It’s Not Booming Like Those Glory Years
The Baltimore Sun reports from Maryland. “The National Association of Realtors’ chief economist told local real estate agents yesterday that he believes the Baltimore housing market has hit bottom and 2008 should be a better year, assuming buyers don’t sit on the sidelines, anticipating major price drops. ‘This area will be very interesting to watch because there’s very solid economic growth, but people aren’t buying homes,’ said Lawrence Yun.”
“He added: ‘Ten years from now, people will look back at 2008 and say, ‘Wow, that was a great time to become a homeowner.’”
“Yun said ‘excessive negative coverage’ about the nation as a whole, which saw prices fall, has given buyers a distorted picture.”
“But other economists aren’t so optimistic. Anirban Basu, CEO of a Baltimore economic and policy consulting firm, said that he’s sticking to the forecast he gave the Home Builders Association of Maryland: No bottom until next year.”
“‘This year I expect to be the year of the falling prices,’ Basu said.”
“The Greater Baltimore Board of Realtors, which brought Yun in to speak to a packed hotel conference room, said yesterday that it will team up with other local Realtor groups in the metro area on a $50,000 media campaign with that ‘great-time-to-buy’ message.”
“‘What we want to do is negate all the national media in terms of the doom and gloom,’ said Cathy Werner, president of the Greater Baltimore Board of Realtors and an agent for 22 years.”
“Denie Dulin, an agent in Baltimore, hopes buyers will stop waiting for that doom and gloom to show up in prices. Right now, they keep delaying a purchase because they think prices and interest rates will drop, she said.”
“‘They’re looking and looking and looking and want to see 50 or 60 homes before they make their decision,’ Dulin said. ‘That’s a lot of looking.’”
“Gov. Martin O’Malley announced a wide-ranging plan yesterday to confront an unprecedented rise in home foreclosures and combat predatory mortgage schemes.”
“Tens of thousands of subprime mortgages are expected to go into foreclosure in Maryland over the next two years at a cost of $2.7 billion in lost property value and $19 million in property taxes, according to the Joint Economic Committee in Congress.”
“About one-fifth of homeowners with subprime mortgages in the state were late on their payments or in the foreclosure process during the three months through October, according to the Mortgage Bankers Association.”
“‘These are really, really tough times,’ O’Malley said. ‘We are seeing a national economic downturn, and we are also seeing a real unprecedented crisis when it comes to foreclosures.’”
“The administration also announced yesterday the ‘Bridge to HOPE’ program to provide interest-free loans of up to $15,000 so that homeowners can catch up on their mortgage payments and avoid foreclosure. The HOPE loan program, announced last summer by O’Malley, didn’t meet expectations. It would have directed $100 million to assist hundreds of homeowners refinance, but only 14 homeowners have qualified.”
“Thomas E. Perez, Maryland’s secretary of labor, licensing and regulation, has frequently said that it’s harder to get licensed as a barber than as a mortgage broker in Maryland, and one regulatory change would increase the amount of experience needed to obtain a license.”
“‘You can be assured that person is qualified to give you a loan,’ Perez said. ‘That person would be required to look after the public interest rather than just lining his own pockets.’”
The Maryland Daily Record. “Sarah Bloom Raskin, Maryland commissioner of financial regulation, said she thinks the reforms will be appropriate, but not too restrictive. ‘We are not expecting any credit availability problems to emerge whatsoever,’ she said.”
“David Pulford Jr., president of the Maryland Mortgage Bankers Association, said a proposed regulation to establish a duty of good faith and fair dealing for lenders, brokers, servicers and borrowers sounds good in theory but uniform definitions of those terms could be problematic.”
“‘If the legislature is going to require us to show a net tangible benefit that is according to legislation, then I have a real hard time with that,’ said Pulford.”
“Kathleen Murphy, CEO of the Maryland Bankers Association, said she does not think the state regulations would prove onerous to the point where they would restrict the availability of credit in the state.”
“She said the secondary market for subprime loans, which are often packaged by the companies that originate them and resold as investment products, is drying up.”
“‘In essence,’ she said, ‘those loans aren’t going to be made because those outlets aren’t available.’”
The New York Times on Maryland. “At Vixxen Hair Salon, the main topic of conversation has always been money. But since last August, Anjanette Booker, the owner, has noticed a new focus. ‘Now it’s money and foreclosures,’ Miss Booker said.”
“For each of the last four years, more than half of the foreclosures in the Belair-Edison neighborhood have been homes owned primarily by women, according to a nonprofit community development organization.”
“Single women have been among the fastest-growing groups of homeowners in recent years, and in Baltimore they accounted for 40 percent of home sales in 2006, twice the national average, according to the National Association of Realtors. Nearly half of these mortgages were subprime.”
“‘When I bought my house, it was the American Dream,’ said Kue McIntyr, a single mother of three who is scrambling to avoid losing her row house, on which she defaulted after losing her job. ‘Now I need to save it for my boys.’”
“In Belair-Edison, these trends converge at Vixxen Hair Salon, where on a recent afternoon the chairs were empty, as they have often been since summer, when many adjustable-rate mortgages in the neighborhood reset — and many women began cutting back on beauty care to pay for them.”
“‘Just our conversations, our demeanor, have changed,’ said Miss Booker, who, like most of her customers, is a single woman trying to save her home from foreclosure. ‘Now when we have the TV on, and something comes on about interest rates, we’ll be screaming at the TV.’”
“Four years ago, Miss Booker bought a brick row house for $130,000, taking a subprime mortgage because she had a low credit score. Her initial payments were $841 a month.”
“‘He said the rate was adjustable but in six months you can refinance,’ she said. ‘But I never did. I didn’t ask why I didn’t get a fixed rate from the beginning.’”
“After two years, her mortgage payments shot up to $1,769. She has borrowed money from her former husband and two friends, but says it is hard to ask for money ‘because most people are going through what you’re going through.’”
“From her house she said she could see five homes with ‘For Sale’ signs out front, signs that went up around the time many mortgages reset. ‘It looks like a ghost town,’ she said of the streets around her house.”
“The neighborhood’s 6,400 houses are mostly owner-occupied, and median house prices have nearly doubled since 2004, to $125,000.”
“Ms. McIntyre, bought her house for $125,000 in April 2006, using two subprime loans, adjustable loans that started at 8.35 percent and 13.25 percent, the lender insisted that she use her savings to pay down a car loan, a common demand on subprime loans. After she lost her job, she had no reserve to pay her mortgage.”
“‘I feel they had me from the start,’ Ms. McIntyre said. ‘I was eligible for money as a first-time home buyer and a state employee. Nobody told me about any of these.’”
“Her house was offered at foreclosure auction in December, without a buyer. She is still living in it, hoping to work out a payment plan with her lender.”
“‘And if I can’t keep my house, I need to save my money so I’ll be ready to buy another house in two years,’ she said. ‘But it’s really hard to get out of this hole.’”
The Washington Post. “Home buyers and sellers in the Washington area face a new challenge: Most of the region has been tagged a ‘declining market’ by the powerful loan underwriters who review mortgage applications.”
“That means appraisals are receiving an extra dose of scrutiny, and lenders are asking some buyers to come up with more down-payment cash. Such a broad-brush treatment of the diverse Washington market risks weakening prices in neighborhoods that, so far at least, have been holding their own.”
“In November, a ‘declining market’ flag was enough to scuttle a $510,000 home purchase planned by Tony and Sarah Pierson, both Army captains. They were only days away from closing on a brick Cape Cod near the historic district in Leesburg.”
“But the deal fell apart when their lender, USAA First Mortgage Origination, notified them that, because of that flag, USAA would no longer honor its preapproval commitment for a package of first and second mortgages covering 100 percent of the price.”
“Even though the appraisal showed a value higher than the Piersons had agreed to pay for the home, USAA told them it would approve the deal only if the couple came up with a 5 percent down payment.”
“‘Five percent of half a million dollars is $25,000,’ Tony noted. They had that in savings, but had been planning to use it to renovate the house. They didn’t close the mortgage.”
