“Balance Definitely Tips Toward Buyer”: MAR
The Massachusetts realtors report the December numbers. “The number of single-family homes sold in Massachusetts fell 16.6 percent in December from December 2005 and the median selling price declined 5.4 percent to $335,000 as the slowdown in the state’s housing market continued.”
“‘It’s good to see the market coming back to some balance. At this point, the balance definitely tips toward the buyer,’ said Doug Azarian, president of the Massachusetts Association of Realtors.”
“The number of condominiums sold fell 8.2 percent from a year ago to 1,493 units. The number of Massachusetts single family homes sold in December fell to 2,980 from 3,574 for the same month a year ago.”
“Inventory figures for December 2006 show a slight 2.9 percent increase over December 2005, with 30,651 homes on the current market compared to 29,771 homes last year. This translates into 10.3 months of supply in December 2006.”
“The number of condos for sale is up 13.7 percent from 14,581 units last December to 16,581 in December 2006. This represents 11.1 months of supply, up from 9 months in December 2005.”
The talking points. “December median price declined 5.4% from a year ago (from $354,000 to $335,000), 11% below its peak (spike) of $375,000 in July-August, 2005. Last month’s sales total was lowest December volume since 1991, when 2,168 homes were sold. On month-to-month basis, home sales decreased 8.2% from November to December.”
The Boston Globe. “Amid new evidence the state is still struggling to emerge from the housing downturn, economists said it is likely prices for single-family houses will continue to decline this year.”
“‘We’re working through the correction,’ said Larissa Duzhansky, an economist with a Lexington economics and consulting firm. She predicted, ‘We’re going to see home prices going down in 2007.’”
“Jim Gibbons, an agent in Stoughton, said that in some communities in his territory prices were down more than the 5.4 percent statewide average, as much as 7 percent or 8 percent. ‘It’s going to be the same story this year, big inventories, big selection,’ he said. ‘Your house has to be the best house out there in the best condition and priced aggressively, or it’s going to sit.’”
“Gibbons said the current situation, a flood of houses for sale, is unique because there are so many types of sellers in the market. In addition to those who want to trade up, there are investors trying to dump properties purchased three or four years ago at higher prices, homeowners unable to meet rising payments on adjustable-rate mortgages or threatened with foreclosure, and empty-nesters eager to downsize.”
“‘We’ve never had that at the same time,’ he said.”
From Worcester magazine. “A quick drive through one Main South neighborhood is a telling snapshot. Weave along the industrial back roads off Washington Square, and you can spot condo action dotting the route.”
“It’s not the only neighborhood like this. The country is condo-happy, but the market has slowed so remarkably that is it surprising the development continues. The market sags, yet we build.”
“Real estate agents are quick to blame the sagging market on the media. But numbers are numbers. The University Lofts have been on the market since June, and three have been sold out of 34. Three have sold of the eight built (46 total will be built) as part of The Residences at Vernon Hill. Out of the 24 units at The Granite Mansion, eight have sold in a year and a half on the market.”
“Two big things happened to add to the inflated market, according to Jane Fine, president of Fine Properties Inc. in Worcester. ‘The 55-and-older community started,’ she says. ‘Instead of doing one or two projects, they are blasted all over the place. In Worcester, the three-deckers have been subdivided into condos along with two-family houses. And with prices going up, they are sitting.’”
“‘There is 10 months of supply, meaning condos for sale,’ says Leif Rosseland, senior VP for Coldwell Banker Residential Brokerage in Worcester and Shrewsbury. ‘Back in 2004, I would venture to guess it was less than half that. Ten months of inventory is a lot. It’s usually gauged at five months. We’re definitely in a buyer’s market in the condominium world.’”
“Rosseland adds, ‘There were more foreclosures this year because of those wacky, fangled purchase agreements that weren’t necessarily beneficial for those signing on the dotted line.’”
“Rosseland and others in the business first noticed the plummet in May 2005, and it has ‘only spiraled in the last 18 months.’”
