Real Estate Crash thread

[RootSkier]

Here in non-resort area Montana, we are seeing a slight slowdown in buyers, but we aren't really expecting a major price readjustment...just longer time on market, and maybe more aggressive offers from buyers. (You can get a totally pimped out house on five acres for $500,000, and there are plenty of 5-10 acre parcels of bare land for sub $200K).

But we also have a booming non-tourist based economy in our little valley, and multiple biotech businesses will be hiring dozens and dozens of highly educated and highly payed people in the immediate future.

[Benny Profane]

http://www.nytimes.com/2006/10/27/bu...=1&oref=slogin

October 27, 2006
New-Home Prices Fall Sharply

By JEREMY W. PETERS
Home builders, struggling to keep ahead in a weakening market, cut prices and offered a variety of other discounts in September to help sell their newly constructed houses, the latest government and industry statistics show.

The Commerce Department reported yesterday that the median price of a new home plunged 9.7 percent last month, compared with September 2005, falling to $217,100, the biggest such drop since December 1970.

Statistics from the National Association of Home Builders showed a similar slide. Builders reported cutting prices in September by 5 percent, according to the association’s most recent data.

Just two months ago, prices of new homes were still on the rise.

At least to some extent, the lower prices achieved the developers’ goal: the backlog of unsold new homes on the market fell in September for the second consecutive month, while the number sold, adjusted for normal seasonal variations, rose by 5.3 percent from the previous month.

[Benny Profane]

http://www.nytimes.com/aponline/busi...f53&ei=5087%0A



October 26, 2006
Home Price Drop Is Largest in 35 Years

By THE ASSOCIATED PRESS
Filed at 8:36 p.m. ET

WASHINGTON (AP) -- Is this what a housing bust looks like? New home prices fell last month by the largest amount in 35 years and owners are being warned to brace for further declines, especially in formerly hot markets.

After years of increases, some buyers say prices are still out of their range.

The Commerce Department reported that the median price for a new home sold in September was $217,100, a decline of 9.7 percent from September 2005.

That was the lowest median home price in two years and the sharpest year-over-year decline since December 1970, providing dramatic evidence of the slowdown in the once-booming housing market.

[Benny Profane]

Housing Market a Drag on Economic Growth


By THE ASSOCIATED PRESS
Published: October 27, 2006
Filed at 9:58 a.m. ET

WASHINGTON (AP) --Economic growth slowed to a crawl in the third quarter, advancing at a pace of just 1.6 percent, the worst in more than three years.

The latest snapshot of the economy, released by the Commerce Department on Friday, showed that the slumping housing market figured prominently in the economy's dramatic loss of momentum. Investment in homebuilding was cut by the biggest amount since early 1991.

The reading on gross domestic product was weaker than the 2.1 percent pace many economists were forecasting.

'The housing bubble burst and that really knocked down growth,''said Joel Naroff, president of Naroff Economic Advisors.

[Benny Profane]

http://www.nytimes.com/2006/11/07/re...rtner=homepage



"The striking contrast tells the tale of a housing bonanza turned bust. Today, the number of unsold homes in the area has soared to almost 46,000 from just a few thousand in early 2005. And builders are pulling back as fast as they can.

They have little choice. Sales cancellations among big builders, not just here but around the country, are running as high as 40 percent, double the rate a year ago."

[Benny Profane]

http://www.nytimes.com/2006/12/06/bu...ab4&ei=5087%0A

"The truth is that the official numbers on house prices — the last refuge of soothing information about the real estate market on the coasts — are deeply misleading. Depending on which set you look at, you’ll see that prices have either continued to rise, albeit modestly, or have fallen slightly over the last year. But the statistics have a number of flaws, perhaps the biggest being that they are based only on homes that have actually sold. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept."

[rideit]

http://www.nytimes.com/2006/11/07/re...rtner=homepage



"The striking contrast tells the tale of a housing bonanza turned bust. Today, the number of unsold homes in the area has soared to almost 46,000 from just a few thousand in early 2005. And builders are pulling back as fast as they can.

They have little choice. Sales cancellations among big builders, not just here but around the country, are running as high as 40 percent, double the rate a year ago."

Not here in Teton Valley, Idaho...which is personally ironic. I just got my real estate license, but I am am more an advocate for extremely limited growth...I guess I have become one of those nefarious 'close the gaters'....

BUT, I just don't see this valley able to accomodate the MASSIVE plans that are taking shape (10,000 new houses...in Teton Valley!)
Targhee is starting to get crowded now...just imagine...

[cj001f]

BUT, I just don't see this valley able to accomodate the MASSIVE plans that are taking shape (10,000 new houses...in Teton Valley!)

WTF? 10,000 residences? Jackson is 10,000 people, isn't it?

[meatdrink9]

Here's a graph of what's currently happening in Salt Lake County. Average home prices have climbed nearly 20K each of the last 2 quarters. It'll be interesting to see what happens at the start of 2007. While I'm completely strapped for cash right now I feel damn good about holding 4 UT properties through this climb.



