Let’s Face It, New Home Inventory Is ‘Off The Charts’
The media reacts to todays housing report. “The pace of new home sales slowed in January, according to a government report Monday that included the latest sign of a growing glut of new homes on the market in some areas. The Commerce Department said Monday that sales of single-family homes decreased 5% to a seasonally adjusted annual rate of 1.233 million, from a rate of 1.298 million during December. Sales dropped 7% in November, rose 7.7% in October, and sank 2% in September and 7.1% in August. With sales falling and starts climbing, there were an estimated 528,000 homes for sale at the end of January, a record level.”
“‘The decline in new home sales in January makes it clear that there is some real softening in the housing market,’ said (economist) Joel Naroff. ‘Let’s face it, the weather in January was as good as it gets yet demand fell. The housing market is coming back to earth,’ Naroff said. ‘While there is no free-fall, when the big push comes in the spring and buyers see they have some power for the first time in years, there could be some major impacts on prices.’”
“David Seiders, chief economist at the National Association of Home Builders, said surveys showed that the number of builders who are throwing in various amenities for free in order to move homes has risen to 41 percent. He said a lot of this year’s change will reflect less speculative investor activity and more sales spurred by people desiring to live in the homes. ‘Hopefully, that is all that is developing here,’ Seiders said.”
“Raymond James and Associates analyst Rick Murray said his checks with builders showed that they believe business has slowed on a year-to-year comparison. The more worrisome feature is the inventory level, which is ‘off the charts,’ Murray said.”
“Bank of America analyst Daniel Oppenheim projected new home sales will fall further to a 1.1 million pace in 2006. ‘We expect new home sales to slow based on the weaker trends that we see in the market, and we think the decline in sales will lead to an even more significant slowdown in home price appreciation, the key driver of margin and earnings growth in recent years,’ Oppenheim wrote. Bank of America also has a ‘Cautious’ view on the sector, based on slowing traffic trends, price appreciation and inventory levels.”
“David Seiders said it is too soon to say there is a glut of new homes on the market. ‘There’s been a definite upswing in the inventory level for some time,’ said Seiders.’ Even the report’s figure on median time it took for completed homes to be sold rose to 4.5 months from a median of 4 months throughout 2005, a number that wasn’t affected by the warm January weather.”
“Home builders have reported an increased number of orders for new homes being cancelled in recent months, raising concerns that buyers who were looking to real estate for an investment rather than their own housing needs are pulling out of the market. Such cancellations could put downward pressure on prices in some formerly hot markets.”
“Home builder Toll Brothers warned last week that it is seeing greater supply than demand of new homes in a number of markets, and it pointed to the drop in interest by investor-buyers. ‘Speculative demand has ceased and speculators are now putting their homes back on the market. The result has been more supply than demand in some regions,’ said the company’s earnings statement. ‘Markets such as metro Washington, D.C.,..will need to work through their excess supply before the imbalance once again tips in our favor.’”
One odd thing about the reporting on this months data is the number of headlines with ‘Record Levels of New Homes’ or something like it. The inventory has been at a record high for several months but the reporting at the time was focused on months sales.
Great Point, however, the media is always about 3 to 6 months behind business reporting.
NPR actually had a segment on the housing slowdown this morning. I found this interesting, as they have tended to either ignore the issue or to be rather bullish about it.
NPR is a big disappointment. they are supposed to be an independent and tough journalistic institution, but what i find is that they are a bunch of wimps, who will sugarcoat tough issues for fear of offending the public. don’t even listen to them and expect them to be at the leading edge of any thing. that’s why i never give them a penny during pledge week.
Yes, I think that NPR’s lack of reporting on the issue has been disconcerting to me because I do tend to trust them to somehow get at more of “the truth” than other outlets. I don’t typically know enough about most issues to be able to evaluate their reporting, so it has been a little scarey for me to see how little substance their housing reporting has had during the past year. No more pennies from me!
I think that the elephant in the room that no one mentions regarding the media, including on NPR, is that an awful lot of the reporters are themselves personally invested in real estate. As I listened to the NPR report this morning I couldn’t help but think that the reporter being interviewed (from the WSJ) and the NPR interviewer probably own homes themselves in N.Y. and D.C. (or at least stand to inherit some inflated real estate). While I don’t think that this means they are being dishonest, I do think that there is an inevitable bias. I certainly know an awful lot of folks who consider themselves “liberal” living in elite communities who have paid for their Volvos with house appreciation.
NPR has changed a LOT under the alcoholic-in-chief. I wonder why?
npr, from what I have heard, has changed dramatically since Bush came into office.
Hmm. Interesting, so what you’re saying is a government funded news source may not be a good idea as it could be used by the government to push a specific agenda?
Well, Pravda… errr NPR… will be upset but maybe it’s for the best.
NPR did interview Shiller and his take on the bubble, which was cautionary, but not sugar coated. That was April 6, ‘05, far earlier than much of the media would take the “bubble” seriously.
NPR also had the Editor in Chief of “The Economist” on for an interview about the housing bubble sometime last year. She was very bearish on real estate. The host asked if she was selling her house since she lives in the DC area. She said was not planning on selling her house eventhough she thought it would decline in value. She cited interest rate risks and the 6-10% costs incurred in a real estate transaction as to why she isn’t selling. I think NPR has done a decent job of covering the housing bubble. NPR tends to report a lot more about life/death issues, Iraq, Katrina, Environmental Degredation, Climate Change, Child Soldiers, and Geopolitical strife, and much less on the potential for a bunch of yuppies to lose money on their houses.
I agree with you about NPR. If you really want to know their bias then listen to all of the foundations, trusts and corporations that support their programming. It’s all big business or big government. They will not piss off their benefactors. It’s a big disappointment to me too. I wouldn’t give them any money either.
NPR and PBS are a total waste of taxpayer money and radio spectrum. There is no justification for quasi-govenment media outlets competing with commerical stations offering similar programming.
NPR is in bed with Fannie Mae, a major contributor. Don’t hope for unbiased reporting from them as the bubble collapses before our very eyes!
Fannie has successfully bought off most people. I wonder if Ben has been approached by them
Oh, please. Don’t get me started about about NPR.
They are OK at soft news, but they have no credibility whatsoever on anything that involves economics or politics. NPR is completely lacking in news judgement. They report what appeals to them personally or what their contributors want trumpeted, but they are probably the least credible news organization on the planet outside of VOA or Al Jazeera.
Give me a break….
This seems to be something of a media breakthrough - “…Yet Number of Unsold Homes Hits Record High…” just appeared on Drudgereport.
Yeah. I guess it seems wierd to me because the trends have seemed to obvious. Makes me get a little conspiracy-theory about the whole thing. But people like new records, so maybe it is the ability to describe something as a “record high” that makes it somehow more credible.
I hear alot about California’s falling real estate, but does anyone know much about Oregon’s real estate and how it will fare in the future.
accroyer,
The main reason for price appreciation nationwide is plummeting interest rates and speculation. States surrounding California have the additional pressure of Californians selling their homes and buying retirement and investment properties there.
