‘Something’s Got To Give’ In California
Some housing bubble reports from coastal California. “The San Luis Obispo County housing market is cooling off, say economists and local Realtors. Sales of county new and resale homes and condos fell 28 percent in April compared with the same period last year, according to DataQuick.”
“Real estate broker Shirley King said her firm is seeing probably ‘more than double’ the listings it had this time last year. There are also fewer sales, and some houses that have sold had reduced prices. ‘I see prices coming down, and I see those that have come down are selling within 98 percent of the listed price,’ King said. ‘With the prices coming down, the newer listings are being able to use better comps.’”
“Builders are also adapting to a return to a normal market, said Jerry Bunin, of the Home Builders Association of the Central Coast. Centex, one of the most active builders in the county, has locked the interest rate for buyers and is offering special financing programs designed to make the buyer feel more ‘comfortable with their payments,’ Chris Bowley said.”
The Press Telegram. ” During the four-month period from January through April, sales fell between 35 percent and 40 percent in Long Beach and surrounding areas, (broker) Randy Smith said. ‘We’re seeing price reductions all over the place,’ he added.”
“Only about 10 percent of homes are selling quickly and ‘to get the house sold it has to be really, really special or it has to be one of the best-priced houses in the neighborhood,’ Smith said. With affordability levels near all-time lows, either prices need to come down or people need to earn more money, Smith said, adding, ‘Something’s got to give.’”
“Author John Talbott says the bubble has stretched about as far as it possibly can. ‘The smart money is getting out. In San Diego, for example, the homebuilders themselves are getting out. I know a condominium developer in San Diego who had properties he was building, and he made offers for people to take them out of the market,’ Talbot said.”
“‘He hadn’t even completed the building yet, but he was selling the condominiums for ridiculously low prices like $190,000 if the buyer would just come in and finish the floors. He was minimizing his exposure for the downturn. In San Diego, condos are off around 30%, that’s huge,’ he said.”
“Brock Harris, a realtor in Los Angeles, sees changes afoot in his once-hot housing market. ‘What we’re seeing right now is a lot of overoptimistic sellers coupled with increasingly cautious buyers,’ he says. ‘That’s keeping a lot of inventory on the market.’”
“Home sales in Southern California fell 16% in April. ‘The pieces are in place for price reductions to begin soon.’ Harris says.”
From the Talbott interview:
‘Didn’t you already say all this in 2003? I wrote my first book in 2003 saying Fannie Mae and Freddie Mac were overleveraged and the market was too high, but I was careful in the book not to say it couldn’t go higher. I wasn’t trying to call the absolute peak in the market. But now with the Fed basically out of the picture and giving up on 1% interest rates, I think the cracks are beginning to show in the inventory of homes for sale and the way the nonoccupied real estate investors are behaving.’
‘If you call the National Association of Realtors, they will say that prices are going to bounce back up, but there are a million signals that this is serious. It’s not like in 2003, when I was talking theoretically that things are overvalued. Now they’re more overvalued, foreclosures are up, and investor-owned property prices are going down. It’s happening.’
Isn’t it remarkable that the slowdown has seemed to hit everywhere in the country in recent months? Real estate markets used to be local and unique but not anymore. I wonder if the flow of information has changed that.
I too, find this remarkable. The entire event is synchronized in a manner that doesn’t resemble localized RE booms/busts of the past. You’re right about the free flow of information and how its changed the market. Also, I think its fair to say that extreme competition in mortgage finance, along with the whole FNM/MBS/Derivatives/No Underwriting/Appraisal Fraud scheme ensures that a flood of liquidity washes over the entire market and enables anyone of any means to buy RE. Speaking of which, who ever said that a 70% home ownership rate was a good thing?!?!? In hindsight its probably a very bad thing.
This was a credit bubble, not an RE bubble. And it is worldwide. Fairly scary time, keep your powder dry.
What does that mean, anyway?
Keep your powder dry?
Is it like…don’t get your panties in a bunch?
Wet powder is worthless for shooting purposes, because it does not explode…
Similar to keep your weapons (ie: cash/credit score) ready and functional.
Lots of trading terms are based on hunting or battle terms. Dry powder is ready to be used. In this sense it means have capital avaliable to put to use when prices become attractive.
“Speaking of which, who ever said that a 70% home ownership rate was a good thing?!?!?”
Your Uncle Sam.
Modern finance is taking a hard look at correlations, it seems that while corellations are on the increase generally, when things turn south previously uncorrelated assets become highly correlated (look at commodity prices and emerging markets as a recent example). In this case, my hypothesis is that costal equity has been pushing up flyover state home values (very slowly) as a secular trend for 20 years, but that there was a great cyclical boom in the trend over the last 4 years. Now the bloom is falling of the rose, but all areas are more highly correlated than in previous boom/bust cycles.
Right, I agree with this. The coastal equity boom gave coasters “extra” money, which they “invested” in real estate elsewhere because they had been so “successful” in doing so in their own area.
im thinking of buying his book. it got good reviews on AMZN.
Those housing futures started trading today.
‘Some of the biggest losses on Monday, versus settlement prices established for Friday, were in deferred Los Angeles, Miami and Washington, D.C., futures. Higher prices were seen for the Denver contract.’
Also, a reader pointed out this Dataquick table showed a YOY loss in San Diego condos.
The line in that DQ report that caught my eye was for Santa Barbara County:
SFR = -4.0% YOY
Condos = -11.5% YOY
At least their affordable housing problem is going away!
How does everyone feel about these housing futures. Is it solely based on whether housing prices go up or down? I would like to put a litle bit of money betting on the housing market going down here in San Diego. Just a couple of grand, what do you think?
They are more tailored to the needs of institutional investors than individuals. What’s more, the price indexes to which these futures are tied are problematic. Prices of completed home sales transactions are inherently a lagging indicator in a downturn, as sellers who do not wish to give up their perceived home equity gains will hold out as long as possible at a list price above market price, especially when said market price has adjusted downwards. Thus during an inventory correction (like the one now underway), the areas which have experienced the largest price drops will tend to not be fully reflected in the data until much later than underlying conditions may warrant.
Many who post here have chosen instead to invest in housing sector stock options (homebuilders, lenders, home remodeling, etc), whereon the underlying is set by the stock price, rather than a (nonmarket) price index whose level may lag current market conditions due to the inventory pileup effect.
P.S. One more issue: If I recall correctly, the new housing market futures have a 1-year term. If you are interested in making long-term bets on black swans, it is better to go for LEAP put options on companies whose values are highly correlated with housing prices.
not worth the trouble IMO. go to Vegas or AC if you want to gamble.
I appreciate the information.
Or invest in housing, or why not the stock market?
… and while you are avoiding any and all gambles, be sure to cancel your homeowners insurance, and your health insurance, and your automotive policy. Gambling is immoral, not to mention just plain bad, in any way, shape, or form!