“According to a Fannie Mae policy statement released last month, its declining market flag calls for a lender to more closely examine whether the home’s appraisal accurately reflects current market conditions. If a giant such as Fannie says values are headed down, what other mortgage investor is going to be so bold as to dismiss the warning?”
“‘It’s not just Fannie Mae, it’s every investor,’ said David Stevens, president of affiliated businesses, including mortgage lending, at Long & Foster Real Estate. As a result, according to Stevens, a loan that used to require 5 percent down now requires 10 percent, and one that required 10 percent now calls for 15. ‘It’s stopping sales,’ he said.”
“The Piersons continue to hunt for a home, with their renovation budget now converted into a down payment budget. I asked Tony if that declining-market notice gave him pause about investing in a home.”
“‘No, because you need a place to live,’ he said. ‘We’re going to be here at least five years. We’re not under the mistaken assumption that we’re going to get rich. When you’re renting, you’re losing $20,000 a year in rent plus whatever tax breaks you miss. You don’t know what’s going to happen in the future.’”
“He also summed up how the fear of real estate losses just may bring about such losses. ‘They’re not loaning the money after they’ve made a written agreement to do so because of what they feel might happen in the future. They created the problem [through lax lending] but their solution is making it worse.’”
The Lebanon Daily News from Pennsylvania. “Lebanon County Realtors say the county’s real-estate market has slowed but is still healthy.”
“‘It’s not booming like it was for two years, but we’ve eased back to a normal market,’ said Melissa MacBride, who is secretary of the Lebanon County Association of Realtors. ‘We’re not seeing homes fly off the market in two or three days, but that’s not typical.’”
“‘We hit those glory years, and you can’t stay there forever,’ said Irene Pickett, president of the county association.”
“Average Lebanon County sales prices have increased every year since 2002, when the mean figure was $115,464. In fact, since 1990, prices have risen every year except 1997 and 2001.”
“‘It’s not all gloom and doom, as depicted in the national media,’ MacBride said.” “‘It really isn’t that bad,’ Pickett said. ‘It has tightened up for people with poor credit.’”
“Pickett said she has seen the lending industry evolve. ‘When I first got into real estate, people had to have 10 percent down unless you were working with FHA (Federal Housing Administration loan programs),’ Pickett said.”
The Evening Sun from Pennsylvania. “Higher gas prices could be to blame for a slight drop in home values throughout the southern region of York County last year, officials are saying.”
“‘I think the higher gas prices have slowed the migration from Maryland to York County a bit,’ said Steve Snell, executive officer of the Realtors Association of York and Adams Counties.”
“The fact that homes in the southern region of the county have historically been the most sought-after might have contributed to the price drop. ‘Those school districts were the hottest in the county and may have cooled the quickest,’ Snell said.”
“Most real-estate experts agree that with more active listings on the market, a situation that often allows for added room to negotiate price, and mortgage rates staying at or below 6 percent, this continues to be a good time for people to buy a home.”
“In the first 11 months of 2007, York County boasted 3,142 active real-estate listings, compared with 2,524 in the prior year.”
“Despite added inventory, the number of homes sold within the first 11 months of 2007 dropped 8.9 percent to 4,953, compared with 5,436 in 2006.”
“Dominic Arcuri, associate broker with Morgan-Collins Realtors, said the drop in home sales has its roots in how the real-estate industry has been perceived by potential buyers.”
“‘Our industry is suffering through a perception problem,’ he said. ‘When you pick up the newspaper or turn on the TV, you hear how bad the market is.’”
‘I asked Tony if that declining-market notice gave him pause about investing in a home.’ - Elizabeth Razzi
Washington Post
Sunday, January 6, 2008; Page F05
Q: “…Is it really devastating to society as a whole if values revert (you say “decline”) back to where they were in 2000? Property values never should have gotten to where they are today. A correction to the point where a property’s price reflects present value of rent would be a good thing.”
E.R.: “Why should a home price reflect the value of rent, anyway? The Bureau of Labor Statistics uses an equivalent rent estimate to represent housing costs when it compiles the consumer price index, but that’s because the bureau specifically wants to remove the investment component of housing from the equation. As a homeowner, though, that investment component is important. Just as buying a car costs more than leasing, buying a home should cost more than renting…”
Is Elizabeth a peach, or what?
That’s freakin unbelieveable. For shame, WP.
thats why WP readers will vote for free-er healthcare
it’s just because
It’s how they “feel”
Lets stick to housing costs. I have plenty of opinions regarding healthcare, but this is the HBB
one of the reasons why i refuse to read WaPo and trash the toilet paper rag every chance i get… but in Northern VA that’s like talking to a brick wall.
“Just as buying a car costs more than leasing, buying a home should cost more than renting…”
Is she suggesting that a car is also an “investment”?
That’s why I buy used. If I want new, I will lease.
Isn’t the saying, “Don’t buy when you can lease… don’t lease when you can rent, don’t rent when you can borrow, and don’t borrow when you can steal?”
jk about the steal part
The down payment to buy a new should equal the initial drive-off depreciation, about 20% average. read somewhere that the median US-built car must be paid off in 33 months to stay above water.
I think there is an appropriate analogy here in that many people will be living out of their cars when this is all over.
When you look at the total cost of running a car, bought VS leased it almost always costs more to lease and less to buy. There are also serious restrictions as to miles driven etc on leases, which do not apply to house rentals. This is a silly comparison.
The only time it makes sense to lease is when the factory offers a substantially subsidized lease, where the residual value in the lease exceeds (by a lot) what everyone knows the real world end of lease value will be. These days the lease incentives seldom exceed the rebate values for purchases. This of course makes sense, as the manufacturer doesn’t want to deal with the ond of lease cars any more.
Just as buying a car costs more than leasing, buying a home should cost more than renting…”
What an idiot!! Just more proof that there is a clear disconnect in this market. Sure, lets let home prices continue to climb further than rent and watch as the housing market goes from a recession to a depression.
Sorry. I disagree. It is plausible for buying a house to cost more than renting and still make economic sense. However, the additional cost should be no more than the amount you save by not having to rent a place to live during the useful life of the house. Start using a reasonable discount rate on that future rent and offsetting it by the costs of ownership while paying the mortgage and after it is paid off, and you will find that the additional value is very very small unless you can reasonably hypothesize large increase in the cost of rent, extremely low costs for up keep and taxes, etc.
However, the additional cost should be no more than the amount you save by not having to rent a place to live during the useful life of the house.
You just said exactly what I am saying in the above statement. The price of homes to rent is just like the P/E in stocks. When rents are lower, people continue to rent when home prices are higher. When rent prices near homeownership costs, people tend to buy.
Right now we have a large disparity between home costs and rental costs. That is exactly what is going on in most markets.
There must be some correlation between renting and buying. If it cost 2 times more to buy than rent a very similar house, things are out of whack…..Why would you ever buy the same house at 2x the cost (except for emotion)?
Every rented house is also owned. If renting consistantly costs less than buying, who would ever be a landlord?
It seems to me that renting should on average cost more than buying to account (at minimum) for the additional risk of owning.
That is the problem in the market NOW - but not before.
I was advising someone who was thinking of buying some 2-4 flat units. He would bring me the listings and say ‘what about this one’? I would take the data (rents, vacancy rate, taxes, insurance and upkeep), run the numbers and say “congratulations - you will only be in the hole by $1000, 2000 or so a month….” He was planning on paying cash and at first couldn’t understand why I keep adding in an amount each month for the purchase price and interest. I had to explain that if he put the money in an account, it would earn $$ - and the amount he put in would never get old or wear out; if he put the money into real estate, he had to allow for depreciation of the building (loss of $$ invested) and the loss of the interest/investment income he would have made.
Now before the bubble and price inflation, owning (even with repairs and all the other costs) was LESS than renting.
If you are going to live here, if it breaks even as compared to renting, go ahead.
If you are buying a single-family as a rental property, you want to buy at a price where the mortgage, taxes, insurance and repairs will be less - and enough less that you have at least a 20% gross profit.
