The Punch Bowl Was Left Out Too Long In Florida
The Pensacola News Journal reports from Florida. “Like the Pensacola Bay Area housing market itself, Randy Phillips and his wife Heather Hood have found themselves with too many homes and not enough buyers. They have a house in North Hill they can’t sell, a mortgage to pay on their home in East Hill, and another mortgage on their former home in Orange Beach, Ala.”
“‘We hate to do it, but we’re now thinking about putting the house in East Hill on the market,’ Randy Phillips said. ‘But, quite honestly, I don’t have the confidence we can sell it for anything close to what we have in it. We’re really caught.’”
“They purchased their North Hill home in 2004, just before Hurricane Ivan hit. ‘The storm took the roof off, and we never spent a night in it,’ Phillips said.”
“But they did spend a year and $50,000 repairing it, only to decide it was too small for them. They then bought their current home in East Hill, and in mid-2006 put their North Hill home on the market for $259,000, thinking it would sell quickly.”
“‘As soon as we bought the house in East Hill, the market turned,’ Phillips said.”
“With so many houses for sale, Phillips and Hood turned to the rental market for relief. They managed to attract someone looking for an 18-month lease, but the deal fell through, and they were forced to put the house back on the market.”
“Several subsequent price cuts have pushed the asking price down to $199,999, more than $15,000 below what they paid for the house in 2004. Burdened with three mortgages, Randy Phillips says something has got to give.”
“Bill and Teresa Preston have had their 5,600-square-foot home near Bayview Park on the market for the past two years, with an original asking price of $895,000. While Bill Preston acknowledges that the original price may have been set too high, it has since been dropped to $689,500.
“A few perspective buyers have looked at the house, but so far, no takers.”
“‘I guess I’m luckier than most because I’m not desperate to sell,’ said Preston. ‘I think it’s reasonably priced now, but I also think if I cut it to $500,000 somebody would snap it up.’”
“The developer of a 412-acre Lost Key resort in Perdido Key filed for Chapter 11 bankruptcy Monday. Carl Icahn, chairman of WCI Communities, said the filing was necessary because the Bonita Springs-based developer’s entire $1.8 billion debt soon may be in default.”
“‘I don’t know exactly what the bankruptcy filing means for WCI’s future,’ said Perdido Key Realtor Brenda Beumer. ‘But if they go and sell off properties piecemeal, it would be a killer for Perdido Key.’”
The Miami Herald. “WCI’s Miami-Dade County developments include One Bal Harbour and Miami Beach’s Mosaic, luxury condos priced from $1.1 million and $2.5 million, respectively, its website shows. In Broward, it’s building homes in the Parkland Golf and Country Club and Heron Bay in Coral Springs.”
“In a sign of just how challenging the real estate business has been for WCI, it reported 84 new condo orders but 174 cancellations or defaults in the second quarter. A hundred of the defaults happened at one project, Pompano Beach’s The Plaza at Oceanside condominium, the company disclosed last week.”
”’When you get more new cancellations than new sales it’s damn near impossible to continue functioning,’ said Jack McCabe, a Deerfield Beach real estate analyst.”
The News Journal. “Locally, WCI built five condo towers and a carriage home complex in the Hammock Dunes community of Flagler County. It still owns more than 40 units in Casa Bella, Tuscany and Le Jardin towers. WCI also owns a vacant oceanfront lot at 1751 S. Atlantic Ave. in Daytona Beach. The company paid $23 million for the .66 of an acre in January 2006.”
The Palm Beach Post. “Talk about fire sales. Laramar Group of Chicago in July paid about $32 million for the 160-unit Oceanview Apartments in Boca Raton. The previous sale, in 2006, was for nearly twice as much. NRW Development of Miami paid $56.2 million for the apartment complex and planned to convert the 40-year-old building into pricey condos.”
“‘It certainly was discounted,’ said Laramar VP Ron Roan. ‘But the prices people were paying in ‘05 and ‘06 were for condo conversions. Unfortunately, a lot of prices people paid then really don’t have any meaning in today’s market.’”
“Laramar will run the property as apartments, and it plans renovations that include washers and dryers in each unit, granite counters in kitchens and new floors. Rents will range from $1,500 to $3,000 a month.”
The News Press. “July was another month of record foreclosures in Lee County and very little new construction of single-family homes. ‘Foreclosures are doing what they’re doing, but the good news is that people are buying foreclosures, so at least there is a demand for these,’ said Jeff Tumbarello, director of the Southwest Florida Real Estate Investors Association, which tracks foreclosures.”
“‘For every two deeds they take back, they’ve been selling one,’ Tumbarello said.”
