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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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MBIA Debt Backed by Crack Houses Perpetuates Blight
http://www.bloomberg.com/apps/news?pid=20601109&sid=aIr.34tYn5Bw&refer=home
Interesting look at what happens to city properties when the job base drops sharply.
H&R Block loss nearly doubles on mortgage weakness
http://biz.yahoo.com/rb/061130/hrblock_results.html?.v=3
H&R Block reported a $39 million pretax loss at its Option One Mortgage Corp. subprime unit, which lends to less credit- worthy borrowers, as lending fell, margins shrank and defaults rose. The unit earned $48.8 million a year earlier.
“H&R Block would be a totally different company if it weren’t being clobbered by Option One,” said David Roberts, a principal at Harvest Investment Advisors LLC, which owns H&R Block shares. “It has a good collection of assets that is being weighed down by a bad business.”
Well, even big companies can buy properties (a company in this case)
that turn out to weigh them down.
It’s interesting to look at the leading edge of mortgage-related
companies that should have problems showing up in earnings and in their
balance sheets soon. But as in the bubble, “soon” can take a while.
The media has been reporting slowing housing price gains, smaller profits, housing permits at average (rather than high rates). That isn’t a housing bust.
Mortgage and development companies LOSING money, prices going DOWN, that is a housing bust.
In NYC, prices flattened and started dropping relative to inflation immediately after the 1987 stock market crash. They didn’t fall in nominal dollars until 1990. Well, here we are in early 1990, relatively speaking, having gone from the peak to losses and declines in one year instead of three.
“The media has been reporting slowing housing price gains, smaller profits, housing permits at average (rather than high rates). That isn’t a housing bust.”
(Click!) At the end of this masquerade party, I want to make sure we have kept careful track of who said what and when…
I would add, Economist, that the real estate run-up of the 1980’s was an effect of the broader boom, rather than the boom du jour, the way it has been recently. This was especially true in NYC, which experienced a grinding, years-long downturn during the 70’s that did not abate until ‘82.
The point is, real estate went up because people were making money at other things. It’s “different this time” only insofar as houses themselves have been driving the economy - the cart has been before the horse.
Un-f#ucking-believable! The LA Times is reporting that housing has bottomed out. I’m gonna buy three houses this weekend using option-ARMS because houses are affordable once again.
http://www.latimes.com/business/la-fi-homes1dec01,0,5272692.story?coll=la-home-headlines
No one who either (a) owns a place now, (b) is in the business (e.g., the Realtors), or (c) is in a peripheral business like banking that is directly negatively affected by a falling housing market, wants this bubble to burst. That is a very big group of people who have a lot to lose, and since many of them are well aware that the state of the market is largely driven by expectations, I expect to see a continuous stream of specious boosterism claiming that we have hit bottom, all the way down. In fact, I’d be curious to see someone put together a list of articles run by major periodicals quoting interested parties as saying we’ve hit bottom every week since the downturn began, perhaps even charted against prices…
That’s a good idea. Really good. Then if such a chart were created, it could be emailed to MSM rabble rousers who might want to make a name for themselves by handing it to the latest RE apologist/guest and asking for an explanation.
Such rabble rousers are bound to get lots of hits to their web sites from the blogosphere (more eyeballs = more ad revenues)…
“since many of them are well aware that the state of the market is largely driven by expectations,”
I would say “since many of them believe that the state of the market is largely driven by expectations,” because there are other factors, such as record low affordability, which are going to sink LA’s market no matter what the LA Times says or leads people to believe.
Right, Stucco. If the state of the market were driven by price expectations with no fundamental reference points, the run-up would never have stopped.
az –
I am not sure of exactly what you mean by “fundamental reference point,” but I am talking about something very fundamental indeed, known as a household’s budget constraint. Once lenders can no longer find anyone who thinks it is OK to spend 50% of their income on a home whose purchase price is more than 10X their annual household income, then you cannot get any more price appreciation. At that point, the GFs who bought last year thinking that 20%+ annual appreciation forever was a viable possibility discover that there are no chairs to sit in.
