‘Buyers Holding Back’ In A ‘Changed Market’
The Lowell Sun reports from Massachusetts. “More and more local sellers are having to bite the bullet and accept offers below their property’s valuation. ‘It’s not a statement of the accuracy of the assessment so much as which way the prices are heading,’ said Middlesex North Register of Deeds Richard Howe Jr. ‘Obviously, they’re heading down.’”
“In the months of May through August of 2005, 9.2 percent, went for less than their assessed value. During the same time period this year, 19.9 percent, went for less than their assessed value. Chelmsford Assessor Frank Reen has seen an even more dramatic trend in his town. He reported that 39 percent of residential sales in 2006 have been for less than assessed value.”
“Howe said there are plenty of indicators that the local market is on the decline. His registry covers Billerica, Carlisle, Chelmsford, Dracut, Dunstable, Tewksbury, Tyngsboro, Westford and Wilmington. ‘You can drive through any neighborhood and see all the for-sale signs (or) look at housing lingering on the market for a longer period of time,’ Howe said.”
The Staten Island Advance from New York. “Buyers are finding themselves solidly in the driver’s seat for the first time in a long time, experts say. Home sales dropped 16 percent and housing inventory rose 25 percent, according to figures from the Staten Island Board of Realtors. A ranch that last year might have sold for $525,000 could sell today for $450,000.”
“Realtor Tom Maira said he advises sellers to be realistic in a changed market. He said one couple insisted on listing their house at $600,000 when the house was worth closer to $530,000. They ended up dropping the price by $50,000 and the house is still on the market. Maira said he released them from the exclusive listing when they declined to cut the price further.”
“‘The buyers know in their gut what the house is really worth,’ said Maira.”
“Inventory has grown on the South Shore and there are more deals to be had, according to Realtor Patrick Gallagher in Annadale. ‘Buyers are definitely holding back,’ said Gallagher. ‘It’s like they are sitting on the fence waiting for the price to come down.’”
The New York Magazine. “The seller’s market has finally started to turn into a buyer’s market—or at least the beginning of one. According to a report by appraisal firm Miller Samuel, the number of sales last spring—traditionally the busiest season—were down 14.8 percent from the year before.”
“Those who bought at the exuberant height of the market—are wondering if now is the time to cash out and take cover in a rental. Some sellers are watching weeks turn into months. Some, in a hurry to unload, are slashing prices twice and three times.”
“Buyers, meanwhile, are wondering if there will be even better deals in six months. Alyssa Gelper, a lawyer who abandoned her search for a two-bedroom, two-bathroom apartment last spring (’I didn’t want to be the last sucker to buy high before the market tanked’), has decided the waters are safe to wade in.”
“In a very short time, the rules of the real-estate game have changed dramatically—and buyers are more in control than they have been in a while. ‘They’re taking their time, and they’re not afraid to make an opening offer that’s 10 to 15 percent off the asking price,’ says Corcoran’s John Gasdaska.”
“The supply of new condos for sale has more than doubled in the past two years, notes appraiser Jonathan Miller. What’s more, some 24,000 units have been approved to go on the market by the end of 2006, an astonishing number considering that altogether only about 15,000 condos, co-ops, and townhouses are sold in any given year—20,000 at the market’s peak, according to Jeffrey Jackson of MMJ Appraisals.”
“High-profile projects like Downtown by Starck, Bryant Park Tower, 99 Gold, and Schaefer Landing are giving discounts, and other condo developers are bailing out before they even break ground. Last week, it was reported that the developers of 485 Fifth, a new designer condo going up at Bryant Park, were essentially abandoning the project because half the units remain unsold, at over $1,000 a square foot.”
“The growing list of casualties includes Williamsburg’s 55 Berry (which is now turning rental) and 133 Greenwich (they’ve put the land up for sale). The glut is affecting everyone in the market, whether they’re trafficking in new stock or a prewar.”
“Carol Candiano’s already moved to the West Twenties while her Upper East Side one-bedroom awaits a buyer at $425,000. ‘We had someone lowball the apartment and offer $340,000. I told my broker to tell him to get lost,’ she says. ‘Just because the market’s a little soft doesn’t mean I’m going to have a fire sale. If I have to, I’ll rent it out. I refuse to be desperate.’”
