‘Unhealthy’ Prices ‘Precipitate An Adjustment’: NAR
Some national reports on the housing bubble. “Housing prices are expected to continue to have a limited fall throughout 2006, according to the National Association of Realtors. ‘After five years of outstanding growth, the housing market is undergoing a period of adjustment and becoming more and more of a balanced market between buyers and sellers,’ says Thomas Stevens, president of NAR, in testimony Wednesday before the U.S. Senate Subcommittee.”
“‘We were seeing home prices and mortgage debt servicing cost-to-income ratios increase to unhealthy levels in some housing markets, which precipitate an adjustment,’ says Mr. Stevens.”
“The National Association of Home Builders told Congress today that the current downswing in home sales and housing production following the record housing boom of 2004-2005 is expected to bottom out around the middle of next year.”
“Testifying before the Senate Subcommittees, NAHB Chief Economist David Seiders said..the record housing starts and sales of the past two years were well above levels supportable by demographics and other fundamental demand factors, and were fueled to a great extent by investors and speculators seeking to make a quick profit and through the surge of unconventional ARMs.”
“‘In retrospect, it was the finance and price-driven acceleration of buying for homeownership and for investment that drove housing market activity into unsustainable territory during the boom,’ he said.”
From Business Week. “In the summer of 2005, the Phoenix real estate market was experiencing what local brokers call a ‘feeding frenzy.’ A year later, the city is feeling the effects of a housing hangover.”
“‘I’ve been here 17 years, and I don’t think I’ve ever seen the inventory levels as high as today,’ says Robert Rucker of the Arizona Regional MLS. Phoenix’s housing inventory has in fact nearly quadrupled over a 12-month period, from 11,656 in July, 2005, to 42,449 homes last July, according to ZipRealty.”
“‘Not only has the inventory increased threefold, but the amount of buyers on the market is less than half of what it was last year,’ notes (realtor) Ron Fillion in Miami. Fillion believes the city will retain a high inventory in proportion to its population for at least the next two years.”
“ZipRealty has tracked the (Las Vegas) market as growing by about 150% over the past six months, hitting a record high of 21,662 homes for sale in July. Linda Rheinberger, Greater Las Vegas Association of Realtors’s president, has advocated several strategies to sellers that could help bring the market back to equilibrium.”
“‘We’re encouraging people who aren’t motivated to sell to delist and place a tenant in their property,’ she says. But the most effective selling catalyst, in Rheinberger’s mind, is always the simplest: ‘Prices are always going to be the main consideration in any marketplace.’”
From CNN Money. “With real estate markets slowing and mortgage rates well above levels of recent years, times are getting tougher for homeowners, the number of homes entering into some stage of foreclosure is surging.”
“In August, 115,292 properties entered into foreclosure, according to RealtyTrac. That was 24 percent above the level in July and 53 percent higher than a year earlier. Florida, had more than 16,533 properties in foreclosure in August. That led all states and was 50 percent higher than in July and 62 percent higher than in August 2005.”
“California foreclosures are increasing at an even faster annual rate, up 160 percent since last year to 12,506. And the formerly red-hot Nevada market recorded a spike of 24 percent compared with July and a whopping 255 percent increase from August 2005.”
“RealtyTrac’s Rick Sharga says the rising foreclosure numbers are in part the result of rising monthly payments on adjustable-rate mortgages, which have a low introductory interest rate that heads higher after an initial period. ‘Usually, foreclosures are a lagging [market] indicator,’ he says. ‘But we’ve never had a situation like this with adjustable-rate mortgages amounting to $400 billion to $500 billion coming up for adjustment over the rest of the year.’”
“‘The real wild card is the nature of the loans themselves. Historically, ARMs were underwritten pretty conservatively. There has been a loosening of standards with lower credit worthiness and smaller down payments,’ Sharga says”
Thw Wall Street Journal. “Home sales have plunged over the past year in many areas where prices had soared over the preceding five years, notably in California, Florida, Arizona, Massachusetts and the Washington, D.C., area. Many potential buyers are waiting for prices to come down further.”
“Sellers gradually seem to be realizing that they will have to lower prices, says Patrick Lashinsky, at ZipRealty. ‘There’s finally some realism getting into the picture.’”
“Ivy Zelman, a housing analyst at Credit Suisse Group, estimates that prices of newly built homes in San Diego, Sacramento, Calif., Phoenix, northern Virginia and southwest Florida already are down as much as 10% to 15% from a year ago. That estimate includes ‘concessions’ from builders, which are disguised price cuts. But Ms. Zelman still sees more price declines ahead.”
“‘We believe that the housing market is still in the early innings of a hard landing that will likely take several years to develop,’ she says.”
“‘We believe that the housing market is still in the early innings of a hard landing that will likely take several years to develop,’ she says.”
Making no friends at NAR, but earning respect the old-fashioned way.
Wall Street analysts are usually behind the curve. I give her props for stating this is the beginning of a downturn that will last several years. Very refreshing compared to the garbage spewed by the NAR cartel.
Unhealthy’ Prices ‘Precipitate An Adjustment’: NAR
Not to mention the unhealthy loans.
“‘We were seeing home prices and mortgage debt servicing cost-to-income ratios increase to unhealthy levels in some housing markets, which precipitate an adjustment,’ says Mr. Stevens.”
Wasnt this guy saying income and dept were inline and healthy… Did he lie to us … Again… for the shame of it all… tisk tisk tisk
the NAR (the same idiots who denied the existence of the bubble and the ones who said RE price never goes down) is claiming that the down swing will last only till july 2007. don’t they learn from the past mistakes? no matter how much they wish it ain’t so, reality always bites baby. the down swing will last for 7 years. RE cycle is 7 years up, 7 years down. just like clockwork.
Farmer’s Almanac says a colder than average winter.
I know one couple who’s gasoline bill alone last month was $1k
Lot’s of pain between now and July 2007.
Jesus man. What do they drive? Peterbilts?
Shermans.
Hummers…powered by HELOC.
Well the M4 Sherman had a 175 gallon tank and got ~.8mpg. There were lots of different versions, including one that had five 6-cylinder engines, so this varied a fair bit.
Is that gasoline, or natural gas?
at $75 to fill a SUV with both husband and wife making a long commute and filling every few days I could easily see this. That is only $30 a day, which sounds like a lot, until you think about it. Ok, I thought about it. It DOES sound like a lot, but I could still see it.
JUST THINK OF THE FOUR PEOPLE WHO SPOKE TODAY - REALTORS, BUILDERS, BANKERS. DO WE WANT THEM TO TELL THE TRUTH -THAT WE HAVE AN OVERSUPPLY OF HOUSES CAUSED BY SPECULATIVE DEMAND OR DO WE WANT THEM TO LIE, LIE , LIE?
IF THEY TELL THE TRUTH THE ECONOMY GETS WORSE BECAUSE WHO IN THEIR RIGHT MIND WOULD BY A HOUSE. BY LIEING SOME PEOPLE MIGHT STILL BUY A HOUSE AND WE PROLONG THE INEVITABLE. WE WANT THEM TO LIE. WE SHOULD THANK THEM. LET’S JUST NOT BELIEVE THEM.
