The Psychology Has Changed
The Missoulian reports from Montana. “More and more condominiums are emerging in the commercially zoned areas of Missoula, ranging from new construction to apartment conversions. There are 210 condominiums currently on the market in the Missoula area, with list prices ranging from about $85,000 to about $585,000. Jeff Ellis, an agent selling the 42-unit Uptown Flats on Orange Street, said they’ve sold about 30 percent of their units, which range from $159,900 to $224,000.”
“The units, which range from 613 square feet to 820 square feet. Monthly condo fees are about $177. ‘People are taking a little more time making a decision,’ Ellis said. ‘We projected we would have this sold in six months to a year, and it could take two years. But that’s just a guesstimate.’”
“With more onlookers than bidders, the owners of a restored Craftsman-style ‘trout lodge’ near Hamilton decided to cancel Monday’s auction of their 3,500-square-foot home.”
“Owners Larry and Mary Melia had hoped to generate excitement and a bidding frenzy for their ranch by choosing a ‘no reserve’ auction. But, moments before the event, they chose to exercise a clause allowing them to withdraw from the auction before the bidding commenced.”
“‘This isn’t what we planned to do and no one is more disappointed than us,’ said Larry Melia. ‘Certainly, the public perception that real estate is in trouble has an effect.’”
“Several real estate agents said the canceled auction also reflects a weakening market for expensive homes in the Bitterroot Valley, where reportedly just one home sold for more than $1 million in the past six months. They said there is more competition these days for buyers of high-end homes, including about 40 homes currently listed for between $700,000 and $1.2 million.”
“Bob Dunbar of Corvallis had registered to bid on the home. He said he was disappointed the auction was canceled, but said he understood the Melias’ decision. ‘I expected half the town to be on the lawn just to see it, if nothing else,’ he said. ‘With the number of people here, I would have jitters if I were the owner, too.’”
The Idaho Mountain Express. “Carey real estate became a hot commodity three or four years ago when spiking real estate prices in Hailey and Bellevue drove many home buyers out of the Wood River Valley market. In response, electrical contractor Craig Patterson developed Carey View Estates, the city’s first subdivision. He said the 36 lots sold quickly in 2005.”
“‘We sold 11 lots in one day,’ he said. ‘The prices jumped from $30,000 to $50,000 and then to $75,000. It was overwhelming.’”
“Patterson said he would get three or four calls a month from people looking for lots. ‘Now I don’t get any,’ he said.”
The Idaho Statesman. “The credit crisis rocking the nation’s lenders has banking customers in Boise seeking a safe place to keep their money.”
“‘The psychology has changed,’ said Rob Perez, who opened his own bank, Western Capital Bank, just three months ago. ‘People are no longer saying, ‘How high are my returns?’ They’re saying, ‘How safe is my money?’”
“He said a customer told him Monday morning that he was opening an account at Western Capital Bank because he knew the bank hadn’t made any of the risky real estate loans now causing so much trouble for other lenders.”
“‘He said, ‘I make an assumption that your loan assets are more conservative than (at) other banks,’ said Perez. ‘You haven’t had time to book problem assets. That’s the first time someone has come to me and made a decision on this basis.’”
The Bend Bulletin from Oregon. “Bend’s 529 home sales during the six-month period from January through June were down 60 percent from the same period in 2005 and 39 percent from 2007.”
“Prices have come down ‘tremendously’ the past six to eight months, said Julie DeVoe, a broker in Redmond. More offers are being made, but many of them are short sales, which require a bank’s approval because the sales price is less than what is owed on the home, she said.”
“‘There are a lot fewer sales than last year,’ DeVoe said. ‘We’re writing plenty of offers, but I’m wondering if they’re going to close.’”
The Oregonian. “Through the first half of 2008, Portland-area homeowners reported 9,800 closed sales. That’s down 34 percent from the same period a year ago. The Portland-area inventory of unsold homes remained at a high 9.5 months, according to the Regional MLS for Clackamas, Columbia, Multnomah, Washington and Yamhill counties.”
“Bill Conerly, a Lake Oswego economist, said he suspects that some homeowners aren’t selling because they don’t want to accept that their home values have dropped. ‘Instead, people are saying, ‘I’ll wait until the market comes back,’ Conerly said.”
“The Portland market’s trouble isn’t because buyers can’t get financing, Conerly said. ‘We just built more housing than we needed,’ he said.”
“Clark County, Wash., continues to fare worse than the Portland area. The county reported a median price of $249,900 in June, a 6 percent decline from June 2007.’”
The Spokane Journal from Washington. “Businesses here that supply goods and services to the home construction market say as home building slows, they’re looking to other markets within the construction industry to help sustain them during the downturn.”
“‘We all saw it coming,’ Randy Hastings, president of Spokane-based R&R Heating & Air Conditioning Inc., says of the housing slowdown. ‘Now, we’ll just buckle down and hang on for the ride.’”
“Troy Varness, general manager at Fred’s Appliance Inc., says…sales of appliances to builders for homes priced between $300,000 and $600,000 have slowed. ‘We’re hearing from our builders that the presold, build-to-suit homes are doing okay; it’s the spec homes that are hurting everybody,’ Varness says.”
“Varness adds, ‘Really, 2005 and 2006 were unrealistic. It was too much growth too fast and there were too many builders in the market.’”
