I truly sympathize with you. My family is also one of the hundreds of families that have been devastated by Rick Koerber. I agree that self interest is the only interest that Rick Koerber has. When Rick says people are assets, he means their money is an asset to him. It's really a shame getting that filled with pride that a man's willing to destroy others for material gain. By his own explanation of the laws of cause and effect, Rick Koerber is morally and ethically bankrupt, (the cause) It's only natural Financially bankrupt comes next. (the effect)
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Another GREAT housing crash expose in the New York Times. Nice to have good writers out there doing their jobs (hint hint Catherine Reagor).
You wonder how this kind of information can be out there, and the NAR and realtors are still out there lying and spinning. It's over folks. It's all over. And with the crash of housing comes the crash of everything. Get ready.
This Is the Sound of a Bubble Bursting
Southwestern Florida is in the midst of this gathering storm. It was here that housing prices multiplied first and most exuberantly, and here that the deterioration has unfolded most rapidly. As troubles spill from real estate and construction into other areas of life, this region offers what may be a foretaste of the economic pain awaiting other parts of the country.
National home builders poured in, along with construction workers, roofers and electricians. But as a kingdom of real estate materialized, growth ultimately exceeded demand: investors were selling to one another, inflating prices. When the market figured this out in late 2005, it retreated with punishing speed.
“It was as if someone turned off the faucet,” Mr. Carey said. “It just came to a screeching halt. When it stopped, people started dumping property.”
Throughout Lee County, a sense of desperation has seized the market as speculators try to unload property or lure renters. On many lawns, a fierce battle is under way for the attention of passers-by, with “for rent” signs narrowly edging out “for sale.”
Mr. Jarrett hasn’t closed a deal in three months. He is on track to earn about $50,000 for the year, he said. Yet he needs $17,000 a month just to pay the mortgages, insurance, taxes and utility bills on his four properties — all worth less than half what he owes. Rental income brings in only about $3,500 a month.
“It started with housing, the loss of construction jobs, mortgage companies, title companies, but now it’s spread through the entire economy,” Mr. Kest says as he walks a strip of mostly empty condo towers on the riverside in downtown Fort Myers. “It now has permeated everything.”
“All the local governments were drunk with money,” says Mr. Kest, the finance professor. “Now, they’re going to have to cut back and learn how to manage.”
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Ah, ya gotta love the first truly worldwide Ponzi Scheme. Who'd have thunk that Irish people would be losing their shirts in Spain or that Brits would be getting slaughtered in Latvia.
The worldwide credit bubble is over. And people around the globe have seen what's happened in Phoenix and Miami and Boston and San Diego and more and they're pulling out of the scam as fast as they can, at any price.
It's over. Ding dong the Global Housing Ponzi Scheme is over.
Thanks to HP'er Christophe in France for the link
Foreign property dreams crash - Irish investors face meltdown as real estate prices plummet throughout Europe and US
Tens of thousands of Irish homeowners may be facing financial meltdown as hugely hyped overseas property investments turn sour.
Lured by unrealistic promises of extraordinary returns, Irish investors borrowed heavily to pick up cheap buy-to-let apartments abroad. But property prices in these so called "hotspots" have begun to plummet in recent months.
Along with rising mortgage rates, the strong euro and dismal rental markets, dark clouds are forming for a so- called "Perfect Storm" that could decimate the investment nest eggs of the househunters in the sun.
About 150,000 Irish investors are thought to have bought properties in Spain. However, the oversupply of apartments in Spain's Costa del Sol has pushed the price of some properties down by as much as 20 per cent.
Last month, the Kyero Spanish house price index revealed massive price falls across the country, with the average value of a two-bed home in Mallorca falling €33,000 to €292,000 in the past four months.
Similar slumps have been logged in areas from Gran Canaria to Girona and Cadiz. Estate agents are now advertising "price-reduced" homes in almost every region.
The slowdown in the overseas property market comes at a time when Irish investors in properties promoted by Michael Lynn, the solicitor and property developer at the centre of an investigation by the Law Society, are already worried. Some of these investors have paid deposits on overseas property but have not yet secured the title.
