Local Market Observations!
What do you see in your housing market this weekend? A new home sale? “This is your LAST CHANCE to get a new Centex inventory home at a drastically reduced price. If you’ve been waiting to buy, NOW’S THE TIME!”
Or lower prices? “Residential home sales have fallen 22.6 percent in the period of Jan. 1 through June 30 of this year, said Kirk Goehring, senior VP at First South Bank in Jackson, Tennessee; the number of homes on the market during that same time period stood at 185, and a 37 percent increase over the 135 homes on the market in 2005.”
“Market saturation has caused some home prices to be reduced, said Gerry Neese, a 22-year veteran of the Jackson real estate market. ‘You can go through the MLS and see a lot of prices that have been reduced,’ he said. ‘We are having to adjust prices back to get houses to move.’”
A related market effect? “Sellers are eager to make deals, and buyers are in control, but there’s nary a real estate sign in sight. Welcome to the new and used vehicle market, where many Northern San Joaquin Valley dealers are experiencing the same slowdown seen in housing.”
“What happens in auto sales often follows housing markets, dealers said…because fewer people can refinance their home loans and use the money to buy a car or truck. ‘That was driving the market,’ said David Hillier, who owns Hillier Ford in Escalon. ‘The best way to describe what’s happening now is like the real estate people say: It’s going back to normal.’”
A housing bubble reflection? “Even Robert Toll admits there are troubles in the U.S. housing market. He spoke to CNN’s Maggie Lake. Maggie Lake: ‘Should we have seen this slump coming? Should we have been better at spotting it?’”
“Robert Toll: ‘I don’t see how we could have done better. The news talked about the bubble while we were still roaring as a market. So there were plenty of warnings that we were entering trepidatious times.’”
“Maggie: You only know after it happens. Toll: It’s hard. You should feel it, but what would you do? You say I’m raising my prices 5, 10 thousand dollars every other week — I better quit? Shareholders might have a problem with that.”
“Maggie: What do you worry about most as CEO of Toll Brothers? Toll: The macro economic scene has bothered me, this time around more than anything else. God forbid we have a recession, a bad economy on top of a bad housing market, then we are in for trouble.’”
“Maggie: What do you see happening? Toll: ‘I’m sorry to say the future is that you will see a rebound that will come back with a vengeance and the prices will chase up even faster than they have in the past.’”
“‘I think what you will see when the market straightens itself out, as it always does, you will see a resurgence so that we begin to pay for our homes proportionately to what they are paying in Britain or Western Europe, which is 45 even 50 percent of their incomes for their housing.’”
Here is a subprime map someone posted this week.
Note to CNN: Mr Toll has been dead wrong about the housing bubble. Why do you still follow him around like a puppy dog?
That subprime red spot over Chicago extends well into the exurbs. I’m in Euros, waiting for that 50% drop, and the realtor.com stuff I’m seeing confirms some liar loans, quite a few large homes furnished from Wally World/Target. It’s rare to see one well furnished. I’ve been using furnishings to gauge seller distress and so far, so good. Also seeing a lot of empty and never occupied offerings. Bad is good!
45 to 50 percent of their incomes? Uh, Mr. Troll, Their massive tax load means that they pay less in gross percentage than you imply. Americans couldn’t possibly afford 50% income without socialism. We pay for our quality of life after taxes. Please grow a brain.
“…you will see a resurgence so that we begin to pay for our homes proportionately to what they are paying in Britain or Western Europe, which is 45 even 50 percent of their incomes for their housing.”—Bob Toll
Why is it that whenever a disparity is noted between the U.S. and European countries the assumption always is that the U.S will change to conform with Europe? Why not the other way around? Even yet, why couldn’t this disparity persist indefinitely? Is there some economic theory that says consumer preferences must be uniform across the globe?
BTW, some Americans already are paying more than 50% of their income on their homes which is what got this market into trouble in the first place.
Seeing as how income growth is flat that would mean a huge, ginormous, cut in disposable income which would absolutely crush GDP growth.
Since Europe has their own housing bubbles going on, using them to forecast our future costs is not likely to get you anywhere.
http://www.housepricecrash.co.uk/
“‘I think what you will see when the market straightens itself out, as it always does, you will see a resurgence so that we begin to pay for our homes proportionately to what they are paying in Britain or Western Europe, which is 45 even 50 percent of their incomes for their housing.’”
Flipping through channels a few days ago, I came across a discussion of our imigration policies on C-Span by a panel of 4 experts. It was pointed out during their discussions that the US has the fastest growing population in the world at a rate of just over 2 offspring per female. Countries including Japan , S Korea Russia and most of Europe have rates of about 1.0 baby per female. The US, with imigration (legal) at 1.6 million per year, will continue to grow slowly. The other countries are, however, plummeting in popuation in a geometric manner.
