Demand Far Below Pre-2006 Levels: CEO
Some housing bubble reports from Wall Street and Washington. MarketWatch, “Pulte Homes Inc. warned it may post a fourth-quarter loss but said it would make an aggressive effort to strengthen its balance sheet by taking charges to reduce its land inventory.”
“Pulte ‘continues to navigate through a challenging operating environment, with demand for new homes during the fourth quarter still far below pre-2006 levels,’ CEO Richard Dugas said in a statement, throwing cold water on hopes that housing has bottomed.”
“The company also raised its estimate of the amount of land charges it expects to record for the quarter. It now anticipates land-inventory impairments and other charges such as options deposits will range $330 million to $350 million. Its earlier estimate was $150 million.”
“‘With our ongoing focus on the balance sheet, we continue to evaluate land positions, renegotiate contracts and, if necessary, forfeit deposits and pre-acquisition costs,’ CFO Officer Roger Cregg said.”
“Banc of America’s Daniel Oppenheim said Pulte’s increased land-charge estimate ‘reflects [a] recent price decline and also a shift in pricing strategy to reduce its speculative homes. We think it may be difficult for home builders to resist the temptation of starting construction in February and March in order to meet 2007 delivery goals,’ he added.”
“Homebuyers have been backing out of sales contracts and forfeiting their down payments during the housing slowdown. Hovnanian CEO Ara Hovnanian said many cancellations are for older contracts signed when the market was booming and home prices were rising. He said one way the company is avoiding cancellations is to negotiate with buyers at the closing table.”
“‘We don’t like to do it, but it can prevent cancellations,’ Hovnanian said.”
“When asked to pick an indicator he’s looking at to spot a potential bottom for housing, Hovnanian said ‘we’re watching [home] resale listings, which is something we never used to focus on.’”
“Toll Brothers Chief Financial Officer Joel Rassman said buyers are putting off home purchases because they think the house may end up being cheaper soon. ‘There was no [spring] selling season last year, and if it happens again a lot of the smaller private builders won’t be around the next selling season,’ he said.”
From Origination News. “The net income of Washington Mutual Inc.’s home loan segment plummeted by more than $1 billion last year, the Seattle-based thrift has reported. Originations of home loans declined 22% for the year. WaMu attributed the nosedive in the mortgage segment’s profits to ‘the continued slowing of the housing market and a significant weakening of overall subprime market conditions.’”
“The company said higher delinquencies on subprime home loans and weaker market conditions shaved $160 million from its pretax earnings in the fourth quarter.”
“Housing markets continue to soften in December and demand for residential mortgages continued to weaken, according to a Federal Reserve report called the Beige Book. ‘Nearly all [Federal Reserve Bank] districts reported a continued softening of housing markets, and high inventories of new homes have generally led to slowing in residential building,’ the Beige Book says.”
“In the San Francisco district (where homes are still appreciating), Realtors ‘are offering significant incentives to sell properties,’ the Beige Book says.”
“Fannie Mae saw a loss in the third quarter of 2006 on a GAAP basis, said James Lockhart, director of the Office of Federal Housing Enterprise Oversight, which regulates the safety and soundness of company. Analyst Jim Vogel predicted the loss to be around $400 million, based on OFHEO’s capital classification released Dec. 28.”
“Negotiations for new legislation are ongoing. One of the remaining sticking points has been whether the new law would allow Fannie Mae and Freddie Mac to purchase mortgages above the ‘conforming loan limit’ established for the rest of the country.”
“The existing conforming loan limit is $417,000. Lockhart said any legislative changes would likely affect 10 or 11 markets, concentrated in parts of California and some suburbs of New York City. ‘Certainly there is an argument that can be made that providing mortgages over $417,000 is well away from the affordable housing mission’ of both companies, Lockhart said.”
The Associated Press. “‘They unfortunately have very, very large problems,’ Lockhart said in a meeting with reporters, referring to the government-sponsored companies that are the two biggest financiers in the $8 trillion home-mortgage market in the United States. ‘They have a long way to go; there are still significant worries.’”
