A Very Tough Pill To Swallow
The Mail Tribune reports from Oregon. “The median October sales price for an existing home in Jackson County was $245,500, 12 percent below the $279,950 price a year earlier. Going into winter, sales generally fall off, but prices haven’t necessarily declined during the off months during the 2000s. The slumping sales prices are a clear sign of more sellers than buyers at the moment.”
“For Ron Galbreath, a top seller in Medford, that means wrestling with sellers over what they would like to get and what they will likely receive for their property.”
“‘I try to get clients to realize the realities of this market,’ Galbreath said. ‘When you do a market analysis telling you this figure would be the value of your home, in today’s market you have to price it 5 to 10 percent less. I’ve told my clients, if they don’t have to sell right now, then don’t sell.’”
“Galbreath said refinancing appraisals from last year are useless. One Reddy Avenue property in Medford was appraised for $340,000 last year, but it’s on the market for $249,000.”
“‘And it’s still not selling,’ he said.”
“‘I heard about an agent the other day that waited until the last day before closing to give the seller disclosure form to the buyer,’ said Doug Morse, an agent (in) Medford. ‘The buyer backed out. If everything doesn’t get done on time, it can be a real deal buster right now.’”
“‘A lot of people have lowered their prices and some (sellers) are losing money,’ Morse said.”
The Dalles Chronicle from Oregon. “With winter settling in over a cold residential real estate market, some Central Oregon builders are rolling out the deals to get something — anything — to move. And Woodhill Homes, a builder of multiple subdivisions in the region is, in effect, partially converting itself into a landlord for the winter to keep its cash flows moving.”
“The builder will probably sell 50 homes this year, co-owner Jay Campbell estimated, but that’s only about half of its early year target. Meanwhile, with its construction pace pared to the minimum, the rents and lease-to-owns help keep the bills paid.”
“‘We are in the business of buying and selling homes, but this is what we have to do today in order to see tomorrow,’ Campbell said.”
“Woodhill isn’t the only builder trying to navigate through a frigid sales environment. Sales of single-family homes on an acre or less were down 27 percent through the third quarter of this year in Bend, compared with the same time last year, according to the Central Oregon Association of Realtors. In Redmond, the volume plunged 48.3 percent.”
The News Tribune from Washington. “Pierce County home prices dipped again in October, marking the second consecutive month of year-over-year decreases as sales remained down. At the same time, 33 percent more homes were for sale than in October 2006.”
“Coldwell Banker agent Sharon Benson said Tuesday that she’s not concerned about Pierce County’s price declines, which she attributed to the market normalizing in the post-boom years. Buyers today, she said, are more picky and bring contingencies, such as the need to sell a first home.”
“‘Some buyers are just not making commitments,’ she said. ‘Buyers at some point are going to realize sellers aren’t going to give their houses away.’”
“The median home price in King County dipped to $387,500 while the number of listings was up 44.3 percent, higher than Pierce County’s year-over-year increase. Snohomish County’s listings jumped even more, by 51.6 percent. Its October decline in sales, however, largely mirrored Pierce County’s as they fell 34 percent.”
The Olympian from Washington. “October home sales in Thurston County fell 13 percent from a year ago, but demand for homes was strong enough that the median price rose four percent in the same period, according to the Northwest MLS.”
“Broker Steve Cahill said a drop in home sales, higher levels of inventory and stricter lending standards have contributed to a slower Thurston County housing market compared with last year.”
“‘We could sugarcoat it but that’s the reality,’ Cahill said.”
“Yet those same factors, such as higher levels of inventory, have helped to create a buyer’s market here, one of the best Cahill has seen in 15 years, he said.”
The Columbian from Washington. “Eleven homes to be auctioned by trustee’s sale drew a recent Friday morning crowd of about 40 people to the Clark County Public Service Center.”
“As Clark County’s once booming housing market slows and foreclosures here rise. Data released by RealtyTrac showed 374 foreclosure filings in Clark County during the third quarter, compared with 180 filed during the same period a year ago, and 182 filed during the third quarter in 2005.”
“‘In the future, I would say there are going to be more,’ said Mike Worthy, CEO of the Bank of Clark County.”
“Research is imperative, said Gary Colemansmith, a Vancouver investor. ‘The property owner might owe $240,000 on a first loan and $60,000 on a second (for $300,000 total), and the house is only worth, maybe, $270,000 because prices are down,’ he said.”
“Auctioneer Sam Burton said he’s noticed investors have changed tactics in the three years since he began conducting the sales. ‘I see them buying the lower-end houses instead of those on the high end,’ he said. ‘More higher-end homes are going back to the bank.’”
“Burton said part of his work includes posting notice of an impending trustee’s sale on the door of the home to be auctioned. Burton said he’s been posting more notices lately.”
“‘Last year, we maybe had three or four postings a day. This summer, we were doing between 10 and 30 a day,’ Burton said.”
The Seattle PI from Washington. “Many prospective Seattle home buyers welcome signs that prices are declining. ‘I think (prices) are way out of sight, and I’m glad to see they’re finally coming down,’ said Steve Noah, while outside a Capitol Hill open house in October.”
“The latest evidence came Tuesday, when the Northwest MLS reported that the typical home in Seattle and King County sold for less in October than it did during the same month in 2006. It was the second consecutive year-to-year decline in median price for Seattle and the first for the county after more than five years of monthly price increases, year over year.”
“Meanwhile, the city and county continued to have fewer sales and many more homes languishing on the market than a year earlier.”
