Cooling Market ‘Most Pronounced In Affluent Northeast’
Bloomberg reports on the housing bubble in the US. “Sales of new homes fell 10.5 percent in February, the biggest drop since 1995, and sales of existing homes slipped in five of the last six months, leaving a record 3 million unsold houses on the market. Sales will fall further this year and price gains will slow, predicts the NAR.”
“Signs of the cooling market aren’t hard to find on Bradford Street in Boston’s South End, where Victorian townhouses are listed for as much as $4.5 million. ‘Last year, houses were snapped up as soon as they were put on the market, so you never even saw a sign,’ says Kenneth Kinna, who owns a 10-room townhouse in the neighborhood. Now there are three ‘For Sale’ signs on his block.”
“The trend is most pronounced in affluent neighborhoods in the Northeast . Maryam Safai’s 5,000-square-foot, five-bedroom colonial in Mahwah, New Jersey, has been on the market for a year, even after three reductions in asking price. ‘I’m not going to give in to the market,’ says Safai, 44, a dentist. ‘I’m not selling below our current asking price’ of $1.69 million.”
“Buyers of houses in the $1 million to $4 million range are ‘particularly sensitive to interest rates because the monthly payments on houses in that range are substantial,’ says Anthony Hsieh, CEO of LendingTree.com. While damping price growth the most at the high end of the market and in the Northeast, rising rates have also reduced demand for riskier forms of financing and begun a shift of power from sellers back to buyers, economists and brokers say.”
“In Montgomery County, which includes the affluent Washington suburbs of Bethesda and Potomac, unsold homes were on the market an average 58 days in February, compared with 37 days a year earlier, according to Metropolitan Regional Information Systems Inc. The 3,030 homes for sale in the county in February were almost triple the 1,190 listed a year earlier.”
“Partly as a result of the Fed’s 15 consecutive increases in interest rates, adjustable-rate and interest-only loans, closely tied to short-term rates, are on the decline. Such loans were popular with buyers trying to stretch their dollars and with speculators seeking to minimize the cost of buying property for short-term profit.”
“‘That’s probably a good thing,’ says former Fed Governor Edward Gramlich, who left the Fed in August. ‘When you raise rates, and we knew what we were doing, one of the consequences is fewer people getting involved in riskier short-term mortgage products,’ says Gramlich.”
“Buyers are looking for more than peace of mind. They’re looking for a deal. ‘It’s switched to a buyer’s market,’ says Karen McCormack, (broker) in Boston’s Jamaica Plain neighborhood. ‘Homes are still selling, but the buyers have much more say in prices this year.’ On a Boston street, lined with a dozen ‘For Sale’ signs, McCormack is trying to sell a three-bedroom house listed at $535,000. She’s holding ‘commuter hours’ open houses on Monday nights to lure would-be buyers on their way home from work.”
“‘When the market was hot, we never would have had to do this,’ she says.”
I thought http://masshousemarket.blogspot.com/ has a wonderful blog posting on the condition of the massachussetts real estate market.
” Soft-Landing, or Meltdown?
The recent housing numbers out of Massachusetts confirm that a decisive downshift in the market is in progress. Some observers, especially those in the real estate business, continue to argue for a leveling of prices at a new plateau, and a soft-landing for house prices and sales. I’d like to present several recent news pieces that paint a decidedly bleaker picture - one that points to sustained weakness that will wrench the speculative excess from current prices.”
Simmssays…
http://www.AmericanInventorSpot.com
AmericanInventorSpot.com
Here is one from realtytimes.com
Why Housing Will Only Temporarily Get Hammered By Higher Rates
by Blanche Evans
http://realtytimes.com/rtapages/20060330_housingtemp.htm
They just can’t stop-
Blanche Evans looks like she’s out of some old high school year book. Too funny.
Time for some new glamour shots, dear.
‘I’m not going to give in to the market,’ says Safai, 44, a dentist. ‘I’m not selling below our current asking price’ of $1.69 million.”
People will wait for a long time paying very high mortage payments before selling their house for less than they wanted, especially if they’re under wanter. Thus the huge inventory buildup with prices only leveling out, as we are witnessing.
“‘I’m not going to give in to the market,’ says Safai, 44, a dentist. ‘I’m not selling below our current asking price’ of $1.69 million.”
I’ve tried thumbing my nose at the (stock) market when it wasn’t going my way before. I was very lucky - I learned that lesson for only a few thousand $.
These poor bastards are going to get a 6-figure (or more) tuition bill.
‘there are three ‘For Sale’ signs on his block..The 3,030 homes for sale in the county in February were almost triple the 1,190 listed a year earlier’
I’m still waiting for one of those people who were talking about a shortage of housing 6 months ago to pop up and say, ‘gee, I guess that was a myth.’
