Sellers Can Reduce Their Frustration By Lowering The Price
The Boston Globe reports from Massachusetts. “Prices in the Boston area more than doubled between 1995 and 2005, even adjusting for inflation. Lax lending standards played a big part. Sellers raised prices, and buyers easily borrowed the wanted money. Many families chose to stretch, agreeing to monthly mortgage payments that consumed a larger share of income than the recommended 28 percent - often a much larger share. Many of them are now are facing foreclosure.”
“In Boston and other hyper-expensive markets, the surge in foreclosures and the resulting drop in prices isn’t bad for everyone. Government efforts to limit foreclosures have the effect of favoring people who want to stay in their homes over the people who want to move in next.”
“Tom Callahan, executive director of the Massachusetts Affordable Housing Alliance, said he’s torn by concern for homeowners, but ‘our hope for home buyers is that the market softens somewhat. When a market has been as hot as it’s been for the last while, your hope is for prices to come down,’ he said.”
“It’s also not clear that the government can prevent prices from falling, even if it wanted to. A number of modest efforts are underway to help people keep their homes. But there is no plan in place to forestall the majority of impending foreclosures.”
“Even if there was, prices would keep declining.”
“George Marshall, a Boston renter who wants to buy a home in the suburbs, has money saved for a down payment, but he’s waiting for prices to drop a little more.”
“Marshall said he wants people to understand ‘how frustrating it is for people who are looking to buy a home to see their governor using their tax dollars against them.’”
“Leave the market alone, Marshall said, so he can buy a home.”
“Foreclosures continue to pile up in Essex County, where the filings for most of 2007 outpaced other areas of Massachusetts, according to data compiled by The Warren Group.”
“Foreclosure petitions increased 75 percent in the county from January through October 2007, compared with the same period in 2006. Data for November and December is not yet available.”
“‘There is still an awful lot of potential for people to lose their homes,’ said Terry Egan, editor-in-chief of Banker & Tradesman. ‘It’s a pretty clear indication the problem is still at, or near, its peak.’”
The Republican from Massachusetts. “Michael J. Farrell, president of Northeast Financial Group in Wilbraham, helps people work out solutions to impending foreclosure. While Springfield is flooded with foreclosures, Farrell said he’s also working with homeowners from Longmeadow, Wilbraham, East Longmeadow and other well-to-do suburbs of the city.”
“Of the four homeowners he worked with in Longmeadow, Farrell said two were subprime loans. One had a no-down-payment $500,000 mortgage, he said. The other homeowner filed for bankruptcy and the lender foreclosed on the home.”
“The two situations he worked on in Wilbraham were also subprime loans, he said, with 100 percent mortgages. Both foreclosures were precipitated by the breakup of the domestic relationships, he said. ‘In a typical scenario, had they not been stretched to the max, one might have been able to survive’ paying the mortgage alone, Farrell said.”
“The actual number of foreclosures in wealthier suburbs to date may mask the potential, Farrell said. ‘The banks are being extremely slow in pulling the trigger,’ he said, pointing to a foreclosure auction in Agawam that has been postponed four times.”
“Farrell said he’s noted another worrisome trend lately: ‘A huge uptick in non-subprime loans coming through now.’”
The Press of Atlantic City from New Jersey. “As the housing market continues to keep its head just above water nationwide, the oceanfront-home market on Long Beach Island is a whole other animal, according to several local real estate agents.”
“‘The oceanfront market is a recession-proof market,’ said Joy Luedtke, owner of Joy Luedtke Real Estate.”
“There now are 37 active oceanfront listings on the island, with three under contract. And 29 closed within the past year, according to the Jersey Shore MLS.”
“‘Oceanfronts always hold their value. It’s about supply and demand, and there are so few available. They’re not making any more oceanfront properties,’ said Sonia Ward, owner of Sonia Ward Realty in Harvey Cedars.”
“According to Ward, owners of multimillion-dollar properties usually are not in hurry to sell, so prices usually do not plummet.”
“‘There are distress sales on the oceanfront. These sellers are not going to compromise. They’ll sit and wait because they know they have something special,’ Ward said.”
“For the owners, the downside of not selling is being able to use the property for another summer.”
The Chambersburg Public Opinion from Pennsylvania. “Home construction in Franklin County during 2007 slowed from the feverish pace of the three previous years. Some out-of-state developers even abandoned a market that they eagerly embraced while it was peaking in 2004 and 2005.”
“The county has a hefty inventory of vacant new homes — more than twice as many as in 2002.”
“‘We went through tough times,’ Guilford Township Supervisor Greg Cook said. ‘Lots and homes didn’t sell as quickly, and some developers got hurt or ran into tough times. I think it is imperative for developers not to bite off more than they can chew.’”
“The inventory of newly constructed homes for sale rose while the market was cooling, according to Metropolitan Regional Information Systems Inc.; 134 at the end of 2002, 154 in 2005, 354 in 2006 and 353 in December.”