Of course, other factors and constraints also apply, of which affordability of the payments to the target buyer is probably the most fundamental, and one dissuading many would-be buyers at this point… though if you think about it, many of the buyers of the past couple of years bought, and pushed prices up at least temporarily, even though they couldn’t afford it, with a delayed fallback after the increase in supply from the resulting foreclosures…
Jim - somewhere out there in cyberspace is a website with a compilation of NY Times real estate articles from about ‘89 to ‘93. I can’t remember the URL, but it is really striking that the only differences, really, between then and now are A) the dates on the paper, and B) the nominal prices reported.
Other than that, the boosterism is the same towards the peak and calling the bottom twice a week are all there.
“Jim - somewhere out there in cyberspace is a website with a compilation of NY Times real estate articles from about ‘89 to ‘93.”
Home Prices Do Fall : A Look At The Collapse Of The 1980’s Real Estate Bubble Through The Eyes Of The New York Times
by James Bednar
http://www.youdovoodoo.com/80sbubble.htm
Hey thanks, Homoaner! Here’s a doozy, only about three years early:
Bottom of the Housing Slump Is Seen in the New York Area
By THOMAS J. LUECK
Published: March 1, 1991
http://query.nytimes.com/gst/fullpage.html?res=9D0CE1DD103BF932A35750C0A967958260
The New York area’s housing slump may have finally hit bottom, or come close to it.
This is an oversimplification that brings up a potentially worthwhile subject to discuss.
Longtime owners who do not intend to move are a much larger part of most communities than is typically acknowledged and may have motivations apart from housing values. The housing boom has trashed basic services since all police, fire, nursing, teaching, and general civil service staff now drive in from far away and do their jobs tired from commuting and without being a part of the communities they serve.
An even bigger and more powerful constituency are business people, especially entrepreneurs. Hiring anywhere near a bubble area has become terribly difficult because the best young candidates want to live somewhere they can build a nice living for themselves.
Many of the most influencial owners are going to be strongly motivated to end this and if possible change regulations so the party never gets this far out of control ever again. That is a long way from “No one who … owns a place now … wants this bubble to burst.”
I think the number of HOs with paper equity to lose that you would find hoping that the bubble will burst is very small proportionally, even if that were the best normative choice for the reasons you point out.
Get used to it. If the early 1990s is any indication, the LA times will continue making this kind of statement on a regular basis for the next six or more years.
Assuming the LA Times stays in business of course
The death of the newspaper can’t be that far away…
I’d guess 85% of the content of 85% of daily newspapers in the land is Associated Press stories.
Who read the LA Times any more?
Who cares what the LA Times says.
More important what was said in “La Opinion”.
(humor off)
“The LA Times is reporting that housing has bottomed out”
The credabilty of the Times is below the radar screen.
The offered it for sale and the only offer they got was
a “low ball” offer from Eli Broad. They were insulted. Sounds like an overpriced homeowner in denial. This is the kind of crappy reporting that makes all Fox News look real
Maricopa County (Phoenix) Notice of Trustee’s Sales:
Jan 05 1297
Feb 05 940
Mar 05 1040
Apr 05 766
May 05 759
Jun 05 767
Jul 05 748
Aug 05 795
Sep 05 669
Oct 05 728
Nov 05 704
Dec 05 749
Jan 06 726
Feb 06 687
Mar 06 790
Apr 06 638
May 06 764
Jun 06 797
Jul 06 851
Aug 06 1019
Sep 06 1114
Oct 06 1238
Nov 06 1493
The trend is your friend.
Ooops! Sorry Ben, thought this was the Bits bucket. Can you move over?
Otherwise, I’ll pose a topic question:
It seems to me that the Notice of Trustee’s Sale recordings are extremely low in Maricopa County Arizona. With a population of 3.6 million people, there were only 1493 notices recorded in November. There are approximately 50,000 properties listed for sale, so 1500 foreclosures is only 3% of the resale inventory. Is a 100% increase in 6 months a headline, or just a blip?