The question you need to answer is, “what would cause those three factors to go away?” Imho: Interest rate hikes may come due to the Fed overprinting dollars which causes them to lose their value. This results in inflation (which is just another way of saying currency devaluation). In order for banks to make money on their loans, they must price their rates above inflation. It’s pretty simple, and it is expected to happen within the next couple of years (although no one has a crystal ball).
Next. What will happen sooner is speculators will leave the market. That is already beginning to happen as evidenced by skyrocketing inventories. I don’t know the inventories in your area, but if it has been affected by speculators… well, you do the math.
Thirdly. As California RE prices fall, the equity inspired speculator will disappear. However, there is something to consider here. Many baby boomers have not saved for retirement. Their home is their nest egg. As their home values fall, they will panic. There will likely be a selling off “before the market completely tanks.” They will take their profits and buy property in neighboring states free and clear. This may prolong the bubble in neighboring states.
However, the most important factor to consider is the herd mentality. As prices nationwide fall significantly, what do you think will be the reaction? Look at what happened to the dotcoms. The same greed that took hold of the “new economy” afficionados was converted to panic. The new motto was, “you can’t make money with stocks.” Guess what the new motto for RE will be? Probably, “you can’t make money with RE.”
Therefore, property will be undervalued. There are no guarantees, but there is the very real possibility that the panic will be as intense as the gung ho mentality. What goes up must come down.
I hope this helps.
Great observations, you make some very valid points.
“While there is no free-fall”
there is a freefall in sales!!
Someone posted this Orange County table. You have to use the imbedded scroll bar to get to the bottom where it says new home prices are down 37%. Lots of double digit declines in resale volume as well.
I saw this earlier today. Love the payment dropping dramtically, HUH??!?!? Based on what - So prices go up, int rates go up and payment goes WAYYYYY down.
on the ocean, the saying goes that you can judge what is going to happen with the weather from the noaa reports that you pick on the hour via vhf. not by what the reports are actually saying (because they’re always wrong), but by the degree of change in what they are predicting. i feel the same way about listening to mozilo and the cheer leaders today. angelo was busy selling hand over fist six months ago while claiming little concern over the market. just like the toll brothers and everyone else on the board, the smart money left the scene six months ago.
Good comment I would tend to agree.
Context is what is important to the comments and where they are now in relation to previous public statements show Mozillo to be a true bear.
Orange County home prices really haven’t budged yet, I have been tracking homes in Ladera Ranch and Rancho Santa Margarita, prices are still higher than they were last February for the same condos we saw for sale. One home we looked at last year for 520K has the neighbooring home (also on Bloomfield lane in Las Flores) for sale for 580K same floor plan 3/2 detached “home” really a detached condo 1500sq/ft.
When these homes are selling for less than 500K, I will know that the market is in reverse.
I would add, that I make good money, without my wifes income, I make 92K, after deductions for my 401K and some saving, and taxes, I take home about 65K. So the 60K increase on this home over the last year was basically an ENTIRE years worth of after tax income, while I spent another 25K on rent and have nothing to show for it. Put the two together, and that is a 85K delta.
I am with you and believe that the market is primed to fall, but I understand why so many are so frustrated and can not hold out forver, and thus throw in the towel and buy even when they should keep renting. You have to understand the pressure is very strong.
BTW, the median home price in the OC is ticking up again, two weeks ago it was 580K, it is now 592K.
Good point. The 20% increase here in the last year made the difference between being able to be buy a condo with 20% down and frugal living vs. needing to cash in most liquid assessts to buy, and still living frugally. A big difference for working people in a country of failing pension plans . . . .
I feel your pain, luckily I jumped in the market here in ‘02 and even then I thought the market may be peaking. Who would have thunk it would keep going up at the rate it has.
My wife and I are looking to trade-up but we are waiting for another year at the very least. I really think with all the slowing sales recently it’s just a matter of time. I’m already seeing price reductions at the higher-end of the market.
My take: Oct/Nov ‘05, ’smart’ speculators start the early dumping of homes, with a mix of prices. By Dec. ‘05, the sales take off as buying public snap up the cheapies (all they can afford) which drives the unit price down, for the appearence of a price drop. This rattles the others spec-ers, causing a now rocketing inventory. The YOY price stabilizes in Jan, maybe into Feb ‘06 as total sales continue to slide down, as the sales mix returns to a more median stance. Then the next crop of cheap houses are sold, and the yo-yo returns. The buyer and the seller gets it now, but from opposite viewpoints: Just wait, and prices will drop. The herky-jerky motion continues for months, then years, then…..
Good points, but remember, it’s those last holdouts’ capitulation that signals the end. That is to say, they are the last to buy before the tide turns quickly. Remember Nasdaq 5000? Some people finally gave in in Jan 2000 and bgt blindly. That was the final capitulation. I don’t know if we have seen that yet. If it has occured, then the party is all downhill from here. This gravy train is on it’s last legs. The headlines will shortly blow people away with fear.
Isn’t this panic buying amidst strong appreciation akin to a ’short squeeze’. A short squeeze is when investors in a short position are forced to buy in which drives the price upward before it comes crashing down.
People buying before they normally would because they are afraid of being locked out forever seems lime a ’short squeeze’ to me.
A short squeeze is different. It is specifcally based on lack of margin requirements (or a getting too close for personal comfort…).
It’s as if your bank called and said, well, your house is now assessed at $180K but your mortgage is $200K. We’ll need you to go ahead and send in a check for $25K or so or we’ll need to sell your house and some of your other possessions to make up the difference. Have a nice day.
Of course, a resetting ARM is very similar!
but that’s exactly why it can’t last. An inanimate pile of bricks and wire cannot provide as much economic output as you can.
It’s definitely frustrating waiting this thing out. As a So Cal renter I am waiting for and watching the first dominoes fall. That would be Phoenix, then Las Vegas, then San Diego, Then……
The inventory in Phoenix is unbelievable and still growing. Watching a housing crash is like watching paint dry. LA/OC will be the last dominoes to fall but they are starting to fall.
I love your comment, “watching a housing crash is like watching paint dry”. So true! I’ve been waiting for the crash since after the elections in Nov 04 when I thought interest rates would jumb up. Unfortuantely I’m hooked and follow the info daily, despite not much change on a day to day basis. The one marker that I do see change daily/weekly is the inventory in a few specific zip codes that I follow in SDGO and Phoenix…they keep getting bigger and bigger. I’m certain we will start seeing the prices drop come summer.
On offer at $580 is one thing. Selling it, perhaps another.
Idea for a fledgling StartUp in America, destined to quickly become a BUY BUY BUY…
Veritcally stacked telephone pole space rental for all the nations’ For Sale signs!
They aren’t making any more telephone poles, ya know.
First five feet: No money down, ARM Option, 100% Interest Only financing available.
Lower rates as the signs grow skyward.
Auction Heaven in ‘07
You’re a frigging genius!!!!!! Another way for the old Baby Bells to wring income out of old fixed investments. Rent advertising space on the telephone poles. Currently they just let anybody tack up any old piece of cardboard. A few guys in a van could drive around and rip down any ads that were put up without paying to rent pole space.
