Sunday, July 23, 2006

BubbleSphere Roundup

If there is one post you read about the housing bubble this week it should be Ghost Housing Market. Incredible post.

There is the Sacramento Real Estate Statistics Blog which offers what it promises. The author just launched a spin off blog titled Sacramento Area Flippers In Trouble Blog. It shows dozens of properties that have been bough recently and are now being offered at less or the same as the previous purchase price. Some flipper already have negative equity in their property. It will be ugly as the housing prices continue to decline in the bubble markets. The blogger blogs "If you ever needed proof that itÂ’s possible to lose money on real estate, I'’ve got it for you."

Bubble Markets Inventory features posts about Henderson, NV (Las Vegas suburb) and Poway, CA. Solid blog.


54 comments:

  1. Here is a nasty old house in the ghetto (based on Injin Lover's aka Redskins Fan's sensibilities) that sat on the market for about 4 days before it went to contract. Asking price was 1.9 million. Let us all keep track of the sale price after the closing, shall we?

    Link

    ReplyDelete
  2. Typical redskins fan here:

    Link

    ReplyDelete
  3. What's sad is you can buy a house like that in flyover country for 200-300k easily. It's too bad nobody builds them like that anymore.

    ReplyDelete
  4. Anonymous said...
    "What's sad is you can buy a house like that in flyover country for 200-300k easily. It's too bad nobody builds them like that anymore."

    uh, yeah ... and could that have something to do with the fact that jobwise most of us just "fly over" that house there and the kind of towns it sits in?

    ReplyDelete
  5. "uh, yeah ... and could that have something to do with the fact that jobwise most of us just "fly over" that house there and the kind of towns it sits in?"

    Many of the towns this sits in have great economies, often with the same paying jobs as DC. The big difference is most those areas don't have the ridiculous zoning, slow growth, smart growth, idiotic ideas that seems to pervade this area. I grew up in the midwest and the hoops you have to jump through to get anything built around here is ridiculous.
    Bubbleheads this is why we have outrageous prices around here, everything is either high-rise condos or McMansions. You can't get anything else built dealing with the local govts.

    ReplyDelete
  6. waiting for godotJuly 23, 2006 10:14 PM

    Good article, pretty much outlines all of the risks that exist in the housing market. Would hate to be a sales rep for one of the homebuilders and watching my commissions slip away as the local flippers cancel their orders.

    ReplyDelete
  7. lance... most people who live in "flyover" country are probably quite happy that folks like you prefer to "fly over" them as opposed to "stopping by"

    ReplyDelete
  8. I am really sick of this housing bubble discussion and defence from housing cheerleaders. The facts ae simple, prices will drop by 30 to 40% in next 12 to 24 months. It is a a fact which speculators/cheerleaders do not want to accept, good for them they can buy more and then fall will be more severe.

    ReplyDelete
  9. > Here is a nasty old house in the ghetto

    Well, it's not a nasty house, it's a nice house, though the neighborhood is not chichi, it is Shaw, I think. The house is HUGE for sure, did you see the size of the rooms? The bathroom was bigger than most DC bedrooms.

    And, ask people in flyover country about their job markets. My family lives in flyover country, in an auto-dependent town. Losing your job there is a big deal, as it is usually because everyone around you is downsizing. And an old charming house like that would be in the older part of town where my family lives, which neighborhood would generally be undesirable, they just keep building new houses, so that old neighborhoods become not so desirable in less than 20 years.

    Flyover country is cheaper, but less dynamic. You choose your priorities, or, like me and so many others, you are here because your industry is here.

    ReplyDelete
  10. boy are bubbleheads nasty and bitter! how can one reasonable argue with the fact that as the last poster said there's a good reason why the "same" house in flyover country isn't the "same" house. such hatred adn bitterness. and why the bad wishes towards realtors or anyone else. are your lots in life so bad that you have to lash out at others. assuming you are a bubblehead of middleage or beyond, you made your choices not to buy when you could have, no one forced you to hold off from buying. and those of you too young to have bought before, you're making your choice to hold off now. again, no one is forcing you to do not buy. and please don't say you can't. there are plenty of places in the District and elsewhere where a young (or not-so-young) person can buy a fixer up, starter home in a transitional area for little down and little per month ... earning the opportunity to get equity in the future like the rest of us have done. either way, i am just shocked at all the bitterness shown by your posts ... and the glee with which you wish others harm. you know there's a thing called karma ... be careful what you wish on to others. peace to you.

