‘Advantage Swings To Buyers’
Some housing bubble reports from the northeastern US. “Kim Bronson’s West Windsor, Vt., home has everything a buyer might expect in a pastoral North Country property. The only thing the property doesn’t have is a buyer. Ms. Bronson put her home on the market more than a year ago at $4.9 million, then shaved the price by $1 million in April.”
“‘I’m really surprised it hasn’t sold,’ she says. ‘I don’t think Vermont and New England is going with the same real-estate flow as the rest of the universe.’”
“Andrew Heiblien has been trying to sell his four-bedroom home in Mystic, Conn., since January. As in many of the small towns that dot the Connecticut shore, the number of for-sale signs in tiny Mystic (pop. 4,001) has doubled since then, area brokers say.”
“Mr. Heiblien says he ‘never dreamed’ he’d need to cut the home’s asking price four times before finding a buyer. The property went under contract last week for $405,000. ‘I really thought the market was stronger when I put the home up for sale,’ says Mr. Heiblien. ‘I had to adjust.’”
The Westborough News in Massachusetts. “For sellers today it can be even more stressful with homes sitting on the market on average from 3 to 6 months. The inventory of homes available is building across the state because more people are moving out of Massachusetts than in.”
“Westborough’s Candy Owen has seen houses come down in price about 10 percent over the last two years. ‘If sellers adjust homes down 10 percent they sell right away. But, if they’re thinking the market isn’t different and they don’t lower the price the homes are staying on longer,’ she explained, saying a home on the market a couple of years ago for $700,000 should now be priced around $630,000.”
“Homes have to be priced competitively, agreed (realtor) Richard Hutner. ‘Prices have come down considerably from anywhere between 5-10 percent,’ he said.”
“‘The Westborough real estate market has definitely changed. There is a lot more inventory which means buyers have more choices, which means sellers that are motivated to sell need to price realistically or consider price reductions. Buyers have a lot more leverage (than) they ever had,’ said (realtor) Susan Flynn.”
The Cape News in Massachusetts. “Volume at the Barnstable County Register of Deeds is down for the 17th straight month. In April the number of property sales dipped by 28.3 percent compared to April 2005. Sales were down 21.3 percent in May and 18.2 percent in June this year. This week in Falmouth there were 513 single-family homes on the market, along with 68 condominium units and 12 multi-family houses, said (broker) Robert B. Dugan. ‘Those numbers have doubled since last year,’ he said.”
“Cape-wide, the number of property sales dipped drastically in the wake of Hurricane Katrina. In October of last year sales were down 17.6 percent over 2004. By December the figure was 20.7 percent, and in January of this year it ballooned to 26.3 percent.”
“(Realtor) Megan Patrick agreed that there is a glut of homes, but has seen activity picking up. ‘The market is saturated, but houses are still moving,’ she said.”
“Ms. Patrick noted that mortgage foreclosures have increased. Many of those were initially bought by buyers who overextended themselves, she said. When they are unable to meet their obligations, she said, their homes hit the market at depressed prices in an attempt to generate quick cash. ‘Now we’re seeing five pages of foreclosure notices, where you used to see just one,’ she said.”
“One of the brighter spots in the market is that lower-priced homes are softening, making it a good situation for first-time home buyers, Mr. Dugan said. ‘We’ve finally started to see some listings for less than $300,000 over the last two months,’ he said. ‘Before, anything under that figure was a fixer-upper,’ he said.”
oh.. boo hoo hoo for these sellers….Mr. Heiblien says he ‘never dreamed’ he’d need to cut the home’s asking price four times before finding a buyer.
Hey Mr.Heiblien.. Wish in one hand and crap in another… see which one fills up first.
Arrr-Harrrr, matey. The captain’ll be see’in you in his quarters now…
(sniff) (sniff) … i feel bad for these ignoramus’ too. if you dream hard enough, then maybe someone will buy. ugh. no empathy for the ignorant and greedy. ’nuff said.
“Meanwhile, the pool of potential home-buyers in the region is ‘falling like a stone,’ says New Hampshire-based demographer Peter Francese. He cites U.S. Census Bureau data showing almost 200,000 residents between 25 and 44 years of age left the region between 2000 and 2004. All six New England states show declines in that category, with Maine, Vermont, and Connecticut far outpacing the national average.
