Perched On A Housing Bubble Ready To Pop
It’s Friday desk clearing time for this blogger. “Big Sky, Montana, is seeing a slow down in home sales, but there is no indication the resort community is perched on a housing bubble ready to pop, according to local real estate agents. Currently, 132 residential properties in Big Sky are listed for sale at $1 million or more, plus another 61 lots and acreages on sale in the same price range.”
“Five Big Sky properties sold for $1 million or more in 2004, ERA reported. Twenty properties sold for $1 million or more in 2005. Another 39 properties sold in same price range in 2006.” ”
Homes in the community aren’t selling as quickly as they have in the recent past, but the community is coming off a few extraordinary years, said ‘If you look at it from a 10-year-cycle, it is still above what we consider to be the norm, but it’s not the intense period of time we had in ‘04 and ‘05,’ said Don Pilotte, incoming executive director of the Gallatin Association of Realtors.”
“The number of people falling behind on their mortgage payments or going into foreclosure in New York State continues to climb, according to new data released by the Mortgage Bankers Association.”
“‘You are going to have people with adjustible rate mortgages who cannot make the new payments and people with subprime mortgages who cannot make their payments,’ said Bob Moulton, president of Americana Mortgage Group in Manhasset.”
“The number of El Paso homes on the market has more than doubled this year, and that’s not including homes under construction or for sale by owner. Real estate agent Barbara Berliner says the difference is clear in the Kern and Rim areas, where homes that once sold in weeks are now staying on the market for several months.”
“Prices aren’t falling yet, but Berliner expects they will if things continue this way for the next few months.”
“From North Dallas to Oak Lawn and Old East Dallas, even in the suburbs, bulldozers are plowing under thousands of aging apartments. With real estate prices soaring, developers are knocking down the dilapidated rental units to make way for new construction.”
“Many of the apartments facing destruction were constructed in the 1970s and early 1980s, often built with savings and loan money and sold to investors looking for a tax dodge. ‘It was built to reap tax benefits in place at the time,’ apartment analyst Greg Willett said. ‘There wasn’t a lot of consideration of whether the designs were appropriate for the market.’”
“In April, the average house price in Saskatchewan was $163,800, up from $132,400 in April 2006. ‘If you’re looking to get into the market, you should do it now and not wait,’ said Bill Madder, executive VP of the Association of Saskatchewan Realtors. ‘There’s no reason to think there’s going to be a drop or a crash. There’s likely more room for gains than losses.’”
“First it was mortgages equal to five or six times a homebuyer’s salary. Now the half-century home loan beckons. A UK broker firm today revealed it was in talks with a lender about launching a 50-year mortgage.”
“When it comes to stretching the length of a mortgage, Britain appears to be following in America’s footsteps. Early last year, a California-based mortgage company launched a 50-year deal that was quickly dubbed ‘the Methuselah of mortgages.’”
“Taipei’s average house price in the first quarter was eight times the annual income of the city’s residents, said the Council for Economic and Planning and Development yesterday.”
“‘First, as unlikely as it sounds, homebuyers are facing less pressure when purchasing homes and paying mortgages,’ said Chang Chin-er, a professor in National Chengchi University’s land administration department. ‘Fewer homebuyers are buying houses for speculative purposes. Homebuyers are less confident about the housing market in the future. They hold the view that house prices will remain at the current level in the short term, yet will drop in the long term.’”
“Ten years after its return to Chinese rule, Hong Kong ranks again among the world’s most expensive cities to live in after a traumatic, roller-coaster ride that has left many home owners still feeling the pain.”
“Average Hong Kongers like Rebecca Leung are still troubled by their property investments made before the handover. The 56-year-old had bought her tiny 500 sq ft flat in the busy but grimy North Point area of Hong Kong island, at an exorbitant HK$2 million in 1996.”
“Today it is worth just 60 per cent of that and Ms Leung can neither keep up the mortgage payments nor afford to sell at such a loss. Ms Leung said: ‘For a long time, property prices were rising. I bought it because I saw it as a safe investment and expected the value to go up, not down.’”
