The Next Hot Market That Could Be Walked Away From
The Herald News reports from Illinois. “The 14900 block of Gardner Street in Plainfield has been a lonely place this year. Dick and Jeannine Goss have lived there since February, when they closed on the single-family home where they intended to live out their retirement. They were the first — and only — people to buy a house in the Fairfield Ridge subdivision near the center of town. After three years of marketing the subdivision with no other takers, developer James McNaughton asked the village to allow the company to replace a large number of the planned single-family homes with more affordable duplexes and townhomes.”
“‘(The Gosses) are placed in the unenviable position of owning not only the only house, but the most expensive house in the neighborhood,’ said trustee Jim Racich. ‘What are you doing to help the Gosses financially where they are not going to suffer financial disaster when you start selling homes for $100,000 or $150,000 less?’”
“Steve Gregory, president of James McNaughton Developmentpointed out that the amount the Gosses have invested isn’t as much as the company has — and with no return. ‘Without a change with more market appeal this development is doomed to fail,’ Gregory said.”
“Jeannine Goss agreed the developer has suffered a significant loss, and that fighting a sagging economy has been a losing battle. But she also pointed out their unusual predicament. ‘At one point Steve Gregory kept talking about all the money they invested. I said well, you still have your homes. This is all of our money,’ she said. ‘He said they’re trying to stay afloat. I said can’t we both be in the boat? Can’t we stay afloat with you?’”
The Chicago Tribune from Illinois. “Custom builders are using more lumber and less stone, delivering shrub-free yards, and subbing those Sub-Zeros for General Electric appliances. These are among the efforts of local builders trying to protect their bottom line. It’s a new financial reality.”
“‘Builders are no longer putting up the largest possible house for the lot size and are installing lower grade appliances or eliminating a window,’ noted Chris Smith, a sales associate for Baird and Warner in Winnetka.”
“‘All materials costs are way up, so obviously the profit has gone down a lot compared to last year,’ said James Shim, Shimco Custom Homes, Bartlett, whose costs rose about 10 percent while his asking price fell about 15 percent. His 3,300-square-foot homes with five bedroom and five baths are priced from $1 million to $1.8 million. ‘Consumers are looking for quality and big bargains, so I have no choice but to cut on our end.’”
“A sobered National Association of Realtors wants the federal government to underwrite new mortgages to make them significantly cheaper to pull would-be buyers off the sidelines. Saying that ‘consumers are tapped out and have given up,’ the trade group’s chief economist told attendees at its annual convention here that it plans to urge Congress to create a housing-specific stimulus package.”
“James Kinney, president of Rubloff Residential Properties in Chicago, who is attending the meeting, said local numbers would be weak. Privately gathered data on showings of homes in Chicago ‘fell off the end of the Earth in October,’ he said.”
The St Louis Dispatch News. “The wave of foreclosures that has crested across the St. Louis region in recent months has brought with it a nasty undertow: a surge of empty houses. Now, in the hardest-hit neighborhoods of St. Louis and north St. Louis County, there might be three or four on a block, foreclosed homes sitting vacant with no one to buy them even at rock-bottom prices.”
“Kelly Kress heads a housing agency that serves one of the hardest-hit areas in the region — a 140-block patch of south St. Louis between Grand Boulevard and Jefferson Avenue and roughly Arsenal Street to Meramec Street, where investors bought up battered brick two-family homes that have since fallen into foreclosure by the hundreds. In the Gravois Park neighborhood, part of Kress’ turf, one in five properties is either vacant or has been foreclosed upon in the past three years, according to city data.”
“‘We’re ground zero,’ Kress said.”
“It was a neighborhood on the upswing, as the tide of redevelopment that lifted nearby Benton Park and Tower Grove South promised to flow in. Money arrived. Gorgeous rehabs got under way. But then the housing market turned. Credit dried up. Novice rehabbers found historic renovation more difficult than they anticipated.”
“‘We went from being the next hot market to a neighborhood that could be walked away from,’ Kress said.”
From KMBC in Missouri. “In the last year, Buchanan County has the most foreclosures reported in Missouri, according to a realty tracker. Clay County was second. Foreclosures in Jackson County dropped, as did Platte County. In Kansas, Wyandotte County heads the list of reported foreclosures. Johnson County is third on the list.”
“Jackie Moore currently rents, but she said she knows a lot about foreclosures, because two of her landlords lost the homes in which she was living. ‘It happened to me twice. But there is nothing I can do about it,’ Moore told KMBC’s Micheal Mahoney.”
“Moore said she blames her landlords for not warning her that home was being foreclosed. Moore is now living in a third rental house. ‘I never did get a deposit back. I was just out of there,’ Moore said.”
The Press Citizen from Iowa. “It appears the housing crisis that has had major effects on much of the rest of the country now is affecting the Iowa City area. Jeff Dill, president-elect for the Iowa City Area Association of Realtors, said he’s also witnessed more foreclosures.”
“‘It’s starting to affect people we know a little more than it used to,’ he said. ‘It’s more noticeable than it ever has been.’”
The Detroit Free Press from Michigan. “Two reports released Thursday indicate bright spots in Michigan’s real estate market, but industry experts say we’ve got a way to go before things are normal. Sales continued to boom in foreclosure-laden Detroit, which saw a 42.2% jump in sales to 1,126 properties from 792 in October 2007.”