Un-click your caps lock key. It’s not polite to yell at your fellow bloggers.
Maybe his/her caps button is broke.
maybe he was pushed over the edge by a new medical condition - bubble induced anxiety otherwise known as BID in the med journals … and some pharma company is working on a chemical cure specifically targeting those brain cells that shed rational light on bubbles. the pills will turn those cells off.
Maybe it took out a HELOC, and that’s why it’s broke.
Maybe he’s mentally retarded.
Easy now…this could be my dad…every email he sends to me is in CAPS, leaving me in a constant state of fear of being grounded.
“‘We believe that the housing market is still in the early innings of a hard landing that will likely take several years to develop,’ she says.”
Ya think? This year has really just been the pivot in the opposite direction. Next comes the building of downward momentum. We’ve seen some verification of the stand taken by housing bears in the last 8 months, but 2007 is going to be a trip!
“‘In retrospect, it was the finance and price-driven acceleration of buying for homeownership and for investment that drove housing market activity into unsustainable territory during the boom,’ he said.”
No kidding. Roll prices back at least 50% and flush the flippers.
Never follow the crowd.
Buying for home ownership and investment? No, no, no. It was buying for speculative gain — or for fear of being “priced out forever”.
My friends who in the past have bought homes as investments (that is, they buy them and rent them out) have completely stopped buying in recent years and are net sellers, not buyers, as they slowly liquidated their properties at obscene prices.
Real investors run the numbers before buying, and they balked years ago at paying top dollar for negative cash flow “investments”.
Well put NoVA. I only wish realtors could grasp this distinction between investment and speculation, and, in turn, stop using the term “investment” as they try to market their overpriced POS’s.
What do they care: 6% commish for speculation, investment or god-forbid - living in it.
Many will be OWNED by their house….not the other way around.
New post up…
http://www.housingbubblecasualty.com
SoCalMtgGuy
Kinda like how liberals never say taxes.. they say “investment”..
Realtors are like any other salesperson. They use the “book-to-bill ” ratio. They look at their book of business and look at their bills, then figure out how to make the most money off their book of clients.
I’m really sorry you have to pay taxes, Big Daddy.
At least this year you get a refund for paying for the 1898 Spanish American War. Woo hoo.
BigDaddy “Kinda like how liberals never say taxes.. they say “investment”
I know what you mean, like when Republicans never say “defict” they just Borrow….” Like in I would rather owe it to you, than cheat you out of it”
Why always put in politics? Big Daddy is probably driving big SUV and blaming liberals for high gas prices.
BigDaddy63 I respectfully disagree with you. The Realtors (TM) are not the ones who play the “book-to-bill” ratio. The lawyers play this game.
BigDaddy “Kinda like how liberals never say taxes.. they say “investment”
Kinda like when Republicans call themselves ‘conservative’ and yet spend hundreds of billions of dollars on a BS war.
Gas prices are actually not high anymore. They will be closer to $2 by Thanksgiving.
Kinda like how conservatives say we should put the 10 commandments in schools to teach values and then support the torture of prisoners.
You f-in liberals are all the same. I mean like you are so high and mighty? Go get your gay marriage, raise taxes so everyone can stay at home and watch Jerry Springer and then lets see where we are at??? There was a time in America when things were different and people had actual values! You hippie terrorist are all the same. Drive you car but say hey you drive a bigger car so you are bad. F-off.
That is all….
Whew!…..Glad that’s over
Wow, partisans are getting touchy these days.
Well this is an interesting thread! In the tech business book to bill means the number of new orders placed vs orders shipped over a period of time.
This is meaningful because there can be long lead times on production and it gives an good indication on whether the industry is growing or shrinking.
So you can think of it like gays getting engaged to gays getting married. As it is hard to get married as a gay person, but easy to become engaged, the Engage (book) to Marry (bill) ratio would be very high, indicating a likely future pick up in gay marriages.
Oliver
I don’t know why I always take the political bait but…
If cbass is a liberal trying to make conservatives look like retarded monkeys then he is doing an amazing job. Otherwise, wow.
Thanks Bruin, I needed the laff. Wow, indeed.
cbass, your homophobic nature comes out. A** like you are giving Republican a bad name. You are not center of this world. You can blame everything on liberals, democrats, gays, blacks, etc. There were times in America where minorities had to use different bathroom and sit in the back of the bus. I like to think we made good progress since then.
“‘We’re encouraging people who aren’t motivated to sell to delist and place a tenant in their property,’
…..never mind the negative monthly cash flow, just suck it up and take one for the team.
Sure. Just go down to Tenants ‘r us & pick up a few.
SWEET!
LOL!
and sell later for a bigger loss!
Right John . I don’t think that it is right to tell people not to sell if they are a flipper . Trying to turn flippers into landlords when the property doesn’t cash flow is asking someone to take a big risk and lose more money waiting for a rebounding market . Are the flippers willing to operate at a neg. cash flow for 10/12 years ? I dont think so .Flippers were never suppose to be landlords and they didn’t buy the property for that purpose .
Again ,asking people to take their houses off the market is a attempt to control inventory .At least they should be honest that they might have to wait 10 or more years .
This prediction by the talking heads at the NAR of this short term correction is so self-serving it sucks .
I would assume, given the current level of suicide loans, that most flippers have no choice but to sell. They cannot afford to pay for someone to live in their depreciating asset. There is only one clear decision. SELL NOW OR GO BROKE.
There is also that most fundamental aspect of human nature, self-interest, as in: “Aaaah, I dunno — maybe I should let the other guys take the advice. There’ll be enough of ‘em that I might be able to slide out the back door.”
I think you’re confusing your conjunctions here, should be AND not OR. Most of them are already broke, they just don’t realize it yet. The game that they and their banks have been playing was an exercise in maximizing leverage, to the point that even low (not to speak of negative) appreciation makes them insolvent when selling costs are considered. The question isn’t are many flippers insolvent and headed to bankrupcy court. The question is how many banks will be in trouble after foreclosure gives them an asset worth less than the loans that they’ve booked.
Coming from the same group of folks who coined the terms, “buy now of be priced out forever”, “throwing money away on rent”, “prices will never go down”, and “soft landing”, this does not surprise me in the least. Asking sellers to delist and rent is consistently selfish advice since the net benefitiaries are the Agents themselves with no regard for the consequences to those who follow such advice. It is the same as convincing someone that they can “afford” the vastly overpriced property by using a toxic loan. You take that advice and they get the commission. Rates reset, you can’t pay, you lose the house, your down and guess who gets to make a new commission on the place?
The simple truth, and I know I am singing to the choir here, is that very very few RE agents and/or lenders have the client’s best interests in mind in anything they say or do.
If I were a tenant, I’d be very hesitant to rent from someone who’s trying to sell my residence right out from under me.
Been there done that — don’t do it. You don’t want a negative cash flow loser as your landlord. At least make sure there’s a management company between the two of you.
