‘Real Estate Is Always A Gamble’
The Boston Globe has this update from Massachusetts. “The decline in real estate sales, coupled with a surge in the number of available properties, is forcing some sellers into a bind. Already smitten with a new home, they must make tough decisions. Do they slash their asking price in order to unload their property quickly? Do they let their dream home slip through their fingers while they wait for the right buyer?”
“The number of condominiums on the market in the northern suburbs last week was up 46 percent over what was available at this time last year. The number of single-family homes up for sale in the region is also much higher: 2,666 last week, compared to 1,972 a year ago. But the number of homes sold is declining.”
“‘The market just came to a screeching halt,’ said Ellen Tibbetts in Danvers, who has been a realtor for 12 years. ‘I’ve gone without a pay check for six months now. It’s prompted my husband to start calling what I do ‘volunteering.’”
“The drop in sales is bad news for many of her clients, including Chris and Heidi Schrock, who own two properties: A three-bedroom ranch with in Hamilton and a cozy four-room Cape Cod-style home in neighboring Wenham. The Schrocks’ Hamilton home has been on the market since last July.”
“‘We’ve had a string of open houses since February, and multiple private showings,’ said Heidi. ‘It’s tiring. People will say they love the house, but then they’ll tell me they have 10 or 12 other listings to go to. There’s just too much inventory out there right now.’”
“The Schrocks have lowered their asking price by more than $70,000 over the past year, to $422,500. To date, they’ve had only one offer, of $476,000. But that was last fall, before the market cooled, when the Schrocks thought they could do better.”
“‘The offer came with a lot of contingencies, and at the time our home had only been on the market a few months, so it was a no-go,’ said Chris. ‘We had already purchased the Cape, and knew we could swing the mortgage payments on both properties, so we took a calculated risk,’ added Heidi. ‘Real estate is always a gamble.’”
A report from New Hampshire:
‘As the real estate market continues to cool throughout New Hampshire, the number of mortgage foreclosures is still rising. ‘People are having a hard time getting by,’ said Joel Dupuis, the register of deeds in Grafton County. ‘Foreclosures dwindled down to nothing, and now they’re back.’
Marriage is also a gamble. Invading a country to plunder eventually the oil, is a gamble. Everything is a gamble. People in the west think that real estate has quasi-magical property! It’s a pun. It has. The black magic of real estate is leverage. Anyways you should try buying real estate just before a civil war erupts in a country. Ok those are extremes. But it happense regularly even today in many part of the world. But nothing doing. People like practising religion when they invest. Personnally I am an atheist. That’s the problem in the US. Too much religion.
Ignoring 12 years of UN Security Council resolutions is also a gamble.
Those who don’t like consequences, shouldn’t take risks.
Yeah, Sadam shouldn’t have built those invisible WMD’s.
Real estate, as an asset class, than a place to live is the religion.
Renting, however, qualifies in the ‘place to live’ lexicon whereas RE is somehow, on a different plane of existence altogether.
That’s why it differs from marriage. Usually, those who marry (outside of cultures with arranged marriages) were at some point dating before tying the knot. Well hopefully, they’d asked all the right questions and observed all the right behavior patterns during that courtship period. Afterwards, whether or not it succeeds has little to do with the rest of the market but with the parties in the contract.
RE, however, is a collective madness that’s a part of society’s valuation of the human being which is then buttressed by a conspiracy of lenders, brokers, and appraisers.
“The Schrocks have lowered their asking price by more than $70,000 over the past year, to $422,500. To date, they’ve had only one offer, of $476,000. But that was last fall, before the market cooled, when the Schrocks thought they could do better.”
Should have taken it ya fool. Nothing like chasing the market down. Keep dropping your price and maybe you’ll unload it in another couple of years at $300,000. Greedy, double paying mortgage, bagholders - that is all they are.
“‘who’s been a realtor for 12 years. ‘I’ve gone without a pay check for six months now.’”
To add to the post above…….sellers wishing they had taken earlier lowball offers along with their realtor who has wished the same. One GF bagholder with their no paycheck in half a year realtor.
AND THE NAR SAYS THERE IS NO HOUSING CRASH RIGHT NOW???
Lotsa people on this blog have stated these types of scenarios were going to play out, and we have just started.
“…sellers wishing they had taken earlier lowball offers…”
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We need to hang a moniker on these types.
