The Spring Real Estate Market Was A Washout
Newsday reports from New York. “Housing sales for spring, usually the busiest buying season, didn’t bloom quite as well this year for Long Island and Queens market, according to a report from Miller Samuel. The biggest drop in prices came from North Shore’s luxury market, an 11.3 percent fall over a year ago in the top fifth of sales prices.”
“‘There’s this underlying weakness in the market, as evidence by rising inventory and slipping sales,’ said company president Jonathan J. Miller. ‘The second quarter, that’s the spring market, the most active of the year, and we saw a fall off. You put those two elements together, and it basically says we probably have more weakness to go.’”
The New York Post. “Residential real-estate sales…in Queens appear to be mirroring the rest of the nation’s housing slump. Weakening prices, rising inventory and declining sales were prevalent during the previous 12 months, with only a few pockets of categories posting positive growth, according to Prudential Douglas Elliman.”
“The median sales price of a Queens residential property this quarter was $469,000, down 4.3 percent from a year earlier.”
“Overall, the number of sales in Long Island fell 5.6 percent in the past quarter to 8,694 residential units, compared to 9,210 units sold a year earlier.”
“Meanwhile listing inventory increased over 10 percent to 36,610 units from the prior year quarter total of 33,141 units, up 91.5 percent compared to the same period 2 years ago. Price levels were down slightly this quarter, compared to the same period last year.”
The Boston Globe from Massachusetts. “The spring real estate market was a washout. Home sales in Massachusetts tumbled as much as 8 percent in June, and prices also dropped during that key month in the real estate cycle, according to two reports yesterday, virtually ensuring that 2007 is going to be another down year in the industry.”
“‘We’re going to be on a continued decline at least through the end of the year,’ said Alan Pasnik, the real estate analyst for Warren Group. ‘I don’t see what’s going to change that,’ given June’s poor results, he added.”
“June is a key month because deals struck in the spring are usually closed then.”
The Boston Herald from Massachusetts. “Jeff Wilson has done some $40,000 of work on his Dedham two-family and knocked $20,000 off the asking price, but still can’t find a buyer. ‘We thought we listed it at a cheap price - but then the market fell further,’ said Wilson, whose property has been up for sale for some five months.”
“The Warren Group reported yesterday that Massachusetts two- and three-family house sales recorded their worst second quarter in 16 years.”
“‘It’s bad,’ said Alan Pasnik, head of Warren’s data analysis. ‘A few years ago, you’d buy one of these places, turn it into a three-unit condo and make a 50 percent profit or more. But now, the market is falling.’”
“The slowdown has particularly hit Boston neighborhoods hurt by the subprime-mortgage market’s collapse. Warren said two- and three-family home sales fell 55.2 percent in Mattapan, 48.6 percent in Roxbury and 37.5 percent in Dorchester.”
“Experts add that it’s often no longer profitable to buy two- or three-families and turn them into condos or rentals. ‘Twenty-five years ago, people would say, ‘I can buy a two-family and pay hardly anything each month because I’ll rent half of it out,’ said Hyde Park broker Pat Tierney. ‘That isn’t happening right now.’”
The Daily News Transcript from Massachusetts. “Sales of homes and condominiums in Dedham and Norwood have continued to slump this year, mirroring the weak housing market statewide. The Warren Group said sales from January to June in Dedham and Norwood were the lowest during that period - as well as for the month of June itself, since 2003.”
“Sales in Dedham were down 15 percent during the first half of 2007 and in Norwood they were down 4 percent, the report said. Dedham also saw a 40 percent drop in condo sales.”
“‘If you are a home seller or a mortgage lender, this has to be disappointing,’ said Terry Egan, editor in chief of publications for the Warren Group. ‘I think early on in the year there had been predictions in some quarters that things would be getting better, but then interest rates picked up in May. It’s a general malaise and we have seen prices working their way downward for over a year now.’”
“‘It’s really statewide now,’ Egan said. ‘There are a few pockets doing well, but now even the western part of the state is starting to feel it.’”
