Paving The Way For A Pop
It’s Friday desk clearing time. “Hawaii Island home sales dropped by 18.4 percent, from 527 sales in last year’s first quarter to 430 this year, according to statistics provided by the Hawaii Island Board of Realtors. Condominium sales were down by almost half. Overall, it’s a buyer’s market, and sellers should wake up to that fact, said Hawaii Island Board of Realtors President Mary Begier.”
“‘I’m telling sellers if they want to move their property, they have to offer value,’ Begier said. ‘People who have been listed for over a year didn’t take my advice, and now they’re chasing the market down. Sellers who still think it’s a seller’s market are only going to hurt themselves.’”
“Tulsa-area home sales hit a record in 2006, with 13,722 homes changing hands, for a total value of $2 billion. Toni Bales said Tulsa’s relatively low prices continue to attract investors and new residents from the West Coast, and Bales doesn’t see the trend slowing down any time soon.”
“‘I can’t tell you how many people I’ve sold to over the last year that have moved in from California, Arizona and other expensive places,’ she said. ‘Prices have gone so high there, and they’re very attractive here.’”
“Licking County home sales from January through March were down 8.4 percent versus the same period in 2006. However, Licking County Board of Realtors President Jim McKivergin said in a press release he is optimistic.”
“‘There’s a wonderful inventory of homes available, interest rates are good, sales prices are coming down, and there are plenty of buyers out there,’ McKivergin said.”
“Figures from a new housing benchmark introduced last week by Johannesburg-based mortgage risk management company Lightstone, suggest that leisure property buyers in coastal areas have dwindled dramatically.”
“So much so, that coastal house price growth dropped from a monumental 64% in November 2004 (year-on-year) to only 4,2% in December 2006.”
“The South Shore may have some of the state’s best bargains for house hunters this spring. The median price of a single-family home in the region fell 4.3 percent from a year ago to $335,000 in the first quarter of 2007. It was the biggest percentage decline of any region in the state, according to the Massachusetts Association of Realtors.”
“Price reductions of $25,000 and more on some properties have attracted new potential buyers, said Barbara Cohen of Pratt Realtors in Canton.”
“Foreclosure petitions rose 86 percent in Suffolk County and 72 percent in Middlesex County over the previous year during the first quarter. ‘A lot of those sellers are really fighting the clock,’ said Terry Egan, editor for The Warren Group.”
“One question my friends and colleagues have asked me repeatedly over the past six months is: Are you still renting? Yes! I sold my house over a year ago and continue to rent.”
“A year ago, I suspected housing prices were set to take a sharp turn for the worse and more ‘For Sale’ signs were coming. Based on the current outlook for housing, I will likely be renting for one to two more years.”
“Economist Christopher Thornberg is now predicting the hardest of hard landings for California real estate: a housing-induced recession. He laughs at the notion that the subprime mortgage meltdown is to blame for continued weakness in the housing market.”
“‘That’s ridiculous, subprime credit CREATED this bubble,’ Thorberg told LA Land this afternoon. ‘How could prices get so high in relation to income? Prices can only get this high when people have available to them ‘crazy credit.’ It allows them to gamble. It’s crazy credit!’”
“It’s increasingly clear that much of our standard economic vocabulary needs revising, supplementing or at least explaining. We’ve been conditioned to think of recessions as automatically undesirable. The labeling is simplistic.”
“Hardly anyone likes what happens in a recession. But the obvious drawbacks blind us to collateral benefits. Downturns check inflation, and low inflation has proved crucial to long-term prosperity. Downturns also punish and deter wasteful speculation.”
“When people begin to believe that an economic boom won’t ever end, they start to take foolish risks. Partly, that explains the high-tech and stock bubbles of the late 1990s and, possibly, the recent housing bubble. Almost no one wishes for a recession, but the consequences might not be all bad.”
“I was driving in my own neighborhood and noticed a real estate agent taking care of those balloons…where an open house is being held. He had a pen or other such implement and appeared to be angrily stabbing at the balloons to pop them.”
“Something about the rather violent manner in which he was popping them made me think of someone who’s not particularly enjoying his job these days. Barbecue chit-chat and busted balloons brought to mind the bursting bubble, as years of overheated prices, fast-and-loose lending practices, and (last but not least) some consumers’ own greed and irrationality have paved the way for a painful ‘pop.’”
“The portion of U.S. homes empty and for sale rose for the 10th straight quarter at the end of March to a record rate of 2.8 percent, the Census Bureau said on Friday.”
“The number has been steadily climbing since the fourth quarter of 2004 when it was at 1.8 percent and indicates a housing market bloated with speculators, said William O’Donnell, head U.S. government bond strategist at UBS Securities.”
“‘This is more pressure on the housing market and shows that the path to recovery is going to be that much longer,’ he said. ‘We just think it speaks volumes for the speculative nature of the housing market.’”
“The United States is currently ‘in a housing recession,’ said Lawrence Yun, an economist with the National Association of Realtors, who said Friday’s data was ‘disconcerting’ but not surprising.”
My thanks to those who support this blog! Please check back this weekend for news, your topics and market observations.
thanks for all you do
OT - are all of you looking at the photos posted in the right margin here? Scary places! Scary!!!
Hmmmm, I thought those balloons were supposed to deflate slowly, something like a souffle.