‘I’m not going to give in to the market,’ says Safai, 44, a dentist. ‘I’m not selling below our current asking price’ of $1.69 million.”
…so he’s not selling until he gets his price, meaning there is a shortage of supply until prices increase enough for sellers. Is that how it works or is it the exact opposite? (j/k)
Doesn’t this bring a smile to your face: “I’m not going to give in to the market,’ says Safai, 44, a dentist. ‘I’m not selling below our current asking price’ of $1.69 million.”
Or else what? You’ll throw a hissy fit?
Some people are determined to completely delude themsleves into oblivion.
Such skepticism!… Obviously you’ve never read page 142 of the Realtor Survival Guide: When drowning, remain motionless and repeat “I’m not underwater. I’m not undwerwater” until help arrives.
The dentist could just choose not to sell. That’s the homeowner’s right. If the homeowner was wise, and was gambling with funny money (aka interest only option ARMs), then I don’t see what the problem is if they decide not to sell.
It’s those people who gambled and their decision tree is incomplete (i.e. what happens if the target price is not acheived), those are the ones in trouble.
This guy’s decision tree is complete, cause he’s got a “Stay in the house” path if target price not acheived.
There is a good article in Business week about the housing market.
One good point it makes is that if you have to sell, don’t ignore the trends, reduce your price and get out to avoid getting stuck with the house as values drop further.
It seems like the dentist is looking at that, sellers around him will reduce their prices and take his customers. While he is sitting at 1.69mil neighboring homes will start selling for 1.5 or less. In supply ridden markets, buyers will ultimately go with best price.
She HAS chosen not to sell. The George Bush school of real estate straggeddy–”Stay the Course”–is delusional.
Please leave politics out at the door, they just pollute the blog.
It’s hard to see how a dentist can afford a place like that, unless he bought it a long time ago for much less money. The property taxes alone on a place like that would run $24K/year.
Purchase price $1.1M in 2003. Annual taxes $15,914. Public tax records are a beautiful thing. Could this be an ARM reset FB???
The dentist could just elect to eat negative cash flow until his coffers run dry.
Of course, that presumes that Bernankes’ chainsaw of interest rates doesn’t change the formula.
Are you suggesting that it is difficult to eat after a chainsaw has separated your head from the rest of your body (financially speaking)?
Milhouse: Then why did I have the bowl, Bart. Why did I have the bowl??
If you seen that episode, you’ll know how it’s relevant to your statement
but maybe he is going to sell below his next year asking price of $0.99 million?
In Dentist school they do not teach economics. See how all dentists, and doctors make the dumbest investment mistakes, because although they are very smart individuals, they have never had any training in managing money, or the cost of it. Most Doctors and Dentists, cannot figure out how they are loosing money if they charge 180 HR for their practice!!!
Exactly. This guy sounds like someone who doesn’t understand inflation. Sure, he can probably get his price when the cycle turns up again. But that’s after years of inflation erasing the real value of his property.
I have had numerous doctors ask me about investing in the Panhandle over the past few years with groups of doctor “investors.” Whichever is the ringleader might not have any doctor friends left in a few years.
I’ve told my medical friend about this blog. He kind of smugly laughed and said he’s been investing in the market for years and knows what he’s doing.
Doctors and dentists have a god ego. They can never make mistakes. They need to show their success with shiny new very expensive cars, and huge houses. It has to do with long years of virtual anonymity that guarantees supressed egos. Long hours in school, then in internship, etc, make for highly repressed earning expectations.
Also curing, or helping people cure is a huge ego boost. Bummer when they die though…
What short memories these people have. I knew one doctor who lost $650,000 with the real estate investment firm Colonial Realty in Connecticut in the 80’s. Colonial Realty also took down seven local banks!
I have two doctors who are polar opposites when it comes to investing. One of them is very shrewd and started investing in real estate long before the bubble. The other one invested in Beanie Babies.
Similar behavior going on all across Northern NJ. There are literally hundreds of million dollar homes for sale here… but very few buyers.
grim
Northern NJ Real Estate Bubble
same here in my area of the Netherlands (with homes in the +750K euro range). Many of these homes have been for sale for years already, just be patient …
Well have a seat in front of the fire, Marayam cause you ain’t leaving anytime soon.
Right on Ted. What’s this dentist going to do, hold her breath until she passes out? In fact, that’s the perfect imagery - because all most of these yuppies are doing is acting like spoiled-rotten children.
As if this “market trend” is some audiacious thing that’s going on - no, the fact that home prices tripled (and wages lowerd) out of pure greed is nothing to get angry about, right?!? Don’t get me wrong, I’m all for capitalism, but give me a break.