“Richard Dugas, CEO of Pulte Homes Inc. of Bloomfield Hills, cautioned against too much optimism. ‘The sales velocity is up, but a huge percentage of the resale number is foreclosed sales,’ Dugas said. ‘It is optimistic to say a sales jump so driven by foreclosures is a signal of the bottom. A huge amount of resale inventory that is not foreclosures is not selling.’”
“Another thing that mars the positive home sales picture is that prices are still on a downward spiral, said Drew Sygit, president of the Lending Edge at Allied Home Mortgage Capital Corp. in Rochester Hills. In October, the median price of homes sold was $70,000, a 40% drop from the $117,000 median sales price in October 2007, according to Realcomp data.”
“‘Prices are still falling. That’s not a stable market,’ Sygit said.”
From WLNS TV 6 in Michigan. “Would a 90 day ban on foreclosures really help the housing market? Home after home, facing foreclosure or already there. Adeline Metzler, Center for Financial Health: ‘99% of these people are serious hardworking people, they do not want to lose their homes.’”
“But Metzler says the plan does raise one red flag, it’d be too hard to enforce. ‘How do you tell all those lenders there’s a moratorium, because many of those loans were made here in the state of Michigan, but we’re dealing with servicers in California and Texas,’ Metzler said.”
“So she says, while it may be a bandaid for the struggling market, it won’t be the medicine that heals the wounds.”
The Capital Times from Wisconsin. “Housing starts continued to be at a virtual standstill in Dane County in October, with only 52 building permits issued for single-family homes, condos or duplexes, less than half the number issued in October 2007. Through October, 612 building permits have been issued in the county, down almost 40 percent from the 1,005 permits issued through October last year.”
“The city of Madison has seen new housing starts cut in half this year, with only 145 permits issued in 2008 compared to 305 permits issued through October 2007.”
“The MTD report shows the average value of new housing construction in Dane County in October to be $263,384, compared to an average last year of $241,062, with the average square footage at 2,536 square feet compared to 2,342 square feet last October.
The year-to-date comparison is also higher, with the value of new homes this year averaging $269,691 compared to $248,783 last year and the size of homes this year coming in at an average 2,573 square feet compared to 2,431 square feet in 2007.”
“From a peak of 2,156 new home building permits issued during the first 10 months of 2004, starts have fallen every year since, to 2,007 in 2005, 1,233 in 2006, 1,005 in 2007 and 612 in 2008.”
“The value and size of new homes, however, have kept rising for the past decade. The average value of a new home built in 1999 in Dane County was $156,049, so with the average now at $269,691, the value of a new home constructed this year is up 73 percent from 10 years ago. Square footage of new homes this year is 27.5 percent greater than homes built in 1999, going from 2,017 square feet in 1999 to 2,573 square feet this year.”
The Journal Sentinel from Wisconsin. “An upscale condominium project in Oconomowoc that ran into delays amid litigation with its former general contractor has sold its first unit. Vespera at Porticellos sold the 2,700-square-foot villa-style condo for $530,000, said Rebecca Sprague, associate vice president at Shorewest Realtors. Sprague said another villa has an accepted offer, with that sale still pending.”
“Icon Development Corp. of Franklin originally planned to build 36 units, and work started in early 2006. But only seven units have been built so far.”
The Pioneer Press from Minnesota. “As home foreclosures pile up in Minnesota, plans are emerging about how local officials will use federal money and work with lenders to handle at least some of the influx. A Pioneer Press survey on Thursday of sheriffs’ offices in the seven-county metro area found that lenders have repossessed more than 15,000 homes so far this year — compared with a total of 13,050 for all of last year.”
“The combined effort would account for less than 9 percent of the estimated 4,000 vacant and foreclosed properties in St. Paul next year, said Natalie Fedie, a spokeswoman for the city’s department of planning and economic development.”
“‘We need a lot more money to really make an impact in acquisitions,’ Fedie said.”
“For the Twin Cities housing market, it’s 2002 all over again. The median price for homes sold in the area during October hit its lowest mark in more than six years, and it’s unlikely it’s the bottom. The median sales price in the 13-county metro area was $180,000 last month, down 18.2 percent from the same period a year ago, according to the St. Paul Area Association of Realtors.”
“In the past two months, said Patrick Newport, a housing economist, economists at Global Insight have pushed back their projection for a bottoming out in the housing market by a full year because of the freezing of the credit markets and a general worsening of the economy. The view was similarly bleak among economists at Wachovia Capital Markets, who issued their monthly economic outlook.”
“‘Declines in home prices and equity prices are expected to shave $9 trillion in household wealth over the next several quarters,’ the economists wrote.”
“Local Realtors weren’t making predictions Wednesday about future median prices, but they did point to what they see as encouraging signs in the local housing market. Closed home sales in October increased 12 percent from a year ago, noted Rae Jean Malone, president-elect of the St. Paul Realtors group. Her group’s report also highlighted a drop in the number of active listings, which could help stabilize the market. ”
“The ultimate silver lining for Realtors right now? They’re not stockbrokers. ‘What’s a safer investment right now — housing or the stock market?’ asked Steve Having, president-elect of the Minneapolis group of Realtors, in a news release. ‘The increase in sales activity seems to point to housing for many folks round here.’”
