Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
Please post off topic ideas, links and Craigslist finds here.
Also, send in your housing bubble photos to:
photos@thehousingbubbleblog.com
Please put ‘HBB’ in the message bar to help with sorting.
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
| M | T | W | T | F | S | S |
|---|---|---|---|---|---|---|
| « Sep | ||||||
| 1 | 2 | 3 | ||||
| 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| 11 | 12 | 13 | 14 | 15 | 16 | 17 |
| 18 | 19 | 20 | 21 | 22 | 23 | 24 |
| 25 | 26 | 27 | 28 | 29 | 30 | |
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
here is very good stat dor the phoenix market
vacancy rate and total listings for the Phoenix metro area.
Total listings: 46,338
Total vacant: 20,414
% vacant: 44%
rest from the good story
http://housingdoom.com/2006/09/27/phoenix-vacancy-rate-revisited/#more-216
that is a scary % indeed.
Too bad that statistics like that are not available for the Netherlands. And even if they were available it probably wouldn’t say much because many homes here are empty without being listed (they appreciate every year anyway, so why bother with renters).
And here’s the latest housing/economic news from Tucson:
http://www.azstarnet.com/business/148459
It’s a lot worse than that.
Look at craigslist tucson real estate for sale — just a quick glance shows many listings offering cash back at close, “below market” prices, seller “taking a loss”, etc. I’m a fence sitter in Tucson, I think that 20% price decline is “in the bag”. I’ll be looking to buy not sooner than 2 years w/ big down payment and looking for a FB to hammer on the price.
Tucsonguy,
When you locate your FB, why not use the “nuclear option” instead of a hammer. LOL
http://www.runutz.net/index.php/?p=23
for the bears i´ve made a piece “party like it´s 1999/reality check”
in this kind of market it sometimes importend to read the facts from the last week to see how big the disconnet the market from the fundamentals is.
hope that helps…
http://immobilienblasen.blogspot.com/2006/09/party-like-its-1999-reality-check.html
wanted to add that this is only a summary of news from the last week
add this to the party…..
U.S. AUG. ELECTRONICS ORDERS FALL 4.7%
U.S. AUG. DURABLE-GOODS INVENTORIES UP 0.2%
U.S.AUG. DURABLE-GOODS UNFILLED ORDERS INCREASE 0.4%
U.S. AUG. CORE CAPITAL EQUIPMENT SHIPMENTS UP 0.3
U.S. AUG. DURABLE-GOODS SHIPMENTS RISE 1.9%
U.S. AUG. CORE CAPITAL EQUIPMENT ORDERS FALL 0.3%
U.S. AUG. DURABLE-GOODS ORDERS EX-TRANSPORTATION DOWN 2.0%
U.S. AUG. DURABLE-GOODS ORDERS FALL 0.5% VS. +0.5% EXPECTED
The market should boom today if recent reaction to bad news is any indication!
If the market booms get ready for the “oil and gas prices only recently declined therefore the August numbers are not reflective of the current environment” and “lends support for an interest rate cut sooner rather than later”. If the market declines the headlines will be “profit taking after two incredible days”. Take your pick.
to be honest i hope that they will get the new high in the dow that is needed/wanted/ordered so that then there is a 1% chance that fundamentals matter a little bit.
I think gas prices at the pump will fall to $2.00 before the end of this November. Dow Industrials and S & P 500 will broach record highs. My trailing stops are on and I’m building more cash in my brokerage accounts. I’m fixing on buying more oil stocks. I am beginning to see some amazing bargains out there but I have patience! Meanwhile Vanguard Prime Money Market is a great place to be!
The market is slightly psychotic today — you see the DJIA racing for new highs, even while the bond market is engaging in hurricane evacuation procedures. What gives?
http://www.marketwatch.com/tools/marketsummary/default.asp
You already know! The market will do what it can do to cause the greatest amount of pain to the most amount of people. Or an older adage from the NYSE was “Buy on Rosh Hosana, sell on Yom Kippur.”
Hoz –
Do you agree that the bond market and the stock market action in the past several days represents wildly divergent views of where the economy is headed? If so, can you foresee how this will resolve? (I have a hunch, but it is hard for me to correct the bias in my forecast for my bearish inclinations…)
No idea - I made my summer investments in May and have sat out of active participating in the market since. My goal is to not lose money. I personally think that Japan is raising rates, ECB is raising rates, Russia is raising rates and China is raising rates- the world is worried about inflation and the US worries about flat screen TVs. According to reports - should the US go into recession it will not jeopardize the world recovery, and one report implied that it would be to Germany’s benefit. Frankly, I am stunned at the short squeeze in the stock market and if the option traders in the OEX pit are long calls - it will be one hell of a drop. The market is going down, but when - je ne sais! I will be looking to buy a couple of stocks in November if they are still at or below current prices, but that is a long time away. I am still on vacation! The risk/reward level in the bond market for Junk bond to 10 Yr US T-Bonds is absurd. IMHO the bonds are pricing a 50 to 75 basis point drop in the fed fund rate in the next 9 months which seems unlikely with inflation pressures still accelerating (no matter what happens to the economy).
“I personally think that Japan is raising rates, ECB is raising rates, Russia is raising rates and China is raising rates- the world is worried about inflation and the US worries about flat screen TVs.”
Hoz, I vote your quote to make a chapter heading in Ben’s book.
Just to show you where that’s getting us:
http://tinyurl.com/qufpf
U.S. Falls to 6th Place in Competitiveness Index
From the Associated Press
September 27, 2006
GENEVA — “U.S. economic competitiveness has fallen significantly over the last year, as high budget and trade deficits hurt America’s business environment, according to a report released Tuesday by the World Economic Forum.
The disappointing government response to Hurricane Katrina, government corruption and a decreasing worker talent pool due to immigration restrictions were other factors cited by the forum, which moved the U.S. to sixth in its “global competitiveness index” from the top spot a year ago.”
Mortgage applications fall even as rates plunge
Purchase loans sink to lowest in nearly three years
WASHINGTON (MarketWatch) — Unmoved by a big drop in interest rates, the volume of applications for mortgages at major U.S. banks declined 4.9% last week, the Mortgage Bankers Association reported Wednesday.
The seasonally adjusted number of applications for purchase loans fell 5.5% on a week-to-week basis, to the lowest level since November 2003. The number of refinancing applications decreased by 4.1%.
Refinancings accounted for 44.3% of loans, the largest share since September 2005. With interest rates declining in recent weeks, homeowners eager to refinance their mortgages has soared.
Mortgage applications overall are down 21.1% in the past year, in line with other indicators of a rapidly cooling housing market.
Average mortgage rates plunged last week, mirroring the recent decline in other long-term rates. The average rate for a 30-fixed rate loan fell 18 basis points, sinking to 6.18% from 6.36%, while the average rate on a 15-year loan dropped to 5.81% from 6.04%.
The average rate on a one-year adjustable rate sank to 5.90% from 5.95%. The spread between the one-year ARM rate and a 30-year fixed rate fell to 28 basis points, the narrowest seen since January 2001.
Accordingly, the share of mortgages with ARMs fell to 26.4% from 27%
Mortgage Apps Data
These data are important because new mortgage applications to buy are the best predictors of home buying in the near term future. New apps were up during the first week of Sept, but this may have been a seasonal effect related to the Labor day holiday, since the same thing happened last year.
Today’s data are important because they represent the second week in a row with significant declines in applications for buying homes. This is happening despite a modest decline in mortgage rates and therefore supports the idea that home buying is continuing to decline, despite the rosey scenario that seems prevalent on Wall Street.
i agree 100%
Up from 98.2% and within expectations. LoL
jmf –
Do you think there is some kind of a misprint there? Because lower rates automatically are sure to bring droves of buyers back into the housing market, just like David Lereah said; I guess this is the reason the homebuilder stock prices are so resilient in the face of an avalanche of bad news. We should also expect lower gasoline prices to result in an increase in the number of drive-by condo investments.
in Europe mortgage applications are (still) rising strongly while rates are rising slowly; and despite about 10% higher rates compared to last year (up from +/- 4 tot 4.4% for a 15-year fixed rate loan) and historically low affordability ratings, home prices are still rising as well. Don’t try to make sense of it all …
mike has some good observations on this.
here the link to mike
http://interestrateroundup.blogspot.com/
‘The only market-based indicator signaling a turn in the market’s prospects is housing/mortgage stocks, which have rallied in recent weeks. Are the housing stocks “right?” Is the data “right?” Is the lumber market “right?” We’ll see …’
Is there any doubt at this point that “someone” is artificially propping up the builder share prices? Can this go on indefinitely? If not, what would turn the tide?
money is moving from RE back into the equities markets. gordo
GS,
What do you think about the possibility of private equity buying out these HBs? The rally in these stocks makes absolutely no sense based on what we are seeing. And I truly believe we are at the beginning of this thing.
Could we be wrong???
It is always possible that we are wrong, of course. But my bet is that the Plunge Protection Team is working overtime to make things look good for the November election. And to complicate matters we are at the end of a quarter. The institutions want their quarter end statements to look good and will influence prices accordingly.
What will happen after the election? Will all those HB stocks that the PPT has accumulated have to be dumped? I guess we will just have to wait and see.
“Could we be wrong???”
Only if the statistics suggesting the number of US homes for sale is approaching 5 million turn out to be a complete fabrication. Otherwise, fundamental reality is going to send this housing bubble down the same path towards collapse as economic history has sent every one of its predecessors.
“money is moving from RE back into the equities markets. gordo”
From what reputable source did you obtain that information? From CNN/Money?
GS:
The talking heads are out in force stating that moneyios moving from RE back into stocks. Turn on any business news outlet. Someone is trying to talk up stocks, and the troops have been deployed to let everyone know what the new meme is…
Why are they cutting interest rates? To “help” homebuyers? Is our enconomy based soley on people buying and selling homes to each other?
Wouldn’t it be nice to get 5% on a savings account, and 7% on a bond again? You could retire with just 2Million in the bank at those rates!
” with just 2Million in the bank”…..
Duh…Hell, @ 0 interest you could take down 10K a month for 16+ years…
Yeah, but what if you live longer than you thought you would!
it’s the War On Savers; better get used to it …
That’s a great term! “War on Savers” I need to use that in my next rant to my elected officials.
