The Promise Of Home Sweet Home Turned Sour
The Rocky Mountain News reports from Colorado. “It appears to be the worst November on record, said Gary Bauer, an independent broker who has Metrolist data on home sales going back almost 30 years. ‘Until a couple of days ago, I thought we were at the bottom or close to the bottom,’ he said. ‘But now I think we might be a few months away from nearing the bottom.’”
“Chris Mygatt, president of Coldwell Banker Colorado, said the sales of homes at $1 million or more have almost come to a halt. ‘That market is paralyzed right now,’ Mygatt said.”
“Cody Lowderman started the bidding at $100,000 for the two-story penthouse in foreclosure at the edge of downtown Denver. Within two minutes the bidding was at $750,000. After a 5 percent fee to cover its expenses and any brokerage commissions, it brings the total purchase price to about $850,000. The previous sale price, however, was $1.9 million, according to public records. The condo had a mortgage of about $1.33 million before it went into foreclosure.”
“‘I think I got a good deal,’ said Jimmy Do.”
“Denver developer Nick Mystrom, who attended the auction in late November, said he hopes someone like Do buys the two luxury homes he is auctioning Monday. Mystrom described his two homes being auctioned as ‘unbelievable value plays.’ ‘I fully expect the winning bidders to end up with beautiful homes in beautiful neighborhoods with a savings of hundreds of thousands of dollars,’ he said. ‘Unfortunately, their gain is my loss. But, given everything that’s going on, I’ll take my medicine and move on.’”
The East Valley Tribune from Arizona. “The number of new-home construction permits issued across the Valley took a shocking downturn last month, plummeting to the lowest level in at least 25 years, according to the latest Phoenix Housing Market Letter by analyst RL Brown. Only 295 permits were reported in November, compared with 517 in October, 697 in September and 1,299 in November 2007. Permit activity has fallen steadily from a high of 6,608 in July 2004, and the downturn has accelerated since August.”
“‘November absolutely was a shock,’ Brown said. ‘Obviously somewhere back in the past there was a number that low, but not since modern-day record keeping, and we’re 25 years into it.’”
“Permit activity is expected to remain just as low this month and into early next year, and builders across the Valley already have had to cut back drastically to survive, he said. ‘We can’t lose sight of the fact that population growth has not stopped, even though job growth has basically stopped and unemployment is (rising). There are still people moving to this town, and they have to have a place to live,’ he said.”
The Arizona Republic. “Just three months ago, Rosario Araujo and her husband, José Zavala, were still living comfortably, though illegally, as migrant workers in Gilbert. He hung drywall for $10 an hour, and she cleaned houses. But when work dried up in the economic crisis, they were forced to head south. The family is part of a small but growing number of Mexican migrants who are heading home because of the U.S. recession and finding Mexico is barely prepared to receive them.”
“The local government is bringing in psychologists from a university to help migrant children fit in at school, said Guadalupe Chipole Ibañez, director of Mexico City’s Center for Migrants. Many of the new arrivals have trouble in grammar and literature classes, she said.”
“‘There are children who speak and understand well in both Spanish and English, but many of them only write in English, and that is causing them a lot of problems in school,’ Chipole Ibañez told a news conference.”
“Arizona’s population is expanding at the slowest rate since the last real-estate-led recession in 1990, new figures show. University of Arizona economist Marshall Vest and others say the new population figures are conservative estimates, unlike the ones released a few years ago by the Arizona Department of Economic Security. The agency accidentally overstated the number of residents by tracking new-home permits.”
“At that time, Arizona’s housing economy was booming. Big growth rates were a predictor of good times for the state’s biggest industry: Past studies have shown one in every three dollars spent in the state was linked to the housing industry.”
“When Arizona began growing rapidly in the 1950s, Census population counts and estimates done every 10 years couldn’t keep up. Arizona’s Department of Economic Security began tracking the state’s population growth in the 1960s by using a model that included home-building figures. The state’s system worked well until the housing boom, when tens of thousands of homes were built and purchased by speculators. No one ever moved into them, skewing the results.”
“‘People are still moving to Arizona, but at a much slower rate,’ Vest said. ‘More would likely move to Arizona if they could sell houses in other parts of the country with deeper economic problems.’”
The Daily Herald from Utah. “A Lindon real estate auctioneer is putting up for sale 42 bank-owned and foreclosed Utah properties and lots tonight….many of which are in Utah County. Bargain hunters can find a mix of starter homes, luxury custom-built homes, condos and lots along the Wasatch Front selling at discounts between 25 percent and 50 percent of their appraisal values at the auction, said Kevin Gallagher, broker-auctioneer.”
“Only three properties — two Belle Monet condos in Pleasant Grove and one home in Saratoga Springs — are being sold at absolute auction, where the property sells to the highest bidder, with no minimum bid or reserve price. ‘Absolute auctions take out the risk of underpricing or overpricing in a volatile market,’ Gallagher said. ‘No one really knows the true value of properties today.’”
“Utah Real Estate Auctions garnered about $3 million from sales of 57 properties — valued between $15 million and $20 million — held in October in Pleasant Grove. While the homes sold between $150,000 and $900,000, the lots sold for $30,000 to $100,000.”
“‘There were a lot of lots for sale. And lots are less appealing to buyers now because not as many people want to build when they can buy a finished home for less than what it will cost them to build,’ Gallagher said.”
National Public Radio on Nevada. “For many years, Las Vegas’ population was increasing at a rate of more than 5,000 people a month. Two years ago, buyers were so eager to buy homes here they lined up and camped out in front of sales offices. To manage demand, builders meted out their homes, and there were lotteries to select bidders. ‘It was ridiculous,’ says Brian Burns, who found himself priced out of the market for several years, and then bought a home in 2005 in the Henderson suburb for $304,000…which he was told recently would sell for $145,000.”
“The realtors and mortgage officers NPR interviewed are all under water on their homes. Dave Shaffer runs Shaffer Realty in the shadow of the famed Las Vegas Strip. The condo where he lives is worth roughly one-third less than what he owes, he says. With prices so low, he and several partners decided to invest in a condo in September. They bought it for $105,000, which was about half what it sold for a couple years before. But in the two months since then, it’s lost another $20,000 of value.”
“On a block of one neighborhood in North Las Vegas, there are two foreclosed homes for sale right next to each other. Next to that, another home is also selling at a deep discount. ‘This is a brand new house. Never been lived in,’ Shaffer says, his voice echoing off the empty walls. ‘And this is a speculator who got 100 percent financing, so what investment did they have in the market? None.’”
