“It’s A Soft Landing, And It’s Here”
Newsday reports from New York. “Winter is coming, and Long Island builder Steven Klar doesn’t relish safeguarding unsold homes over the winter, paying for snow removal and heating the big, empty insides so the pipes don’t freeze and burst. That’s why he’s offering a new $52,000 Mercedes to buyers of his model homes in his Huntington, Manorville and Locust Valley developments.”
“‘Does that sound desperate? No, it’s making the sale,’ says Klar. ‘It’s definitely generated a lot more traffic and interest than if we just said ‘Take $50,000 off the price.’”
“Sellers and agents hope these deals will keep home prices, agents’ commissions and neighborhood property values up, though some homeowners have become willing to reduce prices. Sellers’ concessions were not unknown before boom years, but the perks nowadays are breaking out of the box.”
“Even open house parties must stand out. In May, one agent threw a party at one of his listings in Oyster Bay Cove, complete with DJ, champagne and models in the pool, though he still has no contract.”
“Samira Johnson decided to forgo Paris and give a seven-day stay at any luxury Marriott worldwide with the sale of her three-bedroom Northport ranch. She will hand over her 115,000 reward points, after hearing a California seller offer a year’s free beer and pizza. She’ll do another open house this weekend after a lackluster response to her vacation offer.”
“Giving up Paris didn’t take money out of Johnson’s pocket, which price reductions will: Since putting the house on the market with a real estate agent in May, she has lowered her asking price from $549,000 to $509,000.”
“As of August, there were 13,999 homes for sale in Suffolk, up 59.3 percent from 8,790 the same time in 2005, says to Mohsen Zandieh, vice president of the Multiple Listing Service of Long Island and treasurer of the Long Island Board of Realtors. In Nassau, the number was 10,041 in August, 66.8 percent higher than 6,018 last year; and Queens’ was 10,005, up 76.2 percent from 5,677 a year ago.”
“He says the slower activity stems partly from sellers hoping for boom-time prices and buyers waiting for more price-slumping. ‘Sellers are living in last year’s market,’ Zandieh says. ‘Buyers are living in the future.’”
“Feeling like the perpetual bridesmaids, Larry and Samantha Brittan decided to shell out $10,000 for closing or property taxes after potential buyers kept on picking ‘the other house.’”
“Already in their new home, the couple pay a mortgage on two houses and see a little relief in the doubling of open house visitors since offering the incentive. Set for another viewing of his Colonial in Northport this weekend, Brittan, working with a real estate agent, is asking $559,000, down from $639,000.”
“When it was Ginger Scarpino’s turn at her $1.1 million Dix Hills ranch last month, she spent hundreds of dollars to create a patio-side gourmet luncheon. She’s also proposed giving a $5,000 bonus to her agents, who declined it, and $11,000 for a buyer’s closing costs. ‘Maybe it’ll work, rather than coming down another $100,000,’ says Scarpino, who already had reduced the house $400,000.”
“Shawn Elliott’s Luxury Homes & Estates last month spent $8,000-plus on an open house for a Gold Coast client who’s willing to buy a Mercedes for the agent who bags a buyer. ‘He feels motivating the brokers is better than giving the house away,’ says Elliott.”
“Some agents worry buyers might wonder if they’re shown good houses or if the agents just want that bonus.’I think it diminishes our profession, somehow cheapens it,’ says Kathryn Martin, an agent in Northport.”
The Andover Townsman from Massachusetts. “It is taking Andover residents nearly twice as long as it did last year to sell their single-family homes, and sellers are getting about 8 percent less.”
“That’s according to third-quarter statistics compiled by New England Association of Realtors. NEAR’s numbers show that single family home sales in Andover are down about 34 percent, reflecting a national trend.”
“‘It’s stabilization,’ local realtor J.B. Doherty said of the current local real estate scene, with which he has been involved for the past 33 years. ‘Wall Street guys are saying real estate is not a bubble. It’s a soft landing and it’s here.’”
“Buyers just won’t overpay, he said, so anyone looking to make a profit from a home sale they made within the last 18 months will be disappointed. ‘There’s not much appreciation if you just got into the housing market,’ he said. ‘It’s more like depreciation.’”