Short-term buyers, investors, and greedy yuppies like our beloved dentist have completely done away with any middle class hope of owning a DECENT home for a fair price.
If the “market trends” ever bring back hope - justice will be served in taking this greed money away from these spoiled brats.
What’s more is that the government will just get everyone’s money in the end anyway while we all rot being cared for by a medicare or medicaid funded health aid or in a similar nursing home!
This is all just a big middle class chew toy so the focus is off the rich getting obscenely richer. The AMT tax is proof-positive of this.
Tony, Welcome to the Contract with America. Introduced to you in 1994 by newt gingrinch.
” ‘I’m not selling below our current asking price’ of $1.69 million.” - “Cuz damn it…. my house is worth it, and frankly, I DESERVE it!”
Is this a flip house for this putz?
I think the problem is its his trophy house….and he can’t mentally downsize the “trophy”’s value.
Buyers of houses in the $1 million to $4 million range are ‘particularly sensitive to interest rates because the monthly payments on houses in that range are substantial’
that sounds unlikely to me; usually buyers for this kind of expensive homes have a lot of cash available. They don’t look primarily at mortgage rates but mostly at the potential equity gains (except maybe in countries like Netherlands with their 50% HMD, where it is attractive to buy the most expensive home purely for tax evasion).
Usually, these wealthy buyers are the first to disappear when the market is peaking. That is the experience in Europe and I don’t think the US will be very much different.
Sorry NHZ, but I beg to differ.
Buyers in the Northern NJ market are using the same creative financing techniques. Many of these buyers are not as rich as you might think, nor do they “have alot of cash available”
grim
are you sure?
I have read several stories about this market segment in CA and it sounded very much like Europe: many buyers of these multi-million dollar homes pay cash or at least make a huge downpayment.
I think grim’s right, nhz. Perhaps not at the $4m level, but at the $1-2m level, there’s a lot of over-reaching with exotic financing. In the NoVA area (near DC), it is not uncommon to see homes up to $1.5m bought on spec by ordinary, upper-middle class folks. You know they’re not buying these with traditional fixed-rate mortgages.
nhz-
Don’t be fooled in California it’s all funny money. When those arm’s shift these folks will be rolling out of those properties like they have skateboards glued to their asses
“skateboards glued to their asses”
Maybe the proper image is “surfboards” or “snowboards” glued to their asses?
“Partly as a result of the Fed’s 15 consecutive increases in interest rates, adjustable-rate and interest-only loans, closely tied to short-term rates, are on the decline. Such loans were popular with buyers trying to stretch their dollars and with speculators seeking to minimize the cost of buying property for short-term profit.”
“‘That’s probably a good thing,’ says former Fed Governor Edward Gramlich, who left the Fed in August. ‘When you raise rates, and we knew what we were doing, one of the consequences is fewer people getting involved in riskier short-term mortgage products,’ says Gramlich.”
Wow! Remember the advice offered by Alan Greenspan in late 2004, when he was touting ARM’s to the American public?
“American consumers might beneit if lenders provided greater mortgage product alternatives,” said Greenspan, “to the traditional fixed-rate mortgage.”
This turned out to be terrible advice and it makes you wonder why Greenspan said that. He’s supposed to be protecting the best interests of the public.
“He’s supposed to be protecting the best interests of the public.”
I suspect his comments favored the segment of the public which happens to work in the banking biz…
Yeah, I’d think that someone buying a multi-million dollar house would be particularly senstive to the thought of rapid depreciation of their purchase.
The truly wealthy (those rare few whose wealth is not related to over inflated real estate values) are not concerned with the real estate market. If they need/want a house, they just buy it. They also just sell if they want to move. One person I know in CA who is in this category is not really aware (or doesn’t care) that the market for houses has gone up, and doesn’t care when you say it may go down.
Not entirely so. Yes, they’ll do what they want, but most got rich by watching their money more closely than most. Research shows that RE prices consistently weaken first at the top.
IMHO it’s because their wealth allows them to treat housing as a more discretionary transaction. They don’t fall for realtor bullsh!t regarding “being priced out”, “rising interest rates”, etc.
It doesn’t take a dime of your own cash when 103% financing is available.
The slower the slow-down , the better.
If hosuing drops suddenly, the Fed will panic and stop or srop.