“The gluttony of existing and foreclosed homes on the market isn’t doing the construction industry any favors. ‘Foreclosures are being sold at prices new homes can’t compete,’ said Jamie Pirrello, CEO of Cape-based Vision Homes USA.”
“In Fort Myers Beach, there were no permits issued this month. None last month either and two in July 2007.”
“Realtor Denise Fulton can see Cape Coral’s foreclosure crisis from her front yard. Standing outside her home on Southeast 8th Place, she can point to four abandoned homes rapidly falling into disrepair.”
“‘People are moving on or moving out of the area,’ Fulton said. ‘And they leave these eyesores for those of us who live here.’”
“The owner of the house on Southwest 17th Terrace had walked away but the bank had not yet taken ownership of the property.”
“‘The problem with the foreclosures is the interim period,’ said Tommy Lee, president of the Cape Coral Association of Realtors. ‘It’s definitely taking longer because of the overwhelming amount.’”
The St Petersburg Times. “As the minibus swings into the driveway, Janet Kenyon takes one look at the new three-bedroom, two-bath house and lets out a shriek. ‘”Oh, my God. I hate yellow!’”
“Kenyon and husband Blu head inside to a pleasant surprise. ‘Aw, this is nice,’ she coos, stroking the faux granite countertops. Best of all, the price: $103,000.”
“Three years ago, a house like this might have gone for $250,000 as investors swooped into Cape Coral and transformed the sleepy waterfront city into one of the country’s hottest real estate markets. Then demand dried up, and by February, the Cape Coral-Fort Myers area had a new distinction: No. 1 in the nation in foreclosures.”
“With nearly 11,000 homes in foreclosure - 1 in every 31 households - it could be two years before all the distressed properties find buyers.”
“Cheaper housing prices than those in the Tampa Bay area or South Florida, attracted hordes of speculators. ‘It was a feeding frenzy,’ recalls Suzanne Sherer, an agent in Cape Coral. ‘People were flipping properties right and left. You’d see some homes in bidding wars the minute the sign went up. Prices didn’t make sense anymore.’”
“Blu Kenyon likes Cape Coral’s proximity to Interstate 75 and Southwest Florida International Airport. But the couple decided not to buy one house in Cape Coral. Instead, they decided to buy three. Among them: an 1,800-square-foot home built two years ago for $314,500. Today’s price: $99,000.”
The Herald Tribune. “An abandoned, boarded-up home that sits among the well-manicured properties in the Lakewood Ranch Country Club is a symbol of one way in which the growing foreclosure crisis is marring some neighborhoods.”
“The Presidio Glen home was owned by Preston and SaraLynne Slater, who own another Country Club home in the 7400 block of Riviera Cove. The Slaters, who were reportedly living in the Presidio Glen home at the time of the fire, could not be reached for comment. The phone at their Riviera Cove property has been disconnected.”
“Manatee Building Department Director John Barnott said he learned about the unsafe conditions at the home two weeks ago and then began trying to contact the mortgage firm. ‘They are a hard bunch to get ahold of,’ he said.”
“The problem is particularly acute in the Sarasota-Bradenton market where an average of about 2,000 houses a month have gone into foreclosure since the spring.”
“Manatee County officials gave the company until last Friday to say how it plans to correct the problems at the residence. It was unclear if the company had responded by the end of the day Friday.”
“‘They are either going to repair it so it can be lived in or they are going to tear it down,’ Barnott said. ‘They have to make that property safe, and if they won’t, then I will.’”
“Thanks to speculative home buying during the boom and the exodus of construction workers during the bust, the market for rental properties in Southwest Florida is still way out of whack.”
“Stressed by increasingly heavy tax and insurance bills and the inability to generate rents to cover these costs, some landlords are now walking away from their properties. At the same time, people who paid more for housing than they could afford during the boom are defaulting on their loans and joining the ranks of renters.”
“Jill Lyons, a rental specialist in Sarasota, said homeowners who might have been shelling out as much as $2,300 a month in mortgage payments feel extreme relief after moving into rental property where the rent is only $1,200 a month.”
“Scott Corbridge, president of Sarasota Management & Leasing, said the supply of homes available to rent has grown this year as investors have given up on trying to sell their properties and are looking for temporary relief by renting them. The result is that the additional supply is weighing on rents.”
“‘What used to rent for $1,000 is now $800,’ Corbridge said. ‘What used to rent for $850 is now in the low $700s.’”
“The decline in apartment occupancy and rents is a direct result of the collapse of the housing industry in Florida, and landlords who provide housing at the lowest end of the market have been hit the hardest.”
“‘I’ve got a place in Englewood, a working-class duplex, and I’m not getting any calls at $650,’ said Al Holmes, president of the Sarasota Landlords Association. ‘The jobs just aren’t here.’”
