“The Effects Of Gravity Finally Caught Up”
The Providence Journal reports from Rhode Island. “Rhode Island’s housing market continued to weaken in October, with prices showing double-digit declines from a year ago. The median price of a condominium in October was $225,000, down 12.2 percent from October of last year, according to The Warren Group. Condo prices in the state have now declined for three straight months.”
“Prices of single-family houses also fell, albeit less sharply. In October, the median price of a single-family house in the state was $262,500, a decrease of 4.2 percent from October of last year.”
“‘Our figures continue to show sluggishness throughout the Rhode Island housing market,’ a news release quotes CEO Timothy Warren Jr., as saying.”
“The nationwide slowdown in the housing market has recently weakened demand for condominiums, Warren said. But as the market weakened, he said, ‘the effects of gravity finally caught up with them.’”
“Rhode Island’s housing market has held up better than the market in Massachusetts, where the median price of a single-family house in October was $312,000, down 6.87 percent from October of last year. The median price of a condo in October was $261,750, down 4.82 percent from the same month last year.”
“‘You never know where the bottom of the market is,’ Warren said, ‘until you’re at the bottom.’”
“Home sales fell in three of Rhode Island’s five counties in October, with Newport’s 32.9 percent drop being the steepest. All five counties experienced price declines, with Newport falling by the biggest margin (11.7 percent) and Bristol by the smallest (1.7 percent). Unit sales now have dropped by double-digit percentages in four straight months and six of the last 10 months.”
From New Hampshire Public Radio. “Over the next few years, people will start to see a mix of affordable and upscale housing with prices rangeing from 140 thousand to over 400 thousand dollars. Close to 900 units are proposed. About half of them have been approved.”
“Real estate veteran Paul LaFlamme says developers want to cash in on the national demand for urban housing.”
“Some observers wonder if the demand exists for all these housing projects. Michael Swack, dean of Southern New Hampshire University’s economic development department, questions if home buyers will think downtown Nashua has enough cultural and social amenities.”
“‘It’s speculative. The markets can change. We’ve seen that in different places, real estate markets can go up and down,’ he said. ‘One of the risks they’re taking is the type of units. When you talk about New Hampshire, people generally still prefer single family homes. It’s not like living in New York or Boston.’”
The Boston Globe. “Citing a soft real estate market and increased construction costs, a major Salem real estate developer disclosed last week that it had scrapped plans to redevelop a downtown block as an $80 million residential and retail development.”
“Lynn Duncan, director of planning and community development in Salem, said the economy would shape any future development of the property. ‘The market always has a lot to do with this; the market right now is not as strong,’ Duncan said.”
“Julianna Tache of Tache Real Estate, said condo prices in Salem had dropped between 5 and 10 percent over the last year. Currently, there are 208 condos listed for sale in the city, at an average listing price of $303,752, and staying on the market for 153 days.”
“The glut of condos and the competitive interest rates favor buyers, Tache said, adding that the market would improve only when the condos on the market are sold. ‘To turn this market around at this point, some of the supply has to be bought,’ she said.”
“A provider of Massachusetts foreclosure data released its November 2006 report today, revealing that foreclosure filings in Massachusetts are shattering previous records. The report shows that 2,188 foreclosures were initiated statewide during the month of October 2006, 111% more than October 2005 and 219% above 2004 levels.”
“‘2006 has been a very unhappy year for thousands of Massachusetts homeowners, we are seeing a massive increase in foreclosure filings,’ said Jeremy Shapiro, president of ForeclosuresMass.com. ‘By October 31st of 2006 every county in Massachusetts already had more foreclosure filings than the entire 2005 calendar year.’”
“October 2006 saw over 70 foreclosure filings per day (including weekends and holidays) and nearly 110 every business day. 11,493 foreclosures were filed for the entire year in 2005. So, with 2 months to go in the year we have already eclipsed 2005 totals by 3,640.”
From New Hampshire Public Radio. “Over the next few years, people will start to see a mix of affordable and upscale housing with prices rangeing from 140 thousand to over 400 thousand dollars. Close to 900 units are proposed. About half of them have been approved.”
Is this more garbage from NPR? If I remember correctly, about 6 months ago many of us established they were carnival barkers for the REIC. Anybody recall?
An 11% decline seems very significant at this point. The % are to confuse the public while we brainy bloggers fully realize that a 10% loss wipes out a 20% gain and an investment must double in price in order to overcome a 50% loss.
Hah and this does not addresses any financing or other holding cost nor opprotunity cost.