“‘I wouldn’t want to overpay for a house right now,’ said Jessica Bora, who has been looking at homes with her husband for about a year.”
“Noah, who has been looking at homes for about two years, thinks prices are still too high. ‘I think in the next year that we’ll see some serious readjustments,’ he said. ‘I probably wouldn’t buy right now.’”
“The number of homes on the market was up by nearly 53 percent in Seattle, more than 44 percent in King County and nearly 31 percent in the region from October 2006.”
“Closed sales declined by nearly 9 percent in Seattle, 25 percent in King County and 26 percent in the region, while pending sales, which can be a better indication of the most recent activity, dropped by nearly 21 percent in the city and 29 percent in the county and region.”
“Many agents…say things really slowed in August, because many buyers had a hard time getting financing. ‘I think what happened in August moved us into fall early,’ said Jim Paddleford of Windermere Real Estate. ‘A lot of loan programs disappeared overnight.’”
“Some agents complain that buyers have unrealistic expectations for bargains in Seattle based on stories about the national housing downturn. But Gene Seguin of Windermere Real Estate sees another problem.”
“‘Sellers don’t want to let go of controlling the market,’ he said.”
“Many sellers think about listing their home for six months before actually doing it, meaning the price they can get now is 3 percent to 5 percent lower than what they could have when they first considered selling, Seguin said. ‘That’s a very tough pill to swallow.’”
The Seattle Times from Washington. “The switch to a buyer’s market, with prices dropping, has caught some sellers by surprise. In the last month and a half, Debbie and Carl Sweetland have bought a home and tried to sell one.”
“Their 2,000-square-foot home in West Seattle has been on the market 46 days and they’ve lowered the price $50,000, to $539,000. By comparison, the Sweetlands bought their new house for $610,000 within a day of it going on the market. They closed in no time on the 3,400-square-foot home, which is near their old one.”
“‘I knew the market had slowed down some,’ said Debbie Sweetland. ‘But I thought we’d have an offer by now.’”
“According to an analysis of loan data by The Wall Street Journal, 31 percent of all mortgages originated in the Tacoma market in 2006 were the high-rate loans. That compares with 21.5 percent in Seattle-Bellevue-Everett and 24.3 percent statewide.”
“Tacoma-area foreclosures rose 36 percent to 209 in the third quarter, according to DataQuick. That compares with 154 in the second quarter.”
“The Sweetlands have twice lowered the price on their home and are thinking about taking it off the market to rent out, or also putting their new home up for sale as well to see which one goes first.”
“‘I think by January we’re going to really be biting our fingernails and figuring we better make a decision,’ Debbie Sweetland said. ‘Hopefully it’s going to sell before then.’”
“Galbreath said refinancing appraisals from last year are useless. One Reddy Avenue property in Medford was appraised for $340,000 last year, but it’s on the market for $249,000.”
But according to the Office for Housing Enterprise Oversite (OFHEO) the refi numbers only added 4% to the House Price Index (HPI). It sounds like even the regulators haven’t a clue.
They don’t. They didn’t even know about the Cuomo investigation of Fannie and Freddie. And they’re in charge?
You should examine what Cuomo is going after WM for.
My read is that he is gong to try to prove that WM colluded with third parties to inflate and thereby knowingly misrepresented material issues in contracting with the borrrowers and thereby allowing the borrower the right to rescind the agreement.
This would stick WM with the houses which they would have to liquidate or in the very least write down the values (and cash flows) from the rescinded mortgages.
In other words, they are going to try to pin it on the lenders by claiming the contracts patently misrepresentative and /or fraudulent.
Should this be the strategy, WM will need to be recapitalized I would think, if it survives at all. In either event the common equity disappears (i.e the shares become worthless).
It is doubtful that MBIA and the like will pay out so readily if the waters of liability are muddied if fraud was a factor.
Oh, and by the way, in the future how many mortgage lenders are likely to want to offer mortgages in marketplaces where the contract written with the customer may be rescinded at a later date? Think that is going to spur residential RE sales?
sorry, should read …inflate house prices….
that’s a pretty provocative scenario.
Perhaps, but the exit of mortgage lenders has precedent in Ohio recently and of course there is the example of insurers in FLA, SC, etc. when their ability to do business under predictable regulatory conditions was compromised.
Aside from that, what was provocative - the idea that a US bank loses its equity - check the history books of finance.
I would appreciate your read on the situation txchick57 as I’ve been reading your posts for months now and you display a pragmatism that is usually the hallmark of a good trader. Such perspective would benefit all on the blog, I’d think.
Thanks in advance for any insights you’d be kind enough to share.
Oh hell no, not that a bank loses equity, but that that one does.
Peter,
Excellent observations! (And people that can’t type say blogging is a waste of time!?) I had thought, with over quadruple volume that it was obvious institutions were turning their back on Kerry Killinger. The case against them had teeth and one way or another WaMu would not walk away unscathed. So… who’s more important? WaMu or MBIA? I think we have our answer. Good “read” Peter!
It will be scary and interesting at the same time to see how the derivitive markets hold up with all of this fraud in the system. It only takes one or two dominos to set off one heck of a chain reaction.
A few weak players(hedge funds-derivitive originators/holders) that sliced margins too thin, to get the business of guaranteeing a sure thing, could take down some pretty big players if the perfect storm hits. Because let’s be honest, we all know that NOBODY was properly pricing risk in the past few years, so there have got to be a lot of players that guaranteed losses/gains without the real risk priced into their models. Once what relatively little money they got from one side of the bets is gone, well….all bets are OFF!
