When Markets Start Dropping, Others Will Soon Follow Suit
It’s Friday desk clearing time for this blogger. “A new report from the Des Moines Realtors Association shows sellers have reason to worry, but also to cheer. The real estate group says the Des Moines metro market has about 800 more homes for sale than a year ago. ‘It would be a Christmas miracle if we got our asking price,’ Dubansky Haase said, jokingly.”
From Hawaii. “Many local prices have dropped, said Honolulu-based real estate analyst and appraiser Stephany Sofos. ‘I’m seen prices come down anywhere from 10 to 30 percent in Waianae,’ she said. ‘When primary and ancillary markets start dropping, that is a sign that most others will soon follow suit.’”
From Florida. “Jeb Bush, who will soon vacate the governor’s mansion in Tallahassee, is moving to The City Beautiful. Bush and wife Columba are renting a ninth-floor condo in Segovia Tower in Coral Gables.”
From Massachusetts. “With Bay State home-foreclosure rates soaring, Mayor Thomas M. Menino is calling on the Legislature to tighten mortgage-lending rules. ‘We have all seen the dramatic spike in foreclosures, and we know that a large part of the problem is caused by lax oversight of mortgage companies,’ Menino said.”
“Several U.S. lending trade groups asked mortgage regulators to resist tightening guidelines on the low introductory-rate loans that helped fuel the recent housing boom. The joint letter expresses ’strong concern’ that the rules on such mortgages could be expanded.”
“The current cooling trend in the housing market appears to have dampened investor confidence somewhat in companies whose primary business involves apartments and condos, according to the National Association of Home Builders. ‘The current inventory of unsold condos is somewhat troubling for the multifamily housing market,’ said David Seiders, NAHB’s chief economist.”
From Canada. “The affordability of housing in Calgary and Alberta has plummeted dramatically in the past year, an economic report concluded. Kevin Clark, president of the Calgary Real Estate Board, said the trend cited in the report merely shows the city’s housing market is catching up to its affluence.”
“‘Calgary’s marketplace was largely undervalued prior to 2006,’ said Clark. ‘It looks like a falseness but the reality is, it’s been a correction.’”
From Wisconsin. “Dear Editor: More condos? I notice the ones on Midvale, in front of Hilldale, don’t seem to have a lot of lights on at night. Perhaps that is because no one lives there. There is NO indication whatsoever that the city of Madison can use more condos. Can we stop this building/banking game now?”
From MarketWatch. “The fate of the housing market is no longer in the Federal Reserve’s hands, since psychology has now become the driving force behind the decline in home prices.”
“As everyone knows by now, the 17 hikes in interest rates engineered by Fed policymakers since the middle of 2004 have punctured the housing bubble, the same bubble that the Fed, itself, helped create.”
“As prices fell, the balance of power began to shift from sellers to buyers. Sellers soon found themselves throwing an open house but with no one even bothering to show up, much less make an offer. Buyers, though, could care less about the outlook for interest rates: They smell blood.”
“And there’s no guarantee that sales won’t go lower, especially if the Fed hikes interest rates further. But even if rates stay the same, the damage has been done. Once psychology turns, it takes a long time to reverse.”
Another great week everybody. My thanks to those who support this blog. I doubt there will be much news this three day weekend, but check back for your market observations and topics. Here’s wishing you all a safe and happy holiday!
Thanks to you Ben for being so diligent in creating and maintaining this site. Terrific work.
to you as well - thanks for all you do
Happy Holidays Ben
Happy Holidays, Ben and All.
This blog has been a fun place to hang out this year….and very educational. Looking forward to lower prices on 2007.
Happy Holidays to Ben and all the awesome posters on this blog! Another year together, and what a year it’s been!
Best wishes to all!!
Merry Christmas and Happy New Year!
Received information today on a house that was foreclosed by a large lender. The property purchased for $998,000 in 3/06 and is now “on-sale” for only $700,000 by this bank. Is this a deal??
this depends on the similar houses you find around there. 700k or around 30% reduction of purchase price is ok. but 600 k would be a deal. is this a new house? if you pay cash, the bank may give you another 6% reduction.
Pre-boom this home sold for $520k. I think it could get close to that, however, 30% off is not bad…
It will be at 250k… which is true price before the bubble. Let the blood run in the streets.
And if some idiot buys this at this price wait… there will be another better deal tomorrow.
