‘The Classic Beginning Of A Bust’
A housing bubble report from northeast Florida. “The first quarter revealed a frightening indicator for Jacksonville’s real estate investors. Sales volume was off more than 33 percent, according to DataQuick. Realtors say listings are increasing, but it does mean fewer people are buying.”
“‘It’s the classic beginning of a bust,’ said Sid Rosenberg, a real estate professor at the University of North Florida. ‘Next, all of a sudden, people who can’t sell begin to reach a point where they must sell and drop prices.”
“Investors in the region won’t be happy about what could happen next, Rosenberg said. Lagging sales can herald sagging prices. They did just that in the last busts in the 1980s, he said. ‘A lot of people haven’t accepted the market is going to drop and are holding out,’ he said.”
“As the number of buyers decreases, homeowners looking to unload their investments are letting their property spend longer amounts of time on the market. When adjustable mortgage rates kick in, sparking higher payments, the need to sell will become more urgent, and sellers will start discounting prices, he said.”
“Anecdotally, several Realtors said they’re already seeing that trend. The owners of an oceanfront lot north of Vilano Beach that listed for $1.2 million in September marked it down to $998,000 in March but still haven’t been able to sell, said (realtor) Barbara Jenness in Ponte Vedra Beach.”
“‘The owner is motivated, but people just aren’t calling,’ she said. ‘Almost everybody is starting to lower their prices.’”
And from Inman News. “Charlotte Chipps, an Ohio schoolteacher, bought a condominium-hotel unit last year in Daytona Beach, Fla. A developer had bought up a couple of hotels in the area and converted the buildings into condotels.”
“‘It was sort of a whim,’ she said. ‘I do own a house in the Daytona area that I rent. I had just that little bit of experience. I’m not a person with any money. I just thought that this would perhaps be an investment for me. If values continued to go up, I would keep it for two or three years and make $20,000 or $30,000.’”
“Condotels are not just a flash in the pan, says Dante Alexander, CEO for the condotel association, though they aren’t typically a cash cow for owners, either. ‘People like to refer to it as a trend,’ said Alexander. ‘Now, admittedly, it’s a segment. But it is really going to be much more than a segment.’”
“There is a risk of over-building in some popular condotel markets, and lenders have heightened requirements for projects. ‘Everybody is pulling back a little and appropriately so. There is a little bit of oversupply going on. It shouldn’t be a frenzied environment, and it has been a frenzied environment,’ he said.”
“While attending a real estate conference, Alexander said another attendee asked, ‘What if (the condotel market) implodes?’ Alexander’s response: ‘What if it doesn’t?’ Alexander said he expects that in the next couple of years ‘we’re going to wish we had more’ condotels.”
“A common misconception is that the rental profits of a condotel unit will generate profits for the owner. But with insurance and maintenance and mortgage costs, owners shouldn’t expect to earn any money in the short term, Alexander said. ‘It’s an expense. It’s going to be like owning any other piece of property.’”
“Robin Charles Glass, a real estate agent in Honolulu, said, ‘Generally these units don’t generate cash flow (for owners),’ Glass said. Resale activity lately has been slow for condotel units in Hawaii. ‘Seldom do I ever see someone selling these things these days.’”
“Charlotte Chipps, the Ohio schoolteacher, said that the Daytona area real estate market has slowed to a crawl since she bought her unit, and she may hold onto it longer than she expected. ‘Unfortunately I paid top dollar. I bought it last year when prices had gone up. The whole Florida market has sort of stalled now. It is something that I will probably try to hold onto for my grandchildren.’”
“Instead of enrolling in the hotel program offered through the building, which gives back about 45 percent of the room rental proceeds to unit owners, Chipps makes her own arrangements for room cleaning and rents her unit directly to guests. The rental rates are low in the area, it’s not uncommon for hotels to rent for $40 a night.”
“It has not been a cakewalk for owners of condotel units in the same building. Chipps said that owners have engaged in a legal battle with the developer, who controls some commercial and common areas of the property. But she is hopeful that the investment will pay off in the long run. ‘As Daytona continues to grow that property is going to continue to be more valuable.’”
Thanks to the reader who sent in the Jacksonville link.
This lady from Ohio bought a low paying hotel job. She has to take calls and arrange for renters. Pay someone to take care of the cleaning. And she is competing against $40 motel rooms? These sort of scams should be an obvious tip of a bust coming.
‘While condotels have been around for decades, the latest boom took off about three years ago in Miami, Alexander said. There are about 28,300 condotel units under development in Las Vegas, 11,600 units in the Miami-Fort Lauderdale area, 6,900 units in Orlando, and about 3,200 units in Tampa-St. Petersburg. Other popular U.S. markets for condotel projects include New York, Chicago, Myrtle Beach (South Carolina), Boston and San Diego.’
