“Sellers Could Be In Another World Next Year”
The Seattle PI reports from Washington. “Shopping for a home in Seattle? The median sales price appears to be rebounding somewhat, after drops in August and September from July’s median. Those numbers do not account for homes that sit on the market for months.”
“In a news release Thursday, Northwest MLS director Dick Beeson said floods, snow and ice contributed to November’s sales slowdown.”
“But wet weather only can soak up so much blame. It did not, for instance, seem to dampen the market in January 2006, whose 11.65 inches of precipitation was not far off the January record of 12.92 inches (set in 1953). That, of course, was in the midst of a frenzy of frequent bidding wars and rapidly rising prices.”
“‘I still have a lot of people looking but not as many people making the move, pulling the trigger,’ said (realtor) Susan Robinet. ‘I just think it’s the uncertainty the national news has created.’”
“‘It seems like there’s quite a few homes on the market right now,’ Chelsey Hays said after looking through a Phinney Ridge home.”
“(Realtor) Bill Garrison said he normally is working with three or four active buyers, but has none now. ‘Last December was one of my busiest months of the year,’ he said. ‘This year I’m getting a lot of home projects done.’”
The Seattle Times. “In King County the number of houses and condominiums on the market was 32 percent above the previous November. Pending sales were down 11 percent compared with a year earlier. Those trends were reported in most of the 19 counties within the MLS region.”
“Broker Greg Hoff last month’s falloff is a return to normal, not the bottom falling out of the market. ‘The question I get is, ‘Where’s the bubble?’ he said. ‘They think it’s bursting because it’s not going up the way it used to.’”
The News Tribune from Washington. “Pending Pierce County home sales dropped 16.17 percent in November compared with the same month last year, the Northwest MLS said.”
“The inventory of unsold homes in the 19 Washington counties covered by the Northwest MLS rose more than 35 percent from November of 2005, the report said.”
“That increase, which could foreshadow price softening, was particularly dramatic in Pierce County, where the number of homes on the market in November grew from 4,124 last year to 6,012 in November this year, up 45.78 percent.”
From the Oregonian. “The Portland area housing market will further weaken in 2007, two economists told a gathering of home huilders. Some areas, such as the condo market, could see even more downward pressure on prices because of oversupply.”
“Sellers who think they have the upper hand now, despite buyers who argue the other way, could be in another world next year. ‘It’s going to be a shift to a buyer’s market,’ predicted Jerry Johnson, of (an) economic consulting firm in Portland.”
“Housing permits and starts are ‘in the throes of a sharp correction,’ said Dae Baek, acting chief economist for the state. The problem of high inventory may be ‘darker than it shows in statistics,’ Baek said, because sale cancellations might not be fully reported in those figures.”
“‘It’s not a demand problem, it’s a supply problem,’ Johnson said. The supply of homes for sale may be rising, Johnson said, but only because builders haven’t pulled back enough. Building permits should have fallen 10 percent this year, but they fell 6 percent, he said, ’so we still have some more to go.’”
“Johnson was particularly concerned about the condo market. Although there are about 4,000 urban condos in the works, there are about 16,000 planned throughout the region, he said.”
“All that inventory could increase the number of buyers withdrawing from sales contracts and lead to falling prices, he said. This seems to be at odds with the view of many real estate agents in the urban market, who consider their market distinct from the suburbs.”
“‘If you bought a spec condo last week it was probably a bad buy,’ Johnson said. ‘But if you bought it two years ago it’s probably OK, but will be giving some (value) up.’”
The Mail Tribune from Oregon. “The watch and wait real estate market is in full swing, or on hold, depending on if you are a buyer or seller, real estate brokers say.”
“November figures from the SOMLS show the median sales price for a single-family residence in Jackson County has declined modestly over the past year. The latest compilation for the county shows a 3.6 percent decline to $268,000 for the quarter ending Nov. 30, compared to $277,950 for a similar period in 2005. Sales activity for the year is down 35.3 percent.”
