The Wheels Fell Off Somewhere
The Uinta County Herald reports from Wyoming. “The concrete foundations poured and seemingly left for dead on Cheyenne Drive, and in Brook Hollow Subdivision Phase 4 are just the visible fragments of a big real estate investment and development plan that has crashed down in recent months. Leo Coleman of Utah, the 2003 Utah County Builder of the Year, and his partner, Dean Casutt,…purchased nearly every available building lot in town - 125 lots in at least four subdivisions, according to public record.”
“Investors were then invited to buy lots in order to provide Coleman Construction with capital. The plan, outlined in the prospectus and other documents, was that investors would buy the lots from Coleman; he would develop those lots, build houses on them and then find an end user - someone to buy and live in the house.”
“Kurrin Bickmore, a Utah-based investor, said all of this was to happen in less than a year. Most of the investors had no knowledge of Evanston, nor any intention of owning property here for any time over the 120 days. Few, if any, knew what they were buying.”
“Bickmore admitted that he didn’t investigate his properties and see what he owned until much later.”
“Coleman stopped making the agreed upon mortgage payments for the investors this spring. Still stuck with real estate in Evanston, now making payments, or facing foreclosure and the ruin of their credit, they started to worry and ask questions and investigate the situation.”
“Karen Field of Coldwell Banker facilitated Coleman’s initial purchase of the lots, and though unable to disclose details, adds that after he closed, ‘he got all different people to invest at astronomical prices;’ some for as much as $81,000.”
“‘We all lied. Everybody that has a lot - we signed and said we were making the down [payment] and making payments. Maybe we did it naively, but we did it,’ said Bickmore.”
“Though a picture was painted of numerous workers from the oil fields lining up to buy new homes, Georgia Harvey of Uinta Title said that the need was probably not inflated too much, actually.”
” Harvey calculated that homes could have been built and could have sold, even with the demand slowing - she estimated that at one time there was at least $5.2 million in Coleman’s hands. ‘But,’ she said, ‘the wheels fell off somewhere…something happened.’”
“As it is now, the investors have now found themselves owning pieces of Evanston, lots most likely worth less than $15,000, for which they paid highly inflated prices. Many of them are wishing, as Roger Harding said, that they had ‘done a little better due diligence.’”
“The investors, ‘not unsophisticated, first-time buyers,’ Harvey said, took too much at face value, with things going so well in real estate. ‘They all should have known better,’ is the general attitude floating around.”
From KPVI in Idaho. “The country as a whole has experienced problems when it comes to home loans. Here in Eastern Idaho, things might not seem as bad, but we definitely aren’t immune.”
“Stacy Davis, Consumer Loan Manager: ‘Over the last year, year and a half, the housing market has slowed down. Idaho has been impacted by that somewhat. We are still behind the national average, but we are seeing the impact more recently in Idaho.’”
“Stacy says a big factor that goes into the lending decision is if the borrower is extending themselves financially. They say it’s easy for families to push it when it comes to what they can afford.”
“‘A lot of the problem has been people over-buying for their ability,’ Davis said. ‘As the market begins to lose value and there’s tightening up of guidelines, you will see less people qualifying for large homes. That seems to be the problem, when you are trying to buy more of a home than you can afford.’”
The Heraldnet from Washington. “Major cutbacks in the building industry in Snohomish County are blamed for a sharp increase in unemployment in May, the state Employment Security Department reported Tuesday. Local unemployment increased from 3.6 percent in April to 4.6 percent last month.”
“‘We dodged a bullet for quite a while,’ said Donna Thompson, a regional labor economist with the department. ‘But unfortunately, it’s catching up with us.’”
“Thompson was talking about the national housing crisis. Thompson said the local construction industry is doing poorly because of the slowdown in home sales. ‘There are a high number of homes that haven’t sold and are still in the market,’ she said.”
“Last month, the county lost 300 construction jobs. During the past year, it’s lost 3,300. ‘Construction workers are losing their jobs and it’s really having an effect,’ Thompson said.”
“She noted that many local homebuyers bought adjustable mortgages that could be increasing to much higher interest rates during the next four years. ‘We could be looking for another year of pain and then we should start coming out of it,’ Thompson said.”
The Seattle PI from Washington. “Bellevue resident Dane Gill graduated from the University of Washington in December, just as the national economic downturn was starting to hit here. He has been looking for work since being laid off in September.”
“‘I’ve applied to at least, I want to say, like, 50 places,’ he said. ‘I’ve had a couple of interviews and a couple of them, they told me afterwards that they stopped their search, so I guess they felt nervous about giving somebody a job.’”
“Gill’s job struggle is part of a larger problem in Washington state: It is producing workers faster than it can produce jobs.”
“Another problem facing Washington workers is underemployment, though the state does not collect statistics on that phenomenon because it’s a matter of opinion and hard to track. Gill, the recent college graduate, said that his counselor told him a humanities degree would be useful.”
“‘She said I could do a lot of stuff with it,’ he said. “I don’t feel like working at McDonald’s or Target would be good for me because I went to five years of college, graduated with honors, you know?’”
The Columbian from Washington. “A sharp downturn in Clark County home building this year is showing up in the local job profile. The construction industry has shed an estimated 700 jobs in the past 12 months.”
“Scott Bailey, a regional economist with the Washington Employment Security Department, said he expects the housing market to continue to have an negative influence on construction.”
“‘If we follow the national trend, the other sectors of construction (commercial and home remodeling) will start to turn down as well,’ he said.”
The Oregonian. “Paul West left his Idaho sawmill job in 2006 for Oregon’s promise of steady paychecks from a booming housing market. By last summer, he said, he was hammered with work. This summer, he’s working the carnival circuit.”
