Price Declines Are “Almost Inevitable Now”
The Washington Post. “A housing developer who had offered to give a Virginia town an unprecedented amount of money to build a luxury subdivision has abandoned plans for the community, blaming a cooling housing market as a factor in the project’s failure.”
“‘I am personally saddened by the prospect of not moving ahead with the . . . project,’” Centex Division President Robert Davis wrote. ‘Unfortunately, in my world, as in yours, everything must be couched in terms of economic and political viability; it is a harsh reality for all of us indeed.’”
“Centex’s announcement this month ended any hope for a new deal. ‘All in all, it’s a significant disappointment,’ said Town Council member John V. Albertella. ‘Then again, we understand the commercial reality of the present time.’”
“A recent report from the National Association of Realtors showed that there was a record number of unsold homes on the market during the summer, when home prices declined for the first time in five years.”
The Delaware State News. “If you look in the real estate section these days, you’ll probably notice two words rarely seen in the past few years - ‘price reduced.’ It’s something homebuyers have been longing to see - a sign that the pendulum has swung in their direction.”
“Experts knew it was only a matter of time before the real estate bubble would burst. ‘It was an anomaly and it couldn’t be sustained,’ said Ruth Briggs-King, executive VP of the Sussex County Association of Realtors. ‘It would’ve priced too many people out of the market.’”
“And with the housing market slumping in other areas, Mr. Martin said there aren’t as many out-of-state buyers coming to Delaware, because they are having a hard time selling their homes. ‘The New Jersey and Pennsylvania markets are not as healthy, and they do have an impact on our market,’ he said.”
“‘Sellers are beginning to realize that they’re not going to get premium price for their property, but more realistic values,’ said Charles Martin, president of the Kent County Association of Realtors. In the $200,000-plus range there are so many options that it’s driving prices down. ‘The market is slower at the top, because there are lots of additional properties and not as many buyers,’ Mr. Martin said.”
The Times Online from Pennsylvania. “When Lisa Kusko put her house up for sale last year, she never dreamed she would still own it more than a year later. ‘I had no idea at all it would take this long to sell. I knew it wouldn’t be instant. … I just didn’t think I would own it at this time, this year,’ Kusko said.”
“Kusko said her initial asking price of $112,000 was competitive with other homes in the area. ‘I thought I was starting low, and I guess with the market the way it is, that wasn’t low enough,’ she said. She dropped her asking price to $99,000 a few months ago, and Kusko said she considered a lower offer of $92,000 that fell through.”
“Frustrated with the situation, Kusko, who now lives in Lake Geneva, Wis., decided to take her home off the market Friday and rent it out.”
“Kusko said initially she thought the problem was with her house because it does need some work, but then she realized newly remodeled homes aren’t selling, either. Statistics for home sales in Beaver County show that the drop in sales affected every municipality in the county.”
“‘We’re pretty much seeing a pretty down market, and it’s difficult to keep saying it because we don’t want to discourage people,” said Sally Heimbrook, a real estate agent in Beaver. ‘But there are many, many, many more houses out there than there are buyers.’”
“While Heimbrook said she hasn’t seen many sellers pull their homes off the market, people have reduced the prices of their homes. The decline in the housing market was predicted last year on a state and national level, Heimbrook said. ‘Many people didn’t believe it because we were still booming, and all of the sudden, it came. It’s in Florida and California, too,’ she said.”
From Pittsburg Live. “Two homebuilding associations from Southeast Pennsylvania say they want to set the record straight about the housing market performance in the state — specifically, about the so-called burst of the ‘housing bubble.’”
“‘The bottom clearly has not dropped out of the housing market in our state,’ said Joe Gartner, president, Home Builders Association of Bucks and Montgomery counties, and Ted Moser, president, Home Builders Association of Chester and Delaware counties.”
“They said home builders in the state are ‘troubled’ by news stories that ‘exaggerate the impact of this year’s slow-down in the housing market.’ According to Gartner and Moser, ‘local and regional homebuilders in Pennsylvania are isolated from some of the market volatilities faced by national builders in their operations elsewhere in the country.’”
