“Can’t Run Away Fast Enough On The Way Down”
It’s Friday desk clearing time for this blogger. “Latonya Barbery, a medical assistant in Old Bridge, N.J., said she has looked for a home for the past 18 months but found them still too expensive. ‘They’re asking too much for these little shacks,’ she said in an interview with The Associated Press.”
From Connecticut. “More and more Fairfield homes keep coming up for sale, but buyers are no where to be found. According to Mike Tetreau, the president of the Greater Fairfield Board of Realtors, many homes have been popping up on the market, but house sales are slow. ‘It’s like having twice as much product on the shelf, but selling 25 percent less,’ said Tetreau.”
“The Delaware Community Reinvestment Council is one of the groups calling for tougher guidelines on nontraditional mortgages. ‘We are very, very concerned about the exotic mortgages, particularly in Delaware,’ said executive director Rashmi Rangan. For some people, ‘the only way to get the dream house is through the exotic mortgages,’ Rangan said. ‘In two, three years it’s going to become a nightmare.’”
From Kentucky. “Joe Simms, president of the Greater Louisville Association of Realtors, said Louisville is a buyer’s markete. But he thinks would-be buyers have been scared off by the national reports. The Louisville market ‘is not going to plummet, it never does that,’ Simms said, but ‘when in doubt, it’s human nature to say no.’”
“The number of permits issued for new Oakland County homes dropped by 51 percent in the year’s first three quarters vs. that period in 2005, a decline slightly greater than that of Southeastern Michigan as a whole. The state has the third-highest rate in the nation, behind Colorado and Nevada. ‘If (lenders are) selling a home for 80 percent of what a builder sold it for two years ago, how’s the builder going to compete with that?’ asked James P. Babcock, president of the Building Industry Association of Southeastern Michigan.”
From New Zealand. “Economist Gareth Kiernan said June quarter house prices last week were evidence that the five-year boom was ‘all but over.’ Mr Kiernan said, ‘Kaikoura and Mackenzie are now experiencing annual price declines, with other provincial areas such as Otorohanga and Westland at risk of the same fate.’”
The Moscow Times. “Demand for mortgages fell last month for the first time in years, banks said. Potential homeowners chose to wait out the price boom in hope of a downturn. ‘For the first time, we have run up against falling demand,’ said Sergei Tropin, head of marketing for International Moscow Bank.”
From Canada. “The demand remains strong but the cost of homes in Lacombe is levelling off, according to real estate broker Dale Russell of Red Deer. This is driven mainly by new construction. ‘Where demand starts to fall off a little bit then there’s more inventory. This really silly market we had in December and January, it lasted until probably the end of June,’ added Russell. ‘Now things have kind of cooled off a little bit.’”
From Wisconsin. “Dick Hinsman, who has sold homes in Racine County for 43 years, said he wasn’t sure why there are more listings on the market today compared to a year ago. ‘I don’t know if that’s a sign of the economy or of all the new homes being built,’ Hinsman said.”
“Finally, the bubble in Boise is breaking. What some are calling slumping Treasure Valley real-estate sales, some are calling good news. Others, however, are turning to voodoo. I am not making this up. My friend Stephanie was in my hood because there is a shop down the street where she bought her own plastic St. Joseph figurine to plant in her yard. ‘Stephanie, are you serious?’ I asked. ‘All you have to do is drop the price on your condo because you are asking for an unreasonably high amount.’”
“Economic growth slowed to a crawl in the third quarter, advancing at a pace of just 1.6 percent. Investment in homebuilding was cut by the biggest amount since early 1991. ‘The housing bubble burst and that really knocked down growth,’ said Joel Naroff, president of Naroff Economic Advisors.”
“Stephen Roach, the chief economist at Morgan Stanley, believes central banks have created a monster. Low interest rates in most countries created excess liquidity in global financial markets. This in turn led to ‘a profusion of asset bubbles,’” Roach said.”
“He said the resilience of the global economy for most of this decade was not an organic feature of globalisation, he argued. It was the result of excess liquidity.”
“Anyone who thinks a little drop in interest rates will bring back the good old days is delusional, said Paul McCulley, managing director of fixed-income giant PIMCO. ‘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,’ McCulley said. ‘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.’”
“Real estate is ‘the ultimate momentum market,’ McCulley said. ‘Can’t get enough on the way up and can’t run away fast enough on the way down.’”
This was a historic week for the housing bubble. My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
You know, it used to be that I posted on every thread because of the need to expose some issue. Now, by the time I log on, every issue has been beaten to death. Hey, this ain’t a bad thing - I’m just happy that we’re starting to get it. Unbelievable support indeed - Good job Mr Jones!
I find that I don’t post as much as I used to either. I still enjoy reading your insights when you do. This site used to be sort of like a neat underground club that you had to know about to enjoy. It seems that in the past year it has become an “in place”. That is not a bad thing at all! It’s a true reflection of the quality that Ben puts into running it.
