Local Market Observations!
What do you see in your housing market this weekend? Lower prices? “Orange County’s median home sale price dropped to $291,500 in July, down 11.2 percent from a year ago, according to data released Monday by the Orange County Association of Realtors. ‘We’ve been averaging a 1 percent drop per month,’ said Chris Scibelli, president of OCAR.”
“Sullivan County’s median of $167,750 was down 23.7 percent from a year ago, according to the Sullivan County Board of Realtors. July sales of Orange County condominiums and town homes plunged 53.7 percent from a year ago. Through the first seven months of the year, sales are down 39.1 percent.”
“In the New York metropolitan market, including northern New Jersey, home prices in the April-June period fell an average of 6.6 percent from the second quarter of 2007, and 14.2 percent of homeowners who bought during the last five years are under water, Zillow said.”
“‘That means one out of every seven people in New Jersey are facing negative equity, and that number rings true to me,’ said Jeffrey Otteau, head of Otteau Appraisal Group in East Brunswick and an expert on the state’s housing market.”
“‘We’re seeing short sales all over, and the situation does not know economic or town lines,’ said Ken Baris, president of West Orange-based Jordan Baris Realtors. ‘These days, it is considered an acceptable cost of business for some lenders to have these short sales.’”
Builder problems? “Through the first half of 2008, new-home construction on Nantucket is on pace to be about half of what it was in 2007. For island carpenters like Ralph Kurash, who specializes in interior finish work and cabinet-making, the numbers at the Building Department reflect a grim reality.”
“‘It’s extremely slow,’ Kurash said. ‘It hasn’t been like this since the recession in the late 1980s, and I’m not sure that was as slow as it is now. I talk to the masons that I work with and I’ve hardly heard of anyone putting foundations in.’”
“‘It just hasn’t been like the past, where we were crazy,’ said one longtime island builder who wished to remain anonymous. ‘To be honest, I’m looking to make a deal with them. We’ve got one job now, but it’s not enough to carry the winter. I’ve got two more I’m bidding on, and if I need to get the job I’ll cut prices and make a deal. I’ve got people coming up to me and asking for work all the time. Everybody is cutting corners and trying to save.’”
“From January to June, Gresham housing permits decreased 60 percent compared with the same period a year earlier. Brian Lessler, president of Gresham-based Persimmon Homes, said the company has dropped prices on three homes in the upscale Persimmon Country Club area by almost 20 percent. For those houses, which have been on the market for about a year, he said, ‘we’re not trying to make a profit anymore; we’re just trying to turn the dollars over.’”
“The Beranger, an upscale condominium development, has gone mostly unsold. Seventy-one percent, or 17 out of 24 condos, are still on the market.Other companies have been forced to pull out of the Northwest region altogether because of the housing downturn.”
“Kimball Hill Homes closed its Northwest division in June 2007. The company had planned a 38-lot subdivision in Gresham to cater to first-time, move-in buyers, said Mark Lee, the former Northwest division president for Kimball.”
“The company was less than a month from opening a sales office for the subdivision. The streets were developed, and the lots were ready for utilities, he said. Even as regional president, he was ‘totally baffled’ by the division’s sudden closure.”
“‘It’s a horrible time to sell property,’ Lessler said. ‘It’s a buyer’s market, there’s no question about it.’”
“Homebuyers waiting for the prices of Carroll Creek’s luxury condominiums to drop further will have waited too long after this weekend. If all goes according to plan, K. Hovnanian Homes will sell off the remaining 10 residential units in Maxwell Place at a ‘big closeout sale’ Saturday at its sales center at 69 S. Market St., said sales associate Bill Shukey.”
“Bob Carney, a Long and Foster Real Estate agent in Mount Airy who has toured the condos, said the units have been overpriced at $600,000 to $700,000 for several years. ‘My guess is that was because of the novelty of the area,’ Carney said. He said the $400,000 range would be closer to market value for most of the units.”
Or incentives? “Grand Junction is starting to see big-city tactics when it comes to selling a house. Gene Covello, who with his wife is looking to sell an area home at an asking price starting at $1.2 million, has thrown in the incentive of a new car with an acceptable offer on the home.”
“The home in question is a 4,150-square-foot house on 1.6 acres in the Redlands. It has been on the market since May. The automotive incentive tops a GrandValley home whose owners threw in a $2000 gas card.”
“‘I’d heard about them doing it in Las Vegas where the market was real slow,’ said Covello, who is also offering another home in Grand Junction and will live in whichever house doesn’t sell. ‘My wife woke up and said she had a dream that we had an open house and we had a car out there that we were giving away if they bought it.’”
“The latest MLS figures show that just 21 homes priced at or more than $700,000 have been sold this year in the Grand Valley as of Aug. 1, Covello said. There are 143 homes in that price bracket on the market. Between August 2007 and August 2008, 40 homes in that price range have sold.”
“‘People have a lot of options when they go to buy a home,’ said Kelley Burford, the real estate broker on the home. ‘There’s a lot to chose from. Real estate brokers are probably going to do whatever they can to set their product above the rest and differentiate. In Denver, some are offering cruises and vacations.’”