“‘We’re consistently seeing price decreases more than actual new listings right now,’ Ward says. ‘If sellers want to sell, they’re going to have to lower their prices.’”
“With houses languishing on the market, buyers remain more apt to take their time. Ward has a Pasadena, Calif., client, who has made several recent shopping trips to Southern Oregon. ‘We drive around for a week and look at 15 or 25 houses at a time,’ says Jim Ward, an agent in Rogue River. ‘I’ve written four offers so far and if there is one little glitch, he cancels and says there are more homes to see.’”
“The median price has stayed above the $400,000 mark in Ashland. But in neighboring Talent, where the median price has gone up more than 100 percent over the past five years, prices have fallen 12.4 percent, according to the three-month rolling measure, in the past year.”
“In the tourist towns of Jacksonville and Shady Cove the declines have been 20.9 percent and 23.8 percent, respectively, over the past year.”
“‘The only way to get a house sold fast is getting the price down,’ agent Jeremy Neff says.”
“A three-bedroom, one-bath house with just over 1,000 square feet built 30 years ago drew an offer of less than $180,000. ‘The house next to that one sold last February for $205,000,’ Neff says. ‘There are houses on the same street, built about the same year, that are sitting and sitting.’”
“Sellers who think they have the upper hand now, despite buyers who argue the other way, could be in another world next year.”
YES! Instead of Opposite World for us (buyers), as it has been for years, it will be Correct World for us, and Opposite World for them (most sellers).
Or the beginning of Correct World, anyway.
posted ““Sellers Could Be In Another World Next Year”
Yea, A world of hurt!
On the ground here in Portland, building continues, though it does appear to have slowed somewhat. No new condo towers have been announced; sales begin on an unbuilt one shortly. Prices seem to have come down 5-10% from the peak. I see many places sitting and sitting, or coming off the market, then going back on. There are a few signs of desperation. D.R. Horton is building golf course homes in Newberg (Portland suburb) that I’ve felt are at least $100K overpriced. They seem to be selling, very slowly. I see a very few signs of desperation, from people who must need to sell. Meanwhile, there are still rent specials - not as good as a year ago, but they are there. If I were a first-time buyer, I would wait a year.
so prices rebounded for 10 days in oct ? then it snowed in november
mang that sounds stupid
“But wet weather only can soak up so much blame. It did not, for instance, seem to dampen the market in January 2006, whose 11.65 inches of precipitation was not far off the January record of 12.92 inches (set in 1953). That, of course, was in the midst of a frenzy of frequent bidding wars and rapidly rising prices.”
I remember not long ago reading stories about frenzied buyers hunting for Florida condos in between hurricanes. Economic factors appear to be much more important than meteorological ones when it comes to strength of demand.
“(Realtor) Bill Garrison said he normally is working with three or four active buyers, but has none now. ‘Last December was one of my busiest months of the year,’ he said. ‘This year I’m getting a lot of home projects done.’”
Uh, Bill? Your only home project should be selling your own house…but wait…real estate always goes up so keep weeding the front lawn.
But, but, the realtors told us that people in Washington only buy homes when the weather is bad- that’s their excuse for the slow Summer months when we only got 4% of the usual rain we used to get.
Real Estate and the Single Woman
http://finance.yahoo.com/columnist/article/moneyhappy/17039
“Real Estate and the Children.” I can see it now… buy land for your children from an early age, because “they’re not making any more land.” (Except in Oregon, where Measure 37 is making lots more land)
This is happening because these younger women are giving up on you guys
You’re too flaky.
I hope they are doing their homework. Recently, I conversed with a young woman who just bought a condo in Reno (at the peak), and had no idea prices were falling.
Not true. I still hear the younger women sigh and groan as I pass them on the street.
Actually, I think a lot of that did happen over the last few years. A wealthy friend of mine said that alot of her friends did in fact buy 4-5 houses for their kids knowing that this was a once in a lifetime opportunity and their kids were not in a position to afford a house at that point. I wonder how much the buying for kids effect has on demand over the last few years?
Please expound more on Measure 37 making lots more land? I’m curious what you see happening.
