‘They Don’t Want To Buy, No Matter What The Price Is’
DNR Online has this report from Virginia. “The housing market has flattened, those who work in real estate say. ‘The housing inventory is the highest in years,’ said Don Earman, financial consultant with CTX Mortgage Co. of Harrisonburg. ‘Many sellers are actually lowering their prices since it is taking longer to sell homes.’”
“Home sales were down 5.9 percent in July and down 1.7 percent in the first seven months of the year, according to the Harrisonburg-Rockingham Association of Realtors. Other parts of the state have taken severe hits. In Winchester, home sales were down nearly 30 percent for the first seven months of the year. In the Dulles area, that number is 36 percent.”
“The biggest declines will be the high-end homes, because fewer buyers are willing and able to make the purchase, experts say. Builders will suffer because they can’t afford the carrying costs of finished houses sitting on the market.”
“The boom-based pricing is ending because housing shortages no longer exist, Earman said. Some buyers may be waiting for prices to drop, which has happened in Northern Virginia in recent months.”
“Earman doesn’t think that will happen here; he says the appreciation rates will just return to a more normal pattern. ‘The boom is over,’ he said. ‘And the boom-based pricing is going away.’”
And Morningstar has a new report out. “Sales and home prices fell at a faster clip than expected and inventories climbed further in August as the housing market continued to deteriorate, according to a Banc of America Real Estate Agent survey.”
“‘Consumers are shifting from a mindset of waiting for a better price to one where they do not want to buy at this time, no matter what the price is,’ the study said.”
“The study also found that prices fell sequentially for the 11th consecutive month. Prices tumbled in 82% of the markets surveyed. In July, only 79% of the surveyed markets fell. The use of incentives continued to rise, hitting record levels. The amount of inventory rose in all markets, except Austin, in August.”
“‘Consumers are just of the mindset at this point that it is not the time to be buying a home and this becomes increasingly problematic for housing,’ Raymond James analyst Rick Murray said. ‘Inventory levels right now would suggest that this downturn is probably going to last a period of years as opposed to quarters,’ the analyst said.”
‘ Virginia’s IT industry work force lost several hundred jobs in July, as mergers and consolidations cut the number of positions. The Virginia Employment Commission says the information technology industry in the state shed 1,200 jobs last month. The housing slowdown also caught up with the construction industry, which lost about 300 jobs last month.’
wierd IT is hiring in VA ,but I’d bet the construction thing is under est. because many are illegal
And I don’t think AOL (headquartered in N Va) has released the guillotine blade on its previously-announced layoffs yet.
Don’t forget about the Verizon-MCI buyout. MCI has a huge campus in Loudoun and I’m sure there will be some more asses harvested from the cubical farm.
AOL throws off tons of cash but they have a shrinking customer base that will continue to require cuts. Their dial up business model is dead and AOL is too big of an organization to make the radical changes necessary to make it.
I live in Norfolk, VA and get calls from recruiters DESPERATE to get Sun Solaris and Linux people up in the Northern Virginia area. So to me it doesn’t seem like the IT job market is that bad. Of course, I’m not sure what role security clearances play in it.
They’ll find them in Bombay soon enough…
Desperate? Sun’s been laying off for what
seems like forever. Seems that Solaris folks should be easy to find. I worked on Solaris several years ago and then we went with Linux. Something like a five times performance improvement for one-fifth the cost. Maybe the universities are pumping out too many Windows folks.
They should call folks getting laid off in
Silicon Valley and Massachusetts.
Will these numbers EVER show up again in the monthly employment report?
“The study also found that prices fell sequentially for the 11th consecutive month. Prices tumbled in 82% of the markets surveyed. In July, only 79% of the surveyed markets fell. The use of incentives continued to rise, hitting record levels. The amount of inventory rose in all markets, except Austin, in August.”
I live in Austin and work in the City permitting office. It’s estimated that at least 1.3 of our housing demand is out of town speculators. The housing bubble has officially moved to Austin - which is terrible news.
This is what I love about this blog. The on the ground reporting is simply amazing! The REIC and the MSM can spin all they want but we have honest reporters from all over the country and the world!
1.3 percent?
I assumed one key over 1/3?
Oops - yes 1/3
one third
I moved to Austin from Long Beach, CA in early 2005. If there is a housing market bubble in Austin, it’s only on the lower priced homes. In my neighbouhood near the city center homes priced over 400-500k sit for a few months or more before they sell. I know some CA based friends that bought homes under 200k for rental purposes, so that could be where a lot of the demand comes from, but I wouldn’t say that’s going to affect the whole market nor would I say there is any sort of true housing bubble in Austin.
