“Still In The Midst Of A Market Correction”
The Boston Globe reports from Massachusetts. “Massachusetts single-family housing sales had their worst December since 1991, and the median sale price for a single family home fell 8.1 percent to $310,000 in December 2006. Those are among the conclusions of a report issued today by the Warren Group.”
“On a volume basis, December single-family home sales fell 8.4 percent from December 2005 to 4,037, the lowest level for December since 1991, the report said.”
“‘We’re still in the midst of a market correction which began in the latter stages of 2005,’ said CEO Timothy Warren, Jr.. ‘Sales are still falling below year-before levels, and prices are still under pressure, as buyers and sellers are sorting out the market.’”
“The median sale price for a single-family home dropped to $325,000 in 2006, down 5.8 percent from $345,000 in 2005. The 5.8 percent drop was the first since 1993 and the biggest since 1990, when prices fell by 5.9 percent. The annual median sale price for single-family homes had risen 12 straight years, from 1994 through 2005, after falling five straight years from 1989 through 1993.”
“Condominium sales in 2006 fell 12.9 percent, with 30,203 units being sold compared to 34,672 in 2005. The median sale price for Massachusetts condominiums fell 1.2 percent in 2006, to $275,000 from $278,379 in 2005. The drop was the first since 1992.”
“It’s a word that instills fear in homeowners, foreclosure. Hundreds of property owners south of Boston experienced this last year when the housing market cooled and foreclosure notice filings increased at a rapid pace.”
“In Bristol, Norfolk, and Plymouth counties, the total number of filings in 2006 is likely to be more than double that in 2004, according to ForeclosuresMass.com. Foreclosure notice filings in the first 10 months of last year increased 129 percent compared with the same period in 2004. From January through October last year, there were 1,453 filings in Bristol County, 1,130 in Norfolk County, and 1,780 in Plymouth County.”
“There’s no doubt the number of foreclosure notices filed in Massachusetts has increased dramatically in the past two years. The escalation, said Peter Ruffini, who is president of the Plymouth and South Shore Association of Realtors, reflects the conditions of the real estate market as it slumped.”
“One reason for the increase in filings was that properties were staying on the market longer, which prevented some homeowners from selling their property as an alternative to foreclosure, he said. ‘The average market time skyrocketed, to 120 to 180 days. If you’re in that situation and you need to sell, it puts you in a tough spot,’ he said.”
“Sheila Farragher-Gemma, founder of ForeclosuresMass.com, predicted the total statewide foreclosure figures from last year will break the previous record set in 1991. The 2006 figures are still being compiled, but it appears the Bay State will have had upward of 17,000 foreclosure notice filings, surpassing the previous high 15 years earlier.”
“Foreclosures ‘have been steadily increasing since 2004,” Farragher-Gemma said. And there’s no sign this trend is slowing down — at least not yet. ‘I think it’s going to continue this year, and possibly into 2008,’ she said.”
The Intelligencer from Pennsylvania. “Area home prices rebounded in December after falling for three straight months. Some homeowners continue to do well. Marianne and Chris Zoto sold their Doylestown Township townhouse in June for $475,000.”
“The Zotos may have caught the tail end of the housing price wave that drove values higher throughout the area in recent years. Houses in the same Doylestown Township neighborhood are now going for as little as $375,000, said Marianne Zoto, who’s also a part-time real estate agent.”
“‘It’s a buyer’s market right now, not a seller’s market,’ said Stacy Gallagher, who has been trying to sell her Warwick townhouse for three months. Gallagher has already cut her asking price for the three bedroom, 11/2 bath house from $229,000 to $219,000, and says she’s very close to accepting an offer for $206,000.”
“‘I pretty much have to get out of it, so we’re settling for whatever we can get,’ said Gallagher.”
“‘Frustrating’ is how Bill Turner describes the real estate market. Turner and his wife have been trying to sell their three bedroom, two bath Warminster ranch house since October. ‘We’ve had a lot of people come through, but so far no one’s made an offer,’ Turner said.”
“The Turners have cut their price once, from $265,000 to $254,900, and may do so again. They’re moving next month to a 55-and-older community. ‘I don’t know what the problem is, other than it’s just a bad time to sell,’ Turner said.”
“It’s clear that at the moment, as through much of 2006, that is taking longer. ‘Now, it’s almost like a stalemate … in the game of real estate chess,’ said Herman Petrecca, a real estate agent in Warminster.”
‘For Immediate Release: Wachovia recently conducted an intensive strategic review of its mortgage business which has altered the company’s approach to the origination of non-conforming loans. As a result, Wachovia has elected to close EquiBanc Mortgage - Wachovia’s only business dedicated solely to non-conforming loans.’
‘Once a problem identified with the city, empty homes have become troublesome for the likes of Cheektowaga and Amherst. ‘There are more vacant homes,’ said Randy Randazzo, an Amherst real estate broker for more than 35 yearsn. ‘There are more houses that have been foreclosed on, too.’ Buffalo’s vacancy rate stands at 17 percent, with more than 20,000 homes empty.’