As an “old-timer” I like to reminisce about the days of John-Law, deb, and the others talking about a bubble when all the trolls would just laugh at us and tell us how we were missing out on the boom and we were all just “bitter renters”. Ahhhh…the good old days.
My only regret is that these bubbly boomer bastards will wreck the economy and ruin my post-bubble party with their rotten soup lines.
We all remember Debra Hetmer.
“Bitter renter?” What’s that?
Well, you can always listen to lance over at bubblemeter.
“…historic week …”
Yes indeed!
Largest YOY used home decline in history! Largest YOY decline in new sales in 35 years! YOY declines in Orange County.
Where do we go from here? Off a cliff or a slow death march?
I have kids and i hate death march. the baby used to cry from 12 midnight to 3 am and we had to take turn and march around the house. that’s the only way to calm the baby. dead march is painful but looks like that’s what going to happen.
No you didn’t. You could let the baby cry itself to sleep. They’ll never learn to stop crying if they have a soft-touch parent that caters to their every whim.
Also, is it really so difficult to capitalize the first letter of every sentence?
So, you let your babies cry themselves to sleep. No wonder you’ve chosen the handle, “Sammy Schadenfreude.”
You have to let them cry at least for a while. Amazingly, most of the time they will go back to sleep on their own. Then you learn to separate when they really need to be taken care of from when they’re just testing. Bulwark - are you a parent?…
Oh boy, My wife is expecting our first child in March. Looks like I’m in for many sleepless nights.
Oh boy, My wife is expecting our first child in March. Looks like I’m in for many sleepless nights.
—————————–
Congratulations!!! BTW, I agree with Sammy and eastcoaster. We have three kids who all began sleeping through the night (eight or more hours) by 8-12 weeks. They are very happy and well-adjusted and wake up every day just playing happily in their rooms — we wake up to laughter and music from the mobile (we have a baby, also). It can be done, but you have to have some self-discipline and be able to discern when they NEED to be fed at night vs just adjusting positions/passing gas, etc.
I recommend the book “Baby Wise” as one point of view. It’s worked wonders for us and most of our friends.
Good luck!
CA Renter,
I’ve got two kids, but a very similar experience to yours. Both were sleeping through the night after about 8 weeks. Of course, during the first month we usually would try to rock them to sleep if they cried, and we’d always go in to them if they cried for more than 20 minutes. But, if the babies figure out that every time they cry a parent will scurry in to pick them up, they’ll never learn to fall asleep on their own. We’ve got two very happy, well-adjusted kids (Allah be praised) so we seem to be doing something right.
“No you didn’t. You could let the baby cry itself to sleep. They’ll never learn to stop crying if they have a soft-touch parent that caters to their every whim.
Also, is it really so difficult to capitalize the first letter of every sentence?”
“…(Allah be praised) so we seem to be doing something right.”
You’re an a$$hole. Hail Buddha.
bruin,
Not sure why you would say that. You’re quick to make personal attacks about people you know nothing about. I’ve seen it a few times.
Check out latest diclines on DQNEWS.com for OC
More details with zip provided in link
http://www.dqnews.com/ZIPOCR.shtm
Community Zip Median % Chg Sales % Chg
All homes $626,000 2.6% 2,664 -34.6%
Total resale houses $680,000 0.7% 1,695 -31.0%
Total condominiums $440,000 -3.3% 693 -41.8%
Total new homes $763,000 14.2% 276 -35.4%
Ben, I don’t know how you even keep up with all of the news anymore. But I’m glad you do!
“The length and severity of depressions depend partly on the magnitude of the ‘real’ maladjustments, which developed during the preceding boom and partly on the aggravating monetary and credit conditions.”
- Gotfried Haberler, Prosperity and Depression, 1937
……some good articles on housing at prudentbear.com
Minus 9,7%….. Et ce n’est qu’un début!
“‘It’s like having twice as much product on the shelf, but selling 25 percent less,’ said Tetreau.”
Nice description of an inventory avalanche.
The Auto Nation chain of car dealerships said their car sales are way down, and claimed the US automakers fudge their sales numbers.
Just like every other commercial, government and media entity.
Eat like an elephant, “go to the bathroom” like a canary.
I have always liked this expression (with other terms in the quotes.)
Being in a good mood this afternoon, I will now call this a constipated market.
Man, I’m glad cows don’t fly
Pelicans are close enough. If you have a convertible, you watch closely for ‘em.
Boy, I thought it was bad enough having the powerline to the house running diagonally across my driveway. I park the car sqzeezed into one corner of the driveway.
‘We are very, very concerned about the exotic mortgages, particularly in Delaware,’ said executive director Rashmi Rangan. For some people, ‘the only way to get the dream house is through the exotic mortgages,’ Rangan said. ‘In two, three years it’s going to become a nightmare.’
Lock the barn door now and the cows, which are already on the loose, will freeze to death in the sudden arctic cold spell.
