The Buyer Is Trigger-Shy Because Prices May Go Down More
The Shreveport Times reports on Virginia. “What some analysts are calling the worst housing sales slump in decades prompted U.S. Rep. Jim McCrery to hold onto his Washington, D.C.-area home until at least the spring. McCrery said Wednesday that he put the family’s house in McLean, Va., on the market in April but took down the for-sale sign two weeks ago.”
“‘We just had no idea the house wouldn’t sell,’ he said. ‘We lowered our price $50,000. That didn’t help. In Washington, it’s a little soft right now.’”
The Washington Post. “Washington’s real estate industry, already pinched by a slowdown in residential construction, is bracing for further retrenchment after last week’s meltdown in the mortgage market.”
“In recent months, companies have begun cutting back in big ways and small. Collectively they are beginning to add up across the region. Economists estimate that the real estate industry accounts for 12 to 15 percent of the jobs in the Washington area.”
“At Key Title’s Arlington office, the number of closing documents it processes each month has dropped from 100 three years ago to 35, according to Jay Eskovitz, a settlement agent.”
“The title searching company that Eskovitz uses to research whether a property has liens against it went from two employees to one. The title surveyor, who draws dimensions of the property and home for settlement documents, has pulled out of residential property closings.”
“‘It doesn’t just stop with us but affects so many more people,’ Eskovitz said.”
“Gerardo Avila comes each morning to a site in south Arlington where day laborers gather. He has long seen a decline in the number of contractors and remodelers who come by to find workers. Two years ago, summer days were busy, and he was almost guaranteed a job. But at noon on a recent day, the site was teeming with day laborers unable to find work.”
“‘It’s been like this many days,’ Avila said.”
“‘I see the next year as being very slow, so I’m conserving cash for the future,’ said Roy Kilby, co-owner of K&P Builders in Bowie, (a) Prince George’s firm that reduced its staff.”
“Kilby has cut prices on his homes in subdivisions of Prince George’s and Charles counties. The new homes are built with luxury finishes, the kinds of bells and whistles people were demanding when credit was easy to come by and his sales offices were full of prospective buyers. Now that it’s become harder for home buyers to obtain loans, he’s stuck with expensive houses on expensive lots that he is struggling to sell.”
“‘We’re doing just about anything we can do to get people into a house, said Kilby, a 50-year veteran of the home-building business. ‘And these are people we would have told to take a hike last year or the year before last.’”
“The credit crunch has turned $417,000 into the magic number for home buyers shopping for mortgages. Caught in the middle are potential home buyers who are getting walloped by higher rates or shut out of the market.”
“Tammy Arbogast and her husband, Derrick Fouts, own a townhouse in Germantown. Now that they have two young children, they want a larger home and were planning to buy one nearby until jumbo rates shot up and pushed them to reconsider their options.”
“Instead of buying the home and then selling the townhouse, they hope to do the reverse. But even if they get the asking price for their townhouse, they may need a jumbo loan. To lessen the borrowing costs, they could make a larger down payment by dipping into their kids’ college savings, but they prefer not to.”
“‘We can just stay put in our townhouse,’ said Arbogast. ‘We’ll just wait it out.’”
“Doing so might mean passing up the house they’ve been eyeing, but that’s okay, said Fouts. ‘You can’t get attached to a house in this climate. It’s so easy to lose a house because of variables out of your control.’”
“The question now is how long the jumbo rates will stay this high, said Mark Fleming, chief economist at First American Core Logic. “If this lasts much longer, then people will begin to reevaluate what they can afford.”
The Gazette from Maryland. “CBRE Realty Finance plans to revive the Monterey condo conversion at the former Pavilion apartments in Rockville. The conversion has been stalled since the company foreclosed on the project in May when the developer defaulted on its loan.”
“CBRE’s struggles with the Monterey and a second conversion project in Towson are a sign of how the condo collapse locally and nationally has begun to hurt lenders.”
“In May, the company foreclosed on the Monterey, a 434-unit condominium conversion project, and Rodgers Forge, a 508-unit condominium conversion project in Towson, after Triton Real Estate Partners, the Annapolis developer, defaulted on its debt payments.”
“Triton’s collapse was part of the popping of the region’s condo development bubble, which has seen almost 20,000 condominium units removed from the pipeline during the past 12 months, either by canceled conversions or shifts in new construction to rental units, according to an analysis of area condo trends by Delta Associates.”
The News Journal from Delaware. “After years of double-digit growth, the rise in farmland values in Delaware slowed last year in part due to a cooling-off of the housing market.”
“‘There are not a lot of deals getting done, and if you want to sell your land today you have to be prepared to be reasonable with the price,’ said Preston Schell, president of Ocean Atlantic Companies, a developer and builder based in Rehoboth Beach.”
“Schell said there still is a lot of interest in farmland for development, but some prices have dropped significantly, more than 50 percent. ‘Land that would have cost $45,000 to $50,000 an acre now we can buy for $15,000 to $20,000 an acre,’ Schell added.”
“‘When we see really good deals we are still out there buying,’ said Schell. ‘There are tons of buyers out there; the activity is stronger but the buyer is trigger-shy right now because prices may go down more.’”
The Daily Times from Delaware. “As in most parts of the country, the local real estate market has slowed down substantially in the last year, according to local realtors. ‘Depending on who you talk to or what paper you read, some people say we’re in for this for another year, some say five,’ said Rick Allamong, broker for Coldwell Banker in Bethany Beach.”
“‘The market has slowed dramatically from the pace we experienced two years ago,’ added Rick Meehan, a realtor and the mayor of Ocean City. Meehan, like most local realtors, says Americans are experiencing a buyer’s market. There’s a wealth of attractive properties to choose from and the sellers are willing to negotiate.”
“‘There’s never been a better time to buy,’ said Kathy Panco, another realtor. ‘Concessions are being made to make the transaction happen.’”
“It might be a buyer’s market, but that doesn’t mean that buyers are actually purchasing homes. There are currently 5,461 units on the market in Sussex County and 2,000 in Ocean City.”
“‘I think the jury is still out on what’s going to happen there,’ he said. ‘But we have a two-year supply of inventory and only about 30 percent of that will sell between now and next summer.’”
“In addition, many real estate agents say that vacation areas are usually the first to be hit by slowing sales, because they are not primary housing markets. ‘Resort areas are usually hit first,’ said realtor Ted Smith. ‘People don’t have to buy vacation homes.’”
“Most realtors remain optimistic in spite of the slow market. ‘Pretty soon people are going to be saying shoulda, coulda, woulda,’ Panco said.”
Business Week reports from New Jersey. “About 60 people huddle on the front lawn of the white bungalow with green shutters in Ocean Township, N.J. Many of them clutch bright yellow paper signs showing a bidder number. They hope to walk away with a house, winning a good deal at an auction.”
“Already, states that never hosted many housing auctions are seeing demand jump as home prices plunge and more borrowers find themselves trapped in unmanageable mortgages.”