Big jump on one foreclosure website. It was hovering under 1.5M and just spiked over.
Deflate slowly? Like this?
http://tinyurl.com/yjxp9a
that’s pretty funny
LMAO,
watch that link guys.
thanks for the laugh, I guess were all psychos at heart.
Everyone KNOWS there is no housing bubble! That’s nonsense. Move along, nothing to see here!
“The United States is currently ‘in a housing recession,’ said Lawrence Yun, an economist with the National Association of Realtors, who said Friday’s data was ‘disconcerting’ but not surprising
Does this guy work with DL? I never heard DL say that…
He is DL’s bitch.
kinda like Lloyd on Entourage?
that line by Sasso on last weekends episode……after you sleep with an asian, your horny a half hour later…..I almost fell out of my chair laughing.
that is a great show!
LOL. MY wife is Chinese; I’ll have to tell her that one.
You guys are freakin killin me today, been laughing for 4 min =).
A housing recession is when your neighbor gets foreclosed on.
A housing depression is when you get foreclosed on.
LMAO, I love dark humor!
ITll be like the Beverly Hillbillies in Reverse….sellin the cement pond for a taste of Oklahoma gold. YeeHAW
Cmon down you equity locusts……Tulsa ripe for fresh pickens, and collard greens, chicken necks, pickled pigs feet…I could go on and on, but it just gets stupider and stupider, and….
“…13,722 homes changing hands, for a total value of $2 billion..” Wow, $145,000/home. I have not seen those prices since 1999 in California. You know, the same home that was $450,000 in 2005, and is now listed at $350,000 today. By 2010 the California home will be $200,000 (’99 price + 3% annually). Then where will you want to live? Tulsa for $145,000 or CA for $200,000?
My Broker allways told me when land in CA gets as cheap as land in Oklahoma you’ll see Ma and Pa load up the ol pickup and head for CA once again.
Yea, the ’shooting at some food’ verse can still stay in the opening song.
They’d just have to replace the existing footage with a new one showing him taking a pot-shot at the backyard squirrels…
“‘That’s ridiculous, subprime credit CREATED this bubble,’ Thorberg told LA Land this afternoon. ‘How could prices get so high in relation to income? Prices can only get this high when people have available to them ‘crazy credit.’ It allows them to gamble. It’s crazy credit!’”
This is what we have been saying here for some time, but I admire the fact that Thornberg has the cojones to say it emphatically in public, and I also like the way he is saying it.
“Words ought to be a little wild–for they are the assault of thoughts upon the unthinking.”
J.M. Keynes
Thornburg risked his career to talk about this bubble early.
He’s the kind of economist I like, a long term optimist, he can ignore small potholes, but man is he pointing out this valley.
My sister in law closed on her home. Nick of time!
Got popcorn?
Neil
If there is anyone that Perma Bulls fear is Robert Shiller (Irrational Exuberance). Mans got to get a Nobel peace prize for hitting both bubbles dead on. And today the NAR is disputing his claims. Its like the Tobacco lobby talking about Smoking and Cancer.
Shiller is the man. How many people remember the RE town hall meeting on TV about a year ago. It was Shiller on one side along with that guy from Seagate and Lereah and 3-4 others beating him up and laughing at him-I wish they would bring that group back to revisit the housing bubble question, Shiller would be doing all the laughing now.
Best of all was that doofus that said he had just gotten out of a corporate job to become a RE investor. He said he was in a cash accumulation phase, meaning he thought he woulld quickly flip 10-15 houses build up some cash and become the next Trump. He got on the train just a little too late. When asked if he thought the housing boom would continue he said “I know it will”, exact words. I would love to see him now, he is probably strapped , wife yelling at him to get a job and on and on. That makes me think of another issue, how many think that this bursting of the bubble and resultant financial stress will bring on more domestic problems with home owners that thought the rising RE market would be thier financial answer?
What you are looking for is called the economic hardship model. You can find about a gazillion academic articles on it. Same with the Family Stress Model. Below is a good jumping off publication:
Couple resilience to economic pressure by Conger RD, Rueter MA, Elder GH Jr.
Center for Family Research in Rural Mental Health, Iowa State University, USA.
I can’t recommend the Congers work enough, both Rand and Kathi.
I’d like to throw out a *very* honorable mention for John R. Talbott. His book (written over four years ago) on the housing crash was spot on.
Neil, forget the popcorn. This is going to require a six course meal.
With fine wine.
Oh, my sister in law closed on *selling* her home. I convinced her to rent for 6 months while she decides on where to buy. Hopefully she finds reasons to wait longer.
Got popcorn?
And wine…
Perhaps Elk? (YUMMY!)
Neil
What really bugs is that a lot of Americans thinks that they have to own a house regardless of the ridiculous price. Peer pressure is bloody strong, more so when you are an adult. It seems that feel that they are not successful if they don’t own a “house” = mortgage. A lot of people really feel that they are “second class” citizens if they don’t own a house. A small but significant blame has to be with the government (both parties) who readily promote homeownership for family “stability”. The government should take that crock and shove it!
