Post Local Market Observations Here!
What do you see in your housing market this weekend? A slowdown in construction? “Builders continued their cautious approach toward new homes in the second quarter, with starts down nearly 22 percent from a year ago. The decreasing numbers signal a slowdown in the Austin area’s housing market.”
“Area builders started 3,367 homes in the second quarter, down from 4,295 a year ago, according to Dallas-based Residential Strategies Inc. Builders also sold fewer of those homes, down nearly 18 percent from last year’s second quarter to 3,281.”
“‘The market has plateaued, and investors don’t want to hear that,’ said Mark Sprague, Austin area partner for Residential Strategies.”
“‘Builders are aware of the potential downturn and are taking drastic steps to make sure they’re not stuck with inventory,’ said Harry Savio, executive VP of the Home Builders Association of Greater Austin. ‘While it looks ominous that it is down 22 percent from the second quarter last year, it’s important to note that it was a record year last year.’”
Housing related budget woes? “Facing a souring economic outlook, Florida Gov. Charlie Crist on Friday ordered state government to trim up to $1 billion in spending for the budget year that begins next week. Deeper cuts could be in store.”
“Florida witnessed a drop in state sales and corporate income taxes during the past three months worse than economists had expected, courtesy of the collapse of the state’s five-year housing boom and the subsequent jitters of consumers.”
Innovative ways to move a property? “Both the Putvins and Cliftons still have their homes for sale on the conventional market, but both also put their houses up for swap on a Web site where they’ve posted messages on the ‘Housing Swap’ forum describing the house they’ve got and the one they hope to get.”
“The couples are part of a small but growing group of homeowners in Metro Detroit and other areas looking to swap homes rather than taking a more traditional path.”
“‘It’s not like we haven’t tried our best to sell this house,’ said Kelli Clifton. ‘We’ve offered everything, dropped the price. If this does the trick, that’s fine by us.’”
Or housing bubble financial news? “Benchmark subprime mortgage ABX indexes closed at record new lows on Friday as concerns over subprime mortgages intensified, traders said. The index has tumbled by 42 percent since January.”
“‘Until two weeks ago, the market was mostly focused on trying to discern the impact of the declining housing market and deteriorating collateral performance on the ‘fair value’ of subpime-related assets,’ said Richard Parkus, Deutsche Bank analyst.”
“‘However, with the events surrounding the problems at the two BSAM (Bear Stearns Asset Management) structured credit hedge funds last week, the market is now focused on the risk of a wider-scale contagion issue that could potentially impact other sectors as well,’ he said.”
Some townhouses going up near my home were listed at $280K late last year. They’re listed at $220K now.
Ryland has some townhomes listed at $250K last year and now listed at $190K now.
They’re all still too expensive IMO. There are too many distressed properties out there for under $75/sf. Why buy a townhouse for $100/sf? Maybe some Californians will buy them, thinking that Texas is running out of land.
2000 sq ft townhouse?
These are large “luxury” townhouses. Some are under and some are over 2000sf. The price per sf ranges from $110 to $130. That’s ridiculous for anything out of the LBJ loop. The only people I can see buying these are furners - Californians or Yankees
IIRC, according to Darrel, any dwelling > 2000 sqft is a McMansion!
I just sold a 3br 1 car garage townhouse. It was 2100 swft, and not remotely a McMansion!
“‘It’s not like we haven’t tried our best to sell this house,’ said Kelli Clifton. ‘We’ve offered everything, dropped the price. If this does the trick, that’s fine by us.’”
What a bunch of BS.
I earlier related a conversation with a friend who was trying to tell me that a price adjustment in his price range (1.5m-ish) wouldn’t make a difference because the buyers were normally price insensitive at that range (typical realtor psycho-babble). I asked him and would ask these folks in this article whether they felt their house would sell at half off the listing price? If so, then a price cut actually does sell the house. Now the question becomes how much to lower the price.
All this gnashing of teeth about how to sell a house is just noise and a reluctance to confront the real issue of pricing. Lower the friggin price until it sells. I’m sorry that the price drop required to sell your POS house is quite large and doesn’t seem fair to you, but that is life. Quit whining about it and face facts!