A good topic could be what Arizonans are seeing locally. Especially since the press in the state has stopped much of the reporting on housing.
For example, I learned last night that the record inventory locally excludes mobile homes etc, and is actually 25% higher than reported.
A comment on AZ mobiles. In the parks where I lend, nobody uses a realtor TM. They use a resident who charges sellers a 1% finder’s fee. The finder told me recently there is still no problem finding buyers. I don’t entirely believe it, because one would-be borrower told me the property she was interested in had been put up (by legatees) at a sealed-bid auction. Will be there soon and get a better idea of what is going on.
Around here the mobiles are priced at $300k, but they aren’t moving.
Mobile home at 300k! I can hardly believe it, any photos? On the Big Island you can get a new 3-2 house for under 300k, used to be over 400k.
Hah! Malibu beats that! There’s a whole trailer park up for sale near ‘toney’ Point Dume, with mobile homes (many, many of them) going from 495K - 1.8 million.
This baby is 3b/2b - for a reasonable 699K
http://tinyurl.com/sox6u
…and then people wonder why L.A is the least affordable city in America…..
A good topic could be what Arizonans are seeing locally.
Ben, I also think this would be a good topic. I have been preoccupied for a couple of months but will get back out now and sample my area of Phoenix for the latest trends. The press is providing little worthwhile information at this point.
A blip would be one month. Those numbers have been ramping up for the past seven months. They also appear to be accelerating. I think we have turned the corner here.
It was quoted in a post yesterday that materials prices were partially to blame for high costs in housing. I would think that with the uh-hum… slowdown, materials prices would be going down fast. What’s the true story?
The cost of materials has little to do with the run up in housing prices. Lumber is actually down, and a lot of other materials as well. One can still build a very nice place for $100 per square foot.
I’ve talked to investors in Charlotte claiming to be building multi’s for $66/sf in the surrounding counties. They admit they look like cheap junk, but they still rent. People need affordable housing.
My weekend topic would be for some of the regular posters to write their own bio. Would be nice to gain a little perspective since alot of financial opinions are thrown around here.
Also…..Ben with the end of the year approaching, how bout some stats about the site such as
1 How many hits did you get as the year progressed?
2 Who is the most frequent poster(s) and how many ytd comments?
3 What has been the biggest news story of the year relating to the premise of this blog?
im sure there are some other good q’s along these lines.
Yeah, that’s interesting to me too.
Yeah, that’s interesting to me too.
I think someone is looking for the crown for question 2.
No, I”m not even close. Stucco is way ahead of me.
I’d wager that GS has at least doubled the volume of whomever falls into second place. That said, I’m not complaining…
I’d be surprised if Ben has not been approached by Book publishers. Even if a book tour just breaks even, you get to travel for free
There should be a “Quote of the Year” awarded to one of the housing boobs. Any nominations?
Nominee Mark Hull:
‘And for sellers, it’s almost a nightmare,’ says (realtor) Mark Hull in Detroit. ‘A property can be marketed with every kind of tool you can think of, and unless there are really, really great incentives that make the property 20% below what the market price should be, they’re just sitting there.’
from the thread:
How can a middleman to a market transaction be so obtuse? How deluded do you have to be to say, “Nobody is buying at the market price. Everybody wants to buy below market price. Why doesn’t the market want to buy at market price?”
http://thehousingbubbleblog.com/?p=1861#comments
Housing Price Index graphs for all metropolitan areas in the United States. Updated yesterday:
http://www.housedata.info/
Nice graphs — they clearly document that UT housing prices always go up
You can get very good insight to the lag effect in the Ofheo index by clicking on the CA graphs. The press has already reported that prices are falling, but at this point the Ofheo index still merely indicates price deceleration.
NY’s crash is clearly visible, with the QOQ currently leading the YOY down into negative territory at the most rapid rate of downtrend for the entire duration of the series.
The Northwest Florida graphs (Pensacola-Ferry Pass and Fort Walton-Destin) are in major free fall. Might be able to move back home by mid 2008!