The Philly Burbs. “Real-estate industry insiders often disagree over what’s going on in the housing market, but this week that disagreement got a little ridiculous. ‘Alleged’ housing bubble? ‘Ostensibly little additional research?’ Them’s fightin’ words.”
“We’ll overlook for a moment that fact that all possible measures of home-sales activity, from the number of sales to the amount of time it takes to sell a house to the median sales price to the inventory of unsold houses to the number of building permits issued, points to a slowing market. We’ll note that most market procrastinators expect prices in this area to hold firm, even as they fall elsewhere.”
“The final comparison numbers show that the number of permits issued in Bucks and Montgomery counties in the first half of this year is down from 2003, as it is from 2005.”
“Spokesman Scott Elliott said the release’s tone was due to frustration on the part of some of the associations’ members. ‘They were concerned that the public was getting the wrong message,’ Elliott said.”
“But what the right message is can be a little difficult to decipher. I heard presentations by Mark Zandi, chief economist at Economy.com, and Bernard Markstein, director of forecasting for the NASB, that I can best described as a one-two punch that should TKO any expectation the housing market might be starting to recover right now.”
“‘You overdid it,’ Zandi told builders. ‘I do think there’s too many homes out there, too many new homes.’ Price declines next year, Zandi said, are, ‘almost inevitable now.’”
“‘Based on our forecasts, clearly we’re not in a soft landing,’ Markstein said. ‘We’re past that.’ It will probably take another year to work out a ‘huge overhang’ in housing inventory and get the housing market back on track, he said.”
‘ Delaware County’s home sales dropped 10 percent in the third quarter. The 10 percent decline in Delaware County was modest compared to a 25.3-percent decrease in Bucks County and a 25.1-percent slide in Burlington County, N.J.’
why is it that so few believe in the law of economic gravity?
talk of new paradigm, paradigm shift, all just bs.
time to pay.
Is anyone else as fed up with the phrase “new paradigm” as I am?
It’s as bad as “we need to monetize those eyeballs” was back in the Internet heyday.
‘It would’ve priced too many people out of the market.’”
_______________________________________
HUH? I thought it was “buy now or be priced out forever”?
According to Gartner and Moser, ‘local and regional homebuilders in Pennsylvania are isolated from some of the market volatilities faced by national builders in their operations elsewhere in the country.’”
____________________________________________________
My bad - PA is “different”!
It’s reads like the two clowns you’re referring to are isolated from reality. Someone needs to straight-jacket, duct tape, and institutionalize these fools and stop them from spewing all this insane happy talk. The REIC ship is sinking with everyone aboard and these clowns act like the party just started.
It’s not that their party just started…they have had a great ride these past few years. They don’t want to see it end.
When they say SE Pa. is isolated from market volatilities, I’d like them to be more specific. There is a strong job base here, everything from industrial to service, of course many health-related jobs. But fundamentals still apply here, and right now SE Pa. is over priced and over built.
Simply put, I am from SE Pennsylvania and have been watching the exact same group of about 350 homes for the last 6 weeks and have not seen ONE HOME SELL…
I would also say that about 30-40% have taken price reductions. I also work across the street from a new ‘luxury townhome’ development going for $355K and I simply laugh out loud every time I read the sign. Those homes are going NO WHERE until the price is dropped substantially.
Like the rest of the nation, SE Pennsylvania prospective home buyers have had enough and will stand on the sidelines until it corrects fully.
Oh…finally…I saw a price drop of a $320K home of $235….just so it would be less than another $320K home in the same neighborhood.
That ain’t gonna do it …
That’s interesting, your assertion that a 30% reduction ain’t gonna do it. We here have been asking for 50%, but it surprises me (anyway) that a 30% reduction has not attracted a “knife-catcher”.
I think that Steve meant $235, not $235
Oh I see. You mean the price dropped by 235 DOLLARS, not dropped to $235K. wow
$235.00…not $235K?
