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Before, Even If The House Was A Piece Of Crap, Folks Were Fighting Over It

A report from Bloomberg. “The trustee representing bondholders who invested $250 million in a luxury dorm at the University of Oklahoma accused the college Monday of breaking a promise to lease retail and parking spaces over the 40-year term of the bonds. Bonds issued in 2017 to finance the 1,230-bed complex known as Cross Village, which had a 27% occupancy rate at the end of March, lost a third of their value after the university terminated the agreement.”

“‘Major mutual funds, which aim to judiciously invest ordinary peoples’ valued savings and pension monies, lent $250 million based on the belief that the University would honor its obligations and not unnecessarily jeopardize Oklahoma’s standing in the municipal market,’ Arent Fox, the law firm hired by UMB, said in the letter. ‘This belligerent act sends a loud and clear message to the marketplace and business community. YOU CANNOT TRUST AND SHOULD NOT DO BUSINESS OR BUY BONDS OF THE UNIVERSITY OR THE STATE OF OKLAHOMA.'”

“Colleges from Texas A&M to Kean University in New Jersey have tapped non-profits to finance student housing in an effort to hold down debt as they cope with declining state aid and pressure to limit tuition increases. The University of Oklahoma case highlights the risk of projects that rely on third-party support and recalls a decision by Michigan to terminate a lease in a bond-financed building after four years, leading to a default in 2017, according to Municipal Market Analytics.”

From Mansion Global on Florida. “Buyers are getting another crack at Mariano Rivera’s seven-bedroom, 10-bathroom home in Tampa, Florida. The former New York Yankees relief pitcher’s custom-built home hit the market Wednesday for $3.5 million, according to listing agent Jennifer Fieo of RE/MAX Alliance Group. But it isn’t the first time Mr. Rivera, 49, and his wife, Clara, have tried to sell it.”

“In March 2017, it was listed for $5.99 million, Mansion Global reported. That price was already a 33% drop from 2010, when it was listed for $8.9 million, according to public records. In November 2017, the price dropped again, to just under $5 million, and it was removed in March 2019 before hitting the market again last week.”

From Mansion Global on New York. “With the unofficial end of summer behind us and wealthy New Yorkers returning to the city, an uptick in the world of luxury Manhattan real estate would seem to be in the cards. But that wasn’t the case last week, which turned out to be the slowest Labor Day week in seven years in terms of high-end home sales, according to Monday’s Olshan report.”

“Just 10 contracts were signed at above $4 million—the report’s benchmark for luxury—the lowest total since 2012, when only five contracts were signed.”

From Curbed Austin in Texas. “The last time this Lake Austin ranch came on the market, it was owned by online-gaming pioneer/podcar advocate Richard Garriott de Cayeux and asking $45 million. While we can’t confirm if Garriott is still the seller, it’s definitely for sale again, this time with a $10 million price drop (but apparently without a possible bitcoin discount, as Garriott was offering at one point).”

“Now asking a mere $35 million, the 65.68-acre waterfront property does seem like quite the glamorous refuge—with the potential to be a show palace of a residence or remain relatively woodsy and wild, depending on the buyer’s choice.”

The Seattle Times in Washington. “In the past four months, prices have dropped from a peak of $700,000 in May. This kind of almost predictable seasonal movement isn’t what home shoppers were used to seeing during the frantic years of bidding wars and weeklong listings. Between 2015 and 2018, home prices at the end of the summer buying rush were as much as $100,000 higher than they’d been the same time the year before.”

“It’s a big change from 18 months ago, said Anna Morgan, a Bellevue John L. Scott broker who started with the firm in January 2018, the height of the feeding frenzy. ‘Last spring, where houses were selling in a weekend with multiple offers, it was like drinking from a fire hydrant,’ she said. ‘It was fantastic, but it wasn’t sustainable.'”

