Buyers On Strike, Waiting Until After Prices Have Fallen
The Chicago Tribune reports from Illinois. “By any measure, including the two released Tuesday, little is coming up roses for the housing market, locally and nationally. Chip Wagner, a Naperville appraiser, said sellers’ asking prices appear to be on the way down, which might generate some momentum. ‘People have become more realistic on their pricing,’ Wagner said. ‘The average price of a house for sale today is $436,000; a year ago it was $467,000.’”
“Local real estate agents echoed this. ‘Sellers out there now really want to sell,’ said John Veneris, a broker in Downers Grove. ‘They’re getting less than they had wanted, but they’re happy to get them sold.’”
“Inventory continues to climb in the area.Wagner said the number of single-family homes listed for sale in the MLS of Northern Illinois as of Tuesday had surged to nearly an 11-month-supply, up from about seven months a year earlier.”
“‘I hate to throw salt into the wound to show how bad it has gotten, but we have almost doubled the number of active listings since September 2005,’ when the nation’s housing boom peaked, he said.”
“The deeeper America drops into the housing slump, the further out go predictions of when the market will recover.”
“David Mudd, CEO of Fannie Mae, told Bloomberg News it could be years before the slump is over. ‘I don’t think we hit a bottom until the end of ‘08, and then we have some period of time to work our way back up again,’ he said.”
“He joins the chorus of economists and industry experts looking into 2009 or beyond.”
“‘I’ve stopped making predictions,’ said Chicago builder Alan Lev. ‘You ask 10 different economists, you get 10 opinions. The real answer is, nobody knows.’”
“‘Mismatched expectations,’ explains Jay Ritter, a professor of finance at the University of Florida who says that consumer behavior is the wild card in the marketplace impasse.”
“Many home sellers, he says, are in love with the old days, when home prices seemingly rose by the hour. And sellers, he said, are stuck in neutral, waiting for a better deal.”
“‘When prices are going down and there are articles in the news about prices dropping, it leads more people to wait and see, and it becomes a self-fulfilling prophecy,’ Ritter said. ‘Rather than closing the deal now, they’re on strike, waiting until after prices have fallen.’”
“Stephen Baird, president of Baird & Warner Real Estate in Chicago, says the increasingly gloomy forecasts are an overreaction.”
“‘I think 2008 is a little long [to expect the market to bottom],’ he said. ‘One of the things you have to keep in mind is those guys now want to be overly negative. They don’t want to sound like Pollyanna because there’s been criticism that they were just too rosy about the housing picture. Now, if they’re going to err, they’re going to err on the negative side.’”
“‘You ask me when the market is going to bottom out, and my take is, I have no idea,’ Baird said.”
“The developer of the proposed Chicago Spire will host a preview and party for the global press, but the celebratory mood could be dampened by the worldwide credit crunch and a postponement of the tower’s preconstruction sales.”
“‘If I didn’t think I could deliver, I’d have a good excuse to pull out, but I’m not doing that,’ said Garrett Kelleher, who two weeks ago delayed the launch of sales from this week to Jan. 13, citing the complexity of the documents that must be filed with federal regulators.”
“The preview of the $1.5 billion, 150-story building, slated to be the tallest in the U.S. and the highest residential tower in the world, comes at a tough time for high-end residential developments in Chicago and around the country.”
“Real estate buyers and investors in Chicago, around the nation and in Europe, where Kelleher plans to sell more than half the Spire units, wonder what property is really worth and if it will appreciate.”
“Understandably, European investors are cautious, said Dominic Grace of London-based Savills PLC, who is directing the Spire sales effort. ‘The whole world is spooked,’ he said. ‘They’re aware of the malaise potentially hanging over the U.S. investment market, but Chicago is steadier than Miami and a huge market.’”
“In the U.S., capital for property development and purchases has become more difficult and more costly to secure.”
“‘The debt market is frozen for the inexperienced developer,’ said Robert Horowitz, a partner at Cooper-Horowitz Inc., which places about $15 billion in real estate debt a year. ‘To finance a supertall luxury condo project today, you need to have be an experienced developer with at least 30 percent cash equity, 50 percent presales and the ability to pay 9 to 10 percent interest.’”
“Kelleher, chief executive of Shelbourne Development LLC, said he won’t seek financing until he has the requisite amount of preconstruction sales. Before he would close on a loan for perhaps 70 percent of the cost, he’d have to spend about $500 million on construction. That is a lot of building that will take a lot of time.”