Although I agree with your general sentiment, it could be argued that insurance is a hedge, not a gamble. Indeed, it could be considered the opposite of a gamble.
investing and insurance is not gambling or speculation.
I think the difference between insurance and speculation is the amount.
On would not generally speculate on a spouse dying in the next twenty years. However, it is wise to have money positioned to net a windfall if that should happen even if the insurance company has the more “lucrative” end.
Gambling = buying a home in a housing market which has been destabilized by a credit bubble and its associated effects (appraisal fraud, lax underwriting standards, high levels of speculation, a self-extinguishing building boom, abnormally and unsustainably low interest rates and record high prices)
Insurance = diversifying your investment portfolio by purchasing a few put options which will pay off in the event of all-out financial meltdown
They sure look like a good way for a homeowner to liquidly reduce a portion or all of their exposure to the housing market without the trouble of selling a home and renting. As a bonus you can maintain your very high leveraged bet on the dollar.
What does it mean..’deferred LA’ and’ biggest losses vs. settlement prices’???I don’t understand the languagethey’re using?
Losses vs settlement prices indicates that the CME established a price for the contracts on Friday that they considered fair, and the closing price (settlement price on a futures exchange) declined from there in actual trading on Monday.
On the deferred item, the story isn’t clear (and the contracts are too new to have more than a day in the charts). It either refers to the fact that the contracts were delayed (they were originally supposed to be traded in April and twice in May) or to the later month settlement futures meaning contract for delivery in Feb or May of next year as opposed to Aug of this year (the front month contract which is usually the most active contract in futures). I wouldn’t read too much into the data as there were only 52 contracts (with about 40-50 contracts available to be traded). That would be like an exchange having say 48 stocks listed, but only 52 hundred share lots traded in a day.
If someone were planning to buy within a year and wanted to lock in todays price, this is a cheap way to do it, also if someone wanted to sell (or just wanted to not have exposure to the market) this is probably the only way to short a house.
Down baby, down!
Humboldt county California inventory up to 709, up 7 from the weekend.
Hopefully, the increase in inventory will portend significant price drops here along the north coast, as the rise in inventory in the central valley last summer spelled drastically lower prices now.
anthony, can you post up a good link for humbolt inventory?
Cereal,
http://www.humboldtcountymls.com/search.cfm
It shows the number of single family homes, lots, etc. for sale.
Enjoy.
Sonoma County is: 3369
Sonoma County listings progression
3/20/06 = 1742
3/26/06 = 1766
4/03/06 = 1888
4/19/06 = 2828
4/25/06 = 2868
4/30/06 = 2898
5/07/06 = 3052
5/13/06 = 3187
5/18/06 = 3310
5/22/06 = 3369
norcalmls.com
Sonoma Valley listing progression
2/14/06 = 172
2/14/06 = 183
2/24/06 = 193
2/25/06 = 200
2/27/06 = 214
3/01/06 = 219
3/04/06 = 220
3/12/06 = 230
3/20/06 = 236
3/26/06 = 238
4/03/06 = 268
4/19/06 = 291
4/25/06 = 305
4/30/06 = 315
5/07/06 = 328
5/13/06 = 346
5/18/06 = 363
GMAC mls
Here’s Arcata and Eureka SFH listings.
http://www.humboldt.edu/%7Eindexhum/realestate/listings.htm
Hey Anthony, do you have historical listings from last year?
I’m sitting in Fresno and these “drastically reduced prices” you speak of don’t exist. Still hideously overpriced by at least 25-35%. Your average 200-225k house is selling for 275-375k or even more. Don’t see it lasting though if the inventory balloons.
have patience, grasshopper.
Tauceti96,
In my old neightborhood in Visalia, I sold my house in December for $365K. Now, the exact same floor plans are being offered for $315K. This is in a very good neighborhood that is only 3 years old. Believe me, there is plenty of “panic” selling going on…it may or may nor always be reflected in the “upfront cost,” but people there seem very willing to negotiate down. In my old neighborhood, a 50K reduction in 5 months (15%) is pretty drastic. When you also consider than competing new developments (like those from McMillin and Centex) are also dropping their prices, the crash is certainly further along in the valley than along the coast, at least so far.
$365k in Visalia? Sweet Je@#$!
Where is this money coming from? I hope that greater fool is upwind from one of those fine hog farms on the edge of town.
He’s baaaaack. thereisnohousingbubble online and as acerbic as ever.
The truth sure hurts! No wonder he’s bitter.
What is the site address? Was the site put together by the NAR?
In San Diego, for example, the homebuilders themselves are getting out.
__________________________
I’ve been meaning to post about this. I have definitely noticed more land and lots for sale around North County SD, many with plans already completed. It’s obvious the developers think the easy money is gone around here, IMHO.
O/T: Anyone think the recent weakness in metals, stock market, etc. might be the beginning of the liquidity squeeze (& hedge funds unwinding) we’ve been talking about for a while now?
Personally, I’m out all long positions (including gold which I’ve held for a while) and increased short positions in banks, retailers and oil. Considering Google, but got absolutely killed on that last year (a few EXPENSIVE options expired — ouch). Just a hunch, but thinking all the bubbles might go at once.
Speaking of stock market. Today I solde 3/4 of my stocks. There are a lot of uncertainty today.
stay safe, stay liquid
My current Allocation on $1.2M =
CASH = 20%
BONDS = 13%
STOCKS = 67%
REAL ESTATE EQUITY = 0%
TOTAL = 100%
Gekko,
Hope you have trailing stops on everything. I’m sure you know what you’re doing. Best of luck!
Trailing stops = put options used to offset stock which has taken a black swan dive.
67% = gambling, and a bad bet to boot…
Didn’t I mention the conundrum is ending?
Here is more evidence that now is a bad time to gamble in stocks: The world markets are hit day-after-day with waves of selling (but there is no bursting bubble — just a slow, steady leak, except for maybe in Mumbai…)
——————————————————————————-
AFX News Limited
Asian shares lower amid global equities weakness on rate fears
05.23.2006, 01:00 AM
http://www.forbes.com/markets/feeds/afx/2006/05/22/afx2765255.html#
RE: Gambling in the Indian Stock Market
——————————————————————————
MAY 23, 2006
Investing
By Roben Farzad
Emerging Markets Beat Quick Retreat
The sell-off looks like an overdue correction rather than the sign of an impending crash. As investors rethink the risks, some remain bullish
http://www.businessweek.com/investor/content/may2006/pi20060522_570570.htm
HEALTHY LOSSES (OXY-MORON!). It’s a rude shock for the Johnny-come-lately investor, who had become accustomed to scoring double-digit gains on his emerging-market holdings. The India Fund (IFN), a popular closed-end investment company, has seen its shares slide from their May 9 high of $65 to $46 — a 29% plunge. The Dow Jones Industrial Average would have to shed 3,200 points to equal that percentage decline. The AMEX-listed Indonesia Fund (IF) has fallen from a May high of $14 to $8.27 on May 22; the Dow would have to plunge 4,500 points to match that swoon.
you are ok if you are young….if you are older, you have too much in stock
i’m age 36. my target stock allocation is (100 - Age) = Allocation. index 500 is majority.
