‘Perception Becomes Reality’ As Home Prices Fall
Some housing bubble reports from the northeastern US. ” Home price declines have come to Long Island. Recent data on home sales in Nassau, Suffolk and Queens show that houses in certain communities are fetching less than they did a year ago. A Newsday analysis found median sales prices in three of the service’s zones, Huntington Town; North Hempstead and northern Oyster Bay; and northeastern Hempstead, Bethpage and Farmingdale, declined from May 2005 to May 2006.”
The Times Herald-Record in New York. “Gather the children ’round, and tell them to listen up. They’re about to become witnesses to something that hasn’t happened here since the last millennium. It’s called a buyer’s market.”
“Just a few years ago, Orange County had one of the strongest seller’s markets in the entire country. Buyers and sellers started acting like prices would keep going up indefinitely. People who think that way are hardly ever correct. That’s why it’s called a housing cycle.”
Also in New York. “Rockland’s once-hot real estate market continued to cool in the second quarter. The inventory of available homes rose to 1,607 units, nearly double the number that were listed for sale just two years ago.”
“‘We’re in a shifting market,’ said (realtor) Kevin Joyce in Pearl River. Homeowners who were once debating whether to sell have now entered the market, pushing the number of houses-for-sale higher. Rising inventory isn’t a sign that homeowners need fear that prices will soon plummet. ‘I don’t believe that there’s a bubble-bursting happening,’ Joyce said. ‘I just think there’s a realistic leveling of the marketplace for both buyers and sellers.’”
The Journal News. “While rising interest rates are slowing sales of homes in the Lower Hudson Valley, a sampling of open houses over the weekend shows how hard it is to generalize about buyer interest. When they opened the doors to potential homehunters Sunday afternoon in in Yorktown, Greenburgh and Nanuet..all three houses had had their prices lowered in recent months.”
“Real estate statistics portray a market in which buyers have more listings to pick from than a year ago and are taking more time to decide. In Rockland, the inventory of single-family houses rose by 57.2 percent at the end of the second quarter, to 1,607, the Greater Hudson Valley MLS said yesterday.”
“As Andrea O’Brien showed the first couple through the house, she kept up a monologue of its finer features. Asked about the size of the tax bill, O’Brien’s voice softened as she pointed it out on the data sheet. It’s more than $10,000.”
“Some of the visitors said they were unimpressed with the shape the house was in, given it’s half-million-dollar price tag. Carla Anderson, who owns a two-bedroom condo nearby, took a look around with her mother. Prices ‘are not coming down enough, as far as I’m concerned,’ her mother added.”
In New Jersey. “The ‘For Sale’ sign has been up for three months. But your four-bedroom colonial is just not selling. In America’s cooling housing market, it’s a story many home sellers in New Jersey can relate to these days. Housing activity is slowing across the state, and the inventory of unsold homes is expanding.”
“‘You have this standoff between buyers and sellers who tend to be as much as three-quarters of a year behind the market,’ said Jonathan Miller of a real estate appraisal firm in New York. ‘Sellers have been trained over the past five years to stick with their prices and be firm, and yet now you have buyers on the other side saying they want a deal.’”
“As of June, the supply of homes on the 12-county northern New Jersey market is 69 percent higher than it was in June 2005, climbing from 23,584 homes to 39,829, according to Jeffrey Otteau. Middlesex County saw the largest year-over-year surge in inven tory, with the supply of homes on the market climbing 99 percent.”
“Home-sales volume also is slowing in the state, declining 18 percent through May from one year ago. In northern New Jersey, the slowdown has been more marked. Comparing the first six months of 2005 with the first six months of this year, sales volume declined 20.9 percent according to the Garden State MLS.”
“Otteau also believes ‘the chorus of voices predicting this collapse and the attention they have received from the media’ are playing a big role in bringing the housing market to its current state. ‘As always, perception becomes reality,’ he said.”
From Connecticut. “Antares Real Estate wants to entice more tenants into buying their condominiums at two complexes the company recently purchased by offering to lower the purchase price, a spokesman said. ‘This is an all-out effort to make one last-ditch effort to prove to current residents that owning is better than renting,’ said Frank Marino.”
