‘The Economic Picnic Is Over’ In Virginia
The Daily Press reports from Virginia. “The economic boom times are over for Hampton Roads, says Old Dominion University’s State of the Region report for 2006. Slower increases in defense spending this year and cooling of the housing market mean the region’s rate of growth will fall slightly below the nation’s for the first time in years.”
“‘We’re not heading into a disastrous time; it’s not going to be as good,’ said James Koch, professor of economics.”
“The slowdown in the region’s economy will drive push deceleration in the region’s housing market. That market currently sees homes overvalued by about 20 percent, twice as overvalued as last year at this time.”
“That doesn’t mean prices are due to fall, Koch said. It means sellers won’t make as much of a profit as they might have expected, and homes will stay on the market longer. A house listed at $400,000 might fetch $350,000, or sellers might find themselves offering incentives such as closing costs.”
“The high prices relative to incomes, unemployment, building costs and mortgage interest rates also mean that renting has become even more attractive.”
“‘Everyone who wanted to buy a house has bought one,’ said Aubrey Layne, who manages 10,000 apartments and condominiums in Hampton Roads.”
“Housing experts see trouble ahead is for those hoping to sell condominiums. Condominium permits rose to 3,513 in 2005 from 930 in 2000. Koch predicted that people who bought condos hoping to sell them would instead become landlords at least for a few years. ‘They’ll function as apartment houses until the market turns around,’ Koch said.”
“‘I can tell from personal experience, knowing people who have purchased three or four units in downtown Norfolk, and they don’t intend to live in any of them, they’re headed for disappointment,, he said.”
The Virginia Pilot. “‘All things considered, our economic prospects for the remainder of this decade are much less favorable than they have been over the past few years,’ the forecasters said in a sobering assessment of the region’s prospects. ‘The ‘good old days’ have passed.’”
“‘Despite our high home prices, we do not expect a marked decline in the price of single-family housing across the region,’ the report said. ‘Instead, we anticipate market sluggishness that will generate… larger inventories.’”
“The prices of condominiums, they said, are especially vulnerable to declines because of an abundant supply. ‘Builders and condominium owners will find it difficult to sell their inventory and increasingly will rent, rather than sell, that inventory,’ the ODU forecasters predicted.”
“Improvements in military pay and benefits provided a powerful stimulus for the Hampton Roads economy between 2001 and 2004. ‘We’re now dealing with much more modest growth rates in Department of Defense spending plus the removal of DoD assets and personnel from the region,’ the forecasters wrote. ‘The economic picnic is over.’”
“That doesn’t mean prices are due to fall, Koch said…A house listed at $400,000 might fetch $350,000”
I’m sorry, perhaps I’m just dense, Mr Koch, but $350k looks like a fall from $400k. Could you please explain your first sentence?
Who are these people? Either I’m insane or they are: don’t they listen to what they say?
My thoughts exactly. AND…it sets the stage for the next sale in that area…which sets the stage for the next sale in that area…meaning lower comps…meaning falling prices.
It’s interesting how the MSM always run to these “ivory tower” talking head types who are so f*ckin’ removed from what goin’ out onto the street, they don’t have a clue.
I mean WTF-does this economics professor sellin’ on the side?
The true Marie Antoinette “let them eat cake” crowd.
- That market currently sees homes overvalued by about 20 percent,
- twice as overvalued as last year at this time.”
- “That doesn’t mean prices are due to fall, Koch said.
- It means sellers won’t make as much of a profit
I work in sales and am no dummy when it comes to the ‘Spin Zone’.
This guy makes me feel like a rookie.
Agreed.
I can’t figure out what the heck this guy is trying to say; my head is spinning trying to dechiper it, and I have the strong urge to go buy something really expensive because “everything is going to be OK”.
Damn, he is good!
I think the professor means 350K is still 350K. Of course it’s not last year’s 400K but its still 350K until next year when it becomes 300K. Does that clear it up?
Clear as mud.
Thanks Jim!
If you bought at 400k and were trying to sell, it would certainly feel like a fall.
It is called “double speak”
The only thing he had in mind is that prices have gone up so high that even a fall of 10-20% is not a ‘loss’ for those who bought early enough. What a way to spin!
Please repeat after me until blue in the face:
“There will be no crash. There will be no bursting bubble. Prices will not fall, but will return to normal levels.”
Hold it there — what are normal levels again?
