Sellers Feeling Locked In, While Buyers Have Taken Charge
The Post & Courier reports from South Carolina. “Joe Desagun hopes to sell his mother’s three-bedroom home in North Charleston by fall. So he put it on the market in February, knowing it could take that long to find a buyer in a slowing market. Desagun said he adjusted his expectations after watching friends and neighbors struggle to sell their homes. ‘It’s been really tough,’ he said. ‘We lowered the price already.’”
“Charleston hasn’t been spared effects of the slowdown, which took hold about a year ago. As a result, the number of homes on the market has more than doubled in two years. Now, many sellers hoping to move to a new home are feeling locked in, while buyers have taken charge.”
“‘The market in Charleston is in a standoff,’ said agent Brigitte McElroy. ‘Sellers are living in the glory days, unwilling to come off their prices, and buyers shopping and looking are afraid to put a contract on a home, hoping the prices will fall even more.’”
“‘For sale’ signs are common sights these days, peppering subdivision entrances and front yards from Mount Pleasant to Summerville to West Ashley. ‘There’s so much inventory on the market right now that buyers are overwhelmed by choices and it paralyzes them,’ said agent Dave Johnston.”
The News Observer from North Carolina. “Triangle home sales rose modestly in March as the national housing slump continued to pinch the area’s largest business. The inventory of unsold homes rose 13 percent, and the number of sellers dropping prices increased 16 percent compared with a year ago.”
“‘There’s no question things are slower,’ said Mark Vitner, an economist with Wachovia in Charlotte. ‘The Triangle is doing very well, but we’re seeing it slow all over the country and the Triangle is no exception,’ Vitner said.”
“‘Compared to the rest of the country, we’re doing well, but we’re seeing more and more people who can’t buy ‘here’ because they can’t sell ‘there,’ said Shields Pittman, a broker in Raleigh. Pittman has sold 12 homes this year, slightly ahead of last year, but could have sold four more if owners moving here could sell their houses.”
The Baltimore Sun from Maryland. “A large portion of a new-home project in Harford County is scheduled for foreclosure auction next month, an apparent victim of the sharp slowdown in the housing market that has hurt builders across the country.”
“Several defaulting condominium projects in the Baltimore area are set to be auctioned, while some Eastern Shore development projects that were started at the peak of the boom are now in trouble.”
“About 85 acres, approved for 414 homes, is up for grabs, according to auctioneer A.J. Billig & Co. ‘Everything’s slower than everyone would like,’ said John Kortecamp, CEO of the Home Builders Association of Maryland. ‘There are a number of developments that are being delayed.’”
“K. Hovnanian said market conditions were a ‘factor’ in the Greenway Farm situation and that the foreclosure is a result of a contract dispute with the investor-lenders over land value. Attorney Curtis C. Coon, the trustee appointed by the lenders to foreclose, said K. Hovnanian did not exercise its option to purchase the land that was supposed to be Greenway Farm’s last two phases.”
“‘If they think they overpaid for it, that’s their opinion,’ Coon said.”
“‘We are being extremely cautious in underwriting new land opportunities,’ J. Larry Sorsby, Hovnanian’s chief financial officer, said in a statement when the company’s most recent financial results were announced last month. He added that ‘land sellers have not lowered their expectations to match today’s economic realities.’”
“The market slowdown has prompted similar builder pullouts on the Eastern Shore, said Michael Crosby, president of Crosby New Home Sales & Marketing in Easton. Out-of-town builders rushed to buy land as prices skyrocketed, but when the market turned, they wanted out.”
“‘What we’re seeing now is, the national builders have liquidated or gotten out of deals that they could get out of by giving up, some of them, very big deposits on land,’ Crosby said.”
The Owings Mills Times from Maryland. “Amid the rows of brick town houses in a neighborhood dotted with big trees and pricey cars, a sign reads ‘Foreclosure sale.’”
“‘It’s a nice property,’ said real estate agent Kevin Goodnight. It’s a bargain, Goodnight said, at $278,000. Similar homes in the neighborhood have sold for more than $300,000. The previous owner bought the house for $310,000, only to lose it to foreclosure less than nine months later.”
“Selling the bargain, however, has been difficult. Since it went on the market three months ago, two accepted purchase offers have fallen through because the would-be buyers failed to secure financing.”
“‘Foreclosures are coming out of the woodwork, and they’re coming from everywhere. It used to just be Baltimore City, but now Baltimore County, Howard County, Carroll County are all big in foreclosures,’ said Goodnight, who exclusively sells bank-owned properties in Maryland and Delaware.”
“According to Realty Trac, 106 foreclosed properties were for sale in the Owings Mills, Pikesville, Reisterstown and Randallstown ZIP codes last week. ‘It’s becoming almost epidemic,’ said Steve Verstandig, president of Pikesville-based Citywide Properties.”
“Verstandig’s company specializes in buying, rehabbing and reselling properties, typically from owners in financial distress. The company recently erected a billboard on Reisterstown Road in Pikesville offering to help homeowners avoid foreclosure.”
“‘We’ve had a huge response. We don’t even have to advertise anymore. I constantly have people coming to me,’ Verstandig said.”
“But Verstandig said the lean resale market has constrained his business. Properties that typically took 30-45 days to sell now linger on the market for 90 days, and buyers have become more selective. ‘Projects I would have jumped on two or three years ago I am turning away today,’ he said.”
“‘I think the (foreclosure) market is just going to explode over the next year,’ Goodnight said.”
‘Maryland saw a 160 percent jump in foreclosures for the month, compared to the national average of about 7 percent. Put up against last year’s numbers, foreclosures are up 327 percent in state.’
‘The difference between now and the past is all of the subprime mortgages,’ said Deborah Ford, director of the undergraduate real estate program at the University of Baltimore. ‘Also, a lot of these adjustable-rate mortgages are resetting, meaning rates are continuing to go up. We have not had that in the past. I think it’s going to keep rising this year,’ Ford said. ‘The rest of the nation is going up, too.’
After many hours of resarch, looking up deed records and the like, I have came to the conclusion that Maryland wont see many price drops, they will only see foreclosures. So many of the homes I research can’t sell for less because they are already trying to be sold at what is owed on them. Plus, the sellers can’t take a loss because they have no money to bring to the table. So Maryland is in a standoff phase. Buyers wont buy, sellers “can’t” drop their price, the only way is foreclosure. This is going to be messy.
Once the banks* have a basketfull of REO, they’re likely to start approving shorts IMHO.
*or whoever the bagholder is, IF they have the the authority to make such approvals.
It’s the banks authority to make approvals if…
1. They own the loan
2. Are serviceing the loan
It’s the Mortgage Servicers authority if the loan has been sold on the open market.
Banks can own a mortgage and they can also be the servicer of the mortgage. Also serviceing companies will most likely not own mortgages they just service them.
but the banks can still clear the loan, because they have money. Isn’t that why banks exist?
Interesting how Maryland is hitting the national blog scene. A few things I can say to the above comments. 1. Prices did drop last month 4.33% YOY Check it out http://tinyurl.com/29lho3
Also the article quotes Dr. Deborah Ford. She was one of my teachers in undergrad and is a friend of my family. She is one of the smartest woman I know and has an MBA & PHD from Wharton. Four years ago when I was in her undergrad real estate finance class we would argue about the housing bubble. I was bearish and calling it a bubble then (2nd half of 2003) though she was extremely bullish. Even in recent talks within the past year, she has remained bullish due to the very strong job market in Maryland with unemployment in the upper 3% range. I was very suprised when I first read her statement that foreclosures would continue to rise considering her bullishness on the RE market.