It’s December 1st! Can I wish everyone a Merry Christmas? Really, it’s OK? Well, by golly, Merry Christmas and Happy Hanukkah to all, especially to Ben!
Hey Ben, go check your Paypal Christmas Tree. Santa left you a little gift. Might I suggest a large box of See’s and some Silver Eagles?
Merry Christmas from Fred
Will you send me some See’s too? Of all the things I miss about Clownifornia, that may be the worst
I like the pineapple truffles.
More money for Warren Buffett
“A good topic could be what Arizonans are seeing locally. Especially since the press in the state has stopped much of the reporting on housing.
For example, I learned last night that the record inventory locally excludes mobile homes etc, and is actually 25% higher than reported.”
This reminds me of a broader topic that I have been thinking about: Does the MSM contribute to the risk of severe financial dislocation by hiding the proverbial elephant under the rug?
Because we keep seeing story after story in the press these days about the housing market “bottoming out” with no supporting evidence. In fact, occasional items suggesting the inventory of vacant new homes is at a record high level, builders are continuing to pile on the new inventory, prices are falling faster than official statistics reveal (thanks in part to builder incentives masked by fraudulent appraisals) and foreclosures are rising all generally point into deterioration, not a bottoming out.
At some point, happy talk loses its force when any GF can see the huge gap between what gets reported and the evidence on the ground. Even so, we have seen an occasional post documenting how the LA Times kept talking up a recovery from roughly 1989-1996 last time around (and by 1996, they were right!).
“At some point, happy talk loses its force when any GF can see the huge gap between what gets reported and the evidence on the ground.”
The GF(s) out there just want what they want, so they gleefully skim over negative reports and focus only on the positive spin that will help ratify their decisions; even presidents are guilty of this behavior.
What does the recent fall in the US dollar mean for housing markets, Fed policy, etc?
and does the USD uncertainty mean folks should consider reallocating their IRA and 401k investments?
Currency and bond traders expect a recession and rate cuts. The REIC including shareholders expect a rate cut but no recession.
http://tinyurl.com/t8yhy
Boston Globe
Wal-Mart warning shakes industry
Retailer forecasts weak holiday sales
By Associated Press | December 1, 2006
“NEW YORK — Wal-Mart Stores Inc. unsettled the retail industry yesterday, reporting a sales decline for the first time in 10 years and warning that its holiday sales would be disappointing. The discounter’s news, coupled with a jump in unemployment benefit claims, raised concerns about the strength of the retailing sector at a critical time of the year.
……Wal-Mart’s disappointment was a sharp contrast with results from discount rival Target Corp., which beat Wall Street forecasts, and Federated Department Stores Inc., which far exceeded expectations. Other retailers had mixed sales; J.C. Penney Co. and Costco Wholesale Corp. both fell short of Wall Street projections.”
A certain percentage of people do seem to be cutting back. If anyone has info on places like Gap/Old Navy, The Limited, Best Buy, etc. I think that might give us a fuller picture of the retailers. I read recently that Tiffany’s was doing well this season.
Last nite, Bill “LoofahSponge” O’Really made pathetic attempt to frame Walmarts cratering earnings on…. get this….. organized labor…LMAO.
Walmart not meeting the street speaks volumes of the condition of the typical Walmart shopper. And lets face it, yesterdays JC Penny shopper is todays Walmart penny counter. And Wallyworlds earnings is a clear indication of where the middle class is.
In an interview in Barrons a couple weeks ago a guy said they only economist he listens to is Walmart.
As always, the truth is a mix of realities. WalMart in under siege by unions and municipalities that want nothing to do with their big box outlets. WalMart has a definite p/r problem. In SoCal a WalMart shopper is most likely illegal. Yikes, I said it!
Years ago when I used to go to U.S. Customs auctions, I got a little chummy with the big cheese running it and he told me (this was like 10 years ago) that wally world imported an awful lot of good quality bogus name brand goods (they had intercepted a sizeable amount, apparently), made in the 3rd world de jour, to order.
