The Situation Benefits Buyers
Newsday reports from New York. “In Queens, the trend of bucking the area’s declining prices ended last month. The median closing price fell to $466,400 in April, versus $499,000 a month earlier and $473,000 a year ago. Home sellers have yet to come to terms with a slowing market, some agents said. ‘There are so many overpriced homes on the market,’ said Mona Holzman, branch manager of June Shapiro Realty Laffey Associates in Great Neck.”
“As a result, buyers are holding out, she said. Holzman said she showed a four-bedroom, 21/2 bathroom house in Great Neck about 90 times before a buyer bit, scooping up the house, which was originally listed at $949,900, for ‘considerably less.’”
“Broker Audrey Livingstone said that sellers in her area, Freeport, Roosevelt, Uniondale and Hempstead, aren’t getting their asking prices either.”
“Despite that, ’some sellers are still not budging,’ she said. ‘That’s why the inventory is there.’”
From Bay News Brooklyn from New York. “For the thousands of Brooklyn homeowners facing onerous mortgage payments and the threat of foreclosure, City Comptroller William Thompson, Jr. has launched a new Foreclosure Prevention Helpline.”
“‘There are people that have bought million dollar homes that thought they could afford them, that find out they can’t make the payments,’ said Bruce Solomon, the Comptroller’s Associate Director of Community Relations.”
“Senator Charles Schumer predicts that over the next two years, 91,000 New York City homeowners are ‘likely’ to lose their homes. Schumer said 6,100 Brooklyn families are at risk.”
“The is particularly troublesome given that New York City already has the lowest home ownership rate—33 percent—of any major city in the United States.”
The Poughkeepsie Journal from New York. “Building construction contracts have continued to show a decline in Dutchess County, and to a lesser extent, in Ulster County, so far this year.”
“Homes are down by 58 percent in dollars in Dutchess, with 95 single-family units on the books for the year so far, versus 179 in the same period in 2006, a drop of 47 percent. No apartment deals have surfaced so far this year, versus 338 of them a year ago”
“The situation benefits buyers. ‘The interest is out there, but the traffic is no doubt less than it was,’ said Jean Rowe, executive officer of the Builders Association of the Hudson Valley, so there’s more inventory to look at and price reductions are common.”
The Boston Globe from Massachusetts. “The Massachusetts housing market will remain in a slump, and by the time it hits bottom about a year from now, prices will have dropped 14 percent from the peak in 2005, according to an economic forecast released yesterday.”
“Such a decline would mean the current downturn would match the real estate collapse of the late 1980s and early 1990s, when the median single-family home price also fell about 14 percent.”
“‘Although these price declines are not welcome by existing home owners, they are healthy for the economy,’ said Alan Clayton-Matthews, the University of Massachusetts professor who prepared the forecast. ‘With housing prices in line with incomes, Massachusetts will once again be affordable for the state’s future labor force.’”
“Increasing foreclosures will put more homes on the market and make it difficult to reduce the sizable inventory of homes for sale. In Boston, for example, nearly 30 percent of the subprime mortgage debt is delinquent, suggesting more foreclosures ahead, said Clayton-Matthews.”
“‘All this is going to force prices to adjust,’ Clayton-Matthews said.”
The Republican from Massachusetts. “This city came in second in the state in the number of foreclosures filed during the 12 months that ended April 30. Boston, whose population of 559,034 is nearly four times that of Springfield, saw just under twice as many foreclosure filings.”
“Jeremy Shapiro said his analysis of the statewide numbers ‘has revealed the foreclosure crisis is hitting urban, suburban, rural, wealthy and poor communities in every part of the state.’”
“Statewide, 23,116 foreclosures were filed in the 12 months ending April 30, up 81.3 percent over the previous 12-month period. In April alone, statewide foreclosures rose 63 percent to 2,002.”
“‘This is the seventh straight month with over 2,000 foreclosures,’ Shapiro said. ‘Even if the numbers were to stabilize, they would still be astronomically high.’”
“Michael J. Farrell, president of Northeast Financial Group in Wilbraham, said he’s working on about 30 foreclosure cases right now, with about 20 from Springfield.”
