“Provide Information And Let The Consumer Decide”
Friday desk clearing time. Florida. “Recalling its recent boom, Palm Beach County’s five-year appreciation rate was almost 130 percent, according to OFHEO. ‘Did wages and salaries rise anywhere near that much?’ asked analyst Mike Larson. ‘Of course not. Our prices were driven up by a massive wave of cheap, easy money and rampant speculation.’”
“‘The markets that boomed the earliest, and that had the biggest price gains, are the ones that are now flaming out,’ Larson said. ‘Unfortunately, that’s us.’”
“‘The old, easy model‘ for pricing a house ‘is to look at the computer to see what sold last year and add 5 percent,’ said Stephen Baird, president of Baird & Warner Real Estate in Chicago. ‘That model doesn’t work now. The market is going to tell you what a house is worth. You just may not like what the market says.’”
From Kentucky. “Paul and Rosanne Jantzen’s house has been for sale for more than eight months and has attracted near zero interest. ‘I’ve never seen houses sit on the market for so long,’ says Paul. His agent has told him, ‘Nobody’s out there buying. All you can do is sit.’”
“‘We’ve talked about dropping the price again,’ he says. ‘but we feel the price is extremely reasonable. We’re not going to give it away.’”
“Like the rest of the housing market, however, condo hotels are not immune to the slowdown, and several projects, after splashy sales releases, have quietly curtailed building plans because of sluggish sales and rising construction costs.”
“Turning a profit may very well be an unattainable goal, according to Dante Alexander, CEO of the National Condo Owners Association. ‘Most should not expect to make a profit even with full participation in the rental program,’ Mr. Alexander said. ‘The average condo hotel will generate $7,500 a year but cost you $12,000 a year.’”
“Hawaii’s economy isn’t likely to sour as badly as it did in 1991 and 1992 after the state’s last housing boom took its turn for the worse, said Carl S. Bonham, UHERO director. ‘The housing bubble wasn’t as big and our population isn’t downsizing. This is a slowdown; it’s not a contraction,’ Bonham said.”
“Circuit City put a price tag of $1,760 on a 42-inch plasma high-definition television at the end of the summer. By October, Best Buy was offering the same model for $100 less. Then, Wal-Mart dropped the price to $1,294 in early November. On Black Friday, Best Buy chopped its price again, to $999. Circuit City quickly matched, leaving Wal-Mart in the dust.”
“Economists say the housing slump has made average Americans a lot more cautious, cost-conscience, and for the first time in at least a couple of years. ‘Now that housing prices have stopped rising, people are returning to more normal behaviour,’ explained economist Mark Vitner.”
“Century 21 Canada’s latest national house price survey indicates that there has been absolutely no growth in real estate prices in Vernon during the last six months.”
“‘Prices aren’t dropping but they’ve levelled off,’ said (realtor) Bill Hubbard in Vernon. ‘I want to stress that we’re not tanking. We’re into a good healthy, balanced market. It’s a better market than a year ago because it’s not as radical.’”
From Oklahoma. “Bob Schiermeyer, planning director for the City of Edmond, said building permits are often down this time of year. ‘We have an inventory of over 2,000 lots right now. All are ready to build. This is probably the biggest inventory I’ve seen since the biggest booms we’ve had. I think people are saying, ‘Let’s see how things go’ right now.’”
From Texas. “Even though San Antonio has a robust housing market, you can still negotiate with builders when purchasing a new home. While the inventory of homes for sale is still low, it’s starting to grow slightly. Builders have noticed a bit of slowing in the market. ‘They’re beginning to get a little bit nervous,’ said Jim Gaines, research economist at Texas A&M University.”
The Dallas Morning News. “Lately I’ve been getting calls and e-mails from folks who don’t like what they read about the housing market. They suggest that we quit writing about the slowdown in home sales so that the housing boom can catch its breath and take off again. Some real estate professionals think that’s the way to handle the modest slowdown we’re having.”
“I’ve reported on the real estate industry long enough to know that it’s a business that runs on good news. But every so often in the real estate cycle, activity slows a bit. That’s what we’re seeing now. The days when real estate agents were the gatekeepers for the housing market have gone the way of typewriters and printed MLS books.”
“The key to coping in today’s online housing market is to provide as much information as possible and let the consumer decide.”
Another big reports week! My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
Friday desk clearing time. Florida. “Recalling its recent boom, Palm Beach County’s five-year appreciation rate was almost 130 percent, according to OFHEO. ‘Did wages and salaries rise anywhere near that much?’ asked analyst Mike Larson. ‘Of course not. Our prices were driven up by a massive wave of cheap, easy money and rampant speculation.’”
i love this guy. why can’t we all be truthful? why can’t we all just get this bubble right?
I am secretly hoping my old school Toshiba 28″ tube set dies (that is taped with packing tape to keep the cover from falling apart after it was dropped), so I can finally get a plasma TV.
It was not that long ago when plasmas were 10K.
faster than expected drop, kinf of like housing
http://arstechnica.com/news.ars/post/20041129-4422.html
from 2 years ago
ever, if you can hold off on snapping up a new flat-panel TV for the time being, your purchase will likely cost you a lot less. Similar to PCs, LCD production is becoming a commodity venture, which means lower prices for consumers. A merchandise manager at Sears is predicting that a 20-inch LCD TV which costs between US$700-800 now will retail for under US$299 by mid-2006. Similarly, a 42-inch plasma TV which runs close to US$4,500 today will retail for US$3,100 by the end of 2005 and US$2,250 the following year.
Keep your Toshiba until it gives out and save your money. Why buy a 42″ plasma screen tv just to watch the same crap but bigger.
The government IS still going to give us all $200 coupons for new sets, once broadcasters have to cut over to digital transmission, right? I figure corporate America will be squarely behind this, since people need TVs to watch their ads. I’m waiting for my coupon.
My guess: 42-inch plasma high-definition televisions will be selling for $399 within a year. But this is just a guess, folks.
i disagree. However, HD programming is still very few. No disputing that a true HD viewing is worth the money..$990 for 42″ plasma.
HD Discovery alone and playing DVDs si worth a big tv. Especially if my old tube TV dies. Gotta admit, with S-video it still looks bretty good.