The Quad City Times. “Doug Winter, a regional manager for Countrywide Home Loans, told a group of real estate agents that Countrywide has been the ‘poster child’ for the mortgage industry since last year.”
“Winter, who oversees Countrywide offices in Iowa, Minnesota and Nebraska, spoke during a luncheon workshop at the Quad-Cities Area Realtors Association in Bettendorf. ‘I don’t think … it should have been as pointed as it was,’ he said, referring to criticism of his company as home foreclosures nationwide rose dramatically.”
“Winter said one of the challenges faced by Countrywide was that it was the first of the larger mortgage companies to experience problems and became the example for all mortgage companies facing similar problems. ‘They were looking for somebody to pin the blame on,’ he said.”
“During the workshop, Winter outlined how the housing crisis began. ‘I have said it was like a freight train coming down the road. … We didn’t see it coming.’”
“In 2003-2004, interest rates were low and the number of homeowners continued to grow. But because interest rates were so low, he said many borrowers began taking out second mortgages to finance other purchases. That eventually led to higher interest rates. By 2005 and into 2006, the market began to fail. By June 2007, real estate prices were falling and there was an oversupply of 1 million homes on the market. ‘It was the beginning of the end,’ he said.”
‘An upscale condominium project in Oconomowoc…has sold its first unit. Vespera at Porticellos sold the 2,700-square-foot villa-style condo for $530,000′
$500,000 condos in Wisconsin. In 2008. No bubble here?
This week I learned that one of my sisters and her husband recently bought a condo somewhere near Milwaukee. Rumor has it…the crowd is going to love this one…he wants to open some kind of restaurant, B&B-type deal and retire. He’s in his mid forties. No kidding!
WI RE was pumped bigtime to “equity rich” Chicagoans, but never thought someone this close would fall for it.
Shine on you crazy diamonds!
A good restaurant owner works 7 days a week. Retirement?
Having talked to a B&B owner in Portland, ME during the height of the bubble when he was raking it in, he was bluntly honest in that it couldn’t last and that his margins were really really tough.
Of course, the two wine bottles I generously shared had nothing to do with honesty, no sir, that just was the goodness of his human heart to tell me the truth!
villa-style condos for $530k in a place I can’t pronounce, but I’d like to buy a vowel, are than any “Owes”?
oh con oh mah walk
Leigh
villa-style condos for $530k in a place I can’t pronounce, but I’d like to buy a vowel, are than any “Owes”?
Don’t like Oconomowoc, try Wauwatosa or Ashwaubenon!
Ya-sure ya-know……
I heard that the Formans were asking for a bundle for their house in Point Place, even though the basement has this funny smell….
I do wish Red was around to put his foot up the ass of these dumbasses..
I SAY GOOD DAY!
Uhhhhh…does it smell like cheese?
Does it smell like death and destruction?
The markets are just plain NOT EVER coming back. We are TOAST as as a nation.
Dick and Jeannine Goss have lived there since February, when they closed on the single-family home where they intended to live out their retirement. They were the first — and only — people to buy a house in the Fairfield Ridge subdivision near the center of town. After three years of marketing the subdivision with no other takers, developer James McNaughton asked the village to allow the company to replace a large number of the planned single-family homes with more affordable duplexes and townhomes.”
I really do feel bad for these people.They’re morons, but that doesn’t mean we should let to allow unleashed sharks upon them. It just wasn’t and isn’t right.
Yun said it was unlikely that the lame-duck Congress would act on any housing bailout, but the Realtors are optimistic that the Obama administration would favor one.
Yun said a buydown of 1 point, or 1 percent, “might be sufficient to absorb 800,000 homes in the marketplace.”
And though that could cost the government $100 billion, Yun added, “given the $700 billion package [passed in October], $100 billion would seem reasonable.”
Some group was just fined 500 million dollars for price fixing flat screens. The NAR wants price fixing in the housing market, this Yun guy is truly a complete dunce.
Yun is the poster child for a failed our immigration program.
Having said that, How abount this old Yunny boy. WE give you your discount but you cut your 6% commission to 2%. That ought to help a little.
I’ve got an idea for how to absord those 800,000 homes, lower the damn price. This gets more absurd everyday.
absorb
“given the $700 billion package [passed in October], $100 billion would seem reasonable.”
“Reasonable?” Like he’s trying to negotiate how much of the pie he deserves? Yun is more arrogant than the managers at GM and the spa-hoppers at AIG.
I’m tired of various trade groups holding the little guy hostage: “Bail us out (taking our cut, of course) or we kill the jobs.” I think it’s time for a little Disintermediation, and Yun should be the first to go.
oxide,
I think we’re ‘there’. With eroding benefits, stagnant pay and “you’d best be grateful” attitudes, a lot of… ‘marginal’ workers feel they’d be better off on un-employment.
You’re beating them with a wet noodle.
Frankly, it’s the same mental process “I” went through when I went independent. 18% pay out on your commissions, pffftt 401K “match” ( no defined benefit plan ) stingy medical benefits, oh and you guys are going to have to start -paying- for your parking…
At some point you have to weigh just how much ‘worse’ could self-employment be? Now? I’d never go back.
1% drop in rates will take 800K houses off the market? Where do the 2.4Million net warm bodies come from?
