Back In The Thick Of Things, Just At A Lower Price
The Missoulian reports from Montana. “Some of my Missoula neighbors and I have been spending time out in the street lately, gathering to marvel, pontificate and puzzle over the small, vacant house on our block up for sale for the second time in less than six months.”
“The asking price for this circa-1940 house with about 950 square feet above ground is well over $400,000. It’s astounding to those of us living in similar and possibly better houses nearby. It’s all the more stunning because this same house sold in early winter for $100,000 less.”
“We all know western Montana housing prices are trending skyward, but this is crazy. Flipping crazy, more like it.”
“Of greater concern locally is the reality that people seeking quick profits help bid up the price of housing. When people seeking to maximize their investment gains shop for second or third houses, families seeking the American Dream of owning a home wind up in a bidding war. It’s a war the average Missoulian is losing.”
The Idaho Statesman. “The median price of an Ada County home has fallen for the first time since the slump in Treasure Valley residential home sales began nine months ago. The year-over-year drop was the latest sign that nine consecutive months of lagging home sales have forced some homeowners to slash their asking prices to attract buyers.”
“Hanging over the industry are 4,292 homes that were for sale in the Ada County last month, plus 2,322 listings in Canyon County. The total of 6,614 is 55 percent higher than the supply in March 2004, before the local housing bubble of 2005 and early 2006.”
“Housing sales remained sluggish last month, with 1,050 transactions in the two counties, 30 percent below the same month a year ago.”
‘”I’ve got some clients who should cut their price, but don’t want to,’ said Bob Hurtt, an agent in Boise.”
“Rod Blackstead, owner of Blackstead Building Co., said he managed 10 sales last month because his homes are priced below $300,000. ‘Our market never did get saturated like the market for these high-priced homes,’ Blackstead said.”
The Columbian from Washington. “Clark County home sales in March remained substantially lower than levels of a year ago. Sales of new and pre-owned homes totaled 771 last month, the lowest for March since 2003, according to a report.”
“A local real estate boom that began in 2004 and continued into early 2006 could not have continued, said Sandy Hendrick, executive director of the Clark County Association of Realtors.”
“Excess inventories of new homes could affect the local housing market’s recovery, said Kathy Rylander, an associate broker in Vancouver.”
“‘There’s also a thought process with some buyers who are worried they might be paying too much,’ Rylander said. ‘I think those worries are unfounded. Now is actually a good time to buy because there’s more selection and buyers might be more willing to negotiate.’”
“Some buyers are also concerned about recent problems in the subprime lending industry, Hendrick said. ‘Those loans were being made to people who were having trouble,’ he said. ‘I think it’s a good thing for the housing industry that we’re not going to have those types of abuses occurring.’”
The Bend Bulletin from Oregon. “Central Oregon’s housing market is reflecting a jumbled picture so far this year. On one hand, its general image is recognizable, there’s a buyers’ market everywhere, with plenty of houses on the market and plenty of sellers willing to slash prices or cut a deal.”
“In Bend, inventory levels have remained stable through the first quarter of the year, helped along by lower prices on new homes and strengthening sales in most areas, broker Bill Berger said.”
“Except, perhaps, in west Bend, where 412 unsold homes sat on the market Monday, according to the Central Oregon MLS, about a third of the entire city’s inventory. Among the reasons: 95 percent of the houses for sale in west Bend’s High Lakes Elementary School attendance area are priced above the city’s first-quarter median price of $347,750.”
“In Redmond, the median price has slumped to $255,950, according to first-quarter numbers released by the MLS on Tuesday. That’s 2.6 percent lower than the median price for all of 2006. Sales are off 48.6 percent from the first quarter of 2006, and the inventory of unsold homes has swollen to 619 homes, Berger said, about 13.5 months’ worth of inventory at March’s sales level.”
“In relatively high-priced Sisters, the median price dipped 1.54 percent below the first quarter price of 2006 to $415,000, on sales that were off 46.43 percent.”