Hmmm….no offense CanukinTX, but I’ve noticed the exact opposite. I rent a duplex in Travis Heights and I have noticed more houses on the market, and several of those that have been for sale more than 6 months. I was over in Tarrytown 2 weeks ago and saw pretty much the same thing. We’ll see how it all plays out but I think you could see price declines in Travis Heights and Tarrytown in the next year.
I’ve got a second home/SFH in Austin and am worried about all the new condo projects, including high rises, that are being announced, which may glut the 1- and 2-bedroom housing market in town. I wonder if they will all go through or if some of those will begin to wait out the uncertainty…
I think we’re agreeing Hondje. I was disagreeing with the initial post that Austin is in a housing bubble because I’ve had two brand new homes for sale beside me in Tarrytown for over 3 months, not to mention other homes in the area still sitting. If things are being snapped up in Austin it’s only lower priced homes, not the high end. At the same time, we paid about the same price for this home as it was sold for in 2001 (when it was built), so it’s basically been a flat market since the boom ended, at least in my area.
Actually - as you have noticed there is a lot of new construction going on. As soon as these lots are permitted, they are bought up by speculators. The lots are bought up even before the model homes are built. One subdivision I worked on sold out in weeks - just people buying paper lots. It’s hard to say who is a speculator and who is not. However, the frenzied pace of out of town buyers does indicate speculators. Also, most “real people” do not just drop 20% on a paper lot within an hour of seeing the site. The action is really really hot in the Circle C area. Houses in that area sell within hours. I also know that the redeveloped Muller Airport has a tremendous amount of interest - lots of calls from RE agents asking “when are you guys going to start selling”. I bet Catellas has buyers lined up at 8 am the first day of business.
It’s always “different here” — we on this blog have noticed this a lot.
You left out:
1. All the boomers are moving here
2. All the rich people are moving here
3. Foreigners are all moving here.
4. We have a better job market here.
and on and on….Austin has (and I am not bashing the city) the same thing every other city has, and that is free money in the form of toxic loans.
Welcome to the club
Depends on your point of view - I lived in Austin until 2004 (worked five years for the electric utility department) then decamped for Indianapolis, then San Diego. We want to move back in about four years. Sounds like we will have a big selection of houses to pick from, after speculators flood the market with inventory.
Funny, because Austin was bubbly when I moved there in 1999, from the dot-com boom, then tanked in 2001. Sounds like it’s picking up again. DOn’t worry, though - I make sure to tell everyone in California I meet about the heat and traffic, to keep them away…
While you’re there, be sure to tell them that Seattle is nothing but rain, darkness and meth labs.
“.. Some buyers may be waiting for prices to drop…Earman doesn’t think that will happen here; he says the appreciation rates will just return to a more normal pattern..”
I guess with a name like Earman , he can’t be deaf.. just friggin’ blind. What a maroon!, as Bugs would say. Can people , employed in the RE industry no less, really be this obtuse? Or are they all pathological liars?
Can people , employed in the RE industry no less, really be this obtuse? Or are they all pathological liars?
Probably a bit of both as a group. But money is most of them being liars. The gold rush has certainly attacted airheads, but there is no way any business savvy person could not see the signs by now. He is really saying “it is a buyer’s market!” though he knows as well as us that anyone who buys now will likely be upside down before escrow closes. Slimeball.
Maybe this is how California got it’s Whacky Airhead Capital of the World status, similar types running out there to dig gold in 1849.
“The boom-based pricing is ending because housing shortages no longer exist, Earman said. Some buyers may be waiting for prices to drop, which has happened in Northern Virginia in recent months.”
“Earman doesn’t think that will happen here; he says the appreciation rates will just return to a more normal pattern. ‘The boom is over,’ he said. ‘And the boom-based pricing is going away.’”
If the boom-based pricing goes away then how do prices not drop? It’s scary to think how clever some of these people think they’re being with this kind of double-talk.
“appreciation rates will just return to a more normal pattern..”
I challenge anyone who whips out this BS line (you hear this one a lot from the So Cal crew) to find me a time in our RE history that prices have shot up 100% - 200% and higher in less than 5 years time and then just started appreciating normally from there. Go look up the hisory of real estate prices, find the mean curve, and point me to a place on the graph where this has EVER occured. When idiotic asses like this joker spew this crap it all it proves is that it places them firmly in the “it’s different this time” camp. Sorry, I’ll trust historical averages any day over some fool who bases his predictions on wishful thinking. Oh, and how often is the mean curve proved wrong. I wouldn’t bet against it.
the closest was just after WWII.
But that was a recovery from the drop during the Great Depression - i.e. it was a return to the mean curve, not a deviation from it.
Well said. But see post above. They are not fools, they are scum.
