It’s now become clear why Derrick is so adamant about prices not dropping. He’s a flipper!!

As for your numbers Derrick, I don’t believe them for a second. Your credibility might be enhanced should you actually take the time to proof read your posts. And, had you been reading (and comprehending) this blog long enough, you would know that I sold my house last year and am RENTING. Never in my life have I lived in an apartment. As I mentioned a few threads ago, I like big dogs, gardening, and barbeques, things not enjoyed in such confined spaces.

And to clear something up for you: investing and speculating are two very different things, and you are a speculator. Shrewd real estate investors only buy properties which cash flow. Speculators like you, who relied entirely upon market timing and rapid price appreciation are nothing more than unwitting gamblers, were a dime a dozen as it didn’t take any brains, ingenuity, or financial acumen to follow the herd. Whatever you are doing, I’ll be doing the opposite.

Diane, another Las Vegas link:
Foreclosures could lead to opportunities

About-face: In his latest take on the Las Vegas housing market in light of new home sales remaining weak, new home prices dropping and inventory of existing homes increasing, Smith said he appears to have underestimated what was happening when he predicted at the end of 2006 that the market was bottoming out.

Smith said any suggestions that the market was going to improve by the end of 2007 appears to have been just wishful thinking. He said a recovery may not happen until 2008 or even 2009 based on the current trends.

Smith said he wouldn’t be surprised if some neighborhoods saw home prices drop as much as 20 to 30 percent because of a glut in those areas. Other neighborhoods where fewer homes are on the market would remain the same, he said.
…
The 2007 sales figures will be down from the sales of 2003 to 2006 and the same will probably occur in 2008, Smith said.
…

Everyone, even if you can’t stand each other, can you please stay away from the personal attacks? I’m on the verge of killing this thread.

But before I do, why do long term cash flow realty investors often look down their noses at speculators? Why all the hostility? What’s wrong with timing the market? It’s just another way to make the most of your real estate investment.

I bought my first house in Odenton MD in 1980 for $79k at 14% 30 yr mortgage. In 1989 I moved to Oklahoma, and rented the house out at $750 a month. In 1991, I paid off of the mortgage from profits from the stock market. Every 2 or 3 years I travel out to the house for repairs and re-modelling. I rent to active duty military at below market levels. The current rent is $1700. In the next 5 years 9,000 military and 12,000 highly paid civilians are expected to move to the area. Two professional 18 hole golf courses are to be constructed within 1 mile of the property.

RE: “why do long term cash flow realty investors often look down their noses at speculators? Why all the hostility?”

(Speaking only for myself) The hostility is probably rooted in the reality that speculators of recent years have hurt many families, especially those who had to buy when prices were inflated because of flippers.

A lot of those unfortunate families are in default, foreclosure or upside down with time-bomb suicide loans because that was the only way they could afford a house after flippers drove prices up.

Shame on the flippers.

(I don’t intend this to be a personal attack on anyone in particular).

Forgot to add 1 more link. Also about california jobs consistently moving to Reno and northern nevada.

http://rgj.p2ionline.com/ShoppingChannelNoPopUp/ss/index.aspx?webstoryid=11251917&area=SS&type=page&AdgroupID=72710

Another link for you: click on the video ‘past due and pay day’ http://www.pbs.org/now/shows/317/index.html

Lindie, I guess I just have a dispassionate view of the marketplace. Everywhere I’ve lived, the same thing seems to happen: A place becomes better and more attractive over time for various reasons, home prices rise as a result, some are priced out the market, and people complain about affordability. It happened in the Bay Area, it happened in Truckee, it’s happening here.

When a place becomes attractive, people invest. You can count on it. Though this is the first place I’ve lived where builder oversupply has played a serious role, this too shall correct.

I see the market as waves on the ocean… Cycles that come and go that can’t be stopped. Some people watch them and never participate, some people catch them, ride them out and jump off toward the end in triumph, while others ride them all the way and get slammed against the shore. Others fight them and drown beneath the turmoil before even reaching the beach. The outcomes are endless.