I was told by this guy that this “bank” has several more high end deals in the pipeline. So I am going to wait it out…
The time to buy is when no one would even consider buying….when everyone thinks you are crazy to buy….when you would not admit it at a cocktail party. We are a long way from this point, it might be a couple of years.
We might not reach that stage… the difference between renting and buying will blur in a maze of taxes and restrictions placed by an ever big brotherian governement and homeowner’s asociations (is there a difference???).
Owning a condo and renting an appartment is pretty much the same now… except you have less freedom and a crappier place when you own
As for houses in far away places with a real lot, they will be expropriated gems or something jealously guarded from generation to generation.
Wait until those are low end deals
And even at 250k I would think twice.
Back in 2000 250k was an awful lot for a house… and since 2000 real wages have regressed!!! (Gas alone was $1 a gal back then!)
Well, how many months and years have we all been wanking about how the internet would speed this process up. Looks like that is coming to pass.
Uhm, is that “wanking” as in British slang ?
Depends… If this was in California SF Bay Area.. I would say still to high. $1M homes here are old Echard ranchers from 70’s (1500-1700 sq ft). They were selling for around $200-300K (depending on lot size) so 8-9 years ago. So 30% drop may seem big but not yet the bottom…
looks like another case of mortgage fraud … so throw out the 998 as a reference point
hey, great risk management on the part of this lender huh?
I agree! Thank you Ben, You have open up such a interesting venue for us all!
Happy Holidays
Wow! A house with 14 bathrooms. One could “go” two weeks without a repeat.
And it’s only a bit over $111,000.00 per month!
http://tinyurl.com/yjal6b
curt - i honestly think that place is tacky - even at 1/10th the price…don’t you?!!!
Why is it that houses like that almost inevitably have the most horrendous furniture and interior design I have ever seen?
yeah - like some gilded sultan’s pad - nasty…
I’m trying to picture what a gilded sultan would look like. You didn’t mean a gelded sultan, did you?
LOL - no, but that would be funny
I was fixin’ to make an offer on it, but the minimum wage increase could screw my ability to keep an adequate staff. Guess I’ll wait.
I thought for a moment that was my old house in Ocean Beach!
I am glad it has a carport, or I would have passed up this deal in an instant!
mmmmm….gilded coffered ceiling…..overstuffed furniture….a true “Persian Palace”, as cited in a thread over at Piggington’s.
Tacky, tacky, tacky. As my grannie used to say ….”Nouveau Riche”..
I wouldn’t buy that place at 220K. OK, I would - but only to demolish it and build another,smaller house that I wouldn’t be embarassed to live in.
I’ve often found it interesting that the super high end houses tend to have more bathrooms than bedrooms. You never see that at the low/medium range.
My theory is that the rich have more anuses than the rest of us.
LOL!!
Just to give a personal sliver of whats seems to be going on in the realestate industry. I am here in Sarasota Florida but I purchased a 2br2bath 1300sq ft condo in st. louis mo for 145.000 and did the financing through my local person here in Florida at Bank of America. Well in chatting with him i asked him how was business. He took on a grim look and said “not very good. I am hoping it picks up next year.”
That was the first time i actually talked with someone that was in fear regarding to the oncoming realestate train wreck
oh and by the way he is on commission
Are you moving to St. Louis, or is the condo an investment?
“As prices fell, the balance of power began to shift from sellers to buyers. Sellers soon found themselves throwing an open house but with no one even bothering to show up, much less make an offer. Buyers, though, could care less about the outlook for interest rates: They smell blood.”
“And there’s no guarantee that sales won’t go lower, especially if the Fed hikes interest rates further. But even if rates stay the same, the damage has been done. Once psychology turns, it takes a long time to reverse.”
OK what Psychology. I dont think there are any mythical buyers left. Doesn’t everyone with a pulse own a house or 3.
Cool.
Cow_tipping.
Psychology plays a role at every phase in a product/service lifecycle. It’s influence on purchase decisions is quite normal and persistent. We’re not emotionless buying machines. Most of our purchase decision are made to fulfill some emotional or physical need.
It’s been my observation that whenever a market starts contracting and business people don’t understand clearly what’s causing the contraction, pschology is faulted. However, markets expand and contract all the time. Therefore, psychology alone should not be used to explain away a contraction. In the housing market’s case, other things like price, income, number of buyers, supply, and so on are more relevant factors than off the cuff bovine psychoanalytical flatulence.
I rather disagree. The longer I live with my Econ degree, the more I believe psychology plays a major part in cycles. If decisions were pure supply/demand, we would not be in this bubble or have purchased tulip bulbs at $800 per.