From the Townsman:
‘Andover is one of 15 communities followed by NEAR and the town’s numbers are close to the average for those communities as the home sales were down an average of almost 31 percent and median prices dipped an average of about 6 percent. The towns of Carlisle and Chelmsford reported much bigger drops in single family home sales during the July to September quarter from 2005 to 2006. Carlisle residents sold 65 percent fewer homes while Chelmsford sales dropped 44 percent.’
The Daily News Transcript in Massachusetts:
‘Homes in MetroWest are staying on the market on average as much as five months longer than a year ago as buyers sift through the inventory and wait for price reductions. That’s a normal pattern during a market correction, said the chief economist for the National Association of Realtors, and shouldn’t ruffle sellers who had planned on making a move months ago. Sales in Framingham dropped by 35 percent, but with sales in about the same price ranges as a year ago, the median sale price dropped just 4 percent. The average days on the market for a home in Holliston increased 400 percent, and the median sale price dropped a modest 8 percent.’
The Boston Globe:
‘The administration is visibly nervous about the rise of foreclosures in several Boston neighborhoods. And with reason: A foreclosure in the suburbs is a family calamity. But in Roxbury, Hyde Park, and Mattapan it can be the beginning of the cycle of home abandonment, neighborhood blight, and rise in criminal activity.’
A foreclosure in the suburbs is a family calamity. But in Roxbury, Hyde Park, and Mattapan it can be the beginning of the cycle of home abandonment, neighborhood blight, and rise in criminal activity.
Remember all those people who lambasted my theory that the cenurbs would be hit harder than the exurbs?
This stuff amazes me. How stupid are people to buy overvalued houses just because they’re getting some cheesy bling. Are people really that stupid , or is it just another case of sellers thinking they’re that stupid. Though maybe I’m just old fashioned , I never understood the whole “cash back” car thing either.
How about I offer 1000 shares of YHOO for sale a dollar above the ask , but offer to pay your comissions and throw in a back rub.
Sorry to break the news to you, but people ARE that stupid.
That being said, I think we should bring back large predators to North America to cull some of the stupidity.
I COMPLETELY agree with you.
Bravo!
No, too many mortgage brokers already.
What you wrote is more right than you might be considering. Think about it…
If the gov DOES NOT bail out banks on the bad loans they make and allows them to go broke in the next couple of years. They won’t make crazy loans any more. That simple.
If my tax dollars go to helping out some poor speculator/investor that is living beyond their means. I’m gonna scream.
LOL!
I believe the large predators have come back. They have names like Countrywide, Ameriquest, etc.
Sunsetbeachguy said… “That being said, I think we should bring back large predators to North America to cull some of the stupidity.”
What we need, is a good little plague.
Stingrays seem to do the job nicely.
Careful what you wish for; bird flu may well make plague look like a little rash. It’s not in the headlines anymore, but it’s still out there evolving away. If anything could make people wish they had ammo and tuna stored, it’s that (not Great Depression 2).
“Plague”? Seems a wee bit harsh. Going broke gonna be misery enough for the foolish. Besides Plague doesn’t discriminate based on intelligence.
posted “Sorry to break the news to you, but people ARE that stupid.”
Well we do know atleast 1 in 2 voted for GWBush twice! So IMHO every other person you see is a moron.
“Samira Johnson decided to forgo Paris and give a seven-day stay at any luxury Marriott worldwide with the sale of her three-bedroom Northport ranch. She will hand over her 115,000 reward points, after hearing a California seller offer a year’s free beer and pizza. She’ll do another open house this weekend after a lackluster response to her vacation offer.”
This is unbelievable … I thought making a decision to buy an overpriced house, because the seller would throw in a “free car” was stupid enough ….
But a year of free pizza and beer????
Marriott Hotel reward points????
You have to be f*cking kidding me!!!
Anyone who falls for these ridiculous schemes and buys some overprised POS deserves to be hosed in the coming housing collapse!!
Yes, I agree. This is the lowest and most pathetic thing I have read yet.
At least is wasn’t a year’s supply of “double decaf carmel skinny macciatos”. That would have been the pitch here in Ashland, OR.
Yeah, did’nt these sellers get the memo saying all the ’stupid money’ has left the housing market? What are they thinking?
