 2004 and 19 percent in 2005.”
“Some buyers purchase their homes by borrowing 95 to 100 percent of the cost with little or no down payment. Then, somehow, they fall behind on their payments.”
“‘If I put $20,000 on a house, I’m going to do everything I possibly can, because if I lose that I’ve lost my house and $20,000,’ Peery said. ‘If I do a 100 percent financing, what do you give up? It may hurt your credit, but as far as financially, there’s no consequence. That’s why some of these people are letting it go back.’”
The St Charles Journal from Missouri. “Amidst a housing market where homeowners laugh tonight only to cry tomorrow when their dream of home ownership is broken by foreclosure, two local real estate agents have decided to spruce up the boulevard of broken dreams in St. Charles County.”
“On May 4, agents Laura Ellis and Lorrie Travers rented a 24-person coach bus to take would-be investors, young home buyers and those looking for a fixer-upper through a tour of nine foreclosure properties throughout St. Charles County.”
“‘Prices in St. Charles County have dropped low enough to where people can afford to buy up these properties, whether it’s an investor or even just a regular buyer,’said Ellis.”
“‘People shouldn’t be afraid to throw in any offer. It just depends on how much the owner owed on that house,’ Ellis said. ‘Especially if it doesn’t sell in a couple months, they shouldn’t be afraid to throw in any offer.’”
From Medill Reports in Illinois. “With the Trump brand now a permanent fixture in the neighborhood, downtown Chicago residents and workers have mixed feelings about what its presence means during times of a flimsy economy, depressed housing and the gap between the rich and poor growing wider.”
“Trump Tower condominium residences range in size from 580 to 6,800 square feet with prices that vary from $580,000 to more than $9 million. Costing anywhere from $850,000 to over $3 million, the hotel condominiums are 530 to 2,245 square feet. According to the website, current prices hotel condominium room rates range from $385 to just over $1800.”
“According to Peter Raisch of a public relations company that represents Trump Tower Chicago, investing in hotel condominiums is a growing trend that’s an alternative form of ownership in the uncertain current real estate market. ‘Owning a hotel room is like an investment. It’s also a way for hotels to gain revenues with the market the way it is.’”
“Trump Tower brings several possibilities to Chicago. ‘It will do nothing but drive the nearby property values up,’ said Renee Guider-Selmon, who owns a condo in the area.”
“Asked whether Chicago’s depressed housing market was affecting business, Trump said fine timing afforded him much favor in the current market conditions.”
“‘Hopefully [it’s affected us] positively, because I don’t think that anybody else is going to be building a building in Chicago for a while,’ Trump joked. ‘I don’t see anyone being able to get financing.’”
The Chicago Tribune from Illinois. “Nearly 6,000 condos, by far a record number, are expected to come on the market in downtown Chicago this year at a time when mortgages are tougher to get and sales have slowed dramatically, according to a report.”
“‘It’s tremendously serious,’ said Steven Hovany, president of Strategy Planning Associates Inc., a planning and real estate consulting firm. ‘What you are going to see are buildings going into foreclosure.’”
“Downtown living, almost inconceivable 15 years ago, has contributed an extraordinary amount to Chicago’s economy and its reputation as a livable city. That momentum has drawn more and more projects, but now developers and real estate analysts say more downtown condos are coming on the market than demand warrants.”
“‘There certainly is some oversupply,’ said Alan Lev, president of the Chicago home-building firm Belgravia Group. ‘If you are in the South Loop or the West Loop, you have some inventory to burn off.’”
The South Town Star from Illinois. “Manhattan officials hope to give away $1 million, no lottery ticket necessary. The first 200 people to buy a newly built home in the next 14 months will get a $5,000 rebate from the village. Buy a new townhouse or duplex, get $3,500.”
“Trustee Tom Biscan said he hopes the program works, but he has seen no evidence that this will actually jumpstart housing sales. The $5,000 rebate ‘is probably not going to move the market,’ he said. ‘I suggest developers cut their prices by $5,000 and leave our fees alone.’”
“‘This is a national problem. We’re swimming upstream. We think we can promote ourselves out of this. What if $5,000 doesn’t work? Do we give them another $5,000? What do we do next to placate developers? Do we lower our housing standards?’ Biscan said.”
“‘This will grab people’s attention. It is saying, ‘Hey, come check out Manhattan,’ said Mayor Bill Borgo. ‘We don’t know if it’s going to work, but we have to do something.’”
The Daily Herald from Illinois. “Biscan suggested developers cut their prices across the board by $5,000.”
“‘Lowering the housing prices would lower the equalized assessed value on surrounding homes,’ Borgo responded.”
The Kane County Chronicle from Illinois. “The Illinois Association of Realtors reported that home sales in Kane County declined by 34 percent in the first three months this year. Overall, 796 homes sold in the county from January to March this year. During the same period in 2007, 1,211 homes in Kane County were sold.”
“In the first quarter of 2006, 1,420 homes were sold in the county.”
“‘It will not go down in history as a prize-winning quarter, that’s for sure,’ Peter Swaufield, executive director of the Fox Valley Association of Realtors, said. ‘But, unfortunately, it’s pretty typical of what’s going on in many parts of the country.’”
“‘This is as good a time as we’ve ever had in history to buy,’ Swaufield said. ‘We just need to get more first-time buyers into this market to ease up the logjam.’”
The Dayton Daily News from Ohio. “The city of Dayton plans to aggressively snatch up properties for land banking, with a goal of acquiring up to 1,000 properties this year. The city currently has more than 10,000 vacant housing units in more than 3,800 structures.”
