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People Attempting To Gauge Their Home’s Value Are Discovering A Harsh Reality

A report from the Bay Area Newsgroup in California. “Seventy-year-old Jeanine Fetterly’s dream since 1976 was to have her children build themselves a home on on a lot that she bought down the street from her house. But after the passage of Oakland’s Measure W last year, which put a $6,000 tax on vacant lots like hers, she fears that dream will never come true. She looked into selling the parcel, but since the passage of Measure W, it has lost around half its value, she said.”

“Oakland realtor David Eckert confirmed that the tax has significantly brought down prices of certain vacant properties, which were already weakened by rising construction costs, impact fees and a spike in the cost to install utilities. Fetterly said she believes others in her situation would rather sell at a loss than pay the tax, which she thinks would empower corporate property owners to buy up a larger chunk of the city’s vacant properties — the opposite of what the tax was intended for.”

“‘Somebody who was going to sell a lot for $250,000 now has to sell it for $125,000, and the speculators will come in and buy them all up,’ Fetterly said.”

The Las Vegas Sun in Nevada. “Las Vegas ranks fourth among U.S. metro areas with the sharpest deceleration in home resale prices, according to a report. ‘We’re still flat as of the last numbers we have,’ said Janet Carpenter, president of the Greater Las Vegas Association of Realtors. ‘There’s just not much going on. There’s not much appreciation at all, and appraisals are coming in low for the most part.'”

“Carpenter said people attempting to gauge their home’s value based on what a neighbor got in a sale six months ago are discovering a harsh reality. ‘I think people are thinking they can get the same thing. Well, no they can’t right now,’ Carpenter said.”

The Los Angeles Times. “Former San Francisco Giants general manager Brian Sabean has wrapped up a deal in the desert. His split-level home in Scottsdale, Ariz., has sold for $1.35 million. It chalks up as a loss, records show. Sabean shelled out $1.5 million for place in 2006. He first listed the home for $1.475 million in February, but a May price cut brought the tag down to $1.4 million.”

From Mansion Global on Florida. “What was once the highest-listed home for sale in Palm Beach, Florida, at $84.5 million sold Monday for $40.87 million, nearly half its original listing price. The custom-built, oceanfront mansion first listed in March 2015 and has seen several price cuts since then, Mansion Global has previously reported. The house was reduced to $79.5 million, $74.5 million, $69.9 million, $64.9 million, and $59.9 million before closing at $40.87 million, according to listing records.”

From Bisnow on New York. “The companies behind a luxury condominium in the Financial District missed loan repayments and are now facing foreclosure from their senior lender, according to a new lawsuit. Davide Bizzi’s Bizzi & Partners, Howard Lorber’s New Valley, investment firm Carlton Group and equity partner China Cindat own the project at 125 Greenwich, an 88-story skyscraper designed by Rafael Viñoly.”

“Senior lender Singapore-based United Overseas Bank filed a notice to foreclose on the sponsors earlier this week, claiming it is owed $195M that it provided, plus unpaid interest, The Real Deal reports.”

“The project topped out earlier this year, and a three-bedroom unit is asking just shy of $7M, per StreetEasy. The complaint was filed in New York State Supreme Court, and if the foreclosure goes ahead it will wipe out $130M in equity and preferred equity, as well as $200M in junior debt from various lenders, according to TRD. Earlier this year, the EB-5 lender on the project, Nick Mastroianni’s U.S. Immigration Fund, issued a notice of intent to foreclose, though Mastroianni told TRD foreclosure would only be used as a ‘last resort.'”

The Wall Street Journal. “Chinese authorities are directing Anbang Insurance Group to sell off assets more quickly, seeking to shrink the troubled companyto roughly half its previous size.
Regulators said in a briefing Thursday that Anbang has disposed of or is disposing of more than a trillion yuan ($145 billion) in assets, about half what it held when the government took it over last year, according to its website.”

“That takeover in late May—the government cited severe credit risk—had sent borrowing costs up for smaller banks and financial institutions, sparking worries of a default. The regulator didn’t specify which assets would be sold. The Wall Street Journal previously reported that Anbang is seeking to sell billions of dollars worth of U.S. property and hotels.”

“The insurer was able to fund a global spending spree by selling high-yielding short-term investment products to ordinary Chinese consumers. The government put an end to that last year by taking over the company and sending its then-chairman, Wu Xiaohui, to prison for financial crimes. Regulators described Anbang’s breakneck expansion as a systemic risk to the country’s financial system.”