“Briddell Builders of Libertytown, Md., in November sold for $1.7 million its holdings off Falling Spring Road. The township in 2006 had approved 58 lots for Falling Spring Estates, Briddell’s first venture in Pennsylvania. Briddell installed roads and utilities for the first phase and roads for the final two phases. Lots were not sold.”
“‘They had a lot of money going into the ground and weren’t recouping the cost,’ Cook said. ‘Then the plug came out of the market.’”
The Plain Dealer from Ohio. “Home values in Cuyahoga County are likely to take a big hit because banks that foreclose on houses are unloading them for less than half what they are supposed to be worth, a study shows.”
“In Cleveland, lenders are dumping houses for less than a third of their market value as set by the county auditor, according to the study by Case Western Reserve University.”
“The study, which tracked thousands of houses sold at sheriff’s auctions from January 2000 through last September, found that prices declined every year, but tumbled dramatically in 2006 and 2007.”
“County Treasurer Jim Rokakis and others fear speculators are snapping up the cheap, rundown houses and selling them to desperate buyers, possibly triggering another cycle of foreclosures.”
“Several out-of-state companies have purchased dozens of houses in Cleveland, some for less than $1,000.”
The Toledo Blade from Ohio. “Damaged by a housing market that has been unable to regain momentum, the mortgage industry in the Toledo region took another big hit in 2007. In Lucas County alone, the number of mortgages fell by nearly a quarter to the fewest in more than a decade, according to the county recorder’s office.”
“Over the past two years, mortgage activity has plunged 40 percent in the region’s biggest county.”
“The industry had many changes last year. Appraisers are taking a more cautious approach, said Elizabeth Kollar, senior vice president for consumer lending in Fifth Third Bank’s northwest Ohio division.”
“Once, they alerted lenders to only serious problems such as foundation defects and nonoperating furnaces. Today, appraisers note - and often photograph - less serious problems such as drywall damage.”
“Mortgage brokers, who act as middlemen between lenders and borrowers and were involved in many of the subprime loans at the center of current troubles nationally, have suffered the most.”
“‘It stinks,’ mortgage broker Shane Marzullo said of current conditions. Amid a 10 percent decline in sales, he is pinching pennies more at his three-person Springfield Township firm. But several other local firms have folded, noted Mr. Marzullo, who is president of the local chapter of the Ohio Mortgage Brokers Association.”
“The Lucas County agency responsible for logging and filing official documents such as mortgages has had a lighter workload and didn’t fill a clerk’s position recently vacated.”
“‘Those people are gone,’ county Recorder Jeanine Perry said of title insurance workers and others who used to use her office.”
The Newark Advocate from Ohio. “Licking County homeowners not only struggle to keep their homes, many are learning they can’t sell them, either.”
“Sales of homes and all residential property took longer and closed at lower prices in 2007 than in previous years. The housing market includes more foreclosed properties but precious few new homes.”
“The average sale price of residential property in Licking County decreased from $130,316 in 2006 to $118,513 in 2007, a 9 percent drop. In Newark, the average price fell from $107,443 in 2006 to $93,229 in 2007, a 13 percent decrease, according to a database analysis.”
“Some sellers give up for a while and try later. Others are forced to settle for less than they wanted. Still others stubbornly wait for a buyer to pay their asking price. Ann Moore, whose husband died three years ago, has lowered the price of her Granville Road home from $219,000 to $199,000, but it still has not sold. It’s been on the market almost a year.”
“‘I feel I really need to sell it because I’m alone and it’s a lot for me to take care of on my own,’ Moore said. ‘I really don’t feel I can go lower. You can’t give your property away. I know a lot of people have been (waiting) two to three years. I don’t know what the answer is.’”
“Judy Newton, a real estate agent trying to sell Moore’s home, said the market is the worst she’s ever seen. ‘I’ve been a real estate agent for 23 years, and I’ve never ever seen real estate this bad,’ Newton said. ‘I hate to be negative, but those are my true feelings.’”
“‘There’s a lot of homes on the market waiting to get sold. Usually, you reduce it $1,000 to $2,000 at a time and now we’re reducing it $10,000 at a time. It may be appraised $50,000 more than on the market,’ she said.”
“Real estate agent Mitch Fellows said sellers can reduce their frustration and their wait for a buyer by lowering their price.”
“‘Prices have come down a little bit, and sellers need to realize that,’ Fellows said. ‘Sellers still expect what they could have gotten out of a property two years ago, and I think they have a hard time getting that.’”
“Developers and builders temporarily have given up, as well. In 2006, the Licking County Planning Commission shows 196 lots were approved for platting. In 2007, none were approved. ‘I’ve never seen a year no lots were approved for final plat,’ said Jim Leonard, of the planning commission.”
“Margaret Wiedenbein finally sold her home when she switched real estate agents. She had it listed for nine months without success, then changed Realtors. The house sold in 26 days.” “The key was lowering the price from what the first agent had it listed.”