“The biggest thing for me was spending all that money on rent and at the end of the lease walking away with nothing,”
Oh boy, wait till she walks away with a $20K chapter 13 Monkey on her back.
She’ll be dreaming of the days when she use to walk away with nothing
When I was 24 you could barely get a loan for a car and that was with your Dad co-signing.
I notice the article mentioned *nothing* about the difference in monthly costs. It also tried to play up how her HELOC provided 10 months of capital… almost like that was free money. How they heck do you go out, buy a home, and HELOC out enough not only to live for 10 months but support business start up expenses?!?
Think about that a minute and understand yet one more reason why credit it going to tighten.
Neil
What caught my eye was that she was willing to risk her home because she couldn’t wait and save for 6 whole months. I hope for the best, but I wonder about businesses started like that…
I *wish* her everything a stupid, greedy, reckless speculator like her (who refuses to defer immediate gratification) deserves: complete financial destruction. It’s what she deserves and what she truly needs: a painful lesson in the virtues of living within your means.
“I *wish* her everything a stupid, greedy, reckless speculator like her (who refuses to defer immediate gratification) deserves: complete financial destruction. It’s what she deserves and what she truly needs: a painful lesson in the virtues of living within your means.”
I couldn’t disagree more with your angry spew. With a solid business plan, she could do well. You “have” to be willing to take risk when going into business. I see no difference between using a HELOC, vs. taking out a small business loan with the house as collateral, other than the fact that the HELOC might actually be cheaper. At least she is not out buying an H3 or something. Why are you so hostile?
There’s nothing wrong with risk, but I inferred from the statement that she had a steady job. If saving for 6 months (which is not long when trying to build a business) would prevented a lien on her house, then why take the risk? There’s already so much risk involved with cutting off a steady paycheck and then to add your house on top of it..*head shake*
The less glamorous way would have been to work your rear off for 6 months by hanging onto the job and building the business part time after work.
Obviously, I’m making a lot of assumptions about the situation. For as many stories of folks building a successful business on credit cards, I’m sure there as many and probably more stories of people who had to fold and get a job.
I do wish her well because we all benefit from people living what they define as “success”. (Although obviously, success cannot for us all to be living in $500k houses.
). I suspect, though, that her story may have an unhappy ending built-in.
@BanteringBear,
Yes, starting a business always requires some risk-taking. However, anyone who “can’t” manage to save up 6 months of income and must collateralize his/her house in order to implement a “business plan” is not weighing that risk adequately.
I didn’t see what the 24-year-old paid for her condo, did anyone else? They just cited the monthly payment of “$740, where rentals in her area go for $500-$700.” (she would likely pay $500/month.)
And it’s pretty funny that this so very independent woman says “You can call a guy if your sink clogs or the toilets are overflowing.”
I’m 99.75% certain that $740 is the teaser payment on an IO/negam loan and doesn’t include taxes/assessments.
yep…
I have no problem with her starting a business. I have friends who have HELOC’d for initial capital. What I have a problem with is her buying and immediately pulling out 10 months of capital including start up expenses. Something is fishy…
Why wouldn’t people buy and just slide for a year if its so cheap? Oh wait… it really isn’t…
I’m 99% sure this will go to foreclosure. If it doesn’t I’m very happy to be proven wrong. That would only be due to her hard work and dilegence.
The problem is that people see this as free money. Those people *really* have trouble when the bill arrives.
Neil
“Forty percent of all births are to single women,” he notes…”There’s no social stigma whatsoever in being a single mom…”
Who is he kidding? Unless your name is Madonna or Angelina, there is absolutely still a social stigma of single moms. People might do it regardless, but don’t insinuate that they don’t get raised eyebrows on occasion.
Yeah, what that failed to mention is most of those births are in charity hospitals. I’ll put it that way but you all know what I mean.
Uncle Sam likes paying for all those Hood rats….
“Ten percent of all births are to single men,” he also notes…”There is a social stigma to a man giving birth and they do get raised eyebrows on occassion.”