“Lenders not only worry about backing new development but also fret over buildings in construction that still have units to sell, said Richard Blum, chief financial officer for Chicago-based Fifield Realty Corp. ‘Some [banks] aren’t making new loans because they may face bad loans for projects already in construction that have unsold, unclosed units,’ he said.”
“To protect themselves, banks and private-equity lenders have raised the cost of capital, Blum said.”
“In Chicago, where 13,448 new downtown condos are due for delivery from now through 2010, sales fell 35 percent by midyear from a year ago, and in the past few weeks ‘luxury sales have been way down,’ said Gail Lissner, a VP at Appraisal Research Counselors.”
“Here, ‘everyone is skeptical of everything until it closes,’ said James Kinney, president of Rubloff Residential Real Estate.”
“The tall residential towers in development in Chicago all have vulnerabilities. The $650 million Mandarin Oriental Tower Chicago residential and hotel condominium project has not started construction. The $500 million Waterview Tower and Shangri La Hotel is in construction but hasn’t closed on its construction loan.”
“The half-built, $725 million Trump International Hotel & Tower had more than 200 units to sell as of May, the most recent figures available.”
“Spire developer Kelleher isn’t worried about selling enough units at $750,000 to $10 million to get financing when the time comes. ‘There’s pent-up demand all over the world,’ he said.”
The Columbia Missourian. “Real estate foreclosures in Boone County this year have already set a record, following a trend that has gripped the national housing market.”
“A total of 163 foreclosures were recorded through Sept. 14 in Boone County, 13 percent over last year’s total and topping the previous record of 150 set in 2003, according to information provided by the Boone County Recorder’s Office.”
“Dale Whitman, real estate finance expert and professor at the MU School of Law, thinks the ARMs weren’t responsible for the market crisis. Rather, it was the ‘irresponsible’ way they were handled, with ‘teaser rates’ placed below already-low mortgage rates to attract less-qualified borrowers.’”
“‘Lenders made many loans without much regard to whether borrowers would be able to repay them, assuming that increases in housing prices would inflate borrowers out of their financial troubles,’ Whitman said. ‘Borrowers were willing to accept (adjustable-rate) loans… even when they should have known they would probably be unable to make the higher payments.’”
The Union Eagle from Minnesota. “Princeton area realtor Jan Wokson likely wouldn’t have sold the home she did to a certain young man in his 20s a couple of years ago if she knew then what she knows now. What she knows now, she explained recently, is that the young man got in over his head in what he could afford.”
“Now it looks like he is headed towards foreclosure, Wokson said last week. (The man was asked to talk about his case for this story but declined.)”
“One of the negatives in the foreclosure mess, Wokson said, is that realtors are getting the brunt of the blame, when ‘most are not at fault.’”
“Local banker Ken Haskamp at the Princeton office of Peoples Bank of Commerce, expressed worry last week about the record number of foreclosures resulting across the United States from too many people having qualified for mortgages when they shouldn’t have.”
“Many borrowers, he explained, looked at the low beginning interest rate, translated that to a lower mortgage payment and bought a more expensive house than they otherwise might have.”
“Haskamp said those mortgage payments grew beyond the ability of many homeowners to maintain. Coupled with the rising interest rates, has been the declining value of homes in the midst of a housing glut. That has caused problems for people trying to get another loan or refinancing because their home is worth less than what they need to borrow to pay off their mortgage, noted Haskamp.”
“‘A $310,000 home two years ago may be worth only $270,000 today,’ he said. In the ideal world, Haskamp observed, a person wanting to borrow for a home valued at $270,000, would seek a loan for $216,000.”
“One reason Haskamp was so animated as he spoke about the foreclosure issue, was his explanation that banks don’t want to have to take homes back for non-payment. The reason, he explained, is because banks look at homes as ‘earning assets.’ That means, he said, as long as the payments are being made, they are earning interest for the bank.”
“There have been many unscrupulous lenders that verified a borrower qualified for a mortgage, when the borrower was not near that, Haskamp said. Along with the record number of foreclosures have been a large number of mortgage companies ‘going away,’ from the mortgage business, as Haskamp politely put it.”
“Haskamp also suggested that people steer clear of offers that only require paying the interest. That kind of loan is a ’stupid thing,’ he said.”
