August 14, 2008

There Will Come A Bust In Every Boom

The Rocky Mountain News reports from Colorado. “One out of every four previously owned homes purchased in the Denver area during the heart of the summer sales season was a foreclosure. And in Adams County, one out of every two homes closed from mid-June to the end of July was a foreclosure sold by a bank or other lender, according to Boulder economist Michael Kone.”

“One thing Kone is noticing is a rise in more expensive homes being lost to lenders. ‘When I looked at this stuff a year back, there was not a lot of pain in the upper-price points,’ Kone said. ‘It is a little concerning seeing this spread of foreclosure into the higher-price bands.’”

“For example, in Arapahoe County, 22.2 percent of the foreclosures were homes priced from $400,000 to $499,999. That doesn’t surprise Sarah Hays of Metro Property Brokers. She is listing about 25 foreclosed homes, priced from $500,000 to $575,000.”

“‘The $575,000 home in Castle Rock sold for about $850,000 two years ago,’ Hays said.”

“Lou Barnes of Boulder West Financial Services, and other experts, said there are so many distressed properties being listed for sale in the Denver area that they are driving down home prices for the entire market.”

“The trend is keeping people who don’t have to sell their homes from putting them on the market.”

“‘I can imagine a husband and wife sitting around the breakfast table and one spouse says, ‘Do you think we should sell our home?’ I can imagine one spouse getting a coffee mug thrown at them,’ Barnes said.”

“Jay Sandstrom of Century 21 Advantage Plus estimated that 35 percent to 40 percent of the approximately 26,000 unsold homes on the market are either bank- owned, in some stage of foreclosure, or otherwise distressed. His general advice to clients is not to sell in today’s market if you don’t need to.”

The Pueblo Chieftain from Colorado. “Permits to build new houses in Pueblo County have plummeted in 2008 due to the housing slowdown and the lack of additional soldiers that had been expected at Fort Carson in Colorado Springs.”

“Using 2002 as a more typical year for home sales, Ted Jones, chief economist for Stewart Title of Colorado, said Pueblo actually has a normal home sales rate when compared to job and unemployment numbers.”

“Many real estate professionals don’t realize that because they’re new and don’t know how the market was before 2002. ‘If you entered the business after 2002, all you had to do was sit back and take orders and make money,’ Jones said. ‘We were fat cats.’”

“The low interest rates enacted by Alan Greenspan when he was chief at the Federal Reserve made real estate into a ‘get-rich-quick scheme,’ Jones said.”

The Arizona Daily Star. “Pulte Homes’ Red Rock Village, the ambitious, 4,000-lot project in Pinal County opened about a year and a half ago. Several families who moved into Red Rock since last fall said they are happy with their decision, even though Pulte has cut home prices - effectively lowering their property values - and commuting has gotten more expensive.”

“‘This house was a really good deal,’ said Jeremy Willistein, 26 who paid $165,000 for a 1,300-square-foot entry-model home last year.”

“Now after price decreases, the starting price is $129,000, and Pulte is working on a new floor plan that would be priced even lower, said Shawn Chlarson, division president for Pulte.”

“During the housing boom, Pinal county saw some of the state’s most rapid increases in development - and now it’s suffering from some of the worst of the crash. ‘There will come a bust in every boom,’ said Bill Bridwell, a Casa Grande real estate broker. ‘Everything just got out of control.’”

“Bridwell said it’s only a matter of time until the slower market catches up to Red Rock, and foreclosures show up there, too. ‘Their houses are worth less today than what they owe on them, the same as everybody else’s,’ Bridwell said.”

“At the current sales pace, it may take up to 10 years before Red Rock is built out, Chlarson said. It will probably be at least two years until development can support a convenience store, he said.”

“‘I can’t even get a coffee and a newspaper in the morning,’ said Michael Tarr, 40, who paid about $200,000 for an 1,800-square-foot home last fall.”

The East Valley Tribune from Arizona. “For the second quarter, the median resale home price in Pinal County was $143,100, down from $156,160 in the first quarter and way down from $220,000 in the fourth quarter of 2005, according to the latest report from Arizona State University.”

“Shawn Stagg, a real estate agent in Mesa…has sold houses in Johnson Ranch for about five years. Banks want to liquidate as soon as possible and are willing to sell the houses strictly at fair market value, he said. That makes it hard for homeowners to sell a property at anything above that, he said.”

“‘It’s pretty dismal now,’ Stagg said. ‘The last time I checked … there was a considerable amount of homes in Johnson Ranch for sale, and I’d say probably 60 percent of those are probably either short sale or bank-owned.’”

“Housing values have plummeted across much of Johnson Ranch, Stagg said.”

“‘People who purchased when the market was really high, they’ve definitely taken a 40 percent hit,’ he said. ‘Most of what’s selling out there now are the single-family, 1,600-square-foot or less homes, and some of them are starting to go for like $90,000.’”

The Arizona Republic. “With more affordable homes entering the rental market, apartment complexes are struggling to sign leases. Between the first quarter of 2007 and the first quarter of 2008, median rents in metro Phoenix’s median rent dropped 9.3 percent to $939, according to apartment-research firm Investment Instruments Corp. It was the steepest decline reported in the 12 largest U.S. metro areas.”

