“The Market Might Slow Further The Longer They Wait”
A housing report from the Washington Post. “Plenty of real estate agents note that winter can be a great time for sellers to unload houses and for buyers to find bargains. Sellers are also serious, a plus for buyers.”
“‘People who put their houses on the market in the second half of December or the first two weeks of January are usually doing so because there’s a real need,’ said David Kolakowski, a buyer(s) broker in Bethesda.”
“This year in particular, with slower home sales, the inventory has not dried up at all, agents said. In the District, for instance, the number of homes for sale was 31 percent higher in November than at the same time last year, according to a report released this week by Peter Clute, an agent in Georgetown.”
“‘The inventory will most likely come down a little bit in December, but it should still be high,’ Clute said. ‘There’s still four months’ worth of inventory out there.’”
“Marc and Gina Ciagne spotted a house in the District’s Chevy Chase neighborhood. They were eager to enroll their daughter Jalen in the neighborhood school for kindergarten. So they moved fast. They closed on the house in August and carried two mortgages. They decided not to list their old house on 16th Street NW until after Labor Day.”
“‘We were apprehensive about buying a new house before putting the old one on sale,’ Marc Ciagne said. ‘But we kept focusing on the school issue and that helped us justify and rationalize it.’”
“In the old neighborhood they would have paid private school tuition. By moving, the couple planned to save that money, apply it toward their mortgage payments, and hope for the best. In October, when they received an offer, they pushed to close in mid-November instead of mid-December, as the buyers wanted.”
“Here’s where consumer psychology kicked in. ‘We felt really lucky to get it done before the holidays,’ Marc Ciagne said. ‘We wanted to get it behind us before Thanksgiving. Psychologically, I felt I was going to get really tense if this had to drag on longer.’”
“Keeping a house on the market into the new year, after it has been listed for months, is often a huge mental drain for sellers, especially if they feel the market might slow further the longer they wait, several agents said.”
“Beth Armington decided to sell her Bethesda house in July. When a house two blocks away came on the market, she jumped on it. Meanwhile, her old house sat there. The market started to sour. Armington cut the $1.1 million asking price by $100,000 in mid-August and then another $100,000 six weeks later, without any immediate response.”
“‘Then about a month later came Thanksgiving and we had another open house’ — a rather crowded one, Armington said. Two potential buyers emerged. Last week, the house went under contract for $850,000.”
“She said, ‘It was the first offer I got and I didn’t think I’d get a better one before spring. I didn’t think prices would improve before spring and maybe not even then.’”
“Keeping a house on the market into the new year, after it has been listed for months, is often a huge mental drain for sellers, especially if they feel the market might slow further the longer they wait, several agents said.”
Luckily the drain on sellers is merely psychological, not financial.
“Luckily the drain on sellers is merely psychological, not financial.”
Kinda, in a buyers/down market the longer you wait at a higher price. The more silly your price will appear. So even though you’re not really losing anything. You are losing virtual money (a higher price) the longer you wait for a sale.
Personally I hope all the pigs get stuck this spring. Irrational Exuberance has gotten out of hand.
“So even though you’re not really losing anything.”
Unless you’ve already bought another house and now you’re carrying two mortgages. Unless you want/need to downsize to a smaller house and you’re still paying higher mortgage, tax and insurance costs each month. Unless you know a major repair (roof, HVAC) can’t be delayed much longer and you’re still stuck with the house.
Sorry, but there’s lots of ways such sellers can lose REAL money.
From Pennsylvania
‘Monroe County’s home foreclosure rate is on the rise again for the first time since 2003. There have been 806 home foreclosure filings in 2006 through Dec. 19. This includes 641 filings just since June 2 — more than the 540 filings for all of 2005 or the 618 foreclosure listings for 2004.’
glad to see we have hit the bottom and it is all uphill from here
5 years of boom followed by 6 month bust makes sense
It’s been 18 months since the peak actually.
Not in my area.
Oh, my friend, this 6 month bust has just begun! :)))))))))))
6 month bust? The shortest are typically 30 months and we’ve had two busts that lasted over a decade (Long depression and Great depression).
This hasn’t started. Anyone who buys in 2007 is being foolish (unless an incredibly insulting offer is accepted.)
Neil
Ok, what is unspoken here is that the first sale the article highlights was several years ago during the heady times of the way up in the bubble, the home is in an excellent area that looks great for the holidays (Alexandria VA) and PRICING STRATEGY is never discussed.
What is unspoken about the later more recent post bubble bust sale is the fact that COMPS are not discussed, the home languished on the market for 6 months in another excellent area where a year ago they were snapped up in days with multiple offers that waived all contingencies, and went above asking/list price. The seller had to slash the price by 250k to get a buyer. The merits of the home are not discussed, the amount of equity cushion is not discussed but it appears from what few circumstances can be inferred it was just the seller curbing her greed and getting out before the Spring becomes flooded with homes that would have further threatened her equity cushion to the point that she might actually not make a six figure profit.
The change in perspective is amazing. The only thing that is more amazing is that its never clearly & expressly articulated in the article. The just focus on the annual psychology of selling in the holiday season vs the real motive to dump the unit now instead of when Spring hits until the end of the article where they just quote the seller and leave it up to you to decide the main source of her relief (avoiding the spring market collapse likely being her true motive for the statement!!).
It is also a lesson in lowballing. She owned the house for 15 years, and so likely paid much less than $1 million. She admitted to doubts about a better market in the spring and took the first and only offer made; guessing from the article, at $50k less than her two pricce cuts.
I’d bet she would have taken $700k, or less.
“She owned the house for 15 years, and so likely paid much less than $1 million.”
Ah, Ben Jones, the Master of Understatement. There was no such thing as a million dollar house in Bethesda, MD, 15 years ago. It is a fairly well-to-do place, yes, but houses run the gamut from modest to grand.