“The developer behind the new Donald Trump hotel in Fort Lauderdale faces allegations it violated securities laws by marketing the condo-hotel as an investment. John Taglieri, a Massachusetts restaurateur under contract to purchase a $730,000 unit there, filed suit Monday against the luxury hotel slated to open next year as one of the priciest in Fort Lauderdale.”
“‘There’s a real emphasis on the investment potential,’ said Jared Beck, the condominium lawyer representing Taglieri. ‘This was purchased on the [developer's] representation that it was going to be a great investment.’”
“Dante Alexander, president of the National Association of Condo Hotel Owners, estimates there are more than two dozen condo-hotel lawsuits under way across the country.”
“‘It all started with the change in the residential housing market,’ he said. ‘The majority of these buyers bought them with the intention of making money on them. The appreciation factor is gone — at least for the short-term.’”
The Daily Business Review. “U.S. District Judge Patricia Seitz in Miami dismissed 29 lawsuits Friday against Opera Tower near downtown Miami, stating the contract was explicit about what buyers were getting, no matter what a slick advertisement promised.”
“The brochure showed a 56-story elliptical-shaped building on the water with a nearby marina. The illustration omitted surrounding high-rise buildings. The one- and two-bedroom units were priced from $200,000 to $800,000.”
“Developer Tibor Hollo said the lawsuits filed against Opera Tower are from ‘flippers’ upset with the turn in the housing market. ‘When they couldn’t make the extra money, they didn’t want to close, and they sued for their deposit,’ he said. ‘It’s human nature.’”
The Bradenton Herald. “Much of the time, Miami native Kenneth H. Thomas, a nationally known banking expert, is traveling, often to Philadelphia to lecture at The Wharton School of the University of Pennsylvania, where he got his doctorate in finance. In a recent interview, Thomas weighed in on the state of the banking industry and the economy.”
“Q: When will the housing market begin to turn around? A: I don’t think the market will improve in terms of normal price appreciation until perhaps two or three years, which could be the end of 2010, maybe 2011.”
“Q: Who is to blame for the current banking woes?”
“A: When we do the postmortem in a few years, the way we did with the S&L crisis, I’m certain we’ll conclude that there were many factors. In my belief, chief among them will be the fact that former Fed Chairman Alan Greenspan kept rates too low for too long. And it may very well be he was inordinately influenced by the White House — based on my analysis of his very frequent visits there. But we don’t really know that. But I would say the fact is the punch bowl was left out too long.”
“The gluttony of existing and foreclosed homes on the market isn’t doing the construction industry any favors.”
The gluttony?
Guttony: Noun
1 : excess in eating or drinking 2 : greedy or excessive indulgence
I think the moronic reporter meant GLUT. Are there no editors anymore?
“Are there no editors anymore?”
Who nds ed8rs or tchrs wn u hv the Internet lol?
Agreed, it is… pushing the bounds of acceptable usage of the language, but we’re in uncharted territory here and when you re-read it, it sort of makes sense?
( Also VERY encouraging to see they are rolling out the old Schlitz label if only in the mid-west initially! ) With all the nostalgic demand it just might save the economy.
The bigger question is whether U-Mass@Amherst starts up their annual spring “Schlitz-o-rama” beer fest again?
Then there’s this one.
“A few perspective buyers have looked at the house, but so far, no takers.”
I think the writer meant “prospective.”
Actually, I don’t think newspapers have editors any more. If the reporter gets it wrong, that’s they way it’s printed.
A dear old friend was once a newspaper editor. She found the factual and grammatical errors in our local papers to be so annoying that she called them to offer her services. As a volunteer, no less.
They didn’t take her up on her offer. And, nowadays, the errors are even worse.
I’ve had cases where, even though I’ve sent the newspaper my own copy, via a computer file, they still managed to screw it up, because they can’t leave well enough alone, and think it’s their God-given duty to edit the piece.
No, perspective is right. There are NO prospective buyers, but plenty of people sitting on the sidelines laughing at Bill Prestons wishing price, waiting for his demise. Every once in a while they’ll look at the place, but from their perspective, it’s not even worthy of an offer. These are the “perspective” buyers.
McClatchy outsourced them to India.
If the editing had been outsourced to India, I am sure these mistakes would have been corrected. We are well instructed - by nuns - in the correct use of “English” language.
Naw…Gluttony is the better word.
These homes are excessively eating their owners alive.
Real writers and editors were dumped years ago, in favor of pretend, wannabe writers. For example, one former high-tech writer and editor I know is now training in medical lab technology. Btw, that would be me.
Lot of editors have been outsourced to India.
(Though I remember at my college paper many moons ago calling a small vote turnout a “punitive” number, rather than a puny one.)
This author likely a new grad.
It is a sad state of affairs, agreed.
FWIW.
