‘Nobody Wants To Buy In A Falling Market’
The Washington Post has this viewpoint of the housing bubble. “The real estate market has become an obsession for a lot of people in this region, and James Cave is one of them. He has spent the past eight years saving for a down payment. Cave navigates smoothly through the congested streets of Arlington on a recent workday afternoon. Shaking his head and waving his arms in frustration, he points out what he sees as the rising signs of insanity all around him.”
“He gestures to one newly built condominium tower where he had considered buying. ‘$350,000 to $1 million,’ he snorts. ‘Next to a gas station and a fast-food restaurant. Smell it! Smell it! You can smell the fast food cooking!’ Cave points to another rising edifice. ‘You can see the signs; luxury condos for $800,000. What could be so luxurious in a condo?’”
“He spends at least part of every day thinking about real estate. He worries most about what would happen to him if values were to fall after he finally bought, possibly draining years of his savings.”
“When Cave does the numbers, he finds it hard to justify the expense. A couple of years ago, he noted, one-bedroom condos were selling for $175,000, and now they are listed at twice the price. Take the Arlington condo he rents for $1,400 a month. Units similar to his have sold for $480,000. Recently the investor who is his landlord offered to sell him the place for $440,000. Cave turned down the offer. He figured out it would cost him more than $3,000 a month to own the place, assuming a 20 percent down payment, taxes, insurance and the condo fee.”
“He can’t see spending twice as much to own as he does renting. That would leave him constantly strapped for cash and stripped of his savings, he said. ‘It seems like the moorings are coming undone from reality,’ he said. ‘It’s like the Internet stock craze, you’d sit there and say something doesn’t compute here. What’s happened in the last three years? My salary hasn’t gone up anything like that.’”
“He quickly notes that there are now 47 new complexes being advertised for sale, which strikes him as a lot. He had been noticing that prices seemed to be dropping, and now he notices that the listed prices are no longer available. ‘It’s like they’re hiding the prices now,’ he said. ‘They’ve all taken the prices off the list.’”
“The MLS lists 462 condos available for sale in Arlington, he said. There are several hundred more units available in new buildings and new condo conversions that aren’t listed on that service. In February 2005, 94 condos and coops were for sale in Arlington; in February 2006, that number had increased more than four-fold to 444 units.”
“‘There are probably the same number of buyers as before, but they are not in any rush to buy,’ said Rick Bosl, a real estate agent who specializes in the Arlington condo market. And there are just so many more homes for sale, he said. ‘In some markets, we’ve seen prices go down, and nobody wants to buy in a falling market,’ he said.”
“‘There are probably the same number of buyers as before.”
Once again we see realtors making half truth comments that simply aren’t factual. Just judging from the MBAA purchase index, activity is down about 15-20% from 2005 levels, and the trend is lower not higher. That’s a lot of marginal buyer to remove in an inflated market with a huge increase in sellers.
Who wants to catch a falling knife? Anyone?
It’s actually even worse than the article states buying in a falling market. For example, you have to account for the 6% of cost in selling the property. So right upfront you are down 6%. Add to that the fact that rates are rising which means in a falling market not only your money is not working (and possibly going down) but in fact you are losing the 5-6% interest you could be earning each year. Buying a property in a falling market or even a steady (not rising market) is the stupidest thing anyone can do IMO.
BTW, IMO I expect the real estate market to take 3-5 years to sort out to the downside. Cause it will take that long to break the backs of the idiots who think otherwise and capitulation to set in. JMHO.
The fallout is going to be 20-30% down nationally, and 50-60% in some regions in the next 3 years.
IMO, the Phoenix area will be one of those 50-60% regions.
Maybe not three years. This thing is unraveling pretty quickly. The negative pressures,though, will last long after the dramatic fall of 2006-2007.
Your 3-5 years to “sort out the downside” is on the low-end of the historical range. I would say ten-years to go from bubble peak to trough then back to the same nominal level would also be optimistic, based on the fact that this is what happened in CA 1990-2000, and that the bubble runup is much bigger this time.
3-5 years is what expect that 70-90% of the downside to take place. I agree with you that after the majority of downside has taken place the rest (in a slow chinese torture sort of way) would probably take another 3-5.