Is this one of those situations where you want to be the first bank to recognize your losses, so that you can hit up whoever holds the other side of your hedged bet? Get yours before everybody else raids the cookie jar and bankrupts the middle man, who made a ton of money…..until he didn’t?
you gotta see this, “let’s pawn it off on the taxpayer” WTF!!! why don’t the street banks eat their own garbage?
http://www.cnbc.com/id/15840232?video=591314753&play=1
RE: “Galbreath said refinancing appraisals from last year are useless. One Reddy Avenue property in Medford was appraised for $340,000 last year, but it’s on the market for $249,000.”
The virtual dregs of the appraisal biz…
When the homeowner drags out some previous pie-in-the-sky appraisal-looks you square in the eye and says-
“If don’t get 20% more than this number, I’m ruined”.
You screw me up on this refi, and I’ll be suing your sorry azz.
And it’s one after another.
Needless, to say-I am no longer in the appraisal biz.
Well ,I for one always thought that the appraisal fraud and collusion with other parties had the potential to blow up in the face of people .The last time I checked ,if any aspect of a contract has a fraudulent aspect ,to the benefit of a party to the contract ,than the contract could be voidable . Anyway ,as I have said before ,most of the laws were already on the books ,but the enforcement of laws has been null and void during this lending cycle . Just because everybody was doing it and nobody was checking doesn’t mean that it doesnt rear it’s ugly head . Believe it or not, I have seen this before in a down cycle that all of a sudden the laws matter ,because violations of the laws are traced to being the problem . Just because the cat was away doesn’t mean that the cat isn’t going to come back and eat the mice .
Get a load of this a**hole
http://www.youtube.com/watch?v=wzvtbIZCchw
From the old Man From U.N.C.L.E days Thrush was the enemy!
Just like every housing bull of the last 5 years, there’s no hard numbers, no statistical support, no evidence whatsoever to back up their blow-hard commentary. Just a lot of condescending BS.
So the Sweetlands thought that their new 3700 sq ft house should cost 11k more than their old 2000 sq ft house in the same neighborhood? Sure, if houses cost 30k-40k!
Their new house ran 164 bucks a square foot. That means the price for their old house is…. 330k!
Okay, so you adjust for bigger houses costing less… we’ll be generous and say 400k. And that was at the bubble peak! How much you wanna bet they ride that pig down to the bottom and wind up selling for 200k?
Errr, should be 21k. Still, they must be delusional thinking they could trade virtually ’straight across’ for nearly twice the house.
Come on now, their 2000 sft house is very special.. Seriously though, it will be interesting what they will list their new 3400sft house for, probably $700K since it’s very special too. These guys got caught with their pants down and should be laughed at.
I can’t imagine having two simultaneous mortgages. Unless they own the first house outright, or have the cash reserves to pay off one/both mortgages without crippling their finances, you have to wonder what they were thinking?
I know of three cases where people had dual mortgages. All three have suffered financial hardship.
It doesn’t say, but it looks like the Sweetlands only have two kids. A family of four should be comfortable in a 2,000-sq.-ft. house. I do not understand why people need huge homes. Nor can I understand, in this market, why people buy another house before selling the one they’re in. Madness.
It’s the Goldilocks economy, you silly goose.
You know This house is too Big. This house is too SMALL. THIS CARDBOARD BOX IS JUSSSST RIGHT!
LOL!!!!!!!!!
I think their plan is this: Buy the bigger house for nearly the same price as they WILL be selling the old house for. Thus they will be making a big gain in both transactions.
They couldn’t lose if they could find a GF to unload the old house. Now, where did all the GFs go?
“I think by January we’re going to really be biting our fingernails and figuring we better make a decision,” Debbie Sweetland said.
“Hopefully it’s going to sell before then.”
“Hopefully it’s going to sell before then.”
Hope is not a strategy.
Bay,
It doesn’t say, but it looks like the Sweetlands only have two kids. A family of four should be comfortable in a 2,000-sq.-ft. house. I do not understand why people need huge homes. Nor can I understand, in this market, why people buy another house before selling the one they’re in. Madness.
The only reason I can see owning a larger one might be if one is predicting pending doom (peak oil, helping family, add your own).
But you’re right! That’s a good amount of space, especially if it has a basement (I know most of Cali does not).
We may go 2500sq with basement, and land. Ranch for sure. No need to waste more energy! We may be the saving grace for our family if things go horribly wrong.
Hopefully not, but it sure looks scary.
Best,
Leigh
“The Sweetlands have twice lowered the price on their home and are thinking about taking it off the market to rent out, or also putting their new home up for sale as well to see which one goes first.”
Clueless. Absolutely Clueless.
And these people are buying Half-million dollar houses??
The Sweetlands are in the hall of fame for real estate stupidity.
We’ve read some clueless stories but this one takes the cake (so far).
Really? They sound like 90% of the stories we read about.
“‘Some buyers are just not making commitments,’ she said. ‘Buyers at some point are going to realize sellers aren’t going to give their houses away.’”
That’s right baby, and buyers don’t have to buy!You will learn that the hard way. I really would love to pop the next a–hole that spits out that line right square in the mouth!!
They’ll give it away to the bank! Or, if they’re older owners, they’ll keep living there, and forever be pissed about how they missed their chance to cash out from the housing table.
My wife is still antsy to get a house, but at least now she’s been talking along the lines of “Hey, should we lowball that house?” and I’ve gotten her calculating the ‘value’ of houses based on equivilant rents. Before long, she’ll be undercutting what I think we should pay for a house.
