Local Market Observations!
What do you see in your housing market this weekend? Cancelled projects? “The Penfield, an upscale condominium project that was to be downtown St. Paul’s first residential high-rise in more than 20 years, is the latest casualty of the condo market meltdown. The Penfield condos were priced from about $200,000 to more than $1 million.”
“That market dried up because people have not been able to sell their houses for as much as they would like. ‘There’s a group of people out there that will move to the downtowns and will still live in a condo, they’re just not doing it right now,’ said Mary Bujold of a Minneapolis-based market research company.”
“Building work on a 135-home housing development has ’slowed down’ while bosses ‘assess the market.’ Liverpool-based McInerney Homes started construction on its Belgrave Mill development in September 2006. So far, 44 of the 135 homes set to be built on the site have been completed.”
“The firm has launched a new marketing campaign which promotes the homes as ‘ideal pads for lads and girls.’ McInerney is offering a ‘lads’ pad’ with an LCD TV, games console, stereo, DVD player and Espresso machine. And there’s a ‘girls’ pad’ which includes a karaoke machine, hair straighteners, foot spa, stereo and pink kitchen pack.”
Off-beat bubble zones? “Through May of this year, existing single-family homes in Fargo, Moorhead, West Fargo and Dilworth spent an average of 77 days on the market before selling. That’s up from 71 days in 2006, 66 days in 2005, 62 days in 2004 and 56 days in 2003 - a period that Brenda Martinson, president of the F-M Area Association of Realtors, called ‘almost a feeding frenzy’ for homebuyers.”
“When inventory is limited and the market is robust, homes priced in the proper target range will sell quickly. ‘Unlike today, where they really have to be show-ready and priced in the market,’ Martinson said. ‘They can’t just speculate and hope.’”
“With a larger supply of homes and about a 7 percent increase in average sales price from last year, the summer selling season that likely won’t take off in other parts of the country already is well under way in Midland.”
“‘We’re a hot market in the country,’ said Carroll Nall, member services director of the Permian Basin Board of Realtors. ‘We’ve got people from all over trying to get in here and get a piece of this.’”
“There are about 418 units for sale in the area this week, Nall said, up from closer to 250 at this time last year.”
“The average price for homes sold in Midland-Odessa in May was $169,700, according to the Real Estate Center at Texas A&M University. Compared to last year when average home prices increased by nearly $35,000 from May 2006, prices are starting to level off and increase at more normal rate, according to local agents.”
“‘It was just a little bit more difficult to find something and made the prices go up rapidly, which is not good,’ said Dene Kelly with Dene Kelly Inc. Realtors.”
Bubble fallout? “In the latest sign of troubled economic times, some communities across the Commonwealth are struggling to cobble together the private donations necessary to throw Fourth of July celebrations.”
“The telephone rang at Nancy Hurst’s desk in Abington Town Hall one morning this week, and Hurst had her reply ready. ‘No,’ she told the caller. ‘They’re canceled.’”
“Hurst, an administrative assistant for the town, hung up the phone and sighed. ‘That’s about the 10th call today,’ she explained, and it wasn’t even lunchtime.”
“‘It’s the economy, stupid.’ That’s what it is. This is all a reflection of the poor economy going on right now,’ said Herb Lemon, chairman of the Board of Selectmen in Bridgewater. ‘You drive by gas stations and look at prices that leap right out at you. You go into supermarkets - the prices are up there, too. Foreclosures are at high levels. It is the economy. I don’t think I’m going out on a limb in saying that.’”
Or housing humor? “It’s a tradition people across the country still partake in each week. ‘They come and have a good time,” said Bob Joyce, general manager of a comedy theater and restaurant in Tampa.’”
“Comics, known to make light of bad moments, flip the coin on these situations to get a laugh. After all, comedy streams from tragedy, Joyce said. ‘We can’t have one without the other,’ he said.”
“When Les McCurdy, owner of McCurdy’s Comedy Theatre and Humor Institute in Sarasota, opens a show, he’ll ask who’s new to his theater, which is sometimes followed by, ‘Don’t you have a condo to unload? Let’s get rid of that thing.’”
I’m going to the foreclosure auction here on Monday. One of the properties is a B&B between Sedona and Flagstaff near the rim. It was listed for 1.7 million and the lender is asking $700k. A broker friend called the trustee and was told there is an offer expected at $850k, so it looks like there will be a sale, not just a postponement. This is the most expensive single place I’ve seen go to sale and I doubt anyone will go much over the $850k. That would be a significant haircut. I’ll let you guys know what happens.
Jeez, a B&B in this economy? Buy it Ben, I’ll go in on it with you (you have to cook, I don’t think my Prickly Pear Delight would go over too well). I’ll make the cowboy coffee, though.
that’s about 50% off…
There are a lot of equity-nomad B&B people here. I’m sure it all sounded so quaint back in California. Then they get tired of it and sell. It worked until the couple of few years. IMO, these people were really gambling, as I doubt there was much real return on the rentals. It is in a nice area. Zane Grey country.
I don’t have a lot of contact with the tourism industry here. I don’t know if biz is down a lot or not. But I sure wouldn’t roll the dice on a B&B right now. It will be interesting to see if it’s bought and who is the bidder (what the motivation is).
That’s quite a chunk off of listing, but how much did they pay? That I want to know.
Buying a B&B right now is a terrible idea.
Prices of B&B rooms inflated with access to credit. So did occupancy rates. Hence the claimed margins are artificial.