We had a bunch of open houses near us in our Irvine condo tract this past weekend. A few looky-loos but not too much activity overall. Maybe because people are balking at spending 415k for a 1 bedroom condo. A couple of years ago these were selling for 300k.
The new stuff around here seems to be moving pretty quickly though. Especially the condos.
New stuff moving because of reduced prices.
Builders are smart.
Old stuff not moving because of homeowner stubbornness.
Howeowners are greedy.
That’s why they’re all trying to sell at the same time…
…as the speculators all attempt to dump their 20 homes.
Ben- can we have a new thread called:
“For Crying Out Loud, Why Can’t You OC People Calm Down!”
Argh.
Look, all you impatient OC board people…
…instead of giving me an ulcer having to tell you to be PATIENT…
…why don’t you all go and do something intelligent…
…go make some money, pay off your debts, sell all your old crap…
AND GET INTO POSITION!
Let me rephrase that. The ”newer” stuff is moving (less than 5 yrs old) especially condos. Ours is about 10 yrs old so I think buyers balk when they can get a newer one across the street for about the same price. Even though the location is shittier.
Also, while I’m sure the builders have been discounting (I’ve seen all the ads in the OC Metro mag) the ones they’re selling across the street haven’t been discounted that much. Many starting at $1.2M for a McMansion next to a freeway and a dump isn’t much of a discount.
But we live in OC and we deserve it noooooowwww.
For what it is worth I agree. Go forget about RE for at least 24 months.
When friends and acquantainces ask if you are buying or own tell them you aren’t that stupid.
Auction, hey I agree, but you have to remember, most of us are debt free already, live within our means, and have taken YEARS of whithering criticism about our choices. It does wear on you after a while.
It is painful to watch the foolish be rewarded daily while the prudent are punished with ever higher burdens.
I’m not whining, just expressing some frustration. Am I a bit envious, sure, at times yes I am. I mean, while I spent 6 years in college pursing my undergraduate and graduate degrees, the world changed entirely. At this point, I would have been far wealthier to have flipped properties rather than get a degree. Slackers who are working 35 hours a weeks are making more than doctors. I confess, a bit of envy, it doesn’t seem right. But then again, the world isn’t fair! I guess that’s life.
Forgot to add, I graduated HS in ‘98, finished my masters in ‘04, my wife and I make combined 140K (and you know the tax rate at that income!) and it would be painful to buy anywhere in CA at this point. Rents are increasing, on average of 6-8% in the OC, on 2200/mo that is another 150/mo . considering that with 140K of income, to live within your means, save for retirement, and stay debt free, you are left with about 6K a month, and you are paying about 33% of your net income on RENT!! Anyway you slice it, it is painful.
OCMetro - you graduated from high school in 1998, so you are what, 25 years old . . . and you have already taken YEARS of whithering criticism for renting instead of buying? The world is truly upside down.
Until this bubble got started, at your age most people were just getting started, and the thought of buying a house hadn’t even crossed their mind. My parents were solidly upper middle class and didn’t buy their first house until they were in their late 30s. I am in my early 40s and still haven’t bought because for most of my entire professional life (last 12 years or so) prices in SoCal have been out of line with values. So I rent.
It is sad to me to see someone who is in his mid-20s, has a family income of $140k and has the good fortune to be living in coastal California, complaining that he got the short end of the stick compared to his peers. You know not how lucky you are.
Thank you. I’m in my 40s also and have been renting for 13 years because the first bubble scared me and the second one simply blows me away.
You didn’t dare buy a houes in Dallas after 1989 if you wanted to have any flexibility at all to sell and leave. You simply could not sell. So even though prices were crazy low, I wasn’t even tempted.
txchick -
a history lesson like yours is helpful to counter the view held by some on this board that the coming crash will simply be a chance to “buy on the dip.”
Evidently there is a school of thought here that prices will fall 10 or 20% in the next few months or so, and then we’ll all skip off to the bank, get a loan and then wait our turn to get rich as prices resume their rise. This seems particularly prevalent among people who saw their friends get rich while they were busy in school doing something that was actually productive, and now are simply wishing their timing had been better.
Meanwhile, anyone who lived through a bubble real estate market in the 80s or early 90s knows that it can be (and this time probably will be) much more protracted and painful, and that by the time the whole thing plays out, even the people who are itching to buy property today will be very, very unsure that it’s a good idea.
Wow, these are some good perspectives, I do admit that I get frustrated looking at the world from my own viewpoint and sometimes miss the bigger picture. You all are correct, I have fallen into the camp where I hope prices to fall 20%, then buy and get back to life as normal. Perhaps it is because of my limited life experience that I also must be patient.
Regarding buying a house when you are in your late 30’s as your parents did. THat is true, it seems that only recently have people my age become consumed with the idea of having to buy a house right away. But in fairness, from our limited life experience, if you don’t do that, you’ll be priced out forever. See, for all of our adult lives, that is what we have seen.
OCMetro, you have not known hard times. But it is likely you will witness what many of us have seen in years past very soon.
>that by the time the whole thing plays out, even the
>people who are itching to buy property today will be very,
>very unsure that it’s a good idea.
And THAT’S when you buy…when no one else wants it. I too was frightened by real estate during that last collapse (which coincided with the collapse of the Cali defense industry). So much so that I didn’t want to buy real estate unless I really had to. We missed out on the initial appreciation in the SF bay area (we actually got priced out of the area), but hit the SoCal curve at about the right time (sheer luck). I can see how a crash can scare away people from a certain asset class, but that’s when you get the bargains…when there is “irrational fear”.
It’s interesting to get some perspectives like this (I have been tempted to suggest a weekend topic of “getting to know more about the regular bloggers”). I just turned 40 and have been a renter for 15 years (moved out of mom and dad’s house at 25). In my 20s/early 30s I just didn’t care about owning. Since my mid-30s, I’ve been interested (and trying up until after 9/11) but didn’t find the right place (it didn’t help that I spent several years restlessly moving back and forth between Chicago and Philadlephia). Right about after 9/11, I just could no longer afford anything.
It’s nice to hear there are other 40-somethings who are still waiting for their first home. I sometimes feel like the only one!
youre 24 you have an income of 140k and youre whining.part of the i want it now i deserve it generation.i didnt buy my my first house till iwas 30 on a hell of alot less income than that.why do parents spoil there children so.
bottomfeeder1, I can see why, based on my previous comments you would think that, but, I am not spoiled, my parents are divorced and my mom made under 20K raising two kids. I worked and received scholarships and grants for college, by my junior year, I was hired by a company who agreed to pay my remaining tuition for both undergrad and grad school. I don’t take what I have for granted and I certainly was not spoiled by my parents. My wife and I make good money because we are educated and have a strong work ethic. We drive ourselves hard to try and better ourselves. I was expressing frustration that despite all that, slackers who have no education and don’t hardly work earn hundreds of thousands of dollars flipping property. It is unfair, I never said life was fair, or easy. However, we all reach our boiling points, and I was venting a bit. Please don’t judge me too hard.
