‘This Is Only The Beginning Of The Downward Cycle’
The Boston Globe reports on the condo market. “International design superstar Philippe Starck and his partners in a Boston condominium project, struggling to sell their luxury units in a stagnant market, have dropped their asking prices an average of 12 percent and hired a new real estate agent.”
“Dan LaBarre, a South End agent, said D4’s main problem was always the unit prices. With some priced as high as $950 per square foot, D4 missed out on a hot downtown condo market in 2005, agents said. ‘Unless they’re doing a substantial price adjustment to reflect the current market,’ he said, ‘it’s still not going to sell.’”
“Coldwell Banker plans, for example, to relist a three-bedroom penthouse at $1.65 million. It was first priced at $1.77 million and dropped in July to $1.71 million. A one-bedroom will be reduced to $600,000 from $670,000.”
From Newsday in New York. “For the first time in nine years, Nassau County’s closed median home prices dropped over the last year, leaving experts to wonder whether the housing market’s downturn could be more significant, and longer-lasting, than first thought.”
“‘This is the turn that we’ve been waiting for for a long time,’ said Pearl Kamer, the chief economist of the Long Island Association. ‘This is only the beginning of the downward cycle and only the beginning of the unwinding of the housing bubble. The price declines could continue for a long time.’”
“Part of the problem for the Island, said Prudential Douglas Elliman CEO Dorothy Herman, is that much of the available inventory is somewhat ‘run of the mill.’ If all the homes are too similar, Herman said, it becomes very difficult to sell when there’s a glut.”
The Journal News in new York. “Spurred by slower sales, homeowners and their Realtors are turning to a Roman Catholic tradition of burying a small statue of St. Joseph in yards of properties for sale.”
“Single-family home sales in Westchester and Putnam counties fell 14.9 percent and 5 percent, respectively, during the second quarter.”
“In White Plains, G. Siccardi & Family sells about a dozen St. Joseph figurines a week, with real estate agents sometimes buying a half dozen or more at a time. ‘Our suppliers are out of stock,’ said owner Gerry Siccardi. ‘Apparently, all over the United States people are buying them.’”
“Mount Vernon real estate agent Elvira Castillo said faith in St. Joseph can help move a house, but not counteract an unreasonable asking price. ‘You can bury 10 St. Josephs, and it’s never going to sell,’ Castillo said of some sellers’ unrealistic expectations.”
Condos are doomed, but SFH in my surroundings in CT have MANY for sales signs too. Not too many FSBO though…
Of course condos are doomed, you can’t bury a statue of the Patron Saint of Greed, Entitlement & Denial in the front yard.
you must be referring to St. Gordon (Gecko)
I went to ebay and typed in “St. Joseph statue”. I had 98 hits. Many of them refer to “sell your home kits”. Clearly we are seeing the makings of a St. Joseph statue bubble.
I am currently writing a book called, “Just Lower the F@#king Price”. There is no way it will ever published. People have St. Joe to help them out.
Great…now RE agents are going to start a bubble with St. Joseph figurines…
That is so true. Houses sell on price but sellers keep thinking someone will come along and fall in love with theirs and pay the asking price.
…with buckets of money and a box of stupid
is one choice quote from an article
Actually, FSBO doesn’t work as well as you might think. I know a realtor who has been shaking his head for the past 5 years, expecting a property crash all the time and has been stunned by the rise in values. More to the point, is convinced all this craziness will end badly. He’s seen it all before over the past 35 years in the real estate business but, as he says, “Nothing like this madness.” However, he said the FSBO or the Help-U-Sell properties do not sell as quickly as those being handled by a realtor. He said, FSBO properties usually end up switching to a realtor at some point because it’s a “numbers game” and unless the FSBO has some way of getting the word out (instead of a couple of small ads listed in a paper and a FSBO sign on the front lawn) it’s just luck if a potential buyer becomes aware that the property is for sale.
During the runup, FSBOs worked well. I had a neighbor who sold two homes in less than 48 hours aftering posting FSBO signs in their yard. This was in San Diego in 2002 and 2004, mind you.
Investment firm Raymond James estimated last year that up to 85 percent of condos in downtown Miami were bought by people with no intention of living there.—> 85% flippers
It’s a flipper slaughterhouse out there…
Since “Newsday” stopped printing,in the sunday edition, the graph of median home prices a few months ago, I’m surprised they printed this article. The graph clearly showed declining property values, since the begining of the years. The sunday paper is stuffed with real estate advertising. I guess their advertisers didn’t like the idea of them printing a graph with a clearly decending trend line.
Conspiracy theorists who think that advertisers dictate content should consider that this blog, which is about as negative on real estate as a medium can be, has some housing-related advertisers (mortgage companies, real estate brokers). I think that advertisers care more about how many people a medium reaches than anything else at the end of the day.
Those advertisers are google-planted by keywords as far as I can tell.
