There’s An Oversupply Of Pretty Much Everything
Chicago Business reports from Illinois. “Buyers signed contracts for 1,207 downtown condos and townhomes in the quarter, a 46% plunge from 2,243 in the year-earlier period, according to a report by a Chicago-based real estate consulting firm. It was the seventh straight quarter of declining sales and the biggest quarterly percentage drop so far.”
“‘Buyers have numerous options. They have little sense of urgency,’ the report says. ‘And these buyers are now fewer in number with the retreat of many investors and speculators who had been flooding the market a few years ago.’”
“Some developers have responded to the weaker market by scaling back their plans. Yet other developers are moving full speed ahead with new projects, indicating that the supply of unsold condos is more likely to rise than fall in the coming months.”
“Downtown developers had 7,416 unsold condos at the end of the first quarter, up only slightly from 7,405 at the end of 2006. Sales fell 29% last year, to 5,783 units, and could drop to 3,500 to 4,000 units in 2007, Appraisal Research estimates.”
The Chicago Tribune. “With first-quarter downtown condominium sales cut nearly in half from the year-ago period, auctions are a quick way to sell, eliminating months of carrying costs for owners willing to let go of property for well below asking prices.”
“The number of properties sold on the block has doubled from last year for Inland Real Estate Auctions Inc. ‘Now there’s an oversupply of pretty much everything, including luxury housing,’ said Frank Diliberto, Inland Real Estate Auctions president. ‘For higher-priced housing, there may be less inventory, but there are fewer buyers.’”
“Until 18 months ago, most of the company’s Midwest activity involved commercial property. Now, its auctions involve a substantial supply of housing. The last time the company had so much residential activity was in the real estate downturn of the early 1990s, he said.”
“Last month Inland auctioned 17 newly renovated condos in the Rogers Park neighborhood. They sold for about 15 percent below asking price on average.”
The Courier News. “Home prices in Illinois held steady in the first quarter of 2007, but sales plummeted more than 14 percent from the year-ago figures, according to the Illinois Association of Realtors.”
“Association figures for Kane County show a slightly greater dip in single-family home sales: down 16.7 percent compared to first-quarter 2006 sales.” “The median home sale price in Kane County was $243,000, down about 3 percent over the same period last year.”
“Mary Roberts, broker in Elgin, conceded the market is slow and noted she and her associates now consider it ‘normal’ if sales take a bit longer to consummate. ‘We know for several years’ the delay in selling a home ‘was out of sight, and now we’re back to the normal six-month time to sell a home,’ Roberts said.”
“‘There are still buyers out there, but your home has to be one of the best if not the best in order to get chosen from all those in the marketplace,’ she said.”
“Roberts said some buyers may seem a bit too cautious, but most simply want to see ‘everything that’s out there.’ ‘There’s a lot more for buyers to look at, which makes it very confusing,’ Roberts said.”
The Post Cresent from Wisconsin. “Local real estate professional Dawn Christensen wasn’t surprised to see that sales of existing homes in Wisconsin were down for the first quarter of 2007.”
“‘The early numbers never look good, but as we get into April and May, things do tend to pick up,’ Christensen said.”
“The Wisconsin Realtors Association, citing National Association of Realtors figures, Tuesday reported statewide home sales fell 6.5 percent for the first quarter of 2007.”
“David Clark, an economist with C3 Statistical Solutions Inc. in Milwaukee, which compiles sales data for the state realtor’s group, said the numbers do reflect a ’softening in the market.’”
“‘Buyers are seeing homes on the market longer so they know they can bid down,’ Clark said.”
“Several counties in northeast Wisconsin experienced reductions in sales volume including Brown County down 2.4 percent; Outagamie County down 5.2 percent; Waupaca County dropped 9.4 percent, and Winnebago slid 13.6 percent when compared with last year.”
“Sales drops were most noticeable in Kewaunee County, down 21.4 percent, and Door County, down 27.9 percent. Sales volume fell 5.9 percent in south central Wisconsin and dropped 7.8 percent in the southeastern part of the state. Sales in the northern Wisconsin were down 10.6 percent.”
The Downtown Journal from Minnesota. “Home foreclosures are relatively infrequent Downtown, with the exception of a 90-year-old brick building that has tallied 15 foreclosures since August 2006.”
“The cause of the foreclosure spike at 607 Washington is something of a mystery, but real estate documents indicate that three condo owners are behind nine of the foreclosures, with more than one foreclosure in some condos due to multiple creditors.”
“Several units in the building remained on the market for two years and sold in the summer of 2005 at hundreds of thousands of dollars more than the original list price, a trend that seemed odd to some Downtown real estate agents.”