“Experts knew it was only a matter of time before the real estate bubble would burst. ‘It was an anomaly and it couldn’t be sustained,’ said Ruth Briggs-King, executive VP of the Sussex County Association of Realtors. ‘It would’ve priced too many people out of the market.’”
She is talking about blog experts, right?
“It would’ve priced too many people out of the market.’”
Gee, ya think so?
I work in Coastal Sussex where the Avg home price is well over $300K and median income is $32K. It’s the beach, retirees are flocking to the area from PA/NJ/NY and the Balto/WashDC metro areas turning us into a mini Florida. The problem is there is no industry here……………..none outside of tourism. Unless of course you want to wait tables and cater to tourists. I just hope the low taxes we have now will remain and not turn it into Florida.
I can’t wait until these prices come back down.
Typical temp in Fla in Nov - 70s-80s w/sunshine. Temp in Ocean City in Nov - 50s and raw. Don’t worry - no chance of turning into Florida.
Yeah, exactly.
Could said ‘experts’ give me a heads up when prices bottom out.
Sure they can…right is great time to buy
(i think you mean ‘right now’?)
They (Lereah, Greenspan, etc.) already did — the market will bottom out some time next year before resuming its never-ending upward ascent.
“If you look in the real estate section these days, you’ll probably notice two words rarely seen in the past few years - ‘price reduced.’ It’s something homebuyers have been longing to see - a sign that the pendulum has swung in their direction.”
Now to figure out how many years need to pass for it to stop swinging in our direction…
I’ve seen those 2 words (”price reduced”) all over Ohio these past 3 years. But those signs don’t give me a good feeling.
“Price Reduced” doesn’t mean jack. It is just another marketing ploy by realtors to sway buyers into thinking they are getting a good deal. Many of the so-called “reduced” prices are still at 2005 levels and beyond. They are no indication of value. And I am sick and tired of hearing “Buyers Market”. This is no buyers market. This is a stagnant market with a few sellers still fleecing the greatest fools.
Exactly. How is it a buyers market if prices have doubled since 2002, interest rates have edged up from their historic lows, and incomes are still at 2001 levels. Just because there are more homes available than last year at 2006 prices does’nt make it a buyers market.
When I read newspaper headlines that tout it’s a Buyers Market, a mischievous smirk covers my face and I whisper, ‘It’s the Biggest Suckers Market ever!’
No news paper in this entire country would ever have the courage to print the words; It’s A Suckers Market.
““Price Reduced” doesn’t mean jack. It is just another marketing ploy by realtors to sway buyers into thinking they are getting a good deal. Many of the so-called “reduced” prices are still at 2005 levels and beyond. They are no indication of value. And I am sick and tired of hearing “Buyers Market”. This is no buyers market. This is a stagnant market with a few sellers still fleecing the greatest fools.”
DingDingDing! We have a winner folks!
Every week Sears has the same old $hit “on sale” or “40% off”. What the deaf, dumb and blind don’t understand that it’s 40% off the inflated price. I too am sick of this cheesy worn out “buyers market” tripe. Make no mistake about it, there are still weak hands entering this market to take advantage of “greatly reduced prices”. The dilemma for the REIC is that there aren’t enough weak hands to reverse the price action. 1998 pricing plus 3%/year inflation equals 2007 prices.
“This is no buyers market. This is a stagnant market with a few sellers still fleecing the greatest fools.”
Best description of the current situation yet - ’nuff said.
I agree, BanteringBear. You could put condoms with holes on a table next to an “on sale” sign and some idiot would buy them. The only way “price reduced” matters is if the whole darn national industry is “price reduced”, and by a lot.
Don’t want to “overpost” - but there sure are a lot of good nuggets here.
Lots of “just wait THE GREAT PUMPKIN will come NEXT YEAR” - “Oh GREAT PUMPKIN WHERE ARE YOU!?!?!?”
That was my holiday post.
Crispy (TM)
Crispy- the great pumpkin. Too funny. Happy Halloween!