This War on Savers is not sustainable. The Fed learned this lesson the hard way in the 1970s, when Volcker ended the inflationary mania with two tough back-to-back recessions in the early 1980s. I am confident that BB learned his history lesson and will take the tough action needed to remove the punchbowl, rather than repeating the mistakes of the recent past.
we disagree on this - I think BB learned his history lesson backwards and will try to be even more ‘clever’ than the pre-Volcker FED.
There is NO sign of any tough action, nothing at all. No serious tightening, not even a beginning of a clampdown on crazy lending. Alls signs point to a respiking of the punch bowl, or maybe I should say changing the party scene into one big punch swimming pool (probably with lots of XTC tablets in it as well for some extra Dutch housingbubble flavor).
People people. Some amount of toughness will only happen post elections. Atleast thats my hope.
Some of us were expecting that toughness after the 2004 election, and we’re still waiting. Many bears believed interest rates would charge after GWB got back into office. No dice.
Right now, they are all party hats and champagne on CNBC because of the market rally. I’m getting frustrated.
Speaking of frustration….(check out video)
http://www.msnbc.msn.com/id/15017318/
On the Today Show this morning Jean Chatzky was promoting her new book, and was doing a “money make-over and a single 30 year old professional woman. I’m nodding along with most of it as stuff I’ve heard before and then all of a sudden she adds, the woman needs to get out there and purchase a home because she’s throwing her money away on rent. UGGGGHHHH!!!! I can’t believe people are still promoting the immediate purchase of a deteriorating asset. Anybody want to e-mail the Today Show?
“There is NO sign of any tough action, nothing at all.”
The elections aren’t over yet, either.
yes, that is a great term!
Way OT…
I know we’ve been saying that renting right now is much saner than buying. But maybe not if you’re renting an apartment in New York City.
Here’s the scenario: A landlord buys a building in a gentrifying neighborhood. The landlord hires an architect, who claims that
the building is structurally unsound. They get okays from the Department of Housing and Community Renewal and the Department of Buildings to demolish the building, which landlords use to evict rent controlled tenants, and threaten rent stabilized tenants with no lease renewals. Regular rent tenants, spooked by the harrassment of the other tenants, also take off.
The funny thing is that “demolish” doesn’t necessarily mean tearing it
to the ground. In fact, once the building is vacant, most of these landlords do a gut renovation, and either rent the units at market rates or sell them off. Or they simply flip the building sans tenants for a quick profit. (At least try to, before the housing bubble deflates!)
Apparently this is the latest trend in NYC, but I haven’t seen it mentioned anywhere in the press. And when I say trend I mean all over the city. There are 30 buildings in the East Village alone where landlords are using this legal loophole — including the 17 bought by Extel (which, by the way, is funded by the Carlyle Group; yes, that Carlyle Group, with Bush Sr.). There’s even a landmarked building at 131 Duane Street, and several landmarked buildings in Park Slope.
There doesn’t seem to be much tenants can do right now, the way the laws are written and interpreted. There’s some sort of bill proposed by State Assemblywoman Deborah Glick to stop fast tracking these demolition approvals, but it needs a Republican co-sponsor, and that seems unlikely.
These sorts of shenanigans makes owning enticing…
one way to address the problem would be to abolish rent control and let the markets sort it out. But that sort of idea never flies too easily in NY.
I agree with garcap. Rent control is a total joke. Most of the benefit is accrued by upper-middle class people who by connection or luck happen to land one of the prized apartments. The mother of a friend of mine lives in a rent stabilized 3-4 bedroom apartment on the Upper West Side by herself! The “kids” all left home 15-20 years ago.
You have a system that promotes and rewards coniving. It would be silly to expect that the landlords wouldn’t participate as well.
rent stabilised= soviet term
NY commie central
Actually rent stabilization laws requre that landlords (even when demolishing) get certificates of non-harassment from tenants indicating they vacated the building voluntarily. After a building is redone, tenants who want to move back in have every right to.
Of course many tenants aren’t aware of this. And as for eliminating stabilization — we’ll see how long NYC survives without affordable housing. Wonder how great it’d be for young people to move here when the choice is Section 8 or luxury rentals (or when landlords who can’t fill their luxury buildings start using Section 8 rentals).
You are assuming landlords in this city have some longterm business sense and civic sense, rather than short term greed, and I can tell you from personal experience that is too often not the case.
Housegeek, I think that might be the stealth plan. Bloomberg and most of the politicians in the city no doubt are aware of this trend. I think they’re letting it happen, anticipating much more (and much improved) rental stock when these condos can’t sell, and also a reduction in the number of rent-regulated apartments, thus adding more market-rate apartments into the mix. So the pols get working/middle class housing on the cheap.
Only thing is, it’s just going to be ugly renting-wise for the next two years or so.
“You are assuming landlords in this city have some longterm business sense and civic sense, rather than short term greed,”
No, not at all. If rents were set by the market, there’d be an increase in units, rather than having so many converted to condos and coops.
I’ve known a number of young people who moved to NY and none of them lucked into a rent stabilized apartment. They pay higher rent so the privileged few, usually with 3-4 times the young peoples’ income, can enjoy subsidized rent.
Distorting markets always causes more harm than good.
Distorting markets always causes more harm than good.
And don’t forget that things like the MORTGAGE INTEREST DEDUCTION also distort markets. I don’t think this has ever made housing more affordable–it simply raises house prices…raising your taxes, too, right back up in the form of property tax.
I think taxpayers would be better off with NO mortgage interest deduction. (No sour grapes here…I’ve personally benefited from this deduction…at least until AMT kicked in.)
just look at the Netherlands: most favourable HMD in the world, and probably the biggest housing bubble too (by % gains). Of course, politicians here still say that the HMD makes housing more affordable …
Housegeek-
Good luck finding a rent-controlled apartment that is affordable. They’re mostly spoken for and rarely turn over. Price caps lead to shortages and that’s why there is a shortage of rental units in NYC. Those not lucky enough to be in a rent-controlled apartment subsidize those who are (the landlord has to make his/her money somewhere, otherwise he’d just walk away from the building, right?). Abolish rent control and government subsidize housing and the market would produce plenty of “affordable” housing if that’s what people wanted. Big cities that don’t have extensive rent control programs (Chicago for example) don’t have an “affordable” housing problem.
“Good luck finding a rent-controlled apartment that is affordable.”
quite true. you’ve a better chance of winning the lottery.
but rent stabilization will be less and less of an issue as it was revised about a decade ago so that it only applies until the rent hits $2,000, at which point the apt becomes mkt rate. and rent control is really a remnant of its original self; there are very few rent-controlled apts left of nyc’s housing stock. none of the new inventory of condos flooding the market will be controlled — all mkt. rate.
i think nyc rents will come down a bit in a year or two as many of the new condos are ‘repartmented’, and prices will come down much more significantly, as many others on this blog have predicted….
Just FYI, there are a little under one million rent-regulated apartments in NYC.
Sorry if not too clear on point - which is that the higher the rents, the more outmigration of NYC’s tax and talent base you’re going to see. I live in a rent-stab unit now in brooklyn, after cashing out, and rentals here are actually plentiful and relatively cheap. But landlords as a rule will do a lot to keep rents high — even if it hurts them and their buildings in the long run.
I do think a general downturn will cause some landlords to lower rents -but lots of them will fill their buildings with subsidized tenants too, and they’ll start to neglect their buildings, just like they did before. And if the govt can’t subsidize the tenants in bad economic times, and can’t make sure landlords are keeping places safe for tenants, well, so the spiral goes.
It’s true that rent stabliziation is on its way out-but don’t bet on your landlord’s brain that that’s a good thing for the city.
rent ‘controlled’ and ’stabilized’ are 2 different things. and it is all gradually being phased out (as ‘controlees’ die off, and as ’stabilizees’ rents hit 2,000. so regulated apts will be a gradually smaller percentage of the housing stock. but i agree that it is a completely unfair system that rewards certain renters at the expense of everyone else. and it made it totally unprofitable to build more rental housing in nyc. but a fair question to knowledgeable posters on this blog is, ’since most of the country doesn’t have rent control of any kind, why hasn’t there been more affordable rental housing built?’
i’ve answered my own question. i must be living on another planet: manhattan!
“since most of the country doesn’t have rent control of any kind, why hasn’t there been more affordable rental housing built?’”
Assuming we’re talking about outside NYC, because “inside” seems to be answered by the socialist rent controls there.
It might be that your question really is, “Why hasn’t more affordable rental housing been built in the specific areas/neighborhoods that potential renters want it built?”
The answer to that is simple enough, I believe — it’s not economically feasible for the landlord. In most places there is a ton of land on which to build such housing, but it is “deemed” too far away by tenants who want to make no compromise: they want prime location, prime amenities and prime price. Don’t we all. Virtually never works that way — something has to be compromized.
If the only reason renting makes sense in a region is rent control, than it probably makes good sense to buy. However, I’d guess that given current prices market rents pencil out to be substantially smaller cash drain ex-appreciation almost anywhere in NYC.
Adding to the tight rental market in NYC:
“Rafael Cestero, deputy commissioner at the city Department of Housing Preservation and Development, is the first insider to say what some outsiders had already suspected: Forest City Ratner has made no commitment to complete the second phase of Atlantic Yards by any particular date, according to Norman Oder’s account of yesterday’s City Planning Commission meeting. So much for those hundreds of affordable apartments and seven acres of open space that the developer and Empire State Development Corporation advertise would come by 2016.”
“I know we’ve been saying that renting right now is much saner than buying. But maybe not if you’re renting an apartment in New York City.”
with a .5% vacancy rate in manhattan, i can unerstand why you’d want to buy. but i would wait at least until 2008. and then, i would expect to pay about 30% off 2005 peak prices. and i would be planning not to have to sell for at least 10 years or so. because your place won’t likely be worth nominally what you pay for it in 2008 until 2018 or so, if recent history (90s downturn) is any guide.
… and i would only buy in very, very stable and top-notch neighborhood.
nothing new, they have been doing this for years in the Netherlands; only difference is that it is not free market developers who are doing this, but former government entities that own most of the rental housing stock.