“Renters rejoice. Apartment owners are dangling freebies in front of new tenants who sign 12-month leases. One company, Mark Taylor, is even going so far as to offer a free iPod, a $25 iPod tunes gift card and two months of free rent to new tenants who lease any apartment in its 34 Valley complexes, including eight in Chandler, four in Tempe, four in Ahwatukee and two in Gilbert.”
“With a glut of cheap rental homes on the market, apartments are facing more competition than ever and many are sitting with empty units as vacancy rates soar.”
“‘In extreme cases, landlords are offering three months free,’ said Pete TeKampke, a commercial real-estate broker and board member of the Arizona Multihousing Association. ‘This is a great time to be a renter.’”
“During the Valleywide condo craze, 30,616 apartment units were converted or sold to investors who planned to convert them to condos, TeKampke said. By the middle of last year, 18,000 units had reverted to apartment rental units and many investors had scrapped their conversion projects.”
“The result has left some apartment complexes with a patchwork of owner-occupied condos, investor-owned condo rentals and apartment rentals.”
Or foreclosures? “The national home foreclosure trend is finally showing up in New Mexico with a large jump of residents losing their homes in the last year. In the last 12 months, New Mexicans have seen a staggering 270-percent increase in foreclosures.”
“Experts say housing trends across the nation usually show up a bit later in New Mexico. ‘Typically, we’ll see things begin on the West Coast and the East Coast. Then, six to 12 months later, we see the effect occur locally,’ the Albuquerque Realtors Association’s Don Padilla said.”
There was a builder in Nantucket, whose new job was selling a bucket, “regular or extra crispy?” he’d cry, and please drive up and pay @ the 1st window…
==========================================
“Through the first half of 2008, new-home construction on Nantucket is on pace to be about half of what it was in 2007. For island carpenters like Ralph Kurash, who specializes in interior finish work and cabinet-making, the numbers at the Building Department reflect a grim reality.”
It’s a miracle that a carpenter is left on the Island of Nantucket. But maybe he commutes, takes that fast boat…
I have a relative by marriage that is a cabinet maker on the Cape. His work was on Nantucket but his house was in Falmouth and he took the boat over.
thats so bad,
“HOW BAD IS IT?” the crowd…
“There once was a man from Nantucket,
Who fished and swimmed with a bucket,
nor a guppy nor shark,
tis not a lark,
HE CAN’T SELL THE HOUSE HE DONT LIVE IN !!”
The auction I went to yesterday saw 4 house sales postponed. It’s so regular now that the auctioneer just goes through it like a non-event. A broker sent me some info for August; it looks like listings are up quite a bit in Flagstaff, and about 2 came on the market for every one sold. The big news is the number of new million dollar houses going back to the bank, and several subdivision developers appear to be struggling.
I was told Sedona is in the ‘oh-sh!t’ stage.
I was told that people want to leave because they realized that they don’t like it there as much as they thought. (Saw lots of for- sale - signs to south near Red Rock State Park, 3 weeks ago).
Yeah, OK. Post-facto rationalization.
They were speculating. Cue Ben here.
Rumor has it that a house identical to mine a few doors down just sold for $1.5 million. I bought mine for $209K in 1994. The previous high was $1 million.
The family was quite well off and had the place gut rehabbed to high standards — and then he got transferred a couple of years later, forcing the move. What sort of people can afford that price? Not the sort who have typically lived in this Brooklyn neighborhood, I’ll tell you that.
Still waiting for reality to set in here.
Perhaps a cupcake maker will move in next door.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a6h1pur72rok&refer=home
OMG from ABS investment specialist to hair salon accountant. How does that pay for a Manhattan dwelling?
It doesn’t.
Guessing he lives in NJ, has a paid-off house, and understands the problem. More than can be said for a lot of FB’s.
Anecdotally, there are a lot of people on the UWS living “hand to mouth” right now.
Care to share the anecdotes?
These poor,poor investment bankers, their plight is just heart wrenching…
“Bankers are ‘buying businesses for themselves, moving west or to Europe, including Russia, or to Dubai,’ said Jeanne Branthover, managing director of Boyden Global Executive Search in New York. “They’re also moving totally outside what they do, buying a retail store or a ranch.””
“Bond salesmen and traders are trying everything from bartending to real-estate sales to make insurance and tuition payments for their families, Maloney said.”
““I know a few guys that started gambling, playing poker to pay the bills,” he said. “Especially ex-traders.””
Figures these guys would resort to gambling, just like their old bosses thought they were doing with no risk back in the day when they thought there was zero chance of nationwide housing downturn. Flaw in the model there guys. However, if these idiots think they can really gamble and win to pay bills when the odds are against them, these are future homeless or prisoners of AmeriKa.
“Joshua Perksy took to the streets after being laid off as an investment banker at Los Angeles-based Houlihan Lokey. He strolled New York’s Park Avenue in June wearing a sandwich board reading “Experienced MIT Grad For Hire.””
“While his gambit generated some job leads, none has panned out so far, Persky said. He’s considering a move to Omaha, Nebraska.”
One more REO on the way to CountryFried in 2009.
Got diversified assets?
The national home foreclosure trend is finally showing up in New Mexico with a large jump of residents losing their homes in the last year. In the last 12 months, New Mexicans have seen a staggering 270-percent increase in foreclosures.”