- ‘Lock the barn door now’ ….NO SH!#.
But there is NO problem in Kentucky -
The Louisville market ‘is not going to plummet, it never does that,’ Simms said,
Everyone wants to live in Kentucky!!!!
except my nephew, who is about to move away from Pikeville with his girl friend who is in the Navy at Camp LeJeune.
NOOOOOOOOO THEY DON’T.
I left 14 years ago because most folks were brain-dead. The taxman taxed everything, sometimes 2 and 3 times each year. I am a Civil Engineer and Software Architect who now only views Kentucky from 30,000 feet.
Most Kentucky folks (men and women) smoke, drink, gamble, cuss, burb, fart, scratch their bottoms and attend WWF (i.e. wrastling), watch football and basketball and then shoot something. The only problem with most folks who live in Kentucky is they can vote and reproduce.
Now they can add in Real Estate investing between farting and scratching their bottom.
“Most Kentucky folks (men and women) smoke, drink, gamble, cuss, burb, fart, scratch their bottoms and attend WWF (i.e. wrastling), watch football and basketball and then shoot something. The only problem with most folks who live in Kentucky is they can vote and reproduce. Now they can add in Real Estate investing between farting and scratching their bottom.”
LMFAO!! I just returned from my first trip to KY (for business), and your observations, though harsh, have a ring of truth to them …!
Good news!!! There’s no problem in Texas, either. Definitely not in Amarillo according to the front page of our local paper yesterday morning. We are, of course, immune to the national downtrend in real estate. What else would you expect with all our high paying jobs in the food service and transportation industries…
Same here in Springfield, MO. We have jobs!!! We are special!!!
http://www.news-leader.com/apps/pbcs.dll/article?AID=/20061027/BUSINESS/610270350/1003
Wait, weren’t Amarillo, TX and Springfield, MO separated at birth?
Maybe all the rich people from Albuquerque are going to be blown-in to Amarillo by the persistent 30 mph winds.
The Marketwatch.com read (last link above) is well worth the effort. The closing sentences are indicative of the quality of this piece by Rex Nutting:
‘As in any rapidly rising or falling market, there are plenty of people who swear they’ve seen the turning point and just as many who swear the end is nowhere in sight. History teaches us to be humble about predicting markets, particularly exuberant ones.
Remember the Dow 36,000 predictions in made in late 1999? Or how about this gem from President Hoover in May 1930: “While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover.”‘
-”with continued unity of effort we shall rapidly recover.”
I am using that quote next week at our sales meeting.
“Dick Hinsman, who has sold homes in Racine County for 43 years, said he wasn’t sure why there are more listings on the market today compared to a year ago. ‘I don’t know if that’s a sign of the economy or of all the new homes being built,’ Hinsman said.”
Sounds like ol’ Dick is ready for the senior citizens home. He apparently has become blind.
Not necessarily. He is just flummoxed because, quite literally, nothing like this has ever happened before in Racine County.
Roach takes issue with the Fed’s soft-landing scenario:
‘”Excess consumption has been a direct by-product of the dramatic increase in house prices,” said Roach. The housing bubble was deflating, which “for consumers short of income is a very big deal”, said Roach. In other words, the big impetus that consumption has given to growth is about to shrink. As this engine of growth slows, so too will the US economy.’
“Anyone who thinks a little drop in interest rates will bring back the good old days is delusional, said Paul McCulley, managing director of fixed-income giant PIMCO. ‘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,’ McCulley said. ‘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.’”
Amen Brother! McCulley understands me. Did he say bubble? Is this a first?
‘Risk appetite in property markets will not be restored by modest declines in market-determined interest rates.’
What if the market gets a little help?
It will not help. Like Shepherdson said in the same article, “real mortgage rates were sharply negative a year ago. When lending rates were at 6% and prices were rising 16% year-over-year, the real rate was negative 10%. Now that prices of existing homes have fallen by more than 2% year-over-year, the real mortgage rate is more than 8%. The turnaround of 18% in real rates dwarfs the half point drop in nominal rates.”
“Now that prices of existing homes have fallen by more than 2% year-over-year, the real mortgage rate is more than 8%.”
I agree with your point but think your terminology is a bit misleading. What I would say is that the opportunity cost of renting is dropping like a rock relative to the cost of owning.
OT GDP
Has anybody picked up any hubbub about today’s GDP growth figure being understated due to a mistake in inclusion/calculation of automobile production? Sounds like someone was doing addition when they should have been doing subtraction per an excerpt from Bloomberg:
“Selling accelerated in the markets on concern the report signaled slower growth ahead. An increase in auto production was a statistical fluke that will be reversed, according to Joe Carson, director of economic research at AllianceBernstein LP in New York.”
Also Roubini’s call for a recession sounds more real now per MarketWatch:
http://tinyurl.com/y55wd8
Hey, they’ve been playing games with new home sales for months. Blowing sunshine up every gullible crevice out there. An election is nearing. Odds indicate there is some validity to Carson’s claim. Besides, GDP trend favors further declines.
