‘The Only Question Is How Far And For How Long’
Some housing bubble reports from Massachusetts. “Home sales in Massachusetts tumbled 16.6 percent and condominium sales declined 14.3 percent in June. As homes stay on the market longer, the supply of unsold homes is growing, putting pressure on prices.”
“‘Prices are going to go down, there’s no question about that,’ said Karl Case, a Wellesley College economics professor who specializes in the housing market. ‘The only question is how far and for how long,’ he said.”
“Real estate agents are increasingly discouraged by an unwillingness among clients to lower their listing prices to spark more sales. There were near-record numbers of active listings in Jun, 56,494 homes and condos. Many sellers are holding out for a high price to help them realize the 80 percent price appreciation that occurred in the market between 2000 and 2005.”
“‘In order for sales to begin to edge up,’ sellers ‘are going to have to face reality and adjust their pricing accordingly,’ said David Wluka, the president of the Massachusetts realtors. ‘They have to take the longer view of what the house is worth instead of looking back one or two years.’ He predicted prices ‘will continue to decline until the inventory gets eaten up.’”
“A jump in home foreclosures and yesterday’s report of yet another fall in home sales and prices is causing economists to wonder whether the fragile economic recovery might be clipped by the housing market. ‘This is not a good situation,’ said economist Fred Breimyer, referring to the housing market and its potential ripple effect on the rest of the economy.”
“‘It’s a whole new ballgame,’ said Andre Mayer, chief economic researcher for the Associated Industries of Massachusetts.”
“The economy, fuel Prices and climbing interest rates are all factors in the slower market, Mr. Wluka said. ‘I think it’s job-related,’ he said. ‘People are not going to put themselves on the line if they think they may lose their job. I’ve seen people who want to buy, but they have to sell their home first. They’re waiting because they want to do that first.’”
“MAR spokesman John J. Dulczewski declined to predict what the state’s housing market would do over the coming months, other than to say that modest declines in prices would continue until prices are more stable. ‘There’s a whole educational process going on right now, with sellers having to understand what’s been going on over the last year,’ he said.”
The Daily Item. “(Broker) Don Baker said, ‘If the house is overpriced, we tell them to go someplace else. There’s no sense in spinning your wheels,’ said Baker, who has been selling homes in Lynn since 1967.”
“According to a handful of local realtors,there’s plenty of stock to choose from right now because people tend to sell out of necessity or because of life changes, not because the market is hot or cold. But because of the large stock of homes available, realtors say buyers have been more reluctant to pull the trigger on a sale because a better offer might be right around the corner.’
The Boston Herald. “New figures show Bay State house prices have dropped for five straight months, the market’s longest losing streak in more than 13 years. In addition to declining prices, MAR also reported that the number of houses changing hands tumbled in June for the third month in a row.”
“‘You can’t keep going up forever, at some point you hit the wall,, MAR President David Wluka said. ,There comes a point where buyers say: ‘We can’t afford to buy this,’ or ‘We’re not going to pay that.’”
‘The inventory is staying on the market considerably longer,’ said Elly Butler, a real estate associate ‘in Portsmouth. ‘We have double the listings on the market. We don’t have double the amount of buyers,’ said Kathy Rush.’
‘It’s a key indicator for me and we noticed the shift (of listing periods) begin to change a year ago,’ she said. ‘It was a seller’s market the last five years but we are seeing significant price reductions’ by the sellers to make deals.’
Inventory is definitely the issue. It’s the crux of the whole situation. Here’s a take on it from Jim Willie, one of the most plain spoken financial analysts there is out there:
“The most intriguing element to the housing debate points to housing prices. If a property goes unsold, sits on the market, languishes despite price cuts, wallows in the face of inducements (e.g. paid closing costs, cash under the table, phony projects funded for supposed repairs, subsidized interest rates, even a free in-ground pool), THEN HOW DO WE KNOW ITS VALUE & PRICE ??? The most frightening housing statistic is the inventory data. The June figure for existing housing inventory is up 3.8% to 6.8 months worth of supply. The inventory level for condominiums is at 8.0 months. This bloat represents the highest supply of unsold homes since 1997. In six months we will know what today’s prices are. In twelve months, we will know what prices then will be six months from now. The residential real estate market cannot reveal adequately its prices when a mountain of unsold properties lies in swollen supply.”
