A Steady Slide In The Wrong Direction
The Baltimore Sun reports from Maryland. “An increasing swath of the Baltimore region is caught up in a housing slump that is getting worse and appears to have further to fall. Average home-sale prices in the first six months of the year fell in a little more than half of Baltimore’s suburban communities and a third of city neighborhoods, while sales volume in the region was the lowest for the first half of a year since 2000, a Sun analysis found.”
“In the well-to-do Anne Arundel community of Severna Park, for instance, average prices fell more than 10 percent compared with the first half of last year, to about $550,000. That is a $70,000 drop in a year.”
“‘I call it Economics 101,’ said Marc Witman, who has been a Realtor since 1989. ‘The buyers that are out there are sitting on the sidelines, saying, ‘I don’t see the value out there; I’m not buying.’ If your house has been around for quite a while and it’s not selling, it’s the price.’”
“‘The market is saturated,’ said Dahlia Kaminsky, a Realtor who does most of her business in neighborhoods near Baltimore’s Patterson Park. ‘It’s a great time to be a buyer, let’s put it that way.’”
“Miriam Kelly bought a house in Pikesville at the beginning of last year for $272,000, intending it for her elder daughter. But the daughter married and moved to Hawaii, so Kelly put the four-bedroom home up for auction this month. It sold for $246,000, a loss of nearly 10 percent.”
“Kelly was fortunate that she didn’t have a mortgage on the property. ‘Look, you don’t make money on everything,’ she said. ‘Prices are dropping simply because the interest rates are going up.’”
“Sedgrick Williams figures the end to easy credit is hurting his efforts to sell a ranch-style house in Randallstown. The three-bedroom home has been on the market a bit more than two months. Few people have come to see it. No one came to two of the open houses.”
“Williams is asking $255,000, down $10,000 from his original asking price, and is offering to install appliances of the buyer’s choice at his expense. ‘I think I would have been better off if I sold last year,’ said Williams. He paused, then added: ‘I definitely would have been better off.’”
“The waning of summer has brought on the end-of-season sales in Maryland’s beach resort town. And in a sputtering housing market, Ocean City’s real estate is in the mix, too.”
“The banners tell the story. They’re hung across pastel-colored buildings along Coastal Highway: No closing costs. 100 percent financing. 5.75 fixed. Reduced prices. Now, several projects sit partially sold, hoping to lure buyers with reduced prices or incentives.”
“‘Unless it was already started and potentially couldn’t have been stopped, there’s no builder out there looking to build spec inventory and continue to flood the market,’ said Chris Jett, an agent in Ocean City.”
“The number of condos for sale in Ocean City had nearly doubled as of the end of July (the latest report available) to 1,667 from 843 listings at the height of the market in July 2005, according to the Coastal Association of Realtors.”
“This month, 541 units were available in new condominium projects, according to Hanley Wood Market Intelligence. Still, developers continue building condos in more than half a dozen projects launched before the downturn, totaling about 700 more units under construction.”
“At South Beach Boardwalk, a new luxury building on the Boardwalk with a rooftop pool, three-bedroom, oceanfront units can be had for $1.2 million, reduced from $1.46 million, with no closing costs. The Bella Vista, which has sold 10 of 40 units so far, has shaved as much as $90,000 off the bayside condos that now start at $499,900.”
The News Post from Maryland. “Some Realtors think the slowdown in new construction will bring more people into the existing home market. There are more than 2,000 homes listed for sale in Frederick County.”
“‘This month there were 2,214 foreclosure events, which is the highest number on record since January of 2005,’ said DLLR Secretary Thomas E. Perez. ‘Nationally, Maryland has been on a steady slide in the wrong direction. In less than one year, Maryland has jumped from 40th to 16th in the nation for the number of foreclosure events.’”
“According to RealtyTrac, Maryland saw a 146 percent increase in foreclosure events. The statistics are staggering, Perez said, when comparing July of 2006 to July of 2007, which saw foreclosure events increase 575 percent.”
“Villages of Urbana residents have different reasons for foreclosure, according to the court documents they filed. In at least two of five foreclosures the county initiated in July and August, homeowners ended up owing more money than they agreed to pay for their house.”
