“Buyers More Picky, Because They Know They Can Be”
It’s desk clearing time for this blogger. “Sales of existing single-family homes in New York continued their downtrend in September. Realtors recorded 8,876 home sales in September, down 15.7 percent from the record 10,533 sales in September 2005.”
“The preliminary data showed a median selling price of $238,000 statewide in September, down 10.1 percent from $264,750 in August, and down 8.1 percent from the year-ago median of $259,000. ‘The reduction in the median sales price can be attributed to an increase in available inventory as the shift to a buyer’s market continues,’ said Charles M. Staro, NYSAR CEO.”
From Georgia. “Tim Holdroyd, a longtime Midtown real estate broker, worries that developers and investors are paying too much for Midtown real estate in an uncertain office and condo market. The same thing happened in the district in previous decades, and some properties grew weeds because developers paid too much and couldn’t get their projects out of the ground, he said.”
“‘You have individual developers picking up huge pieces of land for huge numbers — you saw this in the 1980s and 1990s. I don’t get it,’ he said.”
From Alabama. “Existing home sales in Alabama dropped 17.8 percent decline from August. Compared to September 2005, sales were down 12 percent. The average selling price in September dropped to $158,076. The inventory of previously owned homes listed on the market in Alabama rose again in September to 36,414 units, a 2.9 percent increase from August.”
From Australia. “Sydney prices have dropped 9 per cent since the last boom. Sydney house prices are forecast to fall 5 per cent after next week’s interest rate rise. ‘We need another rate rise like a hole in the head,” Real Estate Institute of NSW president Cristine Castle said.”
From China. “The average price of homes in Shanghai dropped by 1.1 percent year-on-year in the third quarter of this year. New home prices in Shanghai dropped by 2.3 percent from the second quarter.”
From Canada. “New housing construction shows more signs of cooling in British Columbia, with a local research firm finding supply outstripping demand in some areas. In a report, the Vancouver-based development-research firm said markets are still strong, but ‘for the first time we are beginning to see small corrections in some areas.’”
“Edmonton home prices have fallen for the first time in 10 months. ‘Panic buying is reduced and buyers have a little more time to consider a home purchase,’ EREB president Madeline Sarafinchan said. After months of reported bidding wars, 65 per cent of single-family home sales in October were below list price.”
From Hawaii. “Two weeks ago, Big Island developer Gil Barden offered 21 units at county-defined affordable prices as part of a 105-unit Hilo condominium project, and only one potential buyer signed up. ‘Shocked’ is how Barden described his response.”
“At the Hawai’i Kai townhome complex Marina Palms, similar quality units with three bedrooms and two bathrooms sold for $599,000 last December and $552,000 in March. Another was listed in June and after at least two price reductions is still for sale at $545,000. ‘It’s definitely slowed down,’ said agent Amy Conley. ‘The buyers are being a little more picky, because they know they can be. The panic buying is over.’”
“An economic ’soft landing’ is likely in 2007, with the housing market worsening before rebounding, consultant Anirban Basu said Thursday. Consumer spending is bound to taper off, Basu said, adding, ‘How many flat-screen televisions do you really need?’”
“What was a seller’s housing market has shifted toward the buyers. Basu said interest and mortgage rates are not the driving force; rather, it’s a ‘buyers’ psyche,’ waiting for ‘fear and panic’ in sellers’ eyes. Locally, the result has been rising inventory, with more existing houses for sale as new construction drops off.”
“‘This will be a lengthy process,’ says Zoltan Pozsar, at Moody’s Economy.com. Some won’t be pleasant, particularly for people who have made good livings in construction or real estate sales in recent years, Pozsar says. Nationwide, sales agents received about $100 billion in commissions in 2005; next year’s total should be around half that amount, Pozsar forecasts.”
“Builders, meanwhile, have yet to downsize their payrolls to match the decline in construction. About 1.2 million jobs were created since housing really took off in 2003, Pozsar says, and employment in the sector is still only about 75,000 jobs shy of its peak.”
“‘If you don’t tell your story, someone else will,’ Joe Williams, co-founder of Keller Williams said recently about the media’s disinclination to quote real estate brokers as sources for the myriad stories written recently about the so-called housing bubble.”
“Instead they turn to anyone but people who buy and sell homes for a living. The effect on buyers has been paralyzing. Many brokers say buyers are concerned with more than rising home prices and interest rates, they’re scared of being the next greater fool.”
My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics!
I saw the NAR’s ad in Today news. it was a bunch of lies. it said that the housing price is expected to increase in 2007 and quoted Greenspan to say that the worse is over. this is so pathetic. it just goes to demonstrate the level of desperation these realtors are feeling. only people with room temp IQ will fall for this trash.
“only people with room temp IQ will fall for this trash.”
But isn’t this the group the lending industry is targeting right now with their suicide loans which are predestined to lead to future bankruptcy?
Economic Darwinism hard at work.
“quoted Greenspan to say that the worse is over.”
They’re right, the worse IS over. However, the worst is yet to come.
Of course they are desperate. They are faced with the prospects of having to get a job at Burger Barn to pay the bills such as their overpriced toxic mortgage on their oversized McMansion and the payments on the hummer.
I think they should get into Pizza Delivery. They could load up about 100 pizzas and hit about 40 homes before making a return trip.
lol
Is Burger Barn a real place? It sounds good and I’m hungry.
Nah… but someone earlier mentioned Burger Barn so I have been saying it all day.
“get a mouthwatering juicy burger your way at burger barn!”
Greenspan did say “most of the negatives are probably behind us” — well, that depends on what the negatives are! The negatives causing the bust have already happened, maybe, but the bust itself can roar downhill for quite a while…
Liberals are more willing to over pay for products than conservatives are; that is why the main stream media is mostly liberal.
The MSM promotes higher prices for almost everything. They jump for joy telling about people buying $600 designer outfits for their newborn babies, and people paying $300 for designer dungarees. And how about the outrageous prices people are willing to pay for tickets to sporting events and concerts? I bet most of the fans are liberals who enjoy their stars making millions off of them. The MSM cheer-leads home prices going sky-high, even if it means, first time home buyers and young families are setting themselves up for financial disaster. Liberals are more easily separated from their money than conservatives.
