“There’s Just So Much Out There”: Orlando
The Orlando Sentinel reports from Florida. “The inventory of available properties total 20,319, still near record levels, the Orlando Regional Realtor Association said Friday in its monthly report. September sales in the Realtors’ core Orlando market (mainly Orange and Seminole counties) totaled 1,965 homes, down 33.7 percent from September 2005, the second straight month in which sales have been down by one-third from a year earlier.”
“Agents are having to work harder or smarter in this slowing market, and successful sellers are definitely cutting prices, said Realtor Beth Goldstein. ‘If you really want to sell your house, you’ve got to price below appraisal and probably 10 percent below the last [comparable] sale in your neighborhood,’ she said. ‘A lot of sellers are still not accepting that change.’”
“Goldstein has organized an open house today for a home she has listed in Oviedo, a nicely appointed pool home that has languished for three months without a showing. ‘This a home that would have sold within a week a year ago,’ Goldstein said. Now, however, ‘there’s just so much out there.’”
“Shelly and Richard Taylor recently sold their east Orlando home by trimming the price and making other concessions. It took a little more than three months, and they accepted $310,000 for the four-bedroom, two-bath home, $25,000 below their asking price.”
“‘We consider it a success story,’ Shelly Taylor said Friday. ‘We paid the closing costs and met some other demands, too, but that’s really what you have to do. We were holding our breath there,’ she said, as the home competed with six others for sale nearby in the neighborhood.”
“Housing prices have been declining across much of Florida and in many other states in recent months, raising fears that a more serious plunge in values could derail the economy overall. All four Metro Orlando counties posted year-to-date declines.”
The Ledger. “Are you a wannabe homebuyer eyeing a particular property that’s captured your fancy? Yet are you petrified that you’ll pay too much? Smart buyers narrow their search to the precise area where they’re looking, says Leo Berard, charter president of the National Association of Exclusive Buyer Agents.”
“Factor in neighborhood economic trends before you bid. At a time when real estate markets are relatively volatile, as they are now, you need to look beyond closed deals to see where values are heading, according to Berard.”
“Check inventory levels before crafting any offer. At present, many neighborhoods have a surplus of homes for sale. That means the supply of housing has outstripped demand and sellers must cater more to buyers.”
“‘An on-the-ball purchaser operating in a strong buyers’ market should be able to negotiate a healthy discount on the overall price or gain valuable concessions from the sellers,’ says author Sid Davis.”
“Often sellers are much more willing to yield to such valuable ‘concessions’ than to give way on price, Davis says. This helps protect their pride.”
‘HomeBanc Corp., through its subsidiaries, engages in the mortgage banking business primarily in the southeast United States. As of December 31, 2005, it originated residential mortgage loans through 21 store locations and 157 realtor store-in-store locations in the states of Georgia, Florida, and North Carolina.’
‘HomeBanc Corp Chairman and CEO Patrick S. Flood said, ‘The Company’s third quarter updated earnings guidance is the result of adverse conditions that continue to prevail in the mortgage finance industry. Although the Federal Reserve has paused at both of its last two meetings, the Fed’s 17 consecutive rate increases which began in July 2004 have had a substantial impact on the housing industry and the housing finance market. The Fed impact is best understood when one considers the 37% reduction in mortgage loan originations from 2003 to 2006 according to the September 12th Mortgage Bankers Association Mortgage Finance Forecast. The by-product of the industry downturn is overcapacity, margin compression and aggressive credit practices. We recognize the need to respond to the current market conditions. As a result, we are accelerating certain expense reduction efforts to better position our company to confront the challenges of the environment in which we are operating. The Company presently expects that it will have a consolidated GAAP net loss for the quarter.’
‘the Company’s wholly- owned mortgage origination subsidiary, implemented an 8% reduction in general and administrative (”G&A”) headcount, mostly at HomeBanc Mortgage’s headquarters in Atlanta. The reduction represents approximately 4% of HomeBanc Mortgage’s overall associate population. This reduction, combined with the hiring freeze implemented by HomeBanc earlier in the year for G&A and other non-sales, non-revenue-generating personnel, has resulted in approximately 16% reduction in these personnel groups since January 1, 2006. Today’s announcement is incredibly difficult for all of us. We deeply appreciate the contributions of the associates affected by today’s action, and we wish them the best in their future endeavors. HomeBanc Mortgage will continue to focus on increasing its total mortgage loan originations through hiring qualified loan officers and considering opportunities for expansion into new markets.’
