Recession

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October 26, 2009

Can I have One McMansion with fries to go please?

Posted by vegasandre under Housing Prices, Recession
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Due to popular demand, Micky D’s has added another item to their fabled dollar menu- The McMansion.

The “McMansion” term has been made popular during the past housing boom describing a certain type of large home:

-Large amount of square footage on relatively small lot built with typically uninspired architecture that is rapidly constructed using modern labor-saving techniques in a manner reminiscent of food production at McDonald’s fast food restaurants

we all have seen these houses that were created during lavish times of cheap money, easy credit and largely driven by the American desire to “keep up with the Joneses” mentality.  

The average American home size had increased from 1600 sq ft in 1974 to nearly 2400 sq by 2005. And top top it off , the average family size shrank from 3.1  pph(people per household)  in 1974 to 2.6 in 2005. Do we really need all that room?   Apparantly not .

Today’s WSJ reports:  “ Fewer McMansions on the Horizon”

If you’re looking to buy a brand-new McMansion in the ‘burbs, you’d better act fast. With home prices this low there’s not much incentive for builders to start new houses. And inventories are getting razor-thin: Economists and analysts at the National Association of Home Builders fall construction conference in Washington, D.C. on Wednesday pointed out that the current 7.3-month supply of new homes is the lowest it’s been since 1992.

Moreover, most of the summer’s pickup in home sales and starts, which has since abated, could be attributed to the $8,000 first-time home buyer’s tax credit. With that credit slated to end on Nov. 30—and with continuing problems securing money to build—builders have little incentive to ramp up their production of new homes.
…
When the market does start to pick up, the NAHB sees that happening two years from now, the landscape will be changed, literally. After a long run-up in median new home size, peaking at 2,309 square feet in 2007,home sizes shrank to 2,091 square feet in 2009. “It’s the largest decline ever seen,” said NAHB’s chief economist David Crowe. Since first-time buyers and their parents, the empty-nesters, will be the dominant demographic groups over the next decade, builders will cater to those groups more modest needs. Already, big builders like Toll Brothers have introduced models that look more like cozy carriage homes and four-squares than their usual English manor-style homes

http://online.wsj.com/article/SB10001424052748703573604574491630350933974.html?mod=WSJ_hpp_sections_realestate

“HOME SIZES SHRANK TO 2091 SQ FT IN 2009″

I know this from actual experiance. I happen to live in one of these 4000 sq ft homes. It is amazing to see how much space a family of Five doesnt really use – wasted space.  I am going to say I have about 1500 sq ft that nobody spends more than a few minutes passing through each week ;unless you count the Kids daily indoor wiffleball games and pitching contests.

Is this just a temporary downsizing that is a byproduct of a large recession and beriddled housing market?  or is it a sign of a majorshift of consumer needs which we see every 20 years or so?  

In my opinion this is temporary. As soon as the economy begins to right itself we should see a return to more normal American spending habits whereby - ”buy bigger” will be a familier theme once again.

 

September 29, 2009

Case-Shiller -3rd straight month for Price gains (except Las Vegas)

Posted by vegasandre under Housing Bubble, Las Vegas Foreclosures, National Real Estate, Recession, california foreclosures
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Home prices down 32.6% from 2006 peak

By Inman News, Tuesday, September 29, 2009.

Inman News

Home prices rose for a third consecutive month in July, and the rate of annual decline continued to shrink for the sixth month in a row, according to the Standard & Poor’s/Case Shiller home price indices published today.

An index tracking prices in 20 metro areas showed prices increased in 18, by an average of 1.6 percent on a non-seasonally adjusted basis. Looking back a year, the 20-city composite index was down 13.3 percent — a smaller drop than the 15.4 percent decline seen in June.

The numbers “continue to support an indication of stabilization in national real estate values,” David Blitzer, chairman of the index committee at Standard & Poor’s, said in a statement.

But it remains to be seen whether the housing market will weather the possible expiration of a tax credit for first-time homebuyers in November, anticipated higher unemployment rates, and a possible increase in foreclosures, Blitzer said.

The 20-city composite index showed prices down 32.6 percent from their peak in second-quarter 2006, to levels last seen in fall 2003.

The five markets in the 20-city composite showing the strongest month-over month price increases were Minneapolis (4.6 percent), San Francisco (3.3 percent), Chicago (2.7 percent), San Diego (2.5 percent) and Atlanta (2.3 percent). Two markets saw month-over-month price declines: Las Vegas (-1.1 percent) and Seattle (-0.1 percent).

Looking back a year, all markets in the 20-city composite continue to show price depreciation, although six of those markets experienced only single-digit declines and three are nearing positive territory: Cleveland (-1.3 percent), Dallas (-1.6 percent) and Denver (-2.9 percent).