You can be a speculator and profit, or you can be a long term investor and retire in comfort, or you can be just a regular homeowner with a nice place to live, or you can go bankrupt trying to game the system. All are possible. None are evil. They are just the dynamics of any marketplace.

What is the truth of this marketplace? I am, via this blog, always trying to figure it out. Buy now? Wait? Hold? Sell? The answers are different for everyone given their unique needs and circumstances.

And for many, real estate isn’t just an investment, it’s home. There are many sources of information regarding the market… this blog is just an on-the-street data point to add to your collection.

Is Derrick evil for making money on his investments in the Bay Area? I think not. He is just one force in the marketplace. As is Bantering Bear and others like him who take a more long term approach. All have their place, and we can learn from each of them.

Name calling, finger pointing and whining about affordability are a waste of time. The market is what it is. The point here is to decode what we see, share experiences and hopefully help others make the right choices that will benefit everyone in the long run.

I think the best solution is to catch the wave and have a good time. I’m sure we can all help each other in that respect.

Did anyone else get a flyer advertising a “Home To Be Sold To Highest And Best Bidder” auction this Sunday in southwest Reno?

If so, are you going?

From today’s WSJ - this is amazing.

As Market Cools, Home Buyers Seek a Way Out
Builders Face Lawsuits,
A Rash of Complaints;
The $266,000 Refund
By MICHAEL CORKERY and RUTH SIMON
May 4, 2007; Page A1

In the latest fallout from the housing market’s decline, disputes are breaking out between builders and buyers who signed contracts for new homes and condos when the market was hot — and now want to get out of them.

Even as many of the new buildings are completed, buyers are filing lawsuits claiming they were duped into purchases they couldn’t afford, or victimized through fraudulent investment schemes. Some are scrutinizing their contracts looking for loopholes, or searching out tiny flaws in finished homes that might allow them to back out without losing their deposits.

For some builders, the disputes are contributing to cancellation rates as high as 30% and writedowns in some markets. “People will go to great lengths to get out of a legally binding transaction,” said Larry Sorsby, chief financial officer of Hovnanian Enterprises Inc. “They were willing to ride the real-estate boom on the way up, but some are not willing to ride it on the way down.”

Newly constructed homes make up only about 15% of total home sales. But a wave of building helped fuel the run-up in housing prices during the real-estate boom, especially in Florida and California. As the market started turning last year, prices on new homes and condos quickly stalled, then began dropping. That gave skittish buyers time to get cold feet.

Florida, a magnet for housing speculators in the boom, is ground zero for such disputes. The state long has been a boon to housing attorneys, some of whom are now filing lawsuits against developers.

One lawyer recently took out an ad in a Palm Beach newspaper reading: “Do you want your money back? Your contract for purchase of a new house or condominium may be illegal…To see if you are entitled to a refund, call us for a free consultation.”

Typically, buyers of new homes and condos put down a cash deposit when they decide to buy, then pay the balance when the home closes and is ready to occupy. But condo buyers, in particular, have a lot to lose by walking away from their contracts because their deposits can total as high as 20% — and some buy multiple units.

Consequently, some condo buyers are aggressively seeking ways to back out, said Brad Hunter, director of the South Florida region for Metrostudy, a residential real-estate market research firm. He expects more to do so in the next year as projects sold during the boom become ready for occupancy.

“If they can find some way in which the developer has not delivered according to the contract, they’re using that as a way to get out,” he said.

Dennis Freeman, an attorney in Aventura, Fla., said he is representing a family who bought a roughly $1.6 million condo in a waterfront high rise, expecting a private entrance. But, he said, the family has now learned that the door to the garbage chute, which is shared with neighbors, cannot be locked. “The privacy of my client’s apartment has been lost,” said Mr. Freeman. He is suing to rescind the contract.

Mr. Freeman recently settled another case in which the developer agreed to return a $266,000 deposit to a condo buyer who claimed that the size of the pool deck and gym were smaller than the developer promised. Mr. Freeman said he was surprised by the settlement. “To me, it’s a reach,” he said.