It’s the same thing stock analysts said in the late 90’s. “It’s different this time”
The price spike after World War II was caused by US Government housing subsidies given to returning GIs, who inflated the price due to lower supply. Today’s market is more like the 1970s and 1980s price spikes, which both returned to their pre-spike levels within a few years.
1 - “The boom-based pricing is ending
2 - because housing shortages no longer exist, Earman said.
3 - Some buyers may be waiting for prices to drop
4 - “Earman doesn’t think that will happen here;
5 - he says the appreciation rates will just return
Then another report; “Sales and home prices fell at a faster clip
Mr Earman of course is a looooser. Trying to give himself some
‘HAPPY TALK’!!??
I live in Winchester. Not only are sellers still drinking the kool-aid, they are smoking crack as well. They still havent grasped that the great game is over. They will though.hehehe. They will.
They Don’t Want to Buy No Matter What the Price Is
Ha! Amazing change in sentiment in one year or less!
I’d buy at the right price, no problem. I just haven’t seen it.
Agree with txchick’s observant post!
From what I’ve seen, sellers are just “lowering” their asking by 3k. Maybe 5k. That is NOT enough, sellers! What I want to see is lowering your asking by 100k *at least*!
The fact that *you* overbought is NOT my problem.
“I’d buy at the right price, no problem.”
Ditto — let one go by just last week — a Greater Fool was willing to pay more than my lowball valuation. Yawn. Maybe I’ll buy it from the GF in 2-3 years when his ARM aches.
I’d buy here at the right price. Say, a 50% reduction. Houses in Rancho Santa Margarita are very very slowly coming back down to earth, but it will still take years. Just saw one listed for 525K. Still alot, but quite a shave from the 750K I am used to seeing. Shave another 225K off of that, and at 300K I might start looking. You would def. get a little of lookers at that price.
I’ve been snooping around Robinson Ranch in RSM and like what I see. Last year, there were about 4 houses in the neighborhood for sale, all priced near $800,000. The cheapest one (on Winchester) sold for, I think, $739,000. Now there are about 30 homes on the market, with plenty of prices in the $600K-$700K range, only a handful of nicer view houses north of $800K, and one that just ducked down to $599K.
Now, I checked on Zillow.com and noticed that one of the nicest houses in the neighborhood — high on the hill, big lot, big house — last sold in 1999 for $372,000. With a healthy annual appreciation of 7%, it shouldn’t be worth more than $600,000 today.
In other words, as much as the neighborhood prices have fallen, I think they’ve got a ways to go, like about 25%. Once they get close to that number, I’ll start looking for a bottom.
Sellers should walk into Kohls and look at the discounts on last season’s merchandise and price accordingly. Kohls prices old stuff to move as it costs them floor space and carrying costs to hold it.
“I’d buy at the right price, no problem. I just haven’t seen it. ”
This spot on for me. I just a guy that needs a house, I have what I need in mind. Once the house is right and the price is right , I will strike and never look back. I will not care if I get the cheapest house. I will not waste time picking the dead bottom. I did not pick the perfect top …..but was in the mid 90% tile and would love to do that good on the bottom fishing!
For me I only got one bite out of the apple and will wait for now. Good luck to all others. In a year or so after the long timers and the lurkers are done breaking thier arms patting themselves on the back for being So Right…….. The Debate will switch to “when to buy?” Who will be right? Who will be wrong? For all the chatter now as events unfold, this will be the next real issue.
They Don’t Want to Buy No Matter What the Price Is
I assumed this reflected a change in job security confidence level. Less people want to tie up capital, set down roots if they fear job loss.
“‘Consumers are shifting from a mindset of waiting for a better price to one where they do not want to buy at this time, no matter what the price is,’ the study said.”
Psychology works both ways. Fear and greed on the way up and fear and greed on the way down. I think the last boom was so, so strong, folks forgot that RE is cyclical.
Buyers can;t buy..because sellers aren’t selling.
I have to sell my home before I can buy another…has returned!
Oh & because I can’t get my price, I can’t afford to buy…has returned!
It’s normal again!
To paraphrase mr. Earman…..who should have said…if we {sellers} just hold the line prices, we will keep prices above trend {by 100%}
“The study also found that prices fell sequentially for the 11th consecutive month. Prices tumbled in 82% of the markets surveyed. In July, only 79% of the surveyed markets fell. The use of incentives continued to rise, hitting record levels. The amount of inventory rose in all markets, except Austin, in August.”
I live in Austin and work for the City permitting office. It’s estimated that at least 1/3 of our demand is out of town speculators. The real estate bubble has enclosed Austin - which is terrible news for the local economy (long term). Like eating candy all day long - it feels great but has no nutritional value.