I will wager my lunch money that a four bedroom house on 1/4 acre in Bethesda 15 years ago MIGHT have fetched 300K. If this seller put up 20% and got a conventional 30-year mortgage, she owes about 150K on the house. 850K minus the note in a time of very low inflation is an incredible windfall.
Speaking of Low Ball, any potential DC-area buyers reading this ought to know that any seller who’s owned the house in question for more than about 4 years is sitting on a pile of equity - there is PLENTY of room for negotiation.
Oh, and the word on the street is 2% seller concessions are now common - so the seller in our example probably paid all the closing costs and bought down the buyer’s mortgage interest rate, or something.
Yeah but come on that’s the MSM for you. This is the same MSM that every Dec 24th has as “news” the fact that stores are busy or the “news” that the day before TK airports are crowded. The seasonal story is their bread and butter.
“‘We were apprehensive about buying a new house before putting the old one on sale,’ Marc Ciagne said. ‘But we kept focusing on the school issue and that helped us justify and rationalize it.’”
Whatever these people do for a livng, they are paid way too much. In the short term, they may have saved a few bucks on the school issue. In the long term, they are going to bleed green.
you’d be amazed how well gov worker/parasites are paid in DC
Hey, I resemble that remark and look forward to using the buying power of my steady/stable bloated gov’t worker parasite paycheck to buy an inside the beltway home from an even more highly paid gov’t contractor/private sector employee who gets canned in the post housing bubble burst recession who just has to sell their property at a discount to get out an onto the next unstable job or make ends meet on unemployment compensation!!
You and government workers - give it a rest already
Just send a quick note to Ben. I take offense to it as I work for the feds and administer a $300million annual budget. On a side note, I enjoy spending all that dough.
It is amazing how poorly government workers are paid relative to pay scales in private industry. The benefits help a bit, but not as much as cash in hand. The low relative pay is one of the reasons so many government workers are incompetent or zealots or both.
Right on moleman. I’m a GS…. forget about it. I’m at 153k/yr, home garage a towncar with gas card. My counterparts in private sector earn double that.
Sorry moleman, I’ve done both and the few that best government wages are very cut-throat. I prefer the lower/stable/steady pay w/o the long hours, weekends always off + all federal holidays, real vacation & sick leave that I can take. I make up for the lower pay w/ my reserve officer pay + military benefits which tack on another 20-30k on top of my GS-15 pay of about 120k. Folks making six figures are in the minority in this country and many in the private sector do not have the same protections/guarantees that gov’t workers have in terms of job preservation, in good times and bad!!
The low relative pay is one of the reasons so many government workers are incompetent or zealots or both.
So how do you explain all the higher paid yet equally incompetent workers in private industry?
I’ll say. I looked up the median income in the Bethesda, MD area; its over 100K! That’s pretty high, especially for a median!
However, median home was about 1M, so, although incomes support high prices, they are just about 10X median income/median home price, which puts them into the extreme bubble zone.
I lived in DC for several years. Bethesda is one of the premier areas there. There are smaller houses there but generally it is a very nice place to live.
Also worked with a lot of fed civil service types. They are paid OK but I’d bet the large majority today make a good deal less than $100k. And BTW, in spite of the complaints (unfounded) a lot of these folks are very good at their jobs. But just like any place you’ll also find some incompetents floating around.
“…a lot of these folks are very good at their jobs”
That’s NOT the problem.
Here’s the problem:
US TAX Code: 20,000 pages + and growing
= more Gov. workers
Now that’s just the IRS
How many Gov agencies are there? FED, State, County, City?
Well, since most employees are:
“a lot of these folks are very good at their jobs”
Let’s create even MORE jobs for them. That will makes us the most economical and competent Country in the world. Did I forget efficient too.
“Here’s the problem:
US TAX Code: 20,000 pages + and growing
= more Gov. workers
Now that’s just the IRS”
Good start. Who writes the tax code? Congress. Who pressures, lobbies, begs and “donates” to get Congress to force changes and additions? Flatffplan and every other upstanding, contributing member of the private sector, that’s who.
In other words, we have met the enemy and the enemy is us.
A few bucks? Have you seen what private school tuition is in DC? If the alternative was a parochial school, they will save about $8K per year. If it was a private school, they will be saving about $16K-$25K per year. If you have two kids, then double the savings. That’s a lot of extra money to be able to use for a mortgage payment on a better house in a much better neighborhood.
The “bitter renters” who cruise this blog (like me) must love the article in today’s Wall Street Journal, “Renters Gloat Over Housing Slump.” (26 Dec 06, p. D1). A choice quote:
“Even though prices have come down a bit in parts of California, Mr. Killelea vows to resist the pressure to buy. Recently he mused on his Web site (patrick.net/housing/crash.html) about why more people don’t follow his example. ‘I get the feeling many wives are pressuring the husbands to buy,’ he wrote. ‘I know it’s not politically correct to say so, but I think a lot of irrational purchases are driven by female nesting instincts.’”
I’m sure this article is available at the WSJ site (online.wsj.com) for a subscription. Like all frugal persons/cheapskates, I’m reading the office copy.
sounds like a scooby doo episode
if it wasn’t for those meddling renters we wouyld have gotten away with it!
looking forward to more bitter renting in 07
http://www.moneyweb.co.za/shares/international_news/535987.htm
Poshboy,
And the holidays are especially brutal for those husbands renting on the sidelines! I can’t imagine any MORE decorating you could do when we “owned” our previous homes that couldn’t be done in our “rented hovel”. The holidays aren’t stressful enough but add to that glum statements like “This is the last Christmas we spend in a rental” and it just makes things all the more “cheery” don’t you agree! Hang in there fellas. One more week of snide, under the breath cheap shot comments and it will be tax season!