He said he thought the game was, you buy 100,000 real Tommy Hilfiger shirts from the manufacturer and you knock off 500,000, in Guatamala and cost average the 600,000 shirts and retail them for a little over what the genuine article cost you.
Apologizing for the gross distortion that organizing is the cause of Walmarts cratering earnings is tantamount to excusing the current leadership for the descent into civil war in the mideast.
Nice try though.
Cratering?? Are Targets earnings cratering??
You’re all hung up tommy.
How long did the “psychology” of the market continue to push home values up even after fundementals were out of line? How long will the “psychology” of the market continue to drive home values down even after fundementals get back in line?
Very good topic Ken . I also would also like to know how much will people overpay for a property based on psychology ,and it would be interesting to know how people plan to make the payments when they go up ,(do they think they are going to get raises ,do they count on refinancing etc.,do they believe real estate always goes up ?)
There was a book written almost 150 years ago called “Extraordinary Popular Delusions and The Madness of Crowds” by MacKay, that chronicles various bubbles (Dutch tulip bubble, South Seas bubble, etc) and although these bubbles took place 200 to 400 years ago, human nature has not changed 1 iota, so the stories read no diffferent. (aside from the toxic loans… ha)
Highly recommended~
Never heard of that book. I remember a book published a year or so ago called The Wisdom of Crowds written by a New Yorker columnist. I wonder if the guy bought a house recently?
This is an interesting topic and if I recall correctly was addressed as “resonance” and the “feedback loop” in Robert Shiller’s book Irrational Exuberance. Probably not a bad idea to give Shiller’s book another reading at this stage of the bubble.
Yes, it’s kind of like reading the crazy revolutionary predictions about the Internet in 1998. Or Ross Perot’s rantings from 1992. Now we can see how foolish we were to believe any of it.
I highly recommend Shiller’s Irrational Exuberance book, both the first and second editions.
Warning: Neither is a book to be raced through in an evening. More likely, it will take you a couple of weeks to read one of them. You have to keep putting the book down and giving careful thought to what Shiller’s saying.
A great book written in the 1840’s.
In L.A., during it’s last 2 housing bubbles, there was a Bush Presidency, for virtually the full ride of both bubbles (i’m thinking the carnage from the current one will be most cruel, til around Jan 20, 2009)
Coincidence?
Today’s math lesson– What’s cheaper the $40.00 domestically made fan purchased at WalMart in 1995 that lasts 20 years or the $20.00 import you can buy today that lasts 5??
Coincidence?? Just like drug dealers–WalMart has created a country of crapheads who have nothing better to do on their weekends then buy more crap.
And some of the talking heads say WalMart helps the little guys?? Sam Walton is doing cartflips in his grave…
“Today’s math lesson– What’s cheaper the $40.00 domestically made fan purchased at WalMart in 1995 that lasts 20 years or the $20.00 import you can buy today that lasts 5??
Coincidence?? Just like drug dealers–WalMart has created a country of crapheads who have nothing better to do on their weekends then buy more crap.”
I totally agree with you on this one, PV Tom. But assuming you’re not really female, something you might not know is that most American women do want to shop and do want to be constantly updated and hip. Throwing out the old cheap fan carries less guilt when the new fall colored fans come out that match the new $400 mixer. Snicker!
What’s YOUR definition of ‘recession’ and are we already in one?
Should GetStucco start his own blog? Or is the bubble blogspehere already crowded enough?
My biggest question right now is…WHY ARE HOUSING STOCKS DOING SO WELL??
Its obvious to me that the new housing buisness is going to get a lot worse before it gets better.
Is this a dead cat bounce, a fools ralley? I just dont get it.
How long can/will this continue?