“In Dedham and Norwood, housing prices, along with the number of properties sold, dropped to their lowest levels since 2003.”
“The median price of a single-family home in Dedham dropped from $380,000 in the first half of 2006, to $345,000 in the first half of 2007. In Norwood, median single-family home prices dropped from $375,000 in the first half of 2006 to $353,500 in the first half of 2007.”
“Westwood and Walpole both saw median single-family house prices drop. In Westwood, the median price dropped from $550,000 in the first half of 2006 to $524,000 in 2007. During the same period in Walpole, sale prices dropped from $409,950 in 2006 to $401,500 in 2007.”
“‘Because of the housing stall, prices have dropped, but buyers know sellers are not going to give things away and interest rates might go up soon,’ said Hope McDermott, a real estate agent in Dedham.”
“‘Prices have come down because they were overpriced to start with, but now brokers are coming in with a more precise number to start with,’ said Jerry Armstrong, of RE/MAX in Norwood.”
The Telegram from Massachusetts. “The Massachusetts Association of Realtors reported second-quarter sales of single-family homes was down statewide…from a year ago. That is a letdown from the first quarter this year, which saw sales of homes and condominiums up more than 2 percent from the previous year, MAR said, when real estate agents were optimistic of a strong spring buying season.”
“‘While it was not as strong as we would have liked, it was the fourth-strongest second quarter on record in Massachusetts,’ said Doug C. Azarian, MAR president . ‘The decline in sales and prices started late in the second quarter last year. Until then, we were seeing peak highs. Now, we’re seeing a solid year of declining sales compared to the peak.’”
“The median (single-family home) selling price for the second quarter was $355,000 in the state, down 1.4 percent from $360,000 a year ago. According to MAR data, the peak median price of a single-family home was $370,500, in the third quarter of 2005.”
“‘Even though we’re looking at price decreases, they’re slight. I think people five years from now will look back and say they should have bought in 2007. There’s still a fair amount of inventory, but not too much….Sellers will see that the market is slow and that they’re not going to get the appreciation they had hoped for. They’re lowering their prices, and should be ready to take what the market will give,’ said Mr. Azarian.”
“Mr. Azarian said that interest rates are still low, and said the high foreclosure rate, though adding to the inventory, has not had a significant drag on prices.”
“‘It appears that lenders are working with Realtors with experience in those kinds of properties,’ he said.”
The Associated Press. “Massachusetts would offer extra protection for homeowners close to losing their houses under legislation endorsed yesterday by Senate leaders, in the latest move to help people after a sharp rise in foreclosures in the state.”
“Mortgage brokers would have to obtain a license to work in Massachusetts and mortgage fraud would become a felony. The measure would crack down on deceptive advertising, give homeowners a last-minute opportunity to avoid a foreclosure auction and require borrowers to educate themselves to risks.”
“‘This is going to make the brokers think twice before they try to fudge numbers,’ said Sen. Stephen Buoniconti, chairman of the Financial Services Committee. ‘Right now, there’s such an urge to try to get people to close loans.’”
“Foreclosure petitions jumped nearly 70 percent last year to nearly 19,000 in Massachusetts, bringing the state’s historically low foreclosure rate in line with national figures. On the Cape, foreclosures have reached the highest level in more than a decade.”
“The Senate bill also proposes the creation of a state subsidy for businesses that pay portions of employees’ housing costs. But the measure does not include an appropriation of funds to support the program.”
“Senate President Therese Murray described the bill as a complement to Gov. Deval Patrick’s plan to curb foreclosures by raising cash through bond sales.”
“‘There is no bailout in this bill, which is telling,’ Murray said when asked to compare the measure with Patrick’s plan.”
The condo meetings must be fun………….. turn it into a three-unit condo and make a 50 percent profit or more. But now, the market is falling.’”