The Bellingham Herald from Washington. “Whatcom County had a significant rise in the number of bankruptcy filings in June. The jump in June has had an impact on year-to-date numbers. In the first six months of 2008, there were 257 bankruptcy filings, up 41.2 percent compared to the first half of 2007. The filings include all types of bankruptcy chapters.”
“Overall there have been 4,181 bankruptcy filings at the Seattle office through the end of June, up 33.2 percent compared to the same period last year.”
“Whatcom County’s unemployment rate took a significant jump in June, rising to the highest level in more than three years.”
“Joe Giannamore, regional labor economist for the state, said the local unemployment rate is reflective of what’s happening with the national economy, noting that the year-over-year change was the biggest jump since April 2002.”
“‘The drop-off (in job orders) really happened in May and June,’ said Gary Smith, regional manager at WorkSource Northwest.”f our services.”
“Part of the drop can be tied to the slowdown in construction. During a time of year when the area traditionally ramps up its construction workforce, the total number of workers dropped from 8,000 in May to 7,800 in June. The number of people employed in construction in June was 500 less than for the same month two years ago.”
“Giannamore said the slump in construction jobs is out of the norm. ‘Whatcom County usually doesn’t see a drop-off in construction jobs until September. Having it happen in June is something we need to watch closely,’ Giannamore said.”
The Province from British Columbia. “The mayor of Kaslo is calling for creation of a new property-tax class that distinguishes between full-time residents and absentee owners. Out-of-towners have bought up much of the affordable housing stock in the village, holding the property for future plans and often pulling it out of the rental market.”
“The result, according to Mayor Jim Holland, is ‘we have a shortage of housing here.’”
“Between January and April, the price of homes in the southeastern B.C. community doubled. ‘Anything that’s not a shack is going to be over $200,000,’ Holland said.”
The Vancouver Sun. “While British Columbia bucked a trend that saw Canadian home prices fall for the first time this decade, the province’s real estate market is squarely in the buyer’s court with inventory up and the volume of sales dropping by 36 per cent in June compared to the same period last year.”
“Buyers here can expect to see prices flatten or even decline slightly, according to Cameron Muir, chief economist for the B.C.Real Estate Association. But if you’re waiting to pick up a Vancouver home at rock-bottom prices, you’ll be disappointed.”
“‘We don’t expect to see a substantial price correction,’ said Muir. ‘It is perfectly reasonable to expect home prices will stay fairly flat or even decline a couple of per cent a year until affordability picks up.’”
“‘We certainly see a large increase in the number of listings out there,’ said Muir. ‘In June, the number of active listings was almost 54-per-cent higher than it was a year ago. In Greater Vancouver, it is 53-per-cent higher.’”
“‘We see demand coming off its record levels and we are seeing inventory levels beginning to swell,’ Muir said. ‘Some home sellers are going to need to sharpen their pencils in terms of pricing; no longer can you price your home in relation to the accelerating market conditions of the past and expect to sell it in a reasonable period of time.’”
“With little upward pressure on home prices, the market now is tilted in favour of home buyers instead of sellers. In B.C. and Vancouver, it is a buyer’s market.”
“Muir said recreational real estate purchases are also feeling the pressure as potential buyers find the equity in their homes not climbing as fast as in the past.”
The Anchorage Daily News from Alaska. “Right now in Anchorage, it takes longer to sell a house than it has anytime in the last eight years, according to MLS statistics.”
“Common in the Lower 48, staging is gaining attention in Anchorage thanks to TV shows like HGTV’s ‘Get It Sold’ and ‘Designed To Sell.’ Since the start of the year, at least three home-staging businesses have opened here. ‘It’s something Anchorage is sort of behind the curve on,’ said Clair Ramsey, a longtime Anchorage real estate agent.”
“Jan Pennington retired last year after working 26 years in the real estate business, where she learned firsthand that staging can bring quicker sales and higher prices.”
“It’s a buyer’s market here right now. Housing prices have dropped only marginally, said Niel Thomas, a longtime Anchorage real estate agent, but there are plenty of houses for sale and it’s taking longer to sell them. That means it’s a stager’s market too.”
“But no one’s getting rich, at least not yet. ‘This is our second job,’ Pennington said. ‘My first job is Social Security.’”
“While many property owners’ renovations are giving downtown Palmer a face-lift, that may be a bit deceiving regarding construction overall. At the City Council’s meeting July 8, Sandra Garley, director of community development, gave the mayor, city manager and the council some grim news: The number of building permits issued so far this year is at a 10-year low.”
“Through June, only 50 permits had been issued to builders. That compares to a high of 80 for the same period in 2003.”
“Even though there weren’t many permits granted in 1999, the value of the property being built was $14.5 million compared to this year’s $2 million.”
“The story’s similar in Wasilla. ‘”We’re experiencing the same thing,’ city planner Jim Holycross, said Monday. ‘In June we had six permits, and this month we have two. Of course the month isn’t over.’”
“With building in slow mode, those who supply lumber, paint, wiring and all the other stuff, are feeling it as well.”
“‘It’s less than before, but everybody’s not doing as much business as last year,’ said Jason Crist, assistant manager at Spenard Builders Supply in Palmer. ‘We had two or three good years there.’”