“Top 10 ways to sell your Florida house in this market: 6) When asked why you are selling, do not say, ‘Are you kidding me? I’m getting the hell out of here and moving to North Carolina.’ 5) When the buyer makes an offer for 60 percent of your asking price, try not to scream, ‘God, yes!’”
“Bay Area homes continued to sell at their slowest pace in 12 years last month, as the median sales price edged up to a new peak, a real estate information service reported.”
“‘It’s likely a lot of potential buyers have been sitting on the fence….It’s easier to buy a home if you don’t think it’s going to go down in value,’ said Marshall Prentice, DataQuick president.”
“Susie and Dale Kinzer picked late April to put their Vancouver, WA, home on the market, just in time for housing sales to hit the lowest point in the past five years. May figures show Clark County home sales fell by 22.7 percent for the month.”
“‘We haven’t had a bite yet, which makes us wonder if this wasn’t such a good time to put our (home) on the market,’ said Susie Kinzer.”
“Broker Scott Mikel said homes in the $400,000 to $500,000 range aren’t selling as quickly, creating a backlog of high-end residences and problems for people who need to move quickly. ‘I’ve had people who lost value because they got called away on a job,’ Mikel said.”
“Sharon Walters, a broker in Battle Ground, blamed the rising supply of houses on the market for sluggish home sales, a situation that pits sellers who want top dollar against buyers who are looking for bargains. That means sellers need to work harder, Walters said. ‘You’re competing with everything else out there,’ she said.”
What a great week. My thanks to those who support this blog. Please check back this weekend for news, your market observations and topics.
any thought on how long before the rise in interest rate will have effect on prices.
The effect of higher rates on demand is immediate (I gave a detailed explanation in the Post Weekend Topics section). However, it takes two to tango, so as usual, it is up to the seller to realize that there are no buyers forthcoming at his wishing price and try relisting at a lower level. Hard to predict how long the adjustment on the supply side will take to play out, as it depends on difficult-to-quantify factors like cash burn rate.
Where I expect to see lots of pain are situations where ARMed FBs thought they could hang on as the rates when up before this last run up. Now, with the this latest rise in the 10 yr, they are coming to the conclusion that they are screwed. They’ll have to let it go back to the bank which takes time.
A classic…the top 10 ways to sell your Florida home.
Top 10 ways to sell your Florida house in this market
10) Offer owner-financing at interest rate pegged to George Bush’s approval rating.
9) Before the Open House, wash the dishes and put on a shirt. This isn’t 2005..
7) Use bleach to shape bathroom mildew stain into image of Mary.
6) When asked why you are selling, do not say, “Are you kidding me? I’m getting the hell out of here and moving to North Carolina.”
5) When the buyer makes an offer for 60 percent of your asking price, try not to scream, “God, yes!”
4) Put marijuana brownies on Open House greeting platter.
3) Explain that rusting trailer park down the street actually is A-rated school.
2) Plant perennials in neighbor’s backyard cockfighting ring.
1) And the No. 1 way to sell your house: Fire your real estate agent!
And, for those who didn’t go in through Ben’s link, do go into that Orlando blog and look at the readers’ comments. Some are funny, but the majority of readers mention that the big problem is price. I looked for blog handles from HERE, but it wasn’t us! There are a whole bunch of “us” out there.
OT, but has everyone seen the latest outrage that Bush and Paulson are pulling with regard to the Enron victims?
these guys will do anything to protect their pet banks!
http://www.truthout.org/docs_2006/061407H.shtml
I wish I was an insider
I thought things were already bad…this is unbelievable…
“The Supreme Court justices will now decide, in the words of the old protest song, “whose side are you on,” Main Street or Wall Street? How this drama turns out will say a lot about our justice system - and a lot about our economy. If Wall Street banks have no liability for fraudulent schemes they concoct, the scandals of the last decade will look like choir boy pranks compared to what is to come.”
Don’t know the fact of this case but when you invest in stocks you know you can loss. Eron executives got hard time. Could be just ambulance chasers going after banks.
Anon,
did you read the whole link…??
Hasn’t Ben made it clear that this partisan crud doesn’t belong here? Next time, at least find a credible site to host it…
I was unaware that real estate prices were “soaring” in Dallas. Seems too me that prices are nice and depressed. Plano/Allen/Frisco square footage cost seems to be around $100/square foot. Compare that to $800/square foot in Santa Barbara.
