This from DC - but it's happened all over the US - Miami, Phoenix, San Diego, ...
The speculators came in, bid prices up 50% or more, made some dough, got everyone locally excited about how great their local area was, more condos were built, and then...
BAM!!!
The ponzi scheme always ends. And when it does, the bag holder looks around and wonders - "where did everyone go?"
Thanks powerlines for the link.
Investors who sought quick profits buying and selling real estate in the Washington region are in full retreat, dampening demand for homes, most notably for condos.
What is becoming apparent, market watchers say, is how big a part speculators played in the region's real estate boom of the past few years. Not just condominiums, but also townhouses and single-family houses, were snapped up by investors using no-money-down financing and non-traditional loans. They helped send prices soaring at unprecedented rates. And now many are trying to sell, or rent at a loss. Some may eventually dump properties at low prices to get rid of them. That could weigh down values for everyone.
Sales of new condos fell 43 percent in the first quarter of the year, compared with the first quarter of 2005, according to one report, and there are almost four times as many existing condos for sale than last year.
April 22, 2006
DC: Watching the bubble pop in real time (the ponzi scheme ends)
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You`re very much welcome !!!
I checked the "bubblicious bench" on Thursday night and there were 45 lockboxes on it. I took my own picture which I actually intend to frame, to remind myself that cooler heads need to prevail in all areas of investing.
anon - please send the pic to housingpanic@yahoo.com and I'll post - with the address too so we can zillow
Texans Going To Pawn Shops To Get Extra Gas $$
http://cbs11tv.com/local/
local_story_110231803.html
Gas prices are climbing again, with most stations prices hovering at, or just below $3.00 a gallon. For some people the high fuel prices are overwhelming.
"We just have customers come in and have to tell us that they need money ‘till the end of the week, for gas to get back and forth to work," said pawn shop owner, Gerald Costner.
Everything from high end jewelry, to name brand purses, and televisions… pawn shop owners say they are seeing it all come in. They say customers are frustrated and have no place to go to get extra cash for gas.
"Some of the construction people tell us they are having to pawn their tools to buy gas, but when they pawn their tools they can't go out and work in the construction business ‘cause their tools are in pawn. So it kind of a catch-22,” Costner said.
Mary Rodriguez has worked at the Casa View Pawn Shop for five years. She says she's seen people of all ages coming in looking for help.
“We've always had a clientele of the young kids, or middle age kids, and now we’re getting an older generation. Which, it just seems wrong that they have to pawn things just to get gas, or ya know, to make ends meet on things like that."
As prices continue to rise at the pumps, many motorists say they don't see things getting better anytime soon, for the consumer.
“It is frustrating, but the thing is they know they can get away with it, because people need gas,” Rodriguez said.
I have to think many owners are avoiding the bench since any shopper who takes a key from that bench will have a dramatic proof that it is a buyers market, and underbid as a result.
I think that there are three factors that are going to drive housing prices down:
1) increasing interest rates as China starts to invest in other currencies
2) increasing utility costs that add to the effective motnhly cost of a McMansion diven by India and China driving up fossil fuel costs as their economy expands fueled by our job dollars
3) growing uncertainty about the future fueled by concern over the huge trade deficit ($800 Billion or about $2500 per person in the US or $10000 per family when the median income is about $50000 per family), the growing federal deficit, etc.
Right now a family home required two full time incomes in the Washington DC area. As the government contracts and federal spending drops in response to these pressures, some jobs will be lost. If the government spending remains constant then taxes will have to increase - gutless politicians will avoid this as long as possible. If they don't either increase funding or decrease expenses it will drive inflation.
The management company who runs the condo development featured in the article should have known what was coming, to make everyone place the lockboxes on that bench. Now the Wash Post has identified the property as being overrun with speculative investors, and anybody who reads the article will look as the development as the role model (i.e. laughing stock) of speculative excess in the real estate market.
I think that there is a very strong possibly that the FED stopping raising the FFR in May will actually lead to higher 10yr+ interest rates. Especially when you consider:
1. The rate rise cessation is occuring in the backdrop of unrelating soaring commodity and energy prices. The precious metals are clearly an indication that the market does not believe the lie about core inflation.
2. The FED is constantly pumping more liquidity into the economy by increasing the money supply. Who is really fooled by the decision to stop publishing M3? After all, this is econ 101. If they keep pumping dollars into the economy while at the same time issuing more debt to fund our twin deficits, the value of the dollar will fall. If the value falls, higher interest will be required for foreigners to continue to acquire our debt.
What is most depressing is that the leadership at the FED and even in our current, incompetent corrupt administration KNOW that the current situation is completely unsustainable and will unequivocally result in a lower standard of living for future generation of Americans. These people understand Macro. But they use their knowledge and intelligence to orchestrate this sham economy built on massive credit, borrowing and increasing of unfunded liabilities just to maintain their slim grasp on power. They are the most spineless, shameless sellouts in US history. Will we ever be offered principled leadership in this country again?
There is a whole row in Woodbridge, VA that is for sale. These were all bought in jan 2006 in the 390k range and listed for about 450k and since reduced to 420k range. Arent these guys already loosing money with these not having sold in three months or so.
1) 2504 OAK TREE LANE LN, Woodbridge, VA 22191, PW5526297
2)2506 OAK TREE LN, Woodbridge, VA 22191,: PW5532718
3)
2507 OAK TREE LN, Woodbridge, VA 22191, PW5530085
4)2509 OAK TREE LN, Woodbridge, VA 22191,PW5530087
5)2510 OAK TREE LANE LN, Woodbridge, VA 22191, PW5524427
Add
2516 OAK TREE LANE, Woodbridge, VA 22191,PW5548242
and
2522 OAK TREE LN, Woodbridge, VA 22191, PW5552115
"Anonymous said...
There is a whole row in Woodbridge, VA that is for sale."
I think the seller(s) are already $7000 min. in the hole if they sell today WITH the 30k mark-up! Going FSBO instead of thru a realtor might not be AS bad, but still bad!
I would be glad to see all speculators get crushed in be in bankruptcy for the next decade. They drove up property tax rates for normal homeowners across the country and priced out first-time homebuyers.
And it is the dc bubble blog bubblemeter that made this article possible.
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