‘Out-of-towners have bought up much of the affordable housing stock in the village, holding the property for future plans and often pulling it out of the rental market.’ ‘The result, according to Mayor Jim Holland, is ‘we have a shortage of housing here.’
‘Between January and April, the price of homes in the southeastern B.C. community doubled. ‘Anything that’s not a shack is going to be over $200,000′
‘We don’t expect to see a substantial price correction,’ said Muir. ‘It is perfectly reasonable to expect home prices will stay fairly flat or even decline a couple of per cent a year until affordability picks up.’
This contrast in the NW and in British Columbia serves as a good reminder of just what a financial mania is made of. Notice these irrational price increases are seen as ordinary. And I think that what we see as arrogant statements about ‘don’t expect’ this or that is actually a reflection of the mentality that this is never going to end. And permanently unaffordable prices are ‘perfectly reasonable.’
We are far enough away from the peak here in the lower 48 that we tend to forget how deluded and crazy so many were for a while. But as you can see, this mania is alive and well in BC, and it’s a tangible popular delusion.
Hey Ben,
thanks for the BC/Vancouver post. I haven’t been posting much here at HBB in the past year, but I’m still following the Vancouver market.
We have finally topped out. Sales/new listings ratios since april have been half their normal values for this time of year. Total inventory is up around 80% yoy. Under construction is over 25K; previous all time high was around 15K. So, it’s all over now but for the crying.
SFH average price in Vancouver is around 800K, more than 10x median family income. We don’t have mortgage interest deductibility.
Still so many condo towers under construction that the city is littered with cranes . . .
And now it shows up. Argg..
Thanks for posting it again, Ben.
“‘We don’t expect to see a substantial price correction,’ said Muir. ‘It is perfectly reasonable to expect home prices will stay fairly flat or even decline a couple of per cent a year until affordability picks up.’”
Now lets see. If house prices fall 2% per year and wages increase 5% per year then it will take Vancouver 17 years to be considered affordable. I’m sure that’s the way it will work.
That’s what happened in Japan. Get ready for a loooong ride…
BC has a savings rate of -8%, and its biggest export is (or was) forest products. Other pillars of the economy are tourism, drugs, and of course RE.
It’s Florida with pine trees instead of orange trees, and will fall just as hard and fast.
BC has a savings rate of -8%, and its biggest export is (or was) forest products.
By the Holy Joshua tree! A negative 8% savings rate?!? Can I use one guess where all of that money was going? Was it… housing?!? Any town/region dependent on manufacturing housing supplies is in deep doo-doo.
Oh, if out of town investors are buying units to rent out, how is there a housing shortage? I’m confused on this one… The units are being built and
stupid flipper FB’s and their bankssome nice people are helping subsidize the housing for thousands. So that doesn’t sound like a housing shortage… it sounds like a surplus!Got Popcorn?
Neil
And mountains! Don’t forget the mountains!
And, of course, 364 days of rain a year.
Not really - Japan I believe had quite a fast downslide in prices initially, then they’ve been flat for about 10 years or so.
Same is happening in the U.S., and will likely happen in Vancouver.
Yogurt,
To assume that the BC economy is not strongly linked to China’s entrepreneurial base is naive.
BC reached its heights in part because of the influx of Hong Kong money. These fabulously wealthy Asians turned Vancouver into a preferred destination from 1995-1999 because of a low cost of living, a relatively mild climate, liberal immigration laws for wealthy immigrants, and the thriving Chinese-Canadian community that was already a well established. At the time, there were fears that the Chinese government would confiscate their wealth somehow. It was one of the biggest geographic wealth transfers in current times, since most of the Chinese property owners actually took up full-time residence in southwestern BC (as opposed to just vacationing there).
I have no doubt that the economy in BC will falter sooner than later, but I think there is enough of an economic buffer that the crash will be gradual and not as rapid as Florida’s, which was based on speculative vacation sales from snowbirds and did not involve a genuine wealth transfer. IMO, their bust will be “stagflationary” like Japan’s was, unless China crashes or there is some other precipitous event.
“‘We don’t expect to see a substantial price correction,’
No one expects the Spanish Inquisition!
My aunt is on the intravenous Kool Aid. She very forcefully proclaims that “prices will NOT be going down around here” as if she’s some sort of all knowing being. And to watch her body language while she says it, she’s almost angry. She paid cash for a Seattle house at the peak last year. When I ask her how ordinary people will afford houses if prices stay so high, she doesn’t have an answer. She just says, prices are this high for a reason, and it is what it is. She’s completely unreasonable. It’s not even worth talking to her about real estate.
There is but one reason why my aunt even has a house, and that is my father. He purchased her and her husband a Bellevue house when they had no means whatsoever. That house turned into her meal ticket, as she would be in a manufactured or something had he not been so generous. This was back in the late 60’s early 70’s when a Bellevue house was $25k to $30k; a far cry from the $600k-$800k that those particular homes go for now. She has my father to thank for her bubble gains.
Your Auntie doesn’t understand why prices will go down because she was given a house. If she had to save her money to buy one she’d appreciate how much money $600k to $800k really is.
Sounds like a neighbor I had, always proclaiming how prices can never go down since everyone is rich and will always want to live near the ocean. Come to find out she was living in a house provided by her parents and didn’t pay any of the bills. This came to light when I asked her how much the HOA fee was and she didn’t have a clue.
