Vacant Homes Mean “Sellers Become Desperate”
A housing report from the Baltimore Sun. “Steve and Debbie Lombel put their four-bedroom Colonial in Odenton on the market in May, figuring it could take maybe four months to sell a house in the mid-$800,000 range. But eight months later, the now-empty house is still sitting on the market.”
“The couple and their children have since relocated to temporary quarters in South Carolina for Steve Lombel’s job. They have borrowed from their anticipated equity and sale to build a new house. Their agent has held 21 open houses. They’ve cut their asking price three times and now are offering to pay mortgage loan points.”
“Such is life after the housing boom. Sales of homes across the Baltimore region plunged 19.34 percent last year from 2005. As listings mount, an unprecedented number of unoccupied homes for sale are piling up, creating unexpected headaches for homeowners.”
“The number of vacant homes for sale nationally jumped more than 30 percent in the third quarter from a year earlier, to 1.9 million homes. That’s about half of all single-family homes on the market, said Michael Carliner, vice president of economics for the National Association of Home Builders.”
“More than a third of those, 825,000, are in the southern region of the United States, which includes Maryland.”
“‘The share of vacant for-sale is unusually high, compared to anytime in history, really,’ Carliner said. ‘Over the past few years, total housing production has been beyond what the underlying fundamentals would indicate.’”
“Local real estate agents say the surge in unoccupied homes is apparent across all price brackets in the market. ‘A lot of people are calling me concerned; they’re carrying two mortgages and that’s not fun,’ said Frank Lanham, a real estate agent based in Fells Point. Nearly half his listings are unoccupied houses.”
“‘The longer homes for sale remain vacant, the more desperate on average become the sellers,’ said economist Anirban Basu in Baltimore. ‘The growing number of vacant homes means more sellers out there are ready to be realistic about the market to drop prices.’”
“And buyers, sensing weakness, tend to pull back and wait for prices to fall more, he said: ‘If buyers are waiting longer, then an increasing number of homes become vacant, which means sellers become desperate and prices fall further. That’s where we are in the cycle.’”
“Agents say that vacant homes for sale are often a result of job relocations that force the seller to move before the house can be sold. And in other cases, buyers decide to buy before they’ve sold their house to take advantage of a deal but then have trouble selling a then-unoccupied house, agents said.”
“‘I do have one listing now where the buyers have already purchased a home and moved into it, which is happening more often now,’ said agent Lisa Edleman. ‘And I’m showing buying clients more unoccupied homes as well.’”
“Buyers often sense a level of desperation in the sale of a vacant house, even when a seller is determined to hang on as long as it takes to get the asking price.”
“‘Sellers like the Lombels are between a rock and a hard place,’ said the couple’s agent, Lore Peterson,. ‘They’re caught in a situation like many sellers where the prospective buyer that’s buying and has a piece of property to sell wants to make sure they have an offer on their property first. If the property the prospective buyer is selling isn’t moving, the [sellers] are stuck.’”
“Waiting it out led to many sleepless nights for seller Dan O’Connell. O’Connell and his wife, who had decided to downsize, put their house in Bel Air on the market last May. In June they found a house they wanted to buy in Sparks. They settled on their new house in July, still without a single offer on their Bel Air house.”
“‘We didn’t want to lose the house in Sparks,’ said O’Connell. ‘I just never thought it would take this long to sell our house. There was a lot of borrowing from Peter to pay Paul.’”
“The couple moved to their new house in August, hoping that the Bel Air house would have a better chance selling as a vacant home. At the beginning of September, they found a new agent and drastically reduced their price, by $73,000, to $302,000.”
“‘At some point you’ve got to cut your losses,’ O’Connell said. ‘It was costing so much a month to be carrying three mortgages,’ totaling more than $3,000 monthly, including the old mortgage, the new mortgage and payments on a bridge loan.’”
“The price reduction worked. O’Connell sold his house last month and now feels relieved to have that experience behind him. ‘It was extreme anxiety, and I was short-tempered,’ he said. ‘It just was hanging over my head constantly. I kept hearing, ‘It will sell, it will sell,’ but when? The hardest thing was, how low do you go with your price, and at what point do you decide it’s costing me money to get a certain price? I had to accept the fact that it’s gone to being a buyer’s market.’”
“The Lombels feel confident that their latest incentive, offering a buydown on a buyer’s interest rate, will bring an offer. Otherwise, they too will have to lower their expectations. ‘In February, we would have to re-evaluate and see where things are, and if we would reduce it more or try another incentive,’ Debbie Lombel said.”
The Baltimore Examiner:
‘Real estate news from the past year has been tough for most home sellers, according to market statistics. ‘The Catonsville area is seeing fallout from Howard County and the surrounding area of overpriced homes,’ said Ed Palmer of Keller Williams Select Realtors in Columbia.’
