Posted on 10/08/2007 9:59:44 AM PDT by oblomov
QUEEN CREEK, Ariz. - Out on Phoenix’s suburban fringes, where cement mixers are fast colonizing hay and cotton fields, the day is winding to a close. The home hour has arrived.
But sundown gives away a troubling secret: Behind dark windows and unanswered doors, it’s clear nobody is coming home.
The ranch home on Via del Palo where the newspaper in the driveway has been sitting unclaimed since April. The house at the corner of 223rd Court with faded fliers stuck in the door.
They’re empty, left behind by a rising tide of foreclosures.
This neighborhood has a still-unfolding story to tell. It’s not always a comfortable one to hear.
Not long ago, builders were raising home prices here thousands of dollars week after week. Families camped out for lotteries to win the right to buy. Buyers gambled with loans whose risks were obscured by euphoria.
This is the tale of how America’s real estate boom came to a seemingly ordinary subdivision called the Villages at Queen Creek, where the whipsaw of easy credit has led to some extraordinary times. They were the best of times, for a while. The empty homes, though, raise serious doubts about what comes next.
As the nation confronts skyrocketing foreclosures, what is happening here and in scores of similar neighborhoods is worth considering.
Because while the pressures at work in Queen Creek were extreme, the choices people made — and the consequences — are not so different from those faced by thousands of other homeowners and their neighbors.
“Honestly,” says Joy Kessler, standing on the doorstep of the house she and her husband are surrendering to foreclosure, “if you were in this situation, what would you do?”
(Excerpt) Read more at msnbc.msn.com ...
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Agreed, a home is an investment. But a house, on the other hand, is a consumption item with a negative cash flow.
And, goldstate's right....a home is not a consumable. They do go nowhere but up over time. It's the over "how much" time that gets folks into trouble.
The lure of easy money.
Lure of easy money? Sounds more like one of the oldest sales tricks in the world....”Buy now while you still can.”
Tell that to those folks on "Flip This House."
1999: Wah! Wah! They tricked me into buying this worthless stock. The Gov’t should dooooo something.
2007: Wah! Wah! they tricked me into buying this worthless house. The Gov’t should doooo something.
Real estate goes thru boom and bust cycles, just like Glowbull Warming..................
In the discussion upthread on whether a house is a commodity or not, mine is a home. I have lived in it for over 20 years, we raised the kids there, it's paid for, it is NOT a commodity. That's not how it's viewed by far too many.
From the article: “There’s been a huge shift in the way people view their houses,” says John Karevoll of DataQuick Information Systems. “Your house now can basically be used as an ATM.”
A home is really a liability, so it shouldn’t be looked upon as an “investment” at all. If you live in it for a long time and sell it for a lot more money than you paid for it, then great. If you live in it for a long time and don’t make any money on it, then it just served its purpose as a place to live.
Interesting article. My son and his wife are buying a house (new construction) out in that area right now and the builder is still tossing enticements their way.
Their base model now includes a third bedroom as std vice an option, which the kids paid for originally. The builder is ‘refunding’ their option fee to keep them on track to purchase.
My biggest concern is that they not get suckered into an ARM, and they’ve already said that they’re going nowhere near that kind of financing. Looks like they’ll be able to take advantage of her VA eligibility.
Housing as an asset has two components: the land and the structures on it.
If you rent the property out, then the whole package meets the conditions of an investment. But if you are living there, then it is generating negative cash flow and you are simply consuming the house over time. The land is the “investment” part of the property, the house is just something you are consuming, albeit slowly.
Since the life of the (constantly maintained) structure is usually much greater than the occupancy period of the owner, the owner does not see him- or herself as consuming the property, but this is what is happening. Eventually the structure will reach the end of its life (maybe 200-300 years for older houses, 70-80 years for the houses that get built now). The land will retain value nonetheless.
Oldest trick in the book. The moment a salesperson says "this price won't last" (even if its true) I'm out of there.
Anyone else notice the same regions have this problem once every ten years or so?
I did, before I bought my home in 2000.
Its appreciated approximately 35% since we closed in the spring of that year. And we refinanced once, and saved a bundle over the course of the 30 year mortgage. And locked in our rate forever to boot.
There are very few ‘guarantees’ in life. There is a huge number of times during your life, however, where you can make smart decisions, or poor decisions.
Anyone that went out and got an ARM was simply ill informed at best, dumber than dirt at worst.
I’d walk away and see how frantic the builder got. It’s a buyers market like we haven’t seen for a long long time.
But as long as there is inflation, the property side of the home will keep going up.
My salesperson didn’t say that - for us, it was “This is the last house, the builder wants to close out this project by the end of the year.”
We closed on 12/23/05.
I knew the price wouldn’t last, and I knew the builder had huge projects going in in Tucson, so I wasn’t worried about warranty work.
I also knew that I was getting a better price than most and that values were on the brink of plummeting. I plan on being here for at least another 10-12 years, so I’m not taking any of the equity out of my house now.
A couple just have to go into these kinds of transactions with both eyes open.
Houses built on a cement foundation will fall down. They should have used concrete.
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