“West still puts in the odd day on the job with troubled builder Legend Homes. But with little construction work, West turned to an $8-an-hour job working games at the Rose Festival and Tigard balloon festival. Still, he hopes to get back to his $13-an-hour building job in a few weeks.”
“‘If that doesn’t pan out,’ West said, ‘I’ve got the Washington County Fair.’”
“Last week, Legend Homes, Oregon’s fifth-largest builder since 2000, filed for Chapter 11 bankruptcy protection from creditors.”
“‘The fundamentals that affects Legend Homes are the same fundamentals affecting everybody else in this industry,’ said Clyde Hamstreet, a Portland business consultant who’s advising Legend Homes. ‘Are there likely to be more bankruptcies? I’d be surprised if there weren’t. A lot of homebuilders are in tough situations right now.’”
“In May, 95,500 Oregonians worked in construction, down 8.7 percent from May 2007. That’s the biggest job loss of any industry in Oregon, according a state reported issued Monday.”
“‘If you know anything about the construction industry, you know it’s gone down by many, many folds,’ said Phil Kartel, president of Salem Painting Co. in Tualatin. He’s cut his company in half from 120 to 60 employees because of slow home sales.”
“What’s worse, no one expects the home-building market to get better soon. Tom Potiowsky, Oregon’s state economist, said, ‘I think ‘08 is going to be a blood bath.’”
“Homebuilders, suppliers and subcontractors built up their business on the housing boom that helped power the Portland economy from 2004 to 2007. People with spotty credit, no down payment or meager incomes qualified in the new lending world.”
“‘It didn’t seem like the demand would dry up,’ Potiowsky said.”
The Bend Bulletin from Oregon. “Martin Montes, a Culver resident, didn’t see it coming. He bought a new home in 2007, when he had a good job and the economy was OK. But a year later a slew of events - a new baby, a reduction in his weekly hours at Bright Wood Corp., from 40 to 28, and a high-interest loan - made mortgage payments impossible to pay.”
“It’s a story that’s becoming increasingly familiar and like many. Montes decided his best option was to broker a short sale, which is when a property is sold for less than the amount owed to the lender. So, Montes will try and sell the home he bought for $190,000 for $169,000, which is the current market value, according to Selef Spragg, a bilingual homeowner specialist with NeighborImpact.”
“In the fourth quarter last year, 4,680 homes in Oregon were in foreclosure proceedings - an increase of 26 percent from the third quarter, according to the state Department of Consumer and Business Services.”
“Montes, who said it’s been a difficult road, offered some basic advice. ‘Don’t buy a house if you don’t have the money,’ he said.”
“The street was supposed to be the stuff of dreams. Along South Grasle Road outside Oregon City, six supersize Street of Dreams homes built in 2007 back up to ribbons of Doug fir and a glazed Mount Hood peak.”
“The builders came to attract future customers, and they were optimistic about selling the show houses that stretched to $3 million. Normally, two or three homes sell during the show and most are sold within a year. But nine months after the Street of Dreams show, none has sold.”
“The show opened just as the U.S. mortgage market tumbled, triggering the Portland region’s biggest home price decline in at least two decades.”
“One Street of Dreams builder tried unsuccessfully to auction his home. Two builders now own their homes and one of them lives in his. Subcontractors who worked on four homes have filed liens to get paid.”
“‘The timing was probably about the worst ever,’ said builder Ray Derby, a Street of Dreams veteran who is still trying to sell his $1.9 million home. ‘We just hit a bad market.’”
“Builder Sean Foushee has built custom homes across the Portland area for 15 years. ‘This is absolutely the toughest time I’ve ever seen,’ said Foushee.”
“Inside the house, Foushee’s voice bounces off the Glacier stone that lines the front room up to the vaulted ceilings. There’s a smoking room outfitted with thick drapes and a Robb Report magazine — the ‘Global Luxury Source.’ There’s a massage parlor and a shower the size of a small bedroom. Even the walk-in closet has a Mount Hood view.”
“And how many fireplaces? ‘I don’t know,’ Foushee said. ‘Seven or something.’”
“Without a buyer, upkeep falls on Foushee and his work crews. ‘It’s not fun,’ Foushee said.”
“Foushee mows the putting green out back. His crews drain the front-yard pond to sweep out algae. Walking next to the wine cellar, Foushee spots dust gathering on the walnut wood floor. The house is still outfitted with $460,000 worth of furniture from the show. ‘The couch alone,’ Foushee says, ‘was $38,000.’”
“He wouldn’t say exactly what his loan payment is, but Foushee said builders for homes in that price range typically must cover a $8,000 to $12,000 monthly payment.”
“Foushee first advertised the house for $3.2 million. He’s now listing it at $2.9 million, and he just wants to get the house off the books. ‘I’d take less than that,’ Foushee said. ‘I’ll take a loss, and it’s fine.’”
“Just as the 2007 show ended and the housing market started to slide, Greg Heinze learned he’d be the lead developer for the following year. By then, it was clear to anyone that the housing market was headed for trouble.”
“Heinze remains confident. He scans his half-built 6,400-square-foot Street of Dreams home on Mount Scott’s peak. Heinze said he did a few things differently to build his house at a lower cost this year.”
“During the 2006 housing boom, Heinze said he might have asked $2.25 million. Now, he’s thinking less than $2 million. ‘It’s primarily market driven,’ he said. ‘You’re absolutely insane to go over $3 million. You’re pretty crazy to go over $2 million.’”