“Inventory levels remained stable in Bend at around 1,250, according to appraiser Mike Caba. That’s about 20 percent more houses for sale than sat on the market in March 2006, but it’s 15 percent below the inventory peak the city hit in August last year, when still-rampant new home construction and steeply sliding sales combined to pile 1,454 unsold homes on the Bend landscape.”
“Some of the remaining inventory is probably owned by sellers who don’t necessarily have to sell, but are fishing the market with asking prices that are set too high, based on prices their neighbors got during the boom, Berger said.”
“Builders, on the other hand, have to move homes to keep their businesses viable, so most, including Pahlisch Homes, the largest home builder in the region, slashed prices and added incentives to carve its inventories down over the winter, Berger said.”
“In April 2006, when 89 Redmond homes sold, the city held about 2.8 months worth of unsold inventory, Berger said. In March this year, with only 46 homes sold, the inventory stood at more than 13 months.”
“Like the region, Redmond’s home market is suffering the afteraffects of ‘rolling too fast, too hard, for too long,’ said broker Fred Baldwin, who has been selling in Redmond for 30 years.”
“Still, he expects the city to grow by another third or so over the next five years. ‘We’ll be back in the thick of things,’ Baldwin predicted. ‘It’ll just be at a lower price.’”
‘The slowdown in new home construction had an impact on the number of new customers Idaho Power connected in the first quarter of 2007.’
‘The number of new residential customers Idaho Power added to its system in the first quarter of 2007 dropped by nearly half compared with the first quarter of 2006. The company added 1,604 new accounts, compared with 3,104 a year earlier.’
‘U.S. lumber producers may suffer a decline in earnings during the next year because of a reduction in new home construction, ratings company Standard & Poor’s said.’
‘Plum Creek Timber Co. said Jan. 29 that profit will drop in 2007 and that it will reduce tree harvesting in the northern U.S. by as much as 7 percent because of low log and wood-product prices. Seattle-based Plum Creek runs 10 wood- product mills in the U.S. Pacific Northwest.’
‘Tacoma Community College will cut its journalism and Web design programs and 16 positions this summer to make up for lagging enrollment and the money problems that go with it.’
‘It’s about the economy and housing prices for all of us,’ Vice President Tim Stokes said of the problem he says many community colleges are facing.’
“‘Tacoma Community College will cut its journalism and Web design programs and 16 positions this summer to make up for lagging enrollment and the money problems that go with it.’”
Yeah, no spillover at all. Move along.
For some reason this article also states the opposite, that enrollment is down because the economy is good. They are basically giving two conflicting explanations. (good economy/jobs +bad economy/expensive housing/decreasing population)
Across the country, community college enrollment is tied inversely to the economy. When jobs are plentiful, as they are in Pierce County now, college’s enrollment goes down. Fewer people need job retraining; fewer people are looking toward higher education in their future plans.
very misleading.
it’s actually very simple: when people lose jobs or can;t find work, how in the hell can they afford to go to college AND take care of their families?
“it’s actually very simple: when people lose jobs or can;t find work, how in the hell can they afford to go to college AND take care of their families? ”
The answer is simple too - student loans. Yep, more debt! That was all the rage when the job market sucked in Denver in 2003/2004, people went back to school becasue they thought that if they were to get a higher degree, that POOF!!, a new job would magically appear for them. Didn’t even serve the purpose of making them more competitive, as everyone else was doing the same thing. Better than getting left behind though.
As a fifteen-year veteran teaching in community colleges I, too, have seen a correlation between the state of the economy and enrollment. Most of my students were victims of NAFTA, and were making good money until the factories where they worked either closed down (especially the appairal factories) or moved to Mexico. The county where the community college I last taught at has lost all but one factory. That was when I first became aware of the housing and debt bubble. About two years ago, even though the county had a high unemployment rate, I started noticing that new banks were being built (the area is also a very popular spot for Florida second-home buyers). I kept asking myself where in hell was all the money to support so many banks coming from. The price of real estate was also skyrockiting to the point that a lot of local folks couldn’t afford to live in their own home county and were forced to sell their land (if they were lucky enough to own any) to developers, and move to adjoining cheaper counties. Also, I kept wondering how most of the folks in the county, being unemployed, were able to live a middle-class lifestyle. Then I figured out that it all had to do with the housing Ponsey scheme, and that they were refiing their houses and living on HELOCs. Now, as we know on this blog, their chickens are coming home to roost. I find myself wishing more and more that all these greedy developers and RE agents would go BK, Depression style, and that local people can start moving back because housing is once again affordable.
