‘Buyers Being More Prudent’ In The Northwest
The Olympian reports from Washington. “An abundance of homes on the market has turned the once white-hot seller’s market into one that is more buyer-friendly, according to South Sound real estate professionals. Home sales fell 11 percent in August, according to preliminary data released Tuesday by the Olympic MLS.”
“Higher inventory levels also meant that homes spent more time on the market. There were 1,730 active list ings, compared with 1,038 last year. The median price of a home was $259,500, compared with $262,113 in July.”
“Olympic MLS Manager Jerry Wilkins acknowledged that the housing market is stabilizing. Designated broker Steve Garrett, agrees. ‘I think it’s leveled out,’ he said. ‘There is more inventory, we’re seeing longer market times. It’s just the way things are now. Buyers are being more selective and more prudent.’”
“Another factor is the construction of new homes coming on the market that might not be reflected in the Olympic MLS data, said (broker) Jim Greene. ‘What’s happening is there is an abundance of new construction,’ Greene said. As an example of how much the market has shifted, 75 percent to 85 percent of sellers last year received multiple offers. This year it has been 5 percent to 10 percent of his business, he said.”
The Register Guard in Oregon. “The once red-hot coastal housing market, which in recent years has seen some of the biggest price increases in the county, is cooling off.”
“Steve Fandrey figured he’d have no trouble selling the three-bedroom house he bought as a rental two years ago and remodeled. Even at a price tag more than double what he paid for the place, the way houses were flipping in Florence, ‘I expected it to be gone right away,’ the Lane County sheriff’s deputy said.”
“But three months have passed since Fandrey first listed the 1,080-square-foot house at $192,000, a price that would have fetched a tidy profit, given that he bought the place for $78,000.”
“With no written offers, he’s now cut the price to $179,000. ‘I’m frustrated about it,’ Fandrey said. ‘But I keep track of what the market is doing. I’m not extremely surprised it hasn’t sold yet.’”
“Nine months ago, Florence Realtor Dale Saari scanned area listings of homes for sale and found eight, between 100 Realtors. Homes simply weren’t staying on the market. On Monday, he checked the numbers again, and saw 395 listings. Over the same time period, Saari has seen an increasing number of price reductions, anywhere from 30 to 40 per week, 56 reductions in the last week alone.”
“Wayne and Marianne Spiller know that pressure all too well. After a year of waiting and sweating, the Spillers recently dropped the sale price of their Collard Lake home to $499,000 and found a buyer. They still made a small profit, Marianne said, but only after lowering the price by $141,000. The home was appraised at $645,000.”
“‘We had two homes on the lake, and we could afford one,’ Marianne Spiller said.”
“Florence developer James Genereaux’s 106-lot Park Village project went from a 100 buyer-long waiting list a year ago to a 10-percent across-the-board price cut for new homes. Genereaux attributes the slowdown to buyers from California having trouble unloading properties there. There’s a particular glut in homes priced above $400,000, he said.”
“‘What’s important is that developers and builders don’t overpay for land and development costs,’” Genereaux said. ‘There were some people going around paying an awful lot of money for raw land. It was overheated.’”
Wayne and Marianne Spiller know that pressure all too well. After a year of waiting and sweating, the Spillers recently dropped the sale price of their Collard Lake home to $499,000 and found a buyer. They still made a small profit, Marianne said, but only after lowering the price by $141,000. The home was appraised at $645,000.”
“‘We had two homes on the lake, and we could afford one,’ Marianne Spiller said.”
These folks are the smart ones. Yeah, they were part of the problem by buying an extra house, but when they saw the writing on the wall, they cut and ran.
I think they know it was never really a $645K house.
Damn! Now they are only down to one house.
OT:
Got a new post up!
SoCalMtgGuy
http://www.housingbubblecasualty.com
Gee, I wonder why they didn’t just rent out the second house?
Wow, so the selling price of a house has something to do with what a buyer is able/willing to pay. Interesting concept…
I don’t recall this being mentioned in print by the MSM before. I thought you arrived at your house’s “fair market value” by taking the July 2005 comps & appraisal and adding 20%.
