Post Local Housing Market Observations Here!
What do you see in your housing market this weekend? Reduced prices? How about builder incentives? “Know anyone in the market for a new home? If so, we have some great news for both of you. Now, when you refer someone to one of our neighborhoods and they purchase a home that closes by year end, not only will you get $5,000 at closing, but they will too!”
“Best of all, there’s no catch. You don’t even have to be a William Lyon homeowner to be eligible.”
Or a repartment. “Developer Steven Samuels told the Boston Redevelopment Authority (he) will press ahead with the 215-unit project located at 1330 Boylston St. in Boston’s Back Bay neighborhood. The residential and office project will break ground next week, but Samuels said it may turn out to be an apartment project rather than condominiums.”
“With financial backing from Samuel’s partner, JP Morgan & Co., and a plan to pursue rental units rather than for-sale condominiums as a ‘worse-case scenario’ the said the project will move ahead.”
From North Carolina. “Nearly a year after City Council approval, the $140 million tower is still in the design stage, none of the expensive condominiums needed to finance the project have been sold, and the groundbreaking originally scheduled this year has been pushed back to early 2007.”
“‘I heard this summer they’d be under way,’ said Mayor Charles Meeker. ‘There hasn’t been any progress on the construction.’”
“According to a report recently released by an Alexandria, Va., commercial real estate research company, buyers are less motivated to buy condos now. Some factors that contributed to the slowdown include: Prices are no longer moving up with last year’s drama. Incentives are low relative to the cost of condos. Buyers fear prices may drop and they do not want to buy at the peak.”
“As an incentive to get people to buy, The Chase, a condo conversion with units starting in the high $200,000s, this month began offering $5,000 toward closing costs on studios.”
Now, when you refer someone to one of our neighborhoods and they purchase a home that closes by year end, not only will you get $5,000 at closing, but they will too!
Somebody call Casey Serin! What a great way to make some fast, easy cash!
/end sarcasm…..
The DC area is a bomb waiting to go off in my humble opinion. The high employment here is due to defense spending and real estate prices that have gone unchecked far too long. This creates a false belief that this city is “recession proof”. Prior to 9/11 and the tech bubble (which imploded here), DC/NoVa was a relatively affordable city. Real estate prices here were low compared to other cities like NY, Boston, San Francisco. What’s going to happen when gov’t defense spending is cut? And you know it will. It has to or the US will go bankrupt. The high paying jobs in defense contracting will disappear and so will the market for highend housing. Regular gov’t jobs that are not cyclical just do not pay exhorbitant salaries and that is the main industry here.
Please tell “Va_Investor” and “Lance” at BubbleMeter! They claim some new paradigm in DC.
VA_INVESTOR said the same thing about Naples. She said that she was savvy and had nothing to worry about with Naples. I bet she has really bad ulcers now.
only if the LP gets elected
defense will tapper off in 09
but until they chop gov heads ?
You are spot on. I was a federal employee in the type of work you are talking about. Of course, federal employees always have some type of job - they just get bumped somewhere else. But during the last series of BRACs (base realignments and closures), the contractors in my town were driven out. The real estate market went into a tail spin for several years. A good engineer worth his salt is footloose and able to fit in with in-demand defense expenditures. Whether the hot item is avionics, missiles, secure communications, helicopters, or the strategic defense initiative, I go there. I’m in a hot item now and it will remain hot the next 5 years even if Al Scharpton/Jesse Jackson become President and VP. There will never be zero defense spending. Our Constitution requires defense spending and does not require entitlements, but many people conveniently forget that. I am about to take a 90 day engineering job on the east coast in my “hot area” and then come back west for another good high-paying 18 month engineering contract. But this 90 day tour will start in early January.
You are spot on. I was a federal employee in the type of work you are talking about. Of course, federal employees always have some type of job - they just get bumped somewhere else. But during the last series of BRACs (base realignments and closures), the contractors in my town were driven out. The real estate market went into a tail spin for several years. A good engineer worth his salt is footloose and able to fit in with in-demand defense expenditures. Whether the hot item is avionics, missiles, secure communications, helicopters, or the strategic defense initiative, I go there. I’m in a hot item now and it will remain hot the next 5 years even if Al Scharpton/Jesse Jackson become President and VP. There will never be zero defense spending. Our Constitution requires defense spending and does not require entitlements, but many people conveniently forget that. I am about to take a 90 day engineering job on the east coast in my “hot area” and then come back west for another good high-paying 18 month engineering contract. But this 90 day tour will start in early January.
Local market observation -
Had lunch w/a friend yesterday, who pointed out to me the group of men behind us were “highly placed agents in a big DC real estate brokerage,” (to remain nameless). Anyway, they sat and ate and bitched and moaned about the market.
“We are in a VERY difficult time,” said one.
“If they would reduce their price like I told them, they would have sold already,” said another. And yet another, “They would have made money hand over fist, even at the price I recommended, but they won’t reduce. It’s still sitting…”
I am not making this up! The real estate agents were actually venting about sellers not reducing prices! I wanted to throw my black bean soup at them, but got control of myself. I hope there are no transactions for the next two years and those bastards are the first into foreclosure.
dcrenter
Actually, the US IS bankrupt. It just hasn’t signed the papers yet. China, Japan and a few others are holding our I.O.U’s.
