May 20, 2007

The end of the housing Ponzi scheme: 63% of homes in SW Idaho up for sale are owned by investors

Investors get in - check.


Investors get out - check.

Locals left holding the bag - check.

Repeat all around the world - check.

Southwest Idaho has large jump in number of homes put up for sale

Experts say investors trying to unload houses in highly populated southwestern Idaho have likely boosted the number of homes on the market.

They say a recent drop in median home prices might have triggered the sales rush.

Nearly 8,000 homes are for sale in the area.

Financial experts say that many homes on the market will likely continue driving down home prices.

Ada County saw a 1.3 percent drop in median home prices in March, the first decline in 10 months.

The current situation is good for buyers, not so good for sellers.

Heinrich Wiebe, co-founder of Genius Realty, says he doesn't see any recovery. He says about 63 percent of the homes in the region now up for sale are owned by investors

36 comments:

Anonymous said...

But they have potatoes!!!

Anonymous said...

Just vote for Ron Paul and he will fix everything. Things will be wonderful once all trade stops and the military is abolished!!

Vote for Surrender, Vote for Paul!!

Anonymous said...

Where does it say 63% in that article? All it says is 8000 homes for sale, no mention of how many are investor owned.

Mark in San Diego said...

Reminds me of a "Roach Motel" Investors check in, but never check out. . .guess all those California people can't sell their stucco shitbox in San Berdoo and move to Idaho with the rest of the LAPD. . .can we say "ripple effect?"

Anonymous said...

I'm not sure 63% is that out of whack in Idaho. Most homes in that area are investment or 2nd homes. Same with western Montana where I'd say at least 50% of property is owned by out of stateers. But that was the case 10 years ago as well as today.

Anonymous said...

I was told that everyone wants to live in Idaho

devestment said...

Imagine that. Supply exceeding demand. This is similar to what has happened with eBay. There is allot more crap out there for sale than money to buy it, for you who thought you could sell on ebay to make your overpriced mortgage payment and wait it out.

SeattleMoose said...

Infestors!!!!

Here in Seattle we have a 50% YOY surge in inventory.

Since the bulls up here make their case based on strong economy (Vista/Zune, Starbucks, and Boeing) and "desireability" one has to wonder exactly why the huge uptick in homes for sale...(although the Zune could factor in...LOL)

Could it be that prices shot up not because we are special (gasp) but because supply was artificially strangled?

"desperate boomers who everything in stock crash" +
"free money" +
"pack em in, grind em up, and spit em out loans" +
"everyone can make money in RE books and TV shows"
= infestors
= drastically reduced supply of homes
= drastically inflated prices of homes
= self-fueling RE mania
= CA Equity Locusts (and more infestors)
= Biggest RE Bubble of all time

The master of belch said...

Here's the 63% in an article from the Idaho Statesman:

http://tinyurl.com/2j2pxc

I was laughing my ass off for a good day or so when I saw this article. I have a friend who I tried unsuccessfully to convince not to buy an investment crapbox in the "Treasure Valley", believe it or not she closed on a 200k cookie-cutter place about a month ago. Really, I love her, but she's in decent shape financially so I can laugh at her bad financial moves and not feel bad about it. We've been good friends for a long time, this bubble is the first thing that's come up that we can't really talk about, she gets really touchy and she seems to think I get touchy so we don't talk about it much. Maybe I am touchy, but just in the same sense that I'm touchy nowadays when the conversation turns to gas prices or American "leadership". So anyway I'll just make fun of her here.

We live in the bay area so yeah she's a locust. Her monthly burn rate with the renter she's got is about $500, so she's counting on appreciation in the price and/or (supposedly) increase in rent over time to make this thing pay out. I'm just curious to see how long she watches her money burn (not to mention the ~10k closing costs) and how long she'll watch the bad news in the ID marketplace stack up before she'll cut her losses. I think after 6-12 months of burning money and bad news continuing to pile up she's going to have to start thinking about cutting her losses. Cutting now is easily her best option but pride and a deaf ear for the market news wouldn't let her do that - yet. So this is going to be an interesting experiment for me to see how long it takes her to come around. I've got popcorn.

