“Buyers Assume The Market Is In Free Fall”: Pennsylvania
The Philadelphia Inquirer reports from Pennsylvania. “A few projects may have been canceled or, in the words of some developers, ‘repurposed.’ But it seems that the condo-sales market in Center City fared better during the 2006 real estate slowdown than markets did in Washington, New York, Boston, Miami and Las Vegas, according to economists, developers and local real estate agents.”
“Among the projects canceled last year were Marina View Towers on the Delaware River and a 57-story condo tower at 15th and Chestnut Streets. In December, South Bridge closed its sales office and returned deposits. The developer declined to comment on new plans for the building ‘until after zoning,’ spokesman Mike Lizun said. Reports are that the gutted building could become luxury rentals.”
“Center City condo conversions the last couple of years have taken 1,500 apartments off the market, not including the two Reinhold projects.”
“Sales at the Residences at Dockside, which went condo in early 2006, have been slower than anticipated. Still, said Donna Bartynski, COO of Dockside’s developer, ‘we remain highly confident in our decision to convert Dockside to condominiums.’”
“By one estimate, 42 projects and 15,000 new condo units were proposed for Center City three years ago. The new reality suggests that 1,000 units will be added each year between 2007 and 2012.”
“‘Fortunately for Philadelphia, we did not start many projects and, therefore, do not have to make the decision to switch to rental,’ said Allan Domb, a veteran player in condo sales and development here. ‘The benefit of not starting many of our projects will help tighten the market eventually and cause us to probably have the softest landing of many major markets.’”
The Morning Call from Pennsylvania. “Kevin and Jen Graney liked the spacious house on a half-acre in Bethlehem Township, but not the $500,000 asking price. So they offered $30,000 less than the list price, and last month, the seller accepted.”
“The Graneys’ experience reflects a shift in the housing market in 2006. Home buyers regained a flexibility to negotiate that had been lost in the boom years of 2004 and 2005. The seller gladly accepted the offer of $470,000 because the home had been on the market for more than a year. Other offers, including one for $525,000, had fallen through.”
“‘People are thinking twice about how much more properties can appreciate in value,’ said Stephen Thode, at Lehigh University. ‘Rather than committing to that jumbo mortgage on the bigger home, they are saying, ‘I think I will stay put for a while.’”
“The slowing pace stemmed partly from the large number of homes offered for sale. New listings outpaced home sales by nearly two to one last year. The local housing stock has swelled, with the construction of dozens of new subdivisions in the last 10 years. The bigger supply of available houses allowed buyers to be more selective, which in some cases depressed prices.”
“Real estate agents in the Valley spent much of 2006 trying to convince sellers that the market had shifted in favor of buyers. Many say sellers still wanted to set asking prices that were too high for the market.”
“‘I worked with quite a few sellers who did not really care that people were saying the market was sliding,’ said Ellen Shaughnessy, an agent in Easton. ‘They still wanted to price their homes at a premium despite what was starting to happen. Some of those [homes] are still there.’”
“At the same time, real estate agents say many buyers have falsely assumed the market is in free fall, and have submitted offers that grossly undercut asking prices.”
“Real estate agent Loren Keim said his Allentown firm put five properties priced at $500,000 on the market at the end of the year. All the properties received offers between $350,000 and $360,000, or 30 percent less than listing prices. Virtually no seller is going to accept an offer so low.”
“Typically, homes in the Lehigh Valley appreciate about 5 percent a year. But since 2000, average prices have soared a total of 80 percent.”
“New homes have been a big draw for people moving here from New York and New Jersey. The average price of a new home surpassed $400,000 for all but two months last year. ‘You will have this natural momentum toward higher-priced homes because there is more of that inventory as a percentage of the total market,’ Thode said.”
“Real estate agents say, for example, that homes priced at less than $200,000 continued to sell quickly. The same can’t be said of the higher-priced homes on the market. ‘Over $300,000, it is really slow,’ said (broker) Jack Gross in Bethlehem. ‘Things are not flying off the shelves.’”