Thanks to the reader who sent this in.
another article in a special sunday real estate section of the post. this article describes a buyer having trouble selling her condo in capitol hill.
When everybody wants out , nobody wants in .
I can not understand the appeal of condos - you have the hassles of apartment living with the resonsibilities of ownership, both for your unit and indirectly through the HOA.
I figure condos just provide an easy packaged means for investors to play in this great pyramid scheme…
I hate yardwork. Of course, it is really nice when your investor-landlord picks up the tab for the illegal immigrant labor to care of the yard around your rental home…
If you hate yardwork, hire somebody to do it. It will cost you a lot less than HOA dues for a condo. When I first bought, I did my yard work for a few months and then said the hell with it and hired a guy in the neighborhood who had a landscaping biz and had his crew do it. Problem solved.
HOA’s can be the greatest homeowner trap ever devised. A developer puts together a crappy development and throws together a crappy building and the buyers are stuck with the maintenance forever. That’s saying nothing about the unethical tactics and abuse that’s so common.
I’ve noticed that my city has begun requiring new condo developments to put in alleys and streets to the same spec as the residential neighborhood around it. The reason is because so many HOA’s tire of paying for street maintenance at some point, and ask the city to take over.
As I said, it is best to let the landlord handle this duty. Their yard, their responsibility. If the yard is not maintained, whose property loses value? Not the priced-out renter…
Condo lifestyle and detached home lifestyle are very different, as are the economics and markets for each. One is not better than the other, just different. However, on this blog (and in the reported data), the two are often not distinguished, which can lead to confusion. I believe that condo prices will crash more easily and more percentage-wise than single family homes, for economic (supply and demand) reasons, and I think that the history of housing values will bear this out. Thus, it might make more sense to get back into the SFH market earlier than it would make sense to get back into the condo market.
I think condos will drop more in price due to the type of owners. Many are investor owned and investors will exit the market when returns fall or evaporate. The other ownership factor is singles and couples with no kids.
It is much easier to move when you don’t have kids. Once people have settled into a house, neigborhood and school district with their children, they don’t just pick-up and move because the returns aren’t good. A house is a home.
Don’t forget aging baby boomers who aren’t up to doing yard/maintenance for themselves anymore….and want that single floor living.
That is a good point. The boomers are the ones buying the high-end (800k +) luxo condos. I don’t know about the run-of-the-mill stuff, though.
Commutes are better, trains are more convenient, more time to spend friends and family
Not everyone wants to live in a house. I don’t like doing yard work and would not dream of paying someone to take care of a yard that I don’t want in the first place. I would rather live in a meticulously finished and furnished 1000 sf condo than a 2000sf house that would cost twice as much to finish and furnish to the same level of quality. I would rather sit on a 300sf terrace with a view of downtown and mountains than a 1/2 acre yard with a view of my neighbors’ yards. I would rather spend $20 per month on utilities instead of $100. I would rather walk 2 minutes to restaurants & shops than spend time and gas sitting in a car (and I happen to like driving cars, but not commuting).
These are some of the reasons why non-speculators buy condos. Although this type of housing may not appeal to you personally, it actually does fill a market demand. In addition, many single professionals will choose jobs according to whether or not there is a populated downtown core. So if a city is trying to attract this particular demographic, it would be motivated to encourage condo construction.
Good point. I think condo prices drop more than single family due to the ease of exit (less stickiness on the way down) precisely because the owners are usually more “mobile”. see my comment above re: kids.
I think history has shown that condo values fluctuate more wildly than single family homes - bigger booms and bigger busts.
The mobility of the owners probably is higher than for SFH’s. Peoples’ needs and priorities do change, especially when they build families, and during boom times there really is a significant percentage of speculator owners. My point was not that these speculators don’t exist, but that they are not the reason why condos exist.
The construction time for a condo tower probably also contributes to the price instability during a cycle. A steel-and-concrete 10-story tower takes a few years to build. So in the beginning of the boom, supply is delayed, and in the beginning of the bust, you can’t just stop mid-construction. (Except, apparently, in Austin, where I saw some half-finished towers a few years back. Very odd.)
Kudos to James Cave. I guess this kind of reasoning is what happens when you spend 8 years saving for a downpayment. Maybe that old 20% rule was a good idea after all …
That pretty much sums it up, doesn’t it?