They will fall first because they are ultimately luxuries not needs.
I’d only buy one under the most stringent assumptions of occupancy, and even then I would want a serious safety margin heading into the storm.
I’m beginning to think that, over the past ten years, the price of just about everything was inflated with access to credit.
Of course, it was, but the point is that luxuries rose faster, and they will fall harder.
Oh, but they’re so charming and unique …
Someone bought an old railroad hotel in a little town near here, completely redid all 12+ rooms, with authentic furnishings in each one…my bike club happened upon it and the owner gave us a cook’s tour. Everyone was oohing and ahhing (except me b/c I was starving and wanted to get on with lunch). Anyway, within a few months it was up for sale.
I mean, whatever. Shoot your wad on the place and certainly someone will be dying to take it off your hands when the inevitable ennui sets in.
In Wisconsin, there was a whole lot of this own a “Bed and Breakfast” in an energy guzzling ancient McMansion or in an out of the way “Historic” small town by RE agents.
Have a Recession , and they will come.
Ha Ha What a miserable way to BLEED to DEATH !:)
My mom came up to visit me a couple of weeks ago and we are thinking of forming an LLC to purchase a small lodging property in a picturesque fishing town in coastal Alaska. We’ve done some footwork looking at rents vs. expenses + mortgage + management costs (we would retain the current owner to manage the place until my mom retires in 2 years, then she would manage it in the Summer and I would manage it in the Winter while she snowbirds). On paper, it has positive cash flow if we can get the seller to drop the price another 10%, and I am confident we can come up with 25% down + closing costs if we made an offer today. Mom and the realtor are frustrated with me because I am dragging my heels.
I have a few concerns about whether or not the rental market will hold up and whether making an offer now is wise given the overall real estate trend. The place has a lot of European and Asian vacationers with close to 90% occupancy. Sure, it might sell before next year but I’m trying to keep my emotions in check. My mother is in love with the place but understands it has to generate enough income to pay the mortgage. I would love to give her more incentive to retire close to me in Alaska, and I want a base of operations so I don’t have to tow a kayak or a 4-wheeler when I want to escape the city.
Decisions, decisions.
Maybe talk to people doing a similar thing, although you probably have. My neighbors had a B&B in Moab, and man, did they work their arses off. They came to bike and hike and never had time. It’s currently for sale, way overpriced (they paid 250k want 750k).
A B&B sounds attractive to me, self-employed, etc., get to meet people…but I think the fun wears off pretty fast. And who knows where tourism will go in the future.
Bed & Breakfast= The most idiotic business model since the beginning of time. Can anyone show me where one cashflows? That is one business I look forward to seeing on the scrap heap.
Darn, I almost had myself talked into thinking about looking into maybe sort of examining the possibilities of possibly doing one…and reality has to show up under the name of Ex.
Don’t let my reality interfere with your fantasy…or however that goes.
They fill a niche between the crappy hotels and the Four Seasons.
Basically, the labor is discounted down to zero so they cashflow all right just not in a true scalable way.
I’ve talked to enough of them to understand that the reason is they work is that the people don’t understand finance. They treat labor costs as 0 and opportunity costs of capital as 0 too.
But given their skill set, I doubt they can do better either on the labor markets or the capital markets.
So it works out for everyone concerned.
Bed & Breakfast = Staying in Grandma’s room.
Not necessarily. Read above.
Oh, forgot to mention…this isn’t a B&B!
The units have their own kitchens. The only routine expenses are cleaning the units and changing sheets (currently $2000/year), and then booking and advertising costs (currently $10K/year with the current property manager) when they check out.
In fact, the place is fully open only in the Summer so in Winter it would mostly be a quiet getaway for me (and the one room I would keep open for the odd winter visitor). If mom or I want to bail or even not go there at all, the property mgr will take care of the place for $10K/year, which is 1/7th the profit once the place is paid off.
Well step up to the challenge Utah. Show me one. Just one that show profit.
waiting….
You have absolutely no experience in the hospitality biz, do you? You primarily want a getaway for yourself, and hope that all the rest miraculously runs itself, it sounds like. From what you say, your mom seems more interested in getting out than staying put. Do pipes freeze where this place is? Heating costs? 90% occupancy for how long, two months?
There are unfortunately a great number of motel owners who, during these last years, could sell some very crappy rooms for absurd rates (no offense, maybe yours is impeccable), and I hope for sure that many of them close up - my opinion. Oh my god the places that I have seen.
Have you visited two dozen other places so you can compare? Have you seen what the guests say on trip advisor? Feedback travels very fast with the internet.
Have you visited every future competitor in town? Are there chain motels that can hold out for longer in a downturn? Or does an LLC make you able to walk if things go south? Do you have any idea who your future clientele is?
Yes Europeans travel there, some via Whitehorse, with Condor. Can you market to them? You may have to do marketing, or do you think just having a yellow page listing is enough? Even the cabins in Yellowstone are regularly updated, with new beds, new mattresses, new carpet. What kind of host do you want to be?
Is this investment worthwhile if the nightly rates are half of what they are?
I am astonished, for sure, that you think 10% off is a good deal when everything that is talked about here is that RE is through the roof, including commercial, and credit about to crash. I bet, you get this at 60 percent off in two years, even though I don’t know the location.
Ex, I was agreeing with you, you just brought me back to reality. I don’t think I could show you one.
Oopsy… I misread and misunderstood. My apologies Utah.