“‘(The Gosses) are placed in the unenviable position of owning not only the only house, but the most expensive house in the neighborhood,’ said trustee Jim Racich. ‘What are you doing to help the Gosses financially where they are not going to suffer financial disaster when you start selling homes for $100,000 or $150,000 less?’”
Well, if they are planning to live out their retirement years in the house, what difference does it make to them how much anyone else pays for a smaller/less expensive house? How does this constitute a “disaster”?
People need to start thinking of their house as the place where they live, not an “investment”. Why hasn’t that message gotten across to the masses yet?
You posted before me. Great minds…
Ooops sorry, meant to add.
I notice that everyone wants to have it both ways. They want to extract $$ from a house as if it were an “investment,” but they will lobby the government to keep them in their “home.” Man, I should start lobbying to prop up my 401K.
Why not, it seems everyone else wants to be bailed out!
I’m a noob here. If I had a great mind, I would have been hanging around a lot longer, and sold all my stocks by now.
Why not, everybody else wants their piece of the bailout!
As for ‘great minds’, if mine really were, I’d have started hanging around the HBB long ago, and avoided some of the financial debacle pain. Sigh.
Not deliberately spamming here, the first of the 2 comments above seemed to have disappeared into the ether so I wrote another. Then they both magically appeared. Argh.
Hey elanor. I have a hard time getting rid of old bras, old shoes and even old make up.
The same is true with old investments. Call me a ‘collector’ and hold my hand on the way down.
My mom has stocks from the 1940’s and I pray they don’t all go bankrupt.
Does anybody feel spooked? Even though I won’t go broke soon, this chaos is nerve wracking and I need a group hug.
It’s amazing that those companies whose stock your mom bought in the 1940s are still around. I hope they make it through this mess.
Reading the HBB sometimes gives me the impression that everyone here got out of the market last summer, or even earlier. Except me, naturally.
I still have shares in the first mutual fund I ever bought, 20 years ago, and it has been pretty good to me.
I blame the current crisis for not being able to give up my nightly glass of wine, or two. Group hugs are way better for one’s waistline, and liver. Sounds like a good idea!
Hey elanor;
my mom didn’t buy stocks in the 40’s she got them from her mom who got them from her dad.
somehow if you ask her she has been thru this many times. If I make it ten years I expect some kind of balance to be there. But in the mean time I am getting out my spiked heels and a whip.
Case in point about old companies and berkshire Hathaway just bought some conoco phillips. Score one for mummy.
I think their concern is that they thought they were buying into a community of single-family homes, whereas now it appears they will be in a higher-density townhouse development. They probably worry about lots of units being rentals which may be less likely to be well-maintained.
That may be the case, but to call it a “financial disaster” is reeeeally overstating their plight.
Aw shucks, I’m just a grump today, even if it is TGIF Day!
I don’t know. We’re maintaining our rental better than the owners did when they lived here.
Yeah. Very weird situation. It’s pretty obvious when I talk to my landlady on the phone that my husband and I know waay more about property maintenance than she does.
“It’s pretty obvious when I talk to my landlady on the phone that my husband and I know waay more about property maintenance than she does.”
Same here! There are a lot of little things wrong with this place. DH has been doing minor repairs, and our landlord compensates for his time and materials via deductions from rent. Good deal all around. Our landlord is psyched. He hopes to sell this some day. Before we came along, this place would have had a long list of “fix-its” on any home inspection.
We’re doing some very minor repairs to bring up the place to our high standards which we’re not being compensated for.
On the other hand, most of what we are fixing is minor wear and tear. We would have painted to add color to the walls anyway, etc. Most of the interior is in good working order.
Other than to maybe have the formality of a 3rd party during a negotiation, I’ll never pay for a home inspector again. The ones we’ve dealt with have not been helpful and I walked away feeling like it was a waste of money.
DennisN,
Personally ( I don’t think it’s ‘that’ much to ask? ) What really got me was the way the builder described their ‘own’ predicament? Hey, wait a minute @$$hole, you’re the guy in business here?
Now all the builders are asking for all kinds of concessions from the lenders, buyers, suppliers, HOA’s, government, sub-contractors and my Great Aunt Maude!
Let’s all stop and think about just how much of our credit crunch is tied up in failed, dumb@ss real estate projects that were doomed from the start? What we should be doing is throwing these d!ckhead builders under the bus, selling their washed up dreams for whatever the market will bare and moving on. We’ve got to have billions just sitting around in “The Dark Towers of Financial Doom”. Suck. It. Up.
The horror, living next to *gasp* renters.
It always seemed to me, as a life-long renter, that renters take better care of the property than many owners.
I guess I’m not very smart, but are materials really THAT much more expensive in Illinois than in Tennessee? I understand that labor will be more, but they are building 3,300 sq. ft. homes in Brentwood for a less than half of the 1.3 million dollar price tag on these McMansions up here.
I definitely think homes up here would be more pricey, but, seriously, double the cost? Or is that builder just full of crap?
You gotta pay off the community organizers in Illinois. Bub,….they sure don’t work for free.
change
unions are expensive
But worthwhile.
unions were necessary in the early 1900’s (ie “the Jungle”), but have morphed into blood sucking bureaucracies that hinder competitive advantage.
Sounds just like the executive class but nevertheless, feel free to give up your weekends, paid holidays, premium time over 40hrs, etc…. Oh yea, don’t forget, the bossman wants two 20 hour shifts from you this week.