The five markets with the sharpest annual declines were Las Vegas (-31.4 percent), Phoenix (-28.5 percent), Detroit (-24.6 percent) Miami (-21.2 percent) and Tampa (-18.4 percent). The index showed prices in Las Vegas down 54.8 percent from their August 2006 peak

caseshillerjuly2009

 

September 28, 2009

Las Vegas citizens in Crisis and “The Untold Story”

Posted by vegasandre under Las Vegas Real Estate, National Real Estate, Recession
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A disturbing article appeared yesterday in The LVRJ.  It is quite humbling on a large degree and describes the many heartaches and hardships that once hard working Las Vegan’s are now facing with the Economic meltdown.

http://www.lasvegassun.com/news/2009/sep/27/more-nevadans-will-need-help-economic-storm-worsen/

Much of the article details how:

  “Total of Nevadans on food stamps jumps 45 percent; state projects greater hardship, more in need of aid by 2013″

• Nearly one in five Nevadans will be on food stamps;

• Enrollment in Medicaid, the federal-state health insurance program for the poor, will increase nearly 25 percent, to more than 250,000;

• Enrollment in welfare will increase by one-third.

 

But I think a major , major untold story here – IS WHAT IS NOT BEING SAID – at least not YET. 

This Las Vegas Crash has wreaked havoc on many Marriages and destroyed many families in the process.

In the previous year or two , many of the questions I have been bombarded with have dealt with Friends and associates struggles with being  hugely upside down in their homes and possible solutions.

Lately , however , I am being beseiged with a much more horrifying storyline (I would like to take this minute to say that I am not trained in Human Psychology or a Psychologist and dont pretend to be one)

It would seem that our economic malaise has turned catastrophic to a shockingly large amount of the marriages I know. Not a day goes by when I do not hear about someone whose spouse decided to run and bail on their marriage and/or family.  Let me go over a very real situation and a common one that I recently heard:

Husband and Wife of 13 years with Four Kids. All Kids enrolled in a very expensive private school on the west side of town costing couple 60k per year.  Husband was a successful Mortgage broker. Wife doesnt work but was accustomed to the Upper Class social lifestyle and its benefits.  Bubble bursts and Husband is barely making ends meet. Then his mortgage company goes under. Faced with their first major economic challange in years-What does the wife do?  She splits and blames it all on him. Now the kids are going to have to face a life changing situation that they werent expecting.  Of course there is always more to the story and two sides to everything .

I am hearing of so many Marital Issues lately that I should have a sign over my desk stating “Going Rate for advice $100 per hour”.   Whether its a Communication issue, Mid-Life crisis, Drinking or gambling problem, Caught the Mrs. with the Mail man thing- there has been one underlying theme:

         The Current Financial crisis has exposed many unstable marriages that prosperity may have temporarily hid.

            Whatever the case -if the foundation was weak to begin with -the cracks will eventually show up.

I also have heard many heartwarming stories about how some families and Marriages have actually grown stronger when faced with similar adversity.  I am sure the local churches(regardless of denomination)must be getting a greatly increased attendance in the past year and have helped tremendously in these matters.

“A Blessing in disguise for some”- Many of these familes  now realize that monetary materialism doesn’t hold the high torch that it once did- There are more important values in life- Your family first.    

Hopefully many can use this current crisis to strengthen and learn from it.

 

    “He knows not his own strength that hath not met adversity.”  – Cesare Pavese

    “Adversity is the first path to truth”- Lord Byron

 

September 26, 2009

Tales of the Bubble from around The US and World

Posted by vegasandre under Foreclosures/Bank Owned, Housing Bubble, Housing Prices, Las Vegas Foreclosures, Recession, california foreclosures, economic stimulus
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From :   www.thehousingbubbleblog.com 

“Chicago’s bungalows and brick Georgians are selling, but woe to the owner of a city condo. Phil Sammarco didn’t think it’d be so hard to sell his two-bedroom, two-bathroom condo in the city’s DePaul neighborhood when he put it on the market in March for $449,000. Now priced at $435,000, he has fielded — and rejected — a few low-ball offers and showed the unit to a lot of first-time buyers who have indicated they have a wealth of properties to look at. Now he’s thinking of turning it into a rental instead of lowering the price again.”

“A slowdown in the local housing market is reflected in assessed values for homes in Yakima County this year, the Yakima County Assessor’s Office said. .Certainly, King County has suffered from a bursting of the housing bubble. Stan Roe, assessment unit supervisor in the King County Assessor’s Office, said Monday market values in King County fell by an average of 15 percent this year.”

“‘I don’t think I’ve seen this big a drop before’ said Roe, who has worked for the King County Assessor’s Office for 19 years.”