“‘Until six months ago, we were only selling assets in California periodically, now we’re selling dozens and it could get into the hundreds,’ said Dean Williams, chief executive of (an) auction firm. ‘Same thing in Massachusetts, New York, Maryland and Virginia. Places where volume has been light has probably doubled since last year.’”
“Tricia Kelly, a local living with her parents, is hoping for a bargain. Even though the housing slump has stopped the sharp acceleration of home prices, Kelly still finds prices are too high for her in this town. ‘I’ve never been to one. If it’s going where I want, I might jump in,’ she says.”
“Lingering on the sidewalk, Tim Lane is curious to see what his old house will go for. He sold the house two-and-a-half years ago for $255,000 to the investor who lost it in foreclosure. ‘The guy tried to flip it for $379,000 a month later. Obviously, it didn’t work out,’ the electrician says with a chuckle.”
“The condo is first and Green rattles off the bids without a breath. The offers start to stall on the condo after its opening bid of $25,000, so Green tries to entice the crowd. ‘The last listing prices for this condo was $160,000,’ he says.”
“Hands shoot up and Tony Nardini, a mortgage broker, finally wins the condo for $75,000.”
“‘Now, here’s the one you have all come for,’ Green says, pointing to the quiet bungalow. Opening at $50,000, the bidding surges above $200,000. Kelly shakes her head as the price soars beyond her budget.”
“Finally, Antonio Pragosa’s offer of $283,000 ends the battle for the bungalow, and the West Long Branch, N.J., resident slips away shortly after signing the auction papers.”
“Nardini, who grabbed the condo for his parents, says: ‘That guy paid way too much. He let emotion take over as opposed to reality. At $200,000, it would have made sense.’”
Prices don’t have to go down, if salaries went up enough to account for 3X (maybe even 4X) loan caps. But the elites who acquired all the massive bubble wealth aren’t relinquishing that money into the economy, so we don’t have a salary “bubble” via inflation.
Remember, all the money lost during the dotbomb was still profit for someone, somewhere. That liquidity hasn’t been destroyed, just shifted from the middle class and upper class to the elite class.
All the profits of the housing bubble still exist out there — in someone’s pockets or non-investing savings account somewhere. It won’t cycle back into the economy, again, because the elite don’t necessarily want wage inflation when they’ll soon be able to buy many of the REOs for a discount and rent them out at a profit.
“‘There’s never been a better time to buy,’ said Kathy Panco, another realtor. ‘Concessions are being made to make the transaction happen.’”
Weren’t they saying this in 2005 also? Always a great time to buy according to these morons.You will never get rich takeing any of their shoddy advice.If you want real financial advice step up to the plate and hire someone who knows what they are doing. A 100 point multiple choice exam does not qualify you to advise a two year old.
This same Kathy Panco goes on to say that “Pretty soon people are going to be saying shoulda, coulda, woulda.” She is wrong. People are already saying it. They shoulda coulda woulda sold that POS 2 or 3 years ago. Of course if they had ALL tried to do that, nobody who coulda bought woulda.
Kathy Panco is the stereotypical realtor with deep dark tan lines, lots of gold around her neck and wrists, and clueless to the realities of the downturn. Ocean City is in for a world of hurt, it’s a pity many places have been torn down to build new condos.
Numbers for Ocean City;
http://coastalassociationofrealtors.com/statistics/default.htm
57 settlements and 1667 units for sale on the MLS. There are 5 major (400 or more) projects currently being built not reflected in the MLS, including one hi-rise project where condos are going for 1Million to 2.5Million each.
Yeah right.
Or you could just be a 100% contrarian to everything they say and try to get rich that way…wait, which would mean ‘never buy’. Hmmmm…I think most people here (myself included) must have done that and now are sitting as a majority of the 1% of the population that is cash heavy/debt light.
Ahh…the benefits of the ’sleep at night’ test. I got a good 7 hours last night myself. Wonder how all these rods are sleeping?
To steal from Niei…
Got Nyquil?
“All the profits of the housing bubble still exist out there…”
No, no, no. They do not “still exist.” Nor was all the money lost during the dotbomb “still profit for someone.” That’s not how it works. Yes, some get out with profits. The vast majority do not.
The “profits” are largely notional - written on a piece of paper - until a transaction occurs and money changes hands. As the market collapses, the notional profits simply dissapear - no one gets to keep them.
The middlemen who made the deals and collected the fees got their profit, unless they also drank the snake oil and put the money back into either the dotcoms or the RE.
Look at the earlier thread about the realtors as bag holders. Wall Streeters have stock portfolios, too.
I think someone posted earlier that you can make some money selling crack, but once you start to smoke it you’re toast.
Tell that to Scarface.
With all due respect, I disagree. A lot of people from all walks of life profited during the bubble years. The bubble money went to anyone who SOLD a property from 2001-2005. That could mean anyone, from the multibillion dollar REIT to (as happened to a lot of folks in DC) poor folks who sold their Columbia Heights, Shaw, Petworth and LeDroit Park townhouses for 10-15 times what they paid 25 years ago and then moved out to Upper Marlboro. Not all the winners were the “elite” (although certainly if you were trading CDOs and MBSs all that time you probably made out like a bandit, too).
You assume that the sellers were logical and savers. Once they flipped property and made the money it was much easier to get back into the game. Add to that the number of cases notated here on this blog were they were selling and buying up at the same time, but how many used the wrong mortgage type and bought more house then they could afford and how many got into the HELOC game. By your logic all of those lottery winners should have more money now than when they won the lottery, but most have gone from millionaires to common folk.
A DC realtor told me that the vast majority of people selling in the DC metro from 2002-2005 immediatly bought over-priced and much larger homes with subprime mortgages or other creative mortgages. Few she knew went fixed 30 year. She said some who took out equity loans on the new McMansion and bought “things.”
The smart ones sold, and then rented waiting for the tide to turn. They made money. Those that sold and left the area for areas where people can actually own decent housing at reasonable prices also did fine. Most who bought up in the DC area did not. They are in over-priced cheaply made mansions that have depreciated. Not enviable.
poor folks who sold their Columbia Heights, Shaw, Petworth and LeDroit Park townhouses for 10-15 times what they paid 25 years ago and then moved out to Upper Marlboro.
It would be interesting to know how much of their windfall went to the purchase of the Upper Marlboro home. Does their income allow for taxes and upkeep on the new property? (and that’s assuming they paid cash for the new house).
I’m kind of in the middle between your post and salinasron’s. Some of the folk who moved up will prove to be good money managers, and some are probably already HELOC busted.
I speculate that a lot of “bubble money” is not sitting in the bank—the money has ended up in the retail and service economy in the form of cars, electronics, vacations, durable goods, etc. Other “profits” are now locked up in a depreciating, illiquid asset known as their home.
Totally agree.
I wonder just how much of the market for flat-screen tellys the size of a small car consist(ed) of ‘bubble money’.
