Getting That Chump Factor Out Of The Market
It’s Friday desk clearing time for this blogger. “The number of residential homes for sale through the Coeur d’Alene MLS has topped 4,000. At the same time, home sales remain soft. ‘They are, but we’re still in what would be considered a normal market,’ said Kim Cooper, spokesman for the Coeur d’Alene Association of Realtors. ‘We’ve returned to 2002 levels, the year before the rapid escalation of home prices.’”
“‘There was a speculative market with unsophisticated real estate investors,’ Cooper said. ‘They were playing it loose and buying homes 10 at a time and trying to turn them. Now, the market has petered out and they’re stuck with those homes.’”
“Homes that are sitting unfinished and vacant because of the depressed housing market are causing problems for people with finished homes that are on the market. ‘It’s hard to sell a house nowadays with the real estate market being as tough as it is,’ says Pete Mocho, who’s trying to sell his Northeast Heights home.”
“Mocho has been trying to sell his home for about a year now. He says one realtor refuses to even show his home because of the unfinished neighboring house. ‘And when you have something as obviously hard to look at as that,’ Mocho adds, gesturing across the street to an unfinished, two-story home, ‘it makes it a little harder to sell.’”
“There are more than 40 vacant homes on the market in North Albuquerque Acres with prices ranging from $500,000 to $1.5 million. Builder Patrick Apodaca estimates there are about 100 unfinished homes across the city, the most he says he’s ever seen.”
“‘I don’t know if it’s because businesses are going bankrupt, but I think maybe contractors overextended themselves,’ he says.”
“Most Birminghamians familiar with Southside’s Highland Avenue neighborhood have seen the Capri Condominiums. During construction, those behind the project insisted that the market demanded precisely this sort of condo complex, and they stuck with that sales pitch.”
“Even as the housing market began to waver-but before it plunged-real estate agents associated with the Capri claimed that, in Birmingham, the market’s demand for condominiums exceeded the supply.”
“Babs Simpson, a real estate veteran who specializes in condos and has sold them for decades, agrees that condo prices have been dropping, due in large part to a glut in available units and high asking prices.”
“‘I think the prices were way too high,’ Simpson says. ‘The reason a lot of prices are going down is not the condo itself, it’s just oversupply. We’re oversupplied in every area of real estate.’”
“How big has New York City’s foreclosure problem become? ‘Two years ago, there were just a few selected ZIP codes where [foreclosures] were bad,’ says Matthew Haines, (who) tracks foreclosures in the five boroughs. ‘Now there are whole areas - areas that contain 12 or 15 ZIP codes - that are really bad.’”
“‘I have a listing in St. Albans, [Queens],’ says Anthony Carollo of Carollo Real Estate. “Their asking price was $399,000 [seven months ago], and they couldn’t sell it. We got it in April, and we started at $369,000. We’ve been going up against homes that banks were willing to sell for $75,000 less.’”
“Both Suffolk and Nassau saw an increase in foreclosure activity last month, compared with a year ago, according to RealtyTrac. And some homeowners are now choosing to walk away from their homes once they’re in foreclosure, as they realize it’s just too expensive to stay.”
“Hicksville bankruptcy attorney Scott Schneider noted that more people are also choosing not to try to save their homes, filing Chapter 7 bankruptcies instead of Chapter 13, which would allow borrowers to stay in their homes. It’s cheaper for some people to rent, rather than pay off a delinquent mortgage and a bankruptcy trustee, he said.”
“‘I think we’re still at the early stages,’ he said. ‘It’s still going to go up and it’s going to get worse.’”
“With mortgages hard to come by, Connecticut home prices are feeling the heat. ‘I think you have a lot of people who can’t afford to get a mortgage,’ said Vince Valvo, group publisher for The Warren Group. ‘The biggest problem is that one-third of the market got completely locked out. Subprime loans are gone.’”
“Part of the problem, he said, is so-called lis pendens filings, which are closely tied to foreclosures. The number of such filings, Valvo said, is now three-and-a-half times the number of properties being sold statewide.”
“‘People don’t want to buy a $250,000 house and, a few months later, see a similar house in their neighborhood sell for $150,000 in foreclosure,’ he said. ‘You feel like a chump. Until we get that chump factor out of the market, things won’t improve.’”
“Buying a house? Hold on…for a while. The Reserve Bank of India’s move to raise repo rates is likely to trigger a further dip in realty prices over the next few months.”
“‘We are heading for a major crisis. Prices have already crashed by 20 per cent. Nobody buys in a falling market expecting further correction. The repo rate will further aggravate the situation,’ said Arvind Goyal, who heads (a) Mumbai-based real estate company. Navi Mumbai, the satellite city developed to decongest Mumbai, is witnessing a real estate boom with more than 800 projects under construction.”
“‘Some of these projects are heading for a crisis due to lack of demand,’ said Goyal.”
“The average housing price in Shenzhen’s six districts dropped to 11,143 yuan (US$1,610.39) per square meter in May, down 23 percent from a year ago and 7 percent from April, according to a report.”
“‘Despite the rise in transactions, I’m not optimistic about Shenzhen’s housing market in the near future,’ said Wang Shitai, brand manager of Sunstars Real Estate in Shenzhen. ‘Developers will have to slash prices further in order to boost sales to maintain their businesses.’”
“‘More investors are expected to stop paying the mortgages later this year and early next year because they simply can’t afford it,’ said Guo Shiping, an economics professor at Shenzhen University. ‘Housing prices will slide further after the Beijing Olympics and banks will feel the pinch. The number of speculators who can not afford mortgages will peak next year.’”
“As desirable a city as Plano has become, Hilltop Lane is lined with broken dreams and a sea of For Sale signs. Since January, almost half the homes in the 3500 and 3600 blocks of Hilltop Lane have sunk into foreclosure. Many of those homes once belonged to a single investor, who lost them earlier this year.”
“‘I’m not upset,’ said Christel Young, a new home buyer. ‘Other people might be, but I’m not. I got a good deal. I believe it was appraised at $139,000 and I got it at $109,000. So yeah, a good deal.’”
“Some signs of struggle in Utah’s housing market were on full display Thursday at one of the first large-scale bank foreclosure auctions held in the state this year, and the first ever by Ogden-based Centennial Bank.”
“Fifty-two properties were put up for bid at the Wells Fargo Building located on Main Street in downtown Salt Lake, many of them casualties of the bursting housing bubble.”
“Eric Nelson predicted that because of the economy, his company would probably be doing auction sales in Salt Lake every 60 to 90 days for the next three to five years. ‘The high-end market is just crashing in the Utah area right now, with homes over a million dollars, and there will be a surplus of them, probably a 5-year supply by October or November,’ he said.”
“Veteran builder Cory Olsen won the auction for a Bluffdale house valued at $726,000 for just $275,000 and felt like he got an excellent buy. ‘I didn’t intend on bidding on that one, but the number stayed really low,’ he said. He said his ultimate plan is to turn the property around and sell it for a profit.”