Great post!
Roger — thanks for the news from the inside. I hope your counterparts elswehere contribute as well.
Yea, that was another place that was talked about a lot at this function I attended this weekend. What is so special about Austin?. I almost thought I was missing the second coming of the gold rush. I couldn’t remember if TxChick had mentioned Austin here or not. One guy told me he had bought 7 properties down there. Seemed pretty proud of himself. He heloc’ed the primary which for me is a no no. I believe in having a ton of equity in the primary if your able and he was. He put down from his account a total of $50k on each house so in his mind he has at least 15% equity in each property. He never mentioned profit, just break-even or negative cash flow or in it for the long run and appreciation(sp? brain freeze). What is the rent like down there? He did admit he was negative on a couple pieces. But in my mind the numbers weren’t really adding up. EX: Between the high-end and the low-end what is the average rent for a 3+2? I couldn’t imagine it being $2,500.00+ per month.
A friend of mine has a brand new rental in San Antonio, and he only gets about 1650 a mo. I highly doubt you could rent a 3+2 for $2,500 anywhere in the Lone Star State!
Oh, the out of state bagholders are trying to get those prices. Trust me. But they sit and sit and sit.
But…but…renters pay $2,500 in Costa Mesa! You mean they don’t everywhere?
God no. In Austin? You’re lucky if you can get 12-1400/month.
Ok, now it makes sense he’s option arming and paying the lowest payment that he can waiting for the increase. He lied and told me he wasn’t might, have been due to the discussion that was had prior to me talking to him about how great option arm loans were… A lot of people in this particular group were not aware of the neg-am aspect. Never knew faces could contort like that. He put cash down to make them break-even thinking that the neg-am on the back end doesn’t matter because when he refi’s he’ll be ok when the price increases. He’s a spreadsheet junkie like the Jeff guy on the San Diego board. Amazing
Last few months totals have dropped off at end of month. Look at numbers now. Unless ZR has added another state total is up 25k in a couple of days. Somebody must be working overtime at FOR SALE sign company.
mid may was 799,000
6/10/06 was 836,471
6/14/06 was 840,935
6/17/06 was 846,120
6/20/06 was 850,317
6/22/06 was 855,892
6/24/06 was 860,647
6/29/06 was 866,037
7/01/06 was 858,675
7/09/06 was 870,854
7/11/06 was 882,239
7/13/06 was 886,055
7/14/06 was 890,896
7/18/06 was 895,022
7/21/06 was 900,000
7/25/06 was 905,170
7/28/06 was 910,001
8/01/06 was 903,718
8/12/06 was 915,336
8/19/06 was 920,755
8/26/06 was 925,176
8/29/06 today 951,242
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
actually I saw that jump too, it happened around 11:30 AM PT.
it jumped from 923K
Was that a flip-blip?
Keep in mind, this does not include NY, NJ, etc.. The numbers are way over 1mil if all contg. 48 were included!
my bad, I guess id does include NJ!
and as of 4:09 CT …951,653 that is another 400 in what, 4 hours.
What is this a list of? Total houses for sale? Nationally? Appreciate the posting but not everyone has the secret decoder ring.
click on below link. ZR only tracks 13 states. I happen to be in one of them. California.
since May or so number has been going up, whether count is exact or not, has an error of 2% or 5%, who knows, number keeps going up. and in last few hours up 25000. Probably an error or ZR added a state. ??
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
It says that the total is ‘Nationwide’….
ZipRealty many times has two entries for the same house….the first quick get it in the system version…and the second with the pictures version (at least in Atlanta this is true). So I question these numbers.
OTOH, the trend is clear.
Every house lsited in my neighbourhood is lsited twice in ZIPrealty.
Stanley –
Look at Lereah’s used home inventory graph — shows it around 3.8m and rising…
Zip’s coverage is clearly not comprehensive for the entire US.
http://www.realtor.org/lsummitweb.nsf/7b97386a8cca5c4f8625717000564cbd/377c01025a83ad1e862571d2006d16dd?OpenDocument#%22Real%20Estate%20Reality%20Check%22
The builder stocks partially recovered this afternoon in response to the Fed minutes, which noted economic slowing,and probably indicate a reduced chance of another rate hike. The building and lending sector was hit this morning by the sharp decline in consumer confidence.
This afternoons recovery is fine with me. Very soon, the Street will find that the economy and, especially, housing has slowed way too much.
Yesterday I bought puts (Jan 40) on IndyMac (NDE) after it bounced. Today NDE was down almost 4%. I am surprised the the S&P made it back to positive territory, but expect that the whole market will soon be wishing that consumer confidence would come back.