“Cookie-cutter condo buildings constructed in the eighties may offer bargains, if you don’t care about bells and whistles. Units in these buildings can have a hard time measuring up to apartments in the shinier, sexier tower next door, so their sellers will have to compete on price. ‘In last year’s world, you were getting very little discount,’ maybe 5 percent, if that, says appraiser Jeffrey Jackson. ‘In today’s market, that discount could be as much as 10 to 20 percent.’”
“‘Developers don’t want to make it look like they’re negotiating on the price,’ says Dolly Lenz, vice chairman of Prudential Douglas Elliman Real Estate. Still, a bargain is a bargain—and that’s a word we haven’t heard in a long time.”
‘Kevin F. Kiley, chief operating officer of the Massachusetts Bankers Association, said consumers are increasingly being placed in mortgage products that, over time, create customer hardship. ‘That trend, when combined with rising interest rates and sagging real estates sales, creates a perfect storm,’ he said.’
‘For the eight months ending Aug. 31, petitions to foreclose in Worcester County rose 62 percent, to 1,362, compared with the same period a year earlier, according the Warren Group Inc. Statewide, petitions for foreclosure in Massachusetts rose 59 percent, to 9,031, through Aug. 31.’
‘Francis D. Paquette, director of the NeighborWorks HomeOwnership Center, said many borrowers who utilized alternative mortgage products in 2003 and 2004 are starting to feel the pinch as those mortgages reset at higher rates. Fees that discourage refinancing might also kick in, he said. ‘Now they’re getting their first increase and all of a sudden they’re behind the eight ball,’ he said.’
…behind the eight ball with a box of stupid and a bucket of overdue bills
if anyone missed Ben’s post yesterday on San Diego Union Tribune’s two front page articles on condo conversions, it is really worth going back and reading those two articles. My take is the impact on the SD housing market will be significant and will take things down several notches more.
I posted an example of somebody that bought in one of the condo complex featured in those articles on my blog. read the articles first, than read my posting, you really have to be the biggest idiot on earth to have bought there. The more we can get across the stupidity of jumping in right now to buy a home the faster this thing will crumble.
Those articles bring to light the fact that it is not only individual households that bought at the bubble top who are getting stretched to the financial breaking point by the current real estate downturn. The idiots who bought apartment complexes at a 50% premium to their fundamental value as rental housing in order to cash on in the condo conversion craze are going to go down in flames as well.
We need a flyer to pass out on why NOT to buy now. Someone make a PDF which collects some choice facts and quotes for legitimate sources as well as a few choice charts and we can print them out and put them in nefarious places buyers might see.
David Lereah has already done the work for you (see his .pdf presentation “Reality Check” on the NAR web site). All you need to do is to read it and make reference to the various dire indicators for where the real estate market is headed which are referenced therein.
In case the NAR has taken this down, I have a personal copy…
Until scores of individuals start losing massive amounts of homes and equity, the greater fools keep buying. In turn, this might take quite a bit of time to unravel. Assuming that the peak was near mid 2005, prices still have not dropped considerably in over a year. That is a lot of time spent teetering near the peak, and should shed some light on how sticky things could be on the way down. Begrudgingly, I am preparing for a painful 5+ year drop. It is not what I had hoped for, since I have had to change my life plans, but in the long run, I think it will pay off. I only pay attention to west coast markets, but what I am still seeing, are wishing prices at 2005 levels and beyond. Yeah, there are lots of price reduced signs, but so what. Until we see asking prices in the 2004 range and below, we are hardly even getting started. Unfortunately, as some have witnessed and talked about recently, there are still boatloads of idiots out there chomping at the bit to “get into real estate”. The sheer number of speculators is truly staggering. My mother shared a story this weekend of how her sister was approached by a few business associates last year regarding “getting in” on real estate in Loudon County, VA. Though financially conservative, my Aunt was nearly swayed by these folks she has grown to trust over many decades. She ultimately declined but these individuals went ahead and bought “investment” homes which they are now unable to sell at their imagined profit. They are now renting at a loss, waiting for the market to turn around, unwilling to take the bath which they are due. They can afford to rent at a loss indefinitely, as they make lots of money. My mother also spoke of a young coworker and his wife who purchased an “investment” home in Arizona. They also rent at a loss, but can afford the few extra hundred a month as they anticipate the home appreciating tens of thousands of dollars. I hope I am wrong, but it seems this may take a long, long time to correct. It seems the majority of the public still doesn’t “get it.”