“..today’s GDP growth figure being understated due to a mistake..”
Sound like someone wants to accept on the good and not the bad - Has to be Kudlow or Bush Admin!
Crispy (TM)
Actually GDP growth was overstated due to that error.
Gotcha. Then nevermind what I said. LOL
Its overstated.That’s what I meant. Damn. Blew it! LOL (TM)
I think this (TM) thing is out of control. LOL
Crispy (TM)
naaaaaah™
™
You guys suck…I still can’t make that little TM thing
Kurt –
One more try: Type ( TM ) , but leave out the spaces around TM.
LIke this (TM) not this ( TM ) .
test ™
(TM)
Alternatively, join these 2 characters &# to the begining of these 5 characters 8482; and append all 7 characters to the end of your word™
I just have to try it myself. Sorry, all! TM
darn, didn’t work. try this™
Sorry, Ben, for mucking up the postings with this garbage (it’s the wine I’m drinking)… One more try™
ockurt - see this site: http://www.w3schools.com/tags/ref_entities.asp
realtor (TM)
fencesitter (TM)
LOL!!!
The language used in this blog and links is amazing. I just learned a new word, ‘ Prescient’. Had to look it up reading the Market Watch link about Roubini’s predictions.Good Read.
The Louisville market ‘is not going to plummet, it never does that,’ Simms said.
Yes, and the Titanic was unsinkable.
Yep, soon we’ll add another ‘never-guy’ to the woodpile.
“don’t worry my dog won’t bite you, he never does that”
…… Oh,…oh my!… Release! Spike! Release!
Imploder make waaahoo laugh.
Reminds me of the classic Inspector Clouseau bit.You know,’Does your dog bite? ans.’No’. Then the dog bites him. ‘I thought you said your dog did not bite’. ans. ‘He’s not my dog’.
Wow, you know its bad when people from Kentucky are using the “it’s different here” line.
LOL. Bet the “it never goes down in Louisville” yahoo was wearing bib overalls and chewing on an alfalfa stalk when he said that.
bib and overalls? IMHO I think you under estimate America, …….CLOWN.
I digress: what do you have against the “image” of a working american citizen in overalls. I’m all Ears………
What are the two defining characteristics of real estate?
Leverage and Liquidity.
Both have turned nasty. Time for the dark side.
Shouldn’t that be leverage and ILLIQUIDITY?
“My friend Stephanie was in my hood because there is a shop down the street where she bought her own plastic St. Joseph figurine to plant in her yard.”
By now, somewhere in the U.S., someone trying to bury one of those St. Joseph dolls has dug up the previous sellers doll.
Isn’t it unChristian to wish an overpriced house and a suicide mortgage on others?
I think it is called Greed, http://www.deadlysins.com/sins/greed.html
Yes it is, Yes it is.
“My friend Stephanie was in my hood because there is a shop down the street where she bought her own plastic St. Joseph figurine to plant in her yard.”
By now, someone in the U.S., has dug up a St. Joseph doll while trying to bury their own.
“Latonya Barbery, a medical assistant in Old Bridge, N.J., said she has looked for a home for the past 18 months but found them still too expensive. ‘They’re asking too much for these little shacks,’ she said in an interview with The Associated Press.”
This is probably the clearest signal yet of the sea-change in popular perception. LaTonya the medical secretary has seen the light and is refusing to be suckered into the “now is the best time to buy” snake oil.
Be afraid, NAR. Be very afraid.
Alas, Too many of the “Joe and Jane six packs” haven’t bought in yet. They will… 2007 will be interesting.
I have a coworker who was practically panicing last year because I refused to buy. (I might be priced out forever…) When he thinks RE is the worst investment ever (This is just like the 90’s, you can not sell a house…) Then I go shopping for a home.
Neil
Right - I hear ya’. Same in my office. Tho’ they are now conceding that prices are coming down. Still, they think a 2.5 - 5% drop will be it, maximum, and then “time to buy!!” HaHaHaHaHaHaHaHa!!!!! Yeah, ok. I’ll check back with them in another 6 months.
Were already past 3-5% in most area’s nationwide they must be reading lagging yahoo charts. i saw one yesterday that didn’t even mention San Diego. Have to wonder where the data came from.
Test
“Real estate is ‘the ultimate momentum market,’ McCulley said. ‘Can’t get enough on the way up and can’t run away fast enough on the way down”
This one is a classic - by a PIMCO managing director no less. Saving it in my best quotes log.
PIMCO has been consistently bearish on housing for a while now.
Oh, I know they’ve been bearish but this borders on pressing the panic button. Good quote.
I agree. usually when I read the guys at pimco they make a lot of sense to me. They speak plainly and clearly.