And that is where the market use to be and needs to be now.
Here in central Florida , it is still crazy but will level off when all these forced landlords finally go BK.
I’ve been in business for 30 Years. Never considered Real Estate a ” Good Investment “. WAAAAY more work and BS to put up with then profit made. But now it is impossible.
Right now , hoses built in 05 and 06, empty for a year or more, many vandalized . Asking Price $187,000 or lease for $750. Not to brag , but I’m really good at math . No Way to make these Numbers a good investment.
Buying a home should cost less than renting to make up for the opportunity cost of being stuck in one place.
The only way to get renters off the fence if is buying makes up for renting somehow, which was us in 1994 but definitely not in 2005.
“Buying a home should cost less than renting to make up for the opportunity cost of being stuck in one place.”
Have to disagree. If you rent it is never your house and you can’t even nail a painting into the wall without worrying about getting your deposit back, much less putting in a jacuzzi if you so chose. Owning your house has a “owner satisfaction” factor that can’t be quantified easily. However traditional rent/own ratio should hold generally speaking nevertheless, but I do not agree owning should be less expensive then renting.
Right, and if you buy, your company can make you its perpetual bitch whereas if you rent, you can give them the finger and move for a better job opportunity.
If you are one of those people who’s happy with just a job, and some kids and a yard, your analysis is fine.
This may even be the majority but it’s by no means everyone. You can keep your “owner satisfaction”. I’ll take “career enhancement”.
This person nailed it. Someone whose house went from $200K up to $500K and then back to $350K has lost absolutely nothing. They have gained $150K and should be satisfied. For them to say otherwise is greed, pure and simple.
There’s a lot of other aspects to renting…I can rent in a better neighborhood with better schools and a bigger house than I can buy with the same amount of monthly payment (way lower in fact). That in and of itself is worth a considerable amount of money.
“that investment component is important”
I bet Elizabeth also buys stocks that pay negative dividends!
“He added: ‘Ten years from now, people will look back at 2008 and say, ‘Wow, that was a great time to become a homeowner.’”
L.Y.’er is resorting to Soviet era 10 year plans, now?
I remember watching Wall Street Week with Louis Rukeyser in the late 1990s.
His panelists, as stock prices got more and more out of line with reality, kept saying “well you can’t expect the kind of returns you have gotten in the recent past, but stocks will still provide a good return over the next decade.”
You could pretty much read between the lines.
“He added: ‘Ten years from now, people will look back at 2008 and say, ‘Wow, that was a great time to become a homeowner.’”
The consumer added: ” I am glad I did not buy in 2008 or I would have lost money by listing to the realtors hype!”
So 2005 / 2006 was NOT a good time to buy? I thought it was always a good time to buy. But for sure 2008 will be? I will grant them this… December of 2008 will be a better time to buy than January 2008, but if you want to buy at a reasonable price 2011 or so…
““He added: ‘Ten years from now, people will look back at 1929 and say, ‘Wow, that was a great time to become a homeowner.’”
“Most real-estate experts agree that with more active listings on the market, a situation that often allows for added room to negotiate price, and mortgage rates staying at or below 6 percent, this continues to be a good time for people to buy a home.”
Can someone PLEASE let me know when a “bad time” to buy a home is. It’s a good time if prices are going up, coming down, moving sideways; interest rates are 0% or 200%.. Hmm.. Is it perhaps, ALWAYS a good time to buy a home? What about those people who bought in 05, who, by now, are probably mostly (or depending on the area) or all underwater. Guess that was, in hindsight, not a good time to buy a home?
-and-
The Evening Sun from Pennsylvania. “Higher gas prices could be to blame for a slight drop in home values throughout the southern region of York County last year, officials are saying.”
What in the heck is the matter with people? Why does everyone equate the higher gas prices with a drop in home prices. I have said this before, I drive A LOT (~30K/yr) in my chosen profession. Even with that much driving, and gas at 3 dollars a gallon, my total expense for fuel is ~$3,000-$4,000 dollars a year. Gas, for most people who should be buying a home, is just not a significant expense. You can get back the increase in gas prices by simply ditching the STBX every day.
Home prices up 100-200% in many regions over the past 5 years. Home expenses account for ~20-30% of the total cost of living for many people. And GAS (which, I would guess, accounts for 1-3% of yearly cost of living) is the problem?? Huh? This is like my previous thread, wholesale prices up 6.3%, so we need an emergency rate cut?
Are we in bizarro world?
I had a running argument with a family member for a couple of years on buying a condo. His arguments, where all familiar to those who follow this blog. “Real Estate always go up, you can always rent it out if you have to move etc., etc.”. Now that prices have started to decline he advises me that it is a great time to buy, because I can bottom fish. He says this without any sense of irony or acknowledgement of how bad his previous advice was. I just sit there and nod. I guess it is to much to expect some rhyme or reason behind such “advice”.
You can always rent it out. As long as you can find tenants.
Trouble is, you can’t find tenants willing to pay in rent what you’re paying in mortgage, taxes, insurance. That’s what my hosed friends are finding when they look for renters on their empty properties.
Yeah, my friend is probably taking a $700/month bath on a 1 bdrm condo if he rents it. And this is in a PRIME LOCATION.. I guess the saying location, location, location doesn’t always hold true.
When are people going to admit there is no hisorical precedence for what happened in real esate in the last few years? NONE. So all previous bets ARE OFF.
You can always rent it out, or you can’t.
Can someone PLEASE let me know when a “bad time” to buy a home is.
When there is a wide disparity between home prices and rental costs and local incomes.
And when you cannot afford to buy a home without counting on appreciation and dangerous loan products.
I bet if you asked the National Association of Realtors a bad time to buy is anytime you don’t use a Realtor.
A good time to buy is anytime that a Realtor gets a commission.
How about when there is a dangerous shortage of Realators?
Ow!
Such jokes put hot coffee into my nose!
ROTFL
Sorry, Realtors ™ are going the way of travel agents. Look at all the costs associated with buying a home.
6% to the realtor
usually about 1.25% to the mortgage broker
Then there are escrow costs, surveys, and other fees that add up to about another 1%
If your subprime, add 4% or so to the loan cost.
So a home immediately losses 8.25% to 12% of its sales prices as soon as it trades hands. Its not quite like a new car… but too close.
Got popcorn?
Neil
Thank god houses aren’t subject to sales tax.
As I try to explain this to people wanting to sell their 2005 Honda with 60,000 miles on it: Hondas are not impossible to abuse, no warranty, and I have to pay sales tax on it. Your finance balance of $18,000 does not make a good price when I can buy a new 2008 for $19,900 out the door.
Actually, when you sell a house in Colorado, you do pay a “sales tax” - it goes directly to the state.
“Most real-estate experts agree that with more active listings on the market … this continues to be a good time for people to buy a home.”
The only ‘experts’ regarding real estate I know (the majority) reside here and I’ve yet to hear anyone make a legit case for such nonsense..
“‘No, because you need a place to live,’ he said. ‘We’re going to be here at least five years. We’re not under the mistaken assumption that we’re going to get rich. When you’re renting, you’re losing $20,000 a year in rent plus whatever tax breaks you miss. You don’t know what’s going to happen in the future.’”
I’m no Kreskin, but I have a pretty good idea that home prices will be falling more in the near future.
Lose 20K by renting or 200K by owning. Survey says??????????
That one always sticks in my craw. Housing is an expense, period. Everyone pays who chooses to live under a roof with running water.
If you read the whole article you will find these two tried to buy a 500K-plus house with no downpayment. Their “downpayment” money was to be used for renovations. Call me crazy, but what the heck are two young captains doing spending that kind of loot on a house and why does a bungalow that needs renovation cost upwards of 500K anyway? It is completely insane, all of it.
plus they are not going to be stationed in the area for more than fours years most likely.
We see that here in the Norfolk/Virginia Beach area. Stationed here for 2 to 4 years? Better buy a house. I saw a $600K home for sale on craigslist, they needed to sell because someone had orders to move. Trying to sell the furniture and everything in it to move the sucker. Totally dumb.
