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Housing Industry? I'm out.

Old 06-23-2007, 11:23 AM
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Default Housing Industry? I'm out.

Here in the southeast the housing industry is in worse shape than I've ever seen. They say we are at the bottom and I believe it. It can't get any worse. Friends and associates are hung with huge, huge interest payments that they can no longer swing or roll. I thought for a while that it was just a bump in the road, but as of now I think that it will take years, maybe as much as 7, to come back to any decent level.

I hope you guys out there in the construction business saw this coming and planned accordingly. Get out if you still can.


http://www.newsmax.com/money/archive...mo_code=3603-1
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Old 06-23-2007, 11:40 AM
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Default Re: Housing Industry? I'm out.

Bug - What's causing the problem?

I went through the housing crash in Dallas in the
80's. At least in that instance the builders, bankers,
and speculators brought it upon themselves. Too
much inventory, unsecured construction loans by the
banks, "flipping" property to fraudulently inflate it's
value, and so on. But what it all boiled down to was greed.
The sad part was they took a lot of the businesses that
support the construction down with them.
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Old 06-23-2007, 11:59 AM
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Default Re: Housing Industry? I'm out.

Dang! Move on over here to Ascension Parish, La. Second fastest growing county (parish) in the U. S. of A.

Everything selling, and I mean everything!

You can put a sign out in front of a dog house and tomorrow somebody is going to buy it.

Up to 18 months wait on a contractor.

Prices are up but are still moderate as compared to allot of areas in the U.S.
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Old 06-23-2007, 12:18 PM
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Default RE: Housing Industry? I'm out.

It's horrible in the northeast too. I'm in the furniture business,and when housing is slow,my biz is slow.From what I hear everything is slow though.Too many creative financing tactics over the past few years let people buy homes that were out of their league,and now they are in trouble.Add all the rediculous credit card debt many Americans have acquired themselves and it adds up very bad times.
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Old 06-23-2007, 12:21 PM
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Default Re: Housing Industry? I'm out.

Hey, be glad you don't live in Florida. I have friends and family down there and things are very rough in the real estate market. Taxes and insurance have gone through the roof to where the old folks can't afford to live in the homes they spent their entire lives saving for. Everything is for sale and nobody is buying.

Banks have made 125% loans or interest only loans while the market has crashed and driven down prices. People can't get out of houses they can't afford, and those who have rental property can't cover their monthly expenses without raising rent to levels their tenants can't afford. It will get worse before it gets better, but as always, it will just make the rich folks richer in the end.
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Old 06-23-2007, 12:28 PM
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Default Re: Housing Industry? I'm out.

Seems to have slowed down a lot here in the Philly burbs. All the articles point to the vacation homes will be the first to be hit but I haven't noticed much of a change along the Chesapeake or Ocean City, NJ.

--JK
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Old 06-23-2007, 01:29 PM
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It's slow here and prices are falling. I rode through a very nice neighborhood the other day and was shocked at the total lack of upkeep on the homes. These were homes selling in the 350-400k range and some had paint peeling on the trim work, rotten spots on the siding, and roofs that had been patched with mismatched shingles. The nothing down interest only mortgages allowed people to get in way over their heads and now they can't even maintain them. Something else I've noticed is that as long as I can remember, the Sunday classifieds in the paper were page after page of full page color ads for the car dealers and for the most part they aren't there now.
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Old 06-23-2007, 01:59 PM
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Default Re: Housing Industry? I'm out.

As Ant wrote - it is real slow here in the NE as well. I pulled back on larger sub-divisions and drastically cut the number of spec houses being built. I now focus on sub-divisions of 15 lots or less. Fortunately, my current land bank is paid for and not much we can do except wait it out.

As noted, I think creative financing caught up to some buyers, as well as people did not anticipate the maintenance costs associated with their 4,000+ Sq ft homes.
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Old 06-23-2007, 02:10 PM
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Default RE: Housing Industry? I'm out.