Another sure trick to push rental prices up is to simply demolish whole neighborhoods with cheap (and good!) rental housing and replace it with luxury villas/apartments. The renters that get thrown out of their home can rent a new - far more expensive - home with lots of government subsidy. Extremely popular in the Netherlands lately, so maybe it’s an idea for NYC?
nothing new, they have been doing this for years in nyc, which is probably about the most socialized city in the u.s. and it’s been done in just about every which way imagineable in terms of gov’t/private/subsidized housing, often with a mandated percentage of lower or middle class affordability. ever since ww2. i’m not sure what the overall effect on rents has been though. and some of them were very successful in actually creating nice places to live, though often not. robert moses was the grand guru of urban planning and neighborhood renewal for much of the 20th century in nyc, and bulldozed quite a few neighborhoods in pursuit of his grand plan for nyc.
much of the so-called ‘urban renewal’ resulted in complete abominations, almost akin to the french ’suburbs’ in terms of being totally humanly alienating in every way, lacking only le corbusier’s concept of cement furniture bolted to the floor. and in the u.s., we have tended to build our subsidized housing in the center of the city, right up close to the swells who live a few blocks away, or possibly right next door.
probably the ancient Dutch heritage is still having its effects on the NYC economy
the dutch were savvy buyers, back when (16??), paying just $24 — in beads! — for the island of manhattan. at least that’s what they were teaching when i was in grammar school.
nothing new about gut renovation. it’s been going on gangbusters for the last 50 years in nyc. it’s just the most sensible way to thoroughly renovate a building of very sound brick/stone/joist construction. the administrative/political angles are another matter.
-
sorry if these were posted already -
—–
Lower rates fail to lift demand for home loans
Mortgage application activity fell 4.9 percent last week, MBA reports, even though interest rates slipped to six-month lows.
September 27 2006: 7:53 AM EDT
NEW YORK (Reuters) — U.S. mortgage applications fell for the first time in four weeks even as interest rates dropped to a six-month low, an industry trade group said Wednesday, providing further evidence the country’s housing market slump is deepening.
—–
Lowe’s: Housing ‘correction’ may take 18 months
No. 2 home improvement retailer sets strategy to spur sales amid ‘challenging’ business environment.
By Parija B. Kavilanz, CNNMoney.com staff writer
September 26 2006: 2:08 PM EDT
NEW YORK (Reuters) — Home improvement retailer Lowe’s, which warned on its full-year results Tuesday, expects it could take as long as 12 to 18 months for the slowdown in the housing market to stabilize.
Thanks for the update. The interest rate releationship is not surprising b/c yesterday’s data from FL told a similar story; the data showed that although prices are coming down, demand is still slowing. Add to this your update, although interest rates are coming down, demand is still slowing.
A really disturbing trend is unfolding in the housing industry. As a result, housing bears will be eating prime rib for the rest of this and probably most of next year b/c the housing bulls will be getting slaughtered.
Another way to describe this pattern is to plot the industry’s demand curve. It appears that we are looking at two distinct price-demand equations; last year’s was flatter and there was little end-user sensitivity to price; this year’s looks steeper and there is much greater end-user sensitivity to price. I hope the captains (home builder CEOs) recognize this negative pattern and adjust their scale and expectations.
i have some news for the dutchman nhz
one of the bigger funds that initiates funds to buy propertys in the netherlands “bankhaus wölbern” is trying to sell all of their dutch properties (50 funds) for around 1-1,2 mrd € / 1,27-1,53 b$.
they created the first fund in 1993.
bidders are of course private equity funds. despite a high vacancyrate they find that this is a greta buying oportunity (handelsblatt).
I generally focus on residential real estate, but I do think the valuations of commercial property have gotten nutty due to a flood of investment money into the sector. Indeed, commercial REITs have continued to surge despite a potential downturn in the fundamentals, in my personal opinion. Feel free to read my commentary on the subject here …
http://tinyurl.com/ltt4s
this is really a great piece. i have linked it to my blog.
we in germany have gib discussions about the introduction of reits. it looks like we will get them in mid 2007.
i think in 2010 we will have the same mania level as in the us.
From the link:
“Why Doesn’t Anyone Care About Valuations Anymore?”
*Sigh*, that’s *exactly* what was said before the tech stock crash. Deja Vu all over again.
don’t know what to say, commercial RE in Netherlands defies gravity (just like residential RE of course …) and I don’t understand the valuations. Vacancies are around 30-40% in many areas (have been for many years) and valuations of the property are almost always based on the official rent - that nobody is interested in paying, except for big companies that loan all the money for nothing from the bank anyway.
Maybe they know that the recent proposal for converting commercial space to apartments (with huge governments subsidies) is a done deal for after the elections?
Anyway, I think this will be a great opportunity for the RE-savvy Dutch pensions funds like ABP to buy some more real estate on top of their already huge holdings.
wow, I never even thought of that issue of vacancy rates vis a vis property valuations being based on ‘official rent’, and the whole idea that even that is based on credit and the whole complex of interconnections you bring up in the Dutch economy. fascinating…
I need some input…I bought a 3bd/3ba Irvine townhome in 2001 for about $325K. Believe it or not, I may still be able to sell it today for $650K. After paying off my loan of $265K, I would clear more than $300K. I have a listing appointment scheduled for tomorrow but I’m interested in hearing your input about whether I should unload my primary residence and rent. I’m not looking to get flamed as I fully recognize I should have/could have unloaded it last year for $60K more. Your thoughts?
Price it very aggressively, well under the nearest comp.
And please take a picture for us of the GF who will pay 600K for a townhouse in Irvine. That was one of the armpits of the OC as I recall.
I wouldn’t call Irvine one of the ampits of OC at all. It’s a fancier part of Orange county with UC Irvine and a lot of medical and bio research facilities that have higher than average salaries. It’s one of those places they have a lot of restrictions on what signs and buildings commerical buildings can have because it’s residents are quite posh and don’t want to look at a lot of ugly strip malls like the riff raff have in their neighborhoods. Not my cup of tea at all but not one of those ghetto type areas where prices skyrocketed.
I agree about Irvine. Nice place. A cute young colleague of mine and her sister bought a townhouse there a year ago. It was before I met the colleague and I could not dissuade her from buying. But she has a lot of relatives in O.C. and there are a lot of jobs in her engineering field, so she will be okay with being “stuck” in the townhouse the next 15 years before she breaks even.
Irvine is the desired place to be for upper middle income families in OC. Very demanding parents make it probably the top school district in OC.
I’m surprised that the market has dropped in Irvine. I got top dollar in July in West Irvine and a few other plans in my tract set records in August. But Irvine will drop as will the whole nation. Even after the price drops, Irvine will retain its place as the desired location for families in OC.
If you believe in the bubble, and you probaby do since you are here, then as mentioned earlier, you must be the lowest priced comp to sell in this environment. You need to offer at least 2.5% to the buyers agent too.
I’m planning on buying back into Irvine in either 2008 or 2009. It maybe a little early, but most of the price correction will probably have happened by then.
-
IMO -
Tough call since it’s your primary residence. I don’t see how you could get hurt selling for that huge gain, bank the profits, rent for 12-24 months and then re-buy. How much to rent a place you’d be happy in? What are your HOA fees now? Other Owning costs? Any family - wife/kids? Only you can make this gut call personal decision, but if you’re single I say sell the pig and bank the gain and pick same type of place up again in 24 months for 70 cents or less on the dollar. $300K is a lot of money - especially when most of it is tax-free. Good luck.
-
“Sell when everyone wants it and buy when there’s blood in the streets.” – Craig Hall
“When someone else wants something you’ve got, and they want it badly enough, let them have it.” – Craig Hall
“When the pay window is open, sell.” – Craig Hall
I always thought the first quote was from one of the Rothschilds. Who is Craig Hall?
A notorious “developer” in the Dallas area who, despite the fact he went belly up in the early 1990s (very nasty bankruptcy) and left a huge mess of bagholders in his wake, has somehow reattained respectability and is considered some sort of RE “expert.” It’s easy to be an expert when you can walk away from your messes and start over as if nothing ever happened.
I’ll bet I worked on 20 matters involving that loser. He was the Dallas law firm full employment act all by himself.
1. Seven Real Estate Trends: Three National - 1. Inflation, 2. Interest Rates, 3. Flow of Funds. Four Local – 1. Job Growth, 2. In or Out-Migration, 3. Path of Progress, 4. New Construction. - “Timing the Real Estate Market” by Craig Hall
2. Four Ways to Know it’s a Seller’s Market: 1. You can feel it. 2. Market data doesn’t lie. 3. Listen to others. 4. Sometimes you’ll know because it simply falls on you. Four Ways to Know Positive Momentum is at Risk: Prices on competitive properties stop going up or down. 2. The bid/ask spread widens. 3. The rental market softens. 4. Avoid the “pack mentality”. – Craig Hall
3. “Real Estate often lags behind national economic trends.” – Craig Hall
4. “Sell when everyone wants it and buy when there’s blood in the streets.” – Craig Hall
5. “When someone else wants something you’ve got, and they want it badly enough, let them have it.” – Craig Hall
6. “When the pay window is open, sell.” – Craig Hall
7. “It’s unreasonable to think that anyone can tell what the top is until history shows it to us. Hindsight is the best judge of tops and bottoms.” – Craig Hall
8. “There is no question that history repeats itself, but it rarely repeats itself exactly. You have to learn to trust your gut instinct.” – Craig Hall
9. “Gut instinct is merely putting together experience and knowledge with confidence. You develop intuition by doing the work and nurturing confidence in your own abilities to rationally understand a market and come up with ideas and plans of your own.” – Craig Hall
10. “All of our perspective is colored by today’s moment in time.” – Craig Hall
11. “The Two Greatest Lies in Real Estate: 1. “It will only take $X to cover needed real estate improvements on this property. 2. Real estate is a cash flow business.”" - Craig Hall
12. “Yes, hindsight is indeed 20/20. And, if you stop and think about it, the thought that occurs just before “We could be in trouble” is “Everything couldn’t be better.” When you’re in the middle of a market in which prices are getting ready to decline, that’s when you’re most likely hearing good news and excitement from investors confident about the future. The irony is that we often get caught up in the enthusiasm without stepping back to look at the facts available about current trends.” – Craig Hall
13. “No matter how successful you are or how smart you think you are, there will come a time when your gut instinct, judgment, and even this book will let you down. Timing in real estate just like in all of life has a habit of surprising us every once in a while and just when we least expect it.” – Craig Hall
14. “Sometimes we do the best we can and things don’t work out, while at other times things work out in spite of us.” – Craig Hall
15. “Maintain your perspective and keep your humility.” – Craig Hall
16. “Relying on luck without knowledge and skill is risky business.” – Craig Hall
-
Timing the Real Estate Market : How to Buy Low and Sell High in Real Estate (Paperback)
by Craig Hall
http://tinyurl.com/otgzo
Who would have thought that a guy from SNL would be so big in real estate.