I was all over zillow looking at home prices in Beaverton OR amazing hardly any decrease in price at all !! Like Phoenix when I moved here 2 years ago. If this keeps up it will be cheaper to buy in Newbury Park CA than Beaverton Oregon. One big difference though rent, 2500 per month in Newbury Park typical house and about 1500 in beaverton. Alot of old beaters in NP that look like the flip this house crew went through and chaged all the counter tops and now want top dollar for rent . Beaverton just alot of newer stuff for rent on tiny lots.
and Hillsboro has crappy school scores so that towns out. Beaverton near Intel pretty darn good. Might as well move to Oxnard if I wanted crummy schools at least I would have great weather. see when you have kids its all about the schools and even if you don’t I expect bad schools = high crime.
You’re assuming things are SELLING at those prices. They’re not. They’re sitting.
yep….even here in Lake Oswego, where it is much, much, different, the market is pretty stagnant. At last.
Delusion is right. I visited with my Canadian relatives last month and man oh man are they in the thick of it! “It can’t happen here”, they say, because Canadian banks don’t have the loose lending practices that American banks have. Clearly, their lending practices have gotten lax enough to allow prices to continue to soar and people to be able to borrow money for the overpriced shacks. It boggles my mind that so many people can’t see the obvious.
Look at this article, Ben. From today’s paper here in Thurston co., WA.
‘Thurston county’s retail sales tumble’.
http://www.theolympian.com/southsound/story/508035.html
In another sign of the slowing South Sound economy, Thurston County taxable retail sales have fallen for the first time in 13 years, dropping 1.3 percent in the first quarter of 2008 compared with the same period in 2007, new state Department of Revenue data show…The county’s overall taxable retail sales declined, in part, because of fewer sales of new and used cars, motorcycles, boats and recreational vehicles, the result of higher fuel prices, the data show…
If they are worried in Boise, worry has permeated the land…
_____________________________________________________________
“The credit crisis rocking the nation’s lenders has banking customers in Boise seeking a safe place to keep their money.”
“‘The psychology has changed,’ said Rob Perez, who opened his own bank, Western Capital Bank, just three months ago. ‘People are no longer saying, ‘How high are my returns?’ They’re saying, ‘How safe is my money?’”
Capital preservation will become the operative phrase in this depression. The key right now is to preserve your money so you can use it to buy assets for pennies on the dollar two or three years from now when all the artificial value created through housing is blown away. Those who think they are getting “bargains” in real estate, stocks, and other assets now are going to wish they had kept their powder dry.
As for those who have been buying and praying in the US stock market in the past few years, they are finding out that equities with a dividend yield of 2.5% and trading for 20.4 times the past 12 months earnings are not going to deliver good long-term returns.
Keep the popcorn popping,
Red Baron
Do the following to get through the depression: 1. Get and keep a job 2. Rent a place or live in an RV so you can be mobile for your job 3. Save at least 25% of your after-tax income 4. Eliminate debt unless you could pay it off if you lost your job.
The Psychology Has Changed…that’s for SURE
“It’s MY Money IndyMac and I WANT it BACK”
How does one hide money in a water bed?
Poke your Krugerrands through the fill hole.
I was golfing over the weekend and kept slicing into banks of moral hazard…
And when it’s time to replace the bed - don’t forget they’re there!!
‘…My first job is Social Security.’”
In about six weeks, it’ll also be …”your only job”
What does “town greeter” pay in Alaska these days?
Kaslo is an old silver mining near-ghost town in the middle of the mountains, about 100 miles from the nearest commercial airport. It has no jobs apart from convenience stores, gas stations, etc. It has a population of 1029.
http://www.kaslo.ca/siteengine/activepage.asp?bhcp=1
Nutty RE developments are springing up all over rural BC in similarly inaccessible places.
Yes, it’s a sleepy backwater that does a mild tourist trade for 2 mths of the year. The only reason prices went up is because more accessible places (like Nelson) have already been bid up to even more ludicrous levels. Idiots from Vancouver think prices below $400k are a steal.
Since the start of the year, at least three home-staging businesses have opened here. ‘It’s something Anchorage is sort of behind the curve on,’ said Clair Ramsey, a longtime Anchorage real estate agent.”
I spoke with a guy selling a house in Anchorage recently: nice starter home on a small lot in a ‘transitional’ neighborhood. This guy moved his family to the East Coast a year ago, and rented his house until this summer. On the advice of a RE agent friend (he is selling FSBO), he kicked out his tenant because “it would make the house easier to sell”. He has subsequently moved back to Anchorage temporarily to work on buffing floors, putting in countertops, painting and installing drywall, and other cosmetic fixes.
He says he is getting a lot of “offers” despite the house sitting on the market the last two months. Every week that the house doesn’t sell, he thinks of a new project that will accentuate its “value”.
I suggested lowering the price, but he said that the RE agent told him his property was “very well priced” and therefore he couldn’t budge on the price. He’s lived in the house for 26 years and has a tremendous amount of equity. He hasn’t seen his family for two months and is quite frustrated that it won’t sell.
So in summary, RE here is seeing a drop in asking prices, but realtards are advising their clients to “stage” the property rather than drop the prices.
Oh yeah, and that Clair Ramsey idiot is the same guy in December who said that prices have risen 3% and that it was “slightly tilted towards being a buyer’s market at this time”. The shill is the go to guy for the Anchorage Daily News anytime they want to quote an “expert” on the RE market.
