January 05, 2008

From the Wall Street Journal:

Posted at 04:59 PM | TrackBack

digg this story

May 01, 2007

Switching gears from our usual talk of the bubble, sales, and economics, I wanted to point out this interesting article from AlterNet on the anti-environmental practices of homeowner associations:

Many homeowners' associations post their covenants on their websites for the convenience of members. Doing some simple searches, I recently found and read a few dozen such documents. They are often highly detailed in describing what is allowed, what is not and what happens if you don't do what you're supposed to do or fail to do what they require...Alice has received no warnings from her HOA -- yet. But you wouldn't expect such guerilla-style energy conservation to be necessary in laid-back Austin. Alice says, "Yeah, usually people think of Austin and they think of relaxed attitudes. But I think since the housing market boomed, it has made people a lot less relaxed." (Emphases added.)

Here we have evidence that the housing bubble wasn't just bad for the economy, but bad for the entire future of the planet. ;) And as far as HOAs go, those friends of mine who live in HOA-overseen communities generally regard them with epithets you wouldn't hear this side of a Lloyd Banks CD. ;) They generally regard HOAs as the root of all evil, and after hearing stuff like this, I'm not inclined to disagree.

Posted at 04:49 PM | TrackBack

digg this story

April 16, 2007

Ad Age's Al Ries has an interesting look at "the most overpaid CEO in America":

"Mr. Nardelli moved to cut back on higher-paid full-time employees with experience as plumbers or handymen," the Wall Street Journal reported, "and to rely more on part-time workers with less experience answering home-improvement questions from customers."

This is really the key, to me, of why Nardelli failed. More than at any time in recent history, the housing boom of the past few years meant more people buying refits for their kitchen, garage, patio, etc., because they believed (rightly or wrongly) that they could pull money out of their home equity and return it via a better asking price at sale time. In a situation like that, you're going to want customer support that's knowledgeable and helpful--something a bunch of part-timers cannot be expected to be. People don't shop at Wal-Mart because of the friendly assistance, after all.

It's more of a marketing-centric article than real estate, but an interesting read nonetheless. Nardelli has been a morbid pet fascination of mine, as I find his saga emblematic of the housing bubble and bust as a whole, and I am glad he's out on his butt.

You can read my selected entries dealing with Nardelli here.

Posted at 04:17 PM | TrackBack

digg this story

March 12, 2007

While searching Broadband Reports for some unrelated information, I came across a fascinating thread: The ethics of photoshopping listing photos. As you might imagine, the readers don't think too highly of it.

The forum linked to a Matrix post on the topic, wherein Jonathan Miller had this to say:

The physical marketing of a property includes showing a property at its best to influence the value, and this can include staging the home through furnishing, lighting and sounds. Those staging efforts don’t bother me because they help the buyer visualize the property potential. The new owner can effect change after purchase. However, the probability of the wires or a water tower being removed after purchase would be remote. That seems to be where the line should be drawn.

Honestly, I can't see any justification for altering photos of homes before listing. You're going to see the real deal in any case, and the idea that the seller would expect to get away with such crude fraud seems absurd on its face. Then again, I remember writing about people who bought plots of land via eBay completely sight unseen at the height of the housing boom, so maybe there's an audience for this sort of chicanery.

By the way, Adobe is apparently working on antifraud technology for Photoshop, but the commenters for that article aren't terribly impressed either. ;)

Posted at 05:22 PM | TrackBack

digg this story

March 04, 2007

Former Apprentice Kendra Todd is at it again. In a column for Yahoo Finance discussing five home improvement projects that will add more bang for the buck at sale time, Todd makes an interesting statement at the outset:

Read the real estate or business sections of the newspaper and you start seeing the stories: reliable government or economic officials talking about the beginnings of a recovery in the real estate market. With spring coming, the time is ripe to sell. However, don't assume that because home prices are out of free-fall that you can stab a For Sale sign in your lawn and be flooded with offers. This isn't 2003. If you want maximum buck for your property, you need to make sure it makes a bang when buyers see it.

Obviously, it would be too much to expect that a shill like Todd would actually come out and acknowledge that the so-called "recovery" is far from such, but I did like the semi-explicit acknowledgement that sellers are going to have to work much harder to make their homes appealing in this much more cautious market.

As far as the recommendations themselves, there are two old sayings that come to mind. One is "You have to spend money to make money," and the other is, "Throwing good money after bad never makes you any richer."

I'll let you be the judge.

I previously discussed Kendra's reliability as a gauge of home sales here.

