“The Only Way It Can Go Is Down”
The Daily Progress reports from Virginia. “Sales of homes in Virginia slid nearly 27 percent in September, marking the largest percentage drop this year, and the 13th consecutive month of slower sales. The median price, with half the houses selling for more and half for less, fell 9 percent to $199,975, according to figures released yesterday by the Virginia Association of Realtors.”
“The Richmond area took a hit as well, with sales of all homes down 15 percent last month. ‘We continue to remind consumers that comparing this year’s numbers to last year’s extraordinary market isn’t a fair comparison,’ said Kit Hale, president of the Virginia Association of Realtors.”
“Still, ‘there is no doubt that consumers are more cautious and taking their time in making a purchase decision,’ Hale said. ‘We’re also hearing that sellers are waiting until their homes are sold before purchasing another in order to avoid placing a contingent contract.’”
“The market here is stable compared with Northern Virginia, where sales fell 35 percent in September, said Wes Atiyeh, president of the Richmond Association of Realtors. ‘Northern Virginia increased so fast that the only way it can go is down.’ There the median price fell to $445,000 in September from $480,00 a year ago.”
Thw Washington Times. “‘There will still be plenty of bad housing news for some time to come,’ said economist Alexander Paris. ‘The length and depth of major boom-bust sectors is generally underestimated,’ he said, noting that the technology sector is still struggling to come back six years after the tech bubble burst in 2000.”
“While housing may experience a temporary rebound after the steep decline of the past year, Mr. Paris said, the fallout from the housing bust is just beginning. Inventories of existing homes dipped a little last month, but inventories of new homes have shot up by 50 percent in the past year and are forcing builders to aggressively cut prices and offer deep incentives to move houses, he said.”
“Speculators, who drove the market for condominiums in Washington and other areas, are dumping properties to limit their losses, driving down prices, he said. ‘That price weakness will spill over to all new and existing homes,’ he said.”
“Also, after the housing boom prompted about 25,000 new jobs a month in real estate, mortgage finance, construction and other housing-related areas, the industry started shedding jobs at the rate of about 10,000 a month in March, he said.”
“The potentially large economic effects from losses, defaults and foreclosures in housing will unfold slowly, and have just begun to show, Mr. Paris said. Foreclosures are up 53 percent from a year ago, with about half of them the result of homeowners being unable to afford payments after their adjustable rate.”
“The leading edge of a large potential problem, Mr. Paris said; around $2 trillion of adjustable rate mortgages taken out to buy and refinance houses in 2004 and 2005 will be adjusting upward in the next two years to three years. ‘That is around 20 percent of all mortgages outstanding, with many of them high-risk loans with low introductory rates as low as 1 percent to 2 percent, back-end loads and other techniques to squeeze high- credit-risk buyers into higher priced homes than they could afford.’”
“‘Corrections of big credit-induced bubbles usually don’t end until we see pictures of more than a few handcuffed industry executives on TV,’ he said.”
The Washinton Post. “One reason prices are dropping is that sellers are having a harder time finding buyers. Nazirahk Amen thought a buyer would snap up his three-bedroom, three-bath Cape Cod in Takoma Park. He was so confident that he bought another house nearby and moved. For the past two months, he has been making two mortgage payments, and recently reduced the price $25,000 to attract a bidder.”
“‘Of course it’s frustrating,’ Amen said. ‘I’m looking for this to end. It’s frustrating, to say the least.’”
“Charles W. McMillion, an economist and president of District-based MBG Information Services, said he saw little sign that the decline was ending. ‘I don’t see stability when sales continue to decline sharply and price continued to decline sharply,’ McMillion said. ‘It’s pretty hard to argue we’ve reached a sustainable level.’”
“Peter Morici, an economist at the University of Maryland, said reduced inventory of unsold houses may mean ‘frustrated buyers are removing their homes from the market.’ Morici said that major price adjustments will be needed to bring the market back into balance.”
“‘The speculative frenzy of recent years is causing a major adjustment, and the happy talk of Realtors is prolonging the process,’ Morici said. ‘The absence of realistic analysis about the extent of overvaluation is characteristic in an industry that sees nothing but an upward progression for values, but houses like any other asset can be overpriced. . . . Things are likely to get worse before they get better.’”
I hear Don Meredith singing “Turn out the lights.”
I live in Northern Virginia, and my wife and I are renting. We are waiting for the fallout of this bubble then we are going to buy.
