‘The Effect Could Snowball If Sellers Get Panicky’
CNN has this report from a Federal regulator. “New evidence of a housing market slowdown emerged Tuesday - growth in the price of a single family home was just 1.17 percent in the second quarter, a decline of one percentage point from the prior quarter.”
“The Office of Federal Housing Enterprise Oversight (OFHEO), which released the report, said it was the slowest quarterly increase since the fourth quarter of 1999 and was the sharpest quarter-to-quarter pullback since OFHEO began the index in 1975.”
“According to Jonathan Miller, an appraiser in New York, ‘The index may not reflect what’s really happening out there.’ He believes that many sellers are holding out for unrealistically high asking prices, and the buyers actually purchasing homes are only the ones willing to pay the higher prices.”
“To close deals with the on-the-fence or reluctant buyers, sellers will have to drop their prices and the index will only then reflect that. The effect could snowball if sellers get a bit panicky and try to sell their properties before prices erode further.”
“‘These data are a strong indication that the housing market is cooling in a very significant way,’ said James Lockhart, OFHEO director. ‘Indeed, the deceleration appears in almost every region of the country.’”
“It’s the fastest deceleration in the index in its three-decade history, OFHEO said.’
“…the buyers actually purchasing homes are only the ones willing to pay the higher prices.”
Well duh.
Not the best quote, but Sam Miller has a very good RE blog, with excellent data analysis from an industry insider. He’s been fairly bearish about RE for a while, and had been critical of the current appraisal process from the honest appraiser’s perspective…
http://matrix.millersamuel.com/
Jon Miller, not sam. thinking one thing, but typing another.
Thanks DC! There will be a lot to cover this fall. Its going to get interesting.
“Miller has a very good RE blog, with excellent data analysis from an industry insider.”
i agree 100% on his data: it is unmatched in accuracy and scope. but i’ve found his blog to be just r.e.i.c. pap.
“Miller has a very good RE blog, with excellent data analysis from an industry insider.”
if it doesn’t allow any comments, it’s not really a blog, is it? it’s a commentary.
Its always allowed comments. Who does your research?
matrix? allows comments? it says clearly at the top of each post “no comments.”
lol@the cluelessness…. “No comments” is a statement about the number of comments on that post, not about your ability to add one.
it also might reflect the lack of interest of readers, don’t ya think??? but you are correct; i noticed that later, when i actually found the way to insert comments. my bad.
Manhattanite, what’s your blog’s address?
Regarding the appraisal process. Red this quote from a Chicago board.
“…you ought to know that assessing real property value is an art rather than a science.”
http://yochicago.com/forums/showthread.php?t=366
The guy was slamming Zillow for their appraisal process. No surprise that he’s in real estate. I guess robbing banks is an art to?
I agree with the general conscientious of those on this forum specifically that RE will plunge significantly in many parts of the country; however, I cannot help but wonder if the more optimistic members of this forum are not taking into account consumer and governmental reaction to a declining real-estate market. I am willing to gamble that the US government will respond aggressively to a declining real estate market knowing the disastrous economic effects that will surface should the RE market run its course unabated.
Several participants on this forum reside overseas and have experienced similar housing bubbles; in many cases, these bubbles have been going on longer than those in the United States and the price gain have also been greater than those in the U.S. These bubbles in these countries have been sustained to some extent by the government offering incentives to potential homebuyers. In some cases, the government will protect against the possibility of a RE loss. Would it be incomprehensible that the US government would undertake a similar program(s) to save the US economy? The tools to prolong this bubble are already being field tested in many parts of Europe.
The Option ARM (among other exotic loans) has allowed the housing bubble to become a reality. Simply put many, homeowners over the past few years have ignored the sale price of the home and concentrated on nothing but the monthly payment (typical US consumer). A $500,000 house is affordable for a short period by a couple making slightly over the median income using an exotic loan (until it resets). Would it be safe to say that until these exotic mortgages are eliminated or unavailable to the masses that the prices may not drop more than a fraction of what people are predicting? After all, there will always be another Sheeple (I love that word) willing to step up and assume similar risk, as long as the money is available, there will always be someone willing to accept it regardless of terms.
Proof in point, look at the ridiculous “pay day” money lending establishments that now dot the landscape in close proximity to nearly every US military installation. In many cases, these “pay day” loans have an 800% annual interest rate, but it appears they have no lack of customers. Sans government intervention, the future of the housing market rests solely on the lending standards and availability of exotic mortgages.
