Local Market Observations!
What do you see in your housing market this weekend? Speculation? “Peter - not his real name - had his dream. Five years ago, he and his wife sold their bungalow in south-west England for £270,000. They used half of the proceeds to buy a house in Britain for their two sons, and reserved half for their palace, a house in a new development called the Albatera Golf and Country Club, 20 minutes by motorway from Alicante.”
“The Spanish developers, San Jose Inversiones, called the house design an Amapola. They handed over £82,000 as a deposit and waited for the club to be built. It never was. Today, the Albatera Golf and Country Club consists of a few show homes, a row of apartments and nothing else.”
“‘I wish I’d never bloody come,’ he says. ‘I wish I was still in England, in my bungalow, with the way of life, and the friends I had there.’”
Builder problems? “YIT Oyj, Finland’s biggest construction company, fell the most in 15 years on the Helsinki exchange second-quarter profit missed analyst estimates on a slumping housing market in the Baltic countries and at home.”
“YIT has a backlog of unsold housing units in Estonia, Latvia and Lithuania, and has not started any new housing in those countries this year. It has lowered prices on unsold properties in the Baltics, Kari Kauniskangas, the head of the international construction division, said on a Webcast.”
“Housing price increases in Finland ‘are more moderate now,’ Leinonen said. YIT has ‘exceptionally many’ Helsinki- area luxury apartments in its portfolio, he added. Price growth in Russia has also slowed since the beginning of the year and housing inflation is now ‘normal’ at 15 to 20 percent, he said.”
“St. Andrews, the large commercial/residential development planned for 330 acres in the southern part of town, has been delayed indefinitely. ‘St. Andrews is on hold temporarily and the sole reason for the delay is the bad economy,’ Joe Gaudio, a representative of the majority owner of the project, told a recent public forum. ‘The capital and credit markets are in disarray.’”
“Gaudio said the national economic scene was ‘unprecedented in my experience’ and that the impact of rising energy and food prices present ‘huge implications for doing business in the town of Hyde Park.’”
Bank problems? “First National Bank, the state’s largest locally based bank and a specialist in lower-quality mortgages, was closed by regulators Friday, a victim of problem loans and the lingering real-estate slump. Friday’s announcement ends a decadelong odyssey for First National, which rode Arizona’s economic boom to become the largest independent bank here, only to collapse even faster.”
“Bank executives didn’t see the approaching train wreck in the real-estate and credit markets. ‘I don’t see a bubble,’ said former president and CEO Gary Dorris, in mid-2005.”
“Northrim Bancorp said its second-quarter profits totaled $1.44 million, down 54 percent from the same three months of last year. The Anchorage-based banking company said profits fell due primarily to two factors: Interest received from loans fell more than interest paid on deposits. Northrim set aside more money to cover bad loans, and it wrote down $977,000 connected to foreclosed real estate.”
“‘While our housing market remains stable, we have experienced longer sales cycles in our major markets, reflecting a tighter mortgage loan market and reduced consumer confidence and uncertainty,’ said CEO Marc Langland.”
“The troubled Florida real estate market is continuing to cause major losses for in-state and out-of-state banks, earnings reports showed this week.”
“On Friday, officials at Stuart-based Seacoast Banking Corp. of Florida said they had written off more than a third of the roughly $100 million they had made in real estate loans, most of it in construction and land development.”
“Dennis Hudson III said during a conference call that the bank was gearing up for massive liquidation sales. In some cases, the value of vacant land slated for development has declined by up to 50 percent of the purchase prices paid during the peak of the real estate boom in 2004 and 2005, CEO Dennis Hudson III said.”
“Given those massive land-value declines, it’s logical that land holders might walk away from their loans, said Ken Thomas, an economist and Miami banking analyst. Thomas said he thinks housing prices won’t stabilize until the middle of 2010 and doesn’t buy more optimistic projections from groups such as the National Association of Realtors.”
“‘People don’t want bad news,’ Thomas said.”
Bubble fallout? “In the Chicago area, some communities that keep track of garage sale numbers-and not all do-report a growth in requests for permits this year, from a slight increase in the City of Chicago to spikes in Park Ridge, Streamwood and Bartlett.”
“In Bartlett, the Woodland Hills subdivision’s fourth annual garage sale last weekend was bigger than ever, a growth that organizers say may have had something to do with cash-strapped wallets.”
“‘A lot of people [are] talking about how this is a great time to do it because of the economy,’ said Ralph Binetti, organizer of the sale, which included 100 homes this year, up from the usual 65 to 75.”
“Even in communities where garage sale permits haven’t been in high demand, the slumping economy was still mentioned, especially the downturn in the housing market.”
