The Housing Bubble

Have a nice weekend, jmf!

NICE post jmf….

Thanks jmf,
Great ‘toons and love that chart on construction.

I wonder if their enforcement of these new coinage rules will be stricter than their enforcement of mortgage lending “regulations”…

Things that make you go hmmmm…

“We are taking this action because the Nation needs its coinage for commerce,” said Director Ed Moy. “We don’t want to see our pennies and nickels melted down so a few individuals can take advantage of the American taxpayer. Replacing these coins would be an enormous cost to taxpayers.”

Old Chinese saying: The high rests upon the low

So, if ONE house is over-appraised at $150,000 thousand Dollars…then how many pennies…
Wait, the Government is concerned about pursuing criminals that perform what type of crime?
Now, I know why the Amish bury their money…it’s a form of free investment that appreciates over time.

If they have to ban the melting of pennies, I expect to seea ten fold increase in stealing/stripping copper wiring from homes.

hehehhehe
she got the fl mansion RE-do
better torch it

http://realestate.yahoo.com/Real_estate_news/columnist/kendra_todd/Best_Places_to_Buy_a_Home.html

Best Places in the U.S. to Buy a Home
By Kendra Todd
November 11, 2006
While the alarmists continue to jabber on about a real estate bubble, the fact is that real estate is regional, not national. That means while many overpriced markets are cooling off, others are poised to take off in the next two to three years. In this column, we’re going to look at some of the most promising places to buy a home in the U.S.

What’s Best, Anyway?
Of course, everyone’s idea of the best place to buy a home varies. For some people, an area close to family is good, no matter what else is going on. For others, it’s all about climate. But for smart real estate investing, these are the criteria I’m looking at:

A strong trend toward appreciation. You want to be able to buy a home for a reasonable price and have it increase in value for years.
A strong local economy. Areas that fit the economic profile tend to have good job growth and new businesses moving to the area.
A “wow” factor that attracts people. It could be weather, scenery, outdoor recreation or even a conservative or liberal reputation.
Solid in-migration to the area. People should be relocating to the region in a regular stream.

You want a market that offers something that speaks to you emotionally, affordable housing that will go up in value, and the promise of good jobs, which means a strong tax base and quality services. What are some of those markets? Let’s take a look.

My Best Places
Generally speaking the high-opportunity markets are the smaller municipal regions that have remained below the real estate speculators’ radar-smaller cities that are self-contained, tend to be filled with history, aren’t full of big box retailers and strip malls, and often have the arts or a university underpinning their economies.

Iowa City, Iowa - This town of 131,000, home to the University of Iowa, is expected to see its home values increase 2.4% by mid-2007, according to a forecast from Fiserv CSW and Moody’s Economy.com published in Money magazine. That’s a small increase, but when you add the other factors-very low unemployment rate of 2.2%, housing prices that are quite low for a college town, and the numerous cultural, sports and educational opportunities that come with living in a university community-this city is a winner.
Lewiston, Idaho - This small city of 57,000 is yet another spot in Idaho where housing values have yet to catch up with the popularity of the open spaces, scenery, and recreational potential. Lewiston is projected to enjoy 6.2% appreciation in home prices by June 2007, and enjoys low unemployment and a very low crime rate. Added to the popularity of Idaho in general, this is a great market for people who can take the cold weather.
Olympia, Washington - This city of 44,000 at the tip of Puget Sound boasts several factors that make it a wonderful market: an unspoiled environment, a healthy economy with an unemployment rate hovering around 4%, and best of all, one of the best projected appreciation rates in the country, 13% by June 2007. In fact, most areas of Washington state appear poised for a boom in real estate prices, as Spokane, Mount Vernon, Yakima and several other areas are also among the top projected gainers.
Spokane, Washington - This large eastern Washington city of 191,000 does suffer from a higher than average crime rate and a higher unemployment rate than I like, but it has huge potential due to its thriving university culture and its wonderful climate. A variety of factors have contributed to its projected appreciate rate of 12.4% from now to June 2007.
Panama City, Florida - Much of Florida is overbuilt and in a state of price decline. Panama City, a town of 37,00 on the panhandle, is a robust exception. In fact, it boasts the highest projection of one-year appreciation from Fiserv CSW and Moody’s Economy.com, 21%, and a low unemployment rate of 3.2%. It does have a crime rate nearly double the national average, but if you can get past that, you can grab a property that will create tremendous wealth.
Tucson, Arizona - The largest city on this list with more than 512,000 residents, Tucson is the antidote to the overheated Phoenix/Scottsdale market. With a projected appreciation of 5.7% and an average three-bedroom home price of about $211,000, this city offers the option of living in the warm, dry Arizona climate for a very affordable cost. I think Tucson will be one of the hottest markets in the next five years.

