Buyers Want Everything
The Baltimore Sun reports from Maryland. “Half the communities in the Baltimore metro area saw average home sale prices decline last year as the housing slump deepened. The most expensive counties - Howard, Anne Arundel and Carroll, had the biggest share of ZIP codes where average sale prices fell last year.”
“The harborfront Canton neighborhood, where real estate investors and homebuyers alike bid up prices during the housing boom, is awash with For Sale signs and declining values. About 250 homes are on the market there. That includes three houses in a row on one block, all with asking prices below what the owners paid.”
“‘There’s so much competition,’ said J.D. DiGirolamo, a real estate agent in Canton who’s handling one of the three rowhouses - a foreclosure taken back by the lender. ‘I think a lot of people got in over their head.’”
“A growing number of lenders are labeling certain local ZIP codes, whole counties and even all of the Baltimore metro area as ’soft’ or ‘declining’ and requiring larger down payments for all types of loans.”
“‘Anything over $200,000 is going to sit longer,’ said Arthur Jordan, a real estate investor trying to sell a rehabbed house in the city’s Waverly neighborhood for $220,000. That’s down $30,000 from his original asking price, but the only offers he has gotten - all for much less - were from other investors.”
“‘I know investors who only sold one house last year. Some didn’t sell any,’ said Jordan, whose house has been on the market for five months and is competing with others on the block. ‘I know guys getting houses foreclosed on.’”
“Guy Cecala, publisher of Inside Mortgage Finance in Bethesda, suspects lenders will continue to pull back. It’s the logical business move ‘when they don’t really have a good idea of what the worth of a property is going to be down the road,’ he said.”
“Case in point: The trio of next-door Canton homes for sale on Foster Avenue, with their brick facades and high-end finishes.”
“One, bought for nearly $353,000 in 2005, is on the market for $349,900. Another has an asking price of about $28,000 less than its $262,500 purchase price in 2005. The third was foreclosed on by the lender last year - and DiGirolamo, the agent, figures the asking price will be about $100,000 less than its $430,000 sale price at the end of 2006.”
“‘I don’t know how it appraised for $430,000,’ he said. ‘I really don’t.’”
The Hudson Reporter from New Jersey. “Further proof that the national economic situation is worsening was unearthed Feb. 1, when the U.S. Department of Labor recorded 17,000 jobs lost nationwide in the month of January.”
“According to one local Union City resident, Oscar Perez, ‘We’re already in a recession, and it’s only going to get worse.’”
“Sergio Portilla of West New York is the proprietor of his own bus under Community Line Service. Driving a daily bus route from Journal Square in Jersey City to Manhattan, he’s noticed a substantial decrease in volume. He blames the plunge on the increased numbers of people being fired from their jobs in New York.”
“‘My customer [base] was reduced by almost 50 percent,’ he said. He added, ‘I used to work 14 hours, and now I have to work 18 hours to make less than what I was making before.’”
“Alma Campos together with her husband, Jesus Campos, have owned Biggies Mexican Restaurant on Bergenline Avenue for eight years. ‘We’ve always had loyal customers, but we’ve seen at least a 35-percent decrease in numbers,’ said Alma on the local effects of the crumbling economy.”
“With mortgage payments and private tuition costs for their children, Alma expressed her concerns regarding a possible tax credit. ‘I don’t know how it’s going to help us, and if it does, it won’t be much,’ she said.”
From Newsday in New York. “Locally and nationally, the economic picture has darkened considerably in the last month, with perhaps worse news about employment and home prices still to come.”
“In a way, experts say, whether the economy is heading into recession or not doesn’t matter because many businesses and consumers are already thinking in recessionary terms and making choices based on that thinking.”
“Kings Park residents Craig and Tammy Mehlsack are seeing that firsthand. As owners of Top of the World Limo, the Mehlsacks know when everyone else is cutting back — then they have to do the same.”
“The first signs, said Craig Mehlsack, came in November and December, when far fewer area customers took the usual holiday trips into Manhattan. So far this year, business is down 10 percent compared with a year ago.”
“Indeed, people are pulling back on everything from East End wine tours to trips to the airport, Mehlsack said.”
“‘Our business is based on the economy; it’s a luxury business,’ he added. ‘When somebody makes money, they’re going to say, ‘Maybe we’ll call Craig and do a wine tour.’ Now, it’s not happening.’”
“So, the couple is pulling back, too. They’re not buying new cars to add to their fleet and they’re cutting back on personal expenses, like eating out.”
“At Farmingdale-based Juma Technology Corp., managers are working to improve cash flow and keep credit lines open — but they’re also debating whether to continue with their growth plans or hold back.”
“‘It’s been a smoke and mirrors economy for four years,’ said Joseph Fuccillo, Juma’s president and chief technology officer. ‘Think about how much of the growth has been fueled by cheap money. You take the cheap money away and what happens?’”
“The biggest problems in the economy continue to revolve around real estate. Take the path of Century 21 Benjamin Realty in Syosset. Since the housing boom began in the late 1990s, Benjamin Realty grew from two offices to six and became a Century 21 brand.”
“Now, the company is back to two offices, both in Queens, as broker-owner Ed Gitlin sold his Long Island operation to Coldwell Banker last week. Business, Gitlin noted earlier this year, had fallen off by 20 percent and a staff reduction and office consolidation didn’t do the trick.”
“Some experts note that home prices on Long Island, which since last year have fallen by 5 percent in Nassau County and 7 percent in Suffolk, could drop by another 10 to 20 percent, or even more.”
“That’s potentially problematic for the overall economy, because in the past, housing has served as a catalyst for economic rebounds. ‘We’ve so paralyzed the housing market that we’ve taken it out of play,’ said economist James Parrott. ‘It’s a real question as to how the recovery gets under way.’”
“While the direction of the economy may lack clarity, the housing market, locally and nationally, is in decline. According to some experts’ predictions, home prices may continue to fall for another two years.”