“In the previously hot Palisades school district in Upper Bucks County, home prices fell 12 percent last year to $465,812, and the number of homes sold dropped 25 percent.”
“Keim said people are hesitating before buying because they don’t want to get caught in a falling market. But he said it’s a misconception that the market is falling. ‘I don’t see a drastic drop-off in the market,’ said Keim.”
‘Rather than committing to that jumbo mortgage’
There is something unsettling about that term, ‘jumbo’ and ‘mortgage.’
‘they offered $30,000 less than the list price, and last month, the seller accepted.’
IMO, this couple blew it. High schools should teach haggling. The seller will enjoy their hard earned money for years to come.
‘All the properties received offers between $350,000 and $360,000, or 30 percent less than listing prices. Virtually no seller is going to accept an offer so low.’
The Morning Call seems to like running these articles chastising lowball offerers. Keep it up out there in PA, guys!
Ben said, “IMO, this couple blew it. High schools should teach haggling. The seller will enjoy their hard earned money for years to come.”
Agree. But at least they are helping to walk the comps down even if its only 6%. A journey of a thousand miles begins with a single step. Thanks guys!
High schools should teach haggling
Yes, they can squeeze this course in between Rolling Condoms onto Cucumbers 101 and How to Survive a Car-Jack (AP)
Cucumber? I feel so…inadequate.
Who needs math and science when you know how to put a condom on a cucumber? That is an invaluable lesson for our youth in today’s competitive world.
They used a banana in my high school. There was something kind of weird about witnessing an old lady equipping a piece of fruit that way.
“High schools should teach haggling.”
Or you can learn it from friends. I did when I moved to NYC. There’s a whole mantra here “never pay retail”. Walk in with cash, and always ask for the deal–it’s amazing how often it works. It’s not second nature to me, but you have to decide not to be embarassed if the merchant says no. I consider it all practice-the more you do it, the better you get at it.
ABSOLUTELY! For some reason, people have an adversion to confrontation and sellers take advantage of it. I’ve told friends and family, over and over and over again, the worse thing that will happen is they keep their goods and they keep you keep your money. At best, you can save a TON of bucks!
“The seller will enjoy their hard earned money for years to come.”
What hard-earned money? That is, if the mortgage was no money down, no closing costs, etc. In that case, it’s “the sellers will enjoy the MBS investors’ and banks’ money for years to come.”
‘The seller gladly accepted the offer of $470,000 because the home had been on the market for more than a year. Other offers, including one for $525,000, had fallen through.”
Ben, the way I read it, correct me if I’m wrong was that the seller was willing to let it go on a prior sale for $525,000 but the sale fell through because the buyer didn’t qualify.
Was he dead? My cat can qualify for 500K in this lending environment. The only way you can’t qualify is if your not trying, and/or dead.
I know dead people who have qualified.
My favorite quote:
Real estate agent Loren Keim said his Allentown firm put five properties priced at $500,000 on the market at the end of the year. All the properties received offers between $350,000 and $360,000, or 30 percent less than listing prices. Virtually no seller is going to accept an offer so low.”
“Typically, homes in the Lehigh Valley appreciate about 5 percent a year. But since 2000, average prices have soared a total of 80 percent.”
So, can’t stand to accept 30% less, but the value went up 80%, so you’d still be taking a 50% profit? Greedy a-holes. No other word for it.
Just because this loser “can’t see” a free fall doesn’t mean it isn’t happening.
The market has spoken. If none have received a $500k offer… none will (other than fraud).
This will get interesting. I feel for the hard workers who will lose their jobs. There is no pity for this level of greed.
Got popcorn?
Neil
Umm… a $500,000 house which was a product of 80% increase over the last five years started at $277,777.77. Assume a more reasonable 5% appreciation per year for five years, the house would actually be worth $347,222.21 or for six years $361,111.10.
Those offers were made by sophisticated buyers and should not have been lightly treated by the sellers.
