Real Estate Consultants Rank The Housing Bubbles
Bankrate talked with some real estate analysts about which markets are, or are not overpriced. Highlights, “The D.C. market ranks 10th on John Burns list of markets facing a potential housing bubble, and home sellers in the metro market report that it’s taking longer to sell than it did a year ago. Plus, builders are offering significant incentives to try to move inventory quickly.”
“Ft. Myers/Cape Coral, Fla. Is it overvalued? Yes. The market is still affordable and more reasonably priced than Sarasota (43 percent overvalued) to the north or Naples (a whopping 72 percent overvalued) to the south, but the amount of building in the market is staggering.”
“What goes up must come down. Fortune lists Las Vegas dead last in its list of 100 metro markets for housing appreciation in the next two years, predicting a two-year combined decrease in housing values of nearly 13 percent. ‘Las Vegas is a very interesting market,’ Ingo Winzer says. ‘A lot of people moved in, but construction has kept up with the pace. For a long time until recently, I didn’t consider it an overpriced market. I don’t think the price increases will last. There’s really not an inability to produce new homes out there if there is a demand for it.’”
“We’re not quite sure what Sacramento ever did to anyone, but it showed up on just about everyone’s list of has-been markets. Winzer’s Local Home Value Ratings rates the market as 59 percent overvalued and Burns Housing Cycle Barometer also lists it as overpriced. ‘Sacramento, we think, has topped out,’ says Richard Gollis. ‘There is just so much (housing construction) in the pipeline. It’s a steady-as-she goes market and has always had consistent growth, but we think the land market has gotten ahead of itself.’”
“The bigger they are, the harder they fall, and Phoenix is the largest housing market in the country in terms of new construction. It’s been running at 65,000 new units per year, with housing appreciation increasing at rates of nearly 30 percent per year. ‘You can’t sustain 30 percent increases a year for very long,’ Winzer says. ‘Of all the 100 markets we review, we think if you’re an investor in Phoenix, you should sell, because vacancy rates are already pretty high.’”
“Gollis says his firm has been studying the market carefully and doesn’t like what it sees. ‘It’s had an incredibly unusual amount of growth,’ he says. ‘The land market has accelerated dramatically and the lot price as percentage of the home price has gone up significantly. We have some concerns about going long in Phoenix.’”
“This one is in Winzer’s backyard, his firm is based in Wellesley, Mass., so he sees what is happening there every day. ‘Until about a year ago, homes would go on sale and be gone in a week,’ he says. ‘Now they’re sitting on the market for a year.’ He doesn’t see the prices dropping rapidly here, or in any market, for that matter, because while real estate prices escalate rapidly, they drop slowly.”
“‘In markets that are well-overpriced, prices don’t really fall because people just won’t sell,’ he says. ‘The adjustment mechanism is skewed by people’s emotions getting involved. People will grit their teeth and hang on as long as they can to get the price they want.’ They might not be able to hang on for long. Burns ranks Boston fourth on his list of markets likely looking at a bubble; Winzer’s analysis indicates the market is 33 percent overvalued.”
“The City of Angels has been described as the poster child for how a lack of new housing near employment centers can hurt an economy. It’s ranked as one of the least affordable places in the country to live, with housing prices consuming 91 percent of income, according to statistics from John Burns Real Estate Consulting. Plus, job growth is virtually flat. Together, it’s cause for real estate market consultant Gollis to predict that the prices for California coastal markets are topping out in single-family homes. Fortune predicts a drop-off of nearly 8 percent in housing prices in the next two years.”
“At 72 percent, Naples is No. 2 on Local Market Monitor’s list of overvalued markets in the country (Santa Barbara-Santa Maria, Calif., is No. 1 at 86 percent overvalued). In actual pricing, it outpaces other Florida markets by a good $100,000 margin. Plus, there is an abundance of more affordably priced options for buyers within a short driving distance. It is no understatement that entire cities are being built nearby. ‘The markets that are the most overvalued are the ones at greatest risk of a substantial correction,’ Winzer says. ‘Naples is at the top of that.’”
“Nassau/Suffolk, N.Y., otherwise known as Long Island, this market is No. 2 in the country on real estate consultant John Burns’ list of locations facing a potential housing bubble. (Modesto, Calif., has the top spot.) Similarly, Fortune predicts a loss of about 6 percent in housing values over the next two years.”
Thanks to the reader who sent this in.
We’re only 10th on the list? That’s an insult. So fine, all you sunshine staters can take the trophy. We’ll just carry on paying six years’ median income for our lousy houses in our filled in swamp. Harrumph.
Phfft - 6 years median ?
San Diego is WELL over that now…
I wish it was just 6X median income…
I couldn’t care less about any of those locations. Does this mean the bubble is only going to pop in these speculator-driven markets, where everyone is buying vacant condos, and where no one wants to live?