$40 motel rooms ? What does she pay to have it cleaned after every stay ?
‘As Daytona continues to grow that property is going to continue to be more valuable.’”
Lady, it’s not even valuable today !
Hey Ben, one of your ad sponsors is a complete scam: http://www.seizedluxuryhomes.com/
The homes within 20 miles of my zip code in L.A. didn’t look quite right, so I entered a Phoenix zip and got many of the same homes, also within 20 miles of the Phoenix zip. Not that the “closing bids” of like 10 cents on the dollar weren’t a tipoff…
Troy, NY has a condotel too. Idiot developer from CA.
Sorry, I know CA. has a lot of fine folks. But this guy was/is an idiot who hasn’t got a clue about checking out local markets before taking the big plunge.
What the heck does Troy have to go for it besides the brewpub?
i wonder haow the cabana market is holding up? maybe vegas gal can enlighten us.
“‘It was sort of a whim,’ she said. ‘I do own a house in the Daytona area that I rent. I had just that little bit of experience. I’m not a person with any money. I just thought that this would perhaps be an investment for me.
SHEEP TO SLAUGHTER!!!!!!!!!!!!!!!!!
There are about 28,300 condotel units under development in Las Vegas”
True, in the same way that my jet-set lifestyle is under development (also known as REM sleep). I only know of one condotel that has been built in Vegas. I’ll have to take some pics.
You could rename the hot CONcept ……CONdotels. Real Estate is a nice CON game. It is based that you cannot never loose by buying CONcrete slabs of brick. People are CONvinced that sure thing investing is sure thing. I wonder who CONvinced them of this. Who? Well how about un-CON-trollable money and credit creation by Central Bankers of the world. Nice CON game indeed.
Marc:
Loose = Not tight
Lose = Opposite of winning
“‘It’s the classic beginning of a bust,’ said Sid Rosenberg, a real estate professor at the University of North Florida. ‘Next, all of a sudden, people who can’t sell begin to reach a point where they must sell and drop prices.”
It is great to finally have a real estate professor come out and call a spade a spade. I am wondering how Professor Rosenburg can avoid the long reach of the real estate industrial complex which seems to lead other “experts” to compromise their academic honesty in exchange for financial support (e.g., Retsinas).
Yes, finally a professor who calls it like it is. He has put the real back into reality. We on this blog could be wrong about the impending RE bust ahead but the odds and history will put us in the money and the speculators out of the money.
The four stages of “Housing Bubble” acceptance:
i) this is worthless nonsense found only on weblogs;
ii) this is an interesting, but perverse, point of view;
iii) this is true, but quite unimportant, RE only goes up;
iv) I always said so.
(with apologies to J.B.S. Haldane)
Norcal Ray — “We on this blog could be wrong about the impending RE bust ahead but…”
I respectfully disagree. It looks like a duck. It walks like a duck. For more than a year we have watched flashcard after flashcard of ducks. It is a duck.
Best of all is the rebuttal to “What if teh market implodes?” with
What if it doesn’t!”
WOW that is an investment! and an answer.
reminds of, “Every fool and his money are soon parted”!
Both the attendee (for going) and Dante Alexander…the brain powered one without an answer!!
“Robin Charles Glass, a real estate agent in Honolulu, said, ‘Generally these units don’t generate cash flow (for owners),’ Glass said. Resale activity lately has been slow for condotel units in Hawaii. ‘Seldom do I ever see someone selling these things these days.’”
Hahahaha. Condotel?!!??? What an outright scam! Who would even CONSIDER such a thing? It’s like subsidizing the Ramada Inn. I’ll bet those things generate positive cash flow for the hotel owner/management.
Next, these “investors” will be paying Denny’s $2,000 upfront for a contract to provide them with a reserved seat and a Grand Slam Breakfast every day for a week per year for the next 30 years. Don’t worry, you can HELOC your condotel and finance the whole thing! Yummy!
And if you provide the meal, service, and clean up afterwards they will give you 50 cents of the $3.99 meal price.
‘Seldom do I ever see someone selling these things these days.’
I could not believe this guy. I live in Hawaii and if you check out the Sunday paper ad, the are so many that are for sale for Ala Moana condo hotel from investors. In fact they have not sold the whole complex yet. They have been advertising for almost a year now that it is 90% sold. Yeah, when they are going the sell the 10%? Another year? I thought realtors from Hawaii are more honest that other parts of the country but I guess I’m wrong. Just another bad apple from Hawaii. What a disgrace?
OT, but highly important to the general theme of this blog. I could not believe my ears this morning when I heard this Marketplace report on NPR’s morning show –
Tuesday, June 20, 2006
Did Greenspan fail us?