His latest whole article is at:
http://www.321gold.com/editorials/willie/willie072606.html
Exactly!! This is what I’ve been trying to say (rather clumsily) with the bid/ask freefall analogy. In the lack of any (or many) bids, it is virtually impossible to set the price of anything and even though the ask may be reduced again and again in a virtual freefall, there is no way of really knowing what the market is doing unless we have more volume, especially on the lower end of the market. Median price metrics really do suck because they don’t show the volitility or the current trends very well. Maybe someday we’ll have better data that focuses on average ask prices more. I think the pending data reports that are floating out there are an attempt at making the data a bit quicker, but these aren’t inclusive and very few people actually realize that we’re crashing right now.
Darth, dude, you are right on top of this. We’ve heard how RE is a market where the prices are set “at the margins”. Most people have no intention of selling, but they are nevertheless affected by the 10 to 15% or whatever small “margin” who either want to or need to. Problem today is that this small “margin” is bigger than it ever was in RE history, because there are so many folks who should have never bought any RE in the first place. These same people who drove the prices up will trigger the prices to crash back down. Oh man, what a disaster is coming. The numbers (esp. inventory) are mind numbing. I think even we RE bears are going to be amazed at how bad it may very well turn out to be. You’re right too about the BS of “median” prices, as many others have pointed out. The irony is that this metric, while appearing to make things look “better” than they really are, will only serve to make things even worse in the end as the overshoot effect becomes fully realized (i.e. the bigger the bubble, the longer the imbalances exist, the worse the correction). These median price hallucinations have only made everyone even more complacent about the impending disaster.
And the final “ditto” on your remarks is that, yeah, for sure, we are indeed already crashing. It’s like watching a plane wreck in slow motion. We just haven’t heard the screaming yet.
Come by our local site and share some of your observations on SLO county. http://www.slobubble.blogspot.com
ccbear, thanks for the invite, I’ll definitely come by…
‘The only question is how far and for how long,’
…how about minus 30-50% over 6 years.
why pay this dufus- isn’t he supposed to comment on how far
? -20% by xmas 07 in NE
There is an old saying: “Excessive things correct themselves excessively.”
Home prices will drop to the level where they are “inline” with incomes, and then drop some more after reaching that point.
Not to mention that incomes will probably be dropping, too, along with the home prices, which will leave a deeper drop to bring the prices in line.
30-50% over 6 years.
By the time 6 years passes in SF Bay Area most jobs would have left for other low cost states. Most recent reports indicate these are high paying jobs are the ones being shifted to lower cost locations.
http://www.labusinessjournal.com/login.asp
High-Wage Jobs Leaving State
“It’s a double dose of bad news for California’s economy.”
“A recent study from a respected think tank has found that not only have the state’s major industries all suffered some net job loss from business relocations, but that this effect is most pronounced among industries that tend to pay higher wages.”
“The findings by the Public Policy Institute of California — which studied business relocations into and out of the state between 1992 and 2003 — runs contrary to conventional wisdom that lower-wage jobs are most susceptible to relocation. Most losses were found to have occurred in finance and insurance, manufacturing, and business and professional services.”
6 years to way to long. We need some really swift changes in the market place.
It won’t be 6 years for California.
First, sales are going to continue to slow as Mortgage brokers are having a very difficult time pawning off Hybrid mortgages. Bond holders are going back more and more and demanding a higher fraction of mortgages be bought back. That is eating away at the ability of the brokers to originate new loans. Hence, sales will slow more.
Also, but mid-2007 the job loses are going to be large.
