Buyers Haven’t Gone Away, They’re Just Waiting
The Patriot News reports from Pennsylvania. “The nationwide housing slowdown that took hold in 2007 might be showing up in the midstate. In the first quarter of 2008, the number of homes sold dropped 21.6 percent from the first quarter of 2007. It was the lowest first quarter for home sales since 2003. And for the first time since the national slowdown took hold last year, the average price of a midstate home sale has dropped.”
“In late 2006, Ryan Sweet, an associate economist with Moody’s Economy.com, predicted housing prices wouldn’t fall in the Harrisburg area. Since then, economic conditions across the nation have gotten worse than experts anticipated.”
“‘The Harrisburg housing market is in the midst of a correction. The labor market in Harrisburg is slowing, and job growth is on the verge of stalling,’ Sweet said. Those factors, coupled with tighter lending standards nationwide, mean ‘demand has fallen more than what we expected,’ he said. ‘You will see prices decline.’”
“‘Sellers were believing the market was the same as a year or two ago, and buyers were wondering why there was no change in price. Now, sellers are starting to recognize they’ve got to be more realistic in their price, and buyers aren’t going to be able to steal,’ said Frederick Briggs, an associate broker in Hampden Twp. ‘There has to be some negotiating process. We believe it’s coming very close to where the market value really is.’”
“Real estate agent Kathy Sumski said the key was the house’s good condition and its price compared with those of similar homes on the market. ‘You can’t have that fluff range we used to have. You have to price it on the money,’ Sumski said.”
The Baltimore Sun from Maryland. “March is usually the month when homebuyers get serious, when sales rocket out of the winter doldrums - but not this year.” “Home sales in the Baltimore area last month fell 34 percent from a year earlier, the seventh straight month of declines roughly in that range, Metropolitan Regional Information Systems reported yesterday. The average sales price slid almost 3 percent to about $297,700, or $8,900 less than a year ago.”
“A larger-than-usual jump in area sales from January to February had fanned hopes that the housing market was approaching a bottom. But that was dashed by the latest data: The 22 percent increase from February to March was the smallest for that period since Rockville-based MRIS began tracking local sales nine years ago.”
“‘Pretty bleak,’ said John McClain, a senior fellow at George Mason University. ‘A lot of people are still on the sidelines. … People think the economy’s in a recession, and it probably is.’”
The Daily News Record from Virginia. “Sales of new and existing homes dropped 22.2 percent in the first three months of 2008, according to the Harrisonburg-Rockingham Association of Realtors MLS.”
“Meanwhile, the median price of a home rose 9.2 percent to $202,000. For the local real estate market, it was the slowest first quarter since 2001, when Realtors closed deals on 186 homes at a median price of $124,800.”
“The remainder of 2008 will be ‘just OK,’ said Larry Martin, co-owner of Re/Max Performance Realty in Harrisonburg. Martin has been in the real estate business since 1981 and remembers two previous downturns in the market, 1981-82 and 1991-92. The current slump is longer and deeper than the previous two, he said.”
“‘I expect some recovery in 2009 and a strong recovery in 2010 and 2011,’ Martin said. ‘Our buyers haven’t gone away, they’re just waiting.’”
“Nearly half of all first quarter activity, sales of 91 homes, occurred in March, according to Scott Rogers, associate broker in Harrisonburg.”
“‘The flip side is that 183 people put their houses on the market in March,’ Rogers said. ‘So the net inventory also increased in that same time period.’”
“Nationally, the housing market is at a 10-year low, according to Lawrence Yun, chief economist of the National Association of Realtors. Home prices are higher than a decade ago, but people’s ability to afford a median priced home is about the same in 2008 as it was in 1998, Yun said.”
“‘The soft housing demand is psychological,’ he said. ‘It is a crisis of confidence.’”
“But prices are ‘out of whack’ with household income, said Chris Gingrich, professor of economics at Eastern Mennonite University. For at least a generation prior to 2000, the ratio of home prices to household income was about 2.8-to-1, Gingrich explained.”
“‘For 30 years, that ratio hardly moved at all,’ Gingrich said. ‘After 2001, the ratio skyrocketed to about 4-to-1.’”
“In 2005, the ratio of home prices to income in Harrisonburg and Rockingham County was 5.6-to-1. That’s based on a Census Bureau estimate of $31,100 median household income and median home price from the Realtors’ association of $173,035.”
“The market was overconfident five years ago, Gingrich said. ‘Housing prices have come unglued to income,’ Gingrich said. ‘And it’s not rocket science to determine how you pay your mortgage.’”
The Roanoke Times from Virginia. “Historic tax credits and the benefits of a city-created enterprise zone likely are drawing developers to this area that stretches down Salem and Campbell avenues to Fifth Street. Already several developers have landed rows of condominiums in structures up and down these streets.”
“At least three other projects are in the works, creating what the city’s economic development administrator, Brian Brown, said is a synergy of urban living in an underutilized district.”
“‘Condo developments tend to feed off one another,’ he said.”
“Genesis Mansions is creating Mansion Square Condominiums, with 30 condos at 501 Salem Ave. Each will have one to three bedrooms and measure 1,600 to 4,000 square feet.”
“There will be other amenities that are unique to Roanoke’s slew of downtown housing units, including an indoor pool and hot tub and a fitness center, said Ron Schenker, project manager. The condos will sell for more than $300,000 each, he said.”
“City real estate records show that Susanne Helbig, an owner of Genesis Mansions, purchased the property for $425,000 last year.”
“Condos aren’t the only ventures that are popping up as investment and revitalization efforts in this section of downtown. The YMCA is planning a 10,000-square-foot expansion to its Church Avenue facility.”
