‘Five Year Housing Boom Over’: AP
The Associated Press is reporting on housing markets. “The five-year housing boom is indeed over, judging from growing statistical evidence and the performance of some of the nation’s leading builders, and the slowdown is already rippling through the economy. Explanations for the recent cooling-off vary.”
“‘We started to see the strain in July and August, and by the fourth quarter the market definitely had slowed,’ said Layne Marceau, president of the Northern California region for Shea Homes, one of the nation’s largest private builders. Rising prices and interest rates pushed more buyers out of the market. When prices finally did cool, sellers couldn’t command a high enough price on their old house to buy the new one, said Marceau, who believes the slowdown is temporary.”
“Builders don’t like to cut prices, it angers customers who paid more, but last week, Centex Corp. advertised $25,000 off on select homes in the Dallas area after making a successful similar offer in California. Around the country, builders are throwing in incentives. Some equal 10 percent of the home’s list price.”
“The median price of an existing single-family home has declined since peaking at $219,700 in July to $210,500 in January, according to the NAR. David Seiders, chief economist for the National Association of Home Builders, said California, Las Vegas, Florida and the Washington, D.C., area ‘have the largest potential for a price slowdown.’”
“The rising prices in those markets were fed by speculators who bought homes intending to ‘flip’ or sell them for a quick profit, Seiders said. ‘The biggest fear I have is investor-owned units coming back on the market in large numbers,’ he said.”
“Mike Mishler said, ‘Maybe it will slow down in a couple years, but right now we have lots of California folks coming in, and empty-nest people looking for new homes.’”
“Mishler, president of the local builders association, says Texas markets are holding up because they are affordable. But even in Dallas, the inventory of unsold homes rose to a record in the fourth quarter.”
“For now, home builders are busy finishing the houses that customers ordered last year. In a sense, their 2006 results are already on the books, and they expect another good year. Investors have been bidding down the stocks of home builders since July. The nine largest publicly traded builders have seen their shares fall 14 to 44 percent since their peaks, with Toll Brothers and Hovnanian the biggest losers.”
“(Analyst) Alex Barron said builder stocks have been trading at relatively low multiples of their earnings since the late 1990s because investors always believed the strong housing market was too good to last. ‘Investors kept saying, ‘Next year housing will go down,’ Barron said. ‘I guess they’re finally right.’”
For Palm Beach County and South Florida it will be a disaster. Too many are putting all their paychecks towards their mortgages and then living off credit cards! You have to pay the piper sooner or later! (I know many people here that live like that)
“Builders don’t like to cut prices, it angers customers who paid more, but last week, Centex Corp. advertised $25,000 off on select homes in the Dallas area after making a successful similar offer in California. Around the country, builders are throwing in incentives. Some equal 10 percent of the home’s list price.”
Soon it will be apparent to prospective new home buyers that the major builders will happily discount next month’s sale price on new homes in order to attract new business. The effect on the comps is to steadily reduce them as long as such discounting is continued going forward, setting off a snowballing effect, especially when prospective buyers begin to price in the depressing effect of future discounts on the anticipated value of a current purchase. Once home-price-deflation psychology takes hold, the price decreases will become self-sustaining, regardless of what builders do to try to attract buyers…
Yup. To tie this into a post from this weekend, the same forces that blew housing through any rational valuation on the way up are now working in reverse to bring valuations right back down. In a maniacal market (i.e., driven by mania) rational valuations don’t mean squat. There are no intrinsic value floors or ceilings.
It’s like what happens with Detroit - they sell more cars when they have those big rebates, but when the rebates are over, sales crater. And people just wait for the rebates. It’s self-defeating.
Self-defeating at the overall level, but prisoner’s dilemma/commons tragedy at the company level. Therefore the car makers did it, and so will the house builders, it’s inherent in non-cartel capitalism once there’s an overall surplus of supply.