Koch is waay…waaay…waaaaay behind the market’s reality curve.
“That market currently sees homes overvalued by about 20 percent, twice as overvalued as last year at this time. That doesn’t mean prices are due to fall, Koch said. It means sellers won’t make as much of a profit as they might have expected,”
OK, now I get it. We can expect a decrease in the *rate of change* of overvaluation. Took me a minute.
“‘We’re not heading into a disastrous time; it’s not going to be as good,’ said James Koch, professor of economics.”
Holy cow, Batman, another economics professor with a PHD given his opinion about the housing market instead of using facts and figures. Hey, professor, your title does not impress me anymore.
Why can’t you using logic which I hope they taught you at economics school and explain to me if there is too much products and too few buyers, prices have to go down. And if the trend of the available product increases, and the trend of the available buyers decreases, and available credit standards are tightening, the laws of economics tells me we might have a major problem, like other bubbles that have occurred in the last 100 years right here in America. Go impress your 21 year old students with your brilliance, but keep your opinions to yourself
This just proves my point that academia and the real world don’t mix. I am sure there are quite a few intelligent professors, it’s just models done in controlled academic environments don’t amount to shit when the real world faces certain economic and political constraints. But hey, that’s just me.
I carry the title “Professor” and the tenure associated with it. I also carry the experience on the transactional side of real estate during the downturns in ‘79 and ‘90 (last job in the industry as the manager of foreclosure operations for a title company). I can assure those in academia who take the position that “all is fine” that they simply don’t have a real understanding of what is going on. It is all about affordability. Buyers establish prices, not sellers. This game has gone on about three years too long. What that tells me is that the time before market prices bottom out is going to be about three years longer that the usual pattern. I’m thinking 2012.
“I’m thinking 2012.”
Exactly.
Having worked in academia in the UK for many years, I can assure you there is no correlation between academic success and common sense…
David Cee,
Good points! So let me get this straight. It’s the slowing in “defense spending” that’s driving your local economy down and in turn taking the housing market with it? Oh for the love of Pete! Will you please……. oh you know what just never mind!
As others here have noted, have you ever heard such spin? Look, dude, you (as were we all) headed for the ultimate meltdown with or without a war, a peace or a truce! Tying home prices ex post facto to defense spending (or saving) at this point is just ridiculous.
Try focusing on shady “hit the number” appraisals, a 1 % overnight lending rate and tax free money when you go to collect your rightful profits every other year! Factor that in and then come back and talk to me about a decrease in dairy farming production/lap dance spending! So….. what, you’d rather get us all worked up about a war than about the REIC? The war didn’t stop anyone from getting 4 cash out re-fi’s in the last 3 years did it? There’s no connection here, so stop trying to fabricate one!
Seeing as how the Hampton Rhodes area is nothing but military, I can’t see what else would foul up their economy worse than defense spending cuts. The other sharp dose of reality will be when those poor enlisted folks and junior officers who took out huge neg-am loans get hammered this year.
David Cee,
Is this the first REVERSE “it’s different here” comment we’ve heard from the MSM? Is it now going to be, “The reason ______ market is being more impacted by the down turn is b/c ______ is “different”?
Gosh, I sure hope so!
Looks like the area isn’t as bullet-proof as the boosters claimed. Ford plant closing too.
This area was not only far from bullet-proof, but may have the weakest fundamentals of any bubble market out there.
Astoundingly, home prices in Norfolk went up something like 18% last year. Shortly thereafter the Census Bureau declared it “the Fastest Shrinking City in the US”.
Great timing there folks.
http://home.hamptonroads.com/stories/story.cfm?story=106392&ran=84979
Email sent to JK
jkoch@odu.edu
“That doesn’t mean prices are due to fall,…… A house listed at $400,000 might fetch $350,000, or sellers might find themselves offering incentives such as closing costs.”
Respectfully, do you understand that going from 400K to 350K is a price fall?
Would love to hear what the reply is.
Will post here if I get one.
Waahoo’s my new hero.
Emailing knuckleheads and calling them out. Thanks!
That’s Super Waaahoo good citizen.
He’s talking about a fall in price appreciation expectation - as in buy a house for 300K, hold it one year and ‘expect’ to get 400k. For specuvestors, dropping that expected price by 50K is a price ‘drop’. Which, in the strange land of American real estate today, makes a certain perverted sense. Create in your mind a mental image of worth, think about it so long it becomes reality, and then express dismay and anger when you are ‘forced’ - by unrealistic buyers and a negative media - to ‘drop’ the price to a point that is still disconnected from the true market.
turnout,
You must have a phd! (smiley face thing)
Respectfully, that wasn’t the most respectful question I’ve ever seen.
