Homeowners ‘Ride The Wave’ Down In Massachusetts
The Enterprise has this report on a housing market in Massachusetts. “Across the region, real estate agents and assessors say home prices have been on a downward trend for several months. And the ‘for sale’ signs are staying up a lot longer. And nowhere is that more apparent than in Brockton.”
“When Richard Breault put his three-bedroom Brockton Cape on the market last year at $279,900 for several months, the home did not sell. He took the house off the market for the winter months and recently put it back on sale. About two weeks ago, Breault knocked $5,000 off the asking price, and on Tuesday reduced it another $5,000, hoping to attract a buyer. The home now lists at $259,900, his real estate agent said.”
“‘It seems like the market has slowed down,’ Breault said. ‘I certainly don’t want to go down any further.’”
“‘The pendulum in this market has swung from a seller’s market to a buyer’s market,’ said real estate agent Bill Carpenter in Easton. ‘It is not a bubble bursting. My view of this is there is a correction going on in the marketplace.’”
“The median single-family house sale price in Brockton dipped from January to February by $12,000, sliding from $270,000 to $257,900. That’s the lowest it has been since July 2004. In a city that is trying to revitalize its downtown with condominiums, the median sale price for condos plummeted $40,000 from January to February, going from $222,900 to $182,500.”
“Denise Higgins, a real estate agent in the Bristol-Plymouth area, said pricing is everything right now. ‘The absolute key is you must price it right,’ she said. ‘If it’s priced right, there’s a buyer for absolutely anything.’ Higgins estimated housing prices in this region began to decline last August.”
“‘We probably didn’t see the signs. We in New England hunt for reasons like ‘The Pats are playing,’ ‘It’s too hot,’ ‘It’s too cold,’ Higgins said. ‘When you get to August and don’t have any reasons to point to, you realize things have begun to change.’”
“While the housing market is cooling off for sellers, real estate agents say they remain optimistic. ‘We’re getting pretty good activity,’ said Brockton real estate agent Paul E. Clancy. ‘People aren’t jumping, but they are looking.’ After knocking off $20,000 from his original selling price, Richard Breault is hoping someone will do more than just look at the house he and his wife have lived in on Gladstone Street in Brockton for 30 years. If not, he has a plan. ‘If we don’t sell it this time, we’re going to stay,’ he said.”
‘It seems like the market has slowed down,’ Breault said. ‘I certainly don’t want to go down any further…the house he and his wife have lived in on Gladstone Street in Brockton for 30 years.’
Surely his basis in the house is miniscule compared to todays prices. Why wouldn’t he be able to come down in price?
He’s probably heloced up to his eyeballs!
It’s conceit. People define their worth as human beings by the price of their home. When a neighborhood home sells for a certain price it becomes an entitlement for everyone else. And we know how protective people are of their entitlements.
RE: Conceit…Not much to be conceited about here.
Brockton’s a shitehole of a city. Crap schools, high crime.
It’s the same old story. Everyone wants to get to heaven, no one wants to die.
Everyone loves asset inflation, when THEIR assets are going up. But the other side of the mountain is a real bitch.
With RE, downturns are often quite drawn out because sellers (like this guy) refuse to accept reality. They’ll wait and wait and wait. If they have to sell, they’ll ultimately sell a lot lower. If they don’t have to sell, they may find themselves holding on for years, a lot longer than they had envisioned.
Having lived in that area for almost 17 years, Brocton is probably near the bottom of the housing values for that area….it probably has to do with where he’s going to. Maybe he’s retiring to the Cape which btw I’d love some stats on what’s going on there if anyone’s got any. Historically, they’ve fallen hard in a downturn.
RE: Cape-seasonal ghost-towns as speculators grabbed GG’s sell-outs for summer rentals.
No year round residents to support local biz.
Rainy spring in ‘05 blitzed rental market crimping incomes.
Plus big property casualty insurance rate
hikes as insurers flee market due to projected losses from a major hurricane.
Traffic a total nightmare when FL expatriates and tourists return.