The Port Townsend Leader in Washington. “Key City Public Theatre has been trying to sell its uptown property for four years with no luck. Now, time is running short. A notice of foreclosure has been filed to go into effect August 30. The nonprofit theatre organization bought the property at 1128 Lawrence Street in 2006 with the aim of building a larger theater in its place. The 8,500-square-foot lot is zoned for commercial use. On the property is a 1,293-square-foot house built in 1900.”

“It was the peak of the local housing boom when Key City Public Theatre bought the property for $500,000. Ian Keith, a board member at the time, loaned KCPT the $500,000 to purchase the building. A $300,000 bequest from Reed Austin, an illustrator and former assistant art director at Playboy magazine who loved musical theater, helped pay down that loan.”

“‘There was a sense of urgency that if we don’t get this property now, there will never be another viable property,’ said Denise Winter, artistic director of KCPT. ‘So we did it. But it has never been worth half a million.'”

This Post Has 71 Comments
  1. ‘since the passage of Measure W, it has lost around half its value, she said’

    Half off in California! Are we there yet?

    ‘Oakland realtor David Eckert confirmed that the tax has significantly brought down prices of certain vacant properties, which were already weakened by rising construction costs, impact fees and a spike in the cost to install utilities’

    No no no, there should be bidding wars, over asking for any burned down 100 year old shack in California. Wa happened? Are you trying to tell us a $6k tax wiped out half?

    Eat yer crowz Thornberg!

    1. ‘What was once the highest-listed home for sale in Palm Beach, Florida, at $84.5 million sold Monday for $40.87 million, nearly half its original listing price’

      But half off is unrealistic?

      1. Why though, exactly, did the passage of Measure W kill the value of lots so quickly? Is everyone dumping them now to avoid the tax, increasing area supply?

        1. Measure W has little to do with the value of lots dropping…It has “everything” to do with the cost of “all in” construction of a new dwelling in California but more specifically in Silicon Valley…

      2. “More independently owned private property going into the hands of investors.”

        Because of the tax. I like it.

        If managed correctly the tax will be removed the exact moment all independently owned private property lands in the hands of the investors.

        It’s God’s will. See Matthew 25:29.

  2. Another day, another NYC tower in foreclosure.

    ‘if the foreclosure goes ahead it will wipe out $130M in equity and preferred equity, as well as $200M in junior debt from various lenders’

    Yellen bucks march off to money heaven…

  3. ‘His split-level home in Scottsdale, Ariz., has sold for $1.35 million. It chalks up as a loss, records show. Sabean shelled out $1.5 million for place in 2006’

    Eeee-bola Scottsdale!

  4. “‘Somebody who was going to sell a lot for $250,000 now has to sell it for $125,000, and the speculators will come in and buy them all up,’ Fetterly said.”

    I think the story deserves the little violin. It makes no sense. You can pay the $6000 tax for more than twenty years and not lose $125,000. Nothing is keeping any of her children from building on the lot and avoiding the tax. She is the speculator, no allege speculator is coming in to buy them up. The $6000 tax discourages speculation.

    1. It’s California. The REIC will cry all day over the poor renters and how they’ll never catch a break, while gleefully celebrating each bit of news that prices are up, up UP! Then, when they get their ass handed to them, blame it on something other than gravity. This old lady is a speculator. And how does she sell at a loss if she bought it years ago? Refinancing is speculating too.

    2. You beat me to the punch ABQDan. In my mind, this measure is having the exact intended benefit. There is no societal benefit for someone to just sit on prime land that could be put to use, especially in an urban city center. Part of the reason why China’s property bubble is so large is because there is no property tax, so the carrying cost on airboxes in the sky is almost zero. Imposing a vacant lot fee, whether paid for by individuals or corporations, will prevent land hoarding.

      1. Empty unit/box tax was implemented in Vancouver, BC. It’s having the intended effect. The tax is just one catalyst to popping of the Vancouver housing bubble. Once the psychology turns, there’s no putting the toothpaste back in the tube. It’s now (finally) documented that Vancouver’s housing bubble was driven by Chinese buyers, including a large component of money laundering activity. Local and national governments in my view aided and abetted the whole scheme, since there was money to be made. “We’re from the government and we’re here to help!” Never mind that most citizens were/are priced out of the market. Hey, laws are for little people. They only implemented the tax after public backlash/outcry about the now insane housing prices.