Besides, there are other things that he could have meant. For starters. . .a house listed at $400,000 selling for $350,000 isn’t a price fall if he bought it for $300,000. And the professor did say “listed”.
Small comfort if you’ve already HELO’d another 100K out of it.
“Koch predicted that people who bought condos hoping to sell them would instead become landlords at least for a few years. ‘They’ll function as apartment houses until the market turns around,’ Koch said.”
This is idiotic… so they buy at whatever price, and now they can simply rent out the place… This bust may take a few years at best and Mr. Koch’s advice is to bleed at negative cash flow while saddled with the headach of being a landlord. A better advice would be to put your finances in order and prepare for the BK court…
I agree - you can’t buy a $300,000 condo and turn around and rent out for $1300/month. In order to recoup your investment, you need to rent at something closer to $2300 to $2700 depending on down payment, insurance, etc.. The math does not work. It’s going to be amazing to see all these condo “investors” chasing the upper 5% of the market. Either these people will have to reduce their rents and go negative on cash flow or leave their properties vacant.
Just more proof that comparable rents matter! When I first brought this issue up with realtors, they just got a funny look on their face. Now, here in over-priced N AZ, there are empty houses everywhere and million $ houses rented for $2,000/mo.
Who in Arizona has $2k to spend on house rent? Is this the same state of Arizona that I’m living in?
Very few have that much for rent, and that’s why the vacancy rate is so high. A lot of folks with second homes think they are getting rich, but in reality, many are losing money every day.
See my comment a posts below about “rent reflecting reality”. I think that’s what AZ is running into, as well as S. FL.
Just goes to show that the “pros” are just as oblivious as the “lumpen” and that DE-NIAL is not just a river.
Peeps who can afford $2K/mo rent (the 5 or 6 in this town) don’t. They already bought their overpriced vintage box in town, an overpriced McMansion near town or–if they’ve really “gone native”–built their WAY overpriced McLodge (a super-sized, trophy log home on some overpriced patch of high desert scrub with a distant view of the San Francisco Peaks).
Who needs Seinfeld re-runs when you can sit back and watch this show play out, eh??
Roger beat me to it..
300K condo for ~2500 a month.. Hahah.. Let me get a new keyboard because I just spit a whole can of soda into that one.
In Palm Beach, in the 2300-2700/mo range, your going to be “knocking” on a million dollar home. 300K condo? Come on, you would be LUCKY, really, really lucky to get 1100-1200 for it.
Amen Mike. Our rent/own ratios in South FL are totally out of wack. People don’t seem to realize that the bulk of workers here make very little money. There are very few “professional” type jobs. However, if you want to make $15/hour at a cement factory you can go nuts. Yes, we have the ubber-rich, but they are small segment of the market. The working class here is not too far above the poverty line in many instances.
Isn’t this where those mythical “wealthy foreigners” come in??
MIRAGE
Moneyed Immigrats Rich Ancestors Generous Expatriates
will prop up the bubble.
TJ,
You got it. South American millionaires, Baby Boomers, Aliens with ships of cash..
You know the game; S. FL re only goes up, no matter what it takes. And we are all priced out forever.
“It’s going to be amazing to see all these condo “investors” chasing the upper 5% of the market.”
They won’t catch the upper 5% of the market. Condos should rent at a discount because they are not professionally managed. I’m living in a high-end rental apartment now. The building has a concierge, 12×7 onsite service and 24×7 on-call building service. A leaf on the hallway carpet or a ding in the wall get fixed within a few hours. An amateur condo landlord cannot provide this kind of service.
I would also comment that the upper 5% of the market is not looking for these condos. I would consider myself upper 10%, and I am done with the cheap condos (even if they “cost” 750K).
Once you get to upper price range for rent, your looking at large SF homes, not condos. Perhaps beachfront condos would be in the same range, but certainly not all the downtown crap that has been built in the last 5 years.
When you get into the higher brackets, competition gets really, really stiff. You want 2500 a month for that 1700 sq ft condo, when I can a 4000 sq/ft home in a gated community with every upgrade for the same price..