I think you mean Rich Hall!
Cheedle: The orange residue left on fingers after eating Cheetos or some other cheesy snack
Housing in Ca should come down by 30-50% over the next couple of years. You may have a good chance of buying another house at 2001-2002 prices. In that case you have nearly enough to buy without a mortgage, if that seems like a good strategy (depending on your tax status and other investing plans and goals).
bad idea to sell, if it is your primary home. Even though we know prices are going down. But how much we don’t..
You don’t but “we” do!
Houses in CA will go down, at the very minimum, to 1995 levels. That is when the Twin Bubble Trouble began. People who bought into the bubbles will take a Bubble Bath!
Jas Jain
Jas: what about the bubble in India? What’s going on with that?
Jas — thanks for the emphatic input. I keep thinking that 1999 is OK in most of the country, but it is good to see even more aggressive thinking from savvy people like yourself.
It interesting to me that the entire RE-interested “population” has moved from Bubble vs. no-Bubble to Majorly-screwed vs. not-Majorly-screwed. It’s almost as if some of the RE cheerleaders think that there is solid ground at 100′ down and since the RE ship is 175′ long, it’s butt will sit on the bottom but the top 75′ will be just fine.
I’m with gekko. It depends on your situation. It really hits on a house as an investment vs. a house as a home.
I’d also consider your career. If you’re in a job that is prone to lay-offs or at a start-up or a mortgage broker, taking some cash off the table might not be a bad thing to do. What’s the outlook for the Irvine economy?
If this is your dream house and you plan to stay put for 10 years, keep it.
If it isn’t and you think you can readily find an apartment that meets your needs, sell now and check back in 2 years. California is in for some very rough sailing.
If this is the house you want to be living in 5 or 6 years from now, don’t sell. If you think you want to be in a different house a few years down the road: sell.
Good anaysis…some more background: I’m a single entrepreneur with lots of money in the bank already. This is townhome near UCI with alot of students around and it’s just not the place I want to be in for 5 or 10 years. The HOA is at $250/month and rising. Thanks for your input…it’s all very helpful.
“Your thoughts?”
I may get flamed for this, but one option is to just keep it and continue to live your life. Are you in a fixed rate loan? Do you still have a lot of ‘equity’ (ie haven’t used the condo for HELOC money withdrawals to buy boats, jetskis, etc.)? Are the monthly payments “comfortable”, allowing you to pay PITI + maintanance while still saving and enjoying a good quality of life? Then maybe you should just stay.
However, reasons to sell:
1. You and your family are comfortable with taking the gamble that prices will come down enough to make selling-renting-buying all worth while. If prices only come down 6% more, transaction costs alone will eat up any profit. I myself believe that they will come down significantly more in The OC, but *you* will need to make the decission on your risk vs. reward tollerance.
2. You really can’t afford the PITI payments, or they will adjust soon to a PITI payment that you can’t afford, without sacrificing savings and quality of life. If this is the case, SELL NOW, and just rent for a while, living within your means.
3. You may move in the next 5 years or so.
MC, ….BAIL.
nope, not an armpit (I rent over in Deerfield). Someone posted here about the incentives having already started over at the new Villages of Columbus development. Remember that a year ago, people were camping out for that stuff?
When the aerospace stuff crashed in early nineties, I remember seeing 30% whacked off of nice older places.
Pocket the green. Await the spanking of others. Then if you still like Irvine, check out the older homes…Deerfield/Woodbridge, etc. The new developments SUCK, designed to make the standard cubicle inhabitant lose the distinction between work & home.
MC,
I grew up in Irvine and I wish I could afford to live there now but if you can get anywhere close to 650K go for it. I believe Irvine is GROSSLY overpriced and will take a huge hit. You can never have too much cash in the bank. 300K is alot of money to turn your back on. I agree with the other posters about buying back in 2008/2009 timeline. Good luck.
Real Estate Board of NY out with an odd little report on the Brooklyn market for 1st half of 2006 - once again not including inventory (miller samuel appraisal firm did, however - in their 2nd quarter report basically describing a stalemate between buyers and sellers, amid spiking inventory)
I am extremely curious how REBNY got all these rising brooklyn #s (no methodology given). I saw co-op prices go down and in my old neighborhood by April 2006 . What I wonder, given their unusual aggregation of quarters, is if they are not folding in the “optimism” of Q1 with a bit of a downward slide in Q2 - for a higher YOY median #…either way, the williamsburg condos now going rental due to a soft market, the projects in my current neighborhood that seem to have stalled mid-build, and the ever growing # of reduced listings do not seem to add any flesh to REBNY’s thin assertions…
http://www.rebny.com/releases/BrooklynReportMidYear06.pdf
I have noticed that they has been a build up in inventory in Brooklyn since early 2006. List prices are down. I heard that accepted offers are at least 5-10% below list. I always wondered about how they get their #s. Does any independent body ever get to audit these #s?
I have friends in Manhattan and Queens that can’t sell.
-
Friends in Manhattan that can’t sell? Where? What are they asking relative to what they paid and/or the 2001 market?
i don’t hear selling is at all easy in manhattan these days. i have a neighbor who’s getting bad advice from his r.e. agent resulting in lots of lookers but no offers. i sense sellers continue to have stars in their eyes, while buyers are are starting to sniff blood. but there’s a big change a comin’.
yesterday i heard a foreclosure mgr call in to a nyc npr talk show discussing housing prices in nyc. he said “i’ve never seen anything like this. we are headed for at least 4-8 years down.” the ‘panel’ was notably upset with his prediction.
they just don’t want you know. not npr or any msm. at least not until the big boys unload most of that new inventory that’s drowning the mkt.
amen to this blog!
I sold last Sunday. First open house. Got my asking price of studio on the upper east side of $259K. Price it right and it will move. gordo nyc
“Got my asking price of studio on the upper east side of $259K. Price it right and it will move. gordo nyc”
Gordo — good for you. Common sense trumps ego every time. Hope you’re able to buy back in, wherever you wish, when everything is dowen by half.
REBNY gets their info from public filings & member brokers. Note that reports from the big brokers (e.g. Halstead) have used a sampling method to determine median prices. Anyway, median prices tend to be the last to fall when the market changes.
Audit REBNY’s reports? Are you kidding? Fannie mae doesn’t even get audited.
http://news.yahoo.com/s/afp/20060927/wl_uk_afp/britaineconomyconsumer;_ylt=Ap70HMB6XLwrlD1KBbjGLEJvaA8F;_ylu=X3oDMTA0cDJlYmhvBHNlYwM-
Housing bubble still going strong in UK - median house price is now more than 8 times the median income (and Brits are among the most heavily taxed people in the world, and gas costs more than $8 a gallon). A US-style “buy now, pay later” mentality, especially among the young, has led to dangerous levels of indebtedness. Mark my words, this is going to end very, very badly.
Really makes you wonder what the grand plan is.
Housing doom hit mainstream cable news yesterday. CNN, Headline News and CNBC all had bearish pieces on housing.
Cannot comment on the Barking Moonbat Brigade known as Fox.
Got an agenda, do you?
No agenda here. But your paranoia and inability to defend voodoo economics is glaringly obvious.
You could have just admitted to a bias rather than lash out and fan the flames you started. Were done here. Nothing to see, move along.
Sure you have an agenda; if you did not you would have just said “Fox” rather than “Barking Moonbat Brigade known as Fox”. As for my inability to defend voodoo economics, I wasn’t aware that I had tried…all I did was ask a simple, five word question. So who’s paranoid, Mr. paranoid?
Question, is Captain Credit = our old friend from Vt who’s handle rhymes with mingus?
Discuss…….
“our old friend from Vt who’s handle rhymes with mingus”
I had wondered what had happened to him/her.
Grubner — my radar constantly scans for that turkey. Could be.
That would be “barking wingnut brigade” . . . moonbat is a winger term for libs. And Fox is unquestionably the winger channel.
“all moonbats please exit left, and wingnuts to the right….”
sorry…I have no idea what these terms are supposed to mean, so my apologies if it seemed I was being ‘biased’ or pushing an agenda in saying this line was funny…
Is this all talkradio or blogosphere lingo or both? I am sorta glad to be ignorant of it…the degree to which we spend our civic energies in trying to essentialize demonize and criticize each other is frustrating and demoralizing…
(I just thought the words sounded funny and seemed to apply to the people Fox can have on in their roundtable discussions of the economy lol)
cheers everyone!
And I just want to thank everyone who comes on here again and Ben for blogmastering…
it has been very fun to be in on this process and very educational as well.
So many smart and saavy and funny people here…
it’s so satisfying to be periodically checking in here and simultaneously watching for instance the Today Show this morning with a ‘realtor’ on actually saying…the bubble has officially gone bust…wow.
Barking Moonbat Brigade…funny!
I just saw, a little late, that CNN and the OFHEO report has Ann Arbor MI’s (my neck of the woods!) rated as the ‘worst performing housing market’ of the biggest MSAs!
But at down just 1.28% that doesn’t seem so big a deal…
The CNN Money report
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm
apparently doesn’t have too many people here worried, and the realtytimes realtors are making it seem like there’s a definite dead-cat bounce happening right now, as buyers on the fence finally make decisions and allegedly people relocating to here buy instead of rent.
But my feeling on the scene here is that in the last 10 years, people have lived in a fantasy that this town was becoming some kind of Palo Alto…the realtors would even say so…and it has slooowly hit, with the help of the auto industry wreck especially, that the things that make this town a decent place to live make it incompatible with Palo Alto type real estate scene, and it’s in the flatland midwest with no ocean in sight and what in hell are people thinking exactly paying money like that for RE?