Rich,
So true. There’s your “gravity” for you. What REIC cheerleaders always seem to gloss over is that while true, a house doesn’t usually go to “zero” like stocks can but if your highly leveraged RE investment goes down by 10% and you put down 10% you just lost 100% of your investment. A 20% correction? Disaster! It may be easy for folks that have been in their investment (I mean home) for years to be dismissive about this but not buyers from 2004 on!
I’m going to go out on a limb here (now that 2006 is basically over) and say the 2004 late to the party crowd is pretty much screwed too.
Funny, I listen to NPR and hear them talking about housing being in trouble.
Captain Credit was referring to “New Hampshire Public Radio” and I’m not sure that is the same as “National Public Radio”
OT:
“Dr. Doom”
“As for the “here and now,” we have deemed the recent performance by the major market indices to be somewhat “unnatural.” Markets typically go up, correct by 25%, and then re-rally if they are going to trade higher. This, ladies and gentlemen, has not been the case recently as the averages have “unnaturally” vaulted higher without so much as ANY correction. We have suggested this phenomena was triggered by Goldman Sachs’ re-weighting of its much institutionally indexed commodity index last July. Why Goldman would mysteriously reduce the weighting of gasoline from 7.3% to 2.5%, in a gasoline-centric economy, and stage those reductions incrementally right into the November elections is a mystery to us, but there you have it.
“Following that, the Department of Energy mysteriously said it would not add to the Strategic Petroleum Reserve (SPR) until after the winter months, even though the SPR was below prudent norms. This is also a mystery to us, but once again there you have it. Then, when it looked like the equity markets were set-up to correct (read: decline) in mid-October, the NYSE petitioned the SEC, and was granted, a mysterious reduction in margin requirements for an already over-margined hedge fund community. And that “mysterious surprise” gave the major market indices another leg-up (read: re-rally). Again, why in the world one would introduce more leverage into an already over-leveraged hedge fund community is a mystery to us! Also mystical is why every time the equity markets look like they are set up for a downside correction, do “buyers from Mars” appear in the futures markets to prevent a decline? We have documented such occurrences in past missives where those “mysterious buyers” have shown up at 6:30 at night and “bid” the S&P 500 futures from 1375 to 1397 (or +22 points) in a mere two minutes, but that is a discussion for another time.”
Or in one word - manipulation. Joe Sixpack’s 401k’s have done really well since this stock market straight up “rally” began around August 14th. Of course, Da Boyz on Wall Street will have done REALLY well running up stock prices. So much it seems, that the media are telling us many of Da Boyz will reduce the inventory of those NY over priced properties by “snapping them up” with their multi-million $ bonus pay-offs. We shall see. On the other hand, I’m betting the Wall Street Financial Gangsters are sharpening their pencils and getting ready to take the market down. Not all the way of course. Just enough to make Joe Sixpack less happy but not unhappy enough to scream “Manipulation”! Still, I suppose I shouldn’t complain seeing as I went long on the 14th August and stayed in. This rally died (went flat line) on November 27th. We will soon know what Da Boyz intentions are…
I think you may have stumbled upon the B Bernanke Ameritrade account.
Media has definately moved into the acceptance stage (still some denial pieces out there)…. the sheeple will soon follow….
Slowly but surely we are moving through the 5 stages…
1. denial
2. anger
3. bargaining
4. depression
5. acceptance
IMHO, many sellers are still in stage one (St. Joe statue, waiting for spring, good luck) but the ones that bought in 05-06 (well underwater) are moving into stage 2. The leading edge is moving into stage 3 (short sales, FC). A trickle is now moving into stage 4 (BK).
I love this pic… http://en.wikipedia.org/wiki/Denial,_Anger,_Acceptance
The repo man is coming….
Denial will continue at least until after the Souper Bowl.
Souper Bowl is right….quite a few people will be watching the 2008 Souper Bowl from Soup kitchens.
All you need to do is put the Foreclosure Papers in the pic.
That’s classic!!
By October 31st of 2006 every county in Massachusetts already had more foreclosure filings than the entire 2005 calendar year.
By October 31st of 2006 every county in Massachusetts already had more foreclosure filings than the entire 2005 calendar year.
Look for foreclosure filing increases to go exponential in ‘07. The spring slaughter is coming.
