“Everybody’s Ready To Hit The Panic Button” In Arizona
The Kingman Daily Miner reports from Arizona. “Headlines around the country are portraying the housing market as ‘gloomy,’ ‘hopeless’ and, for those non-sensationalists, ’slow.’ If the market continues to stagger, which is the assumption given the abnormally stellar market of the past two years, construction of new developments, homes and subdivisions aren’t likely to increase.”
“If fewer people are buying homes, fewer new homes will be built and the mass influx of developers who’ve migrated to Kingman will leave. Some Kingmanites predict that the hordes of realtors and builders who inundated the growing city to earn an extra buck will filter out as the housing market continues to slow.”
“By year’s end, John Kirby, sales manager at Angle Homes Inc., is expecting a 20 percent decrease in the number of new homes the company builds. And right now, he said, because the market is flooded with builders, his outlook on 2007 isn’t positive.”
“‘It’ll be interesting to see who’s standing when the dust settles. It’s just who was smart with managing their resources when the market was good,’ he added.”
“Exactly how much the market has slowed has been a controversial topic as homeowners and constituents increasingly fret over plummeting home values. To claim, as many realtors and market analysts have on the national level, that buying a home right now is a bad idea isn’t necessarily the same perspective held by local Realtors.”
“National statistics are far worse than numbers the Southwest region is putting up, one realtor said. Bob Bass said, ‘Kingman is still doing pretty well compared to everybody else.’ Prices are falling, and interest rates are respectable. ‘Its an excellent time to buy a house right now,’ he said.”
“For those residents worried about home value, the message Realtors are sending is that the heavenly market of the last few years was abnormal. ‘We definitely saw in the last couple of years a fluke in the market, as far as how it took off,’ said Bass. ‘The type of buying and selling that was happening, the increase in price, that wasn’t normal at all,’ he added.”
“The average price of a single-family home on the market in Kingman this year is $249,843 and falling, according to data collected by Todd Tarson, president of the Kingman/Golden Valley Association of Realtors. Drop $13,000 from that for the October average. September’s average asking price fell below October by nearly $11,000.”
“The big difference was realized in the selling price, which on average was $40,000 below the yearly asking price, according to Tarson, whose data includes Valle Vista, Kingman, the Hualapai areas and Golden Valley. Between September and October, the selling price fell $20,000 to $201,250 for the average home.”
“‘Everybody’s sitting here ready to hit the panic button,’ Kirby said. But Kirby’s not going to be the one to push it. Angle Homes hasn’t had to slash prices, although it has lost some employees.”
“Angle Homes, which has been in Kingman since 1996, kept everything in-house during the last few years of a bustling market. To hope for anything to continue like that would only postpone, and likely worsen, a future market crash.”
“The question all Realtors have come to abhor is, how long will this downward trend last? There have been some analysts who’ve made predictions about when the market will recover, but Realtors in Kingman have mostly kept quiet.”
“To make such a prediction, given the large number of factors…would be idealistic at best. And one factor, the number of quality jobs, is another significant determinant of how many people are out buying homes. Without adequate paying jobs, people aren’t going to buy.”
The Arizona Republic. “Since coming to Phoenix 1976, I have been fascinated (strictly as an observer and not at all as an investor) by housing price trends.”
“For the past year, newspapers, including the Republic, have run repeated articles that make two points: the housing inventory (supply) has seen a dramatic rise (from 3,000 units to over 35,000 units in Phoenix) while median housing prices have not fallen or even have continued to rise.”
“Yet, with a couple of minor exceptions, there has been scant attempt to explain this apparent contradiction of the law of supply and demand. This shrugging of shoulders is particularly curious because the explanation is not a difficult one.”
“It is the lumping together of all houses into ‘one inventory’ that misleadingly hides that housing prices are falling, and perhaps by a substantial amount (and not by the mere 3.5% most recently reported).”
“By way of illustration, assume that: (i) in 2004, 100 houses sold and the median price was $250,000, meaning half sold above that amount and half below; and (ii) then in 2005, again 100 houses sold and the median price was 10% higher or $275,000–does that mean housing prices went up? Absolutely not.”