OC- You have a good thing going. Count your blessings.
Be glad you didn’t buy at the peak, for you have not seen what a full-blown RE Bear Market looks and feels like– yet.
this is so very interesting! yes, OCmetro, I understand your pain about being chided for your choices. I am way older than you, with kids, and husband and I spent the last 10 years working on grad degrees and me *not* working to be with those kids. We played with the idea of buying, but everytime it seemed it would kill us financially and it would be living miserably until we could sell and move up. We even actually almost bought a house in a town near here, where the schools were really for crap and we’d be needing to send a kid there soon and couldn’t afford private school, just so we wouldn’t be losing out. the realtors all really seemed worried about us; you gotta get into this market or you’re lost. It was only because I grew up in the bronx and knew too well what it was like to be afraid of walking (okay, only in one direction, not all…that’s okay, right?) 5 blocks away from where you lived, to go to shitty schools, that we backed off that–what were we thinking?! But now, the pressure is even greater. Hubby seems secure in his job, kids are getting older so I feel comfy working soon. That we didn’t buy an overpriced house yesterday I think really mystifies some people, and even as hubby sees these inventory and salesdeclines reports he says please prices are going up *again* in the mls, I want to buy! His relatives don’t get what’s up…there is this amazing ongoing tension with one of his siblings who basically forced me to show her open houses a couple years ago and show her what I could buy. Asking on those props are all like 25% higher now, not CA prices of course, but they’re still ridiculous as then onlymoreso and it just feels wrong to buy one! She thought we should live in a craphole, or said we don’t have to worry about saving for downpayment (we’ve done a good bit of saving since then) because we can buy with nothing down, and then exasperated said oh, i guess some people are just “renters”. OMG. that’s the worst thing you can say about someone these days. hubby still hasn’t forgiven her it stung so bad. I don’t think she was getting kickbacks from local realtors honestly. It’s not just people looking to their neighbors and seeing all the easy money being made, it’s that they’re made to feel defective. Perhaps this new reality where 25 year olds feel the need to buy houses will affect demand in a longterm way. But I think that OCmetro might be the unusual 25 year old earnings-wise, and that once the scene changes so that his peers don’t earn more from speculating than they would from actually adding something to the world, it will be safe for (some, higher-earning, saving, responsible, and job-secure) 25 year olds to buy houses again.
we gotta be strong and understand that this just cannot go on forever, and take comfort that the time is coming ’round for it to stop. just hope it don’t take our jobs with it…
cheers!
>OCmetro:Please don’t judge me too hard.
OCmetro, don’t take it so hard…bottomfeeder1 was basicly whining about your whining. Work hard, keep educating yourself, spend time with your family, and things will work out. And there is nothing wrong with having the fear that you’ve been priced out of a market at a young age…many of my friends feel the same way. They worry that expectations in SoCal are being adjusted, so that now only “rich” people can own single family homes, and everyone else will change their expectations to raising their families in townhouses, appartments, and condos (like some of the other big cities in the world). That can be frightening, and it has nothing to do with your age. So I say keep whining, you have a lot of nice, hardworking, educated people that feel the same way.
Dude…your value system is all distorted. Like some of the other responses to your post, you are rushing things (maybe you feel entitled or something). I rented throughout my 20’s in San Diego as home prices skyrocketed and I felt I would always be priced out. However, I had a blast and always rented in really great places (Coronado, Mission Hills … view of bay and ocean) which were way beyond my purchasing range and enjoyed my life with my young wife without any worries of being a home owner. I continually saved as we were DINKs at the time waiting for when buying might make sense. I never looked at buying a house as some investment opportunity, but rather as a home where I would want to live and raise my family. Well at the age of 39 with second child on the way it was time to buy and guess what? House prices were in the dumps and I got a great house, had the 20% downpayment no problem and a lot left over. Wife was able to quit work and raise the kids. I think you are rushing the formula and need to get more realistic. The only reason that folks your age are itching to buy is because you think it is an investment opportunity that is passing you by. If you just have the patience and committment to save each month, you will score a great place in a couple years when prices drop.
The race isn’t over - just focus on where your talents lie and you’ll be ahead in the long run..
“David Seiders said it is too soon to say there is a glut of new homes on the market.”
I bet he’ll be saying there is a glut when the record January construction starts (up 14.5% YOY, IIRC) hit the market in July and August. Of course, by then, it will be a flood of biblical propotions.
Shouldn’t January construction start hitting the market in April/May?
True, spec homes go up pretty quick these days, or at least the framing and exterior does. The burst of activity might tax the supply of skilled tradesmen, though I am sure many will be glad to put in OT for the extra cash.
But no matter when the new starts hit, they certainly won’t push prices up.
To Accroyer above…
We are from California but are active in Oregon…Same thing has happened in Oregon that has happened everywhere else..The Bend/Redmond area is obcene given its in the middle of the high desert and a million miles from anywhere…The medford and Ashland area have also seen significant increases as Eugene & Portland…The difference with these markets (possible excluding Portland) is they are not constrained by lack of land so any demand will be met with freash supply..The Medford market is already getting weaker…
I have a friend who got laid off from HP in Orange County Calif. and just retired in Grants Pass. I suggested he wait a year or two and just rent but his distortions of Calif. vs Ore took over and he purchased a 5 acre 2 year old home for $600,000 . Ouch! He will probably loose a lot.
Bob the Banker
as a ‘liberal’ I totally recent your silly stereotype o me living in an ‘elite suburb’ driving a volvo paid for with ‘housing appreciation’…….I live in a rather faded mill town just east of Hartford CT by 17 miles- yes I own a townhouse condo bought in 1992- in a diverse area- I drive a 4 year old Mazda protege- I can easily stereotype known Republicans at my GYM- with ‘W’ stickers on their huge trucks and SUV’S- lets try and stop the liberal bashing- and the bltant sterotypes as yours- which I have heard since 1968. Get over the ‘party line’ BS of Rush Limbaugh.
Can you say Chevy SLOBurban?
Let’s not get too political, I am sure people of both political persuasions have benefited handsomely from this housing bubble.
I escaped the “limousine liberal” mecca of Santa Barbara where all kinds of hypocritical environmentalists and hippies decried any form of “development” and worked to keep any and all new housing from being built, then decried the lack of “affordable housing”. They talk about protecting the wilderness and not destroying “land” to build homes, but then go back to their home. It is the basic, “I’ve got mine, so who cares if you get yours” attitude. If they really cared about the environment, they would bulldoze their mansion and return it to the natural environment it was before their built their egotistical edifice to hypocrisy.
The bitter truth is the rich elite, whether Republican, or Liberal Democrat do not like the proletariat. The dirty unwashed masses on either side of the isle are not welcome in the luxury enclaves of the elite, conservative or liberal. Don’t fool yourself; I’ve lived in both Santa Barbara and now Newport Beach, one extremely liberal, one more conservative. Funny thing is, elitism works on both ends.