“In my belief, chief among them will be the fact that former Fed Chairman Alan Greenspan kept rates too low for too long.”
I love how there’s no mention of toxic lending here. If conventional standards had remained in place (fully documented income, down payments, cash reserves, buy at no more than 3x gross income), prices never would have escalated the way they did, even with interest rates as low as they were.
Lisa,
Absolutely agreed. Not to let AG off the hook in any way but had trad. standards remained in place not only would a lot of people not qualified for a home you wouldn’t have had the relentless “FICO Leveraging” that allowed for multiple home purchases.
It would also have greatly dampened the “phantom demand” where people that b-a-r-e-l-y qualified for (1) mortgage were buying their “new home” before even getting a genuine offer ( from a, ahem qualified buyer ) on their “old home”. That alone I estimate could have eliminated a solid 30% of the problem.
And don’t forget to not leave out Wall Street and their bogus ratings on CDO’s and MBS’s .When Wall Street changed their models for risks ,which wasn’t justified ,it set up a can of worms of easy money ,while the loan investors eventually got a high % of bogus loan paper from the bottom filtered up with no check and balances .Some people would say that it’s fraudulent to past bad loan paper to the secondary market ,but fat chance the originators felt obligated to underwrite loans when they could pass them on and get AAA ratings or low risk ratings .
they couldn’t qualify for a furniture loan or a payday loan let alone a House Loan.
There is a legitimate argument for Kenneth Thomas’s point.
Toxic lending has been around for years, for well-qualified (i.e. cash collateral) buyers only. Even the Wall Street gluttons were afraid to unleash I/Os and neg-ams on the general public.
It was the initial 1% interest rates that started the “housing always goes up” meme, which began the rest of the nonsense.
By “housing always goes up,” I mean “housing always goes up faster than historical norm,” that is, housing went up like a stock while appearing* to have the safety of a mortgage. It was only then that housing performed well enough to justify unleashing the no-down toxic loans on the public, and the rest is history. The toxic loans were the powder, always dry and waiting. It was the 1% “housing goes up” that was the spark.
—–
*Mortgages had been safe because of the original filters of income and down payment. Even when greedily they removed those filters, they thought they were safe, because, you know, “it was a mortgage, and mortgages are safe.” It’s like telling people an airplane is safe, taking off the wings, and then saying again that it’s safe, because “it’s a plane.” IDIOTS.
oxide,
Excellent comments. In many cases I’m sure real estate vastly outperformed stocks and what with the additional ’safety net’ of mortgage underwriting in place… what wasn’t to like?
Given that backdrop no wonder the $’s came cascading in. You are cleared for Take Off!
?? are foreclosures sales picking up in your area ??
they are here in N Va
yeah but the Banks in NoVa ain’t takn’ any lowball offers - as of yet
I think I’ll start throwing some more low balls as the cold winter winds blow & the Alt-A’s start to really kick in with even MORE foreclosures….
We’ll then see how “everything always holds up in D.C.” looks then
From the far Washington Suburb of Jefferson County, W VA - Rumor has it that 2 of the 3 homes for sale in our development (42 houses) are under contract to close mid August. Both of these are, at this point, corporate owned (occupants moved with company).
I am very curious as to what the sale price will be (if the sales actually go through). One was listed at 399,900 and the other at $417,000. I am suspecting the sales price will be south of $380,000.
These prices are down 35% from the peak.
I will provide more details when/if they close.
I think the price would be around 350K. But, this winter similar houses will be listed as 350K and would close between 300-320K. If someone waits for just a few months, deals are coming. Banks are playing their game again by not accepting decent offers from buyers. They are shooting themselves in the foot, as if the inventory builds up(which it will), they won’t even get their salary and would be out of their jobs.
Maybe the banks are already cooking some new bubble and it is in the making.
Near the Arizona Slim Ranch, I’m seeing a house with a “for sale/foreclosure” sign out front. Right next to that sign is another one that proclaims that the house is for rent.
Tucson: house in our development was up for short sale 2 months ago, got multiple offers at 275, but the bank didn’t respond. Foreclosed, then came back as an REO at 242, sold immediately. Previous sale in 2005 at around 360. So the bank’s non-response cost it 33K. Meanwhile a much smaller house (but otherwise almost the same) across the street from the REO has been on forever at 310. There’s really no point in looking at anything other than REOs around here, private owners/investors/flippers are still delusional, usually around 100K overpriced in this range.
Here’s another one (same development): REO lists at 215, sells right away. The house *right next door, identical* but crappier location (view blocked by the REO), is sitting on the market at 350.
Well, I went to the courthouse in Palm Beach yesterday.
In the foreclosure sale most (maybe all but 3 of something like 50) went back to the bank/mortgage company.