“The building’s foreclosure plight is not representative of the rest of Downtown, although Downtown foreclosures doubled in the first quarter of this year compared to the first quarter of last year.”
“The city’s 7th Ward, which encompasses Downtown, saw 49 foreclosures in all of 2006 and 26 foreclosures in the first quarter of 2007.”
“Unit 407, advertised to be a 1,560-square-foot space with hardwood floors and a Jacuzzi, was listed as a 1,610-square-foot unit in March 2003 for $399,900 with no takers. Then in July 2005, the unit was relisted for $559,900 for 37 days, and listed again at $600,000 for four days.”
“The unit closed on Sept. 30, 2005 at a price of $600,000 with a seller’s contribution of $98,098. That unit was foreclosed on twice in 2006, according to the Hennepin County Sheriff’s office.”
“The story varies from unit to unit, but tax records indicate that all of the foreclosed units have sold for $140,100–$449,100 more than the 2003 list price, an average unit price increase of about 77 percent over three years.”
“Resident Amit Vas said he moved into the building in December and said he doesn’t know much about what is happening there. ‘There aren’t very many occupied [units],’ he said. ‘I hardly see anybody.’”
“‘We have no idea what’s going on; we don’t care,’ said one employee.”
“There are five units in the building currently listed for sale by a variety of different agents, and three of those units were foreclosures. Angela Larson, (an) agent selling a unit at 607 Washington, said she is listing it at $200,000 less than it was sold for a year ago.”
“‘As soon as a couple of them start going down it makes it hard to get financing in the building, and it makes people not want to buy and it makes it worse for everybody,’ Larson said.”
‘Construction of a 21-story, 104-unit condominium tower on Milwaukee’s east side could begin this fall if the developer can sell enough units by then. Developer Peter Renner says his Break Water Condominiums project will offer units priced from $225,000, for one-bedroom condos, to $1 million for penthouses.’
‘The demand for urban housing remains strong despite an overall slowdown in the housing construction market, Renner said. ‘People want to move downtown,’ Renner said. ‘They are bored in the suburbs.’
They say that in Portland, too. My bet is, if they’re built, they’ll be apartments. But even THAT market is flooded with stuck flippers.
‘The demand for urban housing remains strong despite an overall slowdown in the housing construction market, Renner said. ‘People want to move downtown,’ Renner said. ‘They are bored in the suburbs.’
Where did this developer Kool-Aid come from? It’s like all these guys got together and made something up, then ran with it. Don’t they see all of the failing projects across the country? Is plan B to turn them into rental units? This just boggles the mind.
Who are these bored suburbanites? I don’t know too many of them myself.
“‘Buyers have numerous options. They have little sense of urgency,’ the report says. ‘And these buyers are now fewer in number with the retreat of many investors and speculators who had been flooding the market a few years ago.’”
The speculators were flooding the market a few years ago with buckets of money and boxes of stupid.
They are currently flooding the market with overpriced used home inventory that won’t move, as the builders have cut their legs out from under them with incentives.
‘There’s a lot more for buyers to look at, which makes it very confusing,’ Roberts said.”
What is this lady talking about? The ability to consider numerous properties is hardly confusing for a prospective buyer. IMO it’s a godsend.
She’s a real estate broker, phillygal. Lots of things confuse her.
So true, polly, except in one instance: their commissions. They can calculate their commission on a sale to the penny, (no technology involved), in their sleep.
I used to work with a coven of realtorettes.
I prefer the term:
Realtortrix
A coven of realtorettes. That’s a good one. And, oh, does it seem fitting that such an expression would come out of Philly, the zinger capital of America. (I know. I used to live in that area.)
And that is truly amazing. It is so hard to push calculator keys with nail extnsions. Are they really doing it in their heads? Math is HARD.
phillygal
“I used to work with a coven of realtorettes.”
That is a scary way of looking at it.
Makes mental note never to tease phillygal
It sounds like to me that she’s insulting the buyers intelligence. There are to many choices so the buyers can’t make up their mind. Yeah, that’s teh reason for the sales slump. From now on, chocolate & vanilla only!
Just received this email from a desparate flipper:
FYI,
I have been a real estate investor an unfortunately I am now in financial trouble. I have 6 homes I would like to sell - but 2 that I immediately need to sell before I go into default / foreclosure. These are extremely nice homes in New Tampa - Live Oak Preserve -that would be ideal for families, professional athletes or executives. The homes below are 2 homes I need to sell ASAP
I also have a townhome in Denver - priced much lower at $180,000 - 1900 SF that I need to sell asap also.
If you know anyone or have any clients looking for a great investment property these would be ideal rental homes - but also if you have any clients looking for a home in Tampa or Denver these would be great homes for them to live in.