Joe Logic said...

Here's the local Greg Swann:

http://www.boiseblog.com

This guy has some serious "it's different here" fever. Claiming the high vacancy has to do with everyone moving up to more expensive homes. LOL.

Anonymous said...

There are some problems in that story as well as the original from the local paper. Some corrections can be found here

But, either way, the market is certainly saturated around here and the local buffoons are all insisting it is still a great time to buy/sell/buy/sell...

Anonymous said...

"Heinrich Wiebe, co-founder of Genius Realty, says he doesn't see any recovery"

Genius Realty??!!???!?

The irony is just too much for a Sunday morning.

RJ said...

anonymous said...
"Just vote for Ron Paul and he will fix everything ... Vote for surrender, vote for Paul!"

Just vote for anyone other than Ron Paul and they will fix everything. Things will be wonderful once the country goes bankrupt and we are permanent debtors of international banking cartels; Things will be wonderful once we are overrun by third world immigrants getting government handouts at taxpayer expense and our borders have become meaningless relics of our national sovereignty; Things will be wonderful after we've spent a couple of trillion dollars in the middle east and have lost another 3,500 U.S. troops in order to accomplish nothing but strengthening Al Qaeda and driving up oil prices.
Vote for losing our Republic, Vote for ____________________ (fill in the blank)
Or give the Republic one last chance of survival and vote for Ron Paul.

Lost Cause said...

Highly populated southwestern Idaho? Hehehe....

showmenouns said...

>a recent drop in median home prices might have triggered the sales rush.

It's amazing how many folks had NO IDEA even a month ago that we're entering a severe correction (or worse), when it was obvious to most HPers two years ago.

Think of it, just 30 days ago they had no idea. Talk about taking a good snooze.

Anonymous said...

63% investors with nobody to sell to .Remember 2 years ago when the MSM was touting IDaho as the next hot investment spot in America .The investors listened and now they want out .

I can't tell you how unstable a market is when it has that high of a % of investors/vacant houses but it bad ,real unstable,can't even rent them horrible .

When is the NAR and the main media going to admit that they have a bunch of houses for sale that nobody wants anymore ?

Anonymous said...

Green?!? Talk about misleading?!? By that map one might think anything can be grown there. Fat chance.

Anonymous said...

Oh wait, I can hear it now: Global warming will make Idaho the new Florida!!!!!!

Anonymous said...

"Things will be wonderful once all trade stops and the military is abolished!!

Vote for Surrender, Vote for Paul!!
"

How about getting your head of your ass. I know may be difficult for you to do, but at least try...

Anonymous said...

www.youtube.com/watch?v=naMtwqBzja0

great Ron Paul video. This will be worth 5 mil to his campaign

Anonymous said...

Vote for staying the course in Iraq and bankrupting our country along with having thousands of young men and women return in body bags or with limbs missing. I have no idea why the Muslims are angry about having American military bases all over their Holy Land. I wouldn't mind if there were Chinese and Russian military bases in Washington DC , Kansas, California and New York.

Shakster said...

Mark in San Diego said...
Reminds me of a "Roach Motel" Investors check in, but never check out. . .guess all those California people can't sell their stucco shitbox in San Berdoo and move to Idaho with the rest of the LAPD. . .can we say "ripple effect?"

May 20, 2007 2:40 PM
___________________________________
Yeah ,I'd agree,but in San Beanerdino a house isn't sold ,it's stolen ,sent to a chopshop,it's parts fenced for meth,then painted candy apple red,fitted with hydraulics,lien sold,then put back on the market as a collectors item.

Stuck in So Pa said...

"devestment said...
Imagine that. Supply exceeding demand. This is similar to what has happened with eBay. There is allot more crap out there for sale than money to buy it"

And that "lot more crap" is coming with some pretty hefty starting bids. Seems that the FB's want the price they DESERVE on eBay as well!

anonymous wimp said...

Bwahahahahahahahahahahahaha

Napoleon Dynamite's grandmother was able to sell her 40 year old ranch style home and move to Texas and retire by selling her shitbox to some CA locust that now gets to pay on a $250000 a year mortgage for the next 30 years.