6X is cheap. More like 16X in Bay Area, or maybe even 66X.
Ben,
I have a suggestion for discussion:
Some of us here are playing a double game with respect to supply&demand. When we read industry quotes about soft landing, we all yell: “it’s supply and demand, stupid! look at the inventory!”. But when we read about realtors suggesting houses being taken off the market, we yell: “it doesn’t matter! It’s the comps, stupid!”.
Well, to me this does not make sense. If supply is taken off the market, it should have the (almost exact) reverse effect of supply being put ON the market. The question is: is this impact big in both directions or small in both directions?
Well, there are various views about supply and demand. Some people believe that S&D dictates prices, econ 101. period. Others believe that prices are determined by what most people perceive as the value (which eventually amounts to comps). The latter view is all the more powerful when driven by psychology. Now when psychology is absent, the debate gets more interesting…
Back to S&D: I think that deep down there is “true supply” and “true demand”. That is to say, people who truly need to sell and people who truly need to buy. If we could find a way to measure such data, I believe that supply would outstrip demand by a far margin.
It’s more than that. Pretty soon it’ll be those that CAN AFFORD TO SELL at prevailing prices. Then, for those that can’t stay current and get foreclosed upon because they can’t sell… the ball really goes downhill in a hurry.
Those that wait will be rewarded. Those that wait longer will be rewarded even more…
There’s also a distinction between “people who want to buy” and “people who can afford to buy”. The only thing that has bridged this gap has been loosened credit standards - as signified by the fact that rents haven’t gone up (because rising rent truly requires tight supply and rising incomes - the fundamentals that have been incorrectly attributed to the housing bubble).
guys, i am including the “afford” in the “want to” so don’t worry about that. this is the reason i think prices will go to hell. I am more interested in thoughts about whether supply/demand really does determine prices.
“Nassau/Suffolk, N.Y., otherwise known as Long Island, this market is No. 2 in the country on real estate consultant John Burns’ list of locations facing a potential housing bubble. (Modesto, Calif., has the top spot.) Similarly, Fortune predicts a loss of about 6 percent in housing values over the next two years.”
Manhattan is behind Modesto. I guess it really is nicer out here in CA than NYC, as I have long suspected.
“The bigger they are, the harder they fall,…”
So even though it is No. 2 in terms of bubble potential, the Manhattan market crash may be a harder one than the Modesto market crash?
NYC isn’t LI.
Getstucco, I have the unique distinction of having grown up in Modesto (and I go back every year to see my family) but having moved to the NYC Metro area. I can unequivocally tell you that Modesto ranks FAR BEHIND NYC in every aspect bar none.
You mean to say the New York Philharmonic is better than the Modesto Symphony Orchestra??? And I guess New York has a higher murder rate, although Modesto might have more meth labs…
Is Modesto really supposed to be mentioned with NYC in the same sentence/paragraph/book?
““‘In markets that are well-overpriced, prices don’t really fall because people just won’t sell,’ he says. ‘The adjustment mechanism is skewed by people’s emotions getting involved. People will grit their teeth and hang on as long as they can to get the price they want.’
This reminds me of that poster with a Cat bearly hanging on that says ‘Hang in there baby’.
I think he is right, but sure: ‘as long as they can’ - it depends on how much people really HAVE to sell quickly (and I’m sure we don’t know that for most markets).
In Europe you can see this everywhere. In my area there are plenty of homes on the market for several years that will NEVER sell at a price like that, not even with a 30% discount. When people are sitting on several hundred % gain, they don’t want to think about 2%/year interest payments.
Probably a few sellers will hit the jackpot, the other ones seem to prefer waiting for the next opportunity to win the lottery instead of lowering their price.
Just like most of the investors on the stock exchange who kept their stocks all the way to the bottom (in Europe, most of the small investors never sold - they still have their stocks from pre-2000).
They payment has to come from their current income , isnt it?
nhz, you provide informative posts on the Euro front. Thanks.
nhz (and everyone else) - Another bit of Euro insight:
I spent the last weekend in Dublin with a friend of mine (I am a London-based American). Now, I have been to Dublin several times since 1993. I have seen the whole city change.
Anyway, she is a licensed pharmacist. Does very well. She has spent the last year looking at properties. She has waited in lines in just view a property. Sales agents would not return her call - too much demand. Enquiries were met with smug “come at precisely 5pm and bring a check for €25,000 for a chance” at a 2 bedroom, 800 square foot rat hole.
Dublin is a sea of cranes. Building everywhere. Times sure have changed since I first visited. Everyone *seems* minted.
Getting to the fun part of my story: when I was with her, her mobile rang 2 times in a row without her answering. Annoyed, the third time she picked up. Lo and behold, it was the sales agent from a development she had viewed months earlier. The agent was telling her how she was lucky enough to have been selected to get another chance and that viewings and units were now available.