Also, I have heard this several time before, rent reflects reality. Rent is the price you will pay for something when you do not expect apprecation (because you get none) of the asset. It’s what the item is currently “worth” not what it might be worth 2-5 years from now.
No one seems to ever consider those points, annata. Condo buying friends of mine flippantly say they’ll just rent if they can’t sell. They never consider the professional competition - which at least in my neck of the woods is swelling in its ranks daily. If being a profitable landlord was so easy this RE thing would have been figured out decades ago!
Many so-called investors are finding out that the words “profitable” and “landlord” don’t travel in the same sentence. That is, unless the sentence also includes a couple of four-letter words:
H-A-R-D W-O-R-K
The housing bubble was the worst possible thing that could happen to Hampton Roads because it destroyed the one positive feature of the area - cheap housing. Ironically home prices had been flat or falling in the area due to the stagnant population. There also wasn’t much supply because it wasn’t needed. This made it the perfect target for speculators who swarmed in, bought the few remaining properties on the market, and started a speculative binge which drove prices up 100% in 5 years.
The result? Even more people are leaving the area than before. New construction is being built left and right, and all those investment homes are being dumped on the market en masse.
It’s similar to the situation in South Florida, but perhaps worse - Hampton Roads didn’t have the rapid popluation growth that Florida did, and can even less afford to lose people and businesses due to high real estate prices.
The hammer of iniquity drops.
It makes me question what kind of market research went into these new construction projects. Who is the customer? How much can the customer afford? What is comparable market rent? How will the competition respond?
Apparently all the market research went out the window b/c the builders were playing follow the leader while singing the mantra ‘if we build it, they will come’…
GREEDINESS!!!! THAT HAS BEEN MARKET RESEARCH FOR ALL DEVELOPERS, INVESTORS, AND HOUSE POOR HOME BUYERS.
When I refused to buy a house which I could easily afford with my salary just because I had to put my name in the lucky draw, my other friends looked at me and thought I was a fool. 4 years passed by and they started to see why. There is no bottom for this craze the houses sold for 650 K in mif 2005 are offered at 499K in Folsom, and this is just the begining and specuvestors have not switched to cash burning plan B. Let see when they will reallize that plan B or for that matter Plan XXX will not work if they had bought the property in last 5 years.
Patience will be rewarded heavily! They are not making any more Buyers.
Are you sure? We seriously do get a good number of people leaving other areas to grab up the “cheap” (expensive to us locals) housing. On top of this, while the rest of the country suffered the .com boom, we had no real impact because we had very little .com companies. The incrases in gov’t spending on military can be seen by an increase in the local contractor jobs.
I can tell from personal experience, knowing people who have purchased three or four units in downtown Norfolk, and they don’t intend to live in any of them, they’re headed for disappointment,, he said.”
Bow wow! Disappointment, that’s rich.
“Rich” is certainly not the word for what THEY will be! Hee hee.
NEW TOPIC
MIC military industrial complex
it’s effect
it’s tax and spend and creates no wealth ,but has been a temporay boost
like RIC
I agree wholeheartedly. I am sick and tired of paying taxes just so my government can carry out death and destruction. Obviously a misallocation of resources. I am afraid our economy now depends on war. How sad. Our Congress just ended 800 year tradition of habeus corpus and now any of us can be declared an enemy combatant. And the worst part is, people will think that electing Democrats in November is going to change things.
soon it will go for FREE healthcare
Would you rather speak Chinese? I’ve never seen people complain as much about a government, so I know freedom of speech is still strong. (My sister in law’s father spent some time in a Chinese prison for printing items their government didn’t like.)
Do I like what the curent congress is doing? No. But if you want a waste of money, look at the current Welfare system going onto 4th generation recepients…
Cut the MIC spending too much and you’ll wish you hadn’t. Should it be made more efficient? Yes! Speed up the BRAC! The military *wants* to close bases by the score. Let them!
Neil
Are you also including farm subsidies in your calculations, and the middle class “mortgage deduction” for interest on housing?
Why should anyone be getting a free ride?
http://www.globalsecurity.org/military/world/spending.htm
Why don’t we just try spending, say, only twice as much as China (the next biggest budget)? That’s dropping it by 300%
Really, what on Earth do we need to spend that money on? It’s just silly, or it would be, if it didn’t encourage us to get into unnecessary wars.
Crazy, isn’t it? It is hard to understand why there isn’t a public outrage against ALL of congress for allowing this to become law.
