April 30, 2007

Vegas: Flippers flop - "There's going to be a lot of depression, a lot of anger. A lot drinking, gambling, and desperate stuff going on"

Anyone out there still believe we're not crashing? Anyone believe those lying realtors in Phoenix and Vegas and Miami and DC and San Diego and ...? Anyone believe that the worldwide debt bubble and housing crash won't affect your town too?


Think again.

Classic Ponzi scheme folks. Classic financial mania. And classically coming to a natural end. Hat-tip to all the HP'ers who sent this yahoo.com homepage story in today... Man the MSM is becoming more HP every day...

Flippers flop as housing market cools

In the rampant real estate speculation of the Las Vegas valley three years ago, people lined up outside Pulte Homes sales offices overnight as if they were waiting for the release of the latest video game console or hot new movie.

Having seen his house in an upscale part of suburban Henderson, Nev. jump $200,000 in value in 18 months, Sam Schwartz felt he couldn't miss any part of the boom.

He spent the night in the parking lot with TV, snacks and drinks, along with about a hundred other people.

Schwartz intended to buy a new home and then quickly sell it within the year — for a huge profit. Most people waiting were flippers just like him, he said.

"We had seen real evidence of what was possible in this crazy, inflated market, and we just wanted to get a piece of that investment equity," Schwartz said.

But when home prices unexpectedly took a backward step, many investors seeking to cash in quickly were left "upside-down," or owing more on their mortgages than what their homes were worth.

The result was a glut of homes in the marketplace, communities spotted with empty houses and for sale signs — and a foreclosure rate in Nevada that leads the nation as owners unable to sell became saddled with unbearable debt payments.

In Clark County, which encompasses Las Vegas, one of every 30 homes began the process toward foreclosure last year.

The day Schwartz reserved his home, the sales staff was raising prices $20,000 after every fifth buyer came inside. The $500,000 house he and his wife were eyeing had shot up to $540,000 by the time they sat down. Somehow, it still seemed like a good deal.

"Everybody was thinking, 'Hey it's not the end of the world, because the homes across town are selling for $720,000. We have almost $200,000 in equity in the house and it isn't even built yet,'" Schwartz said.

He and his wife put down $5,000 on a home that would end up costing $560,000 with upgrades.
While the Schwartzes were able to cancel before closing on a property that suddenly was worth only $490,000 — and recoup their deposit on a legal technicality — others were less fortunate.

Schwartz, a 44-year-old life coach, said he "narrowly escaped financial disaster." But the effects of the housing crunch would reverberate for years, he said, something he expects to see among the clients he coaches to succeed in their lives and careers.

"There's going to be a lot of depression, a lot of anger. A lot drinking, gambling, and desperate stuff going on."

36 comments:

Anonymous said...

You are wrong Keith. You can never lose in the housing bubble. If you make money you get to keep it. If you are underwater you just walk away and it costs you nothing. I am kicking myself that I did not participate in the speculation and fraud and MEW.

Adam said...

Yeah, Keith, glad you picked up on this one. I love how the "life coach" was nearly getting bit by a scheme with all the classic hallmarks of any other pyramid scheme.... Just what I want: a "life coach" who doesn't reccognize THAT.

The guy probably nearly fell for the Nigerian scam, too....

Anonymous said...

I put "life coaches" in the same category as Kulosaki and Carlton Sheets so no, it does not surprise me that this guy has a 2 digit IQ and would sit there like a ponzi.

Anonymous said...

Far from feeling sorry for anybody in this article, I got considerable glee from reading about greed getting screwed, and HARD.

Made my Sunday. I can't wait to see the flippers here in Portland get hosed. I will celebrate all the empty spec condos we'll be seeing. Portland thinks they'll somehow escape the downturn, they have a bad case of the "it's different here" syndrome.

W.C. Varones said...

A couple months ago, my co-blogger Old Zeke put in an offer for $30K under asking price on a nice Las Vegas home.

The realtors and sellers tried to jerk him around, countering with a price very close to the original, so he just walked away.

They came back twice, lowering the price each time, and eventually begging him to take it at his offer price. He declined. That house is still on the market today.

Anonymous said...

Las Vegas? The famous place in the desert where the winds of insanity blow through one's empty skull?

Serves them lousy flippers right. May their stomachs roast in hell. :P

Anonymous said...

Keith,

You needn't publish this. I just want to thank you for providing information that helped me and allowed me to make an informed decision. It prevented me from making a terrible mistake. I can not stop thinking about what might have happened had I not found your site. I deeply appreciate the effort and time you have put in to this. The next time you feel it is not worth it, please remember that your time and effort helps people and THEY DEEPLY APPRECIATE IT!