‘Palmer agreed that prices will level and homes will return to its typically selling cycle of 60 to 90 days. ‘But we’ve got to get rid of the huge inventory of homes,’ he said. ‘Once that inventory decreased we will see prices level out.’
This related piece shows some are still flogging the second home movement:
‘Nationwide, second homes and vacation properties accounted for four out of 10 housing sales in 2005, according to studies by the National Association of Realtors. The trend is even spreading into Staunton and the central Valley, as middle-aged, middle-income baby boomers spread out from high-priced areas in Northern Virginia and beyond, some Realtors say.’
‘For Bernice Newman Dandridge, who is building an 1,800-square-foot home on West Johnson Street, it’s family ties. The California business professor owns a business in Staunton and visits family here four times a year but wanted to put down more permanent roots in Staunton. ‘Trying to run things cross-country gets hard,’ Dandridge said. ‘When my friends and family from California come in, I don’t have to rent a room at the Hampton Inn or something.’
Let them all drown. Heaven forbid any of them rent until they sell the first house. “They can’t do that to their kids.” Bullshit. I’d be particularly rough as a buyer on sellers like this.
I’m with you on this txchick. I just posted something to that effect and then saw your comment. Folks who buy before they sell deserve every moment of lost sleep and anxiety they get.
IMO, this is a hold-over from the speculation days. Owning two homes meant two sources of potential profit.
Sheesh, I forgot about that. I was looking at it more that they felt “entitled”, but you are right, it IS a holdover. I guess many people are still in the depths of denial.
“two sources of
potentialguaranteed profit.”“The couple and their children have since relocated to temporary quarters in South Carolina for Steve Lombel’s job. They have borrowed from their anticipated equity and sale to build a new house. Their agent has held 21 open houses. They’ve cut their asking price three times and now are offering to pay mortgage loan points
Mutha-fooker!
Have people literally lost their collective sanity?
One house unsold, and priced in the mid 800k’s(!!!!!!!!!)
and they go and “build” another????
Wait until the divorce comes along from all the finanical stress…
The new American Dream, er….nightmare.
Double mortgages in a 10 year declining market.
Just glad it ain’t me…
Double mortgages plus rent
I do not think you want the buyers to know your situation in a real estate deal.Being vacate obviously tells the buyer more than you would probably want them to know, especially in this market.
Let them go hang themselves. Brainless morons. I saw these same bird brains do the same thing with internet and NASDAQ junk. Hope in the process they bring them with a couple of the pig bankers that lent them the money in the first place. Don’t forget the banking hogs too.
I am seeing the new home builders around here lowering prices.They are haveing a hard time getting people to commit to a house that is typically 9 months out.In order to get a commitment they have to drop prices to give the buyer a comfort zone.Buyers are certianly more skittish in this type of market.
Marc, I am with you on this. The “pig bankers” as you call them, need to be removed from the food chain. Pitchforks and tar, anyone?
To top it off, there is new construction nearby that is going for under $700,000.
http://tinyurl.com/yqdbl8
The Lombel’s have lowered their price to $729,900.
http://tinyurl.com/29e6rm
This guy paid 04/26/2004: $534,610 , so there is more room to go down.
So these “poor” people are trying to make 729.9/534.6 = 36.5% profit in two years and hope someone feels sorry for them?
Um… they took out a HELOC to finance the new home build.
(I may have them confused. All these stories start to look alike at some point.)
Don’t forget the HELOC he wants the buyer to pay off.
The last time the Sun ran one of these articles bemoaning some poor seller’s situation, I wrote a letter to the ed. detailing exactly how much they had paid for the property n question and when, and indicated I thought that should have been included in the piece. That story had sellers asking $480K on a house they bought in 2004 for $340K, whining about the tough market. The paper called me and said they didn’t feel comfortable publishing people’s personal financial info. Talk about a double standard–it’s perfectly fine to say their name, town and asking price, but inappropriate to talk about the potential profit/loss and the last transaction for the house in question? Is there any wonder people who pay attention are so mistrustful of newspapers and the rest of the MSM?
That’s standard practice, so don’t be suprised. But their allowed practices DO include asking the seller directly: “Joe Sixpack, who refused to say how much he paid for the house two years ago…” would be better than nothing.
Uh oh. We bought our second home before we sold our first. However, our first home was paid off, and the home we bought was sold well below where it should have because the sellers just wanted out. The home we bought appraised for $100K more than we paid for it in (2003). Our first home then sold right away. However, I would be afraid to do something like that now. At the time we knew our first home would sell right away.
“The price reduction worked. ”
Yeah, folks, that’s what works. Price reductions. Real simple. If FBs want to bleed while they try “incentives”, well then by all means, BLEED AWAY!
“The price reduction worked. ”
lol. Like it’s a great discovery of modern knowledge.