Like the housing market, America seems to be wearing blinkers. Even if the Democracts get in and raise taxes in a futile attempt to stop the deficit going further into the galaxy, it will make NO difference for years to come. The deficit is so out of control (despite what that idiot in the White House says) that we have hocked our childrens financial futures for decades to come.
According to economists, the US dollar is a “faith based” currency. Not in the religious sense but because other countries have “faith” in America. Again, because of that idiot in the White House, “Faith in America” is somewhat in short supply around the world these days.
It seems we are in for a recession (which of course will be blamed on the democrats when it arrives) but we can only hope it isn’t a bad recession but what you say about defense spending is very true. Of course (because of that idiot in the White House) this disaster in Iraq means the military has a LOT of worn out equipment. Maybe they can increase the deficit a few trillion dollars more (but I think the Chinese and Japanese are getting a little bored covering our gambling debts) and keep the ball rolling a few years more by printing more confetti money to pay for a huge spending splurge to re-new all the worn out military equipment.
Hey, maybe we can cut costs and get China to manufacture some of it with their cheap labor. After all, they have a great manufacturing base now that ours has been decimated. Pretty amazing to look back and see what has happened in the past 6 years since President Jaques Clouseau Bush took office.
That “idiot” in the White House has essentially turned this country on its head. He has done so much damage to this country in such a short period of time. Doesn’t that kind of “accomplishment” take some sort of planning?
I know you were saying that “some kind of planning…” as a jest but I seriously think there could be some truth in Bush’s “planning”. Under “The Idiot”, the really rich of America (Bush’s pals) have become MUCH, MUCH richer. The middle class masses who own property THINK they became become richer because of property price increases. Now they are smelling the coffee. It’s a well documented fact that Bush was determined to destroy all the FDR type programs which were the base that middle class America was built on. It goes along with neo-con thinking. Thus, we end up with not three levels of society, (A) The top 10% who are the super rich, (B) A very large middle class who are comfortable, (C) A less wealthy lower class who are able to improve their lot in life through education and move up the ladder into the middle class.
“The Idiot’s” thinking would basically destroy the middle class, as Lou Dobbs preaches, and Bush has gone a long way in doing that, which would leave 2 classes like Mexico and many other countries.
So, what we end up with is: (A) The super rich like oil executive and drug company CEO’s (Bush’s pals) and those who inherit massive wealth, (B) A much smaller middle class, (C) A massive, much poorer lower class. A large pool of workers means they have much less power in the work place.
At this rate we are going to have a lot of people standing outside the Wal-Mart’s employment office, hoping to get a job as a “greeter”.
You say FDR programs were the base on which the middle class was built on like it’s a proven fact. Give me a break. We had a great country for 200 years prior, and we still do.
True story. When FDR was elected, my great-great-aunt smashed her radio with an axe. There were people ready to go up in arms about unjust social spending then, as they are now.
My father grew up during the Great Depression, and he, along with other friends & relatives, directly credit FDR for helping the totally bankrupt masses get back on their feet.
Just another perspective.
That doesn’t mean that such a system should continue in perpetuity, or that it was the basis for America’s greatness. Anyway, this Mike person sounds like a communist zombie, and I don’t know why I’m wasting my time replying to him.
The last time I checked, Bill Gates, Warren Buffett, and George Soros, all billionaires, were not “Bush’s pals”.
I agree with much of what you say but should point out that under Bush total military spending is 29% of Federal governement spending. Kennedy spent 52%, Johnson 65%, Carter 45%, Reagan 52% and Cllinton 35%. The big hole in our spending is for the social programs.
Really? Well, I guess that makes sense since the lambs that he sent over to Iraq don’t even have adequate armor. But drive around NoVA and all you see are large buildings with defense contractors names on them. I wonder what they’re really doing in those buildings?
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The common disease that afflicts most Americans, especially, when it comes to housing, is: My area is special. That includes those who live in Coachella Valley in CA.
When the current American political system is KAPUTT (two t’s in German), and it will be, who knows where the next leader might want to take his Capital just to make a point about ending the corruption. Yes, NYC, the finance capital, would fare very badly too.
Yes, the current American econo-political system, controlled by BFNYC, is the most corrupt system there is. Think about who and what is behind “Reckless Mortgage Lending?”
Jas Jain
A friend worked on the Space Shuttle program in the Cape Canaveral area in the mid-1990’s when the Clinton Administration cut the funding for the space program. He needed to move but his house sat on the market for 2 years. He finally bit the bullet and took a large check to closing.
I visited Carmel and noticed alot of homes for sale and people putting on new roofs/remodeling. One newer home was 3000 sq feet on the ocean. Their wish price: 8.6 million. I checked zillow when I got home and they rate it at under 2 mill.
A few houses have sold lately in my neighborhood, but only the most competitive priced and yet well below asking prices.
