“The Current Slump Is Good News For Buyers”
A housing report from the Kansas City Star. “The metropolitan housing market was down again in October compared with last year’s booming pace but still did better than the nation as a whole. The number of single-family unit permits issued last month was 666, down 39.7 percent from October 2005, according to the Home Builders Association of Greater Kansas City.”
“Kansas City is behind the pace that led to five consecutive years in which more than 10,000 units of single-family housing were built from 2002 to 2005. ‘The biggest concern locally is that too many consumers, municipalities and even home-building professionals are making decisions locally based upon what is happening in Phoenix and Atlanta, not what is happening in Kansas City,’ said Tim Underwood, the association’s executive VP.”
“There were 5,621 new homes on the market in October, up 7 percent from last year, and 13,863 existing homes listed, up 14 percent from 2005. There were 2,686 new and existing homes sold last month, down 5 percent from October 2005. There were 580 new homes sold, 20 percent fewer than a year ago, and 2,106 existing homes sold.”
“Overall, the region had a 7.3-month supply of new and existing homes. There was a 6.6-month inventory of existing homes and a 9.7 month supply of new homes.”
The Detroit News from Michigan. “Metro Detroiters (are) nervous about their futures, which kept homebuyers on the sidelines and created an oversupply of homes that can sit months, even years, on the market. Now, comes home price deflation, the worst in the nation.”
“‘The overall feeling in Michigan is everybody’s knees are knocking a little bit,’ said Nancy Warson, a Livonia Realtor.”
“Would-be homeseller Brian Kurtz knows uncertainty well. The financial planner from Troy has dropped the price on his Sterling Heights colonial by $36,600 to $259,900 and is now paying $4,000 per month for two mortgages. ‘It’s like trying to sell ice cubes to Eskimos,’ said Kurtz, whose home has been on the market since August 2005.”
“Warson said buyers are just not out there. One of Warson’s clients in South Lyon, who is selling their house for about $500,000, has had only one potential buyer look at it in seven months.”
“To jump start the housing market, real estate agents have pulled out all the stops. ‘We’ve seen plasma TVs, we’ve seen $5,000 bonuses, we’ve seen cars, we’ve seen airline tickets. We’re about as creative as we can get at this point,’ Warson said. ‘It’s still not driving the market up.’”
The Detroit Free Press. “The nation’s top realty agent predicted Tuesday that homeowners could see a rebound in the coming months. Pat Vredevoogd Combs, a Grand Rapids Realtor who became president of the National Association of Realtors this month, said the current market transition, what some call a slump, is good news for buyers.”
“‘This window of opportunity will continue into the new year, but inventories are starting to decline and sellers will be less willing to negotiate when conditions begin to balance in most areas around early spring,’ she said.”
“Tell that to Ruby and Willie Jennings, who have been unable to sell their northwest Detroit ranch-style house for the past few months. The Jenningses have cut their asking price to $112,000 from an initial $119,000. ‘It was sold, we thought, at one time,’ Willie Jennings said. ‘The purchaser backed out. No one has made an offer since.’”
From WKRC Cincinnati. ” More signs of a housing slowdown. Home prices in the Tri-State fell 2.6% this past summer. Larry Ritzert almost had perfect timing. He sold his old house in Pierce Township a year ago. But he started building his new house a year ago … and feels today it would cost 20 grand less.”
“‘In this case we were lucky, on one side, and unlucky on the other, but it balances out,’ he said. ‘If you can just wait here, you’re in good shape don’t panic.’”
“Norm Miller at U.C. makes his living watching real estate trends. He sees a slight drop in local home sales and prices. ‘It could last several months this paranoia because it will last in California and Florida for a while, so we’ll hear about this for at least the next year,’ he said.”
“The slowdown we’re seeing locally is partly about demand. ‘It’s like getting a new car you don’t need one every couple years. That’s right so no demand now. You’re right the demand was satiated over the last five years,’ Miller said.”
“Miller does have advice for people trying to sell; he says instead of offering incentives like cars and TV’s, lower the price and offer a buyer’s agent more commission. However, that’s been controversial buyer’s don’t always realize some homes are being pushed because there’s extra money in it for the agent.”
‘Ohio’s foreclosure rate is weighing on Cleveland’s real estate market. In Ohio, one in every 10 subprime loans, high-interest mortgages for those with impaired credit, is in foreclosure. The number of homes for sale in Cleveland has risen to 49,000, a two-year supply.
Ben,
I believe your WKRC link in the main article is for Cincinnati, not Cleveland. WKRC is a local TV station in Cincinnati. The article talks about Pierce township and Anderson townships, which are neighborhoods of Cincinnati.