I have a heads up in my industry and friends in several Southern California industries on how they’re planning to push the contractors out the door and are making plans to do at least a “gutter cleaning” layoff.
While non-renewal of a contractor isn’t a legal layoff, it is a job lost in the local economy. Think about Hollywood… what fraction of the staff who make a movie are contractors? I would guess 80%. Well Hollywood is cutting movie production in half so that means only half as many contractors will get hired in the next 12 months.
My prediction is a 50% drop (+/- 10%) within 36 months in bubble markets or 30% (+/- 5%) nationally.
Remember, the 1926 Florida price drop was 90% in less than 12 months! Back then, homes dropped to below the cost of materials (forget labor). That is the last market analogous to this market (but things aren’t THAT bad this time).
Neil
Remember, the 1926 Florida price drop was 90% in less than 12 months! Back then, homes dropped to below the cost of materials (forget labor). That is the last market analogous to this market (but things aren’t THAT bad this time).
Some people would argue that they are worse.
This is a LONG read and takes some patience in understanding but well worth the effort. It relates to the crash of 29′ and where we are headed as well as why. http://news.goldseek.com/GoldSeek/1153926120.php
I wonder if brokers are going to start using sharper motivations to get sellers to lower their prices. Such as telling sellers that we’re in a bubble and that if you don’t sell now, you will get lower prices down the road. Maybe you should have a little side page for slogans that brokers can use to convince sellers to drop their prices now to beat the rush to the exits.
OMG -
How in the world can the broker who said, “If you dont buy now, you’ll never get in” change their tune to, “If you don’t sell now, you’ll never get out”?
Well, you have one set of lines for buyers and another set for sellers.
“They’re not building anymore homeless shelters”
“We’re not going to pay that?”
I’ve been saying that for 10 plus years.
The new economy of dot coms was booming in 1999. You could literally fling your resume, and you would get 10 job offers. in 2000, the dot com, and tech meltdown happened. A lot of these people were in technology at the time. I certainly was. Since 2000, massive layoffs, and no economic recovery in Mass has led to a lot of people living off of their houses. Now it is game over. I know of people who had decent incomes, and bought a 150K house in 1998, now wanting 400K for it, and cannot afford to lower the price. Why? They HELOCED and serially refinanced to get money out over the long decline that the state has suffered. There are still less jobs here, than there where in 2000. A lot of people have moved, and those that stayed, either had jobs, or lived off of their house.
Now it is time to pay the piper. I am not paying for someones 5 year vacation, or retirement in the Carolinas!. I am paying for dwelling, a basic need, and not a financial tool. That is my attitude as a buyer. You want me to buy your home, mr seller, price it at what it should be selling, or around circa 1998 pricing. Don’t like it, then you can get another GF to finance your lifestyle.
You said it brother! My sentiments exfreakingzactly!!!!
Penny,
Well said. Price a home as a shelter. It should go for a reasonable amount for the land plus the material and labor (minus depreciation) for the structure (lawn, etc.).
We potential buyers have no incentive to be the last ones in on this Ponzi scheme.
People are about to wake up to the fact many bubble markets are losing middle class jobs.
And if any realtors didn’t save… prepare to lose the BMW and McMansion. Awwww…
Neil
Good rant and wholeheartedly agree. I hope DL is reading this and pays attention. Let’s put to rest this notion that some 5-10% decline in prices is going to bring in buyers from the sidelines. Of course we will see knife catchers the whole way down, but that aside, we (the future buyers of america) require 50+% declines and will not buy for less! These moronic sellers and RE shills need to take a reality pill and understand how we are going to allow this to play out! They need to look themselves in the mirror and come to terms with their financial demise because of their respective foolishness. Let the “long pole of RE justice” meet the “brown round” of RE greed and quit complaining about the well deserved pain! This is an ass-pounding of the highest order and it needs to begin in earnest! Give them no quarter and show no mercy! On to victory fellow bubblesitters (defined as affordable housing)!!!!!
auger-inn,
I don’t know which phantasy you’re in each time you write “ass-pounding” here on the blog, but I would suggest that, each time you do it, you pay 10 USD to a charitative organization, to make something good out of it, too.