This is all to benefit the wealthy elite who own the MSM. That is why they want everyone to be liberal, and promote mostly their own agenda, in order to extract the most dollars from their viewers and followers, and collect the maximum amount of dollars for themselves, in profits.
Go ahead, Have at me.
It must be nice to live in your “Coke vs.Pepsi” world.
Now, take your medication and wait for the nurse to return
Coke.
Okay I will.
Speaking of “the wealthy elite who own the msm” — and you were — When you spit the word ‘liberals’ out with such venom and disdain, don’t you see that sunny smile breaking out across Richard Mellon Scaife’s face?
I sure do…and through that feral grin he’s whispering, “That’s Right, Mike, you Sage, Sage Fellow, You. It’s the LIBERALS to blame for the country’s many ills. The LIBERALS, who obviously have been running things around here since 1994. Now back to sleep, Citizen Sage.”
Your baseless decrying of ‘liberals’ is proof positive to Mr. Scaife that his Half Billion Budget for the Sheeple’’s Complete Attitude Modification (S.C.A.M) was MONEY WELL $PENT.
Do you have any idea what I’m talking about, here?
Pearls before swine?
How about I leave with a quote from one of your Completely Embarrassing Conservative Heroes, Dutch “I do not Recall” Reagan:
“Don’t be afraid to see what you see.”
Look around, Mike. Do you see the power-mad LIBERALS robbing America blind and selling her down the river?
..a fool and his money soon part
http://www.nydailynews.com/news/gossip/story/407693p-345144c.html
“”There’s no prenup — so wish me luck!” said Scaife, who was married to the 58-year-old Mrs. Scaife for 14 years before they separated in December.”
Dude.
Looks like you bought the meth AND used it.
Hmm.
I’d agree that a fiscally conservative people would look after their money better but sadly, most people have lost that attitude long time ago.
However, your conclusion of liberals running the media is the issue is bizare. Are you really Mel Gibson by chance?
Maybe its time that we took a page from the blog where from i learned about this one. Fark has Fark parties in different cities where like minds meet at a bar and exchange like ideas!
Hey, I’d go for that! Good idea, MDMORTGAGEGUY.
ok…so where do you want to meet, arkansas?
I’m about to go to Fla. Anybody got a favorite bar there?
yeah, all of them!
I used to live in florida, what part r u going to?
What part; I can give you plenty in West Palm area.
Me too. I’m in a northern suburb of Dallas during the week. Anyone interested in meeting for lunch, for example?
Home Builder Pulte (PHM) took a nice downward hit on Friday. Thats 3 days in a row and over 2 points. It looks like the investing world has finally come to their knees that supporting these HB’;s with all the negative news is just to much risk for them. This is the moment of truth, and since the next 3 months are the worst performing for sales, I am betting the farm, the hits to their overpriced stocks will just keep coming and coming. Hey, Jim Crammer, still “strong buy” on the homebuilders???
Don’t get too excited yet, David. I see no signs of capitulation; just a little pressure release before the next Wall Street guru issues a strong buy recommendation and kicks their prices back up by 10%.
I agree with this comment about not getting too excited yet. Until the refinancing music stops and loan defaults skyrocket, the banking system will go about blithely loaning money as if it grew on trees. The addicts (builders, investors, and brokers) will not self regulate until the supply is gone. Without the appreciating assets the entire house of cards will fall. The dead cat will lose its bounce and Cramer will look the fool for backing the first ones over the cliff.
They’ll keep loaning money because - for them - it does grow on trees. Money does not exist until it is borrowed into existence. But they need someone to loan the money to. Someone has to borrow it.
It works until debtors hit the wall - they can’t borrow more, because they can’t service it.
Which is why houses aren’t appreciating - no one can afford to service the debt associated with the rising prices - because wages aren’t rising. No down, I/O loans have hit the wall - with no greater fool to sell to when the loan resets, no one will bite.
Houses aren’t appreciating - flippers disappear (well except for one dumba$$ that I know of). Then it dawns on everyone that most of the demand was from multiple-property owning dumba$$es.
So now we have a double hit - no greater fools who can service additional debt + no stupid flippers = no demand/no market/no appreciation.
Once the spring comeback fails to materialize is when mass panic hits. And life as we know it will rapidly cease to exist.
I’m inbetween you two guys. I don’t expect big moves in the HB’s but I think that the trend will be down. Going either way, after a while, one more upgrade or down grade has less meaning or credibility. WCI might be interesting next week, since 2007 earnings
Stocks don’t go straight down. If you are an Elliot wave believer, a retracement will have an A (down) - B (up)-C (Down).
you could argue “A” down occured in May and June, “B” up is going on now and “C”?……….down?
“Instead they turn to anyone but people who buy and sell homes for a living.”
Too bad that people who buy and sell homes and the industry cheerleaders who support them destroyed all their credibility by lying too much.
I read that and nearly fell out of my chair. WTF?!!! Who else should they turn to, dickhead, for the truth other than the people who are getting screwed over by this bust. Part of the reason we’re in the state we’re in is because the only people that we’re quoted in the last couple of years were RE cheerleaders. Basically, what this anus is saying is eliminate the truth and let’s just shovel bull-sh-t. Nice!! The only problem I see, Mr. Joe Williams, is the media’s inability to cover the downside potential of RE three years ago, instead of now when it’s too late. You are an A-hole delux my friend!
Williams needs more of the Gary Watts’ “15% in the bag”.
We need to see more prosecutions of fraud. This bubble is full of frauds.
What he meant was “15% in the hole”.
exactly, we’ve had years of hot air and quotes from the Realtors. Can anybody blame us for finally not believing the lies anymore ?
So if I want to buy a car, I should listen to a salesman and no one else?
Idiots.
Right. The last person I am going to seek financial advice from is a realtor. But they have not been short on giving it during the boom. “Great investment opportunity!”, “Below market value!”, “Income property!”. All were designed to give FB’s the impression that the house was their ticket to financial freedom, not ruin. I bet half of these realtors never spent one day in college, let alone business school.