“‘The single-family rentals are impacting our ability to rent apartments because they are directly competitive,’ said Mike Clow, senior VP for property management at Gray Clow Residential, which owns luxury apartment complexes in Phoenix and Tempe.”

“Nicholas Ingle, director of capital markets for Phoenix-based Hendricks and Partners, the nation’s largest apartment-sales and research firm, estimates that nearly 9,000 homes are currently in the rental market, far higher than the usual 1,000-2,000.”

“‘So many of those owners are just desperate to rent them for whatever rent they can get,’ Ingle said. ‘Those homes should be renting for so much more money.’”

“Compounding that rental situation is the influx of condominium conversions back into the rental market. ‘We still have an oversupply of failed and broken condo conversions and most of the condo conversion units are rentals,’ said Pete TeKampe, VP, investments for Marcus& Millichap. ‘North Scottsdale actually has experienced very high vacancy rates because of the oversupply of condo-conversion units.’”

The Kingman Daily Miner from Arizona. “The ‘Kingman secret,’ as coined by Mayor John Salem, is officially out. Kingman was the subject of a feature published in the New York Times Sunday, which highlights the city’s current and future potential as a destination for large Las Vegas-based developers.”

“Both Chris Stevens of Rhodes Homes and Leonard Mardian of the Mardian Group were interviewed for the article. Times reporter Steve Friess writes how both of the developers are unconcerned with the downturn in the housing market, “even as Las Vegas and Phoenix suffer some of the nation’s highest foreclosure rates and steepest home-value declines.”

“In the article, Mardian predicts an additional million people will migrate to the region over the next decade, then asks rhetorically, ‘Where are they going to live?’”

“Mayor Salem elaborated on a few points he was quoted on in the article and sought to clarify Friess characterization of him as a mayor ‘who won election … on a platform of being friendlier to developers. ‘That’s not entirely true,’ Salem said.”

“Salem said while he believes growth is inevitable for Kingman, it is still important for that growth to be planned out accordingly. ‘People are going to come no matter what,’ he said.”

The Las Vegas Sun from Nevada. “Buddy Yates sits at a dining room table awash in paperwork. Within one block of his home, more than a half-dozen residences are bank-owned or in some stage of the foreclosure process, according to Realty Trac, a Web site that maintains a nationwide database of foreclosed homes.”

“Like his neighbors, Yates was hit by a slumping economy and falling real estate values.”

“Last year, his income started to shrink. As it was getting harder for Yates to pay his $300,000 mortgage, the value of his home was dropping, and as a result he couldn’t refinance his loan. Three weeks ago, Yates met his new neighbors, who had just purchased the house next door out of foreclosure for $167,000.”

“His Texas-based lender, EMC…said that Yates was offered a fair deal that would allow him to keep his home. But Yates, who has missed more than one payment, said the repayment plan would put him only further behind.”

“Yates has asked a nonprofit housing counseling group, for assistance. If he doesn’t get a reprieve, he said, he’s expecting a letter this month saying the company will foreclose on his home.”

“‘When they sold you the home, they knew (with the adjustable interest rate), you weren’t going to be able to make the payment,’ Yates said. ‘They don’t have compassion for the family who’s in the home.’”

In Business Las Vegas from Nevada. “The shutdown of Boyd Gaming Corp.’s $4.75 billion Echelon resort will have a far-reaching effect on Southern Nevada’s economic climate - both good and bad - analysts and economists say. ‘It’s like going through the North Atlantic during iceberg season,’ said Keith Schwer, director of UNLV’s Center for Business and Economic Research. ‘We’re just not seeing everything yet.’”

“Boyd Gaming announced Aug. 1 that it was mothballing the 5,000-room Strip resort being built on the 64-acre site formerly occupied by the Stardust. The shutdown pulled 800 construction workers off the job.”

“Schwer acknowledged it was hard to see some of the bad times coming - especially the explosive energy costs. ‘The housing market was getting worse and the big mistake everybody made was not realizing the fallout that would occur, but oil prices were seemingly difficult to predict,’ Schwer said.”

“The postponement of Echelon Resorts is likely to put more strain on the Las Vegas housing market. The housing industry was counting on the creation of thousands of jobs with the opening of new resorts to help lift the market out of its doldrums of the past two years.”

“‘It is evident that the Las Vegas economy is slowly contracting,’ says Josh Seime, manager of Metrostudy’s Las Vegas division. ‘The Las Vegas economy may be on slightly more shaky ground than the nation as the region’s economy does not have a wide diversity of economic drivers.’”

“The increase in sales of existing homes since January is because of sales of bank-owned properties, Seime says. As for the condo market, closings have dropped below new starts in the past two quarters.”

“Vacant lots have remained stable since the beginning of 2007, Seime says. In the 12 months ending in June, they have declined 1.4 percent, for a total of 31,193 lots at the end of June, a 48.3-month supply, he says.”

The Reno Gazette Journal from Nevada. “While the first homeowners have yet to move in, 40 percent of the 370 units in the Montage condominiums have been sold — proof that there’s a niche for luxury housing in downtown Reno, says developer Fernando Leal.”

“At the Montage, housing will range from penthouses priced at up to $2.6 million to one and two-bedroom units and lofts ranging from $320,000 to $975,000, and studios starting at $245,000.”

“In all, he said no more than 500 units are for sale at the Montage as well as other downtown condominiums. An economic consultant hired by the Reno Redevelopment Agency has projected sales of about 200 condos a year in downtown Reno to buyers who are primarily young professionals or empty nesters seeking an escape from suburbia.”