Yea! (Did you ever think you’d be pulling for tax season?) Well folks, this year it’s your friend. When all the co-workers, neighbors and relatives that bought a primary residence or 2nd (specuvestor home) over the last 2 years figure out the mortgage int. deduction isn’t nearly as much fun when your ass-et is devaluating and you can’t do yet another MEW extraction to reckon w/the holiday bills the HEAT will be off! Hell, half the reason I “study” here and at patrick.net is to get “fresh ammunition” to stay on the sidelines! Thanks for all your tireless efforts and continued support. This week will be the height of the storm. We’ll need to close ranks.
We’re not all like that but I feel for you guys who are married to these ninnies. I can only assume they have other talents that compensate.
LOL
Nope nothing else to compensate…
TX,
I would marry you in a hearbeat.
Seriously, it’s very difficult to deal with the constant nagging that a determined partner can setup. They make 1/2 of what we do and they just bought a great house… I want to start our lives togther, and we do that by buyng a house (and a 10K ring, thank you very much).
Ugh.. It’s just hard. Fiscally conservative women are hard to find, that’s for sure. It’s like they have been born to spend, and not care about the consequences. Christmas is just the spending pinnacle for many women.
I still love women, but God, what I would not give to not have the “housing/keeping up with the Jones fight” on a weekly basis.
Now I just tell her, we live in a 2/3 of a million dollar home, you don’t know anyone else who has this much at our age. Take it easy, patience will make us very wealthy.
It took a while and alot of effort to be stubborn, but I converted mine at least. She got pissy with me temporarily was angry, occassionally, due to my making her actually keep a budget, but if she loves you enough you’ll make it through
One of the reasons I divorced my ex last year was his constant need to outdo the Joneses. I wanted to sell our house and all he talked about was how we should have bought the bigger one up the road…
So we divorced, sold the house, and split the profits. He went out and bought two fancy cars. I opened up a nice big fat CD.
I believe that most men secretly enjoy complaining about their high-maintenance wives. You like the pretty hair, svelte bodies and french tip fingernails, no? Well guys, that stuff costs time and money.
Me, I guess I’ll be single for a long time. Until I find a man as smart as I am, with my values. They are few and far between.
I wondered what happened to K-Fed.
I believe that most men secretly enjoy complaining about their high-maintenance wives. You like the pretty hair, svelte bodies and french tip fingernails, no? Well guys, that stuff costs time and money.
———————–
Well said, Irvinesinglemom! Couldn’t have said it better, myself.
txchick57,
For those of us that “sold early” (last day of 2003) we had no idea that the boom would drag on this long! I mean c’mon, 2005 was totally unecessary and completely below the belt. While 2006 (particularly after the unbridled mania that was 2005) has been rewarding beyond my wildest dreams we still have a LONG way to go. This has been a trying and frustrating experience for all of us. It would have been my preference that NONE of this ever happened.
However; human greed, cheap/free money, fast and easy lending along with an incredibly generous tax code have all helped to create the cliff we’re now standing before. We were responsible owners and great neighbors. We sold. We bailed out. We rent. We were never “priced out”. We’ve owned most of our adult lives. Both my wife and I were raised with our birth parents in the same house from birth through HS graduation. This hasn’t been easy for either of us. We did what we felt was the right thing for our family at a time when there was ZERO support and acceptance from the mainstream and ahead of the learning curve. We didn’t JUST sell in say….. spring of 2006! I don’t need any cheap shots from you to boot.
hey tx-chick you crack me up
my wife is now 100% on board with the waiting to buy now
thanks ben
Back in summer of 2005 I thought of selling my home, renting, waiting and then buying back at a disocunt. It was obvious the market was going to fall, despite the bullshit I read from the expert realtors. But I chose not to become a bitter renter after all.
In order to rent the same home in the same neighborhood, it would have cost the same as my PITI, maybe even a little more since I bought early, cheaply and with a very low mortgage rate. So I crunched some numbers and after taking into account all the factors I figured it would take a 10% price reduction for me to just break even. This took into account the costs of selling the home, moving, buying a home, moving again, the tax deduction lost for 2 years, the higher mortgage I’d get in 2 years (no way I’m ever getting as low a fixed mortgage as I have today), the fact that for 2 years I’d pay down no mortgage principle and also I’d be starting a 30 year mortgage again in 2 years instead of being 5 years into it, meaning I would be 5 years further away from owning the home and paying 5 more years of interest.
So far prices are down less than 5% for homes selling in my area and I’m happy with my decision. But even assuming that I was wrong and the price drop will be 20%, I’m not going to lose too much sleep. In that scenario I will have given up a theoretical $45,000 over 2 years. In order to not have to go through the time and hassle of buying a home, selling a home and moving twice.
What’s my point? The point is that not everyone who owns a home right now is in ire straits. I know plenty of other owners who realize the market is down now but they sleep just fine at night. Not every home owner has some crazy ass 110% mortgage that will adjust to 12% next week. A lot of bloggers like here tend to forget about people like me and focus only on the marginal owners who are in trouble because they can’t afford their home anymore. Like with all news the exception to the norm is reported. You’ll never see a front page story about the 99.99% of planes that land safely every day. And you’ll never see a story about the 99.89% of home owners who don’t foreclose every month.
As for the woman who sold her home for $850,000…wonder what she bought it for. Everyone is assuming she was desperate to sell but hell for all you know, she paid $400,000 for it.
Pig, I doubt she paid 400 and I said so, above. Many of us maintain that a house is a place to live, not a get-rich-quick scheme. If you’ve got one you like and can afford, good for you. Enjoy it.
But keep in mind, if your neighbor with the “crazy ass 110% mortgage” gets in trouble, that will impact you, like it or not.
It gets a bit shrill in here sometimes, sure, but the overall point is valid. Things in many places are way out of whack housing-wise and there is going to be pain. The point is, if one can’t ride it out, (as you probably can), avoid it!