My flat screen was bubble money:-) As was my patio, horse barn and horse paddock. Of course, I also have a nicer home in a nicer neighborhood for the almost the same monthly nut as before (30 fixed 5.25).
My WAG is that maybe 30% of those that sold during the bubble used the funds to add to savings or to improve their quality of life without adding to their debt load. The other 70% took the windfall and managed to come out the other side with a temporary increase in standard of living and more debt than they had originally, and those folks will not fair well in the coming storm.
someone’s pockets or non-investing savings account somewhere. It won’t cycle back into the economy
Like ours. But we will buy back when prices are cut in half.
when this thing is over, this time will be considered one of the greatest wealth transfers in history from the rich to the peons. all the rich people that invested money in hedge funds that invested in mortgages are going to lose a lot of money. this money is going to sit in the bank account of some joe blow who bought a house in 1997 and sold it for huge gains a few years later.
I have to believe most J6Ps who made money by selling at the right time (by accident) blew it all on SUVs, plasma screens and vacations.
Agreed, there don’t seem to be many out there with the discipline/common sense it takes not only get up from the table - but to actually leave the casino entirely.
Given the negative savings rate, I’d have to disagree.
The transfer will not be in the form of “banked gains” from the original house sale, but due to REO portfolios being liquidated at 40 cents on the dollar to the only end user there is, the same J6P that was targeted for fleecing to begin with.
That’s why I don’t understand why the Democrats are worried about the bubble bursting - after all this will increase “affordability” more than any socialist program ever could. If 10% of FBs have to suffer financial ruin to make life better for the other 90% who just need a place to live, isn’t that good odds for a Demo? Sort of like “eat the rich”, right?
seeing as how 70% of our economy is consumer based, I’d say a majority of that money is sitting in t-bills owned by foreigners and will just get recycled back into the price of oil, gold, etc…
To A.B Dada:
Really, if this is allowed to play out, it will be the biggest transfer of wealth from the financial elites TO the middle class in history. I buy a house for a cool 750K. The price drops to 250K and I walk away. Who takes it in the shorts? The banks or hedge funds that bought the CDO.
This is why all the banks are clamoring for a bailout - they want the middle class taxpayer to agree the shoulder the losses. Stick it to the elites, NO BAILOUT!
I would rather have cheaper housing than more income, honestly. They can inflate my wages all they want, but I may not have a job tomorrow. That’s just the way it is with employment.
But, if I bought my house at a reasonably low rate, I will still be able to continue making payments on it while I’m out of work searching for a new job.
The price of the house isn’t going to change, my job situation might.
“Gerardo Avila comes each morning to a site in south Arlington where day laborers gather. He has long seen a decline in the number of contractors and remodelers who come by to find workers. Two years ago, summer days were busy, and he was almost guaranteed a job. But at noon on a recent day, the site was teeming with day laborers unable to find work.”
These day laborers are not counted in the unemployment numbers either. I think the unemployment numbers are probably double what’s being reported. More people are self-employed than any other time in the last 5 decades.
Besides that, the government underestimates real unemployment. At “The big Picture” blog, I read taht if we calculated unemployment the way european nations do, we’d be over 8% (in addition to the factors that you mentioned).
On CNBC a few weeks ago, they put up a chart showing housing starts to construction job growth. They were lock step on the way up. Starts up 5%, jobs up 5%. Starts up another 10%, jobs up 10%.
Then, in the last 18 months, starts down 50%. Jobs down 5%.
Yeah, right. Who do you think you are fooling.
On a more positive note, the affect of them losing their job is not as big an impact on the economy as a citizen. A citizen spends the money, so if they lose their job, it trickles through the economy. The illegal spent less than half the income here, and the rest was sent back to Mexico. Our economy won’t be as badly harmed by them sending less to Mexico.
I agree. And I think this may be a factor in diminishing the negative affect of the housing downturn. Also our little immigration problem may disappear, if all the illegals who can’t get work return home.
You are forgetting, though, that an illegal can apply for public services in many jurisdictions, further draining the resources of local governments who have to pay to give them services even though they are no longer working.
Thats a problem in down times, because property taxes provide the revenue base for many localities, and thats now going to be a problem with the housing bust.
Plus, you now will have people who are not citizens and who dont have jobs walking around the streets of America. Can anyone say CRIME WAVE?
Nor would it be hurt by sending THEM to Mexico.
I assume that’s the gathering spot on Four Mile Run Dr. It’s truly scary how many Central Americans line up to get work there. Arlington actually put up a specific waiting area, since the laborers were congregating all over the place there.
“These day laborers are not counted in the unemployment numbers either.”
-Ditto that for California - times 100 at least.
From the original post comes this classic:
“Resort areas are usually hit first,’ said realtor Ted Smith. “People don’t have to buy vacation homes.”
Say it ain’t so, Ted!
Bravo teddy!!!!!!!! Those poor ski bunnies are going to be hateing life soon.
chuckle… they won’t even know what hit them. I know dozens of people waiting to buy Mammoth 2nd homes. But when the hummer REIC set moved in three/four years ago they stopped buying. I actually know of a few avid skiers hoping for another bad snow season to “kick start” the prices down.
I know people who bought a large condo at Mammoth. They paid $150k for a repo. Original from builder $250. Today? $500k (or more) asking (no sales). They will trade again down at $200k (or so…) Maybe less… The REIC took over Mammoth…
Got popcorn?
Neil
Neil, have I been talking to you through telepathy again? I’ve been saying (and hoping) that RE in resort communities in CO will come down hard, and fast. The stuff I see on Craigslist just keeps getting reposted, at the same prices, time and again. But nothing is moving, even the stuff under 200. I have seen one reduction, of $50. Yes, that’s right, fifty bucks. I’ll have to linky linky.
Yes, here we go.
Original:
http://rockies.craigslist.org/rfs/397696735.html
Re-post:
http://rockies.craigslist.org/rfs/406641486.html
FIFTY FRIGGIN DOLLAR DROP. BIG DEAL.
maybe another 50k off and they could move it. 50 dollars doesn’t pay for the gas to go see the place!
You’re right. And, IF (really big IF) you could make it to I-70 during a big snow, you’d spend 50 bucks on about 2 days commute to Denver, and that’s IF you could find a job in Denver. Hmm, too many ifs. Maybe they should give the place away.
I’ll take it.
Stuff not trading under $200k? Ouch.
Oh, I should point out I’m talking 2 bed + loft condos. It is not even worth looking this year at condos other than curiosity.
As to telepathy… maybe I’m broadcasting today!
Neil
Wait for it to go as a foreclosure, then offer to squat there during the winter season. Just might work!
Neil,
Good plan on the Mammoth Condos Neil. We bought our condo when the prices we around 200k and I saw where one sold for mid-500Ks recently. I have heard there are some flippers who need to sell but the majority are people who love skiing and the area and pay little attention to the current market. Our developement has many families with older parents and adult children as co-owners. If prices get in the area of 200K, buy, and you will enjoy the place. Buy with a family member or ski buddy to help with the cost.