A few FBs trying to sell for what they paid in 04 and 05.
Between 1/3 and 1/2 of the listings are reduced.
Finally, there are several REOs listed in my area (Pasadena, Altadena, La Canada), which would have been a blasphemy just in January of this year.
It looks like another development project in downtown Sacramento has been scrapped because of the residential real estate economy (see http://www.sacbee.com/103/story/43212.html ).
“Construction costs for the ultra-modern project came in about 20 percent over estimates.
That’s partly because the design included an unusual mix of concrete and metal elements. Another complicating factor: the mix of housing units — 32 apartments, 21 loft condos and five town homes. That combination eliminated the economies of scale available when uniform units are built.
The developers could have moved ahead with a less expensive design, but opted against it. “We didn’t have the taste to dumb it down,” Friedman says.
Instead, they notified the Capitol Area Development Authority, which owns the property, they’re walking away from the project.”
“We didn’t have the taste to dumb it down,” Friedman says.
Friedman means:”We didn’t have the taste to lose our shirts”
We’re up to 386 FITs in Sacramento now:
flippersintrouble.blogspot.com
We had 311 on September 30…
Very interesting reading — thanks, Max.
from Clearview,
This is my first post on this site. I live in Santa Barbara, Ca and would like to share my observations of the real estate market in this area.
Between 1996 and 2005, the median price for SFR’s in south Santa Barbara County (which includes the city of Santa Barbara and Montecito) increased from $350,000 in 1996 to $1,300,000 in the summer of 2005. As of September, 2006 the median has dropped to $1,010,000. These numbers come from the Santa Barbara Association of Realtors, as published in Casa magazine. Only 63 SFR’s closed escrow in September, about half of the average volume. Almost every zip code in Santa Barbara County shows a year over year drop in both sales volume and median sales price according to Data Quick. Foreclosures have jumped 188% from last year.
I know several people who own homes in this area. One person, a very savvy businessman, is dumping his 5 bedroom home in the Riviera area (the hills above Santa Barbara) for $1,000,000. A year ago that house would have sold for $2,000,000+.
I believe that Santa Barbara County is leading the way downhill in California. When the median sales numbers come out for October, I expect to see the median sale price in south county drop below $ 1,000,000.
This website is perhaps the best in documenting the collapse of the speculative housing market. My compliments to Ben Jones.
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“This website is perhaps the best in documenting the collapse of the speculative housing market. My compliments to Ben Jones.”
I second that. And I am very stingy.
Jas Jain
Interesting puzzle…Old Atlanta - Morningside area
Two houses just went under contract within .25 miles of each other.
#1. 5-4 4500sf including finished basement 1928 construction completely redone in past 2 years including high end finished basement (media room) and outstanding yard. $1.25 million list…likely $1.2 million contract (2 weeks on market) (Hmmm…where is that woman from Savannah that said houses in here are not worth $700K?)
#2. 5-5 5100sf including finished basement 1999 construction, finished basement. $849K list…likely $800K+ million contract (4 weeks on market - this time…has been on off market for several months at $900K+).
The first house is definitely nicer, but not that much nicer. However, it does have far better curb appeal and that 1920s cottage look. The 1999 house is a decent looking house and really nice inside, but not the appeal of the old home.
oops $800K million = $800K
I know that area well, lived there when I was a kid. Hard to believe houses there are going for that price.
What about Ansley Park? Is it still there or completely rebuilt. I always liked that part of Atlanta.
Ansley is one step up above Morningside in price (figure $700K-$2m+ vs $450K-$1.6m). Old homes still there and many renovated in past 10 years. Closer to Midtown (1 mile vs. 2-3 miles). However, the school district is quite a bit worse. But most of the people in these areas send kids to private schools (except Morningside elementary and Inman middleschool are quite exceptional and beat many Cobb Co. schools).
Prices driven up by scarcity of good solid houses close-in that have a lot of appeal. If you have money, why deal with the traffic? Live in one of these old areas. They really can’t overbuild SFH in this area. No open lots or areas anywhere nearby, just tear downs. Buy something in a state of disrepair for $400K-$500K. Teardown, build $1.0m-$1.5m. These move, but slowly (and slower now than before). Houses are selling in both neighborhoods if high quality and move-in condition. Quite a busy Spring. Slow now…about like last Fall.
They ARE overbuilding condos in Midtown and Buckhead. And they cost more than the small and great old homes from the 1930s!!! These condos are commodities. That will end badly.
It seems a lot of NE and Fla people are coming here. Even Texas plates are now more common. I really am not sure what all these people do. Lots of small companies and entrepreneurship here. Some NE financial services have satellite offices and geographical diversification in case of another NYC 9/11.
There will be pain when the construction boom ends (which it must). Probably the party ends in 2007 when the ripple effect takes hold for the people trying to move here from these other areas and can’t sell. However one cannot use the metro median nor foreclosure rate to assess a particular area. 30306 has virtually no foreclosures at this time…yet the metro area has many. Poor areas close in may switch over to stronger hands through foreclosure which will gentrify. Poor are being incrementally pushed out to suburbs towards east (parts of DeKalb Co) and south and SW. Grant Park is gentrifying now as well as surrounding areas down there.