Smart move, Sean. My wife and I did the same, before we left for GA. Rented a $650K townhouse for $2300/mo for two years. After we moved, the owners reduced the rent to $2000. Ironically, if they went to sell it, they’d probably still ask $650K. Moved to Atlanta and bought a spectacular house in a country club, and in one of the top school districts in the state, for $470K (5800 sf). NoVA prices are beyond ludicrous — they need to come up with a new word to describe it. Those $900K tract houses in Loudoun county are worth $350K max (that’s what they’d sell for here), and that’s probably what they’ll sell for in 2009.
off a solid 10% in 22151 so far
That’s “Dandy Don”, partner!
mad tiger and Curt
Dandy Don was my main reason for watching MNF, years past.
….add the second line….”the party’s over”
It couldn’t have happened to a better group of people.
” He was so confident that his organic garden and greenhouse would be a particularly strong lure in that community that he bought another house nearby and moved.”
Maybe it wasn’t “Snapped” up becuase there were no granite counters in the greenhouse…….
You can set up an organic garden for a couple hundred bucks and a greenhouse for $1.5K or so. Idiot. Someone’s supposed to overpay for a house for that?
Depends on what he’s growing in that greenhouse.
The article did say he was a “natural medicine practitioner”. Probably takes two organically grown “J’s” and a glass of water for a headache.
You’re right. Never thought of that
Back in 2003, before the plague of idiocy took hold, I went to an RE seminar where they gave us a list of home improvement costs (kitchen remodel, hot tub, etc) vs. typical ROIs. All were below 100%, most below 50%.
Here in the NW we still have the bubble deniers screeching that their improvements are going to bring them triple or quadruple digit percent returns when they sell.
If you don’t have Corian in your greenhouse, why are you still alive?
WAYSA? DIGTBK? Former FCer? YAFR?
What happened to that place anyway? (Yeah, I know, if I can’t find it then it’s not a game to be played by children like me, etc)
The board went down suddenly in July or so, and hasnt been back since. What a fun ride that was. What was your name on there BTW? I was Jerry_Seinfeld
Yes, I remember seeing you in some financial threads. I used this name or a dot. I see threadkilla on some of the bubble blogs as well. No doubt they harbor many other refugees.
Weird that the place just died one day. I expected it to go out with a bang, not a whimper.
Roger that.
- Nazirahk Amen thought a buyer would snap up his craphole.three-bedroom, three-bath Cape Cod in Takoma Park.
- He was so confident that he bought another house nearby
- For the past two months, he has been making two mortgage payments,
“‘Of course it’s frustrating,’ Amen said. ‘I’m looking for this to end. It’s frustrating, to say the least.’”
Darn-it Nazirahk, had I of known that you had that puppy on the market I would of made a lowball offer. WTF.
“Maybe it wasn’t “Snapped” up becuase there were no granite counters in the greenhouse…….”
Don’t you just love the expressions the cheerleaders use? “Snapped up”. Since when are half million dollar assets snapped up? Jackasses… Kind of like “homes”. I now refer to those that call housing “homes” as home homos.
Well, this *is* in the People’s Republic of Takoma Park, where greenhouses would be looked upon more favorably than granite…!
“Also, after the housing boom prompted about 25,000 new jobs a month in real estate, mortgage finance, construction and other housing-related areas, the industry started shedding jobs at the rate of about 10,000 a month in March, he said.”
This is pretty intense. The difference between 25K new jobs a month, to -10K jobs a month is 35K jobs.
“‘Corrections of big credit-induced bubbles usually don’t end until we see pictures of more than a few handcuffed industry executives on TV,’ he said.”
Excellent point.
I nominate D.L for the 1st perp walk.
“But,But, I vas unly fallooling ORDERS!!”
ROTFL.
Zee comodant vants to zee du. Schneller!
Agreed. You can expect to see many perp walks in the months ahead, as the sobbing soccer moms cry foul and politicians sieze TV face time as saviors. Lender, appraiser & builder fraud — even borderline fraud will grab headlines.
And… This will serve to intensify the downturn, as the entire housing sector becomes the villain-du-jour as hard times & jail terms become associated with home sweet home — Market psychology shift to distain…
Lender, appraiser & builder fraud
When the SHTF and the regulatory ax comes down, an appraiser won’t be able to sell a number to an underwriter if his life depended on it.
The hacks and crooks will bail from the profession-but the credibilty damage has already been done.