“There’s two other shoes to drop,” predicted Thornberg, now with the consulting firm Beacon Economics. “First, this mortgage problem has not played out.” He noted that investors continue to price mortgages as if the housing market will stablize, not deteriorate. “There is still an astonishing amount of either sheer stupidity or head-in-the-sand mentality when it comes to these mortgages.”
It amazed me to see ads for toxic loans here in Michigan last year when prices had been dropping big-time since 2005. The continuation of this in California is really quite scary - a 95% LTV is little protection against what value decline is probably coming.
Speaking of toxic loans, I ran a couple of errands this afternoon. One was to my credit union, where I made a deposit. They had a big lobby promo for HELOCs and first-time mortgages, and there was free popcorn. (Hi, Neil!)
Well, it being Friday afternoon, the line was long, and the lady in front of me smiled at me and said she really wanted some popcorn. I told her that the free popcorn came with a pretty hefty price tag, especially if you’re interested in a HELOC. I said that it was a loan that you have to pay off with interest.
Well, she still wanted the popcorn, and we hatched a plan to keep the Air Force guy at the promo table talking to the credit union employee who was running things over there. We’d snag our popcorn without having to hear The Sales Pitch.
And the guy behind us added another fun thing to the plan: If the employee launches into The Pitch, just tell her that you’re a renter.
Instead of making a deposit, you should have made a withdrawl.
Or do what someone else recommended on another board — just listen to the sales pitch then tell them you really want the HELOC — “But do I need to tell my landlord? He might get upset if he thinks I need a loan.”
Ha! I thought I was the only one who did that to salesmen. Also funny to pull on vinyl siding telemarketers - hear them out and then enthusiastically agree to an in person meeting. “Apartment number…”.
Im in Northern California, San Francisco Bay Area.
Im amazed people are still buying in over-priced areas.
They really have no clue.
I guess there are going to be a lot of people there taking it in the rear…
No Duh, it is Friday night in SF!
Call in Auger Inn…
rofl! and you haven’t lived until you’ve been on Castro for Halloween.
Of course it is not going to stabilize. When lending gets tough, the tough get to lending. It’s a doublewhammy. They have to offer lower rates to do business, even though those lower rates will kill them 6-12 mos from now when the borrower defaults or refis again. Pick your poison.
The neat thing I have noticed lately is that when meeting new people and talking to them about real estate, they agree that now is not the time to buy. Obviously they bought before the year 2000 or they are renters. This “buyer’s market” slogan going around is 5 years too early, in my opinion. Waiting for blood on the streets.
I agree Getstucco . I like the way Thorberg has called this credit what it was, “crazy credit “. Other words come to my mind also .
Unqualified credit
Fradulent margin buying credit
Mania credit
Crooks credit
Urgency credit
Appraisal scam credit
Lifestyles of the rich and famous credit.
I like how finally some economists are coming out with just how fake this run-up was .
I dunno, when I hear ‘crazy credit’, I envision that scene in Rodger Rabbit where they’re going thru the tunnel and it opens up to Toonland. Like they’ve all been drinking the kool-ade.
Time to add some ‘DIP’ into their punch…
Starve The Agents …….No question that the entire REIC was in la la land . It was like a cartoon to hear all the agents chant out the cheerleading myths like ,”we are running out of land, “real estate always goes up “, “you can’t afford not to buy “, “go on this IO loan now and refinance later”, “15% is in the bag “or “buy now or be priced out forever “,and “we have reach bottom now “,or the rich baby boomers are coming to buy .”
There were alot of reason why this mania got out of hand ,but it could not of gone on unless the lenders financed it. It’s scary to me how long the lenders would of continued with this faulty lending had it not been for the foreclosures and fraud deals starting to bite them in the ass .
According to Thornberg’s presentation at Humboldt State, this is the biggest real estate bubble ever, there is no precedent for it, but prices in 2012 will be where they are today. That might not exactly qualify as a soft landing, but it’s pretty close.
…but prices in 2012 will be where they are today.
Well, he’s gotta throw them some kind of bone. Too bad it’s the one thing about which he’s dead wrong.
I wish economists wouldn’t be weathermen and quit making forecasts, because what prices are going to be in 2012 is entirely speculative. Discussing it isn’t even worth the ascii characters it takes to type. What does matter are things like the level of Krazy Kredit relative to income, methods of mortgate fraud, etc. Economists should work with data and logical concepts rather than guesses about the future. Keep it real.
Totally agree. That’s why Shiller is so good. He skillfully plots the dots, but leaves it to you to connect them.
Jeremy Granthan: all the world is a bubble
‘The bursting of this bubble will be across all countries and all assets.’ — Jeremy Grantham
http://www.thestreet.com/_breitbart/funds/followmoney/10353243.html?cm_ven=BREITBART&cm_cat=Free&cm_pla=Feed&cm_ite=Feed&puc=breitbart
Sorry if this is a report
meant “repost”- sorry, long day!
Grantham did a study of all bubbles (defined as 2 std deviations away from mean).
There have been 28 of them. 26 have burst and 2 are TBD.
Hmm, is it different this time?
Interesting quote from the Grantham article:
“By his calculations, the only assets likely to beat inflation by any significant margin if you hold them for the next seven years are managed timber, ‘high-quality’ U.S. stocks, and bonds.”