‘Last month, police searched the home, appraised at $423,000 , along with 10 others in upscale neighborhoods across New Hampshire, and turned up what the New Hampshire State Police calls ‘the largest and most sophisticated indoor marijuana growing operation’ in the state’s history. Police say the homes, many newly constructed, sited on multi-acre plots, were elaborate marijuana labs, where growers did not live but visited regularly.’
17%!!? What’s that, a two year supply of EMPTY houses? And in Buffalo no less, the warm-weather retirement choice of millions. We as a nation have been looking for an answer to the illegal immigration problem. We found it - just run the construction business into the ground, fire everyone and maybe they’ll all go home.
The answer I thought you were gonna come up with is to send them all to Buffalo and FORCE them to live there.
“send them all to Buffalo and FORCE them to live there”
Gulag.
Amherts is the suburban town that drained Buffalo. While Buffalo in part created its own mess, perhaps they’ll be a little more empathy in Amherst now that it is experiencing the same conditions.
“‘We’re still in the midst of a market correction which began in the latter stages of 2005,’ said CEO Timothy Warren, Jr.. ‘Sales are still falling below year-before levels, and prices are still under pressure, as buyers and sellers are sorting out the market.’”
Most sellers did not get the memo, which explains persistently high wishing prices and ever-increasing used home inventories.
Readers may appreciate my recent experience, as I now feel like a trailblazer in leading prices down. I put my house near Portland, OR up for sale 5 months ago due to a job transfer, at $370k which 2 houses of the exact model had sold for just 2 months earlier. I knew the market had softened some but I did expect to get at least $360. Well months passed, I moved away, I lowered the price 4 times, and started to feel very worried. This weekend I got a semi-lowball and agreed to sell at 315K. Although this seems like a painful “loss”, I expect prices to continue downward. My old neighbors will probably shit brikks, as I’m sure they all still believe their house is worth $370, but I don’t care (no houses have sold since the ones last summer), so this is now the only real COMP. Good luck and goodbye. I would encourage readers here to either not look, or to submit very lowball offers, you may just find someone like me who would actually like to end this whole housing insanity. I will be renting for many years to come.
franklyspeaking,
Thank you for speaking frankly!…If you dont mind, when did you buy in and how did you do financially?…Muchos gracias.
the_economist, about 3 years ago for about 280. I will be precariously close to having to bring a check to the closing table. Yes I’m breaking even, but it’s still a very bitter pill to swallow when I thought I was going to pocket 50k or so not long ago. Oh well, so goes life. BTW This is the 2nd house I have sold and I lost about 10K on the first one 10 years ago. I am done buying houses, they are not the magical pot of gold so many believe.
If you hadn’t taken the 315K offer you would have brought a 50K check to a closing next Spring. I’d say well done.
Thanks, very informative.
So prices have essentially dropped 15% (315k vs 370) over seven months. I don’t think that’s too far off what the market has done in ounce-for-ounce terms, especially on the west coast. We see official reports of median prices down 5-10%, but then for that much money people are getting more house in the form of upgrades, reduced commissions etc.
And you’re done. It’s out of your hair, no longer your problem. Your neighbors are no longer your neighbors and were probably never your friends; screw ‘em.
I agree. Sounds about right. I never understood the bs about “comps” anyway. Sounds like price fixing. Personally, I do not want to screw the next buyer of my home with phony prices. It is a small starter home 1/2 block from a good elementary school. I would like to sell it at a fair price to a family getting started in my town, so long as I can buy something else at a comparable price. Selling at current prices would simply give one more to the retiring equity nomads.
“The Philadelphia area isn’t nearly as vulnerable” as other regions, said Tim Schiller, senior economic analyst at the Philadelphia Federal Reserve Bank.
“The concept of a housing bubble, that’s a myth in our area,” said Thompson.
Sweet has long maintained that a housing price crash is “very unlikely in (the) Philadelphia area.”
“House price appreciation in Philadelphia’s going to decelerate this year,” Sweet said, which means prices will continue to climb but not by the double-digit rates of earlier this decade.
What a tool.
IMO the uptick is median home price is due to HB incentives . Also, since they’re not doing a price per sq. ft. analysis, the numbers are fuzzy anyway.
The Phila. metro area covers a lot of ground. I’m not in Bucks or Montco, I can only report what I see in my neck of the woods. New construction: overbuilt. Resales: inventory builds everyday. Went to one open house yesterday, in the TH community I currently inhabit. The realtress actually looked scared.
The thing that surprised me was that the house was being shown in a state of minor disarray. There are a half dozen THs for sale in this particular community, with more in the pipeline (spring rebound relists). In that environment, one would expect that a seller would present their property in pristine condition.
In the city, the high-end condos are not selling, no sir, they are just sitting there. They are going to take a 20% hit, at least. Maybe that doesn’t conform to Mr. Sweet’s criteria for a housing “crash”. For him to state unequivocally that there is no bubble in our area, well he’s just wrong.