    ReplyDelete
  11. "I am really sick of this housing bubble discussion and defence from housing cheerleaders. The facts ae simple, prices will drop by 30 to 40% in next 12 to 24 months. "

    No they won't.

    ReplyDelete
  12. bitter lance, come on. when housing was doing great, you was the cheerleader of the year. now that people have a different opinion than you, you keep crying.

    it is like the govt officals wondering why people are leaving and cant fill the job openings. And today, i open up the paper an it says.
    School enrollment drops across Florida; educators left puzzled

    it is called housing bubble. oh, i mean housing crash.

    when you got a man in a gorilla suit dancing in the rain in south florida begging people to buy a condo. =) even got the picture to prove it!

    lance, get over it!

    ReplyDelete
  13. ronaldcaglass,

    "when you got a man in a gorilla suit dancing in the rain in south florida begging people to buy a condo. =) even got the picture to prove it!"

    Can you please send me the pic along with a brief description of what condo building and where? I would love to post it. bubblemeter@gmail.com

    Thanks.

    ReplyDelete
  14. D. wants this home: Nice.

    ReplyDelete
  15. Saw this on patrick.net. A MUST READ:

    http://tinyurl.com/h2dh4

    ReplyDelete
  16. "Incredible post"

    Hardly, it's barely credible. I don't disagree with the premise that real estate prices will decline some (not the 70% that Redskins Fans is waiting for), but the hyperbole throughout this post completely undermines its credibility.

    For example, the author argues: "ATM - Add to the problems, all of those home owners that used their homes like ATM machines to buy cars, boats, skiddos and vacations." ALL homeowners did this?? Well, I know this is bubblehead creed, but of course not ALL homeowners did this, probably not even most homeowners.

    This statement is not credible, yet bubbleheads find it "incredible," probably because it echos their long held but yet to come true beliefs.

    ReplyDelete
  17. "For example, the author argues: "ATM - Add to the problems, all of those home owners that used their homes like ATM machines to buy cars, boats, skiddos and vacations."
    ALL homeowners did this?? Well, I know this is bubblehead creed, but of course not ALL homeowners did this, probably not even most homeowners."

    That is NOT what the author is saying. He is saying that there are so many homeowners that used their homes as ATM.

    If the writer meant all homeowners used their house as an ATM he might have wrtitten 'All homeowners used their homes as ATMs"

    ReplyDelete
  18. So, real estate is cyclical. Big yawn. Like stocks and bonds and commodities go up in a straight line.

    If the bubbleheads think they can time the market - then go for it! They obviously missed the last cycle. Maybe they'll be more successful this time around.

    In the meantime, living in a group house in Silver Spring is not my idea of "success".

    ReplyDelete
  19. News Story titled "The Coming Housing Crunch" :

    Here

    ReplyDelete
  20. Anon 4:12--

    How did you get that pic of me? Just kidding.

    I don't know... what is more ridiculous- the guy in the pic or out of staters who want to borrow tons of money for the privilege of living in an area with millions of guys like him? (And, LOL, me too!)

    Anon 6:49--

    I think I said that most houses around here are worth, to me, about 30% of their asking price, which is different than saying they will decline 70%. I have also said many times that while I believe REAL prices will decline substantially, I do not have any idea how much nominal prices will decline.

    A Redskins fan

    ReplyDelete
  21. Anonymous said...

    I am really sick of this housing bubble discussion and defence from housing cheerleaders. The facts ae simple, prices will drop by 30 to 40% in next 12 to 24 months. It is a a fact which speculators/cheerleaders do not want to accept, good for them they can buy more and then fall will be more severe.

    Anonymous,
    I'm with you anonymous. I hope the prices fall even more than 40%. That will allow to be add more properties to my portfolio by cherry picking the best properties.

    ReplyDelete
  22. "Speculation was easy-and quick. No long delays while titles were being investigated and deeds recorded; such tiresome formalities were postponed. The prevalent method of sale was thus described by Walter C. Hill of the Retail Credit Company of Atlanta in the Inspection Report issued by his concern: "Lots are bought from blueprints. They look better that way .... Around Miami, subdivisions, except the very large ones, are often sold out the first day of sale. Advertisements appear describing the location, extent, special features, and approximate price of the lots. Reservations are accepted. This requires a check for 10 per cent of the price of the lot the buyer expects to select. On the first day of sale, at the promoter's office in town, the reservations are called out in order, and the buyer steps up and, from a beautifully drawn blueprint, with lots and dimensions and prices clearly shown, selects a lot or lots, gets a receipt in the form of a `binder' describing it, and has the thrill of seeing `Sold' stamped in the blue-lined square which represents his lot, a space usually fifty by a hundred feet of Florida soil or swamp. There are instances where these first-day sales have gone into several millions of dollars. And the prices! ... Inside lots from $8,000 to $20,000. Water-front lots from $15,000 to $25,000. Seashore lots from $20,000 to $75,000. And these are not in Miami. They are miles out-ten miles out, fifteen miles out, and thirty miles out."