“…the US government will respond aggressively to a declining real estate market knowing the disastrous economic effects that will surface should the RE market run its course unabated.”
It can’t, for several reasons. Foremost, housing has to revert to its long term mean value (approximately its value only as shelter) sooner or later and there is no painless way to get there. Next, borrowers are pretty close to tapped out on their credit; they own house they cannot pay for; and buyers smell blood and will not pay owners what they want nor, increasingly, what they need to get out without a net loss. There are other reasons, as well, but the sheer number of speculatively-bought homes combined with the re-setting of interest rates on toxic loans will do in the market. After all, it’s just dominoes.
Agreed about any assistance to the FBs. They will roast. Not however when it comes to bail-out programs for the GSEs or Member Banks that get into loan-loss reserve problems. They will get shored up, and fast, since they represent the stability of the government. No way those institutions go belly-up. Could come in many ways, relaxing reserve standards and free $$$$$ for some period until lenders sort out their problems.
I agree. the US government will not help out the home owner that will go into default. there will be a class action so and so that will benefit the banks and lawyers.
Look at the Enron scam that left so many holding the bag, real estate will be the same only bigger.
“The Effect Could Snowball If Sellers Get Panicky”
is government-speak for
“The Effect Will Snowball Once Sellers Get Panicky.”
Beautiful.
Slippery slope. This has to be worrisome to Washington and the Fed. The problem is, there isn’t a new asset class available to keep the roaming bubble going. No lifeboats or even life jackets left…
I am willing to gamble that the US government will respond aggressively to a declining real estate market knowing the disastrous economic effects that will surface should the RE market run its course unabated.
Can’t. Doesn’t matter if it “Wants.” Doesn’t matter id it “Tries.” Doesn’t matter if federal, state or local govet lies, cheats, steals, inflates, defaltes, taxes, indemnifies, interveners, nationalizes, papers over or buries at gunpoint. Again. Prices are too high and the only thing that needs to happen and must happen and will happen is for prices to decline. Everything else is just rearranging deckchairs.
- Rest easy.
The Federal Gov’t can cruise for now. Gas is under $3 per gallon now. Folks only have 5 second attention spans. Right now they are thinking of SUV’s again…. the lower gas price completely lull’s them to sleep - thinking of new Flat Screen TVs, etc.
The U.S. government intervened massively in the marketplace beginning in 1933. After 12 years of intervention and the bloodiest war in history, it was successful.
Greenspan’s “expansion” did nothing for equities post-2000, either.
So Bay “The Federal Gov’t can cruise for now. Gas is under $3 per gallon now. Folks only have 5 second attention spans.”
Did you notice that the “Midterms” are only 8 weeks away? Time to make happy kids!!!!
The goverment can’t bail anyone out because they have their own massive debt problem. A person over their head in debt can’t look for someone with more debt than they have to bail them out.
Cash,
This is the very point a lot of the AU and EU market watchers fail to understand. Comparisons to all other countries must also include a look at the massive US debt, ginormous obligations coming online in the next several years, as well as the negative savings rate of consumers. While it could be argued that certain EU countries have had a longer RE bubble period and higher appreciation overall than the US, I don’t think anyone could argue that there is a more cash-strapped, highly-leveraged, and debt-laden population. With GDP that is 70% consumer driven and 1 dollar productivity for every 10 dollars of debt created, we are fast approaching a money-supply cliff from which there will be only one eventual outcome: deflationary depression.
http://financialsense.com/fsu/editorials/jain/2006/0904.html
That about sums it up.
” If one looks at the long-term graph of Total Debt as a percent of the GDP (see graph in the above reference) one sees a Longwave Cycle type of behavior whereby the debt grows for a long period, decades, reaches a crescendo and then seems to fall down rapidly, in a crash-like fashion, and remains low for a long period. Since the process is cyclical in nature, it repeats. Thus, Peak Debt, unlike Peak Oil, is not a theory but an observed reality of our economic system.”
Above, a quote from the financial sense article… I didn’t even bother reading past this point. Jas Jain had the temerity to call the example graph “cyclical”. Regardless of the merit of their other conclusions, I can’t take them seriously if they call that graph cyclical.