“Agents are having to work harder or smarter in this slowing market, and successful sellers are definitely cutting prices, said Realtor Beth Goldstein. ‘If you really want to sell your house, you’ve got to price below appraisal and probably 10 percent below the last [comparable] sale in your neighborhood,’ she said. ‘A lot of sellers are still not accepting that change.’”
Realtors (TM) can thank the NAR’s chief economist, David Lereah, for sellers’ unwillingness to cut their prices to a level where their homes will sell. After all, why should a rational seller drop their price now if prices are just going to just dip a bit into 2007, then resume their rapid ascent, right David? Meanwhile, I guess the Realtors (TM) will have to go hungry while none of their listings sell.
Good comment Getstucco. And on the other hand, we have the advice to reduce price 10% below comps. If it takes a 10% price reduction to sell in the short term, why all of the talk about price declines maxing out at arount 10% and maybe 15-20% in hot Florida markets?
Business Week’s economic forecast/editoral for this week predicts a booming economy in 2007, fueled by energy price reductions, high consumer confidence and stabilizing home markets. On the other hand, we have about 80% of American CEO’s predicting declining economic conditions and some of us think that September’s stabilization in housing, marked by HB stock price increases and stabilization in mortgage applications and housing starts, are just slight blips in a long term and rapid (by housing standards) decline.
‘If you really want to sell your house, you’ve got to price below appraisal and probably 10 percent below the last [comparable] sale in your neighborhood,’ she said.
So the realtor admits that RE has already fallen 10% off from last year.
Not necessarily. Suppose a similar house sold for $300,000 in October 2005. Another similar house sold for $340,000 in August 2006. And you price your house at $306,000 (10% below last comp). It’s still above last year’s numbers.
Not saying that’s correct, but what she’s saying doesn’t necessarily mean that prices have fallen 10% YOY. 10% off the high, yes.
Right, there was a big piece of BS on the Nightly Business Report last night, too: how great the economy is, how the sectors to buy are financials and info tech. Financials? Hmm. Maybe Royal Bank of Outer Slobovia, if that’s too far away for the reach of FNMA.
“Business Week’s economic forecast/editoral for this week predicts a booming economy in 2007, fueled by energy price reductions…”
Boy do these guys have it wrong. According to Roubini, demand for energy is falling b/c the US economy is slowing and that’s why energy prices are falling. He adds, GDP went from 5 to 3 and this week it’s going to come in at 1 to 1.5. Is’nt that a nice trend for an accelerating Golidilocks economy?
Juxtapose GDP trend with the burgeoning banking fiasco and one can only conclude that the guys at Businessweek need to get real!
The other reason energy prices are falling is demand destruction, particularly in Africa and other poor areas. Government financed oil purchases have been cut back as well in Asia and Africa.
Energy prices will fall until the lower prices stimulate economic acitivity around the world. Then they shoot up again, crash again, shoot up again in a boom-bust-boom cycle with an increasing price trendline. This will make it hard for people to make rational planning decisions…e.g., do I buy that house 30 miles out since energy prices are falling? Time to get that SUV? I hate to say, these people will have a rude awakening later this decade.
Lereah said prices will only dip a bit before returning to appreciation, so we now have a Mexican standoff between buyers and sellers. Now Lereah has to convince people to sell now or be stuck in their stucco prisons forever.
It’s been funny to see this 180 degree turn and he will just use the media to accelerate the decline. They figure, the sooner we can make this thing bottom, the sooner people will start buying. They will buy on the way down and on the way up. This will be good for Realtors who sell homes but not for the ones who were involved in the speculation and flipping themselves, which is a large number of them.
That’s OK with me, if the Realtors help to rationalize the market. Like the specialists on Wall Street. We know they are skimming but we need a rational market.
Because of foolish leadership at the NAR, agents are going to starve. Current data supports the argument that builders are more rational than resellers; as a result, builders are moving a higer percentage of their inventory than agents.
RE agents have to twist resellers arms to get them to lower price and by the time they convince the reseller to lower initial asking price, it’s time to lower price again. As you can imagine, this a frustratingly slow and painful process for both agent and reseller.