Of course it does but not just during market declines as some would like us to believe.
I know a woman who lived in Sweden and when she was a child during World ll had to eat tulips to live.
I’m with you Wheatie. Sure, routine stuff isn’t going to be subject to psychology of any sort.
Its when the decisions involve a) a lot of money b) issues of self-image c) a “complex” subject with multiple, often elusive, factors then psychology is very, very significant.
Most significant purchases after all are emotinally based. You either have the confidence to do it or you don’t. Often YOUR confidence is going to be either driven or affected by the confidence of those around you (for better or worse) or by “experts” you trust.
If I had it to over again, I’d have taken as many psychology courses as economic courses. Trying to “understand” economics without a basic understanding of human behavior is (in my opinion) a virtual waste of time.
Reminds me of the night clubs in Santa Clara County during the tech boom of late 90’s. Lots of this and that and people with lots of $$$$ from stock options. Then came the bust of mid 2000. Poof all gone in a puff of smoke.
You go out a month or two later and like .. Where did everyone go! Gone Buddy! then you hear how the strippers and escorts were moving to SoCal due to all the money dried up in Bay Area.
LOL!
Unbelievable isn’t it? And he actually says it’s legal.
Got GOLD coins? .9999 way to go.
I apologize for posting this OT post, but I was afraid it might get buried in the bits bucket. This supports what many of us here have articulated (or at least suspected) before.
Cramer spills the beans on hedge fund stock manipulation:
http://tinyurl.com/yxluuz
ok - I just watched this and pissed my pants…. the whole market is so crooked, I’ll be putting my $$$ in the matress.
Unbelievable, isn’t it?
I hope Elliot Spitzer watches this.
Dude, Cramer says it’s legal. Spitzer’s only going for in-the-bag stuff CNN will dive on.
I recall hearing references to “illegal” activity that the SEC either doesn’t understand or care about.
It’s 1989 all over again in wall street malfeasance and housing.
For some real intelligent commentary on that subject
http://www.itulip.com/forums/showthread.php?t=733
Nice story, but I don’t buy it. The hedges are too numerous (and hence competitive) to exercise the kind of concentrated market power he is describing.
Au contraire. They can’t do it on large caps but they sure as hell can on small and some midcaps via things like PIPEs (see Friedman Billings pays $7M to NASD yesterday I think for sleazy PIPE trading). In the olden days of 2000, it was stuff like floorless covertibles. These days it can be naked short selling, custom derivatives, all kinds of stuff.
TxChick,
Thanks again for grounding my guesses about the stock market in reality
(I wish it weren’t so!)
I’m not suprised, but still I’m somewhat shocked.
I used to run a good size hedge fund and I can tell you that there can be window dressing by some of these clowns. What Cramer is saying is mostly BS. He tries to act like he was a big factor. Pretty soon Rosy Odonnnel will take him down. She knows Donald Trump and Cramer isn’t a Donald Trump.
Think about the logic of what he claims. He spends and exposes millions of dollars to push up or down securities for advantage. Let us say that he wants higher prices in a few stocks. He argues that he then buys them and knocks out the sellers. Great, prices can rise if the stock is illiquid but how does he sell out? He will kill himself unless he can push followers to sell.
It could be argued that the specialist had this power because he had a view of the limit order book.
In order to motivate others to jump in with you and allow you to reverse your position would require rumour and disinformation which is illegal.
I can tell you one thing I used to do to burn my commodity floor brokers that I suspected would front run me. I would sometimes get indications of the size of the market to say buy 1000 contracts (I will leave out my main market). The front runners might tell their buddies of the interest and might start buying expecting my order. I would wait a few minutes and dump a big market sell order on them. Their greed would provide liquidity for my trade. It would also keep them cautious about my plans.
Cramer acts like he is giving some kind of insight. Look at his eyes…he is no trader as far as I am concerned. His eyes communicate a desire for audience approval and there is a bit of fear there as well. Just my opinion. He has no one on the air to call his BS.
The end of paragraph two should be buy not sell.
He’s got plenty of critics in the business who post on the TSCM Yahoo board. Other than this blog, my favorite internet hangout.
LOL about frontrunning your brokers. That’s probably why you virtually never see any of them on the Level 2 montages any more.
That’s how most of us “old” daytraders learned how to make money, by frontrunning big orders.
Oh, you said your commodity brokers. That’s even funnier.
