‘Transition To Lower Prices Is Under Way Nationwide’: NAR
The housing starts numbers are out. “The pace of U.S. home building fell more sharply than expected in August as builders broke ground on new homes at the slowest rate since April 2003, a government report showed on Tuesday. The Commerce Department said U.S. housing starts fell 6.0 percent n August to an annual pace of 1.665 million units, compared to a downwardly revised 1.772 million in July.”
“Compared to a year earlier, August housing starts were down 19.8 percent from the August 2005 pace of 2.075 million units. Permits for future groundbreaking, an indicator of builder confidence, fell 2.3 percent to a 1.722 million-unit annual pace, the lowest in four years.”
“The report came a day after an industry survey showed that home builder optimism sank for the eighth straight month in September to the lowest level in more than 15 years.”
The Times Union from New York. “The housing boom ended more than a year ago, but sellers are having a tough time accepting that fact, says David Lereah, chief economist at the National Association of Realtors. The result has been tumbling sales as buyers stay on the sidelines.”
“The expansion that began in November 1991, when mortgage rates fell into single digits, became a boom following the 9/11 terrorist attacks, when trillions of dollars left the stock market looking for a safe haven in real estate, Lereah said.”
“This correction is different from any others because it wasn’t triggered by a recession, high financing costs or job losses. With unemployment below 5 percent, mortgage rates still below 7 percent and a growing economy, ‘all you need is a price correction, a price adjustment, to bring the market back,’ Lereah told the crowd.”
“The transition to lower prices is already under way nationwide, Lereah said, and will result in a more balanced market than the one that has been dominated by sellers. He said the Capital Region experienced ‘a moderate boom’ without the extreme price run-ups or overbuilding seen in parts of California and Florida. As a result, ‘you don’t need as much of a price correction,’ he said.”
“Lereah predicted prices will drop nationally over the next six months, and that each percentage point drop ‘will bring thousands and thousands of buyers back into the marketplace.’”
“The downturn in the nation’s housing market, including the Albany, N.Y, region, was necessary and will be temporary for the most part, according to Lereah.”
“He predicted a rebound in the next three to six months in most parts of the country, provided the Federal Reserve doesn’t start raising interest rates again. Some areas in the South and West will take longer to recover because the boom of the past five years was much sharper than in New York and other states, he said.”
“The median price for a single-family house in San Francisco, for instance, is $740,000. ‘Who can afford that?’ said Lereah.”
“J. Gregory Connors, president of the Greater Capital Association of Realtors, said agents have to educate sellers about the dynamics of the market and make sure they don’t expect their houses will sell for as much, or as quickly, as they did 18 months ago. Doug Engels, president-elect of GCAR, said, ‘This isn’t a new market,’ Engels said. ‘It’s a regular market that we haven’t seen in a few years.’”
“Lereah said conditions were ripe for a market correction in August 2005 because interest rates had gone up by a full percentage point in the previous year, speculative investors began pulling back and many first-time home buyers were priced out of the market. ‘This isn’t a party with no hangover,’ he said. ‘This is not a prolonged, deep recession.’”
Does anyone think the Northern VA prices might drop by 30% in a couple of years or so? We’ll just keep saving for down pmt anyway but curious what others think about the area.
We saw 25% drops for single family and up to 40% drops for condo’s in the early 90’s. That is what I think is reasonable for this go-around. I have no crystal ball, but I would bet that we see more declines in the next two years.
va_investor - I’m curious as to why you say that. The OFHEO says otherwise; according to their data prices in the DC area (the area defined by the OFHEO to include all of NoVA), prices were flat in the early 90’s. Maybe there were pockets that were down more than others, but I haven’t seen any data that shows this, and if there were they certainly weren’t down 25%.
I’ve found that there’s a tendency amonst the posters on this board to exaggerate a lot, but exaggerating past declines only serves to lessen the severity of the current/coming declines.
I am just relating my personal experience. The house across from me set the “low-water” mark of 307K. The high price was 420K at the top.
btw - I sold last year at 853K, after keeping it as a rental when we moved in 1993. The market was terrible in 93, so we rented it out.
Also had a condo in Tysons (the Rotonda) drop from 160K to 115K.
I have seen OFHEO reports for the MidAtlantic but not for just the DC area. They show the price going from 238.51 in 4Q 1989 down to 231.88 in 3Q 1991. That is only a 3% nominal drop, although a much bigger real decline. Undoubtedly some neighborhoods went up in value while others lost much more than 3%.
OFHEO is going to miss the boat and not be able to report on the current housing bubble because it only includes conforming mortgages. This misses the 50%+ of the market that has taken out ARMs as well as all of the people with Jumbo mortgages. There aren’t many people buying in the bubbliest areas with conventional financing anymore so the OFHEO numbers will not show the true extent of the housing bust.
and they’ll all keep their fed gov jobs-offering useless and old info
what’s a conforming mort- that’s a 90’s concept
OFHEO?