Thank you,
“…would be ideal for families, professional athletes or executives.”
Professional athletes, executives or…FAMILIES?!
Does that strike anyone else as a strange combination of potential buyers? Shaq, Angelo Mozilo or the Smiths down the street.
What’s so scary, is the amount of damage idiots like this were able to inflict. These zeros should have never been enabled by the loose lending.
The only thing confusing me is why I would buy befor prices come down.
I have an email and letter posted on my blog that was sent ot me by Senator Obama’s office. Here is a snippett of the email:
“We need to stop the mortgage practices that got us into this mess, call on private sector lenders to help keep people from losing their homes, and invest in affordable housing so that working families can live comfortably within their means.
The profusion of sub-prime loans helped many low-income families get homes that they otherwise couldn’t afford. But some of these loans included unreasonable fees and terms and were marketed in inappropriate ways which put new homeowners at a disadvantage.”
invest in affordable housing so that working families can live comfortably within their means
Is this the first time in recent history that a politician has said that families are not living within their means?
Probably so. The thing I’m wary of, though, is that to a politician, the term “invest” usually means “spend lots of other people’s money on one of my special interest groups”.
I’d be interested to see more details as to who should be doing the investing. If he’s talking about making it easier and cheaper for developers to build hordes of smaller houses that can be sold for less, fine. But I suspect he’s not quite thinking that way.
“If he’s talking about making it easier and cheaper for developers to build hordes of smaller houses that can be sold for less, fine. But I suspect he’s not quite thinking that way.”
NoVa Sideliner,
You would not be allowed into the Chicago city limits spewing talk like that. Obama isn’t to be questioned. He is the Christ child.
Are we looking at a NY/Chicago (Rudy/Obama) showdown in ‘08? Can’t we just let the Yanks and Cubs battle it out best of 7 and call it a day?
Recent headlines in NY..Mike Rolls Over Rudy.
Most NYers think Mike a far better mayor than Rudy, and that he would make a far better prez. Mike’s a bizman first, and the city is running multi-billion surpluses.
Uh, Mike didn’t start with a city on the verge of chaos.
Rudy may not be presidential material but anyone who knows what NYC was like before he took over and dismisses the turnaround he engineered as insignificant is ……ignorant to say the least.
Rudy is definitely not Presidential material. He’s riding 9/11 for all he’s worth, and God help you if you suggest, like Ron Paul did last night in the GOP Candidates’ Debate, that an interventionist and meddling foreign policy can come back to bite you.
http://www.youtube.com/watch?v=cQrwKr_b4Lg
Ron Paul vs. Rudy. Rudy got on his high horse, and the crowd was with him, but Dr. Paul was making a valid point.
I’m a NYer and anyone who thinks Rudy engineered a turnaround in NYC is ignorant. Crime was reduced and controlled by Ray Kelly police chief, who devised COMSTATS,
now used by police world-wide. Rudy cannot allow anyone to have the spoltlight, so naturally he fired Kelly. He did of course, promote Kerik from Prisons Commish to Police Commish, despite background info listing his mob ties, his misuse of public funds and other activities. Kept him on his private security firm and promoted him for Homeland Security chief, knowing he was a dirtbag. Rudy favors cronyism, not competence. Left the city with huge deficits, despite years of tax windfalls from Wall Street in the late nineties. Also, did his best to stir up needless controvery and dissension. Anyone who thinks Rudy was a good mayor never lived thru his regime.
Bill Clinton was notorious for using the word “invest” to mean what you just said, NoVa.
Investing = robbing Peter to pay Paul, via taxes (e.g. how we collectively “invest” in farming, health care, etc.)
Affordable housing = gov’t-subsidized housing.
Amazing how 1984′ish our politicians can be with their doublespeak.
“invest in affordable housing”
Obama is wrong, we do not need to invest in affordable housing…as the prices crash, housing will become affordable.
Isn’t the market grand?
LOL!
Is there any chance that they are willing to define “comfortably”? Is the idea that people aren’t feeding their kids Top Ramen so they can afford the mortgage payment, or does comfortably mean everyone gets an ipod, a cell phone, and their own laptop by their twelfth birthday. Oh, I forgot about the digital camera.
The profusion of sub-prime loans helped many low-income families get homes that they otherwise couldn’t afford. But some of these loans included unreasonable fees and terms and were marketed in inappropriate ways which put new homeowners at a disadvantage.
What is up with these idiots? The terms are spelled out on the contract, and any prospective buyer has a responsibility to understand what they are getting into. If they couldn’t decipher the wording on their own, then someone qualified to interpret and translate the legalities into simple English should have been sought out.