From Missouri:
‘Lenders made many loans without much regard to whether borrowers would be able to repay them, assuming that increases in housing prices would inflate borrowers out of their financial troubles,’ Whitman said.’
From Minnesota:
‘Many borrowers, he explained, looked at the low beginning interest rate, translated that to a lower mortgage payment and bought a more expensive house than they otherwise might have.’
Two good examples of why we have a national housing bubble in the US.
“All real estate is LOCAL”
-David Leareah………Master Economist….NAR.
Master Propagandist
“‘When prices are going down and there are articles in the news about prices dropping, it leads more people to wait and see, and it becomes a self-fulfilling prophecy,’ Ritter said. ‘Rather than closing the deal now, they’re on strike, waiting until after prices have fallen.’”
Oh, I see. Psychology helps to make a bear market worse than it really is, but there’s no influence of human psychology in bull markets!?! Give me a friggin’ break!
What about, “When prices are going up and there are articles in the news about prices soaring, it leads more people to jump in and buy, and it becomes a self-fulfilling prophecy,’ Ritter said. ‘Rather than [waiting] to close the deal, they jump right in.’”
There, fixed it for him.
Oops! Closed the bold
Exactly, what about all the news articles saying that prices would go up forever, and that you need to buy now or be priced out forever.
It cuts both ways, and that is why bubbles burst so spectacularly.
Also two examples of the gross stupidity of the average J6P that will ensure their loss of ‘middle class’ status.
War of the unsold houses worlds…
“Local real estate agents echoed this. ‘Sellers out there now really want to sell,’ said John Veneris, a broker in Downers Grove. ‘They’re getting less than they had wanted, but they’re happy to get them sold.’”
“‘I’ve stopped making predictions,’ said Chicago builder Alan Lev. ‘You ask 10 different economists, you get 10 opinions. The real answer is, nobody knows.’”
Well, let’s at least make sure we don’t ask ANY of the economists that told us there was no housing bubble a few years ago, mmmm K ??
Even Cramer said don’t dare buy now or you WILL lose money. I think common sense is even starting to penetrate the demographic that sees the multiple Countrywide spots aired during Spongebob. Sales will continue to fall and the nonsense about “rising prices” because low end sales have dropped off twice as much as high end sales will no longer be tenable. Prices and volume are in for a big drop over the next 18 months.
Love the video!
“‘I think 2008 is a little long [to expect the market to bottom],’ he said. ‘One of the things you have to keep in mind is those guys now want to be overly negative. They don’t want to sound like Pollyanna because there’s been criticism that they were just too rosy about the housing picture. Now, if they’re going to err, they’re going to err on the negative side.’”
Nope. They’re still too positive. While I’m an optimist for this blog (prediction bottom in 2010 after a very rapid 2009 drop) I’m thinking the sales people just want to drum up a few more commissions. Volume always precedes price (by quite a bit of time, as we’ve learned).
In other words we’d have already seen a volume turn around to have a recovery in 2008. Now we’re in the October-February timeframe when its normal for homes to drop a little in price… but I’m not thinking a little. Not with the state of the credit markets having to refinance nearly half a Trillion of commercial paper before Turkey day.
Got popcorn?
Neil
All of these “experts” are viewing the downturn as some sort of media led fad. Almost no one realizes that we have a fundamental affordability problem that will make a “recovery” impossible until prices fall 20-50% (depending upon the market).
Bottom line: Someone with the median family income in a city/town should be able to buy an average size/quality home with a standard loan with carry costs 2.5x annual income.
In 1980, that multiple was more like 1 times annual income. I think we’ll get there too. Average price of a 1500 square foot sh!tbox for an average family … $65,000.
AndyInNJ,
While I was in Chicago in 1980,my parents and two sisters lived in Philadelphia in 1980 and I was just out of Temple. Where in NJ could one times the median income buy the median house? I recall 13% seller financing and prices almost triple median income.
Jay
this will never happen again in your lifetime it will be 3.5 to 4 times income cities, 3 times in smaller locales not lower and that will be at the bottom. The question is what will the Median family income - with a falling dollar, my gues is a lot lower in purchasing power, hence my prediction above.
Neil…the information flow puts this bubble on the fast track.