Absolutely! As I mentioned before, am selling a house in W. Colo., listed it at 20% off what comps are, sold in less than a week. Repeating Get Stucco’s advice: You can sell a house in two weeks if it’s priced right.
Problem is, everyone thinks if it sells that fast, it was underpriced. I call BS on that.
Right in a falling market faster is better, lower the price and sell now or lower the price more to sel later.
Congratulations on the sale, lost!!! Hope the escrow goes smoothly. The posters on this blog often give good advice.
You will have the last laugh as others won’t be able to sell at the price you sold. 20% off was reasonable and the only way it was gonna sell. The bottom is gonna be far worse than that. Better get out now while you can.
Exactly the logic I was using on my cousin who washaving difficulty selling last year. His response was: “Of course, try explaining that to my wife.” Unfortunately, most wives don’t have the economic understanding of txchick.
Since the beginning of June, I’m starting to see more significant asking price reductions. instead of the usual $5 or $10 thousand. I’ve seen a number of $50,000 reductions. One property was $499,000, now $449,000. Another was $499,000 last year, dropped to $459,000 in the spring and now $399,000. Another started at $299,000, a few months ago, now $249,000. All continue to sit. Sellers could be finally getting a little more realistic, although prices are still way overpriced. Many will probably chase the market down for the next few years or end up with their lender taking them out.
Also, last week I saw a 1 br condo for $119,000. That was unheard of a couple years ago. No condos were below the low $200,000 range.
When you consider how much more pain is on the horizon, CDO mess, the approaching foreclosure tsunami, the next few years should be ugly.
I forgot to mention, this is Long Island, NY.
Is that $119k condo in a good neighboorhood? If not pass. I remember at the peak, $200k got you a 1/1 condo here in south FL, now there are some for under $100k. One speculator is selling his 2/2 for like $112k, that sucker probably paid $175k. I bet that one will be more like $80k at the bottom
Buyers are really spooked by falling values and this apprehension will get a lot worse.
Hopefully this fear will provide many opportunities to buy below the bottom at the bottom.. meaning they will be afraid to buy the bottom because the “bottom” might not be the bottom.
I see a very soft, spongy, long lasting bottoming period with lots of excellent deals to be had.
My mom lives in FL and picked the perfect time to remodel her bathroom. Materials are cheap (due to a glut) and so is the labor. She had 3 guys bid to do the shower (last years lowest quote was $3700) the best price she got form a 25 year veteran who said it is as slow as he has seen it is $650. She went with it and the shower is beautiful. Talk about deflation. I don’t know how people can pay their bills.
Another friend, a mortgage broker, lined up in some community out in BFE a few years ago for the chance to buy a house and insure future riches. She bought it for close to 300k. Houses in the neighborhood are listed for $220k and $240k that have more than hers. She is trying to rent it for a loss of 2k per month. I said how much do you need to sell for to cover all your costs including holding and she said close to $350k. I said why don’t you just drop the price, sell it, and stop the bleeding. Because she is overleveraged to the mortgage company and she “refuses to take a loss and / or bring money to the table.” When I pointed out to her that this is not sane thinking I didn’t hear back from her. I think she’s in denial and when I gave her a dose of reality, she chose to ignore it.
Oh well, like I said I was going to say, “I told you so.”
she “refuses to take a loss and / or bring money to the table.”
the year of the dot com madness, i lost so much value in my portfolio but of all things i still had large cap gains. of course i hated selling stocks at a loss but i didn’t want to go to jail for non payment of taxes. eenee meenee miny moe.
step up to the plate and take your losses.
and hurry im completely crabby!
she will lose less money getting foreclosed, albet she can kiss her credit bye.
Netherlands: home prices still rising (probably the 15th year with above average price growth). Problems in the US subprime market are sometimes briefly mentioned in the economic news pages, but of course it IS different here. Banks and the RE mob are expecting about 10% increase in home prices for 2007.
Plans to build far more new homes are faltering because local government and big developers are only targeting wealthy buyers, while more and more buyers are dropping out of the market because there are simply no affordable homes left for them (despite 8-10x income, 0% down loans etc.). In Netherlands a home is usually only build when there is a buyer, so many plans are on hold now until a wealthy buyer (or more likely someone who pretends to be that) is found. Probably the trend of less sales, higher inventory for sale and higher average prices will continue for some time.