Talking about things that “that do no compute”:
Love the signs all over the place here in totally opverpriced OC,
“Why pay rent? - Buy!” Buy? - Mmmmmh, do you mean “rent from the bank?”
Well I am paying $2000/month rent for a totally remodeled 1800sqt 5brd. Same houses here go for around 600K
Now let’s turn on good old pocket claculator:
600K (6% mortgage, 1.2% property tax, 1% for repairs) =>
That would be $4.100/month rent to the bank.
“Why pay rent?” Mmmmmmh… GOTTA BUY NOOOOW!!!!
And let’s not talk about those tiny tax write offs - because then I would need to mention that above calculation does only consider interest to the bank, no pay-off of mortgage, no insurance and, and, and…
My line at work when people complain about the cost of RE goes something like this.
I live in Huntington Beach, CA and I can walk to the Pier and the beach. I pay just under $2,000/mo. That is pretty affordable for a household in the low 6 figures income range.
They invariably say but aren’t all the homes $1,000,000 homes in my hood.
Yes, if I was dumb enough to buy it would cost (PITI + maintenance) at least $7,000/mo. That would be near 100% of net income.
Great deals like that don’t come around that often.
It causes most people to stop and think for longer than normal in causual conversation.
Next Saturday in the Real Estate section, listen in as Cave and a group of his friends debate the merits of homeownership and renting in the Washington market.
what’s there to debate about?
People in this country are so brainwashed. I’d say more than those in China.
Next week listen to crazy Bob debate the merits of buying a Condo in Phoenix … wtf
Thanks for posting this. It’s really interesting how articles like this are coming out now (at this time). I mean, did articles raise the finer points of things people would overlook to buy real estate just a year ago? Not really. So, what has changed? Have we run out of land such that we now have to build next to gas stations? No! The only difference is that prices have gone up, and sentiment is changing. It really is like the stock craze where people overlooked companies that had NO revenue!
Speaking of trends, we posted some interesting data dissecting lasts weeks home sales and pricing data. We also have some nice trend lines to help you argue- and we show that both NAR and the government data show the market falling in terms of sales.
BubbleTrack.blogspot.com
Yeah, the articles are interesting to see in the mainstream media.
Lookit the Emporer! Lookit the Emporer! Looky! Looky!!
“He quickly notes that there are now 47 new complexes being advertised for sale, which strikes him as a lot. He had been noticing that prices seemed to be dropping, and now he notices that the listed prices are no longer available. ‘It’s like they’re hiding the prices now,’ he said. ‘They’ve all taken the prices off the list.’”
Brings to mind the missing M3 figures…
“http://www.consumeraffairs.com/news04/2006/03/home_sales_new_feb.html”
Interesting areticle here. One quote says something like “the next time a bubble deflates gently will be the first time a bubble deflates gently”, check it out.
“He spends at least part of every day thinking about real estate. He worries most about what would happen to him if values were to fall after he finally bought, possibly draining years of his savings.”
Think of how much worry Mr. Cave could save himself if he realized that we have collectively worked through all the issues which perplex him right here on this blog…
Had he bought 4 or 5 years ago when he started looking, he would not have to spend all his time obsessing like this. Geesh, he needs to get a life.
The economy is in much worse shape than it was in 2000 or even 1995 and home prices will fall well below what they were worth in 2000 to be in line with the fundamentals. Buyers should just sit on the sideline and enjoy the market crash as a sport while paying much less to rent than own.
For the case of Mr. Cave, the condo he’s renting for $1400 will have to fall over 50% to have the PITI covered by rent.
That is what he could have BOUGHT it for 3 years ago. And at a great interest rate. Now, he has lost 3 years and will need to wait another 5 to be at that same place. Who knows what interest rates will be.
He could have been half way thru a 15yr mortgage.
He’s only been working 8 years, so 4-5 years ago, he might not have had the downpayment. If prices had kept increasing at the historic DC rate (5%), then by now he would have had enough money stashed away for a downpayment.
My situation is similar to his and you have to remember, 2000 was the dotcom craze and many of us had dreams of starting a business; housing was not an interest. In 2001 we had 9/11 and the crash; again, for a young person, housing wasn’t an interest.