Make sure you click away!!
The ads that you see on this site are computer-driven, garcap. They’re not being placed by people who know the content.
Oh no, advertisers demand all kinds of things from publishers. The ability of the publisher to resist is entirely dependent on the amount of money the advertiser spends annually.
Oliver
And now, the news from deep in denial…there has long been a crumbled wall between the ad/editoral depts of major media — I recommend reading the words/essays of anyone from upton sinclair to george seldes to bill kovach for a crash course.. what is quite interesting about the new web model is that not only are ads not served by the sites on which they are immediatley posted, but advertisers now have their panties in such a wad about the diffusion of viewership that they are willing to advertise almost anywhere to reach eyes- no matter how much the content contradicts their mission. This could actually be a golden moment for unbiased journalism (at least where blogs/websites are concerned)
“but advertisers now have their panties in such a wad about the diffusion of viewership that they are willing to advertise almost anywhere to reach eyes- no matter how much the content contradicts their mission. This could actually be a golden moment for unbiased journalism (at least where blogs/websites are concerned)”
so you are arguing my point: advertisers care more about how many people a medium reaches than anything else.
Only if you’re making that point selectivley. On the internet advertisers are at sea, and can’t use their influence to change content; in print and TV they still try, and often succeed, in running the show.
“For the first time in nine years, Nassau County’s closed median home prices dropped over the last year, leaving experts to wonder whether the housing market’s downturn could be more significant, and longer-lasting, than first thought.”
By definition, if you didn’t see this downturn coming you cannot possibly be considered an “expert” in real estate.
If I were actually in the RE business (and correctly kept my emotions from blinding me) I would have not been able to ignore little signs for almost a year now. I really wonder where they get these experts. From a plastic moulding factory, obviously.
Of course. But these “experts” are really just paid cheerleaders for the industry. They screwed a lot of people with their bogus optimism.
Agree, I am sure they pushed a ton of clients into overpriced homes and $hitty loans. They have to act surprised now.
Experts at what? Convincing their unsuspecting clients to put theirs heads under the guillotine? Go on Anthony, (wink); pull the lever; RE will never fall.
“Experts at what?”
They are sales people, just like car salesmen and the salespeople at Macy’s.
“Should I buy this house?” is usually greeted with the same response as if you had asked “is this car model reliable?” or “do I look good in these pants?”
Disclaimer: There are some truely good and ethical people in all sales professions RE agents included, and they are worth more than gold.
I have to attend a lot of business and chamber of commerce meetings in the course of my work. Most of those people honestly believe that the business climate is great, housing has nowhere to go but up, and wealth and prosperity is just around the corner for everyone. A lot of those meetings are like Wal-Mart employee meetings where they sing and high-five each other until they believe what they want to believe. In most cases, I’m like a black cloud hanging over them.
DId I type this???? LOL
Sadly enough, you could be describing my neighborhood. My immediate neighbors include an airlines pilot, a retired Navy captain, a dentist, a financial type from Wharton, etc.
They ALL think the economy is great, no problems, everyone is doing well and will do better.
Ummm, except the folks who come by to mow the grass, clip the hedges, fix fences, trash pickup. I always talk to these people, things are tough and getting worse for them. And several of them DID work for local companies but are now essentially unemployable doing whatever to get by…
Whatever happened to taking care of your own place? As in, mowing your grass, clipping your hedges, and fixing the fences? People, it’s not that difficult to do it yourself. (Although I will admit that I’m happy to have the City of Tucson pick up my trash and recycles once a week.)
I sometimes listen to Bob Brinker, CNN, Kudlo, Cramer, and some of the other econo-cheerleaders, and it’s true. They actually believe the econo-babble they spew everyday. They have hypnotized themselves and others to such a point that they cannot believe anything to the contary. They are in for a rude awakening.
Sorry, contrary.
Hers’s a real expert. PHD Economist from U of Virginia Thats our boy David Learah form NAR….Before listen to anyone telling me how bad things are going to get from the bubble, I check to see if they predicted any kind of housing shortage in 2000. And, if they are really an expert at real estate “How come they are still working” after the greatest run up in real estate prices ever. Talk is cheap!!!
I personally find it difficult to tell from comments I see in print whether the experts in question are ignorant or just deceitful. David Lereah is a great example — I thought he was just a permabull wearing blinders until he posted his powerpoint slides from an August 2006 presentation on his web site, at which point I perceived the vast canyon between the talking points he shares with industry insiders and the rosier scenarios he concocts for the media. In fact, except for the spin, his powerpoint slides fit in quite well with what we regularly discuss on this blog.
GetStucco …no question its deceit .Tell me what fundamentals DL has to back his positions of the minor correction than a up market in 2007 . DL could even get his interest rate decrease and it would still be a hard landing .