“‘When you buy it at this price, you can do a lease option and still have a positive cash flow on the monthly income,’ Olsen said ‘It almost feels criminal to take advantage of buying things at pennies on the dollar. This stuff is selling for 40 to 60 cents on a dollar.’”
“Over a million homes are now in foreclosure, the highest rate ever recorded. Nearly 3 million homeowners have now missed at least one payment. As of the end of March, one in 11 loans were in trouble.”
“But until Ed McMahon went on ‘Larry King Live’ last week to talk about his own housing trouble and, according to The New York Times, ‘humanized’ the problem, all of that just seemed like, well, statistics.”
“McMahon explained that, despite earning millions during his career, he is now about $644,000 behind on his mortgage payments. McMahon bought the house in January 1990 and, despite Los Angeles home prices being up 106 percent since then, reportedly still owes about $5 million on it. In other words, like so many other Americans, McMahon used his home as an ATM over the years.”
“Unlike many others, McMahon was not looking for a handout or to put the blame on anyone but himself. ‘Well, if you spend more money than you make,’ he told Larry King, ‘you know what happens.’”
“Unfortunately, that’s exactly the problem: Most people have no idea what happens when they overspend. And even if they do, they’re not willing to take responsibility for their own actions. ‘How can this be?’ they demand. ‘I was guaranteed the American dream! I was told to buy as much house as a bank would let me, and then take out another loan to make the house even bigger. I was told to buy big televisions and luxury cars and to take great vacations and drink great wine.’”
“It all went according to plan until real life intervened.”
“The Retreat, a gated golf course community that boasted the Inland region’s first million-dollar tract homes, has been hit by a tsunami of foreclosures, proving that even the most elite neighborhoods can’t escape the devastation of falling real estate values.”
“Today, however, about every fourth or fifth house at The Retreat is in some stage of foreclosure and home prices have been slashed nearly in half.”
“The average asking price for homes in The Retreat plunged 46 percent from an estimated $1.3 million in June 2006 to $705,000 today, according to data recorded with a MLS. Six resale transactions in the community this year averaged $675,916 on houses that sold for an average $1,123,000 at their peak, a decline of 40 percent.”
“And prices continue to drop, with about seven homes currently listed between $475,000 and $500,000, said Pat Patton, an agent who has listings at The Retreat.”
“Investors hoping to flip the houses for a quick profit let them go into foreclosure when the market collapsed, according to local real estate agents.”
“Inland Empire economist John Husing, one of several economists who had hailed plans for The Retreat as proving the maturity of the Inland real estate market, now says its debut was sullied by these unexpected forces and a subsequent tightening of lending.”
“Many people who bought homes at The Retreat to live in also considered them investments and have been disappointed.”
“Michael Kroitor said he and his wife, both Canadian immigrants, put $96,000 down in June 2006 to buy a $1 million, four-bedroom house in The Retreat. They were convinced it would be a great short-term investment.”
“Kroitor said he figured his family, including four children, would live at The Retreat for two years, then they would sell at a profit. Meanwhile, he said, they were willing to make monthly mortgage payments of $8,500, or two-thirds of their household income, on top of property taxes.”
“‘We didn’t think the value would go down at all … There was no prevailing feeling of doom,’ he recalled.”
“Tony Muriel said when he and his wife, Carmen, put down $350,000 to buy a $1.3 million house two years ago, they planned to stay 10 years. By then they expected their two children would be off to college, and their home’s value would increase to $5 million and become their retirement nest egg.”
“The Muriels, like many of their neighbors, are upside down on their investment, owing more than $1 million on a house that most recently was appraised for $760,000. But with so much of their savings at stake, they said they are not moving.”
“‘We have to make the payments and continue,’ Tony Muriel said.”
“The couple said they still enjoy their house with its super-size kitchen, koi pond and many other amenities, and their attractive neighborhood and good schools.”
“Time should solve their real estate woes, Carmen Muriel said. ‘In four years, everything should be different,’ she predicted.”
Now that was a crazy week! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
Happy Friday 13th, Ben. Find some time to put your feet up this weekend. You deserve the rest.
BayQT~
Am tipping a Squatters Beer in your honor, Ben!
When I make my way out your way Lost, I hope you will have some Squatters Beer left.
Lost - you are one of the most unique personalities ever to have been a regular here. Unclassified. It will be entertaining and interesting to follow your ventures. You marry a free spirit to sound knowledge of housing issues. Cool beads.
Squatters Beer for you all!!!
Am posting a photo on Ouro’s slideshow, hope you all will too!
“McMahon explained that, despite earning millions during his career, he is now about $644,000 behind on his mortgage payments. McMahon bought the house in January 1990 and, despite Los Angeles home prices being up 106 percent since then, reportedly still owes about $5 million on it. In other words, like so many other Americans, McMahon used his home as an ATM over the years.”
May the fleas of a thousand real estate agents nest in his nostrils:
http://www.youtube.com/watch?v=XnwyQFe3wRA&NR=1
“Time should solve their real estate woes, Carmen Muriel said. ‘In four years, everything should be different,’ she predicted.”
So, these fools thought they’d make almost 4 million in just a few years by doing nothing?
That didn’t work out too well, but they’ve certainly kept their optimism. Good thing, I think they may need it.
Yeah, they were going to be RICH RICH and all the rubes and retards who didn’t buy would be priced out forever, and rue the day they doubted the Realtors™, and be forced to grovel in front of the landowners.
How’s that plan working out?
BWAHAHAHHAHAHHAHAHHHHHHHHHHHHHHHHHH!!!
I feel the purest sense of schadenfreude when fools like this, blinded by their own greed and sense of entitlement, see their pie-in-the-sky schemes turn to dust and ashes before their disbelieving eyes. I would love to be there when they load the moving truck in the dead of night and slink away a few years from now when the payments have sucked them dry and their fantasy of eager buyers springing forward with multiple offers to fund their retirement have proved to be a bitter mirage.
“‘We didn’t think the value would go down at all … There was no prevailing feeling of doom,’ he recalled.”
This is real estate analysis at its best…
350k down??? You can buy a lot of house for cash with that kind of money. Heck you could buy 3 houses in Indianapolis for cash for that kind of money and get 3-4k of rent money per month and make money the hard old school way like real estate investors did back in… 1999.
Where I’m moving to, it would buy me a 1800s railroad tycoon palace.
You forget that during the Roaring ’00s the financial advisers were telling everyone that the road to wealth was through leverage.
Saving was for chumps…in order to have street cred in da hood, you had to be smart enough to “earn” more money by leveraging your equity, even though the fact that the equity itself was leveraged capital was conveniently ignored.
Leveraging your already leveraged money…keeping up with the Jones’ slowly became about having more credit cards and more debt than they did.
My old landlord was acutally overheard talking on the phone telling his relative that “I borrow money from other people so I don’t have to work”. Seriously. They moved to Arizona.
LOL! Any idea what political party he was?
Any news how they “ended” up?
“financial advisers were telling everyone that the road to wealth was through leverage. ”
I remember a young freshly minted Realtor® earnestly giving me the Leverage Spiel back in - whoa, 2006! It made quite an impression on me, but I never got around to doing anything. Bless my lazy, passive soul. He left town in a hurry shortly after that. I think market was already starting to collapse.