DVDs? S-video??!? My friend, you are FAR from HD.
HDMI or component interconnects + a quality upconverting DVD player (look for reviews at A/V websites, plan on $200) = movie bliss.
I bought a 42″ Panasonic plasma on Black Friday for $1199. Hell of a TV; absolutely stunning picture. It may have been a crass consumer purchase, but I drive a car with 160K miles for just that reason.
I bought a 34″ Sony XBR widespreen (CRT), TRUE hi-def (1080P) last October. Consumer Reports gave it their highest rating and the hi-def picture is well worth the $1800 I paid (now down to about $999). Love watching the Discovery channel with the kids - incredible, rich color and details. I’ll wait a couple years to replace the 27″ Toshiba in the basement with a flat-screen, as the technology is only getting better. Unless, of course, I can pick up a cheap HDTV from some FB’s distress sale.
I’d buy me one of them newfangled plazmoid teevees, if only I could find something on it to watch.
I’m with you, Bubbly. The scarcity of compelling content is why I don’t own a teevee.
I got thirteen channels of $hit on the T.V. to choose from.
NetFlix.
I’m considering canceling cable. It’s that simple people. And yeah, it looks great and worth the purchase.
Gotta agree and the $1200/yr extra I’d have to pay for the high def for that content….well, I’d rather go on vacation and see, do it for real. Nothing against those that do - a personal decision!
I’m bad. I use a Sony commercial 3 CRT projector from the early 90s. It delivers a 120″ picture, driven @ 1280×1024 from a PC with a wireless keyboard and attached to a decent audio rig. I can tune HDTV on the PC from over the air, but the PC isn’t really fast enough to handle it. So I pretty much stick only to DVDs, content downloaded from torrents and friend’s tivos, and streaming video. I’ve watched content from google video without issue. I subscribe to the cablemodem service, but no TV. It works well, but technology is rapidly catching up and I will probably look at DLP projectors when the LED light sources are cheaper and in the front projection DLP projectors. My setup is only good when it’s dark out, but that is okay as I don’t watch too much TV.
I will buy a low res plasma when they are $400 or so. I’ve seen them as low as $700 on the craigslist. I’ve gotten some pretty nice deals on craigslist recently, can’t imagine what the future holds.
Your best, uncompressed picture comes from O.T.A. (over the air) It’s not the snow channels you might remember…Good documentary channels available too.
Check out this site. If your zip works, go down and buy an HDTV plasma.
Worth the money IMO.
http://www.antennaweb.org/aw/info.aspx?page=more_info
get the lcd. they’re much better than the plasma.
Agreed. Sony LCOS > Sony LCD (Bravia) > all other LCD > plasma > DLP (if you don’t see rainbows, I do though) > CRT (for weight only)
SED is the tech to watch, but I doubt it’ll arrive next year
If you have the room for a tube tv the Sony XBR is what all other tv’s are compared to. It simply is the best! I paid $1900 almost 2 years ago for it. They are around $1,000 now but they eliminated some of the features of the old model . 34″ and comes with a 2 year warranty but this set is around 200 lbs.
the sony bravias are awesome. I did see a Sony DLP propjection that looked amazing .
I wouldn’t buy a Plasma or LCD unless you have plenty of HD channels. Standard Def is upscaled and looks like crap on most of these large sets. If you can hold out for about a year, SED tv’s will be out that blow the doors off of Plasma and LCD. They’ll have to come in at a pretty competitive price.
I have a Magnavox 19″ CRT color TV with remote that was assembled in Greeneville, TN on June, 1988. I only watch the TCM channel, and those old movies do not look any better now than when they first came out. Also, I use my Heathkit IG-5240 Color Generator to perform a touch-up convergence every few years. I have no real need to spend all of this money on fancy stuff that does not improve my quality of life appreciably.
I have had a Toshiba 27″ since 2000 and I have to say that it’s the best TV that I have ever owned.
I will get an HD TV when a nice sized, good quality one costs around $ 500.00. Not before then.
I am thinking that I should be able to do that by next summer. I am betting that the Chinese are gonna flood our markets with even cheaper electronics to tease more cash out of Americans ever-tightening wallets.
“‘We’ve talked about dropping the price again,’ he says. ‘but we feel the price is extremely reasonable. We’re not going to give it away.’”
And, apparently, you’re not going to sell it, either. They’ll chase the market down, just like all the others that aren’t going to give it away. Greedy idiots.
Oops - I posted a similar sentiment below… wasn’t trying to parrot your ideas.
Looks like this statement got to a lot of us, and we all know how it will end for folks who are too emotionally tied to their home and “equity” to lower their prices. Many more folks out there trying to sell are thinking the same thing, and in six months they’ll be beating themselves up for not lowering their prices earlier and taking the earlier low-ball offers, since all of the offers will just keep going lower and lower.
Are you selling it for less than you bought it for ? Are you taking 50% less then you have to out of the goodness of your hearts ? Then how exactly is it again you consider it “Giving it away” ?
According to that article nothing is moving anyway, at any price. He probably would have a hard time giving it away, at any price. Who on this blog is like me and way too lazy to contemplate spending their life mowing 7 acres of lawn? If you can’t smoke the grass, it really isn’t worth having.
Give me a lawn like they had in the backyard on the Brady Bunch and I might think of buying it. Until then this guy doesn’t have to worry about letting go of his “precious”. How many houses are turning in to Golems as we live and breathe? I sense a Stephen King book coming about some guy that couldn’t sell his house or “give it away”. It will be to houses what Christine was to cars.
Waiting — that’s the line that got to me, too. What’s your priority, bub? The #1 quotation that I transcribed from day planner-page to the next, for the past 20 years is, “What do you want, and what are you willing to trade for it?” Not wishing to sound flamably monumental, once I absorbed the meaning of that question, it changed my life forever after. I realized I will never have it all.
Neither will these folks. No way, no how.
“His agent has told him, ‘Nobody’s out there buying. All you can do is sit.’”
“‘We’ve talked about dropping the price again,’ he says. ‘but we feel the price is extremely reasonable. We’re not going to give it away.’”