“the majority are people who love skiing and the area and pay little attention to the current market. ”
I don’t know about Mammoth, but, in Colorado ski country, people actually have to work to live there. if, you bought, say, a $250K condo in Copper Mountain, it’d be a 1br. You’d be lucky to rent it out monthly (and probably only during ski season) for $1,100 per month. And, the only reason a rent like that is supported is because he or she’ll ask a buddy or two to move in also. No way a ski bum can afford $1,100 / mo on their own. Or, if you rented it to vacationers, you might get $20K in rental per year. So, even best case scenario, after you pay taxes (tiny) and HOA (huge) you’d be losing a grand a month. Being a vacation home “owner” does not automatically mean you are rich. A gazillion (very scientific estimate) people still took out toxic loans, and are trying to make ends meet, thinking they could have 2 places for the monthly nut of one. Now, with resets, they can have two for the nut of four. Good riddance to the property speculators in resort towns that need to get their FUC
That was meant to end F ing charm back.
Maybe I shouldn’t have vented
My daughter is headed to Mammoth this 3 day weekend. She said she scored a great deal on a condo. I’ll take the Virginia Lakes area myself (9000ft abv sealevel).
Virginia Lakes? That’s the area between Lee Vining and Bridgeport, right? I don’t remember any condos there.
Yes, that’s the area. No condo’s as of 4 years ago but cabins, yes. Great place to stay if you are a camper is the ‘Dutch Frontier’. It was $20/night for a cabin to sleep 4.
There is the answer, everyone must be required by law to own at least one vacation home, or at the very least have a interest only in debt till you die mortgage on one.
“””Now, you listen to me! I want trading reopened right now. Get those brokers back in here! Turn those machines back on! [shouts]”””
If that does not work, we should start giving mortgages to newborn babies, it will be part of their birth certificate. The housing industry needs more mortgage holders and if adults can’t do it let just throw it on our children’s shoulders like the national debt.
Yes, Ben, the buyer is trigger-shy, just because the barrel is still pointed at his forehead (i.e. “Buy now or be priced out forever”, mantra).
Depending on locale….30-65% haircuts all around by 2010.
50% in Delaware and 25% from the South Carolina article. Not bad.
Ben,
Already seeing 20% drops in my neighbor just doing my nightly walks around the neighborhood and scarfing up the literature at every for sale sign. (Washington County, Minnesota)
New construction of the 2003-5 period really seems to be getting murdered fastest in the haircut process.
New construction of the 2003-5 period
Junk construction quality resulting in diminished remaining economic/physical life estimates.
Lenders should not be underwriting anymore than a 15 year notes against this vinyl and glue crap.
Sell now or be priced in forever.
Hotel California syndrome.
You can check out……….but you can never leave.
I drive past a Home Depot in Austin that doubles as a day labor site. At 8:00 or even 8:30 AM there are sometimes dozens of guys still waiting. Don’t know if this is typical or perhaps a sign the boom here is slowing down.
I wonder how many get hired? They are all over the place here.I saw two huge homeland security buses cruise througth the area and they scattered like wild fire.
I don’t see them at the Home Depot (El Con Mall) in Tucson. Never have, in fact. Ditto for the Lowe’s on Oracle Road. No sign of them. Ever.
They’re at the Home Depot on Rhode Island Ave. in the District as well.
Did anyone ever see that video where the guy picked up day laborers and drove them to the INS office?
Enforcement of immigration laws + housing bubble = Disaster for illegal immigrants:
http://www.azcentral.com/arizonarepublic/news/articles/0826sanctionsimpact08260.html
IMO the DC metro area prices have just barely shrunk… say 10 to 50K… which for most SFH is somewhere between 1 and 7%. A simple look at any of the real estate websites for prices at 300K and below will tell you that the bottom of the market is no where yet near in sight given average incomes.
Mike - It is incredibly difficult to get accurate information - the industry owns it and spins it like crazy. I suspect we are something like 10-15% off peak prices. Long way to go.
Speaking of accurate information - did you catch the quote from the title company guy? He’s telling us that his business volume has fallen 65% from peak. That is incredible. Anecdotal, sure, but very telling.
The mortgage market blew up a week ago. Give it a year and have a good look around the area.
Someone I know at church told me the exact same thing this past Sunday about the dropoff in business. They’ve managed to avoid layoffs by and large so far, though how I don’t know. One way was by employees moving to other title companies, who have since gone under. One allegedly because of embezzlement issues, apparently. She was also telling about items that their title company would point out as potential fraud (like a $74,000 “consulting fee” on the HUD) to the lender before closing, and the lender would just approve it anyways. Now, a few months later, the lender wants to see the title company paperwork (again). So I’m not feeling too sorry for lenders, not that I ever did.
I am in the market for a new place in Montgomery county in the next few years. No hurry, but we need to be out of DC and into a new school district by the time our kid gets to far along, so within 4 or 5 years.
In the area I am looking (inside the beltway, between River Road and the Potomac), prices haven’t come down much, but nothing is selling. The most common property on the market is a new construction house that replaced an older house. The older properties were bought by a smaller, custom builder for 500k-800k, torn down, and as large a house as possible built on the lot and priced at 1.7M to 2.4M. Some of the uglier ones have been on the market on and off since 2005.
I can’t see who is going to buy these places. In fact, I suspect that the builders are going to be hurting, eventually. Anyone know how to tell when smaller, custom builders are going under? I have been saving cash, and would like to come along and make a low-ball offer that would be close to their costs, but want to make sure the timing is right. Any clues?
I wouldn’t worry about their costs, since many builders will probably have lost the properties by the time you are in the market. Sounds like you’ll be perfectly positioned to hit the bottom of this cycle. By the time you are ready to buy, there will be plenty of places available at good prices. I’m in Arlington, and very little is moving in my neighborhood, especially the big houses shoehorned into our small lots in the last couple of years. Many of those, however, were built by individual specuvestors, rather than by developers.
From the second Washington Post story there (titled “Credit Crunch” in Ben’s entry:
“That tweaking benefited Melissa Pool, who took out a jumbo loan to purchase a new $950,000 loft in Arlington. Her father, Otis Pool, helped arrange the logistics but said the experience “kind of put me in a tizzy.”
Pool said his daughter signed a contract for the loft a few months ago while it was under construction, but as the closing date approached and the jumbo rates jumped, her mortgage company, First Savings Mortgage, arranged an alternative.
Her loan officer advised her to apply for a piggyback mortgage, meaning two loans. She made a $350,000 down payment, as planned. Then she split the remaining $600,000 between a first loan for $417,000 and a second at a higher interest rate for the balance.
The combined rate of the two, 6.875 percent, was about half a percentage point lower than the jumbo loan would have been, the mortgage company said.”
Two things jump out at me - first, of course, is buying a million dollar Arlington loft. Yikes.