A friend’s sister’s husband’s mom owns a townhouse. Bought it for like $100K, and wanted to sell for $200K 3 years later or some crap. Found ONE person actually stupid enough to pay it, which happened to be a Navy couple. Well, the couple had no money, so they needed the closing cost assistance, but the seller wasn’t willing to help because she didn’t want to be ripped off on the sale of her house. Couldn’t hurt that 100% gain. Sheesh, I would have CUT and RUN. But now it’s all downhill from here.
Maybe ten years from now, they’ll look back at 2008 and say, “Wow, we were nuts!”
I never understood the argument that renting is throwing money away. How is getting a place to live throwing money away? How do these people feel about buying cars? The car starts to depreciate the moment you drive it off the lot, you never get back what you pay for it and even if it is good mechanically you have to pay money to maintain it. Yet, no one ever describes buying a car as throwing money away. The mass pyschosis around the cult of real estate never ceases to amaze.
Your car is to show off your disposable wealth. Gotta have the high end Benz or Rover.
“Your car is to show off your disposable wealth. Gotta have the high end Benz or Rover.”
In that case, I must not have any disposable wealth. My car is a beat-up ‘91 Chevy Cavalier with 175,000 miles on it (probably more than that, because the odometer quit working a couple of years ago!). Besides the saving-money-by-driving-a-beater issue, there are a couple of more advantages: one is that I always win the musical parking place game, when I’m competing with high-end cars; two: when I’m parked next to, say a Beemer or a Hummer, which one would a thief be more attracted to?
The thief may go for yours. It is easier to steal than Beemer or Hummer.
You’re absolutely correct.
I’m paying about $16,000 in rent annually.
My peers are paying at least $36,000 annually for PITI, with basically $0 going toward the principal (we’re all young, so at the beginning of the repayment schedule). ON TOP OF THAT they’re looking at $-50,000 or so in “lost value” or whatever you want to call it, which is merely 10% off a $500k house.
By any reasonable measure, in the NOVA area, renting is something like $40,000 to $60,000 better than owning, depending on circumstances, PER YEAR. As history looks back, this will be valid for the time between at least 2006-2009, in my opinion, and we might also include 2005 and 2010-2011.
There’s no need to get indignant when people try to tell me to buy like they did. They get poor, I get rich. I don’t need to be indignant.
They get poor, I get rich. I don’t need to be indignant.
Well said! I just try to smile pleasantly (not too much, not so much that they see me thinking that they are idiots) and only mildly disagree with them. So far I haven’t pushed it with anyone lately, but that’s also because I haven’t seen many rabid housing-always-goes-up type of people lately. Even my real estate agent friends are a lot more reticent these days (privately, not professionally/publicly).
As I was telling some folks at work last year who were talking about why it was a great time to buy a condo in DC “you don’t have to believe me now… you just have to wait.”
I never understood the argument that renting is throwing money away.
A car is a liability.
A house is a liability over time.
People forget to deduct their cost of ownership (expenses) when they sell the house. That is why single family homes have stayed flat since 1950.
A car is a liability.
A house is a liability over time.
A house is a liability the minute you buy it! At least the car comes with the oil full and at least a few gallons of gas in the tank… and they won’t let you drive it off the lot without insurance (even if you pay cash).
A house… oh my god. Gotta immediately furnish it, move, etc. And way too many people buy new before they sell the old, fools.
“The mass pyschosis around the cult of real estate never ceases to amaze. ”
Exactly, you can rent the house or … rent the money to “buy it.” But it’s not really yours until it’s paid off and by then its worn out and old.
I sold my house in 2004 and live on the ocean in No. Cal as a renter for less than half of what it costs to own. Totaly out of debt and a large chunk of $$ in investments and banks.
Couldn’t have done that with owning long term. You can only do that by selling at the top!
Good Luck to All
And, on a related note, shouldn’t there be rules against such large purchases by members of the military- I mean, if they ran into trouble, wouldn’t that possibly present a security issue?
You can lose your security clearance if your credit score falls too much. I don’t know if they do a more detailed look at finances to determine if people are in trouble but it hasn’t hit their credit score yet.
The rules for people who are acutally in the military may be even stricter.
Right on DC.
A place to live is and always will be an expense. 99% of the population chooses to have a roof over there head. A house , electricity , running water have become a necessity of life, to survive in todays world without kaos and craziness.
Hence , You will never be able to ‘own a home’ . We are always Taxed to Death and ripped off by anything thought to be a necessity and used by a majority of the Population.
Housing, utilities, gasoline, food. Even water for most , and it will get worse.
Question? If everyone in America , Paid off their house tomorrow, and all the new people built their own house with cash, and WE became a Debt Free society……………
How much do You think Your ‘ Property Taxes ‘would be?
Sorry, I’m in my ‘dark mode’ today. Get that way around every election. But let’s face facts guys, we are all ‘forced suckers’ in a rigged game and the rules change daily. Till all of us ‘ little people ‘ get smart and figure out how to control the game, it’ll just get worse.
Government, by the people, for the people. It’s all like one big video game. But the problem is , We don’t have the directions and they keep changing it.
Use You Vote Wisely. Look at history and educate yourselves and think for yourselves. We’ve failed sadly the last 2 times.
” But let’s face facts guys, we are all ‘forced suckers’ in a rigged game and the rules change daily. Till all of us ‘ little people ‘ get smart and figure out how to control the game, it’ll just get worse. ”
Excellent points!!!
We need to take control of our money sytem with sound money and a monetary policy that dosn’t penalize workers and savers!
That’s why I’m voting for Ron Paul. Doesn’t matter if he has a snowballs chance or not. WE NEED CHANGE !!!
I voting for a change!
“If you read the whole article you will find these two tried to buy a 500K-plus house with no downpayment. Their “downpayment” money was to be used for renovations. Call me crazy, but what the heck are two young captains doing spending that kind of loot on a house and why does a bungalow that needs renovation cost upwards of 500K anyway? It is completely insane, all of it. ”
The $25,000 was for granite, travertine and stainless steel appliances or a master bathroom complete with giant soaking tub/jacuzzi, 20sqft walkin shower and his n’ her sinks. You know, the bare necessities.
Um, it’s no more throwing money away than the interest on the loan is throwing money away. Take your pick, throw $2k per month away renting or $3k per month in interest…
Oh, and you can have the mortgage deduction (whatever percent actually isn’t used to cover the standard deduction) but don’t forget the property taxes…
Oh, and you can have the mortgage deduction (whatever percent actually isn’t used to cover the standard deduction) but don’t forget the property taxes…
Good point! Why spend $1 to write off 5 cents for a tax break on interest.
You’re right, that deduction is totally offset by property taxes, HOA, and maintenance for a lot of people - it is overrated. As for paying interest - smart loans are short loans - taken to reach a specific tactical objective. Taking out loans for an nearly an entire lifetime is lost cause.
Yeah, a lifetime of debt. Wasn’t the American Dream to get rich, your assets working for you rather than against you. Home ownership is not the American Dream per se.
waht mr. market can’t get through higher interest rates he will get by much tighter lending standards.
“‘Our industry is suffering through a perception problem,’ he said. ‘When you pick up the newspaper or turn on the TV, you hear how bad the market is.’”
True. There are no affordability issues and ppl are not over leveraged with respect to debt. It’s never been a greater time to buy. Renters are creating this perception for their own evil purposes, and trying to redistribute wealth based on productivity and added value rather than property ownership. Stock market continuing to plummet today as we head into full blown recession, or at least the renters perception of one. Is there nothing these bastards will not do?
“Yeah, everyone we need you to just stop perceiving what you are actually reading, hearing and seeing because none of it is really true. Things are great, now is a great time to buy.”
What really bothers me about the “it’s a great time to buy” is that they never even try to give you a reason on why it is a great time.
