Post Local Market Observations Here!
What do you see in your housing market this weekend? Auctions? Related graphs? Builder incentives? A slowing market? “Year-end figures show the number of single-family homes sold in Southampton Town dropped about 25 percent. At least one insider, Judi Desiderio of Town & Country Real Estate in East Hampton, was willing to say last year wasn’t just a ’slump … it was bad.’ From August 2005 until December 2006, sales hit an all-time low, she said. The largest segment of house sales, the $1 million to $3.5 million price range, was also the segment hardest hit.”
Price reductions? “Wisconsin weathered the national housing downturn of 2006, but it came at a price. The market’s peak eroded, with Ozaukee County’s median price sinking to $225,000 from $244,700 in the same quarter a year earlier. Washington County dipped to $198,200 from $212,500. Up north, Sawyer County plunged from $203,600 to $146,700.”
“‘Prices on a lot of homes were inflated, and for a long time, sellers wouldn’t budge,’ said Randy Schmit, president of Schmit Realty Inc. in Port Washington, of the market in Ozaukee and Washington counties. ‘Now they’ve budged.’”
Mortgage fraud? “The story of this Iowan’s home refinancing was told to us by Iowa Assistant Attorney General Patrick Madigan. The woman was a so-called ’subprime’ borrower. The loan officer at this company made up a home-based day care, ‘Debbie’s Little Dolls’,’ Madigan said, even though Debbie had never even worked in child care. The lender made up the company name and years she had worked there, filled out the paperwork and showed up at Debbie’s house for her to sign the document.”
“When Debbie asked the lender whether it was OK to do this, the lender replied that companies did it ‘all the time,’ Madigan said.”
“Last year, more than 40 percent of subprime loans in Iowa were based on stated income.”
Or legislation? “A measure that would make it a crime to coerce a home appraiser or falsify a real-estate appraisal gained traction in the state Senate on Tuesday. The bill would make pressuring an appraiser or falsifying an appraisal a serious misdemeanor, with repeat offenses treated as felonies.”
“Appraisers who falsify their work risk losing their licenses and face fines under current rules, said Geoff Hier, a spokesman with the Colorado Department of Regulatory Affairs. Arvada mortgage broker Jim Spray said he was initially concerned the bill would target only mortgage professionals. But he was assured the bill will cover real-estate agents, as well as buyers and sellers.”
Signs of speculation? “Mini-Cassia Economic Development Commission Executive Director Bob Shepard said the commission is expecting to see 500 new jobs in the area between now and July. According to Idaho Commerce and Labor, the Mini-Cassia unemployment rate for December 2006 was 3.8 percent, down from 4.9 percent the previous year.”
“‘There are more spec homes in the area than ever before,’ Shepard said.”
Sorry for the repost from bit buckets, but here’s the state of California [budget]:
“Housing sector lag hits home in state: Building slowdown, budget fallout seen”
http://www.whittierdailynews.com/business/ci_5245113
[Funny that this article is not found online at sbsun.com nor in news.google — I saw it in their print edition and had to google around to find the URL link.]
Informal inventory tracking methods still showing a slow trickle of inventory increase in So/Central Coastal Cali.
Increases in (informal) inventory since 1/6/2007:
Altadena : +14%
Arroyo Grande: +9%
Pismo Beach: +9%
Apple Valley: +12%
Joshua Tree: +6%
Not exactly a flood of sellers, but a flood of buyers is nowhere to be seen.
From coastal San Diego…. a neighbor sold his place fro $545k back in 2004. New owner a youngish guy, did some minor upgrades, lived in the house… now on the market for $460k. Yikes! (At least he’s realistic about price… a couple other neighbors on the block with similar properties put their houses on the market in mid-2006 asking $565 and $590!! Needless to say, there was no sale on either of those…
Here in Ventura. House next door for sale 520,000. Paid 620,000 in ‘05.
Good. THATS what I need to hear. Somehow the stats aren’t reflected in what I see on the street. I’ve been eyeing the Sherman Oaks area and all I see are high prices and not much inventory. It’s nice to hear of decent price drops in neighboring cities.Hopefully it will creepover to my area.
Report from Santa Barbara, Ca:
This is a typical comp for South Santa Barbara County, Which includes the City of Santa Barbara, Montecito and the City of Goleta:
Home sale- 2/14/07. 76 Manchester Lane, Goleta. 4/2 detached home, 1482 sq ft. $725,900 ($488/sq ft)
Home sale- 7/11/06. 70 Manchester Lane (across the street from 76 Manchester). 3/2 detached home, 1152 sq ft. $848,000 ( $736/ sq ft).
Prices are dropping like a rock, and the comps show a much faster drop than the median. I forecast the following for the summer of 2008:
Santa Barbara City detached home values $400/sq ft
Goleta City detached home values $300/sq ft.
North County detached home values $200/sq ft
Sorry, 70 Manchester is next door to 76 Manchester.
Here is a chart showing median price and # of sales over the past two years in Reno/Sparks. It shows prices back to early 2005 levels, but it’s likely already worse.
Month # Homes Sold Median Sold $
January 2007 276 $290,000
December 2006 319 $297,000
November 2006 318 $300,000
October 2006 409 $299,900
September 2006 384 $299,900
August 2006 371 $305,800
July 2006 410 $322,950
June 2006 463 $325,000
May 2006 425 $316,000
April 2006 411 $317,000
March 2006 434 $328,000
February 2006 320 $317,250
January 2006 325 $325,000
December 2005 385 $319,900
November 2005 443 $331,000
October 2005 559 $335,000
September 2005 601 $336,500
August 2005 695 $334,950
July 2005 677 $345,000
June 2005 607 $335,000
May 2005 717 $326,000
April 2005 650 $315,000
March 2005 660 $309,000
February 2005 411 $301,000
January 2005 381 $295,000
History Lesson:
O.K. Ben here’s a throwback…something for those who did not understand the DYNAMICS of the last real estate slow down in the early 1990’s:
True Story:
Two people, in their early 30’s barley graduated high school:
1st character: Dave the “raw nose” (think cocaine)
2nd character: Mairlou “Sticky Fingers” (think embezzlement) Yes, she’s the office manager. No, there is no oversight.
They are co-workers in a small company
They both own condo’s (poorly made) in Garbage Grove CA. Owned for approx. 4 years.
In fact, the developer’s and builders are both being sued by their own HOA
Here’s where they come up with a GREAT IDEA!
They each find a “House” and then buy it… (While they still have good credit) … Him in Corona CA, Her in Fountain Valley CA
They quit making payments on their condo’s… Guess what happens?