The guy who runs the bond funds at PIMCO, Bill Gross, I think, said in a interview that he sent his own people out, travelling around the country, posing as “real estate buyers,” to get a first hand look at the market.
Obviously, the numbers are “owned” by the industry to a large extent - he didn’t trust them. Smart guy.
If I had the resources, that’s exactly the approach I would adopt. I would also include some sampling of the population within each market and bypass the NAR and NAHB.
Thehousingbubble.com is as close as you can get to the housing market without all the overhead; the daily threads and everday comments from buyers and sellers within are similar to but not entirely the same as conducting a focus group study.
Yep.
I once read that Warren Buffett personally researched the ground-level view of American Express when they got embroiled in a financial scandal way back when (something to do with salad oil IIRC).
Mr Buffett went to a restaraunt where he knew the owners, and simply counted the number of patrons paying by American Express. He formed the view that the underlying business was still sound, and the shares were oversold, so he bought (and bought, and bought, as the price stayed down).
The anecdote ended “American Express went from 33 to 189 over the next 5 years”.
Actually, this is what investment analysts are SUPPOSED TO DO!
They are supposed to look beyond the numbers and hype and find ways to uncover the “real” story. In a lot of cases that is simply done by going to factories, stores and so forth.
Sadly, this is apparently an “old school” analytical process. In fact, its a good example of what anyone should do when they are considering a major investment in something…..go out and physically examine the claims that are being made.
Gee, no comment on this quote?
Cant sell home? Ask St. Joseph…He’s helped 1000’s!” the box advertises. All you have to do is “Ask Believe Trust.”
“Stephanie, are you serious?” I asked. “All you have to do is drop the price on your condo because you are asking for an unreasonably high amount.”
“My neighbors got this price when they sold last summer, so I’m not going to lower it,” she said indignantly. “Anyway, it can’t hurt to try this saint thing.” Stephanie shrugged and headed out the door with a trowel in hand.
She needs to bury her self in that hole!
Stephanie, Stephanie, Stephanie….
Don’t put saint in grass, pull own head from A$S…!
U go imploder!!
she’s already buried in debt no doubt
We have retired friends who buried a statue of St. Joseph when their house failed to sell. Some time later they lowered the price of their house, which they owned free and clear. A miracle- it sold! As they are devout Catholics, I wonder if they credit St. Joe’s intervention.
Now the sad part. They bought a smaller but more expensive (!) house in the same area from a friend who had never even listed it with a realtor, but who got a “competitive market analysis” from a realtor LAST YEAR. Our friends once again have a mortgage, and are now crying the blues about how they’ve had to curtail their travel and activities.
In our last phone conversation, they hinted at having “buyers remorse.” They must have found out what other houses in the neighborhood are now going for.
Wow, that’s gotta hurt. A CMA from the year before. Unbelievable
A few years ago some old lady ordered a mail order plastic Jesus figurine — which her tabloid ad promised had some kind of miraculous powers — and received instead a 9″ um, marital aid. She was a bit upset (so she claimed) and sued for mental distress, etc. — turned out the same company marketed both items.
There’s probably a moral in there someplace, but I’ll be damned if I know what it is.
The moral of the story: you’re going to get screwed either way!
Religious faith is fine, but it is not a substitute for critical thinking skills. God gave you a brain because He wants you to use it.
- economist at Morgan Stanley, believes central banks have created a monster.
- Low interest rates in most countries
- created excess liquidity in global financial markets.
-This in turn led to ‘a profusion of asset bubbles,’” Roach said.”
“excess liquidity in global financial markets” - there is NO WAY to stop this train wreck, it’s world wide.
Central banks are the monsters !
KBH Gets notice of default, stock down after hours.
http://biz.yahoo.com/ap/061027/kb_home_default.html?.v=1
Sounds like KB should expect a visit from Guido the Killer Pimp in the not too distant future!
Or “Moose” and “Rocko” from Caddyshack!
Sorry, kind of an old reference but I still like it…
Caddyshack is never old.
File the Q’s Karatz! What are you hiding? Why are you trying to buy more time? Those stock option issues MUST be bigger then they are letting on to?
KBH has a habit of going bankrupt, they did it last time down as well.
I suspect the top management can extract the most possible wealth from GFs by pretending that all is well until the very moment (not day, not minute, not even the second, but the very moment) of reckoning.
“KBH Gets notice of default” That’s the kind of news Crammer loves to hear. Make KBH a “strong buy” and his pin head listeners go Bu Yah! Hey Crammer, Bull Sh_t!
‘On Oct. 10, KB said it would not meet the filing deadline because it needed more time to finish a review of its history of granting stock options after a committee uncovered evidence of improper accounting for the options. An internal committee found that “actual measurement dates for financial accounting purposes of certain stock option grants likely differ from the recorded grant dates,” KB Home said in a securities filing. The company first disclosed it would review its stock options practices on Aug. 24.’
I bet the internal committee was shocked and appalled to learn the option grants likely were recorded wrong.
