Going once...

[FRED]

Going once...
September 6, 2006 (Boston Globe)

In echo of '90s bust, auction set for 34 unsold luxury condos in Hub

The developer of a new luxury condominium project in Boston's financial district is resorting to a tactic last seen in the real estate bust of the 1990s: It's holding an auction for the 34 remaining, unsold condominiums.

The units on Broad Street -- 11 of them penthouses -- will be sold in a live auction at the Seaport Hotel in South Boston on Oct. 7. The developer of the 14-story Folio Boston project hoped to capitalize on completion of the Big Dig tunnel and construction of the Rose Kennedy Greenway, which has been delayed but would clear the way to the waterfront for pedestrians.

A minimum bid will be required for each unit. A one-bedroom currently offered for sale at $480,000 will be sold at or above its $325,000 minimum price. The most expensive unit to be auctioned, a $1.76 million, two-bedroom with a wraparound terrace on the 14th floor with a waterfront view, has a $1.025 million minimum price.

"There's been a stalemate between the buyers and sellers," said Jon Gollinger, whose firm, Collaborative Cos., was the sales agent for Folio's condos, and who will handle the auction through his other firm, Velocity Marketing.

AntiSpin: The collapse of the real estate bubble, now proceeding on schedule, continues to be news and probably will continue to be news for another six months or so, after which declining prices, poorly attended auctions, bankrupt builders, and crashing mortgage lender stocks cease to be news and become the status quo. Speaking of crashing mortgage lender stocks, our members' favorite short at the moment is BankUnited Financial Corp. (NASDAQ:BKUNA).

"In the middle of one of the hottest U.S. markets, Coral Gables (Fla.)-based BankUnited Financial Corp. (NASDAQ:BKUNA - News) posted a $14.8 million loss for the quarter ended June, 2005. Yet it reported record profits of $23.8 million for the quarter ended in June of this year -- $20.9 million of which was earned in deferred interest. Some 92% of its new loans were option ARMs. Humberto L. Lopez, chief financial officer, insists the bank underwrites carefully. "The option ARMs have gotten a bit of a raised eyebrow because we generate and book noncash earnings. But...it's our money, and we do feel comfortable we'll get it back."

Right. And my Nortel stock is coming back any day now.

There's some debate as to whether "real" earnings are already priced into this stock. Housing related stocks, such as Toll Brothers, peaked when the housing market peaked, and declined on the news not on the rumor. The equity market's future discounting mechanism appears as broken for housing related stocks as it was for dot com stocks in 1999.

It's as if market participants can't quite believe what they're seeing. Not surprising, since they've been hearing the "soft landing" story from so many once credible sources for so long.

[BK]

Re: Going once...Folks don't see the deflating Bubble

I was visiting Sugarbush and Stowe-VT this weekend - construction is happening at a frantic pace. Huge Luxury Condo development is being built in Sugarbush and a large Condo/Hotel development is being built in Stowe (of course a luxury development).
Meanwhile, the Bostonians I met in Sugarbush believe that Condos in a Ski resorts never lose value. Local Vermont residents struggle to pay their $5000 -$10,000 per year property tax bills (remember, there is no sewer or Water service or rubbish removal - many roads are dirt- and a volunteer Fire department - and minimal local police force for most residents). Education costs are driving the Vermont residents to the poor house.

Meanwhile no one believes their money is at risk when invested in Real Estate in Vermont or the Bostonians with their investments in R/E in the Boston Area.

Even as the gapping cracks in the Real Estate Financial Bubble become obvious, the most folks cannot see it or believe it refuse to see it.
When will the average citizen realize that something has gone wrong with the Real Estate Market??

[jk]

Re: Going once...Folks don't see the deflating Bubble

Even as the gapping cracks in the Real Estate Financial Bubble become obvious, the most folks cannot see it or believe it refuse to see it.
When will the average citizen realize that something has gone wrong with the Real Estate Market??

time magazine nailed the peak of the housing bubble with its june '05 cover "Home $weet[sic] Home." when it or a similar mag has a cover on how terrible real estate is, and how many people have lost their homes via foolish purchase decisions, and what a terrible investment it is, i.e. analogous to business week's famous "death of equities" cover, that's when the average citizen will have come to the realization that something is wrong in real estate, and that will be the signal to buy. it will likely take years.

[jeffolie]

Re: Going once...

The last 2 years of home buyers had good intentions (except for the flippers). They wanted the stability of a home to raise a family for the most part. They knew they were making a hugh purchase but thought it was for the right reason and did not want to be priced out of the American Dream.

Have some sympathy for these struggling, stupid people.

It will get ugly.

[EJ]

Re: Going once...

The last 2 years of home buyers had good intentions (except for the flippers). They wanted the stability of a home to raise a family for the most part. They knew they were making a hugh purchase but thought it was for the right reason and did not want to be priced out of the American Dream.

Have some sympathy for these struggling, stupid people.

It will get ugly.

I try to feel compassion for anyone who gets caught up in the various bubbles that have been driving the US economy for the past decade or so. When the future head of your central bank comes out and tells you flat out that "There is No Housing Bubble to Go Bust," then that must be true, right? One reason is that compassion is better for the soul, but also it helps us stay humble. That's important because I guarantee that any one of us is capable of getting caught up in either bubble euphoria, such as during the gold bubble in 1980 or the Internet Bubble in 1999, or in the bubble belief system that becomes as mundane and ever present as the wall paper in your bedroom, as in the case of the tail end of the housing bubble.

If PMs bubble up again, there will be plenty of whooping and hollering, false justifications for the price, terrabytes of disk space filled with writings on the resurgence of "real money."

Just before they crash.

[jk]

Re: Going once...

the word from oz:

THE scourge of negative equity has spread to Brisbane as the property downturn continues to slug investors and the lower end of the housing market, but the Perth market continues to fire.

According to Australia's largest mortgage broker, Australian Finance Group, falling property values in parts of Brisbane has led to an increase in the number of owners with mortgages bigger than the value of their homes.

"In some of the outer Brisbane suburbs we are seeing valuations for house-and-land packages purchased mainly for investment purposes falling short of purchase prices," AFG executive director Malcolm Watkins said.

AFG said some new construction projects in that state were being independently valued at 20 per cent below asking prices."






http://www.theaustralian.news.com.au...-25658,00.html