Secondly - Even with the big downpayment, could that second mortgage possibly be a 30 year fixed?.
Wonder where it is — wish the writer at least identified the building.
One million American dollars for anything in Arlington, Virginia is absolutely astounding. What the hell happened to us?
Oh, there are some mansions on Arlington Ridge Road that should always go for at least $1 million. Not to mention some swank houses in N. Arlington near McLean. But a “loft”? Uhh, no. What the hell is a “loft” in Arlington, anyway? Last I checked, there was not a single part of Arlington (and I live there) that resembled Greenwich Village in any way. I guess a “loft” is a fancy name for an overpriced condo, of which there are many in Arlington.
Yeah — seeing “loft” attached to newly-built condo buildings bugs me, as well. My guess is that they are attempting to equate 12 foot ceilings and/or a particularly open floorplan with genuine loft living.
Did a little research — it might be this building:
http://www.washingtonian.com/blogarticles/homegarden/openhouse/4272.html
http://www.abdo.com/upandcoming/clarendon_blvd.html
They do seem pretty spacious and light-filled. Perhaps more deserving of the loft description than most other new stuf using the term. Just above Rosslyn.
Still — a million dollar condo.
there are more greater fools in the washington dc metro area than anywhere else in the country.
Not surprising. Look at who is the major employer around here.
You can get some excellent townhouses — or even SFH’s — in pretty nice parts of Alexandria and Arlington at a million bucks. And you won’t be choking down the 400 a month condo fee on those.
This must be something with a pretty hot view of Washington. If it’s just a two bedroon + den on a top floor in Clarendon - then she is really really really overpaying.
Her father, Otis Pool, helped arrange the logistics but said the experience “kind of put me in a tizzy.”
He “helped arrange the logistics”. I wonder if he co-signed? If so, I’d say he and his little princess are going to be a “tizzy” for a long time to come.
You’ve captured it. The issue is the $950K, not the $417K.
If you are going to buy a “luxury” dwelling you ought to have a huge downpayment, so the loan limit really isn’t the limit on housing prices. And this woman had $350K in cash. That means she could have paid more than $750K with a conforming loan. But most people would be lucky to have one-third that amount saved.
If she wasn’t in a “tizzy,” maybe she could figured out that the problem is the price is around 40% too high. After all, $517K is still a lot of money.
Arlington is expensive at the moment, to be sure, but with that $350k downpayment should could have easily bought a real house, not a “loft”, in my close-in Arlington neighborhood and used a conforming loan. Hell, there are at least some condos in Arlington that she could have paid cash for.
I guess my man Otis failed to teach his daughter good money management.
A little bit softer now, a little bit softer now…..
Wait till Otis sees us — he loves us!
My guess the 350K was where Daddy stepped in with a personal loan to his daughter - strictly off the books.
I wonder if that $350K wasn’t the result of emptying out her 401K retirement account.
People are stupid. Stupid people = easier to make money. The time to buy is when everybody and their mother tells you its stupid to buy. 1997 was the time to buy a condo in Arlington.
This girl falls in the category of ultra stupid, which I can understand, but I don’t understand her father’s stupidity. He must have been through previous real estate cycles. Just goes to show that stupid people never learn. The same type morons who forked over big dollars in 1987 for the condo I purchased in 1997 at a nice big discount…….and 7 years later unloaded at a nice fat profit……rinse and repeat.
“Better to be early to sell and late to buy, than late to sell and early to buy.” –> I can’t remember who coined this, but that has stuck with me. These condos look nice, they are near my old condo. I think I might buy one in 10 years. Rent it out to stupid dinks who like paying a lot of money for “atmosphere”.
Nightly Business Report on PBS had 2 Housing Bubble related stories last night.
Here’s a couple of choice quotes:
GERSH: So how bad could it get? Standard & Poor’s expects home prices will hit bottom next spring, declining 8 percent from the peak in early 2006. Moodyseconomy.com is even gloomier, projecting a 10 percent decline. Goldman Sachs and Lawler Economic both figure that home prices could fall as much as 15 percent nationwide. Compared to just a few months ago, twice as many builders are now reporting the credit crunch in the mortgage market is hurting their sales. National Association of Home Builders economist David Seiders expects his members will be under more pressure to reduce prices.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: South Florida may be the poster child for the nation’s condominium glut. But to see what real estate pros call “the shadow market”, you have to go online, to the free listings websites like Craigs list where hundreds, upon hundreds, upon hundreds of new condominium units are being put up for rent just in south Florida. These condo owners are trying their hands as landlords to get even a little cash flow from units which have lost 20 percent, 30 percent or more of their value over the past year and still can’t find any buyers. The effect of this shadow market is also spilling over into the traditional rental market, the apartment complexes owned by real estate investment trusts and other institutions. Real estate analysts say those landlords are now having to cut their lease rates or offer large incentives in order to attract the limited supply of people looking to rent.
Links to the transcripts:
http://www.pbs.org/nbr/site/onair/transcripts/070828d/
http://www.pbs.org/nbr/site/onair/transcripts/070828d/
To whomever first predicted this a long time ago. Well done.
We keep having MSM stories in Los Angeles about increasing rents… but we’re seeing the opposite. Oh, nothing like FL, but “the trend is your friend.”
Neil
“Resort areas are usually hit first,’ said realtor Ted Smith. “People don’t have to buy vacation homes.”
Best news I’ve heard that effects my area of the country also. Now maybe some of the locals that have had to leave the county because of Floridians’ second home POSs’ running up the prices of houses can afford to come back, and maybe, just maybe, my property taxes will come down (although I’m highly dubious about that, because policians have to tax us into poverty regardless of whether prices come down.)
Amen! (from Banner Elk)…
I live in a resort area of Florida, and we recently vacationed up your way. Wife and I were astounded at how high the prices were getting in NC, not much different than here. If all those places were purchased by Floridians, they are going to be upside-down in two states. Ouch.
…prompted U.S. Rep. Jim McCrery to hold onto his Washington, D.C.-area home until at least the spring.
Here we go again. LOL! Remember last summer, fall and winter and how we read a ton of stories about sellers pulling their homes off the market to wait for the coming Spring. That plan worked out brilliantly last year. It’s a strategy worth pursuing senator! You’re a foutain of brilliant decisions.
sorry..representative not senator. Still brilliant though.
What baffles me is why people that are buying another house refuse to reduce their prices? By the time your house goes up by $50K, your move-up house has too, so what have you gained?
Everyone who pulls their house off of the market helps those who keep their house on the market!
As someone planning to sell this fall I am all for it!
There aren’t enough Senators in this country to pull their houses off the market fast enough to help you sell your house in the fall unless it is priced way below market.
Not true. Technically in a free market whatever price it eventually sells for will be the market value
–
“The Buyer Is Trigger-Shy Because Prices May Go Down More”
This is the most critical phase of the bubble burst. By this time the speculative demand is long gone and the fundamental demand starts to go down. Buyers can wait for years but sellers of empty homes are under severe pressure to sell. That is when the serious decline in price is right ahead.
