Everywhere You Drive, All You See Are ‘For-Sale’ Signs
The Record reports from New Jersey. “Real estate agents overwhelmingly believe house prices will not rise significantly over the next year, according to a new survey by the National Association of Realtors. Beverly Lanterman, a veteran agent with in Saddle River, said the survey matches her own view of the housing market. She said in some towns, sale prices are off 10 percent or more from the peak a couple of years ago.”
“‘There are just not enough buyers to pick up all the inventory,’ Lanterman said. ‘Everywhere you drive, all you see are ‘for-sale’ signs.’”
“Sellers, she added, are reluctant to lower prices. ‘They’ll start at $679,000 and when it doesn’t sell, they’ll go to $650,000, when they should have been at $619,000 to start with,’ Lanterman said.”
“Buyers apparently believe prices may have further to fall. ‘Nobody seems to be in a whole big hurry,’ Lanterman said.”
The Pocono Record from Pennsylvania. “Home sales in Monroe County continued to slide in the first half of 2007, while sales of foreclosures continued to rise. And making matters worse, it took longer to sell a home.”
“Sales in Monroe County were down 29 percent in the first half of 2007 compared to the same period last year, as reported by the Pocono Mountains Association of Realtors. This follows a disturbing trend that began in the second half of 2006.”
“Foreclosures accounted for a greater portion of homes sold, rising to 17 percent from 11 percent last year. Earlier this the month, the Pocono Record reported that home mortgage foreclosure filings in Monroe County were on pace to shatter previous records. The current sales figures show that the trend extends well beyond filings.”
“‘It’s taking longer to sell because there are more homes on the market,’ according to Eileen Chaladoff, VP of the Realtors’ association, citing 4,200 homes for sale in Monroe County.”
“Chaladoff said the market is changing from a seller’s to a buyer’s market. ‘If sellers are going to hold out on their price, they will have to wait a lot longer’ she said.”
The News Post from Maryland. “Twenty-seven foreclosures are listed today in The Frederick News-Post. It reveals that problems continue to simmer in the housing market. ‘There are still quite a few foreclosures out there,’ said Terry Fox, president of the Frederick County Association of Realtors.”
“Both Fox and Stephen Mackintosh, of Mackintosh Inc. Realtors, said…many people are waiting for prices to drop. More than 2,000 homes are listed for sale in Frederick County, about twice the number of other real estate markets in the area.”
“Steve Meszaros, treasurer of the Maryland Association of Realtors, said some people, often driven by media reports of doom and gloom in the realty market, are holding off. ‘They think that since there are more foreclosures, they will simply wait for one and get a house at a lot less price,’ he said.”
“Considering the current interest rates, inventory of homes and the buyer’s market, this is the best time to buy a house in the past 30 years, Meszaros said.”
“As of May, there were 849 foreclosures listed in Frederick County from the last 12 months, according to RealtyTrac.”
The News Observer from North Carolina. “After a strong spring selling season, Triangle home sales rose only slightly in June, the weakest year-over-year performance since December. In addition, the number of homes on the market piled higher, according to the Triangle MLS.”
“Still, experts say the market may have hit bottom, at least in the Triangle. ‘This is probably where it starts to turn around,’ Wachovia senior economist Mark Vitner said.”
“‘There is no question the [Triangle] market cooled off,’ Vitner said. ‘It would be impossible for it not to. The newcomers are renting for longer periods.’”
“The number of homes sold in Durham, Johnston, Orange and Wake counties rose 0.7 percent from a year earlier while the number of listings rose 16 percent to 12,197.”
“Bernard Helm of Market Opportunity Research Enterprises in Rocky Mount thinks the Triangle is leading an early stage recovery and that Charlotte and Greensboro are as much as six months behind.”
“That said, ‘the path upward is going to be slow and torturous’ due to the effects of rising foreclosures and tightening credit markets, Helm said.”
The Roanoke Times from Virginia. “For years the subdivision in Botetourt County where Janet Beasley lives was perhaps the hottest among hottest home buyers there. But now the development, called Ashley Plantation, sports a smattering of for-sale signs, one in her yard.”
“Her 3,000-square-foot house has been on the market for six months, has undergone one price reduction, down to $515,900, and has been featured in a Sunday showing. Meanwhile, Beasley keeps mowing her lawn and picking up stray golf balls. Still, no buyer.”
“‘I feel like it’s going to sell,’ she said. ‘Got to happen eventually.’”
“But for now, the market for such high-end housing in Beasley’s area is as soft as a sand trap on the 18-hole course that winds through her development. Pockets of pricey housing are selling slowly from southern Botetourt County to Smith Mountain Lake. It is an indication of how the nationwide downturn in real estate is hitting home for some who live in the Roanoke Valley.”
“As in most economic events, there are winners and losers. Because of price cutting, elegant, half-million dollar homes at Ashley Plantation are for sale at tens of thousands of dollars less than they would have cost a few months ago.”
“The downside is, the soft market is limiting the financial gains and hampering the plans of luxury homeowners such as Beasley, whose husband must move out of state for his job.”
“Such conditions were unheard of two years ago when builders were selling houses before they could put in the lawn and scrape decals off the windows. When Beasley bought her house, many a prospective buyer was competing with others, and the mantra for some was, ‘We saw it first.’”
“More recently, only two people came to her open house.”
“Many are betting on the downturn to be temporary. Crews have begun construction of Daleville Town Center, with plans for 300 houses, town houses and condominiums. Builder Robert Graybill (has) a $675,000 home that has been on the market for eight months during construction and for which he lowered the price from $699,000 in response to other builders’ doing the same with their new properties.”
“Here’s one reason buyers are few: To buy a $600,000 home, a buyer would need at least $120,000 cash as the down payment. Then, to cover the roughly $3,500 monthly mortgage payment, the buyer would need a pre-tax, household income of about $95,000, said Eric Compton with the mortgage brokerage Salem Financial. The median household income in the Roanoke Valley is about half that.”
“Many buyers are from out of state, and for some of them, the holdup is their inability to sell their home in a depressed market elsewhere. For instance, 215 Stonewall is under contract to an individual who can’t close until he sells his $900,000 Florida residence, real estate agent Anne Huffman said.”
“Huffman, whose husband developed Ashley Plantation, said the downturn is at least partly psychological, fueled by a gloomy picture of the real estate market painted by the news media at a time when conditions in the Roanoke Valley are pretty good.”
“Of the 320 homes at Ashley Plantation, 36 are for sale. Of them, 24 are new and 12 are existing homes to be resold.”
“Ray Sprinkle, a Daleville real estate agent, said it would take 20 months to sell all offered upscale property in the $500,000 to $750,000 price range. ‘There’s just too much supply out there for the demand right now,’ Sprinkle said.”
“‘It’s taking longer to sell because there are more homes on the market,’ according to Eileen Chaladoff, VP of the Realtors’ association, citing 4,200 homes for sale in Monroe County.”