‘Many sellers are actually lowering their prices since it is taking longer to sell homes.’
Wow…..imagine that!
That is the sentence that really grated on me — it was the word “actually.” Can’t tell whether it reflects shock or arrogance, though my sense was the latter.
Good line reading, Chip.
Arrogance would imply cunning. Personally, the comments by these agents over time seem to imply shock, as in ‘but real estate only goes up’. i think the newbies bought all hype, and are gut-shot.
Nah, he’s just a plain ol’ dummy. Shenandoah Valley is hicksville.
“‘Consumers are shifting from a mindset of waiting for a better price to one where they do not want to buy at this time, no matter what the price is,’ the study said.”
Something with which to arm yourself the next time a perma-bull argues that falling rates will spur demand back to previous levels.
“‘Consumers are shifting from a mindset of waiting for a better price to one where they do not want to buy at this time, no matter what the price is,’ the study said.”
Bingo! Not owning a liability (I mean home) is the in thing right now. When the “out” group becomes the majority, what was once out is now “in”.
This statement makes zero sense. Once prices return to inflation-adjusted normalcy (i.e. close to a 50%+ haircut), I would buy in a heartbeat. I would guess a huge number of posters here would, too.
I hate renting. Sure, it’s nice to up and move whenever you want, but unless you pay top dollar in LA, your neighbors are generally Hispanics (not racist, just don’t like the number of residents per unit) or college students. Plus, you can’t really customize anything unless you want to throw money away.
The survey sample is poorly identified and the questions are badly worded (as is often the case). Are they asking renters? Our are they homeowners who would only be buying a second home as an investment? If the survey sample is predominantly the later (and ownership rates are ~70%) then it makes perfect sense.
making so called improvements on one’s own home is also throwing money away.. Wait until the next big earthquake in Calif, then see what happens to all those improvements..
not trying to pick a fight here.. but your statement would be a little like saying “buying new clothes is a waste of money.. just wait till they start to wear out and get holey” or “buying a car is a waste of money - just wait till you crash it or it rusts down to nothing” All true enough to a certain extent, but chalking up all home improvements to ‘throwing away money’ for fear of the next earthquake is a rather glass-is-half-empty viewpoint, no?
Why not buy earthquake insurance like I do?
Do people still buy earthquake insurance? I thought it was up to the taxpayers to build me a new house because I want to live in an area that happens to be natural-disaster prone.
But seriously, from what I have been told, it is so expensive that it is almost pointless. No?
Buying a car CAN BE a waste of money if it’s cheaper dollar-wise and time-wise to take public transit.
For me, $70/month transit vs $300 for gas, $100 for insurance, $400 parking, $xxx wear-and-tear. Granted, it’s a 16-year old Honda Accord that I was *given* (had to pay taxes and fair amounts of maintenance).
Even with 500mile trips, rentals and air travel were almost cheaper. The thing is… I really like my Honda.
Another reason to hate renting, especially a house: Your landlord can move back in, or indicate that he plans to while at the same time jacking up the rent.
I’ve been renting a nice house in east Costa Mesa that I’ve gotten attached to, and had hoped to buy once things returned to normal. But my landlord just told me he plans to move his mother back in — and, oh, by the way, he’s raising the rent.
As much as I love my kids’ “little house,” this is as good a time as any to beef up my 2008-2009 cash position. So we’re moving to a 2-bedroom apartment and saving an additional $1,500 per month for the happy schadenfreude-y times to come.
It’s a buyers are thumbing their noses at sellers market.
“Earman doesn’t think that will happen here; he says the appreciation rates will just return to a more normal pattern. ‘The boom is over,’ he said. ‘And the boom-based pricing is going away.’”
I’m sorry Dave, I can’t do that. Appreciation rates can not return to a normal pattern and have boom-based pricing go away at the same time. Daiiisy, Daiiiiiisy….
“‘Consumers are shifting from a mindset of waiting for a better price to one where they do not want to buy at this time, no matter what the price is,’ the study said.”
That shift sure didn’t take long. This is gonna go fast.
Wham, bam, thanks Greenspan.
lol.
“”People need to get out of the day-trading mentality,” said Eckerman, who owns about 400 homes in Arizona that’s he accumulated over 17 years. Eckerman still believes the correction will be short-lived and significant price slashing limited to certain markets.”
Yeah, limited to certain markets like Arizona, where dim-bulb speculators own 400 houses at a time.
Now I call BS on that one. 400 houses? Yeah, right. If he has that much money, he’s sitting on his yacht on the Riviera, not wanking to some reporter.