Anyone know how this “incentive” marketing got started? I’m not just referring to the real estate biz, I’m thinking this tactic is the sign of a dying industry, like the American auto industry. I think that’s where it got started. And I can tell you it has infected other market segments. As part of my frugal lifestyle, I shop at thrift stores religiously. Our local Goodwill used to do 50% off sales, but not for the past three or four years. They started doing “Buy One, Get One”, just to move inventory. Now it is “Buy TWO, Get One”, to move inventory and make money. Not worth the effort for the shopper, I can tell you. I just move on to another place that still offers 50% off.
Anyone know how this “incentive” marketing got started?
My best guess: Put yourself in a realtor’s shoes. You want 6% of a large sale, and you have to appear to earn it. Given the choice of
1. Moving inventory by telling your seller (and your client) to just lower the price, or
2. Engaging in a useless marketing exercise where you offer all sorts of kickbacks and free goodies,
brokers aggregate around choice 2.
Sheesh, this bubble is draining my brain. You are right, JP, it’s all about the commish.
I think that any broker with enough cojones to put “The Price Reduction Worked” at the top of their flyers would do much better business, per capita. Not much use having listings by unrealistic sellers, when there is an entire sea of competition. The game has changed radically and I would separate the sorta-sellers from the really-wanna-sellers as quickly as possible.
Recently read Freakonomics (recommended, a very interesting read), where the authors argue that the realtors “slice” of the commish is too low to justify extra work for an extra $10,000 in sales price since the commish is split with the buyer’s agent and the realtor likely has to give 50% of their cut to their higher ups (Prudential, ReMax, etc., or the “team leader”).
In any event, I am certain that this concept works in reverse, too. That is, a realtor would rather have a house sell for $10,000 less today than work an extra week to have it sell for $10,000 more since their cut of that extra $10,000 is likely less than $200.
Scott, that’s what my realtor told me when she was my buyer’s agent. I asked: What will motivate you to get me a good deal on a house when you’ll get a better commission if you don’t? She replied that the extra money she would get is small, and referrals (if she gets me a good deal) are worth more.
But no matter how friendly and “concerned” they are, they want only one thing: To make the deal–any deal–happen. The nicer realtors will try to steer you towards appropriate properties. But if you don’t buy, watch them start to play you.
“They settled on their new house in July, still without a single offer on their Bel Air house.”
I know this has been hashed out before in various threads on this blog, but whatever happened to selling one house before you buy another? I have little sympathy for those who get stuck with two mortgages when they buy before they sell.
An acquaintance of mine just bought a new house ($350K+ I/O ARM) before selling his old one (also $350K+ I/O ARM). He was planning on renting the old house out. No takers. He listed it about two weeks ago. He is royally screwed. No sympathy.
Fourré ben raide.
hope he bites the big one! Darwin was right.
‘In February, we would have to re-evaluate and see where things are, and if we would reduce it more or try another incentive,’ Debbie Lombel said.’
Will we see a spring repricing surge as well as relisting?
What sort of “repricing” surge? Will that be a lower or higher repricing? I’ve been reading anecdotes of people relisting at a higher price. Maybe because they expect traffic in the spring, they’ll open a box of stupid and jack up prices.
I’m in the “stuff” business here in Fla and during the season, everyone jacks up prices at estate sales, at the thrift stores and antique shops. Not working this year. Lots of moaning. They expected the usual “seasonal surge”, but people ain’t buyin’.
Smart sellers realize the market has changed and price their house below the competition. The dumb sellers raise or refuse to change their price. The over priced houses will wither on the vine, as available buyers are snatched up by agressive sellers. It’s no longer buyers competing for properties, it’s sellers competing for buyers.
“The over priced houses will wither on the vine, as available buyers are snatched up by agressive sellers.”
I like that, Vmaxer. It’s the bubble in reverse. Here’s a new mantra for Realtors: “The number of buyers only goes down”, LOL! They need to switch tactics. Before, they hosed the buyer. Now it is Time2HosetheSellers. Sadly, many of the sellers already got hosed as the buyers.
“it’s sellers competing for buyers”
Exactly. What sellers will soon realize is that if they don’t get that (increasingly rare) qualified buyer they may not sell AT ALL!
That will be the next shoe to drop….when articles start appearing with the possibility of something NEVER SELLING.
That should change a few perspectives, no?
It still comes down to this:
How many people are willing to buy a drastically falling asset that is highly leveraged, so they have the opportunity to pay the seller’s retirement? Knowing full well they will not be able to sell it next year.
I suspect not many.
There is no upside to this market, so future losses must be factored into the equation. And that means prices must be low enough to cover several years of steep losses, plus the lost opportunity costs, in addition to the complete loss of flexibility. If you need to move you are screwed. Throw in the new BK laws for added measure.
I’m thinking 40% less than current prices is a good starting point.
Joe Momma-
Fully agree with your scenario…
I easily see a new definition of “fair market value” paradigm evolving from…”buyer and seller acting in their own best interests…to simply a “BUYER” acting in his own best self interest…
The new definition will evolve as foreclosures and short sales become increasingly prevalent putting absolutely crushing pressures on a seller’s bottom line.