Being a single mom is really, really hard. Plus, it’s very difficult for my little boy. I am glad I divorced my husband but I wish it hadn’t worked out this way. It’s a very lonely way to live.
…a cousin in the mortgage business, who found zero-down financing for first-time buyers with Heartwell Mortgage. Her monthly mortgage payment and association fee total $740, while rentals in her area go for $500 to $700.
zero down and $740 mth including fees…that’s gotta be a teaser rate and/or some neg-am loan that’s going to blow up in her face.
There really is nothing quite as nice as getting shafted by family.
RK — during the long run of Ben’s blog, I was surprised at how many times I’d read about one family member snookering another into a bad real estate deal. Reminded me of soap operas.
I remember years ago when I sold cars, guys I worked with would slay their relatives. I always tried to make nothing on relatives and friends. That’s why I’m no longer in the car business, and a less than successful attorney. I’m just not into screwing people, and expecting a paycheck for doing little or no work.
Oh, and I know, there are lots of good, hard working, ethical attorneys out there. I’m also not a big fan of working 60-70 hours a week.
The “median sales price appears to be rebounding somewhat…..Those numbers do not account for homes that sit on the market for months.”
This pretty much describes what sellers will soon face; reverse musical chairs. In recent RE markets, the sellers of housing (chairs) could just sit there and an endless supply of buyers would constantly stream in, elbowing each other out of the way to grab one of the “hot” seats.
Now the game is in reversal. Instead of too many buyers for “chairs” there is an ever dwindling supply. What that means is that, while a few chairs may get the occaisonal sitter/buyer, more and more chairs will merely …sit.
Yeah, the “median prices” will still indicate SOME price is attainable but for many property owners who don’t compete on price, they won’t get any price at all. It may seem the “price” hasn’t changed too much but with insufficient buyers some sellers won’t get a transaction at all until they beat the other sellers in their relative categories down to the very, very bottom.
For those unwilling to “give their homes away” this is going to be a very painful lesson in “illiquid” market dynamics.
“Illiquid”? Try solid — this market is going to freeze up and die.
Try “your colon after eating five pounds of government cheese”.
“‘I still have a lot of people looking but not as many people making the move, pulling the trigger,’ said (realtor) Susan Robinet. ‘I just think it’s the uncertainty the national news has created.’”
Damned media, if it wasn’t for them, everything would go up forever.
Yea… darn the media. This slowdown has nothing to do with affordability, ratio of income to mortgage payment, or people noticing that a neg-am doesn’t exactly earn them equity!
Can we please have more weeks like this in the sub-prime market.
ok, not too many… but enough to stop stupid people from buying before they are mature enough to handle the consequences. I’m all for home ownership… just *smart* home ownership…
I *never* would have thought a decade ago I’d be arguing against home ownership…
Neil
None of what we’re seeing could be considered “ownership” in any reasonable sense, so you’re still being consistent.
touche’ !!
“‘I still have a lot of people looking but not as many people making the move, pulling the trigger,’ said (realtor) Susan Robinet. ‘I just think it’s the uncertainty the national news has created.’”
What a stupid comment. If anything, the media has been too quiet. And last time I checked, the media wasn’t “making up shit” like the REIC. F*** you lady.
Bear: My sentiments exactly! I want to read what is happening in the world, but I don’t want to have to sift through mindless, idiotic, falsehoods being repeated ad nauseum by a bunch of dip$hit realtors who know next to nothing about finance and econ. Like Dragnet: Just the facts! Take your NAR cheat sheet of soundbites and shove it up your Glamour Shot A$$!
“I still have a lot of people looking but not as many people making the move, pulling the trigger,’ said (realtor) Susan Robinet.”
Nice subliminal statement Susan–buying now IS like putting a gun to your head and “pulling the trigger.”
DOC
In the Oregonian article, after offering really no encouraging words for our 2007 outlook, it still adds the following:
What to expect next year? A little unclear, but definitely a weaker market. The economists shirked away from presenting specific appreciation rates, though Johnson said Portland-area home prices will rise about 5 percent to 8 percent next year, compared with the recent high teens of 2005 and early this year.