I wonder if this has anything to do with other countries being so interested in our mortgage backed investments to fund their babyboom retirements? How can their housing markets continue their high prices as the population plummets? Any comments?
good question, I have mentioned this before … the Netherlands is expected by some experts to have negative population growth from next year, and within 10-15 years many EU countries will follow. Add to that the much longer lifespan of the average EU home, and you can see that the relatively high building activity in the US compared to EU does not tell the full story. Actually reproduction rates in EU are higher than you indicate, the lowest are around 1.2/1.3 as far as I know and most of Europe is between 1.5 and 2.0 (but still below the required 2.1 for stable population numbers). This trend is partly balanced by another trend: the average EU household is getting smaller. Obviously, without immigration (and big former immigrant families) many EU countries would already have severly negative growth numbers.
In Netherlands authorities try to solve this ‘problem’ by feverishly demolishing whole areas of cheap (but perfectly OK) housing and replacing it with small numbers of luxury homes. The people who lived there can’t pay the new homes/rent so they get massive subsidies for years to come.
This is definitely done to keep homeprices up (which are also a big chunk of our babyboomers pensions).
A whole lot of Europe is likely already negative, other than the huge Moslem immigration influx over the last several years.
it’s not just muslims coming in - they are a minority of the migrants that gets much attention; and I think the ’second generation’ in Europe often is not religious at all.
The US has a fertility rate around 2.0 child per women as you have said. Anything under 2.05 will cause population to decline. The problem is that the illegal birth rate (Mexican) is 2.6 and this will cause the Mexican population to rise to 25% of the US by 2050. The US population will rise to half a billion.
We have the most bueatiful country in the world (I have seen much of the world) and our idiot policies are over populating it causing a pandora’s box of problems.
The US population will rise to half a billion.
Pundits are saying the earth cannot environmentally nor materially support the US’s current comsumption lifestyle with a population of 300 million, never mind 500 million.
The parking lot is FULL.
we need a new plague
- Dwight Schrute
Mr. Toll was so busy selling shares in his company that he failed to see the bubble. Total nonsense. If he and the other insiders at his company see such a rosy future they should be buying up their shares. Alas, they are all selling.
http://finance.yahoo.com/q/it?s=TOL
Watch what they are doing not what they are saying!
HOLY COW!!!!! What a piece of dreck this Robert Toll. Good find. Toll you lying sack of sh*t. Talk up the company whislt you sell out from under everyone.
pump and dump
You mean it’s NOT different on the Central Coast?
http://www.sanluisobispo.com/business/story/131234.html
“21st Century Mortgage Co., a Paso Robles-based firm that was one of the largest local lenders specializing in high-risk mortgages, has closed after 10 years in business.
It’s a local example of the broader shakeout in the U.S. mortgage market. ”
http://centralcoasthousingbubble.blogspot.com/
21st Century my arse, these clowns didn’t make it past the first decade
I wonder why we follow half these guys.
Toll has little choice but to bullish about housing. It wouldn’t go over very well for a builder to build houses and suggest that people shouldn’t buy them.
Yes, but he was saying this same Euro stuff in May 2005 and the reporter doesn’t connect the dots? Plus he goes from talking about being in big trouble to predicting higher prices than ever? Raising prices every week? Come on CNN!
CNN is in the ratings business, as is every program on tv. The name of their game is to garner ratings.
Toll is also in the ratings game of a different sort. Toll needs to generate positive press about his industry and thus improve his ratings.
This leads to symbosis between CNN and Toll, a mutual back-scratching. CNN gets to interview a big CEO, toll gets to have his story told. Both benfit from the encounter, both get a chance to improve their ratings.
Neither side actually has to believe the story that’s being dispensed. The game isn’t about credibility, it’s about ratings.
This is not a defense of CNN or of Toll, just an observation.
“CNN is in the ratings business,”
Incorrect! They are in the ADVERTISEMENT REVENUE buiseness. They are forced to walk the fine line between propaganda that their advertisers want distributed and complete and total loss of credibility.
The industry is blaming the media for the crisis, when in reality, for a year after prices stopped going up, the media was still reporting YoY gains without comment that those gainse were many. mnay months ago, and over the last 6 months prices were flat to down.
The media has been drug kicking an screaming to coverage of this story. Covereage up it my boost ratings, but will kill off one of their biggest sources of revenue. Who cares if you have people watching if you’re giving away ad time?
Don’t forget that ratings drive advertising revenue. The higher your ratings the more you can charge for a 30-second spot.
Ratings is a secondary effect. A strong economy with companies willing to spend money on advertisement is the primary factor.
I once worked in IT for a magazine publishing company. Lots of low circulation magazines with HIGHLY focused markets. Yaghts, sail boats, gambling, tech gadgets, gaming, etc. It was FAR more about the $ per reader than about the # of readers. We’d end some of our higher circulation magazines, once companies were no longer willing to pay top dollar to reach the subscribers.
Look back and CBS a 6-7 years ago. High ratings, but with stuff an older audience liked. Advertisers don’t pay as much to reach old peope as they do young people. So, they started cancelling a lot of fairly high rated shows like Diagnosis Murder, opting for stuff like CSI that is much more popular with a younger crowd. Better to have 3 CSIs pulling a young crowd, then 2 CSIs and a Diagnois Murder, even though your total audience may be better with shows that appeal to a wider audience.
It’s about ratings. Ratings drive ad revenues. When rating slip so do ad revenues. When ratings slip far enough then the show gets cancelled.