“Bolingbrook saw garage sale permits decrease from 809 to 719 during the first six months of the year compared with the same period last year. That decline likely was tied to slumping home sales, said Jules Stanley, assistant to the village’s finance director.”
“‘Because homes aren’t selling as fast, there are fewer garage sales for people who are moving,’ he said.”
Or foreclosures? “The Chicago area had 21,488 properties in some stage of foreclosure in the second quarter of the year, or one of every 144 households, according to a report released Friday by RealtyTrac. Chicago’s foreclosure rate marks a 22 percent jump from the previous quarter and a 58.3 percent increase from the same period a year ago.”
“Foreclosures are a growing problem in Frederick County and Gray wants to limit the ripple effects. The county had 53 foreclosure filings in 2005, according to RealtyTrac. That number jumped to 100 in 2006 and 898 in 2007. From January to June 2008, RealtyTrac lists 964 Frederick County foreclosure filings.”
“The county ranked 18th in Maryland counties for foreclosures in June. Prince George’s was No. 1, according to the firm. Frederick County might step in to help alleviate the housing crisis. Next week, the Frederick County Commissioners plan to discuss a new law to prevent overgrown lawns.”
Heard some rumblings here yesterday about WAMU…any new info?
Stars End
Yeah, cover your shorts. The PTB have too many options to gamble on financials either way. They have the same problems every other bank has. Get within FDIC limits and worry about keeping your job.
UMAW?
The problems in the U.S. banking system are only starting to be exposed, and the results of the expedient decisions of Alan Greenspan and Ben Bernanke are playing out. If the banks have so much capital, as so many of their top executives claim, then why are almost none of them buying back their stock after it drops 50%, 60% or 70% YTD?
Everyone should listen to Marc Faber:
“The first thing that people should do is stop listening to the Federal Reserve in America, and specifically to Mr. Ben Bernanke.
“They are misleading the public and investors by claiming they want to have a strong dollar and that they’re concerned about inflation.
“But when it comes to actions, they show no concern about inflation and about the ordinary Americans and middle class at all.”
http://www.youtube.com/watch?v=3g7Ln2wc4Ww
It is unfortunate that lower- and middle-income people and savers are being hit the hardest as the Fed and the Treasury bail out the scammers, speculators, bankers, hedge fund types, and private equity types.
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.
5. Dont hold all your savings in USD, diversify.
6. Go take a roadtrip and see for yourself what a clustermess we’ve gotten ourselves into, with a fresher perspective than news thats 6 months old news.
7. Understand that both your job and career are likely to be ever more transitory, no matter your vocation or profession. Expect to be up-ended frequently and plan accordingly.
Traveling around is fun. Orignally Californian, now from Arizona and I met some nice Maryland people here. It’s good to see how people are like on the other side of this 3,000 mile raft.
8. Buy an SIG P226, a learn how to use it, just to be sure.
That’s right. There is no law against serving as your own hedge fund manager if you don’t have enough dough to pay someone else to do it for you. Besides that, your incentives are properly aligned if you are playing for yourself.
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
If I had to live in an RV, the true great depression would be every time I opened my eyes in the morning.
Fore!(closure)
“The Spanish developers, San Jose Inversiones, called the house design an Amapola. They handed over £82,000 as a deposit and waited for the club to be built. It never was. Today, the Albatera Golf and Country Club consists of a few show homes, a row of apartments and nothing else.”
“‘I wish I’d never bloody come,’ he says. ‘I wish I was still in England, in my bungalow, with the way of life, and the friends I had there.’”
It’s been a month since the landlord dropped the price on property from $625,000 to $429,000. This is for a 2 bedroom one bath, and 3 bedroom two bath on one lot. The houses have not been shown, ever. This property is 40 miles north of Fresno. The cost of gasoline is also a problem for commuting because local teachers are complaining about school population declining as folks move closer to Fresno.
Sounds like Coarsegold/Oakhurst, huh? I remember living there in the early 1990s bust. Co-workers were picking up houses for $100,000 to $150,000 around there… if they were willing to buy at all. Everyone knew of friends in SoCal or the Bay that were stuck with houses that could not be sold. You needed some faith to be a buyer then.
I lived between Oakhurst and Bass Lake as a kid when Goldwater was running for President. Good old days. It was the center of the universe, for all I knew!
Oakhurst is what happens when a cool Sierra foothills town gets run over by the man, and more closely resembles any street America, as per the corp’ses wishes.
My father first rode horseback into that area at age 16. This is probably when Bass Lake was just Crane Valley. He returned to Ohio and later served in the Army Air Corps. Got out, got a bride in Ohio, and moved back to the Oakhurst area. He knew what he liked.