Show me, show me; me me, me!
I wanna see a Reality™. I don’t think I’ve seen one in the last ten years. And I don’t mean Realtor™ either.
It works with good locations and volume. If you can bed at least a half dozen, preferably one or two dozen, and the place is in an urban area with a lot of demand and traffic then it can work. Even with all that it is still a subsistence business model.
Sagesse,
Good questions…answering them is making me think this through even more carefully than I already have:
Trip Advisor gave it the top ranking for its location (only 3 rankings available), and the rooms are very, very nice…I would even say extremely nice. We would have the place plumbed so that we could heat one unit + the main residence in winter, and bleed out the water pipes of the other units during the wintertime so we don’t have to heat them at all.
The “Summer Season” for Alaskan tourism encompasses 4 months: mid-June to mid-September, and so far this year and last year it had 90% occupancy (would have been 100% without cancellations). We are requesting 3 years of tax returns to be sure. The owner is in his late ’70s and wants to move to Maui.
Heating oil at current rates is $3000/yr for all units, summer ops only, with potential to build a few more. Winter the place is actually closed but if I’m there I’ll probably keep one unit open for the hell of it, since I need to heat my living space anyway. The town supposedly has way more demand for rooms than rooms to let according to the locals, and there are plenty of B&Bs around that compete, and a couple of big hotels. Like I said, this year was mostly Asian and European tourists, but typically it is a 50/50 mix with domestic tourists and weekend warriors from Anchorage and Juneau.
Pricewise, I think that it is much more reasonable than a lot of comparable rental and B&B properties for sale in the area, but price is still a bit too high for my taste…which is why I am thinking of lowballing him 15-20% this Winter to get him to meet me at 10% less than current asking. I am gauging the expenses for a 15year fixed commercial mortgage at 36K/yr + 20K business overhead (factoring in 10% inflation), assuming we stay hands-off, 8K overhead if we decide to do the labor. Property taxes are actually negligible. At current rental rates, it still gives us a profit of ~10-15K/yr after income taxes and writeoffs (according to Mom the CPA), which we will keep in CDs until we have about a 50K buffer, then use future profits to pay down the mortgage.
Finally, Mom and I can both keep our day jobs (she is starting an internet-based bookkeeping/CPA thing, I have an established internet-based scientific consulting business), so that would be our backup if we need to put money into it. It could be my year round residence if I want it to be (just need to travel to Anchorage twice a month on weekends), and I can easily afford the $3K/mo mortgage payment on my income alone if business drops off entirely, which is doubtful. Mom will probably blow her personal income on travel, fishing and enjoying her retirement. If she goes in with me on this property, I might even have a small chance of getting an inheritance.
That said, I’m taking a ‘wait-and-see’ attitude. It doesn’t hurt to at least look into it. Any offer would have built-in ‘cold feet’ contingencies, of course.
I have another question for you NSO.
Gas is high in the US and Europe. You said most of your clientale is from Europe and Asia. If gas keeps getting higher would this cut into your European and Asian clientale?
SF Gal,
I have no idea how gas prices would affect this, but I will think about it very carefully. I’m enjoying having some motivation to get my feet wet and to look into these things in real terms, instead of passively watching from my window.
My gut feeling is to avoid real estate for the next few years entirely, but anytime I see something that looks like a really good deal I am compelled to at least look into it and think it through. From what I can tell, good deals are coming along about 3-4 times a year in my market, increasing from zero only a couple of years ago.
The worst that will happen is that I’ll be out of my earnest money for a week or two while I wheel, deal, and lowball.
At least by looking around and playing the game, I’ll be getting good experience. If the right situation comes along at the right price, I’ll pounce…but I’m not in any rush, I promise.
Boy…I would hate to own a million dollar home right now that was bought over the last few years..so many of those McMansions are being reduced big time…
Here is Atlanta local community loaded with new McMillion Dollar Mansions is continuing to dump…newest dumps..Once listed at $1.8 sold for $1 million..listed for $1.7 now selling at $900K..another once listed at $2.1 under contract at $1.3..fully expect to see that one end up being sold at $900K..$1M…imagine waiting for that appreciation to come back if you bought!
Expecting it to get worse at NEG AM loans continue to kick in..
Still waiting for the deflation in north coastal San Diego. I’ve been monitoring a few Pardee new developments as well as used homes on the market in Carmel Valley (all within about 3 miles of my office). The used homes are largely being pulled off the market as the summer develops while the Pardee homes are actually increasing (albeit slightly) in price with successive releases. I’ll keep wwaiting and hoping that this winter/spring and the coming Option ARM tsunami shakes some sellers and/or the builders back onto this side of the looking glass. For now, we remain in bizarro world — the rest of the county seems to be bleeding like crazy, but not Carmel Valley.
“Comics, known to make light of bad moments, flip the coin on these situations to get a laugh. After all, comedy streams from tragedy, Joyce said. ‘We can’t have one without the other,’ he said.”
Given the way things are going, we should see a big upturn in entertainment, especially light-hearted stuff to make you forget your woes.
I’ve posted this before, but what the hey, it always makes me feel better:
http://www.youtube.com/watch?v=mHN4FENMVII
Lost, that was so much fun, thanks.
I remember when..not nearly so dangerous, but gosh..
Where is this?
Can we go ?
I’m not sure, I think it’s in New Zealand.
