‘The Bigger The Boom, The Bigger The Crash’
The Capital has this report on the Annapolis, Maryland housing bubble. “Anne Arundel County home sales dropped 31 percent last month, as owners continued to cut prices in a softening real estate market, area real estate agents and analysts said this morning.”
“But that’s the bad news. The good news is that even though the median price of a home sold in June was more than $9,000 less than the previous month, things are much worse elsewhere in Maryland and around the country.”
“The median price for a county home was $351,750 according to a Rockville-based listing service. Since last month, the median dropped from $360,000. But in a telling sign of the continuing slowdown, only 750 county homes sold last month, a 31 percent drop from the same period a year ago, according to MRIS. The total value of those homes was $317,922,308 last month, a 30 percent drop from a year ago.”
“‘We’re seeing the same trend,’ Frank Nothaft, chief economist and vice president at Freddie Mac said. ‘Now we’re moving into a more typical market and a sharp slowdown.’”
“Candice Friday sells homes just outside Annapolis, where condos go for between $350,000 and $1.9 million. Many homeowners have become frustrated because they want to sell faster. ‘It’s taking quite a while,’ Ms. Friday said. ‘I have two listings here, and they’ve been sitting two to five months.’”
“Broker Butch Kline said homes are staying on the market longer because sellers don’t want to come down on their prices. The ones that do will sell more quickly, he said. For example, an Annapolis single family home listed for $439,000 sold within three weeks, he said. Last year, he would have listed the home for $475,000.”
“‘You have to have a seller who is reasonable,’ he said. ‘If they price higher, because they say, ‘well the house next door sold for this,’ than it will sit.’”
“Home prices dipped in Queen Anne’s County. The median sale price for a home there was $329,000, a nearly 11 percent plummet from that month a year ago. Only 79 homes were sold last month.”
“Realtor Mary Thompson said although inventory piled up, homes that are priced fairly are getting more attention, she said.”
“‘The houses that are priced even at 5 percent (more than worth on the market) are being looked over,’ she said. ‘Price is everything and the prices are correcting and that’s good for the market. Because the bigger the boom, the bigger the crash.’”
The next Real Estate Boom? Thoughts?
http://money.cnn.com/2006/07/07/technology/newvillages.biz2/index.htm
Oh man, don’t get Robert Cote started on that one.
We have already beaten the pedestrian friendly development pattern vs. the car friendly development pattern.
I prefer people to cars.
Click on Robert Cote’s name and go discuss over there.
Just one little poke at Robert, I thought that the market had thoroughly repudiated this development pattern?
LOL. Too late. I had already pressed the nuclear button. My missles were in the air before I read your warning. Apologies.
No apologies needed, just a little fun between posters.
Thread posted:
http://exurbannation.blogspot.com/2006/07/to-arms-nurbs-are-attacking.html#comments
Evil New Urbanist propoganda. Transit does not save time, transit does not save energy, transit does not save money. TOD built environments are more expensive, have higher crime and taxes and are almost unbelivably more congested. These perversions of Cotean Exurban Nodaltopias are nothing more than would be social engineering.
Transit does not save time, transit does not save energy, transit does not save money.
Don’t be ridiculous.
Excuse me. I’m sure it was a typing error but didn’t you mean that in your opinion the FACTS that I state are contrary to your opinions? Surely you didn’t mean to just lash out with personal insult that I am ridiculous.
Is the higher crime a feature of all TOD, or just American-style? I don’t imagine Hong Kong or Japan has quite the same issue.
It is TOD but the underlying density and degree of urbanization that is identified as the factor behind increased crime rates. The studies are fairly consistent within societies but as you point out do not cross borders.
Interesting, how almost every country that doesn’t have a deep and slightly incestuous love for the automobile has managed to support public transit - succesfully and economically for - years.
I lived in Geneva, Switerland for close to 6 months, and NEEDED a personal car maybe twice. MAYBE twice. I wouldn’t say that Geneva is
“more expensive, have higher crime and taxes and are almost unbelivably more congested”.
Okay - Geneva IS more expensive, but that’s a side effect of being the banking center of the world, more than a side effect of a city that was designed to be served by excellent public transportation. In a city with a well-desgined, well functioning public transit system, I never worried about getting to work late for a meeting, encoutering urban crime (unless I rode the train to the ‘hood’), and I got plenty of daily exercise without having to go the gym.
In America, we have been seduced by wide open spaces, gov’t subsidies of oil, roads (which are made of oil), and enough empty space to park our cars.