The only difference is that Orange county does allow much more building than Santa Barbara and thus, even though prices are outrageous, you have a better quality of life in Orange County than in Santa Barbara, the jobs pay better as well. Draw your own conclusions.
When I lived in San Diego, nobody wanted to be in OC. Well, maybe in Dana Point or San Clemente, but Irvine, Santa Ana, Anaheim? Forget it. I thought those places were awful 20 years ago. I’ll bet they’re much worse now.
Except Disneyland - it’s the “Happiest Place on Earth.”
Just kidding (not about D-Land, it really IS!) - I just hesitate to throw stones at our neighbors to the north. San Diegans are equally worthy of ridicule in some form or another.
Still America’s Finest City, mind you.
What? Can’t a guy have a little pride in his hometown?
San Diego is the next Enron.
We used to have a poster named Enron by the Sea as homage to his soon to be BK city.
Hey! SLO is a nice town…. (San Luis Obispo). Comparing it to a bankrupt dinosaur ain’t nice.
My favorite writer of all-time, Ralph Waldo Emerson, liked to write about how we all know what we need to know, but that we are taught, by society to continually doubt ourselves so that we end up relying on the advice of others. This, in turn, ends in humiliation for ourselves, and more constant doubt.
We all know what we know.
We all know where this is headed:
It’s a body being thrown off a twenty story roof.
On the way down, it’s going to bounce a bit as it snags itself on flag poles and porch roofs.
P A T I E N C E.
Please stop doubting what you already know.
I loved your metaphor!! LMDAO!!
That’s the exact same feeling/notion I had during the dying days of dotcom stupidity here in the SF Bay Area.
Yeah, it was unbelievable watching the NASDAQ climb over 4,000 and then 5,000, and see a bunch of snot-nosed kids and infantile adults who should know better, ruin the quality-of-life in the City.
But I knew it would all come to an end, thankfully.
Forgive the digression. But I’m keeping track of the realtor statements at virginiamls and enjoying the updates . . .
January 3rd
“Inventory of available homes is at a five year high. Inventory is expect to dwindle through February. The buyer’s market continues, however the dwindling inventory will end the buyers opportunities. Buyers will have the most negotiating power for the next 6o days before the trend may switch back to a seller’s market.”
January 14th
“Inventory of available homes is at a five year high. Inventory is expect to dwindle through February. The buyer’s market continues, however the dwindling inventory will end the buyers opportunities. January inventory has grown. Buyers will have the most negotiating power for the next 6o-90 days before the trend may switch back towards a Seller’s market.”
February 19th
“Inventory of available homes is at a five year high. Inventory is expected to dwindle through March. February inventory has grown slightly. Buyers will have the most negotiating power for the next 30 days before the trend may switch back towards a more neutral market.”
February 27th
“Buyer’s market continues. Inventory of available homes is at a five year high. Inventory was expected to dwindle through March, however February inventory has continued to grow.”
Man, you just gotta keep saving and posting these. This will be a string for the ages. Thanks!
“Buyers will have the most negotiating power for the next 30 days before the trend may switch back towards a more neutral market.”
I once thought we should save the quotes of specific realtors and verbally crucify them when this crashes, but I’m sure the buyers that listened to them will reak vengence for us all.
At least they had the sense to stop making predictions in their latest report.
That is too funny. Great observation.
Priceless! Pun intended.
LOL!
Sing with me . . .
Waiting for the dead cat bounce, oh
Waiting for the dead cat bounce,
Suckers and fools jumping back in,
I’m waiting for the dead cat bounce.
One more time
I’m expecting the DCB and realtor we told you so’s, but what if their isn’t one? With no bounce this could really gain some momentum.
There’s ALWAYS bounces.
TOLL Brothers stock anyone?
I currently know three speculators.
One owns 20 properties, another owns 12, and the last one owns 5.
They are ALL SELLING THEIR PROPERTIES.
Are there people out there who are just fed up, and will go off like postal workers on speed and BUY BUY BUY!
Of course there are.
Investors ARE SELLING.
Investors ARE NOT BUYING.
Who then, does that leave?
REALLY, REALLY DUMB PEOPLE, or PEOPLE WHO ARE FREAKING OUT.
I don’t mean to be racist, but I have noticed a lot of Asians buying lately. They tell me they have pressure on them to stop being ‘renters’.
Asians aren’t necessarily dumb, they’re just conditioned, by their culture, to follow authority. This can make them very, very impatient.
Garden Grove was the ONLY city in last week’s Dataquick numbers that reported positive numbers in almost all OC zip codes.
Asians freaking out.
The rest- REALLY, REALLY DUMB.
Preach it you are on a roll!
Get r Done!!!!!!! Do you have a crstal ball?
I wanted to say something about the Asian thing earlier but feared I would offend someone. Honestly at the open house in my building this weekend the shoppers were mostly Asian, one Indian family, an Armenian (I’m guessing here) family, and one white middle-aged guy. The agent showing the condo was Asian too. I live in one of the best school districts so I know they use this to lure these families into buying. It’s sad when they could rent for so much less and still be in the good school district.
My collegue at work moved with his family to Southern California in 1989 from China. They were told to buy now, before they were priced out of the market. They did, and then the market tank. They spent years with their house under-water. Only in recent years did the value return to level at which it was bought.
Needles to say, my friend is an RE bear and is 110% confident that we will have the same result again this time around.
Asians are flocking to irvine and buying these 1 million dollar homes near the old Tustin Marine base. These homes are next to the creek channel and across from the Waste Management and cement plant. NOISY and STINKS in the summer. BOY what more can I say!
One of my best friends is Asian, but he is really Americanized. His parents are immigrants and are holding onto their excess property. They have it fully paid off and my friend urges them to sell it. Somehow they are determined to hold onto it, and they don’t have a clear exit strategy.
I lived in Asia for long, would like to bring my personal perspective. One reason an Asian would not sell is due to cultural condition he/she grew up back in Asia. In Asia popolation density is Much Much higher, and till recently the capital for real estate was scarce too. ( do not have 5% downpayment loan). Except for those Metro city like Shanghai, Kongkong , real estate price has Almost ALWAYS gone up with time. So once any one is able to acquire a property, it remains with the family, it increases value with time, and eventually passed on to next generation. There It is a matter of great security, and unlike in usa, people do not move much, and even if they do, property remains with some member of family.
The parents in the story would have grown up in Asia, so he is holding on to property, the younger gentleman knows nature of american capitalism, flow of capital and hence is inclined to sell for profit.
I think I’ve posted elsewhere about how I’m seeing too that realtors are willing to play games with buyers in a big way to get the asking price, speaking of ‘offending’ by offering under asking. I think that’s a factor too, and a disgusting one. Imagine trying to negotiate the world of realtor manipulations when English isn’t even your first language, and someone with apparent power is telling you to avoid ‘offense’ in this land you’re not native to. sickening really.
