“From Red-Hot To Ho-Hum’
Newsday reports on Long Island. “John Giamarino wants to pay your mortgage. The catch? You have to buy his house. In the latest incentive to hit the local real estate market, the Seaford resident and his wife are offering to make a year’s worth of mortgage payments for the buyer of another home they have in West Gilgo Beach.”
“The house has been on the market for about six months and has seen a few price reductions, real estate agent Karen Reese said. It’s now listed at $645,000. ‘People need incentives to make the move,’ said Giamarino. As homes in Giamarino’s price range glut the market, it’s no wonder he and other sellers are looking to woo homebuyers with pricey gimmicks. Some slash the price, but others throw in furniture, plasma televisions and even cars or vacations.”
“‘I think if you move into a house and you’re not struggling with payments for 12 months, it’s just another idea to help.’ he said. The concept isn’t entirely new. Indeed, Giamarino got the idea from sellers in the South, particularly in Florida, where he owns other property, he said.”
“Despite their reservations, real estate attorneys Lita Smith-Mines and Neil Garfinkel said they weren’t surprised by Giamarino’s desire to spice up his sale. ‘I have three dozen or more files that are open just from home sellers who can’t sell,’ said Smith-Mines. ‘No one is coming to see their houses.’”
The Long Island Business News. “Long Island’s residential market continued to transition from red-hot to ho-hum in August. Inventory counts..have been skyrocketing for months as owners scramble to cash out on the cooling market. Realtors have begun blaming sellers, saying they’re holding out for the eye-popping gains.”
“‘It’s slow. It’s slow. Most of the buyers are giving us the exact same story: they’re waiting until December or January. Or if we show them a property, again, the offers are coming in much, much lower,’ said Renee Weinberg, a licensed sales associate in Long Beach. ‘We need something to give us a little bit of an uplift … It hasn’t turned. It is not good.’”
Here is the press release for the RI numbers.
prices in RI are down 10-15% and that’s a fact Jack
median , the new BS
When selling our house in East Greenwich RI, we had 7 other houses for sale in our neighborhood. Nothing had sold in 3-4 months. I convinved my wife that we meeded to be the first house sold, under the theory that the 1st one gets the best price, the 2nd the 2nd best price and so on. Happily for us we sold our house and the other 7 are still on the market 2 months later. We priced it to sell. I think it’s the only way.
Most markets with steep price increases had 25-35% of all sales going to speculators. The Bay Area was different with 95% of the sales going to people who actually lived in the homes. So I didn’t expect to see price declines in the Bay Area. However, the latest data says otherwise. San Mateo county (just south of SF) had dropped 6.7% - this county contains many of the poshest areas in the Bay Area.
Oops - forgot to give a reference:
http://cbs2.com/topstories/local_story_263200232.html
The Bay Area suffers from the same ailment as all bubble markets. Simply, the incomes don’t justify the wages.
SF area wages have consistently fallen and numbers of jobs have fallen and even the population is falling. At the same time more and more housing units were built (despite all the regulations, there are tons of new units around the Bay Area), and housing got more and more expensive.
Although nobody saw the intense speculator driven market such as was present in Sacramento and Las Vegas, SF has a different speculator… the end user who thinks “SF property only goes up 20%/year” and so they stretch to buy.
The problem: nobody can afford SF now. With no buyers, prices must come down. And most people who could buy already have (so demand was stolen from the future). and there is simply more inventory. It all adds up to depressed prices.
Thus, SF will fall like it did when I was in school out there. My old place (near Stonestown Mall) fell almost 30% of nominal value in the late 80’s early 90’s. But that’s heresy to discuss.
Thank you for your informative response. I do have a question though. I’ve read that inventory has risen from 1.7 months worth last summer to 3.5 months worth this summer. This is still significantly lower than the 6 months inventory which I’ve been told holds in a balanced market. I expected that until inventory rose past that mark, prices may stagnate but not drop. It’s not really playing out that way from what I can see.
SF Bay area is very hard to track in terms of inventory. There isn’t really a great centralized MLS service, and there are a lot of small operations and a ton of FSBO’s. (who wants to give 6% of $800,000 away)
I also think that SF is behind much of the rest of the state when it comes to bubble issues. They started rising AFTER places like San Diego, and thus it’s not unreasonable to assume that they will fall later as well. We’ve seen this in other markets too… people say “well it’s not happening here” then a month or two later it starts.