Not to mention Tulsa is the barbecued baloney capital of the world. Umm umm!
nuttin but steers and queers in Tulsa, which one are you boy? I don’t see no horns…
Where sub-prime made up a large % of purchases in 2006 is where there’s a meltdown ocurring. Here in Tucson I’ve looked diligently for an uptick in foreclosure filings and to no avail. We’re at 2006 levels of filings. Maybe because we had less than 20% of purchases where from sub-prime.
Tucsons like walking up a staircase in the dark, you go up,up,up and then feel like it’s a free fall only to find your on a landing. one or two steps sideways and up again you go.
BTW that’s where we’re going again, however much much slower now.
Personnally I’d love to see a huge uptick in foreclosure however it’s not happening here. Now go to Phoenix and you will notice more than 250 foreclosures DAILY!
“The South Shore may have some of the state’s best bargains for house hunters this spring. The median price of a single-family home in the region fell 4.3 percent from a year ago to $335,000 in the first quarter of 2007. It was the biggest percentage decline of any region in the state, according to the Massachusetts Association of Realtors.”
“Price reductions of $25,000 and more on some properties have attracted new potential buyers, said Barbara Cohen of Pratt Realtors in Canton.”
What a heaping load of steaming bull$h!t! Less than 5% and it’s a bargain? Someone needs to slap some sense into this shill. How about 50% off you old windbag.
BanteringBear,
Easy with the blood pressure… its ok. The south shore will continue to offer better and better house bargains this spring, summer, fall, and winter.
But just think, its like it used to be buying a computer (HDTV’s aren’t quite following Moore’s law, but they’re today’s closest example). If you don’t need it, wait a year. Difference is, the rent on homes is nothing.
Got popcorn?
Neil
I’m not even going on any open houses until these suckers are down 50% or more.
Don’t know if this has been posted but Credit Suisse has been sued about sub-prime loans by a Florida insurance company. The best part is the suit relates to loans originated in 2001! I would have thought that the 2001 subprime would have been a fine vintage.
“The suit, filed in Florida by Bankers Life Insurance Co., is “one of three to five in the pipeline” involving securitizations by Credit Suisse, Switzerland’s second-largest bank, said Dale Ledbetter of Ledbetter & Associates P.A., one of two law firms representing the Bankers Financial Corp. unit.
“We suspect that once people understand what occurred here, there’s going to be a lot more,” Ledbetter said. A total of $302.6 million of bonds were originally issued in the deal.
Bankers Life, based in St. Petersburg, is seeking to recover about $1.3 million to make up for losses of principal, interest and market value on about $1.4 million of the 2001 bonds it bought in 2004, Ledbetter said. Other investors considering suits will probably seek between $500,000 and $3 million each, he said.”
http://tinyurl.com/yuzx8j
1.3M is chump change compared to the wave that is cresting now.
Maybe they’re testing the legal market to see if they can set precedent?
I’m guessing the insurance companies will win, hands down. Too much fraud out there.
Toni Bales said Tulsa’s relatively low prices continue to attract investors and new residents from the West Coast, and Bales doesn’t see the trend slowing down any time soon.”
Ah…the magic word…”investors”…soon Tulsa will become the Queen Creek of tornado alley.
I mean Tulsa is pretty and all, but really, do ya think swarms of people will move there for the jobs???
That made me laugh.
Tulsa’s different.
Yeah, everyone wants to live there…
There is one REI blogger who is actually doing well in Tulsa. She buys properties that cashflow and fixes them up and sells them to others. She’s doing REI the way it’s supposed to be done.
Until she buys too many and gets stuck like Jeff at SDCIA.
“We’ve been conditioned to think of recessions as automatically undesirable. The labeling is simplistic”
Recession is the new black
Yeah… recession.. deflation.. Yeah! So my money will be worth more tomorrow as long as I don’t spend it.
A few months ago, perhaps 3 I wrote Thorburg congratulating him on leaving his last position and going out on his own. I suspect he was basically run out as he was a maverick speaking about the coming housing issues blowup.
He was nice enough to respond the same day and I asked him what he thought about the chances of a recession this year. He said, “about 1 in 3″. Now this. The question is, is a housing recession the same as a general recession? I think it is due primarily to the equity withdrawal driving the economy over the past few years. It is gonna feel like it in any event.
“‘I’m telling sellers if they want to move their property, they have to offer value,’ Begier said. ‘People who have been listed for over a year didn’t take my advice, and now they’re chasing the market down. Sellers who still think it’s a seller’s market are only going to hurt themselves.’”
Wow. This coming from the mouth of the president of the Hawaii Island Board of Realtors? We need more realtors to talk like this (in public) to help get the price correction going. It’s not that she’s saying anything that we don’t already know (and have said many times), but you just don’t see the REIC talking like this very often.
Oh yes finally someone is talking value . Maybe we should be talking about normal profit margins for builders .
A painting contractor once told me that the speculation construction guys he knows will just go from making 200k per house down to making their normal 30 to 50K .
Who won during the housing boom :
(1) Builders
(2) Realtors /escrow companies /title companies /loan agents/lenders
(3) Flippers/speculators that sold and got out of the market
(4) The tax coffers
(5) short term high yields for investors from wallstreet
(6) Home Depot
(7) HGTV
(8) MSM /TV Shows because of advertising
(9) Construction people
(10) crooks inflating appraisals and taking the money and running
(11) Investment seminar groups
(12) NAR and anyone who published how-to books during the boom .
