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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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everyone post thier area’s % drop so far in 06
and include the 1989-95 % drop
DC area off 8%+ so far
dropped 12-14% in 90’s
What will come out of the Senate hearing on the bubble next week? Who will appear?
in relation to the senate bubblehearing here is a quote from ben bernanke in oktober 2005
bernanke “There’s No Housing Bubble to Go Bust”
http://immobilienblasen.blogspot.com/2006/09/bernanke-theres-no-housing-bubble-to.html
one year later the hearing. well done bb
the fedmembers are all the most overratet on this planet
Let’s keep a very close eye on that one. I propose a kind of bitbucket for all gov hearings on this issue. I am already ticked that it was allowed to go this far and want to know in advance if I am going to get personally shafted by those who claim to represent me. Of course it could end up with some of those in RE and Banking getting the shaft. Naw, they’ll not touch the Banks. They is the Banks. That leaves DL, poor little DL …
It will make all the news channels and cable. Lots of people will see the story - and then they will decide to wait for better prices b4 they buy. Three cheers for Congress - everything they do seems to have unintended consequences
It was just so satisfying to see Liareah on Bloomberg Thursday. Watching him squirm like the worm he is. Trying to explain why he’s had to adjust his rosy forecast to the negative yet again. Even the host seemed to feel sorry for him as she could have asked him some tough questions that would make him duck under the table and cry.
Well, I for one was prepared for this bubble for many years. After all, they made a movie about it. Does anyone remember that movie about the (then upcoming) Housing Bubble? It was made way back in 1982. It was called “Poltergeist”, and was packed with prognostication & metaphor about all of this.
In the beginning, everything is fine with the happy family in their happy home (the housing market). The husband is a successful agent for a large housing development/community where the family also lives. Of course, the greedy land developer had built the homes on a former graveyard site he had relocated, but never moved the bodies (changing the nature of property that already had a noble purpose into a money-making venture, or the condo conversion market).
One day, the little girl is looking at the TV (mortgage lenders/banks) on the channel with no signal (Greenspan), a presence comes out, and she mysteriously states in a sweet tone, “They’re Heeeeere.” The “TV people” or ghosts, a clear metaphor for the flippers, had come to town.
At first some of the family members have fun with the strange happenings that start to occur in the home (we enjoyed and accepted the increase in value of our homes). Slowly but surely, the house begins to turn on them, just like the housing market bubble had affected many of us happily going about our lives. During the heart of the movie, the little girl, who represents those of us who look at a house as a home, and not just an investment, is taken away by the ghosts, and the family has to find some way to bring her back from the other plane of existence (Lereah’s imaginary world where all renters will be priced out forever). They bring in the psychic/telepathic/I speak to dead people woman who is of small size but able to see what others can not and see the future (the small but visionary group, telling it like it is. That would be Ben, us bloggers, Shiller, Roubini, Schiff, and everyone else who saw this thing coming and were not in denial!). She shines a light on what is really going on, tells the family the truth, attempts to bring back the little girl and does all in her power to clean the house of the flippers led by the “terrible presence that is in there with her” (Lereah). She finally succeeds as the girl is brought back (the housing craze suddenly stops as it did just over a year ago) but even she didn’t realize that the ghosts were not gone for good (we’re damn good but can’t know precisely when it will end and how it will look when it’s all over).
For a very short time, things are quiet (real estate business comes to an abrupt halt). Then, the chaos begins again in a different way (dramatic turn-around from sellers market to sellers in a frenzy to sell with little luck). The family narrowly escapes the house as it is taken over by corpses and various poltergeist entities (the very last of our group sells to the next greatest fools, takes the profits and runs). That brings us to about where we are right now and will likely be for the next few years. As the family begins to drive away, the teenage daughter, who represents the F’d borrower, is dropped off by her boyfriend in front of the house and gets out of the car. Breathing heavily, she looks at the home which is now shooting out electrical pulses. She screams “WHAT’S HAPPENING???!!!!” But it is too late. The flippers have already done the damage. Her home is crumbling as it loses value and she becomes upside down in her “investment”. Bent on revenge, these flippers continue to terrorize the home (screams of injustice, requests for bankruptcy, default on loans, beg the Fed to stop raising rates, and ask for the government to bail them out).
