‘For Sellers, Now Isn’t The Time To Mess Around’
The News Tribune reports from Washington. “Home builders are advertising more incentives. ‘Price Reduced’ placards hang below ‘For Sale’ signs. And the house down the block that you’d thought would sell in a few days? It’s been on the market for a few months. For buyers, it’s great news. For sellers, now isn’t the time to mess around.”
“What happened? A rash of condominium projects and new home developments have caused a spike in Pierce County’s inventory, said Dick Beeson, a broker in Tacoma and a director with the Northwest MLS. The county currently has 6,225 homes and condos for sale, a 53 percent increase from last year at this time and the highest inventory for at least the last five years.”
“‘If you drive through Tacoma now, you’ll see a lot of ‘For Sale’ signs that you didn’t see last year,’ Beeson said. ‘It slows everything down. It means buyers are taking their time.’”
“Cathy Reed put her brick Tudor in North End Tacoma up for sale in May. In the two years she’d owned the home, Reed did a lot of work. But the competitive market forced her to pay even more attention to details, and reduce her price three times, from an asking price of $479,000 to the sale price of $399,000.”
“‘Every little detail had to be right,’ Reed said. ‘That wasn’t the way it was last year .’”
“Builders selling new homes are also offering more incentives in hopes of sealing the sale. Michael Dattilo, director of sales for Puyallup-based Premier Communities, said his company is seeing more people pulling out of agreements for new homes.”
“‘It’s either the investor that bought anticipating a bull market and great returns or the buyer having severe second thoughts,’ he said. ‘In the current market situation, there’s a lot of fear and apprehension.’ Dattilo said that comes from people relating concerns about the national real estate market and fears of a housing bubble to the local area.”
The Peninsula Daily News. “Clallam County’s real estate market, industry professionals say, feels the ripples from the rest of the country, with a few twists.”
“Sellers who ask too much for their homes may be contributing to the slowdown in the pace of sales, said Quint Boe, broker in Port Angeles. ‘If you’re priced too high, it’s not going to sell. We’ve seen a lot of price reductions on listings that were overpriced to begin with.’”
“From January to mid-September 2005, 883 homes sold in Clallam County. During that period this year, that number fell to 711, according to the MLS.”
“In the sunnier eastern part of the county, prices may lower a bit due to the building boom, said Steve Marble, VP of the Sequim Association of Realtors. ‘We don’t have a dead market. But we don’t have the robust market we had,’ said Marble. Unrealistically priced properties are the ones that may come down first. ‘The next big boom may be a few years off,’ he added.”
The Kitsap Sun. “The 439 homes sold this past August is a 10 percent drop from the 489 sold a year ago. South, Central and North Kitsap all saw double-digit percentage drops in the number of homes sold from a year ago.”
“Jo Schaefer, who has been doing appraisals since the 1970s, said houses appear to be taking a bit longer to sell than they did a year ago and that year-to-year increases seem to be down a few percentage points.”
“Associate broker Julia Carns said she’s seeing price drops. But they’re coming from sellers who were hopeful the market conditions from last year hadn’t gone away. ‘After the first of the year I noticed an increase in price reductions, but not a decrease in appreciation,’ Carns said. ‘It was just the seller expectations weren’t being met.’”
“Carns said some sellers might walk away from a sale disappointed, because they’ll make less of a profit than they thought they would.”
“Bainbridge Island is adjusting to the slower market in its own way, with the highest-end homes apparently more in demand. They are second homes for some of her buyers, Maureen Buckley said. And many are from out of state, living in those homes only part of the year. ‘We have a lot of clients from Hawaii,’ she said.”
“Surprisingly, the segment of the Bainbridge market that’s feeling the slowdown most is the lower end, she said. Bump-ups in interest rates have caused some buyer hesitation for homes selling in the $450,000 to $600,000 range, even though some of those asking prices may have been slashed.”
“‘A lot of people are just waiting the market out,’ Buckley said. She and (broker) Rod McKenzie agree that island home prices have had some of the fluff removed.”
“Major condominium construction in Winslow will add about 350 units to the island market by the end of the year. While the rush to buy them has subsided, people who bought them as investments are now putting them on the market. ‘The key now is whether they sell or not, with the slowdown,’ McKenzie said.”
“‘If there is a slow-down, says Claudia Housley, a real estate sales associate in Shelton, it’s likely just folks pausing to assess the situation due to increasing speculation of a housing bust. She says many of the buyers she sees are investors looking to cash in on a market correction. So they’re looking for bargains.”
“For buyers, it’s great news. For sellers, now isn’t the time to mess around.”
For buyers, now isn’t the time to mess around, unless they want to catch a falling knife.