One investor did buy 3 properties.
It was definitely NOT a fire sale.
My observation is that Countrywide is finally putting prices on their REOs in central calif. Sales? Not much help there. Was astonishing that they had so many properties on the MLS even with no asking prices. The asking/wishing prices are coming in close to 8-week-old comps. What a “comp” means in this market is open to question. It looks like the higher-end houses will be harder to move, no surprise, at current levels.
have any of these suits been settled ??
There’s a real emphasis on the investment potential,’ said Jared Beck, the condominium lawyer representing Taglieri. ‘This was purchased on the [developer's] representation that it was going to be a great investment.’”
“former Fed Chairman Alan Greenspan kept rates too low for too long. And it may very well be he was inordinately influenced by the White House — based on my analysis of his very frequent visits there. But we don’t really know that.”
I am finally starting to appreciate all the people who argue that we should just abolish the Fed altogether: Politics plays too much of a role in both long and short term monetary policy.
However, no large economy exists that isn’t managed by a central bank…and the Fed got all of its present powers because of the “free market” unregulated conditions that led to the Great Depression.
Maybe we just need to openly admit that it is political and have the Fed chairman and governors run for office…or free them from politics as much as possible by appointing them for life like the Supreme Court.
The lead up to the Great Depression was a result of the exact same policies from the Fed through the 1920’s. Interestingly, the overheated Florida real-estate market started collapsing in 1926, three years before the crash of 1929 in the stock market. Seem familiar?
Fed governors are appointed to 14yr terms. That’s pretty much a lifetime appointment considering the average age of someone whose accumulated the education and experience typical for the position.
I don’t know how you can exorcise politics out of the Fed, other than perhaps just turn the thing over to the computer (only half kidding).
I wonder if a computer could figure out the best course of action to take regarding the economy . The computer could be programmed
with all history ,all economical cycles and tax obligations and possible taxing ,all current data ,all data on human nature ,politics ,oil availability ,you name it .The computer program could be programmed to project out into the future what would happen with various courses of action ,given current data and probable future trends . The program could be programmed not to consider any class
to arrive at the best choices and what those choices would entail .
HW,
Something…. ’similar’ would be a Monte Carlo Projection. I think for you though the flaw would be that you have to take a starting point. X amount in bonds, X amount in prec. metals etc. Then it runs your portfolio like a thousand times and produces a conclusion as to how likely you are to get the intended results.
The broader point being, and I think this is an idea gaining traction everyday is that there is such a thing as “lifestyle sacrifices”. Mind you no FB need concern themselves with that but some here ’should’ be? With as much as posters here have in money markets, cd’s, cash etc. many of us probably ARE over saving.
We’re ( possibly ) being overly bearish and putting too much pressure on ourselves and our current incomes when a MCP would show that without the p-o-t-e-n-t-i-a-l upside equity markets can provide we are forced to make larger payroll/savings contributions than we normally might. JUST an observation!
A very sophisticated agent-based model would probably be most effective for predicting outcomes. The Fed already uses them for some of their forecasting with mixed results, IIRC.
Nosingleone-
You need to check your history and facts. There were a couple of central banks that failed with bubble busts before the “fed,” as we know it today, emerged through a slimy deal in the late night when most of the house was home for Christmas. The “Roaring Twenties” was the pump, the depression was the dump.
“But the couple decided not to buy one house in Cape Coral. Instead, they decided to buy three.”
To the idiotmobile!
LMAO
They did describe it as a “mini bus.” I think it’s the same thing as the short bus.
Three more foreclosures down the line.
Unless cash, or high down, rents (if they can get) won’t cover costs.
“you know,..it’s so low now, it can’t go anywhere but up” RIGHT LOL..
Citibank Puts Indian HQ on Sale, Stanchart to Follow
The tarpaulin has collapsed over their heads in the US, that they are now trying to sell their offices in Mumbai and send money back home.
Foreign banks have put their offices on the Mumbai real estate market as a serious downturn awaits the home mortgage business in the US. The option-ARMs (home loans that start with very low or zero EMIs and then reset to very high rates after a few years) are set to revert in December 2008, thus accelerating the number of foreclosures, as home buyers, who were virtually lured in to ludicrous home purchases, find they are sitting on negative equity. This means the value of their property falls below their purchase price.
On sale is Citigroup Center, located in the Bandra-Kurla Complex in Mumbai. This 2 lakh sq ft tower is expected to fetch Rs 500-800 crore, if market sources are to be believed. This means the price per sq ft is Rs 25,000 to Rs 40,000 at the highest end. However, it is unlikely that even this price may be achieved. Citibank is loud-mouthed when it palms off homes at exorbitant prices to NRIs, like it made sure it splashed the news in all the papers, when it sold a flat in Nariman Point, Mumbai, for Rs 97,000 per sq ft, but when it sells its own property, it is rather tight-lipped, which is to be expected.