There was a lovely short sale hosue we were thinking of lowballing, but the realtor told us he knew where the bank was sticking on price because of the previous ’sale’ that fell through when the bank wouldn’t go down lower for minor repairs. The bank wasn’t going to ‘give it away’, and we were cheerful as we let ‘em keep the damn thing.
“Before long, she’ll be undercutting what I think we should pay for a house.”
My wife has made that transition. She has transformed from thinking that housing was a good investment into an incredible low-baller, from thinking “are we ever going to buy a house” to “instead of 2008, why don’t we just get a long term rental and wait until 2009 or 2020?”
“My wife has made that transition…wait until 2009″
Mine too…2010, maybe 2011 (for a house we live in).
It feels good to be on the same page. Man, we had some fights over buying a house, even though we didn’t buy one. We came close to offering on two houses, but I dug in my heels and cried like a little baby at the prices on each house. Both eventually went ‘over asking’ when I was unwilling to even offer asking. That was back in April-June of this year (in Cali Bay Area, things still ‘looked’ good then) and I’m sooooo glad we didn’t get into the ‘bidding wars’ just to get a ‘piece of the dream’.
SFBB,
Good for you man! It’s been a struggle for all of us. While I was somewhat painted into a corner our market commitment was nominal. If I WAS more or less forced to buy our condo at least it was only 200k. I can’t imagine it would ever go much below 100K.
I remember that over at Patrick’s blog, DinOR. If I remember, you at least were able to tell the realtors/seller to take a short walk off a long pier when they tried to steamroller you with ‘other units selling’ and ‘other offer’ crap.
Yeah, I was not having fun. But as I believe we’ve established, bubble sitting isn’t easy. It was the SECOND flaky LL I’d had sell out from under me so I wasn’t in a very good mood to begin with! I guess the bottom line (in the event I really DO have to “give it away”) the train wreck scenario is I’d be out 200K borrowed dollars!
Hell, there’s a lot of people that are already down that much just since summer! No, seriously I thought this place might be worth 160-175K and it will likely reach that.
Well, my wife is slowly transitioning to the idea of not buying a house just yet. She still REALLY REALLY REALLY wants to buy a house, but at least she is beginning to appreciate the fact that we did not jump in a year or two ago. Aside from all the stories regarding forclosures and such, I have been able to show her current asking prices for homes in the area we eventually want to move to. Having over two years of data in our head, it is now blatantly obvious that home prices are going down. My mantra now is, even if we buy now, the prices will continue to fall. Let’s wait just a little bit longer. I hope we can wait until 2009 but perhaps will start to shop more seriously in late 2008.
I’m incredibly thankful that my wife has absolutely no interest in buying a house in this FB market.
realtor told us he…
minor repairs? i wouldn’t trust a realtor as far as i could throw him..
anyway, things are changing fast. I’d make an effort to identify and contact the lender directly.
I could care less about the house. The price he said was the ’sticking’ point was soooo far above what I’d be willing to pay for the house (200k over) that I don’t even want to bother. Half a year as a REO might change their tune.
I’m single and I tip my hat to any man or woman who can get someone, particularly a woman (sorry girls, but mostly true in my experience) to think objectively about something they are inherently subjective about - like a nest …er sorry, home. I, like most other men, get frustrated too easily or just give in.
Peter,
Sadly it was more about (time). Our oldest daughter was getting married and people were flying in from not only the U.S but halfway across the world. We told the seller “Can’t this sh!t wait until after…?” We’d been bubble sitting here for the last two years and our earlier (lowball) offer had been soundly rejected.
No probalo (I really didn’t want to buy anyway!) I just couldn’t bear the thought of picking people up at the airport and not knowing where I was going to take them once they got their bags? I got the distinct impression the seller was WAY over-leveraged and in a panic. Had we been in a McMansion with a 5-6-800K price tag I don’t think there’d have been much debate. But if we WERE forced to buy (and I almost can’t say that) this was the least of all possible evils. Yet still a bummer.
Peter,
(Lost a post there somewhere) but like I say, we’d already lived there for over 2 years so it wasn’t exactly like we were all “giddy” about it. At the time the mort. mkt. was just starting to fall apart and things were just getting interesting. On the contrary, my wife was as hacked off as I was. By June of this year even non-bubble bloggers knew something was up?
Grin…not in this house. I’ve threatened to take away hubby’s computer and banishment to the television!
He is coming around though. Occassionally he scatters wishful comments about, then I eye laser him, and he is blinded for some time
Realtors at some point are going to realize that lenders aren’t going to give their money away.
More to the point, buyers aren’t. Because the buyers will have to pony up a downpayment.
That’s my new mantra…”I’m not just going to GIVE my money away”.
LOL!
Good for you. It really is just that simple. After years of having the wind at their backs sellers have begun to take on the same slimey characteristics as their REIC buddies.
Realtors at some point are going to realize that their 6% is a real hardship for sellers.
It looks like a 300 point down day for the market. Those poor traders, watching their bonuses leak away like air from a bubble…
360.92 ouch.
Inflation, recession. Rock, meet hard place. Thread that needle, FED, and maybe we can have (keep?) both.
Not a tough needle to thread - that hole is a mile wide at this point. HeliBen seems intent on hitting it smack center nonetheless.
Lets see how Maria likes a 350 pointer coming from the other direction.
I’m stuck at school and can’t watch the Closing Bell. Please please please someone tell me how my girl Maria’s taking the news!