“OFHEO?”
Office of Federal Housing Enterprise Oversight:
http://www.ofheo.gov/
“This misses the 50%+ of the market that has taken out ARMs as well as all of the people with Jumbo mortgages.”
Most of coastal California at the very least…
I disabree w/respect to OFHEO numbers and ARMs, for a couple of reasons -
- The marjority of mortgages I believe are still traditional ones. I don’t have a link to the stats but I’ve seen them linked recently.
- The home prices in a given area are essentially the same regardless of the mortgage types. While ARMs have definitely played a hand in causing over-inflated home prices, the rising tide affects all boats equally, no matter where the water comes from. The OFHEO just happens to measure the boats that have traditional mortgages.
The stats I’ve seen show a slight majority of mortgages are non-traditional mortgages. I’d love to see a new updated link…
Option ARMs have definately let many who shouldn’t have bought up to buy a large home.
Believe it or not… There is a reason every one of my friends in banking is *running* from the mortgage side of the house.
But hey, we don’t have that many resets this quarter nor next quarter. It won’t be until well into 2Q 2007 that mortgage resets really have their impact. By then I expect that the secondary market will have lost its appetite for anything but the better credit.
Neil
There is a reason every one of my friends in banking is *running* from the mortgage side of the house.
More like rats trying to get off a sinking ship.
The bubble was nowhere the size it is now in run-up prices. There will be a big drop in homes in the D.C./Va./MD. area.
>
Oh, please. I find that your stated assessment to be overly broad. Unless, of course, you have a system to protect.
Posters on this Board frequently back up their views with hard data or direct links to the data that provides evidence of their position. Others provide a humorous view of the current state of housing. Repeat after me: “What goes up, must come down.”
My comments were directed at “packman” who stated:
I’ve found that there’s a tendency amonst the posters on this board to exaggerate a lot, but exaggerating past declines only serves to lessen the severity of the current/coming declines.
Just my personal observations Misstrial. Take it for what it’s worth. Or don’t. Who cares?
No I have no system to protect - I’m not a RE investor, and only own my primary residence, that I don’t intend to sell anytime soon. I have followed this blog for a while though, and often see lots of comments of things like zero or near-zero sales in a given area, prices that went down N% in a given area, etc. based on anecdotal evidence and not real statistics. This thread is a perfect case in point. Sorry va_investor to pick on you, but your two examples does not a trend make. There will *always* be outlier examples in any statistical sampling, but these outliers are relatively meaningless, because there are always examples on both sides of a given curve. What is meaningful are whole-quantity statistics, reflect in median and average price and sales data for a significant period of time over a significant area.
Median price has dropped in SD, and that was one of the hottest markets during the runup. This is common knowledge. When a large market like that declines others soon follow. If you read previous blog entries there are numerous links to other articles w/ statistics which show things are definitely heading down overall. To deny this makes me wonder - what is making you think that? Where are YOUR statistics?
Another thing packman, inventory levels have skyrocketed to record levels in Phoenix, SD, and many other places and NOBODY IS BUYING. Doesn’t take a genius…
I thought you were David LeReah for a moment! Dang!!!
I owned both and saw neither in N VA or DC area
due to big gov love$
not unless a real gop gets in- at the rate of spending the central soviet won’t come off 30%
last time 1990-1994 was about 12%
I’m in 22151
I was in 22181, but had property all over nova. I was also in the closing business back then. I saw larger declines than flatffplan. Purely anecdotal.
I don’t even think the “central soviet” can keep this region from declining more than 30%. You’ve been here at least since 1990, so you should have a clear picture of just how unsustainably bloated this area has become.
“real gop gets in”
No such thing any more…only “spend” and “spenderer”.
FLORIDA!
Soaring insurance prices are the top issue for the first time in the quarterly survey of 152 real estate executives, lawyers, and other professionals. The cost of insurance has “gone from a minor operating expense to, in some cases, the largest one,” Wayne Archer, the center’s director, said Monday. “Our respondents are reporting increases [in insurance premiums] of 300 and 400 percent and some even 1,500 percent.”
Liz the way I see it you could find a rental similar to a house you want to buy. Plug the rent into a mortgage calculator to figure what that pmt would buy you at 6% on a 30-yr fixed. Add 20% down payment and voila, you are pretty close to realistic prices.
So 2500 per month would = 415k loan or about a 500k house.
There is a house for Sale/Rent in my Reston neighborhood asking 800k / $2,800. By my prior calculation it is worth 560k.
I am in Reston too. We have already seen 5 to 15% drops.
Hey! Thanks for the info/calculations! We could afford (qualify for much more but AFFORD is how we’ll buy) more and that’s helpful. I’m just hoping I won’t have to move again and get a better price on this place - but I’ll move before I sell my soul to the lenders!!!