    - As recorded by Frederick L. Allen, University of Virginia, American Studies

    ReplyDelete
  23. "Steadily, during that feverish summer and autumn of 1925, the hatching of new plans for vast developments continued. A great many of them, apparently, were intended to be occupied by what the advertisers of Miami Beach called "America's wealthiest sportsmen, devotees of yachting and the other expensive sports," and the advertisers of Boca Raton called "the world of international wealth that dominates finance and industry . . . that sets fashions . . . the world of large affairs, smart society and leisured ease." Few of those in the land-rush seemed to question whether there would be enough devotees of yachting and men and women of leisured ease to go round."

    ReplyDelete
  24. "Throughout Florida re- sounded the slogans and hyperboles of boundless confidence. The advertising columns shrieked with them, those swollen advertising columns which enabled the Miami Daily News, one day in the summer of 1925, to print an issue of 504 pages, the largest in newspaper history, and enabled the Miami Herald to carry a larger volume of advertising in 1925 than any paper anywhere had ever before carried in a year. Miami was not only "The Wonder City," it was also "The Fair White Goddess of Cities," "The World's Playground," and "The City Invincible." Fort Lauderdale became "The Tropical Wonderland," Orlando "The City Beautiful," and Sanford "The City Substantial."

    ReplyDelete
  25. I was out looking at condos this weekend. Looked at a condo on Church St. for 499.5K Lots of traffic. Here is what I left thinking. There must be a lot of people with a lot of money. Or at the least with very high incomes. Also, I noticed that the current owner or renter had little to no furniture. Maybe he/she was a minimalist. Or maybe there was no room in the budget for furniture. The person was literally sleeping on the floor. A very small TV (<20in.). Closets were the cheap wire types. I expected more for a half million dollars. There was also a leak in the bathroom ceiling. Must have come from apartment above. Shoddy workmanship? As I was leaving, I thought to ask about the penthouses on the top floor. I used to go to a club right across the street from this building. I remember the penthouses initially being listed at 1mm pre construction. The building attendant told me that there was one unit for sell recently and that it had sold. That says alot about this market if a 1mm penthouse can be sold twice. I'd love to see the comps on this building. With that said, 499 is too steep in my opinion for this apartment. But it really doesn't matter what I think since i don't have the wherewithal to pay that kind of money. By the traffic at the open house, there seem to be a lot of people that think they can afford the mortgage and the condo fee of 360 that does not even include utilities!

    ReplyDelete
  26. "Perhaps the boom was due for a 'healthy breathing-time.'
    As a matter of fact, it was due for a good deal more than that. It began obviously to collapse in the spring and summer of 1926. People who held binders and had failed to get rid of them were defaulting right and left on their payments.

    "One man who had sold acreage early in 1925 for twelve dollars an acre, and had cursed himself for his stupidity when it was resold later in the year for seventeen dollars, and then thirty dollars, and finally sixty dollars an acre, was surprised a year or two afterward to find that the entire series of subsequent purchases was in default, that he could not recover the money still due him, and that his only redress was to take his land back again.

    "There were cases in which the land not only came back to the original owner, but came back burdened with taxes and assessments which amounted to more than the cash he had received for it; and furthermore he found his land blighted with a half-completed development."

    ReplyDelete
  27. "By the traffic at the open house, there seem to be a lot of people that think they can afford the mortgage and the condo fee of 360 that does not even include utilities!"

    Or they coul be looky loos!

    ReplyDelete
  28. Nathan Boggs said,

    "...condo fee of 360..."

    What was the P.T. Barnum line about a sucker born every minute?

    ReplyDelete
  29. Well there is definitely more than one way of looking at things. I can say that I looked all over for the lockbox tree(s). This was the only condo on the market in that building. That means that in a building this size, only one is Frr Sale. That is a good sign. And I must assume that the other owners are at least renting or occupying the units. By the tone of this board, I expected at least half the apt's to be for sale.