“Shari Springer is also a longtime real estate agent and owns three homes she bought for $600,000 or more. She’d hoped to rent them for retirement income, but now pays more on the mortgages than she can make up in rent. ‘The banks are competing with each other,’ she says, and most homeowners can’t afford to sell at such a low price.”
“Virginia Cavallaro lives next to foreclosed homes. While everyone around her leaves or puts their homes up for sale, she’s stuck because she and her husband paid a lot of money down on their home. ‘It’s very difficult to live here,’ she says. In every direction around her, Cavallaro says, people are trying to jump ship.”
“Burns lost his job in May, as casino advertising fell. He fell behind on payments and tried unsuccessfully to get his lender to modify his loans so he could meet payments. So he’s selling many of his things, packing his car and letting his lenders figure out how they can recoup the most for their investment. With a perfect credit score three years ago, he was able to finance the entire house — so he has little to lose. The one thing he put money into was the backyard, which features a gas fireplace and a grill. But he says he’s even now.”
“‘I feel bad, kind of like I’m not pulling my weight in this crisis,’ Burns says. But the only move that makes sense, he says, is to move away.”
“Las Vegas residents Israel and Clantha Twillie say they haven’t been able to make sense of the many documents they’ve collected in the process of trying to work out the mortgage on their home. They retired and put $80,000 down on their home two years ago, only to have the value of the home drop by about half. To pay some bills and medical expenses, they took out a second loan, then when interest rates reset at a higher rate, they fell behind and never caught up.”
“One big problem is they don’t know what lender currently holds their loan. They’re hoping their lender — whether it’s Countrywide or another company — will agree to reduce the interest rate on their payments and keep their payments low enough that they can stay in their home. Otherwise, the Twillies say, they don’t know where they’ll go. Israel Twillie went back to work recently to increase their income. ‘Our home was supposed to be our nest egg,’ he says.”
In Business Las Vegas. “Bankers and Gov. Jim Gibbons gathered at the Sawyer State Office Building to discuss another round of potential foreclosures as changes for adjustable rate mortgages loom from 2010 to 2012. In Clark County, 31,666 - or 19 percent - of home loans were made to subprime borrowers, according to the Foreclosure Research Project and the Local Initiative Support Corp. Another 16,300 loans (9.7 percent) are overdue by at least 30 days.”
“From 2010 to 2012, 20 percent to 40 percent of adjustable rate mortgages are due to reset. ‘Just because the adjustable rate mortgages are coming due, the automatic assumption is that we’ve got another wave of bad loans,’ said Wells Fargo Nevada President Kirk Clausen. ‘Well, we could have, but those option adjustable rate mortgages may have been made to strong borrowers, too. I’m an optimist.’”
“In a stressful situation, bankers could end up getting back less money than what the loan is for, plus the carrying costs associated with the property. ‘Those things banks really don’t care for,’ Clausen said. ‘First and foremost, we don’t like getting property back. We lend money to people, in general, believing they can repay it and we’re not in the real estate business and we don’t expect to get (the property) back.’”
The Review Journal from Nevada. “Home foreclosures are expected to top 30,000 in Clark County this year, compared with 11,509 in 2007. Foreclosures.com counted 2,974 foreclosures in November, bringing the total for the year to 28,133. The monthly number is up from 2,653 in October and more than double the 1,407 Clark County foreclosures in November 2007.”
“‘Those things are going to be with us for a while,’ SalesTraq founder Larry Murphy said. ‘The first round of foreclosures was subprime borrowers who had no business buying a house anyway, but the second round is people who had a job and were doing OK.’”
“Troy Kearns of Gavish Real Estate said lenders seem more willing to deal on foreclosures. Kearns’ lowest listing — $37,500 for a house on Euclid Avenue — sold in one day. It was only 600 square feet and needed a little repair, he said. ‘You put a renter in there at $500 a month and you’re at 12 percent cash flow,’ Kearns said.”
Las Vegas Now from Nevada. “Las Vegas Housing prices have fallen to a point where they are nearly 19-percent below market fundamentals, according to a new report. In addition, foreclosures are expected to be at a record high. The promise of ‘Home Sweet Home’ turned sour for more than 28,000 homeowners in Clark County in 2008.”
“‘The banks have put them so ridiculously low, so it’s bringing down all the neighborhoods,’ said broker Ronda Matthews-Wolfe. ‘Why they really plummeted is because of the foreclosures, and the foreclosures have happened because people overpaid or got into these adjustables.’”
“‘The price isn’t all that bad either,’ said Bill Baldare, a home buyer. Many bank-owned homes are practical steals. Baldare is bidding on a foreclosed home listed at $32,000. The same home sold for $196,000 four years ago.”
“‘Trying to buy a house now is way out of reach for a lot of people, including myself, but this seems to be what I’ve been looking for,’ Baldare said.”
‘Dave Shaffer runs Shaffer Realty in the shadow of the famed Las Vegas Strip. With prices so low, he and several partners decided to invest in a condo in September. They bought it for $105,000, which was about half what it sold for a couple years before. But in the two months since then, it’s lost another $20,000 of value.’
‘‘Trying to buy a house now is way out of reach for a lot of people, including myself, but this seems to be what I’ve been looking for,’ Baldare said.’
Go ahead Washington, and the rest of you real estate boosters. Keep calling that bottom and trying to ‘get/keep people in homes’. You’re just making the bust that much worse.
“‘Until a couple of days ago, I thought we were at the bottom or close to the bottom,’ he said. ‘But now I think we might be a few months away from nearing the bottom.’ Chris Mygatt, president of Coldwell Banker Colorado, said the sales of homes at $1 million or more have almost come to a halt. ‘That market is paralyzed right now.”
From a paralyzed market to the bottom in just a few months!
‘Until a couple of days ago, I thought we were at the bottom or close to the bottom,’ he said. ‘But now I think we might be a few months away from nearing the bottom.’”
Why is it that the bottom-callers think that if the bottom hasn’t already arrived, then it will never be more than a few months in the future at the latest? Why does the concept of it being YEARS instead of MONTHS away seem impossible to them, especially since we’ve been hearing the bottom-calling now for about three years thus far?
……………..because they never dreamed that prices that doubled in 3 years could drop more than 5-10%, if they went down, at all.
