‘People Want To Believe Things Are Still Going Up’
Some housing reports from the northeastern US. Rhode Island, “As housing inventory builds and the pace of sales slows, some local condominium developers are turning toward a market segment that was somewhat neglected during the housing boom, low- to middle-income workers, even as development continues on a number of high-end, high-profile projects.”
“‘There’s an abundance of condos on the market right now; a lot of them are [former] mills,’ Sahagian said. Rhode Island condo listings this spring jumped 76 percent from a year ago, and in the Providence metropolitan area, which includes parts of Massachusetts, more than 900 new condominium/townhouse units are under construction, and another 2,500 units are planned.”
“In Warwick last month, a Toll Brothers plan to build 395 condominiums at the former Rocky Point Amusement Park was withdrawn. Jason Witham, assistant VP of Toll Brothers’ New England division, said, ‘We elected to rethink our plan.’”
From Vermont. “Developers are moving forward with plans to build hundreds of new residences in Chittenden County despite a weakening housing market. Local real estate analysts said median home prices in Chittenden County fell for the first time in a decade.”
“There are a lot more houses in Chittenden County than there used to be. About 1,200 houses, apartments and condominiums have materialized in South Burlington since the beginning of 2000. Brian Shupe said he can’t help but worry about the viability of these projects. ‘It would be unfortunate that just as we get it right, the economy kicks the legs out from under it,’ he said. ‘There’s still a need for housing,’ he said.”
“The vacation and second-home market in Vermont is showing signs of a slowdown. In the Stowe market, (realtor) Ken Libby said he’s ’seen a 30 percent increase in inventory in the past four months.’ One day last week, there were 116 single-family homes listed for sale in the Stowe area compared to 60 homes the year before. There were 75 condos for sale compared to 35 last year at this time.”
“On the new construction end, a Ludlow builder said while he remains busy there’s no doubt that second home construction has tapered off. ‘Overall there’s been a slowdown as you can tell by the amount of building permits being issued,’ said Doug Burns, a builder of vacation homes near Okemo Mountain Resort.”
From Pennsylvania. “A year ago when Betty and Lee Castle placed a deposit on a retirement community property, they began to think how much they would ask for the Allentown house they had lived in for 30 years. They’d read about the frenzy in the real estate market, and figured it would hold.”
“Fast forward to now: Their 1800s stone farmhouse on the border of Allentown and South Whitehall Township has been on the market for four months, and two price reductions haven’t made a difference. ‘We should have sold a year ago,’ said Betty Castle.”
“The shift in the market is catching some homeowners by surprise. ‘People want to believe things are still going up,’ said Loren Keim, who has offices in Allentown and Bethlehem. ‘It will take time for people to get used to it.’”
“The sheer number of homes on the market allows buyers to be choosier. New listings soared 23 percent in the first six months of the year, compared with the same period in 2005. And last year was a record for new listings, with 13,822 homes for sale.”
“‘Everyone has seen the crazy ones sell on their block for an outrageous price. It is a little bit hard to be realistic,’ said (broker) Angela Brown in Hellertown. Many real estate agents say they have been counseling sellers to lower their expectations. Often it is a hard message for owners to hear. ‘I tell them they need to reduce the price, but they don’t want to listen to me,’ said Pete Ramos, president of the Lehigh Valley Association of Realtors in Bethlehem.”
“Economists say there is no danger the Lehigh Valley housing market will crash. But try telling that to the Castles, who are 10 weeks from closing on their new retirement home in Northampton. They don’t have a whole lot of room to negotiate on the $339,900 asking price of their farmhouse because they need the money for their retirement home.”
“Lee Castle has begun to gather information on bridge loans, in case the house does not sell before the closing of their new home. The Castles’ real estate agent, Suzanne Superka, shares their frustration. ‘I’m at my wit’s end,’ she said.”
Great article.
http://www.contraryinvestor.com/mo.htm
Scary article. The last two charts are eye popping. If you know people who are still drinking the kool aide (and I know a few ), show them those graphics.