“Lowball regretter”
“Early greed; later a fool”
“Two mortgages are better than one; until it’s not!”
“Early lowball offer denier means double mortgage debtor bettor”
Market chaser…
F’d seller…
Meteor…
Bitter owners.
Bitter Flopper
“GF bagholder”
does that mean get f_______ ?
“greater fool”
So these fools turned down an offer that was just 3.3% under their full asking price and now can’t unload it at 14% off. At least they’re phoilosophical about it. Must be rich.
You know they’re going to be regretting (for many years) not taking that $476K offer.
D’oh!
One place where you can really learn this quickly is in stock trading. If you’re in something that isn’t terrible liquid, you put in your limit sell order and the mm drops the big. I takes you ten seconds to turn around an order change. You change it and then the mm drops it some more or it just drops. And then you chase it down some more until you get mad and change the order from limit to market.
I have to think that every experienced trader has gone through this before so it’s really, really easy to understand why you need to drop your price if your holding is in a bear.
‘I’ve gone without a pay check for six months now.”
That’s the story with my brother in law in Folsom CA, not even anything in escrow. He spends his weekends doing open houses and running numbers for the dreamers who come through and want to cash out of their houses for big money so they can move up to even bigger houses than they need. He says he has more listings than he needs right now.
You know, I’ve used the comparison of the various gold rushes we’ve experienced in our history, where people with stable lives walked away from everything to cash in on their supposed fortune. Most, at best, ended up broke and destitute. This RE craze is so similar. I can think of one instance in the town I work in. Here we have an engineer working for an established local company, and earning close to a six figure salary. I was blown away to one day find out that he had abondoned a job he worked hard at for 13 years to be a realtor. What’s even worse is he jumped in at the end of the boom, so he never got his chance to cash in. It’s amazing what people will do and believe in the midst of a mania.
Watching the effects of the slow-down just in this year in the RE sector is going to be a trip. We’ll see how the numbers start stacking up at the end of the year and on in to 2007, but the damage is being done right now.
This will be a time period for the history books.
“This will be a time period for the history books.”
Sit back, learn from the unfolding, take notes, and pass the popcorn.
I’ll have a Dr. Pepper.
I prefer “The great unraveling”
The tale as told by Enron advisor Paul Krugman.
Interesting the people are still dreaming of moving up instead of selling the big house, downsizing and improving cash flow/liquidity.
“‘The market just came to a screeching halt,’ said Ellen Tibbetts in Danvers, who has been a realtor for 12 years. ‘I’ve gone without a pay check for six months now. It’s prompted my husband to start calling what I do ‘volunteering.’”
But but but, I thought the “seasoned, expert” realtors were looking forward to a slow market to rid their profession of all the new baby realtors.
as i had mentioned earlier this week, i spoke to a good friend of mine on cape cod (we bought and sold quite a bit real estate when the median was about $150,000, not the current $390,000). one of his best new agents sold $11M last years, he made several hundred thousand dollars in 2005. this year, he has closed $460,000. he said the market drove off a cliff from november on. based upon the last downturn, these second home markets stall and drop much more dramatically than the primary markets do. just look at myrtle beach, pensacola, long beach island, and on and on.
One and a half years ago I got out of real estate on Cape Cod. I think inventory was around 2500 homes and that was considered alot. Now the home inventory today is 6739 homes. I know of homes reduced 30% and still sitting on the market.
call me when they are 60+%!!!
‘Do they let their dream home slip through their fingers while they wait for the right buyer?’
Not too much from the article gives the impression that what these folks found was one-of-a-kind. This is more likely complacent speculation. There was a time when taking on two mortgages was widely believed to be risky.
Indeed - in a quickly rising market, though, it has been rewarding to buy first and sell yours later. In fact, if you sold yours first, you might find yourself priced out of the home you were hoping to buy.
ben, i lent for well fargo bank in boston from 1986-1988. we did an enormous amount of bridge loans there, just as the market was topping in 1987. most of the jusification for taking them out back then was that you could get “wicked appreciation” on both homes while you carried them, kind of like doubling down. 18 months later the borrowers were absolute toast. i bet you a dollar that i could find this same article in the globe in 1988.
There is NEVER a good ending to a ponzi scheme. The few win at the loss of the many.
And next to Social Security, this is the biggest ponzi scheme of all time.
Well at least we had the option of opting out of this Ponzi scheme. As for SS… I’m counting on a 0% return on all of those 15% of my paycheck contributions.
