‘It’s Like A Candy Store’ In Oregon
The Mail Tribune reports from Oregon. “For the first time since 1984, the median price of a home sold in Jackson County went down, spurred by declines on both sides of Medford. High inventories, fewer first-time buyers and a wait-and-see attitude on the part of newcomers to the market pulled the plug on the heretofore relentless price increases, representatives in the housing industry say.”
“‘People are waiting around because there are so many houses to choose from,’ says (realtor) Sandie Malot in Central Point. ‘It’s like a candy store.’”
“East Medford was the epicenter of the drop, with the median price on 58 sales plunging 10 percent, from $295,950 to $267,000, in August 2005. ‘Overall, there is no catalyst for buying right now. The buyers don’t want to buy into a falling market,’ said John Russell of Rogue Valley Realty Group.”
“The countywide inventory of houses available through the Southern Oregon MLS is up 120 percent to 1,971 single-family residences over a year ago. In west Medford the number has climbed 176 percent.”
“Realtor Kathy Tinsley in Medford says the reluctance of sellers to follow market conditions has contributed to the glut of housing stock. ‘Some people didn’t come down right away in their prices,’ Tinsley says. ‘I have a listing with two houses on one lot that was at $399,000 that would’ve been gone last year and it has dropped to $379,000 now.’”
The Statesman Journal. “A section of South Salem has seen new home prices spike to an unprecedented level for the Cherry City. James Dalfin plunked down $495,000 for a home at Bailey Ridge. He wasn’t overly concerned about the price, having used the proceeds from the sale of his father-in-law’s house in Southern California. ‘We sold it as a fixer-upper for $500,000,’ Dalfin said.”
“Agent Eric Larson, who is marketing houses at Bailey Ridge, said buyers have been a mix of local people and those relocating from out of state. Those flush with cash after selling their old homes don’t seem to mind the prices, he said.”
The Seattle PI. “Real estate experts expect to see slowing sales and price gains and increased inventory, but nothing resembling a bursting bubble, when the Northwest MLS releases its August numbers today. Jill Jacobi Wood said she is looking forward to having local numbers to balance the grim news from areas such as California. ‘It’s kind of dismal in some of these places,’ she said.”
The NWREeporter. “July marked a definite change in pace from previous months, according to Northwest MLS director Dick Beeson. Beeson said the most telling statistic for Pierce County is the surge in inventory, which is up almost 53 percent from a year ago.”
“‘It’s like a buyer woke up from a five year nightmare of no presents under the Christmas tree and discovered a tree brimming with choice gifts,’ said Beeson in Tacoma. With an abundant selection, buyers are now picking and choosing, he remarked.”
I was hopeful that the NWMLS numbers would be out in time to include with this post. Check the last link later today for that release.
I have a question for folks here.
I remember an incident 15 years ago. Someone I know was rear ended by an uninsured driver. The person I know took them to court and got a judgement to pay for the damages. The judge ordered that the person at fault’s wages should be garnished till the debt was paid off. (This was in the Bay Area.)
However, shortly thereafter the person at fault moved and no activity was reflected under their name when a credit check was done for the next couple of years. The person I know was stuck without any payments. Essentially the person at fault must have changed their identity and moved on with life.
What’s to stop under-water flippers from doing the same? They’ve got to leave their home behind anyway. Why not just start a new life with no debt under a new name? I realize that it takes some work/fraud to establish a new identity but considering their alternative most would take the former option.
There are few enough of them that they’d be able to vanish into the population. What would the effect of this be? Is there a reason to believe they’ll be caught?
Aren’t credit checks done from someone’s SSN and when someone changes their identity, don’t they still keep their old SSN? If someone is allowed to change their SSN along with their name…..WOW. I’d be flabberghasted at how ineffective the system is.
If I had to guess, I would think that the at fault individual just started working “under the table” and living on a cash basis. Not too difficult to do in this country as there are tons of unscrupulous business owners who would rather not pay taxes, insurance, disability, etc. and therefore are more than happy to pay under the table at an even higher hourly rate. One needs to look no further than the illegal immigrants to see this truth.
sfv_hopeful,
I agree that they may not be able to get any more loans without building up credit over the next few years. In practice, they may be even better off - they may use a stolen identity and it’s SSN. In the worst case, they can’t get new loans without an SSN or have to apply for a new SSN, claiming they’ve never applied for one in the past.
BanteringBear,
I understand that they may have done what you describe - keep their identity and work with pay “under the table”.
But neither of these comments addresses what I think is a real problem: that many of these people will be off the hook and the banks will be left holding the underwater loans. Why is this bad? Because the government may not bail out FBs, but it is very likely to be leaned on (ala LTCM/S&L in the 80s) to bail out the large financial institutions.