Interest rates are being lowered because the fed is trying to save the Nation from the biggest economic crash of our lifetimes, and there are many homes available to choose from because no one is willing and/or able to pay the prices they are listed at. Not to mention foreclosures are growing at an exponential number. That’s why its a great time to buy. Better do it now before you lose your job in the recession, or you may never make it.
What really bothers me about the “it’s a great time to buy” is that they never even try to give you a reason on why it is a great time.
The veiled threat is that huge appreciation is just around the corner. Of course, we know its an empty threat.
The reason they give is that you don’t have to compete with other buyers.
If I priced my 1998 Lincoln at $35000, about what it cost new, you wouldn’t have to worry about competing with other buyers either. So its a great time to buy my car. Leave a post here if you want to respond to this incredible offer.
Seems a major RE™ propaganda blitz is underway… The San Diego UT has a frothy article out today about how it’s time to buy because prices are the same as 2004. All RE™ sources.
Right.
Also seeing RE™ agents on other boards switching from “take it off the market until the impending rebound” right past “Rent it until the impending rebound” to “Sell that sucker ASAP!!”
Tijuana-adjacent is toast, burned toast.
Several TJ cops were murdered yesterday:
http://www.eluniversal.com.mx/notas/474290.html
Sorry, its in Spanish. In one of the attacks the cop’s entire family was murdered.
Tijuana-adjacent is toast, burned toast.
Never mind the recession, right?
The loans are not there anymore.
Back to the good old days of 10-20% down.
They can try all the propaganda in the world, but the credit is gone.
See Citi bank today. 10 Billion loss. Easy junk credit won’t be back for a very long time.
The credit, rather funding for houses is still there. The credit quality is whats missing.
Sorry if duplicate, blog may have eaten the first one.
“Most real-estate experts agree that with more active listings on the market, a situation that often allows for added room to negotiate price, and mortgage rates staying at or below 6 percent, this continues to be a good time for people to buy a home.”
Can someone PLEASE let me know when a “bad time” to buy a home is. It’s a good time if prices are going up, coming down, moving sideways; interest rates are 0% or 200%.. Hmm.. Is it perhaps, ALWAYS a good time to buy a home? What about those people who bought in 05, who, by now, are probably mostly (or depending on the area) or all underwater. Guess that was, in hindsight, not a good time to buy a home?
-and-
The Evening Sun from Pennsylvania. “Higher gas prices could be to blame for a slight drop in home values throughout the southern region of York County last year, officials are saying.”
What in the heck is the matter with people? Why does everyone equate the higher gas prices with a drop in home prices. I have said this before, I drive A LOT (~30K/yr) in my chosen profession. Even with that much driving, and gas at 3 dollars a gallon, my total expense for fuel is ~$3,000-$4,000 dollars a year. Gas, for most people who should be buying a home, is just not a significant expense. You can get back the increase in gas prices by simply ditching the STBX every day.
Home prices up 100-200% in many regions over the past 5 years. Home expenses account for ~20-30% of the total cost of living for many people. And GAS (which, I would guess, accounts for 1-3% of yearly cost of living) is the problem?? Huh? This is like my previous thread, wholesale prices up 6.3%, so we need an emergency rate cut?
Are we in bizarro world?
Why such a big deal on the subject of gas prices? If the average person drives 15k/year, and the average car 22mpg, = 681 gal of gas per year. If gas dropped $1/gal tomorrow, you’d save $681 this year.
So the reverse is true, because gas is $3 rather than$2, you spend an extra $681/year.
Cut back a little on the Starbucks and lunches out, and you’ll be fine.
“Kathleen Murphy, CEO of the Maryland Bankers Association, said she does not think the state regulations would prove onerous to the point where they would restrict the availability of credit in the state.”
- The problem is the ‘ability to RePay’, not the availability of credit. If you have the correct credit profile, money is available.
- If you are Juan Sixpack and all of your budget goes for smokes, beer, car / boat payments …then you are screwed.
Actually, given the way everyone relies on the warped FICO system, the people with loads of debt seem to have a much easier time getting more versus the people that have zero.
Correct.
I can personally attest to having a FICO of 530 with 0 debt and a completely blank credit history. Right now, after holding a pair of $500 limit credit cards for a few years I’m at 750.
According to my credit reporting service I need to acquire another CC or two to raise my score.
So true. My grandfather never borrowed money in his life - paid cash for houses and cars and everything else. When he got to be aaround 90, my mmother thought he should have a credit card for emergencies - say, if he were ill and a bill had to be a paid or he needed something . She sent in the card applications and every single one of them turned him down - he had 0 credit history. His local bank (which was holding his 7 figure accounts) intervened and got a card issued.
Go figure.
I sure feel sorry for these Army “captains” Tony and Sarah Pierson…
If he thinks he’s losing $20K a year on rent plus whatever tax breaks he could get then he never bothered to find out what the mortgage payment including taxes and insurance would be on a $500K, 100% loan in a DECLINING market versus a comparable rent -buying is the way to lose the money.
USAA did you a favor, buddy. Get more REALISTIC. But you are still probably going to go try to find that $500K house to buy… it’s sad really… you think 5 years is long term… good luck with that…
The sad thing is that there is little doubt that within the Pentagon’s walls there is plenty of chatter of how much some people made in real estate, blah, blah. Captains who bought houses when they were 2nd lieutenants and now have a boat load of equity.
Incredible isn’t it. Shelter is a fixed cost. Whether you choose to go into debt to provide this for yourself is a whole different issue.
Assuming 3x income, do two captains together make about 170K??
I checked this out over the weekend. Assuming they are both in pay band 3 (highest for captains) and with about 6 years in (seems right for stopping to get degrees) they make about $9K per month ($108K per year) plus any housing allowance.
The real analyis is that even if you assume their total effective interest rate on the combined loans (80% at one rate, 20% at a less favorable one) is 7% and you completely ignore payments of principal, insurance, property taxes and upkeep and you assume the max possible benefit from a federal tax deduction, the cost of buying is still 31% higher than what he said would be the cost of renting. If you were to go with real numbers, I’m sure it would be much worse.
Don’t forget what they get “tax free” on top of their annual base taxable incomes! If they own a home, they will receive a little something called BAQ with VHA (basic allowance for quarters with variable housing allowance). This tax free money is based on local housing costs. So, for NOVA, I would expect the amount to be from $1600 to $2200 per month tax free. Now, if you rent you don’t typically get this generous of a BAQ VHA amount. Add in the $150 or so per month of BAS (basic allowance for substinence)… you get the picture, 25% non-taxable income…
Each of them gets 1955.00 per month BAH (assuming they don’t have a child, if they do, one gets $2317.00). VHA with BAQ no longer exists.
BAH does not vary whether you rent or buy. That system was changed several years ago.
You would be surprised about how many military people purchase houses with zero market research, except a conversation with a realtor.
Officers appear to do well. I know a guy (USAF major) who was laid off from United and went back to USAF. After a few years United asked him to come back. Turns out he’s better off in the USAF, so he said no thanks.
Their housing allowance is $5k per month, or $60k per year (they replied to the post in the Washington Post).
That’s $60k tax-free, or ~$90k (pre-tax) for you and me.
As someone pointed out, their housing allowance is more than many folks their age with advanced degrees make in a year (e.g. a PhD cancer-researcher coming out of a 4-year post-doc).
So, two captains making $63k each + $60k = $180k. Never mind the tax-payer subsidized special VA-loans…
base pay, food allowance and housing allowance together should be about 150K. They may also get other bonus $$ for certain jobs/language skills. If they have deployed during the year (pretty much guaranteed in the Army) then that money is tax free plus some other pays. Their take home pay is also higher than civilians b/c they aren’t taxed on their housing allowance of about 4K (combined) per month.
Why do they only have 25k? They should have been able to save more than that.
You would think so. But they’re not so good with money and finances, I guess, as Polly’s analysis above of the interest they’d pay shows (”the cost of buying is still 31% higher than what he said would be the cost of renting” ). Add on the cost of taxes, insurance, maintenance… ouch!