“Experts say housing trends across the nation usually show up a bit later in New Mexico. ‘Typically, we’ll see things begin on the West Coast and the East Coast. Then, six to 12 months later, we see the effect occur locally,’ the Albuquerque Realtors Association’s Don Padilla said.”
What Don is really saying is that NM is the same as Ben says for Sedona. ABQ and NM is now entering the same, Oh $h!t stage. 7000 homes for sale in ABQ, when the norm was 4000. But prices haven’t taken a dump yet. Oh well.
I am pretty glum about the situation here. I see real worry in peoples faces and no movement toward any solution. The local media and industry denial isn’t helping. All I can say to people I know is hold on, it may get rough.
Ben, have you ever thought of the housing bubble as a conspiracy theory to destroy the middle class? The dummies/greedy people took the bait, as in ARM and a Leg loans, but the smart/ungreedy people saw what was going on and stayed out of harms way. Now that the dam has burst the subprime contagion is spreading rapidly to pension plans, 401K’s, mutual funds, and is also affecting the values of houses in general. One is being affected even if he did not participate. For example, one has a traditional loan but got laid off from his job and now cannot make the payments. From a political point of view, IMO, it is easier to control poor people than financially successful people. IMO, the PTB’s are destroying this country and don’t have a clue about what really is happening.
The duration of the denial stage is amazing. I thought we would (collectively) be past it at this point, but now I am thinking it will last until at least the first week of November.
It’s summertime and the sun is shining, gas and commodites are getting less expensive, UE is less than 6%, fed rates at 2%, NAR says June was sweeter than May, the surge is working (in Iraq, at least), govt inflation numbers are reasonable, no major hurricanes, Fannie and Freddie will be saved, the market is heading up from its lows, bailouts for FBs and banks abound and the Olympic distraction are keeping people hopeful. But when the chilly winds of reality come to visit this fall and the summer home selling season winds down hard and fast, hope will fade quickly even with the BS numbers still coming from the govt and NAR types.
Got to agree with you on this one, need2leave: I was in ABQ recently for a seminar, and picked up several RE magazines at the hotel - the ones with pics. Anyway, most of the homes for sale were at wishing prices (imo) with a few seemingly good deals. There were hundreds of homes for sale featured in these magazines.
Rio Rancho is HUGE, I had no idea how big it is…it is my understanding from a mortgage-distress map I saw of NM, that Rio Rancho is ground zero, same with ABQ and get this: Santa Fe. Those 3 areas are the hot spots. We went through Santa Fe on our way to Los Alamos and picked up more RE mags. Same thing - lots of homes for sale - but they are generally in the $700k+ range.
Californians: Santa Fe has the weather of Bishop (its adj to mountains), the size of Arroyo Grande and the terrain of Juniper Hills (juniper bushes and scrub pine and homes set among low rolling hills). No big commercial activity to speak of other than a small airport. Love the architecture though. Seems that most of the employment is either government or hospitality. One mall with no-name businesses.
Las Cruces is a mess - the building goes on in 88007 (who *are* these builders and who is loaning them money to build???) but all the homes are empty except for 1 or 2. 88012 and 88011 have huge developments that have been abandoned mid-build. Its as though the builders just up and left - I imagine the banks stopped lending. No doors or windows on these homes, but tar paper and chickenwire on them or flat foundations with the utilities sticking up into the air, or paved roads indicating a development all leading to no where. Lots of spec homes owned by local realtors.
~Misstrial
I was told Albuquerque has the climate of Iran
“I was told Albuquerque has the climate of Iran.”
lol, not sure about that, although it could be true…ABQ is what I would describe (as a Californian) as high-desert - like the Ana Verde Hills section of Palmdale or over off Ave M like where “dude” has posted being interested in a property there.
Yeah, implosion, I agree with you…I would say..*thinking*…maybe in another year prices for ABQ rental properties may come down to the right levels. Los Alamos is quite remote…had to drive up a winding road..series of mesas that the lab and town are built on. RE is more expensive there due to remoteness. One thing: Los Alamos is No. 1 in the nation for personal savings rate…we frugal-types/investors/savers should vacation with those who are like-minded moneywise, no?
One more thing, implosion, I thought Los Alamos is DOE and not all DOD…
~Misstrial
Definite wishing prices even on -plex rental properties in Abq. Many of these sellers are asking 10+ yearly GRM. Lots of SFR prices don’t pencil out with current rents.
Los Alamos has its own set of housing issues. One company town whose future is uncertain. Its most avid supporter retires from the Senate this year.
Several years ago while visiting Sandia Labs in NM I saw a brief in the newspaper: over 50% of the childbirths are paid for by taxpayers.
If I buy that house with an acceptable offer ($5), do I get a used Honda Civic with that?
I’ve been watching housing with zip reality. I’ve kept the search parameters pretty constant over that time.
I’m starting to see more and more forclosured homes in the Los Angeles south bay cities, aka the high end.
About 1yr ago I started to see a few homes show up at the top end of my search range. Now, picking up more and more.
Taking occasional looks at the high end homes a number of forclosures there as well. A good amount sat through the entire summer. Also seeing plenty of fraud indicators as well. Homes sit for many months and go through several reductions. Suddenly the increase the price and go inactive indicating a sale! Probably Realtors trying to cook the comps so they can defraud the government bailout money.
Also saw a number of houses go inactive and then reappear. I’d guess the financing fell through.