“‘I got what I wanted,’ Wiedenbein said. ‘I thought he had it overpriced. It had been on the market nine months, and anything on the market that long is hard to sell.’”
The comments on the NJ report are pretty funny.
LBI is a destination for folks from New York and Northern NJ. NJ apparently has the highest percentage of millionaires in the country, and we all know about NYC. When I hear about people receiving millions upon millions in annual - annual! - bonuses, I tend to believe some of what the quoted realtor was saying. A few years back I had spoken with a realtor selling properties in an ocean-front community about an hour south of LBI, and he had said that a lot of people were paying cash for their million dollar + homes. While I understand how overly inflated RE is, I wonder how the coincidental huge wealth divide plays into estimating the future of RE.
It *is* a nice area, compared to others on the Jersey shore, but it’s not very big, evidenced by the fact that they only have 39 listings.
“There now are 37 active oceanfront listings on the island, with three under contract. And 29 closed within the past year, according to the Jersey Shore MLS.”
“‘Oceanfronts always hold their value. It’s about supply and demand, and there are so few available. They’re not making any more oceanfront properties,’ said Sonia Ward, owner of Sonia Ward Realty in Harvey Cedars.”
I guess Sonia hasn’t had a chance to check the MLS lately? 15 month supply… but it is all about supply and demand?
You can almost taste the desperation in each word she said. Usually they also throw in some crap about why that particular areas is so much more special than other waterfront areas. She did not do so. I guess she had nothing to add.
Isn’t Dubai building ocean front property?
Yes, but they don’t get hurricanes.
However in Florida they just build canals to bring the ocean inland. No new land created, but there is new “oceanfront” - virtually anyhow - for boating purposes.
I’m waiting for the Dutch engineering firm that builds the Dubai Islands to branch out. Why not build them where real estate prices justify the costs? Yea… certain areas they would be disasters. In others, it would ruin the surfing (not a minor consideration in where they would build this islands).
But I’ll bet they grow.
We’re so close to desperation… but not quite there. Give it another month.
Got popcorn?
Neil
What’s special about LBI it is that it is accessible to NYC and Northern NJ money, but it is not really close to those areas (maybe 2 hours away); so, the riff-raff, common folk, and day-trippers use the beaches closer to the city. The LBI beaches are on a narrow island situated off of a sparsley populated area, and the beaches have limited public access, thus the rich folk need not mingle with the commoners.
Makes me wonder how things are going in the Hamptons. There’s more money there than on LBI. I haven’t read anything about it lately. Then again, New York is “different”.
Here’s a May 2007 AP article that pretty much says what I suspected about the Hamptons (and it even mentions LBI); that is, big money in NYC drives that market. How many people there get these multi-million dollar bonuses? Enough to affect the Federal budget in December: http://www.philly.com/inquirer/world_us/20080112_Federal_budget_surplus_for_Dec__-_but_wait______.html
The budget was boosted by higher quarterly corporate tax receipts and high individual tax withholdings because of year-end bonuses, according to Bloomberg News.
http://www.msnbc.msn.com/id/18868886/
Maybe its just me, but if I had the money, I would fly to a piece of paradise in Hawaii, the Carribean, etc.
IMO Long Beach Island is dead boring.
I like Cape May.
That said, waterfront prices on LBI will slide once “the creep” sets in.
Interesting how predictable the rust belt towns have been, in showing our future, in present tense.
“Home values in Cuyahoga County are likely to take a big hit because banks that foreclose on houses are unloading them for less than half what they are supposed to be worth, a study shows.”
“In Cleveland, lenders are dumping houses for less than a third of their market value as set by the county auditor, according to the study by Case Western Reserve University.”
The only time we were ever in Cleveland was to attend a wedding about 7 years ago. It was wintertime, but with no snow on the ground, so the landscape looked as dreary as it ever can. Riding the shuttle to and from the airport, I noticed all the old and run-down frame and shingle bungalows along the way.
I wonder what kind of property a bank sells for $1,000?
And think about this- raw residential land in that area is worth ZERO. The cost to build a house on it is far greater than what nearby existing, reasonably liveable, houses are going for.
All over the rustbelt, you can snap up homes for less than $10,000.
Erie, isn’t it?
It’s not just Erie, it’s a lot of other places too.
(I’ll bet you were hoping for a response like that
)
When you tell Californians about $10k houses elsewhere, they sometimes drool uncontrollably…
I’m not caifornian, but when I hear of a house for that much, I think cowshack. Or how about shotgun shack?
Cleveland has a ton of run down bad areas. The downtown has a lot more abandoned commercial buildings than it did in the 90’s. People with any money live in Shaker Heights, etc. That’s why Interstate 480 is a nightmare in the mornings with people traveling from the burbs to downtown for their jobs. Many of the poor live in Cleveland because of the bus system to get them where they’re going. I had to go to Cleveland Clinic off an on for over 2 years, and the housing and abandoned stores and bars that surround the hospital is scary.