“‘There’s just an abundance of fraud in the origination documents,’ he said. ‘It’s not something I used to look at in the process of working with somebody in trouble, and it’s one of the first things we look at now.’”
“He’s dealing with ‘numerous cases filled with fraud,’ he said, with ‘phony income numbers, out-of-town appraisers’ overvaluing properties to enable bigger loans. He said all the cases involve mortgage companies, not banks.”
“Farrell added that in some cases, the homeowners made bad financial decisions so there are some cases ‘where the borrower has to take some blame here.’”
The Glouchester Times from Massachusetts. “The nonprofit developer of Pond View Village didn’t know it, but Cape Ann Housing Opportunity was in a race against time to get its condos built and sold before the overheated market began too cool in a regional and national real estate downturn. It was a race Cape Ann Housing Opportunity lost.”
“Taken together, said Christine Cousineau, executive director of the project, when the condos went to market last summer, they were at least one year late. In the interim, the housing boom on Cape Ann swooned, with condos leading the dive.”
“It had reached its high point, according to Alan Pasnik, data analyst for The Warren Group, in 2004, the fourth straight year of spiraling prices and demand. ‘By then,’ he said, ‘demand had squeezed all the credit out of the mortgage companies. People were buying houses they couldn’t afford,’ he said.”
“Prices began declining as supply continued expanding, giving a boost to The Heights next door to Pond View Village as apartments at The Heights were converted to condos and marketed.”
“The tumble of prices was dramatic. The $293,000 average condo price in 2003 was down to $250,000 the next year, then continued to fall to $225,000 in 2005. Prices fell further, to $194,000 in 2006.”
“That was the year Cape Ann Housing Opportunity finally got to market with its housing stock, at prices between $229,000 and $359,000. None was sold.”
The Martha’s Vineyard Gazette from Massachusetts. “The real estate market on the Vineyard has swung strongly in favor of buyers, as record stocks of unsold properties force agents and owners to begin to heavily discount prices.”
“Figures for the first quarter of this year showed the total inventory of residential property up more than 40 per cent over the same period a year ago. The median sale price also continued a decline which began last year.”
“According to the numbers provided by the real estate listing service Link, there were 549 properties on the market, compared with 391 for the first quarter of 2006. The number of unsold properties has risen rapidly over several years. At the same time in 2004, there were 242, or fewer than half as many unsold houses, and in 2005, 314.”
“The trend also is evident in inventories of land. In 2004, there were 59 parcels, in 2005, 73, in 2006, 97, and in March of this year, 115.”
“Further adding to the gloomy picture, foreclosure notices are sharply up and there is evidence that the slowdown is affecting other sectors of the Island economy.”
“Eleanor Wilson, owner of Link, said…that people are being forced to lower prices. ‘In fairly large leaps and bonds on specific properties,’ she said, adding: A price drop of $100,000 is not unheard of. ‘It seems that the people who are keeping their places at a price they could have got a few years ago, are not moving them.’”
It’s funny how when prices come down, you get the generic term it was sold for “considerably less”. When numbers were going up. it was percentages, $$ etc. Funny.
I caught that too. Two years ago posting a number was the thing. Now, numbers are never mentioned.
That’s because “you can’t handle the truth”.
I am amazed foreclosures are up so high in Springfield… the housing market never grew much in the last 20 years, I doubt enough to keep up with inflation. Used to be a nice little city, but if you don’t work at the hospital or one of the third-tier educational institutions, no reason at all to live there.
I mean, after PITI (accounting for a sub-prime interest rate) and no money down you ought to swing this for less than $1,000 per month. If you can two of your kids on SSI you can easily afford this!
RE: Springfield, MA…
I dated a gal who was doin’ unlicensed appraisal, multi-unit re-fi work in Springfield for a hack shop @ $100 a pop.
Believe me-the till has been looted.
HELOC money has all been sent to Mexico and the Dominican Republic.
Let the stupid bankers take back the lead paint infested trashed out garbage.
Sadly,
It isn’t the bankers that will feel the pain…
I think they packaged it rather nicely in a Chinese Take-Away Bag~
I’m sure they pay well at the Springfield nuclear power plant.