If it is reselient, then the Fed will keep raising until this nut is cracked.
and also let inventory build at current asking price levels. the weight will become that much heavier
It is best to boil a live frog by gradually warming the water to boiling. If you heat it up too quickly, the frog will jump out when he notices the rising temperature.
marketwatc.com interviewed a quickenloans hack who states that market will still be strong… http://www.marketwatch.com/news/default.asp?siteid=mktw&dist=&refresh=on
Unfortunately for Florida, We are dependant on home sales up north. Real estate here depends on people selling their homes up north, using the equity they made on their homes and buying here in Florida and re-establishing themselves. They used to be able to come down here and put a huge down payment down or even pay cash so they could handle the massive pay cut. Now if they can’t sell there they don’t buy here… However there are a lot of people struggling who bought here before they sold, now they are stuck with two mortgage payments in a job market where they are lucky to get half what they made up north.
I’m in such an area in the Netherlands.
I think in these areas, ultimately the prices will drop much further because the fundamentals (jobs etc.) simply are not there.
But it will take a long time before we are there, because as long as prices in the most bubbly areas are declining, the cheaper areas will be a refuge for those who cashed out early which will prolong the bubble.
nhz, it seems that there are some differences in the bubble dynamics between the U.S. and the Netherlands, so I was wondering: has there been a building frenzy in the Netherlands like we’ve seen in the U.S.? I suspect that you don’t have the same oversupply problem and that may explain why home prices haven’t moved down sharply yet.
yes, there are different dynamics but the basic problem is just the same: easy money.
The Netherlands has an undersupply problem (always has …) but there are significant vacancy numbers at the same time. There is a lot of hidden speculation here. The population is hardly growing (expected to start shrinking soon, while housing production is rising lately; in my area the population decline has already started).
Also, most homes last a little longer here than in the US. I have lived a long time in a home that was four centuries old and will definitely be around by the time the new construction has already fallen apart. Part of the ‘new construction’ here comes from redevelopment of old, big homes and buildings (also a difference with the US).
I am very sure the supply issue hardly matters at this time. Thanks to easy money (and plain fraud) people simply pay whatever the market is asking. You see exactly the same going on in very different countries (e.g. New Zealand with their oversupply of land, other countries with an oversupply of building). Fundamentals don’t matter, but they will at some time.
I am very sure the supply issue hardly matters at this time. Thanks to easy money (and plain fraud) people simply pay whatever the market is asking.
Perhaps in the short term, but the market cannot defy the law of supply and demand for long. And soon the funny money will dry up — it always does.
to John in VA:
yes, supply and demand will be important at some time.
But the reality is: the housing shortage here is no worse than in the late 1980’s, when prices were 6-10 times lower than they are now.
In fact, I think there is less shortage than before the bubble started, if you include the ‘hidden inventory’ - all the homes that remain empty because the mortgage is far cheaper (effectively 1-2% per year over here) than the yearly appreciation.
Also, expectations regarding required numbers of new homes have changed a lot: around 1990 the Dutch population was expected to top after 2025 at more than 20 million. Current expectation is for a top around 17 million (nearly the current number) in the near future.
I think this clearly shows that the supply/demand issue does not really matter in this bubble.
the problem is that everyone thinks they’re affluent now.
Jamaica Plain isn’t an affluent area. Even the South End was borderline a few years ago. It makes sense to see a lot of multimillion dollar homes in places like Beacon Hill and Back Bay, but when $1,000,000+ homes are the rule rather than the exception in 2nd Tier neighborhoods, something is drastically wrong.
The same thing is happening all over the Northeast. Areas that were solidly middle class or even semi-ghetto 5+ yrs ago suddenly are full of mutli-million dollar homes. Look at brownstones in Bed-Stuy in Brooklyn. I remember way back in the late 90’s, people used to say that the only neighborhoods worth living in in Brooklyn were Brooklyn Heights and Park Slope. Fort Greene, Williamsburg and DUMBO were for the daring. The closest white people came to Bed Stuy was when they popped a Biggie album in their stereo.
The reality is that there are only so many millionaires to go around. People who make enough to comfortably afford a $2, 3, 4 million dollar home don’t really want to live in Jamaica Plain or Bed Stuy. If it costs the same to live in DUMBO as Park Slope, very few people are going to choose DUMBO.
These newly gentrified areas are going to crash hard.
the problem is that everyone thinks they’re affluent now.
Excellent point…..The unearned wealth created by this housing boom….
Many US citizens now firmly believe that money grows on trees. Because of this widely-held belief, it is no longer necessary to save money, and given raging commodity price and housing inflation, probably a bad idea to do so. We all owe the recently retired Fed chairman our sincere gratitude for educating us on the miraculous Wealth Effect of asset ownership.
http://www.bea.gov/briefrm/saving.htm
“Trout, incidentally, had written a book about a money tree. It had twenty-dollar bills for leaves. Its flowers were government bonds. Its fruit was diamonds. It attracted human beings who killed each other around the roots and made very good fertilizer.