Sorry but unless you have more of a historical reference that that, you are way off base.
I remember Cleveland in the lates ’70s - over 30 years ago. Now that was land of boarded up, run down and dangerous neighborhoods that you had to through to get to downtown-business area.
I left that area in ‘85 and wasn’t back there until ‘99. Now I go every 4 months to the Cleveland Clinic. When we first went back, I was stunned and how it had improved. New office buildings, buildings that had been boarded up and run down in previously scary areas had been renovated and were busy, huge development of condos/New Urbanist houses had gone in across the street from the Cleveland Clinic…….
You are way way way wrong - it is much nicer than it was 30 years ago and that was in ‘99. Was just there in Dec ‘07 and it was still the same as in ‘99.
And what happens when all the existing homeowners call the Assessor and ask for a reduction in their assessment based on the new sales..???
i love Cleveland. It’s a great city with some really interesting neighborhoods. I had some friends just buy a short-sale house somewhere in the Western area (city proper, i think). Not sure what they paid, I just kept saying, “lowball, lowball!”
Wonder if they’ll go with the city founder’s original name, now?
Cleaveland
Sounds more appropriate…
http://en.wikipedia.org/wiki/Moses_Cleaveland
“In Cleveland, lenders are dumping houses for less than a third of their market value as set by the county auditor, according to the study by Case Western Reserve University.”
Remember, Ohio does not use market value to determine assessed value. It uses a formuala based on sq foot, # bedromms, # baths, type of foundation, presence of a swimming pool, concreat vs blacktop driveway, etc. In general, the tax assessment is lower than the market value (mayb 10-15%). (The land portion of the assessment is not market value after the first acre, either.) So when these places are selling at 1/3 of assessed value, that means they are really selling for closer to 1/4 of the previous market value.
OT… Why does Google Finance show the Dow off 160 and Reuters show it up 80? Wishful thinking? Or the NAR controlling the numbers?
The market is probably swinging that wildly in the couple of minutes it took to download.
Market open at 9:30 am EST.
If you looked at this this morning (your post is tagged 08:05:22), then it is likely Google was giving you the DOW from Friday @ 4 PM EST, and maybe you were getting the Reuters pre-market readings.
“Government efforts to limit foreclosures have the effect of favoring people who want to stay in their homes over the people who want to move in next.”
They don’t have to be different people.
If someone has been in their house a long time, the only way they are facing foreclosure is if they HELOCed to live large. Do such people need to be subsidized?
Many of those facing foreclosure due to buying high, on the other hand, just got their recently. They aren’t losing the family homestead after 10 generations.
The best thing that can happen to them is to be allowed to walk away, save money for a few years, get a credit score “do over” due to temporary mass insanity, and re-buy at a more affordable price.
“If someone has been in their house a long time, the only way they are facing foreclosure is if they HELOCed to live large. Do such people need to be subsidized?”
Moral hazard at its worst: Govt programs to encourage profligate behavior.
Never mind.
“‘We went through tough times,’ Guilford Township Supervisor Greg Cook said.
- Gee, is it over? We went through…..
This clown has only seen the preview.
Unbelievable that these economists were totally in denial of a housing bubble when median prices more than doubled in 4 or 5 yrs.
It’s much less embarrassing to be spectacularly wrong when you are echoing the very same thing your peers are saying.
It’s much less embarrassing to be spectacularly wrong when you are echoing the very same thing your peers are saying.
Sheeple economists!
its because they get their paychecks from the powers that be. They all knew it was a bubble even then but of course played along for higher bonus checks from their employers CDOs.
“Government efforts to limit foreclosures have the effect of favoring people who want to stay in their homes over the people who want to move in next.”
Some ugly truths about ’save our homes’ govt programs to ward off foreclosures:
1) It may not be in the financial self-interest of the owner to keep paying interest through the nose on an unaffordable loan.
2) To the extent tax dollars are injected to fund such programs (as they presumably would be under HC’s proposal), taxpayers’ moneys are unfairly confiscated to be transferred to current homeowners and their lenders.
3) Bad decisions are rewarded, creating moral hazard for more future bad decisions.
Welcome to America in 2008…..
They’re not making any more oceanfront properties,’ said Sonia Ward, owner of Sonia Ward Realty in Harvey Cedars.”
Hmm, I heard this same saying mentioned about Florida property. It sounds like this realtor has been turned into a NAR realtor robot that is only programmed to make these type of comments.
Sure they’re not making anymore - but there will always be some available. People don’t live forever, and there are lots of gummers in The Sunshine State.
Oh really?
So, you’re telling me that the sh*tbox they ripped down on Singer Island a few years ago (SFH) and then put in a 30 story condo building doesn’t increase the avialable pool of oceanfront properties? You just took that land from 1 property to 200 properties, all oceanfront.