Regards,
Peter
What? A guy can’t even use the term “ass-pounding” any more on this blog? I suppose you are going to tell me “ball walking” is no longer allowed here either?
jeez, just last week I was called a misogynist (whatever that is, my wife didn’t know either) and it was all a complete misunderstanding (at least I didn’t understand it). Perhaps I need to go and reread the blog rules? Be right back.
Nope, doesn’t say the term ass-pounding is a no-no, so I still get to use it!
I will up my donation though, just in case.
if “ass-pounding” is worth $10, then how much is “new jobs for realtors servicing homeless gay men in the seedier parts of town in an attempt to regain their dignity” worth? priceless.
Kudos Penny - You hit the nail on the head.
[b]Now it is game over. I know of people who had decent incomes, and bought a 150K house in 1998, now wanting 400K for it, and cannot afford to lower the price. Why? They HELOCED and serially refinanced to get money out over the long decline that the state has suffered.[/b]
I’m in Massachusetts, and I know some people in this exact same situation, down to the same year of original purchase (1998) and almost exactly the same before-and-after mortgage principals.
Massachusetts is really doomed this time.
Its not just Massachusetts.
I know a coworker who bought a home for $150k in 1995 and is now HELOCED all the way up to its $650 appraisal (circa March 2005).
California is just as doomed. However, we’re just starting to export our jobs. The difference is, we’re well practiced at doing it quickly.
Neil
I can’t believe I purchased anything in the last 5 years competing with these fools!
I purchased two cars in the last three years (replacing 12 & 14 year old ones). For cash. But still I was competing with this crap.
are you saying they pulled out a 1/2 million in equity?
if so, where did it go?
I live in a NH summer resort town frequented by people from MA. I can hear a pin drop this year it’s so quiet.
Great post, Pinch-a-Penny.
> I know of people who had decent incomes,
> and bought a 150K house in 1998,
That nearly describes us, here in MA - 1997, 162K, traditional 30-year fixed, 20% down
> now wanting 400K for it, and cannot afford to lower the price.
Similarity ends here; paid off the mortgage in 6+ years. At this point, it’s a great place to live as far as we’re concerned (new roof, new furnace, new water-heater, new floors). If we must move, anything we get for it is money in the bank. Similar property, not as nice, just sold for 390 down the street. So there’s -some- logic to someone “holding out” for 400 - apparently still some suckers around taking the bait. These are totally out-of-whack prices for entry-level homes though, considering local incomes (central MA suburb).
All right! I like it! One poster on patrick’s said quite simply, “No, I am not interested in buying your “maxed out” credit cards”!
This is exactly what people have been doing. Living off their houses. Didn’t that used to be the other way around? I’ve also heard of it as “Making someone else’s retirement (one mortgage payment at a time).
I don’t really view Penny’s take on this as “rant” at all. It’s just the truth.
“Real estate agents are increasingly discouraged by an unwillingness among clients to lower their listing prices to spark more sales.”
Wonder if the fact these same agents promised them big returns has anything to do with their reluctance to trust them now.
The realtors really have egg on their faces . The cheerleaders were rah rah up until about 4 months ago . Why do they think sellers would sell lower now when the industry was lying to them about the excess inventory and the predicted uptick for 2007?
People were convinced that there was a limited supply of housing in 2005 ,only to realize now that short term flippers were taking up 40% of the supply planning to make a quick buck .
Some people in the “news” have said in essence that all we need now is to weed the speculators out of the market and than the market will return to normal . The speculators drove up the market for the last three years ,so what do you think will happen without that 40% demand ?Regular buyers can’t afford the prices anymore and we have excess supply .People are getting turned off by the adjustable notes now that they can see clearly those loans can go up . Buyers that can afford the fixed rate 20% down are limited now .We will have excess supply for a long time into the future ,( also counting the forclosures coming up the pike ).