The dollar is depreciating rapidly. Shouldn’t you move some of your assets to precious metals? Coins or bullion for some, mining stocks for some and possibly ETF’s in either the metals or mining stocks.
The real inflation that we are suffering is quite a bit higher than reported by the government. All dollar assets are shrinking at a frightening pace.
Didn’t the dollar surge yesterday against the major currencies due to talk of another 25 bps raise from the FED in June? And precious metals are declining from record highs.
Are we under the assumption that this is short-lived and that the dollar will continue to depreciate on the world currency market?
This just in from the SD Union-Tribune
A crowd gathered in the Gaslamp District of San Diego outside a recently constructed condo tower. Kristian Cabuago was standing on the railing of his balcony of his new condo that he just purchased for $550,000 last fall. Cabuago was reportedly alternatively shouting with joy, then panic and fear a few sentences later. Onlookers described him as delirious.
One onlooker describes the scene: “One second he was happily yelling out that he saved $30,000 on the purchase of his new condo and how someone his age absolutely couldn’t lose. Then the next second he would start bawling delirously and scream something about losing $360,000 and some ‘damn granite countertops.’ I couldn’t really understand what was going on.”
The police were able to negotiate Cabuago off the ledge with promises that they contacted MTV so he could appear on the upcoming season of the Real World.
Ah…. the ole’ MTV Real World trick. I love that one..it never fails.
Too funny!!!
In his defense, I couldn’t say with certainty that I wouldn’t be delirious myself once I realized I could be in the hole for… (pinky finger held to corner of mouth in imitation of Dr. Evil) -hundreds of thousands of dollars-
LOL . …..You know I was kidding about 3 months ago when I made a joke about condo buyers jumping from these tall condo buildings in 1929 fashion , ….but …..might be alot of depressed people when this market corrects .
I was there. I heard him yell to the police negotiators: “I want a hoagie sandwich, a cigarette, and I want to talk to Suzanne NOW.”
hoagie? must be from philadelphia…..not oc!
Nah. I just don’t get to use that word very often, so I sprung for it.
Kristian Cabuago has saved about 5% on the sale of an overpriced POS condo and helped to purchase the third Lexus of Mr F. Jerry Atrics. So, to guys like him, eating 95% of a turd is immensely more satisfying than having to eat the whole thing…he can’t lose!
Ok, I get it now.
Last night at the Padres/Braves game, my fiance and I marveled at all the new condos going up, up, up in the SD skyline. We saw at least 6 new buildings under construction from our seats alone. There are so many units under construction it was amazing. Hundreds if not thousands of new units are being built.
As we left, we counted the number of lights on in newly finished buildings. It was sad. Nary one light to every floor. I imagined poor Mr. Cabuago must feel very much alone when he turns out his apartment lights on the empty floor of his vacant condo building.
Sorry for a not quite related distraction, but the RE bubble in the virtual world is getting ridiculous too, someone is making $12,000/month renting virtual apartments.
Net nightclubs, virtual venues generate real dollars
“CYBER VENUES ON THE RISE
The lounge is not alone in the virtual world. Last year, a similar community called the Habbo Hotel began hosting virtual visits by such acts as Gorillaz, Ashlee Simpson and Bow Wow.
The weekend before the lounge’s grand opening, BBC Radio One webcast its One Big Weekend music festival to members of the virtual world Second Life. Far more vast in scale than the lounge, Second Life has roughly 200,000 members who travel around more than 20,000 acres of virtual space, mostly consisting of small islands where users interact with other members or attend events.
Another virtual world, Project Entropia, made headlines earlier this year when one resident paid $100,000 to develop a virtual space station. He now makes $12,000 per month renting virtual apartments and retail space and plans to open a nightclub as well.”
Beanie Babies.
The greater nerd theory.
Don’t mess with us nerds. That is unless you are ready to turn in your home computer, cel phone, xbox, gps, lojack, internet access, yadda yadda. Nerd last year, cutting edge this year, indepensible next year.
Hey, I write software for a living, I race simulated cars over the internet, I have a BIG wireless network. I am a nerd, just wouldn’t buy virtual real estate.
Holy mother of Megahetrz! I was expecting a Pringles can. Wow.
Second Life is known for these types of stunts. Just over a year ago a piece of property “sold” for $100K. Later people found out that the “buyer” was an employee of the site. They engineer stunts like this that generate a lot of PR but not nearly as much cash.
kirk - what kind of network is that? some kind of WIMAX? doesnt the FCC kick down your door with that thing?
It’s a standard 11Mb/s 802.11b but using high end donated Avaya routers. You have to know me and have an antenna pointed at it to use it though. Here’s another shot looking west towards downtown San Diego.
range in terms of mileage?
Hi, I live in North Park. Just northest of North Park. Looks like a very similar view to mine.
Can I know you? Please? Pretty please?
At least two mile range with a flat directional antenna, haven’t tested from farther than that. Feepness, it’s probably cheaper to just get DSL considering the parts you’d need to connect, at least in the short run.
I run a local neighborhood WISP.
We use cheap commodity D-Link routers that have point to point (and multipoint) bridging capability along with some yagis, omnis, etc. It’s a bridge system so each node needs to have it’s own bridge and antenna pointing back to the mothership. It’s not the fanciest setup, but it is cheap and secure.
The longest shot I’ve gone with this setup was a 2 mile link using 12db yagis with a clear LOS. I’m sure we could have gone farther, but it would have necessitated mounting antennas on masts, and we wanted to avoid that.
grim
Can’t you guys conduct your techno-dweeb discussions in a more appropriate venue, say, in your Dateless Dude support group?
Pet Rock.
“a sucker born every minute”
On a related note, my stepson informs me he intends to finance the new car he wants me to help him buy by selling off on eBay some of the virtual “stuff” his character in his Star Wars Galaxies online computer game has accumulated. He claims he can probably drum up $800, and that he could get even more by selling his “character,” an eleventh-degree Master Jedi Grand Poo-Bah or something like that.
I wonder — do uber-geeks really have so much money to burn that they’ll spend that kind of scratch just to make their hours in front of the LCD a little more enjoyable, or is excess global liquidity sloshing so wide in search of return that it’s even causing bidding wars for online gaming characters?
Oh ya…My son BOUGHT A higher level for his character in world of warcraft(I call it world of warcrap) It is VERY impt. to them.
what’s next? tulips?
Keep in mind diamonds are simply shiny rocks.
Keep in mind your stocks are just pieces of paper (or an electronic proxy thereof)…
keep in mind a deed is just a piece of paper. ask Harold the Saxon.