Posted at 12:56 PM | TrackBack

digg this story

February 12, 2007

The bad news keeps coming at Robert Nardelli's former empire, as the company is contemplating the sale of its wholesale supply unit:

Feb. 12 (Bloomberg) -- Home Depot Inc., the largest home- improvement retailer, may sell its wholesale unit after investors said the company should get rid of the division because of its low profits.The company said it's also considering a spinoff or initial stock offering of HD Supply, which sells equipment and supplies to construction companies. The division has $12 billion in annual revenue, about 12 percent of Home Depot's total.

MarketWatch has a more in-depth analysis of the possible moves, including background on how Nardelli's decision to purchase the supply company was the first real sign of his Captain Ahab-esque attitude towards running the company:

Particularly galling to analysts and investors was that Nardelli would buy the business, which sells products to professional contractors, amid growing competition from smaller rival Lowe's Cos., and just as the nation's housing market was about to stumble.

Of course, it won't really matter to Nardelli, since he's been assured his golden parachute, but it's fascinating to watch this company scramble frantically to repair the damage he did while he waltzes off into the sunset. Another tale of the housing bubble, really.

Posted at 04:08 PM | TrackBack

digg this story

January 17, 2007

Yesterday I talked about efforts to diversify the real estate information flow, but it turned out that this was already happening in a few places. On Monday, the Inman News bloggers reported that Minnesota's MLSs were agreeing to share the wealth:

A group of 14 Realtor associations, which represent 10 regional multiple listing service providers and the majority of for-sale property listings in the state, have created a data-sharing system (see Inman News article). The sharing agreement will reduce the need for real estate professionals working in the area to join several MLSs to serve their clients.

As far as I know, this extension of data sharing is only for realtors and not for FSBOs and other competitors, so it's not much in the way of progress--but progress it is. Property Hype wonders if this may portend bigger changes on the horizon:

With a Justice Department suit against NAR for its MLS policy, changes may be forced. Customers and many real estate business entrepreneurs alike want more access to home listing data, and MLS listings changes may provide that.

Indeed. Rather than risk embarrassing details about shady, hierarchical, self-serving business practices coming to light, the industry is diversifying and standardizing to preempt oversight. Dalton's Arizona Homes also points out that this change benefits realtors who often suffer from the same lack of information buyers do:

In truth, the MLS is a parochial being... If I want to see listings in any of these areas, I have to search as the public does - through agents’ sites or, if possible, through a public portal provided by the individual MLS.There also is Realtor.com which, as one my sellers discovered yesterday, provides just enough information to be remarkably useless to someone seriously searching for homes.

'Nuff said. :)

Posted at 06:35 PM | TrackBack

digg this story

January 03, 2007

Holy crap, did I call this or what? Just yesterday I discussed Nardelli's bad business future, and today, he called it quits:

ATLANTA - Bob Nardelli abruptly resigned Wednesday as chairman and chief executive of The Home Depot Inc. after a six-year tenure that saw the world's largest home improvement store chain post big profits but left investors disheartened by poor stock performance...Nardelli's sudden departure was stunning in that he told The Associated Press as recently as Sept. 1 that he had no intention of leaving, and a key director also said that the board was pleased with Nardelli despite the uproar by some investors.

Seems to me that the shareholder revolt finally outweighed Nardelli's desire to be king of the mountain.

What's sad is that even to the last, Nardelli is taking home huge cash money from Home Depot, while the company's stock continues to sag. In a very real way, the Nardelli saga has been emblematic of the housing bubble and bust...you have a guy draining the company of long-term equity and gains for his own personal profit, with the end result being frustrated consumers, stockholders, and employees who suffered as a result of his greed.

Good riddance to bad rubbish.

Posted at 11:55 AM | TrackBack

digg this story

January 02, 2007

"Look upon my stocks, ye mighty, and despair..."

In reading this Daily Kos entry about the comparison of Home Depot CEO Robert Nardelli to Stalin, I was blissfully reminded about some of my own favorite trips down Nardelli Lane, which you can read about here and here.

I did a little digging around, and found out that Nardelli's performance as CEO is under review, with investors considering numerous alternatives, including private equity buyouts and more direct stockholder control.

I'll happily file this under the "Karma is a bitch" folder any day of the week.

Posted at 03:30 PM | TrackBack

digg this story

December 29, 2006

The common wisdom among bubble bloggers, bubble-centric economists, and the like seems to be in two camps. Either the slump is precipitating a disastrous recession that will crush economic growth for years, or it will be a hard, painful, but managable deceleration that will ultimately trigger more investment and home ownership as prices fall.