He left out that Philly is different and special, and everyone wants to live there.
Yes we are special, we have this guy:
Pervert at large
For immediate release: property values skyrocket in Fetish Mugger’s ‘hood!
Total tool. This is exactly my area. And yes, Virginia, there is a Philly housing bubble.
Hey, Balto’s less than 100 miles south, and we’re different here too, in case you hadn’t heard! It’ s amazing how even a 100 mile proximity to any major city (DC, NY) makes a market “different”.
I’m looking forward to a domino effect of correcting prices up and down the east coast megalapolis: starting from Boston going south down to DC, then reversing and going back up from DC to Boston. It was too easy during the boom for investors to skip, hop, and jump from city to city with their flipper money burning a hole in their pockets.
Although the ones who timed it right did make out well.
Got a friend with a condo in Philly…no sale, empty for six months now….going to “put it on in the spring”…..
He can take the hit but he hasn’t figured he’s going to get the hit yet.
I agree with the article to this degree: that Philly will not drop in price (percentage-wise) as much as other more-bubbly cities like Boston, NY, and DC. That said, even Philly prices cannot be explained by migration alone. Philly’s bubble is not a large as, say, DC’s. But it’s a bubble nonetheless.
This is already evidenced by Toll Bros’ dropping prices in their Naval Square development by 25% since late 2005. Some FB’s actually bought units at those prices.Today, many owners of units in that same development are now looking for renters as they wait for the market to bounce back.
This “bought, can’t flip, rent out” strategy is taking place in every new condo project in the city. Craigslist is full of speculators trying to find renters — who will only pay part of the mothly carrying cost.
The sh*t has yet to hit the fan here because a lot of these FB’s are just delaying the inevitable by thinking that their condos will bounce back soon.
“It’s clear that at the moment, as through much of 2006, that is taking longer. ‘Now, it’s almost like a stalemate … in the game of real estate chess,’ said Herman Petrecca, a real estate agent in Warminster”
Though it may appear to be a stalemate on the surface, I predict buyers will win this slow-paced chess match in 2-6 years.
Warminster, PA homeowners are going to have trouble selling their houses no matter what. The Willow Grove Naval Air Station is closing and it will probably become Philly airport #2. Not the best location.
Hi phillygal2 -
Do you want to be regularphillygal?
Someone who used to post here twice called me a drama queen, and I’ve actually thought about using that as a handle.
So if you’d like, you can be phillygal and I’ll switch to drama queen. Or queenie. Or something. Maybe 2muchCorona_in_fridge
The sellers are bleeding with paying mortgage, insurance, tax, HOA, upkeep … while in stalemate. They will resign soon.
It’s not a stalemate, it’s checkmate.
‘I don’t know what the problem is, other than it’s just a bad time to sell,’ Turner said.”
How about the price is TOO HIGH ???
Maybe that’s the problem, Mr. Turner.
I have learned that in free markets there is a PRICE at which everything will sell. Why is this so difficult to understand?
In a usual market there is alot of overlap between highest price a buyer is willing to pay and the lowest price a seller is willing to accept. In may places now there is no overlap.
The free market laws of supply and demand only apply when the market goes up… duh! Don’t you know real estate only goes up?
Seriously though, I think it is unblievable the amount of denial there is out there right now. It is so prevailent that it has held up the prices for the last few month (at the cost of sales). Once the market does finally collapse under its own weight its going to get real ugly for a lot of people. I keep thinking about a game of Jenga in its final moves.
Ha! Jenga, yes. I think that’s a perfect metaphor for a market bubble like this. Jenga towers always go up.
OT, but you’ve gotta love the current state of the home loan industry:
http://forum.brokeroutpost.com/loans/forum/2/87408.htm
Nico : “stated income was designed for documentation relief. not for fantasy. that’s why we have NINA programs and No Doc programs. for people that truly do not have assets.”
Mr.Xclusive : “you cant possibly tell me that in california with all the large loan amounts that all stated/stated deals are just because they dont want to retieve the documents. thats fantasy. I’ve worked for many mortgage company’s from san diego to san jose. STATED/STATED deals are all false. do you think in silicone valley everybody makes 15k/month and has 30k in savings. NO the average SFR is 625k #1 in country. 99.9% of SISA loans are false figures”
DANKA : “listen even lenders know that STATED loans are lies, all the a’es have told me sO especially IF ITS w 2 otherwise you would qualify full doc..”
DANKA : “Furthermore, why bother having stated loans….maybe all 50 states should be like OHIO and become full doc loans only, and that will end the problem of stated income, stated assets and any fraud involved on anyone’s behalf….
Bottom line is this, if you are W-2 employee and going stated, SOMEONE is lying…either the client or the loan officer, and no one can say different”
Tsnyder : “It’s really tempting to jump in but, really, what
is there left to say? You’ve laid it all out… those
who want to do honest business will… those who don’t,
won’t…
…I guess there will be customers who know how to ‘game’ the
system but Im willing to bet that most SISA/SIVA borrowers have
been coached by their LO.”