They stopped Habeas Corpus during the civil war. Did you miss that in your government school’s PC history class? It was probably discussed right before the part about white reublicans being the devil incarnate. I don’t think you missed that part though, did you?
Anyone who suspends Habeas Corpus is a tyrant. Pure and simple. I don’t care if they are American, Russian, anything. Abraham Lincoln was right up there with Stalin, Hitler, and other great tyrants of the past.
It’s a matter of morality, pure and simple. If you are going to throw someone in jail, you should have to explain why they are being thrown in jail. That’s the point. Don’t give me that Civil War crap. Civil War is one of the biggest lies we are fed in school. It was about expanding federal power, not the lofty ideal of ending slavery.
The “military-industrial complex” used to be called the “arsenal of democracy”. It’s not supposed to create wealth, it’s supposed to win wars. If you think it’s expensive to win wars, try calculating the cost of losing one in your own country.
Of course there is a need for national “defense” and fending off attacks from others. But Vietnam was based on a fabricated Gulf of Tonkin story. Iraq and Afghanistan based on a fabricated 9/11 story. Face it, elements of our own government were involved in 9/11 attacks. None of these wars have had anything to do with protecting Americans. All about war profits. I have concluded what average Americans really love is war, death, and destruction because we keep electing leaders who bring us these things. No thank you.
Sure–after the “communist menace” dried up, the MIC needed a new enemy. Enter terrorism. “War on Terrorism”–gimme a huge freakin’ break. [Howd'ya wage a war on a tactic?] Why not the War on Dandruff?? Since it’s not win-able (by any rational definition) the war dudes can crank out more landmines, bombers, missiles, missile defenses and god-knows-what-else into the distant future so long as We The Sheeple can stay skeerd of “sudden death” (as Hitler put it).
The enemy is dead–long live the enemy!
Oh yeah–I’m a hopeless empiricist. You just might want to learn Chinese. Based upon trend analysis, we (the U.S.) are the sunset empire and guess who’s in the “on deck” circle?? But I could be wrong . . . .
Here’s an idea: Try reducing the army in half - that way, it’ll still be the largest army in the world, just not quite so big. Or do you think that’ll lose us a war or two?
Neal& SonicBoomer-
The US spends as much on “defense” as almost the entire rest of the world combined . . . and virtually 100% of our $9 trillion dollar national debt has been spent on “defense”.
It ain’t about defense . . . it’s about profit for the warmongers at our expense. It’s about corporate welfare of the worst kind. It’s about dominating the world for the profit of our wealthiest 1%, while the poor die for it. It’s a sick joke.
Spare me the talk about China . . . their country now owns the mortgage on ours, while I have good friends “defending” America in Iraq right now.
Well when you got about 50 million people (the number of folks in America that I believe are truly vested in the MIC) trying to take on the rest of the world (5.5 billion people?) you better spend as much as you can on defense or start wantonly spraying nukes like there is no tomorrow!
From MSN money today, “In 2005, he says, 29% of mortgage holders had no equity or, because of borrowing, owed more than their houses were worth, a situation known as negative equity. Nearly 11% of those with negative equity were down 15% or more below their home’s value.”
How does this statistic jive with to on much bandied about that staes that 50% of homeowner have no debt?
Does that mean that only the other 11% owe less than their home is worth. Any way you look at this, we are in for some scary times ahead if nearly 1/3 of homeowners are already underwater.
I think that it’s quite possible that 50% of homeowners are fiscally conservative and have paid off all or most of their mortgages without taking out home equity loans. This does not really conflict with the notion that another sizeable group has over borrowed and/or over paid and are heading for trouble.
“I think that it’s quite possible that 50% of homeowners are fiscally conservative and have paid off all or most of their mortgages without taking out home equity loans.”
Completely disagree I’m afraid. Real wages have been stagnant or dropping for the past 6 years and the only way to keep up with real inflation is to dip into savings or to borrow against their equity. The 50% paid off figure seems completely unrealistic.
I’ve read other numbers that put this figure at 35/40%. As in 35/40% of homeowners own their castle outright, which has a fair feel to it. However, this may not include other lines of credit that are based on ownership.
35% does seem right. It’s a generational thing. Consider your own relatives, and the older ones likely do own their places outright. I know in my family, my grandparents own outright; my parents do; in my own middle-aged generation two out of six do (and one holds a mortgage he could pay off tomorrow); and none of the up-and coming kids own outright.