Check the 5 year chart for homebuilders Pulte, KB Homes, Houvarian, Standard Pacific. The crash has been steep over the last 6 months. I really do think this crash caught the economists and builders by surprise because they were reviewing facts and figures from the last quarter or the last year, while the bloggers were working in real time.
I am still on track that Nov 15 will be Capitulation Day. This is 90 days from the mid August finance meltdown, and the bleak winter months will produce the most miserable sales figures ever recorded.
Someone posted some of the MBS agreement data. A lot of those homes can be held on the books for up to three years.
Three YEARS!
That would drag things out much further than 2010 as the peak resets are not till this winter. So, they don’t show up as REO until mid 08. MBS will trickle them in to the system instead of a flood.
That and the second wave of ARM resets in 09. Many of those people will have refinanced and percentage of failures will be lower relative to subprime. It will still be substantial.
All this points to a less steep drop but a far longer deflationary period. Not to mention Fed moves will drag things out a little longer as some people will be cusioned by the rate cuts. The rest of us will be bruised by the high stagflation.
Its only the second round of this ten rounder.
this sounds uber accurate to me.
“David Mudd, CEO of Fannie Mae, told Bloomberg News it could be years before the slump is over. ‘I don’t think we hit a bottom until the end of ‘08, and then we have some period of time to work our way back up again,’ he said.”
Real Estate (1980’s to present)
When I get to the bottom
I go back to the top of the slide
Where I stop and turn
And I go for a ride
Till we get to the bottom and it’s over again…
yeah yeah yeah yeah
Helter Skelter, dah dah dah dah dah dah dah
Helter Skelter
LOL
So my question is if David Mudd,CEO of Fannie Mae knew prices won’t bottom until at least end of 2008 ,than why would he make any loans given the loan appraisal would drop in value (making a current loan a higher risk )?
Likewise why would the government offer a bail out on a declining asset . Again ,it’s up to the lenders that made the dog loans to do their own rewriting if they want to avoid a foreclosure .
“There have been many unscrupulous lenders that verified a borrower qualified for a mortgage, when the borrower was not near that…
It would be too much to expect the buyer to have enough common sense to make a judgment decision about what they can afford.
Why do lenders for these hi-rise condos require 50% of the units to be pre-sold before issuing loans if they know full well that the the contracts are from specuvestors??
http://www.bridgepoint-ventures.com/strategy.htm
Everybody and their brother is an investor in the fricken Mand Or!
Condotels! Yeah, that’ll sell!
Chaps my hide! LOL
Investors will tire of Chicago faster than they did MIA, SoCal, etc.
Those occasional 50-70 mph wind gusts in January and February when it’s -10F should help with that too. Ain’t too many of those in MIA and SoCal.
Luckily Chicago buyers are too smart for the condotel scam. They have always done poorly here and always will.
Yes, they’re so smart …. Not. They were too busy looking northwest and building and buying condos in gang infested neighborhoods. I rented in one of those neighborhoods (preferred it to the suburbs). Seven years ago, my rent was $550 for a huge 1BR. Many of my gang member section 8 neighbors were renting for 300-400/mo. Four years ago, I left, my rent was $600 I think. During the three years I was there were countless shootings (during summers sometimes gunshots every night), and at least 6 murders within 1/4 mile of my apt, including one 50 feet from my back door. Two years ago, they converted my apt to condos, in keeping with the trend in the area. They were asking 200-300K I think. Last I saw many of these apartments were still languishing on the market though, but only because the bubble is bursting. Otherwise I am sure some idiot would have bought them.
It is amusing isn’t it? People were signing up to pay hundreds upon hundreds of thousands of dollars for units that had always been just average workers’ apartments - and many in areas whose wealthiest residents in their entire history wore blue collars to work. A little granite and stainless and the yups lap up the sweet cream of city livin’.
“Overpaying for a house with a toxic, voodoo suicide loan, that a caveman can do it”!!! LOL - the caveman is probably smarter than that.
He’s smart enough to realize a surrogate emotion doll doesn’t respond because “he’s just a doll.” Probably smart enough to realize that a realtor is just as smarmy as a psychiatrist.
You know he may be right the dollar drops another 20% $750K to a Greek German Saudi…….. businessman will look cheap.
———————–
“Spire developer Kelleher isn’t worried about selling enough units at $750,000 to $10 million to get financing when the time comes. ‘There’s pent-up demand all over the world,’ he said.”