Interesting. I haven’t been to Atlanta in many years. Other than the a/p (hate that place).
I’ll have to go by there sometime. When I lived there they were about to go to a population of 1 mil (obviously a looong time ago). Four times that now I think.
“Hmmm…where is that woman from Savannah that said houses in here are not worth $700K?”
Hmmm…that’s quite a misquote. But you are just teasing, right? LOL
This is what I am seeing in my neck of the wood:
1) http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=P510875&page=8&property_type=SFR&mls=mls_so_cal&cKey=377lfqcd&source=SOCALMLS
down from $739k to $639 and still unsold.
2) http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=P531820&page=5&property_type=SFR&mls=mls_so_cal&cKey=rwpkshwc&source=SOCALMLS
Down from $640k to $540k. Zillow check shows last purchased on 11/05 at $607k.
Who said real estate agents are dumb? The first link to those two listings in Walnut starts off…
“Price grately reduced.”
I hope that’s the fireplace grate that the agent is referring to, not the cheese grater.
Alternate link to the North Carolina story:
http://www.charlotte.com/mld/charlotte/business/15809016.htm
This is what I am seeing in my neck of the wood:
1) http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=P510875&page=8&property_type=SFR&mls=mls_so_cal&cKey=377lfqcd&source=SOCALMLS
down from $739k to $639 and still unsold.
2) http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=P531820&page=5&property_type=SFR&mls=mls_so_cal&cKey=rwpkshwc&source=SOCALMLS
Down from $640k to $540k. Zillow check shows last purchased on 11/05 at $607k.
These are in Walnut, CA.
It’s just about 12:00 A.M at the house party and it seems like even the next bigger Fools in line are waking up at last ! Are they are finally realizing that the RE Industry’s Cinderilla American Dream Home is an Overpriced BUST that they WILL spend a lifetime in indentured servitude PAYING For?
Crank up those lazy mice, incentives and get out the used Lexis pumpkin on wheels, the ugly sister’s realty copany NEEDS those 6% sales !!!
It’s just about 12:00 A.M at the house party and it seems like even the next bigger Fools in line are waking up at last ! Are they are finally realizing that the RE Industry’s Cinderilla American Dream Home is an Overpriced BUST that they WILL spend a lifetime in indentured servitude PAYING For?
Crank up those lazy mice, incentives and get out the used Lexis pumpkin on wheels, the ugly sister’s realty company NEEDS those 6% sales !!!
Sacramento Police Department has a nice search engine on their website that identifies type of crimes and locations. I would advise all bloggers to inform friends and family to use such local resoources if they are planning on purchasing a home in a certian area. It could be the extra incentive they need not to buy in a bubble market. It is bad enough that FB’s bought in over priced market, but if they bought in a crap hole hood area then they are twice as screwed.
I just returned from a 52 house auction in Naples, Florida. There were internet bidders and around 400 people present. HOLD ONTO YOUR HAT.
608 Banyan Blvd, Naples, Zillow $1,780,000. sold for $900,000.
2196 Beacon Lane, Naples, Zillow$1,406,000. sold for $880,000.
570 Rudder Rd, Naples, Zillw $1,064,000. sold for $700000.
1166 12th Ave North, Naples, Zillow $595,000. sold for $2750.
522 94th Ave North, Naples Zillow $550,000. sold $320,000.
539 Rudder Rd, Naples, Zillow $809,000. sold $600,000.
1848 Crayton Rd., Naples, Zillow $980,000. sold $620,000.
920 Forest Ave, Naples, Zillow $816,000. sold $420,000.
Cape Coral canal front lots(around five) auctioner asked for $200,000 to start. Only one bid of $60,000.
865 Robin Court, Marco Island, Zillow $934,000. sold for $600,000.
If the reserves settle for these prices the Naples market is off at least 35% from Zillow estimates. The above prices were not outside the relm of the others.
WOW! I think you missed the really cool part, check out the last sale price on zillow..
The Crayton prop was $950k—vs 620k auction- that’s gotta hurt.
& the 920 Forest went $690k to $420k.
Banyan took an $800k spanking!
WOWOWOWOOWOW.
Thanks for the report.
Guess they’ll be seeing an increase in attorneys’ fees in that area soon.
Hope these sales make it into the NAR comps. Somehow I doubt it.
I just returned from an housing auction in Naples. HOLD ONTO YOUR HAT. There were on line bidders and around 400 people present.
608 Banyan Blvd, Naples Zillow 1.78 million sold for $900,000.
1166 12th Ave North, Naples Zillow $595,000. sold for $300,000.
1034 6th Lane North, Naples Zillow $605,000. sold for $275,000.
510 Riviera Dr, Naples Zillow $1,056,000 sold for $800,000.
570 Rudder Rd, Naples Zillow $1,064,000. sold for $770,000.
635 Robin Court, Marco Island Zillow $934,000. sold for $635,000.
About six lots on the water in Cape Corral. Only one bid for one lot for $60,000. The autioner said the minimum was $200,000.