Ask anyone in the biz; these folks are OBSESSED by ratings.
No… it is NOT just about ratings. Someything like Sex in the City, that appeals to women that like to spend tons of money on shoes and clothes, can charge a lot more for ads than something with a larger audience, but appeals to senior citezens who’s big purchased is $4 early bird special at Denny’s.
He should quit smoking that stuff.
“you will see a resurgence so that we begin to pay for our homes proportionately to what they are paying in Britain or Western Europe, which is 45 even 50 percent of their incomes for their housing.’”
See Ben, …only when interest rates get to 14% or above… is when crap statements by crapheads like Toll… will finally disappear…they are simply… conditioned myopic True Believers.
“I think what you will see when the market straightens itself out, as it always does, you will see a resurgence so that we begin to pay for our homes proportionately to what they are paying in Britain or Western Europe, which is 45 even 50 percent of their incomes for their housing.’”
What Toll forgets to mention is that home ownership rates in Western Europe are far lower that in the States. I dunno, but it’s hard for me to imagine having Western European housing prices with American home ownership rates, but obviously Robert Toll knows what he’s talking about.
There are also a lot of government intrusions into those markets. BTW, I have never actually seen facts to back up the ‘live with your parents until you’re 40′ stuff he says. From what I read, in the UK young people are in housing debt up to their ears.
UK dipped when they raised rates in 04- then kept going up- mostly ARM loans- weird ,but true
there are definitely more EU people living with their parents until their 30/40’s (and definitely far more than 10 or 20 years ago), but it is not the norm. It varies very much between countries and is probably worst in Russia and some eastern Europe countries that have now entered the EU and where it isn’t easy to get a huge mortgage as a youngster. But it is true that in many EU countries young people can choose between staying with their parents or drowning in debt (for most of them that is an easy choice …). That sure is a big change compared to 10-20 years ago.
talking about Toll, the 40-50% income for housing is nonsense, maybe it is correct if you talk about net income but with the high income taxes in many EU countries that doesn’t way anything. Even in Netherlands homeowners spend usually 20-35% (higher values for those who purchased recently) of their income on housing, and that clearly is the max. Some high end buyers that earn above 5x median income are maybe spending 50% on housing, but that’s just a tiny fraction of the population.
Less land and more restrictions on knocking down old buildings makes it harder to build in many parts of Europe (especially cities). Lifestyles can be very different from what we are used to in the USA, so it’s hard to make worthwhile comparisons.
I saw Leslie Stall on 60 Minutes with a report on how a lot of single Italian men in their 30’s and even early 40′ live at home with their parents…..they even have a name for these folks in Italian that I believe translates in to something like “moma’s boy” or something like that….but anyhow its both an economic and cultural thing and I guess it’s more common in Southern Europe.
I think Northern Europe (Sweden for example), there are a lot of “government intrusions” in the market that make it easier for people to shoe-horn their way in to an expensive house.
Another reason why Europe is different is that the employment opportunities and cultural activities are concentrated in their capital cities….I’m talking about places like Sweden, Norway, Holland, and even England, but not Germany, which has several major cities and which by the way did not experience much a housing bubble compared to the rest of western Europe….and this contrasts with the US, where there are dozens of cities with diversified economies and job opportunities.
home ownership rates vary strongly within Europe, some countries are close to 90% and others like Netherlands (where government interference is strong) just a little above 50%.
In Europe, high home ownership rate usually means relatively low home prices (or maybe I should say that the other way round …).
I think the UK average percentage of income on mortgage is 19%.
The ownership level is one of the highest in Europe, and prices are very high.
Regards,
Loafer
19% average is not really high … I think there are huge differences within the UK, so statistics like these are probably of little value.
I have friends in London — a couple with 2 good salaries — who have no expectations of ever buying. Prices are just too high, and renting makes life easier b/c they can afford to live closer to central London.
“‘I think what you will see when the market straightens itself out, as it always does, you will see a resurgence so that we begin to pay for our homes proportionately to what they are paying in Britain or Western Europe, which is 45 even 50 percent of their incomes for their housing.’”
Ignores how much less densely populated the US is - Oregon alone is as big as the former West Germany.
Good point, KPOM. Mr. Toll also seems to forget that this is a competitive capitalist country. Housing will revert back to reasonable building costs on reasonable land costs. 2,000 sf for $80/sf + $40,000 for a parcel is $200,000. In the bubble, Toll was paying $300,000 just for a land parcel. You can not sell that land for anything today, since there is no demand and there is no financing for an acquisition land loan.
Toll is a very smart man who runs (or rather ran) a very profitable company which made lots of money. He provided houses for many people willing to pay rediculous prices. Now, he needs to learn how to run a more modest company building houses for poeple who will pay normal prices. If he doesn’t do it, some one else will.
One other thing he doesn’t take into account. There’s more houses than there are people to buy them in this country. I think he flunked econ 101 because he doesn’t understand supply and demand.
So is he trying to say that this bubble cycle will be different from all the prior ones? Or is “the future” simply vague enough that he could be talking about the year 2053? I’m confused.