Don’t see how long they, the comps, will last. There is more inventory going on line and more forclosures every month. Saw first bunch of under 400K houses, but the area I’m thinking of moving to is still above 500K.
Should be an interesting fall. August is almost through and a lot of properties are still sitting.
Update for zip 95050-54 (Silicon Valley)…My last post on this was in April I believe…I was suppose to post again in July but I decided to wait another month because things were deteriorating fast…Pockets of strength in a few area’s of the valley with moderate to severe weakness in most…Inventory in my zip is the highest in several years…Prices are falling rapidly and the foreclosures and short sales are becoming much more common…Selling season is almost over and I expect a very, very, rough fall…Next update in November…
http://www.salon.com/mwt/feature/2008/08/15/living_in_mall/?source=yahoo
Fabulous article and comment on our society.
Speaking of living conditions. 2pg.
DC metro with the exception of the outer burbs remains about 10-15% off peak, less if any renovations have been done, in which case they are maybe 5% off. Twenty percent off might be found if a house has already gone inactive and returned (although I can find at least a dozen houses that are exceptions to that generalization). There are a lot of open houses now though, so maybe the thought that sellers will have gone through the high season altoghether without selling will create more movement in the market.
Mike,
I’m seeing alot of For Sale signs in Arlington. I know Fairfax is way down - condos are dropping 100K in prices. Arlington condos have to come down. There’s no way there’s a market for hundreds of 350k -400k closets - even if they are NEAR THE METRO!!! Fairfax is trying to freeze teachers’ cola for 2009/10 - they foresee a continued drop in housing prices. I still can’t quite figure out Arlington. There’s been a huge influx of megabucks in the last 4 or 5 years. Where did it all come from? Defense contractors? Time will tell…
I spoke to a friend last week and he is closing on a 3600 sq. ft. house in Laurel, PG county MD. The house was 745K in peak times and he got it for 510K. I think it is still high for PF county especially with high tax rates in MD.
Another friend is closing on a house near Martinsburg(Kearneysville, WV). This house is 3600 sq. ft. and was selling for close to 420K in peak times. He is paying 229K with 9K in closing subsidy.
It is evident that suburbs have fallen close to 50% already and may fall further. DC metro area is full of a lot of greedy investors who are making multiple bids on foreclosures. I think it may take another 6 months for these specuvestors to get some brains, especially when mortgage rates go up and FBI starts looking at lies on loan papers. Most investors I met were from China and India and many mentioned that they lie on loan papers that they are buying the house to live in rather investment to get a cheaper rate. What a mess.
I wouldn’t touch a 3,600 sf home with an ugly stick. My last energy bill in SoCal for our 1600 sf home, was $85, in the middle of August. Energy prices are supposed to be going through the roof this fall. Whatever deal your friends think they got with their McMansions is going to be offset by the cost of running these future boarding houses. Unless, of course, they are 1%ers.
Property axes are not high ..less then 1%/ however income tax is a stretch. House prices are down maybe 15-20% from two years ago.
Central Ark is still slowing compared to yoy sales, but prices for mid-range houses seem to be finally starting to come down. I think we are usually about a year behind the rest of the country in most regards, and this seems to be holding true for the burst as well.
I think high-end homes have softened in price quite a bit maybe, but I really dont’ pay much attention to that. I’m more interested in mid-lower end. I expect that a house which was selling for 225 a couple years ago I will be able to get for 160 at some point.
While most of my evidence is just gut feeling or generally anectdotal, I saw a house the other day which sold for 154k in 2004, went back to the bank at 111k in ‘06 then sold later that year for 149k, then went back to the bank in ‘08 for 163k. Now it’s on the market by the bank for ~124k.
Also a house my wife and I looked at with 7 acres which was listed for 199k has now come down 10k, to 189k. If I thought I could get it for 160k I’d probably buy it. I imagine in a few years that will be about the right price, maybe lower.
Gee… 7 acres… You could be a farmer! lmao
I know nothing about central Arkansas, but $189k for 7 acres? Arkansas? Bwahahahahahahahaha!
Well, you fail to factor in that it’s probably Erik Estrada Approved(TM)..
Daa.. Daa.. DA DA DAAA!!!!
Not just central Arkansas Bantering. We’re talking none other that Frogballs, Arkansas. lmao
Two widely separated items. First from Ohio: Got roped into attending a “presentation” by an old GF who sounded desperate for me to attend. Turned out to be a multiple level marketing scam put on by “rich” friends of the old GF. Typical pyramid of getting “new members” under you for a stiff fee; product was nothing more than high priced services for nothing anyone really needs. “Rich” friends said that they made 3 Mil in the last 5 years in MLM businesses. Did get a good meal out of it…. Looked up the friends home on county records.. . They do live in one of the most desirable suburbs of Cleveland. Have serially refinanced 4 times from 2000 up until 7/2006, taking out about $40k each time. Now owe $420K on a house Zillow estimates at $288. Soon to be a forclosure, I’m sure.
From Texas: Supplier that I do business with an office and staff out of Houston notified me that he has a new business address, in Telluride, CO. Turns out this business address is a cono with units for sale in th 1.5 to 2.0 Mil range. Is this good news or what? I’m at loss to explain.
his TX mc mansion was sold at auction so he moves to his villa in the mountains…..