I understand how it has gone commercial. Even in the 60s it was sad to see hillsides leveled for a hardware store or something else.
However my parents loved the area so much that they set up a burial plot for the family there.
Another reason I never want to leave the USA. I’m an atheist, but I’m spiritual in Oakhurst.
I went to a trustee auction yesterday at the courthouse, and thought I’d share what happened.
There were no bidders; just me and another guy observing. There were three houses and two pieces of land. One house postponed, one parcel postponed. One parcel in Sedona was “auctioned” and went back to the bank for $403k. (The beneficiary was the only “bidder”, by default and not present).
Then the trustee rep says she doesn’t know when the two houses would be auctioned. It was scheduled for 11:30 but she was waiting on a call and it could be 10 minutes or an hour. It was clear she didn’t want me to stick around. I’m not sure why. I waited til noon and split.
This is what is interesting; the properties on foreclosure.com didn’t match up exactly with what she had to auction that day. So I asked if these had been postponed previously. She replied of course. The timing of these postponed sales isn’t easily found out.
And the other guy was there to learn about another house west of town, which he said was scheduled in the papers filed in the front of the courthouse. The trustee didn’t have any knowledge of that.
Basically, there was no way an investor could have known what 3 out of 5 properties were to be auctioned that day. And what is the likelihood that somebody is going to walk by, notice a sale and drop a check for the deposit?
This isn’t working. No one seems to be making any effort to put buyers and sellers in a position to get together, and all agree the number of foreclosures and NODs are just piling up. I expect this is due to the system being overloaded nationally, but it is a train wreck coming, nonetheless.
It’s an interesting anecdote.
I don’t know if its just widespread bureaucratic incompetence or some sort of effort to minimize foreclosure sales until after the election, bailout bill passage, or whatever, but it sure seems to me like there’s a growing inventory of pre-foreclosure homes in limbo. Here in Sacramento, a friend-of-friends has been in default for over 6 months now and has yet to enter foreclosure. My sense is that rather than wait 4-6 months, banks are holding off 8+ months before STARTING the foreclosure process.
What Sacramento has seen so far is only a preview, IMHO. If the state government is serious about a prolonged hiring freeze plus layoffs for nonessential staff (and they should be!), our regional economy is headed for one helluva downturn. Without construction, real estate, or state government, there is no engine for job growth. Home prices are already down ~30% from Aug-05 peak. An additional 50-75% decline is possible if the region really enters into an economic funk which seems more like an inevitability at this point. That translates to a total decline of 65-78% from the Aug-05 peak! And a real recovery isn’t likely to start until 2012-15.
Back in 2005, I was thinking that 30-50% with a turnaround in 2010 was likely. Everyday, I thank god we didn’t buy.
“Back in 2005, I was thinking that 30-50% with a turnaround in 2010 was likely. Everyday, I thank god we didn’t buy.”
Do you still think a turnaround is likely in 2010? I don’t.
Look at the last sentence of the preceding paragraph.
sorry - my add acting up again.
” My sense is that rather than wait 4-6 months, banks are holding off 8+ months before STARTING the foreclosure process.”
Seems to me that the prudent thing to do to help the Bureaucracy in Washington through this housing mess is to put out the info that all homeowners who can’t afford their homes to stop making payments and save as much money as they can before eviction. Don’t buy things they don’t need and get their cars paid off before they loose their job. Maybe then Congress will get the message.
Congress is still stuck in that ’symbolism over substance’ mode. Throw a few crumbs to the tax payer right before election while keeping their fingers and toes crossed hoping for a turnaround or a Fed engineered soft stair-stepped landing.
Ben,
What you encountered was chicken bailing wire wrapped denial, cloaked in subterfuge with the hope that nobody like you notices that yes, something is very wrong in the state of Denmark. (or Az. or Ca. or Fla. or?)
Humpty Dumpty is going down…
Ben - that is really interesting, a harbinger. It is all happening virtually exactly as predicted here, but it is a strange feeling to see it so. Roughly like the hypothetical comet that is coming at us. We can see it coming, we can wish it away, but in the end all we can do is fasten our seatbelts and hope our straw is sufficiently anchored to our really-strong margarita. My personal musical reminder is Sammy Kershaw’s “Wild Ride.”
I didn’t see the train coming, she said flatly.
LOL. Can I steal that line?
“This isn’t working. No one seems to be making any effort to put buyers and sellers in a position to get together, and all agree the number of foreclosures and NODs are just piling up.”
