“Housing Has Softened In General”
The Journal News reports from Ohio. “With home sales and new residential construction in a slump in Greater Cincinnati, Realtors and builders are teaming on a new marketing campaign to boost consumer confidence. The result is a six-week ‘Buy Now’ online, print, broadcast and billboard campaign featuring the slogan, ‘Home, Home in your Range.’”
“‘The builders came to us and said, ‘The statistics show that we’re really hurting and we think the statistics show that you guys aren’t doing too well either,’ Cincinnati Area Board of Realtors President Tom Steele said. ‘We thought, ‘Why don’t we take the initiative to let people know the market isn’t as bad as it sounds and all the national stuff, the negative stuff, doesn’t apply to us.’”
“The gist of the campaign, Homebuilders Association of Greater Cincinnati President Dave Wittekind said, is that there is a wide selection of homes to choose from in the market at lower prices than what buyers found this time last year.”
“Both Steele and Wittekind blamed the slowdown on an oversupply of homes. Steele said, there were times last year when there were 3,000 to 4,000 more homes on the market here than should have been if supply and demand would have been in balance.”
“‘There’s a large volume of new homes and existing homes that they can take advantage of this buyer’s market and move into the house that really meets their needs and have the best selection,’ Wittekind said.”
The Capital Times from Wisconsin. “Go back just eight years and there was almost no downtown condominium market. Now, a half dozen larger condominium projects punctuate the downtown landscape.”
“You need a map to keep them all straight. Nearly 900 condominium units, conversions and new construction, have been built since 1998 in or near downtown Madison, and 1,600 more are planned or under construction. Beyond that, there are projects under discussion to add another 1,000 units.”
“But how much is too much? Is there really a market for that many condominiums downtown? If you look just at numbers for 2006, the answer might be ‘no.’”
“In the last quarter of last year, the Realtors Association of South Central Wisconsin reported that there were 2,422 condominium units for sale in Dane County, compared with 862 just two years earlier.”
“Here in Madison, Professor Tim Riddiough said the downtown condo market has clearly softened. That is because housing has softened in general ‘and condos always fall harder than houses.’ Plus, more supply has come online.”
“Riddiough, who is the academic director of the UW-Madison Center for Real Estate, said signs of a soft market are evident in the slowdown in proposals of new condo projects; cutbacks on projects currently under construction, like the Alexander Co.’s Capitol West project; and lights out in many condo spaces.”
“Discussions he has had with real estate agents have also pointed to a soft market, he said, adding that the market is going to stay this way for a while. ‘There is a lot of supply, and the speculative element of demand is gone for now. Prices may have to adjust a bit more to bring things back to equilibrium,’ Riddiough said.”
“Developer Todd McGrath, who has developed more than 200 units downtown in the last five years, said the market slowdown downtown in the last year has been driven by perceptions of uncertainty that were exaggerated by negative coverage in the national media.”
“At his Nolen Shore project, McGrath still has half of its 64 units for sale.”
“John Deininger, executive director of the Realtors Association of South Central Wisconsin, said an important fact to note is that condominiums and subdivisions differ markedly in their rollouts. ‘Unfortunately, condos come in in one fell swoop, and then it takes a while for the market to absorb the balance of those,’ Deininger said.”
‘The result is a six-week ‘Buy Now’ online, print, broadcast and billboard campaign’
It’s almost like these people think we can consume more houses like apples or milk. ‘Just buy more, it’s good for you!’
Great point Ben. But then this is what the housing market became over the last few years, isn’t it?
“Real Estate” decoupled from “housing” and joined with “investment”…seemingly permanently. And why shouldn’t it when it is the ONLY “investment” (much less highly LEVERAGED investment) that NEVER goes down?
Repeat something often enough and it becomes real/true…doesn’t it?
“Repeat something often enough and it becomes real/true…doesn’t it?”
I can fly. I can fly. I can FLYYYYYYY!!!!(THUD)
‘Just buy more, it’s good for you!’
Add this one to the list of ways to tell when it is once again OK to buy a home as an affordable place to live in (not as an investment):
“Anyone who believes it is a wise investment decision to pay ownership costs on more than one home is certifiably insane.”
Because they really don’t have any other ideas. Everything is just a matter of marketing to them - it’s all they know.
“Here in Madison, Professor Tim Riddiough said the downtown condo market has clearly softened. That is because housing has softened in general ‘and condos always fall harder than houses.’ Plus, more supply has come online.”
I love all these experts. They really don’t understand what has been happening over the past few years.