You can’t fool the people all the time , they now know that real estate doesn’t always go up , also too many foreclosure in the pipeline ,lack of affordability ,inventory glut etc. Notice how the real estate industry never talks about the lack of affordability issue /lack of buyers to reduce the inventory .
Yep, to me it was deceit and you can’t even call it sales puff.
If DL could help in keeping this party going look at how many more bookd he could sell.
You know all the answers GetStucco ,I just posted for the lurkers .
Sorry books not bookd
I agree. It is absurd that a distracted and dim bulb such as myself could have connected the dots at least a couple years ago. At first I thought the insane run up in our region (S. Oregon) was “special” but once I learned that places like Sacramento, Las Vegas, and Phoenix were just as bad I smelled something fishy, and I have the business acumen of a banana slug. These “experts” must either be complete inbeciles or corrupt. If I were a betting man I know where I would put my money.
This is just sad. And pathetic.
“Spurred by slower sales, homeowners and their Realtors are turning to a Roman Catholic tradition of burying a small statue of St. Joseph in yards of properties for sale.”
speaking of small plastic molds (and probably from China), I see this too and it is most ridiculous lol
The statues only work in the country their made in.
speaking of small plastic molds (and probably from China), I see this too and it is most ridiculous lol
The last resort of the desperate.
What is a Moslem homeowner supposed to bury?
No worries, those statues are equally ineffectual for all faiths.
For true. Burying little statues is certainly not a Catholic tradiltion, and would be treated just as some quasi-idolatrous superstition by any Catholic theologian.
Hmm - 2 identical postings in the same second and I did not click twice…. odd.
I’m impressed that you sent the first message, noticed the duplication, wrote a second message, and sent it, all in 60 seconds. And they say the MBA is a worthless degree!
It better not be, I’m about to graduate with one….
Who’s the patron saint of the double post?
Saint Murphy of Outcomes.
He has a broad patronage.
Actually I have one, too, even used it for a few years. Kinda musty now, though - last I checked the glass was broken on the frame, which seemed apropos.
Uh, yeah, me to, I have one of those M. D. A. thingies too…and uhhh, so does my wife, uhhh, MORGAN FAIRCHILD.
WHO’M I’VE SLEPT WITH.
(apologies to John Lovitz)
….”inventory is somewhat run of the mill.”
…..”the homes are to similar,Herman said,it becomes very difficult to sell when there is a glut .”
That’s the problem ,we have a “run of the mill” house selling problem , it wasn’t the flippers after all .If we could just have more “special “houses that would take care of the problem .Wouldn’t be the fact that there is just to many of them houses with too few buyers being able to afford them ……no.. that couldn’t be the problem .
Why is that the realtors will not admit that there is a lack of affordable housing problem out there ?
Ahhhh special houses… Is there such a thing? Of course, there is. When sanity returns to the market the run of the mill homes will become ‘affordable’ and for us with cash and looking to purchase– buy a home, for god’s sake, that’s special. And before I get a lot of wise ass comments regarding ‘how special’ recall the times you have been to homes that had unique qualities (ie-location, location, location).
I agree there is little value placed on interesting house. This is how the appraisal process works location, squarefootage, #bathrooms, pool, …
I really don’t understand why we insist on building so many houses on site. Churning them out of a factory and shipping to the final location would save so much money and lead to a superior product.
I have been wondering if we could use giant blimps to move houses to get around the road width problem.
Oliver
Maybe the government should do a study on how effective burying a St Joseph statue is, when selling a house. I should apply for a grant to do that study.
The idea that you can use God to enrich yourself is not only arrogant, but theologically suspect. The almighty does not serve you, you serve the almighty. Who are we to think we can harness the omnipotent to indulge our petty materialism? Perhaps the Lord created the housing bubble to teach us a lesson in humility. Maybe God isn’t even with the person trying to sell the house, he’s with the woman in Darfur who must choose between starvation or rape. I think people who bury a statue in their yard are more likely to attract a lightning bolt than a buyer.
Great comment.
Wow! I just read an article this week’s version of Time on the “Gospel of Prosperity” and your comment beats them all hands down. Well said and right in the money in my opinion. Whoa! and your addendum is even better!
As addendum to my previous comment, I wonder how many of those “saint buriers” would be willing to donate 20% of the sale proceeds to the poor? I’d guess none. These greedheads have never been farther from the Lord in their lives!
Well said!
Oh well, but some of us bubble-sitters are not exactly altruistic either. I am thanking whatever Gods there may be, that the one house I did own was sold (closed yesterday). The agent and I had been holding our breath waiting for the buyer to pull the plug. But she didn’t. Maybe it was because I offered to finance 87% of the purchase price. Of course she will be “under water” soon, but if I have to take it back, it will be easier to re-sell it at 87% than 100%, and of course I will offer owner-financing again. Well, God should not be on my side, except that he did give me at least half a brain.