“Andrew Kleinman, who lives at Greenwich Oaks, said he sees the price reductions as a sign that Antares is not selling as many units as the firm had initially planned. ‘They’re really starting to show it by coming back and offering people lower prices,’ said Kleinman.”
“Kleinman said that Antares’ new reduced prices are still too high. ‘If you take a look and see what’s going on, there’s a lot of properties that are just sitting,’ he said. ‘Nobody wants to lose money.’”
Some builder share prices are oddly falling as well, considering all the bad news is already priced in (TxChick):
http://tinyurl.com/legu8
Not sure I understand the jabs. I take stock positions based on my risk parameters and evaluation of chart/sentiment and use risk control. I don’t generally use fundamentals which you do. If I am wrong, which is always a danger when waterfall surfing, I take the loss and move on. No big deal. I think these stocks are way oversold and could bounce but if not, que sera. I actually am sorry I didn’t just sell puts naked rather than try to bottom fish the stocks. I wouldn’t own them as an investment.
Does selling things “naked” help?
Depends on how cold the air conditioning is.
Sorry, I did not mean offense. I just don’t see how the markets
can price in a steady stream of bad news in excess of the predictions of all the media-preferred “experts.”
MHO poor orders data for Q2 — down 35% YOY, with some regions, like FL, an outright disaster at -47%.
Link:
http://tinyurl.com/q8mgh
I hear ya mike, where are you in FL?
“Otteau also believes ‘the chorus of voices predicting this collapse and the attention they have received from the media’ are playing a big role in bringing the housing market to its current state. ‘As always, perception becomes reality,’ he said.”
That’s a very nice sounding sentiment that means exactly nothing. Of course perception becomes reality, the question is whose perception?
In 2004 the people who perceived a problem in their real estate market were wrong, but in 2006 they’re right and the other people are wrong. Unfortunately the 2004 people missed only an opportunity to turn a fast buck while the 2006 group could be faced with financial ruin.
– Lindsey
And then there are those of us who don’t look at houses as some kind of crap-shoot in the first place.
My tone may have caught the wrong flavor there. I certainly wasn’t advocating looking on housing as a crap shoot, just trying to point out that the statement is empty of meaning.
Sadly, there are too many people whose participation in the housing market really was nothing more than a crap shoot and the dice have gone cold.
There are still plenty playing that could walk away with a sizable gain. But like almost all gamblers they look at how much they had at the top, not how much they’ve gained now. They will keep playing until they’ve lost it all.
They always seem to. I just talked to my friend in NYC, she is still bullish on, of all things Miami (bought a precon condo last year and still thinks she’s 100,000 in the black.) I keep saying “check condo flip”, “check Anything.” She dosen’t listen, thinks I’m nuts, and at the end of the day I will never upset her (with a big exception, if her husband did not have a trust fund I would put her on a bed and make her save her lifesavings.) Not that I’m very controlling, or anything like that…..
In all honesty, I don’t think they ever started out to be. This is the crash from hell. But then again no normal homeowner thought that they would pay a mort. for god knows how long and actually pay it off to have their taxes and insurance rates be halve of rentings. WTF
Lindsey,
That is true, very true. But if we bloggers can in even the smallest way take credit for a “sanity revival” then we should! Hell, I’ll take compliments any way I can get ‘em.
You are underestimating an important factor:
Herd Behavior
‘As always, perception becomes reality’
I don’t agree with that. However, it does seem as though reality is starting to be perceived, finally.
Perception is the only reality any person can know.
I don’t necessarily agree that “Perception is the only reality any person can know.” Case in point: A bear’s perception of the housing market is that it is going soft. A bull’s perception of the housing market is that it is going up, up and away. Others’ perceptions may be somewhere in between. In my version of reality, all of these perceptions exist. Now if you said, “Perception is the only reality any person (who thinks real estate always goes up, up up) can know.” then I might agree. Or if you said, “Perception is the only reality any person (who has one opinion and won’t listen to or consider any other opinions) can know.” I would also agree.