“If that’s so, that means a standing inventory of no more than two years for downtown condos, which Leal said is hardly an overbuilt market.”

“‘I believe in this town. How often do you get to be a Daniel Burnham?’ Leal said, of Burnham, a renowned city planner of Chicago, where Leal built his first projects.”

“Tumbleweeds are popping up on the edges of nearly 200 acres cleared along U.S. 395 in the North Valleys, a sign of the continuing housing slump that has stalled a number of major developments in the Reno-Sparks area.”

“‘We built too fast, too long. Then all of a sudden, the bottom fell out,’ said Tom Gallagher of Summit Engineers said of developments in the Reno-Sparks area.”

“Looking at all construction in Reno over the past 10 years, the slide is even worse. Vern Kloos, a Reno senior planner, said the steep downturn was bound to happen after four years of $1 billion in permits.”

“‘You can’t sustain that. It was just like the dot-com crash. Everything goes in cycles,’ he said. ‘It was crazy. We were hiring consultants to help us. Developers wanting everything done in five minutes. A lot of them overextended and went belly up.’”

“Brian Kaiser, real estate analyst at the Center for Regional Studies at the University of Nevada, Reno, is not convinced the worst is over.”

“‘The rate of descent has certainly changed. We’ve got to be nearing that point,’ he said. ‘But I have to believe we will be scraping along the bottom for another year or more. Sales are still in the toilet. Pricing is still down.’”

“Summer weather typically brings a bustle of activity at residential development sites. But for Sunset Bluffs, the whir of construction machines and the busy hammering of workers seem like a distant memory.”

“Sunset Bluffs is just one of several residential developments that have defaulted in an area hit especially hard by the housing downturn.”

“With property values plummeting and demand for houses cooling after reaching a peak in 2005, Sunset Bluffs, like many developments in the Truckee Meadows, is in financial trouble.”

“At least five businesses that did contracting and subcontracting work for the development have filed more than $1.2 million in liens for unpaid services. The largest was a lien for more than $952,000 filed last year by Jess Arndell Construction. The developer’s failure to honor financial commitments ruined the local construction company, said Mark Simons, attorney for Jess Arndell Construction.”

“‘(Jess Arndell) essentially trusted and believed the developers were going to pay him, and he ended up carrying way too much debt,’ Simons said. ‘Now subcontractors have a half-million dollars worth of claims filed against him, and they’re demanding to be paid. He was in business for 35 years with tons of projects around here … . Now, he can’t afford to do business anymore. It’s been devastating.’”

“‘Our sales are off, and we’ve been making adjustments for two years in anticipation of the downturn,’ said Jim Dickey, credit manager of Western Nevada Supply. ‘It’s certainly the worst market I’ve seen in 26 years.’”

“Even putting a lien on a developer’s land or property to attempt to collect money owed doesn’t guarantee that a subcontractor will get that money. Given the steep declines seen in property values, the developments are no longer worth enough to cover all their associated expenses.”

“‘If the property isn’t worth anything, then the lien isn’t worth anything,’ Dickey said.”




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75 Comments »

Comment by Ben Jones
2008-08-14 08:25:17

‘This house was a really good deal,’ said Jeremy Willistein, 26 who paid $165,000 for a 1,300-square-foot entry-model home last year. Now after price decreases, the starting price is $129,000, and Pulte is working on a new floor plan that would be priced even lower, said Shawn Chlarson, division president for Pulte.’

The big builders continue to flood the market even in the face of thousands of foreclosures, putting even people who bought a few months ago underwater.

As for the Kingman article, a poster at the HBB Forum had some great insight on the N AZ, Flagstaff thread last night. So while the NYT puts up a ridiculous story about Kingman, but I would suggest the HBB is doing a better job getting to what is really happening in this corner of the west.

And not all the players will make it:

‘A Scottsdale-based “land bank” has filed for bankruptcy protection in the midst of pending foreclosure action on hundreds of vacant lots it owns in Gilbert and Phoenix.’

‘Taro Properties Arizona LLC and two affiliates, Taro Properties Nevada I and Taro Properties Texas I, filed for protection from creditors Wednesday under Chapter 11 of the U.S. Bankruptcy Code. In June, Taro Properties Arizona was facing foreclosure on three land holdings, two in Gilbert and the other in Phoenix, totaling 1,251 parcels and $75.3 million in mortgage loans. Its creditors include Bank of America, which initiated foreclosure proceedings on 493 vacant lots owned by Taro inside the Cooley Station North subdivision in Gilbert.’

Comment by AnonyRuss
2008-08-14 11:33:06

‘This house was a really good deal,’ said Jeremy Willistein, 26 who paid $165,000 for a 1,300-square-foot entry-model home last year.

$165K for a 1,300 sq ft house in a remote desert subdivision where gasoline can not be purchased is not even close to being a good deal. At least move into an exisiting exurb, trying to start a new one in 2008 Arizona is a really poor decision.

 
Comment by pismoclam
2008-08-14 14:57:52

I can’t stand all the retards commenting here!! I think I’ll take a nap.

 
 
Comment by Faster Pussycat, Sell Sell
2008-08-14 08:46:47

“‘I believe in this town. How often do you get to be a Daniel Burnham?’ Leal said, of Burnham, a renowned city planner of Chicago, where Leal built his first projects.”

