People Aren’t Going To Pay More Than Something Is Worth
The Salem News reports from Massachusetts. “The first sign of trouble came in December at a lottery to select the owners of some of the new Palmer Cove Condominiums. There were 15 condos for sale, with three-bedrooms going for what appeared a bargain - $189,900. When this project was conceived, an overflow crowd of applicants was expected. Instead, there was just one.”
“‘We knew it was a challenging market, but we didn’t think the market would be that weak,” said Michael Whelan, executive director of the Salem Harbor Community Development Corp. ‘One application was a shocker.’”
“Seven months later, a home-ownership project that held out so much hope for the city’s low-income Point neighborhood, where more than 80 percent of residents are renters, teeters on the edge of foreclosure.”
“The Salem Harbor CDC, a nonprofit agency, has asked the city for permission to abandon the condo project and switch to rentals. That’s the only way out of this financial mess, according to Whelan.”
“‘The real estate market has collapsed out from under us,’ Bill Quinn, the agency’s attorney, told the city’s zoning board.”
“Whelan said it would be disingenuous to keep marketing this as condos and only misleading to the few buyers they might attract. ‘I think we’d be acting in bad faith …’ he said. ‘We have a condo project we know will not succeed.’”
The Boston Globe from Massachusetts. “A Boston-area couple who are in foreclosure, despite their herculean attempts to prevent it, have filed a lawsuit against Washington Mutual. The suit, filed one week ago, indicates the Pestanas would not have gone into foreclosure if they had reached someone at WaMu with authority to resolve their problem.”
“After the couple missed their August 2007 payment, Mark Pestana, a human resources specialist, and Lori Pestana, a business consultant whose work had slowed, still felt they could get current on their loan. One option might have been dipping into retirement savings, they said.”
“‘I feel like we were just sucked in and caught in a vortex that we couldn’t get out of,’ Lori Pestana said about trying to prevent Washington Mutual from foreclosing on a $275,000, fixed-rate mortgage.”
The Boston Herald from Massachusetts. “A California investment firm has agreed to modify 200 Massachusetts homeowners’ subprime mortgages - slashing interest rates and forgiving thousands of dollars in late charges, legal fees and past-due interest.”
“Attorney General Martha Coakley sued Fremont Investment & Loan, a lender notorious for aggressively pushing subprime mortgages during the housing boom, last year, winning an injunction that limited the firm’s right to foreclose on its 2,200 Massachusetts customers.”
“Fremont has since sold off 490 of its Bay State loans - 200 to WMD Capital Markets LLC and 290 to Carrington Mortgage Services.”
“But foreclosure expert John Anderson said the pact does nothing to address the fact that many subprime borrowers are ‘under water.’ ‘For many people, the best thing to do would be to take the $10,000 to $25,000 that WMD is offering and walk away,’ he said.”
The Providence Journal from Rhode Island. “At the end of June, vacant properties in Providence numbered slightly more than 950 - about 300 more than during the last real-estate bust, in the early 1990s recession, according to the city’s director of planning and development, Thomas E. Deller.”
“At last count, 422 of the city’s properties were bank-owned, although the number keeps rising as more people walk away from properties that they are unable or unwilling to pay for.”
“The sidewalk along Ware Court is broken and empty - like the houses. All but one, that is. The two-story cottage at the end of the block is home to the Lewis family. They bought the house in 2001. Now they are, literally, Ware Court’s sole remaining residents. Their neighbors have all lost their homes to foreclosure.”
“‘When we bought it, every house on this street people lived in,’ says Terri Lewis. Now, ‘every house on the street is in foreclosure but mine.’”
“Lewis feels trapped. Her 13-year-old daughter is not allowed to go outside alone. If Terri Lewis’ husband is working late at his job for a security company in Boston, she and her daughter stay locked inside.”
“One day, Lewis was driving her husband to work and saw a man dart out of the house next door. Another time, she caught four men across the street cutting out the copper pipes. She called the police but the thieves took off.”
“‘The police don’t come any more,’ she said. ‘They must think Mrs. Lewis is crazy because I’m forever calling them.’”
“Joy E. Riley, principal broker of Westcott Properties, a real-estate brokerage firm that has built a lucrative business selling bank-owned properties, had received a call earlier in the day from the city’s department of inspection and standards that a reporter had noticed that the door to one of its properties was open.”
“Asked if the properties had any prospective buyers, Riley replied, ‘Yes, there’s interest.’”
“Lewis piped up. ‘You want to put that one on the market?’ she said, pointing to her house.”
The New York Post. “Foreclosures in the city were up 67 percent in July compared to the same month last year. The outer boroughs in particular felt the burn, with the number of auctioned-off homes in Queens surging 81 percent last month compared with July 2007. Staten Island registered a shocking 215 percent increase in the same period.”
“Brooklyn reached a two-year high in foreclosure auctions, while The Bronx recorded a sizable 16 percent increase, according to Propertyshark. Manhattan didn’t emerge unscathed. While only 7.6 percent more homes hit the block last month than in July 2007, there was an alarming 55 percent increase in foreclosure sales from June to July of this year.”
“‘The numbers are pretty dramatic for New York City,’ said Propertyshark CEO Bill Saniford. ‘In Queens, it’s quite scary.’”
“Although foreclosures remain limited mainly to low-income areas, they’re having a domino effect that has driving down prices citywide, said Saniford.”
The Bridgeton News from New Jersey. “Housing foreclosures continue to pile up in Cumberland County. In the past 30 days alone, lenders have initiated new foreclosure proceedings against 51 county homeowners, according to representatives at Affordable Homes of Millville Ecumenical.”
“In addition, more than 900 homeowners in the county, after falling three to four months behind on their mortgage payments, have faced pre-foreclosure since February of last year, the point when many say a burst housing bubble became a national crisis.”
“‘Oh, yes, there was a significant uptick in homes under sheriff’s sales,’ said Chirstine Platania, of the sheriff’s department foreclosure department. ‘First, there was a time when there wasn’t really any increase when everyone was saying we should’ve had an increase. Then all of a sudden, in March 2008, it just spiked.’”
