Who's living in all those houses that are being bought?

[BleedingHeartPatriot]

I posted this a few days ago about WSJ radio report I heard and some astute DU'ers offered their thoughts on why home furnishing sales did not seem to be benefitting from the "hot" housing market.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=104&topic_id=4264554

I couldn't find a transcript of the report, however, I found that, in fact the home furnishing stores took a hit in July.

This seems to underline the disconnect between who's buying the houses and who's living in them.

Haverty sales fall in July
Thursday August 4, 11:01 am ET

Haverty Furniture Cos.' July sales decreased 5.5 percent

http://biz.yahoo.com/bizj/050804/1144772.html?.v=2

Pier 1 July sales fall, sees wider loss
Thursday August 4, 7:52 am ET

CHICAGO (Reuters) - Pier 1 Imports Inc. (NYSE- News) on Thursday said its sales at stores open at least a year fell 7.7 percent in July, and its quarterly loss may be wider than analysts had expected.

http://biz.yahoo.com/rb/050804/retail_pier1_sales.html?.v=1

Bombay Announces July and Second Quarter Revenue
Wednesday August 3, 8:16 pm ET


FORT WORTH, Texas, Aug. 3 /PRNewswire-FirstCall/ -- The Bombay Company, Inc. (NYSE: BBA - News) reported that total revenue was $33.6 million for the four-week period ended July 30, 2005 compared to $34.6 million for the four-week period ended July 31, 2004, a 3% decline.

http://biz.yahoo.com/prnews/050803/daw072.html?.v=9

Linens N Things Posts Q2 Loss on Weak Sales
Wednesday July 20, 9:37 am ET
Linens N Things Falls to Second-Quarter Loss on Weak Customer Traffic, Sales


CLIFTON, N.J. (AP) -- Home accessories retailer Linens N Things Inc. on Wednesday reported a second-quarter loss, reversing a year-ago profit, weighed by weak customer traffic and lower same-store sales.

http://biz.yahoo.com/ap/050720/earns_linens_n_things.html?.v=1

MKJ
:shrug:

[McCamy Taylor]

1. Good find. Some people are buying real estate as an investment

[rzemanfl]

2. Not just some, but lots of them. Here in Florida speculators are

buying up condos before the ground is broken for them.

[BleedingHeartPatriot]

4. In the earlier thread, one of the poster called them "flippers". I guess

the Home Ownership society is yet another Orwellian doublespeak.

It's actually a developer/speculator society, with homes being out of reach to many of our citizens. MKJ

[QC]

3. Nobody. Around here it's mostly speculators who are buying.

And the problem with that, of course, is that speculator's markets can drop really fast.

[JuniperLea]

5. Maybe people are getting smart? Naw... couldn't be:)

Outside of a few end tables from Bombay and a bunch of Ikea bookcases, I haven't bought furniture "new" in over 25 years.

I have, however, bought several battered antiques from Goodwill and other like organizations and had them re-upholstered. Who wants to spend $2000 on a big wing-backed chair and ottoman that will fall apart within five years when grandma's chair can be made new for $500? I have a circa 1928 couch with lovely wood scroll work that I bought at Goodwill for $150 and had re-upholstered. My Federal dining set was purchased at a garage sale for $150 and the seats cost $150 to be recovered.

I've bought three homes in the past 25 years and spent almost nothing on new furnishings, but it looks like I spent a small fortune.

Times are hard. Maybe we've wised up and refused to buy inferior goods? I wonder what the numbers are for goods and services I've described here...

[ninkasi]

22. That's the smart way to do it, Juniperx

One of my best friends and I love to shop at thrift shops, take something that looks like junk, and fix it up. I've gotten more compliments on those furnishings that some I've bought new.
It's a fun way to recycle, and it helps Goodwill, and other organizations, keep people employed.

[bobbieinok]

31. especially wood furniture......new stuff is pressed wood and molded

plastic

[msongs]

6. perhaps people are now satisfied with what they ALREADy have and

are coming to their senses about buying all this trash imported from China.

Msongs
www.msongs.com/political-shirts.htm

[BleedingHeartPatriot]

8. That would be a good thing! n/t

MKJ

[linazelle]

7. I wonder who's buying too at the prices I'm seeing

I want to know, in this country and economy, who is making the money that can pay mortgages for what seem to be an avg. of between $400k and $750k. I know a small percentage of the workforce makes this kind of money but other than than, I just don't know who's making that kind of money.

