Vacant Houses Indicate Speculators: Tucson
The Tucson Citizen has this update from Arizona. “For sale signs are a more frequent sight in the yards of midtown Tucson houses. Some even advertise reduced prices. Those who check will find that many of the houses on the market are empty of furnishings and have no cars on the driveway.”
“‘A good percentage of the resale inventory is vacant, which is an indicator that an investor owns that property and has put it up for sale and is moving on,’ (realtor) said Judy Lowe.”
“Investors and speculators, primarily from California, fed record housing price increases in the metro area a year ago. Now they have left or are getting out of the Tucson market, said University of Arizona economist Marshall Vest.”
“The numbers tell the story. In April 2005, 3,640 houses were listed for sale in metro Tucson, according to the Tucson Association of Realtors’ MLS. Last month, the number was 8,131.”
“Real estate executives say many Tucsonans, after seeing housing prices rise dramatically over the past two years, put their homes up for sale in the hope of cashing in on the real estate bonanza. ‘So many people have put their homes on the market that it has increased the supply significantly and is actually slowing the market,’ said (broker) Laura Mance.”
“Lowe said the increased supply is resulting in buyers becoming more critical of a property’s asking price and condition. ‘When property owners aren’t able to sell a home after 30 days, they need to consider making cosmetic improvements to the property or dropping their price,’ she said.”
“Vest said it’s way too early to conclude the housing correction won’t turn into a fire sale. Changing from a boom to a bust mentality takes a while, he said.”
“‘The market psychology has to go from ‘this thing is going to go on forever’ to ‘this thing is never going to get any better,’ Vest said. ‘That doesn’t happen overnight. It takes a long time, as measured in years, to go from one extreme to another.’”
Looks like the Arizona press is noticing what many bloggers have been pointing out for months, Instead of a shortage, there are empty houses all over the place.
‘Real estate executives say many Tucsonans, after seeing housing prices rise dramatically over the past two years, put their homes up for sale in the hope of cashing in on the real estate bonanza.’
This is very true, and predictable. Many homeowners detected the market was topping and rushed to market. Closet speculators?
‘The number of homes available for sale increased to 8,131 last month, a 123 percent increase over the 3,640 homes listed for sale on the Tucson Association of Realtors Multiple Listing Service. Inventory has doubled in the past year as owners try to capitalize on high prices, said Paul Olson, president of the MLS.’
‘Many sellers, expecting the returns seen a year ago, have asked too much for their homes and are reducing prices. ‘Our inventory listing has doubled. This is also going to eventually equate out into longer market times. With longer market times, sellers are willing to take some off the price,’ said Olson.’
‘Sales of new and resale homes in metropolitan Tucson declined to 2,375 sales last month, a 19 percent decrease from April 2005’s 2,933 sales.’
‘The number of homes available for sale increased to 8,131 last month, a 123 percent increase over the 3,640 homes listed for sale on the Tucson Association of Realtors Multiple Listing Service. Inventory has doubled in the past year as owners try to capitalize on high prices, said Paul Olson, president of the MLS.’
Let’s hear it for eye-popping gains!!
Closet speculators or blatant speculators? One too many seminars on how to get rich quickly?
“The numbers tell the story. In April 2005, 3,640 houses were listed for sale in metro Tucson, according to the Tucson Association of Realtors’ MLS. Last month, the number was 8,131.””
It’s The Inventory Stupid! http://tinyurl.com/oxc2g
David
Bubble Meter Blog
David is “censoring” his blog and deleting posts left and right. His blog now lacks any credibility. It is impossible to even determine how many comments he deletes. It could be as high as one-third to one-half.
Check out his “rules”.
see David’s archives May 24th, 2006. Sorry about being OT. Bubblemeter.blogspot
So go somewhere else…
I plan to. But people have a right to know that stuff is censored. For example, David was insulted that someone referred to him as a “sedentary suburbanite” and used this excuse to delete the entire comment. Give me a break!
I agree with Mr. VA_investor. Blog comments that lack profanity and are not spam should not be deleted. Many blog comment threads follow the echo chamber model. I learn more from a diverse set of voices. Trolls excluded.