The Boston Herald from Massachusetts. “Jeff Wilson has done some $40,000 of work on his Dedham two-family and knocked $20,000 off the asking price, but still can’t find a buyer. ‘We thought we listed it at a cheap price - but then the market fell further,’ said Wilson, whose property has been up for sale for some five months.”
Let me guesss…the monthly rental income of this lovely 2 family in Dedham (appropriate name for the town) is 40% below the monthly nut one would have pay if they bought it at its current ‘cheap’ price.
It will be only be cheap when the potential rental income exceeds the monthly carrying costs, as many on this forum have taught me.
On some rounds around town, I see homes that have been for sale for over a year. I get the feeling that these folks have a firm number in their noodle where they will sell at. They will not budge I bet. Not unlike stocks, when you should of gotten out when your losses were a minor amount, they should get out now. Not only will they lose potential money, but they will sit on the houses waiting for inflation to bring the nominal price back up.
Ahhhh….but stocks don’t have all the associated costs of holding on to a house..,..taxes, curb appeal, mortgage, etc etc etc. It is like compound interest on roids, and stocks just sit there until you move on them, this will eat you alive unless you can get it off your back. I do agree though these fools who think they are entitled to the 05′ gains are going to be butt hurt when this is over, and feel cheated and I suspect depression medication and cheap booze manufacturers will make a ton of money. They should sell NOW and get the hell out like my Mom did and the ass clown flip tard who bought it for 405k in Bellflower(laff!!!) thought he stole it.
The cost of owning a house where the monthly expenses (mortgage, insurance, property tax, maintenance) are twice what you can rent it out for is like having a margin call every single month. And the homeowners who bought it using a low documentation ARM are about to get the shock of their lives when their rates reset.
I’m curious what’s happening to MA rents if this is the case w/multifamilies.
Rents are not going up. Mine has stayed the same for severla years now, and what is worse is that I see the big apartment complexes offering all kinds of bennys like free two months rent, or no security deposit etc. Also lots of duplex houses for rent, without including the condos that are owned by flipper…
Rents are constant or falling (mine is the same this year). Lots of quality rental availability. Population in key demographics falling. Rents run at around 60% of the cost to purchase (factoring in all costs/benefits).
In the Fall River, MA Area you can easily rent a 3 bedroom Apt for $550-650 a month.
Sure, if you want to live down the South end or the Flint. Try finding a decent 2-3 bedroom apartment in the Highlands at that price… that’s what nice 1 bedrooms go for in the better parts of the city.
“The spring real estate market was a washout.”
Now where have I heard that before? hmmmm… I cant remember which town. lol
Massachusetts is one of the most liberal states in the union - and with one of the highest tax load. It is one of only two states that is actually losing population (even with “free” health care for all).
1. No one wants to live under socialism (even though it may sound good in theory for the other guy)
2. No one is going to pay a premium to live in it
3. When you are losing population - it means you need LESS housing
http://en.wikipedia.org/wiki/Sweden
Actually, Massachusetts has a relatively low tax burden. Compared with other states we rank 28th out of 50 with Vermont, Maine, New York, Rhode Island and Ohio in the top 5. This is a common misapprehension, probably based on the fact that Tax-achusetts sounds funny.
The health care insurance program was instituted because in essence people were already getting free care - emgergency rooms are not allowed to turn anyone away based on ability to pay. It was costong the state billions. At least this way, people pay *something* towards their own care, and will potentially choose lower cost options than ER care.
However, your last point remains valid - MA is losing population (unless you count illegal immigrants and students as hizzoner Mumbles Menino does) and housing prices should go down accordingly.
Reason to like Mass:
Our Senior Senator can out-drink almost all other Senators. “Errr Umm more Chivas Regal please”
Nope, taxes are relatively low in Massachusetts, particularly compared to how high incomes are. People are moving because they can’t afford to stay and compete with high-income professionals for expensive housing. No town wants to have any kids move in and soak up taxes for schooling, so new housing starts are low and people with kids move to North Carolina.