And yes, prices are down here.
CincyDad -
Do you have any thoughts on the Columbus economy? We are considering relocating there from Silicon Valley.
Columbus was growing rapidly thru the 1990s, but then took a sizeable hit about 5 years ago. Since then it has seen slow growth overall. Columbus is a lot like Cincy in that there is little heavey industry, but lots of service industry jobs. The Limited stores (and all their brands) are HQ there, as is Wendy’s Hambugers, Cardinal Health (I think), Nationwide insurance, Bank One (most of VISA data processing), and a lot of companies like that. Of Course, Honda of America is located in a western exurb. The county north of the city (Delaware county) is one of the fastes growing counties in the country.
Median house prices are around $180k, but a new 4 bed, 2 bath house in a subdivision will probably cost closer to $300k. McMansions run $425k+.
Columbus’ economy is very diverse and has the University and government to moderate its economic ups and downs. You won’t get rich on RE, but you will plod along at a steady pace, just a little below the inflation rate.
CincyDad -
Thanks for your input. I have friends in Columbus and what they have told me is everything that you just said (I just like hearing an outside opinion since I know they want us to move back!). I’m a CA native but I went to UD. My husband is a native of Ohio. We would have no problem relaxing into a nice life in the Midwest. I really do miss it sometimes.
rush hour is 18-19 minutes- friendly people- cheap homes- you’ll live like a king !
If you had asked about Dayton (Ohio), I would have given you a very different answer.
Yeah, I figured. I hear plenty of economic horror stories about Dayton. It’s too bad, there are some cute little suburbs in the Dayton area.
Thanks, I meant to put Cinncinati.
At least you didn’t put “WKRP”
//grew up in Cincinnati.
///got tired of the WKRP jokes really really fast.
As god as my witness, I thought turkeys could fly
“‘This window of opportunity will continue into the new year, but inventories are starting to decline and sellers will be less willing to negotiate when conditions begin to balance in most areas around early spring,’ she said.”
Hurry! Hurry! Hurry! Buyers are “snapping” up “homes” at a rapid pace! Buy now at any cost or be priced out of the market!
Does this bull$hit even work anymore? It’s so played out like the constant drum beat of “bringing freedom and democracy to Iraq”.
This slump is only going to get worse. Some mainstream economists are predicting 40% price declines!
Article at http://www.realestatedecline.com
Mortgage News Daily taking a shot at NAR:
http://www.mortgagenewsdaily.com/11222006_Home_Prices.asp
Accentuate the positive. Gild the lily.
“Lots of cliches come to mind after reading the third quarter summary of existing home sales released on Monday by the National Association of Realtors. While the statistics showed that sales of previously owned homes and condos were down 12.7 percent from the third quarter of 2005 (which was, in fairness, the second highest level on record) and prices had actually dropped in 45 metropolitan areas (as opposed to the slowing appreciation that has been frequently predicted,) the NAR led the story by focusing on the improved outlook for buyers as prices “corrected” and declining sales activity “helped to build housing inventories.”
Spin City!”
Remember Katrina? Still 100’s of thousands displaced. Moral to this story… You are on your own and don’t count on the government to help out much.
http://www.louisianaweekly.com/weekly/news/articlegate.pl?20061120e
People with homeowner’s insurance who heeded the mandatory evacuation notice should be fine. Those who didn’t, will have issues.
Taxpayers don’t foot the bill when lose in Vegas.
Many are not fine due to insurance industry attempts to avoid paying claims by making distinctions between wind and water damage.
http://www.contracostatimes.com/mld/cctimes/news/15805534.htm
I was just in Mississippi. The insurance industry finagling that Manraygun alludes to is quite widespread. And many people are losing their homes due to foreclosure.
If you are ever counting on an Ins co. to help you, you are in a world of hurt. My mother worked for Satet Farm for 35 yrs. She’s completely disgusted at what the industry has turned into.
Its no different when the big California EarthQuakes we got hit with in 1989! Insurance companies can handle disasters on a small scale but are ill equiped to handle mass damages like Gulf coast hurricans or California Earthquakes. With home prices at an all time high ANY major disaster will wipe out the carriers. Too expensive!
Not really. Replacement costs for the houses in So. Cal are probably 1/3 the going price of the house.
The problem is that people are expecting to get flood insurance without paying for it. Yes, the Katrina victums are screwed. But there is a reason flood insurance is excluded.
