‘Sellers Are Dropping Prices More Than In The Past’
The Journal News reports from New York. “Early indications from executives of Lower Hudson Valley Realtors associations show that swelling inventories continue to put pressure on housing prices. Preliminary data for Rockland County shows the median sales price dropped 8.4 percent to $490,0000 in August from $535,000 a year earlier.”
“Inventories jumped 47.7 percent to 1,594 from 1,079, while sales fell 24 percent to 165 from 217 in August 2005. Roberta Bangs, the president of the Rockland County Board of Realtors, said the drop reflects a lack of buyers for homes priced over $1 million. ‘The upper-priced homes have basically stopped dead,’ she said.”
“Homes listed at under $500,000 are driving most sales, which helped push the median lower, she said.”
“P. Gilbert Mercurio, the CEO of the Westchester County Board of Realtors said Friday that he’d taken a peek at some preliminary data. ‘I think the inventory is going to climb even more. What’s abnormal is that the sales volume isn’t keeping up with what it was.’”
“The Journal News calculated that Westchester’s months-of-inventory ratio stood at 10.4, putting it within the range of a balanced market.”
“If you count yourself among the skeptics who scoff at talk of a housing bubble, you would have found good company three years ago in one coterie of economists who set out to prove the doom-and-gloomers wrong.”
“‘We were very suspicious of that talk and thought it was a bunch of hooey,’ said Richard DeKaser, chief economist at National City Corp.”
“‘Our initial research found in 2003 that only seven metro areas appeared to be overpriced,’ DeKaser said. ‘When you took the total market value of those markets, it only accounted for about 2 percent of the housing value in the country.”
“‘As time played out, housing prices not only continued to rise but continued to rise at an accelerating pace,’ DeKaser recalled.”
“Late last month, the venture’s analysis appeared to all but sound an alarm about overvalued housing prices. The most recent estimate of valuations for the second quarter found that 79 of the 317 markets were ‘extremely overvalued and at risk for a future price correction.’ Those 79 markets also accounted for about 40 percent of the estimated value of all of the nation’s single-family homes, DeKaser said.”
“So we had to ask the economists: If circumstances led to their relocation to the New York area, knowing that the model estimates prices are overvalued by 21.7 percent, would they buy now?”
“‘If I was moving to your area and expecting to stay for a long time, I would buy a house and forget about all this,’ DeKaser said. And if he only expected to be here for three years? ‘I certainly would not buy,’ he said, ‘because I do not see a reasonable expectation for appreciation.’”
The Courier Post from New Jersey. “‘Two years ago, even my dog could have sold real estate,’” said Anthony Yula, (realtor) in Woodbury. ‘Hang a sign around his neck and get him to bark, and the house would have sold.’”
“Once super-charged, the real estate market canters along at a slower pace today.”
“New Jersey’s resale inventory was 67 percent higher in August than it was in January, Patrick O’Keefe of the New Jersey Builders Association said. ‘Selling this backlog of homes will take nine months, even if no more listings are taken,’ O’Keefe said.’
“Through August this year, 11,865 homes have sold in Burlington, Camden and Gloucester counties, and another 23,805 remain listed.”
“Cathie Galanti in Sewell, says her office has 14 percent more listings now than it did six months ago. Higher-priced homes, she notes, are slipping in value. ‘Prices are definitely not going up as quickly and homes in the range of $300,000 and above seem to to be coming down, about 7 percent within the last year,’ she said.”
“In New Jersey, Drew Fishman wonders if some customers are being scared off by national media reports. ‘I believe the biggest problem is perception, that the market is awful and that some unknown balloon has burst,’ said Fishman, who is first VP of the New Jersey Association of Realtors.”
“Tracy Harris said her buyers seem to be in a wait-and-see mode. ‘They know that the market is slowing down,’ said Harris, who hangs her license in Sewell. ‘They are seeing that sellers are cooperating more and dropping (listing) prices more than they have in the past.’”
‘I believe the biggest problem is perception, that the market is awful and that some unknown balloon has burst,’
What you mean is that it was unknown to you. You should have been reading Ben’s blog instead of Liar-ah’s book
When it comes to equity markets, perception is the reality.
Why do you think stocks go up in a crazy way [like they did during the dotboom era]?