“Alyce Hill has been publishing magazines pertaining to condomimiums for about 20 years. In 1990, she said, the market went crazy, and countless condo developments went bankrupt. By 1996, builders were going full tilt again, and that includes the Worcester market. ‘It went really, really crazy from 2000 through now,’ says Hill. She can rattle off pages of developments in Worcester.”
“‘The builders who were planning to make a condo project are planning to do apartments now,’ says Hill. ‘The whole real estate market is correcting itself. It’s been crazy in New England for five years. It’s gone down about 20%, but I don’t think it’ll go down further.’”
“The biggest run-up, according to Scott Hayman, for the City Manager’s Executive Office of Economic and Neighborhood Development, has been condo conversions. Lots of three-, four- or even five-family dwellings have been and are being converted into condos. ‘That often happens at the tail end of a market cycle,’ says Hayman. ‘So it skews things a lot. There has been a flood of these conversions.’”
“The hottest trend, and one that started as a reaction to movements in cities such as Lowell, Boston and Providence, was the conversion of old, distressed factory buildings into condominiums.’A lot of this idea has to do with the energy,’ says Hill. ‘You’ll see it with Worcester such as with Biscuit Place, where you can walk to the train station. You can take the train. You can work in Boston. You can walk to a restaurant. It’s the New York mentality, where you can just go downstairs for everything.’”
“But that idea applies when there is everything downstairs. We’ve said it a hundred times; This is not New York. This is not Boston. Take a drive through downtown in the heart of a weekend night, and it’s not that difficult to breeze through. Developers and analysts of the Worcester area, though, say a lot of the building that has taken place in the past five years is based on hope rather than the present situation.”
“Many developers across the country hope to salvage their investment by changing strategy until the condo market turns around by going rental. Developer Bill Bibaud’s got faith, but right now, he’s not going crazy. The units he converted in the old Charlie’s Surplus factory and other buildings are rentals for now.”
“‘I’m only doing rentals because the market [for condominiums] is not there,’ says Bibaud. ‘The conversion market seems to have slowed down quite a bit. The market started going bad about six months ago.’”
“‘A lot of the investors bought the cheap multis and turned them into condos. It’s a Catch 22. I follow the closure market and you’re seeing a lot of those same units going into foreclosure. There are a couple on the West Side. Initially, they sold for $250,000 and are now in foreclosure. It was a bit of an artificial bubble that hit,’ says Bibaud.”
Note: the links at the MAR talking points site are PDF files.
From the TPs:
‘December 2006 inventory (30,651 homes) was just 2.9% higher than December 2005 levels (29,771) statewide. This translates to 10.3 months of supply in December 2006, compared to 8.3 months last December. The market is ‘balanced’ when 7.5 to 8.5 months of housing supply exists.’
Yes, because it’s normal to have the luxury of waiting 8 months for your house to sell.
Is it 7.5 to 8.5 months?; 4 to 6 months?; 6 to 8 months?; I keep hearing all these different numbers for a balanced market. Just like how the bottom of the market keeps moving. Didn’t we bottom out last fall? Now they tell us that they see signs of the bottom happening currently.
“‘It’s good to see the market coming back to some balance. At this point, the balance definitely tips toward the buyer,’ said Doug Azarian, president of the Massachusetts Association of Realtors.”
It’s all good! And there has never been a better time to buy a home in Mass, or anywhere else on the entire planet, for that matter!
You know, GS, I wonder at what price point the ‘all’s good’ talk starts to change to a note of worry. Does the happy face on a 5.4% drop today begin to strain at 10.8%? Where’s their bottom, and is it 3X too high for the market’s coming correction? My guess is as long as they get a piece of the sales action, screw the comps. The old ‘You lose your job, it’s a recession. I lose my job, it’s a depression.’
These shills crossed the line between harmless suggestions and COERCED CRIMINAL BEHAVIOR a long time ago.
“Karevoll said it is impossible to tell which direction this foreclosure activity will head right now. It could level off sometime this summer, and I think the level off scenario is more likely right now.”