We have a lot of ‘listed below appraisal’ ads locally. I asked an appraiser what that meant to him and he didn’t really have an answer.
Good point. I have also noticed an increase in “listed below appraisal” announcements in my local MLS. What does that mean? Appraisals are behind the curve? Appraisals are fraudulent? Usual marketing hype? Nothing?
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Appraisals are simply an opinion at a specific snapshot in time. They mean nothing. And they mean LESS than nothing in a declining market.
And yet, people are being taxed on assessments based on appraisals/comps at the peak. I think local governments are purposely in denial.
Well, an appraisal in the past few days meant something to me, just in the sense that Countrywide was champing at the bit to lend $185000 on a $175000 house ($175K per appraisal, likely sale price would be $135K right now IMO). Just tells you that appraisals are an upper bound but way above LUB.
and also tells me how hungry C’wide is
I’m going to try this from long term memory. I owned a house in Round Rock TX from 1985-90, 3-2 1400sf.
As I recall the value (1st col) vs the appraisal (2nd col) looked something like this…
1985 $78K $80K - bought with 12.5% 30 year loan.
By this point, there were not too many of these type of loans left to assume (most went through foreclosure) and lots of people who couldn’t get loans.
1986 $70K $80K - refinanced to 9% 15 year loan.
1987 $55K $70K
1988 $45K $55K
1989 $40K $45K - spent $3K fixing the place up…
1990 $42-45K $don’t remember - sold FHA NQ Assumption at $65K
“Appraisals are simply an opinion at a specific snapshot in time. They mean nothing. And they mean LESS than nothing in a declining market.”
They mean the difference between liar loans getting approved or getting denied.
“Often sellers are much more willing to yield to such valuable ‘concessions’ than to give way on price, Davis says. This helps protect their pride.”
So sellers would feel prouder if they gave away a car valued at $25K than if they just dropped the price by, say, $20K? Davis must think the sellers are as stupid as he is…
It’s sad how so many people’s self worth is tied to their perceived value of the box of sticks they live in.
Great comment above about David Lereah and also this comment about pride. I also think it is not just pride people are trying to protect when they incentivize rather than mark down the price. I think some are trying to protect their ass, literally. This was something I noticed during my stay in the Orlando area (Seminole County) at the tipping point (last fall) of the bubble/bust. There was a real nasty mood in the real estate market that seemed to spread to the general population. I hauled it back to the Tampa area as fast as I could. Some people were already trying to cut the price on their homes in advance of the bust and some felt under threat by neighbors and even realtors. In my brief dealings with one real estate firm over there (a truly vicious bunch), I can understand it. It has to be experienced to be believed. As the market moves lower and acceptance sets in, this will dissipate somewhat, but there are some seriously pissed off realtors and homeowners/FBs in the Orlando area. I’m not talking mere disappointment here, I’m talking “flat the neighbor’s tires and stick notes in their mailbox” anger. Anyone else seeing or hearing about this?
2007 should see greater acceptence of lower prices from sellers. Selling a house can be emotional trying. I think many will start trowing in the towel shortly into 2007. As lower prices become more generalized the pride factor will dissapate, when everyones getting lower prices, it’s easier to hide in the crowd and not be embaressed. The serious and smart sellers will make deals in the spring, and run, when the pool of available buyers is the greatest. The stuborn sellers will “wither on the vine”.
I guess anger is one of the stages that people go through in something like this. Comes after denial, I think. Some folks are still pretty angry, it seems.
The Kubler-Ross progression is not necessarily linear, although all five stages manifest. Denial turns to anger, back to denial, then to bargaining, back to anger, etc. until finally acceptance is reached.
Eventually though, acceptance IS reached, and when it is, prices will fall in the degrees they need to.
“. As the market moves lower and acceptance sets in, this will dissipate somewhat”
I don’t think so. The jealosy towards me and other Ben’s bloggerheads will rise as the foreclsoure rate increases. I am already getting those “deer in the headlight looks” from all my friends and associates who bought into the hype while I kept my cool and covered my as_. The can’t believe my prediction and actions were more accurate then their late nite TV guru, their hot shot realtor, their friend in the mortagage business.
I keep my big mouth shut now. The anger as the market turns down is inceasing.
I’m sure there’ll be alot more anger going forward. Eventually the anger will turn to tears and self pity. But anyone with any real pride, will pick themselves up and move forward. There’s a leason about to be learned, on a national scale.