The house, again representative of the housing market, then begins to implode and dissapear into oblivion. No one will want to live on that lot for many years, if ever, and it therefore loses value. In the very last scene, they show the family who want nothing to do with housing. They move into a motel (they rent) and get rid of the TV (banks in big trouble and their stocks tank), which is one of the things that brought the flippers into their home in the first place. While it isn’t 100% paradise, they are comfortable for now and are happy to be out of that disaster until the smoke clears.
Don’t believe me? See the movie for yourself, it’s full of prognostications of this bubble. For example, remember the guy who kept tearing off pieces of his face and threw the flesh and blood into the sink until only his growling skullface remained? Exactly how the flippers who bought in summer 2005 are feeling right now.
-UW 9/8/06
UW — hilarious and quite excellent! what a lot of talent on this board!
wunderbar!
Very good but if I were Ben I’d want to be played by someone other than that little old lady.
Only a metaphor. When the movie is remade by us we’ll let him play the role of Robert Cote’.
Centex is building a 200 +housing project in Atascadero, called Dove Creek,part on an old cemetary site. They relocated the bodies. I think they got them all? But perhaps they didn’t. Bad Karma, as they are dropping prices 100k per unit and sales are in the shitter. Another Poltergeist site perhaps. You can see it at 65mph,to the right,as you drive up 101 toward Paso Robles.
The homebuilders are screwed a lot worse than many think they are—especially smaller private developers and builders.
Not only will they have massive inventory write-downs when they can’t sell the land for what they bought if for, but they also have massive interest expense built into the homes they are building. They account on a ‘completed-contract’ basis, meaning that all the cost of building the home (labor, materials, etc.) are capitalized and put into inventory (as opposed to being expensed) until the house sells.
This includes interest expense! I was just looking at KB’s latest 10-Q and saw that the amount of capitalized interest this quarter almost doubled from last quarter (up $50m+) and inventory climbed by over $2b.
That ‘additional’ capitalized interest (I say additional instead of ‘total’, because it represents an unusual high level of inventory on the books. Would shave 25% of earnings off the books.
Writing down their inventory by 30% would wipe out nearly all of the companies equity.
And KBH is one of the stronger companies.
This same dilemma is also affecting smaller home builders across the country. Massive bankruptcies with developers all over the place. They simply can’t sustain the level of inventory they have. They have to move it quick.
Why does the stock market have such a hard time figuring out the obvious? It sure doesn’t seem to be as efficient as academic finance theory suggests it is supposed to be. I guess this is part of the conundrum — why the market does not quickly price in common knowledge. When the conundrum ends, you can be sure the homebuilder share prices will have reverted to pre-Y2K levels.
Buffett has long been critical of the efficient market theory. He subscribes to the “manic depressive flock” view of wall street, where stocks are often mis-valued but over time pass through fair value.
That is pretty much what Malkiel says in “A Random Walk on Wall Street” — the market is efficient, in the long run.
Mathematician John Allen Poulous, in _A Mathematician Plays the Stock Market_, argues that the more people believe in the efficient market hypothesis and act accordingly, the more the market diverges from efficient behavior, and vice versa.
That should be Poulos, not Poulous.
All powdered and coked up market. Well in the US when the bunch of robbers and monkeys called the US elite have a problem, they make a little war on a ruined thrid world country with a lot of oil. Iran is probably the next one on the list. That way everybody forgets the crooks that systematically profit from the bubbles and the wars.
i always wonder about all the analyst on the calls.
the have been mislead from managemnt for 4-6 quarters and still they are very very tame. no tough questions.
the mood is almost relaxt on every call (except wci). amazing.
no wonder wall strreet has such a bad reputation.
fits inton this topic.