Other disputes are more heated. Red Bank, N.J.-based Hovnanian, one of the largest builders in the U.S., currently is embroiled in one such dispute with buyers in Florida.

One of those buyers, Daphne Sewell, received three construction loans, totaling about $750,000, to buy three houses in Cape Coral and Lehigh Acres, Fla., in May 2005.

An administrative assistant in Broward County government, Ms. Sewell said she and her husband, a carpenter, earned $90,000 a year at the time of the deal and never should have qualified for their mortgages. She also claims a real-estate firm involved in the deal promised that it would find them tenants to rent out the houses. But the renters never materialized, her houses are vacant, and two of her loans are in foreclosure.

“If I close on them I deplete my savings in two or three months,” said Ms. Sewell. “It’s worth the fight.”

After she was served with foreclosure lawsuits by the lender, she filed a countersuit, which names the builder, First Home Builders of Florida, the lender and a real-estate firm that she alleges promoted the deal, claiming she was defrauded by an investment scheme that promised minimal risk. A lawyer for First Home Builders said his client denies any wrongdoing.

Hovnanian, which bought the assets and contracts to build homes from First Home Builders in August 2005, said it has not been served by Ms. Sewell’s lawsuit and that she took out her construction loans before Hovnanian bought out the assets of First Home Builders.

Still, complaints like Ms. Sewell’s are causing a major headache for the company, which says it is trying to help buyers close on the homes by lowering prices by as much as $100,000 while fending off allegations of fraud. Hovnanian took a charge of $175 million in over the fourth and first quarters related to the Fort Myers market, partly because it had to lower prices on the First Home Builders homes.

Mr. Sorsby, the chief financial officer, said many of these complaints are from regretful buyers trying to take advantage of a public backlash against the housing industry amid the subprime mortgage meltdown. “They are going to great lengths to paint somebody other than themselves the bad guy,” Mr. Sorsby said.

In Alexandria, Va., real-estate attorney Beau Brincefield said he has settled roughly 50 contract disputes and has another “50 or more” in the pipeline. They include a case brought last year by more than a dozen buyers who had contracts to purchase homes from NVR Inc., a Reston, Va., builder that sells homes in 13 states.

Mr. Brincefield said the terms of that settlement are confidential. In general, he said, builders have agreed to lower purchase prices by as much as 35% or refund 25% to 100% of a would-be buyer’s deposit. NVR declined to comment.

Mr. Brincefield said that in many of the contracts he’s seen, “the remedies are very one-sided.” These contracts allow the builder to retain the borrower’s deposit or sue for damages if the buyer cancels, he said, but only allow buyers to get their deposits back if the builder doesn’t meet its obligations. In some cases, he said, builders may have violated the Interstate Land Sales Full Disclosure Act, which requires them to make certain disclosures and meet other requirements.

Some developers are not backing down. Ceebraid-Signal, a West Palm Beach developer of condominiums and condo-hotels across Florida, and its affiliated development entities are suing about 30 buyers who are trying to cancel their contracts. Ceebraid-Signal said it is citing a “specific performance” provision in its contracts requiring buyers to hold up their end of the deal and close.

“That’s called chutzpah,” said Marvin Moss, a lawyer in Aventura, Fla. He represents a client who did not want to close on a $375,000 condo because real-estate values had fallen dramatically since she put down her 10% deposit, from which she was willing to walk away, he said.

“This is to frighten people and force them to close,” said Mr. Moss. “It costs a lot of money in legal fees to defend these actions.” A couple of buyers hit with such lawsuits have backed down and gone through with the sale.

Said Richard Schlesinger, managing director of Ceebraid-Signal: “I don’t think there is anything that we are doing that is inappropriate.”

“These are not situations where a woman bought a unit and she’s now a widow and can’t pay,” he said. “These are people who don’t want to close because they can’t flip and make $100,000.”

Write to Michael Corkery at michael.corkery@wsj.com and Ruth Simon at ruth.simon@wsj.com