The 8-storey structure will however be leased back by Citibank. The bank has been on a selling spree for the last few months, in an attempt to shore up capital for its beleagured US headoffice. Citi’s CEO Vikram Pandit has pledged to sell off over $400 billion in assets over the next few years. Citi has also sold property in Tokyo Japan for $445 million to rival JP Morgan, and has leased it back. Over 45 branches have been closed in the US.
Another bank that has put its Fort office on sale is Standard Chartered Bank which has a 40,000 sq ft office space in the Fort area of Mumbai.
It is amazing that at a time when a lot of foreign financial companies are taking billions of writedowns, Barclays Bank chose to pay a rent of Rs 1 crore per month for 15,000 sq ft of office space located in CeeJay House, in Worli, Mumbai.
Citi along with other companies are starting to bring back the customer service jobs. Maybe this is one positive of our economy going to hell in a hand basket. Citi, AT&T, and Dell are the 3 big ones closing up shop in India and bringing jobs back to the US.
I think Citi knows that Indian market is in a big bubble and they are trying to cash out while the market is in its last phase. They are the ones who gave loans on very expensive properties in India and would be toast there too.
I still don’t understand that a lot of these high paid MBAs, starting salaries in 150K range don’t even have the basic common sense that it was all unreal. Maybe they just wanted short term gains, recognitions and bonuses. MBA to me is the most useless degree after seeing all this. Most schools have made their colleges a factory that is producing full time, part time, weekend, executive, online MBAs and charging 60-70K in fees. Everyone is greedy. Even educational institutions.
What ,your kidding Bad Andy ? What kind of jobs are these firms bringing back ,if you know?
HW,
AT&T announced they are bringing 5,000 CSR positions to a call center in Texas. Dell brought back their business support. The Citi building referenced above houses a callcenter. I haven’t been sent to India with Citi Bank for quite some time on the phone.
So these are all low paying CSR jobs…but they are jobs…
Does this mean that I’ll soon be able to call a company and speak to people who communicate in coherent English?
“Does this mean that I’ll soon be able to call a company and speak to people who communicate in coherent English?”
One would hope so. I think some companies are starting to see the backlash from consumers. Part of Sprint’s strategy has even been to bring customer service call centers back into the US. Part of that is a different culture at the CEO position.
“Does this mean that I’ll soon be able to call a company and speak to people who communicate in coherent English?”
Depends on what region of the country. When I set up my MetroPCS line in January, the call went to Alabama or Mississippi. I couldn’t understand her any better than an Indian.
“Unfortunately, a lot of prices people paid then don’t have a lot of meaning in today’s market”
Somebody get’s it! Somebody get’s it!
Truly a Landmark Day. Why with the word spreading we should be through this thing in no time!
“Why with the word spreading we should be through this thing in no time!”
Too bad word hasn’t spread faster. Real estate “professionals” have been screaming about it being a great time to buy since early 2007. Since early 2003 it’s been a HORRIBLE time to buy.
I believe “Blu” Kenyon is an aspiring professional poker player:
http://tinyurl.com/5sjy23
There have to be some good cardplayer phrases — “drawing dead,” perhaps — to describe the monumentally stupid act of buying three houses in Cape Coral, even with one down in value by more than two-thirds. Blu is going to find out real soon that no one is falling for his bluff and that all the money is off the table.
“‘When they couldn’t make the extra money, they didn’t want to close, and they sued for their deposit,’ he said. ‘It’s human nature.’”
It must be against my human nature. I’m upside down even after buying at what I thought would ultimately be the bottom. You sure don’t see me suing my bank for loaning me the money, my real estate agent for helping me with the transaction, and the tax appraiser for telling me the house was worth more then than it is now. This is what’s wrong with society. Everyone wanted to get rich quick. Some got stuck. Deal with it and move on with your life!
amen
why should I have to deal with anything bad that happens in my life when we have so many handy lawyers available to sue everyone in sight? and great gubment programs staffed with more people than they serve to supply me w/benefits just for being alive?
and if I lose it & botch up suicide the same gubment will spend millions to rescue, transport, revive, medicate, placate, & rehabilitate me.
then dump me on the streets w/fiddy dollars in food stamps and a shelter voucher to again embark on the encouraged lifestyle of a dependable, steady, and hopefully prodigious, consumer/taxpayer.
call a do-over, cause it’s just so NOT my fault. Yeee haaawwww
You forgot the big bailout. 400,000 homeowners will be “helped.” My guess that’s about 5% of the looming forclosures. Never rely on government to fix your problems.