[KBH] CITIGROUP CUTS KB HOME PRICE TARGET TO $75
hahahaha
CPAone;…..—especially smaller private developers and builders.
Oh how true !!! There has been rampant speculation “In Land” just like housing (Land Flippers)….They are SCREWED….
What’s the market going to do with HB?
St. Joe and Lennar had bad news after market closed yesterday but there were plenty of price rising earlier this week [in spite of Hovnanian results and warnings from the likes of KB Home and Beazer].
I bought more KBH puts when the stock peaked yesterday (Thursday) afternoon. While the initial drop in response to the KBH warning may have been over done, the move from something like -5% to +1.7% was knee jerk crazy.
Lots of people are trying to the call the bottom in the housing market. Most readers of the blog, including me, don’t think that the decline in home prices is over (it’s barely begun) or that the NAR’s prediction of a very slight decline in home prices followed by steady price increases is any more than wishful thinking and/or self serving propaganda. The builders will keep warning for another 6 to 8 quarters IMO.
I bought my KBH puts when the stock price was 58, Im sitting pretty. I think theres more to gain by buying puts on lenders and midlevel restaurants/retailers. I still have some puts in LEN and TOL, but ive shifted towards NDE, Countrywide, Gap, and applebee’s. Any other ideas out there?
Circuit City, Best Buy, Sony, Harley Davidson…
I’m also making very risky bets on Goldman Sachs, Wachovia, Washington Mutual — in anticipation of some kind of systemic event and/or credit market implosion (long-term leaps).
my dream witness list:
Suzanne
Assad Suleiman, who will take the fifth
Alan Greenspan, who will also take the fifth
surfer-x
Only Sen. Bunning will be allowed to ask questions. Suzanne will sell him a condo in Ft. Myers.
Naw..he wants to go to spring training in P.R.
Maybe he can phrase his questions carefully, no as not to offend any major banking contributors. Keep the focus on beating up Fannie and Freddie. Let’s wait and see.
socalmtguy is out with a new post.
always worth reading
http://www.housingbubblecasualty.com/
The debate even in the MSM is now crash-and-burn vs. hard landing rather than HL vs. SL. Herb Greenberg is now clearly in the C&B camp; here’s his take on Robert Toll’s analysis:
Toll: “This isn’t a soft landing — it’s harder than a soft landing,” said Toll, whose company builds move-up homes in nine states, including California. But Toll denied that the market was headed for a more dramatic decline. “We are not crashing,” he said.
Greenberg: At this point, picture the face and sound of the Aflac duck after Yogi Berra says, “And they give you cash, which is just as good as money.”
Wobegon is predicting a soft landing in Colorado:
‘”I don’t see the U.S. economy going in the tank by any means,” said Richard Wobbekind, a University of Colorado economist. “But if we were to see incredibly weak holiday sales, we should keep our seat belts fastened.”
Cliff Brewis, an economist with McGraw-Hill Construction, said the economy appears stable - although portions of the construction industry are poised for a slowdown.
He said the residential market has clearly softened, although “we don’t expect it to fall off the shelf.”‘
http://www.denverpost.com/business/ci_4303295
And there is more on the Denver-area hosing (sorry, I meant housing) situation here:
Metro home sales up; prices dip
BUYING SEASON HITS PEAK
By Aldo Svaldi
Denver Post Staff Writer
Metro-area home prices dropped and the number of sales rose as the peak homebuying season came to a close in August, according to a report released Thursday.
“Everybody who had to be in a home before school started is done,” said Gary Bauer, an independent real-estate consultant. “Now comes a cooling-off period.”
The number of homes closed on in August was 5,025, up 3.6 percent from the 4,850 sold in July. Compared with August 2005, closings were down 9.3 percent.
The median price of condos and town homes sold during the month fell to $160,000, down from $163,000 in July and $164,000 in August 2005.
The median price of single-family homes sold during the month fell to $252,900, down from $259,500 in July and $255,000 a year earlier.