The Carroll County Times from Maryland. “Debbie Rhode listed her house in Westminster for sale in June 2007. After about five months of some interest but no movement, she gave in and found an agent to sell her house. More than six months after the agent had no luck, she took the house off the market in June.”
“‘It’s very discouraging, and I don’t think it’s anything I’m doing wrong,’ Rhode said. ‘It’s very stressful. I’ve lowered the price three times.’”
“Rhode, who already is living in another home, just hopes that eventually the market will pick up again. ‘I’ve done everything I can think of to make the house marketable. This [takes] a toll on your emotions,’ she said. ‘Nobody is buying houses right now; it’s almost like a celebration when you see a sold sign.’”
The Baltimore Sun from Maryland. “With his unconventional condo project in a former Locust Point grain elevator nearly done, developer Patrick Turner unveiled pricing for the 228 upscale units and said he expects as many as 60 buyers to close in the next month.”
“As the housing market tanked, the head of Turner Development Group developed a strategy to forgo pre-sales and wait to set prices until he finished converting the former Archer Daniels Midland Co. plant into housing.”
“The project, near the tip of the Locust Point peninsula, will be completed by mid-September, when the first home buyers should move in. ‘We’ve said we’re not going to set prices until we’re almost done the building and price it according to where the market is,’ he said. ‘People aren’t going to pay more than something is worth. The initial prices are below market.’”
The Virginia Pilot. “Two years ago, Gary Caruana built more than 40 homes in the region. This year, he says, he’ll be lucky to get four or five built. ‘It takes appointment after appointment after appointment to get them under contract,’ said Caruana, head of Virginia Beach-based Caruana Homes Inc. and GTC Homes.”
“‘It’s not a line of business that we’re coveting in this environment,’ said Ben Berry, CEO of Gateway Bank & Trust Co., whose parent company is based in Virginia Beach.”
“Some builders say now that they overpaid for properties that developers made available. For example, Caruana said he bought 10 lots in the Great Bridge area of Chesapeake in late 2005 for $315,000 apiece despite misgivings about the cost. Several are still vacant, he said, and their values have plunged.”
“William Brice, president of WATAB Construction Corp. in Norfolk, recalled having the same problem. Some developers, he said, required that builders buy a minimum number of lots, which required taking on additional debt.”
“‘They had us over a barrel, but you had to take it,’ Brice said.”
The Washington Post. “Jane Hwang spent $120,000 and devoted five years waiting for her perfect custom home. Then in one brief phone call, she learned she might lose it all. The builder, Seville Homes, couldn’t pay its bills, and its bank was seizing Hwang’s nearly completed house.”
“Scared of losing her investment, Hwang pounced into action. She went to the auction on the Fairfax County courthouse steps and outbid a bank for the house. ‘For five years I have been fixated on this place,’ said Hwang, a real estate agent. ‘I planned my retirement, I put all my life in there. I had to grab that house.’”
“Despite buying the Annandale home at a foreclosure auction for $700,000, Hwang said losing her deposit, as well as paying to complete construction and resolve lingering zoning concerns, means that the home will cost her more than $50,000 over the original $800,000 price.”
“Hwang said she saw Stephen Korfonta, Seville’s owner, nearby during the auction, but they did not speak. ‘I was so angry,’ she said.”
“Seville Homes, a small Virginia builder, collected hundreds of thousands in deposits in recent years for homes in Northern Virginia that it never delivered. There are foreclosure filings on 19 Seville properties, including a Vienna house assessed at $1.2 million and an Annandale house assessed at $1 million. A $2.2 million five-bedroom home owned by Korfonta personally has also been in the foreclosure process.”
“It is common for some small builders to use a buyer’s deposit to help fund operations instead of putting it in escrow, said Kenneth Wenhold, director of the mid-Atlantic region for MetroStudy. ‘There are a lot of builders having issues, especially smaller builders who are wrestling with cash flow and still trying to build houses.’”
“Some Seville customers whose homes have not been delivered are still hoping for their money back. Jeewon Kim heard the news about the foreclosure of her five-bedroom house in Annandale from a friend. Kim immediately called Korfonta, who she said agreed to return her $50,000 deposit. She did not receive the first payment, which was due in May.”
“But another is due in September. ‘We have to find a way to make him pay us the money back,’ she said.”
The Free Lance Star from Virginia. “Here is what a prospective buyer would encounter while touring one foreclosed home in Spotsylvania County: A tree lay on the roof and blocked the front entrance. It was unclear how long the tree, which apparently was hit by lightning, had been on the vacant home.”
“There’s mold in the refrigerator and water damage in the basement. It’s difficult to take the smell for long. Realtors say that house, which is under contract, is in worse shape than most foreclosures. But inspectors say it’s not uncommon to find significant damage, and many require thousands of dollars of repairs before they’re move-in ready.”
“‘It’s mind-boggling,’ said Joel Webber, who has run the Stafford County-based Old Dominion Home Inspection Services since 1998. ‘It’s sad to see it.’”
“Webber said the vast majority of his inspections these days are on homes in foreclosure. Many area residents have lost the pricey homes purchased during the peak of the housing boom a couple of years ago.”
“Webber questioned why the banks wouldn’t take better care of the homes if they’re trying to sell them. Suzy Stone, a Realtor in Spotsylvania, said some banks do fix up the homes. But she said most buyers of foreclosures know there will be some problems. Many of the buyers are investors. They buy them on the cheap, sink in some money for repairs and flip them.”
“Stone said that frequently people take their appliances out of the home before they’re forced to leave. They’ll also often leave trash behind and neglect the lawn, as they no longer care about the home. Old food is sometimes left in refrigerators.”
“‘I opened the front door and couldn’t go in, it was so bad,’ Stone recalls of one foreclosure home she was showing.”