What are you talking about? Debt bubbles are absolutely cyclical. Remember the 1920’s? Just because the current bubble is a hell of a lot bigger than the last one doesn’t mean that there isn’t a cycle involved. This one will end the same way the last one did - badly.
well said Robert
We have had local corrections just over a decade ago, it was S&L crisis. Govt will protect institution not individual. Individual has to look after #1, by choosing the right institution.
I agree. I think it is foolish for anyone to think that the government or the federal reserve will step in to do anything. In fact, the next time the fed meets this month, I’m sure they’ll make up for last months decision not to raise the prime, by rewarding us all with another quarter point hike. Thus, turning the screw. ouch.
Robert
You are right. The deed is done. It will take years to unwind this debt.
I agree Robert.
VR said…
“Sans government intervention, the future of the housing market rests solely on the lending standards and availability of exotic mortgages. ”
Those mortgages only “work out” for FB’s if the prices are still rising and they can keep the refi train rolling. Nothing suprises me but I think the party is over.
As I have pointed out to nhz, it is different here — too much undeveloped land available to build new homes, and already the for-sale inventory is approaching 4m homes. A great deal of money has been made by herd behavior at the household level which would have been viewed as financially suicidal in more normal economic times, such as buying multiple houses on leverage, and buying homes whose price tags far exceed households’ permanent incomes.
The Fed has been openly discussing the relationship between a negative national savings rate and imbalances in the housing market since Spring 05. I cannot say for sure that they will not fold the campaign to restore balance to the economy in favor of the easier course of respiking the punchbowl, but the consequences of doing so would be severe, driving our households to continue their collective abandonment of financial prudence in favor of even more rampant speculation than we have already experienced the past several years.
Lurking in the background is the fear that the housing bubble is the .com bubble circa summer 1999. Without much Fed effort, this thing could run up to one final massive top - before it absolutely implodes at a later date.
IF anything, we may see yet another opportunity for “deregulation” by our government, making it more difficult for joe six pack to get a loan. he shouldn’t have had one in the first place, probably. therefore placing the monies in the hands of those deserving it.
“Would it be safe to say that until these exotic mortgages are eliminated or unavailable to the masses that the prices may not drop more than a fraction of what people are predicting? After all, there will always be another Sheeple (I love that word) willing to step up and assume similar risk, as long as the money is available, there will always be someone willing to accept it regardless of terms.”
******
Maybe I missed the comment, but I cannot believe anyone has not mentioned such yet:
It appears you are assuming lenders would be interested in continuing what will soon become seen as a risk-filled lending practice. The borrowers may “want”, but the lenders may soon not be in the same frame of mind.
Not to mention the reason most borrowers got those loans in the first place was the assumption that their asset was always going to go up in value, thus they were stashing away equity even if they were I/O or neg-am. I doubt too many “Sheeple” are going to sign up for an I/O loan on a depreciating asset. Sorta like high-priced renting only with a lot more downside.
the prices dropping are going to have more to do with supply and demand in general. the loans are only one variable in the equation. Don’t forget the baby boomers retiring and selling, the die-hard ’til the end flippers, and all the NEW construction…. stick the fork in the RE…it’s totally done.
The bubble here is hard to maintain than other countries simply due to the size of the housing market. I am not sure if housing is a good excuse for Fed to cut interests - for economy, possible. But even with the Fed cut, housing still has to unwind, albeit at a lesser slope.
Duh is right. A bit simplistic I’ll admit. I guess the point was that there not a lot of back and forth going on. Sales seem to be all about buyers who are willing to agree to seller’s terms and not the other way around. Therefore, stats show an increase in prices and a drop in volume, yet it doesn’t reflect the mood of many markets.
jmiller,
don’t you think the developers of all these new condos will be willing to negotiate??? they will pancake the rest of the market underneath their reductions.
Sure, some negotiate, others don’t. Buyers have been conditioned over the last 5 years not to think so.
August sales down 29% in Northern New Jersey..
May
Average Sales (2003-2005): 2615
2005 Sales: 2725
2006 Sales: 2298
(Down 15.7% Year Over Year)
June
Average Sales (2003-2005): 3486
2005 Sales: 3682
2006 Sales: 2911
(Down 20.9% Year Over Year)
July
Average Sales (2003-2005): 3495
2005 Sales: 3338
2006 Sales: 2428
(Down 27.3% Year Over Year)
August
Average Sales (2003-2005): 3661
2005 Sales: 3668
2006 Sales: 2599
(Down 29.1% Year Over Year)
More graphs and data available here:
North Jersey August Real Estate Market Report
-Grim
Fixed your broken link:
http://nnjbubble.blogspot.com/2006/09/northern-new-jersey-august-residential.html
“August sales down 29% in Northern New Jersey.”