And then you get stock market crashes where the prices come down in matter of hours, if not minutes?
Perception [including greed and/or fear] is what drives the equity markets, both up and down.
- “‘Two years ago, even my dog could have sold real estate,’” said Anthony Yula, (realtor) in Woodbury. ‘Hang a sign around his neck and get him to bark, and the house would have sold.’”
They have finally crossed the line!
Realtors are not DOGS…..or ARE they?
In defense of dogs everywhere, who can howl but cannot speak, I vehemently protest any linkage between man’s best friend and the unscrupulous reptiles of the RE industry.
Well, I love dogs too, but I gotta come to the defense of reptiles.
My dog had his own game show, we called him Bob Barker. Bwahaha. The price is wrong, Bob. Bowoooo!!!
Wish I could link you to an ad running in the Reno Gazette today:
Attention Buyers: Your market is finally here!!!!
YOU COULD BE MISSING THE BOAT!!
Don’t miss the boat again!
No sh*t!!!
Forgot to add the website link:
Realty Executives Reno Sparks
http://www.rers.net
What’s more amazing is that people can’t see the simply math involved.
Why on earth do most americans seem to belive that there’s some new paradigm that will keep property appreciating at 10%/year FOREVER?
That means every 7 years property prices double.
That means, according to the majority of foolish americans, that you can buy any house–it doesn’t matter how much money you have or don’t have–because in 7 years you can sell it and get all your money back GUARANTEED! And if you just want to make a few hundred thou–just sell it in 1 or 2 years!
You have to be an idiot to believe this. In the long term, a necessity like housing CAN’T POSSIBLY increase more than the general rise of wages.
In fact, if you look at studies that go back 150 years or so for established cities, that’s exactly what happens. Actually, the land will track inflation, and the house devalues to zero over 50 years or so. (Probably MUCH sooner with the crap they’re building today.)
The median LA-area respondent to a poll by Robert Shiller (2003?) thought LA-area home prices would quadruple every decade forever (~23%/annual appreciation). No irrational exuberance there…
See, you don’t realize that things are different this time. They’re not making any more land, and the Baby Boomers are retiring, and there are hot real estate markets in foreign countries, with many reinvesting their profits here in the US real estate market.
What are you going to do? Be a renter for life? You’re just throwing away your money.
I’d rather throw my money at a landlord than a bank, as the landlord has something at stake in the deal.
‘I believe the biggest problem is perception, that the market is awful and that some unknown balloon has burst,’
It is actually very well known what happens when a bubble busts. Most everybody remembers what happened when the NASDAQ bubble burst, and also how it ended. Common knowledge.
classic story of affordability, “you can’t move up if you can’t move out”. as the equity in the lower end of housing vanishes, those $900,000 mcmansions are gonna seem awful silly in a few years.
“‘We were very suspicious of that talk and thought it was a bunch of hooey,’ said Richard DeKaser, chief economist at National City Corp.”
—>>>bunch of hooey
—>>>bunch of hooey
looks like a cut off comment? the less-than and greater-than signs can cause trouble with the html.
And the real question is:
Who has $300,000 income to carry the
loans on all these $900,000 McMansions?
The moderator of the San Diego Real Estate Investment Club Forum, aka the SDCIA, must be getting sick and tired of the steady drumbeat of bad news and deepening gloom among soon-to-be-schooled diehard bubble believers. He’s trying to funnel all the negative news into one discussion thread, called something like, “In yet another sign that the market has turned (bad):
Yawn.
How many times must we read threads that start out like this? Those of you that feel compelled to repeat this story ad nausem feel free to post such tales below in this thread -only. Elsewhere such threads will be deleted unless it’s really something new, special, and worthy of discussion. Your own special thread for bubble talk! Enjoy.
Greg
When I woke up this morning I didn’t realize it was Christmas. How could this day be much better? There is a full schedule of football on tap. Westchester County is facing dropping prices in real estate. That is great. I’m so sick of hearing how Westchester will be immune because “everybody in Westchester is rich” and paid cash for their homes. What a bunch of crap. They will fall just as hard as New Jersey, Brooklyn, Queens, Manhattan and every other ridiculously priced area in this city. I guess they will be a little less rich.