Smart as a whip as my Irish friend is, she declined. She knows whats up, and she is sitting on a good stash - ready to buy at the firesale.
By the way - she rents a €1,000,000 flat for €1,400 a month.
This is the woman I should marry…
I saw her first….
I wish I had stayed single!
NHZ, even though you claim that most Europeans did not sell their stocks post 2000, that did not stop the market falling 50%-70% over there. Somebody with cash had ample opportunity to buy at depressed prices between 2002 and 2003.
nhz, it looks like in Europe there are people who don’t prefer liquidity. Something must be wrong. It is perhaps the overall economic slowdown and the lack of investment opportunities that has plagued Western Europe for many years.
Because I don’t understand why would I lose money when I could make money instead.
Thoughts?
“In markets that are well-overpriced, prices don’t really fall because people just won’t sell,’ he says. ‘The adjustment mechanism is skewed by people’s emotions getting involved. People will grit their teeth and hang on as long as they can to get the price they want.’”
“From the latter part of September on, the money market was megaphoning warnings to the entire world. But a belief in miracles kept people from selling what remained of their speculative holdings…. Finally, there came the awful day of reckoning for the bulls and optimists and the wishful thinkers and those vast hordes that, dreading the pain of a small loss at the beginning, were now about to suffer total amputation – without anaesthetics.” - Jesse Livermore
“…people just won’t sell.”
This was the biggest standout comment that I saw up there. Isn’t there some MAJOR reason why these particular markets are overpriced!!!??? There are a boatload of people who CAN and WILL sell - those who bought under speculation!
The Bankrate article says this about San Francisco:
“Housing prices are unlikely to decline because of short supply — surrounded by hills and its famed bay — there’s just nowhere else to build anything less expensive in the city. But realistically, there aren’t that many people who can afford to buy at those prices, which should keep prices from going much higher.”
Yet today at http://www.sfgate.com there was an article that claimed the following:
“The indisputable fact is that there’s a high-rise construction boom right now the likes of which the Bay Area hasn’t seen in at least 15 years. Instead of office towers pushing up from financial districts, we’ve got residential towers and condominium complexes filling in the long-ragged edges of Oakland and San Francisco, as well as downtown San Jose.”
How do “residential towers” fare in an earthquake?
Actually quite well. Brick or stone construction fails miserably, wood does fine, and highrises usually just sway a bit. The older brick buildings now have glue, metal straps, and other band-aids to keep them together–with new construction brick is simulated or just used for cosmetics.
Much better than “landscrapers”. Highrise technology today is pretty good.
Another indisputable fact is that Japan is even more densely built than SF, which provides little comfort for homeowners whose property values have fallen by over 50% since 1990 and never subsequently recovered.
Good point.
…never subsequently recovered…
The way I read it (Japanese language newspapers), it’s just turned the corner to start heading back up.
On the “more densely built subject” - Tokyo is not in the same ballpark as SF. 15-20 story apartment complexes jam-packed for as far as the eye can see!
Don’t mean to disagree one bit, Mr. Stucco - just emphasizing your point.
They say that here in the OC but they are building as far as the eye can see…high-rise condos in Irvine, infill development galore (right across the street from me) and thousands of new homes planned on some large swaths of old farmland.
Have any of you had the opportunity to visit one of these High Rise Condos in Irvine. I went through the ones at Avenue One off Jeffery and believe me these cracker boxes were only 800 SQ Ft. with kitchenettes and Living Room to gether with a small bed room going for $450,000 to start and going up to $800,000. Who can afford this plus who wants to live near a major traffic area.
It would be interesting if they would explain how they go from a place being, e.g., “60% overvalued” to a prediction of a “4 percent drop in housing prices over the next two years”?
I guess they think housing values have attained a permanently high plateau, kind of like Fannie Mae’s stock price…
But if there were such a thing as a permanently high plateau and we were at it, would things be “overpriced”?
Higher interest rates might start loosening the grips of some homeowners with more marginal mortgages…
http://biz.yahoo.com/ts/050727/10235040.html?.v=2
“10-Year Looks For Home in New Range
For two years, the 10-year has been confined to a trading range of between 4% and 4.50%, with only a few short-lived moves above and below the range. Now, however, with the fed funds rate expected to be at least 4% by year-end, and with fed funds and eurodollar futures now priced for the possibility of a 4.25% funds rate in early 2006, the 10-year is under threat from the fed funds rate in ways it hasn’t been threatened during the current cycle…”
Despite all the terrible news from the ground level in housing markets around the country, and more bad news from Fannie, those builder stocks and Fannie are just amazingly resilient. It seems like bad news is good news, and up is down…
http://tinyurl.com/c47e9
FNM reports the accounting books are a mess, and it will take them more time to figure things out, and yet the price of their stock goes down less than 1%. It doesn’t make sense.