There is more news about ‘krakers’ lately, which is a sign that the times from the 1979 housing crash are returning: the Dutch housing market is totally controlled by big developers and speculators and their buddies in government. That ended badly in 1979, but nobody remembers.
” In Netherlands a home is usually only build when there is a buyer.”
Now there’s a concept! Out spec builders would not be able to fathom that one.
there is probably a good reason behind it … our developers make the big bucks on the land they sell with the house, the margins on the homes themselves are relatively small. There are hardly any independent builders left here. Most of the developers are really land speculators that can wait until they catch a buyer for their overpriced POS plans (independent land sales to citizens are nonexistent here). In new developments nothing gets build before at least 70-80% of the homes is sold on paper. As long as land prices keep rising developers have no real incentive to build.
What the US builders are doing sounds stupid, but the market will take care of it; can’t say that of the situation in most of the EU.
I guess that the difference is that in the U.S. there are usually acres and acres of (relatively) cheap farmland if you go another 5-10 miles out, past the current edge of development. I’m guessing that in Europe that just puts you in the next city.
no, that is the popular myth that the RE mob wants to keep alive.
The Netherlands is the most densily populated EU country and even there only 11% of the country is built land (used for towns, roads, industrial zones etc). Just 1.5% of the total land area would provide plenty of building land for the future, even if the population increases another 20% (which is the highest prediction, some predict declining population very soon). The problem is ‘zoning’: all big political parties support a zoning system that rules out the use of farm land for building. In reality even building on the few remaining pieces of nature is easier than building on farm land. This system makes every farmer a potential multimillionaire (because of course, now and then zoning rules are changed, multiplying the value of the land by a factor of around 100 - assuring huge profits for developers, local government and everyone involved).
Several Dutch governments have already gone down because of discussions about this issue that is a major cause for surging home prices and lots of other troubles in the housing market; over the last two generations, nothing has changed.
Here in Colorado its pretty typical for a builder to not build a house until there is a contract. I’m not saying that there aren’t spec homes, but its nothing like in places like Calif or NV.
In Germany, this year, the government stopped to sponsor new houses and lowered tax breaks for commuters. The result so far: More people move into cities rather than out.
We still have only normal appreciation in the housing markets. Rates are still relatively low, but the recent rises are killing Spain, where 95% of all mortgages are ARMs, and real rates are no longer negative. The problem: Spain did not use the cheap money to improve productivity, now they have an account deficit of about 9% of GDP, and thanks to the EMU, they cannot debase their currency. During 2006, more houses were built in Spain than in Germany, France and the UK combined.
Meanwhile, the Northern EMU countries require even higher rates, we will see at least one rise during this year.
-“Area builders started 3,367 homes in the second quarter, down from 4,295 a year ago, according to Dallas-based Residential Strategies Inc.
- “‘Builders are aware of the potential downturn and are taking drastic steps to make sure they’re not stuck with inventory,’
Well, which is it? They say that they are taking ‘Drastic Steps’ to reduce inventory and then continue to flood the market with more product.
“…the market has plateaued and investors don’t want to hear that…”.
Why should any person in the business of giving investment advise care what investors “want to hear”? That statement speaks volumes about the attitude of most “professional” advisors.
A good financial/investment advisor would never consider what a client “wants to hear”. They would tell it like it is and if the client does not like bad news tough luck. Their mission is to protect and grow the client’s assets, not give the client a stroke job.
Clearview,
I agree, however, having tried that method in that field, I can assure you that the pickings of clients who want to know “the truth” are fairly slim. Most people set their expectations based on whatever the “best” return they’ve seen recently. They wonder “why can’t I get that too?”.
You can show them historic fact, document the time tested wisdom of investment heros counseling prudence and…..they’ll mostly go to the advisor who claims they can get them double digit returns without risk.
Its a matter of greed and ignorance. All of us have a greed instinct and many learn (often by painful experience) how to keep it in check. But many people often get “windfalls” and, having never had reason to study investments before, have a level of ignorance that they cannot fathom in this arena.
If you want an advisor who will tell you what is “best” for you at any point in time you’d better find an advisor who’s pretty financially well “set” and who doesn’t need to “sell” you anything.
The sign spinner for the condo complex next to ours got a new sign. Last few weeks were “[Community Name] starting in the low $200s.” Today’s number is $190.