“Here’s why: If in 2004, 50 houses sold for $249K and 50 sold for $2 million, the median would be $250K; and then if in 2005, there were 49 houses that sold for $220K, one for $274K, and the other 50 for $1 million, and, assuming the 100 houses in 2004 were comparable in every way to the 100 houses in 2005, the overall median housing prices would rise 10% from $250K to $275K while, in reality, the price of all but one house would have fallen dramatically.”
“Another way to state it is this: As the ratio of expensive homes to lower-priced houses sold increases, median prices over the entirety of the housing stock will rise even if prices on all individual houses are falling.”
“The bottom-line is that misleading metrics should be avoided, and it is wrong to use median house sale prices to reach any conclusion about price trends in housing values. The bad news: Median housing prices likely are understating the severity of the housing slump. The good news: The Fed likely is not looking at median housing prices in assessing the severity of the housing slump.”
“Everybody’s Ready To Hit The Panic Button”
So hit it already!
No kidding. In Sedona or Flagstaff please.
In due time…
Sometimes the best humor is just so obvious.
I almost spit my coffee on the keyboard when I read that.
Thanks for a much needed break for a day of idiocy in the IT business (one of my clients is slowly breaking my will to live).
I got this image of the old game show Press Your Luck, except the entire game board is Whammies.
‘Its an excellent time to buy a house right now,’ he said.”
Of course it is!
Nah, wait til they actually hit that panic button.
Every realtor seems to throw in that line.
So, what do you tell the sellers?
Its a great time to buy if you don’t bid too low and insult the seller.
It’s a great time to sell if you take the 1st lowball offer I bring you.
Having sold a place last spring (I didn’t get greedy and sold in less than two weeks) I was looking to invest the proceeds into some acreage as I intend to build my own place as well as cultivate the land. After searching tirelessly for the right parcel, I have given up realizing there are no good deals right now. I am fairly close to actually just ignoring real estate and the bubble indefinitely. One gets so tired of hearing these talking heads with their talking points, etc. The gap between what I am willing to pay vs. what someone is willing to sell for right now is the size of the Grand Canyon. I know the maximum of what I will pay in each given area I have researched, and if I cannot find it, I will never buy. The more BS I hear from the industry, the less inclined I am to even begin negotiations with these greedheads and the buyers they represent. I am not sure if they realize it, but this bubble is turning off a lot of people, not just me. I have a lengthy memory, and the BS these turds have been spewing is wearing thin on me. They will ultimately be the ones who pay dearly for it. Accountability is a b!tch.
I fail to understand the logic in this post. So even if you find something that suits your needs. You still won’t buy. Rationale being that your pissed off at the greedhead sellers and their representatives. Did I read that right? Wow
“you’re”
That’s for the jackals that are stalking me.
Your was correct.
Geez, I can’t win. You’re right. Curse that jackal WeRent. He/She has got me so paranoid. I’m not thinking straight. Sheesh LOL
“Rationale being that your pissed off…”
you’re is correct here. Replace it with “you are” for proof (oops, assumed some here were educated recently in public schools and have no clue about contractions)
Depends upon which “your” you’re talking about.
Let me clarify for you mrincomestream. First, if I found the right parcel and it was reasonably priced, of course I would buy. But I cannot compete with builders on the prices per square foot they have been paying. They are (have been)able to pass it on to their customers, I am not. So I am essentially priced out right now. As far as ignoring real estate, I am changing my short term plans (with the times) in order to effect long term success. As far as my cutting off negotiations with the greedheads (realtors), I have been looking for FSBO land exclusively. My intentions are to cut out realtors permanently. Their bad news is good news, fudge the numbers BS has worn thin with me (and others I am sure). Like it or not (I think I remember you are a realtor or broker), realtors are partially responsible for this bubble. After all, they came up with the “Buy now or you’ll be priced out forever” hype, and were more than happy to initiate fake bidding wars, etc. Unfortunately, large numbers of people relied upon them for advice on the largest purchase of their lives. It is high time they changed their antics. They will be held accountable to some degree. Hope this clears it up a little for you.
Yea, I follow that logic. I thought you were pulling in the shingle altogether because you were pissed off at the greedheads. Which didn’t make sense to me with all the bargains coming to market with just a little patience.
” were more than happy to initiate fake bidding wars, etc.”