You’re comparing Reno to Chicago?!?!?

I’m sorry, now I have seen everything. (wiping tears from eyes)

BWAHAHAHAHAHAHHAHHHHHHHHHHHHHHHHHH!!!

Comment by scdave
2008-08-14 08:59:08

I just spent four days in Reno…I asked a lot of questions from a lot of different locals…They are scared sh$tle$$…Many feel like they are not going to make it…Casino’s are hurting, particularly downtown…The events are way down in attendance…

Comment by Ben Jones
2008-08-14 09:04:56

Well, read these articles. The RGJ has got religion and it looks like a wipe out to me.

Comment by BanteringBear
2008-08-14 09:48:18

Reno’s a total wipe out, and especially the areas like the north valleys. The overbuilding is absolutely mind blowing. There are thousands of bank owned homes which aren’t even listed on the mls. And it’s NOT limited to marginal areas. High end flips and spec homes galore.

Brian Kaiser is one of the biggest Kool Aid pushers of them all. I’ve had a few heated exchanges with him. As recently as last fall, he was touting that the worst was behind us, the bottom was in, blah, blah, blah. Now he’s just changing his tune as we go along, talking about scraping the bottom, blah, blah , while prices continue in a downward spiral. The guy should be fired.

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Comment by EmperorNorton_II
2008-08-14 10:17:05

The housing bubble is especially Oner-ous in Reno, as it always played 2nd fiddle to Vegas, and is probably even more upside down than it’s big brother down south.

About 10 years ago I was in Reno and was playing blackjack with a friend who was betting $25 a hand, and he was winning more than losing, and the dealer started shuffling the deck after just a few hands, and I asked why she was doing that, and she told me “a fellow walked away with $1400.00 from the crap table last night, and they were under orders to make sure nobody else got lucky”

That’s how small a town Reno really is…

 
 
 
Comment by SaladSD
2008-08-14 18:02:12

And we used to think ghost towns were oh so 19th century. The old photos tell the truth, though, of dozens of saloons, a couple opera houses, and opulent Victorian mansions. All turned to dust in a matter of years when the boom went bust.

 
 
Comment by desertdweller
2008-08-14 09:54:53

RENOOOOOOOO?
Chicago?

And Penthouses upwards of 2+ mill? IN Reno?

No way.

Comment by NoSingleOne
2008-08-14 10:16:34

Those are beautiful penthouses. I fantasized about leaving Anchorage for awhile and Reno was at the top of my list. But my reason for leaving Alaska had a lot to do with ridiculous RE prices, and it would have been like going from the frying pan into the fire.

 
Comment by Faster Pussycat, Sell Sell
2008-08-14 10:21:07

Yeah, exactly. :-D

 
Comment by BanteringBear
2008-08-14 10:49:35

There are actually many, many wealthy people who live in the Reno area, but NOT downtown. They’re up in Montreux, and Incline Village.

Comment by NoSingleOne
2008-08-14 13:37:08

Nevada has awesome tax laws, but not as awesome as Alaska’s. I used to know all the differences, but they are the best state to live in tax-wise outside of Alaska, New Hampshire, and maybe Tennessee.

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Comment by aqius
2008-08-14 09:11:30

“‘When they sold you the home, they knew (with the adjustable interest rate), you weren’t going to be able to make the payment,’ Yates said. ‘They don’t have compassion for the family who’s in the home.”

oh brotherrrrrr !! what a freekin whining crybaby. “they” should just have a crystal ball & special mind powers to know everything that has been, is, and will forever occur with their customers. never mind his signature on the dotted line, that really doesnt matter. I rake the agents & banks plenty when they pull crap and now its only fair to say BULLSHIT to this weasel!! I’d say it to his face if I lived close enough. someone needs to.

not only do I think this guy is a douchebag, I think he should be grateful as hell to the loan agency because from the looks of things he is a real piece of work, and I bet they bent over backwards to make the loan to him.
not that he appreciates it. people like him just complain & finger point when things get tough. ($50 says he is a Virgo. heh heh.)

and not that HE has ANY blame in the deal …. noooo it’s always “they”. “them”. etc. etc.

effin hilarious, I tell ya what. and pathetic.

Comment by Gulfstream-fixer
2008-08-14 09:36:33

We’ve subsidized stupidity in this country for years, thus we have an oversupply of stupid.

Did this jackhole not ask himself ONCE what the payment on his house would be, when it reset?

And 26 year olds (for the most part) are the wrong people to ask when detirmining whether something is a “good deal”

Comment by desertdweller
2008-08-14 10:06:44

“Subsidizing stupidity in this country”
Just beware when we get those children out of the “nochildleftbehind” program where all they are supposed to do is pass a test. In this program, it isn’t the goal to teach them how to think, if it were, the schools would get no federal monies. And ‘you’ will see the chasm between Chindia and the USA expand.

We are getting what “we paid for”.

And also we are getting more of the bad manners/ethics/no good sense and no civility types. Sort of like a bad rash, it keeps spreading.

Comment by Doug in Boone, NC
2008-08-14 11:43:27

In one of our local blogs, a college student was taken to task for using “your” instead of “you’re” (which it what he should have used.) When it was pointed out that “your” is a pronoun and that “you’re is a contraction for “you are”, the college student got all indignant — pointing out that the most important thing in life is making money, not speaking or writing correct grammar. All I could do was shake my head in disbelief, bemoaning the country’s future “leaders.”

