A Boom For The Buying Market
The Journal News reports from New York. “The housing market in Putnam County continued to weaken in the second quarter as sales fell and the median price of a single-family house dropped by 9.1 percent, to $398,500, the Westchester-Putnam MLS said. It was the second quarter in a row that saw a year-over-year decline in the median house price in Putnam.”
“Joel and Michele Antonini’s four-bedroom, 4,000-square-foot house in Carmel was priced at $649,900 in May. Since then, they’ve reduced the price by $10,000. Just five people showed up at an open house last weekend.”
“The family bought the newly constructed house in September 2005. Then Joel Antonini moved the family to Houston this year when he accepted a job offer there. He figured it would take some time to sell the house in Carmel since other new houses were being built nearby; now he’s thinking he may have to rent it, or take a small loss on a sale.”
“‘I’m not willing to take a major loss on the house.’ he said.”
“At the Fox Run condominium complex, associate broker Joyce Brennan has been trying to sell a one-bedroom unit for five months. Listed at the start at about $170,000, Brennan said, the price has been reduced four times. Now it’s at $139,000.”
“‘There’s nothing at all wrong with it,’ Brennan said. ‘It’s indicative of what’s going on.’”
“In the second quarter, year over year, the median price fell slightly, the Westchester-Putnam MLS said. The median price of a Westchester house was $700,000, down 2.1 percent.”
“The region’s transition ‘from the feverish markets of 2004 and 2005 to the adjusted realities of 2006 and 2007 has been not too rough - more of a dip than a dive,’ the MLS report said.”
“‘Sales volumes have reset to levels that are fairly strong when viewed in the long term,’ the report continued. ‘There has been a slight downward price correction in the range of 2-3 percent in the main property categories but there are no signals of larger price reductions to come.’”
The Staten Island Advance from New York. “Staten Island trailed the rest of the city in prices for one- to three-family homes in the year’s second quarter, according to a report.”
“Michael Slattery, senior VP at REBNY, said Staten Island could be losing potential home buyers to New Jersey suburbs, where the market also has stalled.”
“Slattery said that downzonings on Staten Island and the elimination of tax abatements for new housing here will lead to a drop in new-home construction and supply and rising prices.”
“There is currently a 19-month inventory of new homes, a recent high, according to estimates by the Bulls Head-based Building Industry Association.”
“Permits for new buildings in the borough also dropped by 25 percent during the first six months of the year, from 464 in 2006 to 345 so far this year, according to the Buildings Department. Last year, new building permits fell by 44 percent, the biggest drop in 14 years and the sharpest decline citywide.”
“More than 1,000 people called the city comptroller’s three-month-old Foreclosure Prevention Helpline, with 15 percent, from distressed Staten Island homeowners.”
“Comptroller William Thompson was expected to announce today the borough breakdown of callers, people often struggling to pay high-interest, subprime loans.”
“So far, operators have fielded at total of 1,150 calls, with 45 percent (518 queries) from Queens; 32 percent (366 calls) from Brooklyn; 7 percent (80 calls) from the Bronx, and 1 percent from Manhattan (11 calls).”
“The helpline also has fielded inquiries from New Jersey, Connecticut and as far away as Florida, said Jeff Simmons, a spokesman for Thompson. ‘It’s troubling, because we never expected so many calls,’ he said.”
“The rate of subprime lending in the borough tripled between 2002 and 2005, according to a report from the New York University’s Furman Center, and the borough has struggled with rising foreclosures.”
“According to a Manhattan-based nonprofit, there were 986 foreclosure actions filed on Staten Island last year. The nonprofit estimates that number could climb to 1,600 by the end of this year because of adjustable rate mortgages.”
The Glouchester Daily Times from Massachusetts. “(Haverhill) is known as an old mill town built on the once powerful shoe industry, hence the nickname ‘Queen Slipper City.’ But with the shoe industry long gone, and developers spending tens of millions of dollars on housing projects, perhaps ‘Condo City’ would be more appropriate now.”
“Two more condominium complexes near downtown are opening within the next eight weeks. The condo boom before now has been concentrated downtown, but the River Street and Vila Street projects mark the spread of these developments beyond the city’s center.”
“Both new condo projects are opening to customers in the coming weeks as the housing market is in the middle of a slump, and condo sales are slow downtown. William Pillsbury, the city’s planning director in charge of economic development, said the market is slow but condos are still selling in Haverhill.”
“‘There is still demand out there,’ Pillsbury said. ‘It’s slow, but it’s not dead.’”
“Around the city’s center…more than 800 condominiums and apartments have been recently built or are in the planning stages. The developers said they are optimistic despite the housing slump.”
“Heather Machia-Gore, manager of The Vila, said she hopes for a rebound in the market, which has a lot of apprehensive buyers. ‘I’m hoping it’s going to make a comeback,’ she said of the condo market. ‘I think buyers are just scared, wondering if it will dip down more. They are trying to wait out the market.’”
“The housing market is sluggish, but Haverhill should recover, according to urban economist Aaron Gruen, a Chicago-based market strategist who wrote the city’s new downtown master plan. Gruen anticipates that by 2020, the annual demand for new homes in the Merrimack Valley will hit 5,300 units.”
“Kathryn O’Brien has been selling homes locally for 21 years and has seen ups and downs. She said the market is ripe for people who are looking for good deals, and people who could not afford a home or condo during the boom can get one now.”
“‘It’s actually a wonderful time to invest because Haverhill is a very up-and-coming city,’ O’Brien said. ‘I’m looking at this as a boom for the buying market.’”