Also Dcluke, I would partially agree that many can not lower their prices without either a short sale or writing a fat check at closing to pay the difference owed. In Canton and Federal Hill (trendy rehab neighborhoods in Baltimore) many investors have large construction loans. Investors were buying gutted rowhome shells for 300K and putting 200K of work into them but nobody will pay 500K to live north of historic Patterson Park where only 3 blocks north is gang land and extreme destitute.
I checked the Washington/Arlington/Alexandria MSA data from RealtyTrac. The YOY increase in foreclosures is 300%. They’re also up 261% from last quarter. I don’t know if RealtyTrac includes the Maryland D.C. suburbs in that MSA.
Virginia is up 138% since last year in foreclosures. So it appears as though the D.C. suburbs are imploding much faster than the rest of the state.
I’ve done the same with quite a few of the long-listed homes up there (lots of my co-workers live in Maryland), and you’re right: Many are trying to sell at a high enough price to pay the commission AND their current mortgages. And it’s just not possible. Even those who bought some years back, who should be OK, have often topped up their debt with home equity loans and refis! Doh!
There are two particular houses I’ve been told about where the owners are trying to sell, and they are priced WAY above the market. A bit of legwork shows that they are setting their asking prices about $20k over what mortgage_payoff + commission would be, thus perhaps in their own minds giving themselves negotiating room. Well, you can’t negotiate if nobody shows up to make any offer!
So since the owners can’t bring money to the table, they seem to prefer to starve and eke out payments as long as they somehow can. Sure would be interesting to see what their credit cards are looking like as time goes by.
Yes, but such a shame the press and masses haven’t figured out that RealtryTrac isn’t reporting the complete carnage going on in Maryland, because they don’t know where else to look for data…
http://countrywide-foreclosures.blogspot.com/
“Charleston”
“‘For sale’ signs are common sights these days, peppering subdivision entrances and front yards from Mount Pleasant to Summerville to West Ashley. ‘There’s so much inventory on the market right now that buyers are overwhelmed by choices and it paralyzes them,’ said agent Dave Johnston.”
I wonder how “Flip This House” Richard Davis / Trademark is doing?
I’ve seen adss for a new series that features his company only, coming soon to the same cable channel. The only add I’ve seen shows him looking concerned and say “We may be in trouble on this one”.
Great way to launch a new series on home flipping.
I think its called the real deal.I saw it the other night here.Richard is a real wheeler and dealer for sure.I want to be gingers personal assistant.
I don’t know how they make any money. They have their heads so far up their a$$e$.
You’d think he’d have a list of qualified contractors that he trusts to do various work but every week he has a different group of flunkies that he hires on the cheap.
Price, schedule, quality. Pick any two.
Builders will always go for the lowest price consistent with meeting their schedule. I guess professional flippers have the same mindset.
you also have to keep in mind, it *is* a tv show, they know there are camera’s rolling. I’d be willing to bet what they say and do when not on camera, is different from what we see.
“You’d think he’d have a list of qualified contractors that he trusts to do various work but every week he has a different group of flunkies that he hires on the cheap.”
This is apparently everyone’s mode of operation in the flip world. Somehow they imagine the estimate of what they plan to do can be executed seemlessly.
Has anyone, in any business, ever seen a project work out that way? Right along the lines of the estimates? Yeah, once in a blue moon maybe. Yet they REPEAT this stupidity over and over.
If anything, these “flip” shows should have been great advertisements for NOT trying to flip something without any expertise in construction, finance or real estate.
” don’t know how they make any money. They have their heads so far up their a$$e$.
You’d think he’d have a list of qualified contractors that he trusts to do various work but every week he has a different group of flunkies that he hires on the cheap”
LMAO. Welcome to to South son. That’s the way things are done around here. Alwys have been always will be. ” And if you don’t like it you can always take I-95 back to NJ or NY”
Yes that slipshod workmanship is SOP in the southeast and the bad attitude is the gravy bonus.
it’s ok if they use 2005 shows like house haters
I’ve been wondering exactly the same thing. Flip That House must be history. Maybe it’s just reruns now.
I am in Trademark Real Estate land. They acutally have this huge sign on one of the main roads on a big overgrown empty lot. It says Future Worldwide headquarters of Trademark Real Estate.
the funny thing is the only thing that they have done in the six months that I have lived here is to cut back the vines growing on the sign. I don’t know how long it has been there, but the mold and vines on the sign say quite a while.
They have to be working on something because they just put a new house on the market from their TV show.
http://tinyurl.com/2u6fym
North GA Dave
Nice catch.
I am greatly relieved that my fence sitting induced paralytic state is now caused by “Major McMansion Inventoritis” rather than the alignment of the RE stars, large sharp icebergs or David Leareah MESSING with the weather Forecasts.
“YOU WANT HOW MUCH for THAT OVERPRICED POS ???!
Ooops!….FORGOT I CAN’T SPEAK either
Crosby still hashing out how we ate our young…
“‘What we’re seeing now is, the national builders have liquidated or gotten out of deals that they could get out of by giving up, some of them, very big deposits on land,’ Crosby said.”
The rats have left the ship via the mooring ropes.
This is WHY they purchase their land in this way. In a downturn, it is cheaper for them to write off options and deposits than to either SELL or build on land that they paid too much for.
So right - I’m a potential buyer and I’m totally paralyzed - my buddy is typing this for me…
Sorry (slow down cowboy) - the post above was supposed to nest under:
‘There’s so much inventory on the market right now that buyers are overwhelmed by choices and it paralyzes them,’ said agent Dave Johnston.”
‘There’s so much inventory on the market right now that buyers are overwhelmed by choices and it paralyzes them,’ said agent Dave Johnston.”
WTF???????????????????????
Actually, the prices are what paralyzes me.
Prices, from what I’ve seen, have driven any interest in Real estate away from the end user buyer. They just don’t care anymore. They don’t want to talk RE.
Of those potential buyers I know, most are resigned to moving out of state. Because of that, they’ve dropped what they’re willing to pay for a bubble market home. (Because they realize what homes cost in Y, and only put so much premium on living in X.)
If prices had corrected more two years ago… I know dozens of people who would have bought. Now? I know dozens of people planning to get out of the state and a handful planning to ride it out.
Maybe its my age group…
Got popcorn?
Neil
The market should of corrected more two years ago when the gig was up but the cash-back and incentive deals kept it going along with the mis-information from the talking heads .
While the general public can’t seem to connect the dots with this sub-prime foreclosure fall-out ,the public on a gut level can feel that they might be a foreclosure down the road also.
Prior to the sub-prime fall-out borrowers trusted the REIC ,but now they see that people are failing and not making money in real estate and owners are giving homes back to the bank .
No matter what spin the REIC is chanting now the buyers can see that something is wrong with all this inventory on the market .
It is a big risk to buy into a market that has the conditions of this market especially when you have a massive amount of specuators /unqualified buyers /fraud loans / that set the prices in many markets .
Market values are unstable to say the least .