TESS VIGELAND: As we mentioned, world financial markets have been on Mr. Toad’s Wild Ride recently. Some analysts blame inflation fears. Others argue that fears of recession because of high interest rates are behind the turmoil. But one group of fund managers and commentators is fingering a more surprising culprit: They accuse Alan Greenspan. Yes, that Alan Greenspan, the former Fed chairman. From London, Stephen Beard reports.
STEPHEN BEARD: Alan Greenspan retired earlier this year garlanded with honors and accolades. One economist called him “the greatest central banker who ever lived.” But one London fund manager begs to differ. Tony Dye says Greenspan was a disaster. Dye traces the cause of the current market turmoil back to Greenspan’s watch at the Fed.
TONY DYE: “The reason for it was the mistake about puffing the bubble up and not taking the punchbowl away, because that’s what I think central bankers should be doing, in the mid to late 1990’s.”
Dye argues that Greenspan inflated the stock market bubble of the 1990s by holding interest rates too low. He failed to take the punchbowl away when the party got started. And then when the stock market crashed in 2000 he had to slash rates to rock-bottom levels and keep them there for more than a year.
DYE: Cutting rates to one percent was basically to try and paper over the cracks of all the problems that would have arisen from the stock market bubble bursting. And it’s just created more problems.
The ultra-cheap credit, say Greenspan’s critics, inflated another bubble — in US house prices. And fueled an American consumer boom that sucked in yet more imports and massively inflated the US trade deficit. And by making it cheaper to speculate he also set off a tidal wave of hot money sloshing around the globe. Andrew Hilton of the CSFI think tank:
ANDREW HILTON: There have been grotesque, positively grotesque imbalances in the global economy. And perhaps the US ought to have bitten the bullet earlier.
http://marketplace.publicradio.org/shows/2006/06/20/AM200606201.html
Hallelujah. Maybe at some point soon we’ll be able to talk truthfuly about Greenspan in public without everyone looking at you like you’re some sort of kooky whacko.
Good point. Greenspan is fairly quiet recently. Hope he has a nice little hiding place whem the shiiiittt hits the fan. He could try Cayman Islands or Costa Rica. Both are nice fiscal paradise and there are no extradition treaty. Kenneth Lay of Enron will probably end up there too.
Amen!!
We have had the good fortune to have concurrently had to endure both the worst central banker and the worst president in U.S. history.
“May you live in interesting times”….
Perhaps the powers that be see the coming economic crash, and will pin the blame on the guy that just left? Diabolical and cynical yes, but someone has to take the blame and why not the guy that doesn’t work here anymore?
Tony Dye was a fund manager at Phillips & Drew (now UBS) who called the top of the stock market 18 months too early before the last crash.
He was right on the fundamentals, just out on the timing.
He now runs his own fund management firm. If you like, he’s a bit like a UK Warren Buffett.
Regards,
Loafer
“Alexander said he expects that in the next couple of years ‘we’re going to wish we had more’ condotels.”
The Ford Edsel comes to mind here….
ROI on the Edsel will prove to be higher than a condotel. Edsels have become a bit of a collectors’ item and you know they aren’t making anymore Edsels.
I already wish we had more condotels. I mean $40 a night that is pretty good. LOL.
Bubblegram:
Condo Hotel=
Do the colon
or New Orleans!
The Titanic too. The unsinkable FED hitting a huge real estate iceberg and sinking in a hour.
Hey did anyone just see the National Association of Homebuilders Cheif Economist on the Nightly Business Report? He was commenting about today’s housing start numbers. I was expecting him to put a rosy spin on them. He didn’t! He was almost uniformly negative on the future of housing this year.
CYA time is here…
Thanks for the tip. I will watch the show!!
VERY BEARISH! WOW! He sounded like one of the regulars on this blog!
I saw it. Everthing was right on the money, but I think he didn’t get to answer the final question right. It was something like the woman asked if he thought it was bad to buy right now, because that is what she thought he was saying. HE WAS!!!!!! She cut him off before he could say “I’m a renter and want nothing to do with the business I represent.” Just kidding, but I do believe it was the NAR who cut the time at the end from the NHBA. Don’t think they can’t do it. If they think they can, they will.
I didn’t get the last question either. It was something like, “what’s the most influential housing bubble blo…” I couldn’t hear the rest!
He did say that he expected housing to continue downward this year, though, with siginifcant downside risk!
Really, this guy must be a bitter renter. I can imagine no other motive. Certainly not the “truth”.
A friend of mine who works in Orange County says he saw the name “Leslie Appleton-Young” on an employment application at “Joes Jug Shack”, a local topless place. The new reality is that RE agents who have no real marketable skills will have to rely on their wits, or was it twits, or…you get the idea.