Because he is looking at past prices in his rear view mirror. He is saying, I shoulda, coulda, and didn’t sell at the peak, but I want to sell now at past peak prices.
Yeah, if he’s been there for 30 years, he probably realizes he’ll never see these kinds of prices for Brockton again in his lifetime.
Following up late on one of yesterday’s topics: “We’re coming out of a market with 25 percent to 30 percent appreciation each year, and no seller wants to accept the reality that that’s not the case anymore,” Howell said. “There is clearly inventory out there that is still priced like the market of last year, and that’s the kiss of death.”
It seems that wishful thinking on the part of sellers works no better than the contortions a bowler makes after he has released the ball and it’s on its way down the lane.
In a surging market, the wishful thinking may not be exposed for what it is, because prices keep moving up. In an upwardly exploding market the phrase “ridiculous prices” is forever being redefined. The envelope is always being pushed — new higher ridiculous prices are put forth and buyers buy at these prices and they become no longer ridiculous.
Then yet new ridiculous prices appear like the handful of scouts that appear in country ahead of the invading army.
Because of wishful thinking, sellers will use the advanced forward scout positions as their sole point of reference in setting prices. “That cape down the street went for $670,000 and we’ve got an equally nice house but have put in $75,000 of landscaping, so $750,000 is a very realistic price”.
Wrong.
The reality is the $670,000 price was just a scout. It was the market testing the edge of the envelope. It was a total aberration. It was not a scientifically calculated price. It looked correct only because someone paid it. It was only the next point on the trend line that failed to materialize.
Unbeknownst to most at the time , the market was at its limit, in its death throes so to speak. The $670,000 was a dying gasp, before respiration began to quickly slow down.
However, because of greed-fed wishful thinking, the $670,000 is viewed not as an anomaly, or a scout position, but as a baseline. And then the $75,000 of landscaping is foolishly tagged on to create an asking price of $750,000.
The house then sits on the market. It doesn’t sell. Showings become fewer and fewer with each passing week as buyers’ agents tell their prospective buyer clients “it’s way overpriced”.
Meanwhile the listing agent does not tell the same to the seller. Rather, she whips up a fiction-writer like list of reasons the house hasn’t sold or even had any low ball offers or even any traffic. After all, she approved the original price when she “bought” the listing, so she won’t admit guilt.
Like the whore she is, the second the seller broaches the idea of a possible cost reduction she will already be putting the new price in the computer, feigning disbelief for the seller.
As for the landscaping - it’s the wrong “L” i.e, not part of location, location, location. It’s great to have and in a madly upwardly surging market it might be useful as a way for a buyer to rationalize paying a stupidly high price when a similarly priced offering doesn’t have such landscaping. But in a downward market, where buyers take their time and take out their magnifying glasses, the landscaping’s $75,000 retail value takes on the price of buying the seeds - just about nothing.
And while the wishfully thinking sellers stay in denial as the market drops, precious ground is lost. They assume that someone - some fool - will come along and pay the full freight, but they fail to realize that the odds for that are now approaching that of winning the lottery.
The seller is now chasing a plummeting market, always a little too high with his price and a little too late.
Well said my friend .
“It seems that wishful thinking on the part of sellers works no better than the contortions a bowler makes after he has released the ball and it’s on its way down the lane.”
Funny line.
This happened in my old neighborhood. A house just like mine (same size house and lot, same condition, even same number address, just over on the next street) sold for a beyond crazy price in May 2005. I know it’s the style here to bash real estate agents but I interviewed 7 of them before choosing one in August 2005. Every one of the agents told me that the other house’s price was an anomoly and they had data to back up that statement. Turns out May 2005 was the peak in my old neighborhood. No house has sold since for anything near the $sq/ft that one sold for. I priced my house $200K lower than that one and my house sold for $60K over asking price in one week (in October 2005). My agent pushed me to get my house ready to sell as fast as possible — he said the market was “tanking” even back in August 2005.
You had a good real estate agent because anyone in their right mind knew that it would go down . I sold in 2005 ,( a little under market ), because I wanted out .