Hows that for wacked out logic? Notice they never attribute the exploding inventory to mispricing.
calculated risk did a nice explanation of the demand curves relative to real estate. Some people never learn. Its why after every overshoot we undershoot.
Got popcorn?
Neil
I read that CR post. Remarkable but his contention that we’ll only see 20% reduction in real pricing is questionable.
Replace questionable with stupid and you sir are on to something.
“There is no question the [Triangle] market cooled off,’ Vitner said. ‘It would be impossible for it not to. The newcomers are renting for longer periods.”
BWAHAHAHAHAHA. The newcomers are renting for longer periods. That’s a new one. You see guys, the problem with the market is that those damn renters won’t stop renting.
I still can’t tell: are renters good guys or bad guys?
Are they good because they pay rent to the speculators and investors, and help them pay their mortgages? Or are they bad because they won’t get off their fat asses and buy up the overpriced speculator inventory?
We is bad! Hee Hee!
About two and a half years ago we were laughed at because we were renters and were going to be “priced out of houses forever.” Now we are scorned because we are not going to finance someone’s retirement by buying an overinflated house. We were wise all along. Now it’s our turn to be smug!
Don’t forget renters throw money away. It’s not like they’re buying a good or service; they’re just throwing money away. Unbelievable!
A couple of comments here.
First, Bill, you also forgot that WE WILL NOT (underlined) also help pay off someone else’s 50K in CC debt, the 150K HELOC, junior’s college education, the Queen Mary II vacay, and the his and her’s escalades, while also helping them buy a nice 250K home somewhere outright with cash. Screw you. Should have lived within your means and saved or had junior and the missus get jobs.
Second, Muggy, I love how they think keeping a shelter and roof over your head is throwing money away, especially when rents are easily half of what a mortgage payment would be for me and my family here in South OC.
This is why this country is in the economic mess it is. People have forgotten what their grangparents went through with the Great Depression and WWII. On top of that we don’t produce anything but debt and pieces of green-colored paper with dead guys on them. To top it off we all want the lifestyles of the rich and shameless, but don’t want to work for it. We want it all right now, Right Now, RIGHT NOW, and we want it given freely to us.
Well, that just about sums up my rant for the day. Back to work!
While I agree that Americans are on a spending frenzy. It’s not entirely their fault. You can make more $$$ pushing paper or managing investments than you can producing a product. This is because if the fed’s interference in the market. It creates an artificial environment where nobody ever loses money . (Goldilocks Economy)
What’s really happening is the fed has driven the economy into a dead zone. Where nothing they can do will make a difference. Kinda like walking the plank on a pirate ship. The first couple of steps are great. It’s the fifth and sixth that you have to watch out for.
Yes…We renters are completely Bad to the Bone!
Traded in my good guy buyer white hat for a BLACK hat and a sly Smile.
(the villainous mustache is optional)
Ready to spit at Suzanne, the squirrels and throw the stale cupcakes at the hungry 6%ers and FB’s
It’s a love hate relationship. Reminds me of that new commercial for Reeses. “Peanut butter hooked up with chocolate. Peanut butter still talks to jelly, but the relationship is strained.” LOL
That reminds me: I need to buy and breed chickens because damn if I don’t keep throwing away money on food.
Actually I used to live there. That market is very different from the classical bubble markets. Lot’s of good paying jobs, plenty of people moving to the area and it never experienced much of a bubble. Low property taxes and insurance. You actually are throwing money away by renting if you can buy a nice 3/2 house on 1/2 an acre for less than $200K.
“Real estate agents overwhelmingly believe house prices will not rise significantly over the next year…”
I was looking for a footnote that might say, “Brought to you by the V.I. Lenin Institute of Journalism.”
“Will not rise significantly” means, to those potential homebuyers who learned English halfway well, that prices will not only — at worst — stay flat, but that the are likely to rise at a less-than-alarming rate. No mention of the possibility of falling prices, of course. How about the likelihood of falling prices? Too bad these writers in New Jersey don’t check in with Grim or one of our other NJ posters, for maybe a hint of balance in their opinions.
So true, and so few “get it” either. They spin and use propaganda nothing more, and the sheeple suck it down.
Anybody looking Jersey ought to keep driving. The state announced it is 58Billion underfunded for public pensions and healthcare costs. Jersey stopped funding its obligations in 1994. Now, ‘modifications” are pending.
“It turns out that New Jersey will need about $58 billion, in today’s dollars, to provide all the care it has promised its current and future retirees. That’s nearly twice the state budget and nearly twice the amount of its outstanding debt. And because of the step it took in 1994, the state has virtually no money in reserve to cover those costs.
In addition, New Jersey’s towns and other local governments owe about $10 billion for health care for their own retirees. ”
Articles mentions talk of selling the Jersey Turnpike to foreigners to raise ash. It’s a new world.
http://www.nytimes.com/2007/07/25/nyregion/25retiree.html?pagewanted=1&_r=1&hp
With these kind of debts and unfunded liability obligations at so many government levels, what kind of bonds does one want to own these days? Where is one’s money safe from the predation by deflation?
There’s no absolute safety, but Swiss government bonds are about the best you can do.
Thanks. Never thought of that and i do have a bank account over there so perhaps i will get some. I am really starting to get concerned about the global banking system and was thinking of buying more gold but this kind of diversification makes sense. If there is a downdraft of some magnitude then even gold ought to get trashed for awhile imho and i will keep what i have but don’t want it all in gold.
How does one go about opening a swiss bank account - BTW?
I guess depends where you live. If you are in a big city i presume you could look up UBS or SBC or perhaps even look them up on the internet and email them, even in Switzerland for information and to try to establish a connection. I am in Canada and do my banking by phone as required and in addition my banker comes to my part of the country a few times a year so i can meet with him and add to my funds over there. One can trade literally any market through them but i am not a trader and usually look at these funds as insurance and take longer term fundamental positions with them. Hope this is of some help to you and perhaps others have better information on this.
And things in the Golden State not looking good either.
“Foreclosures soared to 17,408, for the three months ended June 30th, an increase of 799% from the same period last year. The current rate handily exceeds the previous foreclosure peak set in 1996, when the state was in the final throes of a 6 year slump.”
http://www.latimes.com/business/la-fi-housing25jul25,0,2714634.story?coll=la-home-business
i was just about to post the same thing. wife and i were thinking of buying in NJ in a few years, no way. i wonder what the taxes will be like there in a few years?
My recommendation: New Jersey municipal bonds and US Savings bonds, then you won’t even care about the taxes there in a few years!
More importantly health care. Pretty expensive for NJ and NY form what I heard.
I’m wondering if state government fiscal health will start to become a more of genuine consideration for folks making relocation decisions. I guess it’s already part of the equation of out-migration from Cali and Florida.
I wonder if anyone has done a ranking of states vis-a-vis debt/obligations per capita, or against overall state income. I guess a lot of states don’t — or can’t — run debts like the federal government can. But, instead — they hide them by underfunding future obligations.
Nice weekend topic discussion one of these days — what states (or even cities) face hard ecnomic choices ahead? Who is going to have bite the bullet and raise taxes, or seriously cut spending in a painful manner? And how will such issues relate to housing?