You’re right about that. At the time, I was thinking that there would be no way that prices here could go any higher, given the median salaries, and the bubble had to stop there. Seemed to work that way in SoCal 15+ years ago or so.)
Yet creative financing filled the gap! I have to admit tha I was impressed with how well the finance and real estate industry were able to team up and offer these new products to bring in marginal buyers and also to give “typical” buyers a lot more buying, er, bidding power. It worked. They kept it alive for two more years.
And now look at it. I think their hat has run out of rabbits.
Neil,
I was wondering if one particular state or geographic area was standing out as a destination of these outward bound co-workers. And if so what it was.
Yeah, I hope gwynster will put a few figures out about some migration patterns from CA, maybe a rough picture about the whole US. She said the hispanics were leaving CA for the midwest. Would be interesting.
No one Geographic.
One couple to Florida.
Another to Illinois
A few to Texas…
Just a sprinkling…
Neil
Many I know have gone to Texas. A few to Utah.
Just anecdotes
Chuck Ponzi
http://www.socalbubble.com
Neil, you say : “I know dozens of people who would have bought. Now? I know dozens of people planning to get out of the state and a handful planning to ride it out. ”
I hear you, but I’m also thinking “I know dozens of people who plan to quit smoking or lose weight” but that doesn’t mean it’s going to happen. When are your friends and co-workers going to act on their plans?
A lot has already happened. A good bit is still going on.
Difficult to hire anyone out here. A number of people are retiring early.
lots of young engineers have fled. Others are sharing places and just renting. They have little interest in buying a home.
A good bit of the pattern is they get married and then they are gone shortly afterwards when the spouse starts talking children/house. Native clownifornians seem to be sticking but everyone from out of town is going.
If I wasnt FROM CA I would be soooo outta here.
Im in the camp sticking around a few years. If we dont get a major correction by 2009 I will give up on old CA.
Probably I will go pollute the midwest with my CA values.
I have to agree with James,
Its getting impossible to hire in certain bubble markets. STL Engineer, you want to know if people are just saying they’ll move or acting… yes. Its easy to track. Look at school district flows. The trend is out of the south bay, OC, and San Diego.
Others are sharing places and just renting. They have little interest in buying a home.
Predominates. Since about 60% of engineers are from out of state… they are far more mobile than Joe Californian… (they have no long term ties).
Most of those I know have set hard dates in June. Some are sending out the resumes and will depart as soon as one sticks.
“I know dozens of people who plan to quit smoking or lose weight”
Me too! But most are trying too…
Oh, I discounted the few dozen who bluff and say “promote me or I quit.” This is usually during a hallway meeting. For 90% of those that do that, I always make a point of opening the next door we arrive at and wave them through; they get the idea.
Got popcorn?
Neil
I would agree Neil, even though my comments were made about the way it was 25-30 years ago. (Man, I’m getting old.)
What? The NAR says inventory is a good thing, because it gives buyers more choices! Their own idiots cannot even understand the Lereah code.
I’m not paralyzed, I’m merely relaxing on my lawn chair watching the fun. See, I’m reaching for popcorn as we speak.
“Selling the bargain, however, has been difficult. Since it went on the market three months ago, two accepted purchase offers have fallen through because the would-be buyers failed to secure financing.”
By this time next year, I’m sure this paragraph will be repeated many times, in many places.
Its already pretty common. I wonder what the fallout rate really is?
Got popcorn?
Neil
“two accepted purchase offers have fallen through because the would-be buyers failed to secure financing.””
I’m wondering if anyone is in the mood to explain why this isn’t being ferreted out in the pre-approval process.
Pre-approval is based on the prospective borrower alone. Deals are falling through as now-conscious banks see the overpriced POS houses they are asked to lend against.
“Um, Mr. Smith, there is a comma missing on your application. We are sorry to inform you….”
Because the industry is so hard up for sales they are just throwing anything against the wall and seeing if it will stick .
Im sure a number of deals have fallen out because the appraisals didn’t come in .
Lenders are changing loan policy on a daily basis so the deals are falling out . Also right now I would imagine that the fraud deals are heating up because the crooks know time is of the essence .
Also I think alot of buyers/borrowers are not interested in getting sub-prime loans anymore but at the same time they are getting turned down on the better loans . Only option IMHO for buyers is to save money and wait until you can get a decent loan and by that time prices will have gone down hopefully .
I also believe builders are going to need to start coming up with affordable housing with good long term financing for real buyers . The days of the short term speculator loans are over .Can’t wait until homes just become places to live that people can afford .
I sold in Howard County MD (Ellicott City) in June of ’06 and walked away with $280k. I moved to FL, because the wife started med school. My winnings are now sitting comfortably in a HSBC account earning 5.05% while I wait this mess out.
You are a wise (or lucky) person.
Wise? Would that I could be. No, just lucky.
Or both…
I also sold my Ellicott City townhouse about the same time, invested a similar profit, and moved a few states away to wait it out in a rental. Looking hard (I’ve worked my way through about 30 houses in our price range over the last month or so), but nothing is worth the money yet. We’re driving our Realtor nuts.
I hear there’s a shortage of real estate agents.
Thats a nice gain.
300k tax free = 600k ‘lotto win’ (at least in CA where state tax=9.4%)
I bet if you won 600k in the lottery you would be on the front page of the local city newspaper! What we are seeing is the effect of ‘everyone won the lottery’. Its crazy.
Yes, I agree, it is a nice gain. We simply bought at the right time in the right place. It was luck, not smarts. My spouse and I often joke that we won the housing lottery.
We are in a similar situation to those of you who have sold. We sold our townhouse in Rockville in July ‘06 for $230K more than we paid in Oct. ‘98 and the money is now earning interest for us while we rent.
We had been looking for a single family house to move up to for two years, as we now have two kids and need more space. Because none of the houses we looked at seemed to be worth the asking prices, we couldn’t bring ourselves to buy. I would check the tax records and see what the current owner paid just a year or two before and could not believe what they wanted for the place. It just seemed wrong that housing would appreciate so much so quickly. That was when I started researching the housing bubble (around Spring/Summer ‘95). When I read about the negative savings rate and all of the creative financing going on, I knew we were in trouble. That was when we decided to put our house on the market, take the profits, and rent until things get back to normal.
Now, the question is what is “normal”. I’ve been trying to figure out what houses should actually be “worth” in Howard and Montgomery counties. Do any of you know what the average annual rate of appreciation was pre-boom in Montgomery and Howard Counties?
There is a house on the market asking $945K. It was originally purchased in ‘97 for $438K. From the tax records, it looks like original owners who have not refinanced, so they have a lot of negotiating room. If the housing boom had not happened and the market had appreciated at historical rates, what would this house sell for today?
Does anyone either know, or know where I can find the information on, the historical rate of appreciation? What are your opinions on what the house would be worth today if the boom never happened?
Thanks!
sorry, I mean Spring/Summer ‘05
What is “normal?”
Now, that is a good question. I don’t have any idea what normal is anymore.
Yes, prices have been out of whack so long it is hard to figure out what is normal. Also, I agree with your statement about winning the housing lottery. That is how my husband and I feel, too. We’re even willing to pay whatever the “normal” price would be + our “windfall” in order to find a home to settle our family in. The hard part is figuring out what that should be.