So how much total debt do people thinking Fannie is holding?
Your link is very instructive, Stucco. For those who would like to examine the evidence of a visit by the Plunge Protection Team, just look at the charts for the homebuilder stocks at the link. Notice that all of them were sharply up for the first 40 minutes of trading. Then the “angel” let up a bit and then they were up significantly again until 12:00 noon. Then the angel let up again but came back again later. Now look at the completely different trading pattern for Fannie Mae which is not a home builder.
Do you believe in angels?
It will be interesting to see what happens on Long Island. These are the descendents of those who fled Brooklyn when the housing hit 50 years old after WWII. When it was over, my neighborhood was redlined and houses sold for $40,000. Now, large areas of the south shore are going to be hitting 50 years old this decade and the next.
What significance does “50 years old” have with housing? Have you never seen a beautiful old tree-lined neighborhood? Comparing that to the clear-cut “new” tract homes is like apples and oranges.
Most of the high-end neighborhoods on Long Island (North Shore) consist of gorgeous homes built in the 1940s and earlier. Architecture they just don’t build today.
The only reason Sacramento doesn’t smell like manure is because that odor is overwhelmed by the stench coming from the State House.
Excellent!
I have to believe Sacramento will topple much more than, say SF will. Sacramento is one big crime-ridden sewer of a town. There aren’t very many truly wealthy people there, so most of the price inflation is financed by “thin air”, non-traditional loans, etc. It’s such a big sprawl, and there are a million “howmuchamonths” grabbing up every townhouse in site thinking they’re going to be the next Donald Trump.
Rob, you are probably right. Sacramento sucks.
Ok, so let me understand. The Ft. Lauderdale market has doubled in 5 years. It is overvalued. Prices are not sustainable.
BUT the prices won’t come down because of foreign buyers?
Oh,, I see. Foreigners are dumber than us Americans. They don’t carre if they lose money.
And I thought I heard it all.
it ain’t over till the fat lady sings, BOTH in the US and Europe.
When she does, she will be joined by a whole chorus of belters…
Haven’t you heard? Angel investors from elsewhere will save everyone, everywhere.
Silly me,, of COURSE foreign investors will buy in a down market because……. well because we said so.
How sad. They must have run out of good excuses and have to call in the backups. I can’t wait until next month’s version of “Why the real estate bubble won’t pop.”
Strange they would mention Portland and Seattle in the same breath. Seattle has one of the highest job growth rates in the country. Portland has one of the worst….totally different dynamics working in these cities. The only similarity is a heavy influx of Cali. real estate refugees (and a lot of rain.)
Portland is a double negative, no work and high prices…I suspect the bubble will kill this dump of a city.
Portland has a f@cking mayor who rode his bike in a critical mass rolling protest lawbreaking spee to show his connection to the people. Portland is an awesome city in the clutches of the worst buch of brain dead new age new urbanist transit loving public works wanna be social engineers since the 1980s Santa Monica fiascos.
Easy of the fox news network rhetoric.
Value judgements on livable cities are not resolvable on this blog.
Noted Robert Cote doesn’t like Portland. Don’t move there.
Designing cities around cars is wasteful and dumb.
Portland is one of the most enlightened cities in the country, given their emphasis on commuter bicycling. In terms of what Americans SHOULD be doing, Portland residents are way ahead of the curve.
Geesh, only 8 percent ? I would expect more, but I guess we have to see deceleration up first, then flat, before we see any acceleration to the downside.
In my area, I am seeing a few properties pulled out of the listings after 3 months or 6 months, then relisted at lower asking prices. However the reductions are still a joke. I’ll be impressed when they hit the double digits.
Yeah, I’m seeing some reductions (we’re looking in the 800-900k range) of maybe 10-20k sometimes more if the property is seriously overpriced but that’s about it. I think if you get the right seller you can get a good deal but I think many are just testing the waters and don’t really care if they move now or 5 years from now.
Stir the bubble, stir it…. then POP. Just read this article on MarketWatch….. apologies if someone already posted it…..
http://tinyurl.com/p9wbb
Farrell is scaring me. After reading this, I am all the more certain my HB puts will pay off, but not sure the counterparty will be able to honor the contract…
My naive hope was that Lansner would have responded to our queries much more directly, like Farrell did. I was not familiar with his column, but I was as underwhelmed as Rainman.
If enough of columns like this get written (and for those trying to convince friends and family what is coming, this is a good write up to send them), people really will have to wake up - even if it is too late. If they don’t, they are already dead and beyond reach.
I agree that Lanser did not answer the harder questions to the degree that I would have liked, however, I think he answered as much as he could without pissing off the OCR’s advertising clientele (no, I don’t believe his answer about their objectivity for either). He did admit that he thinks there will be 0% appreciation in Orange County for 2006 and the implication for that is significant.