But make no mistake, prices are coming down… not by much anymore… but they are. how long until people realize that they can buy a place with a PITI of $5,500/year, or rent the same place for $2,500/year? If there’s no appreciation, that gamble doesn’t make sense.
I’m not saying SF Bay Area will fall X%, but it will fall a fair amount.
That’s why I left. We made in the high 100’s at the time, and found we couldn’t afford anything worth owning. So we moved to San Diego… then later to Mpls. At first I dreamt of the day when I’d move back. Now I really don’t. I visit a lot and it’ll always be “home”, but I doubt I’ll ever move back. simply not worth it.
Very interesting insights.
If you don’t plan to move back here even though you think of it as home because it it “simply not worth it”, you don’t expect prices here to drop very significantly, right?
Enough to cause pain, but still not a reasonable multiple of median income - something like that?
Since I live in a bubblicious area, I’ve thought about this point. What happens is that the lower prices in the imploding areas attract would be buyers from more desireable areas. Hence, that great sucking sound!
There has been little building in my area, Long Island, but word on the street is that a lot of people are moving to more affordable areas of the country, which slows the market here. In my neighborhood, at least 50K has been chopped off the price of most listings in the last year and a half.
Not all, though. If you had wanted to get nearly the 2005 price, you had to have waited a year or so. And spruce up the place, and whatever!
Sorry, the tables may not show well. Here is what I just sent out:
September 21, 2006
Evidence of Scam Options Fraud Money & Home Prices In Los Altos, CA
There has been a well established relationship between the home prices in Silly.con Valley, in general, and Los Altos, in particular, and the prices of tech Scams (aka stocks), in genial, Silly.con Valley based tech Scams, in particular. Here is just the latest example of this:
Table: Median Home Prices of Resale Homes (Source: SJMN)
4 Weeks through 4 Weeks through Change
7/14/2006 8/29/2006 Change
Los Altos 94022 $1,525,000 $1,141,500 $383,500
Los Altos 94024 $1,750,000 $1,607,500 $142,500
Relevant NDX 1712 (May high) 1446 (July low) -15%
Number of Sales 45 35
Please note that the sales for 4-week thru 7/14/2006 took place during May, when the tech Scams peaked, and the sales thru 8/29 took place in early July, when tech scams declined substantially. As the tech Scams have gone up substantially since the July lows one can expect a substantial price gains in Los Altos home prices 5-7 week from the 8/29 report. But not for long.
If my prediction of a recession in few months and depression to follow comes true, the home prices in Los Altos should fall below $250K some time during 2008. What Fraud Money giveth the Fraud Money taketh away. A good early warning signal would be when GOOG trades below $100. Believe you me there are quite a few people in Los Altos living off their Home ATM. It is going to be brutal when some of these people will be forced to sell their homes and there wouldn’t be any Fraud Money left to buy the homes in distress sales.
Jas Jain
———————————————————–
September 14, 2006
Housing Price Collapse For Los Altos, CA (Silly.con Valley)
Table: Median Price of Resale Homes (Source: SJMN)
Town Area 7-Aug 23-Aug 16-Day 16-day % Annual
Code Change Change Rate
Los Altos 94022 $1,540,000 $1,345,000 -$195,000 -12.7% -95.4%
Los Altos 94024 $2,000,000 $1,651,000 -$349,000 -17.5% -98.7%
Source: Jas Jain; 9/14/2006
It is the source of money that has driven the housing prices. When that starts to dry up, watch out below. Silly.con Valley’s is the most vulnerable housing market. When the tech stocks drop more than 50%, so would the housing prices.
Jas Jain
The 6-week change is NEGATIVE (it was in red in the table)
Los Altos 94022 $1,525,000 $1,141,500 -$383,500
Los Altos 94024 $1,750,000 $1,607,500 -$142,500
Jas Jain
Sellers should lower the price and stop with this incentive nonsense. All they are doing is paying a higher commission to RE agents.
I just got back from Orlando - it is laughable how much undeveloped land there STILL is there. Right off I-4 and International drive. There is SO much land still available in high profile markets.