(13) Building Departments
(14) Inspectors and Appraisers
(15) Wallstreet
(16) People who bought before 1998 and sold before Jan 1,2006
Who lost …
(1) The dollar
(2) The entire public who has homes that are deflating
(3) People who save
(4) Older people on fixed incomes
(5) People who got priced out of the market
(6) FB’s on toxic loans when the market turned
(7) Gambler bagholders
(8) MBS bagholders
(9) Lenders after the market turned .
(10) Taxpayers when the bailout’s come /Insurance Companies
Who will win in the future …
(1) Lawyers
(2) Maybe priced out people who have been saving
Has it occurred to anyone else that this bubble’s alt-a borrowers will be the next bubble’s subprime borrowers?
I’m expecting federal legislation on borrows to lock down another bubble like this. The Great Depression was trigger by banks putting money into a stock market bubble, and that prompted laws barring banks fro putting money into the market.
In the past we had insurance companies that would oversell, then fold when they had huge losses, so now the government highly regulates insurance with risk groups, deposit requirements, etc.
I expect new laws will come along doing away with independant “loan broakers”, and locking lenders into ratios of prime, Alt-A and sub-prime.
Say farewell to the “mortgage backed security”.
They use to call the sub-prime loan market ‘Hard Money Loans “. These private investors would make low loan to value loans to sub-prime borrowers at higher rates and points ,fully knowing the risk they were taking and allowing for it by only giving a 70% or under loan . These were emergency loans that usually only carried a short term of 2 to 5 years with a ballon balance . These hard money loans were “buy time loans” but you had to have equity to get one . These lenders fully expected to get a high percentage of the loans back in foreclosure or they knew the borrower would sell by the time the loan was due . The Appraisal was really tight and often times the investors would inspect the property themselves .Even with the hard money lenders they tried to make a payment that hard money borrowers could live with .
We went from hard money loans to giving 100% financing to sub-prime ,unqualified speculators ,crooks, and the outright unqualified borrowers on liar stated income loans .The industry deccided there wasn’t enough time to qualify loans .
When did the industry decide that they could make any loan based on real estate always goes up so qualifying didn’t matter anymore and it would be acceptable to just go with whatever was stated on a piece of paper ? How did Wallstreet sell loans (MBS’s)that carried this sort of risk ? Who decided that appraisers could just bring in a purchase price with no regard to the fact that the appraisal exceeded value for the area.
I don’t know if this was a fast one pulled on the secondary market or not or if they approved of the risk of these junk loans .My hunch is that it just became a matter of making the loan packages look like what the secondary market wanted .
Also, I had if I had to guess - the secondary market was also way too inclined to believe that anything backed by house must be “safe”. Banks developed a pretty reliable system with which to loan out house money requiring 20% down, 3X current income, and solid credit history. The system worked well - banks made lots of money over the long term with few foreclosures.
But then they loosened little by little over a long period of time to find borrowers. (I bought 10 years ago, and trust me, I didn’t bring 20% down to the table. :)) I’m sure that few investors really gave much thought to the increasing instability of those lending standards. The perception was of a rock solid investment. The securities were probably an easy sell from that stand point.
Who decided that appraisers could just bring in a purchase price with no regard to the fact that the appraisal exceeded value for the area.
The lenders rigged the system.
They steadily and insidiously put the honest and ethical appraiser outs of business and in turn relied on the proliferation of form filler, incompetant, number hitting hacks churned out by the state licensing boards.
WTF-no sweat off their collective azzes, because some other chump was gonna be left holdin’ the bag.
What many of these bag holders cannot understand is how much of the collateral for these “securities” are trashed, worn out, POS houses located in crummy neighborhoods.
I can remember doin’ scores of negative value REO appraisals in the ‘90/’91. By negative value I mean the cost to teardown was more than the land.
Lots of this shite out there.
However, the real estate finance system have completely compromised by the legions of junk appraisers.
Interestingly enough, I am seeing very little lawsuit action against these liars and fraudsters.
Check out this realtor’s chart….
http://www.arizonarealestatenotebook.com/wp-content/uploads/2007/04/2007_04_19_market_at_a_glance.gif
Sales have stayed at 5,000 a month, but as of January, there were almost 50,000 houese for sale. His graph doesn’t go to March, but as of mid-month, the number was over 52,000.
AND, that 5,000 number of sales per month is largely before lenders locked down standards on sub-prime and alt-A. Based on what is happening in the new home sales market were builders are reporting “sharp declines” for the last few weeks… My guess is the 5,000 number is going to fall like a rock.
Won’t be long before we’re sitting with 30+ months of supply just like Florida.
Won’t be long before we’re sitting with 30+ months of supply just like Florida.
Soon you will be able to pick the house that you want.