=====
I wish that investors of MBS’s would read posts like this and/or talk to real loan officers before buying the securities…wouldn’t that be good due diligence?
Come on, they are not all lies. I am sure there are some people out there who make a lot of money, and would rather pay 100’s of extra dollars in interest every month instead of going through the hassle and expense of copying your paystubs for 10 cents each.
Right.
Ohio doesn’t allow stated income loans? Really? Can someone verify this? If so, is Ohio alone in this respect?
True, they’ve just passed a law, and starting this week no more stated income loans in OH.
tinyurl.com/2oec3p
The Ohio Homebuyers’ Protection Act, SB 185, is effective on January 1, 2007. In general, it applies to loan applications taken on or after January 1, 2007. For example, SB 185 requires new disclosures be provided “at application,” so this requirement does not seem to attach to loans applied for prior to the effective date of the bill. However, certain other requirements may be held to apply to loans that were “in the pipeline” as of the effective date, so best practices dictate complying with all aspects of SB 185 where possible, even if the loan application was received prior to the effective date.
SB 185 was developed over the course of the 2006 legislative session in Ohio, with significant input from consumer advocacy groups and, to a lesser extent, the financial services industry. Parts of the new law cover only mortgage brokers and other registrants and licensees under the Ohio Mortgage Broker Act, other parts in addition cover “nonbank mortgage lenders,” and other portions of the law cover all types of residential mortgage lenders in Ohio.
SB 185 is not just a “predatory lending” law, although certain sections of the law are for “high-cost home loans.” Though the Ohio General Assembly passed the law out of concern for consumer protection in the mortgage lending industry, the legislature did not stop at merely regulating mortgage brokers and nonbank mortgage lenders. Rather, SB 185 contains “something for everyone” – that is, new or revised statutory sections covering not only mortgage brokers and mortgage lenders, but also appraisers, title agents, escrow or settlement agents, title companies and other settlement service providers and affiliations of these parties. Think of the law in terms of three “C’s” – it is comprehensive, complex and challenging.
Everyone should be pleased that the new law has, “something for everyone”.
“I don’t know what the problem is, other than it’s just a bad time to sell,’ Turner said.”
Let’s see…could it be a) massive speculation that created an unsustainable level of demand; b) non-existent lending standards for the last few years; c) a rollover of greed from the stock market collapse; d) all of the above
True story on a house in Medford, MA (8 miles outside of Boston).
Single family house was on the market for 650k in May ‘06. House has 3k of living space and in good condition. Assessed at 470k. Offer made for 525k in May and owner refused to counter. Response was that the owner was insulted. Just checked the real estate transactions and the house sold. It sold for 485K in Dec ‘06. And who said, “real estate only goes up.” Guess that 525K looked pretty good now.
“Response was that the owner was insulted”
Hey, he wasn’t about to “Just Give It Away”.
we’re not impressed as he still got more than assessed value- got to go below that or you’re getting clipped
This conforms to what I’m seeing in Boston. Selling +- 5% around the assessment and 20-25% off the peak.
Its going to get worse in the spring as the examples of actual -25%transactions mount (and the BS of “median prices” become meaningless).
All sellers want to sell, more and more HAVE TO sell. Very few buyers HAVE to buy, more and more will have reasons NOT to buy as the market’s decline becomes OBVIOUS. I think the transition period, from not understanding why RE doesn’t “always go up” anymore, will be pretty rapid….for buyers.
The forced sales should push the total decline down another 20%. Back to 99 or 2000 levels. That’s were “equilibrium” and some affordibility will meet.
you’re telling me the coutny boards lowered assesments over 15% already ?
I figured in Tax-a chussets they’d keep squeesing
“Tax”-achussetts is a convenient fable. The taxes there are actually fairly average for the nation as a whole.
The prices have fallen down to the 2006 assessment levels…they had been 20% HIGHER than the assessment levels in 2006.
No, taxes won’t change regardless of the level of assessments. Are you kidding me? We’re Taxachusetts and we’re not giving that title up without a fight.
Don’t you know, assessments never go down. You’ll still be paying property tax on that $470K assessment when the house is worth well under $200K.
I’m in the market for a house, and will buy this spring because I have no other choice (wife=illogical). I’ve been following MA very closely and can say that prices haven’t really gone down much. From their peaks in 2005, we are still at very high levels. I don’t see the market crashing like others because interest rates are being kept low and there is hardly any unemployment. If the economy goes into recession because of housing, housing will correct even further. Until then, this thing will keep dragging on. I also notice that once a house is ‘priced right’ (that’s subjective) it sells almost immediately. There are still a lot of buyers out there and they are waiting, that’s for sure. Looking at the macro picture, as long as the dollar stays at this cheap level, I don’t see house prices getting much cheaper . There is still too much liquidity out there.
I also notice that once a house is ‘priced right’ (that’s subjective) it sells almost immediately
Nope, that’s objective. All other pricing is subjective.
