A Little More Pessimistic Each Month
The Houston Chronicle reports from Texas. “Until recently, Houston has avoided the housing slowdown that’s been felt in other parts of the country. The number of homes built in the Houston area this year is expected to drop for the first time in more than a decade. Builders are projected to construct roughly 40,000 homes this year, about a 20 percent decline from last year when home building reached its peak, said housing analyst Mike Inselmann.”
“The slower pace of construction has not been the result of a sluggish economy, but rather brought on by the industry itself, said Inselmann. ‘Things are just fine,’ he said. ‘They’re not as good as we want them to be, but there’s a recovery in our future.’”
“As long as that recovery isn’t too far off, the local economy shouldn’t be seriously affected. ‘When you start building fewer homes, you’re selling fewer appliances, less carpeting, less cement and less wood to the local suppliers,’ said Jim Gaines, a research economist at the Real Estate Center at Texas A&M University.”
“The slowdown in construction, however, might not altogether be a bad thing, as it can help keep home prices stable in a market with fewer buyers. And the multifamily market is benefiting from the single-family malaise, as would-be buyers unable to qualify for loans are continuing to rent.”
“‘That’s good news, because we have a lot of apartments coming on line,’ said Bruce McClenny, president of Apartment Data Services. He said there are about 17,000 multifamily units under construction throughout the city.”
“‘First-time buyers probably for the next six months are probably going to have trouble if they don’t have good credit ratings and some money they can use for down payments,’ said Gaines, the A&M economist.”
The Denver Post from Colorado. “Denver is the only county in the metropolitan area that has seen an increase in the number of building permits issued in the first four months of the year, compared with last year, according to data from the U.S. Census Bureau.”
“Jefferson and Adams counties saw the sharpest declines in buildin permits issued but for different reasons. Jefferson County’s limited land supply is the main reason the number of building permits plummeted nearly 70 percent to 323 in the period through April.”
“But in Adams County, where land is abundant, the residential market is overbuilt and foreclosures are rampant. The number of permits issued declined nearly 60 percent to 431, compared with last year.”
“‘Foreclosures are having a psychological impact,’ Willis said. ‘Potential buyers are nervous about selling their homes, so they’re not buying.’”
“In Weld County, where homes are cheaper and foreclosures are high, the number of permits issued dropped almost 31 percent.”
‘”Those low price points are really getting hurt with the foreclosures,’ said Mike Rinner, senior analyst with the Genesis Group. ‘There’s either too much competitive supply or people are having a tough time selling their houses.’”
The Greeley Tribune from Colorado. “While activity goes up in the summer, overall sales in 2007 have been down so far, said Chalice Springfield, CEO of Sears Real Estate.”
“In 2007, there have been 844 homes sold in Greeley and Evans and there were 894 home sales in the same time in 2006, about a 6 percent reduction in sales, Springfield said. Also, the Greeley area is still far away from its peak of home sales. The area hit a record high in 2001 when there were 284 sales in August 2001. In August 2006, there were 173 sales.”
“‘That was a pretty big drop,’ said broker Nate Buie.”
“According to Information and Real Estate Services. Greeley has a nine-month inventory of homes to sell. ‘The Greeley market in 2007 is still favoring buyers at this time,’ Springfield said. ‘If there are more homes for sale and less buyers to purchase those homes, it will affect the time period in which sellers are able to sell homes.’”
“She said it’s a great time for buyers looking for a home, but sellers need to price their homes right and make sure that homes are in top-notch condition for selling.”
“Part of the reason for so many homes on the market was an influx of home building that outpaced growth in the area and also a foreclosure rate so high it led the nation for five months at the end of 2006. Home prices are brought down in areas where there are a lot of foreclosures, broker Norma McMillen said.”
“‘That does affect the price of homes that are not in foreclosure, making it tougher to sell,’ she said.”
The Arizona Republic. “Arizona housing-help agencies, many of which had representatives at the town hall, are getting calls from struggling homeowners and are afraid they soon will be deluged. Many don’t have the resources or funds to handle the wave of homeowners in default that they fear is coming.”
“Joann Hauger, executive director of Community Housing Resources of Arizona, said many homeowners on the verge of foreclosure who are calling for help now are too upside down on the financing of their house, meaning they owe more than it’s currently worth, to keep it.”
“‘Almost everyone we have given default counseling to recently has already refinanced, tapped their equity and now owes more than their house is worth,’ she said.”
“A panel of housing experts agreed the No. 1 way to stem foreclosures is to educate buyers before they get a mortgage and homeowners on their best options when they get in trouble.”