Hold onto your hats out there in the northwest. If you’ll remember, it was when the job losses hit that price declines really picked up speed in the midwest, Florida, Arizona, Nevada and California.
“I don’t feel like working at McDonald’s or Target would be good for me because I went to five years of college, graduated with honors, you know?’”
Perhaps you should have gotten out in four and saved your parents a few bucks, or borrowed a little less money.
Another favorite: “‘We all lied. Everybody that has a lot - we signed and said we were making the down [payment] and making payments. Maybe we did it naively, but we did it,’ said Bickmore.”
Another part of this story bonked me over the head:
“Gill, the recent college graduate, said that his counselor told him a humanities degree would be useful.”
Methinks that Mr. Gill is going to learn the same painful lesson that I did back in the early 1980s: Graduating with honors doesn’t mean much if you don’t have the skills that employers are looking for.
And the best way to develop such skills is to find a job, any job, and work the hell out of it. Learn all that you can about what you’re doing, the company you’re doing it for, the industry the company operates in, etc. Just be a learning machine.
Worked for me back in the 1980s, and it’s still working today. BTW, I learned something yesterday that I need to share with a potential client. Better go e-mail her…
Remember, chicks like guys with skills….
uhhh….would that be the X-skills?
“Gill, the recent college graduate, said that his counselor told him a humanities degree would be useful.”
ROTFL
That reminds me of an old cartoon punch line:
“The next time we need an in house corporate philosopher, we’ll be sure to contact you.”
Ok, if you have skills its ok, some jobs just look for a degree. e.g., a friend of mine with a liberal arts degree (and an MBA) manages enterprise level computer networks. So not all skills are from the classroom.
Got Popcorn?
Neil
nunchuka skills
bow skills
computer hacking skills
Dang, give the kid a break . . . ; )
I agree. Boomers, yes, you all grew up in the time of easy money for less input so stop the lectures and let the kids alone.
“Seattle has a huge problem of underemployment,” he said. “There’s a lot of people in Washington who have college degrees; you have to stand out. I know a lot of people who took lesser jobs just to pay the bills.”
Guess what? This is true just about everywhere.
A few years ago, I had a client who was a World War II vet. After he got back from the war and finished his college degree, he found, much to his chagrin, that jobs were hard to come by. He ended up taking one as a restaurant waiter.
This didn’t make him a happy camper. One day, when he was complaining to his boss about his lot in life, the boss informed him that he too was a college grad.
I’m confused. Some of the luckiest slobs in America were the class of 49′ers. Companies were falling all over them to hire them because of the shortage of educated young created by the war. Nobody ever got a golden ticket quite like that group. These were the guys who created the “three martini lunch”.
Its a degree in humanitites… uh…. what the heck? Its about as bad as… ah heck… basket weaving. No wait, baskets are useful.
Probably as close to worthless as a degree in management.
humanities degree?
Does anyone know how to use a degree in humanities? The humanities skill might be useful the day that someone invents a time machine. Other than that I don’t see a useful skill, and of course a PHD expert can teach humanities to a bunch of college students that are forced to take humanity courses. I believe that if the colleges did not require humanity courses for every student ,there would be zero demand a humanity expert.
I’m, like, going to, like, go out on, like, a totally extreme limb here and guess that, like, Dane’s poor, like, spoken communication, might, like, you know, affect his ability to get a, like, job, you know? I’m not sure he has the verbal skills to clerk at Target.
If that’s the kind of “stuff” that “honors” students graduate with and I were a Washington resident, I would want every dime of my property taxes and all those other levies and assessments back. The public education wasn’t worth it.
It sounds a little bit like you’ve confused the journey with the destination.
As with all degrees: The information is useless anywhere from 0 to 5 years after you graduate. The part that is useful is the process. If you can complete a PhD thesis at a good school and perform original research, it meant that you went from complete ignorance to cutting edge in a few years. THAT is why an employer will find you useful.
As one of the posters above said, you need to show that you’re a learning machine!
Have you read any PhD thesis’s lately? “original research…hmm. 99% of the ones I have seen are exercises in filler and verboseness at best. But that is also the most important task for most corporate positions so I guess it is good training for future mediocrity.
Elitism is much maligned, but it serves to differentiate among the hordes of college graduates with degrees in liberal arts. Fact is, a degree in liberal arts is, as Neil says, marketable if the graduate has also learned critical thinking.
Critical thinking cannot be learned unless you actually
…umm… work hard at it while being under the gun.
In schools where tests are multiple choice, papers are exercises in word count, and structures (400 student lecture classes) work against developing survival skills such as honing presentations and developing cogent arguments, you don’t learn critical thinking.
If you live for four years in a community that makes no apology about flunking you for a sophomoric paper, or for a presentation which is jello-like, you learn — eventually — how to think things through, make a persuasive argument, write a coherent sentence, and cultivate the sangfroid to do it with grace.
The only assurance for mastering critical thinking, given a liberal arts degree, is to go to a TOUGH school. Tough to get into, tough to stay in, and tough to make grades in.
If you can’t get full freight at a really tough school for your liberal studies undergraduate, there’s nothing wrong with that. You are like the rest of us. Go to a state school, or one you can afford.
HOWEVER — don’t buy the BS about the value of a liberal arts degree! Get a degree that commands respect. One that everybody knows is HARD. One that can be compared, apples to apples, against a similar degree from a tough school. That would be engineering, a hard lab science, or mathematics. Even given that, the grads from tough schools will wind up being better at it. You’ve got to be better, at a tough school, to stay even.
The crying shame is the recruiters know it. They follow data on thousands of grads from Schools X,Y and Z, noting their contributions to their corporations over many, many years. There are (paid) info sites which do the analysis. The poor kid with a liberal arts degree from a state school doesn’t even have a chance to snowball a newbie recruiter. He’s got NO edge.