“Now, home inventory in Seattle is up 20% even over 2014 levels, spelling more choice for buyers entering the market. And an increase in pending sales is having ripple effects into the construction industry, said Matt Motzkin, the owner of House Doctors of Eastside Seattle. Last year, most of his work came from remodels. This year, he said, ‘we’re seeing folks putting in a lot more effort to sprucing up their house for sales. Before, even if the house was a piece of crap, folks were fighting over it,’ he said.”

“As the market for King County’s single-family homes stabilizes, condo sales continue to slow. In Seattle, median condo prices are down by 11% over last year, to $450,000. ‘Anything above $450,000 was drastically overpriced,’ said Steve Colony, a broker at Keller Williams in Marysville. ‘Now prices are starting to come down and people who have wanted to buy houses for the past years are making offers and starting to put their own houses on the market.'”

From DS News. “Overall, the U.S. housing market has been strong, but in a few communities across the country, signs of weakness have begun to show. These communities may be at risk for a crash, GOBankingRates notes, even if the rest of the country isn’t, as their foreclosure rates outpace the rest of the country.”

“Peoria, Illinois is GOBankingRates’ number one city at risk for ‘turning ugly,’ -15.9% 2-year home price change and a foreclosure rate of one in every 932 homes. Peoria has seen the biggest drop in home prices over the past two years of any city on the list. The percentage of underwater mortgages here is more than double the percentage nationwide. And the foreclosure rate is among the highest on the list.”

“Portsmouth, Virginia taking the GOBankingRates third spot, has the highest foreclosure rate of any city on the list, as well as the highest rate of underwater mortgages. One in every 730 homes in Portsmouth is under foreclosure, while 19.4% of borrowers hold underwater mortgages.”

“Bridgeport, Connecticut holds the second highest number of percentage of underwater mortgages on this list, as well as a foreclosure rate above the national rate. 26.9% of homes in Bridgeport are underwater. Florida has the highest number of cities with real estate markets that could be in trouble, followed by Illinois. Florida cities on the ranking include Orlando, where home price growth has been slowing. The percentage of listed homes with price cuts in Orlando is higher than the national percentage, at 21.2%. Additionally, the foreclosure rate in Orlando also is higher than the foreclosure rate nationwide.”

This Post Has 65 Comments
  1. ‘Major mutual funds, which aim to judiciously invest ordinary peoples’ valued savings and pension monies, lent $250 million based on the belief that the University would honor its obligations and not unnecessarily jeopardize Oklahoma’s standing in the municipal market’

    Ring ring!

    Hello?

    Mrs Gullible?

    Speaking.

    I’m Dan Backslapper from Wringem Out and Duck, your retirement fund.

    How are you Dan? Me and Hubbykins are just loading up the RV for a cross country extravaganza!

    You might want to sit down Mrs Gullible.

    1. wow – at least the U was not a patsy. It was the dumb bond buyers on wall street. Wow! i thought they were the smartest

      —–

      UMB’s letter contained numerous inaccuracies and misstatements about the university’s obligations, Lauren Brookey, a university spokeswoman said in an email. The school is simply exercising its contractual rights by not renewing the leases, whose costs didn’t justify the benefits, she said.

  2. ‘‘Last spring, where houses were selling in a weekend with multiple offers, it was like drinking from a fire hydrant…It was fantastic, but it wasn’t sustainable’

    Now she tells us. I’d bet “last spring” this UHS wasn’t saying anything like this.

    “Ben, are you saying these agents are double dealing backstabbers?”

    ‘Now, home inventory in Seattle is up 20% even over 2014 levels, spelling more choice for buyers entering the market…’Before, even if the house was a piece of crap, folks were fighting over it’

    Gosh, I hope no one overpaid in such an environment…

    1. “Before, even if the house was a piece of crap, folks were fighting over it,’ he said.”

      – Fighting over a piece of crap. That sounds normal… Think tulip mania.

      – The overall tone of these articles is low key, hakuna matta, “no worries”. Sort of a daytime version of whistling past the graveyard. One might consider rearranging deck chairs on the Titanic as more apropos.