The Boston Globe study projects the median SFH will decline from $370K to $318K statewide (by next year). The economist who did the study says the projected price is “in line with incomes”. From a variety of on-line sources, I get the idea that Mass median household income is about $60K. Somebody correct me if this is wrong. Median SFH price of $200K would be more “in line with incomes” in my view.
I posted with a link to a house in Springfield, MA that would actually work underwriting-wise with an income of $35,000… but the blog ate it. Incomes are way behind the market in most of MA, and a 14% drop will not do the job, unless it then stays flat for a decade while wages catch up.
Most of these studies assume a 20% down payment - that’s how the national realtors board comes up with their housing predictions. However, how many first time buyers put 20% down???? Also, with all the home equity loans taken out and the decline in housing values, is it still practical to assume a typical move up buyer has a 20% down payment for a median priced house??? In Massachusetts that would be $74K after all commissions and buyer / seller fees have been paid in two transactions. Is this still practical - maybe / maybe not.
No, I’d say you’re definately on the right track. From my personal experience, 20% down from savings has virtually been nonexistent for at least 10 years. Recently, meaning the last 5 years or so, big chunk down payments have come from sales of previous homes. With the shift in the market, you’re seeing downpayment potential vanish. With the change in lending standards, that translates into a reduced buyers pool. The money is disappearing, and vanishing along side of it is the housing market.
“With the shift in the market, you’re seeing downpayment potential vanish. With the change in lending standards, that translates into a reduced buyers pool. The money is disappearing, and vanishing along side of it is the housing market.”
And tightened lending standards, even if it’s a minimal downpayment (e.g. 5% for first time buyers) are coming at a time when the U.S. savings rate is negative. Gas through the roof, food up 7% this year according to a CNN story yesterday, health insurance, higher everyday costs make it that much more difficult to save for a downpayment.
Gas through the roof, food up 7% this year according to a CNN story yesterday.
Lisa, do you have a link to this story?
“From a variety of on-line sources, I get the idea that Mass median household income is about $60K. Somebody correct me if this is wrong. Median SFH price of $200K would be more “in line with incomes” in my view.”
60K is what I get too and if condo’s got to about 200K they would be in line with rent. But I just can’t see how the prices are going to get to 200K. Every place I look up the “owners” owe at least 300K. Are 100K short sales going to happen? Perhaps the foreclosures will drive the price down but I can’t figure out what the upside down crowd is going to do.
For example, a place I’ve been watching has this price history.
Price Reduced: 08/25/06 — $609,000 to $589,900
Price Reduced: 09/24/06 — $589,900 to $579,000
Price Reduced: 10/12/06 — $579,000 to $549,099
Price Reduced: 01/24/07 — $549,099 to $539,099
Price Reduced: 04/19/07 — $539,099 to $525,000
Price Reduced: 05/14/07 — $525,000 to $499,000
Comparables have been selling at about 400K…the registry of deeds suggests they can’t go much if any lower due to refi’s. I’m interested in seeing how this one pans out. I’d pay 300K for it.
But I just can’t see how the prices are going to get to 200K. Every place I look up the “owners” owe at least 300K.
Market pricing has never cared about how much somebody owes.
Not now, not in the past, and I think it’s safe to guess, not in the future.
Just look at all the people that have been upside down on new car loans. Dealers love you to trade it in for a new one and lengthen the terms even more.
“if condo’s got to about 200K they would be in line with rent.”
Hey Hobo - you answered your own question about affordability - last bust condos went way BELOW prevailing rents. Don’t worry about how impossible that seems. You will be absolutely shocked at how low some of this garbage goes when this is over.
Mass median family income is around $71K as of 2005. Another example, the median family income for two wage-earners in Mass is $86K (I think the typical middle class SFH buyer in Mass is more representative of this group).
(http://www.census.gov/hhes/www/income/medincearnersandstate.html)
I don’t think we’ll see $200K median SFH in Mass without a depression or some other severe economic event on a national level. My guess, median price bottoms out around $300K by 2009. By then, median income will be over $90K and price to income will be around 3.25… with the caveat that jobs in the area hold up until then.