Once higher education became commoditized and everybody had it, the only quality control left was the rigor of the school (if liberal arts), or the difficulty of the subject. An engineering major from Fresno State, while not the equivalent of an engineering major from Cal Tech, commands respect. An English major? Not so much.
Remove the entitlement to higher education, and dignity may be restored, to some degree, to the working class. We may get young people seeking careers as plumbers, electricians, etc, because they will have become honorable alternatives to a lifetime of student debt. Paradoxically, a liberal arts degree from a state school might once again be worth more than the Sunday paper.
I would prefer a society in which a large segment of our population once again knew how to do things — instead of talking endlessly about them — and one where the skilled tradesman had an honorable station.
My 2 yuans’ worth.
Very good analysis…
Perhaps he should have gotten a degree that qualified him to do more than work at McDonald’s or Target….
“Gill’s job struggle is part of a larger problem in Washington state: It is producing workers faster than it can produce jobs.”
Does anyone know what happens when the supply of something exceeds the demand for it? Anyone? Anyone?
Wait, wait, I think I know this one…
The government subsidizes it, right? Is that it?
Whatever happens it won’t be inflationary.
Yeah. Wages are sticky.
Inside the house, Foushee’s voice bounces off the Glacier stone that lines the front room up to the vaulted ceilings
” Hello..hello..hello…I’m a frigging Idiot..a Moron..a Dummy..an frigging Idiot..Moron..a Dummy..an frigging Idiot…”
“Another problem facing Washington workers is underemployment, though the state does not collect statistics on that phenomenon because it’s a matter of opinion and hard to track. Gill, the recent college graduate, said that his counselor told him a humanities degree would be useful.”
“‘She said I could do a lot of stuff with it,’ he said. “I don’t feel like working at McDonald’s or Target would be good for me because I went to five years of college, graduated with honors, you know?’”
What is wrong with starting somewhere?
How did our thinking go to five years of college equals “I’M at the top of the heap?”
Booksmart, Okay, has it’s advantages - We are educated, therefore we are entitled to top of the line wages?
Does experience count for anything?
What is wrong with working for Target to gain another position a year or two down the road?
Oh, poor baby, you can’t relocate with that five year humanity degree? HAR!
Student loans got ya down? HAR!
Ya just can’t make this stuff up!
Leigh
P.S. Is humble out of favor?
Yes, you know it is really getting bad when they are CANCELLING the Street of Dreams for 2008 in Seattle:
http://www.seattlestreetofdreams.com/20082009showinformation/
There are now years’ worth of supply of these ‘luxury’ homes on the market–no need to build any more!
Great news!
$1,000,000 + homes seem to be a dime a dozen now. In the Sacramento area on trulia or movoto, I see these mansions come up for sale all the time. Quite a few are put up for sale even before they’re completed.
A financial-planner friend of mine recently drove around Vero Beach, Fla., and reported that he saw about a dozen homes for sale in the $10 million range, all of which had been built on spec. When I see these “estates” I keep thinking about the demise of the dinosaurs and how the largest animals emerged right at the conclusion of the Cretaceous Period.
The rain should wash ‘em away eventually
“Street of Screams” or “Street of Reams” would be more fitting, no?
Thanks for the head’s up! I’ve got my 3-D glasses on and I’m sittin’ in the front row. This should be fun…
I posted here, it had to be at least a year ago, how Washington has a long history of boom and bust cycles economically speaking. Things can get really, really bad around here. Come to think of it, it’s already happening. Uh-oh.
Talk about a juxtaposition, I recently spoke to a friend who moved from somewhere in Riverside county to a suburb of Portland OR about 4-5 years ago for a job opportunity and much cheaper housing (she said ‘less than half’). Well after a couple of overcast drizzly 6 month winters the husband went into a deep depression and lost his job, and they wanted to return to Socal to be close to family but it was even more expensive by then (2005). I just talked to her, they are happier than larks. Evidently they found a fool to buy their 1800sft Portland shack for just shy of $300,000 and they are buying a new (I’m not sure if it’s brand new or just newly foreclosed) 3,000sft house in Temecula for the same money. They can’t believe it’s now so much cheaper now to move back to CA. I am happy for them but I just hope not too many of the CA equity locusts return too quickly.
Some people just can’t hang with the gray. That’s why the Northwest will NEVER be the hip spot to retire.
“I just hope not too many of the CA equity locusts return too quickly.”
I do.
The easiest people to fleece in the United States, would probably be Mormons being sold a bill of goods, from another Mormon…
“Kurrin Bickmore, a Utah-based investor, said all of this was to happen in less than a year. Most of the investors had no knowledge of Evanston, nor any intention of owning property here for any time over the 120 days. Few, if any, knew what they were buying.”
Maybe true, since the Mormon Church is what anthropologists call a lifeway church, meaning it’s not just church, it’s your life - your relatives, community, job connections, culture, etc.
How do you know they are Mormon? Roughly 60% of people in Utah I understand are Mormon. So why drag religion into it?
Meh. It’s not a Mormon thing. The biggest banking swindle in Oklahoma history (bankrupted a dozen banks IIRC in the 1980s) was done by the son of a Baptist preacher who got a lot of investors through the church (3,000 members at the time) or connections from the church; he even played the “my parents are invested in this, too - and my dad’s a minister!” card. A lot of people sell religious observance as a reason to trust them, and the more corrupt, the faster they are to claim a piece of holiness. I would honestly be stunned if this guy didn’t.