It’s interesting, most realtors will extol the benifits of the interest tax deduction, but can any of them actually explain how beneficial it will be in particular case?
not salesman…expert
I don’t even get the people who buy and sell homes for a living comment. Is he talking about RE agents? Some do buy and sell houses for a living of course, but most neither buy nor sell houses for a living. That’s not what they do.
The HBs, and maybe some flippers and investors buy and sell houses for a living. We’ve definitely heard plenty from and about them.
The full quotation is: “‘If you don’t tell your story, someone else will,’ Joe Williams, co-founder of Keller Williams said recently about the media’s disinclination to quote real estate brokers as sources for the myriad stories written recently about the so-called housing bubble.”
Two observations. First, it’s flat out untrue; i’ve seen tones of stories that quote all the usual mouthpieces from the NAR, state and local ARs, larger RE firms, homebuilders, individual RE agents, and any other people with a vested interest in seeing prices and transaction volume go up. Trust us, dude, we ain’t missing your side of the story at all.
More importantly, any good journalist aims aims for a wide variety of opinion and seeks out facts and evidence from unbiased sources. Realtors™ generally do not fit this description.
Now maybe this is what he’s referring to as telling your story. Seems like the media quoted this person’s keen insight into the market. (From the previous post).
“Real-estate types, however, remain upbeat. ‘In real estate, there is no bad time to buy a house if you need one and can afford one,’ said Bill Velto, broker in Upland.”
“there is no bad time to buy a house if you need one and can afford one”
Sure buddy, but the problem is that your view of when I “need” to buy and what I can “afford” is quite a bit different from my own.
In other words, if you can afford to lose money, it’s a great time to buy! Problem with that is most of the rich hate to be parted with their money and are stingy SOB’s. They, for the most part, didn’t get where they are by losing hundreds of thousands of dolars on bad RE deals.
good point nnvmtgbrkr. reminds me of this guy I heard being interviewed at a Star Trek memorabilia auction. Pointing at a replica Starfleet bridge for $30K he said “If I had $30K that’s what I’d spend it on”. Which is precisely the reason that he will never have $30K. I bet he’s got a garage full of shit though!
LOL…… I don’t know who the target buyers are for this ad campaign that the NAR is doing . It seems like a big waste of 40 million dollars . While I think the sellers have bought the uptick for 2007 market theory ,I don’t think the buyers will buy it .
If you look at the 1926 Florida real estate crash, it came quickly ,in large part because the prices just went to insane levels in a high speculation market, and finally nobody wanted to buy .
I think that you can’t restart a mania once its starts to crash .
“While I think the sellers have bought the uptick for 2007 market theory ,I don’t think the buyers will buy it .”
Wizard — if you are correct, then there will be an even vaster chasm between what buyers will be willing to pay for a home and the seller’s wishing price. In other words, transaction volumes will slow, in which case we could say the NAR ad campaign severely backfired.
If you don’t know what to do…..make a GESTURE!
Ok, so 40 mill is a big, dumb, waste of a gesture but it gives the appearence of effort!
Joe is simply repeating a rule which every salesperson knows: never let someone else tell your story.
myriad stories written recently about the so-called housing bubble.
I’ve read some of those myself. I find them as unbelievable as those stories about the so-called “moon landing” and the world-is-round nonsense.
“Eonomist (sic) says buyers’ psyche waiting for sellers’ fear, panic
by ANDREW SCHOTZ andrews@herald-mail.com
HAGERSTOWN - An economic “soft landing” is likely in 2007, with the housing market worsening before rebounding, consultant Anirban Basu said Thursday, mixing insight with levity.”
The eonomist expects fear and panic, while the economist expects a soft landing. What is an eonomist, anyway — an economist without the “con?”
Weren’t e-onomists the guys who were touting E-Toys and their ilk back in the late ’90s?
Its exciting for us who have been so patient through the insanity to finally see prices starting to drop, I think this is the beginning of the end because the realization that values are not going up any more will remove most of the speculators from the market.
On a local level for the Vegas people, it seems just as bad as LA(I have only been here 1 week). Alot of special deals advertised on the radio like, “no maintainance for a year, etc. Also I see a few projects that look like they have been abandoned, I saw one today on Flamingo near the Palms called 888, it looked like a vacant lot and an abandoned sales office-the signs around the property said 750,000 to 10 million-ABSURD!
Read about Project was cancelled.
You were right. There will be a lot of hurt in Vegas.
Ben, I love it when you clear your desk
Read about Project was cancelled.
The project was cancelled.
888 probably was designed, at least in part, to appeal to Asian investors. 8 is a very lucky number for most Asians, if not all. The Hong Kong 888 personalized license plate would exchange hands for seven figures, I believe.
They cancelled the project.
I don’t think the Persians or the Pakistanis care too much about the number of 8’s in their address, phone number, license, etc. I can’t vouch for the Filipinos and the Tamilese, however.
OT
A lot of politically correct terms make perfect sense to me, and I use them, like African-American, Native American, persons with disabilities, etc. But some don’t. Fr’instance, using the term “oriental” would be considered offensive, I suppose because it means “eastern” which necessarily implies a western bias. But in fact the accepted term “Asian” has its Greek roots in the word for resurrection, from the myths of the Sun dying in the west and coming back to life in the east. So why Asian is less offensive than Oriental perplexes me. Plus I believe the term Oriental did indeed used to convey everyone in the East, from the Arabs to the Japanese, whereas today the term Asian I think is intended to convey those of - what did they use to call it - the “Mongoloid” race.
Perhaps the most worthless post ever.
“The preliminary data showed a median selling price of $238,000 statewide in September, down 10.1 percent from $264,750 in August, and down 8.1 percent from the year-ago median of $259,000. ‘The reduction in the median sales price can be attributed to an increase in available inventory as the shift to a buyer’s market continues,’ said Charles M. Staro, NYSAR CEO.”
NY median down 10.1% in one month!? That is a 72% rate of decline on an annualized basis. It is decidedly not a shift to a buyer’s market, but a crash.
China! Australia! Canada! Hawaii! The worldwide crash is on!
I was noting the geographic spread too… If its truly global, its already too late to stop the drop. Reduce it? Sure. But governments should keep their powerder dry to restart their local banking systems. If it really is as bad as we’re reading then I doubt that the MBS security market will remain this liquid in 6 months.