Few more months of this and they may be selling at 100x rent. In the meantime, I will continue renting a $230K condo for $1150/month.
Just today saw a large (200 plus) subdivision here in W. Colo. that was marketing homes for 250 - 325k (and going nowhere) just split off a section, rename it, and start marketing it in the 140k range.
Also seeing many more reduced and motivated ads, auctions, and foreclosures.
I spoke with a realtor friend about the market in the San Fernando Valley part of LA. He said that in 2003 there were about 1,300 listings in the valley. At present there are over 9,000.
Prices haven’t dropped here significantly(yet) but I am seeing many, many short sales and foreclosures still overpriced and sitting. It seems the new trend here is to list the house about $10,000 over what you really want to list for and immediately reduce the price by that same $10,000. This way when a buyer searches “reduced” yours will show up at the get-go…even though it’s a new overpriced, POS,crappy listing. Also seeing many re-listings coming out as new….but that’s old news.
Whatcom county (NW Washington state). Prices are still high here, but inventory continues to grow. The following inventory is for the entire county and includes all types of properties (sfh, land, condo…) I’m tracking the numbers from a local realty web site (K Williams).
Date Inventory
1/4/06 1,951
1/6/07 3,021
6/30/07 4,038
A few people have recently commented to us that perhaps we were smart to wait to buy.
Some progress in West LA:
Price Change - Decrease $999,000 4 Beds 2.00 Baths
MLS Number
07-173719
12001 national,los angeles, CA 90064
Area: West L.A.
Luxury living in the heart of West LA! Expansive 4bd/2ba (+ huge unfinished loft!) hi quality/hi tech new construction. Exquisite details abound. Maple floors & custom cabinetry, hi ceilings, impressive use of limestone, marble, granite. Contemporary touches incl recessed lighting, cntrl heat/AC, tankless H2O heater, dual windows, ethernet-ready & more! Large mstr ste, gourmet kitchen, oversized finished garage. Corner lot in prime location close to cafes, shopping. Westside living at its best!
——————————————————————————–
Property Type: Residential-Single Family
Rooms:Center Hall,Dining Area,Living,Loft,Patio Open
Equipment:Cable,Dishwasher,Garbage Disposal,Hood Fan,Microwave,Network Wire,Range/Oven,Refrigerator
reporteddate: 2007-06-29 17:15:56Price Change - Decrease $749,000 3 Beds 2.75 Baths
MLS Number
07-189167
2743 burkshire ave,los angeles, CA 90064
Area: West L.A.
UNBELIEVABLE PRICE REDUCTION - OVER $75,000!! Open House Sun 7/01, 2-5pm. ** SELLER HAS BOUGHT ANOTHER, AMAZING AMOUNT OF HOUSE FOR THE MONEY ** Lovely , spacious 3 bedroom 2.75 Bathroom family home. Redone hardwood floors. Bright living room. Open kitchen w/eat in area over looks family room. 2 of 3 bedrooms have private baths. Secluded yard w/all kinds of fruit trees. Walking distance to Whole Foods, Starbucks and More!!
——————————————————————————–
Property Type: Residential-Single Family
Rooms:Dining Area,Family,Living
Equipment:Dishwasher,Microwave,Range/Oven,Refrigerator
reporteddate: 2007-06-29 15:05:33Price Change - Decrease $1,275,000 # of Units: 3
Walking distance to Whole Foods, Starbucks and More!!
With those selling points, I’m surprised they lowered the price by $75k.
A quick question for real estate watchers:
A real estate agent recently told me that for sale by owner sales don’t show up on any of the comps. Wouldn’t that give a false figure to sales prices in a neighborhood? Surely, when the sale hits the recorder or assessor it must be taken into account. So many fsbo sales are below realtor prices.
How can FSBO’s not show up in the comps, the sale still gets recorded? I think that agent is full of it.
I’ll try this again. A quick question. A real estate agent recntly told me that for sale by owner sales do not show up in the neighborhood comps. Is that true? Wouldn’t that skew the values and prices being asked? Often fsbo sales are below asking when using a realtor. The sale would be public record with the recorder and assessor, so why wouldn’t they show in the comps?
I’d check with an appraiser to find out. Sounds to me like the realtor is ignorant or lying.