“The new owners will frequently have to repaint the home and put in new carpeting and flooring, Stone said. But that’s sometimes worth it considering how little some of the homes are selling for, Stone said. The aforementioned house in Spotsylvania was listed for less than $120,000, about a 50 percent discount from what it might have sold for a couple of years back.”
“‘It’s a whole different market out there,’ Webber said.”
‘I feel like we were just sucked in and caught in a vortex that we couldn’t get out of,’ Lori Pestana said about trying to prevent Washington Mutual from foreclosing on a $275,000, fixed-rate mortgage.’
I think it’s interesting that in Massachusetts, people are suing to stay in loans (plus damages, of course) and in Florida they are suing to get out of deals. And the state passes laws against foreclosing for a time, etc.
Here’s a note to the lenders out there: maybe you should charge a higher rate to borrowers in Massachusetts?
Yikes, I would hope they don’t charge a higher rate for us in MA. But, I have to say, every day I am thankful to not have been sucked into “the vortex”, whatever that is.
A LOT of things terribly wrong with this story. Both were employed, she a business consultant AND they had a FIXED-rate mortgage. This may be a bubble story, but to me looks like a couple of whiners who didn’t plan very well.
The only vortex I see is self created . . . she is a bad consultant resulting in less work, less money, no safety net. Did they also have a HELOC, what’s in their driveway, how many kids, etc?
What could WaMu do at this point? The rate is already fixed, probably at less than 6.5% . . . sorry people, this is an old fashioned foreclosure in my books.
“The suit, filed one week ago, indicates the Pestanas would not have gone into foreclosure if they had reached someone at WaMu with authority to resolve their problem”
That would be the Senate. Try Dodd’s office.
I’ve got his number right here……
1-800-EAT-Sh#T
I briefly looked up their records (property records are public information in Massachusetts).
You nailed the problem.
Serial refinancing and HELOCs.
I didn’t even bother listing it out because it wasn’t over the top compared to some Boston Globe stories; but there were IIRC at least two HELOCS opened and closed and a third outstanding, plus the propert was refi’d a couple times. I guessed off the top of my head they had paid probably $25,000 in closing costs over the years - all for a net gain of (again, IIRC) of about $85,000.
Google Earth was running slow when I zoomed in on the property so I don’t know what was in the driveway…sorry!
Not only are they sueing to stay in their loan, they are practically falling over themselves to throw their retirement savings at the bank to pay for it.
This is an example to save for the next time someone laments: “I just can’t get ahead”. Gee, I wonder why?
I, for one (probably the only one) am glad they are fighting to stay in their loan.
The more payments they make the less money we taxpayers will have to eventually shell out.
Really? I believe it said they stopped paying last October! What they really want is some free money.
Yep ,that what it looks like to me also Ben. How can this couple claim that their problem was a toxic adjustable loan when they went on a fixed note ?
I read this story elsewhere. It seems they were having trouble with debt service and contacted WAMU for a re-adjustment of their loan, based on all the talk about helping homeowners get re-fied.
That was in August 2007. They were told since they were not 50 days or more behind on payments, they did not qualify for any help.
The QUIT making payments immediately so that they could qualify by being behind on their mortgage.
However, since they had the ability to pay, based on assets and savings, they could not qualify as distressed FB’s. They volutarily quit making payments to try and strong-arm WaMu. They haven’t paid since, then so they are going into foreclosure. They are claiming WaMu should have helped them when they defaulted. They are cheaters, unhappy with their upside-down investment.
The lenders should charge higher rates? There is something I don’t understand. Today 2 big lenders Freddie and Fannie make over 70% of the loans, it was not always this way. These companies are at risk of going bankrupt and the need more cash. Raising fees and interest rates would help these 2 companies avoid bankruptcy, but they don’t (at not enough).
But I guess the government wants cheap money to continue to prop up the inflated housing. In the end the dollar will be used for wall paper.
“I think it’s interesting that in Massachusetts, people are suing to stay in loans (plus damages, of course) and in Florida they are suing to get out of deals”
Have you seen the difference in alternative housing inventory?
‘I planned my retirement, I put all my life in there. I had to grab that house.’”
You’ve got some serious problems when your life revolves around a decaying pile of lumber. The language used by these people gives amazing insight into their obvious deficit in logic, priorities and perspective. Someone here accurately referred to all this as “the housing fetish”. What most people just don’t get is all of this world is in a state of decay and until you understand this natural fact, you’ll always be running a treadmill attempting to stay ahead of the decay.
Call it an edifice complex.
exeter,
And ’some’ retirement planning that was!? Let’s see, a 700..800k home. Taxes will be..? Any help from our on-site intel? Eh-huh utilities to heat and light said McMansion ___$’s. Of course, maint.
Even if Jane were able to pay for this place outright, the monthly nut alone would have to be $1,000-$1,200? Evidently living modestly and retirement no longer go hand in hand?
I belive Fairfax is .09%, so taxes should be around $600/month.
NoVaWatcher,
Thanks, lower than I would have expected but that’s about what I plan to spend a month for utilities, maint, w/s, upkeep and taxes! If as Ken Best suggests below is the case then it should be no sweat. So I’m only too happy to support them until death, I’m sure they “earned” it.
Nah, she could be a public employee (federal/state/city) with full salary retirement. One couple I know is retiring with 250K per year. Depending on how long they live, it’s like a 6M dollars in 401K.
“I put all my life in there.”
That might be me you’ve cited as using the term “housing fetish”. I bastardized it off some readings I’ve done on the idea of a “commodity fetish” being behind the hyper-consumer lifestyle.
All the same, you’re right to point to the “state of decay”. Like it or not, globalization is upon us and I’d love for someone to explain to me the outdated postwar logic behind taking on decades worth of debt on a single material object when the current times scream for individuals to be flexible, innovative, and unencumbered.
edgewaterjohn,
Good point. When lifetime employment was the norm, taking on a lifetime of debt at least penciled out. Not to say nobody in their right mind should take on a 30 yr. mort. just that doing so should be well within your means.
Also our parents weren’t acquainted with this notion of “stretching” to meet a mortgage payment. Given the avg. length of employment these days is 3 to 5 years, it makes even less sense today.