Anybody who tells you FL is built out has absolutely NO idea what built out looks like. Even downtown Miami is not really built out; imho, the only place that even reaches close to that is some sections of NYC (and maybe LA). Until there is a high rise on every inch of buildable land, you’re not built out.
The problem that all these idoiots face is that we DON’T NEED ANY MORE LAND in most areas. And we don’t need ANY more houses in almost all places.
It’s just rhetoric, and, honestly, it’s so integral to their job I doubt you could ever break them of the habit. I was looking for a condo (to rent) a few years ago with a RE agent in West Palm Beach. She was walking me from building to building, all the time telling me about how “no more land” in WPB would push prices up forever. Her timing was perfect, as we were walking between condo towers, and were passing a FULL CITY BLOCK of grass. Not teardowns, not a big building to rip down and rebuild bigger. A city block of GRASS. And here’s a RE agent telling me that “West Palm will continue to go up because there is no more land”.
The blindness is truly amazing.
They may not be making any more ocean front property, but that doesn’t mean that what is now ocean front will be ocean front in the future (i.e. global warming - manmade or not). Near Galveston, TX, the shoreline constantly erodes, providing previously inland property owners with shoreline property … er, for a few years.
They are not making any more oceanfront property here in Maine either, but most of the houses for sale in my neighborhood (even the most spectacular ones, like the estate of the guy who invented Yoohoo) seem to be sitting, sitting, sitting on the market, with nobody buying. The article is right in one respect, though: for most people, these are discretionary purchases; nobody has to move and the only downside of not being able to sell is that you might have to spend another summer on the beach.
Noticed a trend?
I’ve observed a common thread among long time owners who owe nothing on their shacks. They’re nearly unanimous in the fact that something went awry and the housing run-up is a debacle. But here’s the disturbing part of their thinking; They believe it is the FB’s/mcmansion buyers/home-debtors who have a problem but their own shacks are still worth $xxx and that prices won’t slide if it is paid off. It’s almost like the proverbial “not in my backyard” logic or it’s different here. When I point this out to them, they go silent. I ask them why their house is different. They never have an answer.
friggin crazy I say.
Have to disagree with you ex,
I’ve owned since 2001, paid off, and readily admit that my house’s “value” has gone down about 25% since the peak. Coincidentally, it still seems to be worth what it would be if long-term appreciation trends had been followed all along, just like it has been on a macro scale for housing since WWII.
Where are these people who claim to be immune from historical trends? California?
Az… I spoke in generality but I think you’re an exception to the rule. You’re spot in that 3% annual appreciation is where prices are today, irrespective of the previous 5 year cheap money induced stupidity. In other words, pick any year in the 90’s and add 3%/year and that is what your shack is worth. No more, no less.
The people I speak are in the northeast, namely upstate NY and VT. My point was that these people have a serious disconnect. They don’t get it that FB’s and foreclosures are setting the new price points.
The most significant thing is that if “safe” long term owners are surprised by the real value of their houses (instead of being realistic all along), it may spook that segment into recessionary thinking as well, even though it shouldn’t.
You are right about this year’s prices being “1997″ * 1.0X^11, where the X is probably from 1 (midwest) to 6 (growing regional economies) . In Arizona, some of the long term owners still think the real annual appreciation was 10% or more per year.
Here’s the gig. At least the way I’m understanding these delusion owners. They lay claim to the high but unrealistic and unsustainable gains but some how dissociate themselves from losses on the other side of the curve. Either you own both or swear off all of it.
I’m with you az_owner. My house isn’t an investment, it’s a roof over my head.
I agree. We paid off our house a few years ago (1500 sqft in 90045) and watched in amazement as prices soared. They are still high here (zillow says $843k! for ours).
I always said “Our home is not an investment, it is a comfort” and was never tempted to refi or use it in any way as a piggy bank.
I should perhaps adopt the discipline of evaluating homes based on the “199X + 3%/yr” rule. Up till now I’ve dealt with the situation by requiring lower and lower LTV ratio, where “V” is today’s purchase price. Somewhere in the back of my mind is the 2001 value, with a calculation that it will probably take a few years for the price to sink back to that; by which time, some amortization of the debt will have taken place.
“Mortgage brokers, who act as middlemen between lenders and borrowers and were involved in many of the subprime loans at the center of current troubles nationally, have suffered the most.”
Oooh, oooh, oooh! “Mortgage brokers… have suffered the most, Mortgage brokers… have suffered the most, Mortgage brokers… have suffered the most…’
You know, I’m just not getting tired of hearing the words.
And by the way, WA legislative session starts today and the realtors intend to ‘push heavily for more affordable housing.’
HAHAHAHAHAHA! Don’t worry there, little weeping realtors! Because it’s going to get more ‘affordable’ all the time! Unless what you mean by desiring ‘more affordable housing’ is actually ‘I want to keep raking in the commissions from selling to FB’s’. IS that what you mean, poor little weeping realtor? Then, wellllll….shucks. HAHAHAHA!