Sellin’ and financing a house is going to be a virtual nightmare for the next decade.
ZipRealty has 959,248 active homes Nationwide
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
Above numbers have remained within a 1000 + or - for last 6 weeks. What’s up with that?
zip values are not very accurate in my neck of the woods… its a web tool but not very meaningful right now in my opinion.
just like a listing on realtor.com. many are not cleaned out etc.
I’ve noticed a lot of properties shown on realtor.com do not show up on ziprealty so you can’t judge simply by what is shown on zip.
Exactly, I punched my zip code in ziprealty and realtor site and I got two very different results. realtor. com had probably 20% more listing than ziprealty.com? Why?
Probably the cost of listing on one site vs. the other. I mean, if you’re a realtor and you know that the owner’s asking price is unattainable (and the owner will not allow you to list it for less),the home’s going to sit there for months. Why would you want to splurge on extra advertising knowing that you have a long recoup time?
more listings == more time on their site == more revenue from page views.
A lot of it is the agents not updating the status of the property on the MLS. So things you are seeing for sale may on the MLS not be. If I remember correctly there is also a dispute between the MLS and Zip Reality. Idon’t recall exactly what it is but I’m sure the combination of the two are the reason for the disparity.
Part of it is that we are heading into winter months, and some folks are taking their homes off the market now. Inventory will be somewhat meaningless until March / April. The action is likely to be with NAR median prices and sales rate declines over the winter.
I am continuing to be puzzled by the stock market guzzling down the koolaide, but the short term bonds are where the hot action is today.
I’m no conspiracy theorist but you have to question the timing of this market rally.
Let’s see: market dives after dotcom cust, housing takes off, housing market dives, stockmarket takes off again. It’s just a little too convenient. I read somewhere recently that the participants trading right now are primarily the big players… not the individual investors who left ( or idled) after the ‘99/2000 bust. It seems like the big guns are just trying to lure the little guys in a again for another joyride.
I would love to hear what others on this blog think.
Yea, it does seem a little fishy.
Shorts are getting wiped out. Same as selling houses to illegal aliens in ‘04 and ‘05. When there’s no one left to buy, what happens?
txchick “Shorts are getting wiped out. Same as selling houses to illegal aliens in ‘04 and ‘05. When there’s no one left to buy, what happens? ”
I think everybody will be broke. I do not think the Stockmarket will be flying very long… I dumped my S&P 500 too soon….Oh well.
Alot of “the money” is due the lenders as the ARM’s reset. Most of these big lenders have been booking unrelized gains from Neg Ams and future ARM’s earnings. They sure the hell are going to want thier money.
I like I said before it will be the first “industrialized mass bankruptizes”
i dont know… there is a ton of cash chasing deals, stocks etc. there is even an anomoly in the bond market where you can own the bond issue and sell a credit default swap (insurance put equivalent i believe) and since there is a negative spread (like inverted yield curve) you can benefit from having your bond issue insured for non-performance. i think globally the us market is the place to play and it should rise steadily over the next decade or so… just my opinion… too bad i live in la where all my $ is tied up in my house..
it should rise steadily over the next decade or so…
Only nominally, due to a healthy dose of hyperinflation.
I don’t think there’s any conspiracy afloat; there’s just still way too much money sloshing around out there looking for returns. We’ll see one bubble after another until it’s mopped up.
“‘There will still be plenty of bad housing news for some time to come,’ said economist Alexander Paris. ‘The length and depth of major boom-bust sectors is generally underestimated,’ he said, noting that the technology sector is still struggling to come back six years after the tech bubble burst in 2000.”
Praise the Lord! There is at least one economist on the planet who does not speak with forked tongue…
I was thinking the same thing. Finally, an economist who sees the market for what it really is and actually says it. No rose-colored glasses view with little caveats to try to CYA. Props to Mr. Paris.
OK,
You’ve discovered a real economist…
Big flippin deal.
Robert Shiller told us this was coming before just about anyone else… He’s a Yale professor economist.
Paul Krugman was one of the first as well… Twisted ideals, but yes, and economist as well.
People like David Lareah and Gary Watts who call themselves “Economists” are not. I can call myself a brain surgeon, but since the state has a licensing requirement, I might be arrested. Unfortunately, there is no licensure requirement for “Economist”. You just have to look at their proof and determine yourself the difference between a salesman, and an Economist.
What would you suggest we do there “big flippin deal” John Doe, not applaud when we see someone furthering the truth because others have done so before him?