      – MSM revenues come from UHS/REIC to a great degree. We probably won’t get the straight story from them until it’s way too late and it’s impossible to hide it anymore. Kind of like on politics. Think of MSM “journalists” as democratic operatives with bylines. Same applies to reporting on real estate. “Cover the story (with a pillow), until it stops moving.”

  3. ‘Florida has the highest number of cities with real estate markets that could be in trouble’

    But there’s no foreclosures! Florida is a tiny place, a statistical nothing.

    In 2016 I posted a report that said 10% of mortgages in Florida were in some stage of default. The REIC diligently buried that.

    1. When the hurricanes get down to the “R” letters, they should name it: “Realtor”

      full of hot air. always spinning . . .

      spinning

      spinning

    2. I’m seeing more and more blue dots (pre-foreclosure) popping up on Zillow here in sunny SWFL. And every one of our towns made the top 50 list of falling markets posted here yesterday. Naples, Fort Myers, Cape Coral and Lehigh Acres.

      I just spend about an hour randomly looking at Zillow listings and had no problem finding several that have been on the market, on and off, since 2017. It looks to me like the primary issue is overpricing from the start which creates a false sense of value in the sellers minds.

      These Used House Salesmen don’t realize the damage they’re doing to themselves and their industry when they dangle astronomical listing prices in front of sellers to get the listing…

      1. I’ve been doing deep dives on two properties of interest. Let’s just say, my realtor found my resourcefulness “scary.” From what I can tell, the owner/seller of one property bought it out of foreclosure in 2011. The previous owner had loans from Countrywide, Greenpoint, Indymac and WaMu. The current owner/seller appears to have used the property as a piggybank but not nearly to the extent that the owner/seller of the other property has. The owner/seller of the first property expects to net quite a bit. I’m not sure the owner/seller of the second property will net anything.

        1. my realtor found my resourcefulness “scary.”

          Realtors… Well if your set on using a realtor you should demand a “rebate” from there undeserved commission check. Unless they are actually negotiating down your purchase price to offset there (your actually paying this) commision, you should be getting part (i vote all) of that back since YOU are the actual one paying it and with interest over 30 years. Click on the “owning.com” link that often pops up on HBB and you can see the ibuyer model will actually offer you a rebate with a fee of course. Most Realtors could care less if you get a rebate, they want you to spend top dollar and squeeze as much as there greedy rat claws can get from you. #ditchrealtors #savethedyingsquirrelpopulation

          1. “And helping me clean out my mother’s house. She’s earning her cut!!“

            Well long as you hide your valuables and keep a sharp eye on her 😉

    3. I recall anecdotes shared here about Floridians in default who stayed in their houses rent free for years, and who bragged about it.

      1. Yes, it happened frequently. I know of two personally who’s banks refused to work with them when the bottom dropped out of the market so they simply quit paying their mortgage and stayed put. Months and years passed with nothing more than an occasional letter or phone call.

        2-3 years later both lien holders agreed to reduce their mortgages to reflect the severely reduced property values and let them stay with no additional penalties for all the months of unpaid mortgage as long as the new payments were made on time for some specified period.

        1. They rolled the dice and won.

          I know plenty of people evicted too.

          Not a game I want to play – in every time I come home there might be a Sherriff with an eviction notice there.

          1. In SWFL I think the banks realized at some point that it was better to leave the houses occupied until they got them off the books.

            The ones that were abandoned quickly became overgrown, damp, moldy and generally unsaleable. The major mortgage lenders had so much on their plates down here that they were gridlocked. Housing prices dropped by half or more and everybody that had bought in 2005-2007 wanted out. It was a total train wreck.

            I believe Southwest Florida and Las Vegas are widely believed to be the hardest hit RE markets during that debacle.

        1. No, they didn’t get evicted. They got their loan modified and were allowed to stay in the home.

          In one instance it was a loan that was originally given by Countrywide and then sold to BOA. I guess there was a paper trail issue that made it very difficult for Bank of America to do anything. So, they just let the people sit there while they waded through their other messes. Eventually they (BOA) came with an offer that reduced their payments and let them stay in the home.