And because of this brilliant advice and stubbornness, you’ll never sell…
From the looks of her, she’s been doing too much sitting. They have 24 acres. Might be time to start jogging.
LOL. Thought the same thing. She should be cutting the grass with a push-mower.
And what did they pay for it 20 years ago? $40k? But they don’t want to ‘give it away’. Idiots.
I understand greed but have no sympathy for gross stupidity. These people will chase the market all the way down, and Bubba can keep cutting the grass till he croaks.
Maybe she could get some exercise by cutting down the trees they talk about in the article.
Psychologically its very difficult to come to terms with the fact that the pricing you’ve become familiar with was all just fake. A house has an empirical value that is set by the market. To now realize that in reality the market, and this one even more so, injected a huge artificially high valuation on the property that is now gone.
On one hand you never had it to begin with so its not a real loss. You can cut the price, still make a profit & move forward with your life.
Others who HELOCed or NegAmOpARMED it or 125% financed it etc, and put you in a real financial corner where you must get the fake price that no longer exists then you are screwed unless you have the cash to bring to the closing table. (To a certain extent people in this situation deserve it).
But with this negative psychology leading to a NO BUY at all entrenchment or overshoting on the low end of price and demanding prices that cut muscle & bone and not just the last 5 years of fat, this will hurt everyone.
Those that bite the bullet and bow to the new downward price pressure will either be priced out due to low to no equity transfer or the will demand their pound of flesh to purchase there next home reinforcing the downward cycle of prices.
Where will it end, no one knows, but all of people who must sell as part of the normal progress of life changes the next 5 years will be directly harmed one way or another and as it cycles through the economy we are all harmed.
We have the misfortune of living in interesting times, hold on tight.
“‘We’ve talked about dropping the price again,’ he says. ‘but we feel the price is extremely reasonable. We’re not going to give it away.’”
There it is again! The seller mantra…”we’re not going to give it away”! How many times are we going to see this in article after article? I guess until we see “they took it away”.
“You’ll get my house when you pry it from my cold dead fingers.”
The bank will never get the house. The land, sure, but the house is going up in flames before the bank gets its greedy hands on it. That’s their castle.
“The bank will never get the house. The land, sure, but the house is going up in flames before the bank gets its greedy hands on it. That’s their castle.”
A few notes on repos and torchdowns… In Reno, an old historic mansion on Arlington Ave. was torched mid remodel this past week. Investigators say it was arson, and are remaining tight lipped as they conduct their investigation. And, 2785 Skyline Blvd. (around the corner from where I grew up) is an REO listed at $535,000 on the mls. It is in horrible disrepair and will never garner that price. Upon checking the sales history, it was just purchased 5/17/06 for $530,717! This reeks of fraud. I cannot see how any property can go into foreclosure so quickly.
I live in Pacific Beach. CA and a house just went up in flames about a block from my house last week. On my way home I’m gonna get the exact address and check out the purchase price on zillow. My neighborhood is infested with speculators that know they’re about to get screwed. I wouldn’t put it past them to try the arson / fire insurance way out.
I live in near there also and arson was my first thought when I heard about that place. Please let us know what you discover!
And obviously their castle is an hour away from decent paying jobs. So, the next king and queen of that castle can spend their lives trapped in their Honda or Ford driving to and from Louisville to pay for the Jantzens’ new lifestyle.
“Paul and Rosanne Jantzen’s house has been for sale for more than eight months and has attracted near zero interest. ‘I’ve never seen houses sit on the market for so long,’ says Paul. His agent has told him, ‘Nobody’s out there buying. All you can do is sit.’”
Or drop the price.
Or bake cupcakes.
Or get the St. Joseph statue.
Or throw in some vehicle or trip.
Or…or…or… OK, maybe they should drop the price.
And actaully, dropping the price might not even do it, now. It just may be illiquid for a while.
Oh no — if they drop the price down to $0, they can find a buyer by tonight.
Cut 5% per week until you find the value of your home.
Not sure $0 might even work for some houses. There are houses where the taxes, assessments and upkeep are so high that free even a fair price. You can’t always afford free.
There is an apartment building in Natomas that went condo. The property has 4 assessments on it and the seller can’t pay them until he sells. To cover that, he’s now increased the price after steady declines to 98,000 from 85,000 for a 1/1 516 sqft. Good luck >; )
$98,000 for a 516 sq. ft. studio apartment? Heck, if they can move it to New York City I will buy it tomorrow. I’d sell everything I can and pay cash if I had to.
“Economists say the housing slump has made average Americans a lot more cautious, cost-conscience, and for the first time in at least a couple of years. ‘Now that housing prices have stopped rising, people are returning to more normal behaviour,’ explained economist Mark Vitner.”
I guess nobody is buying McMansions for over $500K, then, because that is clearly not normal behaviour.
What this really says…
“Economists say the housing boom of the past 5 years has made average Americans stupid dupes, blind with greed, willing to commit fraud just to “get in the game” with dreams of riches. Now that housing prices have stopped rising, people are starting to realize that yes, they were conned, yes they committed fraud, and no, they can not afford the debt.”
“oops”, explained Mark Vitner.
“Lately I’ve been getting calls and e-mails from folks who don’t like what they read about the housing market. They suggest that we quit writing about the slowdown in home sales so that the housing boom can catch its breath and take off again. Some real estate professionals think that’s the way to handle the modest slowdown we’re having.”
Translation: Shhhh - don’t let anyone know housing is tanking. I still need to sell to more suckers. How am I supposed to make my Benzo and Hummer payments?
This is just an amazing statement - Realtors trying to shush the media because they don’t like what they hear now that the news isn’t all rosy.
Some real estate professionals think that’s the way to handle the modest slowdown we’re having.
Some other real estate professionals think that the way to handle the “modest slowdown” we are having is one of the following: (1) bake more cookies at open houses (2) give away bumper stickers that say “If You Don’t Buy A Houses The Terrorists Win” or (3) hire David Hasselhoff as the new NAR spokesman.
On a related note, check this out http://www.theonion.com/content/node/55941
Shhhh…..Hush this Bubble Talk :)….
________________________________________________
Game over for the Realtors.