Contrary to popular belief and the chagrin of bubbleheads. Bidding wars are not fake the vast majority of times. At least in my experience they are not. Especially when the property is a good deal or located in a prime area. I’m often amazed at how many people think they are the only one in the universe looking at or for a property. When I sold R.E.O.’s I often had 10 offers within a day of listing a property and never picked up a phone. Bidding wars happen in up and down markets.
Good luck with your search.
Mrincomestream .I agree that there are true bidding wars but some of the realtors would just make this sh-t up.
As you know , in a mania market with alot of new RE agents running around ,the potential for agents not knowing what they are doing went up . Also I don’t think I have ever seen the NAR try to control the talking points as much as I have seen in recent years ,with the RE agents . You might ignore all that BS mrincomestream but so many realtors act like drones mouthing the chants . It’s really weird and I have never seen anything close to it in the past .I really think more advertising dollars went into this real estate upturn than any other cycle that I have witnessed .
Yea, I’ve seen some cases where it was made up. I’m not denying that.
You know you just hit a key point. I was thinking it was more so an involvement in this blog more than anything. But I can’t shake the thought either that NAR did seem overly involved in the mania.
You’re right about the advertising dollars but I attributed that to all the fresh meat jumping in the market. Although prices were accelerating. From what I have been told it was hard to get business because of all the fresh meat. So everybody had to step up their game if you will from the brokers on down.
Everybody contributed to the mess, but I think the fresh meat did irreversible harm. You see it here everyday.
Right . I think the RE agents that have been around for a while know darn well we are in a major down turn ,but the fresh meat as you call it look at the NAR like a God . That’s why agents got the name “cheerleaders “.
Like you said ,alot of factors contributed to the mess including the greed of buyers and sellers ,easy money etc.
If you have cash to pay for this property, you should start getting to know your local estate auctioneers. It’s possible to cut out the real estate agents entirely and buy from people who need to sell. (If you can’t do this in Arizona, you should move.)
“….it is wrong to use median house sale prices to reach any conclusion about price trends in housing values”.
———————————————————————————
Yet, the “Median Price” is still the predominant metric that gets reported. I’m not a statistician but wouldn’t “Average Price” based on a specific zip code be more accurate in determining price trends?
No, because you would run into the same type of problems.
How about price per square foot sold? Bakersfield has a great site for that:
http://www.kerndata.com
I would think you would run into the same problems C&C. In all honesty it really depends on what you are trying to derive from the numbers. IMO each situation dictates a different analysis ie: If you live in New York and want a roundabout number of what California houses are selling for then median price/sqft info is sufficient. If your local and getting ready to get on the hook then you want a different set of stats a combination of historical and current pinpointed for an area. In my mind NAR/CAR median anything would be irrelevant and worthless.
I think median price is better as the data cannot be skewed by very large/small prices like the average price can. I think the median price is more of a lagging indicator and doesn’t show the severity of price declines. Where I live, West Palm Beach, Fl, our county median is off about 12% YOY but inactuality prices are off about 20% (and heading lower).
DAP,
I agree with you, I think that prices are indeed off between 15-20%, but I see some total madness on the listings now. I am moving up to PGB in a few weeks, and some of the homes (all in the development I am living in) are 300/sq/ft, some are 250, some are 225, and so on. Same upgrades, same size, same community. Location is pretty unimportant in this development (unless you live near the tracks).
I would say, the low prices are about 20% off of peak. However, the higher prices are still right there. I just don’t get it. It’s like nobody knows how to price their home anymore?
You noticing this too in our area? What about everyone else, do you find that home prices (for identical/very similar units) are all over the place right now?
The spread in pricing on similar units is caused by a previously missing factor, known as
“Motivation”!
Spread in pricing because, in some sense, there is no market. Think how big the bid-asked spread can get on a very thinly traded stock.
I’m not a statistician either, although I did ace the class in college.
The median is, according to Wikipedia, “more robust [than the mean] in the presence of outlier values.” The mean can easily be skewed upward by houses at the very top end of the scale, but it’s far harder to skew downward since a house won’t sell for less than $0, and as a practical matter, it probably won’t sell for much less than all the rest of the samples.
Put another way, the mean responds more to sale prices, while the median responds more to total number of sales. Example: Suppose we have a sample of 100 sales, all for exactly $300k. If you add in just one $10 million sale to this sample, the new average becomes $396k, that’s the equivalent of bumping up the “average” sale price by almost $100k, or 32%. The median, however, will only increase by the difference in the 50th and 51st homes, which in this case is $0.