Yes, that is a long time away… But soon the bond buyers will feel enough pain to slow things down. That will tighten credit which will increase the defaults thus increasing the bond buyer’s pain…
Houston, we have a problem.
Neil
“But soon the bond buyers will feel enough pain to slow things down.”
Neil —
Do you think this might help explain the big spike in T-bond yields today?
“Nationwide, sales agents received about $100 billion in commissions in 2005; next year’s total should be around half that amount, Pozsar forecasts.”
…and half that again in ‘08.
http://www.smartmoney.com/aheadofthecurve/index.cfm?story=20061103
You know, I normally like contrarian thinking, but I just can’t agree with that guy’s opinion - I believe a recession is coming. And, doesn’t he see the fault in his own logic: he declares that you can’t look at the past to predict the future, yet his basic premise for believing in growth ahead is that capital investment has been running at 10% (i.e., he’s looking at past capital investment to predict the future).
If he really wants to predict the future without relying on past data, then he needs to explain why companies will continue to invest in capital at high rates, and also explain what effect he believes any slowdown in consumer spending (currently around 70% of GDP) will have on the overall economy. Then, I might have a little more faith in his prediction.
This article is stupid. They have been fighting the word “recession” for the longest time claiming everything is rosey. Guess what folks, sh*t is gonna hit the fan.
If this guy was really a contrarian, he would look at his favorite indicator: “manufacturers’ new orders for nondefense capital goods, excluding aircraft”, notice that it was rising when there is no reason for it to do so other than loose money, and bet on falling stock prices due to overinvestment in capital goods
It’s so easy to overthink this stuff…
What a putz. He fashions himself a contrarian. Nice try. He’s doing nothing more than making the same arguments that the CNBC crowd, and 95% of all economists, and the entire stock market, make every day.
Here’s the linchpin of his thesis:
“What causes growth to happen is capital investment — putting money at risk to start new businesses, buy new equipment, and build new factories. Those things make possible the new production of goods and services that are measured as economic growth.”
Let’s rewrite this to reflect what has actually happened:
“What caused growth to happen was unbridled credit expansion — putting money with little risk to build new houses, buy new houses, and then build even more new houses. Those things made possible the new production of non-productive services and finances built solely on the housing sector, that we now measure as economic growth.”
My guess: Mr. Luskin has personally bet lots of dough on a recession, and he is lining up GFs with room-temperature IQs to make the opposite bet. Because his story holds no water — especially the bit about himself being “the only one” predicting the economy will not head into a recession — huh??? What about the legions of soft-landing prognosticators who get quoted in the MSM on a daily basis?
I like Luskin but when he says “If there is a recession, can bond yields actually go much lower from here? Can P/E multiples get much lower? ” and doesn’t seem to know 18-20 pes are, historically, high …..and he doesn’t even consider a housing and consumer spending collapse worth a mention….I don’t think this is his best work.
“‘This will be a lengthy process,’ says Zoltan Pozsar, at Moody’s Economy.com.
Don’t you love that name. Zoltan Pozsar!
BTW, everyone hit Ben’s Paypal button and help him pay for all the bandwidth these many stories suck up!
Just did. Ben provides a great service to us, and he’s got to get money to cover his costs. I think of it as the best value investment advice you can get, and I’m happy to make a monthly donation.
Yep, poor sap. Parents were playing scrabble with their med labels…Zoloft, Prozac & Paxil…
I’ll be making my bandwith donation this weekend. Well worth it!
FWIW, we need “T” shirts, hats…Something to identify me as “one of them” at an open house.
Great point, Catherine. Think how much most of us might have ponied up for a paid subscription to a newsletter, had we known it would be as rich in content as Ben’s blog. Of course, the blog is the sum of the parts and poster contributions are everything, but Ben busts his tail every single day, without a break, to create fluid, timely reading for us to posit on. I’ve never seen anything like it, and might not again. So I contribute substantially (as in, would challenge anyone to beat it), and encourage others to dig deep. He saved my hide and I’ll bet has has saved a lot of others.
A blurb from Casey. I think I know what happened here. He thought that the exposing of his entrails on the internet would generate someone willing to pony up the bucks to bail him out, partner with him . . . . whatever. I can see that he is that kind of cunning yet naive little squirrel. Instead, he got used by others to promote their own things. Obviously very disappointed that none of this will generate a “get out of jail free” card for him to walk away from the debacle with credit record intact.
Cry me a river.
Here it is
After thinking about all this I am deciding to turn down all mentorship opportunity and just focus on working with my local “Rich Dad”. I have already have a sweet opportunity here and I need to take advantage of it.
That said, I’m VERY grateful to Robert Kiyosaki and all the other gurus/mentors for trying to help me out of this mess. I appreciate the positive energy and motivation. After all the criticism I get on this blog it’s a “breath of fresh air”.
So what I really need to do is to focus. All this hype and “notoriety” has been distracting me. I have a big mess to solve. It’s time to get serious and get down business. My future posts maybe get less frequent and will be short and sweet. I can’t get too distracted with blogging. Somebody compared it to standing in front of a huge tsunami wave and taking pictures of it. Well I need start running, fast … and only take pictures (blogging) if I have time left over.
oh man, thanks for the laugh of the day! That Casey, he’s what the South Park boys would call…”fish squirrel”. LOL
He unknowingly generated a lot of bad publicity for ‘the get rich quick sales industry.’ He’s their worst nightmare — telling everyone how he followed their advice and failed royally. Looks like they are trying to shut him up and maybe they paid him off.
Has anyone ever figured out who Kiyosaki’s “rich dad” really is/was? I mean, there aren’t too many fathers of his schoolmates who would fit the guy’s description.
In the meantime ,why hasn’t Casey been charged with mortgage fraud ? I think I was reading that Casey said he talked sellers into inflating selling prices so he could get extra money out of escrow along with lying on his loan applications .
Somehow I can’t help but think if Casey wasn’t scaming on real estate he would be engaged in some other con game .
casey will have plenty of company pretty soon. his 15 minutes are over and he will soon feel the full impact of the mess he’s created.
“In the meantime ,why hasn’t Casey been charged with mortgage fraud ?”