And catching the falling knife can occur even if the ‘rent vs. own’ equation appears to make sense. If you put 200K down on a 500K house, the 300K loan at say 6% is about $1800, PI. If rates increase to 10%, 200K borrowed costs about $1800, PI.
Your 500K house is now worth 400K to anyone else. Oh, and you’re paying 100K more in property taxes.
Oops …..
You know what I want to see????!!!!! What did they buy it for, when did they buy it, what do they owe and what are they now demanding!!!!!!! There is a madening mystery to this thing and to postings that only tell half the story. What is the profit (or loss) margin so that people participating (or not) can intelligently make decisions. A price is worthless when out of context!! Sorry for the rant. . .
Good rant. The problem of ignoring recent history and focusing on up-to-the-minute “comparison shopping” strategies has a lot to do with the mania. People see price increases of 100%+ over a five year period as somehow permanent, despite a mountain of historical evidence to the contrary.
I am a small Mom & Pop developer building around 10 to 20 units per year. Finished a 17 unit townhome project in 2nd quarter of 05. In that project the first phase units in 2003 went for $180,000 and the last units in phase 3 went for $340,000 in early 2005. After attending a housing forecast confernence in Washington DC I elected not to build. I have been sitting at home for over 1 year now. Not wanting to build at high construction cost (material & labor) with housing prices falling. Hoping to see material(lumber,concrete,steel,drywall,etc.) start to fall heavily in 07. Labor should also drop nicely in 07 as work becomes hard to find. If that happens I will start construction in 4th quarter of 07 and hope to build for $80 to $90/sq.ft instead of $120/sq.ft that it cost me on my last project. Therefore I can price low and still keep my margins in 2008 & 2009. Further I will build units for sale at $200,000 or less in Tampa. I think buyers are there at that price even in a weak housing market. I see further downward movement in 07 and 08 before it levels off.
‘What happened? A rash of condominium projects and new home developments have caused a spike in Pierce County’s inventory, said Dick Beeson’
Alas, the shortage myth dies another death in Washington.
SoRry, It’s just a ‘PAUSE’…
“‘If there is a slow-down, says Claudia Housley, a real estate sales associate in Shelton, it’s likely just folks pausing to assess the situation
“‘If there is a slow-down, says Claudia Housley, a real estate sales associate in Shelton, it’s likely just folks pausing to assess the situation.”
This made me laugh hysterically. Shelton, of all places, is a tiny logging community way down south of the Puget Sound outside of Olympia, with a population of 10-15k. The median income is like 35k max. Homes as recently as a year ago could be purchased for less than $100k easy. Lots of rundown houses, poor people on public assistance, drugs, etc. But prices, as compared to Seattle, etc. were so cheap that speculators showed up, and ran them up. Problem is, other than the locals, nobody is going to want to live in Shelton. There is nothing there! It is way, way too far to commute to Seattle, so Olympia is the only option (or possibly an insane commute to Tacoma). But nevertheless, speculators bought in based solely on the old “cheap compared to” nonsense. When are these mental midgets going to realize that local economies dictate home prices?! Get a fricking clue. This whole market is based ENTIRELY upon false demand. There has been no population explosion. There has been no wage inflation. There has been NOTHING to justify it period. GAME OVER. FB’s lose.
Wow Shelton! I lived on Olympia for about 15 years. Shelton! You have got to be kidding.
Are few weeks ago, my wife and I took a trip through Shelton to the Pacific Coast in a area called Ocean Shores, WA. It is located along the coast just north of Grey’s Harbor. I could not believe all the For Sale signs, new condo projects and homes being built or just completed in the area. I’m not kidding you, it was harder not trying to see a For Sale sign than it was seeing one. I felt like getting out a video camera to shoot footage just to capture the moment. If I was a buyer, I think I would not only be overwhelmed but downright frightened by all the stuff for sale. From what I hear, there are only 2-3 good months of weather in the area (and we were there during the good months) and I didn’t see any signs of activity (people looking for homes). The home sale activity was like a ghost town.
Remember when Erik Estrada was hawking Ocean Shores property on those late night infomercials? That should be enough to raise even the most stubborn of eyebrows. Not only is the weather lousy for most of the year, but there is absolutely nothing around there. It is totally void of culture, restaurants, activities, and anything most people are looking for. It is not surprising to hear of how many homes are for sale as most people who purchase out there end up wanting to leave after a few years. What I do find startling, is just how many stupid spec builders there are right now.
Estrada’s doing the Texas land ‘mercials now, just saw one 2 days ago.
And so is Chuck Woolery, BTW.
Yeah, but there’s only one Shelton.