The real battles being fought at this point are: Mass Media acknowledgment of the Housing situation, acceptance by the general public of the reality of the housing / credit bubbles, and public acknowledgment of the inescapable effects that these bubbles currently crashing are going to have. I’ll applaud every attempt I see in the mainstream media that aids in communicating these points.
he real battles being fought at this point are: Mass Media acknowledgment of the Housing situation
It’s started…
One of the main leads tonight with ABC’s Charles Gibson broadcast, was “The Housing Bust”-largest price declines in 36 years…
Had a single mother with 2 kids in Atlanta givin’ her ARM financed home back to the bank.
Payments had gone up $400.00.
And the NAR shills were encouraging people to catch a falling knive.
Confetti and balloons were falling from the ceiling and the music was really loud and everyone was having a pimping good time when Shiller issued his housing warnings. So, it’s refreshing to finally read in the MSM what is echoed on this blog day in and day out. Again, applauding.. applauding.. applauding.. bowing.. bowing…
i couldn’t agree more. Why don’t they make this guy the head of the fed?
Applauding… Applauding… Applauding… Bowing… Bowing…
I was going to give kudos to Kirstin Downey, the Post writer. She’s my favorite local real estate journalist, and she didn’t interview the dolts at George Mason U., like we’ve seen time and again. Hooray!
yeah, sea change at WaPo. Haggarty’s phone must be ringing off the hook w/ GMU’s Fuller’s extension on caller-id! that guy’s a complete shill, he’s lost all credibility pandering to NAR.
Here I go again, like a broken record. Fuller has never had credibility. He runs GMU’s “Center for Regional Analysis,” which takes money from homebuilders and developers. Fuller and company are paid shills but at least disclose this fact. Here is their “Client List:”
http://www.cra-gmu.org/capabilities.htm
“‘Corrections of big credit-induced bubbles usually don’t end until we see pictures of more than a few handcuffed industry executives on TV,’ he said.”
I agree, and I cannot wait for the day…
interesting difference in opinion from a University Economist (Economist) and the NAR Head Economist (Shill).
I cant believe they are still printing what he says.
only worht a dime if he warned 18 months ago when there was some question, not much, about direction
who would of printed it, if he had? They are printing it, unvarnished. Thats the importance of it. A turning point. Of course it’s a day late and a dollar short.
‘‘The speculative frenzy of recent years is causing a major adjustment, and the happy talk of Realtors is prolonging the process,’ Morici said.”
Bingo!
It is obscene to me that the RE industry is able to spew so many lies, and never be held accountable for them. It is even worse that they are the hand that feeds most of the newspapers.
As soon as people start SERIOUSLY thinking about 30%+ haircuts, this market will continue to be dead.
“‘The speculative frenzy of recent years is causing a major adjustment, and the happy talk of Realtors is prolonging the process,’ Morici said. ‘The absence of realistic analysis about the extent of overvaluation is characteristic in an industry that sees nothing but an upward progression for values, but houses like any other asset can be overpriced…”
“Happy talk???”…okay which one of you guys is Morici?
As one astute poster on this blog noted last time Morici was quoted by the Post, here is a Peter Morici selling his one bdrm condo on CL (last posted Monday): http://washingtondc.craigslist.org/nva/rfs/224475677.html
Perhaps the same one? Interesting to find out.
Haha — that’s down near 50 and the abandoned hotels and rent-controlled housing. Oh yeah, I totally see why it’s worth 339K.
Pete Morici in Asia Times:
http://www.atimes.com/atimes/Global_Economy/HJ27Dj01.html
Good article although I don’t like that talk about the stock market booming to 13,000!
Here’s an interesting article coorelating the homebuilders index and the stock market:
http://www.businessweek.com/investor/content/sep2006/pi20060919_269370.htm?chan=top+news_top+news+index_top+story
“‘The speculative frenzy of recent years is causing a major adjustment, and the happy talk of Realtors is prolonging the process,’ Morici said. ‘The absence of realistic analysis about the extent of overvaluation is characteristic in an industry that sees nothing but an upward progression for values, but houses like any other asset can be overpriced. . . . Things are likely to get worse before they get better.’”
That was the $$$ question. Price swing up only on lack of supply, but there was no lack of housing supply, just a bunch of stupid people purchasing speculatively. Therefore, the rise in prices was not based on any fundamental reason.
And the HBs believed that this speculative demand (let’s say 30%) was actual demand, and overbuilt to fill this phantom demand.