“‘We are way early in the curve in terms of the devastation to housing,’ said Manhattan appraiser Jonathan Miller. ‘I think we will see an acceleration of price declines on Long Island.’”
“Martin Cantor, director of Dowling College’s Long Island Economic and Social Policy Institute, suggests home prices on Long Island, which have fallen by 5 percent in Nassau County and 7 percent in Suffolk over the past year, could drop another 15 percent before prices stabilize.”
“Some suggest price declines on the Island are worse than the data show. In many communities, prices are 15 percent off where they were a year ago, according to broke Bethany Marten of Baldwin.”
“As of December, Nassau’s median home price of $447,500 was 5.6 times the median household income in the county, while Suffolk’s $370,000 median price was 5.2 times income, according to Irwin Kellner, chief economist with North Fork Bank.”
“To get to a point where prices are four times incomes, median home prices would have to fall 24 percent in Suffolk and 29 percent in Nassau. ‘By this measure, housing prices have a ways to go before people can step up and buy them,’ Kellner said.”
“There’s additional evidence that price drops are far from over on the Island. The number of contracts signed in the first five weeks of the year is 30 percent below last year, said Century 21 Laffey Associates CEO Emmett Laffey of Greenvale.”
“‘The buyer pool has dropped dramatically,’ Laffey said.”
The Staten Island Advance from New York. “At one time, the Westerleigh colonial might have listed for a half million dollars even before the bidding wars began. Today, the home on Clinton B. Fiske Avenue, a block with plenty of curb appeal in a desirable North Shore neighborhood, is selling for $420,000 and the owners are willing to include chandeliers and some furniture as part of the sale.”
“‘If they want to make a deal, they know they will have to throw in a little more,’ said Claire Bisignano Chesnoff, a Realtor who is listing the house.”
“One of Ken Licata’s sellers in Sunnyside is offering all the new Bosch appliances with the home. Another offered a Kia car with the house, but the buyer balked. ‘Buyers want everything,’ said Licata, a longtime Realtor. ‘If you throw in a car, they want to know what kind.’”
“Mostly, though, homes that are priced right sell. Homes that are not, don’t, experts like Licata note. He levels with homeowners about the value of their home in today’s changed market. If they disagree and insist on overpricing, he will turn down a listing.”
“Buyers, meanwhile, should be looking closely at low interest rates, added Licata. ‘I don’t think people are really getting it that the interest rates are so good. The $700,000 property they could buy last year — now they can buy an $800,000 property for the same price at the six-and-a-quarter rate.’”
“ERA Master Realtors in Oakwood is listing a colonial in Annadale where the price dropped from $639,000 to $589,000 and the owner is throwing in a snow blower and a new washer and dryer.”
“The number of one-family, detached homes sold dropped by about 14 percent, from 1,168 in 2006 to 1,002 last year, and most real estate experts say there has been no shortage of price slashing.”
“Builder R. Randy Lee said he dropped the price on his new upscale homes at Opal Ridge in Pleasant Plains by about $25,000. He also added granite countertops, radiant heat and special trim packages, amenities once considered upgrades. ‘We are throwing in everything,’ said Lee.”
Don’t believe any governmental statistical numbers, anymore.
“Sergio Portilla of West New York is the proprietor of his own bus under Community Line Service. Driving a daily bus route from Journal Square in Jersey City to Manhattan, he’s noticed a substantial decrease in volume. He blames the plunge on the increased numbers of people being fired from their jobs in New York.”
Believe observant eyes, including your own.
It is pretty well known that anyone who works inside the Beltway is completely disconnected from reality anyhow.
It’s funny that I’m still seeing “last one at this price” in home builder ads… don’t they realize that most people now only could read the opposite meaning into that, making the statement completely idiotic?
“‘It’s been a smoke and mirrors economy for four years,’ said Joseph Fuccillo, Juma’s president and chief technology officer.
———————————————-
People are finally waking up and speaking the truth….. amazing.
Smoke & mirrors, indeed! It was easy money fueling an once-in a lifetime bubble in the housing market. We don’t fully know how many housing-dependent small businesses are going bust these days, we only hear about the big banks that are in trouble. It is going to take a good while before this ship sinks to the bottom.
This past weekend I saw a couple of small biz cracks in the armor. One Cold Stone Creamery franchise, shuttered. Space now available for lease. Next door, in the same bubblemania shopping strip (the same one that evicted its mom-and-pop tenants a few years ago in favor of glitzy national chains) a shop that outfits the outdoors crowd was advertising a 40% off sale. That’s unheard of: merchandise flies off the shelves of that place, and the most they ever discounted was 25%, under extreme duress.
But this was the scary one -
went to get my nails done in a salon that is normally packed to the rafters. They had to expand and add new stations a few years ago. I was there about one half hour, and in that span of time, only one of the twelve pedicure chairs was occupied. In total, the place had about 30% the clientele it usually had on a Saturday afternoon. Formerly I’d been under the impression that women will go into debt to keep their hair and nails groomed, but it looks like that is not the case.
blech…. wife and I had the misfortune of ingesting the putridness served by a coldstone creamery in Rehoboth Beach, Del. Let me attest to the fact that whatever that $hit is, it’s not ice cream. The goo had the consistency of SuperBubble gum and stayed with me for a week. Never will I go near that place again.
that’s the PCI !
pedicure cutical index
do they dis you in Korean
No this particular place is Vietnamese, and the owner has an English only policy. The clientele represented every socioeconomic class when the salon was in its glory days. The other day I saw only those who appeared to be in the money pool. The gals from the hood were absent.
Very interesting, Philly Gal.
Here in MD, the local Value(less) City is going under. Considering that they sell low-end stuff, it makes you wonder… They are also working on a nearby, redundant mall that’ll be finished just in time to go out of business at the rate things are going.
They’re closing 3 Value Cities here in NJ. Not sure if they’re in BK or not, but the chain is having problems…..