For all intensive purposes these people are being taken out of the FMV definition by sheer market dynamics.
Sure the fook I’m glad I’m on the sidel sideline watchin’ all this.
Wake me when these reporters stop painting these sellers sympathetically… when the stories mention selling houses as 2002-2003 prices vs. “couldnt get their asking price of 800000″ (without mentioning they bought the house 4 years ago for 450k (guess)) ill find these articles more interesting.
I think it is when papers don’t have a vested interest in RE prices being high.
This RE valuation thing blows me aways.
They bought their house in April 2004 from the builder for $534,610.
http://tinyurl.com/22j2h6
Currently listed for $729,900, reduced down from $849,900.
http://tinyurl.com/29e6rm
Still trying to make 36%+ profit in less than 3 years, in a declining market. In the normal times, selling so soon after buying would generate a slight net loss in most cases.
“They bought their house in April 2004 from the builder for $534,610.
http://tinyurl.com/22j2h6”
–Keep in mind their $534K was already inflated significantly from 18 -24 months earlier in that area. The “bottom” will probably be well below what they paid. What do you want to be they already spent some of the paper gain, which may partly explain why they are dropping the price so slowly…
“Steve and Debbie Lombel put their four-bedroom Colonial in Odenton on the market in May, figuring it could take maybe four months to sell a house in the mid-$800,000 range. But eight months later, the now-empty house is still sitting on the market.”
…
“The Lombels feel confident that their latest incentive, offering a buydown on a buyer’s interest rate, will bring an offer.”
Yeah, a buydown on the interest rate. I’m sure that will work.
“Yeah, a buydown on the interest rate. I’m sure that will work”
Anything to avoid dropping the price. Oh, the shame in that.
They can’t drop the price. They’ve “borrowed from their anticipated equity and sale” to build their new place. They probably didn’t consider that their “anticipated equity” might be negative.
I understand why builders use incentives, as artificially inflating the sale price protects the value of their inventory of land holdings and new homes not yet sold, plus with a little help from the appraiser, they get the buyer to pay for the incentive as part of the loan proceeds. But how does it make any sense for a used home seller? Wouldn’t it be more efficient to just conduct a Dutch auction than to waste money on incentives that may not be of interest to the buyer with highest willingness to pay for the seller’s home? (This example is right out of Econ 1 — make food stamp recipients better off by just giving them cash instead of coercing them to clog their arteries with government cheese.)
Gs . The reason used home buyers are giving cash backs and incentives is because the only buyers left to buy are crooks , people with no money who can use some cash or a car etc.
If you want to get sticky about things ,even if a sellers pays 10k to buy down a rate for a buyer ,it still might affect the appraisal value and the lender has to review it .
From what I am seeing the REIC is pumping up these incentives ,which far exceeds anything that would not require a adjustment to the appraisal .
Why don’t sellers/builders just lower the price ? That would be honest and the REIC isn’t honest in their quest to keep the party going .
“From what I am seeing the REIC is pumping up these incentives ,which far exceeds anything that would not require a adjustment to the appraisal .”
What will they do when they run out of crooks who want to buy?
Sales will go down more .
“As listings mount, an unprecedented number of unoccupied homes for sale are piling up, creating unexpected headaches for homeowners.”
Bull. I’m a homeowner, and I haven’t had unexpected headaches. Of course, I bought my house for $78 a sq ft, put 20% down, have a 30-year fixed at 6%, and still have a lot of equity. There are still some of us out here that don’t need to liberate all our equity.
However, it’s someone like me who could crush the comps in my neighborhood by undercutting the competition by $200,000 easily if I had to sell. My neighbors had better pray I never need to.
I guess you haven’t heard that appraisers would write your low priced sale off as an “anomaly” that wouldn’t be used as a comp…
It’s only an anomaly on the way down. On the way up, it sets the new comp. That’s how this rigged game works to enslave the middle class.
I like very much the concept of enslaving. The founding fathers should be proud of Alan Grenspan.
Greenspan=loathsome toad.
And abolish the Fed. It has no business being involved in the finances of the US. Pitchforks and tar.
Before the Fed it was the Congress. Are you honestly saying that the Congress will be more responsible with the nation’s money?
Yes, I am saying that. Provided the milk is soured.
When you think about it, the Fed was one of the first government “outsourcing” efforts.
At least Congress is somewhat accountable. The Fed is untouchable.
“And abolish the Fed. It has no business being involved in the finances of the US. Pitchforks and tar.”
Good luck. This plot was started in the 1920’s with the help of the Rothchilds in Germany. Meyer Rothchild once said to paraphrase….”give me control of the nation’s money supply and I care not who makes it’s laws”.
Don’t you find it a little odd that the Anti-Defamation League was started in 1913, the same year as the FED.