“The problems ‘are massive and they’re ongoing,’ he said. ‘We have to prevent these companies from growing out of control again,’ Lockhart said.”
The Daily Star. “Although the correction in the nation’s homebuilding industry will continue, it won’t be enough to stunt a strong U.S. economy, Susan Bies, a Federal Reserve System governor, said in a speech here Thursday.”
“The nation’s housing correction was ‘badly needed,’ she said. Nationally, while less then 10 percent of homes are usually bought by speculators, during the run-up that figure increased to up to 40 percent in some areas.”
“Bies encouraged people to become better-educated about mortgage options and cautioned an auditorium full of future home buyers about the pitfalls of sub-prime loans, such as interest-only mortgages and those with no down payments.”
“‘I don’t want to make you all scared of doing mortgages. They’re wonderful. They work most of the time,’ Bies said.”
‘Question: In your article about how to guard against mortgage fraud, you wrote: ‘Don’t jump at a contract offer that … involves a kickback of the overage to the buyer at closing. Chances are the buyer wants an inflated price on the property so he can take the additional money and run without every making the first payment.’
‘My question is, why should it matter? Maybe I do not understand, but if a buyer buys your house for the full appraised value and he gets a mortgage for that amount, what difference does it make to me as the seller if I only sold it to him for less than the amount he mortgaged?’
‘Answer: I believe you misunderstood, or perhaps I didn’t explain this point fully enough. Either way, the sales price and the mortgage amount are two different things. No, you won’t be on the hook if your “buyer” obtains a mortgage at an inflated appraisal. That’s between him and the lender.’
‘But you could be charged with conspiracy or perhaps as an accessory to a crime if you knowingly sell a property at far more than it is worth and then hand the overage over to the “buyer” at closing or shortly thereafter. The authorities say any seller who does that has to be considered an accomplice because he had to know something is not right. Either that or the seller is a complete and utter nincompoop.’
“Ethics, what ethics, we dont need no stinking ethics”.
I guess 2006 passed without you noticing the single most important event of the entire year!
That was the year every realtor had to take a grueling 1-day ethics class, after which, said realtor would receive a shining plaque with all sorts of important signatures on it - An official certificate - a symbol representing rigorous realtor Ethics standards. These objects will be proudly displayed, adorning realtors’ offices all over the country. You can now feel confident that, despite all the storied past indiscretions, realtors are all of a sudden a creed of the highest moral and ethical standards.
Kind of like lawyers talking about professional ethics…
That’s a load off my mind.
Do you think there’s any chance the highly trained Real Estate clerks and Mortgage clerks might have known that a lot of borrowers bought homes they would not be able to afford? Is this something they might have pointed out to their clients, the ones that paid them dearly for their expert consulting advice?
Given that they signed a “strict” code of conduct and received those ethic credentials, do you suppose they might have been in some way obligated to get a sign-off that they indeed had that discussion?
The FBs ought to get together and initiate a class action against the NAR. That would be both amusing and also might represent the final coffin nail for that corrupt monopoly…
After passing ethics class, they are awarded condoms emblazoned with Realtor™ logo to protect any future clients the $crew over.
That’s pretty funny.
Lawrence Person writes:
“The attempt to require political bloggers to register as lobbyists previously reported by Slashdot has been stripped out of the lobbying reform bill. The vote was 55 to 43 to defeat the provision. All 48 Republicans, as well as 7 Democrats, voted against requiring bloggers to register; all 43 votes in favor of keeping the registration provision were by Democrats.”
Well, of course. The point of the First Amendment is to protect strip clubs, not core political speech.
Good one, Thomas!
doesn’t matter …they still hate bloggers. Too much information and discussion going on in Amerika that can be accessed by anyone!
“Ethics, an important business negotiation tool.” Doonesbury
How does this guy not get that you are cheating the lender?
How do you know the lender did not sell the loan to Fannie Mae, who sucked it into a black hole (aka balance sheet). Maybe the taxpayer is the bagholder?