There is what statisticians call a “compositional problem” with the median. In a given month, or even in a given year the composition of “houses sold” changes and is not necessary representative of eithe the larger housing stock or homes currently on the market.
To be more specific, you have to ask what sold: sq ft, age, condition, added features, location, land, type of construction, etc…
The only good measure of housing prices is the paired sales approach used in the Case-Shiller index. Look at same home sales paired across different time intervals. Aggregate up to the market as whole by estimating how many homes in each category are in the market.
” you have to ask what sold: sq ft, age, condition, added features, location, land, type of construction,”
…….From a median price of a zip code, I try to break out
(1) 1 story vs 2 story to bring more meaning to the median price. (2)Then 3 bed 2 bath vs 4 bed 2 bath. (3)Then the sq. ft. range say 1200 sf, 1300 sf, 1400 sf. Just these available figures gives me, in statistical terms, a very meaningful insight into what is selling. It is not perfect, but with my competition doing nothing but take the raw median, I am lights years ahead.
One needs to track specific houses or groups of similar houses to get a true view of the market… this is relatively easy to do in newer cookie-cutter neighborhoods. A bit harder in older areas due to every house being different and different levels of quality and renovation.
Bogus.
It is highly unlikely in the vast majority of housing markets that the only houses moving are the higher or lower priced ones, with nothing in between. Their examples, while valid, are unrealistic and are being used to cast doubt on a useful, if not alway accurate, metric.
I think all these metrics over and under state the true numbers. I know in my town, the supposed price increases during 2003-2005 did not come close to the actual % in my town - they understated the increase. The #’s show median up 40% or so - it was more like 80%
And now they are understating the actual decrease. The # are show a decline of 2% YOY and I say its closer to 10%.
Agreed. However, let’s remember that a rational, end-using house buyer will purchase as much house as he can reasonably afford. In a falling market, then, Mr. X gets more for his money than Mr. Z did a year ago. The stats don’t and probably can’t reflect that.
We are seeing this phenomanon plain as day in our neck of the woods - swimming pool, extra bedroom, better neighborhood, better block, whatever, being bought for slightly below last year’s median. Buyer beware.
However, let’s remember that a rational, end-using house buyer will purchase as much house as he can reasonably afford.
Nonsence. A rational, end-using buyer will purchase as much house as he really needs. Anyone who buys more house than he needs is speculating on future price increases.
But I think we’ll have to see a lot more downside before buyers get rational.
The more articles I read specifically regarding Vegas, SD, Phoenix etc. the more convinced I am that 2004 *not* 2005 was the peak for these SW markets. 2005, yeah if you were selling, not buying. My brother is in Phoenix and he believes the “bull dozer scenario” is real. He said many of these new sub-divisions are largely vacant and the homes may be uninhabitable before long.
How on earth can the peak of the market be different for sellers than for buyers? They are two sides of the same transaction.
if everyone gets more house for their money but still buy as much house as their “affordability” level will permit, then the median level “spent” on houses stays the same while individual homes sell for much less. Suppose a home that would have sold for $500,000 before can now be had by a couple who could only afford max $400,000 a while ago. So they decide to go ahead and make the leap to buy the most house they can afford and since “so much house” just came down to thier affordability range. People aren’t borrowing any less to purchase a house, so the median purchase price stay’s relatively level for all homes purchase. The decline that will show up in median purchase prices will occur when people realize what their true “affordability level is” and that means a rise in rates, and/or a psychological turn when they see their neighbors forclose and become “happy” in the house the have or the rent they are paying.
Still not there yet.
That is an excellent point, the median is a far better indicator of what the market participants thinks they can afford than it is a measure of individual housing prices.
In Austin in 1986-92, many homes fell 40%-50%, yet the median dropped 25%. Why? Well one could get 1400 sf 3-2 for $80K-90K in 1985. In 1990, one could get 2200 sf 4-2.5 for $80K-90K. And quite a lot more for $100K-120K at lower interest rates (which fell from 1985 - 1990). That 1400 sf 3-2 was $40K-45K in 1990.
William Reber,
“Buying the most house you can afford” is soooooo 2005! I don’t see a lot of couples going “all in” at least up here in OR. All the “pregraniteel” in the world isn’t going to get these (now greatly sobered buyers) off the fence let alone stretch their finances to the breaking point. If anything that’s the situation they (as sellers) are trying to walk away from. It’s also what’s holding them back.