DinOR, I think the exact number was 3.2 years and it is quite accurate, at least from my experience.
What kind of moron would commit to a 30 year sentence with BancoDeScrewYou? Apparently there are alot of them.
Call me ‘Bitter Divorced Guy” but this is primarily an ailment of the female of the species…….
My ex had it. As soon as one of her sisters/cousins/friends moved into some new 4000 sq foot McManshion, I’d start hearing it……..
-”The kids need more room”
-”I’d like a place where we can keep some horses”
-(paraphrasing/embellishing) “Now that I’ve bought these two nags behind your back, we wouldn’t have to pay a stable to board them, if we bought a horse ranch”
Most women see a house as something to brag about. Most of the guys I know look at a house, and see a money/labor/time pit, that they put up with to make the wife happy.
Well, you married wrong. Why take it out on sane women?
Bitter Divorced Guy,
I hear you. Now here’s the important part:
It’s bad enough married guys have to put up with that all of their working years, but the real HELL starts as retirement nears. I’ve been fortunate as my wife has already seen first hand how having a modest lifestyle enables her to spoil her new grand daughter ( endlessly! )
Most guys aren’t that lucky and trust me I’ve seen more than one client utterly deplete their accounts and pour it all into that retirement “dream home”. If more males set their foot down and said, let’s see, travel, dining out, shopping, entertainment, spa treatment oh AND a “dream house” are you out of your MIND!? ( we wouldn’t have the problems we have today!
In fairness to the gals you’d be surprised how many guys want Harley’s, fishing boats and that dream house too!
As it turned out (after I filed for a divorce), her ultimate plan was for me to set her up in her dream house/ranch, then as soon as the kids got out of school, file for divorce, and keep the ranch, letting me help build her equity in the ranch in the interim.
It is not a unique story, either.
I screwed her plans by asking myself “Why am I putting up with this crap???” five years ago.
The bad news: I’ve found out that there is not a huge demand out there by women to meet 50-something, overweight, average looking guys with no money.
(Yeah, I didn’t manage the high-stress, 60 hour week running-my-ass-off-job during a divorce, to a high-stress 60 hour-week-desk-job-in-my-40s transition very well……so go ahead and flame me)
The good news: At least I’m not married to her, anymore. Better to have no relationship than a crappy marriage.
I have found over the last decade that men have wholeheatedly signed up for the same path. I see guys that are more vain than women, tanned, waxed, wearing $500 shoes, and $200 already worn out jeans. WTF?
I walked up to a metro sexual dude in a bar once and told him that he was prettier than any woman in the place. Should have seen that look! It helps being 6′2″ and 225lbs and look like I work for a living, he thought long and hard about getting another (albeit not designer) hole tore in his wardrobe. What a mar-oon.
RE: The bad news: I’ve found out that there is not a huge demand out there by women to meet 50-something, overweight, average looking guys with no money.
Yup-After 7 years in the dating game after my divorce in 2001, I gotta agree.
The problem is…you really don’t find this out until you get there!
However, don’t be too down on yourself.
A recent Happiness Study said women are happiest in their 20s and 30s when they’re nesting and raisin’ kids.
However, the pendulum swings to the guys in their 50/60’s because their still doin’ the hobbyist and outside interest crap they’ve been doing all their lives-and liking it better, and better, probably because they’ve dumped their naggin’ spendthrift rag of a wife who hated it all.
“The bad news: I’ve found out that there is not a huge demand out there by women to meet 50-something, overweight, average looking guys with no money.”
Oh, are we going down this path again? Gulfstream sitter, you’re an interesting guy. I always enjoy your posts. If you think you’re overweight, get to the gym. Want to show you’re interesting, take a class. My thrice divorced brother w/a permanent injury and not the deepest pockets has too many women around. (Let’s not go there. The last 2 choices were very attractive and fun yet deeply disturbed me.)
My shorter, slightly balding, not so financially adept Dad replaced my Mom in about 18 mos. (Mom was the financially astute one) And damn if the step Mom didn’t look better in a dress at 70 than I did at pre-40. I hated that.
And she’s really nice too. Damnit!
I think thier secret is they enjoy life. Get over the ex and go out there and embrace everything you ever wanted to be. Truly fun people don’t have to spend a dime. I know you can do it.
Wanna know a good hedge against all that crap? Convince your wife to buy a small house. I did this in DC years ago. I got my wife to do the whole urban/city living thing. Paid a fortune for the place, and living expenses were high, no doubt about it.
However, the funny thing is, once you got this tiny little place, every time the wife would say “we need this” or “we need that” I would look at her and say “sorry, we got no room for it ” She’d want a nice car and I’d say “but honey, youll have to park on the street its gonna get scratched up” She would back off every time - the amount of crap I DONT have because of this saved me a fortune.
Nah, you’re just not getting the right females. I’m of the feminine persuasion, have a 900 sq-ft apartment, and am deliriously happy with the space. (I would have cut the floorspace up differently, but nothing’s perfect.) Anything larger than this and the housekeeping would drive me nuts.
Helps that I lived in Tokyo for 10 years, though….
I read a story like this, about the woman getting the 800K USD home which she’s obsessed over, and think, “The dog finally caught the car.”
The real irony is how much of the decay is man-made… so we pave over even more things to build even more McMansions to fill with even more junk made from limited resources to “escape” from it all!
Pondering The Mess,
It’s easy to say “what you *don’t want” ( quite another to say what you DO! ) My wife and I sold well prior to peak OR prices and rented for several years. That’s not as easy as it sounds either. Believe me when it comes to looking at alternatives we’ve looked at them all.
Be it in an RV, houseboat, mfr. home in a park or some kind of timeshare etc., they’ve got you figured out! Very few inexpensive ways to go.
DinOR ,I’m sure you remember when housing was pretty cheap ,I sure do . I remember when the average person wouldn’t pay more than about 25% or less of their income toward the housing nut . Than those percentages kept creeping up to about 30 % ,than higher .
