Friday, September 28, 2007

Bonfire of the Flippers

From the Sun Post:

Speculators partly fuel housing bubble

Housing speculators share the blame for a growing portion of the foreclosures in Manteca, according to new data from a California real estate tracker. In August, 41 percent of the Manteca homes sold at courthouse foreclosure auctions were owned by people who never lived in them, according to an estimate by ForeclosureRadar, an online foreclosure tracking service based in Discovery Bay.

According to the service, the foreclosures on investor-owned properties have skyrocketed since four months ago, when just 5 percent of the houses sold at auction were owned by people who did not apply for a tax break available only to those who live in their houses.

The data points to a new segment of homebuyers — speculators — who signed risky loans to buy houses and then sell them quickly at a profit. That stands in stark contrast to the foreclosure crisis image that has grabbed public attention — one of families who took out risky, oversized loans and then lost their homes.
From the Sun Post:
Besides the real estate agents and mortgage companies that have been stung by the rising foreclosures and falling home sales, sellers of big-ticket items — such as furniture stores and car dealerships — are also seeing a downturn. The problem, according to local retailers, is that buyers relied on rising home prices and easy access to borrow cash from home equity lines of credit to make big purchases. Forced to operate on a smaller budget, those people are sticking to the necessities.

Sam Guedoir, owner of Century Furniture...says his sales have been down significantly during 2007...“We’ve started selling more small-sized furniture because people are moving back into apartments.” In a city where housing has been the dominant economic force for the past decade, any downturn in the housing market is likely to put a damper on most other businesses. “We have left most of our eggs in one basket,” Guedoir said.
...
Car dealers face similar problems, even though their business is not directly related to having a place to live. Mike Naranjo, who runs a used-car dealership, Manteca Mike’s Auto Outlet, said his business has performed “just like the housing market.” His sales are down 30 percent, he said, the worst sales clip he has seen during his seven years operating the dealership.

4 comments:

norcaljeff said...

According to Sippin, it's the Internet's fault.

Sittin' Out This One said...

"Bonfire of the Flippers"

Very nice Lander. You have such a way with words and the accompanying photos.

The only difference between this bust and the meltdown in "Bonfire of the Vanities" is that it will take several years to hit bottom instead of several months.

The housing market moves in slow motion. That also means it stay at the bottom three more years after the economy starts to recover. And since the economy has not completely tanked yet, that is 24 months away.

Batten down the hatches.

robbinhood said...

Partly to blame? how about ALL the blame!!

SacramentoCrash said...

Nice photo. Burn Baby Burn, Disco Inferno.