“Targeted properties have been abandoned by owners, who do not pay their property taxes. ‘We’re already maintaining these properties,’ said Dayton City Commissioner Nan Whaley. ‘We might as well control them. We can’t sit around and do nothing.’”
The Toledo Blade from Ohio. “The sales price of Toledo-area homes dropped at twice the rate of the national average at the beginning of this year. But on a positive note, Ohio homes are selling much faster than in other states, a new report shows.”
“The National Association of Realtors said yesterday that the median sales value of homes in metro Toledo fell 13.8 percent to $89,700 in the January through March period compared to the same period a year ago.”
“‘Foreclosures have definitely had a huge impact on our market in Toledo,’ said Larry Cain, a Re/Max agent in downtown Toledo. Lenders are quick to sell them, and buyers have begun to flood the foreclosure market.”
“In the Toledo metro area in the first quarter, 1,877 foreclosure-related filings were made, according to RealtyTrac Inc.. But the influx of foreclosed homes began much earlier, said local experts, and their cheap prices are just now affecting sales values.”
The Gazette Extra from Wisconsin. “Playing your music as loud as you want. Painting your room any color that catches your fancy. Knowing you’re not throwing money away on rent.”
“Those are the factors that encouraged Melissa Williams and her boyfriend Bryan Robbins to buy a brand-new house in Edgerton. The housing market ‘crisis’ didn’t even enter their thinking, Williams said.”
“‘We just looked at our finances and decided we could definitely do it, and that was it,’ the 23-year-old said.”
“Paula Carrier, owner of Best Realty, points to people such as Williams and Robbins when she says the Edgerton housing market is steady. ‘Media in general painted this picture that said, ‘Don’t buy, prices are still bottoming out,’ Carrier said. ‘They’re not here.’”
“‘The fact is, that the boom that we had in small towns in Wisconsin is just nothing like the boom that was experienced in many places in the country,’ said Morris Davis, a professor of real estate at UW-Madison. ‘In small communities, house prices just aren’t going to fall that much.’”
“Paula Carrier isn’t worried about nationwide housing problems affecting sales of condos in Edgerton’s Fulton Square project. Carrier and broker Chris Sweeney are selling the condos for Keller Development of Madison.”
“No one has bought a condo yet, but Carrier and Sweeney have heard plenty of interest, especially from ’snowbirds’ who spend summers in Wisconsin and winters down South, they said. Prices for the condos range from $112,000 to $165,000, Carrier said. The developer is targeting ‘empty-nesters,’ professionals and childless couples.”
“‘It’s going to make our downtown just sparkle,’ she said.”
“Young adults, such as Williams and Robbins, are taking advantage of low interest rates, Carrier said. ‘Why would you wait until the rates are high and the prices are high?’ she asked.”
The Hudson Star Observer from Wisconsin. “Realty agents Cindy Otten and Laurie Larsen are making the best of a bad situation. With dozens of repossessed homes on the market because of the mortgage meltdown, Otten and Larsen have found a niche in selling them.”
“‘A home buyer should absolutely be looking right now,’ says Otten. ‘They should find some very nice deals on the market.’”
“‘Things are really heating up, especially in the foreclosure market. That’s what’s really selling,’ Otten says. She and Larsen are advertising a ‘Repo Bus Tour’ that they hope to guide soon.”
“Larsen recently sold a house on Riverside Drive in North Hudson that provides scenic views of Lake Mallalieu. It’s in good condition and sold for $100,000 less than it would have three years ago, according to Larsen.The offerings range in price from $70,000 for some homes in outlying communities to $780,000 for a mansion in Hudson.”
“‘There are some very nice homes out there. And there are some homes that need work,’ says Larsen. ‘Whatever anybody wants, we’ve got them.’”
“‘Agents in western Wisconsin are trying to do their part to get them sold so we can move on – get our market back to where it needs to be,’ Otten says. ‘The faster the foreclosures get sold, the better it is for everyone. It benefits everyone by stabilizing the whole economy.’”
“Otten and Larsen say they haven’t had enough people sign up for the bus tour yet to schedule a trip. But they’re expecting it to happen now that the weather has warmed. ‘We’ve already got the bus hired. We’re ready to go as soon as we get enough (buyers) to fill a bus,’ Larsen says.”
‘According to Peter Raisch of a public relations company that represents Trump Tower Chicago, investing in hotel condominiums is a growing trend that’s an alternative form of ownership in the uncertain current real estate market. ‘Owning a hotel room is like an investment. It’s also a way for hotels to gain revenues’
This is funny, because there are companies being sued for making claims just like this. Watching Trump crash in Chicago should be interesting.
Imagine if the real estate bubble had lasted just a wee bit longer, and people started investing in motel rooms, like say #236 @ the Motel 6, in Sheboygan?
Heaven forbid.
What next? Sandusky? The motel on the highway? Bates Motel?
On US 1 somewhere around Belfast Maine is a building labeled Bait’s Motel. I wouldn’t be surprised if it’s for sale, a lot of other stuff in that region is.
The foreclosure bus tours in Wisconsin…
Wow…we may not be known for being “wild and crazy” as California but we’re trying to catching up.
The Repo Bus Line is a mighty good road
The Repo Bus Line is the road to ride
The Repo Bus Line is a mighty good road
If you want to ride you gotta ride it like you find it
Get your ticket at the station for the Repo Bus Line
If everybody gave, then we could save the old Repo Bus Line
Grab the cheese curds and cider and all board the old “Repo Express” kiddies:)
Mikey,
Try… Hellbound Train!
Oh btw I read they already have made arrests in the Palm Bay, FL “wild fires”! When they say $9.8 mil. in damage is that pre/post bubble?