“‘People have more education about buying a car than a home,’ said Sheila Harris, director of the Arizona Department of Housing.”
The Arizona Daily Star. “The number of homes sold and the median prices in the Tucson area dropped in May, according to a monthly report published by a local housing consultant.”
“The Southern Arizona Housing Market Letter, released Monday by John Strobeck of Bright Future Business Consultants, showed new home and resale home closings were both down about 22 percent compared with the same month a year ago.”
“The median prices also fell 6.7 percent for new homes and by less than 1 percent for resold home in May compared to May 2006, according to the report.”
“Permits for single-family homes dropped to the lowest level for May since 2001, according to the report. Last month, there were 602 permits pulled, down more than 40 percent from 1,032 in the same month last year. There were 534 permits in May 2001.”
“Strobeck said May’s permit numbers were relatively strong, given that the monthly number of permits has dropped as low as 328 within the past year.”
“He anticipates that prices and sales will start to increase again sometime between the end of this year and the summer of 2008, ‘Although I get a little more pessimistic each month,’ he added.”
“He anticipates that prices and sales will start to increase again sometime between the end of this year and the summer of 2008, ‘Although I get a little more pessimistic each month,’ he added.”
This guy’s just begging to get HBB air time.
It’s really too bad people don’t subscribe to the philosophy that the truth will set you free.
I suspect every one of these people making similar comments know that their ramblings are not based in fact, given fundamentals and available data, even if they really want them to be.
business, pessimism, and truth .. an unlikely combination.
I’ll agree with you. We in Tucson have been listening to him for YEARS.
Slim……I’m starting to hear the pain firsthand from my RE/MB types here in Tucson……even “unrelated” businesses trying to “find places” for their assistants/admins/operations people they like but must let go……good friend MB has been crunched but he does hard money lending and, of course, is seeing alot of “4th and long” financing requests……he says you should see the financial condition some people are in……..Strobeck will need to choke down his optimism just like DL did at NAR…….some still cling to the Tucson will always be different mantra…….I disagree…..money still flowing at La Encantada - “party like it’s 1999″ - I’m monitoring the disappearance of the fast money RE types…..in 2 years you and I should buy the avg. house here 20-25 % cheaper, maybe better in forclosure scenario……..still know friends with two houses…..it will be a shame……care to rent? plenty available with agressive price reductions even at Kolb /Sunrise…..stay tuned…..Sideline
For once I’d like to hear one of these bottom-callers actually use some real data to justify their belief that the bottom is near. I suspect I’ll be waiting a long time, since the only thing they can base their beliefs on now is false hope and eternal optimism.
You can tell that the RE winters of discontent are coming when the REIC gang are scrambling for every IOTA of good news to spin…and the CAN’T FIND any
“Bright Future Business Consultants” + “New Century Financial” + “Long Term Capital” = “America the Beautiful”
Prices down 1% for resale in AZ vs. 6.7% for new - maybe this is why I’m not seeing drops in the properties I”m tracking - I don’t look at new houses since they are all on the far outskirts of the city (except Fulton ranch in Chandler which is interesting but WAAAY overpriced). There’s a house in my ‘hood that sold for $191 in 10/2001, now empty and the guy is asking $375. I think it will sell for around $300 to $320 tops. But even at $290 the guy is still looking at 7% annual return, compounded.
That 6% number almost certainly doesn’t include incentives, either.
I’m very interested in what’s happening at Fulton Ranch. From what I’ve been told, once you buy a lot, you have six months to break ground, or they seize the parcel. They wanted to keep the speculators out. I’d really like to know how those lots are selling, but it is nearly impossible to get any information. I have a personal bet with somebody regarding prices there.
So here is yet more proof about medians. Went for a jog this morning and saw two houses “In Escrow”.
Asking price - $4,875,000
http://www.redfin.com/stingray/do/printable-listing?listing-id=779468
Don’t see the other one even listed, but it was about 5-6 doors down from this one:
http://www.redfin.com/stingray/do/printable-listing?listing-id=742278
Given how slow the market is over here, seems that with the slow low end market combined with the uber-expensive stuff that moves, we might continue to see some rather high median / average prices…and J6P will think everything is fine.
Once again this is because the uninformed don’t know the difference between median and mean (average).
The following list of numbers: 1, 1, 1, 9, 9, 9, 9.
Median is a whopping 9, but the mean (average) is… 5.57. Which, once again shows just how skewed median can be.