Isn’t that the truth and it was apparent to me early in life which is why I gravitated toward the eastern religions. They are the only ones that make any sense to me at all.
My wife is Japanese. She can tell you a thing or two about bhuddist priests in Japan. It’s really all the same.
I think it is important to differentiate between the religions and those who use the creed as a vehicle (greater, lesser, whatever) for extracting cash from the wallets of the supplicants. I would say the business angle is really all the same.
This reminds me of a dictionary which contained the following definition.
MAGIC, n. An art of converting superstition into coin. There are other arts serving the same high purpose, but the discreet lexicographer does not name them.
Ohh do tell… Which of the “eastern religions” have you gravitated to? I’m waiting to hear about the seller who inlists a fung shwei expert to orientate his St Joseph statue properly in the ground. We then will know we have hit the bottom!
“I’m waiting to hear about the seller who inlists a fung shwei expert to orientate his St Joseph statue properly in the ground. We then will know we have hit bottom!”
good one!
txchick57
Wow , what a dame! & brilliant, humorous…keep posting, the more I read, the better I feel about life. I nominate you as: “Blogger Therapist” of the year!
Ben,
Thank you , Thank you, Thank you, for this site!
Well said. The whole St. Joseph thing is just another example of the growing trivialization of religion in our society, much like all of those group prayers before sporting events (as if God cares whether or not the Jackass Flats high school football team has a winning season).
Excellent! So is God punising this greater fool about to buy this overpriced home with a toxic loan?
Right , if God is fair and just ,why would God allow a poor buyer to buy a overpriced house ,just because a seller wanted and prayed for a greater fool to come along .Why would a fair and just God want housing that is unaffordable for his people?
Find mess the Devil got the people into this time . GREED/FEAR
Saint Joseph is not the ‘official’ patron saint of anything, however the Roman Catholics believe he prays especially for families, fathers, expectant mothers (pregnant women), travellers, immigrants, house sellers and buyers, craftsmen, engineers and working people in general.
Since he prays for home sellers and buyers, perhaps he knows more about real estate than we think and instead of workin’ his saintly vibe for the sellers maybe he’s protecting buyers as he lies upside down in the dirt, beseeching them to intercede on their own behalf, and RUN from any house buying folly.
I agree, George. This strikes me as a kooky form of mysticism at best and sacriligious at worst. I’m a Catholic and I’ve never even heard of this sort of nonsense before.
These fools ought to look into the miracle of lower offering prices.
Don’t let Rev. Ike hear you say that.
I have been wondering about this too. My mother-in-law is praying for a buyer right now on one of her many investment properties. It seems to me that this cheapens religion. Does a God really want to work as a real estate agent? Is personal financial wealth something that was deemed important in the Bible?
For all those folks who read the Bible as the absolute word of (their) God, how does taken on debt fit it? I may be wrong but I thought there were prohibitions against borrowing or lending money.
Thoughts?
Oliver
Last I read he was turning over the tables of the vendors who were pushing their ilk in the church. Was that the book of Matthew?
What about the beatitueds (sp?) Blessed are the meek, etc… I don’t recall - blessed are the real estate investors who find a greater fool and place him in a pay option arm. The use of religion in this real estate bubble is blashphmey to me!
We can bring religion into the housing market by asking that good old Christian question: “What would Jesus do?”
Answer: Lower the f–ing price.
Didn’t Jesus get mad at the money-changers ? Hasn’t the Bible stories always warned against greed ,cheating ,etc?
Also remember that as agent He takes ten percent (tithe) of everything. That is almost enough to make one think of going FSBO.
Glad you brought this up. Religion had a hand in the run up of the housing bubble. I had to quit going to church a year and a half ago, because people actually questioned my faith, because I did not buy a house.
“Don’t worry if your faith is strong enough God will always provide for you. Take a leap of faith.”
One lady, who overpaid for her house and was having trouble making ends meet, said that whenever she had money troubles she prayed and then always got enough money to cover her expenses. I asked her where exactly this money came from and she said her rich family in another country(plantations with servants), would send her $1,000 to $2,000 a month. Hmm.
Another woman was having a lot of money troubles, so she prayed that night and the very next day a mortgage broker called her on the phone with a refi deal that took away all of her troubles, she packed 2 new car loans and a sunroom onto her mortgage. She did not shop around or ask questions, because she was sure that God had sent that particular person to her. I was aghast at this, but did not say a word, you cannot reason with these people or they think you are questioning their faith.
It seemed like people started believing that if you were “rich”(mansion you can’t afford), it was because you were being rewarded by God and the poor people(i.e. non materialistic-renter) were being punished by God. Anyway none of this made any sense to me. I quit going, felt like an outcast.
This nauseating concept has reached Australia as well :(, but in one of its Sydney strongholds is getting stress (in every sense :)) tested as we post.
-
So sacrilegious!