My experience in DC is that many condos prohibited investors from buying. Of course owner-occupant restrictions can be worked around. Nonetheless the fact that DC was singled out is scary for those inside the dc bubble.
http://www.dcbubble.blogspot.com
condo developers and homebuilders in DC have had these restrictions on for a while. have you ever heard of someone having their home/condo taken back from the developer for violating this clause.
i’ve been tracking inventory in DC and it looks like the sh*tbox flippers and condo guys are in full blown panic mode. what’s really humorous is running the #s on what the morons pay per month for living in crime ridden neighborhoods with pothole ridden streets. then tack on predatory parking enforcement and a horrific school system. DC is a fun place to live if you’re single, but you’d have to have a hole in your head to pay the prices advertised and raise a family.
so how do you really feel about urban life? when I walk out my front door with my baby daughter we pass a two very safe playgrounds, a theater and great restaurants that we walk to when we hire a baby sitter. all within five minutes.
to my mind that beats the hell out of sitting in Rockthesda traffic, plain vanilla Arlington. Remember the sound of the DC bubble bursting was heard first and loudest in Centerville, not Logan Circle
Granted due to the capital restriction DC has generally been the exception to the rule, but I like the investment advice of an old and savvy real estate speculator whose advice to real estate investors was something like, your most important investment tool in real estate investing is your eyes, look up if you see more than three cranes on the skyline it is time to sell, I pass more than 20 on the subway ride in from Alexandria and four block walk to work. Upper NW will probably do better than other areas since there will always be demand from political change and foreign services keeping a floor of demand (and providing trading volume in all markets). I’d be more concerned about some of the more recently gentrified locations both within and outside the district. If investors leave, buildings are highly likely to be boarded up in certain locations and that will bring unsavory characters back to the area.
I agree, if I had bought as investment in certain NE neighborhoods (Petworth, Columbia Heights, Brookland, etc), I’d be really scared right now, because when this bubble pops, what you said is exactly what’s going to happen. I live in N. Va right now, but I’m actually going to try to rent in one of those areas in DC because the “investors” are making some attractive discounts right now. Once those areas turns back to slums, I can just leave.
Barron said. ‘I guess they’re finally right.’”
Just b/c now-bitter RE bulls are only now acknowledging how badly the heap of s**t piling up around their feet stinks doesn’t make the rest of us “finally right”.
I guess we were right all along…
Could it be median home sprices are ten times median annual salary?
Bueller? Bueller?
Not to mention the 10,000 layoffs at AT&T today and bonds going haywire 4 hours ago.
Yeah-I saw Electro-lux just closed their plant for good-2700 manufacturing jobs down the shitter. I think the local employment talkin’ head said they all will be absorbed as Wal-Mart greeters (short shifts).
“I’ve never seen a market as good as this,” Mike Mishler said as he took a break from making finishing touches on a $1.6 million lakeside home near Dallas. “Maybe it will slow down in a couple years, but right now we have lots of California folks coming in, and empty-nest people looking for new homes.”
just keep on talking to yourself partner. pretty soon you’ll believe your own lies.
Every state is talking about Californians moving in, Nevada,New Mexico, Arizona.There is just not enough of us to keep this bubble going.
I guess CA RE agents can’t use this line, huh?
I was almost a CA buyer in Michigan. … almost.
The purchase actually made sense. $300,000 campus house which rents for $2600 / mo.
It’d better have been one of them 8 bedroom deals if they were trying to convince you it would get 2600/mo, because if you’re talking Ann Arbor then those are the only ones that get that anymore I’m thinking. Rents are coming down near UM, the for-rent signs are as ubiquitous as the for-sale signs and some local forums are showing people bitching about how they can’t rent their places. As a realtor told me at an open house recently, too many people bought the house next door when it went on sale 3 years ago thinking they’d rent it for sure and couldn’t. So, only the closest-to-campus and most desirable props for undergrad living get that kind of rent anymore. People do try to rent their unsold mcmansions for that, but those cost 400-500K typically.
so it was probably a good move to avoid it!
cheers!