Yep, I think it will be a 5+ years long drop in the hottest markets (both coasts and Las Vegas and Phoenix). I’ve situated my life for economic rough times starting in the Fall of 2000 as I became a traveling software engineering consultant working through job shops. I’m on my third gig and the money is much better than when I was an employee of a Fortune 500 company. I have few possessions and I’m financially prepared for deflation, but not so much inflation.
The SD-UT continues collapsing-condo-conversion-craze coverage in today’s paper:
http://www.signonsandiego.com/news/metro/20060925-9999-1n25eccondo.html
And, to be noted here, is that San Diego is a relatively nice place to live! Low crime, nice weather, etc.
If SD is dropping like a rock, imagine what will happen in Boise Idaho, Gilbert AZ, and Central Florida, or Florida Panhandle, all not-so-nice in terms of weather and crime.
Awesome post & comments, ocrenter. Thanks for that link.
BTW, question re the condo conversion sales/rentals fiasco:
Don’t lending institutions restrict loans on condo properties where 20% of the units are rentals? If so, those who bought into these conversions are real bagholders.
Can someone explain to me what “Mello Roos” refers to? It appears to be some sort of tax, but I’ve never heard of it before.
(Mello Roos)
Special california tax to get around prop13
and screw new development
Ballot measure Proposition 88. A parcel tax end run around Prop 13 to increase taxes on property.
what’s the saying? if you look around the room and don’t know who the sucker is…the sucker is you
- “Carol Candiano’s already moved to the West Twenties while her Upper East Side one-bedroom awaits a buyer at $425,000.
- ‘We had someone LOWBALL the apartment and offer $340,000.
- I told my broker to tell him to get lost,’ she says.
- ‘Just because the market’s a little soft doesn’t mean I’m going to have a fire sale. If I have to, I’ll rent it out.
- I REFUSE to be DESPERATE.’”
- Way to go Carol! That will teach those stupid buyers not to give you LOWBALL offers. Hey Carol, vote for Hillary.
and here we see yet again who the last suckers are left buying….double dippers who’ve already bought another place before selling the last
Comment by Sobay
2006-09-25 05:47:59
“Hey Carol, vote for Hillary.”
Why not. Everyone else is. Can’t be any worse than the current group of thieves.
On that you’re wrong cappy. While hardly a fan of the GOP, it is certain that Hilly and the Dems will try to overcompensate for the last few years and in the process will only give the shaft to those who worked hard and lived responsibly. Dem or GOP - the problem is a lot bigger than both, these are big time structural economic pigeons that are coming home to roost. Face it we’re all boned - Hilly will just make sure we cringe about it a little more.
Yeah, I can’t wait for Hillary’s “FB Fairness Act” or whatever she will call it. Probably a government guarentee of everyone’s mortgage payments plus more tax deductions for everyone who buys a vacation home.
- I REFUSE to be DESPERATE.’”
Reminds me of a scene from Star Wars, Empire Strikes Back, when yoda thoughtfully looks at young Luke and says, “Hmmm..You will be…You will be.”
last week i was mall walking and overheard the following conversation “i’m going to buy a piece of property! i don’t care where it is i don’t care what is is i don’t even care what it costs. i just gotta get into the re market!” geez, i guess there are still a few greater fools left. as pt barnum said there’s one born every minute…
Susanmenchey - Do you get that person’s name and telephone number?! I have a house in Virginia I seriously would like to sell … Sounds like my kind of buyer!
Well, there ARE still Buffalo and Cleveland etc. You can actually afford a house on a couple Wal-Mart salaries. Compared to being an FB with a half mil in debt, Buffalo doesn’t sound too bad, really. At Buffalo will still have hydro power when (if) peak oil hits.
And those older houses are probably better quality anyway.
I’ve been thinking about the effects of global warming, and which parts of the USA may be best positioned to weather those effects, or even benefit from climate change. I think the Great Lakes region may come out a winner. As you say, there is abundant hydroelectric power; and more important, there are abundant supplies of fresh water. And if the climate warms up, the winters may actually become tolerable!
Amen. We haven’t begun to factor in Peak Fresh Water come 2015. The Southwest will return to what it was, with the renaissance of the Great Lakes states.
Maybe she is a bk or defense lawyer specializing in fraud and sees years of steady income?