Eventually the sellers will realize the truth of the market conditions but it will take time . Your still getting alot of NAR /realtor spinning going on to hide the truth that it was a bubble.
Sorry ….foreclosures not forclosures
thanks. it wasn’t clear before your correction.
Worse yet, what happens when that 40% demands flips to the supply side, as speculators try to unload their investments?
The sellers have bought into the hype. Realtors sold TOO well. Now everyone is a believer that we are running out of land, that real estate always goes up . . .
While a fall in home prices will damage the Boston economy, the soaring price of housing had done more damage.
Why do you think all the young families left the state? Because at a wage business could afford to pay, they couldn’t afford buy a house! And those who bought even though they couldn’t afford it have no money to spend on anything else.
We were renting in Amherst, MA, waiting for prices to drop. We finally decided to rent across the border in NH. $1100/mo for a three bedroom house - beats overpaying. The prices drops are starting in MA but have a way to go. In NH, price drops have not really started yet. Give it 2-3 more months.
Prices are dropping in the mountains and lakes region according to the Union-Leader.
Check out the zillow curves for addresses in Boston, then Amherst, then Berkshire county. Then compare prices to Columbia County, NY.
It shows a downturn in Boston, the very biginning of a slump in Amherst, and a preppy Berkshire village is still heading upwards. I judge from this that Amherst is about 6 months behind Boston, which, incidentally, is a few months behind Cape Cod.
Columbia County NY? Never went up much to begin with. It is like driving off a cliff to head west and out of MA. This puts the artificiality of this market in sharp relief, because upstate NY is the future of most of MA.
“After 5 Years of Growth, Home Prices Drop” - Washington Post: http://tinyurl.com/kprve
Now that everyone knows that real estate prices do sometimes drop, the new bull’s rallying cry is morphing into, “Prices will not fall by much before they come back. Now is a great time to buy before the market picks up again!”
“(Broker) Don Baker said, ‘If the house is overpriced, we tell them to go someplace else. There’s no sense in spinning your wheels,’ said Baker, who has been selling homes in Lynn since 1967.”
No such luck in California where realtor stock has gone up 50%. One out of 54 people is a realtor. LOL! More reason then any that YOU REALLY NEED to buy this $1M shack so the realtor can eat. There are still plenty of dumb buyers out there adding feul to the fire.
– Freaking Unbelievable
(realtors say buyers have been more reluctant to pull the trigger on a sale because a better offer might be right around the corner.’)
that’s the psychology that drove prices up, but obviously in a different way, and it’s what will drive prices down.
we’ve gone from panice buying to a wait and see attitude.
‘There’s a whole educational process going on right now, with sellers having to understand what’s been going on over the last year,’ he said.”
Hmmm. Our real estate hucksters expect that after years of spewing Orwellian spin, they can simply turn a 180 and expect everyone to stay on cue. Sorry, the hoi polloi internalize myths and find it difficult to jettison those that are most comforting. Sucks when the masses aren’t dancing to your silly tune any longer.
P.S. For those concerned that I am a flim-flamming real estate face jock based on yesterday’s post, it was not serious.
I was concerned and answered, but in a similar manner - I haven’t seen real housing bulls here for a long time. I don’t miss them either, becauser what we need is not all opinions but only reasonable ones, to discuss how this thing will play out: Not the if but the how long and how deep.
Regards,
Peter
I probably should have avoided that approach in one of my first posts. It’s like e-mail, you often can’t tell how to read something without tone.