Charlotte Chipps, an Ohio schoolteacher, bought a condominium-hotel unit last year…
I bet I could rent a $200/night room on the beach at Daytona two weeks a year for ten years and come out ahead of Ms Chipps on money. I wonder what she teaches?
Hope it’s not economics.
BayQT~
Home economics, now that would be funny.
She should write the book, “The Idiot’s Guide to Condotel Investing.”
or “The Condotel’s Guide to Idiot Investing”
“Bought on a whim….I’m not a person with any money.”
No Bubble here. Move along folks, nothing to see here.
OK, who wants to dig up that “South Florida Paradigm” quote again…
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
Florida RE crash 1926: ” Then everybody simultaneously saw the writing on the wall, and panic selling ensued. With thousands of sellers and very few buyers, prices came down with a sickening thud, twitched a bit, and then crawled down even lower “
How fast did they come down during that first sickening thud?
Anybody got some dollar numbers on this?
The stock market went into a tailspin for four straight days. After that there was a run on the banks and they failed. After that there wasn’t much money around so most couldn’t sell at any price, certainly not enough to pay off the mortgage. It will probably happen in reverse order this time. People will default on loans which will cause banks and the stock market to fail.
Thats a good point, “happening in reverse order”.
Yet another replay of the dot com bust in a RE investment vehicle. Another greatest transfer of wealth episode in the history of mankind from Joe and Jane sixpack to the RE industry insiders. The victims are the same but the criminals are different this time around. Expect the same result and lack of jail sentences.
The sheep “buying on a whim” is asking to be sheared.
Sure there are some criminals… on both sides… this case is not one of them.
Did Charlotte leave her phone number or email address? Maybe she’d be interested in my Betamax? They say it’ll be worth 20% more next year!
Oh, that story makes my head hurt.
I”m seeing some increasingly desperate sounding ads on Dallas Craigslist too. Lots of foreclosures, lots of “motivated sellers.”
And here’s a funny one. I got a referral today for someone who wants me to manage a retirement portfolio. The guy’s a custom homebuilder! LOL! I politely declined as I am sure he would not have appreciated my bearish world view.
You should have told him to buy Florida condos, because they only go up in value…..I hear the condom-otels are good as well..condom, because you want to be safed, when you get screwed..sorry for being vulgar, but it was jsut too easy..
HAHAHAHA!!!
This blogs is breeding ground for comedians.
Betamax hung on in the pro markets for many years because it was basically good technology, though now of course digital is pushing it aside. A betamax player is probably still a better investment than a condotel.
damn straight!
Reminds me of some of the stories in the aftermath of the tech bubble implosion. NEWSWEEK profiled some pitiful, bleating bagholder who had to move back in with her mother because her portfolio was completely wiped out. Said bagholder admitted that she approached investing with all the naivety of a five-year-old (her words) and once bought Microsoft stock — at the peak — because she heard that Bill Gates had bought a 30 million dollar piece of art, then lent it to a museum (very altruistic — but don’t quite follow the logic of why it compelled her to buy MS stock at its peak).
Listening to her tale of woe, you’d have to have a heart of stone not to laugh at her. I think our clueless schoolteacher “investor” has a similar painful lesson in store.
Are ARMs, hybrids, or I/O financing available for condotels?
Overheard in an office where a cute but timid condotel buyer is dreaming of riches and a litte down time on the beach:
Heeeeeey Baaaaayby — Uncle Sugah has a deal f’ you! Don’t pass this around, now, because this money is big-time limited, but I can get you that smack for 1% interest and you don’t have to pay anything at all in the first three yeahs! Yeah! This s—’s solid gold, baby! You know what I mean? There’s some fees we got to collect at closing and all, but I think you get ‘em back if you pass the first three years without causin’ any problems, so it’s a little hit now and you’ll be home free, baby! Appraisal? Sweet baby, why do you think they call me Uncle Sugah? Now, these heah papers are a real pain, I know, but I’ve marked a “X” where you should sign - just take you time and sign ‘em — I’m goin’ for some more coffee — you want somethin’ a little stronger, maybe a little celebration, Ms. Real Estate Magnate?
…to be continued
All ARM’S but no head. Yes it must be available.
10y is at 5.16 - Fed funds should be at 5.25 next week. I think (I should check but I am too lazy) that 100% of the time the Fed funds rate has been above the 10y - a recession has occurred.
Crsipy…not every time…but a recession never happened with out one…since the FED has been in charge “leeping inflation contained.”
Oh as for their mission, if you believe that one…”didn’t I see you at that CondoTel conference in Datona…?”
8 of 10. The only two times we have not had recession was 1995 (very slow economy) and now (who the hell knows).