Perhaps, they are still in a state of doped up euphoria from all the supereasy cocaine like money that was squishing around the housing industry. When the sellers come-to, reality is going to be so unpopular that denial will comfortably shelter them all.
hey sounds like a great deal
it is a bargain! I must buy now because your shares are special! I dont want to be priced out forever. Please dont sell those shares to anybody. Pleaaaaaseeeee. I will give you $2 over the ask.
“Are people really that stupid…”
“There’s a sucker born every minute”
P.T. Barnum quote circus promoter 19th century
..and 2 to take him
Actually, PT Barnum never said that I but taken.
http://en.wikipedia.org/wiki/There_is_a_sucker_born_every_minute
If that back rub include a “happy ending” from the real estate lady,
sign me up.
The way I see it, you get to pay $150,000 for a Mercedes after financing it for 30 years as part of your home loan. No matter how much put down, your loan will still be $50,000 higher than it should be because of bumped purchase price to cover an incentive. You’d be better off asking for the price reduction of 50K, then obtaing 50K car loan, heck, even a 10yr car loan, and getting the Mercedes yourself. At least then you’d only end up paying 75K for the Mercedes.
Wake up Debt-Junkies!!….you’re being hosed again!
And the car will last 10 years, max! The house–if it’s new contruction–may last 20.
What about extra Tax on the home. That lasts forever.
How about this scenario. Say I’m some shlub who will never be able to “enjoy” a fine luxury car like that Mercedes. I have 0 assets.. Why not live it up for a while. Shlub gets a mortgage from some pushy lender. zero down, no doc. He enjoys the house for a year, stops paying, gets a few months “free” housing as the home goes into foreclosure. In the end, he would probably be able to keep (or sell) the Mercedes as it was not part of the loan.
Your example is the very reason why it is unacceptable to give a car incentive and keep the value of the house inflated as far as good lending practices is concerned .
Question - if you are ‘given’ this car as incentive , isn’t there a tax ramification?
IMHO the car is taxable especially if its value is over a certain amount ,( i forget the max gift amount allowed by the IRS.)
It’s not a gift. You’ve paid for the car (and the house), although I use the word “paid” loosely. You may have problems with mortgage fraud, but not with IRS gift rules.
OK LA Lawyer . I agree that the car is a problem with the lender , but depending on how the seller declares the incentive will determine how the IRS views it .
It’s slimy. Plain and simple.
You cannot mock the fine American tradition of trying to get something for nothing nor that of trading glass beads and gee-gaws for real estate. Well, I suppose you could, but you’ll never get people to stop trying!
Huck Finn –
“cash back” car thing works like this: buyer has maxed out his credit cards, or their rates are higher than the rate on his car loan. He finances car at 100% (which really includes the value of the cash back) — in effect, the “cash back” is a low-interest loan.
Anybody correct me if this is not an accurate description.
When you’re fishing for greatest fools, you have to use the right bait.
I’m so tired of hearing all these a-holes talk about giving the house away. These jersks probably paid 60K for these now million dollar homes on Long Island, and they’re throwing stupid lunches and giving away cars instead of just cutting into their massive profit a tiny bit. Idiots.
#9,286 - “..not giving this away…”
Soon the bank will be taking it away!
i live in queens and i’m seeing a lot more houses for sale. weird thing is that most of the for sale signs sprouted up in the last two months and not starting in march like they are supposed to. it’s still in clumps though. some areas have lots of homes for sale and others none. and it’s not a panic. not even close. just a bunch of homes for sale.
we’ll see what happens next year. maybe one of these days wife and i will go out to nassau for a few open houses just to see the psychology. we were going to go to a few in levittown a few months back, but as soon as my wife saw what the area looked like she wanted to turn back
dba,
I don’t think we’ll see panic but what they creepy sellers are just beginning to express is this self-righteous indignation and words indicating a sense of entitlement. MAYBE panic will set in when they realize they’ll have to work until 65-70 like the rest of us slobs.