No wonder the real-estate scene in New England — where home prices climbed at least twice as fast as household income during the run-up — is frosty. The population flight ‘weighs on the region’s economy and housing market,’ says Mark Zandi, an economist with Moody’s Economy.com. The collapse in housing affordability, he says, has driven out first-time home-buyers.”
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Are there any locales within the bubblicious coastal regions of this country where household incomes have not been outstripped by home prices to the tune of at least 2x faster growth in recent years?
And the title of the article, “In New England, a different kind of fall”, is priceless.
tax them and they will go to red states
VT and Mystic, 2 economic wastelands
“moving to” what foreclosure.?
If the pool of homebuyers is dropping so sharply, then government services should be decreasing their employment, and therefore budgets, about the same rate. Can’t need as many schools or teachers or police or administrators for those, if the child-bearing population is the largest group that is fleeing. Watch how slowly these local governments shrink, the delay inevitably to be financed by tax rate hikes.
There are already lots of reports in locations like mine (South FL) of enrollment projections proving wildly optimistic. Families are moving to cheaper locations because they can’t afford housing, and I believe many of these enrollment projections are based on housing sales/starts. Trouble is, all these homes have been bought by specuvestors, not owner-occupants. As a result, not as many teachers are being hired and indeed, you’re hearing about scattered layoffs already.
Mike , you mean like the recent PB Post article stating that 90% of the residents in PB county CANNOT afford the median priced home? I could care less WHAT the product is, when 90% of the potential customer base can’t buy it, it’s too damn expensive.
“(Realtor) Megan Patrick agreed that there is a glut of homes, but has seen activity picking up. ‘The market is saturated, but houses are still moving,’ she said.”
They will keep moving as people keep cutting the price. The motivated sellers will win this battle, while the greedy ones will hang on and go down with the ship.
“… the greedy ones will hang on and go down with the ship.”
Reminds me of the rookie naval officer, in the Russell Crowe movie “Master and Commander,” who couldn’t cut it and jumped overboard with a huge cannon ball in hand. By the time he changed his mind, it was too late.
“The home is priced right for the market,” Ms. Eleftherio says. “Serious buyers will recognize that.”
If it’s priced right for the market, why hasn’t it sold in over a year? Hello? Earth to Ms. Eleftherio.
Ms. Eleftherio’s definition of a “serious” buyer = one dumb enough to pay her asking price. apparently a “serious” one hasn’t come along yet.
The way to break this wide open now is for buyers to fish for homes where owners are serious & have a large equity cushion and no patience. They may be more inclined to accept lowballs 30% below comps. That would shatter the comps floor and the FBs will be forced to fold. Tell any dopes out shopping to try this one out!
Melanie Eleftherio’s renovated five-bedroom home in Newport, R.I., has been on the market for almost a year at $1.3 million… has failed to fetch a single serious offer. But the 46-year-old former advertising executive isn’t ready to cut the asking price. “The home is priced right for the market,” Ms. Eleftherio says. “Serious buyers will recognize that.”
Well, of all the shnobbidy, shnobbidies. Apparently the hoi polloi are unable to appreciate the aestetic qualities of Ms. Eleftherio’s house. Any serious buyer would immediately grasp the intrinsic value associated with the architectural marvel that is her home. The plebs might just as well not waste her time as she will not entertain below value offers from riff raff.
aestetic, aesthetic, anesthetic, whatever… I think I might need a brewski.
These sellers just don’t understand that a house is a house. Kinda like a spouse. There is no “one perfect” house for everyone. There are many houses that will get the job done. And since sellers are all competing with buyers, they need to price accordingly. Right now, they’re setting prices as if their house is unique. But to buyers, most houses have lots of substitutes.
Bottom line: If it doesn’t sell, you need to lower your price.
Here is RI for a good school district, I have been hoping to see some big price reductions but haven’t seen it yet. There are lots of listings, but those sold are quite close to asking price, with around 5% price cut.
Problem here is there is very few good rental. Most houses are small, old, outdated. Builders only build big mensions.
I don’t see a dramatic price downturn here happening soon. More likely it would be down 3-4% percent for some years.
I’ve been renting for the past ten years and just cant do it anymore. We need to go to a good school district because of young child and there just isn’t much we can choose from. My best option is to move away but my husband doens’t want to. Well bubble may be bursting in FL, CA, but it is certainly just deflating here in Rhode Island , to my dismay.
> I have been hoping to see some big price reductions but haven’t seen it yet. (…) I’ve been renting for the past ten years and just cant do it anymore.