I tend to favor the latter option, because I'm not a doomsayer and the cycles of economic boom and bust are too pronounced to ignore. With that in mind, it's fascinating to watch the effects of the slump on other business sectors that are bad in the short term, but are ultimately beneficial in the long term.

For example, take this story about declines in lumber production:

The housing slowdown is expected to reduce lumber demand this year by 3.2 percent after reaching record highs in 2005, according to the association.Residential construction is the lumber industry's largest market, accounting for more than 40 percent of the lumber used each year, the association said. After a nearly 9 percent downturn in 2006, it forecast new housing starts to fall by another 10 percent to 1.69 million in 2007.

While this will spell serious trouble for the lumber industry, it can only be beneficial to our environment, which is an often-neglected concern in the mad rush to develop property on every last square foot of earth on the planet.

Or take this story about the dwindling employment for immigrants due to the housing lull. Undocumented cheap labor has been a huge boon to the housing industry these last five years, even as it's contributed to a roiling mass of negative sentiment about immigration, job loss, and even identity theft. But now it seems that the spigot is running dry, leaving a lot of people with no jobs and bad prospects:

"That's one of the dangers of importing lots of workers," said Ira Mehlmen, spokesman for the Federation for American Immigration Reform, which seeks to curb illegal immigration. "After their services are no longer required, you end up with them and with their families. "There isn't much reason for them to return home when services and other benefits are available."

Short-term thinking is the bane of modern society in many ways, and the housing market is just another example. The push to build and sell far too much product to people living far beyond their means has wrought all manner of unforeseen consequences, and the ripples will be felt for many years to come.

Posted at 05:03 PM | TrackBack

digg this story

December 28, 2006

It was an exciting moment early on in the history of this humble blog when we got quoted in the New York Times last year. Well, I'm happy to say that my colleague David Livingston, aka the legendary Bubble Meter has surpassed all expectations with his mention in the WSJ about renters riding out the housing slump.

I've always been of the mind that unless you're 100 percent sure you can commit to buying a house you can afford, with a fixed mortgage and 20 percent down, you should rent. There are too many toxic products out there to lure cash-strapped buyers into financial misery with as it is, and still not nearly enough education and knowledge among the masses. But it's too easy to classify people as stupid renters and gullible buyers. Everyone has a different situation, and different circumstances.

With that said, David and those like him who have sounded the warning bell about housing were dead on the money, so to speak. Prices are too high, demand is slumping, foreclosures are on the rise, and everyone from Ben Bernanke to the Lereah himself has been forced to concede that the downslide is "substantial." If it hadn't been for people like David that challenged the common wisdom of "Renting is a waste of money--you should buy," we'd have a lot more F%$ed borrowers.

So, ignore the haters and listen to the fans, David. You're doing the right thing.

Posted at 03:13 PM | TrackBack

digg this story

November 15, 2006

IM IN UR EARNINGZ REPORTZ, KILLIN UR STOCK PRICE

It isn't just Toll Brothers and KB Home that're feeling the effects of the slumping market. Home Depot just put the word out that their earnings forecasts are looking especially miserable:

"On the home improvement retail portion of this business, I don't think we've seen the bottom yet," Home Depot Chairman Robert Nardelli said during a conference call. "I don't see anything that suggests it's going to get significantly better in '07."

Given Bob Nardelli's extraordinarily bad leadership, you can't put all of this solely on the slump, but when a guy like that comes out and makes a statement virtually identical to that of Bruce Karatz (who is ironically also in trouble for stock backdating), there's clearly a sign of larger problems at work.

Of course, Housing Panic saw it coming as well, which leaves me to wonder how it is the entire world can know the bubble isn't through deflating yet...except the NAR?

Posted at 02:01 PM | TrackBack

digg this story

October 10, 2006

I had the pleasure of attending the Festival of the Building Arts at the National Building Museum last weekend. It was a huge affair, with dozens of tables filled with craftworkers, builders, and masons plying their wares and giving kids opportunities to make and repair virtually everything under the sun.

One of the principal exhibitions at the NBM is the Green House, promoting sustainable development and eco-friendly technologies for all. Anything that promotes the ideas of renewable resources and efficient building practices among the next generations of buyers, sellers, and builders is something I support. Given that the current crop of up-and-coming architects are employing Green trends in their new designs, it's essential to impart the principles of building smartly and for the future while we can.