But hey, if we can ignore those silly numbers and just convince ourselves that buying is so much better a deal than renting, then that couple should be able to save lots of money once they move into their house, right? (Bwaaahahahahaaa!)
2000/month per person? That’s it, this is just completely out of hand- I am not paying taxes anymore. And to think, when I was an enlisted man, I was lucky to break 1000/month in total pay.
I wish they had gotten the loan and blown their $25k on renovations.
Please don’t wish that. I do my banking with USAA. So do a few other people on this blog. I would like my bank to stay solvent, thank you very much.
We do some of our finances with USAA and are happy with them. I wouldn’t like to see them go away.
Pricing has got so expensive that in many cases you can rent for less than the property taxes, HOA, maintenance costs, etc. This is particularly true of all those crazy $500 per sq foot hi rise condos. The guy is just a moron.
Maybe he has a Military Intelligence post.
I wonder if any of the dimwits like Tony and Sarah ever read our disparaging comments about them?
I hope.
[blockquote]“But the deal fell apart when their lender, USAA First Mortgage Origination, notified them that, because of that flag, USAA would no longer honor its preapproval commitment for a package of first and second mortgages covering 100 percent of the price.”
“Even though the appraisal showed a value higher than the Piersons had agreed to pay for the home, USAA told them it would approve the deal only if the couple came up with a 5 percent down payment.”
“‘Five percent of half a million dollars is $25,000,’ Tony noted.[/blockquote]
I am continually amazed by how shocking it is to buyers that they should actually spend some of their own money to acquire a house. Do people really feel so entitled to be given half a million dollars, that showing some financial wherewithal by coming up with $25,000 is beyond the pale?
The bubble was inflated with OPM - Other People’s Money. The buyers; the realtors; the mortgage brokers; the originartors; the investment banks - everyone of them was spending OPM. It’s very easy to bid up the house another $10,000, $25,000, $50,000 - Escalator Clause! - to make sure you get the house when you don’t even have to spend another nickel out of pocket to close the deal. It’s like every level of governement at budget time - they find no trouble at all spending my money taken at the point of a gun.
you have to use these tages for blockquote
You know, 5% down won’t even cover the cost of the Realtwhore they have to hire to sell the house if they find they can’t afford it. They should consider themselves lucky that the fools at the bank are willing to take that risk.
“‘What we want to do is negate all the national media in terms of the doom and gloom,’ said Cathy Werner, president of the Greater Baltimore Board of Realtors and an agent for 22 years.”
It certainly smells and hints of false advertising by the NAR and the Baltimore Board of realtors in their attempt to fool the public.
“The Greater Baltimore Board of Realtors, which brought Yun in to speak to a packed hotel conference room, said yesterday that it will team up with other local Realtor groups in the metro area on a $50,000 media campaign with that ‘great-time-to-buy’ message.”
It is not just NAR and their state organizations - on Seattle sports radio, i heard a bunch of bull advert from Remax. Wow - i wish there was a way to sue them based on this bad advise
It’s going to take a lot more than $50K to negate all the bad news on housing, they’d be better off setting up a training program for soon to be unemployed Realtors.
I went into the Death Star last night. There was a community meeting at the Tucson Association of Realtors [TM} HQ. (It was about a road widening.)
I didn’t find any propaganda or other lit to swipe. (They must have known I was coming, because all the goodies were locked up.) But I did see one office with an “It’s all the media’s fault!” story prominently displayed. The story was recently published in one of our local papers.
They’ve got it all wrong…
It’s not the media’s fault, it’s the medium average price’s fault.
I was tempted to pull out my waterproof marker and write that on the office window where this article was posted. But then I remembered that I really needed to get on my bike and go home. Yesterday was a long day, doncha know…
Who cares what these folks say or think? It’s like listening to a car salesman tell you that it’s a great time to buy a car. It’s always a great time to do so; for him, that is.
Now could be a good time to buy. Find the right property in the right location, figure the right price and make an offer. It will probably be 50% of the list as apposed to the %5 the RE agents are hoping for, but at least it’ll set some realistic comps to get the market moving again. We’re too used to accepting the sticker price as the price.
Is the stock market now beyond the reach of plunge protection?
http://www.marketwatch.com/tools/marketsummary/
LT T-bond yields: What a difference a day makes…
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TNX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=2&freq=7&startdate=&enddate=&hiddenTrue=&comp=tyx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
U.S. ECONOMY
Soothing PPI (AKA deflation)
Producer prices fall 0.1% in Dec. countering big jump in Nov.
can anyone explain the inflation numbers
6.3% but it’s way cool for the year ? WTF ?
“‘You can be assured that person is qualified to give you a loan,’ Perez said. ‘That person would be required to look after the public interest rather than just lining his own pockets.’”
Good luck with that.
Not my usual place to post, but I just got back from a weekend in northern Virginia and wanted to give my thoughts, starting with this one: I have never been to an area where transportation issues hold more sway over people’s lives, and that includes Los Angeles. The freeways are enormous concrete rivers of cars and are crowded even on Sundays, and several locals informed me that a ninety-minute commute each way to work, made possible only by taking on “slugs” and using special high-occupancy vehicle lanes, is considered very reasonable. When I watch television and see ads promoting minivans as a family gathering place and entertainment center and place to eat meals, I used to think “who the #&*%@ spends that much time in the car?” Now I know.
Next, can somebody explain the suburban-exurban townhouse phenomenon to me? I was in urban “Old Town” Alexandria, and some of the older restored townhouses looked great. On the other hand, I also saw numerous new townhouse communities far from anything and situated too close to Metro train tracks, or planted off a distant interstate exit, that just looked … terribly wrong. I stayed with (renting) friends in one of these during the weekend, and they were quite outspoken about the low quality of the construction and the cheap materials and the high price, ruefully saying that “this is what $500,000 gets you here.” The townhouses were arranged oddly, with too many windows looking down into adjacent units, and the area felt sterile with almost no visible interaction–the weather was great for January, and the whole time I didn’t see more than ten people outdoors. Perhaps voyeurism serves as a substitute.
Oddly, I did not see many visible for sale signs. And every now and then I saw a sad group of small pre-bubble houses left over from when the area was more rural and when we Americans somehow were able to make do with less than 3,000 square feet of living space. (The streets retain their country names, like “Old Ox Road,” nothwithstanding the surroundings.) I’ve written before about Fort Myers, Florida, saying that the sense of alienation I felt while driving in the bubble-construction areas of town was so bad that I thought the roads should be named after anti-depressants. The DC suburbs in northern Virginia are a close second. I could not live there.
You’re absolutely right about transportation. It is the #1 issue in NOVA, and yet, they refuse to pay more in taxes to support the increased transportation costs.
I used to live in Centreville and commute to Arlington, and that region needs a significant overhaul. They need to expand the Orange line out to Manassas, and they need to add another lane onto all the major freeways. But I would make that additional lane only for buses and 3 person HOV.
But it won’t happen. They’ll just continue to bitch and moan.
#1 Issue for sure, but the solution can’t be to raise taxes. It has to be to cut spending.
Hell, we’re going to have to cut spending anyway with reciepts on their way down from property taxes. Might as well do a bang-up job and actually cut spending enough to build needed infrastructure.
Yeah NOVA!
Very astute observations. Even more eerie are the townhouse tracts near Leesburg (a little NW of Fairfax). There are miles of farm fields and grass interrupted by installations of 1000+ townhouses all crammed together in what’s maybe 1 square mile, then another couple miles of farm fields.
I have been to Shanghai and seen housing projects in communist China. They’re newer looking and more colorful in Leesburg. Aside from that, many MANY similarities.
Many people say doctors are well paid but fools with money - multiply that problem by a million and you have the major demographic here in NOVA. Unlike most of Florida, wages here are very high, but people still live like paupers after paying $800k for a townhouse between the metro tracks and a 6 lane road (no exaggeration).
If you can telecommute, you’re golden. I’m keeping my DC area salary and moving to the middle of nowhere, where neighbors are people you know.