I also remember when medical costs took a small % of the monthly paycheck ,and food was pretty darn cheap . At the same time I remember income taxes being higher and in some cases people were paying a 70% tax on part of their income . The government use to really sock it to you if you made any money .
Housing Wizard,
Our first house was $67,500 and I think our PITI was like $480 a month? That “creep” you describe is why we’re in so much trouble. My point is that it’s also “crept” over into retirement expectations as well.
One thing I know for sure is that none of us want anything to do with a “turn-key” retirement living arrangement. Basically they’ve found a way to “tape worm” through what they feel your income will be and they WANT it! And that’s just it, the models all these developers were working off of were defective to begin with!
Boomers inherit WWII generation wealth + well employed, well educated, well funded pension plan and savings = A thorough SOAKING! Well it was all just garbage in/garbage out. In many cases they’ve long spent their inheritance, they may have had a good job but haven’t managed to save a dime, their 401k’s have been tapped and NOW they’re underwater after fleecing their primary home’s equity. Yeah, great thinking guys. Sure, they can “afford” it.
Um, the “greatest” generation paid a much much smaller fraction of their income for the biggest expenses in life - housing, health, college (UC used to be free), and food. They had practically guaranteed pensions and jobs.
Every generation from the boomers on have to pay an infinitely greater portion of the income for the basic necessities of life; it is *much* more difficult to save and get ahead. Thanks in large part to the Reagan “revolution” and the dismantling of government protections and free market ideology run amok.
I can’t believe how off base so many of the posters here are regarding the underlying causes for the financial situaiton we’re in. Sure boomers et al are not the most financially responsible generation, but the effect is nothing compared with the crippling of govt. and work protections by the right-wing Republican idoeology. Democrats, you’re not off the hook either.
Oh yeah, forgot to add, the American middle class used to be a solid producing entity, focused on their work and family, not frantic desparate “consumers” obsessed with “lifestyles” and squeezing the last possible dollar out of their granite countertops. That is before run amok capitalism and greed became the prevailing ideology.
Having been down both the divorce route ( didn’t want it but it happened anyway ) and the one large house mistake from 1984 to 1988 when we were able to get rid of it, plus having come from a family where my father BUILT our house that we lived in all the days of our lives as a youngster, I have a couple of comments. When I was a kid, oh so long ago, my parents, both products of the Great Depression, bought a piece of land on a lake 25 miles away from my father’s job in a school district in a major city. It was 4 acres, and took them 4 years to pay it off. Just the land, not any structure on it. During that time, they lived in an upstairs flat in my grandparents’ house. My mother didn’t like living there. While they were paying for the land, they were also building the house. An architect friend of theirs drew up some Frank Lloyd Wright -inspired plans for their wedding present. My parents had weekend building parties, and then everyone would go swimming in the lake, boating and skiing in his homemade ( he was a woodworking teacher at the time ) boat, and they’d have a big barbeque. Eventually, the house was built. It had a great view of the lake, a boathouse, eventually a toboggan slide down the slope to the lake, a raft, a 1-car attached garage, picture windows, built-in cabinets, room for us to roam, a homemade swing set and slide, a long gravel driveway, and NO mortgage. All they had to pay were the property taxes. We even put in our own inground swimming pool, after the lake became polluted with e coli. I remember my friends thought we lived in a mansion, but really, it was a beautifully designed, 1500 sq. foot house on a large, nicely landscaped lot. Mom stopped working as a librarian to take care of us, and eventually got her teaching degree and went back to work when I was in the 7th grade. My father got his master’s degree in education at night and climbed the ladder of adminstration in this big district, eventually retiring as one of the top dogs. Unfortunately, their marriage didn’t end happily, but they were wonderful parents to us 3 kids.
Fast forward 25 years. My first husband & I had one big house mistake, a 2800 sq. foot, 3 bathroom, 4 bedroom heat-gulping monstrosity during the high-interest era of the 80’s. It helped sink us and our veterinary business. We had a heck of a time selling the thing. At one time, we were so house poor we didn’t have enough food in the house to feed our daughter. ( I did manage to cobble together enough food for a meal, but it was all mismatched - cereal but no milk, a can of carrots, some balogna and some cheese. No bread, though. How horrible. But, I did have a doorbeel that played 24 different tunes, and an Aprilair humidifier. So, we were hungry, but we had plenty of room to roam in that structure whilst holding our growling bellies. The business was failing and no cash was coming in. My ex-husband went to a corner store and persuaded the kindly manager to let us have a gallon of milk, a loaf of bread, some canned vegetables, a box of cereal, and some more balogna until we got cash in the door of the business the next day. We squeaked through, but barely ). I was about 34 years old. We weren’t stupid, but boy were we in over our heads.
We sold the house, the business failed, we didn’t go bankrupt, spent 11 years paying off our debts, our daughter got raised and educated, we got divorced, etc. My point is, of course, we didn’t need the huge house, we just thought we did. And compared to the 4000 - 8000 monsters they’re building today, many spoiled people would consider the 2800 “big house mistake” to be laughably inadequate. I shudder for the consequences they’re bringing upon themselves. $ 400,000 - $ 1,200,000 mortgages - oh my.
In the 40’s and 50’s, most parents thought they were raising their kids in paradise if they could afford a tight 3 BR, 1 bath suburban, or big city ranch home with a homemade brick barbeque and a picnic table under a tree in the back. Throw in a dog, bunkbeds, a park down the street, and a car, and viola ! Successful parents. Now, each child seems to need their own bathroom as well as enormous bedroom, and many young couples completely turn up their pointy noses at aging, but remodelled 1100 sq, ft. 3 br, 1 bath housing stock. Standards of what a family “needs” have risen, along with costs. I’ve already been through a financial firestorm, and have lived to tell the tale, but believe me, I wouldn’t want to go through it again. Our ( second husband and I ) investments are relatively conservative, our cash on hand is probably too high, but oh well, our cars are small, 6 years old, we have plenty of food in our 1350 sq. foot home, and our entertainment needs are fairly modest. We live in a part of the country that is relatively low-cost.