I sold a house in brockton ma in 2005 for 410k 2000sq ft bought a house in in houston for 170k 4000sq ft brand new better life down here than there and more afordable ma housing prices are way to high
Assessed at 470k. It sold for 485K.
New owner still overpaid.
May be new owner is getting 35K cash back. Watch for fraud.
A Sunday article in the Denver Post:
Matt Rivette, a broker with Pro Realty Inc. in Greeley, has the opposite experience. He throws cold water in the face of home sellers unwilling to accept declining values and an extended stay on the market. “If you want to sell a house you bought five years ago, chances are that here in Weld County it has less market value than what you paid,” Rivette said.
Home prices nationally have been declining as buyers cope with rising interest rates and excess supplies. The median price of existing homes sold in November was 3.1 percent lower than in November 2005, according to the National Association of Realtors.
Last year, more homes entered foreclosure in Weld County, 2,073, than were sold, 1,870.
More homes entered foreclosure than were sold . . . WTF?? A 27 month supply . . . Parts of Colorado are toast! A lot of these foreclosures are not even on the market yet.
You have to look at the posted URL for an article in today’s Cincinnati Enquirer. Didn’t realize but it seems Ohio and Indiana are the foreclosure leaders. I guess the race is on.
http://news.enquirer.com/apps/pbcs.dll/article?AID=/20070122/BIZ01/701220323
sorry the URl didn’t post
Wow, kitchen looks like a pig sty. I guess she’s too busy worrying about money to clean up. Sad story nonetheless, but… when you borrow money, you have to repay it. Why people don’t “get it” I dunno. And as expected from the lead-in, the article tries to blame the lenders, but they don’t give any specifics. Sigh. Typical mass media half-baked article.
Ugh - I never know how I should feel about articles like that. I’m so obviously supposed to feel sorry for the woman and I do, to a certain extent. Husband died young, car crash leading to disability, autistic son, and probably predatory lenders. Not her fault.
But then I think, what was she spending the money on? Why did she refinance so much? As nice as the house probably is, with all of her problems, maybe renting and letting someone else without health issues and an autistic son take care of her physical surroundings is a good idea.
*sigh* - I don’t know…it’s probably the reason I’ve stopped bothering with most of those types of stories in the MSM….
Some people are just doomed to be poor so best to just let them.
A couple months age someone (Stucco?) observed that in the up-coming political season, the housing crash and its impacts on J6P will be the rage. For Weld County this is looking very prophetic.
pols in france are making housing ” a right” like they did w healthcare
Kinda puts a new twist on a ‘no doc loan’. Just send out the political chiropractors to make financial housing adjustments.
It’s about time! Pols and all of France should have homes to rest in during the 12 paid weeks of vacation. WTF!
It always kills me that so many Americans ridicule the French and other Europeans because they get 8 to 12 weeks of vacation a year … Meanwhile, the same American saps are slaving away all year for a measly 2 weeks off, and still can barely make ends meet.
I used to live in the Netherlands for a short time … Believe me, middle class Europeans have a much higher standard of living (part of which, is much more vacation) than middle class Americans.
I’ve lived in UK, Germany and Texas.
Over there focus is the “quality of life”. In Texas, it is the “standard of living”. I’d hate to be down on your luck here. It is pretty brutal.
Why did you leave the Netherlands if the standard of living over there was so much higher? The Europeans are old and dying off quickly. As bad as it is here, the USA will be here much longer than the EU. Europe might be better if you don’t have children or if you’re a slacker whose career is serving serving coffee or selling cigarettes.
People who want to make something of their lives go to the USA or Asia.
TG
I guess being short time (I guess “vacation” or visiting friends) and not having to pay taxes and/or receive important services (as health care, public transport, education) would make The Netherlands a nice place during summer….until you live there for 6 years (my case) or even only 3 years (my husband’s, hey! and he didn’t have to pay local taxes only the 30% expat level). When people ask my husband if he liked living in Europe he says he went to Europe as a democrat (voted for Gore) and came back as a conservative republican.
The DNC 2008 convention in going to be in Denver. Foreclosure capital of the USA? You bet a big issue will be “my house is worth than I owe, I need a government hand out”
1991
that’s the benchmark bust year
unemployment was over 9%
yeah, but they measure it differently then
Yeah Yeah, where is this housing implosion causing a deep recession? Been hering all this since 2004 or so. Oh I know where it is. It’s next the 2000$ ounce of gold/iran oil bourse/150$ barrel of oil pile. If the economy stays well this it’s time to give up on the doom and gloom bit. Hey the Brown’s are going to the super bowl next year.
Is this truly another virgin to the scary world of reality? Oh boy I hope so. Because if it is having your head in the sand exposes any number of soft parts.
You think the economy is well? Please expain……..unless of course your comment is pure sarcasm.
“Hey the Brown’s are going to the super bowl next year”
Gotta be sarcasm. Nobody is that delusional.
….or if Bloomberg or CNBC told you so.