“Jim Beenders, a financial adviser whose townhouse in Bethlehem Township is for sale and ….
“He is confident his asking price of $271,900 is on the mark because real estate agents soliciting his business say they would have marketed it for more. Nonetheless, he said, ‘We can’t seem to get a buyer in the door.’”
Jim - What is WRONG with this picture? Your confident - but you can’t seem to get a buyer? Sorry dude, you’re in DENIAL.
funny…. I usually determine whether or not my judgment is appropriate by the outcome. If you are selling a house the way to determine if your price is appropriate is by selling the house.
He has his house priced at $271,900 and no buyers coming to the door… looks like he’s got the wrong answer.
But it is funny that he has equated Realtwhore opinions with being correct measurements of his good judgment. ;-D
makes me chuckle just a little…
A follow up 6 years later….we did sell for $267,900. Our price was right at the time. It is all about timing sometimes…
Comment by athena
2006-08-13 09:46:02
funny…. I usually determine whether or not my judgment is appropriate by the outcome. If you are selling a house the way to determine if your price is appropriate is by selling the house.
He has his house priced at $271,900 and no buyers coming to the door… looks like he’s got the wrong answer.
But it is funny that he has equated Realtwhore opinions with being correct measurements of his good judgment. ;-D
makes me chuckle just a little…
(Comments wont nest below this level)
After looking at those two charts, I don’t see kow the industry spin can keep the Ponzi scheme going. It’s all played out. The supply of suckers is rapidly declining. As evidenced by the plummeting sales statistics. Throw in adjusting ARM’s , flippers trying to get out, and a probale recession around the corner, and you don’t an enviroment that’s condusive to price appreciation.
I’m convinced that when the Fed starts lowering rate, the industry will spin it as “A great time to buy, before prices go up because of falling rates”. But we’d be starting from already unaffordable prices and a lowering by the Fed would be out of fear of recession. A looming recession doesn’t exacting inspire people to go out take on bigger morgates, when their worried about their jobs.
The industry spin technique is to always create a ” Sense of urgency” for buyers. “Prices are going up”, “Rates are going up”, “Your going to be priced out forever”. It’s a basic sales technique, and it’s been used very effectively the last several years. It’s going to be interesting to see how they spin going forward, to try and create a “Sense of urgency”.
Your spot on ,the urgency is gone.The spin won’t work anymore because people can already see that real estate can go down .
“Hello lucky homeowner. I am the Equity Fairy. Yes, all those stories you heard are true. Just place your primary residence under your pillow and in no time at all you’ll wake up and find a huge pile of money; as much as you ever wanted or needed. How do Ido it you ask? Easy, volume and margin. At first it was easy but now with both volume and margins eroding your dreams may take awhile. I hope you don’t mind.”
How do we hear so many stories like these of the Castles? They’ve been in their home for 30 years. You would think they would have been old enough to know better. It seems that the Real Estate sickness has cut across age, gender, race and religious lines. It has not discriminated. It has infected everybody.
The saddest part is that they don’t have wiggle room to negotiate off of $339,900. Oh, I guess I had better give you an offer at that figure to make up for your poor planning. I don’t care what anybody says, they deserve whatever bad befalls them. Stupidity, especially right before retirement, is less excusable than stupidity of a 20-something that has never been out in the world. “This time it was different” will be on a lot of tombstones.
Stupidity, especially right before retirement, is less excusable than stupidity of a 20-something that has never been out in the world. “This time it was different” will be on a lot of tombstones.
I concur, the funny thing about greed is that there is no age discrimination. So from my point of view, no matter if your 18 or 80 stupid moves produce the same out come.
One of theories as to why stocks and housing are still holding at these high levels is denial of their own mortality amongst boomers. The theory goes they are holding agressive portfolios/investments well past ages when people traditionally switched to more conservative strategies.