A LOT if not most of the sellers are retirees who are looking to move to a coop or condo. My inlaws aren’t retired but have thought of selling their home in brooklyn and buying an apartment for cash because it’s less maintenance. i even joke that they can sell their home, their business, buy something in the $300,000 range in flyover country for cash, and put the rest in the bank and live off the $40,000 or so annual interest money.
if you look at Zillow and ACRIS most of the sellers are still asking 10% to 20% over 2005 prices. When they start asking 20% under 2005 prices then we can panic. otherwise it’s a return to normalcy in NYC where it takes 6 months to sell your home and not 5 days with buyers fighting each other for the winning bid.
This supports my assertion that there will be a migration inward toward cities and population centers where they find hospitals, doctors, services and family.
My parents want to move to NYC for that reason. But it’s not like anyone can afford something comfortable there.
zillow has serious lag-still 5% high here after recent 5% cut
zillow reset here about 1 month ago
Zillow still has my house shown as having sold for 10x what we paid for it. I sent them an email, but they must be too busy to change it. In their defense, they do have the value now within about 15% of what it should be, even with the outrageous sales price 5 years ago. It does show that past sales activity washes out of the picture eventually.
Zillow is seriously flawed as it predicts current prices based on boom prices and what people got for their houses a year or 6 months ago. Many sellers go to Zillow and price their house accordingly; the only problem with this is that they don’t realize that more inventory will continue to flood the markets thus depressing prices further–that’s why a 4K or 15K reduction does nothing to move the house. So instead of actually pricing “correctly”, they will (especially in the Bay Area and other bubble zones) continue to ride the price curve down and wonder why their house isn’t selling since Zillow says that it is “worth” what they have it listed for.
That’s our plan. Being homebound because you can’t drive when you have the opportunity to live in a city with all amenities easily accessible by mass transit, taxis, etc is a no-brainer.
BINGO. Urban centricity is cheaper and allows more time for leisure activities. Who wants to battle with the antics associated with Sloburbia?
I do - but only because I like a lot of land…
If you like the city, yes. But you’re assuming everyone likes the city.
The other thing to figure…we could be one cruise missle exchange with Iran away from WWII-like gasoline rationing. How well will your living arrangements work if you are allocated 4 gallons of gas per month? Or some variation on that theme? May not happen at all, then again perhaps next week.
Or for those that believe in a dollar collapse…what do you think the price of imported oil will be then? Will the middle east and Venezuela even take dollars? Or only gold and euros? Does one really think these exporting countries that like us so much will help us out
? Figure 4 gallons a month again…
First:–>“‘It’s stabilization,’ local realtor J.B. Doherty said.
And then:–>‘ It’s a soft landing and it’s here.’
Finally: —> ‘It’s more like depreciation.’
All this spewed out of the same empty skull in one paragraph. What’s it gonna be JayBee?
Didn’t we end up agreeing with the “disinflation” guy? Seriously?
w the net why does anyone need a realhore ?
1-2-3
People have properties they want to sell, and there are buyers out there who want to buy. Many transactions are bogus, but quite a few are exactly the kind of generally good fit purchase that one would hope for. When a Realtor does their job they know all about opportunities and potential problems and can help you. Even then buyer beware is the rule because they are just salespeople who connect people in order to make a transaction work. Given that there are more than a million properties available almost anyone could use some advice from genuine experts when choosing one.
The percentage of properties that change hands without Realtors involved has always been very large, so there is no reason to buy using an agent if you do not want to.
“Samira Johnson decided to forgo Paris and give a seven-day stay at any luxury Marriott worldwide with the sale of her three-bedroom Northport ranch. She will hand over her 115,000 reward points. She’ll do another open house this weekend after a lackluster response to her vacation offer.”
“Giving up Paris didn’t take money out of Johnson’s pocket, which price reductions will: Since putting the house on the market with a real estate agent in May, she has lowered her asking price from $549,000 to $509,000.”
What if you don’t like the Marriott? Plus - who wants to pay the rest of a vacation’s expenses, such as airfare, car rental, meals, etc for this “free” vacation. Not to mention paying increased property tax bills for this “bonus” based on the inflated price of the house.
No self-respecting buyer is going to be swayed by such a “bottom feeder” offer. Who can afford to take a vacation RIGHT AFTER THEY’VE BOUGHT A HOME WHICH COST THEM TOO MUCH TO BEGIN WITH?