Sincerely,

Your biggest Fan

Anonymous said...

"There's going to be a lot of depression, a lot of anger. A lot drinking, gambling, and desperate stuff going on."

Which is why I LOVE living in Vegas Baby!

Paige Turner said...

"There's going to be a lot of depression, a lot of anger. A lot drinking, gambling, and desperate stuff going on."

That's for damn sure!

Only this time, what happens in Vegas won't stay in Vegas.

V.L.

Anonymous said...

A life coach? A life coach!!!

No way. Executions all around! We need to bring back the Guillotine. Anyone who pays a life coach needs to be chopped immediately.

Life coach.

WTF?

Anonymous said...

Think about the odds of Casey Serin buying 8 houses and all 8 dropping in value and eventually getting foreclosed

That's a 1 in 256 shot

Anonymous said...

Life's losers ended up in Vegas and Phoenix

I think Greg Swann lived in both!

Anonymous said...

I loved this fact from the article"
"Schwartz, a 44-year-old life coach"

If youre dumb enough to believe this is really a job then youre dumb enough to buy a half million dollar piece of crap.

And the article stated he and his wife put down $5,000.00 to leverage $560K property.

He's lost all credibility as a "Life Coach".

What a stupid country we have.

Anonymous said...

I will state that I believe that the media does a dis service by focusing on all these personal stories of greed and despair.

It tends to cover up the fact that some very large banks in cahoots with the Fed and others "pumped" this bubble to limits beyond anyones imagination.

What can the bankers come up with after this doozy to cover up for the fact that they are more bankrupt than all the "flippers" and housing "fools" put together.

Anonymous said...

1 in 30 homes began the foreclosure process last year in Vegas!!! That is an incredible number. What's your source on that? Anyway, if I'm in line at the sales office and hear that the price is jumping 20k for every 5 buyers, that's enough of a "wake up" call for me. Then again, that is Las Vegas, gambling mecca of the world.

JAFO

Anonymous said...

Pit said:

Whatch this :

124 E POMEROY ST, West Chicago, IL 60185

Price Reduced: 04/02/07 -- $209,900 to $199,900
Price Reduced: 04/27/07 -- $199,900 to $54,900

334 BRUNSWICK CT, Streamwood, IL 60107

Bought : $205,000 07/01/2005

Now : Price Reduced: 03/30/07 -- $209,900 to $194,900
Price Reduced: 04/24/07 -- $194,900 to $154,900

1532 WALTERS, Northbrook, IL 60062

Bought on : $625,000 05/27/2005

Now :
Price Reduced: 11/16/06 -- $623,900 to $614,900
Price Reduced: 12/06/06 -- $614,900 to $605,900
Price Reduced: 12/28/06 -- $605,900 to $587,900
Price Reduced: 01/23/07 -- $587,900 to $578,900
Price Reduced: 02/13/07 -- $578,900 to $569,900
Price Reduced: 03/10/07 -- $569,900 to $560,900
Price Reduced: 04/05/07 -- $560,900 to $552,900
Price Reduced: 04/26/07 -- $552,900 to $544,900

WOW WOW WOOOW,we need Borat !

Anonymous said...

Anonymous said...
Keith,

You needn't publish this. I just want to thank you for providing information that helped me and allowed me to make an informed decision. It prevented me from making a terrible mistake. I can not stop thinking about what might have happened had I not found your site. I deeply appreciate the effort and time you have put in to this. The next time you feel it is not worth it, please remember that your time and effort helps people and THEY DEEPLY APPRECIATE IT!

Sincerely,

Your biggest Fan

April 29, 2007 9:58 PM
-------------------------------------
The fact that you were looking for critical information on the net,elsewhere shows that you have above average intelligence,and have some experiences.
Questioning the so called authorities,and pushers seems to come from experience more than intelligence.I know alot of bright people with lots of potential that fell for the emotional ploys of the market.Next time around will be quite different,meaning ,the next bubble is 60 years out in the future when a boat load of rookies falls for the scam all over again.

Anonymous said...

Anonymous said...
Think about the odds of Casey Serin buying 8 houses and all 8 dropping in value and eventually getting foreclosed

That's a 1 in 256 shot

April 29, 2007 10:27 PM
----------------------------------
On the pass line it was a 1 in 1.98 shot,but the dice were DUE.

Anonymous said...

I was just reading that Ford Motor Company, speaking on behalf of the rest of the manufacturers as well, says that: "April 2007 is going to suck!"

Lost Cause said...

No crystal ball is necessary. Just read the newspaper, and you can see it happening. At least it is in the Orange County Register.

Anonymous said...


among the clients he coaches to succeed in their lives and careers.


Priceless. You just can't write stuff this good.