Signs of slowing, deals falling through
http://www.mercurynews.com/mld/mercurynews/business/14859236.htm
Yes, and I’m sure things haven’t changed much from the 80’s and 90’s. The brokers/agents involved in those crumbling deals have already spent their “commissions”. Next, they’ll skip their quarterly tax payments, and by April 07, they’ll be down at the bank getting a loan to pay their taxes.
One more made-up bubble word:
motondo - motel+condo. As opposed to condotel. Imagine a conversation:
- I was lucky to pick up that Sheridan condotel at $200K last summer in Jacksonville.
- Damn you’re right, bro. I missed that train, but was lucky to get a hold of a Motel 6 motondo at $250K.
motondo: sounds like a trendy drink, would probably be popular with all the dumb dc yuppies. “I’ll have a motondo, and make it a double I just lost my shirt on a studio condo.”
That even rhymes!
or a Sci Fi character “Godzilla vs. Motondo”.
Or the new 8 MPG supersize SUV:
The Mitubishi Motondo
Or an opera singer Palliachi with Alberto Montondo.
LOL.
Max - LOL.
OT…but I had to share this. I am in Vegas this week for business and I saw the most hilarious thing. Accross the street (east side of street)from Spanish Trails between Tropicana and Hacienda there is a new condo development called Viscaya I think. This complex must have been built exclusively for flippers and investors. They have a row of signs outside the gate with one of them saying “Instant Cash Flow”, it just keeps getting worse.
“Instant Cash Flow”
Would that be an inflow or an outflow?
The morons on our city council (before we threw them out of office) approved all kinds of massive condo/townhome projects in my home town over the past few years. They’re dying on the vine, of course.
Every intersection for a couple miles in each direction from the Legacy Village development is plastered with ridiculous ‘come-on’ signs trying to entice buyers to come tour the development. Here’s a sampling:
“Notable lofts!”
“Alluring walk-in closets!”
“Stunning prices!”
“Fascinating ceilings!”
“Captivating windows!”
“Sensational kitchens!”
I damn near caused a few car accidents when I kept changing lanes to point and laugh at these signs. This is the development the councilmember (who owns a construction company) recently claimed “couldn’t build ‘em fast enough”. Yeah, right. That’s why they’re planting these pathetic signs all over the area.
Alluring walk-in closets! is my favorite.
Fascinating ceilings! is a close second.
Alluring walk-in closets… lmfao… (to the tune of the old “Roach Motel” ad….) “Buyers check in but they can’t check out!”
Yeah well in the closets they furnish a corpse. And the ceilings are accompanied with modern pop art from Duchamp, ketchup stains.
Is that in Plano?
The one word you missed is luxury. All these yuppie idiots crawling over each other to buy “luxury” condos, “luxury” suv, “luxury” blender at Target…I think you get the point.
I just laugh because the only “luxury” involved in the transaction is the seller taking advantage of willing minions.
Viscaya…on Rainbow and Tropicana There is even a choice for a vacant unit or a tenant occupied unit. It’s a conversion.
http://www.vizcayacondoforsale.com/
BayQT~
Price didn’t look too bad until I saw the sq. ft. I think a “1″ is missing in front of “949.”
Real estate crash = Banking Crisis = Stock market crash = Recession = 10%+ Unemployment = Pension Crisis = Social Security & Medicare Crisis = The Greater Depression? etc.
On the Pension crisis Marketwatch is firing up a 3 part series:
http://tinyurl.com/e7nbq
“The bottom line here is we’re talking about a taxpayer bailout,” said David John, a Heritage Foundation researcher. “It’s inevitable.”
Social Security? Don’t count on it.
I always wondered how the Fed could possibly “inflate the massive debt problem away” since globalization has frozen wages. I think this article shows how it could be done. Massive new money creation to support the Pension trust fund - even more to support Social Security and Medicaid. This puts more $$ in the hands of elderly/retired citizens and gets it into the broader economy. Helps replace all the “liquidity” now drying up from housing refi/HELOC.
Now might be a good time to invest in health care and the funeral services business…
Apparently, if BB raises rates enough, pension bailouts willl lessen. Another interesting piece of the puzzle.
“Social Security? Don’t count on it.”
Wrong again Fred. Social Security is fully funded until 2014. In fact, it will continue to run a surplus until that time. The general fund is what is the problem, not SS.
The problem is that it’s funds consist entirely of US government debt. When that debt begins to draw down it means either more debt from unafiliated entities or less spending from the non-social security parts of governemnt. +
SS is a ponzi scheme of the highest order and will be exposed as such at some point in the near future. Ya might as well believe in the tooth fairy.