Actually, the Times last year came out with an article stating the housing market turning point was May 2005 if I recall. I could be wrong.
that was good stuff, portland
some new angles in that post
They’ll eventually realize that they are the greater fool.
Wow. 279K in Brockton!!! That is outstanding. Houses there are dumps, it is all working class neighborhoods with tiny lots and even smaller houses, and it is run over by gangs…. That and the luxury of Dorchester, southie, or some of the other dumps that are there, are going to go down in flames. Who in their right mind would want to live there at those prices?
My prediction is that nice older established neighborhoods with almost no heloc, and old mortgages are going to be more affordable than dumpy neighborhoods with recent outrageous mortgages, or heloced out.
Look at historical purchase price for a real price.
Brockton used to be the under 100K city, south of Boston.
Look at people getting stuck in dumps like brockton or Dorchester for the rest of their lives, paying off exorbitant mortgages…
My stomach rolled at that thought but I think the more well established can have their HELOCs too. My in laws living on their trust fund took one out at their lawyers suggestion. Then they put a $50k kitchen in their new condo.
I saw a comment from BeaConst buried in the pile yesterday. In case you are reading, would you care to tell us how well your optimism is holding out in the face of the mountain of empirical evidence which stands in contradiction to the rosy outlook you kept peddling here about six months ago?
He’s probably too busy running for the hills.
“‘It seems like the market has slowed down,’ Breault said. ‘I certainly don’t want to go down any further.’”
Sellers are taking a while to get used to the idea that they have absolutely no pricing power in the face of an inventory crash.
Using Ziprealty, I only found one Cape in Brockton listed for $259,900. MLS #70295345; here is the Ziprealty link:
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=70295345&page=1&property_type=SFR&mls=mls_boston&cKey=n43j63c6&source=MLSPIN
What a dump. Brockton is a hellhole and this house is way overpriced. Drop it to $45,000, Dick. It’s a teardown.
It might be a dump, but if you look carefully in the small print you’ll see that one of the amenities is “cable TV available”. That makes this house quite an attractive bargain.
It also has circuit breakers listed as an amenity. At first I thought “lol” but then it occured to me that in a house like that, you’ll probably be running to the basement every time you run the toaster, which would actually be sort of an aerobic workout. In this market, you really need to think outside the box (or lean-to, as the case may be).
I thought my 24 circuit breaker 220V upgrade was not much for a house in SoCal under 1,000 Sq. Ft. was OK but not over-the-top. Do they even know about GFI’s?
The article says the house is on Gladstone street. But if that’s an example of what $259K gets you in Brockton, then there is no need to look for further evidence that prices have come completely detached from reality.
I tried to look up the guy’s deed records, but Plymouth county charges for access.
Yeah, sorry — I missed the mention of Gladstone Street. And yeah, MLS #70231861 appears to be the correct home:
http://www.ziprealty.com/buy_a_home/logged_in/search/home_detail.jsp?listing_num=70231861&page=1&property_type=SFR&mls=mls_boston&cKey=59sfzbzf&source=MLSPIN
…and it is every bit the scary dump the other house is. Check out the awesome wood paneling throughout. You can have your own little Elks Club lodge. The aquamarine paint in the kitchen looks like marine primer.
these little dumps are very popular out here in california. not sure about that corregated ply paneling house #2 however
Gotta love the constant 2% incremental price reductions. You see/hear this again and again. I don’t know why home sellers think it works with houses when it doesn’t work with anything else.
The think I don’t like is that when this home sells MLS ask and sold will probably be the same.
Concur with Brockton, at least my impressions. One of the less desirable towns in the greater (and I mean greater, it’s probably 30 miles from Boston) Boston metro area. $279K doesn’t buy a shack in most places here.
At 2% increments, your Dutch auction will never keep up with the pace of market price reductions and you will never sell.
LMFAO!
I tried to tell someone I know selling their home that they had to drop the price more substantially than the few thousand they wanted to. To use the 2% example I said “If you saw something you wanted that was $36.99 on sale for $36.25 would you think that was worth it? Because THAT is 2%, and you probably wouldn’t think it was a real sale until it got down to $29.99, which is a 19% shaving.”