Big reduction could happen at the end of this year or in 2008? Just remember, if you buy now, you will be stuck with the debts a lot longer than two years. Impatience can be expensive.
> We need to go to a good school district because of young child
Do you think your child would suffer more if it goes the first years into a poorer school (not a dangerous one, of course), or if its parent are strapped financially and stressed emotionally?
> My best option is to move away but my husband doens’t want to. Well bubble may be bursting in FL, CA, but it is certainly just deflating here in Rhode Island , to my dismay.
Good luck for your decisions, whatever it may be.
Regards,
Peter
thanks for your reply. I just bought a house, will close soon.
My three year old just got diagnosed with severe language delay. I want to enroll him in a good public program this coming September. That is the main reason I finally made the jump. Also the house we bought is well within our budget. We put 25% down with a 15 year fixed. I am prepared the price go down or flat for the next 5 years.
The ironic thing is after I bought the house, at least 2 people congratulated me on making a very good investment. Well there you go, people are still dreaming.
“25% down with a 15 year fixed”
Great job. I honestly do not understand ANYONE (yes, people posting here, included) who would pat themselves on the back for paying off a mortgage over THIRTY YEARS. Paying an AWEFULLY large amount of cash on the interest of such a loan.
Start here.
http://www.iahp.org/Brain_Injured_Children.203.0.html
Great people.
> Also the house we bought is well within our budget. We put 25% down with a 15 year fixed.
You seem to be doing all right in the years to come. And you may actually stay for 15 years there and see the home debt-free and in the next housing bubble
> My three year old just got diagnosed with severe language delay.
That is a special situation, of course, which might demand financial sacrifices. I hope your child will turn out all right; the cousin of my wife didn’t speak until he was three and works today on Wall Street.
Regards,
Peter
Homeschool?
Oil price has gone up to $79 and may go even higher soon. If the high price remains for the next few months, we will see some squeeze.
that may force the Fed to raise interest rate more than 0.25%.
The Fed will try to strip this out, by using “core inflation” stats, which ignore food and energy (clearly, people don’t really need or buy these, do they?). However, since almost everything produced has to be shipped, the increased cost of shipping should get passed through. So far (at least based on the govt. numbers), the increased shipping costs don’t seem to be making it to the retail level, but this can’t go on forever. And, if there is a big spike in the cost of diesel, it will almost certainly have to be passed on to the retail level (whereas the smaller, creeping costs seem to have been absorbed so far by mfrs, shippers, retailers). This leaves retailers in a bind, as their sales are already down, and higher gas prices won’t help their sales. What will the Fed do when facing stagflation?
From today’s Marketwatch -
Imported petroleum prices fall, but non-fuel import prices up 0.7%
I would love to see the squaking on CNBC if they were to go 50 bps in August. That would make my year in addition to the RE complex going postal. Probably 25 bps and a pause, but you never know. If oil is over $80 in a few weeks with no sign of a top it could get interesting.
Go ahead, make my millenium. Bwahaha!
Insanely high oil prices = massive inflation = continued rolling campaign of .5 bps (or higher) hikes as hyperinflation spirals out of control. While it would suck for the cost of gas (and the human toll) a massive war in the ME is just what the RE industry needs. Things should get veeery interesting in the ME by the time August rolls around and in the oil futures market the sky is always falling…
And now you know why “everyone” wants to live in San Diego. (Although everyone most certainly does not want to live here,) the wifey and I fork over around $60 a month for gas and electric, combined.
That would save me a whopping $100 a month in the hot Texas summer with a suburban commute. Less in the other 3 seasons. Think it’s worth an extra $2 kto $3k in PITI payments?
“Even sellers with star power are striking out. Boston Red Sox slugger Manny Ramirez has been trying to unload his 4,500-square-foot condominium apartment in Boston since June 2005, according to Jason S. Weissman, of Boston Realty Advisors, who has the listing. Though the four-bedroom, 37th-floor penthouse has been on the market for more than a year, Mr. Ramirez hasn’t reduced its $5.7 million price tag. He’s prepared to wait in order to get his price, says Mr. Weissman. The market will ultimately judge if he does.”
He’s prepared to wait, but the standoff will be won by the buyers who can afford to wait much longer. As each day passes more people are waking up to the new reality of real estate. This is true in all price ranges of housing, not just $5M condos.
These sellers should cut their losses if they are serious or take the property off the market. I’m a little embarassed for the ones that say they’re “prepared to wait”….don’t they get it?