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Comment by jrochest
2008-08-14 13:58:44

One of two things will happen:

1) he will discover that it’s hard to make money when you write like a functional illiterate, or

2) Everyone will be illiterate, and it won’t matter any more.

If #2 is what it comes to, the little black speck you see plummeting off the CN Tower will be me…

 
Comment by Crusader
2008-08-14 14:33:34

Thus the film “Idiocracy” was born.

 
Comment by Bill in Maryland
2008-08-14 17:51:09

Doug (in Boone). The kid you are talking about must be a “looser!” Oh that’s just a pet peeve of mine besides using “you” when “your” should be used.

 
 
 
Comment by DinOR
2008-08-14 10:09:17

I’m not arguing the “subsidized” part and my kids aren’t much younger, so I get your point there too. Yet when it’s all said and done, it ‘may’ not be a bad deal? If crude prices moderate ( and I happen to be in the camp that thinks they will ) $129-$169k could be a good entry point for younger couples.

It’s more in line with income-to-price ratios and is about what I sold our first home for in 1993. There are people making worse commutes and if gas prices fall back, at least it’s a ‘livable’ scenario.

Comment by Gulfstream-fixer
2008-08-14 11:10:19

The basic price isn’t the problem (without having seen what he paid $165K for)

It’s that he could be as much as $36,000 bucks upside down on a house that currently sells for $129K, and he’s still happy about it.

Of course, I’m a born pessimist. Having just witnessed in the past 60 days how quickly couple of neighborhoods can change for the better/worse, I’ve pretty much decided to stay out of the house buying market for the next five years or so, until the economic poopie-balls finish hitting the fan.

1930’s = “Okies”

2010 = ????

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Comment by DinOR
2008-08-14 11:28:28

Gulfstream-fixer,

Agreed, the one picture they did have looked about as generic as subdivisions come? Yet here’s what it always boils down to for me where younger couples are concerned. If you have small children does it make more sense to uproot them w/ regularity in a rental scenario? Get a monster place “close-in” ( complete with monster payment AND taxes ) with zero discretionary income… OR move further out, suck up the commute in “mileage mobile” and at least have a life on the weekends?

Again what he paid is what a lot of people are underwater ( so far ) I’m not advocating anyone buy now but if you ‘have’ to, be sensible about it?

 
Comment by DennisN
2008-08-14 11:59:09

You can still lose money on a house and in the grand scheme of things come out ahead. It’s much better for an old guy like me than for a young couple in some cases, but the young couple has many years left to “make things right”.

I sold a 1,040 square foot stucco box in San Jose in May 2006 for $670K and bought a fancy 1,985 square foot pseudo-craftsman in Boise for $270K (cash) soon thereafter. My Boise house may be worth $25K less than I paid for it, but I’m still ahead of the game. That San Jose house is in foreclosure now and will probably sell for $250K less than I got for it.

Pulling large amounts of cash out of a very overpriced area two years ago and putting a fraction of that into a nicer house in a much less overpriced area may not be the BEST strategy, but is sure beats most other options.

 
Comment by DinOR
2008-08-14 12:44:37

DennisN,

Wow, must be kind of let down. I know you’d mentioned you had lived there for some time and to see it foreclosed so soon has got to generate mixed feelings. Had it just been the typical “vehicle” 2 year “infestment” well… who’d care?

You guys break 100 degrees yet!?

 
Comment by Gulfstream-fixer
2008-08-14 13:52:26

DinOR,
Just my personal experience, but kids aren’t nearly as sensitive to moves as one might think, at least until they hit 12-13 or so.

After that, the move is not a problem, as long as they stay in the same school district with their buddies (assuming of course, that their “buddies” are a positive influence. There are some kids you are better off getting your kids away from)

My daughters have moved twice since 2004 (in with their mom after the divorce, then in with me early this year after “issues” with mom and the new step-dad. I got a rental in their school district, so they have been cool with it.

 
Comment by DennisN
2008-08-14 14:48:14

DinOR,

Yeah I put a huge amount of sweat-equity into that little house over 25 years. I took a somewhat run-down rental and made it look pretty nice.

The NOD was posted on 25 June, and my friends living nearby say the place now looks like a tumble-down dump. It’s very distressing. A house really goes downhill quickly if there isn’t anyone living in it who cares about upkeep.

Yahoo says the remaining mortgage balance is an amount exactly 80% of the purchase price, so I’m guessing the FB had an 80/20 finance scheme.

He was an itinerant house painter - what would he make in San Jose? About $40,000? That means someone loaned him between 16 and 17 times his gross earnings.

 
 
Comment by AnonyRuss
2008-08-14 11:53:18

“$129-$169k could be a good entry point for younger couples.”

But not for something smack dab in the middle of nowhere. And I am not criticizing “middle of nowhere,” but why live on a 5K sq foot lot in a subdivision there? Either be urban, rural, or suburban. Mixing causes headaches, especially if you add Kool-Aid.

Marana is exurban enough. If you have to commute into Marana, then you have built too far out.

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Comment by DinOR
2008-08-14 12:37:06

AnonyRuss,

Even though I have a bunch of relatives in Sierra Vista I don’t know that much about the area, and I’ll admit a 5k sq. ft. lot doesn’t do much for me either.