I’m a CA renter in N. Va.
Good point! That’s why CA realtors have to use “rich” immigrants from the south. There are millions of them there.
WTF is this guy talking about? Dallas is going no where but down. Good luck moving that high dollar lake house you putz -
I think it can work like that for a long time, depending on the area.
In my area of the Netherlands, prices started rising fast only after the bubble in the big cities (Amsterdam etc.) paused, especially for the most expensive homes. While expensive homes in the big cities went down by 20-30%, homes in my area went up far over 100-200% in a few years.
Amsterdam alone has 3 times more citizens than my whole province; if just a few % of the rich homeowners move (or spend their home equity on investment properties), they have a HUGE influence on the local statistics and that is exactly what has been happening.
If you believe the statistics, most of the homes in my town are now worth 10-15x local wage. Fundamentals don’t apply, like with all manias.
“The median price of an existing single-family home has declined since peaking at $219,700 in July to $210,500 in January”
Realtors always say “Yeah but YOY median prices are up x% ‘this’ month” But if prices just remain flat (which is improbable), it’ll only be 4 months or less untill they no longer can hide behind that one. Of course then we’ll see comparisons to ‘04, ‘03, ‘02 all the way back the first cave dweller. Untill you can buy a house with a handful of shiny rocks and a wooden club they’ll be trottin’ out that stat.
Rainman,
That cave dweller comment made me spill my tea. Shame on you.
Now, some of you embittered renters probably think this is some unrealistic fantasy. But let’s try to understand what the future will hold (we are all interested in the future, for that is where you and I are going to spend the rest of our lives) by looking at the past. If you look at history there has never been any period of time where home prices declined. Never. Even if you go back to Ugh selling the first cave to Ooog for 3 rocks and a wooden club, I guarantee you Ooog made money. No matter when, where, or how you look at it, home prices always go up in the long term. Sure, you might find some isolated instances where home prices declined for a short period of time but even after that aberration prices returned to their normal higher trend.
In ancient times, sea shells were used as money. If a cave was sold for 10 seashells 100,000 years ago and a home now costs far more. I bet some realtors will use it to show why owning a home is good investment.
Actually sea shells are interesting because historicly they are an example of inflation. Wampum (belts of beads made from seashells) were used a medium of exchange by indians in the northeast us. Once modern tools and techniques were used to create them the supply skyrocketed and they became more and more devalued as a medium of exchange. So in that case it wasn’t the printing press but the steel needle that was the engine of inflation.
I am so looking forward to that day — not too far off. I got to listen at Rotary today from the pres of the board of realtors. Everything was just rosy! Reminds me of the Iraqi Information Minsiter
“The rising prices in those markets were fed by speculators who bought homes intending to ‘flip’ or sell them for a quick profit, Seiders said. ‘The biggest fear I have is investor-owned units coming back on the market in large numbers,’ he said.”
Ladies and gentlemen…
…it’s official…
…pigs can fly!
Will Hell begin to freeze over now?
We still haven’t heard from David DiaLereah…
…so the jury is still out on that one…
I….AM…David.Lererah…model number…2600….I..am programmed…NOT…to…speak ..neg.i.TIVE.ly…about…thee…Market. doesnotcompute. doesnotcompute….shutting dowwwwwn.
Yup! The Fat Lady is on the stage. I’ll renew my lease for 6-12 months and see what happens.
Our lease is up for renewal soon. The landlord said he likes us so much he won’t raise the rent (although, as he whinged, it’s not covering his mortgage). Uh Yeah. Like we wouldn’t have said “buh bye!” and swung to a cheaper brand-new McRental.
Think about how crummy it would feel to buy at the top and then watch the builders give deep discounts.
A lot of recent buyers are feeling ‘crummy’ right now.