Hey, I just picked a hot new investment tip. My inside sources tell me that a hot new condo-tel is coming on the market in Seedyville, USA. The two state of the art hotels are located at the corner of Gang and Ghetto, and Rape and Murder. These hot new project will contain all of the latest amenites, including the inebriated wino as the doorman, and Gypsy Rose as the Madame. The deposit required to hold these hot new investments is only $50,000. The developer is Fly By Night Construction. Please email me at watchyourmoneydisappear@URscrewed.com . No phone calls please. You may mail your 50,000 deposit to Your Money is Gone, PO Box 0000, Seedyville USA 00000-0001. Looking forward to doing business with you, before I disappear to the Caribbean with all of my ill-gotten money.
O.T. (and apologize if idea posted before) O.K. need2leave this is too good and outrageous of a piece of fiction not to comment on. There’s so many talented and informed writers out there on this blog. I’m not kidding. I’d love to see a thread of essays just for fun one day.
I’ll bet Ben could just about compile some of these threads without even editing out mispellings, etc. and compile them into a best selling book. Just leave the thread untouched and print it!
Think about it, after the crash compare word for word some of the year ago predictions on this blog dated 2005 and compare them with the 2006 articles as a jump off point for analysis of how Ben’s Army saw this coming but somehow was missed by the msm and govt.
It’ll seem like gallows humor in a few more years.
I have the old “There is no housing bubble blog” satire site saved that would fit nicely in this proposed thread.
Add in Bubbles the Clown pieces.. Classic
I think a comic book with memorable quotes and ideas from this blog would be a killer.
I do own a house in the Daytona area that I rent…
Whoa! I didn’t catch that the first time, she owns a house and a condotel that she bought at the top of the market? How much are they paying those schoolteachers in Ohio anyway?
So, ok….this means that the school teacher may also be living in a house/townhouse/condo that she “bought” (I say this because if she was a renter, that would be significant information to share in this article, right?), plus she has the rental house, plus the condotel…plus she manages and makes arrangements for housekeeping. And what did the guy say? “Generally, these units do not generate cash flow (for owners).”
Now, somehow, girlfriend thinks she’s either gonna make a buck or just hold the property for a couple of years and sell at a $20-30k profit….OR, she will try to keep it for the grandchildren. I wonder how long she thinks she can continue throwing money down a toilet in order to pass it on to her grandchildren? Depending on how old her grands are, by the time they are of age to manage property, these condotels, condo conversions and their ilk will be the stuff of cocktail party jokes.
Wow, what grade does she teach anyway? I wouldn’t want this women teaching my kids anything. She is not a rational thinker. This woman’s gonna crash and burn.
BayQT~
Yes, her grandchildren will really appreciate getting a dilapidated hotel room with monthly assessments.
The more of these stories that I read….
the stronger my conviction is that I’ll be able to actually afford a good home in a good neighborhood.
It does give one a little hope. Unfortunately in the market where I live (Seattle area) there is a shortage of sfr’s and so many restrictions on developing land, I often wonder how prices can really go down. Wages are good too.
Someone in my town bought up a bunch of those porta-pottys that are at all the construction sites, refurbished them, and are selling them like hotcakes as Commodotels.
LOL - can I still get one, or are they not making any more Commodotels?
LOL. And the listing agents are called Commodo Dragons?
One bite from a Commodo Dragon and you are dead 24 hours later. The have a special poison in their saliva that makes you rot from inside. It’s a little bit like the Ebola virus. Hummm! You dissolve in you blood. You rot inside in your house once bitten by the real estate dragon.
I was at an open house back in December, at a house with a $585K asking price. Some scruffy lowlife dressed in “car wash casual” attire oozed in off the sidewalk, slipped into one of the elegant bathrooms, and took a dump. That was just wrong….
Wrong to hold an open house?
dude! every model home in Tampa I looked at had the toilet seats bolted down to keep the drunken “lookers” that wandered through from sh*tting the place up. This didn’t stop 3 drunk Koreans (sorry no offense intended, they just happened to be Korean) from prying open the lid in one Morrison model and dumping and pissing all over the bathroom (they also “liberated” about ten sodas from the fridge and had a good laugh out on the lanai with them)
I am not kidding I am laughing so hard. You know the times when you just can’t stop. Thank you, friend. I have not had that feeling in a very long time. Commodotels for the win.
LMAO!
Just got this in my email from Centex today:
Save the Date Newport Isles June 24, 2006 10AM to 6 PM
Enjoy food, refreshments and a chance to win a $250 gift card at Newport Isles . You will also receive a free $15.00 gas card just for attending the event.
In addition, for anyone attending that purchases a home before June 30, 2006, you will receive an AMAZING :
Up to $100,000 off the price of select homes at Newport Isles. For example; 1695’ home -$324,110, on the water w/granite and stainless steel: deduct $100,000: final price-$224,110!