Is this “new math” or something? What gives???
20% is for the rest of the world.
Palm Beach in particular, and FL in general is different. We use the same equation, but add 40% here.
Haven’t you heard, there is a stream of people heading here with buckets of cash to buy everything in site.
“…buckets of cash to buy everything in site”
That is so much bullshiite! I heard that there were entire YACHTS made entirely out of compressed cash, burning $1,000 bills for fuel, that were steaming down here in a veritable ARMADA to buy everything in sight…. Sheeesh… Its FLORIDA for SHIT’S-SAKE! They aren’t making any more land!!
I thought it was “buckets of cash and a box full of stupid”
I think you are (deliberately) confusing “fair market value” with “wishing price”
I have vacationed on the oregon coast almost every year since I was a child and recently the prices have gotten way out of hand no doubt in my mind they are in for a large correction.
“Nine months ago, Florence Realtor Dale Saari scanned area listings of homes for sale and found eight, between 100 Realtors. Homes simply weren’t staying on the market. On Monday, he checked the numbers again, and saw 395 listings. Over the same time period, Saari has seen an increasing number of price reductions, anywhere from 30 to 40 per week, 56 reductions in the last week alone.”
Hmmm. Were 8 listings, now 395. That’s only a 4938% increase. It’s now a ‘normal’ market. There was no bubble or speculation here.
you read my mind. i’d call it panic. and you need a wet suit just to swim there. i remember hitching up the coast when i was 18.
“Nine months ago, Florence Realtor Dale Saari scanned area listings of homes for sale and found eight, between 100 Realtors. Homes simply weren’t staying on the market. On Monday, he checked the numbers again, and saw 395 listings. Over the same time period, Saari has seen an increasing number of price reductions, anywhere from 30 to 40 per week, 56 reductions in the last week alone.”
Hmmm, interesting. If I am not mistaken, this happens to be that coastal town in Oregon that our fellow poster (I think his handle was Moman?) said was “special.” Oops, looks like the bubble showed up there too!! And with all due respect to those who deserve it, the white trash coastal areas are never, ever going be the next Malibus and Carmels.
Not the same town but your point is noted. I guess appreciation has slowed from 50% per year along the coast. My point was that for high quality properties in good locations on the Oregon coast the prices are still very low compared to similar ptypes of propertiy in California. I think that in the longterm the demand for these properties from retirees and lifestyle users will keep the prices going up. I don’t expect 50% a year or even 20% but I don’t think prices will declinefor this type of property. vacation homes and poorly located properties may suffer more. the town I like is Newport - and I think it is far more beautiful than Malibu or Carmel.
You can’t compare Oregon coast with California coast. Yes, it is beautiful but it is also cold 100% of the year and fogged in and rainy for over 50% of the year. Absolutely apples and oranges.
I agree. The Oregon Coast is lovely, but the climate and frigid water is not for everyone. Why do you think the population centers are east of the Coast Ranges. The Oregon settlers saw it and chose a bit less rain and damp. I too thought CA retirees were the drivers of all this, but after reading the Jackson Hole post, I think the spectacular rise in prices has been largely driven by specuflippers. We will see…
So properties can appreciate quickly, but they can’t depreciate quickly?
Right. The Oregon Coast ain’t Malibu.
What goes up too much will come down.
I, too, find it very beautiful my friend. There are many, many beautiful areas in Oregon, California, in every state really. But what I like to pay attention to are the local economies when looking at home prices. And the argument that retirees, equity locusts, etc. are going to flock to certain areas and push prices into the stratosphere indefinitely is just proposterous. I cannot even count how many times I have read or heard that Californians, retirees, etc. are “going to be coming here in droves.” Here in Washington, I have been hearing this drivel for years now. Everyone has their opinion or defense as to why their area is “special” and immune to a bubble. I am so damn tired of it. When one takes a look at the local economy, unemployment, median income, etc., it is easy to ascertain what the median home price “should” be. Since when does what people expect in the “future” have anything to do with “current” prices? That is BS realtor speak as far as I am concerned. I am maintaining ANY AND ALL AREAS WHICH HAVE EXPERIENCED RAPID PRICE INCREASES OVER THE PAST 6 YEARS ARE OVERINFLATED AND SUBJECT TO A SEVERE CORRECTION PERIOD!!! Special my A$$.