Are you prepared and ready for your new gig?
ha! my new gig is probably going to be grabbing a pick axe and working on the new California train since it looks like the govt is the only one who will have money.
public trans is good.
it is. IF you have the money. not when you are bankrupt.
Nice try:
Goss …intended to live out their retirement…
‘What are you doing to help the Gosses financially where they are not going to suffer financial disaster when you start selling homes for $100,000 or $150,000 less?’”
If they are going to live our their retirement in the home, they presumably will be paying all 30 years of the mortgage and never sell. If they never sell, comps don’t mean squat. The house value could go down to $0 and they still wouldn’t suffer financial disaster. [barring medical, etc.]
How much you want to bet they inteneded to live off cash infusions from serial refinancing?
oxide,
Right, and nothing says “outrageous profit” quite like PLAINfield, Illinois.
P.S. Who needs five bathrooms in a home? For that matter, unless you have four or five kids (which most people do not), who needs five bedrooms?
Crazy, crazy.
Library, Media Room, Hobby Room, Guest bedroom, Bedroom.
Don’t forget, if you’re a retiring metro boomer, you must have a “studio” in your trophy home.
And here I sit, in the studio at the Arizona Slim Ranch. It’s a cozy 90 square feet, but for someone who sits at a computer all day, that’s all that’s needed.
Oh, there’s a bathroom right next to this-here studio, and it’s much smaller than 90 square.
Is that a studio for “making beats” ?
No, I’m a graphic designer and photographer.
I think he has you confused with Fatboy.
My cousin had a mc mansion built prefab easily 5000+ sq ft in Rowayton CT…i think its 4 or 5 bedrooms…..but they made one an exercise room
Here is the a new one…the basement has 10 foot ceiling so they could put in a bowling alley….
And a bigger one he works for HSBC managing 20 people taking care of the ATMs and she works in Insurance….i hope not AIG
No kids but they do entertain a lot they both are good cooks…
We’re putting an archery target in my mom’s basement. Indoor space is nice, especially in the city where they don’t let you do anything fun outdoors. Even Airsoft(tm) is banned in my town.
No basements in Southeastern Virginia… which doesn’t go well for my habit of collecting arcade machines.
Oh, cool hobby. I’ll bet they’re expensive. I want the one with “Elvira”! I’m thinking about replacing my digital POS “sound system” with an older Seeburg or Rock-Ola juke box. Dig… that “tube” sound!
But it will have to be in good shape. When you only have (2) bedrooms, everything in the LR ’should’ look presentable?
Ego storage requires a great deal of square footage.
Right, I saw a house on TV owned by a s/w mogul where he’d recreated the downtown of his midwestern childhood town complete with real working bowling alley and ice cream shop, and you could drive around the downtown in your car, which you got there via a car elevator. All in his “basement.”
Lost in Utah,
Not to “one better” you but my brother worked as a finish carpenter for years. They did a home in NW Portland for some dot.bomb d!ckhead and the wife had an entire Irish pub brought over stone by stone and after they finished assembling it… she decided she didn’t like it!
It also had “secret passages” that led to an aerial escape helo pad. Sick freaks.
If I had the money for a 6000 sq ft house, I’d rather spend the square footage on Howard’s End stuff like servants’ quarters and food pantries and secret passages. This idea of expanding bedrooms and great rooms just to bloat the square footage for profit is disgusting.
A recent HGTV special was on “secret spaces” and they featured Myst designer Richard Garriott’s place. About 6000 square feet IIRC, and dozens of secret passages and hidden cubbies. One of the harder ones had a magnetic key where you had to more a piece of ceramic (specially prepped) in a certain pattern to open it.
Yeah, I’d go for the secret passages. Of course, my college had a mansion they used for retreats that had servant stairs and the like, so I’ve actually gotten to play in a place like that and it’s as fun as advertised.
Why does that sound like a Twilight Zone episode to me?
Great, a Midwest thread!
From Chicago:
I heard this week that the Chicago Association of Realtors H.Q. at Washtenaw and Peterson has a “for rent” sign in the window. My travels today will take me past there and I’ll see what’s up.
The REIC force is strong in Chicago. Without igniting a firestorm, I think it is relevant to our discussions to note that our new elected leader did indeed rub elbows with our area’s “developers”. In fact, I am certain it is impossible to hold any political office in this region without heavy networking with our developers.
For those not from the region, you’d have to read some of the local RE history to get a better idea. Let’s just say that arbitrary “zoning” codes, overpriced gov’t land purchases, and sweetheart land sales are are as much a part of this city as Wrigley Field and Polish Sausage. Expect the REIC to have an even higher profile in the new adminstration.
Let’s just say that arbitrary “zoning” codes, overpriced gov’t land purchases, and sweetheart land sales are are as much a part of this city as Wrigley Field and Polish Sausage.
Ain’t that the truth.
It’s tough to keep up with all the shenanigans even within my own neighborhood — and my local purveyors of graft are small-ballers in the talent-rich Chicago area.
Meanwhile, the nearby public projects I’m looking forward to (the skate park at Logan Blvd. and Western, the expansion of Haas Park at Fullerton and Fairfield) seem to have stalled for the time being, as money and resources are tied up elsewhere. The park is expanding west a block onto land that was occupied for years by a sketchy import/export business warehouse. I wonder how much the city paid for the land?