So it goes. ”
Kurt Vonnegut, Slaughterhouse Five
Many believe money grows on the trees planted at “flip” houses. I was talking to a dad at my the school my kids go to. They are talking about redrawing the boundaries for attendance. He said that if their street is one excluded from this particular school, he’d just flip another house to pay for private school for them. This was back in December. I was shocked. He must think my husband and I are just plain stupid to be actually saving our hard earned $$ to buy a home. BOY is he in for a lesson at the school of hard knocks.
I couldn’t agree with you more. I moved to NYC in the late ’90s and you’re exactly right, there was a universally held perception about Brooklyn that aside from Park Slope and Brooklyn Heights it was to be avoided at all costs. I now live in LA and agree with you 100%- these “gentrifying” areas like Echo Park are going to be slaughtered. I’ve visited friends who live in Echo Park. I could never imagine living there, even for free.
dwr
You are so right, I live in LA due to my career and I am shocked when I hear people say they have a great house in places like Echo Park, Burbank, Claremont and just this past week some one told me they live in a good area, Culver City. I may be spoiled but to me 98% of the areas in metro LA are unliveable.
I think 98% is just about right, especially for those of us who have kids and consider things like good schools, places for kids to safely play outside, etc. when deciding whether an area is good or not.
I think this is a bigger issue than we’ve touched upon. Why is so much of our country “unlivable”? And why have we let that happen? We drive up prices trying to compete for the “good” places. This is the scariest thing for me. I can sell this place and then rent waiting out the correction but where will my kids and I end up? The towns with good school systems don’t build a lot of rental properties. They want permanence….people commited to long term investment and that will pay the school taxes.
“Why is so much of our country “unlivable”? And why have we let that happen?”
Political correctness? We can’t fix problems if we’re not allowed to talk honestly about them. Until we can have honest discourse, expect things to get worse.
“The towns with good school systems don’t build a lot of rental properties.”
Precisely why they have good school systems. (see point above)
culver city is a beautiful place. it’s cleaner and more crime-free than santa monica. but at 750k for a 1950 1,000 sf sfr it’s certainly overpriced.
cereal-
that’s a bargain for Culver City you should have snapped it up.
Glad I’m not the only one who sees a problem with the Silverlake/Echo Park “gentrification.” When I heard people talking about it being a desirable place to live, I had assumed there was another area by the same name. Nope, it’s THE Echo Park. My parents lived in that area in the 50s. Even then, it was considered a very bad area. Didn’t “Coolio” film one of his rap videos there? ‘Nuff said.
My friends bought a place in Echo Park in 1998 for right around $100,000. I’m not really sure what changed since then to justify $400,000+ for a similar house in the area. As soon as appreciation goes flat, people will wake up and say “What the $%&^% am I doing in this area!?” and leave en masse.
Once again, I dont know what people are looking at when they say some of these areas in LA are good areas to live. If you are familiar with some other cities in the country where things like friendly people, a little land with your house, clean well maintained streets and manageable traffic are the norm then by comparison the quality of life in LA is disgusting. Like I stated earlier the uniqeness of my career forces me to live in LA but I think I would move to another area quickly if this was not the case. For the life of me I dont see what is keeping alot of people here who have a job they can do any where and especially who have a family. But thats just me.
i think echo park / silverlake has def bubbled but at least you’re close to downtown and jobs… and there is a diverse community growing there. makes me think of the mission in sf 10 years ago.
i don’t think it will drop as much as areas farther away like antelope valley / inland empire, but if recession hits and crime spikes i guess that could change.
Last night, on one of my husband’s fishing sites, they had a thread discussing the exodus from CA. Basically, everyone was saying what we have here: high crime, dirty, crowded, becoming “third world”, high prop prices, etc. As a So Cal native, I can say that things have gotten much, much worse since the glory days of LA. Used to be there were quite a few neighborhoods where kids could safely play on nice, quiet, tree-lined streets. There were no gangs in the west San Fernando Valley (except “Canoga Park Alabama”, which basically kept to themselves in a small area — and was not as violent as current gangs). It was beautiful. These days, there is no comparison. Obviously, many native Californians don’t move because of all their ties here (family, friends, memories/familiarity, work); but I cannot, for the life of me, figure out why somebody would actually **move here** from somewhere else.
Yes, I also spent alot of time in LA around 1980(college years). Even as recently as then I liked it much more than now. Maybe people are in love with what So. Cal used to be. Another thing that drives me crazy is that I can not get out of my car in the west side to get a cup of coffe with out being accosted for “extra change” by homeless people. Yesterday, I was getting gas in Santa Monica when a man came up to me with a gas can asking me to buy him a couple of gallons because he was out of money and out of gas. This must be some new scam around here because I am reasonably sure he did not have a car.