It’s quantum finance. It’s because you don’t understand Easy Al and his new e-CON-omy finance.
‘But you could be charged with conspiracy or perhaps as an accessory to a crime if you knowingly sell a property at far more than it is worth and then hand the overage over to the “buyer” at closing or shortly thereafter. The authorities say any seller who does that has to be considered an accomplice because he had to know something is not right. Either that or the seller is a complete and utter nincompoop.’
Don’t ask, don’t tell.
Don’t forget, the law tends to recognize “willful ignorance” as distinct from ignorance.
What does the law have to say about “willful stupidity?”
“What does the law have to say about “willful stupidity?”
Not much, since the “Decider” is still in office, Iraq is an abattoir, Gonzales just denied habeas corpus to the Senate Judiciary Committee and Congress sits there playing pocket pool.
So much for the law, don’t be expecting anything to put a damper on mortgage fraud.
“So much for the law, don’t be expecting anything to put a damper on mortgage fraud.”
I don’t expect the law to do much, but I am happy to report the invisible hand appears to be morphing into a giant fist, which will get the job done more effectively, anyway
This time it’s gonna be carrying a flaming 2×4 wrapped in barbed wire.
Other places, other customs: A court decision from Germany, according to yesterday’s Focus Magazine online:
A bank which realizes that the price of real estate is too high is required, by law, to inform the buyer about the inflated price. Real estate which is too expensive is considered unethical, with ‘unethical’ being a criminal offense. If a bank agrees to finance in such a case, it is committing a crime and held liable, and the bank customer is entitled to damages.
Let’s adopt this law in the USA!
Well, if the sub prime lenders had appraisers who were inflating the appraisal value beyond reason I think borrowers might have a point regarding relying on the appraisal to not overpay . The problem becomes that regular lenders used sub-prime appraisal comps, therefore the whole system of appraisals relied on the fradulent and inflated ones also .
I think alot of people assumed that a lender would never lend on something that they didn’t have a chance of getting their money back and people in general where not aware of this sub-prime fraud to the secondary market .
“Although the correction in the nation’s homebuilding industry will continue, it won’t be enough to stunt a strong U.S. economy, Susan Bies, a Federal Reserve System governor, said in a speech here Thursday.”
“The nation’s housing correction was ‘badly needed,’ she said. Nationally, while less then 10 percent of homes are usually bought by speculators, during the run-up that figure increased to up to 40 percent in some areas.”
Bullshit. To own a home today in Amerika and still be middle class requires sh*tting gold bricks. Drop the price some more, you greedy idiot.
If they aren’t making anymore land (NAR), why are developers dumping land?
tsk tsk… the scare tactics used to get people to by homes..
What was said:
“Bies encouraged people to become better-educated about mortgage options and cautioned an auditorium full of future home buyers about the pitfalls of sub-prime loans, such as interest-only mortgages and those with no down payments.”
What I would like to see:
“Bies encouraged people to become better-educated about the Federal Reserve and cautioned an auditorium full of future tax payers and consumers about the pitfalls of debt, interest rates, fractional reserve banking and printing presses.”
Fantastic Google Video on the history of Fractional Banking.
Warning it is in 2 parts very long, very interesting, and very disturbing.
http://video.google.com/videoplay?docid=-1583154561904832383&q=money+masters
You could call it too “fractionnal fictionnal frictionnal banking”.
OCbear,
Make sure your tin foil hat is on tight.
Don’t worry I’ve got extra Reynolds just in case.
OCBear,
In all fairness, I just finished watching that. You’re right it was long.
I had to prepare some statistics recently on the longer-term supply-demand situation in housing. One thing that really jumped out at me:
Between January 2001, when the Fed started cutting interest rates and got this whole boom going, and July 2006 (the worst month so far), the supply of existing homes for sale shot up 117%. The numbers are 1.777 million units in 1/01 and 3.861 million units in 7/06.