“She says many of the buyers she sees are investors looking to cash in on a market correction. So they’re looking for bargains.”
It never fails. No matter whether its houses, stocks or tulips, there’s always dopes that think their getting bargins the whole way down. That’s why the correction will take years, all these fools have to get blown out too.
I have been keeping a spreadsheet of listings (combined SFH, TH, and land) for King Country (Seattle area) since 5/7 and this last week had the biggest spike in listings since I started the spreadsheet.
Date / Listings / Delta / %
07-May / 7302 / /
15-May / 7486 / 184 / 3%
21-May / 7665 / 179 / 5%
11-Jun / 8099 / 434 / 11%
18-Jun / 8154 / 55 / 12%
24-Jun / 8352 / 198 / 14%
01-Jul / 8417 / 65 / 15%
08-Jul / 8758 / 341 / 20%
15-Jul / 9057 / 299 / 24%
22-Jul / 9139 / 82 / 25%
29-Jul / 9044 / -95 / 24%
05-Aug / 9059 / 15 / 24%
12-Aug / 9191 / 132 / 26%
19-Aug / 9348 / 157 / 28%
26-Aug / 9442 / 94 / 29%
02-Sep / 9363 / -79 / 28%
09-Sep / 9597 / 234 / 31%
16-Sep / 9959 / 362 / 36%
21-Sep / 10121 / 162 / 39%
28-Sep / 10639 / 518 / 46%
Source: Bob Glover RE site.
This does not look like the normal “fall” drop in inventory at all. I would say people in Seattle are now just waking up and starting to see if they can get out with at least of some of their big gains intact.
Let the games begin….
I am tracking that poor flipper Seattle Eric’s listings on the internet. He has already reduced one house (in west Seattle) by almost 10k (to $639,500) in the last week. He purchased the thing for $450k and put a boatload of money into it, paying a contractor for virtually everything. New roof, siding, kitchen, flooring, etc. I think he is gonna take a bath as the $450k he paid for it was already bubbly.
Bantering Bear, do you know how much he is ‘into’ this house for with all the fix ups. I thought I read he sold one of his houses…thanks…
No. He doesn’t disclose that. But conservatively, considering the 4 months of payments on the loan, and the extensive work done (materials, labor, permits), he has to be into it at least 100k. Probably closer to $150k.
Seattle Eric has made the neophyte mistake of spending way, way too much money on renovations. So far, he’s been bailed out by insane appreciation, but that’s about to end.
Yeah, Seattle Eric doesn’t miss a thing. He goes all out with professional photos, staging, baking cookies, you name it. Unfortunately he did not go all out with his investment strategy, relying entirely upon insane appreciation, and a buyer with the common sense of a turkey.
But that’s OK. The cash-flow from his Buffalo Section 8’s will allow him to sit out any temporary decline.
Keep us posted on Seattle Eric. He won’t allow comments on his blog, http://www.forsakencraft.com/proof.htm, from “non members”. It looks like there are some hints of concern (panic) in his latest listing. He appears to be underwater by at least $20K on his recent flips but will solve his financial problems by spending $252K on a lot in Mexico (!!). Good luck with that. I didn’t think foreigners could even buy land in Mexico. I thought you could only buy a 99 year lease or some such thing.
Sorry, wrong link. Seattle Eric’s blog is at http://seattlerei.blogspot.com/
Looking at Seattle Eric’s 9/28/06 blog post (see corrected link below), he has decided to sell the Mexico property to cover the losses incurred by his house-flippi- uh, I mean property investments. Kudos to him for being honest enough to share how he is doing with this, be it in the red or black.
This Sunday’s Seattle paper was remarkable for the high number of homes over $1 million for sale; mostly high-end East Side neighborhoods, where in the past you’d see one house in each ‘hood for sale, now 3-5 in each area listed. Only one admitted a ‘price reduced’. I don’t know if they’ve been taking price reductions on MLS.
Some realtors will blame the exceptionally good weather again. People in Seattle are different that they only go out to buy homes when it’s raining?
I have been tracking north Snohomish county (only for about 6 weeks, though) and I have noticed a jump in the number of listings, too, over the past 2 weeks. I think it is up about 40% in a sudden jump. (I mean each week is seeing about 40% more listings than before, inventory is not up 40% (yet. At first I thought it might be a one week deal, but it is still going on.
Great stats, SeattleMoose! A guy I knew just bought his house for $700K on the EastSide a month ago. He wanted to rent it out for a year or two before flipping for a couple of hundreds thousands. Now he can’t find a renter, and he’s paying two mortgages. He sees prices going down around his hood. As a result, he’s fixing up his newly bought house in order to list it for sale. With the market is tanking in Washington state, I think it will take him at least 6 months to sell. After all said and done, his most optmistic, wishfull thinking haircut would be around $70K loss. It will take his family many years to make up for that kind of loss.