I heard this week that the Chicago Association of Realtors H.Q. at Washtenaw and Peterson has a “for rent” sign in the window. My travels today will take me past there and I’ll see what’s up.
In closed real estate office news, the Keller Williams office on the ground floor of my office building completely shut down last month. No takers on the empty space yet.
The Countrywide office on LaSalle just south of Chicago Ave. — near Cafe Iberico — was abandoned all of a sudden in late August or early September, ostensibly because of flooding. They list a new temporary address on the note taped to the door, but I’d wager that address is defunct, too.
Don’t forget that Biden was a friend of Mozillo and got the special “friends and family” discount on his mortgage.
Skip,
Betting against edgewaterjohn looks uphill at best but I certainly hope the REIC doesn’t get any ‘more’ love from the new administration than they’ve already gotten?
How is that even possible? The Bailout elbows are getting pretty sharp but if we ‘are’ to do this thing, the REIC are the LAST people we should be helping. To build…what!?
From the St. Louis article:
“The problem, Williams said, is these houses are small, and a little old. There’s not so much demand for 900-square-foot, two bedroom houses in the inner suburbs these days. So they get converted into rentals, or bought by investors.”
So the federal, state and local governments are going to subsidize the rehab of these homes, which investors will snap up and rent out. I agree with the community preservation angle. In my Brooklyn neighborhood, there were similar activites by local groups to help stabilize in the 1970s, so repeating that in the inner suburbs is a good idea.
The problem: attention apartment investors — the government is subsidizing your future competition.
The older suburbs pose a huge challenge going forward. A challenge that the gov’t is not up to at all. After all, the gov’t did nothing to save the cities lat century - and the factionalized suburbs have even less collective clout. Some older suburbs might hit upon a good deal and propser, but the weaker ones will become outright slums - probably for a few generations.
Will these small house-buying investors be cash flow positive on these rentals? I doubt it, even if they get one of those oh-so-affordable prices.
Why? Because dealing with tenants isn’t exactly a walk in the park. You have to screen them carefully, then hope to hell and high water that they don’t trash your place. (Just think, that sweet couple with the darling 3-year-old can flood your place when the toddler decides to stuff the commode full of paper from that fun roll right next to it.)
Triple net lease? It might work if the tenant is credit worthy. A rent to own deal is another possibility.
Small, old, inner suburb, and 900 sq ft sounds like the neighborhood I used to walk through. Those houses might be Sears catalog Craftsman, very well built and worth saving. Usually the yard is large enough for an addition if absolutely necessary. Would be a nice fit for empty nesters. If they have too much stuff to fit in the house, then they have too much stuff.
“Winter said one of the challenges faced by Countrywide was that it was the first of the larger mortgage companies to experience problems and became the example for all mortgage companies facing similar problems. ‘They were looking for somebody to pin the blame on,’ he said.”
Who’s up for a game of “Pin the tale on the donkey, er Mozilo?”
“For the Twin Cities housing market, it’s 2002 all over again.”
And prices were already too high in 2002. It needs to go back to 1998 and it will. I guess the argument that the Midwest didn’t have a Housing Bubble is flying out the window. The bubble was huge. Houses were being sold, above asking price, without going on the market. That was back in 2002. In my hometown you are already seeing some 1999 pricing. That seems fitting since it is Prince’s home turf.
It certainly feels as if the Midwest is at a real turning point right now. In my daily travels I’m always on the lookout for signs ‘o the times. A few trends stood out this week:
1. Contractor vans with out of state plates. Up until now it had just been passenger vehicles - but all of a sudden I’m seeing vans that belong to independent contractors. They must be coming here in search of remodeling work.
2. More and more cars with hastily made cardboard “pizza delivery” signs in the back window. I see them in the morning - when they are parked after a night of running around. They are parked on blocks where pizza delivery guys traditionally do not live. I even saw one tucked into the window of a late model Infiniti!
3. Denever Boots - lots and lots of Denver Boots on cars - in every type of neighborhood. Funnier still, they’re arent’ getting removed as fast as they used to be removed. There’s an Econoline and a Corolla that have had them on all week now.
Why is that Denver gets things named after it, like no other American city does?
Denver Omelette
Denver Boot
Either of those are better than a Cleveland Steamer.
Also known as the Pasadena Mudslide!
Denver Broncos?
I think New Jersey got the short end of the stick when it got stuck with Jersey Barriers.
Then again, I’ve been through northern Jersey on a train. I can’t think of a more appropriate moniker for an ugly hunk of concrete.
Don’t fewer people order pizza during a slow economy? I mean, come on. It isn’t that hard to make your own pizza. Or something more nutritious, for that matter.
Ordering pizza is cheaper than going out to Applebees.
It is more expensive than cooking a frozen pizza or making it yourself.
You pass through the various level on the way down, though the newly out of work and newly very nervous may skip a few intermediate steps on their way to frugality.
The last time I made pizza at home I realized the ingredients cost me a lot more than having one delivered.
Sad but true.
3. Denver Boots - lots and lots of Denver Boots on cars - in every type of neighborhood.
Da Mayor has made no secret of his belief that the city can tax and ticket its way out of deficits. We’ll be seeing many more boots in the near future, I think.
True story from my Pittsburgh days: Parents would tell unruly children that they were “gonna put the boot on you.” Boyfriends would say similar things to their girlfriends if they didn’t think that the girlfriends were paying enough attention to them.