“ANY AND ALL AREAS WHICH HAVE EXPERIENCED RAPID PRICE INCREASES OVER THE PAST 6 YEARS ARE OVERINFLATED AND SUBJECT TO A SEVERE CORRECTION PERIOD!!! Special my A$$.”
Well put. Why is it so hard for people to figure that out?
There will be no exceptions.
Hey Butch,
Are you in STL?
Downtown Portland, surrounded by cranes and overpriced lofts. The loft crash is going to be horrific.
Working at a coffee shop or microbrewery will not buy you the aveage 500K 900sq ft concrete boxes they are selling downtown. “It’s different here” and “All the Californication money coming” are the same mantras you are hearing in your towns.
The Oregon coast is beautiful, I agree.
So is Mendocino, CA, but it’s an economic basket-case.
That’s what I see when I look at coastal Oregon: beautiful scenary; economic disaster. Compared to California, Oregon’s weather works against it. Compared to Washington, Oregon’s politics work against it. Even the geography works against it, not a single South-facing beach to offer shelter. Fishing is dead, logging is dead, politics are stuck in the early 20th century, no economy to speak of, Intel pulling out because they can get cheap water elsewhere. Other industry pulling out because they can get cheap power elsewhere. Did I mention horrible political climate? Ever flown over Oregon and looked out the window? Potemkin forests along the highways but the bulk of the state is denuded.
Am I in a crappy mood tonight or what?
At least Mendocino has good locally-grown reefer to help compensate for the lack of above-board employment opportunities
The growers I know are in Trinity County. Talk about a basket case: 50% on welfare last time I chacked.
DUDE!!!
Mendocino still grows good grapes for extra-dry white wines.
I am a member of the wine club at Navarro, who produce great inexpensive whites year after year. Forget their reds, nothing to see there. And I’m not telling about anything else related to vacationing near Mendocino, except that the best Pinot I’ve ever had came from a winery that is only known for for their champaigns, and I generally do not like Pinots.
Roederer estate is the best sparkling wine in CA in large scale production. You should try them out.
I find a lot of bottle variation with Navarro which has cooled me on buying it. But I agree when it is good, it is really good. Handly looks interesting up there and may become a good red wine producer. Many people are now making great Zin from the area, but most of the wineries are located much further south.
Oliver
Oliver:
Thanks for the reminder! Roederer is the winery that made the best still Pinot Noir I’ve ever had. They normally use it to make sparklers, but they bottle the extra wine and sell it through their tasting room. Great stuff!
On the Zin, I am not surprised that any of that bottled in Mendocino is grown further south. Zin seems to like hot climates - for example Temecula grows Zin here in SoCal that is vinified and bottled up in Napa.
Zin is a grape that can handle extreme temperatures. The character changes depending on the location, but for cooler climates try the Rosenblum or Ravenswood Zins from Mendocino county.
I prefer the cooler climates with there intense black pepper and raspberry characteristics. When the grapes get really ripe the wines are almost viscous, but with enough acidity to not be cloying.
I agree that Roederer had made some great still wines (and rumor has it that they make the base for Germain Robin Brandies) but they don’t make it into wide distribution.
Oliver
ot, but when i see on my aol screen “wait, it may not be such a good deal” next to a picture of house with an auction sign in front of it — as i just did — you know the SHHTF!
OT—Alert! St. Joe announces exiting home building
http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060907:MTFH89492_2006-09-07_21-32-54_WEN5132&type=comktNews&rpc=44
wow!!!!!!!!!!!!!!
More details on St. Joe:
http://yahoo.reuters.com/news/articleinvesting.aspx?view=PR&symbol=JOE.N&storyID=285996+07-Sep-2006+BW&type=qcna
Erm… about time.
One of my best shorts in recent years. Damn.
Is this the news that hit BZH today? How bad does the news have to get before the other HB stocks sink to fundamental value?
“Earlier this year, JOE announced a long-term relationship with Beazer Homes, USA (NYSE:BZH).”