And that’s a very good and unappreciated (by the MSM) point. I make a fairly high salary and save about 20% of my take home pay. If things go well I can save $2000 a month. That sounds great but it’s only $24K a year. If I took a $70K haircut on an “investment” property that would mean 3 years of savings for me. And I’m betting most FB’s can’t save $2K a month. It will take them a decade or more to recover from a loss of $70K.
“The next big boom may be a few years off”
Define “a few years”. Actually, the next boom in real estate might not occurr again until 30 years after the next baby boom - whenever that will be.
Demographics was also a big contributor to this bubble. And it is well known that the baby boomers have contributed to extremes in the market place ever since we saw the light of day.
Interesting point. It is worth noting that demographics was a key factor in the second-greatest period of US real estate appreciation since 1890 as well, which was the post-WWII period when returning servicemen were forming households and getting the baby boom underway.
It’s worth noting that the Texas housing bust actually seemed to suppress price increases far into the future. Maybe because people developed such a fear of housing. I remember around the time I was going into college people still thought of owning a home as a financial death sentence.
I can see the same outcome occuring here if we have a deep, protracted bust accompanined by a recession. It looks like the probability of this scenario is increasing.
Mr. Vincent, your comment contains the seed of genius.
Can’t you see those CNBC goons jumoing up and down after they start seeing the birth numbers — after all these FB’s and flippers starting having kids like mad — to bail them out of their own mess!
Like farmers used to, the way out of the current housing crisis is for all of us to have ten kids.
Here in Bellingham you see countless condo projects in the works even though the market has softened. And still more in the planning stages, including the 23-storey building (which is large for here) that’s ony half pre-sold.
Prices on SFHs too have flattened. From what I see, not a significant drop yet. I talk to a lot of Cali transplants that are brand new.
We’ll see how they feel after the impending six months of drizzle and clouds.
Met a CA equity locust last Sept in a Kirkland apartment where I was living. Retired, single, and loaded. She spent one winter here and decided she had had enough. Moved to LaJolla and bought a condo.
With the CA equity locust spigot now turned off, flippers trying to dump their flops, RE industry corrpution being exposed, and the media starting to jump on the “bubble is bursting” bandwagon….expect price decreases SOON.
Single and loaded? Did she leave a forwarding address?
You dont’ want unless you are a babby boomer too
It was a delightful dark cloudy day in the high 50’s yesterday. Summer is gone. Assume the fetal position locusts!
My husband came up here from California 27 years ago to go to school. He met me (a native webfoot) and never returned home (except to visit). After all these years he still hasn’t gotten completely adjusted to our dark winters. I don’t see how very many people from Cali would stay if they don’t have family or friends here.
I agree with you about that. I grew up in Everett and then went to OSU (the Oregon OSU). When I left Everett in the late 70s I thought it truly was Gods country and I would definately return. However, after a few years in San Diego and then later returning on a visit to Everett, I immediately knew I would never go back to all the gray days and rain. Once you have had a taste of constant sunshine, the drearines of the Pacific Northwest is not very appealing, even with it’s natural beauty.
I moved to Kirkland (East side of Seattle) a couple of months ago and had a nightmare finding an apartment to rent. Everything was literally 100% full - no vacancies. With the help of a few friends scouring the internet and making calls I found a place to rent. The apartment manager told me that what had happened was that the area was undergoing a trend in which people were selling their houses and moving into apartments.
I’ve been tracking inventory up in Whatcom county (WA- next to Canadian border) and am a couple of weeks away from YOY comparison:
10/10/05 2,102
01/04/06 1,951
09/28/06 3,488
These are all types of properties for all of Whatcom county, per Keller Williams RE web site.
Under the house for rent section of the paper I’ve come across a couple of sellers turning to “plan b”, willing to take the house off the market and lease if for a year. Have also seen a couple of rental listings where they only want to give a 6 month lease!
jj in Bellingham -
If you read this, can you give the name of a couple of good asian restaurants in Richmond, BC? (I saw your post under the Fl rental thread).
WArenter
I live in Vancouver so I don’t dine too often in Richmond, but you might want to try this place
Top Shanghai
Unit 120, 8100 Ackroyd Road, Richmond
tel. 604-278-8798
I don’t know the place personaly but my Chinese student recomended it. Buone Apetite.
krisb-
Thank you for the suggestion. Any good restaurant in Vancouver would be of interest as well.
for cheap food you can’t beat Hon’s Wun Tun House.