Many idiots, Realtors in particular, sold the proposition that RE would continue upward, indefinitely.
Now that its down, they think it can’t go any lower. 40% loss? Impossible! It can’t ! go ! any! lower!!.
Kiosaki has said that houses were a liability, and not an asset. How right he was. And you are right. The “idiots” know nothing of history. This is going to get much worse before it gets better. In fact, I’d say that the stock market will show steady, dependable increases before the housing market will, which will be at least 6 months into 2009.
Kiowaskai is an idiot, a self-help businessman and not a real estate investor. He and his b.s. rent/cashflow/everyone should be a landlord scheme helped fuel these speculators and now he should be laughed off the stage, but he’s pushing gold instead. Of course.
He also bastardized accounting language because his maddness doesn’t fit in normal terms. A house is an asset. The mortgage on the house is a liability.
Assets can increase or decrease in value; the fact that houses have gone down in value does not change the fact that they are assets and not liabilities.
(Months vs years) - yeah, just a couple of days ago, a good friend was telling me how HER friend (in guess what business) told someone not to buy right now but to WAIT, but to wait six months, six months and NO MORE than that! Because that will be the exact bottom.
Riiiighhht
gaaaa!
I tell coworkers I’m planning to buy February 2010. (Note: Don’t worry, I’ve been on here long enough to keep looking at the data. I also stand by my statement that I’m willing to buy when I think its within $100k of the bottom if I can buy a good property.)
But more on topic. They cannot concieve of
1. The bottom being more than 3 months away.
2. The bottom persisting for the 18+ months it will persist!
So I watch coworkers buying… and buying. Only one has bought smart. The others will regret buying. I think I’ve talked six or seven coworkers out of buying (or the market talked them out of it…).
Got Popcorn?
Neil
Another good reason not to buy: mobility, especially in this job market. If you buy, and then lose your jobs, you’re stuck twice.
My BIL was all gung-ho about the possibility of mortgage rates heading to 4.5%; this will fix everything that ails us, he quips. I replied, whoop-ti-do, you think folks who could only “afford” McMansions at 0% are going to be helped by a 4.5% rate, especially if they have to prove income? I don’t like to play Debbie Downer, but geez, this willful ignorance of reality kills me. You can thank The Secret for collective wishful-thinking mania.
“…then it will never be more than a few months in the future at the latest?”
One of the best ways to convince greater fools to catch falling knives is to reassure them that a bottom lies in wait just a few months ahead.
test
I’ve been reading this blog for about three years, and even I am astounded about how bad this thing has been. I knew when we “bitter renters” said the sky would fall in 2005, no one would believe us, but even in my wildest nightmares I had no idea just how devastating the collapse of one important sector would have on the rest of the economy.
I saved myself from buying a place in ‘05 and ‘06 based on the sound analysis I read here on a daily basis. But I knew then that even though I would be okay and reasonably debt-free because I did not take on a suicide mortgage, all of us were going to suffer from the blowback of this thing winding out in some kind of way.
But even I would have laughed if someone told me the entire investment banking sector would collapse in a week, and that the government would defacto nationalize the American banking and auto industries.
“No way are bankers that stupid with their money,” I would have said. Guess they were, eh?
I thought the fumes of fear were bad in September; now the stench is becoming almost unbearable. Our Masters of the Universe turned out to be nothing more than con artists and cowards, and they didn’t know it until they were broke and busted.
Popcorn Neil, I am like you. I’m looking to buy something somewhere in Northern Virginia in that time frame of early 2010. That’s when I see the bottom showing up. If I still have a job then, of course…
“The family is part of a small but growing number of Mexican migrants who are heading home because of the U.S. recession”
What time does the train leave, because I’m ready to hop on. Jumping ship is looking like a pretty good option lately. Maybe having a Hispanic wife will open some doors.
LOL yes lets all go to the land of opportunity.
“‘There are children who speak and understand well in both Spanish and English, but many of them only write in English, and that is causing them a lot of problems in school,’ Chipole Ibañez told a news conference.”
I am surprised they don’t offer bi-lingual education in Mexico.
Chipole got it backward. They can speak English well enough but they can’t write it.
Why should the Mexican government provide bi-lingual education when U.S. taxpayers are told at gunpoint that they have to provide it for free?
Seems like a win-win for Mexico on this score.
The Mexican reverse immigrants are discovering why they left in the first place, and it’s not fun.
My great grandmother came to this country as a young woman. And she missed the other side of the pond for the rest of her life. She even went back for a visit (and there might have been more than one — I’ll have to check with my aunt), but she invariably returned to this country.
Why? Well, I’ll give it to you straight: She had a free crash with my grandfather and his family. Grandpa was her only son, and lemme tell you, the man knew how to pick the right bride. Grandma’s family was loaded, and he and his kids lived in fine style in Westchester County, NY. County Cornwall back in Britain just didn’t compare.
I told y’all that there was a reverse migration in process years ago but many people didn’t believe me >; ) It showed up in our small scale studies first.
This reverse migration might be like a small flock of loons. They may return .
I wouldn’t look for an big-time exodus anytime soon: amnesty, better health care and so on.
The labor market has completely dried up. If they can’t find work, they can’t eat. There is no way for them to collect any unemployment or similar support. At that point, healthcare and education doesn’t figure in at all.
Well, some of the illegal aliens have learned to become more enterprising Texas. They thought there was money in kidnapping.
http://www.foxnews.com/story/0,2933,464747,00.html
Jane:
Lot won’t leave California. I bleeve that would be the conclusion of any poll at an ER waiting room. Schools welcome all. That leaves work and hunger.
People gotta eat, and I wish hunger on no one.
As for work, that seems less essential in these Unied States.
My two cents..
yeah, watch the crime rate go up with all the out of work illegals that don’t want to return to mexico! We need serious deportations to open up the jobs we do have for americans. i loved when they raided the meat packing plant over a year ago, all those out of work americans showed up the next day looking for those jobs. end H1B visa program too!
“In some Mexican consulates, the number of requests for consular IDs has doubled as migrants update their addresses, he said. Many people in Arizona, Colorado and Virginia are moving to California and the Northeast, places seen as more migrant-friendly, he said.”