“I’ve reported on the real estate industry long enough to know that it’s a business that runs on good news. But every so often in the real estate cycle, activity slows a bit. That’s what we’re seeing now. The days when real estate agents were the gatekeepers for the housing market have gone the way of typewriters and printed MLS books.”
…… Realtors will fade away forever after this Mother of All Busts.
public service to close italics.
Bank of America’s CFO Resigns
12/1/2006 4:59 PM EST
In a Friday 4:30PM press release, Bank of America has stated that Alvaro G. de Molina has announced his intention to resign from the company. He is leaving to pursue “other business opportunities”. He has done a great job presenting the Bank of America “story” to analysts and investors, but has only been CFO for 16 months.
The shares are trading down an additional 1% in after-hours trading. No doubt this is a disappointment, and will be extensively discussed by Wall Street next week. I will have some more comments then. Have a good weekend.
What’s up with so many CEOs resigning? Rats leaving a sinking ship?
My guess is these greedy, corrupt CEO’s have seen the writing on the wall now that the Dems are in and are getting out. Henry Waxman (Dem) from California is going to go after this corrupt administration like a pitbull. We can expect a flood of hearings in an attempt to discover just how corrupt the Republicans have been over the last 6 years. My guess is this has been the most corrupt since before WW2. Of course, with the Republican party in power, that meant the CEO’s were free to loot and steal and commit fraud by backdating their options without any fears they would come under scrutiny. Before anyone posts saying the Dems are also corrupt….I agree but not anywhere near as this gang.
What an idiot!
Backdating become big back in the good old Clinton days. It’s only being caught now because the Sarbanes-Oxley rule changes made it possible to see what was actually being done, so give Enron some credit here.
The DoJ and SEC have been pretty busy - SEC investigating back dating, DoJ doing a lot of antitrust stuff (DRAM maker caught, now investigating SRAM makers and graphics chips makers). But I suspect that this is non-partisan — most of these decisions are made by civil servants, who I think would do the same no matter which party is in power.
BTW, here’s an interesting look at Pelosi:
http://www.realclearpolitics.com/articles/2006/11/the_nancy_i_knew.html
Insider Trading Report:
Standard Pacific - $525,000 by CFO this month
Ryland - $3.58 million by CEO last month
Toll Bothers - $24 million sold by Bruce Toll in last two months
Countrywide - $29.4 million sold THIS MONTH
B of A - $58 million sold THIS MONTH, $26 million of it sold by CEO
Wells Fargo - $3.5 million sold by CEO this month
New Century - $12.5 million last two months
Those are just the ones I had time to look up, but you can see the trend of insiders getting out of their own stock.
You know they know something……………
Insiders are always selling, whether their company is doing good or bad. Historically, not a good or proven indicator in the direction of the stock.
I agree, Dimitris. I never have bought the whole insider selling/buying argument. Still see it taken as gospel a lot, so maybe we’re wrong. These guys have boatloads of stock.
Note that the Enron mess began in 1996, who was running things then?
The GOP Congress, of course.
A Democratic President and a Republican Congress.
All politicians are corrupt. I have lost faith in both Dems and Republicans.
Pointlines: I will have a beer with you any day. Not sure why so many threads include party bashing, but it is hard not to see that both of the big two aren’t worth a damn. They each have their own little hot button issues in order to placate their core, but overall D.C. is just a big cesspool.
Pointlines and CA Guy — I agree. Neither of these two parties are worth a damn, and D.C. is just a big [political] cesspool. Only critical thinking about the actions of government officials, and voting thereupon, have any chance of changing the direction of our country to the positive, IMO.
At least you’ve made the first step. Kudos for that.
CA Guy:
Beer? Right on.
I live in Orange County CA. Yeah, a Guinness would taste pretty good right now. Chip, youre welcome to join us.
I hope Henry Waxman kicks butt and takes names. He is a good guy!
Yes, I hope Waxman turns out to be what he seems to be. However, not according to that moron BearCat who defends these CEO scam artists and right wing con-men. My posting concerning corruption also stated there is corruption in the Democratic party as well to which that idiot BearCat responds that it started under Clinton. Yes, with a Republican congress and back then NO CEO was walking off with $400 million (Exxon) or cashing in (or trying to) backdated options, etc for $1.5 BILLION. Worse, they spout b.s defending their actions (and greed). Yes, $1.5 billion is the number UHC CEO McGuire was/has been attempting to slip beneath the radar………and by the way BearCat, I shouldn’t have too much faith in the SEC if I were you. I have personal experience dealing with them and I came away with only one conclusion…………they are in business to protect the big guys and ONLY when the conduct of the big guys becomes so outrageous and EVERYONE is looking, do they do anything. However, BearCat, keep waving the flag.
Both parties are equally corrupt. Both are wholly owned subsidiaries of Wall Street and the multinationals. They are not going to bite the hand that owns them.
You’re right on Sammy! I have a sense that the higher anyone goes in any organization, the less individual or authentic the become. The very nature of advancement up the ladder based on popularity or satisfying others guaruntees that those who advance will sell out to others to get ahead. In business we conform to make those who may promote us comfortable with us as being like them. In politics we end up saying what voters want to hear on the one hand and doing what the powerful (lobbies, corporations, more senior politicos) forces dictate.
We get what the process spits out. Yes-men/women and/or liars. Independent thinkers are pruned out early on because they can’t help but shake up the status quo.
Let’s see, last month David Liar spinned the housing slump price declines as positive because he said “Pending Sales of October is up! We are through the bottom!” during September data release. To his credit, October does end up with 0.5%.
However, during the release of October data, I did not see him spinning any positive numbers. Guess Novermber will be a lot worse than October in both prices and sales. Maybe seasonality play a part as well.
Shhhhhh! Don’t mention a slow down in Dallas. If the Dallas News keeps quiet, the slow down will go away like chicken pox.
Jeez, no wonder these idiots who bought into this ridiculous “greed boom” cannot see WHY the property market is tanking. If they really THINK the Dallas News is the cause of the slow down, they deserve to lose their houses, go bankrupt and end up living in a $40 a night motel for the next 10 years until their bankruptcy clears. By then they might have developed some brains. If not, they will probably get suckered into some other “get-rich-quick” boom like the late 1990’s tech rally or another property boom or maybe it will be time for the old oil lease scam to re-appear.