We can't afford a world consumed by cookie-cutter McMansions that waste land, cost thousands to maintain, and require acres of urban sprawl just to maintain living standards. We have to do better than that.

(Image courtesy of The Community Greenhouse.)

Posted at 03:21 PM | TrackBack

digg this story

October 02, 2006

Once again proving the theory that there are great ideas in the ether that people just pluck out simultaneously, there are a number of interesting articles on prefabricated and modular homes, all of which stress the category's growing popularity with buyers and builders alike.

ConsumerAffairs.Com's headline article this week is a thorough introduction to the modular world, complete with advice on how to choose from the right factory and comparisons between prefab and traditional modes of construction.n

The New York Times gets in on the action with a study on how savvy contractors are promoting the benefits of modular homes and pushing past the "double wide" stigma.

Here's a brief little piece about how the use of modular homes is speeding up the rebuilding effort in the Gulf Coast, and a plea for more homes to be built.

One thing that personally amuses me about the debate over modular homes is listening to traditional home owners stick their noses up at the "sameness" of prefab homes when they go to obscene lengths to buy McMansions that look almost exacly the same. Not only that, they're often pressed so closely together on the same lot of land that they might as well be trailers in their own right. ;)

I generally support anything that promotes innovation and better usage of the environment in home design, so if we can move past the snob factor, modular homes might have a place in the market by the time of the next bubble. :)

(Image courtesy of The Modular Homes Network.)

Posted at 02:06 PM | TrackBack

digg this story

September 24, 2006

Today marks the one-year anniversary of "the forgotten hurricane," one which wreaked nearly as much damage as her big sister Katrina, and further crippled the Gulf Coast and much of Texas economically and socially.

Much like Katrina, the post-Rita cleanup is proceeding faster in some places than others, and there's a great amount of politics and grandstanding involved in the recovery and rebuilding efforts. Many people are understandably angry over what they see as "Rita amnesia," that the damage and destruction from Rita have been overlooked in the political and media focus on Katrina.

There is a lot of progress in the recovery, but it's slow and maddening. To me, it doesn't matter which hurricane did what to who. These people are Americans, and it's a crime that our fellow Americans are still suffering under the yoke of the damage wrought a year ago. We should--we must--do better. These people deserve more than to be cast aside as forgotten, and help for them is needed, no matter if it's Katrina or Rita on the check:

Overall, Boustany said, the recovery is proceeding well, and local leadership and planning have played a key role in that progress. He said he believes people need to continue to fight “Rita amnesia” as recovery continues.

“The further you get from an event, the more people tend to forget about what happened,” Boustany said.

Indeed.

Posted at 08:27 PM | TrackBack

digg this story

September 07, 2006

Bankrate, in its usual evenhanded fashion, has a great article explaining the ins and outs of that most deadly of mortgage instruments, the option adjustable-rate mortgage (ARM). Of particular note is when the author explains exactly who ARMs are designed for and why:

Lots of people are fine candidates for option ARMs. The loans are well-suited for people whose incomes vary from month to month (think small-business owners and salespeople on commission) and people who get a big chunk of their income via bonuses (your boss's boss's boss, investment bankers and sundry corporate chieftains).

Ohlbaum says he has a client who gets half his income from an annual bonus. He pays the minimum amount most of the year, and then pays back all the negative amortization with one huge payment. "It makes perfect sense for the right guy, and he's the right guy," Ohlbaum says. And if you're like that guy, an option ARM probably won't hurt you.

In other words, ARMs are designed for high-income homebuyers, the sales/commission market (which includes realtors), and basically any sort of employment where you can expect large chunks of extra income in lump sums. NOT the average salaried worker or working family. Yet this is who ARMs have been marketed to in incredible numbers, with predictably tragic results:

Some mortgage industry experts estimate that as much as one-half trillion dollars’ worth of adjustable rate mortgage loans (ARMs) are scheduled to reset this year, the Washington Post reports....While lenders claim that borrowers understand the features of these loans, and that they are restricted to borrowers with good credit histories and solid down payments, the Washington Post says, Standard & Poor’s warned last year that disturbing numbers of minimum payment loans were given to borrowers with low credit scores...Cindy Manzettie, chief credit officer for Fifth Third Bank in Cincinnati, said in a letter to regulators last spring, that it’s not the “lender’s responsibility to help the consumer determine the appropriate payment option each month. . . . Paternalistic regulations that underestimate the intelligence of the American public do not work.”

Of course not, especially when lenders who have overestimated the American public's financial savvy can earn such a tidy profit from it.