Enjoy that view of the feedlot!

WiseRenter said...

Things will be wonderful once all trade stops and the military is abolished!!

Vote for Surrender, Vote for Paul!!

--

Go back to Fox News and await your next thought instructions. Moron.

abb said...

We are heading into very hard times. Do we want a power-hungry megalomaniac compulsive liar (aka flip-flopper) like Hillary or Obama or Giuliani or McCain helping us through? Or do we want someone who tells us how it is?

Anonymous said...

MAY 21, 2007

Home Builders In A Hole


Home Builders In A Hole
Battered by the bust, they're filing for Chapter 11 and begging hedge funds for help

When Kara Homes Inc. began building Horizons at Birch Hill, a community for active seniors, the plans were ambitious: 228 spacious residences that weren't typical cookie-cutter McMansions. But four years later, the project in Old Bridge, N.J., has been abandoned by Kara, which is now in Chapter 11. A dozen or so homes stand unfinished, the front doors swinging in the wind, and the half-built clubhouse bears a bright red sign that reads "Unsafe for Human Occupancy." "It's not a great situation, but we're all hanging together," says Frank Ramson, one of the development's 70-odd homeowners. "What's killing us is the uncertainty of how long it might take another builder to step in."


Ramson isn't alone in his angst. The downturn in the housing market has caught the nation's home builders by surprise, leaving many overextended with costly land they can't develop and unfinished homes they can't sell. The financial strain is starting to show. From Arizona to Arkansas, dozens of small- and midsize builders have filed for bankruptcy over the past six months. Among the casualties: Turner Dunn Homes of Phoenix, whose assets were snapped up by Frontier Homes. And in late April, credit analysts at Moody's Investors Service (MCG ) warned that a number of large home builders could fall out of compliance with their debt agreements later this year, leaving them at risk of default unless lenders come to their rescue by granting a waiver or reworking their loans. Some builders are so desperate, in fact, that they're even running into the arms of hedge funds to bail them out with fresh loans at high rates and onerous terms.

Wall Street certainly has its concerns about the industry. This year the price of credit default swaps--in effect, a tool for bondholders to hedge their risks--has risen sharply for several large builders, including Pulte Homes (PHM ), Toll Brothers (TOL ), and D.R. Horton (DHI ). Toll Brothers Chief Financial Officer Joel H. Rassman says: "The people buying the swaps may think it's riskier, but the people actually buying our bonds don't [because our spreads with Treasuries are shrinking]."

But for the industry as a whole, there may be even more problems just below the surface since many builders entered into land deals with partners, amassing billions in debt that doesn't show up on their balance sheets. "I think we're going to see a lot more [bankruptcy] filings in the next 6 to 12 months," says Tucson attorney Eric Slocum Sparks, who is representing one local builder, AmericaBuilt Construction Inc., in Chapter 11. "I've got a couple of clients who want to see me next week, and I know these aren't social visits."

The extent of the industry's woes will depend on where housing heads from here. So far analysts and executives alike are unsure whether, or by how much, the slump will deepen. But the trends aren't pretty. The National Association of Realtors now predicts that new-home sales are likely to drop 18% this year, a bleaker scenario than the 9% decrease it forecast in February. Nonetheless, the current generation of builders entered this downturn with far better balance sheets than their brethren in the last housing bust during the late 1980s. And barring a total collapse in the market, lenders are also likely to offer a safety net, making concessions to keep the larger builders afloat in the near term. "I expect the lenders will be willing to work with them," says Fitch Ratings analyst Robert Rulla. "They'll want to maintain that relationship for when the turnaround comes."

Still, those lifelines can come at a big cost, namely higher interest rates, special loan modifications, and tough stipulations that restrict everything from the builder's right to repurchase shares to its ability to take on new debt.