Nikki guess what? David deleted you. Presumably, it was your use of the “f” word….but, who knows?
A “right”? Its his blog. When you comment on it, you have no rights, other than those given by the blogging software company. As long as someone isn’t modifying your comments, attributing something you said that you didn’t - then there is nothing wrong with deleting comments. I’m sure David is running that blog in his spare time, with little or no compensation. If you don’t like his blog, then just don’t go to it. I don’t.
point taken. Some, however, will be mislead not realizing the heavyhanded censorship going on.
VAIN_vestor:
Have you noticed that you seem to the one constant in these flame outs?
Start your own blog and do with it what you will.
I don’t know what you are talking about. I am talking about open debate; or, at least, a notice to all that it is not.
Va_”speculator”-
You average one blog-fight per week. I think you have too much pent up frustration!
I am attacked alot because I own real estate and therefore am resented by many on this blog. I can’t control what other people think of me and don’t intentionally try to antagonize anyone.
I could careless if anyone owns RE. The are many owners here that don’t get into your style of flame fests.
Take ownership first, then criticize. It works better.
My comments here are about censorship, not personal agenda’s.
“My comments here are about censorship, not personal agenda’s.”
You aren’t being censored. No one is stopping you from running your own blog, after all. Complaining that a person is deleting your comments on HIS blog is as presumptuous as complaining when a homeowner tells you not to smoke in his house.
It’s his playground. He makes the rules. If you don’t want to play by them, you are free to construct your own playground. That includes the freedom to deal with the subsequent messes and fights as you see fit.
Fine. Others have made similar points. David had commented above and I thought people should be aware of his editorial style - which I find quite ooutrageous.
I realize my views on real estate are in the minority, but sticks and stones may break my bones…….
Attack all you want.
I allow PLENTY of opposing views on my blog. Personal insults and swear words are NOT tolerated.
“it’s interesting to note that the unique nature of Tucson real estate does not follow the average up and down cycles seen in many other communities,” said Paul Olson, president of the Multiple Listing Service. “Tucson real estate retains value.”
It’s very interesting how many areas in the US are unique enough to always “hold their value”, even when the price run-up is explicitly caused by speculators. I’ll bet that the number of “prices can’t fall here, we’re unique” communities is close to 100% of all communities.
They aren’t making any more (land, coastline, California, Manhattan condos, San Diego homes, downtown, Tucson houses, beach, etc. etc.)
“They aren’t making any more (land, coastline, California, Manhattan condos, San Diego homes, downtown, Tucson houses, beach, etc. etc.)
Please add desert to the list.
I could use some dessert
I was told this weekend as we were looking at 2300 sq foot stucco boxes for $800K in San Diego: “This is the last master-planned community for San Diego. After this there will be no more”.
I am not sure about you, but every time I hear “master-planned” it resonates like some sort of Stalinist utopia might. I think I need to get my head checked, termites again I guess.
As Beavis would say, ” Fire, Fire, Fire..heheheh!”
LOL
Check out the comments at the bottom of the news article to see what the locals think of you and have planned for you.
It reminds me of the scene in Full Metal Jacket when they are in country and having a “birthday” party for the dead enemy soldier.
Speculators have done the same thing to my town. They have driven house prices up so high that most people who actually work for a living can no longer afford them, driven up property taxes so high that many people are having to try to sell homes they’ve had for decades and go elsewhere, and have dumped so much inventory on the market that this place might take years to recover.
I hope they lose everything they’ve got.
Vacant houses should increase fear levels and sleepless nights. After vacant houses stand for a while the yards grow weeds, trash blows into the yards and isn’t picked up, and soon vandalism of broken windows and graffiti appears on the exterior walls. Next is to board up the windows with plywood. Summer heat is coming on and these houses shut tight with no air conditioning should help permeate the interior with volatitle carpet glue, plasticizers, and other potential cancer producers. On top of this homeower insurance costs for the absentee owner should go up because the property is vacant. How would you like to be the non-investor who bought a home in such a neighborhood?