Massachusetts is highly desirable, so like California, we’re splitting into an economy with a growing high-income group, immigrants who are willing to live in crowded conditions, and fewer and fewer people in between. You do need housing when your population drops because the apartment that used to hold a family of five now holds a gay couple or two 20-something women.
But…It’s different here!!!!
I think that MA is at ther forefront of the bubble implosion (was the first state with YOY declines) and in most places we are at 2003 pricing, but it is also the state where denial runs the strongest. Lots of gullible young grads from the area colleges want to stay, and get fleeced every year. It is not different here, just in a hell of a lot more denial than places like florida, or Arizona.
But…It’s different here!!!!
Ha ha. No, house prices are dropping and I’m happy for it, even as an owner. I was disagreeing with the guy who thinks people actually want to live in Dallas instead of Boston.
“On the Cape, foreclosures have reached the highest level in more than a decade.”
This is one helluva stat and would have been great fodder for the ‘bubble-proof’ discussion. I hope a similar fate awaits Key West.
Yes - might be good to see prices in Key West in about 3 years, when everyone has given up on their ‘vacation home’ returning to their highs.
I’m confused on that one Muggy. Cape Cod was one of the first areas to show the cracks and like most vacation spots during the last economic slowdown will be hit hard.
I am confused that I haven’t heard any Adirondack bubble stories and there are some pretty expensive prices up there. I was wondering if the Adirondack ownership tends toward deeper pockets. (indicating we’ll just be hearing about their pain a little later in the game)
I buy some of the hype: in places like Key West, Cape Cod, Adirondacks, Skaneateles, Fire Island, Hamptons et al. you will always be competing against people that wrap Ferraris around trees, smoke $100 bills, sneeze truffles and crap caviar. However, these are primarily vacation areas, many of which are difficult to live in year-round.
Owning a vacation home is much less appealing when it’s not “paying you.” Plus, a lot of these clowns think that they can rent during peak season to cover their mortgages. That flew when bubblebuck$ were sloshing around and the economy “was booming.”
The bubble came late to upstate and believe me, it’s a bubble when current prices are thrown up against local wages…. if you can find a job.
“Experts add that it’s often no longer profitable to buy two- or three-families and turn them into condos or rentals”
Really? News to me. If you were cognizant of positive cash flow, allowed for vacancy rates and maintenance/upkeep, and knew how to punch some numbers into excel, then you should be doing fine.
Let’s review. I’m spending $12K to renovate an apartment. Based on the increase in rent I can charge for a new apartment and the reduction in heating costs to me by putting the apartment on it’s own heating system, I should see a minimum $100/mo increase in monthly cash flow. That’s roughly a 10% return on investment. Not bad for something that’s “no longer profitable”. Considering the cash for the renovation was in a money market account earning 4.75%, I feel pretty good.
And while these guys lament that they no longer see appreciation as a viable business plan and can’t flip properties within months and make 50%, there are plenty of foreclosure/REO bargains out there that will cash flow. Here’s a hint: If it doesn’t cash-flow, don’t buy it. If you’re buying for cash-flow, don’t buy a two-family…
Almost forgot: The materials were all bought on terms of 0% interest/0 payments for 12 months. That’s a free loan while my cash is earning a return in my savings account.
The money spent on the renovation is tax deductible and will provide a nice write-off come next April (along with every other improvement/expense on the property).
My 10% annualized return doesn’t take either of these facts into consideration, so the return will be higher.
Of course, I won’t get rich quick this way, but over time I will do very well. That is the key. Anyone remember the moral of the story “The Tortoise and the Hare”?
Slow and steady wins the race.
I apologize if this is a repeat as my last post didn’t appear…
Forgot to mention that in addition to the 10% annualized return on the 12K invested, I get the tax deduction on all improvements and expenses associated with the property. I bought all the materials for the renovation on terms of 0% interest/0 payments for 12 months, while my cash earns interest in my savings account. Between the tax write-offs and the additional interest earned, the return will be higher than 10%…
My point to all of this was that money can still be made in Real Estate.