Northern VA: I think your way of calculating the reasonable price is too generous (to the putative seller). If the buyer wanted to rent out a $500K house and break even, he’d have to collect a good deal more than $2500/mo to pay (a) his mortgage, (b) his property taxes, (c) his maintenance and insurance, and (d) the loss of the muni interest on his down payment. The only way such a price/rent ratio would make sense would be in a RISING market !! which, I believe we can all now agree, we don’t have.
My guess would be yes. Possibly the single most amazing thing I have read on the blog in the last six months was the data on the greater DC area. 25,000 condos on the market, 27,000 in construction, and each month only 700 sold, if memory serves.
Seems to me like that has to load a heavy gravitational pull on prices. Even if you yourself want a house, the glut of condos will satisfy other buyers, reducing housing demand. IMO, of course.
Thats stunning. Where was the market for all of those condos? I’ve always been skeptical of that kind of housing and its real value. Too much like an apartment; its not what people really want.
Personally, I don’t care about the sellers or the buyers much but I do worry that there will be some kind of federal bail out of financial institutions because they end up holding houses that the buyers default on. I remember the savings and loan bail-out of the late 80’s and how it was put off budget so that there was very little scrutiny.
Dublin,
In Miami there are some 50,000 condos under various stages of construction and another 50,000 applied for. That is more than a decade worth of supply.
Plus, in Florida the condos that are finished and sold out are mostly unoccupied, because most of the buyers were speculators. I wonder when people will start writing about the risks of condos that are unoccupied. Perhaps the banks will need to pay the condo fees on foreclosed properties, but it’s easy to see down the road that the increased costs of insurance, property taxes and utilities will be a problem
A property here in Fauquier (a “distress” sale) went under contract in a week for 700K and the county’s “fair market value” tax assessment (this January) was 1 million. A comparable property nearby is asking 1.6 million. The nice thing about renting while you’re looking for a primary residence is having the flexibility to jump on something when it seems like a good deal.
I would think depending on price you’ve paid. I saw in late 80’s where seller sold 1.25mil property in Potomac for 800k. Ofcourse he did bought at the top.
There was blurb yesterday on talk radio that said financial analysts in Boston were predicting a 33% decline in New England.
“This correction is different from any others because it wasn’t triggered by a recession, high financing costs or job losses. With unemployment below 5 percent, mortgage rates still below 7 percent and a growing economy, ‘all you need is a price correction, a price adjustment, to bring the market back,’ Lereah told the crowd.”
This is the same guy that, only a few months ago, suggested everyone should invest in housing.
- “The housing boom ended more than a year ago, but sellers are having a tough time accepting that fact, says David Lereah,
Davey finally comes clean.
But don’t worry, because;
“Lereah predicted prices will drop nationally over the next six months, and that each percentage point drop ‘will bring thousands and thousands of buyers back into the marketplace.’”
Soon, Flordia will have a ‘housing shortage.’
He has an amazing grasp of the obvious doesn’t he. In hindsight of course.
It’s unclear to me that hordes will be sucked back into the market with each percentage drop. I’d imagine they’d become ever more afraid of instantly losing equity. Only folks forced to move by their employers are likely to jump in. The rest will likely wait till they see a bottom. No?
“It’s unclear to me that hordes will be sucked back into the market with each percentage drop…The rest will likely wait till they see a bottom. No?”
That, for me, is the big question. I’d bet it comes down to sentiment and psychology…the fear of losing money on your biggest purchase vs. the fear of ‘being priced out forever’. It’s in the best interest of RE cheerleaders to concede that prices have and will go down, in order to (re)gain credibility. They can then use Fear, Uncertainty, and Doubt (FUD) to try to influence the unwashed masses to buy on the dips. We’ll see if our fellow unwashed go for it.
(*side note: I believe that any bounce will be short lived, and lack of affordability and lack of a housing ATM to fuel the economy will finally take us all the way down)
DL has got to be a lurker ,look at the words he’s using . Well for the first time DL has addressed the affordability issue .
I guess he/DL has faith in buyers jumping back in the market willing to catch falling knives . People jumping back in the market would be the best hope for the realtors .He really picked on California ,( San Francisco ),and Florida .
How much correction a area will take depends on many factors ,but its pretty clear that this was a National housing bubble with few areas spared especially regarding the over-building .I would like builder to now consider builder affordable/energy efficent housing rather than catering to speculators selling to each other and overly big homes .Builder should stop building where they are going to end up with vacant houses .
A lesson to be learned is that the speculators can stop buying all at the same time and the baby boomers don’t all retire at the same time .
“Lereah predicted prices will drop nationally over the next six months, and that each percentage point drop ‘will bring thousands and thousands of buyers back into the marketplace.’”