This constant complaining by politicians of people supposedly being victimized is tiresome.
Cause Suzanne researched it….(Menacing head pump by wife towards you).
(Menacing head pump by wife towards you)
LOL!
This house is special. You guys can do this.
If I called my house special, it would be sure to wreak some kind of revenge on me. It would likely involve the plumbing, but I wouldn’t put it past this place to come up with another kind of “gift.”
Corky kind of ’special’.
Delusional cheesehead
‘The demand for urban housing remains strong despite an overall slowdown in the housing construction market, Renner said. ‘People want to move downtown,’ Renner said. ‘They are bored in the suburbs.’
Rennet (for cheese) not renner - you California surfing dude. LOL
Speaking of cheese - got $15.51/100 this morn for milk ~ 12 gallons. Up from $15.31 and ~$1.50 higher than last year.
Yes, check out this Bloomberg link on milk and cheese…more commodity inflation….
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apnhdxBbHC0E
inflations contained, Fed says so….
now how bout some more gouda..
Don’t force my hand, Cheeseheads…
http://www.youtube.com/watch?v=pDat9zdw7Gs
Even though nobody is moving here, they really really want to, and therefore ipso facto the demand is strong.
They apparently are confusing demand FOR buyers with demand BY or OF buyers. There’s plenty of the former in spades; the latter… not so much.
I’ve been to downtown Milwaukee, the burbs are just fine, thank you.
“Several counties in northeast Wisconsin experienced reductions in sales volume including Brown County down 2.4 percent; Outagamie County down 5.2 percent; Waupaca County dropped 9.4 percent, and Winnebago slid 13.6 percent when compared with last year.”
“Sales drops were most noticeable in Kewaunee County, down 21.4 percent, and Door County, down 27.9 percent.
I wish the report gave the number of properties for sale. These are a lot of vacation/summer 2nd home areas.
It seems to me that every vacation home is up for sale - I have no MLS access - just a 4 hr drive south to Milwaukee.
as the price of gas goes up, the price of vacation houses will go down. not rocket science, although here in W. Colo and E. Utah, many seem to be still in deep denial.
Yeah Bend, OR. too. Everyone wants to live in Bend, or if they don’t, they want a second home there. A really expensive second home, because Bend is the next Aspen.
Western Colorado and Eastern Utah are going to be a fraction of their size in 15 years….not enough oil and money and water to sustain a population of hundreds of thousands in an area that is essentially a high plains desert with little water.
Hard to grow tomatoes and peppers there, too, remember that.
On the plus side there is a lot of coal there (at least you will stay warm) and oil shale/gilsonite if you can economically get the black stuff out of it for road fuels.
The housing value crash will be the last of their worries.
A comment on the Mpls story:
That condo building was plagued by problems when it was converted. Some of the weird pricing can be explained by:
1) 2002-2005 was our boom years, especially for the warehouse district (which is where this is)
2) there was a LOT of speculation and immediate flipping going on there.
3) price increases up to 20-40% per YEAR were not uncommon in that area.
4) obviously, this leads to easy fraud.
5) some of the pricing discrepancies might be explained by pre-renovated vs finished-renovated units. (those units are old… VERY expensive to remodel… I had a friend who spent $200,000 on his downtown loft remodel)
I’m not sure how much of those odd price oscillations are due to fraud, and how much due to the mania that was present or price changes due to remodelling.
overall, Mpls did not see the mania that the coasts saw, but some areas (such as the Downtown Condo market) did.
As a point of reference: I bought my Minneapolis house in 2003. The first house I put an offer on the first day it went on the market, and lost out in a bidding war between 14 people (it was all real, my RE agent is a close friend and didn’t want me to bid for that house). The eventual sale was $70k over asking. (we bid $5k under asking).
The house I eventually bought I had to do so by buying it BEFORE it went on the market.
That said, the gist of the article is important:
There are so many condos in downtown Mpls that you can’t believe it. You’d think this is Manhattan or something. They are ALL super expensive (usually around 400-750 per sq ft) with high HOA feeds. (yes I know it’s more expensive elsewhere, but 750 per sq ft is nothing to sneeze at).
many of them are old and converted, and not well. One of the developments converted, and then during the first winter people found out what concrete floors and exposed brick (without insulation) is like. Thus, it needed a re-conversion to put up insulation, then brick up over that to have the correct “look” (it was not cheap)
Other people bought expensive warehouse condos, and then had to live for years through a major condo boom of construction. when done: BAM, no more sunlight since the new condo building blocks out the sun! (this happened to a friend of mine. she used to have great sun and a view of the skyline… now she looks into a concrete wall 10 ft away)
it will not end well unfortunately
$750/sq ft in Minny… what used to be one of the more affordable cities in the US. Granite sure has gotten expensive.