Yeah david, I expect a lot of resentment on my end also, particularly from friends that bought POS fixer uppers b/c they believed the ‘priced out forever’ argument and especially from the specuvestors in my family. I’ll be buying at 40% below what they paid for rental property and on top of that I’ll be able to underprice their rents.
“The jealosy towards me and other Ben’s bloggerheads will rise as the foreclsoure rate increases.”
I’m seeing this too, in small ways. Little snipes about (supposedly other, unnamed) people who sold at the top; a slight drop in friendliness among those who bought into the new condo that I am renting — perhaps they recognize that my carrying costa are half and prices stagnant at best. I limit my discussions about the bust to blogs and a couple of interested close friends. No problem — bragging’s not a virtue, anyway.
David, I earned that beginning this year. I was honestly trying to alert friends that this was a bubble ,and either sell or Don’t buy…I got alot of angry response ,and was straining friendships.
It’s like talking religion, politics….don’t.
—
…as an aside the show on HGTV “design to sell” is now called “hard to sell” a weeks’ show of really hard to sell property , which at this point sounds like it may include a greater percentage of RE out there..
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“When dealing with people, remember you are not dealing with creatures of logic, but with creatures of emotion, creatures bristling with prejudice, and motivated by pride and vanity.” - Dale Carnegie
Good quote, gekko. Something to remember.
“When dealing with people, remember you are not dealing with creatures of logic, but with creatures of emotion, creatures bristling with prejudice, and motivated by pride and vanity.” - Dale Carnegie
Brilliant Quote! Works well with my PT Barnum “Sucker Born Every Minute”
“… but with creatures of emotion, creatures bristling with prejudice, and motivated by pride and vanity.”
That is what dupes are made of and they deny that these could apply to them. They “can’t handle the truth” if the truth is criticism no matter how valid and well-supported.
What dupes want? Donuts and Kool Aid! And I don’t feed either.
Jas Jain
Pride goeth before a fall in price.
And just think about it: If Ben had not started his Housing Bubble Blog, there would not be so much inventory out there in Orlando right now! (ROTFLOL)
Maybe it’s because most of the realtors in Orlando also have skin in the game, i.e., “investment properties” they can’t flip.
This is why they recommend seller incentives other than a price reduction.
There was tremendous participation by agents in pre-construction properties in the Orlando area. A buddy in the commercial end told me of a residential agent colleague who went to an attractive new subdivision about 18 months ago and contracted for six or eight prime lots, using different names and who-knows-what for financing. For a while, these agents were able to flip the properties before closing, thus became serial flippers. I’ve observed some who were pretty successful at it, but it must be addicting because many didn’t get out of the game when they should have, and now are stuck with a number of properties on which they may not get their money back.
Chip … Alot of realtors were buying property from sellers and flipping them in a couple of months during the mania . This practice by realtors ran up the real estate prices . Again , this was false demand ,yet the appraisers accepted the increase in price . I saw some realtors do flips like this to a couple of old couples that didn’t understand real estate .
Example : 100k house . Realtor talked old couple into selling to realtor for 90K . Realtor markets home while escrow is opened and sells for 120K before escrow closes .
As you can see the old couple could of got alot more for their house .What ever happened to the agents duty to get the highest and best price for a seller .Regardless ,the realtors in this example pumped up the prices for their own benefit during a mania and the appraisers accepted it.
I believe most (if not all) of these unscrupulous Realtor (TM) flippers that where taking advantage of the gullible public like this (in this case the elderly) where the first ones to blame blogs like this one for this housing “decline.”
In addition ,these realtors talked the older couple into moving out ahead of time,(before close of escrow ) ,so it would make it easier for them to show the property and double escrow it .
“Check inventory levels before crafting any offer. At present, many neighborhoods have a surplus of homes for sale. That means the supply of housing has outstripped demand and sellers must cater more to buyers.”
Check how far prices fell during the any previous housing bust and how many years it took for them to bottom out before timing any offer.
I remember seeing some graph on one blog (C. Hugh Smith, maybe?) that extrapolates out an eight year decline, based on past trends. I’m thinking maybe this might be speeded up a tad by the influence of the internet/information age. Any thoughts?