This statement is a Clintonian masterpiece. It is an absolutely correct palliative that has little or nothing to do with the issue at hand. Say by “thousands” Lereah means 100,000 buyers per month. With roughly 4 million homes in inventory nationally this implies 40 months’ of inventory. Not reassuring.
Last time I looked, Lereah was a Repug.
economist and e-CON-o-MIST.
The NAR cheerleader will do a fine job at late night infomercial; selling the amazing new breakthrough in stain (memory) erasing.
Just one pop a day and you forget what you said before.
Also works great in predicting the past …..and present (only if you call within the next 10 minutes).
And remember; call now or be priced out!
Uhhhmmm…
And the title of his book
Now watch as the media quote him for the next three years. I will never buy another newspaper.
Lereah should become a news anchor.
He is delivering news.
When he should be foreasting the future
direction of the housing market.
Admit it Ben. You turned up in Albany wearing your David Lereah mask.
As expected, now that people have stopped paying more than they can afford the Realtors are telling sellers to sell for what people can afford.
Unfortunately, all those who bought over-priced homes in the past 3-4 years have either had their standard of living or are going to go bust, throwing homes on the market. The latter factor will keep the retrenchment going through 2007, perhaps into 2008 or longer.
I meant to say their standard of living has been reduced, as they will always pay much more for the mortgage and have much less available for other things. That’s the real loss here.
Learah sounding more and more like Baghdad Bob every day. “Thousands and thousands” of buyers are on their way to save the market. Any minute now. Annnnny minute.
.
.
.
Seriously, they should be here any second.
.
.
.
.
.
.
No really, I can see them out there on the horizon. If you squint, you can see them. No, seriously, look harder.
LOL!!!
made me smile
This isn’t a party with no hangover, he said. This is not a prolonged, deep recession.
Said the host to the partygoers. I get so sick of this guy. What happened to: “Buy now, or be priced out forever.”? Forever is a long time. Liareah is like the shifting sands of utter BS in the wilderness of time. Keep talking, Dave, it feels good.
“Lereah said conditions were ripe for a market correction in August 2005 because interest rates had gone up by a full percentage point in the previous year, speculative investors began pulling back and many first-time home buyers were priced out of the market.”
This guy is so ful of $hit! These are David Lereah’s comments from the September 2005 NAR release on August 05 sale:
“David Lereah, NAR’s chief economist, said the fundamental factors for housing remain positive. “With a general background of growing population and favorable affordability conditions, home sales are staying at very healthy levels,” he said. “Housing inventory improved in August but remains tight, and we have some way to go before we get into a range of balance between home buyers and sellers. As a result, we’ll continue to see above-normal home price appreciation for the foreseeable future.”
Someday he is going to realize that the houisng market of the last few years was based on market hysteria like the .com stocks, Florida in the 1920s, and tulips in Holland.
Thanks! This blog will expose the lies and the liars!
“Someday he is going to realize that the houisng market of the last few years was based on market hysteria like the .com stocks, Florida in the 1920s, and tulips in Holland.”
Do you honestly think he doesn’t know that? Isn’t is painfully clear what realtwhores do? They scare people into buying to generate fees for realtwhores, then they scare sellers into selling to generate fees for realtwhores, then they scare people into buying to generate fees for realtwhores. It’s always a good time to buy, it’s always a good time to sell. Etc. etc.
good catch, Brandon!
book came out feb 06
BUY,BUY,BUY it won’t crash
hope he’s stoned/beaten to death like hoenker in E Germany
Honecker was not beaten to death, but was allowed, after a medical examination, to move to Chile to his daughter where he died a few years later.
“The housing boom ended more than a year ago, but sellers are having a tough time accepting that fact, says David Lereah, chief economist at the National Association of Realtors. The result has been tumbling sales as buyers stay on the sidelines.”
Who the hell is this ass clown kidding with this feeble attempt at revisionism?
Surely someone has him on record last August pimping up the housing market. This guy makes me sick. I hope someone sues his filthy ass royal.
Why doesn’t anyone call him on it? It really is sad.
Also, he says:
“Lereah predicted prices will drop nationally over the next six months, and that each percentage point drop ‘will bring thousands and thousands of buyers back into the marketplace.’”
Not yet. He’s trying to pimp a recovery next spring by scaring people into buying at ‘04 prices. Things had already gone up over 100% in my ex-neighborhood in NoVa (a horrible neighborhood I might add) and THAT was unaffordable for the average income in NoVa.
I haven’t felt as much venom towards this guy as others while agreeing completely with assessments of him, but today, the real nastiness creeped into my heart where he is concerned.
It’s a Lord of the Flies world all.