What makes a house different to a prospective buyer? NOTHING. I just got a confused look.
“It is not a bubble bursting.”
We know that — it is a SOFT landing.
(SOFT = Some Other Fool’s Trouble)
‘It is not a bubble bursting. My view of this is there is a correction going on in the marketplace.’”
I wonder how much of a correction has to occur before people will say the bubble is bursting?
Simmssays…look at
AmericanInventorSpot.com
The NASDAQ started out as a correction in 2000.
It wasn’t til later that some called it a disaster.
As events evolve, we should recognize that, despite our suspicions, it is very difficult to definitively identify a crash until after the fact–that is, when the never-ending soft landing from a previous bubble confirms its existence.
WTF is the difference?? Just call what it really is.
The importance is huge, and not at all what people are selling it as. In a hard correction prices tumble and people run for the exits. Within a few months or at most a few years it is all over and poeple are writing the event into history. With soft corrections the squeeze lasts years and years. Once liquid assets stop moving. Not just houses, but fancy boats and cars just sit on the market. Typical corrections in the US have taken around six years or more to play out, but this one looks a lot more like what happened in Japan which could mean ten years. Saying soft correction does not mean no difference or easy living. It means ten years or more of horrific squeeze. It means many will be killed not with the swift beheading offered by the relatively high-tech guillotine but with the barbaric crush of death by rock pile the way the majority of Salem witches died. Think of horror images like The Will Come Soft Rains or the popular tune Killing Me Softly. That is what a soft landing means.
Crash/correction/asset freeze/asset devaluation is all relative. If gasoline is your largest variable cost, it matters. If you have lots of kids, food may be the issue. Seventy percent of the population own homes. Different variables.
Some of the 70% will have their mortgage as their major focus as their Achilles’ Heel. Statistics say that for the bulk of us that will not be the case. What else can we collectively rage about? Healthcare and retirement? Immigration? I am mad as hell about many things, but not about my situation with RE. Do I feel bad about the RE future for others, including family members who will likely never own a home? Yes, yes, yes!!!
I truly believe that is some of the anger, love, and hate that this blog evokes. We want it to be a fair playing field. Privilege, timing, luck, and speculation have changed it. Can we make it more fair? How?
From the article:
“It’s a cyclical thing,” Sullivan said. “Every five to seven years you have changes. You have to ride the wave.”
As any surfer can tell you, waves don’t correct — they crash
I love this saying “the market is just tapping on the brakes.”
pretty soon that brake pedal will hit the firewall!
pretty soon that brake pedal will hit the firewall!
Too much air in the system?
There will be some buyers out there that will fall for the trap of
“Get in now before the interest rates increase “. In fact, interest scare was driving the market in 2005 , along with investors/flippers etc.The fact is I would rather get a house 100 tho. cheaper and pay a point higher in the interest .The real estate people really play up the urgency factor ,( oldest trick in selling and It aint working any more ). A person should never buy a big ticket item like a house with a sense of urgency.
It is the same tactic as “Buy now or be priced out forever” How can you be priced out forever? If you cannot buy, then who is the house going to sell too? thin air? The market is driven by buyers, not by sellers. The buyer is the one that has to actively put an offer for something. Sellers are just sitting there waiting…
Also, as some other poster said, it is a true buyer’s market when, and only when, buyers can set prices that are rational, and sellers will take the offer. Right now it is not a buyers market…
Amen. Every time I read “it’s a buyer’s market” I get sick to my stomach.
Its a NOBODY KNOWS THE RIGHT PRICE ANYMORE MARKET.
‘If it’s priced right, there’s a buyer for absolutely anything.’
That is true. There are lots of examples of people buying tech stocks all the way to the bottom. Only difference, their pain was acute and swift, these ‘jump-ins’ will get to experience the slow torturous agonizing drawn out pain exacted by an illiquid asset. Sounds like the making of a tv weekly series to me.