During that same time, the Seasonally Adjusted Annual Rate of sales climbed from 5.1 million units to 6.33 million. That’s a 24% increase. Even if you measure from 1/01 to the peak demand month (6/05), it’s still an increase of just 43% in the sales rate.
In other words, the increase in supply on the market far exceeded the increase in demand. Since July, we have only whittled that supply mountain down by 1.1% (to 3.82 million units in November).
This is just one reason why I expect the downturn to be a lengthy, drawn out affair, with relatively weak building activity, sales, and pricing. There is simply too much inventory out there, and a lot of it is held by “weak” hands — homeowners who bought as second homes or investment purchases. They were 40% of the purchase market in 2005, by the National Association of Realtors’ own figures, the highest non-owner-occupied market share percentage in history.
Just some food for thought.
http://interestrateroundup.blogspot.com
Good summary - agree completely, at least from what I’ve seen. Can you perhaps give links to your data sources? Is this all from OFHEO? Is it available to the general public? I’d like to keep track and compile the data also.
I’m quoting the National Association of Realtors figures on sales, supply, and NOO buying share. You can’t access the complete series of sales rates and supply figures online — just the past year or so. I have it via a subscription-based service. However, an Excel spreadsheet with the more recent sales and for-sale figures is available here:
http://www.realtor.org/Research.nsf/files/EHSreport.XLS/FILE/EHSreport.XLS
The figures on the NOO share are in this early 2006 press release:
http://www.realtor.org/press_room/news_releases/2006/secondhomesales05.html
The complete inventory and sales stats in the NEW home market are available online, for free, from the Census Bureau. I didn’t comment on them here, but if you want more of those figures, go here:
http://www.census.gov/const/www/newressalesindex.html
‘Pulte Homes Inc. warned it may post a fourth-quarter loss but said it would make an aggressive effort to strengthen its balance sheet by taking charges to reduce its land inventory’
I know what they mean here but doesn’t this sound rich? Strengthen the balance sheet by writing down equity.
Someone was explaining here just a couple of days ago how write downs are good for the company stock price (and JimmyB emphatically agrees with this opinion
).
Its called monetizing the difference between the present value of a long term migraine headache and chopping off one’s head.
Very funny indeed GetStucco. It’s based on the theory that if you bite the bullet NOW, after that the morons that work on Wall Street, will have all forgotten that your an incompetent and stupid manager. And you know what? It works. People are soo stupid that it works.
Your are an incompetent manager…. Sorry.
Yes. What happens when they take this charge, is they drop it below the line as a “non-operating expense” or in the case of a restructure, “discontinued operations”. They whack their bag as hard as possible, report an inflated “operating cashflow” and artificially boost reported EBITDA in subsequent quarters.
Sadly, the financial press is largely oblivious, and this is often rewarded in the market.
This is symptomatic of a society which poorly grasps “the broken window” analogy. And one where Enron figured out how to fool everyone in the financial press by hiding losses off shore.
I agree. And how many analysts either understand (or are allowed to understand & report) the actual issues/disclosures in qtr/annual reports. Try none.
Analyst is just another word for Happy Hooker.
I still agree.
Thanks for repeatedly sprinkling your unfounded opinions on this blog. We don’t get quite enough of that in the MSM.
At least at this point in time they can write off prior purchase options as losses. Soon, these book-balancing antics will have run their course, and the real book-to-value will be known. And such re-trenchments are available to the largest of builders, where the small to mid-range regional guy can only eat his losses. There is real power in the statement:
“Toll Brothers Chief Financial Officer Joel Rassman said buyers are putting off home purchases because they think the house may end up being cheaper soon. ‘There was no [spring] selling season last year, and if it happens again a lot of the smaller private builders won’t be around the next selling season,’ he said.”
I personally know a number of these guys in the Central Valley of CA, and they are getting close, very close. They are a couple of failed sales from the noose.