Crummy would be an understatement
They are already filing lawsuits.
On what basis though Tom. I mean what kind of case could you really file and expect compensation. I ask that out of sheer curiosity. The only people who I would think would have a case would be the investors who bought the the paper from the I/O and Neg-Am’s other than that. I don’t see a case
Not having a case has never stopped anybody. Rule 11 has a few times. LOL
And I’m pleased to see the Dallas horseshit being exposed for what it is. I again predict that Dallas will fall as hard or harder than any bubble area. Because Dallas IS a bubble area, no matter how many time D Ragazine tries to say it isnt
They have no case. Just like the people who bought tech stocks in the dot com boom only to see the value evaporate over a 3 month period. They got bent over a barrel and there isn’t a thing they can do about it.
Let’s clarify…. Dallas proper (condos downtown) may be a bubble, but Collin county north of Dallas is DEFINATELY not a bubble! My house has not went up in value at ALL since I bought it in 2002(even after putting $20k in upgrades). This is where they are speaking of. Prices are so low in these areas to defy description compared to CA.
Why is that the case?
Wishful thinking, larenter.
It is the case because of abundant supply of both land, new homes and existing homes. Im Dallas, the motto is, “if some is good, then more is better,” even if the area cannot absorb it efficiently. I feel sorry for people out there because there is no appreciation whatsoever in their future and much depreciation possible, no matter how “cheap” it seems right now.
Cheap is always cheap for a reason. Poor quality or no demand. How about both at the same time?
You must not know the area! Why do you say??? How is it a bubble if it has not gone up in the past 5 - 8 years????? Did you see where Dallas was named one of the top areas in the country for business relocation? Because it is soooo cheap to do business there.
So negative….. I know there are a lot of crap houses there, but there are nice areas where the homes are custom built and are well made. I just hope the area holds up for another year or two. I need to ditch my house…
I don’t know the area? I’ve lived here for 17 years. I worked with one of the Chapter 7 trustees in the Eastern District out there in Plano.
Plano as a microcosm is not a bubble for the reasons stated above. But the other half of that equation is that it also never will be for the same reasons unless some category killer industry springs up there like the telecoms of the late 1990s or something like that. Otherwise it’s an aging bedroom community populated by people living on the edge, with builders building new crap as far as the eye can see all around it. Not exactly a formula for price appreciation.
I am not hoping for any appreciation at all, just to get out without having to bring $5k or $10k to the table! I just want to leave with my shirt! I was told never to buy in TX. I should have listened! Stupid!! Stupid!! I should have rented the 9 years I lived there. I just don’t see the market falling like it is already here in S. CA.
Even if TX remains flat, inflation will do the dirty deed.
Indeed…why spend $160k on a used 25 year old house in Plano, when $160k buys you a brand spanking new house that you get to pick out the carpet and paint - and if you buy today you get free granite counter tops.
Gotta love those GCTs.
Just because an area hasn’t appreciated in the past few years does NOT mean it won’t depreciate in the future. This is a credit bubble, and if people were stretching to buy houses in that area by using suicide loans or high DTI ratios, prices just might come down. The prices might have declined already if not for the credit bubble. Just stagnant prices might actually be a sign of an unrealized loss at this moment. It’s not likely they’ll come down as far as the really volatile areas, though. Can you rent it out w/positive cashflow? If so, you might be okay to hold on if you need to.
Best of luck!
I never implied people had a case. I’m just telling you, people are filing lawsuits because they don’t know what else to do!
Just a sign of how desperate people are right now. Talking about a housing bubble is even a taboo topic. It used to be that talking about your home tripling in value isn’t taboo but to talk about prices going down is? People get so defensive. Talk about hypocrits with double standards.
Does anyone know what happened in the HO vs Pulte lawsuits in Vegas over discounting by Pulte last year ???