Last Sunday for the first time here I saw builder’s display ads offering discounts. Lennar (up to $25K off) and Ryan (50% discount on options).
The low-volume builders who build in our neck of the woods haven’t stopped yet. There’s a record number of spec homes on the market within our community, and they just sit. How long can the builders carry them? What kind of discounts will they be offered at when the lender forecloses? Only time will tell.
We’re seeing 70% off inventory homes and free finished basements in our neck of the woods.
Oops, not 70% off… $70,000 off. Yikes, if it was 70%, I’d buy two!
What usually happens with construction lenders is that they keeping rolling the construction loans adding the unpaid interest to the balance. At some point the independent auditors or bank examiners refuse to play along and the lenders charge off the accrued interest and even some of the principal. At that point they foreclose. I expect that the deluge of construction loan foreclosures will begin in 2008.
If you’re looking to short bank stocks find those with large and increasing construction loan balances along with small loan loss allowances. Remember it was construction and development loans that brought down the FSLIC in the late 1980s.
Toll is dead wrong about future Americans spending a higher percentage of their income on housing. What makes it possible for Europeans to spend such a large percentage of their after-tax income on their homes is that in Europe a lot of necessities are paid (or heavily subsidized )by the government out of tax revenue - health, child care, and higher education being a few of the biggies.
In the states, many (most?) middle class people already spend 45-50 percent of disposable income after expenses such as health care, child care, and college funds are deducted.
Wrong again Toll.
How does that work, Mr Toll? 50% of revenue goes to all the governments in America, 50% goes to food, healthcare, transportation, college, and another 50% goes to
housingbanks?You got it Ronin! Don’t forget the 50% bonus income that gushes out of the housing ATM.
Don’t forget American’s transportation costs. Not too many f-250s driving around London. Here in so-cal mass transit is a joke. I would venture to guess the average so-calian spends at least 25% of income on transportation costs, and thats conservative.
Wonder if the Bush bailout of (some - few) FBs, will actually accelerate the bust. Easy to be in denial about the bubble if coming from us tin foil hatters on Ben’s blog. But when the president of the US talks about the bubble time to hit the panic button. Here in DC there seems to be lots of new listings the past week. Seems like a strange time of year for that. Some price are definitely moving in the right direction. Some price still completey delusional. Thought Bloombergs comments were great.
I would say Mr. Bush’s speech Friday just put the whole country on alert that there’s a housing crisis. If there were any idiots out there that didn’t know it, they know it now. If anything he probably has upped the panic mode. Sellers will be listing like crazy and buyers will be backing off more. Thanks pres, you’ve just helped accelerate the price decline.
Yes. Since he will forgive the taxes on short sales, people will start actively pursuing the short sale as a solution.
Go, go, go!
“Poeple are screwed.”
-Big V
looking at real sales in public records my part of queens is anywhere from flat for studios to double digit gains for larger co-ops
Now, co-ops have special restrictions on how much profit can be made at the sale, don’t they? So it’s not possible for a co-op to participate in a bubble is it?
“Robert Toll: ‘I don’t see how we could have done better.
he did - sold ?% almost all his stock
right. Pretend it will go one forever. Get stock price as high as possible. Sell all your stock. Act shocked and surprised when it all comes to an end. Retire to the Caribean.
Success through failure.
You don’t need to have a strong long-term busness plan. You jsut have to have enough people have enough of a vested interest in convincing the sheeple it is a way to get rich quick without working…. And, it is true. It is a great way for the elete few that have the vested interest in leading the sheeple to their sheering, to get rich quick wihout really working.
Finally, price capitulation in an all-jumbo neighborhood I follow in Georgia, near Atlanta. Owners had their heads in the clouds for the past couple of years. Now that it’s too late, they begin to chase the market down. Ignoring the “new” listings at the same old prices and the laughable $1K drops, there’s a 5% cut here, at most 7% there — using a Dixie Cup to bail out their boat while the winds are rising.
I’m seeing up to 100K off 600K NW Chicago exurbs, motivated seller comments, etc.
In the northern burbs of Chicago, sales in Northbrook are totally in the dumps. I am watching ~40 homes. Of the 3 sales in the group I have seen since 4/2007 0 out of the 15 McMansion (more are on the way) have sold. Nobody got their wishing price. With the jumbo loan meltdown, August sales will be just great!
Should have noted, …and none of them is selling. They didn’t have an “It’s different here” neighborhood and are very slowly beginning to realize that. Like those unfortunate folks on the beach in Thailand.
Remax Today seems to be selling a lot of the homes in Astoria, Queens where I live.
http://www.seenyhomes.com/propertysearch/propertysearch.aspx
Here is an example of the lunicy of their prices. Look at this house for $750k:
http://www.seenyhomes.com/propertysearch/propertydetail.aspx?MLSNumber=*975254&MLSMarketCode=LongIslandNY
My wife and I went to an open house by them. Attached with a tenent upstairs. $850k. The asked us to make an offer. I did. $350k.
ed, you are a “predatory buyer.” Keep up the good work!
‘Here is an example of the lunicy of their prices. Look at this house for $750k’
Holy crap!