Trade your euros today at 1.40 to buy a condo in a tower for $1M, sell that condo for 500K in three years and then trade back to euros at 2 per dollar. Sounds like a great deal!
ha ha - if it were not such a cynical predecition, it might actually happen
Some simple math for, for example, Brits who think it is time to buy near Disney:
2007: US$2.00 = 1.00 Pound
2008: US$2.50 = 1.00 Pound
2007: US$400,000 = new low house price
2008: US$450,000 = miraculously appreciated house value (net)
2007: Took 200,000 pounds to buy this investment.
2008: Flipper nets 180,000 pounds. Some investment.
No, I don’t believe prices will do anything but fall farther, but any foreigner who buys in, in the near future, has to believe that prices will rise. Otherwise, they’d be better off in Vegas with some great food, great wine and attentive company to show for their expense.
The pound will soon follow the dollar.
Are you as delusional as the FB’s? Not everyone “…..wants to live here…” when it comes to the US.
Also, any REAl non-domestic business person who happens to have been lucky or smart enough to have substantial cash (can’t get a mtge in the US generally as a foreigner) say, 500,000 to 2.0 million has property in their own country and it is going up in value (or so they believe), unlike the US residential market. VERY FEW PEOPLE ARE TRUE CONTRARIANS. Foriegnerss buy into RISING markets only (tech boom 2000 ring a bell?), the few savvy non-domestic buyers buy when things have washed out.
Also, wait till the IRS starts trying to collect income tax from foreigners who own property and occupy it for more than 4 or 6 months a year. Don’t believe me, they have already started to formulate legislation to this end. Gotta get the $ from somewhere……..
does anyone know why fannie and freddie decided not to expend their portfolieos? and is that a good thing?
sorry “expand”
You’ll get a much better answer from others on here than me, but my Cliff Notes version is that I think they have limits as to how high their portfolios can go, and they need Congress to raise those limits before they can do said expansion.
If I’m wrong, it will hopefully be pointed out gently.
link to question
http://www.reuters.com/article/marketsnews/idukn2738084220070927?rpc=44
Thank you!!
meant to say “So easy that a caveman can do it”. Caveman probably smart enough to walk away and go live in a free cave.
“Many home sellers, he says, are in love with the old days, when home prices seemingly rose by the hour. And sellers, he said, are stuck in neutral, waiting for a better deal.”
Actually, many home sellers have a blown engine, it just looks like it’s stuck in neutral…
Sorry guys, but I’m a potential buyer and I’m stuck in park, with the emergency brake fully engaged. It’ll take a whole lot more in the way of price drops to get me into neutral, let alone drive.
I think “blown engine” is a pretty good analogy for the potential buyers who can’t get a mortgage for anything they’d consider living in, at today’s still-bubbly prices, even if they caved in and decided to buy. Their “car” can’t go anywhere until the engine is replaced.
nobody knows nothing…
“Stephen Baird, president of Baird & Warner Real Estate in Chicago, says the increasingly gloomy forecasts are an overreaction.”
“‘You ask me when the market is going to bottom out, and my take is, I have no idea,’ Baird said.”
“Understandably, European investors are cautious, said Dominic Grace of London-based Savills PLC, who is directing the Spire sales effort. ‘The whole world is spooked,’
So much for foreign nationals coming to the rescue.
“Spire developer Kelleher isn’t worried about selling enough units at $750,000 to $10 million to get financing when the time comes. ‘There’s pent-up demand all over the world,’ he said.”
“Understandably, European investors are cautious, said Dominic Grace of London-based Savills PLC, who is directing the Spire sales effort. ‘The whole world is spooked,”
hmmmm, so which is it - Pent up demand or spooked?
ben - do you get updates on Dubai from time to time?
‘There’s pent-up demand all over the world,’
For Chicago luxury condos?
From who?
And WHY?
In case this developer has not realized it yet, there was NO real demand, but pure speculation.
Weren’t some condos in Florida (a much better place to have a second home, if you wanted ) upward of 70% speculator purchases?
And what is it with the “pent-up demand” theme?
I get the image of cell blocks of buyers straining to bust out of their cages and sign mortgage docs everytime I read that phrase.
the pent up demand was the myth that the realtors and builder have to say to answer the speculators question of “who is going to buy this unit/house from me ?” Examples of who they said end users greater fool buyers are , rich baby boomers ,European investors, rich yuppies looking for second homes , snowbirds ,and on and on .