If the day ever comes where the gov’t can no longer subsidize ANY of the above without sacrificing other things, people will be fleeing to areas where they don’t HAVE to own a car in order to get to work, go grocery shopping, and socialize - and we won’t consider it ’social engineering’, we’ll consider it ‘the smartest thing to do’.
Er, ’scuse me, but shouldn’t we first wait until the dust settles on the crash currently underway before we have this discussion?
No! The planners are lying in wait for just such a relaxation of our eternal vigilance. They will prey on the weakened FBs, they will promise salvation to those condemned to Heloc. They will leverage the cries of “the govt has to do something” by doing something. And that something is a worse circle of Heloc than even having your ARMs being pulled ever upward in eternal torment. Do not listen to their beguiling siren songs of bucolic community. Instead listen to your head, heed the warnings of Saint Milton the Capitalist, Lord Heinlein the Futurist and Harrison of the Stainless Steel Rat.
Robert:
I thought that you would be a champion of this sort of development to preserve the exurban lifestyle values that you enjoy.
Otherwise, your exurban lifestyle will be overrun with leapfrogging suburbs as growth sprawls outward from the urban centers.
I know I lived it for a time in Jamul, CA.
Oh, I love the -sizzle- but I have enough experience to know the -steak- is rotten horse meat left over from the defunt streetcar era.
Those who live in high density areas tend to all own their own automobiles. The congestion and air pollution which result are not exactly great for the planet (drive around San Francisco some time if you want to experience this first hand).
Maybe this is a west coast vs. east coast perception difference. I’m on the east coast any y’all sound positively insane. Folks lived in my town, sans cars, for 300 years. It can be done.
FWIW, I own a car, and use it maybe once a week.
So spunky, what “town” is that? 1606 there weren’t that many. Perhaps you meant “for 200 years before the auto came along?”
You car lovers are crazy… I live downtown in Victoria and ride my bike or walk to work every single day… I drive MAYBE once a week. Takes me 5 minutes to get to work. I USED to live in the bay area, spent HOURS on 280 and 101 and 85 commuting (lived in Santa Clara, Cupertino, and Mtn View). That was HELL. I’ll take a pay cut to live here ANY and EVERY day… scratch that, I already did… You guys are nuts… (Robert…) You guys can have your lifeless exurbs. I’m content living downtown across from the park and a drunken 5 minute stumble from the downtown restaraunts and bars.
No one mentioned love of the car. What has been brought up repeatedly however is the necessity for transit supporters to resort to emotional appeals as the facts are all against them. Thus opponents are mischaracterized, anecdote and extreme example are presented as evidence and anyone who dare bring up information critical of their addictions are excoriated mercilessly. To wit: You guys are nuts… (Robert…) Well, since I won’t sink to your excrable level I can only say given the choice between nuts and what you’ve proven yourself to be I’ll take nuts. What a pathetic response; crazy, nuts, lifeless. Seems a nerve has been touched.
what,no L.Neil Smith! mr cote’ you must be as old as i am…i can actually remember, as a small boy,when this country had the best politicians money could buy.
I can see these catching on in some places, but they won’t work in others. For instance, here in So. Cal., there is no good mass transportation, and there never will be. We are too spread out, with hardly any real city centers, so trying to get people to where the jobs are won’t work by mass transportation.
Yes, until traffic gets so bad that people demand neaby commercial spaces. I don’t this day is too far down the road in OC.
You repeat common myths without critical examination. “SoCal has poor transit” is no more true than “RE always goes up.” We are the densest conurbation in the nation with a bullet. We use transit far above the average and even more than all but a few urban areas. We don’t use transit because it doesn’t work, is too expensive and too slow not because it is unavailable.
It doesn’t work because no 2 people start from, and end up going to, the same place. Most people in LA drive in opposite directions, living hours away from their workplace rather than living closer to work, oddly enough, by choice. You can’t convince stupid people not to be stupid.
$10/gal gasoline might fix that problem. Of course it will create a lot of new ones.
I never said “SoCal has poor transit,” I said that we don’t have “good” mass transit. And, I stick by that. In LA, there are two options - buses or the few trains, and the trains are primarily designed to get people into downtown (one of the only city centers around). Granted, if you happen to live by one of the train lines and you happen to work in downtown, it might be an OK option. But for the vast majority of the millions of people living in LA, it doesn’t work. In OC, buses are the only option. The jobs in OC are everywhere, and mass transit would never be a practical solution because, as you say, it would be too expensive and too slow. Thus, because of the size of SoCal and the fact that jobs are spread out, it is my opinion that mass transit will be a practical solution for SoCal, and a workable mass transit system to get residents to their work was a basic requirement for the type of New Village talked about in the article.