Lereah quotes:
“There is no national price bubble. Never has been; never will be,” -The York Dispatch (York, PA), September 21, 2004
“This is a healthy marketplace,” he proclaimed. “When I look at Florida, you know what I see? I see California 100 years ago.” -St. Petersburg Times (Florida), September 2, 2005
“Well, you know, it ishard to say top because we ve been calling a top for the last several years now and we ve been wrong, but certainly right now it appears that the real estate markets are beginning to slow down, mortgage rates are finally going up, and as they do, demand should slow a bit and that does mean that right now is a good time for sellers, but it may be a better time for buyers somewhere down the road.” -Analyst Wire, August 9, 2005
“The stars are aligned,” Lereah said. “There’s nothing irrational about it. People buy real estate because they have to. It won’t end any time soon. What fuels housing is demographics and household formation.”-St. Petersburg Times (Florida), September 10, 2005
“Florida will be a great market in the next 20 years. When I look at Florida, I see Las Vegas. I don’t see the boom ending in Florida any time soon.”-St. Petersburg Times (Florida), September 10, 2005
Wherever you live, if your local paper carries this latest Lereah story and quotes, write a letter to the editor, providing his prior quotes and the dates. Also point to web sites where those prior quotes can be confirmed. This guy has gotta be revealed for the shill he is.
Bill O’Reilly on Fox News always says he is looking out “for the little guy”…email O’Reilly and suggest this might be a good segment for his TV show, since Learah has a book to pitch. Let’s see anybody from NAR get on O’Reilly and do their spin.
Dateline, 20/20, Prime Time Live, 60 Minutes as well. Those are the news programs viewed by most people. That would get the word out quickly.
I submitted this (topic: NAR’s David Lereah’s lies) to Dateline, 20/20 (specifically John Stossel’s “Give Me a Break”) and 60 Minutes. Doubtful anything will come of it, but I feel better for doing it.
If the economy is doing well, unemployment low and interest rates low, what would happen to housing if these changed?..We could have a lot of people living in their SUVs.
“The housing boom ended more than a year ago, but sellers are having a tough time accepting that fact ….”
“This correction is different from any others because it wasn’t triggered by a recession, high financing costs or job losses…..”
Well, yeah I think it kind of was like others David. Like housing, that great expanding economy, the super sweet interest rates and the GOOD jobs, also ended more than a year ago. We’re just better at lying about it now.
(KOA Kampground stock ….never a better time to buy!)
“The housing boom ended more than a year ago, but sellers are having a tough time accepting that fact ….”
“This correction is different from any others because it wasn’t triggered by a recession, high financing costs or job losses…..”
Well, yeah I think it kind of was like others David. Like housing, that great expanding economy, the super sweet interest rates and the GOOD jobs, also ended more than a year ago. We’re just better at lying about it now.
(KOA Kampground stock ….never a better time to buy!)
coffee finger ….
And the good news is that several people can sleep in an SUV. So, those SUVs could turn out to be America’s best buy in affordable housing.
Putnam Investments in Boston is up for sale.
Absorption by another firm could cost 3+k jobs.
No mortgage loan industry to run to this time.
Let’s see, the median in Los Angeles went from $180k in ‘99 when 51% of homes sold were affordable to the median income household, to $521k in 2006 with 1.9% of homes are affordable to the median income household. During that time, the median household income went from $51k to $56k. Somehow I don’t think the astronomical rise in prices was income driven.
I’m just wondering where prices need to be to bring back these “thousands” of buyers.
Also ,you have 70% ownershipof homes already in the Nation . To get a strong market going tons of people would need to buy second homes or investment property ,(isn’t going to happen ).
In fact ,we are going to see alot of recent buyers become non-owners again when they are foreclosed on because they couldn’t qualify to begin with .
To bad all the buyers didn’t just say “enough is enough ” and stop buying in say 2001-2002 . Instead buyers were put on toxic loans they didn’t qualify for and people believed we were running out of land or they would be priced out forever .Its really a shame that all forces including the media /lenders allowed a mania based on one industries desire profits based on lies .
It is important to note that even the L.A. market was “affordable” in the recent past. This is after the market started recovering from the bottom in 1996-1997.
Deb Posts “Let’s see, the median in Los Angeles went from $180k in ‘99 when 51% of homes sold were affordable to the median income household, to $521k in 2006 with 1.9% of homes are affordable to the median income household. During that time, the median household income went from $51k to $56k. Somehow I don’t think the astronomical rise in prices was income driven.”
I live and work in the “greater LA area”. Thank you for the facts! This rings so true! I did not know the “Stats” But I swear to God I have had a “gut” feeling this was closer to the TRUTH. People are not really making, much more money it has been about the FUNNY MONEY loans and other scams.
Dad and Mom both working and being crushed by poor judgement and the slime devils of the Loan and RE trade. Sad so sad!
My favorite line…
“The median price for a single-family house in San Francisco, for instance, is $740,000. ‘Who can afford that?’ said Lereah.”
And for what serious crap. $740K gets you year-round fog deep in the Outer Sunset (as charmless a neighborhood as SF has). It gets you less than 1000 sf with dry rot and a 70-year-old roof. And you would be expected by your realtor to feel lucky for finding such a gem.
