“You Don’t Have To Like The Price Cut To Accept It”
The Pioneer Press reports from Minnesota. “Welcome to an ultra-competitive spring housing market. Motivated sellers are cutting prices. Axing in some cases. And that new willingness to move the product marks the end of last year’s stare-down between buyer and seller, and could spell a sharper falloff in area home prices over the next year.”
“Chuck Eckberg was stunned when his clients last week announced they wanted to drop the $419,000 price on their house by $20,000. Price reductions are something sellers typically resist like a colonoscopy. ‘I didn’t think we needed to reduce at all,’ said Eckberg. ‘They’re trying to beat other sellers to the punch because they don’t want to suffer through anything they saw, or many experienced, last year.’”
“Serious price reductions that typically don’t start until closer to the July 4 make-it-or-break-it point, are happening now, Eckberg said. ‘I think people are finally saying ‘I get it,’ said broker Steve Hyland.”
“Part of it is a plethora of offerings to choose from. For-sale listings around the Twin Cities have swelled again to 28,362. And that doesn’t capture all the empty newly built homes around.”
“Susan Thacker will be singing if her house just sells. (She) and her husband first listed the house in December for $990,940 after months of extensive improvements. Three price reductions later they’re asking $862,000. They just want to move to their new house, Thacker said.”
“The cuts were tough, but necessary, Thacker said, even though the house is paid off.”
“‘We had a sense from everything we’ve read and watched on TV, and seen on the Internet, that the real estate market was as it is - just very, very sluggish,’ she said. ‘You don’t have to like the reality of price cuts to accept it.’”
“It’s a similar story in West St. Paul. Jean Wirsig, a retired math professor, has been trying to sell her two bedroom, two bath condo since she listed it at $178,900 in 2005. She cut the price another $1,000 last week to $154,000, a deal, said her agent, Mary Farrelly, given its impeccable condition, wooded location and spot high atop one of West St. Paul’s Signal Hills.”
“‘People don’t even come to look,’ said Wirsig.”
“It’s not just homeowners grappling with the slow market. Lenders, trying to minimize their losses on foreclosed houses they’ve repossessed, appear more willing to cut prices too, agents say. Craig Murphy, an agent who deals exclusively with lenders and foreclosures, agreed that lenders are starting to price their foreclosures more realistically from go. ‘We’re seeing the prices come down pretty good,’ said Murphy. ‘It just takes time for them to come to grips.’”
“Anna Green has had her St. Francis house on the market for six months. She keeps an eye on other for-sale signs in the neighborhood, she said, and notices when ‘reduced’ signs appear. So the Greens reduced their $425,000 original price. And reduced. By early March, they were at $400,000. ‘That’s kind of the frame of mind of the buyers, of waiting for things to be reduced,’ said Green.”
“She and her husband, who works in construction, designed it together. He built it himself. They need the money, Green said. Her husband’s construction work has become too sporadic.”
“‘We’re hoping with the nice weather coming back it will start picking up,’ said Green. ‘It’s one of those things, keeping your fingers crossed and hoping for the best.’”
The Journal Sentinel from Wisconsin. “Wisconsinites have paid dearly for the wild success of the quick-but-costly subprime loan trade. Homeowners across the state took on $1.6 billion in subprime loans in 2005 alone, the most recent year for which figures are available.”
“Those loans accounted for nearly 21% of the state’s mortgage market and a stunning 34% of Milwaukee County’s, federal Home Mortgage Disclosure Act records show.”
“This state is now 11th worst in the nation on loan defaults, based on its fourth-quarter 2006 foreclosure rate of 1.46%, the Mortgage Bankers Association reported. Legal actions to seize property for unpaid debt surged 34% last year and are running 27% higher in this year’s first two months, according to ForeclosuresWI.com.”
“‘We’re seeing the fallout from the inappropriate loans of ‘05 and ‘06,’ said Todd G. Clausen, after mapping the numbers attached to all those broken dreams. ‘I think that’s what the big increase in foreclosures is all about - adjustable-rate mortgages, high interest rates, high fees,’ Clausen said. “I don’t think people realized just how high their payments would go.’”