Many people in Westchester have mortgage’s and are “affluent” not “rich”, e.g., they have less than $1 million net worth outside of their house and depende on income from jobs or businesses in the $100K-$400K range.
Given this, there will be drops.
We sold Sept 2005 in Rye Brook which is a “median” type of area in Westchester (typical houses $550K-$800K). It was quite interesting really. We had a 2004 appraisal at $550K which was about right or $10K-20K low. Came on the market at my realtor (and wife’s) price of $750K in May 2005. Lot’s of lookers, no takers. In July, we did it my way. Cut to $689K and was under contract in 2 weeks at $670K. Closed in Sept. That house is heading back to $500K by next year, I’d guess. After that, who knows? Could go to $400K or hold in the low $500Ks. Went for $325K in 1996 when we bought it.
Like living there, but it was good to move out at that time.
Army No. Va.
“‘We were very suspicious of that talk and thought it was a bunch of hooey,’ said Richard DeKaser, chief economist at National City Corp.”
Hooey?
hoo·ey (hū’ē)
n. Slang.
Nonsense: “the romantic hooey that always sold women’s cosmetics” (Jerry Adler).
[Origin unknown.]
“The Journal News calculated that Westchester’s months-of-inventory ratio stood at 10.4, putting it within the range of a balanced market.”
LOL! Balanced? Really?
I’d say that 10.4 months of inventory marks a rout on the sellers.
“The Journal News calculated that Westchester’s months-of-inventory ratio stood at 10.4, putting it within the range of a balanced market.”
“Balanced” appears to be a moving target.
That’s why I still say the lower end will hold up better ,but who knows .
I always find it amazing that people think it’s a bad thing that prices aren’t going up . Do these realtors ever take a look at the affordability ratios in their state ? I guess realtors thought the lenders would just put people on loans they didn’t really qualify for . How could anybody think obscene prices were a good thing, (unless they were blinded by making commissions by this housing party ).This 5 year drunken housing party will be paid for during the next 10 to 15 years to come .
“That’s why I still say the lower end will hold up better ,but who knows .”
I actually believe the lower end will be the first to go. This is usually where first time buyers find their home, and given it may take a dentist salary to qualify for even a starter in the near future, potential buyers may not be able to borrow enough to support current high prices.
housing wizard,
what do you consider low end?
The low end prices are different in different states . But just in general anything under 250k might not go down more than 20% where in the higher end the drop might be more like 30% to 50% in bubble areas .
The lower end is just more affordable ,thats all . I do agree with you that even the lower end is higher than it should be for first time buyers .
Wizard –
By your definition, San Diego has no lower end. Unless you are talking about the income distribution (median home price ~ $500K / median HH income
Yeah, San Diego definitely has no low end any more, and so all of it will be squashed down.
I seem to remember that in fact it was the low-middle end that appeared to explode beyond any reasonable value. A house at $500k was much less than half as nice as one at $1m.
median SD HH income
Sorry for the cutoff posts above. The point is “SD median home prices are (or were recently) north of $500K, and median HH incomes are south of $70K).” So thanks to 100%+ home price appreciation in the past eigh years, there is no low end to the housing market.
Yes , that is what the sad part is about some areas now ,they don’t have any low end .
‘I believe the biggest problem is perception, that the market is awful and that some unknown balloon has burst,’ said Fishman
Well, if you see how a property in a middle class neighborhood in overly populated Queens, NY jumps from $399K to about $625K within one year, will you call that an “unknown ballon.”
Are these people in RE as stupid or as blind as a blind and deaf deer in the middle of hunting season, in the NE or are they genuinelly THAT stupid?
That sort of statement only comes from the mouths of people who are seriously dumb.
I believe the biggest problem is perception
That’s correct. I perceive that the price-to-rent ratios are out of wack, and it’s a problem for me.
“So we had to ask the economists: If circumstances led to their relocation to the New York area, knowing that the model estimates prices are overvalued by 21.7 percent, would they buy now?”
Kudos to the journalist for at least posing this question. Every professional real estate mouth should be asked this same question “Would you buy a house now?” whenever they are quoted for a story.