I can’t help but think of Jack Grubman in 2000. Conflict of interest and personal gain led to misrepresentation and lies and resulted in $BILLIONS of investor $$$$ lost. As I recall his punishment was a ban and a tiny fine. A loser that steals a candy bar could go to jail, and this guy is out soaking up the sun and drinking Pina Coladas. What a mess.
I get so angry when realtors try to tell us that this is a good time to buy. It’s the height of arrogance and irresponsibility. Completely unethical. The only people who should be buying right now in Mass. (where I live) or other falling markets are people who aren’t planning to move in the next 15 years.
Even then, it doesn’t make much sense to buy now. You might as well wait a few years after prices really have bottomed out, and get yourself a home for half the price of what you would pay today.
I was wondering how big the fallout would be and right now my guess is somewhere between 1.5 to 2.5 trill dollars. The number is staggaring and considering worldwide property bubles it seems that there would be global inflation to erase the pain. Ergo rates are going to go up to earn out the losses. England raised to 5.25 and planning more hikes so eventually we will hit 6 or more.
These bubbles are interconnected with each other. A property bust in Florida or California can have an impact in UK reak estate and vice versa.
Take housing down to pre-bubble levels, correct the stock market appropriately and blow up a few hedge funds and you’ll easily erase a full year’s GDP.
6 months is “balanced” 10 is nasty -check back super bowl monday
love all the mincing terms
it’s crashing biaaaaatch
“Gibbons said the current situation, a flood of houses for sale, is unique because there are so many types of sellers in the market. In addition to those who want to trade up, there are investors trying to dump properties purchased three or four years ago at higher prices, homeowners unable to meet rising payments on adjustable-rate mortgages or threatened with foreclosure, and empty-nesters eager to downsize. ‘We’ve never had that at the same time,’ he said.”
It’s different this time, because the REIC cannibalized their future customer demand by making sure to get everyone who could breath into a home of their own. Now the pigs are in the water, and the only buyers left are sharks who can smell the blood.
“REIC cannibalized their future customer demand by making sure to get everyone who could breath into a home of their own”
So perfectly accurate. Here in AZ, all the talking heads sputter about how many many many people are coming here, like, 2 zillion a month. If true, then why over 52K listings just in Phx? There are no buyers, at least not any smart ones.
Catherine, it’s the same sputter that we’re hearing down here in Tucson. But once these newcomers get a look at our job market, they wish they were somewhere else. And, truth be told, many of them leave for greener pastures.
The sputter-ers don’t want to admit it, but Arizona’s population has a lot of “churn.” Our hyper-abundance of low-paying jobs is a big part of the reason.
good choice of word…”churn”…exactly right.
There’s so much churn up here in the northern part of the state, it’s looking like butter. I don’t have enough toes and fingers (to quote D Lereah) to count how many people I’ve talked to who moved here within the last two years and now can’t wait to “get out”.
“Churn and burn.”
and all the talking heads ignore the affordability factor that all the incoming ppl. might not be able to afford that 250K POS on the wages they are making.
I have been keenly observing the local market but havn’t really felt that the blood’s on the street yet, unlike what’s started to happen in FL. My guess is that Phx is about 6-9 months behind. Heard about a few small home builders getting into trouble and a few high profile condo’s getting shelved, but havn’t seen a rash of ‘for sale’ signs and desperate sellers.
I think what happened with the flippers is that CA peaked first, then they went East to Las Vegas, which peaked about two years ago, then the “investors” went to Phoenix. So I think Phoenix is just right now starting to experience what CA has already realized.
Keep an eye to CA foreclosure rates in the next 2 quarters. They will simply leave everyone breathless. I’m guessing well north of 100,000 a quarter. I would say more, but the suspension of disbelief thing starts to shred.
The traveling locust went everywhere running up the prices never mind what the local market prices should of been .
‘I think what happened with the flippers is that CA peaked first, then they went East to Las Vegas, which peaked about two years ago, then the “investors” went to Phoenix.’