Part of my resistance to buying is that I don’t want to see our gains evaporate over the next couple of years. And, if my husband’s job changes and requires a relocation, I don’t want to be locked into a house that I can’t sell. I vacillate wildly from one day to the next. After all, my husband and I are making close to $15k a year in interest off that CD. Why would I want to sink it all into a house that it likely to lose value?
Of course, the flip side is that we are living in a rental that is most likely held with a sub-prime mortgage, and our landlord might or might not be trustworthy. He could see a readjustment and send in the keys before we even knew what happened. Who knows? I’d also like to see our children attend the same school for more than a couple of years running.
So, we continue driving our Realtor & our children (who are tired of looking at houses) up the wall while we sort through our options.
i hear the eviction process is a b!tch.. so if your landlord goes under, not only does the bank has to go thru the foreclosure process, they have to deal with evicting you as well, you could possibly get a few months of free rent out of the whole process. the trick is to keep an eye on your landlords notices at the county’s deed office. if you have evidence that he/she’s is getting foreclosed on then the mortgage is definetly not getting paid and you might not feel too guilty about not paying rent. Also, make sure you do not pay rent without getting a receipt…
i know this line of thought is sinister, but hey if the sub-primes leaches hadn’t elevated the housing price to the startosphere you might have actually bought this house.
got cash?
I can totally empathize. Our son was in Kindergarten this year. We want him to be settled at one school. We go back and forth about buying constantly.
We really want to buy and settle down, but at the same time, we don’t want to be “bag holders” and watch our equity evaporate. We also worry about whether any neighborhood we would buy into would deteriorate if the people around us go into foreclosure. We know the prudent thing to do is to continue to rent and wait for things to get back to normal. But, we feel like we’re being penalized for having done the right thing and not taken part in the mania by taking out a toxic loan on a house we couldn’t afford. Now, houses that we could have afforded on a 30-yr fixed rate with a 20% down payment just a few years ago are totally out of reach. Because of all these greedy flippers driving the market up, we have to put our lives on hold.
Renting has been hard, too. The house we were renting had many problems and caused me a health problem, so we had to move. We always would take care of any problem with our house right away. It is hard waiting for the landlord to do something. Also, we had a couple of neighbors whose landlords did not pay the mortgages on the houses. Now, they have the expense and inconvenience of having to move and will not get their security deposits back. These are the risks we run when renting nowadays. All of the talk of a bailout for the irresponsible people just makes it worse.
It feels like a lose/lose situation. Buy and take your chances on evaporating equity and deterioration of the neighborhood or rent and take a chance on being kicked out if your flipperlord doesn’t pay the mortgage.
Sorry for the rant, but I just wish things would get back to normal so that we can buy a house to live in and raise our kids in at a reasonable price with traditional financing.
One thing I did for a friend who relocated here and wanted to rent, not buy (a success story, thanks Ben and blogsters!) is that we went and checked out potential landlords’ mortgages to see (1) what they paid for the house, and (2) what they owed on it, and (3) if there was a nasty ARM involved. Kind of like the landlord’s credit check in reverse! He settled on a townhouse where the landlord bought just before the bubble and is making positive cashflow. If the landlord is happy and making at least some money, he’s more likely to be helpful, and that seems to hold so far in this case.
Here’s my “take” on what it is worth.
How much does it or a house like it rent for?
Let’s say $4,000 per month.
Subtract $1,000 a month for maintenance, taxes, insurance, etc.
That leaves $3,000 a month to service the mortgage.
That would give you a principal amount of $500,000 or so.
Add $100,000 for a down payment.
Assuming the above assumptions are correct, that $945,000 house is worth about $600,000. Below that looks to be “cheap” and a potential investment opportunity. Above that is “expensive” and “hoping” for higher appreciation or anticipating inflation.
I think the best way to value is to match realistic rent vs. mortgage pmt. + expenses. At least you get in the ballpark of valuations…
Thanks for your response. Rents in the area for that size house are actually around $2,600 - $2,900, although they don’t come up that often.
Also, I just checked the tax records on the whole neighborhood. Most houses sold in the $200’s in the early to late 90’s and there are a lot of original owners. There have been some sales, but most were in the $400’s and a couple in the $500’s. There was only one sale in the neighborhood in the $900’s and the house next door sold for $725K in ‘06, although it was a smaller house and lot. This is one of the “newer” homes in the neighborhood that were built in the $300’s and $400’s.
“The market in Charleston is in a standoff…”
This looks to be happening all over the place. This means there is no orderly unwinding of prices because there is really no balance between buyers and sellers. There are buyers, but they are afraid to buy now and kick themselves later when prices fall.
Many sellers holding out for their price are not stubborn as such, they are just not in a position to sell at a loss and cough up $50-60K at closing.
But this can’t go on for too long as the ARM resets really take start to cascade. Presumably it will be boring to watch on the sidelines for a little while yet, then something will happen and the floodgates will open.
I hate to be a voyeur, but it’s a bit like knowing a train crash is going to happen, and you’re setting up your chair ahead of time to watch (from a safe distance).
Buyers need to realize that if they buy into this so-called “buyer’s market” that they are going to be STUCK there for a LONG TIME. They will have as much, if not more trouble selling the house than the sap they bought it from. Its the “Hotel California” effect - you can check out but you can never leave.
Buyers should understand that they are going to be in the house they buy for a decade or more, that HELOC’s will not be available to them in the future because of lack of appreciation, and that owning the house will have many expenses (roof, appliances, furnace, etc.) and will not be appreciating so it will be a COST. Better off renting for 1/2 the payment and saving your money up.
“Buyers should understand that they are going to be in the house they buy for a decade or more……..”
With the possible need to move and the overall mobility of people in this country these days, I often wonder why many people buy in the first place. The last 10 years have conditioned us to think that we are entitled to appreciation and the ability to sell quickly within just a few years with no penalty.
I don’t wish harm on people per se, but I agree that it will be good to get back to a normal market where people with a goal of saving for their home and who plan to live there for more than 5 years will be a good thing for all.
Seller’s agent Listing price 500k
Buyers bid 100k
Seller’s agent bid 450k
buyers bid 99k
Seller’s agent bid 400k
buyers bid 98k
Seller’s agent out of the market-ohh ohh forclosed
buyers bid 50k
Buyers won!
Perhaps we should just rename this the “BAGHOLDERS MARKET” to keep our American Property HOLDERS all Warm and Happy !
Talking train crash…
Crashes really only count if somebody sees them.
Some of you may be aware that a $235 million 840 foot high bridge is being constructed downriver of Hoover Dam, as after 9/11, the threat of a terrorrist attack on the road that goes over the dam was all too apparent.
Last Sept, high winds caused the collapse of 4 gigantic cranes, 10’s of thousands of tons of metal, fell just below the dam into the water and the cleanup took 3 months and delayed the completion of the bridge from an expected 2008, to perhaps 2010.
You could see gigantic scrape marks on the canyon walls, where metal gaining speed as it fell, gouged roller coaster like tracks.
Wish somebody had a video of it.
The name of the new bridge?
“Mike O’Callaghan-Pat Tillman Memorial Bridge”
If vegas were offering odds, i’d take the don’t pass line, for this white elephant ever getting completed.
http://en.wikipedia.org/wiki/Hoover_Dam_Bypass
Another potential boondoggle (I hope) - talk in Utah of building a huge pipeline from It’s A Reservoir Not Really A Lake Powell to fuel the development in St. George.