Nobody gets it anymore.
We cant live under old union rules……you can’t work 20 years and retire it has to be increased to 25 or 30 years before you can collect a full pension.
Not only are we living longer then 30 years ago….but the BIGGEST change is the level of smokers entering the workforce.
Face it Non Smokers live longer and draw out more pension money so you have to make all employer fund a good percentage of their own plan. Smokers die quicker and that was calculated in the pension actuaries.
I read somewhere that over 60% of GM workers smoked 30 years ago now is like 15% of the new hires.
I wonder if the actuaries took into account all the expensive modern medical care given to prolonging smokers lives ?!
Maybe thats a part (just a small one .. greed still rules) of the reason for the crazy high yearly health care benefit increases.
I know its always chaffed me raw observing people who self inflict damages upon themselves knowing the US med system cannot refuse them care, like smokers, drinkers, drug users.
Whenever I see a wino stumbling down the road I think ” there goes another $200,00 in wasted health care ” that could have gone to some deserving person. Probably even more when you figure in ER runs.
I’m sure no one here wishes ill health on another, but daggummitt why the hell do I have to pay for another persons INTENTIONAL bad heatlh choices? Our countries safety nets have been abused by the scammers who put the word out it’s free lunch time in the ol US of A !
I say the HELL with personal responsibilty, lets all just go out, use fake common names, party hearty, and let the govt clean it up. You feel like a chump doing the right thing when all yer hard work & responsible living amount to a hill O’ beans compared to Mr/Mrs scammer.
Drugs, cars, & mortgages for ALLLL yeeehaaa !!!
HEY, gimme back my soapbox ….. ( ok rant off )
Yo Soapbox.
They at least raised the taxes on cigarettes to help cover the end of life care.
How about this crap, I don’t qualify for healthy New York, low cost health insurance because i have too much money in my IRA account….Never mind i have to struggle to pay the rent each money and Con ed wants to cut off my juice.
aNYCdj
I’d offer you my soapbox to lug some old school record albums to gigs but I venture that modern CD’s & MP’s are easier to move.
If you dont mind the question - how old are you, anyway?
You seem pretty down to earth for the typical DJ type … if there IS a typical type.
(no dusk to dawn gigs sleepin in till noon schedules)?!?
Here at a small city in Ohio all new hires at the hospital have to be non-smokers. They will have random testing and the contract they sign says they will be fired if they smoke. It doesn’t apply to the employees already employed, but the whole hospital grounds is smoke free. If you’re caught smoking on the grounds or even in your car on the grounds, it’s immediate dismissal.
Aqius,
If You’re going to Get on Your Soapbox. At least have enough sense to know what You are talking about.
If You honestly believe the ” Smokers, Winos and Druggies are the reason Health care is so High, then You Know nothing about the way things work.
Regardless of what a person does, People will Need Healthcare, Gasoline, Food, Electric, etc,etc,etc.
Anything People can’t live without will always be exploited by the Government, Corporations, and other Greedy entities to ” Make Big Bucks” . it’s a Fact of Life Get over it and stop Blaming
the ” Little Guy ” because You think they “Cost You Money”.
I’ve Smoked and ” Drank Moderately for 30 Plus Years”. I’m in better shape than Most people 20 Years Younger then Me and a lot better off then the 20% of my High School Buddies who were Health Nuts and Already Dead. I’ve Never spent one Day in the Hospital for anything other than an accident.
Now about Money. I’ve spent Over a Million Dollars enjoying Life with My Smoking and Drinking, and that has Pumped a lot of Tax Money into the Economy, Kept the Cigarette and Beer Companies in Business making Huge Profits, which have paid others wages, circulated More Money Back into the Economy to ” Make Many More Millions in Profit and Taxes so ” I can Help fund Your ” I sit at Home and don’t spend any Money because I am a responsible Cheapskate “, whiny a**.
Fact is, the Number one Killer in America is Stress. The Government is going to take More and More of Your money every year until You Die. You probably won’t be able to stop them. So, Stop Stressing, Live Life, Love Yourself and others, and stop Blaming the Wrong People.
Rant Off.
Now I’m going th the Bar, Drop a Hundred, Tip the Waitress so she can buy Her kids Food, and keep the 50% Sin Tax in Florida going so I can do my share to keep Government going and Help subsidize the Economy.
Party On!
well now marionsucks
interesting you comment & bitch about things but dont take the time to read CLOSELY the items upon which ramble.
My post said ” wonder if the actuaries took into account all the expensive modern medical care given to prolonging smokers lives ?!
Maybe thats a part (just a small one .. greed still rules) of the reason for the crazy high yearly health care benefit increases.
Notice the ” JUST A SMALL ONE ” part ? That applies to you & yer self rightous I’ll-do-what-the-hell-I-want, when I want, and the rest be dammed attitude you carry around like a chip on your shoulder.
You drink in moderation? Well LA DEE DA - again the comment of ” wino” doesnt apply now does it ?
You smoke often? Hey, fair enough, but the fact that you’re still in good health makes you a very small LUCKY statistic, probably due to good genes & and a less than totally effed up lifestyle, vs sitting at home in a double wide hacking out phlegm to Jerry Springer.
As far as me sitting home on my whiny azz, the reason of the 2 hr delay response to you was on account of a bike ride down the american river trail. So again yer full of sh*t !
You want to brag about all the money you generate with your vices … well, those figures don’t mean SQUAT when yer lying in an ICU bed suckin O2 thru yer trach tube to the tune of $10,000 a week, so spare me the diatribe.
Again, the point of my rant was for the people who …. wait for it …. WAIT FOR IT … are irresponsible about their health.
That obviously doesnt apply to you so much,- now go belly up to the bar, tip the stripper, and shut yer piehole with a cancerstick you relish so much. And feel free to jog both ways, superman !
hmmm, is marionsucks German? All his/her nouns are capitalized for no apparent reason…
you go marion
Aqius,
The reason I “commented ” on Your post, was because You sounded like a million other ” self-rightous I am religious, don’t drink , don’t smoke, don’t do anything dangerous, don’t eat meat, drink soda , etc,etc, etc” and ” I am tired of paying everyone else’s way because I don’t spend one penny that I don’t have too and I order water at Restaurants because I am cheap, but I use the ” because I am Health conscious” excuse.
I’m am only stating Facts. I am not a health nut but I am healthy. I’ve had people tell Me it’s only because I have Good genes, but I was the ” Black Sheep” of the Family and I am one of the Few that hasn’t had ‘ Numerous Health problems”.
Some examples……. My Dad and mother. Never smoked, drank and always exercised, ( Dad was a Bodybuilder for years). Bad Heart at 50, colon cancer, skin cancer, and too much to mention, over 50 surgerys, Mom gloucoma , cerebal palsy, nerve damage,vein and brain damage. Uncle, cancer at 29, grandpa cancer, aunt hardening of the arteries, heart disease and cancer.