This reminds me, that there has been some graffiti tags at local vacant houses here in OC. I half suspect it’s competing property owners!!
“How would you like to be the non-investor who bought a home in such a neighborhood? ”
There’s the rub. I think that we’ll begin to see tighter community restrictions that keep the investors out in the future. NYC co-op rules already limit this kind of thing and will likley serve as the blueprint for newer communities.
Yep, there is the house close to me. It has been for sale on and off for oh, about 7 or 8 months. The owners, bought it June of 2005. Last I saw they were aking 11K less than they paid. They have bought a new house & moved out. As far as I can tell, it’s off the market now, and according to the assessor office, it is still owned by the same people (maybe it takes a little while for them to update it online)? Last time I drove by, the grass was dying and overgrown weeds were popping up all over the place. That is soooo very good for the whole neighboorhood! NOT!
There’s a house near me that has been up for sale since the summer of 2004. The people that owned it were in bankruptcy and the house was in pre-foreclosure at one point in time. I don’t know who owns it now. It’s empty and still up for sale. Oh, and the price has dropped from $750K to $625K.
How long until an unheated or uncooled house is made uninhabitable by mold?
Mold? In the desert??
I think he meant “squatters”
I’ve maintained for some time that we’ll reach a point where we have to call ‘em as we see ‘em. As the inventory continues to swell (be it Tucson or elsewhere) taking the the bother to distinguish between what is builder home, investor owned home, 2nd home, vacation home just simply will not matter! The bottom line is that they are VACANT homes. Soon to become abandoned homes! I’d like to dispel the notion that they will be immediately “scooped up” by other eager and willing investors. Why? How would that make sense?
I knew I had to do so much work on my house before I sold it last year (I had water damage all over the place for example) that I rented another place and just moved out before I had the work started.
As it turns out it was five months of work — completely redid the kitchen and both bathrooms, new tile or laminate flooring throughout the entire house, new paint inside and out, every light fixture upgraded, every door replaced — before I got it on the market.
Most prospective buyers assumed I was a flipper because everything was brand new and the place was empty, and I gotta tell you that even then (Sep/Oct 2005) that was a big negative to them.
My agent and I soon made sure to mention right away to anybody looking at the house that I had lived there for more than ten years.
I think you are exactly right. People don’t want to enrich foolish flippers. The psychology is that you don’t mind paying market price when someone purchased 10 years ago, but someone who purchased 6 months ago, changed the carpets, painted and installed granite and now wants $100K extra is a fool. IMO we’ll see much more of this in advertising.
looked at a house this weekend, ouner/realtor was full of stories of how her daughter “just loved that room”, “we loved entertaining in the yard”
yet she didn’t know where the basement light switch was. After intense questioning she admitted that she had never lived there.
Was her name Suzanne?
“‘The market psychology has to go from ‘this thing is going to go on forever’ to ‘this thing is never going to get any better,’ Vest said. ‘That doesn’t happen overnight. It takes a long time, as measured in years, to go from one extreme to another.’”
I disagree. I think that market confidence builds slowly while panic breeds quickly.
garcap,
Slight, slight correction.
Market confidence does build slowly. Market OVER CONFIDENCE and the “panic” breeds quickly. There was a time when many parts of the country were undervalued. Well we shot through that by 2003 and continued on into 2004! 2005 was a joke. I know of very few people that bought and sold within that 12 month period. Yeah, there were a few but for the most part 2005 was for selling, not buying.
How can you have selling without buying?
I think he means there were few people he knew that sold on house in order to purchase another. I believe he means that most sellers he knew just sold out.
Possible if he knows smart people and/or there are lots of investors out there. A friend of mine for example unfortunately purchased ten houses in 2005. Many in Florida. I didn’t speak to him until after the deed was done. He’s… just like that.
I agree with Vest. There will be at least a year where homes will sit on the market and the sellers will think “We’re waiting for the Fall/Spring/Summer selling season.” After a rotation or two through those selling seasons, the prices will go down, slowly at first but more rapidly as people suddenly realize what is happening.