An appropriate analogy though, when one reads these ridiculous “forecasts” coming from the REIC. Any uptick in ‘07 will be nothing more than a dead cat bounce, as many here have said. It is somewhat spooky, the accuracy of this blog’s predictions since I started lurking in early 2005.
Any recent news on those Bakersfield clowns: Crisp and Cole? Still forging ahead with their glamorous high-rise?
Still going ahead. They had a big article a month back or so. I linked on my LOWLY Bakersfield blog - http://bakersfieldbubble.blogspot.com
This will end up like all other “great” condo ideas!
Crispy & Cole: Thanks! Your comments are always good. I was not aware that you had a blog, but I will check it from now on. I’m now curious about the guy you had posted about on your site, the local weatherman/realtor. Could he be realted to the infamous Leslie Appleton-Young? I went to his website and enjoyed perusing all the realtor glam shots. What is the deal with that? You should have Ben put up a link to your blog.
I’m with you on all the new condo ideas. Who would ever conceive that there is a market for that product in the central valley? No offense, but there isn’t much of a view worth building upwards for. That entire region’s bubble absolutely boggles my mind. Driving along I-5, all one sees are billboards for new homes, and they are still building. I don’t care how many models the economists and analysts run, the bubble and inevitable fall-out are right there, in our faces everywhere we turn. Yesterday I was driving around and noticing all the commercial space presently occupied by the RE industry. There are literally intersections where all four corners are occupied by this one industry. Realtors, title cos., mortgage, home furninshings, etc. Go a few more blocks and it repeats! Talk about market saturation. As sales continue to slow down, how will the commercial sector hold up? Where will all these people go for work? Again, how can anyone still believe that this is just a plateau???
“Oh Great PUMPKIN CENTER home prices WHERE ARE YOU??!”
…Sagging like a jack-o-lantern left out until Thanksgiving.
“‘Sellers are beginning to realize that they’re not going to get premium price for their property, but more realistic values,’ said Charles Martin, president of the Kent County Association of Realtors. In the $200,000-plus range there are so many options that it’s driving prices down. ‘The market is slower at the top, because there are lots of additional properties and not as many buyers,’ Mr. Martin said.”
Sounds like the market is suffering from a shortage of McMillionaires.
LOL. “McMillionaires” — first time I’ve heard that . . . and I’m surrounded by them. The median home here (Santa Barbara) was $1mm+ (until recently), so all homeowners think of themselves as millionaires. And no, they don’t figure in mortgages, HELOCs or anything else. Da Nile still flowing wide and strong in my home town.
There are certain areas that I think are more deserving of the runup in prices and SB is one of them - imho. Montecito and Ojai, too.
Sure, if by “more deserving” you mean “more deserving of the bigger, harder fall they will experience by virtue of a bigger run-up in prices”.
Good comment Stucco!
“‘We’re pretty much seeing a pretty down market, and it’s difficult to keep saying it because we don’t want to discourage people,” said Sally Heimbrook, a real estate agent in Beaver. ‘But there are many, many, many more houses out there than there are buyers.’”
By pure coincidence, there are many, many, many more sellers out there with unrealistic price expectations than with realistic expectations.
Getstucco,
Well kind of hard to argue that but the primary reason I see for the “mexican stand-off” (you can say that can’t you) is that with all of the new construction, recent purchases and serial re-financing many sellers simply don’t have a choice? Many long time owners may have been equity fat going into 2002/2003 but by the time the MB’s got them to cash out in 04/05 or realtors got them to trade up they don’t have a lot of wiggle room left do they?
‘The decline in the housing market was predicted last year on a state and national level, Heimbrook said. ‘Many people didn’t believe it because we were still booming, and all of the sudden, it came. It’s in Florida and California, too,’ she said.”’
The predictions were made here. Where else?
Not at any REIC funded “event”/ sheeple slaughter fest!
““Experts knew it was only a matter of time before the real estate bubble would burst. ‘It was an anomaly and it couldn’t be sustained,’ said Ruth Briggs-King, executive VP of the Sussex County Association of Realtors.”