Not in immediate family, Brother in law, dead at 34, ( Brain Tumor, other brother in law, Brain Tumor, 50 ( still fighting). 6 People in my graduating class ( 34 people) Dead by Forty, (Heart disease and cancer ) , all leaving behind “Millions of dollars of Medical expenses.’
These were all ” health conscious people’ Yet most were
dead long ago. If You believe the Health Guru’s , the only 2 things that won’t kill You are ” toothpaste and cotton Balls”.
I’m not saying , screw it , I’m going to drink, smoke and eat 24 hrs a day cause I’m going to die anyway. I’m just saying , Stress will Kill You faster than anything. Enjoy Life a Little and You will Live longer, if the mind and body are Happy they can fight off disease better. If not You’ll leave a good looking corpse and have lived a lot more fun life.
Ragging on Smokers, or drinkers won’t bring down Medical Costs. If everyone in America quit Smoking tomorrow, I can Guarantee ” hospital Bills won’t drop a dime.”
Lighten up on others and Be Happy.
Look, I am originally from NJ. The tax burdens created by these pensions and the unions is insane. Reading up on it is insane. You think CA is bad. NJ is 3X worse. Heck, on a million dollar home in CA, you will pay 11 grand a year at 1.1%. That same million dollar home can cost you upwards of 20-3 0 grand in NJ, dep. on county and town you live in. Nuts, just nuts, I tell you. At some point this thing is gonna collapse on itself and when it does it will not be pretty. Even if the worst is a ‘modification’ it still will not be pretty.
Selling the turnpike to foreigners to raise cash is a nifty idea. While they are at it, sell the whole northern half of the state off to foreigners. Heck, while we are at it sell the whole damned country off. We are slowly getting there anyway. Let’s just do it and be done with it!
Ohio had been talking about selling the turnpike to foreigners. They must be approaching every state with the same thing.
Selling the turnpike to foreigners to raise cash is a nifty idea. While they are at it, sell the whole northern half of the state off to foreigners. Heck, while we are at it sell the whole damned country off. We are slowly getting there anyway. Let’s just do it and be done with it!
The say you can judge the direction of a society by the quality of it’s coinage. Take a good look the quarter in your pocket.
In 1964 it was 100% silver. Today-no better than a Mexican ten-peso piece.
I am counselling my son who just graduated from Rensselaer
Polytechnic, with an honors degree in Mechanical Engineering that he best be giving serious thought to immigrating to Austrailia, New Zealand, or France.
Damned if I’ll have him taxed to death to pay for the legions of early retired government gold-bricks and welfare cheats.
The US is nothing more than one huge Ponzi scheme which is just about to come undone.
“Damned if I’ll have him taxed to death to pay for the legions of early retired government gold-bricks and welfare cheats.
FWIW, Oz, NZ and France are no better in this regard.
emigrate. Hate to pick, but while I agree in principle that the deteriorating coinage is a symptom of the economy, the source of that and many other problems (coming off the gold standard) is just one of many financial evils plaguing this country right now.
hd74man
Congrats on the son’s graduation !!
I’d much rather have a child graduate from a real college, like yours, than one like Lindsey Lohan, graduating from rehab every month, no matter how famous or rich.
Again, congrats to the Proud Papa !!
I was figuring this out awhile back. All of the annual real estate taxes in the state (if you figure the average is $5,000/yr) don’t even cover the annual pension for 220,000 retired school teachers. Nevermind other public servants(?) wages or pensions. Sounds pretty bad to me.
Anyone find an article with more data on other state and local govts? I had read somewhere that IL was one of the most underfunded.
Article says TX doesn’t want to disclose its liabilities. I assume the law requires them to do so anyway?
Does NJ still have the same setup for new employees?
Do these plans stop and medicare take over at age 65?
“Article says TX doesn’t want to disclose its liabilities. I assume the law requires them to do so anyway?”
It’s actually a change pushed through by GASB, kinda the governmental and non-profit equivalent of FASB, that requires them to disclose those liabilities now. The lawmakers, believe it or not, are against requiring the disclosure. It’s pretty bad when the accountants look like the more ethical party. (I say this as a former accountant at a Big 5 (now 4) firm.)
“The imbalance between what is owed and what states can afford has grown so big that some officials in New Jersey, as in many other states, say they now view a national health care plan as the only realistic long-term solution.”
HAHAHAHAHA. THe only realistic solution is to do the same damn thing on a national level. Where the hell do they get these boneheads. uhh, oh, yeah, the people elected them. LOL
Interesting. Central NC (my old stomping grounds) is one area that hasn’t experienced much of a price increase at all relative to inflation. Additionally NC is supposed to be where most of the Florida exodus is going to, and thus should be driving up demand.
If there are now problems in central NC, then that means the housing market trouble is now *really* starting to hit non-bubble areas too.
In other words:
Economy: “Look out below!!!!”
I lived in the RTP area a while back(1997 to 2000). While house prices there were pretty stagnant the trend they did pick up on was building BIG houses. So, while house prices weren’t going up all that much house sizes were, and, of course, they were being financed with the same flaky mortgages the rest of the US of A was using. When we bought our house in 1997 (3/2 on 1.5 acres for $135k) the mortgage broker had all kinds of “options” for us. We said no thanks and took the 30 year fixed with 20% down(in retrospect a flaky 2/28 mortgage would have been fine - we moved in less than 2 years).
Even back then we had all kinds of folks trying to tell us what we could “afford”. So, the RTP area wasn’t necessarily the typical “bubble” market, but the shoehorning of people into big debts was going on there just like everywhere else. What people still seem to miss is that the bubble was nation wide and it was a debt bubble, not a “price of house” bubble. People all over the nation were borrowing more money than they should have been, that’s the bubble.
Yep - I agree.
That’s why it is slowly becoming apparent (to non-HBB folks anyhow) that the economic “recovery” from the 2001 recession was mostly smoke-and-mirrors. It was fueled by debt, not by real productivity increases. Or should I say - there were productivity increases but they were in producing things that we don’t really use, like empty houses. That’s why unemployment numbers and even GDP can be misleading when using them to gauge economic strength - it’s not how much you’re producing that’s important, but instead how much benefit it contributes.
For instance, 215 Stonewall (near Roanoke) is under contract to an individual who can’t close until he sells his $900,000 Florida residence, real estate agent Anne Huffman said.”
ROTFL. I hope Anne hasn’t already spent what she expects to make as her cut of the commission!
$27,000 ain’t bad for a dozen hours worth of work.
“Here’s one reason buyers are few: To buy a $600,000 home, a buyer would need at least $120,000 cash as the down payment. Then, to cover the roughly $3,500 monthly mortgage payment, the buyer would need a pre-tax, household income of about $95,000, said Eric Compton with the mortgage brokerage Salem Financial. The median household income in the Roanoke Valley is about half that.”
—-
Sounds almost reality-based, coming from a broker. Until you do the math, right? How do you make 42K in annual mortgage payments on 95K income??? Is that the new normal? 50% on keeping a roof over your head? Some schmucks would like people to buy that, maybe.