–
“Blame bad bankers for failures, expert says”
I pointed this out 4-5 years ago (it was too obvious) that the housing bubble was created to artificially boost the economy for the 2004 re-election of G. W. Bush, 2004 reappointment of Greenspan in June 2004, and future appointment of Bernanke as the Fed Chairman. Bernanke led the charge in 2003 with deflation scare when the CPI rate was approaching 1%, the lower part of his ideal range of 1-2%. Everyone who has read my comments knows that I have been very critical of bankers and financiers since 2003 and corporate crooks, in general, since 1998.
Jas
Jas,
I’d love to be able to agree and it certainly would make “my” life a lot easier but the truth is in the post tech-wreck world, they began cutting rates as soon as Bush took office. Initially they felt it would spur cap ex. THAT was the primary objective. It didn’t. CFO’s sat on their wallets as everyone waited for the next rate cut. Anyone that took the plunge got burned. ( Your competition just borrowed money at 50 bps. cheaper ) So no one was taking the bait.
What they got instead was a housing boom. So… any port in a storm, right? The HB was not the intended consequence. Now, the intent was the same. By the late 90’s many Americans had more equity in their 401k’s than they did their homes. With retirement looming for millions it was more important to “shore up” the market but as home “equity” again eclipsed that, WTF cared? Certainly not FB’s!
I like your arguement. Also, since Bush wanted to privatize Social Security, a continuation of the stock market boom was a significant goal.
” a continuation of the stock market boom was a significant goal.”
Exactly right, polly.
Sometimes I wonder if the easy money didn’t get mis-directed into the housing boom ,would the stock market of gone off the charts instead ? There was a lot of money looking for a place to invest that yielded a little more than the cheap interest rates at conventional banks ,at the time .Would oil bubbles and energy bubbles taken off during that time between 2001-2007. There was a lot of forces at play of which the low interest rates seemed to of sparked the misdirected investments that turned into manias .And don’t forget Wall Street and their mis-pricing of risk with they new self-serving models .
The really bad thing about the housing bubble was it became so easy to use it as a ATM ,where I don’t know if people would of spent in the same manner had the rise in value occurred in a Stock market bubble at the time .Nobody wanted those low yield with CD’s and saving accounts at the time ,thats for sure .
Add to the equation that jobs were being out-sourced ,Boomers were looking to enhance their retirements ,that were not well funded ,and maybe you can add that the Corporations were promoting this housing equity ATM because it benefited them by Americans being big spenders on false wealth from real estate that was doomed to crash .
When you look back at all forces ,including the main stream media ,the advertisers ,the NAR ,you name it , they were rah rah cheer-leading the high real estate prices . Mass brainwashing going on at the time on all levels with very few experts ,who were given any voice ,challenging the absurd prices . All the check and balance systems people sleeping on the job and everyone remaining silent ,in spite of witnessing outright fraud .Appraisers that did try to speak up were turned away by Congress at the time .
And maybe law enforcement spending all their time on terrorist ,while the real estate market was being destroyed by loan crimes .And we can’t forget how the politicians were in favor of doing anything that the fat cats in the loan and real estate business wanted to pad their pockets .
Housing Wizard,
And it wasn’t until the FBI stumbled on to a Mortgage Fraud/Terrorist Funding operation that they even took notice. IIRC it was in SoCal late ‘06 when when an re-fi/equity skimming/walk-away was brought to their attention.
Several administrations had become aware that Boomers as a group were *not adequately funding their ret. accts. and a rocking stock market held the promise that a great deal of pressure would have been taken off of Social Security. As *polly notes, privatization was a big part of the plan as well, I mean while we’re at it?
After the utter disgrace of Henry Blodgett, Mary Meeker and others WS wanted a more technical approach than… “what the internet can ‘potentially’ become”. If we look back, even while trading revenues at Merrill etc. were in the tank, earnings weren’t all that bad in ‘02, ‘03 etc. The shift was away from trading and on to underwriting. At the time we couldn’t even figure out what they meant by “underwriting”? Where were all the IPO’s? LOL!
Interesting DinOR . What a disaster that whatever the powers were trying to accomplish, it ended up turning into a big housing bust because of a fake bubble .
Re: Preston’s
The article didn’t state what the size of their “small” home was, but why did these people ever think that they needed (or even wanted) a 5600sqft home? That’s twice the size of a pretty large SFH.
Gluttony is precisely the correct term to use in describing the housing markets.
Right ,gluttony . Also ,I think the housing mania reached a point where people started thinking they could make more money on the investment of a more expensive/bigger house . 20% appreciation of a 700k house nets you more money than 20% appreciation of a 400k house . I guess that would be called greed or a form of gluttony . I mean thats the only thing that can explain people buying houses they don’t need space wise and way beyond what they could afford .