Home equity extractions and foreclosures are going to crush Wisconsin with help from high food and energy prices.
Neither stubborness and the infamous Wisconsin RE media blackout can save these FOOLS now.
There will be a lag time because of the long and drawn out foreclosure period process but I GUARRANTEE that there will be a whole lot of “ownership society” butts puckered shut among HouseDebters, bankers and local governments before next Spring…and it won’t just be because of Jack Frost
They did.
http://money.cnn.com/2006/03/29/magazines/business2/suitedeals/index.htm
Whenever I look at Trump, I just think “FB”…he is the freaking Dalai Lama of FBs…the poorly coiffed pimp and crack dealer to a nation of unsecured debt addicts who jerk off all day while watching housing porn all day on HGTV. Seriously, his picture should be in the dictionary under “FB”, no words needed…
I’m really starting to wonder if the gubmint will also consider him “too big to fail”?
Trump is a fraud. He already declared backrupty last time property values fell hard in the 90s. Trump is not a businessman or investor, he’s a chump. Real investors invest in hardworking, talented companies which produce products and services. A real investor is Warren Buffet. Trump just rides the fraudulent real estate booms.
Ed G,
Right. You have Chicago, you have Sam Zell and then you have “that clown”. How much time would any serious investor waste on THAT choice?
However, he is a VERY good self promoter…I have to give him props for that.
The American public is in love with him for it. Americans will put anyone who makes money on a pedestal, even if they are the ones who got screwed in order to make it!
It’s easy to be a self-promoter when you are dealing with an extremely stupid mass populous.
Stupid is as stupid does
Watching him crash everywhere would be more rewarding….He is a arrogant ass that thinks he is some kind of friggen rock star…Who amongst us could not have prospered with a 200 mil stake from his daddy ??
I shall enjoy watching his crash!
As for: Downtown living, almost inconceivable 15 years ago, has contributed an extraordinary amount to Chicago’s economy and its reputation as a livable city.
I dunno about that. I remember in the early 1990’s staying with friends right there in downtown Chicago, meeting up with other friends who lived in downtown Chicago. Perhaps my friends were ahead of their times? Hmmm… Admittedly, there were not many buildings where you could BUY, since the condo inanity had not hit yet, but you sure could rent easily enough.
Trump thinks hes the master of the art of the deal . Trump is a brat that has backed lenders in the corner and has influenced this culture in how to leverage cr-p and win in the end by blackmail . If you owe the bank to much you got them where you want them . I just can’t believe that some people admire Trump .
Housing Wizard,
He basically invented “the sophisticated debtor”. Now that “model” has been replicated by millions of Americans that now think this is how business works. Hey, I can see a guy using ‘guerilla tactics’ when he’s young and trying to get his foot in the door but at some point you’re supposed to grow out of that?
Housing Wizard,
Why wouldn’t people in this country admire him? The whole system in this country is built on fraud, deceit, cheating, and lying….that is what is country was founded on.
Trump was born on third base and thinks he hit a triple
Paul Begala said that about George W. Bush.
Either way, it’s a good quip.
I travel a lot on business (but not to Chicago). Noone in my company would be allowed to spend $385+ for a hotel room, and my company is probably typical. If not business travelers, who is their target market, and how could it be large enough to support this place? Are there lots of rich people that like to hang out in downtown Chicago, even in the winter?
I’m amazed anyone would buy a condotel unit - is there anyone in the USA that’s breaking even on one of these? Everything I’ve seen is extremely negative.
SFC,
My wife and I looked at one in Lincoln City on the OR coast and even at 175k they didn’t come close to penciling out. Just a derivation of the time share really. It was so funny b/c I remember calling the agent back in Portland w/ some very pointed questions about how this all works ( or doesn’t ) and the clown just kept saying “Why don’t you just make an offer?”
Oh I SEE! We pony up the cash and then you explain LATER!? I don’t think so pal. This was ‘06 when OR was still “white hot” so the guy felt totally entitled to be rude. AFAIK the units remain unsold 2 years later.
Come see the Americana in Glendale, CA….I’m wondering who’s wanting to live there? $700K for a single bedroom condo and $2.4 Milllion for a townhouse? In Glendale??
“Hotel condos”–right. Another way to suck money from the greedy and the gullible.
Watching the downfall of the Trump project should be one of the more entertaining episodes here in the Windy City. Pass the popcorn.
Is there anyway to short a short bus, financially?
“Otten and Larsen say they haven’t had enough people sign up for the bus tour yet to schedule a trip. But they’re expecting it to happen now that the weather has warmed. ‘We’ve already got the bus hired. We’re ready to go as soon as we get enough (buyers) to fill a bus,’ Larsen says.”
Now there’s a crowd I don’t mind see getting slammed by $4.50 diesel!
I think they’re all a bunch of bozos on that bus.
If you push them hard enough they WILL fall over. Fudd’s First Law of Opposition.
They can’t find enough buyers to fill a small bus, but the idiots imagine a turnaround is imminent. There’s a serious disconnect with reality there.
These “short bus” tours are going to fold just as soon as a disgruntled ex-homedebtor with a rifle takes out a few window-lickers enjoying a tour with “Fanny’s Foreclosure Tours!” emblazoned down the side.
Bound to happen eventually……
Old Bush: 1,000 points of light
New Bush: 1,000 points of foreclosure
Was wondering about something - is your username perchance a nod to Bowie?
(P.S. Keep ‘em coming)
1,000 points of Blight
“‘If I put $20,000 on a house, I’m going to do everything I possibly can, because if I lose that I’ve lost my house and $20,000,’ Peery said. ‘If I do a 100 percent financing, what do you give up? It may hurt your credit, but as far as financially, there’s no consequence. That’s why some of these people are letting it go back.’”