The scam / obfuscation model of sales is a pretty stupid approach for a market with a glut of unsold vacant properties gradually decaying into desuetude. These scam sellers should read Akerlof’s Lemons Market paper to gain insight about why they are so unsuccessful in unloading properties under current market conditions.
It would make far more sense for sellers to be as transparent as possible in disseminating information about properties for sale, and to keep prospective buyers well informed in the process. The fact that almost nobody is showing up is a good sign that almost nobody believes the present sales process will produce a market-clearing price — i.e., a price that prospective buyers are willing and able to pay.
ATLANTA:
A subcontractor I know says there will not be any builders left next year. One of his good friends, who is a builder, will spend an estimated $6 million in carrying costs for standing inventory this year.
Taylor Construction, one of the largest home exterior remodeling companies, that had been in business since 1969, appears to have gone out of business. Their web site is still up, but their office building is deserted & has a “space available” sign out front.
So a lot of these builders still think the bottom (and upturn) is just around the corner. Believing that, many of them will want to keep holding on (providing for financing).
One wonders how far they will deplete their companies before realizing the end isn’t in sight.
Kid Clu - thanks for that. My vulture territory is exurban Atlanta. While I wish no one ill, including builders, it is very useful for me to know what is going on at street level.
I am off to the wilds of the oil fields very shortly, so will have to catch these anecdotes on the fly.
“Frederick County (Maryland) might step in to help alleviate the housing crisis. Next week, the Frederick County Commissioners plan to discuss a new law to prevent overgrown lawns.”
You just can’t make this stuff up!
Better get the Grass Swat team out there on the double, caveat die chondra…
“Frederick County (Maryland) might step in to help alleviate the housing crisis. Next week, the Frederick County Commissioners plan to discuss a new law to prevent overgrown lawns.”
I don’t get it. How does overgrown-lawn-prevention equate to “alleviat[ing] the housing crisis”?
Unless they plan on building grass huts from the cuttings?
Simple solutions…instead of giving 50K visas each year via “lottery”, open program to issue those visas to individuals/families with good standing and willing to put down $300K+ on foreclosed properties…who needs more labour force anyway?
Mendocino Report: Million dollar foreclosures and “REDUCED” prices like 6.8 million for a 5 acre 5 bed 6 bath in Mendocino.
Has M. now turned into the next Carmel, or is it still hoping to reach that glory?
I’m in Saskatchewan, Canada. House prices here are no longer going up, but holding steady. Apparently the prices are now high enough that buyers are no longer bidding up the prices, and sellers are even beginning to lower their prices slightly to make a sale. One bungalow on my block sold awhile back for something like $300,000, and a two-story home (1700 sq ft, 5 bedrooms, 4 baths, backing onto a park) is up for sale at close to $400,000. If I were feeling generous, I might say it’d be worth $275,000.
On the other hand, home construction is still booming, as the builders are catching up on their backlog of orders. There are also a couple of condo projects being built nearby. One of them is being built on a lot which had been vacant for years and was originally zoned for commercial use, and the other is being built (or converted? can’t recall) by an infrequently-used railroad track.
I was in Calgary a couple weeks ago, and on one stretch of street (roughly two blocks long) there were five or six homes for sale. And this was in an established neighbourhood. Calgary is already feeling the pain, while the decline is just barely starting in Saskatchewan.
On Friday I found the following ad in USA Today;
Auction
Park City, Utah
Previously listed for $2,875,000
Bidding starts at $900,000
August 26
6,636 sq ft 8 bedrooms and 9.5 bathrooms
1.5 blocks to ski lift
What do you think it costs to heat a 6600sqft house in Park City, UT in the winter?
Also, I never understood the whole bathroom > bedroom thing for a single family home. Seems to me like there can be no real justification. If people can share a bedroom, they should be able to share a bathroom. Wouldn’t it just be cheaper (and healthier) to increase everyone’s fiber intake than to provide >1 per capita bathroom?
I’d guess $1300 per month minimum heating bill in the dead of winter.
Ha !! So far, most ‘investors’ seem still happy to ‘vacationrent’ themselves into a big hole.
Here I am in Northern Virginia. We have the “it’s different here” problem too, with government employees and contractors never willing to consider that employment opportunities will dry up.
The suburbs and exurbs that cater to the lower-level service sector of the economy are falling hard. Herndon and some parts of Loudon have recently become immigrant haven for the roofers, office and home cleaning crews, day laborers — they are leading the league in foreclosures.
But most of the communities where the military-industrial complex people live are still at wishing prices, down 15-20% from peak, but nothing, nothing is selling. There are houses down the street in Reston that have been for sale since 2005 that are still listed, still have the sign out front. Nobody is going to pay 800k for your 3-br split-level, no matter how close it is to the toll road.