I like that theory, Robert. I believe there is a strong link between our individual genetic inclination to deny our own mortality, and the collective delusion that a speculative boom can last indefinitely.
the boomers are still high and still delusional…but their bodies can’t take it anymore:
http://www.treatmentonline.com/treatments.php?id=692
But hey when things get really bad, they can always click heels and chant “no place like home”
anybody know what the economy in Allentown PA is like? I’m a little out of date on that front as my most recent info comes from Billy Joel.
(has the bubble turned it into a suburb of NY??)
Well we’re living here in Allentown
And they’re closing all the factories down
Out in Bethlehem they’re killing time
Filling out forms, standing in line
Well our fathers fought the Second World War
Spent their weekends on the Jersey Shore
Met our mothers in the USO
Asked them to dance, danced with them slow
And we’re living here in Allentown
But the restlessness was handed down
And it’s getting very hard to stay
Well we’re waiting here in Allentown
For the Pennsylvania we never found
For the promises our teachers gave
If we worked hard, if we behaved
So the graduations hang on the wall
But they never really helped us at all
No they never taught us what was real
Iron and coke, chromium steel
And we’re waiting here in Allentown
But they’ve taken all the coal from the ground
And the union people crawled away
Every child had a pretty good shot
To get at least as far as their old man got
But something happened on the way to that place
They threw an American flag in our face
Well I’m living here in Allentown
And it’s hard to keep a good man down
But I won’t be getting up today
And it’s getting very hard to stay
And we’re living here in Allentown
-Billy Joel
“ …..some local condominium developers are turning toward a market segment that was somewhat neglected during the housing boom, low- to middle-income workers …..”
I thought the segment that was somewhat neglected was responsible low- to middle-income lending …..
I wonder what those low to middle income condos are going to look like? I see vinyl floors, plastic laminate counters and home depot cabinets. Gasp.
Don’t trash talk modern building materials. Prices for everything except raw materials have plummeted. Bathroom fixtures, countertops, cabinets, windows, doors, light fixtures, all are available in variety, quality and prices that bestow benefits to all. But like most things the “savings”doesn’t show at the bottom line. Instead people buy bigger homes or just more or they upgrade from formica to granite like I did last week.
Of course, anything worth doing gets overdone. No we have a nation of DIY homes that that their mantainence staff (homeowners) think is worth 120% of the improvements. This stuff at best is going to return a fraction invested and for the next several years may only be worth the difference between the rare house being sold and the rest sitting on the market.
Anyone who complains about the WalHomeCostDepot needs a history lesson of only 30 years when a trip to the plumbing supply or hardware store yielded “choice” of 2 bathroom sink faucets and three kitchen sink faucets at 1976 prices where the cheeapest cost more than than next to the top grade 2006 models with dozens of selctions.
I’ve been in the construction business for over thirty years, and I agree in general with your observation. In the not too distant past, pre-depot years (anybody remember Builder’s Square-the first real big-box home improvement center?), materials had to be purchased from lumberyards and crusty hardware stores. Yes, the choices were limited. Professional knew how to get the good stuff but the weekend warriors pretty much took what was available. Now there’s a mind-numbing assortment of everything you could ever want. In many ways that has hurt the homeowner because they end up using materials that cost more, and need more upkeep and maintenance. How many people need oak trim, granite countertops, stainless steel appliances? In my last house I used pine casing and trim from a local mill, concrete countertops, and Kenmore appliances. I saved a lot of money without sacrificing anything I wanted. I rarely shop at the “depot”, but they do have some pretty good buys from time to time.
Contractors Warehouse this week I bought an 8ft sliding glass door. Double pane, tempered, e-glass in a new construction vinyl frame that nailed in true and square with about 15 minutes x 2 of semi-skilled labor. $495. Unf-ing believable. In the olde dayes the casing/frame would take half a day of a real carpenter and $250 of material. The delivery charge for an oversize item like this would have run $200. Don’t even know what glass this big would have cost, a lot I’m sure. A $600 slider that would have cost twice that much in then dollars with an R-13 instead of R-2?