In any event, I share the same goals you do. I try to avoid feeling satisfaction at the mounting evidence that the market may actually correct, but I truly believe that the actions of speculators (whether outright investors or people living above their means) has caused me–at minimum–inconvenience. I would like to be living in a home right now because I have a young baby, but I’m not going to lock myself into being a wage slave to bail out some moron who believes the world is a big Vegas casino. So I wait, save, and live in a 550 square foot shoebox until the market returns to normal. I’m also pretty sure that those of us who acted responsibly will end up bailing out some or all of the morons. The world is divided into those who go around dropping things and those who go around picking things up. This board is probably filled with a lot of the latter category.
> In any event, I share the same goals you do.
Now, it seems so indeed
> I try to avoid feeling satisfaction at the mounting evidence that the market may actually correct
I feel some satisfaction to have been right after last November when I thought about buying a house and stumbled over the housing blogs instead (Thank you, Patrick.net). My main concern, however, is to buy a house when it is appropriate after this housing bubble and to keep my job in the recession after this housing bubble.
> I would like to be living in a home right now because I have a young baby
We have young kids, too, but we raise them in an appartment, just as my parents did until their oldest was six. Granted, when our kids get older and into school and, later, become privacy-seeking teenagers, a house is a better place to be in than an appartment.
> So I wait, save, and live in a 550 square foot shoebox until the market returns to normal.
Keep up the good work. Maybe you’ll find some day even a better rental w/o need to stop saving.
> I’m also pretty sure that those of us who acted responsibly will end up bailing out some or all of the morons.
How do you think that would happen? Taxes on non-homeowners? Inflation to rob savers and save debtors?
Regards,
Peter
That’s a real question–are they actually any bulls left? I guess I don’t hang out on the right blogs for that stuff, but I can only imagine the quantity of glue you’d have to sniff to be a bull at this point in time.
In response to the last question posed by Peter above, I’m not sure how a “bail out” would occur at the macro level (perhaps through an expanded mortgage payment tax credit). However, even without a general bailout, some of us as individuals will be supporting those who took it on the chin. In my case, I have several immediate family members that drank the coolaid within the last year. I tried hard to talk them out of it, but they all thought I was crazy and overly conservative. I can imagine some of them being underwater in a year or two and needing help to get out. Whether it is from me or elsewhere, it will repeat the pattern of them always expecting someone else to pick up the pieces.
ChrisO Said: That’s a real question–are they actually any bulls left?
There are still some bulls on the Craigslist housing forum, although I’m not sure whether they are for real or not.
No worries. Most of us took your comments as satire and those that didn’t were having flashbacks to the unpleasant debates between bears and bulls of yesteryear. (Still a tender spot.)
Welcome and keep posting!
How far? Depends on the following factors: incomes, rents & interest rates. In short, when incomes & rents rise substantially from current levels and when interest rates fall enough to make the all-in carry cost of a home
… less than or equal to 120% of the market rent, then appreciation can again begin to be a factor. How long? Longer than many people can hold-on I suspect.
So many quotes to ridicule, don’t know where to start, ack! Should I make fun of David “it’s not a bubble it’s a balloon” Wluka, or how about this:
Real estate agents are increasingly discouraged by an unwillingness among clients to lower their listing prices to spark more sales.
And this:
There’s a whole educational process going on right now
Yeah, well who’s going to educate them of the fact that their “clients” can’t afford to lower prices because they have all their eggs in the housing basket? There comes a time when a trapped animal quits struggling to get free and just waits with resignation for the end. Most of these sellers have no equity or need what equity they think they have to survive. Those who bought houses to live in them bought long ago and don’t care one way or the other what prices do.
i think wluka, the baghdad bob of massachusetts real estate has finally cracked this week.
Boulderbo -
The press is making things in MA and CO look pretty grim. Is that what you’re seeing on the ground?
Mass looks pretty grim….too much so, to put a positive spin on it….I don’t see how things could improve in the short term…High Inventory, even HIGHER prices..I can’t see anyone going ARM, I/O, neg AMORT, etc., not with the MSM on the bubble brigade (finally)…
With the avg, median, whatever price (house or condo) in the Boston and burbs within 25 miles, somewhere around the $400k mark, the affortability factor is too much of an issue. The median income is around $56K, so unless one has a HUGE down payment, the PITI is just too high, even with a double income.