Reality is that which doesn’t go away when you stop believing in it.
“Otteau also believes ‘the chorus of voices predicting this collapse and the attention they have received from the media’ are playing a big role in bringing the housing market to its current state.
So…he thinks the media MADE the news…instead of just reporting it? How about basic unaffordability? Doesn’t that count at all?
“‘As always, perception becomes reality,’ he said.”
What he should’ve said is: “As always, in a bubble, perception becomes reality.” After all, what defines a speculative bubble better than the positive feedback mechanism of self-fulfilling expectations, both on the way up and on the way down?
‘I just think there’s a realistic leveling of the marketplace for both buyers and sellers.’”
However very shortly there is going to be an unrealistic and uncharacteristic decrease in home prices for buyers and sellers.
‘This is an all-out effort to make one last-ditch effort to prove to current residents that owning is better than renting,’
How altruistic! I bet he personally sits down with each prospective buyer and does the “math”.
‘This is an all-out effort to make one last-ditch effort to prove to current residents that owning is better than renting,’
Remember geometry class? A postulate was something taken to be true without proof, like “any two points define a unique line.” Postulates were the foundation for proving theorems.
It wasn’t that long ago that “owning is better than renting” was accepted as a postulate. Turns out the postulate ought to be: “people don’t want to be taken for chumps”. “Owning is better than renting” is now a theorem in search of a proof. It may become one of those immortal theorems that is never proven.
i like renting right now. rent from the landlord for $875.00 or rent from the bank,tax collector and insurance co. for $1600.00. try calling the bank to fix your airconditioner when it goes out in july in arizona.
Try calling your landlord! About the same result.
Awww…not nice about landlords. Not all of us drag our asses. My tenants (in VA) caused a fire 3 days before Christmas last year, and I got the place (with the wonderful help of my prop. mgr) in tip-top shape in no time….and I’m an out-of-state owner (Calif)! $10k worth of damage. Thank goodness for insurance; and luckily they had rental insurance or else they would have been up the creek.
THEY were negligent…tossed a cig in the master bathroon trash can (probably tried to toss it in the toilet). Needless to say, I am not renewing their lease. Their lucky I let them stay.
Anyway….I just had to defend us “good” landlords.
BayQT~
Just call the repairman and take it off your rent.
I think our landlords are really nice people, so I hate to ask them for anything, really. And we always pay them the Sunday BEFORE he first of the month. Or earlier! In person!
if x > y {
#own
} else {
#rent
}
x = Monthly cost to rent
y = Monthly cost to own
I am glad to see someone else who posts here studied computer programming back in the “dark ages.” I think your algorithm is correct for most, although you need to distinguish between those currently in the market versus current owners. You need to have a very large premium of ownership costs over rent (including the risk of future price declines) to prompt smart folks like Douglas Duncan, chief economist of the MBA, to sell and rent until the bubble crash has played out.
“Gather the children ’round, and tell them to listen up. They’re about to become witnesses to something that hasn’t happened here since the last millennium. It’s called a buyer’s market.”
Oh, spare me! It will be a buyer’s market when the prices are off 40% from where they are now. For now, it’s still a seller’s market…even if the sellers don’t realize it.
“Gather the children ’round, and tell them to listen up. They’re about to become witnesses to something that hasn’t happened here since the last millennium. It’s called a buyer’s market.”
Give me a break. Teaching our children that housing is rare and hard to come by is simply sick sick sick.
Greenlander,
I agree and it ruffles my feathers every time I hear that BM BS too! But the truth here is that soooo many of these people HAVE to sell at or near their asking b/c that’s what they owe! Any thing less constitutes a “short sale” and they very desperately want to avoid that b/c it can seriously ding their credit. In a few more months/quarters these sellers will be found out and it won’t matter anyway so why chip your teeth over it?
nobody read the bottom of the article?
(So, kids, go to college, get a degree in something useful, and maybe by then salaries around here will have caught up with home prices.)
sometimes I wonder.