How do they think prices will appreciate that much when there is plenty of inventory? They simply do not justify it. Just throw it out there so no one will be worried.
Because it is common knowledge that real estate always goes up Up UP! Even if there are more houses than buyers, standard economic principles don’t apply because this is real estate which is “magically delicious.” The average human seems to have the long term memory of a fruit fly. They have no comprehension of anything other than a blockbuster, irrational, money-grows-on-trees real estate market. If its a really bad market then appreciation will be a measly 8%. So stubborn buyers need to just ignore all that biased media and “pull the trigger.” Russian roulette anyone?
RE: the article on Southern Oregon.
I travel to this region a couple of times a year to visit family (pre-bubble refugees from CA). It would appear that residential construction is THE economy there. The number of new units built since 2000 is staggering. Outside of the Portland metro, everything I have ever seen lists OR as one of the nation’s worst for unemployment/welfare. Household incomes in S. Oregon are around $40K if I remember correctly. Last year the new homes were selling in excess of $300K, and these are not McMansions, probably 2K square feet. Point is, unless you are an equity refugee, you cannot afford anything decent there. Just like in FL, the one thing that region had going for it is now gone. It was a good place to downsize, reduce expenses, and retire. That is about it. This area will see serious deflation in housing, and the sad thing is that I cannot think of anything that can take its place. According to family, OR is very bad with attempting to draw outside investment. They want companies to open shop there but then offer nothing in return. Hence, they all go to NV instead.
This is a little out there but I think of all the bubble areas, Nevada will retain the most of its bubble gains (other than LA and SF of course).
But that’s not saying much.
I would have to agree, txchick. Once this bubble fully deflates, NV will still have some pluses on their side. Quite a few CA companies have relocated there, and overall their economy has always been somewhat decent. People from SF area could relocate there and have Lake Tahoe’s assets, while still being a manageable drive to bay area for visits. I’m not a gambler myself, but I admire the way they operate. From what I know (not much, I admit!) they are fairly hands off, which tends to be economically positive (to some degree).
You should thank God you are not a gambler. Gambling sucks the life out of the poor people who get addicted.
Had a neighbor lose $50,000…they’d bring a limo up to bring her down to Foxwoods from Boston. Nice middle class….didn’t have the 50k to lose.
Ask any “normal” (not “gaming” involved) economist. Gambling is worse than a zero sum economic proposition.
OT- Heading to Rockwall Texas next week for a job interview, the company that I am interviewing with tells me Texas is much more affordable then Portland Oregon. The job deals with the commercial RE that seems to “booming” (had to laugh at that) right now, can you give me any insight on that.
Don’t buy in Rockwall unless you’re working there. I can’t imagine a worse commute into Dallas. But as you’re driving along I-30 eastbound, look off to your left and you’ll see all the relics of the Faulkner era 1980s S&L debacle.
I haven’t been there in a while - you mean all that half finished trash wasn’t bulldozed years ago?
Danny got an early release a few years ago because of terminal cancer, and he’s still alive. That guy even conned the Reaper.
I-30? I know people in Dallas who refuse to drive I-30; they’ll go 20 miles out of their way to avoid it. Apparently people get shot/run off the road and such.
When I lived in Dallas in the 80’s, Rockwall was white-trash city. Did it change?
In the early 80’s, I lived in Big D, Rockwall was white trash. Did it magically change?
Sorry. Double post.
No, it’s still PWT (pure white trash). Still lots of bleached blonds and mullets running around. Come to think of it, that’s Dallas, too.
Darlie Routier, you know, and her husband with the two dead kids tattooed on his arm.
You haven’t been to Dallas in a while. It’s mostly blacks and Mexicans everywhere and rich old WASPs and Jewish people in North Dallas. Rockwall is still hicksville but growing fast. It is a horrible commute to DFW too.
Tsk. Tsk. Everyone is in such a hurry to bash Rockwall. Seeing how I live close to downtown Rockwall, I suppose I should share my thoughts. Note there is Rockwall the city and Rockwall the county (smallest in Texas).