There was never really a demand for downtown condos except for marginal buyers, but they make the best “investment” vehicle in RE as all the maintenance/holding costs associated with RE are handled by someone else. Elsewise you would buy a pre-construction house and try to unload before the bills came due.
Both markets have collapsed, but Condos were over-built more than houses, as the ease of using them as a flipper profit-plan is much greater. The difficulty in liquidating is the flip-side to a reversal in the market. Every city in America is filled with “luxury” downtown apartment houses that almost no-one wants to buy.
“There was never really a demand for downtown condos”.
Well said. The artifical demand created by 100% financing fueled the building. Now, the builder is toast. We could ship some of our illegals to them if they will rent for cheap or section 8.
“The difficulty in liquidating is the flip-side to a reversal in the market.”
Condos go down hard in part because with many identical units on the market at the same time, the comps turn luxury housing into a commodity glut, with all units prices adjusting downwards in lockstep.
Exactly! Why does the ‘bottom is in’ camp assume that ‘buyers’ are just waiting poised to pull the trigger as soon as the right spin has been applied by the media? I guess Americans are known as such rampant consumers that even half-million dollar homes are thought to be disposable by the dozen.
Suppy and Demand is a b!tch!
And is as the real estate industry is finding out (Like generations before), Supply and Demand is a two way street!
I thought I heard/read that Home Builders were not going to get greedy this time around and overbuild? Ha, greed “trumps” logic everytime!
‘Ha, greed “trumps” logic everytime!’
That is part of the problem, but not all. It is also challenging for one builder (or home buyers, for that matter) to take into proper account the parallel actions of other builders, buyers and lenders against the backdrop of the greatest ever runup in real home prices in US history, especially with so much REIC propaganda about the boom’s sustainability getting quoted verbatim as “expert opinion” in the press.
I’m still amused how much they overbuilt. More than ever before.
Ironically… if people start leaving bubble markets, that will create a huge quantity of additional homes in “fly over country.”
Got popcorn?
Neil
‘We thought, ‘Why don’t we take the initiative to let people know the market isn’t as bad as it sounds and all the national stuff, the negative stuff, doesn’t apply to us.’”
-because lets face it, DENIAL SELLS!!!
-and while you’re at it, why don’t you pretend you are selling houses and write yourself make-believe commission checks.
“We thought, ‘Why don’t we ……” Laughed my Ass Off when I read that. It sounded like an old Mickey Rooney / Judy Garland movie.
“Both Steele and Wittekind blamed the slowdown on an oversupply of homes. Steele said, there were times last year when there were 3,000 to 4,000 more homes on the market here than should have been if supply and demand would have been in balance. There’s a large volume of new homes and existing homes that they can take advantage of this buyer’s market and move into the house that really meets their needs and have the best selection,’ Wittekind said.”
I have a simple suggestion which might prevent any future repeat of the housing bubble, which is make basic economics a mandatory part of realtor training courses.
Anybody who ever got through a college economics course knows the basics of supply and demand: If you greatly increase the supply of a good, the price has to fall for the market to get back into equilibrium. Yet these idiots are puzzling (in an idiotic newspaper) over why nobody is buying homes when there are so very many homes to choose from. They should be loudly proclaiming the obvious: THE PRICE IS TOO HIGH!
AMEN to that.
“make basic economics a mandatory part of realtor training courses.”
Sorry GS,
Not going to do any good. Realtors jobs are to sell houses. They do whatever they need to do to get you to BUY. I was Realtor ™, back when Paul Volker was the Fed Chairman. I had taken both Macro and Micro courses in college. I knew that when the rates were too high, the PRICE needed to decline. But how do you tell that to the owner who purchased 3 years earlier and needed to sell. He wanted his “investment” to pay a return.
We had a rule back then: if you weren’t planning on living in it for at least 5 years, don’t buy. The “solution” then was creative financing: adjustables, graduated payment mortgages, low fixed with a five year balloon doing negative amortization. It was all BAD. Many people lost their homes.
I got out of the business and went back to engineering school.
“‘The builders came to us and said, ‘The statistics show that we’re really hurting and we think the statistics show that you guys aren’t doing too well either,’ Cincinnati Area Board of Realtors President Tom Steele said. ‘We thought, ‘Why don’t we take the initiative to let people know the market isn’t as bad as it sounds and all the national stuff, the negative stuff, doesn’t apply to us.’”
You could not make this up!! I just can’t get over how this quote epitomizes the current mindset of all the idiots out there who have to sell for some reason. This is unbelievable!
‘Why don’t we take the initiative to let people know the market isn’t as bad as it sounds and all the national stuff, the negative stuff, doesn’t apply to us.’”