Hey, Karl, don’t know if you’re reading but I already see people trying to lease out the W condos. Ridiculous prices of course but it’s a start.
“Coldwell Banker plans, for example, to relist a three-bedroom penthouse at $1.65 million. It was first priced at $1.77 million and dropped in July to $1.71 million.”
I hope the view is really great, because $1.65 million for a three-bedroom condo still sounds really pricy. This reminds me of the rather considerable number of SFRs in Rancho Bernardo priced well north of $1 million. Our area is nice, but it is not Rancho Santa Fe or La Jolla, and I am guessing that many of these homes, which represent yesterday’s spillover demand from the truly upscale San Diego markets, will see multiple downward revisions to their prices before they move, as some of them have already been on the market for upwards of a year.
Holy sh@t. Armageddon is upon us. Barbara Corcoran, one of the biggest housing cheerleaders known to man, is on Cavuto’s show on Fox News Channel this morning. The topic of the discussion was the impact of falling gas prices on housing. The other girl on there, I don’t know nor do I care, to know her name. She’s dumb as a rock. She stated that falling gas prices would stop home prices from falling.
This is where it gets interesting. Barbara Corcoran completely disagreed. She stated that her experience that gas prices have “no” impact on home prices. She stated that she felt that housing prices were going to go down. I nearly swallowed my tongue, teeth and the glass from which I was drinking.
Corcoran’s truth telling continued at the end of the segment. She said the statistics we are currently seeing are not accurate. It will take 3 months to show what is going on in the market right now. She said the statistics in 3 months will show that home prices are down and they are down “a lot”.
Barbara Corcoran and Ben Stein were clearly the most bearish on home prices. Jim Rogers had his head squarely lodged in his a$$. Last spring Corcoran was on Fox News stating it was the best time to buy. Not one drop of optimism flowed from her mouth today. She has clearly spit out the Kool-Aid and drunk a huge glass of sodium pentathol. It was great to watch.
Oopps. I jumped the gun. Barbara Corcoran just said, “buy now. Fall will be a great time.” She must have loaded up on Kool-Aid during the commercial break. She is back to being the Devil. All is right. I just wish my fellow New Yorkers would boycott that little troll.
so much for my post below in favor of corcoran. she’s just a high-priced realtwhore !
That is shocking. I have never heard Corcoran say anything negative about real estate. She’s always been a professional cheerleader, but she is a respected professional with tons of high rolling clients. Maybe she’s going for a “You heard it here first” approach, since once the downturn is undeniable, I imagine a lot of sellers will be firing the agents who lied to them.
But the Cheerleaders have finally figured out that we have a inventory glut and they need to clear it out so they can only do so by having reduced prices for a while .Calling this a “buyers market “,to try to reduce inventory is glossing over the fact that it was a mania that pushed prices 30 to 50% over fair market . They are wrong to suggest that a 10% reduction makes it a good time to buy . Corcoran is a shill.They are trying the good old ,”get in now while it is a buyers market because it’s going back up again “. No basis to support that contention . Salespeople discovered eons ago that you can’t get people to buy overpriced items without pumping people up with the “urgency”factor or the “scarce” factor ,(running out of land),or whatever . All lies lies lies .
Yup, they’re still at it. This week’s inevitable RE conversation at work involved the tech who services our phone system. He just bought a house in East Mesa and owns another one that he was renting out until his tenant, shall we say, disappointed him by tossing the keys on his front step and blowing town. He’s now decided he doesn’t want to be a landlord and is trying to sell the rental place.
Me: “Well, good luck–I hear there are a lot of houses for sale right now.”
Him: “Yeah, but my real estate agent said that by next spring inventory will be way down, because everyone will decide to keep their house and just rent it out. He said 1000 people a day are moving to Phoenix, and with the decreased inventory from all the rentals prices will shoot up again!”
Me: “Oh. Well, hope it works out for you.”
I mean, really, the 1000 people a day line isn’t even a tired cliche, it’s stone cold dead. I wonder if my health insurance covers injuries sustained from trying to suppress hysterical laughter.
Corcoran sold out of her brokerage business, late last year, I think.
What did Jim Rogers say that’s got you so twisted? He’s usually the only one on that show with anything to offer.
Rogers pulled the old “location, location, location” saying. He said that real estate would not go down throughout the country. He sounded like the most empty-headed real estate bull out there. I think he is trying to keep commodities boosted.
“Corcoran’s truth telling continued at the end of the segment. She said the statistics we are currently seeing are not accurate.”
she is imho a reliable source: — a no-bs real tough chick who clawed her way to the top of the r.e. world with great street smarts (and whatever). she owes nothin’ to nobody and has nothing to lose and everything to gain by sharing with the public the unvarnished and brutal truth. all those who take her heed and avoid buying now will be devoted fans forever. i’m surprised to hear jim rogers (who lives up the block from me) blowfarting around the reality of the bubble popping.