That’s true…it’s just like renting from the bank. The costs are social…raising the cost of borrowing for everyone else, and contributing to the financial meltdown that is bringing down the economy.
The fact that 100% financing still exists anywhere in RE just blows my mind. However, it’s not a surprise given the amount of bailout money that Bernanke has helicoptered to banks to continue irresponsible lending, with the full faith and credit of Uncle Sam to back them up.
This math only adds up if the down is a fair (20% ?? ) of the value price, rather than the purchase price. On a $500K purchase in 2006 which is now worth say $325K even $100K will be walked away from, given the loss of $175K.
Here in Wisconsin most people aren’t even at the capitulation stage yet. TONS, millions of people are ready to get the hell out of here after a horrendous winter, yet nobody seems to realize that nobody’s going to buy their house. It’s sad really, we’re happily renting in Madison but it’s going to be a long long slog of unhappy old things getting grumpier and grumpier. I feel like I did back in Florida three years ago… more articles on Chicago-Milwaukee-Madison will be coming over the next three years MIGHT help some of the grumps capitulate, but I kind of doubt it. We might even go back to Flowierda if these A-holes don’t come to grips with reality. The property taxes here are worse than the insurance rates in the hurricane belt.
The State of Wisconsin Board of Revenue Motto is…
“Buy a house in Wisconsin …and RENT it FROM the State ”
Makes me wonder what anywhere up North will look like in 50 years. Half of the relocation forums are FULL of people from cold climates. The winters were one thing, but the taxes and cost of RE and living was the final straw for most. I don’t blame them, but it sucks that they ALL want to move exactly where my parents live down South.
Global Warming. Fresh water. I wouldn’t count out the great lakes states just yet.
Sort of funny about that. It does actually get cold in TN( unbeknown to many out-of-staters) but for the past 5-6 years, it has been mild for most of the year. My Brother made the comment that if global warming means TN is warm most of the year, well that isn’t exactly the worst thing that could happen.
Either way,I tried living in New England for two years. Why settlers decided that was the best place to setup shop is puzzling. The weather is AWFUL!
Global warming has been put on hold. The next decade or so is going to see a global cooling trend. The culprit? A tiny bit less energy emitted by the sun, as evidenced by no sunspots. Google Maunder Minimum.
Bill,you’re kidding me, right? How could global warming or cooling be influenced by minor changes in the sun’s energy getting to te Earth’s surface?
That would mean we would have warm seasons and cool seasons as a result of the Earth’s axial angle……. nah! could not be. It’s all the carbon dioxide!
Makes me wonder what anywhere up North will look like in 50 years.
A place w/a lot fewer whiners? Really, we had barely any snow this winter and 90* days in April.
“Trump Tower brings several possibilities to Chicago. ‘It will do nothing but drive the nearby property VALUES up,’ said Renee Guider-Selmon, who owns a condo in the area.”
“You keep using that word. I do not think it means what you think it means.” Inigo Montoya, Princess Bride
(well actually, to clarify the obvious Ms. Renee Guider-Selmon-FB-hope-springs-eternal. Falling prices will drive up home values……the extra inventory provided by Trump tower will bring down prices, and thereby drive home values up. In effect, you are correct, however i will, as always, stand by my statement and, i still do not think it means what you think it means.)
Jasper
Yeah, nothing like an “unbiased” opinion to shed some light on the looming Chicago condo implosion.
At least in FLA a condotel makes a smidge of sense because people are known to visit FLA for weeks and months on end. But, who is going to pony up for a condotel in Chicago? How many times can one stroll Boul Mich or go to a Cub’s game? There’s maybe enough here for a week’s stay - and there’s already plenty of hotels to fill that need.
First prize: A week in a Chicago condotel, all expenses paid.
Second prize: Two weeks…
I love Chicago, wont buy a condo though.
Nice Ben. Thanks for the Missouri info - normally there’s not a whole lot of news from here. While I personally don’t care about house prices here per se, they are connected to what I do care about - land prices.
Unfortunately, developers have destroyed an inordinate amount of prime farmland around here recently, and around the country as well. Right now where I’m living the average price per acre is in the $15k-$10k range, but there is a 36 acre parcel adjacent to the subdivision where I’m renting where they’re asking an incredible $75k per acre (pushing for commercial)!
Meanwhile hundreds of finished houses are sitting vacant with no serious bites from GFs. Yet this isn’t deterring the developers who are going full steam destroying even more farmland. What I don’t get is where are they getting their funding? No serious financial institution could be backing them at this stage, could they? And who would be plunking down millions in their own cash in this environment?
All I know is that I hope the collapse escalates quick, before there isn’t any farmland left around here at any price. Luckily I’ve tapped into some local farmers, so I have the inside track. And unbelievably, there are still some people who don’t bow to the ever decreasing dollar, but want their land to stay undeveloped.
I feel so bad for a lot of those people who have held fast to their land only to see the neighbor sell out and suddenly what was a beautiful field view from the back porch is now a subdivision. My friends happened to buy in one of these subdivisions and bitched when the old dude parked about 10 junk trucks on his property line which happened to jut into their subdivision.
“‘If I put $20,000 on a house, I’m going to do everything I possibly can, because if I lose that I’ve lost my house and $20,000,’ Peery said. ‘If I do a 100 percent financing, what do you give up? It may hurt your credit, but as far as financially, there’s no consequence. That’s why some of these people are letting it go back.’”