“I hate to be a voyeur, but it’s a bit like knowing a train crash is going to happen, and you’re setting up your chair ahead of time to watch (from a safe distance).”
People here need to keep in mind that sometimes an event can be so big that what appears to be a safe distance is not. Makes me think of grainy video of people watching a tsunami come in from the first floodplain above the beach, or those people watching Nevada nuclear tests with their sunglasses on from a “safe distance” only to die of cancer 20 years later. Got food?
I’ve been investing in food futures for months now…
Gotta Eat.
Yeah, me too - it’s called a garden.
I would say there are different degrees of safe distance. If you bought at the top of the market with nothing down, you are simply waiting to be crushed. But many people who post here are much safer than your typical mortgage slave.
In the 1930’s not everybody was a hobo. Lot’s of people had jobs and made out ok. It might have been more luck than timing for many, but there you go.
The collective idea here I think is to be a winner (relatively speaking) in the unfolding debacle.
I’d say that a decent number of folks here don’t seem to really be able to make a good prediction of how much fallout is possible as the housing bubble pops. It’s non-trivial to come up with a safe distance, and especially so in tail events.
I believe that in the 1930s the country was capable of growing enough food to feed everyone without importing anything. Today?
In an unstable interdependent system it’s entirely possible for a shock to one part of the system to create a situation where there is no “safe distance”. Even if you have completely isolated yourself from the real estate market, what happens when there is no work and your dollars become worthless? You can’t eat gold…
Then even if you have farmland and non-hybrid seeds and tools and water, etc., what if there are no bees?
There’s no way for anybody to know for sure if the system will be able to absorb this without breaking down or not. I just don’t want to be overconfident and think that I’m at a safe distance just because I’m 100′ above sea level. Some tsunamis are a lot bigger than that. I think there is a strong cultural assumption that the 30s are as bad as it could possibly get…
“I think there is a strong cultural assumption that the 30s are as bad as it could possibly get…”
I agree especially for those in my age demographic. There’s a first time for everything, eh? Even if that “everything” is just a worse version of something that’s already happened.
Oh, it can definitely be worse, a lot worse. People are nowhere near as prepared for hardship as they were in the 1930’s.
Train Crashes be Damned…They’re FOR the Tourists !
We KNOW what We’re DOING. “Gimmie a Full 8 NOTCHES on the Trottle and a verse of Casey Serin Jones”. “This Real Estae CANNONBALL is Coming Through”
I agree, but I don’t understand why things work this way. The outcome (short or REO sale) seems to be a foregone conclusion, so why does everyone involved insist on going through the absurdity of waiting and waiting until the inevitable crash-sale happens anyway? Sellers “can’t” sell, banks won’t approve a short sale, and even if they foreclose, they try to sell the house for way too much so it just sits there with all the other junk. Why not just foreclose, sell it cheap, and do it now and be done with it?
Banks (or whoever holds the mortgages) decide what to do when an FB can’t pay. They are the ones in control when an FB “can’t” sell because he has no money to bring to the table. So it would appear that the banks and MBS holders are the dumbos who don’t understand what’s really happening, and are the ones who are dragging out this process. They’re not permitting enough short sales, and when they do foreclose, they’re not cutting the prices on the repossessed foreclosures enough to draw in buyers.
So the whole conveyor belt we know as the real estate business comes to a grinding halt.
Why don’t the banks and mortgage backers “get it” yet? Do they honestly think they are going to get top dollar for their foreclosed properties? I guess they actually do! Because otherwise I can’t explain why they would fruitlessly try to fight the unstoppable ride downward by waiting it out instead of cutting their losses now.
Perhaps there is one other explanation. So many mortgages are held by “nontraditional” entities (MBS) that there are many additional layers of separation between the seized house and the investor saps who now “own” it. And some of these saps are big investment funds for whom there is no one person who makes a quick executive decision.
It’s a rowboat pulling a steamship pulling a battleship pulling an aircraft carrier, and they’re all piloted by really stupid, argumentative, delusional people and now we get to watch them try to slow down and turn the whole fleet around, but only after they break out of their denial about why they should be turning the fleet around in the first place. It’s going to take a looooooooooong time.
It’s downright weird to see it happen like this, to watch avoidable problems not be avoided. The process and outcome are so freakin’ obvious and yet… almost nobody involved acknowledges it. So they play their roles dutifully, lemmings marching right off the cliff together.
Most people either can’t or don’t want to wake up to reality. I guess it’s human nature but it astounds me. Those of us with any brains have no choice but to sit it out. What a colossal waste of everyone’s time.
I agree that it is human nature at work, on the “corporate” scale. I have been in many sales meetings where the internal presentations are largely BS, and everybody more or less knows it, but nobody is in a position to call it out.
So I would assume lot’s of people in the industry have a pretty good idea that things are going south, but are not going to say to their clients “We gave you bad advice because we were greedy” and tell the client to get out now. And please don’t sue us.
Often I have seen it is one or two stupid delusional people at the top, and everybody is forced to take their cues from them, at least publically. It like the old experiment where you put iron filings on a piece of paper, then put a magnet underneath. All the filings line up according to the magnet. The magnet dictates what all the filings do.
So right now everybody is forced to put on a brave face while they try to figure out their own personal situation.
“‘I think the (foreclosure) market is just going to explode over the next year,’ Goodnight said.”
What a tool. He just got done explaining what a great deal some townhouse selling at 7% less than peak price in a falling knife environment is. Total lack of credibility. Maybe some future FB could rent my credit cards to push up his fico and buy it:
http://addatradeline.com/Rent-your-credit-cards.php
Goodnight and good luck…
“‘I think the (foreclosure) market is just going to explode over the next year,’ Goodnight said.”
I really like Charleston. I actually expect that it would hold up better there than other places. But I’m talking about downtown of course, not the suburbs. Then again, I could be dead wrong, because I only know the place for vacations, and have no really knowledge of what actually goes on there.
It is very pretty however, with some excellent restaurants.
On the New York City front, I expect things to get ugly soon. I just bought a car from a euro-car dealer in manhattan. They were frankly desperate to sell to me, to the point I actually got a deal. That’s probably no big thing for most people, but I never get deals, I’m just not that type of person - in fact I usually get stiffed. You could tell that the salesman was terrified I was going to walk however, so he kept chopping the price.
Sweet.
We dropped the wifes car of at Mercedes dealer for service. They used to have 25 plus cars in line for night drop off. They had three this time. I had called for an apointment and they told me “Oh bring it in anytime.” Never before - usually schedule a week plus in advance.
My wife said a number of the desks in the service area were empty when she picked it up. They had/have crappy service but they were one of two dealers in NO.VA. so you had to use them.
I read a story in the New Yorker last night. It was about a writer whose life was falling to pieces. Interestingly he knew he was doomed because his ARM was resetting this year and he was already having financial problems. The story ends with his wife sitting in the kitchen on her laptop selling their music CD’s to bring in some cash.
So, is the implication that MB owners are putting off servicing their cars because of the RE downturn?
One would think it would be the opposite - as the econ slows. fewer new cars would be sold, and older cars would be kept longer, thus requiring even more service and repair.