The context for these remarks was provided by none other than the City of Pittsburgh. That city was boot-happy, no two ways about it. And this was back during Pittsburgh’s Great Depression of the 1980s.
Hey Slim,
I grew up just miles from Kennywood Park.
Left for the USAF in the 80’s.
Leigh
“James Kinney, president of Rubloff Residential Properties in Chicago, who is attending the meeting, said local numbers would be weak. Privately gathered data on showings of homes in Chicago ‘fell off the end of the Earth in October,’ he said.”
I’m willing to wager sales “fell of the earth in October” in every state in the union and will continue until the snot gets squeezed out of the REIC.
Even the doltish RE agents know that winter will be especially long and bitter in the northern reaches of the US.
You think it’s tough to get people to open houses now, buddy?
Wait til January.
Only in crooked Chicago would there be a “Ruboff” RE firm.
the trade group’s chief economist told attendees at its annual convention here that it plans to urge Congress to create a housing-specific stimulus package.”
NAR, I plan on lobbying in the opposite direction to show members of congress that your reckless policies are and still remain part of the problem. The NAR’s own cheerleading helped caused the reckless spending by consumers.
For instance, the advertisments such as “housing prices on average nearly double in ten years” has been nothing but a fabrication of the truth aided by the twisting of statistical data from the years of the housing bubble. Remove that data and it is just puire BS being put out by the NAR!
And they’re still running those ads. I just heard a radio version of this one yesterday.
http://www.youtube.com/watch?v=E2K-v9wDv4Y
Fuzzy Bear,
Good for you. I feel your anger!
NAR ( and congress ) need to wake up to the fact that many Americans would dump their house in hearbeat ( if they could )
The consumer now sees the dream home for what it is, a life-sentence debt trap. No MEW=No Sale.
Can we kindly move on to ‘real’ business now and drop the facade?
. “Custom builders are using more lumber and less stone, delivering shrub-free yards, and subbing those Sub-Zeros for General Electric appliances. ”
(snobbish sounding post coming)
out of all the “custom” homes i have seen onilne and in person (several hundred), maybe 1 or 2 of them had these high-end appliances.
that’s one of the red flags i noticed when realizing there was a bubble. people lined up to buy $ 1 million homes that did NOT have these high end features.
- GE appliances (nothing wrong with GE appliances for practical purposes but in a $ 1 million home?)
- master baths without jacuzi bathtubs or even without a tub period. (not that i like those tubs but i expect to see one in an expensive home).
- granite? i think i am the only one who doesn’t think granite is high-end. expensive yes but not high end.
- some of the crappiest finished basements i have ever seen in my life.
my wife’s father is a custom home builder who puts high-end stuff in his homes. high-end does not just mean stuff either. his craftsmenship is very noticeable right down to the paint job. i guess that’s why he is still building homes for people. quality means soemthing even in a shitty market.
my wife can walk through any of the crap boxes and in 10 minutes point out to you all the crap they put in these things. that’s why we will be renting for awhile which is fine by me.
michael,
Yeah and the realtwhores would quickly shuffle you past expansive walls of “nothing to see here folks” right over to the ‘wonderful’ built-ins a high school shop class could do.
Freaking BUTT joints in a million dollar home!? Sure…
As I mentioned my brother was a finish carpenter and once you’ve done a “walk through” with one of ‘those’ guys, you’ll never look at a home the same way? They’ll point out all the short-cuts and what they call “slam dunk” finish work and you can’t wait to get out of there!
Imagine there’s no Bubble
It’s easy if you lie
No wishing prices below us
Above us only comp sky
Imagine all the realtards
Predicting incomes only rise
Imagine there’s no more credit
It isn’t hard to do
Nothing to fee or refinance for
And no teaser rates too
Imagine all the economists
Predicting sanity
I may say that you’re a dumb ass
But I’m not the only one
I hope someday you’ll sell to us
And the buyer/seller ratio will be as one
Imagine no housing “investments”
I wonder if you can
No need for wars of bidding
2.3 houses & condos for everyone
Imagine all the valuations
Reflecting affordability
I may say that you’re a dumb ass
But I’m not the only one
I hope someday you’ll deleverage
And the absurd specu-flipping will be undone
I’m verklempt!
( Well done, one for the archives )
Meanwhile here in Fort Collins stuff continues to sell quickly if it’s priced right. My wife went to look at a house listed last Saturday and it already had an offer pending by Thursday(not accepted, though). Another house we’ve been watching has just been reduced in price by 2.8% whoopie!
If it’s over 3000 sqaure feet (we count basement here) and under $300k it sells quickly, especially with yards over 8000 square feet.
So, we keep looking, but while prices here are soft (off 5% at most) they’re not much under the triple top set in the summers of 2005, 2006 and 2007.
Fort Collins limited new construction and the cash out refi activity here has been way below normal. What we do have is about 90% of everything built in the last 5 years is too big and was financed with Alt-a option ARMS and flaky prime ARMS. But I wouldn’t buy these houses no matter what the price, the HOAs are staffed by nazi wannabes and the houses are just too big for one family to keep up with.
Its strange, as the job market in Ft Collins is pretty weak. Loveland sales are much weaker. Only a few houses sold in my neighborhood this year, and most of them were priced in the low 200’s. The higher end stuff isn’t moving.