Look who runs the FED, and the Wall Street brokerage houses………..it’s all a game of skimming off the wealth of others. Free money for holding the casino open. The house always wins, and we will continue to pay for it.
Do you think those folks from Goldman-Sachs, Lehman Brothers, Solomon Brothers, House of Warburg are the least bit troubled by the “housing bubble?”
They are buying up all the “assets” with their monopoly money!!
Never gonna end. They own the politicians.
Sorry, 1910’s, not 20’s.
By then the partying had started as the money flowed and everyone was getting rich………..or so they thought.
Real production makes money………not paper.
Fed was created in 1913. That is also the same year the 16th amendment was put in the Constitution attempting to make an income tax legal. It probably would have worked, but the Supreme Court said the amendment didn’t give the gov’t any new tax power (it still had to be appportioned). There is a movie out recently about the subject as well. Freedom to Facism, or something like that.
You can’t have one without the other. Taxes keep up the illusion that the gov’t must tax for revenue. Obviously not technically true at all. As long as folks purchase Treasury debt, it is not at all necessary.
Dioginese is an antiSemitic bigot of the first order. Spoiling a fine blog.
I’m not a big fan of a central national bank. OTOH, study 19th century US ecnomic and monetary history, and perhaps it’s the lesser of two evils. The 19th century had an unwieldly array of monetary instruments issued by banks, corps, towns, states, etc… Tons of fraud, counterfeiting, etc… The there were the panics and depressions (none as bad as 1930s, but worse than anything else in the 20th century).
Isn’t it insane how this whole group, the real estate agents, the lenders, and the appraisers can get away with this whole mess as the gov’t stands idly by and watches? People always cringe at the thought of even more regulation, but you’re hard pressed to defend not having it.
A short while back I tracked a series of townhomes sales on the same street. As much as I can tell, the units were all identical in square footage etc. These sales blew me away because half were sold to investors who all paid $140k. The other half were sold to people who intended to live in the units, and they all paid $160k on average.
That leaves the question - how could all these buyer agent’s real estate people, lenders, and apppraisers watch this happen and say nothing?
If anyone doubts the validity of what I’m saying I can post the link to the research.
They cannot make me buy, so someone else is going to have to do the enslaving.
But I suspect all the games in the world won’t save this market.
“The Lombels feel confident that their latest incentive, offering a buydown on a buyer’s interest rate, will bring an offer. Otherwise, they too will have to lower their expectations. ‘In February, we would have to re-evaluate and see where things are, and if we would reduce it more or try another incentive,’ Debbie Lombel said.”
JUST LOWER THE PRICE! Do buydowns show up in the MLS? I doubt it. Oh look, this house is 20k cheaper than that one, let’s look at the cheaper one then…. “And they never look or find out about the incentive” Yet, they are willing to look at other incentives.
Swallow your pride, drop the price, so the freakin comps are lowered and other people realize that prices have to come down. I know your neighbor might hate you, but guess what!? They aren’t your neighbors anymore.
rate buydowns might work.
Again, many of you forget the “howmuchamonth” mentality that permeates America now.
(I forget who coined “howmuchamonth”)
Many of the current buyers don’t have a down payment, they don’t have savings.
Thus, they really only want to know “howmuchamonth” since that’s all they can really “afford”. It’s not that different from teaser Option ARM rates (which clearly spur “demand” and “affordability” yeah right)
The people who bought my SD condo couldn’t afford to put down any money. Thus, I paid all closing costs. This got them in the door.
I’m sure they are already in foreclosure… I should go look them up.
HIC
If people read this point buydown story, that myth will go out the window quick…
Marketwatch
You can use a mortgage rate buydown to obtain exactly the same monthly payment as would result from a given price decrease. The price decrease will save you property tax, presumably an offset to the mortgage interest deduction. But if prevailing interest rates ever drop, you’ve lost most of the benefit, poof. And, of course, the lender never will drop your principal balance gratis.
You are wearing your buyer’s hat. You have to wear the conical seller’s hat to see why this makes sense
I just looked at a vacant home with a realtor. It has been on the market for longer than 5 months and was owned by a relocation company. They reduced the price 2% once from the original listing price. We made an offer off 10% off the listing price and they countered with less than 1% off listing. Our offer was not contingent on selling. Most of the houses that have sold within this area in the past few months are more than 5% off the listing price sold . With sellers like this it explains why the house remains vacant and why buyers are reluctant to make purchase offers knowing that the original listing price will not be sustained for the next year.
in ME
wtf? they need a shot of winter up there to get the ball rolling
keep in mind NE came down 30% off peak by 1993 in the last downdraft
I know I was around during that time and got hosed by the last downturn in the real estate market. I am finding that the sellers are not motivated to take a price cut of 10% off the listing price even though the Days on Market exceed 180 days.