“The Wisconsin Department of Financial Institutions records show 112 consumer complaints as of mid-March, compared with 358 in all of 2006. ‘Some people say, ‘They should have never made me this loan,’ said Michael J. Mach, the department’s banking division administrator. ‘Some say, ‘I didn’t understand what I was getting.’”
“Milwaukee homeowner Scott A. Schlipp counts himself as one who escaped. In seeking to consolidate the mortgage with some credit card debt, he turned to one of the nation’s top-volume subprime lenders.”
“‘I said, ‘I don’t care what you charge me, I only care what I owe each month, and I don’t want my payments to change,’ Schlipp said. ‘They offered me a 4.75 percent rate, without an appraisal, all over the phone. But they lied. When I got the papers, I checked the APR (annual percentage rate) and found it was variable. The range was from that low all the way to 18 percent. And I’m like, ‘I’m not signing this.’”
“Schlipp said he has lived happily ever after, on a 6% fixed-rate loan from another lender. ‘I laughed when I read they shut down here,’ he said. ‘They were definitely trying to pull something.’”
The Quad Cities Online from Illinois. “Mortgage foreclosures spiked in Rock Island County and inched upward in Scott County in 2006, and are on track for another barn burner if all else stays equal, court records indicate.”
“Rock Island attorney Bruce Buckrop said he has definitely seen a rise in the number of his clients facing financial difficulty because of adjustable rate mortgages. Some borrowers are wooed into an adjustable interest rate by an attractive low starting rate of 5 percent interest that increases six months later to 8 percent and then 11 percent, he said.”
“An 11 percent mortgage rate is ‘a killer rate’ that can take a $400 a month house payment to $950, Mr. Buckrop said.”
“‘I don’t know if we’ve seen the worst of it,’ said Brian Boyles, president of real estate lending for American Bank & Trust Co., Davenport.”
From Chicago Business in Illinois. “With inventory stacking up and few buyers in sight, home sellers are starting to sweeten the deal in the hope of enticing casual house hunters into signing on the dotted line. ‘We all need buyers quite a bit,’ says Tom Gilfillan, a northwest suburban agent.”
“‘I’m telling all of my sellers, give me six months,’ says Barbara Floyd, (an) agent who’s sold real estate in Chicago for more than 20 years. ‘It’s taking longer to sell. You can’t sugarcoat it.’”
“With homes languishing on the market for an average of 131 days, the supply of homes for sale in Cook County as of last week had risen 38% from last year to 43,339, according to the MLS of Northern Illinois.”
“The oversupply situation isn’t lost on those few buyers out there, says Carl Tannenbaum, chief economist at LaSalle Bank in Chicago. The result: a game of chicken.”
“‘If buyers sense that there are going to be bargains out there, and a lot of sellers are very reluctant to lower (prices)…the result of that is the waiting game,’ he says.”
‘Michigan’s above-average reliance on risky subprime mortgages is inflaming the state’s real-estate downturn. About 44,000 of the state’s subprime loans — or 21% of the total of 210,000 — were delinquent at the end of last year. That was almost three times the state’s overall mortgage delinquency rate, which itself ranked among the highest in the nation.’
‘Illinois sales were still 12.1 percent below the 10,007 homes sold in February 2006. In the Chicago area, which includes DuPage and Will counties, home sales totaled 5,885 in February 2007, down 13.5 percent from 6,807 home sales in the same month last year.’
Hard to get all the numbers here, but Cook County Listings were 43,000+
Dupage + Will + Cook county Transactions = 5,885.
Does anyone know how/where to find The total listings in Dupage and Will counties?
There has to be at least 10 months of Inventory, maybe 11.
Wow.
Here’s Dupage…
http://www.realtor.com/Chicago/nbregion11.asp?poe%3Drealtor&poe=realtor
This is for Will & Kankakee…
http://www.realtor.com/Chicago/nbregion13.asp?poe%3Drealtor&poe=realtor
That adds another 19000+ to the Cook #’s
I just think those Realtor.com numbers are fruity. Regardless I think their DuPage #, of just under 10k, is probably close enough to “eyeball it”.
So Cook + Dupage = 54,000 listings
Cook + Dupage + Will= 5,885 sales.
So Chicagoland you are looking at 10 months of supply, easily. Can’t wait to see what happens in the April/May #s.