"If you look at a typical two-bedroom apartment in the Costa del Sol, its paper value could be about €250,000," said Darren Costello, managing director of propertyinvestments.ie, a Dublin firm that offers advice on overseas property investment.
"But you'd be hard-pressed to find a buyer for €200,000."
Bulgaria has been touted as a investment "hotspot" by Irish property promoters. But new figures from investor.bg, reveal that apartment prices in Sunny Beach fell by 4 per cent in July alone.
Similar slumps have been experienced in Ahtopol, Prmorsko and SvetiVlass, as a massive oversupply of tourist apartments remains unsold.
Other hugely popular eastern European or Baltic markets have skidded to a halt, with dramatic price-falls in some countries. Latvia's bubble has well and truly burst, with the Latio Investment agency revealing falls of almost 11 per cent since April.
Estonia and Lithuania have also experienced decreasing property prices. The central statistics office in Poland has also reported values slipping in the second quarter of the year. In Budapest, Hungary, some 3 per cent has been snipped off prices of new apartments, according to the Global Property Guide.
One Irish investor is facing losses of about €30,000 after buying a Budapest property for about €79,855 three years ago. The investor, who is now trying to sell his property, was advised that the best sale price he can secure now is €69,000. By the time he sells the apartment, he will have paid about €20,000 in fees, taxes and renovations.
Posted by keith at 10/21/2007
Labels: classic financial manias and panics, worldwide housing ponzi scheme
22 comments: Lake Woebegone citizen said...
It's good to know AmeriKa is spreading the low education standards worldwide, and who said we spread freedom, suckers, welcome to modern slavery.
October 21, 2007 10:16 PM
keith said...
Once the promise of future riches ended, the whole scam ended
The fundamentals and P/Es didn't support prices, only the lure of a future payoff (that now will never come)
This will end ugly.
October 21, 2007 10:34 PM
serindippity said...
Et tu, Londonistan?
October 21, 2007 10:59 PM
Anonymous said...
The tide is going out and there are now lots of naked swimmers scrambling around the beach looking for their swimsuits and shorts. The problem is that they have already pawned them away for the chance to take a dip in the deep blue sea. They will now have to go about naked without a shred of clothing to cover up their nakedness and there is worse to come: A snowstorm is on the way the likes of which has never been seen before. Everything that could go wrong is about to go wrong and there will be nowhere to run nor hide. Yes, grown men will weep like babies and curse their leaders and all those in the media who have deceived them with feel good stories of a world where the sun never sets. Oh how could we have been so stupid they will say, as they cry for help to the implacable and cynical financiers who led them to dark pits of despair like the Pied piper of Hamelin. Only a few men and women, readers of this blog are left standing at the edge of the precipice staring down at the heap of white sun bleached bones down below. Be afraid, be very afraid.
October 21, 2007 11:15 PM
Anonymous said...
Wow, the Irish are sure dumb, LOL! ;-)
October 21, 2007 11:21 PM
ApleAnee said...
Anonymous said...
The tide is going out and there are now lots of naked swimmers scrambling around the beach looking for their swimsuits and shorts. The problem is that they have already pawned them away for the chance to take a dip in the deep blue sea..... Only a few men and women, readers of this blog are left standing at the edge of the precipice staring down at the heap of white sun bleached bones down below. Be afraid, be very afraid.
I sure don't wanna be dem damn bleached bones looking up at the HP'ers.
You should sign your posts. That was terrific. I am going to take cover now.
AA
October 21, 2007 11:32 PM
Paul E. Math said...
I wonder what will happen when the Irish and the Brits lose all the money they sunk into their vacation homes? Do you suppose a certain number of them will be forced to down-size their lifestyles and sell their overpriced 'flats' in crash-proof Londy?
Quoite da vicious coycle, in'it?
October 22, 2007 12:17 AM
Anonymous said...
Fundamentals, fundamentals, always those damn fundamentals...
A house is worth something when someone actually pays something for it. Its a shame when people always assume that a house is always is as good as sold...
PJ
October 22, 2007 1:09 AM
Anonymous said...
Borat to Realtwhore: "Itsa very niice... how muuch?"
October 22, 2007 2:06 AM
frankensteen (that's eeen) said...