I do not know how many of these bids will be accepted but this was UGLY.
If this auction gets past the reserves (if any) and the 50 odd properties represent the market; Naples, Marco Island and Cape Coral appear to be off 30% since last year.
Wow. Are the first prices you listed former sale prices or list prices or min bids? Those are some nice numbers. I fully believe FL and AZ will be hardest hit.
Nevermind. I see your post below.
The first prices are Zillow prices.
Holy schvitz! I was going to sign up for that but figured a bunch of GFs would be all over those properties and would probably bid them up.
Maybe they did.
Glancing at a few days worth of Midwest real estate deeds in the QCTimes, I notice there are no transactions less than $100,000.00 There is a push locally to fund second loan mortgage programs, for low income residents and high income developers, that have been discontinued by the State. Some flippers who prey on the stupid and the ignorant poor must be squirming. Monthly mortgage payements may be more like rents, the population can only pay so much, that must be why there is a big push for an increase in the minimum wage here. I also notice alot of automobiles dated after 1995 with price tags too high, along with the mileage. 1995 is when the credit bubble started, I always wondered how people could buy the higher priced autos in the late 1990’s, and I couldnt imagine how they were going to sell them years later and still get any of their money back. It always used to irk me when an auto dealership would not soap the price of an auto on the windshield, instead preferring to soap the monthly payment only. Now I know that the old slogan, “if you have to ask what the price is you cant afford it” really means, “if you have to ask what the price is, you must be one of the few who CAN actually afford it.” One last thing, on the local TV real estate show, a house listing description normally ends with, “and the price is…” I saw one that ended, “and it will be up at auction on…”
Also, there are 100’s of houses under $100,000 here, and quite a few farms for the same price, not moving by the looks of things. California has too many $400,000 - $250,000 houses, so do we. We have 2.4 mil tear downs too, just not so many, still sitting too. California rents houses for 1400 - 2000 per mo., so do we, they just seem to be sitting too. When rents go down in CalifornIA, how does anyone in Iowa still think they can get that much to view corn, or a muddy river? I read that every year 1000 more people leave Iowa than come in, they must not be going to Fl. or Az. though.
Iowa once had a very well respected public school system.
A local radio show had a caller who asked how she should do a certain transaction. She and her husband owned a piece of land in one area and a home in another, and were planning to build. The advice given was to sell the house before starting construction, as the caller did not need to have two major financial obligations at once (and if she sold, by her worst estimate it would clear the mortgage and pay off the land, so while they’d still have to pay for the new house, they’d still be better off.) The host also said that since she was not a “motivated seller”, she could put the house up for sale and see what happens, without worrying about deep price cuts. Then he said that it in a year the market might be better. (I think he’s WRONG, but at least he had the ‘it’s better to rent than to have two mortgages’ bit.)
The interesting part of the call was the way the caller referred to the housing market “bottoming out.” I’m sure she didn’t mean it deliberately, but such a phrase means, literally, that the market is at its worse and will improve. So keep your eyes open for that phrasing, which on the seller side probably means a subconcious hope that it is true, that the market is “bottoming out” instead of the dreaded “still falling” or worse, “free fallling.”
“at its worst“, sheesh.
I just returned from a 52 house auction in Naples. There were internet bidders and around 400 people present. HOLD ONTO YOUR HAT.
Lots in Cape Coral on canal fronts with ocean access. Starting at $200,000. There were five of them. NO BIDS except one at $60,000.
Houses in Naples with Zillow listing values of an average of $900,000. sold for around $550,000. some off around 50%
A Marco Island canal ocean access house listed on Zillow for $934,000. sold for $600,000.
If the reserves are met or accepted the auction sold for 35-50% lower then zillow estimates. SLAUGHTER.
Wow, PB, great news. There have been more MSM auction stories in the last month than the previous year.
Sorry about all the e mails. I did not realize the first ones went into the blog so sent back up.
Great news! Those results should send a tremor through Florida’s RE community. Looks like 50% and greater drops in the future are a real possibility. And sooner rather than later. Wow.
How do you buy from auction? What do they require you to have in order to bid?
It depends on the aution but a deposit is required. Then you get a bid card and off you go. In my opinion it is way early to be a buyer. I visit to learn the game.
It is probable that many of the Naples “sales” will not meet the reserve and will end up in the next larger auction. The signs of a low will not be price. The signs will be many lawsuits, banking scandles, a recession or worse, and a series of magazine covers.
Another sign will be an auction that doesn’t have 400 people but only 40 show up.
The FED will try to ease the pain by lowering interest rates at some stage. The 10 year bonds 25 year tops line blocked rates at 5.25% in June. That down trend line will be broken over time and there is little resistance until 6.5-7% on the the 10 year. That equates to an 8% 30 year loan.
The reason for a rise in rates will probably be an eventual run on the dollar. It will result in the FED defending the currency via higher rates. Think Russia in 1998 and Argentina in 2001. In other words the central bank will loose control of domestic money rates.