Snake Charmer:
I think I am renting one of those sterile places where you stayed. They truly do suck- road and train noise, poor materials and shoddy workmanship. I, too, hate it and am just happy that I am one of those who bought one in the last 2-3 years. Between January-August of last year there were always about 10-15 units for sale at a time. Since August, however, some have taken down their signs, the others have just been sitting there. 500-600K for those things- HA! 200K at most
er, did NOT buy one
You’re absolutely right about all of that. My wife and I used to rent one of those exurban Va. townhouse crackerboxes. It was built in 1971, and only 30 years later the upstairs level was so non-level that the master bathroom door wouldn’t close anymore. Historically, those houses around here have always been considered lower income and Section 8 type stuff, and SFH communities have fought tooth-and-nail to prevent townhome developments from being built nearby. It’s only been in the last five years or so that they have become ’standard’ middle-class housing, due to the insane prices around here. I predict in another five years those townhouses will again be lower-income housing. Closer in to town than where you were staying, where densities are higher and land more expensive, there are more upscale townhouses that are actually very nice. They, too, are hilariously overpriced and will suffer.
An excellent summary. It isn’t that bad here in Maryland yet when it comes to congestion, but we’re getting there. I don’t really know since I thankfully don’t have to take the major roads too and from work, but there seems to be a lot more lousy traffic out there in recent years than even a short 7 years ago when I moved down here.
The new housing developments are horrible things… sterile, soulless, filled with grossly oversized monster houses that loom over the landscape like warped cathedrals to waste and ego, and most of them are built like trash as well. Ugh!
“Next, can somebody explain the suburban-exurban townhouse phenomenon to me? “
I can’t explain it, but I too was perplexed by the odd phenomenon of townhouses without towns when I first moved to NOVA.
Nevertheless, the area does grow on you after a while.
I’m one of those “slugs”. Every day. If I have to drive, which I did last Tuesday for the HBB-DC area meet-up, and today to take my wife to Union Station for her business trip, then I pick up the slugs. But most of the time I ride. 90-minutes door to door is about right, but even then it’s subject to getting much worse. About once a month you’ll have a major accident and only one of the two HOV lanes is moving. Instant badness. The whole thing is so far over capacity as to be almost incomprehensible. Civic engineers of 30 years ago are tearing their hair out at our insanity.
I saw those soul-less row homes you write of. They truly are awful. I myself live further south… in a rented rowhouse of the second type, the 1971 construction mentioned by another, but a few years newer. It’s what we can afford.
I have one advantage in this. Compared to most people here, I’m young. I might as well emphasize that. I’m young. And despite the fact that I can’t buy anything to live in now, and rent a less than stellar dwelling for more than I’d really like to pay; despite getting married and taking on all my wife’s college debt… in ten years, Lawrence Yun and I will be looking back at very different times.
“At Vixxen Hair Salon, the main topic of conversation has always been money. But since last August, Anjanette Booker, the owner, has noticed a new focus. ‘Now it’s money and foreclosures,’ Miss Booker said.”
Show me the foreclosure!
This isn’t just a single mother phenomenon, I work with plenty of single no-kids women making decent money that got lured into the Sex and The City/Hipster Doofus City slicker Barbie dream city life-style and paid $200k for faux re-gentrified former crack houses that went for $40,000 5 years ago and will again when this all implodes.
I grew up in this neighborhood. It was always considered a very respectable working class community and our parish was one of the biggest in the city. During the 80’s it started going downhill and now it’s pretty much a war zone.
The DOW’s high was around 14k and we are hovering around 12,600.
The Nikkei’s 52 week high is 18,300 and they are currently under 14k. Could the Japanese market dip below the US’s?
Europe’s FTSE is also off more than 10% frmo their high.
From the first article:
“‘They’re looking and looking and looking and want to see 50 or 60 homes before they make their decision,’ Dulin said. ‘That’s a lot of looking.’”
You just don’t get it do you?? They still can’t find an affordable house. Looking and looking, but nothing is cheap enough to buy.
I haven’t really been looking all that much, as I already know everything here is over-priced and over-mortgaged.
‘That’s a lot of looking.’”, And thats your job Charlie, to spend hours and hours driving your clients around like in the past years before the bubble. The days of “snapping up” the 1st house you see are over and if you don’t like it you can trade in the status Gas Hog and get a real job.
i have looked at hundreds and will look at hundreds more until…wait…here it comes…COME ON DOWN….
THE PRICE IS RIGHT!!!!!!!!!!!!!!!!
‘… people aren’t buying homes,’ said Lawrence Yun.”
“He added: ‘Ten years from now, people will look back at 2008 and say, ‘Wow, that was a great time to become a homeowner.’”
No - more like, for the next ten years, people will be saying, ” Remember in 2008 just before housing crashed 50%, that Yun was a total idiot?”
Baghdad Bob - “They are lying every day. They are lying always, and mainly they are lying to their public opinion.”
Bagholder Yun - “The numbers are lying! They are lying every day mainly to the absent buyers!”
They are dropping pencils, but they aren’t pencils, they’re booby traps to kill the children.
“He added: ‘Ten years from now, people will look back at 2008 and say, ‘Wow, I was a dumbass for listening to Yun and buying that house.’”
The NAR is smart to counter the media reports. As long as buying a house is considered “the American Dream,” desire for buying houses is going to be high. “Desire” becomes equivalent to “demand” when 1) people can get the money to buy, and 2) the mass mentality is that it is a good time to buy. While the NAR can’t impact #1, it can try to impact #2, while, of course, hammering home the “American Dream” message.
In a capitalistic society where “success” is based on money and one’s house is the ultimate in conspicuous consumption, I can’t see how the general desire (as opposed to demand) for buying a house will ever go away.
2) the mass mentality is that it is a good time to buy. While the NAR can’t impact #1, it can try to impact #2.
The NAR is failing at #2 based on the numbers and a more informed consumer who do not believe their false statements.
> I can’t see how the general desire (as opposed to demand) for buying a house will ever go away.
Enough bad experience of loosing money turns people away from any market. What is enough? I don’t know, but I guess: your family, your friends, your coworkers, and no “Flip this house” on TV.
“‘excessive negative coverage’ about the nation as a whole, which saw prices fall, has given buyers a distorted picture.”
What NAR is trying to tell you is don’t read current events, don’t pay any attention to any credible information because it is false, and make sure you trust the Realtors because they serve your best interests.
Now I hear these people that work in the Real Estate Industry saying that the negative press is fueling downward homesale. If they open their eyes and actually read the information being published they would see
1. Investbanks losing their asses
2. Home builders losing their asses
3. Homeowners losing their asses
4. Mortgage lenders bankrupt and the ones still afloat are losing their asses
5. Economy is IN a recession. It seems all analysts and the government think we’re not their yet but we ARE!
6. Consumers losing their asses with debt
7. People with shaky employement will loss their asses.
This is turn is why housing is going spiraling down. This is why people are not buying houses. This is why people that bought houses in 2004, 2005, 2006, 2007 will loss their asses.
It seems to me that lost ass recovery will be the next big boom. Anyone know any related stocks I can but into?
I’ve had my eye out for the same but what else can the globalistas inflate? They’ve already destroyed houses, stocks, gold, oil…….
You mean stocks you can butt into? Was that an intentional typo?
Accidental. It’s hard to type while scratching myself and planning investing strategies at the same time!
That’s a tough market to crack. Many have been wiped out.
lmao.
FP, I think you give house buyers too much credit. The average house buyer has no clue about investment banks, homebuilders’ status, bankrupt mortgage lenders, etc…. Thus, these things, per se, are irrelevant to the average person’s decision to buy. These things become relevant once they ultimately filter down via word-of-mouth and media reports as “it’s a bad time to buy.”
Consider this: If the media was reporting only the opinions from RE bulls that say now is a great time to buy, why would people stop buying? Because the banks are tanking and seeking bailouts? Because other people are being foreclosed upon? I don’t think so. Aside from their inability to borrow the money because of stricter credit conditions, I think people would keep on buying.