“Any idea what political party he was?”
Obvioulsy a member of the “What, Me Worry?” Party (Alfred E. Neumann, Presidential Candidate). Campaign motto;
“You’ve voted for worse, and you usually do.”
SubKommander Dred
sometimes i read these stories and think, “oh yeah there gonna be 20 HBBers commenting on what selfish stupid people these are”.
This development is across the way from a 3M land excavation. It looks like they are trying to remove a mountain and it’s ugly as hell to look at. Why anyone would pay this much to live across from that is beyond me.
I hate to be cruel, but only lizards and snakes can exist on the west side of the Freeway traveling south of Corona. Its a real H*ll hole. The only advantage it offers is that its closer to Orange Co. than Hemet (another lovely community).
I don’t care if they had a $20million manson on site, it sucks.
This is sad, real sad….
I have read there exists underground gardens in CA, somewhere around Fresno? They should a dug a hole in the side of the mountain for these million dollar homes. Better insulation, however they would have to pipe in their water.
so sad, so stupid, so ridiculous…
Yep, Fresno is known for the underground garden. The story was that an immigrant farmer couldn’t stand the heat and dug down below the hardpan (soil that has solidified into something resembling concrete) for natural insulation. It’s actually in the middle of an urban area on flat land (Shaw Ave. & Freeway 99). The trees poke up from below and look like bushes when you drive by.
John, about 25 years ago, the UN (one of its agencies) was involved in attempting to come up with efficent inexpensive housing for the locals using local materials.
There solution for hot areas for inexpensive houses was a mixture of concrete and clay molded into slip form frames producing something similar to adobe houses of the SW US.
With the high cost of energy, it maybe something that is interduced into CA. As I understood it, it impenetrable to water, so need to white wash every year.
If it’s impenetrable…why do you have to whitewash it? To make it porous? That doesn’t follow.
Maybe lost meant “permeable”?
sorry, not porous. This study was designed for Africa. The houses were cheap (using local materials) and safe with minimal maintenance for a third world economy.
Sorry for the confusion.
PS: My mother thought it was such a great idea, that she wanted to do it. Unfortunately, she bought an adobe house in Sacramento, CA and its been a head ache for 20 years. The house needs to be white washed and cracks filled in every year.
Also did I mention the nudist resort/hotspring a hop, skip and jump away.
LOL
Ow ow ow ow. My eyes…
Imagining the situation before the short sale when the REALTOR has to show the nudist property…
only lizards and snakes can exist on the west side of the Freeway traveling south of Corona.
I assume you mean the belly-crawling variety, not the even more unsavory NAR and REIC reptiles.
Both types.
“Tony Muriel said when he and his wife, Carmen, put down $350,000 to buy a $1.3 million house two years ago, they planned to stay 10 years. By then they expected their two children would be off to college, and their home’s value would increase to $5 million and become their retirement nest egg.”
They thought salaries would would quadruple in 10 years? Exactly why should or would anyone else give them $3.7 million for their retirement above what they paid with getting anything in return except the aged home? It amazes me how ignorant ppl were.
I know. Unbelievable. They expected home’s value to quadruple in value in only 10 years (the way things were going from 2002-2005, who could blame them? ).
Sorry kids, you’re going to community college and will be supporting your stupid parents in their impoverished old age!
Not to mention the opportunity cost of that $350K in 10 years time.
People seriously underestimate opportunity cost. That’s a frakk-load of cost!
(Hey! OlyGal, note i’m working that word in everywhere.)
why don’t you just get her address and send flowers? she’ll fall for it, i sense…
Hey, someone whose website starts with “forsaleorrent” should go easy on the haterade!
Haterade ? love it! Almost as good as viagrate.
I don’t get it? Viagrate? Ingrate?
OG would go for big bunch of frisias and gardenias and dahlias like a black grouper after a severed head i tell you.
Severed head of what?
Well,
Since they were suckers, I’m sure they were hoping some other sucker would come along and pay 5 million to live in Corona.
Yep. It takes one to know one, eh?
“The Muriels, like many of their neighbors, are upside down on their investment, owing more than $1 million on a house that most recently was appraised for $760,000. But with so much of their savings at stake, they said they are not moving.”
Why don’t they walk away or do a short sale? The present value of money lost in mortgage payments vs renting is reason enough to bolt. $5K/mo + taxes and insurance and maintainance. The savings are not at stake; they are already lost.
Why is it so hard for normally smart people to understand ‘in order to make money, you must take your losses’? Move on.
I’d feel sorry for them if the whole lot of them weren’t so damn smug and condescending to the idea of government oversight and mandating affordable homes back when things were going so swimmingly.
Turning the other cheek would be fine except now I have to hear them whine about why they need a government bailout to support their profits and fake equity.
I know. They are losing their savings by continuing to pay the mortgage. Some people just don’t know how to think, I tell you.
Maybe they’re hoping to be bailed out? That may explain why a lot of people will wait-and-see, at least until November.
Because hoz, they know tomorrow will be a better day
The sun’ll come out
Tomorrow
Bet your bottom dollar
That tomorrow
There’ll be sun!
Just thinkin’ about
Tomorrow
Clears away the cobwebs,
And the sorrow
‘Til there’s none!
When I’m stuck with a day
That’s gray,
And lonely,
I just stick out my chin
And grin,
And say,
Oh
The sun’ll come out
Tomorrow
So ya gotta hang on
Tïll tomorrow
Come what may
Tomorrow!
Tomorrow!
I love ya
Tomorrow!
You’re always
A day
A way!
I just left a message for Justine Sessions, Deputy Press Secretary for Senator Chris Dodd, Chairman of the Banking Committee. Dodd was the beneficiary of an insider loan from Countrywide for his condo in which he paid no loan fees or points. His constituents could not get that loan. That stinks.
Perhaps I should not hold my breath awaiting a return phone call. If you would like to call and ask a question of Justine Sessions, Dodd’s office is 202.224.2823. Someone might want to ask if Dodd will step down as chairman of the committee until the entire sub-prime controversy is solved.
Hah hah hah. Hold your breath?
You must be an extreme optimist. That phone call has already hit the bit bucket without ever reaching a human ear.
Two influential US senators got “VIP” loans from a leading subprime mortgage lender that saved them tens of thousands of dollars, it was reported last night.
The Democratic pols, Chris Dodd of Connecticut and Kent Conrad of North Dakota, both received the highly favorable loans under the designation “Friend of Angelo,” a reference to embattled Countrywide head Angelo Mozilo, Condé Nast Portfolio reported.
Dodd is chairman of the Senate Banking Committee, while Conrad is chairman of the Budget Committee and a member of the Finance Committee. The two senators refinanced properties through the VIP program in 2003 and 2004, the report said.
—
But it wasn’t just them: “Others who received ‘FOA’ loans include Alphonso Jackson, the secretary of Housing and Urban Development under President Bush who resigned in April, and Donna Shalala, who was secretary of Health and Human Services in the Clinton administration.”