Disgusting and criminal.

Posted at 02:56 PM | TrackBack

digg this story

August 28, 2006

There's a new poll out that claims Americans are not at all sure we can handle another disaster. Of course, one of the major reasons the gov't response has been and continues to be so ineffectual is because FEMA got shrank from a full Cabinet agency and put in the hands of a man who thought horse grooming was key preparation for disaster management.

Katrina tore away any preconceptions people have about the nature of race and class in this country. I still shudder to think of some of the horrific things I saw heard, said, and done. But that horror pales alongside the everyday dramas and trials people who survived the catastrophe have to deal with. It's important that we read the stories of people like the Forrest family, or the residents of Plaquemines Parish.

Read these words, know these are Americans just like you and I, and do what you can to help. For these people, Katrina is not over, and will not be over for a long time to come.

Posted at 12:19 PM | TrackBack

digg this story

August 22, 2006

"But...but...real estate prices always go up! David Lereah said so!"

There's a lot of interesting information you can get from the news of Toll Brothers' third-quarter profit drop:

"The housing market is getting weaker much faster than anybody expected," said Alex Barron, senior housing analyst with JMP Securities in San Francisco. "What's hurting Toll is just the fact that they build luxury homes. Luxury homes are very discretionary. People who want to live on the golf course, they can do so today or they can wait a year. There's no hurry."

That doesn't seem to make sense, does it? If luxury homeowners have no difficulty waiting for a home, then why is Toll Bros' having so much trouble meeting expectations? Particularly if they only build homes when there are orders in the queue? Seems more like the people who Toll Bros. caters to are getting much more bearish and not as willing to commit to big-ticket purchases...or maybe Toll was relying far more on flippers to move product than they are willing to admit.

Then you have the news that Lowe's is advertising bad tidings for the remainder of the year:

But orders for new homes have slowed in recent periods and sales of existing houses are slowing from record levels, putting pressure on sales at Lowe's and larger rival, The Home Depot Inc. Increased gas prices have also affected business, Chief Executive Robert Niblock said.

"Near-term pressures on the U.S. consumer have led to a more cautious outlook for the balance of the year," Niblock said in a prepared statement.

With less discretionary spending due to maxed-out levels of consumer debt, stagnant wages, and a cooling housing market, the ripple effect is spreading beyond the realtors to the home improvement industry now. Then the contractors, then the builders, and on and on and on...

Posted at 03:24 PM | TrackBack

digg this story

July 18, 2006

The boom in environmentally-friendly living has spread from residential desires to the commercial market, as evinced by the new desire of private-equity investors to go for the green:

Whereas Rose hopes to raise funds from private and nonprofit investors, Fitzpatrick (an architect by training who hopes to make a bigger impact) hopes to gain substantial funding from public pension funds. If these funds successfully quantify the financial benefits of investing in green development, they could attract more investment, thereby mainstreaming now-unconventional forms of development.

I've been saying for years that environmentally friendly designs and sustainable building plans are good business AND good for the environment as well. It doesn't have to be a win-lose scenario. Here's a building supplier from the other side of the pond that also gets the message.

Housing Finance has a full-scale special section devoted to the principles of green living, including the still-slow pace of the green lending market.

These are all positive developments, and good reminders that in the long term, past bubbles, blowouts, and crashes, the shape of real estate is going to be affected as much by Mama Earth as it will by irrational exuberance, froth, and speculation.

Posted at 05:43 PM | TrackBack

digg this story

July 05, 2006

Today Ray "The Comeback Kid" Nagin introduced his guidelines for the New Orleans reconstruction effort. As the article adroitly notes, there was no actual timetable set as to what was going to happen when. I guess the bad times roll with the good in equal measure, ne c'est pas?

Architecture Week has a fantastic article that covers the obstacles faced in the massive effort to rebuild the Gulf Coast. The whole article is worth a read, but this leaped out at me:

A major problem is that some builders in the South are not accustomed to working with codes — or even with engineers, Lockwood explains, and implementing building codes is not easy.

Maybe I'm missing something terribly obvious, but why would this be?

In any event, I don't know what of the recent developments regarding the rebuilding effort are more frightening...the fact that KB Home is getting involved, or that Alphonse Jackson didn't think that some NOLA residents might be a little pissed off over the idea that their homes are being destroyed without any input or control from them. There's a great discussion about this at Housing Finance as well.

And just to make the subject gloomier, here's another visual reminder of what the recovery forces are up against:

The latter image is courtesy of Photos from Katrina, which I highly recommend for those who think this is just an issue of people whining about handouts.