Someone on this blog once posted the no U.S. citizen would be able to buy above the 90th floor of Kelleher’s Spire.
I believe that 100%. Chicago is being marketed by a few to a few - remade into an international playground - a world city. Chicago, however, wrestles with the very same socioeconomic problems that vex the rest of the nation. The costs of living is getting too high except for the elites and their lackeys in the “professional class”.
So will the world city scheme succeed here? Don’t bet on it.
And to add to the comments, there is pent up demand for some types of homes in some locations (as evidenced by those of us waiting to buy on this blog). In a sense, many of us are the pent up demand..
The thing that they fail to realize is that this “demand” exists at about 1/2 the current pricing levels. What they ALWAYS fail to mention is that demand is in part determined by PRICE. If Ferrari’s were 10K each, the demand would be insane. However, given their current price point, the demand is exceedingly slim. Demand is determined in part by price, a concept that appears to have escaped these “economists”.
Even 20% would do it for me. But right now area sellers are not even accepting 10 per cent below ask.
A stubborn bunch, they are.
‘There’s pent-up demand all over the world,’ he said.”
Gave me a big belly-laugh when I read it…luckily I had just finished my coffee…
Of course there is pent-up demand!
Unfortunately, everyone was trying to cover this demand. All over the world. Witness all the luxury construction in Dubai.
10 houses were built all over the world for those who have money. Of course, when they purchase, that leaves 9 houses w/o a buyer.
same could be said for every wannabe city I have visited in the past 2 years or so..Toronto, Vancouver, Chicago, Vegas,and on and on. There is nothing, IMHO, in any of these locales that could provide the fundamentals of $US 850 to $ 2,000 per sq ft or justify these valuations except bubble speculation period. I think there will come a time in most major cities in the Western World where people will marvel at the stupidity of someone in Toronto or similar locale who paid 1, 1.5 or even 2 million for a 1,000 sq ft. place to live. Either that or a Macapoopoo burger will cost $20.00 un -supersized.
As pointed out above sell…. to who? and why? indeed.
Can we be done with tower envy, already?
“The preview of the $1.5 billion, 150-story building, slated to be the tallest in the U.S. and the highest residential tower in the world, comes at a tough time for high-end residential developments in Chicago and around the country.”
Here is the winning “DDDUUUHHH, wasn’t that obvious” statement of the day. At least he said it. Too many didn’t heed this simple advice.
Haskamp also suggested that people steer clear of offers that only require paying the interest. That kind of loan is a ’stupid thing,’ he said.”
If Haskamp’s simple advise had been followed, the Bay area wouldn’t have double in value because nobody would have been able to afford a real loan.
I’ve stopped making predictions,’ said Chicago builder Alan Lev. ‘You ask 10 different economists, you get 10 opinions. The real answer is, nobody knows.’”
Opinion (and predictions) are like A$$HOLES. We all have one and for most of us, they are best kept to ourselves (and covered up).
Furthermore, most predictions published in MSM outlets stink.
thats your opinion
that’s funny, I thought that Corvettes were like Haemmeroids..sooner or later every a$$hole gets one.
“‘I’ve stopped making predictions,’ said Chicago builder Alan Lev. ‘You ask 10 different economists, you get 10 opinions. The real answer is, nobody knows.’”
How does the MSM always seem to manage asking the economist who predicts the market will bottom out by the end of next year, then?
Isnt’ that his job, to make predictions? I wonder if that would work at my job.
Sorry, didn’t read close enough. He’s a builder, it’s not his job. I was thinking he was an economist. Even so, as a builder, you should probably do some research.
Neil, remember to hoist one in my honor at the Redondo Cheesecake. I miss that place - had some great fun there. I want to attend the party celebration in absentia from Albuquerque. One week later and I might have been able to join (as coming to Ontario on Fri Oct 5 to visit a friend). I would have made the 50 mile drive from Ontario.
Seems pretty simple either the prices come down to affordability, or the wages go up to make them affordable, doesn’t seem to me that you can have it both ways. The number or millionaires is a limited number is this not so? So all of this credit will blow away like the smoke it is, and hopefully some of the mirrors will too.
“‘When prices are going down and there are articles in the news about prices dropping, it leads more people to wait and see, and it becomes a self-fulfilling prophecy,’ Ritter said. ‘Rather than closing the deal now, they’re on strike, waiting until after prices have fallen.’”