“‘And if I can’t keep my house, I need to save my money so I’ll be ready to buy another house in two years,’ she said. ‘But it’s really hard to get out of this hole.’”
No, she needs to save her money so she’ll have money for a deposit on an apartment.
It was her comment in this thread that really got me. Losing one house now, yet wants to pull the trigger again as soon as she can. Some people just never learn.
“Higher gas prices could be to blame for a slight drop in home values throughout the southern region of York County last year, officials are saying.”
“‘I think the higher gas prices have slowed the migration from Maryland to York County a bit,’ said Steve Snell, executive officer of the Realtors Association of York and Adams Counties.”
A barrel of crude oil is $92, and I just paid $3.19 a gallon, and I paid $2.99 a gallon when it was $60 a barrel…
The oil companies and the government are playing games with the price of oil, knowing that if it was priced realistically, it’d be $4.50 a gallon.
It’d be like me buying 1 oz Gold Eagle coins for $700, on the basis of $909 spot price.
It’s called the “excess windfall profits” tax avoidance plan. As I recall the refiners have taken it on the chin and watched their profit margins drop from about 30% to 5% to keep gas prices from going stratospheric.
If gas gets too high the politicians jobs will be threatened. We cannot have our refiners investments go down the drain…
And if it gets priced @ true market prices, the Norton Line*, is in danger of being breeched…
* the cost of gasoline getting to and from work, vs. net take home pay for a day.
Saw this last night when watching the TV. Made me screem “BS!” when I saw it:
The commerical said “On average, the value of a home doubles every 10 years”
My first thought was “yeah, if you include the last 5 anomalous years”. But, rather than relying on a gut feeling, I decided to do a little fact checking.
So, I grabbed OFHEO data for two cities,(my data goes through Q2, 2007 — I don’t know if they’ve updated it) one bubblicious (DC), and one less so (Knoxville, TN). Then, I went back through all of the data (31 years for DC, and 21 years for Knoxville), and calculated the average 10 year gain. Then, for fun, I calculated the average yearly returns. Keep in mind that this data contains the bubble years:
DC 166%, or 5.2% a year, or 15 years to double
Kn 147%, or 3.9 % a year, or 20 years to double
Keep in mind, that the average for the US is going to be less than that of DC and closer to Knoxville.
And for fun, let’s exclude the last 5 years.
DC 143%, or 3.7% a year, or 22 years to double
Kn 143%, or 3.7 % a year, or 22 years to double
Yes, if you ignore the last 5 years, DC appreciation is nearly identical to Knoxville’s.
http://www.realtor.org/press_room/news_releases/2008/nar_campaign_relates_real_facts.html
Over the past 30 years, the median price of existing homes has increased an average of more than 6 percent every year, and home values nearly double every 10 years, according to historical data from NAR’s existing-home sales series.
if you go back 100 years it’s inflation plus less than 1% aprox
that’s with
hud
fnm,fre
interest write off
Yes, my data shows about 4% normal appreciation. That of course assumes normal times such as historical ratios between rent/income/sales price. Of course to get back to these levels and begin again at 4% using this model we need to drop 40% first.
Good work Novawatcher .It took 21 years for my last house to double and than it went up another 25% between 2004 and 2005 . You would of thought the regulators would of noticed that the increases in prices was way beyond the norm and the market was in a frenzy . You had sub-division prices doubling in 1 year in some cases in high speculation areas which were speculators selling to speculators who planned to sell to the greater fool.
. You would of thought the regulators would of noticed that the increases in prices was way beyond the norm and the market was in a frenzy
oh they noticed. Lots of greedy people considered it a ’shooting fish in a barrel’ situation and lots of money moved around. Of course, some forgot they were the shooters and jumped into the barrel [drank the Kool-Aide]
Someone correct my math. For the NVa case, in 31 years the houses increased 166%. So that means it went up by a multiple of 2.66.
x^31 = 2.66
31*log(x) = log(2.66)
log(x) = log(2.66) / 31
x = 10^(log(2.66) / 31) = 1.032 (or 3.2% gain per year)
I don’t see where you get 5.2%. At 5.2% the house would be (1.052)^31 = 4.8 or an increase of 380%.
BTW, I must be misunderstanding the gains or something. Houses in DC went up at least 166% just during this bubble.
You’re misunderstanding. NAR said that during an average 10-year period, prices increased 200%. So, I went and found the average increase over 10 year periods.
For example, starting in 1980 and ending in 2007, I calculated for each year the 10 year increase (e.g. 1980 prices/ 1970 prices), and then took the average.
So the average price was 166% of what it was 10 years earlier (I shouldn’t say ‘gain’, as that would imply 266%). For example a house bought for 200k would be worth 332k 10 years later. Some years it what less than 100% (e.g if prices were lower in 2000 than they were in 1990), some were much more (e.g. the gain from 1997 to 2007).
166% ^(1/10) = 1.052, or 5.2% average gain per year.
1.052^15 = a little over 2 (actually, I think it should be 14 years).
Still, off by a factor of 40% (14 vs. 10 years), and the data that was used to derive that included the bubble years.
thanks
The bottom line is that Yun lives in a bubble.
Ah, it’s nice to see that Maryland, land of the “Silent Bubble” is getting some coverage. Why, yes, in Maryland it is normal for 3/1 Post War houses to go from $100,000 to $250,000+ in a few years. Yes, that is perfectly normal. $300,000+ condos outside the city are normal. $600,000 starter castles are also normal. Sure, the median household income is only around $60,000, but “prices don’t matter here” because “everyone is moving here!” Right - aside from illegals, I don’t see too many people yearning to move to the slums of B’more or the overtaxed and crowded Old Line State. (Old Line State as in “you get the same old line no matter what questions you ask of the government.”)
Martin O’Money will find some way to drag this downturn out and make it as hard as possible for prices to correct and for honest workers to save up and buy a place, while all the while showering free money on stupid people who just had to have their 4,000 square foot McMansion so they could be different like everyone else. I like how he talks about how “difficult” the times are even as he jacks taxes up AND now starts talking about INCREASING our utility prices after campaigning on a BS promise to LOWER our utility rates. Nice guy! Argh!
$300,000+ condos outside the city are normal.
How about a 1400 sqft condo in… Frederick, Maryland. $645k for 2bed, 2 bath. In Frederick! Realtor.com shows estimated payment of $3251/month with a 20% down payment. Aiiiiieeee!!! Have they gone mad?
“Denie Dulin, an agent in Baltimore, hopes buyers will stop waiting for that doom and gloom to show up in prices.”
For buyers, lower prices represent optimism, not doom and gloom. Only realtors and flippers are gloomy.
“Buyers, get going. I need my commission now!” said Dulin.
These trends converge at Vixxen Hair Salon, where on a recent afternoon the chairs were empty, as they have often been since summer, when many adjustable-rate mortgages in the neighborhood reset — and many women began cutting back on beauty care to pay for them.
Well this isn’t going to help their situation. Now they’ll be single, homeless and have split ends. That’s no way to attract the opposite sex.
As her house price gets a haircut, she has to forgo her own haircut. There is aprice to pay for the “American Dream”.
Here are some specifics I spotted in O’Malley’s dimwit proposal (besides the one about lending late payers money at 0% interest):
“Reform the foreclosure process by:
— Requiring a lender to wait 90 days after default before filing the foreclosure action;
— Sending a uniform Notice of Intent to Foreclose to the homeowner 45 days prior to filing an action; and
— Requiring personal service to notify a homeowner of impending foreclosure and require that a sale may not occur for 45 days after service.
Well ain’t that great: Deadbeats who don’t pay their mortgage get months and months extra to live hassle-free in the house. And then maybe even an indefinite time extension in there if they can just avoid getting served the notice!
And in a few years, there will be the howls (echos from ten years ago) about whole markets being “red-lined” — but this time red-lined legitimately because the bank knows how much money it can lose in those areas where it can’t even foreclose on the loan collateral.
That’s Maryland, where the deadbeats are supported by the system, and the honest folks are pushed out of the state or into poverty by the absurd cost of living.