Awesome. I’m gonna hand out flyers in Spanish around here telling about how there are all kinds of jobs and freebies available in the Northeast, especially Connecticut. Heck, New Haven’s moonbat mayor has declared the city a sanctuary and has issued special cards for illegal aliens so they can access city services. Except, I’d also direct the folks to places like Greenwich, Darien, etc., so all the hedgies and other faux elites can get a good taste of what we’ve had to contend with here. A few AK47 shootouts on Greenwich Ave. and some kidnappings for ransom and I think the faux elites in the Northeast might re-think their shamnesty positions. On the other hand, maybe they want to unload little Snotleigh.
If they can’t find work, they can’t eat…
I thought that’s why they had all those children. They can shack up and live off the kiddie’s welfare.
Palmy…
Did you realize that Mexican nationals in California (and perhaps elsewhere) retain their voting privileges in Mexico while living/residing/ (insert non-PC verb here) in US?
These might be green card holders, though I could have the wrong subset.
But if their interest and love of the homeland is so strong, why do they want to come here and…
Shoot, for all I know, they might be eligible to vote in US elections after they depart under a new, No Migrant Voter Behind Program, courtesy of…
Never mind.
No Migrant Voter LEFT Behind.
Knuckles, cooperate.
Yea, and the Cubans in Miami and throughout Florida are heading back as soon as Castro is gone. NOT!
Never said the Cubans. Business will go there.
The Cubans aren’t the problem (unless you’re a Democratic politician). No, seriously. Every Cuban I know is a hard worker, speaks English well (well, except for this one guy–he has a good vocabulary, but his accent is awful), and has good business sense.
‘We lend money to people, in general, believing they can repay it and we’re not in the real estate business and we don’t expect to get (the property) back.’
Sorry bud, but if you are lending money for the purchase of a house and you will have to take the house back if the loan fails, you ARE in the real estate business.
Maybe pawn shop brokers should take over the lending/banking/financial system, nothing gets by those guys!
I know quite a few higher-end (think Pateks, not Snap-On Tools) pawnbrokers, and they are some of the best businessmen i’ve ever seen, as they have to be quick on their feet, and unlike most every other business, they really have no idea what’s going to happen day to day, and have to have decent to excellent knowledge of what they lend on, covering many facets…
They tend to jacks of all trades and loaners to some.
Pawn shops have always been too expensive to me. I know you can haggle, but they never seem to want to haggle enough. eBay and Craigslist are way better than pawn shops for deals.
I’ll give you an idea of how unimportant it is for some pawn shops, as far as retailing anything goes, nowadays…
One friend has jewelry cases full of gold-plated jewelry, as he used to have it full of the genuine article, but he realized about 6 months ago that nobody was buying anything in that vein, and he melted it all down.
He used to do a melt every few months, and now he tells me he does one every couple weeks.
Yea, with gold and silver and melting it down… the sooner the better so there is no trace of the stolen goods.
Lol… we have a certain pawn dealer in Gainesville who gets raided every year for dealing in stolen goods (like bicycles). He’s down the street from GPD, that’s the funniest part. (Also, because bicycles have serial numbers so the cops can check if there are any police reports out–elementary, really.) This guy has been a slime bag for years, always has some real characters hanging around his joint in the morning.
Thievery in general is so bad that if you sell DVDs or CDs to a used dealer (you can’t get much money for them, these days… chump change) you have to fill out a nasty police form and show your driver’s license, in case they’re “hot”.
CL is less hassle… I wonder how long before the legit guys go out of business (especially since everyone and their brother has a computer with a CD/DVD drive now).
santacruzsux,
Oh had that been true we wouldn’t be in the mess we’re in, now would we? They lent based on a model of ever-rising real estate prices and that’s that! During the “time of madness” the train wreck scenario was “if the guy defaults on the loan, we’ll sell the property out from under him and make a profit!”
It’s disingenuous for bankers to assert anything else.
DinOR ….Real estate never goes down was the business model . What else could explain giving out loans that people could not afford
to really pay . I suppose the money changers thought they could make some absurd fees off 3 or 4 refinances and don’t forget the pre-pay loan penalty income before the FB hands over the appreciating property because they can’t even pay the teaser rate anymore .
The Lenders looked at Main Street borrowers like marks ,and now they get the last word because the taxpayers are the mark . Keep on
killing the host is the business model these days . I’m just ranting
a little because …….this SUCKS .
“and don’t forget the pre-pay loan penalty income”
Wow, I had not even considered ‘that’ at all! That is some of the most damning evidence I’ve heard yet. Period.
The entire concept was that there was no freaking way the banksters were going to let Joe Schmucatelli keep that upside! Especially w/ loans specifically structured to require serial re-financing.
By extending credit to weak borrowers, they KNEW full well he couldn’t make the payments and had their poison pill already in place to eat his lunch each time he went for a credit life line. That ‘alone’ should have precluded any form of bailout for the banks. It adds a whole other level.
“schmucatelli”
I love it.
I can’t believe RL Brown is still being quoted by the AZ Republic. What a joke that guy is. He is supposed to be able to forecast the housing market in Phoenix and for the last 2 - 3 years he has been dead wrong. Just unbelivable!
“Just three months ago, Rosario Araujo and her husband, José Zavala, were still living comfortably, though illegally, as migrant workers in Gilbert. He hung drywall for $10 an hour, and she cleaned houses. But when work dried up in the economic crisis, they were forced to head south. The family is part of a small but growing number of Mexican migrants who are heading home because of the U.S. recession and finding Mexico is barely prepared to receive them.”
“‘There are children who speak and understand well in both Spanish and English, but many of them only write in English, and that is causing them a lot of problems in school,’ Chipole Ibañez told a news conference.”
=======================
About a year ago I was at a retreat having dinner with a couple of priests, whose beat was a series of 3 missionary churches south of Big Bend.
The 1st church was 4 hours down a dirt road, the 2nd was 3 hours further down, and the last was 3 hours further from the 2nd, down that same dirt road.
One priest had been there for 20 years, the other for 12 years.
We talked about a lot of stuff, but the one thing that stood out, was them telling me the utter contempt that Mexicans have for Mexican-Americans, especially those that don’t speak Spanish…
I like that comment about the returnees only being able to write in English. So why don’t the Mexican schools do an immersion program and teach in both languages? Oh Mexico, so much potential wrapped up in a burrito of fail.
We’re not too keen on our in-laws who, after making their living in the USofA, have retired to Mexico to live high on the hog while people back in the motherland keep paying taxes to support their lavish lifestyle.