OCTOBER 2007 HOT SALE LISTINGS:
Iraq vacation homes, now 75% off
Crawford, TX homes, now 80% off
White House, Washington DC, SOLD
October 22, 2007 2:17 AM
the monster crash said...
OK, let's all sing along...
He did the crash,
He did the monster crash,
The monster crash,
It was such a bash,
The housing crash,
He lost all his cash,
The monster crash,
Awwwwwwwwwwwwwwwwwwwwwwe...
Dr. Frankensteen (that's steeeen)
1219 - 1329 A.D.
..
October 22, 2007 2:53 AM
Anonymous said...
Keith,
I posted before. I am completely with you. The blog is great.
But this proves the point. Schiff is wrong. This thing is global. Investing in Euros is a sucker's bet. Yhey're toast too. The EU bank will follow your buddy Ben. I really want to hear your comment on this one.
Again, enjoy this blog every day. Thank you.
October 22, 2007 3:03 AM
Anonymous said...
The Irish property bubble is as great as the lunacy in CA...
Here is a great site that has been tracking this - well worth a listen in:
http://www.thepropertypin.com/
October 22, 2007 3:08 AM
k.w. - southern ca. said...
The speculative greed was global ... no surprise that things are crashing abroad as well.
It's good to take a look at Europe, since they're a bit ahead in the crash - something we've yet to experience, but undoubtably will.
October 22, 2007 3:20 AM
Anonymous said...
The Irish should have stuck to fighting....
October 22, 2007 3:25 AM
Anonymous said...
Hmm, does this mean the Euro and Pound will crash also (ie bring the USD back up?)
Very nice picture, Keith. Borat rules!
-BC
October 22, 2007 6:22 AM
Lost Cause said...
When the tide goes out like this, it is usually for an approaching tsunami. The blush of modesty is temporary, compared to the blanched faces that will soon be noticing the gathering waters.
October 22, 2007 6:58 AM
living in ireland said...
i'm watching things in ireland melt down with glee. 3 months ago i brough t up the topic at a dinner with my "educated" coworkers. everyone thought i was retarded for saying it would crash.
you would not believe how many people i have met here who, when asked what it is they do, have responded with "i'm in property". translation- i am a buy to let slumlord about to get my eyes wiped.
my neighbor tried to sell his house for 1.5m euro. (I rent a similar one for 2,000 a month). I know someone who offered 1.1m euro. the neighbor is now renting it out to "see what will happen". sure he is.
like anyone else, the irish got greedy. they got used to returns of 100% and would not settle to buy a condo to flip it and make 40%...they wanted to invest 50 grand to make 200 grand.
pigs get slaughtered....
October 22, 2007 7:33 AM
Andrew from Russia said...
Drat, flats in Moscow are still at $4000 per square meter. INVEST NOW! (to help us prick the bubble). In real terms it's a 20% decline since mid-2006 anyway.
BTW, "Ponzi" translates to "Mavrodi" in Russian. Boy, what a scheme that was!
October 22, 2007 8:44 AM
shtove said...
The Irish bubble has been inflating since the mid 1990s. A lot of people made a killing on property - not just notional, but banked - especially farmers selling land zoned for development. Many will be badly burned, but others were canny with their windfalls.
The effect on the euro of deflating bubbles in Spain and Ireland will be interesting. The core economy, Germany, has no problem with HPI; and France doesn't seem to have caught such a bad dose of it, except from British expats buying holiday homes.
October 22, 2007 10:18 AM
Economic Reality said...
Hear that Vancouver, Canada?
That's the sound of the worldwide housing bubble deflating and I'm coming for you next.
I would have got to you sooner but you're kind of wet and slippery. I did send notices earlier but half of the shipment was stolen and used for rolling paper. The other half was distributed no problem, but I didn't realize there were so many of you who didn't understand English.
Let me put it more plainly then: House price go up very big then go boom...you very sad. Get it?
October 22, 2007 5:22 PM
Anonymous said...
I had to put down 60% to buy a flat in Hungary (5 years ago before the joined the EU) Seems to me that this lack of leverage will mean LESS catastrophe as I think people with this type of equity will be less likely to walk away. Even without appreciation this flat has turned out to be a good investment considering the increased strength of the Euro to the Dollar.
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