Bad childhood memories of tubing down the Truckee river came back, flooding me with visions of panic and the thankfully minor injuries I sustained. Thanks Dad.
Sorry for bringing that back! I know of whence you speak, I nearly drowned as a kid, my quick-thinking cousin pulled me out of the river, but I can still feel exactly what it was like, and I was about 8.
Wow…I drowned at about 8 years old too. A doctor in the same building as the pool said I was dead. We should form a club
The young lifeguard and I really FOOLED him as he keep pounding on my scrawny lil purple chest and breathing for me. All the other kids and their parents were real AFRAID of me…cause I’d ..BEEN THERE for a long time and I CAME BACK…Powerful stuff for a little kid and even the big kids were apprehensive and my nickname became SPOOK
Moral to the story . As usual ALWAYS …get a SECOND opinion
great story, Spook, glad you came back!
I didn’t get a second opinion…maybe all’s not as it seems…
“Comics, known to make light of bad moments, flip the coin on these situations to get a laugh. After all, comedy streams from tragedy, Joyce said. ‘We can’t have one without the other,’ he said.”
This whole thing has made me more cynical.
I only laugh because I did not buy a home, otherwise I am channeling good vibes, and ducking all the bad news.
Come In positive thoughts, come in. Anybody here to help the renter class?
You’re still doing OK (hopefully), you’ve managed to meet some cool people online, and you’re far ahead of the curve.
I think we’ll mostly all muddle through fine.
If that’s not a positive thought, I dunno what could be.
FPSS,
I agree. We will muddle through just fine.
Take my condo, please…badump dump…..
I’m seeing something I don’t understand and maybe someone can help. I see small-scale projects that are taking forever and still aren’t finished. They started right as the air went out of the local market. One is about a 16-unit apt building getting a complete makeover since last summer, about 1/3 done. Looks like a condo conversion, which would be too bad because it was a nice place and always rented. It’s like one guy is trying to do the whole project himself.
Another is an up-down duplex looking thing down the road from me. They’ve been working on it since last year but seem to have stopped without even putting railing on the deck upstairs. Just stopped.
Then there is the place I used to own, my little house that the buyers (a contractor couple) demolished and replaced with a split, daylight-basement thing. It’s just been sitting there, the yard trashed covered with rocks and the trees I planted just dead sticks for months. I thought it would be rented by now.
Pardon the the stupid question, but can builders go along and just run out of money all of a sudden?
Builders version of “Jingle Mail”….Take your construction loan draws, don’t pay your subs, load up the U-Haul and get outa dodge because its suicide to remain around town with angry subs….
Sorry I didn’t see your post earlier, but I commented below about the same thing. Forgive the repost:
I’m seeing not-so-new condo projects under construction that are being dragged out presumably because the pre-sale infestors bailed. Ditto for SFH planned communities. Some new projects have been in “pre-construction” for well over 2 years now, and other snapped-up buildable lots have ‘reappeared’ on the MLS for sale once again.
I wonder if the bank can foreclose on a construction loan while a project is still certified as “incomplete”? Seems to me that all the builders are using stalling tactics and exploitation of loopholes to keep from facing the music until at least next summer.
foreclose on a construction loan while a project is still certified as “incomplete” ??
Sure they can but it introduces a whole new set of problems….Who finishes the project and takes on the liability for work previously completed by “Who knows Who”…Who is going to “Lend” on this incomplete project ?? These things usually work out one of two ways…The bank hires a GC to complete the project and indemify’s the GC for work completed prior to his starting OR the cash buyer comes in and takes out the bank and completes the project likely at a very deep discount…
I posted earlier in bits but it never appeared. Remember this story Ben posted last week -
“Tribute [in Atlanta] sold 26 units in an unusual one-hour auction Sunday at the Omni Hotel at CNN Center. . . . I’m about to go and celebrate pretty heavily,’ said Atkins, a Georgia Tech graduate who works in Suwanee and turns 25 on Friday. . . . He paid $263,000 - the highest price at the auction - for the 1,306-square-foot unit. Atkins pointed out his winning bid was ‘30.77 percent’ less than the original asking price of $379,900.”
Well this week the developer undercut him by $20k and thats just in the wish price (note that although the 2bd in the add is slightly smaller, it had a 6k higher original base price because it had much better views that that sucker’s unit). I’m sure the developer would take another 20k off to get the deal done. $20k-40k gone in a single week. Got to love these new college grads. Very easy marks.
http://www.tributelofts.com/
Interesting how they managed to duplicate feel of the railroad car apartments of NYC. People in Atlanta must hate windows. :p
More on Atlanta:
The foreclosure down the street from us had squatters again. The neighbors had to call the cops again to run them out. This time the squatters were using it as a crack house. It has been foreclosed since last winter, and there is still not a for sale sign on the property. No one knows why the bank has not listed it. The lady who lives next door to the foreclosure had been trying to sell her townhouse for a few months. The last squatter episode put her over the edge. She packed up & moved back to Tennessee the next day. (She has a friend of hers who is a WWF type construction worker renting her place now, she didn’t just abandon it).
The Atlanta Business Chronicle front page story this week was on the huge increase in the number of evictions that local sheriffs are having to deal with. It is primarily renters who are being evicted –higher food & gas prices are really taking their toll on those with marginal incomes. Only 1/2 of 1 percent of the evictions are due to home foreclosures, as the FBs usually leave the day of the foreclosure sale.