Coldstone folded in Loveland last year. It was a nice gimmick, but eventually people realized that it was horridly overpriced.
What is that $hit they call ice cream? WTF is wrong with it?
Yeah, I had that sickeningly sweet slimey goo, once. Found this interesting website which details the ingredients:
http://web.mit.edu/johnston/www/things-i-hate/cold-stone-creamery.html
For the Bakersfield residents on this site, Dewars is an excellent independent ice cream parlor downtown. Only place you can get ice cream and stare at a moosehead on the wall.
It’s worth pulling off the freeway for.
Those getting their nails done will soon join the wash your own dog group.
The thought of someone else doing my nails makes me feel very incapable and lazy and wasteful of time and money.
“As of December, Nassau’s median home price of $447,500 was 5.6 times the median household income in the county, while Suffolk’s $370,000 median price was 5.2 times income, according to Irwin Kellner, chief economist with North Fork Bank.”
“To get to a point where prices are four times incomes, median home prices would have to fall 24 percent in Suffolk and 29 percent in Nassau. ‘By this measure, housing prices have a ways to go before people can step up and buy them,’ Kellner said.”
Don’t you hate it when economists speak openly in terms that anyone with a high school diploma can understand?
I am naturally curious what it would take for California home prices to get back to 4 times income `where people can step up and buy them’?
And 4x income is a stretch, too! “Back in my day” it as 3.5 (with a 20% down). I suppose this works out for a total purchase price of 4x, more or less.
Have we abandoned the time-tested concept of the 20% downpayment? No matter what banks or the Mae sisters do, the fact is that PMI is still required with anything less.
It should be 2.5x. The 4x is still way too bubbly.
4x is pretty much the norm in high cost areas. Normal rent multipliers in high cost areas is around 150-175. National multipliers don’t apply to very high cost and very low cost areas. For example, you find more rental SFDs in poorer parts of the country such as rural Georgia and North Carolina. Such properties will sell for 100X monthly rent.
tuxedo, I have posted this before, but I’ll say it again. In 1994 I bought a Glendale CA condo for less than 120x likely monthly rent. (Maybe harder if it were SFH.)
That would put me at about 1.2 million. I could never get myself to spend my than 500k. Im an odd duck though. My sisters family grosses about $100k and they are really struggling with a $370k mortgage once she had kids.
Query: I thought the median home was still about $220k (based on the trustworth NAR numbers), although in all the high cost areas I lived in you cant get much for under $500k. I also thought the average household income was about 55k. This would mean that we are not bubbly if the 4x was correct figure. I might have my numbers wrong or they may be so skewed between high and low cost areas they dont mean anything. Any corrections would be appreciated so I can understand better. It might be the average income number as I might accidently be using the large metro number (i.e., 55k might not be national average, but instead limited to certain metro areas).
Did you buy at a market trough? Multipliers for single units, as well as cap rates for multiple unit buildings, change with the market. High cap rates during busts, low cap rates during booms; often irrespective of prevailing interest rates. The norm, is somewhere in-between. When I rented a SFD after a bust in a high-cost area the multiplier was was about 135. At the peak of the boom the multiplier was close to 300.
I am sure that everyone has grown tiered of hearing me say this, but, every now and then, when the topic comes up, I just have to put my 2 cents in on this one.
If we go back to 20% down as the only way to buy a home, it will spell total Armageddon in the housing market. In the bubbliest areas, prices could, and probably would fall 40% overnight from their current levels. In the less bubbly areas, 20+%; again, overnight.
Think about it, how many people do you know (present company excluded) who even have 40K in the bank (totally liquid) to put down on a 200K home? Even if you let people cash out their 401Ks to buy; many first time buyers are just totally unable to come up with this much cash. When you have a negative savings rate, there is just very little demand for any product when you must SAVE this amount of money before buying.
And think, as the prices continue to fall, more and more people get locked out; as the price of their existing home falls, the ability to move “up” into a larger/more expensive home also falls (as they all plan to use their equity to make the down payment).
Trust me, that will truly be the endgame for housing; and, if it happens, I will be in line to buy 2-3 months afterwards; while the mushroom cloud is still hanging overhead. The number of people competing with me for homes at that point will be minuscule, and the prices will immediately bottom out (for those who need to sell anyway).
I am not a PMI expert, but isnt PMI required below 20% equity. Since some areas have already fallen this much, arent these insurers taking a hit, which would result in them increasing rates to stay afloat. Thus, in effect, we should be seeing crazy PMI rates or 100% cash collateralization which would have the same result. Again I dont know much about the industry, but just a thought. Anyone seeing changes in the PMI industry?
I wouldn’t be surprised to see PMI not accept piggyback loans to escape the PMI.
Now when that happens, you’ll see some SHTF.
Can’t the lenders start charging PMI again if equity falls below 20%? In fact, shouldn’t PMI charges be added on if someone takes a home equity loan?
Having never paid PMI (to me, it was just “cash in the trash”) I’m not sure. But i guess that 95% of mortgages written in the past few years have it. And most FBs have no idea they’re paying it. It’s lumped in with “insurance” or “taxes”
Same here. I would never put less than 25% down, so I dont know much about it. My sister said that she got out of paying PMI by sending in an appraisal a few months later that showed how much the house appreciated. That was in 2006. I wonder if the same is true in reverse (ie, if banks can send you a letter that due to values dropping in the area, you need to start paying PMI again or you will be in default)? I dont know if its a once and for all release, or they go to mark to market.
Can’t the lenders start charging PMI again if equity falls below 20%?
Yes, It just happened to a friend who was in denial that the price of his home was dropping. He is a firm believer now that he has to pay PMI.
Forget $40K, people don’t have $5K for emergencies.
20% down will be a hard crash but I expect it to reappear late in the cycle once banks get wary (which they will.)