There are still investors out there purchasing properties now. They seem to think even a 10% drop is market bottom.
A lot of people are going to get hurt this time around.
I did not find necessarily fire sale prices among the more desireable properties for rent. By that I mean either architecturally interesting, on acreage, or exceptionally well built. Junk, yes. Quality, no. But that is probably true everywhere. Tucson is a really nice place!
The last time I was out in Tucson was about 35 years ago as my uncle had a beautiful place up in the Catalina foothills. A bunch of orange groves and desert. I’m a little bit afraid to go back and see if my memories are faulty.
Prefab gains signal housing pain:
http://yahoo.businessweek.com/magazine/content/06_23/b3987045.htm
Prefab is not necessarily what people think. It can be fabulous.
Google Gregory LaVardera or Dwell Mag and take a look at some of their prefabs. I’d take one in a heartbeat.
Mobile homes aren’t what they used to be. In a ‘trailer park’ any kind of prefab home is allowed…so actually…some are really nice! (From someone who wouldn’t be caught dead in a trailer park)
Pulte has a line of homes that are essentially “pre-fab”. They have pre-formed basement walls and structural insulated panels. Pretty cool stuff. I’d likely choose that home over another builder’s, except the development is next to a highway.
Brad,
Interesting article. I have a friend here in Oregon that works the mobile home repo arena and he said in early 2005 you could pick up near new mobiles of as little as $15 a sq. ft. Wow has that changed recently!
http://www.clayton.net/
Warren says Clayton could become #1 US homebuilder. I would welcome this as BRK is my largest holding, countercyclic to housing and the stock indexes.
My #2 after CDs.
Judging from the picts I see, I would guess 1/2 of the houses for sale in Northern Nevada are empty.
Yep, and mostly owned by realtors
…they need to consider making cosmetic improvements to the property or dropping their price
Talk about fighting the last war. Cosmetics are not important in a market where people are looking for the lowest price. This comes from the HGTV channel where they show $2000 in landscaping netting an increas in proce of $6000. Bull, nothing but the remodel industry pimping.
The market psychology…It takes a long time, as measured in years, to go from one extreme to another.’”
10 months tops.
Anyway, we gotta print up some stickers about 4″ around. A bubble popping, a skillet with a flippng fried egg and a fish gasping for breath. Then we run around and slap them on all the signs and realtor lockboxes we find. If you want to get real nasty a sign for the lawn that says; “This flipper raised your taxes and is now leaving!”
You know, I really wish someone would sell some sorta bubble bumper sticker, in packs of 100…
How is this?
http://www.cafepress.com/buy/bumper-stickers/-/pv_design_details/pg_3/id_11977243/opt_/fpt_-ycqD_LRpraC8UgWz2-z-8–BLc/c_0/hlv_t
‘Now they have left or are getting out of the Tucson market’
This is becoming a common refrain. The speculators may physically be back in their home states, but they haven’t ‘left’ anything but an empty house. Some in the press would have you believe that native Arizonans now own these houses and the froth is over. Baloney.
AND they raised everyone’s taxes. Let’s not forget this. The damage is deep. And except for States with property tax caps these higher taxes are going to go even higher. When these flippers clear out property tax revenues will decline and the municipalities will raise the mil rate. We may see Prop 13 finally sweep the nation.
Tax caps should at least reflect inflation, instead of 2% in CA.
Taxes are not like other things. Besides property taxes in California go up way faster than inflation.
Does that in any way discount the validity of my proposal? If municipalities want to be forever dependent on the state for funds, as the result of prop 13, that’s fine with me. Otherwise, something has to be done about it.
I always wanted to ask you Robert, as a proponent of Prop 13 - do you think that homeowners should bear at least some fiscal responsibility for their rising RE wealth. By that I mean that the usual argument of yours is to protect against the devastating effects of speculation, and I could see where you are coming from, definitely. Now, what about say, single-digit appreciation, say less than 5%? Still not responsible for it? At what point a homeowner is equal in responsibilities with say a business owner, or a capital investor (let’s give some slack to the homeowner because that’s where people live)?