She could have paid $400K or $900K or $200K, we simply have no idea and it’s purely a guess.
But my point is that 99.89% of home owners are NOT foreclosing yet the focus is almost exclusively on the 0.11% that are. The november national foreclosure rate was 1 in 961 mortgages. So drive down the road and start counting houses. When you get to the 961st house that’s the one that will foreclose. And that is assuming of course that every house you’ve counted has a mortgage on it.
The crasy ass 110% mortgages are either few and far between or the vast, vast, vast majority of people with these mortgages are holding up OK.
“the vast, vast, vast majority of people with these mortgages are holding up OK. ”
“So far” is the operative qualifier. The more I read your post the more your just seem like a Realtwhore troll.
So let’s set some ground rules for the discussion: Housing is in a crazy bubble, the worst ever since the beginning of statistics on such things. Can we agree on this? Many areas have seen a 100-300% increase in foreclosure levels in the last few months, coming off of historic LOWS. Can we agree upon this? No peak-to-trough in a housing cycle has ever taken less than 4 years and usually much longer. Can we agree upon this? No bottom has ever been put in with a housing cycle without foreclosures being at historically HIGH levels. Can we agree on this?
If so then it’s pretty clear we are in the top of the second inning and things will get MUCH MUCH worse than they are right now at this moment in time.
So let’s set some ground rules for the discussion:
So that’s how this works I have to agree on your terms before daring to have an opinion? OK I agree with everything except the 4 years peak to trough statement. Nationally that is not the case in nominal dollars. The longest it took was 3 years between 1968 and 1971. If you’re going to set ground rules at least have them based in reality.
Capitalist, we’re still very early in the foreclosure crisis. With houses increasing 100-400% over the last few years no doubt there foreclosure rate is low for now. The people who are most at risk are those who bought in the last two years and it’s still a while until their rates adjust.
Your insistenced that it’s such a small percent ignores the data that is out there. In the bubble areas, the numbers of interest only/no-doc/negative equity/teaser rate loans is astounding. In some places it’s well over 50% of new mortgages. Those don’t all go to forclosure at the same time. This is just starting.
Frankly, I don’t want families to lose their homes but I do want affordable housing to come sooner rather than later. (It will happen… the market will always see to that. The only question is when.)
Pig,
You didn’t say where you live. Is it Never Never land?
Doesn’t anyone remember Japan? 15 years of declining assets? Credit crunch, massive foreclosures, a decade of stagflation.
Read this, or at least skip to page 22:
http://www.rieti.go.jp/jp/publications/dp/02e004.pdf
I see California as the next Japan.
5% down, what’s your area?
and the foreclosure rate is trending up which makes for more effective pieces on appraisal and lending abuse (and ideally effect more rigorous practice) than the folks who can *truly* afford their PITI.
I am in the same situation. I could not rent for the cost of my mortage payment, even without the tax deductions. I have a 15 year loan at 5.5 % with 10 years to go. I am going to stay put.
Capitalist Pig,
How tidy! If you were only “thinking” of selling in summer 2005 I’d have to say you were a little late in realizing just how damaging this might be. Down only about 5%? It’s a little early to cozy with your smarmy summation.
On airplane crashes and foreclosures:
I guess it depends on how often you fly? For the travellers that didn’t happen to be lucky enough to have been on the 99.9% of flights that “didn’t” crash, well they were unavailable for comment. Uh, I had just been through a “once in a lifetime” rambling wreck called the NASDAQ and really didn’t need another? I mean c’mon, your assesment is like you live in a vacuum.
Comments overheard during Hurricane Katrina in New Orleans before the levy broke
“Its just some wind and rain”
Here are the facts C Pig
Most arms dont reset for 2 years
Option arms can hold there neg am mini payment for 5 years
After this the fun begins
right now we are just experiencing a little wind and rain.
The flooding will start soon and the water will rise higher than anyon ever expected
If you dont think there is a lot of people out there with toxic mortgages you are either in the real estate biz or just ignoring the facts
I am not in the real estate biz at all. I have no real estate holdings other than my home.
Any data on these “facts”?
- Average ARM adjustment period?
- How many ARMs have adjusted already?
- How many will adjust in ‘07?
- What is ratio of ARM to fixed?
- What the adjustment factors will be?
- What the increased payment will be?
Or can I assume the worst case scenario - every mortgage out there is a negative option that will increase by 100% when it adjusts on Jan 1 causing every single home owner to foreclose?
I don’t live in a vacuum. I live in reality where 99.9% of homes do not foreclose. On blogs like this, reality is turned upside down and every home owner is one month away from being destitute because of a negative option ARM. This is simply not the case.
As for your “crash victims can’t comment” comment I don’t even know where to go with that. Is your point that for the 0.11% that foreclose it is a bad situation? I agree fully….and? You went through the NASDAQ wreck. I feel for you, been there done that myself, although I got out in time to not feel the full brunt. Still not sure what this has to do with foreclosure rates today.
Prices are set on the margin. The vast number of homeowners who haven’t bought or sold in the last 5 years didn’t affect the price on the way up, and they won’t affect it on the way down.
However, any long-term owner who has mined their equity or refinanced with an exotic loan will feel the pain as prices continue to fall. And those numbers are significant, irrespective of your personal situation.
C Pig is a lost cause. Anyone that can’t see the connection between the death of the NASDAQ bubble (which he walked away from just in time, pffft) and the birth of the housing bubble (Part II) isn’t worth debating with. C Pig, you’re a realtwhore, troll or both. After you’ve had your turn in the barrell you’ll be able to connect the dots. What a loser.
The vast number of homeowners who haven’t bought or sold in the last 5 years didn’t affect the price on the way up, and they won’t affect it on the way down.
————————-
betamax,
I’m putting that in bold for all the fools who can’t understand that home “owners” who gained “wealth” because everyone else’s home sold for $XXX more than they paid will lose that wealth in the same way.