Forget about Dallas …
‘If you’re looking to get into the market, you should do it now and not wait,’ said Bill Madder, executive VP of the Association of Saskatchewan Realtors. ‘There’s no reason to think there’s going to be a drop or a crash. There’s likely more room for gains than losses.’
The word on the street is that Bill Madders brother goes by the name of Hatter and has a friend named Alice who knows a rabbit …
It’s not even $100/sf unless you get to the really snotty areas of Frisco and West Plano. Allen, McKinney and most of Plano are around $75/sf. There’s still some morons out there who are buying overpriced homes along Northwest Hwy. A smart person can find very affordable housing in the northern surburbs.
I also saw some homes listed on the MLS since last summer that were pulled and relisted with the DOM reset.
It’s not even $100/sf unless you get to the really snotty areas of Frisco and West Plano. Allen, McKinney and most of Plano are around $75/sf.
Yup! My sister has a 2000 sq ft ranch in Arlington, and its only worth about 150K (if that much).
according to local real estate agents
Anytime I see this statement I get dyslexia
stnega etatse lacol ot gnidrocca
“Can you read me now? Can you read me now?”
of course, I meant
“stnega etatse laer lacol ot gnidrocca”
“…bulldozers are plowing under thousands of aging apartments. With real estate prices soaring, developers are knocking down the dilapidated rental units to make way for new construction.”
Substitute “McMansions” for “apartments” and fast forward twenty years to catch a glimpse of a future story about the California desert areas that have been recently built over with tract home developments.
What housing glut? we need 700,000 new units in Southern California alone:
http://www.coremg.net/newspapers.php?paper=sierramadreweekly&storyid=1000
The Southern California Association of Governments (SCAG) board will meet next month to approve the regional housing needs assessment intended to direct Southern California housing policy over the next seven years.
RHNA, a periodic survey ordered by the state, will set the housing goals for cities through June 30 of 2014. Cities are expected to use the RHNA figures to govern the preparation of housing elements of theirvgeneral plans.
The survey, for the six county area—Los Angeles, Orange, Ventura, San Bernardino, Riverside and Imperial—forecasts a need for about 700,000 new units
-forecasts a need for about 700,000 new units
Does this include illegals? Otherwise we need to double it.
‘If you’re looking to get into the market, you should do it now and not wait,’ said Bill Madder, executive VP of the Association of Saskatchewan Realtors. ‘There’s no reason to think there’s going to be a drop or a crash. There’s likely more room for gains than losses.’”
Another fine graduate of the “Baghdad Bob School of Journalism”
I waiting for the story about the housing boom in North Dakota. Alllthough right now the city in Montana with greatest rise in prices is Great Falls, smaller but the same type of city as Regina or Saskatoon.
Well that is truly amazing… I’ve been through Great Falls many times and it has NEVER struck as the sort of place where “everyone wants to live here.”
Top 10 ways to sell your Florida house in this market
10) Offer owner-financing at interest rate pegged to George Bush’s approval rating.
9) Before the Open House, wash the dishes and put on a shirt. This isn’t 2005..
7) Use bleach to shape bathroom mildew stain into image of Mary.
6) When asked why you are selling, do not say, “Are you kidding me? I’m getting the hell out of here and moving to North Carolina.”
5) When the buyer makes an offer for 60 percent of your asking price, try not to scream, “God, yes!”
4) Put marijuana brownies on Open House greeting platter.
3) Explain that rusting trailer park down the street actually is A-rated school.
2) Plant perennials in neighbor’s backyard cockfighting ring.
1) And the No. 1 way to sell your house: Fire your real estate agent!
The survey, for the six county area—Los Angeles, Orange, Ventura, San Bernardino, Riverside and Imperial—forecasts a need for about 700,000 new units, 279,000 of them for low and very low income households.
Notice that they admit that 40% are for the absolutely broke. The other 60% are for the ‘barely above water’ folks. Bulldoze down those McMansions, or subdivide them into 4 mini apartments per Mc$hitbox. Oh, and they are running out of land in Southern California. Amboy is the next ‘hot spot’ (it was abandoned years ago). And then there is the Salton Sea area.