Well ladies and gents it is March 6th now- has anyone out there in any geographic region seen a rush to view this huge and growing inventory of homes nationally? Record warm weather in the mid and far west- and 60 degrees this weekend in the northeast- Where are the ‘phantom’ buyers’?
Are they magically going to turn out and reduce theis burgeoning real estate overhang- I doubt it. And the scary part is the inventory is likely to be larger in May. How can there be a soft landing? Not with this glut.
The realtors and the FED governors have learned one thing- and have taken cues from the Bush people- begin with a lie, and end with one- eventually the sheep will believe it- too bad that dog will not hunt this time around.
I think everyone is fed up with the lies. The sheeple believed them for a little while. Now it’s over.
PT Barnum would beg to differ.
SF Peninsula—buyers, or at least lookers, showed up in droves at two open houses last weekend.
Ah, the obligatory Bush bash. What took you so long?
Ben:
Saw this one, looked interesting..
US mortgage bonds face risk if house prices fall-BIS
http://yahoo.reuters.com/news/articlehybrid.aspx?type=comktNews&storyid=urn:newsml:reuters.com:20060305:MTFH58138_2006-03-05_20-01-16_L03315106&rpc=44
Now I’m starting to feel bad…people used to come on this blog and laugh at us…but I still feel bad. NOT! HAHAHAHAHAHA!!!!!
I miss RE King. Maybe he’ll make a special guest appearance.
Speaking of Centex, we’ve gone from 12-hour sales to month-long sales here in Sacramento. Save $50,000 to $150,000 (again)!!!
Surprise! Centex 28-DAY Sale
Lander
Sacramento Land(ing)
Excellent post…heh. I check your blog every day, too. Nice.
CTX has done well– as a short play.
Look no farther than your local department stores to see how they discount their merchandises. From 20% off all the way to everything must go. The carrying costs will force them to sell at any price people are willing to pay.
THIS JUST IN…
More Houses on Freeway Than Cars, Disruption Stalls OC’s 405
(AuctionHeavenNews.com)
In a seemingly surrealistic turn of events, hundreds of thousands of SFR’s- more commonly known as ‘Single Family Residences’, began leaving their foundations this morning, and heading to Orange County’s 405 Freeway.
Once inside, most of the SFR’s were seen clutching onto the guard rails on the sides of the freeway, heading south.
“We’ve seen this before,” said State Trooper Benjamin Jones. “A couple weeks ago a condominium got loose in San Diego, and began making its way down the 5.”
“But this time, it appears to be SFR’s. And there’s lots and lots of them. Some of them even appear to be using the carpool lane.”
In a scene remeniscent of a Steven Speilberg movie, cars and trucks sat idly by as SFR after SFR trotted down the on-ramps, flooding the 405.
One local resident, Gary Watts of Mission Viejo, had this to say:
“Well, I guess it makes sense. They’ve been doing all our work for us the past few years. Maybe they just got tired of the low pay, and the long hours. Could be a house strike of some sort. It’s too early to tell. But, I may have to revise my forecast now. Drats.”
Like the condo that made its way to Mexico a few weeks before, and then Tahiti via a large freighter, many of the SFR’s are expected to head for the US-Mexico border, assumably headed for a long vacation.
AuctionHeavenNews caught up with one disgruntled SFR, and it had this to say:
“We’re friggin’ tired of doing all you people’s dirty work. We’re done. Y’all need to go get yerselves jobs, ya hear? Right now, we got some relaxin’ to do. Get r done!”
Orange County Register columnist Jonathan Lansner could not be reached for comment.
Speaking of Lasner at the OC Register……thought you might want to give him a piece of our mind at his new BLOG at the OC REGISTER…..