Interesting read in Business Week Nov 6.2006
…”How common is this boom-bust-boom pattern? Over the past three decades about 40% of housing busts in big metro areas have eventually been followed by strong recoveries. That’s according to a BusinessWeek analysis of inflation-adjusted housing prices. In an additional 15% of markets, prices adjusted for inflation barely got back to their previous peaks after 15 years. In the remaining 45% or so of markets, prices adjusted for inflation were still down a decade and a half after their pre-bust peaks
The disparity between winners and losers was striking: Among the winning markets, the average inflation-adjusted gain after 15 years was 43%, while among the losers the average inflation-adjusted loss was 19%…”
http://tinyurl.com/ylnuab
Good read, and good comments there (readers are pretty bearish). Seems like their supply side analysis is similar to what Friedman argued earlier about restrictive zoning.
Yeabut don’t believe their math. According to “their” subraction, all real estate busts last 3 years. But I get 7 years for NYC, 8 years for LA for the early 1990s (based on years from peak to trough).
7 years cycle like in the Bible.
Sorry, but stats over the last 30 years are boomer loaded. Every dip was a buying opp for the boomers, in any market. That BS is changing.
Investments are meant to be….? Liquidated.
A whole bunch of people are going to be sellers for a LONG time. I wouldn’t touch stocks, bonds, real estate, collectibles.
Nada.
Joe Momma,
Yes, yes and yes. I think even the most bearish of us will be surprised at how long this downturn will be.
Let’s also add globalization/downward pressure on wages with no releif in sight. Elimination of DB pensions and healthcare, which require us to put more money aside for “non-housing” expenses, and we have the makings of a truly historic bust, IMHO.
?? thwe biggest drop in 35 years? how far back does this data go?
NAR was using the 60’s to claim that prices NEVER go down
36 years or so…
1970 was the start of the first oil shock. This shock however was made in Japan and the USA. It’s called credit bubble and asset bubble. I wonder what will be happening to the banking system next year? No problem. Just lower interest rates to zero and print some more of the green stuff.
dollar dropped each day since the last no-raise by Fed
This week, the NBC local news anchor says on TV that this is the best time to buy because prices have dropped. In Fridays QCTimes, the drift of the idea seems to be the Midwest is different, even now, because prices have only dropped slightly, not significantly, like the rest of the nation. A Midwest QCA local broker/local developer/ builder, Tom Swanwick said that prices were,“so high to begin with….The supply is greater than the demand, particularly for new homes priced from about $400,000 to $700,000… We just need a few more customers and a few less houses” This is the fourth week I have been looking at mortages listed in the local paper, none were for less than $110,000 There are quite a few homes for sale under 100,000 in this area, they appear to be not moving. Mondays FSBO shows 191 houses priced between $679,900 - $104,000 v.s. 37 houses between $99,500 - $65,000. It seems we have run out of poorer people who have boxes of stupid and ready to sign the no money down loan. When will those few with money figure things out? The owner of W.T. Grampp Realty said “When something doesn’t sell, the price falls. That’s what’s happening in the new-homes market, but the change certainly is not drastic.” There needs to be a word at the end of that sentence, hmm, yet?
“For some people, ‘the only way to get the dream house is through the exotic mortgages”
:startcranky.
Gawd, why must it always be a “dream home” everyone must simply bankrupt themselves over ? The 1st house I could afford was a dump to put it politely. I had to pull out indoor/outdoor carpeting, refinish the hardwood, new windows, new exterior doors, 2 new bathrooms, 1 remodeled bathroom, new drywall , new deck. etc etc etc. But it was a dream to me because it beat living in a damn apartment and I could AFFORD the payments !!
:end cranky.
I’m looking forward to buying my first home (looks like I need to wait a couple more years), and while it would be nice to get a home in great condition, I am more concerned with affordability, location, and size of the back yard. The condition of the house can be changed with some sweat equity as you did, but payments, location, and backyard can’t. (OK, maybe backyard size could be changed with major renovation of the house, but that seems to the defeat the purpose). And, after years of apartment living, it will still be my personal castle regardless of what others might think, and I’ll enjoy the satisfaction of knowing that I worked on my home. I understand those that have owned for awhile and are trading up or downsizing might not want to get a place that needs a lot of work, but first time homebuyers shouldn’t really have that concern.
Agreed. I’m hardly in my dream home, I’m in an apartment by the train tracks, but my life is good and I’m blessed with a healthy family. Dream homes are overrated. This ain’t just sour grapes, either, I sold at the peak and am quite happy renting my less than dream home.
I wish I were handy. I guess I could be (I guess anyone could be, really). I tend to be afraid of homes that need work. I’m not seeking perfection, but definitely liveable. So my “dream home” is vastly different than most people’s. But still not a true fixer upper.
You would really really be surprised at how easy it really is….
You would really really be surprised at how easy it really is….