FB’s have going thing going for them “the job market”. In SF Bay Area jobs are plentiful as long as your payments don’t ballon and you weren’t counting on a 20 % pay raise you should be able to ride this out a while longer. I expect the correction will take longer to play out because of this, and a lot of trigger happy spectators may jump in sooner than they should.
I agree with you on one thing. The gold “hype”. About 5 years ago a very good friend and a very good stock market trader and not even a bear, was convinced the price of gold was going to go thru the roof. However, I didn’t agree then and I don’t agree now. Gold is basically a pretty colored metal for jewelry and is even being replaced by new technology for industrial use.
The new “benchmark” for valuation is property AND IT WAS PLANNED but this free money mess has to be sorted out first. The b.s about people eventually buying property for 10 cents on the dollar is total rubbish which comes from people like Robert Prechter, who was a one horse show a dozen years ago and has done nothing since, and Sir John Templeton who is about 230 years old and needs to stop missing his daily dose of altzheimers medication. There are other nuts out there - usually on bear sites who, if you follow their advice, you’re gonna go broke real quick.
Personally, I doubt if property prices will fall below the 2000 level. If that. Then government will have achieved it’s objective.
(A) Got millions of non-owners into housing thus making them stable taxable cash cows with an acceptable percentage of collateral damage they expected would happen from bankruptcies via foreclosures.
(B) The main reason. Heading off a social security and medicare crisis 20 years down the road. At that point, means testing will have arrived. It’s already in place in several european countries. Then 70/80/90+ year old people can reverse mortgage their property to supplement pensions or pay for $200,000 hip replacement operations/heart operations, cancer drugs, etc. The government cannot resolve these future problems without massive tax increases and any tax inceases we get in the future will be needed to pay off the US appalling national debt. Even the Chinese with an incredible multi-billion dollar trade surplus has just announced (yesterday) it is going to divest itself of some dollar assets.
As an added bonus once this is over, it will ensure that millions of the, by then middle age children, who will probably own their own homes of these seniors do not end up inheriting $1 million homes and retire early thus putting more pressure of the social security system. You might have noticed how more andf more reverse mortgage ads are appearing on tv aimed at seniors. Ten years from now I think we are going to see a whole army of companies dealing solely with reverse mortgages.
That isn’t a whacko conspiracy theory. It’s common sense because there is no way in hell the government can afford a stable social security system any other way.
As for the Iranian oil bourse? That might or might not happen but I think it’s a much more than 50/50 chance that the US dollar will be replaced by another currency for oil valuation at some point.
As for oil? It all hinges on the middle east mess BUT this downturn in oil prices is just a “blip” and I wouldn’t be surprised to see oil creep up to $60 a barrel before long and possibly to $80 a barrel. If the middle east becomes a bigger mess, then the $100 + a barrel price is certaintly in the cards.
Interesting - some points to consider.
Peak oil - nope, this isn’t a wacko conspiracy theory either.
In the long run energy prices have no where to go up. In the meantime, it will be extremely voliatal due to the reasons you’ve mentioned.
Reverse mortgages - in a free market, banks would be happy to give you money for your house if they believed the asset will be worth more at the end of your life. Inflation and interest helps protect the investment and it should be an easy item to get rid of. Right now the entire lending system is built around the idea that house always appreciate.
What happens, though, if the banking system believes that a house will be worth significantly less in the future? Right now, the last of the WWII generation, the Baby Boomers, and Gen -Xer’s are attempting to own houses simultaneously. What happens if we discovered we’ve overbuilt and more households are trying to get rid of houses than are forming them in a couple of decades?
If houses once again become the depreciating asset that they really are, I can’t imagine that there will be lots of places doing reverse mortgages. Once the price decreases get really rolling, I think you’ll see a significant pull back in banks doing reverse mortgages.
Apologies for the above typos….
Also, take a look again at gold 5 years ago. It was in the low $300s. Did you check the price of gold the last 12 months or now? Mostly above $600. So a 100% gain from 5 years ago for real currency instead of paper money is “through the roof.”
Now with oil dropping and gold not budging, exhibiting good resiliancy, prices are ready to go up higher. The value of the dollar keeps falling It has fallen 95% since the early part of the last century. If you bought gold when it became legal in the 1970s at $35 per ounce, you’d be in great shape. Gold goes up, gold goes down. In the long run it retains its value relative to inflation. A common saying is that you should be able to buy a good quality man’s suit with one ounce of gold. So is gold too high or the cost of men’s suits too low?
Bill_in_Phoenix,
You’ve written about buying gold at $35 in the 1970’s before. Gold was traded between nations at that price. Long before PL93-373 permitted Americans to own gold again, the price had risen. The London PM gold fix was $156.25 on August 14, 1974 when the bill was signed and advanced to almost $200 by the end 1974 when the law went into effect. If you had bought gold when it became legal in 1974, you would have tripled your money in 33 years. Not a great return.