We’ll see if the Realtors are really seeing an ‘adjustment’ to the ‘adjustment’ or are just getting really really worried that with this new ‘honor’ bestowed upon Ann Arbor, plus the auto industry, plus the FINALLY mainstreammedia saying the boom is bust, plus a recent series in the local news about how screwed people are here trying to sell, they need to lie louder and cheerlead even in the face of obvious gloom. I wouldn’t doubt that we’d get some at least small bounce on the ‘oh, what a *grrreeat* time to buy a place!’ pitch, because the notion that it is absolutely impossible to do anything but make out like a bandit on RE in this town is loong-standing. Plus, google is going to bring its adwords division here, and people are crossing their fingers that a bunch of 45K a year jobs will boost things nicely. Now, of course, the average autoworker hourly worker union job paid considerably more than that, and when there was a businessperson conference on the potential impact of google on the local economy, some folks actually suggested that although this salary would not allow the googleworker to afford any of the gazillion new condos being built downtown it might qualify them for the units of subsidized affordable housing the city tries to have builders create when they buy up downtown land. So, it’s either the new workers coming in and changing our economic landscape for the bright-bright-brighter, or the old displaced homeless folks who’ll live in those affordable housing units…what a bizarre scene!
wanted to highlight this that bigdaddy63 yesterday mentioned about the month of supply in palm beach. he has some numbers that were close to 36 month of supply. either way it looks like ground zero.
it is clear what intel would do with 43 month of chipinventory
they would wriet down 20 b$ and will go on.
but when you really have to sell a home. oh boy……
43 month off supply
Buyers closed on 655 home sales in August,
The decline followed a 44 percent drop in sales in July, year over year, and a 33 percent decline in June.
There isn’t much positive to highlight,” said Mike Larson, an analyst with Weiss Research in Jupiter. “And all that occurred despite a recent downtick in interest rates and a general lack of serious hurricane activity, though we did have an Ernesto scare at the end of the month
Meanwhile, the number of unsold homes in Palm Beach County continues to rise, according to a local real estate company’s analysis of Multiple Listing Service records. In August, 28,182 homes were for sale — more than three times the number on the market in August 2005.
this is from a few days earlier (from pbcbubblewatcher)
County foreclosures quadruple U.S. rate
Foreclosure rates in Palm Beach County soared in August to more than four times the national rate — and rose a sobering 226 percent compared with the same month last year,
As the five-year housing boom winds down, that includes creeping mortgage costs, soaring insurance premiums, rising property taxes, stagnant home prices and a growing inventory of houses for sale.
Statewide, 16,533 homes entered some stage of foreclosure in August, more than any other state in the country and a jump of more than 50 percent over July
On a year-over-year basis, considered the most accurate comparison because it eliminates seasonal differences, the 16,533 foreclosures statewide in August represented a 62 percent increase over the previous August, when there were 10,175, the report shows.
In Palm Beach County, a total of 2,241 homes entered some stage of foreclosure in August, up from the 688 homes in the same month a year ago, or 226 percent, according to the report. That is one in every 248 homes in the county. Florida’s rate is one foreclosure for every 442 households.
Wednesday’s foreclosure report comes on the heels of one published report indicating that 24 percent of all purchase and refinance mortgages in Palm Beach County are “option ARMs,” or option adjustable-rate mortgages
Also Wednesday, the delinquency rate for mortgage loans on one- to four-unit homes in Florida stood at 3.6 percent for the second quarter, the Mortgage Bankers Association said. Nationwide, the rate was 4.4 percent, down 2 basis points from the first quarter and up 5 basis points from a year ago. The August numbers, which aren’t included, will be reflected in MBA’s third quarter report.
Months of inventory is very high, but not quite THAT high. The 28,182 includes condos, the 655 you site is only houses. There were 515 condos sold in August, so 655 + 515 = 1170. 28,182/1170 = 24 months of inventory.
thanks
Can you imagine the rental opportunities in such a place? Do your homework and you should be able to pin down a wonderful house or condo for peanuts on a 1-10 year lease. For people who do not have to be in a specific locale for their work, how does life get better than that? Take what you save and prepare a better retirement or, if you’re a glutton for the RE game, buy back in, wherever you wish, when the market has tanked.
I’m like TxChick — for the right terms and the right place, I could sign a 10-15 year lease, no problem. Unfortunately, her husband likely is much more laid back about the idea than is my wife.
The new granite counter tops?
“Snakes, perhaps thousands of them, fell on Lyman Hepworth’s head when he opened the door to a pump house near the small house the couple planned to buy.”
http://www.breitbart.com/news/2006/09/26/D8KCRIH81.html
“Get these MOTHER-lovin’ snakes out of this MOTHER-lovin’ openhouse!” or something like that.
“…though the seller offered to refund their money when he found out about the infestation.”
Well, duuuuh! What’s so hard to consider about that?
A key indicator I’ve been watching like a hawk? The MBA’s weekly purchase mortgage application index. Mortgage rates peaked in late June/early July (depending on what kind of loan you’re talking about). But purchase activity has NOT really responded. And in the most recent week, purchase apps dropped to tie their cycle low. More analysis at my blog about this trend, and what it might mean…
http://interestrateroundup.blogspot.com/
The housing price chart you have up is interesting. The last time housing prices did a “power dive” comparable with the recent August figures was from 80-82. Uh, Oh.
The last time housing prices did a “power dive” comparable with the recent August figures was from 80-82.
Thank You Paul Volker…..
This is why, in contrast to nhz, I am holding out hope that BB will turn out, in retrospect, to have followed Volcker, not Miller.
anyone out there with input on surburban boston market?
i have been following newton/wellesley/lexington for nearly a year and have seen huge asking price reductions
we are planning to buy next fall and unfortunately i think it may take even longer for this all to unwind…..
What do you mean by huge? What percentage?
hi kim -
by huge i mean 10-20 percent declines in the offer price and then nothing sells for asking everything has sold this year, among the 90 houses i have tracked, for 5-10 percent below the asking
many many many have been languishing on the market
to susan - thanks for the outlook! i would like to wait until 2008 - my husband is clamoring for a house hopefully we’ll see some normalizing by late 2007
linda, i live in metrowest too and my gut feeling is that real estate prices will go down to where they were in 1999 adjusted for inflation. no one is hiring and people are leaving the area in droves. too, remember that the median age in the area is quite high. these folks are going to retire and move away someday soon. i would’nt make a move until 2008.
i’ve seen about 20% decine overall, but remember these prices were obscene to begin with. i moved here in 1999 and thought the prices were crazy then. they’ve doubled since. a cape on a large corner lot in southborough, nothing special, with an ugly guest cottage on the front lawn was going for 1.5 million dollars in spring 2004. it’s still for sale today. my plan is to show up with 150k in a suitcase and buy it in 2008. they should really be desperate by then.
Susan — I think your advice is spot on.
I saw Matt Lauer interview some realestate guru chick on NBC this morning. It was not Leslie Applesauce, but I did not catch her name…Matt was ribbing her about her prediction she made 6 months ago about the market not busting…Now she says it is and that it has fallen 10% in her area in the last 90 days…Her advice: If you dont have to sell, take your home off the market until spring when there will be more buyers.
“Her advice: If you dont have to sell, take your home off the market until spring when there will be more buyers. ”
LMAO. These amateurs would make better impressions if they were to appear on comedy central instead of MSM.
Comedy Central is the MSM for Gen Y.
Hey, watch that. CC is about the only TV I watch.
We should start a write-in campaign to get John Stewart to bring in David Liareah as a guest. Or better yet, maybe Samantha Bee should do one of her candid-parody interviews with DL…
yes, that would be great! I vote for the Samantha Bee bit…
That would be side-splitting hilarious!
Samantha Bee!
If you don’t have to sell now - why would you have to sell in the spring? Quick trying to get-rich-quick and live your freakin’ lives.
What got to me was how she was giggling and smiling when Matt called her on the horrible prediction she made six months ago…
She obviously doesnt care about the people that watched that interview and purchased a house based on her previous prediction.
It’s a society of almost total unaccountability. When fundamental laws - like gravity - reassert themselves and hammer people with unavoidable consequences, the irrationality which has pervaded the markets will spill over onto the streets. Shills and “investment advisors” who gave bad advice will be seeking very deep holes.
KIA — your reasoning is exactly why I ceremoniously relinquished the TV remote to my wife about 18 months ago (with a life lease for football games) and turned all of my “media” attention to the Internet and in particular to blogs. It is a move that has paid off handsomely; as a bonus, it impresses my friends to no end, re what I know about what is really going on.
The MSM has not taught accountability since Leave it to Beaver and Lassie and Gunsmoke. For a long while, it was neutral. Now it teaches “unaccountability” which, I believe, is the same as victimology.
“What got to me was how she was giggling and smiling when Matt called her on the horrible prediction she made six months ago…”
Maybe because even though she can make predictions so wrong, she still gets invited back. Where are the people who write the stuff we link to?
And where are these spring ‘07 buyers going to come from? The moon?
Baby Boomers from the moon. Rich ones.
The buyers will come, just like they did in spring 2006.
Immigrants flooding our country to buy up our cheap housing.
they’ll sprout up from the ground, just like the lovely spring crocus and daffodils.
(it’s a fringe benefit of all those buried st. joe statues)
I guess most of them will come from the Caribbean (Cayman Islands), just like all those magic buyers that saved last years US Treasury Auctions.
nothing new. i would rate the examples in the story as an understatement how big the incentives really are.
from bloomberg
http://tinyurl.com/pzcox
Homebuilders Offer Garages, Sod to Lure Buyers Amid U.S. Slump
You gotta wonder what the builders and planners are thinking when they build 2 story “Monopoly-style” houses on postage stamp lots. If Arizona is a retirement destination, and a bunch of old boomers are going to retire here, they’re going to need elevators in those crackerboxes:
Rising land costs prompt builders to wedge homes into smaller lots
Betty Beard
The Arizona Republic
Sept. 27, 2006 12:00 AM
http://tinyurl.com/s8ozy
Home analyst RL Brown, publisher of the Phoenix Housing Market Letter, calls these two-story houses on small lots “absolutely obnoxious.”
While he acknowledged it’s hard to offer larger lots today, he said: “They look like something out of a Monopoly game. It’s almost like street scenes from the East Coast with two- and three-story brownstones touching or almost touching. . . . This is just non-traditional for the Southwest.”
Someone remind me again, what is there to like about Phoenix?
Answer to the what is there to like about Phoenix question: Not much. I lived there for a short time back in the early 1980s. It was already a sprawling, character-less blob, and is even more so now.
September 27, 2006
“The Bubble Has Truly Burst For Housing”
Erin Burnett made this public service announcement on CNBC from the floor of New York Scam Exchange.
