Here's how it goes down. Doesn't matter if it's land in Tokyo, tulip bulbs in Holland, or pre-construction condos in Phoenix.
* My cousin Joey just made some money selling his home
* Hey, my neighbor is putting his house up for sale for way more than we both paid
* Oh, man, I'm rich! My home just went up in value 20%!
* Maybe I should buy some investment property
* Another house just sold down the block for 100% more than the guy paid
* Hello, Cheap Mortgages with No Money Down? I'd like to take out a loan on an investment condo
* Everyone is getting rich buying and selling homes! It's so easy! Why work for a living
* Yes, you're right Mr. New Home Sales Guy, why buy one when I can buy two! Let's do it
* You're right, Mr. Cheap Mortgages with No Money Down, I should take advantage of that no-doc, no-down, option-ARM thing you're recommending. Are you sure I can lie about my income? Cool! I'll buy five of those new condos, not two!
* Grandma, you gotta buy another condo in Florida! We're all getting rich rich rich rich!!!!!
* Hmmm.. I wonder if being $4 million in debt is OK, after all I only make $40,000 a year. But it must be if the bank would lend me that kind of money
* OK, I've closed on all my new condos, time to flip them for massive profits!
* Hmmm... it's been 30 days and no offers. And it is strange that nobody actually LIVES here in this new condo building. I wonder why that is.
* It's the damn realtor's fault, why can't they sell my units. I'm gonna fire 'em and get a new one! One that knows the market!
* OK, it's been six months, and still no buyers, and I'm out $30,000 in carrying costs so far. Hmmm... That's more than I bring home in a year. My credit cards are getting closed to maxed out. Oh well, it's OK, I'll just drop the price a bit and still be rich rich rich rich!
* OK, it's been a year. I can't make the payments anymore, still no offers, I'm on my tenth realtor, still nobody lives in this damn condo building and what happened? My realtor and mortgage broker and appraiser and David Lereah and everyone said I was going to be rich! It's their fault.
* I can't believe I just got foreclosed on. I've lost everything. Oh well, it wasn't my money after all and in a few years my record will be clean and I'll try again! I do wonder though who did take the loss on all my condos, since it wasn't me? Hmmm...
* My cousin Joey just made some money selling his home
* Hey, my neighbor is putting his house up for sale for way more than we both paid
* Oh, man, I'm rich! My home just went up in value 20%!
* Maybe I should buy some investment property
* Another house just sold down the block for 100% more than the guy paid
* Hello, Cheap Mortgages with No Money Down? I'd like to take out a loan on an investment condo
* Everyone is getting rich buying and selling homes! It's so easy! Why work for a living
* Yes, you're right Mr. New Home Sales Guy, why buy one when I can buy two! Let's do it
* You're right, Mr. Cheap Mortgages with No Money Down, I should take advantage of that no-doc, no-down, option-ARM thing you're recommending. Are you sure I can lie about my income? Cool! I'll buy five of those new condos, not two!
* Grandma, you gotta buy another condo in Florida! We're all getting rich rich rich rich!!!!!
* Hmmm.. I wonder if being $4 million in debt is OK, after all I only make $40,000 a year. But it must be if the bank would lend me that kind of money
* OK, I've closed on all my new condos, time to flip them for massive profits!
* Hmmm... it's been 30 days and no offers. And it is strange that nobody actually LIVES here in this new condo building. I wonder why that is.
* It's the damn realtor's fault, why can't they sell my units. I'm gonna fire 'em and get a new one! One that knows the market!
* OK, it's been six months, and still no buyers, and I'm out $30,000 in carrying costs so far. Hmmm... That's more than I bring home in a year. My credit cards are getting closed to maxed out. Oh well, it's OK, I'll just drop the price a bit and still be rich rich rich rich!
* OK, it's been a year. I can't make the payments anymore, still no offers, I'm on my tenth realtor, still nobody lives in this damn condo building and what happened? My realtor and mortgage broker and appraiser and David Lereah and everyone said I was going to be rich! It's their fault.
* I can't believe I just got foreclosed on. I've lost everything. Oh well, it wasn't my money after all and in a few years my record will be clean and I'll try again! I do wonder though who did take the loss on all my condos, since it wasn't me? Hmmm...
19 comments:
Keith, you just wrote Casey Serin's biography!!!
Now, take the scenario that you so aptly described and multiply it by about five million sheeple and you will have a pretty good idea of the size of this bubble and coming bust.
Very funny, you nailed it exactly.
That's blowfly for ya! Now bitter to the end and lashing out anyway possible...
It appears to me that most home owners have yet to take a walk with the Ghost of Housing Yet to Come.
Where I live they are finishing up a 28 unit townhouse community in a 2-acre lot in an ok-but-not-great part of town. The 2-bedroom units start at $675,000 down from $700,000 (only a 3.5% discount in asking price). Keep in mind that these units are a good hour and a half commute New York City and are not in a good school district.