Jas
Most houses for sale in my ‘hood are empty. I read someplace that 40% of the inventory in Las Vegas is empty.
For PHX, 47% of houses in MLS are vacant, and another 6% are rented out. So, less than half of the houses on the market are owner occupied. Norm is said to be about 80% owner occupied.
What buyers? I don’t see any of those around.
“…prices may go down more.”
When Joe6Pack finally gets told by the media that real estate is an asset guaranteed to decline in value, this bubble will stop deflating and finally pop.
Actualy, home prices haven’t always gone down.
Govt started keeping stats in the 1940 census. It happens to be when home prices were 50% below norm due to the little known event known as the Great Depresion. So, in the 40s and 50s home prices rose quickly back to historc norm… In short, house prices doubled, when adjusted for inflation.
Since mid-50s, when prices had recoverd from the crash, home prices have been tighly locked to household income. Household income rose rapidly in the 70s as the two income family became common. As a result, home prices rose rapidly during that time.
People have taken those two big jumps as evidence that prices always go up faster than inflation. They keep trying to get big run ups, but those run ups result in prices falling back to the household income support level. Household income is rising at about 2% above rate of inflation… because more and more multi-income families.
Unfortunatly, the Realtors and govt and anyone else that should be telling people the truth, have flat out refused to show how house prices are locked to husehold income!!!! There is no money in the truth!
–
The Housing Price Forecast Game:
Final Score: Propaganda 49 Truth 3
Reminds me of a 49rs game on the road during their heydays.
Jas
Against the Lions probably.
haha what a fitting name for the team.
But maybe they should change it to the 05ers to keep more in tune with the times.
“As a result, home prices rose rapidly during that time…”
The average size of new houses also increased during that time period, quite dramatically. You have to look at the Case-Schiller Index or another such index that blocks by house (i.e. price changes are derived by looking at pairs of sales at each house). Just because people are spending more on bigger houses does not mean that you can sell your house for more.
“Household income rose rapidly in the 70s as the two income family became common”
Actually, home prices and income rose rapidly due to another phenomenon of the 70’s: inflation.
Which is the damn problem with this Fed; rather than just stepping away and allowing things like deflation or inflation, they practice economy management. What we need more than anything is a good old fashioned 70’s style recession, to clear out the detritus. What we get instead are rate cuts, bailouts, and the like. Wonder what Volcker thinks of that…..
“The question now is how long the jumbo rates will stay this high, said Mark Fleming, chief economist at First American Core Logic. “If this lasts much longer, then people will begin to reevaluate what they can afford.”
I thought First American Core Logic was closed, that all the Flemings marched over the cliff. The rates are still incredibly low. 8% for a 30 year fixed Jumbo is good. For risk analysis First American was right up there with the hedge funds.
“8% for a 30 year fixed Jumbo is good.”
8% of the price tag on a California starter home ain’t so good (8% X $500,000 = $40,000 /year in interest…).
no problem.
Just do a negative-am, on a 125% LTV and re-finance in a couple of years when the price goes back up.
Report just hit CNBC that Bear, Goldman and Lehman are all preparing for large layoffs in their structured product divisions for the first week of sept…
Wonder what effect that will have on the New York housing market.
Gonna be lots of bloodshed in the next 2 months IMHO.
If true, this is the “event” that will signal the change.
Wow… my friends think I’m smarter than I am… I’ve told them all year to wait until October… Looks like things are set. (I told October to non-HBB friends as I felt that was a safe date… seasonally, ,things just fall apart after the kids go back to school…)
Neil
Maybe I should change my screen name to OCTOBER!!
But, I’d have to change it back eventually.
Ben Stein was saying two weeks ago that housing will have little to no effect on the economy because it is only 7% of the total.
What a fenderhead.
Ben conveniently forgets future ARM resets. He’s a shill.
Ben Stein owns a lot of houses.
Great posts..learning a lot..have you guys heard or Ron Paul? If not check out some vid on him - ties in w/ this bubble
When in the course of human events
Don’t Tread on Me
Stop Dreaming
Join The Revolution
Rudy’s answer to everything
What we chose to ignore
Many members of this site are big proponents of the Ron Paul Revolution. I myself, have voted Libritarian in the last 3 presidential elections.
Still, I’m not really a Libritarian. I want a true fiscal conservative…. none out there.
“voted Libritarian in the last 3 presidential elections” Same here. Vox clamantis in deserto, unfortunately.
Mr. Bubble,
You a Latin scholar, or did you go to Dartmouth?
Lots of Ron Paul supporters around here.
Ron Paul, despite his mesage is DOA. When you have an electorate in which 46% do not pay taxes, they are not going to elect anyone that wants to reduce taxes! End of debate. Why? If taxes are lowered it is a threat to there Guvment subsidy (In what ever form it may be!)
http://www.thestreet.com/s/housing-bailout-chatter-gets-louder/newsanalysis/banking/10377008.html?puc=_tscana&
Cool! A bailout would only cost half the early estimate of Katrina damage costs (only $100b, not $200b)…
Add another surprising name to the housing-bailout chorus.
Punk Ziegel analyst Richard Bove became the latest high-profile market observer Wednesday to predict that the feds will take action to forestall the collapse of the U.S. housing market.
Bad mortgages “have become a major problem,” Bove says in a research note Wednesday. He suggests the government may end up proposing to ease the pressure on the sagging mortgage market by offering low-cost federally backed loans to homeowners whose adjustable-rate mortgages are about to reset to much higher rates.
Bove puts the cost of a bailout at $100 billion but says even that hefty price tag could come to be seen as modest given the scale of potential problems in the housing market.
They can “bail out” the FBs all they want, but the fact is that the supply of money willing to fund future stupidity seems to have largely dried up.
Besides, how does refinancing help out an FB who has zero or negative equity, and just basically CAN’T AFFORD THE FREAKIN’ HOUSE???
Sorry for the shouting, but there is just too much “stuck on stupid” out there…
They can forestall foreclosure but they can’t stop prices from dropping. Which means the people paying the mortgages will at some point realize that they’re paying twice as much as their new neighbor, which means they’re going to walk away from a 30 year back monkey regardless of the odds of foreclosure.
I don’t see how US$100 billion would even cover the cost of the Federal agency in charge of doling it out.
US$100b = 200,000 mortgages at US$500k. Not a significant portion of those in trouble, I’d say. And how do you perform the bailout? Pay off the mortgage lender for the difference between the mortgage and the market appraisal? I don’t see that working, either.
The best bailout right now is for the Federal Reserve to stop meeting, period. Don’t change rates, don’t create new liquidity, don’t perform overnight loans for more than overnight, and don’t do let anyone take out more than 1 overnight loan per week.
Stop the madness.
and of course
http://www.thestreet.com/s/mozilo-cashed-out-at-top-of-market/funds/followmoney/10376833.html?puc=_dm&
–
Robert Toll showed the way. You know when is good time to put in place scheduled sales. They had no knowledge of the future of their business.