“And Integrated Imaging has a contract to purchase a structure at 419 Salem Ave. It wants to move its office there by December, said Chuck Hawthorne, a partner in the company.”
“The firm welcomes prospects for a revival in this district. ‘We feel like it’s a really good time to get into that area from an investment standpoint,’ Hawthorne said. ‘Hopefully, more restaurants will fill in there, once there’s actual residents.’”
“The YMCA also considers nearby downtown living projects as benefits to its business. ‘What downtown living does, it kind of brings a 24-hour vitality to an area,’ said Cal Johnson, executive director of the Roanoke Valley YMCA.”
“‘Because the YMCA’s open 16 hours a day, it’s great to be surrounded by people who are living downtown,’ he said.”
The Herald Leader from Kentucky. “If location, location, location are the first three rules of buying and selling real estate, then timing must be No. 4.”
“Hundreds of loft apartments and other condominiums are going on the market in downtown Lexington, just as the national real estate recession rolls over the Bluegrass.”
“For-sale signs are visible at Main & Rose Lofts, the largest of the downtown projects. They are in windows of apartments that have never been occupied. Some developers are offering incentives, like a free garage at Kimball House Square and low-cost loans at Artek Lofts, to sweeten deals and lure buyers.”
“Liens have been filed against three downtown projects — The 500’s on Main, Kimball House Square and NewPast on Main — which means developers and contractors are having disputes over money. Lenders have tightened requirements for loans for both developers and condo buyers following the national collapse of the subprime mortgage market and some major lenders.”
“‘Everybody is running scared,’ said Rob Parker, developer of The Mark Lofts at Woodland Park. He sold 10 of The Mark’s 36 units at one event in March 2007, but only eight in the year since then.”
“‘The market has definitely slowed down,’ agreed Kimball House developer Marc King, who has sold 17 of 39 condos.”
“‘The market is flooded with units right now,’ said Greg Buchanan, a Realtor who represents Kimball House Square. And another wave of condos could be on the way.”
“Meanwhile, mortgage companies are becoming more tight-fisted, less willing to loan money, said Buchanan. ‘People are not able to get certified for loans,’ he said, ‘because the credit market is a mess.’”
“Louisville developer Bill Weyland said lending agencies are demanding ‘a lot more proof’ from developers that they have a market for their units. ‘They want to know if the absorption rate is really going to be there,’ he said. ‘They are really concerned about making sure the developer knows who they are marketing to’ — and that means doing market surveys and getting hard numbers.”
“No one can escape, Parker said. ‘The economy is hurting everybody.’”
“‘Probably very few communities are not experiencing some sort of slowdown,’ said Phil Scherer, whose Commercial Kentucky Inc. is building the Fleur de Lis loft project in downtown Louisville. ‘What you have to understand is it may be a slowdown from record levels of activity, sales and appreciation’ between 2004 into 2007, he said.”
“Raphael Bostic, a real estate professor at the University of Southern California who is often quoted by the national media, said ‘the condo market has pretty much fallen on hard times across the board. They are weak on the West Coast … and eastern cities as well.’”
“Bostic said condos are ‘the most volatile’ of residential properties, because they are often purchased as investments and for recreational reasons. Particularly hard hit are the ‘flippers’ — investors who plan to resell quickly for a profit — and first-time home buyers who may be unnerved by price declines, Bostic added.”
“An estimated 30 percent of the units at Main & Rose Lofts were bought by investors to flip, said Bret Caller, one of the project’s developers. Those flippers might account for several of the 35 units at Main & Rose listed for sale…and the for-sale signs in the windows of some unoccupied units.”
“Asked about sales, Caller said, ‘We have sold 75 (of 96) units; they are out of our name.’ He said closings on several more units will occur in the next 30 to 60 days. He acknowledged that the for-sale signs in windows where big S’s were posted until recent weeks ‘doesn’t look good.’”
“Debbie and Tom Westerfield of Versailles bought a 1,500-square-foot unit at The 500’s as an investment before the building was completed. They paid $280,000 and spent an additional $35,000 to upgrade fixtures and other amenities.”
“The Westerfields think now is not the best time to sell, so they plan to use their condo for entertaining and then rent or sell it for the Alltech FEI World Equestrian Games in 2010.”
“Michael Canan bought a unit in July from a flipper at The 500’s on Main. ‘He (the flipper) had to close or it would go back to the developer, and I bought it from him,’ Canan said.”
“Asked if his unit is for sale, Canan said, ‘I’m in sales. Anything I’ve got is for sale.’”
The Tennessean. “The number of homes on the market in Middle Tennessee started the spring at record levels. The region’s housing inventory rose to 23,730 properties as of March 31, up 6 percent from the end of February and up 24 percent compared with a year ago, the Greater Nashville Association of Realtors said.”
“Driving inventory higher was a sharp drop in sales, which fell 29 percent in March compared with the same month a year ago. The 2,227 deals closed in March were the fewest for the month since 2000.”
“Few sellers have slashed their prices here, but those putting their homes on the market should not expect to make a large profit, agents said. ‘Prices are a little bit softer,’ said Karen Hoff, an agent in East Nashville. ‘Buyers get a little better price, and for sellers, it means they make a little bit less.’”
“The downturn has already taken a toll on builders. Two local firms have filed for bankruptcy, and others have sharply cut back on construction.”
“Only 1,051 building permits were taken out in January and February, according to MarketGraphics Research Group Inc. In 2007, 2,486 permits were taken out during the same two months.”