I recently read a sellers reasoning for offering a car instead of cutting the prices by the same amount. He said the mortgage would only be $300 less, whereas a car payment would be much higher.
Rate arbitrage? Incredible how some people’s minds work. No thought whatsoever as to the true merit or value of a large financial decision, just talk to me about payment. If I’m a buyer, I’d ask them to take the cost of the car and use it to buy my mortgage rate down.
You want to see rate arbitrage? Look at prosper.com. You see people with A credit ratings trying to borrow money at 8-9% and lend it to people at 23%. No thanks.
I think the funny part is that a typical car loan is only 5 years. Of course the monthly payment than if you took the price off the house.
The article says, “the Seaford resident and his wife are offering to make a year’s worth of mortgage payments for the buyer of another home they have in West Gilgo Beach.”
Which implies they’re selling an investment property and it says that he owns stuff in Florida.
This is a guy who can’t afford to see prices drop. I hope we see followups on some of these characters a year or two from now.
“of course the monthly payment is more than. . .”
Lower sales price also equals lower property taxes!!! Year after year after year.
Sure seems like mortgage fraud to me. The mortgage holders depend on the security of the underlying assets. Cars depreciate.
If a foreclosure comes from a deal like that, does the bank also repossess the vehicle? The appraisal needs to meet the full sale price of the house at least. On paper, the car could be given a $0 slice of the deal. It’s not accurate accounting, but so far they are getting away with it.
I would like to know what guarantee you have these clown will make all the mortgage payments for 12 months and who gets the bill if he doesn’t make one or two or three or…? You get the idea.
OK - I didn’t quite understand what his reasoning was here - what did he mean exactly?
Ben posts ” He said the mortgage would only be $300 less, whereas a car payment would be much higher.”
Personally I would take the car.
1. You could make your get-a-way in it, 2 years from now.
2. You could go BK and keep it.
3. you could drive yourself to the poor house in it.
4. you could live in it.
I just read on Minyanville that there are 55 months’ worth of inventory in Florida condos and that some builder there in the Orlando area is sitting on 500 unsold houses “worth” 500K+ each.
Wow. 500 unsold houses worth 400k each! Sheesh. That sure is alot of 300k housing (you get the picture)
Stock Regulator,
Well, finally someone from the “regulatory side”! I have several issues with the whole “incentive scheme”. Firstly (as you’re aware) I can’t “sell the dividend” nor can I offer the stock at a “discount” to select clients. How is it that we can offer cars, TV’s, trips and CASH and it seems like everybody in the REIC seems to be perfectly O.K with this?
Well NAR may be fine with “whatever it takes to get inventory moving” but I think the IRS may have something to say! If you give me cash back at closing, that’s income! If you give me a car to buy your house, that’s income! Talk to anyone that’s “won” something from a game show etc. Even freq. flyer miles were being looked at. So how is it the IRS (while clamping down on collections) seems to be so blissfully “unaware” of what’s going on here?
The IRS has no issue because you are buying two items, the car at market value and the house at price paid less value of car. The basis of the house is the lesser value.
Bull. I can guarantee that no one is going to adjust the basis when they later sell the house…unless their CPA specifically figures out that the car was included. And even then, if the CPA wants to keep the client, they better look the other direction…
All they are doing is paying a higher commission to RE agents.
And, let’s not forget, increasing the purchaser’s property taxes.
- CEO Timothy M. Warren Jr. said the numbers reflect an ongoing ‘modest correction’ in the housing market.
Don’t worry - be happy. It’s just a modest correction.
I’d hate to see the numbers for a hard crash. By his definition, has RI ever had one?
“‘It’s slow. It’s slow. Most of the buyers are giving us the exact same story: they’re waiting until December or January. Or if we show them a property, again, the offers are coming in much, much lower,’ said Renee Weinberg, a licensed sales associate in Long Beach. ‘We need something to give us a little bit of an uplift … It hasn’t turned. It is not good.’”
I’m waiting until after the Super Bowl. And until after Long Beach prices stop falling.
Yeah, cause no one wants to move too soon and miss not having the living room set up for the Super Bowl party.
Welcome to America … where ‘Right Side Up’ is
‘Upside Down’.
‘We need something to give us a little bit of an uplift’
How about a push-up bra?