Wiz — exactly — that baffles me. The kid confessed, indelibly, on the Net and there seems to be no sign of investigation or charges. What the heck kind of example is that for other would-be fraudsters who see that he appears to be getting away with it?
Richard Kimi
http://www.sand-seaside.com/index.aspx
From John T. Reed’s website about RE gurus
http://www.johntreed.com/Reedgururating.html#anchor529971
Robert Kiyosaki (Rich Dad Poor Dad) —I do not recommend
I was told I would like this guy. His book was #1 on the Business Week best seller list. Eager to find another guy to recommend, I bought his book Rich Dad, Poor Dad in a bookstore and read it.
This is one of the all-time worst financial books ever written! I was so disturbed by it that I wrote an extensive review of it.
http://www.johntreed.com/Kiyosaki.html
Very, very entertaining.
Hey, maybe Trump was satisified with Kiyosaki’s answers to the all the points Reed brought up. What a pair.
I’ve bought several of Reed’s books. I have found them all to be useful. He’s a good writer IMO. Obviously many people haven’t read his stuff or ignored it. One of the first things he emphasizes is that RE is a cyclical business.
Arizona Slim …Wasn’t there a big question as to Kiyosaki making up the story about the “Rich Dad” guy because nobody could figure out who this guy could be in his home town ?
I saw Kiyosaki with Trump on TV pushing their new combined book about how they want to make you rich ,(forget the exact name of the book ) .
Trump had a rich daddy and the other guy wished he had a rich daddy , and I’m sick of the spoiled brats ,and they both make me want to puke .
Yes, the “rich dad” is a fabrication of Kiyosaki.
He has made up a lot of stories to appeal to his readers.
While he presents them as true, they are total misrepresentations of fact. He didn’t own half the properties he claimed to have, as there were no public records as such. Most of his money has come from seminars from suckers and readers of his fantasies.
Later, some was invested into real estate.
Cell block D, June, 2007’
“Come here boy, you sures got a purdy mouth boy”
Hawaii has certainly turned.
Maui’s inventory of SFH is at 13.6 months, condos at 16 months, and land at 30 months.
I love the islands, went to college there, but I’d never buy there…I spent half my time plotting ways to get back to the Mainland, cause you tend to get a bit stir-crazy - and there’s also the dark underbelly of paradise…there is rampant racism and related crime. Samoans vs. Haoles, Japanese vs. Chinese, Hawaiians vs everyone who got there after they did. It’s something the state glosses over, but it’s a real issue.
No thanks, I’ll rent a condo next time I need some wave time.
“Samoans vs. Haoles”
Hands down, this is the worst on Moloka’i. I will absolutely never return there. Never saw so much stink-eye in my life.
It’s hilarious that Moloka’i is called “The Friendly Isle”. Right.
BUT, BUT, they aren’t making any more land, and it’s Hawaii
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
But they are making more land on the big island. So the usual “they aren’t making any more land” story cannot explain the reason prices got so overvalued there…
Actually they are creating new land on Hawaii. The active volcano is slowly creating more land mass when it gets to the sea. Another RE lie busted !!
“Instead they turn to anyone but people who buy and sell homes for a living. The effect on buyers has been paralyzing. Many brokers say buyers are concerned with more than rising home prices and interest rates, they’re scared of being the next greater fool.”
You bet buyers are concerned and they should be! They were duped on the way up the ladder by RE agents,Apraisers,Investors and the likes of so called experts. Who are they to turn to now? How is it when prices go up by 10% to 20% per year it is normal and when prices are predicted to fall on a national basis by 7% or so considered extreme!!! The NAR and the mortgage brokers are just nuts to think the would be buyer is anything but careful not to jump in to soon. This week ends news paper adds trying to hold up this market will only INSULT the potential buyer and cause them to wait even longer before making their biggest life time purchase.
They are missing the point. Houses cost just too dang much. Period.
They say if California sneezes, Hawaii gets a cold, or something like that. Prices reductions in my area run 75-100k on 500k houses and no sales, not even lookers. Wish thoses Californians would forget the midwest and Texas and get back to paradise.
Californians are busy trying to forget Phoenix and Vegas just about now.
And those that already have 2nd homes are just trying to get out! Not to mention move to the southeast or somewhere else where they can afford a home on a normal loan and won’t freeze.
Neil
A mass of McTrumps are leading lives of quiet desperation about now, trying to figure out how and when to sneak out the exit door from the real estate investing arena.
“wish those Californians would forget the midwest and Texas and get back to Paradise”.
Hmmm, are you trying to sell? The last thing we need in Hawai’i is more Californians.
OT
This just in:
“The American Roadside News” reports that Illinois’ oldest drive-in theatre is going to be torn down. The Hi-Lite Drive-In was built in 1947 in Aurora, Illinois, and will be leveled in favor of a 240-home housing project.
SON OF A BITCH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1
You mean a pile of 240 shoeboxes? You can’t put 240 homes on the site of a drive-in theater unless they’re Soviet-style concrete shoeboxes.
On the loss of the drive-in theater, that’s what we get for buying in to the high-density no-cars modern theory of planning.
I guess kids today are getting busy before they’re old enough to drive. But man, back in the day…
Next thing you know they’ll be closing drive-thru dairies that sell beer to minors.
OT…….
Sorry to be so dumb, but what implications has the jump in the bond rate got?
IMO an expected increase in the fed funds rate.
Maybe it means the Fed KNOWS that housing is going to tank no matter what the interest rate is (finally) and they want to stave off inflation and prop up the dollar - it’s been pretty weak this week!! (the dollar, I mean)
I suppose it’s possible that a run on bonds is imminent - like hosing itself the sector was overbought based on the self-deception that economic conditions would force the fed to cut the finds rate. But oh no, they just said… Inflation and its forebearer (reduced productivity) is apparently live and well, and while the mass of economic signals are so-so, they just are too damn good to alarm. So the bet now is a funds rate of at best flat to the horizon, and the distinct possibility of a few more raises this winter and spring. If this assumption gets set in stone the yields could break 6% next week.
Spell check idiot.. make that 5%.