Considering the crime and corruption in Mexico, no offense, but they’re nuts.
climber,
Didn’t want to bring it up ( so I’m glad you ‘did’ )
I have neighbors that spend much of the winter there and I’m not sure if they realize how they come off sometimes? For instance, I was talking with another snowbird neighbor and she mentioned being close-by wintering in Yuma and that they have this “standing invite” to come visit them in Mexico ( but never get around to telling them where their place is? )
Firstly wouldn’t it be more appropriate for them to designate a ‘time’ w-h-e-n it would be o.k to visit? I’m not really a dirty-minded person but when you say you have these lavish diggs in a tropical climate ( but no one has ever “seen” them ) I tend to think you’re doing things you’d just as soon folks back north know about?
I mean, it’s as if you’re only vaguely explaining your absence for lengthy periods ( but being NONE to specific about your whereabouts or how you’re filling your days ) or NIGHTS for ‘that’ matter. Is there a book on proper snowbirding etiquette? I’d hate to drop by with Corona’s when obviously you’re way… past… ‘that’.
Din,
Snowbird etiquette. We’ve owned several
large diesel pusher coach’s over the years and
travel during the winter months. This is the
first year we haven’t because we sold the coach to get rid of a potential boat anchor.
Turns out we were right.
It’s not at all unusual to get an invite to
“drop in” when you’re traveling. We’d get
calls out of the blue to “come on over when you can” and we’d pack up the tent and head out to Texas to visit friends.
So for a person to say this is not at all
unusual and for the snowbirds, very much
accepted.
We have friends in Costa Rica who have
given us a standing invite to come visit and
to give them at least a weeks notice to get
everything ready.
I thought you were moving to K’falls?
For some time I’ve been following this guys RV-based blog.
http://blog.vagabonders-supreme.net/
He used to travel around the US and winter in Mexico. Lately he’s been staying there because everything’s cheaper.
He says he has never had any problem with crime, etc.
Too many kids have to drop out of school to go to work, let alone learn two languages. That’s what happens in a country with extremely unequal income distribution.
I like that comment about the returnees only being able to write in English
Uhh…am I missing something? If you know the alphabet, how can you not know how to write in Spanish as well? (Certainly the pronunciation scheme is simpler than English.) I can see a bit of a learning curve, but it’s not like they are coming here and learning how to write in Chinese or something.
Sounds like the contempt that some Arizonans have for Mexican-Americans who don’t speak English.
“From 2010 to 2012, 20 percent to 40 percent of adjustable rate mortgages are due to reset. ‘Just because the adjustable rate mortgages are coming due, the automatic assumption is that we’ve got another wave of bad loans,’ said Wells Fargo Nevada President Kirk Clausen. ‘Well, we could have, but those option adjustable rate mortgages may have been made to strong borrowers, too. I’m an optimist.”
Not that I believe they were all made to strong borrowers, but having the ability to pay at the time of closing has nothing to do with your current financial situation (there are layoffs announced daily and equities are down at least 40%) or willingness to pay an increased amount when you are way underwater. Oh well.
The Credis Suisse reset charts I have are outdated. Is there a current version?
Natalie,
It’s right next to your M-3 Chart!
No, seriously, I ‘do’ hear you. IIRC the original version only went out… to 2010. ( My hope was that those that ‘could’ re-fi, already had? )
It would be nice to know.
A year ago, subprime was the tip of the iceburg, and the ALT-A/Liar loans due during 2009-2010 had the potential of being an even bigger disaster, because they were the real home of the $800,000 mortgage owned by the $29K/year strawberry picker.
Current media reporting lets you believe that the banking problems have been addressed, and that we are starting the process of recovering. Are the Alt-As still going to be the second wave of the tsunami, or have all the banks already written this paper off, assuming that it is a bigger steaming pile than the subprime stuff?
I’m beginning to think that about the best I can hope for, is to try to remain employed for the next few years.
“I’m beginning to think that about the best I can hope for, is to try to remain employed for the next few years.”
Same here, sorry to say.
This thing’s looking more and more like an ugly Hiroshima event daily, with Prime and Sub-prime being “Fat Man” and “Little Boy,” except, they blow up years apart…
What freakin’ good would it do to buy all-cash, only to not have a job to say afloat? Thought I read where folks in the Depression had paid-off homes, but lost them cause they couldn’t pay their taxes, let alone keep food on the table.
What if we need our wisely accrued assets just to survive through this whole mess?
DOC
While unpacking, I found two real estate brochures from the year 2000 for SE Utah. I’d forgotten how cheap stuff was here. And it was inflated, even then, the bubble was going pretty good.
I’d be happy if it would return to 2000 prices (2000 sq ft house for 100k), though about 1985 would be better (same house for 30k). That house is currently at an asking price of 330k. Nothing is selling, I mean nothing. The town is a ghost town except on the weekends, when a few mtn bikers show up from Salt Lake or Colorado, but they don’t buy anything except maybe dinner at Pasta Jay’s.
I’ve gotta believe that SE Utah will fall hard. It’s a cool place, but it seems to far away from anything to attract retirees, there aren’t any job prospects, and the outdoor-types who love it don’t really have any money.
One of Oregon’s tax activists made the observation that when he identifies any town or area as being “too cute”, it’s a recipe for disaster. In no time at all the developers descend upon it and there’s NO turning back.
He noted Sedona AZ, Ashland OR and of course Bend as examples. So if your town is “too cute” ( pay vandals to deface it! )
Ironically, there was a movement some time ago to try to clean up the junk in/around Moab. There was more resistance to this than one might expect, for that very reason. Some of us like the history represented by old drill rigs sitting in back yards (really) and the fact that it irritates the yupsters.
During the uranium bust of the 80s, this area was hit hard. So…everyone who hadn’t left town put their heads together and decided to promote tourism. They said over and over they didn’t want a single business economy like before, but nothing else panned out, just tourism.
Here we go again…and man, are the real estate dealers in denial here. Won’t be long till we’re back to the 80s. I recall coming over here in 1990 and seeing 5 acre lots for sale for 5k. They’re now sitting for sale at 250k up.
Lost in Utah,
Interesting history, hopefully we can learn from it? Here in our dinky OR town we ‘just’ hired a “city planner” and the guy’s resume` reads like a REIC Cartel Membership Application.
Obviously he was brought on during better times. Typical “utopian mindset” believing his “vision” is far better than the economy could dictate on it’s own. In the end I suppose it’s the vanity of thinking ‘you’ have a master plan that far exceeds the natural order of things that really bugs me.