Its why when I owned a home in Florida I only bought a house that had its floor above the 500 year flood plain. (Ok, the floor was 1/2″ above the flood plane…) Why there, we had a 100 year flood. (18″ of rain in one night, IIRC). It was neat having a flooded back yard, street, etc. My home was still 4 feet above the water and that’s all I cared about.
Ok, mowing 2 weeks later was horrible. (Man can grass grow fast when its submerged…)
Neil
Trent Lott had inserted a provision in a Department of Homeland Security bill, signed by the president, calling on the department to
investigate why State Farm won’t pay him for his $600k house. If he can’t get his insurance to pay, how would someone who is not a leader of the Republican party fair?
http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20061020/OPINION/610200317/1166
Coincidently:
The companies that provide Americans with their homeowners and auto insurance made a record $44.8-billion profit last year even after accounting for the claims of policyholders wiped out by Hurricane Katrina and the other big storms of 2005, according to the firms’ filings with state regulators.
http://www.latimes.com/news/nationworld/nation/la-na-insure5apr05,0,3061059.story?coll=la-home-headlines
And, while we’re on the subject of Trent Lott…
Regardless of what you may think of him personally, or his politics, he did all the right things with his house. He had it constructed 8 feet off the ground.
But, alas, even that wasn’t enough to stop the 25-foot storm surge that came ashore at Pascagoula.
If you’ve been there before Katrina, you probably remember all of those nice coast houses just north of the seawall. Many were washed away during Katrina. Nothing is left except bare slabs.
so 110 billion for 120,000 isn’t enough ?
send yours in bro
No kidding. I just got another love letter from the IRS today asking for every dime I have. Screw that.
they’ve become even more nazi like- I just send it in- get it back later
I’m starting to wonder about what the stock prices of the home builders are telling us. Many are breaking out today with significant up moves. Many are up 25 to 50% from the summer lows.
I know..short covering, etc…but this up move is really getting some legs.
The year end for KB Homes is Nov 30, 2006. I am not sure about other homebuilders year end, but if it is Nov 30 for the others and the execs have stock options based on the stock price on Nov 30, they might have a vested interest in getting the stock up, to exercise their options. Since the homebuilders are flush with cashfrom cutting back on land purchases, and stopping home building, they are probably buying back their stock, so their year end bonus is fat. There is no good news today or in the foreseeable future that makes any sense to this stock rise besides their “back room” tatics to drive up their bonuses.
maybe we’re going UK ?
could happen- BB could drop rates and crank it up one last time
See my post on the bits buckets. They’re PE takeover targets apparently.
They’re PE takeover targets apparently.
Thanks txchick57! That really makes sense. The insiders are doing what insiders always do, play fast and loose with the rules. Can not imagine on the day before Thanksgiving, where
volume is down, to have a major move on HB’s.
I can tell you the homebuilding sector is headed into a recession — just look at the preponderance of evidence we have seen here over the past six months — a steady uptrend in prices against an even steadier drumbeat of worse-than-expected results. I can also tell you that there are future ghost towns currently under construction out in the middle of the dessert — we drove past a bunch of them on a Thanksgiving week trip which took us through desert (soon-to-be deserted) McMansion tract developments in SoCal, NV and UT. I can also tell you that industry recessions usually are accompanied by falling stock prices until an upturn is in the foreseeable future (and there is not one — probably not for at least four years).
So now do you see why the builder stock prices are going down?
Oops — I guess you said they are going up… Curiouser and curiouser.
“To jump start the housing market, real estate agents have pulled out all the stops. ‘We’ve seen plasma TVs, we’ve seen $5,000 bonuses, we’ve seen cars, we’ve seen airline tickets. We’re about as creative as we can get at this point,’ Warson said. ‘It’s still not driving the market up.’”
yeah, guys, but none of that appeals to a buyer who’s got game:
http://philadelphia.craigslist.org/rfs/238178551.html
Too funny phillygal.
Or maybe too sad now that i thik about it.
Too lugubrious?
Miller does have advice for people trying to sell; he says instead of offering incentives like cars and TV’s, lower the price and offer a buyer’s agent more commission.
Lower the price? Now that’s a good idea. It’s the incentives like cars and tv’s I wonder about. Do buyers realize that rolling the “incentives” into the loan is like taking out a car loan or tv for 30 years (however long the loan is)? Now thanks, I’ll take the lower price on a house over “incentives” any day of the week.
ditch the realwhore and offer 5% off
heard of the internet ?
“Would-be homeseller Brian Kurtz knows uncertainty well. The financial planner from Troy has dropped the price on his Sterling Heights colonial by $36,600 to $259,900 and is now paying $4,000 per month for two mortgages. ‘It’s like trying to sell ice cubes to Eskimos,’ said Kurtz, whose home has been on the market since August 2005.”