“Other downtown condo sales have been slow. The new Franchi building, which has 53 condos, has sold nine units and two have been rented, Gruen’s master plan report said. Another condominium project on Washington Street has sold only five of 11 units in 21/2 years, with prices ranging from $189,000 to $259,000, the report said.”
“Developers also will try to fill several hundred apartments downtown.”
The Frederick News Post from Maryland. “According to the Maryland Association of Realtors, 248 homes were sold last month in Frederick County, down from 381 in June 2006. Those figures include both new and existing home sales. The average price for a home sold in the county in June was $345,473, a drop from $380,512 last year.”
“Stephen Mackintosh, of Mackintosh Inc. Realtors, said the current market is much like the early 1980s: ‘A flurry of activity then a slow period.’”
“For five years prior to 2006 the housing market soared, both in prices and sales, then stalled with higher mortgage rates and an emerging problem of delinquencies. Though only comprising about 1 percent of the mortgage market, delinquencies, due primarily to risky subprime lending, are causing concern in the industry.”
“Foreclosures are impacting the real estate industry. Steve Maszaros, treasurer for the Maryland Association of Realtors, said people waiting for foreclosures to find a bargain are holding up sales in the regular market.”
“Both Maszaros and Mackintosh blame the media for painting a gloom and doom picture, causing people to fence-sit instead of looking to buy a home. ‘There’s no secret that Frederick County has taken a hit,’ on home sales, Maszaros said.”
“He owns two real estate offices in Anne Arundel County and said he is considering buying homes for investment. ‘It is the best time to buy a home in 30 years,’ Maszaros said, ‘especially for the buyers.’”
“Frederick County has a glut of more than 2,000 homes on the market, about twice the normal level.”
“In June, Montgomery County saw a drop of 19.2 percent in sales, compared to a year earlier, with a median price of a home last month at $584,878. Washington County, where the median price was $262,271, saw a drop of 32.5 percent in sales. Maryland’s home sales were down 22.1 percent in June.”
The Gazette from Maryland. “Garry and Evelyn Scott put their four-bedroom home in the Perrywood community up for sale in February, hoping they would have it off their hands by the time their new house in Upper Marlboro was built.”
“They knew the market was cooling, so they listed the property at $615,000, $10,000 below its assessed value. But the spacious home wasn’t getting any takers. So they lowered the price to $610,000. Then $605,000. Then $599,000. Then $575,000. And they threw in $15,000 in closing costs. Still no offers.”
“‘I’m smoking again. … I’m nervous,’ Garry Scott said. The couple, who bought the home seven years ago, can’t carry two mortgages, and their new home is almost finished.”
“The Scotts’ home is just one of more than 6,000 on the flooded market in Prince George’s County. The boom that lasted close to five years has made a full reversal, as homes that used to be snatched up in a matter of days are sitting on the market for months.”
“‘In any market, there’s a time when what goes up must go down,’ said Realtor Eric Coaxum, who works in Laurel.”
“Agents and experts say the prolonged and frantic boom, which began cooling toward the end of 2005, is one of the reasons for the drastic slowdown. There are fewer buyers, because so many bought property a few years ago. Plus, they say concerns about foreclosures, which are particularly high in Prince George’s, have scared prospective buyers.”
“‘I’ve been doing this for 23 years, and I’ve had to do things I haven’t had to do for 10 years’ to sell a home, said the Scotts’ agent, Ansa Tyus, a Realtor in Washington, D.C. She’s had to circulate postcards for open houses and pursue other tactics she describes as ‘guerrilla marketing.’”
“June statistics released by the Metropolitan Regional Information Systems, showed 6,294 active listings in Prince George’s. The last time the housing stock topped 5,000 was in early 1999. That’s compared with fewer than 1,000 homes for sale in the early part of 2005.”
“Darrell Carrington, a senior loan officer in Bowie, said foreclosure fears have rippled through the market. Of the 4,522 foreclosures recorded statewide last year, 1,558 were in Prince George’s.”
“Agents say the sellers of higher-priced homes are having the most difficult time, especially because they are competing with new luxury homes being built in developments throughout the county. And some of those developers offer competitive incentives. Ryan Homes, for example, is offering 50 percent-off options in several of its residential developments until the end of the month.”
“‘A couple years ago, you could put a price on it — anybody would pay for it. It’s not like that anymore,’ said Donald Frederick, president of the Prince George’s Association of Realtors.”
“On Barnacle Geese Court in Perrywood, the Scotts said they thought they would have an offer by now. They said they’ve put more than $100,000 of equity into the property, including a deck, ceiling fans and hardwood flooring.”
“‘It’s a little discouraging,’ Garry Scott said. The home is still listing at $575,000, and they’re offering a $3,500 bonus for the buyer’s agent. ‘It’s priced right now,’ Evelyn Scott said confidently.”
‘urban economist Aaron Gruen, a Chicago-based market strategist who wrote the city’s new downtown master plan…anticipates that by 2020, the annual demand for new homes in the Merrimack Valley will hit 5,300 units.’
5k a year?
‘A couple years ago, you could put a price on it — anybody would pay for it’….said Donald Frederick, president of the Prince George’s Association of Realtors.’
It always amazed me during the boom that people would say things like this and not realize there was something wrong.
In 2005, a co-worker got a job in Indianna and needed to sell his Scottsdale home. He put it on the market,and in 4 hours had accepted an offer for double what he’d paid in 2000. Someone says to him, if it sold in 4 hrs, you should have listed it for more. No, he says, it already was a stretch to find an appraisal for that value. Without a higher appraisal, no one would be able to buy for 100% LTV, so it wouldn’t sell.