Mortgage rates are tied to the 10 year treasury. Talked to a loan officer this morning who told me that rates had dropped overnight to about 6.3 based on Thursday closing of 5.57 on the 10 year Tbill. This was before the 10+ basis point jump today. Think it, (10 yr. T), finished around 5.71.Like to see where mortgage rates start on Monday.
Brain fart, that should read 4.57 and 4.71. mea culpa
First you need to understand exactly what a bond is: A promise from the US Treasury to make a fixed series of nominal $US payments over a 10-year or 30-year period (or whatever the term) with return of the principle at the end of the period. The nominal payment amounts (coupons) are “locked in forever” as a percentage of the purchase price at the point an investor buys the bond by the current yield rate.
Because bonds pay a fixed nominal $US payment stream, they are an attractive deflation hedge — the real value of a bond increases if the purchasing power of the $US increases faster than was anticipated when the investor purchased it. The yield on bonds (what a new investor gets in return for buying the bond) falls in this case to offset the increased value of the fixed $US payment stream, and the price of the bond increases. (Anyone who was fortunate enough to purchase Japanese long-term bonds in 1989 knows exactly what the above means!)
Conversely, if inflation turns out to be higher than what the markets anticipated at time of purchase, the value of those nominal $US payments goes down (as they are worth less in terms of what you can buy with them); the yield on bonds goes up in this case, as new investors need to be compensated for the increased risk that the future $US payment streams will be eaten up by inflation, and the price of the bond decreases.
The key difference between stocks and bonds is the fixed nominal payment on bonds versus the highly volatile earnings stream on stocks. You will notice how high Wall Street profits have been recently; regression principles suggest that profits will revert to lower levels before long, which tends to make the fixed payments on bonds relatively attractive. This is why bonds go up in value during a recession (at least the ones issued by the US treasury), unless the recession is of the stagflationary kind (e.g., 1970s-style), where the economy is in the crapper at the same time that bond yields are rising.
The bond market is a schizophrenic world where the traders’ world view vacillates between gloomy (”the economy is slowing down”), which is bullish for bonds, and exuberant (”this runaway boom is going to drive up inflation”), which is bearish for bonds. One interpretation of the yield spike the last two days is due to an increase in inflation fears, which might be due to indications from the labor market that core (wage) inflation pressures might be heating up (as indicated by the lowest US unemployment rate in 5 years) coupled with doubts about the Fed’s willingness to take the hard action needed to keep a lid on inflation.
‘You have individual developers picking up huge pieces of land for huge numbers — you saw this in the 1980s and 1990s. I don’t get it,’ he said.
This may be one of the few sane brokers out there right now. Comm. RE also appears to be in a bubble as well. The prices being paid for commercially zoned properties has gotten obscene. These are big players too. JP Morgan, Tishman Speyer, Met Life, etc. Tishman Speyer is also the one building The Infinity condo tower in San Fran. Does anyone here have an idea as to what these guys are thinking? The prices quoted in the article from Atlanta were WAY up there. What is their strategy? Why would they go in with such low margins for error/profit? I guess this is what you get when your Treasury runs the presses 24/7??
Here it is! The solution to the housing bust! The 60 year mortgage!
this is too funny:
http://www.oftwominds.com/blog.html
Ugh, and here I was hoping to one day have a 15 year mortgage or better yet be paid off. Yeah, I know it was a joke but somewhere there is some mortgage broker who thinks this is a really swell idea.
Somewhere? How about all of them in SoCal.
How many of us know a third generation member of any family in the U.S. who wants to live in the same house/property, 50-60 years later? Japan is a bit different in that regard. Sure, a prime-view property in the SF Bay might warrant it, but this is a non-starter for all but the dullest of buyers.
There’s a property that’s been in my family since the late 1940’s, but it’s a second home not a primary residence.
Hey wow, it’s my turn to post the requisite reply to this post:
The payment on a million year mortgage is STILL more than the payment on an interest-only loan (and of course more than the negam)
I have just discovered this blog, and am enjoying it immensely. In reaction to this, and many other stories posted here, I have what amounts to a simple question: When, and how, do I buy? Let me explain.
I just took a job in South Florida, Palm Beach County, on official protest. When my future boss read me the offer over the phone, I laughed at him - $75,000 plus a $15000 sign-on bonus. Now, where I came from, that is an unheard of sum for my field, at least in the entry-level. I can assure you, I would never get that salary anywhere else. But that amount only qualifies me for about a 900 ft home here in South Florida - If I’m lucky.
I decided to take the job, though, and RENTED (Rented from a desparate speculator, actually). The job is a great stepping-stone for my career, and I can always just move away in a year or so. I just might.
But if I have half a clue about what is happening around me, that half a clue is telling me that it might just be possible to stay. In searching sales records, the prices in the neighborhoods I would want to live in are much lower than the 9% drop that is being reported. My count puts it at about a 20% drop over a year. I think the multimillion dollar coastal mansions skew the numbers, but that’s just a guess.
What, then, does a young chap such as myself do? Do I just go in and start making lowball offers? Do I say “I understand you want 350k for this decent home, but I’ll give you 175. Whaddaya say? No? Ok, 150.”
I don’t mind being rude, but I’d prefer not to be equally irrational.
You can make low ball offers but the mass of sellers are not desperate to sell yet. They are testing the waters and see it is getting colder. You goal is to buy when the water has frozen over.
They (the herd) still perceive market price is higher. It will take time to drip away the mentality of RE always goes up and to gain experience of real cost of ownership of box ownership at these prices. That will eventually lead to capitulation and get out at any price. Then will be the time. However, this could take years. Watch 2007 for the next bear wave of reality to hit the herd. The Bear is going to hibernate for the winter soon.
Regardless of the Box price, beware of other things that make RE extremely unattractive in Florida - Taxes (Save our homes and) Hurricane insurance. That is a monster.
Find something you like.
Make a low offer; let it be rejected. Politely reject any counter.
With luck, they’ll come back…after some time and accept or counter lower towards your first offer.
Not only reject but, inform them the market’s gotten worse and your old offer isn’t operative anymore. Low ball again….
Repeat the above for as long as you can. Friend of mine did this in 1990. Took about a year and three or four back and forths. The seller had no other offers, had no one else even to talk to. She capitulated, eventually, and my friend got what he wanted at a price near or at the low.