HB’s marginally up on huge volume. This is very fishy indeed. Program buying? PPT?
I give up on the PPT theory until I see some empirical evidence. But I believe that there is a great story behand the bizarre empirical regularity of homebuilder share prices going up on bad news days, and given the way Enron’s saga turned out, I am very optimistic that it will eventually come to light.
“behind” not “behand” (my hand slipped…)
GS -WOW. A complete 180 in your stance on the PT. Might I have the pleasure of saying I had a part in it??
I feel I must explain something.. People seem to think that if they has an appraisal done for finance purposes (refi) and the value came to be $400,000 six months ago, then they decide to sell the house and list it for $419,000 hoping to get the value 7-8 months ago in a free falling market like we are seeing today they are dreaming. On the refi there is loan pressure to make the deal work (we all know this) and everyone is happy as pie if it goes through, but the value is flawed..I know it should not be, but If someone came to me and said I would like a true estimate of value maybe the $400,000 would now be $395-390. All I know is that the comparables are getting few and far between. One good thing is it will be easy to appraise in a falling market cause the comps are higher. Appraisers can only look @ the past data and active listing (days on market).
Let me ask you something. If I am a buyer and I hire you to appraise a property I’m looking at (I want to lowball the owner and show him your appraisal as evidence), are you willing to “look” for things that are wrong or reasons to take value DOWN instead of up? I’m going to be looking for an appraiser to do that in the future and wanted to know if it’s even ethical to ask for a “lowball” valuation.
That’s a really good question.
It was pretty common to “hit the numbers” in appraisls on the way up, wasn’t it?
Although there are probably more beneficiaries to upwards appraisals than downwards.
Unless of course, sellers keep refusing to lower their prices, as the NAR has asked them to do. Who knows, maybe the whole industry could get on board with this as a way to move houses if nothing else.
Was/is the monkeying with appraisals illegal? Or is it merely unethical?
If it’s just unethical, you may be onto something there TXchick.
As we’ve all seen, the Realtors/banks/lenders/appraisers have no problem with unethical.
And I’m sure that it would catch on with buyers, just as fake upwards adjustments caught on with sellers.
Could help turn things into a REAL buyers market!
The upward appraisals included many kickbacks in the chain, not the least of which was to cover closing cost and other expenses for the owner. Since you never have to pay off your mortgage, only sell it or refinance it in two years for 20-100% profit, the buyer didn’t mind paying off the mafia.
This situation happens all the time between husband and wife in a divorce. One wants it hige and one want’s it low. It usally falls in the middle. Appraisers are not home inspectors. If you want to low ball someone get a home inspection. The way they write those reports it makes it seem like every house is a POS.
TxChick,
In case there are ethical concerns which make appraisers reluctant to pursue your strategy, I suggest Plan B: Find a competent home inspector, and insist on allowing him to do a very careful inspection for any and all flaws with the property. Then find an appraiser who is willing to take the inspector’s report into consideration when writing up the appraisal. I don’t see where this would raise any ethical concerns, but I am just thinking while typing here…
Maybe that’s what’s wrong with Zillow - why the zestimates seem so high to me.
If they ignore current inventory and just average recent comps, then their market value estimates will simply not pass a red face test.
Zillow usually has a 100k price range of low to high value and comes in at the middle range on the estimate . This is not a accurate appraisal . I just use Zillow to get recent sale comps and property information .
In addition, if a appraiser came in with a lower value than warranted pursuant the request of a buyer it would be conspiracy to commit fraud IMHO.
Sure if a appraiser has honest knowledge of defects of a property the appraiser should make adjustments for that in the price . They have a adjustment section on the appraisal form .
I remember one time a appraiser noticed foundation problems on a purchase .The appraiser noted this in his appraisal . The underwriter refused to fund the loan until the foundation was fixed ,prior to the close of escrow ,thinking the buyer would walk because the underwriter didn’t really want to make the loan .
You would not believe it ,the buyer had the foundation fixed at his own expense prior to close of escrow out of his own pocket . The buyer was a lawyer . The lender funded that loan so fast your head would spin .