And to think that I bought LESS house than I could afford. Silly me!
Good point about buying more house for the same money. It is going to suck for those people who bought 800sf crack houses (for 600k), watching their house value plummet off a cliff and crying as their friends are now purchasing 1500+sf houses for the same price. The market is a beautiful thing…the triumph of economics over stupidity was/is inevitable.
If that were true we would never have had a bubble in the first place. As far as, “economics,” I assume you mean a certain brand of mercantilistic free market economics. Never underestimate the stupidity of crowds, (or their economics.)
Josh
Bubbles are inevitable (and even predictable) in fiat-money economies. Any time you can generate unlimited credit and money you will get overspeculation and boom-bust dynamics.
So I guess the tulip mania, South Seas bubble, 1926 Florida bubble (gold standard), 1929 stock market bubble (ditto) were not inevitable, but they happened anyway?
“For those residents worried about home value, the message Realtors are sending is that the heavenly market of the last few years was abnormal. ‘We definitely saw in the last couple of years a fluke in the market, as far as how it took off,’ said Bass. ‘The type of buying and selling that was happening, the increase in price, that wasn’t normal at all,’ he added.”
So what IS normal then?? No appreciation? Risk of a decline? Like that’s supposed to be an incentive to buy at these prices?
I live in Mesa, drive through Kingman on my way to Vegas. What is in Kingman anyway? I see rows and rows of these new developments, but no realy industry or jobs to support the insane prices.
It’s supposedly becoming a Vegas exurb.
Or more accurately, it is not in California. California Industry likes Western Arizona (Kingman, Lake Havasu City, Yuma) as it is the low cost alternative to doing business in CA but still close enough to serve the CA market. And Kingman does have some Vegas overflow (but that is mostly speculation at this point.) So you put some low margin California industries together with a bunch of real estate industry types and add in a few old cowboys who like the cold high desert and you have Kingman.
So now I’m considering leaving Cali for Kingman, like legions of locusts before me. $249K seems like a steal. Anyone know of a good place in town for tapas or seafood? Which venues have the best local jazz acts or foreign movies?
The new Arby’s has all of that.
Hey, I hear they’re getting an Applebee’s. Which is a crucial stepping stone on the road to getting a TGI Friday’s.
How do you say “Kingman” in Spanish? I can see the “low cost California alternative” market moving there.
That makes a lot of sense. Why live in the middle of nowhere in Nevada and have an arduous commute to work, when you can do that in AZ and pay income taxes for driving farther.
I lived there for a few months back in 96 and totally agree. There is nothing there unless you like the idea of being 2 hours away from Vegas or 30 minutes from Laughlin. The fact that the average house is selling at $249,843 is another proof that the market is way upside down. There is nothing but land for hundreds of miles around Kingman and when I was there the average house sold for way less than $100,000. There are a lot of stupid people in this world if we can see that kind of run up in Kingman.
“The fact that the average house is selling at $249,843 is another proof that the market is way upside down.”
I wouldn’t give that for the whole damn town. Better yet, though is the “Silverado” fiasco outside of Kingman. They have actually built a few homes out in the middle of absolute nowhere. http://silveradoaz.com/
Ultimate optimists…The desert will reclaim this place in a few years. It’ll look like Salton Sea…
There really is no industry to supply jobs at this moment. And I don’t know when or if that changes. There really aren’t rows and rows of developments as of yet. There isn’t one Mesa style development in Kingman… there are plans for them however. My jury is out on whether or not thse developments happen or not.
The sellers in this town are very disconnected with the buyers that are out there, willing and able… but not at these prices. I was mentioned in the Kingman article. I offered some charts on SFR activity that were published in the paper version of the article (they don’t show up in the online). The charts do NOT paint a pretty picture of the market. I have my own issues with the market and fellow Realtors here (and I’m the current president of the Association).
“If the market continues to stagger, which is the assumption given the abnormally stellar market of the past two years, construction of new developments, homes and subdivisions aren’t likely to increase.”
You mean trees don’t actually grow to the sky?