She’s lowered the price by 7.4% already - obviously, not enough. Keep your Marriott nights and give the buyer another 25% off and you might get some traction.
What are the tax implications of a $52,000 car incentive.
Do you need to report that as income/gift and pay ~30% tax on that?
For the builder, it’s probably a 35,000 car after the tax write off after taxes.
Good point, and how are these incentives figured into the cost basis for the house? Not that capital gains are going to be a worry for a few years.
This is the million dollar question . How should incentives be treated on taxes and how do they lower the appraisal for the lender ?IMHO these incentives will come back to haunt buyers and sellers if they are not disclosed and treated correctly tax wise . If I was a lender and I found out that 20k to 100k in kickbacks or incentives were given to sell the POS I would want to give a lower loan amount . If I lived or bought in a community where these kickbacks were being given in order to inflate the appraisal I would be pissed that my property taxes were higher because of them .
Where do you draw the line on incentives or kickbacks? Lenders have usually accepted the paying of buyers closing costs and loan buy-downs in prior lending cycles ,(if it’s disclosed ),but most these kickbacks and incentives just force the lender to give a higher loan amount than the property should get .The builders , realtors ,and the escrow officers in the business know that these incentives are questionable ,(especially if they are not disclosed to the lender or final secondary market lender) .
What if you found out that your retirement account manager invested in a bunch of loans on property that the appraisal was inflated to include 50k to 100k in kickbacks to buyers?
In essense ,it’s appraisal fraud when the true market vlaue is not reflected in the appraisal .
I have to think this will be an area where regulation comes fast and furious. These incentives create never-ending price inflation in a market like we’ve had. Either the IRS is ripped off, or the lender is…not to mention the people paying higher prop taxes.
There should be a requirement to disclose ALL kickbacks (even carpet/paint allowances, pools, landscape packages, rate buy-downs, and closing costs, etc.). The appraisal and mortgage should take this into consideration, and the sale should show up on tax rolls at the discounted price (could have notations as to incentives). Kickbacks should be considered either as income or gifts (not sure how each would be treated).
Any reason why this is not done already?
Interesting point: If you accept a car as an incentive, it would be reflected in your assessed value, so you would end up paying parcel taxes on your car, in addition to the usual personal property (or use) taxes. No?
It’s suppose to be done but I have a feeling that people are in violation of the disclosure laws .What you don’t disclose to your lender could come back to haunt you buyers or sellers .
what happens if the house goes to foreclosure? Does the buyer get to keep the Mercedes? I see a whole can o’ worms opened here.
That’s what I’m trying to say BigDaddy ,it’s going to be a big can of worms .A car is personal property and no different than a cash kickback .
sm landlord,
Yes, if the car is included in the sales price, the buyer pays property tax on that amount as well. And in places without Prop 13-type laws, the surrounding neighbors pay on the increased amounts as well (one of the many reasons Prop 13 is such a great law — though there may be room for improvements, such as inheritability, multiple residences, etc.).
“Some agents worry buyers might wonder if they’re shown good houses or if the agents just want that bonus.’I think it diminishes our profession, somehow cheapens it,’ says Kathryn Martin, an agent in Northport.”
That is coffee spitting funny! Thanks for the laugh Kathryn; you’re amazing.
It’s not a ‘profession’ lady.
Somehow cheapens it? Since anyone can be a realtor, how can you make it any cheaper?
Could we say it’s the second oldest profession?
I think that quote belongs on the keepers list, for the depths of the downturn, so we can all get a good laugh — “Cheapens the profession” LOL!
I mean, as if the Century21 monkey suits, DL’s endless clueless remarks and books , the comprehensive 1-day Ethics Class, Suzanne, the rigors of the RE exams, the TV Ads… weren’t enough proof that the RE sales business rates on par with used car sales.
““Even open house parties must stand out. In May, one agent threw a party at one of his listings in Oyster Bay Cove, complete with DJ, champagne and models in the pool, though he still has no contract.”
“Samira Johnson decided to forgo Paris and give a seven-day stay at any luxury Marriott worldwide with the sale of her three-bedroom Northport ranch. She will hand over her 115,000 reward points, after hearing a California seller offer a year’s free beer and pizza. She’ll do another open house this weekend after a lackluster response to her vacation offer.”