This really is my fundamental problem with “timing”. Who knows what the future holds? I have a ton of experience and haven’t bought “investment” property since 2002.
But, when we were starting out, I was unaware of market cycles. We went FHA with 3%down that we borrowed. I did not think that one needs a downpayment anymore?
There can be such a thing as “over-thinking” a situation.
“‘There are probably the same number of buyers as before, but they are not in any rush to buy,’ said Rick Bosl, a real estate agent who specializes in the Arlington condo market. And there are just so many more homes for sale, he said. ‘In some markets, we’ve seen prices go down, and nobody wants to buy in a falling market,’ he said.”
How do you count the number of buyers when nobody is buying?
good point. if a buyer does not buy, he is not a buyer. I think the correct term is “looky-loo”. To rephrase, “There are probably the same number of interested people as before, but they are looky-loos who figured out long ago that there is a housing bubble, or are just now coming to that realization.”
I subscribe to a daily economic commentary written by 81 year old Richard Russell. Below is a snip from yesterday. He is a bear on the stock and real estate markets but mades a good point IMHO that BB will flood the nation with liquidity when RE gets nasty. If so the US$ will really head south.
Real estate — Does the same frustration regarding the dollar apply to the real estate bears? So far, the answer seems to be “Looks like it.” A recent study shows that as of last September, 9.4% of all mortgage borrowers had either no equity or actual negative equity in their homes. That increased to 29% of all owners who took out first mortgages in 2005. This amounts to the following — borrowers with $800 billion in mortgages now owe more on their homes than their homes are worth.
Home prices have declined in selected areas of the US, but in general prices are still above those of a year ago. However, home insurer First America states that if prices were to fall just 10%, the share of 2005 owners with no equity or negative equity would surge to nearly 48%.
Thus, keeping home prices up is a “must” for Ben Bernanke and the Fed. For this reason, I expect liquidity to continue to surge — it has to. The slowly deflating real estate bubble may be Mr. Bernanke’s first priority. He’s got to keep homes prices from caving in. Therefore, nevermind the interest rates, it’s the liquidity that is crucial here. And liquidity is coming in at the rate of almost a trillion dollars a year (the M-3 statistics have now ended).
Another brief comment from Richard Russell.
This must be the “year of the triangle.” Because here’s the Phila. Housing Index, and it too has formed a large triangle. Triangles are patterns of indecision — they can break out either way. The Housing Index looks surprisingly like the Dollar Index. On the fundamentals I would expect this triangle to break down, but why guess — the answer should be coming up shortly.
Can the Fed keep the US housing market afloat the way it has kept the stock market afloat since 2002? I almost feel sorry for Ben Bernanke. What a mess that little egomaniac, Alan Greenspan left him. But Bernanke took the job, he’s got that “Mr. Chairman” title — now he’s got to sweat it out.
In a rising interest rates market, even in the RE prices do not fall but remain steady, you are still much better off renting that buying. Cause not only you are down right of the bat 6% (the cost of selling the property) but the interest on the money you would have on the property more than pays for the rent and then some. Buying in a falling or even steady market is for idiots IMHO.
I’ll disagree within reason. Falling markets are good times to scoop up desirable properties in unique locations — near good schools, etc that can be rented with the financing covered. The fact that it’s a falling market allows one to aggressively lowball, and take only the best plums from the shaken branch.
I agree. The most money is made in a “bad” market.
Not if you expect to lose $100,000 in a $400,000 property you just bought.
I am talking about buying investment property. A home is different for most people, although I bought mine at foreclosure.
Buying investment property at the bottom of a downturn I can understand. Buying at the top of a bubble makes no sense, especially with rising rates and ever increasing expenses like insurance, property taxes, utility bills etc…. But maybe it’s just me.
I agree with you. I haven’t bought since 2002 and won’t buy investment property until the numbers make sense. The folly is doing what this guy did and sitting on his hands for six or seven years. Being so afraid to overpay that he missed a huge run-up in prices.
I don’t know too many people that believe we will see 2000 prices again.
“He’s got to keep homes prices from caving in.” Lot’s of luck with that one. BB can’t keep RE from falling any more than AG could keep the Nasdaq from caving in. In fact, I’d say keeping RE afloat will be substantially more difficult ($30T asset bubble.)