Yes - it was a real rough day. Terrible.
FXA, FXF, FXY, FXE, GLD, SKF, up up up!
Terrible?
360 drop on the DOW; dollar at new low-Canadian dollar at new high; GM with $39 billiion 3Q loss; oil headed to $100 per barrel (anybody with $4.00 high test yet?); gold @ $850.
And winter hasn’t even started yet.
“360.92 ouch.”
About damn time…CSCO getting crushed after hours on better earnings and the 4 hoursemen getting whacked. Looks like a good day tomorrow…
What is the deal with these R.E agents: “‘Some buyers are just not making commitments,’ she said. ‘Buyers at some point are going to realize sellers aren’t going to give their houses away.’”
…
Commitments my butt. I am looking to buy a house as low as possible. How low, you will ask ? How about $1 U.S dollar ?
“Giving it away”. These dumb stupid ASSES do not understand that ‘giving it away’ is just what it means: GIVING IT AWAY FOR NO COST. Like giving money to a church, giving a dollar to a pan handler at the street corner… So do the buyers ask the seller to give the house for free ? If they do, then indeed it is a GIVE-AWAY. But if the buyers are offering even $1.00 for the house, then it is a SALE…
I am glad none of my relatives are R.E people. I would be ashamed to be related to an R.E agent or broker or lender.
One of my cousins became a RE agent a few years ago. I’ve avoided him for many years. Now I have an even better reason for doing so.
How low, you will ask ? How about $1 U.S dollar ?
I’d at least give them a euro, rather than a depreciating currency in exchange for a depreciating house.
I hear there’s a supermodel trying to sell her house and wants payment in euros…..
Hey man, how you doin’! I’ll take it you’re enjoying the show?
Hey D. I still post here a little, but all the news is just starting to look the same.
I’ve met with some pretty interesting hedge fund managers in my new job, including some up several hundred percent this year after holding subprime CDSs. I wish I could say more — I’m posting at work right now — but in market environments like the present you really get to learn who the smart folks are.
Or a loonie.
“In the last month and a half, Debbie and Carl Sweetland have bought a home and tried to sell one…Their 2,000-square-foot home in West Seattle has been on the market 46 days and they’ve lowered the price $50,000, to $539,000. By comparison, the Sweetlands bought their new house for $610,000 within a day of it going on the market. They closed in no time on the 3,400-square-foot home, which is near their old one.‘I knew the market had slowed down some,’ said Debbie Sweetland. ‘But I thought we’d have an offer by now.’…The Sweetlands have twice lowered the price on their home and are thinking about taking it off the market to rent out, or also putting their new home up for sale as well to see which one goes first.”
These are the types of sheeple who juiced the market. This business of buying before selling has had a lot to do with the false demand. The number of speculators with multiple properties is truly astounding. Add the Sweetlands onto the list of FB’s in for a real life lesson in financial destruction.
You feel bad for these folks, as they were merely foolish. Buying before selling is a disaster.
Still, one has to wonder about the mentality of selling one house for a slightly large one in the same area. Going from 2,000 square feet to 3,400 square feet? Unless they have more than three kids (with three of the same sex, one of the other, and two kids bedrooms) , that’s ridiculous. What is it about this country that 2,000 square feet isn’t enough?
“Going from 2,000 square feet to 3,400 square feet…that’s ridiculous.”
Benefits: ‘Better’ friends, more upscale dinner parties, have the relatives “oooh” and “awe” when they come over.
Better gains when the market “takes off” again, in the PNW where prices never go down and are soon to be headed back to the moon.
This is greed. Pure and simple. They saw a lower price on a more expensive home, figured it was a “bargain” and jumped on it. Now, they are finding it was cheaper for a reason.
They just haven’t figured out that the reason is the market has made a turn to the downside.
Complete idiots.
Ya’ know Bear… I never really looked at it like that! That is so true (and so 2005). I have a theory that many of these people KNEW they would wind up losing their original home and were playing musical houses w/ their lenders. I was so focused on their “getting over” as they let the “old” house slide into inevitable foreclosure I’d lost sight of how much this tactic fluffed up demand. Good point.
We did just that in 2000 for a piece of land that was very special. But- I was willing to do a big chop to move the old place. I did have to cut some - pissed the realtor-neighbor off, who said “I could have got you $20K more!” Turned out SHE wanted to sell and was POd at me for lowering the comps. But then, she sold her place without disclosing she is a broker (illegal) and left her directional signs behind in the ground. So many of them did that in our neighborhood that I began recycling them.
Bingo, hence the record number of VACANT houses for sale.
“‘I try to get clients to realize the realities of this market,’ Galbreath said. ‘When you do a market analysis telling you this figure would be the value of your home, in today’s market you have to price it 5 to 10 percent less. I’ve told my clients, if they don’t have to sell right now, then don’t sell.’”
That’s such a contradictory statement. If they “don’t need to sell”, why the hell are they even talking to this guy? It’s hard to believe a seller is just testing the market these days. If you’re talking to a listing agent, I imagine you “need” to sell.
What realtors OUGHT to be saying is “If you’re thinking about selling in the next few years, do it now!”
Seriously, telling buyers to buy at the peak is bad advice. Telling sellers to hang on after is bad advice.
I can’t help but wonder if these idiots would recommend using a sausage grinder as a sex toy. I can’t help but think that they would endorse it whole-heartedly!
“sausage grinder as a sex toy”
(A visual I could live without!) But you’re absolutely right! One of the first things anyone that’s been around the stock market long learns is to cut your losses early. Pretending you’re “not down that much” isn’t helping your cause.