A Little more from Atlanta:
This morning on WSB TV there was a big story about Robert Harris Homes, which went under a couple of weeks ago. Now buyers who have closed on houses are finding out there are mechanics liens from subcontractors on their new purchases. Other buyers who had not closed yet are finding their refundable earnest money deposits are not being refunded. When the local news channel went to the offices of Robert Harris Homes to ask why earnest money desposits were not being refunded, the guys who were there ran out the back door, jumped in their Escalades & took off.
Their website ist kaput!
I posted earlier but it never appeared. Seems like links are being blocked by the spam filter so I will remove them. Remember this story Ben posted last week -
“Tribute [in Atlanta] sold 26 units in an unusual one-hour auction Sunday at the Omni Hotel at CNN Center. . . . I’m about to go and celebrate pretty heavily,’ said Atkins, a Georgia Tech graduate who works in Suwanee and turns 25 on Friday. . . . He paid $263,000 - the highest price at the auction - for the 1,306-square-foot unit. Atkins pointed out his winning bid was ‘30.77 percent’ less than the original asking price of $379,900.”
Well this week the developer undercut him by $20k and thats just in the wish price (note that although the 2bd in the add is slightly smaller, it had a 6k higher original base price because it had much better views that that sucker’s unit). I’m sure the developer would take another 20k off to get the deal done. $20k-40k gone in a single week. Got to love these new college grads. Very easy marks.
Type in the following “www. tribute lofts.com” without the spaces.
At a 4th of July party I went to yesterday, two of my friends told me that they had gotten out of the construction business because it was becoming harder and harder to drum up business.
Here’s some lighthearted stuff - enjoy
http://fc01.deviantart.com/fs13/f/2007/077/2/e/Animator_vs__Animation_by_alanbecker.swf
Here’s some local market observations from Mesa, AZ.
Last night was the first Fourth of July night in 15 years I can remember here where there were NO public or private fireworks displays visible in our neighborhood (North Central Mesa - Lindsay to Greenfield, University to McDowell, etc). The reasons given in the newspaper were about the economy.
Went to the Mesa Arts Center, Ikea Theater Wednesday night. About 15% full, if that. Noticed a lot of empty storefronts on Main Street. The Shanghai Express restaurant ,100 feet from the theater, was empty, closed, out of business. Mesa is the 3rd largest city in AZ. Commercial real estate for sale for lease space available signs on every single block in commercial district. I could not help but wonder how dead it must be out in the boondocks. Was at a private party last Saturday and some local helicopter manufacturing folks were talking about conditions. Some materials very expensive or difficult to get. How real inflation must be much more than the official reports. Then on to the political horizon. Funny how now that we are in Iraq and Afghanistan, Iran is going to be the next one. I found myself thinking - Wars, and rumors of wars. Is that how the government really thinks it can solve serious economic problems; invade another country that has oil?
I was going to go over to the Mesa display at MCC with some friends, but we hung around the house until the severe storm warning cleared, and by then it would have been too late with traffic etc. So we drove up to Tempe Marketplace and watched the Tempe display from the McClintock Dr. bridge, along with a couple hundred other cheapskates who didn’t want to pay $5 to see it up close. But you’re right, there seemed to be fewer displays this year, and shorter ones–the Tempe display was only about 35 minutes.
The entire state of Utah had a fireworks ban, except for municipalities. Shoe, it you’re there, I heard G.R. had a big fire, had to evacuate one of the motels, weeds. Had a helichopper from the BLM at Moab.
Is that how the government really thinks it can solve serious economic problems; invade another country that has oil?
If you read history books, economic problems are very much often the cause of wars.
Notice how much play Bin Laden & Afghanistan has been getting in the MSM the past several months.
History teaches that war begins when governments believe the price of aggression is cheap.
Ronald Reagan
What good fortune for governments that the people do not think.
Adolf Hitler
Complete opposite here in DC. Although the news ran a story about a VA town that cancelled their fireworks, they were clearly the exception. From a highrise condo near the new stadium I could count at least 12 major displays and lots of mini-local displays coming up from neighborhoods throughout the district.
The inventory keeps building up here, but there are lots of sales as well as prices drop back to say way overpriced 2004… this area has been historically way over priced, so the idea that the median income should be able to buy the median house is basically rejected by 95% of the population. It will be interesting to see what happens later this year and next… the mentality could crack, but it will take a big shock to the system to do it. I don’t think simple time will work as there is always the election, BRAC, spring, etc.
The subdivision behind my place usually goes nuts with home fireworks every year since we’re in the county and it’s legal. I mean, they’re over the top usually, roman candles going boom boom boom and waking me up & making me jittery.
But this time it was just another night, aside from a few firecrackers earlier in the day. DH says he heard the stuff go off after I went to bed but I think he’s BSing me (wants me to think everyone’s doing fine, don’t be so nosey etc).
Just drove by a developement in Palm Springs that is surrounded by a wall, with HUGE banners that state PRICE REDUCED.
They have only built, I think,by a fast drive by, only 8 units,not even 1/4 built out. Sheesh.
Feel claustrophic but cool in my house, so am going to venture out and see open houses in a/c car which will warm up like a pizza oven in seconds once I turn it off.
The only thing that drives me nuts in the desert, is that the big trees don’t grow here and provide much needed shade, unless you are a Handicapped stickered person, then their spots area always covered by shady trees.
Sweating already just thinking about the hot car.
Will update on RE
I think that the banner business is a good one for an economic downturn. All manners of special offers and discounts, Leasing, Price reduced, New name …etc.