Anecdotally, this is true. Rationally, this is a mistake. Your downpayment is gone. That check has been cashed and you’re never going to get THAT money back. Decisions about whether to sell should be based upon one’s estimates of future value and return. Future value=what can you sell it for in the future. Return=do you like living there=equivalent rental value. It just doesn’t matter how much you’re out of pocket because you can’t change the past, you can only look to the future.
jim A,
And don’t forget the return you ‘could’ have had if your 20k had been snug in an FDIC insured account? Believe it or not, (because I have always used a VA loan) I’ve never put a dime into a house I didn’t have to. Please note I just used “always” and “never” in the same sentence. Perhaps I should have said, “so far”.
My point is that while I ‘do’ believe it’s important for most buyers to “have skin in the game” I’m not totally convinced the lack of it automatically translates to insta-jingle mail? Something different is afoot here and I’m not sure what. Most Americans are used to being under water. Their car, college etc. Why will RECORD numbers elect to walk away?
Why will RECORD numbers elect to walk away?
IMO, they have spent all their HELOC money and they want more. So they are off to find another foolish lender who is btw supported by our tax dollars in the long run. it’s a win-win for the bank and borrower who doesn’t have any skin in the game at least until the rules get changed.
denquiry,
I was thinking along those lines.
“If only we could find a home on Craigslist or wherever that was totally under priced we could..?” Then they go about “shoe horning” their finances to meet that end. Since the “buy new first/sell old later” scenario has been completely abused they’re still squirming for another option. There isn’t one btw but that doesn’t mean FB’s will quit looking for it!
Yep, this last real estate cycle was the art of leverage to gain appreciation ,as if housing was like a stock .A lot of people bought on margin (or with leverage )during the stock market rally of the late 1920’s also and could not pay when the market crashed in the stock market values .
The lending drove up prices in the 1920’s stock market ,just as it drove up the prices during this housing boom .
How many people could resist the sales pitch that they could get into property with little or no down, gain by appreciation ,and sell to the next fool getting onto the band-wagon?
This is what is different about this real estate cycle verses prior real estate cycles ,(except for the 1926 Florida real estate crash ). I don’t think real estate was ever meant to be a short term investment, in part because there are to many costs involved with buying and selling real estate . Also houses are tied in with property taxes , insurance costs ,and economic conditions of the local areas ,and of course wages
.You can’t just create vacant new houses that nobody intents to live in and try to create a demand that doesn’t exist for housing .It should of been very clear to the lenders that investors were buying up these tracts and they were not long term home buyers who had jobs in the area and the ability to pay the mortgage or even collect rents .
To many borrowers were willing to commit loan fraud to get in on this housing boom band-wagon and they did not care what type of loan they got . it was leverage that the people wanted and the lenders were way to willing to try to make money off this easy money demand at the time . It was pitched in every corner of the World that real estate was a no lose investment ,in fact ,why not let real estate fund your retirement ,fund college ,buy you the lifestyle you really want ,on and on . It was a investment scheme mania/bubble that the lenders funded foolishly ,and its as simple as that.
I ‘do’ believe it’s important for most buyers to “have skin in the game” I’m not totally convinced the lack of it automatically translates to insta-jingle mail? Something different is afoot here and I’m not sure what.
I think that “something different” is the lack of verifiable steady income.
A bank used to require income and cash: a paycheck to prove you can bring home cash, and 20% to prove you can save that cash. Now that banks are allowed to sell their problems up the food chain to Calpers, UBS, and little villages in Norway, bank don’t require either. Foreclosures should NOT be a surpise
“No one has bought a condo yet…”
Key phrase of the day.
I always notice the only people cheerleading about how the banks are clearing out their foreclosed inventory & such are real estate agents.
been my experience that the banks take their sweet-ass time in responding to offers, IF they respond at all. and the agents are, as usual, in cahoots with them to keep prices higher by playing the phantom multiple bidder scam. disgusting! these people will never, ever deal honestly. say and do anything for the commission. just absolutley repulsive. I detest realtors.
(more lies & hype from yer friendly real estate agent to keep the sense of urgency alive.)
Yep. RealtyTrac says otherwise - banks are very much accumulating inventory, not clearing it.
“Palafox advised real estate investment if you make at least a 20 percent down payment to buy”
Excellent advice from an investment advisor, only invest money if you have money to lose. This makes me glad I’ve never sought out one of these fools.
Ellis said. ‘…they shouldn’t be afraid to throw in any offer.’
But wouldn’t that insult the seller?
It creates that list of “competing bidders” that they hope will cause a bidding war.
On MSN.com, a report that Greenspan calls a housing bottom for next year…
““Those are the factors that encouraged Melissa Williams and her boyfriend Bryan Robbins to buy a brand-new house in Edgerton. The housing market crises didn’t even enter their thinking, Williams said.”
“‘We just looked at our finances and decided we could definitely do it, and that was it,’ the 23-year-old said.”
“Paula Carrier, owner of Best Realty, points to people such as Williams and Robbins when she says the Edgerton housing market is steady. ‘Media in general painted this picture that said, ‘Don’t buy, prices are still bottoming out,’ Carrier said.”
WTF, a 23 year old and her boyfriend buying are signs of a steady market? How many times have we heard the same tired foreclosure story; ” Then Bryan and I broke up and I lost my job at the Piggly Wiggly….it’s just not fair for the bank to take my home….I’m a victim!” They should do everybody a favor and give them a pistol with two bullets at closing.
This is part of the “speculative” part. Everyone knows that RE only went up.
None of these hands has the ability to hold on for 30 years.