I think you should put a helmet on and jump in a fox hole…incoming!
Also, what are the repair costs from that giant pitcher with legs and arms sloshing red liquid all over the floor and taking out a wall?
If you’re building REALLY cash flows, good for you! The rest of us will wait for the pricing haircut and buy when RE is on sale.
“your”
The bursting of the bubble has hit the New York suburbs and the more suburban boroughs of New York City — Staten Island and Queens.
Yet there are reports that prices continue to rise in Manhattan and gentrified or gentrifying areas of Brooklyn.
On the one had, these are the places known to affluent Europeans, who now have the currency in their favor. On the other hand, I have this image of hordes of bears storming the country, taking down the weak and poorly defended areas first, then surrounding and closing in and the Emerald Isle.
While I wish it weren’t the case — Wall Streeters seem to make money when the market’s up *and* when the market’s down. Despite the hedge fund nightmares that are brewing on one end of the market — the Dow is breaking new highs, meaning that bonuses will be extravagant this year. A whole new crop of annoying 28 year olds will be looking for swank apartments and brownstones. Live with it… its the nature of the NYC market. Sadly, most of Manhattan has lost its artistic side and has become Geneva: boring, sterile and absurdly rich.
We’ll see trauma in the suburbs, and in the burroughs (although Brooklyn will remain hot).
Plus, as you said the dollar is insanely cheap. Brits are all over Manhattan gobbling up apartments on this side of the pond.
“‘This is going to make the brokers think twice before they try to fudge numbers”.
So sorry Steve, but the investors have already cut off the pipeline on those loans. In Colorado, where they have passed similar legislation, the investors have dropped the programs, not giving the brokers the “opportunity” to cross the line. I don’t think that the legislators realize how much of the business was “stated” over the past three years. It covered the whole credit spectrum, not just subprime. It’s gonna tank the market, imho.
Loulderbo,
I think most of us agree. What I would add is that the sheeple are somehow going to be surprised that hedge fund failures translate to tight credit.
This Christmas is going to suck yet most people do not know it yet. 2008? Oh boy, that’s going to be a Calvin and Hobbes sleigh ride (you know the one where they end up upside-down, over a gulch, philosophizing before impact.)
Got popcorn?
Neil
“‘Even though we’re looking at price decreases, they’re slight. I think people five years from now will look back and say they should have bought in 2007. ”
You know, that’s the second time I’ve seen a realtor suggest that people will look back and say they should’ve bought in 2007. Is that the new catch phrase the NAR has put out to their members?
Five years from now, people will look back and say they should have sold their house in 2005.
Before people say that 2007 is the year to buy, they should have a look at this graphic that shows projection of future gasoline prices, source is theoildrum.com
Projected gasoline prices
I expect Indian and Chinese demand to drive prices quickly to about $8/gallon. (Quickly being by 2010). However… at that point we’ll start finding alternatives. So the “trees to the sky” projection in that article isn’t believable. Its a very Malthusian argument that assumes people cannot adapt. (Mass transit, hybrids, carbon-fiber car bodies, eco-diesels, a better way of making ethanol, diesel fuel from algae or bacteria, coal derived fuel, etc.) At $11/gallon… a huge amount of oil suddenly becomes available.
Also, at $11/gallon a huge amount of demand goes “poof.”
Will oil rise (long term)? Yes. To $100+/gallon? No.
Got popcorn?
Neil
The oildrum is a fantastic blog, read it. Don’t just focus on gas for your cars; think about how you will make plastics, how you will fertilize, etc. It takes the equivalent of 10 calories of hydrocarbons to make one calorie of food.
Yeah, the real affect is in the redistribution of capital, and the resulting deprecation of pre-peak investments. At the end, it may be all good - but it’s the trip not the destination.
Neil, you seriously need to do some reading on energy availability. Shall I lend you my library?