As far as good schools and services the main reason they all stink in So.Cal. is Prop 13. I know alot of people support Prop 13 but if you want a great community that means great schools, police etc. These services must be paid for. Maybe that is the biggest problem, everyone wants to live in LA in an expensive house but no one wants to pay for what really counts. I have no problem paying for a nice house and “fair” taxes, but I do want to get decent value for my money.
“As far as good schools and services the main reason they all stink in So.Cal. is Prop 13. I know alot of people support Prop 13 but if you want a great community that means great schools, police etc.”
I agree with pretty much everything you said except the above. Check out how much money is spent per student in the LA Unified School District. Lack of money spent is certainly not the problem.
That is definiely true, the schools problems have nothing to do with money spent. The problem lies with lazy asses and union coddling.
I used to work for LAUSD. The problem isn’t on the income side, it’s on the expense side. Stop educating, feeding, giving medical treatment, housing, etc. to **ILLEGAL** immigrants, and you’d be surprised how fast that whole “Prop 13 is bad” MYTH is debunked.
BTW, mrincomstream,
I’ve always wondered why people who think teachers are overpaid and underworked aren’t lining up to jump at the chance to be a teacher.
Please **try it first**, before you go spouting ignorant “anti-teacher/union” babble.
Oh no don’t take my comments as directed towards teacher’s teacher’s are highly underpaid as a matter of fact I would never take a teaching job without a prescription for prozac and a permit to carry an uzi to class. But being as I have been involved with LAUSD on some of their commities and having family that have worked for them in various stages for the past twenty something years. I stand by my comments. LAUSD grossly overspends without concious from the salaries of administrators to the closets of books left collecting dust, to the teachers and janitors getting caught with brand new computers designated for students found in their homes and not getting fired because the union saved them. I don’t have enough space on this blog for it all but L.A.U.S.D hasn’t been about educating children for a long long time.
Oh and btw I happen to agree with you on the illegal immigration thing. Thats why my kids are in private school. It annoys me to think that my kid is not getting what I would consider a full education because the teacher has to stop and bringthe non-english speakers up to speed it’s bad enough with kids who are not quite up to speed. IMO it just turns the classroom into a big all day daycare not a whole lot of educating going on. It’s impossible to do in an that kind of enviroment
mrincomestream,
Thank you for clearing that up. We agree that too much money is spent on illegal immigrants (with free breakfast, lunch, school supplies, medical care and social services through the school district).
I also think that there are too many politicians who have their hands in the pot, changing reading/math/science, etc. programs and WASTING lots of money in books, equipment, etc. in the process. Hundreds of thousands per school, per year, in some cases.
Some of us have chosen to go [back] to SoCal.
My parents love the area and won’t move out at all. So we’re in transition to move from Austin,TX to SoCal [sold our home and renting until school is out].
As for school systems in SoCal, we’ve taken the matters into our own hands and we do it ourselves at home, so we don’t care where we live. Personal — and family safety — is more of my concern but like any risk, it’s matter of knowing and then managing each risk….
I remeber a couple of years ago that dorchester, southie, even some parts of north boston were to be avoided at all costs!. They were not safe neighborhoods. What has happened with the lowlifes that used to live there? Did they move? Where did they go? I would hate to buy a 1Million dollar house next to a crackhouse in Dorchester or Roxbury!!!!
I was a camp counselor in MA and there were occasionally kids who seemed deaf - they were completely unresponsive to adult direction. Kids can be unruly, but these kids were unreachable. The other counselors would say, “Oh, they’re from Roxbury you know.”
I know in Portsmouth, NH a lot of the “old families” were forced out with the tax escalation that followed being “discovered” by what I’ve dubbed “the beautiful people”. Many people who had had generations in that old shipping town had to move inland to afford.
Portsmousth NH is a gorgeous town, but except for the Navy base in Maine, what is there to do? I remeber way back when, I used to stay close to Portsmouth, and the night life was great for such a small town. Have not been there in years…
DUMBO is now allegedly the most expensive neighborhood in Brooklyn, which is kind of nuts–there isn’t really even a neighborhood there; it’s totally lifeless. Fort Greene at least has some nice old brownstones and relatively easy access to Manhattan. I live on what used to be the poor edge of Park Slope, and there’s a lot of new condo buildings, bringing in a lot of new yuppies. More on the way. Hopefully, the local market will decline before Ratnerville goes up.
Sheepshead Bay is still relatively cheap though.
The demographics of JP and some of the other areas close in to Boston and Cambridge did start to change after the end of rent control in the 90s, but I would have to agree that the idea of paying a half million or more to live there is not compelling.
8.9 million millionaires in U.S. ….reported earlier this week. That was actually more than I would have expected.