‘It’s like a candy store.’
Except it is hard to wipe out your household net worth by purchasing candy at the wrong time.
unbelievable, these stupid realtor comments.
“a tree brimming with choice gifts” … well, apparently the family members are not very happy with these extremely overpriced gifts; they are piling up alongside the Christmas tree.
Just put the candy on your new VISA with the introductory interest rate of 3.99% and no payments until 2007 …..
With all of the attention quickly turning to the rapid buildup of inventory in virtually every market, you would think that the flippers would be heading for the exits. And especially in places like Colorado, where foreclosures are at alarming levels, one would think it would be the case. Well, I just accidentally stumbled upon this listing .
http://tinyurl.com/ks869
Seems the games continue. Stupid builders, stupid flippers, stupid buyers, stupid lenders, stupid agents, stupid, stupid, stupid……
so how much are they buying ?
“candy store” is a terrible analogy. Kids in the candy store buy lots of candies, not just one, and the purchases are considered inconsequential and disposable.
The frenzied flippers were behaving much more like kids in the candy store, but now they’re all vomiting into the toilet.
Actually, it is a good analogy, when you consider that candy is really junk food with no value. Similar to many houses these days.
I was going to say “Only you’d have to steal a lot of candy and go to jail or something similar to get the full effect of being an indentured servant to your mortgage for the next ten to fifteen years.”
OT on cnbc, REIT Fund manager, Ken Hebneer, saying house prices to fall 50% on coasts. That’s almost main stream media, but of course, Joe6 ack doesn’t watch cnbc (not since the dot com days, anyway). I think he’s been mentioned beforer in several stories, including his gloominess.
Heebner, not Hebneer
Heebner is a very smart guy. He was very bullish on the HB until last summer when I believe he sold out. It was well documented in the media.
Yup, that 50% number keeps coming to the forefront.
Might even be more once this new US “downsizing” paradigm kicks in.
Even Scott Burns (the financial writer) said the fook with the albatross of fixed real estate. He’s cavorting about the country in a used Airstream.
Count me a believer.
Another comment out today:
BOSTON (MarketWatch) — Don Tomnitz, chief executive of D.R. Horton Inc. Tuesday said the company is preparing itself for a tougher housing market in 2007 compared to 2006, with prices finally stabilizing in 2008. “We have never seen housing prices and demand slow as quickly as they have during this downcycle,” said the CEO of the nation’s largest home builder when measured by 2005 deliveries. “Demand has evaporated to the extent of about 20% to 30% for the industry, and in a tighter timeframe than we’ve seen before.” The use of incentives by builders to move homes in a slower sales environment will continue for the next three to four quarters, Tomnitz estimated at the Credit Suisse Homebuilders Symposium.
Of course, the stock is up 6% on the news. Wall Street likes honest talk. I think the Street is basically saying it can tolerate several quarters of outright losses from the HBs at these levels and that the biggest of the big may be ones who emerge intact in the long run.
“Wall Street likes honest talk.”
Especially when the honestly bearish talk is accompanied by skyrocketing share prices. A confused sheep is easily fleeced.
Getstucco,
Ya know, I think the world would still exist without you and that the crash would still happen without your comments. You should tone it down a bit and stop embarrassing us all, IMHO.
The world would certainly exist without trolls posting on this blog.
P.S. This part of the statement will turn out in retrospect to be highly dishonest, unless this time is different. Past downturns have taken a minimum of four years to play out, and by that time, I expect that Horton & friends’ share prices will be back to 1998 levels.
“… tougher housing market in 2007 compared to 2006, with prices finally stabilizing in 2008.”
Prices stabilizing from a homebuilder’s point of view are a little different than prices stabilizing on resale POS’s. I think the big builders will almost stop building for the next 12 months and will do whatever they can to clear inventory, even if it means eventual 30-40% markdowns. By 2008, they will be in a little better position to cherry-pick any new projects. And note Horton is not saying prices will rebound. So all in all I think it’s a pretty fair and honest assessment.
I’m in the camp that says this thing looks like an inverted S where we take a long time to roll over at the top(now completed), make a quick trip down in which almost all of the true market losses take place in a short period of time (by next Spring), and then endure a long slog along the bottom. Of course, some resellers will just be waking up to the new paradigm when market prices are already off 30-40% in the Spring and they still think their now-$250K home is worth $400K.
6 months ago we were hearing about a 2 or 3 month shake out, now the big players are talking about a 24 to 36 month shake out.
This is a major concession on the part of a major builder. He’s bascially saying, “buy anytime between now and 2008 and you can expect to pay the same or less.” Now that’s a concession.
THEN the stock will shoot to the moon when the HB’s declare Bankrutcy.
