$500,000 Is The New Million
Readers suggested a topic on the future of the real estate industry and the housing bubble. “Is there any cause for hope that the NAR will go bankrupt before the housing bust ends? CNN Money. “The number of existing homes sold during November plummeted 8.6% as prices plunged by record amounts, according to a closely watched housing industry report issued Tuesday. The National Association of Realtors said that home sales dropped to an annualized rate of 4.49 million units. That was down from 4.98 in October and much less than the 4.93 million units projected by a consensus of industry analysts.”
“‘The only region where we’re seeing more sales are where bargain hunters are taking advantage of distressed sale prices,’ said Lawrence Yun, the Realtors’ chief economist. ‘About 45% of transactions, nationally, were of distressed properties.’”
“Yun blamed the financial market turmoil for the devastating report. For months, sales had hovered 4.9 million to 5.1 million. ‘Today’s figure reflects the stock market crash that began in October,’ he said.”
“The drop took place despite bargain prices as property values continued their decline. The median existing home sold for $181,300 in November, down 13.2% from a year ago when the median was $208,800. Yun said that price drop was the largest the association had ever recorded and probably the worst decline since the Great Depression.”
One replied, “America is brainwashed that Realtors are ‘professionals.’ It just wont happen.”
To which was posted, “You are a pessimist. I am quite hopeful that once the full potential of internet technology for real estate sales comes to fruition, the traditional used home sales business model will be permanently broken. Let’s both make sure to avoid used home sellers like the plague and only use online shopping techniques next time we buy houses, in order to hasten the NAR’s demise.”
Another pointed out, “In the Herald - Tribune comments section someone refered to the NAR as the sixpercenters. Reminded me of a city youth gang, back in the 80’s, called the five percenters.”
The Bonner County Daily Bee. “Here in Bonner County, the average selling price for residential listings decreased by 7 percent through mid-December, compared with home sales activity for the 2007 period, based on information provided by the Selkirk Association of Realtors MLS. The average time on the local market was nearly five months. The fastest-moving sale took close to three months to close, while the slowest seller hung around for 266 days.”
“In short, there are still more homes than there are buyers and the off-kilter supply and demand cycle that had its roots in the housing boom of 2005 remained a drag on the market during the year that is just coming to an end.”
“One year ago nearly to the day, outgoing 2007 Selkirk Association of Realtors President Dale Pyne discussed how too much inventory - mostly of ’spec’ homes built on the heels of the white-hot real estate market in 2005 - had affected local housing prices and caused a correction in terms of fewer sales happening at lower prices. This month, Lana Kay Hanson, the outgoing 2008 president for the Realtors association, talked about how the correction continued throughout the past year and why she believes there is opportunity embedded in the lower housing statistics.”
“Q: How would you characterize the 2008 housing market? A: ‘It was a continuation of the bad market of the bad market we’ve seen since 2007. But there was some activity in November. It may not be gung-ho - they’re not knocking down the door - but people are realizing they can’t sit back forever.”
“Q: What’s your forecast for when the market might start to move upward? A: ‘I think we’re going to see these lower prices for at least another year, maybe longer. I do think that it’s turning, though. Not that prices are going up, but because people are starting to buy because of the deals out there.’”
“Q: Housing-related headlines in places like Phoenix and Las Vegas are saying, ‘$500,000 is the new million.’ Do you anticipate seeing the million-dollar listings going down in this market? A: ‘They’re already down. If someone had a listing for $1 million-plus in 2005, it’s probably in the $700,000-plus range now. Those properties have already taken the hit. Nobody was sheltered from this. But it had to come back to realism. Everything was getting out of range too fast.’”
“Q: Did the upward price spiral that preceded this correction start in 2005, or did it begin even earlier? A: ‘It really started in the fall of 2004. I remember seeing the statistics for home sales that November and December and realizing at the time that we really hadn’t seen anything like it before, as far as how many things were starting to sell during the winter months. Unfortunately, some people are still thinking their property is worth those 2005 prices.’”
“Q: It used to be said that we run about five years behind California as far as what the housing market is doing. Does that still hold true? A: ‘Yes, but it’s shortened to about three years. We’re really riding behind all of the other markets that are having tough times.’”
“Q: So there are some good buys because of tough times? A: ‘Extraordinary buys. There are some fabulous buying opportunities right now. But what I’m finding is that the new buyers - people who are just coming into the market for the first time - think they can get it for even less.”
“Q: With the lower sales price trends over the past couple of years, could they be right about waiting out the market a while longer? A: ‘I think we’ve hit the bottom, price-wise. We’re there. It may stay level for a long time, but as soon as more money comes into the market, prices are going to go up. It’s always the same story and it’s the same thing I’ve seen over the years. If you’ve got the money and you don’t buy in a market like this one, you’re going to kick yourself in 10 years.’”