“I can’t help but wonder if these idiots would recommend using a sausage grinder as a sex toy. I can’t help but think that they would endorse it whole-heartedly! ”
LOL!!!!! ok, i am now owed one key board from Catherine, mine is now wet with iced tea!
Who is the guy on CNBC that says “you all are overblowing it, oil won’t cause any problems and parents WILL BUY THEIR KIDS CHRISTMAS PRESENTS.”?
SHIT HITTING THE FAN on Wall Street. DOW down over 360 points.
Emergency Rate Cut, STAT!
Yes, we need more inflation as Oil, Silver and Gold are oh so cheap!
It’s the only way to save the Wall Street bonuses! Why do you hate our freedoms?
“The Sweetlands have twice lowered the price on their home and are thinking about taking it off the market to rent out, or also putting their new home up for sale as well to see which one goes first.”
I hate to be the one to tell them: time is going to work against the Sweetlands, rather than for them. Unfortunately, since real estate prices kept going up over time, homeowners were able to use that as an advantage (by just waiting and the price went up). Now, however, it’s a different ball game.
You need to sell, and you need to sell NOW. Even if you have to take a loss, sell it for what you can get.
In a sense, even the people who have lost their homes to foreclosure are the lucky ones right now. Because they no longer have to shovel in every last dime into the Dantes Inferno of a house which burns through all their money.
Now, they can move forward (as RENTERS) and watch what happens next.
The whole thing is about to crash. The longer these people hang on to their “housing Gold Mine” the worse it will be. It will make the crash that much larger and the bottom that much deeper.
I’ll have to agree. Even assuming the house was brand new, you’re only going to get a few years of being basically “maint. free”. The math is bad enough as is but when you factor in a now 2-5 y.o home even with the best renters it will need things. Again, time is not going to be kind.
“You need to sell, and you need to sell NOW.”
There’s another angle to this. If they cut the price of house #1, they set a relative comp to house #2, possibly helping to take it underwater from the start. What a pickle they’re in!
Cliss,
the logic of your post is inescapable, but sellers and RE believers aren’t listening. Spent a long phone call today trying to convince a relative to sell WM and salvage what she can, and use the losses against any possible gains she may have. Had to run thru the whole housing enchilada to make my point, but all I heard was “it will come back, I’d rather hold”.
Really, I’m done. It’s every man for himself, and I am offering no further advice to anyone I know on this subject.
Spike, that’s such a good point.
I’m going to take your advice and just keep my mouth shut from here on out.
I had a long talk with my sister about 1 month ago. Told her the same thing that you wrote in your post above.
She is furious with me, hasn’t even spoken to me ever since.
Good advice.
Yup, people usually hear what they want to hear. “Shoot the messenger” is as old as time itself. Mental accounting and extreme loss aversion towards all that fast evaporating phantom equity will turn the Sweetlands into regretful, bitter renters one day (unlike the many hope-filled, joyful renters here
).
ROTFL!!!!!
“Pat Maddock, a real estate agent…‘If I were you, I’d buy everything I can get my hands on.’ Nobody knows when it’s going to kick back up or level off,””
“Coldwell Banker agent Sharon Benson said Tuesday that she’s not concerned about Pierce County’s price declines, which she attributed to the market normalizing in the post-boom years…“Some buyers are just not making commitments,” she said. “Buyers at some point are going to realize sellers aren’t going to give their houses away.””
This is EXACTLY what was said in California and Florida just a year and a half ago! EXACTLY!
It’s like “deja vu all over again” (Yogi Berra).
she said. “Buyers at some point are going to realize sellers aren’t going to give their houses away.””
Nope… sellers aren’t going to give their houses away. They are going to face foreclosure and have them taken away.
“Nobody goes there anymore. It’s too crowded.” (Yogi)
No shite. Every time I read one of these NW threads, I sit here thinking “wow, it’s been about 6 months since I’ve heard that quote” with said quote having come from a CA, NV, or FL thread.
Someone at NAR must have sent around the email on the “normalizing” of the real estate market. Now, when nothing sells, this is “normal”.
Gee, I thought it was “normal” for prices to always go up. Now “normal” (for most sellers) is for no one to accept their offering price.
What will be the next “normal”? Hmmmmm maybe the next normal will be:
“Take “THE” bid!!! Take THE bid!!!”.
California will be fun to watch-with no livable home under 400k.
Subprime and ALT-As are not the only types of mortages that will collapse here-lots of people here in SOCAL are in for sanguine years ahead. @_@ LOL
A very keen point you make, Ko. What people in this manical state don’t understand is this.
Assume a 6% mortgage rate for 30 years. For every 100K, you are looking at $600/month for P&I, ONLY! Even if you could find a 5% down, you are looking at $2400/month for 400K. Add in HOA, taxes, maintenance, and sweat equity and you have upwards to $3500/month. Assuming even a generous 50% of income to housing, how many are clearing 7K a month? That comes out to about 140K a year. Sheesh, clownifornians either don’t understand math, fundamentals, or are just plain dumb.
In hindsight, maybe all of the above!
“‘Some buyers are just not making commitments,’ she said. ‘Buyers at some point are going to realize sellers aren’t going to give their houses away.’”
- Thats it Sharon, keep telling anyone that will listen to your song.
I never get tired of of the logic that the sellers are in charge.