Here’s my reasoning:
The supply/demand dynamic in eastern Mass is interesting in that there is a limited supply of new construction and most of that is priced in the $600K+ range. The only “affordable” housing is in the condo market, and usually in blue-collar, economically depressed, former factory/mill cities. The typical stock of entry and mid-level houses are older (1970’s) and smaller (1000-1500sqft).
This creates strong demand for modern, updated houses in the 2000+sqft range because of the limited supply available. Unfortunately, I’m competing with people who are willing to sacrafice 40-50% of their net income for that kind of “decent” housing here. As long as that mentality and the incomes to support it are present, those of us looking for a good house at a good value in Mass will be dissappointed. (i.e. I don’t plan on seeing $150/sqft in a community I actually want to live in, on a house I actually want to buy).
That is why Mass and Cali are suffering from a brain drain. College graduates with sought-after skills are more mobile and will look for a place with a more affordable cost of living. The South and Midwest are sucking up jobs from the coasts. The Northeast and West Coast are great places to live if you can afford it. Most people can’t.
I agree 100% with your statement regarding brain drain, Jerry. I would move the family in a heart beat to North Carolina, but for a couple of things:
1. Our families are both local and within 15 miles of us, currently. We’re close to our families and this would be a hard break. They also help out considerably with the kids (currently 3 & 1).
My wife’s current career is not easily relocated. Moving down south would require a large investment in retraining for her to change careers. That downtime for her, while great for taking care of the kids and changing careers, would mean no net increase in our standard of living as we would lose 30% of our current income. While I may be able to replace some of that, the IT/Oracle positions in NC that pay $120k+ are rare.
So, for now we stay… and the longer we stay, the more people relocate to NC, driving up prices, putting strain on schools and infrastructure. Before you know it, the economics of relocation won’t make sense.
Az Lender~
I completely agree with your analysis.
I read the Globe article this morning, and could not for the life of
me determine where this UMass connected economist was gettin’ his numbers for a valuation decline of only 14% before prices start going up again (his forecast)
Asking prices still remain absurdly about local income levels.
Always interesting how the numbers guys also completely miss out on the diminishing “liveability” factor in MA.
Infrastructure is crumbling and the roads are a conjested mess due to a lack of piss poor planning for the future which is a Mazzholeland political trademark
-Clean the coffers while in office-let the next bum deal with the problem-aka the Big Dig.
Another 5 years and the Northshore & Cape will gridlock.
He totally misses the previous “study” which has noted that a quarter million “boomers” can’t wait to bail from MA as soon as the retirement checks start.
Your number @ $200k represents about a 40/50% valuation decline from 2005 levels which to me is where it’s all headed.
To say that number in the Globe would put a price on your head.
‘With housing prices in line with incomes, Massachusetts will once again be affordable for the state’s future labor force.’”
What a novel idea! Incomes to line up with prices. But that won’t last long in So Cal … the minute that we are a dollar ahead - we risk it all for a house.
I was not aware incomes had increased so much or were projected to increase a huge amount in the next year or two. (IF) they did increase the 50+ percent necessary to “bring them in line with housing prices” would this not register a massive inflation increase by the FED and would they not respond with skyrocketing interest rates to quell the inflationary surge? So with Interest rates at 12 - 15% how would this help housing become affordable? Face the facts. prices are way too high and given something must give, the only part of this equation with any flex at all is house prices.
According to Local Area Personal income data from the Bureau of Economic Analysis, per capita income in Queens was 32% above the national average in 1969. It was 7% below average in 2005.
Sure, a large share of Queens residents are renters, not owners. But a price that is more than double the national average?
I keep trying to tell people that NYC, in it’s entirety, is not that well off. There are eight million people living here, and the vast, vast, majority of them do not work for hedge funds or private equity.
I don’t deny the existence of the hyper wealthy, but they are such a small fraction of the population and a lot of them live in Rye or Greenwich anyway.
Also, I wish people would stop acting like their frame house in queens is about to ’snapped’ up by wall street bonus money. Because that is never going to happen.
I had somebody yesterday, once again, tell me that Manhattan will be safe because of the Wall St. bonuses. I pointed out that a lot of those go to Westchester, Jersey, Long Island, etc. I was talking to myself.
I agree with Silversurfer 100%. The top 1% will not save the entire housing market in NYC.