“I’d be very hesitant to rent from someone who’s trying to sell my residence right out from under me.”
You betcha. Personally, I think the combo for-sale and for-rent signs are suicidal. Even if someone rents the place, assuming there are competing rental units available, it isn’t going to be the brightest bulb who does.
“If I were a tenant, I’d be very hesitant to rent from someone who’s trying to sell my residence right out from under me. ”
You nailed it Slim. Most want way too much rent…ie to cover their screw-up and will dump it in a hart beat given a chance! Plus you could get tossed by the bank or sheriff.
In my hood (92883) someone is asking $2650 for a small 4 br. It is at least 45 min commute to riverside and over an hour to OC. Traffic is almost as bad as 405 in LA.
We pay $1500 and I feel like I am getting ripped off.
It’s a free country, they can ask for whatever they want. I don’t think they’re likely to get it. They’re going to discover that no renter cares what your costs as a landlord are, they just care what other people are charging for rents. To the extant that the bubble has created an oversupply of housing, rents will trend downwards because an empty house REALLY has bad cashflow.
There goes that idea of increasing rents.
But there is enough rental property that does produce cash (or at least not a loss) to keep over priced rental properties vacant.
To borrow: “Wishing Rent”
The more likely scenario is if lots of folks get foreclosed on, they will be entering the rental market, increasing rents. That is also unlikely. There will be enough investors who will hang on until the bitter end waiting for prices to rebound. You can live in that home until the bottom.
tommy is the dipsht that had the quote in WAPO - can’t sell his house- trust your realhore
- “‘Not only has the inventory increased threefold, but the amount of buyers on the market is less than half of what it was last year,’ notes (realtor) Ron Fillion in Miami.
So the equation looks like this;
Inv = Inventory
B = Buyers
(Inv X 3) / (B / 2) = SCREWED!
is Seiders credible? I think he’s been more credible than lereah from what I’ve read.
Criswell is more credible than Lereah.
you gotta think by now that baghdad bob is more credible than lereah
Lereah’s prediction of a “soft landing” in 2007 will seem almost as silly as Criswell’s prediction that Denver will turned into rubbery rubble by a ray from space in 1989.
“The National Association of Home Builders told Congress today that the current downswing in home sales and housing production following the record housing boom of 2004-2005 is expected to bottom out around the middle of next year. Testifying before the Senate Subcommittees, NAHB Chief Economist David Seiders said..the record housing starts and sales of the past two years were well above levels supportable by demographics and other fundamental demand factors, and were fueled to a great extent by investors and speculators seeking to make a quick profit and through the surge of unconventional ARMs.”
Didn’t Seiders bother to even read David Lereah’s recent powerpoint presentation, which indicates that past housing downturns took a minimum of four years to bottom out? Or does he just assume that Congressional staffers are too lazy to do any background reading?
See slide 35 of 60 on David Lereah’s presentation called “Reality Check,” publicly available here:
http://www.realtor.org/Research.nsf/pages/presentations_use?OpenDocument
While these NAR talking heads are irritating, we should really be grateful to them. By painting as rosy a picture as they do, they reduce the chance of government intervention in the downturn.
I’m glad this guy is telling Congress, “Nothing to worry about, all part of a normal cycle.”
“They reduce the chance of government intervention in the downturn.”
Good point. Now if we can only get a Democrat in the white house with a Republican senate, or vice versa, we can get the government to *really* stop “helping” us.
No, no, no. Must get congress involved in this. Stop things up front before unspeakeable damage is done.
Expect massive legislation to come out of this effort. Along with pi being mandated to be equal to 3.00000. This solves both the looming economic crises as well as setting to rest once and for all any heretical notions regarding science.
instead of posing at nonsensical ‘hearings’, why don’t they do some real work and clean up the mess that they made over at sallie and fannie. none of them, from either party, deserve a return trip in november.
“Expect massive legislation to come out of this effort.”
Yep. When the last of the speculators sells their ‘investments,’ and the next Prez inks this legislation, will be the exact day to buy.
Congress is worse than the crowd. Don’t follow the crowd, but NEVER follow Congress. By the Congress stops partying with their friends and figures out that there IS a crowd, the crowd is gone!
Congress just follows around the trail of trash the crowd left behind.
A rational people have no use for irrational numbers. Out with π,e and ħ. √2 your day are numbered!
I wonder if Stevens gave a copy of DL’s recent power point presentation to members of the committee as an aid to his own testimony. What a bunch liars.
“Or does he just assume that Congressional staffers are too lazy to do any background”
And why would he not assume that?
“Contrary to many reports, there is not a ‘national housing bubble,’” says Mr. Stevens. “We were seeing home prices and mortgage debt servicing cost-to-income ratios increase to unhealthy levels in some housing markets, which precipitate an adjustment.”
This guy is bs’ing Congress! Unbelievable! Soon as he gets his sorry ass out of town the new figures will come out with a national decline and he’s on record!
I hope they slapped one of those “leg monitors” on him while they had the chance to make sure he’s available for the next hearing in about six months when the SHTF.
Good point. This may have the legs of the Enron perp run - just keep playing out the rope, then whapp!
‘Wal now, Mr. Stevens. Seems ya’ll don’t know much ’bout nothin’, do it, Mr. Stevens?
‘No sir, my brain has been up my a$$ so long it thinks being in the dark is normal’.
‘Bailiff, take this man away’.
Wal now, Mr. Stevens. Seems ya’ll don’t know much ’bout nothin’, do it, Mr. Stevens?
‘No sir, my brain has been up my a$$ so long it thinks being in the dark is normal’.
‘Bailiff, take this man away’.
LMAO!!!!!!!!!!!!
you are assuming that these congresspersons listen to them at all. they can probably hear what is being said but that is just about it. it is all about posturing and showmanship. come time to legislate these witnesses will be making the laws anyway.
I’m not sure Mr. Stevens can get his sorry a$$ out of town. Isn’t his home in the DC ‘burbs overpriced and not moving?
Unless he lowers the price, he’s going to be stuck in town for a long time.
Your are right. But he couldn’t sell it because he was always out of town!
…Linda Rheinberger, Greater Las Vegas Association of Realtors’s president, has advocated several strategies to sellers that could help bring the market back to equilibrium.”
“‘We’re encouraging people who aren’t motivated to sell to delist and place a tenant in their property,’ she says….
Well, they’re talking as if sellers are in a group with a strong collective interest. Those with a strong collective interest are the realtors. As for each of the sellers, he’s just every man for himself. Does he care about the ‘equilibrium’? I highly doubt it. As soon as they put their houses on the market, they want profits, motivated or not…
Wouldn’t it be enlightening to see how many realtor-owned properties get taken off? Right.
Also, who’s going to train all these “people who aren’t motivated to sell” how to be property managers? Oh, wait, I forgot. The real estate agency can do it FOR them, for a tidy fee, of course.
“…and place a tenant in their property,’ she says….