This whole Wall Street thing is just another crap table in Las Vegas, without the pretty girls and the Free Drinks. The sideshow is Krammer and anything else on CNBC. When the dot.com dumped 550 points in one day in March, 2000 and Krammer said it was a buying opportunity, it was time to 12 step out of my Wall Street Addiction.
1. I admitted I was powerless over the Dow and CNBC made my life unmanageable
James Dalfin represents the worst type of equity locust.
The locals already hate him and will look for every little opportunity to take advantage of him.
James Dalfin plunked down $495,000 for a home at Bailey Ridge. He wasn’t overly concerned about the price, having used the proceeds from the sale of his father-in-law’s house in Southern California. ‘We sold it as a fixer-upper for $500,000,’ Dalfin said.”
What happened to the father-in-law? I hope he didn’t die and now his son-in-law is making stupid moves with his daughter’s inheritance.
I wonder how many of these buyers are due to inheritance. Just had dinner with an old SF Bay Area neighbor (from 5 years ago) who filled us in on the new additions to the hood. There were a lot of changes in the last 5 years, and every one was a “young couple” with a 2 year old, or she is pregnant with their first, etc. Not that this was any spectacular area, but the homes are 800K-900K now. How in the hell are these kids affording this, even with the teaser rates?! Very ‘blue collar’ working slob (like me) housing ……
Not even BA jobs pay enough to afford this, and 20’s-30’s age are purchasing….?
Grandma has to be gone.
Young couples having kids here in the Bay Area are usually in their mid to late 30s. Those I know buying houses are either rolling equity from places they bought during the dot-com bust, or have been saving literally for over a decade.
http://today.reuters.com/news/articlebusiness.aspx?type=ousiv&storyID=2006-09-12T191303Z_01_N12323829_RTRIDST_0_BUSINESSPRO-ECONOMY-HOUSING-SENATE-DC.XML&from=business
“The lawmakers will hear from several chief economists like Richard Brown of the Federal Deposit Insurance Corporation, Patrick Lawler of the Office of Federal Housing Enterprise Oversight, Dave Seiders of the National Association of Homebuilders and Tom Stevens of the National Association of Realtors.”
Committee: US Senate Committee on Banking, Housing, and Urban Affairs
Title: The Housing Bubble and Its Implications for the Economy
Date: 9/13/06
Time: 10:00 AM
Place: 538 Dirksen Senate Office Building
Agenda: U.S. Senate Subcommittee on Housing and Transportation and the Subcommittee on Economic Policy
Publication: Printable Hearing not available at this time
Witnesses
Panel 1
Mr. Richard Brown , Chief Economist, Federal Deposit Insurance Corporation
Mr. Patrick Lawler , Chief Economist, Office of Federal Housing Enterprise Oversight
Mr. Dave Seiders , Chief Economist, National Association of Homebuilders
Mr. Tom Stevens , President, National Association of Realtors
http://banking.senate.gov/index.cfm?Fuseaction=Hearings.Detail&HearingID=236
Should be interesting (Are they are under oath for these?)
Panel 2 should include Ben Jones.
Spot the odd position out.
I wonder if the NAR decided that it might be better if DL didn’t represent them, given that some Senator might be brandishing a copy of his book, and lobbied to have the President front instead.
“Lawmakers behind Wednesday’s hearing said that they were concerned that a steady flow of soft housing data could put the nation’s economy in peril.”
I guess it is time to ask the nation’s taxpayers to step up to the plate and help make sure that housing data stays strong, in order to avoid the perilous situation facing the economy. Too bad that doing so would continue to add to already-massive overinvestment in the residential real estate sector. Even with no further government distortion of the market, we will be left with a housing stock far in excess of fundamental demand, whose deflating real value will create a drag on the economy for years to come.
Not necessarily. The immigrants are going to take up at least some of the slack.
Since its quote time, how about this doozy from Robert Toll:
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7bDFF933DD-D746-4A56-AFB5-A53A916DF126%7d&siteid=yhoo&dist=yhoo
“Chief Executive Robert Toll said the U.S. housing market got ahead of itself due to greed on the part of buyers and sellers, and that it now likely faces the highest level of speculative inventory ever. Toll said the current downturn is unique in his experience because it wasn’t driven by a “macro-event” although interest rates have risen steadily. “Every day there’s an article about how lousy housing is now and how dumb you have to be to buy a house now,” the CEO said Tuesday at the Credit Suisse Homebuilders Symposium. “I don’t know what it will take to turn this market — it could take two years, or it could take someone getting quoted in the New York Times saying the market has hit bottom.”
Tol was up 4.06% at the bell today. Go figure!?!
Greed and panic are “uber-macro-events”
As we plot graphs over the coming year, a greed/panic index should be applied.