These numbers could easily be from a report on the ailing US auto industry. Just like Bill Ford said of his company, many owners of real estate are finding that their business model “is no longer sufficient to sustain profitability”.
- Perhaps the old,
” We’re losing money - but we wil make it up on volume’ will work.
2006 sales volumes have rolled back to below 2002 volumes both month to month and year to date. Also a big break from prior year in July and August. The buying pool just dried up.
The numbers lag by a quite a few months, but the beginning of trouble is apparent. Here’s what I found in a few minutes using the raw data in the Excel file:
Boston - First qoq decline since 1994
San Diego - Smallest % increase since 1996
Ft. Collins - Loveland CO - Largest drop since 1987
Phoenix, LV, Idaho, etc. all show increases still, but they’re slowing fast. Download the following excel file to do your own analysis:
Second quarter HPI
And here’s the PDF report:
Second quarter report
2nd quarter reports end thru month of June. The market is changing much too fast for these outdated numbers. If you do July and August research using this blog and other sources, you can anticipate the 3rd quarter to be much, much worse
The effect could snowball—->>> if
It doesn’t snow in Southern California, its different here.
Excuse me while I do some shopping:
http://tinyurl.com/honz9
lol.
You can think of OFHEO numbers as being a full six months behind. Sept. 5 reports April-June figures. Take mid-May as the midpoint. Mid-May was a contract in mid-March - nearly six months ago. In fact that exactly replicates my situation on a house I dumped. . .er, sold, in Va. Although inventories were starting to build, sales taking place were still at or near top prices. The house I sold then couldn’t be re-sold today for the same $.
“The Office of Federal Housing Enterprise Oversight (OFHEO), which released the report, said it was the slowest quarterly increase since the fourth quarter of 1999 and was the sharpest quarter-to-quarter pullback since OFHEO began the index in 1975.”
Right. The slowest quarter until the 3rd quarter comes out, then the fourth quarter and so on and so on…
The HPI numbers lag by a quite a few months, but the beginning of trouble is apparent. Here’s what I found in a few minutes using the raw data in the Excel file:
Boston - First qoq decline since 1994
San Diego - Smallest % increase since 1996
Ft. Collins - Loveland CO - Largest drop since 1987
Phoenix, LV, Idaho, etc. all show increases still, but they’re slowing fast. Interestingly, figures for first quarter were DOWNWARDLY revised in my area to show a decrease instead of the increase they showed in the last report! Download the following excel file to do your own analysis:
Second quarter HPI
And here’s the PDF report:
Second quarter report
“According to Jonathan Miller, an appraiser in New York, ‘The index may not reflect what’s really happening out there.’ He believes that many sellers are holding out for unrealistically high asking prices, and the buyers actually purchasing homes are only the ones willing to pay the higher prices.”
“To close deals with the on-the-fence or reluctant buyers, sellers will have to drop their prices and the index will only then reflect that. The effect could snowball if sellers get a bit panicky and try to sell their properties before prices erode further.”
the above is a STUNNING statement from miller, who is not just ‘an appraiser,’ but apparently the be-all and end-all of real estate gurus in nyc, towering his wisdom (or propaganda) over the manhattan market (millersamuel.com). read this statement again. he is acknowledging that the nyc r.e. market has TANKED. this is a dramatic negative change in outlook from what he was saying just a few days ago. look out below.
dba - please respond!??!?!
have you noticed that dba disappeared — just as jonathan miller showed up???
Clue me in - whose dba?
dba was another poster, rather optimistic (pollyannish … ‘defending’ the market as in, “everything will be fine by next spring”). he curiously disappeared just when you appeared yesterday.