A good appraiser uses solds as comps and may also look at what’s in the MLS, understanding that such listings do not indicate final sales prices but may show market trends. A realtor uses MLS listings to do their comping, thereby basing everything on they and their buddies’ best and wildest speculations as to what a property will fetch.
Comps are relative depending on who does the comping and how thorough and ethical and intelliogent they are.
A good appraiser uses solds as comps and may also look at what’s in the MLS, understanding that such listings do not indicate final sales prices but may show market trends. A realtor uses MLS listings to do their comping, thereby basing everything on they and their buddies’ best and wildest speculations as to what a property will fetch.
Comps are relative depending on who does the comping and how thorough and ethical and intelliogent they are.
Thank you for the answers on the comps. I thought the agent didn’t know what he was talking about, but wanted to ask people who seem to be more in tune with that business than those working in it. Sorry for the duplicate posts, my first post didn’t show up, so I tried again.
I live in Parksville a small town of the leeward side of Vancouver Island. My next door neighbour is from Laguna Beach Calif. and my neighbour across the street is from Palm Desert Calif. the slowdown in US prices is slowing the numbers of USers buying up here.
Put the US housing slide together with the slow death of the US dollar and I think we’ll be seeing mostly buyers from Alberta oil country.
Prices are holding…but not growing at the double digit rate of the past few years.
Saw a TV ad last night for Countrywide Mortgage….”it is a great time to refinance you house”. Wow….talk about leading the stupid to slaughter. I am surprised the CEO Mozillo didn’t personally show his tan-mafia mug and beg for business….yuck, the poster boy for the whole corrupt industry!!!
This ad was followed immediately by one to come and visit North Dakota!!!??? Probably the last place I would go but very odd. Guess gas prices have grounded vacationers.
This is going to get uglier than I thought !!
I had never looked at RealtyTrac because I don’t plan to buy again until at least the end of 2008 . But, just of curiosity, I looked at an area I like. Springboro Ohio 45066.
If I am reading this correctly there are almost “twice” as many homes that are “pre-foreclosure; auction and bank owned than regular sales.
Pre-foreclosure= 149
Auctions= 224
Bank owned= 417
Total 790
FSBO=17
Resale=173
New homes=216
Total=406
Springboro is a very desirable area that has had a building boom in the past few years. A couple of years ago people were over bidding just to live there.
I don’t plan to pay for a subscription to RealtyTrac until I am seriously looking to buy.
Does anyone know the subscription price to RealtyTrac?
Thanks
Just moved a few miles down-beach into St. John’s County - Ponte Vedra Beach. Condo prices are down 10-20% over the last 12 months but prices are still about 200 X monthly rental. And that with condo fees, taxes, and insurance. Needless to say I’m renting.
It only stands to reason: rents have to go up 100% (they haven’t moved up at all last 12 months), prices have to fall another 50% or some combination of the two has to occur before this market bottoms.
But you can’t have rents go up without income going up and I don’t see that happening for most people. Especially in Florida the land of the retire where many of them are on fixed income or the non-retired who provide services to those on fixed income.
Rents and price may come together but mostly through inflation where rents rise and housing prices stay the same if they don’t drop
We talk a lot about numbers and trends and the big picture analysis, but I thought I would share a ground example from my neighborhood that really brings things home for me. Unfortunately, DC is still ridiculous and in vast denial about the endgame of the bubble bursting. This home is a couple of miles from where I live now. I’m currently in a condo, and I would like to stay in this neighborhood, although I don’t necessarily need a house that big. It’s not the best neighborhood in the city, but it’s a decent residential neighborhood, with a Metro stop, Catholic U., and a few shops and cafes (including my favorite neighborhood internet cafe/coffee bar) all in walking distance. But $800k just seems outrageous. I make about $105k (gauche to state one’s pay, I know, but relevant to the discussion) and I would not feel comfortable borrowing more than $250k, which would put me in a $275k home with 10% down. So by my calculations, I would need to get a 45% pay raise and then marry someone else with an equally exorbitant salary to achieve a double income household capable of affording this home. Oh, and I’d need to budget for a vasectomy too, because kids would ruin the budget.