I’ve just finished reading John Talbott’s book “Sell Now”…very interesting reading…even more convinced I was right to sell the house 18 months ago and rent.
Phoenix: ‘It’s been running at 65,000 new units per year.’
How much excess building does this represent?
I’ve seen figures showing that the Greater Phoenix population has been increasing at around 125,000 per year in recent years. Average household size is 2.8, per Wikipedia (below). So, 125k people translate to 45,000 new households per year. There will be additional housing needs for new households from existing population (if household size is falling), plus replacement of existing housing stock.
But, is the figure of 65k units for the same area as ‘Greater Phoenix’? My guess is that the 65k could be for a smaller area. Does anyone know?
http://en.wikipedia.org/wiki/Phoenix,_Arizona
I think they meant for the greater Phoenix area (Maricopa County). With those numbers on new construction added to the resale market, Phoenix will definitely ‘fall hard’.
Listings were at about 32,000 last week with approx 5500 units sold last month (resale). This is going to interesting to see in the next few months when rates go up. I have already seen listings “Pre-forclosure” and investors needing to “liquidate” and considering any offers. Most of the listings in Phoenix have reduced 10-20k in the last month. In the last week I have seen more rental ads and signs in connection with vacant homes. It is going to suck for all those Cali investors still stuck with their flip. For all those who are planning to buy in phoenix in the near future, just hold on… the sh@t will hit the fan.
Boise is again mention on a “best places” and a “top ten list”. While we don’t have a crazy bubble like Cali or Phoenix, the town is already becoming unaffordable for the locals. The only people who cn afford to buy a new home (without creative mortgages) are people who have upsized and people who cashed out of bubble markets (like Cali). Younger people like me who make 30k-40k a year in Boise (which is a lot of people) will just keep renting for 2/3 cost of buying.
“‘Now they’re sitting on the market for a year.’ He doesn’t see the prices dropping rapidly here, or in any market, for that matter, because while real estate prices escalate rapidly, they drop slowly.”
They typically neither escalate rapidly nor drop rapidly. Oops, since 1998 or so, they just escalated as rapidly in history for a period of similar duration…
Oh well, at least they don’t drop rapidly. Right?
(Santa Barbara-Santa Maria, Calif., is No. 1 at 86 percent overvalued).
I have read this in a multitude of national magazines and websites…
BUT FAIL to ever see this information printed in the local Santa Barbara News Press (newspaper).
THE REALTORS definitely are not running around announcing this news either.
Things that make me go Hhmmmmmmmmm….
Santa Barbara BubbleBeliever
A new milestone: total US debt went up 1.1 trillion dollars in the last quarter of 2005, according to recently released figures:
[url]http://www.economagic.com/em-cgi/data.exe/frbz1/fl894104005[/url]
The typical figure for the last 5 years was between 600 and 800 billion per quarter. And Federal debt is at the shortest maturity ever, with 2 trillion coming due (and having to be refinanced) in 2006 and 2007. And all other debt is probably at record low maturities also. Everyone here knows about the mortgage part of the debt and how much of it has to be refinanced in 2006 and 2007. Perhaps this last quarter of data is bearing witness to the start of this process.
I meant to say, refinancing with the added twist of now higher interest rates and rising. Left that part out.
It is worth noting that the total national debt in 1980 was one trillion. Now we have a quarter where the increase is one trillion. Where does all this end?
40 trillion is the US total debt (in 1980 it was 4.5 trillion). You’re referring to US total national debt, which is 8 trillion today and 1 trillion in 1980.
I’m sorry, so stupid on my part. I never mentioned the 40 trillion in the first place. Groan. My original post should have been: “all debts in the US went up by 1.1 trillion in the last quarter of 2005, to a grand total of 40 trillion. These debts include Federal, State, corporate, mortgage, other consumer, and financial.” By the way, if anyone can clear up what financial refers to, I’d be very grateful. It’s about 8 trillion, and if it means the debts of JPMorgan and Citibank and those types, then why don’t they lump it together with corporate debt?
OT, but perhaps a topic…just heard about a divorce…mainly because of the financial ruin they face due to crazy ass speculating….I’m wondering about other stories of personal hell that will be written due to bursting bubbles all over the country…divorce, abuse, suicide, murder, etc. Terrible situations, but considering the cost of owning a home(s)…I can just imagine the havoc. It’s morbid, I realize, to even want to be curious about it…but the damages from the real estate fall-out could be major societal and cultural problems. Think of the Great Depression when people jumped from windows…I fear that this generation does not have the fortitude to personally weather this kind of melt down.
Catherine
Interesting observation. Look at some of the desperate ads on Craigslist and you will see some trouble brewing.