Having used Park and Rides in Mission Valley (one area mentioned in this article), I think it does work and I too would like to live next to a trolley like Mission Valley. Its quiet, cheap, and if my work was on the trolley line (if the UTC line is ever built) I wouldn’t even need a car.
Mission Valley is very densly populated, but it seens to have enough shopping and parking (just barely) for the exact amount of residents.
I don’t understand why you would be opposed to a nicely planned living center WITH good public transportation downtown (and hopefully North County soon).
Mike,
If the “trolley” were 5x more pricey to use and thus reflect its true cost?
And gas were 5x more pricey to accurate reflect our adventures in imperialism costs.
I disagree civilly.
How about the huge subsidy to cars? Who do you think pays for roads and freeways?
Sunset, do the math. Our foriegn adventurism reduces the price of petroleum. Rather than a cost it is a subsidy.
Skipintro, I know exactly, to the dollar and going back to 1926 who has and does and will pay for roads infrastructure and operation. We tax roads users, we don’t subsidize them.
Those villages sound like living in a college dorm - tolerable for a few years if you can’t afford anything better, but hardly an attractive choice if you have any other option.
Re: “New Villages”
Sounds creepy to me - The Handmaid’s Tale came to mind.
For those who despise the idea of living in condos, this sounds like the ultimate Greenie condo to me. Interesting thread, nonetheless — a greater variety of views among regulars than usual, I think. Robert is in good form, sparring simultaneously with several opponents, much like Costner in the recent Western, when his six-shooter fored at least nine or ten shots. “Good stuff, eh what?,” as the Brits would say.
“‘Price is everything and the prices are correcting and that’s good for the market. Because the bigger the boom, the bigger the crash.’”
I can’t believe it, but I actually agree with a Realtor. Of course, I’m sure she’ll be getting a good talking to from the NAR for this type of comment - doesn’t she know that the NAR party line is that housing is coming in for a “soft landing,” not a big “crash?” Maybe she’s been reading this blog, or maybe she’s just actually thinking for herself. Either way, I love to see a Realtor talking about a big crash.
The Realtors that Ben always has quoted on the blog don’t seem to have a good handle on the macro-economic picture. In other words, I wouldn’t necessarily describe what we’ve just witnessed in the housing market as a big boom. A liquidity-fueled speculative and highly-leveraged financial mania seems to fit a little better.
Therefore, when she says that prices are correcting and this is a good thing for the market, I’m not inclined to believe her myopic and disingenuous charactarization of the situation. The coming RE crash will leave the entire economy in ruins and will quite likely lead directly to an inflationary (or deflationary) depression and a complete collapse of the currency and quite possibly our entire way of life. In a few years, most people will wish that they never heard of Real Estate, much as in the tech stock aftermath and most Realtors (and many others) will be unemployed. She just views this correction as the beginning of a new buyer’s market. Hardly.
“She just views this correction as the beginning of a new buyer’s market.”
Exactly! People just can’t comprehend this stopping, everyone has too big a stake in it.
Once the fear sets in there won’t be a housing market.Getting people to buy homes will be like getting your dog through the door of the vets office.
… like bathing your cat.
Easy on the Prozac there, Darth. You seem a little over-optimistic.
“But that’s the bad news. The good news is that even though the median price of a home sold in June was more than $9,000 less than the previous month, things are much worse elsewhere in Maryland and around the country.”
Ladies and Gentlemen, this is your captain speaking. As of this time we are plummeting earthward in a death spiral that is sure to lead to our demise. But the good news, the people in the building we are about to crash into will die before us. Thank you for flying Real Estate Airlines for so long. We know you have a choice of investments and we brokers… err… crewmwmbers know you have a choice of investment vehicles. We also appreciate you willingness to pay more than fulll price for tickets and for your faith in us for so long after everyone predicted we would run out of gas, just as we are doing now. Again, thanks for flying and enjoy your coming swift departure.
LOL.
Good thing most of us here on this blog had the foresight not to purchase any airline tickets recently.
We just get to laugh at the fools trying to sell their tickets, for more than they paid for them, while they’re sitting on the plane.
Then their are the other fools trying to trade up to first class, oblivious to the fact that they’ll hit the ground first.
But the best are the first time flyers still telling themselves flying is totally safe.
Flying is totally safe. It’s the crash landing that kills you.
Where is my Option ARM airmask? My equity parachute? Can I use my loan doc seat as a flotation device?
Instructions on the seat in front of you read:
In the event of an underwater equity emergency homedebtors are requested to bend over carefully placing your head firmly between theirs legs, pucker up and kiss your….