Time is on our side.
I just drove through Tampa and they are rushing to fiish neighborhoods. While the ones they just finished sit empty, they are in the process of building literally hundreds more. This isn’t going to get better, it’s going to get worse, especially when the FEDs start raising rates.
The only bottom I can see would be for a dead cat bounce and I can only imagine that it would happen early in 2007 because folks would want to maximize the MID. But I just have not seen enough movement in price here in OC for that to be realistic. I guess if I drank some of that kool aid I may see things differently. But without the kool aid all I see are a few more signs, some signs changing indicating agency changes. Greediots trying to get that wishing prices I guess.
You’re hearing a lot of that “springhopemania” thinking right now. Seems the delusional are thinking things will start ramping up again in spring (it will, but just for a short, shallow “spring bounce/DCB”, IMHO). They’re all holding on until the market gets better. LOL!!!! During the last downturn in LA, it took 10 to 11 years just to break even, and that RE boom was NOTHING compared to this one. It’s why I don’t think things will improve for decades because of globalization and demographic changes — and the greatest RE/credit bubble in (US/world?) history.
‘The interesting part of the call was the way the caller referred to the housing market “bottoming out.”’
Too funny! If she’s typical of American mortgage payers, then the whole lot is blind to reality.
Hello all- just walked the dog and have my latest local observations. We walked down to a new home sub called Salisbury court where 32 homes priced from 225k to 489k are on the market.
“Highgate”, the sub we rent in, has ten homes on the market; all of these homes have been on the market for 5+ months. Only 2 homes have sold since we have moved in.
“Sundance”, a popular sub down the street from us, closed out construction last spring; 21 homes are back on the market.
The new homes communities around here are having a tough time moving inventory as the investors are gone. Almost every big sub built in the last year or two has a lot of homes for sale by both “investors” and builders. Meridian Idaho, a town of 60,000 near Boise, has 560 “new and never occupied” homes listed on the MLS.
According to the MLS, new homes sold in the 3rd quarter (which should be a hot time for home sales) is down 39.73% vs the 3rd quarter in 2005. http://stats.intermountainmls.com/StaticReports/REPORTS/Ada/2006/Q3-2006-Ada.pdf
And with sales down, there are 19,700 lots in the permit pipeline.
http://www.buildingcredibility.com/All%20Ada%20County%20Subdivisions%20in%20Development
And to top it off, an out of state developer has plans for 12,000 homes near Eagle Idaho. http://www.idahostatesman.com/102/story/55731.html
Treasure valley 3rd Quarter New Constructon Survey results-
http://www.buildingcredibility.com/Treasure+Valley+Market+Reports
Alert! Alert! Alert!
–Dr Horton’s plays pricing gimmickry in the Jacksonville market–
For several weeks DR Horton offered an ‘up to $50,000 price and other incentives’ discount in a neighborhood I’ve been watching. Here is the webAd see for yourself: http://tinyurl.com/ybao8a
Suddenly, in red text the model pricing page reads that all discounts are already reflected in the price: http://tinyurl.com/yat4qq Initially, the the red text read, “New home prices [do not] reflect community savings package.” This made sense b/c the webAd includes incentives other than price reductions like washer, dryer, interest buy down, and so on. Now, the red text reads, “New home prices reflect community savings package.”
Surprised and puzzled by this unusual turn of events, I picked up the phone and called the sales office for clarification. The agent explained that customers were confused by the discounting process; apparently she added, customers could not subtract the stated discount from the selling price to determine the sales price; as a result, DR Horton was forced to cut prices across the board.
Wait, there is more… So, before ending the call I say to her, “well why don’t you just pull the webAd,” because in my opinion, “you are now really confusing customers and here is why: Essentially, DR Horton is offering a discount but it is already reflected in the price; as a result, there is no discount to be had; so, what’s the point of advertising a discount? Why not just say *Prices Reduced.”
All in all, it looks like pure pricing gimmickry to me. They advertised discounts one week and then reneged on them the next simply by removing two words from the model pricing page, [does not]. Can they getaway with this? Sure they can but it is a big turn off… As a result, I am extremely disgusted with the brand.
Sorry, in the last paragraph [does not] should read [do not].
“Can they getaway with this? Sure they can but it is a big turn off… As a result, I am extremely disgusted with the brand.”
But they are DR Horton, America’s Builder.
As a marketer, this is probably the most ridculously botched housing industry sales promotional campaign I have ever witnessed. At the end of the day, it serves only to infuriate and frustrate their potential customers and create all sorts of cognitive disonance. Someone in DR Horton’s marketing dept should be fired for this f@ckup.
Their original approach was much better. Advertise a discount, get the customer out to the neighborhood, and negotiate to the customer’s ‘perceived’ advantage the approriate pricing/incentive mix: Clean, simple, and customer empowering, creating very little disonance.
With the current across the board price reduction sales promotion, a much better approach would be to reflect on the model pricing page slashed original price next to new discounted price (orig price 250,000; new price 200,000).