“750 per sq ft”
Was this also justified because ‘everyone wants to live here’?
I don’t see the salabilty of that one, must have been the ‘we are a growth area’ line, hey?
750/sqft? Can this actually be right? It’s running less than that for new loft / high rise construction in downtown LA. Not that it’s worth it in LA, but in Minneapolis?
Hey, we gots all dem water views, dontcha know. What wit’ da rivers and da lakes. And everybody wants to live here, you betcha!
And in the meantime, the citizens of Stillwater MN are up in arms over their property taxes taking a steep, steep jump. Why? To help finance the development of all the riverfront ‘luxury’ condos the idiot city council approved. After all, the millionaires won’t want to move there unless the city pours tons of money into changing the area.
We’re having the same b.s. fed to us in Maplewood - that: A. all these people are dying to move here to live in new high-density housing; and B. that it’s not fair to make the new residents pay all the associated costs of their new developments. Thus the existing citizens get burned twice: reduced quality of life, and increased taxes.
Hom,
I was fortunate enough to retire at an early age. One of the things I did was buy enough land around me to protect me from future development - my families farm. However, I am not and never will be a NIMBY. Unfortunately, Wisconsin does not allow impact fees. So when one of these sleepy vacation towns turns into full time residences and starts growing, new construction starts. New houses means new schools, police, fire, infra structure etc. In Wisconsin there is no equitable means of having developers and purchasers pay the new assessments. I have friends that saw property taxes jump as a result of new development by 30% and more. One of my sons friends that did everything right (graduated high school, married his high school sweetheart and got a job as a mechanic) has to sell his house of 8 years because he can no longer afford the property taxes. His wages have gone up by 2% over the last 8 years but his taxes have gone up 400%.
They are building I swears 1000’s of multi-story boxy condo pieces of crap from downtown Minneapolis to Fort Snelling to downtown Saint Paul. They sell for 400K plus and are all g#ddamnned empty….and they are still building them.
10 trillion dollar nationwide haircut coming folks….the losses and deaths coming from it will be uncountable.
Nothing The Fed, China, politicians, Wall Street, etc. can do about it.
In some future set of years we will be talking about the Big Bubble and its spectacular collapse and the resulting 5 cents on the dollar cleanup when it comes…..if even that. Some of this construction would be even hard to salvage.
“Yet other developers are moving full speed ahead with new projects, indicating that the supply of unsold condos is more likely to rise than fall in the coming months.”
- Much like China … losing money - but making it up on volume. Instead of losing a small amount of money, they lose a larger amount on larger volume.
China’s private businesses are doing well, its the SOEs that are causing the headache. Kinda like our Fannie/Freddie headache.
I just want a little piece of China’s cash pie.
“The building’s foreclosure plight is not representative of the rest of Downtown, although Downtown foreclosures doubled in the first quarter of this year compared to the first quarter of last year” oh really?, well they certainly will be represented in the comparative sales after they are auctioned.
from money.cnn.com:
“Housing starts rose to an annual rate of 1.53 million in April, according to the Census Bureau report, from the revised 1.49 million pace in March. Economists surveyed by Briefing.com had forecast a slip to a 1.48 million pace in April.”
Isn’t that number still greater than the number of new households formed? Or are they now expecting us to each have two houses?
This number is bogus. The gov’t worker assigned to this spends his day on the internet looking at porn and then makes up the numbers each month. The homebuilders have slammed on the brakes and new apartments and condos don’t make up the difference. I call bullsh##.
My initial reaction, but upon reflection the builders have to get out! Build now and as fast as possible because it is only going to get worse.
New houses will lead the market down.
Mish does a much better job of dissecting the numbers.
”
* Inventories are rising
* Selling season was a bust
* Credit lending standards are tightening
* Permits lead starts
* Permits are plunging
* Starts add jobs
* Real wages are falling
* The latest job numbers were miserable
The signs are all in place not just for a continued housing recession, but for a full blown severe consumer led recession. Expect the Fed to cut rates in the second half. But also assume it will not matter one bit.”
http://tinyurl.com/d8q6j
hoz,
methinks you got this one pegged…..but you left out the stock market crash, expediting the rate cut.
that rate cuts gonna be as effective as a bandaid on a hatchet wound
From Rust Belt to Bust Belt..Minnesota on down to Chicago..It’s different here…EACH and every TIME !
Downtown Condo Sales: Slowed, Not Stalled…
http://chicagomag.typepad.com/dealestate/
You can almost TASTE the Kool-Aid.