101 - 4600 No. 3 Rd, Richmond
Tel: 604-273-0871
for really excellent Chinese food try Shanghai River
110 - 7831 Westminster Hwy., Richmond
Tel: 604-233-8885
Here’s an online guide for Vancouver restaurants:
http://www.tasteof604.com/
Betamax
Thank you. The amount of good info available from this blog is just amazing!
“Sun Sui Wah” google it, directions on the website! =)
Another problem for the Cali. people in the Northwest is that last year was the first normal winter in about seven (very prolonged drought), so people who’ve moved here have no idea what winter is usually like here.
Let’s see how they tolerate a really wet Northwest winter, the first time we have one…
I believe it’s an El Nino Year.
Amazing that speculators are aleady looking for “bargains.” Washington home prices have just gone negative and the inventory is skyrocketing. The inventory data are available on many web sites. I find it incredible that new speculators are already looking for “bargains.” Are these the same ones who are underwater elsewhere, or is this a new cohort of suckers?
Smart investors. They buy when everyone else is selling and sell when every one else is buying. Since they’re the only ones shopping, the smart ones get the best properties at the lowest prices, before most people realize the market has turned again. This downturn will reach bottom before mid-2007, and as usual the MSM and even the die-hard negative bloggers won’t realize it right away. The true negative die-hards will NEVER acknowledge the market is heading back up again, but they’ll call it a momentary statistical aberration or a “dead cat bounce.”
Bill,
I agree with everything you say except for mid-2007. Mid-2007 is only when ~1/3rd of the ARMs reset. This downturn will reach its maximum rate of price decreases about then. The true bottom? Earliest 2008. Most likely the bottom in nominal dollars in 2009, real dollars in 2011.
Neil
But escrow people will know.
Bill in Carolina, that’s cold. I hope you find your GF. Probably waited too late though.
Bill. It sounds as if you believe prices are going to drop for a brief time and then quickly reach dizzying heights again. I disagree as I see future housing prices dictated by a true market of end users, not speculators, who actually use the homes for what they were created. I highly doubt this madness of the last five years is the future in single family homes. God help the American public should it be.
Bill in Carolina is who I am responding to.
In my city on the California Central Coast (Santa Maria) prices are indeed lower by 10% or so than last summer, but many are starting to sell again. For most of the summer not much moves, but in the last month many I have been watching have sold. I don’t know if it is a dead cat bounce or just the fact that interst rates are still pretty low. But if they did go down 20 % or more, speculators would be back in like wolves. A good friend of mine is a realestate broker here and has said most of the speculators have been lowballing sellers with offers 20% below asking price, most sellers don’t even bother countering those offers.
That’s a riot, Bill. Thanks for the laugh.
Looks as though someone got caught with too many homes and not enough income.
I am in Wilmington, Bill, and I know that there is no way people can afford the homes here. The property tax bill is about to readjust as if Nov 1/06 and hurricane insurance will increase here soon enough. This will result in either a. a revolt or b. an exodus. Either way prices east of I95 cannot be sustained at this level let alone the new level you are wishing. Here’s hoping youmake it out financilally intact.
By Mid 2007, foreclosures will be getting full press and somewhere in the background we will be hearoing “Houston We have a problem”. The credit noose will continue to tighten as easy money goes away. Just this week, the IRS is putting in place software to automate income verification. Liar loans just got a whole lot harder. Nope, I am seeing 2012 at the earliest for any hope of rising prices, and then is may be only a small glimmer as prices are likely to be only half of todays. After all, there was a huge population boom in 2004 which created a shortage of homes driving speculative prices off the charts. That boom is no over and there is no reason for prices not to return to the same levels before the boom or even lower, given the sheer numbers of REO properties that will be flooding the market next year.
Another problem for the Cali. people in the Northwest is that last year was the first normal winter in about seven (very prolonged drought), so people who’ve moved here have no idea what winter is usually like here.
Let’s see how they tolerate a really wet Northwest winter, the next time we have one…
Can’t happen here. Nope, not in Texas! Might be happenin other places but certainly not here in Corpus Christi.
http://www.caller.com/ccct/business/article/0,2537,CCCT_873_5034956,00.html
Think agin pardner………………
I love this realtor quote from the article in your link: “Sperling said people are probably saving money for the holidays and are more reluctant to make a big purchase such as buying a home. Hopefully at the start of the new year they will be looking forward to income tax refunds and the additional money could spark interest in investing in a home.”
That’s a new one…I gotta buy Christmas presents this year so we can’t buy a house until after the New Year. What stupid logic.