Most of the houses are vacant for 120 days or longer and no price reductions. Once they are on the market for over 120 days they are either relisted with the same agent or moved to another agent and relisted. The result is a standoff between buyers waiting and sellers refusing to lower their prices. The houses that do sell are aggressively priced at 15% or more than the original listing price. Unfortunately they are few like that in the past six months.
“I know I was around during that time and got hosed by the last downturn in the real estate market.”
Then why the heck are you making the same mistake again? What part of “this is a real estate bubble” are you having trouble understanding? In two years you will not believe the deals you will be seeing. What’s the rush to get into a mortgage?
“I am finding that the sellers are not motivated to take a price cut of 10% off the listing price…”
You left out the key word: YET. I agree with Auger — no offense, but you sound frustrated, as in “Impatiently waiting…” Wither that, or your married to someone who is :-).
you’re
Yes we have been waiting for over 8 years. We broke even with the last house sale. So decided to rent and save money. Now that we have a cash and an option to buy with no mortgage we are looking. We live in a small cramped apartment with no yard and very limited parking. It is considerably cheaper to rent in this area as my heat is included is a real plus. However another summer without a yard, lack of space (1000 sq feet) and parking and I am at my wits end. The options are slim to rent a house here as I figured that the costs to move, pay first month rent and security deposit equals $20k a year for rent and expenses and that is money out the door. It is extremely frustrating to know that you can buy a house with cash but are guaranteed a loss of 20% or more in two years. The market has been propped up around here by speculators and equity locusts from Mass and other bubbly areas. So I figure that with 10% to 15% off the asking price I will break even if I buy this year and live in the house for 10 years. Sometimes you have to weigh the costs vs standard of living, and if I break even it would be worth to have a house with a better standard of living that includes a yard, parking and more space (2400 sq feet).
P-in-ME
No offense intended bro, but Y-TF would you want to purchase in ME again?
This place is socialist welfare, tax hell and at the absolute bottom of the US economic scale.
And things are gettin’ worse by the day.
The entire governmental structure is rigged to feed the entrenched social service and education bureaucratics and they have picked the carcass clean to the bone.
The least you could do is go to NH.
wow-The number of vacant homes for sale nationally jumped more than 30 percent in the third quarter from a year earlier, to 1.9 million homes. That’s about half of all single-family homes on the market,
and WOW again 4 of 10 purchased were vaction = speculation
I’m wondering about that stat as well.
Is it true that 50% of all SFHs on the market are vacant? If so, what is the historical norm?
FOr all the bitching and moaning about vacant homes and a buyer’s market, prices are technically still on the rise in Baltimore, 1%+ for the metro area from Dec 05 and about 6% overall in 2006. Makes me wonder where these price cuts are in the numbers. Asking prices are still rising in this area, although sales have been down double digits for about 13 straight months and were down 20% from 2005 levels. I’m seeing listings pulled after 6+ months with little to no price cuts, maybe I’ll see them again the in spring. New listings are still reaching for the stars regarding pricing, anyone with a Zip acct check out this monstrosity, owned by an agent, no less.
http://tinyurl.com/2hgx2b
good lord that is hideous and doubly so at that price.
nikki, what part of town are you?
I live in Nottingham/Perry Hall area. It’s full of new McMansion subdevelopments that they can’t sell, but their $600-700K list prices prompt existing home sellers to overprice their homes. There are brans new homes in Parkville, near that listing, for less than that dump. Here’s one…http://tinyurl.com/2euw2w It’s an ugly design, IMHO, and of course still overpriced for the area, but it’s on a half acre and is new!
Oops, here’s a clickable link. Sorry.
http://tinyurl.com/2euw2w
thats where i live, i live of beaconswood in those townhouses, millwheel ct to be specific
“The number of vacant homes for sale nationally jumped more than 30 percent in the third quarter from a year earlier, to 1.9 million homes. That’s about half of all single-family homes on the market, said Michael Carliner, vice president of economics for the National Association of Home Builders. More than a third of those, 825,000, are in the southern region of the United States, which includes Maryland. ‘The share of vacant for-sale is unusually high, compared to anytime in history, really,’ Carliner said. ‘Over the past few years, total housing production has been beyond what the underlying fundamentals would indicate.’”
This development brings to mind a favorite childhood cartoon image:
“Wile E. Coyote walks off a cliff and on the air, defying gravity until the moment he looks down and realizes his plight.”
http://en.wikipedia.org/wiki/Wile_E._Coyote_and_Road_Runner
http://www.moneyandmarkets.com/press.asp?rls_id=288&cat_id=25&
Then about 2.5 seconds after Wile E. hits the deck, he glances up to see an ACME anvil plummeting towards ground zero - poor old Wile. E.’s nose.
Big cloud of dust…fade to black
–
“Vacant Homes Mean “Sellers Become Desperate””
With some 10M Vacant Housing Units, Year Round, there will soon be 5M Desperate Sellers. Let the recession begin!