This actually isn’t true. My brother, who deals in old parts, countered me on this recently. If someone needs a 57 Chevy left bumper and all you have to sell is the right bumper, it won’t sell at any price.
negative price, perhaps?
Richard Breault is hoping someone will do more than just look at the house he and his wife have lived in on Gladstone Street in Brockton for 30 years. If not, he has a plan. ‘If we don’t sell it this time, we’re going to stay,’ he said.”
Looks like that’s one less retiring boomer moving to Florida or Phoenix. Speaking of which, I think the whole retiring boomer premise is as faulty as the late 90’s premise the drove the dot-com bubble: that everyone was going to stop going to brick-and-mortar stores and buy everything online. Many boomers have kids and grandkids in the areas in which they live, and they don’t want to move away. In fact, my folks used to talk about retiring in Phoenix and guess what — five years later, they’re still in NJ. I don’t believe that the tsunami of migrating retireees is ever going to materialize, especially now that places like Phoenix and FL have gotten so expensive. Many of them will just stay put.
Toll Brothers rises after Wachovia upgrade
By John Spence
Last Update: 9:43 AM ET Mar 27, 2006
BOSTON (MarketWatch) — Shares of home-building giant Toll Brothers Inc. (TOL : Toll Brothers, Inc.
News , chart, profile, more
Last: 35.84+1.49+4.34%
10:35am 03/27/2006
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TOL35.84, +1.49, +4.3%) rose more than 3% to $35.50 in early dealings Monday after Wachovia Securities analyst Carl Reichardt upgraded the stock to outperform from market perform. While order comparisons at Toll Brothers, which is off 42% since its July top, “remain challenging (particularly in a slowing demand environment), we believe the worst news for [Toll Brothers] is behind it,” Reichardt said in a research note Monday. “The combination of compelling valuation, reset analyst expectations, easing order comps and a uniquely strong competitive position relative to small high-end custom builders lead to us believe that [the company's] shares should outperform over the next 6 to12 months.”
——————————————————————————-
That is a gutsy call…
Resets will matter a lot for Toll in the not-distant future. I am talking about resets on ARMs, not analyst’s expectations, though.
“Gotta love the constant 2% incremental price reductions. You see/hear this again and again. I don’t know why home sellers think it works with houses when it doesn’t work with anything else.”
Because they used the Feds as their guide…15 soon to be 16 ( 0.25% )raises in the Feds Fund rate…..
Doesn’t it strike you as funny that he has been in this property for 30yrs in which case it should be free and clear yet he can’t or won’t lower his price below $259,000. Hope his neighborhood doesn’t go further down hill in the coming years, hee,hee…
This stock is killing me!!! I shorted this POS last Apr to the tune of a 4k loss, then it takes a huge dump. I jumped back on the short at 32 and cannot for the life of me figure out why this stock still hangs around, let alone show some legs.
I think the analyst has it dead wrong, the “best” news is BEHIND this company. I don’t see things getting any better for TOL. So many folks say that their high end target market won’t be affected, I believe that is one of the first markets to be hit. Money is money and if someone has 80K in deposit money, they’ll walk if their house is now worth 120K less then the day they signed the contract.
Bob Toll must be pumping back some of those 2.5 mm shares he dumped at 50 post split.
Bahh, I can’t stand that arrogant SOB.
phew…feel better now. thanks.
Shorting is a tricky pastime. I shorted a tech stock (ITWO) in early 2000 when it was $100 (with reverse splits, $1000). During 2000 I lost like $5K as it went up, and got margin calls and had to sell. It ultimately fell below $1, but I wasn’t onboard by that time.
There were lots of calls on this board to short homebuilders and lenders and I don’t think those have turned out to be good moves.
It’s a lesson for all bubble watchers that even though we know what the eventual outcome will be, the path is not straight down.