Prozac with a vodka chaser usually does it for me
Nothing like house-hunting in Long Island in January.
Now you’re talking lowball season! January 2008, that is…
“‘I think if you move into a house and you’re not struggling with payments for 12 months, it’s just another idea to help.’ he said.
So I gather this guy doesn’t have much concern for the remaining 29 years of struggle?
HEY, MORON, LOWER THE FU*KING PRICE IF YOU WANT TO HELP!!! Then there will be no struggle, get it?
It’s official. I can’t stand it anymore.
[Bugs Bunny Martian Voice ON]
These silly earthling “incentives” make me very, very angry!
[Bugs Bunny Martian Voice OFF]
Did the United States of America wake up last year and take one giant collective Stupid Pill?
I’m not interested in a plasma TV. I don’t want someone else to pay my mortgage for a year. I don’t care about gasoline cards. I don’t want your car, your furniture, or a vacation package.
And I especially don’t want any of these things when they’re really not free because they just jack up the cost of the house.
I want only one thing, Mr. Seller - A LOWER G0DD4MN PRICE!!! Why can’t you understand that?
Actually I want two things. I want a lower price on your house, and I also want a one-way bus ticket to StupidTown with your name on it. Have a nice ride.
No stupid pill. But Greenspan gave everyone was given a box of stupid to do with as they please.
I’m not interested in a plasma TV.
- TIME OUT!
- How else can we watch ‘Flip this House’ and ‘Property ladder?
I can watch it on my 120″ projection setup I bought 5 years ago via eBay, which still works fine and can hit higher resolutions than most of the plasma panels that will be included in the home prices. I think I paid around $1k for the projector (CRT), and it works great.
I don’t really watch those shows. I’m waiting for the negative shows. Short-sell this house, The equity slide, This unfinished flip, fraud busters, Mortgage Fraud Investigators : Norfolk VA, Mortgage Fraud Investigators : Vegas, and Mortgage Fraud Investigators : Miami.
the Seaford resident and his wife are offering to make a year’s worth of mortgage payments for the buyer of another home they have in West Gilgo Beach.
Hmm, sounds great, can I get a loan with a 1 year term.
No, I don’t mean 1 year fixed, I mean a 1 year mortgage.
That cracked me up!
Are you a lawyer? Or do you just have a keen eye and wit?
Not a lawyer… just extremely cheap.
Saw this story on the news last night. Looks like the resale market is going to have a few more vacant homes. This in an area that saw large scale speculation. The growers spent some serious time and money setting up this operation. Market value of the plants was said to be $65 million. Evidently a couple of RE agents were responsible for almost all of the sales. Clearly that is a job field (RE agent) that needs higher barriers to entry. Econ 101 might be a good place to start. Excerpt from the article:
More than 30 homes in the Sacramento and Stockton areas have recently been exposed as elaborate marijuana growing operations. A Prudential real estate agent from the Bay Area who sold several homes to the suspected marijuana cultivators is also under investigation.
http://cbs5.com/topstories/local_story_264014839.html
That’s old school. Where I’m from everyone needs a meth lab to pay their property taxes!
It’s amazing how dense/greedy sellers don’t see how to sell their house: lower the price until the market responds.
Who wants to finance a plasma TV, a car, or a vacation, for 30 years?
Just lower the price morons.
Seller’s have become the falling knives - praying to hand off a bloody and bleeding investment. That economically moronic buyers are still available is a most amazing fact. To cue the story above, as in just what are these people smoking, now we know.
Yes, I am still reeling with disbelief over the successful closing of the sale of my one and only house last Friday. Still waiting for the buyer to come back and sue me or something. She should: I didn’t include in my disclosure the fact that real estate will be declining in value for years to come.
Congratulations on the sale! Welcome to the “Renter’s Circle”.
Holy Cr*p -
Even on Million Dollar Listing one of the Factoids they keep showing at the bottom of the screen is:
“The quickest way to sell a house is to lower the price”
So even the folks at Bravo know the fastest way to sell a house…but maybe Americans won’t get it until Oprah tells them it’s OK to lower their asking price?