Boy am I starting this day off cheerfully. My grandma always urged us all to start a day cheerfully, and that’s what I’m doing. I don’t know how she would feel about the ‘joyful malice’ part, but I can tell you all–it’s better than coffee!
My sentiments exactly. Boo friggin hoo for you…..pukes.
Boo hoo?
They haven’t suffered enough for the damage they created. In about 15 months, their blood will be called for. Then we can have at them with our Joshua trees.
By then everyone will also realize that most Realtors ™ are high school graduates with a sports coat too.
schadenfreude is better than coffee.
Got popcorn?
Neil
Hey, Olympiagal, I was in your neck of the woods this weekend. Yesterday was a beautiful day, wasn’t it? Played craps at the Little Creek casino. Nice little place with some of the best terms at a craps table I know of, $3 minimum and 5x odds. Made about $275 playing Don’t Pass, which should be the official casino bet of this blog.
Anyway, from what I understood WA is running a pretty big *surplus* for 2007 (or 08?), on the order of $1bn. All the discussion seems to be what to spend it on, with no thought at all of giving it back to the people through tax cuts. Christine wants to build up the rainy day fund, which is OK, but why not give it back so the temptation to spend it is reduced?
I think WA will survive the downturn better than most states. This is in part due to the port industry (we’ll still be buying crap from Asia) and Boeing (the one US company that actually makes stuff here and sells it in China).
No, they only want more affordable housing only for the poor. If you’re middle class then, well, protecting current owners is more important than you are.
This is very, very interesting. It is almost as though there is some relationship between price and demand. Sounds like an interesting advanced economics dissertation.
She needs to write a book and put together a set of tapes so that others can share in this wonderous discovery: “Price Cutting: Your Pathway to Riches!”
Thank goodness she freed herself from the grip of that maniacal first agent, who demanded that she set the price too high. Probably had her chained in a basement.
Don’t get all excited. I’m sure her idea of reduced was like 3% less.
It may be appraised $50,000 more than on the market,’ she said.”
Appraisals in the Bubble areas are tainted due to comps being distorted during the boom and do not reflect the true current market value of the home. Just because it appraised at $50,000 higher does not mean it is worth $50,000 more in this market. All one needs to do is go back and adjust the price for inflation plus one or two points year over year to get the true value.
“George Marshall, a Boston renter who wants to buy a home in the suburbs, has money saved for a down payment, but he’s waiting for prices to drop a little more.”
“Marshall said he wants people to understand ‘how frustrating it is for people who are looking to buy a home to see their governor using their tax dollars against them.’”
“Leave the market alone, Marshall said, so he can buy a home.”
This is a basic and obvious point, but SELDOM made in the media, or grasped by politicians.
House prices from 2001-2007 have gone up faster than wages. If any other basic item went up 50% in 5 years, the politicians would be trying to do something to keep things “affordable.”
One of my Senators has on her website that she’s concerned about falling home “values”. Yet elsewhere she talks about the need for “affordable housing.” How can someone talk out of both sides of her mouth like that without going crazy?
Any action by the governement to prop up house prices is immoral and disgusting. (And no, I’m not a “bitter renter”. I own a house–paid off–in Sunnyvale California.)
“One of my Senators has on her website that she’s concerned about falling home “values”. Yet elsewhere she talks about the need for “affordable housing.” How can someone talk out of both sides of her mouth like that without going crazy?”
It’s a job requirement for public office.
Poor Mr. Marshall has the audacity to want to buy a house without entering lifelong debt serfdom…this consumer economy won’t stand for it!
People continue to totally overlook the fact that there are 2 parties in each transaction. The seller is hurt by lower values, the buyer helped. And the reverse, of course, is also true.
It’s a 50/50 split either way, one party is enriched, the other hurt by values moving in either direction. And, for people who are selling one to buy another… Well, they are pretty much market insenstivite, sure, your house is worth less, but so is the home you are moving into. Net/net it’s pretty much exactly the same thing.
And yes, I am very, very bitter about my tax dollars (which, because I don’t own a home, have kids, or any other govt “desirable” investments is just absolutely outrageous this year) being used against me by keeping asset values artificially high.
Actually, not quite!
Because you have to live *somewhere*, if house prices inflate more than other items, you may get more for the sale of your house, but if you plan to buy another, that increase if offset by the price of your next home.
Even people who wanted nothing to do with the bubble who sold their houses in 2005 didn’t profit at all if they simply bought an equivalent bubbly house elsewhere.
That’s why I, who has a paid-up house, don’t care if house prices drop back to pre-bubble levels nationwide. It’ll make little difference to me when I have to move elsewhere.
‘One of my Senators has on her website that she’s concerned about falling home “values”. Yet elsewhere she talks about the need for “affordable housing.” How can someone talk out of both sides of her mouth like that without going crazy?’