Yeah, I know, BB can just print more money and turn up the firehose. The problem, of course, is that the firehose is already on full-blast and the RE bust is upon us. BB’s got to make sure those foeigners keep buying up all our debt, or else the real trouble starts. So keep raising rates to lure in bond buyers but risk an RE bloodbath on the other side. BB thinks he can raise rates on the margin and contain this explosive credit bubble but he can’t of course. What to do…what to do? AG has painted BB into a real corner.
Here’s the main point as I see it: massive credit and liquidity spawn horrific asset and speculative bubbles, but once created, said bubbles take on a life of their own and will implode on their own with no Fed intervention required. Does anybody actually believe that the Fed’s baby-step interest rate increases are what pierced the RE bubble? Interest rates are still at 40 year lows and yet the bust is upon us.
“but once created, said bubbles take on a life of their own and will implode on their own with no Fed intervention required.”
That sez it all Darth! No doubt BB will do what he can, it will not do much…………or make it worse.
I don’t think lowering the rates will help housing. This babe is done at this stage. If BB flood the markets with money, it will just flow somewhere other than housing.
Also, low rates will cause sell off of $$ denominated assets, with the debt burden we have now and further need to borrow, this will be an impossible scenario to sustain.
At that time, what’s at stake is the entire financial system. BB has a host of tough choices to make.
Not to mention that no matter what the FED does here, rates are still going up due to Bush’s huge deficit and the now rising ECB and Japan rates. The U.S. will always have to have a premium on our rates to entice foreigners for them to keep buying our ever increasing debt.
Rates are going up no matter what the Fed does.
Russell says:
“However, home insurer First America states that if prices were to fall just 10%, the share of 2005 owners with no equity or negative equity would surge to nearly 48%.”
Perhaps the most incredible projection/statistic I have ever seen on this blog.
“and nobody wants to buy in a falling market” This statement pretty much sums it up. Here’s the irony in it all: after a year of bubble watching, listening to my wife complain about renting, when it finally becomes clear that depreciation has set in, now she doesn’t WANT to buy. She legitimately has no desire to buy at all. And yet, if you ask her, she won’t say it’s because prices are falling. It’s more of a sentiment change within the community that she’s picked up. Soon, RE will be the nightmare that nobody wants (or even wants to talk about.) I’m not sure we’re not there already.
I remember those times. 1992-3. Fresno. Whenever a co-worker would discuss the prospect of buying a house, the other officeworkers would chime in and ask “Are you CRAZY? You’ll never be able to sell it and cover your costs ,if you need to move.”
It was common knowlege. It was obvious… Real estate was a trap to be avoided.
I bought a house in Fresno in 1997 but lost it by 1998 because of injuries that forced me out of work for a year. It was scooped up in foreclosure by some woman who made a killing I’m sure if she kept it all this time. I’m really looking forward to impending tankage. I figure by mid summer people will be scrambling, by fall there will be panic and by winter we’ll be in a steep plunge heading into a hole in the ground with no bottom in sight. We’ll see.
did you say fresno?
i’m inclined to agree with you. those are $90,000 neighborhoods, not $375,000.
ditto for all the rest of the hell-holes up and down the 99
“after a year of bubble watching, listening to my wife complain about renting, when it finally becomes clear that depreciation has set in, now she doesn’t WANT to buy. She legitimately has no desire to buy at all. And yet, if you ask her, she won’t say it’s because prices are falling. It’s more of a sentiment change within the community that she’s picked up.”
Ditto!
I second that sentiment. My wife has stopped bugging me too. Come to think of it, so have the people around me lately. The madness of the crowds appears to be dwindling.
Now that I think about it the oneupper’s in my town have been strangely silent and even missing. Think their source of pride has been nipped. And maybe now they see that the kids in the smaller homes may not be such losers after all. The wife that didn’t need the granite might actually be looking at a better future. Who knew!
Its what I (and the Economist) have been saying: You look at the delta between buying and renting. In a normal market: interest, tax, insurance, maintinence, - tax savings rent). In these abnormal markets, its the other way around.
You can rent (advertised on Craigslist), for $2500, a golf-course located, 5 bedroom McMansion in Hiddenbrooke in Vallejo, never been lived in. Buying it would be just about $1M. Thats $1500/month more in just insurance, property tax, hoa, and interest, WITH the tax savings in the “You are making 6 figures, take it like a man” tax rates.