Posted at 05:04 PM | TrackBack

digg this story

June 16, 2006

Those of you who shop at or hold considerable stock in Home Depot may want to start rethinking that:

An internal review at The Home Depot Inc. found about $10 million in unrecorded stock option expense, the nation's largest home improvement store chain said Friday. The Atlanta-based company said the amount is not material and it does not plan to restate any of the past year's financial results.

Hmm, wonder where those extra monies might have ended up? Perhaps in the supremely generous pay package of CEO Robert Nardelli?

I pause to quote a scathing entry on Nardelli from the AFL-CIO blog:

Maybe Nardelli learned how to guarantee his retirement security by watching two people with whom he has worked closely in the past: Jack Welch and Richard Grasso....Welch, who was famous for sending jobs offshore to save labor costs—and bragging about it—took away such a lavish retirement package that the U.S. Securities and Exchange Commission (SEC) fined GE for hiding the details of the package from investors.

Truly, one has to wonder if the apple doesn't fall very far from the tree at all.

Posted at 05:22 PM | TrackBack

digg this story

May 29, 2006

Forbes has the latest rundown on the most expensive homes in America. What's amazing about this is that the prices are not only beyond the reach of virtually every normal person in the country, but they're so absurdly priced that even your average millionaire might not be able to swing it:

"You need to have $800 million to see it," says David Barrett, who represents the San Francisco house for Warwick Properties Group. "And at least once a week, we get a prospective buyer who has that."

Who ARE these people that can drop $800 million and yet still worry about being outbid, I wonder? It's like pondering the federal deficit...the numbers are just so cartoonishly huge that you can't even be envious.

The march to wring every last bit of development money out of overpriced areas continues apace, and good ol' grungy Hollywood is no exception, it seems:

The Broadway Hollywood is nearly sold out after just two weekend sales events, with prices from the high $500,000 range to $3 million.

"What you have is people that maybe two years ago would never have thought about buying in Hollywood are now literally fighting amongst themselves for units," said Kate Bartolo, vice president of development for The KOR Group.

This is a great triumph for urban renewal and New Urbanism, but at $2400 a month, I better be getting a personal pedicure, ball wax, and hand-fed truffles with my utilities. :)

I am often left to wonder about the process of buying in such overheated markets. If there are always buyers willing to pay at these prices, where do they come from? What kind of moves did they make to pay those prices? Were they all careful, smart, and wise investors, putting money aside in high-yield savings accounts, diversified stock portfolios, and not following the trends of everyone telling them what was hot and what wasn't?

To coin a phrase, sadly, no:

Today, foreclosure looms over their $129,000 home. That’s a problem facing a growing number of Americans, who are finding themselves one crisis away from financial ruin. RealtyTrac, an industry organization that maintains a nationwide database of foreclosures, says mortgage defaults between January and March of this year numbered 323,102 compared with 188,122 during the same period last year — an increase of 72 percent.

This is the inevitable outcome of a vast divide between people who throw money around like raking leaves in October, and the legions who believe that there is no other way to live than just like that--acquisition for acquisition's sake. A home as a cash machine, not a place to live and grow old in. The end result is shattered dreams, wrecked credit, acres of wasted land, and short-term profit exchanged for long-term smarts.

It'll get better, but it's going to get a lot worse first. Oh, and I'd give someone else a ball wax to get a home for $129,000 in D.C. If it's that bad out in the sticks, imagine how much worse it is in the urban centers...

Posted at 08:04 PM | TrackBack

digg this story

May 11, 2006

It would seem that the legendary journey many D.C.-area homebuyers have been making to Baltimore in search of more affordable housing and investments is coming to an end. The market's sagging in Charm City just like everywhere else now:

"The housing boom is over," Chen said. "We're seeing the down side of the housing cycle. The housing market has been overheated, and price appreciation has been very, very strong -- stronger than can be supported by economic growth. Affordability is eroding really quickly, and exacerbating that is the fact that mortgage rates are rising. These forces are making it more difficult for households to get into a mortgage."

Let's hope their wishing for "anticipated job growth" bears some real fruit.

Speaking of green leafy things (Minds out of the gutter!), Housing Finance has a killer list of environmentally friendly items you can buy from your home, as well as where to get them. That's my consolation prize for not being able to find the "Wired" article on Green living I promised a while back. :)

And in terms of needing consolation, we head back to D.C. for this great story about what happens when overzealous developers meet angry NIMBY residents in one fell swoop. That's the whole issue with the housing market in a nutshell--develop, develop, develop, without a thought to the consequences. It's hardly like D.C. has tons of free green space to spare as it is, so why cheapen it further with McMansions appearing in your backyard overnight?