Deb,
I see declines of up to 70-80% in the nicer parts of LA. Seriously.
please… outside of a depression this just ain’t going to happen…
Once defaults and foreclosures begin to kick in hard and lenders are finally forced to tighten standards, you will be looking for cash buyers at those prices. These are few and far between. I’m not sure about 80%, but I can certainly see 50% in bubble areas, perhaps more, since credit will be very hard to get and the market will be flooded with distressed properties.
A 50% drop returns prices to, what, 2003 levels? Maybe 2002? When thought of this way, it doesn’t seem so crazy.
Lot’s of realtors / mortgage brokers holding property in LA. I believe this is a major wild card.
That’s right, and most are highly leveraged running majorly cash flow negative without the cash flow from other sources to make up the shortfall. They will bring the extemely overpriced markets, most of CA, to its knees. The only possible savior here is if Asian $$$$$ comes in to buy up distressed properties at a rate that prevents a total collapse…
Wow!
The puppetmaster that has his hand shoved up DL’s a$$ sure has changed his tune.
There are many posters here who won’t remember but over a year ago, a poster caught NAR’s job announcement for a handler for their economists.
That guy has converted to a bubble head.
Does anyone have a good link to the numerous quotes DL’s made over the past couple years?
http://davidlereahwatch.blogspot.com
lereah would piss on your leg,and tell you it was raining.i think jon stweart could have fun with him.
From the Lereah speech:
“In three to six months, the transition from a seller’s market to a buyer’s market will be complete and buyers who have been “chomping at the bit” to get back in will jump-start a rebound, he predicted.”
It’s champing at the bit. Chomping at the bit breaks the horse’s teeth. I thought all the horses a$$es left Saratoga after track season ended (literally and figuratively).
Appologies if this article from CNN has already been posted. Check out the funny video halfway down. Oh baby!
He called it “bubble” twice, not boom.
For once I believe him. Once prices drop there will be “thousands” of buyers for the over 6 million homes for sale.
What he really meant to say was that each percentage point drop ‘will bring thousands and thousands of homes for sale back into the marketplace.’
“He said the Capital Region experienced ‘a moderate boom’ without the extreme price run-ups or overbuilding seen in parts of California and Florida.”
For a second there, I thought he was talking about D.C. I was about ready to cough up a lung. But Albany — that I could believe.
Aside from the Southeast of the state, I don’t think NY will be suffering very much — relative to places like Florida, anyway.
Again , the NAR/DL /realtors are trying to confine the correction by picking on a few choice areas like Florida and California . Oh this isn’t a big National problem people ,get back in the market ,is the message .
Really, if someone told me that for each % point of decrease buyers will be jumping back in the market I would want to be the buyer who jumps back in the market after the % points go down about 100x’s or more . It becomes the game of get in now before the % points tick upward .This is the oldest sales trick in the book , “the urgency factor “.
My brother lives in upstate NY and he was telling me that one county over, most of the home sales were second homes for the buyers. They live in the NYC metropolitan area and buy a weekend/vacation/retirement home 3 hours north. I guess that could fuel a little boom because they pay too much.
I guess that explains why places like Syracuse are getting any appreciation at all. I’m sure there wil be a drop there, just not the 50% plunge many other places desperately need.
you mean Erich Honecker ?! He finally died (in 1994) - of all places - in Chile. So research before you produce uneducated contribution. Sorry, had to tell you.
one of the former soviet satellites - my bad
I suspect he/she meant Ceaucescu from Romania.
flattplan is one of our resident wingnuts. OK on the topic at hand, but invariably wrong when politics are involved.
Lereah predicted prices will drop nationally over the next six months, and that each percentage point drop ‘will bring thousands and thousands of buyers back into the marketplace.’”
there are 3 million homes for sale it will take tens of hundred thousand and hundreds of hundreds of thousands of buyers to make any difference.
“The median price for a single-family house in San Francisco, for instance, is $740,000. ‘Who can afford that?’ said Lereah.”
Remarkable. 100% true, but remarkable. This price is the same as it was last year and what was he saying then? Why wasn’t the ridiculous price a cause for concern at that time?
What a PoS this chump is. He seems to find a new way to bash some other part of the country every time he goes out on the road and bullsh!its. Always some other place is going to get whacked. Never the place he’s making his obligatory appearance. I wonder what he’ll be saying in SF?
I have to agree, reading Lereah’s past and present statements. He is like the guy who hands someone a loaded gun and then tells them their wife has been cheating on them with another guy. Then accepts no responsiblity for the consequenses of his actions. I wonder if Lerarh can sleep at night knowing that he may have bankrupted “thousands and thousands” of people and in the process destroyed marriages and families. I guess he can, as honesty and responsibilty are not charished values anymore.
he may have bankrupted “thousands and thousands” of people and in the process destroyed marriages and families.