Yeah, they seem to now be saying that RE isn’t local, it’s national! They must not be aware of basic set theory (e.g. Venn diagrams).
The easy translation of the above quote from the esteemed Mr. Steele: “Why don’t we take the initiative to let people know the market >isdoes
I have a feeling the REIC hasn’t realized they’ve pretty much run out of stupid people.
They’ve blown everyone, on the margin, up. Now the margin is much, much wider and to get to the qualified, interested and much more thoughtful buyers its going to take a lot more than another silly pr campaign.
Its going to take big price cuts before they get to any “meat” of buyers and bring market demand back to equilibrium.
“I have a feeling the REIC hasn’t realized they’ve pretty much run out of stupid people.”
The problem is that the REIC workforce hasn’t run out of stupid people.
“Here in Madison, Professor Tim Riddiough said the downtown condo market has clearly softened. That is because housing has softened in general ‘and condos always fall harder than houses.’ Plus, more supply has come online. Riddiough, who is the academic director of the UW-Madison Center for Real Estate, said signs of a soft market are evident in the slowdown in proposals of new condo projects; cutbacks on projects currently under construction, like the Alexander Co.’s Capitol West project; and lights out in many condo spaces.”
I am suffering a case of paradigm whiplash. It was altogether recent (less than two years ago) that I thought the condo building craze was confined to coastal cities with ocean views like Miami, San Diego, Vancouver, etc. I guess the chance to enjoy a sky-high view of Lake Mendota’s shoreline has made everyone eager to endure the negative 30 degrees Fahrenheit windchill of Madison’s January lakeside breezes?
Do you think there’s money to be made investing in urban building demolition companies? You know, those guys who implode old stadiums and warehouses. Add all these new, vacant high rises in places like Madison to their potential market.
It depends on whether the government gets into the demolition business. I am pretty sure there will be no private profits in demolishing current condo construction for quite some time, as doing so requires you to have a private project whose value exceeds the market value of the condos you are demolishing by an amount sufficient to cover demolition costs plus other opportunity costs of effort to the demolition company, and the price of high rise luxury condos was very high and sticky last time I checked.
The one exception that just popped into my mind is the rotisserie option, which may be privately optimal for those who are criminally brazen enough to try it, and can manage to get their insurers to cough up a claim payment. (See discussion on today’s bits bucket for more on this…).
They won’t demolish these buildings. They will spiral down until they become low-cost government housing. The units will be stripped of any valuable fixtures and materials by years of tenants. They will become dismal memories of the Housing Boom. They will be like those awful human warehouses that were so popular in the ’60s and ’70s. These buildings will destroy neighborhoods. I see no other final conclusion. Just look at all the neighborhoods of beautiful old Victorian homes in many cities that are now slums.
It doesn’t matter how luxury these places start. It’s how ghetto they finish that counts.
then it takes a while for the market to absorb the balance of those,’ Deininger said.”
I think the word he’s looking for is “saturated”.
Here are the last two bullet points in the ad campaign.
http://www.buyhomescincy.com
—
# Your home will earn money for you. Homes are a good investment and appreciate in value, giving you access to home equity, tax deductible loans for education, retirement, even vacations.
# You’ll love what you can do in your home, from creating meal masterpieces in a gourmet kitchen to watching movies in a custom home theater. If you can dream it; it’s out there.
—
Why didn’t somebody tell me I could eat gourmet meal masterpieces while watching movies in my own custom home theater, while actually making money doing it! I feel like such a shmuck now with that whole working and saving money thing I’ve been doing. I need to start dreaming more.
Home, home in my range
Where the tears and the hanging rope sway.
Where hell becomes stirred with encouraging words.
And the cries are heard loudly all day.
LOL…..What a crack up . Your not part of the in- crowd if you don’t go into debt up to your eyeballs for a home theater and a gourmet kitchen .Better yet, get the cash back deal so you can buy these things and add to that a car in the deal ,oh I forgot furniture .
…and the obligatory home re-ri trip to Europe.
The funny thing is that these people are too busy working to pay the mortgage to ever cook in that gourmet kitchen or use the media room.
‘If you can dream it; it’s out there.’
Very compelling.
That statement has two meanings. People can also dream of tornadoes, hurricanes, fires, floods, murders, pestilence, poverty, sickness and Holocausts. A nightmare is just a form of dream.
I dream of affordable RE.
None is out there : (
I dream of …(oh never mind ).
So if I dream that there’s extra money in my account to pay for all this stuff, it’ll be there?