Palmetto — I agree that the Internet should help to compress these cycles in the future, simply because of the speed at which people can confirm or dispel rumors, and research backup data. For example, in a local blog last night, some asked, “How do you know that to be true?” Within a couple of minutes I had replied with several links.
But even more than the Net, with regard to this particular housing bust, I think it is the one-time phenomenon of there being so many FBs out there, with increasingly-unserviceable paper, that will torpedoe the market during 2007-08. Presumably, most “normal” busts would follow excessive new-home inventories and lots of speculators, but the addition of all this bad paper and no-way-out, to me, is O’Leary’s Cow.
Chip,
While I agree its a one time phenomenon, economic cycles are compressing tremendously. Withthe realization that buying MBS’s carry far more risk than the premium they carry… I expect the market to stall and many mortgage firms to have trouble financing loans by late 2007 (end of 3Q 2007 or start 4Q 2007).
That’s when we see the true drop.
I wish it didn’t have to be this way… but that’s wishing the bubble away. Its here, its ugly, and the faster it pops the better it is for the economy (long term).
Neil
You bet, I’m starting to lean in that direction too palmetto; the information transfer to f@cked sellers (FS) is going to reach them much faster as a result of technology (sites like thehousingbubble.com, builder decision mgt technology, and so on) than in periods past; consequently, I expect deep price cuts sooner and expect the market to reach the trough sooner than most.
I recognize ‘euphoric expectations’ psychology is holding up resellers at the moment but I expect them to come around soon and when they do ‘euphoric’ will turn to ‘revulsion and disgust’ once they realize and accept that they are going to be upside down on their mortgages and cash flow negative for 6-10 years. After revulsion is met, all hell is going to break loose b/c of the large number of sellers wanting out of RE and getting into cash or some alternative investment vehicle.
Is that eight years until the bottom is reached, or eight years until prices regain their bubble peaks? If the former, that’s way too long. If the latter, it’s probably a bit too short, IMO.
It was eight years to the bottom, with a sucker rally about two years in, which would coincide with what some “pundits” are saying about “recovery” in 2007/2008. In other words, some buyers will emerge thinking the bottom has been reached about 2 years in, and then things will REALLY tank after that.
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My guess is that the top was June 2005. I think 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 nominal appreciation of 3.5%.
Capital chases RETURN and it appears that capital has left/is leaving RE and is heading into the stock market just like the reverse happened in 2000-2005.
Gekko,
While I agree (although I’m 30% to 60% decline), I would note that capital is leaving RE yet. Its trying, but right now banks are still lending to builders and new FB’s on a net basis. Capital will attempt to leave RE in bulk in 2007 and 2008. Hence why I think it will be a faster drop than others…
Neil
Lee Berard mentions “smart buyers”
Sid Davis mentions “on-the-ball purchaser”
At this time, gentlemen, these are oxymorons.
Thomas Lawler sent me this:
‘The Orlando Regional Realtors Association (ORRA) reported that existing home sales sold by members totaled 1,954 in September, down 33.7% from last September’s pace. ORRA also reported that the median existing home sales price in September was $250,000, up 2.5% from a year ago, and that active listings at the end of September totaled 20,319 – triple the number of listings from last September, but down 3% from the record 21,077 listings in September. Versus September of last year, SF sales last month were down 32%; condo sales were off by 48%; and sales of duplexes, townhomes, and villas were down by 12%. ORRA’s press release was almost a week later than normal, apparently as the ORRA folks took a great deal of time writing the press release – which was much longer than normal, and was clearly a “positive spin” report focusing on the median sales price and the small dip in listings (the first drop since April 2005). Sources tell me that local realtors were really annoyed at the negative press associated with the August report released last month, and ORRA responded. The press release contained less data than normal but a lot of verbiage about how unlikely it is for prices to fall in the area. You can read it at:
http://www.orlrealtor.com/Main/Main.asp?CategoryID=3&
‘It’s most amusing! ORRA also reported that existing home sales in the Orlando MSA (regardless of selling agent) were down 29.4% from last September’s pace.’
This is awesome, from the report:
“Price declines in the Orlando market are unlikely according to a “stress test” applied by the study’s researchers. In fact, a price decline of 5 percent will occur only under extremely unlikely scenarios. For example, mortgage rates rising to 10.5 percent in combination with local job losses totaling 64,000 could lead to a price decline of 5 percent.”