Not only that, no mention of tax, HOA or insurance, which would in most areas add a good $800 a month to a $600K home or around 4300/MO. At over 100K I would be freaking out if I had to come up with those kinds of payments each month. What if I lost my job? Yeah, the 95K estimate is really hopeful. Try $150K / Yr(Assuming 20% down)
Not to mention it was pre-tax 95K. So that’s maybe 75% on payments?
“Sounds almost reality-based, coming from a broker. Until you do the math, right? “
I agree, but at least they attempt to do some math, this is better then “Don’t worry, you can refinance in a couple of years” snakeoil they have been selling
Maybe he meant $95K per quarter.
Yeah, $95,000 translates to like $60,000/yr take home, maybe $65,000. That’s no more than $5,500/month. subtract $3,500 and you’re down to $2,000 left. last I checked, my bills on my small cape cod style house, with no car payments and no CC debt or anything is like another $1,000/month not including mortgage, and I’m not extravagant. SO now we’re down to $1,000 left for food and gas or about $250/week. Most people drive not so fuel effecient cars for figure $50/week gas or $100/week for two cars, and we’re left $150/week for food, clothes, medical co-pays, entertainment etc.. for let’s say a family of four. Doesn’t sound like those numbers work at all under a normal system.
I guess if they have car payments they’re TOTALLY hosed. Not that that they weren’t totally hosed before.
And if they want more than one happy meal a day, they’re equally hosed. what is this asshole smoking………95K a year sounds like about 130-140K mortgage, IMHO.
Seriously. When I bought my house for 93K I made 43k. Now I take home 82k, and to be honest, I wouldn’t want a corresponding mortgage. What’s left on my mortgage is like half of what me and my wife now bring home, and I still can’t see us out buying Hummers or constant Disney vacations. Disney sucks anyway.
I heard someone say actually about three or four years ago that millions of people are literally a leaky roof away from bankruptcy.
Much truth to that statement.
Look at all the blue tarps on the roofs in FL.
Everybody’s expectation was the FED government would go good for the repairs
We make $86,000 a year and bring home $4800/mo net. No way would I even want to make a $2000 house payment. And people scratch their heads and wonder how they got into financial trouble.
Hmmm…assuming GH’s $800 in taxes, HOA, etc, for a $4300 a month payment, I come up with $184k pretax salary .
42K in annual mortgage payments on 95K income???
Even worse as he said,”"
“Here’s one reason buyers are few: To buy a $600,000 home, a buyer would need at least $120,000 cash as the down payment. Then, to cover the roughly $3,500 monthly mortgage payment, the buyer would need a pre-tax, household income of about $95,000, said Eric Compton with the mortgage brokerage Salem Financial. The median household income in the Roanoke Valley is about half that.”
Print-media statements like this are about as rare as those old postage stamps with the upside-down airplane. Refreshing to see, nonetheless.
So you’re saying we need a stamp with an upside down house?
LMAO!
I think we need a stamp with an upside down flag.
I think we need a stamp with “Foreclosure” across the front, so people can use them to send their keys back to the bank.
All of these can be arranged via some Photoshop skill and a custom stamp printer like http://photo.stamps.com/
maybe I’ll draft up a couple for the weekend threads.
“the buyer would need a pre-tax, household income of about $95,000″
I think that Eric neglected to put a digit into his calculation. More like $195,000 (or 3X income, a very reasonable estimaton for an affordable home). He is suggesting a ~500K note with a ~100K salary? 5X income??? Since when is that normal?
Yeah — NYCJoe picked up on it and I didn’t. I was so surprised to see a “negative” view that I didn’t run the numbers. 5X income is toast. When I was young, just 3X income meant few dinners out.
You are so right.
Yes, even 3x is pushing it. I did 2.2 times and there wasn’t a whole lot of money left over at the time. Maybe $700/month left (1996), but a young single guy (even if he is cheap as hell) can go through a lot of that pretty fast. At the time I’d say I regualr saved about $400/month, maybe. I know my bank account always went up during tax season.
What a bunch of crap. A 95K income cannot support a 480K mortgage, pay RE taxes and hazard insurance. gross monthly income $7,920, P & I (6.5%) $3,033, taxes at 1% $500, haz ins $100/mo (probably more) =$3633/mo = a 46% PITI - I do not believe anybody other than subprime would be so foolish. The approximate income for a prime loan would be $145K/yr.
At one time, several houses ago, we had a mortgage that was three times my annual income. It was the tightest financial period in our lives. I cannot imagine a mortgage that’s five times one’s income.
The growing illiquidity in real estate markets is really starting to show. Usually in declining and illiquid markets once a (down)trend is established it becomes self reinforcing. It doesn’t take much of a stretch to envision some air pockets so that perhaps soon more and more properties market “values” will fall (significantly) below the underlying mortgage obligation and in such an event one would think that some of the “owners” of such properties could easily turn the keys back to the lender and walk regardless of their ability to pay. Should that happen then the real declines ought to set in and become self reinforcing for some time yet. Remember that the three times income rule still fundmentally prevails as and against price and most of these markets are so far out of whack from this kind of valuation that things could really start getting ugly from here on in.
About 7 or 8 weeks ago, I recall a Bill Fleckenstein column that predicted in about 3 or 4 months time the mortgage market would “seize up” and essentially come to a halt.
I think most of us would believe that. When? Maybe when Bill suggested. Maybe later. I know when the ball gets rolling it will crush everything. Its going to be very tough to restart the system…
Got popcorn?
Neil
If that was the case, then could that impact the rent market ? ie/ upward pressure.
“…could that impact the rent market ?”
I suspect that in some areas it’s possible, but here in Florida there is so much speculator-owned inventory that I doubt prices will rise much, if at all, for a long time. During the past year here in central FL, we’ve seen rents dropping instead.
I’m going to poke around over in Sarasota in a week or two, to see what rents there are doing, should the place I’m in become unavailable. I don’t mind living in a nice condo and suspect that there are increasingly good deals over there.
In my view, I always saw any loan, regardless of its initial interest rate, length of term or reset schedule as being a abjusted variant of the traditional 30 year mortgage. However one cuts the pie, the dollars required to fund the loans will average the 30’s price. With tightening rules, the mortgages will slow to a trickle - “..this is the best time to buy a house in the past 30 years, Meszaros said.” - be damned. The real declines you speak to will be the result of the slow, building erosion of value throughout all levels of housing. When we get to the hard bumps of price resets is anybody’s guess, but it will be longer and more crushing than most guess. It will just go on and on and on, thru ‘08 then ‘09 and til when?
Remember that the three times income rule still fundmentally prevails as and against price and most of these markets are so far out of whack from this kind of valuation that things could really start getting ugly from here on in.
Always thought it was 2.5X…
“Here’s one reason buyers are few: To buy a $600,000 home, a buyer would need at least $120,000 cash as the down payment. Then, to cover the roughly $3,500 monthly mortgage payment, the buyer would need a pre-tax, household income of about $95,000, said Eric Compton with the mortgage brokerage Salem Financial. The median household income in the Roanoke Valley is about half that.”