OT but who else recently got a flyer from Point Center Financial, Inc? It says “Educate yourself, learn about trust deed investing, successful mortgage and trust deed investmenst seminar.” Seminar locations: Woodland Hills, La Jolla, Costa Mesa, San Juan Capistrano, Santa Barbara.
Now we know who where the ‘greater fools’ are going to surface next. Gee, just when you thought they were closing shop in the OC, they’ve morphed for the semifinal game.
“Educate yourself, learn about trust deed investing, successful mortgage and trust deed investmenst seminar.”
____________________________
Now **that** would be a good idea (NOT!!).
I would have to disagree. Point Center is not a bad company. Trust Deed investing if done properly and with knowledge is a great wealth builder in any market. The downside is that it requires cash and a good amount of it, research and knowledge. If your looking for a quick buck or to get rich quick then it’s not a good choice. Point Center is solid with a solid team they’ve been around awhile. The President is down to earth attending their seminar would nt be a waste of time if you have the money to invest.
I wonder if mortgage and mortgage note investing might indeed be a way to go in future years. If there is a serious downturn we may lose a lot of the subprome lenders, and may see a return to seller financing. There will then be a market for selling these notes at significant discounts.
At this stage of the game it’s not something I would shy away from.
I’ve heard it said that economic cyclical changes (both downturns and upturns) generally start in the Northeast and roll west. It’s possible that this is true with the housing market as well. It seems that Boston in particular was way ahead of the pack with real estate speculation. The first time I hear the term “flipping” was from a friend of mine in Boston who was leaving high-tech sales to flip real estate. This was around 1999-2000, well before the phenomenon took hold in places like Phoenix and San Diego.
yes, Boston in particular does seem to lead the pack, esp in downturns.
You bring to mind the moldy Massachusetts Miracle which helped Dukakis lose to Bush the Father in 1988. MASS was way ahead of the rest of the country, which officially went into recession in July 1990 according to the NBER.
http://en.wikipedia.org/wiki/Massachusetts_Miracle
I hope this greedy jackazz gets what’s comin to him!
While the article talks about a house in New Jersey, and we have also seen prices being reduced, it’s important to note that official new home sales did -not- fall in the Northeast. In fact, neither NAR nor the Census is showing any current cooling in the Northeast.
Again- I know it’s happening. It’s just not getting through on the regional stats yet. The biggest drop was, in fact, in the West.
-X
BubbleTrack.blogspot.com
But, we were the first with YOY price drops!!!
To NHZ,
Here in northern CA, Morgan Hill area, majority of homeowners expect $1,000,000 or more for their property. I looked at some model homes there in Dec. 2005 with an asking price $995,000. Small lots, lots of cars in the street, and the people looking to get in were multifamily or kids with their parents. There are no jobs in that area so the commute would be into SF and San Jose. These people are wantta be rich and those who are afraid that if they don’t get in now, they’ll be frozen out of the market. The starting sq.ft. for these look-a-like houses was 3300.
Salinas…..I just looked at the model homes being build I think by Lennar along the 101 just North of Morgan Hill. 3000 sq. ft. +- on 4000 sq ft lots, 900K….Shocking !!!
“Sales will fall further this year and price gains will slow, predicts the NAR.”
NAR faith-based mantra: Price gains will slow, but never go negative, as real estate prices only go up.
When we watch with amazement as inventories of homes swell in major metro areas across the USA, we should bear in mind the role of statements from the NAR about “price gains slowing” in creating the vast gulf between what buyers are willing and able to pay and what sellers are willing to accept for a sale price. The wide prevalence of sellers who are holding out for a 5% gain over last year’s price may simply reflect a foolishly consistent response to the great advice offered by the real estate experts and their lackeys.
Also as a potential buyer I’d have to say I wouldn’t want to be the fool buying in high. This correction has just started so what seems like a good reduction on a price now may look way too high in 12-18 mos.
Welcome to NAR Airlines. This is your pilot, Captain Liarrhea speaking. Please ignore the view out your window indicating that our angle of descent is a catastrophic nose-dive. Our rate of climb is merely decelerating.
Well, as someone who is financially comfortable, I can tell you that I am completely priced out of the market. It’s a funny feeling to feel like one decision not to buy a house could cost you forever in not being able to afford to buy one.
Can folks really see prices changing or are people still in denial. I would love to hear stories this weekend of people we know that actually got a sale price for their house. Did anyone buy recently that got a good % off?
Simmssays…
http://www.AmericanInventorSpot.com
AmericanInventorSpot.com
Simm:
Nobody can be priced out forever. If you are comfortable, and are unable to buy, then who is buying? I am not in a position I want, but, I am seeing the light in the end of the tunnel. I at least am spending less than what i make, so I am saving. I also thought that I was going to be priced out, untill I figured that it was ridiculous financing, and the expectation of future appreciation that drove this crazy market!.