COME ON PEOPLE … LETS LET HIM KNOW HE’s BEING A PUSSY ABOUT NOT REPORTING THE INVENTORY NUMBERS RISING IN OC !!
http://blogs.ocregister.com/morningeye/archives/housing/
I know, I just saw that they frontpaged his BS blog at ocrealestatefinder.com. You dont even need a password to look at that crap. But someone posted a great reply to one of his blog topics about local appraisals and how fraudulent they are. I cant wait for this crap to come to a head…JF
I just told him to post the truth and linked OC RENTERS site:
http://bubbletracking.blogspot.com/2006/03/tracking-orange-county.html
I have to admit my feelings of satisfaction from being right are melting away into fear as the national media starts to pile onto this downturn…
But I won’t be happy until I see the price structure crumble.
“But I won’t be happy until I see the price structure crumble. ”
I agree prices are still stubbornly high in Irvine..however the guy next to me at work who almost bought in N.Lake Elsinore / Corona area for $510K just was offered $460 for the same house…a nice 10% cut.
So millions of FBs will be forced evacuate their ballooning debt and rent. While those who rented and waited for the insanity to end, can finally buy homes at reasonable prices.
Karma comes full circle?
As cynical as some people are be careful what you ask for because you just might get it. Keep in mind, loss of house will equal loss of jobs and a downward spiral in the economy.
This is why “bubbles” are bad, and it is why a quick and deep price cut is preferred to a slow agonizing decline.
They are bad.
But I’m willing to bet - in much of this country, we’re going to have _both_ a quick and deep cut _and_ a slow agonizing decline. 5, 6, 7 or 8 years…
My job is secure and I don’t live paycheck-to-paycheck. I can easily ride out a 5 year downturn (even unemployed). And I rent. I will still enjoy watching all of the freeloaders (specuvestors) get what is coming to them, even if I have to dip into my savings. I can dip - they cannot! Debt free and cash rich.
amen to that, brother. nice to have $1 mill+ in the bank and earn rent, gas money, and dining out expenses from interest. i sold last summer and folks thought i was a f*cktard. meanwhile, i know of a couple of folks who found out that they can’t deduct the interest on their 100% LTV IO loans because they got smacked with the AMT. who’s the f*cktard now?
I don’t know why I found dcbubbleheads comments funny but I did. So if you’re unable to deduct the interest from your I/O loans. Whats the point?? That cannot be the case with everybody. That would be too funny.
Wait for the stagflation to eat into your savings then tell me you’re not paying for this.
Interesting point– I wonder how many FBs are going to be caught in the AMT trap?
AMT and interest — Under AMT, one can deduct mortgage interest as it is state and local (including real estate taxes) that get flushed down the toilet.
That’s why it’s better to have one swift *correction* rather than years of stagnation a la Japan.
This medicine has been a long time in coming and this country needs the unproductive excesses wrung out of it. Those who have saved and invested conservatively will do fine. Those who were cavalier with thier finances will pay a dear price for thier incompetence and/or arrogance.
I say: Bring it on.
Eventually everybody pays. How are we going to absorp all the contruction and housing related jobs? It is big part of local economy even in DC area.
As much damage as the media did in driving it up. It’s going to be ten times as vicious driving it down. I’m surprised AP popped out an article like this. I would have thought it would have been at least mid-spring or summer before you saw something like this That article has just killed any remaining chance of the market “stabilizing” and forget about appreciation. Now everyone will be banging the get out while you can drum. Should make for an interesting summer in the world of real estate. I wonder how that guy “dave” I think his name was feels the one who had bought all over the country sites unbuilt with 100% financing living off of his wife. I bet he is having some interesting conversations right about now.
I agree with you about the media’s inclination to completely immerse themselves in any storyline that brings drama and heartache. They love it.
“Never hath man felt so dire as when he hath slain his foe. For he hath seen in him his own demise. To behold his adversary lying in defeat doth not assuage his heart, for in the uncertainty of the battle lay the true truth to his fulfillment and gladness.”
Wonderful quote!!!
GetStucco,
that quote was for you my friend…
Rainman18 - Excellent Prose. I think it can only be complemented by these immortal words from Conan the Destroyer:
Mongol General: Conan, what is best in life?