        It looks like that some of the empty box tax is just beginning in the U.S. U.S. is behind Canada and Australia on the housing bubble timeline, but I expect the same progression in all cases. Again, the empty box tax is just one catalyst of many. End result is the same, since bubbles always pop, This was preventable, just eliminate central banks and their virtual printing presses. The ultimate resolution of the global housing bust will be epic, IMHO.

        1. Again, the empty box tax is just one catalyst of many.

          cat·a·lyst
          /ˈkad(ə)ləst/
          noun

          a substance that increases the rate of a chemical reaction without itself undergoing any permanent chemical change.

          Yes, a catalyst indeed. IF we get cities passing these types of laws, then the bubble will collapse sooner. But it can go on longer than most of us here would like without a precipitating event. The cap on MID and SALT is having an effect, but it would have been much larger if MID was at lower amounts. A vacancy tax (or even better, a surtax on foreign holding of property) would be a wonderful catalyst.

  5. ‘Anbang has disposed of or is disposing of more than a trillion yuan ($145 billion) in assets’

    Is that a lot?

    1. I get sick of this BS being spread on my blog. Again, for probably the tenth time: around 2012 a crew were painting foreclosures for me in Flagstaff. They consisted of shack builders, etc, many of the foreclosures we painted they had built. I went out to pay the main guy one day. They had bought a foreclosed lot east of town. He was kinda bragging to me and went into meticulous detail about what everything was costing him. To make a long story short: $37 per square foot, for a custom 3,000 square foot shack and that’s not including the three car garage that had an RV bay.

      So keep being gullible Dan, and the rest of you. These shack builders are ripping you off year after year with their lies. And you’ll pay for it 30 years, with interest. Talk about stupid.

      1. BTW, Flagstaff is the most expensive place in Arizona to do business, and these guys had no illegals on the site.

        A shack is 90%+ air people.

          1. “The Houston-based firm relies on a glossy, maple-paneled $3-million Gulfstream G200 to transport its staff to meetings with clients in Silicon Valley on a regular basis.”

            “’Given the nature of our work, it’s important to be in front of our clients and be able to look, feel and touch their technology,’ Todd Patterson, a partner at the firm, which specializes in high-tech patents and intellectual property, tells CNBC Make It.”

            And this will end when Tech Bubble 2.0 pops.

          2. ‘But the biggest saver, perhaps, is that commuting allows the firm to avoid the exorbitant costs of living and working in California.’

            – Yes, correct. CA is becoming a “halves and have-not’s” State, if not there already. Wealth inequality is a National problem and CA is the poster child for this.

            – Observation: I think everyone agrees that CA is a solid blue state, meaning total control by the Democrats. Hey, I’m not picking on one particular political party or another – I’m a registered independent voter – by let’s call it for what it is.

            So the elites in CA (and most everywhere in the U.S.) are proponents of expanding their (subservient) voter base by extending the welcome mat to illegal aliens, with enticements of “free stuff” (i.e. public housing, welfare, documentation, food stamps, etc.). Meanwhile, those already impoverished by the current Socialist system and forced into homelessness (i.e. living on the streets, in cars and RVs) are ignored, since they’re already captured by the system and “living on the plantation”, like it or not. So, again, the Democratic Socialists are promoting/supporting illegals (i.e. non-citizens) over those legal citizens disenfranchised and marginalized homeless, near-homeless, or about-to-be-homeless, by the system. Does that seem like a pro-American party stance to anyone? Does the Democratic party base think this is all well and good? BTW, all of this pro-illegal immigration activity isn’t free. Taxpayers (from all parties) are footing the bill; by “We the people”. Where’s the compassion? Where’s the concern for the CA homeless from what used to be the party of the working people? It now appears to be the party of the elites, with only intention is expanding their base for self enrichment and power, IMHO. Next stop for CA: banana republic. Not that far off.

          3. So the elites in CA (and most everywhere in the U.S.) are proponents of expanding their (subservient) voter base by extending the welcome mat to illegal aliens,

            The wall we need is a wall around the safety net. Ben Carson’s proposal to remove housing benefits for illegal immigrants was tiny step in that direction.

          4. CA is becoming a “halves and have-not’s” State

            Chuckle. For now it’s “haves and have-nots”. But if the guillotines come out it might actually be “halves and halve-nots”. 🙂

          5. This reminds me of a divorced co-worker when I suggested that he needs to get laid. He replied, “I can afford to live on half…but not a quarter.”