Sickening.
Yes, the ADN is a pretty crappy paper. As you know, I spent the summer there in 2001, just as I was getting my head around the idea of a housing bubble. Alaska has a huge bubble, IMO. Lots of things are expensive there, but land shouldn’t be one of them.
You’re absolutely correct. The bubble was huge, and now that I have an idea of how much prices have risen over the past 6-8 years, it’s nothing short of astounding. The same guy I referenced above told me that “it’s normal for a house to double in price every 10 years”…hello, really?
Well, most Alaskans have seen their property values double or even triple over the past decade, but not their wages. Oil and low taxes are a great boost to the economy, but IMO it was loose credit and crappy underwriting that actually fueled the rise in housing prices here. Oil cycles will just prolong the needed correction.
Oh, brother. Staging. First encountered that nifty idea when the house behind me went up for sale three years ago. The lofty wishing price got no takers, so down came the “for sale” sign and in came the stagers.
After they were finished, that place looked like it had been staged. No two ways about it. A “for sale” sign was re-installed, and, yes, it was a “new” listing. The wishing price was lower than the original, but it was still up there.
Five months after the re-listing, the house sold at well below the second wishing price. So much for staging.
Speaking of staging, I wasn’t able to post a comment regarding the article a few days ago where a woman trying to sell her trashed rent house that had a slanted patio and a broken front window turned to the services of an accredited stager.
Now I could have gotten that broken window repaired, but I lack accreditation. Is there anyone here that can grant it to me?
Granted.
Thank you. I’m so glad you didn’t require a dissertation.
Staging and Feng Shui caught attention because people are lemmings.
A former coworker has gone into the Feng Shui thing in a big way. I haven’t seen her in a few years, but if I do, I’m tempted to ask her for proof of Feng Shui’s effectiveness.
BTW, is there any? Or, is the notion that it will make you feel better proof enough?
it can’t hurt.. although if it’s deemed an effective preventative against some malady, the government might invade everyone’s homes and rearrange the furniture.
Look at the pictures in any Feng Sui book. Don’t pay attention to which way is west, or the single flower decoration, or what is wood or metal or earth. Instead, look at how CLEAN AND UNCLUTTERED the rooms are. You have to have clear countertops and minimal furniture to promote good pathyways for “chi” (good energy).
Oh WHAT-ever. Feng Sui is effective for staging simply because it forces people to throw out their crap.
In Phoenix make sure you backyard DOES NOT face west . In Portland if I move there i hope the yard faces South, In S. CA it doesn’t matter you can live in a tent.
thats my feng Sui.
You don’t want a Portland yard facing south, trust me on that. When the sun IS out, it will be VERY HOT. You WANT a south-facing yard if you want to grow tomatoes (otherwise forget it!).
I have fond memories of climbing onto my north-facing roof angles in Portland to scrape off the 2inch-inch thick moss. Good times living in the northwest, moss on everything without direct sun exposure.
Sheesh…Everyone knows that trick squirrels, dancing bears, pretty girls and lot and lots of CUPCAKES work a whole lot better than Staging
“the owners of a restored Craftsman-style ‘trout lodge’ near Hamilton decided to cancel Monday’s auction of their 3,500-square-foot home.”
3,500 sq.ft. trout lodge!!!
This is where we’ll store the HBB trout!
Muggy,
Ah yes… the old “no reserve” auction cancellation gimmick! Sorry, no empathy here. They’ll look back on that as a mistake. These are people that believe that life is simply ‘all about choices’ and they chose to drop out of the “rat race” lead some idyllic lifestyle ( oh and become outrageously wealthy! )
I call it the “Jimmy Buffet Effect”
All you poor slobs toiling away, stuck in traffic while I’m out here ‘neath the moon and the stars.
They must have been too low-end, since the article claimed there was still vigorous competition for the high end stuff (Competition for what - buyers?)
There’s a Countrywide-owned house on my way home from work here in the Portland, OR suburb of Tualatin - been empty about a month. It’s 3000 SF or so, I guess - they want $473,900, which is two years’ ago price, IMHO. In summer, unwatered lawns turn brown here, but they also stop growing, which is a boon to the neighbors. I neatly tucked away the water and gas shutoff notices, and silently wished the dear departed well.
I’ll watch and report back on the PNW thread.
I wonder where in the advertising the “clause” was located, that allowed them to cancel for other than Acts of God (or whatever the PC term for that is) type stuff. Just when you think that there is a real-deal auction, there isn’t. At least they grabbed their falling knife before it could hurt someone else.
Chip,
You just don’t get it, do you? Any one of us could break the chains of boredom, servitude ( gravity and… common sense? ) if only we had the courage to change!
Your problem is you’re so preoccupied with your daily grind to realize that you’ve held the key to freedom in your own hands all along.
O..Kay, back to reality shall we? The first thing I want to look at is… ‘the books’. If this truly IS a business show me your revenue for ____. Oh, not much in the way of revenue huh?
And so it goes “selling the dream” to the next guy. Here just outside Portland, OR flipping B & B’s is practically an occupational field! Not having actual guests mind you, just flipping to the next GF w/ dreams.
“Your problem is you’re so preoccupied with your daily grind to realize that you’ve held the key to freedom in your own hands all along.”