Some stocks are simply paper. Some though, carry a nice yield too. That’s what I use to figure a floor…
Several of my relatives (ages 35 yrs down to “gulp” 5 yrs) are (or have been) addicted to World of Warcraft. And they told me something really interesting about these characters that are for sale — guess where they “make” them? — yup, outsourced to China. Developing a character to a certain level takes time more than skill and doing so actually provides real jobs for some Chinese people. I heard (read, made-up?) that these “workers” are people in small towns.
my brother sold fantasy money from various online games to the little geek kids in virtual community and made about $500..
I told him to consider getting into this business,, JK
What will happen to rents?
A friend sold a rentail condo in CA last year and 1031ed the money into 7 (yes SEVEN) houses in and around Dallas, TX (5 new, 2 pre-owned). He’s a very smart guy and he says rents will be going up for his houses because of the housing bubble popping. But might rents go down because there will be more places for rent since selling will be more difficult? Will this vary by city/region???
Thanks for your insights.
There was a study done recently to counter the recent hubbub about “rents” are now going to rise. The study was that rents fell in lock-step with housing prices in ALL previous downturns. Sorry no link.
agreed.
Gee, In all previous upticks rents rose with values so it is absolutely proven that this claim is non-operative.
But this time is “different”…
In Sydney rents have increased due to a growing population and the fact that new construction has fallen to levels not seen in 30 years. Remember, though, that the resource boom ’saved’ Australia’s economy from the real estate implosion. Just good timing. Sheer luck to have yet another ‘bubble’ take over so seamlessly.
Rents in CA have been rising very slowly until the past six months and have started to rise more quickly. They will go up substantially as the RE bubble bursts. There is not much rental inventory. Dallas has lots and lots of cheap development, but also a lot of jobs are going there from places like So Cal. However, property taxes there are very high and I wouldn’t want to deal with renters in TX.
As I mentioned. The study was done to counter the hubbub about why it’s different this time, and rents in California will rise as housing falls — nonsense.
You need to understand that rents rise with carrying costs so in simple terms rents toady reflect purchase prices of 3-4 years ago. Go back 3-4 years and overlay. Scary. It won’t be smooth. Expect violent disconnects. Some people have locked in long term leases, others special deals with stupid flippers, etc.
Agree w/ rubble. I believe rents will rise at least in the beginning of the burst as specuvestors try to sell their empty homes (and keep them empty). Once they decide to pull them off the market to rent them out, rents might stabilize or go down.
I also think this is regional. Places where there truly is a shortage of housing (major shortage of cheap housing — including rentals — in So Cal), rents will slowly rise. Even with all the bubble speculation, there still aren’t very many empty houses, relative to other markets, here. Places like Idaho, AZ, Las Vegas, etc., where there has been unbridled, speculative building with no end users, rents will likely decline, and very steeply, IMHO.
The housing bubble has kept rents artificially low as ANYBODY has been enabled to “buy” a home instead of rent. As the worm turns, this will reverse. Just MHO.
no because stubborn specuvestors will first try to SELL their properties. when they can’t get *their* asking sale price (and most will not) they will try to RENT them. hence, rental GLUT.
I know this from personal experince - I have a friend with 2 miami preconstruction condos - and I asked him “Do you think you’ll be looking at a loss or a gain when you try to sell?” and he said “If I can’t get my price, I’ll just rent them and make money that way.” How many OTHERS are saying the exact same thing. And how many others will be able to charge enough rent to cover the PITI?
it’s simple Economics 101. supply vs. demand. when supply increases relative to demand, prices fall.
Gekko,
Yes, I agree with you. That’s why I only think the rents will rise for the short term. Right now, as they try to sell, rentals are being held off the market. Once they decide to rent them out instead, the rents will got down, IMO.
CA - i re-read your original post and see where youre coming from.
I personally know 2 flippers that want to rent their properties out if they don’t sell. As for selling…they’re both askig ridiculous prices…as for renting…I don’t see how they’ll cover half their monthly nuts!!! Even IF rents rise…which won’t be by much. IMO
How can rents rise significantly in a country with a negative savings rate? Where is the money? 2 + 2 = 5?
Rent is coming down in Hawaii: Read this one at: http://honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20060522/BUSINESS04/605220319
One question to all who think rents will go up (even in ’scarce’ locations):
When the implosion finally settles and RE prices return to historical means, do you think people will be renting out newly bought properties at todays rental rates when their mortgage costs are 50% less?
IMHO, rents will have a slight uptick for the reasons Mr. Cote mentioned and will fall all the way down with RE prices. Yes, even in desireable ‘hot’ rental markets.
“Agree w/ rubble. I believe rents will rise at least in the beginning of the burst as specuvestors try to sell their empty homes (and keep them empty). Once they decide to pull them off the market to rent them out, rents might stabilize or go down.”
My parents have owned CA rental property for over 40-yrs. I can assure you that rents are closely linked to employment, and when the layoffs start we are always the first to know as the rents stop coming in on time; before long we’re knocking on doors to collect the rent. As the old joke goes, “When the economy sneezes the landlord is the first to catch a cold.” Eventually the newspapers report that things are beginning to tighten up, but this is always months later. Remember that the bulk of employment growth during the last five years has been in the RE, construction, lending, etc., and as the music stops the companies in business to make money (most of them?) will cut their workforce without hesitation.
No way rents will rise and I have two rentals in San Diego.
Rent are much “stickier” as should rents rise (or income falls) that extra bedroom becomes eyed for the $$$$. Renters decide they can take another co-renter. Kids move back in with their parents. Renters are NOT loyal to their properties and will leave at the drop of a hat. At the height of the last downturn in San Diego, I was getting a free month’s rent on a nicer place than I’d ever been in and my rent hadn’t risen in five years. I didn’t even know how good I had it.
Right now landlords are ASKING for more. Soon, very soon, they will be GETTING less.
“No way rents will rise and I have two rentals in San Diego.”
I agree completely.
Where’s TxChic?
Moving to AZ.
I believe she should be in her new home this week or next. Hope she keeps posting here in while she gets settled.
Rents will continue going down as the remaining Katrina people leave the DFW area and move back to NOLA.
Your friend is absolutely STUPID!! I lived in the Dallas metro for 9 years and had a gorgeous home it took me 2 years to sell after renting it at a loss for 1 year!! The place is a hellhole! The area is totatlly flat and there are houses for as far as the eye can see! There are no restrictions on building and real estate is not worth a plug nickel. I just closed on selling the house last Friday and I thank God for it! I had to take $17k to closing after putting over $40k in the house and owning it for 4 years! It is in a wonderful neighborhood with some of the best schools in the area. I would never, ever buy a house there! RENT! You can never make $$ on a house there!! It is a dump! The weather sucks and the economy is low-paying and awful! Stay away! I am lucky as hell to sell the thing! I lost probably around $100k on this dump! It’s cheap there for a reason! I am originally from Ohio and now live in S. Cal. I am just biding my time now to buy. I am anixiously waiting for these fools out here to go belly-up!