          6. This reminds me of a divorced co-worker when I suggested that he needs to get laid. He replied, “I can afford to live on half…but not a quarter.”

            Sounds like a guy that’s still living in the past and needs to get out a little more. When he figures out that there are other options including women who bring more to the table than you do he’s going to kick himself.

          7. Well, he was a blue collar type, and we’re in corn-fed flyover country. There were also kids involved, the ex was immature and incredibly selfish, so the parenting plan was just another meaningless document that only applied to him. Alas, the only relief was his Canadian R&R to self medicate; he’s no longer with us.

      2. From my limited experience with home repairs/renovations it seems the market is really split into two halves. On the one hand there are companies with flashy websites, tons or marketing, and college educated white guys that drive out to give you an estimate making meticulous notes on ipads and crap. They put a lot of effort into looking fancy and professional. On the other there are the guys you call from craigslist who swing by to give you a quote on the way home from a nearby job. They just jog through the house and give you a number on the spot, then run home to have dinner with the wife and kids. The former types quoted me around $15,000 to paint the interior (950 sf house), put a new coat on the flat roof, and fix a few carpentry odds-n-ends. The latter quoted me $4,000. I went with the $4,000 quote and had a great experience (of course I was a bit lucky to get a good crew). I imagine it’s the same with new construction — if you get Toll Brothers to build you a house it’s probably going to be 4 times more expensive than the sum of the actual labor required.

          1. Yeah, they can’t afford to build anything affordable for the middle class any longer with costs like that to contend with. (sarcasm)

          2. You’ll notice this past week I posted a report saying Dallas shack builders were “responding” to affordability concerns with $250k shacks. Just like that, snap your fingers. And they are making a profit. They’ll keep going lower until they aren’t and stop. We only saw this a thousand times last decade. Meanwhile their former customers are hung out in the wind with those $500,000 loans.

      3. I fully believe Ben’s story about $37 a square foot, but I don’t believe I could ever come close to paying that on any home I might want to build, unless I did most of the building with my own hands, something I am no longer capable of doing. And I am even able to write a check to cover the whole expense.

        1. Another thing to think about is consumer psychology. There are numerous studies about how when something is priced lower on a supermarket shelf, it is perceived as being inferior in the absence of no other data on quality. I could conceive of the same thing working in the housing market. For instance, if someone builds something at a much lower cost than the prevailing price, would buyers be suspect at first and think, “Well, where did they cut corners?”

          1. Lack of understanding is expensive.

            Yes, it is. Another reason why it is probably better to rent for most people. If they are ill-equipped to take the time necessary to evaluate the biggest purchase of their lives, they might buy a lemon and it will sink their financial future.

            You know the difference between a good haircut and a bad one? About 2 weeks. Make a bad decision on a house, well, you’ve kind of screwed up your entire future.

        2. I don’t believe I could ever come close to paying that on any home I might want to build

          I agree. There must be “mafia blocks” (i.e., envelopes of cash) keeping building costs artificially high.

          1. M&L isn’t where the “magic” happens. Look closely at the appraisals. They’re where all the creativity begins and ends. In other words, somebody’s a lion. Rather problematic when money is involved.

        3. It will take you forever by yourself but you’ll be well under $20 a square foot… Including the lot.

        4. Until recently a builder in a suburb of Raleigh was advertising $60. sq. ft. (2000 square foot home for $120,000).

          1. Can you find that advertisement and post it because I have difficulty believing that even with Home Depot materials.

      4. “And you’ll pay for it 30 years, with interest. Talk about stupid.”

        Stupid doesn’t stop at thirty years. Get the pukes to regularly and continuously suck out equity and this stupidity can be stretched out over lifetimes.

        Like it, love it, want more of it.

      5. HA always suggested anywhere in the country with the land. I do not know how you do that when the lot is $250,000. But I made a joke, I was not looking for an argument.

  6. I am of the opinion that the local, bubbly living costs kind of get passed along in the cost structure. The more inflated housing costs are, the more you are going to have to pay for the laborers in that area because the ones doing the work have to live (e.g pay rent or mortgage) in that area. Kind of the same with medical treatment too. There are vast disparities on relatively straight-forward interventions or surgeries that are basically a function of location, which is a function of living costs.