OK–I know that Zillow is crap, but can somebody explain where their numbers are coming from exactly? Is it property tax valuations and comps? Here in the Twin Cities I have been following a few properties in a St Paul zip code that I am interested in, yet since October ‘zestimates’ have been going up, significantly. A small ’20s bungalow has gone up over 40k since mid-Oct. Huh? Now it is ‘worth’ over 300k for 1200 sf in a place w/ a median income of ~44K. Notably 2007 tax estimates have come out (I think), so is the high zestimate from wishful local government valuation or because my longed for price drops still are not happening in any way shape or form(we ARE special here)? Insights much appreciated.
I would like to see a discussion on what “nebulous” indicators do you see pointing to a recession:
I will go first:
I was at a trade show in LA and noticed that a lot of women wearing long dress skirts. Recalling from my early econ class:
An indication of a recession is long skirts. Short skirts/fashions indicate a booming economy.
I drive through Visalia, Ca. about once a week and there are 1/2 a dozen 50 house lots that the graders are doing their thing to and it looks as if they’ll build the houses, although there is no need for more new houses, with over 2,000 on the market, in a city of 100,000.
What do you think goes on in the brain trust of the HB’s?
Is it that they’ve bought the land and all the building material already and full speed ahead, damn the torpedoes, or are they just house building savants that don’t know any better?
I posted this on Mish’s blog, but I noticed a few weeks ago that Home Dumpo isn’t even staffing the registers in the middle of they day now. Just one person at the ‘”self check out” section.
How much does one low wage cashier cost? They must be pinching pennies.
I visited Home Depot last summer when I was in the States. Nobody was at the checkout registers. I thought to myself WTF? Nobody wants to take my money. Finally someone directed me to the “self check out” booth and I almost laughed my azz off thinking about how that “self check out” booth would go down in Moscow. I left the items I wanted to buy at the booth and went to Lowes.
I have watched shoplifters walk right out the door with the alarm going off at HD. The staff doesn’t do anything.
In mid-October, I visited a Lowes store in Tucson. Only one cashier in the main store, and this was on a lovely Saturday morning. (Perfect for doing projects around the house and yard!) The garden center had one cashier station open, and they briefly opened a second to handle a sudden uptick in traffic.
Go Long Gold and Short the S&P
As I track the Britney Spears’ long skirt/short skirt trend, I conclude that the economy’s on fire!
How long did the “psychology” of the market continue to push home values up even after fundamentals were out of line? How long will the “psychology” of the market continue to drive home values down even after fundamentals get back in line?
Ken, this would be a great topic.
Also, being a total newbie, I have the following question: I realize that prices should eventually come down in places where there is a lot of excess inventory, but what of areas like the LA Westside, where I would like to buy a house? There’s no denying that there are quite a few ugly McMansions and more than a few suspiciously new monster SUV’s. But for the most part, houses are sensibly sized and people drive sensible cars that look a few years old.The Mc Mansion owner is certainly in for some rough times, but I don’t want his/her house anyway. Is it reasonable to expect that a significant number of people who own sensible homes are leveraged to the hilt and will have to sell in a market depressed by the speculators? For the time being, I don’t see that happening. If they are sensible, they will try to hold on to their house unless they absolutely have to move, won’t they? So far, in my area, there are a couple of crappy houses up for short sale, a sure sign of trouble. But they both look like your typical flipper who flopped, nothing like a real house coming into the market at a reasonable price….
Ben- I think I have a fresh topic for your den of housing bears.
I live in Santa Monica, I sold my home about a year ago and now I’m renting. My home did not appraise for the price the buyer offered, but they insisted on buying my house anyway even though it was valued 30k under their bid. The value of the home I sold dropped and I received a letter from my buyer (via my real estate agent) stating that they believe they overpaid and they had the nerve to ask me for 30k, the value of the property today. They gave me a long song and dance about how much money I made on the property and how it would only be fair for me to return the money. Of course I told them to take a hike. Would they have shared the $$ with me if the property increased in value.
Has anyone else had a buyer come back to them after the sale to ask for money? Buyers remorse is a bitch.
When does denial give way to acceptance, already? How much more evidence that the housing market is completely toast is needed before David Lereah and other cheerleaders are forced to wave the white flag and shut their yaps? Or will they have the intestinal fortitude to just keep lying away for six or more years until the market comes back again?