If you are young, then chances are that none of your peers have paid their places off, but if you’re near retirement, you get a whole different picture if you look at people around you.
I’ll buy 35%. That’s a little more than a 3rd of the market and I’ve seen those numbers bandied about as well.
As a transplanted Yankee I have found the Hampton Roads RE market to be very fickle. Bought a 3000 sq ft plastic tract McMansion in a very good neighborhood in 1994 for under $200K. Considerably less than a similar home in N. Ohio. In 1999 they were selling for $225K. In 2005 they were selling for $440K and sold in days. Over the last 6 months I have seen asking prices dip below $400K with very little movement. There are also 3 new subdivisions within 2 miles of my residence that were planned for 75- 100, 3500 sq ft residences each. All have 4-5 builders models priced between $600 -800K open for almost a year without a single sale (or start ?). Profit margins have to be huge, but 0 sales = 0 profit. Stopped in at open houses at all 3 over the last several weekends - no one else was at the first and there were several lookers at the other subdivisions. Multiple RE agents in each model looking scared, conspiratorily mentioning that the builder was open to offers on the model. I left with the impression that at any price they would have a hard time selling those properties, this town has left the market enmasse. Do not know what sales will look like this spring but this is a military town and very transient. If the DoD budget goes down so does a significant portion of the shaky tidewater housing market.
Who in the heck working for the DOD can afford an 800K home?
Maybe I am in the wrong line of work, but I did not think that many/any govt employees were in the 200+ salary range?
“Who in the heck working for the DOD can afford an 800K home?”
There aren’t any. What is even worse is that they often get moved around every three or so years so they don’t even get to build up equity to take to the next location. There is also no real large pool of people outside of the military in Hampton Roads making that kind of money. There is some waterfront areas which may realistically price themselves this high but most locals can’t afford it now and outsiders with that kind of money are not moving in in great numbers since these kind of places compete for the waterfront home market with places all over the country.
The whole problem with the McManison craze is that they built huge numbers of these things all over the country without realizing that the number of people who could afford them was much smaller and that all these projects were competing for that same relatively small group of buyers.
There ias a very large contingent of professional employees working on govt contracts/subcontracts that have been moving into the area for the last 4-5 years. A lot of that work was in high cost areas and housing here is (was) relatively cheap. In addition, military officers normally live off base and recieve a tax free housing allowance that depending on family size and rank can equal an extra $2500 per month no problem. The military can buy a home, use the housing allowance to pay for it and take advantage of the interest tax break. It works well even in a stagnant housing market. A lot of folks may be in trouble though if they cannot turn the homes if they get a new duty station and the market is down. Only works well during an inflationary cycle.
easy
a colonel gets 60k pension at 20 yrs
gets a job titan., NG,Rockwell aty 120k
and the wife gets a job ripping off the taxpayers and BAM they’re in
Appraisals assignments are nearly impossiable here in Mass.. High mortgage amounts, lower comparables if you can find them. People can’t qualify for multi families with market rents in the area. The thing I always could not figure out is why the appraiser has to pay for the sins of others.. If you bought a house, hummer, went on vacation, took out an equity loan, maxed out your credit cards..and so on. I am suppose to be placed on the cross like Jesus… It’s just not worth the appraisal fee… I am currentely in search of another profession..but like Richard Gere ” I have no where elso to go”
The thing I always could not figure out is why the appraiser has to pay for the sins of others..
Appraiser’s are a convenient scapegoat and whipping boy because of the unorganized independant nature of their profession.
The profession, despite their inherant power in the financing process could never play ball on the same court as the NAR and MBA who call the shots with their big time lobbyists.
And I don’t want to hear about the Appraisal Institute. These POS’s held spin the wheel with their advocation of the dissolution of the HUD/FHA fee panel system. Talk about putting a gun in your mouth an pullin’ the trigger…I knew scores of appraiser’s who had been doin’ FHA work for decades who never received another assignment once the mortgage originators could hand-pick the appraiser.
Then the borderline whorish nature of the biz become the norm once the state licensing boards unleashed the incompetant and easily manipuated hordes and the sleazebag mortgage broker’s made the honest bankers get in the gutter with them in order to stay competitive.
I got forced out of the biz back in 2001, which at the moment I am not really pained about because my exposure to legal suit in this fiasco is nil.