Ya, I wonder what experts she is referring to. Definitly not the people who the papers had been quoting up to this point.
Headline from 2011:
Experts knew the downdraft in housing prices that wiped out over 50% of 2005 prices was an anomoly that couldn’t be sustained…
Well, she only said “experts KNEW” - she didn’t say they ADMITTED it. Liars liars pants on fires.
“We’ll overlook for a moment that fact that all possible measures of home-sales activity, from the number of sales to the amount of time it takes to sell a house to the median sales price to the inventory of unsold houses to the number of building permits issued, points to a slowing market. We’ll note that most market procrastinators expect prices in this area to hold firm, even as they fall elsewhere.”
Denial ain’t a river in Egypt…
“We’ll note that most market procrastinators”….shouldn’t that have been “prognosticators”?
Then again, in a declining market all you have is procrastinators….of the buying type.
Also the procrastinators who think they’re going to get enough of a spring bounce to put their housing back on the market then. Also the procrastinators in the housing industry who should’ve already packed up their equipment and gone to someplace that really needs houses. Randomly I’ll say Zambia.
“The decline in the housing market was predicted last year on a state and national level, Heimbrook said. ‘Many people didn’t believe it because we were still booming, and all of the sudden, it came. It’s in Florida and California, too,’ she said.”
Yes, it’s airborne; the housing plague is everywhere; it’s in the four corners of the world. If only they would listen, we might have been able to save them…
I am ordering a prescription of TamiFlip from my secret Canadian pharmacy connection…..
Lucky for us we’ve been inoculated by reading and posting to Ben’s blog. Thehousingbubble.com is the ‘anti-dolt’ for inane house buying decisions. One Florida thread and you are forever cured from ever making a stupid house buying decision.
I have had the interesting experience of having visited PA very recently( I am from CA) and I can say without a doubt that the situation there is almost the same as it is in CA: LOTS of homes on the market, very few selling, and of the many up for sale, most are overpriced for their respective regions, hence a downward slide is enivitable. Add to the fact that PA has built tons of new Mcmansions, and this is even more likely.
“Reiburn said the slowdown from 2004 and 2005 has created a more balanced market, which favors buyers. At the same time, he insisted that sellers are still making a decent profit.”
So far this seems to be correct. Even sellers who have reduced their initial asking prices by 10-15% are coming out ahead. In this area, at this moment, the truly distressed sellers are not yet driving the market.
Delaware County is unique in that it comprises the highest median income locales as well as the lowest…relative to the Philly burbs.
The towns italicized in the following quote most likely are skewing the median price higher:
“Upper Darby posted the highest number of homes sold in the first three quarters of the year at 1,034. Rounding out the top five was Haverford at 518 homes sold, Ridley Township at 277, Radnor at 266 and Springfield at 218.
Eddystone showed the largest percent increase in median sale price, rising 54.7 percent in the first nine months of the year, followed by Trainer at 53.9 percent, Middletown at 27.7 percent, Lower Chichester at 24.9 percent and Chester Township at 23.6 percent. ”
The locations showing the highest percentage increase are blue collar areas, and Chester is mostly low income. I’m going to guess that the jump in median price increase has to do with continued flipper interest (due to the low price of available inventory), and unfortunately, the susceptibility of lower income folks to take advantage of toxic loans and “creative financing” in order to buy now or be priced out forever.
“According to Gartner and Moser, ‘local and regional homebuilders in Pennsylvania are isolated from some of the market volatilities faced by national builders in their operations elsewhere in the country.’”
Bullsh!t.
The dirty little secret they don’t want to tell you is that inventory is higher now than it was in the spring.
I haven’t calculated closed sales yet for 10/1 - 10/31, but preliminary numbers tell me that months of inventory will clock in over 9. For Allegheny County, where price appreciation has been relatively muted, that’s BAD NEWS.
“‘You overdid it,’ Zandi told builders. ‘I do think there’s too many homes out there, too many new homes.’ Price declines next year, Zandi said, are, ‘almost inevitable now.’”