Let the party begin!
But what do you really think of Dallas?
Well, I guess time will tell to be honest I’m not sure my friend has actually been there to see his properties. They are all rented right now.
The scary thing about Dallas is the type of people who rent. Home prices are so low in Dallas that if you are renting there has to be something wrong. Granted, we were very lucky and had tenants who were just in town for a year with work (ex-military), but I have heard horror stories about renters who are terrible. I would never, never have rental property there! It’s definately not like here where me and my husband rent due to the crazy market. We have a family income around $200k and could easily afford to buy, but choose not to pay crazy prices. I wish the best of luck to your friend, but my hopes are not high for him! He will probably end up getting burnt.
Sounds like General Antonio López de Santa Anna has finally exacted his revenge.
Long term, ya’ll can speculate all you want, but right NOW, location, location, location…my two remaining exposures to real estate are a rental in Altadena (Los Angeles) and a rental in Apple Valley (the high desert, on the way to Vegas).
The Apple Valley rental market is getting lightly hammered due to speculation, investors, and overbuilding in Apple Valley, Hesperia, and, most egregiously, Victorville. If we lost our current Apple Valley renter, we’d probably have to drop the rent 8% to stay competitive.
Contrast that to the Altadena/Pasadena rental market…prices are still climbing, and 3-bedroom ‘luxury’ APARTMENTS are going for $3K and up. We ended up renting our Altadena house for 11% more than we had listed it for. (Also, the LA Times recently reported rents going up an average of 8% last year for all of LA).
Like they say, Your Mileage May Vary…
“Long term, ya’ll can speculate all you want, but right NOW, location, location, location…”
____________________
Absolutely. Exactly the point I was trying to make above.
I can say for a fact that rents in our particular neighborhood (La Costa, San Diego) have most definitely gone up since mid-2004. I am also hearing from friends in LA that rents in the SFV are going up as well. Again, these are the more desirable places, and LA has quite a decent job market (for now). The outlying communities (Central Valley, Victorville, Antelope Valley, etc.), which have only experienced a “hot” RE market in boom/bubble years, will get HAMMERED by a poor rental market. Nobody moves there to **rent**. However, people will move back to the major metropolitan areas as the bubble deflates, and this will cause some upward pressure on rents, IMHO.
rents are down in my area.
Sorry, another O/T:
Since many here are short HBs, anyone notice anything different about PHM (Pulte)? I’ve been trading HB options for a while now (up and down), and the pricing of their options doesn’t seem to be moving like the rest. Wondering if they might be a takeover target. Any thoughts?
Pulte seems to cater to the over 55 market .In fact I think 75% of his projects are the 55 and older type ,( you know the smaller homes ,biking trails ,golf courses, big rec. rooms .) I think more end-users bought into his tracts . This is just a guess on my part .
I noticed. PHM seemed to be invincible and I have stopped following it as a short target.
Pulte Put Option the 25’s for Jan 2008 purchased 4/26 for $1.90, closed 5/21 at $2.65. Looking for stock to be at $20 by end of year. Still a great short or put
I am not a disinterested observer. I ‘need’ SLO to crash. Either 3 and/or 6 years from now I’ll be paying Cal Poly tuition and I want to buy a house for her/them.
OK, Robert, now tell us why your daughter (or whoever that is ) “needs” her own house for her friends and her to trash while she’s in college. Is that how you teach your kids fiscal responsibility? You sound like you’re a lot smarter than this, so I’m sure I’m missing something.
i bet he wants to buy it as an investment and the kids can live there during school - hence kill two birds with one stone. they do say buying near a college is good sense - always demand. of course you have frat boys pissing all over the place and punching holes in the wall. Does Dr. Cote like spackling????????
Don’t even think of calling me doctor. I work for a living. This is a special case. SLO is, for want of a nastier phrase; Santa Barbara Adjacent. People not familiar with SoCal won’t get the joke. SLO is another of those special cases. SLO tried to run with the big dogs as to price recently but it lacks critical mass to survive a downturn long term. I know college, I may have even attended one (or SIX) myself. I’ve probably “parted association due to mutual best interests” from more educational institutions than most people have ever attended.
SLO is ripe for the picking. By that I mean once the corpse gets ripe we vultures can have our pick.
it was Doctor alright - but “Doctor of Philosophising” from the “School of Hard Knocks”.
Yeah, I barely broke even on my first California real estate purchase. I don’t call it a home or an investment because I didn’t know better. I’m not 50 but yes I’ve seen a lot. I’ve done “spackling.” There aren’t words for the “stuff” I’ve endured in my years of landlording. I’ll be a landlord again in 2-3 years as well. I’m ready.
I sure hope you’re right, Robert. I’m graduating from Poly in 3 weeks, and trying to amass cash to buy a house in a couple years, as I like it here a lot.
Prices are going to have to drop by half, or inflation pick up the difference, before I will consider it though. 300k for an old tract house is all I can stomach.
SLO is a very nice place, but most of the money there came from outside the local market. BTW, what sort of degree?
RMS: I be ah ingineer. Time was aye cudn’t spel it now aye r one.
AmazingRuss: Congrats you are the long term future of SLO and why I am looking at the area in a sew years. You have the numbers exactly right IMO. For places like SLO I’ve predicted a gut wrenching 20% fall then -7% per year and a significant uptick in inflation so 50% and 3-4 years is fully possible.
I too are a engineer…computer engineering. Hopefully I’ll be able to maintain my income relative to inflation through all this. The wife should be finishing her PHD in a couple years, so I think we’ll be set.
Have you priced on campus housing at Cal Poly SLO? I read what I typed and see how you could be misled. Apologies. I’m not buying Alex or Lauren (both girls with deliberately ambigious names) a house. I’m buying a house where they can live and “manage.” In exchange for management they get to live there with 1 or 2 roomates. I depreciate, I call their allowance management fees. I save thousands in room and board and with the coming crash there’s even a chance I might increase asset value faster than depreciation.
This is most assurably a learning opportunity. As if it mattered I spent an hour yesterday explaining auto ownership to Alex. She is earning her Gold Award in Girl Scouts. She was shocked at the costs of owning and per mile. This especially in light of our buying another car on Saturday. The new ‘06 Civic cost $20k but the $20k in the markets (we paid cash) would return at 5% only $85/mo. The Civic even after insurance would save $60/mo above that. The resale value appears to be, get this, positive. Weird but if you do the numbers… Anyway the house in SLO makes sense if you consider my position.
I like the new Civics - but I bought the Scion xA. 15k out the door - 36mpg. Gutless, admittedly though.
you cant go wrong with Toyota or Honda products. I’ll never buy anything but Lexus ever again. I put 135k miles on my last one trouble free.