I wonder what will happen to the “bonus business” if the major indices are down for the year. Perish the thought.
i don’t think bonuses will help much now that the bloom is off the rose. it didn’t even help last year. but now that the nytimes is recommending buyers haggle with an offer 6% off asking, and national housing ubermenschen prescribe waiting a year or 2 (m.i.t r.e. guru on npr 3 days ago: “it will be a great time for the first-time buyer.”), and manhattan is AWASH in new/pre-construction inventory, the manhattan market will be in the eye of its own very special storm. eventually, much of which will be repartmented into rentals (over the next decade, to ease the .5% (lowest in history) vacancy rate and red hot rental market. but this could be our own very special katrina — killing off all the sellers, but leaving the structures intact. and at half price. by 2014.
There are 14,000 new condos coming on the market next year.
All the bonuses in the world matter not when there is that much “new” supply.
Ha! 14,000 condos is chump change compared to here in Miami. We have about 50,000 scheduled to come to market. Only about a ten YEAR supply.
The effect could snowball—->>> if
when anyone in the r.e.i.c. uses the word “panicky” wrt to sellers, it doesn’t matter whether it was preceded by ‘if’, ‘when’ or ‘maybe.’
it means they have already started to panic.
It is hard not to panic when the boa constrictor (ARM/toxic mortgages) is wrapped around your neck.
Panicking is exactly the correct thing to do to get that little adrenaline surge of strength and live to see another day.
i know this all too well, having been an FB in a past life! pills, booze, razor — just trying to do even the wrong in the right order when your panicking is a tough call. not to mention lowering your price 20%!
Did you see the story in the NYT about real estate commitmentphobes? Cracked me up.
yes :)~~ that was r.e.i.c. brainwashing in its most pungent form. the toll bros. cover feature in the july 2005 sunday nytimes mag. was of a similar ilk, with a powerful subliminal message of conquest: “we will build it; you will come; and you buy — at any price.”
i have no idea that smiley got into my above post.
I’m still angry about that article; it came out at a time when the market had already peaked, and it struck me as a cynical attempt by the RE insiders to draw out the last available capitulators while the gettin’ was still good. I was disgusted by how even NYT writers can be such a bunch of tools.
NYC has not yet posted numbers confirming a big decline is here, but you can smell it in the air and once it comes, revenge will be sweet.
Manhattanite, the second paragraph above is not my quote but I appreciate the vote of confidence! That makes your hi-drama point mute, but after filtering out your hyperbole, I see what you mean. Market activity will not improve (number of sales) until buyers and sellers are ready to negotiate. Thats a long ways away I suspect. Sellers are used to calling the shots and they don’t have the leverage they had before. Buyers are waiting for conditions to stop eroding.
“Sellers are used to calling the shots and they don’t have the leverage they had before. Buyers are waiting for conditions to stop eroding.”
What I want to know is when someone of some repute out here in San Francisco will stand up and admit the same thing!
But I suppose I shouldn’t wait too long, for that would require someone in the real estate industry to be honest.
The elephant in the room is only getting bigger.
i bet they will respond soon if they feel the postings on this blog similarly threaten their interests.
“Buyers are waiting for conditions to stop eroding.”
and if the late 80s to about 1996 are any lesson, that will be a very long time — perhaps a decade. and last time, i believe (per the nytimes), median prices dropped about 47% before it was all over.
so where’s the hyperbole? btw, very glad to see someone of your stature in the r.e. industry joining this discussion. i’m sure other posters agree.
Yes I love this blog. I’ve linked to it for a long time and am amazed how much content Ben contributes. He’s a machine!
One thing I have learned from people that say the things that you do, is that you have already made up your mind about the fate of market yet I respect your passion and insight, no matter what you have inferred about what I said or may have said. It shows how much you care about the topic, and thats pretty cool.
i just heard wabc radio news say “real estate pros estimate the market will go down 10% this year.”
that’s not an inference; that’s a fact.
Actually, the only fact here is that you heard it. Its simply a prediction. Big difference. and by a…real estate pro? Who? Is that the same person that was always saying the market will go up? Are “they” more accurate now? Or is it a different person this time? Please elaborate.
that was what was so remarkable about the news announcement; it was quite generalized, very close to: “real estate professionals estimate the market will go down 10% this year.”
which we will both agree is a rather shocking pronouncement to be made in any hourly news announcement, as if it were ‘fact.’ but i only referred to the ‘fact’ of my hearing it, not to its reliability.
btw, i should say that i’ve become much more bearish since i started reading this blog. when i first arrived, i expected a mere 20% fall in the manhattan market. now i expect much worse, although my timeline is about the same — 10-15 years to revert to the mean, with a dip below mean somewhere in the middle!