Sounds like she’s talking about placing one of those little wooden doll people in a fisher-price house. Demeaning and delusional.
perhaps she meant a statue of St. Joseph.
Good point!
I’ve been wondering how many of these distressed/flipped properties are actually owned by Realtors(TM) as investments.
I suspect that with all of the denial going on, that Realtors(TM) have a vested interest in making certain the public’s perception of the market remains positive, while the Realtors(TM) cut and run and leave with the $$$.
Misstrial,
I can guarantee you that realtors drank a bunch of the kool-aid and bought “investment” properties. MANY listings state seller is a licensed real estate agent, or related to the seller. Just in taking random looks at listings, I was amazed at how many homes were vacant, and we’re talking resales, not new. Remember the good old days when people would sell their home FIRST, and then go looking for the new one? With all the units slated to come on line, I don’t see anything but a MASSIVE overhang of inventory. How will this all be absorbed without significant (30-50%) price drops?
Here is DC area. I know this broker office bought whole 5 unit townhomes with broker and 4 agents. Price ranges from 1.3mil for non-end unit and 1.5 mil for end unit. Contract was signed few years ago and now homes are completed. Prices are already way down. What seems to be sure money/flip maker now will be financial disaster.
One of my family members just bought a horse from a realtor in Yorba Linda. They were trying to sell their home for $1.5 million or so and it wasn’t moving. They had to sell everything (boat, trailer, horses, furniture) just to make the monthly payment. Another friend is a mortgage broker and just bought a $700k house in FONTANA (seriously.) They are trying to sell their 3 bedroom house in another fontana hood for $610kwhen 4 bedrooms are going for $450k (should be $120k-220k.) The people I know of were just speculating in their primary residences, but I’m sure many, many of them were buying multiple “investments.” These guys all drank the kool-aid.
I bet it works something like those pyramind (MLM) financial services/insurance companies. They tell them “How can you stand behind this (overpriced) insurance if you don’t hold a policy.” All of these Johnny-come-lately realtors were probably talked into some wacky schemes by the more expreienced folk.
I can tell you for a fact that my former RE agent/neighbor had bought several properties from ‘00-’05 (North County). At least 4 or 5 multi-family units. She recently bought another house for primary residence in Jul-Aug 06 timeframe and didn’t bother to sell existing home. I warned her but, as usual she says RE only goes up. I predict that last purchase will undo all her gains on her other RE holdings. Nice people but got a little too greedy at the end.
‘We’re encouraging people who aren’t motivated to sell to delist and place a tenant in their property,’
Why not? This bubble is based on stealing sales from the future, why not shove inventory into the future? Live for the here and now. Never mind that that inventory will come back on the market at some time in the future. Then what?
Maybe NAR will have a system come out that if your last name starts with a A-F you will be allowed to list that month…..G-M will be next months listings.
With that in place they can go before committees and prove they have things under control.
Like even/odd plates during the gas crisis. Of course this would only work if they would de-list you at the end of “your” month. Might make for more motivated sellers, hahaha.
‘Course, around here in Costa Mesa, probably half the sellers ARE realtwhores…
Also, another important point is that most of these homes can not be rented for what the mortgage costs are. Where are you going to find tenatnts that are wiling to pay over $3000 a month for a place to live???
Around here, $3000/month for a house would be a bargain. In a nice neighborhood, you’re looking a $5K/mo to start. Of course, that still won’t cover the PITI on the house if it was purchased in the last five years.
It is no longer unusual for me to see SFHs for rent asking 5 figures per month. It hasn’t happened yet, but there must be an adjustment coming soon, as these rental prices are truely insane.
sm_landlord, I just assumed you lived in San Marcos. I don’t really pay attention to North County per se but its hard to believe that 3k to rent a house is common there.
Josh
I think SM stands for the People’s Republic of Santa Monica.
D’oh
good point, there is no collective interests when its your financial life on the line….and no one elses.
“there is no collective interests when its your financial life on the line”
Like in scuba diving — the buddy-breathing rescue works great when the helper believes there is enough air for them both to reach the surface.
And of course in this analogy, the realtor is looking at his decompression tables and saying, “Wait here, I’ll be back down with another tank for you real soon.”
the record housing starts and sales of the past two years were well above levels supportable by demographics and other fundamental demand factors, and were fueled to a great extent by investors and speculators seeking to make a quick profit and through the surge of unconventional ARMs.”
___________________________________________________________
So you did not realize this at the time AND now you are sure it will bottom out shortly?
The FED seemed to think this boom was “fundementally” driven. At least according to their recent report from the the Chicago FED.
‘In retrospect, it was the finance and price-driven acceleration of buying for homeownership and for investment that drove housing market activity into unsustainable territory during the boom,’
I guess they didn’t read the article about the 23 year old with 14 houses last year. In retrospect indeed.
Wonder what happened to him. I sure know what most of us wish happened.
‘mortgage debt servicing cost-to-income ratios’
Has the NAR been reading blogs?
Yeah, that’s a new one–not really one of their usual talking points. Probably using their chance to shill for an interest rate cut by raising the “mortgage debt service” issue my guess.
“‘In retrospect, it was the finance and price-driven acceleration of buying for homeownership and for investment that drove housing market activity into unsustainable territory during the boom,’ he said”
But I thought it was because:
1. There was no more land.
2. Housing had reach a new permanent plateau.
3. Prices were reflecting of buyer’s demand.
4. You had to buy now or be priced out forever.
5. Prices would rise 20% for ever.
6. Foreign buyers would keep buying.
7. Low interest rates would stay low forever.
8. Renting was for losers.
9. Real estate NEVER went down in value.
10. David Learah said………
Don’t forget the BOOMERS!!!
“‘Not only has the inventory increased threefold, but the amount of buyers on the market is less than half of what it was last year,’ notes (realtor) Ron Fillion in Miami. Fillion believes the city will retain a high inventory in proportion to its population for at least the next two years.”
Why do they say things like “two years” without giving a reason why. Why doesn’t the journalist challenge them and say, and what will change in 2 years? Just like when the NAR says that things will slow until next summer and then pick up. WHY? Are there any journalists anywhere that ask the tough follow-up questions to expose these idiots???
Also I find it hard to believe that the realtors/NAR didn’t know that they had a high amount of investor/flippers as clients . Wow , in these hearings you would think they just found out .
Now it’s the old blame it on the speculators/flippers that apparently were not dealing with realtors for the last 4 years because realtors didn’t know flippers /investors were driving the market .
Yea sure .
Knew percentage of realtor/NAR buys. Coded in.
I bid against them. I know they won bids. It’s listed on every HUD purchase, etc.
Now, they want Joe’s to delist. I really do want to see the stats from NAR of realtor-owned delists. Next week, (9/20)when the banking hearing is held, it should be a question, since it impacts the mortgage data.
Should be obligatory, if they are asking clients to delist.
Just another black feather, as far as I’m concerned. Now my top ten reasons for “being pissed at Realtors(TM) is up to eleven.