Here’s something fun to do while we’re all tired of the buyer’s market stuff. Go to Google News and type in “buyer’s market” and see all the articles you get. Even Nebraska is going to a buyer’s market now!
Omaha Buyer’s Market
You sure can smell the tourism economy tankin’ in New England.
Ancedotal evidence everywhere.
Deserted streets in front of LL Bean.
Rafting companies running at half capacity.
Waitresses in the bars and restaurant’s complaining of slow business.
Minimal waits at the Hampton Beach NH and York ME tollbooths.
Not much discretionary income when you’re payin’ half your income to put a roof over your head and gasoline in a pair of SUV’s.
The NAR and MBA along with Mr. Greenspan have wrecked it all.
Here in N. Nevada too. I was at the mall on Friday (about noon) I don’t normaly go to the mall. I got to park next to the handicap, the parking lot was just about empty.
Again Sat morning (about 11am or so) when I went to Ross and Target. I walked right up to check out no line. The first time in my life I have not waited in line at Ross.
Is this the Reno area?
Yes, Meadowood mall, and the Target and Ross were in Carson City.
Ah yes, I used to shop there. Not a good omen when that place is slow.
Karen,
My wife and I recently returned from Vegas and even the 4th of July was quiet (by their standards) and Reno was decidedly dead. We took 95/395 through the desert and didn’t see hardly one motor home. Back in Oregon events look sparsley attended, and yes shopping is a breeze!
DinOR,
thanks for your posts, they are usually entertaining and insighful. The street.com had an article that casino traffic is slower in the last few months, which confirms what you saw. Link below.
http://www.thestreet.com/markets/marketfeatures/10296042.html
Gotta add my Upstate info. Went to Old Forge in Adirondacks. I thought the streets looked pretty quiet. Very short waits at all the restaurants. We boarded our dog up there and boarder made a comment that many of her regulars were taking 4 day vacations instead of the full week. She said the phones were ringing off the hook with last minute reservations, though (Weather was incredible). I know our campground was sold out on the 4th. But many were out of there the morning of the 5th.
There were not very many homes for sale there (low inventory) but on July 4th weekend I couldn’t help but notice the proliferation of “For Rent” signs.
Two of NNV largest title companies recently laid off a bunch of employees and reduced the salaries of long time employees region wide.
Wouldn’t that be expected even w/o a housing bubble?
I would think IR going up would cut back on the refi business.
Here’s some more anecdotal evidence, from the Midwest:
We’re going to a festival in southern Wisconsin. The small town hotel we wanted to stay at in the area was booked up (it has fewer than twenty rooms), and we didn’t want to stay at a big hotel chain or motel. We prefer something quiet, charming and rural. Well, there’s a growing number of farmers and other locals who sideline in renting homes, cottages, and cabins to tourists - and _cheap_. We found a 3000+ sq ft, 4/2 log home ten miles outside of town, on five acres of land along a river, that the four of us are getting for $150/night. We’ll have plenty of rural charm and quiet, all right - and at a great price. Even so, it’s notable that the log home was still available to rent on that peak tourist weekend. Things are slowing down.
The best part was finding out from the homeowner that she and her husband had sold out near the peak in Las Vegas, took their money to Wisconsin and bought two homes - one to rent to tourists, one for them to live in.
I’d guess that all the tourists are here in New York. Around Rockefeller Center (where I work), Times Sq., the theater district, etc., there still seem to be plenty of tourists walking around. I’m sure there’s some tourist board flunky who’d say there aren’t enough tourists in New York, but you wouldn’t know it from trying to walk down a sidewalk.
New York is an international destination. The fall of the dollar against the Euro, Yen and even the Canadian Dollar means lots of foriegn tourists in places like NYC.
OTOH, river rafting in New England is mostly a US tourism thing.