It would have sold for more, if they could have bribed an appraisal to come in with an even higher number???????
So, as much we b—- about the appraisers being part of the problem, it could have been even worse without them having to be in the process.
CNBC has wheeled out a couple economists from the bush admin. to reassure the sheeple the economy is fine.This is just hideous.The interviews are going on now.Now the market is up, go figure.
He must have been able to pay cash for his house in Indiana with his take from the AZ sale.
Darrell_in_PHX wrote…It would have sold for more, if they could have bribed an appraisal to come in with an even higher number???????
When we sold our NorCal home in ‘05, we were also concerned about appraisals and for that reason accepted one of the lower offers, which was still outrageously high for the property. The appraisal came in right to the dollar. Our neighbor across the street (who owned the same ugly tract house) sold the very next week for $5k more, and their house also appraised at asking price.
Darryll wrote…..So, as much we b—- about the appraisers being part of the problem, it could have been even worse without them having to be in the process.
That may be true….but with honest appraisers things would be a lot better.
It’s actually a wonderful time to invest because Haverhill is a very up-and-coming city,’
Yes, scenic trash to energy plant has a blinking light at the top of the stack that looks like a red blinking north star. Only the best and brightest gang-bangers from Lawrence live here
Don’t be amazed. There is an increasing number of people who have very little understanding of anything, especially in their field of “expertice”. I see it every day in the building business.
An some don’t even know how to spell the word - expertise.
WAman : go and take a laxative. We all know what he means.
And yet they still use “surprised” and “expert” in the same sentence. How can a so-called expert be surprised at what we saw happening all along!
“Aaron Gruen…anticipates that by 2020″
Aaron has no clue what’s going to happen by 2020.
Aaron has no clue as to what’s going to happen by 2008. Perhaps even next Wednesday is a stretch for him.
‘A couple years ago, you could put a price on it — anybody would pay for it’….said Donald Frederick, president of the Prince George’s Association of Realtors.’
Because anybody could get a loan for any crazy amount they wanted. Moving forward, only those who can truly afford the house will be able to get loans. And most people can’t truly afford these prices. Not with flat salaries & inflation in gas, groceries, health care, etc.
I cannot wait until FB’s wrap their heads around the fact that 50% of their net pay is going towards a mortgage on an asset that may never again be worth what they paid for it.
I don’t think FB’s will be able to wrap their heads around such a horrifying concept as that, because their brains are like tiny little flakey thin tortillas, the cheapest kind, I forget the brand, it has a grinning maiden on the bag, and you have to hold them gingerly and daintily, but they still bust open when you put in beans, or scrambled eggs, if it should be a breakfast burrito, I love those, and make a big mess on your lap? You all know the kind I mean? What brand IS that?
Oh, forget it–the analogy is getting strained. My point is, FB’s are going to have a very hard time wrapping their heads around that sort of concept. I mean, look at good old dumb Evelyn Scott, in the last article. ‘It’s priced right now.’ Evelyn Scott said confidently.’ Good heavens, Evelyn! Beans and lettuce are falling out of your wee little over-stuffed head!
That’s hilarious. I live in Lowell MA upriver from Haverhill. This clown is smoking some major crack thinking that any area in MA is growing. This state has a net outflow of people, just like CA, because prices here are still hilarious. The equivalent loft-type condo to my apt in an old mill starts at $375,000. In frelling Lowell which is not exactly an up & coming area an neither is Haverhill.
“‘It’s a little discouraging,’ Garry Scott said. The home is still listing at $575,000, and they’re offering a $3,500 bonus for the buyer’s agent. ‘It’s priced right now,’ Evelyn Scott said confidently.”
Somebody should offer them $261,000 for it. That’s what these greedy whiners paid for it, exactly 7 years ago.
Take the $261K and adjust up for CPI…$305K-$310K
“Take the $261K and adjust up for CPI…$305K-$310K”
I respectfully disagree. They won’t lower the price enough, so it won’t sell, so they’ll be on the hook for two mortgages (you just know the new house is even bigger and more expensive) and they will go into foreclosure. The bank will hold the place too long, it will sit vacant, and the final price will be lucky to break 200k.
They might have an epiphany after a few months of double mortgages and realize the true value of their curent home and/or the value of just getting it sold. Of course they are chasing the bottom now and do not realize they need “DRAMA” pricing to move the home.
The broader problem is that people are looking at erroneous indicators of valuation. Buyers have sobered up and are not about to pay more that fundamentals dictate. County assements are just as out of wack as comps. You must run the numbers based upon standard appreciation.
The last downturn in Metro DC featured many family crying that if they had sold at peak they would have gotten 100k more etc, etc. Well you did not sell at peak, you’re selling under prevailing market conditions and those conditions are dictating a different lower price, period.
The irony is that they could probably slash pricing to 500k & get a buyer, still probably in excess of fundamentals, but it would move the property. Of course they may have already factored in a greater profit in order to finance the new deal, which they should have made contingent on the sale of the current home. But even if they did not and back out they will just have to leave the deposit on the table as damages to the developer.
The developer wants to get rid of the home and will pressure them, if they stand their ground they might get the developer to work with them. Never take a financial hit for a developer.
The sense of entitlement of this couple just sickens me.
Most developers will not take contingencies on sale of old house. Deposits are usually nonrefundable.
“On Barnacle Geese Court in Perrywood, the Scotts said they thought they would have an offer by now. They said they’ve put more than $100,000 of equity into the property, including a deck, ceiling fans and hardwood flooring.”
“‘It’s a little discouraging,’ Garry Scott said.