“should have bought in 2007″ — that statement made me LOL. I’m starting to look forward every morning to the comic relief in such quotes. Who needs the Comedy Channel?
I went to a foreclosure auction yesterday for a relatively decent house. I was the only one there so I got to talk to the auctioneer. He was an attornee representing the seller. The starting ($230,000)bid was more than the initial loan value ($207,000) from two years ago. I asked him what would happen to the house when it didn’t sell at auction. His response was that it would be transferred to the bank and they would relist in 6 to 8 months for more than the $230,000. I told him it was a rediculous plan and he agreed.
Have the banks not realized what’s going on? When they do I would think that they would try to be the first ones to liquidate buy why haven’t they yet? Ignorance? Disbelief? Do they truly not question the conventional “wisdom” that real estate always goes up?
Roanoke_Steve…
Come on down to Florida and join the fun here !!! The house at the end of my street was foreclosed on 21 months ago. The bank let the owner keep up the place until 6 months ago. The bank just got the place a little cleaned up last week. Asking…189k. I have no idea what the note is. My neighbor who has a nicer,newer,larger house that needs zero work is on the market for 169k and has not had a offer in over a year…
The REO’s will just sit. The best part is if you use rent calcs for pricing the house is probably worth 75-100k. The house across the street which is identical rents for 700.
This is in Port Charlotte btw.
Chris
The bank let the owner keep up the place until 6 months ago.
The guy I know who is getting foreclosed was allowed to stay in his house a while to see if he could sell it himself. He hasn’t sold it, mainly because he turned down the only solid - and reasonable- offer he got. He was holding out for his own number.
Those of us watching the situation are wondering if the bank will let him stay a while longer to keep the place maintained.
Phillygal;
Your anecdote sounds very familar to one situation I know of in lower Bucks county. I seriously doubt that there is only one (thousands?!?) delusional seller in foreclosure who’s all but lost his house has the financial ignorance to pass on the last best offer because it doesn’t meet his expectation of value.
At any rate, is there more than a few cartoon characters in the vicinity of this owner you’re speaking of?
Not Bucks County.
I guess delusional sellers in foreclosure are the New Paradigm?
They don’t book the loss until the house is sold and the unpaid mortgage principal is written off. Banks are also beauraucracies - dumb and slow. Last bust the regulators had to force them to sell foreclosed properties - they would not take action on their own.
But if the houses are sitting on their (the banks) books, that has to mean they have less money freed up to loan out. Plus they still have to pay the taxes and insurance. Some maintenance has to be done or these houses become even more of a depreciating asset. It makes no sense to hold them. Vacant houses deteriorate fast, plus they’re losing interest on the loan that someone would pay if they weren’t deadbeats. As far as I can see it’s lose, lose all the way around.
Not really, REO is an asset, but banks don’t really require the loan to pay off to fund additional loans (even if they aren’t just the servicer). Banks are limited in their lending by their capital so having 1% of your assets tied up in REO (which would be a very high level in the current environment) would have a much smaller impact than writing off .3% of your assets by selling them. With the multiplier of leverage it would mean that 3-5% of your lending capacity is gone.
Why doesn’t the multipler effect also apply to the %1 in REO, that also wouldn’t be part of capital in your example? That’s just dead unusable assets right? Actually worse than that due to ongoing holding costs.
Also, wasn’t part of Japan’s nosedive and deflation since 1990 due to it banks never having to write off bad loans?
This is a very important point, and I think this is waht most people don’t understand. The main thing this bubble has taught me is that very few people–even among financial analysts, MBAs, CFA charterholders, etc.–really understand how our money and banking system works.
I remember the “experts” after the Japanese RE bust saying that the Japanese Banks need to revalue their book to reflect old loans that were no longer valid and they could move on. But no, Japanese consensus management style wouldn’t allow it and why the West was superior etc.