After all this is said and done realtors will be oddities like film is now in cameras vs. CCDs or like VHS is to CDs…
Houses will be items you buy and sell for a fixed price, like the sox on sale at Wal Mart.
Furnitures will be from Ikea and prefab modern will rule…
The MTV generation will finally be in charge of housing!
Suburbs will be in ruins…
Nice idea but the biggest PAC in Washington DC is the NAR… their HQ is based across Capitol Hill..
So??? What can they do against Ikea? Heck Ikea stood up to the russian mafia in Moscow… and in Washington they’re uneducated amateurs compared to the web of connections one needs to navigate to get anything done in Russia (not to mention risk your life if you screw up!).
And no one can put a gun to my head and force me to buy an overpriced POS house.
And the mortgage tax deduction doesn’t mean anything either now that renting is 1/3rd of owning… for a better place!
Gun last century Media this century…
much more powerful than a 44 mag and will blow your head off clean.
You have to ask yourself just one thing punk..
Do I feel lucky…
Well do you PUNK!
LOL! I just had to say that..LOL…
If there are any people interested in Chico Ca here, I have some interesting numbers. The peak of the Chico market was 2nd quarter 2005 meaning those who bought at that time were the greatest fools. Since then, prices have declined 16%. Prices have fallen 10% over the past 12 months. Rents have increased seemingly 10% over the past 12 months but I am not absolutly sure about this.
I predict that home prices will decline 13% next year and we will see rents increase a little. Also, ironically, it is cheaper to rent or buy a new house. So, if you are going to rent or buy, best to talk to contractors who are building homes.
Big Bob –
Is this the median declining 16%? I too have noticed a slight drop in prices, and honestly I don’t really pay much attention to homes below 400k. As others here have opined about sales in their area, it appears to me that the bulk of the decline is simply that we are back to the Chicoan buyers again, and hence only selling the low end. The median then shows a decline while sellers budge little on price. The median I believe is at about 325k, and this is about 8X income. This gets so much harder to sustain those prices, even more so than in the BA, where housing is 10X income. All of the additional expenses of life (Safeway, PG&E, cable TV, phone, etc) cost the same for Chico folks ….. I’d argue that the discretionary income vs. the cost of housing, is just about as crazy as anywhere.
I don’t see much price reduction in the 500k to 900k here, which is the top 25% of the market. In any event, this market is so driven by equity locust from out of the area, Chico is likely as screwed as Florida if the big city refugees quit coming. Inventory is so small though, that it reminds of an earlier debate in Santa Clara ….. low inventory supports stubbornness.
One more thing …..
“So, if you are going to rent or buy, best to talk to contractors who are building homes…..”
NO!! best to talk to me!
Bob is right, the builders do seem to be the only ones getting the message (like the rest of the nation), but this is a tight click of “small town” builders (people for that matter). I guarantee you’ll get reamed! All Mrs L and I have heard since moving here 5 years ago, is how the BA and SoCal folks are moving here, and “we’re going to help them spend their money”. We know (and have met while here), several BA people that are moving back, and I completely understand why. If you are thinking about moving here, R E N T! This has nothing to do with the housing bubble …..
One couple (I work with him) moved here about the same time as we did (2001). Work will not allow him to leave the area…..They are now divorced, and no, there are not other reasons - she has had enough of Butte County (BA gal….)
(to bad, because there are a lot of great people we’ve met in this area too …..nice place to visit, but you wouldn’t ….)
I have not tracked medium price because I feel the medium price is a bad indicator of price valuations. I have been studying home sales in the Devonshire, Bedford region of Chico. It is an average neighborhood. There are over 70 homes in this area and half of them are the exact same model (1,320 square feet) with the exact same floor plan. The greatest fool bought 1884 Devonshire in the second quarter of 2005 for $334,000. Today you can buy the exact same house at 1858 Bedford for $285,000 or less (The sellers are asking $285,000). If you look at all the homes in this area as I have, you will see a neat bubble.
Big Bob, I moved to Chico in 2001 after I sold out in San Francisco. It seemed like a nice town and I bought a fixer in Mansion Park. Spent two years working hard to renovate it but with being sandwiched in between the college and the high school it just wasn’t a nice environment to live in. The college students seem to run the town and you have to put up with very loud parties until late into the night. The police will barley enforce underage drinking or the noise ordinances. It seems that the Chico locals are pretty clickish and not very welcoming to outsiders. Of course, I was one of those BA people they like to take advantage of when selling property to them. LOL. I decided to move to Sacramento for better job opportunities so I left after two years when I could sell without paying capital gains. The good part was making 200K in profit on the house tax free.