“A couple bought a house on Hope Commons Circle for $357,750 on June 30, 2005, according to land records. Over the next two years, they paid $35 against the principal. Because the interest was nearly 7 percent, they owe $368,919.”
“Susan Szajna, the association manager of Community Association Services Inc., said she does not know why people are foreclosing. ‘I really don’t want to know what someone’s personal situation is,’ she said. ‘When people get in that kind of situation when their life is such a mess, they usually don’t want to talk about it.’”
“A recent spike in the number of foreclosures has prompted the Villages of Urbana Board to take action. About $2,000 of the million-dollar homeowners’ association budget is going to be spent on tending to yards abandoned by residents, said Szajna.”
“‘Between delinquencies and bankruptcies, our workload has quadrupled,’ Szajna said. ‘Probably six or seven homes have gone to foreclosure in the Villages and two are pending.’”
“The board’s decision at a meeting last month to trim bushes and mow unkempt lawns so yards don’t look run down sparked mixed reactions Wednesday among residents.”
“‘I think it’s good to keep the community up, but why should we have to pay for that?’ Jennifer Ginsburg asked. The bank or the mortgage company benefiting from the sale should pay for it, she said.”
“At Rines Tavern Lane, where the distance to the Villages’ shopping center is a half block walk, a townhouse that cost its owners $320,000 in 2005 is in foreclosure. It is due to be sold Aug. 8 at a public auction.”
“Bob Faulkner can see Rines Tavern Lane from his front porch. He said the board’s decision to keep things tidy makes sense. ‘I’d rather have the yard neat coming out of the homeowners association rather than it be an eyesore,’ he said. ‘That’s what we pay for.’”
The News Journal from Delaware. “Some of Delaware’s smaller banks have suddenly found themselves in demand with home buyers after years of being shunned for mortgage lenders that offered better rates.”
“‘With the liquidity issues, they [the mortgage lenders] are having to cut back and sometimes even close,’ says Stephen Fowle, chief financial officer at WSFS Bank in Wilmington.”
“In the past week alone, Fowle said, he has seen referrals for mortgages increase, often from buyers with pre-approvals from now defunct mortgage companies like American Home Mortgage. ‘They’re saying, I want to close and I need help.’”
“When the housing market slowed and foreclosures began piling up, investors realized they may have bought into more risk than they’d realized.”
“‘In theory, securitization spreads all that risk around … so it makes us less vulnerable,’ says Jay Bryson, global economist at Wachovia Corp. ‘What we’re finding out now is everybody feels a little bit of the hurt and they don’t like it … so they’re pulling back on their lending opportunities.’”
“‘There are people who literally would have been approved a year ago or six months ago who we can no longer get approved for a mortgage,’ says Ann G. Riley, president of Gilpin Mortgage Co. in Wilmington. ‘We have advised borrowers as well as real estate agents that if someone was pre-approved six months ago, we need to pre-approve them again — because that product might not be there anymore.’”
The Fayetteville Observer from North Carolina. “Developers have been building often luxurious homes in anticipation of up to 45,000 people coming to the Fayetteville area by 2011 through base realignment. Some in the housing industry say the war, BRAC, a credit squeeze and a sluggish economy have led to overbuilding and a glut of houses on the market.”
“Figures from the Fayetteville Association of Realtors MLS appear to support that analysis. Those figures show 889 existing homes and 319 new homes on the market in July, an increase of 183 residential listings and 21 new constructions from a year ago. The average time it takes for a new house to sell has increased from 18 months at this time last year to 21 months today.”
“Developers are stuck with empty homes that won’t sell. ‘It got this way the last two to three years,’ said Bill Richardson, president of Richardson and Sons Construction. ‘The BRAC thing has brought on a lot of it. Everybody got a little bit ahead of themselves.’”
“‘On the Cumberland-Hoke line,’ he said, ‘there are subdivisions that have got hundreds of houses. And in one of them, they didn’t have one sold. But there’s a hell of a lot of houses out there. More houses than I’d be wanting to sit on.’”
