Bubble in Asheville (Washington: insurance, credit card, home equity loan)

[Father John]

My take on all this.

I have been watching the markets for several years now. I always plan ahead - when we built the home we are in now, we spent 3.5 years looking for areas, homes, prices, builders, floor plans, schools, power companies, etc., etc. We have been VERY happy with this house and neighborhood because we planned.

The current market issues have happened before, but not with this kind of publicity. In the 1970s, housing jumped from very low to very high very quickly. By the early 80s, houses were as much as 70-100% higher than 10-15 years before. Then things settled back and for a decade, they didn't rise much. (This is in AZ where my experience is - I cannot speak with certainty about elsewhere.)

In recent years, speculators have driven the market. Greed is another word for it. The idea of "flipping" houses became very popular and the low cost of getting a real estate license sent many people into this field. In some states, like Arizona and Florida and Nevada, where populations are growing rapidly, the flippers came in droves seeing dollar signs from flipping property. Like a fish-feeding frenzy, the prices were driven up way beyond reason. The valuation on my property almost doubled in 4 years. That is stupid. It has since fallen back quite a bit, but is still much better than 4 years ago, so I am not complaining.... much.

The speculators moved on, leaving homes empty and writing the losses off their taxes. A few homeowners (and many more renters) got stuck in this sudden withdrawal from the scene by the sharks, but most of the foreclosures and bankruptcies are speculators, not ordinary people.

A recent report revealed that if you take Florida, AZ, and Nevada out of the statistics, then foreclosures and bankruptcies nationwide are DOWN from prior years! That shows, more than anything, where the problems started.

A wise poster above noted the effects on the rest of us from this. My home does not sell in 20-30 days now because there is a glut of homes on the market. The ones built for and sold to investors have been abandoned. Builders who built and never sold have cut prices. In AZ, we are told there is a 8-12 month glut of homes available.

This means folks like me cannot sell their home easily and thus cannot buy another easily. So my move to NC is totally dependent on selling this home in AZ. THAT is how the speculators hurt me and, in the same way, hurt the markets in Asheville and other NC communities.

Nonetheless, we are patient and will watch. The early bird gets the worm - so does the patient bird. We are anxious to come to your great state for the remainder of our lives, but we have a home and we are secure here. We will come when the doors open and the time is right.

This market problem will not last until 2012 or 2013. It does not have that kind of earmark. It will start to subside in 2008 and the effects will be gone by the end of 2009, except in trickle down places. America is resilient - but there will be other areas where the greed drives a stake into our lives and we will have to watch and wait out that issue when it happens, too.

The key is to prepare, take the slow and steady pace of the tortoise, and open the door when opportunity knocks.

Good luck to everyone. Hope to see you soon!

[Crazy G]

Reply to Fr. John...

I read your comments, and I agree with most of what you have said....however...there are few minor points that I think need clarifying..

The fact, that if you took Fl, Ca., & Nv out of the picture,,,forclosures would be down....I'm originally from Wi, and my kids still live up there, so I kinda follow what's happening up there also....Foreclosures in Wi are also, up significantly by 2-300%....These subprime mortgages were NOT just issued in 3 states....Supposedly the statistic floated, was that in 2006, 40% of all mortgages were subprime....

I told my wife 3 years ago...that heretofore, we must be very careful...
She asked WHY....I told her, that we[the country] was experiencing a macro economic event...

>>""""WE ARE CAUGHT UP IN THE MIDDLE OF MACRO ECONOMIC EVENT""<<<

You're being myoptic, ""IF"" you think this is going to be over by 2008....
You're being myoptic, ""IF"" you think the government can bail this out...

The macro event word to watch....would be "" CONTAGION """....

$100's Billions of dollars of 'bad' debt, has been sold into financial markets around the world....

It's a question of solvency NOW!!!! The people/companies...holding this paper, are on the verge of collapse..."""" BANKRUPTCY """

eg....CitiCorp....largest bank in the US....ON THE VERGE OF COLLAPSE....
eg....[C] had to borrow $8 Billion from the Arabs @ 11% interest just to remain solvent....The same thing with another major bank...had to borrow from Asia...$10 Billion...

Subprime foreclosures will not peak, until sometime around the middle of 2008...So.....Father John....How can you say this will be over by then????....

Then after that.....We have """ OPTION ARMS """ to deal with.....thru 2012....

The only thing I can say to you Father John, is that you must be the confessor to Alan Greenspan, to believe the things he has said!!!!

What I have said, and continue to repeat...over & over...

DEBT WILL BRING THIS COUNTRY TO IT'S KNEES...