Nor should they have been treated with disrespect by the real estate agents! They should know that those were realistic offers!
As I mentioned yesterday, these auction results are very useful guages of market prices, even when the press gets all huffy about the “insultingly low bids.” For instance, in this case, you can infer that the auction price is about 30% below the wishing price of $500K, or $350K.
Now here is the important thing to understand about the relationship between the auction price and the “market price” (most the seller could get no matter what strategy was used) is the following:
1) The auction price is generally lower than the amount for which you can sell at arms length by listing and waiting , because the buyer willing to pay the most for the house may not have been in the bidding pool on auction day;
2) Assuming the auction was well-publicized, the auction price cannot be much lower, as otherwise there is an implied arbitrage opportunity — someone with a bucket of money and a box of smart could pick up the house at the auction and go out and resell it at “market value” for a killing.
So to get a rough estimate of the “current market price,” add to $350K whatever premium you think a flipper could expect to earn over the auction price by listing and waiting for a buyer.
The above situation pertains directly to my sister’s recent home purchase. Last month, she and her husband knowingly paid $40K over the (foreclosure) auction price a few months earlier, but she is one of a dying breed of unsophisticated buyers with bank.
So to get a rough estimate of the “current market price,” add to $350K whatever premium you think a flipper could expect to earn over the auction price by listing and waiting for a buyer.
Yes, but don’t forget to subtract the decline in value during the time spent listing and waiting! Also the difference between carrying costs of continuing to own, versus renting a similar place.
I never suggested the flipper premium couldn’t be negative.
well said
GS, as always thanks for the lesson.
“insultingly low bids” - just a ploy used by those in whose interest it is to make a deal happen. What it does:
1) Predisposes a seller to feel all huffy
2) Predisposes a buyer to bid higher
In short, it is an attept at manipulation. By all means, the buyer is admonished, do not, repeat do not, insult the mightly seller.
By this point an overused, tired attempt at behavior manipulation that has no bearing on anything.
How about insultingly high prices?
Just my opinion, but it sounds like Loren needs to spend more time on putting deals together that are going to work if he wants to keep eating.
Interesting that he did not discuss any counteroffers or negotiatons. Makes me think these were take it or leave it buyers.
The funniest part of all of this has to be how any little sh!t box, on a little bit of land (1/4 acre) now commands $250K. This is absolutely ridiculous. The salaries and wages in the area will not allow even a working couple to afford that sort of a house. You have to commute ludicrous distances every day on I78 into Jersey, or on 476 down to Philly and KoP to get a salary that allows you to afford that sort of mortgage. Boy am I glad I owe less than $90K for my little house.
In this situation it isn’t a 50% profit. You have to realize a percent decrease is much bigger than a percent increase. You can have an infinite increase, but only a 100% decrease. So assume the house costs $100,000. 80% increase means $180,000. A 30% decrease brings it back down to $126,000. This would be a 26% profit (before holding costs, RE commissions, etc.) 26% is still nothing to sneeze at.
“So, can’t stand to accept 30% less, but the value went up 80%, so you’d still be taking a 50% profit? Greedy a-holes. No other word for it.”
You point is still correct, but don’t forget that percentages hurt much more on the way down than they help on the way up. A 100% increase followed by a 50% decline results in no-change not a 50% profit.
I tried to explain to a friend of mine who is considering buying this point recently, and I don’t think it registered with him. He is looking at a $900K house. If prices drop 30% here, someone will buy a similar house for $600K. Years later when prices go back up to $900K, my friend will be at breakeven while the later buyer will be looking at a 50% profit.
If your property went up 80%, and then down 30%, you’re up 26%.
Percentages mean more on the downside than on the upside. If you’re up 100%, and then down 100%, where are you?
This is ridiculous. Lehigh Valley can’t take these kinds of price increases. When I lived there six years ago, $360,000 got you a mansion on three acres (i.e. 6 bedroom, triple car garage, guest house). I was going to buy an end-unit 3-br townhouse with basement for $100k back then. Now they want $360k for these little 50 year old 3-br bungalows in the sticks of Emmaus and $250k for that same townhouse.