It could be true… I knew a guy in Seattle who owned 198 homes at last count (as of around 5 years ago - so could be more or less now), mostly in Seattle. Not all are SFRs and he’s counting duplexes as 2, etc., but still. He tries to be around $100/month cash positive on each one and has been doing this his entire working life. Nice, humble guy who is living proof that RE CAN be a good investment with a long-term outlook, hard work, smarts, and a heaping portion of good luck. This guy is the type of REAL RE guru who doesn’t sell his snake oil on late night infomercials.
Or maybe the US as opposed to the Japanese market. All in the size of the certainty.
“The biggest declines will be the high-end homes, because fewer buyers are willing and able to make the purchase, experts say. Builders will suffer because they can’t afford the carrying costs of finished houses sitting on the market.”
Ah yes, my favorite suspicion confirmed - and yet I doubt these experts are capable of realizomg the effect of this. Ever see a parking garage collapse from the top floor? The effect is not just that the top floor is no longer usable; but that it renders the floor below it worthless. And what of the lower floor that was just decimated? Well, it now is trying to support the weight of two fallen floors so it naturally buckles under its own weight onto the one below IT. And so on, and so on…
Now, if we think of each of these floors as a price range for housing, the picture gets a little unsettling. Most every potential buyer looks for housing purchases in a range. When enough homes prices crash through from the ceiling above, what becomes of the ones already there? Brilliant! They move down a level. This is how pricing will come back to reality. There have already been some interesting observations documented on this blog where disparate homes are selling in the same price range. This just means that one of the sellers is unaware that the floor above has come crashing down.
Eventually the turds at the bottom are squeezed out completely due to the excessive force of this “sphincter effect”. It gets a little messy ’round this time, so watch where you step. Inevitably, it’s a race to the bottom where, for the time being, it’s a little safer.
dd
This is definitely happening in some of the areas that I have been watching. We sold our 1600 sf home (built 1986) FOR $420k in January. Many in our neighborhood are still trying to get $415k-$450k for the same sf. In the newer hood just to the North, 1800-2300 sf on a golf course can be had from $430k-$450k (Built 2001-2006). Someone needs to tell people in our old hood that the floor above them has just caved in.
“The boom-based pricing is ending because housing shortages no longer exist, Earman said. Some buyers may be waiting for prices to drop, which has happened in Northern Virginia in recent months.”
“Earman doesn’t think that will happen here; he says the appreciation rates will just return to a more normal pattern.”
This guy is either a liar or a huckster….. Comments like this dont make any sense..
“‘Consumers are shifting from a mindset of waiting for a better price to one where they do not want to buy at this time, no matter what the price is,’ the study said.”
No way, buyers don’t want to buy because prices are still obscene. Over a half mil for this 1200 sq ft fixer in SD is freakin’ ridiculous. Seller paid $175,000 in June of 1992 and is now asking for $539,600.
http://sandiego.craigslist.org/rfs/200098415.html
That’s insane…my first house in Austin (Round Rock actually) was 1375 sf and nicer….was worth about $45K in 1990. That’s not $450K either!
Thats freakin insane. No really, if someone were to buy that at half that price, they should have thier head checked.
“‘Consumers are shifting from a mindset of waiting for a better price to one where they do not want to buy at this time, no matter what the price is,’ the study said.”
I agree with those who say that real homeowners would buy a house based on historically normal shares of income and underwriting standards. The price isn’t right.
As we discussed earlier, when people’s time of life was such that it was time to buy, they bought even though I begged them not to, in the teeth of bubble pricing, and at great personal sacrifice. Buy now and be house-poor forever! Such people will certainly buy at a cost of 25% — 30% of income for a 15 year fixed self-amortizing loan.
It is the NEWBIE SPECULATORS who will no longer buy at any price. Even experienced speculators will buy, but at a low price.
Total BS. People are not buying because most of us who have not bought either:
A. Will not buy your overpriced junk home that requires tremendous upkeep or repair work
B. Flat out will not buy outside of sound fundamentals, i.e. 3.5X annual income
C. Just cannot afford to buy overpriced junk
D. Do not think life begins and ends with home ownership
E. Care about their quality of life
F. Realize there are better investments than homes
G. Would rather rent 4 miles from work that pay back a 500K loan from the bank so I could commute 4 hours a day (roundtrip)
Anything else Mr. Earman. I’m listening.
OCDan
2006-08-29 13:31:18
I’d buy here at the right price. Say, a 50% reduction. Houses in Rancho Santa Margarita are very very slowly coming back down to earth…
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OC Dan, I’m with you on this one although I think we’ll both be surprised by how fast this thing will correct. Would be buyers have lots more information at their disposal these days. I routinely use Zillow to find out what property purchase history’s are along with other “tools”.