Let’s see if the same “experts” recommend the same treatment now that their institutions have the financial gangrene.
sales slump in queens ny? i can’t believe it?
i mean that must be why the several homes for sale in my area have been for sale for well over a year.
i guess my decision to rent was the right one. we stil have a looooong way to go but the tide has really shifted
Absolutely! We are in the same boat.
Median price in Queens (probably a bit inflated) is $445,000. Median income is $45,000. Still about 10X. When prices get down to 5X, it will be time to buy.
The $500,000 house down the street is still priced at 1.15 mil. On the market for 4 months.
TIMBER!!!!!!!!!
http://finance.google.com/finance?q=BZH+CTX+DHI+DHOM+HOV+KBH+LEN+MDC+MTH+NVR+PHM+RYL+TOL+SPF+
Value stocks in 3 years?
I suspect all the traders are shorting the cr*p out of these right now, so self-fulfilling prophecy.
That is some high class bear’s pornography. I just book market it. NVR has a high price to drop from !
“We’re going to be on a continued decline at least through the end of the year,”
It’s quite amusing how most of the “experts” preface their predictions with “at least” now that the downturn is underway. I was discussing RE with my boss yesterday and he made a similar comment. I said “Hmm, that’s an interesting prediction. I’ve done a little research on prior downturns and they typically last 5 or 6 years.” He just looked at me like a deer standing in the middle of the road caught in a set of high beams.
He [my boss] just looked at me like a deer standing in the middle of the road caught in a set of high beams.
Excellent career move… (j/k)
I hear ya..very funny. Trust me, my boss (unlike most people) has more respect for those who express a difference of opinion than simply agree with everything he says. He gets the “yes, yes, oh you’re right, good point, I couldn’t agree more..” from all the kiss@sses in the company, but not from me.
He’s probably got some RE investments that he was already worried about. I just hope the messenger doesn’t get shot.
Countrywide’s Goose Eggs!
Prime losses
Countrywide said payments were at least 30 days late at the end of second quarter on 4.56% of prime home-equity loans serviced by the company, up from 1.77% a year earlier.
“The impairment charges on these residuals were attributable to accelerated increases in delinquency levels and increases in the estimates of future defaults and loss severities on the underlying loans,” the company said.
Payments were late on 23.71% of subprime mortgage loans, up from 15.33% at the end of the same period in 2006.
Further dampening enthusiasm, Mozillo commented: “During the quarter, softening home prices continued to affect many areas of the country and delinquencies and defaults continued to rise across all mortgage product categories as a result.”
My Comment: Looks like the horse’s mouth has been cleaned… This ought to make every realtor quiver.
Does this mean deliquency rates on prime mortgages are busing through the long term average and heading to the stratosphere? I think so.
Woa…
I missed the uptick on prime loan delinquencies… it is happening quickly. Perhaps my prediction for a quick drop in 2008 isn’t so insane?
Note: That doesn’t mean buy in early 2009. Oh no… we must let a few rounds of foreclosures “season” home prices.
Got popcorn?
Neil
“Countrywide said payments were at least 30 days late at the end of second quarter on 4.56% of prime home-equity loans serviced by the company, up from 1.77% a year earlier.”
Remember when Glenn Beck’s Wall Street guy said the consumer spending of the top 40% were driving the market and they didn’t have to worry about what was going on with the rest…..heh heh heh, maybe Wall Street Guy should read these numbers and rethink that.
Pass me that popcorn Neil. I’m gonna sit down and watch me some numbers!
This just in. Lindsay Lohan busted again. The MSM is resembling the Daily Show. Maybe a merge could be financed?
That’s an insult to the Daily Show
Talk about being severely STOOPID.
Think about it how many rock stars were they caught drunk driving?
I think most were smart enough to PAY for a full time sober driver.
Well maybe NOT Billy Joel….but he should get the hint someday.
Mr. Wilson paid $155,000 for his two family in 1986. At $379,000 with no money down it would cost about $3,000 a month to own. Rents would be about a $1,000 a month for each unit ($2,000 total). Sign me up.
Real Estate 101 for the Greedy, Stupid and the Common American criminal.