I had an interesting experience with this idea…about a year ago, after 15 years of self-employment, I took a job to gain some experience with a particular technology. Ended up getting into a hollering match with an incompetant, dishonest engineer and walked out on them at a really, really bad time.
Ended up getting the job back as a work from home contract, and more than double the pay. The lesson I take from the experience is “No, you don’t HAVE to put up with it”. The key to freedom is no debt and cash in the bank.
If more people would put a little aside and stand up for themselves, working conditions would be better for everybody.
As and example of how overloaded the servers are, my dashboard shows this comment as posted, but it isn’t here:
VHB
Hey Ben,
thanks for the BC/Vancouver post. I haven’t been posting much here at HBB in the past year, but I’m still following the Vancouver market.
We have finally topped out. Sales/new listings ratios since april have been half their normal values for this time of year. Total inventory is up around 80% yoy. Under construction is over 25K; previous all time high was around 15K. So, it’s all over now but for the crying.
SFH average price in Vancouver is around 800K, more than 10x median family income. We don’t have mortgage interest deductibility.
Still so many condo towers under construction that the city is littered with cranes . . .
Yeah, I ran the Vancouver Marathon in 2005, and the area around GM Place was condo city. Apparently they were selling like hotcakes then. Has that now changed to be more in line with reality?
Ben,
The bubble is so big in Vancouver (avg home > 10x avg income), that if/when it starts to crater, it will bring down the Canadian banking system.
We hear a lot in Canada about how there can be no bubble here because our banks are so much smarter than in the US. But I call BS on that, as we just haven’t had the price declines yet, so defaults are still low. As our bubble was about 2 years behind the US bubble, I expect that our banks will start to feel real pain over the next year or two.
D-day for zero down mortgages in Canada is Oct 15, as the government announced that they are tightening lending criteria starting on that date. I am looking forwards to the beginning of the end on that date.
I find it amazing banks will accept appraisals on property which will clearly fall in value in the future.
GH
here is a perfect example confirming yer comment;
Credit Union appraiser gave our major fixer upper, still in progress, a value of $350,000 when we were considering a HELOC to speed up some major home improvements.
I was laughing so hard I almost fell out of the chair at the bizness table. the VP, who was drooling at this possible loan, asked what was up? I told him less than a year ago it was appraised by probate at $240,00. which was only due to my insistence that the lazy court- appointed appraiser get the fuk out of his chair & come by IN PERSON to see this long-neglected, possble teardown, for a FACTUAL valuation. not some computer generated overvalued comp. so now it’s UP to $350,000???! Hilarious! he turned beet red, made some small talk to gloss it over, then changed the subject.
sidenote; since we are keeping the house in the family & have no desire to sell it, it would be thrilling to have it valued at a dollar. (much less taxes & so forth.) why people must continually keep pushing up their property values just to show off has always amused me, as it just serves as fodder for the inevitable tax hikes for all the civil servants.
so, anyway, I’ve been working like a dog for 2 years on this house but NO WAY IN HELL did it go UP over a $100,000 in a year when average properties are still selling but have easily dropped 20-30%. (sacramento)
I later explained in detail to the Mrs. how the appraiser was on the take by the bank/credit union to value as high as possible to enable a loan for as high as possible. she rolled her eyes in disgust at the obvious collusion & implicit fraud.
and it keeps on going . . .
‘the government announced that they are tightening lending criteria starting on that date.’
If they didn’t have crazy lending, why is this neccesary? I was asked about this stuff by a Calgary newspaper last year. The subprime, option arm loans probably only changed the timing of the bust, but not much else. The reporter also mentioned the resources boom, and I replied that it only made things worse in the Texas bust.
Things like oil, coastal limitations, etc, are common rationalizations; everywhere they were employed. In Florida, it was boomers and sunshine. Manhattan is an island. Massachusetts and the colleges. Wisconsin and Minnesota; the level headed nature of the population. Everybody’s moving to Arizona, Utah and Nevada. Oh, and the gambling.
There’s a bit of truth to all of this. But the way it gets used after the fact to explain away unreasonable price increases is a familiar sign of the housing bubble, IMO.
Ben Jones,
Totally agree, especially on the “timing of the bust” where subprime is concerned. Some time back there was an “epic” argument here between myself and SoCalMtgGuy where he wanted to single-handedly take blame for creating the bubble and ultimately the bust.
In the end, turning to subprime as the complete explanation for this entire debacle is incredibly simplistic. A factor? Certainly, but I like your take on it better. More an “accelerant” than anything else.
Subprime didn’t really take off until 2003. Option ARMs/stated income loans much later than that. These people that say this was strictly a credit bubble are full of it. There was a raging bubble in Alaska in 2001. This was as classic a RE bubble as there has ever been and there have been a bunch.
Ben Jones,
Right, as more hard evidence continues to pour in it’s getting tougher for the ‘credit camp’ to deny. Funny we’d describe the introduction of Option ARM’s etc. as coming “much later”? With as quickly as the MB’s were bringing new financial products to the market, you’d think the people at the front of the ‘camped over-night’ condo infestors was going “full doc” and by the time the last guy in line went through he was I/O?
It happened quickly, but not THAT quickly.
“…There’s a bit of truth to all of this.”