-
My estimate is that the top was in June 2005 we will have cumulative price declines totaling 20-50% (depending on location and type of home) over 3-5 years followed by 2-3 years of price stagnation followed by a return to normal long-term historical appreciation.
How to prevent catching a falling knife? Offer 1997 or earlies prices + 3.5% annual compounded.
I still don’t buy all this “return to normal long-term historical appreciation” stuff.
There is no normal long-term historical appreciation for real estate. Real estate is not stocks and bonds. Real estate is a place to live. If you can anticipate where or how people want to live, or have some building or building maintenance skills, you might be able to do better than most people at home ownership. Otherwise, it has far more in common with an automobile or a yacht than with any investment. Do yachts have normal long-term historical appreciation? No, they rot and depreciate, just like houses will.
Actually (although I don’t have the source handy) I believe that over the long term real estate prices track the growth in GDP, about 3.5% per year. There are spikes and dips of course but eventually prices revert to the mean as they say.
People buy houses based on their incomes, so new house prices will track GDP. Existing houses depreciate, and only seem to appreciate because people pay money or labor to fix roofs, driveways, floors, paint, remodel, etc.
Follow-up: Also long-term growth in real GDP is not 3.5%. First off, population increase in US is approx. 1%, so subtract that to get per capita growth. Since WW II (The Golden Era) growth in per capita GDP has averaged under 2%. Since the Industrial Revolution, it has averaged well under 1%.
The more I read Ben’s blog and research on my own, the more I conclude that there is going to be a “kool aid” moment where every seller every where gets hit in the head with reality. Picture somebody yelling “fire” in a crowded theatre. The dot.com of 2000 had that 1 day sof 512 points down and me thinks the realty.com bubble will end the same way. I thought Labor Day would bring some sense to these idiots, but there was too much logic in that assumption. Can any month be worse for selling homes than Decemebr? and if unemployment increases, and ARM’s reset, motivated sellers will have no choice but to compete downward.
“The dot.com of 2000 had that 1 day sof 512 points down and me thinks the realty.com bubble will end the same way.”
The main difference is the housing bubble will end with a silent scream, as housing prices are not electronically posted and disseminated minute-by-minute the way stock prices are. (If a tree falls in the forest and nobody is present within earshot, is there still a sound?) In fact, given the difficulty with selling at anywhere near last year’s prices which we keep reading about here, I am wondering whether that moment may have already passed.
There are probably a great number of people thinking they’ll re-list next spring, and the market will be back.
I bet there is a tendency among owners, to assume home prices are like the price fluctuation in a 401k. Thinking it’s just a “dip” right now, which can be avoided by being a little more patient.
Which is of course a fallacy. Home prices move in a slow, riptide like manner. Once a trend gets underway (rising, flat, declining) it tends to last years… not months.
The people who have the ability to wait and relist next spring aren’t the ones that will lead the market down. Between now and then, the FB speculators that are loosing money need to unload their properties along with real sellers that are doing job transfers, divorce, etc. It seems like if you have the ability to just wait until next spring you aren’t a serious seller.
David - I thought there was a first real period of awakening in the weeks just before Labor Day. Since then, it has been, as a responder says, a silent scream. I think this week has the chance of being another big week of awakening. Gas prices were off sharply and partly because of that the stock market was fairly strong in September, and that made people complacent about underlying problems in the economy. But I expect a weaker market going forward, which will likely allow the voices of fear (i.e., reason) to be heard more clearly.
In California the tax assessments are going out, with the first instalment due November 1. For some GF’s on teasers this is the first time they have to pay out some serious coin, because last year’s taxes may have been rolled into the mortgage.
Took a ride around the neighborhoods close to downtown Dallas today, and there is building everywhere. There are condos going up all over the place, McMansions are sprouting all around the lower Greenville Avenue area of town (trendy, about 2 or 3 miles from downtown), and cranes are all over the central business district.
It’s as if everyone had to get the projects all going at once. I remarked to my wife that all of these different projects will be ready simultaneously at the same time the real estate market is completely in the toilet. This city is toast. Oh yeah, I forgot, Texas real estate is such a bargain.
If you want to see a bubble market gone wrong, check out Boise’s inventory situation. Keep in mind that the average Boise family earns $56k, so you would think that you could find a decent SFH for $180k or so. NOT. You can buy a friggen 800sqft tear-down for $180k.
SFH inventory +199% in one year!!!!
http://www.housingtracker.net
Nobody can afford anything anymore - THANK YOU CALIFORNIA.
If Boise’s median household income is $56K that is only about $4K less than the venerable Orange County, CA.
Yikes.