Now that that appreciation has turned negative, what incentive is there for me to purchase an overpriced asset? None. The incentive right now is to wait!.
Patience.
Who is buying? What a great question that is to ponder. When lenders offer 103%-financed suicide loan contracts to help buyers purchase homes which are clearly unaffordable, then you get what economists refer to as “adverse selection,” which in layman’s terms means a SOFT landing is underway (Stupid Oafs F_ck Themselves).
I’ll tell you who is buying in the bubble areas. It is plain and simple “gamblers”. But they dont think they are gambling, they truly believe that this will go on forever where RE will go up 10-15% a year and this will be thier livelyhood. How can so many be so wrong? If you look at this logically and realistically analyze it, this can not possibly work out.
What distorted the whole market for others is the GAMBLERS were NOT gambling with their own money!
It is easy credit from mortgage lender, behind whom there were chain of people and finally the LOAN is held by public or hedgefunds or financial institution as MBS.
If lending standard was based on one’s earning and capacity to pay, then this bubble would NEVER appear.
With easy money the so called gamblers , now they are known INVESTORS, cornered all the availbale assets.
Credit supply was free and easy, Asset supply is not.
All boils down to giving $600K loan to people earning 40K /year. And as the asset price increased, giving the same person now $1.5 Million! IMHO.
well said, rent2home.
Plenty of people can be priced out forever. That guy in a cardbord box under the overpass? Priced out forever. But, everybody can’t be priced out forever. If there are no first-time homebuyers the whole appreciation express escalator grinds to a quick stop. It’s shuddering to a stop as we speak.
Yeah, wanted to tell you guys there is a “prices dropped” category and a “new this week” search on local site of RE for sale. All of a sudden the under $150,000 category went nuts! I was wondering if it was those ARMs adjusting. Or maybe investors dumping instead of keeping rentals for investments.
Actually, I’d rather be priced out forever if the rent is only 1/5 to 1/2 of the price to own the same home. The longer I rent, the more money I’ll save. In the mean time, I invest the money in something I’m very familiar with and make far more money than locking it in the sticky RE market that has no where to go but down. The supply of new homes far exceed demand, so I’ll be able to enjoy low rents for years to come.
Well I noticed yesterday that newly built homes in one Upstate town are listing at about $30,000 less than I saw them for just a month ago. That would be a 11.5% drop from the original price.
“She’s holding ‘commuter hours’ open houses on Monday nights to lure would-be buyers on their way home from work. ‘When the market was hot, we never would have had to do this,’ she says.”
The important question for house shoppers: Does she serve guacamole dip at those commuter-hours open houses?
I don’t see why they can’t serve a three course dinner.
stats show a cooling market in dc, but not a bubble bursting market
http://dcbubble.blogspot.com/2006/03/no-more-talk-of-rising-prices-but-no.html
not yet but it’s in the mail… vicious rate resets and public awareness regarding sky high inventory are going to clean house. no more “earnest money” horsesh*t either. good riddance.
hehehe…Just read this morning that Hamilton-Wenham MA, a wealthy exclusive enclave of mega-estates and upscale McMansions on the northshore of Boston is so broke tax-wise they just cut the HS girl’s varsity field hockey team and all freshman sports.
Talk about a facade…
“Pay no attention to the man behind the green curtain!”
I am the Great Oz!!!!!!!!!!!!!
Hey, that’s in my hood and having been to my share of polo matches in Hamilton, I am utterly shocked to hear it.
Home of the cross dressing wife murdering doctor.
what do you have against doctors?
I think some of the gentrifiying neighborhoods like Bed-Stuy might hold their value a bit better than expected. The housing stock is wonderful (nice old brownstones) and its not like the folks who are buying them are white folks who are moving from the suburbs and don’t know what they are getting into. Most likely they are the people who gentrified Park Slope and are moving on as the neighborhoods lose some of their initial appeal. One neighborhood that will be interesting to watch is Long Island City, which appears to be ground zero right now who are trying to remake the Queens waterfront into the next high-end area of the city.
“‘When you raise rates, and we knew what we were doing, one of the consequences is fewer people getting involved in riskier short-term mortgage products,’ says Gramlich.”
Gotta like that one from a former fed…”AND WE KNEW WHAT WE WERE DOING.”
The cover story of the April 10 BUSINESS WEEK is the HOUSING MARKET. See:
http://www.businessweek.com/magazine/toc/06_15/B39790615housing.htm
There are a number of articles and places to COMMENT online.
I’m going to give them a piece of my mind. You have to believe there will be a lot of prospective buyers reading these comments!
This might be a great opportunity for one and all to comment as well!