Saturday, April 30, 2005

Camping For Housing Concept Spreads

The Contra Costa Times tells us buyers are sleeping in their SUV's to get to bid on homes. "'In one respect, it's sort of sad that it's come to this,' said Jim Croy, who took a day off work to take the head of the line."

"San Francisco resident Melissa Shanoian persuaded her sister to drive by periodically to see if a line was forming. She and her husband, rushed to the site at 9:30 p.m. Thursday to become fourth in line (for) townhomes that go on sale Sunday."

"'I just made it,' she said. The couple placed a television in their SUV and inflated an air-bed for the night. Shanoian's sister brought her a muffin and coffee in the morning while her husband went to work."

In this case the developers are enjoying the sensation. "The camp-out pleasantly surprised company officials, said DeNova sales and marketing director Debbie Bahr."

"Her husband slept in the van overnight and she stayed there during the day, alternately knitting an orange scarf or reading. 'Right now, the price looks OK, and that's the reason that we're jumping into this. But I didn't know that people do camping for housing.'"

19 Comments:

At 8:10 AM, Blogger Ben Jones said...

If you don't subscribe, try right clicking the link, paste it into google and you can access the story.

 
At 8:16 AM, Anonymous pb said...

Good God - are these builders English? That's the only way they could come up with such winning understatements as "pleasantly surprised" - as in "I was pleasantly surprised when bags of cash began falling from the sky."

Here's another concept that should catch on in a couple of years - camping *as* housing.

 
At 8:50 AM, Anonymous Pamela said...

Uh-huh. This is exactly what it was like in early 1990, right before my husband and I (newly married) purchased our first home in Tracy, not very far from this area being discussed. Everyone at my husband's work said "you have to get in now--you won't be able to afford to buy soon". We were one of the lucky ones (although we were very diligent in making sure we were set up financially to make the purchase) who were not upside down on our loan when we sold in 1995 for a relocation to San Diego, although we lost about $25,000. The RE market tanked shortly after we bought, and never went back up for the five years we owned there. And BTW, during those five years we lived in Tracy, the crime increased, upkeep of individual homes/neighborhoods went down, and the builders kept on building cheaper homes. It was a sad way to leave our first homebuying experience, but a great lesson.

 
At 9:14 AM, Blogger desi dude said...

thx pamela for the input

I need to hear these anecdotes to keep my sanity.

We have a friend(we are in LA suburbs), husband does some kind of business-- not regular/steady income. wife is a teacher in a private school, going be the exp of my wife in a similar occupation, makes about 12/14 per hr.
They have been living in a rented home for past few years, approx 1600 rent per month.
now the owner is selling, these people want to buy it . cost 600,000

Husband's family is supporting with downpayment. I wonder how will they be able to keep up with mortgage?? who will give them mortage , i mean a sensible banker .

it upsets me a lot that they are going into this with out thinking.

I think that is the power of hysteria about real estate, I guess.

 
At 10:06 AM, Blogger John Law said...

when I heard people were camping out to get to get properties I knew it was a bubble.

then I heard the cost of a house far outstripped it's rental income, I knew it was 100% a bubble.

 
At 11:09 AM, Anonymous Anonymous said...

Hang in ther Desi!

Here's another example of the absurdity of this market:

In October of 1998 I purchased a 2300 sf home, an hour and change east of Contra Costa County, for $158k. In October of 2004 I sold for $415K (to a buyer with 100% financing of course).

We invested $50k of our $261k net proceeds in a metals fund as an inflation hedge. The balance is sitting in FDIC insured savings.

While RE for sale is scarce and ridiculously priced, There is a glut of cheap rentals available. We moved into a brand new rental house (Thanks investors!) and figure we are saving about a third over owning, without even taking maintenance into consideration.

Forget about location... Let's talk about timing (with due credit to San Diego RE Expert Robert Campbell). When I purchased my home 6 years ago, the developer was trying to get out of a subdivision that had about a dozen unsold houses and no buyers. They offered handsome incentives including discounted financing, upgrade credits, and even free trips to Hawaii! I opted for the $10k in free upgrades.

Now we have people camping out for the privilege of becoming slaves to an IO or ARM on a hopelessly overpriced piece of real estate! Who do you want to be - you or them???

When my landlord decides to raise my rent (which isn't very likely in the forseeable future) I can say "no thanks", and move. When a mortgage company sends "the campers" a notice that their payment is going up another $300 next month, and their house value has just dropped another $10K, they can't say "no thanks" and move. Who do you want to be???

BC

 
At 12:37 PM, Anonymous suburbanite said...

Walnut Creek is selling well. Part of the problem, frankly, is supply. There just isn't that much development going on in the Contra Costa area. And the people that already own homes aren't selling because they know they couldn't afford the new prices.

So you have lots of demand and very little supply. The main question in my mind is where all this "demand" is coming from. After all, Walnut Creek (and environs) has grown about 10% over the past 10 years. The job market is flat and so are incomes. Yet homes have nearly tripled since 1996.