It is just the beginning, folks. Get ready and set for years of horror story after horror story on American housing. The two areas with the worst horror stories would be Silly.con Valley and Manhattan, home to BFNYC, the two areas that are the biggest beneficiaries of Fraud Money. Houses built on Fraud will implode and the prices will come down to the ground.
The most important story about the US economy is its reliance on Fraud.
Jas
Jas, in case you didn’t see my comment above, please talk about the bubble in India.
Thanks.
Hello Texas Chick,
Indian Scam Market and E-CON-omy would do worse than the US for the next 2-3 years.
India is a bad copy of America. We have Hollywood and they have Bollywood!
Jas Jain
Apart from credit boom and software indusytry, there is one more thing I heard is helping the Real estate Bubble in India: BLACK MONEY.
I am not sure how many in this blog come across this term!
Basically it is money from business transactions and kickbacks all done in cash and kept in cash form.
Keeping money in cash form for huge amount is a problem, but that is how it is kept till it can be used profitably in underground econnomy again.
Real estate has always been providing a PERKING place, over last 5-10 years, very profitably too!
( The realestate is purchased in False name or more commonly a friend/ relative as the proxy)
The price explosion in some of the metro city/area has been 10 times the gain in last 10 years!
txchick
It is very much the same there. Loose money lending. Just like here no doc stated loans, ONLY two pay stubs no employment verification.
Too much demand in places like bangalore due to software millionaires. I know several people who buy real estate because it is for sure goes up and stock market is too volatile. Bank interest rats-savings - are too low. inflation is high.
I myself bought 1200sf plot in bangalore in 1997 for 400000 Rs. Now it goes for 25-30,00000 rs. construction cost has gone through the roof too due to inflation…
Do they foreclose and repossess property as quickly as they do here? That sort of activity must be nearly unheard of in India.
I have a persistent fantasy about retiring there.
TxChick - in many ways, it is a wonderful country. I think their food is the best in the world. But I would never, ever consider retiring there unless you have a lot of family already there or unless you rent there for 2-3 years first. There’s different, and there’s DIFFERENT. Culture shock, as a permanent condition, is not easily overcome when one is well past 30.
An aside — women generally hat constipation. Men generally hate diarrhea. In the arena of those problems, women will be happier there.
Litigation is long , overdrawn process. Generally it is done brute force method, even the banks some times resort to it. Not offcially, but the manager incharge may resort to this on his own.
But it does happen legal ways also, just that it takes a very long time.
new home sales down 17,4% y/y
FIRST YEAR-OVER-YEAR DROP IN MEDIAN SALES PRICE SINCE 2003
U.S. AUG. NEW-HOME SALES FALL IN WEST TO 5-YEAR LOW
U.S. JULY NEW-HOME SALES REVISED TO 1.009M, 3-YEAR LOW
U.S. AUG. NEW-HOME INVENTORIES DIP TO 6.6-MONTH SUPPLY
U.S. AUG. NEW-HOME MEDIAN SALES PRICE DOWN 1.3% Y-O-Y
nehmt die incentives von im schnitt 10% (in der spitze bis 30%) hinzu und das ganze sieht noch unerfreulicher aus.
U.S. AUG. NEW-HOME SALES UP 4.1% TO 1.05M V. 1.04M EXPECTED
Sales are down 17.4% in the past year ( was in the fineprint)
more details
Sales are down 17.4% in the past year and are down 23% from the peak last July.
Regionally, sales rose 21.7% in the Northeast, 12.2% in the Midwest, and 11.1% in the South. Sales dropped 17.7% in the West to the lowest level since November 2001.
The standard error is so high, in fact, that the government cannot be sure sales increased at all in August. The 4.1% increase is statistically meaningless.
The six-month average is down 16% from December.
Actually, May, June and July were revised sharply lower. If August also needs to be revised lower by the same amount as July(-.063M), which does not seem unlikely, then August numbers will actually be lower than July, and they will be under 1M.
As far as I can see from the records, the data as it first comes out is always revised lower, within 3 months, data is not accurate for the current months. This means that both the YOY and the MOM percentages are different if you checked again in 3 months, but the new media never reports on the real revised data. Here are some of the results after checking with revised data for both the beginning and the ending months, June and July may be revised still lower next month:
Original report Revised report (my calculations)
July -21.6% -26.1%
June -11.1% -14.2%
May -5.9 -16%
April -5.7 -6.7%
March -7.2% -13.9%
Feb -13.4% -16.7%
So the actual change appears to always be lower than what they report in the news. The Census Bureau covers themselves by saying that their results are accurate +-10% or more, but I have to question the usefullness of a 5% that is +-10%. Pretty wide range of accuracy there.
But the headline said new home sales were up unexpectedly last month — it did not mention anything about any 17.4% YOY drop. I am so confused.
yes. it is like a never ending story.
i assume when the yoy comparrison was advantagues they would have put this in the headline.
i´m just guessing…..
it would also good to know what the july revision was. maybe they revised it down so they can show an increase m/m
would be no surprise.
The july was revised down from 1072K to 1009K.
thanks.
not surprising
“I am so confused.”
LOL.
“nehmt die incentives von im schnitt 10% (in der spitze bis 30%) hinzu und das ganze sieht noch unerfreulicher aus.”
Sicherlich! Wie sagt mann auf Deutsch “liar’s bias?”
oh.
copyed from my blog
we have no such a term. but i´m sure when we are in the danger of a bursting bubble we will create a marking….
As fur myzlfen, I zink dat zer shuld be einen kommen dikzionarien uf der termz dat relaten to das snakez off der mortgage und realty buzinezzen. Zen ve vould not haf to tranzlaten hieren. Neferzelessen, pleaze keepen uppen yur gut werken offen!
Ich bin laffingen.
(The “bulletin” is a visual sound-bite that appears on top of this marketwatch.com story about coping with condo-investment hangovers… Go buy some homebuilder stocks today, because the new home market is picking up again!)
bulletin
U.S. NEW-HOME SALES SHOW UNEXPECTED AUGUST PICKUP
REAL ESTATE
The aftermath of condo fever
How to cope with a condo-investment hangover
By Amy Hoak, MarketWatch
Last Update: 7:50 PM ET Sep 26, 2006
CHICAGO (MarketWatch) — People camped out for the chance to buy a unit in Radius, a condominium development in Hollywood, Fla. The building’s 285 units sold out in just over 10 hours — half a year before construction was even set to start.
But that was in the summer of 2004, when the red-hot condo market was peaking and money could be made by investing in condos expected to quickly appreciate. Units were often on the market for resale as soon as they were completed. It’s a much riskier proposition to flip a condo in some of today’s cooling markets.
http://tinyurl.com/rn89c
More supply — Bring it on!
Pipeline is still pretty full and needs to be emptied out at whatever price the maket would bear.
Jas Jain
Someone should come up with a two page, short-but-sweet, fact-ridden pamphlet on David Lereah, showing his two different book covers and a chronological list of his quotes with facts about the market, and make it available to us so that we can print a stack of them out and plop them down next to the sign-in sheets at open houses across America. More people should know what a lying, unethical jerk this guy is.
#1 is his contention that home prices have **NEVER** dropped, YOY, on a national basis. He repeated this over and over again, until they dropped on yesterday’s report. Now, we seem to have had 6 national price drops since the Great Depression — so as not to scare the sheeple into thinking it’s anything to worry about. See, they’ve gone down before, and they ALWAYS go higher over the long run!
CARenter — excellent point. None, until it’s obvious, thereafter it’s just one among many. Propaganda at its finest.
A sign of the times: Agassi will make his next career in real estate…
http://go.reuters.com/newsArticle.jhtml?type=domesticNews&storyID=13593662&src=rss/domesticNews
Armani did the same a year or two ago.
Saturation in most businesses as everyone gets into every business they can to grow at all costs.
Low rates always create huge over-supply and then we have to go thru a long depression to deal with the over-supply.
American consumer is over saturated already.
Jas Jain
At least Armani’s timing was a bit better. Hopefully Andre will, after reflection, focus on the 2010+ market.
Need opinions/insights. Sorry to use this forum as a self-help group but hey, we’re all devoted to an ideal/cause so it gives us something else to voice off about. For a while I’ve been a fan of a particular house (I drive past this house technically every day on the way to the train and back). I know my GF has utterly loved this house since we’ve been together (over 9 years) for even longer as she’s lived only a mile away from it for 20 years. We’d always hoped that when we were ready to buy it would somehow be available (its been owned by the same people since before I can online search its records - back to 1997). Now, I’m a firm believer in the bubble but perhaps I’m just too young and too much of my adult life (with actual bills and money involved) has been in the bubble and I cannot seem to convince myself that this house will drop more than 20 percent off its current price. Therefore, I’m toying with the idea of offering a 20 to 30 percent lowball on it, but my bubblelistic nature still worries that (presuming they negotiate it back up a bit), I’m catching a falling knife or such. Its located in Shrewsbury, a rather wealthy area on the North Jersey shore in the nicer sections where I presume incomes actually can sustain such prices. The only mortgage I can find on the property is for 250K back in Aug05. Zillow prices at 510K but that is due to tax assessment as it hasn’t been sold on Zillow’s record. Currently listed for 800K but has sat for quite some time. Even including a tinyURL link to it: http://tinyurl.com/kkhrr
The only serious probs I see are sticker shock with payments (my rent is infinitely cheaper but that’s because I chose a simple apartment far far below my means in order to save up my downpayment faster) which would put a cramp on personal expenditures… heck, I’ve always completely talked myself out of this already…. either way, please finalize this convincing by telling me its a bad idea
Don’t know what your future plans are, but if they include kid(s) make sure you can afford the house payments if one of you stays home with it/them for a while. Then when and if you go back to work, you’ll need daycare or a nanny. Kids are wonderful, but not cheap. With private school, lessons, food, medical, college fund, etc., we spend more on our two kids than our mortgage payment.
It’s not bad if you like that style but 800K? No freaking way. No way, now how, no way NO WAY. What I’d do if I was interested is get the sellers to allow you to send an inspector in (tell them you’re interested in making an offer) and tell the guy to find EVERYTHING that’s wrong with it or outdated. Then present them with a long list of stuff that’s wrong + a 35% or more lowball offer.