Conan: To crush your enemies, see them driven before you, and to hear the lamentation of the women!
Mongol General: That is good.
That could apply to his Governorship as well…:)
thanks
BTW the fact that an attorny can quote that verbatim makes me a little uneasy to be in a courtroom!
*attorney
I have a soft spot in my heart for the works of Conan. His mastery of not just the sword, but the English language as well, has set the proper atmosphere at many a settlement table.
Try this one: ‘Let death seize upon them, and let them go down quick into hell, for wickedness is in their DWELLINGS, and among them’. Schadenfreude to thee also.
sorry to ask, but can you explain it?¿?¿?¿?¿?
To explain it to you Dawson would be to deprive you of the joy of discovery. The clue lies in GetStuccos’ original post.
If prose isn’t your thing, try this:
The nuclear missile headed towards a city does not care who successfully predicted its deliverance. It just wants to blow shit up. Collateral damage is indiscriminant by definition.
I think the term “flipper” is now outdated. It is now officially “flopper”. All of those floppers are going to be getting kicked in the A$$ and they deserve it. CA has a long way to crash, and I am happy to be one that is leaving this looney farm here.
No, I think for the short term “fluffer” may be a correct term as well.
I kind of like the term fulipper…That would be
the fked flipper
Aw…come on you guys.
We’ve got months and months and months to go before we can truly proclaim ‘victory’.
Let’s see…
March April May June July August - and finally- major price reductions in September. Small ones in August.
Six months more of THE MEDIAN PRICE WENT UP! THE MEDIAN PRICE WENT DOWN! THE MEDIAN PRICE WENT CAMPING! before anything truly significant happens.
There’s still plenty more false ‘See I Told You So’s’ to come from the media.
I have to go now.
I gotta go lasso me uh SFR!
Giddy up Cowboy!
Correct me if I’m wrong, but didn’t we already see YOY price declines nationwide in December? Isn’t this why NAR said they’re not going to report monthly numbers, but only quarterly numbers, next set due in May?
Bubble Butt-
I posted the SFR piece on his blog.
Of course, we’ll have to see if he prints it.
Maybe he’ll be a good sport?
Let’s hope he is “balanced” as he say he is and posts it. He sometimes appears to be negative, but then puts in a crap Goldilocks RE piece to soothe the Realtors that pay the Register’s bills.
Let us know if he posts it.
Last summer, I went with a close friend to a remote small town in Mexico to view investment properties. After a 6 hour drive from PHX, my friend was convinced that she had found her dream house. No amount of logic was gonna convince her that she was about to make the worst financial investment in her life. She ended up buying a house plus an extra lot for more than $250k. Did I mention that most houses in the area don’t have running water or electricity? Or that as a US citizen, you can’t buy property outright in Mexico? here is a link of a house that we saw for sale then and still is.
http://www.eldoradoranch.com/Real_Estate_Sales/6450-006-03-04.htm
Ummm i would have a serious friggin problem kicking down 135k for that for a whole lot of reasons.
The next thing you’ll have to convince her of is to let go of the tequila bottle as she realizes what she’s done.
Not only have pigs flown…
http://blogs.ocregister.com/lansner/archives/2006/03/buffett_on_real_estate.html#comments
Okay, Jonathan. Maybe you ain’t such a bad guy after all.
HE POSTED IT!
(I think I need a drink.)
You got to know he’s reading this blog
I have been following this blog since July, and all I can say is - things are unfolding exactly as we all predicted - uncannily so.
- Saves
I think that’s why some of the long-time posters are so vicious, and getting more so, towards the flippers.
It wasn’t that hard to predict what was going to happen sooner or later once interest rates started returning to normal levels and the NAAVLP’s started to reset. And yet people caught up in the bubble were openly laughing at those correctly advising caution, and what’s more were being egged on by the MSM.