Again the reason I took this in a positive light is from what they described these homes likely had linoleum flooring and modest appointments. The way most homes ‘used’ to be. It’s a step in the right direction.

 
Comment by AnonyRuss
2008-08-14 14:38:45

“I’ll admit a 5k sq. ft. lot doesn’t do much for me either.”

I don’t even knock the 5K lot (or 4K or 6K), just the idea of driving 15 miles from the nearest gas station to live on one is absurd.

 
 
 
 
Comment by NovaWatcher
2008-08-14 09:40:48

“The Lord helps those that help themselves.”

In other words, if you’re too damned lazy to figure out if you can afford the payments, then tough.

 
Comment by AnonyRuss
2008-08-14 13:28:00

“If you have small children does it make more sense to uproot them w/ regularity in a rental scenario? Get a monster place “close-in” ( complete with monster payment AND taxes ) with zero discretionary income… OR move further out, suck up the commute in “mileage mobile” and at least have a life on the weekends?”

How many false choices can you include in one paragraph? Plenty of people rent places for many years at a time without moving. And plenty of “owners” move constantly. I doubt that Red Rock Village is going to be below average in its levels of transiency. If the project survives, there will be construction going on in the subdivision for a projected ten years. Sounds fabulous.

Why does the “close-in” place have to be “monster?”

“1930’s = “Okies”
2010 = ????”

2010 = Red Rock Villagers?

Comment by Gulfstream-fixer
2008-08-14 13:59:53

2010 = “Fubyars”, “Fubiars”, “SoCalies”?

Locally, I’ve been noticing a lot “Flofubyars” lately.

This, in contrast to one of my relatives, who is a SoCalfubyar in Texas.

 
Comment by Bill in Maryland
2008-08-14 17:53:45

The secret is to not have kids until you can afford to give them a stable roof over their heads.

 
 
 
Comment by EmperorNorton_II
2008-08-14 09:15:59

Oh, the tight antics of those clowns @ UNLV…

Lower Lifeboats!

“The shutdown of Boyd Gaming Corp.’s $4.75 billion Echelon resort will have a far-reaching effect on Southern Nevada’s economic climate - both good and bad - analysts and economists say. ‘It’s like going through the North Atlantic during iceberg season,’ said Keith Schwer, director of UNLV’s Center for Business and Economic Research. ‘We’re just not seeing everything yet”.

 
Comment by boulderbo
2008-08-14 09:24:18

still working on a 100 year supply of high end condos in boulder. hopefully, they’ll sell 5 or 10 more this year and we’ll cut it down to a 50 year supply.

 
Comment by EmperorNorton_II
2008-08-14 09:25:19

Is it any mistake that you no longer hear or see Vegas’s motto anymore?

“Whatever happens in Vegas, stays in Vegas”

Sounds more like somebody stranded in sin city nowadays, because of high gas prices…

Comment by Faster Pussycat, Sell Sell
2008-08-14 09:46:43

The banks that loan in Vegas, fail in Vegas? ;-)

 
Comment by Arizona Slim
2008-08-14 10:44:55

Actually, the motto is, “What happens here, stays here.”

Comment by BanteringBear
2008-08-14 10:54:23

I’ve always hated that saying. Part of the sheeple’s vocabulary.

Comment by bink
2008-08-14 11:39:53

Funny, I always thought the same about the term “sheeple.” ;)

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Comment by BanteringBear
2008-08-14 11:53:42

LOL, nice! Jeez, how else do I describe them?

 
 
Comment by Doug in Boone, NC
2008-08-14 11:54:30

Too bad Vegas’ housing bubble didn’t stay in Vegas!

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Comment by peaceful
2008-08-14 11:58:35

If you (anyone) aren’t part of the sheeple, what are you part of? I think unfortunately that everyone is a sheeple in one way or another, even people who know more about the re bubble than others do. If you aren’t a sheeple, what are you actually doing to revolt, change things, etc. If you go about your daily life letting the W administration create fake documents to justify their war and change the definition of torture, etc., etc., etc., like everyone else is doing, how are you not sheeple? You need more than awareness to not be a sheeple. We are all following because we are all so busy and engrossed in our own lives.

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Comment by Paul in Florida
2008-08-14 13:06:27

OT alert:

Part of awareness is refusing to accept constantly repeated neo-non-words (such as “sheeple”), or expanded and thus watered-down and inappropriate definitions for existing words (”ironic,” “pun,” and “literally” come quickly to mind), which are created by people not intelligent enough to understand language correctly. Dumbing-down the language dumbs down consciousness in the same way that failing to do arithmetic well does, and thus decreases the quality of life.

Orwell wrote a great essay about this - here I found a link just by typing “Orwell” and “language” - talk about standing the test of time:

http://www.mtholyoke.edu/acad/intrel/orwell46.htm

 
Comment by BanteringBear
2008-08-14 13:44:03

Way, way, waaaaaay too serious there bud. Relax sometime.

 
 
 
 
Comment by cvca
2008-08-14 13:01:36

Edit.

“Whatever happened to those that stayed in Vegas?”

Done.

 
 
Comment by bangkokobserver
2008-08-14 09:40:39

My sister has three rental properties in Estes Park. They have always rented out for Labor Day weekend: this year not one has been reserved, even though she’s brought down the rents significantly.