Maybe it's the two income couples, or the two-income-two-plus-jobs couples. If that's the case, then this economy is driving the neglect of the "family values" of the hypocritical Republicans. In about ten years or so, there are going to be a lot of kids on psychiatrists couches or in the streets with guns in their hands because their parents abandoned them to pay mortgages. :eyes:

[BleedingHeartPatriot]

9. MY husband used to install structured wiring and alarm systems

and described many people as "house poor".

They would be living in these huge homes with no furniture. It was evident to him that the all their money was going to their mortgage.

MKJ

[Skink]

10. In Flordia at least....

The speculators are there to prey on the baby boom generation as they move south. The babyboomers already made their wealth during the greatest bull market ever seen. For our generation a 30 year bear market seems more likely.

[DoYouEverWonder]

11. Lots of people like them are taking out zero prinicipal loans

they are only paying on the interest, so they never finishing paying for the house. It's a great way end up with nothing.

[Nabia2004]

19. Right, buying because it is more practical than renting

for many, low interest rates made this a once in a lifetime opportunity. pushing themselves nearly beyond their means, they have no money for anything else.

this was my brother 4 years ago, now the house values in his neighborhood have already doubled. he still has second and third hand furniture.

[getmeouttahere]

15. Bingo was his name-o, linazelle....

they want us to go out and shop, consume, but they also want us to stay home with our kids. And since I just read a report that 2/3 of the economy is consumer spending...

But in order to own a home, especially in certain areas of the country, you must have AT LEAST 2 incomes to own even a modest home. And whatever happened to "starter" homes, BTW?

[SoCalDem]

16. Bingo-BANG-o next month when bankruptcy filings shoot up

September will be the "death of plastic" for a BUNCH of people who take this last chance to bail out before the new laws kick in.. These people will be a bit wary of new plastic.. and it's gonna be just in time for the holiday no-shopping frenzy..

The splatting sound we will hear is the shit hitting the fan :)

[MissB]

28. I'm sure in some cases

they're buying them like we bought ours. We had a house that we'd been sitting on for years and sold it and purchased a similar sized home in a nicer neighborhood with a bigger lot. We ended up with a small mortgage on a piece of property that is worth more than 3x the mortgage.

Someday someone will come along and buy our house for a tear down and they'll pay dearly to do it.

I guess my point is that not everyone has to have a huge mortgage to buy a home in that price range. Taking a profit from a previous home can make a move like that pretty realistic for a one-income family.

[SoCalDem]

12. With huge house payments, who's got money for furniture?

We had friends once who had ZERO furniture in their living room.. a bed and a dresser in each bedroom, a cheapo table and 4 non-matching chairs in the dining room, and patio furniture in their family room..

They spent every dime they could borrow and save to get the "big new house", and they lived like that for a few years..

[wishlist]

13. Investors are buying many of them for investment, holding for resale

In my area I have noticed many of the homes are being quickly snapped up but either stay vacant while owners try to lease them at high rates or while owners do some fix-up renovations in order to make the property more valuable on resale. Many are also bought as second homes and being left vacant until owners retire or have more time to furnish them.

Perhaps with investors buying homes and renting them out while they appreciate in value, some renters are spending so much on rent they cannot afford new household furnishings. There is a older house for rent for $1600 in my average North Carolina neighborhood next to a trailer park. Needless to say, it has stayed vacant on the rental market for several months but the owners have painted and renovated it and know it is going up in value so they are willing to wait for someone who can afford the rent, which is most likely to be a well off retiree or a professional with good salary.

With retail sales mediocre, I am also surprised that furniture and antique sales at auctions, shops and flea markets do not seem to be drawing higher prices with all of the huge new houses that have been built in my area and must need furnishing and decorating.

My guess is that buyers of homes intended primarily for vacation or investment may be furnishing them more modestly and minimally than if the homes were going to be used as a primary residence.

[enlightenment]

14. As far as I can tell, it does seem

like speculators are buying, but not living in all these new homes. A few weeks ago, I was wandering the "market" and found it fascinating that the several "Del Webb" +55 communities had SO many rentals available, even while new construction is taking place a block away. Talked to a realtor, and he said most of the rental units are privately owned, brand-new, never lived in -- and that they are willing to "fudge" the details to get people into them. In other words, they'll find a way for you to move in, even if no one in your family is over 55. Apparently the same thing is happening in other new growth areas of town, not just the "active senior" burbs.

Kind of scary, I think.

[Finder]

25. Investors are waiting for all the forclosures coming...

and come they will. The last few years with the low interest rates has allowed many lower/middle income people to buy homes. Between layoffs and the economy, many will lose these homes and investors will swoop down and the cycle will continue as it always has.