Those guys on the Street just kill me. Driving up the stock price despite the loss, and all because Pulte says they are going to work on their balance sheet? These are the same guys who estimated write downs of $150M and delivered somewhere in the neighborhood of $330-350M. They also estimated earnings per share of $.30-$.70 and are now saying it will be $.05-($.05). WTF? Either these guys don’t know their own line of business, or they are just shysters trying to pump and dump. I think it may be the latter of the two.
From Wikipedia:
“The term mortgage (from Law French, lit. death vow) refers to the legal device used in securing the property, but it is also commonly used to refer to the debt secured by the mortgage, the mortgage loan.”
So I guess that article could be translated as “I don’t want to make you all scared of doing death vows. They’re wonderful. They work most of the time”
“Bies encouraged people to become better-educated about mortgage options and cautioned an auditorium full of future home buyers about the pitfalls of sub-prime loans, such as interest-only mortgages and those with no down payments.
‘I don’t want to make you all scared of doing mortgages. They’re wonderful. They work most of the time,’ Bies said.”
I would have been scared if I had heard her say this, as I have no idea what she meant (and I claim to understand quite a bit about how a mortgage works!). Is she trying to suggest that everyone should steer clear of I/O and no downpayment loans going forward? Because if everyone follows this prudent advice, a hard landing is in the bag.
I was there. She was indeed trying to warn about the pitfalls of ARMs and interest only mortgages.
She needs to warn the folks attending theseChump RE seminars:
This guy (Jim Canale) is on local radio pitching his seminars, which he claims are still drawing SRO crowds. What does he offer - buy and hold rental unit strategy? No. Foreclosures? No.
He says he is here to educate the public regarding a “new understanding of money”. Can you say no money down I/O loans?…There, I knew that you could!
He started out local but it appears he’s branching out to Houston, TX. Spreading the smarm far and wide.
What upsets me is that enough local GFs are attending these seminars, leaving starry-eyed about future wealth, and propping up the RE market just enough to slow the price slide.
Thanks for nothing Philly metro GFs!
Arizona Slim attends this event:
http://www.azstarnet.com/business/165292
And plays Count The “For Sale” Signs along the way. Here’s my report:
The Berger Auditorium is just a hair under 1.5 miles away from my house. On the way over, I saw six houses with “For Sale” signs. One is on its third real estate agency and has been on the market for almost a year. Another, a flip attempt that doesn’t seem to be succeeding, has been on the market for more than six months. The mailbox was knocked off its post last month — the box been sitting on the ground ever since.
There’s another house that’s in a state of decay — even the “For Sale” sign looks worn out now. The other three are relatively new listings, meaning they’ve been on the market for two months or less. All but one of these six houses are vacant.
So, into Berger I went. I was expecting to see a big turnout of the local REIC, but they didn’t show. Instead, the hall was packed with students. Some were even sitting in the aisles.
Since the audience was so heavy on students, Dr. Bies went into Professor Mode and gave a lecture on:
1. The near-term economic outlook
2. What the Fed does
She lamented the lack of financial literacy in the United States and noted that the public schools have really dropped the ball in this area. I couldn’t help but agree. She went on to urge the students to be careful shoppers when it came time to look for a mortgage. Good point.
But I couldn’t help but wonder why this word wasn’t getting out to people who weren’t in college. Where were they going to gain their financial literacy? Certainly not from the financial industry. They’re not in business to provide such a thing.
After the lecture and reception, I took a different route home. I wanted to go by those two adjacent houses that had been on the market for almost a year. On my way over to Berger, I noticed that their “For Sale” signs had been removed. Perhaps they’d been sold or rented? It was hard to tell in the dark, but I sure didn’t see any lights on. Something tells me that the seller(s) are adopting the Wait ‘Til Spring strategy. I wish them lots of luck.
‘There’s another house that’s in a state of decay — even the ‘“For Sale” sign looks worn out now. The other three are relatively new listings, meaning they’ve been on the market for two months or less. All but one of these six houses are vacant.’
Did Susan get tour the local housing market as part of her visit? Because it sounds like there was a great opportunity to see how bad things are by taking a short walk around the neighborhood outside the auditorium where she spoke.
