It's not just the half-finished condo towers that will create urban eyesores for years to come, you'll also see these deserted graveyards of framed houses dotting the fringes of Phoenix, Tampa, DC, Boston, Albuquerque, Tucson, Sacramento, Vegas, Boise and more...
Unfinished houses put people in limbo
State and local officials are investigating a months-long work stoppage that has left about 200 unfinished houses in Casa Grande and Maricopa withering in Arizona's summer as home buyers wonder whether they'll ever be able to move in.
Buyers like Laquita Jackson and Cedric Moore, who signed a Turner-Dunn Construction Inc. sales contract more than a year ago, have been stranded in rentals instead of living in their dream home. They fear thousands of dollars in earnest money has evaporated.
They haven't been able to contact anyone from Turner-Dunn in weeks.Other buyers, like John Wayne, applied a full-court press on the small construction company, only to move into houses with conditions so dangerous that some buyers are afraid to let their children play in their backyards.
As the Valley's housing market ebbs, smaller builders like Turner-Dunn, which may have arrived late to capitalize on Pinal County's gangbusters housing market, are more prone to failures, said Jay Butler, director of the Arizona Real Estate Center at Arizona State University.
Unlike big builders, they can't absorb rising labor and materials costs, struggle with credit and sometimes lack experienced management that can deal with a cooling market, Butler said.
"If you look at the numbers nationally, the market is slowing tremendously," Butler said. "With small builders, the problems just cascade."
July 31, 2006
The bubble's new housing graveyards - Another Arizona builder walks away from hundreds of unfinished houses
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What will Swann say about this? Surely, with the hoardes of people moving to Phoenix, as most of his "21 reasons" pointed out in slightly different way, will want to live in these homes?
-- the Flying Monkey with the brown shirt
How long will it take to have this same news headline in the newspapers of every formally hot real estate market?
How long will it take to have this problem hit the large corporate homebuilders like Lennar, Centrex, Toll, Hovnanian, Ryan, Ryland, etc., etc?
I use to hear the echos of hammers, nailguns, delivery trucks and dumptrucks in this Northern Virginia valley. The quiet is deafening to the homebuilders and beauty to me.
'Against the Wind'
7/10: 50,167
7/20: 51,557
7/31: 52,662
There was a house down the road that was abandoned in the early 80s. it was framed and had plywood siding but was never finished. It sat that way for at least 8 years before someone finally bought it for cheap and finished it.
I see the same thing here in St. Petersburg, Florida. There are dozens of unfinished townhomes here: http://www.villasofcarillon.com ($650,000+), yet they are starting TWO new projects (from the high 700's) a few hundred feet away! Great, add more inventory! That will make my purchase at the bottom a better value :)
-Dragasoni-
I think lots of listings in the Phoenix market are being pulled off the market by homeowners who realize they missed cashing in by selling at the top and are now going to ride it down, but keep the house
San Diego Home Sales Figures: Not All That They Seem
by Bob Schwartz
Reviewing the recently released real estate sales data for San Diego, the lay person might conclude that the June home appreciation figures were down approximately 1 percent as compared to June 2005. The reality is the decline is probably much closer to three or five times the published figures.
The reasons for this are really quite apparent when one considers the following facts:
The appreciation figures cited are the median sales prices. The upper-end, luxury home market has been extremely strong in Southern California and is relatively immune to increasing interest rates. It operates totally apart from the rest of the real estate market. The sales of these upper-end luxury estates skew the median appreciation sales data.
A far more accurate figure would be the average sales price. Alternatively, data should exclude, or make million dollar plus sales a separate category.
The reported sales data does not take into consideration incentives used by not only major builders, but, in today's market the majority of home sellers, to entice scarce buyers to purchase their properties.
Just open up the Sunday real estate section of your local paper and the magnitude of these incentives becomes quite apparent. Just a few incentives I noted in my recent paper: $15,000 closing cost credit and $25,000 towards an interest rate buy down or upgrades; $50K to help pay your mortgage; seller pays interest portion of your new loan payment for first 6 months, all nonrecurring closing costs, plus 12 months of HOA fees. I could go on, but, you must understand that the builders are not being altruistic. No, they just want to move standing inventory, and move it now before any further declines!
While on the subject of builder incentives, it was just a little over a year ago that the majority of builders were not even co-operating with real estate agents. Now, the builder/agent cooperation has gone 180 degrees plus! Typically, builders offer two or 2.5 percent co-op commissions. Now, agents are being invited to catered brunches and offered co-op commissions up to 5 percent, as advertised in the July 23, 2006, Union-Tribune!
The purchase incentive phenomenon is not by any means the exclusive domain of new home builders. Actually, I would say the majority of individual homeowners are also being forced into the incentive game. Though not many are offering incentives from the start of their marketing, after six to eight weeks on the market, the idea becomes more appealing. Even without offering any incentives, the majority of offers are now being presented with buyer incentives built-in as a condition of sale!
A year ago one would be hard pressed to find any individual home seller or major new home builder offering incentives. Now, it is just these incentives that also skew the appreciation data. A $500,000 home sale with a $25,000 interest rate buy-down/closing costs package incentive will be recorded as a $500,000 sale. Yet, the $500,000 sale, in reality was only $475,000 or 5 percent below the reported sales data!
So if the $500,000 sale was just 1 percent below the June 2005 median appreciation, you can see that the 'real' difference was 6 percent below last year!