Maybe we shouldnt have let the Republican government dump all that money into the Iraqi sanbox….maybe you can collect your social security from Halliburton and the Mullahas in Iraq, that is where the money went.
No gamble in Tampa! Lennar has their nifty “Guaranteed Pricing” plan in place. To wit:
If, at the time of closing, the price of the home plan in the community where you purchase has been lowered, we’ll reduce the price to match. If the home prices go up, your price is guaranteed, too. You are covered either way!
They don’t explain what’ll happen to you when home plans go down afteryou close.
Evidence here in Connecticut is that we have a growing inventory of single family homes and condo’s that are not selling well. Prices are still higher over a year ago- but not by much. Considering the weak job growth here, it seems these prices most likely will fall at least 10% if not more.
Hartford/Central CT has zero job growth of any import. The city is dead - conventions even cancel due to labor disputes. All around a bad situation. I estimate my ppty is down about 15-20%. I would ask for 90% of last year’s mkt price if I were selling - and then be lucky to get 80%. Good thing I have no intentions of selling!!!!
A client of mine is a realtor on St. Pete Beach. She’s been in the business since 1979 and lists and sells mostly beach condos. Her comment was, “Since i’ve lived in this building, there were never more than 2 or 3 units for sale at any time. There are now 9. Several have been sitting for 6-8 months. I haven’t had a sale in 5 months.” That is the case on all the Gulf Coast Beaches. I’m on Clearwater Beach and several projects where the old beachfront hotels have been torn down have not yet started - after months. An article in the Clearwater Gazette gave an indication that there are problems. Why am I not surprised? Driving along Gulf Blvd., the For Sale and the New Price for sale signs are increasing daily. One building on Indian Shores (a narrow strip between the intercoastal and the gulf) has units starting at $3.2 million. It has been finished for six months, the builder’s for sale sign is still in front, and there are only three or four cars in the garage at any given time. Who the hell can afford $3.2 million - or should I say, who was stupid enough to pay $3.2 million?
The ball is definately starting its roll downhill.
The tide is starting to go out - I hope those swimming naked are wearing sunscreen!
I haven’t had a sale in 5 months.
She must be getting hungry by now.
I used to stay at the Fargo Motel on Treasure Island and they tore it down to build condos. I figured that this market would come crashing down after all of the new development was built. It looks like it will happen before all of that. I booked a week vacation for January 2007 at another place on Treasure Island and the manager on the phone would not even give me a price due to exigencies of inflation, insurance, possible sale, hurricanes, etc. His attitude was quite surprising.
“‘The market just came to a screeching halt,’ said Ellen Tibbetts in Danvers, who has been a realtor for 12 years.
I find myself forgetting how drastically the market has changed in the bubble areas across the country. When I read the BS put out by the NAR, CAR, etc. it starts to get me a little fired up until I remind myself of what the market was like just 1 year ago. I suppose I’ve been guilty of following this a little too closely. If I had completely avoided all updates on RE over the past year, I would be blown away when I learned about the current state of the market. The realtor associations will continue their spin, but it doesn’t take a genius to figure out the direction this will continue in for some time.
“‘The market just came to a screeching halt,’ said Ellen Tibbetts in Danvers, who has been a realtor for 12 years. ‘I’ve gone without a pay check for six months now. It’s prompted my husband to start calling what I do ‘volunteering.’”
There’s gonna be a lot of hurting for realtors and mortgage specialists.
from the same article:
“Randy Greenstein isn’t convinced. An account executive in the sales department at “Kiss 108″ WXKS-FM (107.9), he and his wife bought a home in Lynnfield in December, a month after listing their three-bedroom contemporary in Peabody for $629,000.
“The owners of the Lynnfield house needed us to close in order to close on their other place,” said Greenstein, 30. “They were friends of ours, and so I agreed, but I never thought this would happen. I never thought [the Peabody home] would last on the market.”
To make the deal on the Lynnfield house work, the Greensteins took out a bridge loan to cover the down payment, confident that they would be able to pay off that debt once they sold their Peabody home.
At first, it seemed their wager would pay off. After lowering the asking price to $599,000 in early February, they received and accepted an offer for $560,000. But the deal fell apart in March when the buyer had trouble securing financing. Over the next few months, the couple fielded four more offers, each one lower than the last. The most recent bid came two weeks ago. It was for $425,000.