Once again we see the newspaper confuse its presumptive purpose as a source of unbiased information with a surreptitious effort to sell real estate. Any newspaper reporter who made the slightest effort to research the history of US real estate markets could soon learn (even from David Lereah’s own powerpoint presentation on the NAR website) that past periods of real estate price decline have taken a minimum of four years to bottom out. Talking about better opportunities in six months smacks of outright deception.
“past periods of real estate price decline have taken a minimum of four years to bottom out…”
but if this gets out the realtpeople are toast! game over. not even the greatest gf has a hard time understanding the folly of, “buy now, before it’s worth less tommorow!” from now on, the whole game is convincing the gf’s that “the bottom has arrived.”
the nyc perspective in the article certainly seems to back my understanding of the manhattan bust. if i thought -20% was the future, i now see -40%, though it will still take 5-8 years to reach bottom.
manhattanite, re 5-8 years to reach bottom: But do things happen faster now, with the communications changes of the last 15 years? Just wondering if this bust will follow historical norms.
I’ve been wondering about who will write the definitive account of the Great Real Estate Bust. I’m betting that it will be a writer from Britain or some other part of Europe. “Investigative Journalist” is a long-exinct species in the USA.
Nah, Americans are great rear-view mirrorists. We’ll have plenty of books and some how plenty of experts who saw it coming all along.
“I’ve been wondering about who will write the definitive account of the Great Real Estate Bust.”
You are reading it right now…archive this site, and in 7 years write a book…
Don’t forget to send Ben his share of the royalties.
OT but I think consumers multiply the $50 savings per month inot a 30 finance equity value of $ 5-7K
and run out and spend it
Did anyone read the interview with Nouriel Roubini in that New York Magazine article? The title introduces his position as an “extreme view” and then, in the interview, he predicts NY prices will be “five to ten percent lower a year from now.”
So don’t worry folks, even a leading doomsayer’s worst nightmare is a 10% correction. What’s up with that?
I’d have to think that even though NYC is holding up comparatively, a 10% retraction has already happened.
Barbara Corcoran herself, the first lady of Manhattan real estate, last week on TV, said that “what is happening right now will not show up in statistics for another three months.”
You can bet your bottom dollar a 10%-plus fix is already in.
So, the numbers coming out today reflect how the market was 2 to 3 months ago when contracts were signed. Talk about a lagging indicator. Then, factor in the numbers coming out today, at the end of the month, which try to fake you into believing, this is what happened 1 month ago. Now we are talking, the numbers that came out today, really reflect what happened 3 to 4 months ago. If you project the trend to what is really going on today, the numbers must be much worse.
I hope the Wall Street folks aren’t smart enough to understand this concept.
well, if they’re already 10-15% lower than at the top a year ago … and they’ll be another 5-10% lower next year — we’re already 15%-25% off peak. and why not another 5-10-15% lower a year after that? this thing will play out very stickily! by 2012 same result: prices will be 40% lower NOMINALLY than they were in 2005. that’s quite a gulp.
“More and more local sellers are having to bite the bullet and accept offers below their property’s valuation. ‘It’s not a statement of the accuracy of the assessment so much as which way the prices are heading,’ said Middlesex North Register of Deeds Richard Howe Jr. ‘Obviously, they’re heading down.’”
Glad to see it is suddenly so obvious to all which direction prices are heading. But I was wondering about the use of the pronoun “their” in the first sentence, as in “their valuation” — my first guess was that this refers to the buyer’s subjective valuation, AKA wishing price? Or maybe it refers to last year’s (fraudulent) assessment?
This line helps clarify matters:
“‘The buyers know in their gut what the house is really worth,’ said Maira.”
Yes, but sellers don’t seem to have that great gut instinct.
I grew up in the real estate world - my dad was an HONEST builder - and it’s so difficult for me to go into a condo that the owner/speculator wants 200k for, and it’s worth maybe 120k.
I know what quality construction is, and for the most part, what’s out there right now is shlock.
“In the place of expertise, we have elevated the Gut, and the Gut is a moron, as anyone who has ever tossed a golf club, punched a wall, or kicked an errant lawn mower knows. We occasionally dress up the Gut by calling it “common sense.” The president’s former advisor on medical ethics regularly refers to the “yuck factor.” The Gut is common. It is democratic. It is the roiling repository of dark and ancient fears. Worst of all, the Gut is faith-based.”
–Esquire, “Greetings from Idiot America”
Have to give props to NY mag, again for doing these pieces - including the Q&A with roubini cited in the bits bucket-glad someone in press decided to clear the smokescreen hiding the real nyc real estate market.