“1Fam. House, Detached, Frame, With Driveway. ”
So they’re saying that one of the selling points is that the house has a frame?
i have a friend who recently relocated to LA - we’ve been talking about the HB for months, having the same convo that’s happening here on this blog. but he STILL just bought a house! took out 2 mortgages, the whole bit. the pressure to buy in these bubbles is so intense, and combined with the emotional pull of “homeownership” can make an idiot out of pretty much anyone i guess. not just the specul-haters. now when i see him i just gotta avoid that whole topic - it’s like finding out he has hepatitis or something.
Hep-H
it;s not usually to see price reduced signs now.
this is a little quote from Fed member Miskhin:
Big gains in house prices around the world in the last two decades raise worries about further hits to economic growth if price gains are reversed, he said.
World Wide RE has followed the USA into bubbleland, now the fear is that it will unwind on a world wide basis and taking the financial world as we know with it. Behind every loan is an asset and most use RE of some strip so it doesn’t take much to realize how critical it is from a liquidity point of view to keep prices high othewise, poof goes all the leveraged bets by banks and the othe participants in the game.
Cracks appearing in England. Prices flat and sub-prime lending standards tightening. That means 9-months to 1-year before the true implosion gets rolling.
don’t think so … the latest official report is up 10% from same month last year. Maybe the last month was flat compared to previous month, but that does not make a trend…
Duh…. Perhaps they should have been more concerned as the house prices were running up at ridiculous levels. There is a worldwide Housing Bubble. In Australia house prices are even more expensive per capita than in L.A. (if that is even possible). The only benefactors are the baby boomers who are sitting on tons of cash via their mulitple properties. Gen Xers just get saddled with a huge mortgage. Gen Y’s …good luck to them even affording a house at these levels.
The bubble needs to deflate and it is a good thing for society. England is just rampant with mortgage fraud. They have just as many people who tapped their so called equity to prop up their lifestyle. What do you think inflated Spanish real estate????
The bankers and policy makers knew exactly what they were doing. A lot of people made a LOT of money and the masses just had a huge millstone tied around their necks. Life is more than working 24/7 to pay off some absurd mortgage for a house. Excessive debt is not at all Liberating.
Listings in Anthem, AZ 85086 per http://www.ioanthem.com
705 listings selling about 40 per month.
Small contractor in the area had his pickup truck repo’d recently (reported here) and now his house is on the market. Don’t know the price yet, but it’s over $620K.
259 homes listed over $600k per realtor.com
221 homes in foreclosure per foreclosure.com which is a drastic increase from a couple weeks ago when it was in the 170’s.
They say the upper levels are selling better, but the ones that I see on my daily walk with Ms. Jetta aren’t moving at all. I think this fall is going to be UGLY for those that have to sell.
local market observations from Europe:
- UK home prices still rising at 10% yoy
- Dutch home prices also keep rising, currently around +10% annualized
The bursting US housing bubble is totally ignored in Europe, except for some discussions about the influence on the stockmarket and the blame game regarding the ratings agencies. I have not seen one article in the Dutch newspapers asking if this can happen in Europe as well. Both in UK and Netherlands (and probably some other countries) higher interest rates from BOE and ECB are hardly translated into higher mortgage rates; not quite clear why, but in both countries the increase in mortgage rates is less than 1/3 of the official central bank rate increase.
nhz,
That’s interesting, isn’t there a credit crunch over there? I thought this was a world wide housing bubble caused by easy money.
I think this is important because the next administration will have to deal with the problem and they’re bound to look at what’s been happening in Europe.
So, how are you doing it?
Lip
there is no credit crunch at all, getting credit has never been easier than now. No change at all in mortgage conditions either. Some banks are now advertising 5-year fixed rate mortgages at 3.5% (that’s below ECB rate and lower than last year). The credit bubble IS global, and that’s why I’m still suspicious about the ‘crash’ in the US. It is certainly not a matter of Europe lagging the US, because the EU housing bubble is much older (and bigger) than the US bubble. It could be that strong government interference in the housing market and other parts of the EU economys delays market forces.
I don’t agree with your analysis. The Danish bubble is clearly bursting. 4% down Q1 to Q2, 2007. This was the bubbliest market in 2005, driven by legalization of interest only mortgages at end of 2003. Spain and Ireland are cracking. The UK is an enigma with this headfake in 2004 when I thought it was about to crash. I predict that the UK is going to be a disaster when the shit hits the fan. Remember that their market was down 30% nationally ca. 1990-1995. It’s going to be a bloodbath once the global macro credit bubble bursts. Sweden (where I am writing this from and own property) is still humming along with enormous differences between Stockholm in rural areas. They built drab 1960s concrete mid-rise buildings in rural areas too and a funny article in Swedish business daily DI noted that you could by 18 of the identical apartments in this rural town compared to a drab Stockholm suburb. Interest rates have gone up and there is talk of the bubble now….. things will get ugly because the max can you can get is a 10 year ARM. Denmark has 30 year fixed like the US (rare in Europe and unique according to Fannie Mae ads, although I was talking to a friend in Belgium when I was there last week who claims that they have 30-40 year fixed but he’s not too reliable), but I have found the equivalent of subprime: don’t worry if you bad credit, 108% LTV loans. Pulled up dozens of Danish websites like this.