  4. Once again, HBB readers are years ahead.

    August 14, 2018

    From News OK in Oklahoma. “Upperclassmen move into campus housing Wednesday at the University of Oklahoma, but many rooms will be vacant. OU’s efforts to entice more students to live on campus after their freshman year began last fall with the opening of two elegant residential colleges that together can accommodate 600 upperclassmen. Officials predicted there would be a waiting list to get into Dunham and Headington going forward.”

    “But this fall’s occupancy for the two residential colleges is at 70 percent, OU spokeswoman Erin Yarbrough said. Another 1,230 beds for upperclassmen are available for the first time this fall with the opening of Cross Neighborhood, a luxury complex that has an occupancy rate of 28 percent for the fall semester. New OU President Jim Gallogly said earlier this summer the residential colleges were ‘cash negative from Day 1.’”

    “They feature spacious dining halls, made-to-order food options, private courtyards, game rooms, comfortable lounges and libraries filled with books and artwork on loan from the campus museum. Before he took office July 1, Gallogly announced the university has been losing money every year. Total debt is nearly $1 billion at the Norman campus and debt service costs are almost $70 million a year, he said.”

    “‘Our debt has more than doubled in the last 10 years as we’ve been on a building campaign,’ Gallogly said. ‘As a result of that, we have a beautiful campus and a lot to be proud of, but during that period of time, we spent approximately $730 million and that’s why the debt has gone up to that level.’”

    http://thehousingbubbleblog.com/?p=10541

    I was able to see this bubble in 2014 because I could see they weren’t making money. (Even though rents had never been higher!) Why would anyone build? Because they expected a greater fool to buy it from them. Classic mania.

    1. What about Grand Canyon University in Phoenix? Where did they get the money/investors to bank-roll the massive housing and campus update (GCU Arena, Soccer Stadium, Baseball Stadium, Huge Rec centers, STEM building, Jerry Colangelo School of Business, and so on.) They just changed their for-profit status back to non-profit. Someone/people must have cashed out big time.

  5. housing bubble burst 2.0 in full force as the Open House signs appear at intersections. again

    bet the UHS are piiiiiiiiised they actually have to tote those damn signs around, instead of just cashing ez skim from desperate buyers.

    the nerve of those picky fence sitting greedy buyers. stop making insulting low ball contingency laden offers & just pull the trigger

    turn those machines back on, damn it

    1. “housing bubble burst 2.0 in full force as the Open House signs appear at intersections. again”

      its gaining momentum for sure. I get constant emails for open houses in my area 7 days a week. 150+ open houses each weekend and climbing, where as mabye 5-10 a year ago.

  6. In Seattle, median condo prices are down by 11% over last year, to $450,000. ‘Anything above $450,000 was drastically overpriced,’ said Steve Colony, a broker at Keller Williams in Marysville.

    Ding Dong

    “With the unofficial end of summer behind us and wealthy New Yorkers returning to the city, an uptick in the world of luxury Manhattan real estate would seem to be in the cards. But that wasn’t the case last week, which turned out to be the slowest Labor Day week in seven years in terms of high-end home sales, according to Monday’s Olshan report.”

    Damn you SUMMER!!! Oh wait…

    1. “But that wasn’t the case last week, which turned out to be the slowest Labor Day week in seven years’

      Its different this time, didnt you get the memo / spam email i sent you! Everyone, EVERYONE has briefcases full of cash and will buy as soon as they return from 1-2yr vacations.

          1. Thanks. But it’s fun to respond to txprs minimalist poetry, in kind. It actually takes more thought than complete sentences.

  7. house flippers here in N. Cal are getting their azz kicked!

    thanks to the many online sources now available, people (whoops, I mean “folks”) can easily research a listing.