Is this a joke? $95,000 household income for a $600,000 house? Right…
They would be spending around 50% of gross income on housing per year. What a disaster.
That is pretty funny. Even with his twisted logic, he concludes that homes are unaffordable by as much as 2x. LOL
Yeah and I’m sure lots of buyers are ponying up that $120k for a down payment. If you’re crazy enough to buy into today’s market, you should at least be smart enough to go 100% and let the bank take the risk.
Well that is a luxury house so the median buyer would not be in the market for it. It is still probably unaffordable to the target demographic but a median person should not be buying a 3000 square foot house in a gold community.
JJ,
I agree. I won’t want to beat on a Realtor ™ just because he can only admit homes are overpriced 50% rather than the 60% to 70% they are…
As another poster noted, illiquid markets develop downside momentums of their own. Once J6P knows home prices are falling… they will fall for 9+ months *after* they get to rational values.
Oh… in this case I admit “9+ months could be ~36 months.” The bottom isn’t before 2011… so no rush to predict exactly when it will be. Just don’t buy before December of 2009… you’ll feel like you were the recipient of that Joshua tree if you do.
Got popcorn?
Neil
Okay, that didn’t work. What should have appeared in the block quote box was this:
“Considering the current interest rates, inventory of homes and the buyer’s market, this is the best time to buy a house in the past 30 years, Meszaros said.”
The first comment was my response to the above quote.
this is the best time to buy a house in the past 30 years, Meszaros said.”
Not.
It may be the best time for some knife-catcher to throw commission money Meszaros’ way, but we’ve got a way to go before we get to real-time affordability.
What’s sad is that any Realtor knows without a doubt that this would be absolutely the worst time to buy a house and to tell anyone otherwise slaps in the face of ethics. Be interesting to know the quantity of Valium required to sleep after closing a sale in todays market?
Sarah in DC: You beat me to it. The quote you respond to (see below also) is just total bull. I got a 30 year fixed rate mortgage at 6.5% (no points) on a Metro DC condo priced at 110k in 1998. Today you can get the same mortage product BUT the condo now goes for 350k. This is NOT the best time to buy in 30 years, the quote is TOTAL BULL!!
“Considering the current interest rates, inventory of homes and the buyer’s market, this is the best time to buy a house in the past 30 years, Meszaros said.”
Off topic, this $2 billions project is scheduled for completion in March 2008. The construction started in 2004. When the boom was in high gear and the flow of credits seemed endless.
http://www.nationalharbor.com
National Harbor is located in Prince Georges County, MD just south of DC. What are the chances of success? I posted a similar but smaller project last month on this blog (konterra.com).
Realtors = Swine
‘Introducing National Harbor, the place that changes everything. How you live. How you work. How you shop. How you play.’
It’s both a floor wax and a dessert topping!
“It’s both a floor wax and a dessert topping! “
LOL!!!!
“the place that changes everything. How you live. How you work. How you shop. How you play.’”
Yes, you live hand to mouth since your mortgage takes everything, you work two full time jobs and deliver papers in the morning, you shop at the thrift store, you play “Please someone take this dump off my hands”
Looks like an attempt to copy the success of Baltimore’s harbor area (the only (very small) part of downtown Baltimore that doesn’t look like a pit abandoned by God* and man), but without government support.
PG County is famous for being the home of a large population of middle class African-Americans. Blacks have ascended to all levels of government there. In their terms it is “our county–our chance to prove ourselves.”
Given that, I personally would be superstitious about trying to repeat a Baltimore Harbor, which was white money to attract white business travelers while completely disinvesting in the rest of the mostly-Black city. For example, a former governor chose to spend millions to steal a football team (The Ravens, stadium convenient to the Harbor) but in the same year underfunded the Baltimore public schools. PG County is in the same state–probably only a 45 minute drive away, but it was almost ten years ago and memories are short, it seems.
*-being facetious, of course, as I do not recognize any gods
gubermint be good work-don has to work much an NOone ever gets fired
PG county is deadly, especially the schools
Considering that most of the (non-government) well-paying jobs are in Virginia, a person considering whether to buy at National Harbor should try crossing the Wilson Bridge a few times during rush hour before making a decision. I guess when the new bridge is finished it will be better, but that’s still a hell commute around the Beltway. And all for the pleasure of living in, um, Prince George’s County. I mean, who doesn’t want to live there?
I just came back from a NY to DC trip. Spent one hour on 295 at the approach to the Woodrow Wilson Bridge, about 2.5 miles.
I lived in PG — sorry — ‘Prince George’s’ County for 10 years. There’s a reason why homes in this county average $200,000 less than right-next-door Montgomery County. There’s also a reason why PG hasn’t attracted any upscale shopping or dining. This huge monstrosity of a commercial development is way, way out of place.
For what it’s worth, there is a Gaylord Hotel there (the same folks who run a huge hotel/convention center at Opryland and elsewhere) that is already well-booked for convention business in its first years - so there is one aspect of it that may do well.
It’ll be intesting to see how the residential component does, though. Different groups have been working on a project here for a couple of decades (it was first envisioned as “Port America” a long time back). They sure would have done better completing this five years ago.
“Sellers, she added, are reluctant to lower prices. ‘They’ll start at $679,000 and when it doesn’t sell, they’ll go to $650,000, when they should have been at $619,000 to start with,’ Lanterman said.”
My friend finally sold his house that he listed in January this year. Started at $279K, itty-bitty price cuts til it finally sold for $242K a few weeks ago. But $242K wasn’t the real sale price - it’s the price that will show on the comps. There was a $7500.00 cash back to the buyer at closing.
He was one of those sellers anticipating the Spring Bounce that never happened.
(But $242K wasn’t the real sale price - it’s the price that will show on the comps. There was a $7500.00 cash back to the buyer at closing.)
Amazing.
…and a fraud perpetrated on appraisers who work the area and, if there’s a mortgage, almost certainly on the lender. Wouldn’t it be simple enough to have one extra statement at the closing, to be signed by the buyer and the seller and distributed to all parties, that all numbers in the transaction match — that there are not two sets of records and no unrecorded disbursements?
There was a time where it was illegal to give cash back to the buyer. You couldn’t even get a gift of the down payment from parents or anyone. If it wasn’t in your bank account for 6 mos. prior to purchase, they wouldn’t approve the loan. They also checked your bank records to make sure you didn’t get a large deposit somewhere along the way that you couldn’t prove was money you earned on your own. Of course at that time you had to have 20-33% down too.
Did you think he was realistically priced at $279K, or did you think he was crazy to ask that much? Do you think $235K is still more than it was worth? Just curious, because I’m still surprised at what people think their houses are worth out here.
$279K was not a realistic price. It’s the price the realtor who was selling him his new home came up with in order to sell friend the newer house. In other words, $279K is what friend needed in order to make purchase of new home comfortable for him.
So, how does his being about $45k short of feeling comfortable play out?