Compared with August 2005, single-family home prices were down 0.8 percent, while condo prices were down 2.4 percent.
Bauer attributes the price declines to pressure from new-home builders, who overestimated demand and have had to offer large incentives and price reductions to move their inventory.
The inventory of unsold homes, which reached a record 31,989 in July, fell about 1 percent to 31,664 in August.
http://www.denverpost.com/business/ci_4303303
univ of CO
he’ll keep his gov job
Given that prices are out of touch with reality, how should one determine the “true value” of a home?
Traditionally, housing is valued on the comparative sales approach, whereas income properties are valued on the capitalization of income approach. My firm does it both ways, and based on a presumed reasonable rate of return, evaluates the extent to which commercial property is “overvalued” or “undervalued” relative to its income.
Perhaps an “income approach” is needed for housing too. Get the income to those who live in, or are now moving to, an area and buying homes. Apply tranditional underwriting critera for mortgages. They may stretch and pay more in a bubble. They may benefit and pay less in a bust. But 30% of income for housing and, say, a 10% downpayment on a 30-year fixed is probably a good idea of what a typical house in an area is worth. Compartive sales could be used to add or subtract value from the typical house.
From Yahoo Finance:
http://finance.yahoo.com/columnist/article/business/9490
A Scandal Deepens, Realtors Stop Smiling
by Harold Maass
Utility Links
Printable ViewEmail this PageFriday, September 8, 2006
Realtors get worried
“The housing sector is looking sicker by the day,” says Peter Coy in BusinessWeek.com. The “perpetually optimistic” National Association of Realtors has just said for the first time that home prices are about to show a yearly decline. Sales and housing starts are plunging. “No wonder homebuilders are lowering their forecasts” left and right.
But you’ve switched your meaning of “income.” First you were talking about revenue generated by a property and then you switch to non-housing-related earnings of the individual owning a house.
The best way to gauge under- or overvaluation of housing is by comparing or estimating rental values to monthly costs (including opportunity costs) of ownership. The income model has more flaws because it varies over time and by location because (1) wealth relative to income varies, (2) people’s valuation of a living space relative to other consumption items varies, and (3) locations attract people for different reasons, which may or may not involve income-producing potential. The rental model takes care of these issues.
For example, socialism in South America helps support the south Florida market, so it makes sense that incomes relative to housing prices in Miami are going to be (reported) lower than in, say, Peoria.
Using rents or imputed rents doesn’t take of every detail, as it can’t deal precisely with certain benefits of ownership, but it still provides a muchbetter overall measure of over- or undervaluation.
Most new homeowners in California are building no equity!
Most new home loans last year were interest only!!
Check out the video newscast at http://www.realestatedecline.com
TOPIC SUGGESTION: How accurate is Zillow.com?
Readers could check recent sale prices in their areas against Zillow’s estimate.
I have done this in my area and it’s generally not been horribly accurate (+/-10-15%) but in some cases it’s high, other cases low. I just checked what they have on my house and it went from optimistic to delusional. If they want to offer that much, they can have it.
I think it must have a big lag time and maybe they use an algorithm to create the estimate that assumes an average appreciation.
BTW, the link to the photo gallery doesn’t seem to be working.
I think it’s a big-time lag (much like the statistics being reported are). My belief is that zillow just ballparks the price of a home based on what other homes in the general area have sold for. If nothing’s sold since 2005, then 2005 values are what it’s projecting. When homes start selling at lower-than-peak prices, these “zestimates” should start going down. I could be wrong, but that’s what I tend to find.
Oh, and, I don’t think they update/refresh the sales data all that regularly. Meaning I don’t know that homes that sold over the summer are necessarily being factored into the mix yet. I follow a friend’s address on zillow and currently the comp sale dates range from 12/2005 thru 3/2006. I know for a fact several homes in the neighborhood sold over the summer - where are those comps?…
I just noticed that Zillow didn’t include two great comps that closed in the last month in my area , yet Zillow included another one that closed around the same time . Why the lag time ,all these sales should of been recorded around the same time .