“When asked to pick an indicator he’s looking at to spot a potential bottom for housing, Hovnanian said ‘we’re watching [home] resale listings, which is something we never used to focus on.’”
Mr. Hovnanian further elaborated:
“As long as home resale listing prices are signficantly higher than our cost to build and land costs we feel we have a pretty good business going forward. Of course we need to make some adjustments as our margins will be cut in half but we never really believed we would be able to maintain our sky high margins of 2004, 2005, 2006 in the long term.”
“Our real competition will be the foreclosures on buyers who purchased in 2004, 2005, and 2006.”
‘we’re watching [home] resale listings, which is something we never used to focus on.’
I am watching them too, like a hawk. SD County, which had the biggest Dec 05/Dec 06 price decline out of all the southern Cali counties, has already seen inventory climb from near 15K (on 1/1/07) to a current level over 17K (according to ziprealty.com). Normally home owners take their homes off the market when prices are falling, but this time is different.
Boy, thats interesting that a big builder would be looking at the potential forclosures coming down the line, yet the NAR and all the experts don’t see this as a major factor in builders being able to remain in the game .
Why doesn’t someone in the media question the REIC ad campaign regarding foreclosures and the high amount of investment buying on sub-prime loans which shatters the concept
of “Time2Buy”.
HW–I added that bit about Mr. Hovnanian further elaborated. He didn’t acutally say that. Sorry.
See what you started. Everybody is quoting your ad-lib….nice.
“Our real competition will be the foreclosures on buyers who purchased in 2004, 2005, and 2006.”
-Good job! You created your competition. I hope you get your ass handed to you.
Pcola Popper …. But your point has merit . The builders have to worry about competition with foreclosures , especially in their own tracts ,as this high speculation ,(over 50% ), sub-prime ,low down loan problem shakes out in the coming months .
The builders in combo with their sub-prime buddies put a high % of low down liar investors in these new home tracts/condos and they won’t be able to compete with the foreclosures in their own tracts . I don’t believe the buiders will be able to get away with this incentive/kickback game for very much longer either in that the sub-prime lendings are folding .
When I found out how high of a % the investment purchases were,along with them being on low down loans, is when I knew the market was doomed .
Prefer their head handed to them. But I forgot they had no brains in first place. Fooled by liquidity from the bastards at the FED, they overinsvested exactly like the morons in 2000 with the NASDAQ. Fu-ken bankers of all stripes.
Hovnanian’s not dumb. He knew what was going on, he knows what’s happening now and while he’ll get hurt over the next couple of years, he won’t be screwed as badly as his 2004-06 customers will be. He’s slaughtering the very market he helped to inflate, but it’s not his fault the sucker buyers willingly ignored the math in the first place.
It’s a market. You want touchy-feeley, go watch Oprah. I admire him.
North Scottsdale AZ had a skyrocket avg price to 1,062,735 the last 10 days and 80 homes sold where 77 sold in the same period last year could a turn around be near?
You better buy now or you will be priced out forever…
The bottom is here! Better buy some sand before they quit making any more of it. Wait… they don’t make desert any more? Time2Buy!!!!
I have a real pristine real estate piece to sell to you. A nice sand castle. Or even better an Ice Hotel in Québec. Interested ?
“They work most of the time…..Even my buddy Alan thought it a good idea to take on adjustable mortgages with rates at historic lows.”
someone splain to me howcome the HBs are up on this news?
Usually you can find a headline or wire blurb with a tidbit which ‘justifies’ the trading. But for this dreadful PHM announcement and the ensuing price action the business press hasn’t (as of noon eastern) been able to come up with even a one liner to account for the HB uptick.
the stock market doesn’t have to make sense
Neither life sometimes
they’re in a triangle trying to break out
however, as we saw with the nasdaq, sometimes those “breakouts” are fakeouts
Reason: The boyz have too much dough sitting around… Needs to be put to work. IMHO as long as the market is climbing and $ is available, the #$%@ HB stocks will go up. They may see a high short interest, like HOV Short % of Float (as of 12-Dec-06)3: 28.90%. Where “normal” is 1 - 2 % and want to SQUEEZE them.
yes, but why only these stocks and not every other one. My own theory is that investors may be breathing a sigh of relief that HBs are writing off their land options (that has been a big change in risk management for the builders) rather than going full speed ahead and exercising them in a slowing environment.
anyone seeing the prices on lots builders are dumping ?