This one I pass by when walking the dog. I think its been on the market 3 years now. Looks like they finally lowered the price (still too high):
http://www.zillow.com/homedetails/4227-Golf-Vista-Dr-Loveland-CO-80537/13888458_zpid
‘99% of these people are serious hardworking people, they do not want to lose their homes.’”
Oh! That’s different! I didn’t realize they were serious, hardworking people! This is America! Every hardworking person deserves a Free House!
Are we lowly renters not hard-working too? I don’t see them handing out homes to us.
Had I known that the Free House offer expired in August 2007, I would have bought one before then.
“Jackie Moore currently rents, but she said she knows a lot about foreclosures, because two of her landlords lost the homes in which she was living. ‘It happened to me twice. But there is nothing I can do about it,’ Moore told KMBC’s Micheal Mahoney.”
“Moore said she blames her landlords for not warning her that home was being foreclosed. Moore is now living in a third rental house. ‘I never did get a deposit back. I was just out of there,’ Moore said.”
I’d like to find any instance of ANY federal elected official who ever proposed something to help real victims like Jackie Moore. Sadly, her dishonest landlord who wasn’t paying the mortgage, was charging her rent, and kept her deposit is going to get a big hug from Congress, Chris Dodd, Barack Obama. Jackie Moore will get a kick in the rear end.
Why do banks kick good, rent-paying tenants out of their apartments when they foreclose on the owner? If they started taking the rent money, the bank wins and the tenant wins. Some of these bankers are dumb as a box of rocks.
“Some of these bankers are dumb as a box of rocks.”
As is amply evidenced by the fact that so many deadbeats got mortgages in the first place.
“Custom builders are using more lumber and less stone, delivering shrub-free yards, and subbing those Sub-Zeros for General Electric appliances. These are among the efforts of local builders trying to protect their bottom line. It’s a new financial reality.”
I find this rather irritating. Reversion to historical norms doesnt mean 30% less house for 30% less. It means same house but an additional 40% off. Why does everything think that someone else should pay for their bad business decisions.
You don’t have to pay for their decisions. You just don’t buy the house.
However, an increase in land prices, an increase in demand for relatively limited resources (like cut stone & stone masons to install it) raised prices, and since some of those are sunk costs like land, the only way to recover some costs is to cut corners elsewhere.
They are building houses to sell for profit afterall, and margins aren’t that high. You can see that with the number of homeowners that have gone under.
Lots of competition = lower margins.
And when talking new construction, it is almost always true that newer is much bigger than older houses.
“It appears the housing crisis that has had major effects on much of the rest of the country now is affecting the Iowa City area. Jeff Dill, president-elect for the Iowa City Area Association of Realtors, said he’s also witnessed more foreclosures.”
At last! I grew up in Iowa City and dearly love the place - it is a great little university town and IMO has a lot to recommend it (great schools and hospitals, an educated population, a fair amount of culture).
However, the area has NOT been immune to the wider pressures of the housing bubble. The building in the area has been crazy - and this in a state that is losing population. I also heard just as much real estate crazy talk there during the bubble as I hear out here in coastal California - with all the usual “we are different” and “everybody wants to live here” explanations for rapidly rising prices.
The fancy condo complex in the middle of the downtown was built during this time, and I personally know people who snapped up these pricey units for “the investment”.
Iowa City, I will always love you, but your housing market must take its lumps like everywhere else.
I was mot aware he could tell the truth..
//
WASHINGTON, Nov 14 (Reuters) - U.S. Treasury Secretary Henry Paulson said on Friday recapitalizing banks is the most effective use of a $700 billion financial bailout war chest, but acknowledged the U.S. reputation is tarnished as a result of the financial crisis that has spread around the world.
“We have in many ways humiliated ourselves as a nation with some of the problems that have taken place here,” Paulson said in an interview with CNBC television. (Reporting by Glenn Somerville, Alister Bull and Mark Felsenthal, Editing by Chizu Nomiyama)
//
Who the heck is this guy? And who the heck is going to tell him to tone it down?
“During the workshop, Winter outlined how the housing crisis began. ‘I have said it was like a freight train coming down the road. … We didn’t see it coming.’”
Huh ! what is a freight train doing coming down road?
what is a freight train doing coming down road? You have to expect that when the economy comes off the rails.
‘What’s a safer investment right now — housing or the stock market?’ asked Steve Having.
Well, Steve, I’d say it’s the stock market, because there are so many ways to play it.
If you buy and the stock market goes up, you make money.
If you sell short and the stock market goes down, you make money.
If you’re approved to sell options, there are strategies to make money if the stock market goes sideways.
With (the physical real estate side of) housing, it’s go up, or go broke.
I like 2 % mortgage rates and 280k for coastal SD.
But nobody asked me.
“A sobered National Association of Realtors wants the federal government to underwrite new mortgages to make them significantly cheaper to pull would-be buyers off the sidelines. Saying that ‘consumers are tapped out and have given up,’ the trade group’s chief economist told attendees at its annual convention here that it plans to urge Congress to create a housing-specific stimulus package.”
Listen to these sleezebags. Just a few years ago I was told by several of these sleezebags that real never goes down but goes up 10% at least a year and it is a great time to buy.
FU Realthors. I will not allow you sleezebags to make one penny off of my home purchase.