Same deal where I live in PA. The comps they show for a house aren’t the best comps. Dunno how they decide which sales to list. Should just list most recent within a perimeter..instead, it’s like they try to use similar homes (which aren’t so similar anyway).
As best I can tell Zillow helps with comparing one house to another but is worthless in determining values, expecially in today’s market. Suburbs of Boston is a good example; they still are showing appreciation in August of homes in the million-dollar range - what a joke!
In Memphis area, I’m finding that about 70% of advertised rentals are asking approximately 125 times the current zillow valuation, give or take 5 percentage points. That’s pretty reliable in a yardstick sense, although I haven’t yet tried to get current sales comps on the rentals.
Oh and the other 30% of rentals? They tend to cluster at the end that is even MORE expensive relative to comps, as much as 1/80th of zillow valuation. (It is even worse for the condo market, maybe because they are basing their asking rents on apartment comps.)
Topic suggestion: Anyone check out the “nest egg index” that just came out?
http://www.marketwatch.com/News/Story/Story.aspx?guid={C0D205C6-9FA0-48EC-8D67-5814806699C0}&siteId=google
BAD post formatter, no cookie. (Ben, if you could close my quote, appreciated…)
zillow scks - they have a house that sold for $ 455k at 538
=zillowlag
Zillow is a joke - ignore them. Sold my house last year for $430K - I think zillow had it about 200K.
While you’re at it - ignore forclosure.com as well. Use the local paper to get the legals for foreclosures. Here in my area of GA by the time they list a house it has long since been sold at the courthouse and the bank is actively trying to sell it.
I love Zillow, but not for estimates of value. They seem to have strange ways of deciding on comps, picking houses with 1/2 acre to compare with a 5 acre house or extremely different home sizes. I like it because it is a quick way to see what some houses have sold for in the area, although they may not be the best comps, and also I like the pictures of the property, I can tell if a home is by powerlines, which they never tell you in the advertisements. I can’t tell you how many times in the past when I was looking for a house and I drove all the way to look at it it was right next to power lines, which takes it instantly off our list. And I can tell other things about the property, such as which way the house faces, how close it is to the street, where things are located…
We aren’t buying yet, but I still like to window shop.
New rule: When any economist or any pundit says “we should see softening, hard landing etc but if xxxx happens then”. Assume that everything after the if is happening and that the S*** is going to hit the fan. It seems like they use that ” but if” to basically admit that they don’t have a goddamn idea about the future and they are trying to say they predicted it when we all know they are so far behind the curve they can’t even see the 18 wheeler rounding the other side on the worng side of the road with the driver sleeping.
How about a ranking of public HB’s in order of likelihood of implosion i.e. weakest to the strongest?
The thread could be started by providing a list of ten HB’s with links to their financials/web pages for analysis. HB’s could be graded by concentration of work in geograghical bubble areas, quality of construction, and financial strength/weakness.
Ben could review the input of the thread and provide a highly controversial “final tally” Sunday night or Monday morning.
Nominate your “favorite” HB below for inclusion!
from the bigger builders i vote for wci
the first quarter 07 will be the make or break for them.
they think they can sell the new condos. good luck…..
Here is Ryland’s investor homepage - I’m not savvy enough to analyze it, but have heard on this blog that they may have less aggressive land positions.
Anyway, I know that they are discounting inventory homes heavily & renegotiating deals with current contract holders to keep them in line - after only offering incentives in the spring. So maybe they can ride it out if they play it smart and build smaller & cheaper homes to keep the first time home buyers in their niche.
http://www.ryland.com/home/investors.html
Hey, did you ever get the house you wanted?
I have puts on KBH, CX and LEN, not because I think they are necessarily the worse off, but partly due to pricing/timing issues.
But damn, WCI looks maybe it’s a canadite. None many of the others I know of are involved in condos, and condos in Fla! They have plenty of debt (1.6 X equity), only $2m in cash (hard to believe), negative cash flow, and the puts are actually reasonably priced!