And the middle income folks in Manhattan, say around 200k with a couple of kids, are stretched. 2 beds or 2.5 beds (the former maid’s room) even in Columbia U area are 1.5, 1.7m.
Add in private schools, daycare/nanny, and even a few extras like ballet lessons or soccer club, and they’re up against the wall. And that’s with not owning a car. Latest buzz is rising maintenance bills and special assessments for roof repairs or repointing. Private kindergarten runs 20k a year.
Actually private K at the good name private schools is closer to 30K a year. Pre-K for 5 days a week, 3-1/2 hours a day is 15K in NYC.
Have a couple of friends I know buying soso co-ops on the UWS. Both are each paying about 1M for 2BR 2BA (1 is only 1BA but prewar, the other is a white brick 60’s slab tower), not so special places. 1 is convinced there is value to these places. I think they are out of their trees. Both are attorneys, but I cant imagine that its not a stretch for both of them.
What are rents like in Queens? Given a weird set of events I could find myself moving a large family to Astoria… a place I know nothing about.
An 2 bdrm apartment rents for 1600 in Astoria
Astoria is lovely - mix of rentals mostly older walkups, and a lot of owner occupied 2 and 3 families, some stupidly priced condos.
Safe, conveninent - and the reason i live there - EASY to get a cab to take you home from manhattan and only about $3 or 4 more than when i lived on the upper east side.
And ALWAYS time the walk to the subway before you pick a place - if the broker says its a 10 minute walk it’s probably 20 or more - and remmeber you’ll be on foot so that can be tough in the winter.
A couple of public housing projects to be aware of as well.
I’m also in Astoria (we need a night out for Queens’ bubbleheads! Bohemian Gardens anyone?:-)
I’d say $1600 to $1800 sounds about right. Lots of 3 family homes with nice apts. As opposed to the 2 family where the second apt is usually the basement.
If you go with a broker, tell him not to bother showing you the first apartment he was going to. They always show the apartment they can’t get rid of, hopping to find a sucker.
Also Craigslist is a good resource.
Astoria is great, lot’s of shopping and restaurants and closer to Midtown than places like Columbia and Washington Heights.
oh well i guess my rental in queens is not such a bad idea after all
the articel is tru there are a large amount of homes for sale in the area i live for 550k or better that need 100k in work and are releatively small with little property
i have alot of space for less than half of what it would cost me to buy even with 20% down and a rate south of 6%
il see what is doing next spring
i am in no rush at all and may never buy
enjoy your debt free weekend !!
I have a $300 balance on my credit card. I charged something last Saturday. I can’t wait for payday next week to get rid of that load. I hate being swamped in debt like that.
American homeowners are overleaveraged. They cannot play, I am a Hedge fund game!
8.4 months of inventory in existing home market:
http://biz.yahoo.com/ap/070525/economy.html?.v=9
I’m trying to remeber what the peak was last year. Anybody?
Whatever it was, it probably wasn’t in April.
Don’t know. But, since we’re at record inventory and 4 year low for sales, I doubt they were close to 8.4 months of supply.
August last year was 7.3 months (July was similar):
http://www.realtor.org/press_room/news_releases/2006/ehsjuly07.html
“For the thousands of Brooklyn homeowners facing onerous mortgage payments and the threat of foreclosure, City Comptroller William Thompson, Jr. has launched a new Foreclosure Prevention Helpline.”
Here is the perfect recording for them to use:
“Thank you for calling the Foreclosure Prevention Helpline. If your monthly payment is 60% or more of your gross monthly salary, then please perform the following steps:
1) get an envelope
2) place your keys inside the envelope
3) mail the envelope to China
Have a nice day.”
LOL…..I would not imagine very many of those sub-prime borrowers can afford a adjusted up payment at 10 to 13% interest rate . Is there any wonder that a high % of these borrowers are defaulting on the loan ? Why are all the experts acting so shocked ?
Also the Mortgage Brokers say it wasn’t their obligation to make sure the borrower could pay the loan . I wonder if the secondary market feels like the lenders had no obligation to make sound loans and prevent fraud . If the Mortgage Brokers had no obligations to anyone other than their own big fat commissions ,as they are trying to suggest ,wouldn’t that be the most idea job in the world ? Don’t let them fool you ,they failed to enforce guidelines and make rational loans and fraud was the name of the game . I don’t buy this BS that the final loan investor bagholder was at fault .A reporter should ask to see what the agreements were between the lenders and the secondary market .