The ultimate business for the foreseeable future is making those gold oval “made in China” stickers.
Probably the next best is making “going out of business” banners.
Scotty, beam me up!
Mike
I’m seeing not-so-new condo projects under construction that are being dragged out presumably because the pre-sale infestors bailed. Ditto for SFH planned communities. Some new projects have been in “pre-construction” for well over 2 years now, and other snapped-up buildable lots have ‘reappeared’ on the MLS for sale once again.
I wonder if the bank can foreclose on a construction loan while a project is still certified as “incomplete”? Seems to me that all the builders are using stalling tactics and exploitation of loopholes to keep from facing the music until at least next summer.
We went to a BBQ and saw a great fireworks display in Moses Lake, WA last night. Homes are still being built there, and businesses that depend on high electrical energy consumption are relocating there too; schwing concrete pumpers can be seen everywhere. The Ag folks are doing well, for now, since comodities are prices are up. The host asked me not to bring-up housing when we arrived, so I knew some of the guests there are wading without their trunks, but I didn’t see any breast implants; plenty of long lean tanned legs though. One fellow mentioned the glut of high-end homes for sale in the area, which is something I’ve mentioned here before.
“The host asked me not to bring-up housing when we arrived”
LOL! I suspect I’ve been blacklisted from several dinner parties lately myself.
And your friends get a certain look on their face when they recognize that someone you just met is saying stuff that is going to “get you started…”
F**k ‘em, f**k ‘em with a rubber dildo till they bleed from every single orifice.
If I were ever asked to not bring up something, I would do so ruthlessly at the opening of the evening, and ruin everything in sight. Never appease the morons. EVER.
Gee, FPSS, I wouldn’t hurt my friends just because they get a certain look on their faces when someone says something that is “going to get me started…”
But if I could get my hands on some of those greedy developers though, that would be a different story, Myra.
Firstly, they are not your “friends”. If they were true friends, they would be genuine, and value your opinions, good, bad and ruthless.
At best, they are acquaintances, if that. Unless you have something to gain from them for business reasons, I wouldn’t bother too much with their feelings.
Real friends are different. Rare and valuable.
Casual acquaintances, eh, whatever. Move to a different place and you’ll find a new bunch.
The people I consider my friends are my friends, Genuine, and we’ve been friends for years. I have acquaintances too, who don’t know and wouldn’t have any reason to care what particular things are likely to set me off…
I’m not the one that said my friends told me not to talk about something or blacklist me from dinner parties. I said : ‘they get a certain look on their faces when someone says something that is “going to get me started…”’
My friends value my opinions, especially on things that I know a lot about. We share core values, and also many opinions - including those about “luxury” development construction gone wild. I am probably the most bearish on the economy, but I think the others value my opinion.
I saw “that look” last night at the 4th of July party, when a friend’s cousin started talking about how all the rich young trendies and deep-pocketed boomers are dying to buy a condo in my neighborhood in Austin. Which of course set me off…
My friends weren’t rolling their eyes or telling me to shut up, but I could see “here it comes…”
And friend didn’t have to introduce me to her cousin by saying where I live anyway, she could have said, “just got back from Kansas” or “rides her bike a lot.”
Anyway, lighten up, FPSS. Join me in a glass of Beaujolais?
Or a Bloody Mary with a dildo instead of the celery stick?
When I talk about housing, I get the distinct impression that I am coming off like the Jack Nicholson character in “As Good As It Gets.”
What exactly is wrong with that?
I think I resemble all three main characters in different ways. I even live in New York.
Puss,
I like the way you think.
Mike
“How do you write FBs so well?”
“I think of an HBBer and I take away reason and accountability.”
“We went to a BBQ and saw a great fireworks display in Moses Lake, WA last night…The host asked me not to bring-up housing when we arrived, so I knew some of the guests there are wading without their trunks…”
What a joke! I can’t stand those whining crybabies. They’re the ones who can’t shut up when they’ve “struck it rich” in housing, but heaven forbid anyone make so much as a peep should those bets sour. F*** them and their control freak environments.
preach it, Bear!
From Bradenton, Fl:
I went to the local 20 screen theatre Friday evening for the 5:20 showing of a particular movie. The place was dead; I was the ONLY person in the showing of my movie.
What movie was it?
Paint Your Wagon - a new version out for FBs, but none of them had the money to get in. The reviews were good, though:
“Why?”
“Exit the theater!”
“No bad movie list would be complete without it.”
“I saw this movie and can’t remember any of it. This is unusual for a three hour movie. I’m hoping to retreive my memories of this film in therapy.”
Have you seen the ads for the new movie out about the family who takes in borders? I can’t remember the name of it, but its supposed to be a funny movie for children–it looked more like propaganda to me–trying to sell the “fun” of having boarders in the McMansion.
The movie I saw was “The Happening” with Mark Wahlberg and a really great looking gal I have never seen before; Zooey Deschanel. The movie was so-so and Wahlberg is probably twice the age of Ms Deschanel but it is Hollywood after all.
BTW, it wasn’t just this movie that was low in attendance, there was about 40 cars on the lot with 20 screens playing. I really can’t say if there were any other single viewer ones though. I was able to get a good seat though.
I walked around my block to check out the vacant homes. The block I live on has a total of 42 houses. A total of 12 are vacant (almost 29%) 11 of these houses are evictions/forclosures (some obviously broken into) and one had a fire (gee, I wonder why?)