The population of Chico is declining! I have seen lots of people who are moving out and the numbers at Butte College and the school districts show the decline. Many BA people got jobs up here in RE. Many bought homes. Now they are moving back to BA and are flooding the market with their overpriced homes. I think we will see a wave of foreclosures because of this. We have seen a shift of the landlords from locals who know what they are doing to rookie BA people who are asking too much for the market. But, they are succedding in raising the rents a little.
“Jeb Bush, who will soon vacate the governor’s mansion in Tallahassee, is moving to The City Beautiful. Bush and wife Columba are renting a ninth-floor condo in Segovia Tower in Coral Gables.”
I guess not everyone buys the CIC’s top economist’s soft landing prediction, then?
Maybe he has a good accountant (who can see that renting is cheaper than buying)
Aha! Even the Governor of Florida is going to rent! Jeb the Housing Bear.
Thinking of bumper stickers: “Why buy? Jeb didn’t” or “I’ll buy when Jeb buys (maybe)”
I thought the same thing - he knows enough not to be a FB…
Jeb recently commented to a Spanish language newspaper “No tengo futura” (I have no future). Cryptic comment. Many take it to mean a political future. Well, he’ll get to experience what the boom/bust has done to Miami.
M. B. A. posts “I thought the same thing - he knows enough not to be a FB… ”
Least his daddy taught one of them something.
Why buy when you will be selling in 24 months to move to Washington DC??
‘I’m seen prices come down anywhere from 10 to 30 percent in Waianae,’
Waianae is one of the more run-down areas on Oahu, but also one of the prettiest. Right next to Makaha, which roughly translates into “den of thieves”, or “savage place”, or something like that. In ancient times, bands of thieves would hide on the bluffs of Makaha, and slaughter innocents who wandered through. To some extent, the image lives on to this day.
“Waianae is one of the more run-down areas on Oahu, but also one of the prettiest.”
Prettiest maybe but probably still the worst place to live in Oahu. The coastline is occupied by homeless people. I’m not talking one or two person but whole families living on the beach. Not a pretty sight.
But home price in Honolulu beginning to drop especially the high-end condos in Salt Lake. I’ve been tracking the activity in one building in which one unit was sold for 508k in the beginning of this year but now one unit is listed for 379K. Sure it’s lower floor but they are the same size. Furthermore, higher floors are selling for around 410K.
Thanks Ben for this site. It’s been entertaining and enlightning.
Happy Holidays to all!
Agreed. Thanks Ben!!
Ben,
I too wish you the happiest of Holidays and New Year. But most importantly, I wish all a peaceful new year.
Keep in mind, that above all, we live in a land of oppurtunity. Yah, at times it may stink and seem a bit out of wack… but, your future is up to you. No one else.
No pussies, no whinners…
What the hell is a whinner???
methinks a “whinner” is not a “looser!”
The mayor’s bill would require lenders to:
disclose all loan costs - including fees, prepayment penalties and “payment shocks” - in ads.
place a warning label on mortgages the state commissioner of banks deems “high risk.”
include projections of every loan’s maximum monthly payment over the mortgage’s first 10 years;
require licensing, bonding and annual recertification of all mortgage originators
I wish they would get this through and pass it that way the greedy originators would know what it meens to put your license on the line.
MERRY CHRISTMAS everyone.
“we will see rents increase a little. Also, ironically, it is cheaper to rent or buy a new house.”
There is very little reason regarding rent increases. The same was said regarding 10% increase in bay Area .. they pointed to Palo Alto and parts of San Francisco… two of the most trendy areas. If you look elsewhere nearby rents are still rather flat adjusted for inflation.
If someone tells you rents are going up.. you need to challenge that and ask were is your inflation data.
I know that rents in Chico CA are going up based on places that have actually rented. This should be no surprise because rents generally go up dependably. However the sample I have been looking at is small. I will say that in Chico there still are “investors” (usually from the BA) who are buying brand new homes and renting them out at a loss. The investors have a theory that they can rent at a loss for a few years and then begin to make a profit. I am sure that they have been correct in the past but..unfortunately, they will need to rent the new homes for much more than they are getting now to turn a profit and the inventory of rental is too high to allow them to raise rents much. I believe that this year the banks are going to stop playing along with these “investors” and we will see and end to the buying of brand new homes for the purpose of rent. Then the price of new homes will really drop and so to may the employment levels of construction workers. Watch the dominos fall!