You would have had a 300% increase. From $156 to today’s $642. A nice house in my town of Fresno on the north side cost $44,000. Today, if it was properly valued, it would sell for $490,000 but now sells for $800,000. You do have a point. But gold is useful in your portfolio to reduce risk. All hell could break loose because of many reasons. One reason is most Americans don’t want the United States to fight Islamic terrorism. No other nation is interested in combating Islamic fundamentalism. And it just keeps growing, infecting over 1 billion people on earth. Islamic fundamentalism has replaced communism as the big threat to civilization. I can name some other reasons to buy gold: declining value of the dollar is one reason. Another is the declining educational standards / results of American public schools. Another reason is gold production has been decreasing over the years (peak gold).
I would never put more than 10% of my net worth in precious metals though. I hope gold, silver, and platinum prices fall, because that means my equities will continue to grow in value, and over half my portfolio is in equities.
All this excess property will be soaked up by immigration and first time buyers when the price is right. I think there is a plan in the works to “ease” immigration levels. Especially for would be immigrants south of the border. The US could easily absorb another 50 million people in the next 20 years and there isn’t a 50 million excess properties out there. As for financing? They (government) will find a way to manipulate it so that people can afford it.
The US could perhaps absorb that many. However, excessive immigration leads to serious social upheaval. The rate of immigration you are discussing is higher than we’ve *ever* previously experienced as a nation. You’re suggesting a rate of 2.5 million people per year - I can’t imagine that not being resisted by the population at large.
Also, the government cannot magically create financing people. Look at all the affordability programs there are now, ~12 million vacant houses, and low interest rates. It seems to me that the first time buyer shouldn’t be priced out at all right now. I’m not convinced that the gov. will find a way in the future…
That isn’t a whacko conspiracy theory. It’s common sense because there is no way in hell the government can afford a stable social security system any other way.
you make some good points, but arguing that the government *must* be doing something about a long-term problem is simply wrong, however nonsensical government inaction may seem.
The government focuses on short term goals, doesn’t plan anything past winning the next election, and can’t keep a secret to save your life, so don’t expect any long-term master plans; there are none…
When I say “government” I don’t mean the celebrity politicians who the media wants elected. At the moment that celebrity being Obama. I mean the faceless career civil servants who sit in obscure offices, planning years into the future, knowing that the celebrity politicians are going to be out in 4 to 8 years and it’s all change again. About 25 years ago I was living in North County about 50 miles from San Diego. Temecula/Fallbrook area. I used to drive around some days checking out the area and I would see these recently built roads but they led nowhere and there were houses. Sometimes for miles around. Now, guess what? Miles and miles of tacky track houses. Some career civil servants in obscure government offices, a few years before I noticed this roads, had already drawn up plans for what would happen 20 or 30 years on.
Should have read: “There were NO houses…”
” Then 70/80/90+ year old people can reverse mortgage their property to supplement pensions or pay for $200,000 hip replacement operations/heart operations, cancer drugs, etc. ”
Nope, they’ll take out and spend the equity first and then get the operations and drugs on the backs of those working.
My grandmother is talking about getting three flatscreen HDTVs.
You’re not drinking the koolaid, but you’re definitely drinking.
Just how many newly arrived illegal aliens do you think can afford to live by themselves, let alone individually purchase a home? Get real.
The Zotos…could be perceived as having done well in selling their house whether they received $475,000 — a $200,000 gain — or “only” $375,000, which would still have been a $100,000 gain.
If Gallagher gets $206,000, that’s still a 37 percent gain over the $150,000 she paid five years ago.
And the Turners, who paid $20,000 for their home 36 years ago, stand to profit handsomely.
Greedy MFs. Lower the price and be happy.
No Herman, it’s not like chess. It’s a game of “who can hold his breath longer”. The sellers are heavy smokers, lung capacity shot to h#ll, standing in an overheated kitchen. The buyers are healthy young athletes wearing scuba breathing gear that lasts for hours.
Hmm. Who can wait longer?
We’ll put a pillow down so you don’t hit your head on the granite countertop when you pass out, Herman.
Look at this crap:
http://www.denverpost.com/business/ci_5057866
Don’t worry…past a certian yearly term, it doesn’t really help much monthly payment wise.
With $400K loan at 6.5%, the monthly difference is $186.44. 30 year payment is $2528.27 a month, $2341.83 a month.
And if you are trying to refinance out of a teaser rate option ARM, you would actually be paying much more per month with the new 40 year fixed rate loan…so no help there.
I imagine we will see 50 or maybe 60 year loans which can be inherited by your offspring at no cost.
the Colorado Housing and Finance Authority
has a Soviet ring to it
free healthcare included on that 40 year?
“Still In The Midst Of A Market Correction”
I love that phrase. The Titanic also had somewhat of a correction. What exactly do people think we are in ‘the midst’ of?
……….”We’re living in a world of Make-believe, and trying not to let it show-oh.”…………….Moody Blues.
Actually, that was “living in a land of Make-believe”.
“I don’t know what the problem is, other than it’s just a bad time to sell,’ Turner said.”
You would think they would have been “clued in” when their agent advised them on how much to list the home for.