Flippers were recently sighted as far east as Bucharest, Roumania…
http://www.chron.com/disp/story.mpl/ap/fn/4486681.html
Ukraine, Bulgaria, Estonia, Lithuania, Moldova, Monté Négro, Boznia, Croatia, etc…..
The hell holes of Eastern Europe are catching on fire and infected with the cancer bubble. What’s not funny is that now the locals cannot buy anything in their own country. Not a pretty sight and a pretty story.
GS that’s funny.
LMAO
“Gibbons said the current situation, a flood of houses for sale, is unique because there are so many types of sellers in the market. In addition to those who want to trade up, there are investors trying to dump properties purchased three or four years ago at higher prices, homeowners unable to meet rising payments on adjustable-rate mortgages or threatened with foreclosure, and empty-nesters eager to downsize.”
Well the folks at the NAR said it is different this time and they are right it is different this time!
I remember all of the dancing idiots in 1998 when they had just elected Jesse “the body” Ventura as Governor of Minnesota. I asked anybody that voted for him, “why did you vote for him?” All I got in response was, “I wanted to send a message”. All I replied was, “you sent a message alright”. It’s just like now when people say, “this time is different”. I merely reply, “it sure is”. They don’t understand why their statements are so accurate but so far from what they think they mean.
If you are going to say something about how much you like Jesse Ventura, feel free. That won’t change the fact that the man is a loud-mouthed boob.
Right! Jesse Ventura for President!
It is different this time. I recon if you want to sell, best do so in the next 3 - 6 months, because once the onslaught of foreclosed properties hit the market they will set the bar.
I’ve talked to a lot of people in Mass. who are still in complete denial about this.
I thought I was going to be moving up there about two months ago but the job did not work out. I made some calls and I got HUGE attitude when I asked about rents vs. buying (not that I would buy now anyway). The rents in Boston (comparable to Manhattan) are so high I started looking in NYC again b/c the salaries are 30% higher for what I want to do. When I mentioned that to the real estate people I spoke to they said, in a very snotty way, “Well that’s what it cost to live here and rents and home prices are NOT going down.”
I’ve never felt like I wanted to feel good about someone elses misery but after those conversations and seeing this post, a slight bit of that is creeping in.
Where I live in Boston I’m seeing “For Rent” signs for the first time in 20 years. Rents are soft and, with the condo glut, due to get softer.
Rents in the Boston metro area are definitely going down. When looking through rental guides I notice that rents are about the same. What’s different, though, is that more landlords seem to be including heat and hot water in the rent, as well as giving up to 2 months rent free and requiring a smaller (or no) security deposit. Driving around I definitely see more houses with “for rent” signs in front of them. The market is soft.
Novasold,
Apparently you didn’t get the memo that Boston is the Hub of the Universe.
I’m serious. That’s what they call it here.
I live in the Boston area and I’ve grown to like it (I’m a transplant). There are a surprisingly large number of nice people here but you need to look for them
and I can’t say I’m even the slightest bit surprised to hear that you encountered a snotty attitude regarding how Boston real estate and rents “will not go down”.
Even though they’ve been doing precisely that for 17 straight months! What is it about real estate that turns seemingly normal people into zealous fact-free fingers-in-ears hands-covering-eyes la-la-la-I-can’t-hear-you idiots?
I see that elitist nonsense all the time. When we tell people we rent our house (at the same low rent we paid back in 2001!) instead of buying, my wife’s friends look at us as though we had just invited them to a human sacrifice. Either that, or the “poor dear, I’m sure we could find you something you could afford” condescension. And this is from the people who (knowingly or not) are already $50K or $100K in the hole and sinking like a rock from their “genius” home purchases at the top of the market in the last 2-3 years. Thanks, dearie, we can afford to buy, but we have a preference for not wasting tens or even hundreds of thousands of our hard-earned dollars to live in the same place we can rent for half the price.
Boston real estate crashed hard in 1990 but you wouldn’t know it from talking to anyone around here. Their memory banks are wiped clean, and the denial about the current plunging state of the market is still pretty strong. But reality is slowly seeping in. After a year and a half of steadily falling prices even the thickest-skulled citizens among us are slowly starting to realize that not all is well in magical money-tree fairy land.