As a lender they had not obligation to make sure the borrower could pay. If they had planned to keep the loans for a good long time, it would have been in their best interests to do that, but they weren’t planning to keep the loans, so that motivation doesn’t fly.
However, as a seller of the loan, they MIGHT have had an obligation to make sure the borrower could pay the loan. But that depends on the terms of the agreement under which the sale was made. Since the guys who bought the loans to repackage them into securities also didn’t plan to keep them, they didn’t need to writes terms like that into the sales agreements.
Diagnosis - too many middle men quite literally spoiled the process. If the lenders had dealt dirtectly with the people who would have ultimately held the mortgage backed bonds, there would have been an incentive in the system to make sure they were good loans. Without that direct connection, you had to wait for the pipeline to break (lack of inflationary prices halted the refinance merry-go-round), for the end users to stop the party.
more BIG GOV LUV invlovement
hope they don’t do this sht in VA
“What we’re hearing is that when people call their banks or financial institutions to say they’re having a problem making payments, the banks weren’t able to do anything to help, or didn’t try to do anything to help,” Bruce Solomon said.
In contrast, staff at the new Foreclosure Prevention Helpline will research each case and make appropriate referrals to non-profit organizations certified by the United States Department of Housing and Urban Development.
Great, so the FB calls the Foreclosure Prevention Hotline anticipating a little money love, and instead they get the phone number of another bureaucrat.
So while FB sinks further underwater, s/he also gets to ride the Govt. Agency Merry-go-Round…wheeeee!!!!!!!!!
‘By then,’ he (Alan Pasnik) said, ‘demand had squeezed all the credit out of the mortgage companies. People were buying houses they couldn’t afford,’ he said.”
That’s the first time I’ve EVER heard that (squeezed the credit out of the mortgage companies) offered as an explanation. Talk about an unlimited resource…
Ok, I will be the first to say it. I guess it isn’t different in New York!
“There are so many overpriced homes on the market,’ said Mona Holzman, branch manager of June Shapiro Realty Laffey Associates in Great Neck.”
Homes were overprices a few years ago as well, but with “15% in the bag” every year, people didn’t care. Now that’s off the table, the homes are just plain-old overpriced. Who wants to take on all that debt for a flat/declining asset?
It’s also a good sign that someone is talking about home prices as it relates to household income, duh.
“Senator Charles Schumer predicts that over the next two years, 91,000 New York City homeowners are ‘likely’ to lose their homes. Schumer said 6,100 Brooklyn families are at risk.”
“The is particularly troublesome given that New York City already has the lowest home ownership rate—33 percent—of any major city in the United States.”
That’s due to r*e*n*t c*o*n*t*r*o*l, Chuckie, you moron.
“Senator Charles Schumer predicts that over the next two years, 91,000 New York City *homedebtors* are ‘likely’ to lose their homes. Schumer said 6,100 Brooklyn families are at risk.”
fixed.
rent control is a disaster in NYC
just one of the items that makes NYC excruciatingly expensive. There is no right to live in NYC.
That’s due to r*e*n*t c*o*n*t*r*o*l, Chuckie, you moron.
—————————————————
OH HOW WRONG YOU ARE…..YOU NEED TO BE EDUCATED ABOUT RENT CONTROL….
The basics, a landlord agrees to limit rents in exchange for making a reasonable profit…YES no kidding it states that!
The City agrees to lower the REtax to compensate for the lost income.
Owners can BUY RS buildings at 10-20-30%+ off Full market price building…NO KIDDING….Lower controlled rents means a lower BUYING PRICE
Owners can make RS into free market apartments by PAYING OFF THE TENANTS…which is a GREAT DEAL for the landlord pay a tenant $25K to get out and the value of you building goes up by Double or triple that….since you can charge a lot more rent. Or wait for the Tenants to get old and move to FL or die. RS buildings were for LONG TERM OWNERS.