They sacrifice their credit (sort of) and go to work like nothing happened.
Fast…………………..Forward to 2007:
My question is this:
Will some folks be tempted to do the exact opposite of this?…” it’s different this time”
Walk from McMansion..into… a smaller residence that they can actually afford?
I’d like to “downsize into that $300,000 condo” the taxes on this $650,000 house are just too much for us to take. And ALLSTATE Ins. is not happy with that broken washer water hose that flooded the carpet.
I don’t think it is that easy this time. I do remember a co worker doing that. Bought his place at the peak, then the slump happened. He bought a less expensive house across the neighborhood and then walked on his that had become worth much less than he owed. But the new BK laws and 80/20 loans along with the IRS forgiven debt this time could put you in more than just FICO score trouble. I heard of a few that did it last time and didn’t here anything bad from it, but I doubt they would talk about the bad stuff.
Anything is possible. They’ll have to sell the $650,000 house first though. If they don’t sell the $650,000 house, the lenders (and more importantly investors) will treat the condo as an investment property/2nd home.
22151 N VA
slight increase in inventory
cheap stuff is moving
peak 5/05
off 10-12% since then
Seeing the same in 20175. Prices off about 12%.
One key stat is that the % of selling price is running about 92-93% for the past 6 months - the lowest it’s been since the beginning of the data in ‘97. Normal rate is about 96%, up to about 100% during the peak in early ‘05.
After dropping steadily since Sep., inventories leveled off in early January, and now are on a slow climb. Still a ways to go through to reach peak levels, however are still up YoY - I expect inventory levels for the NoVA area to peak this summer at about the same levels as last year, which is about 2.5 times higher than average, and 4 times higher than the inventory levels during the boom.
Not much price dropping here in DC. I’m starting to see a lot more For Sale signs on empty houses, sometimes next to each other. Almost all of them look like flips. I don’t know about the McMansions because I don’t often get out to the burbs. And the condo ads aren’t letting up. They are still clearly targeting the 20-something crowd, hawking the “vibrancy of the city” and showing pictures of young couples painting the walls or dancing at a club.
Also — sorry OT, the bits bucket looks full.
RE: my post yesterday that a 1100 starter house costs $128K to build. The building-cost.net estimate is taken from the National Building Cost Manual, which is published annualy. So the materials and labor is probably peak 2006 price. Even so, I don’t know how much (illegal) labor costs can fall, and it still doesn’t include the land.
Based on this, I still skeptical about the $100K newly built starter home. In fact, I’m starting to think that it’s no longer possible to buy a SFH as a starter home, not on reasonable financing. In the DC area, a “starter home” is a condo or a packed-together shoddily built small townhome. isn’t this how cities used to be anyway? Little kids playing in the street, and you moved up to the suburbs when the kids were teens.
100k would be on a slab w/o much wind rating
like an anchored trailer
Inventory increasing since super bowl Sunday. Homes taken off late last year are reappearing. Price reductions, seeing more income property listed as the investors are coming on board the “bubble express”. Still lots of disbelief and denial, though, as both longtime owners and FB’s think it won’t happen here. I tell them it’ll not only happen here, it’ll be worse than the rest of the country, save mayby NYC.
LA Times
Todays business section states that the residual income that Illegals send home to Mexico from California ’slowed to a trickle’ in November and December….
If you read between the lines that means that ‘Construction’ jobs are drying up. Money sent home to Mexico is the second largest source of income for Mexico - behind oil production.
bingo- the 9.5% RE employment will be hard to track as it reverts to the mean of 6%
1099 types go to ? retail and become employed
illegals aren’t counted
It will revert and then overshoot the mean.
This economy is on the brink. How long will it take to go over? Who knows. April and May are going to have huge construction job losses. These losses will continue until the end of the summer. Expect deflation for salaries. See CR’s excellent blog for more information.
Just sit back and wait. The nation (except maybe for Florida) are still in mass denial.
Relax.
And make sure you…
Got popcorn?
Neil
I would like to believe the decline is related to a fall off in construction activity.
Was the decline on a month to month basis or a year over year basis? There might be some seasonality involved with Christmas–maybe the illegals were taking advantage of the sales at Wal Mart by loading up on plasma televisions.
Recidivism actually overtook oil last year. The other main component of their economy is tourism. With many of those tourist dollars coming from the USA, (some of it heloced for sure). Will this “soft landing” also “soft land” Mexico’s economy against the fan. I just opened an office in Guadalajara, and have spent some time there recently. They have their own little building boom going on there. Such as the Tsunami’s -a seismic event thousands of miles away will sweep over their economy as well.
“Todays business section states that the residual income that Illegals send home to Mexico from California ’slowed to a trickle’ in November and December….”
Makes sense, and I don’t doubt it. But, how the hell would anybody know this? How is money going from here to Mexico tracked?
Western Union
warren buffet bought into WU- think he blew it ?
lots of competition coming from online pay
OT, but now you can pay cash for an airline ticket at Western Union, at least for American. I thought the feds interfered with cash purchases of tickets a while back in the name of anti-laundering. Remember reading about some poor soul who was arrested just because he brought cash to buy his ticket.
A few years back, Western Union saved me about $700 when I was being scammed by an Alaska-based fraudulent EBay seller (Saw you lost a bid, I have the same item, etc.). They blocked the transaction and told me it was a suspected crook at the other end. Turned out true. That scored maximum points with me, for sure. I wish ‘em well.
A report from Crested Butte, CO.
Hello All - I just got back from a nice snowboarding trip at Crested Butte. 9 inches of new snow – it was a great time.
The housing market for luxury condos has cooled considerably. Crested Butte, like many resort areas has seen a boom of condo building and subsequent property flippers. A year ago, property flippers took lottery numbers for the opportunity to put a deposit on a yet unbuilt condo. Existing Condos have doubled in value in just 4 years. A 1-bdrm was $100K in 2002 and is now valued at $200K. Now there appears to be little demand for the condos. Several are listed in the MLS with some indicating the price has been reduced. One developer is selling an entire land – site plan deal including the architectural drawings. There are several ads for other building lots as well. The best ad I saw was for a hotel room for 205K with the subtitle “Motivated Seller”. Also, single family home lots are dropping in value as well. One I have been following has dropped from $229K to $189K in the last 8 months - still no takers.
It should be noted that on the previously mentioned hotel room, the room would rent for $149/night according to the hotel website. Assuming the seasonal occupancy factor and the fact that the hotel will charge 50% management fees – you would be a fool to buy it.