I can’t imagine any business economy in your region that would work on a sustainable basis. The tourism economy was based on a consumer society and cheap automobile travel, a mere flash in the pan.
$5K is about right for lots in the desert. Until land lots come down to where building pencils out for the average resident. VT has a long way to go in that regard, too.
(And please, send me the names and addresses of people paying $250K for a desert lot…I’ve got some other things to sell them.)
“‘The price isn’t all that bad either,’ said Bill Baldare, a home buyer. Many bank-owned homes are practical steals. Baldare is bidding on a foreclosed home listed at $32,000. The same home sold for $196,000 four years ago.”
=============
Mission AcCOMPlished
It’s over in Vegas!!!!
“Recovery is under way. Affordable is back in the housing market,” McGee said. “In 2009, housing will not only recover, but we’ll see buyers leap into this market in droves, depleting our housing oversupply, and actually put higher price pressures on the market.”
http://www.lvrj.com/business/35855694.html
(I wonder if McGee wears a short skirt and shakes pom-poms?)
“‘The banks have put them so ridiculously low, so it’s bringing down all the neighborhoods,’ said broker Ronda Matthews-Wolfe. ‘Why they really plummeted is because of the foreclosures, and the foreclosures have happened because people overpaid or got into these adjustables.’”
So, which is it? High prices were bad because they forced people to overpay and/or get adjustable loans? Or low prices are bad because they bring down everyone else’s property values??
And as for “ridiculously low,” no, the banks have put houses at a price today’s buyers can afford without the crutch of voodoo lending. Funny how that changes the picture when you have to bring cash to the table and document your income.
So we’re finally back to 2001 in Colorado? In that case, the big drops should occur quickly now as we go back further. I think Colorado gained about 20% per year from ~1996 until 2000.
Not Denver, at least if you believe Case-Schiller. They had lower than average appreciation during those years.
I use the OFHEO HPI index, it’s based on same house sales and refis (and the refis throw it off a bit). It’s for conforming loans only - the majority of Denver houses, and I can’t afford a jumbo anyhow.
As far as I recall Denver has never had a 20% year on the HPI index. I’m too busy to look it up, though.
http://www.ofheo.gov
look for the HPI (house price index) It won’t show Greenwood villiage vs Littleton, though, and there is a great deal of regional variance in Denver. Take Montbello, for example, - you don’t want to go there. Likewise, the 5 points area is best left to those who have family there.
Try this on for business sense:
Buy up hotels in an expensive tourist area, pay lots of cash to demolish them, then put in car sales lots in a town where the Dodge dealer just went broke. www dot postindependent dot com
GLENWOOD SPRINGS, Colorado — A weak economy and requirements from both the city and auto manufacturers have led Vista Auto Group to abandon plans to build three auto dealerships where two hotels were in West Glenwood Springs, the company’s president said.
Vista demolished the 1st Choice Inn and the Budget Host motel earlier this year to make way for plans to build Nissan, Honda and Subaru dealerships on the property.
“We are not going to build the dealerships (where the two hotels were) due to the economic climate and the requirements to complete construction,” Buscher said.
The 3.85-acre former 1st Choice Inns property was purchased for $4.9 million in November 2007 and the 2.11-acre Budget Host property was purchased for $1.3 million in July 2007.
Bill Bullock, of Bullock and Hinkey Real Estate, said the 1st Choice Inns property went up for sale at $7.9 million and the Budget Host property went up for sale at $4.4 million about two weeks ago.
Plus, the aging budget hotels are already demolished and the property has been cleaned up. But Vista Auto Group has spent a “very significant” amount of money demolishing the hotels, doing environmental work and grading, and designing the dealership plans that won’t pan out, Buscher said.
The city, which has watched sales tax and lodging tax revenues slow down this year, lost around 142 rooms between the two hotels. But the demolition opens the door for something better to go up. Vista donated an undisclosed amount to Catholic Charities to benefit people displaced from the rooms.
Hows about opening a dealership selling repo-ed vehicles on the property?
/snark
So demolishing real property is a plus for values?
In Glenwood a hotel is one of the few businesses that makes sense. I suppose they could pave them and make them RV parks. Because everyone knows you HAVE to park somewhere.
Again ( here I go ) but I question the necessity of having car dealerships at all! Weren’t the ‘internets’ supposed to make this entire retail model obsolete?
Have any of you guys been to the auto mfrs. websites? Man, you can change the color, the interior, do 360 deg. views, cut-away views and even customize your order. Who needs a “showroom” with all that technology?
Or if you want to keep your showrooms, then why spend all that money on that fine @$$ pimping technology? Either/or guys, especially when you come around w/ your hand out.
The problem is warranty work, but then again Detroit could change the business model. They could offer repayment plans to “in plan” mechanics to perform warranty work, similar to how PPO health plans pay in plan doctors for services.
Most people would rather go to indepedent mechanics anyway.
DennisN,
Never thought of that? Makes sense. There HAS to be a tax angle here for the dealers. In fact if you’ll recall when the internet first went “live” it was assumed that car dealerships would be the 1st casualty!
There’s only (1) Jag dealer in Oregon and they’ve been pretty good about loaners etc. Do we really need a Chevy dealer on every corner?
Then again, had it not been for the MEW extractions of the last d-e-c-a-d-e isn’t it possible that the dealerships would have gone belly-up long ago?
I need a test drive before I buy.
Al,
I have heard that reasonable response in the past and typically I’d take it a step further. I have a friend that insists about a LOT more than just handling/breaking etc. It’s about the vehicle fitting your lifestyle!
He always rents anything he’s considering buying for a week before he commits to buying. Picking up kids, elderly parents, stop and go traffic etc. It just seems to me that it’s an awfully expensive proposition to have all those dealerships from coast to coast.
My snowbird reply gotten eaten by Ben’s
invisible shredder .
In Texas, it is against the law for a dealer to sell cars on the internet unless you have a bricks-and-mortar dealership. A dealer is anyone who sells more than 5 cars a year.