Where was all this demand 10 years ago when homes were selling for one-third the price? The demand isn't being fueled by population growth or income growth or job growth. It seems to be fueled by sentiment. Either: 1) people feel the market will run away and they will never be able to afford a home; or 2) they think homes will continue to the sky and they want in on the gravy train.

What's funny is that there is no housing shortage in Walnut Creek and surrounding areas. There are plenty of rentals, but no one wants them. They only want to buy and they don't seem to care what they pay for them so long as they can get financing. In a couple of years, when these ARMs and I/O loans begin to bite, there's going to be hell to pay.

 
At 1:46 PM, Anonymous Anonymous said...

Anonymous 12:09
You touched the interesting subject, which I would like to be discussed on this blog.
You said that You have some money sitting on FDIC insured account. I think we all here very smart on the issue of housing bubble, but it seems we dont realize what is going to happen to US banking system after the burst. I am a little bit afraid that many bloggers are smart about RE, but they call cash a King a little bit to soon. Sure it is better to have cash than plummeting RE, but cash is not much save when the banks which live off mortgage originations, mostly, these days, will stop seeing revenue coming. We all know the story of S&L in nineties. We about to see repeat with banks as a major actors of follow up of RE bust. And that may also cause big brokerage houses to disapear. I believe safe deposit boxes, seens located in banks buildings, are not sure thing either. And obviousely FDIC is a big joke. Who wants his 100 K to receive in payments over 20years.
Unfortunately, I didn't figure out a way to protect my money with easy access that I need and have them instantly available when I need them. And we all should be discussing the subject here. We can convince each other about RE bubble, but it is more usefull to discuss what we can do about to secure our future, because with the size of this bubble and 25 % jobs of this country related directly or indirectly to RE we cannot rule out Greatest Depression in the near future.
Mike C., Chicago.

 
At 2:58 PM, Blogger Ben Jones said...

Mike,
Good point and a while back we did get into that. Personally, I own mostly Swiss Francs that I can take physical possession of overnight. Gold and silver are good, too. Any suggestions?

 
At 6:16 PM, Anonymous Anonymous said...

buy some oil. it keeps well.

 
At 6:22 PM, Anonymous Anonymous said...

in NJ in 1986 i camped out to buy a townhouse built by Hovnanian. i sold it 2 years ago when it shot up what i thought a ridiculous amount.
even in 1986 i was educated about popular delusions and the madness of crowds but i saw "real demand" and i figured housewives didnt speculate. it took 15 years for that purchase to get back to break even. todays scenario is 5x worse. hopefully i can profit on both sides of this situation...but it wont be easy.
btw i think it tops this spring.

 
At 9:35 PM, Anonymous Anonymous said...

Mike,

I couldn't agree with you more regarding the possible future of FDIC savings. Figure I'll be relatively safe there until mortgage defaults start hitting. Then it'll be time to go elswhere.

BC

 
At 11:08 PM, Anonymous Anonymous said...

Ben,

Where did you get and keep those Swiss Francs?

 
At 11:17 PM, Anonymous punchbowl said...

I'm pretty gloomy (I do indeed believe that we're heading for the biggest depression since the 19th century), but I don't believe that the FDIC will become insolvent. (More precisely, I believe that Congress and the Fed will do whatever is necessary to assure FDIC solvency -- including running the 'ole printing press.) Remember, those insured by the FSLIC ultimately did get their deposits (and for many their funds were never unavailable, even as the thrift failed). Don't get me wrong -- the next few years are going to be ugly -- but failure of the FDIC will essentially be default on sovereign US debt. (And of course, a US default is impossible as long as the US is borrowing in its own currency.)

 
At 6:17 AM, Anonymous Anonymous said...

Punchbowl,

Yes, he gov will make sure FDIC does not fail, and pay back every dollar you have in the banl...but those dollars will be almost worthless due to inflation.

Buy gold and silver.
Take physical possession of some, and consider goldmoney.com for daily transactions.

 
At 7:48 AM, Anonymous Anonymous said...

Buy CD's in foreign currency.
That way you gain as the $ falls even lower

http://www.everbank.com/

 
At 9:11 AM, Anonymous Anonymous said...

Anybody have an opinion on CEF or any other metals holding company?

 
At 10:01 AM, Anonymous Anonymous said...

Ben! Could You enlight us about the way You and others protect themself. I dont even know where to go for Swiss Franks other than futures contracts. And being RE investor, I think after first wave of fall out of prices, carefully chosen RE, may be safer then Greenback, because is tangible.
I also think about gold. But it is not easily liquid and , frankly, 'confiscation" cannot be rule out.
Mike C., Chicago

 
At 8:20 PM, Anonymous Anonymous said...

Waiting in line overnight - this reminds me of the story my previous landlord in Singapore told me - he bought his apartment in 1996, bang smack right at the height of the Singapore property boom. He waited overnight, of course, as he only wanted that particular unit out of the whole development. Back then he paid close to S$1.1million ... failing to sell it for a modest loss to previous renters, he's now looking at the current market valuation of about S$700k or so and wondering if he should absorb the loss...

Waiting overnight is definitely a sign of the bubble bubbling over.

 

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