“One good thing is it will be easy to appraise in a falling market cause the comps are higher.”
why should the comps be higher in a falling market? please expand.
comps are higher because the last sale that took place was below the previous price, but still higher than what you will get for yours, and so on, and so on.
Thats the problem in a declining market ,the appraisal becomes outdated as quick as the next lower sale .That’s why good appraisers also look at listing prices to see what the trend is ,( but list prices can be upwardly bias as GetStucco as pointed out ).
that’s why an ethical appraiser emphasizes pending sales and listings in a declining market, rather than 6 month old sales. when doing ERC (relocation appraisals) the appraiser is expected to forecast market trends as well.
I have been stating (oversupply) on my recent appraisals with no flac yet from picky underwritters.
Brilliant article about the oversupply of houses here. Great data comparing empty homes in 2001 and empty homes in 2006.
http://www.safehaven.com/article-5841.htm
Here is a pretty decent analysis on the housing market/economy.
http://www.financialsense.com/editorials/bronson/2006/0907.html
Thanks for that link; excellent site, lots of good info there! And a great page to link to Shiller’s chart on the home prices for the last 120 years.
Thx!
- “With no written offers, he’s now cut the price to $179,000. ‘I’m frustrated about it,’ Fandrey said. ‘But I keep track of what the market is doing. I’m not extremely surprised it hasn’t sold yet.’”
- Stevie …. lower f*cking price to 98K.
People seem to forget the 120″ of rain the coast gets…the months of fog. Astoria is supposed to be the new happening place. I bust up laughing when I read that: have these people even spent ONE winter in Astoria?
As to the prices, I was in Manzanita two weeks ago - 1700 sf house one house in from the beach was 800K. That’s about 2.5 times what it’s worth, in my book. I rented for $900 a week, if that gives you an idea. And the place I rented was two houses from the water - four bedrooms.
You’re right. Lewis and Clark could not have picked a worse place to spend the winter during their Voyage if Discovery.Or maybe that was payback from Sacagawea.
Didn’t the governator film a movie there, ‘Kindergarten Kop’ ??
UK prices up in aug
=weird
They have a long history of serfdom. That is their “new normal”.
Not that weird given the way figures there are compiled. Hardly in an impartial way. Its usually the large Building Society’s (lenders) publishing numbers. They each have there own way of doing it that doesn’t in my opinion provide an accurate reflection of the market. One for example, uses asking price to compile their numbers. I mean, really…
Also, the UK consumer is a much less informed consumer than in the US. Here the use of the internet dominates, people are market savvy. The numbers here are definitely skewed as well (median value nonsense), however they do have a modicum of honesty about them. In the UK I never believe any statistics generated. The UK market well go the same way as the US housing market. It will just take longer………
dude- at least UK customers speak english
and they’ use arm type loans , nes paw
One big big difference between the UK and US is that the UK is not only very small, but has very restrictive planning laws which severly limit the supply of new housing (you thought California was tough?)
The bubble there cannot destroy itself through oversupply, as it is doing throughout most of the US. It can only deflate on the demand side.
Some pretty strong stereotypes there, Gary!
UK use of the internet is one of the highest in the world - 62.9% v. 68.7% for the US.
The UK also has a much broader and independent media sector, particularly the press.
In terms of stats, if asking price were used currently in the US, I would think it would show the slowdown more accurately than the lagging median statistics. To be honest, the best data comes from the Land Registry anyway, which is actuals, lagging, just like the US.
I do agree the UK market is overvalued. It will be interesting to see how far it falls, and I think in some bubble locations, where we have more land and therefore overbuilding, it could be bad, particularly northern cities.
Regards,
Loafer
Whoops, 11% reduced sales and a slipping median.
Looks like not everyone is willing to pay premium to live here in paradise. LOL.
Not that weird given the way figures there are compiled. Hardly in an impartial way. Its usually the large Building Society’s (lenders) publishing numbers. They each have there own way of doing it that doesn’t in my opinion provide an accurate reflection of the market. One for example, uses asking price to compile their numbers. I mean, really…
Also, the UK consumer is a much less informed consumer than in the US. Here the use of the internet dominates, people are market savvy. The numbers here are definitely skewed as well (median value nonsense), however they do have a modicum of honesty about them. In the UK I never believe any statistics generated. The UK market well go the same way as the US housing market. It will just take longer…..