I agree the Realtor.com #’s are suspect but they atleast give a reference point.
I think it’s safe to say supply is 10-12 months.
MLSNI listings of single family detached + attached:
Cook: 48195
DuPage: 9428
Lake: 7099
Will: 7008
Kankakee: 543
You have to keep in mind, however, that there is a competing MLS in the Chicago area. It’s called MAP MLS and they’ve agreed to merge with MLSNI, but that hasn’t happened yet. Most of the listings that MAP has are duplicated in MLSNI, but MAP does have a pretty good number of unique listings in the older suburbs, especially on the north and northwest side.
I have access to the MLSNI database, so if you have any questions post them here and I can try to answer.
Thanks Brian
You’re welcome!
BTW, here’s some stats that everyone might find interesting:
Actual sales from March 1-26 for Cook County:
Detached homes:
2BR or less - 132 sold, average sale price $220k, average time on market 109 days
3BR - 707 sold, $292k, 120 days
4BR - 385 sold, $463k, 155 days
5+BR - 152 sold, $921k, 185 days
Attached homes (condos, townhouses, lofts, etc)
2BR or less - 1329 sold, $260k, 137 days
3BR - 362 sold, $419k, 150 days
4BR - 38 sold, $672k, 120 days
5BR - 1 sold, $2.25mil, 1041 days
Same period 2006
Detached
2BR or less - 223 sold, $208k, 67 days
3BR - 1047 sold, $260k, 74 days
4BR - 514 sold, $416k. 94 days
5+BR - 200 sold, $687k, 129 days
Attached:
2BR or less - 1754 sold, $251k, 63 days
3BR - 435 sold, $360k, 101 days
4BR - 28 sold, $453k, 103 days
5+BR - 6 sold, $1.9mil, 185 days
My husband and I are one of those buyers waiting..I bet we can wait longer than most of the sellers out there in Wheaton. Right now I am just waiting, saving and watching (I have very specific searching criteria in MLS, stock a month ago was 60 houses, now 76 houses…). I am tired of seeing a house, go to see the history and most of them were bought from 2000 to 2004 and now they ask from 100k to 200k more…wtf!! I am not going to pay those prices, there is nothing to justify those prices (unless they can show me updates and renovations accounting those amounts). Next year when we will start with lowball offers, I will make them taking into account more rational appreciations (and they can sove…their greedy prices)
rant off
It’s seems the prices are still going up but as long as the sales continue to fall and the inventory builds that won’t last long.
Brian, can anyone register for the MLSNI?
No, you must be a member of one of the Realtor associations in the area, and pay a lot of money.
curses!
Brian –
Interesting data. To me it looks like the “move-up” market is tanking, but there’s still enough demand amongst first-time buyers to drive the starter home market up. (though the decline in absolute numbers of sales argues against this… maybe we’re starting to see the sub-prime implosion hit the first-timers…)
It’s sort of difficult to get an idea of what’s going on. As we enter the final week of the month, it looks like Cook County is on pace to record about 3300-3500 sales, which would indicate a supply of approximately 13 months (?). While sales are down, the average (not median) price is up in all categories. As far as I know, there were no large-scale luxury condo deliveries in March. Mid to Late summer should see a LOT of closed sales at high prices - a bunch of larger condos in the South Loop are finishing up construction.
Or maybe things are mostly selling in the best areas that always command higher prices. Maybe buyers are only taking the best of the best so the numbers look higher but that is because you are comparing apples to apples and oranges.
I agree that the numbers seem to make little sense. Maybe the OFHEO index or Case Shiller index would provide an additional data point.
Keep holdin’ out NAM. The prices are going to come down. There’s nothing underpinning the lofty numbers.
As I said in another post under another thread, Cook County has experienced a net loss of 88,000 people since 2001. That does not bode well for the area’s housing market. I guess developers think that fewer people are going to buy more real estate!?
Apparently, people are starting to leave DuPage as well. Few newcomers can afford houses that escalated in price by $75K-$100/yr. each year from 2004-2006. Few want to pay $8 - $12K in property taxes each year, either. I hope for your sake that prices do fall and that you’ll buy into Wheaton when the climate is good. It’s a wonderful commuter town.