I have never really understood realtor’s slavish praying to the Church of Seller. They make money on sales. High price or low price - if you don’t sell you die. If I were an RE in this market, I would grab every low-ball selling baby-boomer listing I could and still be screaming ‘lower your damn price!’ These are the folks that will survive. Sharon will return to her former occupation - get-rich-quick dreamer.
“ok honey.. lets go.. i don’t have all day. Put the money on the dresser.. and here’s your party hat.”
“Don’t I know you? You look familiar.. hmm.. have you ever sold real estate?”
Don’t I know you? You look familiar.. hmm.. have you ever sold real estate?”
lmao -good one
“Suzanne, is that you? Well, research THIS!”
If I were a realtor in this market I say:
If we put your offer out and it sells near it in a couple of months I’ll only charge you 3%. If you use my offer first, I’ll only charge you 3%. But if you start at your offer and end up selling it near my original offer (or below) the commission will be 6%.
Is that fair? If the customer is right, they get a discount. If the realtor is right they get a quick sale (versus none). If the seller wants to play games in an obviously falling market they should be willing to pay for the broker’s (excess) deployment of time.
why bother.. with all the inventory it aint like listings are hard to find.. I’d give ‘em my best argument and then:
“Here’s my card. Call me in 6 months when 2 or 3 agents stupid enough to take this listing has failed to sell this house.”
What so many people do not understand is that the Realtor® usually does not make that 6%. The listing agent and buyers agent usually split it 50/50, then if you are affiliated a national company they take 5-6% of they agents commission, then the owner broker takes their split which can vary greatly but often 50% to 20% of the agents portion.
So on a $250,000 sale and a 6% commission equaling $15,000, many people think the agent is getting too much money and should cut there commission. In reality that agent is probably making after their E & O insurance roughly $3500 to $5600 with other expenses to be taken out of that.
There are still advertising expenses, taxes and other costs in doing business.
If the listing agent takes the listing at 3%, do you really think a buyers agent is interested in showing a home that is offering a 1.5% commission to the buyers agent.
The key to selling or buying a home today is to hire the right agent to begin with. Some sellers will try the FSBO route and most will fail and eventually list with an agent. Someone made the comment that it would be better to sell now than later, I agree. I think prices will continue to decline for the foreseeable future.
Pen’s letter to Kim appears fairly accurate to me.
I have seen many negative remarks about Realtors® here, it’s too bad that some lousy Realtors® give all of us the black eye. That is like saying all Doctors are terrible or all Business owners are terrible. You just can’t generalize like that and expect to be taken seriously.
People move whether the housing market is up or down. I believe it is a good time to buy and a good time to write lowball offers. When you hire a Buyers agent their job is to get you the best deal they can. I just did a deal that the home appeared to be priced about right, but I knew it was a distressed sale, I recommended my client write an offer considerably less. They were able to purchase that home for 37% less than the asking price. My client would tell you I earned every penny of that commission.
Not all agents are created equal, make sure you hire the best. A referral from someone that had a very good experience with an agent is the best way to locate a good agent. If you don’t know anyone to give you a good referral, I have other very successful ways to locate good agents if anyone needs a good agent.
I agree, I can’t help but feel incredulous at that logic. Two of my husband’s bosses are getting their asses handed to them with that logic. We live in South Jersey/Philly metro area. Boss One has multiple mortgages on three houses, at least some of which are ARMS. One fancy ass house in the one of the two ritziest towns in South Jersey, and two down the shore (a huge bubble market). He bought his second shore house before he sold his first (with down payment help from inlaws.) The first home has been on the market for two years now. It’s been like pulling teeth to get him to lower his price, which he has done a little. It’s still sitting. He is feeling the pinch and freaking out over his bonus. Boss Two owns two homes in the other ritziest South Jersey town, which two years ago was named best place to live in the country…which means people think they’re entitled to any price they want. They bought the second fancier home before selling the first. First home is nearing two years on the market. The word I had gotten awhile ago from hubby was “the other homes in the development just like ours all sold for x….for some reason ours won’t sell.” This was a long time ago. They have been through so many buyers and realtors, price has been jacked up and down. Probably about 6 months ago, someone made an offer I think 14,000 under asking price. Boss 2 and wife declined. He tells hubby “Well, I’d rather wait and get full price….that is more of a loss than if I paid the mortgage for a few more months.” Their stupidity is mind blowing to me. These are adult men, much older than my hubby and I. How do you not understand by now that YOU DO NOT DETERMINE the price of your home. Your house is only worth as much as someone is willing to pay for it. I’d love to see this magical buyer who appears after 1, 2 years saying “oh yes, I will pay that price that no one else has wanted to pay for years.” You should be sent to the loony bin if you think that will happen. Hubby also said that Boss 2 and wife would have made a huge profit even with that 14,000 less offer. The greed and entitlement are just ridiculous and disgusting. Honestly, I’m glad this bubble is busting…as others on this blog have said I hope it teaches some people to live within their means again.
For those of you who don’t think Portland has California prices, I strongly disagree and give you Exhibit A:
http://homes.realtor.com/search/listingdetail.aspx?ctid=25751&typ=7&lid=1087376121&fhv=1
I looked at a house not far from this one back in 2000 that was larger, much more charming, and was listed for $275k.
That is not a California price you would be hard pressed to buy that in a warzone for less than 800k, the way the market is now…
I’ve noticed that the Oregon bubble seems to have had close to 100% price increases. Its the percentage not the absolute amount thats important. I can only guess that the median did not go as high because more reasonable homes where bought/sold.