Other factors not being mentioned in the press that are important to our market direction are:
Typically the period from late March through September is the strongest for real estate sales. What does both a huge and continuing month over month sales decline and now a home appreciation drop, during this 'hot' time, portend for the market as it enters the weaker Fall/Winter period? Lastly, the bulk of the interest only, 100 percent loans used to prop up our market for the last few years, has two or three year time periods until the re-amortization (at the current prevailing interest rates) of the loan balances. The majority of these interest rate adjustments will occur in 2007 and 2008.
In my opinion, this is no 'return to normal' or 'slight correction' to the San Diego real estate market. By year's end there will be no denying we will experience a double digit appreciation decline. A decline that will take years, not months, to work itself out.
Published: August 1, 2006
Joey, Boston Scientific, our most illustrious tech company, is now offsourcing.
Will the biotech companies in Kendall Sq and the last few IT companies like Akamai hire everyone considering that our mutual fund industry is on the rocks: Putnam, MFS, even Fidelity's moving tons of jobs out of MA as well as mainstay's like Reebok and Gillette?
The MA you and I grew up in with top American (and I really mean America's finest) companies like John Hancock, First Boston, Polaroid, Gillette, DEC, Data General, etc is no more. We're gradually becoming another Buffalo NY, a once great city during the Industrial Age, but now, a rust belt town.
Buffalo has a leg up, though. They never had a bubble and have already lived through staggering job losses. And, it certainly beats this overpriced dump called DC.
When California collapses and the rest of the country feels the pain, Buffalo will have 2 legs up..while its getting F-d in the a-hole.
:Buffalo has a leg up, though. They never had a bubble and have already lived through staggering job losses.
Interesting to note, Buffalo was the industrial age's equivalent of Boston. Boston was its successor, the leader of science and techology starting from the 60s till today. From the 20s to the 50s, all kinds of production facilities were in the Lakes region with Buffalo as its capital in machine parts and components. Once it became cheaper to make stuff elsewhere, and manufacturing started leaving the country beginning in the late 60s/early 70s, Buffalo entered a perennial bear market for both jobs, housing, and wealth per capita.
In 1970, both metro Buffalo and Boston had 2 million metro. By 2000, Buffalo was at 1 million (losing half its population) and Boston, 3 million (growing by 50%). Much of Boston's growth was due to it being the national center of high tech and in some ways, being more diversified than let's say a Silicon Valley (hardware only in the 70s/80s, software only in the 90s). Boston had it all... hardware (DEC, Data General, etc), network services (BBN, Banyan, etc), biotech (Biogen, Wyeth, etc), software/IT (Powerbuilder, Sapient, CTP, etc), hospitals (Longwood Ave/MGH), finance (First Boston, John Hancock, Fidelity, Thompson, etc), defense (Raytheon, MITRE, GTE, etc) and specialty chemicals plus tech R&D (Polaroid, Cabot, Arthur D Little). It was quite literally, the workshop of the world. Now, how much of the above is still going strong today? Less than a third. Boston's losing its leadership role and it looks like even the MIT/Harvard company breeders are doing mainly the basic research in Cambridge but already have plans to start development enterprises in cheaper locations.
:Boston's losing its leadership role
The coast is toast.
In my opinion, this is no 'return to normal' or 'slight correction' to the San Diego real estate market. By year's end there will be no denying we will experience a double digit appreciation decline. A decline that will take years, not months, to work itself out.
Agreed.
The real yoy median price change for June turned negative for Insane Diego, which is the first time since the '90 to '96-'97 period, the last big real estate bust. Ventura and Riverside/San Bernardino are not far behind and will see yoy real negative price growth by the end of summer or this fall.
The boom is over. The bubble is deflating. The bust has begun. It's real. It's going to be nasty. Deal with it.
The Boston of 2006 is a shadow of what it was during the peak of Digital Equipment Corp when practically anyone with a tech degree had a job for life or at least a chance for one.
Did anyone forgot Teradyne? They paid to send their technicians to get EE degrees at Northeastern by night. One of the city's finest employers and now, they're at 40% the original headcount and will probably be gone by the end of the decade with no one of their stature to replace them. And believe me, Teradyne was more a job for life than even DEC since practically anyone there (including the janitors), with motivation could be getting degrees at night and moving up the food chain.
Today, employers in Boston don't have any benefits aside from the baseline health insurance and they're insipid enough to say that discounts to a Gold's Gym is a benefit as if one's not paid enough to purchase dumbells from an Olympia Sports. What people need is company sponsored training and education with a chance for a promotion, not BS gym discounts! So, if anything, real estate is significantly overpriced in Mass because jobs are disappearing and being replaced by sales and marketing nonsense with the real work heading out to Romania and India.
"Today, employers in Boston don't have any benefits aside from the baseline health insurance"
About the same in any city. Employer-employee relations have completely dissolved during the 90s to the point where headcount is a four letter world to any executive out there. If Boston's business history was based upon the good big corporate employer then the city's clearly living in the past. Wake up and smell the shit everyone.
Graveyards are a part of life. We all are going to die.
Still projects die even when the economy is doing well. So what if a few builders go bust. A lot do. And what difference is it if they are newly constructed, semi-built shells or the millions of homes built over the past 200 years that sit abandoned in every city and town in America? Even in Europe there are millions of vacant homes, many crumbling in the countryside.
This is a non-issue.
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