I don’t think 95% of mortgages in the last few years are paying PMI. That’s one of the things about piggyback loans - it’s a way of avoiding PMI. Instead of the insurance, you pay a premium for the second lien loan. To some degree it made sense because PMI was not deductible, and interest on a second was. AFAIK, starting this year PMI is going to be tax-deductible.
My wife’s colleague was saying that she kept $3000 for emrgencies. Quite impessive, my wife thought until it turned out that 3K was the available balance on the colleague’s credit card, not real cash!
Yeah, the ol’ credit-is-cash routine except when the card gets cancelled which it does in a credit crunch.
Ooopsadaisy!
So in the old days - didn’t the guys with VA loans get in without a down? Who else? Did FHA allow that too?
VA loans can be up to 100% but you pay a funding fee on top of your loan amount instead of PMI. Hubby and I used it in 98. Back then they were very cautious about lending that money. They would only approve us for 2.5x his income (Navy) because I had only been in my job for 1 month (new college grad) even though my salary was higher than my husbands. Their strict lending standards really helped our financial situation. We learned to live on one salary (his) while putting mine in savings. Eventually when we had kids it was an easy transition for me to be a stay at home mom. I don’t think people who got caught with these huge mortgages realize how long their lives are going to be screwed up.
If we go back to 20% down as the only way to buy a home, it will spell total Armageddon in the housing market. In the bubbliest areas, prices could, and probably would fall 40% overnight from their current levels. In the less bubbly areas, 20+%; again, overnight.
This is exactly what needs to happen!
And I’m not some “sour grapes bitter-renter”. I own a home, 100% paid off, in Sunnyvale, CA and land in Florida.
I think returning the R-E to traditional pricing is what’s best for America, and the sooner the better. If I were a “debt person” who believes house-value==net worth, I’d be worried about “losing” hundreds of thousands of dollars.
But I don’t care, because I’m smart enough not to think that way. If my house drops 50% in “value”, so will any future home I’d want to move to, so it will all work out.
That will happen. Oh… they’ll keep FHA around, but Fannie and Freddie aren’t having presale over-subscriptions to their bond auctions anymore. Buyers of the bonds aren’t trusting the insurance companies like they used to. So… that translates into higher down payments.
It won’t stop at 20%. I still predict 25% down will be the norm in the darkest days of this market.
And why don’t people have 20% down? The demographics show that most of the US is older and thus should have it saved.
Got popcorn?
Neil
Except that all the banks instantly go bankrupt and the FDIC doesn’t have the cash. Freddie and Fannie would be toast.
Look, I think we are going to get there. There will be a time when FDIC is tapped and Freddie and Fannie are in default.
At that point, government will be forced to make a decision…. print the money to make investor/depositors whole = hyperstagflation. Don’t just print the money = global depresion.
I think there is only one way to avoid this. Nationalize a significant portion of consumer debt trough a $2 trillion cash hand-out, and then disassemble the debt machine to ensure we don’t get back into this position again.
And why don’t people have 20% down? The demographics show that most of the US is older and thus should have it saved.
They don’t and that is a major problem. I believe less than 30% have $10,000 or more.
Worse. If you look at the Federal Reserve’s Survey of Consumer Finances, they explicity exclude the house from the calculation of “net wealth”.
Why? Toss it in, and everything would go negative. People wouldn’t have a pot to p*ss in.
However, any accountant would tell you, that’s not how you do a balance sheet.
I remember when I was starting out and we saved our 20% downpayment! (And this was after maxing out in 401K plans. We weren’t stupid, so we never considered dumping the 401K plan to get a house.)
It was a fun challenge. It took about 4 years. We just lived frugally with our goal in mind until we saved until we had enough for a 20% downpayment + 6 months housepayment cushion.
Of course, we still live frugally, and save a lot (for which our government punishes us)
And because that’s what EVERYONE else did (though it was possible to get a 10% down mortgage then, too), it was possible to do.
“Most of the US is older and should have it saved.”
Yeah, most of the US is older and DOES have it saved, in the form of, most of the older US owns a house, condo, or trailer that is basically paid for. Which doesn’t help the wannabe sellers at all.
I inquired the other day about the amount of people that have $6,500 for a down payment on a house, and that wasn’t going anywhere, imagine having to come up with 40 Grandidos?
Many young buyers will borrow from their parents(in-laws). That was always true even before the bubble. The buyers with no possibility of a down payment were SOL.
BUT I’m not sure if the parents have money today (outside of retirement savings). I recall my buddies’ parents did an HELOC for their down payment before the bubble. You can’t do that anymore with a depreciating asset.
I have enough for a huge down in Silicon Valley but I’m not stupid enough to buy a ugly fat pig at $800K.
“Many young buyers will borrow from their parents(in-laws).”
Perhaps, but don’t you think that many of the parents that are in the best position (and the ones most likely) to help their kids - have already done so? And that their assistance went to pay for bubble priced dwellings?
If many of said parents are entering (or close to) a period of “fixed income” living, how will they be able to scrape enough together to give the kids another go around five or ten years from now?
“have enough for a huge down but not stupid enough to buy fat pig for $800K” — FP post above. (I don’t suppose FP stands for fat pig!!)
This post describes a lot of us, I think. Sitting with a lot of cash or cash-equivalents and wondering when, if ever, we can convert it into “settled” housing. Having to invent safe (?) investment vehicles to preserve our $$$ against the ravages of inflation and taxation, given that tax-free income is not available at the real inflation rate or higher. Yawn, the guv is going to make us wait a long, long time.
They actually used to check for gifts, too! If you bought a house in the mid to late 80s, the bank would look at your bank statements for the past year or so to make sure the money didn’t arrive in one big lump a month before you wanted to purchase, without some explanation (like you sold stock and could document that)
But this is exactly what we need: people NEED to save and NEED to have skin the game. This absurdity of being able to get loans for the down payment and such needs to end, and I really don’t care how many would be home “owners” get run over in the process. I am sick of competing with halfwits who don’t have to save or conserve and can yet get huge loans for any amount they desire. This nonsense needs to end if our nation is to ever get back on stable economic footing.