Many years ago I was getting into an elevator and was met with a woman who was working on the elevators in the building. I struck up a conversation with her and said I was very impressed that she chose such an occupation. She said she always told her kids that no matter what vocation they chose that they should also learn some kind of a trade. She said in bad times there are certain things that everyone still needs to have done and by learning a trade you can protect yourself somewhat from a downturn (compared to someone with a desk job and no other real usable physical skills). I’ve always remembered that.
There are definitely alot of people out there who will find it very difficult to fend for themselves if things get real tight (sew your own clothes, garden, work on your own car, etc., like many of our parents and grandparents did). I hope it doesn’t come to that but you never know.
Catherine ,
Been thinking your very thoughts for a number of days now and not to thrilled about what is to come.
Yeah, and watching the fall out after Katrina…well, gives me some idea of what people are (or are not) capable of.
They wont even half enough money to find a window to jump from.
This insanity has only strengthened my relationship with the wife. Kinda helps that we’re both rational folks when it comes to needs AND wants (why would anyone want to clean 4.5 bathrooms?). Shall I teach everyone our little “We Rent!” dance again?
You are correct in your observation.
There’s a website called “Ripped-Off” which exposes various scams and frauds perpetrated against average people.
When you read some of the stories of what the sleaze-bucket mortgage industry has done to people, it defies credulity.
The tone and wording of the letters imply absolute total utter desperation and misery. And it’s not only the 0% down/interest-only; greed-head spec crowd.
Bein’ in the appraiser biz, for 22 years, I’ve always encouraged people to deal with their small local bank-no matter what the interest situation-so my empathy does have it’s limits…However, wrong is wrong…abuse is abuse.
It will be interesting at what point, people are really gonna start goin’ for their guns to square away accounts.
I thought that Arnold cleaned up all of that stench coming out of the Capital Building. Did I miss something?
Modesto has 2 things going for it. It really does smell (and I mean literally - had to keep windows up when driving through it once - has the strong bovine fecal matter smell). And the area’s #1 tourist attraction - yes, their very own “Scott Peterson” home. And last I heard, it was up for sale.
lol. The stench is still there…it’s coming from Arnold’s Cuban cigar smoke…
Updated today……
HousingTracker
Real Estate market statistics (including median asking prices and home inventory numbers) for cities/metros across the United States.
http://www.benengebreth.org/housingtracker/
Florida inventory numbers pretty scary over the last 7 days…
Orlando
03/14/2006 17,417
03/07/2006 16,815
3.58% increase
Jacksonville
03/14/2006 10,288
03/07/2006 9,991
2.97% increase
Miami
03/14/2006 28,324
03/07/2006 27,492
3.02% increase
Tampa
03/14/2006 13,252
03/07/2006 12,815
3.41% increase
Here in Palm Beach county two of my students told me that their parents are trying to sell their house. Both of them have had 2 open houses on the homes with no shows on both occasions….
We all know that Scott upgraded his neighborhood and living quarters. He is now residing in a large, palatial estate witWhh breath-taking views of the City, the Bay, Golden Gate bridge, Bay Bridge, Treasure Island, Alcatraz, San Rafael-Richmond Bridge, Angel Island, and of course, the ocean. What better living for such an esteemed person as he is.
Of course, the State, due to its deficit, has proposed closing down that aging relic of a palatial estate on prime waterfront property and selling it to developers for more way overpriced Marin real estate. Then maybe Scott will be rehoused in Folsom or Pelican Bay? What do you think? (for those not familiar with my sarcasm, that is where San Quentin prison is really located. The state really has proposed closing it and selling the land due to the age of the prison facility.
I think they should re-house Scott at the bottom of bay with a nice pair of cement shoes…and it would be good fish food too!
IMO it’s a rather attractive building — San Quentin. Maybe they could turn it into office buildings. But seriously, the affordable housing efforts here in Marin are such a joke it’s absolutely shameful. Marin doesn’t really care about affordable housing and is content on exporting its workforce to other counties.
Catherine = I think you are right. There will be a lot of people that will not be able to weather what they have put themselves into. It will get ugly and have a lot of societal effects (and not for the better).
There’s no real data for Northern NJ and the NY counties that surround NYC. The data looks like it’s for NYC proper.
What are you talking about? The only data in the original article was for a few Northern NJ towns and the two LI counties. There was no data for the five boroughs or Westchester county or Fairfield County, CT.
I just spent the last hour trolling the desparate FBers from the Bay area on Craigslist. I think I put up some pretty humorous (although sacarstic, but true) observations. You may see that on SoCal’s site - http://www.housingbubblecasualty.com Click on Forums, and then the Craigslist - mine are listed as ambell1
Link for my comment above:
http://www.realestateconsulting.com/metro_statistics.htm
Housing prices can easily crash. In the past crashes have been rare because affordability was helped through massive refinancing cycles.