John Giamarino? Long GuyLand, NY? Those people would give anybody the creeps.
something interesting for NYC area readers - the NY post carried an article Sept. 8 detailing how 1-2 family home prices have shot up in Brooklyn during first half of 2006 as compared to same period in 2005 - what is curious is REBNY still hasn’t seen fit to post any data on this on its website. It’s last release is for manhattan prices - 1st Q 2006 — what is interesting about that release, is unlike prior releases, there are no figures on inventory.
I’ve been trying to get a good read on the Bklyn market for a while….like Manhattan , it seems to be firm from the limited info I can gather. Queens, LI, NJ and the other burbs, well, that’s a different story.
A friend of mine just sold a one bedroom in Brooklyn. He bought around 140k 4 years ago. He put it on the market for 345K in June. Got an offer for 335K didn’t take it. Next offer in was 299k, refused. He said many apt in the same complex suddenly went on the market. I heard he had another offer recently which he took. Don’t know how much.
Discouragingly, it almost seems like there’s a bit of a “bounce” happening in Manhattan right now. From my window I can see a new condo tower that’s nearing completion, and at any given moment there are several groups out on the balconies - RE agents and couples holding brochures. Earlier in the summer the market seemed much more dead.
I think miller report said manhattan inventory is still 54 percent higher than last year — chin up.
i just got an email from propertyshark.com that they are now listing individual co-op sales listing prices. this is new. any true market data can only be bad news for the co-op/condo market.
Isn’t it also true that listings and sales tend to pick up briefly after Labor Day? Just wait until September and early October are over, and the holiday season sets in.
“Just lower the price morons. ”
..but if they do that then the sales price won’t cover the HELOC they took out for the Plaz and Beemer.
Eggs-actly!
I wonder what the LawnGuyLand folks who work on Wall Street make of this article from way out in the SF Bay?
http://www.schwabinsights.com/2006_09/mktoutlook.html
BTW, just in case you suspected the CIC is blithely oblivious to the housing bubble:
“Over the last three years, (Liz) Sonders has been one of a small group of economists/strategists invited many times to Washington, D.C. to meet with President George Bush, Treasury Secretary John Snow and other cabinet members to advise on the stimulus package, the economy and the stock market. She was also a participant at the 2004 White House Conference on the Economy as a member of President Bush’s panel on deficit reduction. In early 2005, Sonders was appointed to the President’s Advisory Panel on Federal Tax Reform, which submitted its final report to Treasury Secretary Snow on Nov. 1, 2005.”
Didn’t they recommend abolishing the mortgage interest deduction? Seems like that would curb some RE speculation, no?
IL_NC_IN_CA,
Oh yeah that’s right! The notion of “debt=wealth” doesn’t need any more coddling than we’ve already given it! I know that Sched. A deductions phase out at some point but we obviously need to scale that back. I firmly believe that the “once every two years get out of tax jail free card” has created SO MANY problems! Now with access through MEW and/or sale Americans now get “bored” with their homes about as quickly as they do with their cars!
GetStucco,
What I like about Liz even more is that she takes pains to put her reports in language that people can actually understand! There’s no carefully hedged comments, qualifiers or caveats. She said what she said. Most analysts are careful to throw in a “spoiler” or safety valve that they can exploit to walk away from bad advice.
(I hope she rec. doing away 500K in tax free bubble bucks!)
“I hope she rec. doing away 500K in tax free bubble bucks!”
The problem is that rescinding the various bubble stimulants would turn a hard crash into a large crater in the ground.
Here’s an “incentive” idea. How about lowering the price?
Last time I checked out the old Supply/Demand curve, decreasing demand and increasing supply leads to LOWER PRICES.
What a bunch of clowns.
I suppose this is what you call the “denial phase” of a crash.
Next comes “anger” — which is when the real finger pointing begins.
Then comes “acceptance” - which is when the economy takes a digger, and prices tumble.
lower price = lower taxes
stock market off- things are “cooling” too fast
no surprise to anyone here
Check out this :
“The state is examining Pinnacle Development Partners LLC, whose ads tell investors they will receive a 25 percent return on their investments in 60 days. Capitalizing on investors’ thirst to strike it rich in a waning real-estate market, Pinnacle says it refurbishes foreclosed properties and then sells them at a hefty profit. However, real-estate records show the only buyers of the properties are located at Pinnacle’s address. A person familiar with Pinnacle said those buyers are related to the company.”