Eh, don’t laugh. I invested in two new homes by the Salton Sea back in 2004. Thankfully the builder couldn’t build them up within the contract span of one year, which was right about the time I pulled my head out of my a$$ and realized I was about to make the biggest mistake of my life. Got my entire deposit back, thankfully.
Have you actually SEEN land in California? Its goes on and on and on. Beleive me, we ain’t running out of land. Water maybe, but definitely not land.
Tons of land in California. Especially in northern parts. Most people cluster around the cities, like anywhere, in CA. Imagine how many more people the state can hold? Here is a blast from the past: Malthus.
http://www.alibi.com/index.php?story=19379&scn=film
An interesting article about a documentary film made about the Salton Sea. Many years ago, the rich in So Cal thought it would be “the place”. And all of that building area still abandoned. But, I thought So Cal housing was the ticket to guaranteed riches.
So Cal should be proud of this fact “It’s the greatest sewer the world has ever seen,” A detailed history follows, one that is both deeply amazing and disturbing. After the flood that created the lake, the area gradually became a tourist attraction. Fish were introduced, and as California wetlands disappeared, the Salton Sea began to attract waterfowl. By the ’50s, fish flourished, bird-watching was world-class, water recreation was magnetic, infrastructure was built as a handful of communities arose and the lake became a bona fide vacation destination marketed as the “California Riviera.” Attracting legions of families and the rich and famous alike, the Salton Sea was on its way to becoming the next Palm Springs
As the article mentions, the Salton Sea becomes saltier and more polluted every year, since the water it receives from ag runoffs just evaporates, leaving behind whatever was dissolved therein. The article mentions fishkills in the 1990s. A docent at the visitors’ center told me the Salton Sea has had to be continually restocked with different species of fish, each type more tolerant of high salinity than the previous type. Eventually it won’t support any fish at all.
“Five Big Sky properties sold for $1 million or more in 2004, ERA reported. Twenty properties sold for $1 million or more in 2005. Another 39 properties sold in same price range in 2006.”
These were purchased by high end speculators. There is no other way to explain this spike in demand at these prices. A lot of people with money have been doing some really stupid things with it.
Maybe not. They may have been doing very fraudulant things with it… Like repeatedly selling homes with big cash-back at closing amounts to pump up the appraisals, selling and reselling, taking out cash each time… ready to walk away and let the bank have the house for double what it is worth.
In which case.. I guess tha banks (with money) were doing some really dumb things. Okay, you were right.
Big Sky is overhyped IMHO. I owned a condo up there until early 05. Developers are building a new town center and are touting the place as “The Next Jackson Hole”. The has been a considerable amount of speculation done there over the past few years but it will never be a JH because there is no local airport. The closest airport is 50 miles away in Bozeman and you have to travel down a hwy 191 ( a two lane stretch through the canyon and one of the most dangerous in the country). I’m reform jewish and I would say three hail Mary’s and make the sign of the cross before I drove that sucker in winter. A white knuckler to say the least. Also the weather is very unpredictable in Montana. Right smack in the middle of your ski vacation the weather may turn a you have sub zero temps. About the best thing you can say about Big Sky is the mountain is challenging and there are no lift lines. But there are so many good ski destinations to choose from today I don’t see it as that special.
Thank you! Now convince your buddies to stay away from Montana! I want to retire where I grew up someday.
You’ll be able to. It just won’t be the same place.
Nope…I believe it’s a Wal-Mart parking lot now
I’m glad to know that there are a few of us here are from Montana. Just spoke to a nice guy yesterday in Livingston. He said he will be moving to Salt Lake soon, but first he have to sell his house in Livingston. Typical Montanan, he thinks Montana is special. I suppose especially when one lives in Paradise Valley.
Excluding Big Sky (resort town), I think the most overprice market in Montana is Bozeman, where I’m living. I think Bozeman median income is $41K and household median income is $51K. Numbers published by various RE sources say that the median house price range from $285K to $310K in 2006. SoCal has the sunshine tax, we have the ski tax albeit smaller than Park City, Utah.
Cinch
At least you didn’t end up in the river.