Just to finish my thought: There are two ways to run an economy: with savings and proper, prudent investment for the future, OR by blowing endless Bubbles that accomplish nothing, save for making the early schemers and fee-takers rich. I am sick of us consistently chosing the Bubble path, and it doesn’t matter how many home “owners” flame out in a few years as their toxic loans guaranteed if I still can’t afford a house of my own.
Srsly! I feel you, Pondering the Mess. I mean, it’s nice and all, to be able to walk around all day looking at big empty castles and parked land yachts and going, “Ha, ha!” Very diverting. But it would be even nicer if to be in a snug little nest somewhere looking out a paid-for window at the blizzard of bubble schrapnel. Plain old Freude beats Schadenfreude any day.
‘I am sure that everyone has grown tired of hearing me say this… but, every now and then, when the topic comes up, I just have to put my 2 cents in on this one.
If we go back to 20% down as the only way to buy a home, it will spell total Armageddon in the housing market. In the bubbliest areas, prices could, and probably would fall 40% overnight from their current levels. In the less bubbly areas, 20+%; again, overnight.
Don’t be silly, man. I could never get tired of hearing you say it. I was even thinking of having your words embroidered on a pretty sampler, except it’d be kind of big.
LOL!!!
4x income on purchase price is ok with current interest rates — but 4x income for loan amount is really a stretch. And, of course, other debt, outsize HOA, high property taxes or a non-fixed loan make it a less sanquine proposition.
Even though it is a stretch, it would take a while to get to 4X levels as a lot of people are still looking at houses as investment vehicles and not homes. Anytime they become affordable and if ‘easy’ money is there, there will be a run up in prices because of common people turned into investors and all Realtwhores touting for it to make a sale for their commission.
There’s another issue to consider. Since I wasn’t buying any real-estate during the bubble, it was something I didn’t give much thought.
People who don’t believe in carrying too much debt, had cash for 20% down, and made $350K/year may have been avoiding purchase of a home during the bubble.
You’d have to be nuts to put all that money into a home just to live between some single mom on SSDI and a strawberry picker, both wih 110% teaser-rate i/o financing.
My guess is people with appropriate resources bought into exsiting, established neighborhoods, and avoided brand-new developments. (The fact that there was slap-dash construction and crazy HOAs probably discouraged buyers with their own, actual, money too!)
If my guess is true, then all these new developments in Sacramento, Manteca, Inland Empire, Las Vegas, Florida, will turn into boarded-up slums sooner than we all imagined!
“You’d have to be nuts to put all that money into a home just to live between some single mom on SSDI and a strawberry picker, both wih 110% teaser-rate i/o financing.”
Boy, if that’s not the truth! If ever there was a fiscal plan to concentrate a dysfuctional population, “easy money” is it. Hey, maybe it’s a conspiracy…
Great idea! We just put barbed wire on top of the brick-mold-concrete walls on these new gated communities in Sacramento, and turn them into prisons!
to live between some single mom on SSDI
You have a problem with people who are disabled?
Last night I was reading the comments from that article in Newsday.
Boy, there were some bitter people!!!
I also thought 4x income was a bit of a stretch. Yjey also commented that the national average was currently something like 3.6x income. Somehow, I doubt that.
Sample comment:
“They over exaggerate the situation and perpetuate any fears people may have. They certainly aren’t helping the housing market with all their negativity but I’m sure they like collecting money on the real estate ads. Newsday is trash. I have such a hard time reading some of these articles because they are so poorly written.”
or how bout this:
“Please, continue your fear-mongering! You should be proud of the way you are helping our country. There certainly is no bias in your reporting. ”
LOL, I just love this stuff!!!!
These SAME people LOVED Newsday when the front cover was a picture of a shack in Nassau County and the number “$500,000″ writen below it…losers!!! (Wish I could find a link…)
I remember that headline!! It was on the front page, I think in 2005. If I’m not mistaken that was the catalyst that made me google “housing bubble” and found the good ole HBB.
oh boy i have got to go back and check the comments
danni saw the listing you posted yesterday in the bucket
10k plus for seaford lol
this will end badly
danni i liked this one
Scott a Starving Realtor
Ronkonkoma, NY Reply »
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I had been in Real estate for the last 12 years and the last 2 years have been horrible with buyers and seller so unrealistic making it hard to make a living year. This year our office typically holds 90-100 licensed agents we are down to about 40-50 with only 15 people actually working at it and struggling, about 3 people are making over 50,000 1 person who does foreclosure work only is over 100,000. I come to work seven days a week to a typical a long day because I know that either business will turn or enough people will get out of the business and I will pick up the business. I have made some serious money prior years in Real estate my best year was 750,000 my average year was 250,000 last year was 30,000 talk about a life style change!! I went from four new cars and a large home to a 2000 SUV and a one bedroom apartment cottage. But life goes on, I like what I do and have faith that it will come around again and when it does I will plan a little different for that rainy day.
Best wishes to you all and just have faith as long as you have you health and a sense of humor life will just run its course.
Scott a realtor with the right attitude!
LOL, A lot of posters ripped him a new head.
Dude made a million bucks in two years and spent it all?!?!?! On what!??!
And I thought I was living large being able to drop $300 for dinners out every week…
Sounds like he “earned” millions of dollars in his dozen year stint as a seller of used buildings. So what does he have to show for it now? An 8 year old truck and a one bedroom apt cottage?
What was his plan for retirement? 15% RE appreciation every year into eternity? Great plan.
I hope these people never again are on the receiving end of loan proceeds. Instead, what they deserve is the dish washing retirement plan.