The only thing that matters is what houses are SELLING for. When REOs become a bigger part of the houses which are FOR SALE, the prices will shift down.
EZ financing caused prices to rise. EZ financing will make them fall as well. Doesn’t matter what the long-time homeowner does. **They do not affect the market if they are not buying or selling.**
Capitalist Pig:
Here’s another problem you forget to mention with your stat’s:
“You’ll never see a front page story about the 99.99% of planes that land safely every day. And you’ll never see a story about the 99.89% of home owners who don’t foreclose every month”
With things as they currently are, my question to you is this:
How many young people or young couples (meaning the children of Boomers) will have jobs that will allow then to live in a house like yours, nearby where you live at today prices?
99.99% of most people in America can buy an airplane ticket.
How many can afford a home? And live in it economically safely for 30 years?
Gotta’ chime in here. I may not have the investing smarts of txchick, but I’m very conservative with my money. And I know FOR too many men who are horrible with money, have debt out the wazoo, crappy credit ratings, and are just plain, old irresponsible financially. A definite turn-off, let me tell you. I know WAY more guys like this than I do spendthrift women.
FOR = FAR
eastcoaster, What are you doing Saturday nite?
lol economist
i love my wife dearly but she tends to be a little irresponsible with money at times but she is getting better
it is all about compromise
actually my sister is a very financially responsible woman
(sorry already married) they are out there you have got to look for them, in nyc we have the carrie bradshaw syndrome running wild
Yeah, and I think many of us guys can you tell stories of women who simply cannot live within their means–especially when their wealthy, retired parents urge on their appetite for “the good life”. Our society is rife with these types, and any financially conservative man or woman is going to constantly meet these types.
It probably does depend on what area of capital allocation you’re talking about. Everybody has their blind spots.
For instance, if you told me that I had to pick between the average male investor and the average female investor to manage my money for the next 30 years, I will probably pick the female investor. Not overwhelmingly so, but I have a little more faith in their ability to think long-term and act prudently. Based on my personal experience, I think more males are likely to be overconfident about predicting the future and bet accordingly.
There is some bias here in that since women are usually not the investors in the household, the women who break stereotype are more qualified than the more numerous males who follow the stereotype and think it’s their given right to manage the money regardless of experience, skill, or education. But I think there were some behavioral finance studies a few years back that supported my suspicions.
You are correct. Statistically speaking, women are better investors than men.
http://news.bbc.co.uk/1/hi/business/4606631.stm
Based on my personal experience, women are far better than men at handling their personal finances. Men tend to waste their money on gambling, **DRINKING**, trying to impress women, cars, motorcycles, tools, **HOBBIES**, etc.
But for a few exceptions, buying a home is usually the best financil move on can make (mostly due to inflation). Yes, women tend to want to buy a home once they get married. That is usually a good thing. It’s not until men get married that they do better financially — anecdotal, but very consistent among our many friends & acquaintances. Coincidence? I think not!
Said it before, but I’d bet about 50% of the posters here are women. Some of us (Deb, Melody & myself) were here from the very beginning.
financil=financial
I think a good new year’s resolution for America would be to ignore political correctness - it’s gotten us into lots of trouble. For example, the war on terror should have been the war on Muslim extremists since the beginning. But I digress.
As for the politically incorrect female nesting instinct - I believe it to be very real. It’s a very deep instinct that doesn’t care much for micro trends in the big scheme. A nest must be obtained no matter what and for many females, renting is not quite a real nest.
It’s one of a variety of events that cause people to buy and sell, often without much regard to where we may be in any given RE cycle, e.g., death, marriage, divorce, job transfer, promotion, job termination, retirement, kids graduate from high school or college, inheritance, etc.
This ad says it all.
Plenty of real estate agents note that winter can be a great time for sellers to unload houses…
What kind of insane statement is this? The real estate market is dead during the Winter in DC. The fact that anyone would say something so absurd is a real sign of desparation.
Winter buyers tend to be serious - not just lookers.
Given a choice, I’d prefer to house-hunt in the winter. Far less competition, and the sellers tend to be motivated.
“Plenty of real estate agents note that winter can be a great time for sellers to unload houses and for buyers to find bargains. Sellers are also serious, a plus for buyers.”
perhaps, or just extremely hopeful. I found a realtor-couple trying to unload their $760,000 mcMansion for $799,000 starting this month, with the hope of “renting back” from such Greater Fool. What’s the builder asking for a similar floorplan? try $599,000.
Bubble Markets Inventory Tracking
Get the overpriced Pigs fresh lipstick and new dresses folks. Spring, suicide resets and Panic is in the AIR !
i’m stuck. what’s more important than a child’s education?
They cut their price and sold. They didn’t speculate. They moved for the betterment of the family and STILL get slammed.
The child’s education was taken care of by private school.
My guess is that some social climber in the house just “has” to live in Chevy Chase.
Very good insight. The housing stock in “16th Street Heights” is amazing, but the neighborhood does not go over well down at the Country Club.
The housing is great in 16th Street Heights, but the public schools are awful and no good parent would send their kid to the schools there if they had better alternatives. It’s not a neighbrhood for young families who want to send their kids to good schools and can’t afford Sidwell at $25-30K per year.
Anyone see this:
http://www.hmic.com/
To All HMIC Business Partners,
It is with deep regret that we announce Harbourton Mortgage Investment Corporation will cease operations effective the close of business today, December 20th, 2006.
Gone like the wind.