And, I’ve been told, UK Realtors charge only 2 to 3% commission total. How does that work? (4th request)
I think it may be as low a 1.5% in some cases.
You have said that you believe the standard 6% commission model is inherently flawed. What’s wrong with it?
Would you rather pay 3% or 6% for the same service? Commissions in the United States are much higher than anywhere else in the world. Great Britain has a 1.5% average. China has 1%. Australia averages between 1.5% and 2%.We are one of the only countries with excessive commission rates, and nobody yet has come up with a compelling model to provide customers with full service because that’s what they want - full service. They want somebody to hold their hand and reduce the stress of that process.
http://www.nysun.com/article/11446
They charge 1% typically. And the homesellers still complain like you wouldn’t believe.
Thanks Skip and CPAone,
I have tried for months to get this large issue discussed. Some realtors charge as much as 7%. Should there be an a la carte menu?
1) Sign in yard with flyer, answer phone call inquiries = 1%
2) Open house every week? = 1%
3) MLS with photo, accurate, grammatically-correct description, and virtual tour = 1%
4) 1 to 3% for buyer’s agent/broker.
5) Feature ads in LA Times and OC Register (for example) = 1%
Cut it all by half, and I think we will see the emergent RE world. Especially in light of huge valuations/rewards vs. other comparable jobs.
1% is rare more often internet only - 1.5-2% more typical.
They make a decent living.
I have no idea why you pay so much. It doesn’t make any sense. If it is any consolation, the Germans are the same as you.
Regards,
Loafer
The same way it’s going to work after the housing bubble burst and doldrums that follows.
Housing prices are up 88% nationally over the past 5 years (per Zillow). That means that 5 years ago the comission (at 6%) for selling a $200k home would be $12,000. Today, that comission would be $22,500.
How many of you employee types have gotten 88% increases over the last 5 years?
I actually got more then an 88% increase in the past 5 years.
Could have had something to do with graduating college 4 years ago and working my ass of though.
88% for doing the same exact job, in a market where my cat could have closed a million dollar deal? Ugh, no, I don’t think that’s normal.
not to defent realtors here… but…
while they may have seen total commissions go up 88%… the number of realtors has also doubled (you cannot walk across the street in Boston without stepping on one or two) so each individual realtor has probably seen a decline in revenue (on average). I think that in a rising market realtors spend all their time looking for listings and in a falling market they look for real buyers… but in neither market do they spend time trying to sell your property.
Tracking Whatcom County, WA - far NW corner of the state. Inventory for all types of properties (sfh, condo, land, comm…) for the entire county. Not sure how accurate the numbers are, I get them from the local Keller Williams site:
10/10/05 2,102
01/04/06 1,951
09/07/06 3,484
Browsing recent listings and noticed two pieces of property (both SFH with acreage) that I remembered seeing for sale last year, so I looked them up on the assessors web site. One had been purchased Summer 05 and the other November 05. Both were asking for more than paid last year. But the increase on one would barely cover carrying costs since purchase.
Talked to an older guy, friend of our landlord, who is originally from So. Cal. His son still lives down there and is losing his $600k house in foreclosure. I asked him if he wouldn’t mind telling me how much his son was making in order to qualify to buy a house at that price - his reply “apparently not enough”!
OT, but worth reading. This reporter was beaten by an incensed couple for looking into “shady” RE deals (which in my opinion applies to just about every RE transaction since 2002…)
From the LA Times.
SAN DIEGO — A television reporter investigating a suspected real estate scam was attacked by a woman and her husband, who punched and tackled him as a cameraman videotaped the incident.
http://www.latimes.com/news/local/la-090706reporter,0,4558735.story?coll=la-home-headlines
My God these kinds of people are the ones that realy make me want to get out of california. As the bubble continues to deflate and frustrations rise we will see alot more crimes like this. I predict it will get to the point where instead of scammers it will be Joe Sixpack. The housing downturn is going to hurt alot more than just pocket books.