Yep, I’ve driven 191 up the Gallatin River many times in winter and always arrived exhausted and shaking. All of the truck traffic from Utah and Idaho takes 191 up to the interstate (and returns along the same route) and they kick up so much snow you can’t see a thing. Lovely little white crosses along the highway to remind you of all the previous deaths on that stretch of road.
Big Sky is beautiful and still a bit less trampled that other resort areas. But (1) it is getting more trampled all the time; (2) snow isn’t all that reliable; and (3) it can get bitter, bitter cold.
Another reason it won’t be another Jackson Hole: Montana has very high state income tax, Wyoming has none.
Great point! No one with serious investment or other income wants to claim residence in Montana.
“First it was mortgages equal to five or six times a homebuyer’s salary. Now the half-century home loan beckons. A UK broker firm today revealed it was in talks with a lender about launching a 50-year mortgage.”
“Taipei’s average house price in the first quarter was eight times the annual income of the city’s residents, said the Council for Economic and Planning and Development yesterday.”
Britain & Taiwan are pikers. Try 11.6 TIMES median houshold incomes in Cali, baby!!!
Sources:
http://quickfacts.census.gov/qfd/states/06000.html
Median household income, 2004: $49,894
http://www.car.org/index.php?id=MzE3ODY=
March, 2007: $580,090
Remember that Taipei is the commercial capital. Equivalent would be NYC or DC. What is price over income?
Notice also that average price will always be higher than median price.
Median of 11.6 times in the entire freaking state is utterly insane!
Not wanting to be TOO picky, but the 2004 median household income of $49,894 has probably increased a little bit. Not enough to support the 2007 median price of $580K, of course. I’m just questioning the accuracy of the 11.6 multiple. It might be more like 11.0 or 10.6 (?)
Richard
Cook: It’s Official: The Crash of the U.S. Economy Has Begun
Thanks, tj. That is a really good article. I like what’s behind door number 4:
“Could there ever be a real try at reform, maybe even an attempt just to get back to the New Deal? Since the causes of the crisis are monetary, so would be the solutions. The first step would be for the Federal Reserve System to be abolished as a bank of issue and a transformation of the nation’s credit system into a genuine public utility by the federal government. This way we could rebuild our manufacturing and public infrastructure and develop an income assurance policy that would benefit everyone.”
We will know which way it is going if China agresses toward Taiwan and the US stands down. That will be the warning shot of what’s to come and at that point, it’s live free or die hard.
On a lighter note, I enjoyed this article:
“Top 10 ways to sell your Florida house in this market: 6) When asked why you are selling, do not say, ‘Are you kidding me? I’m getting the hell out of here and moving to North Carolina.’ 5) When the buyer makes an offer for 60 percent of your asking price, try not to scream, ‘God, yes!’”
Is that the chop-chop-chop of black helicopters that I hear on that site?
The guy’s a nutter. And he doesn’t even have his facts straight:
“millions of young people with student loans that can never be written off due to the “reformed” 2005 bankruptcy law”
Student loans were made non-dischargeable in 1998. Whatever changes the 2005 law made to student loan status were negligible compared to this.
RE: student loans being practically non-dischargeable, this actually went into effect in 1990, under Bush pere when the “undue hardship” clause was added to the federal bankruptcy code. The 1998 law basically just gave lenders even more power to sue defaulted student loan debtors, attach wages, place liens, harass, etc.
yes, but due to the recently discovered scamming, they are trying to roll back that provision for private student loan lenders (seeing as how they bribed counselors into pushing students into private programs when better federal loans were available.) Sodomites were angels compared to the morals of any American who pushes loans in front of the naive for a living.
Thomas, I don’t know if the guy’s a “nutter,” but he did fall into my favorite semantic trap, using the word “mortgagees” to refer to borrowers, who are actually “mortgagors” (pledgers of their houses). The lender is the mortgagee.
Yup, the mortgagor walks through the door, the mortgagee is we.
Well, that brightened up my day!
Loved the bit about the mysterious “black” helicopters.
And we thought nobody SAW us….RECONDO
All the way
What are the debt to EBITDA numbers for the current LBO deals?
It will vary by industry but just wondering if anyone knows what they are doing now compared to the past?