If Garry would remove the ceiling fans and take them with him - he could reduce the price another 50k.
They said they’ve put more than $100,000 of equity
No, they just spent $100k on a deck, ceiling fans and hardwood flooring.
I like the arrogant prick who “isn’t willing to take a big loss” on some overpriced POS in New York. Wonder how big his loss will be after a couple of years of negative cash flow while he “rents” it, that is if he can even find someone to rent it the whole time.
It’s utterly absurd arrogance like that that really twists my balls. Then I have to wonder if it’s arrogance or all the RE Koolade the fools drank since 2001.
Look at the picture of that ugly crackerbox! You could buy that for $155K in Allen, TX. Of course you’d spend another 100K per year on hallucinogenics to live there without taking a swan dive from the roof.
Right. I guess they think it’s so ugly that they had to hurry up and get a new bigger uglier house.
“Of course you’d spend another 100K per year on hallucinogenics to live there without taking a swan dive from the roof”
that was too damn funny! how much for mushrooms?
morels or enoki
Ceiling fans? That cost $50-$150 each at Lowe’s and take a couple of hours to properly install? How many did they put in? A couple hundred?
” We put 100k equity in ceiling Fans, wood flooring and decks” . Whaaaaaaat?
I did remodeling for 20 yrs. Guess I quit too soon. I could use some extra Money. Next time anyone needs some ceiling fans, a deck and flooring for a ” Hundred Grand” please give Me a call .
Ben Dover
777 Grabuankles Ave
Wescrew, Fl
1-77V-AS0-LINE
There is a house a few doors down from mine that is having vinyl siding installed (Don’t know why, the old stuff just needed some paint).
The place is about 3000 sq feet. Anyway, as I was walking the dog, I asked the installers how much something like that costs. Oh, about $20,000 they told me.
So I’m thinking: wtf, Its taking two guys about a week to install the stuff. Their labor must be pricey, as they both had new, high end , super-duper diesel pickup trucks. But sheesh, you could buy a new car for 20K. How can they justify 20K for slapping some plastic on a house.
Just ridiculous.
Vinyl siding on a 3000 sq ft. house? Where I come from (Va.), vinyl siding is the way to spruce up 1200 sq ft homes that sell for under $150K. Not only are they spending $20K, but they are almost certainly lowering the resale value of the house. Vinyl siding is so 1998.
FWIW, vinyl is pretty rare out here, which is why I noticed. The owners are new, recently relocated from Maine.
Not only are they spending $20K, but they are almost certainly lowering the resale value of the house.
Crazy as it may sound, its considered desireable out here (otherwise how could they charge so much).
Whats so dumb is that they could have had the house exterior repainted for 3-4K.
“greedy whiners” - Well, these guys don’t sound like flippers; they lived in their place for 7 years and wanted to move up to the next house. Lots of us want to do that. These guys just got caught at the peak. I’ve no sympathy for them, mind you, but I wouldn’t villainize them either. That’s what sucks about bubbles - lots of good people just trying to do better for themselves end up getting hurt. This is what free markets do to average Joes.
They aren’t flippers, but they are whining because nobody wants to pay them 2.5 times what they paid for the house 7 years ago.
Do you really think this is a free market? Look at how much the gov’t influences market decisions through their tax code.
Shaun - Not sure where you’re going with the “free market” comment, but I think the tax code is a little beyond the scope of this forum. A far as RE goes, a little more government regulation on lending would have helped.
Housing is not a free market. Read a book.
Hey Ben-
You deleted my intelligent response to this comment from Betamax, yet you leave his comment that contains nothing but an unsubstantiated contrary remark and a condescending end note? My “Read this” ending was a response in kind to Betamax’s. If you’re going to redact, redact fairly. Otherwise, your site and you lose all credibility. Thanks.
I don’t know what you’re talking about.
“‘I’ve been doing this for 23 years, and I’ve had to do things I haven’t had to do for 10 years’ to sell a home, said the Scotts’ agent, Ansa Tyus, a Realtor in Washington, D.C.
Oh, I can just imagine!
Yeah, things like put in an honest day’s work.
10 years… 1997, a recovering market.
What happens when they get back to 1995 and the old tricks don’t work? Hint! The low priced home of the neighborhood always sells.
Home sales don’t every really stop. Not even in the famous “week without a phone call” from So-Cal. In 1994 (or was it early 1995) post the Northridge earthquake.
Get the homes on the net… drop the commission. Only take clients who will price homes at the market…
I’m amazed how fast some areas are falling apart in what should be an ok economy. Hmmm…
Got popcorn?
Neil
I guess it should have all the “parade” fixings like that other agent said. Who knows what that means, I know I would want an ugly huge float on the lawn and creepy clowns slinking around making balloon animals.
That my friends has to sell a house!
“June statistics released by the Metropolitan Regional Information Systems, showed 6,294 active listings in Prince George’s. The last time the housing stock topped 5,000 was in early 1999. That’s compared with fewer than 1,000 homes for sale in the early part of 2005.”
“Darrell Carrington, a senior loan officer in Bowie, said foreclosure fears have rippled through the market. Of the 4,522 foreclosures recorded statewide last year, 1,558 were in Prince George’s.”
I sold in Bowie in the spring of 2005. Wife even had the realtor raise the price by 10,000 and it sold the day it listed. I was very nervous approaching closing because it was clear then that the whole scheme in PG County was starting to collapse.
Although I did buy again, I am glad to be out of that market. PG County is going to get crushed. Lots of unsophisicated over [paid government employees who afre living well beyond their means on credit cards and home equity loans.