“mute”
you mean, “moot?”
yes I do. Thanks.
“Home prices are now growing only slightly faster than the 4.4% inflation rate for other consumer goods and services, OFHEO pointed out.”
if you factor in what some consider a true measure of inflation, homes prices have fallen both in nominal and real terms, no? or at least in real terms.
latest numbers from ground zero:
( Miami)
Trend 09/01/2006 1 month 3 month 6 month 12 month
Median Price $380,000 -1.3% -3.0% -4.8% -10.1%
Inventory 38,850 +3.7% +14.5% +43.5% +203.5%
For July 2006 Palm Beach County
http://iprecom.tempdomainname.com/trendg/images/palsld.PNG
July 2006 July 2005
Inventory # 22,286 inventory # 7071
Sold # 612 sold # 1782
# of months supply 7/2006= 36 # of months supply 7/2005= 3.9
And the kicker:
http://www.housedata.info/FL/WestPalmBeach.BocaRaton.BoyntonBeach/
Prices currently are some 35% above long term average prices.
the scary part is the “official” is quoting this number
prices are down 5%+ in any zip you can name- go ahead find one different
- 1 and was the sharpest quarter-to-quarter pullback
- 2 The index may not reflect what’s really happening out there.
- 3 sellers are holding out for unrealistically high asking prices
- 4 sellers will have to drop their prices
- 5 The effect could snowball if sellers get a bit panicky
- 6 try to sell their properties before prices erode further.”
- 7 housing market is cooling in a very significant way,
- 8 deceleration appears in almost every region of the country.’”
“It’s the fastest deceleration in the index in its three-decade history, OFHEO said
- YIKES. THEY SCARED ME AND IT’S NOT HALLOWEEN YET
I’ve posted graphs of the OFHEO HPI for all 300+ metro areas here:
http://www.housedata.info
This is a great service, do you work for the REIC?
Nope. I just did it for fun (and maybe some google ad money
Fascinating data–but why did you graph it on a log scale? I think that diminishes the visual impact of the bubble…
Jon
“Diminishes the visual impact of the bubble”? In other words, you want to lie with statistics, just like the sleazebags who created the bubble.
A log scale makes perfect sense for for exponential data. It’s the best way to compare current price rises with past ones, for example.
In fact, NOT using a log axis would be the lie.
Holy crap. In a sea of increasingly alarming MSM stories, this one gave me the chills. Of course it’s going to “snowball”….the news is out and accelerating faster than anyone imagined.
“the news is out”
“and we helped!” (remember the shake ‘n bake commercial?)
by “anyone” I presume you mean the “experts”?
yeah, the “experts”.
We’re just neophytes. LOL
Anecdotal stuff. Spent some time talking to a broker in Vegas. His words, its totally dead out there. The condos he’s pitching, buyers are gone. The biggest factor that worries him he said is that even with rising inventories, it does not reflect fully what’s for sale. He says there are tons of expired listings and folks hoping to relist when the market gets better. Right now at 8 months inventory but true numbers are more like 1 years worth.
Simmssays..lots to read
http://www.americaninventorspot.com
The OFHEO data is not terribly relevant for many high priced metro areas. The methodology uses only “TRANSACTIONS INVOLVING CONFORMING, CONVENTIONAL MORTGAGES PURCHASED OR SECURITIZED BY FANNIE MAE OR FREDDIE MAC”. How many transaction in Los Angeles or similarly high priced cities meet this criteria? I would guess only a small fraction. So they are basing this entire index on the sales at the VERY BOTTOM entry level into the market, and most likely transactions involving somewhat more qualified buyers who can actually get standard financing meeting GSE guidelines.
Not a very representative sampling!
SFV Updates?
Thanks
Holy smokes. Good call deb!
Welcome back, deb! You’ve been missed!
very very true…just like the Freddie mac data on cash out refi doesnt nearly capture the reality of how much equity was spent. All the conforming crap disappeard in the bubbles years ago…that shit is toast!
Deb-
The guy in the interview DID mention that the data applied only to homes under 400K.
And he did say things were likely WORSE than the study showed, precisely because of that ommission.
‘The Effect Could Snowball If Sellers Get Panicky’
If?