Or you can harass the tenants and face years of lawsuits and tenants withholding the rent.
But the vast majority of “Owners” would have never been able to AFFORD their building if it were free market rentals
I hope that makes it a little clearer of the trade offs…
He was just spouting right-wing talking points. Go easy on him.
LOL
It’s not right-wing BS. It’s the truth. I know people who have been living in the SAME rent-controlled apartments in NYC for 40+ years. These renters are professionals, btw — not working-class people. If you think the the owner of each of these apartments is making up the loss of “market price” by tax incentives and other governement subsidie, you are kidding yourself.
Thank you for that explanation. I was curious as to how that worked.
And thanks for shutting down another BS Wingnut Talking Point.
Schumer’s brain is addled by Lyme’s Disease.
http://apnews.myway.com/article/20070524/D8PB28QG0.html
I call BS
same homes are down 10% more median magic”
The median price of a home fell to $220,900, an 0.8 percent fall from the midpoint selling price a year ago.
What do you suppose the median suqare footage of homes sold for increased to at the same time. I know this still is not a great measure as it does not take into account extras and condition, but I will bet folks are getting much nicer homes today for any given price range.
more square footage does not equal better
Looks like Lawrence Yun has stepped right in to David Lereah’s shoes-
“He said the big rise in unsold homes on the market could be an indication that sellers are testing the market in hopes of selling their homes and moving up to larger units, which he said would be a positive early sign of a rebound in housing.
http://biz.yahoo.com/ap/070525/economy.html?.v=16
Uh, maybe the debt pigs are unloading because they can’t make the reset payments? Just a crazy thought…
The builders sold at lower prices; the homeowners held out for higher prices. Wait ’til the summer.
I think you are getting more people that just want to cash out of housing than buy up right now .Everyone wants to sell high and buy low ,just like in the stock market .
Or, based on new home contracts, they have already put a down on that new home and are now desperate to sell their existing home without taking a loss.
isn’t this just like we were all predicting on this board that the builders would be the first to exit the doors, and the FB would be left holding the bag. The news about “new homes” sales jumping is in line with the builders dumping inventory like crazy.
lets see if this trend holds up for the next few months.
Any body has numbers on the ‘new homes’ supply, i.e how long will it take the builders to get ride of these albatroses?
i love this board.. its like everytime the MSM reports somethings, we have already gone over that scenario before.
got cash?
“Ladies and gentlemen, this is captain Yun speaking. If you look out the window, you’ll see that both engines are on fire. This is what we pilots call afterburners. Not a problem, and the reason why we’re in a nearly verical drop is that we want to pick up speed before go even higher. So sit back and relax, I’ll be back later with more good news”
market theory question
shouldn’ we get increasing transactions at quickly falling prices soon ?
No. Based on what they owe, there is little or no room for most sellers to lower prices. We’re going to see a stuck market with exploding inventory and falling sales until the foreclosures cause a MASSIVE and sudden crash in prices.
I’m sure that crash will be completely unexpected by the “experts”.
I have noticed in San Diego inventory has been slowly climbing back and will probably hit a new record later this summer at the peak, but it is not climbing as fast as it did last year. My reasoning - manyh who want/need to sell cannot because they are upside down. As prices fall yet further more and more will be locked in to their own private little place in mortgage hell.
Until their ARM resets and the bank comes and takes the house.
Depends why prices are falling doesn’t it?
Prices are falling now because of to much supply,(foreclosures,investors dumping ,excess new home inventory , stressed borrowers ,etc.), and not enough qualified buyers with tighter lending .
I still think that this correction with the real estate prices will be faster than anyone is expecting ,especially with builders with standing inventory . The used home market is a ghost town in many areas right now .
Go home builders! Build, build, build, sell, sell, sell
King Solomon’s Mimes?
“‘There are people that have bought million dollar homes that thought they could afford them, that find out they can’t make the payments,’ said Bruce Solomon, the Comptroller’s Associate Director of Community Relations.”
“‘Although these price declines are not welcome by existing home owners, they are healthy for the economy,’ said Alan Clayton-Matthews, the University of Massachusetts professor who prepared the forecast. ‘With housing prices in line with incomes, Massachusetts will once again be affordable for the state’s future labor force.’”