I’ve noticed that the fact that Massachusetts and Colorado leading the nation in foreclosure increases also seems to directly coincide with the OFHEO numbers showing that MA and CO are the first states to start the housing slowdown & subsequent downturn. Not a coincidence. As other states pass through their downturns, the foreclosure numbers there will also follow suit, in many cases more severly than MA and CO, since a lot of other states (e.g. FL, CA, VA) have had a bigger bubble than MA and CO did.
He he - just realized that the wording of that is funny - I stated that they coincided and then in the next sentence that it’s not a coincidence. Anyhow, you get what I mean. It’s not an unrelated coincidence, but rather a related coincidence.
That’s an ‘incidental coincidence’, then.
I spoke with a friend last night who had an open house Sunday in Lincoln, one of the more exclusive suburbs of Boston. Not one person showed up.
All the looky loos were probably over at the mall spending a gazillion dollars on cheap Chinese imports. It is Christmas shopping season, after all.
I have a friend in Boston who bought a condo in 2005. She told me that a neighboring unit sat for a long time in the market until it was finally sold for less than what she paid for hers.
But didn’t CNN say Boston was one of five “bubbleproof” cities?
Say it ain’t so!
OT, but I thought this was scary. A friend works for a major US corporation, one of the biggest in the world. He is being transferred to San Diego from his present location in the Central Valley. The company is paying his moving expenses, and arranged for him to meet with a company employed financial advisor to go over the package they’re giving him for the transfer. In the meeting, my friend said he wanted to rent a place for at least the first year before committing to buying a house (he doesn’t know San Diego at all). But the financial advisor “advised” him that he should buy a house, and that renting was a waste of money. When my friend said that his initial research showed it was much cheaper to rent a house in San Diego, the advisor replied, “Well, not based on an Option ARM loan. You can pay the negative amortization option and it will be about the same as renting or less, and that’s what you should do.”
Remember, this is a highly paid employee of a Fortune 500 company that has 100,000 employees in the USA. I shudder to think how many people he’s advised over the past few years, and how many of them are poised to lose their homes because they followed this guy’s advice.
Working for a relatively large corporation - my experience has been that the relocation folks in corporations tend to be some of the most clueless beings on the planet. (I hope none are reading this post and know who I am
) I would imagine the same is true for corporate-employed “financial advisors”.
Of course they probably don’t spend half their day reading RE bubble blogs like my lazy butt, either.
The monkey that doesn’t play “monkey see, monkey do” usually gets a face full of flung feces. Tis’ better for most to parrot the script that was handed out during the “training period” than to risk the paycheck. (Been there done that, got fired.)
Never ever bad mouth the FED in front of a boss that has license plate holder that states, “Thank you Federal Reserve”. Yeah, I was really loudmouthed and stupid 15 years ago.
I’m just absolutely covered in crap. I was born in the year of the pig though so I kind of enjoy it!
Loudmouthed and stupid? Sounds like you were the smartest employee in the company?
LOL! Well stupid in that I was making some really good money and should’ve just kept my mouth shut and kept my outbursts for more sympathetic ears with less power over my financial well being.
Ah, the impetuousness of youth. I haven’t quite lost it all yet. The impetuousness that is, as the youth is long gone
Sounds like misery looking for company.
I’ll bet the financial advisor also would have had an agent to recommend for your friend. And that agent or his company would have a relationship (financial or personal) with the financial advisor or the company. Of course, that wouldn’t be disclosed to your friend. And, I’ll bet there would be a “preferred lender” at the ready to supply that tasty I/O loan, as well.
zeropointzero,
Exactly! I just HATE this brand of “sales”. All three in this daisey chain need to be lined up and shot! It’s so obvious that the “relcoation manager/fin. planner” dude had ALREADY spent the money! Note the desperation in comments like “throwing your money away on rent” and “not if you get a neg. am option ARM” etc. He’d probably already called his realtwhore buddy that some “fresh meat” (new guy) was transferring in the minute he got the word! Why can’t people just go out and do their OWN sales? Then again this is part and parcel w/realty-world so why wouldn’t everyone be sleeping in the same bed at the corporate level? Sheesh. I just hate it.
Perhaps this is because the company doen’t want the guy to be secure.
Remember the old saw “I owe, I owe. It’s off to work I go”
If one doesn’t owe anything, then one doesn’t _have_ to work.
Many moons ago I was going to interview for Micron Technology in Idaho. I wasn’t really serious about the job, but thought it would be worth the visit. This strange company prioritized drug testing and spending a half day with a RE agent over the actual interview. They were going to have me do this without even talking to me. I would never take a job requiring a drug test, but doing so before interviewing was bizarre…… Also, I got numerous calls from this RE agent and was sent endless brochures. (The key feature in Idaho is apparently RV parking!) In the end I told them to get lost and gleefully noted that the plane tickets for myself and significant other were non-refundable, but still quite pricey. This was in the late 1990s, btw.