Anecdotally also here in the OC. Took the old Saturn in for an oil change. The guy tried desperately to get me to rotate the tires. Said it is the #1 problem he sees. Yeah, right. Also, told me the front brakes need replacing, which is true. What was telling though was that usually the oil change is finished late afternoon. Not this time. Drop off about 10 and by 12:30ish I get a call that the car is ready. This is a dealer and usually the wait on a Friday is several hours if you are not waiting for the car. I urmise that things are getting very slow. I have also noticed that my dear Saturn Co. is slowly getting into higher-cost cars. WTF? The brand was built on competing with the Japanese. 27K-30K for a Saturn? Bunk. At that point why not kick in the extra 10K and get a low-end Mercedes or Lexus. Makes no sense, esp. in this economy we are currently in. No wonder Toyota finally passed GM as the #1 seller in America. We are so screwed up in this country!
One would think it would be the opposite - as the econ slows. fewer new cars would be sold, and older cars would be kept longer, thus requiring even more service and repair.
Ah, but you are mixing service and repair needs! When you’re direly short of cash, as I was in my entire 20’s, what do you skip? Regular car servicing, for one! Not only did I change my own oil, but I did it half as often.
Now I’m not saying that the Benz owners are changing their own oil, but they might well be skipping or delaying maintenance as I used to do. Or they might be skimping by doing only the mandatory maintenance at Jiffy Lube instead of the full (and expensive) dealership checkover.
Heck, in my 20’s my attitude was this: Oil changes are nice, but what are the chances I won’t total this car in a year anyway? And the same mindset might apply these days if someone’s behind on their car payments as well as their ARM! Doh!
THough I’m not a FB, I spent 20 minutes reading how to change coolant and spark plugs, 20 minutes getting the parts, and then about 45 minutes doing the work. Saved me about $200 from dealer’s ludicrous prices. How do those guys sleep at night?
Our local dealers have all moved to a new Auto Mall. These new places look like Taj Mahals, and they must be very expensive. There is no way these dealers are going to drum up the extra business to cover their new costs.
Its not just FB’s who can’t resist a shiny, new building with a huge mortgage attached to it.
I thin kthey are called “Garage Mahal’s”
I had somethign was a little similar … I was in McLean, Va., pulling into a parking lot (going to buy some beer at Total Beverage, if you must know). As I get out of the car, a guy in Black Hummer H2 pulls up behind me and says “Hey - I see you have some scratches on your car … I can fix that for you” — I gave him a cheerful “no thanks” (I just have the usual scratches on bumpers you get from a life of parallel parking and getting stuff in and out of the trunk).
I know that’s a long, boring story — but I didn’t think body shop guys who drive Hummers usually have to hustle for business in shopping center parking lots.
Brother, could you spare a Hummer?
If you were in LV, I’d swear it was my friend’s friend who’s $600,000 McMansion is in foreclosure, but is still driving his Hummer. He’s down to selling his furniture to his friends so it wouldn’t surprise me if he drove out to Nellis (away from his neighborhood) to clean windshields for the military folk.
The guy you mention may be in a similar situation. But I’m with you. It’s hard to picture someone in a Hummer hustling for work on the street.
BayQT~
Anybody who drives a Hummer who isn’t in the military or a rancher is a dork. Anybody I have ever known about driving one is usually leasing it.
I live in ranching country (W. Colorado), have a number of ranchers in the family, and NO rancher I know would be caught dead driving a Hummer - they couldn’t afford one, anyway. They all drive old Ford pickups or Willys Jeeps. Another Hollywood myth. IN fact, even in Moab (where I used to live and still spend a lot of time), everyone looks down their noses at Hummers (this is four-wheeler heaven where everyone’s a 4X4 connoisoir - sp?) - Hummers are too wide for a lot of the old roads. Just some OT trivia…
I know what you mean. I went out an bought the last 2006 jeep rubicon at my local dealer when I found out that the “new” jeep (2007 model) was almost a foot wider and has a mini-van engine in it.
My father in law works in the autoparts business in Colorado and it seems lately that there is little if any business. I don’t know if this is just a temporary thing but it is worth watching.
I read an interesting book about the Great Depression one time. Forget the title.
The upshot was that no newspaper of the time had any headlines saying - “The Great Depression Started last month.” Things just got worse and worse without official comment until the folk wisdom figured out that we were in “Hard Times”.
It will be interesting watching the current downturn unfold - whether it will end up being called a Depression will only be known after it is over. So I think of it as living through a historic time. I’m trying to observe and remember how we all react to this.
Interesting post, Sad.
I was in Salt Lake the past couple of days and the Tribune reported that hotel room bookings are down.
There is an official definition of what a “Depression” is (n consecutive quarters of negative growth). Of course, the government will fudge the numbers so that we won’t know, but eventually “folk wisdom” will figure it out: lots of empty, closed casual dining and retail outlets.
A “lifestyle center” opened in our town 18 months ago. It still has plenty of vacant space. It has a huge sporting goods store (a chain) that always seems to be empty (I wonder how long that turkey will last).
“Verstandig’s company specializes in buying, rehabbing and reselling properties, typically from owners in financial distress. The company recently erected a billboard on Reisterstown Road in Pikesville offering to help homeowners avoid foreclosure.”
He’s a flipper, and his business model is BROKEN. He can only make money if he buys below what the potential foreclosee owes, and the bank won’t permit it. Sure, the opportunity (ie, quantity) of potential foreclosures is through the roof, but from a flipper’s perspective they are all financial dogs.
Which is why manias, at the end, destroy the fortunes of those who “made it” pretty quickly.
We’ll be in a stalemate through summer. But around August (earlier Florida, later some other places) enough foreclosures will be entering the market to set the prices. But this is going to be slow… for a long time. Then the price dam will break. But when?
Got popcorn?
Neil
If in the next few months sales don’t pick up, I bet you will start to see real price drops in summer and fall in most major bubble areas.
I suspect August when sellers figure out that people w/kids are getting ready for school. I have already made it clear I will not pull my kids out of school to move midyear or end year across the country. Will have to be summer. However, for these FBs, it will be summer ‘08 for me, at the EARLIEST! Aside from me though, I think the pain will be August. Hey, families are getting ready for school. Despite all our crazy schedules, the September-June calendar still runs many people’s schedule. Therefore, I’m in for August. I would add though, by summer ‘08 the pain will be excruciating.
I would like to go back to the comments at the top of this thread. It is going to be real hard for all these bagholders, no matter who it is, even if it is the banks. The problem is we are not talking about several thousand short sales of 25K each. The problem is we have a mammoth inventory, whcih is growing daily, of homes that are overpriced, for whatever reason (nefarious and otherwise) by 100-300K. You could say the Bank XYZ could take a couple of hits, but when bank XYZ has to short sell let’s say 100 750K homes at 350K that’s $40 million. Now we are starting to talk some real money. Now, multiply that by hundreds of banks that have to take in forclosures. See where I am going with this. One is a tragedy, but hundreds of thousands is going to be an economic tsunami.
We have all seen how many joke lenders have gone bust, but the pain will come in a second wave when banks begin to go bust over these homes and shortselling. So much money is going to be lost on these homes it won’t be funny. Sure, BoA and Wells Fargo will survive, but what about the local credit unions and the smaller local banks. I know, I know, screw ‘em. They lent the money now let them eat the loan/house. I am just pointing out that this mess is sooooooooo huge that everytime we think we have all the answers anotehr aspect must be looked at and sadly, every time I think of another legit angle it is not a good one.