I've been noticing lots of interesting ways to make money out here. Rent prices aren't following home prices and therefor neither are the prices of duplexes. In the zip code I'm working in the current cost per square foot for a home or condo is $220 per square foot. You can buy duplexes for closer to $100 per square foot. I looked into converting legal duplexes into townhomes or condos (basically a flip on paper) and then sell them as muliple units rather than one for the much larger price tag. The only problem is it looks like it's a 4-5 month process with lots of bureaucrats getting involved and wanting checks along the way (which doesn't really work for me and the speed I do things). Just saying there are a lot of different ways to approach a market and find niches that work for your particular skill set. Swinging a hammer isn't mandatory, but getting creative is.

[RootSkier]

md, I take it you haven't sold your project houses yet? Have you been showing them much? That astronomical rise in prices would have me sweating.

[Core Shot]

MD9 - pay attention to the green line.
That can't keep increasing at the same time the blue line keeps going up.
At some point, oversupply will depress prices.

- i still think your market is far from collapsing, though.

[meatdrink9]

Given the time of year I've had quite a few showings. One lady almost bought both properties (they're next door to eachother). Also, they just announced a new redevelopment here in SLC that's one block away from the properties (re-doing ZCMI, and crossroads mall as well as some other properties surrounding the area, much like Cherry Creek in Denver). I figure the properties will go early in Q1. There's a shitty lot (borderline impossible to build on) the exact same size as one of properties we will soon be selling for only 15K less than our fully remodeled house and it's 2 blocks further out of the city. I've seen it under contract twice, but I'm sure peole quickly see there's no way to build. Hopefully I'll wrap up the remodel for the second property and have it listed within a week.

Fortunately I bought the houses for dirt cheap. I've got a 200K margin on one and a 100K margin on the other. The prices I got them for are well below prices three years ago on that chart and they're in the spendiest part of town. I've always been of the mindset that don't make money when you sell real estate, you make it when you buy. So in other words, don't buy if it isn't a crazy good deal.

[powder11]

over the long haul real estate has proven to be a winner. anyone with 1/2 a brain and some cash can play. there will always be undervalued property in any type of market. find it, shine it up and make some money.

a buddy of mine recently made 85k in 4 months renovating a flooded out trailer that a golf course had paid him to haul away. all he did was buy a plot of land to park the trailer, remodel the interior with a nice kitchen, added on a small addition for a master bedroom, some wood siding and a roof facade so it didnt look so much like a trailer anymore. he took out a 100k interest only mortgage to buy the land/material and sold it for 185k. he did all this in a flat market where nothing was selling.

its fun listening to him tell the story about all the people who laughed at him when he 1st parked the flooded out trailer on his recently purchased land.

[rideit]

WTF? 10,000 residences? Jackson is 10,000 people, isn't it?

Just to be clear, we are talking about Teton Valley, Idaho, which currently has about 3000 residents, including Victor, Driggs, and Tetonia.

Technically, it is platted to be legally possible. There are at LEAST 3000 new homes going in in the next two-three years, (as planned today), and that would only eat up a tiny percentage of the private and develop-able ground over here. It is insane...The Huntsman project, just to the west of Driggs, (those big, wide open fields you see past the big buffalo on the main corner) is going to be 1800 homes. And that is only ONE of dozens of big development projects. There are plans for 6 golf courses, as well. This is a huge valley, and no-one is making any money growing seed potatoes...all the old school mormons are choosing to grow McMansions, instead. It's nuts...and I am in the middle of it, and so incredibly conflicted. We really are gonna need another ski area, or at least run a Tram to the top of Table Mountian...and then on up to the backside of the village....and then one down to Taylor...Trois Vallee, you got nuthin' on what we could have here!

[Eldo]

Here's a graph of what's currently happening in Salt Lake County. Average home prices have climbed nearly 20K each of the last 2 quarters. It'll be interesting to see what happens at the start of 2007.

It doesn't look like that trend will continue, at least if you look at the Salt Lake County stats for October (the first month of the 4th quarter). Average price is up only $2,000, and another big jump in listings. The market definitely seems to be flattening out.

If you have last year's October numbers for comparison, you might want to have a look at them very closely.

Not that it matters that much, because you have a big cushion on your current properties. But tread carefully until you see where this is all headed.

Even here in Calgary, which had the hottest real estate market in North America (average prices were climbing $500 a DAY for a couple of months), things cooled off all of a sudden in October.

But since my house rose in value almost 50 per cent in the last year, I can't complain.

[Benny Profane]

http://www.nytimes.com/2007/03/11/bu...hp&oref=slogin


“I guess we are a bit surprised at how fast this has unraveled,” said Tom Zimmerman, head of asset-backed securities research at UBS, in a recent conference call with investors.

[mrryde]

http://www.nytimes.com/2007/03/11/bu...hp&oref=slogin


“I guess we are a bit surprised at how fast this has unraveled,” said Tom Zimmerman, head of asset-backed securities research at UBS, in a recent conference call with investors.

iits a great time to increase your rental portfolio.