And this seems like an unfortunate decision to merge:
http://www.mawmortgage.com/
Forgot to add the link to the merger:
Harbourton Capital Group Inc. Announces Completion of the Purchase of Molton, Allen & Williams Mortgage Company, LLC
2006 Sep 5 9:24 PM
Harbourton Capital Group Inc. announced that it has completed the acquisition all of the outstanding membership interests of Molton, Allen & Williams Mortgage Company, LLC (MAW), headquartered in Fairfax Virginia, with additional facilities in Birmingham, Alabama. Harbourton merged the Molton, Allen & Williams Mortgage Company, LLC assets with and into a wholly owned subsidiary, Harbourton Mortgage Investment Corporation.
http://today.reuters.com/stocks/keydevelopments.aspx?ticker=HBTC.PK
So they merged in September, and are already out of business in December.
The sub-prime market is collapsing.
I think the most troubling aspect of this shutdown is the fact that its not a fly by night company. They are a division of Allstate, a oretty deep pocketed & diversified financial serices company.
I wonder why the new school was such a draw? Could have been that it was FREE and the other school charged tuition.
Okay, folks. Here’s a (shocking) update from the Los Angeles area! Yesterday, I took a drive up the SFV part of Topanga. For those who don’t know the Los Angeles area, this is an area which is “mixed”. Some nice areas and some parts bad gang areas. This particular area (Topanga north of Ventura Blvd) I’m going to describe is NOT what you would call a great area to live in. Anyway, I started off at Ventura Blvd and headed north up toward the 118 Freeway. I noticed a lot of smaller new construction going on but as I neared the 118 Freeway, there was one construction development which had a sign with prices. It said, FROM $700,000. I almost crashed my car! $700,000 in this area! For ticky tacky crap dwelling! It gets worse! As I drew nearer to the 118, near Rocky Point (which is a strange looking rocky outcrop area where Hollywood used to shoot low budget cowboy movies in the 30’s and 40’s) I saw a sign out of the corner of my eye but missed what it said. I should I say I couldn’t believe what it said. I did a “U” turn to take a second look. I stopped and read the sign and wondered if I was having some kind of stroke because what I was reading just COULDN’T be real. The sign read: “New homes. Prices start in the low million dollar range.” Notice the “low million dollar”. That means $1.4 million!
Are these people serious! I’m going to be very kind here and not get carried away. These houses, in this area, at the VERY MOST and taking into account that we are at the start of deflating a massive property bubble…….are worth no more than $250,000 to $300,000. Tops. And I’m being VERY generous. From the low Million Dollar range! Jeeeeez.
So, what does one deduce from this? I think 2007/8 will bring the answer. Who in their right mind would pay over a million dollars for these properties and who, in their right mind, would saddle themselves with the property taxes and upkeep on a million dollar + property close to a pollution spewing freeway a few miles away from gangland where the temp. rises to over 100 degrees in the summer?! Are people that stupid? Tell me it isn’t so.
I doubt very much if even a totally naive GF idiot would pay $500,000 for this crap so where they are going to find suckers willing to pay $1 million + totally eludes me.
I have no idea how this is going to play out over the next 2 years and I have discovered, investing in the stock market on a daily basis for quite a few years, that logic and reason are two attributes which DO NOT serve you well in these circumstances. The stock market, of course, is manipulated by various entities such as the Fed and Da Boyz of Wall Street (you didn’t think they made $60 million a year bonus payouts for being savvy stock pickers did you!? lol) but this property situation cannot, I beleive, be so easily controlled like the stock market.
However, even if logic and reason is telling me that even a GF will not buy million dollar homes close to a pollution spewing freeway, only a few miles from gangland in an area which is clouded in smog where temps reach 100 + degrees, I cannot see for the life of me how this will finally play out. Who can afford to buy this crap and who is stupid enough to buy this crap and how on earth can this kind of crap drop to it’s true value ($250,000 to $300,000 tops from $1.4 million) without some serious ramifications to the economy. In the 80’s, there were quite a few foreclosed properties in the Valley area. Some boarded up and deteriorating because the builders went belly up. I wondering if we are going to see a repeat of this - but much worse.
Mike, I’ve grown up in Los Angeles and the only way I can make sense of the prices you describe is 1) I’ve been trapped in a cryogenic chamber and have awoken in the year 2080, where inflation has pushed prices to those levels or 2) God has told a large swath of us that the world is ending in the year 2008 so it doesn’t really matter what you pay for a house.
My fingers are crossed for an earthquake. That sould bring LA prices back to 2002 levels, for at least a month.
I honestly don’t think you need to hope for an earthquake; it will come in the form of a real estate collapse. I honestly wasn’t aware of the breadth of the problem until I stumbled upon these bubble blogs about a month ago. Since then, I’ve been talking to friends and family about real estate and have come to the conclusion that this bubble is gigantic. My brother, who’s smart in every other way, has an IO on a BA house (he’s not a speculator, just trying to afford to live near his work). I didn’t realize this until we’d started talking real estate a few days ago. He’s eminently employable, so I don’t worry about him living on the streets, but I do worry about him taking a bath in this market. I literally didn’t know what to say when he mentioned the IO. He’s a hard-working, rational guy. Wow. What I’m saying is, if my brother is caught in this, there are a lot of people who are not speculators, who are caught in the bubble. It’s scary.
Not far… from the devastating Northridge earthquake either. But that’s only “little concern”, given the asking price of the house.
IMHO there is no doubt that the market will slow further, much further. Reason 1 you cant buy a new house if nobody will buy your house. Reason 2 mortgage lenders will tighten up requirements significantly locking out people who were in the last few years allowed to enter the market. Reason 3 speculators are gone there only presence in the market today consists of trying to unload overpriced homes. Reason 4 actual investors will revert back to sound business practices meaning rents will have to cover expenses in order to be considered a buy. In my market sw florida prices would have to be cut in half for this to happen. Resaon 5 all the pain that people go through when they find out the reality of option arms and interest only adjustables will be so widley broadcast on the news that only a crackhead would consider this type of loan which happens to be the main reason people thought they could afford these houses.
“Reason 1 you cant buy a new house if nobody will buy your house.”