Has anyone done any research on any viable foreign countries (to live in/buy in?). I know I am not the only impatient renter who reads this board. None of us KNOW how quickly this will happen. Both sides, slow and fast have good points. But what if the slow proponents are right, what if the prices are sticky and this does take years and years? By which time we might not want to buy here anyway IF the most dire happens and there is a collapse of the US Economy/dollar. I keep coming back to this board because I credit it for the 300K burning a hole in my pocket. Thanks to you ALL for your help. I sold at the End of November. But what is the next step? I think I want a democratic country with a cheap house by the beach. Costa Rica seems overpriced, but something around there might be good. What are your escape plans for if things get ugly? I know everyone here (pretty much) is planning on buying LOW in the US, but surely during these discussions you have thought that for many reasons, that might not work? I really HATE being homeless and I have burned through 60K in a really short time. Its expensive. I would love to know peoples plan B’s if they are comfortable sharing. thanks!
This bubble is pretty much world wide. The timing varies South England is falling slowly while outlying areas are still experiencing the outer shock waves with rising prices. New Zealand is way high and Australia is very high and falling slowly. Asia is about 5 years ahead of us and has been falling for some time and South Africa and Spain are both very high. Mexico and South America are high. Best deals to be found are in the midwest here in the US if you can stand living there. My thoughts are that if the fed is smart, and believe me they are they will let inflation run amuk for a while. For many years we in effect halved the national debt every 7 years, but this has not been the case now for the last 20. Unfortunately for the average joe, you are competing with offshore labor at a minute fraction of your current salary and you will not be getting any raises any time soon, herald in the new underclass America.
Long live Homer Simpson!
Here’s one you might like:
Nestled amongst the historic ancient ruins of 2004 is this Cozy 1 bdrm 0 bath charmer in the exclusive East Euphrates Riverview development. Marvel at being the biggest house on the block as the rest have been demolished for renovation. Think of the future comps! Imagine the serenity of basking in your own private compound/courtyard as armed Toyota security patrols convey warm feelings of security and safety…and rest easy that your little tykes will be safe as there is a strict curfew just about all the time. Romantic open ceiling plan with breathtaking starlight views year round! Enjoy the excitement of mingling with your colorful neighbors at the communal bathroom facilities. And don’t forget about our recreation and fitness programs as you run wildly to your new home dodging bullets and crater size potholes. And there’s no need to worry t about high utility bills because here at EER, you can rest assured that there just isn’t any need. Bask in the delight of uncluttered streets, as unattended cars are severely restricted giving unabated views of the marvelous plumes of smoke dotting the city!
Seller will entertain offers between 8 and 12 computer monitors from the 1980’s plus small monthly HOA dues of $13,000 US for road and infrastructure improvements.
Hurry! This one won’t last. Seriously. It’s not going to last.
Call Dottie Al-Zwakihri for an appointment.
In my humble opinion, you will not be able to simply move to a foreign country to live, good sir. Not when America’s crash has devastated international economies and every nation is dealing with unemployment. Heck, that’s true today, even. You, or your employer, would need to prove to that country’s government that you can provide an essential service - a service that drastically few (of that country’s) citizens can perform. Think English teaching in Asia.
You said you have 300k in cash equiv.? That’s 25 years of rent covered at a grand a month. Assuming you have a job during this time, I think you’ll be just fine.
“Democratic country with housing by the beach.”
That’s rich.
(I don’t mean any disrespect - just a lighthearted jest)
That’s apartment rent at a grand a month, of course - not house.
Running away from home (wherever that is for you) is no answer.
What is home? Stay there and make it better with your talents.
Running away to Mexico, Nicaragua, Costa Rica, Chile is not the answer. I know personally Mexico, Costa Rica and Nicaragua are all in bubble states. It is world wide.
Find home and become native to that place.
One of the more creative and angry trolls we enjoyed several months ago claimed to be living the good life in Baja, Mexico.
If you have spent any time in Mex you would know the locals (people who regard your getaway as home) really don’t like you and will relish the opportunity to bleed you dry and send you back home (wherever that is).
Couldn’t agree more.
Corruption rules south of the border, beware.
I like the idea of an overseas investment account in an asian country in their currency . If the dollar tanks you make even more!
DHOM news out:
The Company’s year-end backlog for 2005 was the lowest in several years and reflects a slowdown in home sales that began during the second quarter of 2004 and continued throughout 2005. The Company’s land position, which had grown in response to sales levels that were achieved in 2002 and 2003, became disproportionate to the lower demand for its homes experienced during 2004 and 2005. As a result, the Company began to aggressively reduce its land position during 2005. The Company sold land with a cost of $16.6 million, including $15.9 million during the three months ended December 31, 2005. In addition, the Company wrote-off or reserved approximately $6.5 million of land costs, including $3.5 million during the three months ended December 31, 2005. These write-offs and reserves primarily related to deposits and due diligence expenses for land the Company decided not to purchase.
Due to our low backlog at the end of 2005 and the anticipated reduction in our gross margin, we do not expect to be profitable for the first quarter of 2006.
To; Apacalypso
Check out South America…Need to be a little careful because of the USA resentment in some countries turning socialist but, there are some interesting alternatives…If I had to pick a couple it would be Costa Rica (Getting Expensive) or Panama (My Choice)….
Panama, just spent 6 months there, it has much going for it.
What are the housing prices and the general cost of living in Panama?
Someone was saying earlier that these homebuilders would make money no matter what?? Well not DHOM!
The big home builders get ALL the advantages…Cheep Money (Wall Street)…Cheep Subcontractors (Economies of Scale)…Believe me..They are still making a boat load even with hudge discounts…You just won’t see them with any new releases that are not already committed. The margins will then be considered to thin and they will let go of all those otions that they have on all that bare land…These guys are pro’s…Its going to be the mid-leveal builder and the small speculator builder that will get trampled by the dancing Elephants…
I will agree with the big builders having significant economies of scale, however, I think all builders will be hurt in the down turn. Time will tell.
They do…Its unfortunate since they have made soooooo much money but the fact is its not if they make money but how much…They will discount and bail and the average guy will be left behind with the baggage….
Do you work for a big builder? I know the VP of Home Building for a major HB and the controller for a major HB. They tell me the same things - we will survive, the last bust was different ,we have learned soooo much from the 90’s etc…….
Do not work for a big builder but watch them very closely so I can stay out of their way…I stopped building two years ago when I could no longer get decient subcontractors to do my work…The big guys had them locked up long term…Get out of the way or you get trampled by the Elephants…
They should have because they got their hats handed them. I remember rows and rows of unfinished tract home and condo projects all over the place.
In the 90’s, the builder held the inventory of spec houses and held the risk. In today’s market, they have the “investors” (flippers) to buffer them. Although that buffer looks like it’s finally evaporating…
DHOM:
Nice balance sheet- cash down 53% YOY? Yikes
apocalypso…
What would I do with 300k in my pocket?
I dunno, I got 65k in mine, and it’s invested in short term CD’s.
By the looks of all those folks I saw at Home Depot last week buying fix it stuff for the homes they’re about to put on the market- that looks like a pretty good idea.
How about Ebay?