“‘We may see some downward price pressure in some spots, but I don’t expect to see any fire, house-burning bargains,’ said Bill Ford, an economist at Middle Tennessee State University and a former president of the Federal Reserve Bank in Atlanta.”
“‘It’s not like in other parts of the country that I travel to,’ Ford said.”
Sweet prediction, dude.
“In late 2006, Ryan Sweet, an associate economist with Moody’s Economy.com, predicted housing prices wouldn’t fall in the Harrisburg area. Since then, economic conditions across the nation have gotten worse than experts anticipated.”
While I rip on the “experts”, I can’t be too proud either. I thought my area was going to start dropping around 2001. I find comfort in the fact that I don’t give investment advise, so my being wrong has not harmed anyone.
maybe it would have dropped except for FED actions taken as per 911.
Damn right it would have. Anecdotal, but Denver metro is starting to crack.
‘The condos will sell for more than $300,000 each, he said. City real estate records show that Susanne Helbig, an owner of Genesis Mansions, purchased the property for $425,000 last year.’
Perfect example of the price mania creating a product that otherwise wouldn’t exist. At that buy-in price, $100,000 condos should be possible. But that isn’t attractive enough. At $300k, she’s all in. Now, at 100 they might sell or be rented, but will probably won’t at 300. Now, how to get one of those renters at the Y to pony up?
‘city-created enterprise zone likely are drawing developers to this area that stretches down Salem and Campbell avenues to Fifth Street.’
Granted, Roanoke has some nice recreational access to the Blue Ridge, but it ain’t no Raleigh for jobs.
Ben,
I’ve said this for years. If you look back at the inception of the condo it was all about downsizing, convenience, simplicity and low maint. for empty-nesters. How in creation did this get perverted to a point where we have condos that are as ( if not MORE ) expensive than SFH’s?
An excellent point; something that never really made sense to me either. Condos (in the area I live) will routinely cost more then a SFH per/sq/ft, and sometimes even on an absolute basis. Add in the maint fees, and it’s far more expensive for many to live in a condo then it would be to just move into a nice SFH.
In very crowded areas, I do understand it; there’s just not enough land, and the SFHs will sell for a huge permium, pushing more and more into condos.
However, in the really bubbly areas (especially those with no land shortages) what in the heck justifies a higher price for a condo then a SFH. They should be 1/2 the cost (per sq/ft), and instead they seem to sometimes be as much as 2X the cost. Another example of the stupidity of this bubble.
It’s the “living experience” of being able to walk to dinner and the new 20-plex.
They just don’t tell you about all the car alarms going off in the middle of the night, the dogs crapping on your sidewalk, having to shut all your blinds to keep people from looking in, etc. etc. Oh - and the fact that if you live in an SFH 2 miles away you can still drive and park for dinner and the 20-plex.
I think the condo craze was to create artificial land shortages to make it harder to get a nice, normal single family home. If we pave over everything and put in stupid condos, you’re either stuck with a high-priced condo run by some nutball HOA or you have to pay a premium to get a house with land like most people want. In the end, it’s about screwing the customers and getting as much money as possible.
Michael,
Glad I’m not the only guy that sees it that way. I remember as a kid in the 70’s growing up in Chicago a lot of my folks older friends were buying into “these new fangled things”. At the time it wasn’t a bad deal, they could be bought for less than HALF a SFH and that mom & dad could bank the difference and “splurge” for the grandkids once in awhile.
Obviously the units were pretty spartan but most of the guys were fairly handy and made them like little Polish Palaces on the inside. That way they could “pay as they went”. The whole idea of turn-key/built-to-flip condos is purely a reflection of the bubble.
Pondering The Mess,
And I’ve wondered that TOO! When I look at Portland (OR) a solid majority of what’s available IS… condos! Believe me, my desire to be a gentleman farmer left a long time ago and I happen to love the convenience but the whole idea behind SHARING a wall/s was that it would make it cheaper! Screw the amenities, just give me a shell and I’ll take it from there.
Well your point isn’t lost on me. When all you have to chose from is “high-end” condos what are you going to do?
Here in San Diego I wouldn’t mind buying one - if it weren’t for the HOA fees. SFH are pretty hard to come buy - really only for those lucky enough to have bought pre-2000 or the stupid, who continue to take out interest only loans… Condos are often the only choice (if you want to own and to continue living in San Diego)
“The condos will sell for more than $300,000 each, he said. City real estate records show that Susanne Helbig, an owner of Genesis Mansions, purchased the property for $425,000 last year.”
Well, since SUSANNE herself researched it, don’t you think Genesis is only the beginning?
There’s a much larger story to be told. Perhaps the greatest ever. HEL, its BIG.
Downtown Roanoke basically consists of restaurants, banks, a few gift-type shops, and a couple of museums. I loved living there, but those condo owners - unless they can live on the weekly offerings of the farmers market - are still going to have to get in a car to get to the grocery store or the movie theatre.
“buyers aren’t going to be able to steal”
This is a weird one for me. I sent a listing to a friend who wrote back and said “Oh, the sellers priced it much too low. It’s worth more than that”.
I would think if it were, then it would spark a bidding war. Is it possible for a buyer to “steal” in an open market? I can understand something done under cover, perhaps.
I remember that mindset - if you asked a lower or reasonable price to get it off your hands, you were some kind of loser. The more you demand, the more of a bigshot you were.
The only way I know of to “steal” a house is to lie on your credit application and then allow it to foreclose a couple of years later when it fails to realize any appreciation. But then that is why we are in this mess to begin with right?