Speak for yourself. I’m a current homeowner and I welcome declining prices. I happen to have children. My view of the future isn’t just about the price I can get for the wooden box I live in.
climber ….I feel the way you do. As long as I can afford my house payment i can take the real estate cycles . When real estate became a short term investment, because of the hype, was when real estate became doomed .I also want the market to just correct ,and I can’t wait until homes become places to live again .I’m just sick of all the for sale signs .
A friend of mine just told me they want to start buying real estate and flip them because of the current price reductions . In spite of me trying to talk this person out of this sort of investment in this market it ended up that this person just wanted to do it because they were bored with their job . This friend has always made out on real estate investments and has never had a loss yet . You can talk until your blue in the face but people who have never had a loss are to positive about real estate ,just like the young first time buyers .
Climber, this is something that I’ve mentioned before that hasn’t gotten enough play. Baby boomers on the cusp of retirement age who are woefully underfunded but are sitting on home equity are playing this game with each other. It’s called “You f*** my kids and I’ll f*** your kids and we’ll all retire in Boca together”.
My mother wants to sell her home this year, a nice home to live in and raise a family (I should know). No mansion (Mc or otherwise) by anyone’s standards. I’m ready to buy but the market won’t let me. I told her I can’t afford to buy it at going (even currently declining) market value.
So here we are, one of the first American generations since the Great Depression to be systematically poorer than their parents were.
And the masters of spin…. They still hang on to the 16% increase in new home sales from march, but neglect that YOY it is something like 11% down.
BTW NE leads the charge down with a 8.8% decline Yupeee!
http://www.bloomberg.com/apps/news?pid=20601087&sid=a6ee4DjrTxuQ&refer=home
More importantly, they ignore the 11% DROP in price of new home sells, on top of the 10-15% extras and concession they were already given. That is KILLING the resell market where overextended sellers simply can’t match the price drops + upgrades of 20+% that the builders are doing to push inventory.
As the price drops in new homes continues to kill the resell market, the builders will have to continue to increase these price cuts and incentives.
Builders doing whatever it takes to push inventory into a saturated market is BAD, BAD, BAD for the housing market.
Market pricing has never cared about how much somebody owes.
Not now, not in the past, and I think it’s safe to guess, not in the future.
I live in Irvine ,Calif and I can remember in the 1990’s that RE agents in my neighborhood saying that prices would no go lower because of that same reason. Well guess what? They not only went lower they wer off 35% from the 1989 highs. Check past history!!!!
“The Situation Benefits Buyers”
Yes, both of them
“‘The run up,’ Yun said, ‘was an investor-demand driven boom, and it was followed by an investor-driven collapse.’”
A convenient but misleading assessment. Mr. Yun is starting to look like DL Lite. Yes, “investors” - let’s call them what they are, flippers - played their role in running up prices and demand. But Yun knows investors and second home buyers are a relatively small segment of the market. The real issue, which I’m quite sure Mr. Yun would rather the American public not recognize, were all those millions of FBs that “took advantage” of easy credit to get into houses they couldn’t afford in the long term. Now the chickens are coming home to roost, and not just for the “investors.” The problem is a lot bigger than just burned flippers, as enjoyable as their plight is.
“That was the year Cape Ann Housing Opportunity finally got to market with its housing stock, at prices between $229,000 and $359,000. None was sold.”
I’d steer clear of any housing development that had “opportunity” in its name. That smacks of Section 8 deadbeats and little welfare predators up to their usual tricks. No thanks at any price.
Astoria, Queens is a lovely, convenient and affordable neighborhood, but no NYC neighborhood compares better for families than the Upper West Side (or alternatively, the more affordable Morningside Heights around Columbia University) in Manhattan. Access to Central and Riverside Parks are unmatched for quality of life. These areas have been gentrifying for 35 years, and I predict the long term trends will continue, with or without a property market downturn near-term. I have owned here for 18 years, and my ownership costs have averaged $1500/mo, which compares favorable to renting, even not counting the “equity gains”. Vacancy decontrol is gradually raising the rents in the area. I say, when you know where you want to be, buy what you can afford to, or safely stretch to. You truly can save in the long run and you won’t be sorry.