These people are too dense to realize just how lucky they were during the fat times. That, and being financially and numerically illiterate makes for a Scott who pisses it all away. What he probably omitted to mention is that he probably bought dozens of “investment” properties with his income, and now the properties are foreclosed and his investment is gone. Funny how those highly leveraged investments can go up in smoke on a moments notice. Of course, “everyone” in the office was doing it, so how could it fail? He probably figured that he would have a 8 figure net worth in a few years.
He made over $750k in one year, and made an avg of 250k a year, with little or no education, and now is struggling? I would be ready set for retirement and living debt free with those numbers. If his own house (or apt) is not in order, why should anyone use his services?
Despite a surprising whiff of objectivity, Scott still has serious denial issues:
`I [] have faith that it will come around again’
Its like a day trader’s faith that JSDU will go back to 200, you can check your stock quote optimistically every morning but irrational exuberance does not come back to the same area — it builds a new completely different pyramid elsewhere, leaving Scott to work 7 days a week, forever hoping for the housing boom’s return. To think, earning $750k/year could have been a cruel twist of fate!
Q: What do you call a day trade gone bad?
A: Investment
What a dumb-shmuck! He got rich ripping people off in the great scam ever told, and he didn’t save a dime of it! He deserves whatever fate he gets! Any way to make sure he doesn’t breed and spread his stupidity around the gene pool?
Somewhere over the rainbow, way up high…
I just looked at some inventory that Southern Crafted homes had on the market in Land O Lakes, Florida (Pasco County. The prices were stiil more than the four times incomes for the Tampa Bay area and unaffordable.
The sales person informed me that Southern Crafted Homes was not impacted like the other builders such as Lennar, etc. I just laughed as I drove by house after house of inventory and many empty lots. I am surprised this builder is still in denial, but they claimed they were selling the properties. I will be searching court records to determine if they are selling, which I doubt.
I was up in Pasco last Friday, driving down SR 52 from the Suncoast Parkway to Hudson, and came to the conclusion that the entire area is one big failed real estate development. Remarkably, amidst the utterly dehumanizing sprawl I still saw a couple of fields with cattle grazing.
If you guys want some real awakenings, then keep heading north up US41 to Brooksville, or on north.
Go through Pasco up the the Hernando County line and see all the developments in the middle of nowhere. Like the ones in South Hillsborough, Ruskin and Riverview, these houses are all 2-story “mcmansions” built so closely together that when you neighbor finishes showering, you can had him/her a towel. Priceless.
“Builder R. Randy Lee said he dropped the price on his new upscale homes at Opal Ridge in Pleasant Plains by about $25,000. He also added granite countertops, radiant heat and special trim packages, amenities once considered upgrades. ‘We are throwing in everything,’ said Lee.”
Is Lee still in business. He was the head of the Staten Island Builders in the 1980s boom, when they pioneered the 13-foot-wide rowhouse using a zoning loophole that claimed that it was actually a 26-foot wide condo with the units side-by-side instead of up and down.
Perhaps that bubble was bigger here. They didn’t need to put granite countertops in to sell them in 1986-87, before they became virtually worthless and were plowed under.
“[T]he owners are willing to include chandeliers”
While this is still considered a concession, we know that we are still in the very first stage of the decline.
The chandelier line caught my eye as well, it’s like saying they’ll include the drapes.
Also liked the kia giveaway - what are the chances that a kia will still be on the road in 15-30 yrs when the mtge is paid off?
And how much will you pay on that ‘free’ $40 snowblower after 15-30 yrs.
These type of ‘bribes’ must have toddlers as their target market.
True. I would also think that you should have to disclose it to the lending institution so that they know the whole purchase price is not being applied to the “mortgaged property” encumbered by the mortgage and closing costs. Seems fraudulent in that it would put the appraisal in question and the lender has a right to know. Wouldnt surprise me though it its not required. There seems to have been no regulation.
Best bribes I heard was instead of lowering the price, the home builder would offer a LEASE on a HUMMER! Hahahaha - nothing quite as stupid as rolling a LEASE on a depreciating asset into a 30-year loan! And for a HUMMER - a huge, useless, gas-guzzler! Gah - does it come with leased spinners on the rims, too?
I guess you have to understand your target audience.
Indeed. I remember the housing market in the 80s, and “punch lists” of things that needed to get fixed before the sale.
“I will not give you $100,000 for X commodity until it is in X condition.”
A far cry from this “‘Buyers want everything,’ said Licata, a longtime Realtor. ‘If you throw in a car, they want to know what kind.’”” mentality.
Uhm, if you expect me to pay you $300 or $400K for a crummy 50s brick box, then you’d damned well better be sure I’m not going to take your pinto to get the price for the house down to $150 where is belongs.
Bitter renters don’t want everything.
We just want the ground consecrated with the blood of 8 virgins (4 male and 4 female.)
We’re pretty easy-going that way.
ROFL
I want the previous owners to come back and feed the squirrells.
Um…I am eagerly awaiting that point in time when landlords will require these former REIC people to write an essay explaining why they should rent to them. (Any pictures will be a plus.)
People in DC suburbs like Urbana, Frederick and even Martinsburg are still holding on to their houses expecting a spring rebound. I went for a drive to Martinsburg area in WV, they call themselves DC suburbs. I met some people in a community and 60-70% people in the Washington Trail community drive to DC for work or take the train. Idiots. Sale by owners are listed in the range 380K to 489K and REOs are listed 236K to 299K. Every second house is on sale or is rented. DO you think 200K is the right price for these 2500 sq. ft. mcmansions built by Ryan etc. as is the price in Baltimore.
the further out from DC, the harder the fall. Peeps just can’t accept the truth.
The Spring Rebound Myth is also alive here in Tucson.
What happens is a few dummies come in at the same time and buy houses and all of a sudden Agents and Sellers think it’s coming back because of minimal action. The same thing happened here in DC area over the last two years. They all got excited just to be disappointed by the time spring was over.