    ReplyDelete
  30. DC_Too,

    While you are posting what happened back during the depression, can you please also tell us why this isn't relevent to now since (a) we have plenty of lending safeguards in place specifically because of lessons learned back then and, more importantly (b) it was a general economic collapse that caused the real estate market failure ... and we are currently instead experiencing a great economic expansion due to the technological revolution and globalization ... particularly here in DC where we are the nerve center for this technological revolution and globalization effort. Or, do you rather just leave people with the wrong impression? Btw, a link would have done the trick .... This is after all David's blog ... and large articles should be left for him to post.

    ReplyDelete
  31. Was listening to the show "Intersection" on WETA radio this morning here in NoVa about real estate; a caller asked the host whether it's a good time to buy and commented about the rapidly declining real estate market in part of California where his brother lives. The host said it's a good time to buy now and DC/NoVa area has no peaks and valleys like California. This was what the host actually said and I didn't make it up. Is it really true that NoVa has had no peaks and valleys in real estate?

    ReplyDelete
  32. Oh, hi Lance. Sorry you're offended by the University of Virginia's history of the last Florida bubble. David's lead post is about Florida - thought it would be fun to post.

    In case you missed yesterday's selection, here again is from Harvard's Professor Galbraith:

    "Strongly reinforcing the vested interest in euphhoria is the condemnation that the reputable public and financial opinion directs at those who express doubt or dissent. It is said that they are unable, because of defective imagination or other mental inadequacy, to grasp the new and rewarding circumstances that sustain and secure the increase in values."

    "And thus the rule, supported by the experience of centuries: the speculative episode always ends not with a whimper but with a bang.

    "There will be occasion to see the operation of this rule frequently repeated."

    ReplyDelete
  33. " Is it really true that NoVa has had no peaks and valleys in real estate?"

    What utter BS.

    ReplyDelete
  34. "By Jamie Smith Hopkins
    Sun Reporter
    Originally published July 23, 2006
    First of three parts

    The Baltimore metropolitan area stands ready to add more than 200,000 jobs over the next 25 years, propelled by the huge economic engine of the nation's capital and the growing demands of talent-hungry employers. But it won't have enough homes for all those workers."

    see link above for the entire article.

    ReplyDelete
  35. "Most of the millions piled up in paper profits had melted away, many of the millions sunk in developments had been sunk for good and all, the vast inverted pyramid of credit had toppled to earth, and the lesson of the economic falsity of a scheme of land values based upon grandiose plans, preposterous expectations, and hot air had been taught in a long agony of deflation."

    -UVA's American Studies

    ReplyDelete
  36. U.S.A. population in 1920 was around 100,000,000.

    U.S.A. population in 2006 is near 300,000,000.

    Now, we have things called "Interstate Highways" and "suburbs". These things did not exist in 1925. What other fundamental differences can you discern between 1925 and 2006? (some hints to get you started: global economy, intra & inter-national air travel, population migration, and more!)

    If we believe that the US is today very much like it was in 1925, we're brain-damaged. (just think of the changes WWII brought to bear between then and now)

    ReplyDelete
  37. "add more than 200,000 jobs"

    Yeah, well all 200,000 adults who fill those jobs will live in group homes, thereby surpressing demand for housing and keeping real estate prices down.

    ReplyDelete
  38. "If we believe that the US is today very much like it was in 1925, we're brain-damaged. (just think of the changes WWII brought to bear between then and now)"

    And if we can't learn lesson from the 1920's we are ALSO brain damaged.

    ReplyDelete
  39. "If we believe that the US is today very much like it was in 1925, we're brain-damaged. (just think of the changes WWII brought to bear between then and now)"

    And if we can't learn lesson from the 1920's we are ALSO brain damaged.

    ReplyDelete
  40. Now were back to the "the equities markets are fundamentally different from the real estate markets"

    Also, the equities market (singular) of 1925 was fundamentally different from the equities markets today. Look into it. (Hints to get you started: global considerations & US government regulations)


    Whee!

    ReplyDelete
  41. lance said,

    "...we have plenty of lending safeguards in place specifically because of lessons learned back then..."

    You mean like those that led to the Savings & Loan crisis?