Again, I imagine a huge force of bears over-running the country, now surrounding the capital, Manhattan. They are just a few miles away, in Putnam County, on Staten Island, in New Jersey, on Long Island, and in eastern Queens. They are getting closer and closer.
You’d think from way up in the towers, the “it’s different here” crowd could see them coming.
Since all the numbers i see are always “revised” the following month/quarter…Is it safe to assume that all the numbers are optimistic and should expect them to be revised???
“‘It is the best time to buy a home in 30 years,’ Maszaros said, ‘especially for the buyers.’”
Hey, the realtor in AZ only said it was the best time to buy in 10 years.
I got 10, do I hear 30, 30….
I got 30, do I hear 50…..
Must be the new coaching line from NAR
Best time to buy in the last 30 years was 1977.
But now is at least a better time to buy than 2005 was. 2010 will be much better though, so keep waiting.
de, when your auction gets to 70-75 years… I’ll be scared.
This recession is going to be far worse than the 1974 real estate led recession. I still cannot believe the bulls. Their LBO mania is about over. It will be interesting/scary to see how the i-banks do as this falls apart. Those pier loans might not be too stable…
Got popcorn?
Neil
“‘It is the best time to buy a home in 30 years,’ Maszaros said, ‘especially for the buyers.’”
Okay, who is he parroting? I recall reading this little talking point a few days ago, when someone here astutely observed that “Five years ago, when prices were half what they are now and rates were lower — that was the best time to buy in 30 years.”
I think that what the moron meant to say in the first quote was “now is the worst time to sell in 30 years.”
Nonsense, you can still get [b]way[b] more for the same house today than 5 years ago. Price it right and it’s sold.
“He owns two real estate offices in Anne Arundel County and said he is considering buying homes for investment. ‘It is the best time to buy a home in 30 years,’
besttime to buy in 30 yrs lol what a joke.
I’m starting to think the best time to buy was in 2000 then sell in 04 and rent til 2010.
Huh, I guess I got screwed then because I bought in 1999 30 year fixed at 6.5% for 1/3 the price now being offered for the same condo units in my complex with 30 year fixed rates at the same rate.
What a load of bullcr@p these realtors shovel hoping that you have no brain or memory whatsoever!
reality may slowly be sinking in here in the tri state area
“‘I’m not willing to take a major loss on the house.’ he said.”
And that is the typical attitude here in downstate NY. The stupidity is thick with stupid comments like “everyone in NYC who can’t afford to live there want to live in Westchester, Putnam or Dutchess counties”. The truth is that anyone who wants out of the boroughs are public servants earning 60k/yr. (60k)(2.5)=210k…
Guess what Joel Antonini, you’re gonna take a loss my friend.
He’s already taken the loss; willing or not. It’s not up to him to decide where the market is. All he can do is decide to hold on to that depreciating asset. Who knows, 10 or 20 years from now, after paying taxes for the entire period, perhaps the real value of the dollar will be so low that he can ‘get out with a profit’!
blame it on the golf course (Centennial), that changed Putnam County from a town with tiny winterized-summer bungalows to McMansionville…no jobs in the County - long commutes and sky high taxes
“sky high taxes”
What an understatement. The property taxes in putnam county are absolutely scarey. 11k/yr taxes for a crappy 50yr old bungalow on a quarter acre lot where my coworker lives. I’ve never seen such criminal taxation ANYWHERE.
Whenever I read things like this I thank my lucky stars that I live in Colorado, where I pay 2K for an 8 year old 3000 sq ft house.
I’ve never seen such criminal taxation ANYWHERE.
Try New Jersey — the home state of criminal, insane property taxes.
I lived in that area for 12 years, there is no market for rental houses of that size at the price he’s going to need to charge. This guy will be bleeding red ink for years.
Anyone making double mortgage, tax, and insurance payments “is” taking a loss. He needs to wake up.
It is the best time to buy a home in 30 years,’ Maszaros said
In witnessing my wife’s spending habits over our 10 years of marriage, I’ve come to realize that a lot of people (most?) do not put price very high on the list in making purchasing decisions.
We lose sight of that here, but “Best time” is a relative term. For example, if you’re primary objective is to settle quickly, it probably is the best time to buy. One of the worst times for price (if you care about such things), but best time for many other reasons.
I still find it amazing that those trying to sell just don’t get it. If the answer to buying real estate is location. location, location. The answer to people being able to buy real estate is income, income, income.
With inflation as rampant as it is (true number as opposed to government numbers which are no longer valid in ANY area is about 6% to 7%) and the middle class being squeezed, these valuations just do not add up.
I know many people of my generation here in the US who are in their 60’s and 70’s (in fact 99% of them) who bought 20, 30 and even 40 or 50 years ago who, back then, could NEVER have afforded to buy the property they now live in had prices + incomes been what they are today. Does it take a rocket scientist to figure that out? I have a friend in the UK who drives a black London cab who now lives in a $1.3 million house. His income has never even come close to being able to buy a $1.3 million home but he originally paid $20,000 back in the early 1970’s AND had trouble getting a mortgage. The world has gone financially nuts.
The world has gone financially nuts.
Mike, it’s whole new world out there. I’m in my 40s and I’ve managed to be financially conservative, but my younger sister has adapted to living a life on credit. She continues to borrow and borrow (even from me), yet does without anything. My wife would be that way if I allowed it. The word “afford” doesn’t mean what it meant 20, 30, 40 years ago. Me, if I owe more than I have in savings, I can’t sleep at night. Most younger people today can’t sleep unless they have everything they want; no concern about being able to pay for it.