… although of course i agree with him that my own place will be hardly affected, due to its celestial location :)~
I agree with you 99.99% of the time manhattanite, however, throughout the summer 2005 she was on Fox News “cost of freedom” shows pimping real estate to now end. She countered every bearish claim with 10 NAR propaganda claims.
i must confess i jumped the gun by defending her! i don’t watch tv and was relying on an above comment as to her purported bearishness. i see that was unfounded! she is a high-priced realtwhore. i seek dispensation for my sins. but it’s interesting that she said prices would go down. i wonder how that slipped out.
you’re probably right. i didn’t see today’s show since i don’t watch tv. i was relying on someone else’s post as to her bearishness.
can i take back my post above????
LOL. I too am shocked she is changing her perma-bull tune. However, I think some of these perma-bulls are trying to do the old “I told you real estate is going down” to save face.
If burying St. Joseph statues in the yard is not your preferred method for spurring sales, perhaps you should consider buying a new home and getting the builder to Help’U'Sell the old homestead. All of these strategies fit under the umbrella of builder incentives designed to sweeten the deal without contributing to the already-large officially-posted price reductions they are using to move their bloated inventories.
Details are given in the top-of-the-page C1 WSJ article today:
—————————————————————————————————
New Home-Buying Tricks
To Get You Into a New House, Builders Help Sell the Old One; Showing Off Hardwood Floors
——————–
By Ruth Simon
——————–
Home builders have a new trick to try to sell you a new home: They will help you get rid of your old one.
Faced with falling sales, some builders are helping would-be buyers spruce up their current home by bringing in professionals who advise them on what furniture to get rid of and tell them whether they should rip off the wallpaper. Others are offering to make payments on the buyer’s old mortgage (or the new one) in an effort to close the deal.
There is also renewed interest in so-called buy-back programs: The builder, or a broker, agrees to buy your current home, for a preset price, if it turns out that you can’t sell it.
The offers are coming both from local builders and national firms. For instance, Pulte Homes Inc. recently started pairing its customers with professional “stagers” who sweep in and do things like remove window coverings and touch up the paint, and covering up to $2,000 of the cost of the service. The program is available in about a dozen markets, including Detroit, Indianapolis, Sacramento, Calif., Tampa, Fla,., and Washington, D.C.
In Phoenix, Lennar Corp.’s U.S. Home division is offering a program in which customers who sell their homes through Coldwell Banker pay 3% instead of 6% commission on the sale of their current home. (To make up for that, Coldwell Banker is paid a 3% commission for the sale of the new home.) In Detroit, Toll Brothers Inc. will make principal and interest payments of up to $2,500 a month on a buyer’s new mortgage for the first six months, or give the buyer a credit equal to that amount at closing.
“Everyone is trying to be creative,” says Larry August of Pacific Pride Communtiies, a central California builder. With so many homes on the market, selling an existing home is a “huge obstacle for anyone looking to purchase a new home.” In some cases, Pacific Pride is making mortgage payments on customers’ old homes for as long as six months.
Again, this is effectively a price reduction. Builders have a long way to go to clear inventory and must use every trick in the book to make the reduction in prices as slow and unrecognizable as possible.
As for the “stagers,” builders also understand better than most homeowners what prevents sales from taking place, and they have access to crews that can do jobs better and more cheaply than the homeowners. It’s pretty enterprising, really. Every sale made is one less headache to deal with on the road to the bottom.
All these people are sure working a hell of a lot harder than I am. I’m trying to figure out whether to take a nap or go to the beach.
“… must use every trick in the book to make the reduction in prices as slow and unrecognizable as possible.”
Remember that a 1% reduction in new home sales prices is more-or-less applied against the value of all homebuilder inventory. I can’t wait for the writedowns, which cannot be forestalled forever by Help-U-Sell gimmicks.
“I can’t wait for the writedowns.”
Ditto. In this post, or the other one so far today, someone remarked about FSBOs being less likely to sell homes. Generally, I think that is true, but at least the FSBO can slash the heck out of his price. Agents can take a whole lot of heat from their colleagues if they price a property at a level that is sure to screw the comps, yet that is exactly the way to move the place.
Pulte is supposed to be pulling out of the Detroit market. They are selling undeveloped land they bought.
I will add, these guys are maggots to work for, they do every trick in the book to get the lowest prices . They burn though there own employees like kindling. They “import” labor that in turn they point to for setting the contract price, yet can’t handle the volume of work.
3,4, 5 year pulte home owners are mad cause the home they bought back than, because of the above, is still being built for the same price they bought for.
But hey, the CEO made $20+ million bonus last year.
Oh, and to add, the CEO or one of the big guys at Pulte had there own mega home built around Detroit area……….. they had another builder do it.
Wow , doesn’t that show you just how hard up builders are for buyers.
which saint statue should a buyer get who is looking for reasonably priced shelter for his family?