For some, the white knights may be hedge funds. Consider the plight of Dominion Homes Inc. (DHOM ), an Ohio-based builder that sold $257 million worth of homes last year. When Dominion fell close to default last August on $216 million in bank debt, hedge fund Silver Point Finance bought the loans and negotiated tough terms. Some $90 million of the refinancing came with an interest rate of 15%, vs. the 9.25% Dominion had been paying. The deal also stipulated that Silver Point could receive 15% of Dominion's stock if it wants it. "The [fund was] willing to go where no other regulated institution would go," says Ronald F. Greenspan, an attorney and restructuring adviser for FTI Consulting Inc. Dominion CFO William Cornely admits the new rates are high, but says it "affords us the opportunity to continue operations during the downturn and positions us for the rebound."

If business doesn't stabilize, more builders could find themselves in the same hole in the ground as Dominion. Already, some analysts are concerned about the pace at which many builders have been burning through cash. Moody's credit analyst, Joseph A. Snider, notes that 11 of the 21 large builders whose debt his firm rates had negative cash flow in 2006 as many were stuck with higher-than-expected inventories of homes they couldn't sell. Dallas-based Centex Corp. (CTX ) took a $150 million charge after walking away from options for more than 37,000 lots nationwide and wrote down other land by roughly $300 million, triggering a 79% plunge in fiscal 2007 profits. "We still see uncertainty in many of our markets," Centex CEO Timothy R. Eller told analysts on Apr. 30, warning that the industry could be in the middle of a three-year correction.

More bloodletting may be ahead. Many large builders also took minority stakes in joint ventures, allowing them to stockpile land for future needs while keeping billions in debt off their balance sheets. Alisa Guyer Galperin, an analyst at the Center for Financial Research & Analysis, estimates that Lennar Corp. (LEN ) is on the hook for up to $910 million of $5.6 billion in debt through partnerships not on its books.

One fear is that if a partner runs into financial trouble, Lennar and other home builders could find themselves battling with lenders that demand they make good on the partnership's total outstanding debt. Florida builder Technical Olympic USA Inc. (TOA ) is embroiled in a lawsuit with one of its lenders, Deutsche Bank (DB ), which claims the builder is in "multiple potential defaults" on $675 million in debt owed by joint venture partners that failed. For its part, CFO Bruce Gross says Lennar has mitigated risk by partnering with strong institutional investors like the pension fund CalPERS and has structured the deal to make sure it isn't liable for partners. "Our joint ventures are very strategic and are designed to share the upside opportunity and downside risk with other investors," says Gross. For now, Wall Street is thinking largely about the downside.

Benjamin Franklin said...

There was an interesting story on the new fad of "accidental landlords", i.e. would-be flippers who didn't intend to buy and rent, but who are doing it in hopes of the market turning up again....

http://tinyurl.com/yw348c

Yeah, good luck with THAT!

Anonymous said...

Rents are on the rise across the U.S. -- nationwide, apartment rents average $939, up 4.4% from a year ago, according to real-estate research firm Reis, Inc.

I love it when the realwhores talk about renting HOUSES and quote APARTMENT prices. WTF???

Anonymous said...

Wal-Mart pressured the gov to not impose the container security check because it would cost them $15 more per container. So we don't have port security because Wal-Mart doesn't want to spend $15 per container. And the sheeple continues to shop there.

Anonymous said...

I wouldn't mind if there were Chinese and Russian military bases in Washington DC , Kansas, California and New York.

Can't you people think for yourselves? Ron Paul says some garbage about China you imbeciles start quoting it. You're no better than the doofuses who take their marching orders from Rush Limbaugh or Keith Olbermann. No wonder this country is so fucked.

Anonymous said...

Will the last one out wake me up, as I want to buy all those vacant places at a penny on the dollar, and the local govt also, with my declining in value dollar, as i once had luck growing potatoes, and have you seen the price of potatoes lately, why they sprout in dark cabinets ready to be set outside in the ground, in damp and wet climates!

Anonymous said...

Can't you morons think for yourselves? Muslims would not want American soldiers on their land anymore than Americans would want Muslim Jihadists on American soil. Get your head out of your ass. The world doesn't love you

Anonymous said...

Idaho is where the skinheads hang out, perfect place for the Ron Paul supporting, government hating HP crazy. Maybe you should go up there and buy something, I hear there's lots for sale and you can get a good deal.

jymkata said...