You know, government conflict-of-interest rules can be pretty exacting where worker bees are involved, but these guys didn’t see anything wrong with taking “VIP loans”?
good catch rusty
the whole system is just rotten to the core. we all just try to carry on as best we can hoping to make it to SS age rocking on our porches while not dying from random gunfire, salmonetic veggies, or bursting a blood vessel on an internet blog.
From what I understand they’re claiming that they didn’t know the rates were lower than normal. Not that any of us could get away with that claim, of course.
So, they’re claiming to as clueless as many FBs, since they have no idea what rates they were getting. That’s why those clowns are so willing to do a bailout for their FB compatriots. The hands of deceit and fraud stretch from FB, RE agent, mortgage broker, banks, investment banks, appraisers, land developers, builders, town counsels and many other politicos. But when the dishonesty and ignorance reach the highest levels of office, there is little reason for being optimistic that this will end well.
“So, they’re claiming to as clueless as many FBs, since they have no idea what rates they were getting.”
There seemed to be an endless array of rates and terms during that period. The rates and terms available to any particular individual was similarly wide. I think it’s entirely possible one could know the rates and terms and yet have no idea how it compared to rates and terms others with similar circumstances might be getting.
If they shopped for loans like anyone else and yet were given preferential terms, perhaps without their knowledge, that’s one thing. However, if they worked through preferential contacts, that suggests they were seeking and perhaps receiving preferential treatment.
I actually like Dodd and his positions against warrantless wiretapping, etc. but this is just scummy and blatantly wrong. Shame.
I’ll take the man that will warrantless-wiretap me, peer through my bathroom window, and follow me around all day with a tape recorder over the man who
promisesthreatens a mortgage bailout.I hope they get arrested for that crap. Then maybe they can start a gang in prison. “The Carrots”.
Nah,
They should be called the “Countrywide 4 and Counting.”
This is exactly why “the people” fought so hard to get term limits enacted. And, IMO it is exactly why we should resurrect that initiative. Until we throw out incumbents, we never ever will have better government. I far more would rather throw out the very few good representatives or senators we have, than to retain the others. Change is good and, IMO, in government, change is imperative lest we be made slaves — slowly, mind you, like a good saute. Our freedoms are easily lost, but were bitterly won. Makes no sense, but for laziness and greed.
A couple of months ago it was Senator Dodds that was questioning the Orange man in the Senate hearings wasn’t it? Senator Dodds should of removed himself because of conflict of interest .
Chip,
In Virginia, we have term limits. Governors are limited to one term. It’s not so good, really. They have a 2 year budget, so in the last throes of their term, they do all sorts of things that just stick the next guy/gal with the bill.
I don’t know the solution, but it’s not term limits. It’s so much bigger.
Oh, so THIS was CA Rep Richardson’s problem. She wasn’t a FoA.
From the original post:
“Veteran builder Cory Olsen won the auction for a Bluffdale house valued at $726,000 for just $275,000 and felt like he got an excellent buy. ‘I didn’t intend on bidding on that one, but the number stayed really low,’ he said. He said his ultimate plan is to turn the property around and sell it for a profit.”
“‘When you buy it at this price, you can do a lease option and still have a positive cash flow on the monthly income,’ Olsen said ‘It almost feels criminal to take advantage of buying things at pennies on the dollar. This stuff is selling for 40 to 60 cents on a dollar.’”
To which I say, JUST $275,000? Why, that’s more than a quarter of a million dollars. Still too much.
And don’t get me started on lease options. One of the biggest scams going.
Actually, Slim, lease options are big on Craigslist for W. Colo. and I don’t know much about how they work, other than you’re tied into an agreed on price in a dropping market, plus very little of your cash goes to the price of the home, kind pf like paying rent but you can’t get out as easily. Is there more one should know? I would never sign one, but just wondering…
For the most part, lease/options are used when the owner just can’t unload the property for the price he wants…For a buyer, you should;
#1. Make sure 100% (or at least most of it) of your rent is allocated towards the purchase of the property at the time you exercise the option.
#2. The purchase price is set at the time you sign the Lease/Option and connot change…
#3. The price for the property should be set by some independent arms length opinion unless you feel confortable with the price…
For a buyer, you should;
Another strategy would be to allow yourself to be negotiated for a high purchase price and in exchange for a monthly nut lower than any nearby rent. (And then don’t exercise the option.)
Owners that have not acknowledged the reality of how much their home is worth might also think you actually intend to buy their overpriced home for a stupid amount. So you might as well play along and get a low rent in the process…
You might also want to see if you can have it recorded at the country recorders office, in order to protect your interest. I guess is how to insure it. You can only insure your insurable interest. You may need a lawyer to figure this one out and not an insurance agent.
They always charge you higher rent in exchange for your lease option. It has no advantage to the buyer. It only advantages the seller, who gets a contract for either of the following:
-Selling the house tomorrow at today’s (inflated) price
-Collecting outlandish rent for 1 year
Big V - in today’s market, I agree with you 100%. In the market I expect to trade in before I’m in a wheelchair, I agree with you 100% - but I’m old. In a “hot” (rising price) market, you never see such offers. ‘Nuff said. Along with the others here, I think lease options are for fools. They remind me of auctions that have reserves/minimum bids.
‘It almost feels criminal to take advantage of buying things at pennies on the dollar. This stuff is selling for 40 to 60 cents on a dollar.’”
Relax, Cory…or should we call you “Corky.” You’re no criminal, but no genius, either. That home “valued” at $726,000, that you paid $275,000 for, has a new market value: $275,000. Yep, and the odds of a GF coming along and paying you a dime more than that are slim. So, no harm, no foul, but don’t go thinking you got a “steal,” when by this time next year you’ll be seeing comps that will make you want to retch.
Yep! If he got it for $275K, the next guy (or gal or couple) that comes along is going to want the same deal.
But surely he accounted for that in his strategy/business plan, right?
I went to this auction last night (just as an observer - no cashier’s checks in my pocket).
It was my first auction and I was interested to see how it would compare to the descriptions of other auctions I’ve read about here.
The bidding was interesting. The first house went very fast, (and high) and then everyone got conservative after that. The auctioneer had to come down to $100,000 in almost every case to get bidding started. Lots of responses there, and once he hit $200,000, most everyone would drop out, and there would be 2-3 bidding against each other for the rest of the round.
The place was packed…standing room only, with an overflow room for observers. It didn’t feel high pressure…the auctioneer made lots of jokes, everyone was pretty relaxed, no alchohol was served…just soft drinks, and no loud music. So, kinda different from the accounts I’ve read here. I was watching pretty carefully and I don’t think the bidders were shills. Most were couples, some even had their kids with them.
Another interesting anecdote. The other couple we were with are from Utah originally and they ran into quite a few people that they know. All were just there to watch and see what happened, none were bidding.
Many of the houses are new and are in the 4,000-5,000 sq. ft. range. They are on good sized lots too - one third to half acre. (Gotta accomodate those big LDS families, ya know.