These sellers must be out of their minds. It is as if they are treating buyers like 3 year old kids. Are these sellers REAL? Cut the freaking price and let me decide what I do with my savings.
yeah, maybe they will start throwing in free Nintendo games!
The next trend: PS3’s and Wii’s with purchase of homes! And Elmo TMX’s!
Nexter trend:
$50,000 in bearer bonds, coupons attached.
Or a stack of Euros, Kruggerands, or some similarly sound currency.
‘Wall Street guys are saying real estate is not a bubble. It’s a soft landing and it’s here.’
“We see people discard all the right companies with the right people with the right vision because their stock price is too high. That’s the worst mistake an investor can make.”
- Wall Street Strategist, Jan. 19, 2000
“South Florida,” he said, ”is working off of a totally new economic model than any of us have ever experienced in the past” according to a realtor who predicted that a land shortage will support higher prices indefinitely.”
- New York Times, Trading Places: Real Estate Instead of Dot-Coms, 3/25/05
“For 5 years at least, American business has been in the grip of an apocalyptic holy-rolling exaltation over the unparalleled prosperity of the ‘new era’ upon which we have entered.”
- Business Week, 1929
“The public preference for stock is not only as marked as ever, but also the will to speculate is still a speculative factor not to be overlooked. The prompt return of huge speculation and the liberal manner in which earnings are again being discounted indicate that it will be difficult to quench the fires of stock market enthusiasm for long.”
- Barron?s, March 24, 1930
CAT = quenched
the hywy bill was supposed to keep this going
In a way, I think a lot of people miss the point about incentives. It’s not so much what is being offered, whether it’s granite countertops or a Mercedes, but the signal from the seller that they are willing to move on price. Whether they’ll move to where you want, is another question.
The builders just wanted their cake and eat it to with these incentives . The builders didn’t want to lower the price so they avoided the heat from prior sellers or buyers under prior contract ,while they could still market the higher loan amount if the sales price didn’t change .
I think we can all agree that some of these kickbacks and incentives have become huge . Wait until the lawsuits start by people that go into foreclosure claiming they were hoodwinked .
One more thing. What exactly is a “softlanding”? I’m sure for a seller who gets 20 or 30 percent less then they expected, it doesn’t feel so soft. (Please note I said expected, not what they should, there are probably many homes that are still overpriced at 30 percent lower than asking.)
I think there are going to be a lot of people who have to be carried from this RE “landing” because the impact with the ground was quite a bit harder than they could handle. For those not on the plane, it matters a lot less how hard or soft this landing is.
I take the “realtor” interpretation of “soft landing” to imply that the plane does land, but at 14K feet on the Bolivian Altiplano, also known as the high plateau theory, implying only a small if any drop in real prices and a very short lived decline, which in theory should now be complete - look out for rising prices in spring as stupid renters realize they made a mistake and and concede the crash will never happen.
Pay no attention to the foreclosures behind the curtain.
Those ARE the numbers to watch going forward. The FBs simply can’t sell at these levels and can’t stay current. In a corner 1000 ways, with 1 way out - FORECLOSURE. Those numbers are now on a tear in %INCREASE terms in bubble areas. They will pass averages soon, Q1 2007. That’s when the price declines will begin to show real movement. By Q4 2007 REOs should reach saturation, where loan-loss reserves become a sore spot and attract the attention of regulators, in the business of protecting the stability of the financial markets. Gonna get very interesting…
to me, a soft landing is one that does not jar your teeth (we all know the ones) or require foam on the runway.
We are so far past that, it is ridiculous. Anyoe still using those 2 words is not even looking at the latest numbers
In bubble markets, “soft landing” is used to describe when nominal prices of assets significantly decelerate in rate of recent appreciation/growth but do not fall and nominal prices more or less remain the same for a period of time. Although inflation and other opportunity costs are quietly eroding the value of the asset, the stablization of nominal prices is usually sufficient to prevent mass sell-offs.
We probably passed the point of no return for a soft landing sometime in early 2004. Right now its not a question of whether nominal prices will fall, its a question of how far they will fall. 2004? 2001? 1998?