At 84 miles on the odometer I’m not ready to comment but hot darn. I had to flashback to the luxury Accord my girlfriend drove in college #5 (?) to relive the experience. High 30s mpg for our driving and room for everything with 4 passengers. The early 80’s luxury Accord was nice, this is nicer. WTF is wrong with Ford? A 40mpg econobox for $20k that holds value? No, instead we get a Focus or 500 from them.
“WTF is wrong with Ford?”
1) Greedy unions who have bled the cash cow dry.
2) Stupid management.
Americans can and do build good cars. It simply requires a Japanese company to manage things, in parts of the country where militant union assholes aren’t as powerful. It’s not a mere coincidence that all the new auto plants are going up in the south.
Is Ford a health care provider which happens to also manufacture automobiles, like GM is?
No, GM is a mortgage lender that also dabbles in car manufacturing on the side.
BTW, I think poor planning and R&D are what’s killing GM and Ford, not the unions. If they were forward-thinking and innovative, the pension & healthcare costs would not be such a problem. They allowed the Japanese take market share. I used to only buy American cars. Now we own a Honda, and couldn’t be happier.
Agreed with CA Renter. It’s a matter of building reliable, decent cars that people actually want to buy. Horrible design, long-term quality issues and refusal to quickly accept market trends has all but doomed the American Auto industry.
I like my Ford Freestyle though. Six seats and it drives like a car.
(And the five-star safety rating is VERY nice, particularly after getting rear-ended while sitting in the back row, half a foot from impact— and nary a bruise.)
But I won’t comment on the rest of their line, as the Freestyle is pretty much unique at this point, and maybe another manufacturer would do it better. Visually, think of it as a cross between a tall station wagon and a mini-SUV that gets 24 MPG in-city.
Buying to house college kids is not necessarily a dumb idea if you get the timing right. My folks did it for me back in Dec ‘90. I had to have a room mate, who paid them rent. as it happens, the place was a great little investment (they paid cash) and they still own it to this day as a rental. Helps fund their retirement.
Also, I learned how to be responsible for a place from age 18. I will definitely consider doing the same for my kid(s).
Right on all counts. Bet you learned as much from the experience as in any class you attended as well.
I know several people who did this. In all cases it was done for 3 reasons; 1) offset stupidly high on-campus housing cost, 2) teach financial responsibility to the kids, and lastly 3) investment. In all cases #1 and #2 were primary reasons and #3 was just a bonus.
For all, #2 had the biggest impact and was the most lasting. IMO making your kid responsible for maintaining the place, collecting rent, paying bills, etc. is one of the best things you can do for them. I wish my parents had done it for me, and I plan to do it for my kids if I can afford to.
Has your daughter ever considered renting? People like you make me sick. I think you would be doing your daughter a favor by not buying her a house. I’m a 1996 Poly grad and I put myself through school. Didn’t have daddy’s help. I moved back to SLO last year and I can’t afford anything because of “investors” like you. When there’s proof that RE does not go up you guys are history.
Foose, I don’t think you’ve been reading all the comments. No one is talking about giving her a house. We are talking about buying a house for her to live in while attending Poly. This means I’ll be taking 2 or 3 students out of the house hunting market. I’m unconcerned about the investment aspect, this is to save money and teach responsibility. If saving money and teaching responsibility makes you sick, so be it.
Why don’t you teach her to be self-reliant. Isn’t that the purpose of college? Nobody needs their dad to buy a house for them because renting is so horrible. Dude be realistic. You want to buy investment property for yourself. Your daughter is a safe tenant for you. The bottom line is I can’t afford a house in SLO for me and my family and your whining about how you can’t afford a house for your daughter while she attends Poly. It just seems so odd to me. I’m still trying to understand who uses this Blog: (a) Renters that can’t afford homes or (b) investors waiting for an opportunity to swoop in on the helpless or (c) a FBers. I’m in the (a) group. I think your in the (b) group.
While I am indeed positioned to bring pain down on the deserving that isn’t the point here. You need a few more semesters in the school of hard knocks before you bust my case. I’m your best friend. I’ll set the price and that price will be LOOOOW. My cash and positioning will mean the sale goes through that lets you afford the same house next door with a conventional mortgage. Managing a household is a tall order for a 17 year old, the scheme does teach self reliance. I will repeat for the last time, it won’t be her house. I will repeat for the last time the purpose of buying a house rarher than paying room and board is to save money. I will repeat for the last time I fully expect the period of 2008-2012 to be flat money and only because of tax benefits at that. This isn’t an investment, this is a college expense. I’m not your “dude” and were I merely an investor as you incorrectly assume I’d be ready with this plan even if she and here sibs “full boat” to ‘tute or ‘vard, all distinct possibilities. I don’t really care about your housing affordability problems. Not because you aren’t screwed in part because of circumstance beyond your control. not because I’m not sympathetic, but because you are proving to be willfully and obstinately unwilling to understand the situation. I als admit to a small amount of additional indifference because of your unfounded accusations like my being a whiner, I’m only human.
There’s a lot of really smart people saying really deep things on this blog. It’s all free and even cheaper than trhat when you spend more time listening and less complaining.
Cote san,
you have the right approach. While at Poly in the 80’s, I kind of resented the kids whose parents could afford to do that kind of thing. I was on my own financing school since 9th grade. But, I also was quite aware that it was the smart move on the parent’s part. However, I hope your daughters learn the correct lessons and don’t get an entitlement attitude from the situation.
As a manager now, I have to deal with that kind of attitude, and it seriously impedes their career growth.
Glendale, Calif.-Lisings are up and so are prices-well priced above million dollar homes still go into escrow real fast. These same home were under a million dollars just one year ago.
Ha ha ha ha ha ha! I live around Glendale so you can’t fool me!
Can’t wait till it starts falling. Keep us in the loop,ok?
Armenians???
You may live here-however, you obviously do not know the market-i.e. Hoover Hills.
Need some addresses?
I will be more than happy to give them to you.
Yes, I am Armenian.
Touchy… I didn’t even say anything else.
Must be from the “Armenian Money Train” *
* Obscure ‘Shield” reference
“Builders are also adapting to a return to a normal market, said Jerry Bunin, of the Home Builders Association of the Central Coast.”
Yeah, the ole return to a normal market. They better be adapting to a market where there is tons of inventory and no buyers - if that’s normal, then they’re on the right track.
I was thinking the same thing !!!
Are equity markets telling us something? I think one thing we all have to realize is that everyone and their dog just about has a 100k minimum sloshing around in equity. Until liquidity is ended and saving is encouraged everything will trend higher. How will this liquidity be reigned in is the question, and will housing be the last to go (even though you’d think it’d be the first).
it’s not real equity. it’s phantom equity. and it’s evaporating as we speak.