“We have all seen how many joke lenders have gone bust, but the pain will come in a second wave when banks begin to go bust over these homes and shortselling. So much money is going to be lost on these homes it won’t be funny. Sure, BoA and Wells Fargo will survive, but what about the local credit unions and the smaller local banks.”
BoA is a joke, their only jumping in the wagon because their rates really suck during the boom and now they want buy out other lenders…. oh please, all BoA is going to do is hike up the rates and make the current situation worse. I know this because I of used to work for BoA and here the number of complaints on how the BoA raise rates from 6% to 21%.
This is definitely slow motion price drop. Some markets, like VTs are still feeling the effects of the bubble rise even as CA/FL, etc are starting to see the deflation. (I had my small, “affordable” house under contract in 1 day because there’s nothing under 180K now. I’m keeping my fingers crossed - closing is June 15th, but the couple’s financing seems solid.)
It’s sometimes hard to read a blog updated daily on the situation. It’s sort of like getting an daily update on the growth of grass.
Its going faster. The ARMs are hitting people and some are trying to prempt the hit from the forclosures.
You can see it in the inventory. People will be trying to figure out what their best course of action is.
Options…
1) Stay and live rent free while stalling the bank? Figure its six months or more after the tax refund mioney is gone. If its a big enough volume you might squeeze out 7-8 months before they kick you out. That gives you plenty of money for a rental deposit and time to shop. Not to mention the possibility of a ill thought out bailout. Also spend the time running on credit cards. If you are going to go under might as well do it all at once.
2) Renegotiate with the bank… I guess you do this if you have other assets the bank might want. Variable with laws in your state.
3) Put it on the market and take your lumps.
4) Engage in some kind of sketchy deal
5) refinance into a fixed rate and take an ochie
6) Rent it and stretch it out
7) Refinance in to a new toxic loan and rent it out if possible
I had hopes that people would have consolidated debts with all the low rates and spread their obligations so that shocks would not hurt them. All they did was get dumb ideas and spend more.
I saw a forclosure on Torrance Blvd. Nice person I talk to when I walk my dog. Small amount but guy looks like he is retired.
I felt pretty ill.
“But Verstandig said the lean resale market has constrained his business. Properties that typically took 30-45 days to sell now linger on the market for 90 days,”
Mr Verstandig, if ALL of your properties eventually sell in ‘90 days’ … you can surely factor that into your profit equation.
I’m betting there will be no sudden, big drop in prices. Instead, the air will continue to be let out slowly over the next couple of years.
Verstandig doesn’t dig what’s going on…
Verstanding nicht verstehen.
Oder, so ist’s bessa’… Verstandig versteht nicht!
Gel?
Herr Verstandig ist nicht verstandig!
We dont want any trouble in here, not in any language.
But it’s German, the lilting language of peace, love, and romance!
OK, before I get branded for insulting other cultures, or languages, with that snipe above, I better point out that (perhaps due to my background) I actually like the sound of German, though my preference is the southern rather than northern. It sounds comfortable and soothing to me. Really. But my American and Brit friends in general have a different opinion. Oh well.
Buyers are afraid, or paralyzed, or standing-off. This is the excuse given for not selling by people whose job it is to sell. Although they are professionals, they take the listing even at the price asked, yet are unable to do the job for which they demanded an exclusive listing.
The reality is that there are probably no buyers.
‘There’s so much inventory on the market right now that buyers are overwhelmed by choices and it paralyzes them,’ said agent Dave Johnston.”
Again with the paralyzed buyers! Here’s a newsflash, NAR…there are no buyers left. They’re all in, trying to sell, or all out, not about to get back in.
Yes, indeed I am paralyzed by the thought of removing my money from my healthy investment portfolio, and throwing it away in the form of a downpayment, only to see it quickly dissipate by falling home prices. In that case, I am frozen fresh.
You and me both. I thought that I really wanted to purchase this summer, but I’m so disgusted by the market I can’t seem to convince myself to do it. I like having about five years of expenses in the bank, earning 5.25%. Pays rent on a nice house in a lovely neighborhood. At least it’s nice for the moment. Another family moved out last weekend, a week ahead of the sheriff. That’s three REO’s on my street now, and a couple more for sale. The price on the house across the street is down from $315 to $300 in a month. Lots of showings, no bites. Guess there are a lot of people like me who are afraid to jump in.
where are you?
Douglas County, Colorado (south of Denver)
Jeez Louise - my niece bought a house there six months ago - said she’d like to come back to W. Colo. but has to stay 2 years, something to do with her mortgage (hmmm, prob. some refinance penalty, etc.). Good luck to her.
lost,
Just curious, not ripping on your niece, but if she knew she wanted to move back to W. CO why did she buy a place?
I really want to understand the benefit of buying a house for that short a period of time.
Not that simple, Sleepless. Her husband wanted to move there to be closer to his family. He promised her they’d come back after a couple of years, then he, too, decided he didn’t like it over there. They’re hosed. They are totally brainwashed Americans as far as owning a house meaning personal value. BTW, he sells cars - she’s a respiratory therapist, so she’ll be paying the mortgage, IMO. BTW, visited the place you mentioned near Salt Lake - like something out of a scifi movie (the aliens abducted everyone…)
“The reality is that there are probably no buyers.”
How much of the possible supply of “buyers” has been already consumed (and devasted) by subprime loans? How many might buy if only they could sell first? How many who haven’t been consumed by subprime yet but would need a subprime like product now won’t qualify or will face much higher, discouraging, rates? How many intelligent, fully qualified new buyers, seeing how they are likely exposed to a significant downside at this point, have backed off nearly completely?
The problem the real estate market faces is the snowballing effect now under way. It would seem the only people buying now are those who, somehow, manage to sell their existing property, those who are “lucky” enough to qualify for some kind of loan and stupid enough to buy at this point (without negotiating 25% lower prices) and those with such great financial situations that even a loss of 25% (or more) is not a big consideration.
That doesn’t seem like a very big pool of buyers to me. Certainly not enough to absorb the foreclosures, the excess new home inventory and the re-sale of existing homes. History indicates the process of prices declining will be slow and drawn out. But history never had this many negatives apply to the buy side of the equation, has it?
Got a feeling when the declines start to come they’ll set a new precedent.
Got a feeling when the declines start to come they’ll set a new precedent.
Yes, I think where I live it will begin after Labor Day this year.
I do a check on MLS sales every so often during the month. I usually check the activity in the 2nd and 3rd weeks. A new trend is emerging. This last month there were 879 sales in the 2nd week and 718 in the 3rd week.
This all came after lender crashes. My guess is we are having qualifying issues. We have the worst month going now since 1992.
Oh guess where….Central Florida. It truly is different here.
I better explain after reading my post…..Solds dropped from 1 week to the next.
When will the other shoe (prices) fall? “Won’t somebody please think of the children?!?”
Spring selling season, though it has now crept beyond reason into post-superbowl, is the selling season because people look to shop in the spring close over the summer, so the kids can start in the new school in the fall.
It’s an unfortuante fact that the best numbers are trailing ones. I look for pricing to reflect real nominal declines in September, based on sales that closed in August. By that time, sellers who’ve been on the market since February (or longer) might get a hint that if they don’t sell NOW, they might be stuck with their albatross all winter.