“Developer Watson Caviness, who has been in business for 12 years in the Fayetteville area, blamed the media for giving the local housing market a bad rap of late. Reports of a bad market, he said, have been exaggerated.”
“‘It certainly is slow. It certainly is off,’ he said. ‘I have seen a lot of indicators that the fall could be a good market.’”
“Builder Loyd Landry said 200 to 300 builders can be found within 60 miles of Fayetteville. ‘And that’s what’s killing the market,’ he said. There’s an 11-month surplus of some homes that sell within the same price range, he said.”
“Richardson said his company is not building homes during this weak market stretch. ‘I think it’s overbuilt right now,’ he said. ‘It’s a cycle around here. Only this time, they’ve overbuilt more than in the past.’”
Realtor Dahlia Kaminsky: “It’s a great time to be a buyer. Let me put it that way.” Gee, Dahlia, have you EVER put it any other way? Even when prices (and they still are) were totally in cuckoo land. Don’t forget the other part of the mantra: “Interest rates are still low.”
“‘The market is saturated,’ said Dahlia Kaminsky, a Realtor who does most of her business in neighborhoods near Baltimore’s Patterson Park. ‘It’s a great time to be a buyer, let’s put it that way.’”
Please explain to me why it’s a great time to buy in a depreciating market?
Because she needs a comission….
It is a great time to
buygive me a comission.It’s a great time to catch knives?
Nice to see MD finally starting to come down. I have many friends/family in the area and most have been in denial thinking prices would NEVER come down due to job growth, no more land, (insert typical cliche here). I had numerous friends in MD buy very average townhouses in the $400k range thinking they would be priced out forever despite my warnings. The tightening credit in itself is going to hit every corner of the country regardless of how “special” each place is.
The credit situation finally puts people who cannot afford to buy out of the market. At today’s prices that is most people. It is precisely the ability of people to buy homes they could not afford as a result of EZ credit over the past few years that fueled the bubble to begin with, and without this there is no way prices do not adjust downwards to meet incomes.
‘On the Cumberland-Hoke line,’ he said, ‘there are subdivisions that have got hundreds of houses. And in one of them, they didn’t have one sold.’
Uh-0oooh
A lotta poor man make a five dollar bill, Keep him happy all the time.
Some other fella’s makin’ nothin’ at all And you can hear him cry,
“Can I go, buddy, can I go down Take your shift at the mine?”
Gotta get down to the Cumberland Mine.
Gotta get down to the Cumberland Mine.
That’s where I mainly spend my time.
Make good money, five dollars a day. Made anymore, I might move away.
Lotta poor man got the Cumberland Blues He can’t win for losin’
Lotta poor man got to walk the line Just to pay his union dues.
I don’t know now, I just don’t know If I’m goin’ back again.
Hey, spot-on Robert Hunter quote! Much appreciated.
No worries, we were assured that the HB’s learned their lesson from the last but…
*bust…
“I have seen a lot of indicators that the fall could be a good market.”
Name one.
His checkbook is empty by then… And that is an indicator that fall would be a good market for you to give him a comission.
It’s an army town so the usual indicators are lots of fast food restaurants, dive bars, tattoo shops and used car lots. Someone should remind this guy that army bases also provide housing, and soldiers deployed in Iraq may not want to worry about an ARM on a house they won’t see for 15 months.
“I have seen a lot of indicators that the fall could be a good market.”
Depends on the word fall. If you assume Fall Season I agree with you; If you assume ‘fall’ as in falling house prices and sales I agree with him.
But we all know what meaning he had in mind, don’t we!
Talk about disconnect Starter homes at $400K…
We sure have a major housing shortage in America for real starter homes starting at under $150K
Call me old fashioned I’d rather have 1000 extra square feet of a backyard then 1000 square feet of a house and no yard.
It makes you wonder what management has been smoking when they think starter homes should cost $400K. How long did they think this disconnect between salaries and prices could continue? No ponzi scheme lasts forever.
“Developers have been building often luxurious homes in anticipation of up to 45,000 people coming to the Fayetteville area by 2011 through base realignment.
Because army towns need luxury homes for those high military salaries.