What happened to waterfront property here between 2000 and 2005 was insane. Homes doubled or tripled in 'value' and lots went 5X or more in some cases. I got in just in time. Now, like TN said, there are a lot for sale but nothing is selling. There is a spec home across the canal from me that has been done for about 18 months, and it is sitting. Another just went up next door.I drive about a quarter mile to leave my subdivision, on two streets, last time I counted there were 15 lots or housesfor sale. Seems like another pops up every week. I think the taxes and insurance are really hurting the situation. It's bad enough if you were in before it went crazy, but to buy into it now is just rediculous. I'm trying to buy the lot on the other side of me so I hope it stays this way a little bit longer. I haven't heard anything lately that indicated it wasn't going to be slow for a number of years.
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Old 06-23-2007, 02:15 PM
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Default Re: Housing Industry? I'm out.

I truly hope that the stock market holds up, if it crashes the "R" word will become a reality. Recession. I think that parts of the US are already in a recession, just nobody wants to say it. One good terrorist attack would be the nail in the coffin. IMO. I pray they can't get that done. I don't want to preach gloom and doom but it is what it is. Some of the stats like unemployment, are not really a reflection of what is going on. Almost the entire housing industry in the southeast paid employees with 1099's as contract labor, making them uneligable for unemployment benefits. At least there are manufacturing jobs and government jobs for people but I'm sure most will go from being painters or electricians or plumbers making 60 to 100k per year to making 30 to 40 in a warehouse and with fuel up it's killin em.

You could blame the realestate agents and the mortgage brokers for the heist of the US consumer with greed being the primary factor, but ultimately the consumers bought the homes so what can you say. The ones who will make out in the future (no time soon) will be the banks because alot of peoples credit will be damaged throughout all this and they will fall prey to high intrest and everything they buy in the future. Vicioius cycle.
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Old 06-23-2007, 02:29 PM
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Reeeelax it will come back around. It ALWAYS does. It's like nature. Give it another 5-8 months and things will start to swing. Not like they did 6 years ago. Face it, 8-10 years ago the real estate market was like a bunch of whores gettin' top dollar for anything. This is just a reality check. And please don't say the "R" word. CNN might hear you and next thing you know, it will be on Headline News.
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Old 06-23-2007, 04:35 PM
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Default RE: Housing Industry? I'm out.

This seems to happen every seven to ten years and it always comes back. Some people get burned because they made unwise real estate purchases, while the guys with cash will be out bargain hunting soon. One thing I'm seeing for the first time though is our newspaper, Providence Journal, now prints a seperate "Legal" section and it is filled with forclosures and mortgagee sales.
So that, the cost of this war, and the fact that everything seems to be made in China these days might treat us all to something we've not seen before. I am always amazed though at how quickly things turn around and get going again.
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Old 06-23-2007, 05:20 PM
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Interest-only or reverse-amortization loans with variable rates made by financial institutions that have no reserve, and inflated property values contribute to the problem. Take a look at the statistics on foreclosures.
We are also experiencing a slowdown in new housing starts in SC--with the exception of the coastal market--as well. IN the upstate 10 years ago $150K got you a 2500 square foot house in a nice neighborhood. You can't even touch that for $275K now....
Atlanta has been on the bubble for the last few years....the same is the case here......I do not like the indicators. I won't say the "R" word, but a slowdown is definitely in the offing.
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Old 06-23-2007, 06:23 PM
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Default RE: Housing Industry? I'm out.

I spent the last 1.5-2 years wondering how long this boom would last in atlanta.The end of the boom is definetely here,but I am not sure the bottom is yet.The number of foreclosures continue to climb,mls listings are growing by the day,and interest rates continue to rise.Not a good combination if you need to sell a house.