The NYtimes does a real estate promo every Friday, under the rubric Havens. Mostly to sell vacation properties, they profile pretty towns in the tristate area, and elsewhere. Today’s features Woodbury Ct. This weekend I was in West Cornwall, Ct. also in Litchfield Ct., a pricey county. Yeah, it’s beautiful, but the runup in housing prices reflects the money in Manhattan. The for sale signs are everywhere…Sharon, Washington, Cornwall, including the pretty towns on the NY side of the border. Vacant land is up for sale too, with big signs posted. It does look like the second-home market is being put on the market.
http://www.nytimes.com/2008/04/11/greathomesanddestinations/11havens.html
“Debbie and Tom Westerfield of Versailles bought a 1,500-square-foot unit at The 500’s as an investment before the building was completed. They paid $280,000 and spent an additional $35,000 to upgrade fixtures and other amenities.”
“The Westerfields think now is not the best time to sell, so they plan to use their condo for entertaining and then rent or sell it for the Alltech FEI World Equestrian Games in 2010.”
Just when it looks like we’ve reached the stupidity bottom . . .
Yes, you know, wherever I go, no matter WHO I’m speaking with they’re ALL talking about the Alltech FEI World Equestrian Games!
To the Westerfields: Can I stable a horse there, too?
I’d be interested in a stable relationship, but i’m going to the WaMu BK World Financial Games, that very weekend.
Sure, just hitch ‘im to the post in the living room!
“Yes, you know, wherever I go, no matter WHO I’m speaking with they’re ALL talking about the Alltech FEI World Equestrian Games!”
LOL
“Nationally, the housing market is at a 10-year low, according to Lawrence Yun, chief economist of the National Association of Realtors. Home prices are higher than a decade ago, but people’s ability to afford a median priced home is about the same in 2008 as it was in 1998, Yun said.”
“‘The soft housing demand is psychological,’ he said. ‘It is a crisis of confidence.’”
“But prices are ‘out of whack’ with household income, said Chris Gingrich, professor of economics at Eastern Mennonite University. For at least a generation prior to 2000, the ratio of home prices to household income was about 2.8-to-1, Gingrich explained.”
“‘For 30 years, that ratio hardly moved at all,’ Gingrich said. ‘After 2001, the ratio skyrocketed to about 4-to-1.’”
“In 2005, the ratio of home prices to income in Harrisonburg and Rockingham County was 5.6-to-1. That’s based on a Census Bureau estimate of $31,100 median household income and median home price from the Realtors’ association of $173,035.”
One of these two people isn’t telling the truth. I wonder which one is lying? Hmmm. Yun is a complete joke making statements like that.
Well Golly Gee Gomer….the banks had a real good reason to limit you to 3 times your income. They kinda lika wanted you to pay it back on time.
“They kinda lika wanted you to pay it back on time.”
Yeah they did until the financial machinery was altered to where risk to the bank was passed along to someone else.
After that they just didn’t care.
“Nationally, the housing market is at a 10-year low, according to Lawrence Yun, chief economist of the National Association of Realtors. Home prices are higher than a decade ago, but people’s ability to afford a median priced home is about the same in 2008 as it was in 1998, Yun said.”
“‘The soft housing demand is psychological,’ he said. ‘It is a crisis of confidence.’”
Yun, ALMOST, i say ALMOST says something intelligent in the first paragraph, but misses again.
It’s not the median price that’s the same affordability as 1998, it’s the income that’s at 1998.
Then, he concludes by making his usual STUPID remarks.
It’s not a crisis of confidence. It’s simply about affordability. No one can afford the ridiculous price hikes without bizzaro-world financial schemes to make the payments. Without rampant price inflation, it’s not going to happen. Perhaps that’s what he meant? We’re not confident that prices will continue to skyrocket??
I just can’t take much more crap from the National Association of Realtors(tm). Total parasites.
Yun is partially right about the soft housing demand being psychological. After seeing numerous people have their lives fall apart because they bought too much house, many are fearful of the same fate. It’s like when a rat gets a shock from pushing a button, so it stops pushing the button. Now that’s psychology.
‘Now that’s psychology.’
What about the experiment with the miniscule jolt to the ratty brain pleasure center, delivered via a rat-managed button or lever? The happy rats just stand there bustin’ their noggins and their little pink paws pressing the button over and over and over until they die of dehydration.
I always thought it was a real pity those rats couldn’t cogitate just a wee bit better, just enough to reason that, ‘Hey, if I go get a drink then I can come back and press this here button even longer, ’cause I won’t die! Alright!’
Or, they could shout to their pal to bring them a drink on a little tray or something.
And then I would wonder ‘Hey! Where can I get ME one of those implanted electrodes, and a little button to press?’
Now THAT’S psychology.
That’s why there’s commercials on American Idol.
Some people don’t even respond to psychology. Folks who are still buying Armada sized SUVs must be deaf, dumb or blind. $3.88 a gallon for regular in my slice of heaven and I’m still seeing little blonds and fat guys in their bloat mobiles. Maybe they’ll be living in them soon.
“Hundreds of loft apartments and other condominiums are going on the market in downtown Lexington, just as the national real estate recession rolls over the Bluegrass.”
He obviously didn’t get the memo from the National Association of Realtors(tm). It’s not possible to have a national real estate recession. “ALL REAL ESTATE IS LOCAL”. “Now is the best time to buy.”
Get a clue buddy.
I drove thru Lexington a couple of weeks ago. The area has had a major economic boom the last 5 years with Toyota’s Georgetown facility bringing thousands of jobs to the area (Georgetown is a Lex. suburb).