As far as divorce, I was literally kicked out of a 23-year marriage. It was painful. However, one thing I’ve realized is that divorce actually opens up tremendous opportunities to grow in happiness. If my first, embittered and sometimes delusional husband ( not for this board, but quite spectacular ) hadn’t fired me, then I wouldn’t have had the opportunity to meet my 2nd husband, who is a wonderful man, and a much better match for me emotionally, mentally, and physically. Last I heard, 1st husband was on his 3rd McMansion. Some things never change. The taxes on the 2nd one were $19,500 a year 4 years ago, and was for sale for $ 775,000. I’d hate to see the monthly nut on that puppyl Luckily, I didn’t have it yapping around my checking account !
Stay frugal, stay simple, stay conservative, and stay small.
She’s a realtor, been mainlining Koolade for years now.
She thinks she overpaid by $50k? LOL. Wait till it’s worth half what she paid.
“Had to grab that house.”
If we could all manage extravagant desires, the world would be a better place.
What made it all worse, of course, is “commerce without integrity,” one of Ghandi’s seven deadly sins (not to go all Eastern on everyone).
This was posted in the bits bucket:
‘If there were any doubt that Loudoun County’s long-standing reputation for rapid growth and affluence is changing, consider this: During the first six months of the year, the number of foreclosures in Loudoun almost matched the number of new homes permitted.’
‘Just a few years ago, government hearings were packed with residents dismayed by the transformation of their rural county into a buzzing suburban hub. Now, county officials are more likely to field complaints of next-door neighbors disappearing overnight, leaving behind overgrown lawns and the threat of sinking home values.’
‘There’s a lot to worry about,” Supervisor James G. Burton (I-Blue Ridge) said. “I’m somewhat pleased that the number of building permits is down. But we’ve got a real problem in certain pockets of the community where the empty houses are leaving a bad impression of the neighborhood’
‘It is a pattern repeated in other parts of suburban Virginia that experienced a growth boom in recent years.’
As an aside - Loudoun is still experiencing rapid growth - of empty office buildings. You would not believe the number office complexes still being started along the Hwy 7, Hwy 28, and Hwy 50 corridors. And when they’re done they’re all for the most part sitting empty.
In addition to the current residential crash, Loudoun county is going to see a commercial real estate crash the likes of which are rarely seen.
As an aside to the aside - the WaPo used to post a weekly graph of DC area office vacancies. The trend was downward up until last year, when it started upward. They’ve since stopped posting it. I wonder why? I imagine the stats are starting to get *really* scary.
wapo , a commie rag
who ever gets elected allot of the big gov military gravy is going away= tough times on the dulles corridor
Much like the M3 numbers - when the numbers look bad, don’t bother publishing them.
Winston (from 1984) would be proud!
NoVa is the Houston of the 1990s, commercial-wise. It’s one of the few places where developers went hog-wild with office space, since most of the hog-wild developers were busy with housing.
There were empty office buildings along RT 28 when I moved here in 2002 — the last thing they needed around here was new office space.
Yup, I’ve mentioned the commercial RE glut a couple of time on the blog. I work in Chantilly, just off Hwy 28 and everywhere I look, there’s empty office buildings.
Wait till the government changes and a lots of these defense contracts are slashed. A lot of defense related commercial space and jobs would be lost. It will be a nightmare for both commercial and residential. I think around 300K jobs will be lost in the first six months of the new Govt. THOUGHTS????
AND IF LOUDON IS IN SUCH A BAD SHAPE WHAT ABOUT SO CALLED DC SUBURBS LIKE CHARLESTOWN/MARTINSBURG, WV. THERE MOST PEOPLE ARE WAITING FOR THE MARKETS TO REBOUND AND HAVE PUT THE HOUSES FOR RENT INSTEAD OF SELLING THEM. IN MY COMMUNITY, ONLY 30% OWNERS LIVE IN THEIR HOUSES, 30% ARE EMPTY AND 40% ARE RENTAL PROPERTIES.
SELLERS ARE STILL HOPING TO GET 300-350K FOR THEIR McMANSIONS WHICH I THINK SHOULD NOT BE MORE THAN 200-230K. REASONS BEING HIGH UNEMPLOYMENT IN THE AREA, VERY LOW SALARIES, HUGE INVENTORY, HIGH GAS PRICES WHICH IS TURNING OFF COMMUTERS, NOT VERY GOOD SCHOOLS AND THE LIST GOES ON….
THE LIST GOES ON….
yeah it goes on and on in capitals
stop it!
Yes, I’ve noticed all of the fancy, empty office buildings through there, too. I commented on it a few months ago on this blog. It’s like a ghost town for overly ambitious corporate builders in the evenings as your drive along the highway on the way to Dulles Airport - all of the lights on and the big “for rent” signs out in front of them.
RE: Salem MA condo’s
I’d be very curious to know as to whether the Point Cove units have parking facilities.
Quite a few Salem condo project’s went forward with no parking or a special lease program that spaces would be made specifically available to purchasers.
Needless to say, the program is in “crash and burn” mode with condo owners reporting repeated incidents of vehicle theft, vandalism, obnoxious smells from urination by street bums; disregard of private parking notices, and on and on into the night.
I’m sure any appraiser who did a feasiblity study or subsequent appraisal was told immediately told by the lender to delete any reference to the possiblility of the emergence of these types of negative ownership factors.
LMAO…Who are you to say “no parking” is a bad idea!!
Guess it’s all part and parcel of that young, hip, urbanist lifestyle to which the attraction escapes me.
RE: special lease program*
made available for space in a recently completed public parking garage.
hd74man …………………….One of the reason I like living in a house is that I have a two car garage ,(course a lot of condo projects
have garages also ). But, I never liked having my car exposed after some thief tried to steal my engine in the middle of the night ,when I lived in a apartment when I was younger . Than the thief came back again ,and I ended up chasing him down the street in the middle of the night ,(didn’t catch him ).