Same project (I built an office in the backyard, I’ll post pics at my blog in a few days) I got thee proverbial granite counters. 16 feet running with full bullnose and backsplash, $450. Again, built counters would have run that much in labor. Even formica would have cost $208. I needed the surface for chem and heat anyway. This is all part of the greater “consumer myths” syndrome; “thet don’t make ‘em like they used to.” Yes, and thank goodness.
It is sort of funny how granite counter tops are all the rage for the last ten years. People spend big bucks on these things. In Italy they have been installing this stuff for thousands of years.
David, they used the best materialfor the job that wwas vailable and affordable. Slaves in the marble pits were cheap. Wood from Lebanon was expensive even if it weren’t confiscated forwar engines and ships. Corian and synthetic stone are the surfaces of choice but stupid market restrictions keep it too expensive. The current rage in stone is trifold the wealth effect, the drop in price and middle class thinking they are emulating the upper classes. Same thing for flooring.
“Even formica would have cost $208. I needed the surface for chem and heat anyway.”
Meth lab?
Now there’s a recession-proof business.
(And before y’all go PC - I am just kidding!)
Meth? Nothing so mundane. I’m trying to genetically splice an animal realtor hybrid. Why realtors? One, there are lots of them, two they’ll do just about anything on commission and finally simplicity, they have only two moving parts, one at each end and those are interchangeable.
To the Castle’s - if anybody is even remotely interested, THEY will determine what they are WILLING to pay for your 200 yr old POS. They will not give a RAT”S ASS what you NEED for your new retirement home. It is a completely separate issue. Over and out.
I don’t know the specifics of their house, but mine is 150+ years old, and I wouldn’t trade it for a newly minted POS. My old log & stone house stayed bone dry in recent torrential rains, when mostly all the newer ones nearby had nasty flooded basements.
Everyone wants to live in the Lehigh Valley Right????? They have…………….Old defunct mill towns and …………..well it’s north of Philadelphia anyway.
…well it’s north of Philadelphia anyway.
Not far enough.
Perhap people wanting to see the market continue to rise is like a person that just broke-up with a significant other… whereas they feel pain and keep having visions that they’ll get back together?
But in the end, they don’t get back together… and they must pick up the pieces and move on.
Good analogy …. one of the thing that concerns me “This Time” is that so many properties were purchased for investment …… and the owners are not RE investors. Too much emotion will be wrapped up in them ….. Kubler-Ross process may be slow and painful, with a lot of folded arms and scrunched faces.
We were unhappy as hell in the 90’s when our property wasn’t appreciating like it should (actually dropped 25% - at least), but us simple ‘one home’ folks were more equipped to handle it financially. No one to be angry with, but I’ll admit I lost a little sleep …..
The true RE investors just yawned through the whole cycle.
I’m going to join them this time…..
“Economists say there is no danger the Lehigh Valley housing market will crash.”
I’m embarrassed to be an economist.
On the other hand, perhaps I would be more chill if they sent me some of whatever it is that they are smoking.
“Give me a one-armed economist” -Harry S. Truman
Brian Shupe said ‘It would be unfortunate that just as we get it right, the economy kicks the legs out from under it,’ he said. ‘There’s still a need for housing,’ he said.”
Hey Brain, you idot - you mean the greedy builders / flippers get it right by the high prices you created with the ‘it only goes up’?
‘We should have sold a year ago,’
You’re right, you should have. Now the trick is to slash the price to circa-2000 era pricing. If you’ve been in the house for 30 years this shouldn’t be much of a problem. Nobody said the gains of the last few years were permanent. Oh wait, the Realtwhores actually did say this. Well, they were wrong and it’s time to get with the program.
“It is a little bit hard to be realistic”
I’m not sure why people have such a hard time accepting the new reality. Maybe it’s all those years of Realtwhore brainwashing or something, or the thought that a house can make you a bunch of money for basically doing nothing(?!?!?) When I hear crap like this I start thinking the only way for this bubble to end is badly (bunch of foreclosures.)
The Castles’ real estate agent, Suzanne Superka, shares their frustration. ‘I’m at my wit’s end,’ she said.”