Did anyone see that special on BRAVO today, a reality show that follows RE agents around Malibu, Hollywood Hills, etc., and shows them screwing all their clients and walking away with big commissions?
I didn’t see the BRAVO show today, but I did take a long run around santa monica today where I saw a bunch of RE agents who weren’t screwing anything!! More unsold houses, more new listings. I really feel for them.
Didn’t see the show, but anyone who’s buying around here right is getting screwed, RE agent or no. The prices are absolutely unreal. I saw a old scraper yesterday asking $2.3xx million. The only way these places are going to sell at these prices is if the Saudi Royals decide to move here.
I guess that’s possible, based on what happened around here when the Shah was overthrown back in 1979. But if the sellers are counting on the Saudis to get their prices, they may have a while to wait.
Did you see the place on Montana, right next to the country club? Asking $2million, i saw that they had a moving container out front today. It was probably worth $500k 5 years ago, now it would take a $250k investment to be converted into a SFH. It is a 2-unit rental, I guess it *might* cashflow at $600k.
No, I walked back down Alta from 26th, so I missed it.
I saw a older duplex on 12th yesterday for $2.6 million, in good shape but wouldn’t pull more than $3000/door, so it’s not worth more than about $750K if it already has been completely re-piped, otherwise less.
Stunning. Simply stunning.
I’ve been asking myself this since I have been in the business. Other then the ocean factor what makes one pay so much for SaMo and Malibu. I have been in some shacks in Malibu and have had to stile laughter when folks tell me what they paid for them. The pricing in those 2 area’s have always been unbelievable.
Hey MIS,
Yes, the prices have always reflected a premium, but it has never been so crazy in the past. I personally feel that a reasonable premium is justified, based on the ocean air, great schools, cool neighborhoods, yada yada. I gotta tell you my walk down Alta street today was like being on a different planet than Los Angeles. After 30 years, I still marvel at how great it is to live here. Which is why I (and my tenants) pay up to live in the area.
Let me tell you a story: a friend of mine is looking to rent a place for his family near Hollywood. So I pointed him to Hancock Park, and they went and looked around. His reaction was “it felt like a cavalry fort in Indian country”. That pretty much says it all.
Santa Monica and Malibu feel safe. The only question is: what is that worth? And of course, compared to what?
I’m with you SM Landlord, a shack here really is worth 2 million. There’s nowhere else in LA that’s even liveable. This area beats the hell out of Beverly Hills, IMO.
posted “Did anyone see that special on BRAVO today, a reality show that follows RE agents around Malibu, Hollywood Hills, etc., and shows them screwing all their clients and walking away with big commissions? ”
Well, it was a reality show.
just got off zip realty for san diego,many foreclosures and short sales.also seeing older homes in the 300k to 400k range.they are getting desperate down there.
Drove from SW Springfield MO thru Battlefield and Republic this evening. New McMansions everywhere! Springfield is the big city here and it is only 150,000 people. Battlefield is a bedroom community, and Republic although further out is similar. Really farm towns turned upside down by builders. The houses are in every state of construction from 3 yr old finished and occupied (some for sale) to recently completed and empty to half finished to basement only to empty lots. Many for sale signs but not as many as I expected. Some of these houses are beyond HUGE. They are two story with full finished basements. And they are all done in the fake chateau style. When did this become the cookie cutter home style? I couldn’t believe it when I watched the Billings video. The houses there are clones of the ones here! No sense of place anymore. Anyway I don’t know what the median income is here in SW MO but it’s one of the lowest in the nation who the heck is buying these things? I know that “everyone wants to live here” but ummm…this place defines nowhere (I’m not knocking it really, but it’s not Santa Monica). All of sudden there are thousands of new families being created? Moving here? Getting divorces and each buying a McMansion? I’m mystified by who the heck is buying these things. I do know that a relative’s boyfriend, age 26 and still in college is contemplating buying a house (he also works full time in a factory). Is it the 20somethings that are now buying that couldn’t before? I bought a apt turned condo when I was 20 but that was after working 7 years and getting a master’s degree.
What I cannot get over is how enormous these houses are. And how the builders managed to incorporate so many differnent facades on one house — stone, brick, vinyl siding, wood, stucco, all together, all on one house, with those little fake stoney things in the corners on the brick to make it look “olde”.
oops mistake I was 30 when I bought that condo. I sure wish there was an edit capbility to this blog.
Hey, at least it prevents revisionism!
While thwarting correctude. But I make mistakes frequently, and would like to be able to correct them.