But like many non-diversified Midwest cities, once a major employer completes it start-up, the employement growth comes to an end. Levels are kept at a consistant level for years and years, but there is virtually no increase in jobs after a 2-year point. I’ve seen this in a number of smaller cities in the MW.
But developers, builders, and polititions don’t want to believe the growth will end. After many, many years of economic stagnation, they see a big flurry that raises the local economic level of activity by a signficant percent, but then plateaus (actually gives back some of the increase due to the end of construction activity). They plan and build as if the growth will continue endlessly.
Once the build-out is complete (Toyota Georgetown facility & support companies), the music stops and they are left holding the economic bag.
Aint nothing there to continue the growth.
Cincy Dad,
Here’s the difference. If you or I got a credit card with a 50K balance we’d say, Hey that’s great and maybe we’d use it and then again likely not (or very sparingly on a special purchase)
Well builders don’t think like that. (In fact in order to be a builder “thinking” is a detriment) So the bank gives them a $50 mil. line of credit and BAM! They’re off! They never stop to think that land/materials may actually get cheaper? Or that they may NEED that float down the road. It’s always “put it all on black” for this crowd. Besides, these guys LIVE off of OPM. That’s the whole idea behind being a “successful” builder.
““‘Pretty bleak,’ said John McClain, a senior fellow at George Mason University. ‘A lot of people are still on the sidelines. … People think the economy’s in a recession, and it probably is.’”
Yippie Ki Yea MF’dB !
“Asked if his unit is for sale, Canan said, ‘I’m in sales. Anything I’ve got is for sale.’”
What a horrible way to view the world.
Lots of good stuff in these articles, but this statement fell out at me. It just seemed so… so transient, so grubby, so careless somehow.
“Anything I’ve got is for sale.” My morals, my ethics, my self esteem….
The new Amerika! Embrace it while screwing over your neighbor!
This was the ol’ Amerika too. Just go read a 19th century history book. So it has been, and so it goes …
Faster,
I recently watched “There Will Be Blood” and it’s amazing how little has changed. The difference was these were the actions of a lone and independent oil man. Now everything like NAR is so well lubricated it’s designed to fleece the public at every turn.
Yeah, living here in New York is like living in an Edith Wharton or Fitzgerald novel.
Replace railway tycoon by hedge fund manager and you realize it’s all the same.
And Thorstein Veblen lives!!!
Another classic book of note:
“War is a Racket” by Brigadier General Smedley Butler.
This little gem from 1935 foreshadows Eisenhower’s famous military industrial complex speech. Instead of Haliburton, the WWI profiteers were US Steel, DuPont, Anaconda, and American Sugar Refining Co.
He’s obviously from the “everybody has a price” school of thought. I argued against this ugly American POV when an attorney friend of mine said that Ron Goldman’s dad would never go through with his civil action against OJ. My friend stated, as if conventional wisdom, that OJ would make him an offer he couldn’t refuse. I replied that some things can’t be bought or sold. I can be cynical, but I do have faith that some things transcend greed.
Firstly, Fred Goldman is a SAINT!
My thoughts though were greed, price and ambition are concerned are more along the lines something most of our fathers said to us at one time or another:
(Let me know if this sounds familiar)
“Son… anyone can act like they have class when their WINNING! (It’s when you’re losing that we find what you’re really made of)”
This for me describes the REIC in a teeny, tiny nutshell. Ever gloating when things are going all their way with their SUV’s and tanning sessions and “got to get away from the stress” Cabo vacations. Yet at the first sign of having to break a sweat showing, flipping or financing a house and you’d think you were talking to someone that’s been down-trodden for generations! Well, we found out what they’re “made of”.
Total. Classless. Pigs.
The reason I placed emphasis on “got to get away from the stress” is largely for comic effect.
Yeah, the stress of fleecing people down for 6% commissions when there was a bidding war! Sheesh. Think about THAT level of lunacy? A seller has buyers tripping over one another to stick a bigger check in your face. How freaking “stressful” could that “sale” be?
Realtors weren’t taking vacations due to anything remotely resembling “stress”. They were because they could afford to. Nothing more.
The builders and developers built condos and housing projects for the short term investor . Even people who bought to owner occupy had short term investment goals in mind . I have never seen so many people needing to sell within a short time of purchasing . Wall Street turned housing into a buying on margin stock thats crashing like 1929 .When everybody wants out ,nobody wants in .
IMHO ,the Wall Street market makers found a way to duplicate the risks of the 1929 stock era by shifting to real estate and acting like it was a different beast . Same beast ,buying on margin on inflated assets .
“No one can escape, Parker said. The economy is hurting everybody”
Oh I think I’ve heard about enough of that. When the “good times” were rolling all we got got from REIC Beneficiaries was “permanently new plateau” garbage and now it’s “the economy” and now it’s “everybody”.
When housing completely de-coupled, functioning entirely independently (regardless of all fundamentals) and became “The REIC-based economy” while everyone from airlines to stock-traders struggled they didn’t have any empathy for anyone! Besides, they had homes to build!
Now that RE is in the tank “it’s the economy!” You know what man..? Just E’f YOU! That’s all I got for ya’. Just E’f you.
The “economy” never hurts everybody. Even the “great depression” was quite the opportunity if you had enough cash on hand. My grandparents didn’t get caught up in the mania of the 20’s, so when things went bust they had savings and used it to buy the farm my uncle lives on today. Grandpa basically created his own job with savings from the boom years.
According to my parents, my paternal grandfather did quite well as a stock market investor during the 1930s. He invested in railroad stocks.