Does the Fed have a plan for turning around this deflationary psychology? I suggest bulldozing the 2.6m vacant houses — this would quickly convince everyone that there is a housing shortage, and then real estate could start always going up again. What’s the cost of a broken window to a bunch of neoclassical economists, anyway?
very witty
I’m thinking obi wan Ben Bernanke might come clean, sooner than later…
Use the Force you’ve been given to do the right thing
Don’t be a stooge, obi wan
“Stephen Baird, president of Baird & Warner Real Estate in Chicago, says the increasingly gloomy forecasts are an overreaction.”
Au contraire! The increasingly gloomy forecasts are an underreaction, which explains why almost every housing market data release turns out to be ‘worse than expected.’
“Local real estate agents echoed this. ‘Sellers out there now really want to sell,’ said John Veneris, a broker in Downers Grove. ‘They’re getting less than they had wanted, but they’re happy to get them sold.’”
Man, it must be a bummer to be holding the bag in Downer’s Grove…
The Chicago Spire, which is already under construction, has a projected opening date in Q4 of 2011. This is in line with some of the most dire predictions on this blog of when the housing market will start improving.
The developer is a billionaire who is currently financing the project with his own Euro-denominated money, which looks particularly good right now since he’s paying for things in US$. He doesn’t need to finance anything right now, so why do it?
The real question on success or failure is whether the asking prices will be reasonable come 2011. They are higher than anything ever seen in Chicago, though lower than any other “world class” city. This is his challenge. He’s building a “world class” tower and all he needs to do is convince 1000 wealthy people around the world that Chicago should be considered a “world class” city.
My personal opinion is that this thing gets built without any problems at all, but is somewhat like the Empire State Building. Iconic building under construction during the depression that takes a few years after opening to get to full occupancy.
I’ve got a suggestion. If Chicago wins, skip the Olympic Village and just put everyone in the tower. Then have the athletes sign their names, countries and sports on something in the unit. Problem solved.
I do think that nationally this kind of development in this kind of place has a market in the long run. The question is “at what price.” The taller the building, the higher the price psf.
Even if I could afford it I don’t think I’d want to live in the tallest building in the US. I’d kind of feel like I live in a target for every terrorist in the world who wants to do one better then Osama.
The Empire State Building was completed in 1931 but wasn’t profitable until 1950.
Cliff Notes…
The Greenback Dollar (1861-2007)
From the original post:
The Union Eagle from Minnesota. “Princeton area realtor Jan Wokson likely wouldn’t have sold the home she did to a certain young man in his 20s a couple of years ago if she knew then what she knows now. What she knows now, she explained recently, is that the young man got in over his head in what he could afford.”
“Now it looks like he is headed towards foreclosure, Wokson said last week. (The man was asked to talk about his case for this story but declined.)”
“One of the negatives in the foreclosure mess, Wokson said, is that realtors are getting the brunt of the blame, when ‘most are not at fault.’
Ahem. Slim here with a refreshing blast of blasphemy. I’m sure I’m not the only one who’s known real estate agents who STRONGLY recommend a certain mortgage person.
Of course, the agents aren’t doing this out of the goodness of their hearts, are they? Nope. They’re steering business to these mortgage folk in exchange for a kickback, umm, referral fee, err, commission.
So, Jan, don’t tell me that real estate agents are innocent. Just don’t.
Hey Slim, you headed to Ann Arbor anytime soon???
I tried to cross the picket line and the Realtor scabs wouldn’t let me pass…
“Stephen Baird, president of Baird & Warner Real Estate in Chicago, says the increasingly gloomy forecasts are an overreaction.”
“‘I think 2008 is a little long [to expect the market to bottom],’ he said. ‘One of the things you have to keep in mind is those guys now want to be overly negative. They don’t want to sound like Pollyanna because there’s been criticism that they were just too rosy about the housing picture. Now, if they’re going to err, they’re going to err on the negative side.’”
“‘You ask me when the market is going to bottom out, and my take is, I have no idea,’ Baird said.”