This is the reality of the situation once you sort thru all the BS.
Last year, he was saying anything to keep sales going. Now, with sales stalling, he is seeing the weaker hands in the market as the sellers, with exotic mortgages, and the only way to get sales (and commissions) started again to get prices to drop to bring back some buyers.
The object of the game is VOLUME folks, say anything to get the volume of sales up, or keep the volume of sales up.
Exactly.
It is mindnumbing to think consumers *believe* Realtors are really out to “help” them. Those crappy Century 21 commercials come to mind.
But, are used-car salesmen out to help the consumer??
How are used-house salesmen any different???
“The pace of U.S. home building fell more sharply than expected in August as builders broke ground on new homes at the slowest rate since April 2003, a government report showed on Tuesday.”
This is the usual worse-than-expected news, which is sure to lead to a rally in the homebuilders’ share prices today, or at least a flat line. Can the permanently low plateau be maintained indefinitely, or will some inexorable equilibrating force ultimately hammer down share prices into alignment with fundamentals?
GS, thought you might be interested in this, yet another recession indicator, this one assembled by John Hussman:
http://www.hussmanfunds.com/wmc/wmc060724.htm
This particular model tracks new home starts (not sure if I undertand completely how it’s calculated), but hasn’t been updated for August and September numbers yet. My guess is that the indicator has completely rolled over by now.
FWIW!
Historical data of the NAHB survey further emphasizes the speed of the downturn. Compare it to the gentile contraction in 1990/1991.
Per the Economist: “Bubbles always last longer than you expect, but they eventually inevitably burst.”
http://www.nahb.org/generic.aspx?sectionID=134&genericContentID=530
Last time the NAHB Index dipped below 33, the economy was at the beginning of a recession (July 1990). The index froze to the level of the low 20s by the following winter.
Now it has registered 33 for July, then dropped “by more than expected” to 30 for August; are we already in a recession? The stock market does not seem to think so.
Here is a shocking back-of-the-envelope analysis of the NAHB Index which suggests just how hard the housing sector is currently crashing. Last time the Index peaked at 65 (6/86) and gradually deflated over a four year period to get down to its recession-kickoff level of 32 (7/90). This time is different — the Index was at a lofty level of 68 as recently as last October, and has fallen off by more than 50% (to 30) in only ten months.
And as we have seen in other posts, the Index is a reliable predictor of the stock market twelve months down the road.
Is anyone other than Realtors (TM) and stock brokers still talking about a soft landing now?
Interesting, GS.
To me, houses now are like stocks in 1930. It almost doesn’t matter what fair value is, because the price drop will be sharp enough to pop the overall credit bubble. The resulting deflationary spiral is how you end up with price drops that now sound “ridiculous”, like say 80%. Of course the Fed will fight it and overinflate eventually, but given how fast this appears to be playing out, I think they’ll be behind the curve, not wanting to (publicly) acknowledge the true severity of the situation.
Anyway, I think you’re right that the real story here is the slope of the drop.
“Compare it to the gentile contraction in 1990/1991″
Yes but did the Jews keep buying?
Yes new housing starts are down, but Jim Cramer from CNBC says to buy the housing stocks because they’re “working” through their inventory so expect these stocks to increase in the coming months as they draw down their inventory. Why doesn’t all the bad housing news affect the stock market?
PAUL B. FARRELL
America’s ‘Hollywood economy’
Where the future is all in your head, manipulated by master illusionists
By Paul B. Farrell, MarketWatch
Last Update: 7:23 PM ET Sep 18, 2006
ARROYO GRANDE, Calif. (MarketWatch) — “Nothing is what it seems:” That rule fits Hollywood. It also works for the illusions of Wall Street. Every illusionist knows that your brain secretly loves being mislead, deceived and manipulated by fantasies. Want proof? Let’s begin in Hollywood …
“The Illusionist” is a brilliant new film about Eisenheim, a magician who fascinated Vienna a century ago. “Nothing is what it seems” warns the subtitle. Oh, the clues are everywhere. But not obvious till later when your brain retraces the unfolding drama.
What is it about our brains that pull us inexorably into this shadow world, where we willing accept as “real” a world of illusions where nothing really is as it seems? When enter a dark theater, once inside you know your brain is programmed to trade reality for a world of fantasy and illusion, even untruths and deceit. You know you will not only be misled, you insist on being deceived. In fact, you will feel cheated if you are not deceived, if you figure out the film’s plot too easily!
Admit it, your brain really loves being misled, lied to and deceived! Why? Because it is programmed to deny reality. Because it delights in being tricked by fantasies. Call it ‘entertainment” if that helps rationalize your denial. But the truth is: Your brain inexplicably draws secret, dark pleasure from being deceived, misled and manipulated.
Brain works same way when investing…
http://tinyurl.com/qxc7a
Good interesting post Get Stucco . And the biggest trickers right now are ……….?