MSM headline for July 2007: “Panic adjusted housing index for June shows a 2% increase over 2006. Without the adjustment, the index has fallen 30% in the last year.”
These are incredible numbers [from the latest Grandich letter]
Credit-card debt alone spiked from about $250 billion in 1992 to $804 billion in 2005.
To appreciate how much homes became “ATM machines” for Americans, one has to only recognize that Americans borrowed just $11 billion in home equity in 1995, but by 2005 borrowing had soared to $243 billion.
U.S. spending has reached 107 percent of GDP, requiring an $800 billion annual infusion of foreign money and even higher levels of debt to prevent a slowdown.
We can’t stabilize both growth and debt levels at the same time. One of them has to give- I believe it will be growth.
Is there a multiplier effect that should be applied to the amount of money HELOCed out of houses in order to get the economic impact like with changes in bank reserve requirements?
I vote in favor of stealth inflation that keeps the nominal growth positive while inflating away the drag of future debt repayment.
i am in fall river on vaction now.more for sale signs here in central oregon than i have ever seen.lots that sold for 10k are now 200k so this is major bubble here in bend area.
a spec builder bought 3 acres in Spring River (Bend, OR) for 80k. The guy that owned it offered it to me for 22K years ago and I thought that was too much! He started a house on it last Sept. and it is still sitting about 60% complete. Not sure I would want to buy a house that had two feet of snow sitting in it last year and then had 3inches of water completely covering the subfloor for a month. Some Californian wit a “Box full of Stupid” and a “bucket full of cash” will probably buy it.
Will one of the local Ashland residents post their observations about that market? I’m looking to buy there in 2007. Thanks!
Ashland is horrifically overpriced even in this overpriced (Rogue) valley…. Medford/Ashland WAS one of the most overpriced markets in the entire country not too many months ago…..and has now given up that “honor” to Bend…. We keep sinking on the list, but buying in Ashland in ‘07 will be for those who think it’s rational to plunk down $750K for a cottage…. It amuses and mystifies me who would make such a choice… Sweet little valley, but come on…. We’re hardly San Francisco here. We’re a mix of aging hippies and rednecks in a place w/100 degree summers. Real estate sales have simply stopped for the moment. Few owners believe their castles can possibly erode in price. Lots of surprises ahead. Like others have suggested on this blog, I’d rent awhile before I bought…… Ashland will always be the most expensive area in the county, but it doesn’t have adequate appeal to most of us to pay the 50% premium over other locales. Hope this helps
Funny post. Your descriptions made me laugh.
Funny, and also spot on Mary Lee. Prices here are simply absurd. Things are dropping, but it may be several more years before sanity reemerges.
Lisa, if I recall correctly, you sold in Marin. In that case you will be in the minority of bubble hoppers (nearly all from BA Calif.) that will not be surprised by Ashland prices. They are definitely incredibly high by Oregon standards and driven exclusively by CA money. However, of you are set on buying here, you will certainly find more for your money in 2007 or 2008. Also, you will be doing local wage earners and families a favor by not propping up the current “equity locust only” market.
Hi Fester, Thanks! Yep, I sold in Marin and am waiting. If California really drives the Ashland market, prices should come down. People who are retiring and can pay cash won’t be impacted, but I think everyone else will. Why own a second home/vacation home/investment property in a market that’s done appreciating?? Why bother?? And how many can afford a second home at higher interest rates and when the CA market is beginning to noticably weaken?
Mary Lee, Your comment helps a lot. I sold my CA house in 2004 and looked in Ashland, but at that point, folks from CA were literally throwing money at houses…and this in a market with no real job base. It just seemed insane so I’m waiting. It seems Ashland is totally dependent on “outside” money, so as that faucet shuts off, it would seem price declines are unavoidable. Or so I’m hoping…maybe prices will have to come down to where the locals can actually afford to buy.
I dunno, the Rogue Valley has been moving toward becoming a ‘retirement mecca’ for a long time now, and that can have a long-term distorting effect on prices, since a lot of outside money is involved that does not depend on the local job base. See Jackson Hole, Wyoming, for an even more extreme version of this. I question whether houses are going to become truly affordable there for the locals even though prices will undoubtedly drop. Of course, if California crashes and burns, that could mean a drastic drop-off in the number people with cash to burn in S. Oregon.
I’m a former Portlander, myself, and I always thought the Rogue Valley was pretty darn close to paradise.
And are retirees enough to keep the local real estate market propped up?? In a town with 20,000 population? That’s the big question.
Do no think that any area is immune to the draft downward this market will create. FEAR is the biggest motivator and just like the rapid increase in the last 4 or 5 years the downside will be even more dramatic.