I was born in Indiana and gas hit $3.38 a gallon for regular today.
They are usually about 0.50 to 0.75 cheaper than So Cal (not now). My dad told me that folks will line for 2 blocks at a gas station to save 10cents a gallon. The pain in the Midwest is going to be ferocious.
Article with good housing stats:
http://news.goldseek.com/GoldenJackass/1179339882.php
False Housing: Gold Headwind
By: Jim Willie CB, GoldenJackass.com
– Posted Wednesday, 16 May 2007 | Digg This Article
home: Golden Jackass website
subscribe: Hat Trick Letter
Jim Willie CB, editor of the “HAT TRICK LETTER”
Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise like a cantilever during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by heretical central bankers and charlatan economic advisors, whose interference has irreversibly altered and damaged the world financial system. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy. A tad of relevant geopolitics is covered as well. Articles in this series are promotional, an unabashed gesture to induce readers to subscribe.
The newest deceptions are with jobs and housing. Each is much worse than reported. The housing decline might be as much as 15% worse than reported, which leads to much bigger job loss than is reported. Most of the home construction job loss is under the table, to people not on state jobless insurance programs, and to immigrant workers paid in cash. Both fall through the statistical cracks in those home frames and plywood floors underlayments. A quick preface on the two biggest corrupted statistics first, since of paramount importance. The US Federal Reserve will likely respond to more rapid job loss, and to more rapid home sector erosion decline. When they do, expect an official rate cut sequence to resemble that of 2001. As in, sharp & sudden. The signals surround us, that the major powers are in the process of permitting the USDollar to fall.
Premeditated doctored and falsified economic statistics are the laughing stock of the USGovt reporting system. The are the tarnish on a once respected emblem. The two most important chronically corrupted pulse measures for the USEconomy are the Gross Domestic Product (GDP) on the economic growth, and the Consumer Price Index (CPI) on the price inflation. The GDP is lifted improperly by 4% to 5% in order to conceal the ongoing fight with a recession since the 2000 stock bust. The enabling device is a ridiculously low price inflation figure which might be wrong by 7% to 8%. Most reported growth is merely improperly adjusted price inflation. Be sure that the practical benefit from suppressing the CPI is to keep Social Security payments down, along with federal pensions related to agency workers, military retirees, and those who used to sit on judge benches. The direct market motive is to sell USTreasury Bonds and other debt securities, while painting a picture of fiscal health for a nation far more sickly than official statistics reveal. Lying has become an institutional feature of US government, if not corporate life.
The objective is to achieve plausible deniability of falsehood by means of abstruse goofy confusing indefensible methods behind the calculations. Like who besides math/stat jocks knows the effect of using a geometric average rather than simple arithmetic average? Doing so drops the CPI by at least 1%, a useful gimmick. Does anyone realize milk and cheese were absent from the March CPI carefully crafted calculation founded in convenient deception? If an item rises, remove it or substitute it. We all buy milk and cheese. Former USFed Chairman Arthur Burns starting the nonsense, which has taken a life of its own. He first removed volatile food & energy from the CPI, now a standard practice. The moral of the CPI/GDP story is that if you lie by at least 5% on the CPI, you not only save on the USGovt budget deficit but you enable a 5% lie on the economic growth. Who wants to report the USEconomy is stuck in a recession, now at minus 2% to 3% decline?
HOUSE SECTOR IS CRASHING
Every reason looms large that housing data is equally inaccurate as most other major economic statistics. Whether intentionally falsified or incompetently calculated by the National Assn of Realtors (NAR), it is irrelevant. Call it financial engineering. My guess is again a premeditated doctoring of the statistics, since their motive is so clear, to sell homes. In a worse declining market, sales would halt, pure and simple. We are in an age where those parties with the worst, most egregious, vested interest are given charge of assembling, calculating, and reporting their own statistics. This is laughable. Imagine the mafia in charge of reporting on crime levels, or children in school reporting on actual valid sickness and missed days in class.!
“Both existing home sales and new home sales data are providing misleading national sales information. The new home curve ball involves cancellations, which are not properly recorded in current data. The housing market has declined much more sharply than is being reported, like 13% to 15% worse. When looking to confirm data, a triangular method is effective, meaning related and supporting information must be consistent. It is not. Look to other sources of information, and attempt to confirm or refute the aggregate. One inconsistency is possible, but not a set of inconsistent figures that presents itself. Independent research outfit John Burns Real Estate Consulting sampled 181 key counties with just over half of the US population where the large home builders are active. Their work is the most comprehensive and well organized to cross my desk (thanks to intrepid hound Kevin F).