Then again, they're still doing better than the working poor in California, who are being ground up under the treads because the housing market is distorting how poverty costs are calculated. It gives the phrase "House-poor in California" a whole new meaning, doesn't it?

Posted at 03:35 PM | TrackBack

digg this story

April 07, 2006

I'm going to take a page from David Lereah's and Ben Bernanke's books, and for one glorious day, pretend there's no housing bubble. Let's see how many interesting real estate items I can find that don't mention it in any fashion at all.

In New York City, housing advocates have teamed up with major banks to force landlords to repair dilapidated properties. I'm amazed this doesn't happen more often. Follow the money trail--if using legislation and advocacy doesn't work, pressure the lenders to make changes or have them be embarrassed through exposing their risky portfolios. Good on them.

In New Orleans, it seems the milk of human kindness has dried up, and residents of upscale NOLA neighborhoods are banning FEMA trailers. Unbelievable. First of all, it's a shock to me that there are any upscale neighborhoods LEFT in New Orleans. Hey, schmucks, your whole city was UNDER WATER less than a year ago. Your property values ain't exactly skyrocketing. Second of all, how dare these people turn up their noses at their fellow residents? It's inhuman and selfish to the extreme. Is it any wonder the country's all but written off the Gulf Coast, when the people right in the thick of it are more concerned with appearances than doing the right thing?

A comment over at the Inman Blog that's worth repeating in terms of the Great Immigration Debate:

mmigration legislation currently under consideration in Congress could bring about a "crisis" in the homebuilding industry, we are told by Gary Roden, immediate past chairman of Associated Builders and Contractors. "Our industry is almost desperate for new workers. If the current undocumented workers are pulled out of the industry, we will be in crisis mode," Roden said. And the National Association of Home Builders said the industry could be in danger of losing a significant portion of its labor force if immigration reform doesn't include a guest worker program and a program to address illegal immigrant issues. As lawmakers wrangle over three different immigration bills, what do you think? Click the comment button to share your opinion.

That is so true. One reason why the current housing boom....

Goddamnit. Two links in and I muffed it. Oh, well.

Anyway, the boom is so profitable for construction companies and contractors is because they've been using low-cost (i.e. illegal) labor, and pulling more money back in profit. If all of those day laborers suddenly got deported, or even better, became American citizens and earned the right to work for living wages, the market would absolutely collapse in on itself.

The whole "guest worker" idea is a cheap facade, so to speak. It's a way to ensure a never-ending pool of under-the-table workers--get them in here for a few years, have them build houses and flip burgers, and pay taxes using stolen I.D.s--which leads to identity theft--then cycle them out again with false hopes of getting a legal way into the country, while making way for the next batch.

The housing market is almost totally dependent on undocumented worker labor, and the fact that the market is tanking will only exacerbate that concern.

It's a mark of how serious the bubble is that even completely unrelated discussions end up going that way, isn't it? :)

Posted at 06:44 PM | TrackBack

digg this story

March 16, 2006

This rather (ahem) ominous pic is in tribute to Business Week's article on the omens of housing. It touches on most of the points we bloggers are already familiar with--the expansion of Midwest into bubble markets while the coasts fall into slumps, the admission that the markets aren't bouncing like the traditional media claimed they would, and the acknowledgement that the continuing drive for more development is "pushing against capacity."

One paragraph caught my eye in particular:

The home-price data from the Office of Federal Housing Enterprise Oversight [OFHEO], which reflect a carefully constructed index based on "repeat sale" information, revealed a powerful 11.9% rate of price increase in the fourth quarter that was not significantly different than the 13% growth rate for prices in 2005 overall.

The OFHEO is basically the watchdog agency of Fannie Mae and Freddie Mac, designed to make sure they still have all their books in the black and aren't offering too many loans that will overextend their portfolio. However, there is a lot of question as to whether or not OFHEO is utilizing its own data selectively. The legendary Bubble Meter has been exploring this issue extensively, and you can read about some of his findings here and here.