Just think of it this way in terms of housing:
100K, 100K, 100K, 1Mil, 1Mil, 1Mil, 1Mil. The median is 1Mil, but the mean (average) is 4.3mil/7 or roughly more than 615K. That is a big difference, but to J6P who doesn’t know the meaning of simple stats, whatever.
As my college statistics prof used to say (in Czech-accented English), “Vich average are you talking about? The mean, median, or mode? In stah-distics, you MUST be specific!”
just build bigger and bigger houses each year, the median price will certainly to go up.
9 is also the mode (most common).
Yep - you nailed it. My point was whether looking at Median or Average, if the more expensive homes keep selling, and the less expensive ones don’t, you’ll more than likely see increases in both. That’s life I guess.
That is water front property in NB, that is going to be super expensive and the funny thing about that, the house aint worth diddly. It is the land and land alone, so there is no reason to have that giant of a leap in price…complete NB douche bag antics as usual.
Why is the psychological premium on land so high?
I think the best way to show the inflatation of the median sales price statistics is to comapre it to the median *asking* price in the same region. For instance, here in South Florida, the mean sales price for May was $367,700. However, the median asking price for homes currently listed on the MLS is $330,000.
Does this mean that nearly everyone who sold their home received more than 10% above their asking price? Of course not. That’s why I think the median asking price is a better statistic than median sales price.
The best site to check the median asking price of homes in your area is:
http://www.housingtracker.net/
America, let me introduce you to your neighbor…
“‘Almost everyone we have given default counseling to recently has already refinanced, tapped their equity and now owes more than their house is worth,’ she said.”
…but probably not your neighbors for very much longer.
LOL!
Blame it on the interest rates.
No, blame it on the weather.
No blame it on the (negative) media.
No, blame it on the next presidential election:
http://tinyurl.com/2jzeky
“Toll sees no housing jump before April
Wed Jun 27, 2007 2:17PM EDT
The sagging U.S. housing market probably will not rebound before next April, when the U.S. presidential candidates become apparent and start boosting national confidence, the head of luxury home builder Toll Brothers Inc. (TOL.N: Quote, Profile, Research) said on Wednesday.
“I see no reason to expect a change in confidence until probably April ‘08, when the candidates will fairly well be settled for the presidential election and we’ll start to listen to speeches about how we’ll get better,” Robert Toll, chairman and chief executive, said at the Reuters Real Estate Summit.”
Additional words of wisdom from Robert Toll:
Home buyers usually reappear after the July 4 Independence Day holiday.
I’ve got news for Mr. Toll, I think the holiday for buyers will last a little longer than one day this year.
Dear Robert T(r)oll:
FB’s will eventually reappear after the July 4-th, too bad the year will be 2012.
I LOVE that statement, “Home buyers usually reappear after the July 4 Independence Day holiday.” It’s as if buyers skulked away to some distant fairy land, and will emerge like ravenous grizzley bears chanting, “feed me, Liareah, feed me.”
So the fat guy from Law&Order will save the housing market? LOL.
Actually he invented the housing market.
Why will having a choice between Tweedle Dum and Tweedle Dee suddenly boost national confidence?
That is rich!!!
I am in Houston inside Loop 610 west of the Heights. The area around my little 3 block post WWII development continues to boom with new town homes (200s-300s K) replacing what were crappy SFRs.
A friend of mine bought a brand new 2500 sq ft house in metro Houseton last year for about 150K.
150k barely gets you a parking spot in downtown here in Beantown
“A panel of housing experts agreed the No. 1 way to stem foreclosures is to educate buyers before they get a mortgage and homeowners on their best options when they get in trouble.”
“‘People have more education about buying a car than a home,’ said Sheila Harris, director of the Arizona Department of Housing.”
Press 1 for english !!
The Realtor and the loan broker are much worse than the used car saleman, both in term of commision size and damage to your life.
“‘Almost everyone we have given default counseling to recently has already refinanced, tapped their equity and now owes more than their house is worth,’ she said.”
This is all they’ve heard about 24/7 for the last 4 years on TV ads and now it’s a surprise that everyone already has used that “trick”?
“.. now owes more than their house is worth”….
…which sort of makes most people technically bankrupt, as I bet most of these FB types don’t have cash in the bank, brokerage accts or retirement savings…well, there is always the equity in the Hummer, Escalade or BMW…
“‘People have more education about buying a car than a home,’ said Sheila Harris, director of the Arizona Department of Housing.”