Go ahead and make an offer based on what you would like to pay, and can afford to pay, I am guessing not more than $500K. I don’t think it would be worth it to make a list of everything that is wrong with the house at this point because they will almost surely reject your offer right now. The only explaination you need is that your budget for a home is no more than the amount you offer, no need to say you think their house is crummy. The purpose is to let them know you are interested so that if no one else offers them more, maybe after some months or a year they might come back to you and say they are interested in your offer and you can start from there. If you buy it now even at a 20% discount I think you will regret not waiting.
“The only serious probs I see are sticker shock with payments”
If you lowball at 30% off, what will be:
1. Your mortgage payments? What type of mortgage?
2. Your property tax payments?
3. Your insurance payments?
4. Your plan when something breaks? Plan for some money here.
OK, with that in mind, how close are you to busting your budget? Will you be in rice and beans mode for the next 5 years? Nothing wrong with rice and beans, except if it will make you feel resentful that you bought the house. *Especially* if prices fall further.
One thing for you and your girlfriend to remember…you are young and have plenty of time. There is plenty of time to buy your “dream home”, and *now* might not be the time. How about do what most buyers are doing…wait a few more months for the listing to sit/’season’?
With 20 percent down, 30 year fixed, approximately 2988 mortgage, if they accept a 20 percent cut. Add to that property taxes of nearly 1K. HO is hopefully 150/mo, rounding off to 4K total payments, making it 31% of gross combined. Only saving grace is no other debt than student loans.
An always present danger of financial trauma is the unraveling of relationships. Figure out if you’re going to get married, since that will affect your (and your girlfriend’s) options in how you can deal with things unraveling. Figure out if making a commitment to property is easier or harder than making a commitment to a fellow biped. The scope of the risk you are contemplating taking can have ramifications beyond which we might currently imagine, getting all caught up in gotta do something now. There it is.
Maz — it’s wonderful to have dreams and it will suck when someday you are so old that there are few left. But I might have dreamed of owning an oceanfront pad in Malibu and that was never, ever going to happen.
You have the singular advantage of youth. You can afford to (a) make a lowball offer consistent with your long-term ability to service the debt and related costs; or (b) just wait and see if a buyer goes underwater and puts it up for sale again. I would guess that $500K is the max you should pay, unless you and GF make a reliable salary that is a lot more than you’ve revealed here. It is soooo much easier to get screwed than to get unscrewed.
A hint of panic is hitting the MSM. Today, on the Yahoo! sign-on page, they have a video clip: “Homeowners Panic Over Falling Market.”
It’s about some woman who quit her job to devote herself fulltime to selling her house.
Yeah, that’s the “cupcake lady” Bill posted yesterday. I think that she needs to be more creative than just making cupcakes for the lookers and offering them water.
Jas Jain
Spin, spin, spin - whatever happened to responsible journalism?
“New Home Sales Rise by 4.1 Percent
Wednesday September 27, 10:04 am ET
By Martin Crutsinger, AP Economics Writer
New Home Sales Rise in August by Largest Amount in 5 Months
WASHINGTON (AP) — Sales of new homes posted the biggest increase in five months in August, raising hopes that the steep slide in the housing industry may be leveling off.
Sales of new single-family homes increased by 4.1 percent last month to a seasonally adjusted annual rate of 1.05 million units, the Commerce Department reported Wednesday. It was the biggest increase since an 8 percent gain in March.
The August rise followed a 7.5 percent plunge in sales in July, which had registered the third straight decline.
The gain was far better than the 3 percent decline economists had been expecting and could signal that housing is beginning to level off after a steep slide. However, the price of homes sold in August fell to $237,000, down 1.3 percent from August 2005. It was the biggest year-over-year price decline in more than three years.”
Aug first cut sales were down 2.1% relative to Jul first cut figures. Calculated risk follows this closely. Recommended.
It’s amazing that when the M2M were declining, but the YoY were up, they touted the YoY numbers, but now with th4e YoY down, and with the M2M up (only because of revision) the M2M numbers are being pushed. I expect this from RE peddlers, It’s their job, but whatever happened to “independent” journalism? Are they so busy teaching them political correctness that they don’t have time for critical thinking anymore?
“It was the biggest increase since an 8 percent gain in March.”
I guess sometimes they do report based on the revised numbers. Originally in March they said that the increase from Feb to March was 13.8%, but now they have changed it to the revised 8%(which is correct, I checked). I bet when the current numbers are revised it will be slightly in the negative for the July to August change, but they won’t splash it all over the news.
They report whatever it is to their advantage to report. Which is why they are useless. Only the underground news is truly useful. Nothing new, except the means.
Recent 2006 Marketwatch Headlines:
Existing-home prices fall for 1st time in 11 years
Mortgage applications fall even as rates plunge
Durable-goods orders unexpectedly fall 0.5%
Housing starts fall more than expected, 3 year low
U.S. third-quarter profit warnings ramp higher
Oil imports lead to record trade gap in July
Rising Inventory of Unsold Homes
And here’s a 2005 Marketwatch article that has some amazingly accurate, albeit premature, predictions on the economy:
http://tinyurl.com/z42j4
Rate hikes may create ‘perfect storm’
Commentary: How oil, housing, and China could all crash
Joe Duarte
Apr 5, 2005
The oil connection
” With the IEA projecting a 25% increase in Chinese oil consumption for 2005, OPEC is continuing to pump at full tilt. Yet, this is a dangerous game, since any kind of significant slowing in the Chinese economy could lead to a major decrease in oil consumption. The bottom line is that a sudden drop in demand would lead to an oil glut.
Conclusion
Assuming that the Chinese economy hits what is an inevitable bump in the road, that would mean that somewhere later this year, perhaps in July or August, the traditional time for financial markets to start stumbling and churning, we could be in for another Asian meltdown, as in 1997’s Thai Bhat debacle.
That could mean that by October, the usual bad month in the markets, things could be fully underway.
If U.S. households find themselves in a cash flow crunch, as a result of rising mortgage rates, and the Chinese economy is suddenly drained of foreign cash, being repatriated to the United States due to the lure of rising interest rates, a significant change of scenario in the markets is not just likely, but inevitable. The shift could start suddenly, and progress quickly, fueled by fiberoptic communications and the flow of information at the speed of light. A sudden slowing of the global economy would also nearly guarantee lower oil prices, a situation that in and of itself, given the geography of OPEC and Russia, the world’s number 1 and 2 oil producers, could lead to geopolitical instability.”
BTW, the Dow is poised to set an all-time record high. Maybe this means something really bad is about to happen??
Here’s an esoteric way to play the housing thang
http://internet.seekingalpha.com/article/17585
I like Yahoo, personally. It’s too bad they blew it on their Real Estate advertising model. When I put my place up for sale on Yahoo, in Spring/Summer 2005, the ad process was easy, the ad prices were right and I was a happy seller. But soon enough I learned that they did not clear out “sold” properties in a timely way, to such an extent that their ads seemed to be unreliable in the “is that place really still for sale?” sense. If they had been as conscientious about fluffing their ads as is realtor.com, I think they could have made a solid go of it. Too bad. It’s never too late!
mish is out with a great piece on houisng
http://globaleconomicanalysis.blogspot.com/2006/09/updating-arrow-after-home-prices-drop.html
What is interesting to me about this ad, and this area, is that it is a retiree haven. Most of the people who buy in Palm Coast, to my knowledge, leave feet first — either to a plot or to a nursing home. So KB is fairly safe from violent retribution in offering such large and soon-to-be-common discounts. All the 2005 buyers can do is shake their canes at the dastards.
Ben, this blog is killing me. I can’t keep up with the increasing number of posts. I have a job. I was surprised to see over 150 posts today in the Bits Bucket by 10 am, mountain time. Lets see…quit job and become a professional blog reader, or stop cold turkey? I guess I’ll give my notice.
“I have a job.”
As you stated, *that* is your problem.
crash,
Same here. I actually stayed up until 6:00 a.m. a few nights because I couldn’t quit. Needless to say that wasn’t going to work over the long run, so have sadly resigned myself to not being able to read all of the posts every day.
Pretty soon we may see a bubble in the number of blogs similar to the hedge fund bubble which is already here…
From:
http://moneycentral.msn.com/community/message/thread.asp?board=YourMoney&ThreadId=60637&BoardName=Hide&header=SearchOnly&Footer=Show&BoardsParam=Page%3D1&LinkTarget=_parent&pagestyle=money1&ForumId=18
Here’s my favorites:
“I put my West Seattle skyline view (from the deck AND the bedroom), 4th floor of 5, CORNER end-unit, IMMACULATELY clean, light, bright and open spaced 780 sq. ft. 1br condo (built in 1997) on the market 19 days ago for $265K - I’ve had 2 people look at it, and no offers or lookers the past THREE weekends! So I’ve dropped the price TWICE now - as of today, it’s listed at $254,990 - I’ve already rented an apartment in a closer-in Seattle neighborhood for move-in the 2nd week of October, and I’m FREAKING. The unit 2 doors down from me, with NO VIEW (unless you stand out on the deck) and crappy carpet and weird use of space sold 3 months ago for $246K after FOUR DAYS . . . the ugly, no view studio unit next door (which smells bad and has been unoccupied for 1.5 years!) sold also in FOUR DAYS, for about $229K. Am I frustrated? You BET CHA, considering that “Brand! New! 1br Condos!” are being sold across the street from me STARTING at $270K!! And they don’t have half the amenities I have!! Grrrrr. I got the place 3 years ago for $177.5 - $250 is my minimum, and it better sell QUICKLY - I will NOT be buying again at any time soon! Thank you GW and all the rest of your useless cronies for screwing over the American Middle Class once again!”
“I purchased my 1 bedroom condo in one of the most upscale neighborhoods in downtown Washington, DC for under $80,000 11 years ago. It was appraised this past January at $315,000. I have had it on the market for over 70 days now at $265,000, which is my 3rd cut in listing price, and it still will not go. I am paying two mortgages and at this point in time, slowly going broke. I have updated all appliances, and installed a state of the art HVAC system. My agent strongly suggests that I do even more renovations such as hardwood floors, granite countertops, etc., I have already had to post pone my wedding to pay for the upgrades that I have already done, and simply can not afford to do anything more. If I rent the place out, and something brakes I have no money to do the repairs which will then make me a slum landlord. Ugh!!!!!! I am dying a slow and very painful death. Any suggestions????”