I can’t see people or companies staying or moving here, if affortability does not return. I don’t see it happening through mtge products or increase in incomes, so that leaves us at price reductions………………
Mort –
I am with you on this post. I believe the ultimate magnitude of the correction will be determined by how many would-be sellers will ultimately be forced to throw in the towel. A few will get lucky and find a clueless buyer to purchase before the capitulation phase, but many will just hold out at a price above market value until cash burn forces their hands. This is oh-so reminiscent of the dot com crash, when it suddenly became obvious to everyone that all these internet startups which wasted money on wild parties and other frills would never reach a level of profitability that began to cover their cash burn rates.
Nice to see the Daily Breeze in the South Bay (So. Cal) finally admitting that the situation is gettng worst.
“The statewide housing slowdown appeared evident in some South Bay cities such as Torrance, which saw 1.2 percent appreciation in June; Redondo Beach, 2.7 percent; and Gardena, 5.4 percent. Manhattan Beach saw the median price slip 0.3 percent in June.”
See article http://www.dailybreeze.com/business/articles/3426041.html
how long to return to 100 yr. real estate trend line? 15 years: c. 2020
how deep? -30% in healthiest nonbubble markets; -75% in worst-case, most bubbly markets.
i think we’ll hit close to bottom around 2008 after the big reset foreclosure tsunami and then bounce along the bottom for around 10 years before gradually recovering longterm trend line.
I would say there are no non-bubble markets, only those who have expanded less. I see ridiculous garbage even in places like Mississippi and South Dakota.
well, we can define a non-bubble market as one that only loses 30% of it’s value from the peak!
I can be in my dreamhouse for 15 years if in 2008 it is $200,000 instead of $800,000. But even I don’t see prices falling that far that fast.
However, I am planning to buy a house I can be in for at least 15 yearsin order to wait out this market! Because the harder it falls the less people (sheeple) will want to buy in.
no, of course — it will take until 2012+ before the last drop of 25% is rung out of the market. at least if the 90s were any lesson….
“‘You can’t keep going up forever, at some point you hit the wall,, MAR President David Wluka said. ,There comes a point where buyers say: ‘We can’t afford to buy this,’ or ‘We’re not going to pay that.’”
Wait a minute……I thought that real estate ALWAYS goes up!!!!
I thought if you went up you would hit the ceiling.
or run out of oxygen and die.
“According to a handful of local realtors,there’s plenty of stock to choose from right now because people tend to sell out of necessity or because of life changes, not because the market is hot or cold.”
There are always plenty of reasons to sell: death, divorce, job changes, financial difficulties, etc.
We all have to live somewhere, right?
But renting can work just fine for most of us. We do not have to buy…
“But renting can work just fine for most of us. We do not have to buy…”
I would amend this to say that renting can work fine for ALL of us. The “need” to buy is purely psychological. Once people accept that it is a “want” and not a “need”, people will get more rational in their financial decisions about shelter.
Amen Amen Amen!!!
It’s sad to see people go crazy comparison shopping when buying a $300 TV, but then let emotion and sentimentality dictate the biggest purchasing decision they’ll ever make.
I don’t claim to be a ’superior’ that way–for awhile I was one of those folks who thought that crazy housing prices would be permanent and that I had missed the boat. In that sense, I guess my wife and I were “fortunate” enough to have so much student loan debt that we couldn’t even qualify for a toxic mortgage.
What turned the lightbulb on for me was simply wondering who the hell was buying $600,000 houses. My wife and I make decent money, but even with zero debt we wouldn’t have been purchasers. It eventually started to dawn on me that this ‘new economic model’ was actually modelled on the Hindenburg.
http://tinyurl.com/mp483
Sorry it was worth a repeat
There has never been a boom or bust that has not been directly related to the expansion or contraction of the money supply.
Milton Friedman