I’m also noticing a lot of homes coming on to the market in Santa Margarita for mid/high $ 700 k - these homes were being listed last year for $ 800k +
It’s happening! Just be patient.
ChillintheOC:
I have been watching RSM prices too. I also have noticed that even most of the ones reduced lower to the mid to high 700k’s are not selling either….a trend which we all want to see continue for the next couple of years.
See above re: Robinson Ranch listings.
Buy a house now and you’re a fool:
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
Lovely chart of real estate prices for the last 100 years, share with your friends and neighbors.
This graph is really amazing. It really puts the current boom / bubble into perspective.
This graph is really amazing. It really puts the current boom / bubble into perspective.
This graph is amazing. It really puts the current boom / bubble into historical perspective.
While the graph is amazing, the repetition of my input was accidental and not to be interpretted as over-enthusiasm.
My wife and I are ready to by now. Just as soon as the $700,000 houses here in Queens, NY go back to the realistic price of $300,000 to $350,000
No kidding. People are not buying because everyone is waking up to the fact that prices are ridiculously unaffordable, and becoming more reasonable by the month, and it is very costly to own an asset worth ten times your annual income when it is falling by 10% or so per year.
Funny how the BOA survey pretends that it is common knowledge that prices have already been declining for almost a year now; first I read that in print myself…
Ditto. How many years do you think it will take Queens houses to drop 50% ? Prices in Queens, NY seem to take much longer to drop than the rest of the nation and when they drop, it drops less. But drop they will. Patience is a virtue.
OT- Recognize this is a housing blog, but would be interested to know what you all think will be the next bubble. Have my own personal opinions but would be grateful for your input.
Physical gold, silver and mining shares with substantial proven reserves in the ground. Build a core physical position if you haven’t done so already and then invest (do not trade) in the quality gold and silver miners. At this point the more attractive miners may be the high-cost producers.
There is a ton of ‘new money’ or debt created every day which is watering the value of US dollars. As the baby boomers retire this can only get even worse. How do you pay for all that healthcare-fake money!
So I don’t see how gold, silver and mining shares cannot go up.
“Sales and home prices fell at a faster clip than expected and inventories climbed further in August as the housing market continued to deteriorate, according to a Banc of America Real Estate Agent survey.”
In what country did BOA conduct this survey? It could not have been in the USA, because there is no national housing market, and home prices don’t fall — they always go up.
I’m in Westchester, NY, I would only pay $180k for the condos listed at $400k, that’s how much I think it is worth anyways. Haven’t seen many ads starting with “Motivated seller” though, but it will happen in time.
Arizona is imploding. I think we are the most bubblicious market in the US. Expect proce drops of 40% in
What I have noticed about real estate sales is that many salespeople in NYC, seem to keep the lowballing bids low, not taking low balling offers, I do not know what is their reason behind. I believe it is because they want to keep the prices of houses artificially high, I guess there are still many fools out there who actually buy these over inflated houses… But then, when I did a Zillow search, actually I realized that someone, this one buyer, actually sold his/her property about 80K below estimates, lower than last year’s prices around July, 550K for an attached one family house. That shows that depending on the property, and of the seller, prices are going down.
What I have observed about what is selling is this:
A house will sell if…
1-it is conveniently located, close to the subway.
2-It has a large plot of land (if you call NYC housing lots large for that matter)
3-It has more sq footage than the average offering.
4-It is priced lower than the average houses.
Arizona is imploding. I think we are the most bubblicious market in the US. Expect proce drops of 40% in
Just back from a day down in Charleston, S.C I live 120 miles away in Columbia. My buddy down there says that over the last few years they had been seeing 25% a year increases and now it’s “kinda leveling off” but it won’t go down, it will go up, but just at around 5-10%. I said well, remember I lived down here in the 80’s and we had a downturn and prices actually came down( even on the beach) hell, Folly Beach was damn near a ghost town for awhile… His responce, won’t happen this time, to many people want to live here. Funny how everybody and I mean everyone I run into is an expert in the RE Dept. Something wicked this way comes!
‘ He doesn’t believe the stock prices reflect this longer-term downturn.
“We would argue that the stocks are not pricing in the prospect that this could be a very prolonged downturn similar to some that we’ve seen in past cycles,” Murray said.
He said homebuilding stocks are currently trading at about 1.2 times book value, which is “far above where valuations have troughed in past cycles.” During the housing crash of the late 1980s and early 1990s, valuations fell to 0.6 times book value.’
I don’t think the stock prices have factored in the long-term nature of the downturn yet, either. It is mainly a question of how long the plunge protection levees can hold up from here on out…
Haven’t they dropped enough to eliminate the tinfoil-hat-created PPT?
No.