Faster Pussycat,
That is true. I’ve always been concerned about 30 yr. mortgages. Let’s think about it for a minute. The avg. marriage lasts HOW long? Employment is what, 3 to 5 years? But somehow through illness, divorce and lay-offs there never seemed to me to be enough of a provision for those life events. I’ll bet most posters here “get by” on about $25-$50 a week spending money. But we’re not “most people”.
The whole financial relationship seemes pretty inflexible. But when borrowers were given a choice with their pick-a-payment loan they always picked the lowest payment! Maybe if we had these people pay into an int. bearing reserve acct. they would have something to draw on in lean times? Not tap for vacations and elective surgery… lean times!
There HAS to be more of a financial relationship than just paying/collecting interest?
I have ALWAYS argued against 30 years but then I am a minority here on that front.
If you want to maximize your career, etc. you can’t have a stone mill around your neck. That having been said, I like owning for all the usual reasons but I am not insanely attached to it any more.
As I have said, when the time comes to buy, there will be far more lucrative investments for my money.
C’est la vie!
Faster Pussycat,
I’m just old enough to have parents that thought a TWENTY year mortgage was abusive ( let alone a 30! ) My father said that during the 30’s and 40’s 10 to 15 was more the standard. So, you’re no longer entirely alone in that view. I’m glad that my father didn’t live long enough to see people rejoicing in 40 and 50 yr. loans. Absolute insanity and by no means a path to “ownership”.
Yeah, but you can do what I did. You can pay any amount of extra principal you want to so I would pay the next month’s principal as well as the current payment, cross those two months off my chart, and do the same thing next month. Amazing how you can cut the loan term by paying extyra early. And the interest savings over the life of the loan are amazing.
These are all minor things at the end of the day. What matters is the length of the loan.
You could equally argue about putting your bonus towards principal, etc. but once again what matters is the length of the loan.
A friend of mine told me that in his mid-20’s he bought a small house with his girlfriend. They had the money, they could afford it, and “that was it” so to speak.
A year or two later, they broke up, just in time to face the crumbling LA housing market of the… was it early 1990s? They were so screwwed. Not only did they have to disentagle themselves from the joint ownership, but they they could neither sell the house quickly nor afford for one to buy out the other.
As it was, they lived together for months after the breakup, hating life, until they finally managed to bail, each losing about a full year’s worth of takehome pay on the deal, what with lost downpayment and bringing money to the closing table. It took him years to recover financially.
23-year-olds just shouldn’t buy houses. That’s what rentals are for. Seriously. And not just for the above reason. (Think upward job mobility.)
Think enjoying life, and not spending your weekends mowing the lawn, or refurbing your basement after it floods, or pushing the crowds at Home Despot.
20-somethings and even 30-somethings should focus on their career and enjoying life (and investing some money on the side.)
I respectfully disagree. There was a young lady that bought a house up the street from mine. Back then, this area was so bad that the real estate agent refused to show her the house.
But she insisted. And bought the place.
Then she married a very nice young fellow, and, oh, did they go to town on fixing the place up. And, trust me, they had plenty of time for enjoying life, which they did.
They sold out and moved three years ago, and, alas, the current owner is much older and not as hard-working when it comes to maintaining a property. But that’s another story for another time.
What’s to disagree?
If you enjoy pissing away your life working on a house and a lawn, more power to you. For the rest of us, it’s a gigantic bore.
If you want to spend your days sanding the walls, and finishing your basement, do it. I’d rather just spend my evening at the opera, or cooking, and my weekends going hiking or at the beach.
You can keep your “home improvements”.
We just paid off our 30 year in 22 years (including 3 refis..2 for lower rates and one for cash out college loans). We have the most lovely flower gardens…we DIY everything, plus the daughters row house. We go to opera in DC (just saw Placido Domingo in Tamerlino) and in Baltimore, lots of concerts. I biked the Erie Canal last summer….I am leaving work now to bike the C&O Canal from the Smithsonian to Great Falls. You can have a nice home and a great life….just turn off the damn TV.
Shhhhhhh … you’re giving the secret away.
(Also doesn’t own a tee-vee.)
“a 23 year old and her boyfriend ” buying a house. Getting married or buy a house together. Either way, they are both hosed.
“Why would you wait until the rates are high and the prices are high?”” 18 months+ of falling home prices? I’ll wait.
A woman who lives with a man is making a mistake. A woman who buys a home with a man is insane.
The thinking by the woman must be; “if he’s willing to live with me he’ll surely want to marry me soon” and “if he’s willing to buy a house with me surely he’ll want to marry me even sooner”.
Unfortunately for young women, young men think more like this; “Sure I’ll move in, it’ll be cheaper than living alone and the sex should be incredible”. As for the guy buying with a woman; “Sure I’ll share the risk with you (or anyone else). I’m happy to reduce my exposure to this investment (not “home”)…..and the sex should be incredible”.
Would that NOW would actually educate women about this reality but, then again, NOW probably has no clue when it comes to men anyway.
bitter much?
Not at all. Just amazed and saddened by the trend of women who have become deluded into thinking that living with a guy will “work” for them.
If you don’t hold a man to commit to a relationship, they won’t. A “man” who won’t commit to a relationship is either a) not that “into you” or a boy. Living with a boy makes you more of a mother than a “partner”.
OTAY - are you from the area? The irony, Edgerton HAS a Piggly Wiggly.
Columbia, MO has never really had any home price appreciation so any kind of bust there is huge news. Centrailia, MO? There are something like 30 houses in the whole city of 200.
My parents and friends (in central MO) continue to insist housing prices cannot fall because they didn’t rise much. My ass! My dad sold a house for $83,000 in 1997 bought in 1985 for $69,000 and the neighbors listed the house next door for $149,000 in 2005 (final selling price unknown), but there were lots of buyers in those years. When I was growing up wooded land with some small pasture sold for about $1000 an acre. A couple years back it was 10-12K an acre. Population growth has been 2-3% per year, so slightly over the national average but nothing that would suggest a large run up in prices.