In the meantime, if you want something to do, I suggest you go out for a drive early on a Sunday morning. Check out downtown Chicago by the river and Near South to about Cermak (22nd). There are condo towers going up all over. Must be 12-18 of them. Amazing, really, considering that there’s many thousands of unsold condo conversion property all over the city. I’ve a 12-unit right across the street - not one unit has sold in the 15 months it’s been on the market. The $40K price reduction/unit put in place four months ago has yet to snag any buyers.
What IS interesting lately is the near total absence of new tear-downs/McMansion projects in Chicago proper, at least north of North Avenue and east of Pulaski. A year ago, they were ubiqutious. As of late, it appears that a fair number of individual homeowners have downed some strong coffee and decided to delay or stop construction. Or perhaps have run out of money and financing. That tends to awaken people, too.
What’s it like in DuPage? Still a new McMansion on every block?
Yes, still McMansion territory for the new construction. The styles are horrible, and the energy bill must be gigantic. I hope the easy credit stops so they cannot build more McMansion in downtown Naperville.
Ah yes, that seasonal spike in salaries ..
Susan Thacker will be singing if her house just sells. (She) and her husband first listed the house in December for $990,940 after months of extensive improvements. Three price reductions later they’re asking $862,000.
These markdowns are irrelevant without knowing what they paid for the place, whwen they bought it, sizeof the house, etc…. Heck, I could put my house on the market today for $990K, then cry, “boo-hoo,” if I have to mark it down to $862K. Oh, sure, it’s 2000sf, I bought it in 2002 for $250K, but it’s got GRANITE. Hate to take that $125K loss there.
You forgot to add the part that she just wants to move into her house on Summit Avenue. Bwahahaha. That might be the most expensive street in St. Paul. So they have another huge mortgage awaiting them.
Clouseau and I have discussed this before. Summit Avenue is a beautiful street of Victorian mansions in St. Paul. They probably bought something for a minimum $1.5 million.
Actually, the article states that the house they’re trying to sell is already paid for. So at worst, these people temporarily have one mortgage on the new house, which they expect to pay off (or at least a large part of it) when they sell the old house.
But this is demonstrating what most people suspected would happen: The sellers who are making the big price cuts are the people who can afford to do so. Theirs will be the only houses that are selling, and they will pull the median down.
These sellers tout their reductions like they’re giving money away, when realistically, the initial price was just part of their deluded fantasy. I would guess they still have a long way to go on their price cuts.
Bear, I saw a couple of former neighbors who fit your description to a tee. I was out on one of my famous Arizona Slim bike rides when I saw them.
Fortunately, they didn’t see me. I say “fortunately” because I find it hard to hold my tongue about their dual mortgage stupidity.
LOL. They’re hard to miss actually, as they’ve shown up in just about every neighborhood across this country.
“It’s a similar story in West St. Paul. Jean Wirsig, a retired math professor, has been trying to sell her two bedroom, two bath condo since she listed it at $178,900 in 2005. She cut the price another $1,000 last week to $154,000, a deal, said her agent,
Good Lord I’ll bet that made headlines!!
“a deal, said her agent, Mary Farrell of Edina Realty, given its impeccable condition, wooded location and spot high atop one of West St. Paul’s Signal Hills.”
This part cracks me up.
Somebody help me here. Where is this wooded area near the Signal Hills? Is that really near the old Signal Hills mall? That area is junk. There is no condo anywhere near that area that could be worth $150,000. This lady has a serious haircut in front of her.
The problem in West St. Paul is that everybody thinks they are in Mendota Heights. Put a fork in it.
Mary Farrell: I see a bus coming!…It must be a bus load of investors that want to buy your home Jean
That $1000 price drop must have done the trick!
Jean Wirsig: No…No that is the bus my neighbor just bought to live in since he is being forclosed on.
Hey now, I live in West St. Paul and like the neighborhood quite a bit.
It’s close to the city, but also quiet, and there are lots of wooded areas around (I live near the Dodge Nature Center).
I looked up this woman’s listing, and the association fee is $293. That is EXTREMELY high for around here. Most associations are about $150.
WOWZERS!!!