And the proliferation of so many ’special’ places didn’t help either. In this bubble, everyplace was so ’special’, that the bubble was not going to reach them.
Stupid pills all around!
I think the phrase is a bucket of money and a box of stupid.
“…the happy talk of Realtors is prolonging the process,’ Morici said. ”
But they might get to screw ONE MORE FB!
“the happy talk of Realtors is prolonging the process,’ Morici said.”
“Happy Talk”? I guess somebody’s reading Ben’s Blog! I know I’m not the first, but i’ve been using that term for two weeks straight!
UK firming ?
weirdest market of all
Indeed. I can hardly believe it, having lived there a few years ago, and thinking at the time that it was a hopeless bubble. Yet now prices are even higher than when I was there.
I even saw an article recently that some UK lenders are relaxing standards, which should keep the bubble alive, but in my time there, I thought lending standards were ALREADY lax, what with 105% mortgages and no-docs (called “no status” there) offered all over the place. I guess the difference then was you got either a 105% *or* a “no status”. Maybe now you can get both in one package. Yikes.
The worrisome thing with UK real estate is that practically everyone is on a variable rate mortgage. When they say “fixed rate mortgage”, they mean fixed for perhaps three years, not 30! Rates have been under control lately, which s good, but if BoE needs to raise rates, the housing market turns to poo real, real fast. Some of my older friends in the 1990-era remember painfully as they fed their mortgages and subsidised renters for years until they could sell out and “break even”. My younger friends don’t see it as a possibility.
it does point to a possibility in the US
dip then firming as Uk did in may 2004-2005
Can’t I ask for ‘Political Immunity’ there and receive 3 years free room and board?
You mean Asylum? Only works for oppressive regimes, and no, Bush doesn’t count. But they will let you in for 3 to 6 months — so long as you have the mean$ to $upport yourself. Believe me, the room and board sure ain’t free in that place! Not unless you manage to get into Wormwood Scrubs (not far from where I was, come to think of it!)
From the Va Paper:
Wes Atiyeh, president of the Richmond Association of Realtors, said he was surprised that sales here fell as much as they did.
“They may be down 15 percent, but that doesn’t mean they’ve tanked,” Atiyeh said. “We’re still in a good market.”
_____________________________________________
So all the sheeple who bought last year and are now 15% UNDERWATER - no biggie for them. What a Joke!
Yea, many people have drowned in 6 inches of water. (Especially if a huge A$$ mortgage has it’s boot on your neck!)
And this: ‘We continue to remind consumers that comparing this year’s numbers to last year’s extraordinary market isn’t a fair comparison,’ said Kit Hale, president of the Virginia Association of Realtors.”
Right - you just “consumed” an extra $150,000 of goods that you got zero utility from. BTW, if I remember my national accounts accounting correctly, residential housing is part of I (investment), not C (consumption). Understandable that realtors are now trying to eliminate the I-word.
But, hey, the point is: it’s just not fair for you to complain because our brokers pushed you into CSCO at 80 and it’s now back to 65 - last year was such an extraordinary year [for us, that is. . . hey, you shoulda seen it, hot dang we were cooking. . .]
try csco at 8.
You think some people who bought from Wes last year might call him on the phone and ask for their 15% rebate? No big deal, right?
Holy $hit. As many as 20% of all mortgages are “toxic.” I never dreamed it would be that high. But I never thought about those fools who bought their homes even before the bubble, who had nice, stable, affordable mortgages, and who were lured into a toxic, super-sized mortgage in the last few years.
Note to self: Convert all assets to cash ASAP. The crash will be here shortly. No metals, thanks. When the global economy crashes, there will be no demand for copper OR gold.
At least the newly destitute will have a roof over their heads- all those new and never occupied homes and condos. Has anyone seen any MSM articles about squatters yet?
You think 20% is high? Someone please post that color-coded map of the US I’ve seen….out here in Cali it’s as high as 60+% in some areas, especially in the San Francisco region. Let’s not forget that most Californians, already over-leveraged in their own homes, also own a few “investment” properties in places like Vegas or Phoenix…now likely with no equity.
sf is gonna blow
heres the map. Thought it was from CNN Nummy, but it’s from BusinessWeak
http://www.businessweek.com/common_ssi/map_of_misery.htm
Note to self: Cash that is not backed by gold or other hard assets is subject to devaulation through inflation or GOV whim.