ANd just when you think the jig is up, there’s a whole new opportunity to borrow more money, e.g., 100-year mortgages. Not sure where it ends.
I have a dumb question…
Is 2.5 to 3 times household income the maximum one should pay for a house? I’m a first time home buyer and our household income is only $90K. We live in a town in the Boston area. Current homes are listing for $400-500K. The median household income in our town is $97K. Does that mean the median house price should be no more than $250K to $300K?? I’m confused, since our buyer agent said we’d never be able to bid so low for a house that’s listed for $400-500K?
Any advice would be welcome.
That “500K” house was priced that high due to a sick RE market. The cure is on it’s way and will arrive soon enough.
Thanks. Do you think these “$500K” homes in the Boston area will really sell for $250K-$300K in the near future? In how many years?
Is offering such a bid now considered an insulting offer? I don’t think our buyer agent will do it.
They must eventually sell for a reasonable multiple of local incomes.. It’s not a matter of choice. It’s a matter of time.
When properties sell at prices above and beyond the ability of people to pay without overstretching their budgets, the market is unstable, and prices will be pulled down with the ensuing rash of defaults, foreclosures and bankruptcies.
Why is offering an lowball bid of $250k insulting? Look at it from this point of view. Can you handle a mortgage of $300k with no problems? If you cannot and you feel that you can handle a $250K mortgage then that should be your target, otherwise wait or lowball until someone bites.
Remember a mortgage payment should always be: principal, interest, taxes, insurance, HOA, and maintenance; and this should not be no more than 25% to 27% of your net household income. Notice, I did not say gross income here.
I have to respectfully disagree with that figure. A quarter of net income for all housing-related expenses? Some people get loads of utility out of their home - 1/3 or even more is not at all unreasonable, especially in short-commute urban areas or for people without kids. Larger the family, lower the figure.
My opinion: Yes, I think 500K (at peak) will go to 250-300K in Boston area within 3 years. 1mm at peak is already down to 800K on its way to 500K in 3 more years (my brother owns one).
“Is offering such a bid now considered an insulting offer? I don’t think our buyer agent will do it.”
You can always get another buyer agent that more willing to do the low balling for you. Besides how many buyers out there in your area compared to Real estate agents.
Better yet there there is redfin and buyside realty that will give you back a majority of thier commision.
Try to mention that to your buyer agent and see what happens.
Rule 1) If you’re not embarrassed presenting an offer, your offer is too high.
Rule 2) If your first offer is accepted, you offered too much and left money on the table.
Corollary 1) You can always increase your offer, but you can never decrease your offer without evidence.
Corollary 2) It is better to insult a seller than insult your own financial health.
With zillow.com you can find out the price history for the houses you are looking at. The 500K houses in this area typically went for 250-300k in the late 90s. That’s a huge unwarranted jump.
Chances are that you are going to run into problems getting a mortgage right now based on your income and your price range. I hope so, for your sake. 2.5x income is a rule of thumb that you ignore at your peril. I’d say that the mortgage should never be more than 2-times. The other .5 is your down payment — 20%.
Most of us that are homeowners in these bubble-priced houses paid 2-times income many years ago. In my case I paid 2-times and made a 20% down payment. That was 1992 — not that long ago. Time flies, but the laws of nature (and economics) never change. I had to wait through the “Massachusetts Miracle” years of the 1980s when I refused to get locked into one of those “affordable” financing deals on an over-priced home. Eventually, prices came crashing down to reality.
It’s the law. Agents have to present all offers. If your agent refuses turn them into the state board. No one really knows how desperate a seller is until you low ball and they accept.
first of all do not listen to your buyer agent, he is desperate to get a deal. The botttom line is do you feel even remotely comfortable paying the mortgage + other costs associated w/ home ownership, for a 400k house with a 90K combined income? Have you even looked at the numbers? How about if one of you lose a job? Would you be able to do it? Please open an excel spreadsheet and make a budget and really look at the numbers honestly. I had some mortgage broker tell me and my husband a few years ago that we could take out a I/O mortgage and qualify for a $400, 000 house in Framingham, no less. At the time my husband and I made combined 90k. I told the mortgage broker slimeball that I was not AT ALL comfortable paying that mortgage with our income. He looked at me like I was Satan and I don’t think he could believe that I wasn’t buying into his bull. of course, I also told him that the prices (2005) were unsustainable. Needless to say, we didn’t have much to talk about after that.
Those are just rules of thumb. Your PITI (principle, interest, taxes, + insurance) should never exceed 28% of your income, and your total debt (housing + cars, student loans, etc.) should never exceed 36% of your total income.
So, if you make $90k, and if we assume that property taxes and insurance is $500 a month, then that leves you $1600 a month for the mortgage. At today’s interest rates, that would a ~$256k loan.
Personally, I wouldn’t go over 20% of my income (I like the idea of having a cushion, not to mention money left over to buy food, furniture, etc.). That would be the equivalent of a roughly $180k mortgage.
Good post, many people years ago stayed in these guide lines and now own their homes.
This is far from a “dumb question” by the way. It’s exactly the right question that home buyers should have been asking for the past 7 years, but weren’t.
True. But it will take a long time before I can afford a house. It seems I should not be paying more than $270K. That’s a 40% decline from today’s prices.
yup and so you will have to rent or move to a more affordable area. That’s why i have been seething for the past 3 years about this bubble, for some reason people just were complacent and said oh well that’s just hte market so i guess i just have to suck it up and get in over my head…great idea schmuck! now they are all teetering on foreclosure or marriages are wrecked because of this sucking it up…just say no to this bullsh**t and don’t buy….unless you have some compelling reason to buy but just rent and save some good old cash for when this market finally reverts to mean…
There is no such thing as a dumb question, but there are dumb people. My advice is DON’T BUY NOW. If you do you’ll be catching a falling knife. This market correction has a LONG,LONG way to go. IMHO there is a least another 30% correction coming. Be patient. Good things come to those that wait. Your time will come. Just keep banking your money.