I am in the building supply business and it has been a tough year so far.We have seen several of our customers go under and if things don't turn around soon there will be many more.From what I have seen there are a lot of builders who only have cash reserves to carry them for 6-9 months and that time is almost up.I am still amazed though at how many spec homes are going up right now around the metro atlanta area.I wonder how many of these guys can't afford to stop building and are only prolonging the inevitable.Things will be very interesting if we don't see an improvement by the first quarter of 08.
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Old 06-23-2007, 09:00 PM
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I for one am delighted to see the rampant, balls-to-the-wall, development come to an end. Around here developers got to do whatever they wanted, as much as they wanted, regardless of the impact to the quality of life for the community. Meanwhile, the taxpayer picks up the bill for the infrastructure costs, while the developer makes all of the profits. I look forward to a big adjustment in prices and a long, long recovery.
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Old 06-23-2007, 09:23 PM
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Just1more - 6/24/2007 11:29 AM

Reeeelax it will come back around. It ALWAYS does. It's like nature. Give it another 5-8 months and things will start to swing...

Don’t think so. I was just talking with a guy that is a contract realtor. His job is to sell houses that get repo’d by the mortgage company. He said the foreclosures are at an all-time high for his 30+ years as a realtor, never seen it this bad, and he is projecting 10 to 15 years out…IF there is a recovery. This is not like the crunch of the 80's where mortgages were at 12%-15%. Keep in mind the US is now embedded in an international/global economy in a way it never was before. And the value of the US dollar is also at an all-time low on the international market. It is not just the housing market, it is the economy as a whole that is taking the hit, from the outside in.

Fwiw, that realtor also said house sells in the middle ($500K to $800k) are hit the hardest, not moving, and he doesn’t think they will ever realize their previous value. However, homes in the $1.3-million and up are still selling as before, no change, no increase in foreclosures.

It used to take 3-mons to get foreclosed on. Now, out here, it is taking up to a year. The mortgage companies are doing anything they can to keep from foreclosing whenever possible. I know someone that literally walked away from his home. The value dropped below what he owed so he packed up, locked the door, walked away, and never looked back. The bank took it over, sold it at a loss.

Me? I don’t think we are even close to the bottom we are destined to hit.
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Old 06-23-2007, 09:46 PM
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If I can offer a silver lining and an alternative point of view.....

If you know me you know that I think against the grain. I know that when CSCO was at 70, and everyone said it was the one stock you had to own, that it wasn't. I know that when in 2003 CAL was trading at $10, and everyone (CNBC) said it was going to go bankrupt, that it was a buy. I bought Ford and many thought I was crazy (I am by the way). One year ago everyone on this board was talking about how the real estate market would always be a sure thing, as it is a real asset. Assets are priced buy buyers and seller, mobs if you will, and their behavior is that of a mob. There are whole fields of psychology devoted to studying mob behavior, and prediciting it. I think we are closer to a bottom, as each day CNBC and CNN run new stories on how bad the housing market is. I think this is good. I think we are closer to capitulation. I knew it felt wrong when CNBC ran housing story after story at the top, and I know feel they are doing it on the downside.

I am not prediciting the absolute bottom right now, but I am putting my money where my mouth is. I bought TOL (Toll Brothers) yesterday. So.... this means that I am early as I ususally am, but we are close. Hang tough. I am sorry for your pain. All of you (us). Be well.

Edit... this post came across more "know-it-all-ish" than I wanted. It is how I feel, but I hope you read it as my posting with respect for you all, and not smatypantsish.


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Old 06-23-2007, 10:43 PM
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Default RE: Housing Industry? I'm out.

I agree with Sal; but then, I too am crazy.

Was discussing builders stocks earlier this week with a freind whom I regard as smart & wise when it comes to the markets. He was buying Toll bros.

From my view, the overriding determinant in this is twofold - the ridiculous mortagages written in the last 10 years are still tumbling, and the impact from that has another 90 to 120 days before settling. Interest rates - Bernanke's hand will be forced by this, and rates will drop.

Toll bros, eh? Hmmmm............


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Old 06-23-2007, 10:47 PM
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Default Re: Housing Industry? I'm out.

Parkersal and Al, I'd put a builder stock right now right up there with Ford. Sal you are a glutten for punishment.

One way to check it out though. Call up Toll Bros. and ask if they're hiring any superintendents. You guys are market genius's.
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Old 06-23-2007, 10:50 PM
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Default RE: Housing Industry? I'm out.

Man, I was looking to buy shares of Bugbuster International, but I couldn't find any.


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