Hahahahaha. Now THAT is the single most ridiculous local pricing forecast I have read during this entire housing bubble boom and bust (with fair credit given to housing-always-goes-up). If it wouldn’t cause so much pain, I’d WISH for 10.5% mortgage rates along with 64,000 jobs lost, to show these morons just how low prices CAN go.
Go take a tour of Buffalo, Rochester or Detroit to get an understanding of what “low” prices from job losses means.
Ahh yes, the great structural impairment. National City Corp, had a webcast with thier chief economist who pointed out that Michigan was one of the most overpriced markets, even though housing price CAGR was only 3%.
Why? Because the bottom has fallen out of the michigan economy. The buyer fundamentals are not there to support even flat housing prices.
When people start moving out of florida, it will get very nasty, because you cannot sell to buyers who aren’t there.
People are moving out of Fla. I see MANY Fla plates here in Atlanta. Not all of them are driving through or here just on business (We are 250 miles north of Fla state line). If they were going back to Summer homes (not now) in NY, they’d be going up I-95 not I-75. Don’t think too many are heading to Ohio or Michigan either.
Additionally, there are many do-it-yourself home sellers in the Orlando Market that are goin it alone. They still believe there house is worth Summer of 2005 prices. These homes don’t show up in MFR MLS. Furthermore, many of the MLS listings expire and become for sale buy owners futher distorting MLS figures that inventory is dropping. Recently, I took a look at homes that sold in the Winter Springs, Oviedo, and Winter Park areas of the Orlando suburbs. Some of these homes I have been tracking since April of 2006. Some of them were re-listed at lower prices as time progressed. Almost all that entered into contracts had changed their listing price to the buyer’s offer price to give the effect that what the seller asked for in price they received in offer from a buyer for that price. Reviewing my printouts of these listings over time, I saw the data fields, in the beginning, for Original Price and Previous Price and Current Price filled in to attract buyers and show discounts in the pricing of the seller’s home. But once it went into contract and then was sold those data fields would have no information, except the original price and selling price that would match the exact price that was sold in County Records. It’s difficult to trust the information coming from the ORRA and local realtors without verifying the info yourself by researching MLS and driving the streets of your own neighborhoods. My best advice to local buyers is to research local areas on your own (start by internet research on the Orange County Property Appraiser website http://www.ocpafl.org or Seminole County Property Appraiser website http://www.scpafl.org), question the experience of your realtor, appraiser and mortgage broker. And finally, don’t be afraid to make offers that are affordable to you and that may piss off the sellers and realtors. After all, it is a market, haggle with the seller, be outrageous with your offers, and walk away from the bargaining table it you don’t like the counteroffers. Finally, the best advice i can give to buyers, 2007 will be better for buyers than 2006, if you have patience and time on your side, wait it out. Common sense is beginning to take hold of sellers.
Orlando native — “Almost all that entered into contracts had changed their listing price to the buyer’s offer price to give the effect that what the seller asked for in price they received in offer from a buyer for that price.”
That is VERY interesting. Nice work — hope you continue to follow and keep documentation on that “practice.” This is so intriguing that I just called an agent I know in Brevard. She said that in their MLS system, you cannot change a listing price in a record that is in contingent or pending status. So these people may be returning from the closing table, changing the listing back to “active” just long enough to change the list price, then go to “sold,” either via C/P or not.
This sounds WAY out of bounds regarding ethics and I hope you report it to the ethics people at the Florida Department of Business and Professional Regulation (the government office, not the association office). I looked it up and believe you can send an e-mail to info@stateofflorida.com. It looks like fraud to me in that it is manipulation with the intent to influence valuable consideration, but I’m not a legal eagle, so maybe it is not that.
If you don’t get any results there, your observations could spice up the newspapers a bit!
From Lansner’s blog, OC Register. Don’t know if this was posted.
Pimco’s McCulley says low rates won’t help housing
Here’s what Pimco’s top Fed watch Paul McCulley is telling his clients ….
“Hopes for a quick and short correction from the property market bubble are just that, and history says, at least to me, are unrealistic. When a bubble market swings from being a seller’s market to a buyer’s market, it stays shifted, and shafted, for a long, long time.”