The next big story I hope someone does is the biggest foreclosures neighborhoods in the city (bedstuy alas appears to be one of them) - and what will result from it. I believe NYC will learn like no other area that skyrocketing house prices are going to be hugely damaging to the communities they purport to raise up.
“Inventory has grown on the South Shore and there are more deals to be had, according to Realtor Patrick Gallagher in Annadale. ‘Buyers are definitely holding back,’ said Gallagher. ‘It’s like they are sitting on the fence waiting for the price to come down.’”
It sounds like the buyers are wising up. Unless this time is different, only those with lots of money they don’t mind losing should be buying homes at this point in the cycle.
“Median sales prices of existing homes fell from year-ago levels in August for the first time in 11 years and just the sixth time in the past 30 years, the National Association of Realtors said Monday.”
How did the cheerleaders suddenly change their tune. I thought that housing prices had NEVER fallen (well, since the GD at least). Now, suddenly, they make falling prices sound routine. I’m confused.
What’s more, they now are claiming that “everybody knows which way prices are headed,” which somehow hints that they knew which way prices are headed all along?
I’m confused, too. From CBSMarketWatch:
“Median sales prices of existing homes fell from year-ago levels in August for the first time in 11 years and just the sixth time in the past 38 years, the National Association of Realtors said Monday.”
I don’t recall the realtors mentioning the previous six drops.
Previous five — but your point is taken. Somebody ought to sue the NAR for deceptive advertising.
Who would have thought that the GD was just 11 years ago…
Maybe the NAR is talking in dog years to more portray their character…
11×7=77… 2006-77=1929… Almost to much of a coincidence!?!?!?!?!
Isn’t it interesting how a owner tells a buyer to “get lost” regarding an offer that might be in line with values 18 months ago. That same owner would think nothing of a number of buyers biding against each other to pay up on a house a year ago.
the goog news isthey know who the low-baller was….in six months orless they’ll contact him/her and the low-baller will not take it.
What is unkown from the article is what is meant by “Upper East Side.” Traditionally defined, it is the most expensive neighborhood in New York City. 425K ask for a “true” one bed is actually low enough to make me suspicious. It is either in one of the early 19th century walk-up tenements that are still standing, or maybe it is actually in Spanish Harlem, which I understand the REIC is now calling “Upper East Side.” Ha Ha.
Would love to hear from New Yawker with boots on the ground over this one.
i’d not be surprised if, at the height of the mania, that $425K might have a few bidders at $525K. now, she would be real smart to take that $340 — next year she might have to be happy with $300!
the upper east side extends north to 96th st., unlike the upper west side, which does in fact run right up to columbia u. at 116 st. (one of the most beautiful neighborhoods is between 96-110 on the uws, especially west of broadway). but really for the first time on the east side, during the past 5 years the gentrification has extended up into the low hundreds, in what has traditionally been spanish harlem (the ‘barrio’… ‘here is a rose in spanish harlem’). these outlying, newer ‘hip’ neighborhoods are in for the worst hit as prices decline over the next several years.
” It is either in one of the early 19th century walk-up tenements …”
not necessarily. much of manhattan’s best housing stock is made up of beautiful, well-built townhouses and brownstones, constructed around the turn of the century (~1900). definitely not to be confused with tenements.
DC_Too,
The Upper East Side is, and always has been, a mix of both the fanciest and the most modest neighborhoods in the city. The UES is a huge area: traditionally bounded by 59th street to the south (bottom of Central Park), 96th Street on the north (start of Spanish Harlem projects) and laterally, everything from the park to the East River. The western part is indeed the most expensive and presitigious neighborhood in the city, i.e. all the blocks on and between 5th Ave and Park Ave, where townhomes can cost $12 million and the best co-ops will not give you an interview unless you can prove a $100 million net worth (100% downpayment is the rule in these places too, obviously).
However, as you go east, the housing turns into a mix of walk-up tenements and dreary 60’s rabbit-warrens. By the time you’re out at 1st Ave., you’re ofen a 15-minute walk from the nearest Subway and a 25-minute walk to Central Park. There are still nice townhomes and pre-war buildings sprinkled throughout, but the vast majority of the units are dim and noisy shoe-boxes in commie-style 60’s buildings with 7-foot ceilings, chintzy aluminum window frames, and hollow-core doors. I doubt Apartment 29-U in one of these tragedies is anyone’s idea of a dream home.