That’s beautiful country and good living up there - one day I will own a nice piece of it when prices are reasonable. At least in Missouri you can count on your neighbors to keep an eye out for you; in Florida they are watching to see when you leave so they can rip you off.
I too, was amazed that the bubble even hit - in Missouri, of all places. I have family there. Last time I was there, about a year ago, there were half million dollar houses in little towns of five or six thousand people. Once the local “big wigs” (think doctor, funeral home director, lawyer, and…superintendent? high school basketball coach?) buy theirs, who is left that could possibly afford those homes? The only jobs left in small towns in the region are Wal-Mart greeter and Sonic carhop.
Thank you !
I also noticed this in flyover country if you will. Prices did go up a lot as you noticed about 30-40%. Incomes basically did not change much over the time period. Also the numbers of people buying homes using crazy mortages in these regions is huge.
This is a fantastic link.
http://www.newyorkfed.org/mortgagemaps/
If you look at the loan distributions they are effectively the same nationwide. What the median is not going to capture is that twice as many homes where sold and the number around the median price was much higher this effectively hides all the uneeded McMansions.
Basically if you double the number of homes sold around the median price this growth swamps the statistic. And the sheer length of the bubble run over 12 years does not help.
Disconnect
….and here’s another story on the MSN.com finance section, “Will our kids be dumb and broke?”:
“This is a global issue now,” Duvall said. The battle cry that’s being heard from all sides: “Education, education, education.”
“We keep trying to get a quick fix for problems that have been staring us in the face,” Duvall said. The truth is that building a money-smart populace is going to require four things:
*A public that demands it.
*Continuing pressure from parents and watchdogs.
*Money to provide schools and teachers with the resources they need to teach financial skills.
*Testing to make sure kids are mastering the knowledge they need.”
This reminds of a 20/20 report with John “Gimme a Break!” Stossel about 10 years ago where he looked at some inner city NYC schools that were basing a lot of their curriculum on the idea that if you try to tie things that kids are learning in the classroom to entrepeneurship/running a business, then the kids really start to get in to math and communications skills. You know, fractions/percentages are pretty boring stuff to most 4th graders, but ask these same kids to calculate their gross margin on a slice of pizza that they sold for $3 bucks when they paid $10 bucks for an eight slice pizza, and they start to get more interested in learning math….most of these kids DO want to succeed in life, but the keyis to show them that math skills are essential to running your own business…..
Ruthless JT-action will also produce the same result.
Consumption is not savings; liabilities are not assets; and buying depreciating assets on credit is moronic.
But that would pretty much end the American Way of Life(TM) as it seems to be these days.
I think there is a bigger issue. Our schools have this socialist mentality that no one shoulod fail. Sure, no parents want their kid to be the loser…. But, there HAS to be serious pain from failure.
We need to actually start flunking kids. More detentions for missed assignments. Weekend detentions. Stronger enforcement of the “do your work or don’t participate in activities”.
Make it very painful to be lazy from a very early age.
So the Housing Boom/Bust was because of “socialist mentality” in our schools?
Darrell, that was very disappointingly stupid comment, coming from you. I’ve never seen you get so off-topic.
Flunking kids? Why bother, the graduation rate is only 75%.
Darrell has a point. A lot of people probably did buy because they were lead to believe in “easy money” and “everyone is a winner”.
This is my point. Fear is a great motivator to be smart.
If we never let an investment bank fail investors in investment banks won’t be careful.
If we never let a student fail (or makeit VERY hard to fail) they will learn that failure isn’t something to be feared and avoided.
Survival of the fittest drives evolution to be something better. Without fear of death, no drive to improve.
True, but his point is not germaine to the Housing Bubble. He’s using the ole straw man.
There were quite a number of well-educated, well-meaning people who bought into the Housing craze, people who came from the same schools as you or I. Bubbles can make fools of anyone, it seams.
I completely agree with Darrel. Our society does have this socialist attitude that everyone should get anything they want, regardless of their ability to work for it. Heck, I’m only 30 and I don’t understand why my friends have felt entitled to have the same lives as my parents who have been working 20 more years. My generation is used to buying expensive SUVs, McMansions instead of starter homes, and we all feel entitled to it.
In the past you bought something based on your income and ability to repay the loan. Now you just get to ‘try’.
“Will our kids be dumb and broke?”
The dumb, broke members of the two or three current generations really don’t see the irony in this question?
Shoot, they’re not even dumb and skinny…dumb and lazy maybe.
I have one friend with an md…one with a phd…and two with masters. They are all recent grads and all of them purchased houses near the peak. You can’t teach smart.
You can’t teach common sense. Common sense told me 4 years ago I couldn’t afford to buy a house. Common sense tells me the same thing now.
Have a friend who is about to Dept. Head of Dance at Stevens College in Columbia MO. She’s from NYC. Have to email her right away and point out that just because Columbia RE is cheaper than NYC doesn’t make it an immediate “buy” (referring to Ben’s top post above)
Does she understand that you have to evaluate a property w.r.t. local incomes?
That’s what all RE is local actually means.
Seriously - don’t worry too much about Columbia’s housing bust. Homes there appreciate about 1% per year, so it won’t be much of a fall. Do tell her that the best part of the city is the southern belt (Rock Bridge area).