I think the DC Metro area will be one of the last holdouts, especially as either new candidate is going to create a lot of government jobs to save us all.
A former girlfriend of mine from high school just bought a house in Arlington. She’s 6 months pregnant and hubby’s a government contractor. I didn’t say anything (we just found each other on Facebook, after not talking for ~12 years), but I’m pretty sure that it’s not going to end well.
Since Nova is the anomaly in this whole mess at the moment, how do you think rent is going to be affected? Rent has been soaring here in the last few years. My rent went up $220 in 3 years. I know prices far out are declining - Herndon especially. But all seems quiet here in metro d.c.
And you know the gov’t contract juggernaut is going to end soon. Right? Right???
Just returned from a 5-day visit to Newport, OR on the Pacific Coast. It sure is pretty…when the sun is shinning. Lots of weathered FOR SALE signs. The dull box-like beach-front condos built during the past few years stand empty…waiting for the Cascadia tsunami. However, the nice hotels were packed solid, and the local buffet restaurants were very busy. Last year we spent about $260/day for food, lodging, etc.; it was $320/day this year, which likely reflects the higher cost of energy. However, the Best Western Agate Beach hotel kept their indoor swimming pool well heated, and I let them know at check-out that their pool is what keeps us coming back every year.
From Atlantic City, NJ:
1. Got it wrong last weekend about The Donald’s latest promotion for his AC casinos. Should have been: 3d Prize- Pay your mortgage for six months; 2d Prize- Pay your mortgage for one year; 1st Prize- Pay your mortgage for life.
2. On my drive to Pakland Minimart in city adjoining AC, saw at least six For Sale signs sporting “REDUCED” or “NEW PRICE” additions to the signs. They weren’t there two weeks ago; guess the “Spring Bounce” done bombed.
3. Spent part of last Sunday with a retired doctor who, within last six years, bought and sold a condo somewhere in Fla. and now is renting a condo on the boardwalk in AC. At one point, he actually said they were “giving away” condos in Fla.; he also let loose with a loud, “Hoo, hooooo– NO!” when I asked if he were thinking about buying the condo he currently is renting. I think members of the public are starting to “get it.” Have a nice weekend.
We live in Coconino County in Arizona (largest county in AZ, second largest in the U.S.). I’m v-e-r-y concerned that the local stasi, i.e. the county bureaucrats, with fewer new homes, septic systems, etc. to inspect will turn to the rest of us and start inspecting septic systems, looking for unpermitted structures, etc. with the goal of raising revenue through fines.
I’ve already heard a few horror stories from one of the local septic system servicers about homes getting red-tagged (pulling occupancy permit) and levied huge fines for septic systmes that don’t pass muster. It’s not like the Coconino County beauracrats haven’t already done their best to Californicate this part of AZ with their “slow growth” policies and over-regulating septic requirements.
Time will tell, but they seem to be gunning for the rural get-away-from-it-all crowd.
As far as the local RE market goes (from scanning my old Flagstaff `hood in the MLS) it looks like most sellers are still trying not to blink.
Just heard a positive for the N Ohio flyover economy; medical firm is moving its headquarters and mfg here from Bend, Oregon. What’s happening in Bend that requires this drastic action??
“What’s happening in Bend that requires this drastic action??”
Socialism, Oregon style.
Lots of SFHs for sale in Tucson below $200,000. Today on realtWhore.com I saw an existing home for sale for $119,000 in my former zip code. 1600 square foot. Costco, HD, Hooters, a shopping mall, LA Fitness in the general area.
I’d like to go back to work at Raytheon some day. Could take an express bus to the plant site and leave the car at home. Done that before years ago.
Yep, prices are headed in the right direction but I don’t see enough blood in the streets yet.
“Yep, prices are headed in the right direction but I don’t see enough blood in the streets yet.”
Still just a nose bleed in SLO, but they’ll bleed-out too given enough time. I need a SFH for my two children to live while going to CalPoly; eventually I can retire in it if things go right.
These things:
http://lasvegas.craigslist.org/apa/772211692.html
actually, they look all empty, from the monorail.
Second observation:
Malls: how many of their retail stores (all over the country) sell teenager bling stuff???
Third: Las Vegas is very busy !! (Airport, car rental, hotels, pools, etc). Yet: new retail development out in the nowhere looks like it’s just stopped dead. No wonder: the retail spaces nearby offer nothing but high end bling - are also dead.
My mind computes: there is a competition for the global luxury market: who gets the sale first. The Arabs now go to Asia for Dior and Gucci - not to NYC anymore. Dior and Gucci don’t care.