Rockwall has changed a great deal since 1995. The ’shock wave’ of building from the DFW metroplex has gone through it mostly. Lots of new residential construction in the last 10 years. The current bleeding edge of the construction shockwave is more east of the city and now hitting towns like Fate, Royce City, and Quinlin.
Since 2002 or so, there’s been significant non-residential construction in the county. Retails, Professional, Medical, etc. Lots of retail stuff along I-30.. Put a Fry’s out here and I’ll have no reason to go out of town except for work. I-30 by the way has been much better since the widening project was completed a few years ago. Also, a second bridge across lake Ray Hubbard was added to Hwy 66 and commuting across it has not been any trouble since. I work in Plano and have about a 25 minute commute Hwy-66 through Rowlett, then up Hwy 190.
Personally, I find Rockwall to be a more enjoyable place than Garland, Rowlett, or Mesquite, but then it helps to have spent a lot of time getting to know where the nice parts are and the not so nice parts are (and to know what you really want). I don’t care much for the new subdivisions and not at all for HOAs, of which there are plenty, so I chose an older neighborhood along the lake.
Housing is going to be more affordable than Portland. And your housing choices will be plentiful. Weather is ok, except for 4 months of hot & humid a year, but it depends on what you want.
If I knew more about your situation, I could tell you more. But mostly I think that if you spend a few days here, you’ll probably have an idea if you’ll like it, or if it is not for you.
Are you speaking of northern NV or southern NV? Huge state, totally different economic realities.
Yeah, TX, what part of NV are you talking about? LV’s doomed to become an island of casinos surrounded by a vast sea of empty housing tracts. Drive a mile off the strip in 2010 and it’ll look like the aftermath of the “Night of the Comet”.
The other “world” sellers are going to be in next year (and the year after that) is called “Hurt”.
‘Timber land owners from Oregon’s coast to its northeast corner filed significant development proposals this week, squeaking in before a Monday deadline for the state’s property rights law. Three Stimson claims in Lincoln County asked to be excused from land-use restrictions on 3,400 acres.’
‘Meanwhile, Plum Creek Timber Co. spelled out details of the largest known Measure 37 request: allowing housing on 32,000 acres of coastal forestland.’
‘Plum Creek, a Seattle-based real estate investment trust, filed nearly 100 applications Thursday. The company proposes allowing residential development on 22,000 acres in Lincoln County and 10,000 acres in Coos County, spokeswoman Kathy Budinick said. ‘
Long-time lurker with a first post here.
I have (had?) a bet with a friend that CA prices would fall 8% from jan 2006 to jan 2007. It would appear that I timed the downturn wrong, and am going to lose the bet.
He is offering a double-or-nothing bet for an 8% drop from jan 2007 to 2008. Or, I can pay up now.
Would you take the new bet? Home prices are from OFHEO index.
I’d take the new bet. You called it early, but a lot of a perfect storm is brewing for ‘07: resets, recession, tighter credit, etc.
oops, make that “a perfect storm”, not “a lot of a”…changed the wording, then saw it a millisecond after I clicked on Add comment - doh!
Ben, any chance of getting a “Preview” button added like some of the other blogs?
This bites everyone and nobody wants to look like they smell bad…:-)
Seattle — we used to have one, long ago, but that server/system was always going belly-up; there were a lot of spam and troll problems; the authenticate fuzzy-word thing slowed it down, etc. Whether or not it’s a cause, I’d guess that Ben’s blog has vastly more viewer traffic than almost any other single-issue blog out there.
I would not take the bet, because of certain limitations on the OFHEO index to accurately measure changes in market value. Of particular concern is its dependence on repeat sales, which makes it tend to miss changes in the market values of overpriced homes which are not selling, its exclusion of auction sales (I think — but check me on this if you really want to know) and the effect of the $417,000 (or whatever that number is) conforming loan limit, which for the most part takes all of coastal California out of the sample.