ZipRealty has 1,171,178 active homes Nationwide
mid may was 799,000
6/10/06 was 836,471
6/14/06 was 840,935
6/17/06 was 846,120
6/20/06 was 850,317
6/22/06 was 855,892
6/24/06 was 860,647
6/29/06 was 866,037
7/01/06 was 858,675
7/09/06 was 870,854
7/11/06 was 882,239
7/13/06 was 886,055
7/14/06 was 890,896
7/18/06 was 895,022
7/21/06 was 900,000
7/25/06 was 905,170
7/28/06 was 910,001
8/01/06 was 903,718
8/12/06 was 915,336
8/19/06 was 920,755
8/26/06 was 925,176
8/29/06 was 951,242
9/15/06 was 955,352
12/1/06 was 925,170
12/2/06 was 915,258
1/01/07 was 857,760
1/20/07 was 900,302
2/14/07 was 932,055
4/21/07 was 1,148,456
4/27/07 today 1,171,178
Appears to be a direction here. UP.
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
Well, Zip-a-dee-doo-dah!
Looks underreported. My area has at least 1-2 homes per block, not showing on zip.
WOW…….an increase in the inventory of approx 23,000 homes in a week……..23,000 freaking homes………this is mind numbing. That’s approx 2 new listings every second.
Every minute.
yep sorry………meant a minute
‘‘I’m not saying it’s a flourishing market, but in comparison to the last nine months, it has definitely picked up,’’ said Barbara Cohen of Pratt Realtors in Canton. ‘‘There are new faces out there.’’
The problem is last year these same realtors wouldn’t admit there was any downturn - it seems to only be an after-the-event type admission
In spring 2008 - they will probably claim “2007 really was terrible”
Here is article on the PPT thats 6 months old. It may be old news but a good read I hadn’t seen before.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/10/30/ccview30.xml
Fortune: Aren’t you concerned that GDP growth dropped to 1.6% in the latest quarter? That’s kind of anemic, and we’ve seen a downturn in the housing market. Convince us we’re not going to have a recession next year.
Paulson: “I can’t convince you. But as I looked at the third quarter, I felt good because I saw a major correction in the housing market, and I knew that was going to take more than one percentage point off GDP. And then I’m looking at the rest of the economy - strong corporate profits (ed. this is now slowing) and investment (ed. slowing also), good growth outside the U.S. (ed. still true), strength in the construction sector away from housing (ed. this is now slowing), and then an equity market that has gone up and added $1 trillion in value.
I know how much people care about housing. But I would be quite hopeful that through 401(k) plans, pension plans, and elsewhere that the average American is feeling an uplift from the appreciation of the equity market that would be very offsetting to any potential decline in housing.”
http://www.financialsense.com/Market/wrapup.htm
Yeah, all those subprime & Alt-A homeowners have lots of money invested — NOT!
The problem is the “new faces “, don’t have the same loan terms they had last year in the business . Hope the “new faces ” can qualify for inflated property and have some down payment money .
(We will see just how many lenders can now obtain a crazy-lending backer from Wallstreet in spite of the advertising they can do it )
On another thread Arwen mentioned that the closer in areas of DC historically have not been as impacted as the outer burbs. True.
It has been said on this blog a million times before but I want to repeat it again.
Most people, even a two income household making the average in any county around here, have to S T R E T C H to afford a home close in or in the outer burbs. At this level things won’t get any easier to afford for them. College for the kids? Nope. Saving for retirement? Well maybe, but not to the extent they should be saving. Let’s not even consider if we don’t have SS or Medicare.
Many people are relying on a credit cycle to make that stretch. The housing HELOC has basically ended it as a source to make the stretch work in the short run.
I moved from NYC to DC in 2000 because I could afford to buy something here and the tax rate was much more affordable. Thank God I sold in 10/05.
It seems like all of the major cities are now only really affordable for the elites. So what do we do next: look to Tulsa and like locales and see if we can do the stretch there. Guess what? Even there you can’t make the numbers work for the average income. Even in freakin’ Kern County California. Good grief!!
What will the kids of these families do? Start off life with 100k in student loans. How are they going to afford to buy a house let alone save any money?
We are all neck deep in it. I might have a shot b/c I sold when I did, but I’ll tell you, this can’t go on forever. I’m no stock market genius but in order for ‘the other 90%’ to plow money into 401ks or the market they need to have the money to invest. If the majority of the country is spending +50% on the MTI that isn’t going to happen.
CNBC can predict a soft landing but even the little guy needs to have money to make any money.
Arwen made the point that it isn’t different this time. I have to agree. The majority of people I know are living on fumes. In the meantime I’ve been trying to become as lean as possible about what I expect in terms of being able to continue to invest and save so when I am old I can afford a brown box to live in. My friends are trying to figure out how to continue the party. Kids in every sport, with special tutors and herbal healers because of ‘ADD’, several vacations a year, clothes from designers, lattes every day, manicures, pedicures and on and on. I consider myself lucky to be able to purchase Dunkin’ Donuts ground coffee and have a nail clipper and nail file.
If the economy proves me wrong I’ve been planning to have to eat crow whether I’m right or wrong but unless someone plunks down massive salary inflation without inflation on all other consumable goods, I can’t see how this is going to end in a remotely good way.
I’m thinking of pitching a Penny Saver show to any network who will entertain the thought. It surely will be a hit no matter what happens.
Maybe we should all pitch Ben’s Blog Cheapskate and Common Sense Investing show.
Posters here know much more than I do but it is clear to me that this blog is pretty unique. From time to time political or relgious stuff sneaks in indicating that we are all very different people. It’s neat to see raw information sharing in such a place not dissolve into that kind of dialogue which is better fought in other venues.