“My God these kinds of people are the ones that realy make me want to get out of california.”
No No No They deserved each other!
These are the kind of people who make me glad that I don’t live in a California prison, which is the place to which they will soon move.
Can someone there in San Diego tell us if those two were Re/Max or KellerWilliams agents.
My guess would be Re/Max.
thanks.
He fought like a Re/Max wuss, so that is my guess. Plus, I think the KellerWilliams folks kick and bite more, which I didn’t see.
Neither… he is an independent real estate agent “working” out of La Jolla.
Make that he WAS an independent real estate agent… he is now looking at another business venture, making license plates.
The report says they posted bail and couldn’t be reached for comment. I would have thought with an assault charge like that they’d keep ‘em off the street!
“Interest rates crept up just enough to start disqualifying large groups of first-time homebuyers,” Saari said. “They aren’t able to afford loans because their debt-to-income ratio is too high.”
WHO THE F IS THIS GUY!! Debt to Income ratios are too high because of interest reat increases. How about PRICES being elevated to unachievable levels,thus forcing buyers out of the market.
Exactly! Prices got to high. A 30yr fixed below 7% is still relatively cheap. It’s the asking prices that are the problem, not interest rates. People associated housing are just trying to jawbone the Fed into a rate cut. A rate cut won’t work though now. As prices are already high. When the Fed lowered a few years ago prices were much lower, which made the rate cut more effective
You really got to love the old “it’s interest rates”.
A 1% point increase on a $500K loan is $5k per yr at a 33% qualifying ratio, this would mean one needs $15k in income to pay for the rate increase. Well, if one is taking a $500k loan, one should be making enough that the extra $5k in interest isn’t a deal breaker. Sure, it’s $400/month, but again, it shouldn’t be a deal breaker. Also, you get rid of 1/2 the 1% higher rate by paying a couple of points.
I’d be willing to be that when “they” refer to the higher rates, that “they” are referring to the reduction in the spread between the ARM, I/O and teaser rates vs. conventional financing. MAYBE, JUST MAYBE, the GF population has thinned out enough that there aren’t many GF left willing to become “Suicidal FBs”.
The real reason for the current market problems is the prices went up to high in to short of a period of time .
Have you ever seen a 10k car inflate to 100k in 5 years ?
I’m beginning to think that in a frenzy/mania we cannot count on the market value comp approach to determine value .
Since the people who where buying and setting market comps were brain-washed sheep,or flippers who believed outright lies from the cheerleaders, and the media refused to do their job ,we have to have a check and balance system .
A check and balance system would in some ways be a violation of the free market system .Keep in mind that the lenders use to do the risk analysis job and use to be the check and balance system.
I have made a suggestion that if a area goes over a certain max. appreciation rate in one year the buyer has to put a bigger down payment . That way markets can’t be driven up by speculators that simply create false markets .Let the speculator take the risk by putting their own money on the line by higher down payment requirements .
Really should the market value of a area be determined by how many flippers want to make a short term flip,or should it be determined by long term end-user demand /local wages and rental prices ?
This is why I said the other night that I carry old fashioned candy on my walks and dangle the candy in front of old ladies. If they tell me what the houses on their streets just sold for…Bingo, they get candy.
I’m sorry Pat ,maybe I’m just tired, but I fail to see what your point is .Can you maybe clue me in a little more .
The median price of a home was $259,500, compared with $262,113 in July. Olympic MLS Manager Jerry Wilkins acknowledged that the housing market is stabilizing. Designated broker Steve Garrett, agrees. ‘I think it’s leveled out,’ he said. ‘There is more inventory, we’re seeing longer market times. It’s just the way things are now. Buyers are being more selective and more prudent.’”
Levelling out, or crashing? It is hard to say from a data sample of size one, but the price decline occurred at an annual rate of 11.3%*, with an ongoing inventory crash to boot. If I were a betting man, I would bet crash, rather than permanently high plateau.
* [(259,500/262,113)^12-1] X 100% = - 11.3%
This A-Frame in Bandon, Oregon was recently dropped in price by $50K to $350K: http://tinyurl.com/zxbeg
Sorry, but even on a raw land basis that seems expensive for a shack with 800 sq ft.
