The new ghost towns

‘Trapped in their own homes’ in Minnesota

For a brief while, as Crystal Colvin handed out lemonade to the sweaty hopscotchers on her front porch, it seemed like a picture-perfect afternoon at the Colvin house in Albertville.

But inside, the atmosphere was tense.

Jon Colvin, 38, a telephone network technician and father of six children, had just informed CitiFinancial that he would be unable to make his March mortgage payment, and would probably miss April’s, too. He hoped the news would finally scare the bank into renegotiating a mortgage he can’t afford for a house he can’t sell — and now wishes he had never bought.

“It’s not something I feel proud doing,” Colvin said of missing the payments. “But how else am I going to get the bank’s attention?”

The reckoning inside the Colvins’ four-year-old home is playing out at kitchen tables and corporate boardrooms across Minnesota — and the world. For the first time in decades, U.S. home values are plunging, dragging economies around the world down with them.

The roots of that financial crisis can be found in places like Wright County, where the combination of affordable land, cheap money and boundless optimism lured builders and families chasing big homes in the kind of brand-new subdivisions they thought were beyond their reach.

The county’s population swelled nearly 30 percent in the past decade. Home prices seemed to climb with each arrival, making everyone feel rich.

But the boom has unraveled as quickly as it began. While many established Wright County neighborhoods have avoided the worst of the housing market collapse, the county ranks as one of the state’s worst areas hit by foreclosures. Pockets of this county, about 30 miles northwest of the Twin Cities, have seen home prices fall 30 percent or more in the past year.

Families such as the Colvins are trapped in homes worth far less than what they paid. Speculators, who helped fuel both the boom and its collapse, are also stuck, their get-rich-quick properties now money pits.

Meanwhile, cities and townships such as Buffalo, Otsego, Albertville and St. Michael, which were in the throes of building schools, roads and expanded water-treatment plants to match their growing populations, are left with big bills and the prospect of a dwindling tax base.

There are few trees or hills in this flat, predominantly rural county to obscure the evidence: Rows of vacant and unfinished homes, often with lockboxes on the front doors and foreclosure notices taped to the windows. Realtors call them “see-through houses,” so empty of furniture and curtains that it’s possible to see right through them.

“Based on what I see out here, we’re headed for the Great Depression,” said Dan Frie, a sales agent with Wright Sherburne Realty in Monticello, who has been in the business nearly 30 years.

Story continues, here.

Canadian market update, April 20

Housing market cools in first quarter
Vancouver Sun – British Columbia, Canada
OTTAWA — Canada’s once-hot housing market is clearly cooling with sales falling and the number of unsold homes on the market hitting record highs in the

‘Cooling’ the watchword in Canadian real estate
CBC.ca – Toronto, Ontario, Canada
As usual, the most expensive real estate could be found in Greater Vancouver, where the average resale last month cost $616496, up 11.1 per cent in a year.

Housing sales cool as sellers flood the market
ReportonBusiness.com – Canada
according to data released today by the Canadian Real Estate Association (CREA). On a seasonally-adjusted basis, sales of existing homes across Canada

14 comments ↓

#1 » The new ghost towns on 04.19.08 at 10:58 pm

[…] Garth Turner is a wealth of unprecedented information. The last post on The new ghost towns is highly regarded. Here’s a brief overview: […]

#2 Leah on 04.20.08 at 12:50 am

I just love how they say “cooling”. They are going to spin this until the end. We also hear balanced, softening etc.

#3 Mike M on 04.20.08 at 9:06 am

The self serving real-estate industry is never going to admit the market is turning. Before the crash in the US it was never mentioned in the mainstream press either.

#4 Re-diculous on 04.20.08 at 11:18 am

That’s because, and I quote from the Economist:

“…once people begin to expect lower prices, it is very difficult to reverse a self-fulfilling downward spiral in the housing market.”

#5 wealthyrenter on 04.20.08 at 12:25 pm

You make me laugh Vultur.