LowTenant - That is why I asked what is meant by “Upper East Side” in the context of the article. There are different worlds pretty close together. I would also add, as a native myself (lower east, then upper west), that the UES is the least interesting place in Manhattan. Just my opinion, to each his own.
Former Upper West Sider here. No boots on ground, my apologies. However, if you are still curious, trulia.com has some excellent data on the Upper East Side in specific as well as other neighborhoods in Manhattan. Evidently one CAN find a property in that neighborhood for under 500K. They all tiny…400 to 600 square feet or so–I just took a quick look so don’t take my typing as gospel. Also, I don’t know what these tiny places are like inside.
uhm, and those from Mass. definitely know about “perfect storms”! They are too late to get out…
According to the WSJ, “Last month marked **the first year-to-year median price decline** since April 1995, and it was the second-biggest in the survey’s 38-year history.”
Bloomberg:
`We’ve been anticipating a price correction and now it’s here,” Lereah said. “The price drop has stopped the bleeding for housing sales. We think the housing market has now hit bottom.”
yeah, because that’s exactly how asset bubbles work
Page & date reference, please?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAFuT8YFNJQk&refer=home
“Those who bought at the exuberant height of the market—are wondering if now is the time to cash out and take cover in a rental.”
Sorry, suckers, it is about twelve months too late for this plan, as your would-be buyers are already taking cover in a rental by now.
According to the WSJ, “NAR chief economist David Lereah said an **anticipated** decline in prices compared with a year earlier has begun and is likely to continue until the end of the year….”
‘Buyers are definitely holding back,’ said Gallagher. ‘It’s like they are sitting on the fence waiting for the price to come down.’”
You better believe it!!!!!!
it was expected
I said so in my book
LIErah
David Lereah, the Realtors’ chief economist, said the drop in prices had been expected, indicating that sellers are finally starting to lower their asking prices in the face of weaker sales and soaring inventories.
“David Lereah, the Realtors’ chief economist, said the drop in prices had been expected”
Gee. Then I wonder why he wrote a book titled “Why the Real Estate Boom Will Not Bust - And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market”
Next year’s revised edition will feature a new title:
“Why the Real Estate Boom Will Bust - And How You Can Profit from It: How to Build Wealth in Today’s Contracting Real Estate Market”
hahaha….
Just laughing about the comment made by KirkH. David Lereah is too funny.
DL added, “the drop in prices is going to stop the bleeding in sales….”
RE NAR–
Is this the current report? There are unadjusted August ‘06 numbers included
sorry, link didn’t make it:
http://www.realtor.org/Research.nsf/files/EHSreport.pdf/FILE/EHSreport.pdf
Based on what DL/NAR/Realtors are saying regarding a rebounding market for 2007 ,many sellers are refusing to reduce enough to get a sale. Why would a seller reduce when they think it’s just a little waiting game until the first or second quarter of next year ?
Waiting for a better market is not wise when the better market might take a decade or more to come .
People are going to suffer loss as a result of not acting in their own best interest . It’s fine for people to hold on for years if they can afford the house and they don’t want to move ,but some people need to act or they might lose everything .
The industry is predicting an ‘07 rebound to get buyers back in, NOW. This is so predictable. What they are really doing is setting up current sellers for the age-old game of “follow the market down.”
I think I’m having an Epiphany here. Listen very careful to what the REIC has to say, careful consider the NAR’s advice, and do the EXACT OPPOSITE. Phew, that feels better.
All this means is that most Reamtors still have their own properties to unload. Once they’re done, they’ll advisor their clients to sell now.
That is a bogus comment. Realtors are agents. Most only handle deals. Many are in the work because they dream of the kind of homes that they help sell. Realtors are typically used to sell properties and has been rare throughout this bubble for people to decide to either buy or sell based on advice from a Realtor.
Even if you believe all Realtors are crooked, which really does not make sense or match any available data, then you need to think about the basic small time criminal rule of thumb: “My own hands must remain clean.” Like midevil doctors, they are just there to bleed people who call on their services.
The lesson from this bubble is not that it is cool to make up stuff that sound kind of right and amusic, but that buyers should beware and anyone even thinking of getting in any kind of market need to do the math for themselves.