BTW, it is shaping up to be a red numbers day at marketwatch.com…
http://www.marketwatch.com/tools/marketsummary/default.asp
Reality must be stalking GOOG by now … when will it pounce?
——————————————————————————————-
“Yahoo 3Q sales hit by recent ad malaise; shares dip 10%
By Ben Charny
Last Update: 11:51 AM ET Sep 19, 2006
SAN FRANCISCO (MarketWatch) — A slowdown in advertising revenues from Yahoo Inc.’s (YHOO : Last: 26.65-2.35-8.10% 11:42am 09/19/2006) auto and financial features over the last three to four weeks will impact Yahoo’s upcoming third quarter financial results, Yahoo executives told analysts on Tuesday. Yahoo chief Financial Officer Sue Decker told the gathering that, because of the ad slowdown, Yahoo expects Q3 sales to “come in the bottom half” of the $1.1 billion and $1.2 billion Yahoo projected in July. Shares of Yahoo were trading lower by 7.5% to $26.77 on Tuesday.”
Luckily the PPT has turned on the water hoses at full blast…
http://tinyurl.com/oysr7
Eureka California continues to buck the national trend. MLS inventory has held steady or drifted lower the last couple of months. The Eureka Times-Standard recently published a story about “house prices back up, sales down” but these are likely skewed by sales of higher priced homes.
Still, there are a lot of people who have considerable faith in the RE here. My neighbor, who is building a house on a 3,500 square foot lot across the street from where I rent, still expects to fetch $619K for this new 2,000 square foot home—which is still $75-100K above comparables. She said that the market is “a little softer” but there would be no problem selling it as it is a great house and retires will have no problem paying for it. My guess is she put no more than $200-250K in construction and land costs. Greed has blinded people to the reality in front of them.
Another, unrelated story, my wife works at a bank and had a 74 year old couple show up yesterday to cash several hundred thousand dollars worth of CDs…to buy a house. Talk about catching a falling knife!
It must be that Eureka has amazing public schools where kids are off the charts in IQ, free coffee at Carpe Diem, and the number of attractive genius people. Oh wait! That’s just a TV show! doh….where’s my coffee?
“Lereah predicted prices will drop nationally over the next six months, and that each percentage point drop ‘will bring thousands and thousands of buyers back into the marketplace.’”
This reveals the new NAR spin, so completely opposite of their previous position. Now they’ll court the buyers, and all propaganda will be toward elevating the financial savvy of the buyer…whereas, just a few short months ago, buyers were slow, financially retarded, at the mercy of the sellers, and just not “hip”…whereas all those flippers were razor sharp profiteers.
Buyers are the new sellers!
Lying about the buyers who won’t be back for the next four years is the new black…
Blue is the new black. Choice of colors intentional.
Lol. Anything to the get the party going again . Nothing worst than a dead market with buyers refusing to buy until they think the bottom has been reached .
Court me by offering me the right price. Period.
“He predicted a rebound in the next three to six months”
In a way, he’s doing nothing more than trying to change the psychology of the situation. He’s basically saying to potential buyers: “You were right to wait a few months. That shows you are a smart shopper! However, when you start seeing bargains again in three to six months, that will be the price bottom for the foreseeable future, so you’d *better* think of putting up *serious* offers, or risk being priced out forever. Again, congratulations on being such a smart shopper!”
DL’s job is to find GFs, or if there are none to be found, to manufacture more.
Yeah. What makes my ears smoke is not that Lereah spews garbage, but that his garbage is regurgitated so uncritically by the media. Is there any other industry spokesman that’s treated like such a wise, all-seeing oracle? A CEO’s opinion on whether to buy or sell his company’s stocks would be understood as biased, a network president’s thoughts on his new shows seen as promotion.
“Lereah predicted prices will drop nationally over the next six months, and that each percentage point drop ‘will bring thousands and thousands of buyers back into the marketplace.’”
No way. Once people realize that RE does NOT always go up 20% a year and is not a “liquid” asset like stocks, these thousands may just decide it’s way less risk to rent. Owning a home used to be a long, long term investment and a lifestyle decision, nothing more. Certainly not a get rich quick vehicle. What’s the incentive to take on a mountain of mortgage debt for a flat or declining asset?
PMI fall report is out:
http://phx.corporate-ir.net/phoenix.zhtml?c=63356&p=irol-publications
Hooray! san Diego is still number-1! 60.3% chance of falling prices.
100% chance — they have already dropped.
Doesn’t PMI read the DataQuick reports?
“The Commerce Department said U.S. housing starts fell 6.0 percent n August to an annual pace of 1.665 million units, compared to a downwardly revised 1.772 million in July.”
They tweaked the July number down to make the month to month drop look better. Original July number is 1.795 million, that indicates a 7.2% drop, not 6% as reported above.