Anyway, it will be interesting to see if the bank accepts the high bids which were in the $250,000-$350,000 range mostly. There were a few that went higher.
The estimated values were high so I didn’t pay much attention to those numbers. However, the high bids ended up around $60/sq ft in some cases. Not bad.
We will see. It’s hard in Salt Lake County to access public records, but I am going to try to follow up in a month or so and see if I can find out if any of these homes actually close at these prices.
Kris - I hope you follow up by posting here details of that auction. Bet yet will be posting details of “closed” prices, which will take longer. Thanks for giving us a “per square foot” number. As for myself, that is the number that matters most. Am assuming that you mean per-foot including the lot, which is how most people would evaluate an auction.
Funny. Foreclousures driving out the SFH sales, now future auction lookers are filling up the auctions.
“Corky”, you’re killing me Sammy.
“This stuff is selling for 40 to 60 cents on a dollar.”
A little anecdote from the SUNNY PacNW this Friday. So sleepless finds himself looking for a new couch. I go to the “Liquidation Sale” that’s been going on for 3 months and like one that’s prices at $1200.
I ask if they’ll take $350. No way, that’s like 70% off, they tell me. So I says, “well, 70% off of an inflated number.” I continued, “I bet that couch doesn’t list for more than $699 (if THAT). So, really it’s only 50% off. And you’re going out of business in 10 days.”
Blank stares and the obligatory “I’ll see what we can do.” $600 is their offer. Hand him my card, tell him to call if they’ll entertain my offer.
Moral is, these renobs think this house is actually WORTH $726K. Insanity!
““Michael Kroitor said he and his wife, they were willing to make monthly mortgage payments of $8,500, or two-thirds of their household income, on top of property taxes.”
Property tax should be around 10-12K So they are paying around $9500. It said it is 2/3 of their income. Are they saying gross income or net (after taxes). If it is gross, then they are already underwater. What are they eating? Top Ramen? STUPIDDDDDDD!
“Tony Muriel said when he and his wife, Carmen, put down $350,000 to buy a $1.3 million house two years ago, they planned to stay 10 years. By then they expected their two children would be off to college, and their home’s value would increase to $5 million and become their retirement nest egg.”
How did they come up with $5Mil? I think they went to a RE seminar and drank some kool-aid. Wow. retirement nestegg to working at Wal Mart greeting customers for life.
Take the appreciation rate for 2004 or 2005 and apply it for 10 more years. Simply forget about the mean or rationality.
This reminds me of the Tech Bubble. How many of you knew people that were otherwise bright, but ran retirement projections based on assumed stock market rates of appreciation at 20, 30 or 40%? I knew several. We all know how that panned out.
I know a few ppl that actually quit their jobs before the burst at young ages banking on such rates of appreciation to live out the rest of their lives based on their stock market investments. They all had to beg for their jobs back.
It’s an important point. Manias are like that, people are fully confident, even at the peak, that outsized appreciation will continue. I remember at the top of the oil prices in the 80’s, almost everyone in Texas thought they would more than double, and bet accordingly. When I was filling up in Bakersfield the other day, this guy at the pump near me volunteered, ‘I hear it’s going to $10 a gallon.’
Manias are also characterized by a growing fear of not taking on risk.
Regarding oil
Hedger: buy a tank now or be priced our forever.
Speculator: buy a whole gas station or someone else will beat you to it.
Lobbyist: buy a politician now because everyone else is doing it.
oil, gold, real estate…..all get punished. why do I know this? Im long them all.
and you are gonna eat, drink, sleep and work through the whole enchilada.
combotechie is right, cash is king, but what is cash money? is money the ability to produce or the fruit of production?
either way, its production.
You should ask the negative of that question. How many people were sane?
I knew a few in person (less than fingers on one hand), and quite a few online on the “message boards”. We were all rubes and retards, of course, for not participating. We did do well on the downside though after the fever broke.
Too bad you can’t short RE.
Lots of ways to short real estate beside the Merc there are some ideas from last year.
Looking To Short Real Estate Via ETFs
http://seekingalpha.com/article/31724-looking-to-short-real-estate-via-etfs
“Wow. retirement nestegg to working at Wal Mart greeting customers for life.”
That’s if they can get on at Walmart. Methinks this downturn is going to drive a lot of folks to seek work at Wal Mart, more folks than Wal Mart will need.
i know someone who went head first into rentals… bought 10 (5 duplexes) of them in 2005.. 5 more single family homes in 2006… an early 30’s guy who was gonna retire in 5 years with millions.
Well, things didn’t quite work out as planned. Sh*t happens dontchaknow. Another baby is on the way. Even with dad’s considerable help, this self-made property mgr. needed a job.. and get this.. he’s now an investment advisor. Beware.
Speaking of getting a job at Wally world, mothers neighbor who speaks 7 languages wanted a pt job and applied at Wally world. She wasn’t accepted because
BECause she didnt’ speak SPANISH.
Can you frakkin ( I believe that is the new term!) believe that. Now this woman over 60 boycotts verbally wallyworld.
Yep, the great equalizer. She was probably way to smart to work there and they didn’t want anyone who could think for themselves.
“How did they come up with $5Mil?”
They ran the same spreadsheet that I did in early 2005. I told my wife what they didn’t tell themselves: “Honey, this is impossible. People cannot or will not pay what this place supposedly will be worth in 2xxx.” That’s when we sold out and rented. I am grateful every single day for that one best decision of my life.
Yep.
I had a work colleague bring me almost exactly the same calculations about 10 years ago, with smaller numbers, on a “surefire investment opportunity” in SE Queensland (Australia).
The spreadsheet had 3 models, based on 12%, 15% and 18% annual appreciation for 10 years. He was working his figures off the “medium appreciation” of 15%. I commented that I didn’t think even the “low” number would hold up based on the other 10-year assumptions (3% average CPI, 5% average wage and rental growth), and got a real deer-in-headlights stare.
My bottom line comment was that if the 15% column on the spreadsheet was valid, then in 10 years time he would be selling to either;
1. An investor willing to accept a 2% GROSS rental return, or
2. An owner-occupier willing to pay 10 x median household income,
for a 10-year-old 3/2 townhouse. I added that I couldn’t visualise either as a realistic possibility.
Oh well, he went on with the purchase anyway. (And, to be fair, it probably actually made him a fair bit of money. Just not the $500K or so he was expecting for doing nothing.)
Ben, Thank you for your dedication. You and the other bloggers are the blessing for RE ignorami like myself. Thank you!
If you ever need anything at all (custom software?), contact me.
Best regards,
Ari T
“Ben, Thank you for your dedication. You and the other bloggers are the blessing for RE ignorami like myself. Thank you! If you ever need anything at all (custom software?), contact me.”
Sounds like someone who almost got high on RE Koolaid; ‘ya saved another soul, Ben. BTW, arit try Ben’s Paypal button!
“The biggest problem is that one-third of the market got completely locked out. Subprime loans are gone.’”