A whopping 0.65% drop in the price… That will save me exactly $6 per month on the mortgage payment. I wonder if it’s too late to jump on this deal?
Yup. I beat you to it.
Such a deal I couldn’t pass up. And to live in West St. Paul, no less. I’m getting verklemt.
Seriously, didn’t anyone tell Jean Wirsig, a retired math professor, about the minus sign?
Math professors know all about imaginary numbers.
If she was smart, and dropped it by $5001, she would at least have it priced at $149,999, and would fall into more search criteria, and maybe someone will open the listing email after a 3% price drop. Seeing the $1000 drop won’t influence anything.
From the numbers ($178K 2005, $154K now), it seems she’s been reducing about a thousand a month. I don’t know if that’s fast enough to keep up with the competition (evidently not really, since it hasn’t sold), but just think: in another 13 years her price will be zero!
“Part of it is a plethora of offerings to choose from. For-sale listings around the Twin Cities have swelled again to 28,362. And that doesn’t capture all the empty newly built homes around.”
179,000 new homes (supposedly) are sitting unoccupied, competing with construction already in the pipeline and burgeoning resale inventory. But don’t worry, this will all clear up by the end of 2007… the NAR told me so.
It seems that 1 out of 4 four homes I check out on the internet is empty.
Who gets to eat the lost value of these homes as the sit unoccupied and (presumably) unmaintained? Wouldn’t it be cheaper to just lower the price to a level where they would sell than to let them sit empty and gradually crumble to the ground?
You would think! But then again never under estimate someone’s greed and sense of entitlement when it comes to profit on their beloved home.
‘cept that Granite takes a long time to grumble….lol
Unfortunately, the only market so far that obviously goes down here is North Minneapolis (subprime, blight etc.). But we can wait some years and look happily at the turning market.
Nope. St. Paul and the inner-ring east side suburbs (Maplewood, N. St. Paul, Oakdale) are seeing price declines, too, both in established housing and the newly-built. We’re massively overbuilt on new condos, townhomes, and rowhouses in redeveloped areas and they are having a heckuva time finding any buyers.
Next up for the pricing haircuts will be the outer-ring newly built sprawl-o-ramas north of St. Paul, between Hugo, Centerville, and Forest Lake. It’s absolutely unbelievable, the development going on there. Take a drive up Hwy 61 and gape at all the desperate signs flogging newly-built homes. And they’re breaking ground on yet more huge new developments. Sheesh. Where are all these people supposed to be coming from?
Homoaner, Thanks for the good news. I usually don’t drive around there (like I have to do in North Minneapolis), so I missed it.
“It’s taking longer to sell.”
Not if you list at the right price rather than wishing for the perfect buyer.
What Barbara is saying is “…you can still get your price, it is just taking longer now.”
Real estate agents are still pushing this myth?…
“What Barbara is saying is “…you can still get your price, it is just taking longer now.”
Real estate agents are still pushing this myth?”
Undoubtedly. They’re not the sharpest tools in the shed, and though starving, haven’t made the connection between transactions and income.
Bantering, cut that out! You’re making me laugh in agreement with your posts, and it’s attracting the attention of my over-HELOC-ed neighbors.
Not so, it’s just taking longer…say around 2045.
“With homes languishing on the market for an average of 131 days…”
And that is a BS number to start. When talking to your realtor about any property, you need to ask “was this home listed before and taken off the market? And what about before that? I need the total DOM including previous listing cancellations.”
Otherwise your realtor is lying to you.
A house just down the street was relisted like that. Taken off the market last summer, rented for 9 mos, and relisted last month. It sold surprisingly quickly the second (?) time around. We’ve yet to find out the selling price and whether it was heavily discounted.
The loft I sold to a flipper last year just renewed its MLS number … It’s been on the market since last summer and reduced by 15%. But now it’s got a shiny new MLS number!
This is a great article. Finally people are starting to get it. Of course, we have several more stages of reality to go but this is progress.
This time next year should be SWEET. Not only will people have accepted that we are in a major down market, but the economic recession will be undeniable, and banks will be trying to unload their huge supply of foreclosures as well.
Buying now is suicide. Wait 12 months and then start low-balling. Heck, you’ve waited this long. What’s another 12 months?