Unfortunately, Agere has been laying off people for the last six years straight and more to come due to its purchase by LSI Logic. It is going to be ugly ugly ugly.
“In the previously hot Palisades school district in Upper Bucks County, home prices fell 12 percent last year to $465,812, and the number of homes sold dropped 25 percent.
Keim said people are hesitating before buying because they don’t want to get caught in a falling market. But he said it’s a misconception that the market is falling. ‘I don’t see a drastic drop-off in the market,’ said Keim.”
Wouldn’t a 25% drop in sales qualify as drastic? And don’t drops in sales normally lead to future price drops? Oh yeah, I forgot, it’s different this time.
GetStucco,
“Oh yeah, I forgot, it’s different this time.”
And…
Never a better time to buy a house!
or Sell…………….
I’ve become so confused by the REIC that I’ve decided to sell my house… and then buy it… and then sell it again… and then buy it… luckily for me, the price has been dropping!
Sure that will be the next tactic: make $$ on the churn of your own residence…why not?!?!?
BTW just saw your last nite post about the Blockbuster contract…funny!
LMAO
It reminds of what my cat does when it throws up its own food, then re-eats it.
ROFLMAO!!
Ugh, you know, that tactic might not be as stupid as it sounds.
So, take FL, property taxes are based on SALE price of the home. So, you buy a home for 500K, and then sell it to someone for 250K. They sell it back to you for 200K. You pay them for their time, and for using their leverage to move the home around. Then you immediately get it appraised and HELOC out the money you need to pay off everyone involved.
I am probably not the first person to think of this, but what keeps this kind of thing from happening? I know the rich do a similar scheme by reducing the sale price, and just passing a huge box of money under the table (to control their taxes), but what is to prevent normal people from doing something like I have outlined above? Just the lack of trust in the system? Or lack of a few hundred K to throw around? Honestly, you could have a company that would do this for you; you would need very good credit, but hey, if you can save 50% on property tax for the REST OF YOUR LIFE (if SOH portability passes), it would be very much worth it.
Comments?
In California commercial properties are never sold. When Prop 13 was passed decades ago, owners transferred title to shell corporations. They don’t sell the property, just the corporation. The property taxes are based on the last sale of the property itself - decades ago.
Prop 13, just like SOH in Florida, was just a Ponzi scheme based on ever-increasing property values. It will soon collapse.
“But he said it’s a misconception that the market is falling. ‘I don’t see a drastic drop-off in the market,’ said Keim.”
Then what do you call this:
“In the previously hot Palisades school district in Upper Bucks County, home prices fell 12 percent last year to $465,812, and the number of homes sold dropped 25 percent.”
There is no misconception. You are a moron.
“Home prices fell 12 per cent, and homes sold dropped 25 per cent. Gee, if a picture is worth 1000 words, I would like Mr. Keim to look at a chart of these 2 declining numbers and tell me which way are the trend lines moving .Up or Down. But don’t let the facts get in your way of your gut feeling!
“economists, developers and local real estate agents.”,,,, Hear no bubble, See no bubble, Speak no bubble…..
–
“The same can’t be said of the higher-priced homes on the market. ‘Over $300,000, it is really slow,’ said (broker) Jack Gross in Bethlehem.”
Maybe the higher priced homes are priced too high, beyond what people can afford.
“‘Things are not flying off the shelves.’”
Elephants don’t fly!
Jas
Jas,
Haven’t you been to Disneyland? Elephant’s named Dumbo do indeed fly.
“Elephants don’t fly!”
Nope — they hide under rugs, instead.
Over 300K is higher priced? God, I am jaded from FL. 300K is a 1BR condo here. 450-500K is a decent home. Anything over 500 is where it starts to get “nice”. I am sure those in CA are still trying to pick up their mouths from the keyboards after reading that. I think a garage in CA proably sells for more then 300K.