I live in Rockville off Montrose Rd and it amazes the prices people are still paying. In Old Farm houses are going for more than they were last year and they are selling fairly quickly. It further amazes me that people are asking $800plus thousand for houses that have only one car garages and need new kitchens and bathrooms and they are getting their price. The last house that sold in North Farm sold for 99.6% of the asking price of $784,000 and there were three bids. Plus the house had the original 22 year old kitchen and needed work. Are people crazy? I just don’t get.
Not everyone can me making $250,000 to carry the $600,000 plus mortgage and still lead a decent life plus save for retirement and college. What am I missing?
Hey, I live near that area, if you go over to Potomac or Rockville (20850), it’s a different story. Old Farm and Bethesda will be the last ones hit. In fact Bethesda 20817, is barely moving.
what do you mean by barely moving?
slow sales
I track 20814, 20817, 20854, 20817, 20852, 20850 - 20852 is by far the strongest selling zip.
You left out 20853, where friends just put their house on the market. My wife remembers them talking last year about what they could probably get, and their asking price is about $75K less than that. Will be interesting to see how quickly it sells.
Still alot of people with equity from the 6 year runup in their old place. There’s lots of anecdotal evidence that many are optimistic about what they’ll get for their old place and that informs what they’re willing to pay for their new place. I wonder how well and for what price those condo’s just South of Randolph road are selling.
in 22151 we’re 13% off peak
bus ride to Pentagon = 20 minutes
In 22101, I’ve seen the same house for months with a “Priced to Sell!” sign out front. Hasn’t sold yet.
Saw the same thing…..house on the market for almost a year the the storyline in description reads “Won’t last long at this price!”. Errr, still hasn’t sold.
Michael, I’ve already said I suspect you are a RE troll. How could/do you know how many bids houses have?
Your stories don’t match the stats…
http://www.mris.com/reports/stats/
I know the people who bid on the house and they were told their bid was the worst of three bids. I
…and were they shown the other two bids? the old low-bid trick has been around awhile…
Prices are so uneven here. I had a neighbor who got a reappraisal (9-year old, pre-bubble quality), they came in at just under $100/sq. foot. New n’hood 0.2 miles away is getting buyers paying $175-$200 per sq. foot, and the houses are all closing fine. Educate me on appraisals. How that can happen?
Cannot say definitely without knowing your area, but school quality can do that, easily. Ithaca NY rezoned its school district a several years ago so that houses out by the airport were no longer in the same school district as the professors houses. Prices dropped like a stone.
You gotta love these realtors. Every time they open their mouth you just know that the new mantra, along with, “Now is a great time to buy,” will be, “I don’t think a slow down will affect this area.” Even if the property is in a gang infested area. Makes you wonder if they have someone at the NAR head quarters who’s only job is to sit in his office all day thinking of catch phrases and sound bites.
they can’t help themselves, they are brainwashed D-Bags
I used to work for one of the credit bureaus who would verify trades on credit reports before the loan would close. It was surprisingly odd how some Hispanics would get non-traditional loans through these mortgages and loans. They would not have any credit and their social were not legit. Their loan processor would supply us with a list of trades to contact. We would verify the landlord reference and most of the time the landlord would mention that the applicant was late over several times. When we verified the trade, most of the trades would tell us that they did not recognize the individual and would hang up. Then we would contact the loan officer notifying them that the trade could not be added because the trade did not recognize the individual. Minutes later we would get a phone call from the trade telling us that it was an error on their part and the applicant does business with them. I knew there was always something fishy with this and when I did try to let my supervisor know she would say to just add the trade because the loan processor would get frustrated. I was so amazed on how it was easy for these losers (applicants) would get an approved loan based on references that could be friends of theirs. I was also shock how applicants that already filed for bankruptcy were applying for a mortgage to get another house. Oh yeah dead beat dads and deficient borrowers with 30 collection accounts were on the list.
We got an offer on our house in California from a Latino landscaper that was obscenely high compared to other offers. I remember asking our Realtor her opinion, because it seemed too good to be true. I was certain that the house would not appraise. She confirmed that it sounded suspicious and skirted delicately around the issue. We ended up taking a lower offer from a buyer who appeared to have more secure financing. I’ve always felt weird about the situation, thinking I had been racist by denying the Latino family’s offer. Now, a couple of years and many blog reads later, I think I did the right thing. It was a fishy deal, and even if I hadn’t been burned, my neighbors would have been down the line.
Most of the mortgage providers would be American Home Mortgage and Countrywide Loans that would provide these loans to Bad credit applicants. Loans going into closing started to decrease in September 2006.
Fannie Mae to the rescue (I smell a taxpayer bailout in 5 years):
http://news.yahoo.com/s/csm/20070426/ts_csm/aloanhelp
Be sure to call your senators and congessmen about this, I don’t know how much good it will do and I know you’re probably tired of making phone calls on this issue already, but this could be a major financial disaster for our country, having the federal gov’t absorb hundreds of thousands if not millions of bad loans…
Fannie Mae’s number is 202-752-7115
“Washington Mutual, another giant lender, says it will refinance $2 billion in subprime loans, helping borrowers avoid foreclosure. The new loans will come with below-market interest rates.”
Hey… No Fair!
My house is financed through WAMU. I got a Prime 6% 30 Year Fixed because I pay my bills on time and didn’t buy more house than I can afford. Are they going to give me a below market interest rate, as well.
Another example of rewarding people for bad behavior.
Definition of Buyers Market- All of your neighbors hate you because values stopped decreasing after your purchase in 2010.
“‘It’s a nice property,’ said real estate agent Kevin Goodnight. It’s a bargain, Goodnight said, at $278,000. Similar homes in the neighborhood have sold for more than $300,000.
When did they sell for that price? How long will it take for the collective mindset get off ’05’s price sheet?
“‘There’s no question things are slower,’ said Mark Vitner, an economist with Wachovia in Charlotte. ‘The Triangle is doing very well, but we’re seeing it slow all over the country and the Triangle is no exception,’ Vitner said.”
“‘There’s no question things are slower,’ said Mark Vitner, an economist with Wachovia in Charlotte. ‘The Triangle is doing very well, but we’re seeing it slow all over the country and the Triangle is no exception,’ Vitner said.”
Whoa! The Triangle is ‘doing very well’ and by the end of the sentence ‘the Triange is no exception’ to the slow sales. What?!
Foreclosure market going to “EXPLODE”
YEAH!
Locked in?
Start making huge price cuts. not 5% or 10% or chunks like 20% at a time.
Close italics.
David Greenleaf is seeing both sides - seller’s and buyer’s - of Tucson’s housing market. He recently sold his far East Side house but it took him eight months. The golden days of just two years ago, when eager buyers bid up prices and homes sold in days, rather than months, is a distant memory.
Tucson now ‘extreme’ buyer’s market
Italics…….off?
Sleepless, don’t know if you’ll see my post above - visited the subsivision you mentioned in Slat Lake - eerie!
The Triangle will continue to do well. I used to live there, still hanging on to my house there. Great jobs, good pay, good climate, few natural disasters and you can still buy a nice house for around $250K, stuff that would cost you $800K in Miami and $1.2 million in CA. Why did I move to Miami? I’m still trying to figure that one out.
…mostly I got a nice promotion in a job I like. Like ancient man followed the herds modern man follows the jobs.
I do’t know about that. I lived in RDU from 2000-2002. Those were some lean years for housing when nothing sold.