Well, I really don’t care what happens to the flippers. But I do wonder what will happen to all the folks that lose their homes when the bottom drops out. Where will they go? Live in a tent, under a bridge, back home with parents?
And even the flippers who got a huge HELOC on their current home to speculate in RE will be in the same boat.
A lot of people have no other places to go do they? I’m especially wondering about those who bet the farm (so to speak) on RE appreciation that are near retirement age. There seems to be quite a number in this category that are going to have a pretty miserable life to look forward to.
People are gonna get hurt and the epicenter for pain will be big city America…
Try and be somewhere else when the you know what, hits the fan.
Well, here’s a different sort of conversation…How many of you actually like where you’re living?
Seems like everybody complains about what an armpit their location is. NYC, San Francisco, San Diego, FL, Dallas, AZ, Boston, Chicago, etc. It sucks because of A, B, C, etc.; there’s no way it justifies a premium of any sort. And then…the great suck contest.
“It sucks, and I should know because I live there.”
“No, my city sucks more than yours. I can’t wait to leave.”
“No way, you don’t even know suckage until you’ve lived in my city!”
“I would kill to get to ’suckage’. You have it easy. Where I live…”
Ben,
Topic suggestion: Are we looking in the wrong place for ‘ground zero’?
I’ve seen San Diego (and California in general), Las Vegas, Phoenix, DC and Florida talked about a lot, plus references to places like Detroit and Denver.
However, if you look at the latest NAR figures the area that seems to be going down fastest as a region is the North-East (I acknowledge there have been several threads on NY and Boston).
35K (12.1%) drop in median, and 24K (7.6%) drop in average over the last 4 months. That just has to be curdling the milk in recent buyer’s coffee.
I think some interesting data that could help clarify the housing bubble, is a ratio of the number of houses for sale per number of households in the local real estate market. For example, I live in Pensacola, Florida, and my un-scientific calculation yielded 1 house for sale for every 15 households. House being defined as detached house, condo, townhome, mobile home, etc., but not land or commercial properties.
My over-simplified calculation was: US Census data for number of households + allowance for population growth / (Number of MLS properties for sale + estimate of properties FSBO - allowance for pending sales).
Does anyone know if data showing the ratio of properties for sale per number of households by major metropolitan area is available? What other variables should be included in the calculation? Is this ratio meaningful?
Thanks for any input.
Now that we have feasted on the first of this season’s holiday meals I am wondering how everyone’s family and friend conversations went this year. In the past many of you have posted about the discomfort you experienced when others in these types of gatherings were boisterously professing their economic sainthood based on their paper wealth. And in many instances I have heard of (and experienced) a level of arrogance from the bulls that was pretty nasty.
How are things now? Have the rude and arrogant found humility? Any apologies? Horror stories and I’m a victim tales? Inquiring minds want to know.
My worst experience with a rude bull left me searching for the oval oracle. He was not only arrogant, but insulting as he continued to posit that … wait, let me get the exact words here …. “PRICES WILL NEVER COME DOWN IN THE 92627 ZIP CODE YEAR TO YEAR …” Caps are his, not mine. This was sent to me on Sept. 11, 2006. I left that conversation with the idea that at some point one of us would capitulate and buy the other a beer. Not a peep since.
One relative is still bullish; he thinks RE is the best investment ever and remains detached from reality. I let him down gently quoting the 44 pct median drop in the Ft. Myers market; he’s ‘currently visiting’ from out of town.
Another relative in South Florida is still waiting for her realtor to rent her second investment property. She lowered the price already and is quickly approaching the 4th month since closing. She’s begining to blame the realtor for the problem — victim. I did not pour salt on her wound, she’s pathetic.
Any housing related stories after interacting with friends and family over the holiday?
I would like to open discussions about what will be worth investing in if the real estate market implodes and drags many average citizen with it. Will anything be put on sale for a long term play ( other than houses and land) if you have cash ready to buy?