–
“At the same time, real estate agents say many buyers have falsely assumed the market is in free fall, and have submitted offers that grossly undercut asking prices.”
The only way to find out is to test the waters! Buyers can wait while the price reaches their level, either via free fall or slow grind down. In 2004-05 sellers waited until the market reached their asking price; In 2007-08 the reverse would start to happen.
Jas
“The only way to find out is to test the waters!”
Jas — I claim the auctions do exactly that, in the sense of providing a usefully tight lower bound on market value. The all important question, IMO, is how does one get their hands on auction results, when the REIC has a natural urge to hide them from view?
The only true numbers from Auction Results, is when the property actually changes hands, when the new owner has his deed recorded. I worked the RTC auctions in the 1990’s. Almost 30% of the winning bids, even at the RTC auctions, fell out. And these were Bank Owned REO’s. Based on the drop out rate from New Home Builders, and wouldn’t be surprised if 50 per cent of the winning bidders get “buyers remorse”.
Again, no numbers are real in real estate until the new deed is recorded.
“Almost 30% of the winning bids, even at the RTC auctions, fell out.”
Please meditate on my post above. Even if the deal falls out, the winning bid provides insight to current market value.
GetStucco,
Unless a decent percentage of those 30% that fell through were winning bids by shills who pressed the real potential buyers a bit too much. In which case auction prices can be a bit high, if anything.
Great point…
“In 2004-05 sellers waited until the market reached their asking price;”
What I saw then was not a matter of waiting, so much as underestimating the bid, which led to many bid wars at first listing. Now that I understand the power of subprime rocket fuel to inflate a household’s home purchase bid far above their ability to afford the home, this makes perfect sense.
In 2008-2009, I expect to see serial lowballing work as a close approximation to bid wars in reverse. If the market were a little freer, then a buyer could make simultaneous lowball offers on ten homes that interested him, setting the offer price in each case to reflect his subjective value of owning that particular home. If more than one of the ten offers was accepted, then the buyer could be like a kid in a candy store. If none were accepted, he could repeat the strategy a month later, after prices had dropped a bit further…
–
“What I saw then was not a matter of waiting, so much as underestimating the bid, which led to many bid wars at first listing.”
The real “smart” ones really did overprice and they learned that they were smarter than the rest!
Galbraith: “Genius is rising prices”!!
For lowballers of today the genius would prove to be falling prices.
Jas
“Buy later or be priced-in forever” (or what will seem like “forever”)
Buyers should play the fake bid game in reverse. Have friends/family put in fake lowball bids to make your lowball bid look better
When I wear my evil thinking hat I think that if I was looking to lowball a property I would have someone place a high bid with a 6 month closing which they cancel at the 11th hour to make all other offers seem low and to tie the property up while prices drop further.
The key fact that many sellers don’t like to think about: In a falling market, you are throwing away money every month you spend owning instead of renting! Corollary: not too many renters are going to be interested in buying in this market!
Buyers can wait, sellers might be able to wait, but RE agents can’t wait at all. They’re screwed w/o transactions and they know it. These guys are actually the ones sounding a little desparate.
desperate, of course
another day, and we have more sellers being insulted by offers.
if these are the only offers out there that is the going rate buddy!
ride this train wreck to the bottom you greedy fool
These prices in those areas mystify me. Allentown is a dump. Here are some crime stats: http://allentown.areaconnect.com/crime1.htm
And a 1/2 acre in Bethlehem Twp.? Big whoop!
I looked a motels online for Allentown….one reviewer noted that the reservation desk was behind bullet proof glass - we decided to drive straight on through.
i have heard to it refered to as the “ghetto in the woods”
Is this the same Allentown that Billy Joel sang about back in the early 80’s?
http://www.youtube.com/watch?v=t4fajzslVxA
Isn’t this where they filmed The Deer Hunter, with de Niro and Christopher Walken?