Same MLM scam is running out here in the desert. It’s huge right now. They said there’s a huge presence in OH also. I went to one meeting with a friend and there were nearly 300 people there. That’s a big crowd for summertime here. Some of the services are worthwhile, but I just can’t see harassing friends & family into it.
cono = condo
Dutchess Co, NY
Wife picks up daughters friend at friends mom and dads house for sleep over at our place. Neighbor is at daughters friends house crying at the kitchen table. Wife asked what the problem was. Apparently visiting neighbor is getting her shack repo’ed by the bank. No details on her gig. Part II: Daughters friends mother pipes up and said she too is having $$$ problems. Evidently her mortgage is weighing on marriage heavily and they *must* net $1000/wk just to pay current bills or else. That doesn’t include any unforseen expenses. She went on to say how the house is in rough shape. From what I could tell, the house is experiencing differential settlement/soil subsidence at a half assed addition done some time ago. She made the statement, “I just want out from under this dump but we still owe $210K”. She concede to wife that they could get 150k for it at best. With structural issues like I’m thinking, she couldn’t give it away.
There was no indication or discussion of mortgages so I’m not sure what is exerting the pressure on these two families.
“…the house is experiencing differential settlement/soil subsidence at a half assed addition done some time ago. She made the statement, “I just want out from under this dump but we still owe $210K”. She concede to wife that they could get 150k for it at best. With structural issues like I’m thinking, she couldn’t give it away.”
There is only one answer, stop paying and run away from that house!
So true, BanteringBear.
“There is only one answer, stop paying and run away from that house!”
Think of the millions of structures with known problems of unethical sellers who accepted the FB’s offer based on waiver of contingencies involving inspection, and not necessarily the highest offer back in the day when multiple offers were rollin’ in. The foolish lenders still standing will eventually eat this mess, and eventually the U.S. taxpayer when hundreds of billions of dollars end up being created to buy preferred stock in Fannie & Freddie and recapitalizing the FDIC when it officially goes insolvent.
The litigation from this mess is going to clog our court system for years, one more unexpected addition to this mess as the great credit pumpkin unwinds. Neil, please pass the popcorn.
Got diversified assets?
A vacation report from Ontario, Canada.
We are in Cottage Country for a week and the wishing prices here in Muskoka are still very high. $500k CA for waterfront 3 bedroom cottages at the lowest. Very small 1 - 2 acre islands for 1 - 2 million when a premier 25 acre island with 6k sq/ft “cottage” went for 2.5 mil in the mid eighties. And this all with no MID for Canadians!
Having said all of that, this area does deserve the premiums it garners, but as money tightens up things should come off these tops.
Next week, a report from Pittsburgh, PA as we wrap the summer holiday with a visit to the old homestead before heading home to the OC.
North County San Diego:
Sale in the lower-end neighborhoods are on fire! Prices have already dropped 50-60% in many cases, and an investor could get positive cash-flow at current rents (which are too high, and will come down as more investors buy to rent and the economy slows further).
The mid-tier is starting to show some significant price deterioration — maybe 15-30% down — and sales are slightly lower/stable relative to 2007 (a very slow year here).
The higher-end areas are still fairly strong. Prices are steady or maybe off 10-15% from peak.
What’s surprising to me is that LA, specifically the southern corridor of the SFV (which I’ve also tracked for many years) is getting hit hard! This market was running behind SD by about 12-18 months, but are now showing significant price declines in some areas — around 2003 prices, or below, which are about 30% off peak in a number of areas. Same pattern as SD, in that the lower-end areas get hit first while the higher-end levitates for a bit.
One more bit…
We are in the market for a large truck (yes, we use/need it).
The dealerships are hurting like I’ve never imagined possible. It’s one thing to read about it, but when they are BEGGING you to take a vehicle that’s been discounted by 30% or more, it really hits home.
I wish I was in the market for a new truck right now. I would get so much satisfaction out of naming my price. Like say, I don’t know, $24,999 for a brand new fully loaded 3/4 ton quad cab 4X4 with a sticker price of $55k. Sure, they probably wouldn’t take it. But I would go to every dealership in this state until perhaps one did.
A few of things I noticed this week.
-More yard sales and garage sales than I am used to seeing.
-A Salvation Army store offering everything for 50% off.
-4S Common$ absolutely dead on a Saturday Morning at 11am.
-A few houses I had been loosely watching have been pulled off the market, hoping for better conditions next year for their wishing prices.
A few co-workers are finally starting to realize that the market is in trouble. Most don’t have a clue. One just bought a $700K house after asking me for some resources to get a feel for the market. I had passed on some of the usual factual sites and stats for SD so that he could make a decision that would be best for his situation. He didn’t bother to look at anything I suggested. He thinks he got a bargain at the bottom because his UHS told him so. Now he’s calling me a bitter renter. This doesn’t bother me, but I would call his ability to maintain his current income in the face of current economic conditions somewhat questionable. Sigh.
With LA unemployment over 8 pct, versus only 6.4 pct for San Diego, their labor market is ahead of San Diego’s.
Report from zip code 20832, outside Washington DC. Neighbor’s 3br nothing-special townhouse is newly on the market for $335. Bought in 2000 for $140. This pricing appreciation is pretty typical and sadly, houses are still transacting at these figures. Oh, and this TH community also requires a monthly $75 HOA fee. I am renting here for $1550 and have abandoned hope of ever buying.