”
My husband I purchased a home in Vero Beach Florida in March 2005. We moved there for a job opportunity that did not pan out. In November 2005 we decided to move back to Maryland and put the house on the market. We listed originally for 275k (in a new community that was what the builder was charging) After one month of no offer, we reduced the price to 256K. Still no luck. In March we reduced to 239,900. April offered double commission, May offered closing help. June reduced the price to 215K. We can’t go any lower b/c we owe 204K on the Mortgage. As it stands we will OWE money at closing. Everyone in the community is desperate to sell. 168 houses on the market in the same community, all brand new, never lived in, most owned by investors looking to make a quick buck. I blame the builders and the county for the drastic market crash. They did not regulate how many homes investors who were just looking to flip could build. Vero is pretty rural and they are now flooded with new homes. Salaries are really low here (we got the impression you were raking in the money if you were making more then 30K) More empty homes then people moving to the area wanting to buy. In June the builder was just as desperate and sold all their existing homes and lots to a Miami investor for dirt cheap. Rumor has it he will list the homes for 160k, a more realistic price for the income range in the area. We got an offer in July for 180K and were working the mortgage company to arrange for a “short sale” The mortgage company denied the offer b/c they did a market analysis and claim the house is worth 214K. They will not budge on that market value. Then we got another offer for 200K. The mortgage company was willing to consider but wanted the buyer to get pre approved for that loan amount. The buyer had bankruptcies and was going through a divorce so he retracted the offer. My real estate agent was trying to convince us to do “owner financing”. We were so offended that she was so willing to through us under the bus just to complete the sale that we fired her and got a new agent. We now have the house listed at 207k. The mortgage company has “put it out there” that they will consider loan assumption for the right qualified buyer. We cannot list that as a selling point because it is subject to approval by the mortgage investors. We are now considering foreclosure or “deed in lieu” b/c we have been carrying 2 mortgages for 10 months. I think this qualifies us for desperate.”
I read that board, and *my* funniest was this comment:
Here in Dallas, Or it is a very hot market.
I bought my new home in 2002 for 93$ per foot/ with upgrades.
I can sell it for 170$ per foot today
1. I *can* sell it is a far cry from I *did* sell it. Why do these people sit and fantasize about wishing prices? (What happened to the good old days when men fantasized about centerfolds?)
2. Is the house he’s living in! Not an “investment”. Even if he did sell it for near his “wishing” price, where’s he going to live? In a cardboard box?
With mortgages so easy to get, do any people think they were special because they “qualified” for a mortgage, got a house, and then put it up for sale to some sucker who wasn’t able to qualify when prices were lower, but now can–now that prices are higher? The whole logic behind this mania is simply crazy.
Did anyone else notice that this “Bit Bucket and Craigslist Finds” has over 170 posts before 1 pm EST? That is by far a record! I also noticed that yesterday’s last article on California has 345 comments? The increase of posts in is huge! It must mean that more people are coming here and believe in the bubble. We are gaining momentun! Donate to Ben’s blog to keep the servers going!
Ben:
Have you ever talked about “incentives” and how they’re accounted for? It seems to me that there’s something funny going on.
Let’s suppose you get a “free” car, worth $25K
1. Is this a “gift”? If so, then doesn’t the recipient need to pay income tax on it?
2. Is the price “included” in the house? Then doesn’t the selling price of the house need to be adjusted down 25K?
3. If the price is “included” in the house, then how can the buyer justify taking the HMD on the portion that covers the car?
Shouldn’t our Government be looking into this practice?
And is the value of the $25K incentive subtracted off the “current market value” of new homes for purposes of inventory valuation? If not, should it be?
Dear Crabby,
Grrrrr. I got the place 3 years ago for $177.5 - $250 is my minimum, and it better sell QUICKLY.
- Idiot
Dear Idiot,
You want it to sell quickly? LOWER YOUR PRICE. @sshat!
Dear Crabby,
I am paying two mortgages and at this point in time, slowly going broke. My agent strongly suggests that I do even more renovations such as hardwood floors, granite countertops, etc. I am dying a slow and very painful death. Any suggestions?
- Retard
Dear Retard,
Have you thought of sterilization? Failing that, how about, instead of installing gold shower fixtures and giraffe skin shower curtains, you just LOWER YOUR PRICE. And, just a hint, next time DON’T CARRY TWO MORTGAGES. Buttpope!
Dear Crabby,
My husband I purchased a home in Vero Beach Florida in March 2005. We moved there for a job opportunity that did not pan out. In November 2005 we decided to move back to Maryland and put the house on the market. We can’t go any lower b/c we owe 204K on the Mortgage. We are now considering foreclosure or “deed in lieu” b/c we have been carrying 2 mortgages for 10 months. I think this qualifies us for desperate.
- NotTheBrightestBulb
Dear NotTheBrightestBulb,
What, did you take a bottle of stupid pills? How about next time you *rent* in the new area to MAKE SURE EVERYTHING WORKS OUT? Stop to actually think! Maybe you wouldn’t like the area. Maybe your husband would get fired for stealing office supplies. Maybe your neighbors would hate you and continually put eggs up your tailpipe and dead squirrels in your engine compartment. Who knows? Next time, it MIGHT MAKE SENSE TO TRY BEFORE YOU BUY. Furwad!
(Sorry, this was supposed to be a response to Dan’s post above.)
I got the place 3 years ago for $177.5 - $250 is my minimum, and it better sell QUICKLY - I will NOT be buying again at any time soon! Thank you GW and all the rest of your useless cronies for screwing over the American Middle Class once again!”
I LOVE this comment! Because she’s not getting rich quick off Real Estate, she’s blaming George W. Bush!
Now, there are a lot of things you can plausibly blame our President for…but not being able to “get rich quick” by flipping a condo certainly isn’t one of them.
The following link is to an excellent Asia Times article on the US housing bubbled titled, “US housing bubble: Economy in denial”. It provides an easy to understand overview , chart for “Financial Obligations Ratio” (FOR) that tries to capture all forms of debt service payments from lease payments on cars and other debt service payments such as mortgage payments as a percentage of disposable income, and a US dollar index — “These days, foreigners need to acquire more than $2 billion worth of US dollar-denominated assets every single day, just to keep the dollar stable; we do not need foreigners to sell US dollars for the dollar to be under pressure, we just need them to buy less.”
http://www.atimes.com/atimes/Global_Economy/HI27Dj02.html
another great piece from tim und calculated risk
Friday July 29, 2005
Bernanke: House Prices Unlikely to Decline
Bernanke said in an interview on CNBC television. “It seems pretty clear, though, that there are a lot of strong fundamentals underlying that.
The pace of housing prices may slow at some point, Bernanke said, but they are unlikely to drop on a national basis.
“We’ve never had a decline in housing prices on a nationwide basis,” he said
very good story. rest here
http://themessthatgreenspanmade.blogspot.com/2006/09/housing-report-that-mattered.html
‘“We’ve never had a decline in housing prices on a nationwide basis,” he said.’
I am curious about the contrast between Bernanke’s statement made last summer and the MSM story last week quoting the NAR to say that home prices just fell for only the sixth time in the past thirty years. Does The Board take the output from the NAR’s propaganda machine at face value?
I wouldn’t put much hope in Bernanke. I just don’t see a single shred of evidence that the man is not a kissing cousin of David Lereah. The above comment would be a good case in point.
sure, just read all the papers that Bernanke has written in previous years; he firmly believes inflating the money supply is the cure for all problems. There can be no doubt about how he is going to ’solve’ the current mess. And on top of that, he has been programmed at the White House for some time and has been found a loyal Bush servant.
http://www.abcnews.go.com/2020/Housing/story?id=1923550&page=1
Story about overheated Miami
“Buyers Take Risks in Overheated Markets”
So now they tell the masses. Last summer, it was all “Rah! Rah! The market’s hot! Everybody’s getting rich!”
The MSM is at least 3-6 months behind in its coverage.
What’s it doing in your area? In mine:
GSMLS - http://www.gsmls.com
(Garden State Multiple Listing Service)
Single Family Homes, Condo, Coop
(Bergen, Essex, Hudson, Morris, Passaic, Somerset, Sussex, Union, Warren Counties)
9/13 - 18,886
9/27 - 19,108 (1.2% Increase)
CHICAGO (MarketWatch) — People camped out for the chance to buy a unit in Radius, a condominium development in Hollywood, Fla. The building’s 285 units sold out in just over 10 hours — half a year before construction was even set to start.
But that was in the summer of 2004, when the red-hot condo market was peaking and money could be made by investing in condos expected to quickly appreciate. Units were often on the market for resale as soon as they were completed. It’s a much riskier proposition to flip a condo in some of today’s cooling markets.
More resources
on real estate
• Fixed rate or adjustable?
• How much house can you afford?
• Mortgage calculator
• To rent or to buy?
• Should you refinance?
Also see: Real estate section
Sponsored by Bank of America
“You see some of these communities that investors purchased … there are no lights on at night,” said Bill Donges, chief executive officer of Lane Company, developer of Radius, which is scheduled for completion in the spring.
The lack of post-dusk illumination in some South Florida condo communities is a sign that many buyers never planned to move into the units they bought, he said. Their plans now: sweat
http://www.marketwatch.com/news/story/Story.aspx?guid=%7B911A8180%2D1B32%2D4577%2DB89D%2D48887F5AC4FF%7D&siteid=
Check out this steal:
Free 2002 Chrysler mini van with purchase of home:
http://washingtondc.craigslist.org/nva/rfs/213053477.html
It doesn’t get much funnier than that!
To Buy or Not Buy That is The Question
http://tinyurl.com/hz9kf
David
Bubble Meter Blog
agree that it is definitely not an attractive time to buy.
But I’m also afraid that is may not be a good time to buy for at least 10 years. In my country (Netherlands), even if prices decline by 50% housing is still extremely overvalued (currently at +600-1000% from 1990 levels). If homeprices return to the historical trendline the whole country will be bankrupt and everybody will loose. Politicians and banksters will do anything they can to inflate themselves out of the mess which means that rents will be rising strongly. I would love to see the banksters, RE mob, politicians and stupid borrowers pay for the mess they created but it is not going to happen. Good time to buy in Europe? Maybe in one generation, after the EU and ECB have collapsed
http://tinyurl.com/s89d5
test
http://tinyurl.com/s89d5