There is no easy solution. Therefore, cover the bases with pre 1933 gold and silver legal tender coins.
Better keep it in a bank, I knew a guy who put a safe with all his gold and silver in his basement back in the 80’s “boom”……unfortunately he came home one day and his visitors knew about his safe……bye bye assets.
I hate CNBC…pumping and pimping housing, again.
lol
I look forward to watching Lyin’ Larry Kudlow, Senior Carnival Barker at CNBC tonite at 5pm. Guaranteed to spew enough BS to sink a battleship….. every night.
I just can’t understand the greed. I have an Aunt and Uncle in the Dumfries, VA area. They bought their house (1983 Victorian, 4/3 about 1800sf) in 1996 for about $130,000 and have done some normal renovations (finished basement, new paint, carpet, etc) over the last 10 years. They wanted to retire to FL this fall so they put their house up for sale in June for $450,000. Needless to say no takers. They have lowered the price to $444,000. Still nothing. The best part is that they bought their retirement home in FL 2 years ago for $120,000 with 20% down (Its been a rental for the last 2 years at a positive cash flow). So if they are that serious about moving why dont they slash the house price to $350,000 and still walk away with almost $200,000?? They could pay off their retirement house and have cash in the bank? Granted they may have HELOC’d themselves into owing more than $135K on the house but they aren’t the kind of people who buy new cars or take crazy vacations and they certainly didnt put granite countertops in! What is wrong with people? It seems like even people who have made good financial decisions all their life got swept into the housing frenzy!
can’t give up their paper gain, you know.
Paper gains have a much stronger, emotional hold on people than many realize. You could see that from the 2000 stock market crash, when people wouldn’t bail out, no matter what their original cost basis was. Their minds never could shake that number from the peak value.
Same goes for lots of Enron wailers, who “lost” incredible amounts of money in their 401k’s. Some did, but many of them saying they lost hundreds of thousands actually only put in a couple of $10k’s of their own money. Still, they claim their losses based not on what they put in, but what they mighta-coulda-wish-they-coulda gotten out if they’d had perfect timing. And they feel robbed.
And this similar frame of mind is how house sellers are feeling these days. When the whole sentiment changes, and people accept the debacle, I have to wonder how many in years to come will talk about how they “lost” $100k in the housing market, when if they did all the actual cost-basis paperwork, they instead made $200k like the couple mentioned by navygator.
It seems like even people who have made good financial decisions all their life got swept into the housing frenzy!
I’ve been complaining about this for a while now. I guess “good for them!” if they can get their asking price. BUT what I detest is when they can’t get the price they want and they start talking all, “…Well I’ll just rent it out until the market bounces back because this house is not worth a penny less than blah, blah, blah…” When the “sensible” ones start acting like this, that’s what sets me off. BTW, I’ve always considered my parents sensible and my mother is becoming “one of these”… Ugh!
Dumfries and Woodbridge are some of the hardest-hit areas in Northern Virginia. http://www.foreclosure.com/search/VA_153.html
They need a better agent, if they’re using one. Overpricing is bad news.
It will feel like they lost money if they lower further, so they are anchored on the high selling prices of the past.
It’s all about the short term money.
Agreed shows lack of foresight.
ext year is going to be very interesting for the housing market.
One reason prices are dropping is that sellers are having a harder time finding buyers.
And sharp-edged analysis like this is what we’ve come to expect from the Washington Post…
I would love an indepth analysis into why there are no buyers?
The Housing Industry is arguing that the buyers are just waiting until the market bottoms out. And I imagine there is some truth to that.
However, I tend to think that the Housing Market squeezed out all the buyers it could find in the past 5 years. And the one’s that are left don’t trust the market and don’t want risky loans.
So it’s not just a matter of buyers waiting. It’s also a matter that the remaining buyers are much more sophisticated and aren’t going to get suckered into taking a risky loan for an overpriced home.
“However, I tend to think that the Housing Market squeezed out all the buyers it could find in the past 5 years. And the one’s that are left don’t trust the market and don’t want risky loans. ”
Spot on, with one addition. Those of us living in bubbleville simply will not not justify paying $450K for a 1-bedroom condo or $650K for a “starter” single family residence.
The internet is their friend. Hard to get somebody to move when they spend all day at work seeing bad news about buying a house on yahoo and CNN scolling across their screen. I overheard a cell phone conversation where a guy was chastising his friend about being an idiot for investing in a house in Arizona. He was basically telling him if he couldn’t afford to lose money he shouldn’t have invested and didn’t he see all the stuff on the net saying that buying a house was a bad idea. Interesting conversation, I know I know I shouldn’t have been eavesdropping.