These town houses are a testament to the vitality of the housing bubble in the greater New York metro area.
Considering that $675,000 can get you a free-standing house with a backyard here, why would anyone want to live in a 28-unit project in an undesirable area just because the construction is new?
With my admittedly less-than-professional assessment of these units as worth around $350,000 each, I am shocked at the asking price... SHOCKED...
Lets not call this bubble over just yet.
You forgot the last one
"Who can I sue now since none of this is my fault?"
That final paragraph says it all. There are virtually no consequences to the poor decisions people make. I have relatives who have declared bankruptcy not once but twice, back to back. Do they have trouble obtaining loans? Nope. They are currently preparing to close on a new home using 100% financing. No downpayment because they blew through all the cash they made from the sale of their prior home. Will they go under with this purchase? Most likely but so what. There's always another idiotic lender out there looking for a fast buck. I think the whole problem is that the lenders can pawn thier risk off on investors willing to buy the packaged loans as mortgage backed securities. When will lending standards return to sanity?
JAFO
Casey's still chasing corporate credit.
Like the line in 'The Water Boy',
The new play is:
He fakes Right. No no wait,
He fakes Left!
No wait,
He fakes about faking!!!
If these folks were clever enough to have made like they were going to change Realtors, but then DIDN'T change Realtors, THAT would have been the winning ticket.
OC Brainwiz says:
New brain activity reported by idiot in Las Vegas. Schmuck lost his house in foreclosure that he bought in 06. So what does he do buy another one from a For Sale By Owner who is willing to carry the note. Watch out more idiots coming your way.
Considering that $675,000 can get you a free-standing house with a backyard here, why would anyone want to live in a 28-unit project in an undesirable area just because the construction is new?
Your logic is wacky dude. It's the same area right? So as you say $675K is the going rate for a house with a yard in the area. Doesn't sound all that undesirable if houses cost $675K to me.
How old are these houses? 20, 30 years? Personally if given a choice of a 20 year old house or a brand new townhouse for the same price I'd pick the latter myself.
Does the complex have a pool, tennis courts etc?
I'm not saying it's a good investment or a bad investment, but your logic is very shoddy.
This is hilarious - well done!
Author, Author!!!!
Hmmm.. I wonder if being $4 million in debt is OK, after all I only make $40,000 a year. But it must be if the bank would lend me that kind of money...
You're exactly right. Hopefully people will learn that a lot of the time, their best interests are quickly sacrificed for the prospects of boosted earnings.
What am I saying? See you all next time, on Housingpanic2028.
"Your logic is wacky dude. It's the same area right? So as you say $675K is the going rate for a house with a yard in the area. Doesn't sound all that undesirable if houses cost $675K to me."
Are you kidding me? A condo in a cramped complex, with shared walls (that I'm sure are VERY thin by today's construction standards) so you can hear your neighbors through the walls? And the hassles of condo parking? Not to mention that these places use the cheapest possible appliances and a/c and heating meaning huge utility bills.
I live in a condo now that is VERY nice as far as condos go - 2 level, attached 2-car garage which someone ALWAYS manages to block, located on a Westin resort property, but I'm going back to living in a detached house in a few weeks. It's more than worth paying extra.
Anon said:"I'm not saying it's a good investment or a bad investment, but your logic is very shoddy".
What kind of an investment is it then?
Most boom construction is built below standard with shoddy workmanship and sub-par materials, whereas a 40 year old SFH is built with superior materials that will last a great deal longer than new stucco, granite and stainless steel veneer.
No homeowner dues with a house, but with a condo, homeowner dues are not tax deductable with owner occupied. And did you know the HOA directors can instantly add an assessment out of thin air to pay for lawsuits, maintance, insurance or shoddy construction issues used in the new building, at any time, for any reason.
Thanks, but no thanks.
I live in Henderson, NV, suburb of LV. My neighbour across the street bought the home for $421,000 in May. He has to leave town due to a new job opportunity in Denver that came up. He listed the home for $419,000 fsbo last week. Yesterday he sold it for $410,000. Quite accurately, zillow's price for his home is $413,290.
A 2.6% drop in selling price from what he paid. Add in closing costs and real estate tranfser taxes and he's losing about $20K on the deal. Not the ideal situation, but he's not exactly going bankrupt or having to eat Raman noodles either.
Buying and selling a home in 9 months is a money loser no matter what. He also could have probably waited it out and got more money but he needs to go ASAP.
The house was built in 2001. Original owners paid $175K. My home which is a little bigger and a bigger yard was bought for $192K, also in 2001.
The sky isn't falling.
Keith,
You are so going to love this article in Baltimore's City paper www.citypaper.com. The article zeros in on the shenanigans of a local former bar boy-turned mortgage broker. This man actually sold a hole in the ground to some poor sap (actually a friend and business associate...God I can't imagine what he would do to his enemies!)for $325,000!! Something smells 'fishy" in Denmark...
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