KBTC interrupts this blog to bring you the following educational program.
Hey boys and girls! It’s me, your old trusty pal Buhbles the Clown!
Are you ready to have some more goofy, crazy fun with me?! Okay, let’s go!!!
On today’s show, we’re gonna talk about my best, most favorite friends! You guessed it…The Realtors! Now don’t boo kids, Bubbles thinks that The Realtors are just misunderstood. And to show you, I’ve come up with a special wacky invention. It’s called the “Anagram-o-nater”! Do you know what an anagram is? That’s right, it’s when you take a word or a phrase and you mix and jumble all the letters around and come out with something completely different using the exact same letters! And since Realtors say funny, crazy mixed up things all the time, Bubbles thought, hey!, we could take what the Realtors say and put it in the Anagram-o-nater and see what they really meant to say or to reveal what’s really lurking behind the scenes. It’s kind of a reverse anagram! FUN! And it doesn’t just work with phrases, you can put in a name or a real estate term or whatever! Some are scary, some might make you put on your thinking caps, and some are just silly!
And later kids, in THE BTC FUN ZONE, Bubbles will have a special jumbled up message to all of my Realtor friends that you can unscramble yourselves! Yippee!
Okay, just to show you how it works and that I’m a good sport, Bubbles will go first.
Rearranging the letters of ‘Bubbles the Clown’ makes:
“Blew belch on stub.”
Yikes! Bubbles does that all the time!
Okay, ready?! Here we go!
Rearranging - ‘David Lereah’ - makes:
“Drivel ahead.”
“Lie hard, Dave!”
Linda Rheinberger – President of the GLVAR =
“Gin-bred hen liar”
“Nag! Bridle her in!”
‘National Association of Realtors’ =
“Fiasco reason? Totalitarian loons.”
‘Realtor’ =
“Rat role”
‘sellers agent’ =
“Less large net”
“Green sets all”
“Glee slants RE”
‘buyers agent’ =
“Say, Be urgent!”
“Grub easy net.”
“Greet by anus.”
‘I don’t see a housing bubble’ =
“No? Bite us, biased Bunghole.”
“Baboonish but dense guile.”
’soft landing’ =
“Told in fangs.”
“Lift and snog.”
“Sat fondling.”
“Fling ‘n’ toads.”
That’s right kids, the next time you hear a Realtor talk about a soft landing, you can say, “Oh, he’s just ‘fling ‘n’ toads’!”
‘For now, prices are holding steady’ =
“Fictional, sharp-eyed wrongdoers.”
“Craftily wrong-headed poisoners.
‘fifteen percent slam dunk’ =
“Stiff-necked, mental prune.”
“Fun speckled, eminent fart.”
Bubbles giggled about that one too! Yuk!
‘This time it’s different’ =
“Fiend’s thriftiest item.”
’supply and demand’ =
“Spend lad! Any dump.”
“Dump and deny pals.”
“Damn! Spend up lady.”
“Nap, muddled pansy”
’spring bounce’ =
“Benign corpus.”
“Cringe up, Snob.”
‘median home price’ =
“Ha! Demonic Empire.”
“I’m cheaper, dim one.”
‘They aren’t making anymore land’ =
“An arrogant, keen, many lied myth.”
“Markedly mean, annoying threat.”
“Oh My! A kindly, neat arrangement.”
“I’m the lanky and arrogant enemy.”
‘Everyone wants to live here’ =
“Oh! Sweaty, reverent Evil one.”
’strong job growth’ =
“Grr! Job ghost town.”
‘This place is special’ =
“Happiest, classic lie.”
‘You’ll be priced out forever’ =
“Foul, corrupt evil-eyed bore.”
“Corruptively feeble odour.”
‘Price reduction’ =
“Priced neurotic.”
“Rerouted picnic.”
‘San Diego Real Estate’ =
“Eerie loads stagnate.”
“Alas! It degenerate so.”
“Genitals adore tease.”
Bubbles couldn’t agree more with that one kids, those stagnating loads are eerie!
‘Florida Real Estate’ =
“Deteriorate as fall.”
“Fatal or dearest lie.”
“O Dear! Frailest tale.”