Surely they were more than a bit surprised to list it for such a great amount given they probably only paid 50,000 for it.
Do some people really wander around with NO CLUE at all on what is going on around them.
I hope they do not drive cars or operate any sort of machinery including toaster ovens.
SKB
I put my townhome in MA on the market last April. It almost sold in September but fell through after our buyer’s buyer fell out. This process has been very frustrating, but since just before Christmas until right now, we have gotten more action than we’ve gotten all through ‘06. We are hoping to see a couple of offers this week. I can only guess that there are enough buyers out there at the low end of the market still trying to get into a home and they are believing the current hype that ‘now is the time to buy!’. All I know is that I will be renting for at least the next year or two in San Diego where the bubble is far worse than anything I saw back in MA.
I recently put in a offer for a home that was 10% less than the asking price as it was the tax asssesed value. The sellers were dissapointed and countered at 1% less than the asking price. My agent told me to wait until spring close to the listing expiration date and make the same offer. Maybe they will be to negotiate this spring.
That is when you should submit bid a 20% less
Exactly!
And when they are “insulted” by the 20% less bid….wait.
Had a friend in 1990 who did this three times. With NO buyers to compete with you, you’d be surprised how sellers can soon become “unoffended”.
read your yesterday posts , Patiently
Trust me, I know how it feels to just want to buy a place and feel settled. And I haven’t even waited as long as you have.
It’s often been discussed here that the first offer a seller gets is usually the best offer. So maybe you have a better than average chance at getting your house at a price that won’t rack you.
Houses that I do want are completely priced out of this world. The math just doesn’t add up on who can afford them unless they have an interest only loan. If the requirement was to make 20% down with a convential fixed only income earners in the 5% top bracket would be able to afford them. The jobs don’t pay that well here. Yet when I do the research in the tax records the house price in 2002 would be priced for average middle class person. You can tell when they are overpriced by looking at the tax assessed value. If I do see a house that I want I make a purchase offer slightly below the tax assessed value. If they aren’t willing to negotiate I move on a look at the next vacant house for sale. It has been very frustrating to see new featureless vacant house after house in the past year with asking prices commanding a salary that is non existent in this area.
Luckily I have an buyer’s agent willing to put up with me and submit the purchase offers. Next time I think I am going to try the mutiple offers route ;> To get the seller to negotiate. It is time for the sellers to realize this is a BUYERS market. Most of the comps for houses that have sold within the past few months have been reduced 7 to 10% off the listing price and are close to the town tax
assessed value. I have seen major downward price trends of 10% or more but it is really kept quiet to the average buyer.
I should have bought in 95 but at the time I didn’t want to settle. By the time I was looking to buy in 2004 prices were ridiculous with bidding wars and I decided to wait this out.
It doesn’t take a financial wizard to realize that if a house doesn’t sell within 90 days to reduce the price….
STOP WORRYING ABOUT THEM!
“prices didn’t make sense” to you? Yep, and that’s why you’ll be smart if you only bid what DOES make sense now. You have a buyer’s agent “willing to put up with me”? How do you think THEY GET PAID?
I bought two homes without agents. Sold one without an agent. Brokers, most often, do little or nothing in these transactions. I bet you are listening to one now, saying “don’t bid so low”!!!
Guess what? They aren’t your friend. Bid 20% below. No one will take it. Wait. I guarantee you that the absence of buyers will FORCE sellers to come back to you. Why? NO ONE ELSE IS LEFT!
Please, stop listening to buyer agents. Find properties you’d really like to have. Make an extremely low offer. Let it be rejected and wait. Think about what is going through the minds of your sellers who are getting NO OFFERS. NO BIDS at all.
That is terrifying. At some point, someone is going to come to your port in this storm because you’ll be the only port they know even exists.
Absolutely great advice from Jag! Don’t be the next GF on the block. Next year your lowball offer will be high, then how will you feel?
I think buyers should start playing their bidding games too. Make a lowball offer to offend the seller. Then get friends and/or relatives to make a lower offers. When the seller contacts you to take your offer, make him/her lower it. What’s good for the goose is good for the gander.
Man this is really cool… I’ve been saying this was going to happen for years but all my friends look at me as if I was building a boat to survive a massive rainstorm that was going to wipe out every living creature on earth:)
Annnny Hoooow, I was just wondering how many of those realtors that so arrogantly offered their unsolicited advice (real estate ALWAYS goes up, BUY NOW otherwise you’ll be priced out of the market, THIS ONE’s gonna sell fast so you better make an offer…) are now facing foreclosure because they haven’t made squat in sales this year or have their leased Benz repoed. Aint that a B^%CH.
I’m still on the sidelines watching the fireworks… Think I’ll wait until the finale before I start droping my lowball bombs…. FIRE IN THE HOLE. Hahahahahahahahahahahahahah… HEEEEEH HEHEHEHEHEHEHEHEHE…..HOOOOOHOHOHOHOH AAAAAHHHHGH…. I’m gonna wet myself… gotta go.