Well, we’ve been up against this crazyness all along. I wish the MSM would take the blinders off, because you really can’t have it both ways.
I actually got two emails from both Senators out here in Cali mentioning that falling home prices and foreclosures would create neighborhoods of blight and abandonment. What total moronic crap. What happens when homes get foreclosed in CA? They get bought for less by those picking up afterwards and would likely be able to actually afford the payments which in turn would create… better neighborhoods. What total rubbish. I sent that exact reply and have sense not received a response. Not even a canned reply.
Good post>
Look if you can barely afford lets say a 800k house certainly you are not going to be in any postion to landscape nicely or even keep it up, but if you can obtain that home for 600k and you have money left over you are apt to do very nice upgrades and maintance thus a neighbor that you can be proud of not one that is just holding on for dear life?
In some areas, those senators might be correct. Take a look at what happened to Palmcaster in the last couple of busts. The same thing might happen in the parts of the IE this time.
That said, the more economically viable areas will benefit once the properties are returned to people who can afford to keep them up, so I generally agree with you. The less viable areas will have to bottom out hard before they start to improve, which could take a long time - longer then the election cycle, which is why the pols are concerned.
But this is the way the government works. They WANT high prices, because then that will make the common people dependant on government in order to buy a home. If the government can short-circuit the markets, then they will have a monopoly on “affordable” housing by creating government programs to subsidise certain people buying homes at the peak price.
If prices drop to where anyone can buy a house, not only will this hurt the pockets of certain special interest groups that own the government, it’ll also mean less people will be dependant on the government; a lose-lose for them.
Farrell said he’s noted another worrisome trend lately: “A huge uptick in non-subprime loans coming through now.”
While most of the foreclosure wave of the last two years has been pinned to subprime loans - loans made to borrowers with poor credit, sometimes with creative terms that are or become unaffordable - Farrell said he fears other factors may be coming into play that are making it hard for people even with conventional loans to keep up.
IMO, this is the scariest quote in the Ben’s post. Housing woes are no longer contained to subprime. Not only in high-finance securitization circles, but also in conditions on the ground. Subprimes reset are foreclosing, Alt-A and Prime exotics (including HELOC) are due to reset and foreclose too. The next domino is when the ensuing inflation is going to hit the 30-year-fixes who will have to choose between the $5/gallon milk and the mortgage.
Look out below. And I don’t think renters are immune either.
A columnist for the Financial Times, Wolfgang Munchau, just posted a sobering article about a possible global financial meltdown.
http://tinyurl.com/2nqa8u
We all knew this wasn’t about subprime. Unfortunately, even if the media accepts this they’ll still say some nonsense like, “subprime problems are spreading to prime.” That still leaves the impression that prime was okay if only subprime didn’t mess everything up.
It’s like blaming the first card to fall when the house of cards finally comes down….
And I don’t think renters are immune either.
Immune from what? Rental demand is shrinking as FB’s recruit roomers and kids go back with their parents. Supply is increasing as condo conversions go back to rentals, and house sellers give up and rent.
Plain fact is that there is more housing stock per household then ever before, and that is negative for both prices and rents.
“Government efforts to limit foreclosures have the effect of favoring people who want to stay in their homes over the people who want to move in next.”
If you watch the Democratic debates these days, all of them are crying to “help those poooor whittle’ homeowners”. Add this to their plan for socialized healthcare and our nice little recession and you see where this is going: 1970’s-style interest rates and the creation of the exact OPPOSITE of what would be the most beneficial. But lord knows that at least we’ll be able to save all those homeowners… This stuff makes me disgusted.
Xlnt condition, xnt location,low price= Sold
Good condition,xlnt location, low price = Sold
Poor condition,xlnt location, very low price=Sold
Fair condition,fair location, very low price= Wait time but will sell
Poor condition,bad location,very low price= very long wait and not much hope
Simple really. low price must be in the equation every time and good property in good locations always sell and bad property in bad locations is just that in any market, good or bad?
Our 1967 ruthlessly un-updated tract home would not get anybody hot and bothered, in this market.
But in August of 2005, a Korean flipper was able to look past in ordinary-ness, and bought it from us.
Actually, the ARE making more ocean front property. It’s located a hundred yards or so behind current ocean front property. (This may not really be a real estate story soon - but it probably will be before some 30 year mortgages are paid off). I’d be nevous buying barrier-island property, though (unless I had money to burn).
http://www.washingtonpost.com/wp-dyn/content/article/2008/01/13/AR2008011302753.html?hpid=topnews
Climatic changes appear to be destabilizing vast ice sheets of western Antarctica that had previously seemed relatively protected from global warming, researchers reported yesterday, raising the prospect of faster sea-level rise than current estimates.
While the overall loss is a tiny fraction of the miles-deep ice that covers much of Antarctica, scientists said the new finding is important because the continent holds about 90 percent of Earth’s ice, and until now, large-scale ice loss there had been limited to the peninsula that juts out toward the tip of South America. In addition, researchers found that the rate of ice loss in the affected areas has accelerated over the past 10 years — as it has on most glaciers and ice sheets around the world.