No offense, but I hope you don’t teach English. Your spelling is worse than mine.
No, I don’t teach English. I teach computer science. You’re right about my spelling being bad — usually I use a spell checker (I usually write my posts in Word, spell check them, and do the ol’ copy and paste thing). I wrote that one without using Word. That’s probably why there are so many spelling errors.
oh come on…he misspelled ponzi, apparel and skyrocketing, bfd.
no apologies needed Doug, nice post
It is a big deal for someone identified as a college teacher.
No, I don’t teach English. I teach computer science. You’re right about my spelling being bad — usually I use a spell checker (I usually write my posts in Word, spell check them, and do the ol’ copy and paste thing).
I also suggest you diversify your technology a bit more - Firefox 2.x browser really is a good cross-platform product. It has a spell checker built in
I’m a long-term Windows guy, it really is better (RAM is cheap again, and you will outdo Word+IE combo).
My father taught for years, has a PhD, and can’t spell to save his life.
LOL. Good point.
Can’t wait hear ole Bernanke spin this at his next visit to Congress.
regardgin Bend…“Still, he expects the city to grow by another third or so over the next five years. ‘We’ll be back in the thick of things,’ Baldwin predicted. ‘It’ll just be at a lower price.’”
the thick of traffic, suffering infra-structure, and lower quality of living…. thats exactly what Bend needs. And lower housing prices, of course.
maybe some thick smog, for all of the snobs to breathe…
Snobs? Naw, mostly goat ropers and cow pokes live in and around Bend
Goat ropers and cowpokes drive Volvos and Benzos with CA plates?
Who, pray tell, can afford to pay $400k for a house in Missoula?
Dennis Washington is the only name that comes to mind.
you mean, who, pray tell, can get a LOAN for a $400k house in Missoula.
Answer: A lot of people, most of whom can’t actually afford to pay off the loan.
The question I have is what, pray tell, is actually worth 400K in Montana? It better be the Gubnor’s mansion and maybe a few millionaires’ homes. The average schmoe’s home, going for 400K. Absolutely nuts.
Ben, keep these stories coming. It’s stories like this that make me realize I want no part of this crazy PONZI scheme until at least winter “08, but probably summer ‘09, at the earliest. We still have a long way to go if Montana has people looking for 400K homes that are less than 1K sq. ft. Sheesh! Don’t people put any value on anything, let alone their maoney, anymore?
What has this country come to?
Yea - are there any major industries in Missoula? Did Intel open up a fab there? Did Exxon open a refinery? Did J.P. Morgan open a bond trading office? What is the employment base?
HAHAHAHA, small retail and tourism, which we all know can take you from rags to riches!!!
This why places like Missoula, Boise, Reno and Bend are just gonna get absolutely slaughtered. You pull the housing rug out from underneath these cities and you have nothing left but low wages.
FWIW Boise is home to some quality employers (like HP). They aren’t doing a whole lot of hiring these days, but they are there.
Yea - are there any major industries in Missoula? Did Intel open up a fab there? Did Exxon open a refinery? Did J.P. Morgan open a bond trading office? What is the employment base?
Who can afford to buy in Missoula? That’s an excellent question, and one my husband and I keep asking ourselves. We make 2 times the local average, and still it would be a stretch to enter the market right now — and not a worthwhile stretch, either. You should see some of the homes in our price range (up to $400k). Most are either extremely small or in need of major updating. We saw one over $400k last week that needs at least $100 k of repairs to make the “finished” space livable.
In addition to flippers, apparently there are a lot of out-of-towners who buy second homes here. Why, I’m not sure. It would make more sense for them to buy closer to Glacier NP or in the Bitterroot Valley. There is some legitimate demand for high-end homes from doctors and lawyers, though, because Missoula is the medical and legal hub for Western Montana and Northern Idaho.