That all this happened in Cincy… I guess it shouldn’t surprise me, they’re no better at avoiding the overbuilding than any other place is. Now that they’ve broken out of the hillier areas to build on the flat farmland, the sky is no doubt the limit.
gourmet kitchen… buzzphrase that ALWAYS gives me a headache.
Have you ever had to clean up a gourmet kitchen after the chef has gone? Now you can!
Have you ever cleaned up a theater after a show? Now you can!
Big news this morning in northern Maine, where a battle between the people of Maine and the largest Real Estate Investment trust in the U.S. is shaping up. http://tinyurl.com/265cda
This development is in THE MIDDLE OF NOWHERE, which is precisely why it’s always been one of the wildest areas in the country and a favorite of fishermen, hunters and other outdoors types.
The people in this part of Maine are very poor as measured by money. But they are rich in the surrounding beauty and recreation they have been blessed with.
So now, Plum Creek, the nation’s largest landowner is riding in on a white horse from their native Seattle to save the poor people of northern Maine from themselves — and make a gigantic fortune in the process.
What is really happening is the area is being turned over to the wealthy from away and the native Mainers will become even more poor in the long run. This is a classic manifestation of the polarization between rich and poor we see becoming even more pronounced in the single digits of this century.
The one good thing is it’s far away from population centers and it’s cold. This should keep out some of the rich-raff.
‘Why don’t we take the initiative to let people know the market isn’t as bad as it sounds and all the national stuff, the negative stuff, doesn’t apply to us.’”
If it doesn’t apply to them then why are they having to spend money to tell the public that they should already know. They should look at the avg price of homes in their area now compared to 5 years ago and the number of homes for sale now as compared to 5 years ago. Then look at the increase in real wages in the area in the last 5 years. I suspect that after doing that any rational person would conclude that anything spent on advertising now is a waste of money.
New links are now posted. Thanks for the support!
http://madisonhousingbubble.blogspot.com/
The REIC already borrowed sales into the future by putting every unqualified borrower ,speculator, and fearful buyer they could get their hands on into a house by mid 2006. The REIC even paid borrowers to buy a house with the cash-backs and incentives schemes . Every trick in the book as been used on the buying public to get them to buy now ,(in spite of the fact that many will end up in foreclosure ).
The builders used every trick in the book to sell out projects that were built for speculators in large part .
Currently there is such a excess supply of homes that need to be sold that its scary . Vacant homes everywhere ,owned by people that thought it was a good Time2Buy .
When is the REIC going to realize that they got a gravy -train of sales for to many years now that they were not entitled to because the people didn’t really qualify and the REIC took full advantage of mania duress and slime sub-prime lenders .
It’s reaching a point where the REIC/NAR should be stopped from advertising their lies because its false advertising .You can’t tell the public that it’s a good time to buy IMHO because it’s investment advice . They (REIC) can say they have a huge supply of homes ,they can say they have 8 million excess homes ,they can say they have thousands of condos that are unsold ,but to say it’s a good time to buy is false unless you don’t care about clients catching a falling knife .
I guess the REIC got away with all their other false lies for the last 4 years, so they think they can say anything they want . Better that the public except the fact that the market has to correct because of the hyped up mania and faulty lending .
The REIC still wants to put unqualified buyers into homes and thats a bad faith thing to do in my view .
That being said , ‘Condos for everyone “.
OK ,everybody correct my spelling errors in your own mind .
“That being said , ‘Condos for everyone “.
Condoms for everyone! We really need to stop these idiots from breeding.
It’s been tried. Forced sterilization is unconstitutional.
“Both groups are forecasting an upswing in the local market with housing sales increasing and sale prices stabilizing this year.”
But lf course.
“Both groups are forecasting an upswing in the local market with housing sales increasing and sale prices stabilizing this year.”
But of course.
can we pass around some of the names of cities w high ries condos now
Lubbock TX
Sacramento Ca
Madison WI
Asheville NC (mid rise)
next up
Napoleon Dynamite’s home town
Mayberry
Smallville
If you build it, they will come
Lubbock?
Lubbock?
Here in Madison, Wisconsin, it’s always fun to sit in your overpriced POS “Luxury” downtown condo eating Ramen and Equity Vapors by candlelight and wondering if you will STILL have a job Monday when it’s -12 below without the windchill and “WONDERING what the Hell am I DOING HERE!!! ?”
Mikey - You about blew me off my chair with that. What a beautiful synopsis of RE realty today. I can just feel the emotion of your description, especially “Equity vapours by candlelight” and “WONDERING what the Hell am I DOING HERE?” Think you must be some kind of literate, but if not you definitely deserve multi kudos. Thanks for the Great post………