I’m sure other states have similar laws to protect the public from unscrupulous internet dealers.
dinOR
you’ve touched upon a subject (internet auto dealer sales) which I’ve just had some personal experience;
walked into an area Nissan Dealer 3 months ago with a cashiers check for a 2009 Versa to complete a purchase . . .
the sales person almost fainted when I looked it over for a whole 5 minutes then told her ‘ I’ll take it it ‘ !
she asked if I wanted a test drive? nope. then practically peed her pants in excitement. she said I was the easiest sale she had ever made, and I also got the feeling the sale was the first in awhile for her . . .
thorough internet research for the prior 6 months was able to tell me 99% of what I needed to know, and then various consumer blogs tell the real owners story. e-pinion. cartalk. etc.
rave reviews from owners & no negatives at all for this model, which is very unusual. (I know, some comments are shills from dealers but you can tell which is genuine.) the very high safety rating was the clincher.
of course when I arrived at the dealer the actual car had some unmentioned “extras” like a spoiler, door sills, and such that added $2000 to the MSRP price online.
So I politely but firmly advised the manager I was there in response to the call placed 1/2 hr earlier confirming the MSRP price, and anything else was a deal-breaker. needless to say, they deducted the extras from the price (and some hocus pocus rebates) while leaving ‘em on the vehicle, and we concluded the deal.
what was humorous was the staff reaction to this situation . . as I was dressed in a flannel work shirt w/dirty jeans, standing in the showroom with a $2000 cash deposit(cashiers check for balance next day), talking in-depth about plug-in cars, economics, and whatever else came up while they did paperwork at the managers podium.
they also said virtually no one paid for a vehicle in cash these days, so it was amusing watching the staff whisper & point over at me while I was there . . . but in fact, I hate paperwork so much if possible, I would have just tossed ‘em a duffel bag full of cash for the car(DMX-Exit Wounds) & drove out. Seriously !
anyway, I grok your I-net observation, using it to preview the vehicle in detail, then continued shopping inventory online in my area for the exact color (light blue) preference. there was only ONE in the Sac valley, hence my rushing over with a deposit.
cheers, compadre.
if you’re over 30 and not paying cash you’re doing something wrong
DinOR,
The reason we are stuck with purchasing a vehicle from a dealer and not the car maker is this…
Decades ago, the car makers made a deal with those wanting to open dearlerships–they would only sell to them and not sell directly the general public in anyway.
—the 2.11-acre Budget Host property was purchased for $1.3 million in July 2007… [and] went up for sale at $4.4 million [in Nov. 2008]. The Zombie lives! What a ridiculous situation.
—But Vista Auto Group has UTTERLY WASTED a “very significant” amount of money demolishing the hotels.
—Vista donated an undisclosed amount to Catholic Charities to benefit people displaced from the rooms. Full disclosure of the amount donated would be an embarrassment to Vista and provoke a public outcry.
Would that amount be typical of what I might carry in my wallet at any given point in time?
Denver market is interesting right now. Our neighbors just put their house on the market and had two offers within a week (no idea what price, probably pretty low). But then they bought bank-owned new construction for about 2/3 of what the developer had been asking prior to foreclosure.
Case-Schiller has shown the market to be doing OK — less than a 5% decline YOY, with a decent seasonable bump over the spring and summer. Foreclosures are dropping for once. BUT. Articles like the one in the Rocky suggest that sales are down and prices are dropping.
I think you are seeing real estate at both ends of the scale get hit — higher end stuff because too much of it was built in this market and lower end stuff because of foreclosures — but the middle is doing OK. At least I hope that’s what it is, given our status.
I think you are seeing real estate at both ends of the scale get hit — higher end stuff because too much of it was built in this market and lower end stuff because of foreclosures — but the middle is doing OK. At least I hope that’s what it is, given our status.
Eventually the ‘high’ will skim off middle buyers (as it drops) and ‘low’ buyers will be unable to upgrade. Think of it as a connected spring under a dynamic load. Eventually the middle will move in the direction of the ends…
Sorry to have to point out the bad news…
Got Popcorn?
Neil
Grand Junction, Colorado - so much for the oilpatch saving everyone (gjsentinel dot com):
Quarter of GJ businesses plan staff cuts, survey shows
Almost a quarter of the local businesses that responded to a recent survey plan on decreasing staffing levels, 62 percent surveyed plan on cutting spending and nearly half believe sales will decrease in the next six months.
The Grand Junction Area Chamber of Commerce conducted the online survey of its members and received responses from close to 200 businesses, or about 17 percent of those invited.
So how is the oilpatch doing, considering the recent plunge in oil prices?
Some of the big companies (Barrett) are pulling rigs, anywhere from 20% to 60% pulled are the numbers I’ve been seeing.
“real estate values are 19% below fundamentals”.
What an absolute classic.
Got to hand it to the realtors - nothing gets in the way with reality with these folks.
I can just picture Lawrence Yun with next quarters outlook.
“Now is the best time to buy. Houses are priced at 42% below fundamentals”.
definite turn around by 2020 - no need to worry
People are still clueless in Vegas. I’m looking at rentals there (which probably makes me clueless too, but anyway…), which aren’t exactly going quickly, even though rental prices are about a third what they “should” be if current asking prices were realistic.
The owner of one place I liked wanted three personal references, and wanted me to explain why I’ve been renting, and to explain my “intentions” for the house. Uh, to live in it, perhaps? See ya, lady, let me know when you wake up, which will probably happen in a bankruptcy court, so I can go pay cash for your foreclosed house and throw a big party in it in your honor.
It’s gonna be fun having a front row seat in Vegas
Lebowski,
TOO damn funny! Maybe she hasn’t heard? These days it’s the RENTERS that are checking the LL’s references!
Uh… how many stories have we heard about perfectly good tenants being evicted b/c of shabby amateur LL’s? About 5 a day? Next time have some real fun and tell her you’re “design” is to use for p0rno shoot and that you’re still “casting”! That or training pitbulls. Sheesh.
My mom is renting a house from a local company that actually built the house she’s renting 20 years ago (and owns it out right). She still asked them for references before signing the lease.
We should have asked for references from our current landlady. I’m still concerned that if they get into personal financial trouble, the mortgage on their absentee property will go unpaid. I did have a chance to talk with the previous tenants, who had no reason to lie (they were buying) and that helped.