OT, outrage of the week. Bush and Paulson gang up on the Enron victims.
http://www.truthout.org/docs_2006/061407H.shtml
I swear if there was an easy way for me to convert my 401k into gold, I’d do it in a heartbeat.
Silicon Valley latest snapshot is posted: “Declining ‘Worth’”, at
http://www.viewfromsiliconvalley.com/id336.html
Coming this weekend: The Last 30 Days (Jun’06 Edition)
Thanks!
MSM as in the San Jose Mercury is finally getting on board with the fact that the their spin is not totally accurate. Stay tuned…………..
That was interesting, Mister view-from-Silicon-Valley. The complete absence of end-users is revealing.
here’s some spooky bear food pics:
(no, it’s not Chernobyl, it’s Gary Indiana)
http://www.growingchicago.com/images/other/mypicsVI/
Those are truly desolate photos. I am guessing they are not very unique for heartland cities, though…
http://www.pbase.com/cincyimages/east_st_louis_illinois&view=slideshow
http://ghettoamerica.blogspot.com/
After a studied comparison, I think Gary has a much more substantial feel and nicer architecture than E. St. Louis. (And I thought Cairo, IL was bad.)
Obviously they need a casino to make it better.
That is really sad. I fear for Detroit. There are areas here where I could take similar pictures…but then on the other hand it still has a downtown which has actually improved in the last 5-6 years. I don’t know if we will have the same fate.
That was awesome.
On a more optimistic note, with the weekend coming:
http://tinyurl.com/3a8tgg
Sorry about that link. Try this
http://tinyurl.com/383hvk
Wow… those pics were depressing
Can’t FOOL me brad!.. That ISN’T Gary, Indiana. That’s just San Francisco without the Bay, Hills and all the rich people.
Rust Belt Scary…Be Afraid America..real Afraid
All the rich people don’t live in SF, they just pretend they are rich. Hey, you can’t drive or park a car there, so you just saved on gas, right?
Wow. It’s like “The Omega Man”!
As I look at all those pictures of acres and acres of desolation it makes me wonder why, instead of razing pristine land across America, we can’t raze these areas and put new housing there.
In some of those areas, it appears you could have a good sized yard as well.
Wow, any moment I was expecting Charlton Heston on a motorcycle to come riding down one of the streets with a bag of groceries and ammunition.
“Big Sky, Montana, is seeing a slow down in home sales, but there is no indication the resort community is perched on a housing bubble ready to pop, according to local real estate agents.
In related news oil profits are normal and prices are accurate to areas and demand vs supply said an Exxon spokesperson.
Why do they keep going to the ramen eating propagandists?
I actually received an answer from Gary Watt’s office. Not a bad answer.
From: Gary Watts [mailto:gary@impactre.com]
Sent: Friday, June 15, 2007 3:14 PM
To: ‘Donna’
Subject: RE: some questions on OC real estate going forward
Alan,
When I have time, I answer some of the more sincere emails and I find yours to be one of them. The first thing that I noticed is the 10 years you did not buy California real estate. It might have been because of what the San Francisco Examiner had forecasted in 1996: “a home is where a bad investment is!” That line may have kept you and others out of the housing market. Had you bought that $400,000 home, then sold in last year in California and moved to Albuquerque, you could have purchased at least 3 to 4 more homes, had no mortgage and more monthly income. I am happy that you did finally buy and that you love it there. In the future years, you should find that you made a great investment decision.
In California, the days of really big housing price run-ups are over for now and probably for quite a few years. However, despite what you read or hear in the media, the Bay Area and southern California are holding their own. Last month the Bay Area, even with declining sales, posted a new peak median sales price of $660,000 which represented a gain of 3.4% from May of last year. In southern California, even with declining sales, the median price rose 4.9% over the past 12 months to a new high of $505,000. Here in Orange County, our price was up but barely at 0.01% from last year. This is not bad when you consider all the media news about foreclosures, late payments, sub-prime collapse, etc. There are still so many buyers fence-sitting but I assume that a couple of more months of prices continuing to increase versus the same period last year, will get them back into real estate homeownership before interest rates begin to rise.