50% off or ???
Likely not “dumping” anything…Just not “exercising” their options….
The spring selling season will not materialize in my opinion and listings will start to climb big time in February.
In my area, homes taken off market in Oct-Nov are already re-listed. What I expect to happen: the typical sales surge around May, June - buyers wanting to be settled in before beginning of next school year. But this would apply to SFHs only. Some elated that they “got over” on builders offering every kind of incentive on new homes…even saw one HB advertise that they could guarantee against a sliding market.
Newly minted Flippers ecstatic that they are buying the dip, just in time to turn over property come 2007 selling season.
No big uptick in median price. Way too much inventory for that. Also have noticed party chit chat trending in favor of buyer’s market.
No the Ides of March. Beware Caesar of the Ides of March. I say that the real bloodbath will happen in march.
“Although the correction in the nation’s homebuilding industry will continue, it won’t be enough to stunt a strong U.S. economy, Susan Bies, a Federal Reserve System governor, said in a speech here Thursday.”
You can believe that, or…..
http://financialsense.com/fsu/editorials/willie/2007/0118.html
nnvmtgbrkr;…How about a reno/carson update ??
scdave, according to the RGJ, in yesterdays article about foreclosures, there is a huge gap between what is happening in Las Vegas and what is happening here. I.E. It’s DIFFERENT here. http://news.rgj.com/apps/pbcs.dll/article?ID=2007701180341
Last night on the local news, they tried to cover this story, but did a poor job, with the main focus being interviews by local real estate agents stating that while prices have declined a bit, there is no chance of any significant property value declines, and in fact they will be going up as soon as Spring hits. I am sure nnvmtgbrkr can add more detail to my observations, but this is just the view from one “bitter renter” here. Oh, and by the way, rents are also increasing here now only cheaper than CA. http://news.rgj.com/apps/pbcs.dll/article?AID=/20070118/NEWS10/701180339/1016/NEWS
Median prices down. Inventory ramping up with over 500 new listings within the past week. Foreclosures have not hit with a vengeance, yet. Over 50% of the workforce in the Reno area makes less than $13 per hour. Already reports of people leaving the area for cheaper housing. Look for significant downward pressure on pricing as we move forward the next several years.
BanteringBear, appreciated seeing your comments on local realtor Dian Cohn’s blog. We really need to up the exposure in this area that things are no better here than in the rest of the bubble markets and that we, too, are in for a rude awakening.
Thanks…Both of you….
Thanks Reno Girl. Diane uses comment moderation, but seems to allow bearish posts. While she has that typical realtor exuberance (who can blame her, it’s her profession) she seems realistic about the marketplace, not hiding the fact that prices are down, and inventories up.
Susan is full of ……
TIMBERRRRRRRRRRRRRRRRRRRR:
http://www.marketwatch.com/tools/quotes/quotes.asp?symb=hmb&vc=&dist=dropmenu
Harakiri next …..
‘There was no [spring] selling season last year, and if it happens again a lot of the smaller private builders won’t be around the next selling season,’ he said.”
F-n’ aye, bubba. A lot of the small timers made it through last year on yesteryears profits. For the small timers, this reserve that has got them through is gone. Around my neck-of-the-woods, these builders are on their knees pleading to the Housing-Baal to give them their spring recovery. It ’s really pathetic, actually. And no, I don’t feel sorry for them. A lot of these guys still could have made a profit if they’d just cast aside their greed that kept them blind to the obvious, and lowered the prices of their product and moved their inventory last year. That opportunity has since long come and gone. Look for builder blood-spatter all over NNV his summer.
nnvmtgbrkr;…Can I assume there has been a lot of “wannabee” developers/builders that jumped into these land deals….???