I THOUGHT THAT SUZANNE “RESEARCHED” ALL OF THIS….
“I’m at my wit’s end,’ she said.”
Evidently not a very long trip.
I can’t believe it, still, just last night I heard, “you know, they’re not building anymore land!”
That would make sense if:
- nobody ever died
- nobody ever moved
- nobody ever had a change in lifestlye
- nobody ever took a paycut
- nobody ever took a pay raise
- nobody ever took a new job change
- nobody ever got divorced
- nobody ever got marriaged
- nobody ever had a baby
- rates never changed
- moods never changed
- the weather never changed
You get the idea…
All across the nation they realy are making more land. The evil US urban planning cadre calls it infill, upzoning and other such doublespeak. In Greater Boston “swamps” have been filled in and waterways rechanneled to put housing in places that our forbears knew better than to even touch. The California coast is choked with pylon houses and the hillsides crowded with retaining walls and ridge cuts. It isn’t just the 87% of undeveloped area in thiscountry, the developed areas are by fiat and engineering creating more land.
And around Vegas the US Government is starting to sell land. Wait until the foreigners stop loaning us money and the feds get desperate for cash. 90% of raw ground in Arizona, New Mexico and Nevada will be for sale!
Or in the case of allentown it would make sense, if mines never ran out of coal and tons of the light and heavy industy was not moved to communist china.
The mines never “ran out.” Using Pennsylvania Anthracite was justeventually revealed to be about as smart as smoking corn silk with asbestos filter tips. Centralia still burning? Yep.
Sorry for the typos… got goin’ a little crazy there. Feel free to add to the list.
Nobody ever lost their job
Nobody ever lost their medical coverage
Nobody ever got sick
Nobody ever had to take care of a parent/family member
nobody ever went to jail
nobody ever gets called to serve in Iraq
I was just listening to the radio (97.1 in LA) and there was a commercial for Beezer Homes in Santa Clarita Valley. Thier come on was you can get a home and have no mortgage payment for 6 months, JUST LOWER THE PRICE-IT IS INEVITABLE!
“He is confident his asking price of $271,900 is on the mark because real estate agents soliciting his business say they would have marketed it for more. Nonetheless, he said, ‘We can’t seem to get a buyer in the door.’”
Forget about what the real estate agents say they would have marketed it for — if you can’t find a buyer, then the home is listed at too high of a price.
“Fast forward to now: Their 1800s stone farmhouse on the border of Allentown and South Whitehall Township has been on the market for four months, and two price reductions haven’t made a difference. ‘We should have sold a year ago,’ said Betty Castle.”
Imagine how many times the following phrase will be spoken over the next few years, “‘We should have sold a year ago’”….
“We COULD have sold a year ago…”
“We WOULD have sold a year ago…”
(”…but we thought the RE market only goes UP.”)
But you DIDN’T sell a year ago…
And he has committed the bonus bad move of having bought another house before selling the one he’s in now.
“SO+B” Seller Owner plus Buyer
Always the stupidest of moves- even in an up market.
How did these 2 morons put themselves in the position of needing over 300k from their old house to justify the purchase of their retirement house? Old house is heloced? Paid way too much for retirement house? What the H were these clowns thinking about besides raking in big dollars on their old crib so now I can buy that shiny new house with all the cool stuff.
You can’t expect them to park those old cars in the new driveway….
Brings down the neighborhood values …..
Right, because you have to remember that all retirees NEED a new Lamborghini. . .
“……what the H were these clowns thinking …..”
Remember, if they lived in the house for 30 years, they likely missed all the exciting RE cycles in this millennium. Sort of like having to go out on a ‘first date’ again at age 65 …. you have probably missed a lot. It is different this time, it’s going to be a shit load worse !
(no excuse for their dumb-ass behavior intended)
Just saw this feed…interesting with all these years behind us…it turns out we did sell our house for $267,900. I was not in that much denial at the time as we had a wonderful home and found the a willing buyer.