Home sales have fallen 22% on a 12-month basis versus the prior 12 months, in reality. On a simple year-over-year monthly comparison, the decline is even worse. Contrast that to a mere 10% in the compromised NAR reports. It is hard to call theirs or USGovt’s work analysis, when it is more like a fraudulent marketing promotional effort”…….
Sorry about including the header in the above article (that was just an excerpt BTW, read the whole article, many more goodies)
“Does anyone realize milk and cheese were absent from the March CPI carefully crafted calculation founded in convenient deception? If an item rises, remove it or substitute it. We all buy milk and cheese.”
Where we not just bs’n about milk and cheese yesterday in the Bits Bucket? WTF is going on? I’m starting to get paranoid.
none of my real friends listen to me anymore…..
Im all doom and gloom……I dont think you are paranoid popper, its just that BIG BROTHER is out to get you.
The DOW has gone up over 900 points or slightly over 7% over the last thirty days. At this rate we will hit 14,000 some time next week. Is this a blow off phase?
I mean this is the D-O-W this ain’t no frik’n teenage hormone fueled emerging market. I’m doing fine but this is starting to get surreal.
I have TMJ on a daily basis now. I had no idea I could get this angry.
I sincerely hope you don’t mean that literally.
‘ At this rate we will hit 14,000 some time next week.’
- It’s called the ‘Melt-Up.’
The S & P 500 and NASDAQ are not following, the transports are hitting highs and the truck companies are laying off workers. The volume on these new highs are the lowest since 2001. Just remember in 1938 the DJIA dropped 50% after the same type of weak rally.
Buy now or be priced out forever.
Not sure it was mentioned, but CBS 60 minutes did a segment on Sunday about traditional 6% brokerages being undercut by deep discounters. Fairly interesting story -however the amazing thing is how upset realtors are about the story and how 100% certain they are that their services are worth full value, and that anyone daring to question this deserves to be shouted down - and now I see 100’s of posts on the CBS site from these realtors
http://www.cbsnews.com/stories/2007/05/11/60minutes/main2790865.shtml?source=mostpop_story#ccmm
Shouldn’t those upset Realtors be out there selling houses? Or, at the very least, trying to?
I like this comment:
“What value-add do real estate agents really give? They take zero responsibility for anything after the ink dries. They and banks were complicit in ensuring that the lowest mortgage rates in 30 years were taken care of by the highest housing costs in history. For example, in Minneapolis, a 1948 bungalow with about 1600 sq. ft. is going for a cool 250,000 now. This hyper inflation of housing costs were a banking, real estate agency and house appraisal consipiracy.
If they don’t get you on interest rates alone, they’ll get you on house valuation. I as a carpenter know the intrinsic value of a home, and it is no-where near the market price. It’s time that the real market pressures are felt by these greedy industrialists. The internet is the best thing to happen for the working stiff, because we can now exert our own pressure.
6% on 250,0000 is a lot of money. They have no liability (if they are always truthful). They have no major costs. They have nothing as a stakeholder in the transactions.
All you need to sell a house is an appraiser, a bank and an attorney. They cover themselves. The appraiser is required by the bank, the attorney is required by the bank. All you need to do is present yourself as a worthy credit risk to the bank and you’re in. No realtor is ever needed and thus the 6% is yours as it should be. The banks take care of themselves and make plenty of money in the deal. Why on earth would anyone use a real estate agent?”
Hang in there txchick, we’re all counting on you.
Airplane?
My husband and I are getting ready to take a look to properties in Wheaton and maybe to send some lowball offers in 2008 (I know a lot of the properties currently in the market will still be in the market next year).
This Saturday we are going to look one property (which looks the type would like to buy). Current wishing (really wishing, dreaming..) price is 349,900, 180 days in the market, one reduction of 10k last April (omg!), bought in July 2006 (omg!!) for 260,000…The guy “renovated” the kitchen and baths and he finished a patio last week. He wants some FB to pay 100k more just because he held the property for less than a year (!?). I’m just soooo curious to see what he renovated and to check the facts. I’d never paid more than 275k for that place and that being generous. In fact he is the FB, he bought it in 2006 for 260k from a couple who bought it for 140k in 2004…oh well he can dream! I am tempted to give a very lowball offer and see what happens…although I think I will just look, note the minuses to the realtor and then wait for next year (there will be plenty of houses to chose anyway).
Offer 150K….
and watch him choke.
Be a De-Nihilist and make no offers…
SECOND TIME I HAVE LAUGHED TODAY.
I’ll get even with you for having to clean up my key board!
Good won, eh?