In many parts of the country, a 40% decline would be very reasonable. What’s not reasonable is house prices doubling in 4 years. What would have been reasonable is houses appreciating at the rate of inflation, which would have been a 12% increase over 4 years.
Last year I thought that a 20% price cut would be too much to haggle with a seller. Now, with the latest YTD price drops, I think 30% or more drops are gonna happen. Things are different from a few months ago. The psychology is rectifying.
Just to add a bit. The reason people here, including myself, expect such a big drop in the near future is that the entire system of financing is coming down right before our eyes, and that’s only really taken hold in the past few months - still not long enough to be anywhere close to fully reflected in pricing.
Just this week, Countrywide was finally able to admit the obvious - that people at ALL levels of income and credit are not paying back their loans (Countrywide had to wait until its owner was able to finishing selling his shares). Countrywide also said and did something very interesting - they said that they cannot resell their mortgages, as no one wants them anymore - and they killed off most of their subprime programs. Others did the same
In other words, just about the entire entry-level mortgage market has evaporated in the past month - and even the dingbats on Wall Street are starting to catch on. So there will be a lot of blood in the streets, and much sooner than later.
Is 2.5 to 3 times household income the maximum one should pay for a house?
YES!
It’s not just about payment DTI, it’s also about overall DTI (i.e., mortgage balance vs. annual income). Why? Because the higher the overall amount financed, the more difficult it is to overcome a shortfall. It’s all about leverage. Sure, low interest rates make a payment go further, but they also magnify losses.
Here’s another interesting quote in this post: “‘I’m not willing to take a major loss on the house.’ he said.”
Can you imagine how many homeowners have this same mentality right now? How many think that all they have to do is wait it out for the next 2, or 3 years when the think the market will finally turn around?
I wonder what percentage of homeowners will find themselves in the position of needing to sell - be it being over-leveraged, relocating for a job, loss of job, retirement, sickness, etc…. Eventually the hold-outs are gonna have to drop their prices; buyers can wait this out forever, if need be.
italics off
“Of course you’d spend another 100K per year on hallucinogenics to live there without taking a swan dive from the roof”
that was too damn funny!
The thing that I do not understand is who the heck are these people that continue to buy? Do they not read or watch the news? Have they not the ability to observe? Are they devoid of history, common and/or financial sense? Do they not research?
Well, I’ll give you an example of a friend of mine: he and his wife have been living in a tiny, tiny apartment renting and saving money. They don’t make much money but their credit is good, and they have the dough for a down payment. They are trying to have a baby and can’t possibly imagine staying in the apartment they’re in.
I send him articles, try to convince him that the right move is probably to rent a LARGER apartment for the coming baby, and buy in two years. They’re the type who I can imagine buying a house and staying there for 20 years, easily. They look at it like, “you can’t time the market, in 20 years it’ll be worth well more than what it is now, and we don’t want to move twice.”
Home ownership has been their dream; but an interesting tidbit from their looking (they’ve been looking for a while now) is that every time I send my buddy an article, he replies with “well if the crap is hitting the fan where are the price reductions? We’ve seen a lot of houses on the market and very few have any substantial price reductions”.
I try to explain that the full scale of this has not set in for most sellers.
My point is I think the propaganda line (you hear it in relation to the stock market)- you “can’t time the market” - has had its intended effect for some people.
Personally I think that timing the housing market is way easier than timing the stock market.
“You can’t time the market” is Wall Streetese, meaning, “give us all of your money right now.”
Timing is the one and only thing that matters in the game of buy low and sell high. Very simple.
Brian : I’d let it go. You are not their keepers.
Indeed, you are correct. But I don’t think it hurts to give a little advice…
You meant “They are not your -keepers- ” ?
sounds similar to my situation. we did not buy, we are renting
a really nice huge 3 bedroom and it is fully furnished with new furniture and other stuff we needed. all paid for in cash and now we are comfortable sitting and waiting for the prices to come down. i have all my stuff now so i just need a home to put it in and i am patient
“in 20 years it’ll be worth well more than what it is now, and we don’t want to move twice.”
Originally hailing from a Rust Belt city, I would have to say that the statement is not necessarily true.
We built 21 years ago in NE Ohio and even in a down market our house is worth probably $100,000 more than we paid for it. If you’re in a city house prices have slipped more in some places than others. The small towns, at least in our area aren’t dropping as much as staying flat. The high bubble areas that appreciated 50, 100, 200, 500% are going to really take a beating.
These days they are most likely folks who’s wives would not think about living in a rental home for a year of two. Some see a 10% price drop from a couple of years ago and believe the NAR (better buy quick before …)
my wife is now finally a bubble believer
it took awhile but she knows i was right
thanks ben and the hbb for saving my hyde
here’s the thing..
You want to buy a home. You go down to the local real estate office and casually ask an agent to look in the MLS for something that might suit you.
And just like that, it’s over. The trap is sprung.
Ostriches, Suzanne did the research for them so, no worries.
In my area (south Denver metro), a lot of them are down-shifters from the coasts. Former Californians, including me, have almost completely taken over some neighborhoods, because the housing prices here are just not that bad by comparison. It’s caused quite the culture war with long-time Coloradoans, who are not happy to see us moving into their beloved state.