    ReplyDelete
  42. http://tinyurl.com/rq82m

    gotta love this realtor...
    "BTW, why complicate things -- people understand what average sales price means. Median....?"
    yea nobody uses median.

    she also didnt understand me when i mentioned a buyer in this market would rather pay 20k less and not have granite than pay 20k more to have it. i know people want 'luxury condos' but with most first time buyers priced out, i think they'd take a lil less luxury

    ReplyDelete
  43. Anonymous said...
    “Was listening to the show "Intersection" on WETA radio this morning here in NoVa about real estate; a caller asked the host whether it's a good time to buy and commented about the rapidly declining real estate market in part of California where his brother lives…..”

    Yep, I caught that episode. What a joke. The realtor basicaly said:

    “…… that there is never a bad time to buy if it is a home you are buying…."

    That sounds eerily familiar…..

    ReplyDelete
  44. Hey David! How come no mention of the Post article from this weekend about how DC has actually gained more than 30,000 residents since the 2000 census? That sort of affects the bubblehead argument that people are fleeing DC in droves b/c of housing prices which will cause a price collapse.

    Amazing how some items just don't seem to merit a thread.

    ReplyDelete
  45. There was also a very long article in today's Post on DC developer Jim Abdo's plans to turn a large chunk of Northeast DC into his next luxury housing project.

    You would think that if the Bubblehead Creed were rock-solid, that developers would see the same writing on the wall and not be rushing out to build more units since housing prices will drop massively in the coming year or two.

    No thread on that story either. Of course, if Abdo had said his company was abandoning some project because of lackluster sales, you can safely assume that there would be a thread on that story.

    ReplyDelete
  46. "No thread on that story either."

    I just posted it. [In general, I can't post all housing articles]

    ReplyDelete
  47. Fritz,
    There's also an article on WaPo about people moving to Baltimore b/c of more affordable housing there. From that article (http://www.washingtonpost.com/wp-dyn/content/article/2006/07/21/AR2006072100663.html):
    "In his 2003 inaugural address, D.C. Mayor Anthony A. Williams (D) set a lofty goal of 100,000 new city residents, but the population -- 558,010 by the latest count -- keeps going south, or, er, north."

    So which should we believe? The DC population is getting smaller or bigger?

    ReplyDelete
  48. That Post story came out the day after the Census revision.

    In other words, the Post editors screwed up and should have made revisions to the story to reflect the new Census information, but the editors failed to do so.

    ReplyDelete
  49. David:

    Thanks for posting that link, but man is that a weak post! If the info had been the other way, you would have been highlighting that story as proof positive that all these condos were being built in DC, yet residents were still leaving in droves. Instead, the Census finally admits that their estimates have been wrong and that the city gained more than 30,000 residents since 1999-2000, and there's not a single peep about it on your site until I mentioned it and now there is a nothing more than a link to the story.

    Pretty weak and intellectually dishonest if you refuse to acknowledge any facts that go counter to your stated premise.

    ReplyDelete
  50. fritz,

    I think Census did a legitimate job revive those numbers. I have not once claimed that DC population is falling in any of my posts. Look.

    ReplyDelete
  51. " That Post story came out the day after the Census revision.

    In other words, the Post editors screwed up and should have made revisions to the story to reflect the new Census information, but the editors failed to do so."

    Nice catch. I noticed that too. :-)

    ReplyDelete
  52. From the article:
    "Census estimates are used to allocate funds in a number of programs, including Medicaid, social service block grants and foster care."

    "The Census Bureau acknowledgment came after Williams challenged the 2005 census population estimate, which said 550,521 people were living in the city as of July 1, 2005. That number represented a decline of about 4,000 people from July 2004 and a drop of more than 20,000 from the official 2000 count of 572,059."

    Hmm let's see Anthony Williams is good friend with one of the developer Jim Abdo who was poised to develop a big chunk of a DC property. Sounds like he wants to project an image of city that keeps on growing. Talking about intellectually dishonest. Don't think politics can influence science? Ha think about what the Bush admin is doing to the stem cell or global warming debates.

    ReplyDelete
  53. From the article:
    "Census estimates are used to allocate funds in a number of programs, including Medicaid, social service block grants and foster care."

    Not to mention getting more dough for the city

    ReplyDelete
  54. In re Anon 2:00pm:

    Yeah, everyone knows the influence the Mayor of DC has over the Census Dept.

    In fact, traditionally, the Mayor of DC has more power than the Chief Executive.

    That's usually the case, but Dick Cheney is giving the spineless Tony Wlliams a run for his money.

    ReplyDelete