At least from my perspective that should not be a slam on Mormons; it’s a slam on con men and the marks who believe someone claiming to be righteous is, in fact, righteous.
My recent favorite gambit by the charlatans of blind faith was praying for lower gas prices, next to the one-armed outdoor bandit.
Odds are good they’re Mormon. Even though Utah now has a lot of non-Mormons, it’s still pretty much run by Mormons and a lot of the business people are LDS. The Mormon Church creates a climate of trust that would make it easy to fleece another Mormon. Much more so than most religions.
Kevin Phillips makes the same point in his latest book, Bad Money.
Sounds interesting, from this review:
http://www.post-gazette.com/pg/08097/870372-148.stm
The domination of financialization, Phillips observes, presaged the decline of global powers in Spain, the Dutch Republic and Great Britain. Unfortunately, the United States now “luxuriates in finance at the expense of harvesting, manufacturing or transporting things.”
Constituting 21 percent of gross domestic product, the financial services sector, which is loosely regulated by government, has made billions promoting, packaging and leveraging public and private debt.
By bundling debt, whose market value is difficult to specify, Phillips maintains, liquidity factories, in forms ranging from private equity to hedge funds, have created a money pyramid without parallel in history.
In 20 years, debt has quadrupled to $43 trillion, and, after 9/11, President Bush gave debt a nudge by adding “a slight tint of red, white and blue.”
Then-Federal Reserve Board Chairman Alan Greenspan cooperated by slashing interest rates and ratings agencies bestowed high safety classifications on questionable loans. Delayed-fuse mortgages went to buyers with no income, jobs or assets.
Phillips predicts that the impact of financial sector securitization and the real-estate bubble will be deadly. Responsible for about 40 percent of economic growth and employment during Bush’s tenure, housing now seems to be leading the nation into a recession.
He may or may not be Mormon (odds on favorite), but listen to what he had to say back in 2002…
“According to Kurrin Bickmore, a financial advisor in the local offices of Morgan Stanley, “I am steering clients away from individual stock picking and moving them into asset allocation through the use of professional money managers.” Bickmore remarks that investors are concerned about another Enron lurking around the corner and want to know what they can do to avoid those types of situations. He suggests, “By using professional money managers who ‘kick the tires’ so to speak, your risks of having an Enron in your portfolio are very slim.”
Ummm… The investors were not all Mormon. I know some of these got this “Investment Deal” pitched to them through licensed investment advisors.
Sorry if posted already: RBS says Prepare for a Possible
Credit Meltdown.
Stupid question: Is this illegal?
I know this sort of stuff was happening two years ago in California. What can I say, we’re a little behind in Montana.
By the way, any Bozemanites have any tips for must-see areas, housing wise, in the Big Sky area or Gallatin Valley? Any chance someone could sneak me into YC to snap some photos?
Hey, Tango. Have you seen this discussion at New West? http://www.newwest.net/topic/article/echo_effect_slows_regions_real_estate/C35/L35/#comments
Would be fun to have you weigh in.
Nice link; New West has had some excellent housing reporting lately that puts the local papers to shame. I enjoy the comments too. You just might see me there sometime.
Tango In Uniform,
I tend to think RESPA would frown on these types of “arrangements”. They were rampant in Las Vegas in ‘06 and ‘07 as their market had peaked early. I responded to some of those Criagslist posts just to see what kind of response I would get and I’ll be damned if not ONE of them could explain w/ enough confidence to convince me even THEY understood it!
It’s just a slip-shod marketing tool designed to drive traffic to their listing. Here in OR Jeremy Richardson is facing federal charges for fraud on “Rent2Own” deals he was working. What really told me these guys were fleecing lenders is that NONE of the details of the “cash back” deal were disclosed to them!
Also NONE of those guys could explain the TAX implications of walking away from a closing with 50-75-100k. ( Never a good sign )
From my very basic research, it looks like fraud. The seller is writing you a check without disclosing it to the lender. So the lender is potentially lending you more than the property actually sold for.
“What really told me these guys were fleecing lenders is that NONE of the details of the “cash back” deal were disclosed to them!”
Casey Serin says that it’s a grey area.
Hmm. I lived there a couple of years ago; housing is really high, the whole area over, at least compared to Oklahoma and Texas, where I am from. If you’re looking for a permanent place to live, Manhattan or Belgrade were more reasonable, and the people were really nice. The towns aren’t quite as charming as some mountain towns, though, but the schools are supposed to be good. Livingston is cheaper than Bozeman (east 25 miles on I-90) and has a great downtown and a pretty area, but the people are a little crazy. (Seriously, there’s the guy who hisses at buildings and the woman who wears a two-foot tall purple witch’s hat with silver stars, and the schizo I had to get a restraining order against. Good times!) You can find good deals every once in a while, but you have to be patient. There are also tons of old homes to choose from, from the 1890s and early 1900s, with the original glass windows and wrap around porches and doorways and built-ins; they may need some TLC, but the downtown-ish areas of Livingston, Manhattan, or Belgrade had some great homes.
If you just want to observe an implosion, then your best bets are Bozeman or West Yellowstone, because that’s where the rich people’s ski lodges were being built up. A million dollars or more for a tiny condo.
I just move from the suburb to downtown Bozeman (renting both places). At least 30% of this town economy is REIC related. I think pretty soon we’ll put Stockton, CA RE crash to shame.
How to get into the YC? Fine someone who works in construction or skiing and hitch a ride with them is my only/best advice.
Favorite bumper sticker of all time: “Try skiing the Yellowstone Club with my boot up your ass”
Cinch
For the life of me, I can’t understand what is propping up prices in those areas. I would have thought they would be in full meltdown mode by now. I once looked at job listings in several western MT cities and towns, and the pay was laughable.