The interesting thing is that there is still a real estate office on every corner and all of these people seem to be still insisting that Crested Butte is the next Aspen – Telluride. I don’t know how these people are going to survive on a ski instructor’s salary once reality sets in.
There seems to be no shortage of little mountain resort type towns that like to refer to themselves as “the next Aspen”.
I just got back from Durango and your report is a carbon copy of what I saw up there with the exception that there is probably more building and planning to build going on up in Durango. I saw 1.5mil townhomes (ski in/out) for sale as well as many lots and other condos being built/for sale. They were working on the foundation for another condo tower at the base as well. Should be a disaster for them come summer.
Was this in the town or in the ski resort itself? This summer at Crested Butte, there was a huge meeting of condo buyers taking lottery numbers to purrchase the new units. From my conservations with the locals, most of these people could not ski and had no interest in learning. They were hoping for a quick flip.
“From my conservations with the locals, most of these people could not ski and had no interest in learning.”
IMO, that’s a “classic” for the annals of this housing bust.
From the Philly Burbs – people still aren’t getting it and the listing prices are too high. In the 16 months that we have been waiting to buy a house, 2 that have met our criteria have sold.
One listed at $609 (At peak a nicer house in the neighborhood sold for $630) After doing roof repair, it finally sold for $440.
One listed at $520 (At peak, similar house sold for $510) finally sold for $420.
Two of the best stories:
Two neighbors were listing their houses and one’s listing said “Compare us to our neighbors asking $150K more”
Realtor owned property was on the market last year, started at $600K went to $570K then was pulled for the holidays. Relisted in January at $619K.
We know of several houses that have been vacant for over a year.
The houses we are looking at sold for $280-$330 in 98 and are currently being listed from $550K-$700. Also, the current inventory matches the inventory level from last May. Yes, there is a bubble in the philly burbs, and yes prices are going down but listing prices are not. Have also noticed considerable foreclosure activity our very desirable zip code.
From the Philly Burbs – people still aren’t getting it and the listing prices are too high. In the 16 months that we have been waiting to buy a house, 2 that have met our criteria have sold.
One listed at $609 (At peak a nicer house in the neighborhood sold for $630) After doing roof repair, it finally sold for $440.
One listed at $520 (At peak, similar house sold for $510) finally sold for $420.
Two of the best stories:
Two neighbors were listing their houses and one’s listing said “Compare us to our neighbors asking $150K more”
Realtor owned property was on the market last year, started at $600K went to $570K then was pulled for the holidays. Relisted in January at $619K.
We know of several houses that have been vacant for over a year.
The houses we are looking at sold for $280-$330 in 98 and are currently being listed from $550K-$700. Also, the current inventory matches the inventory level from last May. Yes, there is a bubble in the philly burbs, and yes prices are going down but listing prices are not. Have also noticed considerable foreclosure activity our very desirable zip code.
Hey, nice handle!
Heard a Centex ad offering 3% of the base price of houses in the DC/No VA area. Nice to see the builders finally starting to cut the base price in addition to the other gimmicks they have been using lately.
This ad should ruin the appetite of other recent buyers..let’s see $500,000 house, atleast a sure $15,000 in the hole before sales costs.
Speaking of local markets, there is a longish article about Zillow on Yahoo today. Also has a great Realtor quote:
“You look out on the street and see five to ten houses for sale, but many people still don’t believe things have changed,” he says, shaking his head at a dirty carpet. “The average seller says, ‘I need to get this much out of our house to move up.’ But the market doesn’t care.”
Here is the link.
“The average seller says, ‘I need to get this much out of our house to move up.’ But the market doesn’t care.”
Yep. Just happened to a friend of mine trying to sell his house. He had an offer which was contingent upon the sale of the prospective buyers home. My friends realtor wanted to see the other property for sale. He took one look and said “No way, they’re asking way too much for the house, it’ll never sell”. It’s going to take some time to dash these peoples hopes.
Any news on the Massachusetts/Boston markets?
keep renting
In general I agree with pete2303, though it’s worth keeping an eye out for something you can afford (be conservative here!) I don’t think MA is getting hammered as much as some areas, but most properties are still way overpriced.
And in general, if you buy a place make sure it’s somewhere you’ll want to stay for 10 years or more.
Jamaica Plain (Boston neighborhood- dicey in some spots for those who do not know) - inventory down since the summer - I usually look at 2 bedrooms under 360 on Boston.com - was up at 90 - now down to 25 or 30. But the interesting thing is that most of them are 3 families turned into 3 condos - they used to be NONE that listed at less than 300 - now the range extends from 219-350 - and only a few are in the 300s - most of these “condos” are going for 200s. I am waiting for them to go under 200. Just a small sample - but telling nonetheless.
Menlo Park and Palo Alto, CA. The fact is that for the first six weeks of this year there have been more buyers than sellers. Inventory rose a little bit but then it came right back down. There are only 84 active single family homes are on the market. At least a dozen homes in the $900k-2M range have gone pending within 5-15 DOM.
I had my heart set on this charming $900k home but it went pending within a week:
http://www.mlslistings.com/common/properties/photo_page.asp?mls_num=704457&Line1Address=2371+CARMEL+DR&Line2Address=Palo+Alto%26nbsp%3BCA%26nbsp%3B94303
I have to second this, unfortunately. I’ve been tracking inventory in several parts of the Bay Area for over a year now. Mountain View (compared to last year) is extremely low on inventory right now. Cupertino inventory is slightly lower than it was a year ago, but not much.
On the flipside, Sunnyvale inventory is up slightly YOY, and San Jose inventory is definitely up a good bit YOY.
WTF do people do there, and at what income, that they can afford those prices?
I used to live in SillyCon valley (Mountain View to be exact) in the late 90’s…moved in 2000 because I was “priced out forever”. It’s a nice place to live, and tech jobs were/are again plentiful, but almost $1,000,000 for that little shack? Fugidaboudit. As Cartman says, “Screw you guys, I’m going home”.
I agree. The party is still going on in Silicon Valley, prices have started to go up again and inventory is very low.
I had my heart set on this charming $900k home…
LOL!
well, there are a lot of hi tech workers (Oracle, et al) in the area….in the mid level (or jr exec) and higher, they can afford this in many cases. palo alto and menlo park are supposed to be some of the best locations in the valley. they will hold up much better than san jose, etc…
otoh, i think i’ll stay in atlanta in my 1930s home 2 miles from midtown. i could convert my garage into something like this
“i could convert my garage into something like this ”
No joke. I’d sooner live in a modern double-wide, than that place.
A couple (who transferred to Texas) across the street listed their San Diego home for 730K 6 months ago. It’s now listed at 640 with NO takers.