A comment like that scares me, I’m in the construction business and it is not easy. To apply your craft takes a lot of know how! If your a weekend warrior type then I really don’t want to buy your home for fear I will have to undo what most have done with remodels and repairs and then do it properly.
Remember, the joy of low bid lasts long after the job is complete!
I really don’t think eastcoaster and her son are going to be replacing the roof or adding an addition anytime soon. That’s more TxChicks style but I digress. Routine maintenance, painting, wallpapering if that’s your kick, sodding a lawn, replacing faucets things of that nature on a cosmetic fixer upper a contractor is not needed. Putting granite on the counters yes, laying tile sheets in the bathroom no.
mrincomestream - you get me!
Okay, you got me. My reason for my previous post was I see botched remodeling jobs all the time, to many home debters watching the HGTV channel. I’ve seen some really shoddy construction on new homes since this bubble started but man, talk about peolpe doing it themselves, that’s even worse and that really scares me. How many folks out there are going to be buying someone else’s pos advertised as newly remodeled and find out the work was performed by less than desirable craftsmen. New or resales.
Dude I used to sell R.E.O.’s you’re preaching to the choir. I have seen some truly hideous stuff new and resale. But I don’t think eastcoaster would choose to be quite that industrious from her previous postings. TxChick on the other hand I dunno but she’d probably do an excellent job.
I bought a property in 1998 from a rehabber who bought HUD properties and resold them (flipper, but the GOOD kind). The house had a new roof, upgraded electric (to code), new carpet, linoleum, Formica countertops and sinks. It was awesome, and cost less than $120K in a working-class neighborhood about six miles from the coast (San Diego County).
All one has to do is wait for the right time to buy. It’s easy even for us bears to get excited because this housing bubble’s gotten to ALL of us (it’s why we spend hours on a housing bubble blog, every day). When we stop checking in here (because housing is boring), it’s time to buy.
I reroofed one a house I was renting for the landlord once in exchange for a month’s free rent. In July. In Texas. It was fun! I spent a couple of months learning how to do it right and then just did it. It took over a week to do it alone though.
I reroofed one a house I was renting for the landlord once in exchange for a month’s free rent. In July.
———————–
LL should have given you at least three months for roofing in Texas in July!
LOL really 3 mo’s at a minimum.
Another nail in the coffin for the housing bubble…
Gap between mortgage rates narrows
The trend is leading to diminished demand for adjustable-rate loans.
The Orange County Register
The gap between a couple of key adjustable and fixed rates narrowed this week to the lowest level in more than three years, according to National Financial News Services.
The trend is somewhat diminishing demand for adjustable-rate loans since fixed rates are nearly as attractive, brokers say.
Some homeowners have already swapped their adjustable-rate loans for fixed ones since July, when fixed rates began falling.
Paul Scheper, a broker with Loan Link Financial in Aliso Viejo, said some customers are passing over loans fixed for just seven to 10 years.
They’re asking why get a fixed for seven to 10 “when I can get a plain old vanilla 30-year fixed for literally almost the same,” Scheper said.
The gap between a 30-year fixed with a one-point fee and a one-year adjustable with two points fell to 1.67 percentage points. That’s the smallest gap since June 2003.
The savings on the adjustable amounts to $1,060 a month based on an average $300,000 loan, said Quentin Caruana , head of Sage Credit Co.in Irvine.
That amount might help a consumer qualify for an adjustable but not a fixed-rate loan, he said.
Of course, that savings comes with some risk and is short-lived. Once the introductory rate adjusts, the monthly payment will increase.
Both rates fell this week.
The average rate on a 30-year fixed dipped to 6.064 percent with a one-point fee. Last week it was 6.120 percent.
The average introductory rate on a one-year adjustable loan slipped to 4.397 percent with a fee of two points.
Jeff Lazerson, president of brokerage Mortgage Graderin Laguna Niguel, said long-term rates likely will drop even more next year.
A combo of slumping loan demand and abundant supply of investor cash to fund loans will push rates down, he said.
He cited a recent forecast by the national Mortgage Bankers Association, which says nationwide loan volume will drop 14 percent next year to $2.1 trillion. He said volume is falling as homebuyers sit on the sidelines.
Help me with the arithmetic here. Hey, i really AM a lender. I don’t see that a difference of 1.67% on a $300,000 loan is $1,060 a month. More like $400 a month. Haven’t got my little amortizing calculator with me, but this makes no sense.
You’re right. Maybe he’s talking about an Option-ARM, where with the lowest payment option, $600 of interest a month is added to the principle?
Man, just typing that make my head spin.
“The number of permits issued for new Oakland County homes dropped by 51 percent”
IIRC, permits are issued not only for new construction, but for additions, remodels, and other work requiring inspection, like deck additions, major plumbing upgrades, etc.
So it would seem that a 51% drop in building permits could equal a near 100% drop in new construction.
Any contractors or others who could confirm this?