People who rely on the main stream media for their informtaion are starting to get burned.
This applies to more than just the housing market news.
Yea, but who do you suggest that the general public turns too for their information a bunch of deliousional bitter renters on some wacko’s blog. LOL
you know mrincomestream, you’re not paranoid, if they ARE following you!
Couldn’t john Q Public read both and make up his own mind as to which it delusional? Or is that to much trouble?
John Q Public READ????????
wow…. look at the wings on that flying pig.
imploder does like to toss out the occasional joke!
John Q Public READ????????
58% of US adults haven’t read a complete book since graduation from high school.
65% only read the comics and sports section in their daily newspapers.
We are WAL-MART Nation
I overheard a cell phone conversation [...] I know I know I shouldn’t have been eavesdropping.
If someone was yakking on a cell phone loud enough for you to hear it, then forget your guilt about eavesdropping. They deserve it.
My favorite is when I’m on the train and some loudmouth does that. I look right at them while they talk. They get fidgety. And then when they say something to their friend like “[blah blah] can you believe it?”, and I just keep looking right at them and mouth “wow… oh man”. Oh boy, do they hate THAT! Some of them even get up and move away.
i actually did this in a restaurant (saw it in a movie and it worked) . guy was talking on his cell phone at the table next to us, ’so did he do bla bla’ he said, ‘yeah and it worked out pretty well’ i said as loud or louder than he said it. 2 or 3 rounds of that and he literally looked at me and left the restaurant to continue his call.
Pure psychology. Everyone wants to ride the money train, but nobody wants to catch the falling knife.
It really doesn’t matter how far it drops, because people just won’t buy until it stops dropping.
“Inventories of existing homes dipped a little last month”
Wow, this must be the first time in history that inventories dropped right before winter.
It’s too early to crow about inventory reduction, that’s for sure. Last year was the real anomaly, with inventories starting to take off around the end of Summer.
Fairfax County, VA, is still above 8,000, whereas for the bubble years it was in the sub-1,000 range. It’s peak was about 8,800 or so this Spring. So it’s gone down, but not a lot.
I’ll not argue with the possibility that sellers might see hope in inventories ceasing to grow. The problem is the months of inventory is still determined by how many home sales are accomplished out of the current inventory. And the rate of sales will affect prices regardless of the quantity of houses on the market.
Hey Robert Cote, if you’re out there:
This place is less than a mile from that cool place I tried to steal a few weeks back. It’s a foreclosure. Look at the price reduction.
62 Details Active - Foreclosure Bluff Ridge Dr Cedar Hill TX 75104 5 / 4 $549,900 $816,334 UN
This is why I am bird dogging that house I liked. It’s still offered at 698 but I won’t be suprised to see it go for half of that eventually. There is absolutely no market out there for houses that expensive.
txchick57
Could you please post how you find foreclosures? Are you finding foreclosures in the newspaper, web, or word-of-mouth?
Thanks!
HB
there’s a site called foreclosure.com
gives you the street names of foreclosures in your zip, then you have to do the legwork on the local county websites.
My posts aren’t posting. I’ll look into the problem.
The average used-home seller will be stunned when they find out what new home builders have been doing to their comps recently, now at an accelerating pace. Totally rational. New houses will get cheaper and cheaper and cheaper, until inventory is down to a comfortable level; builders have incredibly fat margins to cut and will sell at zero profit when it gets to that. They also want to build more houses, and those will be priced more like the year-200-01 models. Meanwhile, increasing numbers of used-home sellers will be chase those prices all the way down, always a little short. Right now, though, most won’t get off the dime and even think about serious cuts; the closers likely will dutch-auction their way out of their sinking ship.
I think thats exactly right. As land prices fall and building materials and labor fall the builders will build and sell for less and less until prices come back down to 1999 levels with maybe 10% for inflation. Baring out of control inflation I think it will be decades not years before house prices start setting new records again.
We’re going to see a self feeding cycle. Land, materials, and labor will all drop in price incredibly quickly. I see no reason all three categories wouldn’t drop 50% (with land dropping even more).
I don’t think we’ll see the peak prices again for 11 to 20 years (baring hyper-inflation).
Neil
Land and Materials will drop quickly but Labor is already cheap from all of the illegals. I doubt there is much room for labor rates to fall.