I go to Allentown for Dick Blick.
I’m almost afraid to ask but what is “Dick Blick”?
I thought anitbiotics cured that.
agghh!
It’s an art store…
Dick Blick
Maybe you’re thinking of Blick’s Dick?
“These prices in those areas mystify me.”
Subprime loans help buyers stretch their household wealth to buy at prices they cannot afford. Mystery solved.
The homes shouldn’t be priced anywhere near what they are, though. This is so insane.
–
“This is so insane.”
Insanity is in the mind of the beholder!
Jas
Demand was being pushed from the bottom. People who would never have qualified for conventional mortgages rushed in droves to buy lower-end houses and condos, driving those prices up dramatically. They were truly price-insensitive as they rushed to get what they perceived to be a bargain. The prior owners all received windfall profits from this mad rush and upgraded, thereby driving up the prices of the midrange units.
This is already unwinding from the bottom. Most of the lower-end is being foreclosed or having their interest rates adjusted upward as we speak. New borrowers are not appearing because the lending standards are being tightened, and loan buybacks are on the upswing. Those units will become vacant and stay vacant until prices drop significantly. Meanwhile, the midrange will sag as over-committed, but savvy, midrangers downsize and others get foreclosed.
All of this will begin with Superbowl Sunday (the “New Spring Market!”) and will continue through 1Q. By April, the builders will realize that there is such a massive backlog of inventory that it will never move, and they’re wasting money by continuing to build. Moreover, their owners’ stock options, exercised vigorously last summer, will have been cashed out approximately 12 months ago, therefore they will be relatively well insulated from insider trading accusations. They will finally cut their production substantially. Unemployment will spike up through the summer, and by fall, there will be an air of serious concern bordering on desperation.
“They were truly price-insensitive as they rushed to get what they perceived to be a bargain.”
It only looked like a bargain under the assumption of 10%+ real price appreciation forever.
I like your summary of the situation. But unless I overlooked it, you forgot the role of yesterday’s flippers morphing into today’s lengthy market exit queue. This will add a lot of extra weight to the roof of McMansion prices sagging over the resale market of smaller, older homes beneath.
Actually I don’t think that the severe clue-bat beatings will take place until September rolls around and houses haven’t sold. Alot of the FBs have enough hope and greed to hold onto their wishing prices until then.
“This is so insane.”
Not at all. It is a natural consequence of relaxing lending standards to the point where everyone who can breath can qualify to buy a home they cannot afford. The guy with the deepest bucket of money and biggest box of stupid gets to enjoy the winner’s curse of a future foreclosure, while more qualified buyers get to enjoy the pleasure of renting from an invester-landlord.
It’s been said before here that having a specuvestor as a landlord probably isn’t a picnic. First, they’re idiots, do you trust them to do maintenance? But mainly, when the poo hits the air impeller, you’re in line behind two banks (the 80 and the 20) to have your lease terms enforced and get back your damage deposit.
“First, they’re idiots, do you trust them to do maintenance?”
They do when there is a severe risk of property damage involved. The little stuff I either do myself or ignore.
Take the cracks in the driveway, for example — if it were my home, I would have paid to have the driveway repaired two years ago, when it was obviously subsiding thanks to unusually heavy rains in the winter of 2005. It seems like the kind of problem which is cheaper to repair early than later, but that is not my call, as I don’t own the price risk.
But mainly, when the poo hits the air impeller, you’re in line behind two banks (the 80 and the 20) to have your lease terms enforced and get back your damage deposit.
Depends where you are. Where I live any new owner - including a forecloser - assumes all contractual obligations to the tenant of the prior owner, including lease terms and deposit.
Well worth checking out before you rent.
In the recent boom, the whole “location is everything” mantra was thrown out the window, leading to such aberrations as $500k houses in Compton and Bakersfield. Even a generation from now, we will look back at such excesses and laugh, and houses will STILL be worth less than $500k in such places.
Why wait that long?