OT - Though I don’t agree with his timing, I love this guy’s approach. Almost sounds like something I’d do, except I’d add Canoga Park to his list:
http://losangeles.craigslist.org/rfs/163623637.html
he’s at least 1 year early.
I’d say maybe 2 years early at least. But can you picture the realtors/sellers looking at it in shock/gall? “What nerve! He’s going to ‘entertain’ an offer from me?!?! I’m the seller!!!”
“the times they are a changin’”
Last year Realtors would have openly laughed at him, a few months ago they would have snickered. Today his ad is probably greeted with silence. Two years from now he would get hundreds of calls from desperate sellers and realtors begging him to take this crap off their hands…all from the same Craigslist text.
Totally agree. But the silent greeting shouts volumes. =)
he should wait a year and throw in some felllllaaatio demands from the WH0REaltors as part of the bargain.
WH0REaltors
Gekko: I personally know one realtor who gives her pu$$y to her client the the close of escrow.
Nice marketing, Haaa?
“Anything to close a sale!!!”
I wonder if some people would actually fall for this… and I’m guessing that there are some out there who would (shaking my head) - If this is the incentive that gets someone to pull the trigger on buying a house today, both the realtor and the buyer would get screwed, and both deservedly so.
>I have up to $500K and want a house.
>2 bd/1 ba
It still amazes me how desensitized to unbelievable prices we in Cah-lee-foirnyah have become. Half a million for 2 bedrooms and one bath? Now I realize that half a mil no longer buys what it used to, but this whole thing is nuts.
So true!. I just zillowed my house here in Southern Oregon. $306k! And it is so small that the roaches have to go outside to copulate.
That was priceless
OT, but will at some point add fuel to the RE fire.
“That in turn, could crush the US housing sector”
http://news.goldseek.com/GoldSeek/1148314209.php
nah. Oswald acted alone.
To all readers,
I am a huge fan of this blog and have read it for a long time. Unfortunately, I started reading this after I made a big mistake. I hope that some enlightened readers with some experience in the biz could shed some hope/ worthwhile advice on the situation. Here goes some trolling for advice….
About a year ago, my job situation changed and I relocated to northern VA. My wife and I (previous renters) were shocked to see what the prices were at the time. It was hopelessly frustrating trying to find a place to live that had good schools for our 6 year old, was affordable, and didn’t have a long commute. The house also had to be large enough for our twins ( 6 months old). If any one knows the northern VA area, they would laugh because they know, as we found out, that no such place exists. It turns out that the only decent place that we could afford was an hour away. That is 2 hours on a light traffic day, every day, just driving. In a moment of desperation, we put down 20K on a house that was being built in small development.
The whole point of this long winded rant, is that we don’t to purchase that house any more. Now that we are in VA, it is pretty clear to see that mapquest times don’t coincide with northern VA traffic. If I ever want to see my wife and kids, this just won’t work. The house as is, was barely, barely affordable for us w/out an ARM.
Does anybody know how possible it would be to make the contract null and void with the builder, but do so legally? Ideally, it would be nice to get the down payment back. The less ideal situation would be to lose the deposit and get out of the deal. The third senario is that we will lose the deposit and get sued for damages by the builder. This is our biggest fear.
Thanks for giving this some thought.
Hopefully Homeless
I THINK you’ll “just” lose your $20K deposit. But you may want to take your contract to a SPECIALIST real estate lawyer who may be able to scour it and POSSIBLY find a loophole which will allow you to walk away completely unscathed.
Good luck.
p.s. you remind me of the father with the family who bought the fake stock in the movie “Boiler Room”.
Gekko,
Your comment was hilarious… I had to google the movie and remember seeing it. I know exactly what you are are talking about.
Even though I may come off like the dad in “Boiler Room”, I am violating the agreement ( one that shouldn’t have been made in the first place, but still). I believe that your word is your bond, but struggle with this because I am now acting as if “Your word if you bond, when it is convienient.” This isn’t right to do.
Even though this builder is rich beyond his wildest dreams and my money is nothing to him, the moral fault is mine. He and others may have ethical questions to account for in other areas, but that is not for me to judge.
Being honorable and true to your word is one thing. But doing what is best for your family is another. If you made a mistake, just suck it up and do your best to correct the situation.
Given the general widespread predatory practices in the RE industry, don’t waste any time feeling bad for the builder.
As far as NoVA, I would recommend renting (apartment, house, whatever) for awhile until you get a feel for the area. The traffic is pretty bad, so you’ll want to figure out works best for you location wise (commute, schools, etc.).
They must have misrepresented something. Come on, think…
Fred,
You are right, they actually, did, but I am not going to get into the details. Their hands are not entirely clean.
Any bad real estate attorney is better than my amatuer comments but they must have already technically violated something on the purchase agreement. Most likely competion date? Just guessing but if there is any firm number like date or maximum cost ceiling or promises of underground utilities that are not being met you just enforce and get your deposit back. If you are “stuck” look into selling your place in line to the next sucker.
Robert, thanks for the advice. Selling it to the next sucker looks like our backup plan! I like your posts throughout the blog.
Welcome to NoVa! Now bend over… oh wait, you have. Perhaps you can still make a run for it and escape the millstone of a huge mortgage and endless commute, though. How is your income situation? A friend of mine managed to get out of a very similar house deal some time back when he and his wife decided they didn’t want the megacommute:
His wife worked in nursing and was often on short term (albeit lucrative) contracts. As the house was halfway done, and their cold feet got colder, all she had to do was to phone the lender, and then follow up in writing, telling them that “You might want to know that I lost my job. Does this affect our mortgage application?”
Naturally, the lender said YES, it DOES affect the mortgage because now there’s not enough income from him alone to qualify! The builder was frikkin’ LIVID! But my friend just told them that according to the deal they had signed, the applicant was *required* to tell the lender of any changes in financial situation, and “All we are doing is following the rules…”
So they escaped with their down payment intact. And she got a new job contract wihtin a few weeks.
Sh!t has hit the fan.
Question is how much of it and how far will it travel.
Got a link to back that statement up, or did it just become apparent to you?
just found that there are two pre-foreclosurs in my street, and I live in a decent upper middle class area.
OT: this is kind of interesting:
http://www.google.com/trends?q=housing+bubble
About Google Trends
With Google Trends, you can compare the world’s interest in your favorite topics. Enter up to five topics and see how often they’ve been searched for on Google over time. Google Trends also displays how frequently your topics have appeared in Google News stories, and which geographic regions have searched for them most often.
That’s an excellent find. Ben should put it on the front page.
message from agent in 90275 zip to me. 90275 pretty much faces san pedro, ca
you must be very happy, the phones are not ringing at all….
that’s the first sign that things are bad…and getting worse
Bring on the PAIN!
All I can imagine is Jim Kramer pounding the button: “House of Pain!”
Somebody please get the sound file.
http://washingtondc.craigslist.org/rfs/163670881.html
Enjoy
“Due to popluar demand after a $100,000 incentive the builder has decided to make the price cut permanent.”