Wouldn’t you just love to pit Mark Zandi up against Lereah in a steel cage match?
Zandi’s ok, but he flip-flops and hedges too much to be considered a true Bubble stalwart. Ben or Patrick vs. Lereah would be a much better match-up.
I vehemently disagree that sellers who refuse to take less than the premium price are stubborn. If they feel they deserve top dollar, they are entitled to wait for top dollar. I remember back in 2000 when I had 5000 shares of Pets.com at $9/share. The peak price was $14/share. In late 2000, the price went down to $1.50 a share and despite pleas from my financial advisor I REFUSED TO SELL. If I wasn’t going to get at least $14/share and a 40% profit, then I just wasn’t going to sell damn you! Sometimes principle must trump economic reality!
I hope all the so-called “stubborn sellers” out there will draw the same line in the sand! Just because my asset eventually went down to 17 cents per share doesn’t mean other asset-holders shouldn’t continue to cling to their depreciating assets long past their sell-by dates!
I respect your position but I think it’s a tad different when trying to compare $50K of a depreciating stock vs a $500K ARM loan on a home that’s valued at $400K. No FB can hold their wad that long.
The old “cut your nose off to spite your face” logic. Some sellers will most certainly subscribe to this, clinging to their wishing prices and sacrificing their entire future in the process.
Enjoyed your sarcasm, vioviv. I have a friend who bought Marimba at $60/share, and I thought I was being smart when I bought it at $36, when I averaged down at $13, and when I averaged down again at $3.50. The last purchase did cut my losses, as the company was eventually bought out around $6. I did lose some dough, though. About 1% of my net worth. My friend who bought Marimba and held it down to some single-digit price (without averaging down) went and bought herself a house on an IO ARM in early 2005. Guess how much attention she’s paying to my advice to get out.
“Guess how much attention she’s paying to my advice to get out.”
Hahahaha. Quit trying to help ‘friends’ with well intended advice, or you’ll have no friends left, except maybe your dog..
The longer they hold on to their wishing prices, the more they will loose. This is the best case scenario for price drops, as comps set the new prices. I hope they hold out as long as they can.
Thought this would amuse you all. From Minyanville
Wait! Title Revision! Title Revision!
According to their 3Q 2006 U.S. Foreclosure Market Report released today, RealtyTrac reported that 318,355 properties entered some stage of foreclosure nationwide, an increase of 17 percent from the previous quarter and a 43 percent increase from the third quarter in 2005.
“What our third quarter research appears to be showing is that the first wave of adjustable rate mortgages is having a negative impact on the number of homes going into foreclosure,” said Saccacio. “With the volume of these loans–more than $1 trillion of them due to adjust over the next 15 months–this is a trend that definitely bears watching,” DSNews.com reported.
A 55 percent increase in foreclosures launched Florida as the leading state with total foreclosure filings during the third quarter.
James J. Saccacio, chief executive officer of RealtyTrac, states that hikes in interest rates and a slump in the market are two key factors to the 43 percent increase since third quarter 2005.
The bad news here is that Lereah’s publisher is probably going to have to change that book cover… again.
In 2005, National Association of Realtors Chief Economist David Lereah released the book,
“Are You Missing the Real Estate Boom? Why Home Values and Other Real Estate Investments Will Climb Through the End of the Decade - and How to Profit From Them.”
Interestingly, the title for the 2006 edition of the book was changed to,
“Why the Real Estate Boom Will Not Bust - and How You Can Profit From It.”
Below are Minyanville’s suggestions for subsequent title revisions in later editions of Lereah’s book through 2015:
2007: “Why the Real Estate Boom Will Not Bust and How Foreclosures are Technically Part of the Continuing Real Estate Boom, In a Way.”
2008: “Why the Real Estate Boom in Distressed Properties Will Not Bust (except in certain local markets) and How You Can Use Leverage to Profit From It.”
2009: “Why the Phrase “Real Estate Boom” is Often Misunderstood to Mean Higher Prices and How You Can Pray for Them.”