Don’t use that as a guide (can you say priceline, hotels.com or hotwire.) It’s all relative
Noticed similar signs in Tampa Bay (FL)
-Stores are not busy at all (costco, walmart, target, malls)
-Beaches extremely busy for the summer (because it’s free)
-Highways aren’t too busy
-Restaurants slow, especially the trendy places
-Campgrounds fairly empty 4th of July weekend (unheard of)
And the kicker, went to book 2 business trips today on AA for midweek flights - all four flights had less than 10 seats sold (based on seat maps) for a trip one month away. I haven’t seen that since Oct 2001.
This is *the* topic of conversation here in Wolfeboro NH, the “oldest summer resort in America”. Light traffic, plenty of seats at restauarants. Hotel bookings way down. We’re only two-plus hours from Boston, so it can’t really be gas prices. I think the HELOC ATM has run out of cash south of the border.
Home price declines are lagging indicators. The sales data for any given month reflects deals that were hammered out during the previous months. My sixth sense is telling me that in spite of the denial on the street that declining median price numbers will establish a definite trend in the coming months. If it weren’t for the ridiculous incentives offered by builders and flippers alike the numbers would already be down, big time. As a side note, I think that offering cash to the buyer, in any form, should be punishable by death. i.e. hey, buy my car for 10k and I’ll give you 2k cash. WTF!!??
My old man calls that “bag” money - definitely a scam.
“Real estate statistics portray a market in which buyers have more listings to pick from than a year ago and are taking more time to decide.”
Gee, here’s a novel idea: maybe there also aren’t as many buyers, what with most of the greatest fools having already bought into the scam.
My friend works in a paint manufacturing plant. According to him the summer is generally the busiest season in the past several years as construction & home modeling at its peak. Generally the plant would run 7 days/week 24hrs/day just to keep up with demand.
This year the slow down is very noticeable both in the consumer & contractor (new home) demand. They are now working only 5 days/ week and still surpassing demand. The plant had released all contractors and is not considering cutting back some permanent employees.
We are only at the very beginning of the slowdown. The impact of this housing burst will be deeper than any economic’s current prediction.
… is now considering cutting bck some permanent employees.
and happening in a single 6 month time frame- the 90’s down turn was preceded by oil patch in 86
so 1/5 of USA was already tanked by 87
Sellers have been trained over the past five years to stick with their prices and be firm, and yet now you have buyers on the other side saying they want a deal.
No, buyers aren’t necessarily looking for a “deal”, they’re just saying that they’re unwilling to pay double what the home sold for three years ago. They’re also saying that they’re unwilling to commit financial suicide by taking out a toxic loan, and unwilling to eat Top Ramen for the rest of their lives for the privelege of owning a 3br, 2.5ba crackerbox that they could rent for less than half the monthly cost.
Good news for me, despite the potential price of my house falling back toward its actualy value. My kids will be able to afford to live in Brooklyn 15 years from now if they choose. Unless we are in the middle of a THIRD bubble then.
If we still have a Federal Reserve in 15yrs, we will have another bubble. That’s what they do. Perhaps not in housing though.
GARY WATTS SAYS OC PRICES WILL NOT DROP
Dissent on housing descent
Gary Watts, the Mission Viejo broker and economist, says “I would imagine that a ’soft landing’ would have home price appreciation equaling the inflation rate, but O.C. home prices won’t even be in the ‘approach pattern!’ We are and will continue to climb to an ‘altitude’ (with price gains) between 10 percent and 12 percent this year. And if we pick up a tail wind in the latter half of this year, we may climb to 15 percent. Next year’s appreciation should also keep O.C. home prices up in the air with no plans for landing anytime soon.”
Can’t someone prosecute this liar for fraud, and why do they keep interviewing him so he can fool more people into financial ruin?
At least he’s no longer saying 15% is in the bag. Baby steps.
15% was in the bag - baked in the cake - a lead pipe cinch - etc…
This guy is a total joke!!
The truly horrible thing about this kind of fraud is that folks believing this will X themselves financially so he can make “just one more” sale… I suppose anything is possible in some universe, but clearly ALL of the numbers are pointing at decline right now. Inventory is up, wages are stagnant, cost of living is up and interest is up. All of these place clear downward pressure on housing prices. I suspect Gary may already have a “tail wind” problem.