It sounds like HBs have to fall another 50% to get from 1.2 times book down to 0.6 times book before the correction is done. Does anyone know whether book will fall as well when, say, the plummeting price of land catches up with their accountants ability to spin the numbers? If so, I guess they will have to fall by more than 50% from here…
Why would anyone want to buy right now? It’s to hard to determine present and future value .I’m sure people are wondering if they are going to lose their job or not .It’s just like Florida right now ,why would anyone want to buy today with a hurricane a coming .
and the fools still keep on streaming into FL, like sheep for the slaughter. As someone I met in an educational conference have told me, the insurance cost of some FL real estate have doubled since last year and what is the logic behind paying insurance rates that are double the yearly tax assessment? The incentive for lower pay to get a job in FL used to be called “Sundollars,” now they should coin it something else.
Does anyone here believe that there is a tendency among RE salespeople to keep the prices of their properties artificially high, by simply not accepting low bids all together? If I were the property owner, I would have liked to have had all what was offered to me, regardless of the offer, not that I would go for the lowball….but isn’t the job of the RE salesperson to get all offers delivered to the owners?
What I have noticed about RE prices in central queens neighborhoods is that I saw the same property, when being offered by the owner to be at least 80K cheaper, while the same property offered by an agency would be 80K more expensive. Does this imply that the owner knows that in order to get offers, they need to cut down the price, especially to out compete other properties on sale in the same neighborhood?
Would this sort of selling actually begin to destabilize the market and trigger lower pricing?
I have been hearing awfully lot about RE bust elsewhere, but here in the more desirable neighborhoods in NYC, be it Forest Hills, Kew Gardens or Rego Park, prices have bulged a bit if not at all.
“Does anyone here believe that there is a tendency among RE salespeople to keep the prices of their properties artificially high, by simply not accepting low bids all together?”
Yes. This was documented by Steven Levitt, first in a peer-reviewed academic study, then in Freakonomics. The conclusion he reached: On average, Realtors (TM) keep their own homes on the market for longer and sell for a higher price than they get for selling their client’s comparable homes.
“‘Consumers are shifting from a mindset of waiting for a better price to one where they do not want to buy at this time, no matter what the price is,’ the study said.”
HAHAHA, thats funny. When I sold my Townhome this past June I cleaned and painted the whole inside spotless. There was no junk left in any drawers, no junk in the trash cans or the garage. Spotless. And empty because I had moved. Now other empty places for sale were flithy, garages full of junk, spider webs on ceiling, toilets running becasue of a leak, etc. And I priced mine to sell, duh.
I see thoses other Townhomes still on realtor.com with itty bitty price reductions. Good luck.
I think comsumers will buy but have figured out that the last 3 years were a big fat bubble. You price it right and it will sell, say about 150x rents in the area.
Do you think that we’ll be seeing “Million $ House Survivor’s” on reality tv coping with the holding costs and taxes in this Fall’s lineup ?
Went with my wife this weekend to see models in a new subdivision in Va Beach. Looked like about 40 lots with 5 models constructed by different builders. The models had been open for about 5 months and no foundations were started. The development is about 1 mile from a major business road and is located at the end of a 1960-1970 neighborhood of 1200 - 1400 sqf brick ranches that sold last year in the $175 range. The new subdivision is at the end of that road and is built on a curve of a 6 lane highway with high tension wires cutting through. The new homes ranged from 3000sf= to 4000- sf and started at $650K to $800K with bells and wistles. Some observations based on conversations with the RE folks:
1. The lot prices were $300K builders price and were a real value since they were not marked up. 2. A similar project last year sold out in 8 months. When my wife asked how many had sold in this development over the last 5 months the Rehore became upset and said that the builders were not putting up specs and that was why no homes had been sold. 3. There was an 8 ft wide drainage ditch along one side of the subdivision and the lots were $30K more because it was waterfront (stated without a smile). 4. When asked about builders incentives we were told that any reasonable offer would be considered (especially on the existing models) but prices could not be reduced. Upgrades could include closing costs, buydown, swimming pool or all of the above please just make an offer. The last agent stated that he was not happy with this location, had recommended that the builder not purchase the 30 lots but it was not his call. He also said that nover the last 3 years that he had purchased 11 sfh for rental because the economic strength of the area (other than military and fed gov jobs this area [tidewater] is statistically the 2nd lowest per capita in the country. $15 per hr is big $ here). I asked if the rent covered the cost and he said not this year but rents were going up and he would be in tall cotton shortly.
Based on location I would not have been tempted to buy one of these noisy, out of place gaudy POS in late 05 for half of todays prices. I have a feeling that IF they can sell the models there will be 5 fb’s sitting in the middle of a former bean field for many years.