It’s going to be so much fun watching everyone with a pro-real estate agenda try to spin the inevitable spring uptick in sales volume into a big rebound for the market with as little (or no) reference to declining prices and increasing inventory — even with 30 year fixed rates at 5.5%.
Please be vigilant in helping correct these numbers.
They’re just coming off the high of the prime Winter Wonderland Sales Event.
Those aren’t actually D.C. suburbs. Oh sure, they’re marketed that way, which is a classic sign of an overheated and zany market. Even without traffic, that’s a helluva slog to/from D.C. A lot of that stuff is going to be selling for well under $200k, I predict.
I think the Realtwhores should be doing more for the economy, also. I think they should discard the 6% commish concept immediately, and adopt a $20 per throw fee, just like the other pros on the street.
20 bucks doesn’t cut it here!
We really need some laws and guide lines regarding these realtors, many of whom seem to have very limited intelligence. A good start would be an I.Q test. Take realtor Ken Licata for instance. I know he’s nothing more than a used car salesman (as are all realtors) but one would think he would pick his words more carefully so anyone using him as a realtor, couldn’t pick holes in his arguments. EXAMPLE: Licata says, “Buyers are not getting it. Interest rates are so good at the moment, yada-yada, etc.”
If I were using him, my first question would be: “It’s highly likely that this $700,000 property you are touting, will eventually drop to $400,000 or even $350,000. Why would I buy a property for $700,000 at 6% interest when, in the not too distant future, I can buy this same house or one like it, for $400,000 with (maybe) an 8% mortgage or even less? Why would I want to pay the mortgage for 30 years on a property I bought for $700,000 when, for 1% interest more, I can pay the mortgage on a house which only cost $400,000? Added to that, if I need to sell it in the next 10 years (which is how long it will take to clean up this mess) that means I’m underwater!”
Still, like I said, these realtors are really only used car salesmen and their prime motivation is to get you to buy even if the vehicle breaks down in a couple of weeks. How long before we hear realtors saying, “Okay. I can see you’re hesitating. Tell me, what’s it going to take to get you to buy this car (house)?”
One of the realtors last week asked me “How do you know that the market will go down”? I was shocked by this question and I asked her if she watches news and the past rundown in prices over the past 2 years and how unreal this all had been for the past 4-5 years. She didn’t want to buy anything and said that she would give me back 1.5% commission back cash if I made an offer for the house. I told her that you bring the price down by 200K and I’ll give you 25K cash.
She also said how I could be saving money in taxes and I didn’t know what I was doing by throwing away money in rent. This really pissed me off. I told her that it doesn’t require an MBA to understand these basic concepts and if she understood some of these things she wouldn’t be doing what she is doing “touting people with false info. to make her commission”.
I am on the commercial side, having been in the biz since the late 80’s. I graduated from a university program, and know how $ works. Most of residential used home facilitators need minimal education (So Ca). They need to up the license to a minimum of 24 solid units of Finance, Economics, R E Math, and other real classes. I can not stomach the pseudo professionalsI I meet.
Its not a used car, it is the biggest purchase of your lifetime. Too many slugs in the business. But then again, caveat emptor.
how funky is commercial?
it started getting soft in DC area this sumer- no big change just a little more inventory
What’s really annoying is they persist in believing that you really just don’t get it.
Over 50% of all realtors do not realize that the money “saved on” taxes is just a percentage of what you are paying in interest. They also fail to realize that rather than throwing money away on rent, the difference between the rental payment and the mortgage/hoa/taxes/insurance/maintenance payments is actual true savings that you can invest as you wish (even use to buy the same house at 40% off in two years). Those ppl are so amusing.
She also said how I could be saving money in taxes and I didn’t know what I was doing by throwing away money in rent.
Ask her if it such a big tax savings, why is she not buyin g the property? Then ask her why would you spend $1 to write of 2 cents for a taxes. It does not add up either way for a tax break…., it’s a myth!
I’m curious if that realtor even paid attn after a few sentences of contrary info you tried to give her, or if her eyes just glazed over as she went into a stupor, after automatically spouting the NRA party lines, until yer lips stopped moving!?
Most people that do not want to hear a contrary point of view just start daydreaming when the talk gets boring.
Just ask any married couple . . . !
“how do you know the market will go down?”
Merrill Lynch forecasted a 15% drop in house prices for this year.
That may not work , though. The realtorette may not know who ML is.
I always tell them the same thing. Let me know when the inventory levels and foreclosure rates are dropping significantly, backing out normal seasonal adjustments (i.e., in the Winter in colder places as much as 30% of the ppl take their homes off the market until Sping with nothing to do with sales). They stare at me blankly, as there really is no response that makes sense to support their position.
I’ll say it again. All the RealTurds drank their own koolade and leveraged up on the same junk they convince others to do. In their narrow little minds, they MUST be made whole or else bankruptcy. Watch the little turds wither on the vine and fall to the ground. They haven’t quite wrapped their empty skulls around the fact that todays loss is smaller than tomorrows loss. In fact, the idea of a losss isn’t part of their reality………. yet. If these asshats never leveraged up on shacks, we’d see prices falling far more rapidly than they are right now.
you are absolutely right
they are talking (shouting?) their own book of business cause they are all long housing - their income, asset values and their debt loads all depend on high prices
talk about being “all in”
“Okay. I can see you’re hesitating. Tell me, what’s it going to take to get you to buy this car (house)?”
I wonder what would happen if you asked for some nookie?
I know, be careful about what you ask for, you might get it!
If you could see some of the female realtors in my area, with their bad (mulitiple) face lifts which ‘em look like they’ve just stepped out of a wind tunnel, you wouldn’t even consider “nookie”. In fact, if you woke up next to one of them in the morning and they were sleeping on your arm - you would chew your arm off to escape.
I refer to most female real estate agents as “plastica.” A mixture of ignorance, hair dye, botox, silicon, tanning spray and chemicals, and very, very tight skin. Ive been desperate before, but never has it been that bad. I get goose bumps at the thought of one touching or brushing against me.
