Thursday, August 30, 2007

The Plural of Anecdote: Housing Un- and Underemployment

by Tom Bozzo

Barry Ritholtz observes from recent renovations at his house that contractors are all of the sudden more available and more compliant. Fancy that!

We resemble those remarks. In a late phase of the work, a drywall contractor canceled on the scheduled morning due to a paperwork snafu. That they wouldn't have rectified that might run contrary to Barry's thesis (though it does not require that all contractors be twiddling their thumbs), but a more than suitable substitute was brought in on the same day. The HVAC contractor had been chomping at the bit throughout the project.

(A corollary of this post is that our house is construction-free for the first time in several months. You can see some pictures of the end result here, with before pictures in this post, if you're curious.)

We've also witnessed two layoffs due to the bust among our family and friends: one who worked for a subprime mortgage lender, and another who did high-end finish carpentry for super-McMansions. In the former case, there may be at least karmic benefits, as I'd heard a while back that the subprime loan terms made her want to scream "run away" to clients.

A casual survey of Edina, Minnesota during our recent trip seemed to show a steep, though not total, decline in high end building on spec. In my mother-in-law's immediate vicinity, where the sixties suburbia has been prime tear-down territory, one large house was rising on the lot vacated by what may have been (due to gross neglect) the cruddiest house in Edina. Three other high-end houses in the vicinity built on spec remained unsold since our last visit, roughly 90 days earlier, at prices ranging from $1.8 million to $3 million.

While a marketing flyer for another $1.8 million house (of mid-90s vintage) described the price as an "investment," the people across the street from my MIL — who had all but torn down the '60s walkout ranch that had been there and built an admittedly very nice '00s walkout ranch in its place, have so far turned a total "investment" of about $1.4 million into what area listings suggest might be an almost Irvine Housing Blog-worthy $1 million or so today. (N.B., Grandma does not live in a $1 million house.)

I guess big-buck LIBOR interst-only ARMs aren't available like they once were. It actually helps restore my world view a bit.


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