Townhouse in Reston, 2- bedroom, listed at $340k. The 3-BR end units sold this spring for $390k, last summer the other end unit was $377k. We paid $330k for our 3-bedroom in 2003, they were closer to $200 in the late 90s.
Reston is really, really sticky. Prices are still high, but if you take 10% off your wishing price some sucker will buy it.
At night, I am a teacher at a local university and one of my students was talking about how he just bought a house. It was difficult not to deduct points for his obvious lack of judgement
Some news from my friends here in Austin, TX. They accepted an offer on their condo/townhome - not sure the proper term for their place. Anyway, been on the market for maybe 1.5 months. Got an offer for a little under asking after a single reduction ($5k I think). So the offer is for roughly $175k. This is in NW Austin at roughly 183 and McNeil.
The buyer is an “investor”, and they will be leasing back the property for a few months while their new house is built - for $1300/month.
Doing the math, assuming 20% down on a 30 year fixed with a generous 6.5% APR, PI = $885. Taxes around here are roughly 3%, but I’ll be conservative and say $300/month. I’ll guess around $100/month for HOA, that puts us at $1285 without even considering insurance, maintenance, or vacancies…
Looks like folks in Austin are still banking on appreciation to make money in RE.
J
Area code 85044 phoenix in Ahwatukee Neighbor still can’t sell his house and now the rental across the street is for sale. Some homes do sell and if they sell they usually sell very quick the rest just sit for months.
My previous Townhome hood back in CA 93021 is way down I imagine because of the very high HOA over 400 per month. I talked to my RE investor friend back in CA 91360 he says prices are down 30% and most sales are foreclousres or short sales , short sales taking many months to complete as the banks sit on it waiting for a better price.
Still lots of houses for sale in Ahwatukee (85044). Driving down Equestrian Trail, I counted 7 or 8 houses alone for sale (higher end older houses for those not familiar). Wishing prices are still way too high though, according to ZipRealty listings. Most going for well above $150/sq. ft. in the area, even the older houses. The house right across the street from me just went into foreclosure, which I believe is the first on my street.
http://www.zillow.com/homedetails/1527-Calle-Artigas/16435796_zpid
Zestimate. : $534,490 - $658,790
For Sale: $559,000
MAJOR PRICE REDUCTION!!! VIEWS, VIEWS, VIEWS. INCREDIBLE VIEWS FROM THIS OPEN AND AIRY HOME. BACKYARD POOL W/NEWER SOLAR HEATER, NEWER STAINLESS APPLIANCES, AND LAMINATE FLOORING, DUAL-PANED WINDOWS, LUSH CARPETING, AND LANDSCAPING. CEILINGS HAVE BEEN SCRAPED, BATHROOM REMODELED, CEILING FANS IN BEDROOM’S, CLOSET ORGANIZERS IN BEDROOMS, CUSTOM ENTERTAINMENT CENTER IN FAMILY ROOM. THIS HOME SHOWS GREAT. OWNER HAS BEEN TRANSFERRED AND IS HIGHLY MOTIVATED
transferred yes its just like the last bust now all they need is an earthquake
Never quite understood the “view” thing. If I want a good view, all I have to do is walk to the nearest Blue Ridge Parkway overlook near where I live. It’s a hell of a lots cheaper, and just as good (maybe even better) than the view from the porch of someone’s McMansion!
“…all I have to do is walk to the nearest Blue Ridge Parkway overlook near where I live.”
The view thing is about ‘owning’ the view, as in the ability to sit on one’s butt in the living room and see it out the picture window.
The “view” thing was just another way to tack on tens, if not hundreds, of thousands of dollars to some overblown fantasy house price. Having lived in a prime view, high bluff waterfront home on the Puget Sound, I can tell you that one can “get used” to views. Sure, they’re very nice, but they’re also overrated.
Santa Ana winds will rip from the North east right into this homes pool so this view is not a big deal. Unless you like wind.
Zillow says it sold for $625k in June 08.
That’s an 11% decline in two months. Hey, at this rate it’ll be $0 by February 2010!!!
yea thats prefect.
perfect too
At the end of June, we (my girlfriend, cat and I) moved from a rental in Key West. We loved that place. It was a cottage “house” in a 3 cottage “house” compound with shared swimming pool. A beautiful gated community in the heart of downtown Key West.
Our rent was $1900 a month, with $75 deducted every month for tacking on the swimming pool lights to our electrical.
Last November, our landlord moved from California with his son to take up residence in a “shed” out back which had a toilet and shower. I thought it odd this multi-millionaire who owned properties in CA and NC was now back in Key West to try and sell this entire property . . . or . . . to at least get it refinanced.
My landlord had his mail forwarded to my lockbox out front. I would sort our mail, take his bunch out back, and set it on top of the washing machine and dryer which I paid electrical on and which he and his son were using.
Sorting mail, I began to see thick envelopes from banks, credit card companies, machinery companies, and so on, in the clear tell colored envelopes which shout “Immediate Attention” to someone who wasn’t paying bills on time.
How bad was my landlord in debt and upside down?