I posted the income stats in a previous thread, but the bottom line is Median Family Income (family of 4) in Mass is currently approx. $60K, allowing for a $180K Median House using the traditional 3X income figure. Currently, the Median House in Mass is $335, requiring $112,000 gross income. Either we see a 50% drop in real estate or we see an 86% increase in income or some combination of the two to make real estate affordable in the Bay State…
Well how about this!! That job that I didn’t think would work out has come back on the radar today just after I posted before. It’s in Burlington Mass.
So Nova begins to dig around and now we have 2/2 apartments for 1400 per month with three months free rent. That includes heat and hot water also.
If the job works out (not definite yet) I may have to sign a lease for a year on an apartment there (even though I really, really want to rent a house) because 4200 more investment money on top of what I already save is a pretty good deal.
Nova digs further and rents really are coming down from when I looked about six weeks ago and there are a SHITLOAD of apartments out there for rent in “new LUXURY” communities.
Hmmmm.
CharlesZ: I love New England. I grew up in N.H. and my parents are still there. I’m moving to be closer to them to help them when they need it. A lot of people say New Englanders are cold. I tell them that they are just reserved but if you need help, most of them will give you the shirt off of their back. I think I just got a few really defensive realtors on the phone. I didn’t even say I thought there was a bubble and that prices were going to crash, I just mentioned I was shocked that rents in Boston proper were approaching a 1/1 in Manhattan.
I can’t wait to get back up there
CharlesM I mean. Opps, forgive me……
December new home sales up higher than expected, but inventories are barely dented and prices are down. Expect the market to take this hard.
the builders have discounted every nickel of margin - dec would include the super warm and happy days
(It’s the New York mentality, where you can just go downstairs for everything. But that idea applies when there is everything downstairs. We’ve said it a hundred times; This is not New York. This is not Boston.)
Right. In high density living, you give up personal amenities to get share amenities. If the shared amenities are not there…
Yep, it seems every city, town, burg, village and whistle stop has fallen under the sway of New Urbanism. The walkable city is an admirable concept but they’re trying to bring it to places where it just doesn’t make sense. I hang my hat in one of the most densely settled census tracts in Chicago, yet the local CofC is desperately fighting consumer “leakage” as everyone hops in their cars and seems to spend their money elsewhere. The amenity issue is a huge determinant in the fate of the condo market across the nation, either you have them or you don’t.
10 year bond yield keeps creeping up - 4.892 now
Bond bubble soon implosing too.
HIGHER INTEREST RATES MEAN TROUBLE AHEAD
by Peter Schiff
Euro Pacific Capital
January 26, 2007
When I last commented on the bond market (December 5th’s What’s really going on with bonds), bond prices were inexplicably rallying, sending yields on ten year Treasury bonds to 4.4%. At the time, Wall Street was offering a variety of half-baked explanations as to why the market had moved beyond the cause and effect stimuli that had ruled for generations. My advice to investors was simply to sell into the rally and ask questions later. Since then, bonds have reversed course, with ten year treasury yields hitting 4.9% (a five-month high). Just as Wall Street’s explanation for falling rates was way off base then, so too is their explanation for rising rates now.
The consensus asserts that yields have turned around because new “evidence” of a bottom in the housing markets will keep the economy from tipping into recession, which in turn will diminish the likelihood of a Fed rate cut. The problem with this explanation is that there is no evidence of a bottom in the housing market. Despite the self-serving rhetoric of biased real estate industry spokesmen, a bottom is nowhere in sight, both in terms of price and time.
Although 2006 saw existing home sales decline by 8.4% (the biggest drop in 17 years) and new homes sales fall by a stunning 17.3% (the largest in 16 years), Wall Street Pollyannas stressed that opinion and sentiment trumped data. For example, based solely on a 7.9% decline in existing home inventory, perennial real estate shill David Lereah (chief “economist” for the National Association of Realtors) claimed “It appears that we have established a bottom.” (Mr. Lereah has seen more bottoms than a diaper attendant in a hospital nursery.)