Jas
Hopefully the pain will be concentrated among the REIC and not spread too far. I hope the stupid foreigners and pension funds that bought up the MBS can take the rest of the pain. They were the enablers.
You are right on the stupid foreigners part. I was always completely amazed by the stupidity of foreign investors when it comes to the US financial system. Really amazing. Objectivity or rational thinking and behavior seems absent for these folks when you talk about the US. The wake up for these fools will be very brutal for them.
I notice that Diogenes regularly uses Jewish examples to spew his
bigotry. Can’t he be censured? It does this great blog a disservice.
Understanding the corrupt nature of the financial system is on topic for this blog. All theories and observations are welcome, especially those the MSM tries to label verboten.
Gary,
The reason this is a “great blog” is because it is also a genuine bastion of free speech and free thinkers. No individual or group is off limits, and even unpopular and outright lunatic points of view can be expressed and weighed for their merits. If Diogenes is factually incorrect in his assertions or information, you have the right and obligation to set him straight for the benefit of the board. You do not have the right to try to silence him out of hand by labeling him a bigot or anti-Semite, and demanding that he be “censured.”
Just about everybody who reads this board has probably seen comments in here that could be reasonably be construed as inflammatory or offensive to their religion, ethnicity, race, gender, sexual orientation, occupation, etc. Ben has deleted posts that were blatantly anti-Jewish, extremist, or otherwise out of line. I would respectfully suggest that if you are upset by Diogene’s posts, that you exercise your right to present a contrary point of view and refute his comments, instead of trying to arbitrarily silence him by accusing him of bigotry.
Actually, I almost never take on an “anti-semitic” tone or post.
Palmetto got me going with the FED, the creature from Jekyll Island, and I thought I would make a few points.
You are quite welcome to call Abraham Foxman or Klanwatch or any of your other myriad organizations to seek out and destroy anyone who says things you don’t like. I simply pointed some little facts that the owners of the MEDIA won’t touch.
And we all know why, don’t we?
NY Times, WAPo, Time, Newsweek, VIACOM……all your buddies.
If the FED chairman were Catholic for the past 2 or 3 posts, along with the Treasury Secretary, Heads of World Bank and IMF, and a bunch of top presidential advisors…….It would probably be protested by the press as a “conspiracy”. Hell, Sumner Redstone would probably be screaming for an investigation. There are a lot of Catholics in the USA, as opposed to other ethnic groups, so the odds are much greater. But that never happens. Why?
It’s just a logical question to ask. I’m not “persecuting” anyone, Gary. I’m just looking at the astronomical odds..and go HUMMM? (3 out of 100 in general population)
Remember the FRIGHT when a Catholic (Kennedy)became PRESIDENT? It was something that concerned the “media”.
Nonetheless,
I do resent your calls for censureship but I’m sure you will try.
I haven’t even called anybody any names or used any racial or ethnic slurs. I’m just looking at key players in a game i don’t like.
Oh! and Gary……….one last thing.
I never mentioned that anyone of those folks I referenced were Jewish. You did.
The implications of this article are huge. Several times it is stated that HALF the inventory of unsold home are empty. That means that infestor component to the bubble is even bigger than I thought. I am revising my outlook for RE from bad to very bad.
Of course Seattle is “different”….
This house is the poster boy for the “hot” Seattle Market. It started out at $499K (over holidays), then $479K, now $429K. Can you say “panic”….
Still a long ways to go for that property.
What is this property actually worth?
In 1997 it was worth $179K. Assuming 3% appreciation from 1997 to now gives us a present value of $275K plus any improvements that may have been made in the last 10 years. That means that even a listing price of $429K is still 36% OVERPRICED (assuming no improvements).
Fundamentals are completely out of whack….
Nice pun. INFESTOR instead of investor. I like it. Stock racket infestor. Hey that would make a fantastic name for a science fiction film. “The return of the Infestors.” Call pest control !
“‘A lot of people are calling me concerned; they’re carrying two mortgages and that’s not fun,’ said Frank Lanham, a real estate agent based in Fells Point.”
My sister decided to join this group over the holidays, against my best advice.
Very funny. Two mortgages. Au contraire it’s a mucho fun. I think we have seen nothing yet on the foreclosures front. Is there a way to bet for the number of US foreclosures in Las Vegas Casinos ? That way maybe they could hedge their infinite stupidity. Bet you that there is a lot of three mortgages too ?
I can think of one Canadian who (at least fairly recently) had 28!
Monkey see monkey do.
Canadians want soo much to be like Americans.
“The number of vacant homes for sale nationally jumped more than 30 percent in the third quarter from a year earlier, to 1.9 million homes. That’s about half of all single-family homes on the market, said Michael Carliner, vice president of economics for the National Association of Home Builders.”
The MSM announcement that maybe 50% of homes on the national real estate market sit vacant is a watershed moment, IMO. When Russ Winter posted that 51% of San Diego home sales for December 2006 were vacant, I chalked that up to an unusually high level of invester activity in the San Diego market, but this news shows the divestment trend to be rampant across the whole country. This is very bad news for sellers for the foreseeable future, but hopeful news for current renters and those with the patience to wait for prices to bottom out to buy (probably by 2010 or so).