Well, before we moved into our $1900 rental, we researched the 3 house compound in possibly the most desirable Old Town locale of Key West. Being in a no-flood zone, this area is one of the few areas where no flood insurance is required by a bank when a loan is made. Hence, houses in this “X” zone usually command better prices as homeowners save a bundle by not being forced to buy flood insurance when getting a loan.
That said, when we moved into our rental in September of 2006, we knew the whole compound was on the market for $3.9 million. Our one bedroom house alone was being marketed for $1.7 million. The house in the middle was offered for sale for $1.2 million. And the remaining house was offered for $1.0 million.
During the time this property was on the market for $3.9 million, we had several Open Houses where absolutely ZERO people showed up. I did have a Realtor wake me up one day for a “walk through” (I work nights in a bar ’til 4 AM) and that was the last time she made the mistake of not verifying I had gotten a text mail message from her as my 24 hour notice to show. (The couple who “walked through” were scared beyond belief that a red-eyed giant of a guy was p.o.ed he was woken from a deep sleep.)
After my landlord lost his new concrete business in CA (Laguna Beach . . . he admitted to me building had dropped way off out there), and after moving back to Key West, and after all his unpaid bills began stacking up on our washing machine, he then confided in me that he needed cash to keep his other RE up in North Carolina. So, he was going for a refi in December of 2007. He was very confident he would have no problem as he is well known in Key West circles.
Needless to say, he met with every bank and lender in town. No one would extend him credit. This once gregarious, confident man became glummer by the day.
During this time, we continued paying our rent on time. We also watched the house be removed from the MLS . . . twice . . . in a maneuver so that the old listing price would not show a massive “reduction” in price. This was a psychological move which my landlord and Realtor agreed would telegraph the owner was not desperate to sell. (I’m indebted to my landlord for being so brutally honest about this method of reducing a home’s selling price without showing reduction in price on the MLS. Watching his panic moves really opened my eyes to the way Realtors spin the truth.)
In essence, the compound was marked down from $3.9 million to $2.9 million. Then it was dropped to $1.95 million. During this 50% drop in listing price, absolutely ZERO people showed up for Open Houses. In fact, the Realtor herself did not show up for the last Open House.
Eventually, in April of 2008, the landlord dropped the price to $1.695 . . . and did so to show a “reduction” on the MLS. So, finally, on the MLS, you had a listing price of $1.95 million, “reduced” to a new price of $1.695 . . . with no mention whatsoever the property had been marketed for $3.95 million in 2006. (Slick, huh?)
Still, no one came by to view the compound.
Then in late May 2008, I heard our door bell buzz. I walked out to the compound gate and I met a process server who gave me a 75 page document in my name warning me the property was being foreclosed upon. Since neither of my neighbors were at home, they could not be served. However, this process server told me the paperwork was basically a formality, and, in essence, we could have about 6 more months of living in our rental before the bank took it and the whole compound back from my destitute ex-multi-millionaire landlord.
Before sitting down with my landlord, I actually read the whole 75 page document written in horrific lawyerese which I had to keep referncing on the Internet to understand. The time I spent deciphering the language was time well spent as it taught me how badly in debt my landlord really was.
One thing which shocked me was this: my landlord quit making payments on this compound in Key West in December 2007. Thus, he had come back to Key West in November. He and his son moved into basically a renovated tool shed with a toilet, shower, single bed (the son slept in a sleeping bag on the floor) and mini-fridge while he would attempt to refi or sell the property. Lastly, he was using the money from the rent of the three houses in our compound to live.
I couldn’t believe it. When I met this guy 1 1/2 years earlier, he had assistants, maintenance men, etc., all jumping at his commands. One assistant moved from Key West to manage this RE mogul’s North Carolina properties. And within 18 months, this guy was bust, he hadn’t paid his Key West property’s mortgage for six months, and, he was reduced to living off rents we blue collar workers continued to pay like clockwork.
I gave my one month’s notice in June. We got one month rent in July in return for our “last” month’s rent.
During July, we found a 3rd floor condo which back in 2005 would rent for $2000 a month and which was now renting for $1600. We snatched it.
On the day we moved from our old rental, we noticed our old compound had been reduced from $1.695 million to $1.2 million for the whole shooting match. It has not sold at this price.
Do the math. A three house compound with in ground swimming pool was selling for $3.9 million back in Summer of 2006. It is now being marketed at $1.2 million and has been of the market at that new price for 1 1/2 months.
Now that might sound like a “bargain” to some stupid Snow Bird investor who doesn’t know Key West. But if anyone with half a brain does the simple “math” they will find the three rents still will not cover the mortgage payments + the ever increasing RE taxes (just went up another 10%) + maintenance + insurance for wind and homeowners. And oh yeah: for the first time ever, my landlord was being told by his lender that he had to have “flood insurance” ($3,000 a year).
Flood insurance for this area was a first, but it’s one of the new costs of “Global Warming”: more hurricanes, more intense hurricanes, and bigger storm surges pounding the low lying Keys.
All in all, my ex-landlords taxes and insurance for the whole compound were running $30,000 a year. And that, added to a mortgage for a fast depreciating asset, is not going to make sense to any investor. (Along with the new flood insurance, the landlord has always paid higher wind insurance, homeowner’s insurance, and the ever increasing city and county taxes on the compound.)