OMG in 102 years every single home in MA will have been foreclosed on at the Oct 2006 fc rate!
2,688,014 total in MA / 2188(x12) = 102 years
I would like to compare this # of years to other states. I bet FL will surpass this next year.
Here is my source for # of housing units
http://72.14.253.104/search?q=cache:8q5YPjbvKI0J:www.chapa.org/pdf/HousingTrendsinMA06.pdf+massachusetts+number+of+housing+units&hl=en&gl=us&ct=clnk&cd=10
“A provider of Massachusetts foreclosure data released its November 2006 report today, revealing that foreclosure filings in Massachusetts are shattering previous records. The report shows that 2,188 foreclosures were initiated statewide during the month of October 2006, 111% more than October 2005 and 219% above 2004 levels.”
Record shattering foreclosures presage more price declines — it’s in the bag.
If this was an oblique reference to Gary Watts’ “It’s in the bag” prediction for Orange County house price gains, remember there are still 19 days left in 2006. Home prices could very well surge 10%-15% here in the home stretch and make us all look stupid.
http://interestrateroundup.blogspot.com
And this is after a trivial number of the ARMs have reset. Almost as many ARMs reset in 2Q 2007 as have reset in 2006.
And IIRC, we’re not at all time record foreclosures, just multi-year records. If we do not adjust for population… we could very well set the all time record. Keep the powder dry. 2007 is going to be interesting.
Neil
Not a problem here in Massachusetts. Barney Frank said so, just those greedy “speculators” getting busted on a little 10% decline…once this gets cleaned out its “too the moon Alice”.
sthpeculators- their savages !
agree congress won’t provide bail except for the victim classes
Right. The Lenders.
OT, but Fed holds rates. See Marketwatch.
cites remaining inflation risk, “substantial” weakness in housing, one guy wanted to raise rates.
“substantial my ass, this is a mild correction.” Dave Lereah responded on CNBC. “Those clueless Fed f*ckers better buy before they get priced out in the spring rally” quipped Lerah.
My thoughts/laments on the Fed’s latest meeting, for what they’re worth …
The Fed kept rates stable at 5.25% for the fourth meeting in a row … with the last hike on June 29.
Some highlights from the post-meeting statement:
- The Fed pointed out that economic growth has slowed this year, attributing it to a “substantial cooling of the housing market.” The qualifier “substantial” is new, indicating that the Fed may be more pessimistic about housing.
- The Fed said that “readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures” — references to the fact the core CPI is still above the Fed’s preferred range and the fact the unemployment rate remains low. But officials also argue that stabilization in energy prices and past rate hikes will work to alleviate those inflation pressures.
- Once again, Jeffrey Lacker dissented in favor of a quarter of a percentage point interest rate hike.
What I can’t understand is why the Fed continues to focus purely on the REAL economy and say nothing about the FINANCIAL/ASSET economy. The European Central Bank makes a point of discussing money and credit growth. Other central bankers do, too. Yet the Fed continues to stay mum about the explosion in new credit, the worldwide surge in money supply, the spree of multi-billion dollar LBOs, the gigantic surge in commercial real estate values, and several other indicators that monetary policy is anything but tight. Sigh…
What do you mean “the Fed continues to focus purely on the REAL economy”. They are focusing on the doctored numbers (they specified most of the smoke and mirrors, other gov. agencies did the dirty work). I think they know they are on the Titanic just before it hits the iceberg, but there’s nothing they can do.
Good Morning America did a piece today on foreclosures. It started out with some foreclosure data, then went to the usual fianancial advice fluff, e.g. “ARMs may not be for you”. No kidding, now you tell us?
Yup. Those stupid shows never change. First, Katie Kuric (or some other flavor of the month) telling us with a grim expression how people are losing their houses through foreclosure then, as soon as she’s finished with the bad news - the grim expression quickly fades and a perky smile appears with, “In our next segment our laundry expert will show you how to get those blueberry stains out of your favorite blouse.” $500,000 a year (and sometimes much more) for being on tv and showing you’re an idiot. However, I hope they keep going. Good Morning America is one of my favorite comedy shows.
As usual the media rides in after the disaster. Where were they two years ago when they could have done some good?