Dependent on the State due to Prop 13? I wish people would learn about 13 rather than imagine the worst. Nonupling my property taxes would serve no purpose. Your idea would only give the addict more heroin
Fiscal responsibility for real estate wealth? Of course, that’s why the 500k expmption was so foolish. For people who stay in a home there is no wealth until they sell. It is responsible citizenship to do everything possible to keep the State from taxing people based on some theoretical unrealized wealth. In fact, if we went with your plan the effect would be to reduce wealth and ultimately collect less.
Robert isn’t so crazy on Prop 13.
Several months ago it was beaten to death.
The middle ground was plug the commercial LLC loophole that has caused most commercial property to be bought and sold without ever changing the deed and the assessment.
Secondly, an item that would cull a lot of speculation is to make cash-out refi the basis for a new tax assessment.
Those two things would improve Prop 13 and still not kick granny out of her house.
Robert, actually all capital investors pay some dues in proportion to their capital, even unrealized. Look at fund fees and custodial fees - you gotta pay for somebody to take care of it.
With real estate it’s even more pronounced because it is high maintenance, and require utilities, schools, police, firemen, and so on. So again - at what point do you see homeowners actually paying respective dues on their wealth?
Personally, my implementation of Prop 13 would provide an inflator per CPI, plus some equity tracker.
What is the mechanism for Prop 13 sweeping the nation when many states don’t even have a ballot proposition system?
“We may see Prop 13 finally sweep the nation.”
Uh, no.
Took a drive on Monday and noticed a number of empty homes with FOR RENT and “714″ area codes. Looks like a certain city has been “investing” in Bakersfield.
What city area code is 714?
North Orange County, I’m sad to admit. I’m in the area code, but I don’t know of anyone here stupid enough to invest in Bakersfield.
Must be stupid, greedy, and recent transplants. Those of us who were raised in North OC know Bakersfield as the POS it continues to be!
It (714) also includes Huntington Beach.
ANOTHER ONE BITES THE DUST:
Synergy Mortgage is discontinuing what is left of its net branch operation as of June 1, according to Joe L. Williams, chairman, chief executive, and president of the company’s parent bank, Synergy Bank.
One More:
American General Financial Services, Evansville, Ind., has reportedly closed its correspondent loan channel, according to an executive who has done business with the company.
Last night I had a headache and was flipping through late-night infomercials while waiting for the Tylenol to kick in. God, so many real estate CD/tape pushers, amazing. I forgot the name of this dude, last name starts with ‘C’, and he was on at least two channels. There was another couple, peddling tax foreclosure sales. Of course with complete promises of early retirements, girls in bikinis, watercrafts, etc.
All insist on making cash-flow positive investments. I wonder, just where at this day and age you can find a CF+ investment?
I heard that Tom Vu is back. Same commercials from the 1980’s The girls in bikinis might be grandmas by now.
Read John T. Reeds assessment of all of these guys.
It is devastating and accurate.
Ben should really try to get an interview with him.
I promise I click ads all the time for Ben.
Great website!
“‘The market psychology has to go from ‘this thing is going to go on forever’ to ‘this thing is never going to get any better,’ Vest said. ‘That doesn’t happen overnight. It takes a long time, as measured in years, to go from one extreme to another.’”
More accurately, the market conditions (supply-versus-demand) can turn on a dime (”Where did all the buyers go?”) but it takes the untutored masses a considerable length of time to figure out that once the housing market has turned down, it keeps heading down for years. Not until the wishful-thinkers have given up hope and dropped their list prices down to a level where they can sell will this show up in the data.
and you know, stucco, there is another camp that feels the www will accelerate the learning curve on the way down. how can it not?
perhaps there is a middle ground in all of this
I think it’s all got to do with the banks.
Individuals freeze until they are forced to take action. So they simply will keep their prices too high until they are forced to leave. Another point is that when they are reduced to zero equity - if they had any to begin with - there is no reason for them to “work” on making the sale. They will leave mortgage notices unopened. They will change their address and never return.
We don’t need no stinking ghost towns !