[enlightenment]

26. Okay, that sounds reasonable -- and realistic, but

why are there so many new homes bought, but not lived in? I ask seriously, because I have no understanding of this kind of thing. Where are the lower/middle income people living if not in the homes they just purchased with the "interest only" loan that's going to eat them alive, and leave their purchase open to the investors? Is there a difference between the "flippers" and investors? Do you know of any books or articles that offer simple explanations -- kinda a "Real Estate Bubbles for Dummies" guide?
I'm pretty smart in many ways, but really ignorant about this sort of thing. Sigh.

[Finder]

29. They are living in them as far as I know.

I don't think a lot of them are vacation homes or investments myself. If you bought a piece of property back in the early 90s, it doubled the past few years. Sellers have made handsome profits and are waiting with cash in hand to reinvest.

I know I am.

[BleedingHeartPatriot]

27. OMG, how true. Scary stuff that. n/t

MKJ

[Cleita]

17. Nobody is living in them.

Mostly they are bought and sold for profit. In my area that is a vacation destination, most of the homes go empty a good part of the year or are rented out for weeks at a time to vacationers. Believe me the rentals are furnished out of the Good Will and garage sales.

[sandnsea]

24. Vacation & Retirement

Exactly. Same where I live. This is looking more and more like the farm land spikes of the 70's, followed by the farm crisis of the 80's.

[lonestarnot]

18. Bought by richees with tax breaks for further tax breaks or drug houses

to further destroy middle class neighborhoods. It's a class war baby.

[FreedomAngel82]

20. Beats me

I know this couple at church my age and they have a little girl and are looking for a better place now. There are two houses being built in my neighborhood and this one house has been up for sale off and on but never seen anybody move in or out. :shrug:

[Tierra_y_Libertad]

21. The speculators are now buying from the speculators.

Since they started offering "No down payment financing" to the suckers it's become pretty obvious that the meltdown is coming.

It's a giant pyramid scheme. Everybody's trying to get the last bite of the apple before it rots and falls apart.

It's like the high tech bubble. There's going to be some billionaires emerge who timed it right, but the vast majority will be paying mortgages on properties that will be worth half of what they owe.

If it wasn't for the destruction of the environment to build the McMansion crakerboxes, it would be amusing to watch.

[BleedingHeartPatriot]

23. kicking, T.y.L, because of your spot on description of the pyramid

scheme.

I really believe you're right, and when this bubble bursts, especially in concurrence with the bankruptcy bill, millions will be feeling the pain. MKJ

P.S. In the Denver metro suburbs, beautiful pristine areas of the NW front range are ruined by the monstrosities that have just recently been built.

[World Traveller]

30. I 'm in Houston-Lived thru MAJOR RE Bust in 80's-Future I Predict

I've been in Houston since '75. Married in '83, bought our first home then, just when prices were peaking, just before '80's oil bust. Home we paid $70k for in '83(1400 sq ft ranch. It was worth $45k in '88. Over half in our sub-division were foreclosed. What drove price plunge? 2 things. MAJOR job losses in Houston area. And many who bought their houses during oil boom when INTEREST RATES were high (average 13% in late '70's, early '80's), were upside down by '85 owing huge monthly payments on houses that were worth less than what they paid for them. So what did my neighbors ( and MANY others) do? We had an expression for it then - THEY WALKED (left the houses).

So I think about what may happen in other parts of country. Income levels are not going to rise to point where these leveraged home-owners will be able to afford their adjustable rate mortgages in the future. Or they may lose their job and have no cash reserves, etc. Plus job growth is next to nothing, except for minimum wage type jobs.

On an inflation ad-justed basis, it took Houston 20 years (2001) to get back to price levels 0f 1981, per article in local paper.

One alternative is for Feds to inflate and debase the dollar. That would bail these homeowners out. But the signs are not pointing in that direction. Since Greenspan, what has Fed ever done for the little guy? Fed under Republicans will always side with the banks. Banks don't want major currency depreciation, they want either their money back or the asset back. But they don't especially want a depreciated asset back (i.e. another Houston).

I don't think Feds will allow another Houston, it would be too devastating on a national level. I believe they will opt for turning the average Joe into a debt slave. Extend the mortgage term from 30 to 40 years or similar tricks if it looks like Joe can't cough up the money for his monthly mortgage bill.

[w8liftinglady]

32. In DFW area-14,000 foreclosed properties on market as of 8/7