“Even a generation from now, we will look back at such excesses and laugh…$500k houses in Compton and Bakersfield.”
The Bakersfried City Motto:
Bakersfield,
Oil, carrots and pesticide dust.
Send them a Bakersfield City welcome basket:
1 quart of Mobil 30 W motor oil
1 lb bag of baby peeled carrots
10 oz jar of Ortho Malathion pesticide
allentown, proper, is awful, with one of the worst school districts in the state.
Bethlehm, is not Allentown, and is nicer. Still not great.
Easton is just an armpit.
However, the surrounding Allentown Suburbs (yes, its big enough to have suburbs) are rural-ish, and have pretty good school districts, like East Penn, Parkland, Southern Lehihg, etc.)
However, the local economy absolutely can not sustain 400k+ starter homes, and relies on commuters to buy these. With energy prices raising, the commuting option will be less attractive, and these homes will go unsold/abandoned. It absolutey stuns me that there are 500k townhouses going up in Alburtis, PA, which is not convenient to either a NYC or Philly commute.
Oh - and the “Allentown” song by Billy Joel - It was about Bethlehem, but its easier to rhyme things to “town”.
The folks at the Tivoli are having trouble moving inventory -
$347 sq. ft.
“This unit has only been lived in for 1 year and the owner is sad to see it go!” Can you say ARM reset?
Been flogging this one for months
this one too
This is an upscale development, centrally located. One of the buildings that the empty-nesting boomers were supposed to populate.
Not.
“But it seems that the condo-sales market in Center City fared better during the 2006 real estate slowdown than markets did in Washington, New York, Boston, Miami and Las Vegas, according to economists, developers and local real estate agents.”
What else would the shills say - “Hey everyone, we’re in the early stages of a meltdown…grab your lifejackets … sauve qui peut!
This is a test……..
I’m a empty nest boomer and can say, without reservation, I’ve never considered moving INTO the city and live in a condo. Now that I’ve see what it looks like, I now why it never occured to me.
We now return you to our regularly scheduled bubble watch…..
Is it just me, or does anyone else think the words “luxury” and “upscale” are thrown around a little too easily in those ads?
Nice looking, well done, clean — sure. But those sure look like a basic apartment conversion to me (with maybe the exception of that nice high ceilinged LR on one of them — I’d call that “above average” — though still not “luxury”)
Is it just me, or does anyone else think the words “luxury” and “upscale” are thrown around a little too easily in those ads?
No, it’s not just you. Those are feel-good words to help the FB justify the fact that s/he just signed off on a $3500/mo. note to reside in a skybox with no soul.
Dear Mr./Mrs. F@cked Homedebtor:
I am willing to extend you an offer for the house you are desperately trying to unload. Now I know this is really hard to understand, but what you owe on the house and its current market value have no relation to each other. I know you paid $800,000, and now thanks to the voodoo no money down we pay you for 6 months toxic loan you took out, your balance is now $903,539.35. However, I can only give you $200,000 in cash, after you settle with the Bank of Joe 6Pack, who is the present bagholder of your mortgage. I can only give my more than generous offer when J6PK will release the title to me, and you will need to deal with them for any outstanding debt. I can only hold this offer for 3 days, because there 50 other homedebtors in your neighborhood alone wanting to bale out of their white elephant home also.
Sincerely,
Refused to be a California Homedebtor.
“All the properties received offers between $350,000 and $360,000, or 30 percent less than listing prices”
See, my bid wasn’t so ludicrous after all!
Allentown/Bethlehem is a NY/NJ spillover area. Working class people with homeowner aspiratations, and a desire to get out of the hood, live there, drive to a train station, and ride to Manhattan — 2+ hour commutes each way. It happened in the late 1980s, disappeared in the early 1990s, and has returned.
The area also has a boom in logistics, from warehouse activity pushed out of NY-NJ. It’s our “Inland Empire.”