I can buy any house in RI for 15% less than 05
fell 30% in last pop 90-95
how could you go bk in 04 ? those were bidding war days in NE
statewide during the month of October 2006, 111% more than October 2005 and 219% above 2004 levels.”
It’s the American way… blame it on someone else…
——-
Fannie Mae files complaint against KPMG for negligence
By Ana Campoy
Last Update: 2:42 PM ET Dec 12, 2006
SAN FRANCISCO (MarketWatch) — Fannie Mae (FNM : Fannie Mae
FNM60.14, +0.29, +0.5%) on Tuesday said it filed a complaint with the Superior Court of the District of Columbia against KPMG LLP for negligence and breach of contract. KPMG was Fannie Mae’s former outside auditor.
Look at the pot calling the kettle black…
It’s going to be fun watching the blame game gathering momentum. First, people rushed to get a Real Estate licence. Now they should rush to get a licence to practise law and specialize in property litigation.
The list of “targets” in this bursting bubble is pretty substantial. Crooked mortgage brokers, crooked realtors and brokers, crooked builders cutting corners, crooked appraisers. We might even see a few local politicians getting caught up in the web on corruption charges. That would REALLY be nice.
I’m looking forward to watching C-Span and politicians in Washington holding endless public hearings and calling scores (if not hundreds) of witnesses in the mortgage industry, building industry, banking industry, etc. Of course, it will all be political photo-op b.s but the comedy value should be great as long as you realize that’s all it is -a political photo-op.
My eyes will be looking for Hilary Clinton as she attempts to cement her image as someone concerned about the welfare of the average American. Here’s a guarantee. We will not see her smile. Not once. She never does when she is trying to look concerned. Her expression will be one of subdued anger at the people engaged in this deception. Of course, even though it has been going on for almost 6 years, she knew nothing about it. Bill has taught her well. “Play to the camera, Hilary.”
Oh, BTW, I’m a liberal democrat.
Wonder if she’s still trading sugar futures. Ask Refco.
I think it was a magical cattle futures trade. Little Rock mafia at its finest.
Yeah I used to trade cattle futures too. Was up 100k or so in less than a year but decided not to do it anymore.
Why did I stop? Hmmmm….good question!
Why did I stop? That was pretty good money wasn’t it?
Why DID I stop?
Bill’s into poontang futures, an overlooked commodity. He’ll probably do well.
Analyst Downgrade:
Dancing on the bottom - downgraded to - might be dancing on the bottom - R Toll
Someone else noticed the word “substantial” re housing
Richard Suttmeier
The “Bond” Conundrum Will End In “007″
12/12/2006 2:46 PM EST
Fed Adds One Word to Press Release - SUBSTANTIAL
Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market.
I have been tracking this and the added word substantial shows a growing concern by the Federal Reserve that the economy is slowing. Add to this the December 6 press release from FDIC.gov and the Federal Reserve could add commercial real estate as a contributor to slower growth into the press release at their next meeting. I re-iterate the call I made on CNBC this morning. Two quarters of GDP growth below 2% are feasible this quarter and next, and that will move the FOMC to cut the federal funds rate on June 28.
This is not bullish for bonds, or stocks, so be careful. I know the Dow can trade up to 12,347 today and to 12,648 by yearend, but beware if Friday’s close is below 12,103.
The “Bond” Conundrum Will End In “007″ and that’s bad for the dollar, and dollar assets. The FOMC will be lowering rates while inflation is above their comfort zone, more bonds will be issued in 2007 with less foreign demand. Higher yields will drag stock valuations.
Position: none
“The “Bond” Conundrum Will End In “007″
I like it, the dollar is going to be treated like a male 4th grader wearing plaid carrying a doll on the playground.
“Higher yields will drag stock valuations.”
Higher yields will also drag housing valuations.
“Position: none”
That’s the one that gets me. As in, someone knows an awful lot of something that I don’t know.
Rhode Island’s housing market continued to weaken in October, with prices showing double-digit declines from a year ago.
How can that be? Didn’t I just read on this board a few days ago that everybody and their cousin are itching to move to Providence?
I can solve the excessive inventory problem and jumpstart the market in RI.
Since the ultimate status symbol in RI is a low number car license plate, round up all the low numbers and include it with purchase of a house. Stand back and let the bidding begin…….
Dan — find a Chinese investor and you might retire on that idea. Get him/her the number 888 and you are home free. Superstition is worth a LOT of money when working with certain ethnicities. Heck, just look at modern America — no “13th floor.”