This is pure crap. People buy both houses and cars using the same reasoning, ‘How much’a month it a’gonn’a cost me’ and that’s why the auto market will go the way of the housing market! When people have extra money they don’t pay down debt, they increase their debt.
I disagree.
For cars they do the “how much a month?” thing combined with a “how much will the value drop when I trade it in for new in 2 years?”.
For a house they were totally ignoring the “how much a month?” and purely doing a “I’ll be able to sell it later for how much more?” thing. Prices are rising at 20% a year… hmmm… I can buy at $200K at 4%, and in 2 years when the low initial ARM period runs out, I’ll sell for $280K+….
If they were just looking at the “per month”, they would have EASILY seen that renting was the much better deal!!!!!
I disagree. You I know of too many lower income people who bought just because if they didn’t they wouldn’t be able to buy. Most bought because their friends told them that they needed to buy for the tax write off without even understanding that most would be spending $4 to save $1. And lastly when liar loans,etc became available they bought because the RE agent showed them that the cost of buying the house was half the cost of a decent rental. Geez, here in Salinas some were paying $800 to $900 a month to purchase (mortgage) a $600K house and they had money left over for a how much’a month it’a gonn’a cost me car, motorhome, motorcycle, etc.
Let’s hear from those who bought overpriced houses in TX in the flood plane. Let’s hear from those who bought overpriced RE in Tahoe. And in a month or two let’s hear from all those living anywhere near a flood plane or forrested area when their insurance costs go up. It’s not just FL baby who’s hidden costs are about to head for the stratosphere.
I believe it’s “plain”.
No, I think “plane” is correct, as in a specific height above sea level.
Rintoul is correct - plain.
Sorry, can’t resist: I’m taking bets that the average age of Was Optimistic and Rintoul is higher than the average age of salinasron and technovelist.
You’re all wrong. It’s nose dive plane… argh… actually it’s one word, “floodplain.”
“The Southern Arizona Housing Market Letter, released Monday by John Strobeck of Bright Future Business Consultants, showed new home and resale home closings were both down about 22 percent compared with the same month a year ago.”
http://www.youtube.com/watch?v=3KPhOjF_H3o
“In 2007, there have been 844 homes sold in Greeley and Evans and there were 894 home sales in the same time in 2006, about a 6 percent reduction in sales…”
Hardly a significant decline. A lot of this has to do with the fact that the funny money is still flowing. I guess the losses just haven’t been enough for the Wall Street crowd, so it’s business as usual for the banks, as they sheer the sheeple and then the investors.
Given the low median incomes and high numbers of illegals in Weld county, it has to be more funny money. There are few good jobs in Greeley. Other than the hospital and the University, where else can one get a good job there? Hewlett Packard left town years ago.
The slaughterhouse?
“‘First-time buyers probably for the next six months are probably going to have trouble if they don’t have good credit ratings and some money they can use for down payments”
Is this finally true - can some one tell me if you have to have some money to move into a house these days? Are the days of zero - down / roll the closing costs into the mortgagte over??????
I doubt it. Maybe they are asking for actual proof of income now.
Nope, zero down is still widely available. Just not to someone with a FICO of 200. The tightening of lending standards is more hype than it is reality. The truth is, suicide specials are still the flavor of the day. Interest only ARM’s a plenty.
What happens after that 6 month period? Housing salvation?
“‘First-time buyers probably for the next six months are probably going to have trouble if they don’t have good credit ratings and some money they can use for down payments,’ said Gaines, the A&M economist.”
I suspect that this won’t be limited to first time buyers. I bet the move-up buyer and the next level of move-up buyer are going to have the same issues. Especially given the rapid evaporation rate of equity, past zero/low down payments, MEW, etc. I’d also bet that it won’t be limited to only the next six months.
I was looking at the ARM reset rate chart/graph earlier in the week. Approximately $220 billion of ARMs will reset in the next five months. I can’t believe that there is any way out for the FBs at this point. Too late for anyone to really do anything about it, I suspect. If the foreclosure rates are high now, what will they look like 3 months from now and on?
Also, if a bailout does take place (I suspect any bailout will be window dressignat best), that involves loans having to be re-written at new terms, then I suspect that will severely crimp the pipeline for any new originations. If the lenders/underwriters/mtg backed security buyers feel that the rules are getting changed when the game is almost over, then they will be a whole lot less willing to play the game (i.e. make new loans without an upfront premium).
Just my thoughts..
yours?
“‘Almost everyone we have given default counseling to recently has already refinanced, tapped their equity.. ”
Then… “a fool and their money are soon parted”.