Words fail me.
mea culpa, mea fulla crap-a
“Alan Greenspan said they had not acted on concerns about complex and risky financial deals because only very wealthy people invested in them.”
http://news.bbc.co.uk/2/hi/business/7017568.stm
i would like to tell you how ruff it is here in bakersfield, my neighbor bought a new home and bridged a year ago, he has not been able to sell the old one. he switched realtors last month and the guy whos picture is on the sign has been secretly living in the house thats for sale. he is real quiet when he comes and goes trying not to draw attention to himself. i almost dont have the heart to tell my x-neighbor about it, but i think it will be worth the laugh!
what…?
I think this is a first…no realtor squatters have ever appeared on HBB, AFAIK.
Puuuuuuuuuuuleeez tell, and may we have a full report?
Ya just can’t make this stuff up!
Smiles,
Leigh
OMFG. That’s got to be the funniest thing I’ve ever heard.
So there’s a conundrum for you - he wants to sell the house to get the commission - but if he does he’s out on the street. What to do? What to do?
i am serious, i have not seen one person look at this house since he took over. i think he is one of those guys that bought up the new houses being built around here and got stuck in the speculation mess. my neighbor left furnishings in the house so it would sell faster. i wonder if the realtor is sleeping in his bed??? lol
OK, I am done spitting up. This one is too good.
But if it’s for real, I would get your neighbor on the phone to 1-800-LAWYERS and get after the listing agency for big $$$.
so… sort of unrelated. Anyone been watching the market today? Apparently, the market is stalled because investors are waiting to see if the Fed is going to entertain the idea of cutting rates AGAIN.
What a bunch of BS. How stupid would that be? Quite a few people made a lot of noise over currency erosion over the last cut. Surely they would not be so foolish… then again, I could be wrong and they could be a lot more foolhardy than I could imagine.
“Surely they would not be so foolish” I’ve learned that this line of thinking can be really expensive. I don’t make predictions anyome. I live below my means and diversify my savings. I’ve seen way too much foolishness to trust anyone 100% (even myself).
It will take all weekend for the stock market (crack addicts) to hear about the big heroine bust (Gold and USD). They thought it was a slow day, in reality it will be a historic day.
Next week will be real interesting in currencies. 4% moves are huge in currencies, unlike stocks.
Currencies are stock for the biggest blue-chips of all, aren’t they?
You mean U.S. of A. Inc. and friends?
Imagine a struggling corporation trying to work out their problems by massively increasing the extant number of stock shares. How would shareholders of record feel about this approach to bailing out the company?
The stock market is like an amusement park, entertaining and distracting the average MSM watcher. Meanwhile the world outside is falling apart.
I wouldnt just inform the seller about the squatter realtor; thats no fun. Instead, I’d make a big prank out of it by maybe . .. calling the local police dept & mentioning someone who resembles a wanted person has been seen hiding in said house. (Hey, it’s no crime to report a SUSPECTED person. Anyone can be suspected. After all, innocent until proven guilty right??! Our overloads even encourage reporting suspicious activity.You fit the profile.)
However, the ensuing commotion at the house while the police surround, then roust this realtor isthe real U-TOOB moment, yesrrireee !!
And of course the owner getting a call from the PD later to confirm the situation; priceless.
M.O.O.N. spells “payback”, mr lying scumbag realtor. laws, yes.
Someone else just watched “The Stand” too, I see. Don’t worry, I read the book too. Whaddaya think about that happy crappy, eh?
Thank you everyone for the great and honest converstions on the reality of the real estate market. I haven’t visited this blog in 8 months. About a year ago this blog was a major influence on me deciding to sell my home in the burbs sooner than later. I wasn’t really happy, money was tight and I was starting a family. I listed it under the neighborhood mean (a recco through this blog) and it sold quickly. Almost a year later, we’re renting a duplex and couldn’t be happier. We have time for ourselves, money isn’t tight and we’re out of the real estate nightmare mess we have today. Keep up the good work. Hopefully prices will settle down to a managable level where we can all live stress free and at peace.
Matty — nice success story. Now that we’re renting and cash flow is awesome, my wife and I have to struggle to find things to fight about.
Man, it must be a bummer to be holding the bag in Downer’s Grove…
Hurry, get Gary Watts up to Downer’s Grove to console these poor seller and help them in holding the bag
Riding the Wave - we need some pictures of this squatter Realtor sent to Ben. My gut hurts from laughing so hard at picturing this idiot. We want all of the details, and pictures of telling the neighbor and him/her going and confronting the squatter. LOL - Only in Bakersfield.