“An Inconvenient Truth” by Daffy Duck
National Medium Duck family income: $45,000 USD pellets
National Medium house price: $375,000 USD pellets
National personal Duck savings rate: -2.65%
National Looney Toon Anthem: “How I cooked my Goose” sung in French Canadian…it’s just sounds better some how.
I still see debt ducks…some without bills!
lol
I was visiting relatives in Winnipeg last week and noticed massive stucco box developments on the edge of town, i.e., in the middle of nowhere, essentially defenseless against the absurdly frigid winds that blow across the prairie. Lots of chatter in the local papers about the red-hot market.
I spent all but about 30 minutes in Lake of the Woods, which is a beautiful spot just east of the Peg. Bumped into a crazy local, a veritable giant of a man, who lives year round at the lake (which is akin to living in the Shining hotel in the winter). The giant claimed that his tattered cabin was worth 400K. He scared me, so I didn’t argue with him. The idea that people think these cabins that are habitable (for normal people) about 3 months out of the year are worth that much speaks volumes about how vast this bubble is. Imagine having a vacation fund of 400K instead of owning the cabin.
LOL! Enjoyed that, Lionel. And, while I’ve never been to Winnipeg, everything I’ve read points to it as a place where people want to move away from, not relocate to. I’ll never forget a story I read about the Winnipeg Jets hockey team leaving. It detailed what an absolutely miserable city it could be in the winter.
Bantering Bear, every time I visit Winnipeg, I look skyward and thank my father for getting us the hell out of there.
How’s your new place BTW?
It’s funny…when people are financially stressed, they have no problem with hocking their jewelry or their car (sometimes for pennies on the dollar) just to raise some cash. However, the idea of dumping real estate for a penny less than what they think it’s worth is anathema. Some of the most stubborn sellers I have seen are the ones who own their homes outright or have a large equity buffer.
That’s why I hope this downturn gets ugly enough to make people wake up and smell the coffee about their supposed mini-empires. This Ponzi scheme has caused them to lose their common sense completely.
“Some of the most stubborn sellers I have seen are the ones who own their homes outright or have a large equity buffer.
That’s why I hope this downturn gets ugly enough to make people wake up and smell the coffee about their supposed mini-empires. This Ponzi scheme has caused them to lose their common sense completely.”
It’s easier to deny truth than to admit to having been deceived. I think it’s called pride.
that if/when it starts to crater, it will bring down the Canadian banking system.
No it won’t. All high-ratio (>80% LTV) mortgages in Canada are insured, and guaranteed directly or indirectly by CMHC, a government agency (think FHA, not Fannie/Freddie). The banks aren’t holding the bag, the taxpayers are.
Note also that BC, which is the only insanely priced (as opposed to just overpriced) part of the country, has only a bit over 10% of the population. It’s as if California were the only US super-bubble state. Also BC has no local banks (it had one which failed in a similar bust in the 80’s), and the RE exposure of Canada’s major banks is spread across the country.
Nevertheless the government will have to cover any net losses for CMHC and if it happens, expect a lot of political fallout in the East, especially Quebec. Canada’s bubble provinces in the West are the major base of support for Canada’s ruling (but with <50% of the seats) Conservative Party. One of its first actions after being elected was allowing 0% down/40 year mortgages, which has just been reversed. If you get the impression they were a deliberately fueling the bubble, so do a lot of other people.
Today’s entry in ‘Austintowers’ gives a bit more info and an artist’s rendering of the condo project in Austin that mysteriously ceased construction. (sorry no permalink)
http://www.austintowers.net/Austin_Downtown/index.php
Further down that page, there is a seriously creepy you-tube “rendering” of the Four Seasons Residences condos.
“With more onlookers than bidders, the owners of a restored Craftsman-style ‘trout lodge’ near Hamilton decided to cancel Monday’s auction of their 3,500-square-foot home.”
I wonder if the onlookers included the person who did the satirical Bitterroot Valley craigslist ads along with a few of his / her friends. IIRC, the first was selling a very tiny patch of BV land and the second was selling a yurt on a bit of BV land.
“Some builders said condominiums reflect a changing lifestyle as people no longer want to mow lawns or deal with home repairs.”
Do the condos and their appliances repair themselves or does nothing in them ever break or wear out?
SDGreg,
As a condo-dweller I can assure that our gutters clean themselves, over-grown trees threatening the structure cut, split and stack on their own and our parking lot is self-resealing!
Clearly, condos and their appliances do either repair themselves or nothing in them breaks or wears out.
Proof: the condos come in, accompanied by boutiques, spas, expensive coffee shops, high-end sports equipment as retail. At the same time, the hardware stores, lock and key places, and the like, move further out.
If that isn’t enough proof, you can look at their promotional materials. Now mostly you don’t see human beings, you see the trees that were cut down to build the condos, or you see the park (which is still going to be public even if you buy a condo), or the granite countertops. But when you do see a human being in condo promotional materials, what are they doing? Replacing their doorknob or plunging their toilet? No, they’re doing yoga.
So the builders should say, “condominiums reflect a changing lifestyle as people no longer want to mow lawns or deal with home repairs, they only want to do yoga and go to the park.”
I’m getting too bummed out. I can’t go to the park right now, but I think I’ll get up and stretch…
No, stuff breaks. It’s just that, in order to get it fixed, you agree to pay the condo fee (2 arms + 1 leg) instead of getting a handyman yourself (1 arm + 1 leg.)