They are desperate people who feel they are entitled to own a house. They usually have bad credit and no down payment. There’s still mortgage companies out there giving out sub prime loans right and left. Just turn on your TV and watch the commercials.
“There has been a slight downward price correction in the range of 2-3 percent in the main property categories but there are no signals of larger price reductions to come”
they need to visit HBB, we have seen the giant smoke signals fortelling larger price reductions to come! have we not?
“‘In any market, there’s a time when what goes up must go down,’ said Realtor Eric Coaxum, who works in Laurel.”
Noobie alert. This guy hasn’t been drinking enough Kool-Aid. Will he get his RE license revoked for such blasphemy??
OT: todays’ GDP stats are BS. Wait till they revise them down later.
Here’s a quote from CNN:
There was some weakness in Friday’s GDP report. Consumer spending, which accounts for nearly three-quarters of the nation’s economy, rose at a weak 1.3 percent rate, down from 3.7 percent in the first quarter. In addition, spending on equipment and software, a measure of business spending, again fell short of expectations with an increase of only 2.3 percent.
But there was strength in exports and spending by the federal government, which helped account for the better-than-expected reading.
Housing consumers awareness, enlightement and education to the REIC Racket is finally becoming apparent through blogs such as this, MSM and financial PAIN. The light shines upon the Roaches.
Dispite the 6%ers, brokers and RE spin experts take of the lame reasons for the housing Bust Pyschology, one FACT is a constant.
Sensible and responsible people FEAR and RESPECT PAIN of any kind for a Damned GOOD Reason as it sends a message that even a 2 yr old can Understand…PAIN HURTS !
Hold your ears and hang on because we are about to hear a lot of screaming and crying from the sheepile that didn’t have the brains of a 2yr old and GOT BURNT !
Why do RE agents tell potential buyers that it’s a great time to buy ? This line is suggesting that the borrower has no downside investment risk . In fact , with the excess house inventory , the sub-prime fallout ,and the foreclosures coming down the pike ,the future downmarket risk is high .
If a buyers wants to buy a house right now …than that’s fine, but I object to buyers being told there isn’t a downmarket risk to buying right now .If a buyer is willing to take the risk or they think they have lowballed the sales offer enough to account for the risk than that’s OK to . Having many properties to choose from is not a valid reason to call this a “good time to buy “.Having many properties to choose from is a sign that the sellers are dumping but the demand is low .
“According to the Maryland Association of Realtors, 248 homes were sold last month in Frederick County, down from 381 in June 2006.”
Does the sale of 248 homes include foreclosed home?
“According to the Maryland Association of Realtors, 248 homes were sold last month in Frederick County, down from 381 in June 2006.”
Does the sale of 248 homes include homes that are foreclosed and repossessed by banks?
http://www.thedenverchannel.com/money/13767698/detail.html
What will happen to Robert Toll? Angelo Mozilo? All the other RE shills who kept selling yet kept saying the outlook was looking rosy. Will they suffer the same fate?
“The home is priced right”. “The home is priced to sell.”…. after a run up of prices for 5 years ..in some areas with prices increasing by 100%….reducing the price by some 10K or so… makes it priced right…Who are they kidding…bunch of liars.
They forgot they are hitting people in the frontal lobe with a mallet to price it right also. How much is this house…*wham*…10k off market a great deal….*staggering* uhh….yeah sounds good.
The classic housingbubble blog post:
FB’s, truth-challenged RE agents, idiotic predictions.
I love it.
HBB porno at it’s best!
When was that Housing rebound predicted? First 2006, then 2007, now 2009?
Businessweek Economists predict 2009 Housing Rebound
http://biz.yahoo.com/bizwk/070727/jul2007db20070725384162.html?.v=2
Stupid Newsmedia. There will be no Housing rebound for the rest of this decade. The decade long “credit” bubble in Housing prices will take equally long to correct. The massive capital misallocation in McMansion Housing and gas-guzzler SUV’s purchased off home equity loans will need to be liquidated in a long and deep recession. Period.
“‘I’m smoking again. … I’m nervous,’ Garry Scott said. The couple, who bought the home seven years ago, can’t carry two mortgages, and their new home is almost finished.”
No problemo there Gary. When you can’t sell just forfeit your deposit and I’ll contact the builder for a lower purchase price. Thanks for telling me what upscale neighborhood I should be looking.
“‘I’m smoking again. … I’m nervous,’ Garry Scott said. The couple, who bought the home seven years ago, can’t carry two mortgages, and their new home is almost finished.”
Hmmm. Seven years ago…They probably bought that house at half the price they are selling it now. What’s the deal. They can go lower….Unlessssssss…. they took out an HELOC. LOL!
“‘It’s a little discouraging,’ Garry Scott said. The home is still listing at $575,000, and they’re offering a $3,500 bonus for the buyer’s agent. ‘It’s priced right now,’ Evelyn Scott said confidently.”
Don’t forget if the house is selling for $575k and not moving….it is the WRONG price. Whoopty friggen doooo $3500!
I HAD to share this with you good folks, this is from July 18 paper here in Orange County, this is exactly why realtwhores are the laughing stock of people with 2 synapses to rub together.
http://www.ocregister.com/money/nar-home-year-1770542-association-brokers
Realtors expect market rebound by early 2008
Saw you quoted in in the San Jose Merc, Ben. Got yourself a plug for your blog…………:-) Maybe folks will read it and actually start to lower prices in the Bay Area — long overdue!
Saw you quoted in the San Jose Merc, Ben. Got yourself a plug for your blog…………:-) Maybe folks will read it and actually start to lower prices in the Bay Area — long overdue!