Option 4 : Bank forecloses, condo is sold for 64k next year.
Not legal . Anytime a seller writes a check outside of escrow ,or does not disclose the full terms of the sales contract to the lender ,its loan fraud .When you purchase a home all sales documents/escrow documents have to be submitted to the lender .You can’t raise the price of a house and than give money back to the buyer (because the property is really worth less than the bogus sales price ).So, the lender makes a higher loan than they should of and the comps are screwed up in the neighborhood because the appraisal was raised higher than a true arms length buyer would of paid . Sometimes lenders allow closing costs and some costs to be paid for .
How would you like your 401k to be invested in MBS’s that are backed by loans that the seller raised the price of the property and than gave the money back to the buyer on the side .So if the property goes into foreclosure ,the property was actually worth less because it was based on a bogus sales price . So the investor that invested in that loan was deceived into loaning more money than the property would really
fetch ,so the investor was deceived on the risk .
That is why it has always been important for appraisals to be accurate and for sales contracts to be arms length and fully disclosed . The fact that lenders weren’t underwriting loans and allowing unqualified buyers to purchase property ,(which raised the value of property because of fake demand ,while all the while those loans were rated as having low risk ),caused the disconnect between true value and the mania faulty lending values .
Putting people into property that they cannot afford ,by often times liar loan fraud ,raises the value of property falsely because the sales comp is based on a unqualified buyer . You could have a bunch of 5 year old create a market also ,but they would not be able to make their payments so its a bogus sale and a bogus appraisal comp . If you can imagine ,at the height of the housing boom ,appraisers were being threatened if they didn’t bring in any value that was indicated on a sales contract . And people wonder why values are crashing .
Oh, I also forgot that if someone gives you a gift of 20k (lets say on cash back fraud ),the IRS will consider that you received funds without paying your fair share of taxes on it . Also ,if a lender wants a buyer to put a certain amount of funds down on a loan to offset the risk of the loan ,if the buyer gets that money from the seller ,they are not really putting that money down from their own funds .So that buyer doesn’t really have any skin in the game and they will more likely walk. Bogus sales will falsely raise the values in
the area and end up raising the property taxes and insurance costs
in a false manner .
Also ,lenders will give a lower rate and terms to people that put more money down because the risk is lower. So if a bogus sales contract is made ,and its really the sellers funds that is really being put down ,instead of the buyers ,than the buyer got a better loan or a higher loan amount by fraud that they really deserved .
You can see how any kind of fraud or lack of disclosure of the real terms of a sales contract can create a situation of loss for the party that puts up the funds for the loan ,as well as create havoc on other costs that are tied to real estate .
If the person isn’t going to live in the property ,than the lender needs to know that because the risk is higher on that loan and the lender will want a bigger down payment and interest rate to offset the risk . The lenders didn’t underwrite the loans during the boom ,so people just said anything they wanted without fear of being questioned on it ,therefore risk factors were not weighed in a proper manner .It really is not acceptable what the lenders and the liar loan borrower did .Thats why the MBS’s are losing so much value now because of the repricing of the risk on them. We the taxpayers should pay for any of this cr-p.
its just like when insurance companies want to underwrite a policy to know what the risk is on the policy . Could you imagine a insurance company giving the same rate on a life insurance policy on a 25 year old verses a 95 year old man ? The insurance company would charge the 25 year old a lower rate of course ,or they would go out of business fast .
So, any kind of fraud in lending ,or lack of proper underwriting ,or bogus appraisal have dire consequences ,especially if that fraud in lending is widespread .
You’re absolutely insane to go over $3 million. You’re pretty crazy to go over $2 million.’”
So that makes $1 Million sane ?
“So that makes $1 Million sane ?”
No, a 6,400 square foot house should be well under $640k.
Oh yea, they sound just like ’sophisticated’ investors, not some lowlife first time buyer. Mr. Brickmore sure sounds worldly, suave, & deboner… : -)
“Bickmore admitted that he didn’t investigate his properties and see what he owned until much later.”
“The investors, ‘not unsophisticated, first-time buyers,’ Harvey said, took too much at face value, with things going so well in real estate. ‘They all should have known better,’ is the general attitude floating around.”
“‘The couch alone,’ Foushee says, ‘was $38,000.’”
OH MY FREAKIN’ GOD THAT’S INSANE.
but it was upholstered with the chest hair of failed sub-prime bankers making it worth every cent.
Snarf!
Coffee up the nose!
Oh… that spot there isn’t chest hair….
Got Popcorn?
Neil
I remember in 2001 my boss was telling me about one of her friends who was a WorldCom millionaire (many times over) who would buy things like $10,000 couches. Everything was great, except she bet the farm that WCOM would double again. Ooops!
Hmmm… I wonder what the resale value on a $10K couch would be….
My sister worked for World Com, invested and lost all of $52K. At the time, she figured it was a flippin’ UTILITY! Guess not.
“Tom Potiowsky, Oregon’s state economist, said, “I think ‘08 is going to be a blood bath.”"
First, has anyone in the MSM called it a “blood bath”? Second, this tool was towing the “it won’t really affect us in Oregon” line just a year ago.
Of course, that’s what he’s paid to do. He can’t admit that there is a problem until it becomes impossible to deny it.
“In May, 95,500 Oregonians worked in construction, down 8.7 percent from May 2007.
Down only 8.7%? I doubt that when they follow with this:
said Phil Kartel, president of Salem Painting Co. in Tualatin. He’s cut his company in half from 120 to 60 employees because of slow home sales.”