2010: “Why the Real Estate Boom Will Soon Bounce Back and How to Eventually Profit From It.”
2011: “Why Did I Have to Write “The Real Estate Boom Will Not Bust Through the End of the Decade” and How Did I Not Realize How Long A Decade Really Is?”
2012: “Oh, Dear God, Please, Please Let the Real Estate Boom Bounce Back… and How You Can Profit From It.”
2013: “Please, Please, Just Let the Real Estate Boom Come Back This One Time for This One House and How You Can Break Even From It.”
2014: “Why I Am Willing to Accept a Small Loss of 35% On the Real Estate Boom and No Longer Care About How to Profit From It.”
2015: “Why Can I Maybe Borrow a Couple Dollars Off You Until the Real Estate Bust is Over?”
TXChick, Let’s see, $1,000,000,000,000. That’s 1 Trillion. If the average home loan is $400,000, then we have 25,000,000 homes with loans needing to reset next year. And this quarter, we are touting 318,000 loans entered some stage of forclosure. That is only 1.2% of the loans needing to reset next year. How many do you think will go into foreclosure? 5% per quarter would be 1,250,000. That would be a 393% jump from this year. Is this possible or likely? I don’t believe there are a lot of FB’s out there who will be able to pony up 10-15% of their home value, to requalify for 100% refi’s. Is this a sleeping giant, or am I overstating?
That’s 2.5 million loans in your trillion dollar example, cowboy.
Exactly. I meant to say this whole issue is much ado about nothing. Thanks, Bluto.
Distribution matters greatly. For instance, CA coastal bubble zones will prove to have a disproportionate share of the ARMs which reset, and a commensurately disproportionate share of underwater owners who cashout-financed and invested away all of their accumulated equity.
GS, as Bluto pointed out, this is 2,500,000 homes (@ $400k/home). How many would you expect to cash in, unable to reset? We see this $1 TRILLION (pinky to mouth, Dr. Evil style) in resets bandied about so much. Can we really quantify the effect? Or is there no historical basis and too many other unkowns (like how many in CA?)
Likely an uneven geographic distribution in loan size as well. We keep hearing of people getting into trouble in Denver and Dallas with these type of loans with much smaller loan amounts.
OT: any one know about this builder’s finances ?
http://www.hoganhomesinc.com/index.php
tia
“Two homebuilding associations from Southeast Pennsylvania say they want to set the record straight”
“‘The bottom clearly has not dropped out of the housing market in our state,’
“They said home builders in the state are ‘troubled’ by news stories that ‘exaggerate the impact of this year’s slow-down in the housing market.’ According to Gartner and Moser, ‘local and regional homebuilders in Pennsylvania are isolated from some of the market volatilities faced by national builders in their operations elsewhere in the country.’”
Thank you for setting the record straight my dear StuccoBoxBoys…… We admire your economic wisdom in that market forces do not apply to your fantasy world. Let’s all head down to the mortgage brokers office ASAP!
“The bottom clearly has not dropped out of the housing market in our state”. Yet.
Judging from the lack of sales the bottom has indeed dropped out, it’s just that sellers are still hanging on by their hands, with their feet suspended over a drop of unknown depth. How long can they hang on?
The stupidity factor was that for the most part, cities and towns in the US were an attractive option to move into because the prices were so cheap as compared to large metro areas. That’s what made them ’special’. Once the prices took off, no one had a reason to move into those places.
can someone explain to me how these articles get away with constantly painting price increases as a good and decreases as bad? Not everyone is on the same side of this bet, and it’s strange to constantly feel like you are a subversive for WANTING housing prices to crash.
I do understand that the expanding housing bubble created a collolary economy of building, renovating, etc. But this should really be a minor, secondary point.
It just seems like the audience greeting the end of the housing bubble with open arms is at least as great as those who will be screwed. why does the media portray it as a tragedy?
where were the stories about the evicted tenants and families with working financial risk detectors who had to pick up and move out of hot areas, losing friendships and community in the process?
these aren’t rhetorical questions, i honestly have a hard time understanding whose POV these stories are taking.