There will not be a refinancing cycle this time.
Risk-premiums and rising global interest rates will ensure that mortgage rates do not go lower than the last period save for only the top credits.
this is why I shake my head at the “experts” who say we are only going thru a “rebalancing” or “soft landing” period. call it denial, stupidity, or just habit, most people don’t realize there is no safety net under their high flying stunts.
When I first found this blog ? ~ a year ago, many of the factors cited in this housing bubble were ones I was at least vaguely familiar with, not being a financial expert, but then I read something Deb wrote which has been repeated now many times that in the previous downturn after the peak in ‘89 (at least on the east coast) affordability was aided by dropping interest rates and this time with rates rising affordability could only be obtained by dropping home prices.
Boy, did that realization hit me like a brick. I remember the early 90’s and how stagnant things got with real estate. This is going to be far more widespread in its impact.
Real Estate is an illiquid asset. As such, it only takes 1 transaction to affect the price of a neighborhood.
Even if 90% of the people in the neighborhood don’t sell, it only takes those handful of people to drive down the “comps”.
Yup…just a few desperate sellers…
AND THERE WILL BE A FEW DESPERATE SELLERS. JUST LOOK AT CRAIGSLIST FOR A FEW
Such as this one. Price dropped from 1.17 million to 775K, having an open house tomorrow, after which they will “review all offers,” as of there is going to be a sudden bidding war.
I have 2 questions here:
1. How can it be a ‘brand new house’ if it was built in 2003? Does that mean it’s been kept empty for around 3 years?
2. How much did it cost to build in 2003? Maybe there’s still some fat in this one.
I don’t care how much the press is sugar-coating the housing glut, the masses are catching on !
Albuquerque was listed in John Burns as close to the top currently for appreciation. Any comments on that?
hmmm…that was curious. I watch NM closely (for personal, greedy reasons) and that analysis may be just behind the curve…on my last tour of the city, lots of for sale and open house signs…on a Thursday. I have no idea of the listing inventory, but I know that it has been attractive to Californians for at least the last 9 months…the “next big thing”.
Did anyone noticed that there are ZERO real estate bullish trolls? Remember “Antonio Villaraigosa”? I wonder what’s up with him.
Their tactics have changed. They’re not gloating anymore. Instead, they pretend to be bears and then make a statement like “…I’m losing patience…why is the median still going up in the OC…not seeing the price reductions..”. They know they can’t engage us on the facts anymore so now they’re trying the psychological angle.
Do you guys remember King Arthur? lol…i loved that guy!! He could ramble for 8 paragraphs with big words scattered around like bird feed and say literally nothing of value or sense! And then everyone would pounce on him like a sumo wrestler and then he’d just come back and do it again….
Ah, the good ‘ol days.
Do you guys remember King Arthur? lol…I loved that guy!! He could ramble for 8 paragraphs about the bubble with big words scattered around like bird feed and say literally nothing even remotely correct or that even made sense! And then everyone would pounce on him like a sumo wrestler and he’d get up and do it again, totally unfazed!
Ah, the good ‘ol days.
I miss googlefl. He was a riot. He would run in & yell that “EVERYTHING IS GREAT IN FLORIDA…” then dissappear.
First off I have been religiously reading this blog since last summer to the tune of 1-2 hours daily. It is truly an addiciton. Congrats to Robert for (and I hope the credit is yours) inventing the term “howmuchamonths”. This about sums it up for me. Being a mortgage banker here in Tucson the past 3 years it has been truly amazing to see the Californians change our market. Up until August I had about a 12 month run where 30%-40% of my deals were California “howmuchamonths” purchasing 2nd properties using their HELOC for a down payment. It is not a stretch to say many of these buyers were between 25 and 45 and were truly clueless about the entire process and rolled into town in Hummers. They will soon be &%$&%%’d in this market. For sale and for rent signs are popping up everywhere (it’s especially funny to see the proverbial house on the market for the past 3-6 months which is now for rent). I am not your typical mortgage guy….I have tried talking the Californian howmuchamonths out of pick-a-payment loans….they simply don’t listen. I have lost lots of business because I am ethical and won’t do certain deals (maybe I pay in the end with less income but I can sleep with that). In addition it amazes me the levels of debt and bad credit howmuchamonths are in this country and driving a nicer cars then me….they are truly idiots. These people do, however, help me get through the day with humor…their levels of cluelessness astound me. If there is anyone on this site who doubts we are in a bubble…trust me, I run 10-20 credit reports weekly. We are truly a nation with almost zero financial IQ. I work in an office with 100+ real estate agents….the bubble is beginning to pop. Open houses are empty, MLS’s are skyrocketing and realtors $700 SUV payments are due (not to mention it takes $85 to fill the tank). The funny thing is that last summer I had an agent (new and clueless like about 80% of them) tell me she was buying a $40,000 Tahoe because it was fully tax deductible as she is a realtor….she actually thought she made the payments and then come tax time the govt sent her a refund check for those payments..hehehe. Then there was the couple from CT who owned a townhome there and make a 125K profit in 8 months. They then moved to Tucson and spent their profits on new cars, clothes, or god knows what. When taking their loan application the guy was adamant about 100% financing. I asked him what he was going to do when the capital gains were due from the CT sale as he had burned through the profits. He told me you don’t pay taxes on real estate profits. I really tried educating him to let him know he would have to pay taxes and he wanted none of it. I then tried talking him out of an Option ARM and he never called me back. The real estate agent told me he purchased a 550K home….the guy didn’t even have a job yet in Tucson. Well I could go on and on. For the record (before people pounce on me) I make a good income but live in a modest 3 bedroom house with a 100K 15 yr fixed mortgage and drive an old car and bank most of my income. Not all loan officers are shady….some of uactually enjoy helping people buy homes…it is to the point where this business has really turned me off and I will be looking soon for a new sales job in anything that does not include dealing with real estate agents or the general public. I need to get back to selling to intelligent business people who actually consider their needs before purchasing. Ben, you’ve really done a great job here…thanks.