Just how fast are the oceans rising? I found this site:
http://www.grida.no/climate/vital/19.htm
They have a chart that extrapolates expected rise over the next 100 years, with three scenarios. By 2050, the scenarios predict somewhere between 10 to 40 cm (4 to 16 inches) of rise.
This next site uses satellite measurements.
http://sealevel.colorado.edu/
The best-fit curve of all the data points since 1996 is pretty linear, with a 4 cm (1.6 inches) rise in 12 years. That’s about 1.5 inches every decade.
BTW, barrier islands are constantly eroding and reforming. Building on a barrier island is stupid whether there’s global warming or not.
Ah, so it is “different” at the Shore. No doubt it is, especially when the hurricanes roll in, or something like that. I like how some people still trumpet how “prices don’t matter!” Right!
Amazing how the concept of lowering the price is seen as unspeakable!
Very true… Costs for everything are on the spike (up). Although home heating oil prices are down from 2 months ago, $3.15 is a JOKE. It costs us (renters) $400 a month to keep us at 67 degrees (North Idaho). When will we be able to burn politicians, mortgage brokers, and RE agents to stay warm?
Man, I won’t even consider an apartment if it doesn’t have those two magic words heat included. I have yet to pay a heating bill in my life, or for that matter, a cable teevee bill.
Well, you pay it anyway. It’s just a bundled cost with your rent. The fact that isn’t separately itemized doesn’t mean you don’t pay it.
However, you may be different, and hence, immune from basic economic laws.
It depends upon how long he has had his lease. He may have paid for it initially, but by locking in prices months or years in advance he could get off “cheap”. It also depends upon how much “heat” he uses. If he keeps the place at 80 degrees, I bet the land lord had not planned on that price, so he got “free” heat.
Of course I pay it indirectly, the same way I pay property taxes and condo assessments too as a renter. Geez, I thought after posting here so long I’d have some credence.
In the Chicago rental market most rentals have heat included. The ones that don’t tend to have rents about 5% lower, but this does not come anywhere close to making up for heating costs. Most other cities I have looked at that have anything resembling a cold season are the same way.
Man, I won’t even consider an apartment if it doesn’t have those two magic words heat included.
You wouldn’t like me as a landlord. I make my tenants pay for everything except water. I went a few years paying the heat bill for my tenants. Never again…
Me, too. I pay water, sewer, and garbage for my tenants, but they pay for heat, electricity, phone and cable.
“You wouldn’t like me as a landlord. I make my tenants pay for everything except water. I went a few years paying the heat bill for my tenants. Never again… “
You may be running out of rope on that approach.
Speaking for myself, I won’t buy a building that doesn’t have separate meters for gas and electric. And a number of companies are doing a good business lately by separating the metering on buildings that are not already that way. Of course, YMMV, I only know the western US market, and I’m guessing that you are in the east???
“Ann Moore, whose husband died three years ago, has lowered the price of her Granville Road home from $219,000 to $199,000, but it still has not sold. It’s been on the market almost a year.”
“‘I feel I really need to sell it because I’m alone and it’s a lot for me to take care of on my own,’ Moore said. ‘I really don’t feel I can go lower. You can’t give your property away. I know a lot of people have been (waiting) two to three years. I don’t know what the answer is.’”
One of our fav quotes to point and laugh at. Y’all didn’t miss that, did ya?
BayQT~
collective subconscious
Several out-of-state companies have purchased dozens of houses in Cleveland, some for less than $1,000.”
I’ll take 2 dozen. Do you take Visa or Mastercard?
Judy Newton, a real estate agent trying to sell Moore’s home, said the market is the worst she’s ever seen. ‘I’ve been a real estate agent for 23 years, and I’ve never ever seen real estate this bad,’ Newton said. ‘I hate to be negative, but those are my true feelings.
Come on Judy. Let us have your true feelings. I think the HBB crowd can handle them. We might even agree.
I feel I really need to sell it because I’m alone and it’s a lot for me to take care of on my own,’ Moore said. ‘I really don’t feel I can go lower. You can’t give your property away. I know a lot of people have been (waiting) two to three years. I don’t know what the answer is.
Ann, you know the answer. You don’t want to accept it. Would you ‘give your XXX away” if it was like an old car after you drove it for 15 years. Would you expect 10X what you paid for it after using it and the junkman is hauling it off as scrap? I didn’t think so. Market value is whatever someone is willing to give, and maybe it is nothing.
A guy I used to work with moved out of state almost six months ago, leaving a realtor to sell his empty McMansion. Naturally he listed it at his wish price, and naturally it’s sitting onsold. I had to suppress a smirk when I heard that he’s been calling a former neighbor of his back here to rail on the “tight asses” who refuse to pay his inflated must-have price.