I am not naïve about the problem areas, especially the newer communities where a lot of building, exotic loans, and rising house payments are hurting buyers. When you look at the numbers, they are very small compared to all the homes, condos, mortgages that exist in this State. Today, the notices of default for the last quarter totaled 46,760. While that seems like a huge number, it represents only 0.008% of all mortgages in California – a number too small to effect or affect home prices in any meaningful way. Also, I should point out that only 11% of those “notices” actually end up as a foreclosure. The other 89% were successful is stopping the foreclosure by obtaining new financing or selling their home. By the way, last month 24 states saw a decline in their foreclosure starts. Maybe, just maybe things are near the end for those individuals who purchased a newer property near the beginning of 2005, with little or no money down, using the exotic loans. The good news is that when you measure those types of loans versus all mortgages in the U.S., they represent only ½ of 1% of all loans in the U.S.
I hope this clarifies some of your issues and in another year, we can once again compare notes and see how things are going. A year ago, many emailed me about the immediate Housing Collapse. Here it is a year later and despite what they have read in the media, most of the housing market is still in good shape.
Gary Watts
P.S. To address your other statement about people moving out of California, you are correct. Maricopa County in Arizona received 11,375 Californians in the past
year. Yet with all those departures – even to other states, the State of California and especially southern California still had positive population growth.
“I hope this clarifies some of your issues”
That is as remarkably arrogant thing to say in the context of your letter, and you are cleddarly not arrogant by sharing it. In other words, Watts says, OK, you make some points, but I know better than you and here’s how things really stand.
The most untenable statement:
There are still so many buyers fence-sitting but I assume that a couple of more months of prices continuing to increase versus the same period last year, will get them back into real estate homeownership before interest rates begin to rise.
Dream on.
as=a
cleddarly=clearly
Smiles everyone SMILES!!!
It’s nice that they wrote back to you, but why can’t these people address the affordability issue (IIRC you mentioned that in your original letter). I just find it so frustrating when everyone (those people/”the man”) think that increasing prices is always a good thing and ignore the fact that those “sideline buyers” may not actually be able to afford a $660k house for more than 2 weeks.
What….who doesn’t have 66k to put down on a house? Wait….132k for 20% down….the biggest problem I see is that you have to make so many trips to the ATM at $300 a day limit…that I see is the bigger problem it should be at least a 20k a day minimum. Where is the outcry against the $300 a day limit I ask you?! Sorry I have to go and light this cigar with a $50 I ran out of the $100s I had with this limited $300 day supply and my monocle needs to be cleaned…and this cover bun and top hat are very uncomfortable I should get into my silk PJs.
Wow. Clearly a person who is full of optimism.
So, the problem with our market has nothing to do with people who bought in 1996. The last 5 years are the problem. Agreed on his one point- runups are over with for several years henceforth but as to holding our own? Only because MSM has slanted it in such a way that we believe that cost of housing has increased. Why? Well, because the median increased due to the sales of $1m plus homes or high end homes! So lets focus on what’s going on in our suburbs, exurbs (is there such a name?) — low income people bought supposedly affordable housing and commuted to work — some traveling 100 miles a day round trip. Gas went up, loans reset (not necessarily sub-prime but Alt-A too) so mortgage payments increased — therefore foreclosures increased, values of homes came down because there were too many on the market and because they were overpriced to begin with, speculators bailed: it became harder to refinance because loan companies wanted proof of income and became just a leeeeetle more concerned about debt to income ratio — but this bozo thinks that because the percentage is so small in comparison to the # of people who own homes and have no issues - there’s going to be no impact on the economy!! He fails to see that just because some were able to refinance, that we just prolonged the agony?? Can we say Alt-A?? Also, let’s not ignore the Prime folks who took out loans because they were told that the ‘market will never go down’.