“Steve Meszaros, treasurer of the Maryland Association of Realtors, said some people, often driven by media reports of doom and gloom in the realty market, are holding off. ‘They think that since there are more foreclosures, they will simply wait for one and get a house at a lot less price,’ he said.”
Steve, these folks ‘KNOW’ that prices will drop … they are not just ‘Thinking it’.
what a difference a year makes!
my co-worker and my mother both mentioned the implosion of the mortgage market this morning
and both said wow you said this would happen awhile ago
can i take off my tin foil hat yet?
Nope. It sure looks like it may be time to start polishing it up again and maybe even putting some flashing lights on it. This declining liquidity and declining price scenario in real estate and (all) credit markets looks like we may not have seen anything yet.
Where do you get TIN foil these days? The CIA is still speaking to me through Aluminum foil.
What is it saying to you?
MGNYC, I’ve been blabbing about this ever since I stumbled upon Ben’s blog last year. Just this morning, my buddy’s wife opened the LA Times and said, “Hey, Lionel was right.”
If I was going to buy I would choose these no risk states, Massachusetts, New York, Ohio, Pennsylvania, New Jersey, and Maryland. Because you can’t go wrong you can sign on with greed in mind to make big bucks, buy at the wrong time with the wrong loan in the wrong market and come out smelling like a rose on the tax payers dollar.
I guess the State Gov got a little glimpse of the truth from the RE lobby and they had to run to the bathroom to empty their underwear….and decided a 500m buy out would solve this trillion dollar issue….brilliant!
http://efinancedirectory.com/articles/500_Million_Dollar_Bailout_Extended_to_US_Mortgage_Borrowers.html
Weeee…..
The funny thing is many intend to fund this brilliant idea with..(drum roll please..).. BONDS. Doh ! what do you mean no bids for bonds backed by property.
Bhwaaa.
Huffman, whose husband developed Ashley Plantation, said the downturn is at least partly psychological
This one basic truth, somehow invisible to most of our population, could have prevented this entire mess. And it will fix this entire mess.
I am not an economic expert, but c’mon people… #1 driving force = supply and demand. Supply is real. DEMAND is purely psychological (with regard to luxury housing, at least).
Most of human existence is purely psychological.
climber, you have a fan:
Bernanke says managing perceptions important
Fed chief tells Harvard audience investors expectations affect inflation
http://www.msnbc.msn.com/id/19696660/
One can THINK oneself out of a foreclosure?
But I object to the fact that the boom years in housing were based on real demand . Real demand would be a willing and able borrower buying a home to live in long term that they can afford long term . Speculation would not exceed 10% in any given area because those long term landlords would only buy usually if they could cash flow or make a profit monthly .
The demand for housing from about 2003-2006 was based on a high % of speculation buyers and sub-prime buyers who were looking at short term gains based on real estate going up .The builders took out permits to meet this false market demand .
I think everybody in the United States should have a class action law suit against the industry for putting unqualified buyers/speculators into housing with fraudulent loans /appraisals that created a artificial fake market ,that raised costs for everyone . The market is not crashing because of job loss or a recession but rather because of a fake speculation RE market that was marketed and financed by the RE industry/Wall Street , based on unqualified buyers .
I could never get it out of my head that the secondary market were buying these low down junk loans until it came out how they were rating this junk paper.
As far as I’m concerned ,some serious crimes have been committed against the citizens of the United States . Along with that the fake market made criminals out of alot of normal people , who became willing to commit fraud on their loan application in mass numbers ,because the industry was endorsing it and even encouraging it ,based on fake spin and real estate and loan myths .”Get in now or be priced out forever ,” is a fear tatic ,along with ,”You can’t afford not to buy .”
Do we go ahead and dream up bailouts for a industry that failed to do their duty, or do we define what really happened and make the right parties pay for the horrible downside of the fake market that is crashing ?
IMHO this RE investment scheme ,that became a mania on a National level , will never be resolved in a just manner ,because it’s just to big .Maybe the History books will call this market what it was, but right now everyone is skirting around what really happened with this real estate market .The out of control RE market really was a big crime on a mass level without one check and balance system stopping it .
I would have to guess if some sort of trials were held and in the end RE shills from the NAR as well as some state level NAR people along with some Wall Street big whigs were hanging from gallows and telephone poles by their necks, it might actually sink in to those types that it might not be wise to engage in such practices. Unlikely that would ever happen. Better to focus on alleged dead beat parents (most the men they focus on) and get those little guys that hardly make a blip on the national radar screen rather than these moneyed scumbag assholes that wreck an entire system for everyone.
I think so much of the PR that is going on now is to define the bust of real estate in terms of some out of the blue unexpected event ,rather than the crimes against our society that this appreciation run-up was .
Question regarding PMI. Since the first time I purchased circa 86 (clueless borrower by the way) I have avoided it as if it was the plaque. It was my understanding that at any point after closing and incurring PMI you could have your home re-appraised, and if the appraisal (bank approved appraiser) showed you had 20% equity you could lobby the bank to drop the PMI.
My question … if properties continue to deflate in value can the banks potentially do the inverse if your equity slips below 20%?
Good question! I’m guessing no, but that’s pure speculation on my part. That would require the bank to do actual work - to get your house re-appraised, or to look it up. Banks don’t like to do work. They just like you to do the work and give them money.
IMHO , the banks can’t put PMI insurance on your note after the fact because the original contract prevails . In the course of a long term loan there can be many times in which the value goes under the original terms of the loan. While the banks have alot of clauses in the original loan contract to call the note ,I do not believe they can demand PMI insurance after the fact .
No, Ms. Anne Huffman, it isn’t “psychological”. It’s 100%
“financial”. People who bought your husbands over valued sh*tboxes do not enter foreclosure because they feel they have made a mistake. They go into foreclosure, destroying their credit and in many circumstances their future, because they cannot afford the ridiculous prices. People do not refrain from buying property for psycholgical reasons even though the realtors and mortgage brokers and greedy developers use it as an excuse. Once people get over the sudden adrelinin rush to riches these booms and busts generate, they start to think. The result being that those people who are not (A) Financially naive or (B) Greedy speculators, sit down with pencil and paper and figure out the numbers do not add up.
To mis-quote a character in Charles Dickens novel, David Copperfield, who was always in financial trouble: “Income $5, expenses $4 - happiness. Income $5, expenses $6 - Misery.”
http://money.cnn.com/2007/07/25/news/economy/homesales/index.htm
“Although general buying conditions remain favorable for long-term home buyers, it appears some buyers are looking for more signs of stability before they have enough confidence to make an offer,” said Lawrence Yun, NAR senior economist, in the group’s statement.”
Hello Captain Yun, Earth callling…… We’re not looking for stability, and we have plenty of confidence (and patience).
“Here’s one reason buyers are few: To buy a $600,000 home, a buyer would need at least $120,000 cash as the down payment. Then, to cover the roughly $3,500 monthly mortgage payment, the buyer would need a pre-tax, household income of about $95,000, said Eric Compton with the mortgage brokerage Salem Financial. The median household income in the Roanoke Valley is about half that.”