In our local paper, I’ve noticed an increasing number of ads (and larger sizes– quarter pages, half-pages) for realtors that pitch based upon if you’re unsatisfied with your current realtor, try us out, sort of deal… The local boutique realtors are getting destroyed piece by piece.
Here in the Tucson area, we have a real estate agent who does the same thing. Her pitch is of the “If you don’t like the work I’m doing for you, fire me!” approach.
I’ve also noticed that, due to the abundand of listings, two of the four major free real estate magazines have gone from being saddle-stitched to perfect bound. (These mags are the ones you get out of the racks at the front of the grocery store.)
“…have gone from being saddle-stitched to perfect bound.”
??? Whuzzat?
They are thicker now.
Printer’s terms. Saddle stiched is stapled through the middle. Perfect bound is glued/stitched at the inner edge.
wow and I thought those were phone books they were giving away at the grocery store.
Thanks, Chris.
So, how does one capitalize on the upcoming foreclosure/preforeclosure market?
I figure that it’s 12-24 months away, but now is the time to get ducks in a row.
CNBC “Mortgage Meltdown Ahead?” on in 3 minutes. But I suppose we already know the answer to that question so what’s the point of watching?
US ReaL EstateTarget Bearing one-seven-three..Speed…Dead in the Water ..Range..one-two-zero-zero meters..Spread….4 TORPEDOS H.E. ..FIRE !
We’ll be fine as long as nobody panics or goes tits up broke, or can’t make they’re payment, no one gets sick, nobody decides to sell to get while the getting still isn’t too bad, no one loses a job, or a spouse dies, no Asians stop buying US debt instruments, no Oil Bourse are established, and specuvestors continue to bid up property in an increasing rate environment. As long as none of that happens should be fine.
“Tango Uniform.” Wow, have things gotten so bad so fst?
“tango uniform”
as in “tits up!”?
An old aircraft industry term. You remember the aerospace industry don’t you? It was the lynchpin that meant SoCal never suffered the economic cycle.
Just like the entertainment industry that was always counter-cyclical. Until it wasn’t.
I love the following, posted by a fellow blogger not long ago:
“Don’t panic. But if you are going to panic, be the first to panic.”
Might get it put onto a bumper sticker.
HA!
I panicked in spring ‘04, really. The agent was making fun of me when I sold (in, like, 3 hours). “Relax for cryin’ out loud, the place’l sell…”)
The sense of relief after closing was profound.
Just imagine how you would feel if you hadn’t sold and still owned that property now! I sold one house in Oct ‘05 (had multiple offers after 2 weeks on market) and a second house in May ‘06 (took 5 months to get 1 offer). If I try to imagine my stress level now if I hadn’t sold those houses I get all shakey…and that’s just imagining! The stress level for people holding depreciating housing assests must be terrible. I know some on this blog have no pity for the speculators, dumb borrowers, etc. but there are plenty of people who were/are busy with their lives and not paying attention. Now, if they need to sell in the next 5 years for whatever reason — loss of job for instance — all of a sudden they wil find a totally different environment than the one that they were “expecting”. I have plenty of friends in that situation — not overleveraged or with toxic mortgtages but still assuming they would be able to pull a lot of cash out of their house when they sold. And some of my friends were planning on selling sometime in the next 5-10 years and retiring. I tried to urge those in the most precarious job situations to sell and rent, but I didn’t convince anyone. However 2 of my friends did sell and rent; they came to the same conclusion on their own and in fact their actions were part of what convinced me to do the same.
I was unable to convince anyone. I think that
people don’t want to
1. believe that it’s going to be as bad as we predict,
2. deal with the hassle of selling & moving again so soon if they bought in the last few years,
3. explain their actions to their “real estate is the best investment” family members and friends.
I just hope that the worst that happens to people I care about is that they are stuck with their home for a while (5 - 10 years).
‘Housing Bubble’ or ‘Peak Oil’. Can’t really say which one gets a blanker look. Which quickly turns to anger if you continue.
I tried to convince several people of what I thought was coming, but they all thought I was crazy. Now they are stuck.
I feel bad, but relieved that I paid attention to the signs.
Peak oil is similar to peak land. It’s an illusion.
Peak Oil pisses me off by just being mentioned. Absolutely proven (not demonstrated, proven) wrong every year for the last 148 years and they demand respect for their CLOD perspective. STFU until there’s evidence.
i hope you are right (but fear you are wrong). as if we don’t have enough problems!!!