A wandering post from a very tired Novasold. This is one of those nights where I’m done!
Have a great weekend all.
This is a fantasic blog and it never ceases to amaze me the kind of great discussions that are here on a “free for all” board. I used to frequent the Motely Fool and I have to say these discussions are much better.
And unfortunately, I have to agree with you - I don’t see how this all ends well. The smart kids with student loans continue to rent. The other ones go out and will be in debt for the rest of their frickin lives. My husband and I had modest student loans, which will be completely gone assuming (knock on wood) our house sale goes through next month. Even if we walk away from that experience, I will never encourage my kids to take on student loan debt unless they are reasonably confident they can pay it back quickly because their new level of education will return it.
One other thing I forgot.
I believe I heard a commentator on TV state that if taxes are increased on 200k or more that it will only affect 1% of the population. Is that true?
If so, how will the HB work out if 99% of people make 199 or less given prices of homes countrywide?
http://www.denverpost.com/business/ci_5760213
Rents are starting to rise in Denver because of lowering vacancy rates? Are they serious? There’s gonna be a TON of SFHs, THs, and Condos all over the place up for rent by desperate flippers trying to keep their heads above water.
These maroons are still rTRYING to commit Suicide
Lenders, stung by a surge in defaults, have rediscovered the virtues of caution over the past few months, eliminating many of their no-money-down loan offerings. That tightening is “really starting to bite,” says Ed Mixon, a real-estate agent for Re/Max Real Estate Services in Monarch Beach, Calif.
Mr. Mixon recently had to advise one of his clients, a young woman with a good job and credit record, to put off her dream of buying a $300,000 condo in Laguna Niguel, Calif., until she could come up with more than her current nest egg of $5,000 for a down payment. A year ago, he says, she could easily have obtained a loan to cover 100% of the condo’s price.
Oh Mr. Mixion, That ISN’T just A Bite. That is REALITY EATING your lame ass ALIVE !
Of my dual-income friends in the $200K salary range, nearly all are in IO mortgages up to their eyeballs. In their minds, they are “investing”. When in fact, they’re just speculating.
If they were truly investing, they would be putting down a bit of principal every month. By only paying the interest carry, they’re speculating that they can sell the home at a gain in the future.
Even if prices stay stable now, they will loose to inflation. In other words, an IO mortgage without price appreciation will look an awful lot like a very expensive rental home.
That’s the problem I’m trying to convince one of my friends he’s in.
He’s got an adjustable rate mortgage, and he’s almost totally tapped out on equity in his place. He’s paying principal, but only because he has to; he’d much prefer an IO but didn’t/couldn’t get it arranged.
Anyway, he’s paying about 6.5 to 7% right now, not too terrible, but the problem is, when I ran through the stats of all the condos bought and sold in his area, their appreciation has only been 5.5% per year since 2000.
So he’s basically losing 1% or more on all the money he’s “renting” from the bank, plus maintenance, plus insurance. I compare his “investment” in that place to a really, really bad mutual fund that loses money every year but your account keeps increasing ever so slowly in value because you keep pouring money into it.
Did I mention he doesn’t even live in the place right now because he works in another city? Yet he’s too lazy and/or worried about deadbeat tenants to rent it, and he has no intention of selling it because “it’s my retirement plan” — and his 401k contributions are zero because all his free money goes into that condo.
OK, I can convince a few and keep them out of trouble, but I can’t convince ‘em all. Sorry guys, I tried.
I forgot that CNN’s Debtor Nation series was going to be on foreclosures this week. Came in with around 20 minutes to go. To call that journalism is to call my wife’s Camry a Formula 1 race car. Paula Zahn should be ashamed to host the show.
They did cover Greeley and Cleveland while I was watching. One Greeley woman was losing the home she had for 30 years. No explanation of how that could have happened. I guess that would have tarnished the woman’s victim status.
Awful reporting. I guess it’s just Frontline for me from now on, despite its bias.
Someone’s trying to make dime in this mess…
http://flagstaff.craigslist.org/rfs/320244471.html
Todays comm by Peter Schiff:
“As the Dow burst through the 13,000 milestone this week, few understood the hollowness of the achievement. Measured against the rising dollar-denominated prices of just about everything else on the planet, the Dow has actually lost value over the past seven years. Measured against the truest benchmark, the price of gold, the record high for the Dow was set back in January of 2000 when its price equaled approximately 43 ounces of gold. Today it is only worth about 19 ounces.
To better appreciate just how much of stock gains can be attributed to inflation, consider that the record high for the Dow in 1929 of approximately 380 also equated to 19 ounces of gold. So despite all of the hoopla and a thirty-fold increase in stock prices, the Dow has actually gained no real value during the past eighty years. The entire rise from 360 to 13,000 has been an illusion made possible by the magic of inflation. So much for the concept of stocks being a “can’t lose” long term investment — unless you feel that eighty years is not quite a long enough time horizon!
Now that is not to imply that the Dow has not generated returns during those years: it has. However, those returns have been a function of dividends and not appreciation. But its not yields that Wall Street celebrates, its prices. By dazzling investors with higher prices, they distract their attention from the unpleasant reality that they are actually treading water. What difference does it make if you have more dollars if the dollars themselves have less purchasing power?