Bandon (south of Florence) has had huge runups in prices after a coastal golf course went in a few years ago.
That’s not just any golf course, that has replaced Pebble Beach as the best in America. It will soon be a national treasure.
Bandon has a great boutique cheese factory with the Maytag Blue cheese.
Probably a total of 10 jobs for that prominent employer.
Bandon OR also has Cardas cables. They make hi-end audiophile quality cable. They’ve been there for years.
I remembered this because I happened to wear the company’s t-shirt today.
“Wayne and Marianne Spiller know that pressure all too well. After a year of waiting and sweating, the Spillers recently dropped the sale price of their Collard Lake home to $499,000 and found a buyer.
They still made a small profit, Marianne said, but only after lowering the price by $141,000. The home was appraised at $645,000. ”
Thats a 21% hair cut off the top. As I recall the NAS dropped some 20% in its first quarter. Not bad! Wait for 4th quarter and 1st Quarter to see major drops of more …. we may see tht 50% drop..
Still as the other buyer puchased two years back and marked it up 100%… hardly any justification based one Income or Rental equivalent. A 50% drop or more makes sense to me.
You know they said the home appraised for $645,000 ,but that doesn’t mean that a bunch of equal value homes sold for $645k
recently and they just took a 141K haircut . If they bought the property for 645K anytime within the last 2 years and they just took a 141k haircut ,than Im saying “wow “that market is crashing .
‘they still made a small profit’. The buyer still overpaid on the prior owners overpaid price. Nothing reduced here - just a same-amount sale. Now had they LOST 141K and sold for say $300,000 you’d be talkin’.
Dropping the for sale price to 499 doesn’t mean it sold for 499… buyer may have lowballed that asking number.
I do love a guy who calls me “prudent,” not “stubborn.”
*swoon*
Senate to Fed: “Yes there is a national housing bubble, and we need to figure out how to deal with the blowback…”
——————————————————————————–
10 a.m.
Banking, Housing, and Urban Affairs
Housing and Transportation Subcommittee
Economic Policy Subcommittee
To hold joint hearings to examine the housing
bubble and its implications for the economy.
SD-538
http://www.senate.gov/pagelayout/committees/b_three_sections_with_teasers/committee_hearings.htm
I know! (Raises hand!) How about letting us honest taxpayers take up the slack for idiots who lost their shirts buying overpriced houses?
Senate to D L………There is a bubble!!!!!……..now shut up you fool…….we’ll take it from here.
luvs –
Who’s D L?
And what’s footie?
I wonder if Ben Jones will be invited to this? Arwen posted this two days ago and stated that he asked his Senate contacts to talk to Ben.
As long as they are openly discussing the market-condition-which-must-not-be-named, it seems like they ought to consult the leading unbiased experts, rather than rely on MSM shills who make more money when real estate goes up.
Lennar cuts earnings estimate, cites weaker housing market
Look for LEN to close about where it opens today, after a steep selloff on the opening bell. The new way to sheer sheep is to shake them out with a scary selloff, then pump the share price back up so that you can do it again tomorrow
31% drop in earnings estimate. This $hit stock might even go up 10% today. LOL
Fair is foul, and foul is fair
Hover through the fog and filthy air.
OT — Is goog on a permanently high plateau now? How do growth stocks level off to such a nice soft landing after rocketing skyward and convincing the bull set they will go up really fast forever?
http://tinyurl.com/nxv23
the Spillers recently dropped the sale price of their Collard Lake home to $499,000 and found a buyer. They still made a small profit, Marianne said, but only after lowering the price by $141,000. The home was appraised at $645,000.
No there’s a number thrown up by a 24 hour-turnaround, trainee
GED-educated hack workin’ for a two-bit appraisal bucket shop.
The moron’s only off by 30%.
Just think of the HELOC loans out here done with the same level of competency and expertise.
So much forFederal Appraisal Standards Board and their total USPAP BS.
Does anyone know how the market is doing in carmel?Is it adjusting?Is there more supply?