Anonymous said...

YES!!

Anonymous said...

Need I say it? Just another word from the choir: you can debate whether these people got what they deserved but clearly, they got what was so obviously coming. Deluded away all their reason because of greed, no different than the internet and other stock bubble five years ago, no different than the fools inside the casinos, each one convinced they'll eventually "bust the house" while the house grows fatter and fatter. Oh well, even if they made all the money they dreamed of I'm sure the happiness they all thought they were guaranteed by wealth would have eluded them anyhow. I'll continue in my life of modest desires and goals and happiness. All the greedy fools are welcome to theirs.

Anonymous said...

Drinking, gambling, anger, depression.......

Sound like just another day in Vegas!

Anonymous said...

Life Coach? What a joke. Their job is to con stupid rich people. The kind of morons who sit around worshiping Oprah.
The only regret from reading this article is that this grifter didn't get taken to the cleaners.

I love how this article tries to claim this will all be fixed in a year because 8000 people a year are moving to Vegas. What they don't discuss is the majority of these people are just young losers in their 20's moving there to party, work in nightclubs, or trying to strike it rich gambling. They only rent and after a few years, leave Vegas after burnout and collecting a few STD's.

Let's also factor in that nationwide, housing markets will stagnate or correct downward. That means a whole lot less people will be visiting vegas to gamble, shop, and party.

Macau is also now overtaking Vegas in size and money being gambled. Many of those from the far-east will be going there instead of Vegas from now on.

Vegas's economy is going to get absolutely destroyed over the next couple years.

Anonymous said...

I wonder if part of the reason why the real estate mania was possible was because people were desperate to begin with .

I have never seen such large scale insanity in my life (except for maybe wars I have witnessed ).

Anonymous said...

Yes, it was a conspiracy by "The Man" to give all of us too much money.

Anonymous said...

Loser town full of losers losing money

Adam said...

Hey, I want the mortgage industry to give me a "stated income" loan for $1 Mil as I want to invest on "black" on the roulette wheel.

Which is safer: rigged real estate markets or Vegas gambling? Frankly, I prefer Vegas, as at least you should reasonably understand that it's a game of chance, where the real estate market is pitched as a "can't lose" investment.

Also, the gaming industry in Vegas is better regulated than the real estate "professions". Sad, but true....

Adam said...

Loser town full of losers losing money

True, but at least they're gambling with THEIR money in Vegas. In real estate, people are gambling with borrowed, highly-leveraged funds that are OPM (other people's money).

Wasn't that the lesson the Stock Market learned back in 1929, not letting people gamble in a speculative market using borrowed funds?

Geez, didn't ANYONE pay attention in History class? That's why we're about to see the New, Improved Depression of 2008, AKA Worldwide Depression V 2.0.

Anonymous said...

"I wonder if part of the reason why the real estate mania was possible was because people were desperate to begin with ."

No. A lot of them were doing just fine, but knew someone who retired early fipping houses. Keep in mind, the well-heeled people who started this became overnight millionaries. This article is about clowns who waited until the last minute to "get in" (and NO, I don't approve of speculation - if you want to get rich quick, invent something, start a business, earn it).

Anonymous said...

But it was not opm, it was derivitives

Adam said...

But it was not opm, it was derivitives

Technically, the problem was CDOs, with the risks of loss so confused and diffused the lenders were handing out $$$ when no one really knew who's loss it was going to be, aside from unknown Wall Street investors. The lenders were giving loans, without even knowing where the money was going to come from, as the loans hadn't even been passed on.

Hence why firms like New Century were caught off-guard when Wall St. started demanding they buy back bad paper that failed within the first 90 days of origination....

Hmmmm, sounds alot like these lenders modelled their funding system after the U.S. government, where Congress passes bills and fund programs with no idea of who will pay for them, aside from knowing it'll be unknown taxpayers at some point in time.

Anonymous said...

What the f*ck sort of bullshit is that? "Life coach"

It's probably for boomers who had dumb parents and had no place to turn to for advice.

It's the therapeutic society. Like the "counselor" on "Star Trek: The Next Generation." She had to be there to monitor everyone's emotions and make sure they were OK. They did not have any of that crap on the original "Star Trek" where people were supposed to be able to cope with life on their own. I'd tell the Beta-Zoid bitch, "Hey, shut up and give me my god-damned meds!"

Anonymous said...

You *do* know that one of the steady-to-booming industries in a casino town is Suicide Cleanup?

TM said...

"But it was not opm, it was derivitives"

Like Adam said, it was Mortgage-backed securities, specifically CDOs. What's really cute is that a lot of these were snatched up by pension funds and such. So, it still is other people's money; it could be yours, and it will be coming out of your retirement.