Let us see, for how many years Gates, Toll and Mozilo didn’t sale any stock, or juts a tiny bit?
Jas
I bet Tan Man and Bob McMansion Toll will go to jail for pulling the same scheme.
“You can’t get attached to a house in this climate.”
The real estate industry in general relies a lot on emotions (”this is the perfect house for you, don’t let it slip through your fingers.”), and a change in the attitude of buyers will cause just as much downward pressure on prices as credit tightening.
Emotions again: ““‘There’s never been a better time to buy,’ said Kathy Panco, another realtor”. Is that part of the RE exam, learning how to always respond with “There’s never been a better time to buy”?
And again: “‘Pretty soon people are going to be saying shoulda, coulda, woulda,’ Panco said.”” Don’t let this opportunity pass you by! Act now! You will be sad when prices start going up again, and you’ve realized that you missed the boat, that the train has pulled out of the station, and the rocket is headed for the moon without you!
On the AZ Repugnant site, I’ve been in a debate with a Realtor. She, of course, is saying that it is not their fault. Never my contention it is “thier fault”. There is too much blame to go around, and Realtors were just one of the major players.
I continue to ask, “If now is a good time to buy, when is it a bad time to buy?”. No answer. Of course, the real answer is that the Realtor always needs a comission, so it is ALWAYS a good time (for them) for you to buy.
and why should a Realtor or the NAR give any direction to people on whether or not it is a good time to buy. I thought the purpose of their job is to match buyers with homes, not give out advice on market timing.
My understanding is that the DC area is a very high risk area for housing. Even with the federal government nearby, what warrants $400K housing values? I don’t think that even your government employees are paid that well to be able to afford that. For the record, I don’t think the DC area is a good place to live. There’s tons of crime and poverty (in the nation’s capital of all places) and a good chunk of the job market is dependent on the feds who might not be as strong as we’d like to believe in a few years. If millions of people lose their houses and jobs, and unemployment is more than 20%, would we expect tax revenues to dip at least a little bit at the federal level? Sure, we could make up for the loss by raising taxes and confiscating people’s properties and freedoms even more, but I wonder how well that will hold up.
Better head for the hills if you’re in DC!
Government tends to be recession proof. So then it’s a good place to work and live.
The problem is that most jobs in DC are only indirectly government jobs. Most of the largest companies in our country have a large office in the DC area so that they can have more influence over the federal government policies.
The Government jobs may be safe, but the government priorities may shift and leave many contractors out of work. Cuts from big companies will certainly be made in the DC area.
gov workers are cradle to grave
DC is off 12% in 06 w no change in 07
turnover is steady as BIG GOV gets bigger
go Ron Paul
Most of the DC area is actually very nice and not at all like the hellhole parts of DC itself. And the federal government is a very stable employer. None of the incompetents ever get fired, since they’re all unionized.
And all of the lobbyists/lawyers/IT contractors etc. who revolve around Uncle Sam? They make a lot of money and aren’t going away. That said, incomes and housing prices are way out of whack even in the most affluent suburban counties in metro DC.
WOW…. Who was that dude on CNBC power lunch?
“We’re in a solvancy crash, not a credit crunch. There is nothing the fed can do to restore solvancy.”
“King of shorts” He is a well known short seller.
“…. prompted U.S. Rep. Jim McCrery to hold onto his Washington, D.C.-area home until at least the spring. McCrery said Wednesday that he put the family’s house in McLean, Va., on the market in April but took down the for-sale sign two weeks ago.”
“‘We just had no idea the house wouldn’t sell,’ he said. ‘We lowered our price $50,000. That didn’t help. In Washington, it’s a little soft right now”"
OH CRAP!!!!!! If an elected FEDERAL representative does not know what is happening in the hosuing market after all of this turmoil and reporting, then we are screwed even worse than I had previously thought as a country.
You expect an elected official to understand this at an early stage?!? (Yes, its still early.) You have a higher opinion of elected officials than I do. Now, as to restaurants, mixed drinks, and women, I’d bet they would be “informed.”
Neil
In DC, an area I had been watching was near Logan Circle, 12th and N street. Back in May I saw 5 or 6 for sale signs pop up all at once, I was really curious what would happen. Well, it turns out there is only one sign left. I was told every other one sold, some for more than the asking (but I have not confirmed this, it was stated by an individual that lives two blocks over). Loan circle is one of the few neighborhoods that has completed a full transition in DC, and might be the most resistant in falling.
But are they all occupied? There are still a few specuvestors trying to do renovation/flips in my Arlington neighborhood, believe it or not.
I think Logan Circle is still iffy on the Southeast side. There are projects a few blocks away on 10th and 11th Streets. And the area to the Northeast (Howard U) can be iffy, too. No way Logan Circle is most resistant in falling. I’d say it’s one of the 1st places to fall.
Just because it has one of the worst traffic planning, way too many street lights at night for anyone who wanted to let in some night air, and several resident bums does not mean that it will be one of the first places to fall… perhaps third.
Is that near the 9:30 club?
“The credit crunch has turned $417,000 into the magic number for home buyers shopping for mortgages. Caught in the middle are potential home buyers who are getting walloped by higher rates or shut out of the market.”
$417,000 is the magic number for politicians who want to respike the Jumbo lending punch bowl by qualifying low income (FHA-financed) households to buy Jumbo California McMansions with loans that are no longer classified as Jumbo. Do you think the Dems have considered that they might be putting more of their low-income constituents on the road to future foreclosure and bankruptcy if their proposed bailout measure passes?
Dems are not interested in them but getting votes and making money.
if you look at where most democrats are from you’ll see that low income people aren’t their constituents. it’s the bankers and hedge fund managers
“Tammy Arbogast and her husband, Derrick Fouts, own a townhouse in Germantown. Now that they have two young children, they want a larger home and were planning to buy one nearby until jumbo rates shot up and pushed them to reconsider their options.”
Hmmm…
Husband, wife and 2 little kids in Germantown TH which means 3 bedrooms, 1000-1300sq and possibly a basement.
Why do people always think they need huge houses? Since when do children even require their own bedrooms?
““Instead of buying the home and then selling the townhouse, they hope to do the reverse. But even if they get the asking price for their townhouse, they may need a jumbo loan. To lessen the borrowing costs, they could make a larger down payment by dipping into their kids’ college savings, but they prefer not to.””
Interesting dilemma. Overpriced home now or overpriced degree (calling it an education is just plain wrong) later?
Why do people always think they need huge houses? Since when do children even require their own bedrooms?
There was an interesting thread a few days ago with a few comments about the “perfect sized” house. Modest by “McMansion” standards, they were still very large by the standards of just a generation or two ago. At least, they seemed large to me.
Our kids share a bedroom and do not seem tramitized (yet).
Actually, they seem to be far more content then my nephew who must sleep alone in his own room.