Since across the board price reductions is clearly not their intent, however, I can only conclude pricing and advertising gimmickry. In other words, it is a mischievous attempt to confuse their customers. As you can see from the above referenced webPages, they are trying to have it both ways: Offer a discount without giving a discount.
Furthermore, if Horton is going to reduce prices across the board and hope to generate additional sales from said price reductions, they need to clearly, accurately, and loudly promote the reductions for maximium bottom line impact. In other words, celebrate the price reductions. For example, Horton could advertise *prices reduced to 2004 levels* or some other variant.
As it stands, the current promotion reads like the customer could.. well.. maybe.. get a price cut.. but we’re not sure. There is no energy or enthusiasm in the current approach. It’s simply befuddling.
Yeah, sounds like Horton is trying to giving someone a dry stroke. Tricky HBs!!
I plan to check out the Big Sky RE Investment Club (Billings MT) next month. I’m curious what the “investors” here do to make money. It’s difficult to find a cash-flowing property here, unless it’s in a super low-income area.
Anyway, the funny thing is that, on their links page, they have a link that says:
Montana DEQ Meth House List - A list of houses that have been contaminated by “cooking” meth
Ahhh.. the joys of investing in the meth capital of Montana.
One of the addresses was “200 Pipe Creek Rd”
North County San Diego:
Most of the inventory is from spring/early summer, and still has not moved. Some sellers are taking their homes off the market in hopes of relisting in spring (said it before, but I think this spring’s inventory party will be a doozy!). Sellers are lowering prices, but by the trivial $5K to $20K at a time — how stupid can they be?
I am seeing some newer listings (and some old ones) that are priced at late 2003/early 2004 pricing (the full-throttle, massive appreciation moment for us in SD was during this period, where large numbers of people were literally rushing into homes, contracts in hand). I’ve been watching different price points over the past few years, and have not seen so many under certain levels in about 30 months. Here’s the neat part…even though they are priced at 2003/2004 prices (when they would fly off the market in hours or days), they are sitting on the market now. This tells me we are effectively at mid-2003 pricing. Can’t wait to see what 2007 brings!
See, when these greedy sellers knock off, maybe 1% or 2% of their selling price, yet people’s incomes all over the U.S. are still increasing at a miniscule annual 2% or 3% and federal funds rates average 4.5% to 6.5%, there will be no sales. The winner is the renter. Time is on the side of the renter, and time certainly works against the seller.
DataQuack numbers are shown in the SD Union-Tribune Home section today. My zip code (Rancho Bernardo West — 92127) shows overall prices off 25.7% YOY. This is somewhat inflated by changes in the quality mixture (more condos, less SFRs), but that bias is offset by the unknown magnitude of incentives used to sell new homes, which are not properly reflected in the reported sales prices. Used SFR prices are off 8.5% YOY.
A link to SD Zip Codes is here:
http://www.dqnews.com/ZIPSDUT.shtm
Just did an update on the Estates at Lincoln Crossing development north of Sacramento:
Massacre at Lincoln Crossing
Just for you, JR.
“Massacre at Lincoln Crossing” Let the Halloween massacre begin.
Sac wins the ultimate “bubble” prize. Oct 21 thru Jan 21 will be 90 days of hell. No buyers, ARM’s resetting, and builders trying to clean up their books before filing BK.
Looks like grist for a new version of an Everly Brothers classic: “Bye, Bye Comps.”
Those are some hummer price reductions.
What a lot of people don’t realize is that the builders margins in Sac have been huge. Some of these lots were optioned in the late ’90s for a few thousands apiece. At $600,000 for 4000 sqft, you’re looking at a 100% markup.
The builders can drop prices a lot further and still remain profitable. That’s why I say the bloodbath is just begining.
Inventory here in Allegheny County (PIttsburgh) is almost as high as it’s been all year, at 9,271.
Closed sales, 9/1/06 - 9/20/06 - 588
Closed sales, 10/1/06 - 10/20/06 - 530
Of all the “for sale” homes I monitor along my daily routes, I’ve seen only 3 sell in the last 6 months or so. In the last few weeks, 4 home sellers have given up and pulled their listings.
At work, I have an estate with two listings. One is a SFR, about 1,000 sq. ft., listed at $29,000. We got one offer, about two months ago, from a NY investor, for 20K, which the executor rejected. The other property is a rental, bottom floor is rented to a barber, second and third floors are rented to two families. Total rental/mo is $1,100. Asking price was $99,000, then reduced to $79,000. No offers.
Here in the IE, I have been seeing those spot lights that people shine in the sky to attract attention to events (my wife calls them “Batman Lights”, I forget what they’re called.) I couldn’t figure out what they were for because it was in a residential area.
I found the answer: “Moonlight Madness” from KB Homes. The models are open until midnight. I don’t know what incentives they are offering, but they sound desperate. This is off of the I-15 at Limonite.