“2 years” can be used as a standard answer for any question where the appropriate answer should be “no clue” or “indefinite”. The trick is to try to provide an answer that passes the hearer’s smell test, but give very little commitment for anything to really change. This works as a great delay tactic.
For example;
- When will US be able to pull out of Afghanistan? …2 years.
- When will US be able to pull out of Iraq? …2 years.
- How long until Iran cooperates with Nuclear arms pact? …2 years.
- When will I be able to flip my property for a profit again? …2 years.
If the answerer were to reply “1 year or less”, then the questioner may actually recall the original prediction and call them on it when the time comes and the event did not take place.
If the answerer gives a reply “3 years or more”, then the questioner may call them on it right then and there for why it will take so long.
ejamie — pretty clever observation/theory.
The spike in foreclosures in August is scary. Greater than 50% increases in FL and CA from the previous month suggest a statisitical fluke or a very rapid change. If we see several months with large increases in foreclosure rates, that will be something that everyone will notice and be concerned about. Since the foreclosures were largely attributed to ARM resets and increasing difficulty in selling houses, these are factors that are only going to get much worse.
Today the lenders and banks, especially the largest subprime lender, IndyMac (NDE) are way up. IndyMac’s CEO is speaking at the CS housing symposium at 2:30 today (Wednesday). The big runup in NDE today suggests that the speach will be optimistic about profits in the subprime market.
Does anybody have an idea at what point the foreclosure figures hit a critical mass nationally or state wise to cause some serious damage?
And by the way if you didn’t catch the news—Florida’s No. 1! No. 1 baby! Stay back Cali!
Today the lenders and banks, especially the largest subprime lender, IndyMac (NDE) are way up. IndyMac’s CEO is speaking at the CS housing symposium at 2:30 today (Wednesday). The big runup in NDE today suggests that the speach will be optimistic about profits in the subprime market.
And the emperor has not clothes…
You haven’t seen shite until you start appraisin’ foreclosed sub-prime properties.
Pure rot, filth, and garabage.
The housing was junk to begin with.
The previous hack appraiser lied about the effective age, and now the place is in total ruins. Plumbing stripped-windows busted-interior wall systems trashed from leaking roofs-blown boilers-urine/excrement stench from the dogs pissing and crapping on the floor.
WTF you mean the place is only worth $125k, says the loan work-out guy. We got a previous appraisal that the property was in good condition. We got $425k lent against this place!!!!!!!!
haha suckers…go call the POS who lent the money!!!!!!!!!!!
Let him clean up all the dog crap in the basment. Maybe he’ll smarten next time on who he loans the money to.
Who says it was the dogs?
LOL
Perhaps option expiration week. If true, they’ll be back down on Monday.
“Florida, had more than 16,533 properties in foreclosure in August. That led all states and was 50 percent higher than in July and 62 percent higher than in August 2005.”
That really is incredible, up 50% in one month! Of course, these are off of historic lows in many places.
I’ve been reading figures on what it costs a bank to take a home through foreclosure. The low figure was “more than $30,000″ the high, $50,000. So with the average home price around $220,000, an 80% LTV really left a slim margin for safety if home went into foreclosure within the first few years.
Now 40% of people put no money down, have riskier mortgages and prices are beginning to fall. Plus many valuations for refis are likely to have been 5% or so high to begin with.
I really don’t get why Wall St is so sanguine about this. Bonds backing these mortgages pay not much more than some MetLife preferred shares I own. These people seem to believe the risk is about the same.
On the subject of foreclosures, I followed a link from somewhere to this story in the Detroit News, which contained this interesting tidbit:
‘Nearly every week, Troy real estate agent Bob Schneider shows up for Sheriff’s sales in Macomb or Oakland counties, hoping to find clients who may be able to sell their homes instead of foreclose.
“There’s 75 houses that go to sale. Every week I’m trying to find anybody with equity. It’s like you got to be kidding, every one of these people has mortgaged their houses to the hilt,” he said. “The bidding has virtually almost stopped.”‘
““Florida, had more than 16,533 properties in foreclosure in August. That led all states and was 50 percent higher than in July and 62 percent higher than in August 2005.”
On our local central Florida TV news the past hour, the 16K number and #1 position were announced. BUT the 50% was not. Now what is the more salient point to most viewers? The 16K number that they can’t really relate to anything? No. The #1 position? Possibly — that’s certainly an eye-opener. But IMO the 50% increase in one month is the BIGGIE because a lot of people can project that kind of math over future months.
“Give ‘em the fact that you have to give ‘em, Clem, but don’t analyze nuthin’ that’ll get ‘em all upset.”
this is today news from mba. compare this with the cnn news.
there is quite a disconnect………
i doubt that everything could be ecplained with a time lag.
U.S. MORTGAGE DELINQUENCIES UP SLIGHLTY YEAR-OVER-YEAR: MBA
U.S. MORTGAGE DELINQUENCIES EDGE LOWER FROM FIRST QUARTER
MORTGAGE BANKERS ASSOCIATION SAYS 4.39% OF LOANS DELINQUENT
PERCENT OF U.S. HOMES IN FORECLOSURE AT 0.99, LITTLE CHANGED
(compare this with the cnn story/mit cnn story vergleichen!)
PRESSURE ON HOLDERS OF SUBPRIME ARMS, MBA’S DUNCAN SAYS
HEALTHY ECONOMY OFFSETTING SLUMPING HOUSING MARKET: DUNCAN
U.S. mortgage delinquencies edge up year-over-year
The percentage of homeowners falling behind in their mortgage payments inched up in the second quarter from a year earlier, although the number was down slightly from the first quarter, the Mortgage Bankers Association said Wednesday. Delinquent loans, those more than 30 days past due, represented 4.39% of outstanding mortgages in the second quarter, up from 4.34% a year earlier but down from 4.41% in the first quarter. The percentage of loans in the foreclosure process was 0.99, up from 0.98% in the first quarter but down from 1.0% a year ago. Doug Duncan, chief economist for the mortgage bankers’ group, said a generally healthy economy has countered a decelerating housing market to keep bad loans in check. But he noted pressure on holders of subprime adjustable-rate loans, those made to the riskiest borrowers, and said that could spur modestly higher delinquency rates in the months ahead.
add to this the latest news with eraly default payments
early payment default (example hr block)
first payment default up to 3,82%
secound payment default up to 7,35%
third payment default up to 11,66%
the data from mba doesn´t fit to all the other data
http://immobilienblasen.blogspot.com/
“there is quite a disconnect…”
Not necessarily. For one thing, the second quarter ended June 30, the othe figures are for July and August. Plus, a lot of the figures from MBA are only for their members, they are only half the market, and may be the more reputable half.
some time lag explains a part of the disconnect.
but the forclosure data in 2nd quarter was also way above the last year.
one explanation could be that the mba data represent not a high percentage of subprime.
the weakly data from mba shows that in the last year there was also a high percentage of arms and a low fixed rate.
no fico data.
who knows more?
“weakly”
Good one, if intended.
to be honest. not intendent.