“It was insulting,” said Greenstein, who rejected the offer. “I mean, look, I’m not going to give the house away. I’m not desperate.”
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LOL. Famous last words. He’s going to have these ONEROUS double mortgage w/bridge loans and follow the market all the way down.
These stories point to how many people bought their “dream home” based on how much they “thought” their current home is “worth.”
John Talbott in his new book Sell Now! explains a lot of the bubble is due to people overreaching, climbing the status ladder. Conspicuous consumption.
also from the same article:
The couple’s difficult climb up the property ladder has become the subject of ongoing banter on the “Matty in the Morning” radio show. Host Matt Siegel likes to rib Greenstein about rising interest rates and the bite his housing conundrum is taking out of his paycheck.
In all, the Greensteins’ housing costs add up to about $6,400 a month: $3,000 for the Lynnfield home; $2,400 for the Peabody property; and $1,000 on the bridge loan.
“You can’t buy before you sell, unless you know you can swing the payments — for years,” Greenstein said, deadpan.
Pearls of wisdom from a man stuck in a financial pressure-cooker, but even his own parents aren’t listening. They are in the process of buying a new condo on Revere beach. Their home in Nahant has not yet sold.”
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This is one radio talk show that should help burst the bubble.
Wow! With these housing expenses, plus all the other basic living expenses (like gas, electric and, oh, yeah, FOOD), can you imagine if one of them loses a job or gets ill. My, my, my…..the predicaments that people put themselves in.
I couldn’t bear to live like that. That is just too over the top for me and too stressful.
And, ironically, they all really, really thought they were doing it right when they did the first flip, or decided to buy/sell in this crazy market.
BayQT~
“It was insulting,” said Greenstein, who rejected the offer. “I mean, look, I’m not going to give the house away. I’m not desperate.”
Let me guess , he’ll just rent it out instead of “giving it away”. Sheesh. He and I have very different definitions of desperate because I’d consider having two mortgages as the market’s taking a nose-dive a fairly desperate situation.
Maybe he can sneak in some freebie ads at his station. $600K to $429. Wow!
I feel like playing: Let’s Get It Started by the Black-Eyed Peas.
Heidi: ‘Real estate is always a gamble.’
I think she nailed it.
“‘The offer came with a lot of contingencies, and at the time our home had only been on the market a few months, so it was a no-go,’ said Chris. ‘We had already purchased the Cape, and knew we could swing the mortgage payments on both properties, so we took a calculated risk,’ added Heidi. ‘Real estate is always a gamble.’”
Calculated risk? I guess that shows how DUMB they are…if they had any clue as to what was going on n the mkt they would have taken that offer and SMILED……
Comment by Peter
2006-07-09 10:06:57
Heidi: ‘Real estate is always a gamble.’
I think she nailed it.
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But we have always been told by the real estate “experts” that: Real Estate ALWAYS goes up”
The Schrock’s paid 199K for their house in 1997. Greed knows no limits.
It is worth about $240,000. That’s their ‘97 sale price plus annual appreciation equal to inflation.
‘Real estate is always a gamble.’”
I thought “real estate always goes up”, “real estate is a no-lose proposition”. That’s what the realtors told us.
Buyers in Boston. Stand your ground. We’ve got the sellers on the ropes. No place for them to run. Prices will keep falling, and the foolish sellers will keep placing their price at the ask, rather than the bid. Keep lower those bids, let the fools chase the market down to the price where this bubble started at.
I second your statement. Lower home prices is necessary if Boston wants to stay competitive and stop losing its educated population.
“Buyers in Boston. Stand your ground. We’ve got the sellers on the ropes.”
Well I’m coming to the conclusion that if you can find your dream home that costs 1/5 of your net worth, it is never a bad time to buy it. Why wait otherwise if you can be at once happier in the new surroundings with a gamble of 20% of your NW? For now, I’m afraid most people in the Boston area don’t have enough net worth to follow that rule, so I would agree to advise them to “stand your ground.” Same goes, of course, to the markets of my interest (California’s Newport Coast, Marina Del Rey, and the South Bay).
Is there anyone here looking to buy in Boston? I don’t think that I’d buy in Boston whether I could afford it or not. Would you really want to tell your friends who that your mayor was Tom Menino?
I’d really rather have a mayor like Menino. Shortly after moving to this town, our mayor publically smacked his wife in the face. The scary part was there was no reaction from the town.