Nice Quote!!!!!!!!!!!!!!!!
permanent instant equity?
Hopefully Homeless
Get yourself a good (referred) RE attorney - it’s not that expensive and well worth the money.
Thanks ChillintheOC - That will most likely be our next step
to Mike,
>>Now that we are in VA, it is pretty clear to see that mapquest times don’t coincide with northern VA traffic.
Hi Mike. Keep us posted on your results. RE Atty is the best course of action. You should read in fine tooth comb fashion before going to atty so you are best prepared with questions for him.
need to leave ca,
I will keep you posted. Thanks for the support. I hope that RE ATTY can be kept at a minimum so the real folks can work it out. I keep reading about all of these deals falling though, but have been hard pressed to find actual people who have done this. I guess that most of these cancelled contracts are done by investment companies? Who knows.
CA is now way too wacky. Can’t wait to hear the yelping in from &&^%^&**( flippers all the way in ABQ from LA, SD, SF, Sac, etc.
to Mike,
“Now that we are in VA, it is pretty clear to see that mapquest times don’t coincide with northern VA traffic.”
seriously, i don’t want to kick i guy when he’s down, but i gotta ask…you bought this house based on mapquest driving estimate?! seriously, i feel bad for you, but if that’s the effort you put into a major life decision like buying a house, man good luck to you. That’s the part about this housing bubble that kills me. On the one hand i know guys that spend HOURS research some consumer product (camera, mp3, stereo) whatever, and on the other side people buy houses (especially ones at the limit of affordability) seemingly without any due dilligence.
I’m not crowing about what a genius i am, but for comparision, i was living in NJ 10 years ago. I was planning to rent a small house with a college buddy 50 miles south of my job, instead of the 20 miles away in the opposite direction where i currently lived. He worked in the same town so it was easy for him to say “sure your commute won’t be too bad, its all highway”. Well the monday after we looked at the house, BEFORE i signed any lease, i got up a 5am drove down past my office all the way to this new house, turned around and drove back at the exact time i would have to leave for work. the commute was total hell. Each of the 4 toll plazas on the route cost 15 minutes on top of the regular drive time. I got to my office exhausted, called up my friend and said “bro, it’d be a blast living together, but no way in hell am i doing that drive every day.” and that was for a RENTAL!
I’m not saying people don’t get blindsided by things like wooded lots nearby getting turned into waste water treatment plants, but come on, your commute? What about asking potential co-workers what their commutes are like?
sf_renter - There were other considerations that I did not put in this article - as I needed to keep it brief. There are personal considerations involving family. My wife’s brother was seriously wounded from service in Iraq. A major consideration for the house was that it would have been close to his VA hospital. Regrettably, this need do not exist any more.
I do appreciate your response though. If you have some experience dealing with breaking a contract, I would be happy to hear it.
Mike,
At least you wised up before it was truly too late. Don’t sign anything. Tell them you aren’t interested any longer. 20k is a cheap lesson compared to a huge morgage that could ruin your future. I doubt you are the only one with cold feet they have encountered lately. I doubt very seriously they will try to sue for more. Most courts favor the buyer having second thoughts in this situation.
Mort,
My feelings exactly. 20k is comparably a cheap lesson.
Beyond that, just look at Sigalert for your area!
feepness,
This looks pretty cool. Thanks. Wonder how well it really works. Do you use this?
It works perfectly! My hours are flexible so I leave when this tells me. I use the map speeds directly and set my firefox “Reload Every” extension to once per minute. Easy as cake.
Feepness,
This is pretty cool. My wife was reading a magazine and mentioned something that sent texted messages to your cell phone. Maybe there is something on the East Coast already.
Actually the list of things that can be “wrong” is huge and in retrospect if something does go wrong you can easily beat yourself up over it. I think the point though is that it really takes a lot of time and effort and exploration to figure out whether a living place is right or wrong (for you). In the market of the last 5 years you had to make awfully quick decisions and if you were moving from a long distance with a new job, kids, pets, etc. etc. maybe finding the time to do so was hard.
Example — I looked at an old church that could have been turned into a house. The price was right — $85K! BUT of course there were a million reasons why this wasn’t going to work starting from the obvious HUGE heating and air-conditioning bill and going to the 4 block proximity to a dog-food factory (yikes, the smell is terrible but only when they’re cooking — I would never have figured this last one out until the summer came and the factory started up again).
I guess my point is that you really have to hang around the neighborhood for awhile before you buy to avoid most of the mistakes, even the obvious ones.
Saratoga,
Thanks for the thoughtful response. You are right. There are a million and one things that can go wrong. I hope that you sold the church/house!
Re; Wanting to get out of N Va. deal and get $20K back
I’m thinking Albert Brooks in “Lost in America” spinning with the casino manager. I do hope it works out for you though.
sorry Saywhat, I haven’t seen this movie, but reading about it, I have tough time understanding the connection you are trying to make.
Ben, you may like this 5/22/06 buisnessweek report.
http://www.businessweek.com/investor/content/may2006/pi20060522_866341.htm
“In San Diego, for example, the homebuilders themselves are getting out. I know a condominium developer in San Diego who had properties he was building, and he made offers for people to take them out of the market. He hadn’t even completed the building yet, but he was selling the condominiums for ridiculously low prices like $190,000 if the buyer would just come in and finish the floors. He was minimizing his exposure for the downturn. In San Diego, condos are off around 30% — that’s huge. Prices normally trade off 1%.”
Yea, I’d like to know where those condo’s are selling for 190k the seller sounds like my type of guy
Troll Brothers lowers earnings again!!
Mike,
A good attorney should be able to tie this up so that the builder would be left holding it for a long time - unable to sell to another party until resolution. This will make the builder come to terms vis-a-vis your deposit.
ASK every attorney you speak with their experience in these matters. You’re going to have to spend some time and money here, but since you neglected to do this upfront, this is your only shot. Your attorney should review EVERY contingency opportunity: financing, delivery dates, amenities - EVERYTHING. If competent, he/she will find at least one hole in the contract to threaten suit. That will be enough angst for the builder to cry “uncle” - making it easier for them to walk away. Good luck…
Mike
If the builder did it to you, he’s probably done it to someone else.
A savvy attornety will know this and likely threaten to drag other skeletons out of the builder’s closet. He will likely consider giving you your 20K back a small price if the attorney can “frame” your situation properly. Bad publicity can only cost the builder. If you’re the right personality type, you could file a small claims court suit and invite the press and local TV. Get my point.
eyefo,
I just talked to my Realtor ( who isn’t a horrible person, if that is possible
) and he recommended the same thing. There have probably been people who have probably had negative experiences with the builder before. Your point was gotten about making a fuss as well. An open billboard on the side of the road could be dangerous too.
Dr. digits,
Thanks… I think (and hope) that you are right!