But my point is that I know that many areas have no parking ,but I can’t imagine a new condo project not providing at least underground parking with the prices they want for these units .
RE: so we pave over even more things to build even more McMansions to fill with even more junk made from limited resources to “escape” from it all!
One lesson I learned from all the shufflin’ around due to my divorce.
Never buy a television you can’t move all by yourself.
Hee hee, yes, you’re right, HD. We bought a new plasma after our 26-year old Sony conked out, and that was a mother to move outside. As far as the plasma, my God, you have to hire a special company to hang it up for you. But it’s cool. ( No we didn’t into hock for it ). And we still don’t have granite countertops. Who would put them into an asset with declining value, anyway.
RE: never liked having my car exposed after some thief tried to steal my engine in the middle of the night ,when I lived in a apartment when I was younger .
I’ll bet there’s a lot more heroin and meth junkies floatin’ around today than when you were doin’ the apartment trip.
These worthless, POS losers have become more and more brazen and will steal anything not nailed down.
The interesting thing is, they are as much a part of the rural landscape as urban now, and are actually more dangerous because of the low density development and attendant lack of neighborhood watching eyes.
They keep forgetting that many of these young, hip urbanists don’t have much money.
And since they don’t have much money, they can’t afford to buy one of those hip, urban condos.
Sounds like a vicious circle doesn’t it AZS?
Yes, but the banker men also see them as having many decades left of life to toil for their benefit. Don’t the hipsters realize this? It’s their call after all - do they really want to get caught in the “perfect REIC mousetrap”?
Lot’s of dazed and confused Fbs and GFs are learning to their great surprise “You DON’T own a House…It OWNS You”
“They keep forgetting that many of these young, hip urbanists don’t have much money.”
They never did. And now they don’t have much credit. That was the fuel for the stupidity we witnessed 2002-2007. With credit card limits about to be decreased by lenders “chasing down the balance”, soon they won’t have any credit at all. Some of these morons look at their unused lines of credit as money in the bank. How priceless it would be to see their faces when they find out the bank lowered the limit before they could take the advance they were planning to use as their lifeline.
As the credit bubble is deflating and dying a slow death, I have the thought of the Wizard of Oz song “Hey hey the witch is dead” (I’ve been waiting for the credit bubble to implode since 1996 so please excuse my glee). However, this death will be a slow death thanks to government intervention, and it will be at least 4-8 years before I will buy another real estate property. And I really believe that I will not see foolish lending again in my working lifetime (48 years old).
Got diversified assets?
pdxHOMEDEBTOR,
Want a little more “glee”? What you describe is already happening and as C/C companies lower the amount of credit available, fluffed up fake FICO scores diminish as well!
A 10k limit w/ only 4k charged up leaves a 60% avail. credit line. When they cap it at 5k they only have 20% avail. That and you can no longer “piggy back” on someone else’s card as an authorized user. Yep, things are getting “tough” all over.
Frankly, I prefer “young, hip, urban” over “old, decaying, suburban-masquerading-as-urban”. That doesn’t mean that I like the “immature, pretentious, bar-oriented” types either.
RE: That doesn’t mean that I like the “immature, pretentious, bar-oriented” types either.
LMAO…one of the alphabet soup local nightly news show ran a recent RE hype segment awhile back about a young, urban-to-be, 20-something hipstress about to unload $300k+ on a re-vitalized fomer factory building condo with no parking or built in closets (You could see the armoires in the BRDRM) in dunghole South Boston next to the Southeast Expressway.
When asked about her reasons for purchase, all she could do was blather on about the nearby bars and restaurants.
Huh?
And all I could think as I watched the episode: WTF does this woman do for work that she’s ponying up $300k for a 1 bdrm/1B with beaucoup HOA and then has the disposable income to go out and party it up in with the $75 per martini crowd?
With infinite credit, all things are possible.
Now days, not so much…
Not only that, but think about it… she said bars and restaurants nearby… why would you agree to 30 years of financing on something near bars and restaurants? Do you think you’ll be bar-trawling into your late fifties?
Let’s be honest, these people weren’t going to hold onto their properties, they were renters who just happened to sign a mortgage, enticed by the ‘throwing money away on rent’ argument even if renting a comparible place is 60% of the cost of ownership.
Don’t get me wrong, I see the allure of living in a city loft, but there’s absolutely no reason to own one unless you’re going to rent it out. Most people eventually get married and move to a suburb simply because a single family house offers more privacy and less bums pissing in the alley behind your flat.
“…these people weren’t going to hold onto their properties, they were renters who just happened to sign a mortgage…”
I would tend to agree Ed. Time will tell, but for now I’m keeping my eyes peeled for a mass condo exodus.
The way real estate is crashing, it’s only a matter of time before the witch hunts begin.
I believe some have already been dunked and found guilty. They are now being tied to the stake and waiting for someone to light the fire.
With the exceptions of a few places in the outer burbs (Ashburn and Manassas) and some places in PG county, the DC Metro area continues to chase the market down. Prices for the median house are still much higher than the median income (by about 60-70K or 20%). There is an amazing number of houses on the market that require 100K or more worth of renovations but are only knocking off 20-30K off the 2005-2006 prices.
Real Estate declines can take years - don’t worry - D.C. is getting theirs! It works it’s way in from the outer ‘burbs, like it always has done in past D.C. Real estate downturns -
Just ask anyone who’s been around the last 30 years or so
D.C. DOES get the RE smack-down - despite what people want to believe!!
Shelby - do you have a site or a reference of some sort for this? People have been telling me this for 3 years, but to date the fall close in has been minimal at best. I want to believe the fall is coming, but honestly after 3 years, my enthusaism is running short.
Please, somebody give me something - I want to believe!
I hear ya burby. The prices around here are insane - still. My insurance co just referred me to a provider for eyeglasses in Clarendon. POS frames starting at $200. I walked out - I’m not paying their rent. I would say after the election and hopefully a significant decrease in def contract spending.. then you’ll see D.C. metro take a hit. If not - then I’ll seriously think of moving. But I’m doing that anyway..