‘Orange County Real Estate’ =
“A snooty, elegant creature.”
“Anal courtesy to teenager.”
Umm, Bubbles has no comment…move along.
Now when Bubbles put in ‘Phoenix Real Estate’ the Anagram-o-nater started smoking and gurgling and spit out a whole bunch of ‘em. What do you suppose that means kids?!
‘Phoenix Real Estate’ =
“A hot, retail expense.”
“Expense: hot air tale.”
“Experts heat on a lie.”
“A present, elite hoax.”
“Hoax lies penetrate.”
“A honest expert? A lie.”
“Expose alien threat.”
“Repeat hot alien sex.”
“Ho! Aliens eat expert.”
“Aha! No elite experts.”
“Expire to anal sheet.”
‘Las Vegas Real Estate’ =
“Savage tearless tale.”
“Leave large ass taste.”
Yuck!
Yea! Wasn’t that fun?! I hope you enjoyed that as much as Bubbles did! I think we all understand our friends The Realtors just a little bit better now, don’t you?! If those zany folks would just stop trying to confuse us, Bubbles wouldn’t have to use the Anagram-o-nater to figure out what they’re saying, and could go back to making margaritas with it!
DOINK! Hey! Do you know what that sound means?….that’s right, it’s time for THE BTC FUN ZONE!!!
Bubbles has made his own special message to Realtors but it’s all scrambled up and he needs your help! Can you be the first one to unscramble it and send it in to the show? If you are, you’ll get a special BTC housing decoder ring so you can decipher what a house is really worth and not the zany price on the flyer! Yea!
Okay here it is.
“Worriedly un-gutsy, hideous loony-bin.”
Okay Bubbles will give you a hint…here’s how it goes:
ruyo intoysheds liwl eb uory nuigond.
Good Luck! And kids, if you come up with any Real Estate anagrams, send ‘em in to the show. Or if you have sayings you’d like Bubbles to put into the Anagram-o-nater, just send those in and we’ll see what it spits out!
Allrighty! See ya next time!
Buh-Bye Kids! And remember: Bubbles the Clown is Fun! Housing bubbles are icky.
A rainman18production 2006 copyright
BTC#3
AWESOME, Rainman.
“Your ___________ will be your undoing. Blast, I can’t get that word. How dare you make me think on Saturday!
dishonesty
Do I get a BTC housing decoder?
Some-restrictions-apply.
Offervoidinthefollowingstates:
VA
-Bubbles
You really are the Rainman, aren’t you? How many toothpicks, Ray? How many?
can i play?
appleton young =
no typo, plunge!
openly got pun
opponent: ugly
penal guy on top……
ok moving on
fresno crash =
serf’s anchor
it’s different here =
REDEFINE THEFT, SIR
“tethered if in”, …..serf
refined serf tithe
PERPETUAL APPRECIATION=
anticipate a rule popper
ethical realtor =
a hot rectal liar
Rainman,
YOU RULE!!!!!
Great post! I had one question about this part:
“He reflects on the old rule of thumb that people shouldn’t pay more than one-third of their income for housing. When did that change? Some of his friends, he said, say they are paying 60 percent of their income for housing, doing it with interest-only loans, facing the prospect of balloon payments that will come due.”
60 percent? Are they referring to income before taxes? If they are, that’s insane! Has that become common over the past few years in pricier parts of the country?
They are just about to fall off the cliff. You can see the fear in their eyes.
Is this 60 percent after taxes? Anyone?
If it’s a no-doc. loan, does it really matter? Also very different for a family income of $50k vs. $200k IMHO.
You are right. Certain costs are relatively fixed (groceries, gas, utilities, etc.) and a higher income leaves significantly more “disposable income.”
I’m trying to figure out the psychology behind the housing market-economy linkage now. Think we have perhaps around 80% of homeowners, who may be largely indifferent to the fact that a part of their big windfall is being given back. As long as it’s only 5-10% off the peak, or just back to early 2005 levels, their behavior will be impacted only marginally, especially if they buy into the still are single digit increases nonsense. And if not, their attitude is probably, “oh well, easy come, easy go, not going to harm me, I’m Teflon”. This is the audience of the shills and canards that Mish alluded to.
http://globaleconomicanalysis.blogspot.com/2006/03/apologists-club.html
The big wildcard though are the 20% or so dicey buyers who bought late (2004-2005), or have serial refied aggressively almost all their late stage gains, see “gaming out the housing Bubble, 2/15/2006)
http://www.xanga.com/russwinter?nextdate=2%2f16%2f2006+18%3a40%3a1.373&direction=n
But those are the folks that seem to be in biggest denial, so we only see them changing behavior marginally once again?