You’d think the passengers would have figured it out when the chair-man, I mean pilot, passed out free peanuts made by tech air( An airline that went bust a few years back).
If you would like to join the mile high club before impact please see the captain about a home equity line of credit, as it is our quickest method of getting #%*&ed.
Would this be the mile-high quick-fi?
Yes, as as we like to say “a quickie”
The median sale price for a home there was $329,000, a nearly 11 percent plummet from that month a year ago.
________________________________________
11% DROP! WOW! Must be a mis-print - as RE never goes down?!??!
‘Now we’re moving into a more typical market and a sharp slowdown.’
That must be a typo. I am sure he actually said “soft landing,” not “sharp slowdown.”
TYPICAL MARKET = SHARP SLOWDOWN? Freudian slip?
“‘The houses that are priced even at 5 percent (more than worth on the market) are being looked over,’ she said.”
I believe this is representative of a much broader effect that will accompany the death throes of the conundrum, which is that fundamentals will once again be reflected in prices.
There was an interview on CNBC today whereby they said that rent for summer vacation homes had dropped 25%. Hmmm…
Yeah, I knew that was coming when last Feb/March I kept hearing about all the “deals” to rent places for a week in the Hamptons, in the Vineyard, on The Cape and in southern Maine.
A leading indicator so to speak.
Just like the jeweler I met at an X-mas party who told me her six or so biggest customers (usually spend $$$) didn’t come in this holiday season as buyers.
“… her six or so biggest customers…”
Those being some minor titans of various industries here in the SF Bay.
They are weeding out the buyers who will buy on the first dip as well. Soon all they will have left is real hard a$$e$ like we have here on this blog. Did you say 50% off? I can’t hear you.
It’s a great time to be alive!
“the bigger the boom, the bigger the crash”
LOL! Boom, schmoom - whatever anyone wants to call it.
I’ve been waiting for that headline for a long time!
“‘The houses that are priced even at 5 percent (more than worth on the market) are being looked over,’ she said.”
Typo: should read “being overlooked.”
Actually they’re not being looked over or overlooked. The potential buyers are glancing at the prices and then busting a gut laughing as they go down the road to the serious seller’s house.
Mort — true, absolutely true. Most of the stupid potential buyers are long gone and the remaining bunch are too savvy to fall for stuff that is way overpriced. There likely will be some who jump in at the dead-cat bounce, but most will hang in there, I believe, as you and I will.
Clear your desk!! Clear your desk!
LOL!
Hello, I live in Annapolis, MD. My nieghborhood has a street that borders on the Magothy River and Chesapeake Bay. There is a waterfront homeowner (flipper) who bought an old home in bad condition in 2003 for $625K. He has had it for sale on and off since he bought it, the last price was $1.6M. Now, he is putting in new windows and new siding and will be putting it on the market again. It’s like he doesn’t think a home inspection will show the extensive termite damage or collapsing foundation. We can’t wait to see what price he thinks it is worth now. Of all the waterfront houses for sale on this street, only one has sold. The price started at $1.2M, but it sold for $949K. Everything else is just sitting.
Sounds like he could be underwater in more ways than one.
So, just a month into the summer, and we see the world “Crash” in a headline.
Max — did you mean “word” instead of “world?” If yes, I agree that it will be soon enough. If no, we may have to wait a year or more.
this post confirms what i’m seeing on ziprealty’s website for the DC area. it seems as though my canned searches are pulling up many more homes that meet the criteria that i set recently and inventory is starting to build up, after falling a little bit recently
Inventory should reach a new high by next weekend in Northern VA. I’ve noticed rental inventory increasing hugely, too. (Failed sells, plan “B” in effect).
An 11% year over year drop in price.
Hmmm..that means many/most who bought a year ago and put less than 10% down (nearly everyone) is now officially UPSIDE DOWN in their house. (and that’s before selling costs)
..and we’re just getting started on the downswing; should be interesting
“..and we’re just getting started on the downswing; should be interesting”
You got it. It will be worth the tickets we bought more than a year ago, to see this go down.
Exactly. I feel as if I’m in the bleechers, watching some macabre, twisted tale tale acted out on a huge stage. Pass the popcorn.
After reading the article and noting the following quote:
“It’s really saying the market has cooled, its cooled nationally,” Dr. Cater said. “Now what we’re sort of coming back to is a much more relaxed trend.”
I have come to the conclusion that these ivory tower dudes and real estate folks take the same yoga class. Where in the world do we hear the words “relaxed”, “soft landing”, “breather”? This is getting stupidily funny.
They’re borrowing them from the Internet stock analysts, circa 2001.