Thats not interest in real estate, I meant to say “interest rates”
The spring season is over without ever getting started, and there is nothing to suggest why a “tail wind in the latter half of this year” should take place - it’s wishful thinking at it’s most obvious. If people are taken in by this chump, then they deserve to lose it all.
Save the articles by jokers like this, that way you can pull them out and read them to your grandkids the next time we go through a cycle like this. The media these days equals deception, and articles like this prove it. I do not believe for one second that this POS believes all the crap he’s shoveling. This character knows he occupies a position that allows him to manipulate, and manipulate he does. That’s right, keep saying whatever you have to to wring one more FB out of the OC crowd, Mr. Lasner. I hope Karma rears it’s ugly side on his ass!
I wouldn’t bother e-mailing this joker, either. The e-mails should be directed to the the OCR’s administration asking them why they allow someone like Lasner to occupy a position of expertise when he’s an absolute joke.
NNVmtgbrkr:
Jon Lansner is the only journalist yet to come to this blog and engage us directly.
Jon Lansner is a bear, he admitted it here.
http://thehousingbubbleblog.com/?p=248
http://thehousingbubbleblog.com/?p=277
However, the general population of OC is smug and self-satisfied which is why OC will get hammered according to Chris Thornberg of UCLA Anderson Forecast. Oh yeah and Ameriquest, New Century and almost all of the subprime lenders are headquartered in OC.
Jon has to write about the social milieu in OC, this article clearly reflects joe-sixpack’s outlook in OC. (delusion).
“Otteau also believes ‘the chorus of voices predicting this collapse and the attention they have received from the media’ are playing a big role in bringing the housing market to its current state. ‘As always, perception becomes reality,’ he said.”
great logic. Shaq became a great basketball player as a result of the chorus of cheers from his fans.
gary watts - is there a blog to dis this idiot ?
You can always do it here!
So Cal RE bubble blog by John Doe has two posts dedicated to Gary Watts.
http://socalbubble.blogspot.com/2005/10/gary-watts-will-burn-in-hell.html
http://socalbubble.blogspot.com/2006/04/gary-watts-will-still-burn-in-hell.html
The OC bears definitely gave Watts a rashing at OCR’s (Jon Lansner’s blog).
Rocky Mtn News Foreclosure Article.
http://tinyurl.com/otzyh
“More than 9,500 real estate foreclosures have been filed in the Denver area in the first half of the year, about 34 percent more than in the first six months of 2005.
Soaring foreclosures are a puzzle because the rest of the economy is doing so well, said Tom Clark, executive vice president of the Metro Denver Economic Development Corp.
“We thought the foreclosures would wash out by the end of the summer, but now with rising rates it looks like that is not going to happen until the first quarter of 2007,” Clark said. “
They’re clueless. 2007 will be just the end of the beginning.
“Soaring foreclosures are a puzzle because the rest of the economy is doing so well”
Soaring foreclosures are a major sign the economy isn’t doing well Mr Tom Clark you flaming nitwit. Yeah, you’re really in tune and earning your pay.
because the rest of the economy is doing so well
“Say it long enough, and everyone will eventually believe it to be the truth”
Joseph Gobbels-Nazi Party Minister of Propoganda
With prices dropping, there will be those who will decide that they want to buy in.
Just curious to thoughts on pricing from the other members. What would you pay for a 1985 house that was sold in 95 for 565k in a northeast suburb. Have a cousin who’s been looking for a few years. Growing family, dog, rental market not good in this area.
Interested in numbers, not “I would wait until next year when it would be cheaper” which it might be, but someone has to buy to reset the comps…
but someone has to buy to reset the comps…
They are certainly welcome to do that.
“Interested in numbers, not “I would wait until next year when it would be cheaper” which it might be….”
For me acceptable price is a moving target. Now that the market is cratering my price threshold is lower than it was a year ago.
(What would you pay for a 1985 house that was sold in 95 for 565k in a northeast suburb.)