What’s CLOD?
CLOD, chicken little oil depletionist.
Vast Oil Pool tapped in Gulf of Mexico
There is something else I disagree with Robert Cote on.
Robert links please for the demonstrated repudiation of peak oil.
It won’t be as bad as the doomsayers but it won’t be fun either.
SM Landlord:
There have been many similar announcements after explorationary wells are drilled.
ALL of the recent wells, once into production significantly disappoint.
Matt Simmons is a hardcore roughneck that grew up in the Houston oil patch and here are his presentations.
http://www.simmonsco-intl.com/research.aspx?Type=msspeeches
This one doesn’t fit Robert’s CLOD description.
Oh yeah and Dick Cheney when CEO of Haliburton said this.
http://www.theviewfromthepeak.net/docs/Cheney_PeakOil.pdf
I think oil producers will have one more glut (cheap oil) period courtesy of the housing bubble induced recession but over the long run peak oil is geologic reality.
i agree, ssb.
news is somewhere from 3 billion to 29 billion barrels worth of oil has been discovered in the Gulf of Mexico. The same story said the U.S. uses 5.7 billion barrels of oil a year. Complicating the story, the oil is 4 miles down, and it will take several years and billions of dollars to extract it. It will probably provide a good bell curve for 8 years and at most buy us a little more time to develop alternative energy, such as build a hell of a lot of nuclear power plants. I’m still not giving up gold, platinum, and canadian oil stock. This discovery is not going to mean we can stop worrying about running out of cheap oil. We are running out of cheap oil.
I just sold in early June. House was on the market for 5 months. I got a really low offer with an explanatory letter about the downturn in the market from the realtor, and then the next day I got a better offer, then the bidding war! So, I was lucky and sold within 10 grand of my asking price. Now I am renting and very, very relieved as everything seems to be really tanking now. My bigest decision is if and when I buy again. With a large amount of money that still cannot buy a house in the Berkshires outright, should I buy when I can offer what I have to pay cash? Or should I really just sit tight and rent for a long time?
I would do the latter. (Not investment advice.)
In this area, you get much more for your money than when my house sold two years ago. It’s not like you’re guessing on the bottom of the market, which is quite different thatn guessing what the top will be, IMHO. (not investment advice.)
Buy when the fundamentals make sense - and only if you feel like doing so.
When a traditional mortgage payment (after 20% down; 30 year term) for what you want is around the cost of renting, and you feel like buying - then buy.
Someday that will happen (the former; the latter is up to you).
From what I’ve seen, the truth is finally out there. People, including those who normally don’t pay much attention to real estate or economics, know that “there’s a housing slowdown” and are starting to have an inkling of what has been happening. Most don’t yet know just how bad it is, and even we don’t know how bad it may get. The only people who don’t seem to get it are those who can’t change course now, like one poor sod at work who’s nearing retirement: just bought a $400K house in a mediocre town and has yet to unload the old one. He wants about $250K for it, yet it is in its own private little ghetto, so who would buy it? Poor sod is in deep, deep trouble since he took out some sort of funny-money “double mortgage” or something to get the new house. I can understand wanting to escape his private ghetto (his neighbors are a mix of city-trash and illegal aliens), but he may well have ruined himself finacially. Poor guy still believes his real estate agent: things will pick up, it will sell soon, hold it for a year or so and you’ll have made tons of money, etc. My buddies and I have tried to open his eyes, but no luck yet. I hate watching friends destroy themselves.
Gotta love the advice of that realtor(tm).
….Unfortunately, I see more than a few suicides coming up here, if folk……(like me)…..in their 60’s….wandered into this quicksand. I guess there’s no age limit on gullible. Or wishful thinking. Those of us who socked away 12% or more of income during 45 working years don’t have the time left to make up for incredibly poor decisions. Heaven help these folk.
It doesnt matter if the Fed cuts rates to 0%… it still wouldnt make a damn bit of difference to someone if they asset they are going to purchase is falling in value from the day they buy it. This isnt a liquidity issue sheeple…geez. There just isnt enough room in REALISITIC rates cuts (say 300bp) that can offset through cheaper financing, the massive capital loss you take from buying into a downturn. We are doomed.
When in danger or in doubt, run in circles, scream and shout, Uncle Sam will bail you out ! Call 1 800 Dial A Prayer