Be tough, be patient and be polite.
These are good ideas. I’ll post as I wander through this process, and let you know how it pans out. One thing is certain - I simply won’t pay the prices I’m seeing (as if I could).
Vancouver peaked two months ago. Its all downhill from here.
“in a report, the Vancouver-based development-research firm said markets are still strong, but ‘for the first time we are beginning to see small corrections in some areas.”
Which is what the “experts” were saying just before the 1981-3 crash, which took prices down almost 50%.
“buyers are concerned with more than rising prices and interest rates, they are scared of being the next greater fool”
— because they see perfectly well that prices are NOT rising now.
But you know what’s absolutely nuts to me?
I see it still, even from people who are moving from one bubbly area to another seeing declines, actual declines, and massive job loss (the midwest)…
when folks ‘transfer’ from one part of the country to another, they look to *buy* immediately…
they don’t know the new town; rentals are readily available for cheaper and in the same areas, but they look to buy right away.
What in hell is with that?!
seems to me that the the NAR ‘campaign’ has already worked. The common american wisdom for a long time now seems to be that it’s *always* better to buy than to rent.
Keep calm, this attitude will change.
realtors really are shameless. my wife and I have been watching the brooklyn market for some time, missed the run up completely and were thinking of buying last year. luckily we checked out blogs for info and decided to hold off till next yar or even 08. My wife’s friend owns an apt and is thinking of selling and mving to a brownstone. realtor, last weeks is spinning the usual yarns about huge demand, but when my wife and others challenge the data she provides (they’re all half formed rumors designed to make her buy first and then worry about selling her existing apt), she says, but we trust this realtor because we worked with he before. I hope she decides to test the market with a sale before she buys anything, but we’re staying out of it.
On the Nightly Business Report today, appeared James Dines. People who were investing 30 years ago or more will remember him as the Gold Bug, esp around 1974 stock crash. In response to Paul Kangas’s first question about stocks (now) etc, Dines said “The housing bubble has burst.” No elaboration, just “The housing bubble has burst” as if it were so obvious that it was barely worth mentioning. Says he has been bearish on RE several years (actually I think he was bearish on RE since 1975. Anyone know?) …What’s he touting now? Gold is old hat, now he’s into uranium. Anyhow that’s off topic. The point is, Kangas certainly didn’t react to “The housing bubble has burst” as any kind of news or surprise. MSM doing OK.
Dines is all about commodities. His point is these things go in long trends, commodities especially as it takes a lot of capital to impact an underinvestment in something like mining.
His argument has merit, it is historically accurate, my only concern is that the distortion, today, is with hedge funds throwing loose money around and chasing “momentum”.
Maybe there is another 7 years (out of a 15 yr trend) that you can make money on….it wouldn’t be the worst idea to be diversified in this regard. But, like I said, I’d be concerned about the distortion of hot money in these markets where it didn’t exist to any great extent, in the past.
Wow all y’all are talkin about interest rate rises. Seems like I was the only one talking about that a few weeks ago. The economy has underlying strength outside of housing dudes. Underlying strength…at capacity…capex deficient…labor deficient…all inflationary boyyyzzz…or rather stagflationary when you begin to model the effects of HIGHER interest rates on home prices.
In 6 months y’all be talkin about how the stock market and gold were a good buy, meanwhile hedgefundanalyst was all over that biiiaatttchh.
Puuuhhllleeezzzzzz.
“Wow all y’all are talkin about interest rate rises. Seems like I was the only one talking about that a few weeks ago.”
A one-day pop for reasons that will evaporate in the months to come will do little to validate your thesis.
Hope you’re around in six months so we can talk about this some more.
You were the only one! BAHAHHAHHAA! GMAFB!
You have been sniffing that Conn/NY air for far too long!
As to the stock market going up from here in 6 months, by what 2%! No more than that. You are like the NAR - you pimp your own products will such unbiased zeal and do it with rose colored glasses. This economy and the hedge fund business are built on a moutain of debt that will soon slide off a cliff!
As to int rates, they are right where they have been for several years now, 10y trading range is tigher than that gay Co republicans a $$. So we move up a few bps in a day and now you called it. Make a real call!
au contrere, mon frere: the point of the recent relevations is that it ISN’T tight at all (the a$$, that is.)
So the stock market got it all wrong in the 1970s? It’s a good time to buy equities AND metals? What am I missing here?
HedgeDude,
You still looking for GFs to buy stock on this blog? Go advertise somewhere else.
The right way to think about a jump in bond yields is that bonds and stocks are competing asset classes. When bond yields spike, bonds are going on sale (kind of like when a builder offers to pay your old mortgage until you find a buyer). Stocks are still overpriced, paying low dividends, and not going up (thanks to hedge funds who milk the potential gains like dairy cows). In normal times (like 1987, for instance), a higher long bond yield presaged a drop in stock prices, as equilibrium requires money to flow from the asset whose price is still overvalued (stocks) to the one which just went on sale (bonds). Of course, things have become much crazier since 1987 with all these noise traders (aka hedge funds) mucking up the works…
I am agnostic on next direction on the stock market and prepared to trade it either way. It is a QLD vs QID decision.
For the housing bears out there, remember there is a sea of liquidity chasing higher returns. It is not going into RE so where does it go next ? If bonds are unattractive, stocks are where to be. Commodities per CRB index are in a downturn that may be just a retracement.
It doesn’t have to be rationale just get momentum behind it. You may not realize but ‘the public’ is only a small part of stock market. If they have less disposable money, it will not matter much to stocks. Hedge funds and insiders like Goldman sachs are what drive the market.
Many funamentally bearish traders I know are looking at the market and quesioning if there is still steam left in to go up into 2007.
You bet on that hedgefundanalyst. Bet everything you’ve got, cause I’ve got the entire other side covered.
It’s your job to be all over that. That’s why they pay you the big clownbux . . . isn’t it?????
While you’re here - Sept numbers: Placitas - 11.2 mos supply; High Desert - 17.2 mos.
Good one TX.