AXIOM 1. A bank or lender might allow you to refinance the mortgage loan rates …Eventually.
AXIOM 1(a) You can NEVER refinance the Actual PRICE you PAID for the overpriced POS Dream Home. (See bankruptcy, forclosure and troll living under a bridge RE axioms for final solution to this minor Problem)
Real Estate 101 for the Greedy, Stupid and the Common American criminal.
AXIOM 1. A bank or lender might allow you to refinance the mortgage loan rates …Eventually.
AXIOM 1(a) You can NEVER refinance the Actual PRICE you PAID for the overpriced POS Dream Home. (See bankruptcy, forclosure and troll living under a bridge RE axioms for final solution to this minor Problem)
Here’s the thing about MA (and the NE in general) that is completely ignored in most discussions: the housing stock is old and run down. Not only is the property overpriced relative to incomes, but you are getting a 75 year old house on average. 75% of these houses need a *lot* of work: lead, rayon seepage, settling, cracked foundations, efficient insulation, central air (thank you global warming)…a buyer of a typical home in MA will probably have to spend $150,000 to $250,000 to update them in the next 10 years.
I think this is true in a lot of bubble areas. In CA a lot of the crap houses that are close to 1mil in my area..are 50+ years old, often with rotted wood frames, cracked up stucco and asbestos. The quality of many of these buildings is a disgrace..I can tell you from experience that buildings in many other countries (at least europe and asia) are better made.
“Most discussions in the MSM”, I meant.
This maybe an over-generalization, but:
I would rather buy a “run down” 50 year old SFH, than a brand new, sparkling McMansion built with chinese manufactured crap.
I suppose you’re just as likely to rebuild each. I think the sweet spot is 15-30 years old, myself.
Sweet spot is redone or a good price for a redo 1920s or 1930s.
1950s-80s..no where near the charm and appeal of the 1920s-30s housing stock….and Depression era houses are usually quie well built as the shoddy builders were mostly driven from the business.
1990s-00s…mostly too far away from employment and recreation.
Having lived in both west and east, I can confirm the general suckiness of much of the housing stock on the East Coast. I was actually shocked about that when I moved here over a decade ago. I was like “people actually live like this in the USA???” Upper middle-class homes without central air or even enclosed garages. And those are the good houses…
Depending on where you live, you may also need to deal with lead paint, lead pipes, old electrical systems, and (if you have a well) arsenic in your drinking water.
queens is not as bad as it says
the bad parts of queens maybe, but around rego park/forest hills, woodhaven, middle village you don’t see very many for sale signs. above article is only for homes and co-op prices are holding up.
i do see a leveling off
http://newyork.craigslist.org/que/rfs/375950137.html
this started off at $480,000 back in May. add in $1300 taxes and co-op maintenance a month and it’s like $3800 a month after a 20% down payment. do the math and you can buy a $600,000 house in the area for the same amount of money after accounting for taxes, utilities, etc.
i’ll check ACRIS in a month or so, but so far the selling prices of co-ops seem to be a tad higher than last year in the better queens neighborhoods.
Because of the housing stall, prices have dropped, but buyers know sellers are not going to give things away and interest rates might go up soon,’ said Hope McDermott, a real estate agent in Dedham.
Small world…, I’m in LA (where it’s different this time
) but my mom’s in Dedham and Hope (aptly named…) was her RE agent. Mom downsized a year or so ago, and Hope, in a market starting it’s decline, priced her old house at or above comps. It took over a year to sell, and she chased the market down to 750k from a million! Had she priced it at 850 or so, it would’ve sold in a month. Might’ve even got multiple offers, it was a *really* nice house. Hope springs eternal…
Also, last week, my mom told me that the market in Dedham is looking up, I’m sure based on her agents assessment. Hope is deluded, but a lot of folks get their info from agents like that, on both coasts. Until sellers *and* buyers stop listening to these cheerleaders, prices in “desireable” areas will remain sticky…