They bought a home in north Ft. Worth for 495K..a screaming bargain they thought until they realized they had to pay 2 mortgages.
The wife had to go back to work and leave her 3 kids in daycare for $2000 month. The reason they moved there so she could stay at home with the chitlins.
Oh, how goofy people think.
495K in Ft. Worth is ludicrous. They got taken there too. Wait until they try to sell it.
Good god! 495K in Ft. Worth and folks said there’s no RE bubble in Dallas/Ft. Worth. Just the high property tax on the house will eat them alive.
Californians used to the ~1.2% RE tax rate in Ca are always unpleasantly surprised when they find out how much they have to pay in income-tax free Texas on RE taxes (doh, that one reason houses are cheaper in Tx).
The only people paying those prices in Texas are suckers from bubble areas. Anyone from around here knows you can get 3000sf for around $200K. I think I need to buy some foreclosure properties in Texas and advertise them in Californians for a 100% profit.
I can see $500K in University or Highland Park, but not anywhere in Ft Worth.
$495K in Fort Worth? I’ve been tracking home prices in the Metroplex since January 2005. What did these people buy? That’s one heck of a lot of money for a house in that area.
Sorry, that’s A heck of a lot of money.
I am just guessing by what I have read, but aren’t taxes on that going to be over $1,000 per month?
I’d guess around $1,300-1,500.
My rule of thumb for Texas residential real estate taxes is that it runs about 3% of the home’s value.
North-of-Boston suburbs here:
Well, after Wednesday’s snowstorm, I could tell which houses are vacant, because the driveways don’t get cleared right away. On our street, 6 houses are for sale and 4 of them appear to be vacant. One is across the street from us, a reasonable 3BR ranch with a nice finished basement. The guy who owns it has had it on the market on and off for over 2 years and it’s pretty clear he’s not willing to drop the price enough to sell it. It’s off the market right now. He bought in 2004 I think. Last summer when it was for sale, for $429K, people were coming up to our bigger but older house hoping it was the one for sale (um, no. We have a subdividable 3 1/2 acres and even in this market we could get that for the land.) That’s a pretty clear sign he was asking too much!
Beyond that, things are slow. Reports of people getting into trouble with suicide loans are increasing. There are lots of empty “luxury” condos sitting around… some get rented but most just sit, and the builders are not doing basic maintenance on the buildings.
Pensacola Beach, Florida
I caught a Realtor/Flipper while fishing off Pensacola Beach who must have been drinking her own kool-aid or at least didn’t get the memo about the housing meltdown in Florida. Obviously a few get rich quick types still active.
Emerald Dolphin Condo
850 Fort Pickens Florida, Unit 850
Bought 12/2006 $585,000
Listed 2/2007 $785,000
Listing:
http://tinyurl.com/ywnchj
Property Appraiser Records
http://tinyurl.com/3bqfd4
P’cola,
What’s the story on insurance on the coast. Allstate is pulling out of MS altogether and the last I heard, people were freaking out in FL. Also, what coast city would you keep your eye on for the future?
Thankx
Dan, I don’t have anything new on coastal insurance. I need to call my BIL who writes the policies for a number of the hotels and condos along the coast in NWF for an update.
NWF although cheaper than SF is way overpriced. In order for beach houses to produce a decent return excluding appreciation prices need to drop from 50% to 70%. Until the big price drops come I am a happy to rent a beachhouse for the month or so that I need it during the summer.
Another advantage of renting is that you can change your place of vacation if need be. For example I usually rent a beach house on P’cola Beach but last summer the beach was still showing the signs of hurricane Ivan so I moved our vacation spot a few miles to the east and rented in Destin where there was no hurrican damage. No muss, no fuss.
Watch for fraud !
I checked out the MLS listing.
1) Seller is a licensed Florida real estate agent.
2) The condo is “New for 2007 and ready for the rental market”
I looked up rental rates at the Emerald Dolphin and they range between $2700 - $3000/month. What kind of investment is that? I could put the $800,000 in a CD at my credit union and generate better income!
Having owned on the beach and rented the place out, I can assure you that the $2,700-3000/mo is not nearly 12 months a year. For me, eight or nine months’ rental was a pretty good year. Also, if the condo requires a minimum 1-month’s rent, that cuts down on months rented; if they allow weekly, the renters destroy the place.
The bill would make pressuring an appraiser or falsifying an appraisal a serious misdemeanor, with repeat offenses treated as felonies.”
Sorry boys-too late the messenger.
Barn’s burned down and all the horses have run away.
Good try though…
In Florida, its a felony for a non licensed person to perform certain real estate sales services, such as showing property.
Now “The bill would make pressuring an appraiser or falsifying an appraisal a serious misdemeanor, with repeat offenses treated as felonies.”
I always thought falsifying an appraisal was a felony. A non licensed person showing a house has far less potential for harm than a falsified appraisal.
Who’s watching this stuff?? We’re all being played.
This graph is seems to be pretty consistent with my own observations about San Francisco and great Bay Area real estate. Overall, the market has come down 5-10% from the peak a couple years ago, but top areas like Palo Alto, Menlo Park, etc. are stable or slightly appreciating. This is not Florida, Las Vegas, or even eastern Los Angeles (Inland Empire) where prices have dropped dramatically and are still dropping. We sold our house at the top of the market in a very desireable area and it has appreciated since then.
In my neighborhood in SW Charlotte, (7 miles from uptown) inventory is low, and homes are selling. However, I am noticing that some of the juicy prices from last summer aren’t appearing in the MLS. I get the impression, that sellers are being coached away from being “too aggressive” by the local Realtors.
Closer in to town is very interesting. Some of the quasi-gentrified neighborhoods like Wilmore (which I still consider a “hood”) - have many homes listed for 3X what they sold for 4 years ago, and they sit and sit… I think some house flippers still have $ signs in their eyes and are too far ahead of where the real market is.
Vegas-
We moved into our rental a year ago. Neighbor was asking $580,000 dropped it all the way to $499,000 after no interest for 6 months. Then took it off the market. Relisted last week and is now asking $475,000. Still too high, might be worth 380,000. Our landlord is now trying to raise our rent $400 to cover his mortgage since he paid $560,000 for the house we are living in. Time to move again, can’t wait until it’s time to buy, I do miss owning a house.
Costa Mesa, CA 92627: Seeing some condo and townhome price reductions, but SFRs not moving too much lower yet. Lot’s of RE noise about buying, but we all know that is only the incessant call of the canthelpitselfus lyinsackomerdes.
OK — I got all but the “merdes.”
http://tinyurl.com/3yrovz
Real estate SALES fall in 40 states, but not in the Pacific NorthWest.