TxChic, you should see the selection on eBay!

Has the Silver, Gold and Bronze Edition.

I wonder which one Casey purchased?

Txchick

Did you say something yesterday about an invester buying 5 billion in S & P puts?

The post is already flagged and removed. I assume it was an attempt to sell some sort of “get rich in real estate” crap.

This is what it blogged on that site.

“It is not a go time to buy. If you buy right now with a toxic loan you will be screwed when the ARM is reset, because you took out a 100% loan at a sub-prime rate. Wake up people and smell the turning of the market. There is nobody left to buy up the houses.”

My answer might surprise you. To put it simply, there’s NEVER been a bad time to buy in Sarasota.

Sure surprised me. Must be different in Sarasota.

Ugh.. that site makes me puke. Nothing but trolls and Realtors sucking up. I left a message but I doubt it will get posted.

What a B.S. blog. I wrote a nice entry and the response when I tried to post it was, “Awaiting Moderation”. I bet there is no way they will post my “realistic” views on the current market and that now is NOT a good time to buy. They will moderate only the entries that match their views on to their blog.

Here’s what I wrote to that blog. I intentionally kept it pretty tame. It will be interesting to see if they post it.

“We left Sarasota in the summer of 2005. Didn’t want to deal with the eventual hurricane. Talked to a former associate last week who said we picked the right time to leave, as prices “are down about 20% in the last year.” So if you think the decline is about over, then now is a good time to buy. Just check what your property insurance and tax bills are going to be. And sell your other house first. Carrying two mortgages for any length of time can be hazardous to your financial health.”

I posted at http://www.thesaundersblog.com. Let’s see if it runs or if it disappears.

Saunder’s “argument” for buying is content free and emotion full.

Don’t let facts stand in your way of leveraging yourself to oblivian. Trust your “instincts” and buy, buy, buy or else “Bye, Bye, Bye” my business………….

Here’s my reply to the Asshat Realtor from Sarasota:

“Only an idiot would buy Real Estate in Sarasota right now.

Good luck Realtors. Your profession is due for some startling, painful and abrupt changes.”

Certainly that will never get posted to his cute, happytalking, informative little blog.

We’ll see.

Sure you can nominally do better than 3% with treasuries, but appreciation is HUGELY leveraged with a mortgage where practically no money controls several hundread thousands of dollars. I don’t agree with the 3%, but the article is simple wrong on that simple math.

And of course, the 4 kids and all that goes with that. Whatever. You can like like a king in Nebraska with that income.

As a Georgist who thinks buy-to-let of SFH is a horrendous social injustice, I am mildly gleeful reading that.

ecpt oils over 62
cpi low showing labor arbitrage

Good day for people long Dec. 1425 calls anyway. Jesus, get this over already!

I say, “Erin, go for that subpoena and/or court order. Do it with gusto.”

Don’t worry about the REIC mortar fire, Erin. We on the HBB have your back.

At last someone in government, even if it is local government it’s a start, has suddenly realized that the foul stench around real estate which has been getting stronger with each passing year, is corruption. However, how dare the government ask the real estate whores to show them their books just to make sure there has been no sheenanigans. After all, there’s no point in upsetting the thousands fb’s who got suckered into buying way overpriced property because of corrupt practises by those in the real estate industry.