However, the drop in inventory in existing homes is most likely the result of discouraged sellers taking their homes off the market with the intention of re-listing them in the spring. This is a common tactic among realtors as spring is traditionally the strongest home buying season and stale listings are a turnoff to potential buyers. Also, my guess is that lots of other potential home sellers are planning on listing their homes for sale for the first time come spring, and many more would list their homes now if they thought they could actually get their “appraised values.”
New home sales figures are even more misleading. Although the headlines trumpet that inventories dropped in December, the figures ignore cancellations which are running at record highs. So while cancelled contracts are excluded from the “official” inventories, they are definitely part of the real inventory that will ultimately exert additional downward pressure on prices. Also, while new home prices “officially” fell by a modest 1.8% in 2006, the real decline is likely far more substantial. That is because the sales incentives now typically offered by developers, such as paying closing costs, free upgraded floors and countertops, free appliances, free swimming pools, free plasma TVs, free landscaping, decorating allowances, health club memberships, vacations, etc., are not reflected at all in sale prices. However, they are reflected in recent home builders’ earnings reports, which have been universally dismal.
The elephant in the living room is that the recent jump in bond rates suggests that things are about to get much worse for the housing market. Since January 5th, interest rates have risen by over 30 basis points and gold has risen by over $40 per ounce. When rates and gold prices rise together the most likely explanation is escalating inflation fears. Indeed, my guess is that rather then sensing a bottom in the housing market, bond investors around the world are beginning to appreciate the inflationary implications of a real estate crisis.
A substantial decline in real estate prices will either produce a severe recession on its own or exacerbate one that arises from other factors. In either case, the result will likely be the Fed coming to the “rescue” with inflationary monetary policy. Inflation will push long-term rates even higher, causing more loans to default. With credit destroyed and home equity and jobs lost, foreign creditors will rush for the exits sending the dollar into a tailspin. The Fed will be forced to buy all of the paper foreign lenders no longer want and that savings-short Americans cannot afford. Domestic money supply will explode sending consumer prices soaring.
As is so often forgotten, interest rates are merely the price of money, which like any price is determined by supply and demand. In the United States, where hardly anyone saves and almost everyone borrows, that price should be very high. Our low interest rates are a temporary fluke, once made possible by naïve foreign savers but now mainly a function of misguided foreign central banks.
Instead of trying to fabricate benign explanations for why interest rates are rising, Wall Street should instead prepare investors for the unpleasant consequences to their portfolios should rates continue doing so. The true mystery is why long-term rates have remained this low for so long. Unfortunately by the time Wall Street solves the riddle many of their clients will be broke.
Goobermint just released new home sales +4.8% vs +0.5% exp
Last months revised up to +7.3% from 3.4%
If you believe these numbers ……………..
a) the bottom is in
b) brooklyn bridge is being auctioned on ebay
c) real estate always goes up
what time is the auction? I am just about finished making my phony paystub in Word and with my 580 credit score, I should be able to swing that option arm my BIL loan officer pre-qual’d me for last week while we were watching the big game…
I don’t believe either the price or inventory statistics, as they are likely biased in a favorable direction due to their ignoring discounting and cancellations. However, I completely believe the sales numbers. Aside from the weather contribution, we have been seeing a substitution trend for the past several months: home buyers, especially new home buyers, shying away from expensive existing homes and purchasing speculative units.
The substitution does not bode well for 2007. Since new home inventories are not significantly dented, new home buyers can continue to purchase these relatively inexpensive homes instead of existing ones. This could cause some major pain to existing home sellers in 2007, while at the same time not benefiting the new home builders because of low margins. However, this activity will likely add to the Fed’s reluctance to lower rates any time soon. They may wait until existing home sellers start going bankrupt en masse, an event at least 6 months away. I believe this is the worst news the market could have expected (worse than if it had been unexpectedly bad).
cancellations not included ?
net numbers or ?