… AND …
“The Fed “needed” to tighten until it cracked risk appetite in residential property markets. This is what I belatedly said the Fed was going to do over a year ago and, I submit, is precisely what the Fed did, as the bubble in property is deflating with a vengeance. While the housing bubble was inflating, it seemed impervious – or inelastic – to the Fed’s rate hiking, so the Fed kept tightening, on the thesis that an unresponsive mule is not really unresponsive, just in need of additional whacks on the head with a two-by-four. And it worked, as the mule has gone into severe retreat this year. No surprise here, really, as housing is, using the word of George Soros in the mouth of PIMCO’s housing guru Scottie Simon, one of the most “reflexive” asset markets in the world, the ultimate momentum market: can’t get enough on the way up and can’t run away fast enough on the way down.
“Which brings me to my core thesis looking forward (and on the opposite side of former Fed Chairman Greenspan): housing is going to be very inelastic to falling interest rates on the way down, just as it was very inelastic to rising rates on the way up. To think otherwise after a bubble is to not understand bubbles. Risk appetite in property markets will not be restored by modest declines in market-determined interest rates, particularly if the Fed refuses to “validate” them with lower short-term policy rates, limiting or even reversing declines in market-determined interest rates.”
‘Which brings me to my core thesis looking forward (and on the opposite side of former Fed Chairman Greenspan): housing is going to be very inelastic to falling interest rates on the way down, just as it was very inelastic to rising rates on the way up. To think otherwise after a bubble is to not understand bubbles. Risk appetite in property markets will not be restored by modest declines in market-determined interest rates’
A world of toxic low down easy qualify 1% option ARM’s and 5% fixed rate 30 yr mortgages does a lot to support housing. We need the world of 5-10 years ago where down payments, no negative ARM’s and fixed rates at 8% were the norm. Then you have your regional housing crash in spades..
test
Realtor=TM
realtor
REALTOR = BS
test (I’m not a Realtor)
Realtor”TM”
GS said #2 - I think?
Yeah, but where is that #2? Is it referenced at the bottom of the blog like this ?
I’ve tried it doesn’t seem to work.
K, I just typed that description in and it didn’t post
Realtors ™
Can’t you guys follow GS’s instructions. Sheesh!
Realtor™
Why don’t you explain it again, smarty pants?
I wrote everything down and can’t get it to work.
Help! I’m in Realtor hell!
I’d like to help you guys but I don’t have seniority on Ben’s blog. You know its kind of like a secret handshake for HBB!
test
Realtor
Kurt,
First type this “(TM)”, then remove the ” before and the ” after (TM), and presto: (TM)
Crispy (TM)
Thanks (TM)
“(TM)”, then (TM)
Realtor”(TM)”
gs, you know what I’m doing wrong…I’m not putting the upside down quotation in…can’t seem to find that.
Need some keyboard 101 info.
Try leaving a space between the word “Realtor” and “TM” before you put in the first quotation that way your first quote (open quote) will recognize it is for “TM” and not “Realtor”. Go low tech and just cut and paste the ™ into your post.
Realtor “TM”
Well, thanks for trying to help anyway. I guess I’ll just do the copy/paste thing.
Kurt,
NO QUOTES. Just put tm inside (), with a space in front to be certain, and you get ™.
‘.. there are many do-it-yourself home sellers in the Orlando Market that are goin it alone. They still believe there house is worth Summer of 2005 prices. ‘
I was just tin Orlando last week which seems to be lagging other bubble markets by a couple of quarters. Everything I saw in the metro area showed asking prices still way above what comps were the first half of 2005. $225-250k for ugly old ranch houses in trashy suburban neighborhoods that were $160-175k early 2005 and $110-125k in 2002.. I do think they are dropping quicker when you go farther out to new areas in competition with builders and precon flippers that are often to long a commute to jobs like in Poinciana.
‘Desperate times call for desperate measures
But are things really THAT bad? Today Inman News reported that real estate auctioneer Hudson & Marshall is putting 400 foreclosed single-family homes in four Midwestern states up for auction in the last week in November. OK, not so startling when you consider the company has auctioned off $180 million in property in the last two years.
But what if somebody was planning to auction off 44 upscale homes in a single, already depressed market in Florida — say, Naples? Well, that’s the plan, and the homes to be auctioned off Oct. 21 aren’t in foreclosure — they are owned by investors who are trying to bail out at little or no profit.