And, truth be told, he did have some advantages:
1. He married a gal from a very wealthy family.
2. He worked on Wall Street as a securities analyst.
Oh absolutely! Any time someone makes a statement with “economy” and “everybody” in the same sentence they can safely dismissed. What it further makes obvious is that REIC kool-aid drinkers truly DO… believe our entire economy revolves around home building/selling/financing.
These clowns see absolutely no relation between their ‘contributions’ to society and the amount of wealth they can ( or should ) be able to accumulate? They see absolutely NO reason why a builder w/ a HS deg. can’t retire just as comfortably (if not more so) than the CEO of a bio-tech research firm. They see no perfectly good reason in spite of the fact a vast majority of Americans have very modest retirements why their’s should not only be opulent, it should early! Who’d have thought you could do all that just by stacking 2 by 4’s?
If they had played their cards right rather than reinvesting all proceeds right back into the Ponzi game, they would’ve had an opulent retirement (in relation to their skills.)
Of course, that would require you to actually, oh I don’t know, think outside that proverbial box that they always keep talking about.
I agree. It’s been my experience though (and not just w/ builders) but ALL REIC players is that the “big score” is always in the NEXT deal! And so they go about becoming their own greater fool.
All FIRE players, every single one of them.
REIC is just the RE part of FIRE. Although some of the F people get it and bail out wisely. Takes a certain humility to realize that your earnings were situational not a product of your unique skill.
“Even the ‘great depression’ was quite the opportunity if you had enough cash on hand.”
Careful with the “cash” word. That word makes some posters here go a bit crazy.
Now all the geniuses in the media are starting to talk about how housing prices have completely decoupled from incomes. Too little, too late. Many people will lose everything from this fiasco; many others will watch their savings evaporate thanks to runaway inflation. The only winner will - as usual - be the crooks, ranging from the Wall Street shmucks who packaged the worthless MBS’s to the assorted fee collectors in the food chain all the way down to the bums who lied about their income while flipping a half-dozen “owner occupied” houses at a time.
Yes, and even bubble-sitting becomes nigh on impossible when “Anything I’ve got is for sale”. I never looked to these blogs/sites as a way for me to “profit” from the housing bust. Never. All I ever actively sought was to idendify ways to stay clear of it as it came down in spectacular fashion.
Sounds simple, right?
but people’s ability to afford a median priced home is about the same in 2008 as it was in 1998, Yun said.”
The NAR, nearly two years into the correction is just now finding this out? Mr. Yun, you simply need to get out of your office and your cheerleading outfit and get down to the street level to clearly understand economics. Get a clue Mr. Yun, your association members prospective clients are tired of the fluff and stuff and the inability of the NAR to get it right! It’s time you listen NAR!
If I provided this level of advice this late in the game, I would be out of a job!
I think you misunderstand Mr.Yun.
He is saying that affordability hasn’t changed, that the reason people aren’t buying is psycological.
He is an idiot.
In other words, if you could buy a 1500 sf house in 1998 for $120k with 10% down and interest of 7%, then in 2008, you can buy a $240,000 house with 1% down, and 3% interest, adjustable at some future date, so the cost of “Getting In” is about the same.
Therefore, the price is justified, and the cost is the same, even if the cost being the same only lasts for 2-3 years before the loan re-set.
This is how Realtors(tm) think. And sense you can count on steady “appreciation”, the Realtor(tm) did you a favor getting you into a house you really couldn’t afford, because you could just refinance, or sell at a profit when the day of reckoning came.
Again, my point, these people have no clue about “affordability”, because it’s not their problem.
Their only problem is getting another transaction.
He is saying that affordability hasn’t changed, that the reason people aren’t buying is psycological.
He is incorrect when you use economic models based on todays current conditions vs the conditions in 1998. That is why I mentioned he needs to get out of his office and get down to the street level to understand the true economic picture and the impact on consumers and corporations.
If you were my customer and I provided you this incorrect information and it ended up costing you, you would most certainly fire me. Yun is only cheerleading and trying to paint a picture to the public that is not correct from an economic standpoint!
That GE miss was a real whopper. Every quarter GE sells assets or plays other games to smooth earnings. Need to make the Wall Street gangsters happy. Unfortunately this game didn’t work out too well this time, as they couldn’t sell assets to smooth out their earnings. The really funny thing about it was the dipshits on CNBC were talking about it and never asked the obvious….”is this BS a reasonable way to report earnings”? I know it is legal, but it is also complete manipulation.
Oh yeah, CNBC is owned by GE. Never mind.
Just another reason why I do not give a penny to Wall Street.
rob,
I understand the frustration level right now, really, I’m there with you… But these game is hardly new. When you own shares of a major conglom. like GE reporting earnings is always a shell game.
“Well, we’ll make it up in our defense contracting/____ division!”
That’s why even in the 90’s I stuck w/ “widget companies”. Makes things simple, How many widgets did you make, how many widgets did you sell?
My reluctance (like Mike Shedlock’s) is that SO MUCH is being moved off-exchange into what Mike describes as the “opaque world of Structured Investment Vehicles”.
Believe me I know this is nothing new. I guess that’s the problem. Why are these games allowed to continue year in and year out? I for one won’t put a penny into the game. Transparency is gone in the market. It is a shell game. Agree 100%.
No thanks.
Notice how every CNBC article says “the latest sign the U.S. economy may be in a recession.” MAY???? what more Signs do they need? A thunder bolt from the Heavens?
“what more Signs do they need?”
A repo company removing the furniture from CNBC offices? Nah, Steve Liesman would still spin that somehow.
The plan is simple. Spend months and months “wondering” if there is a recession, and then when the obvious fact cannot possibly be denied any longer, immediately flip to “there WAS a recession.”