I know such couples exist (I even know a few), but I am already in the top 10% of DC earners, and I don’t think there’s that many of them out there. And the ones I do know probably aren’t buying over there, because for the same (or even a bit less), they can get a much more prestigious zip code on the other side of the city, near Wisconsin Ave or Connecticut Ave. I will be watching this property to see what happens with it. I can’t find it on ZipRealty.com, and Realtor.com doesn’t seem to have it either.
http://www.zillow.com/HomeDetails.htm?zprop=497921
Try the above link. I can’t figure out which house it is, but you probably can. Nice place, but can a little picket fence keep away the low-lifes, and what are those upstairs bedrooms, about 9 x 12 each? Gotta believe this place has more walls than closets, although nice to see that DC does still have some attractive old housing stock.
Wow, those are cute homes! Wish we had more of that in So Cal — land of the pink/beige stucco McMansions.
New Sign O’ The Times–
Zip realty has added new criteria for the advanced search–”Short Sales” !
Mebbe they oughtta start planning for an REO criteria as well.
Saw my first Winter Springs (Orlando area) sign twirler today — for a Morrison Homes project just a block west of 417 on Aloma. Looked like a UCF math major — they need a hottie in a bikini to have any hope of a draw.
Prices in the east coast of central Florida(St. Lucie, Indian river, Brevard counties) have dropped alot. One developer slashed $60k and now wants $176k for a nice new 2 story 3/2.5/2 house at about 1760 living square feet. The $100/foot(house+lot) mark has been reached. I still say prices have another 25-40% to go down. Or costs per living square foot should ultimately be around $75. Do any of you think this price point is reasonable for this part of Florida? How cheap will interior north FL be?
Cities ranked for affordability
Indianapolis remains one of the most affordable major housing markets in the country.
That’s according to the most recent National Association of Home Builders and Wells Fargo Housing Opportunity Index.
Mobile News | Subscribe Online | Order Reprints
Lehigh Valley Local Links
The index for 2006 found that 89 percent of the homes in Indianapolis were deemed affordable based on median-family income of $65,000 and median prices of $113,000.
In 2006, the median price of a home in the Lehigh Valley was $189,000 while the median income was about $49,000 in Lehigh County and $54,000 in Northampton County, according to U.S. Census Bureau data.
In the Lehigh Valley, 50 percent of homes were affordable in the first quarter of this year, according to the index.
According to the NAHB Housing Opportunity Index, the least affordable market was Los Angeles-Long Beach-Glendale where just 2 percent of new and existing homes sold were affordable, based on the median household income of $56,200. The median price of all homes sold in the index period was $525,000.
Nationally, the index found that nationwide housing affordability remained virtually unchanged from the end of 2005.
Slightly lower home prices and higher household income helped offset an upward movement in mortgage rates to keep the index almost flat, explains NAHB president David Pressly.
Also, near the top of the list for affordable major metros was Youngstown-Warren-Boardman, Ohio-Pa., followed by Detroit-Livonia-Dearborn, Mich.; Rochester, N.Y.; and Buffalo-Niagara Falls, N.Y.
Four smaller housing markets outranked all others in housing affordability:
Lansing-East Lansing, Mich. at the top of the list; Davenport-Moline-Rock Island, Iowa-Ill.; Lima, Ohio; and Battle Creek, Mich., respectively. Bay City, Mich., was the fifth-most affordable market smaller than 500,000 people.
Other major metros at the bottom of the housing affordability chart included Santa Ana-Anaheim-Irvine, Calif., followed by San Diego-Carlsbad-San Marcos, Calif.; and New York-White Plains-Wayne, N.Y.-N.J.
Among metro areas smaller than 500,000 people, Santa Barbara-Santa Maria, Calif., was the least affordable housing market. Four other small California markets also fell at the bottom of the affordability chart: Modesto was the second-least affordable small market, followed by Salinas, Merced and Napa.
The average income in the Lehigh Valley is 49k and homes are 189k. 5 years ago our average home were under 100k. This article proves we are nothing but a HOUSING BUBBLE. Our area is going to get hammered, I CAN’T WAIT!
In West Sac there are 29 homes on my street. last week two more went up for sale which now makes FIVE on my street alone. One is a forclosure and the empty rental across the street will soon be a forclosure (ASSUMPTION). The owners live out of town. NOw I just pray my LL don’t fall behind on payments