Exactly. The boom went bust all on its own, even while the MSM was still writing stories about the boom. So, the MSM is a lagging indicator, so it didn’t cause the boom to stop booming.
Although, since the boom was a mania, they will help to change some of the psychology that led to the boom. But, that’s just how manias happen. I guess the MSM shouldn’t have reported on the stock market during its crash, either. Then it wouldn’t have crashed. The people blaming the media for the crash are clearly biased (realtors) and/or ignorant.
You’re so right. An otherwise sane friend of mine, whose only REIC connection is that she owns a small apt building, has been blaming the media for the decline. I asked her if she thought the newspapers caused the stock crash in 29. No answer.
It really seems like blame the media is going to be the m.o. for these Realtors. They loved the media attention when housing prices were going up with a steeper ascent than Superman at Six Flags. Now they are going to blame the media for the “modest slowdown”.
This last couple weeks especially, there have been more and more Realtors crying about the media’s coverage of this crash. You can’t have it both ways.
That’s because these Realtors are, for the most part, cut from the same right wing, christian cloth as the GOP, Christian Coalition, Family whatever that blame the media for every other damn thing. It’s the only thing they know how to do. Whatever you do, DO NOT take responsiblity for ANYTHING.
OTOH, the agent I had (for buying this house) was a flaming liberal.
Audet — the realtors are from all over the map. We all agree that almost all of them are wrong in their happy-happy forecasts, but that does not in itself cast them in a particular partisan mold — especially the “associates” (or whatever they are called), the grunts on the street. Partisan name-calling is OK at times, but not gratuitously.
“That’s because these Realtors are, for the most part, cut from the same right wing, christian cloth as the GOP, Christian Coalition, Family whatever that blame the media for every other damn thing. It’s the only thing they know how to do. Whatever you do, DO NOT take responsiblity for ANYTHING.
”
What you talkin bout Willis!!! That has to be the weakest transition from the housing bubble to “hate righty” I have ever seen. Keep it coming though…It’s very entertaining.
They suggest that we quit writing about the slowdown in home sales so that the housing boom can catch its breath and take off again. Some real estate professionals think that’s the way to handle the modest slowdown we’re having.”
Let me translate that for you. There are several high profile condo buildings in Dallas downtown and uptown that are not sold yet and the Perot, Jrs., Craig Halls, Lucy Billingsley’s (all very wealthy) would appreciate it if the local rags would stop writing about a slump in the Dallas market so they can continue to fleece the Californians and others who continue to believe that Dallas is a “value.” How “value” translates into $800K to $1M downtown condos escapes me but maybe that’s why I am a bitter renter and Trammell Crow can spend $50K a month watering his lawn.
Oh, and Karl, I’m starting to see a few “distress” type sales in those M Streets and lower Greenville McMansions. As expected, prices in the 600K and up range - way way WAY above the historical norm for that area.
Interesing condo hotel story in NYC. Housing is prohibited from manufacturing zoning districts here, so that residents won’t more in and start trying to harass businesses out to raise their property values (no trucks on our neighborhood streets!)
Hotels, however, are permitted.
So The Donald files a building permit for a hotel with kitchens, intended to be sold as a “condo hotel.” Of course, if the owners want to occupany the hotel units year-round, the city could try to get a subpeona to prove it.
Expect a rush to build these things in sub-par locations before the city tightens the rules.
Well, considering what it costs to spend a night in NYC now, you guys certainly could use a few dozen more hotels.
People returning to normal behavior, huh?
How about the truth, or at least something slightly more accurate?
People don’t have any money.
Or this: People are in debt up to their eyeballs already.
Or this: People finally pulled their heads out of their asses after watching friends, family, neighbors and colleagues foreclose or go bankrupt.
What’s interesting to me about the fall of RE is what people in other industries not related to it are saying in many instances. For example, I went to the GM corporate blog and one of the replies to a posting was:
“And we already saw when GM stock was going up this year all of Wall Street was counting their windfall. Once dead and dying portfolios saw signs of life, Blue chip stocks came out of their 5 year slumber, money once tied up in real estate coming back to the market. The dow tested new highs and blew past 11,000.”
As you can see, some people are viewing the changing focus of investment returning to more sustainable industries as a positive. I certainly do. I always thought the idea of RE investing as being stupid anyway.
BMW released a statement yesterday that they believe that the popping of the housing bubble is going to affect car sales. They also talked about the possibility of a recession and what auto makers would do in that scenario.
Actually, it’s interesting that car makes like BMW, Mercedes, and Audi have had record sales throughout the bubble. If you recall the last “bubble” in the late 90’s, many Luxo-makes suffered falling sales then as well.
At the same time, makers like GM, Toyota, Nissan, maybe Ford will probably have better sales because they sell a larger portfolio of econo and mid-entry level cars and trucks. During the tech bust, These brands weren’t as affected. I can believe BMW had great sale s due to a surge in people refinancing their homes.
Affect car sales? In a good way or bad way? After all, you can live in your car, but you can’t drive your house.
That’s interesting. German auto supplier branch in our town has been hiring like crazy…open houses….Now Hiring posters everywhere. BMW contracts one of the reasons.
“‘The old, easy model‘ for pricing a house ‘is to look at the computer to see what sold last year and add 5 percent,’ said Stephen Baird, president of Baird & Warner Real Estate in Chicago.’”
Huh?? The ‘old, easy model’ for pricing a house for the last 5 years in my neck of the woods (SoCal) was to see what it sold for last year and add 20-30 percent! 5%?! That’s barely inflation. Who does this guy think he’s kidding?
Inflation typically runs between 2-3%, and housing runs about 1-2% above inflation (long term). So given 2.5% + 1.5% = 4%, the 5% number he quoted isn’t too far off for a “normal” market. Of course, when is it ever a normal market?
Real Estate Weekly
http://www.marketwatch.com/news/story.asp?column=Real+Estate+Weekly&dist=nwtreal&siteid=mktw
THIS WEEK’S REAL ESTATE STORIES
Conditions in the housing market have continued to deteriorate, if
you’re a seller. If you’re a buyer, you are wringing your hands with
glee.