I too just spent some time going through both the Realtytrac numbers and the MBA Q2 numbers. Some interesting trends, including the fact that the percentage of prime ARM loans entering foreclosure is at its highest level in four years. Subprime delinquency rates are surging as well … and this is all with the economy overall doing well. More analysis on these trends at my blog, if you’re interested …
http://interestrateroundup.blogspot.com/
A lesson in History.
Looks like history Rhymes , it does well.
Oct 22 1992
973. Builders, brokers and lenders are offering layoff insurance to worried
would-be buyers. Prudential Realty of California recently unveiled a plan
to pay up to $5K monthly for 12 months. Buyers are covered only if they
lose their jobs during the first year of ownership. The coverage costs
from $20 to $700, depending on the amount of the payments guaranteed.
Customers can renew the program every 12 to 18 months. Glendale Federal
Bank will pay up to $,500 a month for up to 12 months at a cost of 3.75%
of the monthly mortgage payment. [McClatchy News Service]
974. Residential mortgage rates plunged to a 20-year low this week amid renewed
pessimism on the economy. The lower rates aren’t revitalizing housing
because of continued fear and uncertainty over the economy by prospective
buyers. [Wall Street Journal]
1008.The high end of California’s housing market is really suffering. And where
there is some activity at the high end, it’s at a price level the seller
never anticipated. In Los Angeles’ Brentwood Park, lots are going for $85
a square foot; just 2 years ago the price was nearly 30% more. At Ventura
County’s Sherwood Country Club development there have been only 18 sales
in well over a year in what is supposed to be a community of 650 homes.
[Wall Street Journal]
1010.Bay Area economists say the California Association of Realtors’ 1993 fore-
cast is overly optimistic and extremely naive. The forecast says existing
home sales will increase 1.9% if the GDP rises 2.3%, while interest rates
will drop. But the GDP not influence California housing sales because the
state’s economy is still going down the tubes and there is no relief in
sight. The state has not seen the end of job losses, and there is nothing
to attract new businesses; in fact, more and more people are leaving
California. Some see no growth in real estate until 1995. [Times Tribune]
1011.Once the engine of California real estate, move-up housing has plunged in
the past 5 years. The erosion of the middle class, flat home values,
declining incomes and white-collar layoffs will keep move-up housing
sluggish even after the overall market improves. Low inflation will make
moving-up even more risky. In 1988 there were 350,000 move-up buyers; this
year there will be less than 200,000. The supply is growing as seniors
sell and move out of state. Seniors and cash-strapped households are also
trading down. [Times Tribune]
1013.Kennedy-Wilson will auction 126 homes, apartment buildings and land
parcels throughout California. Golden State Fall Quarterly. Seven homes
sold with no minimum selling price. No unpublished reserves! You bid with
the knowledge that your high bid will be accepted! [San Jose Mercury News]
Dec 30 1991
669. Real estate investors are feeling their share of pain. In many parts of
the country, the value of income properties has fallen, sales are
sluggish, rents are soft and foreclosures and bankruptcies are up. In
areas such as Silicon Valley where thousands of jobs have been lost due to
high tech and defense-related cutbacks, smart landlords will keep the
rents 5 to 10% under market. [San Francisco Examiner]
667. A dozen of Fremont’s most expensive new homes went on auction. With the
housing market bleak, builders in the Mission San Jose hills have been
trying to unload homes above the $800,000 level by slashing prices tens or
even hundreds of thousands of dollars. Contractors are ready to give it
up, and sell them for what they cost. One house appraised at $1 million
last year now has a minimum bid of $745,000. Others appraised for $1.2
million could go for $800,000. [San Jose Mercury News]
Nov 14 1990
33. This is not a typical recession. There is no glaring problem with
inventories of conventional merchandise. Instead, the system is clogged
by bad debts–most notably, real estate that nobody wants to buy or
occupy. [SF Examiner]
34. California has experienced an unprecedented decline in real estate values
in the last year, with almost a 6% decline in median home prices since
the peak in July 1989, according to the Calif. Association of Realtors.
Bay Area home prices have fallen even further, more than 8% since August
1989. What is incredible is that there is seemingly no outside cause.
Housing prices simply rose higher than most people can pay.
Joe Arsenio, an analyst with Hambrecht & Quist Inc, says that the
fuel for further home price increases is not available. “We are not
getting the explosive growth of the past, and there will be a more
extended period of flattening in real estate prices.”
First Interstate Bank chief economist Jerry Jordan expects 3 to 5
years of flat to stable home prices in California, with actual price
declines early in the decade, especially hitting the higher-end homes
–those costing $400,000 or more.
Kenneth Rosen, chairman of UC Berkeley’s Center for Real Estate and
Urban Economics says, “There are not as many people out there trying to
buy a new home. And the absolute level of home prices is so high, it
scares people. There’s risk of more pronounced home price declines
because we are at such a high level already.” Rosen expects a 15%
decline in home prices from the peak in July 1989.
“A lot of buyers who bought just last year have lost their equity,”
said Michael Rivers, National Directory of Real Estate Advisory Services
for Ernst & Young. [SF Examiner]
35. Coming hard times will be made even harder by the historically high debt
that American households have piled up during the past 2 decades, an
economic research group warned yesterday. If a lot of people lose their
jobs in a recession, bankruptcies, delinquencies and mortgage foreclosures
will come quicker and more often than if savings had been piling up.
[SF Chronicle]
38. The median price of a home dropped $4,000 in October, to $216,000, as
reported by the San Jose Real Estate Board. In the 3 months since July,
the median has dropped $14,000. [San Jose Mercury News]
“A lot of buyers who bought just last year have lost their equity,”
given that over the last three years the average down payment was less than 3%, that comment seems prehistoric.
Just typed Ivy Zelman in to Google. What do you know? She was #1 for accuracy according to Forbes in 2005 . . . and 2004. Looks she’s on her way to a three-peat to me.
As a lawyer, I am looking forward to the civil suits against mortgage brokers. Might as well be a full-employment act for litigators. I hope that the prosecutors get busy too.
So if one files a civil suit against a MB whom is/was part of say, an LLC with minimal assets, how much would one expect to recover?
So if we read David Seiders testimony he believes we built an extra 400,000 houseing units. If we do some interpolation on other sites with the historical ratios of housing/population we have about 2.5 million extra housing units. This difference will define the landing
record existing and new home inventory…no national bubble here.
move along now.
sorry housing is not spelled houseing
hosing, housing… the spelling will define the condition, it’s what it feels like that matters to some folks!
Housing prices are expected to continue to have a limited fall throughout 2006
“Limited fall”
O RLY?
What do you mean by “limited”?
What will be the limit? And who will do the limiting?
C’mon chicote, think about it. The fall is limited to 100%.
Sheesh.
OF the estimated “value”, or the MORTGAGE AMOUNT??
125% LTV loan ?
Less than that, jp. When houses cost a dollar, I going to buy them all….AND put 20% down on each and every one.
I just want to tell you guys how much I appreciate your comments over the last several months. I, like so many of you, thought I was going apesh!t looking at property prices go so far out of whack with fundamentals, and the RealtWhores(tm) cheering it all on with all the usual cliches, and people I know who bought giving me crap for renting.