Special financing plans available
“Centex will only sell a home to an individual that intends to use the home as a primary or secondary residence. While Centex appreciates our previous investor participation in our communities, the new investor policy is in effect as of June 1, 2004.”
“Secondary residence?” In other words, Contex will sell to anybody, including investors, and the new policy means absolutely nothing.
That is stunning……no soft landing here!
If you win the $250 gift card, the example house is only $223,860! It’s a total deal maker.
Errrr, where is Newport Isles, because from where I sit (in Australia) that sounds like one heck of a deal.
That’s a reduction of more than the 30% some folks have been quoting as the peak->trough decline. Holy dooley :D.
“Alluring walk-in closets!” LMAO…
Reading about these condotels gave me a sick feeling when I remembered the time my husband and I were about 24 and attended a timeshare event in Tysons Corner, VA for the first and last time. The presenters were large, fat-ring-fingered scary types and we were sweating by the time we escaped . . .
I just had to type that - that Ohio teacher must have mush for a brain. I had to comment on that. Was too much fun typing that. Some of these idiot ‘investors’ might have even taken it seriously. LOL
She’s teaching American kids how to function in the world
“I was at an open house back in December, at a house with a $585K asking price. Some scruffy lowlife dressed in “car wash casual” attire oozed in off the sidewalk, slipped into one of the elegant bathrooms, and took a dump. That was just wrong….”
Well, it was better than dumping on the sidewalk. That’s what bathrooms are for. If he was elegantly attired would it have been different? Yo take yo chances when yo stage an open house.
Here’s a good one. I attended an open house with my just recently toilet trained Son. I got the ‘daddy I need to pee’ line just after we got in the door. I took him to the bathroom but the family had one of those stupid latches to stop the pets / kids drinking from the bowl. ‘Hold on Son’.. I couldn’t for the life of me get it open. A few more seconds he had his pants down and was pissing all over the show. On the tank, on the lid, on teh floor, on the paper. There wasn’t much I could do to clean up, so we quietly slipped out without saying anything to the realtwhore.
Must-see-TV for SD-area bubbleheads:
KPBS Full Focus - weeknights at 6:30 & 11 pm
Tuesday, June 20, 2006
Housing Watch
New home prices are falling in San Diego and local homeowners are feeling the crunch. Mortgage defaults and foreclosures are on the rise. Who’s most at risk as the market drops? We discuss the latest housing trends on Tuesday’s Full Focus.
Plus, summer is here and many shows are hitting San Diego’s stages. We’ll preview what local theatres have to offer and highlight the most popular musicals and productions.
Guests & Resources:
Housing Watch
Guests:
* Alan Gin, University of San Diego Economist
* Erik Weichelt, Foreclosure Broker
—————————————————————————
I just saw this show, in near-disbelief. The news that the bubble is collapsing has reached local San Diego prime-time TV! A couple of highlights (see the show if you want the verbatim version):
INTERVIEWER: “Could you dump your ARM in favor of a less risky mortgage?”
MR. WEICHELT: “I wouldn’t refer to it as ‘dumping.’ But there are other alternatives available.”
(But Erik, we just went over this yesterday; you need to pay closer attention when you read here! If a buyer could only get into a place last year when interest rates were lower than now by using an ARM, then they cannot, I repeat, cannot afford the monthly payment on a fixed rate mortgage now that rates are higher, especially if they could not have afforded a fixed rate at last year’s price. What part of IMPOSSIBLE is hard for you to grasp?)
—————————————————————————–
INTERVIEWER: “What is your outlook for prices over the foreseeable future?”
PROFESSOR GIN: “San Diego still has a strong job market. We anticipate 20,000 new jobs will be added to the economy next year. Strong employment growth will help housing prices continue to appreciate, but at a lower rate because of the record high inventory level.”
MR. WEICHELT: “I politely disagree. Home values are going to continue to decline, because a family earning $50,000 a year simply cannot afford an $800,000 house.”
(Professor Gin, have you still not bothered to read Professor Piggington’s blog, where he cites evidence that the recent net migration to San Diego represents an outflow? And if you are the economist, how come you don’t grasp why a family cannot afford to buy an $800,000 home on a $50,000 income, something your non-economist fellow interviewee pointed out is basically not possible?)
——————————————————————————
INTERVIEWER: “Who stands to lose from the latest developments in the San Diego housing market?”
MR. WEICHELT: “I don’t really see it as a loss.”
(Perhaps he would see it differently if he were one of the REO cases which will lead to growth in his foreclosure brokerage business over the next few years.)