I’m actually planning to see if I can’t figure out how to make sure that the mortgage is up to date. (Taxes are easy as that’s completely public information in VT. )
I should await the Calif thread, but won’t be able to log on in that time frame today, so…
Just investigated the possibility of making some loans in the condo-ized mobile home parks here in Morro Bay. That is the essence of my business in Pinal County Arizona. YES there are condo-type MH parks here in MB, but egad! the single-lot prices are like $200K, down from like $300K a few years back. Whom are they kidding. I suppose I could write a note for $100K for 15 years and assume that by the time the prices get down to $100K, the note will be significantly amortized. Not that anyone here has asked me for a loan. But hey, I am still game to do business. This morning I lent $100K to Morgan Stanley (i.e., bought a bond), yield close to 12%, much of which will be LT cap gain since the coupon is only 4.75%. Well, that’s assuming that Mitsubishi is backing Morgan Stanley seriously. Heck, at least it’s not Glitnir Bank.
‘Our home was supposed to be our nest egg,’ he says.”
Uh, isn’t a nest egg something you build up BEFORE you retire ? These two should have never bought a house with their finances.
“They retired and put $80,000 down on their home two years ago, only to have the value of the home drop by about half. To pay some bills and medical expenses, they took out a second loan, then when interest rates reset at a higher rate, they fell behind and never caught up.”
Sounds like their 20-year “nest egg” (speculative investment) has already paid off –they withdrew an undisclosed amount with that silent second, which they’ve already spent and will never pay back. Hopefully it was more than the $80k they lost on their down-payment.
Can’t really fault them for consfusing a speculative flop with actual savings though. The entire country has been told for years by policy makers that debt=wealth and saving is for stupid people. The federal & state tax code housing give-aways & Fed’s near-ZIRP just reinforces that notion.
“Cody Lowderman started the bidding at $100,000 for the two-story penthouse in foreclosure at the edge of downtown Denver. Within two minutes the bidding was at $750,000. After a 5 percent fee to cover its expenses and any brokerage commissions, it brings the total purchase price to about $850,000. The previous sale price, however, was $1.9 million, according to public records. The condo had a mortgage of about $1.33 million before it went into foreclosure.”
“‘I think I got a good deal,’ said Jimmy Do.”
He’ll be screaming “Do’h!” next year when it be worth only 400K.
‘Bubble Characteristics’
“Treasuries have some bubble characteristics, certainly the Treasury bill does,” Pacific Investment Management Co.’s Gross said in a Bloomberg TV interview from Newport Beach, California. “A Treasury bill at zero percent is overvalued. Who could argue with that in terms of the return relative to the risk? There is no return.”
The real return on a T-bill paying a nominal rate of 0 pct is equal to the extra stuff I can buy with it if I delay purchase. With house prices falling at a 40 pct or so annual rate and oil prices dropping at an astronomical rate, this real return could currently be pretty high.
For instance, suppose X is the amount of stuff that you can buy at the beginning of the year, at nominal price Px, and Y is the amount you can buy at the end of the year with the same nominal amount of money, but now at the deflated price Py. Then assuming the nominal amounts of money are the same, one has
X*Px = Y*Py, so
Gross (real) return = R = Y/X = Px/Py.
For instance, if deflation is running at 10 pct per year, so
Py = 0.90*Px,
it follows that
R = Px/Py = 1/0.90 = 1.11 is the gross (real) return, and the net return is
100*(R-1) = 11 pct, meaning you can buy 11 pct more stuff at the end of the year for the same nominal amount of money.
Of course, it is a bit murky why one could not just hide the loot under the matress for a year, as opposed to purchasing a bond with a 0 pct nominal rate of return.
P.S. With house prices falling by 40 pct per annum, the increased amount of house I can buy at year end for the same cash as at the beginning is:
R = Px/Py = 1/(1-0.40) = 1.67, or 67 pct more house, just by sitting on my hands for a year. Noice!
““‘I think I got a good deal,’ said Jimmy Do.””
Jimmy, DOH!!
“Well, we could have, but those option adjustable rate mortgages may have been made to strong borrowers, too. I’m an optimist.’”
Definitions:
Optimist: One who tends to think that the future will be better than the present.
Dreamer: One who thinks that Option ARMs have any chance of being repaid according to their terms.
“‘November absolutely was a shock,’ Brown said. ‘Obviously somewhere back in the past there was a number that low, but not since modern-day record keeping, and we’re 25 years into it.’”
Whu??? You mean prior to 25 years ago they recorded permits with Peruvian counting knots? No, dude, you’re just too lazy to sift through the paper records they kept before they computerized it all.
Aaaaaa, the stupid, it burns!
“I feel bad, kind of like I’m not pulling my weight in this crisis,’ Burns says. But the only move that makes sense, he says, is to move away.”
Dude, if all the Wall Street Scumbags, Bankers and other assorted minions that fueled this mess had half your accountability, we wouldn’t be in this mess.
DOC
““From 2010 to 2012, 20 percent to 40 percent of adjustable rate mortgages are due to reset. ‘Just because the adjustable rate mortgages are coming due, the automatic assumption is that we’ve got another wave of bad loans,’ said Wells Fargo Nevada President Kirk Clausen. ‘Well, we could have, but those option adjustable rate mortgages may have been made to strong borrowers, too. I’m an optimist.’”
I’m an optimist too, Kirk. Optimistic the wave of resets and resultant foreclosures will bring down home prices to where they should be. Hell, maybe even “cash-flow positive.”
DOC
$7.5 m / 56 = $133,928.57 per property.
Gallagher said he believes Tuesday’s auction won’t fall through like the one held on Sept. 30 by Eric Nelson Auctioneering in Salt Lake City. That auction netted $7.5 million in bids on 56 distressed Utah properties, but flopped after the owners — three banks and two private lenders — decided they may get a better deal holding out for the government’s bailout package announced on Oct. 3. Congress authorized the Bush administration to spend $700 billion to try to thaw frozen credit markets.
“The timing was bad,” Gallagher said. Not that Eric Nelson Auctioneering could have known that Congress was going to approve the bailout just a few days after the company held the auction. The banks could not accept any offer because they didn’t know at the time whether the government was going to buy their toxic assets, he said.
Last month, Treasury Secretary Henry M. Paulson announced that the $700 billion bailout doesn’t include buying those toxic loans and securities after all. Instead, it will continue pumping cash directly into shaky banks and other lenders.
No more looking for bailouts in all the wrong places
Looking for bailouts in helicopter races
Searching the skies, looking for traces
Of what.. I’m dreaming of…
I read somewhere that historically, home values over a long period of time, appreciate an average of about 3 to 4 % per year. If this figure is applied to what home prices were about 10 years ago, it may provide another estimate of where the bottom is.