Whether you’re trying to save more money to get in position, or you’re trying to pay your overpriced bad loan, doesn’t Ebay look pretty good?
Don’t know what it’s trading at, don’t really care. A lot of demand in Ebay.
With Ebay comes what?
Shipping.
Yep, UPS. Lots and lots of UPS- ground, that is.
Here’s my advice:
Leave your house. Drive around. Go places. Watch what people are doing. Ask dumb questions- “My, my, that’s A LOT OF PAINT YOU HAVE THERE- what’s it all for?”
Okay, here’s one I probably shouldn’t give out, but hey, what the hell, I’m feeling generous…
What’s the first major thing people sell when they either can’t make their payments, or need money for a downpayment?
Their cars.
Watch your streets.
You’re going to start seeing them lined with more and more cars with for Sale signs in the windows.
So what?
Thing is, most of these people are nervous. At first, they’ll ask for more than what their cars are worth. People won’t buy them. Call them anyways, and say ‘hello’.
A week or two later, call back. Offer to buy their cars again at a really good price. If they say yes…
SELL THE CAR ON EBAY.
If you don’t want to do any of that…
Just go get a hobby.
I’m currently photographing all my wife’s old clothes, to sell in a lot on Ebay. Lots and lots of clothes.
I have no idea what it’ll sell for, this big lot of clothes, and I don’t care.
It’s a distraction, it’s fun, and I just might make some money at it.
If NONE of those things work- ask your wife to put the 300k in the bank, hand her a large hammer, and allow her to knock you unconcious for the next five-six months.
That might work, too.
My wife’s had the hammer ready since September.
That’s why I’m selling her clothes. Much less of a headache.
Auction, LOL. I think you need a drink buddy
OC Kurt and Auction Heaven I am up for beers anytime before early April. Baby is due at the end of April.
Haha we’ll have a “Housing Bubble” get-together..what a concept!
Great message. I was thinking yesterday that the auto repossession business might be seriously booming soon.
“put the 300k in the bank”
But be careful which bank. You can put it in 3 month treasury bills and it will bring in over $1000 a month to help pay the rent.
How about put $300K in bonds…maybe Federal I-Bonds?? Currently 6.73% On 300k that would be $20,190 a year..or about $1700 a month.
http://www.treasurydirect.gov/indiv/products/ibonds_glance.htm
sorry chief–30k max /year on electronic or paper i-bonds. Jeez– not like there’s a shortage of debt to finance.
“David Seiders said it is too soon to say there is a glut of new homes on the market. ‘There’s been a definite upswing in the inventory level for some time,’ said Seiders.’ Even the report’s figure on median time it took for completed homes to be sold rose to 4.5 months from a median of 4 months throughout 2005, a number that wasn’t affected by the warm January weather.”
Just wait until word gets around to all sheeple about these experts predictions for falling sales and prices! You will see a real glut at that point.
Buy/invest in eastern europe. They’re not banana republics, and the demand will grow as they join EU.
Especially the costal places like Bulgaria and Romania’s cities on the Black Sea cost, and Croatia and Monte Negro properties on the Adriatic coast.
Careful you don’t loose your a$$ to corruption.
The greater the risk, the greater the rewards.
When they join EU and have to obey by EU laws it will be easier to buy real estate and more people will invest there. Better be first to the party than last. But do the research and don’t give the money to some guy through paypal
Croatia is nice on the Adriatic. Growing fast. Infrastructure isnt there yet, but improving. Old Roman ruins, lots of limestone. Visit before you consider a purchase.
Agree, Croatia is beautiful and cheap. However, don’t let the looks fool you. The goverment ther is very corrupt and unemployment is high. As with that Baja story, your beachfront home could loose it’s vista very quickly due to backroom dealing.
Gringos beware.
I enjoyed this article from a Contra Costa Realtor(tm) who says there is no bubble.
“Media scare people out of buying house“
This is TOO funny!!!!! Perhaps the most hysterical piece I’ve read re there’s no housing bubble. Too many precious quotes so I’ll just pick my favorite:
“And also unlike stock, [with houses] there is no ‘margin call.’”
Boy have you got that right!
No margin call, ha! Just wait until that neg-am IO toxic loan resets adn the appraisal comes in low!
They’ll wish it was just a margin call.
A few articles from the rip-off report.
Read about State Street Realty Realtor Ripoff got our listing, but did not make a good faith attempt to sell our home Dover Delaware.
Read about Westside Rentals ripoff fake apartment listings, bait and switch technique, no apartments available, cant schedule showing Los Angeles County, Orange County California.
Read about Jill and Roger Taylor ripoff, overcharging of property, misreposentation and tax fraud Haines City Florida.
Read about Housevalues ripoff, promised me leads of people looking to sell their homes, all I received is lists of people who want to get the value of their homes. No one wanted to sell! I was charged 350 a month for this service and I could not back out without paying for a full year of this garbage service. Kirkland Washington.
Ouch, that one hurt!!!
sorry, but it seemed like those folks fall into the DOH! category. Like, they overcharged me for the house, man. uh, if you were willing to pay, it wasn’t overcharging baby!. Priced at what the market will bear.
If you have 300K put it in 3 banks!!! I had an uncle that lost a fortune to the S&L collapse of the late 80s. Only got his $100K FDIC back.
sounds like the better option is no bank.
Boy that home sales report did get everyones blood pumping, huh? Thanks so much for the array of interesting, humerous, and thoughtful responses. Relocated from AZ to NYC, thats part of the reason why I am panicking. The 300 was alot in PHX, not here. I will consider the advice (e.g. great idea to divide it up between banks; I have too much in that ING acct right now). Got a call tonight and looks like I might have a lead on a new job. If that doesn’t work I will decide between Panama and the hammer….
Read about New Mexico real estate agents must offer more service.
“The rule change, which will reportedly take effect within about a month after the commission formally files the rule change, effectively bans certain types of real estate business models such as fee-for-service companies that place properties in a multiple listing service for a flat fee while providing few other services for clients. Some discount real estate brokers opposed the changes.”
Who did the realtors pay off?
lobal credit ocean dries up
(Filed: 24/02/2006)
The cash machine that sustained a world boom is about to close, and it’s going to get ugly, says Ambrose Evans-Pritchard
Well THAT certainly has a high “pucker factor”.
Yea, thats probably the best and scariest article I have read since coming to this blog
do I get a prize?
Errr hmmmm let me get back to you. Sheesh I thought acknowledgement was the prize. You must be one of those gen-x’ers I keep hearing about. Wait I got it how about a nice condo conversion in Phoenix how’s that. LOL j/k
awesome story. A credit squeeze will choke things off faster than damned near anything. Gonna get un-fun for everyone.
Amen, Auction, amen. Sittin’ here in OC, selling crap on eBay, money in the pocket, debt-free … sick and tired of waiting, but what can you do?