Pulte the Builder just announced that on 2 of his projects he is giving up to 50K in incentives ,or the buyer can choose to have the price reduced if you close before the end of the year .
Thirty-year mortgage rates highest in 5 weeks
From the Associated Press
October 27, 2006
Rates on 30-year mortgages rose this week to the highest level in five weeks.
Mortgage company Freddie Mac reported that 30-year fixed-rate mortgages increased to 6.4% last week. That was up from 6.36% last week and was the highest since they also hit 6.4% the week of Sept. 21.
Rates on 15-year fixed mortgages averaged 6.1% this week, up from 6.06% last week.
Rates on one-year adjustable mortgages edged up to 5.6%, compared with 5.57% last week.
Rates on five-year adjustable mortgages rose to 6.14% from last week’s 6.11%.
The mortgage rates do not include add-on fees known as points. The 30-year and 15-year mortgages each carried an average nationwide fee of 0.4 point. The one-year ARM had a nationwide average fee of 0.7 point and the five-year ARM had an average fee of 0.6 point.
(TM)
TM (TM)
Damn, I just can’t get it to work….TM…….hahaha
(TM) there I put it at the beginning. But I think it needs to not be at the beginning, just somewhere else. Like this (TM)
Just don’t start a sentence with it…. (TM) which is basically ( TM ) without any spaces.
There’s getting to be altogether too much Transcendental Meditation ™ on this blog.
Gotta try it now - just to see what all the hubbub is:
Asshole(TM)
http://tinyurl.com/yfteg
I read this and the only thing that comes to mind is confusion.
“Cutting prices on subsequent phases would seem like the natural thing to do. But if the company drops the prices of one phase, prospective buyers may wait to see whether it will do it again on the next, company executives reasoned.
“Our goal was to not let buyers chase the market down,” Sares-Regis’ Eyerman said.
The company instead wanted to see how far buyers might drive prices up. So it reset the price to $295,000 on 30 condos that had been languishing for months, then invited interested buyers to an Orange County hotel to bid.”
Do people really want condo’s that bad?
‘If (lenders are) selling a home for 80 percent of what a builder sold it for two years ago, how’s the builder going to compete with that?’ asked James P. Babcock, president of the Building Industry Association of Southeastern Michigan.”
Pretty easily, Mr. Babcock. Lumber prices are nearly 1/3 down. Wallboard and cement are following, with copper finally easing. Labor — just whistle — they’ll come from out of state and it’ll take a week or so, but they’ll be there. And the price at which your members sold two years ago — what was the profit margin on those units? Won’t take much of a cut there and your folks will be very competitive, alright. The only people who are guaranteed screwed are the re-sellers who bought in the past couple of years. Not your problem.
Realtor™
Very (TM) cool (c)
©
FINALLY™
ENOUGH(TM)
Damn (TM)
Is it just me, or is Roach hinting at the possibility of a global recession (or worse) triggered by the housing bust?
It isn’t just you. Its hard to interpret his comments in any favorable light, for sure.
GetStucco™………hehehe
Gawd, like a kid with a new crayon . . .
Or paint(TM)
Damn you!
Damn (TM) you!
Sweet(TM) momma!
Wha? (TM)
Wha?(TM)
Stucco(TM)
Stucco (TM)
How you get it to run up against the last letter in the word?
Come on, baby(tm)
™®©imploder
Actually, Groucho Marx probably has the (TM) on my blog name…
It’s different in Vegas. The local newspaper says so!
http://tinyurl.com/y7y74c
One of the nice thing about making ridiculous statements like “the LV housing market is perfectly healthy and intact” is that virtually no one will ever remember how wrong you were.
Maybe its different these days with internet search but Murphy is probably safe from ever being called on this…..assuming he’s wrong. And if he’s right, he can point to his “vision” forever.
Moral? If you are going to make a contrarian claim you might as well make it an outrageous one. You’ll be able to hang your hat on it if right and (virtually) no one will ever remember you were wrong.
Ben, here is the link y’all have been waiting for:
“Housing Boom Goes Bust”,
“In case you haven’t heard, the Great Housing Boom of the Early Millennium appears to be over. Certainly, the July data for both existing and new home sales disappointed most expectations, which were modest to begin with.”
http://www.clevelandfed.org/Research/dailyupdate/2006/august/28/housing.cfm
Now if the right hand doesn’t know what the left hand is writing? How will David Lereah spin this?
Could we ask Heli Ben for a comment………..
Sorry……..Heli Ben™
“and prices, though flat to slightly declining, are not yet plunging.”
Notice the use of the word “yet”.
LOL!
http://www.myebid.com/cgi-bin/auction/view?cmd=view&listingID=2435
Can I tell you how creepy I find it that he wants interested parties to send him a “massage”? Ewwww.
Does anyone want to predict when we will have the first high-profile online real estate foreclosure auction that turns out to be a pure take-the-money-and-run scam? Or have the auction web sites figured out how to preempt such “market failures?”