If the 70% homeownership rate is for real, there are indeed more people on the Wrong side of this bet. Indeed that’s one of the things that made it a bad bet. In addition, my guess would be that educated people with above-average incomes are MORE likely to be homeowners than less-educated people with below-average incomes. Age might be a factor too. I am 60, and the number of my personal friends who are renters (i am) can be counted on one hand, minus the index finger, the thumb, and the pinkie. BTW i do have a few more friends than that.
the 70% figure shines a little light on the issue. however, what portion of those owners were actually in the market to sell? it takes some pretty specific circumstances to benefit from rising housing prices even if you bought in early. you have to make a gain, realize the gain, and then remove the gains from the table. if you miss any of these steps you haven’t actually benefitted.
my pop bought a place in SF for $200,000 in the late 90’s. It was a great deal then…. unbelievable now. sometimes we marvel that the place is estimated at over $600,000 now. but then we say, “so what?” if he sold he would just have to turn around and pay it right back to buy anything else… or go back to renting. the only metric relevant to him is how his mortgage payments compare to what he would have been paying if he still rented… plus an adjustment factor for security and other intangibles. he’s still faring pretty well, but it isn’t like $400,000 fell out of the sky.
so the only people who actually benefit from rising prices are those who are making preparations for imminent sale and who do not intend to enter the market again. that population would have to be well below 70% and well in the minority.
meanwhile far more people will benefit if homes get back into range where they can actually afford to own one and pay down the loan with a cusion suitable for riding out tight periods.
is it just that people are in love with the idea of cashing in? people need to learn that there is no such thing as “cashing in.” there’s always the question of what you do the next day. having the house should be more valuable than having the cash you could get for the house.
If I had a choice of taking 1/2 million dollars cash by selling my house today, or staying and living from paycheck to pay check, I would sell my house today.
Aflurry-
In the past month or so, there HAS been mention in the media that prices are unealistic and must correct. To me, that’s been a really good sign. Six months ago you never saw that- at all.
Many long time owners may have been equity fat going into 2002/2003 but by the time the MB’s got them to cash out in 04/05 or realtors got them to trade up they don’t have a lot of wiggle room left do they?
You are absolutely right…they don’t have much wiggle room. But it’s not the total fault of the REs and MBs…there is such a thing (as we have said here many, many times) as thinking for yourself, doing your due diligence. It is not always necessary to *trade up*, not always necessary (unless you are in a credit hole already) to get a HELOC. Their eyes were bigger than their pockets and they got sucked into the center of the vortex.
BayQT~
“She dropped her asking price to $99,000 a few months ago, and Kusko said she considered a lower offer of $92,000 that fell through.”
A house for $92,000?? I think that town is stuck in a time warp.
Or has already moved to 2009.
I wonder if this is it.
http://tinyurl.com/ybzdlg
BayQT~
That house has a basement AND a swimming pool. And it’s a nice simple style. Wow.
Maybe when it rains the basement becomes the swimming pool
“A house for $92,000?? I think that town is stuck in a time warp.”
No, it’s in Pennsylvania. Of course, to some, that’s Dutch for “time warp.”
You can still buy $35,000 dollar houses in small towns. TX has plenty.
“A house for $92,000?? I think that town is stuck in a time warp.”
That $$$ would get you a pretty nice pad in my area.
So Californians need to wake up and start lowering their house prices if they’re serious about selling their homes. Buyers are waiting and they’re patient, knowing that they have the edge now. SoCalifornia houses are outrageously overpriced and the bubble is only going to get worse until sellers realize they have no choice but sell at a much reduced price (possibility 35-40%) to get the market moving. The creative mortgage programs coming due will soon will definitely toss more house into the market and the prices will drop. More houses for sale with no buyers will force the prices down. Many many people bought homes during the boom that they could not afford if not for the creative mortgages, but in three, five and seven years they will call come to term….forcing many people to sell. Time is on the side of the buyers if they can wait.