The latest survey of market conditions from HouseHunt Inc., an Internet
real estate firm, showed just how tough it is: All six of the market
measures the Web services uses in its surveys of real estate agents
across the country posted declines in the third quarter.
First, the time a house stays on the market before selling has
continued to lengthen. Only 26% of houses now sell within 60 days
compared with the 45% of houses that sold that fast in the first quarter
and 75% that sold that quickly two years ago.
Second, 52% of real estate agents say there are more sellers than
buyers in the market versus 36% who say the opposite; 12% report a 50-50 split. Two years ago, buyers outnumbered sellers 66% to 14%, with 20% of markets split 50-50.
Third, the inventory of unsold houses is growing. The number of agents
reporting a “good supply” of homes on the market hit 89% at the end of
the third quarter, up from 81% in the first quarter and up from just 36%
two years ago.
Fourth, barely half of sellers say they are getting 95% or more of
their asking price when they sell. That number was 75% in the first
quarter of this year and 90% two years ago. Fifth, only 25% of sellers
report multiple offers on properties for sale, down from almost 80% two
years ago.
Finally, selling agents confirm that home-price appreciation has cooled
considerably. Only 11% report prices increasing 10% or more and
one-third report price declines. Two years ago, one-half of agents said
prices were rising 10% or more and none reported declines.
“Although random based and not statistically pure, we feel that our
surveys of member agents reflect the opinions and actions of home
buyers and home sellers at the time they were conducted,” said Michael
Bearden, CEO of HouseHunt, Inc. “The surveys give us an insight into
today’s marketplace, show us where we’ve been, and helps us anticipate
future market trends.”
The HouseHunt survey, which is from the front lines of the market where the agents are slogging it out each day, is in line with other data that shows a still-tenuous market. While existing-home sales were up last
month, new-home sales tumbled again. And the latest home-price numbers from the government regulator of mortgage giants Fannie Mae and Freddie Mac as well as from a private home-price index confirmed the cooling trend.
You can expect buyers to retain the upper hand in most markets for some time, as that inventory of unsold homes works itself off. But with
long-term mortgage rates creeping back down near 6%, those buyers who are taking their sweet time today may decide to jump all of a sudden if they sense those rates, now in their favor, are starting to turn against them.
Steve Kerch, real estate editor
——————————————————————————–
I can’t wait for the interest rates to go up and turn against sellers, as higher rates imply a lower market value for debt-financed big-ticket assets (like housing). If you think they are having a hard time selling now, just wait until mortgage rates rise 100 bps as the Fed does what it can to save the dollar from collapse. You ain’t seen nothing yet!
Glee, here.
“Second, 52% of real estate agents say there are more sellers than
buyers in the market versus 36% who say the opposite;”
More than a 1/3 consider their market a seller’s market? I find that hard to believe.
There are always exactly as many sellers as buyers.
Wannabees, that’s another story.
That means that consumers are feeling overly cautious, even after enjoying a windfall gain from sharply lower gasoline prices, he [Merrill Lynch economist David Rosenberg] said.
Gas windfall? Didn’t realize I had one. see ya, I’ m gonna go buy that 42″ plasma.
Gas is $2.66 here. From the way the MSM is wetting itself, you’d think it was $1.50 (you know, like it was back before the “blood for oil” program). But yes, I’m sure that whopping 40 cents/gallon savings will offset any pain from the slowing economy and housing bubble implosion.
Indeed, Comrade: This gas argument is lamer than a three legged horse, IMO. There is no way in hell these minor drops in price are going to save housing or the economy. I turn the channel whenever I see reporters discussing this topic. Do they really believe people will run out and buy some new designer clothes because this week it cost $30 to fill the tank, versus $34 the week prior? B.S.
Heck, CA, this was a fav argument with the bought-and-paid-for economists crowd.
We’re not hearing it so much, now that retail sales didn’t zoom as they all promised.
BTW, Comrade, let me know if you ever decide to not frequent this blog anymore. I want to appropriate your name!
Yes, that was also before the “Terrorists crash planes into WTC buildings program”.
Do you imagine that oil was going to stay low after 9/11 even if we continued with the Clinton “Fire cruise missiles into African aspirin factories to fight terrorism program”?
If so, you probably do sympathize with a “comrade” mentality.
Dear David Rosenberg:
I didnt get that windfall check, so please deposit it in my Merrill account and let me know once it is there.
‘The Dallas Morning News. “Lately I’ve been getting calls and e-mails from folks who don’t like what they read about the housing market. They suggest that we quit writing about the slowdown in home sales so that the housing boom can catch its breath and take off again.”‘
Sorry, pigs. You’re gonna be squealing for years to come, until even I don’t enjoy it any more.
‘We’re into a good healthy, balanced market. It’s a better market than a year ago because it’s not as radical.’
Stupid, thoughtless statement of the day. If prices haven’t fallen, if interest rates are roughly the same - it’s not a better market, it’s the same inflated, over-priced market it was. Not as radical? It’s the prices that are as radical as ever. This focus on slower home price appreciation misses everything.
Good point. Although the best market for a buyer is when houses are reasonably priced and appreciating at a reasonable rate, the next best market is when prices are high, but can be expected to rocket still higher — because the expected upside compensates for some of the burden of the higher price. But the absolute worst market is when prices are high, but the market is stalled or heading south: The buyer is stuck with the burden of paying high prices, without the expectation of rapid appreciation to make it worthwhile.
“But the absolute worst market is when prices are high, but the market is stalled or heading south: The buyer is stuck with the burden of paying high prices, without the expectation of rapid appreciation to make it worthwhile.”
It will get worse for would-be sellers when interest rates revert to historic levels. Because then the value of their homes will drop, as market values fall with higher interest rates.
Waitin’. Watchin’.
Top 10 Metro Foreclosure Rates
Detroit, Fort Lauderdale, Denver Top the List
http://tinyurl.com/yfqd5s
So interesting that no CA or AZ metro area is in top 10 yet.
yet
‘but we feel the price is extremely reasonable. We’re not going to give it away.’