I got so tired of answering the “why in the world don’t you BUY what in God’s name are you waiting for!” questions, I finally just started telling people that most of my nest egg was lost in the stock market. You can only say the phrase “housing bubble” so many times around friends and family before to them, you are basically a SCARY CONSPIRACY THEORIST. I’d rather tell a little fib and let them think I’m a sloppy gambler. It makes dinner table conversation much lighter and more pleasant.
Sunsetbeachguy…
We will have that beer before your baby comes.
Also, we’ll have a bit more proof by then that this dead body is doing cartwheels off the side of the building as it falls.
I have some Bebe tank tops to shoot now, so I must go.
Followed by Charlotte Russe.
Followed by Forever 21.
Come to think of it…
…Where the hell did she get all these clothes?
Argh.
Charlotte Russe and Forever 21 won’t sell very well. Better to put them up in larger lots than sell individually.
From Barron’s via The Big Picture Blog
OCmax…
That’s too funny! You need to come along for a beer too, along with OCMetro.
But not yet.
I still have bras and panties to shoot.
>I still have bras and panties to shoot.
Hmmm, I’m thinking there is yet another way you can make money from those photos.
Hey guys. I think ILiveHere needs some help at theburstingbubble.com. Supporters who’ve posted letters since yesterday are now being called his alter-egos by the realtor bloggers. Here’s the page link:
http://theburstingbubble.com/forum/viewtopic.php?t=49&postdays=0&postorder=asc&start=135&sid=76a113aeeff74adad22828b437d263cb
Interesting read:
http://www.bloomberg.com/news/economy/fedwatch.html
OZ has the hottest commodity exports in the world
Ned has been dismantleing socialism and UK has bs stimulus going via war spending- all of this is not present here or will soon end in US
I don’t get why they keep calling this stuff news… It isn’t new information, yet they always sound surprised…
Sonoma Valley
GMAC MLS listings for sale
Homes for sale priced under $950,000 = 157
Homes for sale priced above $950,000 = 57
Total listings: 214
Houses Sold February 2006: 25
Median price for Sonoma Valley: $686,818
Sonoma County
http://www.greathomes.org MLS listings: 1934 (SFR only)
Median price - Sonoma County $614,000
test
DHOM, SPF have some crappy orders numbers out. DHOM is a relatively small midwest builder that’s been struggling for a while. SPF is a larger nationwide builder. Sales look to have dropped in every single state/region except for the new investor hotbed, Texas.
Links:
SPF — http://biz.yahoo.com/prnews/060227/lam119.html?.v=27
DHOM — http://biz.yahoo.com/bw/060227/20060227006132.html?.v=1
Lots of public home builders doing investment presentations in the next several days, too. So more “confessions” could be coming down the pike.
I think it’s so interesting that Texas is the new investor hotbed…why is that?
What has changed about TX in the last year or so that would make it more attractive to investors? A new economy there? Or is it just that now more than ever info is available to everyone at the stroke of a key on the laptop while having coffeebreak and TX comes in as ‘undervalued’ by the numbers we all see. Well, maybe that and ‘investors’ are thinking that with the Katrina refugees some will just stay in TX and need houses they’ll be ready to flip ‘em.
I’m beginning to feel like this house of cards will take a while to come down, and if it doesn’t happen sooner rather than later it’ll be all the more disastrous.
cheers!
Here in Florida, they need to change the state flower from the Orange blossom to the for sale sign…
As far as inventory here, its crazy how many properties are for sale. In a lot of condo conversions, developers are competing with speculators over the few people actually interested in a condo-conversion. Speculators are selling for the same or slightly higher prices while condo converters are reducing prices and paying hoa fees and closing costs. Speculators are loosing big time they can no longer flip before selling due to lack of demand they are forced to close and hold the properties, they still need to cover all the costs of selling since many have turned to realtors on top of all the taxes, interest, hoa fees, insurence and other fees they paid to own it. This has pretty much scared off investors, again leaving few interested in actually becoming owner occupants.
If you are in the market for a new home or townhome, expect to get nice discounts, upgrades and most of your closing costs covered… Just don’t leave the sales rep your phone number. We got called 3 times by the same lady asking us if we were coming back.
Its as if the state’s housing and real estate industry is in this dillusional state asking “what happened”… “you just wait until the spring buying season”. Unfortunately for them a few things have happend since this past summer to grind the property laddur to a halt.
- Higher rates = tighter lending standards
- Few homes selling up north = less people moving down with cash in hand.
- High prices = lower and middle class priced out, very few entry level buyers, very few “trade up” buyers.
- Speculators and investors are running for the doors leaving a trail of homes for sale along the way.
If Spring/Summer 06 does not bring in a massive wave of buyers, expect inventories to reach un-imaginable levels and panic selling to begin by late summer early fall.
I just saw the strangest example of condominium overbuilding! I’m in Orlando for the week on business, and had to find a store to pick up a few things I forgot to pack.
In the PARKING LOT of an OUTLET STORE they were building “Luxury Condominiums”
http://www.lbvresortvillage.com/
Litterally
thats funny Robert,
Take a drive around town. Brand new homes not even lived in for sale all over. New subdivisions are covered in signs for rent or for sale.
Condo conversions are even worse, their major source of demand came from speculators but now thats dried up so the offers are getting crazy. Pick up a copy of the paper and look for yourself, its covered in advertisements for new condos and condo conversions.
Comment by OC Max
2006-02-27 20:24:00
I got so tired of answering the “why in the world don’t you BUY what in God’s name are you waiting for!” questions, I finally just started telling people that most of my nest egg was lost in the stock market. You can only say the phrase “housing bubble” so many times around friends and family before to them, you are basically a SCARY CONSPIRACY THEORIST. I’d rather tell a little fib and let them think I’m a sloppy gambler. It makes dinner table conversation much lighter and more pleasant.
Ain’t that the gawd honest truth. I’ve been labeled a conspiracy theory by my in-laws just because I believe there is a housing bubble.
My own father in law is a california real estate agent and he can’t see the damned bubble, or put two and two together, even though he has very little business these days. Last meal we had together yesterday (at a disgustingly horrible cheap restaurant he insisted we go to, since he couldn’t really afford anything else), he berated me and my husband for “not buying a house yet”, since we sold our last one at a profit. He insisted we “needed to get in the market soon to build equity up and retire on, or else we would be forever priced out of the market.” To him, the only way to make serious cash is by flipping homes into infinity because regular working jobs are for chumps.
The old man is in his 60s, and during our meal together he and his wife declared their new retirement plan: reverse mortgage of their home, they only have to wait a few years until his wife is old enough to qualify for it. All I can say is that they are f*cked. Their home they are going to use for their reverse mortgage isn’t even paid off, the real estate market is going down in thier area, and their home, bought brand new 5 years ago, was only worth 150$ K tops at the time, now it is suddenly a “400$ K home” due to the bubble. I don’t expect thier home to keep increasing in value, and if they finally manage to get their retirement reverse mortgage on a home that is racing back down to the bottom, I expect them to be in a world of hurt. (Hell, I couldn’t even fathom anyone really trying to live off a $400K reverse mortgage, I imagine thier home is going to worth about maybe half that once they reach the right age to retire. They are going to be so screwed).