Now… “a fool and their equity are soon parted”.
I remember reading something about a lender bigway saying “There’s over 6 trillion of untapped equity in the US housing market” sometime in 2005-2006 ish (maybe on this blog). It almost had the same feel as if someone said “There’s over a million dollars in untapped cash in little old ladies’ purses” to a room full of purse snatchers somewhere.
The equity in your house is one of the most sought-after things you can possess financially, at least in terms of the peace of mind it can give you. Every lender, shyster, and con man wants a piece (or all of) it. To use it for cars, vacations, plastic surgery, or whatever is so insane, yet so common these days.
Mission control to flight deck: We have 6 trillon pounds of fuel left to burn…
bigwig (bigway?)
Is it equity in your house is one of the most sought-after things or the lack of debt, that is the holy grail?
Are you kidding me?
The “holy grail” of today’s typical American is bling…. Bank account balance is irrelivant. Net worth is irrelivant. Debt is irrelivant.
The only thing that is important is the ability to roll up on a scene and flash some bling to show you are a playa. So what if the repo man is after your Hummer, the creditors are constantly calling, the jewelry is hot, and the cash you are flashing was just gotten from the payday loan place down the street…. You got to be able to flash the bling if ya wanna hook up wit a be-atch.
http://biz.yahoo.com/cnnm/070627/062707_subprime_abuses_may_persist.html?.v=2&.pf=real-estate
“It would appear that subprime lenders have yet to learn from their mistakes. According to a consumer advocate group, abuses persist industry wide, despite the recent subprime mortgage meltdown”
“More than three quarters of the subprime loans CRL looked at turned out to be adjustable rate mortgages (ARMs). 90 percent of those were hybrid ARMs”
“CRL also found that more than two thirds of the subprime loans it looked at contained prepayment penalties.”
‘”They’re gambling,” said Armstrong, “doubling down and that’s a recipe for disaster.”‘
‘”It is important to recognize that the vast majority of borrowers have used subprime credit successfully and regulations that would deny them access to mortgage credit could force them to use higher cost sources,” he said.’
What is a higher priced source than an ARM that has huge fees, starts at 8% and can jump to 12%+ with pre-pay penalty equal to 6 months’ interest??? Credit card?
Just hitting the tape: Beazer Homes, which is being investigated for fraud by the FBI, fired its chief accountant for trying to destroy documents…
More corporate gangsters. They are everywhere these days.
‘I was looking at the ARM reset rate chart/graph earlier in the week. Approximately $220 billion of ARMs will reset in the next five months’
An interest rate increase of 1 point will translate into $2.2 billion/yr extra in payments. Where will this money come from?
from the cashout refi, of course…NOT!
Ft Lauderdale considers banning “McMansions:”
http://tinyurl.com/2j28jo
I know that most HBBers don’t have a fondness for McMansion, but how do you feel about government interference in their construction?
I’m not exactly a fan of the McMansion, but as a Libertarian and a huge proponent of the free market, this type of government interference makes my blood boil.
Could it be that “government interference” is the reason for the proliferation of the McMansion in the first place…?
an outright ban would not sit well with me.
However, meeting property setbacks, ratio of home square footage to lot square footage, height, etc. is fine with me. I do like to see new homes be kept somewhat in style and scale with the existing homes, at least when the lots are on the smaller side. I think this is why most new developments have some sort of covenant. I don’t like giving up my soverignty, but I also don’t want to be at the mercy of someone else’s.
I don’t mind using property tax, utility rates, etc. or as others have said, house size to lot size ratios, minimum setbacks based on house size, etc.
But outright ban on houses over a certain size??? no way.
Imo, a city can be viewed as an individual organism. As such it should be permitted to take whatever risks it deems worthy or to protect itself in whatever way it sees fit.
It will eventually prosper or wither by it’s own hand.
Darrell_in_PHX summed up the “new American way” nicely. It is all about the bling, looking like a player, walking around with an arrogant swagger while showing off “what you got!” I see this at work - every shmuck has to drive the most costly car they can find, move from a 3,000 sq foot McMansion to a 4,000 sq foot one because they had ONE child and “everybody else is doing it.” And on and on the silliness goes… Oh, screwing over your fellow man is part of the culture these days as well. Hence toxic loans, expecting other people to buy an overpriced house so one can retire off the loot, etc.
Huh? Ya mean I’m *supposed to* buy stuff to impress people?
Something’s wrong with me… must be suffering from BDD.. bling-deficit-disorder.