However, what does bother me, is how all the honest and ethical appraiser’s are going to be painted with the same brush
when the government undertakes it’s witchhunt for someone to blame.
Everything you said is 100% correct. The Appraisal Institute and other organizations only care about adding classes to the C.E. schedule. When lender select was implamented that was giving the fox the key to the hen house. The witchhunt will take place and I have already increased my E & O insurance this year although I am not sure if that is a scam also. Thanks for your thoughts
Saw this article on Yahoo this morning: “American spend more of incomes on homes.”
http://news.yahoo.com/s/ap/20061003/ap_on_re_us/housing_costs
“‘Everyone who wanted to buy a house has bought one,’
Now I’m in total agreement with this statement. In fact, I would put it “Everyone who wanted to buy a house has bought one because loose lending standards meant no one was excluded from being a home owner.” This is one of the reasons that a sudden housing recovery is impossible. Since speculation in investment properties is officially dead, where are all these new buyers coming from if they’ve already bought. All you had to be was breathing in the last 3 years to qualify for a home. And as for that term “bitter renter”, in light of this it makes no sense at all. Most renters today are renters by choice since all they’d have to do is pick up the phone and call their local broker and they would be a home owner. Home ownership is no longer this exclusive club that shows that you saved, earned, and qualified for a poisition in it. How can you have an exclusive club when everyone is qualified to be in it?
Next logical conclusions:
“Not everyone who bought a house should have.”
“Not everyone who has a house can keep it.”
Excellent point.
I don’t think that there really is such a thing as a “bitter renter”. I am very happy to be renting right now, I feel like I am getting a great value for my money, and have the freedom from all the crap in S. Fl (insurance mess/property tax).
If I wanted to buy a home, I would. RE agents drool when I tell them what my combined income is. They would place me into a 1 million dollar home, not doubt about it; probably without even inflating my income that much.
And then, because I cannot afford a 1 million dollar home, when my rates reset and I had to start paying principal back, I would lose it. And my credit with it. Which is what is going to happen to most of the people who “took the bait”.
The only thing I am bitter about is that I can’t buy a home right now that is priced right because of all the easy money. That’s the only thing that makes me bitter; I make over 3X the median income in PB County, and I can’t buy a home because all these idiots took the bait and sent our prices through the roof. I would love to own; but not at a 2-3X premium over renting.
Oh, and I am also bitter because even though I was prudent through this housing market; I am going to bear some of the pain along with all the idiots. That makes me bitter as well.
The only thing I am bitter about is that I can’t buy a home right now that is priced right because of all the easy money.
Yes Mike-
And all the girlie-girls on the i-net dating sites who bought their overpriced condo’s on neg AM loans and equity from their divorced hubbies will have nothing to do with you because your are merely a “tenant”…and thus haven’t the sufficient male tenacity and will to be a financially secure “homeowner”.
LMFAO…Reset and carryin’ cost hangman’s comin’ for all these dollies!
Believe me, we’ll all have the last laugh!!!
LOL.
You have to remember where I live. Palm Beach is the opposite of the rest of the world.
Down here, women who are 50 years old (and stunning, no matter what their age) pick up guys like me (30 years old, decent job) and take them to their 50 million dollar homes in Palm Beach.
Trust me, women are not a problem down here, so many of them have more money then you could even imagine; they don’t need your money, just that you have a job that does not embarass them in front of their friends.
Palm Beach is the best place, in the world, imho, to be a younger guy, especially if you like older women. Make sure you have some social grace, keep yourself in good shape, and hang out on the island.
Its like nothing I have ever experienced before in my life. I am in a serious relationship now, but before that, was dating a girl that had use of a private jet. She was 30 years older then me, a total knockout, and had taken her husband to the cleaners (he was a CEO/COO of some auto company.. Like GM
Let’s just say, it was an amazing time in my life; watching people spend 2000 dollars a plate on dinner; that frankly, was not even that good. It was like the world was ending tommorow, and we had to spend as much as possible today…. And then, when the world did not end, try and spend it all again tommorow.
Palm Beach is the best place, in the world,
It’s a totally foreign place for me, bro, (laugh).
Never been S. of Tallahassee.
Fortunately, I like big freshwater rivers, mountains, and coffee brewed over an open fire vs. mediocre $2000.00 dinners.
Unfortunately, I’m the 50YO who got his clock cleaned by a divorce in my late 40’s. I had to sell my home in ‘01 and missed the run-up.