“On a gut level, Meacham says, the packages of loans that Long Beach and WaMu began bundling and selling to investment banks didn’t make sense. But those loans held the lure of bigger profits for everyone, and the investment banks couldn’t seem to get enough of them. Meacham says he could see the housing crash coming, and sold his California home in 2006 at the peak of the market: ‘It didn’t take a financial genius to work out that blue-collar workers can’t be paying $3,000 a month for their houses,’ he says.”

“A. At one point average prices in Orange County hit US$750,000, roughly ten times the household income. This could not be supported and that’s when the drop occurred. But houses are affordable again: the average house price is about US$400,000. There were small 100-year-old units close to Chapman that were two room bungalows, maybe 900 square feet, going for US$900,000. Now they’re down to US$300,000, and still people look at them and say, ‘My goodness that should be no more than US $75,000.’ But in Orange County that’s affordable.”

“The real-estate bust that has pummeled San Diego’s downtown condo market and wreaked havoc in its outlying suburbs has hit its once-impregnable beach communities. Beachfront property has come down as much 30 percent in some areas from 2006 highs, with much greater savings possible on foreclosure properties or short sales.”

“Even the crown jewel, Coronado, hasn’t escaped the downturn. ‘Four years ago, you couldn’t find anything in Coronado for under $1 million,’ said Maureen Kerley, a real-estate agent who works in Coronado and Scottsdale. ‘Now, there are dozens.’”

“The Florida housing market is struggling because of a declining population, tight credit, high unemployment rates and a lengthening of the home-buying process, economists said. ‘I think we have a tougher path to get (out of the housing slump) than the nation as a whole,’ said Dr. Sean Snaith of the University of Central Florida’s Institute for Economic Competitiveness.”

“Tax credits won’t solve the main problem of limited credit, Snaith said. ‘Most people cannot get financing right now — that to me is the bigger problem,’ Snaith said.”

 

“‘On the one hand Australia is vulnerable to a collapse like the United States, where prices fell by a half during the sub-prime collapse … or to a long slow decline as in Japan since 1988,’ Dr Flood said.”

”’The country that promised limitless land, cheap housing and near universal home ownership to all comers now has the most expensive housing in the world amid very tight housing and land markets and little prospect of restoring the balance,’ Dr Flood said. ‘As long as the Government, the public and the media remain in denial, and self-congratulatory rhetoric continues that Australia has cleverly avoided the housing market correction it needed to have, there is little chance that matters will improve.’”

 

read the whole story here:

http://thehousingbubbleblog.com/?p=5653

 

September 21, 2009

Mortgage Delinquencies keep Accelerating in August

Posted by vegasandre under Foreclosures/Bank Owned, Housing Bubble, Las Vegas Foreclosures, Las Vegas Real Estate, National Real Estate, Recession, unemployment
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http://www.cnbc.com//id/32952470

High U.S. unemployment keeps pushing up the rate of mortgage delinquencies, which could in turn drive personal bankruptcies and home foreclosures, monthly data from the Equifax credit bureau showed on Monday.Among U.S. homeowners with mortgages, a record 7.58 percent were at least 30 days late on payments in August, up from 7.32 percent in July, according to the data obtained exclusively by Reuters. 

August marked the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89 percent of mortgages were 30 days past due in August 2008, while in August 2007, the rate was 3.44 percent, Equifax data showed.

The rate of subprime mortgage delinquencies now tops 41 percent, up from about 39 percent in each of the prior five months.

The results, which correlate with consumer bankruptcy filings, suggest U.S. homeowners remain under financial stress despite signs of improving sentiment and fundamentals in the U.S. housing market.

August bankruptcy filings were up 32 percent from a year earlier, compared with a 35 percent year-over-year increase in July. 

Still, while more Americans were late with mortgage payments, they are keeping up with other bills. The proportion of credit card accounts at least 60 days past due was down in August for the third straight month, while subprime card delinquencies also fell.

That improvement in delinquency rates partly reflects risk-aversion among issuers, which have cut the number of cards by 82 million, or 19 percent, over the past year, while slashing credit limits by $721 billion, to about $3.6 trillion.

The number of new cards being issued is down even more dramatically. In June, 2.6 million new cards were issued, compared with 4.7 million a year earlier.

Lenders are increasingly targeting consumers with high credit scores, Equifax found. While in 2007, about one in five new cards went to people with a credit score above 760, such consumers account for two in five new cards in 2009. Equifax found similar trends in auto loans.

“The data from August further confirms that we’re witnessing a dramatic change in consumer habits,” said Dann Adams, president of Equifax’s Consumer Information Solutions group.

Total consumer debt is down more than $300 billion, or almost 3 percent, from its peak in September 2008, Adams said, while the savings rate is nearing 5 percent, “a level we haven’t seen in years.”

 

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