One rental sits 20 feet away from a 500 square foot “cabin” squeezed in with other rentals behind storage sheds and along what passes for the river. Rt 36 is about 100 ft away. They want $300K for that box. The right price is about 55K.

 
Comment by Rich
2008-08-14 09:53:36

#1. “‘We built too fast, too long. Then all of a sudden, the bottom fell out,’ said Tom Gallagher of Summit Engineers said of developments in the Reno-Sparks area.”

#2. We were hiring consultants to help us.

You wanna know what the consultants will say ? see #1.

Comment by DinOR
2008-08-14 10:20:25

Rich,

I didn’t mean to get hyper-sensitive in the previous thread. Yes, ultimately I DO plan on “cashing in” on the bust or I wouldn’t waste my time here or any where else. A little early… for ‘my’ entry point, but that’s just me. Remember ( I’m a tech-wreck Vet ) so I do have something of a “survivor’s bias”.

And I’m not an “altar boy” either. I have to make a living too. Yet one of the things I’ve insisted on since BEFORE “the boom” was the opening of the MLS. So at least I’m consistent. Having a system that appears to be set up for the sole benefit of it’s members treating rank and file consumers ( that don’t have an “in” ) second rate, is just wrong.

Comment by athena
2008-08-14 10:57:32

Hey Dinor,

Don’t forget, you need to come house shopping with us when the time is right. You need to make sure I am properly embarrassed by the offer we make! :-D

Athena

Comment by DinOR
2008-08-14 11:20:28

athena,

Oh that’s right! Rich is right in your area! You’ve no idea how frustrating it is to have your your kids looking at homes in Oregon for 250-275k that would be about 125k in Stockton, SAC etc? Let alone Modesto, Madera and beyond.

I wonder if realtors there are telling potential buyers that “Cash Fat Oregonians are snapping up these deals left and right down here!”? I have mixed feelings b/c here we’ve seen sales volumes fall off a cliff ( but prices are only down 3-5% ) so that’s… ‘o.k’ for me, bad for my youngest yet at the same time a 2nd home ( where it doesn’t rain constantly ) is getting cheaper all the time!

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Comment by Triangle Gal
2008-08-14 10:07:19

Someone explain this to me.

I’m watching a neighborhood on Ft Lauderdale where my friend bought a house, (275K) she was intending to flip, in the spring of 2006. Now zillow has her house depreciating badly and houses around her are in foreclosure and listed for 105K, 169K, 205K.

But two houses in her neighborhood — unremarkable houses which are much smaller than the other houses mentioned– sold recently for 300K.

I don’t get it. Can there possibly still be mortgage fraud going on in this neighborhood? In this housing and lending climate?

Comment by Arizona Slim
2008-08-14 10:41:33

I think you’ve got a case of mortgage fraud on your hands. Now, how to report? I don’t know. Any Floridians with some advice here?

 
Comment by BanteringBear
2008-08-14 10:56:54

Did you notice any prospective “buyers” made of straw looking at the house? ;)

Comment by Earl The Vagabond
2008-08-15 07:45:38

That’s NOT a scarecrow in the front yard….That’s the owner!

:)

 
 
Comment by diogenes (Tampa)
2008-08-14 11:45:51

where did you get the “sold” information?
How do you know what they “sold” for?
Is this a Pending sale? or did they actually close and a deed was recorded at the courthouse?

This is either an obvious case of mortgage fraud, a sale to a really stupid foreign buyer, who thought they got a “deal”, or just misinformation.

If the asking price was $300,000, and the sellers tell their neighbors that they “got what we wanted”, the neighbors think it sold for the asking price.
What they wanted may have been just to get out with a short-sale.

I suspect the facts in this case need more clarification.

Comment by Triangle Gal
2008-08-14 13:11:44

I noticed this on Zillow when I was checking on the neighborhood properties on behalf of my friend. She’s renting her bad purchase out now and can’t bear to look at how her house is doing. So I noticed these sales on zillow and checked them out.

They’ve gone through.

I definitely think these have to be some kind of mortgage fraud, because the #’s don’t make any sense. Which means in within the year there’ll be even more foreclosures in her neighborhood.

Her husband is in big trouble!

 
 
 
Comment by taxmeupthebooty
2008-08-14 10:32:40

is AAUK the least leveraged gold play ?
I’m looking for the Canroys of gold…….any thoughts

send me money mcmonthly, yo

 
Comment by Arizona Slim
2008-08-14 10:38:17

From the original post:

“‘I can’t even get a coffee and a newspaper in the morning,’ said Michael Tarr, 40, who paid about $200,000 for an 1,800-square-foot home last fall.”

And, what’s worse, this wonderful Red Rock community is a long way from anywhere. Tucson is something like 30 miles away, and like it or not, that’s where most of the jobs are. Ditto for anything worth noting in the way of shopping, schools, or entertainment.

All I can say is that I hope Michael likes his car because he’ll be driving it quite a bit.

Comment by BanteringBear
2008-08-14 11:00:07

Michael sounds like someone who should have purchased a condo rather than a stucco sh!tbox in the middle of nowhere. At least he could have walked to get his morning coffee, etc. He’s a little out of touch with himself. Me, I relish the fact that I don’t have any crappy strip malls, Charbucks, or the like near me. The elk suit me just fine.