It’s only going to get worse folks when inflation fears re-emerge, just in time for the spring selling season, IMO.
FYI, I sent you an email. Just giving you a heads up. Thanks.
..And the RE Industry has declared “Open Season” on the FEW remaining “Greater Fools”..the Hunt is ON !
‘There’s not much appreciation if you just got into the housing market,’ he said. ‘It’s more like depreciation.’
Was that last sentence of his a question, or the beginnings of an epiphany?
More like? How about it is depreciation. These agents were so sure on the way up, why so vague on the way down? “So, like if you, you know, like buy a house like now, it will like sort of like maybe kind of be worth about the same later or maybe like kind of sort of like maybe a little less.”
Did someone actually use the “d” word? Not “deceleration of appreciation” or “moderating appreciation” or “normalization”? This guy should be fired on the spot!
“…..Wall Street guys say it isn’t a bubble….” Here’s a news flash sweetheart. Wall Street guys said the Dow was going to hit 28,000 back in 1999. If you’re gonna back a horse, don’t put your money on one called, ‘Wall Street Guy.’
Like the “free” refrigerator post here a while back. “Giving” me a Mercedes is joke. The buyer is paying for it, and to make matters worse, it is being purchased with a 30 year loan, even though the car’s usable life span is maybe 5 years. So for the next 20-25 years, YOU will be paying for a car you no longer own. What’s the interest on that???
Well, using the following assumptions:
$50,000 car and 6.25% interest on a 30 year fixed…
Total interest paid: $60,829.60, or 122% of the principal.
To put it another way, this “gift” adds over $300/month to your mortgage payment. So on a $500,000 loan, you’ve increased your monthly payment from $3,079 to $3,386. And that’s not even touching insurance or property taxes.
Maybe that’s the way to explain why incentives are a bad idea to the flock of how-much-a-month?
What the hell does a $1.1 million RANCH look like? I can’t believe a RANCH on Long Island would have dared ask $1.5 million, which was apparently Mrs. Scardino’s first price.
“Ranch” in Dix Hills is probably a 3000+ sq. ft. one-level house on about an acre — not what most people would consider a ranch. Nevertheless, probably would have gone for less than half that in 2000.
Very good article on the bubble,
http://www.nysun.com/article/41659?page_no=2
Of interest… “As an example, 62% of non-agency loans made last year had low or no income verification, up from 24% in 1998. Also,52% of such loans made in 2005 had zero or negative amortization requirements. In 1998 there were no such loans.”
And the facts you listed BigDaddy63 explain why the property values inflated the way they did . It was a false buyer demand in most market’s because the buyers really couldn’t afford to buy the house . It’s the same as the false short term speculator demand that ran up the prices in many areas.
Only if these buyers had been well qualified long term end user buyers would the demand and prices been justified .
Yep. It’s like handing every wannabe “homeowner” a million dollar coupon, and wondering why prices suddenly reached a million dollars. This is why, IMO, we are seeing prices in places like Phoenix reach San Diego/LA levels. People are not buying based on what a house is worth, but how much they are allowed to borrow. Seems a lot of people have been given loans up to around $500K. Since the credit bubble is national, we are seeing the spread between traditionally more expensive areas and cheaper areas get smaller and smaller. At least, that’s how it appears to me.
IMHO it is analgamous (sp) to when a person goes into buy a car with subprime credit. Almost instantaneuously he becomes a “how much payment can you afford?” buyer and the actual PRICE of the car is not even discussed. They simply “fit” this person into the payment. The really ironic thing is that NO dealer or lender will do this type of credit ( sub 600 score) without income verfication or proof if income, compared with the house lender that will- on an asset that is 10-20 times more money.
The sheer insanity of it all is laughable.
No, a co-worker of mine got a subprime loan with no income documentation by putting down a few thousand.
What amazes me is the number of people who are getting into trouble BEFORE the loans reset. Not only didn’t they read the small print, apparently they were incapable of reading the bottom line.
Probably the people who thought they could stick it out for 6-9 months and turn around their POS for a tidy $60K profit.