Maybe it’s pure shadenfreud, maybe the bad taste in my mouth from having a step mother growing up who was a realtwhore(tm), but it’s very refreshing to see that yes Virginia, real estate prices can and do go down, especially when they are so artificially blown up like they appear to have been this time around.
I’m also EXTREMLELY grateful for the people that keep a running record of the endless train of turds spewing out of the mouth of the likes of the LIErah.
This correction/downturn/crash/whatever/AHHHHHHHHH! will probably end up hurting a lot of folks that don’t deserve it along with those that do, and the people that went out of their way to fan the flames CAN NOT get a free pass on this.
Keep up the good work guys!
http://davidlereahwatch.blogspot.com
“…But Ms. Zelman still sees more price declines ahead.
‘We believe that the housing market is still in the early innings of a hard landing that will likely take several years to develop,’ she says.”
Why isn’t Ms. Zelman the one testifying in front of Congress? Note how Congress is only hearing from one side of the whole real estate issue.
I wonder if Congress just wants to get RE industry comments on record at this time. If things truely get ugly in another 8 months (as we expect them too), then Congress can call these people back to defend today’s statements.
But wouldn’t it then bolster the argument to also have on record that at the time there were in fact people who were warning that things would be worse? That way the RE folks can’t say “well, who knew it would be this bad?”
At this point, the only people we want testifying to Congress are the NAR “everything’s fine, nothing to see here” folks.
The best thing that could happen to the real estate market (in terms of letting it handle the bust naturally) is for Congress to do nothing. The rosier the picture that’s painted for them, the more likely is it that they won’t take any meaningful action.
The worst possible situation would be for Congressmen to start reading this blog. If Congress were to realize how bad this is going to get, they might take action to start propping things up.
If so, I could easily see a situation where the bubble is artificially kept from bursting, where credit and lending requirements are relaxed to the point where no one ever actually gets foreclosed on, but never actually ends up with any equity either, where median wage-earners can afford median houses by paying the ever-increasing minimum on an interest-only loan until the day they die.
So, any politicians who happened to wander in here, feel free to ignore us. We’re all just bitter renters; the only problem with the market is psychologically-maladjusted buyers and overly-gloomy media, and that will all pass like a brief cloudy period on an otherwise sunny day. Everything will be just fine…
Don’t be so sure Congress or affiliates don’t read this blog. They’re not all so highly-paid, no access to real easy money after the last few scandals, and they’re worried about all of their homes, too.
Human nature is human nature.
I think Congress knows the situation actually . This is just a dog and phony show for the public . IMHO unqualified borrowers and flipper/speculators created at least 50% more demand than would of been there from 2002 onward . It caused the builders to overbuild ,which they are still doing .
It’s really sad that out of state locust buyers would set the price of a local economy rather than the local economy .
Had the lenders required down payments it would of weeded out alot of questionable buyers who where not ready for home ownership or where just speculators .
My biggest point is that the lenders/appraisers should of never allowed speculators to determine values in a area in that they are not end users and lenders should of put a cap on yearly appreciation loan amounts .
And don’t tell me that the lenders did not know that the borrowers were locust or flippers or speculators or marginal buyers .
On a side note, that’s quite a calculation error made by ZipRealty, and it went into all the graphs and made the print edition (I assume). They might not be getting any more calls from WSJ:
Inventories of unsold homes listed on multiple-listing services in 18 major metropolitan areas grew 3.5% in August from July, according to data compiled by Zip Realty. In an earlier version, the increase was incorrectly reported as 4.7% because of a calculation error by Zip. The Seattle area was up 6.4% and Dallas was up 0.6%. In the earlier version, the Seattle increase was incorrectly stated as 13% and Dallas as 16%.
Hell, I think the pitcher is still warming up.
OT: but MIC big war bs spending will fall too
some in 07 and big in 09
I remember someone else making that prediction about DoD cutting budget in ‘09. Why do you say that? I’m not for or against it, I just wonder where this information is coming from.
I still dont understand how or why people believe that the RE will take 8 years to unwind….I believe 2 at best…too many people bought with incomes insufficient to their mortgage, why would that take 8 years to unwind? Everyone I talk to is in deep trouble with their home(s). We also have to contend with a recession on the horizon, which will escalate this debacle. In 2 years there will be plenty of cheap deals for housing and Real Estate.
There were plenty of cheap deals in Japan in 1995, but they were even cheaper in 2000 and finally had their first uptick in 2006. Houses are not stocks - they are not liquid, they are not an asset (assets produce income) - The credit bubble started in 1994 and it will take at least 10 years to unravel - 15 to 20 years to start going up.
a good hypothesis can be found on Itulip.com
15 years to revert to the mean.
But in Japan everyone had enough savings to live on for 15 years.
A very good point.
Regards,
Joss
I still dont understand how or why people believe that the RE will take 8 years to unwind….I believe 2 at best…too many people bought with incomes insufficient to their mortgage, why would that take 8 years to unwind? Everyone I talk to is in deep trouble with their home(s). We also have to contend with a recession on the horizon, which will escalate this debacle. In 2 years there will be plenty of cheap deals for housing and Real Estate.
I am also a believer in a quicker drop than prior real estate cycles .
Agree. The existence of the internet to disperse information alone will accellerate the decline something-fold (don’t want to pull a % out of my butt) compared to pre-internet busts. I think that is an unassailable supposition.
a quick big drop this next 2 years, and then an excruciatingly long small annual drops coupled with higher inflation. maybe 7 years.
8 to 10 years until the drops stop and the prices start to recover. I agree in 2 - 3 years, many deals will be available. You’ll get a good house at a reduced prove and lower taxes. Interest rates should also be pretty good, too.
But if you plan on moving for 5 to seven years, expect no gain or a net loss on your property.
In addition, expect it to be more difficult to borrow. After all, RE will be a pariah investment.
Interesting topic. I think it is very hard at this point to get any idea how long this will take. I agree with the poster from another thread that said that the Long downward trend in Japan was kind of specific to them and has a lot to do with their particular conditions, government, etc.
I think we certainly have the potential for as big a fall as Japan has had, I just think it’s pretty unlikely the timeframe will be the same.
For one thing, I think the Japanese are a bit more prudent than we when it comes to savings and recurring expenses. That means the average FB over there can hold out longer before having to sell or walk.
Whereas here, we have a negative average savings rate and so many people HELOC’d to the hilt or in a suicide-type loan, or both.
I remember reading a while back that about 40% of our total economic growth was tied to the REIC. I’m not sure if that was just for WA or nationwide, but if it is, that means our whole economy might have been just floating along thanks to the FBs.
So we now may have the potential for a “vicious cycle” situation where things spiral downward sharply.
That’s why I think we could easily see a drop as big as Japan’s has been, but in a shorter time.
Out of curiousity, does anyone have any figures on how many people use “exotic” loan products in Japan, or know if they’re even available there?