I feel your pain. My Toll puts expire in June, and I just don’t see much downward movement by that time. Txchick57 has posted a number of times that she doesn’t think now is the time to short HB, and I think she is wise. It’s just too tricky to get the timing right. Could be well into ‘07 before they really take it on the chin, when the magnitude of this slowdown becomes apparent even to the most fervent bulls.
ok 2006 prices will equal 2004
how about 2007 ?
please let it be 2000 because my husband is very impatient and it’s driving me mad! He looks at the paper, sees how a recent “summit” on the MI economy had UM economist George Fulton say:
“We are in a pickle. The state of Michigan is in the midst of serious structural economic trouble, probably its worst crisis in our lifetime. Since 2001, the state has lost one-quarter of its automotive work force and is in its sixth consecutive year of job loss, a period of decline unequaled in the 50 years for which we have data”
read about the GM buyout proposal, see articles about 3 year supplies in some places near here…but see the local realtor numbers indicate that a couple more houses sold in ann arbor in feb 2006 than in feb 2005 (even though there was a modest decline in median and mean price!) and see how asking prices are still ridiculous with the new crop of spring listings and concludes, well, we better just lower our expectations for a house we can like and buy something we can squeeze into so we can get in the market already. or buy a condo. because otherwise we’ll be priced out. especially with interest rates going up. he really believes this. it’ll take fire sales to convince him otherwise, and there’s so far a back-off from even the “price reduced” adverts we saw over the winter. there’s like a new game-face and it works on some people like my spouse dammit…
Many of the retirees will stay where they are. Moving is a hassle. They do want to be close to their children. Most of the people that I know who moved, did it to go where their children went, and not vice versa. My folks never considered leaving their house.
For those that don’t have a ziprealty acct, is there a generic code we could have to look at things like this Brockton home. This guy’s logic makes him sound like a total buffoon. He should be joining the circus.
And, he can’t go below $259K because that his all of his retirement savings. He probably didn’t think to save anything, and then got the itch to bail due to the bubble good fortune. And now he missed it. TOOO BAAAAD.
I was at an open house in Ann Arbor MI yesterday (went to like 8 places, one of 2 or so names at 6 of them, mostly neighbors at 1 of the other 2…it’s kinda scary how I look at the addresses of signees now to check on that!) and overheard a couple talking to the realtor saying things like “well, if it happens it happens, if not, that’s okay too”. They were apparently holding their house open a couple blocks away, and gave the total vibe that they are trying to see if they can cash out, but not in an emergency to sell. These sellers had a modest house and they looked like 40-somethings (priced like this guy in brockton’s place, for a crappy ranch, but at least all neighborhoods in ann arbor are decent), so they probably had a lot of ‘equity’ in it. I think there are a lot of people who’ve had their houses for a good while, maybe spent the last couple years on the re-fi bandwagon and cashing some but not tons out, and now are sorta late to the party but checking out the scene. They maybe never intended to use their house as a way to finance retirement, they maybe intended in the old days to do the reasonable thing and buy a house they could afford, pay it off, and have very little housing expense in their dotage. But the idea that the PoS they paid 40k$ for 20 years ago can now fetch 250k is just too much temptation. There are perhaps a lot of sellers still out there who can keep prices sticky because they don’t need to come down, or even need to sell….this kinda guy in brockton, high-income people who don’t like to see the two-mortgage bleed but can stand to lose a pint or three, speculators with some reserves to get them through these ’soft’ times, etc. It’s amazing to contemplate, but since the whole tower of cards relies on ridiculous prices staying put, it might really take banking getting hit on a huge scale for anything to start coming apart.
At one open house I went to (that deceptively advertised to make it sound like a decent-sized house when it was really 800sf), which really could only appeal to young first-time buyers, there was a realtor *and* a side-kick mortgage person! First time I’d seen that…usually it’s just a brochure they hand out showing mortgage products, but they had a real-live person hanging about to, what, pre-qualify you to pay their asking price?! It was weird…very car dealer-like.
cheers all!
Trust me on this. If this guy has been living in Brockton more than 10 years, he is not a high earner. Brockton is about as blue collar, low wage area you can get, at least excluding New Bedford….
I know *of* Brockton…think I may have driven thru it once or twice 15 years ago…so indeed I do get how amazing it is for anyone to even imagine selling a house for that there!