One of my ‘proprietary’ data sources for the state of the local economy in Seattle is to see how many guys are standing out under the 99 viaduct in Belltown hoping to get picked up for drive-by day labor work. There were just a few guys out there this Spring, but the numbers look like they have been steadily rising. Same thing outside the Home Depot in the SoDo neighborhood, more and more guys hoping for construction day labor. I bet labor costs can continue to be squeezed down.
I don’t think there is a big disparity any more between what illegals and legals earn in construction trades in which illegals are heavily involved (concrete, sheetrock, non-technical tiling and roofing, glazing, masonry, etc.). As demand for these jobs falls, wages should fall, illegals or not. The big upshot will be the political and legal fallout on the illegals - it will become increasingly difficult for them to work.
Chip-
Add to the mix the fact the R.E.O.’s will be killing the builder comps. A lot of people leave that out of the equation the builders will be chasing those comps. With Wall Street holding the bag on the coming R.E.O. rash it will be interesting to see how they choose to clear it up. I expect slah and burn.
I agree Wall Street thinks in quarters not years..
All this excess new inventory will cut the resellers off at the kneecaps, I think at warp speed.
The NY Times joins other major newspapers with a brutally candid take on today’s new home sales numbers. From the front page of their online edition:
“Developers Slash Prices to Increase Home Sales”
OOPS! Not so fast. Five minutes later the Times backed off that incendiary headline and replaced it with:
“Home Prices Drop Sharply in September”
And if downward sales revisions continue the real headline should read: “Developers Slash Prices but Demand still Falling”
here in somoma county land prices are down substantially since june,probably 25-30%,and lumber is down about 30.not sure about other materials,and concrete is still high.i see a lot of condo/townhome developments just coming on the market,and last saturday’s paper had 26 new home developments advertised,some with incentives heavily emphasized.they seem to start with plasma tv’s,then no hoa,or closing costs.
And all this can be yours too !!!!
http://tinyurl.com/ycwkr4
Fixer! Fixer! Fixer!
Dump! Dump! Dump!
posted “Fixer! Fixer! Fixer!”
Yes I agree. All you need is a bulldozer.
needs more Cowskull.
a tear down at best.
Lots are that expensive? Knock the house down and the lot is now worth $150,000?
lots in my town (that have sfr on them) are actually worth more without the house than with (since they will smash and build mcmansion / townhouses). i think buying lots and building will be the absolute best way to go in 2-3 years if this works out like we think
It says it has indoor laundry facilities, but it doesn’t say the toilets are indoors.
‘It’s pretty hard to argue we’ve reached a sustainable level.’
It’s the easiest thing in the world to argue …………. if you are a realtor, and your income depends on it.
“The arguments that the economy is cooling due to the housing downturn are overblown,” said Rich Yamarone, director of economic research at Argus Research. “Are you really not going to get your kids the present they want for Christmas because you home might be worth 2 percent less than it was a year ago?”
I have an intolerance for idiots.
Idiotic as it sounds he speaks the truth. I’ve watched people in foreclosure take gambling trips. I’ve seen foreclosed houses in Jan. with Christmas trees and new bike boxes in the trash. You would be amazed.
I agree with the comment from the economist from Maryland on frustrated buyers pulling their homes off the market as the reason existing home inventory dipped a bit. On the two streets near me up in here in Boston there have been quite a few for sale signs that have gone away, but I’ve been checking and only one was actually sold. I’m guessing most of these people will relist after the holidays. Things aren’t moving up here unless significant price cuts are offered, but some can’t seem to get it through their heads. I expect increased inventory glut after x-mas with prices continuing downward.
Maybe, Rich, if you’ve maxed out your HELOC, no; Crystal won’t get her upgraded Ipod.
If you’re a realtor, builder, mortgage originator, appraiser, building material supplier, lumber yard owner, tile store employee, appliance manufacturer or one of the poor bastards who’s variable is about to reset 30% higher (and can’t refi at a fixed rate without putting up cash due to the decline in prices)….no, maybe you don’t buy the latest “hot” thing for the kids this year.
Everytime I read the “Ricks” of the world I’m comforted by the fact that I’ve sold my stock positions. This is the same asshat arrogance that I heard in the 1980’s real estate bubble and the stock bubble.
Its the “you just don’t get it” version of arrogance.
He’s a director of economic research? I expect he’s about to learn a whopper of a lesson.