Despite its recent eclipse of 13,000 the Dow now buys 30% fewer euros than it did then back in 2000 when it was priced at approximately 11,500. It also buys 35% fewer gallons of milk, 40% fewer bushels of corn or wheat, 65% fewer ounces of silver, 70% fewer barrels of oil, 80% fewer pounds of copper, and 90% fewer pounds of uranium. Try figuring what the Dow will buy in terms of other necessities, such as housing, insurance, college tuition or hospitalization. Any way you measure it, the Dow is worth far less today then it was in January of 2000.
Back in 1980 one Zimbabwe dollar was worth more than one U.S. dollar. Therefore a billionaire in Zimbabwe was also a billionaire in America. Today, almost everyone in Zimbabwe is a billionaire yet few of them can afford a pack of chewing gum. Do you think that anyone invested in the Zimbabwean stock market these past 30 years cares how many record highs that market has made?
Many might feel that a comparison of the U.S. to Zimbabwe is ridiculous. However, fundamentally there is no real difference between a Zimbabwean dollar and an American dollar. They are both simply pieces of paper, the value of which depends on the resolve of politicians not to print too many of them. During the difficult economic times that lie ahead, the pressure on the Fed to run its printing presses full throttle will be immense.
Think back to the German experience with hyper-inflation during the Weimar Republic. At the time of its currency meltdown, Germany was a major economic power (even after the devastation of the First World War). Yet that status did not prevent its currency from becoming worthless. The impetus for Germany’s hyper-inflation was the fact that its industrial base had been badly damaged during the war, yet under the terms of Treaty of Versailles it was obligated to pay enormous reparations to the Allies. Lacking the ability to export enough goods to repay its debts, it resorted to a printing press instead. America is now in a similar predicament. Although our industry was not destroyed by bombs, it’s gone just the same. While we might not be bound by a treaty to pay reparations, the trillions of dollars of American IOU’s now owned by foreigners will be just as burdensome an obligation. It is hard to image we can “repay” these debts without civil unrest, massive inflation, or both.
The point to remember is that when it comes to records, it is real purchasing power, not nominal value, that counts. Measured by its purchasing power, the Dow has clearly lost value over the past seven years. Those who have remained invested in Dow stocks during that time period are clearly poorer as a result. Those who continue doing so will likely lose even more wealth in the years ahead, regardless of how many more nominal record highs the Dow sets.”
“Any one who would buy a home to turn a little profit deserves neither and will lose both”
Benjamin Franklin
Wow ,good find SeattleMoose .
I am struck by just how much the main stream media seems to not comment on just how short term the holding period was for alot of these borrowers going into foreclosure .The MSM talks to people going into foreclosure that only purchased about a year ago who didn’t put a dime into the purchase .It’s just so clear that so many of the FB’s did not plan on having long term ownership of the homes they purchased .It became nuts that borrowers thought they could make money the first year of ownership .
Thats not an actual quote. The real quote, and don’t quote me on this, is something along the lines of, “those who would give up a little liberty for a little security deserve neither and get nothing.”
This is true. There are also many “investors” who bought many homes with nothing down and no money of their own. Why is it the main stream media doesn’t cover this? It’s clear that none of these people planned to hold onto their purchases.
What’s really incredible to me is that lenders didn’t realize this. They just kept handing money out like it was candy knowing that no one had any skin in the game but them. If I would have known that banks were handing money out like candy, I would have gone and gotten my share too! Especially now that I realize that they don’t expect any of these people to actually pay back the loans.
NEWTOWN, Pa. –A woman was struck and killed by a car driven by her boyfriend after the two had an argument outside a restaurant, police said.
Richard Patton, an attorney, was behind the wheel of the car that struck and killed Heather Demou at around 10:30 p.m. Thursday outside the restaurant in Newtown Township, Bucks County, police said.
Patton, 51, of New Hope, has not been charged with any crime and police said an investigation was continuing. As many as 60 people saw what happened, Newtown Township police officer Daniel Bell said.
Police said Patton told them that it was an accident that happened after Demou stepped in front of his car to stop him from leaving the parking lot.
Demou, a 34-year-old real estate agent from Doylestown, and Patton were three months into a relationship, according to her brother, Mac Butler. Demou has an 18-year-old son and a 15-year-old daughter, he said.
http://www.centredaily.com/129/story/81224.html
Not sure what this has to do with RE?
Maybe he refused to be her lawyer in her upcoming fraud case (just a joke ).
For those of you who missed the Thornberg comments:
“There’s two other shoes to drop,” predicted Thornberg, now with the consulting firm Beacon Economics. “First, this mortgage problem has not played out.” He noted that investors continue to price mortgages as if the housing market will stablize, not deteriorate. “There is still an astonishing amount of either sheer stupidity or head-in-the-sand mentality when it comes to these mortgages. There’s a shockingly low amount of risk being placed on these assets.” Shoe number two (number three, actually — the subprime meltdown was the first): Consumers. “The money they’ve been spending is money they’ve yanked out of their homes. This is one of those weird little vicious cycles. Prices are going down, and the consumer is eventually going to say, ‘Holy crap, I’ve got to pull back on spending.’” “You have an entire U.S. economy right now that’s completely driven by consumer spending,” he told me. “And consumer spending is driven by the housing market.”
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