But, so, you think he’s one of many who hope to sell and rent/live-on the proceeds of the sale? There’s an interesting phenomenon really…people on the verge of retirement who lived in shitty places and who have no money saved and crap for pension/socialsecurity but who suddenly find their houses worth something. Will they come off this position of “we’ll just stay then and not sell for less” or will they bail bail bail and sell for 20-30% less than they’d hoped for?
Good point. If you actually *own* your property, and after 30 years are almost done paying your mortgage, your living costs should be less. That being said, a lot of people, and I know of several that work with me, are in their late 50’s early 60’s and STILL have large mortgages. How on earth are these IDIOTS going to survive? One I know, just bought last year. Bought a bigger house, with a pool.
These are the kinds of people that I have no sympathy for. They deserve, and are going to get crushed in the forthcoming adjustment. Over 100K in Brockton? Give me a break…. Try 50-60K at most!
“At one open house I went to… there was a realtor *and* a side-kick mortgage person!”
That’s EXACTLY what happened at an open house over the weekend in Shrewsbury MA! Only this was a $799K 3100sf listing. The RealtorTM handed the property info to my fiance and I went for the financing side-kick’s worksheet which had four toxic loan alternatives. After lurking around this blog for several months I was laughing inside. All four had monthly payments of nearly 2X what it would cost to rent a comparable home. The mortgage person thought I was intrigued and added “Interesting, yes?” thinking that a greater fool had arrived. My first impression was that this place needed a $100K haircut in listing price. I looked up the sales history on Zillow (sold in 1997 and 2002) and connecting the dots via a “normal” 5% YOY gain would have the house selling for selling for $700K, without accounting for the fact that the 2002 sale was already overly inflated.
I wonder how common it is for a mortgage person to hang around an open house. And yes, the financing was being presented very car-like based on monthly payments only, without regard for the fact that that $150K in equity will likely vaporize at the closing.
not to mention that Shrewsbury’s inventory has gone from about 125 homes on the market in March 05 to 293 today…
Not that unusual to have a mortgage person at an open house with a realtor at least here in Cali, esp. since some realty cos. either own or are affiliated with mortgage and escrow firms.
the open house where the mortgage person was hanging was a listing from one of the realty cos in town that has a ‘finance’ arm…they’ve had their own mortgage affiliate for years now I believe, and have sometimes handed out their brochures even in a property-specific way (this is what it would cost with X Y Z loan types etc) but not until now have I seen an actual extra body in the house. Maybe they’re soo hurting for business that they are hoping to just get names on applications! She seemed to have forms and such at the card table they’d brought into this vacant overpriced 800sf dump they were asking 240K for.
I plan to buy my next house for cash. It may take some years. But I bet they’ll be damn glad to get it. Everything now is based upon EZ finance. And with the Chinese/Japanese/etc essentially picking up 50-70% of the new toxic mortgage paper right now, there’s no reason for anyone to get tough on credit.
But a change will come. It always does. And cash money will talk once again.
Tried to buy a new car last year for cash. They didn’t even know how to process the deal. They wouldn’t offer me 5 cents off the price, but if I signed up for a 6-year lease, they’d cut me a sweet deal. Wink wink.
Until cash talks, I walk.
A different story however if you were buying a used car, and especially if you were buying privately.
A guy I worked with about 15 years back had a very lucrative ‘hobby’ buying and selling used cars. He once told me that the biggest single factor in getting a low-ball offer accepted was to show the seller physical banknotes.
I’m sure many people refinanced homes with the idea of lowering the APR then was told they could take more money out, so they did with the idea to improve the home then once they got the money, saying it will only increase the value of the home, they did some home improvement and also spent some of the money of a plasma TV, etc as well…
just my thoughts of how most of the refi’s worked out…
I looked at recent sales in that neighborhood and there are three similar (old) houses that sold for 280-288k last summer. That’s a 30k haircut in 6 months. Next year at this time it will be below 200k.