Denmark is not an euro country which could make a huge difference … Spain is NOT bursting at all, there are cracks in many EU countries but that has been the case for many years already.
yes, Europe has their own flavors of subprime and there will be a bloodbath at some time; I’m just not sure if this will be in the near future.
p.s. regarding 30-year fixed: that used to be the norm in the Netherlands, only in the last 5 years or so people have switched to 5-10 year fixed and have started using more exotic constructions like IO loans. The Netherlands also has some fixed rates for longer than 30 years and even generation mortgages (where parents provide the collateral for their kids 0-down, I/O loan starter home with their own home). We also have 110/120% financing, but the numbers are small.
What do you mean Spain is not bursting? It’s the worst bubble in Europe built on ziltch. Complete house of cards that is falling apart….. At least Ireland has non-housing related economic growth.
Denmark is very significant because it has the allegedly strongest economy in Euroland. High end suburbs of Copenhagen went up 40% in 2005 from already elevated levels. 25% nationally in that year.
But it’s going to start with Spain and its going to strain the ECB, and there might be a push for them to leave the Euro when things get ugly because they need to inflate more than the ECB will allow.
People in the US that are down on the USD and want to own the Euro are nuts. It was a good play in 2002. Now it’s at a peak against just about everything and will fall against USD (well, who knows, kind of a race to the bottom), gold, you name it.
NHZ, it is a good sign that you have thrown in the towel and think the bubble will go on indefinitely….. that’s exactly when bubbles crash…. when you are surrounded by endless optimism and euphoria.
In the Swedish press today. Global credit bubble is bad news…. but it won’t affect us because of our strong economy. Morons……
That’s interesting. I imagine that it would require a large recession to dent the European market. Europe is denser, over here the US homes sky rocketed and were miles from any sorta culture or jobs. Also we are “expected” to buy a home(70 percent or so own). I would imagine is pretty normal for families to rent in many European cities without any stigma attached to it. Europeans will be better off for this in the end. But watch out for the economy, Europe exports alot to the US, if we don’t shop its lights out-which is a scary but plausible scenarion.
Europe exports the biggest chunk of its production within Europe; so I think the economic fallout of a US recession is not a major problem. On the other points I agree.
The EU housing market has far more government interference; because of that any change will be slow. But also, that is probably the reason that the EU bubble is bigger - so when it finally starts collapsing it will take more time and cause more pain (especially for taxpayers) than in the US.
A former coworker went off to work as an engineer in the residential high-end audio-video business. She got laid off yesterday.
These businesses grew at a fast clip due to MEW. Contraction is starting.
Residential high-end audio-video business. That’s gotta be one of the most economy-sensitive businesses going. You’ll always need bread and Ramen (sp?) but you can sure do without the $5k single-channel tube amps, $10K speakers, and all the other “mine’s bigger than yours” techie A/V stuff.
I noticed the high-end A/V dealer in the Sarasota area (he even did yachts) was closed when we visited there in January.
Nice thing about getting older is I can’t be tempted by that audio stuff. Heck, these days I have to turn on captions when I watch a movie, or my wife complains about the volume. Works very well, by the way.
Since I have a BS in Civil Engineering and don’t understand why every single job title I hear is over inflated. Was she an actual graduated engineer who was designing cables, receivers, etc.? Or was she a person who was installing TV and Speakers in someone’s house? I am curious which portion of that market goes first.
Yeah, why does everyone want the word “engineer” after their title? It used to be “scientist”.
As I reported early this week, a semi-random check of closings in PHX area saw about 50% drop from the first week of August to the second week of August.
I’ve been tracking listing in my zip (85306, northern Glendale AZ)through ziprealty.
300K+ 300-250 250-200 200-150 150K- Total
5/10 20 34 52 20 1 127
5/17 20 39 52 22 3 136
5/24 21 39 56 22 3 141
6/1 22 47 62 20 3 154
6/7 22 48 59 17 4 150
6/14 23 47 59 19 4 152
6/28 22 39 68 22 3 154
7/5 26 39 68 27 2 162
7/13 24 41 67 31 4 167
7/27 23 42 61 24 3 153
8/25 26 42 60 32 6 166
8/31 30 42 61 35 8 176
% gain 50% 24% 17% 75% 700% 39%
40% gain in 4 months.
There’s a million garage sales in my neighborhood this weekend. People are putting out some good stuff, some with unrealistic prices. Lady down the street put out all her good wool and silk asian rugs and told me she bought some new ones - from Wally World. The kids with the new baby across the street have half their wedding gifts out on their driveway. Moving sales, estate sales, garage sales, all over town. Cash is King.
A story about Long Beach, CA:
In 1989 we bought a 3/2, 1200SF house there for $250,000- the peak of the last RE cycle, and we sold it in 2004 for $385,000, which is roughly 2.75% per year appreaciation.
Well of course most of you know the southern CA market crashed that year, and we were upside down on that house for many, many years. Luckily, we were 20% down, 30 year fixed note, and had solid jobs. We liked the house and the neighborhood, and back then a house was where you lived, not an “investment”. So we payed our mortgage and lived our lives.