One woman, Marjorie Dresner, owns 26 of the homes to be auctioned off, the Naples Daily News reports. Dresner just sold a house on Oct. 2 for $564,000 — $71,000 less than she paid for it in June. “We are auctioning off everything she owns, except for her own home,” auctioneer Paul Drake told the Daily News.
With sales already off 50 percent in Naples, local real estate professionals are ready to revolt, saying business has come to a halt because buyers want to see what kind of deals are available at the auction. The Naples Area Board of Realtors has refused to include the auction properties in its MLS listings. But the auction’s got it’s own Web site, viewable here.
–Matt Carter, Inman News’
http://www.inman.com/blogger/bradinman.aspx
Incredible how many homes this person owns, near 40 perhaps, and the prices she paid the past couple of years. Seems $500k+ was the norm for each.
http://www.collierappraiser.com/
She’s been very busy borrowing tens of millions it seems. Countrywide, WashMutual among others..amazing
http://www.clerk.collier.fl.us/orispublicaccess/search_document_results.aspx?NL=DRESNER&NF=MAR&a...
Seems the lax underwriting of our lenders even more out of control than even I thought.
John Vosilla
Jesus. I didn’t know Naples was getting that bad…had a co-worker that bought some condo there about 18 mos. ago. I’m guessing it was about 1500 sq. ft. and paid about 300k for it.
Think she’s underwater?
she is beyond underwater!
realtors
I give up
LMAO…HBB™
esplain to me - please!
tm=’”‘
Crispy
‘”‘TM’”‘
My powers have weakened!
crispy&cole (TM)
I thought I would give a little personal experience about the current Orlando market. I am a liscensed agent and also the ‘R’ word. I just closed on my house a few weeks ago in a popular north Orlando suburb with ‘A’ rated schools. It was a 3/2/2, ~1500 sq ft, almost 1/4 acre. If I had updated the bathrooms and kitchens (they were eighties ugly), and replaced the solid but likely original roof, I probably could have sold for 280k in April 05. I figure 260k would have been realistic as it was.
Fast forward to this summer, when with a new and more agressive HOA I finally got my wife to agree that we should move and rent for a while, pending a move closer to the Smokies.
Due to realisitc pricing, I did have decent traffic on it. I had 3 different people who would have paid 240K for it this year, but fell through for various reasons. One guy offered that to me on the spot, but wanted to sell his house first. I told him I was giving a good price, but I wanted no contigenecies. He agreed to the price figuring he would do a LOC against his present property, but lets just say that did not work out. He tried to sell it for almost 4 months, and finally removed the listing from the agent he found (he offered to me, but I balked because he wanted to skimp on commission to the selling agent - I only asked for 1% for my side). In talking to him, he was downsizing because of concern his job was going overseas, not that he had any concern about the housing market. His other bright idea was to become a mortgage broker
In any regard, all these “number of listings” increases and “decline in sales” numbers are looking kind of paltry compared to what I was seeing in the area (about 3 miles by 3 miles) that I used as a search for my comps around my house. Look at this and tell me you would not be more than a little nervous:
MLS Active listings, April 2005: 9
MLS Active listings, Today: 161
I think this peaked at 167 about 2 months ago, but has basically been between 160-167 since then.
Sold 09/01/05 - 10/21/05: 45
Sold 09/01/06 - 10/21/06: 27
Sold 08/01/05 - 10/21/05: 77
Sold 08/01/06 - 10/21/06: 44
Based on a similar sale that just occurred, apparently I could have got about 38K more, if I would have done the following:
Replaced the roof.
Redone the kitchen and bathrooms.
Painted everything inside and out.
Recarpeted at least the great room area.
Paid another agent on the selling side.
Discounting this, I figure I left about 10-15K on the table. In any regard, I am free to live where I want, and I got the cash.
I kinda feel bad that the -38K low price is gonna show up for my neighbors sake, but we had to go.
What was your actual selling price? I couldn’t figure that out from your post.
Where is my post?
huh…never mind. It just took like 15 minutes to get there for some reason.
Tom (TM)
Just type this
( TM ) without any spaces
beebs tm
ric “TM”
ric (TM)
test
SFran (TM)
I’m moving to the orlando area with kids. Want a good family neighborhood with great public schools. Can someone recommend areas for me in ranking order? Thanks.