Very true. I’m in the area and at the height of the boom, you’d see NY and NJ plates at every open house… There were also plenty of flippers in this group as well (I even saw some properties bought by CA ‘investors’). This area was hit big time during the last boom/bust (late 80’s early 90’s) and it will be hit again… The number of soon to be ghetto developments in the middle of farmland Macungie is unbeleivable.
Also wanted to add an update, our local new construction flipper is still holding the bag on 10 twins (very ugly new construction) and the builder has continued to undercut the prices (i posted this one before)… Link here
I’ll agree that the NC in this area is very ugly. Especially compared with the older homes from its industrial heyday. But you can buy nice looking houses in the three cities (Allentown, Bethlehem, Easton) for less than 100K even at bubble prices. Can’t speak for the neighborhood, however.
The sellers are going to go down slowly if it’s not a “distressed sale “.
The realtors and the NAR are telling sellers to just wait for the spring bounce ,after the market has finally hit bottom. It’s not all the sellers idea that they are holding out . Some sellers can’t go lower because they don’t have the cash to bring to closing .Other sellers are just testing the market and won’t sell unless they get their price .
Auctions are not “market price ‘ because they are considered a “distressed sale ” where the buyers terms are different than the regular market where you have to have more cash to play . Like GS said ,auctions reflect the lower end of the market plus a premium because in the regular market the terms are better and the buyer pool is larger .
If you have areas that get nothing but auctions ,bank REO’s ,foreclosures , short sales ,60% investor bought vacant tracts , areas of excess building etc., those areas are going down fast and hard and those “distressed sales ” become the regular market because those are all the comps . It’s a matter of % of sales .
I contend that the overall market is” distressed “,so eventually that will set the prices that will play out with time . I think prices are going to drop faster than prior downturns because of the pressure of “distressed sales “,with a more limited buyer pool .
My aunt has her home up for sale in a not great neighborhood. Its been on the market for 2+ years and she is desperate to sell because the house she had built in the Poconos is just about done and she needs the money from her first home. She paid low 30’s for it in the 70’s and its been on the market now for just under 700k.
My point is she wants to drop the price so it sells, her REALTOR keeps telling her NOT to drop her price. Wait… we will get it! My aunt knows nothing about the market and trusts her realtor is right. Of course she just had to pay her annual tax bill of over $13,000.
These realtors are trying to control the pricing. Wouldnt they just WANT houses to start moving instead of the current stalemate?
liz
Where is your aunt’s house that is not selling?
If she’s had it on the market for two+ years, she must have gone through a few realtors by now…did she start by FSBO?
In my area the realtors are hungry for a transaction, anything to make a sale. Is your aunt’s realtor a newb?
Perhaps the realtors are busy unloading their own. They don’t want her to compete or lower their comps.
Liz . If a seller has their house on the market for 2 years something is realy wrong with the price . I don’t know why this realtors wants your aunt to hold out for top dollar ,but it seems like your aunt has a realtor that has some motive that does not make sense . Could be a dumb realtor ,could be a set up for a fraud deal ,could be the realtor really believes that prices will return . Don’t know .
What I have noted lately is that realtors have been trying to control inventory by advising alot of sellers to wait until the big spring price come-back .
Remember realtors are under obligation to get the highest price the market will bear for a seller ,but if realtors are advising sellers to hold out for top dollar when the market and comps have clearly changed it bad advice if the seller really wants to sell . This is the kind of damage that the NAR is doing with their National ad campaign because its making sellers think everything is going to be alright . Its a myth /rumor that the Feds are going to lower interest rates and should not be used by realtors to predict a better market for 2007.
I think this is great advice, as it will delay the turnover of inventory, and add to the spike of inventory in the spring. The bigger inventory, than it otherwise would be, will drive prices even lower than they would be. Bravo REIC.
Yes, the realtor is adament that they will get their price in the spring. Just wait!!!!!!
Yes, the realtor is adament that they will get their price in the spring. Just wait!!!!!!
Yes, the realtor is adament that they will get their price in the spring. Just wait!!!!!!