Yes, in metro DC, the only people who can afford to by are pre-bubble owners who sell and use the bubble run up equity as a Yuppie Housing Coupon to discount their new home to bring it down to the price is should sell at. If you do not have a Yuppie Housing Coupon then you have to rent, save your money and wait for the bubble to deflate & your saving/income to go up to the price point equal to the discounting power the Yuppie Housing Coupon would give you.
hey joe that scenario sounds familiar
the realistic 1st time buyer has a long time to wait
glad to know i am far from alone
In other words, the “Yuppie Housing Coupon” may not be redeemed in the absence of ready, willing and ABLE first time buyer. It says so in the fine print on the back of the coupon, really.
Yep, the party is over. Buyers are insisting on part of the value of the yuppie housing coupon. Sellers who concede then become buyers that demand an equal or greater portion of the next seller’s yuppie housing coupon. Sellers who refuse either cannot redeem their yuppie housing coupon at all or realize the need to give up part of its value to late and are forced to give up even more value. Thus creating a greater downward spiral. Sellers who purchased their new home w/o getting the coupon are the one’s in the toughest position. They factored in the coupon’s value when the purchased the new home and not when they finalized the sale of the current home.
Back in summer of 2005 I thought of selling my home, renting, waiting and then buying back at a disocunt. It was obvious the market was going to fall, despite the bullshit I read from the expert realtors. But I chose not to become a bitter renter after all.
In order to rent the same home in the same neighborhood, it would have cost the same as my PITI, maybe even a little more since I bought early, cheaply and with a very low mortgage rate. So I crunched some numbers and after taking into account all the factors I figured it would take a 10% price reduction for me to just break even. This took into account the costs of selling the home, moving, buying a home, moving again, the tax deduction lost for 2 years, the higher mortgage I’d get in 2 years (no way I’m ever getting as low a fixed mortgage as I have today), the fact that for 2 years I’d pay down no mortgage principle and also I’d be starting a 30 year mortgage again in 2 years instead of being 5 years into it, meaning I would be 5 years further away from owning the home and paying 5 more years of interest.
So far prices are down less than 5% for homes in my area and I’m happy with my decision. But even assuming that I was wrong and the price drop will be 20%, I’m not going to freak out. In that scenario I will have given up a theoretical $45,000 over 2 years. In order to not have to go through the time and hassle of buying a home, selling a home and moving twice.
What’s my point? The point is that not everyone who owns a home right now is in dire straits. Not every home owner has some crazy ass 110% mortgage that will adjust to 12% next week. A lot of bloggers like here tend to forget about people like me and focus only on the marginal owners who are in trouble because they can’t afford their home anymore. Like with all news the exception to the norm is reported. You’ll never see a front page story about the 99.99% of planes that land safely every day. And you’ll never see a story about the 99.89% of home owners who don’t foreclose every month.
As for the woman who sold her home for $850,000…wonder what she bought it for. She could carry two very big mortgages and was not desperate to sell obviously. So I’m not sure what she did that was so wrong or what her situation really proves other than there are still buyers out there who will pay $850,000 for a home in the DC area.
Would you buy a home today? You can still get a great 30 year fixed rate.
I’m trying to piece together the facts here. So you bought in 2003?You said there’s no way you could get near the same fixed rate again but rates are still at rock bottom and haven’t changed much since 2003 (still around 6%) so I have to assume FHA or something weird. Where are you anyway? Both coasts top to bottom were already firmly in a bubble by 2003 and there’s no way rent was anywhere near PITI at the time. If a 20% reduction is only 45K and your area is only down 5% right now, I have to assume you are somewhere in the rust belt or maybe Texas and didn’t see all that much appreciation anyway. In your position, I probably wouldn’t sell either and I definitely wouldn’t spend much time thinking about an RE bubble (unless like me you just have a morbid fascination with the macro elements!)
Not even close but I give an A for effort.
1. Re-read the post. $45K is lost if prices fall 20%. My break even is a 10% fall since there are significant costs to selling, moving, buying and moving again. Redo the math and it ‘ll make sense.
2. I bought my home for $300K in June 2003. In mid-2005 similar homes in my area were selling (not listing for but selling) for $465Kish. The same model home as mine sold 2.5 weeks ago for $450K in my subdivsion. Mine has a pool, his has a yard twice the size of mine so it’s a wash. The last one that model sold for $455,000 in August. The smaller homes in the subdivision were selling for $410-$420K last year. Last one sold this month at $400K. The subdivision has less than 100 homes so 2 sales in December is pretty good. A decrease in prices has taken place, but less than 5% from 2005 as I stated originally. Not saying it can’t go 10% or 20%, but it hasn’t happened yet and we’re 18 months into the downturn.
3. Re-read the post. I said PITI was the same as rent in 2005 not in 2003.
4. My current mortage is 5.35% 30 yr fixed, nothing weird about it. I put down 20% at the time with no points and no lender fees. No FHA here friend, I made way too much money to qualify even if I had wanted to get an FHA. Best i could do today is 6.125% with no points or fees. But re-reading my post you’d see that I said mortgages would be higher in 2 years from 2005, meaning mid-2007. I doubt the rates will be at 6% then, sure as hell won’t be at 5.35%.
4a. You - like most here - make the automatic assumption that I along with every other home owner who bought in the past 5 years, did so using an exotic mortgage or as you say “something weird”. This is simply not the case. In 2003, out of 7.2 million mortgage applications nationwide, a whopping 13% were for non-conventional loans.
http://www.ffiec.gov/hmcrpr/hmda03.pdf#table2
5. The home I bought for $300K in 2003 was originally purchased for $189K in 2001 by the original owners. So yes I suppose you could say it was already in a bubble. But to be fair, when they bought it, the home was literally in the middle of nowhere. It was one of the first homes built in a 1400 home, master planned golf community. At the time, the whole area was one huge construction zone with the closest store 5 miles away and the nearest interstate access also miles away in the other direction. By the time I moved in, there was a community here, a new shopping center 3/4 of mile away, 2 new schools including a private school, a park, tennis courts and the back 9 of the golf course had been completed as well. So some of the original appreciation was due to the fact that the area became a more desirable place to live.