DC renter - lets hope for something other than govt contraction doing it. Asking the US govt to not get bigger is like asking a drug addict (who has the ability to make needles & dope btw) not to get high in a room full of smack.
Bigger issue (and Shelby this isnt a crack at you) - everyone says, “dont worry core dc comes down too”, and then when I press them on it, ask for the specifics, all I get is silence.
Looking at bubbles from the past is a decent clue. However this is/was a credit fueled bubble, and the credit spigot shut off everywhere at the same time. 2 years ago, ultra wealthy, fancy pants places like Loudoun fell apart, but fancy pants arlington held strong. Again, lack of credit hit them both at exactly the same time. Why did one fall apart and the other one didnt? It just doesnt make sense to me.
Well, I can only answer for a couple people I know who bought in Arlington. One just before everything exploded - she came into an inheritance. Her income has since steadily increased, she married etc. Very good with money - knows how to stretch a dollar. Second friend, divorced and had equity from divorce settlement - bought a little closet condo at the height of everything. She also has a stable job with some increase in salary and is good with a buck. But she’s been trying to sell for a year now and can’t get rid of it.
On the whole, I would say Arlington has a more responsible population of mortgage holders. I don’t know why - but it seems to be the case. Now, if there is a huge recession with layoffs - that’s another story. I don’t wish that but I’m beginning to think it would take that to really make a dent in Arlington. Stuff has gone down but I think there is, sadly, a floor where it can only go down so much. It is a prime location.
DC - agree on all points. The govt retracting would drive down everything, but I indirectly feed from that teat so I dont necessarily want that either.
As to the responsible mortgageholder comment - maybe you are on to something. See my comment about the McMansion owner above. In some ways, its hard to go crazy with $$$ when you live in the shoebox size places in Arlington, DC, Alex. When I owned, I would pine over power tools, exercise equipment, whatever. Every time, I wouldnt buy b/c I had no room for it. When my wife & I married, we got tons of misc countertop appliances (belgian waffle makers, expresso machines, etc). We had to get rid of all of it b/c of no room (made a small forune too). The two of us got by on one car, got gas once every 3 weeks - sold it the other one 6 years old with only 43K miles on it and did well on the resale.
I sold my DC place in 04 due to a job relocation. Now Im back and back for good. I waited to buy in 06, 07 and now 08, hoping prices would come back down to earth as I “knew” they would. Now, with prices seeming to not budge much further down, am wishing I just rented out the old place when I was away…
manasty, va had a spike in sales of foreclosures
the ones in my hood are sitting 22151
I’m just wondering if Doctor Evil shows up in 2012 how much money he will ask for?
Dr Evil: I want ONE HUNDRED BILLION DOLLARS
Laughs from the JCS: Dr Evil, no one has that kind of money!
Dr Evil: What happened? I asked for one hundred billion eight years ago?
JCS: Yeah, deflationary spiral. We’re back on the gold standard…. ah… How about 1 Million dollars?
Dr Evil: I don’t know. Its kind of a let down. I’m going back in the time machine.
“Rhode, who already is living in another home, just hopes that eventually the market will pick up again.”
ahh…there’s that word again…hope.
to me…the words hope and want are to some extent interchangeable. to this i add a saying my fahter told me many times growing up.
“want (hope) in one hand…and shit in the other…see which one gets the fullest” - michael’s pop
hope…an entire nation (and a presidency) depends upon it.
“Fremont has since sold off 490 of its Bay State loans - 200 to WMD Capital Markets LLC and 290 to Carrington Mortgage Services.”
WMD Capital. is that a joke? b/c I’m laughing.
“There were 15 condos for sale, with three-bedrooms going for what appeared a bargain - $189,900. When this project was conceived, an overflow crowd of applicants was expected. Instead, there was just one.”
The last and greatest fool.
In the end, there can be just one!
The Baltimore Sun from Maryland. “With his unconventional condo project in a former Locust Point grain elevator nearly done, developer Patrick Turner unveiled pricing for the 228 upscale units and said he expects as many as 60 buyers to close in the next month.”
Somehow, that is perfect for Maryland: overpriced condos in a grain elevator. Pay more for less - the new motto of Maryland!
I also get a laugh out of the $189,900 “affordable” housing units in the first part of the article. Um, right… here’s a hint: the median household income in the United States is only in the $40,000 to $50,000 range. $189,900 is not affordable housing, although it is closer than what one finds here in Maryland, where prices in the “low $300’s” are considered “cheap.”
And don’t even get me started on the foreclosed house with the dead tree on it! Great stuff - I’d love to watch the Realtor spin that one as to how the house is “ecologically friendly” or “is on a very wooded lot.” or perhaps “has an indoor arboretum!”
RE: And don’t even get me started on the foreclosed house with the dead tree on it! Great stuff - I’d love to watch the Realtor spin that one as to how the house is “ecologically friendly” or “is on a very wooded lot.” or perhaps “has an indoor arboretum!”
I’m sure she’s run a MLS ad, noting “NEXT YEAR’S HEAT FOR FREE*
with the caveat:
*must wait another year to secure a back-ordered woodstove.
Ah, born and raised in Carroll County. Nobody knows where it is… one hour from Baltimore, Frederick, and Washington. Always a bedroom community.
Now it costs as much to live there as in the NoVA suburbs, without the infrastructure, culture, or schools to support the prices.
When they put in a 25 hour Dennys a few years ago, I knew my hometown had finally hit the big time.
People still thinking “rich people” from DC are going to move out and buy thier crappy 1980s split foyers for $400k.
24/7 Dennys - sorry, there is not an extra hour in Carroll County, although time sure passed slowly as a teen…
Hey HD74man,
Any insight on the lead story of the Palmer Cove condos in Salem?
Is the PCYC yacht club still there?
I spent a lot of time in that area in the early late 80s. Know it well. Didn’t know about the 80% rental ratio though. Yeow! What were they thinking?