It’s interesting to see the bubble talk finally starting in Missoula. It’s been a very long time coming, and still the realtors are in denial. I met one the other day who told me he had just purchased two rentals. This was right after he showed me the graph depicting rising house prices for the last 13 years…
The thing that kills me about Montana is that it is not a disclosure state for house selling prices. That’s right — you can only compare asking to selling price if you hook up with a realtor who gives you access to MLS. So much for the “free market.” Remember Econ 101? A free market depends on complete information.
Another business driven by no-down, no-doc loan availability:
http://www.latimes.com/news/local/la-me-pothouse17apr17,0,543906.story?coll=la-home-headlines
Now that is efficient use of a McMansion. (Pothouse)
From the article:
I don’t see how a business can afford to take that many hits before they close up shop and decide to try another business model.
What hit? As far as I can tell the cops are shutting down the homes after they have made a profit.
According to law enforcement officials, California is in the midst of a major boom in large-scale marijuana cultivation operations run from inside homes, with authorities confiscating more than $100 million worth of pot in the last year alone.
Let’s see… typical success is on the order of 2% (IIRC).
So why would the gangs not be getting into this business? As the article noted, neighbors don’t care if the house is quiet and neatly kept.
Although if people get paranoid… this could get interesting considering the number of flips, homes owned by part time residents, etc. We could have a witch hunt on our hands.
Got popcorn?
Neil
Can they take bong hits?
Million dollar homes in Diamond Bar?!! Dear lord, the end is nigh!
There are multi-million dollar homes in “The Country” in Diamond Bar. It’s an area that is gated and used to be horse property. The most famous resident being Snoop Dogg.
Now that I think about it, maybe he just wants to be close to his supplier.
When you are down to what’s left in your ramen trust fund, the idea of paying serious moolah for mary jane, doesn’t seem appropriate, somehow.
But I got high…. Afroman
I jumped over to real estate in the LA times. The article stated NOD had jumped up. Do they send NOD after five months or after two months. Five months sounds like you are going under and not recovering. Two months and you might make it.
Just more proof the Housing market is goin to pot!
‘We’ll be back in the thick of things,’ Baldwin predicted. ‘It’ll just be at a lower price.’”
somehow, i tend to think not. when this whole thing reverts you’re gonna find a buying and selling public unwilling to pay you a 6% commission to do nothing more than feed you hype and tell you it’s a great time to buy/sell real estate. you’ll go the way of the stockbroker, travel agent and life insurance salesman. there is far too much information available on the internet to justify your existence when this whole thing shakes out. just mho, mr. baldwin.
in EU agents get 1-2% for the whole deal
and many houses go FSBO
in US FSBO is still small % -but that’s going to change
“in EU agents get 1-2% for the whole deal
and many houses go FSBO
in US FSBO is still small % -but that’s going to change”
People keep preaching this, but how is it going to change? Most FSBO’s I see languish on the market with few showings, only to eventually list with a realty company. I wish you were right, but I think you are wrong.
FISBO companies are springing up that hold your hand - they write copy for you, put out flyers, take calls, and will even show your house if you want. Different levels of services for diff. prices. Some of them have RE licenses, but they charge a flat fee (in W. Colo., about $2500) for the deluxe treatment. You decide the price, they advertise it and leave you alone, no hard sales. I see more and more homes in their brochures, which usually have as wide a distribution as the realtor’s ones. Seems like a good blend for those who are afraid to go it alone.
Median income is around $30k in Bozeman, MT and median home prices around $300k. THe Missoula bubble ($43k and $200k) looks mild by comparison.
GHD,
Do you know what people in Montana think about this crazy run-up, generally?