There’s no way you can go from $189k in 2001 to $450K today without being in a complete bubble-zone (Arizona, L.V., IE, FL, Sacramento, etc.) My gawd, those markets are in for a complete bloodbath. Forget 20% guy, you’re looking at a 40-50% haircut minimum, and that’s if the entire economy doesn’t tank. You have completely misrepresented your situation, imho and you might want to re-run your numbers based upon a 70% worst-case. It would have been a lot easier had you just mentioned where you lived in the first place so that things wouldn’t be so cryptic and we could have a basis for a discussion. You seem like a smart guy, but all of this cagey-ness makes me wonder if you aren’t a Realtwhore.
Gosh, just where I’ve always wanted to live! Smack dab in the middle of an instant cookie cutter “community”. C Pig, you’re an idiot.
Well said, however I think we’d need to compare the % of over-leveraged equity owners who lost it all which triggered the great depression to the % of homeowners who are over-leveraged to see how great the potential risk of injury exists for the greater economy.
The transaction costs for many likely tilted the cost-benefit analysis toward staying put and maybe just doing a refi to cut your interest costs (not an equity pull refi mind you).
The point is that not everyone who owns a home right now is in dire straits. Not every home owner has some crazy ass 110% mortgage that will adjust to 12% next week.
Not every stockholder during the tech bubble was a crazed speculator. But enough of them were. All you need is an economic critical mass where other parts of the economy become dependent on the party continuing. Given the impact of housing on job growth, consumer spending through housing-derived debt, and speculation, I think that critical mass was reached a while ago.
As this capital is sucked out of the economy, either something else will take up the banner, or we will hit a recession. And at that point, even sensible mortgage owners can be adversely affected by a contraction. Again, no different than overall sensible investors who were adversely affected by the tech bubble popping.
Mike .. Don’t worry the development will never finish out things will tank before it’s to completion. Just look around The outskirts of Vegas there are abandoned developments where buyers canceled contracts. The nonsense in So Cal is just starting to unwind. I have many mortgage broker friends in So Cal who’ve told me point blank sub-prime market is gonna tank many are just renting their units and playing landlord. Not many are doing re-fi’s or new loans anymore. I moved out of california but several have told me in two years their will be a glut of properties on the market. I honestly see a 40-50% haircut coming in the next two years possibly sooner then I’ll be back. Don’t freak out it’s not going to last too much longer.
prices have been going up for houses and rents in sd since 1997. we are shellshocked.
women want to settle in not nest. we want walk in closets, walk in pantries and a giant clean garage.
“She said, ‘It was the first offer I got and I didn’t think I’d get a better one before spring. I didn’t think prices would improve before spring and maybe not even then.’”
LOL! Your going to be very thankful some one paid $850K cause no will pay that much by the time spring comes around. That someone — the buyer — will be fuming next spring when his home slides even further down to $750K…
““Beth Armington decided to sell her Bethesda house in July. When a house two blocks away came on the market, she jumped on it. Meanwhile, her old house sat there. The market started to sour. Armington cut the $1.1 million asking price by $100,000 in mid-August and then another $100,000 six weeks later, without any immediate response.”
“‘Then about a month later came Thanksgiving and we had another open house’ — a rather crowded one, Armington said. Two potential buyers emerged. Last week, the house went under contract for $850,000.”
Where are all the multiple bidders pushing prices higher…
LOL There were none… just another trick by realtors using
fake multiple bids to inflate the prices and their commissions.
Trust but verify…..Ronald Regan
A friend of mine’s father is trying to move out of his home. But I was told that there was so much inventory available that it was slow going. I asked him when the house was bought. Like 30 years ago. The house is totally owned.
“That’s easy. Just underprice the lowest comparable home by 15% or more, and you will probably find a buyer fairly fast. Your father will have more than enough equity to sell the home.” (On a side note, it does feel a little strange to say “You own enough of this to be able to get rid of it.”)
“Oh, he can’t do that. He wants to retire and needs a certain amount from his home.”
Funny. I tried that one the CA lottery board after they didn’t draw my number, but it didn’t stick. Maybe he’ll have better luck.
I could relate to Mike’s coments. The SFV is and has been out of control for years. Check out yourrealestateangel.com MLS listings in Sherman Oaks. A home is listed on the street I grew up on. Paradise in the 1960’s and 1970’s. Now the sounds of police heleicoptors will keep you up at night. The asking price is $799,000. 2 + 2 1700 sf. It is located just down the block from an older apartment complex which is now renting 7 to 8 people per apartment. Gangs are just a few blocks away in the “Up and comming Van Nuys area”. Still waiting to see some significant reductions in the SFV or Ventura county area.
ex valley girl, a few years back an acquaintance of mine told me he bought a house in Van Nuys with zero down for about 550. I remember distinctly that I had a lot of cognitive dissonance — 550? VAN NUYS?!!! It just didn’t make sense, and it still doesn’t make sense. He’s a good guy, but I can’t see that scenario ending in a pretty fashion.
ex valley girl,
We were just at my MIL’s in SO, and can attest to the helicopters. It seems that every time we’re up there, we hear them buzzing around us all night long. They’ve been having a lot of break-ins and thefts, as well, in that ‘hood.
Anything north of Ventura is NOT in a “good” area…no matter how high they price them. Old, run-down, crowded and a growing homeless problem in that area.
The acompanying chart in the WaPo article shows that while current closing are higher than at this time last year, this very slight uptick was all canabalized from sales that didn’t happen during the preim summer months. This is why one has to be very careful about looking at seasonally adjusted numbers.