I think the point is that current residents will be able to reap huge prifts by selling their existing homes at infalted prices to the poor soldiers. The current residents will then take their huge windfalls and move up to the luxury homes.
Huge windfalls in Fayettnam? Not gonna happen. The place is the absolute pitts of hell. The only major NC city that has been losing population for years ‘cos it sucks so bad. An accumulation of low end housing and trailor parks fueld by those high military salaries.
Lucury homes in Fayetteville. What, was Lumberton all built out?
Sedgrick Williams, a steam fitter, figures the end to easy credit is hurting his efforts to sell a ranch-style house in Randallstown… The three-bedroom home with a finished basement has been on the market a bit more than two months. Few people have come to see it. No one came to two of the open houses. Williams is asking $255,000, down $10,000 from his original asking price…
“I think I would have been better off if I sold last year,” said Williams, 45. He paused, then added: “I definitely would have been better off.”
He considered selling the house three years ago - … He got several offers the first day for more than his asking price of $140,000. He decided to keep the house as an investment property …
Now, he said, “I’m just hoping to sell this house as quickly as possible
The greed! The man listed 3 yrs ago at 140K and now he is whining that he can’t sell at 255K. When I read stories like this, I fervently hope for a mother of all crashes - even if it means I too may suffer due to a severe downturn in the whole economy.
He probably heloc’d the baby dry.
What on earth is a ’steam fitter’ ?
What is says: Steam fitter is someone who deals with equipment that involves pressure created by steam.
That nice dually 4X4 truck and plasma must really have been great investments.
“Developer Watson Caviness, who has been in business for 12 years in the Fayetteville area, blamed the media for giving the local housing market a bad rap of late. Reports of a bad market, he said, have been exaggerated.”
Gee Watson, let’s don’t take any blame for building 5 houses for every family in the community.
If anything the press way under-reported the housing problem for years. Had they done their job and not bowed to their advertisers, maybe a lot of people wouldn’t be in this situation today. This market was so oversaturated in 2004 that a crash was inevitable, again economics 101.
“Prices are dropping simply because the interest rates are going up.”
Sorry Kelly, you’re listening to too many brokers. Prices are dropping because there is a MASSIVE oversupply of housing in most areas of the country (and I’m sure Baltimore is one of them).
“Kelly was fortunate that she didn’t have a mortgage on the property. ‘Look, you don’t make money on everything,’ she said. ‘Prices are dropping simply because the interest rates are going up.’”
Interest Rates Goin Up???? To my knowlege 1) Forclsures are up and 2) Lending standards are geting more realistic - gota have some skin in the game.
What would she know anyway. She spent more than a quarter mil in cash on her kid - and the kid up and moved off to Hawaii anyway? Sounds like some Mommy Dearest crap - probably a real loon.
Probably to get away from Mommy.
“The bank or the mortgage company benefiting from the sale (of the foreclosed property) should pay for (the upkeep prior to sale), she said.”
I agree that they lender should ultimately pay, perhaps the HOA should slap a lien. What bothers me is the term “benefiting from the sale” - the lender DEFINITELY does not benefit from the sale, as it will be recorded, almost certainly, as a huge loss. The idea that people still think that lenders are making money on the FBs shows why the stocks for many of them (particularly banks) is taking so long to wind down.
It’s not that banks benefit from the sale, it’s that they are now the “owner” of the property and thus responsible. They wouldn’t have so many of these properties if they actually had downpayments and lent to credit worthy people. Let em pay. They helped create this mess that the rest of us have to live with.
Agree.
Can’t help but think that builders could reduce the price of those homes where not one house sold . IMHO ,these homes were built for speculators and California/New York equity locust . The desease that was spreading the Nation in 2004 and 2005 that created this false demand died .No more easy money to fund the speculator frenzy or the unqualified buyer .
At the end of the year the NAR is going to need to report that the United States went down by at least 10% in price ,but it’s more if you include the incentives . Makes those NAR commercials of “Good Time To Buy” seem like a big lie doesn’t it . When is the REIC going to stop leading the sheep to the slaughter ?
“When is the REIC going to stop leading the sheep to the slaughter ?”
Stop with the rhetorical questions.