Wrong blog, but read that hedge fund managers who bet sub-prime would crash are alerting the governing market authorities to check for manipulation because of proposed bailouts for those markets
“Five Big Sky properties sold for $1 million or more in 2004, ERA reported. Twenty properties sold for $1 million or more in 2005. Another 39 properties sold in same price range in 2006.” ”
I should have known back in the early 70’s when I spent a week in Big Sky staying with my cousin that everybody wanted to live there. Of course, I was only around 10 years old, which wasn’t the problem. The problem was that down payments were required back then. I guess I am now priced out forever. Sigh
I’m in Bozeman, 35 miles north of Big Sky, and ski often in both Big Sky and Moonlight Basin. Someone above suggest that Big Sky is not unique, and that you can find other places like it. In Montana alone, we have Big Mountain and Yellowstone Club. I prefer community ski area like Bridger and Snowbowl in Missoula.
A million dollar house just to spend 2 weeks out of the year there? I guess, if I have to ask, I can’t afford it.
Cinch
YOU WONT BELIEVE THIS! Rolling in disbelief here. Got a mini newspaper type thing in the mail from a local real estate office (Kansas City) . http://www.explorethejungle.com In a nutshell what they say in their heading and (what I deciper), front page “counteroffer is a rejection of the earlier offer” (sellers if you reject offer with counter, original offer is null, cant go back) Also on front page “Tax facts, who pays what” (don’t be mad at your taxes, the richer pay bigger share) 2nd page, testimonials from other GF, 3rd page note about bankruptcy education class, 7th page from a “time to move” article, and I quote, “if homes are generally selling at 5% below list, you have that starting point for determining your offer.” page 12, “its a great time to buy” line, first sentence, in “mixed messages for buyers” article. Also from article “ownership gives people a greater stake in local communities” and “owning a home affords individuals a certain ego, status and financial standing” also and “yet as a society we need renters and we recongize that not everyone benefits from home ownership. We need renters becuase without ‘em investment in real estate would make little sense. Also, not everyone should buy, especially individuals who will be short ter residents in a community, those with small declining or uncertain incomes and often, individuals who live in areas where both jobs and people are leaving.” After that the “prices have stabilized” then “median up 88% in ten years” “points made by NAR are all true — and each deserves to be examined with care”
This is not a joke. I am going to frame this (not to mention call this office Monday) LOL. Geez
“owning a home affords individuals a certain ego, status and financial standing” also and “yet as a society we need renters and we recongize that not everyone benefits from home ownership. We need renters becuase without ‘em investment in real estate would make little sense.”
I’m glad that I don’t live in their aristocratic fantasy world. This is pretty “classist” to me. If you do call their office, it’d be interesting to know what they say.
We renters need moronic pretenders who can’t do simple math to overpay for properties so we can live in them until they go bankrupt for 30% of a mortgage payment. It’s all good™
Amen SuzanneIRT.
That means sellers need to work harder, Walters said. ‘You’re competing with everything else out there,’ she said.”
Yep, working harder is the key. Gotta vacuum every day, empty the trash cans after every meal, make sure those toilet bowls sparkle… Price? What does that have to do with selling a house?
“…Ms Leung can neither keep up the mortgage payments nor afford to sell at such a loss.”
Is it just me, or is “can’t afford to sell at a loss” the oxymoronic cliche of the year? If you can’t keep up with payments, how can you “not afford” to sell? Seems like she can’t afford NOT to sell.
stop buying! how easy is this?
stop buying and prices will drop. What’s wrong with you people that you think its OK to pay lots of money for a POS?
Wait! Prices will drop. You’ll be glad you did.
Sorry, I know I didn’t contribute to a discussion, but my god, how stupid can people be. They can’t wait for one year, or two years! Don’t they know they are responsible for keeping those prices inflated? Sigh! I guess not!
This “contribution to a discussion” is just fine and should be repeated over and over.
Hi,
A 30-year mortgage for $500kat 6% costs $2997/month, against $2632/month for a 50-year mortgage with the same terms. By my calculation the monthly payment is only 12% lower when amortized across the extra 20 years. At best, this would support house prices 12% higher than what they are today. As we all know, house prices appreciate at 20% per year, so after about six months we once again run out of buyers. Unfortunately, extending the loan period to 100 years results in a reduction of only 5% compared with the 50 year plan. Please advise?
“‘It’s likely a lot of potential buyers have been sitting on the fence….It’s easier to buy a home if you don’t think it’s going to go down in value,’ said Marshall Prentice, DataQuick president.”
It’s easier to buy a home if its price is only a single digit multiple of my annual income.