I hope Ben didn’t mind being a State Trooper for a day.
LOL.
Hi, I’m Argentine and I just discovered that my country is more real estate insane than California.
The 3 crucial stats are as follows: the dollar selling price of houses today is identical to the price before the 2001 crash (when the peso was linked 1-to-1 to the dollar). BUT! But… average salaries today (always in dollars) are exactly half what they were before 2001. And another but… rents today (always in dollars) are also exactly half there pre-2001 level.
Thus… The house to income ratio has DOUBLED in 4 years! And all this has happened immediately AFTER the worst economic crisis in this country since the 1890’s!
All you people who wonder that Australia and Britain had a “soft-landing”, look, this is the most insane global financial mania in more than a hundred years. Even the dead are walking (I’m referring of course to my own country). Spreads between first world and third world debt are at an all time record low, it was reported that interest rates on german bonds were at their lowest since the time of von Bismarck, etc.
Wow, I’m psyched. The newspaper article where I finally got this info blew my mind (I always suspected it but didn’t have any official confirmation). I wish I had better statistics about what’s going on in my country, like you guys do in the US.
no surprise; I have several times read about people from Europe or the US who go bargain hunting for homes in Argentina.
For someone from the Netherlands (or other bubble countries), homes in Argentina look ridiculously cheap. Nobody looks at fundamentals like local wages and of course, most buyers from bubble countries are buying overseas with FREE money so there is no way they can loose.
It’s difficult to believe that professional economists still haven’t made the connection between mortgages and wages.
Where are the Florida Buyers? Its extremely warm here in the sunshine state and no bites! the inventory is like the energizer bunny..it keeps growing and growing and growing…..
What excuses are FL realtors going to use this time?
Probably that the unusually warm winter has kept all the buyers up north.
President Chavez in Venzuela told wealthy S. Americans not to buy.
More soft landing, we’re not really concerned language from these guys. The prospect of a housing slowdown appears less frightening than a few months ago - WTF is this guy talking about. A few months ago, these guys wouldn’t even admit to a slowdown, let alone saying it might be frightening. Do these reporters look at the inventory numbers or the sales numbers before they print this dribble?
From everything I’ve read and seen over the last couple of weeks alone, I’m inclined to believe this will be far worse than anything we’ve even speculated. And yet, helicopter Ben says it won’t crash. But, no reason why, just trust me.
I’m really tired of the government saying trust us, everything is going to be OK.
What I want to know is what his definition of a moderate slowdown is. I’d love for him to go on record for that one.
meh, let ‘em call it a soft landing. Their optimism will force Bernanke to keep upping the rate until their ears bleed.
I take all the reassuring talk from above of “yes it’s slowing but everything will be fine” as a very positive sign.
To me it means they don’t intend to try to stop the crash, even if they could.
And that’s about the only thing that has gravely concerned me for the past several months is that they might try to stop it.
To me it means they don’t intend to try to stop the crash, even if they could.
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I think you’re exactly right.
(I’m Argentine and I just discovered that my country is more real estate insane than California.)
I have a proposed source of income for Argentines. Give speaking tours in the U.S. about what’s it’s like to live in a formerly rich country 20 to 50 years after a series of generations that served themsevles, ran up the national debt, and left that country bankrupt. You know what we may be facing.
We had some interesting documentaries about that some time ago on Dutch television, mostly regarding the informal economy that developed in Argentina out of necessity when bank accounts were frozen. VERY informative.
However, if you hear that phones, internet etc. stop working because people dig up the copper cables to get some money, you start to realize that it is difficult to plan ahead for what to do in such events.
P.S.: the people that bankrupted Argentina was just a tiny fraction, certainly not the general workers (maybe they lived a bit beyond their means but certainly not like the average US citizen now). When the IMF took control, the national debt of Argentina was lower than the amount of money in US bank accounts from the Argentine elite.