Saints 0f desperate, forgotten, impossible or lost causes or situations:
* Jude Thaddeus
* Gregory Thaumaturgus
* Philomena
* Rita of Cascia
Source:
http://www.catholic-forum.com/Saints/pst00440.htm
Jeez. No wonder my house isn’t selling. I thought you had to bury a Barbie doll in the backyard…………
My instructions clearly stated you should bury Barbara Corcoran head down in your backyard…
I live in Brooklyn and, of late, I’ve noticed properties sitting quite a bit longer, and some price reductions. Long Island and Westchester clearly turned first, but this now appears to be affecting the city (Surprise! NYC is not an island state unto itself.
Michael-
Thanks for the color on the Brooklyn market. I’m in Manhattan, but have a hard time taking the temperature of what’s going on out there.
Keep posting.
Real estate in the outer boroughs of NYC, seems to have come to a standstill, price wise. I think this does not hit all neighborhoods the same way. Neighborhoods that were from the onset undesirable due to crime statistics or being really inconvenient from a decent subway line have been stagnating for the past year. EG: Hollis, Jamaica, any development near Hillside avenue in Queens. As you drive by those neighborhoods, you will notice about 3-5 For Sale signs, and NONE are selling. More faraway neighborhoods such as Queens Village (it takes a bus and then to the F line, local to NYC), prices of houses have declined a little, but not substantially enough (median might be about 500K)… More convenient locations such as other neighborhoods of Central Queens, such as Middle Village, and Kew Gardens are seeing plenty of listing, without many buyers at all.
Perhaps more than simply a lack of buyers, what contributes to the large number of listings, are the overly ambitious prices. In one neighborhood I am looking at, the median price is $580K…While houses above this median (which means 3 b 1.5 bath, basement and garage) sell, they need to have the following requirements, be larger than average and be in prime condition. Everything else that is priced just slightly higher does not sell, regardless of many showings are conducted. Just yesterday, I have noticed a house which was exclusively listed at one RE Agency having dropped its price by 50K, from $649 to $599K. While the seller might not realize, is that while the RE agent is supposed to look after their interest, they might be getting too greedy, thus instead of accepting a lower initial offer, not taking an offer at all.
The real estate bust is closing in towards NYC, that seems to be inevitable. Zillow is NOT accurate, their numbers do not reflect the reality of a local market, perhaps if they update it more often.
If you need to sell things are bad around the tri state area. Probably already 20% off. The median price does not mean anything. I will give you a first hand example: someone AI know well needs to sell their house in Denville a nice suburb of NJ in a good school district. It is a community of simmilar houses that are about 4000sq ft each. The last house in the community sold for 1.1 million in august 2005( which I think was the top). I advised him last Oct to price it for $999,999 and see if he can get a quick sale. The logic was if it is underpriced he should get a bidding waqr and will end up witht he right price but if not atleast he will get out quick since he is not living in the house and mortgage cost is $5k a month. But he priced it at $1.1 million. it is now September of next year and he has chased the market down. The only bid he has is for $825 K and that too the buyer wants to make it contingent on selling his house first. Ha!Ha! You know where that is going. So basically over the year he lost $60K in mortgage payments + basic upkeep and lost 200K aoff the price he could have got. This is not a soft landing. This is going to destroy people, this country and this economy. This is the end my friend!
NYC metro area should be subdivided into different RE zones. NJ as well as LI, Westchester have felt the bite of the deflation already… The thing about houses that cost close to 1 million, is that they are bound to suffer more than houses in places where the median is lower. I have already seen plenty of overpriced houses that had their owners cut their prices by 100Ks, but, houses that are less than $600K, especially in convenient and safe neighborhoods, there is a lot of less dealing. The sellers have entrenched and they are not idiotic flippers. Some have lived in their property for 50 years or more, so their selling is not due to need. Nevertheless, even in this type of conservative and desirable (in terms of location, because there is NO new construction in neighborhoods such as Forest Hills, Kew Gardens and adjancent areas), there is a feeling of malaise, the only people cheering RE being the agents, but sure there is no serious buyers who are willing to remodel and deal with pseudo “good bargains.” I have even seen a family having remodelled their house up to the top…I say they have wasted their money, as someone like me will NEVER consider paying for goodies and are simply like dressing, without adding ANYTHING to the prime value of the property. Unless someone is selling their house a way off the median (in my case $580K) for a property in reasonable condition, there is NO WAY anyone will bite.
I have attempted to low ball in a property that needs extensive cosmet ic remodeling, listed at 625K, with a inital 450k offer, the RE agent did not want to take it. I say, let it rot until some other dude buys it. I say let them ride to see whether they could live in their “forever Sunny” real estate mindset…they are looking are worser things to come.
NYC, Manhattan RE is very soft and when the large scale of CONDO projects comes due, you will see what bears can do to you.