[Asheville Native]

I walk my dogs past a 3 acre piece of land under development by yet another developer trying to make his fortune. The sign posted says there will be 18 homes on this 3 acre plot of fairly steep land.

The first footing and foundation are already been started, within feet of the street. Counting the concrete blocks for the foundation, the building will be 24' by 24' and it is already listed online with a price of $625,000 for 1753 sq/ft (on 3 floors), on a tiny and steep lot. Makes the McMansion up the street at 4,000 sq/ft for $875,000 look like one heck of a deal even though it is on a stupid steep 0.20 acre lot.

Betting on some people having more money than sense I guess

WOW, just did the math, that is $360 per square foot!!!!!!!!!!!!

[Crazy G]

You know how the story goes???? The developers/builders will continue to build/develope as long as the banks continue to loan them money....I noted, that United Community Bank got nicked for about $27 Million, on a bad deal up in Penland....

I'd give you 6:1 odds, that in 2 years, the bank will own that property, and you could buy it for $125/ sq ft.....

You can't get easy financing for mortgages above $417K.....You need 20% down, and you'll pay 7% + on a mortgage.....
Do the math...who's got $125K + to put down on a mortgage, and is going to pay 7% on a $500K mortgage.... You're talking house payments of $5K/mo...
In order to afford that house,,,,,you'd have to be making $250K/yr.....

HOW MANY PEOPLE MAKE THAT KIND OF MONEY?????

Probably less than 1% of the population.....

God's honest truth.....YOU CAN BUY """BEAUTIFUL""" 4500/ SQ FT HOUSE IN SUBURBAN WEST PALM BEACH FOR $100/ sq ft....I mean a gourgeous house....

[Crazy G]

Just a further note to you......

In West Palm Beach.....@ the current rate of sales....it'll take more than 4 years to sell all the houses listed.....

In all honesty.....I think you're praying to the wrong gods....if you think you're going to get out of your house alive...

This is a macro- event that is going to last a whole generation....30 years or more.....

Like I've said.....THE """X""" Generation, just got """X""ed out

[WeavervilleNC]

We've had our house on the market for 6 months now.
Seems really slow.
Two years ago we sold our last house in 12 days for MORE than we were asking for. Now we're in a nicer, bigger house - with a waterfall and incredible landscaping (more land too 1.67 acres) - and it's not selling.
These two homes are only 10 miles apart. So I'd say it's the market.
Hearing that from everyone form bankers to builders to real estate agents.

Things "are" still selling. But tons of inventory.

Kelly

[gypsychic]

Originally Posted by WeavervilleNC

We've had our house on the market for 6 months now.
Seems really slow.
Two years ago we sold our last house in 12 days for MORE than we were asking for. Now we're in a nicer, bigger house - with a waterfall and incredible landscaping (more land too 1.67 acres) - and it's not selling.
These two homes are only 10 miles apart. So I'd say it's the market.
Hearing that from everyone form bankers to builders to real estate agents.

Things "are" still selling. But tons of inventory.

Kelly

Well, it could depend on your asking price. Also 10 miles apart can be a lot depending on where exactly you are. Just curious why you just sold 2 years ago and already want to sell again - do you not like the area?

[Asheville Native]

Oversized, overpriced McMansion just down the street, constructed on a stupidly steep tiny tiny lot, and it has been on the market 18 months or longer (construction started in fall 2005) and counting. I hope the developer who was trying to make a fast buck by sticking a monster (4000 sq/ft) house on a very steep 0.2 acre lot is taking it in the shorts every time he has to pay the construction loan, as he has ruined the property value of several nearby homes this ugly McMansion towers over. Greed is ugly, and it creates ugly neighborhoods.

And I have no doubt in the world that when it eventually sells, we will see NY, FL, or CA plates on their vehicles, as no one that has any respect for our mountains would even consider this ill placed monster, or want it with it ridiculously tiny lot and very steep driveway.

[lovesMountains]

Originally Posted by Crazy G

Just a further note to you......

In West Palm Beach.....@ the current rate of sales....it'll take more than 4 years to sell all the houses listed.....

In all honesty.....I think you're praying to the wrong gods....if you think you're going to get out of your house alive...

This is a macro- event that is going to last a whole generation....30 years or more.....

Like I've said.....THE """X""" Generation, just got """X""ed out

Just wondering if you believe in the "end times" too (this kind of post reminds me of the way end-timers talk - all doom and gloom)

[Flat2MT]

Originally Posted by lovesMountains

Just wondering if you believe in the "end times" too (this kind of post reminds me of the way end-timers talk - all doom and gloom)

The housing situation is going to get a lot worse before it gets better and Crazy G is obviously very passionate about this subject. We shouldn't interpret his postings as nothing more than that.