BTW, I realize my 2010 prediction looks quite pessimistic along side of NAR and other REIC members’ assurances that a soft landing is in the bag for late 2007. But I don’t see how this inventory glut of vacant houses can possibly be resolved that quickly, especially when the cheerleaders are leading sellers to believe they can hold on without lowering their prices and high rates of appreciation will soon make them whole again. With subprime subsidence and rising foreclosures, I don’t see how the bubble can be reflated in a few short months (maybe “they” know something I don’t?).
Helicopter Ben to the rescue. S.O.S. Helicopter Ben is coming to the rescue.
The problem on the helicopter drop game plan is that
(1) everyone already anticipates helicopter drops (BB said he would in his speeches, publicly available on the FR Board’s web site);
(2) new Fed chairmen are supposed to prove their reputation as inflation hawks, or else face the consequences of heightened expectations for a higher future inflation rate;
(3) holding the FF rate flat while letting Wall Street run wild with rumors that lower rates are on the way is no way to prove your reputation as an inflation hawk (contrast to Paul Volcker’s rather convincing performance when he started at the Fed chairmanship);
5) “everyone” in the financial press keeps saying a soft landing is on the way;
6) the consequences of bond market expectations for a high future inflation rate and an ever-strong economy is normallya steepening of the yield curve — high long term bond yields in excess of the short term yields.
So why does the T-bond yield curve stay conundrumishly inverted, in the absence of evidence that Bernanke stands ready to raise the FFR as needed to extinguish any inflation fires which break out? Something does not add up…
In a nutshell it’s a mystery. Bond markets and interest rate markets can be as irrational or even crazier and cracked up than any other market. I won’t even try to explain. Maybe it’s the water people are drinking or the presence of too much CO2 in the air ? “Yield to the mystery of the inverted curve or is it the perverted curve ?” Nothing adds up today GetStucco. Traditionnal analysis is useless when weird things happen and persist.
In a nutshell it’s a mystery. Bond markets and interest rate markets can be as irrational or even crazier and cracked up than any other market. I won’t even try to explain. Maybe it’s the water people are drinking or the presence of too much CO2 in the air ? “Yield to the mystery of the inverted curve or is it the perverted curve ?” Nothing adds up today GetStucco. Traditionnal analysis is useless when weird things happen and persist.
When you have 50% vacant houses on a national level , add to that builder inventory ,add to that unqualified borower foreclosure bound ,you will have a inventory glut so huge that it’s scary .
Nobody had been able to answer the question about who are the buyers going to be for this massive amount of inventory that needs to be bought at inflated prices .
It’s funny that today’s post mentioned vacant homes for sale. Today hubby and I went and looked at 11 houses in the NE part of Portland (OR not ME). 7 of the 11 houses were vacant or staged–as in the seller is not living there at all. I had wondered aloud to my hubby, how long these folks can leave an empty house sitting? Some have been on the market for a long time (5 months or more). When we looked for a home to buy in 1996 and again in 2000 we almost never saw a vacant home. When we started looking again during late summer 2006 the one thing I noticed (as much as the high prices) were the number of vacant homes. Very interesting and very telling of what is going on…me thinks.
hamster, it’s actually people like you who keep prices up by giving the sellers hope. I actually own an empty house outside of Portland, OR and I keep hearing from my realtor that a lot of people are looking, therefore I have been reluctant to lower the price enough (although it’s currently under contract at a very reduced price, I didn’t want to wait for the onslaught of listings which I expect in the next few months).
oops, it was 7 our of 9 houses! Miscounted
1.9 million vacant homes! Holy hell! How many households are there in the US. Considering 300 million people, and the average household having 3 people maybe a little less, I’d have to guess 110 million households. That 1 out of every 53 houses is vacant, that’s not even counting vacation rentals and soon to be foreclosed on homes not to mention we’re at all time homedebtorship. We could easily see 10+ million foreclosed/empty homes in the next couple of years seeing as how we haven’t even gotten too far into this bust yet.
Borrowing from “anticipated equity”?
Not surprising
Looks like 729k ask on that Odenton property now, proabably still way too much
very few homes at that high a price in that locale, so it’s not hard to find, and this appears to be it:
http://www.realtor.com/FindHome/HomeListing.asp?snum=1&locallnk=yes&frm=bymap&mnbed=4&mnbath=0&mnprice=700000&mxprice=99999999&js=off&pgnum=1&fid=so&stype=&mnsqft=&mls=xmls&areaid=17606&poe=realtor&ct=Odenton&st=MD&sbint=&vtsort=&sorttype=&typ=1&x=47&y=3&sid=07F16A14213CC&snumxlid=1059838164&lnksrc=00003