LOL!
This eCONomist either has not figured out that at 4X income people are getting by with increasing CC debt, or he is pandering to the REIC.
Next time, try 3X income.
I’m going to start asking that a potential seller compose a nice letter to me that outlines the reasons why I should purchase their home. An extra paragraph, or two, that persuades me that they’ll feed the squirrels in the backyard of their next home might make their letter stand out from the others.
Already has happened in Atlanta. Some realtors now include in their property descriptions a link to “A Message From the Sellers” in which the Sellers describe all the great things they love about their home that might not be noticed by a walk through.
Here is a link showing one of many examples.
http://viewonvinings.com/fromsellers.php
Goodness!!!
This lovely home has been a place of beauty and peace for our family. Over the years our mother spent many hours sitting at the kitchen table watching the birds and squirrels at play.
You’re kidding, right?
Bipolar.
I was thinking clinical depression myself–who spends “hours” staring out their kitchen window at birds and squirrels at play?
If you “love” something you don’t sell it.
Take my albatross…please!
SFI
squirrel feeding index
What do you think is the future of Fannie and Freddie stocks? They have been going up and down in the range of $28-$38? Will their auction of bills this wednesday raise their stock price?
“‘Anything over $200,000 is going to sit longer,’ said Arthur Jordan, a real estate investor trying to sell a rehabbed house in the city’s Waverly neighborhood for $220,000. That’s down $30,000 from his original asking price, but the only offers he has gotten - all for much less - were from other investors.”
Americans make a living by selling each other houses, paid for with money borrowed from China . . .
Americans make a living by selling each other houses, paid for with money borrowed from China . . .
got fried rice?
Good to see the long, crushing, brutal decline under way in the Maryland - land of the “Silent Bubble.” It’s “different here” because “we’re all rich since we live near DC.” Right… Median household income in the state is about $60K, while median housing price is well over $300K. AND that includes the unliveable areas of Baltimorgue, so the situation would be even more absurd if one only looked at liveable areas.
I like how somebody outside of the Blog World commented on how we have a “smoke and mirrors” economy - very true!
I also got a laugh out of the concern about housing declining to 4x median income - that is STILL TOO HIGH! Factor in run-away inflation and job loss and housing is going to just keep going down.
But what about BRAC?
(/lol)
I think Spring will bring the sales to the person with equity in there home looking to downsize or upsize. I think long term investors will begin to buy. I think people are waiting on the Presidental election to see exactly who will lead us out of this mess. After this I see things changed and picking back up 2010. I do think we are gonna see more to this real estate foreclosure and we have only hit the tip of the iceburg.
I think Spring will bring the sales to the person with equity in there home looking to downsize or upsize. I think long term investors will begin to buy. I think people are waiting on the Presidental election to see exactly who will lead us out of this mess.
I think you are incorrect. Consumers will not buy overpriced real estate and banks will not loan them the money.
“Buyers, meanwhile, should be looking closely at low interest rates, added Licata. ‘I don’t think people are really getting it that the interest rates are so good. The $700,000 property they could buy last year — now they can buy an $800,000 property for the same price at the six-and-a-quarter rate.’”
I’ve always thought that this kind of thinking is a major fallacy. Let’s say, in accordance with his example, I can now afford the monthly payment on $800K which is the same as the payment on a $700K when the interest rates were higher. But now I’m stuck with a higher mortgage, so that when I do have to sell, if interest rates are higher, the potential buyer that could have afforded $800K at 6.25% can now afford less since interest rates are higher.
These low 30-yr fixed interest rates that we have now and that we’ve pretty much had since 2003 will come up again to the historic mean eventually (and likely above the mean as well). The mean is something like 8%. Remember the 80s and 90s?
I’ll take the lower price at a higher interest rate over the higher price at a lower interest rate every day of the week (and twice on Sunday). In addition to the reason you mention, I can always refinance if rates go down, and can do so serveal times if favorable. On the other hand, you’re stuck with your purchase price until you sell, and you can only sell it once.
“Buyers, meanwhile, should be looking closely at low interest rates, added Licata. ‘I don’t think people are really getting it that the interest rates are so good. The $700,000 property they could buy last year — now they can buy an $800,000 property for the same price at the six-and-a-quarter rate.’”
An “$800,000″ property that next year will be worth $700,000, and the year after that $600,000, and the following year…
“Buyers, meanwhile, should be looking closely at low interest rates, added Licata. ‘I don’t think people are really getting it that the interest rates are so good. The $700,000 property they could buy last year — now they can buy an $800,000 property for the same price at the six-and-a-quarter rate.’”
I’m tired of the “but the interests are so low!!” lines from people. They have BEEN low for years. They may go down a bit lower but what happens when they start to move up? Puts more pressure on home prices. I mentioned this to someone over the weekend and got the deer-in-the-headlights look from them. As long as prices are plummeting, I could give a rats arse about rates….
just as predicted here:
http://abcnews.go.com/GMA/story?id=4271175&page=1
While it is more likely related to general economic malaise, rather than foreclosure and the like, when I went to school in Buffalo several years back I was surprised by number of news reports related to home/business fires. I then met some people from Toronto, who, in their psuedo-English accent, asked, “Is that city always on Fire?”
Homeowners threatened with foreclosure could get a 30-day reprieve under a Bush administration initiative announced Tuesday. But people in Lee County, where the number of foreclosures jumped to a record 1,833 in January as prices have plunged over the past two years - had little good to say about the proposal. ‘This new plan doesn’t address people like me who can’t or won’t just walk away, people who feel a sense of responsibility but who are stuck in a bad loan due to unforeseen circumstances,’ said Kathy Reed, a former real estate agent.”
I love this “moral high road” Kathy is taking. “Won’t just walk away.” Think how stupid this is.
“I can’t pay my mortgage! But I’m so moral, I won’t just walk away! Why doesn’t the government help me?”