That’s actually a pretty funny link of an argument between a hardened/optomistic/silly/lying?? - who knows what to call them at this point- Seattle realtor and others.
Off the local REIC blog.
97470-Douglas County Oregon…
Big Time Washigton Builder….Hayden Homes, RAISED prices on postage stamp lot, sh#t box tract homes by 5% in February…3/2 1300ftsqr now goes for 160k
97470-Douglas County Oregon…
Big Time Washigton Builder….Hayden Homes, RAISED prices on postage stamp lot, sh#t box tract homes by 5% in February…3/2 1300ftsqr now goes for 160k
Still pretty much of a standoff in Colorado Springs. Inventory slowly but inexorably increasing, along with foreclosures. Sellers still stuborn and greedy for the most part. Most homeowners are aware the market is soft, but are too much in denial to seriously investigate or dispute the local NAR shills’ mantra of “it’s different here” or that the Spring Miracle Revival is still on track. Most sellers are firmly convinced we’re still in 2005. I think a lot of illusions are going to crumble in a very compressed timeframe, but the capitulation could still be months away.
I think you’re right Sammy. While a lot of people made out well the last several years, most will not. They are late to the party, and are just figuring that out. We are still in the denial phase, and how long it last depends on each persons financial position, as well as their motivation. We might not see full blown capitulation until next year. Especially since there are still a few GF’s paying near peak for certain properties. This has a delaying effect.
Good to know. We are in Omaha now, Have owned a couple of rental houses since 1998 that we plan to own for a long time. I’ve thought that the run-up in prices the last few years was unrealistic.
the best graphs of cities that i can find are at
thebubblebuster.com
the only thing is a lot of them are still 3rd quarter…
I saw an example of desperation trying to sell a house in Orange County, California today, in a neighborhood of $800,000 homes. Somebody decided that the way to attract people to their open house was to have their teenage daughters dress in skimpy shorts and bikinis and stand out front holding up signs and looking coy. Sad.
Whoa — if Leno gets hold of that one…
For those quoting the SF South Bay, Menlo Park, PA, etc: I think this will be one of the stickier areas on the downslope, because of the “you can’t lose” psychology in the area. Of course, a lot of these same people bet on the dot-com rally, and they may just get “surprised” again. The Bay Area will be one of the last places to come to grips with a downturn.
House up the street from me in San Mateo went pending in about 2 weeks. $1.3 mil. Nice views though.
The one on Parrott Drive? Doesn’t mean the market is still going up.That was the one nice house of all the sfh listings.
Kennebec valley maine RE market remains steady. Prices are not dropping on listings, inventory is stable, sales seem slow to average. There was a house listed in my hood double the 2002 sale price that sold in 3 weeks. I would say the bubble is still alive here but have noticed foreclosures now appearing in local paper so I do believe the top is in (Maine has low foreclosure rate)
For those of you who track inventory in a given area, have you noticed the following for your areas?:
As one measurement of inventory, I use Windermere’s Property Point tool. I simply use Portland, OR as the area. When I do this during the day/evening, the number of available properties is around 1800. When I do it at night, the number is around 2500.
I decided to track this for awhile before posting about it, and have noticed it just about everyday since the new year. Can there be any other explanation than number manipulation?
I think that to mask the new listings that came on in January, they only show the new inventory number at a time of day that people are less likely to notice it. Or could this just be in my head?
Sleepless — doesn’t happen here (Florida). Have you tried comparing, at the same times of day, the number of active listings in realtor.com? If the variations are the same, then there is truly something strange going on. If the variations are nowhere near the same, someone at Property Point is using or misusing the data. But what is the value of that?
As in, qui bono?
Big equipment auction here in Orlando, lots of construction type stuff.
http://www.deancoauction.com/
search for ‘1st Annual February Kissimmee Sale - 4 Big Days ‘ and you should find it. It’s just off the road I live on and I drove by the site on Thursday, I am not an expert in equipment auctions but it looked like a massive amount of stuff to me.
Steel — I read about that in the paper. There is a giant heavy-equipment seller on the north side of I-4, out toward Haines City, that had an incredible amount of equipment (including the highest cherry-pickers you can imagine) on their property when I passed by a few weeks ago. Wonder if those assets are part of the sale. Would seem odd to have two competitors in such a stratified market located so close together.
The internet is amazing, we would have never known what ’s going on outside our own neighborhood, let alone our own city if it were not for blogs like this. Very helpful in a sense.
Here’s the report on the ground from Portland. Have been looking for a house in the inner NE part of Portland since last summer. Sold in June 2005. Things do seem to be sitting longer, especially if they are not a good value to price ratio and many things have been ultimately sold about $20k less than the lowest asking prices. I often grab a flier, and then mark on it the changes as the price gets dropped. That said, I’m not sure the bubble has deflated here. True there are really nice older homes that are well-built and have the lifestyle that goes with neighborhoods that have sidewalks, and a viable business a few blocks away. So the housing prices are going to hold stronger than a cookie cutter subdivision 20 miles outside of town. BUT some of these prices are amazing. I’ve gone through houses bought last year for $400k and then the buyer has put $150 k into it and now they are listing for $879 or prices like that!! It’s amazing. Why are there so few houses in decent shape that haven’t been remodeled to within an inch of their lives, available for prices that existed last year? So prices are still high here. Things sit a bit, and ultimately the price might go down some, but still its looking too expensive for anyone making less than $150k without an huge influx of cash from a previous house sale or other windfall.
On a national level, did you see the NY Times editorial today that talked about a Humpty Dumpty Housing Market. They are not calling a bottom, but did say that there should be help for the buyers hurt by unsavory lenders.
There are really just three numbers that are talked about, and only two of them matter.
The first is the asking (wishing) price. It doesn’t matter in the context of our typical analysis, IMO.
The second is the selling price, the most important of the two that do matter.
The third is the previous selling price(s) — that matters only in historical context, but is interesting nonetheless.
A fair number of newer posters, and almost all of the MSM reporters, focus on the wishing prices as if they matter at all at this stage of the bust. They don’t. Askin’ ain’t gettin’, and the spread is gettin’ worse.
Inventory, per Zip Realty:
TAMPA
01/21/07 59,865
02/17/07 62,274
MIAMI/FTL
01/21/07 103,131
02/17/07 108,591
ORLANDO
01/21/07 32,341
02/17/07 34,093
PHILA
01/21/07 32,698
02/17/07 32,611
ATLANTA
01/21/07 57,620
02/17/07 60,844
BOSTON
01/21/07 42,170
02/17/07 42,828
BALT.