And this is what you’re seeing everywhere in these western regions. Our area is median income 44K, median home price around 380K. What’s not to get about home prices falling drastically?!! I mean, c’mon! there’s nothing to argue here. Either peoples incomes double or triple in the coming months, or home prices fall. You can go on and on about other violations of fundamentals to prove the case for a housing bubble, but this one factor should suffice. That’s why when people ask me how far prices will drop, i simply respond by saying “until we reach an acceptable affordability threshold”. Drag it out as long as they may, we will again reach what is considered a fundamentally normal and sustainable market.
I was talking to some ex-Californians last night. Now, when I tell them about $700k loans to people who make $30k/year, they shake their heads in astonishment. What a difference a year makes.
That story made all the difference this weekend when I was explaining the bubble to my Dad. It also helped to explain that the housing bubble might be concentrated in certain areas, but the credit bubble was nationwide.
Either peoples incomes double or triple in the coming months…”
I’d like to see that happen! Boise is always touted for job growth, but they don’t get into the detail that the job growth is in call centers, Target, Kohls, Wal-Mart, Best Buy and….construction- jobs that self feed off the bubble.
I’m about to get into a 3/2/3 rental for $1175 monthly. Zillow shows the home at around about $320K with a $19K loss in the last month. Gee, why should I buy and lose money when I can rent and save.
No-Brainer indeed! I currently rent a 3/2/2, 1600 sq ft, .25 acre lot for $1000 even.
What’s the last number mean? 3 bed, 2 bath, 2 what? Garages?
Zillow showed my house going up $30k two months ago.
time to sell, sell, sell!
Here here, ex. The one constant, no matter what else, is that for the majority of consumers, prices have to be tied to what people can afford. For example, if I clear 50K a year and I spend 50K + 1 dollar, then somewhere that extra dollar needs to be made up. Choices, spouse works, loan, advance from the first week’s pay of the next year. The sheeple just don’t get it. When housing runs anywhere from 6-14X income, dep. on where you live, then there is an affordability problem. I just laugh when people say, well get used to it, housing will now cost 600K in Orange County. Not for long, because even if people can afford to make the payments, they can’t afford to go without literally EVERYTHING else, such as food and clothing, esp. for the kids.
The sheeple in this country just keep on digging their graves by going deeper and deeper into debt. What most people don’t get is that if you buy a home, you will pay close to 3X the loan amount, once for the principal and twice for the interest. Most people who don’t bother to look at the real cost, look at me like I am from Mars when I tell them that. Therefore, once you get beyond 250-300K, you better have waaaay more than even 20% down or you may never recoup the entire cost of the home when you factor in taxes, up keep, sweat equity, etc. Combine that with inflation 700K 20 years ago is worth way more than 700K now, just imagine all these mortgages now, and you begin to realize that housing isn’t such a great investment. Safe, in terms of a roof over your head, esp. if paid off or close to paid off. But this nonsense about making 1/2 mil on the home you bought 2 years ago has got to stop. Bottom line is that salaries just don’t support these high costs!
“Either peoples incomes double or triple in the coming months, or home prices fall.”
I would tend to say it like this: “Speculators need to be driven out of the marketplace in order for prices to fall.”
ex-nnvmtgbrkr
Over at the Seattle Bubble Blog we have found the overlooked factor with regards to the disparity between median home price and median family income - it’s called “dark income”. It’s very similar to the “dark matter” you may heard about. It’s all the rage with astrophysicists. “Dark matter” and “dark income” share the charactersitic of being undetectable but there is ample evidence that it exists!
While the overwhelming majority of the problem is in people buying houses they can’t afford, I think that there is an argument that old “values” required a person be able to save money for the proverbial rainy day and those values have changed. I’m guessing the old standard of 28% of gross income included the idea of saving for the future. If people decide that saving for the future isn’t their thing, 35% or even 40% of gross income may become a new standard. Of course, the extra crap that people think they need to buy probably costs more than what people used to save, so maybe the affordability standard all comes to the same place in the end.
Just rambling….
I wonder how we missed out on this in Larimer County, Co (Fort Collins). The median household income is in the 60’s and the median house price is in the low 200’s.