From CNN:
“New home sales plunged 17.3 percent in 2006, the biggest drop in 16 years, although warm weather in the Northeast gave a better than expected lift to December sales.
The Census Bureau reported Friday that new home sales finished the year at 1.06 million, down from the record 1.28 million reading in 2005.”
Wow! This is way nastier than I thought. With the higher sale in Dec’., I think the last “buyer” has been squuezed out of the sponge.
Maybe that explains why Vodka sales are up 4.5% and high end vodka is up ~ 11% (I mean, if you are going under you might as well drink the good stuff).
Good article that discusses how the Southwest Florida housing collapse is hurting a Nebraska bank:
http://www.journalstar.com/articles/2007/01/25/news/business/doc45b9282b993c3005827112.txt
““These loans were made primarily to individual homebuyers on the west coast of Florida, which has and continues to experience a price correction in housing values and delays in housing construction,” the bank said.
Florida’s west coast has been a hot market for second homes and retirement homes.
Swotek explained the situation: TierOne goes through mortgage brokers to people building these homes, and has a direct relationship with the homebuyer, who’s financing construction with a 12-month to 18-month loan. Permanent financing happens later, either through TierOne or some other lender.
The local governments’ permit processes have been backlogged, Swotek said.
“So what you have is a homebuyer who wants to have their second home built, they have entered a contract to build this house, the builders down there file for a building permit, and because of the backlog, nothing happens,” Swotek said.
So the homebuyer has been paying interest on the construction loan, there’s no permit, no ground broken, and meanwhile, “there has been some cooling of housing values,” Swotek said.
“Some are just not making payments on their loan,” he said. “They’re waiting for something to happen.”
It just proves how markets are all interconnected and you cannot predict where sh-t will be hitting the fan. Very interesting article indeed.
Sounds like that bank has a problem with the concept of diversification. Grandpa taught me never to have all my money in one bank, he also taught me how not to need much money to be happy.
“At this point, the balance definitely tips toward the buyer,’ said Doug Azarian”
“Mr. Madison, what you’ve just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.” -principal in the movie “Billy Madison”
I challenge this guy to actually look up the definition of BALANCE.
Balance is a verb or a noun. I think in this case they’re using it as a noun .
My wife wants to sell our house this spring. We’re noticing that on a cash flow basis renting is now cheaper than owning in my area (Fort Collins CO). Previously this wasn’t the case. Our plan is to sell and rent and then watch for a bargain. Since we refiancnced into a 15 year loan it will still be more expensive to rent than stay in our house unless prices drop fast (more than 10% per year).
Perhaps I should have quoted the entire thing. As clearly he is suggesting the market is “balancing”(verb).
“‘It’s good to see the market coming back to some balance. At this point, the balance definitely tips toward the buyer,’ said Doug Azarian, president of the Massachusetts Association of Realtors.”
But let’s assume he meant it as a noun. I’m visualizing a Balance with an huge amount of homes for sale on one side and all of the buyers jumping off of the other side. What happens next? The side with the houses suddenly slams to what I refer to as a BOTTOM.
Yup, the little kid on the teeter - totter can get thrown clean off.
“‘I’m only doing rentals because the market [for condominiums] is not there,’ says Bibaud. ‘The conversion market seems to have slowed down quite a bit. The market started going bad about six months ago.’”
So there will continue to be additional pressure on rents as well.
In fact, declining rents will pressure apartment prices, and as property gets cheaper new land lords will be able to charge less rent. This is a good mechanism for the market to cope with lower real wages and to increase real affordability. It’s a shame that the government bailout will thwart this process and harm the very affordability that they’ve been crying about for so long.
What, you mean newer apartment building buyers won’t be paying 4% & 5% cap rates on Asking Rents?
sarcasm off
I thought, I’d post this link: http://www.renaissancetownhomes.com
The website has a starting price of $499,000… They’re listed on Realtor.Com as now starting from $449,000. I can hear the neighbors crying about the 50 Grand haircut all the way from the other side of the valley!