“(my wife calls them “Batman Lights”, I forget what they’re called.) ”
Searchlights
I drove through some neighborhhods in the Lakewood Ranch part of Manatee County in Bradenton, FL yesterday and I continue to be amazed at the flood of ‘For Sale’ signs. 3, 4, 5 in a row for sale in many cases. I took note of some of the addresses and did some research on what these owners paid and as expected many are still aksing fantasy prices even though all of their neighbors are also trying to sell. Many were bought in 2003 in the sub-$300k range and now are for sale at $500-600k+. I did see a couple that were recently bought and were for sale $30-$50k lower than their purchase price. I came across one house that seemed like a fairly decent deal as they had purchased new for $280k 3 years ago and were asking $320k. This same model was for sale by others in the $400k+ range. So it appears many people are still in denial while others are trying to price it right. Of course even the houses priced “reasonably” are still sitting. This will continue to get very ugly here in Bradenton……
Flic — I was over there two weeks ago and it looked dead. Do you happen to know the “line” for determining the highest insurance rates now? Is is US41?
I had an interesting conversation this weekend. I went to New Hope, PA, a popular tourist attraction for unique shops, art work, and dining. I hadn’t been there in years. When I asked about family dining, the parking attendant told us how everything was overpriced and where we might be able to eat without paying $10 for a children’s meal. Then he went on to tell us where everyone was getting there money, from housing. He said that over the past few years, people have been spending like crazy and he thought it was all coming from the equity gains in housing. (In the Philadelphia suburbs, prices have doubled during the boom, though there has been no change in the number of new jobs in the area during that time)
Opps…meant to say “their” not “there”
Yellow Alert! Yellow Alert! Dr. Casey Severin has escaped detention!
Stardate 5832.3. The Enterprise has pursued several stolen housing units on an unauthorized heading into the Option ARM zone and engaged tractor beams to prevent further movement. Our initial radio contact was with Dr. Severin, leader of the flipper gang, who demonstrated disrespect for reality and demanded be to taken to Eden….
http://www.realmeme.com/roller/page/realmeme/Weblog?catname=%2FTroll
Just got back from an open house in Venice (Los Angeles). The house was 1.2 M. Two beroom apartments in the same block rent for $1,500/mo. The real estate agent asked if I was planning on buying soon and I said that I had heard about the housing bubble and was worried about buying now. She said that she just read an article saying prices would only go down 2-4% on the westside of LA. She added that she would recommend buying to flip at this point, but if I buy now and hold for 10+ years, I would come out ahead.
Ooops, that should be “would NOT recommend buying to flip…”
“…but if I buy now and hold for 10+ years, I would come out ahead.”
The famous “long-term mantra” that Scam Lovers (those long stocks) repeat after the Scam Market bubble burst.
Yeah, the time will take care of the pain. So, don’t worry about it.
Jas Jain
Jas posts ““…but if I buy now and hold for 10+ years, I would come out ahead.”
Old joke. What do you call a failed specutlator? An investor.
What do you call a failed stock [or property] flip?
A long term investment!
From another message board….Here’s what’s wrong with the Atlanta, GA market:
“The problem i have with this is that Atlanta, unlike most other cities, Has so many builders it balances its self out, If someone makes an unfair price, the other houses will stay at the right price, and will not try and “Out-Price” Its self. Now the people in Atlanta are all holding back on buying houses, drowning the Atlanta Real Estate market, and soon may eliminate the high number of builders in Atlanta, throwing the ballance off and creating a “Bubble” Which is what Atlanta has managed to Keep out of play. This is the problem i have with the “Hold Back” Idea that Clark was talking about. I am just worried that if this keeps up it will lead to a “Bubble” In atlanta, which is not what Atlanta wants.”
Huh???? What kind of freakin’ logic is that?
Dan — from talking to an old friend, an Atlanta architect and builder, tonight, I think that Atlanta will no more be spared the hit from the bubble’s burst than any other major city, New Orleans being the only anomalyfor obvious reasons.
You know, I was watching a news report on Sacramento’s potential levee crisis a week or so ago and thought, “The only thing that could save the housing market would be a major natural disaster.”
If floods took out a good chunk of the western part of the city, that might reduce inventory enough to allow remaining homeowners to cash out and create enough demand from construction to keep the local construction economy up and running.
I wonder how many FBs out there have opted to not spend the $600/year on flood insurance?
Sacramento’s falling fast. Six months ago, $275k was the bottom for a 3/2 1200sqft place in one neighborhood that we’re looking at. A house on the market as short sale at $293k back on 8/22 was just lowered for the fifth time on Friday to $210k (Zillow values it at $310k). Others in the area with similar features are starting to be listed below $250k (at the peak in mid-2005, everything was above $300k). In Elk Grove, the floor for such a house used to be $350k, now we’re seeing things near $300k.
For the time being, we’re going to do what pretty much everyone else is doing and hold for at least another 10-16 months. Its very likely that prices in some better areas will fall to levels that we could seriously consider.
What’s going to kill the housing market is the homogeny of all the new houses. Pretty much every builder has thrown up the same house with some very minor differences. Faced with perfect substitutes throughout the region, the only way sellers can differentiate is through pricing. And in a race to the bottom, even the winner loses.