Continue that 2.75% appreciation, fast forward to today and this house would be “worth” around $408,000, or so you would think.
I’m sure it comes as no shock that this very same house is currently listed at $600,000, and has been on the market now for almost a year. It’s empty, a bank repo. It needs about a 30% haircut to bring it’s price in line with the long term trend.
What about the rest of Long Beach, and Southern CA? Ready for a 30% haircut? Have what it takes the ride the coming storm out for many years?
Yep, it’s “different” this time, very different.
And very scary.
In Juneau, AK: Inventory continues to grow (226 up from ~130 last December). More high-end, ocean-front and/or view properties for sale; some have been on the market for a year now. I’ve noticed several mentions of increased inventory and price reductions in the local newspaper. Housing affordability is a big issue here. Paper periodically bemoans brain drain of younger professional class; population is getting older, school enrollment is declining at the younger ages. Meanwhile, new construction focuses mostly on higher end.
My subdivision in Bradenton, FL had a little dead-cat bounce in July with 24 homes being sold (quite a few were new homes). The first 2 weeks of August have seen one sale and an uptick in visible ‘For Sale’ signs. I think the mortgage mess is really going to kill sales going forward…..
There’s gotta be a mistake:
http://www.zillow.com -
148 1st St., Hermosa Beach, ca 90254
4 beds 3.0 baths, 1,832 square feet;
recently sold for $100,000 on 03/09/2007
zillow range est: $946,591 - $1,230,569.
Valued in the $300k range in January 2004 before the LA bubble really began. This is a couple blocks from beach. Houses next door zillowed in the $1,000,000 range.
remember these gems from mr. toll? pay attention to the growth rates!
“New York and Washington and Phoenix and San Fran and L.A. and Las Vegas and Naples and Boca” - were about to slow down painfully. “Investors will get creamed, and they’ll get out of the deals,” he said, noting that a subsequent recovery would take anywhere from 3 to 10 months. But beyond that - a catastrophic crash? “Why can’t real estate just have a boom like every other industry?” Toll asked in complaint. “Why do we have to have a bubble and then a pop?”
…
The company expects to grow by 20 percent for the next two years and then will strive for 15 percent annually after that. Those estimates suggest that the company’s expected production of around 8,600 houses this year will expand to at least 15,000 houses by 2010. Individual Toll developments now range in size from a few dozen to 3,000 houses.
…
In the past couple of years, Toll and his deputies have begun analyzing European housing data to see if they hold any lessons for a maturing American housing market. Toll has been talking up the research to stock analysts and the financial press for the past year. His conclusions carry a whiff of new-paradigm thinking, but he nevertheless seems convinced that Europe’s present-day reality is America’s destiny. I asked Toll what our children - my kids are both under 8, I told him - would be paying when they’re ready to buy. “They’re going to live with us until they’re 40,” Toll said matter-of-factly. “And when they have their second kid, then we’ll finally kick them out and make them pay for the house that we paid for. And that house will cost them 45 to 50 percent of their income.”
I grew alarmed. Was he kidding? He assured me he was not. “It’s all just logic,” Toll said. “In Britain you pay seven times your annual income for a home; in the U.S. you pay three and a half.” The British get 330 square feet, per person, in their homes; in the U.S., we get 750 square feet. Not only does Toll say he believes the next generation of buyers will be paying twice as much of their annual incomes; in terms of space, he also seems to think they’re going to get only half as much. “And that average, million-dollar insane home in the burbs? It’s going to be $4 million.”
http://www.neighborspac.org/Toll-brothers-chasing-ground.htm
Then a black swan will fly out of his rear end. Toll doesn’t seem to realize the USA has a nearly endless supply of land. Maybe if the population of the USA grew to be 900 million and the government paid for healthcare and many other social services, housing might get somewhere close to those prices. I get a feeling he is drinking too much of his own kool-aid
it has nothing to do with available land; these problems are similar all over the anglo-saxon world, irrespective of population density (just look at New Zealand and Oz). I think Toll has some interesting points: of course homes ARE still cheap and big in the US compared to Europe and some other parts of the first world. But that has more to do with government influence than with land supply. And although EU citizens have far less space, they certainly have far more than 100 years ago. In Netherlands it’s around 400 sqft per person now compared to about 40 one century ago (although I think available space has been shrinking lately because of high prices). Maybe the trend is simply bigger homes with more wealth?
This just in from my local Zip Realtor. There is no real financing problem …
“Many times, especially when it comes to our local real estate market, you don’t get the whole story from reading the newspapers and watching the local news. Take mortgage financing, for example. Relying solely on the media, you might think no one is able to finance a home purchase these days. The fact is that many people are still buying (and financing) homes. The key is to know who to talk to about what!
At ZipRealty, we can connect you with national or local lenders who know about programs (some specific to your area of interest) that you may not have heard about. Many of these programs provide for below-market rates, relaxed borrower qualifications, and other attractive features. All are designed to help people achieve our Great American Dream: Homeownership!
Please call me today and get started down the path toward your new home!”