It is amazing that anyone actually believes that this is a real investment.
Oops.
Take one look at the generation-Z doofuses depicted in those Newsweek Pinnacle ads and your scam alarm will buzz out of control.
http://www.newsweekshowcase.com/real-estate/pinnacle-development.php
RI,CT took the full 30% ream last time
18 of 22 hoods around Hartford didn’t get to par till 2001 = yo
30% of a typical Greenwich price is a chunk of change…
Realtors have begun blaming sellers, saying they’re holding out for the eye-popping gains
Well let’s give credit where it’s due
“…The remaining markets have experienced rapid appreciation deceleration, according to the OFHEO.”
wow..what a use of the english language “repaid appreciation deceleration”. Looks like this person has been getting lessons from Bill Clinton..(.ie. I did not have sexual relations with that woman….Monica Lewinski”
Can’t this person just say prices are comming down….you can see that on Zip Realty.
‘We can say, with some certainty, price appreciation is zero and may even be—->>>> slightly retracting.
Regarding NY condos (hope not a repost)
http://www.vanityfair.com/commentary/content/articles/060918roco02
This article hits the nail on the head. Newer NYC condos are almost all the same and usually have a marketing tie-in with some local over-priced restaurant or a high-profile (but not necesarily very interesting)architect. There’s a place going up un 18th; out front is a giant billboard with a picture of a guy sitting on small stones meditating, as if a crappy $2mm apartment somehow elevates one’s soul.
I’ve seen that truly godawful building! I need to take some pictures or something!
What’s amazing is that condos are cropping up like fungus all over Chelsea, north of Gramercy.
There’s was even an article about lofts in Chinatown!
Want to know what’s really hideous about the new NYC condos? the tax structures. The taxes are abated for the first ten years but then jump up to $3,000 in year 11 for the typical newly built 1BR. The agents advertise the tax abatement as a great thing, but it’s really like a neg am mortgage. Sure, you can sell before year 11 rolls around, but the market will probably price in the higher taxes before long.
That’s $3k per MONTH, btw.
Did anyone see 93,000 homes for sale miami on zip? A week ago it was 60k is that correct?
I don’t follow Zip so have no personal knowledge, but there have been posts on this blog that say Zip continues to add new communities so tracking numbers through them might be kind of meaningless.
“Flip this House”…..I’ve only watched a few of the shows but in each one the process they employed was insane.
They’d run to some “find”. Come up with some renovating ideas, buy it and THEN arrange for the contractors they’d use! Lo and behold, the contractors “screw up” every time and the costs escalate.
Man, if that show isn’t the epitome of the boom mentality….happily its on tape and maybe it will get shown the next time a “boom” comes along as an example of abject stupidity.
Then again, by the time the next real estate boom comes around no one will remember the follies of “Flip this House”.
There are two shows: “Flip That House” and “Flip This House.”
“Flip That House” has amateurs, who often implode, while “Flip This House” had real pros for season 1, but this season has some scammers from Austin Texas, who try and make money by cutting corners and hiring illegals for slave wages.
Season 1 was a hoot, those guys were a machine, finishing a house in 10 days and doing it right.
Drove through Mid northern VA today (RT 15, RT 234). There must be 20-25 large developments along that route still stamping out 3000-sq. ft. houses and condos on postage stamp size lots. Difference from last year is that all the ‘Priced from the 400’s, 500s, 800s…’ signs are gone, replaced by signs advertising incentives (low interest rates, seller buy downs, closing costs paid). Also saw lots of for sale signs on existing homes, and quite a few for rent/for sale signs.
I also heard a new add from Centex on the radio. Something about …its a buyers market, we’ll buy down your interest rate to historical lows, and we have great homes for sale, now is the best time to buy.
No VA is so ripe for forclosures you can smell it.
(BTW, I feel for those poor souls who have to get onto Route 66 west of Mannassas. I was just trying to get across that area and every road was a parking lot as folks tried to get onto 66, which was also a parking lot.)
Don’t you just love suburban sprawl? It really makes you yearn for the subway.
Anyone who lives outside and works inside the beltway in NoVA is toast. I think rte 66 is actually better than I-95 south of the beltway. It is so brutal - I truly do not understand how people can do that every day.