The one big caution sign: it’s already at .6 of book value. Though if much of that’s condo land, it will probably devalue quickly.
I’d love an article on the overall weaknesses of various markets. This should be a compilation of the following factors:
1. Prices/wages
2. Fraction of loans option ARM/no doc/etc.
3. Unsold new inventory
4. Job migration (in/out?) and wage growth/decline
5. Availability of land
6. Fraction of jobs dependent upon home construction/sales
Markets to compare:
A. Normal “megabubble markets”: Boston, DC, Florida, San Diego, OC, Sacramento, Vegas, and Pheonix
B. Some non-megabubble large urban areas: Houston/Dallas/Austin
C. Any other cities that interest the author.
Let’s skip the 2nd home markets (Martha’s Vinyard, ski resorts) as those have skewed criteria. Although, Hawaii would interest many people…
Neil
When the historians look back, they’ll say how did the same nation that just had a stock market bubble almost immediately move to the next retire early scheme- housing?
will be laugh at all the justifications for why housing prices would only go up, like we laugh at dotcom companies that had little in earnings but were worth more than some old economy companies?
oh, I need a good quote.
“Speculation buys up, in a very practical way, the intelligence of those involved.”
-John Kenneth Galbraith
It was the fear of missing out on rising prices that caused people to buy. The fear of lower prices will cause them to sell, or stop buying.
Quote of the Day
“That men do not learn very much from the lessons of history is the most important of all the lessons of history.” - Aldous Huxley
So this is how is it that the homebuilders didn’t learn from the last time.
Since I am of the opinion that we are going in to a world wide economic debacle - my suggestions for quotes:
“The welfare of the people is the ultimate law.”
(Salus Populi Suprema Est Lex)
and
“Endless money forms the sinews of war.”
Cicero
Here’s a topic suggestion: what are everyone’s plans for the holidays? My guess is that all of the FB’ers out there won’t be buying their kids a Playstation 3 this Christmas.
Excellent suggestion.
I believe the holidays are going to get slammed, particularly on “big ticket” items like SUVs, HDTVs, PS3/Xbox, etc. The hardest hit, IMHO, is going to be the vacation industry (Florida will get a double wham with reduced rentals, airlines, hotels, restaurants, etc.)
Christmas 2006 will be the start of a “cozy return to family” holiday (more in home meals, fewer restaurants). People will HELOC whatever they can to make Christmas happen, but that doesn’t mean certain industries won’t already be hurting. No more 4 month Florida condo/home rentals, it will be for far reduced durations. Expect *a lot* more white Christmases.
Christmas 2007 is going to be so ugly I really cannot make myself think about it.
Man… I wouldn’t want to be a cruise ship operator this Christmas… the 2006/2007 snowbird season isn’t going to be like last years… not at all.
Neil
You’ll read a lot of smarmy crap about how they have all come to the realization that Christmas is not about materialism, but about “family,” blah blah blah while the kids in the picture are trying to disguise just how pissed off they really are.
I’m dreaming, of a RED Christmas!
SM Landlord, want to finish this one? I don’t remember the rest of the lyrics!
OK, you asked for it:
I’m dreaming of a green christmas,
just like the ones I used to know
Where the Hummers glisten and gifts are hidden
beneath giftwrap and red bows
But I’m looking at a red christmas,
unlike the ones I want to know
Where the debt is frightening, with budgets tightening
and bills, piling up the woe.
And I’m looking at a red christmas,
Unlike the ones I used to know
with ARMs resetting, bedrooms subletting,
And bills still due from long ago
Still I’m dreaming of a green christmas,
with every rubber check I write
My old debt is scary, a blight!
and to all my creditors, goodnight.
That was awesome, sm landlord!
Have we been focusing on the wrong thing? is the true danger not the housing bubble, but a LTCM-like event or a US dollar crisis, perhaps just waiting something like a housing bust to trigger it?
The bond market - very boring, but it is many times the size of the stock market, and a big chunk is the highly leveraged US consumer and overspending Fed govt. When the 5-10 yr bond yields start tweaking up, watch out below.