A 1995 sale is a good benchmark for a fair price. Try offering that plus the metro area gain in per-capita income from 1995 to 2004 (www.bea.gov), plus another 10 percent for the following couple of years and lower interest rates.
But was the house really worth that much in 1995? Sounds like one hell of a lot.
the 1995 price is almost the bottom though. I’m not sure I’d use that.
If the market craps as badly as many on this blog believe it will, we may well see 1995 prices again before it’s all over.
As much as we’d all like to believe that - I don’t think we’ll see 1995 prices again.
Ain’t NEVER gonna happen. Dream on, buddy.
Actually, 1995/96 represented the last time that housing was at the historical median; everything since has been above. The inevitable reversion can easily take housing well below that.
It’s a pretty big house (3700 sq ft) in a very good area. Top schools, etc…
Larry, Those are helpful stats.
Looks like 44% per capita growth from 1995 to 2004 or an average of 3.5% a year.
So 3.5% from 1995 to 2004 is 770k. Then the next two years at 10% gives us 931k.
Prices are coming down in Santa Cruz. On Bay Street this morning, sorry no address, there was a for sale sign with price in a BIG font saying $579,000. These houses in that neighborhood were going in the $700,000 range. I don’t know if the seller is trying to attempt a bidding war starting from such a low price or is just desperate to sell. If it sells in the high 5’s(still too much imho) the price drops in Santa Cruz are in the bag!
“in the bag” !!
“If it sells in the high 5’s(still too much imho) the price drops in Santa Cruz are in the bag!”
Not really. The industry will make its own rules and consider it an exception. Not to scare the natives and all that, mind you.
In fact, expect the vested interests to extend mind-boggling concessions in order to keep prices up.
More, new kind of bubble - From a WSJ article,
“…Corporate executives are increasingly turning to debt for the cash they need to feed stock investors with share repurchases, dividends and empire-building exercises, a trend that is starting to worry some bondholders.
During the first half, U.S. nonfinancial companies issued $84 billion in investment-grade bonds, up 72% from a year earlier, according to data from Thomson Financial. Issuance of riskier junk bonds by less-creditworthy companies was up 25% to $47 billion, and bank lending soared, especially to companies looking for financing to back acquisitions and special dividends.”
“Corporate executives are increasingly turning to debt for the cash they need to feed stock investors with share repurchases”
More like “the cash they need to feed their stock portfolios”. I wonder why nobody nominated Ponzi for the Nobel Prize when the fella was alive? He surely fed more people with a piece of bread than Jesus, for sure.
Hedge Funds are aggressively asking companies to lever the balance sheet for large stock buy-backs. Seems to be the investment bank idea du jour to goose stock prices during a time when blue chip stocks are stagnating.
You made me laugh out loud.
Out here in So. CAl, the tipping point is occuring. Even the Inland Empire is finally seeing huge reductions from original asking prices. Again, let me reitterate what I’ve been saying over and over again, this situation is going to get very ugly. Especially since credit card spending is starting to pick-up to offset drops in HELOCS. People are probably using their CC’s to pay mrtgage payments and taxes…
“Gary Watts, the Mission Viejo broker and economist,”
He gave up the right to be called an economist when he became a broker, real economists don’t have to make make up bullshit to prop up their other job.
It’s still B.S., but they get paid for it directly.
“You have this standoff between buyers and sellers…”
There’s that word again! It’s not a standoff. Not, not, not. *stomps foot* When the media start characterizing buyers as understandably cautious, rather than just stubborn, I might start believing their other assertions. Until then, *raspberry*.
I for one won’t consider buying in my area (California) without 40 to 50% real-dollar price drops. In other words, I am waiting for prices to revert to the mean. If that makes me stubborn, then so be it. I’m perfectly happy to continue renting until then.
Or until rents soar to the levels that the RE folks are direly predicting
Which we of course don’t beleive 
amen to that.
Well then, I predict you are going to wait forever.