“Muir said recreational real estate purchases are also feeling the pressure as potential buyers find the equity in their homes not climbing as fast as in the past.”
An implicit acknowledgment that buyers of ‘recreational’ RE typically fund their purchases by borrowing against their primary residence. That’s not going to end well when prices drop significantly on both.
Betamax,
You’re BOTH wrong!
It’s the stock market’s fault! With plummeting portfolio values buyers are feeling uneasy about their “wealth effect” and THAT’S really the problem. If only there wasn’t so much greed and corruption on Wall… Street… the market for recreational real estate would be as strong as ever!
Nah, to keep the fun going it wasn’t “You’re BOTH wrong! It’s the stock market’s fault! ” has a ring of truth. I know a Dr. who after the stock market crash (2000) lost a huge portion of his IRA, pulled out all of his money that remained and started investing around 2002 in RE SFH’s. Last I know of (2007) he had a huge amount in Sac, Medesto, etc.
So brand new banks are considered safe because thay hadn’t had time to make bad loans.
That’s sound thinking. Extends the definition to the term “legacy costs”.
From the Stating the Obvious files:
‘We’re hearing from our builders that the presold, build-to-suit homes are doing okay; it’s the spec homes that are hurting everybody,’ Varness says.”
oh. The presold homes are selling then, are they? Great.
ROTFLMAO!
And yet there are so many spec homes out there… some owned by builders… some by flippers.
Is it one or two more large bank failures until J6P wakes up? The FDIC is *botching* Indymac; its creating a bit of panic. Not much mind you… But one more large botched bank closing and we’ll be in a new investor emotional state.
Got Popcorn?
Neil
OT
is congress investigating oil speculators causing prices to crash ?
Yes, yes, here, here.
We need to enact NEW legislation to ’support’ oil prices as we ALL have an interest in keeping those up until “the market returns to normal”.
I’d like to lobby for a Tax Credit for each ‘new’ barrel of oil purchased. This helps the suppliers clear any excess inventory they may have over-paid for off their books. The ‘program’ will be called “Project Crude Hope”… but it’s not for speculators!
Nah - it’s just supply and demand. Worldwide demand for oil just happened to drop 10% in one week. Happens all the time. Our elected and appointed officials wouldn’t lie to us.
Since price reflects supply/demand, demand rose about 50% in the last year.. ok.. whatever.
I think you need to study up on something called “elasticity”, or lack thereof.
how about we try and stay within the context of the subject of the thread..
Do you think that the reversal of whatever factors caused a 50% rise in price might also be responsible for a subsequent fall in price, or not?
Potemkin Village, Ak.
“Jan Pennington retired last year after working 26 years in the real estate business, where she learned firsthand that staging can bring quicker sales and higher prices.”
“It’s a buyer’s market here right now. Housing prices have dropped only marginally, said Niel Thomas, a longtime Anchorage real estate agent, but there are plenty of houses for sale and it’s taking longer to sell them. That means it’s a stager’s market too.”
“‘This isn’t what we planned to do and no one is more disappointed than us,’ said Larry Melia. ‘Certainly, the public perception that real estate is in trouble has an effect.’”
It’s not ‘perception’ that RE is in trouble, you dumb dickweed… It is a fact!
Did you love that? Well, as my old boss at the radio station used to say, “Perception is reality”.
Bellingham is different. Once people drive through here on the way into BC for the 2010 Olympics and sit for three hour border waits (and experiencing a sampling of the seven months of 40 degree drizzle), they’ll fall in love with Bellingham and move here in droves.
…that’s what basically everyone says here in Bellingham. And considering the two largest industries in Bellingham are construction and retirees, real estate is a huge industry and everyone has some interest in it - from school teachers on a second job through the summer to the myriad r/e professionals scattered everywhere.
I am personally glad that they are building their ugly snout houses far from the downtown near where I live. Many of the locals find it acceptable to drive twenty or thirty year old cars. The newcomers are the ones driving the shiny $40,000 suv’s, even though 80% of the residents here make less than $18/hr. There are certain parts of town where you don’;t go in Bellingham - not because of crime, but becuase it is Little California with unhappy, arrogant people pushing to live the lifestyle they attempted to escape. Idiots. But I digress.
BULLETIN SOME FED OFFICIALS WANTED RATE HIKES ‘VERY SOON’
ECONOMIC REPORT
Home builders index hits another record low
Contractors don’t see any turnaround in next six months
By Rex Nutting, MarketWatch
Last update: 1:17 p.m. EDT July 16, 2008
WASHINGTON (MarketWatch) - The home builders’ sentiment index fell two points in July to record-low 16, with all three components of the survey also dropping to historic lows, the National Association of Home Builders reported Wednesday.
Last night I watched the DVD of the movie: Capote, based on five years of Truman Capote’s life when he was researching his legendary book: In Cold Blood.
The bonus features of the DVD included a report on the making of Capote.
Interestingly, it was filmed in and around Winipeg. According to the makers of the movie Winipeg was the only place in Canada that accurately reflected the architecture of 1959-64 Kansas.
So rent the movie and see Winipeg before the property bubble!
Winipeg was the only place in Canada that accurately reflected the architecture of 1959-64 Kansas.
That’s got to be the most damning indictment of Prairie architecture I’ve ever heard.