01/21/07 46,025
02/17/07 45,708
wow! Florida is going to deliver more bad news soon. Miami inventory up 4 or 5% within one month to a whopping 108,591! Miami is toast. It’s 81 years later than that last bubble.
Not often that the homoaners are toastier than the weather, this time of year in Florida.
Eureka, Humboldt county (California)
4,500 sq ft, 5/3
Orig. price $828,000
Current price $705,000 (last 72 hours)
DOM 520
Getting into too much of a blow-by-blow here tonight, but that price drop is only about 15%, after almost a year and a half on the market. That seller missed the train and probably will continue to do so.
I might pay that for a pretty new, top-quality-finish house on a decent-size lot with a great view, but I suspect that is not what you’re describing.
Petrolia is quite remote. I guess nice for a summer cabin. Now only $274274.
Wikipedia: population of 300-500 people. “There are only two roads that lead into Petrolia, one from the north from Ferndale and one from the south from Honeydew. Both are very windy, steep and sometimes unpaved roads.”
Yeah. I can vouch for the unpaved. Comes as a surprise.
Uptick
Petrolia, CA
Price: $274,274
ZESTIMATE: $212,423
Sale history: 11/03/1999 for $24,000
Square Ft: 886
Year Built: 1954
Condition: Average
Lot: .96 acres
Sounds like a “Real Home of Genius” to me.
Sarasota-Bradenton inventory at an all-time high with about a 2 1/2 year supply. It seems Realtor’s are contacting the local newspapers and trying to talk up the market by saying traffic has picked up and using urgency tactics (ie. get in now before all the good “deals” are gone). In driving around, there are more For Sale signs than ever yet sellers are still pricing like it was 2005-2006 in many cases. Big pricing disparities in some communities on the same model house yet the lowest priced is still sitting. A client of mine is a Realtor and his words from Friday were “the local market is moribund…”.
’nuff said….
You could do that local market a favor by sending a letter to the editor showing asking and selling prices for a number of properties that sold recently. The pros won’t do it and it’s no longer in the papers’ interest to suppress it. The residents there who don’t surf the NEt will be eager to know this. You can be the local hero for a day, not said facetiously.
Denver, CO 80212
A little foreclosure news in our hood. We live in North Denver (Highlands) and there have always been a lot of turnover in the last 10 years. However, I can currently describe the situation as a lot of wannabe turnover as the market appears to be stalled. Today the porta storage truck drove up to a house a few doors down, unloaded the storage cubes, and the workers to empty the house. The sheriff delivered the notice to vacate and the dance was on. This house was remodeled a few years ago (HELOC’d to the gills, no doubt) and is a great place. I’d guess that during the peak it was ~$500k. The former state representative who owned the house is out and it sits empty tonight.
There are 2 houses across the street from us that have been for sale for 12 and 6 months. They haven’t seen any action as near as I can tell. I would guess that now that the foreclosure has happened, they are screwed.
One of the most interesting things to me about this foreclosure is that it happened to a state representative. I’m not of the belief that government officials are particularly (more) intelligent. However, they should generally have some clue as to what is going on. This guy wasn’t J6P. Apparently, that didn’t make any difference to macroeconomics or the sheriff.
Was in Aspen the last week - No end in sight for condos.
They are everywhere. The Aspen Snowmass area has 5-7 condo towers going up right now. There are several condo towers going up in Aspen also…
One of our neighbors has had his house on the market for the last two and a half years. It was under contract on five separate occasions. Finally it looks like this last one might actually pull it off. The NAR statistics would show this house to have sold five times in that two years, no? Could this be happeneing in more instances in other markets? If so, the inventories are much higher than reported, with fewer actual sales. Realtors are simply juggling more and more properties.
“The NAR statistics would show this house to have sold five times in that two years, no?”
The NAR reports only actual closings.
I think Wait for the fall is right. Not totally sure though.
I do know that Dataquack counts a foreclosure sale back to the bank as a sale.
At least in the Chicago area, NAR/IAR/CAR stats include only transactions marked as closed by an agent in the MLS. A house under contract gets market as contingent until the deal falls through (marked as back-on-the-market), it closes (marked as closed), cancelled, expired, and any other possibility I have missed.
The statistics (and I have knowledge about the Chicago area) don’t include foreclosures, FSBO transactions, estate transfers, etc - only what goes through the MLS. They track FSBO listings, my guess is so their agents can use it as a marketing tool, but either aren’t smart enough to tract the eventual transactions or don’t want to. My guess is that they don’t want to, because that would mean their agents seeing them when preparing their CMAs for clients. Twice a month, for free, you can download a raw text file with all the transactions recorded in the county - it would be simple for the Realtor people to compare their data and add the missing stuff to the database, but it’s not happening.
Best place to try first is the local tax appraiser / tax assessor office. Property tax records are not only public information, they are available online in most areas as far as I know. There you can look up who paid what and when. Some offices, naturally, are better than others in keeping records up to date, but even in the sleepy South, I find records are no older than 90 days.
If you’re a real vulture (used to be bargain-hunter, but now we get to be vultures), in most places liens are also public information, but you often have to go to the courthouse and pay $0.50 - $2.00 a page to have it printed out. Knowing what the seller has borrowed against the house that you plan to offer on can save you a ton of time and, in the best of circumstances, a ton of money. Well worth it, IMO. Take a good joke or two and flirt with the ladies in the courthouse office, if you’re in the South. It’s the culture here and if you don’t sound too much like a Yankee, they’ll be as helpful as possible.
From Arcata California:
The house I’m renting (I sold mine in ‘04), has been on the market for almost a year. The price has dropped from $636k to $589k. There seemed to be a burst of lookers late Jan into early Feb. But no takers. The landlord and fellow investors are getting despate. When I refused to let realators in to show the house on the weekends (Ca. Civil Code 1954 states that the landlord may have access to show the house but only during resonable hours which is stated to be normal business hours, M-F, 9-5, NOT WEEKENDS) one idiot actually called me and threatened me with a 30 day eviction notice. Now keep in mind, when the house your renting is up for sale (under CA law anyway) you are subject to the 30 ecivtion notice at any time. I told the guy to put it in writing and we are not going to show the house except M-F, 9 to 5!
I know they need the money (my rent) and the threat was hollow. Moreover, the market here is flat with tons of inventory.
Since that day the landlord has called and aplogized. But we are still not letting the realators in on the weekends!
I’ve never thought this strategy makes sense for a seller. I’ve got 3 rentals now, but I would not show them with tenants.