Washington Post 8/26/07:
http://www.washingtonpost.com/wp-dyn/content/article/2007/08/25/AR2007082500214.html?hpid=sec-business
The Washington Post has struggled to report the real RE situation here in an unbiased manner. I suspect that much of the WP leadership and the staff “bought into” the hype of the last 5 years. Some may have “investments” that will not pan out as they would like if the “truth” were told.
DC metro is strange. I work near the beltway but admittedly I am not one for urban living . Arlington holds no appeal to me. I dislike condo buildings, traffic, diesel fumes, most of the SFHs in that area, and the cramped townhouses.
People are different and I can appreciate those differences, but a many people here seem to think “everyone” wants to live close-in to DC when some of us don’t.
I, for one, want to live in Arlington and think that prices here are insane. I hope that the Washington Post article is wrong and that prices will come down.
I also hope that there are plenty of people who do *not* want to live here
Many people who work in DC want to live close in because the commute to the city is heinous unless you do live close in. I think the idea that “everyone” wants to live close in is more a statement that a lot of people work in the city and don’t love spending hours a day in their cars.
I want to live close in, but I wouldn’t live in one of those townhouse farms if you paid me to do it. Identical, ugly, crappy construction and you don’t even get the city living benefit of being able to walk to basic services, entertainment and public transportation.
Did someone post just yesterday a list of 5 townhouses that were being sold at foreclosures in Alexandria that were just built and bought in 2005-2006. Actually, make that of the 8 that were being sold, 5 were foreclosed upon.
IIRC, all of those (at least the foreclosures) were listed for substantially less (e.g. $550k vs. $700k) than the 2005-2006 original selling prices.
Did someone post just yesterday a list of 5 townhouses that were being sold at foreclosures in Alexandria that were just built and bought in 2005-2006. Actually, make that of the 8 that were being sold, 5 were foreclosed upon.
IIRC, all of those (at least the foreclosures) were listed for substantially less (e.g. $550k vs. $700k) than the 2005-2006 original selling prices.
“Miriam Kelly bought a house in Pikesville at the beginning of last year for $272,000, intending it for her elder daughter. But the daughter married and moved to Hawaii, so Kelly put the four-bedroom home up for auction this month. It sold for $246,000, a loss of nearly 10 percent.”
That 10% is before you paid the RE their 5-6% com.
Plus closing costs of at least $6K when she bought it.
$26K (loss) + $6K (closing) + $12K (5% realtor) = $44K (actual loss)
Oh well, it’s only money. At least the brokers made $18K for filling out some forms.
Interesting that prices haven’t dropped nationally year over year since before 1950. That correlates with my assertion that the Baby Boomer generation and their parents fueled this massive run in housing, and they will ultimately cause it to reverse. We are already seeing it now.
This crash will be Baby Boomer fueled. No doubt about it.
Expect 10-15 years of ugliness.
BRING ON THE PAIN, BABY!!
WHAT THIS COUNTRY NEEDS IS A GOOD SIZE FINANCIAL SMOKING CRATER AND SOME TWISTED METAL.
There’s definitely going to be a big difference in the amount of housing that’s needed after the baby boomers are gone. Our parents had 4 and 5 kids or more in every family. The boomers mostly had 1 or 2 sometimes 3. So the generation behind the boomers is a lot smaller However I’m noticing this current young generation having 4 and 5 kids again. It goes in cycles I guess.
You may be right, but OTOH fewer are getting married, and those that are are usually doing so much later in life or divorcing quickly without pumping out any tots.
You think bankruptcy carries no stigma nowadays… what about divorce?
Housing Bubble Bursting Cartoon
http://www.toondoo.com/View.toon?param=42648
I have the answer to the “housing bust” and it will not cost government (tax payers) a dime. Get the the Department of Justice to create a team that can feed into computers all the information regarding any property in foreclosure. Include (1) The name of the broker including all persons who collected commissions. (2) The name of the realtor. (3) The person who assessed the valuation. (4) Check the paperwork via the computer for signs of deception such as fake incomes, etc. Finally, go after the realtors, brokers and assessors financial assets. Nothing would please me more than watching these scam artists lose their homes, BMW’s, etc. Wouldn’t it be wonderful to see a realtor on her/his way to work at the local Target store driving a 1975 Gremlin. Hope springs eternal……
Loved the comment about BRAC bringing in more Army brothers and sisters into the area in 2011. Everyone just sort of got ahead of themselves…LOL.