    1. This right here. You see this in Hawaii big time. People have to be able to afford housing, food, insurance, etc. and with housing being the biggest component, that cost of effects the cost people/companies charge. You need new tires? Pay up. New furniture? Pay up.

      If Hawaii had a vacant lot tax like mentioned above it would crash prices overnight. I think the prices people charge would be a little sticky but eventually come down as those who went swimming with a bathing suit (not naked) would be able to dominate the competition. There would also have a mass exodus from the islands as people who went bust leave for better opportunities elsewhere – happens every bubble.

      1. Vacant lot tax AND a foreigner tax. I think they did that in Vancouver or some other Canadian city. The tax I am thinking of would be something like this: If you can’t tie a state tax return to the property you own in that state, then a higher property tax rate would be in effect. Tie it to SSN so that corporations or LLCs that own property would still have to tie back to a single SSN.

        It would basically function as a tax on those who are speculating, buying 2nd, 3rd, 4th, etc. properties, but it would spare the locals. Prices would fall and could be purchased by locals who would have a competitive advantage because of a lower tax rate. Let specuvestors go into some other asset class.

      1. But labor, cost of permits and restrictions on height, mandated materials, impact fees etc. do vary but as I have said many times it is land values which are the major reason for the variance

        1. A 10% labor delta and $1500 building permit and we’re all still profitable at $50/sqft any where in the US.

          1. BS.

            Show the numbers. Break it down mr estimator. Trade by Trade. Materials, Labor and soft costs.

            You won’t. Because you can’t.

          2. Here’s what MB posted in March:
            – Site package- $15k (mass excavation, backfill, trenching/pipe/corp stop, asphalt, misc concrete)
 Concrete-formed surfaces $100/cy +crete, flat work $2/sqft+crete. 

            – Framing package(deck, sheat and install winders)- $6/sqft of floor plan +materials
            
- plumbing package-$2500/bathroom or kitchen

            – E package $6000, $1k for fixtures, fix trimout $120/

            – HV package, $8k
            
- EFS, $200/sq

            – Shingles $50/sq +materials

            – kitchen- $4500 +1000 install
            
- Door &trim, $5k
            
- Gypboard, $35/4×12 sheet

            – insulation, $2/sqft or $4/sqft for foam
            
- Paint, $4000/2000sq ft structure

            – floor, $2/sqft + materials

            – tile, $3/sqft+ materials

          3. See how nice and “round “ all those numbers are. It’s all BS

            By the way. How many handles do you have now HA

          4. I’d like to add, I wish people would not change their names. It’s confusing and sometimes I only catch on that the person has always been here, but now under a new name. My duh.

  7. “Meanwhile their former customers are hung out in the wind with those $500,000 loans.”

    …. And a rapidly depreciating asset emptying their wallet month without a buyer in sight.

    I thought it’s cheaper than renting a house?

  8. “‘Somebody who was going to sell a lot for $250,000 now has to sell it for $125,000, and the speculators will come in and buy them all up,’ Fetterly said.”

    Pop quiz, Jeanine: who do you think owns “your” representatives and the corrupt municipal Democrat Party machine?

    Hint: it’s a big club and you ain’t in it.

  9. “A report from the Bay Area Newsgroup in California. “Seventy-year-old Jeanine Fetterly’s dream since 1976 was to have her children build themselves a home on on a lot that she bought down the street from her house. But after the passage of Oakland’s Measure W last year, which put a $6,000 tax on vacant lots like hers, she fears that dream will never come true?”

    That dream is 43 years old.

    Isn’t there a statute of limitations on dreams for your kids?

    I don’t know what lots in that hood went for in 2005 but if they were anything like SE Region IV lot prices in 2005 I would have turned that dream into one Fat Check.

    Oh

    “She looked into selling the parcel, but since the passage of Measure W, it has lost around half its value, she said.”

    Back in the day on this Blog it was referred to as a game of musical chairs. Apparently the music stopped and Jeanine got no chair.

    1. Jeanine got no chair

      She’s still got a chair. But she thought the one at the head of the table had her name on it. If she keeps walking around complaining she’ll find her current chair gone when she goes back to it.

  10. Jeanine sounds like an old lady neighbor of mine who bitched bitterly at a city meeting about being assessed for the first time ever for street reconstruction in our neighborhood. We were all getting tired of her nonstop pissing and moaning at the meeting and finally one neighbor dared say what the rest of us were thinking: “Shut up, lady – you’ll be dead before you have to pay it off anyway!”

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