See the excellent NY Times piece by David Leonhardt posted here yesterday under the “It’s Payback Time” thread for more on this fascinating subject, which goes far to show why “real estate always goes up,” even when prices are falling!
This link may or may not work:
http://www.nytimes.com/2006/12/05/business/06leonhardt-side.html?_r=1&ei=5087%0A&em=&en=2d65613f2701746f&ex=1165554000&adxnnl=1&adxnnlx=1165500569-DNcHS2KaOvxC5AC5/EiXzQ&oref=slogin
I seldom bet on things I have no control over, and I never bet on the actions of fools. I’d pay up and consider it a cheap lesson in forecasting.
As you may know Colorado had huge price run ups in 1994 and 2000. I was certain prices in Colorado would fall after the stock market crash and tech bust. I was WRONG. It cost me a lot of credibility with my wife who now doesn’t believe that it’s finally happening. She’s ready to buy a bigger house because prices “never fall far” and “it’s a great time to buy”.
Climber wrote, “It cost me a lot of credibility with my wife….”
So what!? You were wrong….everybody makes timing mistakes; I know I have. You learn and move on but don’t let it affect future decisions. It sounds like emotions are coming into play on a business decision…..kick them out of the equation; regardless of where they are coming from.
I *almost* pulled the trigger on a house this week because I am sick and tired of not being settled and felt the self imposed pressure to get this purchase behind me. Bad, bad way to make decisions.
After sleeping on it, I realize how close I came to writing a BIG check for the wrong amount, at the wrong time, on the wrong house.
Logic +
Emotion -
You will be rewarded for your restraint….
I was certain prices in Colorado would fall after the stock market crash and tech bust. I was WRONG. It cost me a lot of credibility with my wife.
Buddy, you and me both. Just substitute California for Colorado. I just have to work harder in bed now. Its all good.
“Home prices are from OFHEO index.” This Index is based on homes selling below $417,000., Fannie and Freddie limit. You picked the wrong index for Cal. Very few houses in Cal will enter this Index.
As mentioned by others, you’re using the wrong index for California. The median price in California is above the OFHEO maximum threshold, so the index is pretty skewed, and the OFHEO includes appraisals for re-financing (not just sales), and those appraisal figures are likely way too high.
I’d take the bet if you could switch the index (maybe use DataQuick or CAR numbers - not that I really trust either of them, but at least they’ll try to capture all of the sales). If you do switch the index, I’d also make sure that it’s only for re-sale homes and condos, but excludes new homes (builders’ prices are totally deceiving since they’re using incentives up to $100K).
If your friend won’t agree to these changes, then I’d pay up and take it as a lesson learned. (Primary lessons: it’s hard to time this crash, and be aware of how numbers are calculated).
Take the bet. 2007 will be so brutal it won’t matter what index you’re using.
I think TJ is right. Otherwise, pay him now and ask him to be a sport and bet the same amount that it won’t drop another 2%, based on your measurement inde this time.
You might end up winning? The Jan comps won’t come out until March or so. You got a ways to go.
Downtown San Diego has a new condo tower named SmartCorner, lots of TV commercials featuring the voice of a 20-something woman with a very smug self-satisfied attitude, using her haughtily affected semi Valley Girl accent. You’re just sooooooooo SMART to pay 500K for a studio at SmartCorner.
google smartcorner to see what I mean. You Have Arrived.
Trying hard to convince someone via blatant ego stroking that they should overpay for a downtown box that will probably only get to 25% sold before developers throw in the towel and start renting the rest out as apartments…
Yea I REALLY wanna join that party!!!
“‘I still have a lot of people looking but not as many people making the move, pulling the trigger,’ said (realtor) Susan Robinet. ‘I just think it’s the uncertainty the national news has created.’”
Go right ahead and kill the messenger, then. Forget about the collective effects of the REIC cheerleaders preaching “real estate always goes up,” easy money, overbuilding of McMansion tract home developments, overbuilding of McLuxury condos, elimination of loan underwriting standards, repackaging of subprime loans into junk MBS, etc.