  8. Funny thing happened over the weekend in my hometown of Cody, Wyoming. Kim & Kanye liked their recent trip to Jackson, WY so much that they decided to buy one of the big overpriced ranches in the area that trade hands between out of towners every once in a while. So everybody is pretty amused about it because they WAY overpaid. The funniest part is that Cody and Jackson are very different…and the buyers might not fully understand that.

    1. Jackson is a unique place sort of like Squaw Valley near Lake Tahoe, so they’re able to overcharge for everything. Any home with a view of the Tetons is priced accordingly. However, I bet their long cold winters up there wear on anyone used to warmer coastal southern California.

    2. I was in Victor, ID last year when Kim and Kanye came by and headed over the mountain to Jackson, WY. Talk about a culture clash when they brought their entourage into town…

  9. I don’t think that “moral obligations” hold up in court.

    Whoever made a significant investment based on something verbal like that got what they deserved.

  10. ‘This belligerent act sends a loud and clear message to the marketplace and business community. YOU CANNOT TRUST AND SHOULD NOT DO BUSINESS OR BUY BONDS OF THE UNIVERSITY OR THE STATE OF OKLAHOMA.’”

    Stamp your little feet! Stamp ’em, stamp ’em!

    (Oh, and you’d have to be a few IQ points short of moron to “invest” in luxury student housing…a flawed concept on multiple levels.)

  11. Before, even if the house was a piece of crap, folks were fighting over it,’ he said.”

    And now they’re stuck with a rapidly depreciating piece of crap for which they overpaid. Sucks to be them.

  12. “Now asking a mere $35 million, the 65.68-acre waterfront property does seem like quite the glamorous refuge”

    I looked at the listing, fully expecting to see some kind of mansion. It’s LAND. Land with some weird outbuildings(?) on it. A tiny-house (the only livable structure). A play wooden fort. A play wooden ship. A play lighthouse. A Texanized version of the Globe Theatre (maybe that’s the house?). A funky roof over a few small boats. A ruin(?) made of concrete — I don’t know if it’s a burned out warehouse, a recreation of the Roman Forum archaeological dig, or a stage set from Schindler’s list. A hunting blind. A sculpture that resembles Sputnik. The hell??!?

    You get a better look from the Zillow listing.

    https://www.zillow.com/homedetails/7400-Coldwater-Cyn-Austin-TX-78730/125903175_zpid/?

    $35 million? Maybe there’s oil under there…

  13. Looks like a 3/2 but anyway, how long they been asking $725,000 for a $185,000 house in Austin, TX.?

    $725,000 7 bd 2 ba 2,146 sqft
    4801 W Frances Pl, Austin, TX 78731

      1. “How do you lose that kind of money selling pricey stationary exercise bikes?”

        Evidently you add $4,000 high-tech treadmills to your high-tech $2,000 bike line.

        High-tech fitness startup Peloton has filed for an IPO. Here’s what it’s like to use its $2,000 bike.

        Mary Hanbury Aug. 28, 2019, 10:14 AM

        The buzzy New York startup has revolutionized home fitness with its high-tech indoor bike, which enables users to stream live classes from home. More recently, it launched its second product, a treadmill that costs nearly $4,000 plus a $250 delivery fee.

        We got to try out the bike that launched it into popularity. Here’s our step-by-step review.

        https://www.businessinsider.com/peloton-bike-cost-review-photos-2018-4

        1. use its $2,000 bike

          They have some sweaty young “instructors”. The videos on their website seem crazy and chaotic. I’ve never thought I needed to buy expensive things to exercise. Maybe it’s a substitute for just exercising.

        1. Both of these companies jumped the gun, their business models being dependent on autonomous vehicles that are not yet ready for prime time, the repeated traffic disasters caused by complacent, overconfident or ill-trained Tesla drivers being one example.

          Anyone who thought they were ever going to make a career out of being one of their stop-gap drivers is equally delusional.

      1. When the engineers are cut, but the marketing dept survives it’s the firm’s death knell.

        But not yet. It means the bagholder search just got serious.

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