This is not just a sub-prime issue. I have excellent income and tier 1 credit, just not enopugh of a downpayment. Here in the IE of SoCal I see former 800k homes listing at 500k, so just for fun I went to a broker to run some numbers. Turns out without 20% down you get highly penalized in this market. There are no 2nd loans available and on your first the rates are not too great even with a high income and tier 1 credit. Then they have to impound everything and charge PMI. He quoted me a $3,800 payment on a 467k loan. I’m like “Hello McFly, I rent a similar house in the same neighborhood for 2k!” Just wanted to report the “fencesitter” is going to be sitting for a lot longer.
I think the biggest problem is that 1/3 of the market was subprime. That should have set off some bells somewhere.
Fine, just save some more money. You’ll be the only one around who has any by the time this thing has bottomed out.
Capitalize your rental at 100 x and it’s a 200K house. Why would you entertain paying three times that?
Compared to prices in Canada the US real estate looks like a bargain. Stupid Canucks.
Compared to prices in California, Oregon looks like a bargain. Stupid Californians.
Let’s take this even further. Compared to prices on EAST/WEST Coasts, almost anyplace looks like a bargain. Stupid…(?)
EVERYONE, no matter where they lived, was looking for a bargain.
BayQT~
“The number of residential homes for sale through the Coeur d’Alene MLS has topped 4,000. At the same time, home sales remain soft. ‘They are, but we’re still in what would be considered a normal market,’ said Kim Cooper, spokesman for the Coeur d’Alene Association of Realtors.
“Normal” my behind! I was hiking with a Coeur d’Alene Realtor two weeks ago (met him on the trail) and got an honest assessment of the situation. Crash and burn! (The guys is retired and only works in real estate as a hobby, so he can laugh about it.) According to this guy, most of the realtors up there invested heavily in residential RE during the boom years so they are now facing the double whammy of lost income and lost investment money. One big agency was actually the primary investor in a major development.
If you wonder why Realtors don’t talk prices down to stimulate sales (and commissions), the answer is that most drank their own koolaid. Stimulating sales means killing their own speculative investments.
Makes perfect sense, used house sales people went into buying up homes full throttle. Try as they may to keep prices up….looks to me that they are losing the battles and then finally the war.
Same is true in Alaska. Most of the RE agents here own several properties and most of it was bought in the last 3 to 4 years and are scared s*itless.
I know this because have a friend who became my RE agent (didn’t get a choice on that one) and we have schizo feelings toward each other as a result because he knows I’m a housing bear. He alternates between being honest with me and passing me Koolaid.
When I point out contradictions in what he says about the market, he just gets mad.
Sounds like me and my (recently ex-) girlfriend regarding religion.
Housing bears in Alaska? I’d give them a WIDE berth.
Housing Bears = Godless Dream-killing Machines
(if Colbert were a RealTor(TM))..
This is why I always have said in the unread letters I write to Frank, Dodd, Pelosi, Obama, that any “Bailout” should at least excluded Licenced R-E agents and mortgage brokers.
They are a significant percentage of FBs, and NOBODY can argue that the were somehow duped, scammed, or forced into a something they didn’t understand.
How do they know that 4,000 = “the top”? I’m thinking that the “top” would be some number that equals “total houses in Coeur d’Alene”
“If you wonder why Realtors don’t talk prices down to stimulate sales (and commissions), the answer is that most drank their own koolaid. Stimulating sales means killing their own speculative investments.”
I surmise the involvement runs deeper than any can fathom.
Three years ago I was fortunate to meet an honest’ old school’ [83 years old] broker/realtor. In the business for over 40 years, she just worked to stay busy. She shared her frustration with all of the realtors and other brokerages in her small town. They were ALL drinking the cool-aid they served. She was pretty much black-balled because of her veracity. Sweet lady.
Crash and burn! (The guys is retired and only works in real estate as a hobby, so he can laugh about it.) According to this guy, most of the realtors up there invested heavily in residential RE during the boom years so they are now facing the double whammy of lost income and lost investment money. One big agency was actually the primary investor in a major development.
1. The market in CDA hasn’t crashed and burned. As Kim said, it is a normal market and agents/consumers who don’t think so have a very short memory.
2. You met someone retired, not actively involved. Do you even know how actively they were involved prior to retirement? Source is questionable is my point.
3. The issue is not investing in real estate - the issue is living beyond one’s means and not having money set aside for the cycle of real estate. It’s also about using too risky of loans without financial backing.
4. Agencies are often major/primary investors in developments/sub-divisions. What does that have to do with anything?
5. Good agents tell a prospective seller reality - they don’t gloss over it - and telling a seller the reality has absolutely no bearing on my real estate investments as we’re not selling right now.
Please note I am speaking specifically of Coeur d’Alene, Idaho (Kootenai County).
Michael Kroito, all of Canada thanks you for emigrating to California and taking your wife and four kids.
We don’t need faux hollywood millionaires.
Homeland security can be very nasty to any non citizens entering the US including canadians with a vacation home. answer one question in a way the agent doesnt like, and he can arbitrarily deny you entrance to the US forever or a long time. Many canadians, europeans, and other foreigners are wising up and avoiding the US for vacations and vacation homes because of this. Say 1 thing that makes the border agent think you are working without a visa, or involved with drugs and you will never be able to see your vacation home again.
On the Ground in Anthem
For those that don’t know, Anthem is close to ground zero for REO foreclosures in the Phoenix metro area, but sales have been picking up lately. I just got off the phone with an RE agent and he told me the following information for the entire Phoenix metro area.
# of REO sales in May 2007 = 160
# of REO sales in April 2008 = 1,444
Avg sale price to listing price 97%
What’s it mean? If you believe the data, banks are finally gettting realistic regarding their asking prices, with the “apparent” avg cost around $105 per sq ft.
So things are starting to move, but are these all knife catchers?
With 700,000 REOs nationwide and foreclosures increasing and a few houses for sale and an economy weakening. Nah, they are not knife catchers, they are seeking the guillotine.
Banks are getting scared and just starting to dump. It will get really ugly in September.
“Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.”
Albert Einstein
Yeah I think the dumping starts this winter and into next summer.
And this just pushes more REO’s on the market. Also I figure we will finally have to admit we are in a Recession by 2009 the fact that its really been going on for a year will escape most people.
This will cause its own tide of foreclosures. Also baby boomer retirement should be getting going in earnest in 2009 esp since I suspect a lot will be forced to accept early retirement as businesses cutback.
Finally spiraling gasoline and food costs will cut hundreds of dollars out of even prudent peoples purchasing power. Every hundred dollars more in monthly expenses cuts 15k off what you can spend for a house.
So 2009 will be a fine year for renters. I’m going to start poking around for a house in 2010 I’ll probably move to the area I want to buy in and rent for at least six months.
Earliest I plan on even really looking is late 2010 probably 2011.
No rush.
Yeah I think the dumping starts this winter and into next summer.
I agree with everything, including the pushing of other people into foreclosure via the grind of declining home prices *except* the start time. I think the start of the fast decline will be the Fall.
This Fall. Ok, late fall… but hold on tight.
Please someone update the real estate roller coaster video! I guess I’ll have to go out and buy railroad tycoon.
