Monday, April 28, 2008

'Consumers and Lenders Got Caught Up in Something Artificial'

From the Sacramento Business Journal:

Add one more casualty from the housing downturn: homeowners associations. They need a steady flow of monthly dues, which can slow down when a member loses a house or condominium to foreclosure, or even when family budgets get tight.
...
Some associations are no longer getting dues from 30 percent or even half of their units...The Wild Wings Homeowners Association has seen a 30 percent drop in the amount of dues being paid, said board member Jordan Durbin. The development has 337 freestanding homes about five miles west of Woodland. Far less than 30 percent of the homes are in foreclosure, but even some residents who aren't facing foreclosure don't send in the checks. "Money is pretty tight for a lot of families," Durbin said.
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"I've been doing this now for 21 years, and I've never seen delinquencies to this magnitude," said Jay Michael Jr., president of Michael and Sons, a property management company that manages units in the Sacramento area on behalf of homeowners associations.
From the Sacramento Business Journal:
With Sacramento's gloomy distinction of having one of the highest foreclosure rates in the country, it's no surprise that many of the new housing developments that were started last year have stalled. Visually jarring sites such as Elk Grove's Laguna Ridge development, which was to encompass 8,000 homes crowned by an ultra-modern civic center, have seen construction slow to a crawl with only a handful of homes completed.
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[I]t's not simply a sluggish economy and too much inventory that's keeping the new-home market slow. Complicated legal twists and turns along with horror stories of mechanics' liens and bankrupt developers have many potential homeowners watching their backs and thinking twice before buying.
From the Sacramento Bee:
In greater Sacramento, housing starts in March fell 66 percent from a year ago, the California Building Industry said...[Association economist Alan] Nevin said the construction slump is being worsened by the flood of repossessed homes that lenders are unloading at steep discounts. About half the home sales in the Sacramento area this year are repossessed properties, and the median sale price in Sacramento County of all homes has fallen 36 percent since the 2005 peak. Nevin said inland California is experiencing the worst of the construction downturn...[H]e visited Sacramento recently and found the relative absence of construction activity appalling. "Placer's still chugging along a little bit. But you look at Natomas and some of the other areas, it's brutal," he said.
From the Sacramento Business Journal:
A Sacramento couple is in the market for a three-bedroom, two-bathroom home that they could move into soon. They set their price limit at $300,000 for about 1,500 square feet and rule out fixer-uppers. They view houses over the next few months, make offers on several and enter a contract on one. Meanwhile, they continue to look at other houses to try to find a better deal.

Why would they keep looking after they were already in contract? Because the Sacramento real estate market is putting buyers in the driver's seat, and they know it. They have hundreds of homes to choose from, and they are taking their time looking, making sure they find the right home at the right price. And they have no problem breaking their contract if they find a better deal, said Tracey Saizan of Keller Williams Realty in Elk Grove.

"Buyers are pretty darn particular today; they really are wanting the moon and the stars. They know it's a buyer's market, and they're milking it," she said.
From the Modesto Bee:
Court clerk Richard Heltzel said the Eastern District had 2,501 [bankruptcy] filings in March, putting it on pace for more than 30,000 filings in 2008...Under worst-case projections, filings could top 40,000, which would be the highest ever.
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[Attorney Ann Marie] Friend said that she's seeing 10 to 12 new clients a day who plan to file for bankruptcy. "And we're just one office," she added. She and other attorneys said that many clients were hit both ways by the housing meltdown, because they worked in jobs tied to real estate, such as electricians and mortgage lenders.

But other professions also are affected, said attorneys Scott Mitchell and Tamie Cummins, who opened an office in Modesto 2½ years ago. Mitchell said he's seen small-business owners, fitness trainers and other non-real estate-related workers filing for bankruptcies, with incomes and backgrounds of all kinds.
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Mitchell said housing is driving his busy schedule, with some clients showing him figures for loans that are staggering. "These people made $50,000 to $60,000 a year, and they borrowed $500,000 with an adjustable rate, at the top of the market," he said. "I think both consumers and lenders got caught up in something artificial."
The Business Journal interviews the new president of the Sacramento Association of Realtors. Some excerpts:
...it's a good time to buy....

...it's a good time to buy.
More...

8 comments:

Patient Renter said...

The Business Journal interviews the new president of the Sacramento Association of Realtors. Some excerpts:
...it's a good time to buy....


You know what's interesting is that the SAR, CAR, NAR, etc., make no apology for touting now as being a "good time to buy" up to, before, and after the peak of the bubble, all of which would have been good times NOT to buy, at least as it would concern anyone who wanted to avoid major depreciation.

With that concern in mind, it is still NOT a good time to buy, yet being that Realtor's make no apology for leading folks right over the edge of the cliff during the peak of the biggest bubble in our nation's history, why would they do any differently now?

I think I'd take Joe Realtor a little more seriously if he at least apologized for and acknowledged the mistakes of his recent past. And for the record, "who woulda known" is not an acceptable response, since at least on this blog, we all knew.

Rich said...

"Buyers are pretty darn particular today; they really are wanting the moon and the stars. They know it's a buyer's market, and they're milking it," she said.

And what, Sellers weren't milking it a few short months ago?

Jacob said...

"Buyers are pretty darn particular today; they really are wanting the moon and the stars. They know it's a buyer's market, and they're milking it," she said.

And what would we call what sellers wanted a few years ago? Certainly well beyond reasonable.

now a buyer wanted a non fixer for $200 ft2 is unreasonable? lmao.

It is always a great time to buy for everyone except the buyer. Coincidentally the only party not benifiting monetarrily from the transaction and also the party that has noone looking out for them.

STOP ROSEVILLE CRIME said...

Glad to see buyers finally in command of the drivers seat after years and years of obnoxious builders and annoying sales reps being in the drivers seat. Karma can be a real b_tch sometimes.

Diggin Deeper said...

It seems we just can't do these markets without excess. Today buyers, that will, are feasting on all the excess left behind with more coming. Saw a nice place in Roseville over the weekend, 3600 sq ft, nicely appointed, pool, neighborhood, schools, etc. Price is down to $135 sq. ft. In a few months it's probably down below $115. While it's debatable whether its a good time to buy, there's certainly no doubt it's a horrible time to sell.

Buyers will get their due...

Diggin Deeper said...

Schiller Index sees prices across the board down 12% in Feb. Consumer Sentiment falling due to inflation and jobs stability...I guess it's not so much whether you've got a job but whether you'll be able to hold onto it...18.9 million vacant homes in the US highest since 1955.

Thank God we're in a guvment town. Those jobs are sacred...or are they?

And the markets just keep doing a lalalalala for reasons uknown.

Patient Renter said...

18.9 million vacant homes in the US highest since 1955.

That is to say that the vacancy rate right now is the highest ever on record (stats only go back to 1955).

smf said...

Hasn't someone in this blog stated that there are more houses than people existing to occupy them, at any price point...