Not much I can do to complete with 30YO’s like yourself.
Enjoy the ride.
Mike I hear ya…
take a deep breath and try cracking a smile at the fool who paid $299K for a 800 sq ft. POS, that’s gonna be in foreclosure in a few months…
Best thing to do is to pick out an area you would like to buy a house in and monitor a couple of properties that were recently (in the last year) bought by flippers (ppl. owning more than 1 property), and just follow them through to the bank (REO), this might take a year or so.. but hey you’ll just be building more of a downpayment in the mean time.
I hate to sound so cynical, but it kinda hurts when this crazy speculation has made a home so unaffordable for folks who exhibit above average financial matuarity.
“Since speculation in investment properties is officially dead, where are all these new buyers coming from if they’ve already bought.”
Well, you’d have the usual people looking to buy because they’re moving into a new area, but that presumes that they’ve managed to sell their existing homes. But largely I think you’re correct—the pool of buyers at ANY price has virtually been exhausted. I have a feeling that if we all woke up tomorrow to find that median house prices had returned to 3x median income nationwide there would still be piles of unsold inventory simply because everything is so overbuilt.
I went to public school and have no fancy letters after my name, but isn’t 20% off 400K $320,000?
“I went to public school and have no fancy letters after my name, but isn’t 20% off 400K $320,000?”
yes, but that’s not what he said. he said “20% overvalued.” assume a baseline of 100. and then add 20%. see what i mean? so to come back down to 100 is only 20/120 (or 1/6th) = ~16% drop (actual percentage of fall).
my dumb! although my above post is correct with respect to figuring out overvaluation, it doesn’t translate into a $50k drop from 400k. should be ~$65K
(hey, whadya expect? i went to public school too.)
It’s time to get rid of using c for the k sound. Publik skool looks some much better to me and is a lot easier for me to spell since I are a publik skool gradumatater.
OT, Sorry but you have to read the last few lines.
http://www.nysun.com/pf.php?id=40411
“The market, she adds, is very unpredictable — slow one week and active the next — helped by a high rental market and hurt by the press’s creation of a bubble that isn’t there.”Once people realize the bubble talk is a lot of nonsense,” she said, “they come back and buy.”"
yeah, that’s rich!
and i’m real glad jmiller is still reading my posts. looks like he’s finally become aware of that new manhattan condo inventory (can you say “homequest???”).
He said some surprising things, but this is not one of them. His 20% was an estimate by itself (note the about 20%). So his rounding up to $350 isn’t really all that a big deal considering the precision of his estimations.
Furthermore, the numerical values being quoted are not really the main point of his argument (though figuring that out is another issue), so again this degree of imprecision is not that much a problem.
(‘Instead, we anticipate market sluggishness that will generate… larger inventories.’)
And who will keep on paying the mortgages on those larger inventories while the market remains sluggish for the next couple years? Families with stable incomes who bought with 20-down-30-year-fixed, who don’t have to face a rate reset or the end of an I/O period?
Suuuurrre. That’s the 800-pound elephant nobody is talking about. This is not your father’s housing bust. Your father could ride it out. Not this time.
HonestAppraiser, I feel for you. I am a loan officer for the last 10 years and no i dont do toxic loans. Thruout the years i have had to listen to customers complain about getting “jobbed” by the appraiser, even when i point out the nearly identical comps on the appraisal. They dont understtand that by and large the appraiser will do everything he can to help support a value necessary to do a loan so, if your house came in 30% less than you expected, it is you the customer that was jobbing us …wasting our time. In all of my years of doing this i have noticed one glaring fact that makes 0 sense. 90% of the appraisals i get come in lower (even if just a little) than what the customer wished for. Since customers are not professional appraisers shouldnt their uneducated guess be wrong equally on both sides. In other words shouldnt half guess too low and half too high? What is really obnoxious is when they tell me they bought the house 6 months ago for 130k but now its worth165k. Why, is your name on title worth 30% more than the old homeowner?
Sorry I’m late to reply. ODU’s Economic group published a report last year saying there was no bubble in Hampton Roads. I emailed them, calling them out on it, and they never replied. Pay them no mind, they are idiots. I can only assume they are in the pockets of real estate.
“The prices of condominiums, they said, are especially vulnerable to declines because of an abundant supply.”
No. Condos are vulnerable because they are inferior products and only sell when buyers are forced to settle for less. Condos rise last and crash first, faster and deeper.