Isn’t human nature amazing? People feel in their hearts that they DESERVE the highest prices, even when it’s clear they may have missed the boat.
It’s the same idiotic logic that drives people to continue to burn through money like Paris Hilton burns through bed sheets long after their incomes start declining. Deep down, they feel like they still DESERVE to live large.
Case in point: Cousin of mine who tried to leverage his way to prosperity is currently stuck with two houses that won’t sell. Monthly expenses are KILLING him - six figures on his plastic, the whole nine yards. So what do you think he did when his SUV’s lease came up recently? By a used car? Try getting by with just one car?
Nope. He went out any leased a brand new luxury German SUV. His credit is so bad right now that they wouldn’t even let him finance it directly - he had to get his inlaws to co-sign.
Now THAT’s denial baby…
The thing about people with bad credit histories is that they got that way for a reason. Just because they did something stupid in their past doesn’t mean they’ve learned their lesson.
I had a co-worker who went out and bought a brand-new car, and had to finance it at 19%!!! His credit rating was trashed because he had some student loan that he simply decided he wasn’t going to pay back. Now I had advised him beforehand that he didn’t need a new car, shouldn’t buy a brand new one from a dealer and should save his money and pay cash. Reason is lost on the unreasonable.
“His credit rating was trashed because he had some student loan that he simply decided he wasn’t going to pay back.”
BAD MOVE:
I hear that they are making getting out of paying student loans about as difficult as getting out of paying taxes to the IRS. Tell him he may want to check out the consequences as this will stay with him for life and they will be hunting him down to pay.
You would be surprised at the number of people who finance cars at credit card interest rates.
The dealerships sell cars to elements of our society that the courts have termed ‘unsophisticated consumers.’ It is a large and growing portion of our 300,000,000 people society.
The sales pitch consists of “how much can you afford a month?” and gets worse from there. These consumers usually say they can afford $300 to $400* a month, and the dealership constructs the financing around that. They place the consumer into a entry level car, jack up the price to that of a medium priced car, and hike up the interest rate into the high teens or lower 20’s. The terms are extended 60 to 84 months and a few extra warranties are tacked up. Bingo, $415 per month.
There are a million shady dealership tactics but this is just one of them. I don’t really have the time to detail the rest!
*$300 to $400 a month car payment, plus full coverage insurance, usually ranges from 20% to 35% of the consumers net income. Its what these people will spend on their cars. I’m a lawyer and had a only a $200 a month car payment.
Car payment of any size is insanity IMO. Buy a used dog till you can save the cash for a compact clunker.
I’m a lawyer, as well, and paid 12K, 5 years ago, for a Mazda Protege. Got 130K miles on it currently, and will run it into the ground.
I hate paying money for cars. Before the Mazda, I paid $1,500 for a used, beat-up pick-up. Drove it for a couple of years, but it was just too uncomfortable.
I had a coworker that absolutely pissed and bitched for a week because the IRS kept her tax refund to put towards her college loan she never paid back. She kept saying - “but I was counting on that money, its not fair”!
NB Bear — nice anecdote. Pumps us up. Too bad for your cousin, but he chose his own course. Thanks.
In-laws obviously felt he deserved it too. Wonder what the chances are they’ll be financing that decesion.
These people who are car rich and brain poor are getting what they deserve, IMO. I agree with you, it is not by coincidence that these people are always broke.
There is a businessman who owns car dealerships in two states who recently had to pay several million dollars to settle an insider trading case with the SEC. Now he is sueing his former broker to recover his millions.
The few times I tried to buy a new vehicle from his dealerships they emphasised payments, payments, payments! Nothing is negotiable with these people. And one time I tried to buy a used car from them; you gotta love the way they cursed me out as I was walking away from their bad deal.
“‘Did wages and salaries rise anywhere near that much?’ asked analyst Mike Larson. ‘Of course not. Our prices were driven up by a massive wave of cheap, easy money and rampant speculation.’”
Where were Mike Larson’s quotes the past five years? I guess the papers didn’t want their readers to know what was really going on. The fundamentals are too boring, flipping is fun!!
In D.C. the temperature reached the 70s today. It looks like the cold weather is behind us.
That’s right. Just ask the NAR. The NAR says trends never go down.
The front coming through tonight that will push it into the 40s is like the front that will hit the FBs in the spring. Down 40% suckers!
Winter temps have bottomed! Look for moderate appreciation. I can’t believe spring has arrived so soon!
Yup, that wave of warm air reached Maine around 10 pm. Spring is here. Time to put all those houses back on the mkt.
Yep. They are not making any more weather.
Here’s an interesting article from Sarsota, Florida that shows how local lenders are starting to pay the piper. (Sorry if it was already posted)
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20061201/BUSINESS/612010469
Excerpt:
“The pending foreclosures are the first sign of financial trouble resulting from the series of multimillion-dollar transactions by Husani and Tringali during the last two years — deals that, to some observers, typified the excesses of the boom-boom real estate market of 2004-05.
They also represent the strongest example to date of the potential risks that the region’s lenders put themselves in by assigning so much value to the properties when market prices were much lower.”
“A month later, Coast Bank began foreclosure proceedings after Tringali missed payments on a $4.9 million loan.
Last week, Tringali also faced a deadline on a $3 million line of credit from Bank of America originally due in July.
Another $14.5 million loan from Orion Bank is payable Dec. 30, while a $16.25 million loan from Fifth Third comes due on Jan. 12.”
“When that happens, he will be able to start selling the lots and recouping the hundreds of thousands of dollars he has spent to build roads and extend water lines.”
It is not just the integrity of the homes that have been built during this boom cycle that is of concern, it is the integrity of the infrastructure as well. It is going to cost somebody lots of serious money to dig up these water lines and redo them correctly. (We are dealing with a builder whose middle name is “inexperienced”.) If they don’t get corrected then what happens to the foundations in this very wet earth? Just a thought.
I can just feel the noose tightening on credit and the comps disapearing. poof. gone.
“It’s normal to see inventory increase in a slowing real-estate market…”
Isn’t that like saying, “It’s normal to see blood pouring from a person who’s been shot.”? Well, yeah, it’s true, but it’s really bad news nonetheless.