Got Popcorn?
Neil
Hoz:
You always make me feel better.
-BV
higher interest rates and banks dumping REO will put a floor under this thing in short order.
what comes out smelling like a rose other than an Elliot Spizter tart fart?
Do you know the avg cost per sq ft in 2007? I would like to know the percentage drop it took for this movement to occur.
We have a little magazine that comes out weekly and they show the avg price per sq ft in 2007 ranged from $140 - 180.
I concur with Michael. Lots of REOs to sell off and not that many with the capacity to pay so it’ll be LOOK OUT BELOW.
Of course there’s that little thing called inflation that will also have some effect on the prices, but probably neglible compared to the crashing prices.
Lip, what are you doing in Phoenix, I thought you were in Denver?
lostcontrol
No, the boss is in Denver, I live in Phoenix. Its a pretty good gig if you can get it.
ya, when the cats away, the mice will play!
lol
Lip, with the high gas prices (4.59 9/10 in So. CA today), I guess the drive by inspections are out. So what do you do know, phone inspections?
lol, lol lol…
No, we spend the money to do the face to face time and we don’t call them inspections
I’m a consultant don’t you know.
I wish I took the time to do a little playing around (of golf) but it hardly ever happens. I’ve talked to a few agents/brokers lately some are getting downright desperate. Hope things are going good in lcville.
Come on lip, you can not win this war between inspector and consultant. I fought it for 30 years and lost. Why do you think I refer to myself as lostcontrol.
I hate to break the bad news to you (LOL), but your position is pr, document/cover the but of the underwriter and provide documentation for reinsurance.
It took me 20 years to find this out and only when I moved over to the sales/broker side of the business.
But what the heck, as long as you know whats going on and they pay you a good salary, you will not sell your soul.
By the way do not buy the pension and health insurance for low wages. Every insurance co. will turn on a dime, if will cost them a dime.
Good luck,
LOL, LOL, LOL…
10-4
Come on lip, sorry to ruffle (is there such a word) your feathers.
You can not win this war between inspector and consultant. I fought it for 30 years and lost. Why do you think I refer to myself as lostcontrol.
I hate to break the bad news to you (LOL), but your position is pr, document/cover the butt of the underwriter and provide documentation for reinsurance.
It took me 20 years to find this out and only when I moved over to the sales/broker side of the business.
But what the heck, as long as you know whats going on and they pay you a good salary and you do not sell your soul to the Devil. You do not want to be like an FB who buys an over inflated house and flip it for a profit, do you. Same thing.
By the way do not buy the pension and health insurance promises for low wages. Every insurance co. will turn on a dime, if it will cost them a dime. Heven knows, I worked numerious companies, they all said the same, but they lied. They were Home Ins., Chubb, CalCasualty, Republic, Mission Ins. and Kemper(not in that order).
Good luck, wish you the best and stay out of the sun.
LOL, LOL, LOL…
LC,
I definitely hear what you’re saying and I’ve learned about the role of what I do. Also, it took me about the same amount of time to figure it out.
In fact, I worked for Kemper back in 1980 - 83, when the Chicago branch went from about 13 LC Reps to about 4 when I left. I have prepared myself for the worse by getting one designation (CPCU) and I’m going to get the 2nd this year (ARM). Besides that, I work harder than anyone else and I work on the quality of my reports.
So I hear ya, but I spend about 50% of my time working at the computer in my shorts, Tshirt, & flip flops. I work for a boss that leaves me alone except for maybe one phone call a month. I get a company car and I have a ton of freedom. If it all ends, then maybe I’ll have to go out and get a real job
Talk to ya later.
Isn’t Anthem the master-planned community that had its own song?
Slim,
Yes regarding the master planned community, but I don’t know about the song and I’m not sure I want to learn about it.
We’re famous for a few things that I personally don’t know anything about.
Can you sing it in weblog?
Lip
Slim,
First post got ate I guess. Yes, I live in a master planned community but I never heard about the song. Do I want to hear it?
We are famous for a few things that I personally know nothing about.
Lip
NEW YORK (MarketWatch) — Stocks rallied on Friday, but posted mixed weekly performance, as fears over inflation were somewhat abated by a rising dollar, a drop in crude-oil prices, and a report showing May consumer prices were in line, excluding food and energy.
Food and Energy, who needs em!!
Wall Street finishes with sharp gains - AP - 9 minutes ago
Wall Street ended a turbulent week with a sharp gain Friday after government readings on inflation and a drop in oil prices eased worries about the effect of rising prices on consumers.
Inflation jumps by biggest amount in 6 months - AP - 1 minute ago
Soaring energy costs pushed inflation up in May at the fastest pace in six months. Food costs kept rising, too, and all signs are pointing to more bad news on gasoline, oil and food in the months ahead.
The headlines contradict each other…..Makes no sense!!!!
Makes no sense at all. Heard in Ireland the problem of gas and food/energy prices are going through the roof.
Some consumer advisors are suggesting the grocery stores (3 main ones) should start competing in lowering their prices.
Gee, I wonder if they knew the groceries arrived by gas or air?
Anyway, it is a problem growing by huge leaps in other countries as well, but they are talking about it on tv alot.
obviously, you cant have a rising dollar, rising interest rates, and rising inflation…… thats just not possible.
world peace is predicated on exponential smoothing of just the opposite.
Deseret News Publishing Co
Salt Lake City, UT
The Deseret News will cut up to 35 staff positions by mid-July as a result of rapidly declining classified advertising revenue, the newspaper’s management said Thursday. “It’s extremely painful,” Deseret News editor Joe Cannon said. “It’s unprecedented in the history of this paper, at least in its modern history.” The newspaper’s revenue has fallen 32 percent since January, largely from a drastic drop in employment ads in the classified section. …”
Deseret Morning News - June 6, 2008
Meredith Corp
Des Moines, IA
Meredith Corp. has fired 60 employees and eliminated another 60 open jobs due to weak advertising and book sales, company officials said Thursday. …Meredith Retail, which includes special interest magazines and the company’s media and newsstand businesses.”
Des Moines Register - June 6, 2008
“A drastic drop in employment ads” and “Weak advertising”
I guess women of today don’t have to buy the latest Family Circle or American Baby (among the 30 magazines Meredith targets to women). stock symbol MDP NYSE
ouch! That paper’s been around. If I’m right, it and its competitor (Deseret News) are both owned indirectly by the Mormon Church, which is quite wealthy.
Whoops, meant to say the Salt Lake Tribune.
I guess you dont wrap fish in the desert.
more than a few acres underwater might bring the fish back I suppose.
Hey, ever seen the Great Salt Lake?
Probably no fish in there, though, I dunno much about it, lots of brine shrimp and sea gulls.
This whole state used to be underwater, the Salt Lake is a remnant. I think it’s coming back…to housing, anyway.
Strawbuyer with zero down for a cool 500K fraud (1.4 mil - 900K)?
From the article:
….
Some early investors at The Retreat made a handsome profit.