“‘If I was moving to your area and expecting to stay for a long time, I would buy a house and forget about all this,’ DeKaser said. And if he only expected to be here for three years? ‘I certainly would not buy,’ he said, ‘because I do not see a reasonable expectation for appreciation.’”
It is interesting how some of the bullish economists’ views have morphed from “real estate is so likely to keep going up for the next three years that the risk of short-term loss is negligible” to “real estate prices are almost certain to go up over the long run.” To which a hard-core dismal scientist might respond, “In the long run, we are all dead.”
Dekaser’s last comment–that he’d purchase and just forge about the market–seems especially silly, or at least reflective of a class perspective. If you purchase an $800,000 row house (a bargain in the hallucinogenic market of NYC) with 20 percent down, you will pay well over $4000 a month for the next 20, 30 years.
If that same rowhouse drops to $680,000 by next year, you will be paying something much closer to $3000 a month for that same period. That is a strong argument for smart and careful buying, no matter how long the time horizon.
As well, salaries are growing at a rate of just under inflation, so unless you’re 28 years old and the upward arc, you’d be unwise to assume that rising salaries will float all house boats.
That struck me as particularly idiotic as well.
I may not have an ability to time the market with “extreme precision”, yet I know housing is way overpriced. How does staying in a house 10 years make it a good idea to buy at height of a bubble? Sure, in ten years the nominal value of your house may have increased, but what solace is that when two years down the road the house across the street sells for half of what you paid? It’s as if the idea of renting until prices come down to earth (and having money for something besides a mortgage payment) never occurred to these people. Mind boggling.
Not so mind boggling when you factor in the conflict of interest involved with working for the REIC. Especially if you invested in the Florida condo market as well, as David Lereah apparently did.
Required Reading
Sobering commentary from Jim Willie
[url=http://www.financialsense.com/fsu/editorials/willie/2006/0929.html]JimWillie[/url]
“My forecast is for the current housing decline, which is several months along, to become the worst housing bear market in modern history, just as the lending abuse was the most insane in modern history. We arrogant over-indulgent Americans love to boast on our innovation. However, when it comes to housing, our innovation is for kooky devices which enable people to purchase houses who should not. The promotion went so far as to have Fanny Mae advertise on television for minority families of color to participate in the dream of homeownership. This unfortunate group will stand as the last buyers, the suckers. No, the housing market will become a living breathing monster which cannot be reined under control, which will refuse to respond. Its momentum will grow too powerful. A new hobby among writers will be to recount the horror stories. One friend reported that his realtor agent friend in Chicago claims that bids in September simply disappeared. My friend has a brother in the Miami home building sector who reports that people are canceling new purchases since they cannot sell their other homes in transition. In resort locations such as the Outer Banks of North Carolina, banks will not provide mortgage funding unless a property can demonstrate a positive cash flow. My own eyes saw a plethora of “for sale” signs during a brisk bicycle ride on a road bike. No truck-like sluggish mountain trail bikes for me.”
NEW HOUSING FROM 2008 TO 2010
“This is a nasty topic, replete with political overtones, with a hint of the harsh heavy hand of state power directed to exert control during upwardly escalating chaos within our society. Expect creation of debtor prisons in future years, without any doubt whatsoever in my mind. With a collapsing housing market, removed piggy bank with home equity, rising mortgage costs, and struggling wages, our American Dream will fade into memory. The loss of the critically important manufacturing sector has rendered our nation as incredibly vulnerable to a housing decline, one which is at our doorstep. Housing prevented a recession and nourished the sick USEconomy, but now housing has turned into sour milk for that nourishment. The need will arise to house people who have lost their homes. The need will be acute to prevent bands of people invading the wealthy suburbs, to seek assets in survival mode. The more pressing national need will be to create a new renaissance of a manufacturing sector. With forward vision, one can see debtor prisons with paired mfg sites, ready cheap labor, and worker reinstatement programs so as to exit the dire straits of bankruptcy. Its laws have changed, much less liberal nowadays.”
no comments?? this is very important …
“With forward vision, one can see debtor prisons with paired mfg sites, ready cheap labor, and worker reinstatement programs so as to exit the dire straits of bankruptcy.”
This is just plain silly, and won’t happen, as the negative political ramifications will prevent it.
Oh?