Hopefully, this story will get around and a light bulb will go on in several state attorney’s brains. It could have “legs” and gather momentum because revealing the massive corruption and fraud which has gone on in the real estate and mortgage industry is a win-win scenario for any ambitious Elliot Spitzer style state attorney.

Truth is, I’m fully expecting to see our prisons releasing minor offenders in the next few years to make room for corrupt mortgage brokers and fast talking hype realtors.

IMHO this is pure crap. Sure there is fraudulent appraisals out there, but blaming the increasing foreclosures on an appraisal appears to make no sense. Did the appraisers review the loan applications, the verification of employment, the income? The lender reviewed these items and decided that the borrower could afford a house of this much. This is more CYA BS, where was Erin Toll in the runup?

but Metrolist doesn’t plan to just hand it over.

It’s a friggin spreadsheet. What are you hiding? Go get the supoena.

What a joke. I’m sure he will find some darelict though.

Flaky reasoning. The annual rent equates to over $600 a square foot. Someone could use that to argue that houses are underpriced.

The comparison must be between selling price and monthly rent. Any ratio over 200:1 means housing is overpriced. Under 100:1 means it’s underpriced.

Huh?? That’s 56 CENTS per ft^2 per month, or $6.75 per year.

OTOH, the economy of the early 1970s was one when a college grad could still expect his/her sheepskin to be a ticket to a good job at a big company. And, decades down the road, he/she could expect to retire from that company with a pension.

Much has happened since then. And I think that the events of the last 30-or-so years have much to do with the increased focus on being well off. Big education, big companies, and big government are obviously not going to do it for us. We have to do it for ourselves.

“More than half of American households owned stocks and mutual funds in 2005. The 91 million individuals in those households had a median age of 51 and a median household income of $65,000.

See? The preferential tax treatment of capital gains and dividends benefits half of us!

You really want to live down there? There’s an average of one person per day being shot. Dude, look elsewhere. Your life may depend on it.

Here’s an “all is well” diary article from a miami condo inverstor/buyer. She thinks she’s lucky though you can see the fear in her grin.

http://www.nypost.com/seven/12142006/realestate/baby__youre_the_one_realestate_suzy_buckley.htm

December 14, 2006 — Count me among the lucky group of buyer-investors who cashed in on the wave of Miami’s lucrative preconstruction craze. I wasn’t one of the risk-taking visionaries who made big money investing and flipping in the late ’90s and early ’00s. Somebody just dragged me to a condo-sales launch party in 2003, where I had a few cocktails and chicken satays and got caught up in the hoopla.

Everybody in town seemed to be at the party for One Miami, The Related Group of Florida’s project in then-deserted downtown Miami, just north of Brickell Avenue.

“Did you buy here?” I remember asking a broker friend at the party who had already made a fortune buying and selling units in Related projects (Yacht Club at Portofino, Murano, et al.) in South Beach’s South of Fifth area.

“Of course, are you kidding?” he replied. “I already bought three and [my girlfriend] bought two.”

The girlfriend nodded, adding, “And my mom’s buying one.”

At that time, one- and two-bedroom preconstruction prices at One Miami (approximately $250,000 to $350,000) were comparable to those at some completed luxury buildings in Miami Beach, like the one I lived in then. But the emerging downtown intrigued me, and - judging from my friends’ success stories and the rapidly escalating prices of this particular developer’s completed projects - I knew it was a good moment to buy.

But everyone’s doing it! Even my mom! You can’t lose!
———————————————–

In January 2006, I closed on my $324,000, 1,105-square-foot two-bedroom, two-bathroom unit with a balcony on a high floor of the building’s East Tower, directly on the water, and moved in.