The key then will be new activity and new marginal buyers, and I really feel that’s what’s lacking now. So listings will just sit, and prices slip away, the lending standards will gradually get tightened more, layoffs in real estate sectors will pick up leaving big holes in Bubble dependant locales, and the housing market just gets sandpapered. But sandpapering isn’t the same as a “soft landing”, it just takes longer.
The other prospect is a big credit event, a sudden risk recognition, much like a big ice flow breaking up, which quickly unravels available credit for housing, and especially for marginal buyers and speculators. Then we will see a rapid waterfall regardless of what homeowners think. Personally I lean towards this outcome, feeling it could come at any moment, or may even be underway.
Russ, gotta argue this one. Savings have disappeared, household debt has skyrocketed, and homeowner’s equity percentage has declined despite rising home “values”. This can’t happen without broad participation.
Regardless, I expect the psychological effects to be devastating even to those that are otherwise materially unaffected.
But don’t worry, Russ, va investor’s properties will not decline in value and it doesn’t matter if they do, because she got them all for free and all of her “tenants” pay 2x her mortgages every month. Plus she has ALL those heloc checkbooks to play with!. It must be a wonderful thing to be a master of the universe.
Don’t forget that seven figure 401! Hey tx, get a life and please stay out of mine. Seriously, tho, if you want to brain-storm SW Florida - I’m in.
I have to admit to being indifferent as to what the market does. We will sell our house prior to buying elsewhere ( a great lesson learned from the FBs who didn’t whose tales were told on this blog and other links). We’ve saved well, so moving up is possible and moving down means even better savings to reap returns. We’re conservative “boomers”. Please don’t hate us.
Robin - kinda’ begs the question: Why, then, are you following this blog?
I didn’t know that you had to one opinion versus another to participate here.
‘It seems like the moorings are coming undone from reality,’ he said. ‘It’s like the Internet stock craze, you’d sit there and say something doesn’t compute here.”
Aaaah yeauhhhhhh……
And the fact that Ben’s site is being HAMMERED by more and more POSTERS (I can’t believe how many comments from so many people in such a short time…)
YOU CAN FEEL THE LOVE of this BUBBLE BURST in the making…
It was just a few weeks ago that we were all writing in DUMBFOUNDEDNESS that the NATIONAL PRESS had not grasped the enormity of this Cluster F.
BY all the news stations now picking up on it, I figure there are a lot of reporter LURKERS reading this stuff and with Ben’s WELL DOCUMENTED STORIES/HEADLINES/NUMBERS… they now have courage to REPORT the facts
I sense it is going to become very TRENDY to report on the housing bubble debacle in the coming weeks.
some friends! this is why he’ll probably he’ll catch a falling knife at some point, although he seems like he might be able to wait if he’s held off this long.
Some disappointing signs from my neighborhood in McLean, VA:
A $2 million list new spec house (teardown of $700k ranch house purchase in Nov 04, on market since June (?)) now has a “sold” sign. Two exact same models (with different siding) are now going up on the same block.
http://listings.margenau.com/index.php?op=showproperty&id=41
A ~$800k flip (house purchased in Feb 2005) with ~$100+k profit based on list sold in early December after ~2-3 months on the market. Despondent looking realtor pacing the driveway during open houses. Suspicious that “under contract” sign remained up until a few weeks ago. 7117 Old Dominion Drive.
I think we’ve established that there are a lot of brain dead “investors” in N. Va.
sticks and stones….
“Rick Bosl, a real estate agent who specializes in the Arlington condo market.”
soon to specialize in the used car market
I live 4 blocks from where the post took that photo. There are at least 5 big condo development projects underway within half a mile radius.
The term is “McMansion” - not RealWhore ese
Once in awhile we find a diamond*Langley HS* Backs to parkland*NEW** This is not a mega mansion. It has been built with details not seen in any home at twice the price.