PS: Only one bright spot I see, in NJ, is NJ City, on the Hill overlooking Southern Tip of Manhattan. The ride to the City is less than 20 minutes, via local bus and then, via the Path train. I know of someone who bought a townhouse there for 300K about 3 years ago and now the property has doubled. The entire street down from him was purchased by developers, for remodeling and to be sold to Street types looking for larger spaces and lower prices than NYC can ever offer. All drug dealers and lower income people have been practically forced out of the area.
Not all of NYC real estate is crashing….but prices will come down slowly, but steadily, after all, they say about 60-70% of Americans move in their lifetime, that does not excluse New Yorkers. But if I were a seller trying to unload my property now, I would be gnawing at my nails. If I were in a foreclosure situation, then, I would simply walk away.
“If you need to sell things are bad around the tri state area. Probably already 20% off. The median price does not mean anything.”
i think this is true in manhattan as well. the art of r.e. in this town is the art of concealing prices. but the reality is that buyers are already sniffing “-20%” off of wishing prices listed in the nytimes. the stats mean zilch until you put your place on the market and wait for an offer. everything up until that point is spin — an actual offer is where the rubber hits the road.
btw, about 2 weeks ago, the nytimes had an article suggesting that buyers offer about 6% less than asking. this was to start to retraining manhattan buyers, who are used to getting led around by their noserings. so if the nytimes, who are notorious for sucking up to big r.e. interests, suggests 6% off — then i think it’s safe they are underestimating the weakness of the market considerably.
i think the reality of the -20% will only hit reality with the sellers when the big developers start to hammer down prices on the deluge of new construction that’s hitting the nyc — especially manhattan — market. i view the large number of homequest blind addres listings of new construction in the nytimes as a leading indicator of this pancaking/hammering that will get more and more pronounced as the bubble deflates.
btw, if location, location, location means that the most prime and select areas in nyc/manhattan will only lose 20% of their value, then i would agree with him! many neighborhoods will fare far, far worse before the bottom is reached — which won’t be for at least a few years.
Same 7 houses STILL sitting for sale, a couple of minor price reductions. Haven’t seen a single looker in months. In Chandler, AZ it looks like we have offcially run out of idiots!
In Detroit, Toll Brothers Inc. will make principal and interest payments of up to $2,500 a month on a buyer’s new mortgage for the first six months, or give the buyer a credit equal to that amount at closing.
Buyer are stupid if thy take this offer as they will be paying higher RE Taxes for the nex 30 years on a home that should be selling for less. GOOD MOVE Toll Bros. Stick the client!!!
“GOOD MOVE Toll Bros. Stick the client!!!”
Why not? They stuck shareholders with top management selling out in droves at the top before the 50% haircut, and stock buyback programs destined to result in more shareholder losses.
Mmmmm, 20 percent off in NYC strikes me as a bit of wishful thinking–right now. That’s an important caveat because things are changing fast. In intriguing ways, this bubble popping is the mirror opposite of 1989 to 1994. At that time (and a quick perusal of the clips will confirm this), NYC pitched first into the abyss. There were quite a few articles in national mags and newspapers circa 1990 and even 1991 noting that LA seemed immune. The usual yada yada: Not enough land, soooo many rich people, etc. Then of course LA went down and probably harder because its bubble had gotten even bigger than in NY.
This time around, we see California’s slowdown coming first, with the usual stuff from NYC realtors earlier this year that NY was different, NY had no land, sooo many rich people, etc.
As a number of the posters have noted, LI, NJ and Westchester went first, the markets softening noticably. And now you see it happening in NY. I agree with another poster, that Zillow is a tricky tool at this moment. Particularly in shoulder neighborhoods (that’s not an insult, just a description) such as Windsor Terrace, Prospect Lefferts Gardens, Kensington, Sunset Park and to an extent Clinton (All in Brooklyn) and in Washington Heights in Manhattan and Jackson Heights in Queens, the situation on the ground is changing faster than Zillow would seem to indicate. Even reputable realtors will tell you to bid under by 15 percent (true story, it’s happened twice).
It promises to be an interesting fall. This is the last chance for realtors and sellers to try and “turn” this market …
If the realtors /sellers are sucessful in turning the market ,it will only be short term and than we are back to the same problems again . The market overshot by 20%to 50% in bubble areas and you can’t get around it .There is not enough qualified buyers to get the inventory down enough to support a minor correction and than a bounce back in 2007 theory . The economy now need to catch up with the market that went to high .
When you think about how big the inventory would be right now if everybody that actually needed to sell put their houses on the market ,we would have years of supply .
In Detroit, Toll Brothers Inc. will make principal and interest payments of up to $2,500 a month on a buyer’s new mortgage for the first six months, or give the buyer a credit equal to that amount at closing.
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Wow, this will sure help those folks working at Ford and GM who are about to get “bought out”.