“My husband and I are getting ready to take a look to properties in Wheaton and maybe to send some lowball offers in 2008 (I know a lot of the properties currently in the market will still be in the market next year).”
nam,
Do your homework. Keep track of listings. What they sell for, how long they are on the market. Maybe they don’t sell disappear and then reappear (sometimes at a HIGHER price, don’t laugh I’ve seen it). Don’t get stuck on one house. Follow the “type” of house you are looking for in the area you want to live.
I think the time to buy in the Chicago area will be ‘09-’10. JMHO
Thanks for the advice!
That’s what I am doing. I already saw a couple of houses which were in the market last year, they came back last March, same price; they are still in the market, if someone didn’t buy them last year for that price, I have no idea why they think it will sell this year. I guess they are looking for buyers who don’t do their homework (I check everything, zillow, dupage county records and foreclosure records at the sheriff office, I love the American market, it’s soooo transparent!).
My husband and I have an amount of mortgage we’ll feel confortable paying back (in 15 years fixed interest rate, taking into account one salary for the calculations). If we don’t find a house we like in 2008, we will continue renting and just save more money for the downpayment. It was a bit difficult to convince him at first but I explained to him the “numbers” and he agreed to my plan.
I would love to know just what kind of house sold for $140,000 in 2004 in Wheaton. Was it on fire? Was it thirty feet from the Chicago & Northwestern tracks? Was it under the C&NW tracks? Since $300,000 will barely get into a three bedroom in 2007 in Aurora (Mexico City Midwest i.e. land of crappy schools, Hill Avenue Open Air Prostitution Market, and Gangland Training Academy) $260,000 for any home in Wheaton at this point sounds like a cast iron smokin’ deal.
Itcouldhave been a major rehab project but , I agree, you would have a hard time find much in that range.
As far as Aurora, you can find PLENTY under the $300,000 range if that’s where you want to live. 724 SFH & townhomes in Aurura for $300,000 on down according to ZIP.
http://www.ziprealty.com/buy_a_home/search/results/sample.jsp?msg=&page=1&cKey=gm497k86
I looked up that Wheaton property on a map. If it is the one I think it is then It IS 30 ft from the Chicago & Northwestern tracks. Good grief! I lived in Wheaton for 25 years so I do know a bit about the town. Please don’t even begin to tell me about all of the sub $300,000 bargains in Aurora. Numero Uno: townhomes are not “homes” they are apartments with a misplaced sense of importance. Number two: depends upon WHERE the SFH is located: there are parts of Aurora that the POLICE are afraid to drive through let alone walk through or live in! Number three: I would suspect that a rather large portion of the “SFH” for under $300,000 are in the “HomeTown” development which give the term “rabbit hutch” a run for its money. Sure they have two car garages: they will fit two Minis and they both better be convertibles or you won’t be able to get out of the cars. For goodness sakes take a reality pill will ya!
rjsko,
I have found houses (not townhouses) in Aurora in Dupage part of the city (the one within Napervill schools district) for less than 300k, 2k sqf.
Just check realtor.com
The house I am talking about in Wheaton is very closed to Northside park, it doesn’t show even close to the railways in the map….is there a railway close that doesn’t show in the satellite pictures?
260,000 was last year, this year is 349.900, for that price you can get something in the nice streets around Roosevelt (downtown Wheaton), it won’t be a Mcmansion but nice 70-80s house, nice lot, 1800sqf (we don’t need more). It is in Wheaton but it is in unincorporated land (that might be the reason was cheaper). After seen pictures of the house and the description, I think the couple who bought it in 2004 did the big chunk of the renovation (roof, electrical, a/c, plumbing…) and this guy just made some cosmetic touches (not enough to ask for 90k profits in less than a year).
who are the stupid dopes buying?
what a bunch of uniformed boneheads.
I just got back from Madison and there’s all kinds of real estate crap being built and sold there. Who in the world buys this stuff? I think the vast majority of households make less than 60K. I don’t buy that there’s tons of moneyed Americans out there. Also, the majority that make more than 60K probably manage their money as poorly as the lower income households. No way in h#ll will a $13/hr job market ever afford a 200K home, I don’t care how you spin the numbers. I stay by my belief that 2000 prices (without inflation games) will be here in 2007-2009. Will it rip the economy apart? Probably. Do I care? Not really. I don’t care if the homebuyers of the last 7 - 10 years get reamed in the rear if thier house falls back to 2000 or lower prices. These are the same people who flipped you off for addressing the housing bubble, the same people who cheat and lie with every breath they take, and they’re the same people who ran up all kinds of debt. I think lower housing prices will be a breath of fresh air in a way because we don’t have to deal with all the Hummers and duallies and those yuppie looking crossover vehicles. These aren’t smart people, they’re morons. Anyone who is buying a home now is going to get it in the butt.
Got Lube?