I've been saying this for years.

What if the French had decided they had enough in 2003 and invaded and overthrew George Bush.

They occupied our country with 1 million men, but most of them were stationed in the heavily populated Northeast region.

Large military bases were scattered throughout the country, but there was no rule of law and gangs and militias roamed over large swaths of our territory.

Occasionally, French missiles would destroy a home in your neighborhood based on "intelligence" that said insurgents were living there. Likewise, there were occasional "surges" into your city that succeeded in killing lots of civilians and destroying lots of buildings, homes and infrastructure. Of course, nothing ever got cleaned up because it was too dangerous, so everything was deteriorating and delapidated.

Anarchy reigns. The militias and gangs engaged in car bombings, kidnappings, beheadings, and sabotage. The police and national guard are corrupt tools of the militias and gangs. Everyday, something else is blowing up.

Now it's 4 years later, you still don't have access fresh water, electricity is intermittent, your neighborhood is in shambles, nobody has a job and everybody is killing everybody else. Wouldn't you want to get a gun and kill some Frenchies in revenge?!?

Anonymous said...

I live Meridian, ID (southwest Idaho) about 5 miles from Boise. The real estate situtation in the Boise valley is far, far worse than most residents fully recognize and 10 times worse than the realtors are letting people know. Home owners who are trying to sell are for the most part still in the hope/denial mode playing the home selling game much like one would play lotto -- hoping their lucky number will be called --- only its far worse for some who will be going bankrupt soon if a seller does not appear from out of nowhere. It is not at all uncommon for a small city block to have 3 or 4 for sale signs.

I put 75% of the blame on realtors in the valley who have decieved and are continuing to decieve the public with false information/lying statisics and 25% on the stupidity of people mostly those who are out of state ---how stupid can you be buying what the locals know is extremely overrpiced and soon ready to collapse in price - oh well --a fool and his money are quickly parted. Hope you enjoy losing 30%+ of your money in the next couple of years. Oh and by the way out of staters --- I bet your real estate agent in Idaho forgot to tell you about an epidemic that is plagueing the state --- west nile virus. Or how taxes keep going up, up, up and away.

If the west nile problem is as great as last year I suspect even more people will be leaving the state for good.

It is worth noting that there is only one reason the woes of real estate article made the front page of the local paper in the valley--namely, the realtors are getting hungry. Nothing gets printed about real estate unless it gets the nod from the local realtors --- after all don't they pay for 2/3 of all the advertising in the local paper. Realtors are selling so few homes that they know that the homeowners must reduce their price or they will not be able to fleece off their commision. The market will just stagnate further.
They clearly must have given the paper the nod to print some articles to prod the sellers to lower their prices.

The job market in Idaho is also horrible --- that is unless you can figure out how to pay for $200,000+ home on a $5 to $7 an hour job--that is if you can even find one. We are a right to work state --- which translates no unions, no livable wages, and limited/no rights for workers.

Our two most esteemed employers Micron and HP are already saturated with employees and likely will be cutting positions in the next couple of years as they continue to outsource to China and abroad. Our other high profile employer Albertsons has already cut jobs and a different computer manufacturer in Nampa is millions of dollar in debt and stands a very good chance of closing their doors for good.
There has been a fair amount of retail growth/serice growth in the valley but actually a decline in jobs that actual produced goods. The writing is on the wall for a major economic collapse in Idaho. The only thing that has kept us afloat was the funny money from housing and now that is gone.

The effect of any kind of US recession in the valley will be like a nuclear bomb went off. The value of housing could easily drop 40% within a year or two.

I still get steamed up when I remember of local real estate show on the radio where the realtor was trying to convince an old man to take his entire retirement savings and invest it in real estate about 1 year ago. The realtor claimed a 100% return on his money in 1 year. I pray that the man was wise enough to reject the advise --- if he had followed the realtors councel then right now he would be negative 100%. He would have lost everything plus he would be in the hole.

Realtors should go to prison if they cheat the elderly out of their retirement. Does anybody else out there have parasite realtors trying to push buying real estate with your IRA's?