Something just isn’t right with this story but my little non-finacial-planner-sized brain can’t seem to figure it out.
I thought his comment was telling. Notice how often we hear that the peak of the market was about Oct 2005, but many, many anecdotes of listings on the market since before that time? Quite an overlap.
The rest of this article is so full of BS I have to hurl. Especially from the new NAR pres. Doofus. His crystal ball is foggy.
Regarding Kansas City: “There was a 6.6-month inventory of existing homes and a 9.7 month supply of new homes.”
Sounds as if the builders in Kansas City will soon be cutting off the legs of the existing home sellers.
The rust belt is getting killed. I had always thought that FL, CA, AZ, etc., would be the states leading the U.S.A. into an economic downturn; now I’m not so sure.
They may not lead it, but they’ll definately hop in the saddle and ride this hoss off the cliff.
“The number of single-family unit permits issued last month was 666, down 39.7 percent from October 2005, according to the Home Builders Association of Greater Kansas City.”
There a report of a 40% YOY drop in single family permits showing up again in yet another location. It seems like a 30-40% YOY drop in permits took place almost everywhere in the USA where houses are built. Isn’t this sufficient evidence to say that residential building is already in a recession?
The real question, IMO, is how to properly interpret all the happy talk from the powers on high:
1) They want to avoid scaring would-be buyers by truthfully warning about what happened to home prices in the last four residential construction recessions (which all overlapped with GDP recessions and big increases in unemployment and mortgage default rates)?
2) They realize that this time will be different thanks to some grand reflation scheme they have up their sleaves which will let them pretend in retrospect that the slowdown was only a blip?
3) They are completely out of touch with reality?
Which is it? I am dying of curiousity!
IMHO: Mainly 1 some of 3.
For a little light reading over the long weekend, enjoy the latest chapter in the on-going saga of Silicon Valley RE at:
“The Last 30 Days (Nov’06 edition)”
http://www.viewfromsiliconvalley.com/id281.html
Thanks!
“The nation’s top realty agent predicted Tuesday that homeowners could see a rebound in the coming months. Pat Vredevoogd Combs, a Grand Rapids Realtor who became president of the National Association of Realtors this month, said the current market transition, what some call a slump, is good news for buyers.”
“‘This window of opportunity will continue into the new year, but inventories are starting to decline and sellers will be less willing to negotiate when conditions begin to balance in most areas around early spring,’ she said.”
Yet another Realtor with an intestinal disorder characterized by abnormal frequency and fluidity of fecal evacuations………in short……….Verbal Diarrhea
Questions for Pat: Are inventories declining because of failing-to-sell houses being pulled off the market? Or are they declining because the sellers try to rent them out until the market “improves”? Details, please…
How nice that the new NAR President has RE-appropriate initials, PVC. Maybe since she is a liar like Lereah, I will name her Iron Piping (only masquerading as PVC).
The reason the inventory of unsold homes in Mi is down is not because of a surge in buyers but rather a sharp rise in those unsold houses going the rental way. I personally know 7 homes within a 2 sq mil area of me that were changed from for sale to for rent. A couple of them have been rented, at least the for rent sign is gone. But actual sales around metro detroit are terrible. The other thing I’m noticeing is that in the warren-livonia-troy area, you just don’t see homes above about 230k selling at all. It looks like if someone can now get a mortgage for that amount, they’re sure not choosing to live in those areas so those homes just languish.
Gee, I’ll bet that the residents of Michigan are just LINING UP to rent from landlords who can’t cover their monthly carrying costs. Sounds just wonderful, doesn’t it?
‘The biggest concern locally is that too many consumers, municipalities and even home-building professionals are making decisions locally based upon what is happening in Phoenix and Atlanta, not what is happening in Kansas City,’ said Tim Underwood, the association’s executive VP.”
OMG. Know what? He’s right. . . ’cause everyone in KC bought with 20% down, and a fixed 30yr. And their economy is strong because of - oh - what is it? Casinos and amusement parks?
And greeting cards (Hallmark). Jazz musicians are paraded around as living history for tourists. Everywhere you go you see eyesores leftover from Kansas City’s once-booming cattle industry:
http://www.gotfootagehd.com/thumb/HD-034/HD034-148.thumb.jpg
How is it good news for buyers. How is a falling price of anything good for buyers. I buy today for $100 - its down from $125 (lets just say - lets say it was cisco stock circa 1999) … a few months later its at $10 … WTF … how was that good for me.
Cool.
Cow_tipping