Agreed! This thing won’t turn around tomorrow.
If houses could be sold short, next year will still be great to short sell. I do not expect any real buying to occur for a decade.
“Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after an investor has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.”
Great quote, Hoz. Who’s it from?
Jesse Livermore
Livermore sold the stock market short before the crash of 1929, and entered the depression with $100 million in cash.
$100 million in 1930 was what, a gazillion dollars now?
$1.1-$1.2B
Jesse ended up giving most of it back trying to pick the bottom over the next few years. While not completely broke, he did blow his brains out in the men’s room of the Sherry-Netherland hotel a few years later. In a melt down, even smart money (and for a time, Jesse was some of the smartest) gets crushed. It’s part of our natural tendency to underestimete the downside and overestimate the upside. Over the next decade, lots of smart money will get crushed. Be right and sit tight, however long it takes. A year or two ain’t gonna do it.
Reminds me of a cartoon put out by Grant’s Interest Rate Observer from a few years ago showing the average IQ of a bull rising with the market (and then falling with it).
Recent success extrapolated into the future makes people sure they are geniuses and can do no wrong, setting the table for their downfall. The smart money should read “Fooled by Randomness” by Nassim Taleb. In markets, a little humility can go a long way.
People are always convinced that past performance in matters financial, are the way it will go in the future…
To give you an idea of just how hard it is to keep a business concern going…
Name some 19th Century concerns, that are still around?
There’s a few, but not many.
Most of them got blown out with the dawn of the 20th century and our mechanized age.
Things Change
Joe Momma: Right, I have become a one-note poster– besides the ARM-reset peak that happens at the end of 2007, there is a second very broad peak in ARM resets that is due from mid-2010 through most of 2011.
I started looking last summer and IMMEDIATELY pulled back when I started reading the bubble blogs. Now wifey is pushing me to buy, cause the media says it’s such a great time to buy, so many bargains…and I told her, “We’re waiting until next Pring babe, we’ll see some real bargains then”.
Which premium would your wife be willing to pay for renting money instead of a home? Give her the number. By now, you can comfortably assume zero appreciation; maybe it’s already negative where you live.
You don’t HAVE to like an FB getting evicted from their McMansion, you only must ACCEPT it. Lol.
but I like it too, is that so wrong?
Price cuts will affect us all sooner or later. We have a healthy market in our part of South Carolina, but I spoke with the new owner of a house in my neighborhood. Seller wanted out, didn’t want to monkey around and priced about 10% below comps, even though only 2 of 60 houses in the n’hood were on the market. He offered 10K under her asking price, and said he would move on if she didn’t take it (he told me he would have really paid her full asking price because it was exactly the home and location he wanted). She accepted the lowball offer, ended up selling about 30K under comps. Now my home’s value has been affected, too…
Carolina W. Are you in Greenville?
First, you and your pals be warned that my house has a lethal TERMIDOR band around it…
Now, yes, Greenville County, not the city. I will admit only to those on this blog that it is a super-fantastic place. (There you go, palmetto.)
I have been saying for awhile I want to move to South Carolina. Visited there this summer and really liked it. Looked at some tract junk as well as some regular nice homes for sale and liked what I saw. I cannot for the life of me believe what 100K will buy, let alone the 150-200K crowd, if I wanted to go that high. I realize that this is a much different lifestyle than the OC, but heck, Southern Cal was a much different world 22 years ago. Guess as I get older I just want to own something free and clear at a reasonable rate in an area that my kids can play safely in and not be a slave to all kinds of other debt or a HOA/Mello Ruse!
Can: You mentioned in the previous thread: “I am absolutely stunned by what 100 grand will buy in Spartanburg South Carolina. 3 bd 2 bath is all my family needs. Now if I can just get that job to take care of health insurance, utilities, and groceries, I’d be gone in a heartbeat.”
I sold on Keowee 9/2005 after living on the lake for 20 years. Have been renting since and looking for a place in Greenville. IMHO Greenville County is better than Spartanburg County. Maybe Carolina W has an opinion. Crime, I think, is a problem in Spartanburg.
Thought I put OCDan. WTF.