By the way there is one thing that kills me on this blog…..why do people always confuse lose and loose….does anyone else notice this? Please see below
1) Lose-to not win,etc
2) Loose-does not fit well,etc
you can’t loose your house by not making mortgage payments and your pants will never be lose.
I’m out…….
I assume the CT couple only lived in the house for 8 months and therefore cannot count it as their primary residence?
correct…you must live in your primary for 2 years to avoid capital gains
There are exceptions that allow you to take a prorata share of that 500k tax free - ex. job relocation, divorce, etc.
Don’t know if any of these applied. 8/24 = 33%
.33 x 500k= over 150k tax free.
2 out of the last 5 ….
John L,
Your post helps remind me of the good people like yourself in the Mortgage and Realtor professions that will not deserve any collateral taint that will be flying around in the aftermath of this debacle.
Yes, I said ‘collateral taint’ and I’m not proud of it. Sometimes I just ‘loose’ my mind.
I have seen ‘looser’ for ‘loser’ so often I wondered if it was another quirk of American English :).
Picking up on your she actually thought she made the payments and then come tax time the govt sent her a refund check for those payments, I think we should consider the possibility that Realtors with this level of knowledge have been letting ARM borrowers think (or even actually telling them :() that a 1% rise in interest rates means a 1% rise in payments.
1. How can it be a ‘brand new house’ if it was built in 2003? Does that mean it’s been kept empty for around 3 years?
2. How much did it cost to build in 2003? Maybe there’s still some fat in this one.
That post was supposed to end at payments.
Looks like it picked up the back end of my previous post. Didn’t notice, sorry.
John,
“Your” right. But, be careful - the “loosers” get defensive around here. “Its” pathetic.
John L, your post would have been much more readable if you had broken it up into short paragraphs.
I should have added that I enjoyed the post very much, after I clipboarded it into a text editor and split it into paragraphs.
It’s as commonplace as “than” and “then” my friend. Sorry!
With all these tax misconceptions, now I wonder if folks actually are doing their taxes REALLY WRONG! For example, deducting all of their mortgage interest payments from their actual taxes. Or, as your Tahoe buyer said, deducting the cost of the car from her taxes…
(Hopefully none of these misinformed people are filling out their own tax forms.)
Catherine - give me your personal take on NM. You can email me housingbubblesobstory@yahoo.com Thanks
Comment to John,
It is my understanding that if you are forced to relocate by your job during the two year period that a portion of the sale is void of capital gains.
There is provisions for job relocation in the 2 out of 5 rule that allows for no gain recognized but I cannot recall exactly what they are…. LALAW may know…You out there LA ?
John L,
You seem to have a gift for writing (like many on this blog). Might want to consider a new vocation that will utilize that talent. Thanks for the skinny on Tucson and the window into the world of the clueless.
P.S- ‘intelligent’ business people can be a bit of a challenge as well.
OT hpothetical-
A homeowner sells his/her paid-off house for $500k in a declining market. Immediately after selling, she/he buys a $700k house in the same area. Smart move? If married, all of the proceeds should be tax exempt. If the $500k price was after the market took a 20% haircut, the seller would have lost $100k in the market, but saved $140k. If transaction and rehab costs are 10%, the the seller actually loses $10k for the move up. Probably higher property taxes, and if the market drops further an increased loss.
Does this mean that unless such sellers can time the bottom of the market exactly their greater potential won’t be realized? Is this some of the stickiness if the sellers are thinking?
Could be