[Benny Profane]

http://www.nytimes.com/2007/03/17/bu...hp&oref=slogin



"Consider Nathaniel Shields, who expects to lose his four-bedroom Cape Cod house in southwest Chicago to a foreclosure in May.

He cannot afford his mortgage payment, which jumped to $1,300 a month from about $1,000 after his loan reset to a higher interest rate last summer. A divorce and the loss of his county government clerical job, which paid $14.80 an hour, have also hurt."

[rideit]

I just found out over the weekend that my house increased in value by over 100% in five years...in real terms. Crazy. From $230K to $550K, but it doesn't matter...unless we move to somewhere else, where we live is all we can afford. It's bizarre.

[Benny Profane]

http://www.nytimes.com/2007/04/25/bu...on.web.html?hp

[Art Shirk]

Here's a graph of what's currently happening in Salt Lake County. Average home prices have climbed nearly 20K each of the last 2 quarters. It'll be interesting to see what happens at the start of 2007. While I'm completely strapped for cash right now I feel damn good about holding 4 UT properties through this climb.



I've been noticing lots of interesting ways to make money out here. Rent prices aren't following home prices and therefor neither are the prices of duplexes. In the zip code I'm working in the current cost per square foot for a home or condo is $220 per square foot. You can buy duplexes for closer to $100 per square foot. I looked into converting legal duplexes into townhomes or condos (basically a flip on paper) and then sell them as muliple units rather than one for the much larger price tag. The only problem is it looks like it's a 4-5 month process with lots of bureaucrats getting involved and wanting checks along the way (which doesn't really work for me and the speed I do things). Just saying there are a lot of different ways to approach a market and find niches that work for your particular skill set. Swinging a hammer isn't mandatory, but getting creative is.

My firm cranks condo conversions (not my area of expertise) and I am sure we have streamlined the red-tape issues as best we can. Talk to a local law shop about this possibility before completely dismissing it. By perusing your posts, etc., I think I have a decent understanding of your Real Estate MO and I don't think that conversions are necessarily mutually exclusive. Just my $.02.

[FollowMe]

We're still waiting for the "crash" here in California...

From the LA Times:

The median price paid for a home in Southern California last month was $505,000, up 4.6% from March 2006, according to La Jolla-based DataQuick Information Systems. The median is the point at which half the prices are higher and half are lower.

http://www.latimes.com/business/la-f...1,922028.story

[Black Market]

The median home price in jackson just passed 1 million after the first quarter of 2007. Glad i got in when i did as i was priced out of this market several years ago. More like speeding up here than slowing down.

[Benny Profane]

Jackson pops up every now and again in this thread as some sort of reference. Let's get something straight. Jackson is not real. It is like the rest of America as Manhattan, Malibu, and Aspen is.

[meatdrink9]

SLC has definitely slowed down. I think during one 2 month period the zip code we were selling in only had 6 home sales. Condos have continued to go like crazy and for stupid expensive amounts per square foot. We sold our first ever "flip" project last week. We bought in July 06 for 181K and sold it last week for 355K. It took 40K in remodel money and 3 people working full-time for 3 months to complete the work. It was stressful as hell. Selling a home sucks. I blew my remodel budget and my payment budget. It took longer to sell than I thought. I had to go into CC debt to cover all the costs, (and the fact that I wasn't making money designing when I was tied up swinging a hammer full time) but in the end that was the most money I've ever made that quickly. Definitely risky. Plan for everything and have way more money set aside than you actually need. We did remodel two places at once and that obviously was a rough way to try getting into the flip thing. The other property is still up for sale. It only took a month to remodel and 15K in funds. Hopefully it will sell here shortly. But now the pressure is off and when that sells it'll just be gravy. We've already had one offer for well over what we're into it, but it wasn't enough to let it go.

Ogden is going berzerk. It's cheap as hell, but also fairly beat to hell as well. I've spent the last week searching for properties up there. It looks like almost everything could flow on a 15, but there's some shitty landlording going on that's keeping a lot of the city down. It'll be interesting to see if the city takes the turn the mayor is pushing for. Right now Ogden is my area for "buying and holding/rental" strategy, but the Avs/Cap Hill/Marmalade in SLC is still my location if I'm looking for flips. There are some crazy cool houses and neighborhoods in Ogden, but it's all really spotty. Incredible, restored 6-thousand square foot victorian mansions back-up to total crapshacks that have been divided into TINY triplexes. There are a ton of cool old Vic mansions around that have been cut-up into crappy multi-units. Hopefully they'll all get restored before too long. But to give a tiny taste of costs are up there. You can find homes for $50 a square foot, already remodeled. If you want to do the remodeling you can find stuff down around the $33 per square foot range. I found a cool old commercial building over 14,000 sq feet for $22 a square foot (and in a good location). I've already got one bid in on a bank owned property and will be seeing more properties tomorrow. I'd like to have 4 or 5 Ogden properties in the next year.

Saying real Estate as a whole is screwed is stupid. There will be areas that drop, but there will always be pockets that do well. Just like the stock market. Some stocks may lose value while others rise.