Western Colorado has gone nuts, too. Million dollar homes everywhere. My hometown (Montrose, Colorado, pop. maybe 15k)has nothing going for it (economy-wise) except it’s a crossroads for tourists (to Telluride, ski towns, etc.) - it has always been an ag center. A couple of years ago it had its first million dollar homes - that are now just sitting. I’m now seeing a few motivated seller and price reduced ads, but I think it’s just starting. Up the road, in Telluride, they call them “price adjustments,” but they’re starting to show up for mega multi-million $ homes there. In Moab, Utah, where I currently am (think Arches and Canyonlands Natl Parks), the only economy is tourism. Houses have gone nuts here too. They sell fast if they’re under 350k, the more expensive ones are now sitting (400 up). A year ago, a house would sell within a week at about any price. Of course, there’s absolutely nothing on the market here, as it’s a small town. The realtors are in denial, they think it’s different here because it’s small and because of the beauty and recreation. Wait till the price of gas goes up. After Katrina, this place was a ghost town for the two primest weeks of the high season. In the early 80s, you could buy any house in town for 20k because the uranium industry went bust.
Who would have thought that houses in dirt poor Montrose and Moab would cost much more than in much more prosperous Fort Collins.
Simply amazing!
“Fannie, Freddie to offer subprime help
Program will offer troubled borrowers a variety of options in order to get a mortgage they can afford.”
http://money.cnn.com/2007/04/17/news/companies/fannie_freddie.reut/index.htm?postversion=2007041708
I hope our tax money is not used for this.
It will be when the GSEs default and say “But we were helping the American Ho-moaner afford the American Dream.” It may not come out of your pockets as taxes, more likely in the form of a depreciated currency and therefor wages.
Homoaner, I like that, as in moaning in pain.
Chief Executive Officer Daniel Mudd said in written testimony prepared for the House Financial Services Committee in Washington.
“The best way to influence the subprime market, and be part of the solution, is to stay engaged and provide funding for conventional loans to these borrowers that are affordable over the long term,”
Freddie Mac plans this summer to offer subprime borrowers more “stable” financing, including fixed-rate loans of as long as 40 years…
A program for Ohioans in which Fannie Mae offers to buy refinance mortgages for victimized borrowers has only “rescued” 42 of the 508 people who’ve applied…”
I think that is all the answer needed. 8.3% could be helped.
“Opposing `Bailout’
A bailout for subprime borrowers wouldn’t be the best use of government dollars, said Representative Spencer Bachus of Alabama, the senior Republican on the committee.
“I can’t agree to taking taxpayers’ money and addressing this problem,” Bachus said.
Freddie Mac’s Syron also cautioned against a borrowers’ bailout. Such a policy “could have lasting, unintended consequences that harm the housing finance system in the long term,” he said. “The ability to enforce a mortgage contract, including the use of foreclosure, is critical to continued investor confidence in the U.S. housing market.”
A government-funded bailout is “unlikely,” Frank told reporters after the hearing.”
Bloomberg
http://tinyurl.com/ys55kh
“Basically, what you’re going to have is a recognition that many of the holders of these securitized entities have an interest in not foreclosing,” Frank said.
40 year mortgage. If that is the new paradigm, I will rent until they bury or burn me. No way will I ever go for 40 years. In fact, it has been said that if you can’t afford to go 15, then don’t buy. While I wouldn’t use that rule of thumb everywhere, it is a good one. However, 40 years. Imagine, the average homoaner stays for 7 years and if you stayed for 40, you might well retire in that house.
Instead, let’s try this. Make homes affordable and mortgages 20 years. That way people can actually live in the homes without making mortgage payments. I know we can do that now, but let’s get it started nationwide and make it a fundamental, not an exception.
All you have to do is send in an extra $20 a month…that 40 year mortgage will shorten to ~20 years.
“The ability to enforce a mortgage contract, including the use of foreclosure, is critical to continued investor confidence in the U.S. housing market.’’
…continued investor confidence in the U.S. housing market? BWAHAHAHAHA! As if the bank’s getting a huge number of underwater houses will cause confidence to surge. The question in my mind is who eats the losses? The PMI companies? Companies who credit swapped the MBSs? Lenders? The companies who bundled the MBS? Or will they all sue each other in a bloody frenzy?