No forum is complete without a troll, and truth is, most of us laugh at you. I have never met Mr. Turner, nor do I agree with all his financial advice, which is not always for the risk adverse. However, I have bought many of his books, including, “The Greater Fool,” and I appreciate that the fact he has given a voice to people who refuse to buy into the real estate mania. For others, I hope the book serves as an educational piece for people desperately wanting purchase a home, and don’t have a pot to piss in, yet alone the means to responsibly own a home for the long term. You know, those things that banks cared about in the past.

It nice also to have some confirmation that real estate is overheated in Canada, and that the sun will rise tomorrow if we don’t run out and buy a million dollar home on Royal York (Toronto,) which we can easily afford.

“I have the ability to craft a far better self-help manual for the masses than this poor lemon head of a MP ever could.”

Wow, thanks to the power of this inter-thingy, and the thousands of unique hits that Mr. Turner generates for his web sites, (cue big real estate/banking voice) YOU DO HAVE the place to publish your wisdom, and the place to market it.

http://www.booksurge.com/ (where it can be listed on Amazon.com.)
http://www.cafepress.com/
http://www.lulu.com

I am waiting with baited breath to read it, or is that “baited troll breath?”

“Darth is telling you nothing new that you couldn’t source with 10 google searches.”

Lets us divide your number by 2. Link or cite five, (recent/significant/credible) Canadian economists, real estate or financial professionals concerned that our aggregate real state market is a potential bubble. I am not even asking for “doomsayers,” but they could round out your list of ten.

Mr. Turner is pretty much a lone voice on this subject in a sea of “loan” voices.

You must have a lot of skin in this real estate game to even care what a few housing bears think or read.

#6 wealthyrenter on 04.20.08 at 12:30 pm

Hello Mr. Turner,
Please put my last post in the hot and bothered Toronto section.

Thanks, Steve

#7 TS on 04.20.08 at 3:15 pm

Thought you’d find this interesting…what one flipper is doing to get showings in TO.

“Toronto man selling east-end house for $1”

http://www.ctvtoronto.ca/servlet/an/local/CTVNews/20080418/one_dollar_house_080418/20080418/?hub=TorontoNewHome

#8 Dom-GTA on 04.20.08 at 5:23 pm

Did you folks actually read the whole article? Also some of the comments. Wow, it looks like a lot of people believe that what happened was well deserved by the average consumer.

I personally lean a little more to the thought that yes greed will get you but I also believe there is a lot of manipulation and money making going on by a lot of interested parties. Those parties are coming out way ahead, whether there some are bankruptcies or not. I am not a conspiracy theorist or anything but this is all a zero sum game and many people made more money in a few years than most people make in a lifetime.

#9 nearmilton on 04.20.08 at 6:37 pm

That’s a very interesting marketing concept dollar deal applied to real estate.

Can’t wait to see the next smart flipper who decides to list at a penny instead of a dollar, hey thats 100x cheaper!!!

#10 nearmilton on 04.20.08 at 7:20 pm

The photo looks just like any city in ontario, cold with snow – Milton to Otsego directions, good way to get a visual of the geographic location where this happened

http://maps.google.ca/maps?f=d&hl=en&geocode=1975559755674121040,43.531977,-79.896912&saddr=HWY-401+W+%4043.531977,+-79.896912&daddr=Otsego,+Wright,+Minnesota,+United+States&jsv=107&sll=45.266671,-93.601799&sspn=0.067416,0.156555&ie=UTF8&z=5

#11 Chandresh Patel on 04.20.08 at 7:50 pm

TS,

Nothing new with that!!

http://reddeer.comfree.ca/display.html?code=1939

A house on sale for $ 0 in Red Deer, Alta….the so called booming province….and for 6 weeks…

Garth, You are doing a great service to young people wanting to buy a house desperately…

Chandresh

#12 Jim on 04.20.08 at 10:21 pm

Chandresh my man,

The price is obviously wrong on the web site. Even Garth would recommend getting into a house if you can get it for free.

#13 jrochest on 04.21.08 at 3:28 am

I dunno, I think you’d have to pay me to move to Red Deer. :)

#14 Chandresh Patel on 04.21.08 at 8:44 pm

Jim,

This house belongs to a colleague of mine.He is trying to sell it for 4 months now…

I only posted to show that market has cooled sustantially here.

Garth, can u give ur comments on the market in Central Alberta ???

Chandresh