Hedgefund. . . who do you think you are??? I smell a troll. If you were the only one talking about rate hikes a few weeks ago, it must have been on another blog. Gonna take this to your boss on Monday and tell him how you were right? To quote you, “Puuuhhllleeezzzzzz”. I’ve been in gold and silver for quite some time now. And I’ve mentioned it here. What about that underlying strength? Just read the numbers. The economy is JUST BARELY creating enough jobs to cover new grads. Keep in mind that this is all jobs, including those at McD’s. Oh, and all of those jobs created by the housing bubble (about 1/3 of all new jobs since 2002/2003). The stock market has been driven by psycology above 11,000, then above 12,000. There is nothing supporting the underlying companies of the index to prop up this rise. This can clearly be seen by changes in the makeup of the indices themselves. Get a clue. And grow up with your language skills. Your supposed status title should afford you more civility than blogging here with comments like those. Do you drive around your new Ferrari and hang your head out the window, quoting Dave Chappelle? “I’m rich, beeatch!”
F off
I think he had a couple of apple martinis on board when he posted that.
Oh, yeah, it was spilled alcohol that made his keyboard sticky. . . or was it internet porn and a high speed connection?
Seen the movie “Boiler Room”? He won’t be far behind. Man the lines and the unemployment office are going to be long (with a lot full of Bimmers).
at, AT the unemployment office. I must be drinking too.
The economy has underlying strength outside of housing dudes. Underlying strength…at capacity…capex deficient…labor deficient…all inflationary boyyyzzz…or rather stagflationary when you begin to model the effects of HIGHER interest rates on home prices.
In 6 months y’all be talkin about how the stock market and gold were a good buy, meanwhile hedgefundanalyst was all over that biiiaatttchh.
Stagflation: an inflationary period accompanied by rising unemployment and lack of growth in consumer demand and business activity.
Ok………..pass the pop-corn this shows just starting to get interesting.
Panic buying in Edmonton of all places. For god’s sake… did somebody put our a rumour that there’s a land shortage in Alberta??? That’s like saying there’s been panic buying in the frozen tundra of Siberia — hurry, before it’s all gone!
Actually, there does seem to be a real estate bubble in Siberia (and Moscow).
Actually, investing in land in Siberia is probably a better bet than California. As oil approaches/passes $100/barrel, it becomes much more economically feasible to drill in remote/difficult areas like Siberia that have vast petroleum reserves. Over the next 50 years, a great deal of infrastructure and new jobs will be created in Siberia (and northern Canada). In terms of appreciation (not absolute value), land will be a better performing asset in areas more likely to experience growth than in established areas that are already fairly or overvalued.
Also, thanks to global warming, Siberia will likely be more liveable in 50 years than it has ever been during the era of human kind.
I’m not saying that Siberian acres will ever be worth a fraction of a fraction what Californian acreas are. But in terms of appreciation over the next 20-50 years, it wouldn’t surprise me if Siberia’s gains exceed those of California.
I don’t know about land, but there has been a big runup in apartment prices in Novosibirsk…
This has got to warrant it’s own thread
http://realtytimes.com/rtapages/20061103_campaignneg.htm
Heh. Kind of like blaming Consumer Reports for the decline of the American auto industry.
Saxon announced a loss after the close - I wonder if Morgan Stanley backs out of the buyout??
Saxon Capital Moves to 3rd-Quarter Loss on Drop in Revenue
GLEN ALLEN, Va. (AP) — Real estate investment trust Saxon Capital Inc. said Friday it swung to a third-quarter loss on a higher short-term interest rates, continued price competition and an increase in delinquencies.
ADVERTISEMENT
Saxon posted a loss of $26.4 million or 53 cents per share, compared with a profit of $31.9 million, or 63 cents per share, for the third quarter of 2005.
Total net revenue and gains dove to $52,000 from $67.2 million in the year-ago period.
The company said net interest income, or earnings from interest on deposits and loans, fell to $18 million from $47.3 million in the year-ago period.
Mortgage loan production edged down less than a percent to $846.3 million.
Saxon is in the process of being acquired by Morgan Stanley Mortgage Capital Inc. for $14.10 per share in cash, or a total of about $706 million.
Saxon shareholders voted on Tuesday to approve the deal, which is expected to close in December.
Shares of the company closed unchanged at $14.14 on the New York Stock Exchange
The positive spin by the NAR and other lesser realtor oganizations about things getting better in 2007 could be an attempt to limit inventory by keeping as many sellers as possible from listing properties for sale right now.
Emotion will cause some sellers to believe the market will be better next year. Come spring, these sellers will be very sorry they were emotional.
The NAR is fighting for their very life. This AD is pure desperation. It is like they are in the 10th round against Iron Mike (when he was at his top - 1988 or so), with one arm gone, bloodied all over, and trying for one last sucker punch against a very big, powerful foe. Who is your bet on?
NAR will do just fine. But their constituents are going to suffer a bloodbath.
I agree with the desperation comment. You end an ad with “Don’t Delay”? Talking about Real Estate in November? Come on. Even if I was somewhat persuaded (I wasn’t, not even by a single bullet point) that would have to give anybody pause.
This is preaching to the choir: an attempt at morale building and talking points for the Realtors, especially the newer ones.
Hello all. long time lurker, first time poster
Firstly thanks to Ben and all the other contibutors to the blog, fantastic insightful info presented almost every day. Really screws up my productivity at work. Was vaguely bearish on RE before finding the blog, now , well you know…..
I’m an FBI (full blooded Irishman) and I own in Jersey. Within the last six weeks both my brother and my best friend from back home have both inquired of me whether they should buy apartments in Manahattan. Apparently they are being marketed very aggressively in Ireland. Both of them have done very well in the Irish market, but no-one in Ireland really believes what goes up can come down. One, my friend, had verbally agreed to do the deal. I think was able to turn him off completely with the usual arguments (24K new apts, condo’s back to rentals, never cover your nut, why the hell do they need to market these things in Ireland if everything so great here etc)Not sure on my brother, who owns a lot of Irish property. Anway, they’re really running out of GF’s here in NY.
Anyway, thanks a lot to everyone here, because I wouldn’t have been able to do that without the info I’ve learned here. Right now, I’m seeing colonials in the town we’re looking at eventually moving to in Orange cty NY at $130K less than I would’ve expected last year. there are a couple of houses for sale at $15k above their 2004 price..