The media will say it started a LONG TIME ago (back date it), and then proclaim that historically it should be over by now. The idea is to avoid admitting we are actually IN A RECESSION.
It’s a game that the media is very good at playing. Seem it many times before.
Sweet… now you tell us.
“‘The Harrisburg housing market is in the midst of a correction. The labor market in Harrisburg is slowing, and job growth is on the verge of stalling,’ Sweet said. Those factors, coupled with tighter lending standards nationwide, mean ‘demand has fallen more than what we expected,’ he said. ‘You will see prices decline.’”
I know this is a sore subject for some, but the latest bailout talk from our beloved government includes a whopping $300 billion to be used so FHA can refinance all these bad loans, bail out the lenders, and stick the public with the bill. If this passes, and it almost certainly will, we should see the impact showing up in the Case-Shiller numbers a few months after it passes. I also think a big tax increase will be coming, as we are forced to pay for this one way or another. Inflation will also continue to rage.
it is going to be real hard to resist jumping into real estate if this happens. First, even if I buy and prices drop further, there is a good chance the lender will reduce the loan balance thanks to Uncle Sam. And if I buy a foreclosure the government kicks in $7k of tax breaks. Not much, but it helps. Also, if I have to walk away I won’t be getting a tax bill from the IRS. It looks like the government is going to do everything possible to keep me in the home, and since California is a non-recourse state I can just hand in the keys. I just need to find a loan that has a low down, so my risk is minimal. I still see them out there, and our FICO is 750+ with lots of cash and good income.
With taxes about to go up I am going to need a way to shelter my income so a mortgage will also be essential. Otherwise I am going to get hammered on taxes. I don’t mind paying my share, but under these circumstances I am not going to pay for the insanity of others.
One more thing. As inflation starts to heat up the MSM asswipes are going to start beating the drum that real estate is a great way to protect your wealth from the forces of inflation. A lot of sheep are going to believe this, and it could lead to a self-fulfilling prophecy.
I know I am not the only one thinking this. I’d bet a lot of people are already out buying houses in anticipation of this latest bailout scheme. I am not going to pull the trigger until the facts show up in the Case-Shiller numbers, but I have a feeling that won’t be too far off.
Nice to live in a free market system, by the way. NOT!
Personally, I think the bigger concern should be that commodities are going to inflate to the point that regardless of what you do or buy, dollars are going to become worthless. So even if you buy a house… so what. Nobody is going to be able to afford it. Either that or the price of housing is simply going to crash hardcore, and much more so than simply from a housing bubble. The US economy will essentially be in the crapper and buying a home will be the least to be concerned about.
But if dollars are going to become worthless don’t I want to get out of them and into something real before that happens? But then the asset bought could implode, so the money gets vaporized anyway. The people that caused this mess piss me off. Assholes.
I hear ya, but I’m just not sure if buying a house is really a way to transfer dollars into tangible value, because even if you buy now, I seriously doubt that inflation, the housing bust, and so on are really going to stop the slide in RE value.So the money you would pay wouldn’t really be “safe” but more likely decreasing since what you could sell it for would be less than what you paid. Its one thing if you have enough cash to buy a house outright and therefor not have the rudimentary requirement of shelter to deal with ( even though the property tax would probably be about the same cost as renting in CA), but if you buy and have the whole mortgage kit and kaboodle, I’d think investing in stocks would actually be better to counter inflation. International stocks as well as US companies that sell in international markets.Just my two cents worth.
You might be right man. The problem I see is inflation will put upward pressure on rents. Maybe this doesn’t happen, and many here argue it won’t. But my lying eyes have seen a major bump up in rents in Orange County. I’m just reacting to what I see. Throw in all these bailouts, and it is possible the crash could be slowed dramatically. Still going to see prices fall in the long run (I think) but in the long run I am dead.
Right now the strategy is to follow the Case-Shiller index. As long as it keeps dropping for my market, I will do nothing. I went back to the beginning and plotted 4% inflation since 1987 to see where prices should be IMO. Not even close to the mean. But if/when this changes I have some tough decisions to make. I would agree with you on international stocks but I just don’t trust anyone on Wall Street anymore. It’s too easy to cook the books. I prefer not to play that game.
Right now there are no good options.
The problem I see is inflation will put upward pressure on rents
Only wage inflation puts upward pressure on rents. Price inflation with stagnant wages means people have less money to spend on housing, and results in downward pressure on rents, and also on prices to a greater extent due to leverage.
Oh, this plan will spare the gansta’s on wall st and can drag things out for a while.
I don’t see how it will work. My fear is the comodities bubble will cause distortion of the agricultural production. Then we could end up with an actual food shortage.
Anything is possible, but at least they’re not packing up hated minorities on rail road cars and gassing them.
The apparent purchasing power of your savings is due, in part, to the ignorance of foreigners. Don’t be afraid to lose some of it, there are hoards of people enduring worse.
Still- it is a bit of a concern to me that there are 20 hour bread lines in China as we speak. Serious food shortages elsewhere. I’m not exactly worried myself, but even so, I can see things getting serious if those countries keep growing in the way that they are.
As far as buying a house, well unless the government simply starts buying houses for people outright, the problem of price still remains, and especially in places like CA. I don’t care how much bailing is done, 600k is still 600k, and last time I checked, most in this state don’t make near enough to support that price. The rules are still in play: Wages versus cost.