30% I would guess at the least.
I think those may be “official” numbers. The other 20% or so may not have been entirely on the books.
This country is getting a huge reality check. The party over for the overconsumption game in America. If you don’t know much about what the Great Depression and the 1979-1981 recession were like, you are about to find out.
Do the following to be prepared for the depression that has already started:
1. Get and keep a job.
2. Rent so you can be mobile for your job. Don’t tie yourself down with a house or a condo.
3. Save at least 25% of your after-tax income and direct it into whatever savings or investment vehicles you feel appropriate (e.g. money market funds, CDs, TIPS, gold, food and guns, etc.)
4. Eliminate debt unless you have enough money to pay it all back if you lost your job.
Keep the popcorn popping,
Red Baron
Livin’ this one. Wife and I are DINKs and saving 50% of our income in a mix of retirement, general savings fund, and a house down payment. Sure is easy to sleep at night.
Hey Foushee, The place has a ‘massage parlor’ you may consider renting that out. The right person or persons could turn a few bucks on the weekends.
Surprised that Robb Report magazine didn’t sell the place, perhaps you should throw in a subscription.
“Inside the house, Foushee’s voice bounces off the Glacier stone that lines the front room up to the vaulted ceilings. There’s a smoking room outfitted with thick drapes and a Robb Report magazine — the ‘Global Luxury Source.’ There’s a massage parlor and a shower the size of a small bedroom. Even the walk-in closet has a Mount Hood view.”
Voices bouncing off the stone would drive me nuts.
Especially if they echoed back, “You’re F@CKED!!”
Well I’m sure I wouldn’t know what a “Glacier” stone is but I’m sure his hollow statements and empty promises to bankers will bounce off them for some time to come.
This whole SOD thing has just got to stop. Enough already. The ones in Seattle ( that didn’t sell from last year ) seemed to spontaneously ignite and they can’t seem to find the “eco-terror group” that supposedly set them.
“It didn’t seem like the demand would dry up,” Potiowsky said.
Duh!! If everyone could get financed, the home ownership rate would go over 90%. Who doesn’t like free money? Why is this hard to understand?
Mahaffy said Medallion is in OK shape, partly because it didn’t take on debt to expand. He just wants consumers to recognize now is the time to find a deal on a new home. He pledged money for an industry group promoting the message, “Buy Now Oregon.”
GRR!!
We’re doing great! Really we are! No, seriously, we’re in great shape! But just so you know, buy now or be priced out FOREVER!
Who’s got the trout?
They’re in the pond that’s down the road from the Joshua Tree farm.
Why is it any builder’s CFO or whatever comes out and makes that kind of 11th hour defensive statement they announce BK within the pay period?
“He just wants consumers to recognize now is the time to find a deal on a new home”
———————-
There’s nothing wrong with what this guy is saying - he wants people to go out and try to find a good deal.
So for instance go look at new houses that were selling for $500,000 in 2006 and offer $180,000. That would be a pretty good deal. If the builder says no, just move on to the next property - there are PLENTY available!
‘If the builder says no, just move on to the next property - there are PLENTY available!’
LMAO
“build houses on them and then find an end user”
People have now morphed from consumers into end users.
Why not just populate the houses with mannequins and be done with it?
So basically spec houses, hmm might help if he had buyers before beginning his Donald Trump impersonation. Nah, too easy I guess.
I get so tired of these kids who take basket weaving and community volleyball courses who want to start at the TOP! I got a degree in Chemistry and do Bbreast cancer research for a living generally 10 to 11 hours a day. I am one of the few Americans here because these kids are out doing keg parties and “shooters” for 6 dollars a pop while the chinese, russian, koreans and indians that I work with were studying.
Sorry gen X, Y, Z or whatever…nobody is going to wipe your hiney.
My father majored in chemical engineering. He recalls being the only guy in the fraternity house on Saturday nights. Which was fine with him, because with everyone else gone, the house was a quiet place to study.
I wonder where the “kids” learned that attitude from?
But come on, generalizations are useless. Even if all the Boomers want me to wipe their hineys. Or at least subsidize their debt, medicare, SS, etc.
Be completely honest: In all the uproar over oil prices over the past two weeks, how many people saw or heard any reference to this little tidbit.
BEIJING, June 7 (Xinhua) — Passenger car sales in China in the first five months of 2008 rose 17.41 percent over the same period a year earlier, an industry group said on Friday.
According to the China Association of Automobile Manufacturers (CAAM), car sales reached 3.02 million units, including 2.23 million sedans, 179,200 sport-utility vehicles (SUV) and 93,200 multi-utility vehicles (MUV) in the period.
Sales of passenger cars, SUV, and MUV in May alone totaled 564,600, up 16 percent over the same month last year. The growth rate was quicker than April’s 11 percent.
Auto sales in China were expected to exceed 10 million units this year, which would represent a full year sales growth of 14 percent, CAAM said. Auto sales have maintained double-digit growth since the beginning of the year, in contrast to weakening sales in much of the world’s other major auto markets.
We’re different here in Portland. We still HAVE a Street of Dreams (even if we can’t sell them). Seattle cancelled theirs… and their show last year burned to the ground. Anecdotally I still see things sitting - my place lost 4% on Zillow in a month (20 miles out of downtown) - but some bottom feeders are picking up stalled individual projects, I think. Or would that be knife-catchers? Yes, it’s starting to catch up with us too.
‘done a little better due diligence.’
Yoda: there is no try, there is only due, or due not.
“The concrete foundations poured and seemingly left for dead on Cheyenne Drive, and in Brook Hollow Subdivision Phase 4 are just the visible fragments of a big real estate investment and development plan that has crashed down in recent months.”