 
Comment by DinOR
2008-08-14 11:11:49

Arizona Slim,

Again I may be a ‘little’ biased here as I commuted 34 miles 1 way for about 15 years. Here’s what I found;

I put about 200k miles on a Volvo 940 w/ a 4 cyl. engine. Yes even when gas was a dollar. Everyone that doesn’t walk to work complains about parking anyway. ( Cost, hassle etc. ) Everyone of your co-workers thinks you’re insane.

Every weekend they put as many miles on as you do during the week “getting out of the e’f out of the city”. Friday afternoon when you get off work… you’re done! Your weekend begins out in the country your co-workers are still hung up in traffic trying to get to! You learn to coordinate your shopping needs along with your commute by making small stops a few times a week. You do your business primarily along your commuting route. You learn to stock up.

Your kids may not have to pass thru a metal detector to get to class. Smaller class sizes. Ultimately, they grow up and you have to make choices. I’m still not sure we made the right ones. I know we always discuss the negatives of lengthy commutes but like everything, it’s a trade off. IMHO.

Comment by Arizona Slim
2008-08-14 11:29:43

The kiddies may not have to go through the metal detectors, but the K-12 education out in those parts isn’t much. You’re almost forced to become an after-school homeschooler. Oh, wait a minute. You also have to do that in urban Arizona.

Comment by DinOR
2008-08-14 11:48:36

Arizona Slim,

Oh I hear ya! My niece went to Cochise Community College just to get “caught up”. LOL! ( I think she said the Army courses were a ‘lot tougher’? )

That aside I’m VERY leery of anyone that claims their consumption habits ( homes, “vacation” homes, SUV’s etc. ) are “for the kids”. And for people that w/ sprawling McChateaux’s in far flung suburbia commuting in a Hummer, screw ‘em. Like Joe Walsh said; “You bought it, You name it”. No doubt many in the near future will be better served by renting but I like the idea these homes are MUCH smaller and very basic. I view it as part of the bubble healing process!

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Comment by mattR
2008-08-14 13:52:11

That’s the thing in Northern VA. Every needs a 30k+ car to impress the locals. It’s “for the children.” Like your toddler gives a rat’s ass if you have a BMW or a Ford.

Too bad about housing prices being sticky in Fairfax, though. The entitlement mentality is still going strong in the government contractor sector.

Maybe a balanced budget amendment might not be so bad after all.

 
Comment by Gulfstream-fixer
2008-08-14 14:18:19

Want to get rid of all the BMWs, MBs, Hummers, Escalades that were purchased as “bling”?

Slap a property tax payment on it. Yearly, at tag renewal time.

That will cull the herd.

The downside to it, is that people will keep driving their old cars, because you can buy a lot of gas (even @$4/gal) for the difference in property tax between a 15 year old Mercedes, and a new Mercedes.

 
 
Comment by Bill in Carolina
2008-08-14 11:55:08

Slim, I think you have to do that just about everywhere.

Close government schools. End mandatory education. Also, no vouchers. If parents want their kids to succeed, they’ll figure out a way to pay for an education.

At least two retired educator friends of ours agree with me.

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Comment by diogenes (Tampa)
2008-08-14 11:52:51

I don’t think the commuting is the real issue. It’s only part of it, given gas has quadrupled in price in 5 years.
Most housing out in the “country” are CHEAP, because there are no conveniences. If you can buy a cabin for $30,000, then commuting isn’t so bad.
If you pay $200,000, i would expect to find a store nearby.
This fool didn’t have one, and paid a premium price, anyway. That’s housing desperation. This was common in 2005. It’s less common now.

 
Comment by awaiting wipeout
2008-08-14 13:13:47

300K (mostly freeway) on my Volvo 940 and I love her so much, I named her “Vixen”. The turning radius is amazing on this car.

 
 
 
Comment by EmperorNorton_II
2008-08-14 12:02:51

“Bust a move” = Foreclosure

Comment by peaceful
2008-08-14 19:04:20

: )

 
 
Comment by beosguy
2008-08-14 13:16:50

She is listing about 25 foreclosed homes, priced from $500,000 to $575,000.”“‘The $575,000 home in Castle Rock sold for about $850,000 two years ago,’ Hays said.”

$500K is still WAY OVER priced for area… thats nearly 7-8x local incomes…

The laid off lying realtors are now still lying and working for the banks… give me a break… lying realtors need to drop another 200K to sell these homes… the region can only afford $300K homes..

housingbubblebust.com/OFHEO/Major/SouthWest.html

Comment by AnonyRuss
2008-08-14 15:15:12

Whenever I read something about Castle Rock, CO real estate, I remember an amusing news brief several years ago about a city council member there who did a short stint in federal prison for bank fraud involving her house (she did this before it became cool and was actually a bank employee). When she had to resign her council seat, the lady mentioned her long-standing dedication to the town. The Thursday night meetings forced her to “miss the Seinfeld era.” Another barely amusing thing, her last name was McCain (no relation).

 
 
Comment by Bill in Maryland
2008-08-14 18:03:08

Nice reading about rentals in my community of Phoenix. I just renewed my lease. I think it went up by $8.00. But it’s okay. Looks as though I’m going to get my engineering contract out here in Maryland extended through the end of October. Rents in Phoenix have been cheap since I moved there in 2000.

 
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