That’s the problem, there are only a limited number of people in the country who can afford houses this expensive and all over the country developers have been building McMansions for the same relatively small clientele. Even the developers have realized the problem to an extend by billing these as “second homes” but numbers of McMansions built would require the people who can afford it to own not only “second homes’ but third and fourth homes as well.
p.s. here’s an over the top example…remember this is the Ozarks, hillbilly country. And what we have here is an inauthentic FRENCH CHATEAU!
(spelling errors courtesy of the RE Agent)
Listing #617311
$1,500,000 (LP)
2169 Eagle View Dr, Battlefield, MO 65619 Active
Beds: 7 Baths: 8 (6 2) (FH) Sq Ft: 7800 Lot Sz: 3.090ac
Region: CW-CW1
Remarks
Enjoy all the French Country Estate qualities of this elegantly appointed 7800 sq ft home. Tastefully landscaped on 3+ acres in Eagle View Estates. Truly a Gourmet’s kitchen with granite counter tops and furniture style cabinetry. All with table and counter dining open to the lovely hearthroom. 3 living areas with another service kitchen to accommodate media room, game room, family room. Main floor master with 6 other generous bedrooms. 6 full baths with 2 half baths. Separate entrance, to be completed Nanny or in-law quarters. In-ground heated pool.
——————————————————————————–
Gently Curving Circular Driveway with Entry Through Alcove to Private Auto Area. A Large Concrete Pad equiped with Utilities for maintenance on Your Autos. Attached two Car Oversized Bay with a Seperate Single Car Unit which Faces Front.
How the hell can you enjoy 7800 square feet of anything, except open land. Everytime you turn around you’d be blowing out another lightbulb or dealing with a balky toilet or just trying to keep the dust down. What are the chances that at least one spot in the roof is not properly flashed, that at least one part of the HVAC system isn’t F’d up, that at least one of the gutters isn’t properly hung? The only reason to buy this is if you think there is a GF. Nobody wants to live like that, it’s just ludicrous.
Erm, with help?
This is a real mansion, not a McMansion. People who own these things do not change their own light bulbs. That just happens by default. And the shareholders pay for it.
What shareholders? People out here have cows, not shareholders?
I think one of those Seattle Flippers owns this one….LOL
http://labnol.blogspot.com/2005/05/inside-bill-gates-home.html
i live in anchorage and had the unpleasant experience of losing my earnst money this summer. we were going to buy a home at the extreme limit of our budget. we were caught up in the hype and phatasy that real estate never goes down and only suckers rent. it felt to me that if we didn’t buy now, home prices would continue to rise effectively pricing us out.
our realtor was a total slime ball. he would insesently say that it was a sellers market even though sales were slowing down big time. we were inexperienced and dumb and he took advantage of that and tried to scare us from backing out of our offer. he would threaten that even if we loose our earnst money, the seller could make us buy the condo–total bullsh@t.
we then went to our morgage lender and explained our situation that we wanted to get out and she told us the many ways we can get out of the sales agreement and still get our earnst money back. unfortunately, the doors were all closed. but she tried to assure us that home prices were not comming down and that all of these great things were going to happen in anchorage that will make home prices sky rocket and we shouldn’t be scared. she assured us we were going through buyers remorse and that every 1st time homeowner goes through it. she was giving us the old good cop bad cop routine.
we decided to back out and now i feel completely relieved even though we lost over 2 grand. we might have been way over our heads and miserable living pay check to pay check.
now we’re renting for have the amount and are laughing at the whole situation developing in the country. from realtors pretending there is no bubble, to sellers asking unrealistic prices.
here, like the rest of the u.s., people think there are these rich people who want to buy property in their town, like it’s some undiscovered paradise. don’t get me wrong, anchorage is nice, but the winters are long and dark and cold and we are pretty isolated from the lower 48. some speculate that orietals are buying the homes.
the median income vs. the median home price here isn’t balanced. too much supply, no demand points to falling home prices. there are more homes for sale now than anytime this past few years.
Sorry, O/T. We were talking about inflation and bailouts — joking about moving to Latin America. Just saw this:
“Latin American Bonds Rally as Inflation Falls Below U.S. Levels”
By Valerie Rota and Adriana Brasileiro
“Oct. 2 (Bloomberg) — Latin American bonds are posting their biggest gains in more than a year as inflation in Mexico and Brazil, which topped 6,800 percent in April 1990, falls below U.S. levels.”
http://www.bloomberg.com/apps/news?pid=20601086&sid=a0TySn7OqGBA&refer=news
I’ve been driving past this home for sale every morning that sits on SE Lake Washington. It’s a PoS, but has a nice view of the Lake (and of the south end of Mercer Island, where the real money sits). It’s been on the market for 3+ months, then about a month ago a “Price Reduced” sign was added. This morning, a hand-painted sign was added: $649,900. Cheeky!