Oddly enough it’s always been this way, just no one considered it. I guess they thought the 1 or 2 year teaser rate would for some magical reason last longer than one or two years. Funny how that happens, the expiration date approaches, and then the teaser rate expires. Odd. How can something like that happen?
They were all told “don’t worry, you can just refinance”. Assuming they even bothered to notice they were on a 2/28 at all, of course. I’ve seen a ton of quotes from these wizards who were convinced they were on a fixed rate.
‘They think that since there are more foreclosures, they will simply wait for one and get a house at a lot less price,’ he said.”
“Considering the current interest rates, inventory of homes and the buyer’s market, this is the best time to buy a house in the past 30 years, Meszaros said.”
So this dipstick believes that buying now at a much higher price and higher rate is a better deal than purchasing 4 years ago at a lower price and lower rate? This guy’s not even qualified for a job at McDonalds.
But he’s the treasurer of the MD Association of Realtors.
Isn’t it about time for a FunYun? The wackadoo has been mysteriously quiet. I long for for another outlandish statement from him.
Steve Meszaros, treasurer of the Maryland Association of Realtors, said some people, often driven by media reports of doom and gloom in the realty market, are holding off. ‘They think that since there are more foreclosures, they will simply wait for one and get a house at a lot less price,’ he said.”
No, Steve. Houses are overvalued. I’m not going to buy one until I can afford the right one. If that’s never, (”priced out forever, oh noes!”) then that’s never. I’m certainly not going to buy into the fallacy that I need to buy more than I can afford (giving you a fat juicy commission), feeding my kids meatloaf made with cardboard pulp, and just “hold out” until my wages catch up to my negative amortization.
Ben, serve us up an order of FunYuns. He’s talking again.
http://www.msnbc.msn.com/id/19953440/
““The downside is, the soft market is limiting the financial gains and hampering the plans of luxury homeowners”
That is just so sad…sniff sniff! What is this country coming to, when luxury homeowners have their financial gains limited by market conditions. *Sob* *cry* *cry* *sob*.
“Many are betting on the downturn to be temporary. Crews have begun construction”
Good call…all indicators are showing that we are the bottom, and it’s all up from here! Build, build, build!
“Here’s one reason buyers are few: To buy a $600,000 home, a buyer would need at least $120,000 cash as the down payment. ”
Under the old DTI “front end” ratio (1/28) and current interest rates, you would actually need a yearly gross income of $130,000. If you went 100% financing with a 8.5% piggyback, you would need a yearly gross income of $169,000 a year.
Or you could gross $50,000 a year and lie about, err, I mean “state” your income…
Existing home sales down, median sale price up.
http://www.msnbc.msn.com/id/19953440
Wealthy folk buying, I assume, or the low end buyers are stupider than I thought.
My brother lives in Roanoke and I’ve thought about going there many times to escape the NOVA rat-race. Unfortunately, there’s just not a whole lot there besides agricultural business and related service industry. There’s a ton of available commercial space (here - http://www.roanokeva.gov/DeptApps/AvailableBuildingsSites.nsf/WebByUseType?OpenView )
That webpage is worth looking at. Do you see the rental rates? $2.75 /sq. ft. $3.00 / sq. ft. $4.00 / sq. ft. - and it’s vacant! Unbelievable - unless you go there and look at it. A lot is ancient, dusty stuff that nobody’s rented for decades. The residential rental page (here http://www.roanokeva.gov/WebMgmt/ywbase61b.nsf/CurrentBaseLink/N26U3Q2V743LBASEN ) is even better. There are about 22,000 houses in Roanoke which rent for between $300.00 / mo. and $750.00 / mo. There are about 4,000 above and below that median range, but only 276 units which rent for $1,500.00 or more. The schools and the city are the largest employers followed by the railroad, Wal-Mart and the state (here - http://www.roanokeva.gov/WebMgmt/ywbase61b.nsf/CurrentBaseLink/N25ZDJ3F289LBASEN ) I also found it interesting that the eleventh largest employer is a car parts chain and the twelfth is the federal government. None of those are what most folks would think of as high-paying jobs.
SO… the point of all of that? Where do you see any basis for supporting a neighborhood of 300+ houses which are all valued at over a half-million dollars?
From the St. Paul (MN) Pioneer Press:
40-home auction latest sign of metro housing slump
Mass ’short sale’ a new tactic as foreclosures rise, values fall in Twin Cities
BY Jennifer Bjorhus
At least 40 houses across the Twin Cities will be up for bid soon in St. Paul at a rare mass property auction complete with paddles, auctioneer and “Do I hear $150,000 … ”
The event - a “short sale” auction of homes in the early stages of foreclosure - is being organized by National Realty Guild, a small St. Paul company rolling the dice in a housing downturn.
Randy Burg, the company’s 32-year-old president, said he hopes the auction can grow into a quarterly event. For now, he’ll be satisfied attracting 40 potential buyers to the sale, scheduled for Aug. 11 in downtown’s Galtier Plaza.
It’s the latest sign of distress in the local housing market, and a new tactic in the “move that house” game under way as Twin Cities agents struggle with rising foreclosures, dipping home values and a record crop of for-sale signs.
Murphy said he’s skeptical the auction will work, given how reluctant banks and mortgage lenders are to accept short sales. It’s one thing to win the bidding, another to get the lender to agree to the deal. After all, lenders take a loss on short sale. Auction organizer Burg said he can’t guarantee the lenders would accept winning bids. Since the properties have not yet been technically foreclosed on, the lenders may be unaware the property is part of the auction, he said.
Twin Cities snapshot:
34,630 homes were for sale at the end of June, up 10.7 percent from a year ago and believed to be a record.
20,034 homes sold in the first six months of 2007, down 16 percent from the same period a year ago.
I keep thinking about how vunerable the lenders are about the appraisals they endorsed . When you start getting 25% drops in prices within 6 months of a appraisal ,without major job loss or a recession to explain it ,it goes back to failure on the part of the lenders to prevent fraud or confirm a solid appraisal value in a area .
Lenders use to check on how many speculation purchases were in a given area to determine risks of defaults in a given area . In the recent lending cycle there wasn’t any concern for the high amount of short term speculation purchases that were being made to unqualified buyers ,(40 to 50% in some cities ). The high % of investment purchases were announced in late 2005 regarding California ,Florida ,Arizona ,and Las Vegas ,yet no alarm bell went off on how out of the ordinary those numbers were .The RE industry went on to fund even more risky loans for another year and 1/2 until defaults stopped them .
The public in gereral would feel that if the bank hits the numbers on a appraisal ,it must mean the value is there . A 25% dump in a short times means the appraisal was wrong .A high % of foreclosures means faulty lending practices and faulty appraisals .
We all know what I’m saying ,but there was no excuse for it to take another 1 1/2 years for the loan industry to tighten up .
Now it is official on MSM. The great CNN story.
http://money.cnn.com/2007/07/25/real_estate/prime_catching_subprime_ills/index.htm?cnn=yes