You might want to take a look at the ‘detainment camps’ scattered across the country.
http://video.google.com/videoplay?docid=277826260716604258
You mean like the political ramifications from what started all of this credit fiasco, be it home loans or credit cards? Or maybe you mean the political fallout from the new BK law. Or maybe you mean the political fallout from the 30 million illegals making our most of our metro areas “shanty towns”. Yes I see the blood in the streets right now…
Seriously Stucco, I agree with most of what you post and I have learned a great deal from you and others here, but in my 39 years I have seen the country go down morally, ethically, decreased standard of living, corrupt politicians, baby-killers be set free to kill again. And so far I see no political outcry, just more idiotic brainwashing and mudslinging: “no the Democrats did this”, “no your Republicans are such and such”. With the vast majority of America either illiterate or drugged up on Meth, liquor, beer or prescription drugs. Most people are just worried about feeding their offspring tomorrow (including me).
Nothing that happens anymore shocks me. And the apathy is deafening. I think if they just started rounding people up and taking away their guns there would be a few that would fight back, like me, but ultimately our country is F’d.
Further, what do you think is going to happen with this coming bailout. We all know that here and on other blogs people have mentioned that there is already talk of a bailout. So when that happens and banks and borowers are taken off the hook for their foolishness and/or fraud, do you think the foreign interests that buy our bonds and watch the dollar take a 75% (est) haircut are just going to sit ther and take it. Or is the currently silent, but still military training Red China going to decide to use their military to persuade us to uphold our end of the U.S. Treasury bargain?
I wouldn’t rule anything out right now - way too early.
I’ll comment on the second half of the article. Great writing. I’m not sure on if debtor prisons will happen. More likely there will be urban chaos in other forms: looting, for one. The smart people with wealth (gold, platinum, money overseas in tax havens) will look like the downtrodden when they have to be among the downtrodden. Survivability will be the game. Millionaires who know other millionaires should band together and form communities in outlying areas (such as “flyover” country), and defend one another in case the bands of people invade their areas. Night vision goggles, large dogs, lots of ammo, and 24/7 security or lookouts is what it will take. Usually those people who saved diligently happen to have strong ethics and enough smarts to defeat the bleeding gum meth-heads who try to invade their turf. Smarts will always defeat drugged-out zombies. It may not come down to this scenario. Another possibility is that one may be able to survive in upscale urban areas in the best of the existing gated communities the same way - by organizing 24/7 patrols among tenants. Cities will always have the advantages of having the best medical facilities and other services at lower cost than the rural areas. Howard Ruff years ago had some good advice about food storage. Even renters can survive food shortages if they rent a place with a garage, or even a large enough apartment and store dried food and water jugs in an unused room. The key is to not look wealthy if you live among the non-wealthy. I think I will start checking out four-day weekend trips into the Carribean. Phoenix flight to Miami, then from Miami to ?. Plunk down $9,999.99 at a bank (one I will carefully research), establish a foreign bank account, and make return trips 4 or 5 times a year to do the same. It’s all legal.
Might want to check out “Parable of the Sower” by Octavia Butler for one possible scenario in about 10 to 15 years.
FWIW, people are already banding together to form secure communities, more out of concern for Peak Oil than the housing bust. But the premise is the same: When you’re surrounded by people who are hungry, desperate, and have nothing to lose, you are in great danger, no matter how diligently you have saved or how fertile your garden is or how morally you have lived your life.
Bill,
any reason you would avoid using canadian banks? That’s usually just a drive across the border.
“The need will be acute to prevent bands of people invading the wealthy suburbs, to seek assets in survival mode.”
This is why I want a gun. The national guard may be a common site in many neighborhoods for a long time, and the need to recall troops from Iraq.
C’mon guys, this is ridiculous.
The “wealthy suburbs” is where you’re going to see some of the most desperate of the desperates, people who have gone in way over their heads to keep up with the Joneses, and now either don’t have a job or don’t have the income to service their loans.
Are you going to go to the barricades with them to keep their creditors away? If so, you’ve just joined the criminal gangs you so despise.
Today we are having the open house for the short sale of the unit where I live. It will be auctioned to the highest bidder next Sunday. The unit is a 1930’s 2 on 1, 2ed/1bath in front and 1/1 in back. Starting bid is $295k, sale subject to lender approval.