I remember reading a article during the boom where some shill was saying that Baby Boomer wanted bigger houses and condos . At the time I thought that it didn’t sound right because why wouldn’t one headed toward retirement want to down=size if anything.
Following up on last week’s discussion here, the article about Cape Coral contains this tidbit on the region’s ongoing and inexplicable appeal to German speculators:
“Such deals are especially enticing to Europeans, whose strong euro makes a $128,000 home cost the equivalent of $82,000. Word of foreclosure-driven bargains has spread so far that a German TV crew was recently in town to make a documentary.”
I have lived abroad, but I would have no interest in buying a property in Germany, or anywhere in Europe, even if the dollar and euro switched places and my salary tripled. And in this state’s future, Lee County easily could be the economic equivalent of Dresden after it was bombed in 1945. Hello, cattle ranching.
Good thing my mother’s side of the family left Dresden in the 1800s.
“Stressed by increasingly heavy tax and insurance bills and the inability to generate rents to cover these costs, some landlords are now walking away from their properties. ”
My landlord collects about enough rent from me to cover taxes and insurance. Repairs and mortgage payments come entirely out of his own pocket. Prices will have hit bottom once you can start making money being a professional landlord. That will still take a while. Not only prices will have to fall much further but also the ridiculously high taxes.
“…but also the ridiculously high taxes.”
Mike,
The taxes in Dade are not nearly as high as they are here in Palm Beach based on value. As values decrease the tax problem should fix itself. Hopefully people won’t stand for an increase in the tax rate. If they do, it’s their own fault.
“Three years ago, a house like this might have gone for $250,000 as investors swooped into Cape Coral and transformed the sleepy waterfront city into one of the country’s hottest real estate markets.”
Anybody know the whereabouts of Taco Jeff?
AHAHAHAAAAAA!! I LOVED that smarmy, egocentric pinhead and I truly enjoyed watching him go down in flames. I lurked over there at SDCIA for months and even managed to keep my big mouth shut while he masturbated his ego about what a genius he was. ‘The first million is the hardest’- yeah baby, the first million can be sheer hell.
“Such deals are especially enticing to Europeans, whose strong euro makes a $128,000 home cost the equivalent of $82,000.”
Ouch. Please don’t do that!
Reminds me of the Montreal tourism ads several years ago that said “your dollar is worth 40% more!” Only if you didn’t notice that Canadian prices were higher in numeral terms…
Yeah, same thing in Vancouver, BC when I’d go up there on biz.
IIRC food prices and hotels were the same or a little bit higher in nominal terms so you saved a bit there, but everything else currency adjusted was about the same in real cost.
I remember going on vacation to Toronto to take advantage of the $1.50 to $1.00 exchange rate. After paying 15% in sales tax, the cost was quite close to going on vacation in the states. A $14 hamburger was really quite shocking to my senses then.
“The St Petersburg Times. As the minibus swings into the driveway, Janet Kenyon takes one look at the new three-bedroom, two-bath house and lets out a shriek. ‘Oh, my God. I hate yellow!’
“Kenyon and husband Blu head inside to a pleasant surprise. ‘Aw, this is nice,’ she coos, stroking the faux granite countertops. Best of all, the price: $103,000.”
I swear, some of these reporters HATE the people they’re following around doing stories on. Why else go out of your way to portray them so unflatteringly?
Not that I blame them…
“I swear, some of these reporters HATE the people they’re following around doing stories on.”
More likely they hate the assignment given by the editor.
These must be younger reporters and/or don’t give a damn about the subject matter.
I’d have field day (so to speak) with these people.
“So, why is it you’re buying 3 houses today? Oh, uh huh. I see. Great investment, they’re not building anymore land, it’s a buyer’s market, uh huh. That’s good stuff, let me right that down.
Say you do know that real estate only yields .5% after inflation, right? Oh you didn’t. Well certainly all of these properties cash flow when including PITI, vacancies, 10% management fees, and 10% maintenance fees right? Oh, they don’t?
Well, obviously you’ve done your homework or you wouldn’t have bought them…”
…and more stuff like that.
Bought and flipped a spec house in the Heron Bay WCI community a few years back..never even moved into it and made a easy 6 figure…unlike many who went back for more…I was satisfied…same house today..worth $300K less than the last guy who bought it..
That place now is loaded with foreclosures and short sales..hard to believe they sold those properties without ever having a model for you to look at..
Home prices are heading back to rational levels. It does not matter what you paid. What matters is what it is worth now. Longer you hold more you will lose. Cut your losses and run.
$100K property was being sold for $300K. Investment of $20K returned $280K in 12 months. So do your math!
House prices will return to 1999 -2000 levels for them to make any sense. Just like dot com bubble. PE of 1000 came down to 10.