They did the same thing in Fort Walton Beach/Niceville/Destin/Crestview FL region in anticipation of BRAC troops coming in 2011. Er…it’s not even 08 yet!
Everywhere I look, the builders keep building! My husband took a short trip up to Montello WI a few weeks ago. He came home and asked me what the heck was going on up there (like I knew…LOL)
He said there were for sale signs EVERYwhere. Now folks, this is a sleepy little town with maybe 3000 people and median income of about 40,000 (mostly retired).
All I could say to him was the same thing that is going on everywhere. Yes, I said it, everywhere in the USA. Small towns, large cities…the panic is beginning.
Just an observation–seems like most want to cash out while the getting is good. (Or so they seem to think) How many are testing the waters vs I really need to get rid of this thing?
Got aspirin? LOL.
OT: Fox News had an RE Bimbo on this A.M. saying to expect home prices to drop 1 to 2% in the “Hot” spots over the next year and then level off. I didn’t watch the rest of that crap, but how in hell can these people get a spot on T.V.? It ain’t news it’s comedy!
Fox Bulls & Bears is almost like Jerry Springer. It’s right down in the gutter with CNBC, maybe even worse.
I read the same thing in an article in the paper today, but I don’t think it was attributed. Could it just be more NAR mumbo jumbo??
Developers are stuck with empty homes that won’t sell. ‘It got this way the last two to three years,’ said Bill Richardson, president of Richardson and Sons Construction. ‘The BRAC thing has brought on a lot of it.
I didn’t know Bill could double as the New Mexico governor, run this construction company in Maryland, and run for President. Wow, he can spread himself around. LOL.
This shouldn’t surprise anyone who has been watching housing the last few years. It is obvious to most rational people that the rapid increase in housing prices since 2000 or so wasn’t sustainable. Quite honestly, I believe that the run up in housing prices was due to the massive growth in the derivatives market, a.k.a. the global casino market. In 1998, the derivatives and similar finance markets were valued at around $80 trillion USD. In 2006, that increased to around $410 trillion. I would like to believe that a massive growth in fictitous finance would circulate throughout the US economy from housing costs to health care to gas prices (which is why I have my suspicions of peak oil). In reality, it wasn’t speculation and demographics that were responsable for most of the rapid growth in housing, it is FRAUD. You’re seeing it in the mortgage markets now, and don’t be surprised if most of the economic ‘growth’ of the last few years is basically hot air. From what we’ve seen in history regarding bubbles based on fraud (most economic bubbles are usually fraudlent in their nature), they tend to come down pretty hard, and many areas in the USA may see more than mere 50 - 80% declines. As they say, you live by the sword, you will die by it. Will we hyperinflate the currency? I’m sure that is an option on the table right now, but it won’t work in the long run.
“I’m not a real estate bum,” the president of Executive Preferred Properties announces. “I wear diamonds, Rolexes and necklaces. I’m a classy Realtor.” …..
“Equally irritating are the bank warning letters laid out before her on the kitchen table. Seither invested - unwisely it turns out - in expensive Clearwater waterfront property at the peak of the recent boom. Lenders are after her for millions of dollars in debts.”
After juggling 15 calls from debtors, creditors and clients, Seither lays the phones aside and delivers a pep talk to herself.
Read the sad, sad, story of the Tampa area realtors® that drank the kool-aid they were selling.
http://tinyurl.com/29d3bg
There is so much stupidity in this article, I don’t even know where to start.
TAXES TAXES TAXES! Is no one talking about property taxes and how much they are going UP UP UP! Who will pay all of these taxes to the counties. When owners walk away, do the banks have to pay? Do not the counties have the first right to sell these properties?
It is going to get real interesting in the months to come as property owners get those big inflated tax bills SOON!
“I GOT IT WRONG.”
http://www.nytimes.com/2007/08/26/business/26housing.html?pagewanted=2&_r=1