Zillow says the womand paid $365k in feb ‘04, and it is worth 530k now.
The “investor” has neg-ammed this to 470k according to the agent. She is calling us daily to pay the rent, promising that she’ll convince the new owner not to evict us. We (myself & the other tenants) are unanimous in holding the rent at least until we can pay it to the escrow account. We are already on the hook for security deposits in the investor’s possesion, and do not want to get in line behind all her other creditors when she implodes.
I’ll be surprised if she can sell at short sale. These are termite shacks, and all of her “improvements” were poorly done by a druggie boyfriend. They’ll have to be ripped out. New roofs leaking, sidewalks need jack-hammering, ceilings wasted, sloppy siding, everything you can imagine.
Not sure If I’ll pay rent if I get a notice to vacate. Depends on its affect on my credit rating.
Tell your luzr landlord that you are going to start paying rent at the end of the month instead of the first. If she don’t like it, tough.
Today we are having the open house for the short sale of the unit where I live. It will be auctioned to the highest bidder next Sunday. The unit is a 1930’s 2 on 1, 2ed/1bath in front and 1/1 in back. Starting bid is $295k, sale subject to lender approval.
Zillow says the womand paid $365k in feb ‘04, and it is worth 530k now.
The “investor” has neg-ammed this to 470k according to the agent. She is calling us daily to pay the rent, promising that she’ll convince the new owner not to evict us. We (myself & the other tenants) are unanimous in holding the rent at least until we can pay it to the escrow account. We are already on the hook for security deposits in the investor’s possesion, and do not want to get in line behind all her other creditors when she implodes.
I’ll be surprised if she can sell at short sale. These are termite shacks, and all of her “improvements” were poorly done by a druggie boyfriend. They’ll have to be ripped out. New roofs leaking, sidewalks need jack-hammering, ceilings wasted, sloppy siding, everything you can imagine.
Not sure If I’ll pay rent if I get a notice to vacate. Depends on its affect on my credit rating.
My only question is should I put out the cupcakes or the rat traps?
“We are already on the hook for security deposits in the investor’s possesion, and do not want to get in line behind all her other creditors when she implodes.”
That is the reason I zillowed all my potential landlords. I’d be pissed if I didn’t get my 2 grand back.
My vote is for the rat traps but my guess is your *ahem* lovely apt will speak for itself.
Update: Agent is here, says he’s had four calls, including some requests for bid sheets, but no sheets have been returned.
One old guy came through, looked, and is picking up a bid sheet.
Its 12:06, and thins are off to a great start. They have this going on ’til 6PM.
I’m no expert, but I really wouldn’t worry about your credit rating. Last thing this hosed hussy is gonna do is file a rent non-payment report on you. I’d much rather try to hang onto real-live $ as you are doing.
Thanks, I doubt that she’ll be starting an eviction process concomitant with her foreclosure.
It’s now 1:36, and we’ve had another looker. He is interested in an investment property. The agent is telling him that there is no recent sale info, even though the owner paid 365K in Feb ‘04. He is also trying to get him to the auction (and bring your family & freinds!) even if he’s not interested, just so he can get leads on other properties.
A third just showed up. None of these people have agents.
3:00 pm: Just had a broker come through. She’s interested in living somewhere, and letting her daughter use their 1/2 acre home in Bonita. She was about to leave without even seeing both units. Too crowded.
No bid submitted yet.
Bidding is open, no reserve yet subject to lender approval. Round robin on the increases.
Doubt this place will sell, so I’ll have to mail the owner one more rent check before foreclosure. I wonder if my holding back on the rent is what will force the repo?
Well, its closing up now. 1/2 hour early. Not too much interest. One initial bid of 249k - 50k less that the starting bid of 295.9k. About a dozen showed.
I also found out that the owner did a quit claim on the deed to some other guy to avoid unknown legal problems. So it seems that I she “doesn’t own” the property, I can’t owe any rent to her, right?
flaky woman.
Paul
Sorry for hijacking these comments on your blog, Ben. I thought that your readers might be interested. If you don’t object, I’ll make some comments about the auction next Sunday.
danke/thanks