I saw something like this during the weekend when I was out in Pittsburgh,CA. There was this massive subdivision complex next to the state park I was hiking in. From above, I could see that almost 50% of the lots were vacant with poured foundations and nothing else.They looked like they had been sitting like this for awhile because grass was growing up all around the lots. It looked like the aftermath of a hurricane, having swept away half the houses. Very strange.
My stupid company blocked my internet access again so I’m unable to access the HBB at work unless and until they ease up on restrictions like before. Dammit ~ it’s like going thru withdrawal. Always too much to read at the end of the day.
Get an iPhone - then you can surf the net outside your employer’s network.
eastcoaster, YOU’RE FIRED!!!
>> “‘She said I could do a lot of stuff with it,’ he said. “I don’t feel like working at McDonald’s or Target would be good for me because I went to five years of college, graduated with honors, you know?’”
They should create special jobs for all of the college graduates.
A few years ago I had a top student in her final year of college take part time job as a wingman on a snow plow. I asked her if this was a suitable job for her training. Oh yes she said. Now I am on the inside and I can see and apply for all the upcoming job openings before they are made public. The Monday after final exams she started at a very suitable full time job. Smart girl.
“deboner” ? You mean debonair. French, literally, “of a good air”.
My two cents, for what it’s worth:
First, the problem isn’t that the young grad studied humanities. The problem is that “his counselor told him a humanities degree would be useful”.
I was told the same thing and believed it. I learned the hard way (six years of working for less than $25,000 after graduation) that employers don’t value liberal arts studies. I was told (and believed) that university is not intended to be a place for vocational training. It’s a place to become a well rounded person, a critical thinker, a problem solver, an idea creator, etc… That was probably true 50 years ago but it’s not true any longer. Universities are now mostly for vocational training. Whether that’s good or bad I don’t know.
I don’t have any regrets. I have a good career and have had some great experiences along the way. However, I’m going to tell my children that while there is value in studying art, culture, communications, etc… they should also study a vocational skill.
By the way, I didn’t graduate with a sense of entitlement. I was hopeful and still dream of making it to the big time in my field of study (journalism) but I knew it was a long shot even as a student. Fortunately, I also went to a vocation school. Those 12 weeks of vocational training have kept me employed for many years. I’ve notice, though, that after getting hired the people who move up most rapidly are those with degrees in any field.
I work with many computer programmers. I’m not a programmer but I find it interesting to note that many of them have liberal arts degrees or no degree at all. Many, many, many of them were hired because of the six months they studied at ITT Tech or similar vocational schools and they are doing just fine.
Liberal arts, humanities, and similar studies may seem like a waste of time to those of you who studied subjects that are in demand by employers. I could have studied chemistry as well but I chose another field because I really thought it would result in a great career. It had nothing to do with the courses being easy, I can assure you.
Counselors should know by now, though, that the purpose of universities has changed. The honors grad. is probably a victim of bad advice. However, I’m sure he’ll be fine in the long run.
RE: Ben Jones 6/18/2008 posting: “The Uinta County Herald reports from Wyoming. “The concrete foundations poured and seemingly left for dead on Cheyenne Drive, and in Brook Hollow Subdivision Phase 4 are just the visible fragments of a big real estate investment and development plan that has crashed down in recent months. Leo Coleman of Utah, the 2003 Utah County Builder of the Year, and his partner, Dean Casutt,…purchased nearly every available building lot in town - 125 lots in at least four subdivisions, according to public record.”………”
Hey Ben, I saw the following info about Dean Casutt in the comments section on the ClaimsJournal.com website. Allegedly the Missouri Attorney General brought charges & found Dean Casutt GUITLY OF FRAUD. (This guy Dean Casutt sure gets around.)
Here’s what the comment was:
“JACK & CONNIE DONAHOO FOUND COMPLETELY INNOCENT OF ALL CHARGES. No culpability OR any wrong doing on their part.
DEAN CASUTT FOUND GUILTY OF ALL CHARGES AGAINST HIM. He fled the state and, as far as is known, he has made no attempt to pay any restitution monies owed to the State of Missouri or any other civil judgements awarded against him in Missouri.
This isn’t the first time Mr. Casutt has defrauded consumers and business acquaintances. Newspaper reports indicate he has a track record of deceptive business practices in Utah, Wyoming, Kansas, Missouri, and possibly other states as well.
Mr. Casutt uses the same real estate & investment M.O.: He markets himself as a Real Estate “Guru”. He recruits (sometimes even hires) Real Estate Investors, Developers, Manufacturers, Contractors & Buyers via seminars, Home Shows, internet blogs & web pages, flyers, newspaper articles, radio shows, barter companies, real estate & investment groups, city development projects, mortgage & other financial lenders, real estate developers & brokers, church groups (EVEN HIS OWN CHURCH!),court house step auctions, etc.
For the purpose of avoiding prosecution & culpability, Mr. Casutt usually makes sure business bank accounts, business ownership, and his personal residence is in names other than his own, yet he usually maintains control and benefits from every aspect of the projects & monies. Many times his relatives have been involved in setting up corporations, bank accounts and acquiring other assets for Dean’s use & benefit.
It usually happens that once Dean Casutt gets access to client & business associate’s construction and/or investment monies, it’s not long before funds are missing and/or used for purposes other than what innocent clients & business associates intended.
If you know where Mr. Dean Casutt is, please contact:
Missouri Attorney General’s Office
Supreme Court Building
207 W. High St.
P.O. Box 899
Jefferson City, MO 65102
Phone: 573-751-3321
Fax: 573-751-0774″