This is only one tiny block in Pontiac, Michigan in one of the relatively safer areas. I can only imagine what is going on in the rest of the city. Especially in the really scary areas.
What I find even more interesting is that at least 4 of these houses have been vacant for almost a year, and there are no signs of any activity, like cleanup/renovation or any for sale signs.
Gulp! We had 1 foreclosure / empty home in town (Hainesville, IL) last year. The place was re-sold & now occupied. What a scary scene you are seeing, bummer
The situation in southwestern Ohio is interesting. The unemployment is well above average. The courts are refusing the banks permission to foreclose unless they can prove they have the paper. Since most loans were sold to hedge funds that is impossible. So the mortgagees are living free.
The sellers are standing their ground and refusing to reduce prices. Two that I have been watching for nearly a year just reduced their price by 2%. One other house I have been watching has been on the market and EMPTY since 10-14-06 and still they have not reduce the price by $1. The Realtor said these sellers will not look at any offers that are less than asking price. The feel they priced it right. I think it is way too high. They want a 67% increase from the price they paid 6 years ago.
So it is a stand off between the sellers and buyers.
Unless the courts start allowing the banks to foreclose this will end up as the biggest home give-away in world history
Interesting post. I think it’s hysterical that the hedge funds can’t provide the paper in order to foreclose. It’s got to be somewhere, doesn’t it? Looks like they need to get their ship in order.
As for a house sitting vacant for two years with the owners refusing to lower their fantasy price; I love it. They’re losing money every single day, and it’s wonderful to hear about. It’s just beautiful when the greedy cheat themselves.
I know someone like that. They paid $400k for their house 5 years ago and now they are trying to sell it for $675k. The house has been on the market since last year (they started at $700k) with not one potential buyer. It is a nice place and they might possibly be able to sell it for $450k even today.
They were whining to me about it, I told them I knew how to sell it. At first they were very interested until I told them to drop the price $50k, if it didn’t sell in the next month, drop another $50k and then more drops until it sold. They no longer speak to me. And its still on the market at $675k.
“They were whining to me about it, I told them I knew how to sell it. At first they were very interested until I told them to drop the price $50k…”
Well, I suppose that’s one way to make sure they don’t whine to you anymore.
Now that a lot of the denial has turned into anger and frustration, it’s REALLY hard not to rub FBs noses in their own mess. I mean, REALLY REALLY hard.
The “it’s different here” arguments are getting feebler.
The guy doing some work on my house told me that despite the “recession,” there is still money out there (to fuel all the building going on). The evidence : I was writing checks for him and his assistant.
I. Me. Moi. (I’ve told him what I think about money and spending, and why I am finally doing some needed home improvements. Maybe it didn’t sink in?)
But my goodness, if the continuation of this building boom is depending on ME letting money out of MY tight little fist, those developers might just want to line up now to jump off the 38th floor and get it over with.
Rockport TX had quite a good municipal fireworks show. But I didn’t see the usual private displays or “semi-private” (like RV parks) ones. Didn’t hear any firecrackers at all, even though there were plenty of fireworks stands outside the city limits.
Driving down from Austin on Thursday, there was much less traffic than I expected and I didn’t see anyone hauling a boat. There weren’t many people fishing on the old causeway, which gets vacationers that fish all night, rather than getting a motel room.
But motels and rv parks are full, also the beach park and downtown shopping area. I think the motels are offering deals and advertising in different markets than before. I would guess more people from San Antonio and small towns, fewer from Dallas.
Hardly any boats out in the bay, yesterday or today, even though the weather is good and there’s a lot of fish.
Several small motels and B&Bs are for sale. Waterfront properties on S Water St haven’t sold, although one unattractive house has a sale pending sign. The owner stuck himself with two houses (bought at the peak), so he may be selling that one at a loss as a tear-down to avoid losing the other. He doesn’t live here, so who knows how many houses this RE genius owns.
On the other, posher end of town : Key Allegro, a development that is an island (connected by a little bridge) with canals running all through it, is full of For Sale signs. And the holiday rentals there had For Rent signs. I don’t think they used to have signs - people just contacted the Key Allegro office for holiday rentals.
The 4th of July party at the other end of our street was great, as always. But I drank too much. I don’t do well when there are guys circulating with wine bottles to fill your glass.
I got the ticket for not getting totally hammered when you just want to be socially drinking and not get a hangover.
Just drink some pi$$ light beer like coors or keystone light and it’s like drinking water all day. I drank 12 beers oevr the course of 8 hours on the 4th and I wasn’t drunk and felt pretty darn good the next day.
From Long Island’s Newsday. A run down of the last year’s “Why you should buy my house.” A feature in their RE section which is basically a free ad for some lucky schmo masquerading as an article.
http://www.newsday.com/classified/realestate/ny-hocov5732035jun20,0,6060557.story
This is the choice part:
“Of the 52 homes featured in Newsday’s Why You Should Buy My House column for the past year, a dismal nine have managed to close the deal, and four are in contract. (At this time last year, 22 of 52 homes had closed or were in contract.) Twenty still are available at reduced prices, 13 are holding steady, and five have been taken off the market. One is on market for an increased price.”
9 out of 52 houses that got the biggest press on L.I. That is a very bad market.
As Led Zep would say to New York, your time is gonna come!
edhopper — did you use to run a BBS?