The way the median is calculated explains another phenomenon we will likely see next year: a brief bear rally in prices. In the first stages of a collapse in residential real estate, flippers who bought condos bail out. The increasing sales rate at the lower end of the market brings the median down and signals the beginning of the end. The next step will be an across the board reduction in sales volume and a slight increase in median prices. Why? Volume drops because prices are too high, and the median price increases because the ratio of low-end sales to high-end sales reverts back to its norm.
Watch how the NAR will tout this blip in the median price as the beginning of the new rally. Buy, Buy! BUY! This blip will bring in those buyers who missed the run-up, who are still convinced prices will rally, and who think they are “buying the dip.” Volume won’t pick up much, but this activity will probably support the market through 2007. This last rally should signal capitulation: everyone who wants to buy will have bought. The volume will drop to very low levels, prices will drop, volume will increase, prices will drop further, panic will set in, volume will increase more, prices will drop very quickly, typical market panic behavior.
Anyway, watch for the low volume price blip as the NAR rallying cry: it’s coming.
Interesting theory…. is the bear market rally that emerged in the UK in 2006?
What you say would explain the strange blip up on the 75th percentile homes in Phoenix lately:
http://housing-watch.com/regionview.aspx?city=Phoenix&pct=75&g=m
Daud,
Awesome website,
Could the rise in median home prices be caused by higher priced home sellers lowering their prices enough to bring them into the 75th percentile?
The point about “people buy as much house as they can afford” is critical. Apples-to-apples I know of nearby condos in Tysons (Northern VA) that have lost 25% from peak to the lowest recent sales. But the stats did not reflect 300% appreciation, which is the reality for the units from 2000-2005.
Now, this would not be true if mortgage rates had increased significantly from the peak but this has not happened, so the median data looks decent……. But apples-to-apples it’s a bloodbath for the leverage speculator.
“people buy as much house as they can afford”
This metric will be rapidly falling as baby boomers retire. They’ll be able to afford a lot more house than they want. I believe houses under 1500 sq. ft. are going to have a resurgence.
Looking to rent a SFH / townhouse (3 br / 2 ba) near ASU West campus in glendale, or within a decent commute. what are rents like? thanks!
btw — fiance wanted to buy before we stumbled onto this blog. compromise is to rent until at least 2008, and see where things stand then.
I live about 3-4 miles from ASU West (80th ave and Cactus). Houses in my neighborhood (Garden Point) for a 1600 sq 3 br 2 1/2 bath are going for about 1,200 a month. Don’t know if they get that but that’s what they are advertised for. These are newer homes with a community pool and front yard landscaping included.
Pretty much any freestanding SFR in metro Phoenix goes for $1100 to $1200. Folks in nice neighborhoods ask more, but have trouble getting it. If you see a house for less, make sure you look around the neighborhood at various times of day and see how many folks you find lurking in the alleys.
I know of a SFH in Surprise for $950. 3 bed, 2 bath, 2 car garage, no grass to cut.
Ben,
Not to change the subject, but the wife and I are heading out to Phoenix for the National Championship game (she’s a Buckeye and I’m a Florida grad). Where should we stay? Looking for something between a Motel 6 and the The Phoenician.
Thanks
In separate rooms.
If possible, let her win. Happy wife, happy life.
Drive around first convenient new housing development you find. Identify one of numerous vacant houses for sale (this is the easiest part). Go around house in search of unlocked door, window or other orifice. Repeat with other houses until successful, or just break a window if you get tired. Voila: free short-term lodging.
lol
Make sure PAC-10 officials are not on the field. They will make sure both teams lose.
I can only wish. Either that or that last Saturday never happened and it was just a bad dream (UCLA beating USC).
Try travelaxe…
Can’t say, I’ve only driven through twice.
Check any national hotel in Peoria, AZ (near Bell Rd and 101). There are many hotels, with many restaurants within walking distance, and all about 10 miles from the stadium.
I just happen to have a large range of rooms you can look through in Phoenix for your stay. This link is for hotels in and around Phoenix. You can sort by price or other criteria if you’d like. Just enter a date range to get prices.
http://reservations.californiasunhotels.com/681_hotel-list_m2.html
Realtors, 2006: the message Realtors are sending is that the heavenly market of the last few years was abnormal.