I’ve sold two houses in my life so far - and both times I cleaned all my junk out, and moved to a temporary location so that it was clean and ready to show 24/7. I didn’t want any impediment to a Realtor opening the lockbox and showing it!
Putting renters into a house you want to sell, just turns off the buyers and creates too many avenues for trouble.
I have a few renter occupied for sale home horror stories. I was the one looking to purchase. Most tenants don’t care, period. Therefore, when it is time to show, you literally walk into the tenants “life” without ANY effort in clean-up.
The Kansas City Star, front page:
Prices reel from robust to bust
•Last year, the average resale price of existing homes declined in almost half — 44 percent — of almost 100 ZIP codes tracked by The Star in the six-county area.
•Housing appreciation didn’t even keep up with inflation in more than two-thirds of all ZIP codes last year. By contrast, prices rose faster than inflation in more than three-quarters of ZIP codes in 2005.
•Only 10 percent of all ZIP codes experienced a double-digit jump in average resale price last year after 40 percent of ZIP codes achieved that in 2005.
The housing-price misery rippled across the city and suburbs last year.
Kansas City’s Country Club Plaza-Loose Park area plunged 17 percent. Platte County’s Tiffany Springs area was down 9 percent. The Southland’s Hickman Mills section was off 7 percent. Even Johnson County’s 66208, encompassing Mission Hills and part of Prairie Village, declined 2 percent.
http://www.kansascity.com/mld/kansascity/16724478.htm
I know all about the 66208 decline. Previously it was considered a prime zip code, but it took us 13 tortuous months to sell our house there.
Background: I’m a workers’ compensation claims examiner in California. My account is mainly in the Bay Area, but the office handles claims all over the state.
Lately, there has been a major uptick in requests for lump sum permanent disability advances/commutations and offers to buy out future medical rights on my desk. I mentioned it at lunch with some coworkers last week and again at a friend’s party last night; they are also seeing it. In the case of commutations (which happens when there has been an award, PD is still being paid out for a set period and which must be approved by the judge who signed the award), the supporting documentation is almost always housing related now — one of mine was for delinquent property taxes and two others for NODs. The other examiners are seeing the same thing, housing caused money crunch as justification. In the buy outs, we can’t tell what caused the offers to be made.
So, in a very unscientific study of claims examiners, there seems to be an uptick of FBs raiding their WC claims to hold on a bit longer.
Also, all of the sudden, we are getting requests from various mortgage lenders for verification of disability income. The scariest one I’ve seen only needed verification for one year going forward, most are looking for three years. This is also a fairly new thing — no one has cared about verifying disability income the last couple years.
Side note: At last night’s party, I was the victim of realtor pounce. I mentioned that my roommate and I were looking for a new rental and, all of the sudden, I had a new best friend. She did lay off when I said I wasn’t interested, but I got to hear how it was a buyer’s market and ‘the selection will never be better!’ It was rather funny to get major financial advice from someone who was quite drunk.
“I was the victim of realtor pounce.”
Same thing happened to me after I was displaced due to a fire in my building over the holidays. When I was frantically calling around to find another place to rent, one of the realtors I spoke to started telling me what a great time it was to buy. This being Florida, I told him that it wouldn’t be a good time to buy until the insurance issue was handled and prices reverted to 2000. He laughed and actually agreed with me.
“….the supporting documentation is almost always housing related now …housing caused money crunch as justification.”
I must be missing something. What bearing does housing (affordability) have on requesting worker’s comp? Isn’t worker’s comp solely to replace income lost as a result of injury at work?
I would presume these are open disability claims. The recipients have decided to take their remaining disability as a lump sum payout. Ya know, kinda like one’s choice with the lottery…
I would presume so as well. But as part of laying out their case to get a lump sum payout, they’re stating an inability to make house related payments as a reason to get the payout, no?
I wouldn’t think payout would depend on anything but expenses related to the original claim.
Ah, sorry, I was unclear. Normally you’re right. An injured worker receives an award for a certain percentage of permanent disability, which is paid out over a number of weeks at a set rate. For example, 25% PD for a 2005 date of injury = $220.00/week for 100.75 weeks, totalling $22,165.00.
That’s how it usually goes, but, under Labor Code 5100, a judge may order a lump sum payment if there is a prior finding of PD and it is found to be in the IW’s best interest to issue the payment. The judge cannot award additional disability based upon hardship, but he can force any/all remaining disability be paid immediately. Of course, the IW has to demonstrate genuine hardship before the judge will sign that order. Anything that goes to the judge has to come to us as well, so we know the mortgage of $3200/month is 90 days past due or the taxes haven’t been paid since 6/2004.
What’s really sad is that a couple of mine are working and are still this over their heads. People have made some stupid financial decisions.
For the record, judges do insist on genuine hardship — a couple years ago, one of my coworker’s IW’s tried to get a couple thousand so she could give her ‘children the Christmas they deserve’. The judge denied it and sent a nasty letter stating that she was trying to abuse the system, toys are not a valid hardship and that “she should consider the true severity of her situation before filing frivolous petitions which waste the court’s time.”
Yes, it was passed around the office. That judge was our hero for some time.
Thanks for clarifying, Ren. And I suppose that it makes sense considering they can’t work.
Seems like they’re delaying the inevitable.
See, that’s the thing, most people with permanent disability return to work. A finding of 100% PD is pretty uncommon (total blindness, quadraplegics, severe psychiatric damage, that sort of thing). So most people get their payments while working their pre-injury job or at a permanent modified position. This means they’re raiding their comp claims despite having their normal income.
Delaying the inevitable indeed.
So they’re getting worker’s comp, income and still can’t afford house payments?
Now I’m getting p!ssed.
Bingo. $600-$900 extra a month (depending on date of injury and level of disability) on top of their earned income and still not paying their bills. Course, if your dancing man Option Arm just went up $2000 a month, you’re screwed no matter what.
Ren — your occupation and knowledge offer a “specialty” we haven’t previously had on Ben’s blog, as best I recall. Though specialized, it is big-time pertinent. I hope you will continue to provide updates to us on your office experiences as they relate, directly or indirectly, to the housing bubble and bust. Thanks for your posts.
Glad to share. Up until the last couple months, I haven’t really seen anything on my desk worth contributing, but there has been a definite upswing since Christmas (one last round of gift shopping the FBs couldn’t HELOC their way out of?). I’m keeping my eyes open, though, esp. now that I’ve noticed the trend.
From Phoenix:
A small area of my subdivision was built recently (2004), 12 homes in total. 4 had for-sale signs late last year. That went down to 1 during the holidays. Just noticed the other day, all 4 are back up.