Congrats to Mike Larson for the great job he did in the PBP interview.
“Hawaii’s economy isn’t likely to sour as badly as it did in 1991 and 1992 after the state’s last housing boom took its turn for the worse, said Carl S. Bonham, UHERO director. ‘The housing bubble wasn’t as big .”
Poster boy for crack addiction.
It’s different in Hawai’i!!
Whatever, dude. Your state will likely suffer much in this downturn once all the west coast ass hats discover they can no longer “liberate” their equity for Escalades and vacations. It’s a nice place, but people need to eat.
“‘Prices aren’t dropping but they’ve levelled off,’ said (realtor) Bill Hubbard in Vernon. ‘I want to stress that we’re not tanking. We’re into a good healthy, balanced market. It’s a better market than a year ago because it’s not as radical.’”
Oh please buy a house. I really need a commission!
What part of good and healthy is a market where foreclosures are increasing dramatically and hundreds of billions of option loans will push countless more FB’s over the edge. What part of healthy is a market in which it is not possible to buy a home without lying on your application and takinng on two or three times more debt than you could possibly ever repay. Healthy? Oh Yeah, please buy a home, I really really need a fix!
http://tinyurl.com/yl2yeh
Daily Real Estate News | December 1, 2006
Optimism Takes Hold on Housing Market
Although there is no denying that the U.S. residential property sector is still soft compared with the previous three years, a growing number of analysts are beginning to hint that the country’s housing slump may be over.
Read this short article. It is total bull. “the housing slump may be over because HB stocks are rising and interest rates are declining.”
Well, it is REALTOR magazine after all. It’s just a mouthpiece for the NAR.
Recession in 2007?
Bet on it.
New Imroved Bernanke ™ Bubble-Repair Kit:
Just three EASY payments:
YOU GET:
- a worthless dollar!
- hyperinflation!
- stock market to die for!
- duct tape
- scissors
- K-Y jelly
- vomit bag
But wait - there’s MORE!
act now and you will also get a no-doc, no down, no nothing loan for whatever piece of crap you desire!
-YOU CAN’T LOSE! act now! operators are standing by…
Nice hunk of bear meat for everyone:
http://www.itulip.com/forums/showthread.php?t=663
Interesting point here that Dem. congress may be restrained in its spending habits, just as “conservative” Bush was the biggest spender of all time. They all have to appease their opposition once elected.
There might be a point to this. In our local congressional election, the Republican candidate (who eventually won) accused his Democratic opponent of being against “earmarks” as if that were a bad thing.
Az_Lender
Let’s look at it another way. The Dems sure don’t have to do much to give the impression they are being restrained! The bunch of crooks who have occupied the White House for the last six years make Democratic Liberal spenders look like Scrooge! There is a big difference though. The Deomocrats tax and spend - the Republicans cut taxes, print money to make up the difference and put our kids in hock for the next 50 years.
Does anyone have a good analysis of why the housing prices aren’t falling faster or at all in some regions yet?
I know…people are going to say just wait…but what are some people’s best guestimates as to when it’ll begin to tumble….or will it?:(
Incomes pure and simple. In my area in Southern California, the incomes are pretty high. Two people working and making $60,000 to $80,000 each (not unusual around here) can afford to hold on, even if they bought at the top and prices drop.
Also, remember that MANY people are still in the same house they bought in the 70’s or 80’s and even the early 90’s and don’t move and don’t want to move.
The prices where the BIG drops will happen are in areas which suddenly ramped up massive development and got caught up in “irrational exhuberance”. Florida, Arizona, Nevada, etc. There was not a big local population that bought in the 70’s, 80’s and early 90’s. These areas now have masses of full priced properties and need a lot more than just the locals “switching houses” to lower the inventory.
It’s a well known fact that in most older established areas, people tend to move locally. Thus, they sell their $500,000 property which in many cases is now mostly equity and buy a house, say, for $600,000.
However, as usual, it still comes down to “money in - money out”.
To paraphrase Charles Dickens’: Mr. Macawber’s advice: “Income 2 dollars a week and expenses 1 dollar fifty - paradise. Income 2 dollars a week and expenses 2 dollars fifty - misery.” (Something like that anyway!)
The problem at the moment is, a lot of people who got caught up in the boom are in the misery bracket. Not enough money coming in to cover expenses going out.
Actually, there are select few zipcodes in California where you will find $120K - 140K household incomes and in those areas condos “start” at 500K and homes typically go for a million four +
Califonria has one of the lowest affordability rates in the nation, as evidenced by the percentage of buyers in the past 4 years who bought using negative am loans, so I would not count on California riding this one out. Prices in San Diego for example are at least twice what most can afford, and the home equity tap just got shut off, which will mean less spending and layoffs.
Some of the bears think 2007 will be the year of the big decline, but I think it will be 2008. I think there will be enough who “buy the dip” to offer some price support or maybe even create a mini bear rally in 2007. These few remaining buyers will be the last to drink the cool aid give some false hope to sellers (and maybe bail a few out).
As long as there is a belief in the market that prices could go higher and that “buying the dip” is your last chance at home ownership, the market will not completely collapse. None of the buying activity in 2007 will change the underlying fundamentals: home ownership is still ridiculously expensive when compared to rents. The only rational justification for the price of home ownership is a belief in continued appreciation. The only possibility for appreciation is continued buying. It is a self-fueling cycle until the buyers are exhausted. We aren’t quite there yet. When all the buyers who believe in “the dip” have spent themselves (probably by the end of 2007) there will be no more lurking buyers; then the catastrophic collapse will occur.
The collapse will occur. Prices cannot remain detached from their fundamentals forever. The bottom will be found when the cost of home ownership is less than the cost of rents: and not before. My guess is that will be sometime in 2009 at prices 40% below where they are today.
IMHO in 2007 you will have far more supply of housing for sale ,(foreclosures ,people dumping ,forced sales ,new home inventory ,) with even less demand than in 2006, which will bring the prices down ).
Housing wizard,
I agree, but with a twist. It’s already happening.
When folks torch their homes to collect the insurance funds, do the insurance companies actually pay them? I would have thought that the insurance companies would pay the holder of the mortgage.