We looked at a 3 bed, 1.5 bath, 2,000 sq ft ranch in Orange Co, NY recently on over an acre (less than 1/2 an acre was usable) with an asking price of $525K. Absurd. It needed updates and improvements including a new roof (the roof over the garage was visibly sagging which is always a great sign for buyers!), updated kitchen, baths and floors. I swear they picked the price out of thin air and greed. We presented comps from area sales (there haven’t been that many in that neighborhood, last one was early 2006 for $430K) in the range of $345-$430. I thought the listing agent was going to pass out on the floor.
Serves them (the agent) right. And why, pray tell, was the listing agent not aware of that comp? What an excellent example of ineptitude. Unbelievable…..
BayQT~
Oh, by the way, they ignore comps that don’t support their commissions. This isn’t a surprise to anyone, is it?
in west sonoma county i have seen a large number of houses come on the market in the last 2 weeks,and a stagnant market.homes priced a little below last year at this time still sell.also had a nice office meeting where the boss quoted robert eyler as saying california coastal markets have no risk of falling prices,and she handed out a chart showing why arms are a better deal than a fixed rate loan.the median has fallen $70k since august in my area.and yes,in a falling or stable rate environment an option arm is a good idea…
We live in NY and when we tell our freinds that we are waiting for a correction to buy, we are told real estate prices never have and never will go down in NY. So this Newsday article must be wrong:-}
Seriously, some one at the end of the article says price are still up in Queens. No they are not. My wife and I are tracking single family homes. The prices have come, it’s a small decline so far (5% or less), but they are lower. This must be “median price” BS!
Also inventory has doubled and houses are on the market for a long, long time.
Newsday is like a certain kind of poison. Newsday has a monopoly over Long Island. Moreover, they are in cahoots with Cablevision, another monopoly.
There is NO freedom of speech on Long Island.
Long Islanders: Please don’t buy Newsday. If you need to read it, go to the free website, but please DON’T give them ANY money.
Thank You.
Wow, this is a bit off topic, but… I just got back from a semi vacation, spending the 4th of July in Vegas and this last weekend in Anaheim. I have to agree with some of the previous posters, this summer, everywhere I went, I saw the beginnings of the housing equity money drying up.
For 4th of July, Vegas was surprisingly slow. I’m a Vegas resident, and for years, I would always try to book 4th of July week out of town for a mini vacation because it would become so damned crowded everywhere. Not this year, I was stuck out here due to business, and was extremely surprised to see how slow things were for Vegas. We were even able to walk down the Strip comfortably on the 4th!
And Anaheim…my husband booked a last minute weekend tour off of an Expedia.com like site, a hotel for a summer weekend blocks away from Disneyland for a steal. Its been years since I’ve seen discounted rooms near Disneyland, over the summer, their peak tourist season. I thought my husband was insane for even suggesting we there this time of year, due to the fact that the theme parks are usually packed with families and their screaming kids this time of year.
Disneyland was extremely slow for the summer as well. If you were and adult and didn’t do any of the kiddie rides, and avoided all the fast food restaurants in the park (in other words, the stuff that families frequent) you got on fast for the rides, and for the restaurants, got excellent service. (One restaurant, my husband left a 40% tip because the service was so excellent…we’ve never had such attentive waitstaff at a Disney property before, as they had few other people to wait on). Before, I would avoid Disneyland over the summer, because everywhere was packed with annoying kids, even the more expensive restaurants. Not this year. For Disney, whose main money makers are spending families, this is a bad thing.
I think we are in for some interesting times ahead.
Soooooo…… Will this be known as the recession of 2006, or 2007?
I think 2007, because it takes the National Bureau of Economic Research a long time to make their minds up. Kind of like the 1990 recession. My mother worked in an architect’s office and said by summer of 1989 it was clear nobody was walking in with plans. They laid off most of their staff by the end of the year.
Submissions of plans to the Planning Department at the City of Irvine, Orange County is markedly lower over the last few weeks.
The implosion has begun. Inventory records being shattered daily accross the nation. All the RE cheerleaders see it coming, they know the fat lady is singing…
ITS A CRESCENDOING MARKET!