Tucson Home Sellers The Big Gamble
June 25, 2007
Post Tags: placing-the-bet , qualified-buyer , the-big-gamble , tucson-home-sellers
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Rolling the Dice
Rolling the dice is only fun in games of chance when you don’t care if you win or lose. Rolling the dice in real life can be very risky especially when you decided to roll the dice and take a chance with what is probably the largest investment you have.
It is amazing how many Tucson home sellers are somehow thinking that selling their homes is like shooting craps on a rigged table.
Two years ago it seemed like it was a rigged table. All you had to do was put your house on the market at just about any ridiculous asking price and someone would come along and offer you more.
Back then it wasn’t a gamble, it was considered a sure thing, not anymore.
The Table isn’t Rigged Anymore
The table isn’t rigged anymore, but a lot of home sellers are pricing their homes like it is the same game in town that was here in 05 and 06. The end result, the dice just keep on rolling and no one is buying these overpriced properties.
Placing The Bet
Here is the big gamble in placing this bet.
- Finding a qualified buyer willing to pay above market value for a home in a falling market.
- The buyer will have an incompetent agent that doesn’t know how to run a comparative market analysis to inform the buyer it is over priced.
Some would say that 2 is easier to find than 1, but in this gamble it isn’t an either or situation; You have to have both.
This is why it is called “The Big Gamble”
Tucson Home Sellers are you sure this is a bet you want to place?
June 25th, 2007 at 9:32 pm
Now your talking Dave… Now your talking.
June 25th, 2007 at 9:36 pm
Now, if we could get home owners to realize that 1998 - 2000 prices with 3% growth is a “fair” price… the market would fix itself. Alas, this is probably a dream because homeowners have emotions and are not rational in any sense of the word.
June 26th, 2007 at 9:07 am
Hello Dave!
Check out Lennar’s 2nd Quarter numbers… ouch:
Revenues of $2.9 billion - down 37%
– Loss per share of $1.55 (includes a $1.33 per share charge related to FAS 144 valuation adjustments and write-offs of option deposits and pre-acquisition costs)
– Homebuilding operating loss of $351.7 million (includes $329.1 million of FAS 144 valuation adjustments and write-offs noted above)
– Financial Services operating earnings of $14.2 million - down $20.4 million
– Homebuilding debt to total capital improved to 31.6% from 33.5% (net homebuilding debt to total capital of 29.6%)
– Deliveries of 9,568 homes - down 28%
– New orders of 8,056 homes - down 31%; cancellation rate of 29%
– Backlog dollar value of $2.8 billion - down 56%
“As we look to our third quarter and the remainder of 2007, we continue to see weak, and perhaps deteriorating, market conditions,’’ Chief Executive Officer Stuart Miller said in the statement. “We currently expect to be in a loss position in our third quarter.’’
Homebuilding operating loss of $351.7 million (includes $329.1 million of FAS 144 valuation adjustments and write-offs noted above)
The only bright spot is that they have managed to hold their cash position: Homebuilding cash 2007/234,256 2006/164,157
June 26th, 2007 at 5:41 pm
As I said on May 18th here: Tucson Foreclosures and the subprime buyers
I finally have some “real” meat on the bones people agreeing with my stance. Bill Gross of Pimco wrote:
“”The right places to look for contagion are therefore not in the white-washed Bear Stearns hedge funds, but in the subprime resets to come and the ultimate effect they will have on the prices of homes — the collateral that’s so critical in this asset-backed, and therefore interest-sensitive financed-based economy of 2007 and beyond,” he wrote.
“The flaw, dear readers, lies in the homes that were financed with cheap and in some cases gratuitous money in 2004, 2005, and 2006,” he wrote.
“Because while the Bear Stearns hedge funds are now primarily history, those millions and millions of homes are not. They’re not going anywhere…except for their mortgages that is. Mortgage payments are going up, up, and up…and so are delinquencies and defaults.”
Pimco sees subprime homes, comnsumers