Yeah, right! With each and every communique this buffoon moves further and further out on my “rings of respect” chart. If it wasn’t so comical to get these every so often I would turn it off.
Canberra, Australia (which I admit is pretty far from “local” for most of you).
It hurts to say this, but I have to be objective and the spring (Southern hemisphere) bounce is nicely underway here.
Entry-level SFH prices are now $A320-330K, up from $A290-300K last year. All market sectors are seeing around a 10% price hike YOY, and sales are fast.
Overall median is about $A460K, which is about 6 x median household income.
So much for my carefully analysed decision to “sell at the top” in 2004…
up 10% fits nicely with the experience in many other parts of the world, like UK and Netherlands (where the top was called around 2001 by many, and prices are now at least 50-100% higher). In Netherlands the median price is 8.5x median personal income (probably around 6x household income).
the US housing downturn is still VERY local up to now, in other parts of the world there has been nothing more than a few small bumps in the road and RE markets are still surging. With the record low interest rates and now change in credit conditions, what else to expect?
correction: now change = no change
Metro Denver observation. The neighbor down the block has had their house on the market for a few months now (2 homes for sale on this block alone). A “sold” sign went up last week. It is likely to come down next week. The appraisal came back well below the target price. The potential buyer’s now have to figure out how to kick in more cash or walk away.
When we asked the potential seller when they were moving they said, “Well, we may decide to stay”. Heh. She meant to say, “It has been decided that we have to stay until we collapse under the weight.” It is an odd feeling to feel bad for them and be laughing on the inside at the same time.
Things have really changed alot here in NE and in my town of Nashua NH. Even with a relatively low forcelosure amounts Im seeing places in my price range I could only dream of just this past winter. I’ve seen townhomes that were low 200’s now in 170-180 range. The glut in some complexes is staggering. I can’t even imagine having to sell a 3 bedroom home(250 and up) in this type of market. The change really came this summer which is amazng considering its the “busy ” season.
One said note, a coworker of my wife bought a house. I told my wife she could never afford it and she just lost it. My wife was using her as an argument to buy back in 2005. This is one time I hate being right(not on hosues but about her coworker). 11 bucks an hour doesn’t allow for a 180000 place. Simple economics and I told my wife she must have gotten a toxic like loan.
Toll’s full of baloney. This market’s going to be in the tank for years. Ask him why he sold so much stock in his company last year. Ask him why Toll’s been building like crazy. (Land with houses on it is worth more than undeveloped land in a crash.) Toll has been trying to cut their losses with full knowledge the Ponzi scheme was unraveling. The promise of a big rebound is further evidence they’re trying to get out the door fast. Sue his a** off!
Waiting to sell… sitting open to the elements. Who would buy an unfinished house at this stage of the bubble?
http://i117.photobucket.com/albums/o72/muggyFL/PICT0002_27.jpg
http://i117.photobucket.com/albums/o72/muggyFL/PICT0001_29.jpg
Western and northern edge of Columbus, OH. Not much building going on, but plenty of bubble-crap (condo, TH, McM and the like) on the fringes of town. Very few for-sale signs, except for some billboards for new developments. I’m new here, so I don’t know what prices were before the boom. On realtor.com, $132k will get you a TH. But that same $132K will buy a run-down old farmhouse on a few acres if you go 10 miles out.
My guess is that bubble pricing applies only to new construction. I’m going go possibly hunting next summer at exisiting stock (10 years old or more).
Eastern regional TV in the UK a couple of days ago had a report of a homeless man living in a tent on Great Yarmouth beach.
Perhaps this indicates the 10% year on year growth in house prices in the UK ?
Bah. Inventory not really going up here in Philadelphia and prices aren’t coming down. But houses are staying on the market longer.
Meh. Who am I kidding we’ll keep renting once the bailout comes.
toll would love you to spend 50% toward housing like they do in europe. in case he did not know housing is way overpriced in europe too! and, with europe raising interest rates..it could fall their too! Toll would like everyone to buy one of his million dollar homes and become a slave to this insane american debt mentality. I would rather live on a beach in a tent than own a million by buying a toll home. don’t worry toll brothers will be taking the hits and he will be just lucky to keep his company going with this meltdown.
maybe he should be building and selling homes in europe as it seems they are willing to pay more.
The market in LA’s Westside.
Hi, all, I’m just back from a long vacation and trying to grasp how things are unravelling in my neck of the woods.
A lot less houses listed in the LA Times and very few open houses. It looks as if people are thinking that the selling season is over. I visited a new building on Manning with good sized 3 bedroom condos (around 2000 sqft) that have been on the market for a while and whose price has been reduced by 100K.The lowest asking price was now 1.195M, the most expensive 1.295M. The realtor mentioned that one of them fell out of escrow due to the new lending guidelines. It’s the first time I heard that happening in my area. As for the rest, the asking prices are still ridiculous. Sellers are not budging and there have been a couple of bidding wars in Cheviot Hills over the summer. We have a much longer way to go than other areas, that’s all I can say.
http://www.nytimes.com/interactive/2007/09/02/weekinreview/20070902_FORECLOSE_FEATURE.html