“my nephew who must sleep alone in his own room”
Have you smacked that kid yet?
I’m a minimalist by nature (I drive my family crazy throwing out things that haven’t been used in five minutes), but even so I think 1000-1300 sq. ft. is tight for a family of four. We used to live in a house that was 1450 sq. ft. in California. We found it more than adequate, especially since we spent most of our time outdoors. When we moved to Maryland, we bought a townhouse that was about the same size, thinking we would be perfectly content. However, the kids were indoors a lot more because of inclement weather, and in the end, we decided it was too small. Now that we live in Colorado, we’re in a house that’s about 1700 sq. ft., and it is much more comfortable for all of us.
Also, townhouse communities are filled with singletons, younger DINKs & retired folks. They are generally not kid-friendly environments. I can’t fault the couple in the article for wanting to move into a SFH.
As far as children requiring their own bedrooms, it’s pretty much essential if they are of opposite genders once the oldest reaches age ten. Been there, done that.
1000 to 1300 SF doesn’t seem excessive for a family 4 to me. Seems fairly modest.
My mom and dad raised eight kids in a 3 bedroom, 1 bath, 1200 sq ft home they built themselves. I slept on the floor for a couple years, and slept in the basement laundry room for a couple years more, but it didn’t traumatize any of us.
Now we’re all middle-aged, and I live in the house my parents built. Funny thing is, I’ve got the smallest house in the family, but the most storage space, because when my dad designed the house he built a big attic and basement and loads of closets. Plus an oversized detached garage. My siblings live in modern split-levels with hardly any closets, no attic storage, no basement storage, and teensy attached garages. So they store all their stuff at my house.
I’m sure it didn’t traumatize you. My dad slept on a mattress tucked into the basement corner of a 750 sq. ft. 2 bd/ 1 bth as a teenager. Prior to that, he slept in the corner of a dining room, when he and his widowed mother were taken in by his grandmother. Nonetheless, I wouldn’t want to repeat that kind of set-up with his grandchildren, and neither would he. No doubt my children are living a luxurious youth compared with his, but I don’t think it’s excessive for my kids to have rooms of their own and a yard to run around in. Even my grandparents, for all of their frugality, aspired to the same thing. They just never quite got there.
Being stuck in a 1200 sq. ft. house with any number of kids, of any size, would render me considerably crazier than I already am. I guess I’m the one who would be traumatized!
I need my space…literally.
1000 to 1300 SF doesn’t seem excessive for a family 4 to me. Seems fairly modest.
To me, it seems like poverty.
But them, again, I’m from the Midwest. The land of 2000 sqft houses (3000 sqft ifyou include the basement) plus large backyards.
The 3:00 dow surge is starting about 20 minutes early today.
PPT boys in there already…..exxxccceeellleeennnttt (in my best Montgomery Burns voice)……keep that dope and trash flowin’ into the markets veins, BB.
Oh, it’s all about “bargains” today. They all expect a Fed Funds Rate Cut. They all think it’s in the bag, or mandatory. We’ll see. Pretty far out to price that bullsh!t in over three weeks in advance, even if you KNOW, or think you know, it’s going to happen. Then what would happen if they did cut? You got it, another surge! Because they forgot all about the surge from three weeks ago! it’s all good!
Sarcasm off.
“‘I think the jury is still out on what’s going to happen there,’ he said. ‘But we have a two-year supply of inventory and only about 30 percent of that will sell between now and next summer.’”
Huh?
Two year supply, but less than a third will sell in a year. SOunds more like a 3+ year supply, and they know it. And next summer it’ll be a 6 year supply.
2 year supply is takings listings and dividing by sales… But we’re in summer, so higher than average monthly sales. Months’ of supply will grow as we enter the slower season… and as transactions are slice in half by newer, tighter lending standards.
test
Moody’s says leveraged loan commitments of major US investment banks do not have negative rating implications as liquidity remains sufficient; earnings impact “manageable”
MSNBC Reporting. It’s all over. Everything is good. We can shut down all the blog’s and go back to work.
Of course it’s good, because the Fed is buying the toxic sh!t, and becoming the new bagholder. The greater fool is now the FED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Passed with flying colors, Chazman!
Test
“Already, states that never hosted many housing auctions are seeing demand jump as home prices plunge and more borrowers find themselves trapped in unmanageable mortgages.”
Auctions are currently a sham. They’re using high-pressure sales techniques to work buyers into a frenzy, often even employing SHILLS posing as bidders to drive up the sales price.
I think DESPERATION of behalf of sellers needs to set in more thoroughly before REAL ‘deals’ are to be found at these -for now- phony auctions.
The ONLY thing that will make people “reevaluate what they can afford”
Lookie! Lookie! “Debt” may be the newest four-letter word!
http://www.tucsoncitizen.com/ss/personal_finance/61313.php
Moody’s says leveraged loan commitments of major US investment banks do not have negative rating implications as liquidity remains sufficient; earnings impact “manageable”
MSNBC Reporting: It’s all good. We can shut down all the blog’s now and go back to work.
Look at
http://biz.yahoo.com/ap/070829/expensive_homes.html
The point is: 521.25K is the max. for almost all buyers. (with 20% down, 417K/.8=521.25). Having the median price above $1million in SF and Silicone Valley, means prepare for a 50% decline.
Of course, there is a possibility of ceiling increase. This will immediately translate to a huge money influx ==> high inflation ==> crushing dollar ==> high real interest rates ==> unaffordable loans for everyone. Either way those “little boxes” worth no more than 50% of their price.
I’ve long had a dispute with CA DoF’s numbers and stuck by my (relatively) trusty US Census data.
So while trying to uncover an additional dataset or two, I came across this article. Very interesting reading if you are wondering why the domestic outmigration numbers for the last 7 years feel squeggy.
http://www.ccsce.com/pdf/Numbers-apr07-population.pdf
psst PDF warning
Also, if anyone can grab me MHI data by county for 1971 to 2006, I’d be seriously thrilled. Same with median Home price by county.
BEA and USC aren’t giving me anything.
Thanks for posting this.
Can someone please tell me were all this gambling money is coming from, went to Vegas and all week the hotels and strip are packed and people are betting like nuts on everything at every table. Maybe they never turn on a tv or leave the casino for months on end and don’t realize what is happening?
Don’t you know, those are the truly rich. The same that’ll keep prices boosted in ski resorts, the beach, blah, blah, blah. . .
Seriously though. Maybe it is because people are having a last hurrah? Or they are trying to win a few more mortgage payments? Or they booked the trip a long time ago?
p.s. The casinos here in Iowa are far less busy than last year.
I’m over in the Bahamas, based at Atlantis Marina at the moment.
Casino is packed every night and most tables start at $100 minimum bet! Yikes!
Enforcement of immigration laws + housing bubble = Disaster for illegal aliens
http://www.azcentral.com/arizonarepublic/news/articles/0826sanctionsimpact08260.html