The Housing Bubble Casualty relates another sobering aspect of the post-boom market...all the realtors fleeing the industry like the Jews from Egypt. Unfortunately, Ben Bernanke is neither Alan Greenspan nor Moses:

I have met with several of my friends that are also account executives in the industry. One of them told me that only one person in their region ‘commissioned’ last month. For a territory that is used to doing 30-50 million per month, they did only 10 million. There was a time not too long ago, where the top rep in this territory was doing more than 10 million a month. I talked to 2 other reps where nobody in their regions hit their numbers. All but one of these reps is about to start looking elsewhere for work.

This can only mean a bonanza opportunity for FSBOs and such to prove that you don't need fly-by-night, quick-buck types to do the do when it comes to buying your house. Don't let the door hit you in the tuckus on the way out, chumps!

Posted at 02:37 PM | TrackBack

digg this story

March 05, 2006

There's a lot of noise being made about the rebirth of Mike Brown as a crusading hero against the failures of Bush and Chertoff regarding Katrina. I am certainly not willing to cut Brownie even the least bit of slack, but at least he has the foresight to realize that they're hanging him out to dry, and he's not going down quietly. Imagine--if he'd shown that kind of testicular fortitude circa August 29, 2005, we might still have a functional city in New Orleans!

It's really hard for me to be empathetic to Brown. I view this much more as yet another case of thieves and liars turning on each other. But it's keeping the aftermath of Katrina in the public eye, which means more people will be realizing what a serious economic and financial crisis this is.

How to maximize your home's sellability, courtesy of CNN Money. Very interesting and useful advice, though I had to snicker at the first header: "Get On Your Hands and Knees." Yeah, if you want to sell in this market and expect top dollar, that's the position to take, all right.

Urban Trekker pointed me to this article from the Washington Post about Montgomery County's new anti-discrimination housing laws causing lenders to flee that regional market. I'm sorry, but that's a crock, kiddies. If it's such an onerous burden to provide fair lending terms and rates, you shouldn't be in the business.

Remember, Ameriquest had to cough up $325 million because it couldn't be bothered to explain to its customers how the game was actually played. I also don't buy the tired old saw that state regulations can cause things to be confusing. If you can boil every bit of a borrower's history down to a three-digit-score, you can afford to give said borrower the rates they deserve.

Posted at 07:30 PM | TrackBack

digg this story

January 26, 2006

One reason why Sen. Mary Landrieu has come out against filibustering Alito is because she wants to focus on getting the Baker bill passed. Unfortunately, if the comments from Gulf Coast Recovery Chair (and Bush Ranger) Donald Powell are any indication, Landrieu is SOL.

My problem isn't necessarily that the Baker bill is perfect, but that the Bush administration is dismissing it out of hand, and for incredibly stupid reasons. I wasn't fond of the Baker bill because I disliked the idea of the government buying property at a loss and simply reselling it at a profit, or just demolishing the homes to make way for luxury condos and what not. It's foreclosure by another name. But some of Powell's reasoning is just asinine:

Powell was careful to say the emphasis on owner-occupied property is only a recommendation and that federal rules give states wide latitude in how they spend grant money. He said other programs are available for flood-damaged homeowners, such as Small Business Administration loans and up to $26,000 in assistance from the Federal Emergency Management Agency.

Did Powell forget that the Senate diverted FEMA money to the states directly, because FEMA is completely inept, I wonder? Or how about the fact that the big NOLA housing boom is a bust?

Don't forget all those misappropriated SBA loans that went out to "9/11 victims" that had nothing to do with the disaster. :)

Landrieu obviously realizes the importance of getting the Baker bill--in some form--on the books. Here's hoping she will get her priorities right and stop trying to play softball with an administration that is definitely swinging a corked bat.

Posted at 01:56 PM | TrackBack

digg this story

October 13, 2005

The biggest factor that can affect property value -- market conditions -- are outside of your control. But other factors -- including the condition of the property, certain home improvements and neighborhood stability and safety -- are not.

For example, specific home improvements can increase your property value above the cost of the improvements themselves, such as remodeling a kitchen, adding a bathroom, finishing a basement or upgrading landscaping. Just be sure that quality pays with remodeling. A bad remodeling job will do little to boost your property value.

home improvement

If you live in a high-crime area, an organized community watch program not only will lower the crime rate but can enhance property values, too. It also helps to live in an area where other homeowners are upgrading their homes, which can help pull up your property value, too.

The bottom line is to measure the cost of any improvements you want to make against the overall values in your neighborhood. If you overimprove for the neighborhood, you may not necessarily recover your costs or boost your property value significantly.

Looking to do some remodeling? ServiceMagic offers a service that will match you with a prescreened contractor. Click here for more details.

Posted at 09:36 PM

digg this story