Although an appraiser valued my unit at $609,000 at closing a year ago, here’s today’s market reality: At press time, the lowest price of a one-bedroom, one-bath unit in my tower is currently $349,000, while the lowest 2/2 is on the market at $499,000. Also for sale: a 1/1 listed at $525,000 and a 2/2 listed at $730,000. I added wood floors and ordered $15,000 in finishes. So conservatively, I’m confident my particular unit has at least $200,000 in equity.

$15,000 of improvements = $200,000 gain! I want some of that stuff you’re smoking!
———————————————————————

A few months ago, the thought of walking away with more than $200,000 enticed me to put my unit on the market for $550,000. I don’t need to sell: I’m locked into a great interest rate and - more important - I bought at a phenomenal preconstruction price.

But I see this market as an opportunity to trade up. If I sell my unit, I could put 40 percent down on a larger condo on Miami Beach or in downtown Miami that’s selling for $700,000 and - after considering the new taxes and maintenance fees - end up with monthly payments just marginally higher than I have now.

I’ve thought about it and don’t mind rolling my profits into somebody else’s bubble. I’m going to live somewhere long-term, so why not buy a bigger, better place and capitalize on the still-attractive long-term interest rate?

Knowing when to walk away from the blackjack table is the most important part of gambling. Greed is a powerful narcotic.
—————————————————————————–

Prices throughout Miami are grinding to a halt, although I haven’t seen any of the so-called bargain-basement deals everyone’s been talking about showing up on the MLS. I think price points have a lot to do with it. Common sense says investors carrying a $5,000-a-month mortgage on a $700,000 condo will have a harder time renting their unit to cover costs than those with a $2,500 mortgage for a $350,000 condo.

Bottom line: I’m not the least bit worried. Although my agent showed my unit only a couple times when I first listed it in September, he showed it three times in two days two weeks ago. I’m getting lots of lookers; lots of wait-and-seers. I’m OK with living here long-term, and I put my place on MLS as much out of curiosity as anything else - as I assume many people who purchased at One Miami have.

Meanwhile, I receive calls regularly from agents reminding me that the larger condos I’ve looked at are still on the market, if and when I’m interested in making a move.

Yes, the market has slowed, but no, it doesn’t feel like it’s evaporated. Statistics from University of Florida’s Bureau of Economic and Business Research say that nearly 1,000 more people move to Florida each day than leave. Those people have to live somewhere, and I’m betting the average person is more likely to buy a brand-new 2/2 $550,000 condo in the heart of Miami than one of the many $1 million-plus condos on the market everywhere from Coral Gables to Aventura.

Sure, there are market gluts: Certain categories of inventory (non-waterfront in the $700,000-plus price range, for one) don’t seem to be moving. But those of us who took advantage of low purchase prices several years ago can afford to ride out the alleged storm from the balconies of our brand-new, waterfront high-rise homes.

Why am I sensing so much apprehension? Ya gotta love the brokers laying out the baitline to reel in a big fish on a bigger ane even more overpriced condo! BTW honey, people are not moving to Miami to live in condos like yours. they rather live in stucco boxes.

We enjoyed a terrific ong period of low inflation in the 1930’s, too.

Just as disgusted as you by the cogs of a wheel commercial. good rant

I’ve seen that ad, too, and I hate it as well. Plus, its a “check card” not even credit. Oops, lost the card - Mr. Banker, please put that $2,000 back into my account, I’ve got to pay the rent today?

It’ called an ATM, people. They’re everywhere.

I remember as a little kid, bored out of my skull at the bank while my mom waited in line to make a withdrawal.

DOC,

Yes! That ad drives me nuts too.

i use cash myself. Bought a gift at Best Buy, you’d think the clerk had never seen cash before. Seriously, he looked confused, and had to count it twice. Using cash does cut down on spending, also, I am not happy to leave a trail for data banks.

“prepared the false HUD form.”

That was his mistake, the Feds like to make examples of those who cheat them and they have the power to do it. He should have just ripped off some sub-prime lender and have the whole thing get buried when the sub-prime lender sells off the bad loan to some faceless investors.

Good post - multiply this by ohhhhh 200,000 loans!!