Funyums isn’t getting any love these days
http://seekingalpha.com/article/76981-nar-s-lawrence-yun-continues-to-mislead-on-housing
No further comments necessary. The juxtapostion of separate articel quotes is priceless:
“Asked whether Chicago’s depressed housing market was affecting business, Trump said fine timing afforded him much favor in the current market conditions.”
“‘Hopefully [it’s affected us] positively, because I don’t think that anybody else is going to be building a building in Chicago for a while,’ Trump joked. ‘I don’t see anyone being able to get financing.’”
next article:
“The Chicago Tribune from Illinois. “Nearly 6,000 condos, by far a record number, are expected to come on the market in downtown Chicago this year at a time when mortgages are tougher to get and sales have slowed dramatically, according to a report.””
I think that there has been a lot of influences in the last 30 or 40 years that have brought Americans to the kind of screwed up divided Country it is today .
It all started with the hippies (now baby boomers )rejecting the values of the War and Depression generation . Than the Viet Nam War and all that failure . Than a lot of time was spend in this culture trying to get equality for different ethnic groups and human and employment and women and gay rights issues took center stage for years .During this time the economy was expanding and jobs were pretty plentiful and the issues were more involved with Justice and fairness and human rights and entitlements ,and all that jazz.
Than somehow the culture went into kids paying 100 bucks for a pair of tennis shoes and gangs gaining power and everybody looking to maintain the American way of life because they were entitled to it ,while more and more jobs were being out-sourced and getting a education didn’t necessary get you the great job they promised .The baby boomers started selling their souls for retirement security ( funny since boomers rejected capitalism when they were young ) and the younger generations started wondering if there would be any slice of the America pie left for them .
Than we got attacked on 9-11 and the very worst insecurity came out in all age groups ,which no doubt set the stage for the housing boom along with other factors . Somehow after that the Corporations started rejecting the American worker in favor of higher profits because the Unions went to far in their demands and Globalism gained power.
So ,really isn’t the issue that people need jobs to live and get ahead and getting rich quick by selling houses to each other doesn’t work and we need to start addressing the real economic issues facing America today?
Yeah, it’s all the hippies fault.
Women caused the failure of the gold standard. Free love cause the Fed funds rate to go negative. Gay rights caused the housing bubble.
Go back to your cave old man before we laugh you out of town.
When a society has a lot of jobs and money ,it works on social issues .When a society has lack of jobs or money ,than economic issues take center stage .There has been different stages in the last 50 years . Right now there is a viable need for good jobs for Americans IMHO .I’m not saying that it’s all the hippies fault ,but rather its just the different cycles that have taken place . The baby boomers had a lot of job security so they worked on social issues . Today economic issues are creating problems for all age groups . A lot of questionable social programs were set up during good as well as bad times . There is always a history behind trends , and they don’t just come out of nowhere .
I’m not trying to blame any generation because I just think all generations try to do the best they can with what they have been handed .
The Gazette Extra from Wisconsin. “Playing your music as loud as you want. Painting your room any color that catches your fancy. Knowing you’re not throwing money away on rent.”
Dang it, Ben, what will I rant about this weekend?
And to the Mikey commenting on foreclosure bus tours in WI - sorry - I unintentionally swiped your username for the Gazette Extra.
Overall, the Edgerton condos are supposed to be great for the snowbirds. Last I heard, the snowbirds were going to bail out the Madison condo market.
All things considered, I like the Edgerton area. I just see no difference between home prices in Edgerton and Madison. Besides, for those following the area, Edgerton is in Rock County, where GM will be layoff/eliminate 750 positions, and the associated suppliers will also be laying off people because GM is laying off. Conservative estimates are about 1000 people losing very good paying jobs. Granted, Madison is driveable from Edgerton, but the home prices are going to have to come down to below Madison’s.
What the Chicago Tribune article doesn’t say - other than first quarter new condo sales plunging 83%- is that only about 200 of them sold. With nearly 6,000 expected to come on-line this year- unless sales pick up, that’s nearly 7 years worth of inventory.
Ha! And people think Miami and Vegas are the only one with the inventory problem.
And that’s just in NEW construction. Another several thousand units are being sold by flippers/investors in already completed buildings. Those aren’t selling either.
But the article is correct that developers- so far- haven’t blinked (heck, even the ones that are going under.) A few buildings are being turned into rental apartments. But the others are sitting there with 50% sold and only giving away free parking.
What I’m seeing, though, is more foreclosures popping up among the investors. They can’t hold on a year or more with rents not even coming close to covering their costs. Most of them who bought in 2004 or 2005 had no idea that they’d actually have to pay a mortgage payment. They all thought they could flip within weeks.
Whoops!
The South Loop is going to get hammered the hardest but Streeterville and River North aren’t far behind.
The developer of the luxury building on N. Michigan (that’s the new Ritz)- who thinks maybe it was good to be delayed 8 months on construction is living in a dream world. The high-end market is completely overbuilt.
Yes, some of it is selling. But there are only so many buyers in Chicago for three million dollar units. Between Trump only being 75% sold, Waterview Tower around 75%, the Legacy about 80% and One Museum Park- the huge tower at the south end of Grant Park- only 70% sold and already starting closings (cheapest units start over $1 million in a 60+ story building)- where are all the buyers going to come from?
Chicago is literally building something like 8 of the 10 tallest buildings in the country right now- ALL residential high rises. And that doesn’t include the Spire.
It will be VERY interesting to watch - even over the next 12 months.
Outside of the immediate downtown, stresses are developing in condo owners in Lincoln Park, Lakeview and such- where they bought two years ago and now want to move and are finding they can’t come close to covering their costs. Foreclosures are a slow trickle in those two prime areas though. They’re happening- but not like in the downtown.
Chicago’s going to get interesting!