So CNN has this article:
The url is:
http://www.cnn.com/2008/LIVING/homestyle/04/10/curb.appeal/index.html
The headline is:
What could stop your house from selling
* Story Highlights
* Buyers will reject a house based on its outside appearance, agent says
* Denver realtor says buyers often connect with sellers with similar taste
* Most curb appeal projects take a weekend
* Sellers should re-examine areas of their home they don’t often go
* Next Article in Living »
By Steve Almasy
CNN
Decrease font Decrease font
Enlarge font Enlarge font
MARIETTA, Georgia (CNN) — Pat Junod knows why this home in an Atlanta suburb has been sitting empty for months. It isn’t the market. Even during this nationwide downturn there are still plenty of potential buyers. So what is it?
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Ok kids, what’s missing from this picture? Could it be…….PRICE?
I’m so sick of the MSM ignoring this. I’d love to buy a house, but not until the prices are in line with incomes, period.
Why are there not stories about how overpriced houses are compared to incomes?
“She sees the problem from her car as she drives up the street. The yard is, well, in need of some work. OK, a lot of work.
The neighbor’s tidy, weed-free front lawn is quite a contrast to the seller’s yard, Junod points out. In fact, they already have bales of pine straw ready and waiting for spring-time sprucing — even before their spotless Bermuda grass has started to green.
At the very least, the sellers need to repaint the house and trim the overgrowth in the yard, says Junod.
As she walks toward the front door of the Marietta, Georgia, house, Junod points more out-of-control shrubs.
Overgrown bushes are a huge enemy of curb appeal, according to many agents.”
If you are looking for a house and care about yard condition, you should be happy with the seller’s neighbors’ yard being in good shape - since you can’t control what your neighbors do.
The house you buy, you can trim bushes, plant what you want etc. Paint too, replace siding, trim, whatever - houses are “plastic” and it can take some time to get them just the way you want.
But then you want a lowish price, in line with incomes…
The Harrisburg story probably made more than a few locals spit up their coffee all over the newspaper, especialy those in the business. The local Realtor board has been saying no bubble, no problem, things are great for the past two years and the Patriot News is publishing it as gospel.
Yet board membership dropped about 9 % in January (Dues is due) and will drop more since license renewal time in May 31.
Some other “numbers” announced yesterday - Days on Market is up about 25% Year on Year - Average Sales Price is down about 3% Year On Year.
One other thing the article didn’t cover - foreclosures are up about 30% versus same period 2007.
Buyers Haven’t Gone Away, They’re Just Waiting
http://en.wikipedia.org/wiki/Cargo_cult
The Tennessean. “The number of homes on the market in Middle Tennessee started the spring at record levels. The region’s housing inventory rose to 23,730 properties as of March 31, up 6 percent from the end of February and up 24 percent compared with a year ago, the Greater Nashville Association of Realtors said.”
This is interesting. For a year, I kept records of the amount of homes for sale on the MLS for the Nashville area. The number went up considerably last spring and never went down. I was looking primarily for houses in the 100-150k range. This spring, I noticed the numbers began to climb again. Then all the sites I looked at suddenly changed the way they presented the numbers. Most had previously showed ALL available property in one giant number. This changed to show only the number available by area, not region. Now that the data is out that there are more homes for sale, I get a feeling I know why.
In regards to Lofts in Lexington… Lofts in cities like these seems nonsensical.I saw these in Knoxville too, and they were all at least double the cost of an average SFH. Loft to me doesn’t= big bucks. It’s a freakin’ condo. What a joke.
I think they are cool in cities with great skylines. Not that I would want one, but in the right location with the right view…they are pretty cool.
“‘Pretty bleak,’ said John McClain, a senior fellow at George Mason University. ‘A lot of people are still on the sidelines. … People think the economy’s in a recession, and it probably is.’”
I was always get them mixed up…
Which one is the blowhard eCONomist, and which one was just a blowhard, running for the Presidency?
Seems that the blowhard running for president is having some major fundraising problems. Looks like all of that campaign finance reform advocacy is coming back to haunt him.
Backing McCain is like betting on a pair of deuces, after all the cards have been drawn and there’s still 4 other players, each raising the pot…
Or the NYC cop battling terrorists in an LA high-rise, Dulles airport, etc.
…from Pennsylvania. “The nationwide housing slowdown that took hold in 2007 might be showing up in the midstate. In the first quarter of 2008, the number of homes sold dropped 21.6 percent from the first quarter of 2007. It was the lowest first quarter for home sales since 2003. And for the first time since the national slowdown took hold last year, the average price of a midstate home sale has dropped.”
Oh, goodie. That means that the slowdown train should be pulling into my area one of these days soon. It’s always appeared to me that things start on the the left coast and travel across the country until it finally hits here. If we’re already up to Harrisburg, I can finally see the light.
Absolutely, eastcoaster. It’s coming here. It’s gonna be ugly.
My neighbors who literally just moved in put their house up for what they paid two years ago to sell quickly (relocation for job) - it’s sitting.
A friend who also moved to ChesCo a couple of years ago from FLA also has to relocate for her husband’s job - their McMansionette has been on the market since January. Her price is way too high (but “they can’t afford” to lower it) and now other, bigger houses in her development are listing for less! Not to mention all the new high-end developments where a larger, new house is $100K less than she’s trying to sell for.
There’s a lot of stress and anger here in ChesCo and MontCo is going to be the same . . .
Down in Downingtown.
Buyers Haven’t Gone Away, They’re Just Waiting
Waiting for Go Dough…
“Oliphant has been trying to sell the house at a $100,000 loss and plans to file for bankruptcy, losing her $50,000 down payment. She said she might ultimately have to abandon that house and four others she bought in Florida.”
Tough titties. I doubt Oliphant will be checking into a homeless shelter.