If they are available, I bet far fewer people there (per capita) would use them. Of course that’s just a hunch I’m pulling out of my bottom…
I don’t think they had exotic loans as in neg-am etc, but they did have “multi-generation” loans (!).
I posted this one a few days ago:
http://www.financialsense.com/fsu/editorials/2006/0909.html
There is another possibility that I shudder to think about:
We could see that vicious cycle continue for as long as the “slower” decline in Japan.
Even I will suggest that that’s pretty far fetched, but can not completely rule it out. Our currency is pretty inflated, national and personal debt at all time highs, on the down side of that economic long wave mentioned earlier, massive outsourcing, and all the other factors could be brewing a perfect storm.
I do think it’s a long shot though.
On a different note -
David:
Thanks for the link - I was just looking at the LereahWatch blog earlier. It’s a shame nobody seems to post there, but it’s great that someone is keeping a record on the guy’s BS.
We’ve been here before….1873-1879 Depression followed by 17 more years of deflation till 1896. Totally different circumstances, but deflations can go a long time…It was this period that instilled a sense of conservatism in Americans 3 generrations ago. Of course, they lost that in the 1920s only to relearn what their parents and GPs knew in the 1930s. We’ve long forgotten…
OTOH, Japanese attitude was to stick with the obscene payment, get family help, etc… work 3 jobs…ANYTHING not to go through the shame of default. Here…let er roll…it will be fast. It was fast in Austin in 1986-87…By YE 87 $80K 1985 priced houses could’t be sold for $45K-50K. Bottomed out at $35K-$40K in 1989-90.
I would guess anybody boomer or older will never see another decent housing bull market in their lifetimes. There’s just no fundamental reason for house-price appreciation. It will go back to, hey, if you’re pretty handy around the house and like working on the yard, you should own. Otherwise, no overriding reason except for not having a landlord.
What if the adjustment period lasts until the boomers start to retire, that’s only about 5 years out for the leading edge. The demographic trends at that time will be selling properties in major metropolitan areas where they now work to move to move suburban/rural areas where they can retire in a little more style. Any one modeling the effect of that?
But they won’t need to move. Sure, it would be nice, but they can retire in the ‘burbs. They don’t need that new home in FL. And they won’t buy it in 5 years. Remember, “RE is a bad investment”
My fav line in the blog is “limited fall throughout 2006″..
In the course of data collecting prior to inspecting the property for appraisal, I obtain the tax record. I have noticed a trend here in good ole Taxachusetts. It seems properties are being listed @ or sometimes below the price purchased in 03.. I figured it must be people getting out of there arms… I have been tracking two to three listings in a condominium and the DOM is pushing 100+-.. I will let everyone in this blog know when it hits 2002 prices, but for now it seems if you bought in 2003 and did not sell before say June of 05 you have lost equity..
Somebody is going to make a nice chunk of change coming up with a boilerplate lease or lease admendment list that tenants can negotiate for inclusion when dealing with a FB or investor. Just one more contract that you can pick up from your local office store; but it would cover protections for a tenant in case of owner default (many states evict and void lease immediately upon foreclosure and what they would or would not be required to put up with in terms of an owner looking to sell (constant prospective buyer walk-throughs? A kitchen remodeling 6 weeks before you move?), etc.
I guess many here just wouldn’t want to rent from a FB, period, but those may be the deals, especially in markets where the pre-pre-foreclosures for rent will come to outnumber the “traditional” investment rentals by a huge margin. I can’t see continuing to pay our family’s current rent a year from now, don’t see our landlord lowering the rent (heck, she owns outright and would probably prefer not to ride out a decline) - but I expect that there will be a lot of novice landlords (direct or under property management cos) in a year or so, and maybe quite a few novice renters as well. It’ll be the shellshocked bargaining with the shellshocked, and a lot of horror stories to ensue. I figure a requirement of certain lease language will be our best protection. I’m certain some landlords will take high umbrage at the NERVE of presenting a laundry list of contractual “gotta haves”, but they will also be comparing us as financially stable tenants, with the recently foreclosed and other questionable candidates.
“The National Association of Home Builders told Congress today that the current downswing in home sales and housing production following the record housing boom of 2004-2005 is expected to bottom out around the middle of next year.”
Noticing a lot more of the ‘calling the bottom’ by the HB folks. Wonder if there is any correlation between their projected bottom, and their projected date of being out of cash……
“OK fence sitters, there’s the bottom. You win….. time to buy now”.
(So someone besides us buys our stock …. please?)
Today I am bothered! (please excuse my rantings here, I need to get this off my chest) So, if you may remember, yesterday I posted my realtor’s email response to me about the 550k house that was ‘pending’ and how I should not be looking for a house in the 550k’s if I only wanted to spend 500k.. blah blah blah…. Fast forward to today.
My realtor sent me an email link to these articles:
http://www.srar.com/pressreleases/09-11-06-222.php
and
http://www.srar.com/pressreleases/09-11-06-111.php
Embedded in those articles are just lies, embellishments, whatever you want to call it.
For example, do you believe this:
“There still are not enough homes available to satisfy demand,” Mueller said, “which insulates the market from any dramatic plunge in resale prices.”
- I mean, what about the ARM’s re-adjusting, that certainly does not offer insulation. People will drop their price and try to unload their homes they cannot afford, we all know this is starting to happen now. Ok, so that was not mentioned at all in these 2 articles.
and this quote:
“It does not surprise me to see prices vary over a wide range from month-to-month,” Link said. “I think price swings will be common until buyers and sellers get used to the new realities of a calmer, moderate, evenly paced residential housing resale market where neither buyer nor seller have the upper hand.”
- hmm.. sounds like SRAR really does not want the buyer to have the upper hand.
and this quote:
“An increase of 116 percent in active listings sound ominous,” said Jim Link, the Association’s executive vice president, “but the inventory was so low, for so long with so many buyers chasing too few listings and driving prices ever higher, that any increase in inventory is welcome news.”
and this:
“The Valley would require nearly three times as many listings before the tables would be turned enough to suddenly transform today’s balanced market into a buyers’ market,” Link said, “and nothing on the horizon suggests that will happen.”
“Unlike the economic upheaval of the early 1990s, both Link and White noted that the Southern California’s diversified economy remains solid with more good news coming from an array of industries than signs of stress.”
- I am so tired of all this fluff in the real estate news. Please why don’t they tell the truth. ::: rolling eyes ::::
‘California foreclosures are increasing at an even faster annual rate, up 160 percent since last year to 12,506. And the formerly red-hot Nevada market recorded a spike of 24 percent compared with July and a whopping 255 percent increase from August 2005.”’
These increases are directly attributable to phenomena that are really only BEGINNING to appear. We have arrived at the very beginning of high numbers of loan resets during a time of historically low unemployment. Unemployment will be increasing now and the number of resets is going to be accelerating, peaking 3-5 years from the time when purchases peaked in 2003-05. By the end of 2008, the foreclosure spike will amount to at least a 1000% increase from the beginning of this downturn.
Ha ha
Realturds(tm)
Research this!