“Susan Thacker will be singing if her house just sells. (She) and her husband first listed the house in December for $990,940 after months of extensive improvements. Three price reductions later they’re asking $862,000. They just want to move to their new house, Thacker said.”
“The cuts were tough, but necessary, Thacker said, even though the house is paid off.”
Financial freedom was within their grasp…
“They just want”….
I’ll tell ya, if I read that phrase one more time, I’ll erp.
All this “wanting”….with no forethought, or planning, or waiting…just…”wanting”. Like a toddler with a toy just beyond his grasp. People want new stuff they cannot even begin to pay for. That mindset is what has driven this whole housing market to the cliff.
Of course, you realize that this mindset is what really makes our consumer economy work. If everybody realized that they didn’t *actually* need big houses, fancy clothes and flashy cars, the whole economy would come to a grinding halt …
Annata, you are so unAmerican. Didn’t you get the decider’s memo about spending after the 9/11 attack? Shame on you for even hinting that people should live within their means and not shop for crap they can’t afford and don’t need to impress people they don’t know or soothe their egos/compulsions. I am calling the shopping police on you right now!
That’s because our economy is based on smoke and mirrors.
Just make a real cut to like, oh I don’t know, 700K and see what happens! If that thing is paid off then a price drop shouldn’t hurt. Heck, even if they paid 700K for it originally, they still break even, but walk off with a 700K check, which isn’t too bad. The greed of these people is insane.
‘It’s one of those things, keeping your fingers crossed and hoping for the best.’
He’s doomed. He forgot his toes.
I’ve got hammertoes so they’re always crossed. But it doesn’t help.
I assume that’s better than being a hammerhead, like some of these people we read about.
OT–the spin is out on the decrease in new home sales…drum roll please…it was the weather!
“Today’s numbers overstate the magnitude of the correction because of the very cold weather,” said Mark Zandi, chief economist of Moody’s Economy.com Inc. “But even accounting for that, it is clear that housing is continuing to fade.”
MarketWatch
http://tinyurl.com/2dxezl
Just wait. March numbers will be in the tank because everyone is sitting at home right now watching college basketball.
‘If buyers sense that there are going to be bargains out there, and a lot of sellers are very reluctant to lower (prices)…the result of that is the waiting game,’ he says.
“Waiting game”? Let’s see, one party has an alligator mortgage which is sinking them deeper into debt every month. The other party is watching from the sidelines as homeowners get bloodier and bloodier.
Who do you think is going to win this, um, “game”?
Right! Like, who’s gonna blink first?
A buyer, with nothing to lose by waiting?
Or a seller, with 2 mortgages, a HELOC, a job selling granite countertops and diminishing assets?
Quite a game, eh?
It’s the “waiting for foreclosure” game.
“Anna Green has had her St. Francis house on the market for six months….They need the money, Green said. Her husband’s construction work has become too sporadic.”
In other words, they’re f’ed either way.
My parents have neighbors in construction. On our side of the property line, we keep things neat -n- tidy. On their side, there’s a dumpster that’s been sitting in the driveway for months, landscaping that’s going to pot, and the busted up remains of a back patio that was jackhammered last summer.
I’ve suggested fast-growing shrubbery as a way of screening this mess out, and, this spring, I think my mother’s going to do just that.
Speaking of those messy neighbors, the theory in the Arizona Slim parental household is that their construction work has become sporadic. Hence, the unkempt look of their property.
i dont have to play chicken, i own completely and own a rental property for college graduates. until people stop going to college, i keep making a little money every year.
Here’s some porn for bubbleistas:
Kass: The Simple Math of Subprime’s Slide
By Doug Kass
Street Insight Contributor
3/26/2007 1:12 PM EDT
It is truly remarkable how the slightest provocation (last week’s “solid” home-sales headline) had the media and other permabullish types declare that the housing market has finally bottomed (again!) and that the impact on the subslime mess would be contained.
Here is a more accurate analysis of what occurred in housing last month:
“Home sales increase in the springtime month over month, every year, even if the world is ending. It’s called “the homebuying season” for a reason. So you don’t look at February vs. January, or April vs. March. No, just like retailers look at Christmas vs. Christmas, not Christmas vs. July, any dummy that follows the housing market looks year over year. Here’s the real numbers, and headline the MSM should have reported: Dubious NAR report shows home sales continue to crater, off 3.7% vs. last year, while unsold inventory explodes by another 763,000 units and median sales price (without incentives) is down 7.6% from peak.