This being somethinglike the umpteenth time the issue of incentives has come up I finally decided to see if I could get inside theheads of the buyers. My first thought (incorrect) was that a package of house and Mercedes limited the potential buying pool to those that needed a house and car. That’s when it hit me. It still isn’t about need. The offer expands the pool of buyers to include those who -want- a house and -want- a Benz.
Yes, they can acquire two “Jones-equivalence” points for the price of one.
“It is taking Andover residents nearly twice as long as it did last year to sell their single-family homes, and sellers are getting about 8 percent less.”
But don’t let that fool you into thinking that prices are off by 8 percent…
“Even open house parties must stand out. In May, one agent threw a party at one of his listings in Oyster Bay Cove, complete with DJ, champagne and models in the pool, though he still has no contract.”
What kind of idiot would be swayed by a party ! I guess if Wall Street threw a party, that would have helped stop the dot.com
bubble. Just a bunch of lazy wanna-be’s who cant seem to actual hold a real job so they turn to be realtors.
What a freaking Joke! This is so 1920’s mentality.
The Gold Coast will always be the same.
louie louie,a couple of roofies and a bj can really help close a deal.
tom stone,
now how would a “ben jones” help close a deal? LOL
If “models in the pool” doesn’t “cheapen the profession,” I don’t know what does.
I’m a believer that this market will be a soft landing.
Either quicksand or sh1t ! I’m not sure which one though.
“Sellers and agents hope these deals will keep home prices, agents’ commissions and neighborhood property values up…”
Neither the agent nor the seller could care less about keeping the property values of any one particular neighborhood up - they’re both off to greener pastures over the next hill. They’re taking the money and running and the next guy down the ladder can go rot.
Free cars? Anyone taking part in this game deserves to live in a cardboard box for a few winters - but they won’t. Hucksters never pay for their sins - they get others to do that for them - and the media celebrates them every step of the way.
Thanks in advance RE industry and media for all the neighborhoods you will ruin while playing your great capitalist shell game!
If the buyers agent is accepting “incentives” or in other words “gifts” from the seller, isn’t that a conflict in interest? How can buyer’s agents convince their clients to buy a property when they are accepting bribes from the other party? If this happens, the buyers are paying their agent for their “services,” which consist of showing them only properties that are in the agents best interest and then having the cost of the “incentive” added onto the cost of the house, and then they have to pay interest on it! How can this be legal? When I deal with contractors I can’t even accept a cup of coffee from them, but buyer’s agents can receive over $50,000 in “incentives”
Ridicules
Its not that dissimilar from mutual funds providing incentives to financial advisors to sell certain funds. As long as everything is disclosed (disclosed, not necessarily advertised), its generally legal.
Which is why no one should totally trust anything anyone tells them about financial matters. The only one completely interested in your financial well-being is you. People who blindly follow advice ultimately deserve what they get.
Generally speaking, there is no such thing as a Buyer’s Agent.
Yes, that’s what they call themselves but they will you sell you (buyer) out in a hot minute if they can swing a deal with the seller’s agent.
It’s all about the commission.
“Sellers are living in last year’s market,’ Zandieh says. ‘Buyers are living in the future.’”
All the buyers have to do is wait and the future will come. How are the sellers going to get back to last year’s market?
“‘Does that sound desperate? No, it’s making the sale,’ says Klar. ‘It’s definitely generated a lot more traffic and interest than if we just said ‘Take $50,000 off the price.’”
BS — not everyone who is dumb enough to nibble at this offer is likely to want a Mercedes. Even if it is funded on a home purchase loan with tax deductible interest. Generally speaking, money is more valuable to any given individual than a particular good purchased with the same amount of money; especially when $50K off would reduce PITI.
Not only is a cash reduction on price of a home better than a incentive in terms of paying lower property taxes but also you don’t risk getting a notice from the lender down the road that they were victims of fraud on kickbacks involving the purchase price, or a notice from the IRS that you owe some taxes for a gift accepted etc.
Remember 30 years ago when all those people were taking windmill write offs and the people found out later it wasn’t allowed by the IRS .Just because realtors , builders ,sellers etc. are playing with these car incentives doesn’t mean the shit doesn’t hit the fan down the road .
The only honest way to do this would be for the bank to get a lien on the Mercedes at closing. Has this ever happened in the history of these promotions?