Since DL is a cartoon charcter himself it is only appropos that he be compared to another. Wiley Coyote. You know the point where he falls off the clif and lands about ten feet down on a rock and wipes hisbrow and sighs with relief. Then he hears the rock cracking….
“Based on what DL/NAR/Realtors are saying regarding a rebounding market for 2007 ,many sellers are refusing to reduce enough to get a sale. Why would a seller reduce when they think it’s just a little waiting game until the first or second quarter of next year ?”
The more people that take this advice the better. This will cause the downturn to be even worse, when these people realize they’ve been had.
I’m preparing to sit back and laugh at the dip buyers who are awaiting their cue to appear on stage. Example: A property worth $250,000 in 2000, finally reached $700,000 in 2006. It drops back to $650,000 in 2007 and in come the sucker dip buyers, “Wow! $100,000 less than it was last year. I’m buying!” It’s no different than the tech stocks of 2000. The best known tech stock was the (then) QQQ’s which reached $120. Then they started to drop. The QQQ’s reached $100, in came the dip buyers. At $80, in came the dip buyers. At $60, in came the dip buyers. At $40, in came the dip buyers. When the QQQ’s reached $20 around the time of 9/11, buyers were so gun shy they had given up. 5 years later the QQQ’s are still only around $40. Trillions of investors $$$’s wiped out (which is one of the reasons why Greenspan inflated property prices with easy money to increase Joe Sixpack’s asset value) and we will see the same in property prices over the next few years. I doubt if property will fall as far as tech stocks because stocks are just paper whereas property is land, location, bricks, etc. However, I fully expect a 25% plus decline. Just watch the charts of BZH, RYL, LEN and a few others. When they hit bottom, if they don’t go bankrupt, the charts will signal.
You remember Bob Brinker telling his listeners to buy the QQQ at 49 or 50, I think it was. It has never seen that price since.
He never mentions this either.
Suze Orman rec’d the QQQs as well. :/
> I doubt if property will fall as far as tech stocks because stocks are just paper whereas property is land, location, bricks, etc.
The apparent reality of real estate is misleading. It is more appropriate to compare the equity in a house with the “equity” in stocks. Because real estate is much more leveraged than stocks, the equity therein can be hit harder and actually go negative (the price of a piece of real estate remains positive, but decreases below the debt on it).
“Just because the market’s a little soft doesn’t mean I’m going to have a fire sale. If I have to, I’ll rent it out. I refuse to be desperate.”
Many stressed-out sellers have no idea what it takes to be a landlord or know the risks involved with owning rental property.
They may regret selling to what they thought were low-ball offers after prices really start falling next year.
Right , That’s another game the realtors are playing to control inventory . Turn sellers into landlords while you promise them that they will be able to get out down the road in 2007.
Can you imagine how big the inventory situation would be if everyone who really wanted and needed to sell put their house on the market ?
What really does suck is that these “landlords” are trying to jack up rents above the areas norm to cover the nut on their place. If enough do this and there are enough fools to rent these properties, up comes the comp on rental rates.
“What really does suck is that these “landlords” are trying to jack up rents above the areas norm to cover the nut on their place.”
I’m thinking good ole supply and demand will force rents lower.
I have already seen price cuts that measure up to close to 8-10% in an area where the median house is about $580K, here in an NYC outerborough. I believe that these sellers were badly mislead by their own greed and their greedy realtors, who were not skilful enough to understand that what betrays them now is their bubble mentality than reason out there. To have a property priced correctly, is to have it like as a lone sitting duck, with NO ONE shooting for it. Once you miss the moment, you are a hunting duck, without a purpose, most hunters having left elsewhere for better buys.
Overpricing is an expensive mistake, that is common with most, if not all owners now. If they think things will get better next year, see the rivers run red in the end of the Summer of 2007.
That will make Iraq, like some mid western town YMCA. Hehehehe
They may regret not selling to what they thought were low-ball offers after prices really start falling next year.
I abused the realtor on this one over the weekend. This is a neat place and very well built. Only a couple of minor problems:
http://www.davidgriffin.com/index.aspx?List=2933&Area=5&Agent=159&Link=25&id=ctrl/Detail.ascx
1. It’s priced at least $125K over anything else in the neighborhood (which is small 1940s - era ranches with a few newer townhouses here and there)
2. It fronts onto a fairly busy street and is across the street from an inner city public jr. high school (and you know what that means)
3. It’s designed and built in a style (ultramodern) which only about 1 out of 10 buyers likes.
4. Despite what the listing says, it was built in late ‘04 - ‘05, not ‘06 and was on the market for at least 6 months back then at 389K (36K less than now and it was unused then!)