The one that stayed up is an obvious flip-turned-flop; there’s no landscaping out front, just a dirt lot. In fact, somebody was out raking it yesterday (I didn’t have the heart to say anything).
They’re asking around $500-$600k (last I checked) in a $400k area (non-bubble, it’d be $250k). Oh, and one of the 12 sold last year for $430k. But I’m sure the 4 remaining homes are “different”.
In Miami Beach prices seem to keep going up slightly. I have been watching specific areas very closely and noticed that a number of units that were on the market for over a year with dropping asking prices all of a sudden sold for much more than the asking price. In the building I rent , one unit last monht that was on the market for over a year sold for 100K over the asking price and far higher than any of the comps. Last week I noticed that 2 units that had been on the market for over a year, one for over 2 years. The asking prices had gone down over this period to 279K from 350K and now are listed for 425K each. The units have different owners but the same realtor. I emailed the realtor and asked why he thought these units that did not have any view would sell for 425K when even the penthouse does not sell for that amount. He sent me an email back in caps asking me who I was and why I was contacting him. I smell fraud and have called the local FBI. Will wait and see and if these units go into pending sale, I will contact them again. The seller obviously will receive 146K back from the buyer and the unit will eventually foreclose. If nothing gets done I guess this indicates that the government could care less.
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Jeff — good instincts. Sounds like strong potential for fraud to me, too. Keep at it — report the possible perps to the FBI or, if they’re not interested, to Paladin. Not an original thought, but I think that the magnitude of fraud that has pervaded this Fed-induced loose market will astound the public.
Jeff, your local FBI office is really busy and until the possible fraud you’ve uncovered is proven to have crossed state lines they will probably not get involved. You should follow up with your county investigators as this would be, at the most basic form, a county-level fraud case. If your county guys find something they would be the ones with the ability to bump it up to the FBI or state investigators.
I’ve worked with some federal law enforcement people and sometimes things come their way that they can’t do anything about until it follows the proper channels up to them. If you really have evidence of fraud, you should start locally and only work your way up if they aren’t interested in doing anything about it.
My wife (not an economist, finance or real estate specialist) just commented out of the blue that “there are a lot more homes for rent in our neighborhood now” (SD 92127 zip code). I suspect that rental signs are replacing last year’s For Sale signs on places where the market is unwilling or unable to pay sellers’ wishing prices. We just saw one this weekend that rents for what we are paying but is 270 sq ft larger and has a pool and AC (ours has neither of these luxury items). So it sounds like we may be able to rent a place with a back yard pool soon with no rent increase. Awesome!
From the Connecticut Post (Feb. 18):
Developers just finished the ‘Renaissance tower’ a 17-story residential complex for over 60 million dollars in tiny Shelton, CT.
The building is about six weeks from being totally enclosed. Once finished, it will feature 42 luxury condominiums, which will average 2,260 square feet and sell between $690,000 and $990,000. So far, 3 units have been sold. 126 other apartments, with square footage between 1,650 and 2,260 square feet, will be rented out for something between $1,600 and $3,000 a month.They expect the condos will sell well among ‘empty nesters’ that like to live in an area with some activity.
For the full article see
http://www.connpost.com/localnews/ci_5253738
So developing still gowing strong… even in way-out Shelton!
But i can tell you, if I had $900,000 I would not be so stupid to buy a freaking condo in Shelton. A big house in Westport or Greenwhich would come to mind. See how that story will end…
If you (logically) assume that the cheapest for-sale unit at 2,260 sq.ft. sells for $690,000 and rents for $3,000/mo., the owners likely have 50% negative cash flow. And that’s assuming that tiny Shelton, CT has renters willing to pay $3K/mo. (Didn’t happen here in sunny Florida, I can tell you).
“Shelton-math” is not going to work there. What would deter me from renting in the condo, unless I didn’t care about the duration of my stay, is that the owners/HOA could go under early on and maintenance would cease, more bad news would ensue, etc. Much better to rent in a place that is not so lopsidedly out of whack in the accounting/finance end of the continuing operation, IMO.
Some anecdotal evidence from Phoenix. Had a discussion with a relative yesterday that went something like this.
Background: My relative is married and in her late 50’s, has had their house on the market for 10 months because of her husband’s job relocation to Portland. The house was originally listed at $730K. It’s now listed for $630K. They bought it for $298K in 1999 and they have a $200K mortgage.
Me: “So, have you sold your house yet?”
Her: “No, these buyers are ridiculous.”
Me: “Have you gotten any offers?”
Her: “One, but it was insulting, so we turned them down.”
At this point, I logged on to zillow.com and showed her the current valuation of $575K, and how it had peaked about a year ago at around $650K.
Me: “What was the offer for?”
Her: “$580K. We countered at $610K and they walked away.”
Me: “Too bad, sounds like $580 was a good offer.” (I bet their realtor, who is also my cousin, begged her to take it.)
Her: “No way. They would have wanted another $10K in repairs, too. They try to bleed you dry.” (At this point, I thought to myself, “You’re worrying about $10K when you had $250K cash in your hand, after expenses…okay…)
Me: “So what are you going to do now?”
Her: “Hold out for $630 because it’s worth at least that much. There aren’t very many single-story homes in our neighborhood, plus we keep our home up much better than the guy across the street who sold his for $680 last year.” (I guess single-story homes are desirable. Also note denial that the market has changed in the past year.)
Me: “But the market is telling you it’s worth less than that.”
Her: “But you don’t understand, we need at least that much to get into the house we want in Portland, unless we want to live in a run-down dump.” (Apparently, $580K will only buy you a run-down dump in Portland.)
Me: “But aren’t you guys getting ready to retire?”
Her: “Exactly, and this was supposed to be our retirement money.”
It got more irrational after this, so I’ll cut it off here. We talked for about a half hour, until I determined my comments were falling on deaf ears. I could hardly believe what I was hearing. Here was a normally rational, educated person, being so emotional and irrational about the biggest single financial decision of her life. It occurred to me on the drive home, that is was a wonderful allegory to illustrate the pitfalls of the following topics so often discussed here:
(1) Greed
(2) Lagging the market down
(3) Foolishness and lack of planning for retirement
(4) Having unrealistically high standards
(5) Denial, denial, denial about what the market is telling them.
–Chet
RE: Mortgage fraud: I would like to not believe it, but I do. Some people will do most anything nowadays. Ralph Roberts is quoted in the 2007 edition of the Swanepoel Trends Report by saying that more and more people are being sent to jail on charges of bank fraud and conspiracy to commit mortgage fraud. This is a major concern to me. Do you think this trend will be more prevalent in the following years to come?