February used-home sales (per the dubious NAR numbers) were supposedly 387,000 units, vs. 402,000 units February 2006, down 3.7%. Inventory is now at 3,748,000, vs. 2,985,000 in February 2006, up 763,000 unwanted homes, or 25.6%. And the median sales price (without cash back or incentives) in February of $212,800 is down $17,400 from the July 2006 peak. (Here is a further analysis that underscores the weakness — not the strength — in the housing market. — Housing Panic Blog
Perusing the historically misguided statements by former Federal Reserve Chairman Greenspan and NAR economist David Lereah that follow suggests almost as much denial as Simmons and Fisher registered 78 years ago — right before the Great Depression roiled the U.S. economy.
Oops!
October 2006: Greenspan foresees a housing “bottom.”
“Last week’s rise in weekly mortgage applications” could signal that “the worst may be over for housing.” — October 2006.
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2006-07: Lereah on the multiple housing “bottoms” and opining on the quality of mortgage lending.
“It was very clear that the standards had deteriorated … I’m not a lender though, I kept on saying to myself — I guess they know what they’re doing. — March 2007.
“It appears we’ve hit bottom, the price drops are necessary to stir sales. It’s working. … It’s important to focus on where the housing market is now — it appears to be stabilizing and comparisons with an unsustainable boom mask the fact that home sales remain historically high.” — December 2006.
“We’ve been anticipating a price correction and now it’s here. The price drop has stopped the bleeding for housing sales. We think the housing market has now hit bottom.” — September 2006.
“This may be the bottom. It (housing) appears May is a little better.” — May 2006.
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1928-29: Simmons and Fisher forecast continued stock market gains in the fool’s paradise prior to The Great Depression of 1929.
“I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.” — E.H.H. Simmons, president, New York Stock Exchange, January 1928
“Stock prices have reached what looks like a permanently high plateau. … The end of the decline of the stock market will probably not be long, only a few more days, at most.” — Dr. Irving Fisher, October 1929 and November 1929
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God, I love porn.
Soft Porn, but porn nonetheless.
Keep provacateuring~
“…Price reductions are something sellers typically resist like a colonoscopy…”
They’ll be begging for a colonoscopy before this is over.
“constipated” is just about the perfect word to describe the housing market right now.
As if knocking 20k off a house selling for 419k - is some big deal
Buyers always have the option to bid below list - these sellers and brokers are still in a time zone back in 2005
There is some home for Americans. At least one American consumer actually bothered to read what exactly he was committing to!
“‘I said, ‘I don’t care what you charge me, I only care what I owe each month, and I don’t want my payments to change,’ Schlipp said. ‘They offered me a 4.75 percent rate, without an appraisal, all over the phone. But they lied. When I got the papers, I checked the APR (annual percentage rate) and found it was variable. The range was from that low all the way to 18 percent. And I’m like, ‘I’m not signing this.’”
home = hope
I worked in banks in the late 70s/early 80s and what our local market did was housing was booming, more so than anywhere in Canada. We had a ton of low down payment home purchases, and then interest rates more than doubled.
People tried to keep their homes, but many ended up just walking away. These kinds of loans aren’t permitted in Canada without paying insurance on them, I guess because of the devastation of that housing boom and crash. Lots of banks lost lots of money. Now, for a 5% down home payment you have to pay a flat 2.5% insurance premium. I think even at 20% down you have to pay 1%, although most arrange other financing for that other 5% rather than pay that insurance fee.
But, when this happened before mortgage rates were in the 10% range through the housing boom and went to 20%. Well, a 3.5% loan rate going up 1% will increase payments about 30% whereas if the rates are at 10% when you borrow a 1% increase will only increase payments by 10%.
I have 4.4% up for renewal in 18 months. I think rates are about 6% now. That’s 36% more interest. That’s an extra $250/month or 7 more years of paying back mortgage…
Funny, I asked my husband, who has no number sense what so ever, if he felt stressed financially. He said, “Why would I be stressed financially?”