IMHO the U.S. Gov’t should save its cash to bail out Ginnie Mae- that is the only agency backed by ‘full faith’ of the gov’t, so we will have to eat it’s losses anyway.
The 8.3% Solution…
Thanks Hoz~
It will do absolutely nothing to slow down the collapse. Kinda like parking a pick-up truck in front of an oncoming train - won’t even slow it down.
‘”I’ve got some clients who should cut their price, but don’t want to,’ said Bob Hurtt, an agent in Boise.”
Or they can’t. I’m curious how many people are leveraged to the hilt in HELOC loans. According to Trulia.com, the median household income in Boise is only $54,000 a year, yet this town is full of new $30k-$40k 4×4 trucks and SUVs, ski boats, ATVs, snowmobiles, and such and retail in the area is still booming. With a median home price of $260k a year, where is all of the cash coming from to support high consumption and a relatively high median home price in relation to household income? My wife and I are right at the median income, pay rent of $895 month, have one car payment, a few credit cards, average student loans payments, and no kids. We sure the hell can’t afford a $35k car, boat, ATV, etc. not to mention a $260k house. I’m not complaining, but we would have to start dealing drugs or robbing banks to maintain the lifestyles of the $50,000 a year millionaires we have around town. A lot people are drunk on HELOC money and it’s gonna catch up with them.
Brandon, just hang in there. My wife and I make over $175K/year….and we can’t afford to buy in our neck o’ the woods.
Save your money, pay off your cards, do what is right. Pay no attention to the fools in your communnity living WAY beyond their means. Pity them, as they will be forced to pay the Piper.
And one more thing….do not go selling drugs. That;s not a viable option, friend.
Of course, I was joking about the drugs! We are concentrating on paying down debt and saving money, so we are on the right track. I just wonder what the fall out is gonna be when the house of cards falls down?
“I just wonder what the fall out is gonna be when the house of cards falls down? ”
My worry is that the “fall out” is going to hurt all, even those of us who did not play the RE lalaland game. I hope I am wrong, but once RE goes seriously south, it will take more than just the iditiots who half million dollar homes on 12/hr wages.
The Fed will have two choices: (1) open the flood gates of liquidity or (2) tighten money supply and raise rates. Option 2 is what the patient needs and will probably result in a cure, but it will be painful. The other option is tantamount to juicing the patient with morphine and making him feel good. It does nothing to get the patient well, but at least it has the feeling of euphoria and will certainly be the option of choice for Washington. With Americans’ 30 second attention span, I guess the People At the Top figure there is no way the average American will figure out what’s really going on. If anyone challenges the inflation/morphine track, then the rebuttal is simple: you’re feeling good, aren’t you! Then don’t complain. Everything will be fine. Move along. Nothing to see here.
“Now is actually a good time to buy because there’s more selection and buyers might be more willing to negotiate.”
This is an interesting statement: ” … there’s more selection and BUYERS might be more willing to negotiate.”
If there’s more selection, then SELLERS will be the ones more willing to negotiate.
In Redmond, the median price has slumped to $255,950, according to first-quarter numbers released by the MLS on Tuesday. That’s 2.6 percent lower than the median price for all of 2006. Sales are off 48.6 percent from the first quarter of 2006, and the inventory of unsold homes has swollen to 619 homes, Berger said, about 13.5 months’ worth of inventory at March’s sales level.”
$256K median price in Redmond? Isn’t that the land of Microsoft Millionaires??
I thought the same, but I think they mean Redmon, OR.
Yes, Redmond, OR. Heck, even I would be flipping houses in Redmond (WA) if the median price was only $255K!!! Some FB is waiting for a GF to buy their $1.1M crapbox they bought new down the street last July for $999,450, and it’s FSBO (can’t even spare a (per)cent or two for the listing agent, apparently). This is 2mi north of Microsoft. Days on market: 30+
Nothing says ‘cash-strapped flipper’ like the bedsheets and blankets over the upstairs windows!
No, it’s Sagebrush, OR. they refer to. Les Schwab country.