“Auctioneer Sam Burton said he’s noticed investors have changed tactics in the three years since he began conducting the sales. ‘I see them buying the lower-end houses instead of those on the high end,’ he said. ‘More higher-end homes are going back to the bank.’”
It’s not a change in investor tactics, it’s a change between investors and SPECULATORS. Smaller, less expensive places are much easier to rent, and to longer-term tenants. They have historically been a better investment. We still have a long way to run in PDX/Vancouver, though. Those truly investing in RE for the longer term, I think, are still knifecatchers.
By the way, Measure 49 passed in Oregon yesterday. It headed off the little trailer parks and strip malls that would have made Oregon California (and stuck taxpayers with big infrastructure bills).
MacAttack,
Right on the money! Try renting out a 3,800 s/f monstrosity and you’ll learn pretty quick. This is something I’ve maintained for sometime now. When the SHTF folks much lower on the “property ladder” are less likely to get hurt. Since their cost basis is more in line with “basic shelter”.
Ehhh… still kind of on the fence about 49? In the end I’m about what’s good for OR long term? It’s just that we JUST jumped through hoops for prop. owners a few short years ago and NOW!!! I kind of took the attitude that if you wanted to make sure someone *didn’t* build a subdivision next to your farm, well… you’ve got to be rich in the first place to worry about that so I guess you’re on your own!
I know, I know, crummy attitude but I’m winded from jumping through hoops.
I am a somewhat reluctant supporter of 49. FWIW, I’m certainly an advocate of property rights unless that new subdivision infringes on mine. 49 gave some ability to still develop.
Independent of that, what I wonder is how badly would people be fighting in support of 37 (and against 49) if this whole RE gold rush hadn’t happened in the first place, considering we’d gone 30 years without anyone making a fuss until 2004.
“Buyers at some point are going to realize sellers aren’t going to give their houses away.”
**shrug** Okay, so don’t. Do these people really believe they’re hurting buyers by continuing to pay their unsustainable mortgage with Visa convenience checks?
Stupid, stupid sellers. Too stupid to realize that as long as they won’t sell, they probably can’t buy. They are basically pricing themselves in. If they don’t have equity or cash to bring to closing, then they are truly house poor and house bound. Hey seller, how’s that fist up your butt?
U.S. House panel endorses home appraisal standards
http://www.reuters.com/article/marketsNews/idUKN0759815820071107?rpc=44
DOW is down over 360 points and shitheads at cnn.com has the Finnish loser story as headlines !! MSM sucks bigtime ( just like housing
))
“…Gary Colemansmith…”
Someone has to be making these names up…
OT..but I thought you all might enjoy commenting on this..
A while back, I had emailed Kim Blanton, at the Boston Globe. We exchanged a few emails and had a decent dialogue. Well, at one point she askes, “Who am I?”. I wrote a reply that included a reference to how the average person has no clue about what the impact to our economy could be as a result of the sub-prime fiasco/housing bubble. Anyway, today I sent a follow-up that I thought you might enjoy reading, so enjoy….
Hi Kim,
Given that you never told me to not write you, I will assume that you won’t mind receiving this email.
You might rember part of my response to your question of “Who am I?”, included a reference from me regarding the impact of the sub-prime/ARM situation on the economy and how people just aren’t getting the message.
Well, here it is about a month later and things have and still are worsening in the credit markets. The Fed, from their Ivory Tower, has cut rates at the last two meetings. This didn’t save the mortgage markets and it had a disastrous effect on the US dollar. The “super fund SIV” that the major investment banks are trying to string together, just isn’t happening fast enough, and probably won’t happen at all. Basically, the jig is up, the word is out, they’ve finally found us…the credit markets aren’t interested in buying the debt of the over-leveraged Joe Sixpack borrower via SIVs, CDOs, etc. The Pigmen of Wall Street are already begging for another rate cut. If the get it, the already ailing dollar will be DOA.
The folks over at Countrywide are complaining that the government hasn’t stepped in to bailout the lenders, borrowers, real estate salespeople, mortgage brokers, appraisers and other dolts, who created this bubble (yes, it’s a bubble, there is no denying it) in the first place. Turns out Countrywide is trying soemthing on their own, which is basically re-writing the mortgages with better terms. Care to guess where the funding is coming from? I bet it isn’t from the executives’ pockets.
Even Alan Greenspan is on board now. Too bad he told everyone to take advantage of the low interest rate ARMs a few years back. (Hey Al, how is the book selling these days?)
The National Association of Realtors and Massachusetts Association of Realtors included in their market forecast for Massachusetts a statement that home prices here could go up by 10.8% in 2008. I’d like to know how they can see past the continued falling prices here (and they are falling, despite any data that might claim other-wise) and into next year and get their forecast to a precision of one decimal place. MEANWHILE, the President of the National Association of Realtors can’t get his own house sold, because he hasn’t figured out that, “It’s the price, stupid.”. I’d be willing to bet that the average dues paying member of the National Association of Realtors doesn’t live in a million dollar plus home (in Virginia, no less) and I bet they are afraid to ask why, for fear of being black-balled.
Where to from here? Just watch and see.
Pen
Bulletin: Morgan Stanley writing down $3.7 billion due to subprime exposure, says could get worse”.
From marketwatch, email alert.
Would we be surprised if it was $37 Billion, honestly?
Wow. One right after the other these days. Gonna be one cold winter.
Was the fed serious about not cutting again, or just bluffing (again)?
What is disturbing is that the PNW is turning out not to be so “special” after all…..in spite of the Zune.