Ed Zorn, a broker at ZEC Realty in Corona, said a house he recently listed in the community was purchased from the builder for $900,000 cash in February 2006 then resold that November for $1.4 million in a transaction that was 100 percent financed.
“It was a fantastic deal” for the first buyer, Zorn said. But the next buyer saw the home’s value plummet before the lender foreclosed.
Zorn said the same house recently was purchased out of foreclosure for about $600,000. The new owners, he said, are a couple of empty nesters who had been living simply and saving their money.
…
$600k for a house-for-two? Methinks that they could live a much simpler life.
Since it’s Friday afternoon, here’s a fun toast to the American consumer:
http://tinyurl.com/3jffww
Hilarious! : )
I can just see it now……
Barnako, Mali- Kiddu and Tiffany Othmani were estatic two years ago, when they were able to move out of their rented tent, and moved into a new tent, on the outskirts of their Touareg encampment. But that was before they found out that Countrywide Mortgage put them into an adjustable rate mortgage.
“We did not understand the terms of the contract” said Kiddu, “We have never been to school, nor do we know how to read or speak English”
Countrywide loaned the Othmanis $400,000 for their 600 square foot tent. Ths is 266 times the average Mali income of $1500/year.
“They said we had no verifiable income, and that they were putting us into this, how you say, Liar Loan” said Tiffany
Things are looking up for the young couple, however.
Countrywide’s first attempt at foreclosing on the tent ended with their agent “disappearing”. “We have no idea what happened to him”, said a smiling Kiddu.
somebody wasn’t a friend of Angelo.
Gulfstream, I had to read that one several times… very funny!
I’m still grinning over that one!
Most excellent.
Lovely. Smug yuppie next door who paid 805 in 2004 now zillowing 821 and falling, after being well over a mil at one point. (Property tax 2007: $8927)
Duplex on other side, bought for 865 last October by a brilliant investor named Chuck, now zillows 761k — down 12k in last 30 days…
can’t wait to pop that Foster’s oil can in the fridge after work and sit out on front stoop next to my motorsickle as thee sun sets on the bubble, ahhh…
Change that beer to Labatts, and I might join ya…
got my Solar estimate for the shop.
Now, its only a 10 bay heavy diesel south facing metal standing seam roof, and the power bills on the monthly run about 700 bucks anyway..
512k out of pocket. 400 panels.one inverter.
PPL writes me a check for 80k
the bill goes to 5 bucks.
heres the kicker…you gotta have a tax appetite of about 300k to warrant the move. No sale. However, if I can find or be matched with a pass through deep pocket entity or leaseback with no out of pocket……the numbers might change. This is why backwater rural community solar is not happening…. deep pocket tax appetites are not hungry enough…. think about why this is about to change. This is why muni-solar bonds are about to make an impact in communities that are away from the urban centers.
How quickly will the technology become affordable that the no-brainer happens? panels currently retail at $925.00 each.
anybody wanna hazard a guess of energy costs annual increases over the next say, 15 years? 3.5% is probably a good gubmint number.
?What does this have to do with real estate? well, one theory of why someone would want these commercial sites is deep pocket pass through tax appetites…….
512k????
Where’s iftheshoefits? He does solar, call him, I bet he can do it cheaper, he’s only a few thousand miles away…
entity creation, taxable exchange, personal loss long term tax carry forward, offsetting Cap Gains for energy gains?
Talk about the green tax, the antithesis of Carbon tax…
I smell something…..its either tax incentive change or Corporate expansion, or debt creation…. whats it gonna be?
or is it just low price? NPV out of pocket?
If I dont hay the fields, do I pay higher taxes for the Elk herd?
I sense you are onto something big and important and I dig your posts and the fact that you seem to know how to do actual things, Voz, but you lost me at “metal seam standing roof”.
Nope, for most people it would cost 50-200k to offset the “typical” US homemoaner. It’s a good part of the reason that I’m moving away from pure solar and going into demand side reduction. Much better return on reducing consumption, before substituting with solar.
Reducing consumption is going to be the killer app of the next decade. Commuting, heating, cooling, whatever, figure out how to thrive on less. Be there or be square.
test
Foreclosure crisis looming in western New York, experts say
http://www.democratandchronicle.com/apps/pbcs.dll/article?AID=/20080613/BUSINESS/806130351/1001
It finally looks like the kool-aid is wearing off slowly in the land that the bubble was supposed to miss. It’s difficult to try and convince the local crowd that what happens in CA, FL, NV, MA, MD, etc., will happen in western NY, but they will be convinced eventually.
I must have missed the exodus from Socal and Arizona for those Buffalo winters. It is different there.
The people I know who bought at the top of the market in LA all had one thing in common: they really wanted to feel rich. They wanted to have the fancy home, drive the luxury cars, belong to the nice country club, send their kids to the top notch private schools. They saw real estate speculation as their ticket to this lifestyle they felt they so richly deserved. And everyone else they knew was doing this - so why not them? Now all these people are on the same sinking ship, slowly realizing that some serious consequences are coming their way in the very near future. It’s pretty pathetic really, and those of us who didn’t buy will have our patience tested over the next couple years. Good things come to those who wait.
Pawned - I see that around me every day. It is fascinating, but not in a nice sense. I liken it to an anaconda that tries to swallow an animal too large — it dies in the process. That’s the way it goes and always will. When the Greed Train’s comin’, I step aside. Lotta greedy bones under them tracks.
Lip,
two books that I am sure you have on your bookshelf, but if not, I offer these-
“Techniques of Safety Management” by Dan Peterson
“Industural Accident Prevention” by H.W. Heinrich, Dan Petersen and Nestor Roos.
I tried to sell this my employers and clients for 20 years.
I just wanted to know that your heart is in the right place, however, I now operate as…
Experience over hope.
Regards,
Mike Murphy
If I recall Dan Peterson was a Prof at UofA. and he recently passed away.
Sometimes all I can really say, life’s a bitch!!!
Wish you the best and save your money. Insurance Co’s will suck the big one.
Regards
A side note,
While education will not guarantee success from a financial standpoint, its critical to survive with all the con artists out there trying to separate you from your money.
I do not know who to blame, someone, everyone, but if I had my choice, it would be the elites of this country. They always get special treatment.
Thanks, Ben for this website. I have been radicalized.
Thanks to all your contributors who have opened my eyes on arcane subject of finance, business and housing.
Best wishes to you all!
hey lip,
you why safety is a disaster in So. Ca., because private employers are looking for the lowest wage workers with the minimal knowledge how processes work.
Without being impolite, women are hired as Safety reps by private companies (and in CALCOMP’S case while in business) to massage the clients.)and to process claims. Not that women are not capable, but the women hired in SCAL are claims clerks. They never leave there office. I have more respect for an accountant to go out in the field to see what his/her company is doing and to consider the safety hazards and liability exposures.
What the heck, I am an old timer (never thought I would say that). Let the next generation fight our wars.
Best of luck from S.CA.
>>”“Homes that are sitting unfinished and vacant because of the depressed housing market are causing problems”
By definition if no one is living in a house it is not a ‘home.’