Realtors, 2004: WHAT HOUSING BUBBLE? WHY TODAY’S HOUSING MARKET WILL BE HERE TOMORROW
“The bottom-line is that misleading metrics should be avoided, and it is wrong to use median house sale prices to reach any conclusion about price trends in housing values. The bad news: Median housing prices likely are understating the severity of the housing slump. The good news: The Fed likely is not looking at median housing prices in assessing the severity of the housing slump.”
What metric is the Fed looking at? And is it adjusted for the combined effects of appraisal fraud, suicide lending, homebuilder incentives and time lag in the data against a price downtrend? Because all of these four effects result in price indexes which are biased to the high side.
Forget the Fed. They are far more interested in overseas interest rates and Chinese leading practices than J6px hanging himself in his foreclosed garage.
“The average price of a single-family home on the market in Kingman this year is $249,843…”
This says it all about the housing bubble. We have a long, long way down.
Sorry, but what the hell is in Kingman that generates income to buy a $249,000 home? All I can gather is California is next door. Is there a bubble in Mississippi too?
Sheesh! Am I sick of reading these idiot remarks by realtors. The latest being by Bob Bass out of Kingman, Az. “Prices are falling. It’s an excellent time to buy real estate.” He sounds like the guy who fell out of a window on the 99th floor and as he passed the 30th floor he yelled at someone standing at a window, “Not a problem! So far - so good!”
Realtors! Enough already! The boom is is over! Quit the hyping and the used car sales patter. Go and get a job somewhere like Costco or Target or WalMart who pay an hourly rate. You’re just sales people and when the product you’re selling isn’t selling, find a product which is selling. Here’s a hint concerning your future ability to make a living selling real estate. There are not enough financially qualified buyers to soak up the massive inventory out there. Even in places where there isn’t a big inventory - there are not enough financially qualified buyers. Exotic loans are breathing their last breath unless your potential buyer is a doctor or a lawyer, etc. Prices HAVE to come down. Big time.
On Sunday I was in Borders Books and picked up Money Magazine which has an article related to the housing bust and some predictions on how long they think the slump will last. Wow! In some areas they are predicting 2010. I think Los Angeles was the 4th quarter of 2008. If that holds to be correct, there are going to be a LOT of fb’s drowning in debt who will be going down for the third and final time between now and then.
Las Vegas’ problems (and I would think places like Kingman, Az are in that camp and possibly worse ’cause who the hell wants to live there) are on the hook well into 2009.
Here’s my own prediction. After this bust has run it’s destructive course, there will still be plenty of time to buy because, just like the tech bust of 2000, the dreaded, “I’m scared it’s not the bottom so I’m not going to be the first one back in,” psychology will have kicked in. Forget all that crap about the stock market doing well after the bust - it isn’t. A score or so stocks driven by manipulation are driving the markets but plenty of those stock which declined (actually the 2000 market didn’t crashed it just died of a thousand cuts over two years just like the housing bust is doing) have not recovered. My point being, when this is finally over, prices will be stuck for years and THEN, and only THEN, will the realtors who are still left standing, be able to say (truthfully), “We’re back to a normal market.”
Mike……you nailed it
Right on Mike . Also I would add that the real estate people got commissions from future sales by telling people they better buy now or be priced out forever . Its not my fault that RE agents and mortgage people didn’t save their dimes for a raining day .
““Prices are falling. It’s an excellent time to buy real estate.” ”
The absolute worst time to buy real estate is when prices are high, but falling. When prices are high, but rising, the burden of servicing an onerous debt load is partially offset by future appreciation. When prices are high, but falling, the burden of servicing that debt is offset by…
(crickets chirping)
A time of falling prices is a good time to buy, IF AND ONLY IF prices are falling down to a rational level, from which they can be reasonably anticipated to recover.
Thats just it though, prices haven’t started falling in Kingman… yet. I think that will change next year. I still see, practically each month, sellers asking for more on new listings each month even though the sales prices have remained steady throughout the year. Oh, and these sellers have to realize that property is not being transferred at the clip it was in 04 an 05.
I turn down listings that I know won’t be sold… but that doesn’t mean that all the other Realtors are turning these so called listing opportunities down.
Buyers and sellers are really disconnected in Kingman at the moment, and Realtors on average aren’t doing anyone a service by keeping them so far apart.
I would like to see metrics for comparable homes valuations over time (factoring sale perks and improvements). Median sale price is only at best a very vague statistic and mostly valueless as it does not include any information about “what” sold.