I don’t know what a BBS is. But I’m pretty sure I never ran one since the only thing I’ve ever run is mu mouth off:-)
Thanks for the reply, even if you’re not the edhopper I was thinking of.
A BBS (Bulletin Board System) was an old-school 80’s online hangout. You’d dial in with your 300 or 1200 baud dialup modem, and once there, you’d upload/download files, write/read messages on a forum or two, check your email, and log off so the next person could use the BBS. If the BBS was big time, it might have 4 or 8 lines so multiple people could use it at once.
There was one called Ed Hopper’s BBS that I used to frequent every now and then.
B&B may be the highest and best use for some outsized homes that are no longer near the path of progress. I wonder how many McMansions in Riverside will be subdivided into apartments or used as boarding houses the way the old captains houses were in New England. What else do you do with 3,500 square feet two hours from good jobs? At least the McMansions in Carlsbad can become B&Bs for Legoland.
The problem with McMansion-as-B&B is that half the square footage is tied up in the useless “great room”, and the FBs would have to do some serious remodeling to make it work.
San Diego here. I don’t know if anyone is still reading this thread, but I got a big shock yesterday. A house on my block sold within 30 days (not sure exactly when, but I saw the sign with “Still accepting backup offers” yesterday). The seller (a realtor) had bought the house for $399K. It had major structural defects. I went to one of the open houses he had and he did a good, but bland job (at least on the interiors). He was trying to get between $450K-$500K and I thought, “That’s ridiculous. It’s only 1,500 square feet and it’s on the wrong side of the street [meaning--no view].”
“What do you see in your housing market this weekend?”
MOLD!
A little story about a relative that has a Countrywide foreclosure in Maryland: The family filed for bankruptcy last fall and gave back a Countrywide financed McMansion with a loan balance upwards of $900k. The property has been vacant since at least October of 2007. Even though Countrywide had the front door lock changed, they’ve never re-titled the property in their name. Nor is it advertised for sale. Nor do public court documents state they own it.
I drive by it this week and in addition to the grass being waist high, the front door was standing open. This is an extremely high-end, custom built home of around 6,000SF. An equal amount of that square footage is the finished basement, each floor is roughly 3,000SF.
I called the relative and asked what was up with the front door being open? He said he didn’t know, but called the local police department and had an officer meet him there. The police searched the house with him in tow and found nothing amiss on the main floor.
The real story was in the basement. The power has been off to the home since last fall and the relative reports there is MASSIVE mold growth covering everything in the basement. The walls are completely covered.
Not only did the house not being heated and cooled affect things, but the power being off prevented the basement sump pumps from running, which left standing water on the basement floor.
I’m sure the neighbors are also enjoying the 4′ foot of green water in the backyard pool as well.
Moral of the story? While the press is pumping foreclosure bargains for the REIC, the public has no idea of how many of these toxic time-bombs are awaiting new owners. At the new owner’s health expense.
Oh wait, it gets better. This same family did the “let’s buy a house we can afford and let the expensive one go to foreclosure while our credit is still good” routine. That home is now in pre-foreclosure as well, because they couldn’t afford it either.
Countrywide allowed them to finance a home priced in the mid 500’s for nearly $600k. They gave them an 80/20 loan. The relative reports that they were forced to do an interest rate buy-down on the primary loan, but the second loan has a nearly 15% interest rate. The sales price on the home was boosted to cover nearly $40k of closing costs to cover the loan expenses.
They haven’t made a payment on the second home in nearly four months.
It is good to be Bank of America!
No longer Contrywide’s problem.
Only 2 vacant townhouses in our 41 untit cul-de-sac neighborhood in SJ. Every week I pick up the trash along both streets and cut the lawn of the one vacant TH , the other is being cut by who-knows. It seems by keeping up on the little things it is keeping our neighborhood above water. Other neighborhoods nearby are going seedy and downhill fast.
For those in Florida counting on the snowbirds of Northern Ohio come this winter, the local fishwrap just did a massive front page spread on the latest gloom and doom: Median home sale price in Cleveland has dropped 75 percent compared with the first six months of last year - from 62K to 15.5K. Fourty percent of all single family homes were purchased for less than 10 K each. Inner ring suburbs are down 70%, 67%, 49% etc. Only brightspot, California investors are buying up some of these babies to resell as fixer uppers. I guess no kool aide is as good as California kool aide.
Come on down folks, we’ve got a lot more of these bargains! Next winter we should be able to offer maybe what, 10 to 20 thousand for one of them Florida retirement specials. That oughtta perk up the Tampa economy real nice!
Fewer fliers between Phoenix and Baltimore, fewer patrons at restaurants.
Both of those are my observations this weekend. Thursday late afternoon before a holiday flight to Phoenix is usually oversold. This time on July 3 I had my own row in the frequent flier row. Was like first class but with no free drinks or free food
Red Lobster late afternoon Friday - restaurant workers were talking about lack of people. Same observation at On The Border in Ahwatukee on Saturday. Same complaints. But I tipped generously. I rented and squirreled away savings in government securities and precious metals since 2001 while the greedy people who overstated their incomes bought huge McAnchors (McMansions) that they could not afford. The chickens are coming home to roost.
My “buddy” with real estate at Biscayne Bay text’d me another brag message. He’s still saying he’s doing well in his South Florida real estate. I very much doubt it. I think he is doing “well” only because he bought in 2000 or 2001 and is not negative. Just wait til his tenant scatters when the lease is up to a lower rent on the waterfront.