Anecdotal evidence that the housing market has turned 180 degrees here in Portland, OR. The house across the street was listed for sale at 300K in Nov, 1 month after an identical model sold for 299K in one week, only 2 doors down. I figured it would also sell in a week or two. Well fast forward 4 months and it’s still unsold. I spoke to the owners yesterday, they said they have received LOWBALL offers ranging from 250K-282K. I refer to these as lowball because no one has reduced their prices, however there is absolutely noone looking now! Normally by March there are tons of people looking, and I personally haven’t seen a single car drive by slowly for over a month! Things appear to be at an absolute dead standstill around here, no buyers to be found. And this is in an excellent, safe neighborhood with very good schools nearby.
I’m in a quandery. I live 40 miles from my job through grueling traffic so I was looking to move closer to work. The area I’m in now is terrific but the area closer to work is less desirable. But prices are ridiculiously high. They have gone up 50% in the last 3 years. So I thought I would share the following email I sent to my realtor to show you another angle on how this mania effects people in my situation:
Hi {agent name},
I wanted to thank you for the time you have spent with me to get to know the Tacoma market a little better. I really liked the house on 17th but my wife did not like the neighborhood. We all really liked the neighborhood on the other listing I told you about last night but the house didn’t quite fit.
I have done a lot of market analysis and my conclusion is that the Tacoma market is in the late stages of a mania. I think it will crater just like Pheonix, Florida, Boston and San Diego are now. I think the owners of both of these are not that serious about selling or their prices would be in line with county appraised values and comps from recent sales in their area. IMO they are throwing prices out there to play the RE greater fool lottery game. I will not be the greater fool who buys at the top of a mania. I could be wrong, but the facts from my research are holding me back.
It is rather disappointing to me. I was really hoping to find a great home in a great neighborhood for a reasonable price. I think I would have found something if I had bought two or three years ago before the market lost all grounding in fundamentals such as price/rent or price/median family income.
So I guess I will suffer through the commute until some other employment opportunity presents itself, or housing prices come back to earth. So, if you see something that is a really great deal in a really great area then let me know. For now I will hold off on actively searching for a home.
Regards,
love to see his/her reply!
hope it all works out for you…I guess rents close to work in decent areas are too high?
Rents are decent. I own my existing home and really like it for the most part except for the size (1600sf). I wanted to rent it out and have the rent pay for a nicer bigger house in a comparable neighborhood closer to work. I planned on putting 20% down but the numbers don’t add up.
Guess I shouldn’t complain because I’m sure there are people in much worse situations than mine. However, I’ll bet that there are a lot of people like myself that do not move up or closer to their jobs because of high RE prices.
I’m in the same boat as you. I rent in Southern New Hampshire but work in a Boston suburb. It’s a 35 mile commute. Prices are insane around here and I refuse to buy “affordable” $400,000 pieces of crap.
I’m glad to hear that prices are falling in MA but I think the RE plunge will do major damage to the New England economy. A lot of people here are mortgaged to the gills.
Realtors reply below (btw, I think I’ll keep her as my agent)
Hi {deflation guy},
Thanks for the update. I certainly understand your disappointment with the current housing prices in the North End of Tacoma. It may take some sellers a little time to adjust to the leveling off of our market. I believe sellers are not adjusting for the change in the market this last quarter and
are using sales data that reflects unrealistic continued record appreciation. I believe the market will be going under a price
correction in the next 6 months.
I will certainly keep you posted.
Regards,
I was in suit with a builder in Mass. for 5 yrs that was just settled with cash on the day of trial, However the day of the trial my RE Agent/she is also a friend/ discussed on building the home and flipping it and the close comps for sale listed at about 619K we figured I’d just list for 559K and dump it, that would of sucked for the other homes. Any how settled and ran with cash.
Now on another state FLA, I now live in, this will be a blood bath since homes that sold in my neighborhood for 400K in 2000 are now listed for 1,8000,000.00 and i’m sure the incomes have sure not raised that much.
Well happy to sit on the sidelines as a HAPPY renter while this plays out..
40K in one month?