So, so many people are going underwater on mortgages, I’m watching it almost sick facination. And when mortgages start defaulting, the bond market is not going to be happy. Some bond holders - banks, foreign govts, individuals, etc, are not going to get paid back, plain and simple.
John Law,
Yes. I think you’ve nailed it. The problem is the credit bubble, rather than the housing bubble. Perhaps, there is a derivatives bubble where all the risk is priced out due to various types of (derivative) insurance. To be sure, there is NO real risk premium in any of the markets that I can see. Everyone’s complacent.
But it looks like the derivatives are piling up (derivatives for derivatives) — not sure exactly how this works. From what I can tell, the derivatives market has to keep expanding (much like the credit market) to keep pricing out the risk. At some point, something has to give. IMO, the longer we put off the inevitable (some kind of real recession/market collapse), the worse it will be.
Derivatives and leverage…that’s where the problem lies, IMHO.
Yahoo (New Media Giant) posts recent cover story of Business Week article on TOXIC LOANS
A topic discussed many times over on this board over the past two years. Finally mainstream catching on to what Ben Jones Bloggers have been discussing. We hope many will take notice and read the article this weekend.
http://biz.yahoo.com/weekend/mortgagepain_1.html
TOPIC SUGGESTION:
How will new communities planned for 07, 08 and beyond fare?
I got this survey in my email today for the new development in Rancho Mission Viejo in South Orange County.
http://207.68.255.19/perseus/surveys/1756068118/3926680a.htm?q=2
It’s a little long, but worth looking through…
3 things for discussion:
1. This community is slated to have 14,000 units (homes, condos, etc) but 6,000 are ear-marked for the 55 and older set. Will that make it (and other like communities) more or less desirable as the market continues to slide?
2. The predicted prices assume 30% appriciation from now until they break ground in 08. We’re talking 800k for a 2 br townhouse. Will the prices magically reduce by the time this all happens or will someone wake up and cancel the project all together?
3. Is there anything that can save a new development besides lower prices???
I think this is a very interesting topic suggestion. I’d say:
1. Earmarking some of the homes to those 55 and older seems an odd choice in a declining market. You’re cutting out a lot of potential buyers.
2. I don’t live anywhere near the OC so I really cannot comment directly on the prices or appreciation, but from a great distance I look at those numbers and think ‘Yowza, not good.’
3. If there is an area of the country with job-growth that’s not related to the housing market and those jobs pay decent salaries, then yes, even now I think that new development would do OK there as long as the houses were priced according to those wages. Is there such a place? LOL
Is it just me or does the idea of having some of Ben’s regulars, ie Getstucco, DinOR, txchick, smlandlord, Robert Cote and Crispy (and the rest) host an anti-home decorating/househunting/FB show on HGTV seem amusing to anyone else? Instead of sponsored by Home Depot and Frazee Paint, I supposed ads would be by payday loan outfits, pawn shops, and BK lawyers. Each episode would end with the FB turning over their house keys to the bank in a creative new way. Later editions would be the excited reactions of people as they receive and accept Cote’s offer to buy for 40x rent.
Only if they promise to feed the squirrels.
I like it…have Ben comment on just a home-for-sale show that follows about 10 sellers in bubble markets and then edits each seller’s quotes together chronologically over time, the rationalizations, the denial, the bargaining, the grief, the submission….
I’ll do the music. Let me see if if I can get Billy Idol to let me use “Rebel Yell”, I have some ideas for that one.
Let’s see:
With a flipper yell, he cried “more, more, more”
In his darkest hour, he cried “more, more more”
More, more, more.
…I’d sell my deed for you, babe.
For money to burn with you.
Yeah, I can do something with that
our devolopment has new carriage homes (northern, New Jersey) starting at $490,000’s, they just changed the sign (a little slide out wood piece) that replaces the price and now it reads, “starting at $460,000s.” LOL i’ll have to take a picture of that.