Maye - but I’ll bet if they had moved, the big boys would have moved to under cut them. It just would have expedited the obvious.
Maye - but I’ll bet if they had moved, the big boys would have moved to under cut them. It just would have expedited the inevitable.
OT but I am getting sick and tired of that “unbiased” sleezy operation, DataQuick. I hate it when their analysts get creampuff interviewed by the media and regardless of how obvious DQ’s assertions are they get completely overlooked. The following UT article,
http://www.signonsandiego.com/news/business/20070117-9999-1b17default.html#name
got me sufficiently pissed that I sent an email to the “reporter”…
Mr Pierce,
Interesting topic for your article, but somehow, it left me a little bewildered. Bewildered because the elephant in the living room went unnoticed in your piece. The following quotes,
“Because there are about 650,000 homes in the county, the current level of default is not disturbing, Karevoll said.”
AND
“During the last housing downturn, in the mid-1990s, there was “a spectacularly high rate” of foreclosures because property values dropped steeply, Karevoll said.”
seem to be a little hard to reconcile when I look at the chart at the bottom of the article.
While I agree the full year numbers for foreclosures & NoD for this past year are substantially lower by comparison, I don’t think it’s even the slightest bit relevant. If you look at the chart and see the slope at the end it clearly looks very disturbing. Then, if you simply take the last month and project that out flat for this year (given the increases that would be silly and underestimating by at least 50% IMO), the numbers will be in the historically high range.
Something sounds fishy. I wish you could have asked those questions. He seems very dismissive about the likelihood that the real estate market is about to face some very hard times.
“I hate it when their analysts get creampuff interviewed by the media and regardless of how obvious DQ’s assertions are they get completely overlooked.”
At least it is easy to point out how stupid their comments are…
Yep, they don’t make it hard for the peanut gallery here.
Read about Enter to WIN a 5-Day Package for Two to the 2007 Super Bowl in Miami at Talega.
I heard this on the radio yesterday. Free food and enter a contest if you go to their open house this weekend. This is in San Clemente.
Downwind of the San Onofre nuke-ular power plant, right?
Probably won’t do as well as if the Chargers would have made it past New England.
He said one way the company is avoiding cancellations is to negotiate with buyers at the closing table.”
“‘We don’t like to do it, but it can prevent cancellations,’ Hovnanian said.”
Wow, imagine having to actually negotiate with a buyer?? Perish the thought. Golly. It’s not like, for the last 6 years, realtwhores have been using straw bids to goad buyers into upping their bids at the eleventh hour, or sleazy lenders have slipping in extra fees at the closing table or anything.
Stupid unethical buyers!!
From the AP story:
“Fannie Mae has not reported or forecast its results beyond June 2004. The company, which is the second-largest U.S. financial institution after Citigroup Inc., is not expected to return to timely financial reporting until early next year. ”
What would happen if I hadn’t reported my financials since ‘04 and let the IRS know it would be a couple of years before I could let them know what the situation is….it would go over like a fart in church.
Fannie Mae has to be the only publicly traded company that still provides “guidance” for 2004 and 2005.
fart in church
dude, ty that had me rolling
Update from Mass:
27 WILLOWDALE DRIVE, Merrimac, MA 01860**
Purchased 4/20/04 for $490,000
Current asking $459,000
On Market 264 days
Whoooo-ah.
P.S. I see the “Listing” Tsunami on the horizon. head for the hills!
People leaving California, decreasing demand with a large existing supply.
http://promo.realestate.yahoo.com/
What happened to HBs trying to take the “big bath” last quarter so that their financials would look good going forward? It seems like they just keep taking bigger and bigger baths.
From the Fannie/ Freddie article above:
“Certainly there is an argument that can be made that providing mortgages over $417,000 is well over the affordable housing mission of both companies”.
Gee…ya think?!
Thought they had already established last summer that they were going to hold to that limit.