I learned from my 75 page document my landlord’s mortgage is with NCC Bank. He bought this compound in 1998 for $575,000. He did several HELOCs with other lenders, how much total I never found out. But I do know those lenders will never get their money back.
Now stop for second and think about this: the compound doubled in price 3 times (take a few hundred thousand dollars) between 1998 and 2006. Nope, no Bubble here. Move along. Nothing to see. Just the average normal doubling in RE price every 2.5 years. (I can remember ads in the paper circa 2003-2005 touting this “fact” to prospective buyers.)
As for me, this was a eye opening free education in how not to over-extend. This lesson also showed me the debt free life is also more stress free and allows one to enjoy a life of living below one’s means with more happiness.
I don’t know where this former $3.9 million compound will be sold, but I do know this: our County government is now broke like many locales across this country. To balance the books, staff are being laid off, services are being slashed, and taxes are being raised. Taxes will rise as quickly as home prices will depreciate. This is an absolute.
Remarkably, snowbirds keep buying properties down here eventhough the bottom is obiously not here. Sales have slowed dramatically. Brand new condos built three years ago sit empty. And yet 2 or 3 homes/condos sell every week in this town which shows you can still fool some of the people all of the time.
We are in a Tourist Recession. Fewer cruise ships are hitting our port. Fewer drive downs from Miami due to higher fuel prices. Hotels and motels are dropping nightly rates. The airport shows fewer and fewer arrivees.
And yet the local NAR is still pumping out Sunday paper ads touting their new fact “Real Estate in Key West doubles every ten years because everyone wants to live here.”
To which I say, baloney.
We’ve still got tiny Key West crackerbox houses built in an area which has flooded three times in the last 20 years selling for $300,000 (they were $600,000 in 2005).
Do the math. Double that $300,000 every ten years for 100 years.
By 2018, Realtors are banking on the idea these tiny homes will once again fetch $600,000 as they did in 2005.
By 2028, it would take $1.2 million to purchase one of these.
And if you double this out every ten years for another 80 years, a post WWII cracker box home in Key West would sell for (do the math yourself to verify this as I did this in my head) $307,200,000.
That’s a little over $300 million dollars your heirs would have in equity in 2108 should you pass on your tiny cracker box house which Realtors in Key West assure you will double in price every ten years.
Raise you hands, folks, if you think a home with less than $40,000 in today’s materials will fetch that much in 100 years. What? No one thinks its possible. Must not be any Key West Realtors who drank the Kool-Aid in this forum.
Lastly, I will point out this: during the 1928 Florida Housing Bust, mansions in Palm Beach . . . which still exist from that time. . . still do not fetch their 1928 market top asking price from 80 years ago. That is correct: eighty years of rising commodity and asset prices, and a 1928 Palm Beach mansion is still not fetching it’s market top price (accounting for inflation).
But Real Estate in Florida always doubles every ten years according to the vested interests of the RE profession. Right?
Caveat Emptor.
Keep saving money.
This bust has a long, long way to go.
It’s going to get much worse.
Good Report…
I think what will shock this country to the bone, is the fact that a lot of ‘rich’ people, including those that from an outward appearance, looked quite prosperous and stable, were anything but.
My “rich” uncle was flat broke before he died. I don’t think he had a penny to his name. I won’t recall the story. It might make me cry. I don’t need that on a Sunday afternoon.
Wow, this epic story sounds like the Citizen Kane of real estate speculation. FYI, I’m heading to Miami/Key West for a family vacation the end of November. We tried to get the Raleigh in south beach to come down on their hotel rates, figuring the tourist trade was depressed. Wouldn’t budge.
Booking on short term notice helps. Only during the NY Marathon it didn’t…Or: check prices again a few days before event. Cancel original booking….
Great post, thanks.
Thanks for the lengthy but illuminating post, Rock. Lots of quiet desperation playing out behind the “crisis is contained” facade.
It has been much harder to get a feel for local San Diego real estate sales results since Sandicor stopped making its monthly sales reports publicly available last April, but I get the general feeling that the normally red hot summer sales season has been a bust in San Diego. At this point in the season in the past several years, there was abundant evidence of sales activity, including lots of For Sale signs and open house announcement signs posted along local streets, but there is little visible evidence of much evidence by either sellers or used home salespeople to move standing inventory. The prices of unsold used homes (aka MLS prices) have shown very little movement since earlier this year, despite evidence from the C.A.R. that sale prices are dropping rapidly across the State of California.
I drove around Chula Vista near SD were my Stepdaughter lives it was forclosure city.
Misstrial, I agree with your analysis also.
http://www.zillow.com/homedetails/1423-Calle-Fidelidad/16435883_zpid
How this home stacks up
This home $ per sq ft: $227
Comps avg $ per sq ft: $286
This is getting better. I think this is an original owner paying 600 a year prop tax so 500K is a big profit they must have bought for less than 100K. I will hope for 400K next year or less than 200 per square foot.
Checked craigslist for houses in Astoria, Queens (NYC). EVERY listing was for condos in Long Island City.
No SFHs listed, just new, overpriced condos.
I’m looking there too. Its totally disgusting.
‘Highway 78 corridor sales are on pace to drop 90 percent from sales in 2005, according to MarketPointe.”
Music like a lullaby to my ears. Too bad I don’t want to live on the 78 corridor but the 5 corridor west is beach front. Drop Baby drop.