Nice to hear the that the Freddies are proposing some kind of bail out.
Perhaps in a couple of years we will get some accurate financial statements.
This is going to get really ugly.
I am thinking of buying a multi million dollar home on the beach here in the southbay. Then not paying.
If it plays out just right I can probably go for 6-9 months of paying nothing. If things go really well then congress bails us all out or has a mormatorium on forclosures I can hold on for another year or so.
Two years with no cost.
Who says we’ll ever get accurate statements from the GSEs. It could easily be that the FED is feeding them cash under the table to keep them afloat. They could sell non performing loans to the FED. The FED can keep the paper as “assets”, it’s not like they need the income they can just print income. With no M3 reporting there’s no way to know what’s going on anymore.
I’m starting to get really ticked off with my RE friends. “got to buy now, never been a better time.” Told my buddy he has been saying that for 1.5 years. When is it not a good time to buy? I know three people that have been trying to be my agent. I must be the last person who doest have a house in my area (Placer County) because they are starting to flock to me. Said Im not going to be ready untill next year. No…..your ready now, buy with this loan, that loan, zero this, neg that and its getting really old. Been reading this blog for a long time, possibly for 2 years now and everything I have been telling people (friends) is coming true. Just wanted to thank Ben for this blog and especially the readers and posters.
You’re lucky. I figured housing would fall soon after the stock market crash. Even with the current news my wife thinks I’m wrong about houses being overvalued, oversized and over leveraged. In her adult lifetime houses have never gone down. Her mom used to sell real estate and her aunt does now. If our marriage were based on shallow values and self gratification we’d be divorced already. Because I called the stock market crash in 1998 she knows I tend to be early on my calls, but she’s still not convinced.
tell em you just bought a vacation house somewhere else and maybe they’ll leave you alone.
What seems crazy is that many homes are now sitting 7 or 8 months and the owners refuse to budge, what this has caused is the new listings see that nobody is moving on their price so they list just as high or higher.
I guess you can say follow me into the black hole of real estate, i wonder how many of these people can hold out much longer, maybe they have a lot more money then the public thinks?
Good point.
Eventually, they must sell, at whatever price…or declare BK.
The same thing is going on in my neck of the woods. I ALMOST bought a $400K in Co Co county, Cali. Nice place, built in 2004….and NOBODY ever lived in it, though it’s been through 5 different owners. Pathetic.
Climber, I’m in your shoes - one of the wommyn who is trying to hold off the husband’s nesting or hunter/gatherer or whatever instincts. We aren’t getting any younger, neither are our kids, etc.
Now, with the Fannie/Freddie news, it seems like this bubble could get a whole new leg, and what some of us never thought could drag on until ‘06, will now claw itself up, reanimate, and keep this blog in business for ???? many more years? Depressing.
Even more depressing to think of the potential collusion between some big players to ignore the ‘Mac’s continued shady business and keep the bubble in business by saving homedebtors a whole 5% on their monthly payment spread out now over 40 years. (Theoretical, potential collusion, don’t quote me or send any black helicopters my way.)
Shadow and Memphis, I wrote up higher that if prices this high are the new paradigm, I would rent until I buy the farm. Hang in there and no that you will never be a lifetime debtor or housing serf. Owning is nice, but as Hoz mentioned on Sunday, renting is nice because you can move when needed, esp. if in a hurry. Keep in mind you have options when you are not tied to a home, esp. if it is at 600-700K. Just hang in there.
Right! And there are few things worse than trying to sell a house in a slow (dead) market, esp.if you have to. It’s a psychological nightmare - day in and day out waiting waiting waiting - keeping the place looking nice, wondering if you can make the electric bill this month, etc. etc. When people get desperate, they bake cookies and buy cut flowers for showings, etc. - only to never hear a word back from anyone. It’s the classic scenario for feeling a total lack of personal control or efficacy.
Remember, if you can’t find the greater fool……you’re it!
I am looking for a home to move to in Great Falls with something very cheaper, afforable and reasonable(somewhere about the range of $25.000 to $45.000 figure.