These signs drive me nuts, too. I just pull them up, recycle the plastic, and use the stakes. The signs are illegal to place, and cause litter. Have a great holiday!!!
http://portland.craigslist.org/mlt/rfs/252416306.html
“As everyone knows by now, the 17 hikes in interest rates engineered by Fed policymakers since the middle of 2004 have punctured the housing bubble, the same bubble that the Fed, itself, helped create.”
pretty sad isn’t it when 6% or so interest rates deflate the bubble. what would the market be like if, god forbid, rates go to 8 or 9%??
or 13%, like in the 80s.
Don’t worry about the effects of interest rates. The NAR “Home Price Analysis reports” from Oct 05 clearly describe why it would take interest rates of 19.5% and 73,000+ job losses to cause housing prices to drop 5% in my area.
Don’t worry, BE HAPPY!
(Looking at the newest Report I found for the DFW area, TX, they have removed that funny section about how high interest rates would have to climb before a price decrease. Gosh, I wonder why.)
“Kevin Clark, president of the Calgary Real Estate Board, said the trend cited in the report merely shows the city’s housing market is catching up to its affluence.”
“‘Calgary’s marketplace was largely undervalued prior to 2006,’ said Clark. ‘It looks like a falseness but the reality is, it’s been a correction.’”
This has to go down as one of the most retarded comments to date by a real estate booster. 2 years ago, the average family could purchase a home using 35% of thier salaries with traditional financing. Today, the average family can purchase a home using 75% of thier salary. The market is simply correcting the past “under-valuations.”
What a schmuck
Calgary had long been fairly cheap compared to most other big cities in Canada, and for good reason:
- biggest cultural attraction is a rodeo.
- dry climate with cold winters -> moonscape.
- endless wallpaper suburbs.
- empty land surrounding the city as far as the eye can see.
Think a smaller Denver with less history and culture. Or a cold Dallas.
NFW should this city be significantly more expensive than, say, Ottawa, which is about the same size but is much nicer.
RE in Calgary crashed just as hard during the 1980’s oil bust as in Texas, and it will crash again.
Bookmark this for future use:
http://realtytimes.com/rtcpages/20051125_squealers.htm
We’re all squealers. I want everyone to rub this smug a^^hat’s stinky article in his face.
That article needs to join the worst articles ever written in Ben’s Hall of Fame.
Sounds like it was written by a fat, smelly bully from fifth grade. Probably smells like it, too.
So how would the DC/Nth VA market look like if the builders put up the 463K unit “shortfall” he’s talking about?
Squealers are good. The article just reinforces my viewpoint that we are all responsible for our own decisions. Go ahead, buy a house if you believe that we are not in a bubble. Getting your motivation to buy one based upon what real estate people say is a mistake you will maybe make once.
Let’s hope and pray that lawmakers give a resounding IGNORE to the letter sent by lenders whining about restrictions on funky loans.
Here’s part of that article:
“In its letter Wednesday, the lending industry said the senators’ suggestion [to regulate the lending industry] ‘would dramatically expand’ the rules on nontraditional guidance and ‘risks denying many borrowers the opportunity for homeownership or needed credit options.’ ”
Exactly, you lending-industry greedy bastards. The whole point of the regulations IS to deny many UNWORTHY borrowers the opportunity for homeownership.
The malls in Chico CA are filled beyond capacity. I have never seen so many people buying so much stuff. Smells like inflation to me. Any body else notice usual large amounts of purchasing?
Yes. The malls were looking relatively slow until the past week or so. Now, every parking space is taken and it is packed! Looks even busier than last year, IIRC. This is in North County San Diego.
On Long Island, NY, back in 1986 I bought a house for 155,000. The market peaked the following year, 1987. Prices fell about 20 percent from the high in around 1993 or 1994. Prices didnt return to the previous high until 2003. I can see the same thing happening this time. With prices peaking in 2005, it may take up to 6 years to reach the bottom which would be around 2010-11, after which it may take another 4 to 5 years to reach the previous high set in 2005. That would be around 2014. All this could be accelerated for reasons like the existance of the internet and house price option trading or new tax laws or some other fed intervention but I dont think it will be that much different this time. There was much more building this cycle than last. That takes time to be absorbed. And people dont forget being burned. Also, it takes time for people to recover from foreclosure and bankruptcy. About 10 years. Mmmmmmmmmmm…. is that a coincidence in the timing of the prices reaching previous peaks ? Perhaps…