—————————————————————————–
- I never even knew there was such a thing as a Foreclosure Broker, but something tells me this will be a growth industry around SD over the next couple of years; perhaps it was the way Mr. Weichelt could not contain his laughter in response to the interviewer’s question, “Is your business going to prosper in the next year?” (He also mentioned that October 2005 was the time of the first REO in a long while for SD. I would guess it was the first one since 1996 or so…)
http://www.kpbs.org/fullfocus/index_062006.php
I use to sell “real estate owned “(REO’s) for the bank for a while ,(while I had other jobs to do also ) .Use to write up real estate deals on napkins with the people . But ,my best guess on what a Foreclosure Broker is =a person who is a regular RE broker who has developed a realtionship with the Banks/saving and loans on selling the bank/saving and loans REO inventory . During bad times any realtor/broker would love to get listings from the bank.
“Your search has returned the first 200 of 22,203 homes”
zip has 156 new listings with today’s date — an unusually good yield for a Tuesday. I wonder how many stuck sellers saw the KPBS show, and whether the pace of new listings will pick up as a result?
“A common misconception is that the rental profits of a condotel unit will generate profits for the owner. But with insurance and maintenance and mortgage costs, owners shouldn’t expect to earn any money in the short term, Alexander said. ‘It’s an expense. It’s going to be like owning any other piece of property.’”
Ding ding ding. I know its only Monday but we have our first strong nominee for “Idiot of the Week” award. So, Mr. Alexander, if we should not expect income but rather expect to lose money, why would anyone with half a brain purchase a condotel? Oh yeah, I forgot, these half-a-brain types do exist…but none have any $$ left. LOL.
The lunacy continues…
What’s the big deal? A condotel is just like any other type of real estate–It’s an EXPENSE!
If values continued to go up, I would keep it for two or three years and make $20,000 or $30,000.’”
Potential upside 20k for 2-3 years, before taxes, RE commission, etc. etc. Potential downside? Huge. Weighing your options before making an expensive mistake? Priceless.
Does anyone know how much these condo hotels cost ?
I know of one in Vegas. Prices start from the $750s, according to the sign. It’s in a bad location; I wouldn’t rent there. Sits beside a 24 hour convenience store, on the corner of a 6 lane road. Across the street is an electrical substation. Classy huh?
I found some pics. They don’t wanna get too close, you can see the mini-marts. LOL.
http://www.manhattanization.com/las-vegas/platinum/images.rub
They shoot it from behind buildings and up high to block the view of what is beside it. Also, they crop really close the photos from ground level. I would too.
Wow diceman ,what a ripoff .
“Does anyone know how much these condo hotels cost ?”
In the beach areas of east central Florida, they were running well under $100K each. Mind you, they they would not be mistaken for Sheratons.
Chip …Are they just little 200 or less square feet little motel rooms without a kitchen ,(if you know ) ?
OT; but related. in todays kingman daily minor a new rhodes home 1870 sq ft. for rent $750.00 per month. the payment has to be $1600.00. talk about neg cash flow for this flipper. this is in a trac of 69 homes that sold out to flippers in 4 hours last year. most are for sale or rent or both. none of thease kingmanites can even afford 750.00 per month. local wages are $8.00 to $10.00 per hour.
That’s what I just cannot seem to understand. Who did these idiots think they were going to rent/sell to? And how did the builders arrive at the decision to build there? Things that make you go hmmmm….
azrenter,
I spend quite a bit of time in Kingman on business (parachute system testing at Red Lake), and I have to say that one of my favorite past-times in Kingman is to go to the local Wal-Mart and people watch. Strange people in that town.
Anyone that buys investment property in Kingman is an idiot!
ugh…I’d hate to be the 1st person to test a parachute.
Flipping in Kingman? Next they will be flipping in Yucca Arizona (mostly abandoned buildings from 50 yrs ago). Hippest place in town - The Honolulu Club. Looks 80 yrs old, and will burn like tinder in the heat.
“While attending a real estate conference, Alexander said another attendee asked, ‘What if (the condotel market) implodes?’ Alexander’s response: ‘What if it doesn’t?’
Brilliant logic. Applicable in so many ways.
What if I spend my entire paycheck instead of paying my bills and my creditors come for me? Yes, but…what if they don’t?
What if drinking an entire case of Pilsner Urquell in one sitting hurts my liver? Mm-hm, but what if it doesn’t?
What if I seduce my beautiful neighbor and her karate-instructor husband walks in on us? WHAT IF HE DOESN’T?!?
Finally the Murky Snooze admits all is not well in Silicon Valley.
http://www.mercurynews.com/mld/mercurynews/14867139.htm
The headline is a classic.
Posted on Wed, Jun. 21,
SLOWDOWN IN FORECAST
REPORT PREDICTS EVENTUAL DROP IN HOME VALUES BUT NO DECLINE IN PRICES
By Sue McAllister
Mercury News
“Home prices in the Bay Area and the rest of California will level off for at least two years after edging higher in 2006, according to a closely watched economic forecast expected today.”