I thought it was generally understood that if you buy a house for over 2 mil. you better be prepared to own it a long time. What are the chances that some other millionaire is going to think that your leavin’s are the bee’s knees? How many times do we have to hear a sob story from some Richie Rich who can’t sell his mansion? I could name a half dozen off the top of my head. Oh boo hoo hoo!
Raising cash in a down market is a real beotch.
Exactly. In this stand-off, it costs the seller mortgage payments, taxes and upkeep to wait while it costs the buyer nothing. In fact, given the inventiry build and price declines, waiting greatly favors patient buyers.
It’s not a buyers market. It’s a WAITERS market. That’s why nothing is selling.
Last year I was thinking to myself; “What if I’m wrong about this? What if it keeps going for a few more years?” Now I’m prepared to be a “WAITER” for a good number of years until this bottoms out. I’m so glad we didn’t buy last year.
I screwed up by selling part of my holdings in fall of ‘04. I missed another 150k by not pulling the trigger in Sept ‘05 (our top).Oh well. Could still sell in my market for spring ‘05 prices. Ten months inventory on market in Pismo at this time and rising.Median price 835k.
manny doesn’t fall into the ordinary people group. he can afford to make a 7 figure mistake.
Considering Manny likely paid cash for that place (and could buy an entire Boston neighborhood on top of it, given his salary) he can afford to wait.
Making over 20 million per year, he can afford to wait indefinitely. But it still is not smart money. Why not price it accordingly, sell it, and really grow those funds? It just goes to show that wealth and intelligence don’t necessarily go hand in hand.
sfjack
Actually your figures on population decline in New England are way off.
Mass. is the only state with a decline (of 30K) since the 2000 census.
New Hampshire has gained the most (about 9%) followed by Connecticut about 3%. In Tolland county CT a new home can be bought for under 300K- A new colonial 2200 square feet, on 1 acre for about 325K- can you buy that in the bay area ? Yet we have an annual Per cap. income of over 65K a year- in this county.
Get your facts straight- before you speak. California egocentrism -oh boy!
Peter: I live in MA and I know where you are coming from. Houses around here shot up around 300% in 5 years, but the population both declined in quantity and quality!.
The middle income IT guy was replaced with the rough illegal, or southern laborer as wages are a bit higher around here. Most of the jobs lost where high paying IT/Tech Biotech jobs, and those gained have been construction/RE related. There is a world of difference between a framer and a Lynux Admin!
Peter -
Did you actually read what I wrote?
I said no such thing, as I was quoting the article. I even used quotes (these things before and after the words: “blah, blah, blah”).
My comments are below the line. The line that looks like this:
********
Besides, “California egocentrism” isn’t part of my repertoire.
Now go back and read what I wrote.
Further, what I was quoting is the decline in a specific age group in New England.
25 to 44 year olds, not the population as a whole - did you notice that?
also Mystic CT is a very desirable place to live
New London (just to the east) is considered on of the best places in the nation to get the most bang for you buck (#1 actually) beating out such places as Huntsville AL
Some of these red state people have a very narrow view of New England- which is NOT Boston centric- Boston is Boston- but travel 75 miles away and real estate is very reasonable- and I may add the quality of life far higher then Flrida, Nevada or AZ- and California as well!
holy smok’ums kimosabi
zip realty has 890,000 teepees for sale
Pinch a penny
there are many X-Boston- ites in central and eastern Connecticut- where home prices are just 30K over the national median- Some still commute to Bean town from towns in eastern CT-’The Quiet corner’ like Woodstock- its an hour commute to Boston Eastern CT has very sprawl or traffic, with peace and quiet- housing is much cheaper here. I see NJ and NY plates as well- escapees driving up RE prices locally- but considering per cap income here- and the location RE is still a good buy.
Needless to say inventories are building here as well- and housing prices have risen over 55% in the last few years.
“Westborough’s Candy Owen has seen houses come down in price about 10 percent over the last two years. ‘If sellers adjust homes down 10 percent they sell right away. But, if they’re thinking the market isn’t different and they don’t lower the price the homes are staying on longer,’ she explained, saying a home on the market a couple of years ago for $700,000 should now be priced around $630,000.”
Someone finally herd my cries about WTF it means when they say, the home must be priced right. Finally a concrete example, even though the house is till overpriced.
‘Advantage Swings to Buyers’
Good things will come to those who wait.
Hurry up and buy now if you want to catch a falling knife.
One small Nuke will really bring down prices!