Just to be obnoxious, I emailed him a bid for $275K. No answer.
Were you actually interested or were you just doing a public service?
No, not really interested and of course, they’d never accept that offer. Yet.
I admire your energy! and thank you for your public service…
I abused this one too. Tax appraisal on it is 230K. This guy has fixed the place up but he’s on some serious hallucinogens with this price.
http://dallas.craigslist.org/rfs/211703624.html
First off, I have absolutely no knowledge of the local Dallas market. Still, as a big fan of modern design (and knowing how complicated it is to build modern), I think a 125K premium is quite appropriate. It is an architect-designed house with (from what I can tell) pretty high-end finishes, real wood and masonry on the outside, as well as the latest in energy conservation technologies built in. It’s an absolutely beautiful house, and I know that if I had the choice between this or some crumbling 1940s vinyl-sided shack (surely in need of updating), I would gladly pay the $125K difference. Too bad they don’t build spec houses like this in the east, especially at that price point.
I agree with you but the Dallas market won’t support that price. No way.
I used to live off Skillman Ave back in the 1980s and have to agree. Park Cities, maybe. West of White Rock Lake, no way. This is very close to Bubbaland (Garland, Mesquite, etc…)
If you’ve got a minor league arm, you can throw a rock from the front yard of that place and hit a few nortenos.
West Mesquite and South Garland are quickly becoming Little Tijuana and Ghetto Land. There are blocks full of run down apartments flying the Mexican rag where you can’t find a person who speaks English.
That’s a decent area and White Rock Lake is a nice place. It seem cheap to people on the coasts, but is too expensive for the Midwest.
Another thing, you don’t want those skylights in Texas when summer rolls around. We had over 40 days straight of 100 plus degrees this summer. I don’t know how their electric bill was $100/mo. The electric bill for my apartment last summer was $125/mo and I kept the thermostat at 80 degrees. Most people I know who own a house paid around $250/mo and they didn’t even have skylights
Not really housing bubble related, but I thought this was interesting and maybe slightly misleading:
The paints used are low VOC (volatile organic compounds)
While it’s always nice to be environmentally friendly, this is irrelevant if the house was painted more than a month ago, as the VOCs (benzene, formaldehyde, etc) are present in the solvent, which evaporates as the paint cures. Most of what’s left on your actual wall should be fairly identical between low-voc and conventional paints (titanium dioxide + dye + binding agent).
The way that sentence was placed in the paragraph it seemed like you might get some health benefit from it over the life of the paint, which is not likely to be the case.
HAHAHA
that’s great, a new pitch: BUY A HOUSE…It’s HEALTHY for you…!
Disclaimer:we are obliged to inform the public that this home has not yet been approved by the FDA
Well, I don’t know. Not a fan of 60’s modern here. Seems to me I would be concerned about those big glass windows in the front - especially in an “iffy” neighborhood.
I wonder if the neighbors have iron grillwork over their windows and doors.
The Lake Highlands area used to be a great neighborhood around 15 years ago before HUD surrounded it with Section 8 ghettos. On one side of Skillman you have nice homes and the other side is full of gang-infested apartments turned into crack dens.
“In the months of May through August of 2005, 9.2 percent, went for less than their assessed value. During the same time period this year, 19.9 percent, went for less than their assessed value. Chelmsford Assessor Frank Reen has seen an even more dramatic trend in his town. He reported that 39 percent of residential sales in 2006 have been for less than assessed value.”
Doesn’t this just mean that the “assessors” are trying to inflate house prices? IF they were doing their job, their estimates would be better.
So the other 80 percent still payed asking price this past summer? The big picture still points to a big slowdown but this “free fall” talk is still a bit early. I subscribe to the philosophies of Prudent Bear, Financial Sense online, etc. but I just don’t see this “crash” scenario playing out this year. There is still too much credit out there and the economy is just mediocre enough to keep it from busting.
> A ranch that last year might have sold for
> $525,000
This isn’t California and it isn’t even Boston. The Lowell area is 40 minutes outside Boston.
$525K for a ranch? Don’t think that I’ve seen
prices that high even in the Greater Lowell
Area. Of course you can now get it at the
bargain price of $400+.